Progress Report Trust Fund For East Timor (TFET) East Timor Rehabilitation and Development

Transcription

1 Progress Report Trust Fund For East Timor (TFET) East Timor Rehabilitation and Development ADB/UNTAET - Managed TFET Projects ADB s Technical Assistance Grant Projects Donors Council Meeting Lisbon, Portugal June 2000 Asian Development Bank

2 Operational Highlights, 2000 iii Foreword In December 1999, the Asian Development Bank (ADB) was appointed as an implementing agency for the Trust Fund for East Timor (TFET). ADB has now accepted the task of coordinating and managing TFET investments for rehabilitation and development in the sectors of transport infrastructure, power, telecommunications, water and sanitation, and microfinance. The Board of Directors of ADB has also approved the commitment and disbursement of an initial amount of up to $5.0 million of technical assistance grant financing, primarily for capacity building in East Timor. It is expected that additional TA grant financing will be made available for future years. This report reviews the implementation progress of ADB-managed projects under the above two financing mechanisms. Specifically, it provides briefs on the design and implementation of the TFET-funded Emergency Infrastructure Rehabilitation Project, and the design of the forthcoming Water Supply and Sanitation and Microfinance Development projects. ADB appreciates the role assigned to it by the contributing donors of TFET. ADB will continue to closely coordinate with UNTAET, World Bank and the East Timorese in ensuring early and effective implementation of TFET-funded projects. I hope this report will be useful to the delegates of the Donors Council Meeting in Lisbon on June Basudev Dahal Director Office of Pacific Operations

3 iv PROGRESS REPORT: East Timor Rehabilitation and Development Abbreviations ADB AusAID BPAM CAPET CEP CNRT CTA Depkes DSRSG ECHO GDP GoP GPA ICRC IDA IFA IHA IKK Interfet JAM JICA NCC NGO NRW OCHA OW&S PDAM PDD PMU RWS&S SAPET SRSG TA TFET UN UNHCR UNICEF UNDP UNOPS UNPKF UNTAET UNV WB WFP WS&S Asian Development Bank Australian Agency for International Development District Water Board (Indonesian) Capacity Building Project for East Timor (AusAID) Community Empowerment and Local Governance Project Conselho Nacional da Resistencia Timorense (National Council of Timorese Resistance) Chief Technical Adviser Department of Health (Indonesian) Deputy Special Representative of the Secretary General European Community Humanitarian Organisation gross domestic product Government of Portugal Governance and Public Administration International Committee of the Red Cross International Development Agency International Funding Agency Interim Health Authority UNTAET main sub-district town (Indonesian) International Force for East Timor Joint Assessment Mission Japan International Cooperation Agency National Consultative Council Nongovernment organization Nonrevenue water Office for Coordination of Humanitarian Affairs Office of Water and Sanitation UNTAET Local Government Water Enterprise (Indonesian) project design document program management unit rural water supply and sanitation Staffing Assistance Program for East Timor (AusAID) Special Representative of the Secretary General technical assistance Trust Fund for East Timor United Nations United Nations High Commissioner for Refugees United Nations Children s Fund United Nations Development Programme United Nations Office of Project Services United Nations Peacekeeping Forces United Nations Transitional Administration in East Timor United Nations Volunteer World Bank World Food Programme water supply and sanitation NOTE: In this report $ refers to US dollars unless otherwise stated.

4 Operational Highlights, 2000 v Contents Page n Operational Highlights, n ADB/UNTAET-Managed TFET Projects 5 Emergency Infrastructure Rehabilitation Project 6 Road Subsector 8 Port Subsector 13 Power Subsector 17 Water Supply and Sanitation Rehabilitation Project 21 Water Supply and Sanitation Subsector 23 Proposed Microfinance Development Project 26 n ADB s Technical Assistance Grant Projects 27 Community Empowerment Program 28 Transport Sector Restoration 30 Road Subsector Strategy 31 Maritime Subsector Strategy 35 Power Subsector Strategy 38 Aviation Subsector Strategy 40 Capacity Building for Governance and Public Sector Management 44 Poverty Assessment and Statistics 46 Rehabilitation of the Telecommunications Sector 48 Microfinance 50 n Appendixes 53 Appendix 1: Report on a Project Grant from the Trust Fund for East Timor 53 Appendix 2: MOU of the Water Supply and Sanitation Rehabilitation Project 79 Appendix 3: Proposed Microfinance Development Project for East Timor 99

5 vi PROGRESS REPORT: East Timor Rehabilitation and Development

6 Operational Highlights, Operational Highlights, 2000 Resources Authorized grants todate from Trust Fund for East Timor (TFET) for ADB implemented projects is $29.8 million as of 30 June Nearly $5.0 million has been provided as ADB s own technical assistance grants for project preparation and advisory purposes for East Timor reconstruction activities. Sector Activities Under TFET Grants Transport, Power and Communications: Todate, there has been one project approved by ADB on 13 April 2000, the Emergency Infrastructure Rehabilitation Project for road, port, power rehabilitation, for $29.8 million. The Project is being implemented as of May Social Infrastructure: A water and sanitation project is currently under preparation. A Memorandum of Understanding has been signed in June The appraisal of the proposed project has been completed. The estimated project cost is $4.5 million. It is expected to be approved by ADB in August 2000 and will start implementation in September Microfinance: A microfinance project is currently under preparation. The project preparatory consultants have been fielded in June The estimated project cost is $6.5 million. It is expected to be approved by ADB in October 2000 and will be implemented starting December 2000.

7 2 PROGRESS REPORT: East Timor Rehabilitation and Development Technical Assistance Under ADB Grants TA 3400-ETM: Community Empowerment Program, for $0.99 million was approved on 9 February The TA supports the initial phase of the TFET funded Community Empowerment Project. The TA has been under implementation since March 2000 and will be completed in August TA 3401-ETM: Transport Sector Restoration, for $1.0 million was approved on 10 February The TA was implemented as ADB s first intervention in the transport sector for establishing the institutions and regulatory frameworks in the road, port, and airport subsectors. ADB has completed the port, airport, and power pricing studies. TA 3412-ETM: Capacity Building for Governance and Public Sector Management, for $1.0 million was approved on 9 March The TA is to assist the East Timorese develop planning and management capabilities. ADB has fielded two international consultants to train local professionals in the operations of Central Bank and Central Payment Office. A public sector management specialist will be fielded in July 2000 to assist in the overall coordination of public sector strengthening activities under this TA. Under this TA, senior East Timorese officials are undergoing public sector management training. Project Performance Report ($ million) as of 15 June 2000 Grant Projects (TFET) Infrastructure Water & Grant/TA Project Rehabilitation Sanitation Microfinance Grant/TA No TF Executing Agency UNTAET UNTAET UNTAET Effectivity Date 19/04/00 N/A N/A Closing Date 31/05/02 9/01 12/03 Total Project Cost b 6.5 Committed Amount Grant/TA Project Progress (%) a a b a Yet to be approved. b Proposed Project Cost.

8 Operational Highlights, TAs (ADB) Community Public Sector Telecom- Empowerment Transport Management Poverty munication Microfinance UNTAET UNTAET UNTAET UNTAET UNTAET UNTAET 07/03/00 21/03/00 09/03/00 08/04/00 17/04/00 10/05/00 31/07/00 30/11/00 31/03/00 30/06/00 01/08/00 10/09/

9 4 PROGRESS REPORT: East Timor Rehabilitation and Development TFET Grant Projects and ADB s Technical Assistance Grants by Sector (amount in $ million) TFET ADB Total % Transport and Communications Social Infrastructure Others Total TA 3425-ETM: Poverty Assessment and Statistics, for $52,900 was approved on April The TA is to undertake a poverty assessment including the nature and extent of poverty. ADB has fielded a consultant in May Preliminary field work has been completed and a detailed report will be finalized by end July This will be followed up with a more extensive household survey in TA 3428-ETM: Rehabilitation of the Telecommunication Sector, for $150,000 was approved on 17 April The TA is to identify viable technical and economical solutions in the telecommunications sector. ADB has fielded a consultant from May 2000 and a preliminary assessment of the situation has been completed; the first report will be available in June TA 3435-ETM: Microfinance Development, for $150,000 was approved on 10 May The TA is to assess and initiate community-based opportunities for income generation. ADB has finalized consultant selection and the study will commence in June 2000; the feasibility report is expected in August Proposed ADB s Technical Assistance for 2000/2001 ADB has planned another 4 TAs in 2000 for about $1.5 million in the areas of environment, communications, capacity building and training, and poverty analysis. ADB is also preparing another $5.0 million for TAs to East Timor in 2001.

10 ADB-UNTAET Managed TFET Projects

11 6 PROGRESS REPORT: East Timor Rehabilitation and Development Emergency Infrastructure Rehabilitation Project Summary Project Rationale Beneficiary Project Description East Timor s transport and power infrastructure has been severely damaged due to conflict and is unable to facilitate humanitarian relief efforts or security operations. The roads have been damaged in many locations and can only carry very small loads. Humanitarian aid and military vehicles have been lost in river crossings and one person died on a steep and weak embankment. Food aid is flown in at the cost of $1,000 per ton. Because of Dili Port s extremely limited capacity, it has become a bottleneck to channelling humanitarian aid to the population. Power supply is needed to facilitate water supply and is essential to health services, but most of the power stations are unoperational due to damage and because operating staff and fuel are lacking. Restoration of power supply will enable operation of borehole water pumps, provision of emergency health care, and resumption of economic activities. East Timor The Project will (i) undertake emergency road repair works to facilitate efficient transport of humanitarian aid and help revive economic activity; (ii) expand the port facilities to reduce congestion, and (iii) reinstate power supply. The Project will also support financial management of the power sector, and implementation of transport sector institutions. The closely related ADB technical assistance (TA) 3401: Transport Sector Restoration Project will help establish management of the transport subsectors and support, in tandem with the Project, implementation of efficient management mechanisms and institutions. The Project has been classified as environmental category B. An initial environmental examination was undertaken, and its summary is a core appendix. The immediate benefits of the Project include facilitating the (i) provision of food supplies to famine stricken areas, (ii) provision of agricultural supplies to enable cultivation, (iii) resettlement of internally displaced persons and refugees, and (iv) movement of the United Nations Peacekeeping Forces. The Project will employ people especially in rural areas, where poverty is extreme and most people do not have income-generating opportunities.

12 ADB/UNTAET-Managed TFET Projects 7 Emergency Infrastructure Rehabilitation Project Summary (continued) Executing Agency Cost Estimates and Financing Plan Period of Utilization Estimated Project Completion Date Procurement of Goods and Services The use of local labor will stimulate the economy and thus help the reconstruction of the communities. The beneficiaries of the power component are primarily the urban and semiurban population. The reinstatement of power supply will make possible provision of essential services such as water supply, hospitals, schools, commercial establishments, and industries. The United Nations Transitional Administration in East Timor will be the recipient of the grant. The Project will be executed and implemented by a project management unit (PMU), comprising five East Timorese project management staff and five international counterparts including a chief technical adviser. A project steering committee involving broad stakeholder representation will monitor implementation. The total Project cost is estimated at $29.8 million equivalent. The Project will be financed by a grant of $29.8 million from the Trust Fund for East Timor (TFET). These funds have been contributed by donors and do not include resources from the Asian Development Bank (ADB). The International Development Association of the World Bank Group is the Trustee of TFET. Until 31 December May 2002 Civil works will be awarded on the basis of international shopping and international competitive bidding in accordance with ADB s Guidelines on Procurement. International contractors are encouraged to include jointventure arrangements with local contractors and will utilize labor-intensive methodologies. Eligibility for procurement and engagement of consultants will include ADB member countries, East Timor, and all donors and members of international organizations that have contributed to the TFET. International consulting services will be required for the PMU and construction supervision. The consultants will be selected in accordance with ADB s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants.

13 8 PROGRESS REPORT: East Timor Rehabilitation and Development Road Subsector Introduction Progress (January - June 2000) Planned (July - December 2000) Attachments Road Rehabilitation was identified as a priority sector, due to the potential risk of major damages of parts of the road network and the potential for quick employment creation. ADB is the lead agency in this sector. The planned sector activities include: the road rehabilitation works under ADB administered Emergency Infrastructure Rehabilitation Project (EIRP). The estimated total cost for the road component under the Project is $22.61 million. A 10-person project management unit (PMU) will administer the EIRP up to completion until 31 December Emergency Road Rehabilitation Component under the EIRP The Project began implementation from May To date, twenty (20) work instructions have been issued to address the most urgent road blocks in a total value of $350,000 and were to be completed on 24 May Six more works instruction were mobilized on 30 May for a total value of $150,000. These will be completed on 5 June These together have generated 3,000 person-days of local employment. Small-scale works are being awarded to address critical drainage and pothole problems on high volume road sections by local East Timorese contractors. In addition to the technical objective of these contracts, they facilitate assessment of local contractor capacity and training requirements. Five 120-day road repair contracts have been awarded on 31 May. These will rehabilitate and open the priority roads identified by UNTAET. During the 2 nd half of 2000, the project will continue with its activities planned in the first half of 2000 and will continue with the finalization of the remaining bids. In this regard, the five large international competitive bid (ICB) contracts were planned for road rehabilitation, strengthening local contracting industry, and establishing regional road maintenance regime. Due to the severe and dramatically deteriorated road conditions, these will be reduced to four. Tender for the four ICBs will commence on 15 June. The funds from the fifth contract will be shifted to support (i) emergency bridge rehabilitation work on the 18 recently failed bridges and (ii) a district labor-based emergency road maintenance program. The bridge rehabilitation program is proposed at $3.0 million and would be prepared by a bridge engineer under the TA. The nationwide maintenance program proposed at $2.0 million will be disbursed through local field engineers or district infrastructure personnel, as appropriate, using quantity and quality controlling guidelines. Funds will be initially disbursed for a pilot project starting 15 June, and thereafter the program will be extended to cover works in each district. 1. Road Sector Plans 2. Budget 3. Implementation Schedule

14 ADB/UNTAET-Managed TFET Projects 9 Road Subsector Plans Unusually severe rains have been experienced during the first half of In addition, wheeled military traffic and heavy trucks have impacted adversely on the road network. The former has caused road failures, particularly in the mountainous central region of the territory. The cost of the damage caused by the military movements on the roads has been estimated at $21 million. Current network assessment is in Appendix 6. Due to the dramatically deteriorated road conditions, EIRP road component budget will be consumed to tackle emergency road problems that currently interrupt communications between main population centers and significantly challenging humanitarian and aid program delivery. New funding for the sector is required for an emergency bridge restoration program and road restoration to a viable condition. UNTAET has requested ADB to field a Project Appraisal Mission to prepare project documentation in accordance with ADB guidelines for preparation of a road rehabilitation project. Feasibility work for the Mission would be carried out under TA No ETM: Transport Sector Restoration Project. In light of the funding constraints under TFET, this Mission is proposed for early 2001 and the following changes have been agreed under EIRP. (i) (ii) (iii) Transfer of Funding to Road Component of EIRP Additional funding will be moved to the road sector from the port component by possible deletion of cargo handling equipment and refurbishment planned for Dili Port ($1.0 million); this will be confirmed during the Project review in August 2000; Emergency Bridge Program In place of the planned 5 ICB contracts, only 4 will be tendered on 15 June. Funding from the fifth ICB will be used to address emergency abutment strengthening requirements on failed 18 bridges ($3.0 million); District Emergency Road Repair The balance of funding from the fifth ICB will be used to set up district labor-based road repair contracts in each district commencing with Ermera, Liquica, and Viqueque ($2.0 million).

15 10 PROGRESS REPORT: East Timor Rehabilitation and Development Road Subsector Budget ($ million) 2000/1 Jul-Sep Oct-Dec Jan-Mar Apr-Jun Capital Construction TFET DFID Funded Road Rehabilitation Norway Funded Road Rehabilitation Japan led Assessed Unfunded Buildings Equipment Consultants Road Engineer 0.02 Road Planner/Institutional Specialist Recurrent Road Sector Management and Operations International (person-year) Salary Cost Local (person-year) Salary Cost Training Maintenance Building Maintenance Equipment Maintenance Other Operation Expenses Regulatory Operations Bridge Maintenance Contract Mechanical Maintenance Regular Labour Based Maintenance Total Annual Financing Requirement

16 ADB/UNTAET-Managed TFET Projects /1 2001/2 2002/3 Total TFET Japan Other Unfunded

17 12 PROGRESS REPORT: East Timor Rehabilitation and Development Implementation Schedule July - December 2000 Subsector/ Activity Jul Aug Sept Oct Nov Dec Roads Emergency Road Repair Work Orders IS Emergency Road Repair/Rehabilitation Contracts ICB Tender ICB Road Rehabilitation Emergency Road Repair Work Instructions First Round Backlog Road Maintenance Contracts International Competitive Bid (ICB) for Remaining Backlog Roads Maintenance Start of Works under ICB Contracts Bridge Repair Program District Road Maintenance Program Financial Management By end June

18 ADB/UNTAET-Managed TFET Projects 13 Port Subsector Introduction Progress (January - June 2000) Planned (July - December 2000) Attachments 1 2 Dili, the major port in East Timor suffers from a high level of congestion and to facilitate effective delivery of cargoes, major improvements are needed. Under the EIRP, the port component includes; (i) wharf extension at Dili Port; (ii) restoration of the landing craft slipway at Dili Port; (iii) restoration of the container yard at Dili Port; (iv) provision of beach matting in Beacu, Betano, and Suai; (v) port repairs; and (vi) equipment for landing of goods. 1. Emergency Port Rehabilitation component under the EIRP: Contracts for items for wharf extension, restoration of landing craft slipway and restoration of container yard at Dili Port have been tendered and works will be mobilized on 15 June The port program under funding from the Government of Japan includes repair of the navigation aids and fenders at the Dili Port. 2. Sector Management: The institutional proposal prepared under the TA 1 assistance recommends the separation of the regulatory and operational functions in the maritime sector. The proposed East Timor Maritime Safety Authority would be responsible for regulating maritime affairs, including port state control. Responsibility for port operations would be vested in an East Timor Ports Authority (ETPA). 2 This authority would be established as a legal entity separate from the government, and would report to a board comprising predominantly East Timorese. ETPA would operate as a landlord, with port operations such as stevedoring and towage performed by private sector companies. ETPA would let a short-term (3 years) contract for the provision of management services to manage the daily operations of the port safely and effectively; and to train East Timorese nationals to take over the management function at the end of the contract period. 3. Port Tariff: A Port Sector Pricing Study completed in March 2000 recommended a tariff structure designed to move to a full cost recovery strategy over a three-year period. The proposed tariff was approved by UNTAET Infrastructure Division, and has subsequently been endorsed by the National Consultative Council (NCC). However, to what extent the UN should be exempted from the tariff has yet to be resolved. Implementation of the tariff has been delayed pending resolution of this issue. The works at wharf extension, restoration of landing craft slipway and restoration of container yard at Dili Port will be in full progress from July 2000 onwards. 1. Budget 2. Implementation Schedule TA No ETM: Transport Sector Restoration Project approved on 10 February 2000 for $1.0 million. Working title.

19 14 PROGRESS REPORT: East Timor Rehabilitation and Development Maritime Subector Budget ($ million) 2000/1 Jul-Sep Oct-Dec Jan-Mar Apr-Jun Capital Emergency Works Plant, Equipment and Furnishings Consultants 0.06 Pricing Study Port Operations Specialist 0.03 Port Management Specialist 0.03 Recurrent Port Management International (person-year) Salary Cost Local (person-year) Salary Cost Operations and Maintenance Infrastructure Maintenance Equipment Maintenance Training Other Operating Expenses Regulatory Operations (person-year) Regulatory Operations (cost) Total Annual Financing Requirement

20 ADB/UNTAET-Managed TFET Projects /1 2001/2 2002/3 Total TFET Japan Other Unfunded

21 16 PROGRESS REPORT: East Timor Rehabilitation and Development Implementation Schedule July - December 2000 Subsector/ Activity Jul Aug Sept Oct Nov Dec Ports Wharf Deck Completion and Slip Repair Container Yard Improvement Bridge Repair Technical Specification Bridge Repair / Rehab District Labor-Based Maintenance Program Maritime (Wharf Extension) Emergency Works Procurement of Equipment, etc. Engagement of Consultants Engagement of Port Management Consultants Operation and Maintenance Training Completion of Wharf Extension Completion of Container Yard Rehabilitation Completion of Technical Specification for Bridge Rebuilding By end June

22 ADB/UNTAET-Managed TFET Projects 17 Power Subsector Introduction Progress (January - June 2000) Planned (July - December 2000) Attachments The power system was heavily damaged. At present of the 57 stations, 15 will be rehabilitated under the Project. The remaining are being rehabilitated by bilateral donors. The power sector restoration program under ADB administered Grant No ETM: (TF) Emergency Infrastructure Restoration Project (EIRP) includes (i) rehabilitation of 15 power stations; (ii) rehabilitation and reinstatement of distribution lines; (iii) restoration of communications between Dili and power stations; and (iv) replacement of destroyed Comoro power station switchgear. The estimated total cost for the power rehabilitation component under the Project is $2.77 million. 1. Emergency Power Rehabilitation Component under the EIRP: During this period, an estimate has been prepared for the cost of power supply to the various consumer categories. The initial findings have concluded that the weighted average power supply costs per consumer category are: (i) Non-residential 20 kv cents/kwh (ii) Non-residential LV cents/kwh (iii) Residential cents/kwh (iv) Plus - fixed monthly charge for metering & billing A tariff proposal will consider equity and social concerns relevant to the conditions of East Timor and are likely to result in delayed implementation of a cross-subsidized residential tariff of about 7-9 cents/kwh to be implemented in one year s time leaving a small consumption-based life-line with a lower tariff charge. Options for various tariff scales are being considered and weighed against the resulting revenues and cost recovery ratios. The final recommendation for the power tariff will be ready during second week of June, The program will be funded under the next funding allocation to the Project from the Trust Fund for East Timor (TFET) planned for July The terms of reference for the financial sector management are being prepared and consulting services will be selected based on ADB s Guidelines on the Use of Consultants commencing 15 June Specification and contract packaging for services required for integrated power station rehabilitation will carried out from 15 June to 15 August These services will be negotiated in accordance with ADB s Guidelines on the Use of Consultants with due consideration to economic efficiency. Funding for Comoro switchboard ($0.15 million) and radio communications ($0.08 million) will be moved to the road component under EIRP as bilateral rehabilitation funding has become available to cover these needs. 1. Budget 2. Implementation Schedule

23 18 PROGRESS REPORT: East Timor Rehabilitation and Development Power Subsector Budget ($ million) 2000/1 Jul-Sep Oct-Dec Jan-Mar Apr-Jun Capital Emergency Works Power Sector Improvement Program Government of Japan Projects Portuguese Government Projects Consultants Pricing Study Operations Specialist Management Specialist Sector Investment Plan Recurrent Power System Management International (person-year) Salary Cost Local (person-year) Salary Cost Operations and Maintenance Fuel Lubricants Tools/Equipment Inventories Oil Tankers Tree Trimming Distribution Support Rural response crew Engine overhauls Power Generation Support Team Spare Parts Motor vehicles Office Equipment Communications Building refurbishment Total Annual Financing Requirement

24 ADB/UNTAET-Managed TFET Projects /2 2002/3 Total TFET Japan Other Unfunded

25 20 PROGRESS REPORT: East Timor Rehabilitation and Development Implementation Schedule July - December 2000 Subsector/ Activity Jul Aug Sept Oct Nov Dec Power Station Rehabilitation Technical Specification Power Station Rehabilitation Estimated Financial Management for Power Subsector Tender for Consultant Services

26 ADB/UNTAET-Managed TFET Projects 21 Water Supply and Sanitation Rehabilitation Project Summary Project Rationale Beneficiary Project Description During September 1999, East Timor experienced a campaign of destruction and terror over which three quarters of the population fled their homes and most of the country s infrastructure and private homes were destroyed. The widespread destruction included looting, burning, and damage to town and village water supply and sanitation (WS&S) facilities throughout the country. Typically in towns with public water supply systems, vehicles, pumps and motors were removed; water treatment plants damaged; offices, stores and other buildings burned; pipelines, tools, and spare parts stolen; storage tanks ruptured; latrines and septic tanks damaged; and water sources impaired. And in the burning of houses, water connections, including meters, were completely destroyed. None of the former water supply or sanitation institutions now exist. Therefore, it is essential to support physical repair and rehabilitation, develop new institutions and systems for managing, operating, maintaining, and further developing urban and rural water supplies in East Timor that are both appropriate and sustainable. East Timor The project comprises three components: (i) a Water Supply and Sanitation Sector Management Program, which includes the establishment of a project management unit (PMU) under the United Nations Transitional Administration in East Timor s (UNTAET s) Office of Water & Sanitation (OW&S) and the preparation of a detailed, budgeted, project implementation document for coordinated improvement of East Timor s WS&S sector; (ii) a Capacity Building and Institutional Development Program, which identifies and implements priority capacity building and institutional development activities to support physical construction already under way, or planned and to complement capacity building and institutional development activities by other donors; and (iii) the Water Supply and Sanitation Implementation Program, which includes (a) an OW&S WS&S Quick Response Facility, (b) complementary works for the Dili Water Supply Repair and Rehabilitation, and (c) complementary works for the District Water Supply Repair and Rehabilitation.

27 22 PROGRESS REPORT: East Timor Rehabilitation and Development Water Supply and Sanitation Rehabilitation Project Summary (continued) Executing Agency Cost Estimate and Financing Plan Estimated Project Completion Date Procurement of Goods and Services UNTAET will be the recipient of the Grant from the Trust Fund for East Timor (TFET). The project will be executed and implemented by a small PMU. PMU will be funded under the Project. A project steering committee involving broad stakeholder representation will monitor implementation. The total cost of the Project is estimated at $4.50 million equivalent. The Project will be financed on a grant basis by TFET. 30 June 2001 All procurement under the Project will be conducted in accordance with ADB s Guidelines for Procurement. The proceeds of the Project will finance imports of goods and services, local purchases, and civil works identified under the Project. Under ADB s Guidelines, these may be procured off the shelf, or through international shopping, local competitive bidding, or international competitive bidding, as appropriate. Eligibility for procurement and engagement of consultants will include ADB member countries, East Timor, and all other donors and members of organizations that have contributed to TFET. International consultant services will be required for PMU. The consultants will be selected in accordance with ADB s Guidelines on the Use of Consultants and other arrangements satisfactory for ADB for the engagement of domestic consultants.

28 ADB/UNTAET-Managed TFET Projects 23 Water Supply and Sanitation Subsector Introduction Progress (January-June 2000) Planned (July-December 2000) A significant amount of work has been done by both bilateral donors and United Nations agencies during the emergency phase, including sector needs assessments and urgent rehabilitation works. However, at present there are no water and sanitation policy frameworks in existence in East Timor. ADB has been invited to take the lead in coordinating and managing any activities of the Trust Fund for East Timor (TFET) in the water supply and sanitation (WS&S) subsector. As an initial step, ADB has undertaken a sector planning and project fact-finding mission in April 2000, to draw together information on the work that has already been done, identify gaps and donor interests, and prepare a prioritized framework for future action. The mission developed a draft WS&S sector development framework that aims to provide the people of East Timor with adequate and affordable, WS&S services using appropriate technology and good system management. It proposed that this would be done through (i) building local capacity and capability to effectively manage the WS&S sector; (ii) rehabilitating and developing WS&S facilities in urban and rural communities; and (iii) promoting improved health, hygiene, and community participatory practices. Another mission was fielded in June 2000 and a memorandum of understanding was signed on 8 June 2000 with the United Nations Transitional Administration in East Timor (UNTAET) for a small and modest TFETfunded Water Supply and Sanitation Rehabilitation Project. Implementation of the Water Supply and Sanitation Rehabilitation Project is planned to commence 1 September The project has three components: (i) a WS&S Sector Management Program, which includes the establishment of a project management unit (PMU) under UNTAET s Office of Water & Sanitation (OW&S) and the preparation of a detailed, budgeted, project implementation document for coordinated improvement of East Timor s WS&S Sector;

29 24 PROGRESS REPORT: East Timor Rehabilitation and Development Water Supply and Sanitation Subsector (continued) Budget (ii) a Capacity Building and Institutional Development Program, which identifies and implements priority capacity building and institutional development activities to support physical construction already under way or planned, and to complement capacity building and institutional development activities by other donors; and (iii) a Water Supply and Sanitation Implementation Program, which includes (i) an OW&S WS&S Quick Response Facility, (ii) complementary works for the Dili Water Supply Repair and Rehabilitation and (iii) complementary works for the District Water Supply Repair and Rehabilitation. In consultation with UNTAET, an amount of $39.9 million has been proposed to the TFET as the overall three-year budget for the WS&S sector for the next three fiscal years. The amount comprises $14.0 million TFET funds and $25.9 million from other donors. For the first fiscal year an amount of $4.5 million was proposed for TFET funding.

30 ADB/UNTAET-Managed TFET Projects 25 Sector Framework The mission fielded in April 2000 developed a draft Water Supply and Sanitation Sector development framework which aims at providing the people of East Timor with adequate, affordable, water supply and sanitation services using appropriate technology and good system mangement. It proposed that this would be done through: (i) building local capacity and capability to effectively manage the WS&S sector; (ii) rehabilitating and developing water supply and sanitation facilities in urban and rural communities; and (iii) promoting improved health, hygiene and community participatory practices. The sector framework has four components/outputs, which are outlined below in more detail: (i) (ii) (iii) (iv) WS&S Sector Management Program, under which the Project Management Unit (PMU) would be established and a detailed Project Implementation Document (PID) prepared. Capacity Building and Institutional Development Program, which would establish the human and institutional foundations necessary to complement the physical water supply and sanitation works. WS&S Implementation Program, which would cover repair, rehabilitation and development of urban and rural water supplies and sanitation across East Timor. Environmental Health Promotion and Strengthening of Local NGOs, under which complementary health promotion, hygiene education and strengthening of local NGOs would be carried out. The sector framework is designed to: distribute its benefits in an equitable manner across East Timorese urban and rural communities; be responsive to communities needs; contribute to sustainable development and operation in the WS&S sector; reduce poverty; and minimize environmental impacts. It is expected the project will directly, or indirectly, benefit most of the country s 800,000 population. Budget In consultation with UNTAET an amount of $39.9 million has been proposed to the TFET as the overall three year budget for the WS&S sector for the next three fiscal years. The amount comprises $14.0 million TFET funds and $25.9 Million other donors. For the first fiscal year an amount of $4.5 million was proposed for TFET funding.

31 26 PROGRESS REPORT: East Timor Rehabilitation and Development Proposed Microfinance Development Project Summary Project Rationale Beneficiary Project Description Executing Agency Cost Estimate and Financing Plan Period of Utilization Estimated Project Completion Date Procurement of Goods and Services East Timor s economy in general has been badly hurt due to the recent conflict and there is serious need to provide various alternatives to improve the people s economic conditions. It is proposed that microfinance activities will provide income-earning opportunities to the local population. Microentrepreneurs in East Timor The Project will (i) rehabilitate and expand the operations of credit unions, (ii) develop local capacity to manage effective microfinance institutions, (iii) establish a microfinance bank, and (iv) develop a policy and legal framework to monitor microfinance development. The United Nations Transitional Administration in East Timor will be the executing agency and the recipient of the grant. The Project will be executed and implemented by a project management unit (PMU). A project steering committee involving broader representation will support and monitor implementation. The proposed total project cost is estimated at $6.5 million equivalent. The proposed Project will be financed by a grant of $5.5 million. The Asian Development Bank (ADB) and other donors will provide about $1.0 million as technical assistance grants. Until 31 December June 2002 In accordance with ADB s Guidelines on Procurement and Guidelines on the Use of Consultants.

32 ADB s Technical Assistance Grant Projects

33 28 PROGRESS REPORT: East Timor Rehabilitation and Development Community Empowerment Program, TA 3400-ETM Project Rationale Beneficiary Project Scope Executing Agency Cost Estimates and Financing Plan The required major reform in East Timor s public administration must be based on a new system of governance. Achievement of this new system of accountability at the local level will require an intensive training and capacity-building program to reverse past practices and ensure the participation and empowerment of all citizens, especially females. The new system must also secure credibility by stressing maximum transparency and accountability. In addition to ensuring appropriate values and processes, the redevelopment of effective local government will also require a rapid transfer of practical skills in budgeting, planning, and management. Rural communities in East Timor The technical assistance (TA) will lay the groundwork for a network of local councils that will progressively cover all 13 districts, 64 subdistricts, and 440 villages of East Timor. In addition to training and deploying district facilitators to help establish the councils, the TA will also initiate a comprehensive capacity building program to assist each village to develop the leadership, skills, and systems needed to design and implement priority rehabilitation and development projects. United Nations Transitional Administration in East Timor The total cost of the TA is estimated at $1,290,000 equivalent, comprising foreign exchange and local currency costs. UNTAET has requested ADB to contribute $990,000. The World Bank will also contribute to the TA by providing other consultant inputs as needed and essential technical knowledge derived from the Kecamatan Development Project initiated in East Timor in The distinction between foreign and local costs has not been made because of the exceptional circumstances in East Timor where there exists neither sovereign government, official local currency, nor local revenue sources. Similarly, in the absence of a local government, no provision has been made for counterpart financing. Although local contributions have not been specified, the United Nations Transitional Administration in East Timor will provide counterpart staff, support services, and office facilities. Support will also be provided by Conselho Nacional da Resistencia Timorense and from local communities.

34 ADB s Technical Assistance Grant Projects 29 Community Empowerment Program, TA 3400-ETM (continued) Period of Utilization Estimated Project Completion Date Procurement of Goods and Services Implementation Progress Todate Until 31 July July 2000 International consulting services required. The consultants have been selected in accordance with ADB s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants. 5 international and 2 local consultants have been fielded since March local East Timorese have been recruited as facilitators, trainers, and district monitors to assist in the TA implementation. 5 out of the 13 districts council elections have been completed. 10 out of the 41 subdistrict councils have been formed. 314 out of the 328 village development councils have been formed. 890 village development council members have been elected at the subdistrict level.

35 30 PROGRESS REPORT: East Timor Rehabilitation and Development Transport Sector Restoration, TA 3401-ETM Project Rationale Beneficiary Project Scope Executing Agency Cost Estimate and Financing Plan Period of Utilization Estimed Project Completion Date Procurement of Goods and Services Implementation Progress Todate Under the reconstruction program, a lead-agency role is assigned to ADB for infrastructure sector restoration, including the transport, energy, telecommunications, and water and sanitation sectors. This technical assistance (TA) will implement ADB s initial intervention in the three transport subsectors by (i) taking initial steps to establish the institutions and regulatory frameworks for the road, port, and airport subsector management, and (ii) reviewing the respective long-term development requirements to enable these subsectors to contribute to poverty reduction and economic growth. East Timor For each of the three subsectors, namely land, maritime, and air transport, the TA will (i) review the legal, regulatory, and policy frameworks; (ii) propose and establish immediate management and administrative structures; (iii) outline specifications for an immediate and long-term restoration and procurement needs and development program. United Nations Transitional Administration in East Timor The TA is estimated to cost $1.0 million. The entire cost of the TA will be financed by ADB on a grant basis from the ADB-funded TA program. This includes international consultant remuneration and per diems, international and local travel, communications, office equipment, supplies, and contingencies. The TA will also finance all costs of East Timorese counterparts in the absence of an administration with a local payroll for counterpart staff. Until 30 November November 2000 International consulting services required. The consultants have been selected in accordance with ADB s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants. A total of 8 consultants have been fielded from March Road, power, port, and aviation subsector strategy reports have been completed.

36 ADB s Technical Assistance Grant Projects 31 Road Subsector Strategy A. Overview The road subsector in East Timor consists of approximately 1,400 kilometers (km) of main road and some 6,600 km of secondary roads. About 50 percent of the main road network was originally paved and well developed to provide a high level of serviceability for light vehicles. Geography of the country s interior spine is generally precipitous and unstable, particularly toward the west of the country. The road bench is susceptible to landslips and washouts, while river crossings are constantly subjected to scour on the steeper slopes, and river realignment on the braided lower reaches. Traditionally, network maintenance costs have been high while serviceability has remained relatively low particularly at vulnerable locations during the monsoon seasons. When the financial crisis affected Indonesia in the mid-1990s, maintenance funding in East Timor was drastically reduced. This has resulted in cumulative increases in road damage over the past four or five years, resulting in numerous and frequent road closures. Currently, many parts of the network are also experiencing pavement failures from the combination of unsuitable vehicles and poor road drainage in addition to the original formation damage. Finally, a large number of bridges and culverts have failed due to either excessive wheel loads or inadequate preventative maintenance since Eighteen bridges have been lost and of these 10 have temporary Bailey bridge replacements. The remaining river crossings are impassable during periods of high flow, cutting isolated rural communities from institutional services and relief assistance, and hindering the movement of security forces in certain areas. The remedial strategy has three components: (i) restoration of the road bench through an intensive program of backlog maintenance and emergency rehabilitation; (ii) urgent restoration of normal systematic routine, emergency, and periodic maintenance; and (iii) implementation of a capital program of pavement rehabilitation and strengthening.