Project Completion Report Project Number: 34355 Loan Number: 2034 April 2013

Viet Nam: Central Region Urban Environmental

Improvement Project

CURRENCY EQUIVALENTS

Currency Unit – Viet Nam dong (D)

ABBREVIATIONS

ADB – Asian Development Bank AFD – Agence Française de Développement CMC – community management committee EIRR – economic internal rate of return GAP – Gender Action Plan km – kilometer m – meter m3 – cubic meter M&E – monitoring and evaluation MOC – Ministry of Construction O&M – operation and maintenance PCU – project coordination unit PMU – project management unit PPC – provincial people’s committee TPC – town people’s committee URENCO – urban environmental company

NOTES

(i) The fiscal year (FY) of the Government of Viet Nam ends on 31 December. (ii) In this report, "$" refers to US dollars. Vice President S.P. Groff, Vice President, Operations 2 Director General K. Senga, Southeast Asia Department (SERD) Director T. Kimura, Country Director, Viet Nam Resident Mission (VRM) Team leader D.N. Hoang, Senior Project Officer (Urban Sector), VRM Team member T.B. Dung, Project Analyst, VRM In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

At Appraisal At Project Completion (31 October 2003) (5 April 2011)

D1.00 =

$0.000064

$0.000047

$1.00 = D15,615.00 D20,895.00

CONTENTS

Page

BASIC DATA i

MAP vi

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1

B. Project Outputs 3

C. Project Costs 6

D. Disbursements 6

E. Project Schedule 7

F. Implementation Arrangements 7

G. Conditions and Covenants 8

H. Consultant Recruitment and Procurement 9

I. Performance of Consultants, Contractors, and Suppliers 9

J. Performance of the Borrower and the Executing Agencies 10

K. Performance of the Asian Development Bank 10

III. EVALUATION OF PERFORMANCE 11

A. Relevance 11

B. Effectiveness in Achieving Outcome 11

C. Efficiency in Achieving Outcome and Outputs 11

D. Preliminary Assessment of Sustainability 12

E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 12

A. Overall Assessment 12

B. Lessons 13

C. Recommendations 13

APPENDIXES

1. Project Design and Monitoring Framework 15

2. Project Outputs 20

3. Summary of Gender Equality Results 22

4. Appraisal and Actual Project Costs 24

5. Projected and Actual Disbursements 25

6. Compliance with Loan Covenants 26

7. Summary of Contracts 32

8. Economic and Financial Reevaluation 36

9. Quantitative Assessment of Performance 39

BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agencies 6. Amount of Loan 7. Project Completion Report Number

Viet Nam 2034-VIE Central Region Urban Environmental Improvement Project Socialist Republic of Viet Nam Provincial People Committees (PPCs) of Thanh Hoa, Ha Tinh, Quang Tri, Thua Thien Hue, Quang Nam and Quang Ngai SDR30,731,000 ($44.0 million equivalent) PCR:VIE 1387

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (number of years) – Grace Period (number of years) 8. Terms of Relending (if any) – Interest Rate – Maturity (number of years) – Grace Period (number of years) – Second-Step Borrower

8 September 2003 18 September 2003 6 November 2003 10 November 2003 8 December 2003 6 February 2004 6 May 2004 23 June 2004 1 31 December 2009 25 April 2012 2 1.0% per annum during grace period 1.5% per annum thereafter 32 8 5.4% 20 6 Urban Environmental Companies

ii

9. Disbursements (by ADB)

a. Dates Initial Disbursement

10 February 2005

Final Disbursement

25 April 2012

Time Interval

87 months

Effective Date

23 June 2004

Original Closing Date

31 December 2009

Time Interval

66 months

b1. Amount ($ million)

Category Original Allocation

Last Revised Allocation

Amount Disbursed

Undisbursed Balance

1 Civil Works

1A Drainage and Waste Water 19.1 26.2 23.5 2.6

1B Solid Waste Management 5.2 4.8 4.3 0.5

2 Equipment and Materials

2A Drainage and Waste Water 4.9 3.9 3.1 0.8

2B Solid Waste Management 5.3 6.6 6.2 0.4

3 Project Implementation Assistance

3A Consulting Services 1.4 1.5 1.5 0.0

3B Incremental Administration 0.4 0.6 0.6 0.1

4 Awareness and Pro-Poor Sanitation

4A CAPP 0.2 0.2 0.1 0.0

4B CBS 0.2 0.2 0.2 0.0

4C Household Sanitation Program 0.3 0.4 0.4 0.0

5 Service Charges 1.3 1.4 0.5 0.9

6 Unallocated 5.6 1.9 0.0 1.9

Total 44.0 47.6 40.4 7.2

b2. Amount (SDR million)

Category Original Allocation

Last Revised Allocation

Amount Disbursed

Undisbursed Balance

1 Civil Works

1A Drainage and Waste Water 13.3 16.9 15.2 1.7

1B Solid Waste Management 3.7 3.1 2.8 0.3

2 Equipment and Materials

2A Drainage and Waste Water 3.4 2.5 2.0 0.5

2B Solid Waste Management 3.7 4.3 4.0 0.3

3 Project Implementation Assistance

3A Consulting Services 1.0 1.0 1.0 0.0

3B Incremental Administration 0.3 0.4 0.4 0.1

4 Awareness and Pro-Poor Sanitation

4A CAPP 0.1 0.1 0.1 0.0

4B CBS 0.1 0.1 0.1 0.0

4C Household Sanitation Program 0.2 0.2 0.2 0.0

5 Service Charges 0.9 0.9 0.3 0.6

6 Unallocated 3.9 1.2 0.0 1.2

Total 30.7 30.7 26.1 4.7

ADB = Asian Development Bank, CAPP = community awareness and participation program, CBS = community-based sanitation, SDR = special drawing right

iii

10. Local Costs (financed by ADB) Appraisal Actual

- Amount ($ million) 4.5 3.2 - Percent of Local Cost 10.6 12.2 - Percent of Total Cost 4.7 3.2

C. Project Data 1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 53.6 74.8 Local Currency Cost 42.4 26.4

Total 96.0 101.2

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation Costs Borrower Financed 19.9 25.1 ADB Financed 42.6 39.9 AFD 29.5 32.5

Total 92.0 97.5

IDC Costs Borrower Financed 0.3 0.0 ADB Financed 1.4 0.5 AFD 2.3 3.2

Total 4.0 3.7

ADB = Asian Development Bank, IDC = interest during construction.

3. Cost Breakdown by Project Component ($ million)

Component Appraisal Estimate Actual

A. Base Cost

Part A: Awareness and Pro-Poor Sanitation 1. Community Awareness and Participation Program 0.5 0.2 2. Community-Based Sanitation 0.2 0.4 3. Household Sanitation Program 0.4 0.4

Subtotal Part A 1.1 1.0 Part B: Drainage and Flood Protection 1. Drains, Canals and Associated Roads 29.0 39.6 2. Flood Regulating Basins 6.7 10.4 3. Flood Protection 2.8 3.5 4. Construction and Operation and Maintenance Equipment

3.3 4.3

5. Land Acquisition and Resettlement 4.6 6.1 Subtotal Part B 46.3 63.9

Part C: Wastewater and Public Sanitation 1. Interceptor Sewers and Pump Stations 4.7 6.8 2. Wastewater Treatment Plant 2.0 2.4 3. Public Sanitation Improvements 0.5 0.9

iv

4. Construction and Operation and Maintenance Equipment

1.0 0.0a

5. Land Acquisition and Resettlement 0.6 0.2 Subtotal Part C 8.8 10.3

Part D: Solid Waste Management 1. Solid Waste Storage 1.2 5.6 2. Solid Waste Treatment and Disposal 4.8 0.0 3. Collection & Landfill Equipment 5.6 6.3 4. Access Road to Landfill 1.7 0.0

b

5. Land Acquisition and Resettlement 1.3 0.6 Subtotal Part D 14.6 12.5

Part E: Project Implementation Assistance and Institutional Strengthening

1. Project Management, Design & Supervision 4.9 } 7.1

2. Institutional Strengthening Program 1.4 3. Engineering and Environmental Surveys 0.6 0.4 4. Incremental Administration 1.7 2.3

Subtotal Part E 8.6 9.8 Total Base Cost 79.5 97.5

B. Contingencies Physical 8.0 0.0 Price 4.5 0.0 C. Service Charge 4.0 3.7 Total 96.0 101.2 a Included in B.4 (operation and maintenance equipment for drainage and flood protection) b Included in D.1 (solid waste storage)

4. Project Schedule

Item Appraisal Estimate Actual

Date of contract with consultants Q2, 2004 2 December 2005

Completion of engineering designs Q3, 2005 Q2, 2008

Civil works contracts

Date of first contract award Q3, 2005 26 July 2008

Date of last contract award Q2, 2006 10 February 2009

Completion of works 2009 a 5 April 2011

Equipment and supplies contracts

Date of first procurement Q4, 2005 28 May 2007

Date of last procurement Q2, 2006 31 July 2009

Completion of equipment installation 2009 a 31 July 2010

Other milestones

First extension of loan closing date … 6 October 2010

Second extension of loan closing date … 5 April 2011 … = not available, Q = quarter a No quarterly schedule available for 2009.

v

5. Project Performance Report Ratings

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 1 January 2004 to 31 December 2004 Satisfactory Highly Satisfactory

From 1 January 2005 to 31 December 2005 Satisfactory Satisfactory

From 1 January 2006 to 31 December 2006 Satisfactory Partly Satisfactory

From 1 January 2007 to 31 December 2007 Satisfactory Partly Satisfactory

From 1 January 2008 to 31 December 2008 Satisfactory Partly Satisfactory

From 1 January 2009 to 31 December 2009 Satisfactory Satisfactory

From 1 January 2010 to 31 December 2010 Satisfactory Satisfactory

D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members

1

Fact Finding Mission 14–31 July 2003 3 32 a, b, e

Pre-Appraisal Mission 8–18 Sep 2003 3 30 a, b, c

Loan Inception Mission 3–7 May 2004 2 10 a, b

Loan Review Mission 1 22–26 Nov 2004 1 5 a,b

Loan Review Mission 2 14–15 Jun 2005 1 1 a,b

Loan Review Mission 3 19–20 Sep 2005 1 1 a,b

Loan Review Mission 4 8–9 Feb 2006 1 1 a,b

Loan Review Mission 5 17–19 May 2006 1 3 a,b

Loan Review Mission 6 5–8 Dec 2006 1 4 a,b

Loan Review Mission 7 2–5 Jul 2007 1 3 a,b

Loan Review Mission 8 10–14 Dec 2007 3 12 a, b, g

Loan Review Mission 9 18–26 Feb 2008 2 14 a, b

Special Loan Administration Mission 1 28–30 Apr 2008 1 2 a

Midterm Review Mission 15–23 Oct 2008 4 23 a, b, g, h

Loan Review Mission 10 25 May–4 Jun 2009 2 10 a, b

Special Loan Administration Mission 2 20–23 Jul 2009 1 3 a

Loan Review Mission 11 2–16 Nov 2009 1 10 a

Special Loan Administration Mission 3 1–3 Mar 2010 1 2 a

Loan Review Mission 12 10–12 May 2010 1 2 a

Special Loan Administration Mission 4 9–12 Aug 2010 1 3 a

Loan Review Mission 13 8–11 Mar 2011 2 6 a, e

Project Completion Review 1–12 Aug 2011 3 17 a, b, g 1 a – project officer, b - project analyst, c - counsel, d - economist, , e - control officer, g – social development and gender officer, h – country director

Hai Phong

HA NOI

Son La

Dien BienPhu

Lai Chau

Lao Cai

Ha Giang Cao Bang

Bac Kan

Lang Son

Yen Bai

Tuyen QuangThai Nguyen

Thai Binh

Ninh Binh

Hoa Binh

Phu Ly

Hung Yen

Bac Giang

Ha Long

Vinh

Dien Chau

Thai Hoa

Dong Hoi

Hue

Da Nang

Hoi An

Pleiku

Bong Son

Kon Tum

Quy Nhon

Tuy HoaBuon MaThuot

Dak Song Ninh Hoa

Cam Ranh

Di Linh

Lien Huong

Da LatGia Nghia

Phan Thiet

Phan Rang-Thap Cham

Bien Hoa

Dong Xoai

Ho Chi Minh City

Vung TauMy Tho

Rach GiaPhu Quoc Island

LongXuyen

Can Tho

Vinh Long

Vi Thanh

Chau Doc

Ha Tien

Cao Lanh

Soc Trang

Tra Vinh

Ben Tre

Bac Lieu

Ca Mau

Tan An

Thu Dau Mot

Tay Ninh

HaiDuong

Nha Trang

An Loc

Dat Do

Viet Tri

Phu ThoMong Cai

Cam Pha

That Khe

Vinh Yen

Thanh Hoa

Ha Tinh

Dong Ha

Quang Ngai

Tam Ky

Lang Co

Lai Chau

Dien Bien

Son La

Lao Cai

Phu Tho

Tuyen Quang

Ha Giang

Yen Bai

Cao Bang

Bac Kan

Thai Nguyen

Vinh Phuc

Ha Noi

Bac Ninh

Hung Yen

Lang Son

Quang Ninh

Bac Giang

Hai Duong

Hai Phong

Thai Binh

Hoa Binh

Ha Nam

Ninh Binh

Nam Dinh

Nghe An

Quang Binh

Da Nang

Kon Tum

Gia Lai

Binh Dinh

Phu Yen

Dak Lak

Dak Nong

Khanh Hoa

Lam Dong

Ninh Thuan

Binh Phuoc

Tay Ninh

Binh Duong

Dong Nai

Binh Thuan

Ba Ria - Vung Tau

Ho Chi Minh

Long An

Tien Giang

Dong Thap

An Giang

Kien Giang

Hau Giang

Can Tho

Vinh Long

Ben Tre

Tra Vinh

Soc Trang

Bac Lieu

Ca Mau

Thanh Hoa

Ha Tinh

Quang Tri

Thua Thien Hue

Quang Nam

Quang Ngai

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PROVINCES

62

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3839

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4243

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46 4748

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525354

55

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5758

60

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LAO PEOPLE'SDEMOCRATIC

REPUBLIC

CAMBODIA

PEOPLE'S REPUBLICOF CHINA

Central Region Provinces

Project City/Town

National Capital

Provincial Capital

City/Town

National Road

River

Provincial Boundary

International Boundary

Boundaries are not necessarily authoritative.

VIET NAM

CENTRAL REGIONURBAN ENVIRONMENTALIMPROVEMENT PROJECT

(as completed)

100

Kilometers

50 2000

N

13-1410 HR

103 00’Eo

103 00’Eo

108 00’Eo

108 00’Eo

12 00’No

12 00’No

20 00’No

20 00’No

This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, colors, denominations, or information.

vi MAP

I. PROJECT DESCRIPTION

1. Urban environmental infrastructure in the six project towns—Thanh Hoa, Ha Tinh, Dong Ha, Lang Co, Tam Ky, and Quang Ngai, located in Viet Nam’s Central region— was not improving because of a lack of capital investment and maintenance funding, and weak institutional arrangements.”. While around 40% of households in provincial towns and 10% in the district town had steptic tanks, only a few were connected to sewers or drains. Normal practices included the use of composting latrines and defecation in open areas, which resulted in major health risks, particularly during floods. Solid waste was collected from about 70% of urban households in provincial towns and deposited in unsanitary landfills. 2. The expected impact of the project was to improve the quality of life and health status of urban residents and reduce poverty in the six project towns, and to promote balanced regional economic development and reduce migration from the central region to Hanoi and Ho Chi Minh City.

3. The project outcome was to improve urban environmental conditions in the project towns. The project outputs included (i) expanding and upgrading urban environmental infrastructure, (ii) improving autonomy and managerial and technical capacity of the urban environmental companies (URENCOs), (iii) improving the urban management and planning capacity of the city people’s committees (CPCs), (iv) strengthening urban management policies through support to the newly established Department of Urban Infrastructure in the Ministry of Construction (MOC), (v) developing appropriate cost-recovery mechanisms to ensure sustainability of urban environmental services, (vi) increasing community participation in planning and managing urban services, (vii) enhancing public health, and (viii) enhancing the role of women in urban management and institutions.

4. The project consisted of five components: part A, awareness and pro-poor sanitation; part B, drainage and flood protection; part C, wastewater and public sanitation; part D, solid waste management; and part E, implementation assistance and institutional strengthening. The project was approved by ADB on 8 December 2003 and became effective on 23 June 2004 for a loan amount of SDR30,731,000 ($44,000,000 equivalent at approval), to cover 45.8% of the total project cost. The Agence Francaise de Developpment (AFD) jointly financed parts B, C and E for a total of €30 million ($31.8 million equivalent at appraisal). The loan was originally scheduled to be closed by 30 June 2009.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

5. At appraisal, the project design was consistent with the objectives mentioned in the government’s Comprehensive Poverty Reduction and Growth Strategy for 2001–2010, namely: (i) promoting balanced and sustainable economic growth between regions, (ii) developing urban areas to create more jobs and improve living standards, (iii) strengthening environmental protection and ensuring a healthy environment, and (iv) promoting gender equity and enhancing the participation of women. 1 The project formulation was also consistent with the Asian Development Bank (ADB) country strategy and program (2002–2004) for Viet Nam to support

1 Socialist Republic of Vietnam. 2003. Comprehensive Poverty Reduction and Growth Strategy. Hanoi.

2

the government in: (i) economic growth through infrastructure development, (ii) human development, (iii) gender development, and (iv) environmental protection.2 6. The project remains relevant at completion. The government of Viet Nam’s 2006–2010 socioeconomic development plan’s3 objectives relevant to the urban and water sector include: (i) provision of essential infrastructure, especially water supply and sanitation, to poor households in cities and towns across the country; (ii) improvement in socioeconomic development planning to include both countrywide and interregional dimensions; (iii) integration of infrastructure plans into master plans and land use plans; (iv) introduction of governance reforms to support devolved planning and implementation of infrastructure projects; (v) mobilization of resources for adequate operation and maintenance (O&M); and (vi) enhancement of cost recovery for infrastructure investments by setting and collecting appropriate tariffs and fees. ADB’s urban sector assessment, strategy and road map for Viet Nam 4 suggests that key areas requiring attention are financial sustainability, efficiency of decentralized sector institutions, and urban wastewater management to reduce pollution of water and soil. 7. The assessment, strategy and roadmap for the urban sector (2010) also proposes the development of secondary cities and towns as regional economic hubs to foster balanced regional development and strengthen rural–urban linkages, including through the upgrading and expansion of priority urban infrastructure such as water supply, sanitation, wastewater treatment, and solid waste management, supported by clearly defined institutional arrangements and the building of necessary local capacity. 8. Gender equality was well integrated into the project design, which included sound gender analysis and a comprehensive gender action plan (GAP). The GAP was updated early during project implementation based on consultations and comments from the community management committees (CMCs) and communities in the six project towns. The development of the GAP, including targets for women’s participation, resulted in high levels of participation by women in project activities; women’s participation exceeded expectations, and surpassed all the targets that were set.5. 9. The project design included an extensive list of benefit and monitoring indicators to be used for monitoring and evaluation (M&E). A detailed M&E plan was supposed to be developed and implemented by the executing agencies. Although baseline data was collected, the project had difficulty updating the data because of limited M&E capacity, and the M&E system was used only for monitoring project outputs.

10. In 2006, the 2003 feasibility study report and the total project costs were updated. The 2006 updated project costs were significantly higher as a result of price increases, and the project scope was consequently reduced to ensure the total project cost did not exceed the available funds.6 The scope of works for components A and E was implemented as originally envisaged; the project scope was altered to reduce the length of the secondary and tertiary drains, and remove the wastewater treatment plant and associated interceptor system and a solid waste disposal site in Thanh Hoa city. The wastewater treatment plant and associated

2 Asian Development Bank. 2001. Country Strategy and Program Update: Viet Nam, 2002–2004. Manila.

3 Viet Nam. 2006. Five-year Socioeconomic Development Plan, 2006–2010. Hanoi

4 ADB. 2012. Viet Nam Urban Sector Assessment, Strategy, and Road Map. Manila

5 Nethercott, K. et al. 2010. Gender Results Equality in ADB Projects: Viet Nam Country Report. Manila.

6 A major reduction in scope of works was approved by ADB and the government in November 2006.

3

interceptor system were subsequently included in another ADB-financed project for Thanh Hoa.7 The solid waste disposal site was also canceled because Thanh Hoa Provincial People’s Committee (PPC) could not find a suitable location. B. Project Outputs

11. At completion, six outputs had achieved and two outputs had partially achieved the targets specified in the updated design and monitoring framework (Appendix 1). The detailed achieved components are in Appendix 2. Estimated beneficiaries at project completion are in Appendix 2, Table A2.3. 12. Part A: Awareness and pro-poor sanitation. Part A was designed to achieve outputs (i) increased community participation in the planning and management of urban services, particularly by the poor and (ii) enhanced public health awareness which both well achieved the targets. Though comprising a small financial part of the project, part A had a significant impact on the lives of poor households in the project towns by improving access to hygiene. The community awareness and participation program provided 20 training sessions for local people in health education and mobilized a motivator network, carried out awareness campaigns, and organized public events. The community-based sanitation portion of part A provided small grants, technical advice, and training for demand-driven, small-scale environmental sanitation improvements in urban areas. All implementing agencies reported increased improvements in environmental sanitation, reduced incidences of defecation, and a willingness on the part of local communities to connect to the sewerage systems and pay solid waste collection fees.

13. The household sanitation program was designed to provide grants to help poor and low- income households to build septic tanks, toilets, and connect household wastewater to public drainage and sewerage systems. Sanitation credit schemes were established in each project town for poor and low-income households to maximize septic tank coverage. The CMCs, with the women’s unions as major members, administered the credit schemes as revolving funds and provided health awareness and technical information to borrowers. The average collection rates were 98%. Revolving fund details are in Table 1.

Table 1: Progress of Sanitation Credit Scheme as of 4 April 2011

Subproject No. Septic Tanks Credit Conditions

Targeted Achieved Maximum loan

Amount (D million) Interest rate (%)

Repayment period (months)

Thanh Hoa 900 938 4.0 0.6 30 Ha Tinh 550 563 4.0–6.0 0.5 24 Dong Ha 600 664 4.0 0.6 30 Lang Co 150 174 4.0 0.6 30 Tam Ky 700 718 4.0 0.6 30

Quang Ngai 600 682 4.0 0.5 36

Total 3,500 3,739

Source: Ministry of Construction’s Project Completion Report (2011).

14. Part B: Drainage and flood protection. Part B aimed to improve drainage and flood protection systems in project towns that partly contributed to the expanded and upgrade urban

7 ADB. 2009. Report and Recommendation of the President: Proposed Loan to the Socialist Republic of Viet Nam for the Thanh Hoa City Comprehensive Socioeconomic Development Project. Manila and the project completion review mission.

4

environmental infrastructure output. Improvements to drainage included the rehabilitation and construction of flood regulating basins, primary, secondary, and tertiary drains. Flood protection infrastructure consisted of the construction of dikes (in Tam Ky and Dong Ha). The targeted outputs in the original design included rehabilitation and cleaning of 55 kilometers (km) of existing drains, building or upgrading 60 km of primary drains, and construction of 175 km of secondary and 138 km of tertiary drains.

15. For flood protection, 7.2 km of flood protection dikes were constructed in Tam Ky, Dong Ha, and Ha Tinh. In Ha Tinh, Tam Ky, and Quang Ngai a total of 42.3 hectares (ha) of stormwater regulating basins were constructed to provide temporary storage of flood peaks during periods when river levels are high. In Quang Ngai, a 12,500 cubic meter (m3) per hour capacity stormwater pumping station was constructed to pump stormwater from inside the existing flood protection dike to the main river.

16. The outputs achieved are estimated to meet about 70% of the target envisaged at appraisal. As a result of price escalations, the outputs were reduced and focused on the construction or rehabilitation of primary and secondary drains, canals to convey storm water, and the rehabilitation and cleaning of existing tertiary drains. The targeted outputs of 80% coverage of drainage did not take into account the continuing urbanization of the project towns or the growth of the population. Despite the shortfall, all project management units (PMUs) reported that the drainage works and flood protection systems have improved existing drainage conditions. Flood duration in project areas has been reduced from two hours to half an hour per event. 17. Part C: Wastewater and public sanitation. This was also part of the expanded and upgraded urban environmental infrastructure output which finally partly achieved the targets. The wastewater component was designed to collect, treat, and safely dispose of wastewater from the urban areas in two project towns (Thanh Hoa and Lang Co). The public sanitation subcomponent was designed to improve public health and reduce pollution in streets, canals, waterways, and lakes in and around the six project towns.

18. A complete wastewater system was built in Lang Co consisting of (i) 12 km of gravity sewers, (ii) four sewage pumping stations, (iii) 5 km of sewage pumping pipelines, and (iv) a wastewater treatment plant with a capacity of 3,560 m3/day. The treatment facilities have been designed to ensure that the effluent meets national standards. The facilities were at full capacity at project completion. It is estimated that 80% of the wastewater in Lang Co area is collected and treated.

19. In Thanh Hoa City, the appraisal team planned to build a 13,500 m3/day wastewater stabilization pond and an associated 6 km gravity sewer and three wastewater pumping stations. Due to price escalation in 2008, Thanh Hoa PPC decided to cancel this subcomponent. This subcomponent will be financed under the ongoing ADB-financed Thanh Hoa City Comprehensive Socioeconomic Development Project (footnote 6).

20. The public sanitation subcomponent helped to improve public health and reduced pollution in the streets, canals, waterways, and lakes of the project towns. This subcomponent provided 168 public toilets in schools and markets, compared to the 300 toilets that were envisaged. 21. Part D: Solid waste management. This also supported to the expanded and upgraded urban environmental infrastructure output. The solid was component has improved the full cycle of solid waste management activities by constructing new sanitary landfills in the four towns of

5

Dong Ha, Lang Co, Quang Ngai, and Ha Tinh, with a total landfill area of 62 ha, compared to the 111 ha that were envisaged. The proposed landfill in Thanh Hoa was canceled because the city authorities were unable to find a suitable location.

22. This component expanded and equipped the existing waste collection and transport system to increase coverage, established a long-term sanitary waste disposal facility, and improved the productivity of workers and equipment. At completion, the project (i) provided a total of 48 new collection compactor trucks, 797 handcarts and pedicarts and 9,932 portable storage bins; (ii) constructed 10 temporary waste storage stations; and (iii) provided landfill heavy equipment, including five bulldozers and three track-type loaders. Plastic storage bins are being used for collection of waste from commercial and institutional premises in the six towns. All towns are using compactor trucks equipped with mechanical lifting devices for direct transport of collected waste to the landfill. It is estimated that 80% of solid waste in those towns is now collected. A comparison with original targets is provided in Appendix 2.

23. Part E: Implementation assistance and institutional strengthening. Part E covered five remaining outputs, four of which finally achieved targets 8 and one of cost-recovery mechanism partly achieved the targets. This includes project implementation assistance and an institutional strengthening program for town people’s committees (TPCs), URENCOs, the MOC department of urban infrastructure, and town-level women’s unions. A consulting firm was mobilized in December 2005 and completed their services in April 2011. It provided (i) project management and support to six PMUs (implementing agencies) and one project coordination unit (PCU); (ii) detailed designs; (iii) construction supervision; (iv) social and environmental monitoring; and (v) institutional strengthening for URENCOs, TPCs and women’s unions. 24. The consultants (i) trained TPCs on urban management and planning, and contract preparation and supervision; (ii) trained URENCOs on management information systems, asset management systems, administrative and financial management, social and gender issues, and guidelines on O&M for project-financed facilities; (iii) supported the MOC department of urban infrastructure in preparing guidelines on urban management for provincial towns, and guidelines on drainage, sanitation and solid waste tariffs; and (iv) trained Women Unions on public health awareness, community-based sanitation and the household sanitation program. Upon completion of the project, it is estimated that about 200 staff (30% of whom are women) from PMUs, TPCs and URENCOs have been trained on management of contracts and now have asset management skills.

25. Gender equality results. The project was successful in achieving high rates of participation by women in construction, O&M of small infrastructure, and decision making and management of CMCs. 9 The training strengthened their planning, project management and monitoring capacity. 10 Women managed credit funds and implemented and monitored civil works. The involvement by women unions in resettlement committees ensured that women received their entitlements when households were displaced due to the construction of

8 Four outputs are improved autonomy, managerial, and technical capacity of the URENCOs; improved urban

management and planning capacities of TPCs; strengthened urban management policies through support to the newly established Department of Urban Infrastructure in the Ministry of Construction; and enhanced role of women in urban management and urban institutions.

9 ADB. Viet Nam: Meeting Women's Needs and Interests Through an Environmental Improvement Project – 2010. http://www.adb.org/themes/gender/case-studies/viet-nam-meeting-womens-needs-and-interests-through-environmental-improvement-project

10 Training was provided for 75% of women in management skills; for 67% of women in gender and sanitation; and for 74% of women on management and IEC methods.

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drainage, flood protection, wastewater, and public sanitation infrastructure. These ensured women’s needs were considered and resulted in special provisions for households headed by women.

26. The traditional lack of participation by women in civil works, sanitation and infrastructure activities was addressed by having the women’s union implement awareness and pro-poor sanitation activities. The capacity-building activities included in the GAP ensured that female union staff members could develop plans, undertake project management, manage credit funds, and manage civil works activities. Women also managed and led activities as community motivators and as managers and implementers of part A. This increased the visibility of women in community management and led to more opportunities for women to participate in decision making at the commune and ward levels. A summary of results is provided in Appendix 3. C. Project Costs

27. At appraisal, the total project cost was estimated at $96.0 million. The foreign exchange costs ($53.6 million) accounted for approximately 56% of the total cost, with local currency costs ($42.4 million) accounting for the remaining 44%. It was envisaged that ADB would finance $44.0 million (equivalent to a SDR30.731 million loan financed from ADB’s Special Funds at approval), and AFD $31.8 million. The PPCs would finance $20.1 million from their own resources (including the full costs of taxes and duties, land acquisition and resettlement), and project beneficiaries the remaining $0.1 million. 28. At project completion, the actual project cost was $101.2 million (including $3.7 million in financing charges). The main reasons for the increased project cost were higher-than-expected land acquisition costs, which increased the Government of Viet Nam’s contribution, and high inflation resulting in high price escalations in 2006 and 2008. Of the $101.1 million total cost, ADB financed $43.2 million, AFD $34.8 million, and the borrower $23.1 million. The ADB loan financed about $40 million of the actual foreign exchange cost (53% of the total), and $3.2 million of the local currency costs (12% of the total).

29. The project’s midterm review (conducted at the end of 2008) identified surplus loan funds resulting from unused contingencies, and foreign exchange gains (about $5.9 million under the ADB loan and about $6.4 million under the AFD loan). Based on the request of the government, $8.7 million was used for expansion of drainage and flood protection systems, which was part of the original packages but suspended because of high inflation in 2006 and 2008. Cumulative contract awards totaled $41.9 million (88% of the net ADB loan amount). Appendix 4 shows a comparison of project costs at appraisal and completion. D. Disbursements

30. Project funds were disbursed to seven imprest accounts, one for use by the PCU, and one for each of the six PMUs. From 2004 to 2007, disbursements were low because of a substantial delay in the recruitment of the project implementation consultant, which resulted in delays in the implementation of works and procurement of goods. In several project towns, late submissions of requests for payment resulted in lower-than-expected loan fund utilization. The proceeds of the loan were disbursed in accordance with ADB’s Loan Disbursement Handbook (2012, as amended from time to time). The statement of expenditure procedure was used for incremental project administration and some project activities. Advance payments were made to the contractors and the consulting firm upon the receipt of advance payment bank guarantees without any delays. The actual disbursements met the annual projections (Appendix 5).

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31. Loan closing was delayed by about 1 year due to issues regarding reconciliation of accounts in the Thanh Hoa subproject. On 25 April 2012 (the loan closing date), disbursements amounted to $40.4 million equivalent to 85% of the ADB loan, including interest during construction of about $0.5 million. E. Project Schedule

32. The loan was approved by ADB on 8 December 2003 and declared effective on 23 June 2004, as specified in the loan agreement. The project implementation assistance consultants were mobilized in December 2005 (18 months behind the original schedule). This delayed updating of feasibility studies and completion of detailed designs, bidding documents, and tendering of works. Implementation delays were also caused by (i) difficulties in land acquisition, resulting from the need to build many facilities in highly populated and dense areas; (ii) poor quality geotechnical and topographical surveys, which were implemented by survey consultants recruited by the PMUs, and led to the need for design adjustments; and (iii) delayed construction of works in some project towns (Dong Ha, Quang Ngai), as a result of poor contractor performance. However, these issues were adequately addressed by the international consultants, the PMUs and PCU throughout project implementation.

33. Loan closing was extended for 15 months until 5 April 2011 (the original loan closing date was 31 December 2009) to use the loan savings to improve the project outputs.11 With the loan extension, project outputs were effectively increased. To fully use the loan savings, the loan closing date would have needed to be extended beyond 5 April 2011. However, AFD had no capacity to extend its loan further, and thus the unused loan amount of $7.0 million was canceled. F. Implementation Arrangements

34. Implementation arrangements were as envisaged during project appraisal. The State Bank of Viet Nam represented the Government of Viet Nam. The PPCs of the Project Provinces were the Executing Agencies. Each PPC was responsible for the implementation of the Project in its respective Province. Each PPC established a PMU under PPC with full time professional staff for daily implementation of their subproject. For overall project coordination at the national level, the MOC established a PCU that was responsible for (i) overall coordination of the project; (ii) selection and management of project implementation consultants; (iii) consolidation of reports for submission to ADB, AFD and the government; and (iv) recording of withdrawal applications. These arrangements were sufficient to deliver the project‘s outputs and achieve its outcome. During project implementation, ADB, AFD and relevant government agencies jointly conducted review missions and made important decisions (e.g., loan extensions and reallocation of funds).

35. ADB and AFD jointly financed all civil works contracts under parts B and C and the consulting services contract. This joint cofinancing scheme complicated project implementation because: (i) of a duplication of effort, whereby the PMUs had to seek separate approval from both ADB and AFD for contract awards; (ii) the percentage of financing from ADB and AFD was fixed in the loan agreement, thus reducing flexibility when adjusting the scope of works; (iii) payments and disbursements were also administratively more complex, especially at the end of

11

In July 2009, ADB and AFD approved the first loan extension of 9 months (from 31 December 2009 to 6 October 2010). In October 2010, ADB and AFD approved the second loan extension of 6 months (from 6 October 2010 to 5 April 2011).

8

the loan period when both loans needed to be financially closed, and (iv) AFD lacked the capacity to extend the loan closing date (which ADB was able to do). AFD’s inability to extend the loan closing to finance the joint-financed contracts resulted in significant loan savings remaining unused (para 33).

G. Conditions and Covenants

36. The loan agreement contained 28 covenants, grouped into six categories: sectoral, environmental, economic, financial, social, and others (Appendix 6). At the loan closing date, the borrower had complied with the sectoral, environmental, social and “other” covenants. The project engaged an independent monitoring organization, which assessed that land acquisition and resettlement was completed in a timely manner in accordance with ADB’s policies, resettlement framework and approved resettlement plans.

37. The economic and financial covenants have been partially complied with. The covenants required PPCs to increase solid waste collection fees and wastewater charges to a sufficient level to recover all O&M costs and parts of the capital costs within a specific timeframe. In 2007, the government approved new regulations—Decree 88/2007/ND-CP on drainage and sewerage in urban areas and industrial zones, and Decree No. 59/2007/ND-CP on solid waste management—requiring tariffs to cover O&M costs, but not within a specific timeframe. The differences between the loan covenants and government regulations are shown in Table 2:

Table 2: Tariff Requirements: Loan Covenants vs. Government Regulations

Sector Financial Covenants Government Tariff Regulations

Solid Waste Management

Costs to be recovered from tariff revenue

Full O&M cost + part of capital cost

Unspecified portion of the cost of collection, transport and disposal of solid waste

Timing Within 42 months from the loan effective date (i.e., before 24 December 2007)

Not specified.

Drainage and Wastewater Management

Costs to be recovered from tariff revenue

Full O&M cost + part of capital cost

Full cost (drainage) or full O&M cost + part of capital cost (wastewater)

Timing Within 42 months from the loan effective date (i.e., before 24 December 2007)

Not specified.

Based on a road map that describes a gradual increase in tariffs over time

O&M = operation and maintenance Source: Ministry of Construction’s Project Completion Report (2011).

38. Road maps for drainage and wastewater tariff increases had been developed and agreed upon with the PPCs and MOC, with tariff increases of 10%–20% per year to fully recover O&M costs. At project completion on 5 April 2011, the road map was implemented by the Ha Tinh, Tam Ky, Lang Co, and Dong Ha PPCs, while the Thanh Hoa and Quang Ngai PPCs did not implement the road map despite several follow-up letters by ADB and MOC, due to a lack of commitment by these PPCs.

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39. Achieving full cost recovery in these two sectors appears overly ambitious. Local governments—both in Viet Nam and globally—rarely impose full-cost recovery for such services. Thus, the requirement that the project towns achieve full cost-recovery may be viewed as a deficiency in the project design. Compared to most other towns in Viet Nam, the project towns of Ha Tinh, Tam Ky, Dong Ha and Lang Co have shown a genuine and strong commitment to improve the financing of wastewater and solid waste management services through a combination of tariffs (which are now higher than in most other towns in Viet Nam) and subsidies from general budgetary resources. More alarmingly, the failure by Thanh Hoa and Quang Ngai provinces to increase tariffs in a timely manner may lead to sustainability problems for the facilities in these two provinces.

40. The loan agreement contains one sector covenant that includes a requirement for MOC to issue national guidelines on urban management and tariffs for drainage, sanitation, and solid waste. This has been complied with through MOC’s issuance of Decree 88/2007/ND-CP on drainage and sewerage in urban areas and industrial zones and Decree No. 59/2007/ND-CP on solid waste management.

41. The loan agreement and project agreement required compliance with many financial covenants within a certain number of months from the loan effectiveness date. Because the mobilization of the consultant was delayed by 18 months, the construction of civil works and procurement of goods were also delayed substantially. PPCs were reluctant to increase tariffs before the planned improvements to solid waste management, drainage, and wastewater systems were in place.

H. Consultant Recruitment and Procurement

42. The recruitment of consultants was undertaken in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time), using the quality-and cost-based selection procedure. The consultants comprised an international and a national firm and were initially mobilized for 4 years, from 29 December 2005 to 31 December 2009. The prolonged approval process in Viet Nam resulting from multi-layer decision delayed recruitment of the project implementation consultant by 18 months, and caused delays in other project activities. The consulting services contract was extended to 5 April 2011, in line with the extended loan closing date. At project completion, a total of 135 person-months of international consultant and 1,415 person-months of national consultant inputs were used. This compares with the original inputs of 116 person-months of international consultant and 1,104 person-months of national consultant services. 43. Procurement of all goods and services was carried out in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time). A total of 42 main contracts were awarded, including 19 contracts that were awarded through international competitive bidding. The remaining contracts (23) were awarded through national competitive bidding (see Appendix 7). This compares with the original procurement plan which included 18 international competitive bidding packages and 17 national competitive bidding packages. I. Performance of Consultants, Contractors, and Suppliers 44. The performance of the consultants was generally satisfactory; however, they made four replacements of the consultant team leader and other key personnel, which caused delays in completing detailed design and bidding documents. Lack of understanding of ADB’s procurement procedures, social safeguard guidelines, and quality control requirements added to

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delays in contract award and completion of construction. However, the consultants improved their performance over time. 45. The performance of the contractors was varied but generally satisfactory. The contractors in Ha Tinh, Tam Ky, Thanh Hoa, and Lang Co performed well by delivering works at an acceptable quality and within the specified timeframe and without cost escalations. On the other hand, poor performance of contractors in Dong Ha and Quang Ngai caused delays in completion of civil works contracts in those project towns. It was also noted that many contractors did not provide adequate site staff to complete invoices, which resulted in unnecessary delays in loan disbursement. J. Performance of the Borrower and the Executing Agencies

46. The performance of the executing agencies is rated satisfactory. The PCU was slow in recruiting the project implementation assistance consultant, which caused an avoidable delay in project completion resulting from the lengthy approval process within the MOC for consultant recruitment. However, the PCU’s capacity improved during project implementation. The PCU provided timely guidance to the PMUs during the construction phase. The PPCs provided sufficient counterpart funds based on an annual allocation from the Ministry of Finance, complied with most covenants, and ensured that project activities were implemented as approved. The performance of the PMUs varied by province. Initially, the PMUs were not familiar with ADB’s social safeguard requirements and procurement guidelines, which were not explained in a detailed manner during loan processing. However, PMU performance improved over time. The PMUs were able to successfully complete the physical construction in just 33 months, rather than the 42 months envisaged at appraisal. K. Performance of the Asian Development Bank

47. ADB’s performance is rated satisfactory. ADB conducted two loan review missions per year, fielded a timely midterm review, fielded several special administration missions in response to project needs, and conducted a project completion review mission in association with the PCU, PMUs and State Bank of Viet Nam. ADB was responsive to requests by the borrower, PPCs, PMUs and PCU (most requests were responded to within 7 working days). On 29 August 2005, the project was delegated to the Viet Nam Resident Mission. The project team in the resident mission prepared the detailed project implementation plan with the executing agencies and updated it on a regular basis. The resident mission team effectively worked with these agencies in monitoring project progress, identifying key issues and taking necessary remedial measures. Proven effective measures included: (i) ongoing communication between ADB and the executing agencies; (ii) working with the MOC and provincial steering committees to resolve issues or request remedial actions; and (iii) in several cases, a request that key staff of poorly performing PMUs and consultant teams be replaced. The resident mission staff spent adequate time training the staff members of the PCU and PMUs on project implementation procedures and provided relevant guidelines in a timely manner. Advice on technical and implementation issues, preparation and evaluation of bid documents, and loan administration were appreciated by Vietnamese government officials involved in the project, as well as by consultants, contractors, and suppliers. No notable delays were reported regarding ADB’s approval of withdrawal applications or issuance of no objection to work plans and contract awards. ADB’s close monitoring helped ensure that gender aspects were properly addressed by the project (a 2010 report on gender equality in ADB projects in Viet Nam cited the project as

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being “a good example of how gender equality results can contribute to the overall effectiveness of the project”).12

III. EVALUATION OF PERFORMANCE

A. Relevance

48. The project is rated relevant because project impact and outcome are consistent with government’s development objectives and with ADB’s country strategy. The government’s socioeconomic development plan for 2011–2015 13 and its social economic development strategy for 2011–202014 continue to place a high priority on sustainable urban development and balanced regional development. ADB’s long-term strategic framework for 2008–2020 identifies five core areas of operations, two of which are directly related to project overall objectives: infrastructure development and the creation of livable cities.15 B. Effectiveness in Achieving Outcome

49. The project is rated effective. The project achieved its immediate outcome of improving urban environmental conditions in the six project towns by (i) expanding and upgrading urban environmental infrastructure; (ii) improving autonomy, managerial, and technical capacity of the URENCOs through institutional strengthening programs; (iii) improving urban management and planning capacities of TPCs and strengthening urban management policies through the MOC through implementation of new regulations (para 37); (iv) increasing community participation in the planning and management of urban services; (v) enhancing public health awareness; and (vi) enhancing the role of women in urban management and urban institutions. Upon project completion, communities in all six project towns benefited from hygiene education and sanitation improvements. C. Efficiency in Achieving Outcome and Outputs

50. The project is rated less efficient in achieving its outcome and outputs, because delays in project implementation resulted in higher implementation costs. The impact of inflation may have been less significant if the project was implemented as originally scheduled. 51. At appraisal, the estimated economic internal rates of return (EIRRs) for the drainage projects ranged from 16.4% to 21.1%. At loan completion, the estimated EIRRs were substantially lower, because project costs were higher than expected, and the number of project beneficiaries lower. Financial reevaluation indicates that the minimum required tariffs for solid waste collection and the minimum required wastewater surcharge were estimated correctly at appraisal. At the loan closing date, the actual tariff for domestic solid waste collection was 80% of the required tariff in 2012 in five of the six project towns. However, none of the project towns covered more than 35% of the required costs of drainage and wastewater from the surcharge to the water bill (Appendix 8, Table A8.3).

12

Nethercott, K. et al. 2010. Gender Results Equality in ADB Projects: Viet Nam Country Report. Manila. p.15. 13

Viet Nam. 2011. Five-year Socioeconomic Development Plan, 2011–2015. Hanoi 14

Viet Nam. 2011. Social Economic Development Strategy, 2011–2020. Hanoi 15

ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank 2008–2020. Manila

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D. Preliminary Assessment of Sustainability

52. The sustainability of the project is rated likely. A proper O&M program was developed for facilities financed under the project. Upon project completion, URENCOs have gained substantial experience in operating and managing drainage, sanitation, and solid waste collection systems and their capacity was enhanced by the institutional strengthening and capacity program provided during project implementation. 53. The government approved Decrees 88 and 59 (para. 37), which enabled local governments and URENCOs to raise tariffs for cost recovery for wastewater and solid waste, which is supposed to cover (as a first step) operating expenditures. A road map for tariff increases was prepared and approved by PPCs, which allows a gradual tariff increase of 10% annually until O&M costs are fully recovered; the shortfall in operating expenditures prior to full cost recovery will be financed through provincial and city budgets. Financial sustainability is dependent on the ability of URENCOs to generate sufficient revenues and lower O&M expenditures. E. Impact 54. The project has (i) provided access to expanded and upgraded urban environmental infrastructure for the population in the project areas; (ii) increased participation by the community, and especially women and the poor, in the planning and management of urban services; (iii) enhanced public health awareness; and (iv) enhanced the role of women in urban management and institutions. All PMUs report improved environmental sanitation, reduced incidents of open defecation, and a willingness to connect to the drainage and sewerage system and pay solid waste collection fees. In addition, local government agencies are more aware of the need for environmental sanitation interventions, as reflected in their socioeconomic policies. According to the PCU report, the project successfully eliminated potential negative environmental and resettlement impacts. 55. The project authorities acquired land and compensated affected people in accordance with ADB guidelines and approved resettlement plans. A total of 239 affected households were resettled; the affected people were satisfied with the market rate compensation provided, which included timely provision of serviced residential plots. Resettlement committee compensation payments were timely and made in manner that was convenient for the affected households. Resettlement sites were provided with basic infrastructure, including roads, water supply connections, drainage systems and electricity. According to the Resettlement Impacts Assessment Report, the living standards of affected people in resettlement sites are equal to or exceed the pre-project standards. 16 .The resettlement plans did not identify any specific vulnerable groups.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

56. The project is rated as successful. The project was relevant at the time of appraisal in addressing the policy objectives of the government and ADB, and remained relevant at the loan closing date. The project was also rated effective given that it achieved its intended outcome. The project was broadly implemented as formulated during appraisal. Although the project outputs may not have been completely achieved due to price escalation, no major shortfall

16

Independent Consultants. 2010. Resettlement Impacts Assessment Report.

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occurred and the expected outcome and impact will largely be achieved over the life of the project. The sustainability of the project’s benefits and impacts is also rated likely. The project was deemed less efficient, primarily because of the lengthy delays in project implementation and low EIRR. The quantitative assessment of performance is in Appendix 9.

B. Lessons

57. The recruitment of consultants by executing agencies remains time-consuming. This problem is not specific to the project, but common in all ADB-financed projects in Viet Nam. Delays in consultant recruitment result in delays of the entire associated project. In the future, advance actions and project readiness filters should be applied to minimize start-up delays. 58. The loan covenants required compliance with most financial covenants within a certain number of months from the loan effectiveness date. It would be better to link the achievement of such covenants to the delivery date of project assets instead of the loan effectiveness date. 59. Sanitation coverage indicators should be simplified by using nominal targets rather than ratios. Monitoring of coverage ratios requires that two independent parameters—physical outputs and population growth—be known. This is complicated by the continuing growth of the service areas under the control of the concerned utilities.

60. The project provided sufficient resources to implement gender-focused design features. The provision of adequate resources is critical to both successful design and effective implementation of the gender action plan. The project was an excellent example of how attention to gender equality through a comprehensive and well-targeted gender action plan can lead to practical and strategic gender equality results.

61. The calculation of the EIRR and financial internal rate of return at appraisal should be made in a manner that facilitates their re-evaluation at project completion. C. Recommendations

1. Project-Related 62. Future monitoring. Sustainability of the infrastructure built in Thanh Hoa and Quang Ngai provinces remains at issue, because of the lack of a tariff increase in these provinces to cover O&M costs. This issue should be further monitored by MOC and ADB. In other project provinces, wastewater and solid waste tariffs need to be adjusted regularly as specified in the approved road map to ensure cost recovery for O&M costs is fully achieved in compliance with the government’s Decree 88/2007/ND-CP.

63. Covenants. It is necessary to link the achievement of financial covenants to the handover date of project-financed assets. The loan agreement required PPCs to increase tariffs for solid waste collection and wastewater services within a stipulated number of months from the loan effectiveness date. For obvious reasons, PPCs were reluctant to increase tariffs before the project had delivered the works and equipment needed to improve solid waste and wastewater management services. When the implementation of the project was delayed, PPCs also delayed scheduled tariff increases. It is recommended that the deadline to achieve tariff increases is linked to the date on which an executing agency receives the assets needed to improve the tariff-related services.

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64. Cost estimates. The project team must ensure correct estimates are made of price contingencies during project preparation. The project preparatory technical assistance consultant estimated price contingencies at $4.5 million, or about 5.1% of the May 2003 base cost, including physical contingencies (this is an unusually low figure for a country with a history of high inflation). This estimate was subsequently included in the report and recommendation of the President, which states that the estimation was based on annual price increases of 2.4% for the foreign exchange cost, and 4% for the local currency cost. Based on these assumptions (and given that most of the disbursement would take place in 2008 and 2009), price contingencies should have been at least 15%–20% of the base cost plus physical contingencies, instead of 5.1% (a difference of $10 million).

2. General 65. Minimize start-up delays. To avoid delayed project start-up, it is recommended that ADB continue the dialogue with the Government of Viet Nam to revise Decree 131 on the management of official development assistance-funded projects to establish a legal basis for advance action.

66. Institutional reforms. ADB should provide more assistance to MOC and local authorities to improve the institutions and systems required to ensure that wastewater and drainage systems are maintained and operated efficiently. ADB should continue dialogue with the government on urban service reform, the application and targeting of government subsidies for sanitation, and the development of more transparent, efficient, and equitable mechanisms for directing such subsidies in public services.

67. Decentralization of project preparation and implementation. It is crucial for project sustainability that the executing agencies fully participate in identification, design, procurement and supervision of works. Future projects can serve to strengthen the capacity of provinces by enhancing their involvement in project design and execution. The project proved that PPCs with strong capacity and leadership are able to shorten the time needed during project implementation for required local authority approvals.

68. Parallel financing. Joint financing reduces the flexibility to adjust project scope during implementation. The use of fixed percentages in every contract cofinanced by ADB and AFD resulted in practical limitations in adjusting the scope of works. Joint financing is also administratively more complex, especially at the end of the loan period when both loans need to be financially closed. Therefore, it is recommended that a joint project administration memorandum be developed to ensure that parallel financing provides the project implementation flexibility needed to enable optimal use of cofinancing resources.

Appendix 1 15

PROJECT DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Indicators/Targets

Assumptions and Risks PCR Evaluation of Achievements

1. Goals

To improve the quality of life and health status of urban residents and reduce poverty in the six project towns and surrounding areas

Improved environmental conditions and reduced incidence of waterborne diseases

National and provincial data are not sufficiently specific to enable an assessment. However, based on the assessments of PPCs, this target has been achieved, thanks to a substantial increase in coverage of solid waste collection and wastewater management.

To promote balanced regional economic development and reduce migration from the central region to Hanoi and HCMC

Increased investment and per capita income and reduced net migration from provinces in the central region

No data are available.

2. Objective

To improve urban environmental conditions in the six project towns

Reduced pollution of surface water

Central and local governments adopt and implement the institutional

and policy reforms necessary to facilitate sustainable management

of urban services

Drainage and solid waste management fees are increased to ensure that urban environmental

companies (URENCOs) have enough resources for proper operation and

maintenance (O&M) of urban infrastructure

Achieved, because of increased coverage of city drainage systems.

Reduced flooding in urban areas (less than 10% of urban wards flooded annually)

Achieved.

Increased coverage and efficiency of urban services

Achieved, because of a substantial increase in service coverage, resulting in increased efficiency stemming from economies of scale.

16 Appendix 1

Rehabilitated and upgraded drainage, wastewater, sanitation, and solid waste infrastructure in urban areas

Achieved (see Appendix 2 for details).

3. Outputs

(a) Expanded and upgraded urban environmental infrastructure

80% coverage of drainage or sewerage connections in urban wards

Timely recruitment of competent consultants

Available and timely release of counterpart funds

Achieved in four of six towns (April 2011 coverage in urban wards in Dong Ha was estimated at 37%, and in and Tam Ky at 61%); 99km of drains and 22.4 km of sewers were built, and 43 ha of regulating basins.

90% coverage of solid waste collection in urban wards

PPCs appoint qualified and

experienced staff to the PMUs

Achieved in five of six towns (April 2011 coverage in urban wards in Dong Ha was estimated at 82%). Three sanitary landfills were built, with a total area of 51.7 ha.

Sanitation program provides grants to 3,500 households

Land acquisition and resettlement plans timely implemented

Achieved (3,739 equivalent compared to original target of 3,500)

Septic tank coverage at least 90% in towns

Achieved in four towns: Thanh Hoa, Ha Tinh, Tam Ky and Quang Ngai (coverage in urban wards in Dong Ha was estimated at 70%, and unknown in Lang Co due to the lack of data)

80% of wastewater in Thanh Hoa and Lang Co service areas collected and treated in waste stabilization ponds

Not achieved (the wastewater component of Thanh Hoa was cancelled, wastewater in Lang Co was treated by a treatment plant with 3,560 m

3/day capacity)

(b) Improved autonomy, managerial, and technical capacity of the URENCOs

URENCOs focused on urban servi-ces management, with separation of major construction activities

PPCs adopt the reforms necessary to transform URENCO into efficient companies

Achieved

Appendix 1 17

Increased managerial and technical capacity of staff in the URENCOs

PPCs implement cost recovery tariffs and budget allocations necessary for financial sustainability

Achieved

Efficient financial and management information systems implemented

Appropriate staff made

available for training

Achieved

O&M plans, manuals and procedures in place and being used correctly and proper budgets allocated for O&M

Partially achieved (in 2010, O&M budgets for drainage and wastewater management were lower than required in all six towns)

Contract agreements between URENCOs and TPCs established and service levels agreed implemented by URENCOs and supervised by TPCs

Partially achieved in two of the six project towns (only the Ha Tinh and Quang Ngai TPCs had signed contracts with URENCO specifying agreed service levels)

(c) Improved urban management and planning capacities of TPCs

TPCs capabilities to coordinate and monitor URENCOs and other public and private operators increased

Appropriate staff made available for training

Without a performance-based contract with URENCOs, CPCs do not have a better basis for monitoring URENCOs than at the start of the project

(d) Strengthened urban management policies through support to the Department of Urban Infrastructure in the MOC

Guidelines on urban management prepared and approved by MOC by 2007

Sufficient coordination among departments within MOC and with other concerned ministries, such as Ministry of Finance

Achieved by the Law on Urban Planning No. 30/2009/QH12 prepared by MOC and approved by the National Assembly in 2009

Guidelines on drainage, sanitation, and solid waste tariffs prepared and approved by MOC by 2007

Achieved (in April 2007, the Government of Viet Nam issued Decree 59/2007 on solid waste management and Decree 88/2007 on drainage and sewerage in urban areas and industrial zones).

(e) Development of appropriate cost-recovery mechanisms to ensure sustainability of urban environmental services

Water surcharge for drainage imple-mented and progressively increased to recover O&M costs of drainage, wastewater, and sanitation by 2007

Sufficient commitment from PPCs

Not achieved. Surcharge increased but covers only 25% of actual O&M costs

Solid waste management fees increased to recover O&M costs by 2007

Not achieved. Fess increased but cover only 50% of actual O&M costs

18 Appendix 1

Environmental fee or surcharge on the land and house tax implemented by TPCs by 2007 to recover capital cost investments in urban environmental infrastructure

Not achieved (in April 2011, none of the TPCs had imposed an environmental fee or surcharge on the land and house tax)

(f) Increased community participation in the planning and management of urban services, particularly by the poor

Community management committee established and operating efficiently with representatives of women’s unions, TPC, and URENCO

Strong cooperation and coordination between URENCO, TPC, and

women’s unions; and willingness of

communities to participate and contribute and consideration given to GAP,

PPC, PSC, and URENCO commitment

Achieved

(g) Enhanced public health awareness

Changed behavior in relation to proper hygiene and environmental sanitation and scavengers using protective gear in landfills

Women’s unions properly manage the awareness campaigns with CMC support.

Consideration given to implementation of GAP

Achieved

Increased community awareness in proper use of drainage, sanitation and solid waste disposal

Achieved

Majority of communities using and paying for drainage, sanitation, and solid waste collection services

Achieved in five of six project towns (in April 2011, the coverage rate for drainage in Dong Ha was 37%)

(h) Enhanced role of women in urban management and urban institutions

Increased number of women in URENCOs, incl. management positions

PPC and URENCO adopt project’s GAP

Achieved

At least one member of the PSC is a woman and CMC headed by representatives of women’s union and 50% of its members are women

Achieved

Appendix 1 19

Inputs

Appraisal (September 2003) Completion (April 2011)

Funding ($ million) ADB AFD Borrower a ADB AFD Borrower a

Part A: Awareness and Pro-Poor Sanitation 0.7 0.0 0.5 0.7 0.0 0.3

Part B: Drainage and Flood Control 23.0 19.9 10.9 22.6 22.9 18.4

Part C: Wastewater and Public Sanitation 4.8 3.5 1.8 4.0 4.3 2.0

Part D: Solid Waste Management 12.3 0.0 4.6 10.5 0.0 2.0

Part E: Project Implementation Assistance and Institutional Strengthening

1.8 6.1 2.1 2.1 5.3 2.4

Service Charges 1.4 2.3 0.3 0.5 3.2 0.0

Total 44.0 31.8 20.2 40.4 35.7 25.1

CMC = community management committee, CPCs = commune people’s committees, GAP = gender action plan, HCMC = Ho Chi Minh City, MOC = Ministry of Construction, O&M = operation and maintenance, PPCs = provincial people’s committees, PSC = project steering committee, TPCs = town people’s committee, URENCOs = urban environmental companies a Including contributions from project beneficiaries

Source: Asian Development Bank.

20 Appendix 2

PROJECT OUTPUTS

Table A2.1: Planned and Actual Project Outputs

Component/Output At Loan Appraisal

After Major Change to Scope

At Loan Closing

Part A: Awareness and Pro-Poor Sanitation

Septic tanks (no.) 3,500 1,219 3,739

Part B: Drainage and Flood Protection

Primary drains (km) 39.0 30.8 27

Secondary and tertiary drains (km) 176.0 57.7 72.4

Dikes (km) 9.0 7.7 7.2

Regulating basins (ha) 47.5 48.0 42.3

Storm water pumping stations (no.) 1 1 1

Tide gates (no.) 4 4 4

O&M vehicles (no.) 40 25 29

Part C: Wastewater and Public Sanitation

Gravity sewers (km) 33.8 28.0 17.2

Pumping sewers (km) 8.9 7.4 5.2

Pumping stations (no.) 6 7 4

Wastewater treatment plants (m3/day) 18,250 17,060 3,560

Public sanitation facilities (no.) 500 500 168

O&M vehicles (no.) 9 9 10

Part D: Solid Waste Management

Bins (unit) 9,875 9,885 9,932

Hand carts (unit) 659 711 797

Collection trucks (unit) 66 50 48

Temporary storage areas (unit) 77 56 10

Landfills (ha) 111.0 76.6 51.7

Landfill equipment (unit) 17 11 28

Landfill access roads (km) 13.0 13.2 5.2

O&M = operation and maintenance a Provisional data.

Source: Asian Development Bank.

Appendix 2 21

Table A2.2: Project Outputs by Town

Component/Output Dong Ha

Ha Tinh

Lang Co

Quang Ngai

Tam Ky

a

Thanh Hoa

TOTAL

Part A: Awareness and Pro-Poor Sanitation

Septic tanks (no.) 664 563 174 682 718 938 3,739

Part B: Drainage and Flood Protection

Rehabilitation of existing drains (km) 6.1 10.0 16.1

Primary drains (km) 5.3 4.9 4.5 1.9 6.3 22.9

Secondary drains (km) 14.7 5.8 4.2 5.8 30.5

Canals (km) 1.5 4.1 0.5 6.1

Dikes (km) 1.1 6.2 2.9 10.2

Regulating basins (ha) 14.4 5.9 22.0 42.3

Storm water pumping stations (no.) 1 1

Tide gates (no.) 1 3 4

O&M vehicles (no.) 2 2 4 4 2 4 18

Part C: Wastewater and Public Sanitation

Gravity sewers (km) 17.2 17.2

Pumping sewers (km) 5.2 5.2

Pumping stations (no.) 4 4

Wastewater treatment plants (m3/day) 3,560 3,560

Public sanitation facilities (no.) 100 16 6 9 37 168

O&M vehicles (no.) 2 2 2 1 3 10

Part D: Solid Waste Management

Bins (unit) 475 1000 2147 2470 1710 330 8,132

Hand carts (unit) 194 150 69 57 42 285 797

Collection trucks (unit) 6 4 10 10 9 39

Temporary storage areas (unit) 4 1 5 10

Landfills (ha) 16.5 10 26.7 8.5 61.7

Landfill equipment (unit) 3 6 5 2 12 28

Landfill access roads (km) 2.5 2.6 5.1

O&M = operation and maintenance a Provisional data.

Source: Asian Development Bank, based on Project Management Unit data and Ministry of Construction’s project completion report.

Table A2.3: Estimated Project Beneficiaries at Appraisal and Completion

(‘000)

Component At Loan Appraisal

At Completion Index

(Appraisal =100)

Drainage and flood protection 384.3 258.4 67

Wastewater and public sanitation 366.2 261.7 71

Solid waste management 589.3 561.1 95 Source: Asian Development Bank, based on Project Management Unit data and Ministry of Construction’s project completion report.

22 Appendix 3

SUMMARY OF GENDER EQUALITY RESULTS

Loan Component/Gender Action Plan Provisions

Gender Equality Results

Project objective: improved urban environment

Improved living and environmental conditions due to the success of the Viet Nam Women’s Union (VWU) at creating awareness among women and men about the links between health, the environment and sanitation.

A. Awareness and pro-poor sanitation

VWU responsible for implementation

Training on gender roles and environmental sanitation for men and women

Training for URENCO workers

50% of motivators will be women

Consultation with both men and women

30% of community and neighborhood group members are women

Participatory process for community contribution.

Exemption consideration will be given to households headed by women

High participation of women, with targets for participation exceeded in all activities and training (67%–90%)

75% of women were trained in management skills (total of 24 women and 8 men)

67% of women were trained in gender and sanitation (total of 30 women and 15 men)

74% of women were trained on management and IEC methods (total of 23 women and 8 men)

More than 12,000 students were trained in sanitation

90% of CMC members were women; all leaders of the management board for CSB were women

All directors of community management committees were female and 89% of urban motivators were women

Opportunities for women to participate in decision making at commune and ward level increased

Planning, project management and monitoring capacity of VWU was strengthened

More middle-aged men actively participate in public meetings and trainings on sanitation

Over 75% of credit recipients for household sanitation improvements were women. Women received loans to build toilets and septic tanks

Exemptions from the cost-recovery requirement for CBS operation and maintenance were given to households headed by women

B. Drainage and flood protection C. Wastewater and public sanitation

IEC targeted to men and women

Address different needs of men and women in the design and operation and maintenance (O&M) of wastewater and public sanitation

Women participated in consultations about wastewater, public sanitation and solid waste management activities

VWU participated in monitoring the quality of construction activities

VWU was involved in resettlement planning meetings and implementation to ensure special consideration for households headed by women, including extra compensation and land titles

D. Solid waste management

IEC to improve men and women’s

Gender training was conducted for ward leaders and community members

Appendix 3 23

awareness and practice, and payment of monthly sanitation fees

Women’s concerns addressed in URENCOs

Hand-carts and garbage cans were redesigned and special transport mechanisms introduced to meet the needs of female garbage collectors

URENCO female garbage collectors participated in gender, HIV and safety training

E. Implementation assistance and institutional strengthening

Gender awareness training for all staff and partners

Use of gender-sensitive indicators for implementation and monitoring.

Ensure the resettlement plan is gender responsive

Training on leadership for female URENCO staff

Capacity of VWU increased; reinforcement of VWU’s role and profile in the community and in government institutions

URENCOs, community leaders, PMU and CMCs trained on gender issues; increased understanding by URENCOs, community leaders, PMUs and CMCs of gender issues in urban environmental, sanitation and health

Data on women’s participation collected and reported

CBS = community based sanitation, CMC = community management committee, IEC = information, education and communication, O&M = operation and maintenance, PMU = project management unit, URENCO = urban environment company, VWU = Viet Nam Women Union Source: Asian Development Bank. Viet Nam: Meeting Women's Needs and Interests through an Environmental Improvement Project – 2010 http:// http://www.adb.org/themes/gender/case-studies/viet-nam-meeting-womens-needs-and-interests-through-environmental-improvement-project

24 Appendix 4

APPRAISAL AND ACTUAL PROJECT COSTS ($ million)

Component Appraisal Estimate Actual

Foreign Local Total Foreign Local Total

A. BASE COST

Part A: Awareness and Pro-Poor Sanitation

1. Community Awareness and Participation Program

0.1 0.4 0.5 0.0 0.2 0.2

2. Community-Based Sanitation 0.0 0.3 0.3 0.0 0.4 0.4

3. Household Sanitation Program 0.0 0.4 0.4 0.0 0.4 0.4

Subtotal Part A 0.1 1.1 1.2 0.0 1.0 1.0

Part B: Drainage and Flood Protection

1. Drains, Canals and Associated Roads 19.4 9.6 29.0 32.4 7.2 39.6

2. Flood Regulating Basins 4.5 2.2 6.7 8.5 1.9 10.4

3. Flood Protection 1.9 0.9 2.8 2.9 0.6 3.5

4. Construction/O&M Equipment 2.3 1.0 3.2 3.9 0.4 4.3

5. Land Acquisition and Resettlement 0.0 4.6 4.6 0.0 6.1 6.1

Subtotal Part B 28.1 18.3 46.3 47.7 16.2 63.9

Part C: Wastewater and Public Sanitation

1. Interceptor Sewers and Pump Stations 3.2 1.5 4.7 5.6 1.2 6.8

2. Wastewater Treatment Plant 1.4 0.6 2.0 2.0 0.4 2.4

3. Public Sanitation Improvements 0.2 0.3 0.5 0.7 0.2 0.9

4. Construction/O&M Equipment 0.7 0.3 1.0 (included in B.4)

5. Land Acquisition and Resettlement 0.0 0.6 0.6 0.0 0.2 0.2

Subtotal Part C 5.5 3.3 8.8 8.3 2.0 10.3

Part D: Solid Waste Management

1. Solid Waste Storage 0.7 0.5 1.2 2.3 3.3 5.6

2. Solid Waste Treatment and Disposal 2.0 2.8 4.8 0.0 0.0 0.0

3. Collection & Landfill Equipment 3.2 2.4 5.6 5.7 0.6 6.3

4. Access Road to Landfill 0.6 1.1 1.7 (included in D.1)

5. Land Acquisition and Resettlement 0.0 1.3 1.3 0.0 0.6 0.6

Subtotal Part D 6.5 8.1 14.6 8.0 4.5 12.5

Part E: Project Implementation Assistance and Institutional Strengthening

1. Project Management, Design & Supervision 1.8 3.1 4.9 } 6.9 } 0.1 } 7.0

2. Institutional Strengthening Program 0.8 0.6 1.4

3. Engineering and Environmental Surveys 0.1 0.5 0.6 0.0 0.4 0.4

4. Incremental Administration 0.1 1.6 1.7 0.2 2.1 2.3

Subtotal Part E 2.8 5.8 8.6 7.1 2.6 9.7

Total Base Cost 43.0 36.6 79.6 71.1 26.3 97.4

B. CONTINGENCIES

Physical 4.3 3.7 7.9 0.0 0.0 0.0

Price 2.8 1.7 4.5 0.0 0.0 0.0

C. SERVICE CHARGE 3.5 0.5 4.1 3.7 0.0 3.7

TOTAL 53.6 42.5 96.1 74.8 26.3 101.1

O&M = operation and maintenance

Source: Asian Development Bank (2011).

Appendix 5 25

PROJECTED AND ACTUAL DISBURSEMENTS ($ million)

Year Projected Actual

2003 0.00 0.00

2004 0.00 0.00

2005 1.00 0.71

2006 0.44 0.44

2007 3.72 0.27

2008 2.22 8.27

2009 16.10 16.38

2010 10.60 9.74

2011 7.00 4.58

2012 0.00 (0.06)

Total 41.08 40.33

( ) = negative

Source: Asian Development Bank Loans Financial Information System

Source: Asian Development Bank Loans Financial Information System.

0

10

20

30

40

50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Figure A5: Cumulative Disbursement of Central Region Urban Environmental Improvement Project Loan, 2003-2012

($ million)

Projected Actual

26 Appendix 6

COMPLIANCE WITH LOAN COVENANTS

Loan Covenant Source Required Date of Compliance

Status of Compliance

Sector Covenants

1. Within twenty-four (24) months of the loan effectiveness, the MOC shall in coordination with the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Natural Resources and Environment prepare and submit for government's approval:

(i) the guidelines on urban management for provincial towns, defining the responsibilities of the TPCs and the URENCOs; and

(ii) tariff guidelines on drainage, sanitation and solid waste, ensuring the sustainability of urban environmental services and reducing the government subsidies.

LA, Schedule 6, para 11(i)-(ii)

6 May 2006 Complied with (delayed due to delays in project implementation).

In April 2007, the Government of Viet Nam issued Decree 59/2007 on solid waste and 88/2007/ND-CP on Urban and Industrial Park Water Drainage.

2. Within twelve (12) months of the effective date, the PPCs shall issue regulations on sanitation requiring among others:

(a) connecting sullage drains and septic tanks to drains in high and medium density areas, and to drains or properly designed and constructed soakaway in low density areas;

(b) that each household or business located in high and medium density areas will have a septic tank that meets prescribed standards; and

(c) that hotels, restaurants, hospitals, and industrial enterprises will have on-site treatment facilities to treat their wastewater.

PA, Article II, Section 2.24, RRP assurances, para 68(iv)

6 May 2005 Complied with (delayed due to delays in project implementation).

In April 2007, the government issued Decree 88/2007/ND-CP on Urban and Industrial Park Water Drainage, Government of Viet Nam 2007.

3. Each of the PPCs, except for the PPC of Thua Thien Hue, shall ensure that, within twenty-four (24) months of the effective date, the URENCO will focus its activities on management and O&M of urban infrastructure, by establishing and maintaining a separate unit for construction activities under the URENCO. The PPCs of Thua Thien Hue shall ensure that, within twenty-four (24) months of the Effective Date, a separate unit will be established under the URENCO for the O&M of the Lang Co system.

PA, Article II, Section 2.17

6 May 2006 Complied with (delayed due to delays in project implementation).

As of 25 April 2012, the PPCs of Quang Ngai and Thua Thien Hue had not complied with this covenant.

4. Each of the PPCs shall ensure that, within twelve (12) months of the effective date, the URENCOs will own O&M equipment and keep in its account sufficient funds for the provision for depreciation of the equipment.

PA, Article II, Section 2.17

6 May 2005 Complied with.

Appendix 6 27

COMPLIANCE WITH LOAN COVENANTS

Loan Covenant Source Required Date of Compliance

Status of Compliance

5. Within twelve (12) months of the effective date, each of the PPCs shall cause URENCO to:

(a) adopt and implement efficient and effective asset management procedures;

(b) prepare and adopt O&M plans, manuals and procedures; and

(c) implement efficient Financial Management Information Systems.

PA, Article II, Section 2.17

6 May 2005 Complied with (delayed due to delays in project implementation).

6. Within eighteen (18) months of the effective date, each of the PPCs shall cause the TPC to:

PA, Article II, Section 2.23

6 Nov 2005

(a) provide its urban management division with enough human resources to take responsibility for urban planning and management in the town, in coordination with the DOC in the PPC;

Complied with.

(b) establish performance standards for service delivery; and Partly complied with.

As of 25 April 2012, only the TPCs of Ha Tinh and Quang Ngai had established service performance contracts.

(c) prepare, execute and supervise service performance contracts with the respective URENCO and other public or private urban service providers, and strengthen autonomy of the URENCO.

Environmental Covenants

7. PMUs in each province will ensure that IEE will be made available in the local language on request at the town offices before the project begins. The PMUs will update the subproject IEEs and EMPs following completion of the detailed designs and after further consultations with local communities. The updated IEEs and EMPs for the subprojects will be submitted to the DNREs and ADB for review and approval before civil works begin.

LA, Schedule 6, para 16 and 17

Prior to start of civil works

Complied with.

Economic Covenants

8. The borrower shall cause each of the PPCs to be responsible for ensuring that a comprehensive program for project benefit monitoring and evaluation (BM&E) acceptable to ADB is carried out as part of the project performance monitoring system (PPMS). Annual BM&E reports will be prepared by each of the PMUs for PCUs consolidation and submission to the Bank.

LA, Schedule 6, para 12

Prior to start of civil works

Partly complied with.

The BM&E has only been partially carried out, to the extent of monitoring the physical outputs.

28 Appendix 6

COMPLIANCE WITH LOAN COVENANTS

Loan Covenant Source Required Date of Compliance

Status of Compliance

Financial Covenants

9. Notwithstanding any other provisions if this loan agreement, no withdrawals from the loan account shall be made:

LA, Schedule 3, para 9(i)-(ii)

RRP, para 70

Prior to loan disbursement to the imprest account

(i) for parts B and C of the project in a particular province, until the PPC in such province has introduced a water tariff surcharge of at least 10% over the water tariffs to recover O&M costs related to drainage and sewerage systems, and has made arrangement to ensure that the funds collected by the provincial water supply company will be transferred to a dedicated account of each URENCO; and

Partly complied with.

(ii) part D of the project, in a particular province, until the PPC in such province has increased current solid waste tariffs at least by 30% over the tariffs as of 1 July 2003 for all user groups

Complied with.

10. Each of the PPCs shall ensure, within twelve (12) months of the effective date, that the URENCO will maintain accounting systems and separate budget and accounts following Viet Nam Accounting Standards for each of its main activities, distinguishing between (a) drainage and wastewater; (b) solid waste management; (c) other O&M activities; and (d) new construction activities.

PA, Article II, Section 2.16

6 May 2005 Complied with.

11. Each of the PPCs shall ensure that, within twenty-four (24) months of the effective date, the URENCO will calculate, recommend and justify appropriate fees for drainage, wastewater and solid waste treatment to its clients and to the People’s Council, and agrees on appropriate service levels with the TPCs.

PA, Article II, Section 2.18

6 May 2006 Partly complied with.

12. Each of the PPCs shall ensure that, within twelve (12) months of the effective date, the URENCO will collect drainage fees (through provincial water supply company) and solid waste fees and retain all revenues in two separate accounts, and use them solely for O&M of the solid waste and wastewater and drainage facilities respectively, under its responsibility.

PA, Article II, Section 2.20

6 May 2005 Partly complied with.

(full compliance with the collection and use of solid waste fees, partial compliance with the collection and use of drainage fees)

13. Each of the PPCs shall ensure that, within twelve (12 months) of the effective date, the URENCO will request and the TPC will impose penalties on people not paying the fees for the service received, or destroying urban infrastructure under its responsibility.

PA, Article II, Section 2.21

6 May 2005 Complied with.

Appendix 6 29

COMPLIANCE WITH LOAN COVENANTS

Loan Covenant Source Required Date of Compliance

Status of Compliance

14. Within twenty-four (24) months of the effective date, the PPCs shall increase, or cause to be increased, the water tariff surcharges for drainage and sewerage to twenty (20) percent of water tariffs.

PA, Article II, Section 2.25

6 May 2006 Partly complied with.

15. Within forty-two (42) months of the effective date, the PPCs shall PA, Article II, Section 2.26

6 November 2007

(i) increase, or cause to be increased, the water tariff surcharges to a sufficient level to recover all O&M costs and depreciation of O&M equipment related to drainage and wastewater systems; and

Partly complied with.

(ii) levy, or cause to be levied, drainage and wastewater charges through a fixed monthly environment fee or a surcharge on the land use and property tax to finance capital investments in drainage and wastewater systems. The PPCs shall ensure that the charges will be collected by the TPCs and will be consistent with the new National Guidelines on Drainage Sanitation and Solid Waste Tariffs to be developed by the MOC.

Partly complied with.

16. Within twenty four (24) months of the effective date, the PPCs shall increase the solid waste tariffs as of 1 July 2003 by at least fifty (50) percent for all user groups.

PA, Article II, Section 2.27

6 May 2006 Complied with.

17. Within forty-two (42) months of the Effective Date, the PPCs shall set the solid waste tariffs at sufficient level to recover all O&M costs and the depreciation of O&M equipment related to solid waste systems.

PA, Article II, Section 2.28

6 November 2007

Partly complied with (complied with by the PPCs of Ha Tinh and Thua Thien Hue, no compliance by the other PPCs).

Social Covenants

18. The PPCs will ensure that land acquisition and resettlement are taken in accordance with all applicable laws and regulations, and ADB's policy on involuntary resettlement, as set out in the agreed resettlement plans and framework. The policies and principles outlined in the resettlement frameworks affected people. In case of discrepancies between the Vietnamese laws, regulations, and procedures and ADB's requirements and Policy on Involuntary Resettlement, ADB policy will apply. The PPC shall prepare quarterly reports to the PCU for inclusion in the borrower's quarterly progress reports.

LA, Schedule 6, para 13 and 14

During implementation (i.e. before loan closing date)

Complied with.

Land acquisition and resettlement were completed in accordance with ADB’s policies, resettlement framework and approved resettlement plans. Resettlement sites were provided to affected

30 Appendix 6

COMPLIANCE WITH LOAN COVENANTS

Loan Covenant Source Required Date of Compliance

Status of Compliance

households with basic infrastructure including internal roads, water supply connections, drainage systems, and electricity.

19. The borrower shall cause the PCU to recruit, for all resettlement activities under the project, an independent external monitoring agency or experts for independent review of resettlement implementation, with approval from ADB. The external monitor shall be engaged prior to commencement of the resettlement process.

LA, Schedule 6, para 15

During implementation and one year after completion

Complied with. The PCU engaged an independent monitoring organization on 14 February 2008.

20. The government will ensure that, under part A of the project, each of the PPCs through their PMUs will update and revise the Gender Strategy and Plan, if necessary, and in accordance with ADB's Gender and Development Policy. Negative gender effects arising from the Project will be avoided and mitigated where possible. The Gender Strategy and Plan will be implemented in a timely manner, and have adequate resources allocated for its implementation.

LA, Schedule 6, para 17

Complied with. A detailed Gender Action Plan was developed and implemented in a timely manner in consultation with all stakeholders.

21. The borrower shall ensure that, within twelve (12) months of the effective date, at least one representative of the WU will be included in each of the PSCs and at least fifty (50) percent of the members of each of the CMCs will consist of women, and the CMCs are headed by representatives of the WUs.

LA, Schedule 6, para 18

6 May 2005 Complied with.

22. Each of the PPCs shall ensure that, within twelve (12) months the URENCO, in coordination with the TPC, will implement a process of consultation and community participation in O&M of urban environmental infrastructure.

PA, Article II, Section 2.29

6 May 2005 Complied with.

Other Covenants

23. Each PPC to set up a PMU under the TPC, except in Thua Thien Hue the PMU is in DOC and Quang Ngai the PMU is in URENCO. Each PMU is to be comprised of staff with expertise in project management, drainage and sanitary engineering, environmental management, accounting, and community education and development.

LA, Schedule 6, para 3 and 4 PA, Article II, Sections 2.01 and 2.11

6 May 2004 Complied with.

Appendix 6 31

COMPLIANCE WITH LOAN COVENANTS

Loan Covenant Source Required Date of Compliance

Status of Compliance

24. The services of consultants shall be utilized in the carrying out of the project.

LA, Article IV, Section 4.03, and Schedule 5, para 1

During implementation

Complied with.

25. Within 3 months of loan effectiveness, the borrower will cause each PPC to establish a CMC to overview part A of the project in each province. The PPC will ensure timely disbursement of funds from the PMU to the town's women's union for activities under part A.

LA, Schedule 6, para 7

6 August 2004 Complied with.

26. The borrower shall ensure that LA, Schedule 6, para 10

6 November 2005

(a) within 18 months of loan effectiveness, the women’s union in each project town will develop, under CMC guidance and in consultation with the PMUs, local authorities, and communities, will develop an HSP to provide grants to low-income and poor households with conditions and eligibility criteria acceptable to ADB; and,

Complied with.

(b) the WUs will apply the conditions and eligibility criteria during project implementation.

Complied with.

27. PPCs shall furnish or shall cause to be furnished to ADB quarterly reports, within 30 days after the end of reporting period on the execution of the project and on the operation and management of the project facilities.

LA, Schedule 6, para 14; and PA, Article II, Section 2.08 (b)

During Implementation

Complied with.

28. All major contract variations require ADB's prior approval.

LA, Schedule 4, para 2

During Implementation

Complied with.

BM&E = Benefit Monitoring and Evaluation, CMC = community management committee, DOC = Department of Construction, DNRE = Department of Natural Resources and Environment, EMP = Environment Management Plan, IEE = initial environmental examination, LA = loan agreement, MOC = Ministry of Construction, O&M = operation and maintenance, PA = project agreement, PCU = Project Coordination Unit, PMU = Project Management Unit, PPC = provincial people’s committee, PSC = project steering committee, RRP = report and recommendation to the president, TPC = town people’s committee, URENCO = urban environmental company, WU = women union,

Source: Asian Development Bank.

32 Appendix 7

SUMMARY OF CONTRACTS

Contract Number

Cost Item

Mode of Procure-ment

Description of Contract

Contractor / Supplier

Contract Value ($‘000)

DH/ICB/1 CW ICB Main drainage and flood protection Vietnam Investment Construction and Trading Corp.

4,241

DH/NCB/1 CW NCB Main drainage construction in wards 3, 5

Company No. 508 1,486

DH/NCB/2 CW NCB Main drainage construction in wards 1-2

PIDI and Song Da II 1,573

DH/NCB/3 CW NCB Construction of flood protection dikes An Phu Construction Company 373

DH/ICB/2 GD ICB Procurement of drainage maintenance vehicles

Hiep Hoa Environment & Equipment 1,035

DH/FA/2 CW FA Improvement of public sanitation Dong Ha URENCO 76

DH/NCB/4 CW NCB Construction of landfill and access road

Constrexim Holding 1,662

DH/FA/3 CW FA Construction of waste collection points

Dong Ha URENCO 20

D3 GD S Procurement of solid waste collection bins

The Hse Engineering and Trade 31

DH/S/8 GD S Procurement of hand carts Hiep Hoa Environment & Equipment 23

E4 GD Procurement of vehicle for use by PMU Quang Tri

Kim Lien Trading Limited Co 44

HT/ICB/1 CW ICB Main drainage works Constrexim No. 6 7,876

HT/S/8 CW S Upgrading existing drain network Nam Truong Construction 50

HT/S/9 CW S Improvement of public toilets Nam Truong Construction 47

HT/ICB/2 CW ICB Regulating basins and Cut River works

Vinawaco and Xuan Ha (JV) 6,854

HT/ICB/3 (Lots 1, 2)

GD ICB Procurement of solid waste collection and drainage maintenance vehicles

Hiep Hoa Environment & Equipment 698

HT/NCB/1 CW NCB Rehabilitation of landfill and access road

Lien Minh Investment and CC412 352

HT/ICB/3 (Lots ICB Procurement of solid waste collection Lighting and Urban Equipment 507

Appendix 7 33

Contract Number

Cost Item

Mode of Procure-ment

Description of Contract

Contractor / Supplier

Contract Value ($‘000)

3, 4) vehicles and equipment

HT/S/6 GD S Procurement of solid waste collection bins

The Hse Engineering and Trade 55

HT/S/7 GD S Procurement of hand carts Hiep Hoa Environment & Equipment 17

E4 GD S Procurement of vehicle Cong Ty Co Phan Co Khi Oto 19/5 44

LC/ICB/1 CW ICB Main drainage and sewerage works VIWASEEN 6,819

LC/ICB/3 (Lot 1)

GD ICB Procurement of drainage maintenance vehicles

Hiep Hoa Environment & Equipment 797

LC/ICB/3 (Lot 2)

GD ICB Procurement of drainage maintenance vehicles

Lighting and Urban Equipment 437

LC/NCB/2 CW NCB WWTP and access road VINACONEX Da Nang 2,447

LC/FA/1 CW FA Construction of septic tanks HEPCO 103

LC/FA/3 CW FA Installation of domestic sewer connections

HEPCO 338

LC/FA/4 CW FA Septic tanks civil works HEPCO 198

LC/NCB/1 CW NCB Construction of landfill and access road

VINACONEX Da Nang 1,743

LC/FA/2 CW FA Construction of public toilets and waste transfer stations

HEPCO 27

LC/ICB/2 (Lot 1)

GD ICB Procurement of compactor trucks Lighting and Urban Equipment 848

LC/ICB/2 (Lot 2)

GD ICB Procurement of solid waste collection bins

Viet Xanh Environment Equipment 157

E4 GD S Procurement of vehicle for use by PMU Thua Thien Hue

Daesco Vehicle Center 44

QN/ICB/1 CW ICB Main drainage works A VIWASEEN 2,905

QN/ICB/2 CW ICB Main drainage works B, including pumping station

VIWASEEN 3,597

QN/FA/1 OT FA Cleaning and rehabilitation of existing drains

Quang Ngai URENCO 252

34 Appendix 7

Contract Number

Cost Item

Mode of Procure-ment

Description of Contract

Contractor / Supplier

Contract Value ($‘000)

QN/NCB/1 CW NCB Regulating basin civil works Urban and Industrial Zone Construction Company

852

QN/ICB/3 (Lots 1, 4)

GD ICB Procurement of solid waste collection and landfill vehicles

Lighting and Urban Equipment 710

QN/FA/2 CW FA Upgrading of public sanitation Quang Ngai URENCO 70

QN/NCB/2 CW NCB Construction of landfill and access road

Constrexim Holding and PIDI 1,766

QN/FA/3 CW FA Construction of temporary waste storage area

Quang Ngai URENCO 16

QN/ICB/3 (Lots 2, 3)

GD ICB Procurement of solid waste collection vehicles

Hiep Hoa Equipment 1,118

QN/NCB/3 GD NCB Procurement of solid waste collection bins

The Hse Engineering and Trade 150

QN/S/6 GD S Procurement of hand carts Hoang Yen Co. Ltd. 14

E4 GD S Procurement of vehicle for use by PMU Quang Ngai

Daesco Vehicle Center 44

TK/ICB/1 CW ICB Main drainage civil works VINACONEX 25 3,731

TK/NCB/1 CW NCB Canal civil works VINACONEX 25 2,615

TK/NCB/2 CW NCB Regulating basin civil works VINACONEX 25 2,645

TK/NCB/3 CW NCB Flood protection dike civil works VINACONEX 25 3,170

TK/FA/1 CW FA Upgrading of public toilets Quang Nam URENCO 82

TK/ICB/2 GD ICB Procurement of landfill vehicles Lighting and Urban Equipment 873

TK/NCB/4 GD NCB Procurement of solid waste collection bins

Hoang Huong 272

TK/S/7 GD S Procurement of hand carts Dacom 11

TK/S/8 GD S Procurement of solid waste collection bins

Hoang Huong 88

E4 GD S Procurement of vehicle for use by PMU Quang Nam

Daesco Vehicle Center 43

TH/ICB/1 CW ICB Main drainage and sewerage works Bach Dang Construction Company 2,973

Appendix 7 35

Contract Number

Cost Item

Mode of Procure-ment

Description of Contract

Contractor / Supplier

Contract Value ($‘000)

TH/NCB/1 CW NCB Drainage civil works A Urban Construction- Hanoi Housing 3,163

TH/NCB/2 CW NCB Drainage civil works B Constrexim No. 1, Thanh Hoa 2,843

TH/NCB/3 CW NCB Drainage civil works C Urban Construction-Hanoi Housing 2,164

TH/FA/1 OT FA Cleaning and rehabilitation of existing drains

Thanh Hoa URENCO 111

TH/ICB/2 GD ICB Drainage maintenance and solid waste collection vehicles

Mico Heavy Equipment and Machinery 1,676

TH/ICB/3 GD ICB Procurement of street maintenance and landfill vehicles

Hapulico 847

TH/FA/3 CW FA Upgrading of existing drains Thanh Hoa URENCO 24

TH/S/6 GD S Procurement of solid waste collection bins

Thanh Hoa Import-Export and Trading Services

93

TH/S/7 GD S Procurement of hand carts Thanh Hoa URENCO 59

E4 GD S Procurement of vehicle for use by PMU Thanh Hoa

Cong Ty Co Phan Co Khi Oto 19/5

44

E1 CS QCBS Consulting services for project implementation assistance

Black & Veatch International Ltd 7,075

E3 CS LCS Resettlement monitoring Vica Consultants Intl Co Ltd 42

E4 CS LCS Auditing of project accounts AAFC 56

E4 GD Administration and office equipment Various 204

E4 GD S Procurement of vehicle for use by PCU

An Dan Company 44

TOTAL 88,443

CS = consulting services, CW = civil works, FA = force account, GD = goods, ICB = international competitive bidding, LCS = least cost selection, NCB = national competitive bidding, QCBS = quality and cost based selection, S = shopping.

Source: ADB Loans Financial Information System.

36 Appendix 8

ECONOMIC AND FINANCIAL REEVALUATION

1. Overview. This appendix describes the methodology that was used to assess the economic and financial feasibility of proposed subprojects at appraisal. It updates the results of the analyses using the data available at loan closing, and discusses the potential causes of differences between the original and updated results. The methodology applied for the reevaluation was based on Asian Development Bank (ADB) guidelines for financial and economic analysis of projects.1 A. Economic Reevaluation

2. Scope of the economic analysis. During project preparation, an economic cost–benefit analysis was carried out for the drainage component of each project town. No economic analysis was prepared for wastewater and public sanitation, or solid waste management projects because it was not possible to quantify all of the benefits, and cost–benefit analysis was therefore not attempted for these components.2 3. Economic analysis of drainage projects (at appraisal). The economic analysis considered twelve types of economic benefits, three of which (avoided work loss, sick days, and hospital days) accounted for over 75% of total economic benefits in all project towns. Economic costs consisted of the investment cost and operation and maintenance (O&M) cost (net of taxes, and adjusted shadow exchange and wage rates). Economic costs and benefits were expressed in constant May 2003 prices and analyzed during the economic lifetime of the proposed drainage projects, which was estimated to be 30 years. A project was deemed economically feasible if its real economic internal rate of return (EIRR) exceeded a threshold of 12%. At appraisal, this was the case for all six project towns, with EIRRs ranging from 16.4% to 21.1% (Table A11.1). The project completion review differed from the appraisal analysis by excluding the land registration fees and annual land use fees from the benefit streams, because these items are transfers rather than genuine economic benefits. After correcting for this, the EIRRs remain above 12% in all six towns.

Table A8.1: Economic Internal Rates of Return of Drainage Projects at Appraisal and Completion

Subproject

Appraisal (Sept. 2003) Completion (April 2011)

Original Method Adjusted Method a

Adjusted Method

a

Level of Efficiency b

Dong Ha 17.5 16.6 13.8 Efficient

Ha Tinh 19.0 17.5 8.1 Less efficient

Lang Co 17.4 17.4 11.5 Less efficient

Quang Ngai 16.4 15.8 8.0 Less efficient

Tam Ky 18.2 17.5 4.7 Inefficient

Thanh Hoa 21.1 21.1 9.9 Less efficient a Excluding benefits from land registration fees and annual land use fees.

b An economic internal rate of return (EIRR) >12% is rated efficient; an EIRR < 6% is inefficient; and an EIRR > 6%

and < 12% is less efficient (based on ADB Independent Evaluation Department classifications). Sources: ADB. 2009. Report and Recommendation of the President: Proposed Loan to the Socialist Republic of Viet Nam for the Thanh Hoa City Comprehensive Socioeconomic Development Project. Manila (appraisal, original results), and the project completion review mission (other results)

1 ADB. 2005. Financial Management and Analysis of Projects. Manila; ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila; ADB. 1994. Framework for the Economic and Financial Appraisal of Urban Development Sector Projects. Manila; and ADB. 2002. Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB. Manila.

2 GHD (2003). Central Region Urban Environmental Improvement TA 3809 – Feasibility Study Report. Hanoi (p6-1).

Appendix 8 37

4. Economic reevaluation of drainage projects (at completion). In November 2006, ADB approved a major reduction in the scope of works. This reduction was needed because unit costs were substantially higher than expected. The original benefit streams (corrected for registration and land use fees) were adjusted in proportion to the assumed reduction in the number of beneficiaries according to a Viet Nam Resident Mission memo dated 20 November 2006. The original economic costs were replaced by the actual costs at loan completion but converted into constant 2006 prices. O&M costs were assumed to remain at 5% of the investment cost. Because the number of beneficiaries of drainage projects decreased substantially, whereas economic costs increased (or decreased by a small margin), the EIRRs were lower at loan completion than at loan appraisal in all six towns. Only in Dong Ha did the EIRR of the drainage project remain above the threshold value of 12%. In four other towns, the EIRRs of the drainage projects ranged from 6% to 12%, and would therefore be classified by ADB’s Independent Evaluation Department as less efficient. The EIRR of the drainage project in Tam Ky was estimated at 4.7%, and therefore deemed inefficient. B. Financial Reevaluation 5. Scope of the financial analysis. During project preparation, a financial cost–benefit analysis was carried out for the solid waste management component of each project town. Projected solid waste tariffs at appraisal were compared with actual tariffs at loan completion to obtain an indication of the relevance of the financial projections. For the drainage and wastewater components, the preparation consultant recommended wastewater surcharges only. 6. Comparison of solid waste collection tariffs at appraisal and loan completion. The project preparation consultant estimated tariffs for solid waste collection that an urban environmental company (URENCO) would need to collect to cover the full O&M cost plus the capital cost of O&M equipment financed from the proceeds of the loan. Table A7.2 shows projected tariffs for the collection from household waste in 2007 and 2012 (domestic waste collection fees remain the most important source of fee revenue for all six URENCOs). The projected tariffs for 2012 range from D9,400/month in Lang Co to D17,100/month in Ha Tinh, and are comparable to tariffs estimated by the project implementation assistance consultant in 2010 . In April 2011, the actual tariff was at least 80% of the projected tariff for 2012 in five of six towns (the cost-recovery rate of Quang Ngai was about 50%). This indicates that most towns cover the full O&M cost of solid waste management from collection fees at the loan closing date, plus a substantial portion of the capital cost of the O&M equipment supplied by the project.

Table A8.2: Domestic Solid Waste Collection Fees at Appraisal and Completion (D ‘000 per month)

Subproject Appraisal (Sep 2003) Completion (Apr 2011)

2007 2012 Actual As % of 2012

Dong Ha 13.8 16.9 14.0 83

Ha Tinh 13.9 17.1 15.0 88

Lang Co 7.7 9.4 12.0 128

Quang Ngai 13.3 16.2 8.0 49

Tam Ky 11.6 14.2 12.0 85

Thanh Hoa 13.3 16.3 15.0 92

Sources: ADB. 2009. Report and Recommendation of the President: Proposed Loan to the Socialist Republic of Viet Nam for the Thanh Hoa City Comprehensive Socioeconomic Development Project. Manila (appraisal), project completion review mission (completion)

38 Appendix 8

7. Comparison of wastewater surcharges at appraisal and completion. The project preparation consultant estimated the minimum required surcharge to the water bills that provincial people’s committees (PPCs) would need to impose to cover the full O&M cost plus the capital cost of project-financed O&M equipment for drainage and wastewater management. Table A11.3 shows projected surcharges for 2007 and 2012. For 2012, these range from about D900 per cubic meter in Thanh Hoa to over D1,600 per cubic meter in Dong Ha and Ha Tinh. These estimates are, again, broadly comparable with minimum required surcharges estimated by the project implementation consultant in 2010. In April 2011, the actual surcharge was less than 35% of the projected tariff for 2012 in all six towns (for this component, the lowest cost-recovery rate was in Quang Ngai).

Table A8.3: Wastewater Surcharges at Appraisal and Completion (D ‘000/m3)

Subproject Appraisal (Sept. 2003) Completion (April 2011)

2007 2012 Actuala As % of 2012

Dong Ha 1,321 1,615 200 12

Ha Tinh 1,315 1,607 553 34

Lang Co 1,291 1,578 413 26

Quang Ngai 1,236 1,511 125 8

Tam Ky 1,278 1,562 422 27

Thanh Hoa 772 883 199 23 m

3 = cubic meter

a Average surcharge based on standardized composition of water revenue (75% domestic, 5% institutional, 10% industrial and 10% commercial)

Sources: ADB. 2009. Report and Recommendation of the President: Proposed Loan to the Socialist Republic of Viet Nam for the Thanh Hoa City Comprehensive Socioeconomic Development Project. Manila (appraisal), project completion review mission (completion)

Appendix 9 39

QUANTITATIVE ASSESSMENT OF PERFORMANCE

Table A9.1: Results of Quantitative Performance Assessment

Criteria Assessment Rating

(0–3)

Weight

(%) Weighted Rating

Relevancea Relevant 2 20 0.40

Effectivenessb Effective 2 30 0.60

Efficiencyc Less Efficient 1 30 0.30

Sustainabilityd Likely 2 20 0.40

Overall Rating Successful 1.70 a Project impact, outcome and outputs were relevant to the strategic objectives of the Government of Viet Nam and the Asian Development Bank

b Project achieved its outcome

c Project achieved outputs in an less efficient manner

d Project benefits and development impacts are sustainable

Source: Asian Development Bank

Table A9.2: Rating Scale Used for Quantitative Performance Assessment

Ratinga Relevance Effectiveness Efficiency Sustainability

3 Highly relevant Highly effective Highly efficient Most likely

2 Relevant Effective Efficient Likely

1 Partly relevant Less effective Less efficient Less likely

0 Irrelevant Ineffective Inefficient Unlikely a Rating scale: >2.7: highly successful; ≥1.6 and ≤ 2.7: successful; ≥.8 and <1.6: partly successful; < 0.8:

unsuccessful Source: Asian Development Bank