program implementation document - asian development bank · 2016-11-23 · purpose of the program...

Project Number: 49056 November 2016

PAK: Access to Clean Energy Investment Program

Program Implementation Document

CONTENTS Page

I. Program Description 1 II. Results and Disbursement 2 A. The RBL Program’s Overall Results including Disbursement Linked Indicators is in

Table 2 and 3 below. 2 B. Disbursement Allocation and Status 12 III. Expenditure Framework and Financing 14 A. Expenditure Framework 14 IV. Program Systems and Implementation Arrangements 14 A. MHP Implementation Business Model 14 B. Monitoring and Evaluation System 17 C. Fiduciary Systems 20 D. Satisfying Procurement Member Country Eligibility Restrictions 22 E. Safeguard Systems 22 F. Suggested Guiding Principles for Voluntary Land Donations 23 G. Gender and Social Dimensions 23 H. Communication and Information Disclosure Arrangements 23 I. Development Coordination 24 V. Integrated Risks and Mitigating Measures 24 VI. Program Action Plan 24 VII. Technical Assistance 24 A. Summary 24 B. Consulting Service Requirement 25 VIII. Monitoring of Key Program Covenants 25 IX. Summary of Key Outstanding Issues 25 X. Accountability Mechanism 25 XI. Program Organizational Structure and Focal Staff 25 A. Organizational Structure 25 B. Program Officers and Focal Persons 26

PURPOSE OF THE PROGRAM IMPLEMENTATION DOCUMENT

1. The Islamic Republic of Pakistan is wholly responsible for implementing the program supported by

results-based lending. The Asian Development Bank staff support the results based lending program design and implementation.

The program implementation document (PID) consolidates the essential program implementation information. The PID is a management tool which supports effective program implementation, monitoring, and reporting. It is developed throughout the program processing, and should be discussed with the developing member country at loan negotiations. It is a living document that should be refined and kept up to date during program implementation.

Abbreviations

ACE - Anti-Corruption Establishment

ADB - Asian Development Bank

AFD - Agence Française de Développement

BPEEL - best-practice energy efficiency legislation

AGP - Auditor General of Pakistan

APFS - audited program financial statement

DC - development contractor

DDO - Drawing and Disbursement Office

DMF - design and monitoring framework

DLI - disbursement-linked indicator

EA - executing agency

EAD - Economic Affairs Division

EDP - Energy Department of Punjab

EIA environmental impact assessment

ERC - Energy Resource Center

FD - Finance Department

FABS - Financial Accounting and Budgeting System

FS feasibility study

IA - implementing agency

ICT - Information Communication Technology

IEE initial environmental examination

KPEPA Khyber Pakhtunkhwa Environmental Protection Agency

KPP - Khyber Pakhtunkhwa Province

M&E - monitoring and evaluation

MHP - micro-hydropower plant

MW - megawatt

NAB - National Accountability Bureau

NAM - New Accounting Model

NBP - National Bank of Pakistan

OCR - ordinary capital resources

O&M - operations and maintenance

PAP - program action plan

P&D - Planning and Development

PEC - Pakistan Engineering Council

PEDO - Pakhtunkhwa Energy Development Organization

PEECA - Punjab Energy Efficiency and Conservation Agency

PHC - primary healthcare facility

PID - program implementation document

PMU - program management unit

PbPR - Punjab procurement rules

PMC - program management consultant

PPMS - program performance monitoring system

PPR - program progress report

PPRA - Public Procurement Regulatory Authority

PPTA project preparatory technical assistance

PSSA - program safeguards system assessment

RBL - results-based lending

RRP - report and recommendation of the president

SBD - standard bidding document

SBP - State Bank of Pakistan

TA - technical assistance

WA - withdrawal application

Access to Clean Energy Investment Program (RRP PAK 49056)

I. Program Description

1. The results-based lending (RBL) program will support the Government of Pakistan’s national and provincial goals of providing uninterrupted access to affordable and clean energy by financing a slice of the provincial power sector plans in Khyber Pakhtunkhwa Province (KPP) and Punjab. The program scope, defined by community-based renewable energy initiatives and public sector energy efficiency programs, is summarized in Table 1. The RBL program will exclude activities that would be classified as category A in the Safeguard Policy Statement (2009),1 and activities that would involve procurement of works, goods, and services under contracts whose estimated value exceeds specified monetary amounts.2

Table 1: Program Scope (As of November 2016)

Item Broader Government Programs Results-Based Lending Program

Outcome Uninterrupted access to affordable and clean energy for all sections of the population.

Increased access to sustainable and more reliable electricity services, particularly for vulnerable communities in KPP and Punjab.

Key outputs

(i) Expanded generation capacity, (ii) increased electrification rates, (iii) increased renewable energy generation, and (iv) increased private sector investment in energy sector development.

(i) Renewable energy-based power plants are installed, (ii) increased opportunity for women and girls to obtain energy services and benefits, (iii) enhanced institutional capacity to foster sustainability, and (iii) public sector energy efficiency is promoted.

Activity types (i) Development of renewable and thermal energy resources, (ii) development and enforcement of policies and regulations, (iii) (iv) provision of reliable electricity to all population, and (v) demand-side management and energy efficiency initiatives.

(i) Installation of micro-hydropower plants in rural KPP, (ii) introduction of sustainable business models for off-grid power, (iii) implementation of off-grid decentralized solar solutions for education and primary health care facilities in KPP and Punjab, and (iv) support to energy efficient initiatives in Punjab.

Program expenditure

$26 billion: $10 billion for KPP $16 billion for Punjab

$ 454.3 million $ 330.3 million for KPP $ 124.0 million for Punjab

Main financiers and respective financing amounts

Provincial government $25.3 billion Community $30 million ADB $ 325 million AFD $ 78.6 million

Provincial government $ 40.8 million (9%) Community $9.9 million (2.2%) ADB $ 325 million (71.5%), OCR Funding AFD $ 78.6 million (17.3%)

Geographic coverage

KPP and Punjab KPP and Punjab

Implementation period

20172021 20172021

ADB = Asian Development Bank, AFD = Agence Française de Développement, KPP = Khyber Pakhtunkhwa province, OCR = ordinary capital resources. Source: Asian Development Bank, Energy Department, KPP and Punjab

1 Asian Development Bank, 2009. Safeguard Policy Statement. Manila.

2 The amounts are currently $50 million for works, turnkey and supply, and installation contracts; $30 million for

goods; $20 million for information technology systems and non-consulting services; and $15 million for consulting services. ADB, 2013. Piloting Results-Based Lending for Programs. Paragraph 66. Manila.

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II. Results and Disbursement

A. The RBL Program’s Overall Results including Disbursement Linked Indicators is in Table 2 and 3 below.

Table 2: RBL Program Results Framework (As of November 2016)

Results Indicators

DLI Yes/no

Baseline value Year 2017 2018 2019 2020 2021

Outcome: Access to sustainable and more reliable electricity services increased, particularly for vulnerable communities in KPP and Punjab

1. By 2021, access to electricity is provided to an additional 240,000 households and 2.6 million students in unelectrified and poorly electrified areas:

Yes DLI 1

0 2016 40,000 households 80,000 households

120,000 households

180,000 households

240,000 households

0 500,000 students 1,100,000 students

1,600,000 students

2,100,000 students

2,600,000 students

KPP: households (cumulative) 0 40,000 80,000 120,000 180,000 240,000 KPP: total students (cumulative) 0 160,000 320,000 480,000 640,000 800,000 Punjab: total students (cumulative) 0 340,000 780,000 1,120,000 1,460,000 1,800,000

2. In previously electrified areas, the number of targeted schools and PHFs affected by load shedding is reduced to zero by 2021:

No 13,000 schools, 1900 PHFs

2016 10,400 schools 1,520 PHFs

7,800 schools

1,140 PHFs

5,200 schools 760 PHFs

2,600 schools

380 PHFs

0 schools 0 PHFs

KPP (cumulative) 3,000 schools 120 PHFs




600 schools 24 PHFs

0 schools 0 PHF

Punjab (cumulative)

10,000 schools 1,780 PHF

8,000 schools 1,424 PHFs

6,000 schools

1,068 PHFs


2,000 schools

356 PHFs

0 schools 0 PHF

Output 1 Renewable energy-based power plants installed

3. By 2021, power generation capacity from clean energy sources is increased by an additional amount of 182 MW:

Yes DLI 2

0 MW 2016 36 MW 73 MW 109 MW 146 MW 182 MW

153 MW in KPP (MHP and solar) (cumulative)

0 MW 31 MW 61 MW 92 MW 123 MW 153 MW

29 MW in Punjab (solar) (cumulative) 0 MW 5 MW 12 MW 17 MW 23 MW 29 MW 4. By 2021, at least 26,587 sites have renewable energy-based power plants installed, of which:

Yes DLI 3

0 installed 2016 5,317 10,635 15,952 21,270 26,587

KPP: 1,000 MHPs installed (cumulative)

200 400 600 800 1,000

KPP: 8,187 solar plants installed (cumulative)

1,637 3,275 4,912 6,550 8,187

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Results Indicators

DLI Yes/no


Punjab: 17,400 solar plants installed (cumulative)

3,480 6,960 10,440 13,920 17,400

Output 2. Opportunity for women and girls to obtain energy services and benefits increased

5. By 2021, at least 30% of schools with solar plant installed are girls schools:

Yes DLI 4

0%; no school connected to solar plant

2016 6% 12% 18% 24% 30%

KPP (cumulative) 6% 12% 18% 24% 30% Punjab(cumulative) 6% 12% 18% 24% 30%

6. By 2021, at least 7% of target households newly connected to electricity are women-headed households

1 (cumulative, KPP)

Yes DLI 5

0 %; no newly connected households

2016 2% 4% 5% 6% 7%

7. By 2021, 500 PHFs used by women for delivery or antenatal care (ANC) are equipped with solar plants.

No 0 PHFs equipped with solar plants

2016 50 PHFs 150 PHFs 275 PHFs 400 PHFs 500 PHFs

KPP (cumulative) 10 PHFs 30 PHFs 50 PHFs 60 PHFs 70 PHFs

Punjab (cumulative) 40 PHFs 120 PHFs 225 PHFs 340 PHFs 430 PHFs

8. By 2021 3000 women are trained to equip them in using energy benefits.

No 2016: 0 women trained

2016 500 trained 1500 trained 2000 trained 2500 trained 3000 trained

KPP (cumulative) 500 trained 1500 trained 2000 trained 2500 trained 3000 trained

Output 3. Institutional capacity to foster sustainability enhanced.

9. By 2021, governance, financial management and procurement functions are improved.

KPP energy department (PEDO)

Yes DLI 6

No procure-ment unit, no internal audit

2016

Corporate governance structure implemented, including dedicated procurement unit

Internal audit department established and operationalized

Procurement manual adopted

Business model adopted for micro-hydroelectricity plants

Program management unit strengthened.

First internal audit report approved by PEDO board

PEDO internal performance audit report on the program produced

1 Women-headed households mean any household headed by: (i) a single woman living on her own, (ii) a widow, or woman separated from her husband for any

reason, including migration, with or without children.

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Results Indicators

DLI Yes/no


Energy department of Punjab (EDP) No procure-ment unit, no internal audit

Dedicated procurement unit established.

Internal audit department established and operationalized

Procurement manual adopted

Program management unit strengthened.

EDP internal audit report produced

EDP internal performance audit report on the program produced

10. By 2021, 100% of identified energy and finance department staff of both provinces trained on technical issues, gender, project management, financial management, contract management, and environmental and social management.

No 0% trained 2016 20 % staff trained 40 % staff trained

60 % staff trained

80 % staff trained

100 % staff trained

KPP (cumulative) 20 % staff trained 40 % staff trained

60 % staff trained

80 % staff trained

100 % staff trained

Punjab (cumulative) 20 % staff trained 40 % staff trained

60 % staff trained

80 % staff trained

100 % staff trained

11. From 2017, ICT-driven program performance monitoring system (PPMS) is operationalized to produce annual performance monitoring reports on all indicators and PAP actions.

Yes DLI 7

No PPMS 2016

KPP PPMS set up, 2017 report issued

2018 report issued on all indicators and PAP actions




Punjab PPMS set up, 2017 report issued





Output 4. Public sector energy efficiency promoted in Punjab

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Results Indicators

DLI Yes/no


12. By 2019, energy audits are conducted on 100% of identified public sector buildings and a model net zero building is constructed.

Yes DLI 8

No energy audits, no model net zero building

2016 30% of identified public sector buildings have conducted energy audits

Construction of model net zero building initiated

100% have conducted energy audits

Methodology developed and approved for follow-up on energy audit recommendations

Construction of model net zero building completed and government standards and design for net zero buildings notified.

ADB = Asian Development Bank, DLI = disbursement-linked indicator, EDP = Energy Department of Punjab, ICT = Information and Communication Technology, IVA = independent verification agent, KPP = Khyber Pakhtunkhwa province, MHP = micro-hydropower plant, MW = megawatt, PEDO = Pakhtunkhwa Energy Development Organization, PPMS = program performance monitoring system, RBL = results-based lending. Sources: Asian Development Bank, Energy Department of Punjab, and Pakhtunkhwa Energy Development Organization.

Table 3: Disbursement-Linked Indicator Verification Protocols

(As of November 2016)

Disbursement-Linked Indicator Definition and Description of Achievement and Verification

Information Source and Time Frame

Verification Agency and Procedure

DLI 1. By 2021, access to electricity is provided to an additional 240,000 households and 2,600,000 students in un-electrified and poorly electrified areas.

2016 baseline: 0 All targets are cumulative and provide the minimum threshold for disbursement without prejudice to the arrangements for partial disbursement. Disbursement targets for KPP: Households:

2017: 40,000

2018: 80,000

2019:120,000

2020: 180,000

2021: 240,000 Students:

Definition:

For MHP, the DLI refers to the total households connected to the MHP grids provided by the RBL program. For solar sources, the DLI refers to the total number of students in schools provided with solar electricity by the RBL program, to be obtained from education authorities. Conditions for disbursement are met when (i) the total number of households

provided with electricity by the program from MHPs equals or exceeds the annual cumulative target specified, and (ii) when the total number of students in beneficiary schools is equal to or exceeds the annual cumulative target specified. In KPP, MHP component counts for 80% of full disbursement and solar sources component counts for 20% of full disbursement. For example, if all the household targets are achieved but student targets are not, then 80% of the target amount allocated for KPP for that year will be disbursed.

KPP: PEDO reports drawn from its PPMS. Punjab: EDP reports drawn from its PPMS. Frequency for reporting will be annual.

PEDO or EDP prepares an attestation that the DLI is met and attaches the relevant report. The IVA will verify the results each year first, from the administrative records. These will be the number of consumers per site and schoolchildren in connected schools in KPP and the number of schoolchildren in connected schools in Punjab. Second, the IVA will back this up with random spot checks of communities, and schools in field visits. Field trips may be combined

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2017: 160,000

2018: 320,000

2019: 480,000

2020: 640,000

2021: 800,000 Disbursement targets for Punjab Students:

2017: 340,000

2018: 780,000

2019: 1,120,000

2020: 1,460,000

2021: 1,800,000

Partial disbursement: The DLI is scalable and partial disbursement is allowed

for each of the above components. If the target is not fully achieved, then disbursement is proportional to the increase made from the previous period’s targeted achievement for that component. The following formula will be applied:

Partial DLI disbursement = planned DLI disbursement for the period (actual achievement of the current period – targeted achievement of the previous period) / (targeted achievement of the current period – targeted achievement of the previous period).

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Disbursements are allowed for early or late achievement of the DLI. This means that the planned disbursement amount for a given year can be released when the set target is fully achieved, even if the achievement is a year or more late, as long as this is within the loan period. If the target achievement is early, early disbursement can be made.

as appropriate for DLIs 1 to 5, with checking of different elements for each DLI on the same field trip. Within three weeks of receiving the independent verification report, ADB confirms that the target is met and initiates the process of disbursement.

DLI 2. By 2021, power generation capacity from clean energy sources is increased by an additional amount of 182 MW.

2016 baseline: 0 All targets are cumulative and provide the minimum threshold for disbursement without prejudice to the arrangements for partial disbursement. Disbursement targets for KPP:

2017: 31 MW

2018: 61 MW

2019: 92 MW

2020: 122 MW

2021: 153 MW Disbursement targets for Punjab:

2017: 6 MW

2018: 12 MW

2019: 17 MW

2020: 23 MW

2021: 29 MW

Definition:

Clean energy sources mean MHPs and solar plants installed by the RBL program in KPP, and solar plants installed by the RBL program in schools in Punjab, and the University of Bahawalpur. For each province, installed power generation capacity will be added up. There is no need to disaggregate by type of renewable sources. Conditions for disbursement are met for each province when the total

installed capacity from the above sources reach or exceed the megawatts specified in the annual target for that province. Partial disbursement: The DLI is scalable and partial disbursement is allowed.

If the target is not fully achieved, then disbursement is proportional to the increase made from the previous period’s targeted achievement. The following formula will be applied:


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Disbursements are allowed for early or late achievement of the DLI. This means that the planned disbursement amount for a given year can be released when


PEDO or EDP prepares an attestation that the DLI is met and attaches the relevant report. The IVA will verify the results each year through (i) a review of program records on delivery, installation and capacity of power source and (ii) backed up by field spot checks. The verification process will take into account the different capacities of each source. Field trips may be combined as appropriate for DLIs 1 to 5, with checking of different elements for each DLI on the same field trip. Within three weeks of receiving the independent verification report, ADB confirms that the target is met and initiates the process of disbursement.

2 For each year, the baseline (representing 0% disbursement) is taken from the previous period’s planned target, while the current year’s target (representing

100% disbursement) is taken from the current year’s planned target. 3 For each year, the baseline (representing 0% disbursement) is taken from the previous period’s planned target, while the current year’s target (representing

100% disbursement) is taken from the current year’s planned target.

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the set target is fully achieved, even if the achievement is a year or more late, as long as this is within the loan period. If the target achievement is early, early disbursement can be made.

DLI 3: By 2021, at least 26,587 sites have renewable energy-based power plants installed.

2016 baseline: 0 All targets are cumulative and provide the minimum threshold for disbursement without prejudice to the arrangements for partial disbursement. Disbursement targets for KPP: Total MHPs installed:

2017 : 200

2018 : 400

2019 : 600

2020 : 800

2021 : 1,000 Solar plants installed:

2017: 1,637

2018: 3,275

2019: 4,912

2020: 6,550

2021: 8,187 Disbursement targets for Punjab: Solar plants installed:

2017: 3,480

2018: 6,960

2019: 10,440

2020: 13,920

2021: 17,400

Definition:

Renewable energy sources mean MHPs in KPP, and solar plants in schools and PHFs in both KPP and Punjab. These are considered installed when the plant is operational and producing electricity. Whatever the installed capacity of the MHP or solar plants, each plant is counted as an entity. Conditions for full disbursement are met for each province when the total

number of installations (MHPs and solar plants in KPP and solar plants in Punjab) is equal to or exceed the annual target for that province. For KPP, the MHPs account for 80% and solar plants for 20% of full disbursement. For example, if all the MHP installation targets are achieved but not the solar plant targets are achieved, then from the target amount allocated for DLI 3 for KPP for that year, 80% disbursement will be made for the full achievement of MHP installation. Partial disbursement: The DLI is scalable and partial disbursement is allowed

for each component. If the target is not fully achieved, then disbursement is proportional to the increase made from the previous period’s targeted achievement for that component. The following formula will be applied:


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PEDO or EDP prepares an attestation that the DLI is met and attaches the relevant report. The IVA will verify the results each year, in the same process as for DLIs 1 to 5 (review of records backed up by field spot checks). For DLI 3, field checks will focus on the installation and operationalization of plants. Field trips may be combined as appropriate for DLIs 1 to 5, with checking of different elements for each DLI on the same field trip. Within three weeks of receiving the independent verification report, ADB confirms that the target is met and initiates the process of disbursement.

DLI 4: By 2021, at least 30% of schools with solar plant installed are girls’ schools.

2016 baseline: No school connected to solar plant. All targets are cumulative and provide the minimum threshold for disbursement without prejudice to the

Definition: The numerator for this indicator is the number of girls-only schools

(“girls’ schools”) connected to a solar plant. The denominator is the total number of schools connected to a solar plant. Each year, the numerator and denominator are measured on a cumulative basis.

KPP: PEDO reports drawn from its PPMS.

PEDO or EDP prepares an attestation that the DLI is met and attaches the relevant report. The IVA will verify the results each year, in the same two stage process as



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arrangements for partial disbursement. Disbursement targets (Share of girls schools within the total number of schools having received solar plants): for KPP:

2017: 6%

2018: 12%

2019: 18%

2020: 24%

2021: 30% for Punjab:

2017: 6%

2018: 12%

2019: 18%

2020: 24%

2021: 30%

Conditions for disbursement are met for each province when the percentage

share of girls’ schools equals or exceeds the annual percentage target for that province. Partial disbursement: The DLI is scalable and partial disbursement is allowed.



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Punjab: EDP reports drawn from its PPMS. Frequency for reporting will be annual.

for DLIs 1 to 5 (first, review of program and school records; second, random spot checks conducted in the field). Field trips may be combined as appropriate for DLIs 1 to 5, with checking of different elements for each DLI on the same field trip. Within three week of receiving the independent verification report, ADB confirms that the target is met and initiates the process of disbursement.

DLI 5: By 2021, at least 7% of target households newly connected to electricity are women-headed households.

2016 baseline: 0 All targets are cumulative Disbursement targets for KPP: All targets are cumulative and provide the minimum threshold for disbursement without prejudice to the arrangements for partial disbursement. Share of women-headed households within the total number of households in KPP having received electricity generated from MHPs:

2017: 2%

2018: 4%

2019: 5%

2020: 6%

2021: 7%

Definition:

The denominator for this indicator, the “target households”, means the households in the communities selected by the RBL program that have received electricity generated from MHPs. The numerator is the number of women-headed households provided with electricity from MHPs under the RBL program. Women-headed households mean any household headed by: (i) a single woman living on her own, with or without children, or (ii) a widow, or woman separated from her husband for any reason, including migration, with or without children. Conditions for disbursement are met when the percentage share of women-

headed households equals or exceeds the annual cumulative target for KPP. Partial disbursement: The DLI is scalable and partial disbursement is allowed.


Partial DLI disbursement = planned DLI disbursement for the period (actual achievement of the current period – targeted achievement of the previous


PEDO or EDP prepares an attestation that the DLI is met and attaches the relevant report. The IVA will verify the results each year, in the same two stage process as for DLIs 1 to 5 (first, review of program records, and second, random spot checks conducted in the field). Checks for this DLI will focus on the number of women-headed households in MHP beneficiary communities. Field trips may be combined as appropriate for DLIs 1 to 5, with checking of different elements for each DLI on the same field trip. Within three week of receiving the independent verification report, ADB confirms that the target is met and initiates the process of



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period) / (targeted achievement of the current period – targeted achievement of the previous period).

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disbursement.

DLI 6: By 2021, governance, financial management and procurement functions are improved.

2016 baseline: No procurement unit, no internal audit department. Disbursement targets for KPP:

2017: (i) Corporate governance structure implemented, including dedicated procurement unit, (ii) Internal audit department established and operationalized, (iii) procurement manual adopted (iv) business model adopted for micro-hydroelectricity plants, (v) program management unit strengthened.

2018: First internal audit report approved by PEDO board.

2021: PEDO internal performance audit report on the program produced.

Disbursement targets for Punjab:

2017: (i) Dedicated procurement unit established, (ii) Internal audit department established and operationalized, (iii) Procurement manual adopted, (iv) Program management unit strengthened.

2018: EDP internal audit report produced.

2021: EDP internal performance audit report on the program produced.

Definition:

The actions under DLI 6 in terms of institutional strengthening are measured by the results produced, as follows: a) An internal audit department must meets the following criteria. The department (i) independently assesses the organization's risk management, governance and internal control system, (ii) reports regularly on these to the highest level in the organization (e.g., head of the organization, management and the audit committee), and (iii) is made up of qualified and skilled people able to work in accordance with the requirements contained within the International Professional Practices Framework. Most importantly, the internal audit report (2018) and performance audit report (2021) produced by the internal audit department must meet the standards set by the Auditor-General of Pakistan. b) A dedicated procurement unit must meets the following criteria: (i) it is established as a permanent unit of the organization with supplementary procurement staff in the Program Management Unit, (ii) its functions are procurement planning, procurement process, contract management and procurement monitoring and reporting, and (iii) the roles and accountabilities are clearly defined within the unit as well as with the rest of the organization. c) The procurement manual must be able to guide all PEDO/EDP activities in procurement and contracting practices and must meet provincial regulatory requirements in the procurement of all goods, services and works, as well as in the internal controls and standards of conduct for all personnel involved in the procurement process. d) The business model adopted for MHPs means the KPP government has to review, select and adopt one of a number of business models developed as part of the due diligence report under ADB’s TA 9047 PAK. e) A strengthened program management unit means a unit that has been established and staffed in line with the organogram in the PPTA report, which means having the operational strength to implement PAP.

KPP: PEDO reports Punjab: EDP reports Frequency for reporting will be annual.

PEDO or EDP prepares an attestation that the DLI is met and attaches the relevant reportand the following as applicable:. (a) for the implementation of the corporate governance structure: a copy of the new corporate governance structure in place, with an indication of the names of the staff occupying the various positions reflected in the structure, and a copy of the document which describes the functions and responsibilities of each unit and position in the structure; (b) for the establishment of the dedicated procurement unit or internal audit department: a certification from the appropriate officer of PEDO or EDP confirming that the procurement unit or internal audit department has been established and operationalized with a copy of the document which describes the functions and responsibilities of the unit or department and a list of the names of the staff occupying each position in the unit or department; (c) for the adoption of the



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Conditions for disbursement are met for each province when the institutional

action(s) specified for that year has been completed and the entities or products set up or produced meet the criteria set out in (a) to (d) above. For 2017, each of the 5 actions required of the KPP government accounts for 20% of the full disbursement allocation for that year, while for Punjab, each of the 4 actions required accounts for 25% of the full disbursement allocation for that year. That is, if Punjab completes only the action on internal audit and no other in 2017, then it will receive only 25% of the full allocation for that year. Partial disbursement is not allowed: The DLI is not scalable. The action has

to be completed before any disbursement. Disbursements are not allowed for late achievement of the DLI. This means that all actions and reports must be completed on time. Early payment against an earlier than scheduled completion date is allowed.

procurement manual or business model: a copy of the notification or other order of the appropriate body or officer in PEDO or EDP adopting the procurement manual or business model, and a copy of the manual or model; (d) for the strengthening of the program management unit: a certification of the appropriate officer in PEDO or EDP listing the actions that were completed in order to strengthen the program management unit, with an indication of the dates of completion and other supporting details. The IVA will verify the results in 2017, 2018 and 2021 on the basis of the required reports. Within three week of receiving the independent verification report, ADB confirms that the target is met and initiates the process of disbursement.

DLI 7: From 2017, ICT-driven program performance monitoring system (PPMS) is operationalized, to produce annual performance monitoring reports on all indicators and PAP actions.

2016 baseline: No PPMS Disbursement targets for KPP:

2017: PPMS set up in PEDO, 2017 report issued

20182021: annual performance monitoring report issued on all indicators and PAP actions.

Disbursement targets for Punjab:

2017: PPMS set up in EDP, 2017 report issued

20182021: annual performance monitoring report issued on all indicators and PAP actions.

Definition:

Operationalization of PPMS means the establishment of the PPMS in EDP and PEDO, with the required software and capacity in place to (i) conduct performance monitoring of all DMF indicators as well as additional indicators, as required, for the procurement, installation and functioning of MHP and solar plants, and (ii) to implement all the PAP actions as agreed. The PPMS should be a web-based monitoring system, to allow for data transmission and collection from remote locations. “All indicators” mean all the indicators agreed on by all stakeholders in the early part of 2017. Conditions for disbursement are met for each province when the actions

specified for that year are met. For 2017, full disbursement requires (a) PPMS to be set up (50% of full disbursement allocation for that year) and (b) a 2017 report to be produced on all indicators (50% of full disbursement allocation for


PEDO or EDP prepares an attestation that the DLI is met and attaches the relevant report. The IVA will verify the results each year on the basis of the performance monitoring reports. Within three week of receiving the independent verification report, ADB confirms that the target is met and initiates the process of disbursement.

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that year). Partial disbursement is not allowed: The DLI is not scalable. Disbursements

are also not allowed for late achievement of the DLI.

DLI 8: By 2019, energy audits are conducted on 100% of identified public sector buildings and a model net zero building is constructed.

2016 baseline: No energy audits Disbursement targets for Punjab: 2017:

30% of identified public sector buildings have conducted energy audits

Construction of model net zero building initiated

2017:

100% of identified buildings have conducted energy audits

2018:

Methodology developed and approved for follow-up on energy audit recom-mendations

Construction of model net zero building completed and government standards and design for zero-net buildings notified.

Definition:

“Identified public sector buildings” are all those in the list developed by EDP in the first quarter of 2017 and acceptable to ADB. The number of buildings on this list constitutes the denominator for this indicator for 2017 and 2018. The numerator is the number of buildings from the list that have had energy audits conducted. “Net zero building” means a 62% reduction from current average level for net emission. Conditions for disbursement for the energy audits are met when the

percentage targets for 2017 and 2018 are achieved, and when the institutional actions specified for each year have been completed. For the net-zero building, condition for disbursement for the 2017 target is met when civil works are started and target for 2019 is met when the building has been completed, furnished, equipped and Energy Department staff shifted to the building. For each year, the institutional actions relating to energy audits are allocated 15% of the full disbursement amount and institutional actions relating to net-zero building are allocated 85% of the full disbursement amount for that year. Partial disbursement: For 2017 and 2018 energy audits percentage targets,

the DLI is scalable and partial disbursement is allowed. However, partial disbursement is not allowed for the institutional actions. Disbursements are allowed for early or late achievement of the DLI. This means that the planned disbursement amount for a given year can be released when the set target is fully achieved, even if the achievement is a year or more late, as long as this is within the loan period. If the target achievement is early, early disbursement can be made.

EDP reports drawn from its PPMS. Frequency for reporting will be annual.

EDP prepares an attestation that the DLI is met and attaches the relevant report. The IVA will verify the results for energy audits in 2017, 2018 and 2019 on the basis of the energy audit reports produced in 2017 and 2018, and the approval of follow up on energy audit recommendations in 2019. For the construction and government standards on net zero building, the IVA will conduct checks of the site and the notification of standards. Within three week of receiving the independent verification report, ADB confirms that the target is met and initiates the process of disbursement.

ADB = Asian Development Bank, DLI = disbursement-linked indicator, EDP = Energy Department of Punjab, ICT = Information and Communication Technology, KPP = Khyber Pakhtunkhwa province, MHP = micro-hydropower plant, MW = megawatt, PEDO = Pakhtunkhwa Energy Development Organization, PAP = program action plan, PHF = primary health care facility, PPMS = program performance monitoring system, RBL = results-based lending. Sources: Asian Development Bank, Energy Department of Punjab, and Pakhtunkhwa Energy Development Organization.

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B. Disbursement Allocation and Status

Table 4: Disbursement Schedule for Khyber Pakhtunkhwa ($ million)

Disbursement Linked Indicator

Total ADB Financing Allocation

Share of total ADB financing

(%) 2017 2018 2019 2020 2021

DLI 1 By 2021, access to electricity is provided to an additional 240,000 households and 800,000 students in un-electrified and poorly electrified areas.

44.65 20% 8.93 8.93 8.93 8.93 8.93

DLI 2 By 2021, power generation capacity from clean energy sources is increased by an additional amount of 153 MW.

55.85 25% 11.17 11.17 11.17 11.17 11.17

DLI 3 By 2021, at least 9,187 sites have renewable energy-based power plants installed.

44.65 20% 8.93 8.93 8.93 8.93 8.93

DLI 4 By 2021, at least 30% of schools with solar plant installed are girls schools.

15.65 7% 3.13 3.13 3.13 3.13 3.13

DLI 5 By 2021, at least 7% of target households newly connected to electricity are women-headed households.

17.85 8% 3.57 3.57 3.57 3.57 3.57

DLI 6 By 2021, governance, financial management and procurement functions are improved.

22.34 10% 13.40 4.47 0.00 0.00 4.47

DLI 7

From 2017, ICT-driven program performance monitoring system (PPMS) is operationalized to produce annual performance monitoring reports on all indicators and PAP actions

22.32 10% 11.16 4.47 2.23 2.23 2.23

DLI 8 By 2019, 100% of identified public sector buildings have conducted energy audits and the methodology for follow-up on energy audit recommendations has been approved.

0.00 0% 0.00 0.00 0.00 0.00 0.00

Subtotal 223.31 100% 60.29 44.67 37.96 37.96 42.43

Interest and Commitment Charges 14.00

Total 237.31

ADB = Asian Development Bank, DLI = disbursement-linked indicator, ICT = Information and Communication Technology, MW = megawatt. Sources: Asian Development Bank and Energy Department of Punjab.

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Table 5: Disbursement Schedule for Punjab ($ million)

Disbursement Linked Indicator

Total ADB financing allocation

Share of total ADB financing

(%) 2017 2018 2019 2020 2021

DLI 1 By 2021, access to electricity is provided to an additional 1,800,000 students in un-electrified and poorly electrified areas.

16.75 20% 3.35 3.35 3.35 3.35 3.35

DLI 2 By 2021, power generation capacity from clean energy sources is increased by an additional amount of 29 MW.

20.90 25% 4.18 4.18 4.18 4.18 4.18

DLI 3 By 2021, at least 17,400 sites have renewable energy-based power plants installed.

16.75 20% 3.35 3.35 3.35 3.35 3.35

DLI 4 By 2021, at least 30% of schools with solar plant installed are girls schools.

6.70 8% 1.34 1.34 1.34 1.34 1.34

DLI 5 By 2021, at least 7% of target households newly connected to electricity are women-headed households.

0.00 0% 0.00 0.00 0.00 0.00 0.00

DLI 6 By 2021, governance, financial management and procurement functions are improved.

8.36 10% 5.02 1.67 0.00 0.00 1.67

DLI 7

From 2017, ICT-driven program performance monitoring system (PPMS) is operationalized to produce annual performance monitoring reports on all indicators and PAP actions

7.54 9% 4.18 0.84 0.84 0.84 0.84

DLI 8 By 2019, 100% of identified public sector buildings have conducted energy audits and the methodology for follow-up on energy audit recommendations has been approved.

6.69 8% 1.67 2.51 2.51 0.00 0.00

Subtotal 83.69 100% 23.09 17.24 15.57 13.06 14.73

Interest and Commitment Charges 4.00

Total 87.69

ADB = Asian Development Bank, DLI = disbursement-linked indicator, ICT = Information and Communication Technology, MW = megawatt. Sources: Asian Development Bank, Energy Department of Punjab, and Pakhtunkhwa Energy Development Organization.

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III. Expenditure Framework and Financing

A. Expenditure Framework 2. Program expenditures. The broader government programs’ expenditures are estimated to be $26,280 million from 2017 to 2021, of which the RBL program expenditures are estimated to be $454.3 million. 3. Program financing plan is summarized in Table 6. The co-financing from AFD will be loan. The cofinancing will be joint and collaborative, and will not be administered by ADB.

Table 6: Program Financing Plan

Source Punjab KPP

($ million) Program Share of Total

(%)

Government Provincial government 13.8 26.9 40.8 9.0

Community contribution - 9.9 9.9 2.2

Development partners

Asian Development Bank

Ordinary capital resources (loan) 87.6 237.3 325.01 71.5

Agence Française de Développement 22.4 56.2 78.6 17.3

Total 124.0 330.3 454.3 100.0

KPP = Khyber Pakhtunkhwa. Sources: Asian Development Bank estimates, Energy Department of Punjab, and Khyber Pakhtunkhwa.

IV. Program Systems and Implementation Arrangements

A. MHP Implementation Business Model 4. Under the RBL program, the MHPs will provide electricity to around 1.5 million people in rural areas of KPP, and solar plants installed at schools will provide electricity to more than 2.6 million students, including 1.2 million girls. The MHP program will be implemented with the assistance of NGOs, hired through a competitive procurement process serving as the lead partner of the contractor, and responsible for site selection, conducting feasibility study and community mobilization. The contractor team will together be responsible for construction of the plant and training of the community team on operation and maintenance. The community organizations will be responsible for operation and maintenance of the plant and collection of cost recovery tariff to ensure sustainability. Four possible business models have been developed by the project preparatory technical assistance consultant. In all possible business models, the following essentials to ensure successful project implementation and a sustained long term operation are to be address:

(i) Tariff: Application of proper tariff scheme covering all costs of direct expenses for operation and maintenance, financial contingency for unexpected events and the accumulation of funds for future renewal of the asset.

(ii) Licencing: All projects independent from the ownership has to ensure that they dispose all the necessary licences and approvals according to federal and provincial regulation.

1 The interest and other charges during construction to be capitalized in the loan.

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(iii) Fulfil provision for operation and maintenance: To ensure a safe and stable operation and to enable a maximal lifetime of the micro-hydropower plant the provisions for operation and maintenance are to fulfil.

(iv) Funds: The owners and the operators have to ensure – observed by PEDO – that they allocate the dedicated shares of tariffs for contingency and renewal in the foreseen accounts.

(v) Social and Environmental Safeguard: All provisions concerning social and environmental safeguard are to fulfil.

5. Based on the above essentials for sustainability, Table 7 shows different models.

Table 7: Options to Structure the Business Model Business

Model Development and Construction Asset Management and Operation No. Project Owner Project Developer Asset Owner Asset Operator

A.I PEDO Development Contractor Community Community A.II PEDO Development Contractor PEDO Community A.III PEDO Development Contractor Community O&M Provider A.IV PEDO Development Contractor PEDO O&M Provider B PEDO Development Contractor Private

Investor/Operator Private Investor/Operator

C Private Investor Private Investor Private Investor Private Investor/Operator

6. Four different business models have been proposed by the PPTA consultants. Details are as below:

Figure 1: Business Model for Plants with Generation Capacity Up to 200 KWs

COMITY=group of people nominated by a community, HDF= Hydel Development Fund, PEDO= Pakhtunkhwa Energy Development Organization. Source: Asian Development Bank project preparatory technical assistance (TA-9047) for the Access to Clean Energy Investment Project consultants’ report.

A. Funds out of Hydro Power Fund of Government of KP are allocated to PEDO

B. PEDO selects the developer/Mobilizer to perform the works.

C. Development Contractor/Mobilizer shall direct interact with Community for social mobilisation and project development

D. PEDO shall approve technical proposals, ensure the process follows the rules and receive the final works when commissioned.

E. PEDO is transferring the asset to the COMITY -in the form of COMITY- and ultimate responsible of the Operation and Maintenance as owner of the plant as all liabilities* are transferred to COMITY

*in case of full ownership transfer

PEDO

Development Contractor/Mobilizer

Community

HDF

A

B

C

D

E

Development Operation

COMITY

Business Model – Privatisation

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Figure 2: Business Model for Plants with Generation Capacity from 200 to 500 KWs (Option 1)

COMITY= group of people nominated by a community, HDF= Hydel Development Fund, KP= Khyber Pakhtunkhwa, O&M=operations and maintenance, PEDO= Pakhtunkhwa Energy Development Organization. Source: Asian Development Bank project preparatory technical assistance (TA-9047) for the Access to Clean Energy Investment Project consultants’ report.

Figure 3: Business Model for Plants with generation capacity from 200 to 500 KWs (Option 2)

HDF= Hydel Development Fund, O&M=operations and maintenance, PEDO= Pakhtunkhwa Energy Development Organization. Source: Asian Development Bank project preparatory technical assistance (TA-9047) for the Access to Clean Energy Investment Project consultants’ report.





E. PEDO is transferring the asset to the COMITY -in the form of COMITY- and ultimate responsible of the Operation and Maintenance as owner of the plant as all liabilities* are transferred to COMITY

F. COMITY is undertaking an operation & maintenance agreement with an private service provider

PEDO


Community

HDF

A

B

C

D

E

O&M Prov.


COMITY


F





E. PEDO shall undertake a Lease Agreement for operation and maintenance with a private sector O&M provider.

PEDO shall be ultimate responsible of the Operation and Maintenance as owner of the Plant. Community is beneficiary of the operation.

All liabilities are by PEDO.

PEDO


Community

HDF

A

B

C

D

E

O&M Prov.


Community

Business Model – Lease-Out

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Figure 4: Business Model for Plants with Generation Capacity from 500 – 1000 KWs

HDF= Hydel Development Fund, KP= Khyber Pakhtunkhwa, O&M=operations and maintenance, PEDO= Pakhtunkhwa Energy Development Organization. Source: Asian Development Bank project preparatory technical assistance (TA-9047) for the Access to Clean Energy Investment Project consultants’ report.

B. Monitoring and Evaluation System 7. This section describes the monitoring and evaluation (M&E) system that will apply to the rest of the program period with RBL financing, and incorporates the recommendations of the program M&E system assessment on ongoing M&E activities.

1. Summary of Monitoring and Evaluation System

8. Institutional arrangements. Similar M&E systems to track program progress for KPP and Punjab are managed in parallel and will report on program progress to ADB; and coordinate with the relevant provincial departments. The M&E responsibilities are summarized in Table 8.

Table 8: M&E Responsibilities by Agency Agency Responsibilities PEDO, EDP, and PEECA

Populate the web-based M&E system with field information.

Verify and confirm the field information.

Maintain the M&E system.

Issue and approve the quarterly reports.

Submit disbursement requests to ADB.

Coordinate with provincial finance, education, and health departments.

ADB Process disbursements based on fulfillment of DLIs.

Monitor the program status.

Periodically deploy TA consultants to validate PEDO and EDP’s reports on DLIs (see para __).

Provincial health, finance and education departments

Facilitate data collection of field information during the operations and maintenance stage for the solar program.

Provide inputs on status of indicators in the solar-powered schools and primary healthcare facilities.

ADB = Asian Development Bank, DLI = disbursement-linked indicator, DMF = design and monitoring framework, EDP = Energy Department of Punjab, M&E = monitoring and evaluation, PEDO = Pakhtunkhwa Energy Development Organization, PEECA = Punjab Energy Efficiency and Conservation Agency, TA = technical assistance.

9. M&E indicators. The expanded M&E indicators for the rest of the program period, which





E. PEDO is privatizing and transferring the asset to an private investor

F. Private investor is undertaking the operation & maintenance by himself or he is awarding an private service provider with an operation & maintenance agreement

PEDO


Community

HDF

A

B

C

D

E

O&M Prov.


Private Investor


F

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will be monitored by PEDO, EDP and PEECA. The agencies will update the status of the program DMF, DLIs, and PAP; and compliance with the loan agreement. The key indicators are in Table 9. The M&E systems will be web-based, where the data on indicators will be aggregated in quarterly progress reports for the entire program, and for specific indicators. 10. Organizational setup and information flow for M&E. Figure 5 illustrates this process. 11. Data collection, analysis, and reporting with web-based M&E system. A web-based M&E system is being designed,2 which will enable PEDO, EDP and PEECA to effectively monitor the expanded M&E indicators. The system will allow large volumes of data to be collated, analyzed and captured in the program progress reports to be submitted to (i) the provincial energy, health and education department secretaries; and (ii) ADB bi-annually. 12. Program evaluation. Within two years after RBL effectiveness, ADB will field a midterm review to report on the progress against the program indicators, and agree on catch-up measures for any delays. Within one year from RBL closing, the program EAs will submit program completion reports to ADB and the Government on the results of the programs in KP and Punjab. Within two years from RBL closing, ADB, in consultation with the EAs, will prepare its own program completion report, and share the same with the Government.

Table 9: Key M&E Indicators

Key Indicator

Program Indicator

Responsible Monitoring Agency

Minimum Monitoring Frequency

Deliverable to External Parties

DMF DLI PEDO EDP PEECA DC PPR WA

Number of approved feasibility studies * * Quarterly *

Energy produced * * * Monthly *

Commissioned capacity * * * * Monthly * * Beneficiary population * * * * Monthly * * Female population benefited * * * * Monthly * * Percentage of women-headed households * * * Monthly * *

Number of women trained on using energy benefits * * * Quarterly * *

Percentage of private operators * * Quarterly *

Number of jobs created * * * Yearly *

GHG mitigation * * * Monthly *

Final capacity expected * * * Quarterly *

Number of created utilities * * * * Monthly * *

Aggregated cost * * * Monthly *

Percentage of annuity recovered * * Quarterly *

Global availability * * * Quarterly *

Number of complaints * * * Quarterly *

Percentage of girl schools * * * Monthly * *

Number of PHFs with delivery and antenatal care * * * Monthly * *

Percentage of compliance with BPEELs * Yearly * * Compliance with energy efficiency audits in public building plan

* Yearly * *

Compliance with construction work plan for the ERC * Quarterly * * BPEEL = best-practice energy efficiency legislation, DC = contractor, DLI = disbursement-linked indicator, DMF = design and monitoring framework, EDP = Energy Department of Punjab, ERC = Energy Resource Center, M&E = monitoring and evaluation, PEDO = Pakhtunkhwa Energy Development Organization, PEECA = Punjab Energy Efficiency and Conservation Agency, PHF = primary healthcare facility, PPR = program progress report, WA = withdrawal application.

2 The system is being developed by the project preparatory TA consultants under TA 9047-PAK: Access to Clean

Energy Investment Project, and finalized with PEDO and EDP.

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Figure 5: M&E Organizational Setup and Information Flow

ADB = Asian Development Bank, DLI = disbursement-linked indicator, EDP = Energy Department of Punjab, M&E = monitoring and evaluation, PEECA = Punjab Energy Efficiency and Conservation Agency, PEDO = Pakhtunkhwa Energy Development Organization, TA = technical assistance.

Table 10: M&E Responsibilities of Energy Department/Agency Staff and External Parties Staff/External Party

Number of Staff

Responsibility PEDO EDP PEECA

Energy department/ agency head

1 1 1 Effectively operate M&E system, and approve quarterly progress reports.

Project director 1 (solar) 1 (MHP)

1 1 Coordinate the activities of the field supervisors, and smart meter operators (as needed); manage contractors; and draft program progress reports on M&E indicators.

M&E head 1 1 1 Coordinate M&E activities, including overseeing the web-based M&E system to guarantee its reliability; circulate M&E data; and flag issues that require mitigation measures.

M&E analysts 3 3 Review (i) consistency of information on completed sites, and raise alarms as needed; (ii) reports from smart meters to ascertain the operational status of the power plant; and (iii) system alarms, and provide relevant staff with the information for solutions.

Prepare comprehensive reports for approval by M&E head, and subsequently by the project director, and then energy agency head.

Field supervisors 12 10 Verify field information from the contractors on site progress, ensure that information from finished power plants are complete and accurate, and uploaded to the web-based M&E system.

Finance department 1 1 1 Input data related to contractors’ payments in the web-based M&E system.

Smart meter operator

1 1 Collect data on power generation and availability from the on-site smart meter and camera in each power plant, and submit reports.

Program beneficiary

Report any major incident.

Ensure that smart meters are operational.

Contractor Upload comprehensive data from each power plant during feasibility, construction and commissioning

EDP = Energy Department of Punjab, M&E = monitoring and evaluation, MHP = micro-hydropower plant, PEDO = Pakhtunkhwa Energy Development Organization, PEECA = Punjab Energy Efficiency and Conservation Agency.

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13. Public disclosure. PEDO, EDP and PEECA will publicly disclose the status of the M&E indicators by publishing the program progress reports on their websites. The energy department secretaries of KPP and Punjab will also circulate the reports among their district and municipal authorities, and through media programs (TV and/or radio) to disseminate the results. The program completion reports (para 13) will be published on the Government and ADB websites.

2. Monitoring and Evaluation System-Related Program Action 14. Implementing the web-based M&E system is included in the program action plan (PAP).3 ADB’s capacity development TA will support training on monitoring and verifying the program indicators. The TA is described in Chapter VII. C. Fiduciary Systems 15. The financial management assessment confirms that an adequate financial management exists in KPP and Punjab governments with sound budgeting, accounting and financial reporting, and auditing procedures and practices. Improvements are needed to strengthen internal control and establish internal audit function. 16. Internal controls. The Government’s internal control system for expenditure is based on a series of regulations including the New Accounting Model (NAM), Financial Rules, Treasury Rules, Delegation of Financial Powers and Rules of Business. Auditor Generals set up a small internal audit department with the mandate of payroll audits only. Internal control for non-salary expenditure is strong on expenditure commitment control, but less effective on comprehensiveness, relevance and rules and procedures. 17. Accounting and financial reporting. The government has adopted International Public Sector Accounting Standards (IPSAS) on cash accounting basis. The Department of Auditor General of Pakistan follows International Standards of Supreme Audit Institutions (ISSAI). The use of FABS, NAM application, and capacity building of accounting staff strengthened financial reporting. Using a uniform chart of accounts for budget formulating and execution at federal, provincial and district levels enables uniform data classification and direct comparison with the original budget estimates. Monthly civil accounts are prepared based on these reports, and posted on the Finance Department, Auditor General and Controller General of Accounts websites. For this RBL, separate assignment accounts and records for the program will be maintained in each implementing agency who will prepare the RBL program annual financial statements for each fiscal year commencing on program effectiveness date and have them audited annually by the Auditor General of Pakistan (AGP). The RBL program will follow the government accounting and financial reporting system. In the case of MHP, community contributions such as land, labor and transportation will not be included in the financial statements due to remote areas and difficult to measure.

18. Internal audit. There are no internal audit units in provincial government departments. Capacity constraints as well as the pre-audit arrangement resting with the Controller General of Accounts slows down establishing the internal audit function in line ministries or departments. 19. Independent audit. The AGP submits audit reports to the governor of the respective province who lays it before the Provincial Assembly. The external audit is conducted using auditing standards of the International Organization of Supreme Audit Institutions. The AGP will

3 The Program Action Plan is in linked document 12 in Appendix 2 of the RRP.

21

also conduct external audit of the program’s funds for EDP and PEDO. 20. Disbursement and fund flow mechanism. Disbursement by ADB will be subject to achieving key results in the DLI matrix, and submission of withdrawal applications with verifiable evidence of DLI achievements. Fund flows for both EDP and PEDO are as in Figures 6 and 7.

Figure 6: Fund Flow from ADB to PEDO

APFS = audited program financial statement, DLI = disbursement-linked indicator, EAD = Economic Affairs Division,

FD = Finance Department, IA = implementing agency, KPP =Khyber Pakhtunkhwa Province, MoF = Ministry of

Finance, NBP = National Bank of Pakistan, P&D = Planning and Development, PEDO = Pakhtunkhwa Energy

Development Organization, PMU = program management unit, RBL = results-based lending, SBP = State Bank of

Pakistan.

Figure 7: Fund Flow from ADB to EDP

APFS = audited program financial statement, DLI = disbursement-linked indicator, EAD = Economic Affairs Division, FD = Finance Department, IA = implementing agency, KPP = Khyber Pakhtunkhwa Province, MoF = Ministry of Finance, NBP = National Bank of Pakistan. P&D = Planning and Development, PEDO = Pakhtunkhwa Energy Development Organization, PMU = program management unit, RBL = results-based lending, SBP = State Bank of Pakistan.

21. EDP and PEDO will maintain books and records for all expenditures incurred on the RBL

22

program. EDP and PEDO will prepare separate RBL program financial statements following the government's accounting laws and regulations. 22. EDP and PEDO will cause their RBL program financial statements to be audited by the AGP. They will submit separately the audited program financial statements in the English language to ADB within six months of the end of the fiscal year. 23. Public disclosure of the RBL program financial statements, including the audit report on the RBL program financial statements, will be guided by ADB’s Public Communications Policy (2011).4 After review, ADB will disclose the RBL program financial statements for the program and the opinion of the auditors on the financial statements no later than 14 calendar days of ADB’s confirmation of acceptability. The Audit Management Letter will not be disclosed. 24. The audited accounts will be submitted in the English language to ADB within 6 months after the close of Pakistan’s fiscal year. ADB reserves the right to require a change in the auditor (in a manner consistent with Pakistan laws and regulation), or require additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. 25. Improvements are needed to strengthen internal control and establish internal audit function for EDP and PEDO. Details are in the PAP. 26. Summary of the Procurement System Anticipated contracts under the program include works, goods and consulting services below currently applicable maximum thresholds for RBL eligibility. 27. The assessment at provincial level found that procurement procedures and practices are guided by sound procurement principles of economy and efficiency, transparency, fairness and equal opportunity. The rules incorporate adequate provisions for competition whereby open competitive bidding is the principal method of procurement (other methods of procurement allowed only under certain conditions). However, some discrepancies with international best practices were identified in PAP and should be mitigated. 28. Key program actions are required in order to mitigate the identified risks in the respective provincial procurement rules, and strengthen PEDO and EDP and have been included in PAP. 29. Summary of Anticorruption System and Actions. At EA level, there is no overall integrated and proactive approach to anti-corruption. Staff refer to their obligation to adhere to appropriate rules which govern respective activities and the codes of conduct for public officials in KPP and Punjab Provinces. These rules include service rules and various accounting and financial manuals. In service rules, applicable details include classification of employees, devotion to duty, misconduct, inquiry procedure and sanctions and penalties. The accounting and financial manuals refer that authorizing expenditure is guided by high standards of financial propriety. Public reporting of corruption allegations could be made clearer. D. Satisfying Procurement Member Country Eligibility Restrictions 30. The RBL program is co-financing with AFD. Universal procurement will be applied. E. Safeguard Systems

4 Available from http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications.

http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications

23

31. Summary of Safeguard System. The program has a safeguard categorization of B for environment, indigenous peoples, and involuntary resettlement. The program will have no adverse impacts on indigenous people, and may even benefit indigenous communities in Chitral. Screening at site selection stage will be conducted to exclude environment category A as well as involuntary resettlement. Environmental assessment studies, including environmental management plans, will be performed for each site. The PAP provides the mitigating actions. 32. Status of the key safeguards actions which will be implemented throughout program implementation are in the PAP (Chapter VI). F. Suggested Guiding Principles for Voluntary Land Donations

33. Depending upon relevant assessment of current program intent and implementation the

following voluntary land donation principles may be further spelled out and applied in the

proposed RBL:

(i) During initial consultations, conducted during the screening phase, potential land donors will be informed that they have the power of choice and ability to say “no” if they do not agree with such donation;

(ii) There is often more than one suitable location for an MHP in a particular community and the project screening report will include an evaluation of the alternatives with an emphasis on requirement for land donation

(iii) Land should be identified by community through a participatory approach, and this needs to be reflected in the records of consultations.

(iv) The screening report needs to indicate that there are no squatters, encroachers, or other claims to the land donated;

(v) Written agreement must be obtained from each affected person donating the land;

(vi) Detailed records must be kept on all consultative meetings, and all grievances, and actions taken to address such grievances, must be recorded in a grievance log.

34. There should be confirmation through an independent third party that the process has been transparent and inclusive. G. Gender and Social Dimensions 35. The RBL program is classified as “General Intervention,” which supports poverty reduction indirectly. The program will also entail social mobilization, awareness raising and skill development programs for poor and vulnerable women in the targeted communities. 36. The program is classified as Effective Gender Mainstreaming, having output indicator for women and girls, and three gender specific DLIs. Other actions under the program include conducting training programs for PEDO and EDP on gender-inclusiveness and program designed for consultations with men and women groups. Gender actions and program indicators will be monitored as part of the overall monitoring framework and evaluated as part of the independent impact assessments and ex-post evaluation studies. H. Communication and Information Disclosure Arrangements

24

37. The program progress will be publicly disclosed by publishing the program progress reports on the government websites. The energy department secretaries of KPP and Punjab will also circulate the reports among their district authorities, and through media programs. The program completion reports will also be published on the Government and ADB websites. I. Development Coordination 38. The program builds on lessons from previous ADB and development partner project investment and policy based loans to Pakistan and the successes generated by their complementary approach and multi partner dialogue. ADB will continue working with existing development partners, while co financing opportunities with other partners will be explored.

V. Integrated Risks and Mitigating Measures

Table 11: Summary Integrated Risk Assessments and Mitigating Measures (As of November 2016)

Risks Ratings Key Mitigating Measures

Results. Issues relating to site access, and the

failure of communities and local authorities to undertake O&M of plants

Substantial Ensure back-up plans for site selection and access, and implement robust monitoring.

Expenditures and financing. Government may not

include any budget for the O&M for solar plants

Moderate Include O&M for the first t3 years in the installation contract and ensure another O&M contract for next 3 years is awarded.

Fiduciary. Absence of internal audit in Punjab

Energy Department and PEDO Procurement. Institutional procurement, project

management and contract administration capacity is limited.

Substantial High

FD will establish internal audit system and prioritize implementation in ED. IAs will (i) establish capacity and procurement specific skills, (ii) prepare procurement manual, (iii) prepare customized SBD’s with due attention to discretion and eligibility, (iv) strengthen contract management capacity, (v) establish procurement monitoring system.

Operating environment. Some sites may not be

implemented due to security risks.

Moderate Undertake extensive consultations with community elders to find solutions for extreme high security risk areas. Ensure sufficient insurance of assets is made.

Overall RBL program risk Substantial

ED = Energy Department, FD = Finance Department, IA = implementing agency, O&M = operations and management, PEDO = Pakhtunkhwa Energy Development Organization, RBL = results-based lending. Source: Asian Development Bank.

VI. Program Action Plan

39. Status of Program Action Plan, Issues and Challenges. This section will be updated during program implementation.

VII. Technical Assistance

A. Summary 40. The TA will support program implementation, particularly to achieve Outputs 2 and 3 of the DMF. The TA will (i) strengthen M&E by the executing agencies (EAs) Energy Department of Punjab and Khyber Phaktunkhwa (KPP), and implementing agencies (IAs), Chief Engineer (Power) in Punjab and Phaktunkhwa Energy Development Organization (PEDO) in KPP, (ii) improve safeguards management, (iii) support ADB staff in verifying results of sample sites, and (iv) assist in sample validating the IVA’s verification reports on the program indicators.

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41. The TA is estimated to cost $800,000, out of which $750,000 will be financed on a grant basis by ADB’s Technical Assistance Special Fund. The government will support the TA in the form of counterpart staff, office facilities and other in-kind contributions. B. Consulting Service Requirement 42. This section will be updated during program implementation.

VIII. Monitoring of Key Program Covenants

43. This section will be updated during program implementation.

IX. Summary of Key Outstanding Issues

44. This section will be updated during program implementation.

X. Accountability Mechanism

45. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted operations can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures.5 People who are, or may in the future be, adversely affected by a program supported by RBL may submit complaints to ADB’s Accountability Mechanism (2012). 46. Before submitting a complaint to the Accountability Mechanism, affected people should make a good faith effort to resolve their problems and/or issues by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, they approach the Accountability Mechanism.

XI. Program Organizational Structure and Focal Staff

A. Organizational Structure

Table 12: Key Organizations’ Roles Role Organization Responsibility

Borrower Economic Affairs Division

Lender Asian Development Bank Finance portion of the Government’s program through results-based lending

Program steering committees

Headed by the Additional Chief Secretary, Planning and Development of the respective provinces

Monitor development results.

Executing agencies

Energy department of KPP

EDP

Monitor overall program results, and report to the program steering committees.

Implementing agencies

PEDO

Office of Chief Engineer (Power)

Punjab Energy Efficiency and Conservation Agency

Execute the MHP and solar programs in KPP through PMUs.*

Execute the solar and energy efficiency programs in Punjab through PMUs.*

Finance Finance departments Ensure adequate budget appropriation and smooth

5 ADB. 2012. Review of the Accountability Mechanism Policy. Manila.

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Role Organization Responsibility

managers fund flows.

Monitoring and evaluation experts

EDP and PEDO

Independent verification agents

ADB TA consultants

Update status of program indicators.

Verify results.

Verify results.

Contractors Private sector Develop and operate MHPs.

Program beneficiaries

Vulnerable communities, basic health units, schools

Contribute to program financing, donate land for MHPs, and provide field information.

* May be supported by program implementation, monitoring, and capacity development consultants. ADB = Asian Development Bank, EDP = Energy Department of Punjab, KPP = Khyber Pakhtunkhwa Province, MHP = micro-hydropower plant, PEDO = Pakhtunkhwa Energy Development Organization, PMU = program management unit, TA = technical assistance.

B. Program Officers and Focal Persons

Table 13: Program Officers and Focal Persons (As of November 2016)

Key Government Staff and Positions

Key ADB Staff and Positions

1 P. Ahmed Junejo, Senior Joint Secretary, EAD F. Cleo Kawawaki, Director, Energy Division, Central and

West Asia Department (CWEN)

2 Engr. M. Naeem, Secretary, Energy and Power Development of Khyber Pakhtunkhwa

A. Tareen, Senior Energy Specialist, CWEN

3 A. Ayub Khan, Chief Executive Officer, PEDO D. Pham, Financial Management Specialist, CWEN

4 A. Rehman Gillani, Secretary, Energy Department of Punjab

program implementation document - asian development bank · 2016-11-23 · purpose of the program...

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