Grant Implementation Memorandum

Transcription

1 Grant Implementation Memorandum Project Number: JFPR Number: 9139-MON October 2009 MON: Demonstration Project for Improved Electricity Services to the Low Income Communities in Rural Areas (Financed by the Japan Fund for Poverty Reduction) The grant implementation memorandum is an active document, progressively updated and revised as necessary, particularly following any changes in project or program costs, scope, or implementation arrangements. This document, however, may not reflect the latest project or program changes.

2 TABLE OF CONTENTS Page Project Map List of Addresses and Personnel Concerned Currency Equivalent Grant Processing History Conditions of Grant Effectiveness (i) (ii) (iii) (iv) (v) I. GRANT DESCRIPTION 4 A. Grant Area and Location 4 B. Grant Development Objectives, Outcome and Outputs 4 C. Components of the Grant Implementation Project 5 D. Reporting Requirements 7 II. COST ESTIMATES, FINANCING PLAN, AND GRANT ALLOCATION 8 A. Cost Estimates 8 B. Financing Plan 8 C. Allocation of Grant Proceeds 8 III. IMPLEMENTATION ARRANGEMENTS 9 IV. DEMONSTRATION BAG CENTER SELECTION CRITERIA 9 V. COMPLIANCES 9 A. Anticorruption 9 B. Scaling-Up Strategy 9 C. Operation and Maintenance 9 D. Environment 10 VI. IMPLEMENTATION SCHEDULE 10 VII. PROCUREMENT 10 A. Equipment 10 B. Bid Evaluation Committee 11 VIII. CONSULTING SERVICES 11 A. Outline Terms of Reference for Consultants 12 B. Qualification and Scope of Work 12 C. Reporting Requirement 17 IX. DISBURSEMENT ARRANGEMENTS 18 A. Disbursement Procedures 18 B. Reallocation of Funds by Expenditure Categories or Components 18 X. CHANGES IN SCOPE OF GRANT 19 XI. REPORTING REQUIREMENTS 19 A. Monthly Progress Report by 19 B. Audited Grant Accounts 19 C. Implementation Completion Memorandum 19 XII. GRANT MONITORING AND EVALUATION 20 A. Contract Awards/Commitments and Disbursement Projections 20 B. Grant Reviews 20

3 2 C. Monitoring Indicators 20 D. Midterm Review 20 XIII. MAJOR COVENANTS 20 APPENDIXES 1 Project Framework 23 2 Implementation Schedule 25 3 Fund Flow Arrangement 26 4 Organization Chart 27 5 Direct Payment Procedure 28 6 Imprest Fund Procedure 29 7 Guidelines for the Preparation of the Progress Report 33 8 JFPR Progress Reporting 39 9 ADB Audit Requirements Implementation Completion Memorandum 41 SUPPLEMENTARY APPENDIX A Withdrawal Application for Direct Payment and Reimbursement 48 B Summary Sheet for Direct Payment/Reimbursement/Replenishment/Liquidation 50 C Narrative Procedures for Direct Payment Procedure 51 D Withdrawal Application Form for Imprest Fund 52 E Estimate of Expenditures Sheet 54 F Statement of Eligible Expenditures for Contracts of US$100,000 and Below 55 G Statement of Eligible Expenditures for Contracts over US$100, H Statement of Eligible Expenditures for Operating Costs 57 I Statement of Eligible Expenditures Free Format 58 J Liquidation of Advance 59 K Example of Comfort Letter for an Imprest Account 60 L Second Generation Imprest Account Reconciliation Statement (SGIARs) 61 M Narrative Procedures for Imprest Fund Procedures 62 ADDENDUM

4 96 o 00'E 111 o 00'E R U S S I A N F E D E R A T I O N MONGOLIA DEMONSTRATION PROJECT FOR IMPROVED ELECTRICITY SERVICES TO THE LOW--INCOME COMMUNITIES IN RURAL AREAS Hanh 50 o 00'N Ulaanbayshint Dayan Tsengel BAYAN- OLGIY Yarantay UVS Tsagaannuur Olgiy Olgiy Hovd Uyench Ulaangom Naranbulag Manhan HOVD Dariv Togrog Tayshir Burgastay Tes Tudevtey ZAVHAN Altay GOVI-ALTAY Tsagaan-Uul Tsahir Uliastay Buutsagaan Hatgal HOVSGOL Bayanhongor BAYANHONGOR Altanbulag Moron Suhbaatar BULGAN SELENGE Selenge Darhan Hutag-Ondor Erdenet DARHAN-UUL Bulgan ORHONSumber ARHANGAY HENTIY ULAANBAATAR Hishig Ondor ULAANBAATAR Battsengel Batnorov Baganuur Lun Nalayh Zuunmod Tsetserleg Maanit TOV Ondorhaan Harhorin GOVISUMBER Arvayheer Nariynteel OVORHANGAY Choyr Mandalgovi DUNDGOVI Saynshand Bayan-Uul DORNOD Choybalsan Monhhaan Baruun-Urt Ereentsav Matad Erdenetsagaan Bichigt SUHBAATAR Havirga Tamsagbulag 50 o 00'N Dalanzadgad Tsogt-Ovoo DORNOGOVI Zamyn-Uud 42 o 00'N OMNOGOVI Bayan-Ovoo 42 o 00'N Gashuun Suhayt National Capital Provincial Capital N PEOPLE'S REPUBLIC OF CHINA City/Town Main Road Provincial Road Railway River HR Kilometers 96 o 00'E Provincial Boundary International Boundary Boundaries are not necessarily authoritative. 111 o 00'E

5 (ii) LIST OF ADDRESSES AND PERSONNEL CONCERNED GRANT (JFPR) 9139-MON: Demonstration Project for Improved Electricity Services to the Low Income Communities in Rural Areas Organization Designation Contact Details Asian Development Bank Mr. Ashok Bhargava Officer-in-Change, EAEN/ Principal Energy Specialist Mr. Shigeru Yamamura Energy Specialist, EAEN Ms. Gladdys Nave Assistant Project Analyst, EAEN Ministry of Mineral Resources and Energy (MMRE) Mr. D. Zorigt Minister Tserenpurev Tudev Ministry of Mineral Resources and Energy Government Building-2, United Nation s Street-5/2 Ulaanbaatar, , Mongolia Ministry of Finance (MOF) Mr. B. Khurenbaatar Project Steering Committee Director General of Energy Policy Department Director General of Department of Development Financing and Cooperation Director, MMRE (Chair) MOF representative Soum center representative Consulting Firm ( in association with ) Tel: Fax: Tel: Fax:

6 CURRENCY EQUIVALENTS (as of 23 July 2009) (iii) Currency Unit - togrog (MNT) MNT1.00 = $ $1.00 = MNT1, ABBREVIATIONS ADB Asian Development Bank EA executing agency ERA Energy Regulatory Authority IA implementing agency ICB international competitive bidding IEE initial environment examination JFPR Japan Fund for Poverty Reduction kv kilovolt kw kilowatt MMRE Ministry of Mineral Resources and Energy MOF Ministry of Finance NCB national competitive bidding PIU project implementation unit PSC project steering committee SOE statement of expenditures SWER single wire earth return NOTES In this report, $ refers to US dollars.

7 (iv) GRANT PROCESSING HISTORY Milestone Events Dates (i) First Listing in ADBBO 9 Jan 2009 (ii) Fact-Finding February 2009 (iii) Signing of Memorandum of Understanding between Government of Mongolia and ADB 23 February 2009 (iv) Staff Review Committee Meeting 23 April 2009 (v) JFPR Grant Proposal submitted to the Government of Japan for approval 5 May 2009 (vi) President's Approval 18 August 2009 (vii) Board Approval 9 September 2009 (viii) Grant Agreement sent to MNRM 30 September 2009 (ix) Signing of Grant Agreement XXX (x) Signing of Consultant's Contract XXX (xi) Mobilization of Consultant XXX GRANT IMPLEMENTATION HISTORY (i) (ii) (iii) (iv) (v) Inception MAR No. Mission Composition: Review MAR No. Mission Composition: Workshop MAR No. Mission Composition: Review MAR No. Mission Composition: Completion MAR No. Mission Composition: Milestone Events Dates

8 CONDITIONS OF GRANT EFFECTIVENESS (v) 1. The Government shall carry out the JFPR Project with due diligence and efficiency, in accordance with the arrangements described in the Grant Assistance Report, and as provided below. 2. ADB shall administer the JFPR pursuant to an agreement ADB has entered into with the Government of Japan, and as provided in the Grant Assistance Report and as otherwise described below. 3. The Government shall make available, promptly as needed, the funds, facilities, services, equipment, land and other resources which are required, in addition to the funds to be provided under the JFPR Assistance (the JFPR Funds), for the carrying out of the JFPR Project. 4. Except as ADB may otherwise agree, the Government shall apply the JFPR Funds and any interest or the income earned on the imprest account to the financing of expenditures specified in the Grant Assistance Report. 5. Except as ADB may otherwise agree, the Government shall ensure all goods, services and other items of expenditure financed out of the JFPR Funds are used exclusively in the carrying out of the JFPR Project. 6. The procurement of any goods and services (excluding consulting services) financed under the JFPR Assistance shall be carried out in accordance with the ADB Procurement Guidelines (2007, as amended from time to time). The engagement of any consulting services financed under the JFPR Assistance shall be carried out in accordance with ADB's Guidelines on the Use of Consultants (2007 as amended from time to time), and such other arrangements satisfactory to ADB as may apply to the engagement of domestic consultants. 7. No local taxes or duties payable by public entities (whether the central government, any local government or any public institution) shall be financed under the JFPR Assistance. 8. The Government shall maintain, or cause to be maintained, records and accounts adequate to identify the goods, services and other items of expenditure financed out of the JFPR Funds, to disclose the use thereof in the JFPR Project, and to record the progress of the JFPR Project (including the cost thereof). 9. (a) The Government shall (i) maintain or cause to be maintained, separate accounts for the JFPR Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors opinion on the use of the JFPR Funds, and the operation of any imprest account and the application of any statement of expenditures (SOE) procedure authorized under the JFPR Project), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. (b) The Government shall enable ADB, upon ADB s request, to discuss the Government s financial statements for the JFPR Project from time to time with the

9 (vi) Government s auditors, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB. 10. The Government shall enable ADB s representatives to inspect the JFPR Project, and the goods, services and other items of expenditure financed out of the JFPR Funds, and any relevant records and documents. 11. (a) The JFPR Funds shall not be disbursed by ADB after February 2011 or such other date as ADB may agree. (b) The Government shall follow, or cause to be followed, procedures acceptable to ADB to facilitate disbursement of the JFPR Funds under the JFPR Project. These provisions shall include detailed arrangements to be agreed upon between the Government and ADB on applications for withdrawal, evidence of authority to sign such applications, evidence to support such applications, and sufficiency of such applications. (c) In the event that the Government and ADB agree to the establishment of an imprest account under the JFPR Project, the Government shall establish, immediately upon its confirmation of this Letter of Agreement or such later date as ADB may agree, an imprest account at a bank acceptable to ADB. The imprest account shall be established, managed, replenished and liquidated in accordance with ADB s Loan Disbursement Handbook (January 2007, as amended from time to time), and detailed arrangements agreed upon between the Government and ADB. The initial amount to be deposited into the imprest account shall be US$240,000 as agreed upon by the Government and ADB. (d) The statement of expenditures (SOE) procedure may be used for reimbursement of eligible expenditures for the JFPR Project and to liquidate advances provided into the imprest account, in accordance with ADB s Loan Disbursement Handbook (January 2007, as amended from time to time), and detailed arrangements agreed upon between the Government and ADB. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed an amount agreed upon by the Government and ADB. 12. (a) The Government shall furnish, or cause to be furnished, to ADB all such reports and information as ADB shall reasonably request concerning (i) the use of the JFPR Funds; (ii) the goods, services and other items of expenditure financed out of the proceeds of the JFPR Funds; (iii) the JFPR Project; and (iv) any other matters relating to the purposes of the JFPR Assistance. (b) Without limiting the generality of the foregoing, the Government shall furnish, or cause to be furnished, to ADB semiannual reports, as agreed by ADB, on the carrying out of the JFPR Project. Such reports shall be submitted in such form and detail as ADB shall reasonably request (c) Within three months after physical completion of the JFPR Project, the Government shall prepare and furnish to ADB a report, in such form and detail as ADB shall reasonably request, on the accomplishment of the purposes of the JFPR Assistance. 13. The Government shall cooperate with ADB to ensure that the JFPR Project is carried out promptly and effectively, and for this purpose, shall issue appropriate instructions to its officials, agents and representatives.

10 14. The Government and ADB shall, from time to time, at the request of either party, exchange views on the JFPR Project, and consult on any reports prepared by consultants or others and the implementation of any recommendation made in those reports. 15. ADB may use any reports prepared by consultants for any purpose which ADB may consider appropriate, and those reports may be made public unless otherwise agreed by the Government and ADB. 16. The Government may at any time request ADB in writing to terminate the JFPR Assistance. 17. (a) ADB may at any time suspend or, after consultation with the Government terminate the JFPR Assistance if any circumstances arise which, in the opinion of ADB, interfere or threaten to interfere with the successful implementation of the JFPR Project, the accomplishment of its purposes, or the execution of the JFPR Project in accordance with the terms and conditions of this Letter of Agreement. (b) ADB may cancel the JFPR Assistance if implementation of the JFPR Project and related disbursements do not start within six months after the execution of this Letter of Agreement. (c) ADB may cancel the JFPR Assistance if any ADB loan operations related to the JFPR Project are cancelled. (d) If at any time ADB determines, (i) after consultation with the Government, that any amount of the JFPR Assistance will not be required for the purposes of the JFPR Project, or (ii) that corrupt, fraudulent, collusive or coercive practices, as determined by ADB, were engaged in by representatives of the Government, the EA, IA or any beneficiary under the JFPR Project during the implementation of the JFPR Project or as part of the procurement or consultant selection, or the execution of a related contract, for the JFPR Project, without the Government having taken timely and appropriate action satisfactory to ADB to remedy the situation, or (iii) that the procurement of any goods and services, and recruitment of consultants to be financed out of the JFPR Assistance is inconsistent with the procedures set forth or referred to in this Letter of Agreement including the Annex, ADB may by notice to the Government terminate the right of the EA to make withdrawals from the JFPR Assistance. Upon the giving of such notice, the JFPR Assistance or the relevant portion thereof may be cancelled by ADB. 18. Upon completion of the JFPR Project, (i) any equipment financed under the JFPR Funds may be transferred by ADB to the Government or any agency designated by the Government on terms and conditions satisfactory to the Government and ADB, and (ii) any remaining balance in the imprest account, including interest of the income earned thereon will be returned to ADB. 19. ADB shall monitor the outcomes of the JFPR Project so that the results are fed back into Mongolia's poverty reduction operations. 20. The Government shall take all measures necessary to cause the Recipient to fulfill the obligations under the Letter of Agreement. (vii)

11 A. Grant Area and Location I. GRANT DESCRIPTION 1. Mongolia is a landlocked country with a total area of 1.56 million square kilometers, a population of only 2.62 million (2007) and a very low population density of 1.5 person per square kilometer, which is among the lowest in the world. Administratively, Mongolia is divided into 21 aimags (provinces) which comprise an average soums (counties). Mongolia has altogether 321 soums in total and each has 4-5 bag centers. Generally, a bag center is located km from a soum center and 5-20 families reside there. The total number of bag centers is about 1,500. B. Grant Development Objectives, Outcome and Outputs 2. The Project will improve the quality of life in bag centers (generally with 5 20 families living together in a community). The outcome will be extended electrification in rural areas using single-wire earth return (SWER) system. 3. Each bag center generally includes, several public buildings (bag center administration office, community health clinic, veterinary clinic, school, etc.), some private-owned shops, and livestock related cottage industries. Drinking water points for humans and animals, as well as irrigation points also exist in each bag center; these are mainly pumped by diesel-powered generators. Currently, electricity is supplied only for 4 5 hours a day by diesel-powered generators, which is unreliable and costly because of high and volatile fuel prices. Electricity is used not only for these public buildings but also for processing of animal products (skin, wool, cashmere, meat) brought by herdsmen. Peak load for one bag center is typically estimated at 8 kw in summer and 14 kw in winter. 4. There is little official disaggregated income data available for bag centers; but it is assumed that it is much lower than the income level in urban centers (soum centers). The monthly average cash income per household in rural areas (including the bag centers) is $177, which is 20% lower than that in urban centers ($223 in 2007). The percentage of population living below the national poverty line in rural areas is 36.8% compared with 20.4% in Ulaanbaatar (2006). 1 Detailed socioeconomic analysis will be conducted at the beginning of the Project to establish a baseline data. 5. Lack of reliable electricity supply for long durations at bag centers is constraining socioeconomic development of the local population by restricting the delivery of basic services and limiting economic activities. Providing a reliable electricity supply to these communities will assist in improving the delivery of services in (i) health care and education services; (ii) complementary infrastructure, i.e., drinking water supply and communication; and (iii) key input for small businesses that will enhance labor and capital productivity, promote rural economic growth, and increase income and generally improve the overall welfare of the community. Supplying reliable electricity to bag centers is one of the objectives in the State Policy of Mongolia on Fuel and Energy (2008). Development of the rural economy through rural infrastructure development is an outcome included in the country strategy and program for Mongolia The Japan Fund for Poverty Reduction (JFPR) Project will demonstrate the provision of regular grid-base (monthly average of over 22 hours a day) and affordable electricity service to 1 Mongolian Statistical Yearbook, 2007.

12 selected bag centers by a SWER system. It will construct the electricity transmission and distribution network to electrify both public buildings and residential structures for nine small bag centers SWER is a proven electricity supply system and is widely used in developed countries to electrify sparsely populated and remote areas, e.g., Australia, Alaska in the United States, Brazil, Canada, New Zealand, and northern Sweden. It has not yet been used in Mongolia. Typically, a SWER line is linked to a grid-connected isolating transformer of 300 kilovolt-ampere, which isolates the grid from ground return current, and steps down the grid voltage (110 kilovolt [kv]) to the SWER system voltage (12.7 kv or 19.1 kv). At the community end, a transformer further reduces the voltage to 220 volts which is then extended to consumers as a two-wire system a common, safe and proven practice for connecting small consumers. 8. Instead of two or three wires, a single-wire transmission line is used in supplying singlephase electrical power from a power grid to remote locations with low power demand. The capital cost of a SWER system is about 50% of an equivalent two-wire single-phase, or about 70% less than the commonly used three-wire three-phase power transmission systems. Maintenance costs are also lower about 50% of an equivalent capacity line. There are some disadvantages also, mainly because SWER will not allow connection of larger three-phase motors, and some imbalance will get reflected into the power grid, which could marginally increase system losses. However, these are not serious when the power demand is small (as is expected in bag centers) and the economic advantages of SWER outweigh the technical constraints. 9. The consumers, i.e., public sector organizations, private enterprises, and residents will need to pay the tariff determined by the Energy Regulatory Authority (ERA) of Mongolia. ADB has ongoing relationship with the ERA through the Members Electricity Regulators Forum of the Central Asia Regional Economic Cooperation, and it is considered among the more capable regulatory authorities. 10. The Government requested ADB assistance in August 2008 for demonstration of the SWER system for the rural electrification of nine bag centers. 11. The Project activities consist (i) verification of a long and short list of probable bag centers that can be connected to the existing power grid using SWER system, (ii) conducting detailed field survey including baseline survey of socioeconomic aspects, (iii) selection of nine demonstration bag centers in three soums, (iv) preparation of SWER system design and technical specification, (v) preparation of bidding documents and evaluation criteria, (vi) evaluation of bidding proposals, negotiation and award of contract, (vii) construction of transmission and distribution networks and installation of meters, (viii) conducting technical training including maintenance scheduling and budgeting to local distribution company, (ix) drafting a rural electrification plan and preparing related knowledge product, (x) conducting baseline and poverty impact surveys, and (xi) monitoring project implementation. C. Components of the Grant Implementation Project 12. The Project has three components: (i) detailed field survey, baseline socioeconomic survey, and shortlisting the demonstration bag centers; (ii) construction of transmission and 5 2 The transmission poles will have a diameter of 50 centimeters and the single-wire transmission lines will traverse a maximum distance of 50 km through barren land. Interval of the transmission poles will be about 140 meters. It is estimated that supply for each bag center will have 360 poles.

13 6 distribution lines in selected demonstration bag centers; (iii) grant management, monitoring, auditing, and knowledge dissemination. 13. Component A: Detailed field survey, baseline socioeconomic survey, and shortlisting the demonstration bag centers consists of the following: (i) (ii) Bag Center Selection. Identification of demonstration bag (village) centers in Tuv, Bulgan, and/or Dundgovi aimags (province) using the following selection criteria: (a) bag centers located within 50 kilometers (km) from existing soum (county) center sub-station, (b) relative proximity to Ulaanbaatar, (c) bag centers that are relatively clustered, (d) peak power demand of bag center is less than 14 kilowatt (kw), and (e) bag centers where anticipated socioeconomic impact is high. Identification Baseline Socioeconomic Data. A gender-focused socioeconomic data for selected bag centers will be collected by the consultants. Data to be collected will include: (i) income level and sources of income, (ii) monthly and seasonal expenditure on fuel, (iii) electricity use analysis, 3 (iv) potential electricity use with improvement of electricity services, and (v) household information Activities under Component A are estimated to be completed from December 2009 to February Selection of nine demonstration bag centers, Receipt of letters of support from soum and bag center governments and collection of socioeconomic baseline data are the three major outputs expected to be met under this Component. 15. Component B: Construction of transmission and distribution lines in selected demonstration Bag Centers consists of the following: (i) (ii) (iii) (iv) Preparation of Design and Technical Specifications. Consultants will prepare a draft single-wire earth return (SWER) system design and technical specification, which will be a part of bidding documents, and shall be approved by the Project Steering Committee (PSC). Preparation of Bid Documents and Evaluation Criteria. A set of draft bidding documents and evaluation criteria will be prepared by the consultants and shall be reviewed by Asian Development Bank (ADB) and approved by the PSC. Competitive Bidding, Evaluation of Bids, and Contract Award. On approval of the bidding document by PSC, the Executing Agency (EA) will invite bids, evaluate bids, seek approval of ADB for the bid evaluation report, and award contracts for supply of goods and works for construction of the projects. Construction of Transmission and Distribution Lines. Selected contractors will construct the transmission and distribution lines according to the technical specifications. Construction shall be done between July 2009 and October Upon completion of construction, commissioning and acceptance test will be conducted and endorsed by the State Inspection Commission (SIC). 3 Such analysis will include electricity utilization by public and commercial buildings health centers, classrooms, water pumps, etc. 4 Information such as quantities of electricity consumed, home appliances, household member s education and employment status, household demographics, etc.

14 (v) Training to Local Electricity Distribution Companies. Adequate number of training courses will be provided by the consultants and the Ministry of Mineral Resources and Energy (MMRE) for staff of local electricity distribution companies to familiarize them about the technical features of SWER system and necessary knowledge on (i) operation and maintenance, (ii) appropriate methodology and installation procedure for network expansion, and (iii) management skill on stocks and equipments Implementation activities will be carried out in 11 months from January to November The major outputs expected under this Component are: (a) Submission of bidding documents including SWER system design and technical specification acceptable to ADB; (b) Submission of bid evaluation report acceptable to ADB; (c) Nine bag centers are electrified by the SWER system; (d) Acceptance letter from SIC; (e) At least two trainings conducted to the local electricity distribution companies. 18. Component C: Grant Management, Monitoring, Auditing, and Knowledge Dissemination. The component will support the following activities: (i) overall project coordination, supervision, management, and reporting; (ii) preparation of work plans, implementation guidelines and procedures for grant financing; (iii) poverty impact assessment; (iv) annual independent external auditing; and (v) final dissemination workshop (i) (ii) Poverty Impact Assessment. Impact assessment (with-without and before-after) at the household and community levels will be conducted after commencement of electricity supply over the newly constructed transmission and distribution lines; the assessment will cover all the demonstration bag centers. Assessment includes (i) satisfaction level of the electricity consumer, (ii) income levels, and (iii) number of households, public and private buildings connected with SWER system. Final Workshop and Preparation of Knowledge Product. The final dissemination workshop will be held with representatives from concerned government agencies to share the impact and outcome of the project, recommend and seek consensus regarding further actions. As an output of the workshop, a policy brief, technical note, or best practices note on rural electrification will be prepared as a knowledge product, and submitted to the Government supporting SWER system in its rural electrification policy. 19. Implementation activities will be carried out in 15 months from December 2009 to February D. Reporting Requirements 20. The following reports are expected to be completed and submitted: (i) Comprehensive project work plan, (ii) Implementation schedule (iii) Guidelines prepared and attached to the grant implementation memorandum (iv) Financial ledger/report indicating efficient utilization of funds for each component (v) Inception report, (vi) Quarterly progress, and completion reports; (vii) Baseline Socioeconomic Data

15 8 (viii) (ix) (x) II. Evaluation of staff performance; Financial and poverty impact assessments prepared and submitted on time and of good quality. Workshop proceedings COST ESTIMATES, FINANCING PLAN, AND GRANT ALLOCATION A. Cost Estimates 21. The total cost of the Project is estimated at $2.4 million equivalent. B. Financing Plan 22. ADB will finance $2.4 million equivalent on a grant basis through the Japan Fund for Poverty Reduction (JFPR). The government will finance $200,000 in kind contribution. C. Allocation of Grant Proceeds 23. The allocation of the JFPR grant amounting to $2.4 million as well as the Government contribution are shown in Table 1. Item Table 1: Cost Estimates and Financing Plan ($') Foreign Exchange Local Currency Total Cost A. Asian Development Bank 1. Consultants a. Remuneration and Per Diem i. International Consultants 274, ,800 ii. National Consultants 121, ,000 b. International Travel 20, ,000 c. National Travel 24, ,000 d. Reports and Communications 30, ,000 2 Equipment 1,500, ,500, Workshop and Trainings 80, , Surveys 60, , Miscellaneous Administrative and Support Cost 40, , Office Equipment and Supplies 20, , Domestic Transportation 3, , External Audit 10, ,000 Subtotal A 2,182, ,182,800 B. Government Financing 1. Office Accommodation and Transport 0 30,000 30, Remuneration and Per Diem of Counterpart Staff 0 170, ,000 Subtotal B 0 200, ,000 C. Contingencies 217, ,200 Total 2,400, ,000 2,600,000

16 III. IMPLEMENTATION ARRANGEMENTS 9 A. Grant Organization and Management 1. Executing Agency 24. The Ministry of Mineral Resources and Energy (MMRE) will be the Executing Agency (EA) of the JFPR Project. The MMRE will have overall responsibility for project management. 2. Implementing Agency 25. The IA will be the project implementation unit (PIU) within the Energy Agency supported by the consultants. The IA will (i) monitor the progress of day-to-day project implementation, (ii) prepare withdrawal applications, (iii) prepare project progress reports, and (iv) maintain the Project's accounts and complete grant financial records for auditing the Project. The PIU head, who is acceptable to ADB and has adequate experience in project management, will be responsible for the overall project management, and a deputy PIU head will be responsible for supervising the day-to-day implementation activities. Three additional staff members (an accountant and two transmission and distribution network engineers) will be recruited to ensure that the PIU has sufficient capacity to implement the Project. 3. Project Steering Committee 26. The Project Steering Committee (PSC) will be chaired by the Director of MMRE and will include representatives from the MOF, and soum center governments. IV. DEMONSTRATION BAG CENTER SELECTION CRITERIA 27. The following selection criteria will be applied to select demonstration bag centers: (i), bag centers located within 50 kilometers from existing soum center substation, (ii) relative proximity to Ulaanbaatar, (iii) bag centers relatively clustered, (iv) peak power demand of bag center is 14 kw, and (v) bag centers where anticipated socioeconomic impact is high. A. Anticorruption V. COMPLIANCES 28. The Project shall (i) undertake necessary measures to create and sustain a corruptionfree environment, and (ii) ensure that Mongolia s anticorruption laws and regulations and ADB s Anticorruption Policy (1998, as amended to date) are strictly enforced during project implementation. B. Scaling-Up Strategy 29. The Government is expected to replicate the single-wire earth return system by using funds from the national budget. C. Operation and Maintenance 30. Consumer will pay for monthly electricity use based on the tariff determined by the Energy Regulatory Authority, which sets the retail tariff to cover operation and maintenance and

17 10 other direct costs. Local electric distribution companies are responsible for operation and maintenance of the single-wire earth return system. D. Environment 31. The Project has been classified as Category B under the ADB's categorization system and has been prepared in accordance with the Environment Policy (2002) and Environmental Assessment Guidelines (2003). The initial environment examination (IEE) has been prepared by MMRE. The Project will be implemented according to the environment management plan and monitored according to the environment monitoring plan in the IEE. If there are any changes in scope beyond the coverage of the present IEE, environment assessment should be carried out for the changes.. VI. IMPLEMENTATION SCHEDULE 32. The Project will be carried out over 15 months, and is expected to begin in December 2009 and will be completed by February The detailed implementation schedule is in Appendix 5. VII. PROCUREMENT A. Equipment 33. All procurement shall be in accordance with ADB's Procurement Guidelines (2007, as amended from time to time). Contracts for goods estimated to cost $0.5 million or more shall be procured using international competitive bidding (ICB) procedures. Contracts for goods estimated to cost equal to or less than the above ICB thresholds but more than $100,000 shall be procured on the basis of national competitive bidding (NCB) procedures in accordance with the Public Procurement Law of Mongolia 2000, subject to modifications agreed with ADB. Contracts for goods estimated to cost $100,000 or less shall be procured using shopping procedures. For ICB invitations for bids, invitations for prequalification, draft prequalification documents, draft bidding documents, prequalification and bid evaluation reports are to be submitted to ADB for prior review and approval. For NCB, the first draft English language version of the procurement documents should be submitted for ADB review and approval regardless of the estimated contract amount. The ADB-approved procurement documents should then be used as a model for all NCB procurement financed by ADB for the Project, and need not be subjected to further review. ADB will review the bid evaluation report and award of contract on a post-review basis. For shopping, ADB will review the award of contract on a postreview basis. 34. The indicative procurement plan is in Tables 2, 3 and 4. a Table 1: Indicative Procurement Plan Approval Date of Original Procurement None Plan Approval of most recent Procurement None Plan Publication for Local Advertisements a Procurement notices in local newspapers Period Covered by this Plan 12 months from grant effectiveness General procurement notice and invitations to bid.

18 Table 2: Procurement Thresholds, Goods and Related Services, Works and Supply and Install Procurement Method Estimated Contract Value ($) ICB Goods (turnkey) > 500,000 NCB Goods (turnkey) < 500,000 Shopping Goods < 100,000 Direct Purchase Goods < 10,000 Exceptional Methods community participation ICB = international competitive bidding, NCB = national competitive bidding. Source: Asian Development Bank estimates. 11 Table 3: Procurement Thresholds and Consultants Services Procurement Method To be Used Above Value $) Quality- and Cost-Based Selection 200,000 Consultants Qualifications Selection 100,000 Least-Cost Selection 10,000 Source: Asian Development Bank estimates. Table 4: List of Contract Packages, Goods a and Consulting Services Procurement Method Ref Contract Description Estimated Cost ($) 1. Three Turnkey Contracts for Construction of Transmission and Distribution Networks in Bag Centers Less than $500,000/ package 2. Consulting Services $703,800 Firm, QCBS- FTP, quality and cost ratio is 80:20 Expected Date of Advertisement b Prior Review Y/N NCB (Turnkey) March 2010 Y Comments July 2009 Y Will be engaged by ADB ADB = Asian Development, Bank, FTP = full technical proposal, N = no, QCBS = quality- and cost-based selection, Y = yes. a The invitation for bids, request for expressions of interest or invitation to prequalify, as the case may be. b For international competitive bidding invitations for bids, invitations for prequalification, draft prequalification documents, draft bidding documents, prequalification and bid evaluation reports are to be submitted to Asian Development Bank (ADB) for prior review and approval. For national competitive bidding (NCB), the first draft English language version of the procurement documents should be submitted for ADB review and approval regardless of the estimated contract amount. The ADB-approved procurement documents should then be used as a model for all NCB procurement financed by ADB for the project, and need not be subjected to further review. ADB will review the bid evaluation report and award of contract on a post-review basis. For Shopping, ADB will review the award of contract on a post-review basis. Source: Asian Development Bank estimates B. Bid Evaluation Committee 35. A bid evaluation committee must be established to ensure that a transparent and efficient process is used for procurement under the Project. It is recommended that members include (at a minimum) the project steering committee, EA, and IA. VIII. CONSULTING SERVICES 36. The total input will be 12 person-months of international consultants and 44 personmonths of national consultants. The consultant will procure the office equipment and will deliver the equipment to the EA on completion of the Project. The consulting firm (including international and national consultants) will be recruited through quality- and cost-based

19 12 selection 5 with a full technical proposal in accordance with ADB s Guidelines on the Use of Consultants (2007, as amended from time to time) to provide implementation, management and progress monitoring services for the Project. A. Outline Terms of Reference for Consultants 37. The grant assistance will be implemented in consultation with the stakeholders concerned local communities, national and local governments, private sector associations, and other developmental agencies. The project consultant will review evaluation reports of similar projects funded by the Asian Development Bank (ADB) and other agencies, especially with regard to the lessons learned and factors that influence sustainability. B. Qualification and Scope of Work 1. International Consultants (total of 12 person-months) a. Electrical Engineer/Team Leader (6 person-months over the project implementation period) 38. Qualifications: The specialist's qualifications will be as follows: (i) University degree in engineering. (ii) In-depth technical knowledge of the high voltage transmission system, including single-wire earth return system (SWER). (iii) Experience in implementing SWER. (iv) Experience working in Mongolia or similar countries with cold climate. (v) Fluency in English and excellent writing and computer skills. 39. Tasks: The specialist's task will include, but not be limited to, the following: (i) Implement and manage the overall grant Project and other team members. (ii) Coordinate the project with the other donor initiatives. (iii) Establish baseline data (load and consumption factors). (iv) In consultation with the other team members, prepare the technical specification, contract packaging, implementation schedule in accordance with ADB policies. (v) Prepare the design of the SWER system (including codes and procedure for implementation); provide the instruction manual and procedures for construction and operation; methodology to monitor, test and calibrate the newly implemented SWER demonstration project equipment and facilities. (vi) Assist the Ministry of Mineral Resources and Energy (MMRE) to advertise the bids, carry out the bid evaluation, and prepare bid evaluation reports, contract negotiations, and contract awards. (vii) Supervise the supply and installation of SWER equipment. (viii) Organize training courses for SWER, development of design, installation and operation. (ix) Organize midterm and final workshop as necessary. (x) Prepare all required reports. (xi) Prepare a project marketing brochure for information dissemination. (xii) Establish a database of project accounts and procedures. (xiii) Manage and monitor all project accounts. (xiv) Establish baseline gender focused socioeconomic data for pilot project areas and conduct impact survey (with-without and before-after evaluation) at the end of the 5 Quality and cost ratio is 80:20.

20 (xv) 13 Project. A comparison group shall be selected from the list of candidate bag centers to conduct with-without survey. Prepare a draft policy note on rural electrification. b. SWER Design Specialist (2.5 person-months over the Project implementation period) 40. Qualifications: The specialist's qualifications will be as follows: (i) University degree in electrical engineering, experience in rural electrification and conducting training courses. (ii) In-depth knowledge in design of transmission grid up to 110 kilovolt (kv) voltage level with SWER system. (iii) Experience working in Mongolia or similar countries with cold climate. (iv) Fluency in English and excellent writing and computer skills. 41. Tasks: The specialist's task will include, but not be limited to, the following: (i) Provide recommendation and advice to assist MMRE develop and prepare the SWER design for demonstration bag centers; and assist in the supervision and monitoring of work at the construction site. (ii) Assist the team leader in the preparation of instruction manual and procedures for construction and operation of the SWER system. (iii) Assist the team leader in the implementation and management of the overall grant Project and supervision of national consultants. (iv) Assist the team leader in the establishment of baseline data and impact assessment. c. Protection and Safety Specialist (2.5 person-months over the project period) 42. Qualifications: The specialist's qualifications will be as follows: (i) University degree in electrical engineering, has experience in rural electrification and conducting training courses. (ii) In-depth knowledge in grounding equipment and protection facilities for transmission lines up to 110 kv voltage level with SWER system. (iii) Experience working in Mongolia or similar countries with cold climate. (iv) Fluency in English and excellent writing and computer skills. 43. Tasks: The specialist's task will include, but not be limited to, the following: (i) Provide recommendation and advice (a) to assist MMRE develop and prepare the SWER design for demonstration bag centers, and (b) for the selection of transmission equipment and protection facilities. (ii) Assist the team leader in preparing the instruction manual and procedures for construction and operation of SWER system. (iii) Organize training and provide required information to staff from MMRE and local distribution companies regarding the SWER system, e.g., use of ground return, isolating transformers, protection relays and devices. (iv) Organize training among local engineers and workers for installation and operation of SWER system and assist in the supervision and monitoring of work at the construction site. (v) Assist the team leader in the implementation and management of the overall grant Project and supervision of national consultants. (vi) Assist team leader in the establishment of baseline data and impact assessment.

21 14 d. Financial Specialist (1 person-month over the Project implementation period) 44. Qualifications: The specialist's qualifications will be as follows: (i) University degree in business administration, accounting or finance. (ii) Experience working with international development organizations. (iii) Knowledge in ADB s disbursement procedures is preferred. (iv) Experience working in Mongolia or similar countries. (v) Fluency in English and excellent writing and computer skills. 45. Tasks: The specialist's task will include, but not be limited to, the following: (i) Assess the budgetary operating cost implications in the implementation of the proposed Project. (ii) Determine the cost of procuring and installing the recommended equipment and materials, and the time required. The procurement for the required information technology equipment will be arranged by the project implementation unit. (iii) Overseeing the project implementation to be carried out by the national consultant. (iv) Assist the team leader in the establishment of baseline data and impact assessment. 2. National Consultants (total of 44 person-months) a. Electrical Engineer/Deputy Team Leader (13 person-months over the project period) will assist the team leader and Design Drawing and High Voltage Grid Specialists (international). 46. Qualifications: The specialist's qualifications will be as follows: (i) University degree in electrical engineering. (ii) In-depth technical knowledge of the transmission and distribution grid and rural area electrification. (iii) Knowledge in ADB s disbursement procedures is preferred. (iv) Experience working for internationally-funded projects. (v) Working knowledge of English and excellent writing and computer skills. 47. Tasks: The specialist's task will include, but not be limited to, the following: (i) When the international electrical engineer/team leader is not in Mongolia, implement and manage the overall grant Project and other international and national consultants. (ii) Establish technical and gender focused socioeconomic baseline data for pilot project areas and conduct impact survey (with-without and before-after evaluation) at the end of the Project. A comparison group shall be selected from the list of candidate bag centers to conduct with-without survey. (iii) In consultation with the other members of the team, prepare the technical specification, contract packaging, and implementation schedule in accordance with ADB policies. (iv) Assist the MMRE to advertise the bids, carry out the bid evaluation, and prepare bid evaluation reports, contract negotiations, and contract awards. (v) Supervise the supply and installation of transmission and distribution equipment and facilities. (vi) Organize trainings for local engineers and workers of power utilities. (vii) Organize midterm and final workshop as necessary. (viii) Prepare all required reports.

22 (ix) (x) (xi) Prepare a project marketing brochure for information dissemination. Establish a database of project accounts and procedures. Manage and monitor all project accounts. 15 b. Design Drawing Specialist (6 person-months over the project period) will assist the team leader and Design Drawing Specialist (international). 48. Qualifications: The specialist's qualifications will be as follows: (i) University degree in development of design drawings for transmission and distribution grid. (ii) In-depth knowledge in transmission and distribution grid and rural area electrification. (iii) Experience working for internationally-funded projects. (iv) Working knowledge of English and excellent writing and computer skills. 49. Tasks: The specialist's task will include, but not be limited to, the following: (i) Provide recommendation and advice to assist MMRE develop and proceed with the design drawings in selected bag centers and assist in the supervision and monitoring of work at the construction site. (ii) Assist team leader in implementation and management of the overall grant Project and national consultants. (iii) Assist team leader in the establishment of baseline data and impact assessment. c. High Voltage Grid Grounding Engineer (6 person-months over the project period) 50. Qualifications: The specialist's qualifications will be as follows: (i) University degree in electrical engineering, has experience in rural development and trainings. (ii) In-depth knowledge in grounding equipment and protection facilities for transmission grid up to 110 kv voltage level with SWER system and high voltage grounding system. (iii) Experience working for internationally-funded projects. (iv) Working knowledge of English and excellent writing and computer skills. 51. Tasks: The specialist's task will include, but not be limited to, the following: (i) Provide recommendation and advice to assist MMRE (a) develop and proceed with the design drawings for grounding system in selected bag centers (b) in the selection of transmission equipment and grounding and it s protection facilities, as well as on required isolating transformer, and (c) during installation works. (ii) Organize training among local engineers and workers for installation and operation of SWER system. (iii) Supervise and monitor work at the constructions site. (iv) Assist team leader in the implementation and management of the overall grant Project and national consultants. (v) Assist team leader in the establishment of baseline data and impact assessment. d. Relay Protection and Automatics Engineer (6 person-months over the project period) 52. Qualifications: The specialist's qualifications will be as follows: