Panj Amu River Basin Sector Project – Additional Financing (RRP AFG 48042-002)

Project Number: 48042-002 10 September 2020

Islamic Republic of Afghanistan: Panj-Amu River Basin Sector Project – Additional Financing

Project Administration Manual

ABBREVIATIONS ADB – Asian Development Bank ADF – Asian Development Fund CDC – community development council DMF – design and monitoring framework EA – executing agency EU – European Union FMA – Forest Management Association MAIL – Ministry of Agriculture, Irrigation and Livestock NWARA – National Water Affairs Regulatory Authority MOF – Ministry of Finance NRM – natural resources management O&M – operation and maintenance PAM – project administration manual PES – payment for ecosystem services PIO – project implementation office PMO – project management office PPMS – project performance monitoring system RBA – river basin agency SBA – sub-basin agency WUA – water users’ association

CONTENTS

I. PROJECT DESCRIPTION 1 A. Outputs 1 B. Impact and Outcome 4 C. Outputs 4

II. IMPLEMENTATION PLANS 5 A. Project Readiness Activities 5 B. Overall Project Implementation Plan 7

III. PROJECT MANAGEMENT ARRANGEMENTS 8 A. Project Implementation Organizations: Roles and Responsibilities 8 B. Key Persons Involved in Implementation 9 C. Project Organization Structure 10

IV. COSTS AND FINANCING 14 A. Detailed Cost Estimates by Expenditure Category 15 B. Allocation and Withdrawal of Grant Proceeds 16 C. Detailed Cost Estimates by Financier 16 D. Detailed Cost Estimates by Output 18 E. Detailed Cost Estimates by Year 19 F. Contract and Disbursement S-Curve 20 G. Fund Flow Diagram 21

V. FINANCIAL MANAGEMENT 22 A. Financial Management Assessment 22 B. Disbursement 22 C. Accounting 24 D. Auditing and Public Disclosure 24

E. Risk Analysis 25 a. Inherent Risk 25 b. Control Risk 26

F. Proposed Action Plan 28 VI. PROCUREMENT AND CONSULTING SERVICES 29

A. Advance Contracting 29 B. Procurement of Goods, Works, and Consulting Services 29 C. Procurement Plan 29

VII. SAFEGUARDS 35

VIII. GENDER AND SOCIAL DIMENSIONS 40

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 42

A. PROJECT DESIGN AND MONITORING FRAMEWORK 42 B. Monitoring 45 C. Evaluation 46 D. Reporting 46 E. Stakeholder Communication Strategy 47

X. ANTICORRUPTION POLICY 48

XI. ACCOUNTABILITY MECHANISM 48

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 49

Project Administration Manual Purpose and Process

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

The Ministry of Finance (MOF) as the executing agency and the National Water Affairs Regulatory Authority (NWARA) as the implementing agency are wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance by MOF and NWARA of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

This PAM is particularly for activities under the additional financing, and not applicable to activities under the original project.

At grant negotiations, the borrower and ADB shall agree to the PAM and ensure consistency with the grant agreement. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the grant agreement, the provisions of the grant agreement shall prevail.

After ADB Board approval of the project's report and recommendations of the President (RRP), changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

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I. PROJECT DESCRIPTION

1. On 26 October 2016, the Asian Development Bank (ADB) approved the original project to increase agricultural productivity in the Panj–Amu River Basin through improving access to and use of water at farm, scheme, and river levels, and enhancing climate resilience with development and implementation of watershed natural resource management plans.1 Through these interventions there will be an increase per capita income and a reduction in poverty among rural and pastoral communities. The additional financing for Output 3 of the project, will enable expansion of proper watershed management and protection to additional watershed sub-project sites, with investments in water harvesting (ponds, water conservation structures, revegetation and reforestation) to increase availability of water to rural households by increasing recharge, improving access and reducing water run-off and flood damage. This additional financing supports the Government’s priority in watersheds to enhance resilience to disaster and climate risks. 2. The project is aligned with the following impacts: per capita income increased and poverty among rural and pastoral communities reduced.2 The project will have the following outcome: agricultural productivity in the Panj–Amu River Basin increased.3 The project outputs are (i) water allocation and availability improved, (ii) command areas enhanced; and (iii) watersheds properly managed and protected. The impact, outcome, and outputs will remain unchanged for the overall project. 3. Under output 3 of the original project, activities are being undertaken for 26 watershed subprojects in three provinces (Badakhshan, Kunduz, and Takhar). Details are provided in the Summary of Project Performance.4 With the additional financing, the project will expand activities to an additional 77 watershed subprojects in the existing three project provinces and in six additional provinces: Samangan, Baghlan, Bamiyan, Panjshir, Parwan, and Wardak. Forty-two of the subprojects will involve small investments (less than $100,00) and 35 will involve investments greater than $100,000. Subproject selection criteria is detailed in Priority Subprojects and Selection Criteria.5 4. With the addition of 77 watershed subprojects, the forestry and rangeland protection target under output 3 will be increased from 10,000 ha to 27,760 ha. Activities under the additional subprojects will include (i) installation of physical infrastructure and application of bioengineering (revegetation and reforestation) to improve water availability to rural households for irrigation and other uses, increase recharge, and reduce runoff and sedimentation; and (ii) preparation of watershed resource management plans, with community-based organization engagement at subproject sites to be developed through water users associations (WUAs) and community development councils.6 Staff training will be expanded to cover the new subproject areas. Training will target river basin and sub-river basin authority staff, local NWARA staff, and departments of agriculture, irrigation, and livestock (DAILs) staff. The training will enhance capacity and train staff to become master trainers who will conduct training of communities.

1 ADB. 2016. Report and Recommendation of the President to the Board of Directors: Proposed Grant and

Administration of Grant to the Islamic Republic of Afghanistan for the Panj-Amu River Basin Sector Development Program. Manila.

2 Islamic Republic of Afghanistan. 2017. Afghanistan National Peace and Development Framework, 2017–2021. 3 The revised design and monitoring framework is in Appendix 1. 4 Summary Project Performance (accessible from the list of linked documents in Appendix 2). 5 Footnote 9. 6 The project implementation consultants (under output 1) will continue to undertake the assessment, feasibility studies

when required, and implementation under the additional financing. The incremental consultant input will be financed from current savings under output 1 and will be included under a variation in the existing contract.

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5. As a result of the change in scope to output 3, one of the project’s original outcome indicator targets will change: the target command area (irrigated agricultural land) for the overall project will expand from 74,500 ha to 146,900 ha..

A. Outputs 6. Output 1: Water allocation and availability improved. Under this output approximately 21 schemes will have headworks and main canals rehabilitated and upgraded, operations and maintenance agreements signed, and Water User Associations (WUA) established and registered. With the rehabilitation works, under package 1 for three schemes this has been completed; package 2 for rehabilitation works of two irrigation schemes is ongoing; and package 3 for water user association capacity-building is progressing well and ongoing. Finalization of designs for 6 more schemes are underway. Further, the topographic survey of eight other schemes has been completed. Bid evaluation for package 4 is on-going with the contract award expected in May 2020. With Package 5 the bid documents are under preparation with a contract award expected by Quarter 3, 2020. The remaining four packages will have the feasibility study and detailed designs completed in 2020, with contract awards completed by April 2021, and implementation completed before the closing date of 31 May 2023. Ongoing security threats in the project area, have caused delays in the detailed field surveys and contract package preparation, and in civil works implementation. Work on operations and maintenance contracts with WUAs for transfer of completed works is ongoing, as is the support for formation and registration of the WUAs. Activities related to the joint water commission between Afghanistan-Tajikistan, training of river basin agency, sub-basin agencies, water user associations and support to the water management department are ongoing. 7. Output 2: Command areas enhanced. With the 22 irrigation schemes all secondary canals are surveyed, designed and five national competitive bid (NCB) packages are prepared. Two NCB contract have been awarded, one contract is about to be awarded (Quarter 2, 2020), and two were re-advertised in August 2019 and will be awarded in Quarter 2, 2020. The final NCB package (a pilot subproject of two main canals) was surveyed, designed, and is advertised, with estimated contract award in early Quarter 3, 2020. The five community-based contracts, through community development councils (CDCs) for rehabilitation of canals have been awarded. An additional CDC contract is surveyed for award in late Quarter 4, 2019. Of the planned 106 irrigation associations (IAs), 103 are established (18 in Badakhshan, 32 in Kunduz, and 53 in Takhar provinces). In the 22 subproject areas, 388 secondary canals have been identified, and for effective O&M of these canals IAs will need to be established and trained for each of the canals. Of the planned 21 demonstration plots, 6 were established in 2019, with 9 plots to be established in 2020 and 6 plots in 2021. Fifteen MAIL staff, including 3 female staff have been trained in demonstration plot design. MAIL have trained approximately 1,191 farmers, including 297 females, with on-the-job training covering on-farm water management and organic techniques, such as land laser levelling, and intercropping. 8. Output 3: Watersheds properly managed and protected. With the 21 watersheds, all are identified and surveyed, with designs competed in 18 watersheds. Sixteen contracts have been awarded for check dam construction and seven of the contracts are completed, and work is ongoing. Twenty-one contracts for the reservoir and solar power installation have been awarded, with work completed on seven of the contracts. With the 21 natural resource management plans for the sites these are under preparation, with two plans completed. The catchment area of the 21 watersheds is 10,000 ha. In these areas the revegetation, afforestation and planning of medical plants is being undertaken. Twenty-one forestry management associations are established and registration is ongoing. The community-based natural resource management technical manual

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and guidebook is prepared and under review by the Natural Resource Directorate of MAIL. Training of staff with MAIL project management staff, and the local departments of agriculture, irrigation, and livestock (DAILs) and community Forest Management Associations (FMAs) is ongoing, with 80 members of FMAs trained in NRM plan development and 32 NRM staff trained in NRM plan development and rehabilitation of watersheds. The Output 3 activities will help restore 10,000 ha of forestry and/or rangeland in the vicinity of 21 prioritized schemes and protect irrigation structures under Outputs 1 and 2 from flash floods and sedimentation, and result in improved household livelihoods. 9. The original project’s compliance with environmental and social safeguard requirements is satisfactory, and the project is successful in the management of risks. The mid-term review concluded that with grant covenant compliance there were no major issues, as all key covenants that are due were complied with, with the exception of the covenant on preparation and issuance of a O&M policy, which is being prepared by the implementation supervision consultant firm.7 10. In 2018, Afghanistan had a large-scale drought which affected approximately 1.4 million households on the northern areas of the country (including project areas) and this was followed in 2019 with severe flash floods. In responding to these climate impacts, the Government increased the focus and priority on water harvesting with a Presidential decree8 on improving water retention in watersheds, reducing run-off and improving household access to water, and in stabilising slope land. As part of the national water harvesting program the National Water Affairs Regulatory Authority (NWARA),9 has identified and prepared pre-feasibility studies on 334 sub-projects with a large number being small to medium scale. Given the progress under project Output 3, Government requested ADB support to expand its watershed interventions in the Panj-Amu river basin. The additional financing is consistent with ADB Afghanistan Country Partnership Strategy 2017−2021,10 and the country operation business plan (2020−2022).11 11. The additional financing is for Output 3 under the original project and it will support the Government’s priority request. It will scale up and expand the scope of activities to 77 sub-project watersheds in the Panj-Amu river basin.12 The additional financing activities will be completed within the current project period. The additional financing modality is appropriate13, as the original project sector modality, design and implementation arrangements are effective and efficient. It will meet the eligibility criteria as it is technically feasible, economically viable, and financially sound; is a high priority for the government; and is consistent with the project’s development objectives and the country partnership strategy. (footnote 9) 12. The project follows the fragile and conflict-affected states and enhanced project delivery approaches that includes: (i) sector financing, which allows flexibility in subproject selection and implementation given security concerns; (ii) streamlined project management office structure, which helps long-term programmatic sector interventions; and (iii) community participation in procurement and involvement of local elders throughout sub-project cycles, which minimizes interruptions of works contracts. The project readiness is enhanced by the use of advance contracting and financing of taxes and duties on eligible project expenditures.

7 ADB. Grant 0506/0507-Afghanistan Panj Amu River Basin Sector Project Mid-term Review, November 2019. 8 Presidential Decree no. 237 dated 25 May 2019, supported though letter no. 962/835. 9 National Water Affairs Regulation Authority is undertaking the water sector functions and implementation role of the dissolved MEW (refer footnote 7), which was the implementing agency in the original project.

10 ADB. 2017. Afghanistan Country Partnership Strategy, 2017−2021. Manila. 11 ADB. 2019. Afghanistan Country Operational Business Plan, 2020−2022. Manila. 12 A list of the candidate sub-projects is included in the list of linked documents in Appendix 2. 13 ADB. 2018. Operations Manual Policies and Procedures Section H5 Additional Financing.

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B. Impact and Outcome 13. The project is aligned with the following impacts: (i) increased per capita income; and (ii) and reduced poverty among rural and pastoral communities.14 The project will have the following outcome: agricultural productivity in the Panj–Amu River Basin increased. The Panj-Amu River Basin is one of Afghanistan’s five major river basins, and under the original project watershed activities are being undertaken in three provinces (Badakhshan, Kunduz, and Takhar). With the additional financing the project will expand activities to a further 77 sub-project watersheds in the existing original three project provinces and in areas of six additional provinces (Samangan, Baghlan, Bamiyan, Panjshir, Parwan and Wardak) that are part of the Panj-Amu river system. 14. The overall project aggregate impact and outcome will not change as a result of the additional financing. One of the overall outcome indicator targets will increase, as the command area will expand from 74,500 ha to 146,900 ha. C. Outputs 15. Output 1: Water allocation and availability improved. There will be no change in this output with the additional financing. The output includes the following activities: (i) rehabilitating and upgrading head works and main canals in 21 priority irrigation schemes covering estimated total command area of 74,500 ha in the three northern provinces of Badakhshan, Kunduz, and Takhar; (ii) establishing and strengthening the capacity of approximately 112 water user associations (WUAs) to operate and maintain conveyance infrastructure in these schemes; and (iii) enhancing the capacity of NWARA, river basin authorities, and sub-basin authorities for effective water allocation between schemes to benefit downstream users. The project implementation consultants are included under this output, and one task under the project is to undertake the sub-project feasibility studies. 16. Output 2: Command areas enhanced. There will be no change in this output with the additional financing. The output includes the following activities: (i) rehabilitating secondary and tertiary canals in schemes identified for improvement under output 1 to secure an integrated approach; (ii) establishing and strengthening the capacity of approximately 105 irrigation associations to operate and manage irrigation infrastructure in these schemes; and (iii) improving on-farm water management and agronomic techniques (such as land levelling, bed and furrow irrigation, and intercropping) with approximately 6,300 farmers having improved knowledge from 21 demonstration plots. 17. Output 3: Watersheds properly managed and protected. The additional financing will expand scope of this output, with an incremental 77 sub-project watersheds to total an overall 103 sub-projects. The overall Output 3 indicator targets will also increase to reflect this expansion. These activities will restore an additional 17,760 ha of forestry and/or rangeland in the vicinity of 77 prioritized sub-projects, when combined with the original project 10,000 ha under development, the overall target will be 27,760 ha. 18. This output includes both ongoing activities under the original project and incremental activities with the additional financing. With the additional financing the activities include: (i) the incremental investments in watershed management and protection at the additional 77 sub-

14 Government of Afghanistan. 2017. Afghanistan National Peace and Development Framework, 2017-2021.

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project sites15 [which will involve physical infrastructure and bio-engineering (revegetation and reforestation)] to improve water availability to rural households for irrigation and other uses, increase recharge, reduce run-off and sedimentation; and (ii) the preparation of watershed resource management plans, with community based organization engagement at these sites to be developed through WUAs and CDCs. 19. The additional financing will use sub-project designs and approaches that have been proven under the original project to be appropriate and effective in the local watersheds, and for the smaller-scale investments to be within the capacity of local community organizations to undertake. The government will ensure that, for the larger structures outside the capacity of community-based O&M, adequate funds are allocated from the government’s budget to finance the O&M activities of SBAs. This will include for efficient O&M of sluice gate installations in the larger structures. 20. For community-based O&M, the government will ensure that pre-construction O&M agreements are signed before any watershed/irrigation civil works (including check dams and canals) commence. Hand-over agreements will be signed before these civil works are commissioned by and between SBAs and WUAs, community development councils, and other community organizations. These agreements will also cover the commitments for O&M of check dams, including desilting and sedimentation removal requirements, and for WUAs the O&M and cleaning of off-takes. Further, for other watershed management planning and bio-engineering works that such agreements be signed between the SBAs and the respective community organizations to ensure long-term watershed sustainability. 21. With the original project the activities include: (i) completing the ongoing restoration and protection work at the original 21 watershed and/or rangeland sites; (ii) working with the community-based management associations for these sites, and preparing and implementing watershed natural resource management plans; and (iii) completing the preparation of a community-based natural resource management technical manual and guidebook. Training of staff which has been undertaken will be ongoing to cover the expansion in sub-project areas, and will include river basin authority and sub-basin agency (SBA) staff, and local NWARA staff, to enhance capacity and effectiveness, and skills to be master trainers who will conduct training of communities.

II. IMPLEMENTATION PLAN

A. Project Readiness Activities

Table 1: Summary Project Readiness Activities

Indicative Activities 2020

May Jun Jul Aug Sep Oct Responsible Agency Advance contracting actions NWARA

Establish project implementation arrangements

NWARA

ADB Board approval (Sep 2020) • ADB

15 The project implementation consultants (under Output 1) will continue to undertake the assessment, feasibility studies

when required, and implementation under the additional financing. The incremental consultant input will be financed from current savings under Output 1 and will be included under a variation in the existing contract.

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Grant signing (Sep 2020) • ADB and MOF

Government legal opinion provided • MOJ

Government budget inclusion MOF Grant effectiveness (Oct 2020) • ADB

ADB = Asian Development Bank; NWARA = National Water Affairs Regulation Authority; MoF = Ministry of Finance; MoJ = Ministry of Justice Source: Asian Development Bank.

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B. Overall Project Implementation Plan

22. The Gantt chart recording outputs with key implementation activities on a quarterly basis is in Table 2. This chart will be updated annually and submitted to ADB with contract and disbursement projections for the following year.

Table 2: Gantt Chart

CDC = Community development council; NCB = National competitive bidding; PMO = Project management office; PIO = Project implementation office; ISC = Implementation supervision consultant; FS = Feasibility study; DD = Detailed design; AF = Additional financing. Source: Asian Development Bank.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Table 3: Project Implementing Organizations Project Implementation Organizations

Management Roles and Responsibilities

Executing agency: MOF • Signing grant agreement; • Procurement approval authority; • Timely provision of agreed counterpart funds for project activities; • Ensuring timely submission of one audit report which covers

activities of NWARA and MAIL; and • Support in payment process of both direct payment and SOE

procedures

Implementing agency: NWARA NWARA will be responsible to oversee the implementation of additional financing under Output 3. The PMO in Kabul in the NWARA main office, will be part of an overall ADB CPMO responsible for all ADB projects and programs implemented by the Ministry. It will further staff the set- up of PIO for basin-level activities in the river basin agency (RBA) in Kunduz, embedded within the RBA office to avoid setting up a parallel structure and to strengthen government institutional capacity. The PMO and PIO will coordinate with the nine SBAs, in which project personnel will also be based.

Central Program Management Office

The CPMO will be responsible for the following: • overall management and coordination of the relevant outputs for

the respective IA, and for coordination and liaison with each other, and with other relevant Ministries and agencies

• guiding and overseeing the work of the PIOs • establishment and implementation of the project performance

monitoring system (PPMS) • hiring of project staff • confirming subproject selection, feasibility studies and submitting

to ADB for “no-objection” • procurement of goods, works and services, following ADB

procedures. • Ensure safeguard implementation as per ADB SPS 2009,

including preparation of LARPs, DDRs, and obtaining approval from ADB safeguard team before award of contract

• establishing and managing an advance account, submission of withdrawal applications to ADB, retention of supporting documents, and overseeing sub-accounts of the PIOs

• preparation of annual forecast of contract awards and disbursements

• compilation of reports from the PMO and PIOs and preparation of project progress reports

• submission of progress reports and annual audit report and financial statements

• preparation of a project completion report Project Implementation Office (PIO)

The PIO at RBA level will be responsible for the following: • implementation of project activities at the basin level, under the

management and leadership of the respective PMO/CPMO at NWARA

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Project Implementation Organizations

Management Roles and Responsibilities

• coordination and liaison with each other, and with other relevant basin-level departments and agencies

• establish and manage sub-accounts and retention of supporting documents

ADB ADB will: • provide a grant from the Asian Development Fund resources • issue “no-objection” for subproject feasibility studies for financing • monitor project implementation arrangements, disbursement,

procurement, and reporting • monitor schedules of activities, including funds flow; • review compliance with agreed procurement procedures • review compliance with grant covenants • monitor effectiveness of safeguard procedures • analyze the outcome of the capacity building and training

initiatives • monitor conformity with ADB anti-corruption policies; • undertake periodic review missions • undertake a joint midterm review mission with the government and

EU.

ADB = Asian Development Bank; MOF = Ministry of Finance; NWARA = National Water Affairs Regulation Authority; MAIL = Ministry of Agriculture, Irrigation and Livestock; CPMO = Central Program Management Office; PMO = Project Management Office; PIO = Project Implementation Office; EU = European Union; SoE = Statement of Expenditures; RBA = River Basin Agency; SBA = Sub Basin Agency. Source: Asian Development Bank.

B. Key Persons Involved in Implementation

Executing Agency Ministry of Finance Mr. Abdul Habib Zadran

Alternate Governor for Islamic Republic of Afghanistan in the Asian Development Bank & Deputy Minister for Finance, Ministry of Finance of the Islamic Republic of Afghanistan, Kabul, Afghanistan Mobile #: +93 (0) 799890676 Landline #: +93 (0) 20 210 3271 Email address habib.zadran@mof.gov.af

Asian Development Bank Afghanistan Resident Mission Narendra Singru

Country Director Telephone No. +93 711 999678 nsingru@adb.org

Mission Leader Mohammad Hanif Ayubi Senior Project Officer Telephone No. +93 711 998930 mhayubi@adb.org

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C. Project Organization Structure

23. MOF will be the executing agency for the project and NWARA the implementing agency supported by a project management office (PMO). Project implementation offices (PIOs) reporting to the PMO will be established at the basin level. The overall project organization structure for the additional financing is in Chart 1. 24. Project management and implementation will be embedded in existing government structures to prevent setting up parallel structures, which will help strengthen government institutional capacity. At the central program management office (CPMO) level, the project will build on structures set-up under the ADB funded projects to the extent possible. This will help avoid duplication and minimize implementation complexity. There will be no project steering committee proposed as this is not necessary and would be an ‘artificial’ structure with a lack of long-term ownership—this is part of the lessons learnt from past ADB projects. An ongoing coordination platform exists between the two implementing agencies, NWARA and MAIL, including via the Supreme Council for Land and Water (SCLW) which includes representatives from other relevant Ministries such as the Ministry of Rural Rehabilitation and Development (MRRD). Ongoing coordination between NWARA and MAIL at the local level will be strengthened, to fully realize potential synergies, avoid any overlaps, and address any identified policy gaps. Should any issues arise between the two implementing agencies that are not resolved, the MOF in its’ role as the executing agency, will have a coordination role. 25. NWARA will be responsible to oversee the implementation of the additional financing under output 3. NWARA has a PMO for this project in Kabul in the NWARA main office (Chart 2). This PMO will be part of the overall ADB CPMO responsible for all ADB projects and programs implemented by the Authority. PIO for basin-level activities in the RBA in Kunduz is already established, which will be further staffed with additional human resources for the additional financing under output 3. The PIO is embedded within the RBA office to avoid setting up a parallel structure and to strengthen government institutional capacity. The PIO will coordinate with the SBAs, in which project personnel will also be based (Chart 3). 26. The project organization structure is shown in Chart 1 and associated PMO and PIO structures in Charts 2–3.

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Chart 1: Overall Project Organization Structure

ADB = Asian Development Bank; CDC = community development council; CPMO = Central Program Management Office; ISC = implementation support consultancy; NWARA = National Water Affairs Regulatory Authority; MOF = Ministry of Finance; PIO = project implementation office; PMO = project management office; RBA = river basin agency; SBA = sub-basin agency; WUA = Water User Association.

CPMO Central Program Management

Office

PMO Management Office

MOF Executing Agency NWARA

Implementing Agency

RBA Implementation Unit

SBA Supervision Unit

SBA Supervision Unit

SBA Supervision Unit

SBA 1 Supervision Unit

SBA Supervision Unit

Implementation Support Consultants FS + Design PIO

Implementation Office

WUA Beneficiary

Build Contractor

CDC Contractor

Supervision Support

Sub Project (Output 3)

Government Organization Lines Project Management Lines

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Chart 2: Project Management Office (PMO) Structure at the National Water Affairs Regulatory Authority (NWARA)

CPMO Director

PMO Deputy Director Project Manager

Senior Design and Supervision Engineer (CPMO)

Contract and Procurement Officer (CPMO)

Finance Officer (CPMO)

Admin and HR Officer (CPMO)

Environment Safeguards Officer (CPMO)

Social Safeguards Officer (CPMO)

Clerk 1 Clerk 2 Driver 1 Driver 2

CPMO = Central Program Management Office; HR = human resource; NWARA = National Water Affairs Regulation Authority; PIO = Project Implementation Office; PMO = project management office; NRM = Natural

NRM Coordinator

PIO Coordinator

Social Mobilization Officer

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Chart 3: Project Implementation Office (PIO) Structure at the National Water Affairs Regulation Authority (NWARA)

(1 PIO located in RBA)

Clerk 1

Driver 1

PIO Director

Senior WUA Officer

Finance Officer Administration Officer

Admin/Finance Assist (5)

SBA Finance Officers (6) SBA Drivers (4)

Junior WUA Officers (SBAs) (5)

Building Design Engineer GIS/IT Officer

Senior River Basin Planning Officer

Junior Supervision Engineers (SBAs) Additional Supervision Engineer (11)

GIS = geographic information system, IT = information technology; NWARA = National Water Affairs Regulation Authority; PIO = project implementation office; PMO = project management office; RBA = river basin agency; SBA = sub-basin agency; WUA = water user association.

Social Mobilization Assistant (10)

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IV. COSTS AND FINANCING

A. Cost Estimates Preparation and Revisions

27. ADB will finance the expenditures in related to civil works, goods, sub-project matching grants, security, recurrent costs non-land land acquisition and resettlement related expenditures related to LARP implementation,16 inclusive of all taxes. While Government will finance land compensation and resettlement costs (if any), and office accommodation and utilities.

Table 4: Escalation Rates for Price Contingency Calculation

Item 2020 2021 2022 2023 Foreign rate of price inflation -0.5% 1.09% 2.81% 4.56% Domestic rate of price inflation 2.3% 5.88% 10.12% 15.07%

Sources: Asian Development Bank estimates.

16 $0.5 million non-land acquisition and resettlement cost associated with removal of trees, vegetation, structures and

allowances under the land acquisition and resettlement plan, and for the PMO to undertake payment assessment and administration to be financed by the ADB.

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A. Detailed Cost Estimates by Expenditure Category

28. Detailed cost estimates by expenditure category are in Table 5.

Table 5: Detailed Cost Estimates by Expenditure Category ($ million)

Item

% of Total Base Cost

Foreign Exchange

Local Currency

Total Cost

A. Investment Costs

1. Civil works /a 2. Non-LAR Compensation

2.378 0.100

11.772 0.400

14.150 0.500

87.5% 3.0%

Subtotal (A) 2.578 12.072 14.650 90.5% B. Recurrent Costs 1. Incremental Project Staff (PMO/PIO) 0.00 0.800 0.800 4.9% 2. Office Accommodation 0.00 0.250 0.250 1.5% 3. Office Running Costs 0.00 0.480 0.480 3.0% Subtotal (B) 0.00 1.530 1.530 9.5% Total Base Cost 2.578 13.602 16.180 100.0% C. Contingencies 1. Physical \b 0.129 0.604 0.733 4.5% 2. Price \c 0.125 1.493 1.618 10.0% Subtotal (C) 0.254 2.097 2.350 14.5% Total Project Cost (A+B+C) 2.832 15.698 18.531 114.5%

Notes: Numbers may not sum precisely because of rounding. \a National Water Affairs Regulation Authority \b Physical contingency computed at 5% for civil works \c Price contingency is computed for local currency costs at 2.3% in 2020, 3.5% in 2021, 4% in 2022 and 4.5% in 2023 and following years. The foreign exchange cost is computed at 1.5% in 2020 and at 1.6% in the following years.

Source: ADB estimates.

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B. Allocation and Withdrawal of Grant Proceeds

29. The government has requested a grant not exceeding $18.28 million from the ADB’s Special Funds resources to help finance the project. The government will contribute $0.25 million by way of office space and utilities for project implementation. Allocation and withdrawal of grant proceeds are in Table 6.

Table 6: Allocation and withdrawal of grant proceeds 1. ADB ADF Grant

Panj-Amu River Basin Sector Project – Additional Financing Category ADB ADF GRANT FINANCING

Number Item Amount Allocated ($)

Percentage and Basis for Withdrawal from the Grant Account

Category

Goods, Works, Consulting Services, non-land acquisition costs, recurrent costs and contingency*

18,280,000 100% of total expenditure claimed

Total 18,280,000 *Subject to the condition for withdrawal described in paragraph 5 of Schedule 2 Source: ADB estimates. C. Detailed Cost Estimates by Financier

30. Table 7 identifies the types of expenditure included in the overall project cost.

Table 7: Detailed cost estimates by financier

ADB (Grant) \b Government Total Amount % Amount % Amount I. Investment Costs A. Civil Works 1. Allocation for Output 3 Sub-projects \a 2. Non-LAR Compensation

16,292.3 500.0

100% 100%

0 0

0% 0%

16,792.3 500.0

Total Investment Costs \c 16,792.3 100% 0 0% 16,792.3 II. Recurrent Costs A. Incremental Project Staff (PMO/ PIO) 963.5 100% 0 0% 963.5 B. Office Accommodation 250 100% 250 C. Office Running Costs 525.6 100% 0 0% 525.6 Total Recurrent Costs 1,489.1 86% 250 14% 1,739.1

15

Total Project Costs 18,281.4 99% 250 1% 18,531.4 \a National Water Affairs Regulatory Authority, \b including taxes and duties of $1.25 million. \c Non-land land acquisition and resettlement cost to be financed by project proceeds. Source: ADB Estimates.

Note: Numbers may not sum precisely because of rounding.

16

D. Detailed Cost Estimates by Output

31. Detailed cost estimates by output are in Table 8.

Table 8: Detailed Cost Estimates by Output ($ million)

Output 3: Watersheds Properly Managed and

Protected \b

Total I. Investment Costs

A. Civil Works 1. Allocation for Output 3 Sub-projects \a 2. Non-Land Compensation

16,292.3 500.0

16,292.3 500.0

Total Investment Costs \c 16,792.3 16,792.3 II. Recurrent Costs A. Incremental Project Staff (PMO/ PIO) 963.5 963.5 B. Office Accommodation 250 250 C. Office Running Costs 525.6 525.6 Total Recurrent Costs 1,739.1 1,739.1 Total PROJECT COSTS 18,531.4 18,531.4 \a National Water Affairs Regulation Authority. \b Climate adaptation technologies will account for $6.4 million of the project costs. \c Non-land land acquisition and resettlement cost to be financed by project proceeds. Source: ADB Estimates.

19

E. Detailed Cost Estimates by Year

32. Detailed cost estimates by year are in Table 9.

Table 9: Detailed Cost Estimates by Year ($ million)

2020 2021 2022 2023 Total Investment Costs Civil Works (implementation)/a 10% 15% 35% 40% Total Cost (Base Cost) 1,465.0 2,197.6 5,127.6 5,860.2 14,650.4 -Local cost 1,207.2 1,810.8 4,225.2 4,828.8 12,071.9 -Foreign Cost 257.8 386.8 902.5 1,031.4 2,578.5 Contingencies -Physical 73.3 109.9 256.4 293.0 732.5 -Price (total) 31.6 118.6 470.5 876.3 1,497.0 ---Local 27.8 106.5 427.4 809.7 1,371.4 ---Foreign 3.9 12.1 43.1 66.5 125.6 Total Cost (with Contingencies) 1,569.9 2,426.0 5,854.5 7,029.4 16,879.9 Recurrent Costs (base cost)

(100% local costs) Incremental Project Staff (PMO/ PIO) 240.0 240.0 240.0 80.00 800.0 Office Running Costs 144.0 144.0 144.0 48.00 480.0 Price Contingencies (Local) Incremental Project Staff (PMO/ PIO) 5.5 14.1 24.3 32.0 75.9 Office Running Costs 3.3 8.5 14.6 19.2 45.6 Total Cost (with Contingencies) Incremental Project Staff (PMO/ PIO) 245.5 254.1 264.3 112.0 875.9 Office Running Costs 147.3 152.5 158.6 67.2 525.6 Total Project (with Contingencies) 1,962.8 2,832.6 6,277.4 7.208.6 18,281.3 /a Includes an amount of $500,000 for Non-LAR compensation Note: Numbers may not sum precisely because of rounding. Source: ADB estimates.

18

F. Contract and Disbursement S-Curve

33. The forecasted contract award and disbursement profile at project design stage is shown in Table 9 (ADB ADF grant). Projections of contract awards and disbursements will be confirmed with the MOF and NWARA during ADB inception mission and the PAM will be updated accordingly. The CAD projections will be updated following the grant effectiveness.

Table 10: Contract and Disbursement (ADB ADF Grant)

($ million equivalent)

Projections for Contract Award Projections for Disbursement Year Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2020 -

-

-

1.50

1.50

-

-

-

1.10

1.10

2021 3.50

4.00

4.10

4.00

15.60

1.20

2.00

2.00

2.50

7.70

2022 0.50

0.68

-

-

1.18

1.50

1.50

1.00

3.50

7.50

2023 -

-

-

-

1.80 0.18 - -

0.28

Total 3.50 4.68

4.60

5.50

18.28

4.13

4.15

5.00

5.00 18.28

0

2

4

6

8

10

12

14

16

18

20

2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3

S-CURVE

Contract awards Disbursements

19

G. Fund Flow Diagram

ADB = Asian Development Bank; MOF = Ministry of Finance; NWARA = National Water Affairs Regulation Authority; PIO = project implementation office; PMO = project management office. Source: Asian Development Bank.

Withdrawal Application

Grant Agreement

NWARA Implementing Agency

ADB

Advance Account

Output 3

MOF Executing Agency

PMO/PIO Project Staff

Individuals

Civil Works CDCs and Contractors

Con

tract

Invo

ice

Replenishment Direct Payment

Invo

ice

With

draw

al

Appl

icat

ion

Paym

ent

Inst

ruct

ions

Loc

al P

aym

ents

Budg

et A

lloca

tion

20

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

34. A financial management assessment was conducted as part of the project processing and produced through linked document in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The financial management assessment considered the capacity of NWARA, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. 35. The NWARA have significant experience in the implementation of projects financed by ADB, the World Bank, the European Union, and other international development agencies. Based on the assessment, there are no significant financial management risks in respect of its proposed role in project management under the proposed project. 36. It is concluded that the over-all pre-mitigation financial management risk of NWARA is substantial. The ADB CPMO at NWARA has adequate capacity to administer advance account procedures with the 6-month expenditure limit proposed and the SOE procedures with the proposed ceiling for individual transaction limit. B. Disbursement

37. Grant proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time)17. To expedite implementation of the project through the timely release of funds, advance account will be established in US Dollar for the ADF grant at Da Afghanistan Bank (DAB, the Central Bank of Afghanistan) for exclusive use by the PMO (at NWARA) for eligible expenditures. The government implementing agency who administers the advance account is accountable and responsible for proper use of advances to the advance account. The advance account will be managed, replenished, and liquidated in accordance with ADB’s Loan Disbursement Handbook, and detailed arrangements agreed to by the Recipient and ADB. NWARA/CPMO will be responsible of; (i) collecting and retaining supporting documents, and (ii) preparing and sending withdrawal applications through MoF to ADB. Online training for project staff on disbursement policies and procedures is available.18 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control.

38. Advance fund procedure. The total outstanding advance to the advance account should not exceed the estimate of ADB’s share of expenditures to be paid through the advance account for the forthcoming 6 months. The NWARA may request for initial and additional advances to the advance account based on an Estimate of Expenditure Sheet19 setting out the estimated expenditures to be financed through the account for the forthcoming 6 months. Supporting documents should be submitted to ADB or retained by the implementing agency in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) when liquidating or replenishing the advance account.

17 The handbook is available electronically from the ADB website (http://www.adb.org/documents/ loan-disbursement-

handbook 18 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning 19 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as

amended from time to time),

21

39. Statement of expenditure procedure.20 The SOE procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance account. “The ceiling of the SOE procedure is the equivalent of $10,000 per individual payment.” Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB's disbursement and review missions, upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit. “Reimbursement and liquidation of individual payments in excess of the SOE ceiling should be supported by full documentation when submitting the withdrawal application to ADB.”

40. Before the submission of the first withdrawal application (WA), the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per WA is stipulated in the Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid (i) by the implementing agency and subsequently claimed to ADB through reimbursement, or (ii) through the advance fund procedure, unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for Disbursements (CPD)21 system is encouraged for submission of withdrawal applications to ADB. 41. Basis for Withdrawal from the Grant Account. Except as ADB may otherwise agree, the proceeds of the Grant shall be allocated to items of expenditure, and disbursed on the basis of the withdrawal percentage for each item of expenditure, as set forth in the Table 6. 42. Reallocation. Notwithstanding the allocation of Grant proceeds and the withdrawal percentages set forth in Table 6,

(a) if the amount of the Grant allocated to any Category appears to be insufficient to finance all agreed expenditures in that Category, ADB may, in consultation with the Recipient, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Grant which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and (b) if the amount of the Grant allocated to any Category appears to exceed all agreed expenditures in that Category, ADB may, in consultation with the Recipient, reallocate such excess amount to any other Category.

43. Disbursement Procedures. Except as ADB may otherwise agree, the Grant proceeds shall be disbursed in accordance with the Loan Disbursement Handbook. 44. Conditions for Withdrawals from Grant Account. Notwithstanding any other provision of this Grant, no withdrawals shall be made from the Grant Account for Category 1 with respect to Works or non-land acquisition costs, in each case for a Subproject that involves involuntary resettlement impacts with land acquisition until: (i) ADB has approved the relevant LARP, (ii) the

20 SOE forms are available in Appendix 7B and 7D of ADB’s Loan Disbursement Handbook (2017, as amended from

time to time). 21 The CPD facilitates online submission of WA to ADB, resulting in faster disbursement. The forms to be completed

by the Borrower are available online at https://www.adb.org/documents/client-portal-disbursements-guide.

22

relevant LARP has been disclosed by ADB, (iii) compensation and other entitlements have been provided to affected people in accordance with the relevant LARP, and (iv) a comprehensive income and livelihood restoration program has been established in accordance with the relevant LARP. C. Accounting 45. NWARA will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project. NWARA will prepare separate project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. NWARA will submit its project financial statements to MOF and ADB. MOF will prepare a consolidated project financial statements of NWARA in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. D. Auditing and Public Disclosure 46. MEW will cause the detailed consolidated project financial statements of NWARA to be audited in accordance with International Standards on Auditing and with the Government's audit regulations, by an independent auditor acceptable to ADB. The audited project financial statements will be submitted in the English language to ADB within six months of the end of the fiscal year by MOF. 47. The annual audit report for the project accounts will include an audit management letter and audit opinions which cover (i) whether the project financial statements present a true and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting framework; and (ii) whether grant proceeds were used only for the purposes of the project or not. 48. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor. 49. The Government, MOF, and NWARA have been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements.22 ADB reserves the right to require a change in the auditor, or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures.

22 ADB approach and procedures regarding delayed submission of audited project financial statements:

• When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (i) the audit documents are overdue; and (ii) if they are not received within the next six months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

• When audited project financial statements have not been received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (i) inform the executing agency of ADB’s actions; and (ii) advise that the grant may be suspended if the audit documents are not received within the next six months.

• When audited project financial statements have not been received within 12 months after the due date, ADB may suspend the grant

23

50. ADB shall disclose the annual audited financial statements for the Project and the opinion of the auditors on the financial statements no later than 14 calendar days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter will not be disclosed.23 E. RISK ANALYSIS 51. A financial management, internal control and risk management assessment was conducted. The risk assessment approach is based largely on International Standard on Auditing 400: Risk Assessment and Internal Control. The following risk assessments are based on existing circumstances, staffing and procedures, and include recommendations for risk mitigation measures.

a. Inherent Risk

52. Inherent risk is the susceptibility of the project financial management system to factors arising from the environment in which it operates, such as country rules and regulations and entity working environment (assuming absence of any counter checks or internal controls).

Table 11. Inherent Risk Risk Type Risk

Assessment Risk Description Risk Mitigation

1. Country specific risk

H Widespread corruption and poor governance.

Align implementation of the Anticorruption Strategy through the High Office of Oversight and Anticorruption (HOOAC). Monitor anticorruption plans of NWARA. The project financial management system has been designed to encourage accountability and minimize risks of corruption.

S Limited institutional capacities.

The Government is implementing organizational reforms (budget, financial management, and procurement) through a capacity development plan to improve the capacity of NWARA. Capacity is to be augmented with transparency and capacity development plans based on (i) available ADB training resources, (ii) capacity development provision in ongoing and future ADB financed grants/loans, and (iii) capacity development opportunities by other development partners.

S Weak internal control framework with focus on financial compliance

MOF Internal Audit Department supports capacity building of internal audit units in line ministries including drafting of an

23 This type of information would generally fall under public communications policy exceptions to disclosure. ADB. 2011.

Public Communications Policy. Paragraph 97(iv) and/or 97(v).

24

instead of systemic issues and internal controls.

audit charter, manuals, and guidelines.

2. Entity specific risk NWARA,

M Delay in processing payments may be significant due to overlapping procedures, roles, and review steps at the project, CPMO, IAs Finance Department, and MOF Budget and Treasury Departments levels.

Implementation of integrated accounting software will streamline payment process at PIU and CPMO levels. Embed CPMO finance staff in NWARA Finance Directorate to facilitate coordination.

M

Inadequate benefits of staff cause staff turnover and lack of staff efficiency.

After implementation of NTA salary scheme in 2016, the government started the implementation of another reform for employees benefits under the name of Rutub wa Maashat.a However, this reform started at Director level with the intention to be implemented at mid and low level of employees in coming years. Donor agencies to discuss the impact of such reforms with IA to prevent negative impact of project implementation in long term.

3. Project specific risk

M

Project Implementation Offices (PIO) may not have capacity to manage project fund flows and ensure disbursement arrangements.

All PIOs will be staffed both by project staff and consultants in the initial years, to improve project implementation. Experiences gained in prior ADB funded projects and further training in ADB procedures will help to mitigate this risk. To ensure timely cash flow and reduce administrative burden, the disbursement will largely adopt direct payment and commitment procedures. Reimbursement procedures will be used for small amounts only.

M Low salary and staff turnover in the PIO.

The project would be adopting the NTA Scale to limit staff turnover.

Overall Assessment of Inherent Risk

S

H = High, S = Substantial, M = Moderate, N = Negligible or Low Note: a: Rutub wa Maashat is a scheme lower than the NTA salary scheme applicable to public sector employees.

b. Control Risk

53. Control risk is the risk that the project’s accounting and internal control framework are inadequate to ensure project funds are used economically and efficiently and for the purpose intended, and that the use of funds is properly reported.

25

Table 12. Control Risk

Risk Type Risk Assessment

Risk Description Risk Mitigation

1. Implementing entity

M CPMO: Financial Management Policies and Procedures are in place, however personnel still need to gain experience.

Implementation Consultants to be hired for the project should include a Financial Management Specialist that would provide support for NWARA CPMO to assist in enhancing the financial management system. Implementation consultants will be provided to strengthen the PMO and PIO capacity.

2. Funds flow M Challenges may be encountered in managing disbursements, due to inappropriate cash flows. This may cause delays in payments to consultants.

The project will apply direct payment, commitment, and reimbursement procedures for the Contracts.

3. Staffing M Staffing skills are satisfactory for book-keeping, but staff responsibilities for the effectiveness of accounting systems and reports could be improved.

The FM Specialist / Consultant will assist in providing Accounting staff with avenues to acquire higher skills levels in accounting by allowing them to learn by example and through learning by association (objective is to increase the competence level of local counterparts).

M Staff turnover and a lack of financial management skills.

Project staff to be remunerated at NTA Remuneration Policy Rates to retain qualified staff and enable recruitment and retention of highly skilled staff.

M NWARA Accounting staff (non-CPMO) have limited understanding of ADB procedures (i.e. Procurement and Disbursements).

Provide regular training on ADB’s procurement and disbursement processes.

4. Accounting Policies and Procedures

M

Updated Accounting system not fully implemented (i.e. charts of accounts used for projects and activities). Project budgeting is carried out in some detail but use in performance reports is so limited.

Implementation consultants will be provided to assist in timely implementation of updated accounting system. Implementation of project financial management manual developed by ADB

5. Internal audit M Weak internal audit impairs the ability to ensure compliance with policies and

Include the proposed project in NWARA’s internal audit plan annually

26

procedures, review the effectiveness of internal controls and adopt a risk management strategy.

6. External audit

Nil Nil

7. Reporting and monitoring

M Inaccuracy and incompleteness financial information due to spreadsheet monitoring

Implement accounting software for the project to reduce errors.

8. Information systems

M Project financial management information system only recently contracted in NWARA.

Monitor and support implementation of project financial management information system in NWARACPMO.

Overall Assessment of Control Risk

M

H = High, S = Substantial, M = Moderate, N = Negligible or Low.

54. The overall risk assessment is moderate and reflects the financial management arrangement provisions within the CPMO of NWARA as IA for the project. Appropriate mitigation measures have been included in the risk mitigation plan for implementation with assistance of the implementation support consultants. F. PROPOSED ACTION PLAN

55. In view of the findings of this FMA, it is proposed that the following actions be taken, as outlined in the Tables below.

Table 13. Consolidated Action Plan by NWARA for the year 2019-2020 S.No Action / Task Responsibility Timing

1 Fill up the CPMO Finance Manager position as the focal point to handle the project’s financial management.

Finance and Human Resource (HR) at NWARA CPMO

Within 6 months after effectiveness

2 Reassess finance resources during project implementation for additional finance staff

Finance and HR at NWARA CPMO

Within 6 months after effectiveness

3 Training and Capacity Building of New and Existing Staff.

Finance/ HR/ Admin – NWARA CPMO

Within 6 months after effectiveness

4 Mobilize implementation support consultant national financial management specialist to assist the CPMOs in ensuring that project

NWARA CPMO Project Manager

Within 3 months after effectiveness

27

financial management adhere to sound accounting principles.

Note: The actual timing for recruitment of new staff and set up of PIU at provincial level is also dependent of the project starting date.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting

56. All advance contracting will be undertaken in conformity with ADB Procurement Policy (2017, as amended from time to time), Procurement Regulations for ADB Borrowers (2017, as amended from time to time) and Staff Instructions – Procurement shall apply. The issuance of invitations to bid under advance contracting will be subject to ADB approval. The recipient, MEW have been advised that approval of advance contracting does not commit ADB to finance the project. 57. Advance contracting. No contract will be awarded until after additional financing grant effectiveness. However, to ensure smooth implementation startup, advance contracting for procuring civil works which includes preparation of tender documents, invitation for bids, and bid evaluation will be done. B. Procurement of Goods, Works, and Consulting Services

58. All procurement of works will be undertaken in accordance with ADB’s Procurement Guidelines. The procurement plan indicates review procedures, and works contract packages and national competitive bidding (NCB) guidelines. National competitive bidding (NCB) procedures will be used for civil works contracts estimated to cost more than $100,000 and international competitive bidding (ICB) for those that cost more than $5,000,000. Similarly, NCB procedure will also be used for goods contracts estimated to cost $100,000 or more. Shopping procedures (through community participation in procurement (CPP) contracting) will be used for contracts for procurement of small works worth less than $100,000.

C. Procurement Plan

Project Name: Panj-Amu River Basin Sector Project- Additional Financing Project Number: 48042-002 Approval Number: XXX Country: Afghanistan, Islamic Republic of Executing Agency: Ministry of Finance Project Procurement Classification: Implementing Agency:

National Water Affairs Regulation Authority Project Procurement Risk: Substantial Project Financing Amount: US$ 18,280,000

ADB Financing: US$ 18,280,000 Project Closing Date: 31 May 2023

Date of First Procurement Plan: {Date of approval} Date of this Procurement Plan: August 2020 A. Methods, Thresholds, Review and 18-Month Procurement Plan 1. Procurement and Consulting Methods and Thresholds

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

28

Procurement of Goods and Works Method Threshold Comments

International Competitive Bidding for Goods

US$ 1,000,001 and Above National Competitive Bidding for Goods

Between US$ 100,001 and US$ 1,000,000

All NCBs are subject to prior review

Shopping for Goods Up to US$ 100,000 International Competitive Bidding for Works

US$ 5,000,001 and Above National Competitive Bidding for Works

Between US$ 100,001 and US$ 5,000,000

All NCBs are subject to prior review

Shopping for Works Up to US$ 100,000 Community Participation in Procurement for Works

Up to US$ 100,000 First five are subject to prior review, rest post review.

2. Goods and Works Contracts Estimated to Cost $1 Million or More

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

3. Goods and Works Contracts Estimated to Cost Less than $1 Million and

Consulting Services Contracts Less than $100,000 (Smaller Value Contracts)

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

Goods and Works Package Number

General Description

Estimated Value

Number of

Contracts

Procurement

Method

Review (Prior/ Post)

Bidding Procedure

Advertisement Date

(quarter/year) Comments

NWARA/P-ARBP-Addf/CPP

Community based sub-projects

1,697,509 30 CPP Prior/Post

Q3 /2020 Comments: First five are subject to prior review, rest post review.

29

NWARA/P-ARBP-Addf/NCB

Catchment protection sub-projects and Construction of check-dams Lot 1: Lot 2: Lot 3: Lot 4: Lot 5: Lot 6: Lot 7: Lot 8: Lot 9: Lot 10:

4,111,785.8 206,736.90 407,950.61 305,679.76 223,111.75 405,075.13 351,823.64 513,898.91 695,779.64 688,060.36 313,669.09

10 NCB Prior Comments:

C. Indicative List of Packages Required Under the Project 62. The following table provides an indicative list of goods, works and consulting services contracts over the life of the project, other than those mentioned in previous sections (i.e., those expected beyond the current period).

Goods and Works Package Number

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement Method

Review (Prior/Post)

Bidding Procedure

Comments

NWARA/P-ARBP-Addf/CPP

Community-based subprojects

600,000 12 CPP Post Comments: First five are subject to prior review, rest post review.

30

Goods and Works Package Number

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement Method

Review (Prior/Post)

Bidding Procedure

Comments

NWARA/P-ARBP-Addf/NCB

Catchment protection sub-projects and Construction of check-dams Lot 11:

Lot 12:

Lot 13:

Lot 14:

Lot 15:

Lot 16: Lot 17: Lot 18: Lot 19: Lot 20: Lot 21: Lot 22: Lot 23: Lot 24: Lot 25: Lot 26: Lot 27: Lot 28: Lot 29: Lot 30: Lot 31: Lot 32: Lot 33: Lot 34: Lot 35:

8,165,061.3 231,328.36

413,986.91

215,280.00

130,020.00

130,188.00 285,910.91 437,251.64 369,268.36 789,927.27 137,637.82 181,759.04 225,650.24 156,208.36 291,277.09 1,076,779.6 497,588.73 281,857.09 643,222.91 500,504.73 282,505.09 163,636.36 190,909.09 182,181.82 207,272.73 142,909.09

25 NCB Prior Comments:

31

National Competitive Bidding

1. General

63. National competitive bidding for the procurement of goods and related services shall conform to the provisions for Open Tender without prequalification as prescribed in the Procurement Law of October 2005 and elaborated in the Rules of Procedure for Public Procurement issued by the Ministry of Finance in April 2007, with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the ADB Procurement Policy and Regulations (2017, as amended from time to time).

2. Registration and Other Pre-Bid Requirements

(i) Bidding shall not be restricted to Shortlists or Standing Lists.

(ii) No bid shall be declared as ineligible of the grounds of debarment without ADB’s prior concurrence.

(iii) No bid shall be declared ineligible on the grounds of government regulations that restrict sources without ADB’s prior concurrence.

(iv) Foreign suppliers and contractors from ADB member countries shall be allowed to bid, without registration, licensing, and other government authorizations. However, in case these foreign suppliers and contractors are declared winning bidders, the requirements may be completed after award and before signing of contract, without unreasonable costs or additional requirements.

3. Prequalification

64. Post qualification shall be used unless prequalification is explicitly provided for in the loan agreement/procurement plan. Irrespective of the procedure applied (whether prequalification or post qualification), no domestic or foreign contractor shall be precluded from participation. If prequalification is undertaken, the prequalification criteria should include "Eligibility Requirements", "Financial Situation", "Pending Litigation", and "Experience". Technical Capacity (personnel and equipment) should not be part of the prequalification criteria. Interested bidders shall be given a minimum period of 28 days for the preparation and submission of prequalification applications.

4. Advertising

65. Bidding of NCB contracts estimated at $500,000 or more for goods and related services and NCB contracts estimated at $1,000,000 or more for works shall be advertised on ADB’s website via the posting of the Procurement Plan.

5. Bidding Documents

66. Procuring entities shall use standard bidding documents acceptable to ADB, based ideally on the standard bidding documents issued by ADB.

6. Bidding Period

67. Procuring entities shall allow for a minimum of four weeks for submission of bids.

32

7. Bid Security

68. Where required, bid security shall be in the form of a bank guarantee or check from a reputable bank and should not be more than two percent of the estimated value of contract to be procured.

8. Preferences

69. No preference of any kind shall be given shall be given to domestic bidders or for domestically manufactured goods.

9. Evaluation

70. No bid shall be rejected on the grounds of price, or for any other reason(s) not related to the evaluation and qualification criteria, without ADB’s prior concurrence. Prompt payment discounts offered by bidders shall not be considered in bid evaluation.

10. Price Negotiations

71. Price negotiation shall be allowed only after receiving ADB’s prior concurrence.

11. Advance Payments

72. No advance payment shall be made without an advance payment security in the form of a bank guarantee or check from a reputable bank.

12. Government-Owned Enterprises

73. Government-owned enterprises in Afghanistan shall be eligible to participate only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not a dependent agency of the procuring entity, or the Project Executing Agency, or the Implementing Agency.

13. Right to Inspect/Audit

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

14. Anti-Corruption Policy

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

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

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

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15. Disclosure of Decision on Contract Awards

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

16. Eligibility

76. The eligibility of bidders shall be as defined under section I of the Guidelines; accordingly, no bidder or potential bidder should be declared ineligible for reasons other than those provided in section I of the Guidelines, as amended from time to time.

VII. SAFEGUARDS

77. Environment (category B). The watershed management and protection sub-project investments will generate significant positive environmental benefits, through improved water harvesting, increasing water recharge and water availability for irrigation and households, and reducing run-off and flood damage. Potential site-specific adverse environmental impacts (e.g., generation of dust from soil excavation and refilling, noise generation, disturbance to residents and traffic by the construction work, water availability, occupational, community health and safety hazards, etc.) will arise during the construction phase of some of the subprojects. Some impacts will also arise during the operation phase (e.g. dumping of waste in canals, resulting in clogging, water availability for downstream farmers, etc.) An environmental assessment and review framework (EARF) has been prepared to ensure project compliance with ADB’s Safeguard Policy Statement (2009) by specifying the environmental safeguards procedures required for subproject selection, screening and assessment during implementation. Each subproject will be screened for environmental classification. Subprojects classified as category A will not be financed considered for ADB financing. Category B subprojects will require preparation of an initial environmental examination (IEE) study, including an environmental management plan (EMP), and incorporation of environmental management plan EMP measures into civil works contracts. Category C subprojects will require summaries of environmental implications in their feasibility studies. Adequate resources have been allocated for environmental safeguards preparation, implementation, monitoring, and reporting. The environmental assessment and review framework will be disclosed on the ADB website in July 2020.

78. The project classification is high climate risk.24 A climate and disaster risk assessment and management report has been prepared and all subprojects will be screened for climate and disaster risks and incorporate risk reduction measures. The representative subprojects include designs to improve watershed management with physical interventions to increase access to water (water storage ponds, improvements in infiltration and recharge), land stabilization measures such as revegetation/ forestry/ other tree species to reduce soil erosion and runoff.

79. Indigenous peoples (category C). There are no indigenous peoples were identified in

24 Climate change Assessment accessible from the list of linked documents in Appendix 2).

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project site areas as defined in ADB’s Safeguard Policy Statement 2009 for operational purposes.

80. Involuntary resettlement (category B). The additional financing will not require scale up or modification of the project. The project design details and areas, which may lead to significant impact will be excluded from the subproject/sections/packages. Therefore, the project is categorized as B. Land acquisition and resettlement framework (LARF) has been updated to guide the preparation of subproject land acquisition and resettlement plans (LARPs). Due diligence will be conducted in areas where no land acquisition and resettlement (LAR) impacts are anticipated (any non-land asset compensation that may arise during implementation will be payable to affected people from the project proceeds). Upon completion of such due diligence and confirmation of no LAR impact, due diligence report will be prepared for such area, submitted to ADB for clearance, and disclosed upon ADB acceptance. The project does not intend to select any sub-projects which involve, or may involve, LAR impacts. However, if during project implementation, and following prior discussion between the government and ADB, a sub-project(s) that has LAR impacts is proposed by the government for ADB financing, LARPs will be prepared for LAR impacted areas, submitted to ADB for review and clearance, disclosed prior to contract award and all compensation and other entitlements must be paid and verified by an independent third party monitoring consulting firm acceptable to ADB, and the LARP fully implemented. All of these actions must be done prior to civil works commencement. Consultations with the affected communities will be continuously conducted throughout all stages of the project. ADB would like to recruit a Third Party Monitoring (TPM) consulting firm as recommended in the Enhanced Project Delivery Approach Paper for Afghanistan, to carry out on-site monitoring of project implementation to enhance portfolio monitoring and reporting.

81. EA is responsible for overall project compliance and ensuring all necessary project management arrangements in place. Social safeguards specialists will be engaged at the CPMO and PIOs for preparing and implementing LARPs and DDRs. DDR or LARP needs to be accepted by ADB prior to contract award of a relevant contract. EA/CPMO/PIO can delegate delivery of compensations payments and other actions on implementation of LARP to contractors. ADB shall accept compliance report confirming full implementation of the relevant subproject LARP prior to: (a) commencement of civil works; and (b) no objection to withdrawal applications on funding civil works. All non-land acquisition and resettlement costs to APs will be funded by the project.

82. For sub-projects with no LAR impacts: Due diligence reports confirming absence of any LAR impacts for sub-projects with no LAR impacts shall be reviewed and accepted by ADB prior to contract awards. For cases of unanticipated LAR impact or LAR impact caused by minor or major design changes into final project design upon contract award, DDR or corrective action plans shall be reviewed and accepted by ADB prior to commencement of works in the relevant section of such contract. Social safeguard officers, an international consultant and an external monitoring agent/individual for compliance review are in place as part of the original project. Non-LAR subproject costs and other costs required for delivery of compensations may will be included in the BOQs for civil work contracts as defined in relevant LARPs for subprojects with social impact.

83. For sub-projects with LAR impacts: Resettlement specialists (international and national) will be engaged at the CPMO and PIOs for preparing and implementing LARPs and DDRs. LARP needs to be accepted by ADB prior to contract award of a contract with LAR impacts. EA/CPMO/PIO can delegate delivery of compensations payments and other actions

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on implementation of LARP to contractors. ADB shall accept compliance report confirming full implementation of the relevant subproject LARP prior to: (a) commencement of civil works; and (b) no objection to withdrawal applications on funding civil works. All non-land acquisition and resettlement costs to APs will be funded by the project.

84. The government shall allocate sufficient budget for such compensation as a condition to contract award. Once the contract has been awarded, the government promptly make such LAR compensation available to the contractor, and in any event prior to giving site access to the contractor. the contractor will then be responsible for paying compensation before civil works begin.

85. LARPs for subprojects under the Project with LAR impacts will provide detailed compensation and rehabilitation costs assessments and will clearly describe the methodology followed to identify the replacement rate for each and non-LAR and LAR affected asset. DDR or LARP needs to be accepted by ADB prior to contract award of a relevant contract.

86. Compliance report confirming full implementation of LARP on subprojects/contracts will be verified by third party monitors prior to its submission for ADB review. ADB shall accept compliance report before construction work begins in the relevant subproject/contract. Also, social safeguards monitoring will be conducted by CPMO and social safeguards monitoring reports will be submitted to ADB on semi-annual and annual basis. Regular social safeguards monitoring reports will be included as part of the progress reports that the PIOs will submit to the CPMO as part of the Project Performance Monitoring System.

87. Step-by-step and details on the payment process for the original project as well Government determination of APs and payment processes are as below:

The Current Payment Process for APs

a. LARP preparation identifies number of APs and types of impact, accordingly budget is calculated based on replacement cost.

b. The compensation cost is to be added as non-competitive item part of the BOQ. c. Also, cost for delivery of compensation and other assistance in implementation of

LARP will be included in the BOQ. d. Prior to start of civil work, consultation is held with APs, list and number of affected

assets to be verified by WUA and CDC and they are requested to provide Bank account.

e. Contractor will pay the compensation before start of civil work to APs. f. To ensure transparency, a committee with members from PIO, Contractor, WUAs and

CDC is assigned, and compensation to be paid in presence of them. g. Contractor will claim the compensation amount based on actual payment. h. Compliance report to be prepared by CPMO/PIO and TMP will verify compliance report

prior to submission of the compliance report to ADB for review and acceptance. i. No objection to civil works commencement may be provided upon ADB acceptance of

compliance report.

The government process for allocating budget for LAR and non-LAR compensation:

88. Based on ADB Safeguards Policy Statement (2009) and Afghanistan laws, compensation payment process for both land acquisition and non-land are as bellow:

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a. Due diligence report (non-LAR) and LARP (with LAR) will be provided by implementing agency.

b. The implementing agency will request MUDL to clear and process the type of impact and number of APs.

c. MUDL after review of the document will request the president order to assigning team for land clearance and determining the rate of affected assets.

d. Based on president order a committee from different department will be assigned for land clearance and determining rate for every affected asset.

e. The rate of assets will be verified in provincial administrative meeting and will be referred to implementing agency.

f. Implementing agency will submit the documents to MUDL. g. MUDL will review the documents and if there is no problem will ask IA to submit the

document for cabinet approval. h. After approval and verification of the documents by cabinet and allocation of funds to

IA, final LARP will be submitted to ADB for its review and acceptance. i. Compensation payments .

89. It is suggested that the bidding documents should have the language properly spelled out for contractor to adopt during implementation: Social safeguards covenants/conditions:

• Award of works contract will not be allowed prior to availability of procurement plan tied to availability of: (a) detailed design of the project; (b) implementation ready LARP or DDR based on detailed design accepted by ADB and publicly disclosed; (c) government budget has been allocated for LAR and/or non-LAR compensation.

• Commencement of Civil works shall not be allowed and withdrawal applications on

civil works shall not be accepted prior to (a) full payment of compensation and entitlements to APs in accordance with the LARP (for subprojects with LAR impacts) (b) Submission of Contractor’s verification of compliance report to ADB or DDR based on detailed design accepted by ADB prior to contract award; (c) ADB acceptance of compliance report, and TPM verification report (for subprojects with LAR impacts) or DDR based on detailed design.

90. Works Contract: Include the following services in the scope of works to be completed by the works contractor:

Prior to civil works commencement:

• Transfer funds to APs and provide support to reallocation activities, if any; and • Provide support to EA/IA in clearance of right of way (ROW). • If any unanticipated LAR impact are identified, support supervision consultant and

PIO in identifying the initial inventory of unanticipated LAR impacts;

Upon commencement of civil works:

• Provide support to supervision consultant in social safeguards monitoring (SSM) through including section on SSM in each monthly/quarterly progress report;

• Stop construction works if any unanticipated impact is identified; and

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• Support EA/IA and supervision consultant in preparation and implementation of a corrective action plan if any unanticipated impact is identified.

91. Table 14 outlines the process steps for non-land LAR planning and implementation of the additional financing under output 3.

Table 14: Project Implementation, Subproject/contract Handover in civil works contract Project Implementation Stage

# Project Milestones Social Safeguards Activities Supervision Consultant Engaged and resettlement team (int. and nat.) mobilized

1. Inception Report of Supervision Consultant

Arrangements with MUDL to request to establish the ownership verification and valuation committees for each province

2. Third party monitors engaged and mobilized25

Monitor the processes

Due diligence actions on subprojects/contracts to confirm ZERO LAR impacts

3. Final project design of substantial DDR section (route or other features allowing to define ROW in place)

GRM established and consultations conducted

4. Social safeguards due diligence (field surveys, verification of state ownership rights, etc.) of final design of the subproject/contract

5. State ownership verification of DDR section land

6. Due diligence conducted and DDR submitted to ADB

7. Finalized DDR with ADB comments addressed

9. ADB no objection letter to contract award and further civil works commencement on DDR package

Due Diligence report accepted by ADB 10. Social Safeguards Monitoring

LAR actions for subprojects/contracts with LAR impacts 3.26 Final project design of LARP GRM established and consultations

conducted 4. Detailed measurement and other social field

surveys 5.

Inventory of Losses, census, ownership verification, valuation

6. Project design route amended to avoid/minimize adverse impact and include APs’ and/or community suggestions/needs

Meaningful consultations and focus group discussions

7. Compensation Funds allocation completed 8. Implementation ready LARP finalized and

submitted to ADB

25 External and third-party monitors are usually hired by executing or implementing agencies. ADB may provide

additional TA support and hire third party monitors. 26 These actions on subprojects/contracts with LAR impacts can be done in parallel with DDR actions on

subprojects/contracts with no LAR impacts.

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9. Finalized implementation ready LARP with ADB comments addressed

10. Implementation ready LARP disclosed

Commencement of LARP implementation 11. Preparation of compliance report 12. Verification of compliance report by

external/third party monitor and its submission to ADB

13. ADB no objection letter to commence construction works on the implemented LARP for section [coordinates]

Compliance report accepted by ADB

14. Social Safeguards Monitoring 92. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (2009), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the Safeguard Policy Statement (2009). All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB.

VIII. GENDER AND SOCIAL DIMENSIONS 93. Social and Gender. The project is categorized as effective gender mainstreaming. The project will specifically benefit women farmers, through trainings in water use and management, to enable them to better participate in WUAs and other community-based organizations. Women farmers will also participate in watershed resource management and are expected to improve their incomes through nursery and forest management-related livelihoods. Formal and informal approaches will be used to increase their participation in the water user associations, irrigation associations and in other community organizations working with the project. The gender action plan below, details the project’s gender activities and targets.

94. To facilitate implementation of the gender activities, the project will have female staff undertaking community mobilization and watershed management planning, as women are active participants in a range of the watershed activities. Female staff will be part of the project management and field offices. The gender specialist already engaged in CPMO/MAIL will be responsible for overseeing GAP implementation.

GENDER ACTION PLAN

Activities Performance Targets/Indicators Responsibility Timeframe

Output 1: Water allocation and availability improved 1.1 Build rural women’s confidence to participate in WUAs

1.1.1 At least 90% of female members of WUAs trained on leadership and organizational skills (baseline 2020:0) 1.1.2 At least 1 women-only training organized for women members of WUAs (baseline 2020:0)

NAWRA and Gender Specialist at CPMO/MAIL

Q4 2020 – Q4 2021

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Output 2: Command areas enhanced

2.1 Train women in on-farm water management techniques

2.1.1 At least 1 women-only training conducted on farm-related water management techniques (baseline 2020:0) 2.1.1 At least 1000 women farmers trained and adopted on-farm water management techniques (baseline 2020: 297 women farmers)

NAWRA and Gender Specialist at CPMO/MAIL

Q4 2020 – Q4 2022

Output 3: Watersheds properly managed and protected

3.1 Increase women’s participation in community-based watershed management

3.1.1 Social mobilization team hired for the project includes at least 2 female social organizers (baseline 2020: 0) 3.1.2 By 2023 increased engagement of women (to at least 15% of members), in community-based watershed management planning and implementation, and in community organizations (irrigation and forest management). 3.1.3 At least 2 trainings conducted for women on nursery and forest management skills (baseline 2020: 0)

MAIL, DAIL and Gender Specialist at CPMO/MAIL

Q4 2020 -Q4 2022

3.2 Develop and implement strategies to increase women’s participation in community based and livelihood training and income earning opportunities

3.2.1 Women accounted for at least 25% of participants in community-based trainings, and livelihood training (in nurseries and forest management related activities) (baseline 2020: 0). 3.2.2 At least 2 consultations held to identify need and scope of community based and livelihood training (baseline 2020:0) 3.2.3 At least 100 women from the sub-project areas developed profitable livelihoods in relation to nursery and forest management (baseline 2020: 0) 3.2.4 5% of the forest wardens hired from the local communities are women (baseline 2020:0) 3.2.5 15 MAIL staff, including 3 female MAIL staff capacitated on training local farmers in field demonstration plot techniques

MAIL, DAIL and Gender Specialist at CPMO/MAIL

Q4 2020 – Q4 2022

3.3. Document gender impacts and results of the project

3.3.1 At least five case studies of rural women who improved their livelihoods from the project (baseline: 0) 3.3.2 One gender impact study conducted by project end

NAWARA, MAIL, DAIL with the support of Gender Specialist at CPMO/MAIL

Q1-Q4 2022

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

95. The implementing agency, NWARA will be responsible for monitoring project progress and evaluating project outputs. Monitoring and evaluation shall be in accordance with the Design and Monitoring Framework (DMF) and the implementing agency will be responsible for regular reporting, with NWARA producing consolidated report and submit to MOF and ADB.

A. Project Design and Monitoring Framework

REVISED DESIGN AND MONITORING FRAMEWORK

Impact the Project is Aligned with Per capita income increased and poverty among rural and pastoral communities reduceda

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Mechanisms Risks Outcome Agricultural productivity in the Panj–Amu River Basin increased

a. Cropping intensities increased by 20% (2016 baseline: 148%; 2023 target: 168%) in total command area of 74,500 146,900 ha (OP 5.3.1) b. Crop yields for wheat and rice increased by 7.0% (2016 baseline: wheat 3.0 tons/ha, rice 3.3 tons/ha; 2023 target: wheat 3.3 tons/ha, rice 3.5 tons/ha) (OP 5.3.2)

a.–b. PPMS and crop production surveys at the end of project

Adverse climate effects on production and productivity

Outputs By 2022: 1. Water allocation and availability improved

1a. Headworks and main canals rehabilitated and upgraded in approximately 21 schemes (including approximately 84 domestic and 21 livestock access points) (2016 baseline: 0) (OP 5.1.1) 1b. O&M agreements signed by WUA for all completed works, or with government assurance of continued O&M (2016 baseline: 0) (OP 5.1.1) 1c. 112 WUAs established and officially registered with NWARA (2016 baseline: 0) (OP 5.1.1)

1a. PPMS and project progress reports 1b. Signed O&M agreements 1c. NWARA register

Insecurity delays or suspends field activities Insufficient available funds for system O&M may jeopardize infrastructure sustainability Consolidated government financial statements deviate from international

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Impact the Project is Aligned with Per capita income increased and poverty among rural and pastoral communities reduceda

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Mechanisms Risks accounting standards

2. Command areas enhanced

By2022: 2a. Secondary and tertiary canals rehabilitated and upgraded in approximately 21 schemes (including approximately 21 domestic and 21 livestock access points) (2016 baseline: 0) (OP 5.1.1) 2b. O&M agreements signed by irrigation associations for all completed works (2016 baseline: 0) (OP 5.1.1) 2c. Approximately 106 irrigation associations established and officially registered with MAIL (2016 baseline: 0) (OP 5.1.1) 2d. Approximately 6,300 farmers (including 1,000 women) adopted on-farm water management techniques (2016 baseline: 0) (OP 5.1.1)

2a. PPMS and project progress reports 2b. Signed O&M agreements 2c. MAIL register 2d. PPMS and project progress reports

3. Watersheds properly managed and protected

By 2022: 3a. Approximately 10,000 27,760 ha of forestry and/or rangeland restored and/or protected (2016 baseline: 0) (OP 3.2.1) 3b. 21 catchment management associations established and registered with MAIL; an additional 42 watershed management associations or community-based organizations established and responsible for an additional planned 42 community implemented subprojects (out of the 77 total additional subprojects) with NWARA (2020 baseline: 0) (OP 3.2.4).

3a. PPMS and project progress reports 3b. Approved NRM plans, watershed resource management plans, and PMS

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Impact the Project is Aligned with Per capita income increased and poverty among rural and pastoral communities reduceda

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Mechanisms Risks 3c. Twenty-one NRM plans prepared and implemented; 77 watershed resource management plans developed for an additional 77 subprojects (2020 baseline: 0) (OP 3.2.4) 3d. 103 (26 original project and 77 additional financing) watershed subprojects completed and operational with agreed O&M financing plans (2020 baseline: 0) (OP 3.2.5) 3e. By 2023: Increased engagement of women (at least 15% of members) in community-based watershed management, planning, and implementation, and in community organizations (irrigation and forest management) (OP 3.2.2) Women accounting for at least 25% of community-based training and livelihood training (nurseries and forest management-related activities) (2020 baseline: 0) (OP 3.2.2)

3c. MAIL register, NWARA and SBA project reports, and PPMS 3d. NWARA and SBA project reports and PPMS 3e. PPMS and project progress reports

Key Activities with Milestones27 1. Water allocation and availability improved 1.1 Commence construction of three representative subprojects by Q2 2017 (completed) 1.2 Conduct feasibility and detailed design studies for other subprojects by Q3 2017 (unchanged/ongoing) 1.3 Commence construction for other subprojects by Q4 2017 (unchanged/ongoing) 1.4 Establish river basin model and put in use by Q3 2019 (unchanged/ongoing) 1.5 Commission and hand over all works completed to WUAs or SBAs by Q4 2022 (unchanged) 2. Command areas enhanced 2.1 Tender designed works by Q1 2018 (unchanged/ongoing) 2.2 Train DAIL staff to become trainers by Q4 2017 (completed) 2.3 Establish approximately 21 crop production demonstrations by Q2 2018 (unchanged/ongoing) 2.4 Commission and hand over all works completed to irrigation associations by Q4 2022 (unchanged) 3. Watersheds properly managed and protected 3.1 Identify watersheds in the vicinity of subprojects by Q4 2017 (unchanged/ongoing) 3.2 Prepare community-based NRM technical manual and guidebook by Q1 2018 (unchanged/ongoing)

27 There are several packages/actions under each activity, started in 2017 and 2018 and will continue till 2022.

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Key Activities with Milestones27 3.3 Prepare 21 NRM plans (plus one pilot payments for ecosystem services plan) by Q2 2018 (unchanged/ ongoing) 3.4 Assist 21 catchment management associations in consultation, establishment, and registration by Q3 2018 (unchanged/ ongoing) 3.5 Complete restoration and/or protection of selected watersheds by Q4 2022 (unchanged) 3.6 Conduct assessments and feasibility and detailed design studies (when required) on the 77 prioritized watershed subprojects by Q3 2020 (added) 3.7 Commence implementation of subproject bioengineering and physical interventions by Q1 2021 (added) 3.8 Prepare community-based watershed resource management plans in each of the subproject watersheds by Q2 2021 (added) 3.9 Assist community-based organizations (WUAs, community development councils, irrigation associations, and forest management associations) to work with SBAs and DAIL in developing sustainable community watershed resource management systems by Q4 2021 (added)

Inputs

Asian Development Bank: $26 million (current) $18.28 million (additional) European Union: $50 million (current) Government of Afghanistan: $750,000 (current) $250,000 (additional) Assumptions for Partner Financing Not applicable

DAIL = Department of Agriculture, Irrigation, and Livestock, ha = hectare, MAIL = Ministry of Agriculture, Irrigation, and Livestock, NRM = natural resources management, NWARA = National Water Affairs Regulation Authority, O&M = operation and maintenance, OP = operation priority, PPMS = project performance monitoring system, Q = quarter, SBA = sub-basin authority, WUA = water users association. a Government of Afghanistan, 2017. Afghanistan National Peace and Development Framework, 2017–2021. Kabul. Contribution to Strategy 2030 Operational Priorities: OP 3.2.1 Area with reduced flood risk (hectares). Target: 27,760 hectares. OP 3.2.2 Gender-inclusive climate and disaster resilience capacity development initiatives implemented

(number). Target: 2 nursery and forest management skills training, and 10 watershed management and planning programs conducted.

OP 3.2.4 National and subnational disaster risk reduction and/or management plans supported in implementation (number). Target: 98 NRM plans.

OP 3.2.5 New and existing infrastructure assets made climate and disaster resilient (number). Target: 103 watershed subprojects.

OP 5.1.1 Rural infrastructure assets established or improved (number). Target: In 21 irrigation schemes headworks, and main, secondary, and tertiary canals rehabilitated and upgraded.

OP 5.3.1 Land improved through climate-resilient irrigation infrastructure and water delivery services (hectares). Target: 146,900 hectares.

OP 5.3.2 Farmers using quality farm inputs and sustainable mechanization (number). Target: 21 field demonstrations and 6,300 farmers.

Source: Asian Development Bank. B. Monitoring

96. Project performance monitoring. The NWARA will lead the development of comprehensive project performance monitoring systems (PPMS) with inputs from MAIL, and closely monitor the progress of project activities, outputs, and outcomes based on the PPMS in accordance with the DMF and subsets of indicators. In particular, the PPMS will assess the following outputs and indicators (i) progress of planned activities according to the milestones, and (ii) progress in achieving each project output and project outcome according to the performance targets and indicators indicated in the DMF.

97. Currently, due to security concerns, ADB staff may not be able to conduct regular review missions in many project sites. ADB staff have to rely on the supervision consultant and CPMO

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to know projects’ progress, which is under contract to the executing/implementing agency, rather than ADB. Without access to project sites, it is neither possible for ADB to adequately assess the causes of project delays, nor identify ameliorative actions. To address this situation, ADB would like to recruit a Third Party Monitor (TPM) consulting firm as recommended in the Enhanced Project Delivery Approach Paper for Afghanistan, to carry out on-site monitoring of project implementation to enhance portfolio monitoring and reporting. The TPM will be required to conduct in-dept performance monitoring and provide evidence that projects are being implemented correctly and focusing on infrastructure quality assurance along with social safeguards compliance, security and gender issues, and select financial/fiduciary aspects. 98. The TPM firm will provide government with an example of project monitoring and data collection and showcase how such practices could improve project performance and results, thereby helping to strengthen the monitoring programs of the executing and implementing agencies. The firm will report directly to ADB, but also work closely with the Ministry of Finance (MoF), sector line ministries, and PMOs responsible for project implementation at the local and central level. The specific work to be conducted by the TPM consulting firm depends upon the specific project, its needs, systems and monitoring capacity.

99. Information and data gathered during the project implementation period will be analyzed and measured against the targets. The IAs will submit quarterly progress reports, covering progress and achievements during the period against milestones and indicators in the DMF, and a project completion report at the last year of project implementation, outlining the achievements and lessons learned. NWARA will prepare a consolidated report.

100. Compliance monitoring. Compliance of grant and project agreement covenants will be monitored through periodic ADB review missions, annual progress reports by each IA, random checks of documents, and review of the project annual audited financial statements.

101. Environment Safeguards monitoring. CPMO will submit to ADB semi-annual environmental monitoring reports during the construction phase and annual safeguards monitoring reports during the operation phase and disclose relevant information from such reports to affected persons promptly upon submission. If any unanticipated environmental and/or social risks and impacts arise during construction, implementation or operation of the project or any subproject that were not considered in the EIA/IEE, EMP, promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed corrective action plan. CPMO will report any actual or potential breach of compliance with the measures and requirements set forth in the EMP’s promptly after becoming aware of the breach. Moreover, the supervision consultant will submit monthly environmental monitoring reports to respective CPMO’s during the construction phase of the project.

102. Gender and social dimensions monitoring. Each IA will be required to report the achievements on gender actions in its quarterly and annual progress reports.28

C. Evaluation

103. ADB will conduct semiannual and midterm review missions to assess the progress of the project and review compliance with the grant agreement and project agreement covenants. The midterm review mission will undertake a comprehensive review of the project design and

28 ADB's Handbook on Social Analysis: A Working Document, is available at:

http://www.adb.org/Documents/Handbooks/social-analysis/default.asp, Staff Guide to Consultation and Participation: http://www.adb.org/participation/toolkit-staff-guide.asp, and, CSO Sourcebook: A Staff Guide to Cooperation with Civil Society Organizations: http://www.adb.org/Documents/Books/CSO-Staff-Guide/default.asp

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the performance of the project. It requires to modify the current eOps projections, it may also require a change in the design and implementation arrangements. Within 6 months of physical completion of the project (by Q2 2025), MAIL will submit a project completion report to ADB in a form acceptable to ADB.29

D. Reporting

104. The implementing agencies through the CPMOs will submit to ADB the following reports (i) quarterly progress reports in a format consistent with ADB's standards; and (ii) annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, (d) issues concerning environment and social safeguards (through semi-annual reports); and (e) updated implementation plan for next the 12 months.

105. The implementing agencies through the CPMOs will submit a government’s PCR within 6 months of physical completion of the project, which will be consolidated into one report by MEW. The government’s PCR will evaluate the performance and achievements of the project against the indicators, expected benefits, and outcome, and should include information on (a) project implementation, and (b) the use of grant funds to ADB the associated auditor's report, should be adequately reviewed.

E. Stakeholder Communication Strategy

106. The EARF and LARF contain a public consultation and/or information disclosure plan and grievance reporting mechanism. Public consultation meetings will be held as part of each subproject feasibility study, with findings relevant to local stakeholders disclosed in a form, place, and language accessible to them prior to tendering. During construction, PIO construction supervisors will liaise frequently with WUAs and IAs where these exist (and with community leaders where they do not) to disclose information, receive and respond to questions and comments, and to record and address grievances; unresolved issues can be progressively escalated to PIOs and CPMOs progressively. During operation and maintenance, WUAs, IAs, SBAs, DAILs, district governors, and CPMOs will exchange information about subproject performance, including environmental and social impact and mitigation information.

X. ANTICORRUPTION POLICY

107. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.30 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the implementing agencies and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.31

108. To support these efforts, relevant provisions are included in the grant agreements and the bidding documents for the project. The Government, through MOF, NWARA and MAIL, will ensure that the anticorruption provisions acceptable to ADB are included in all bidding documents and contracts including provisions specifying the right of ADB to audit and examine the records and accounts of the executing agencies and all contractors, suppliers, consultants,

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

Sector-Landscape.rar. 30 Anticorruption Policy: https://www.adb.org/documents/anticorruption-policy 31 ADB's Office of Anticorruption and Integrity website: https://www.adb.org/site/integrity/main

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and other service providers as they relate to the Project.32

109. The IAs will preferably provide updated information on the project on their websites, including information on the performance of the project, business opportunities, bidding process and guidelines, outcome of biddings and summary progress reports of the project.

XI. ACCOUNTABILITY MECHANISM

110. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.33

XII.RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

111. All revisions and/or updates during the course of implementation should be retained in this section to provide a chronological history of changes to implemented arrangements recorded in the PAM, including revision to contract awards and disbursement s-curves.

Table 10: Record of PAM Revisions and Updates

Description of Revision Date PAM Agreed with the Government at loan negotiations

___________ 2020

Inception mission ___/___/_____

32 Governance and Anticorruption Action Plan II Guidelines. http://www.adb.org/Documents/Guidelines/GACAP-II-

Guidelines.pdf. See also Sourcebook: Diagnostics to Assist Preparation of Governance Risk Assessments. http://www.adb.org/documents/books/Diagnostics-to-Assist-Preparation-of-GRAs/default.asp.

33 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.