Higher Education Reforms Project (HERP)

Higher Education Reforms Project (HERP) Report on Achievement of Disbursement Linked Indicators 1 st Claim for Year 1, (2015/16) (Overall Claim- 2nd) University Grants Commission (UGC), Sanothimi, Bhaktapur Nepal February, 2016

Table of Contents Acronyms Executive Summary... 1 1 Introduction... 3 2 Process of DLI Achievement Report Compilation... 3 2.1 University Grants Commission Process... 3 2.2 Tribhuvan University Process... 4 2.3 Student Financial Assistance Fund Development Board Process... 4 3 Progress in the Achievement of DLI Targets... 6 4 Eligible Expenditure Programs (EEPs)... 11 5 Challenges Encountered and Lessons Learned... 12 6 Conclusion... 12

Annexes Annex 1: The guidelines for FBF for universities and autonomous campuses, PBF for all HEIs participating in HERP and the PBF criteria for regular funding of community campuses Annex 2: Public Administration Campus Autonomy - TUEC Decision Annex 3: Salary Expenditures of TU Institutions a) FY 2071/072 auditor certified b) FY 2072/073 up to Poush 2072 (January 14, 2016) Annex 4: Attachment 6 - Statement Relating to Roll-Over of Eligible Expenditure Programs and DLI Amounts for Category 1

Acronyms DLI EEP FA FBF FY GoN HERP IDA PBF PMT PU QAAA QAAC QAAD RDI SDR SFAFDB TU TU-PIO UGC USD Disbursement Linked Indicators Eligible Expenditure Programs Financing Agreement Formula Based Funding Fiscal Year Government of Nepal Higher Education Reforms Project International Development Association Performance Based Funding Proxy Means Testing Purbanchal University Quality Assurance and Accreditation Agency Quality Assurance and Accreditation Council Quality Assurance and Accreditation Division Research Development and Innovation Special Drawing Rights Student Finance Assistance Fund Development Board Tribhuvan University Tribhuvan University Project Implementation Office University Grants Commission United States Dollar

Executive Summary Following the signing of the Financing Agreement (FA) between Government of Nepal (GoN) and International Development Association (IDA) on April 06, 2015, the Higher Education Reforms Project (HERP) has been formally activated from May 22, 2015. In the baseline year starting from July 2014 till June 2015 almost all necessary preparatory work were completed and accordingly baseline year DLI reimbursement received. Subsequently, in year one implementation activities have been started targeting DLI achievement for the year. This report covers the project implementation progress up to the month of Poush 2072 (January 14, 2016) of the Nepali fiscal year 2072/73 which is the first year of the project implementation with full annual work plan and budget. The implementing agencies - University Grants Commission (UGC), Tribhuvan University Project Implementation Office (TUPIO) and Student Financial Assistance Fund Development Board (SFAFDB), have taken necessary actions to ensure that the implementation targets relating to all seven disbursements linked indicators are met. The following is a brief summary of the activities and the progress: DLI I: The UGC has amended its Rules in order to setup functionally autonomous QAA system at UGC and published on its website (www.ugcnepal.edu.np). It is in the process of getting government endorsement. Nonetheless, UGC has initiated strengthening the QAA Division with provisions of making it independent and self functioning unit of UGC. DLI II: The guidelines for FBF for universities and autonomous campuses, PBF for all HEIs participating in HERP and the PBF criteria for regular funding of community campuses constitute DLI2 target of year 1. The related sub-target has already been achieved. Reimbursement of US $ 1.5 million allocated for the DLI sub target achievement is being claimed now with this reporting. On the basis of the provisions, criteria and processes listed in the Project Implementation Guidelines (PIM) 60 community campuses have been selected (45 on the basis of national competition and 15 on regional competition basis. This constitute partial fulfilment of DLI 2 target for year one. Orientation programs have been launched for undertaking the project activities towards ensuring the fulfilment of the remaining targets. DLI III: Public Administration Campus, Kathmandu has been granted the status of autonomy by TU on December 5, 2015 (Mangsir 19, 2072). TU has also prepared ranking criteria and procedure for granting academic autonomy to constituent and affiliated campuses as per the revised Autonomy Rules. The current DLI achievement regarding institutional autonomy constitutes 50% of the target; this qualifies for claiming US $ 0.375 million. DLI IV: In order to achieve the DLI sub-targets of fully complying with the published academic calendar within one year TU has prepared internal working manual for implementation of the revised Academic Rules that it has adopted since June 2, 2015 (Jestha 19, 2072). 1

Similarly, it has started implementation of the plan for examination reform endorsed on June 4, 2015 (Jestha 21, 2072). DLI V: The provisions of supporting new programs and the criteria and procedures for selection of programs in priority areas and institutions have been discussed in the university coordination committee meetings in September 2016 (Bhadra-Asoj, 2072). The guidelines for HERP support and the frame work for the national priorities have already been approved by UGC on June 1, 2015 (Jestha 18, 2072). DLI VI: Data entry of the PMT form received from students seeking enrolment in the science stream at the higher secondary level has been completed on online based (www.sfafdb.edu.np) PMT scoring. Also 6500 PMT forms have been collected for Bachelor level students, the data will be entered for PMT scoring. Agreement has been made with RBB for fund transfer and partial monitoring of beneficiaries of SFA Program. DLI VII: UGC has made announcement calling for submission of proposals for funding on competitive basis is being scheduled; TU is preparing criteria and guidelines for recruiting faculties in line with the Parallel Recruitment and Promotion rules recently adopted on May 15, 2015 (Jestha 1, 2072). Earlier in the baseline year, almost all of the baseline year activities were accomplished and the baseline DLIs targets were met. The total amount earned against the Year Zero DLIs was SDR 5.951 million (equivalent US$ 8.625 million). On the basis of the total EEPs by the baseline year reporting period of June 15, 2015 WB had provided US $ 6.119 million (1 US $ = NPR 102.5) against the DLI achievement equivalent to US$ 8.625 million. The roll over amount in the Year 0 report was US$ 2.506 million which had remained to be claimed with additional EEP reporting. The total EEP as on 2072-3-31 (July 16, 2015) reported on FMR/Project Account was NPR 5,092.76 million which is final and auditor reported. The 20% of the same is NPR 1,018.55 million. The difference of 20% of EEP as reported on DLI achievement report of Year 0 and 20% of EEP as reported on July 16 is NPR 391.4 million which is equivalent to US$ 3.56 million (@ US$ 1=NPR 110). The EEP Year 1 - First Claim Period i.e, of 16 July 2015-14 January 2016 is NPR 1,519.88 million. The 20% of the same is NPR 303.98 million which is equivalent to US$ 2.76 million. The DLI claim for year one by the end of Poush FY 2072/73 (July 16 - January 14, 2016) includes one DLI 2 achievement (Criteria for PBF based regular funding for community campuses adopted by UGC) which is US $ 1.5 million, one DLI 3 Achievement of US $ 0.375 million. The EEP that can be use to claim (20% of the total EEP) by the end of Poush FY 2072/73 (July 16 - January 14, 2016) is US$ 6.32 million which is the sum of roll over EEP of year 0 reporting period i.e., US$ 3.56 million and the EEP of the current reporting period i.e., US$ 2.76 million. Thus the total DLI claim in this period is US $ 1.5 million + US $ 0.375 million + US $ 2.506 million = US $ 4.381 million. The EEP that can be rolled over to next reporting period is US$ 1.94 million. 2

1 Introduction Following the financing agreement (FA) signed between Government of Nepal (GoN) and International Development Association (IDA) regarding Higher Education Reform Project on April 06, 2015, UGC has prepared this DLI achievement report for year one first withdrawal by compiling and consolidating reports from Tribhuvan University Project Implementation Office (TUPIO) and Student Finance Assistance Fund Development Board (SFAFDB), to achievement of UGC s own part. This report covers withdrawal under sub-category (1) disbursements according to the achievements stated in DLI 1 - DLI 7. 2.1 University Grants Commission Process 2 Process of DLI Achievement Report Compilation UGC has been mobilizing its organizational set up, human resources and office facilities in coordinating implementation of HERP as well as implementing major components of the project. Specifically, UGC Research Division (RD) is given responsibility to implement DLI component 7(a); DLI component 1 to Quality Assurance and Accreditation Division (QAAD). Monitoring and Evaluation Division (MED), Education Management Information System (EMIS) Section, Administration Division and Finance Division are mobilized to ensure effective and efficient implementation of HERP activities. Reform Unit (RU) is given specific responsibility of overall coordination along with specific tasks of achieving the targets of DLI 2, DLI 5, part of DLI 3, and supporting HEIs in achieving accreditation status. The Reform Unit also coordinates and compiles the information for preparing progress reports and the DLI achievement reports. UGC Reform unit also receives the information and data from TU PIO as well as SFAFDB indicating progress in their respective areas of DLI achievement responsibilities. Quality Assurance and Accreditation Division (QAAD) of UGC undertakes the activities relating to quality assessment and accreditation contributing to achieving the targets of DLI 1. In order to ameliorate the QAA system making it more credible with independent assessment and accreditation UGC has strengthened the capacity of the division towards making it function as an autonomous unit. UGC has already revised its regulation towards developing a fully autonomous QAA system and has submitted to the government, it is awaiting endorsement of the regulation by the government. UGC Reform Unit supports HEIs participating in HERP to undertake reform and development activities with performance based funding regarding DLI 1, DLI 2, and DLI 5, as well as part of DLI 3 relating to universities other than TU. Reform Unit also maintains the information relating to NPHERD/HERP participating beneficiary institutions including universities and their constituent as well as community campuses relating to all performance based funding. It also compiles and prepares the comprehensive regular implementation progress reports and maintains the data. Reform Unit also keeps the record of all MOUs and contracts relating to PBF and FBF. 3

Research Division (RD) has prepared database relating to research funding activities including research support, fellowships, and institutional support as well as publication of the research projects funded by UGC. UGC research related documents are also part of the system. RD has already published the announcement for submission of proposals by prospective MPhil and PhD students, faulty researchers, as well as institutions for competitive selections for research funding and scholarships. It was published in Kantipur national daily on December 31, 2015 (Poush 16, 2072) and subsequently in Gorkhapatra national daily with last date of submission on February 3, 2016 (Magh 20, 2072). The proposals are now being processed for selection. The Monitoring and Evaluation Division has database of the community campuses focusing on the regular grants provision, development support and progress, and monitoring. 2.2 Tribhuvan University Process TU has set up TUPIO which includes Finance Section, EMIS Section, Administrative Section, Procurement Section and Monitoring Section, to undertake HERP implementation. It also mobilizes Office of the Controller of Examination (OCE), TU Finance Division, Central Departments, Autonomous and Decentralized campuses, as well as affiliated campuses. TUPIO coordinates and compiles the information for preparing the baseline and progress data from all these entities. The report and the data are submitted to UGC to prepare the comprehensive baseline and progress report. TUPIO maintains the information relating to HERP of participating beneficiary institutions including constituent as well as affiliated campuses relating to all performance based funding, institutional autonomy and academic autonomy, examination reform and implementation of academic calendar, revision of academic programs and new programs, implementation of parallel system for appointment and promotion of faculties. It also compiles and prepares comprehensive regular implementation progress reports, eligible expenditure programs and maintains the data. TUPIO also keeps the record of all MOUs and contracts relating to TU components of HERP. TUPIO monitoring section, in coordination with EMIS, finance and other sections maintains records relating to all TU components of HERP including grants provision, progress, and monitoring. 2.3 Student Financial Assistance Fund Development Board Process SFAFDB has Finance Section, Administrative Section, Procurement Section and Monitoring Section to undertake HERP implementation. It has also mobilizes Department of Education (DEO), Rastriya Banijya Bank (RBB), Higher Secondary Education Board (HSEB) and other stakeholders. SFAFDB coordinates and compiles the information for preparing the baseline and 4

progress from all these entities. The report and the data are submitted to UGC to prepare the comprehensive DLI achievement report. SFAFDB maintains the information relating to student financial assistance components of HERP. It also compiles and prepares comprehensive regular implementation progress reports and maintains progress data. SFAFDB also keeps the record of all MOUs and contracts relating to SFAFDB components of HERP. To complete the baseline under DLI 6, SFAFDB has developed new student application form based on the PMT targeting model derived from NLSS 2010 data. New scoring system, including web-based students database, has been developed. Copies of supporting documents relating to achievement of each of the baseline DLIs are included in Annexes 1 through 3. These documents are also uploaded in UGC web- sites (www.ugcnepal.edu.np). TUPIO and SFAFDB have also uploaded the documents of respective baseline DLIs in their respective web-sites (www.tuherp.edu.np; www.sfafdb.edu.np). 5

3 Progress in the Achievement of DLI Targets 3.1 DLI I: The UGC Rules have been amended to setup functionally autonomous QAA system at UGC. The amended regulation was endorsed by UGC on June 12, 2015 (Jestha 29, 2072) and subsequently published on its website (www.ugcnepal.edu.np). It is in the process of getting government endorsement. However, UGC has initiated strengthening the QAA Division with provisions of making it independent and self functioning unit of UGC. 3.2 DLI II: On the basis of the provisions, criteria and processes listed in the Project Implementation Guidelines (PIM), application calls were announced in Kantipur on August 4, 2015 (Shrawan 19, 2072) and in Gorkhapatra on August 5, 2015 (Shrawan 20, 2072) (two national daily newspapers) for the Higher Education Institutions in the country including TU constituent campuses and affiliated community campuses for participation in QAA Process and for participation in Performance Based Funding (PBF). Similarly, the universities in the country were notified regarding the provisions of Formula Based Funding (FBF) in the University Coordination Committee held on August 2015 and September 2015 (Bhadra 2072 and Kartik 2072). UGC has already prepared and endorsed the guidelines for PBF for HEIs participating in HERP, PBF of regular grants for community campuses, and FBF for universities and autonomous campuses on June 1, 2015 (Jestha 18, 2072) and subsequently published on its website (www.ugcnepal.edu.np). The guidelines of PBF including the criteria for regular funding of community campuses is the DLI target of year 1 and was achieved in the baseline year itself. Reimbursement of US $ 1.5 million allocated for the DLI achievement is being claimed now with this reporting. 3.3 DLI III: Public Administration Campus, Kathmandu has submitted expression of interest along with strategic development plan to get institutional autonomy in line with the revised Autonomy Campus Rules for constituent campuses that TU adopted in June 2, 2015 (Jestha 19, 2072). Subsequently, TU formed a review committee on July 27, 2015 (Shrawan 11, 2072) to assess the feasibility. The campus got autonomy status in December 5, 2015 (Mangsir 19, 2072). TU has already prepared ranking criteria and procedure for granting academic autonomy to constituent and affiliated campuses as per the revised Autonomy Rules. The rules are posted on the UGC website (www.ugcnepal.edu.np) and TU website (www.tuherp.edu.np). The current DLI achievement regarding institutional autonomy qualifies for claiming US $ 0.375 million. 3.4 DLI IV: TU has initiated implementation of the revised Academic Rules that it has adopted since June 2, 2015 (Jestha 19, 2072) for ensuring completion of the academic calendar within one year by developing an internal working manual. Similarly, it has started implementation of the plan for examination reform (with special focus on centralized examinations). The plan was endorsed on June 4, 2015 (Jestha 21, 2072). The rules and the plan are available on the UGC website (www.ugcnepal.edu.np). 6

3.5 DLI V: The provisions of supporting new programs and the criteria and procedures for selection of programs in priority areas and institutions have been discussed in the university coordination committee meetings in September 2016 (Bhadra-Asoj, 2072). The guidelines for HERP support and the frame work for the national priorities were approved by UGC as a constituent part of the guidelines for PBF on June 1, 2015 (Jestha 18, 2072). The guidelines are available on UGC website (www.ugcnepal.edu.np). 3.6 DLI VI: Data entry of the PMT form received from students seeking enrolment in the science stream at the higher secondary level has been completed on online based (www.sfafdb.edu.np) PMT scoring. Also 6500 PMT forms have been collected for Bachelor level students, the data will be entered for PMT scoring. Agreement has been made with RBB for fund transfer and partial monitoring of beneficiaries of SFA Program. Efforts are being made for coordination with community campuses for monitoring of the progress of the beneficiary students in the campuses. Earlier in the base year, the Proxy Means Testing (PMT) processes for selection of students was revised by SFAFDB (www.sfafdb.edu.np) and the database and process was computerized. 3.7 DLI VII: UGC has (a) revised the existing guidelines for research funding; and (b) identified priority areas for research support and subsequently published on its website (www.ugcnepal.edu.np); announcement calling for submission of proposals for funding on competitive basis is being scheduled; TU is preparing criteria and guidelines for recruiting faculties in line with the Parallel Recruitment and Promotion rules recently adopted on May 15, 2015 (Jestha 1, 2072). The rules are posted on TU and UGC website (www.ugcnepal.edu.np). The Table below gives the summary of targets and achievements for Year One DLI Description DLI-1: National Accreditation System Established and Functioning Table 3.1 Achievements of targets for DLI 1-7 in FY 2014/15 F.Y. 2015/16 Target 8 HEIs accredited (cumulative 20 including 12 at baseline) F.Y. 2014/15 Achievement Additional 2 campuses accredited; 9 PRT formed- Total accredited 14 % of Target Achieved Progress in number addition of 2 accredited: 25% of target achieved DLI Pricing, SDR ( 000 ) As per FA not yet earned DLI Pricing, USD ( 000 ) Approximate not yet earned 7

DLI Description DLI-2: Performance- Based Financing Extended to Higher Education Institution F.Y. 2015/16 Target (a) First group of 45 HEIs selected as per PIM, Memorandum of Understandings (MOUs) signed; and first tranche of performance based grants released F.Y. 2014/15 Achievement Public call made; 101 applied; reform committee formed for selection % of Target Achieved Selection fully achieved; MOU and disbursement on the process DLI Pricing, SDR ( 000 ) As per FA DLI Pricing, USD ( 000 ) Approximate -- -- (b) Criteria for PBF based regular funding for community campuses adopted by UGC UGC has adopted the PBF for regular funding for community campuses (endorsed by UGC on 1 June, 2015) 100% achieved 1035.3 1500 DLI-3: Autonomy Extended to Additional Campuses /Schools DLI-4: Examination Reforms Implemented and Academic Calendar Enforced in TU Autonomy granted to two campuses/ schools (cumulative six including four at baseline) Two autonomous /accredited campuses or schools exercise academic autonomy Academic calendar of three program-years of centralized Master s programs adhered to Results for regular centralized Bachelor s programs 1 published within seven months on an average (Humanities & Soc. Sc; Ed; Management) One campus got autonomy (Public administration campus on December 5 Consultations with stakeholders are being held Academic rules of TU revised and approved as envisaged; and implementation initiated 50% achieved 258.8349 375 -- -- -- -- -- -- A plan for examination reforms approved as envisaged; and implementation initiated -- -- -- 1 Humanities and Social Sciences, Education and Management. 8

DLI Description DLI-5: Academic reforms introduced : Revision of existing and introduction of new programs at undergraduate and graduate levels F.Y. 2015/16 Target A total of 20 programs revised or introduced 2 F.Y. 2014/15 Achievement Areas of priority approved; Guidelines for selection of programs and institutions approved; Application Call is scheduled for third week of March % of Target Achieved DLI Pricing, SDR ( 000 ) As per FA DLI Pricing, USD ( 000 ) Approximate -- -- -- DLI-6: Poverty Targeted Financial Support for Under-Privileged Students (i) First cohort (at least 3,000 3 students) selected through PMT; and (ii) funds released to at least 3,000 students Data entry for selection ranking of HSEB students completed; Forms of Bachelors level students collected -- -- -- DLI-7: Institutions Supported for Academic Excellence in Priority Areas through RDI awards (i) First batch of projects ( at least 100) selected; and (ii) funds released as per schedule First batch of faculty (at least ten) recruited and/or promoted based on excellence Announcement made for submission of proposals for funding support made Criteria and process of selection prepared -- -- -- -- -- -- Total Value 1294.1349 1875.00 SDR 1= US$ 1.4488 As shown in the Table above the total amount earned against the Year one DLIs by January 2016 is SDR 1.294 million which is approximately US$ 1.875 million. Earlier, all baseline DLIs except one (Quality Assurance and Accreditation Agency with functional autonomy established at UGC) were achieved. Accordingly the DLI based reimbursement claim was US$ 8.625 million, however the EEP reporting limited the the amount to be received to US $ 6.119 million. The remaining amount US$ 2.506 million is being claimed now along with the amount earned on the basis of DLI achievement in year one by January 2016. Thus the total 2 50 to 60% of the target is for revision of existing programs, which can be in any area/discipline, and remaining 40 to 50% of the target is for introduction of new programs that have to be in identified priority areas. 3 79% of the target is for students at Bachelors Level (HE) and remaining 21% of the target is for students at Higher Secondary Level altogether. 9

amount claimed in year one by January 2016 is US $ 1.5 million + US $ 2.506 million + US $ 0.375 million = US $ 4.381 million. The EEP (based on expenditure of TU on staff salary) in the baseline year, fiscal year 2071/72 was NPR 5092.759 million. However, EEP amount reported and used was NPR 3306.502 million accordingly US$ 6.119 million DLI reimbursement (20% of the EEP converted to US $) was received. The EEP in year one (also based on expenditure of TU on staff salary) is the remaining EEP amount from year 0 which is NPR 1786.257 million and the EEP reported by January which is NPR 1519.880 million. The table below provides summary on expenditures made under Eligible Expenditure Programs EEPs: Time July 17, 2014 July 16, 2015 FY 2071/72 July 17, 2014 July 16, 2015 July 16, 2015 December 30, 2016 EEPs Salaries of faculty and staff of TU campuses Salaries of faculty and staff of TU campuses Salaries of faculty and staff of TU campuses Table 3.2 Expenditures under EEPs Expenditure in NPR Expenditure in US $ Remarks 3,306,502,202.75 32,258,558.08 As per EEP reported by the time of first claim-- Institutions that have reported partial EEPs of FY 2014/15= 103; yet to report=18 @ 1 US$=102.5 5,092,759,369.79 Final Total EEP for the FY 2071/71, Auditor certified 1,519,877,258.27 38 campuses out of 122 are yet to provide update of expenditure upto Kartik; By Ashadh 121 reported EEP; 6 campuses reported upto Marga and one upto Poush DLI achievement, EEP, DLI Claim and rollover DLIs Amount Equivalent to Earned DLIs (Based on DLI Report 1) Amount disbursed by IDA against DLI Report 1 Balance amount to be claimed against DLI Report 1 Criteria for PBF based regular funding for community campuses adopted by UGC Autonomy granted to two campuses/ schools (cumulative six including four Amount (In Millions) Currency 8.625 US$ Remarks 6.119 US$ NPR 627155101.35 2.506 US$ 1.500 US$ 0.375 US$ Year one target was achieved in Year zero Target 2 and one campus opted autonomy (50% 10

at baseline) achievement) Amount against DLI Progress 4.381 US$ Eligible expenditure Programs, Year Zero complete, Total 5,092.76 NPR Final total of FY 071/72 Auditor certified: NPR 5,092759369.79 20% of EEP, Year Zero complete 1,018.55 NPR NPR1018551873.96 EEP to be carried over from Year 0 to Year 1 391.40 EEP to be carried over from Year 0 to Year 1 (in US$, exchange rate NPR 110) Eligible expenditure Programs, by Year 1, 2072 Poush (January 14, 2016) NPR 3.56 US$ 1,519.88 NPR NPR 1018551873.96 - NPR 627155101.35 20% 303.98 NPR Eligible expenditure Programs, Year 1, 2072 Poush (January 14, 2016) (in US$, exchange rate NPR 110) 2.76 US$ EEP that can be claimed (20% of the US$ 3.56 million + US$ 2.76 6.32 US$ total EEP) by the this reporting time million = US$ 6.32 million Amount that can be claimed in DLI Progress Report 2 4.381 US$ EEP that can be carried over to DLI Progress Report 3 1.94 US$ Please refer Annex 4: Attachment 6 - Statement Relating to Roll-Over of Eligible Expenditure Programs and DLI Amounts for Category 1. 4 Eligible Expenditure Programs (EEPs) For the year one, the total salary expenditure of TU and its constituent campuses/schools/ departments/ verified and reported for the period June 2015-January 2016 is NPR 1,519.877 million (USD 13.817 million). This includes salary of 75 institutions/cost centers out of which eight institutions included EEPs for Year 1, 2072 Poush (January 14, 2016); six campuses included EEPs for five months; and one for six months (See details in the Annex 3-b). Additional EEPs (salary component) from forty-seven institutions/cost centers are yet to submit the report and all these institutions, remaining EEPs will be submitted along with the next DLI achievement report. The EEP claim based on this year reporting by TU US$ 2.76 million. The carry over EEP from year zero based on auditor certified final total reporting of TU is US $ 3.56 million (20% of auditor certified EEP - Amount received from the IDA). The total EEP by this reporting period is US $ 6.32 million. This includes only salary as no expenditures were made during the period for EEPs related with scholarship and research. Hence, for first term, year 1 FY 2015/16, UGC would like to request the World Bank to disburse US $ 4.381 million to the GoN treasury against the DLI earned amount as per the Financing Agreement. The remaining EEP amount US $ 1.94 million will be rolled over to the next reporting period. 11

5 Challenges Encountered and Lessons Learned The devastating earthquakes of April 25, and May 12, 2015 adversely affected the financial environment of the country, more so in the higher education institutions in the country. Further Immense challenges are added by the political tumult following the endorsement of the constitution of Nepal by the National Assembly this year. There is immense pressure on HERP to address the situation. Stakeholders of HERP at the early preparation phase assumed World Bank grants funding support to the project which later changed to soft loan on the basis of apparent country capacity of loan payback. The condition is however far removed from the apparent loan payback financial capacity of the country; there has been demand from stakeholders in the country for review of the financial provisions and modalities by stakeholders. Nonetheless the challenges provided opportunity to develop stringent measures of fund utilization. The effect of prevailing political milieu in the country continued to influence regarding higher education reform initiatives. It has created challenges in the decision making. The tenure of the UGC Member Secretary had expired on May 15 and the post remained vacant until now. Also from October this year, the tenure periods of the four nominated UGC members completed. New members are yet to be nominated by the government (Cabinet of ministers). Earlier, the UGC Board fell short of two members after the completion of the terms of two Vice Chancellors (TU and PU) in August, government nominates two members from among the Vice Chancellors of the Universities in Nepal. This is a serious issue as the UGC Board now fall short of the minimum quorum of 50% of the members for a formal meeting, 6 members out of 11 are yet to be nominated. In order to mitigate this challenge the responsibilities have to be shared by UGC Chairman and the other UGC staff, but without capacity of major decisions. The issue is likely to remain challenging for some time. Overall, there is a need to review HERP provisions and modalities to also address the changed contexts in terms of the need to respond emergency conditions, rehabilitation and reconstructions priorities as well as new socio-psychological conditions of the stakeholders. 6 Conclusion The DLI claim for year one by the end of January 2016 (July-January 2016 period) includes one DLI 2 achievement (Criteria for PBF based regular funding for community campuses adopted by UGC) which is US $ 1.5 million, one DLI 3 Achievement of US $ 0.375 million as well as the remaining portion (US$ 2.506 million) of the DLI achieved in the baseline year which had remained to be claimed with additional EEP reporting. Thus the total DLI claim in this period is US $ 1.5 million + US $ 0.375 million + US $ 2.506 million = US $ 4.381 million. The total EEP including the rollover amount from the base year and the TU reporting for year one amounts to US US $ 6.32 million. Hence, for this FY 2015/16 first claim year, UGC requests the World Bank 12

to disburse US$ 4.381 million to the GoN treasury against the DLI earned amount as per the Financing Agreement. Earlier in the baseline year DLIs except one (Quality Assurance and Accreditation Agency with functional autonomy established at UGC) have been achieved. The total amount earned against the Year Zero DLIs is SDR 5.951 million (equivalent US$ 8.625 million). Total EEPs by the reporting period of June 15, 2015 was US $ 6.119 million (1 US $ = NPR 102.5). The World Bank has already reimbursed the amount to the GoN treasury. There is need for facilitating meaningful participation of the HEIs in HERP provisions, modality and process. Institutional capacity development will remain crucial for successful implementation of the project. The documents will be revised regularly based on implementation experiences and feedback. There are great expectations from HERP. The expectations will be heightened by the recent disaster brought by the epic earthquake in the country and the political turmoil following the endorsement of the constitution of Nepal by the National Assembly. Challenges will remain in terms of political milieu. All these need to be addressed with empathy, sensitivity and most importantly with critical reflection. 13

7. Annexes: See attached files 14