Project Administration Manual

Khulna Water Supply Project (RRP BAN 42171)

Project Number: 42171 Loan Number: XXXX May 2011

Bangladesh: Khulna Water Supply Project

Project Administration Manual

Contents I. PROJECT DESCRIPTION 1

II. IMPLEMENTATION PLANS 1

A. Project Readiness Activities 1 B. Overall Project Implementation Plan 4

III. PROJECT MANAGEMENT ARRANGEMENTS 5

A. Project Stakeholders – Roles and Responsibilities 5 B. Key Persons Involved in Implementation 5 C. Project Organization Structure 6

IV. COSTS AND FINANCING 7

A. Detailed Cost Estimates by Expenditure Category 8 B. Allocation and Withdrawal of Loan Proceeds 9 C. Detailed Cost Estimates by Financier 10 D. Detailed Cost Estimates by Outputs/Components 11 E. Detailed Cost Estimates by Year 12 F. Contract and Disbursement S-curve 13 G. Funds Flow Diagram 14

V. FINANCIAL MANAGEMENT 15

A. Financial Management Assessment 15 B. Disbursement 15 C. Accounting 16 D. Auditing 16

VI. PROCUREMENT AND CONSULTING SERVICES 16

A. Advance Contracting 16 B. Procurement of Goods, Works and Consulting Services 16 C. Procurement Plan 17 D. Consultant's Terms of Reference 17

VII. SAFEGUARDS 17

A. Environmental Safeguards 17 B. Social Safeguards (Involuntary Resettlement) 18

VIII. GENDER AND SOCIAL DIMENSIONS 19

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 22

A. Project Design and Monitoring Framework 22 B. Evaluation 22 C. Reporting 23 D. Stakeholder Communication Strategy 23

X. ANTICORRUPTION POLICY 23

XI. ACCOUNTABILITY MECHANISM 24

XII. RECORD OF PAM CHANGES 24

ANNEXES Annex A Procurement Plan 25 Annex B Outline TOR of Consultants 29 Annex C Design and Monitoring Framework 45

Project Administration Manual Purpose and Process

Khulna Water Supply Project is jointly financed ADB, JICA, and the Government. The procedures and guidelines in the Project Administration Manual are applicable to the components to be financed by ADB and the Government. For the components to be financed by JICA and the Government, applicable procedures and guidelines are described in Operational Matters and Agreed Points (Appendix 7 of the joint mission MOU). The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the 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. The executing and implementing agencies are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by executing and implementing agencies of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. 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.

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

ABBREVIATIONS

ADB = Asian Development Bank CBO = community-based organization CMSC = Corporate Management Support Consultant CQS = consultant qualification selection DMA = District Metering Areas DMF = design and monitoring framework DSC = Design & Supervision Consultants ECA = Environmental Conservation Act ECR = Environmental Conservation Rules EIA = environmental impact assessment EMP = environmental management plan ERD = Economic Relations Division GAP = Gender Action Plan ICB = international competitive bidding IEE = initial environmental examination JICA = Japan International Cooperation Agency KCC = Khulna City Corporation KWASA = Khulna Water Supply and Sewerage Authority LGD = Local Government Division M&E = monitoring and evaluation MLGRDC = Ministry of Local Government, Rural Development, and Cooperatives MOF = Ministry of Finance NCB = national competitive bidding NGOs = nongovernment organizations OHT = overhead tanks PAI = project administration instructions PAM = project administration manual PMU = project management unit PIU = project implementation unit QBS = quality based selection QCBS = quality- and cost based selection QPR = Quarterly Progress Report RRP = Report and Recommendation of the President to the Board of Directors SOE = statement of expenditure SPRSS = Summary Poverty Reduction and Social Strategy SPS = Safeguard Policy Statement SWTP = surface water treatment plant TOR = terms of reference

I. PROJECT DESCRIPTION

1. Project. The Project will develop a sustainable water supply system in Khulna city. Khulna city relies entirely on groundwater and the project will introduce surface water as the main water source to avoid excessive groundwater abstraction. The project will also strengthen corporate management systems of the Khulna Water Supply and Sewerage Authority (KWASA). The impact of the project will be improved urban services in Khulna. The outcome of the project is that majority of households in Khulna have reliable access to potable water. The outputs of the Project are presented below. The Project will be cofinanced on parallel basis by Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA). JICA will finance most activities under Output 1, while ADB’s funding will be mostly utilized to finance activities under Output 2 and 3. 2. Output 1: Augmented and sustainably managed water sources in Khulna city. Activities under Output 1 include construction of intake facilities, a surface water treatment plant, an impounding reservoir and a raw water transmission main, which will be financed by JICA; and rehabilitation of deep tube wells and monitoring of groundwater, which will be financed by ADB. Quality of raw water will be carefully monitored and appropriately mixed with water stored in the impounding reservoir to meet quality standards, particularly salinity level. Groundwater will be carefully monitored and the abstraction will be limited to a sustainable level. 3. Output 2: Extended and efficiently managed distribution network in Khulna city. Activities under Output 2 will be financed by ADB and include expansion of distribution network, construction of a clear water transmission main, and establishment of zonal offices. The current system covers only part of the city, which will be expanded to the entire Khulna city. The distribution networks will be organized in five blocks managed by zonal offices, and blocks will be further divided into District Metering Areas(DMA). Amounts of inflow, outflow, and consumption will be diligently monitored for each DMA to identify and minimize leaks. 4. Output 3: Professional and sustainable corporate management of KWASA. Activities under Output 3 will be financed by ADB and include capacity building programs and consulting services for developing and strengthening KWASA’s corporate management system. The Project will strengthen KWASA’s corporate management system, since KWASA has been recently established with limited financial and human resources. The Project will support the implementation of various activities under the first 5-year business plan, which includes a capital investment plan, financial plan, and human resource development plan. In addition to the expansion of service areas, volumetric tariff and other charges will be introduced to enhance revenues. Human resources will be gradually expanded and adequate training will be provided for professional management of the water supply system.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Action Due Responsibility DPP clearance ECNEC approval of DPP 15 June 2011 PC Steering Committee and PMU

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Action Due Responsibility Notification to expand the Steering Committee is issued

20 June 2011 LGD

Notification to establish the PMU is issued 20 June 2011 LGD Appointment of PMU staff 15 August 2011 KWASA Loan processing (ADB) Management review meeting [completed] ADB Loan negotiations [completed] ERD, ADB ADB Board's project approval 14 June 2011 ADB Loan signing 30 June 2011 ADB, ERD Loan effectiveness 15 July 2011 KWASA, ERD Loan processing (JICA) Loan negotiations [completed] JICA, ERD Project approval [completed] Safeguard Endorsement of safeguard documents [completed] KWASA Cut-off date (section 3 notice) for land acquisition

20 June 2011 KWASA, Deputy Commissioner’s office

Consultancy recruitment (ADB) Invitation of EOI [completed] KWASA Deadline of EOI [completed] KWASA Draft short list and RFP sent to ADB [completed] KWASA RFP issued 20 June 2011 KWASA Consultancy recruitment (JICA) Invitation of EOI [completed] KWASA Draft short list and RFP sent to JICA completed KWASA RFP issued 20 June 2011 KWASA

ADB = Asian Development Bank, DPP = Development Project Proforma, ECNEC = Executive Committee for National Economic Council, EOI = expression of interest, ERD = Economic Relations Division, FD = Finance Division, GOJ = Government of Japan, JICA = Japan International Cooperation Agency, KWASA = Khulna Water Supply and Sewerage Authority, LGD = Local Government Division, PC = Planning Commission. PEC = Project Evaluation Committee, PMU = Project Management Unit, RFP = request for proposal, SLA = subsidiary loan agreement.

Readiness filters Filters Fact finding mission

Before loan negotiations

Status

Finalize draft invitation documents

Consultant selection for critical packages finalized up to Bid Evaluation Report

EOI request issued and short list being prepared.

Prepare procurement plan Endorsed procurement plan [Completed] Procurement plan prepared and agreed

Finalize draft PQ Endorsed draft PQ Not applicable Finalize draft bidding Endorsed bidding documents Bidding document being

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Filters Fact finding mission

Before loan negotiations

Status

documents prepared by Executing Agency with consultant’s support

Prepare disbursement plan Endorsed disbursement plan [Completed] Disbursement plan prepared

Prepare draft land acquisition and resettlement plan

Endorsed land acquisition and resettlement plan

[Completed] Resettlement plan, including plans for land acquisition, finalized

Draft DPP prepared by Executing Agency

Approval of DPP by the government

DPP is in the final stage of approval

BER = Bid Evaluation report, DPP = Development Project Proforma, TOR = terms of reference, PQ = Pre-qualification.

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B. Overall Project Implementation Plan

ADB = Asian Development Bank, DD = Detailed Design, DPP = Development Project Proforma, JICA = Japan International Cooperation Agency, PQ = Pre-qualification. Note: The table shows the schedule up to 2014, though the project will be completed in December 2017. Major works will be completed in the middle of 2016, followed by minor works (expansion of service connections).

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities Central Level Inter-ministerial Steering

Committee Provide policy guidance and supervise

the overall project implementation Ensure smooth inter-ministry/agency

coordination Executing Agency – KWASA

(PMU) Implement the project, including

procurement and supervision of works Report the progress of the Project ADB Jointly monitor and advise overall project

implementation Reviews and issues no-objection for

procurement of ADB-funded components Provide funding for eligible claims of

ADB-funded components JICA Jointly monitor and advise overall project

implementation Reviews and issues no-objection to

procurement of JICA-funded components Provide funding for eligible claims of

JICA-funded components

B. Key Persons Involved in Implementation

Executing Agency KWASA Officer's Name: M.D. Abdullah

Position: Managing Director Telephone: 041-2830557 Email address: [email protected] Office Address: 1062/1ka, Khan-A-Sabur Road, Khulna- 9100, Bangladesh.

KWASA Officer's Name: Jaglul Haider Position: Deputy Managing Director Telephone: 041-810608 Email address: [email protected] Office Address: 1062/1ka, Khan-A-Sabur Road, Khulna- 9100, Bangladesh.

ADB Division Director Staff Name: M. Teresa Kho

Position: Director, SAUW Telephone No.(632)632-6858 Email address: [email protected]

Project Team Leader Staff Name: Masayuki Tachiiri

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Position: Urban Development Economist, SAUW Telephone No. (632) 632-5708 Email address: [email protected]

JICA Project Team Leader Staff Name: Kotohi Inoue

Position: Deputy Director, South Asia Division 4, South Asia Department; Tel: +81-3-5226-8693 Email: [email protected]

C. Project Organization Structure

5. The following chart shows the organizational structure of the Project implementation.

Figure 1: Project Organizational Structure

ADB = Asian Development Bank, JICA = Japan International Cooperation Agency, KWASA = Khulna Water Supply and Sewerage Authority, LGD = Local Government Division, PMU = Project Management Unit.

6. Inter-ministerial Steering Committee. The Steering Committee established for the feasibility study commissioned by Japan International Cooperation Agency (JICA) will be expanded and become the inter-ministerial Steering Committee of the Project. The inter-ministerial Steering Committee will include Local Government Division (LGD) under Ministry of Local Government, Rural Development and Cooperatives (MLGRDC), Department of Environment (Khulna Division) under Ministry of Environment and Forest, Economic Relations Division (ERD) and Finance Division under Ministry of Finance, Implementation, Monitoring and

Inter-ministerial Steering Committee

(Chaired by LGD)

Managing Director Deputy MD -Technical

KWASA

Project Director Project Management Unit

Project manager-ADB PMU

Project manager-JICA PMU

Design and Supervision Consultant - JICA

Design and Supervision Consultant - ADB

Corporate Management Support Consultant

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Evaluation Division (IMED) under Planning Commission, KWASA, and KCC. The inter-ministerial Steering Committee will be chaired by the Secretary of LGD. The inter-ministerial Steering Committee will meet at least every four months or as and when necessary. The inter-ministerial steering committee will be responsible for policy guidance, supervision of implementation and smooth inter-ministerial coordination for the Project. 7. Executing Agency and Project Management and Coordination Unit (PMU). KWASA will be the executing and implementing agency and will be responsible for the execution of the Project. A PMU will be established at KWASA to assist KWASA in implementing the Project, including selection of consultants, procurement of goods and works, supervision of works, and monitoring and reporting of project implementation, including compliance with safeguard and other assurances. The PMU will be headed by a full-time Project Director preferably in the rank of Chief Engineer, supported by two full-time Project Managers preferably in the rank of Superintending Engineer. One Project Manager will be responsible for components funded by ADB and one Project Manager will be responsible for components funded by JICA. Each project manager will be supported by Senior Accounting Officer (1), Accounting Officer (1), Executive Engineer (1), Assistant Engineer (2), Sub-Assistant Engineer (4), Project Technician (4), and Computer Operator (1). Including shared Rehabilitation and resettlement officer (1), Environmental Engineer (1), and office assistants and support staff, the PMU will have 43 staff.

8. Subsidiary Loan Agreement. KWASA will enter into a subsidiary loan agreement with the Ministry of Finance (MOF). The subsidiary loan agreement will set out the financial terms and conditions, acceptable to ADB. The term includes 30 years or repayment period including a grace period of 8 years, and an interest rate of 2% per annum. The subsidiary loan will be in local currency and the Government will bear the foreign exchange risk.

IV. COSTS AND FINANCING

9. The Project is estimated to cost $364 million. The Government has requested a loan in various currencies equivalent to SDR 46,927,000 (equivalent to $75.00 million) from ADB’s Special Funds resources to help finance the Project. The loan will have a 32-year term, including a grace period of 8 years, an interest charge of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions set forth in the draft loan agreement. The ADB loan of $75.00 million equivalent or 21% of the Project cost will be used to finance civil works (56% of the gross-tax claim), equipment and vehicles (100% of the net-tax claim), and consulting services (100% of the net-tax claim). JICA will provide 15,729 million yen ($184 million equivalent) to finance civil works and consultants. The Government will provide $105 million, to finance the cost for land acquisition and taxes, and part of civil works and equipment.

8 A. Detailed Cost Estimates by Expenditure Category

Table 1. Cost Estimates by Expenditure Category ( in US $)% of total cost Including Taxes % of total cost

A. Base Cost 1. Civil Works and Equipment 238,889,613 65.71% 293,688,399 80.79% 2. Consultants 18,210,602 5.01% 21,778,576 5.99% 3. Resettlement Cost 5,926,737 1.63% 5,926,737 1.63% 4. Administration Cost 1,614,410 0.44% 1,614,410 0.44%Sub-total A 264,641,363 72.80% 323,008,123 88.85%B. Contingencies 1. Physical 13,603,433 3.74% 13,603,433 3.74% 2. Price 24,266,056 6.68% 24,266,056 6.68%Sub-total B 37,869,489 10.42% 37,869,489 10.42%C. Financing Charges During Implementation 1. Interest During Implementation 2,655,237 0.73% 2,655,237 0.73%Sub-total C 2,655,237 0.73% 2,655,237 0.73% D Tax and duties 58,366,760 16.06%Grand Total 363,532,849 100.00% 363,532,849 100.00% Note: Numbers may not sum precisely because of rounding.

9 B. Allocation and Withdrawal of Loan Proceeds

Item Total Amount

Allocated for ADB Financing (SDR)

Percentage and basis for withdrawal from the Loan

Account

Works 35,531,000 56.0% of total expenditure Equipments 580,000 62.0% of total expenditure* Resettlement Costs (other than land acquisition and asset compensations cost) 235,000 100% of the total expenditure* Incremental costs 434,000 100% of the total expenditure* Consulting Services 4,596,000 100% of the total expenditure* Interest during Construction 1,617,000 100% of the total expenditure* Unallocated 3,934,000Total 46,927,000* Exclusive of taxes and duties imposed within the territory of the Borrower. Note: Numbers may not sum precisely because of rounding.

10 C. Detailed Cost Estimates by Financier

Table 2. Cost Estimates By Financier (in US $)ADB JICA GoB

% of Cost Category

Total % of Cost Category

Tax Non-Tax Total % of Cost Category

Total

A. Base Cost 1. Civil Works and Equipment 57,711,438 19.7% 145,871,345 49.7% 54,798,786 35,306,831 90,105,617 30.7% 293,688,399 1.1 Water Intake Facility - 81,501,754 76.8% 24,599,970 - 24,599,970 23.2% 106,101,724 1.2 SWTP and Impounding Reservoir - 64,369,591 76.8% 19,428,907 - 19,428,907 23.2% 83,798,498 1.3 Development of Monitoring Wells 128,075 55.6% - 23,903 78,354 102,257 44.4% 230,332 1.4 DTW Rehabilitation 165,123 55.8% - 29,887 101,020 130,907 44.2% 296,030 1.5 Distribution Reservoirs and OHTs 13,137,251 55.6% - 2,450,496 8,037,136 10,487,632 44.4% 23,624,883 1.6 Clear Water Transmission Main 16,568,755 55.6% - 3,097,652 10,136,470 13,234,122 44.4% 29,802,877 1.7 Distribution Network Improvement 25,833,265 55.6% - 4,825,805 15,804,332 20,630,137 44.4% 46,463,402 1.8 Connection for LIC 1,060,937 55.7% - 194,485 649,063 843,548 44.3% 1,904,485 1.9 Office Equipment and vehicles 818,031 55.8% - 147,681 500,457 648,137 44.2% 1,466,168 2. Consultants 7,345,294 33.7% 10,865,308 49.9% 3,567,974 - 3,567,974 16.4% 21,778,576 2.1 Design Supervision Consultants - JICA - 10,865,308 87.0% 1,629,796 - 1,629,796 13.0% 12,495,104 2.2 Design Supervision Consultants - ADB 5,118,300 79.1% - 1,352,498 - 1,352,498 20.9% 6,470,798 2.3 Groundwater Monitoring 182,294 79.0% - 48,486 - 48,486 21.0% 230,780 2.4 Corporate Management Support 2,044,700 79.2% - 537,194 - 537,194 20.8% 2,581,894 3. Resettlement Costs 375,357 - - 5,551,380 5,551,380 100.0% 5,926,737 3.1 Land and Assets - - - 5,551,380 5,551,380 100.0% 5,551,380 3.2 Resettlement Costs 375,357 100.0% - - - - 375,357 4. Administration Cost 694,196 43.0% - - 920,214 920,214 57.0% 1,614,410 Sub-total A 66,126,285 20.5% 156,736,653 48.5% 58,366,760 41,778,425 100,145,185 31.0% 323,008,123

- - - - - - B. Contingencies - - - - - - 1. Physical 2,885,448 21.2% 8,760,215 64.4% - 1,957,770 1,957,770 14.4% 13,603,433 2. Price 3,402,848 14.0% 18,467,650 76.1% - 2,395,558 2,395,558 9.9% 24,266,056 Sub-total B 6,288,295 16.6% 27,227,865 71.9% - 4,353,328 4,353,328 11.5% 37,869,489

- - - - - - C. Interest During Implementation 2,585,419 97.4% - - 69,817 69,817 2.6% 2,655,237 Sub-total C 2,585,419 97.4% - - 69,817 69,817 2.6% 2,655,237

- - - - - - Total Project Cost (A+B+C) 75,000,000 20.6% 183,964,518 50.6% 58,366,760 46,201,570 104,568,331 28.8% 363,532,849 Note: Numbers may not sum precisely because of rounding.

11 D. Detailed Cost Estimates by Outputs/Components

Output 1 Output 2 Output 3 GRAND TOTAL (Output 1+2+3)

A. Base Cost 1. Civil Works and Equipment 146,343,916 89,481,896 3,063,801 238,889,613 2. Consultants 11,047,602 5,118,300 2,044,700 18,210,602 3. Land and Resettlement Costs 3,348,622 2,578,115 - 5,926,737 Compensation 3,348,622 2,202,758 - 5,551,380 Resettlement costs - 375,357 - 375,357 4. Administration Cost - - 1,614,410 1,614,410 Sub-total A 160,740,141 97,178,311 6,722,911 264,641,363 B. Contingencies - - - - 1. Physical 8,976,148 4,474,095 153,190 13,603,433 2. Price 18,803,293 5,116,271 346,492 24,266,056 Sub-total B 27,779,441 9,590,365 499,682 37,869,489 C. Interest During Implementation 85,601 2,406,821 162,814 2,655,237 Sub-total C 85,601 2,406,821 162,814 2,655,237 D. Taxes 45,760,950 11,724,458 881,352 58,366,760 Total Project Cost (A+B+C+D) 234,366,133 120,899,955 8,266,760 363,532,849

Table 3. Cost estimates By Outputs and Components (in US $)

Note: Numbers may not sum precisely because of rounding.

12 E. Detailed Cost Estimates by Year

Table 4. Cost Estimates by Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total

ADB LoanA. Base Cost 1. Civil Works and Equipment 1,070,688 7,657,662 14,304,515 13,388,385 15,866,060 5,424,128 57,711,438 2. Consultants 2,378,837 1,758,286 1,677,386 911,886 508,400 110,500 7,345,294 3. Resettlement 150,260 225,097 - - - - - 375,357 4. Administration Costs 106,799 106,799 106,799 106,799 106,799 106,799 53,400 694,196Sub-total A 257,059 3,781,421 9,522,748 16,088,700 14,407,070 16,481,259 5,588,027 66,126,285B. Contingencies 96,705 643,826 1,378,577 1,465,804 1,948,368 755,017 6,288,295C. Interest During Implementation 42,889 153,488 349,799 533,028 749,361 756,855 2,585,419Total ADB Loan 257,059 3,921,015 10,320,061 17,817,076 16,405,902 19,178,988 7,099,899 75,000,000

JICA Loan 75,000,000A. Base Cost 1. Civil Works and Equipment 31,006,238 62,012,476 41,637,037 10,923,197 292,398 145,871,345 2. Consultants 4,269,521 1,129,866 2,094,456 2,302,156 1,069,308 0 10,865,308Sub-total A 4,269,521 32,136,103 64,106,932 43,939,193 11,992,505 292,398 156,736,653B. Contingencies 487,609 4,318,422 10,562,074 8,818,788 2,985,515 55,457 27,227,865Total JICA Loan 4,757,130 36,454,526 74,669,006 52,757,982 14,978,021 347,855 183,964,518

GOB

Land Acquisition 2,286,031 2,595,625 669,724 5,551,380Physical Works and Equipments 655,028 4,684,822 8,751,248 8,190,776 9,706,573 3,318,385 35,306,831Physical Contingencies 109,753 349,706 437,524 409,539 485,329 165,919 1,957,770Price Contingencies 151,914 347,931 405,864 487,214 706,648 295,987 2,395,558Administration Cost 141,571 141,571 141,571 141,571 141,571 141,571 70,786 920,214Taxes 123,268 1,358,846 10,994,241 22,016,842 15,852,382 6,785,123 1,236,059 58,366,760Interest 476 4,121 11,589 16,865 18,365 18,402 69,817Total GoB 2,550,870 5,013,212 17,192,116 31,764,638 25,098,348 17,843,609 5,105,537 104,568,330

Grand Total (ADB+JICA+GOB) 2,807,930 13,691,357 63,966,702 124,250,720 94,262,231 52,000,618 12,553,290 363,532,849 Note: Numbers may not sum precisely because of rounding.

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F. Contract and Disbursement S-curve

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

3Q 2

011

1Q 2

012

3Q 2

012

1Q 2

013

3Q 2

013

1Q 2

014

3Q 2

014

1Q 2

015

3Q 2

015

1Q 2

016

3Q 2

016

1Q 2

017

3Q 2

017

Disbursement

Award

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G. Funds Flow Diagram

ADB

KWASA’s imprest account at commercial bank

MOF

(ii) (v)

(vii) (iv)

(vi)

(viii)

(i) (iii)

Contractors, consulting firms, and goods suppliers (Direct payments in foreign currencies)

Fund Flow

(ix) KWASA’s imprest account at central bank

Contractors, consulting firms, and goods suppliers (Other payments)

(vii) (iv)

KWASA’s project account at commercial bank

For Direct payments in foreign currencies (i) Contractors and consultants issue claims to PMU (ii) PMU send request to ADB for direct payments together with contractors' and

consultants' invoices (iii) ADB makes direct payment to contractors and consultants

For Other payments

(iv) Contractors and consultants issue claims to PMU (v) PMU request imprest advance, liquidation or replenishment (vi) ADB makes payments to imprest account (vii) PMU makes payment (viii) PMU request the MOF to release the counterpart funds (ix) MOF makes payments to PMU

Document Flow

ADB = Asian Development Bank, KWASA = Khulna Water Supply and Sewerage Authority, MOF = Ministry of Finance, PMU = Project Management Unit.

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

10. A financial management assessment was conducted for the Project, covering the executing agency and the implementing agencies.1 The financial management assessment identified training needs of concerned staff and other support requirement to ensure appropriate procedures and standards of funds flow, accounting, reporting, and audit. The Project will provide these support through consulting services.

B. Disbursement

11. The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),2 and detailed arrangements agreed upon between the Government and ADB. Pursuant to ADB's Safeguard Policy Statement (2009),3 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.

12. The loan proceeds will be disbursed through direct payment, reimbursement, imprest fund procedures (advance payment, liquidation and replenishment). KWASA will choose appropriate disbursement methods depending on the nature of payment. KWASA is responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) keeping supporting documents, and (iv) preparing and sending withdrawal applications to ADB.

13. Foreign currency payments for consultants, goods, suppliers, and contractors may be paid directly by ADB. The PMU will submit the withdrawal application for direct payment together with the approved invoices and documentation to ADB in accordance with the ADB's Loan Disbursement Handbook. 14. KWASA will, immediately after the loan effectiveness, establish an imprest account at the Bangladesh Bank to receive funds from ADB in US dollars. KWASA will open another imprest account at a commercial bank acceptable to ADB, which will receive funds converted into Bangladesh Taka from the imprest account at the Bangladesh Bank. The imprest account ceiling will not exceed the lower of (i) the estimated expenditure to be financed from the imprest account for the first six months of Project implementation, or (ii) the equivalent of 10% of the Loan amount. The statement of expenditure (SOE) procedure may be used to reimburse eligible expenditures or liquidate advances provided into the imprest account for payments less than $100,000 equivalent. The 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.4 15. Before the submission of the first withdrawal application, the PMU should submit to ADB 1 Financial Management Assessment (accessible from the list of linked documents in Appendix 2). 2 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 3 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf 4 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

16

sufficient evidence of authority of the person(s) who will sign withdrawal applications on behalf of the borrower, together with authenticated specimen signatures of each authorized person. The minimum amount per withdrawal application is US$100,000, unless otherwise approved by ADB. The PMU is to consolidate claims to meet this limit for replenishment of imprest account claims or other payments. Withdrawal applications and supporting documents must demonstrate, among other things, that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. No withdrawals shall be made until the following conditions have been satisfied: (i) The Borrower shall have established the SC, in accordance with the PAM; and (ii) The Borrower shall have established the PMU and shall have appointed the PD and PM in accordance with the PAM.

C. Accounting

16. KWASA will maintain separate project accounts and records by funding source (ADB, JICA, and the Government) for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices.

D. Auditing

17. KWASA will cause the detailed project accounts to be audited in accordance with International Standards on Auditing, by an independent auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within six months of the end of each fiscal year by KWASA. The annual audit report will include a separate audit opinion on the use of the imprest accounts, the project accounts and the SOE procedures. The Government has been made aware of ADB’s policy on the requirements for satisfactory and acceptable quality of the audited accounts and their timely submission. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting

18. All advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines (April 2010, as amended from time to time)5 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).6 The Government has been advised that approval of advance contracting does not commit ADB to finance the Project.

19. Advance Contracting. Advance contracting is allowed for selection of consulting services, including (i) request for EOI, (ii) short-listing, (iii) request for proposals, and (iv) evaluation of proposals; and for procurement of minor goods and works, including (a) prequalification, (b) tendering, and (c) bid evaluation.

B. Procurement of Goods, Works and Consulting Services

20. Procurement of Goods and Works. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines. International competitive bidding (ICB) procedures will be used for civil works contracts and goods supply contracts valued at

5 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 6 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

17

$1.0 million or higher. National competitive bidding (NCB) procedure will be used for works contract and goods supply contracts valued at $100,000 or higher, and below $1.0 million. Shopping may be used for works and goods supply contracts worth less than $100,000. One package for deep exploratory well development will be procured through direct contracting to the Geological Survey of Bangladesh7, since it is the sole entity capable to conduct very deep drillings required. ADB and the Government will review the public procurement laws of the Government to ensure consistency with ADB’s Procurement Guidelines. The detail procedures of procurement will be found in Project Administration Instructions (PAI). The most relevant sections of PAI8 for the Project are PAI 3.03 (ICB) and PAI 3.04 (NCB). 21. Consultant Selection. All consultants, community-based organizations (CBOs) and nongovernment organizations (NGOs) will be recruited according to ADB’s Guidelines on the Use of Consultants.9 Consulting services are required to (i) support project management, (ii) carry out detailed design and construction supervision, including monitoring for safeguards compliance, and (iii) provide institutional and capacity development programs. Two major consulting services will be engaged through quality- and cost-based selection (QCBS) method with a standard quality/cost ratio of 80/20 and full-technical proposals. One small package will be selected through Consultants’ Qualification Selection method with simplified technical proposal. The most relevant sections of PAI10 are PAI 2.05. 22. Procurement Capacity of the Executing Agency. A procurement capacity assessment was conducted for the executing agency.11 The procurement capacity assessment identified training needs of concerned staff and other support requirements to ensure appropriate procedures and standards. The Project will provide this support through consulting services. C. Procurement Plan

23. An 18-month procurement plan indicating threshold and review procedures, tentative contract packages, and national competitive bidding guidelines is in Annex A. D. Consultant's Terms of Reference

24. Draft outline terms of references (TORs) of consultants are in Annex B.

VII. SAFEGUARDS

A. Environmental Safeguards

25. The Executing Agency prepared an Initial Environment Examination (IEE) as part of the feasibility study, including an environmental management plan (EMP), which meets the requirements under the Government’s Environmental Conservation Act (ECA, 1997) (recently amended-Amendment 2000), the Environmental Conservation Rules (ECR,1997), and other

7 The EA and the Project Team examined the availability of domestic companies which can carry out the very deep

drilling (600m) and found there are no such companies. Since it requires to mobilize specialized equipment and the contract size is not large ($100,000), it is unlikely that international companies show interest and submit competitive bids. Geological Survey of Bangladesh is a government entity specializing in geological investigation and have equipment and experience in very deep drilling.

8 http://www.adb.org/Documents/Manuals/PAI/default.asp 9Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation

at: http://www.adb.org/documents/handbooks/project-implementation/ 10 http://www.adb.org/Documents/Manuals/PAI/default.asp 11 Procurement Capacity Assessment (accessible from the list of linked documents in Appendix 2).

18

relevant government laws (e.g., forest, labor, etc.), ADB’s Safeguard Policy Statement (2009), JICA’s Guidelines for Environmental and Social Considerations (2002). The Project will use the same IEE and EMP which cover the entire Project, regardless of funding sources. According to the Government’s regulations, the documents are referred to as an environmental impact assessment (EIA); however, since the Project is Category B, ADB requires only an IEE in accordance with its safeguard policy. The EIA will serve as IEE under the ADB’s safeguard policy. The following are institutional roles and responsibilities to ensure the implementation of the EMP during design and construction stages.

26. Project Management Unit. The PMU, with assistance from the environmental specialist of the consultant team is to (i) confirm existing IEE/EMP are updated based on detailed designs; (ii) confirm whether the EMP is included in bidding documents and civil works contracts; (iii) provide oversight on environmental management aspects of the Project and ensure EMPs are implemented by contractors; (iv) establish a system to monitor environmental safeguards including monitoring the indicators set out in the monitoring plan of the EMP; (v) ensure compliance with all Government rules and regulations regarding site and environmental clearances as well as any other environmental requirements (e.g., No Objection Certificates), as relevant; (vi) review, monitor and evaluate the effectiveness with which the EMPs are implemented, and recommend necessary corrective actions to be taken as necessary; (vii) submit semiannual monitoring reports to ADB; (viii) ensure timely disclosure of the final IEE/EMP in locations and form accessible to the public, and (ix) address any grievances brought about through the Grievance Redress Mechanism in a timely manner as per the IEE.

27. Civil Works Contracts. The Government will ensure that civil works contracts and bidding documents under the Project include specific provisions requiring contractors to comply with all environmental mitigation and monitoring measures specified in the EMP and environmental clauses in contract documents. EMP will be included in these documents and verified by the PMU. Contractors are to carry out all environmental mitigation measures outlined in their contracts including any environmental monitoring requirements, as stated in the EMP. B. Social Safeguards (Involuntary Resettlement)12

28. The Executing Agency prepared a draft Resettlement Plan that meets the requirements under the Government’s Acquisition and Requisition of Immovable Property Ordinance (1982), ADB’s Safeguard Policy Statement (2009), JICA’s Guidelines for Environmental and Social Considerations (2002). The Resettlement Plan is prepared for the entire Project, regardless of funding sources. The cost related to land acquisition and resettlement/rehabilitation will be borne by the Government. The PMU is to ensure that any physically or economically displaced persons are compensated prior to displacement. The following are institutional roles and responsibilities to ensure Resettlement Plan are implemented during design and construction stages:

29. Project Management Unit. The PMU is to (i) conduct internal monitoring of the resettlement process to ensure smooth implementation; (ii) update resettlement plan during the detailed design stage; (iii) implement the Resettlement Plan with support from consultants and support staff;13 (iv) conduct meaningful consultations with stakeholders and affected persons;

12 The project will have no impact on indigenous peoples; ADB's Indigenous People's requirements are thus not

applicable. 13 Implementation of the Resettlement Plan will be facilitated by a consulting firm.

19

(v) provide timely payments of compensation and other entitlements as per the Resettlement Plan are made before displacement occurs; (vi) ensure all training and capacity building activities are provided to affected persons by linking them to relevant local Government training programs and institutions; (vii) ensure all grievances are addressed and when necessary activate the Grievance Redress Committee; and (viii) submit monitoring results as part of quarterly progress reports to ADB that describe the progress of the implementation of resettlement activities and any compliance issues and corrective actions.

30. Inter-Ministerial Steering Committee. The inter-ministerial steering committee will discuss land acquisition and resettlement issues if/when there is a significant delay or difficulty in such activities in order to expedite the process in accordance with Resettlement Plans. The committee will ensure all grievances will be addressed in a timely manner through the project grievance redress mechanism outlined in the Resettlement Plans.

31. Civil Works Contracts. The Government will ensure that bidding documents and civil works contracts under the Project include specific provisions requiring contractors to comply with all (a) applicable labor laws and core labor standards on (x) prohibition of child labor as defined in national legislation for construction and maintenance activities, on (y) equal pay for equal work of equal value regardless of gender, ethnicity or caste, and on (z) elimination of forced labor; and (b) the requirement to disseminate information on sexually transmitted diseases including HIV/AIDS to employees and local communities surrounding the Project sites.

VIII. GENDER AND SOCIAL DIMENSIONS

32. Gender. The detail of the gender aspects of the Project is described in the Gender Action Plan (GAP), for which appropriate resources will be allocated under the Project. The Project will improve access to safe water, which will (i) reduce the burden of woman who tends to fetch water for the whole family, and (ii) improve health conditions of city dwellers. Low income households may form a water user group to share a tap, where women will be encouraged to play a major role. Women will have an equal opportunity to participate in training programs to be supported under the Project. Efforts to reduce wage inequality between men and women and to ensure core labor standards will be in place. Women will have an equal opportunity in employment as PMU staff and construction laborers. Awareness raising and training activities will include women. GAP will be mostly implemented by the PMU with support of consultants. Monitoring of GAP implementation will be carried out by the PMU with support of consultants, which will be reported to ADB through Quarterly Progress Report (QPR). The evaluation of GAP implementation will be carried out as part of preparation of the Project Completion Report by the PMU and the following project evaluation.

20 GENDER ACTION PLAN

Activities Indicators and Targets Responsibility Time

Output 1: Augmented and sustainably managed water sources

1.1 Conduct consultation sessions in selected wards in Khulna City, with community members on infrastructure planning and implementation issues, including compensation for land acquisition and resettlement, ensuring that every session includes female landowners, female household heads (FHHs), and other affected women from other groups.

50 citizens (target: 30% women) consulted during each consultation sessions (15), for a total of 750 community members consulted

All female landowners and female headed-households (FHHs) affected by the project, assured of equal compensation (target: 100% women)

PMU staff supported by consultants

Years 1-2

1.2 Include relevant clauses in the bidding documents on core labor standards (equal pay for work of equal value, occupational health and safety, water supply, sanitation, segregated shelter and facilities), and monitor their implementation

Relevant clauses on core labor standards included in bidding documents of all contracts (100%)

PMU

Year 1-7

1.3 Employ women, including indigenous women, as laborers in earthwork, construction and maintenance work, and enforce the core labor standards including “equal pay for work of equal value, occupational health and safety, water supply, sanitation, segregated shelter and facilities”

Core labor standards enforced in all contracts (100%), especially those relating to equal pay for work of equal value.

PMU Contractors

Years 2-7

1.4 Orient all PMU staff and contractors on gender-related aspects of core labor standards (equal wages, occupational health and safety, water supply, sanitation)

All PMU staff (100%) and contractors oriented on gender related aspects of core labor standards

PMU staff contractors

Year 1-2

Output 2: Extended and efficiently managed distribution network 2.1 Conduct awareness-raising seminars in selected wards

in Khulna City, on public hygiene, economic use of water, and gender-related issues in water and sanitation

100 citizens (target: 75% women), 2 rounds for each ward (15), for a total of 3,000


Years 1-6

2.2 Conduct community consultations in selected wards, on issues related to connection fees, tariffs and other charges

100 citizens (target: 50% women) oriented in each ward (15), for a total of 1,500 on issues of connection fees, tariffs and other charges


2.3 Provide individual connections with a low subsidized connection charge to women headed households

Number of women-headed households with individual connection will increase from 2,876 connections to 14,187 connections


Years 2-7

21

FHH = female-headed household, GAP = Gender Action Plan, KWASA = Khulna Water Supply and Sewerage Authority, O&M = operations and maintenance, PMU = Project management unit.

Activities Indicators and Targets Responsibility Time 2.4 Establish communal taps managed by Water User

Groups (WUGs) in low-income areas where individual connections are not feasible

1,500 number of communal taps established in strategic locations in low-income communities (target: 30% women representation and 30% women in leadership positions)


Years 2-6

2.5 Conduct ward level trainings, on the O&M and management of communal water taps

Members of all water user group (100%) trained on O&M and management of communal water taps (target: 50% women representation)


Years 2-5

Output 3: Professional and sustainable corporate management 3.1 Recruit/promote women at various levels of

PMU/KWASA with equal opportunity with men Promote recruitment and promotion of female

staff under equal opportunity. Women/men ratio in staff recruitment and promotion will be monitored.

PMU staff KWASA

Throughout project implementation

3.2 Include gender considerations in Water Supply and Sanitation Training Modules and implement them

One module or section on gender-specific issues in Water Supply and Sanitation included in all training modules

PMU KWASA

Throughout project implementation

3.3 Ensure that all technical training provided to female staff in PMU/KWASA

Promote participation of female staff in training under equal opportunity (target: 100% of women participation).

3.4 Collect sex-disaggregated baseline data and report the gender results

Sex-disaggregated baseline information and data collected

Collected data is complied and reported in quarterly progress report.


3.5 Monitor and report progress on the implementation of the GAP covering resettlement, compensation, core labor standard and women’s participation and benefits

Quarterly progress report on the implementation of the project-specific GAP


22

33. Social Development and Participation. The social aspects of the Project are described in the Summary Poverty Reduction and Social Strategy (SPRSS). Among the major findings of the social assessment is lack of access to piped water, and concerns with the affordability to use the new system. The Project will provide household connections with a low connection charge to promote individual connections even for the poor. For low income communities where individual connection is not a practical solution, water user groups will be formulated to manage communal taps. The tap will be metered and KWASA will collect the bill through caretaker of the tap chosen from the user group. Another benefit of the Project is employment opportunities in construction, which will be open for unskilled men and women. Specific measures will be taken by the executing agency to ensure enforcement of core labor standards on the work camps/site. The evaluation will be carried out as part of preparation of the Project Completion Report by the PMU and the following project evaluation.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

34. The Design and Monitoring Framework (DMF) is in Annex C. 35. Monitoring of Indicators. Within 9 months of loan effectiveness, the PMU with support of consultants will establish a project performance monitoring system in line with the targets, indicators, assumptions and risks described in the DMF. The baseline data corresponding to indicators and targets set out in the DMF will be updated during the detailed design stage within 12 months of loan effectiveness, including disaggregated data by income levels and sex as required. After the initial baseline survey, the PMU with support of consultants will conduct annual survey and quarterly monitoring of indicators, and submit the results in Quarterly Progress Reports (QPRs) to ADB and JICA throughout the project implementation. QPRs will include these indicators and provide information necessary to update ADB's project performance reporting system.14

36. Monitoring of Compliance with Loan Covenants. Status of compliance with loan covenants, including policy, legal, financial, economic, environmental, and others, will be monitored and reported by the PMU through the quarterly progress reports, which will be consolidated and submitted to ADB by the PMU. The results will be reviewed in detail during ADB's review missions. In particular, status of the implementation of safeguard measures described in EMPs and Resettlement Plans, as well as measures described in SPRSS and GAP, will be monitored and reported by the PMU through the QPRs.

B. Evaluation

37. Within 36 months after the effectiveness, ADB will conduct a mid-term review to identify problems and constraints encountered and suggest measures to address them, including appropriateness of scope, design, implementation arrangements, schedule of activities and compliance with safeguard and other covenants. Within 6 months of physical completion of the Project, the PMU will submit a project completion report to ADB.15 14 ADB's project performance reporting system is available at:

http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool 15 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar

23

C. Reporting

38. The PMU will provide ADB with the following reports: (i) QPR including (a) utilization of fund, (b) progress of procurement and contract

awards, (c) physical progress measured by output and outcome indicators in accordance with the DMF, and (d) compliance with covenants, and (e) key implementation issues and solutions.

(ii) Annual reports including (a) updated procurement plan; and (b) updated implementation plan for next 12 months, which will be attached to the last quarterly progress report in each year; and

(iii) Project completion report within 6 months of physical completion of the Project.

D. Stakeholder Communication Strategy

39. The Project intends to maximize transparency by communicating relevant project information to stakeholders in various means. The PMU will set up a website within 12 months from the mobilization of consultants and disclose all key project-related information, including the scope, cost, and financial and institutional arrangements of the Project, project safeguard reports such as IEE and Resettlement Plan, and project progress such as procurement, contract awards and disbursement. When KWASA introduces volumetric tariff and other charges, it will conduct extensive consultations and establish communication programs with support of consultants in order to ensure effective participation, understanding and support of stakeholders.

X. ANTICORRUPTION POLICY

40. In compliance with ADB’s Anticorruption Policy (1998, as amended to date) 16 and the Policy relating to Enhancing ADB’s Role in Combating Money Laundering and the Financing of Terrorism (2003), the Government and KWASA (i) acknowledges ADB’s right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project; (ii) agrees to cooperate fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation; and (iii) agrees to refrain from engaging in money laundering activities or financing of terrorism and will allow ADB to investigate any violation or potential violation of these undertakings. 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.17 To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the Project.

41. The Government will (i) ensure that the Executing Agency conduct periodic monitoring inspections on all contractors’ activities related to fund withdrawals and settlements; and (ii) ensures that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of KWASA, each of the implementing agencies and all contractors, suppliers, consultants and other service providers as they relate to the Project.

16 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 17 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

24

XI. ACCOUNTABILITY MECHANISM

42. People who are, or may in the future be, adversely affected by the Project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.18 The Project will establish a Grievance Redress Mechanism to ensure greater accountability. Within 12 months of loan effectiveness, KWASA will prepare a Grievance Redress Mechanism, acceptable to ADB, and establish a special committee to receive and resolve complaints/grievances or act upon reports from stakeholders on misuse of funds and other irregularities, including grievances due to resettlement. The special committee will (i) make public of the existence of this Grievance Redress Mechanism; (ii) review and address grievances of stakeholders of the Project, in relation to either the Project, any of the service providers, or any person responsible for carrying out any aspect of the Project; and (iii) proactively and constructively responding to them.

XII. RECORD OF PAM CHANGES

43. The first draft of PAM has been prepared and agreed upon at the loan fact-finding in December 2010. 44. Minor editorial changes and updates have been made in preparation of RRP in February 2011 and at loan negotiations in April 2011.

18 For further information see: http://compliance.adb.org/.

Annex A 25

DRAFT PROCUREMENT PLAN

Basic Data Project Name: Khulna Water Supply Project Country: Bangladesh Executing Agency: Khulna Water Supply and

Sewerage Authority Loan Amount: $75 million Loan (Grant) Number: TBD Date of First Procurement Plan: December 2010

Date of this Procurement Plan: December 2010

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

1. Project Procurement Thresholds

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

Procurement of Goods and WorksMethod Threshold International Competitive Bidding (ICB) for Works Over $1,000,000 International Competitive Bidding for Goods Over $1,000,000 National Competitive Bidding (NCB) for Works Below $1,000,000 National Competitive Bidding for Goods Below $1,000,000 Shopping for Works Below $100,000 Shopping for Goods Below $100,000

ICB = international competitive bidding, NCB = national competitive bidding.

2. ADB Prior or Post Review

2. 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 CommentsProcurement of Goods and Works ICB Works and Goods Prior NCB Works and Goods Prior if over $500,000 NCB Works and Goods Post if below $500,000 Shopping for Works Post Shopping for Goods Post 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

CQS = consultants qualifications selection, FBS = fixed budget selection, ICB = international competitive bidding, LCS = least-cost selection, NCB = national competitive bidding, QBS = quality-based selection, QCBS = quality- and cost-based selection, SSS = single source selection.

26 Annex A

3. Goods and Works Contracts Estimated to Cost More Than $1 Million

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

General Description Contract

Value Procurement

Method Prequalification of Bidders (y/n)

Advertisement Date

(quarter/year) Comments Construction of clear water transmission mains

$ 26,705,225 ICB No Q3/2012

Construction of distribution reservoirs and OHTs

$ 21,174,387 ICB No Q3/2012

Construction of distribution pipe network

$ 39,624,705 ICB No Q3/2012

Service connections with meters

$1,836,421 NCB No Q4/2011

Connections for low income areas

$1,710,000 NCB No Q3/2012

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

4. 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

International or National

Assignment Comments Design and Supervision $5,118,300 QCBS

80:20 Q1 2011 International

Corporate Management Support

$2,044,700 QCBS 80:20

Q1 2011 International

Groundwater Monitoring $ 182,294 CQS/QCBS 80:20

Q2 2011 National

5. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000

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

General Description

Value of Contracts

Number of Contracts

Procurement / Recruitment Method Comments

Rehabilitation of deep tube wells (DTW)

$266,143 1 NCB

Development of deep exploratory well

$100,000 1 Direct contracting

Geological Survey of

Bangladesh Development of monitoring wells $106,429 1 NCB Tools and equipment for zone offices

$67,873 1 Shopping

Portable water quality monitoring equipment for zone offices

$54,299 1 Shopping

Leak detection equipment for zone offices

$54,299 1 Shopping

Office equipment $111,700 Multiple Shopping Vehicles $906,787 Multiple ICB/shopping

Annex A 27

B. Indicative List of Packages Required Under the Project 6. 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,

$1000)

Estimated Number of Contracts

Procurement Method

Domestic Preference Applicable Comments

Equipment Tools and equipment for zone offices

$67,873 1 Shopping

Water quality monitoring equipment for zone offices

$54,299 1 Shopping

Leak detection equipment for zone offices

$54,299 1 Shopping

Office equipment $111,700 Multiple Shopping Vehicles $906,787 Multiple ICB/shopping Yes Business System software $300,000 Multiple Shopping Works Construction of clear water transmission mains

$26,705,225 1 ICB Yes

Construction of distribution reservoirs and OHTs

$21,174,387 1 ICB Yes

Construction of distribution pipe network

$39,624,705 1 ICB Yes

Construction of KWASA office building

$1,941,791 Multiple NCB

Service connections with meters


Connections for low income areas


Rehabilitation of deep tube wells (DTW)

$266,143 1 NCB

Development of deep exploratory well

$100,000 1 Direct contracting

Development of monitoring wells

$106,429 1 NCB

Consulting Services Design and Supervision $5,118,300 1 QCBS, 80:20 FTP Corporate Management Support

$2,044,700 1 QCBS, 80:20 FTP

Groundwater Monitoring $182,294 1 CQS/QCBS 80:20 STP CQS = consultants’ qualifications selection, FTP = full technical proposal, ICB = international competitive bidding, NCB = national competitive bidding, QCBS = quality cost based selection, SSS = single source selection, STP = simplified technical proposal.

C. National Competitive Bidding

1. General 7. The procedures to be followed for national competitive bidding shall be those set forth for the National Open Tendering Method in the Government’s Public Procurement Rules, 2008 (as updated and issued pursuant to the Bangladesh Public Procurement Act, 2006) with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the Procurement Guidelines.

28 Annex A

2. Advertising

8. 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.

3. Anti-Corruption

9. Definitions of corrupt, fraudulent, collusive and coercive practices shall reflect the latest ADB Board-approved Anti-Corruption Policy definitions of these terms and related additional provisions (such as conflict of interest, etc.).

4. Location of Bid Submission

10. Submission of bids to ‘primary’ and ‘secondary’ locations, or ‘multiple droppings’ of bids, shall not be required or allowed. Advertisements and bidding documents shall specify only one location for delivery of bids.

5. Rejection of All Bids and Rebidding

11. Bids shall not be rejected and new bids solicited without ADB’s prior concurrence.

6. Member Country Restrictions

12. Bidders must be nationals of member countries of ADB, and offered goods must be produced in member countries of ADB.

7. Lottery

13. A lottery system shall not be used to determine a successful bidder, including for the purpose of resolving deadlocks.

8. Qualification Requirements

14. A successful bidder must be determined by an assessment process that shall include the application of qualification requirements to all bids.

9. Rejection of Bids

15. A bid shall not be rejected on the grounds that its bid price is not within a percentage range above or below the contract estimate.

Annex B-1 29

OUTLINE TERMS OF REFERENCE: DESIGN AND SUPERVISION CONSULTANTS

I. INTRODUCTION 1. Citizens in Khulna have been suffering from limited access to safe and potable water. Less 20% of total 1 million population have access to piped water supply and the rest resorts to alternative water sources such as river, pond and shallow tube well, etc. The existing distribution network is old and poorly maintained, resulting in low quality of water at tap. ADB initiated support to the KWASA through TA: Supporting the establishment of KWASA (SSTA), approved in December 2008. Japan International Cooperation Agency (JICA) commissioned a feasibility study of the proposed Khulna Water Supply Project. It is agreed that JICA will fund upstream works (including water intake, impounding reservoir, and water treatment plant), and ADB will fund downstream works (transmission of clear water, distribution reservoirs, and distribution pipes). This consulting assignment is to design and supervise the facilities to be funded by ADB. 2. The JICA’s Feasibility Study proposed the division of the entire service area under KWASA into five service blocks. Each of the five service blocks are further divided into District Metering Areas in consideration of the proposed eleven overhead tanks located at various vantage points. The treated clean water from the surface water treatment plant will be conveyed to the five distribution reservoirs proposed for each zone through the transmission mains. The JICA’s Feasibility Study was studied and reviewed by TA team of ADB 7385 BAN: Preparing the Khulna Water Supply, which is the basis of the proposed ADB investment. 3. The components to be funded by ADB is comprised of the following main components:

(i) Water Transmission. The treated clean water from the surface water treatment plant (SWTP) proposed under JICA support needs to be conveyed directly to the five distribution reservoirs proposed for each zone through transmission and feeder maims. The total pipe length required for the transmission mains from the SWTP to the ground reservoirs is about 28 kilometers of pipes varying in size from 1100 mm to 300 mm in diameter.

(ii) Distribution Network Expansion. The new proposed network will be about 430 km of primary and secondary distribution main up to 150 mm of pipe size and about 300 km of connection pipes.

(iii) Replacement of Existing Pipe Lines. There are over 250 kilometers of existing pipe lines, which comprise of asbestos, MS, PVC among others. The portion of old pipes will be determined after a detailed investigation and assessment.

(iv) Metering and Service Connections. The metering and connection programs include metering of existing connections – legal and illegal – and installation of service connections in distribution areas where supplies are gradually enhanced. The Project also envisages setting up District Metering Areas (DMA) within the service zones to monitor production, supply and consumption of water supplied and monitor Non-revenue water (NRW).

(v) Ground Reservoirs and Overhead Tanks. In the proposed service zones, ground reservoirs and overhead tanks (OHTs) are recommended at different locations of KWASA service area. The detailed planning, design and implementation of the ground reservoirs and overhead tanks will be carried out in the five service blocks.

(vi) Production Wells and Water Collection to Ground Reservoir. Deep tube wells (DTWs) will continue as supplementary source of water supply in KWASA.

30 Annex B-1

Based on an average collector pipe distance of 500 meters from the nearest storage reservoir, this would require a total collector length of about 20 km.

4. The Design & Supervision Consultants (DSC) will be engaged to provide services in completing the detailed design and construction management activities involved in the Project. The consulting support will include (i) project-management and monitoring; (ii) detailed planning and design activities; (iii) contract preparation, execution, and management; and (iv) construction supervision. 5. The DSCs will work under the overall guidance and control of the Project Management Units (PMU) established under KWASA. The DSCs will, through the PMU, also report to KWASA, which will guide, supervise and monitor the overall project implementation and assist the PMU in reviewing all technical and other submissions from the DSCs. 6. Separate consultants will assist the KWASA in overall management and implementation of the Project, namely Corporate Management Support Consultants (CMSC). The DSCs will provide all necessary support to and coordination with these consultants and NGOs to achieve the desired outcomes of the Project.

II. SCOPE OF SERVICES 8. The scope of services of the DSC will include but not necessarily be limited to the following:

(i) Assisting with the day to day management of the Project; (ii) Preparing the overall project implementation and the detailed yearly

implementation plans; (iii) Preparing detail engineering design and specification, bid documents and

contracts; (iv) Assisting the PMU in tendering, conducting pre-bid meetings, evaluating the

Bid, awarding contracts and implementing the contracts under the Project; (v) Assisting PMU with the general and site supervision of all construction contracts

and ensuring quality of work on a full time basis; (vi) Assisting the PMU in making payments to contractors; (vii) Establishing criteria for supervision, coordination, and management, and

assisting the inspection and monitoring; (viii) Ensuring and assisting the PMU for carrying out all project works in accordance

with ADB's environmental and social safeguards and policies (including the governance and anticorruption measures);

(ix) Ensuring compliance with ADB policies concerning resettlement, environmental and other safeguards issues;

(x) Preparing progress reports incorporating budget control sections for approval by the Project steering Committee (PSC), and process reports for ADB, including quarterly progress reports and project completion report; and

(xi) supplementing and providing other project-related works, as requested by PMU.

9. Main activities of the DSC are described below.

A. Detailed Engineering Design and Procurement Assistance Phase

Annex B-1 31

1. Clear Water Transmission Main (i) Based on the JICA Feasibility Study, extensive field survey to be conducted to

fix the water transmission main layout alignment from the JICA supported water treatment plant up to the proposed/recommended ground reservoirs to be constructed at different locations in the city area.

(ii) Hydraulic analysis and preparation of detailed engineering design of the transmission main considering all design aspects such as the demand, flow, flow velocity, peak hour flow, elevation of inlet and outlet of the transmission main, material and roughness, etc.

(iii) Identification and location of pipeline accessories such as sluice valves, air release valves, chambers and other accessories in the detailed engineering design.

(iv) Preparation of detailed pipe laying specification. (v) Preparation of detailed cost analysis with different pipe material such as

Ductile Iron (DI), High Density Poly Ethylene Chloride (HDPE) etc., comparative study and selection of the suitable materials.

2. Pipe Network

(i) Taking over from KWASA of the existing database, drawings, computerized hydraulic model, including design zone, population and demand projections for adaptation of new water supply system defined in the JICA Feasibility Study report. Review and verification and quality assurance of the model and taking the full responsibility for using the model in network analysis with necessary modification.

(ii) Study and review the entire distribution network under KWASA proposed by JICA Feasiblity Study and adapt five service zones with necessary modification. Each of the five service zones are further divided into several sub-zones in consideration of the overhead tanks to be constructed at various vantage points.

(iii) Development of a network model reflecting the existing and future demand and supply, including ongoing and proposed water source development.

(iv) Extensive field survey to prepare a detailed implementation plan.

(v) Considering all aspects, engineering design and planning of the total water supply system.

(vi) Preparation of detailed network pipe specification.

3. Ground Reservoir and Overhead Tanks (i) Study and review locations of 5 ground reservoirs (1 for each distribution zones)

proposed in the JICA Feasibility Study. In principle, the ground reservoirs should be located closer to the OHTs to be recharged.

(ii) Planning and preparation of engineering design considering all aspects and specification; submission to PMU for approval.

(iii) Study and review locations of 11 OHTs proposed in the JICA Feasibility Study. (iv) Planning and preparation of engineering design considering all aspects and

specification; submission to PMU for approval.

4. Tube Well Rehabilitation Program (i) Regeneration of selected production tube wells out of existing 111 (31 nos. 6”

wells and 80 mini wells).

32 Annex B-1

(ii) Planning, detail design considering all aspects of 30 nos. 6“ new production wells producing 100 m3/hr for 20 hours a day.

(iii) The new wells will be located around the ground reservoirs within a distance of 500 m.

(iv) The collector pipes to the reservoir will be about 20 km to be designed properly to transport abstracted water directly to the reservoir.

5. District Metering (i) Study and review the distribution zones for setting up district metering areas

(DMAs) within the service blocks to monitor production, supply and consumption of water supplied and monitor NRW.

(ii) Identification of bulk meter installation points in the zones. Bulk meters will also be placed at vantage points in the distribution system, inlet and outlets of reservoirs.

(iii) Preparation of detail specification and costing of bulk water meters.

6. Customer Connection and Meter Implementation (i) Review and investigation of the existing service connections in KWASA. (ii) Proposal for service pipes, connections and meters to be made. (iii) Preparation of planning, design and specification; submission to PMU for

approval. (iv) Installation of service connections with water meter.

7. KWASA head quarter building and zone office building (i) Prepare design of KWASA head quarter building and 3 zone office buildings,

based on future staff size, structure, and function of each office.

8. Tender Assistance (i) Preparing and reviewing contracts packages for works and services under the

Project. (ii) Preparation of bills of quantities for each contract package. (iii) Preparation of tender documents for the above contracts using ADB’s

standard documents for ICB packages, and Government standard documents for NCB packages (Public Procurement Regulation) with modifications specified in the NCB Annex.

(iv) Assistance with tendering of all contracts, evaluation of tenders, contract negotiations and preparation of final contract documents for signature by KWASA.

(v) Preparation of CSRN and RFP for consultant services in accordance with ADB’s Guidelines on the use of Consultants (2010, as amended from time to time), if found required.

(vi) Assistance with technical evaluation, financial evaluation, contract negotiation and preparation of final contract documents for signature by KWASA.

B. Construction Management and Post Construction Management Phase

1. GIS and Database (i) Updating the GIS database by recording all existing facilities and facilities

developed under the Project. (ii) Assisting KWASA to maintain the GIS database and providing hands-on training

to utilize, maintain, and update it.

Annex B-1 33

(iii) Establish a work flow to regularly update the database even after the Project completion.

(iv) Handing over all drawing & data collected and developed, including as-built drawings under the Project, in electronic and printed drawings to KWASA for future use.

2. Project Supervision (i) Assistance with general and detailed supervision of all construction and

maintenance works. (ii) Assistance to the householders in rectifying the service connection in

collaboration with the public awareness campaign. (iii) Assistance with pressure testing of all laid, relined burst water mains, suitable

segments of relined mains with new service connections. (iv) Assistance for handing over of works to KWASA after commissioning. (v) Assistance with training of KWASA personnel based on operation and

maintenance routines to be worked out by the individual contractors. 3. Environmental Safeguard Compliance (i) The consultants will be responsible for ensuring compliance of all activities of

Khulna Water Supply Project, including ADB-funded and JICA-funded facilities. All activities shall be in compliance with the policies and guidelines of Government, ADB and JICA.

(ii) Update IEE/EMP based on detailed designs; Prepare and finalize activity plans as identified in IEE (e.g., Site Management Plans, Waste Management Plans, Sludge Management and Disposal Plans, Occupational Safety Plans, etc).

(iii) Work out the site specific mitigation measures for components as required and integrate the same into contractual provisions.

(iv) Conduct environmental training programs and workshops for the staff of the PMU and Contractors and in accordance to the Capacity Building Program outlined in the EMP.

(v) Supervise and monitor the implementation of the Environmental Management Plan by the Contractors; Prepare environmental monitoring reports in collaboration with PMU environmental officers and submit to PMU for review by ADB.

(vi) Establish dialogue with the affected communities and ensure that the environmental concerns and suggestions are incorporated and implemented in the Project.

4. Social Safeguard Compliance (i) The consultants will be responsible for ensuring compliance of all activities of

Khulna Water Supply Project, including ADB-funded and JICA-funded facilities. All activities shall be in compliance with the policies and guidelines of Government, ADB and JICA.

(ii) Implement Resettlement Plan during construction works, with particular attention to temporary impacts to businesses during pipe laying. Ensure businesses, hawkers, vendors are properly identified, shifted, and given assistance as per the Resettlement Plan before displacement occurs for each section ready for construction.

(iii) Update Resettlement Plan based on any detailed design changes and submit updated Resettlement Plan to ADB for review and clearance before contract award.

34 Annex B-1

(iv) Provide necessary supervision throughout the design, planning, and implementation process.

(v) Provide awareness and training to the construction contractors to strengthen their capacity in managing and monitoring resettlement impacts.

(vi) Review records of negotiated land settlements to ensure fair and adequate prices and compensation; Assist PMU in grievance redress process.

(vii) Assist PMU in monitoring implementation of land acquisition and resettlement and advise and take corrective actions where necessary.

III. CONSULTANT REQUIREMENT

10. The consultant shall make available the following personnel:

Position PM International

Team Leader/ Water Supply Expert 48 Transmission Pipe Design Expert 17 Distribution Pipe Design Expert 7 Structural Design Expert (Civil Engineer) 6 Electro-Mechanical Engineering Specialist 10 Contract/Procurement Management Specialist 10 GIS Specialist 6 Needs Based Expert 6 Resettlement Specialist 2 Subtotal 112

National Deputy Team Leader/Water Supply Expert 48 Transmission Pipe Design Expert 25 Distribution Pipe Design Expert 42 Structural Design Expert (Civil Engineer) 38 Structural Design Expert (Buildings) 39 Architect 9 Electrical Engineering Specialist 7 Mechanical Engineering Specialist 18 GIS Specialist 15 Construction Supervision Engineer (Dist. Pipe) 24 Construction Supervision Engineer /Civil Engineer -1 24 Construction Supervision Engineer/Civil Engineer-2 24 Hydrogeologist 18 Contract Management Specialist 16 Needs Based Expert 12 Resettlement Specialist 8 Environmental Specialist 25 Subtotal 392

Grand total 504

Annex B-2 35

OUTLINE TERMS OF REFERENCE: CORPORATE MANAGEMENT SUPPORT FOR KHULNA WASA

I. INTRODUCTION 1. ADB initiated support to the KWASA through SSTA: Supporting the establishment of KWASA (the SSTA), approved in December 2008. Japan International Cooperation Agency (JICA) commissioned a feasibility study of the proposed investment project. JICA will fund infrastructure from raw water intake to water treatment plant outlet and ADB will fund the investment in transmission of clear water from the treatment plant outlet, storage reservoirs and distribution in the city. 2. KWASA has been recently established with limited financial human resources. It does not have a strong corporate management system, including financial management, information technology, procurement, and human resource management. The purpose of the corporate management support consultancy is to support the KWASA in strengthening its managerial and institutional capacity to develop it into an effective and professional water utility. 3. Under TA 7385-BAN: Preparing the Khulna Water Supply, KWASA developed the first 5-year business plan including financial plan, capital works plan and human resource plan. This assignment will support the KWASA to implement various activities under the business plan. The consultants also support the KWASA to institutionalize the business plan, with regular monitoring, assessment and updates. Across all areas, the consultants will provide organized training sessions and on-the-job training to KWASA management and staff.

II. SCOPE OF SERVICES

4. The consultants will support KWASA in the following areas:

(i) Business Plan. Assist KWASA with the implementation and ongoing development of the 5-year business plan prepared under TA 7385. Assist preparation of business plans and budgets on annual and rolling 5-year basis, including application of financial model, setting expenditure and revenue targets and projected cash flow. Assist KWASA management to prepare and implement corrective plans in order to achieve business plan targets.

(ii) Tariff Design. Review and recommend tariff structure and other charges required to reach financial sustainability. Examine tariff schedules for different customer classes and any cross subsidy mechanisms between different customer classes and different services. Develop and implement a strategy to inform KWASA Board, government authorities and customers on tariff structuring. Analyze the impact of current tariff structures and connection fees on low income families and households. Carefully investigate the implication of multiple households under one connection, especially for low income households.

(iii) Human Resource Management. Assist in the implementation of organizational structures and staffing plans, preparation of a human resource policy, and procedures. Establish job descriptions, employment contracts, competitive recruitment and compensation strategies including performance-based

36 Annex B-2

remuneration. Support KWASA in the recruitment and transfer to the new organizational structure as requested.

(iv) Communication and Public Awareness. Assist preparation and implementation of Communication and Public Awareness strategy; help institutionalize the stakeholder consultation process; and support for customer complaints system. Awareness campaigns will be designed to enhance acceptability of tariff adjustment and promotion of public hygiene, among others. KWASA may facilitate establishment of citizen fora and / or WATSAN committees in Khulna city in a similar manner to pourashavas to facilitate the citizen participation and consultation.

(v) Operations and Management Systems and Procedures. Assist KWASA management and staff to design and implement business systems and procedures, and provide training for their use, including: (a) Financial Management and Accounting Systems; (b) Billing and Collection System, or systems to monitor outsourced services

in this area; (c) Procurement guidelines and procedures – based on the anticipated

procurement modalities; (d) Maintenance Procedures and Schedules; (e) Fault and Emergency Response Systems and Procedures; (f) Key Operating Procedures – such as meter installation methods, zonal

supply schedule, pumping schedule, etc; and (g) Communications and Public Relations Procedures.

(vi) Operations Monitoring & Benchmarking. Assist KWASA in operations

monitoring, establishing policy, systems and good practice. Support the design of a benchmarking system, including identifying the relevant benchmarks, developing measurement procedures and data gathering methodologies and developing reporting formats. The benchmarking system should monitor key performance and service quality parameters. The Corporate Management Support Consultants (CMSC) should ensure the integrity of data used for benchmarking and consistent use of benchmarking methodology. Help with the preparation and dissemination of performance reports.

(vii) Information Technology Systems. Assist KWASA to operate and troubleshoot its Information Technology Systems, through outsourcing if appropriate, including basic computer systems and local area network, management information system (MIS), accounting, billing, geographic information system (GIS), computer-aided design (CAD), communication systems and the corporate website. Train staff in systems maintenance and support KWASA dealing with third party service providers.

(viii) GIS Mapping. Assist KWASA staff to generate infrastructure facilities and relevant micro-level land use information and integrate it into a system-wide GIS map. Obtain, update and verify, in the field, data on sewerage system, water supply schemes and convert this data to digital form. Compile data into a comprehensive digital database. Train KWASA staff to update infrastructure and micro-level land use information data.

Annex B-2 37

(ix) Sustainable Service Provision for Low Income Consumers. Assist KWASA to

develop effective approaches to service delivery for low income consumers. Whenever possible, individual house connections will be encouraged, but if it is not possible practically, KWASA will provide a shared tap managed by a user group. Provide technical analysis and support to KWASA at Zone level and advise generally on matters related to connections and business expansion, tariff setting and collections, customer relations and quality assurance with respect to low income households. Ensure proper gender considerations in designing and implementing the communal taps. Identify alternative supply models that would increase the ability of KWASA to reach low income and unconnected households.

III. CONSULTANTS REQUIREMENT

5. The consultant shall make available the following personnel:

Position Person-months

(International) Institutional/Capacity Building Specialist / Team Leader 15 Finance, Accounting & Tariff Advisor 6 Customer Service Specialist 2 Community Development Specialist 3 Human Resource & Training Needs Specialist 4 Total 30 (National) Utility Management Advisor/Team Leader 36 Utility Finance & Accounting 24 Customer Service Advisor 6 IT/MIS Specialist 12 Communications/Community Development Specialist 18 Engineering Specialist - Support to GoB & Metering Program 12 Human Resource Specialist 18 Monitoring and Evaluation Specialist 12 GIS/Mapping Specialist 9 Total 147

38 Annex B-3

OUTLINE TERMS OF REFERENCE: GROUNDWATER MONITORING CONSULTANTS

I. INTRODUCTION 1. KWASA is required to manage the groundwater resources within the Khulna district on a sustainable basis. In order to achieve this, the design and implementation of a monitoring program for key bores in the Khulna area is required, along with monitoring and metering of production bores for the Khulna area. Various studies in Khulna over two decades have started monitoring programs but these have not been adopted on a consistent basis. Institute of Water Modeling (IWM) conducted a groundwater assessment study in 2010, which proposed a framework to monitor the groundwater. The consultants will refine the framework and implemented monitoring to support the groundwater management by KWASA. 2. Any future monitoring and management of the deep groundwater resources for Khulna will require KWASA to take a more active role in monitoring extraction of deep groundwater not only by KWASA but also by other large users such as industrial and institutional users. The population of Khulna is expected to more than double by 2030 to 2.9 million; this will mean increased demand for water. Regular monitoring of water levels, salinity and other water quality parameters needs to be implemented for both the shallow and deep aquifers, as well as improved monitoring of the amount of groundwater extracted from KWASA tube wells and from industrial and institutional wells. 3. In Khulna, the number of dedicated monitoring wells is insufficient, which hamper timely and regular monitoring of water levels, salinity, and groundwater extraction patterns. It is required to select appropriate locations for new monitoring wells, tentatively total 10 for the deep aquifer are required in the KCC area, and 5 for the Phultala area. 4. Data derived from oil and gas exploration by Jones (1985), suggested that fresh water may also be available from older tertiary strata down to depths of 1800 m. The geological information, particularly data from petroleum companies, shows the possible presence of potential aquifers below 350 m. However, hydrogeological information is not available and quality and quantity of deeper resources are unknown. The construction of very deep exploratory tube wells (up to 600 m) in the Khulna City abstraction is to be undertaken to assess the potential of deeper aquifers. 5. This outline TOR presents the main features for the design and implementation of a monitoring strategy for the shallow and deep aquifers in Khulna area in southwestern Bangladesh.

II. SCOPE OF SERVICES A. Water levels and Water Quality Monitoring

(i) Review and refine the monitoring framework proposed in IWM’s groundwater assessment study (2010), and implement the regular monitoring of water levels, salinity, temperature and other water quality parameters for both the shallow and deep aquifers.

Annex B-3 39

(ii) Select bores to be instrumented with loggers for continuous monitoring of water levels, salinity and temperature. Select locations to sample water through KWASA’s distribution network to monitor water quality.

(iii) Survey water levels and salinity on a quarterly cycle (Jan, Apr, July, and Oct) for all designated monitoring bores in the KCC and Phultala areas and points of distribution network.

(iv) Collect water quality samples from designated monitoring points and conduct quality test through a reputed institute. The samples should be collected as per WHO guidelines and samples sent for testing of major ions, selected trace metals, etc. Water quality sampling is to be carried out bi-annually during the dry and wet season.

(v) Store the monitoring data in Excel format which can be used to produce time series graphs of water levels and water quality parameters.

(vi) Provide a groundwater status report which can be produced at regular intervals (annually) for KWASA management, resource managers and for the community. The report should examine the impacts on water levels and water quality in the shallow and deep aquifers.

B. Monitoring Groundwater Usage from the Deep Aquifer

(i) Regularly compile information on all KWASA production wells in the Khulna area by refining and implementing a strategy for monitoring yields from production bores in accordance with IWM’s groundwater assessment study (2010). KWASA already has a program for monitoring groundwater extractions and this is required to continue.

(ii) Regularly compile information on non-KWASA wells, particularly those of large industrial and institutional users in the Khulna area, by refining and implementing a strategy for monitoring yields from production bores in accordance with IWM’s groundwater assessment study (2010).

(iii) Compile information on abstraction from irrigation wells in the study area. (iv) The Consultant will store the monitoring data in Excel format for easy use and

analysis. (v) The Consultant will provide a groundwater status report at regular intervals

(annually) for KWASA management to be used for corporate planning. The report may be disclosed to the local community and other interested parties. The report should examine the impact of abstraction from the deep aquifers on water levels and salinity.

C. Drilling and construction of Monitoring Wells

(i) Select appropriate location for new monitoring wells (tentatively 10 new monitoring wells for the deep aquifer are required for the KCC area, and 5 for the Phultala area).

(ii) Design the monitoring well and prepare detailed scope of works for the well developer.

(iii) Assist KWASA in tendering and concluding the contract with the well developer. (iv) Supervise the works by the developer. (v) In addition, nested piezometer may be required in selected locations where the

model predicts excessive drawdowns, such as in the southern parts of the KCC area between EXD_62 and EXD_69 (Lobanchara district). The nested piezometers will be useful for monitoring water levels and salinity from the shallow and deep piezometers.

40 Annex B-3

(vi) In addition, the recent draft final report submitted by IWM has proposed line bores for monitoring in three selected locations.

D. Drilling and construction of Deep Exploratory Wells

(i) Prepare detailed scope of works for the well developer. Given the special nature of the work, the development of the well is proposed to be commissioned to the Geological Survey of Bangladesh by Single Source Selection.

(ii) Assist KWASA in making a contract with the well developer. (iii) Supervise the works by the well developer. (iv) Compile all information and analyze the potential of groundwater resource from

the very deep aquifer. (v) Prepare the report.

E. Policy and Legislation Framework 6. At present, there is no legislation regulating the take of groundwater by large industrial and institutional users. Improved management of the resource will require some controls on how much water can be used by industrial and institutional users. 19 KWASA is establishing a database of private wells, and plans to introduce a formal registration system and annual charge of the private wells. The Consultants will assist KWASA in reviewing policy and legislative frameworks to introduce these measures.

III. CONSULTANT REQUIREMENTS Experts PM (National) Note Hydrologist / Team leader 6 PM For establishment of database, monitoring

system and policy framework (first year only) Data manager / Hydrologist 12PM For monitoring (3 PM X 4 years) Engineer / Hydrologist 6 PM For supervision of well development (first year

only) Note: Development of monitoring wells and deep exploratory wells will be carried out under separate contracts, managed by the groundwater monitoring consultants.

19 For example, in most states in Australia, stock and domestic users do not need a license to take water if the take is

below 2 ML per year. This avoids the need to license the thousands of stock and domestic users. Similarly, in Bangladesh the large number of individual hand tubewells does not need to be licensed. However, licensing and monitoring of industrial and institutional users is needed so that improved management of the resource can be made possible.

Annex B-4 41

OUTLINE TERMS OF REFERENCE: CAPACITY BUILDING FOR KHULNA WASA (TA grant)

I. INTRODUCTION 1. ADB initiated support to the KWASA through SSTA: Supporting the establishment of KWASA (the SSTA), approved in December 2008. Japan International Cooperation Agency (JICA) commissioned a feasibility study of the proposed investment project. It is principally agreed that JICA will fund infrastructure from raw water intake to water treatment plant outlet and ADB will fund the investment in transmission of clear water from treatment plant outlet, storage reservoirs and distribution in the city. 2. KWASA has been recently established and does not have experience in managing large externally-funded projects. It does not have strong capacity in procurement, financial management, social safeguards, and other various areas. The purpose of this capacity building technical assistance is to support the operationalization of KWASA through capacity building in advance of the anticipated investment, which will enable KWASA to implement the project effectively and efficiently. 3. This TA is designed to focus on priority areas which are required to be addressed before the mobilization of long term consultants for corporate management supports. The consultants will provide training, advice, and other support in the areas below. Across all areas, the consultants will provide organized training sessions and on-the-job training to KWASA management and staff in areas of consultant expertise.

(i) Procurement capacity to follow guidelines and procedures of ADB and the Government;

(ii) Financial management and accounting in accordance with international accounting standards;

(iii) IT and MIS strategy, planning and design to ensure integration of management systems software and hardware;

(iv) Implementation of KWASA meter connection program; (v) Communications and public awareness program; (vi) Safeguard measures complying with guidelines and procedures of ADB and the

Government; and (vii) Support to KWASA corporate plan implementation.

II. SCOPE OF SERVICES

4. The Consultant Firm will support KWASA in the following areas:

(i) Procurement capacity. The consultants will provide training to KWASA engineers on procurement guidelines and procedures of ADB and Government, including ADB’s Procurement Guidelines (2010, as amended from time to time) Guidelines on the Use of Consultants (2010, as amended from time to time), and Government Public Procurement Rules. On-the-job training will be provided by using KWASA’s ongoing and future procurement packages.

(ii) Finance & Accounting Management. The consultants will provide training and other support to strengthen the financial and accounting management systems of

42 Annex B-4

PMU and KWASA. The consultants will review the current financial and accounting management systems, and design first manual-based systems, policies, procedures and users manuals for budgeting and planning, cash operations, procurement, project accounting and business planning. The improvement of manual systems will be followed by the introduction of computerized billing and accounting systems, which will be implemented in close collaboration with the activities under the information technology systems. The consultants will further provide advice and assistance in the implementation of revenue enhancement measures identified in the 5-year business plan. The consultants will also support KWASA in completing the audits.

(iii) Information Technology Systems. The consultant will review the existing system and design information technology systems for KWASA, including basic computer systems and local area network, billing, accounting, MIS, GIS, CAD, and the corporate website. The consultant will prepare service contracts to develop and operate these systems. The consultants will provide or arrange training to KWASA staff to operationalize the systems.

(iv) Meter Connection Program. KWASA will be introducing a comprehensive customer metering program; the consultants will support KWASA in finalizing the connection policy and implementing it by planning the meter procurement and installation program. The consultants also propose technical standards of service connection, and provide training to KWASA staff to enforce such standards.

(v) Communication and Public Awareness. The consultant will assist KWASA in preparing and launching a Communication and Public Awareness strategy; help institutionalize the stakeholder consultation process; and provide support for customer complaints system to use them to improve service.

(vi) Social safeguard measures. The consultants will provide support to KWASA for smooth and timely land acquisition and compensation in compliance with ADB’s Safeguards Policy Statement (SPS, 2009). The consultants will conduct detailed measurement survey, distribute ID cards, ensure timely full payment of compensation, educate affected persons on entitlement matrix and procedures, and establish a Grievance Redress Mechanism.

(vii) Business Plan. The consultant will assist KWASA with the implementation of the 5-year business plan prepared under TA 7385. The consultant will assist the management in preparing more detailed operational plans, and assist them to prepare and implement corrective plans in order to achieve business plan targets. The consultants will also assist KWASA to monitor, assess and update the Business Plan including the financial model on an annual and rolling 5-year basis.

(viii) Engineering & Planning Capacity Development. Provide engineering support as necessary to ongoing engineering activities within KWASA, ensuring continuity and integration between the ongoing KWASA projects and upcoming loan projects; Conduct trainings and seminars, and provide on the job training to KWASA staff to help them develop capital projects.

Annex B-4 43

III. CONSULTANTS REQUIREMENT

5. The consultants to be engaged under the TA will be as follows:

Position

Person-months

(International) Utility Management Advisor / Team Leader 4 Finance and Accounting Management Specialist 4 Procurement/Contracting Specialist 2 IT/MIS Specialist 2 Total 12 (National) Engineering Specialist /Deputy Team Leader 9 Engineering/Planning Advisor 9 Contract Specialist 6 Survey Engineer 9 Finance & Accounting Management Specialist 9 IT/MIS Specialist 6 Communications/Public Awareness Specialist 6 Resettlement and social development specialist 9 Total 63

6. The input of the consultants will be required on an intermittent basis from July 2011 for a period of nine months.

V. IMPLEMENTATION ARRANGEMENT

7. The KWASA will be the Executing Agency of the technical assistance. The KWASA will establish a Project Management Unit (PMU) for the Project, which will also be responsible for implementation of the technical assistance. KWASA will provide office space and counterpart staff for the technical assistance. KWASA will provide office space inside the KWASA headquarters for the consultants. KWASA will also provide access to the internet, phone and local area network once these systems are operational. The consultants will provide its own computers and other IT equipment. All travel needs, including vehicle rental cost for work done on behalf of KWASA within KWASA service area, will be covered by the consultants.

44 Annex B-4

VI. INDICATIVE COST ESTIMATE

Item PM Cost

(1000 $)

A. ADB Financing 1. Consultants a. Remuneration and Per Diem i. International Consultants 273.6 Number of Person-months 12 ii. Domestic Consultants 209.7 Number of Person-months 63 b. International and Local Travel 47.2 2. Equipment (Computer, Printer, etc.) 10.0 3. Workshops, Training / Seminars & Conferences 25.0 4. Surveys and tests 31.4 5. Reporting, Support staff, and Other Miscellaneous Costs

44.6

6. Contingencies 58.6 Subtotal (A) 700.0 B. Government Financing 1. Office Accommodation and Transport 50.0 2. Remuneration and Per Diem of Counterpart Staff 25.0 3. Others 25.0 Subtotal (B) 100.0 Total 800.0

ADB will provide a $700,000 grant from the Technical Assistance Special Fund (TASF-IV) and the government will make in-kind contributions to cover the remaining cost of the TA. The equipment purchased under the TA will be handed over to the executing agency upon completion of the service.

Annex C 45

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets and Indicators with Baselines

Data Sources and Reporting Mechanisms Assumptions and Risks

Impact

Improved urban services in Khulna city

Average time to fetch water per day per household (Total households: from 90 minutes in 2009 to 15 minutes in 2020; households headed by women: from 110 minutes in 2009 to 20 minutes in 2020)ab

Annual consumer survey

Assumption

Khulna city does not expand to include fringe areas.

Risk

A large number of migrants settle in fringe areas.

Outcome

Expanded and reliable access to potable water in Khulna city

Household coverage with access to piped water (Total households: from 22.6% in 2010 to 62.3% in 2018; households headed by women: from 22.8% in 2010 to 62.3% in 2017) b

Average hours of supply (from 5.3 hours/day in 2009 to 24 hours/day in 2017)

Share of water samples meeting the government’s water quality standard (100% in 2017)

KWASA’s MIS reports


Laboratory test results

Assumption

Population of Khulna city does not grow too rapidly as a result of large migration.

Risk

Pollution of water sources by new industries upriver from the intake.

Outputs

1. Water sources in Khulna city are augmented and managed sustainably

Additional production capacity using surface water (110 million liters/day in 2016)

KWASA’s groundwater abstraction in Khulna city (from 30 million liters/day in 2009 to maximum 50 million liters/day throughout the implementation period)

Groundwater level (maximum 6 meters drawdown throughout the implementation period)

KWASA’s quarterly progress report

KWASA’s MIS report


Assumption

Abstraction of groundwater by private wells does not increase substantially.

Risks

Implementation delays resulting from slow land acquisition

Change of river flow caused by development in upper stream of the river

2. Distribution system is extended and delivers water efficiently in Khulna city

Length of new pipe network (758 kilometers in 2016)

Number of household connections (Total households: from 15,032 connections in 2010 to 50,019 connections in 2018; households headed by women: from 2,876 in 2010 connections to 14,187 connections in 2017) b

Physical loss (36% in 2009 to 20% in 2017)c

Number of water user groups (1,500 groups in 2017 with 30% target for women’s representation and 30% target for women in leadership position)





Assumption

Households are willing to connect to the KWASA network.

46 Annex C

Design Summary

Performance Targets and Indicators with Baselines

Data Sources and Reporting Mechanisms Assumptions and Risks

3. KWASA manages the water supply system professionally and sustainably

Average response time to customers’ complaints (30 minutes in 2017; no standards currently in place)

Revenue collected according to the financial plan (minimum 90% of target throughout the implementation period)

Posts filled according to the human resource development plan (90% of the plan); recruitment of female staff promoted under equal opportunity

Training conducted according to the human resource development plan (90% of the plan and 100% of targeted women participated)





Assumption

Competent managers and engineers apply for posts and are recruited.

Risk

Households are unwilling to pay the charge.

Activities and Milestones Inputs 1. Augmented and sustainably managed water sources1.1 Consultants recruited and mobilized by December 2011 1.2 Bidding documents prepared by November 2012 1.3 Contracts awarded by July 2013 1.4 Works completed and the water treatment plant commissioned by June 2016 1.5 Monitoring of water resources conducted throughout the implementation period 1.6 Private wells registered and charged by June 2017 2. Extended and efficiently managed distribution network 2.1 Consultants recruited and mobilized by January 2012 2.2 Bidding documents prepared by October 2012 2.3 Contracts awarded by July 2013 2.4 Works completed and the distribution network extended by September 2017 2.5 Zone offices established to manage district metering areas to reduce leaks by

September 2016 3. Professional and sustainable corporate management 3.1 Consultants recruited and mobilized by November 2011 3.2 Annual performance monitoring conducted every August from 2012 to 2016 3.3 Volumetric tariff introduced by June 2017 3.4 Phase1 of organizational change completed by June 2014 3.5 Phase 2 of organizational change completed by June 2017 3.6 Annual consumer surveys conducted every June

Total $364 million, of which:

ADB: $75 million

JICA: $184 million

Government of Bangladesh: $105 million

Cost categories:

Works and equipment: $239 million

Consultants: $18 million

Land acquisition and resettlement: $6 million

Administration costs: $2 million

Contingencies: $38 million

Interest charges during implementation $3 million

Tax and duties: $58 million

TA grant: $0.7 million

ADB = Asian Development Bank, JICA = Japan International Cooperation Agency, KWASA = Khulna Water Supply and Sewerage Authority, MIS = management information system, TA = technical assistance. a 90 minutes per day to fetch water can be valued at Tk562 per month, by estimating the lost income opportunity

assuming a minimum wage, discounted by 70%. b Households headed by women are a subset of the total households. c Physical loss = water produced – billed water consumption. Source: Asian Development Bank. Benchmark indicators are mostly based on a consumer survey conducted in 2009.