Public-Private Partnership Support Project (RRP VIE P44507-002)

Project Number: 44507-002 Loan and/or Grant Number(s): August 2012

Viet Nam: Public-Private Partnership Support Project (P3SP)

DRAFT Project Administration Manual

Contents

ABBREVIATIONS

I. PROJECT DESCRIPTION 1

II. IMPLEMENTATION PLANS 3

A. Project Readiness Activities 3 B. Overall Project Implementation Plan 4

III. PROJECT MANAGEMENT ARRANGEMENTS 5

A. Project Implementation Organizations – Roles and Responsibilities 5 B. Key Persons Involved in Implementation 5 C. Project Organization Structure 6 D. Process Steps for Project Development and Procurement Process 9

IV. COSTS AND FINANCING 20

A. Detailed Cost Estimates by Expenditure Category 21 B. Allocation and Withdrawal of Loan Proceeds 21 C. Detailed Cost Estimates by Financier 22 D. Detailed Cost Estimates by Outputs/Components 23 E. Detailed Cost Estimates by Year 24 F. Contract and Disbursement S-curve 25 G. PDF Fund Flow Diagram 26

V. FINANCIAL MANAGEMENT 28

A. Financial Management Assessment 28 B. Disbursement 30 C. Accounting 32 D. Auditing 32

VI. PROCUREMENT AND CONSULTING SERVICES 32

A. Advance Contracting And Retroactive Financing 32 B. PROCUREMENT OF GOODS, WORKS AND CONSULTING SERVICES 33 C. PROCUREMENT PLAN 34 D. OUTLINE TERMS OF REFERENCE 41

VII. SAFEGUARDS 53

VIII. GENDER AND SOCIAL DIMENSIONS 53

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 56

A. Project Design and Monitoring Framework 56 B. Monitoring 59 C. Evaluation 60 D. Reporting 60 E. Stakeholder Communication Strategy 61

X. ANTICORRUPTION POLICY 61

XI. ACCOUNTABILITY MECHANISM 62

XII. RECORD OF PAM CHANGES 62

Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and management requirements to implement the PPP Support Project (P3SP) on time, within budget, and in accordance with the government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

2. The Ministry of Planning and Investment (MPI) in close collaboration with other Government of Vietnam (GOV) ministries/agencies - Authorized States Agencies (ASAs) involved with PPP is wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with the government and ADB‘s policies and procedures. ADB staff is responsible to support implementation including compliance by Ministry of Planning and Investment (MPI) of their obligations and responsibilities for project implementation in accordance with ADB‘s policies and procedures.

3. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan 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 Loan Agreement, the provisions of the Loan Agreement shall prevail.

4. After ADB Board approval of the P3SP‘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.

Abbreviations

ADB = Asian Development Bank ADF = Asian Development Fund AFD = Agence Française de Développement ASA = Authorized State Agency CPS = Country Partnership Strategy IMTF = Interministerial Task Force JICA = Japan International Cooperation Agency MOF = Ministry of Finance MPI = Ministry of Planning and Investment ODA = Official Development Assistance P3SP = Public-Private Partnership Pilot Project PCA = Procurement Capacity Assessment PDF = Project Development Facility PDF TT = PDF Technical Team PMU = Project Management Unit PPP = Public-Private Partnership SEDP = Socio-economic development plan SOE = State-Owned Enterprise SSTA = Small Scale Technical Assistance USAID = United States Aid for International Development VNCI = Viet Nam Competitiveness Initiative of USAID

I. PROJECT DESCRIPTION

A. Summarize the project's rationale, location and beneficiaries 1. Viet Nam‘s infrastructure needs are massive and its resources are limited. Not only is there limited fiscal space, there are also huge gaps in public sector capacity to build and operate infrastructure. Improved quality and service coverage in power and water supply, sewerage treatment, transport and logistics are vital for Viet Nam‘s economy. Tight fiscal constraints require innovative approaches, away from the traditional role of the government as the service provider, to ensure that the massive investment needs are financed with the assistance of the private sector. Sound project preparation is the key requirement to develop bankable PPP projects that can be brought to both commercial banks and private investors and to build investor confidence. Project preparation activities: (i) pre-feasibility studies to identify candidate PPP infrastructure projects; (ii) preparation of detailed feasibility and investment banking reports, technical and engineering designs, environmental and social impact assessment with management plans, financial analysis, risks assessment and mitigation, and assessing PPP legal framework; and (iii) bid and contract documentation. The detailed project development process to be covered under (ii) and the bidding process stated in activity (iii) above are aimed to help develop bankable structures that will provide the necessary comfort to both the private sector as well the prospective lenders to the project through appropriate risk allocation. Improvement in the capacity to develop bankable projects is also important for the pace of investment in infrastructure to increase. 2. To facilitate project development for PPPs, a Project Development Facility (PDF) that provides project sponsors with the resources to procure consultancy and expert services involving technical and engineering designs, environmental and social impact assessment with management plans, financial analysis, risk assessment and mitigation, and assessment of the PPP legal framework needs to be established with a high probability of generating viable infrastructure projects that can more easily be financed through public and/or private sources (e.g. PPPs). The PDF would fund- consultants to undertake such project development activities. B. Impact and Outcome 3. The P3SP‘s expected impact is increased private sector investment in infrastructure. This will, in turn, improve the efficiency and quality of infrastructure services and accelerate Viet Nam‘s economic growth. 4. The P3SP‘s expected outcome is an improved capacity by the government to catalyze PPPs and infrastructure investments. C. Outputs 5. The table below shows ADB‘s Project Design and Monitoring Framework which outlines the outputs along with performance indicators and corresponding data sources.

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PROJECT DESIGN AND MONITORING FRAMEWORK: OUTPUTS

Design Summary Performance Targets and Indicators with Baselines

Data Sources and Reporting Mechanisms

Outputs 1. Institutional Mechanisms for Developing Bankable PPP Projects Established

• PDF established by December 2012 with $20 million seed capital. By June 2013, 2 pilot projects identified for processing by PDF. • A pipeline of 10 PPP projects processed by PDF by 2016. • PDF fully operational with pooled resources from other donors; financial closure of minimum of 2-3 projects by 2016.

• ADB Mission/Loan agreement • MPI / Government website • MPI / Government website • ADB Mission • Government/MPI reports

2. Strengthened PPP Enabling Framework and improved institutional capacity for PPP

• Complete a medium term capacity building plan for core government agencies covering all aspects of PPP projects, in which the training process will include environmental and social safeguards and gender assessments by June 2013. • Initiate the implementation of the medium term capacity building plan by July 2013. • Complete the implementation of the medium term capacity building plan by December 2015. • The IMTF is restructured by March 2013. • The guidelines on the implementation of PPP pilot projects, including gender assessment, issued by August 2014. • The standard operating procedures for the utilization of funds through the PDF issued by February 2014. • Review of sector laws and regulations related to PPP with recommendations for sector reforms finalized by December 2014.

• TA Report • TA Report • TA Report • MPI website • Line GOV ministry/agency reports/ websites containing information on decrees/circulars issued to reflect enhanced legal PPP regulatory framework • Consultant report based / GOV • Government/MPI • Government website

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities1

Month (2012) Indicative Activities

May

Jun

Jul

Aug

Sep

Oct

Feb 2013

Responsible Party

Establish project implementation arrangements

V Government and ADB

Appraisal Mission

V ADB

ADB Loan Negotiations

V Government and ADB

ADB Board Approval

V ADB

Loan Signing

V Government and ADB

Government legal opinion provided

V Government

Government budget inclusion

V Government

Loan Effectiveness

V Government and ADB

1 The Project Readiness Activities have been checked again the Viet Nam Project Readiness Filters.

B. Overall Project Implementation Plan

Activities Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

A. PREPARATION

Identification and Agreement by GOV of the

enabling provisions for setting up the formal

PPP Office and PDF

Advance Procurement of the PDF Technical

Team (PDFTT)

Develop transparent procurement procedure for

utilizing funds under PDF

B. PROJECT ACTIVITIES

1. Institutional Mechanisms for Developing

Bankable PPP Projects

Establish Dedicated PPP Office

Establish Dedicated PMU for PDF

Establish PDF by September 2012

Finalize guidelines for PDF operations

Open escrow account exclusive for PDF

Engage /Mobilize PDF Technical Team

Develop criteria for ―bankable‖ PPP projects

Develop pipeline of bankable PPP projects (first

batch), by July 2012- onwards ongoing

2. PPP institutional capacity building

Develop medium-term capacity building plan for

core government agencies involved in PPPs

Government/MPI to mobilize funds for

institutional capacity building including govt

budgetary allocation

Initiate Training for PPP Office staff, by Sept

2012

Allocate /engage resources for insitutional

capacity building

Implement sequenced institutional capacity

building program

3.Strengthened PPP Enabling Framework

Review legal/regulatory framework for PPP

Set up restructuctured PPP Task Force headed

by Deputy Prime Minister

4. Project development

PMU/PDTT to coordinate/support

ASA's/People's Committee in engaging

consultants/transaction advisors

Negotiating with private sector bidders

C. MANAGEMENT ACTIVITIES

Annual Review

Gender Action Plan and Key activities

Project Completion Report

20182012 2013 2014 2015 2016 2017

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations – Roles and Responsibilities

Project implementation organizations

Management Roles and Responsibilities

Restructured Interministerial Task Force on PPP

At high level: The restructured Interministerial Task Force for PPP (PPP Task Force) will oversee and provide necessary guidance on the Project‘s operation and will review and make decisions on which PPP projects will be eligible to receive PDF support

Executing Agency MPI in close collaboration with other ASAs involved with

PPP: Ministry of Finance, Ministry of Justice, Ministry of Industry and Trade, Ministry of Transport, Ministry of Construction, State Bank of Viet Nam, People‘s Committees and other relevant agencies

Responsible for policy measures Project specific

management body Project Management Unit (PMU) of MPI with support from

PDF Technical Team Consultants, which will cooperate closely with ASAs to realize the PPP projects, establish the PDF and its operational procedures

ADB Provide financing through concessional project loan Approve procurement activities. Project monitoring

B. Key Persons Involved in Implementation

Executing Agency MPI Officer's Name: Mr. Le Van Tang

Position: Director General, Public Procurement Agency Telephone: +84 4 3733 7611/ +84 91 9416636 Email Address: levantang@mpi.gov.vn

Office Address: 6B Hoang Dieu, Ba dinh, Ha Noi, Viet Nam ADB Public Management, Financial Sector, & Trade Division, (SEPF) Southeast Asia Department

Staff Name: Shigeko Hattori Position: Director Telephone No.+63 2 632 6455 Email address: shattori@adb.org

Mission Leader Staff Name: Bob Finlayson Position: Principal Public Private Partnership Specialist Telephone No: .+63 2 632 1540 Email address: bfinlayson@adb.org

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C. Project Organization Structure

Diagram 1: Proposed PPP Institutional Structure for PPP Programs in Viet Nam

The Restructured IMTF

PDF Technical Team (PDF

consultants)

MPI

PPA/ PPP Office /

PMU and PDF

ASA

Donors

Consultants: FS and transaction

advisory

Deputy Prime Minister; Minister/Vice Minister of MPI, MOF

and other relevant

ministries

Special A/C for reflows

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Diagram 2. PPP Institutional Structure in MPI

Restructured Inter-Ministerial Task Force on PPP Headed by the

Deputy Prime Minister

ASA ASA

MPI

SBVSBV

MPI Public Procurement Agency (PPA) as one stop single window for PPP

Headed by Director General, PPA

MPI Division - PPP Office

Functions Function as lead agency for

MPI‘s PPP tasks

Serve as standing agency for the PPP Task Force

Provide support to project preparation and proposals

Coordinate implementation of activities related to technical assistance, capacity building, and training on PPP

Provide support to PPP promotion activities

Receive, manage and use sources of funds in support of PPP project development

Organize PPP communication activities

Conduct PPP international cooperation activities

Develop a PPP database system

Implement other PPP-related tasks as assigned by PPA Director General of MPI Public Procurement Agency

Project Management Unit (PMU)

Headed by Leader of PPA1 Supported by PDF Technical

Team Proposed Functions Act as gatekeeper of potential

PPP projects

Screen/Appraise all proposals for PDF funding and endorsement by DG or competent approval authority

Appraise PPP structured projects from ASA‘s for submission directly to restructured IMTF through DG

Conduct research on PPPs to support restructured IMTF

Prepare model documents, manuals and toolkits

Disseminate information on pipeline PPP projects

Support ASA‘s/People‘s Committee to undertake pre-feasibility studies/ detailed feasibility studies on PPP projects as well as in project structuring through procurement/engagement of external consulting resources

Carry out necessary coordination within MPI/other agencies/private sector. Act as a hybrid body for executing the said functions

Notes: (1) Minimum DDG Level

MOF MOJ

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6. The diagrams 1 and 2 illustrate the proposed institutional framework of the PPP Office, PDF and PDF Technical Team. The PPP Office will deal with state management functions and those listed in the diagram. MPI will establish a Project Management Unit (PMU) that will be responsible for the operations of the PDF, in compliance with the ODA law. The PMU will be made up of staff from the PPP Office and will be supported by a team of national and international consultants that will comprise the PDF Technical Team. The PMU will report directly to the Director General of PPA. The Director of the PMU will be the Leader of PPA (minimum Deputy Director General level) and will be supported by a Deputy Director of the PMU.

7. The PMU will manage the PDF and the PDF Technical Team. The PDF Technical Team will comprise firms made up of international and national consultants to be based in Hanoi for an initial period of 3-4 years and will assist the PPP Office in the day-to-day management of the PDF. The PPP Office, with support from the PDF Technical Team, will:

Evaluate PPP project proposals of Authorized State Agencies (ASAs) to identify projects that have potential to be developed as PPP projects, with particular initial focus on selecting Pathfinder Projects;

Assist ASAs proposing Pathfinder Projects to develop Project Proposals of an acceptable quality and provide capacity building to enable ASAs to develop Project Proposals for subsequent PPP projects for submission to the PDF, through MPI;

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Develop the terms of reference (TOR) for the selection and appointment of a Feasibility Study (FS) consultant(s) (and other advisors, as required) to prepare the FS for Qualifying Projects;

Provide resources to manage and work with the FS consultant and the ASA Designated Department (ASA DD) to provide input on PPP structuring to ensure that the project is compliant with the Government‘s PPP Pilot Program and meets the market‘s requirements (i.e., investability /bankability). This would include assessment of state participation, investment security mechanisms (government guarantees) and Viability Gap Funding (VGF), as applicable;

Develop sound model PPP project structures and project contract agreements for the Pathfinder Projects;

From model PPP structures and project agreements, develop a set of standardized PPP contractual terms and conditions / agreements; and

In conjunction with ASAs, monitor the performance of projects implemented under Viet Nam‘s PPP program and report successes, challenges and lessons learned to MPI and other government agencies.

8. The PDF Technical Team will support the PMU and PPP Office through a ―learning by doing process‖, and will also have the following responsibilities:

Assist in establishing the PDF and its operational procedures;

Provide guidance to the PMU, PPP Office and ASAs over the life of the initial Pathfinder Projects – expected to be a period of 3-4years; and

Assist the PMU, PPP Office and the ASAs bridge the many gaps and practical hurdles facing the initial implementation of the Pathfinder Projects under the PPP Pilot Program.

9. Although the PMU and PPP Office will play a significant role in the PDF‘s operations, the ASAs are also expected to play a significant role, as they will be heavily involved in the initial screening and selection of projects to be funded by the PDF, and will be the primary beneficiary of in-house capacity building. 10. The PDF will be established as a sustainable revolving facility. The project development expenses funded out of the PDF will be reimbursed by the winning private sector bidder. In certain cases the winning bidder would also pay a success fee to the PDF. In the case of a project that is not successfully bid out, the reimbursement of the expenses will be decided by the Government on a case by case basis. D. Standard Operating Procedures for Utilization of Funds Through PDF (to be

reviewed and revised by the PDF Technical Team)

Step Action Responsibility Est. Timeframe

A. Advance Selection of PDF Technical Team (PDF TT) - IDC through QCBS

1. Selection of 2 firms-technical and legal

2. MPI and ADB agree with the TORs provided by ADB in the PS3P procurement plan for the two firms to be

MPI/ADB

10

selected

3. MPI invites EOIs MPI

4. MPI evaluates and short-lists firms. Draft RFP approved by ADB

MPI/ADB

5. MPI issues RFP- to be procured under Indefinite Delivery Contract through QCBS

MPI

6. RFP evaluated and firms ranked both for the technical and legal component. ADB to approve

MPI/ADB

7. Consultants mobilized MPI

B. Procurement Capacity Assessment

8. PDF Technical Team will carry out a procurement capacity assessment and provide necessary training for the project sponsor to carry out the recruitment following ADB‘s Guidelines on the Use of Consultants (April 2010, as amended from time to time).

PDF TT/ADB

The International Procurement Advisor will assist the ASA‘s in the entire procurement process

C. Project Identification and Evaluation

Pre-Feasibility (Pre-FS) Studies

Pre-FS will be recruited through CQS provided the value of the contract is below the threshold of USD 400,000. If the estimated budget is above USD 400,000 QCBS will be required

9. ASA identifies potential PPP project. ASA

10. ASA prepares Project Proposal in required form including TORs for consultants to undertake Pre-FS and submits to PDF TT for review and funding

ASA

11. PDF TT reviews proposal, revise TORs if necessary in agreement with ASA and submits to Project Monitoring Unit (PMU) in MPI Public Procurement Agency (PPA) for approval for funding of Pre-FS. Copy to ADB

PDF TT

12. PMU, in coordination with PPP Office and with approval from Director General PPA (DG PPA), approves funding proposal for Pre-FS

PMU

13. ASA invites EOIs for engaging consultants for Pre-FS ASA

14. Consultants submit EOIs to ASA with copy to PDF TT Consultants

15. ASA in conjunction with PDF TT short-lists candidates. Prepares RFP with support from PDF TT.

‗NOC (No Objection Certificate) from ADB‘

ASA/PDF TT

16. ASA issues RFP to shortlisted candidates ASA

17. ASA with support from PDF TT reviews proposal and select consultants, submits to PMU and DG PPA for approval for funding. ADB for ‗NOC‘

ASA/PDF TT

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18. Consultant commences work under supervision of ASA ASA

19. PMU, in coordination with PPP Office and with approval from DG PPA, approves and issues instructions for disbursement directly to consultants in accordance with the contract

PMU

20. Consultant‘s report submitted to ASA/PDF TT for review

Consultants

21. Report finalized after incorporating comments from ASA//PMU/PDF TT

ASAPDF TT

22. Technical Quality of report certified by ASA and submits documents to PMU for release of payment to consultants. Upon receipt of relevant documents, PMU, with approval from DG PPA, authorizes payment. No technical evaluation done by PMU.

ASA/PMU

D. Procedure for carrying out detailed feasibility study and project structuring

23. PMU will establish a list (panel) of pre-qualified firms through CQS that are eligible and qualified to carry out detailed feasibility studies and transaction advisory. The list of pre-qualified firms will include a minimum of six (6) firms/consortia for each sector. The pre-qualification list will be valid for two (2) years where it will be subject to renewal through a CQS process. The list of pre-qualified firms will be used for all proposed PPP projects valued below USD 300,000,000 while feasibility study/transaction advisory consultants for PPP projects valued above the threshold will be recruited following standard QCBS (80:20) process. In cases where the ASAs and the PMU agree that the list of pre-qualified firms will not meet the needs of the project they may choose to advertise and prepare a new shortlist with the prior approval of ADB. It is expected that as a minimum three different sectors will be covered under this arrangement: roads/bridges, ports and water supply. Depending on the pipeline of PPP projects additional list may be required. Any firm/consortia may qualify in one or more sectors.

24. PDF TT/sector ASA will collectively prepare TORs, invite EOIs and evaluate and short-list firms.

25. PDF TT/Sector ASA prepare RFQ with ‗NOC‘ from ADB. PDF TT issues RFQ.

26. PDF TT/Sector ASA evaluates RFQ and ranks firms. ‗NOC‘ from ADB

27. Panel of six firms created for each sector

E. Approval by Prime Minister of Candidate PPP Projects

28. ASA nominates Designated Department (ASA DD) for PPP project, including Team Leader to lead

ASA; ASA DD

12

development of project.

ASA DD and, in particular, the Team Leader, to have the principal role of driving the Project forward.

29. ASA prepares Project Proposal in required form based on pre-feasibility study.

Form of Project Proposal to include Project Application Form, together Pre-Feasibility Study (Pre-FS).

ASA DD

30. ASA submits Project Proposal to MPI for consideration as a PPP Project.

ASA DD; PPP Office; PMU

31. PDF TT to evaluate Project Proposal. PMU; PDF TT

32. PDF TT logs Project Proposal in its Project Database. PDF TT

33. ASA enters into agreement / mandate with PDF TT in respect of the Project.

This will be important as the basis, for example, for PDF TT to recover costs at Project award – mandate letter therefore would provide for this mechanism and obligate the ASA to include provision in the RfP for PDF TT cost recovery and, if applicable, Success Fee. It also needs to cover (initially, at least) the provision of PDF TT resources to assist in completing the Project Proposal.

ASA DD; PDF TT

34. If not already done, PDF TT assist ASA to conduct informal market soundings with a representative group of investors in the relevant sector.

ASA; PDF TT;

35. Concurrently, PMU consults with ministries, sectors, provincial-level People‘s Committees and agencies (Relevant Government of Viet Nam Agencies) to obtain opinions on Project Proposals.

PMU; PDF TT

36. Within 30 working (business) days of receipt of request from PMU, the relevant government agencies provide their opinions on Project Proposals - no opinion is deemed to be a ―no objection‖.

PPP Office; relevant

government agencies

30 Business Days

37. Project Proposals that are ―Passed‖ (and for which no objections have been registered during consultation process) are proposed by PDF TT to MPI for inclusion on the PPP Project List to be approved by the Prime Minister (PM).

Even Propjet Proposals that ―Pass‖ may require additional information from ASAs to fill information gaps.

If so required, PDF TT will need to develop an action and resourcing plan for Passed Projects.

PDF TT; PMU; PPP Office

38. PDF TT prepares a work / resource plan and schedule for ―Passed‖ projects and projects that require additional work

PDF TT; ASA DD

39. PM approves Project List. PM

40. For Project Proposals that are returned to ASAs for additional information – PDF TT develops an action

PDF TT;

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and resourcing plan to assist ASA complete / incorporate additional information in the Project Proposal to meet the requirement.

This will be an important component of the early work of the PDF TT. The objective will be to help the ASAs ―learn-by-doing‖ and so the emphasis will be to build capacity so that, over time, the draw on PDF TT resources will lessen for this activity.

ASA DD

41. Project Proposals that are rejected for development as PPPs may be redirected by the ASA to public procurement

ASA

42 MPI and relevant ASAs publicize the Project List approved by the PM.

MPI; ASA

F. Detailed Feasibility Studies / Transaction Advisors Recruitment

43 TORs for FS/ transaction advisors role drafted by ASA in consultation with PDF Management Team, including scope of work, budget and basis for recruitment. The work will need to be carried out under one package in two phases-phase 1 to carry out the detailed feasibility study (DFS) and phase 2 for the transaction advisory work. Both phases will be contracted under one package.

44. Short form proposals issued to panel firms for that sector if total estimated project cost is below $300,000,000. If justified ASA/PDF TT may decide to look beyond the panel of firms. If project cost is estimated above $300,000,000 then EOI‘s/ RFQ will be issued and firm selected on the basis of QCBS.

45. ASA ranks firms in consultation with PDF TT. Procurement Expert from PDF TT to be an observer in the selection. ‗NOC‘ from ADB

46. ASA DD negotiates contract with Consultant, supported by PDF TT.

Should develop form contracts to expedite process

ASA signs contract with selected panel firm. A technical agreement is executed between MPI PPP Office and the ASA to capture the obligations between the PPP Office and the ASA for the release of PDF funds.

Contract likely to be structured with milestone payments

47. Selected firm mobilized

48. PPP Office advises commercial bank for disbursement directly to consultants

G. FS Preparation and Approval

49. Consultant commences work, managed by ASA with support from PDF TT. (ASA to have a proactive role)

Consultant; ASA DD; PDF TT

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50. PDF TT guides Consultant on issues related to PPP structure, GS, VGF etc.

PDF TT

51. ASA with support of PDF TT carry out a ‗market sounding‘ on Qualifying Project by ASA.

At this stage the market sounding may be formalized and open to all interested parties / potential bidders. The intent of the market sounding is to understand potential investor concerns / issues in relation to the Qualifying Project so that these may be addressed in Project structuring and contracting arrangements.

PDF TT; ASA

52. PMU coordinates consultations with Relevant GoV Agencies, in coordination with ASA and PDF TT (Project Team).

PMU; ASA; PDF TT; relevant government

agencies

53. Consultant delivers draft FS to Project Team for review (i.e., to ASA DD and PDF TT) with copy to ADB

FS Consultant

54. Relevant government agencies provide opinions on FS to ASA/PDF TT.

ASA DD; relevant government

agencies

[10 business days]

55. ASA DD summarizes comments from PDF TT and relevant government agencies and delivers to Consultant for inclusion in FS.

ASA DD

56. Consultant amends FS to take account of comments received.

FS Consultant

57. Consultant delivers final FS to ASA DD and PDF TT. Copy provided to ADB

FS Consultant

58. ASA certifies technical quality of FS report. ASA

59. ASA submits required documents to PPP office for payment authorization for FS. PMU reviews documents (no technical evaluation by PMU) and authorizes commercial bank to release payment

ASA

H. Article 18 Report

60. ASA/PDF TT prepares a report on state participation portion, investment security mechanism (Government Guarantee), VGF necessary for the Project (Article 18 Report under Decision 71).

In reality this would be done in parallel with FS development. Early engagement / consultation with MOF is particularly critical here and should be provided for during the FS development.

ASA /PDF TT; MOF

61. ASA submits Article 18 Report together with FS and other relevant documents (dossier) to the PM.

ASA

62. MPI, through PMU, consults with MoF and concerned ministries – circulates dossier comprised of Article 18 Report, FS and other relevant documents.

MPI, PMU, MOF, other concerned

ministries

63. MPI/PMU collects opinions of MoF and concerned MPI (PMU); MOF; 30 Business

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ministries within 30 Business Days of receipt of complete dossier from the ASA.

MOF‘s role, in particular, will be critical on these Article 18 matters.

concerned ministries

Days

64. MPI submits appraisal reports in respect of the project dossier to the PM.

MPI

65. PM issues decision on matters contained in Article 18 Report (and dossier).

PM Article 18 Decision needs to provide sufficient certainty as to level of state participation portion, investment security mechanism (Government Guarantee), VGF necessary for the Project etc. to enable the ASA to include these parameters in the RfP to be developed during the next Phase.

PM

66. Upon receipt of PM approval of Article 18 Report in respect of the Qualifying Project, ASA approves FS. Once FS is approved ASA DD will need to initiate land acquisition process and other matters to ready project for tendering.

ASA

I. Transaction Advisory /Project Structuring/Bidding/ Negotiation

The same consulting firm will carry on the phase 2 of the contract package.

67. ASA and PDF TT (Project Team) and Transaction Advisors (TAs) agree timetable for RfP development, tender process and negotiation / finalization of Projects Agreements.

This should have been set out in the TA TOR and included in the TA Contract.

TA support will be required through to Financial Close and TA contracts should reflect this. All reports to be copied to ADB

Project Team; TA

J. Development of RfP and Project Contracts

68. TAs commences work, managed by ASA DD (Project Team) in coordination with PDF TT

TA; PDF TT; ASA DD

69. TAs prepares Project Agreements in consultation with Project Team.

TA; Project Team

70 TA prepares EOI notice, Request for Qualification (RfQ) and RfP in consultation with Project Team. Screened by Procurement Expert in PDF TT

RfP to include provision for recovery of project development expenses and, if applicable, Success Fee.

TA; Project Team

71. MPI/PMU coordinates consultations with relevant government agencies in respect of input required for Project Agreements and RfP, in coordination with ASA + PDF TT and TAs.

PPP Office Liaison Officer leads this activity.

MPI/PMU; relevant government

agencies; ASA; PDF TT

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72. TAs delivers draft RfP package (including Project Agreements) to Project Team for review (i.e., to ASA DD, PDF TT) Ideally the review of RfP / Project Agreements should be well advanced before issuance of the EOI Investor to avoid protracted delays if issues arise on RfP package.

TA

73. ASA DD and relevant government agencies provide opinions on RfP package.

ASA DD [10 business days]

74. ASA DD Project team summarizes opinions of PDF TT and relevant government agencies and delivers to TAs for inclusion in RfP package.

ASA DD

75. TAs amends RfP Package to take account of comments received.

TAs

76. TA delivers final RfP package to ASA DD and PDF TT.

RfP Package to include documentation relating to State participation, investment security mechanism (Government Guarantee) and/or VGF, as applicable.

TA

77. PDF TT, in consultation with PMU, reviews state participation portion, investment security mechanism (Government Guarantee), VGF necessary for the Project to confirm it is in line with PM approval (per earlier Article 18 Report).

In reality this would be done in parallel with development of RfP package.

PDF TT;

PMU

78. In the event of variance from PM Article 18 approval, PDF TT consults with PPP Office and ASA DD.

PDF TT; PPP Office; ASA DD

79. PPP Office in turn, consults with relevant government agencies.

Again, MOF will provide critical input in this process.

PPP Office; relevant

government agencies

K. Article 18 Variance Report

80. If required, PDF TT (with input of PPP Office and ASA DD) prepares a report on changes required to PM decision on the Qualifying Project (Article 18 Variance Report), including justification for variance.

PDF TT; PPP Office; ASA DD

81. PDF TT submits the Article 18 Variance Report to the ASA.

PDF TT

82. ASA concurs with the Article 18 Variance Report. ASA

83 ASA submits the Article 18 Variance Report to the PM together with other project documents (dossier).

ASA

84. In Parallel, ASA formally submits the dossier to the MPI (PMU).

ASA

85. MPI/PMU consults with MoF and relevant government agencies – circulates dossier comprised of Article 18 Variance Report, and other relevant documents.

MPI; PMU; relevant government

agencies

86. MPI/PMU collects opinions of MoF and concerned ministries within 30 business days of receipt of

MPI; PMU 30 business

17

complete dossier from the ASA. days

87. MPI submits appraisal reports in respect of the project dossier to the PM.

MPI; PMU

88. PM issues decision on matters contained in Article 18 Variance Report.

PM

L. Finalization of RfP and Conduct of Tender

89. ASA approves RfP Package.

Subject, in the case of Qualifying Projects that require an Article 18 Variance Report, to PM approval of that report.

ASA

90. ASA Establishes Project Procurement Committee (PPC). Procurement Expert from PDF TT to sit as an observer

ASA

92 ASA issues call for EOIs to develop the Project from investors.

ASA DD

93 Interested investors submit EOIs to ASA.

PDF TT and TA assist ASA throughout tender process, with PPP Unit oversight / coordination.

Investors

94 ASA in conjunction with PDF TT prepares report on EOIs submitted.

PDF TT

95 ASA invites EOI Respondents to submit Qualifications in response to RfQ.

ASA DD

96 EOI Investors submit qualifications to ASA. ASA DD

97 ASA distributes RfQ responses to PDF TT and TAs for assessment/comments.

ASA DD

98 ASA with support from PDF TT, in conjunction with TAs, prepare report on RfQ (RfQ Report) responses received from investors, short-listing qualified investors (QI).

PDF TT; TAs

99. ASA advises QIs that they have been shortlisted, makes announcement on web site of ASA and PPP Office.

ASA DD

100. ASA (led by ASA DD) conducts tender process in consultation with and support of PDF TT, Tas.

ASA DD

101. ASA issues RfP to QIs. ASA DD

102. ASA holds Bid Conference, with support of PDF TT and TAs.

The purpose of the Bid Conference is to communicate the RfP process to Bidders and explain key issues e.g., risk allocation, evaluation criteria etc. Bidders are given the opportunity to raise questions / seek clarification in open forum.

ASA DD

103. QIs submit Clarification Questions (CQs) on RfP and Project Agreements to ASA DD.

QI

104. ASA, PDF TT and TAs compile responses to CQs. ASA; PDF TT; TA

18

105 ASA issues responses to CQs. ASA

106. QIs submit comments / mark ups on Project Agreements.

QI

107. ASA, PDF TT and TAs review comments / mark ups on Project Agreements.

If the Project has been well prepared and Project Agreements are balanced (i.e., demonstrate a balanced risk allocation) this process should be relatively straightforward with minimal mark ups; if project is ill-prepared and Project Agreements are poor qualify and/or one-sided there will be substantial comments and mark-ups and this process will be protracted. To a large extent the efficiency of this process will be driven by the quality of the TAs and the willingness of the ASA (and other government agencies) to listen and respect their advice.

ASA; PDF TT; TA

108. ASA issues revised Project Agreements. ASA

109. QIs submit Bid Proposals.

In an ideal world, with high quality TAs and willingness of ASAs (and others) to adhere to advice from TAs the RfP process can be relatively straightforward and the long negotiation process on Project Agreements can be avoided.

TAs should have confidence in their capacity to develop a bankable project structure and project contracts.

ASAs need to display confidence in their selected TAs (or Retained TAs in the case of Pathfinder Project).

Bid Proposals to be submitted in two-envelope system – Technical Proposal and Financial Proposal.

QI

M. Bid Evaluation and Award-

110. ASA opens and reviews QI Technical Proposals with support of PDF TT, Tas. Experts involved with the preparation of FS may be consulted as they are from the same firm as that of the TAs.

As noted, may wish to structure FS Consultant contract with a Phase 2 component to support tender process, subject to project proceeding.

ASA DD; PDF TT; TA

111. ASA DD in conjunction with PDF TT (Procurement Expert)and TA (and FS Consultant) prepares Technical Bid Evaluation Report

ASA DD; PDF TT; TA; FS Consultant

112. ASA conducts Bid Opening Ceremony, with support of PDF TT and TAs, for QI‘s Financial Proposals for those QIs Technical Proposals that achieved a ―Pass‖ grade.

This should be done very quickly following Bid submission to assure QIs / investors generally of open and transparent process.

ASA DD; PDF TT; TA

113. Following Bid Opening Ceremony, ASA conducts a review and check of QIs Financial Proposals (which

ASA DD; PDF TT;

19

achieved a ―Pass‖ grade for their Technical proposal, in conjunction with PDF TT, TA and FS Consultant.

This is for the ASA to assure itself that no errors or miscalculation is made in the First-Ranked Bidder‘s Proposal.

TA

114. ASA DD in conjunction with PDF TT and TA [and FS Consultant] completes Bid Evaluation Report, including Financial Proposal parameters

ASA DD; PDF TT; TA; [FS Consultant]

115. Upon confirmation, ASA announces First-Ranked Bidder and publicizes this on ASA and MPI web site.

ASA; PMU

117 ASA issues Letter inviting First-Ranked Bidder to negotiate Project Agreements and implementation schedule for the Project.

If the process is properly conducted there should be minimal issues up for negotiation and the Parties may proceed to initial Project Agreements quickly.

ASA

118. ASA and First-Ranked Bidder negotiate Project Agreements – ASA supported by PDF TT and TA and FS Consultant.

ASA; PDF TT; TAs

119. If First-Ranked Bidder and ASA agree Project Agreements these are initialed and First-Ranked Bidder moves into financing phase for Project

This approach relies on a high quality RfP and bankable Project Agreements and a tender process managed by high caliber TAs. It does not work if any of these elements are absent.

Vietnam should avoid slipping back into protracted negotiations on ICB transactions which are underprepared and/or put into the market with unbankable terms. This approach undermines the ICB process and (usually) results in re-negotiation of Bid terms. It also substantially delays the implementation of projects and, therefore, delivery of infrastructure undermining the benefits of private sector participation in PPPs.

ASA; First-Ranked Bidder

120. If First-Ranked Bidder fails to agree Project Agreements with ASA within acceptable timeframe, ASA commences negotiation with next-ranked Bidder.

ASA

121. Winning Bidder pays Project Development Costs - potentially structured as a proportion due upon award and balance at Financial Close

Estimate of expected Project Development Costs needs to be provided in the RfP together with mechanism for variation of payments in the event there is variance on that number. Alternatively, ASA may simply indicate a hard number and agree this split with PDF TT.

Winning Bidder

122. Upon award ASA to tender for the appointment of a consultant to undertake Contract Management on behalf of the ASA.

ASA

20

Provision for appointment of independent consultant to monitor compliance with conditions precedent under project agreements and ensure PPP Project Company implements project in accordance with contract.

Likely that the costs of this may be borne by the PPP Project Company – if so provision will need to be made in PPP Project Agreements.

PDF TT support in contract monitoring / management and ASA should provide periodic reports submitted by Project monitoring consultant

123. PDF TT and TAs (and FS Consultant) support the ASA through to Financial Close

PDF TT; TA: FS Consultant

124. Investor applies to MPI for Investment License Investor

125. MPI Issues Investment License, formally establishing PPP Project Company

MPI

126. Investor, PPP Project Company and ASA execute PPP Project Contract

Investor; ASA

127. Investor / PPP Project Company achieve financial close for the project

Investor; Lenders

IV. COSTS AND FINANCING

11. It is proposed that P3SP will use a project loan totaling SDR equivalent of $20,000,000 from the Asian Development Fund (ADF), the proceeds of which will be used as the ―seed capital‖ to establish a PDF. The PDF would primarily be used to fund project preparation activities for PPP projects. The P3SP was supported by a small-scale TA (SSTA), which conducted a review of the institutional, legal and regulatory framework for PPP in Viet Nam and provided recommendations for the establishment, operation and funding of the PDF. 12. Agence Française de Développement (AFD) has indicated an interest in providing additional seed capital for the PDF in the amount of €8 million via a parallel loan under AFD‘s PS2 conditions.2 Separately and outside of the P3SP, AFD is also processing a grant of €600,000 to support the institutional capacity initiatives on PPPs. 13. Table 1 shows the tentative sources for the P3SP.

Table 1. P3SP Funding Sources (amounts in $ million)

Sourcea Amount

%

ADB 20.00 87.3 Government 2.90 12.7

TOTAL 22.90 100.0 a The government counterpart funding amount includes estimated financing charges of $0.9 million.

2 AFD‘s PS2 loan is priced at 6-month EURIBOR less 45 bps, which can fluctuate depending on AFD‘s cost of

funding. The loan has a term of 20 years, with a grace period of 7 years.

21

A. Detailed Cost Estimates by Expenditure Category

Table 2. Detailed Cost Estimates by Expenditure Category

Item

Amount % of Total Base Cost

A. Base Costa

1. PDF Operating Costsb 1.30 5.9%

2. Consulting Services 2A. PDF Technical Team–International Consultants

c 2.00 9.1%

2B. PDF Technical Team–National Consultantsc 0.70 3.2%

2C. Project Developmentd 18.00 81.8%

Subtotal / Total Base Cost 22.00 100.0% B. Financing Charges During Implementation

e 0.90 4.1%

Total (A+B) 22.90 104.1% Source: Asian Development Bank estimates.

a Includes taxes and duties of $1.4 million to be financed from ADB loan resources. Financing of taxes and

duties from the ADB loan is justified because: (i) it will not represent an excessive share of the project investment plan; the taxes and duties apply only with respect to ADB-financed expenditures; and (iii) financing of taxes and duties is material and relevant to the success of the project.

b PDF Operating Costs includes establishment costs of PMU, PMU staff salaries, office rental, utilities,

supplies, transportation, taxes, contingencies and miscellaneous costs. c PDF Technical Team costs are composed of consultant fees over the first 3 years for consultants that will

support MPI in managing the PDF. d Project Development consist of consultant fees for the preparation of pre-feasibility studies and feasibility

studies and the provision of transaction advisory services for PPP projects. e Includes interest charges. Interest on the ADB loan has been computed at 1% as per standard ADF loan

guidelines for first 8 years.

B. Allocation and Withdrawal of Loan Proceeds

Table 3. Allocation and Withdrawal of Loan Proceeds (amounts in $ million)

Category ADB Financing

Number Item Amount

Allocated

Withdrawal from the Loan Account

1. Consulting Services

1A. PDF Technical Team – International Consultants

2.00 100% of total expenditures claimed

1B. Project Development 18.00 100% of total expenditures claimed

Total 20.00 Source: Asian Development Bank estimates.

.

C. Detailed Cost Estimates by Financier

Table 4. Cost Estimates by Financier (amounts in $ million)

ADB Government

Item Amount

% of Cost

Category Amount

% of Cost

Category Total Cost

A. Investment Costsa

1 Consulting Services

1A PDF Technical Team – Int‘l Consultantsb 2.00 100.0% 0.00 0.0% 2.00

1B PDF Technical Team – Nat‘l Consultantsb 0.00 0.0% 0.70 100.0% 0.70

1C Project Developmentc 18.00 100.0% 0.00 0.0% 18.00

Subtotal (A) 20.00 97.0% 0.70 3.0% 20.70

B. Recurrent Costs

1 PDF Operating Costsd 0.00 0.0% 1.30 100.0% 1.30

Subtotal (B) 0.00 0.0% 1.30 100.0% 1.30

Total Base Cost 20.00 91.0% 2.00 9.0% 22.00

C. Financing Charges During Implementatione 0.00 0.0% 0.90 100.0% 0.90

Total Project Cost (A+B) 20.00 87.0% 2.90 13.0% 22.90 % Total Project Cost 87.0% 13.0% 100%

Source: Asian Development Bank estimates.

a Includes taxes and duties of $1.4 million to be financed from the ADB loan resources.

b PDF Technical Team costs consist of consultant fees over the first 3 years for consultants that will support the MPI in managing the PDF

c Project Development consist of consultant fees for the preparation of pre-feasibility studies and feasibility studies and the provision of transaction advisory

services for PPP projects. d PDF Operating Costs include establishment costs of PMU, PMU staff salaries, office rental, utilities, supplies, transportation, taxes, contingency and

miscellaneous costs. e Includes interest charges. Interest on the ADB loan has been computed at 1% per annum as per standard ADF loan guidelines.

22

D. Detailed Cost Estimates by Outputs/Components

Table 5. Detailed Cost Estimates by Output / Components (amounts in $ million)

Output 1. Establishment of

Project Development

Facility

Output 2. Strengthened PPP

institutional capacity

Output 3. Strengthened PPP

enabling framework

Item

Total Cost Amount

% of Cost

Category Amount

% of Cost

Category Amount

% of Cost

Category

A. Investment Costs

1 Consulting Services

1A PDF Technical Team – Int‘l Consultantsa 2.00 2.00 100.0% 0.00 0.0% 0.00 0.0%

1B PDF Technical Team – Nat‘l Consultantsa 0.70 0.70 100.0% 0.00 0.0% 0.00 0.0%

1C Project Developmentb 18.00 18.00 100.0% 0.00 0.0% 0.00 0.0%

Subtotal (A) 20.70 20.70 99.0% 0.00 0.0% 0.00 0.0%

B. Recurrent Costs

1 PDF Operating Costsc 1.30 1.30 100.0% 0.00 0.0% 0.00 0.0%

Subtotal (B) 1.30 1.30 100.0% 0.00 0.0% 0.00 0.0%

Total Base Cost 22.00 22.00 99.0% 0.00 0.0% 0.00 0.0%

C. Financing Charges During Implementationd 0.90 0.90 100.0% 0.00 0.0% 0.00 0.0%

Total Project Cost (A+B+C) 22.90 22.90 100.0% 0.00 0.0% 0.00 0.0% Source: Asian Development Bank estimates.

a PDF Technical Team costs consists of consultant fees over the first 3 years for consultants that will support the MPI in managing the PDF.

b Project Development consist of consultant fees over the first 7 years for consultants that will prepare pre-feasibility studies and feasibility studies and provide

transaction advisory services for PPP projects. c PDF Operating Costs include establishment costs of PMU, PMU staff salaries, office rental, utilities, supplies, transportation, taxes, contingency and miscellaneous

costs. d Includes interest charges. Interest on the ADB loan has been computed at 1% per annum as per standard ADF loan guidelines.

.

23

E. Detailed Cost Estimates by Year

Table 6. Detailed Cost Estimates by Year (amounts in $ million)

Item

Total Cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

A. Base Costs

1 Consulting Services

1A PDF Technical Team – Int‘l Consultantsa 2.00 0.67 0.67 0.67 0.00 0.00 0.00

1B PDF Technical Team – Nat‘l Consultantsa 0.70 0.23 0.23 0.23 0.00 0.00 0.00

1C Project Developmentb 18.00 4.00 6.00 7.00 0.33 0.33 0.33

Subtotal (A) 20.70 4.90 6.90 7.90 0.33 0.33 0.33

B. Recurrent Costs

1 PDF Operating Costsc 1.30 0.44 0.17 0.17 0.17 0.17 0.17

Subtotal (B) 1.30 0.44 0.17 0.17 0.17 0.17 0.17

Total Base Cost 22.00 5.34 7.07 8.07 0.50 0.50 0.50

C. Financing Charges During Implementationd 0.90 0.02 0.08 0.15 0.19 0.20 0.26

Total Project Cost (A+B+C) 22.90 5.36 7.15 8.22 0.70 0.70 0.76 Source: Asian Development Bank estimates.

a PDF Technical Team costs consists of consultant fees over the first 3 years for consultants that will support the MPI in managing the PDF.

b Project Development consist of consultant fees over the first 7 years for consultants that will prepare pre-feasibility studies and feasibility studies and provide

transaction advisory services for PPP projects. c PDF Operating Costs include establishment costs of PMU, PMU staff salaries, office rental, utilities, supplies, transportation, taxes, contingency and

miscellaneous costs. d Includes interest charges. Interest on the ADB loan has been computed at 1% per annum as per standard ADF loan guidelines.

24

25

F. Contract and Disbursement S-curve

26

G. PDF Fund Flow Diagram

Fund Flow for the Component 1 +++++++++++++

PDF Technical

Consultants

2

1 3

5

4

PMU’s

Account

PMU ADB

27

Fund Flow for the Component 2

The PMU will be responsible for the PDF‘s operations.

The loan from ADB is proposed to be provided as state budgetary allocation in the form of grant to MPI and the Authorized State Agencies.

The ADB loan proceeds will be deposited in a separate dedicated imprest account within a commercial bank (similarly in the future, as and when other donors participate in funding the PDF, such donor assistance will also be placed in a separate account within a commercial bank). Likewise the disbursement from MPI out of its budgetary allocation of $2 million will be placed in a separate account. As and when MPI requires the use of the funds to pay consultant expenses based on invoices or consultant claims received, the Public Procurement Agency of MPI will instruct the commercial bank to transfer the funds from the ADB imprest account in the following manner: (i) for payment of claims of international consultants of the PDF Technical team, funds will be transferred directly to the consultants‘ bank accounts, and (ii) for payment of claims of consultants for project preparation expenses, including preparation of pre-feasibility and full feasibility studies and provision of transaction advisory services, funds will be transferred to the dedicated and separate bank accounts established by the relevant line ministry or ASA to receive funds from the ADB loan, which will then be used to pay such consultant claims in no

2

7

1

6

8

Cost reimbursement

PPP contract

ASA

PMU

Investor

ADB

ASA’s account

Consultants

3

5 4

PMU-PDF’s account

28

longer than seven (7) working days. The commercial bank will not have any say /decision on the allocation of funds. Replenishment of the ADB imprest account will take place once a request is submitted by PMU to ADB for liquidation and replenishment of funds.

The Authorized State Agencies will be the originator of all PPP projects and will be responsible for procuring the consultants based on ADB procurement procedures with the support of the PDF Technical Team/PPP Office. The Authorized State Agencies will also be responsible for implementing of the PPP projects.

Request for funding from the PDF will be submitted by the Authorized State Agencies together with its certification of the deliverables of the consultants to the PMU/PPP Office for endorsement and instructions to the commercial bank to transfer the approved amount to the dedicated and separate bank accounts established by the relevant line ministry or ASA to receive funds from the ADB loan, which will then be used to pay such consultant claims in no longer than seven (7) working days.. The PDF Technical Team will comprise of international PPP experts to help and support the Authorized State Agencies in the procurement and project development process.

The Authorized State Agencies will need to set up its own PPP focal point from its own resources.

Upon successful bidding of the PPP project, the winning bidder will be required to reimburse the expenses incurred on project development. The winning bidder will pay a success fee in accordance with the standard operating procedures for the utilization of funds through the PDF to be agreed with ADB. The Government will ensure that the funds received from the winning bidder will be deposited immediately and directly into the Reflow Account. The Government will also ensure that any funds received from the Authorized State Agency to reimburse the PDF for expenses incurred in conducting, as applicable, the pre-feasibility studies, feasibility studies and transaction advisory services, will be deposited immediately and directly into the Reflow Account.

The Government will ensure that the proceeds in the Reflow Account will be used to finance project preparation expenses of PPP projects. The amount recovered from the winning bidder as mentioned above will be directly redeposited in a dedicated separate account with a commercial bank for further funding of new PPP projects.

14. The primary responsibility for generating PPP projects, procuring consultants and implementing projects will be the absolute responsibility of the Authorized State Agencies.

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

15. An interministerial task force on PPP, chaired by a Deputy Prime Minister and comprising Ministry of Finance, Ministry of Justice, Ministry of Industry and Trade, Ministry of Transport, Ministry of Construction, State Bank of Viet Nam and other relevant agencies as members, was established in mid-January 2011 to provide overall guidance to the Government‘s PPP piloting initiative. It is anticipated that the task force will be further strengthened with more senior personnel than it is now, and will also ensure coordination of the P3SP. ADB will coordinate closely with other development partners, particularly with AFD, and the U.S. Agency for International Development (USAID)-funded Viet Nam Competitiveness

29

Initiative (VNCI), which will be providing consultants to the task force at MPI, to support the overall PPP initiative of the Government. 16. As part of the implementation of the P3SP, a formal dedicated PPP Office was established on April 2012 within MPI‘s Public Procurement Agency. The PPP Office will establish a PMU that will be responsible for the PDF and will oversee the PDF Technical Team (PDFTT). It is anticipated that staff of the PMU will be composed of qualified staff who can manage the financial accounts of the PDF. Training will be provided to the PMU staff on financial management and ADB loan disbursement procedures. 17. While the PDF refers to the project development facility or the fund allocated to it, the PDFTT will be the management resource that will be predominantly funded by the PDF, to deliver the project development services for which the PDF has been established. This includes the procurement and management of the consultants that assist the delivery of such services. The PDFTT will be formally established under the oversight of the PMU within MPI. The PDF will initially be funded from a loan of $20 million from ADB, and other donors are expected to participate in funding the PDF, including AFD who is presently processing a Euro 8 million (approximately USD 10 million) loan that will also fund the PDF. The Government will allocate a budget of $2 million of counterpart funding for the PDF 18. The Socialist Republic of Viet Nam will be the borrower for the ADB loan. The loan will be used to (i) make payments to engage the consultants/advisors to manage the PDF, as well as (ii) provide funding for project development activity of the Authorized State Agencies (see PDF fund flow diagram above). Expenses for project development will be paid out of the PDF through the standard operating procedures detailed above. All fund flows, except in the case of direct payment procedure which may also be used to pay consultant expenses directly in certain cases as described in para 22, will be done through the use of a dedicated imprest account for ADB3 to be established in a commercial bank and managed by the PMU. In the case of payments for consultant claims for project development activities, the payment will be done through a dedicated and separate account set up by the Authorized State Agencies, which will be coursed through the PMU. MPI through the PMU will assume powers to issue disbursement instructions to the commercial bank, and will only issue such disbursement instructions upon receipt and review of actual consultant invoices. For successfully bid out projects the expenses incurred for development will be recovered from the winning bidder and paid back to the original provider of funds by way of depositing to a separate dedicated account with the commercial bank.4 In the case of a project that is not successfully bid out, the reimbursement of the expenses will be decided by the Government on a case by case basis. The PDF will be a non-profit oriented revolving and open fund (i.e. open to funding by other donors and institutions). 19. Depending on the size and complexity of the project, any project development expenses normally should range between 3–4% of the total project cost. Assuming the estimated average project development expenses to be in the range of $3–4 million an initial PDF size of $18-$26 million should be sufficient for funding the project development activity of about 6-10 projects in Viet Nam. As the PDF is proposed to be revolving the PDF will get replenished by the expenses recovered from successfully bid out projects to support the development of additional projects later down the pipeline. Like any other fund, the PDF also runs a risk if the percentage of projects that are not successfully bid out are high. This risk is mitigated by ensuring proper

3 In the future, additional separate accounts will be established by the PMU to accommodate donors such as AFD

who want to provide funding to the PDF. AFD is presently processing a loan of Euro 8 million under the P3SP. 4 Section G on the PDF Fund Flow provides details on the use of imprest accounts.

30

selection of projects and engaging transaction advisors with the right expertise to help develop viable bankable projects that will attract both the investor as well as the lenders.

B. Disbursement

20. The ADB loan proceeds will predominantly be utilized to engage consultants/advisors through a transparent selection process based on ADB‘s Guidelines on the Use of Consultants by ADB and its Borrowers (April 2010, as amended from time to time). 21. The ADB loan proceeds will be used to finance the proposed Project Development Facility, in particular for the use of engaging consultants to provide support to the PMU to manage the PDF and a separate set of consultants to support line ministries in the project preparation process. The Loan proceeds will be disbursed in accordance with ADB‘s Loan Disbursement Handbook (2012, as amended from time to time),5 and detailed arrangements agreed upon between the government and ADB. 22. To facilitate efficient disbursement of ADB loan proceeds, a separate dedicated imprest account will be established within a commercial bank. The ceiling of the ADB imprest account will be 10% of the ADB loan amount. The currency of the ADB imprest account will be in US dollars. In the future, as other donors participate in funding the PDF, dedicated and separate accounts will also be established for them. As and when MPI requires the use of the funds to pay international consultant expenses of the PDF Technical Team based on actual consultant invoices or claims received, the PMU will instruct the commercial bank nominated by the State Bank of Viet Nam (SBV) to transfer the funds from the ADB imprest account directly to the consultants‘ accounts. As and when MPI requires the use of the funds to pay consultants for project preparation expenses incurred by the line ministries or ASAs, including the preparation of pre-feasibility and full feasibility studies and provision of transaction advisory services, the PMU will instruct the commercial bank nominated by SBV to transfer the funds from the ADB account directly to the dedicated and separate bank account established by the line ministry or ASA to receive the funds, which will then be used by the line ministry or ASA to pay the consultant claims in no longer than seven (7) working days. In the future, as other donors participate in the P3SP to fund the PDF, MPI should maintain a reconciliation, by financier, of funds provided to the consultants. Replenishment of the ADB imprest account will take place once a request is submitted by MPI to ADB for liquidation and replenishment of funds. Direct payment procedure may also be used to pay consultant expenses directly, particularly for large expenditures, in order to avoid unnecessarily depleting the imprest account or where such expenditure exceeds the imprest account ceiling. Any disbursement of the Government counterpart funds for capacity building for PPP in the government will be disbursed over a period of up to 5 years. 23. Disbursement of the ADB loan proceeds will be allocated as follows: (i) for payment of international consultants of the PDF Technical Team, the ADB loan would fund 100% of such expenses; and (ii) for payment of both international and national consultants engaged by the ASAs to prepare pre-feasibility and full feasibility studies and provide transaction advisory services, the ADB loan would fund 100% of such expenses. The government counterpart funding would fund 100% of the national consultants of the PDF Technical Team. In instance(s) where the loan allocation described above requires revision, MPI should submit the proposed revised loan allocation to ADB requesting their approval.

5 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf

31

24. In the event that other parties/donors want to provide funding to the PDF, the funding arrangement between the other parties/donors and ADB should be approved by ADB. In such instance where other donor(s) participate in funding the PDF alongside ADB, in the event that financing from one of the financiers is not available, the borrower should not utilize funds from the available funding to cover the unavailable funding unless prior approval from all financiers that have agreed to fund the particular activity is obtained. 25. The funds received by the PDF from the winning private sector bidders or from reimbursement from the ASAs/PPCs should not be used to fund project preparation activities until the ADB loan has been fully disbursed. 26. The request for initial advance to the ADB imprest account should be accompanied by an Estimate of Expenditure Sheet6 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the ADB imprest account has been duly opened. For every liquidation and replenishment request of the ADB imprest account, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the ADB imprest account is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned bank statement against MPI‘s records.7 27. ADB's statement of expenditures (SOE) procedures are proposed for reimbursement and liquidation and replenishment of the imprest account. The SOE ceiling shall be $100,000 per individual payment. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.8 28. Before the submission of the first withdrawal application, the State Bank of Viet Nam should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The PMU is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. 29. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),9 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. 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.

6 Available in Appendix 29 of the Loan Disbursement Handbook.

7 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook.

8 Checklist for SOE procedures and formats are available at:

http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls

9 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf

32

30. The PMU will have a qualified Finance Manager responsible for the financial operations of the PDF. The Finance Manager will report to the Head of the PMU to ensure that finances of the PDF are effectively and accurately managed and monitored, and that the fund flow mechanism agreed between the MOF and MPI is effectively implemented and adhered to. C. Accounting

31. The MPI in close collaboration with other ASAs involved with PPP will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices or those prescribed by the Government's accounting laws and regulations.10 D. Auditing

32. The MPI in close collaboration with other ASAs involved with PPP will cause the detailed consolidated project financial statements to be audited in accordance with International Standards on Auditing and/or in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited financial statements will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the MPI. The annual audit report will include a separate audit opinion on the use of the imprest account and the SOE procedures. The Government and MPI have been made aware of ADB‘s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts and financial statements to confirm that the share of ADB‘s financing is used in accordance with ADB‘s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.

VI. PROCUREMENT AND CONSULTING SERVICES

A. ADVANCE CONTRACTING AND RETROACTIVE FINANCING 33. All advance contracting will be undertaken in conformity with ADB‘s Guidelines on the Use of Consultants (April 2010, as amended from time to time).11 The issuance of the RFP under advance contracting will be subject to ADB approval. The executing agency, MPI, has been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 34. To facilitate rapid start up, the government and ADB agreed to a number of advance actions to expedite the establishment of a functional PPP Office with sufficient number of qualified and experienced staff. 35. ADB will provide retroactive financing or reimbursement for project development expenses already incurred by the ASAs or People‘s Committees subject to the latter following the prescribed procedure detailed in the procurement plan below. ADB‘s ‗no objection‘ will be required for the said procurement and engagement of consultants. The retroactive financing amount shall not exceed 20% of the ADB loan amount and shall be for eligible expenses incurred within 12 months before loan signing.

10

{Reference to Government laws/regulations to be added during loan processing.} 11

Available at: http://www.adb.org/documents/guidelines-use-consultants-asian-development-bank-and-its-borrowers

33

B. PROCUREMENT OF GOODS, WORKS AND CONSULTING SERVICES

i. Procurement of Goods and Works

36. No procurement of goods or works will be financed by the project.

ii. Consulting Services 37. All consultants to be financed by the ADB loan will be recruited according to ADB‘s Guidelines on the Use of Consultants. 38. The Project will require a team of PPP advisors to support the PPP Office and PMU including PPP financial experts, PPP procurement advisors, PPP sector advisors, Safeguard specialists and PPP legal specialists. The key outputs for the PPP advisors are: (i) support the PPP Office and PMU in developing guidelines for PPPs in Vietnam; (ii) develop standard documentation (templates for bidding documents, concession agreements; (iii) support project sponsors12 in recruiting consultants for feasibility studies and transaction advisory; and (iv) Capacity development of PPP Office and project sponsors. The team of PPP advisors will be hired through a firm using QCBS 80:20. The contractual agreement will be an IDC where experts are on call at the agreed unit rate. 39. To support the PPP Office and PMU, the Project will fund a total of estimated xx person months of international specialists and 185 person months of national specialists for a total of xxx person months for LIC. Consulting services at this level are considered necessary to assist the PPP Office and PMU in fulfilling their mandate and build the institutional capacity of both the PPP Office and the project sponsors. Detailed consultant terms of reference for the PPP advisory team are presented in Section D. 40. Within three months after the loan effectiveness date, the government, in consultation with ADB, will have shortlisted the candidate consultants that will support the PPP Office and PMU. Within three months after the loan effectiveness date, the government will have prepared and made available to ADB the relevant Request for Proposal (RFP) document and have issued the RFP to the shortlisted consultant candidates. 41. The PDF will be used to fund pre-feasibility studies, feasibility studies and transaction advisory.13 The recruitment and contracting of the consultants will be carried out by the ASAs. Prior to the project sponsor recruitment the PPP advisory team will carry out a procurement capacity assessment (PCA) and provide necessary training for the project sponsor to carry out the recruitment following ADB‘s Guidelines on the Use of Consultants (April 2010, as amended from time to time). 42. To facilitate the recruitment of consultants the PPP Office and PMU will establish a list of pre-qualified firms through CQS that are eligible and qualified to carry out feasibility studies and transaction advisory. The list of pre-qualified firms will include a minimum of six (6) firms/consortia for each sector. The pre-qualification list will be valid for two (2) years where it will be subject to renewal through a CQS process. The list of pre-qualified firms will be used for all proposed PPP projects valued below USD 300,000,000 while feasibility study/transaction

12

Project sponsors can include line ministries as well as Provincial People‘s Committees 13

For details see the detailed description of the PDF in section xx

34

advisory consultants for PPP projects valued above the threshold will be recruited following standard QCBS (80:20) process. In cases where the ASAs and the PPP Office or PMU agrees that the list of pre-qualified firms will not meet the needs of the project they may choose to advertise and prepare a new shortlist with the prior approval of ADB. It is expected that as a minimum three different sectors will be covered under this arrangement: roads/bridges, ports and water supply. Depending on the pipeline of PPP projects additional list may be required. Any firm/consortia may qualify in one or more sectors. 43. Any contract for feasibility study/transaction advisory will be awarded through a competitive QCBS (80:20) process with the participation of the firms on the pre-qualified list. The feasibility study and the transaction advisory will be awarded as one contract with two phases and an option for the Government of Viet Nam to cancel the second phase of the contract if it decides not to bring the project to the market. 44. Pre-feasibility studies will be recruited through CQS provided the value of the contract is below the threshold of USD 400,000. If the estimated budget is above USD 400,000, QCBS will be required. 45. A procurement capacity assessment of the EA will be carried out prior to loan effectiveness, however since the EA (MPI) also host the Public Procurement Agency, the risk is determined to be manageable. The EA will be responsible for the recruitment of the PPP Office Advisory team and for setting up the list of pre-qualified firms. To mitigate the risk setting up list of pre-qualified firms will only be initiated once the Advisory Team is mobilized. 46. The majority of the contracts under the Loan will be managed by the ASAs, i.e. line ministries and Provincial People‘s Committees, which are unidentified and will be determined by the projects submitted for financing under the PDF. The PPP Office and the Advisory Team will carry out a PCA as part of project screening and provide necessary guidance and training during the recruitment process. Furthermore, the International Procurement Advisor will assist the ASAs during the entire recruitment process. C. PROCUREMENT PLAN14

Basic Data

Project Name: Country: Viet Nam Executing Agency: Ministry of Planning and

Investment Loan Amount: $20,000,000 Loan (Grant) Number: 44507 - 002 Date of First Procurement Plan: 31 August 2012 Date of this Procurement Plan: 31 August 2012

A. Process Thresholds, Review and 18-Month Procurement Plan

1. ADB Prior or Post Review

14

Upon Board Approval, the Government and ADB may review and revise the procurement plan, including the selection methods for recruitment of consultants as necessary.

35

47. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project.

Procurement Method Prior or Post Comments

Recruitment of Consulting Firms

Quality- and Cost-Based Selection (QCBS) Prior Quality-Based Selection (QBS) Prior Other selection methods: Consultants Qualifications (CQS), Least-Cost Selection (LCS), Fixed Budget (FBS), and Single Source (SSS)

Prior

Recruitment of Individual Consultants

Individual Consultants Prior

2. Consulting Services Contracts Estimated to Cost More Than $100,000

48. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General Description Contract Value

Recruitment Method

Advertisement Date

(quarter/year)

International or National

Assignment Comments

PPP Office technical advisory team PPP Office legal advisory team Pre-feasibility studies Pre-qualification of firms for Feasibility study/transaction advisory

$3,600,000

$500,000

Greater than $400,000/$400,000

or less

n/a

QCBS (80:20)

QCBS (80:20)

QCBS(80:20)/ CQS

1

CQS

3/12

3/12

1/13

4/13

International and National

International and National

International and National

International and National

The firm(s) will be hired under

an IDC arrangement

where the PPP Office can call on the services as and when

needed

Up to 20 different pre-

feasibility studies will be

contracted out funded by the

PDF

A minimum of 6 firms for each sector will be pre-qualified

under the IDC. Subsequent

bidder following QCBS is required

Notes: (1) ADB has allowed the use of the CQS recruitment method for contracts up to a value of $400,000 on an exceptional basis for the Project.

B. Indicative List of Packages Required Under the Project

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49. The following table provides an indicative list of all procurement (goods, works and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the comments section.

General Description

Estimated Value (cumulative)

Estimated Number of Contracts

Recruitment Method Type of Proposal Comments

PPP Office technical advisory team Pre-feasibility studies Pre-qualification of firms for Feasibility study/transaction advisory Feasibility study/transaction advisory

$4,100,00015

3,000,000

n/a

23,000,000

2

20

n/a

Up to 10

QCBS (80:20)

QCBS (80:20)/CQS

CQS

QCBS

FTP

STP

STP

FTP/STP16

The contract will split

between 2 firms. The firm(s) will be hired under an

IDC arrangement

where the PPP Office can call on

the services as and when

needed

Up to 20 different pre-

feasibility studies will

be contracted out funded by the PDF

A minimum of 6 firms for each sector will be pre-qualified under the

IDC. Subsequent

bidder following QCBS is required

C. National Competitive Bidding

15

Although only $2 million of the ADB loan proceeds and $700,000 of the government counterpart funding is allocated to the PPP Office technical advisory team (PDF Technical Team), it is envisaged that AFD will be funding the balance of $1.4 million through their loan to the PDF which is presently being processed. In the event that AFD financing does not become available at the issuance of request for proposal for the package, the procurement plan will be revised to reflect the reduction of the contract value to become $2,700,000.

16 STP will be used when the list of pre-qualified firms are used as the shortlist.

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1. General

50. The laws to be followed for national competitive bidding are set forth in: (i) the Law on Procurement No. 61/2005/QH11 of 29 November 2005; (ii) the Construction Law no. 16/2003/QH11 of 26 November 2003; (iii) the Amendment Law No. 38/2009/QH12 of 19 June 2009 amending and supplementing key articles of the above-mentioned two laws; and (iv) the processes described in Decree No. 85/2009/ND-CP of 15 October 2009 on ―Guiding Implementation of Procurement Law and Selection of Construction Contractors under the Construction Law‖. Whenever any procedure in the national procurement laws is inconsistent with the ADB Procurement Guidelines (April 2010, and as amended from time to time), the ADB Guidelines shall prevail, amongst others on the following.

2. Registration (i) Bidding shall not be restricted to pre-registered firms and such registration shall

not be a condition for participation in the bidding process.

(ii) Where registration is required prior to award of contract, bidders: (i) shall be allowed a reasonable time to complete the registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification.

(iii) Foreign bidders shall not be required to register as a condition for submitting

bids.

(iv) Bidder‘s qualification shall be verified through pre- or post-qualification process. 3. Eligibility (i) National sanction lists may only be applied with approval of ADB.17 (ii) A firm declared ineligible by ADB cannot participate in bidding for an ADB

financed contract during the period of time determined by ADB.

(iii) A firm which has been engaged by the borrower to provide consulting services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods, works, or services, resulting from or directly related to the firm's consulting services for such preparation or implementation.

4. Prequalification and Post qualification (i) Post qualification shall be used unless prequalification is explicitly provided for in

the loan agreement/procurement plan. Irrespective of whether post qualification

17

Section 52 of the Integrity Principles and Guidelines allows ADB to sanction parties who fail to meet ADB's high ethical standards based on the decisions of third parties, such a decision can only be made by the Integrity Oversight Committee on the basis of ADB's own independent examination of the evidence. As such, the process should follow the normal assessment and investigative processes prescribed by the Integrity Principles and Guidelines. http://www.adb.org/Documents/Guidelines/Integrity-Guidelines-Procedures/integrity-guidelines-procedures-2006.pdf

38

or prequalification is used, eligible bidders (both national and foreign) shall be allowed to participate.

(ii) In the event where pre-qualification is used, interested firms shall be given no

less than 42 days to prepare their pre-qualification submission. (iii) When pre-qualification is required, the evaluation methodology shall be based on

pass/ fail criteria relating to the firm‘s experience, technical and financial capacities.

(iv) Qualification criteria shall be clearly specified in the bidding documents, and all

criteria so specified, and only criteria so specified, shall be used to determine whether a bidder is qualified. The evaluation of the bidder‘s qualifications should be conducted separately from the technical and commercial evaluation of the bid.

(v) In carrying out the post-qualification assessment, the Employer/ Purchaser shall

exercise reasonable judgment in requesting, in writing, from a bidder missing factual or historical supporting information related to the bidder‘s qualifications and shall provide reasonable time period (a minimum of 7 days) to the bidder to provide response.

5. Preferences (i) No preference of any kind shall be given to domestic bidders or for domestically

manufactured goods.

(ii) Regulations issued by a sectoral ministry, provincial regulations and local regulations which restrict national competitive bidding procedures to a class of contractors or a class of suppliers shall not be applicable.

(iii) Foreign bidders shall be eligible to participate in bidding under the same

conditions as local bidders, and local bidders shall be given no preference (either in bidding process or in bid evaluation) over foreign bidders, nor shall bidders located in the same province or city as the procuring entity be given any such preference over bidders located outside that city or province

6. Advertising (i) Invitations to bid (or prequalify, where prequalification is used) shall be

advertised in Government Public Procurement Bulletin. In addition, the procuring agency should publish the advertisement in at least one widely circulated national daily newspaper or freely accessible, nationally-known website allowing a minimum of twenty-eight (28) days for the preparation and submission of bids and allowing potential bidders to purchase bidding documents up to at least twenty-four (24) hours prior the deadline for the submission of bids. Bidding of NCB contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB‘s website via the posting of the Procurement Plan.

(ii) Bidding documents shall be made available by mail, or in person, to all who are

willing to pay the required fee, if any.

39

(iii) The fee for the bidding documents should be reasonable and consist only of the

cost of printing (or photocopying) the documents and their delivery to the bidder. (Currently set at 1 Mln VND, increase subject to approval of ADB)

7. Standard bidding documents (i) The Borrower‘s standard bidding documents, acceptable to ADB, shall be used.

The bidding documents shall provide clear instructions on how bids should be submitted, how prices should be offered, and the place and time for submission and opening of bids.

(ii) Bidders shall be allowed to submit bids by hand or by mail/ courier. 8. Bid Opening (i) All bids received after the deadline for submission indicated in the bidding

documents will be rejected.

(ii) All bids received before the bid submission deadline shall be opened except those with proper notice of withdrawal.

(iii) A copy of the bid opening record shall be promptly provided to all bidders who

submitted bids.

9. Bid Evaluation (i) Merit points shall not be used in bid evaluation. (ii) Bidders shall not be eliminated from detailed evaluation on the basis of minor,

non-substantial deviations.18 (iii) Except with the prior approval of ADB, no negotiations shall take place with any

bidder prior to the award, even when all bids exceed the cost estimates. (iv) A bidder shall not be required, as a condition for award of contract, to undertake

obligations not specified in the bidding documents or otherwise to modify the bid as originally submitted.

(v) Bids shall not be rejected on account of arithmetic corrections of any amount.

However, if the Bidder that submitted the lowest evaluated bid does not accept the arithmetical corrections made by the evaluating committee during the evaluation stage, its bid shall be disqualified and its bid security shall be forfeited.

10. Rejection of All Bids and Rebidding

18

Minor, non-substantial deviation is one that, if accepted, would not affect in any substantial way the scope, quality, or performance specified in the contract; or limit in any substantial way, the Contracting entity rights or the Bidder‘s obligations under the proposed contract or if rectified, would not unfairly affect the competitive position of other bidders presenting substantially responsive bids.

40

(i) No bid shall be rejected on the basis of a comparison with the owner's estimate or budget ceiling without the ADB‘s prior concurrence.

(ii) Bids shall not be rejected and new bids solicited without the ADB‘s prior

concurrence. 11. Participation by Government-owned enterprises

51. Government-owned enterprises shall be eligible to participate as bidders only if they can establish that they are legally and financially autonomous, operate under Enterprise law and are not a dependent agency the contracting entity. Furthermore, they will be subject to the same bid and performance security requirements as other bidders.

12. Non-eligibility of military or security units

52. Military or security units, or enterprises which belong to the Ministry of Defense or the Ministry of Public Security shall not be permitted to bid.

13. Participation by Foreign contractors and suppliers. Joint Ventures and Associations (i) Foreign suppliers and contractors from eligible countries shall, if they are

interested, be allowed to participate without being required to associate or form joint ventures with local suppliers or contractors, or to subcontract part of their contract to a local bidder.

(ii) A bidder declared the lowest evaluated responsive bidder shall not be required to

form a joint venture or to sub-contract part of the supply of goods as a condition of award of the contract.

(iii) License for foreign contractors operation in Vietnam would be provided in a

timely manner and will not be arbitrarily withheld. 14. Publication of the Award of Contract Debriefing (i) For contracts subject to prior review, within 2 weeks of receiving ADB‘s

―No-objection‖ to the recommendation of contract award, the borrower shall publish in the Government Public Procurement Bulletin, or well-known and freely-accessible website the results of the bid evaluation, 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 and evaluated prices of each bid that was evaluated; iv) name of bidders whose bids were rejected and the reasons for their rejection; and v) name of the winning bidder, and the price it offered, as well as the duration and summary scope of the contract awarded.

(ii) For contracts subject to post review, the procuring entity shall publish the bid

evaluation results no later than the date of contract award.

(iii) In the publication of the bid evaluation results, the borrower shall specify that any bidder who wishes to ascertain the grounds on which its bid was not selected, should request an explanation from the procuring entity. The procuring entity

41

shall promptly provide an explanation of why such bid was not selected, either in writing and / or in a debriefing meeting, at the option of the borrower. The requesting bidder shall bear all the costs of attending such as debriefing. In this discussion, only the bidder‘s bid can be discussed and not the bids of competitors.

15. Handling of Complaints

53. The national competitive bidding documents shall contain provisions acceptable to ADB describing the handling of complaints in accordance with Chapter X of Decree No. 85/2009/ND-CP, read with Articles 72 and 73 of the Law on Procurement No. 61/2005/QH11.

16. ADB Member Country Restrictions

54. Bidders must be nationals of member countries of ADB, and offered goods, works, and services must be produced in and supplied from member countries of ADB.

17. Fraud and Corruption

55. ADB will sanction a party or its successor, including declaring ineligible, either indefinitely or for a stated period of time, to participate in ADB-financed activities if it at any time determines that the firm has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for, or in executing, an ADB-financed contract.

18. Right to Inspect/ Audit

56. Each bidding document and contract financed from by ADB shall include a provision requiring bidders, suppliers, contractors to permit ADB or its representative to inspect their accounts and records relating to the bid submission and contract performance of the contract and to have them audited by auditors appointed by ADB. D. OUTLINE TERMS OF REFERENCE 57. To support the PPP Office two firms will be contracted following ADB Guidelines on the Use of Consultants (2010, as amended from time to time).

Package A. International Firm – Policy, Institutional, Financial, Social Safeguards 58. An internationally recruited consulting firm should make available experts to support the PPP Office (established within MPI) and the Authorized State Agencies (ASA‘s) which includes the People‘s Committee in the context of this engagement. The firm should have at least 10 years of proven expertise in (i) PPP policy and enabling environment development and PPP project development processes; (ii) PPP legal and regulatory framework improvement; (iii) PPP project financial structuring/transaction advisory, (iv) PPP procurement procedures based on international competitive bidding practices and in line with ADB procurement principles, (iv) PPP information management systems; and (v) capacity building of government staff in conceptualizing, developing, bidding, contracting, implementing, and evaluating PPP projects. Among other things, the experts would typically have been involved in developing PPP manuals and have built up a knowledge base in all aspects of the PPP project development cycle including financial and legal assessment, statutory project assessment, project management,

42

stakeholder consultation, risk assessment and output specification, payment mechanisms, and contractual issues etc. 59. The key outputs for the PPP advisors are: (i) support the PPP Office in developing guidelines for PPPs in Vietnam; (ii) develop standard documentation (templates for bidding documents, concession agreements; (iii) support ASA‘s in recruiting consultants for feasibility studies and transaction advisory; (iv) Capacity development of PPP Office and project sponsors; and (v) help establish a central database on PPP projects at the PPP Office, including developing a methodology and format for collecting and tracking data and information on PPP projects. 60. The contract is subject to a review of the consultants/firms‘ performance after the first 12 months and any continuation of the work beyond year one will be based on such reviews. The firm should make available the right mix of experts for carrying out the following indicative tasks:

A. (a) PPP Policy and Enabling Environment (b) PPP Project Development Process and PDF Utilization 1. Policy and Institutional Expert- International (Intermittent 28 months over a

period of 36 months) 2. Social Safeguard Expert-International (Intermittent 15 months over a period of

36 months) i. help establish a central PPP Office in Ministry of Planning and Investment (MPI)

with a clear mandate and effective operational mechanisms; ii. analyze existing PPP policy documents; iii. develop a draft set of principles for a national PPP policy; iv. develop the standard operating procedures for the Project Development Facility

(PDF) and step by step process for project preparation through the use of the PDF;

v. review national approaches on risk allocation; documentation, and PPP project development and bid processes etc. This may involve review of documents and discussions with relevant government bodies to understand;

vi. the rationale for the approaches to date. In the process help understand the concept and rationale of viability gap funding and the application thereof in the context of Viet Nam ;

vii. help develop a PPP policy manual in the context of the legislative and regulatory process containing detailed instructions on processes and procedures to be followed during each project identification, planning, procurement, implementation, and monitoring phases, for the project to comply with national and local environmental laws and requirements, dispute resolution mechanisms and its dissemination on a website;

viii. develop PPP toolkits and model PPP agreements and other standardized documents, including environmental sustainability and gender and vulnerable group filters and check lists, for various stages of the PPP project cycle;

ix. help the PPP Office and Authorized State Agency (ASA) with preparing detailed terms of reference, assessing submitted proposals, and conducting negotiations with the consultants to be hired under the Project Development Facility (PDF) and support monitoring of the consultants‘ performance;

x. advise government agencies, whose PPP project proposals were approved for PDF funding on quality and/or technical aspects of the terms of reference and bidding documents for the transaction advisors;

43

xi. advise the PPP Office, among other issues, the quality of the submitted proposals for PDF funding of PPP project preparation. The experts‘ opinion will be reflected in the approval documents. The consultant will keep ADB informed of the PPP Office/PDF decisions with respect to each project;

xii. help develop sector guidelines to attract private investors in PPP projects;

xiii. lead the team of national consultants to be hired under the TA, in close coordination and consultation with the PPP Office;

xiv. ensuring that the crosscutting themes of gender equality (including the protection of vulnerable groups) and environmental sustainability are integrated in the project;

xv. help the PPP Office streamline work flow, policies, and procedures of the (PDF), including financial management of the project accounts; in the process support the PPP Office in terms of PDF operations, staffing, and sustainability;

xvi. help develop policy reforms and appropriate structures and arrangements to facilitate private sector participation in education and health sectors;

xvii. provide professional advice to the PPP Office on various PPP issues; xviii. develop toolkits, systems and procedures to support PPP office in appraising

PPP projects for submission for approval by the Prime Minister; and (b) monitoring and evaluating PPP projects during implementation;

xix. In coordination with other experts, help prepare a check list to identify potential projects for development under PPP mode;

xx. Help establish a data base for the PPP Office to act as a center of excellence and repository of information for dissemination to the public; and

xxi. Provide training/capacity building to MPI and ASAs on PPP project implementation, including social safeguards and gender.

3. Gender Expert-International (Intermittent 9 months over a period of 36 months) i. Prepare checklists/ guidelines for gender assessments/ analysis for each of the

priority sectors; ii. Develop gender related briefing/training materials for each of the priority sectors; iii. Ensure that the medium term capacity development plan will include plan for

development and roll out of gender briefing/ trainings for staff of PPP office, MPI, and sector agencies;

iv. Ensure that for every PPP project, due diligence on gender is followed and a social/ gender specialist is a member of the design team;

v. Provide training to all staff at PPP Office and PMU in MPI on gender issues in the key priority sectors and gender assessments;

vi. Ensure that relevant staff of sector agencies are trained on gender issues vis-a-vis sector and gender assessments; and

vii. Ensure that mitigation measures and other social risks will address gender concerns.

B. PPP Financial Structuring International (28 person-months over a period of 3years)

i. help ASA‘s develop TORs for carrying out pre-feasibility, detailed feasibility studies, project structuring. Help hire and brief outside financial advisors as necessary;

ii. advise ASA‘s on the feasibility studies required in order to demonstrate project viability;

44

iii. help ASA‘s review consultant‘s report on the financial structure for these projects based on a knowledge of the market‘s ability to provide finance and bear risk;

iv. help ASA‘s to ensure that the government‘s explicit and implicit fiscal obligations and risks are determined in the feasibility study stage and that these are communicated to the appropriate agencies/offices in government and managed appropriately. This includes guarantees and other instruments;

v. help ASA‘s review all financial models, both in the feasibility studies and in proposals submitted as part of the competitive bidding process to ensure that the projects are affordable, financially sound and sustainable with appropriate risk allocation;

vi. contribute to the development of PPP Methodologies; and vii. help develop capacity within PPP Office to carry out project appraisals.

C. Support for PPP Procurement activities. (International intermittent 24 months over 3

years)

61. An International Procurement Specialist will be engaged on an intermittent basis under an IDC arrangement. The expert should have a post graduate degree qualification with a minimum 10 years on international procurement and should be fully familiar with international procurement practices, in particular with ADB procurement procedures. The expert will form part of the PDF Technical Team and will support the PPP Office established in MPI and also the ASA‘s in the procurement activities for PPP projects. His / her main tasks will include:

i. support the PPP Office in establishing standard procedures and templates for various procurement activities in PPP project development and bidding out the project to private investors;

ii. support the PPP Office to engage a panel of consulting firms under an IDC facility for carrying out pre-feasibility and detailed feasibility, transaction advisory services/preparation of bid documents;

iii. support the ASA‘s agencies in drafting required documents in developing expression of interest, preparing request for qualifications, request for proposals for engaging experts for undertaking pre-feasibility studies, detailed feasibility studies, transaction advisory/project structuring, bid documents for inviting private sector participation and for the selection of consultants and transaction advisors to be paid out of the PDF for IDC assignments;

iv. support the ASA‘s in conducting evaluation of submitted proposals, negotiating a contract with the winning consulting or transaction advisory firm, and if needed, negotiating contract variations;

v. act as an observer in the procurement committee of the ASA‘s while evaluating the proposals and ranking/selecting the consulting firms;

vi. provide opinion/comments to ADB on the final submission of the ASA‘s on the selection process;

vii. support the PPP Office in carrying out the procurement capacity assessment of ASA‘s and support the PPP Office in implementing the recommendations of the procurement capacity assessment; and

viii. develop an operations manual and standard documents on selection of consultants and transaction advisors for preparation of PPP projects.

The firm has also to provide national consultants to support the international consultants of the PDF Technical Team (PDFTT). Six National Consultants. Total person months-148 person months over a period of 3 years.

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62. To support the International Technical Consultants under the PDFTT, national consultants will need to have at least 10 years of proven expertise in their respective areas, and have solid knowledge of the government processes relevant to PPPs. The consultants all on intermittent basis will comprise: (i) an infrastructure engineer (24 person-months; (ii) a finance/economics expert-(28 person-months); (iii) a risk management expert (24 person-months); (iv) a social safeguard expert on environmental sustainability (15 person-months); (v) a gender expert (9 person months); (vi) a procurement specialist (24 person-months); and (vii) a financial management specialist (28 person-months).

Package B. Public–Private Partnership Legal and Regulatory Framework Improvement

International (intermittent 24 person-months over a period of 36 months)

63. The firm (ideally a separate legal firm should be procured) should make available the right mix of experts for carrying out the following indicative tasks:

i. thoroughly reviewing relevant government/sector level legislation and regulatory arrangements and suggest recommendations to strengthen the legal and regulatory environment for development of PPP projects;

ii. review Decision 71 and Decree 108 in the light of the issues being faced during PPP project development and structuring and submit recommendations to close the gap between Decision 71 and Decree 108, provide guidance on legislative and regulatory reforms based on a comparative analysis with international best practices and in light of the evolving PPP policy framework;

iii. carry out review of PPP-relevant national government-, sector- and provincial level legislation and regulatory arrangements, and draft required amendments or new legal acts;

iv. liaise with ASA‘s on all legal and regulatory matters pertaining to their proposals;

v. vet and comment on specific contracts and agreements;

vi. provide guidance to the PPP Office, ASA‘s, and legislative and judicial bodies on PPP-related legal and regulatory reforms and practices based on a comparative analysis of international best practice;

vii. support the PPP Office and ASA‘s in assessing candidate PPP projects from a legal perspective to avoid delays and problems during processing and implementation;

viii. support the ASA‘s to monitor the detailed feasibility studies and project structuring exercise carried out by consultants/transaction advisors on PPP projects;

ix. support the PPP Office in of drafting regulations and other associated legal requirements for the establishment of a mechanism for guarantees against risks, against which there is no insurance available in the market;

x. provide written opinions on legal and regulatory matters related to project development; and

xi. manage the preparation of Standardized PPP Contract Provisions. National Consultant. (24 person months on an intermittent basis over 3 years) 64. One National legal expert well versed with all laws and regulations relevant to PPPs in Viet Nam

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Generic Terms of Reference for Preparation of Pre-feasibility Study / Preparation of Full Feasibility Study / Transaction Advisory19 65. The terms of reference below are in relation to the development of the pre-feasibility study and feasibility study for PPP projects; preparation of documentary requirements and bid documents; and provision of advisory services during the bidding process until financial. The consultants engaged to carry out these activities will be responsible to carry out all the tasks including, but not limited to, assessment of technical, financial, economic, legal, institutional, safeguards (social, environmental, gender, etc.), and other aspects of the project to successfully develop a well-structured bankable PPP project. The consultants will look into the: (i) technical requirements and design including performance specifications and standards, (ii) financial and economic aspects (financial and economic models will be prepared), (iii) environmental, gender and social safeguards, (iv) legal and institutional aspect, and (v) PPP structuring, among others. The scope of work is divided into four (4) phases. Specific tasks and activities include, but are not limited to, the following:

a) Phase I: Preparation and finalization of the Pre-feasibility Study

(1) Review and assess the recommendations indicated on the concept proposal prepared by the Authorized State Agency and determine the adequacy of available data and information in relation to the requirements of the study, and if found inadequate, provide the required data through research from other sources, preferably a similar project in the ASEAN Region;

(2) Determine the need for the project and the private sector interest for undertaking such project on PPP;

(3) Conduct a review of global best practice on similar projects and apply global best practice into the project;

(4) Carry out a preliminary assessment of the current state of operation, practices and requirements of the sector and related projects/business/services particularly the regulatory requirements for the construction and operations of such projects;

(5) Provide the legal basis for its implementation, carry out a legal review of the project based on all relevant and applicable national and local laws and regulations to identify legal processes and concerns as well as well as impediments/ requirements and the legal strategy to undertake the implementation of the proposed project under a PPP arrangement;

(6) Develop the technical description of the project including technical parameters / standards/ specifications;

(7) Carry out a preliminary market research and demand estimation/analysis with details on the methods and parameters to be used in the projection; and the need for the project;

(8) Carry out preliminary financial and economic analysis, including value for money (VFM), based on preliminary cost estimates and proposed cost-recovery mechanism including an assessment of the acceptable pricing of the services to be made available by the project and

19

These Terms of Reference will be updated/amended for each specific PPP project.

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the need for any cross subsidy. The study will also assess the merits of other sources of financing e.g., Official Development Assistance (ODA);

(9) Conduct initial environmental and social/resettlement/gender assessment and associated risk factors, if any;

(10) Carry out a preliminary financial, political and legal risk analysis including institutional issues that may impede the implementation of the Project and the required government support, if any, for implementation of the project;

(11) Based on data collected, conduct gender analysis to determine how the project addresses the differential needs of women and men;

(13) Assess the different PPP modalities for the Project, and determine the PPP modality that will provide the best value for the Government, in particular, the lowest viability gap financing (if required) and the maximum contract termination value for the Government;

(14) Propose an appropriate and workable implementation plan for the implementation of the project; and

(15) Recommend the institutional set up around which the project will be implemented, including which government agency would be appropriate to enter into a PPP contract. The consultant shall conduct regular consultations with the PMU in MPI and the ASA in the course of preparing and finalizing the pre-feasibility study; and (16) If at a particular stage of the pre-feasibility stage, it is determined that the project is not viable or would not be implemented under PPP, the consultancy services shall be deemed to have been completed under the contract and the consultants shall be paid for the milestone(s) completed. On the other hand, should the pre-feasibility study establish that the project is viable for PPP implementation, the consultant will provide all necessary technical, legal and financial advisory support (including compliance with social, environmental, resettlement and gender issues) for securing all necessary approvals and procurement of a private partner. This advisory support must be in compliance with all elements of Decision 71 and, and all other applicable laws and regulations.

b) Phase II: Project Feasibility Study and PPP Structuring

i) Task 1: Develop the Feasibility Study The consultant is required to prepare, in close liaison with the ASA and PMU, a comprehensive feasibility study for project. The feasibility study needs to clearly demonstrate affordability for the full project cycle and propose the optimal value-for- money solution for the ASA to achieve its desired outcomes. After the approval of the pre-feasibility study, the consultants shall prepare a detailed project feasibility study and carry out overall assessment of PPP options and determine the best PPP option including, among others, the following:

(1) Project Development and Market Research

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a) Prepare a design and monitoring framework (DMF) for the proposed Project, which will include, among others, the monitoring requirements for the ASA in terms of contract implementation and management;

b) Prepare the project implementation schedule which will define and set timelines of the major phases of project work to fulfill the desired objectives and achieve the expected deliverables from time of award to completion. The project implementation schedule should include the deliverables being set, major activities for each deliverable, and key milestones, among others;

c) Prepare a detailed project rationale, including job generation projections;

d) Carry out a detailed assessment of the current state of operation, practices and requirements of related projects/business/services particularly the regulatory requirements and local government permits for the construction, operations and maintenance of the project;

e) Conduct a comparative analysis of the project‘s expected fees and charges with the fees and charges being charged by existing services;

f) Prepare financial model showing the impact of the cost of project, either by project component/ or as a whole package to the future fees and charges to be charged to the facility users;

g) Conduct a thorough gender-sensitive market research and demand estimation/analysis covering, among others, the details on the methods and parameters used in the projection, the need for the project and the private sector appetite for undertaking such projects on PPP;

h) Provide a list of likely private sector investors to bid for the project; and

i) Review the experience in other countries in PPP arrangements for the construction, operations and maintenance of similar facilities and recommend arrangements appropriate for the project.

(2) Design, Technical Requirements and Minimum Performance Specifications (MPSS) a) Conduct a technical assessment for the project requirements and recommend optimal sizing and capacity, land use and environmental impact, performance standards and the indicative project costs, among others;

c) Identify optimum timing and phasing of the construction of the buildings and roll-out of equipment and facilities taking into account the relevant technical, economic and financial factors;

e) Carry out a preliminary design of structures and layout of the facilities; and

f) Prepare the construction, supply, installation and operation and maintenance performance standards taking into consideration global best practices and finalize the technical specifications for the proposed project.

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(3) Legal and Institutional

a) Assess current laws, policies and institutional assessment to ascertain the validity and viability of the proposed PPP structure for the Project, including ASA‘s capacity to manage and monitor implementation of the project once operational and recommend required changes to improve the governance of the same;

b) Develop ―bankability‖ measures for the proposed PPP project structure, such as fee payment mechanisms, performance guarantees, preconditions for a private operator to fulfill in meeting service obligations, default and risk clauses, and step-in rights of government;

c) Formulate the appropriate institutional arrangement for the project taking into consideration the roles and responsibilities of all stakeholders;

d) Review all legal requirements relating to project implementation (compliance with related laws) and tariff setting (legal review to identify legal processes and impediments/requirements, including review of the relevant jurisprudence, regulatory framework and previous rulings that might have an impact on the project and suggest appropriate legal approaches to be undertaken in the implementation of the proposed project);

e) Assess Government's role in the proposed PPP project, whether that role corresponds with the Government's legal obligations, and maintains sufficient power to protect the Governments interests;

f) Develop and provide detail to the legal architecture and design of the transaction, identifying e.g. the (i) type of PPP contract to be used (e.g. BT, BOT, BTO, etc); (ii) investment commitments to be required, their nature and management; (iii) investment plan, how, where and when investments will be made; and (iv) type of public sector support required, including terms and conditions; and

g) Review and assess legal issues associated with the management of the social, economic and environmental impacts of the project in a manner consistent with international best practices, including among others issues on resettlement, and environmental consequences of the project.

(4) Environment Sustainability, Gender and Social Safeguards

a) Conduct comprehensive environmental impact assessment and social risk/resettlement assessment and analysis. The Consultant will make sure that all aspects related to environmental and social safeguards and necessary mitigation measures are integrated into the project's design and cost;

b) Prepare an appropriate poverty reduction and social strategy framework (e.g., gender action plans, resettlement plans, and indigenous peoples‘ development plan) with recommendations for involuntary resettlement, indigenous people and gender safeguards in accordance with the requirements in Viet Nam; and

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c) Conduct gender analysis and identification of gender issues and gender gaps that the project must address.

(5) Risk Assessment

a) Conduct project risk analysis to determine, assess, allocate and manage risks (such as, but not limited to project, commercial, financial, political, economic, force majeure and legal risks) during all project stages. The risk analysis should cover valuation, allocation and mitigating measures; and

b) Based on the risk analysis, prepare a contingent liability model for ASA that quantifies the contingent liabilities, how the same shall be managed and the funding requirements. The Consultants should recommend mitigation mechanisms that may be adopted by the party identified to bear each of the identified risks. In doing so, assessment and applicability of various risk mitigation mechanisms should be carried out, including review of the extent to which the risks of the project can be underwritten by commercial insurance cover and the likely cost of such cover.

(6) Economic and Financial Aspect

a) Prepare the base case project cost estimates covering capital expenditures(CAPEX), operations and maintenance (O&M), land acquisition costs, taxes and the required contingencies, etc.; and prepare a preliminary bill of quantities for each of the project components as well as the project‘s financing and procurement plans;

b) Develop cost recovery options (and alternative revenue generation) to ensure that the project is sustainable;

c) Carry out value for money (VFM) analysis;

d) Conduct an independent market assessment of potential local and foreign investors‘ interest in the project;

e) Conduct an economic analysis - estimation of the economic costs and benefits of the Project; and calculation of the economic internal rate of return (EIRR), including sensitivity analysis as required for obtaining approval;

f) Conduct a financial analysis - determination of financial internal rate of return (FIRR), net present value (NPV), debt service coverage ratio (DSCR) and other ratios; The financial analysis model should have capabilities to perform sensitivity analysis for the purpose of quantifying the financial and economic impacts of different structuring options;

g) Develop a full financial model and financing plan including timelines for implementation and funds flow requirements. The financial model should include, but not limited to, tariff modeling, shadow bid model and bid pricing analysis model, etc., financial models for achieving financial close; financial model for implementation, based on the project capital structure, project implementation schedule and funding structure, etc.; and

h) Formulate an appropriate parametric tariff adjustment formula considering the impact of the said adjustment to all stakeholders.

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(ii) Task 2: PPP Options Development:

(1) The consultant shall evaluate various PPP options where funding sources and mix, cost recovery mechanisms, among others, should be considered. Options will be ranked based on pre-determined criteria with the end in view of recommending the optimal PPP modality to be followed. The consultant will provide clear details of the proposed PPP structure/s along with a risk assessment matrix and likely impacts to ASA, the private investors and the main stakeholders of the ASA; and

(2) The consultant shall carry out any other related tasks as proposed by the PMU and ASA and agreed upon by the consultant.

(iii) Task 3: Final Financial Analysis and Project Structuring of the Recommended Option (1) The consultants shall finalize among others the following:

Cost estimates

Financial model and sensitivity analysis

Legal and institutional requirements and processes, contract structure and monitoring and management systems

Financing plan, risk allocation and mitigation measures

Default mechanisms and arbitration procedures

Social/resettlement/gender and environmental impacts and mitigation measures,

Project implementation schedule

Stakeholder consultations, particularly with potential private sector investors and involved local communities

Development of the final PPP structure

Detailed timelines for the bid process until contract award

Post-bid and contract management frameworks (2) The consultant shall conduct regular consultations with the PMU and ASA in the course of preparing and finalizing the feasibility study. The results of the feasibility study should be presented to the PMU and the ASA for approval. (3) If at the feasibility study stage, it is determined that the project is not viable or would not be implemented under PPP arrangements, the consultancy services shall be deemed to have been completed under the contract and the consultants shall be paid for the milestone(s) completed. The PPP Center shall not be liable for any further payment and the contract shall cease to exist. (4) On the other hand, should the feasibility study establish that the project is viable for PPP implementation, the consultant will provide all necessary technical, legal and financial advisory support (including compliance with social, environmental, resettlement and gender issues) for securing all necessary approvals and procurement of a private partner. This advisory support must be in compliance with all elements of the Decision 71and all other applicable laws and regulations.

(iv) Task 4: Support to the ASA on Securing Approval/All Other Government Approvals

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(1) The consultant shall complete all the documentary requirements to be submitted to the MPI/Prime Minister‘s Office, and assist the ASA in addressing all concerns until the approval is accorded by the competent authority. c) Phase III: Management of the PPP Bidding Process and Preparation of Transaction Documentation (1) The consultant shall prepare all the necessary documents to undertake a competitive, transparent bidding process. Specifically, the consultant prepare bid/tender documents (RFQ, RFP, contract and other related documents) in accordance with Decision 71 and provide support during the entire PPP bidding process until the award of the contract to a successful bidder. The responsibilities of the Consultant include, among others, the following: (i) Task 1: Bid Process Design and Bid Documents: The consultant shall recommend appropriate bid strategy in accordance with Decision 71; prepare all necessary bid/tender documents, including the draft contractual agreements, Information Memorandum, request for qualification (RFQ), request for proposals (RFP), bid bulletins, qualification and evaluation criteria, invitation to prequalification and to bid notice, including all appropriate Bid Forms such as Bid Letter, Statement of Bid, Technical Bid Proposal, Financial Bid Proposal, etc.. PPP Agreement: The consultant shall prepare a draft PPP agreement in close coordination with the ASA and PPP Center. Said draft PPP agreement must take into account the agreed risk allocation regime and use best practice to maximize competition and pricing low while protecting ASA‘s interests with a view to facilitate project implementation and manageability over the project term. (ii) Task 2: Support during Bidding Process and Evaluation: The consultant shall assist the ASA in the following activities: a) issuance of all bidding notices/request and supplemental notices, b) conduct of the pre-bid conference/s, c) conduct of bidding, d) responding to queries upon proper consultation with the ASA and the PMU, e) evaluation of bids, and g) contract finalization and award. d) Phase IV: Assistance Until Financial Close of the Project i. The consultants shall provide all the required assistance and advisory support until the financial close of the Project (or a period of 180 days from the effective date of the contractual agreements signed with the private sector proponent or the concessionaire, whichever is earlier).

ii. The consultant must assist the ASA with all functions relating to grant of approval on any issue to the private sector proponent or signing any agreement or any other document with the private sector proponent or assisting in providing interpretations relating to any matter until financial close. The Consultant must also compile a comprehensive close-out report and case study, and must incorporate any additional factors that may be required by the ASA. The close-out report will be a confidential document of the ASA. The case study will become a public document, made available on various government websites.

iii. The consultant must, in close liaison with the ASA, draft a comprehensive PPP management plan for the ASA, in accordance with the provisions of the PPP agreement, to help the ASA in the management of the Project and its risks, rights and obligations after financial close.

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iv. While carrying out the specific tasks, the consultants shall build capacities of the ASA and PPP Office and PMU counterpart staff through technology and knowledge transfer during the entire duration of the consulting assignment.

V. Team Composition

(1) The team shall have extensive international and country-specific experience/expertise that would include knowledge of the sector, legal, regulatory processes and issues involved and the initiatives taken by the Government for the successful implementation of PPP projects, the project‘s taxation framework, including exemptions and tax exemption regime, the country‘s accounting systems, domestic and global insurance and guarantee sector and their products, special privileges and incentives available to the PPP projects, concessional financing options available for PPP projects from the public sector and other country-specific knowledge. For specific expertise areas, requirement of national and international expertise has been prescribed to accomplish the tasks for the respective expertise areas.

(2) Consulting firms are encouraged to form joint ventures or associations with other consulting firms to enhance their capabilities, strengthen the technical responsiveness of their proposals, make available bigger pools of experts, and enhance the value and quality of their services

VII. SAFEGUARDS

66. The project is C category with respect to environment and social safeguards. It is anticipated that the project activities will have minimal or no adverse environmental or social risks, thus the project is treated as category C and need not apply any other specific requirements. In general, ADB‘s prohibited investment activity list will apply, as set forth in Schedule [ ] of the Loan Agreement.

VIII. GENDER AND SOCIAL DIMENSIONS

67. Infrastructure development and economic growth are strongly linked. Greater provision of infrastructure and related services has a particularly beneficial impact on the poor by, for instance, improving access to markets and areas with greater economic and employment opportunities. For the poor, in particular, improved water supply and sanitation, rural electrification, and better community and subdistrict infrastructure can have tremendous beneficial impacts. Moreover, investments in human capital and in infrastructure interact, thus increasing the returns to each investment. Investment in infrastructure services can contribute to sustainable growth by: (i) reducing transaction costs and facilitating trade flows within and across borders; (ii) enabling economic agents—individuals, firms, and governments—to respond to new types of demand in different geographies; (iii) lowering input costs in the production of almost all goods and services; (iv) opening new opportunities for entrepreneurs or making existing businesses more profitable; and (v) creating employment. 68. The constraints that affect growth and impede poverty reduction are characterized by:

• poor service coverage in all infrastructure sectors; where some services are available, the quality is low, disjointed, and unreliable; and

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• regional disparities in the availability of public sector resources and weaknesses in legal and institutional frameworks curtailing investment.

69. The benefits to society arising out of improved and more equitable access to infrastructure and the strong linkages between economic growth and investment in infrastructure are well established on the basis of global experience. The primary objective of these programs is to improve the investment climate, and thereby to boost economic growth and reduce poverty. 70. The proposed Public-Private Partnership Support Project (P3SP) seeks to address the issue of creating bankable and commercially viable PPP projects, while continuing to engage Government in a policy dialogue to address the PPP issues mentioned above and to support its initiative to promote a more conducive environment for PPPs. 71. The project will as well impact on and promote gender equality and women‘s empowerment. The following actions will be undertaken to mainstream gender at the PDF and PPP project levels: (i) gender assessments/ analysis will be undertaken in every project to ensure that gender issues are integrated and that project benefits are maximized for women and men; (ii) PPP implementing guidelines will include guidelines for undertaking gender analysis and developing gender action plans; (iii) a social/gender specialist will be recruited at the PDF level to ensure due diligence on gender; (iv) the design for individual projects will include a social/gender specialist in the project team; (v) at least 40% of the staff at the PPP office will be women; (vi) the medium term capacity development plan will include plan for development and roll out of gender briefing/ trainings for staff of PPP office, MPI, and sector agencies; (vii) all staff at PPP Office and PMU in MPI will be trained on gender issues in the key priority sectors and gender assessments; (viii) relevant staff of sector agencies will be trained on gender issues vis-a-vis sector and gender assessments; (ix) in ensuing PPP projects with civil works, 20% of unskilled laborers hired will be women and men and women will receive equal pay for equal work; and (x) mitigation measures and other social risks will address gender concerns. 72. The project will ensure that a due diligence process is followed in the development of the PPP funded projects, which includes the implementation of gender and social analyses, recommendations to maximize gender benefits and actions to mitigate potential adverse impacts in the design of the proposals. The project supports the development of guidelines for gender assessments and the training of government staff on gender mainstreaming. The project is likely to indirectly benefit gender equality and women's empowerment through the PPP infrastructure projects it will fund. The gender impact and mainstreaming will depend on the type of projects as well as the sector. Since the loan supports PPP in a range of infrastructure investments: roads (in particular for rural/ provincial roads), schools, water supply and sanitation, hospitals and other social infrastructure as well as rural electrification related projects have the potential to have major gender and social impacts and considerations. Some examples are provided below. In road projects, women are likely to benefit from local employment generated through civil works and maintenance. In urban road projects, gender sensitive infrastructure design can benefit women through separate male and female toilets, women‘s only waiting spaces, adequate lighting in platforms, stations and surrounding areas, child friendly access and facilities, shop spaces for female owned/run businesses as well as jobs for women as, ticketing staff, station attendees, supervisors and as maintenance and operations staff. In urban water projects, women may benefit through inclusion in community management committees and water user groups and roles for women in water agencies as well as training targeted at women for maintenance, health and hygiene awareness (targets/ quotas). Specific

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direct benefits may be identified for other sectoral PPP projects through gender analyses and assessments pertaining to the sector/ project.

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION

A. Project Design and Monitoring Framework

DESIGN AND MONITORING FRAMEWORK Design Summary Performance Targets /

Indicators Data Sources /

Reporting Mechanisms

Assumptions and Risks

Impact Increased private sector investment in infrastructure

Aggregate 5-year private investment in infrastructure will increase from $3 billion (2006-2010) to $4 billion by 2017 (2013-2017)

• International and national business climate surveys • World Bank PPP database • MOC, MOF, MPI, SBV and other government statistics on infrastructure investments contained in websites, reports and publications International and national business climate surveys • World Bank PPP database • MOC, MOF, MPI, SBV and other government statistics on infrastructure investments contained in websites, reports and publications

Assumptions

Stable macro-economic environment and financial sector

Sufficient liquidity available in the private sector

Risks

Exogenous, international financial shock, and macro-economic instability

Outcome Improved government capacity to catalyze PPPs and infrastructure investments

By 2014, at least 2 commercially viable PPP projects are successfully bid out and ready for implementation By 2016, at least 4 commercially viable PPP infrastructure projects are successfully bid out and ready for implementation

• Reports of procurement agencies of key ministries involved in public infrastructure investments • Annual reports of project sponsors/financiers • Reports of procurement agencies of key ministries involved in public infrastructure investments • Annual reports of project sponsors/financiers

Assumptions

Appropriate incentives for private sector participation are available

Risks

Political resistance and vested interest may slow down reforms

Poor governance and corruption. With the high stakes involved in large infrastructure projects in several sectors, the P3SP may face significant impediments in the form of weak governance, collusion, and corruption

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Design Summary Performance Targets / Indicators

Data Sources / Reporting

Mechanisms

Assumptions and Risks

Output 1. Institutional

Mechanisms for Developing Bankable PPP Projects Established

PDF established by December 2012 with $20 million seed capital. By June 2013, 2 pilot projects identified for processing by PDF A pipeline of 10 PPP projects processed by PDF by 2016. PDF fully operational with pooled resources from other donors; financial closure of 2-3 projects by 2016.

• ADB Mission/Loan agreement • MPI/Government website MPI/Government website • ADB Mission • Government/MPI reports

Assumptions

Project preparation activities for PPP are coursed through the PDF mechanism

The SSTA outputs are implemented under the P3SP project loan

Risks

Political resistance and vested interest may inhibit use of PDF

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2. Strengthened PPP Enabling Framework and improved institutional capacity for PPP

Complete a medium term capacity building plan for core government agencies covering all aspects of PPP projects, in which the training process will include environmental and social safeguards and gender assessments by June 2013 Initiate the implementation of the medium term capacity building plan by July 2013 Complete the implementation of the medium term capacity building plan by December 2015 The IMTF is restructured by March

2013. The guidelines on the implementation of pilot PPP projects, including gender assessments, is issued by August 2014. The standard operating procedures for the utilization of funds through the PDF is issued by February 2014. Review of sector laws and regulations related to PPP, with recommendations for sector reforms, finalized by December 2014.

TA Report TA Report TA Report MPI Website Government ministry/agency reports/ websites containing information on decrees/circulars issued to reflect enhanced legal PPP regulatory framework Consultant report / Government reports or website Government / MPI Website Government website

Assumptions

Consensus within GOV on the need and means to move forward with PPP

Sufficient capacity in government agencies to implement reforms and generate bankable PPP projects

The SSTA outputs are implemented under the P3SP project loan Risks

Regulatory and project development risk. Much of the implementation of PPPs and generation of bankable projects originates from constraints in the policy, regulatory, and project development areas

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Activities with Milestones

1. Institutional Mechanisms for Developing Bankable PPP Projects Established

Activity Scheduled Start Scheduled Finish 1.1 Develop transparent procurement for utilizing funds under PDF

Feb 01, 2012 Jul 19, 2012

1.2 Develop criteria for bankable PPP projects

Mar 21, 2012 Jul 31, 2012

1.3 Develop pipeline of bankable PPP projects

Aug 01, 2012 Dec 30, 2018

1.4 Propose guidelines for establishment and operation of PDF

Jan 31, 2012 Jun 29, 2012

1.5 Establish Project Development Facility

Aug 01, 2012 Sep 30, 2012

1.6 Provide regular updates on PDF to other donors

Oct 01, 2011 Dec 30, 2018

2. PPP institutional capacity developed through a medium-term capacity building plan

Activity Scheduled Start Scheduled Finish 2.1 Develop medium-term capacity building plan for core government agencies involved in PPPs, by Sep 2012

April 1, 2012 Sep 30, 2012

2.2 Initiate Training for PPP Office & PMU staff

Jul 31, 2012 Dec 31, 2013

2.3 Initiate Training for other gov‘t agencies

Jul 31, 2013 Dec 31, 2015

3. Strengthened PPP Enabling Framework Activity Scheduled Start Scheduled Finish 3.1 Central PPP unit set up by July 2012

April 1, 2012 July 1, 2012

3.2 Finalize implementing guidelines for PPP

Aug 01, 2012 Dec 31, 2013

3.3 Develop institutional/organizational model for PPP in Viet Nam

Mar 21, 2012 Jul 19, 2012

Inputs ADB - US$ 20,000,000 Govt - US$ 2,900,000

Source: Asian Development Bank

B. Monitoring

1. Project performance monitoring 73. By the end of inception, the PDF Technical Team (PDFTT) will establish a comprehensive program and project performance monitoring and evaluation (M&E) acceptable to ADB including the targets for the Contribution to the ADB Results Framework. Further, PDFTT will submit quarterly reports to the National Steering Committee and ADB. Disaggregated baseline data for output and outcome indicators gathered during project processing will be updated and reported quarterly through the PDFTT quarterly progress reports

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and after each ADB review mission. These quarterly reports will provide information necessary to update ADB's project performance reporting system.20 2. Compliance monitoring: 74. All program covenants will be monitored regularly by the PDF Technical Team, and twice a year during ADB loan review missions. 3. Safeguards monitoring: 75. Since the project loan will not finance any investments in project implementation and will support only the preparation of feasibility studies, business case development, transaction advisory services and PPP procurement up to the signing of the PPP contractual agreement, it will not be subject to ADB‘s environmental and social safeguard requirements as prescribed in its Safeguard Policy Statement (SPS) 2009 PDF. There is therefore no need to monitor safeguards. 4. Gender and social dimensions monitoring: 76. The PMU under the guidance of the PPP Office will be responsible for implementing and reporting on gender actions. The Project Director of the PMU will be supported by the social/ gender specialist recruited at the PDF level. The PDFTT will also be responsible for monitoring and reporting on the gender actions related to individual PPP projects. Progress update information on implementation of gender actions will be made available to ADB review missions and progress on implementation of the gender actions will be incorporated into regular reporting to ADB. C. Evaluation

77. ADB will conduct an inception mission within two months after project start-up, and a review mission every 6 months thereafter. The midterm review mission will occur early in year 2 of implementation. Within 6 months of physical completion of the Project, the PDFTT will submit a project completion report to ADB.21 D. Reporting

78. The PDFTT will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated 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 and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency Audited Financial Statements (AFS), together with the associated auditor's report, should be adequately reviewed.

20

ADB's project performance reporting system is available at: http://www.adb.org/Documents/Slideshows/PPMS/defauIt.asp?p=evaltool

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

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E. Stakeholder Communication Strategy

79. In addition to the quarterly reporting from the PDFTT to the PPP Office and PMU, the Project will engage Information, Education and Communication Specialists (IECS). They will coordinate with the various experts of the PDFTT and then take the lead in developing IEC and advocacy strategy targeted to various partners and stakeholders affected and involved in the Project. They will assist in the roll out and initial implementation of the respective lEC and advocacy programs.

X. ANTICORRUPTION POLICY

80. ADB reserves the right to investigate, directly or through its agents, any violations of the anticorruption Policy relating to the Project.22 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/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.23 81. ADB's Anticorruption Policy (1998, as amended to date) and the Policy relating to Enhancing ADB's Role in Combating Money Laundering and the Financing of Terrorism (2003) were explained to and discussed with the government and Executing Agency. Consistent with its commitment to good governance, accountability and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB's Anticorruption Policy are included in the loan regulations and the bidding documents for the Program and Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of the Executing Agency and all contractors, suppliers, consultants, and other service providers as they relate to the Project. The Government of Vietnam has handled several ADB projects and is familiar with ADB procedures and anticorruption measures. The Project will further enhance the MPI's capacity to comply with ADB and government procedures as outlined in the Project administration manual; also, for each procurement contract, the government will publicly disclose: (i) the list of participating bidders; (ii) the name of the winning bidder; (iii) details on the procurement methods; (iv) the amount of the contract awarded; (v) the list of goods and/or services purchased; and (vi) the intended and actual utilization of loan proceeds under each contract. It is noted that the Government is taking an active approach against corruption, and recently adopted several legal changes, including the Anti-Corruption Law. A steering committee against corruption which has the power to suspend officials suspected of wrongdoing has also been established.

22

Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 23

ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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XI. ACCOUNTABILITY MECHANISM

82. 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 a good faith effort 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.24

XII. RECORD OF PAM CHANGES

83. {All revisions/updates during course of implementation should be retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the PAM.}

24

For further information see: http://www.adb.org/Accountability-Mechanism/default.asp.