People's Republicof Bangladesh Post-FloodRecovery Assistance Program ProposedAmendments to Five Development Credit Agreements A. Background 1. Overview of the Floods. Bangladesh, one of the world's most vulnerable countries to natural disasters, experienced devastating floods between July and September 2004 that caused almost 800 deaths and significant damage to housing, vital infrastructure, and the agriculture sector. The main wave of flooding started in early July, when heavy monsoon rains swelled the waters of the Meghna River. By the time the waters began to recede inearly August, approximately 38 percent of Bangladesh, includingDhaka, had been inundated. In September, a localized monsoon depression brought additional flooding in some of the already-affected areas and new flooding in the southwest and central parts of the country. 2. Government Response. The Government of Bangladesh (GOB) did a commendable job in responding to the flood emergency and assisting the affected population. It rapidly organized emergency rescue and relief operations, opened emergency shelters and deployed medical teams. The Government also distributed seeds, provided cash grants and roofing material, and accelerated the Vulnerable Group Feeding (VGF) program. To help restore the livelihood of affected families, the Government quickly started a number of programs, including food-for-work and cash-for-work schemes, 3. Community, NGO and International Response. Affected communities rapidly started to repair and rebuild their housing and to find ways to restore their livelihoods. Non-governmental organizations (NGOs) provided food, health supplies and services, water, and other basic necessities to thousands of families throughout the country. BRAC, one of the largest national NGOs, has created two loan programs, and the Bangladesh Red Crescent Society helped reconstruct 1,000 homes and provided agricultural inputs, such as seeds, to 30,000 rural families. 4. UN agencies effectively supported the Government's relief efforts. In addition, the UN Disaster Management Team (UNDMT) and the UN Disaster Assessment and Coordination ( W A C ) team, which i s directly under the Office for the Coordination of Humanitarian Affairs (OCHA), were timely deployed. The UN also launched a Flash Appeal, raising US$76 million for immediate rehabilitation needs.' The Local Consultative Group (LCG) in Bangladesh established a Disaster and Emergency Response (DER) sub-group, which helped coordinate the emergency response of donors and international agencies and conducted a rapid damage and needs assessment. To assist in the recovery effort, the UN Development Program (UNDP) deployed a team from its Bureau of Crisis Prevention and Recovery (BCPR). Several bilateral donors, including U SAID, AUSAID, the Government of Norway, DFID, CIDA, SIDA, JICA, and the EUcontributed resources for post-flood relief programs, which were mostly channeled through NGOs. 5. Bank Response. Responding to the Government's request for assistance, the World Bank established a cross-sectoral Flood Response Team, which jointly with the Asian Development Bank (ADB), carried out in September 2004 an assessment of damage and needs related to the floods, and helped formulate a recovery program. Each institution also discussed with the Government the ways ' Thisamount includes contributions from governments, NGOs, international agencies and private sector. According to OCHA, contributions to the 2004 floods inBangladeshtotaledUS$101million, including the FlashAppeal. 2 inwhich assistance would be phased and financed. The assessment, which was carried out in close collaboration with GOB, included field visits to a sample o f affected districts and consultation with NGOs, donors, academics, and the private sector. The joint ADB-World Bank Report (circulated separately) was shared in draft with the Government in mid-November 2004, and finalized in January 2005 after receiving Government comments. This report includes detailed social, economic, environmental and sector-specific assessments. 6. The overall post-flood Bank assistance has been agreed with GOB on the basis o f the damage and needs assessment. The initial program, detailed below, will be supported through the reallocation o f existing credits funds, following OP 8.50 (Emergency Recovery Assistance). Bank assistance i s underpinned by a long-term and comprehensive hazard risk management approach, buildingupon and directly supporting (a) national capacity for immediate post-disaster response and recovery, and long-term multi-hazard risk management; (b) donor initiatives developed over the years to complement government and civil society's efforts; and (c) Bank experience in supporting post-disaster recovery and hazardmanagement inBangladesh and inother counties. Social, Environmental,andEconomicImpact of the Floods 7. Preliminary estimates indicate that the total impact o f the floods, including asset and output losses, was about US$2.3 billion, constituting 4 percent o f GDP. Of this total, about US$1.35 billion correspond to lost assets and US$930 million to lost outputs. The country suffered the most damage inhousing, transport infrastructure, schools and education centers, individual and community water and sanitation facilities, as well as crops, fisheries, and livestock. Public sector accounts for 43 percent o f asset losses. Most o f the output losses were experienced by the private sector, due primarily to the impact o f the flood on the agriculture sector. 8. Social Impact.Nationwide, 36 millionpeople (about 25 percent o f the population) across 39 districts were affected by the floods. Households living in areas o f northeast Bangladesh near major rivers experienced the longest and generally the most severe floods. Women and children were particularly vulnerable during the floods, facing, among others, challenges to ensure their physical security in urban shelters and adequate nutrition. Almost 900,000 families were made homeless and over 3 million more suffered damages to their houses. Two million acres o f agricultural land were affected. In relative terms, the overall incidence o f diarrheal disease following the flood shows a declining trend (compared to 1998). However, urban slum dwellers living in poorly-drained areas suffered from long periods o f standing water that increased the risk o f diarrheal disease, especially among children. Flood waters also reduced income and employment opportunities o f many households, who, to a great extent, resorted to informal loans at high interest rates to cope with the emergency. More specifically, about 2 million workers, including the rural poor, farmers, day laborers, rickshaw pullers, small traders, and fishermen, lost work for an average o f 40 days. Factory workers and day laborers suffered income losses due to disruption o f industrial activities in many districts. 9. EnvironmentalImpact.The floods exacerbated, and often triggered riverbank erosion, soil erosion, water logging, and water contamination that increased health risks. Riverbank erosion and soil erosion were exacerbated, especially along major rivers. Water logging, which was often contaminated, contributed to health risks, particularly inthe urbanized flood-prone areas. 10. Economic Impact. Bangladesh's economy has become more resilient to the effects o f floods, as a result inpart o f consistently sound fiscal and macroeconomic performance. Inaddition to the flood impact, however, the country faces in FY05 the initial effects of the phasing out of the Multi-Fiber Arrangement (MFA). Under these circumstances, Bangladesh is not expected to 3 increase, or even maintain the GDP growth rate o f 5.5 percent achieved in FY04. On the positive side, the GDP growth rate will likely fall a few points only, to about 5.2 percent. Importantly, delayed Aman rice planting and flood-induced setbacks in other food crops have resulted in higher inflation. The balance o f payments position may marginally deteriorate, but Bangladesh will be able to absorb the related pressure on foreign exchange reserves due to a relatively comfortable reserve position and its floating exchange rate regime. 11. On the other hand, the budget deficit in FY05 is likely to expand significantly. The relief effort, expansion infood-assisted safety nets, repairing damage to public property, and the impact o f floods on economic growth are likely to put pressure on both public expenditure and tax revenues. The overall budget deficit can be expected to rise from 3.2 percent o f GDP inFY04 to 4.7 percent in FY05, incontrast to the pre-flood target o f 4.3 percent. Recovery and Financing Needs 12. The projected financing needs o fthe public sector relatedto rehabilitationandreconstruction o f physical infrastructure range between US$670 and US$715 million, depending on the level o f improved standards that are applied during implementation. Financial resources, which are more difficult to estimate, are also needed to help the poor and vulnerable recover from the floods, and ensure speedy recovery o f the agriculture sector. 13. Itis estimated that GOB hasreallocatedTk 24 billionor US$410 million(about 7 percent of total) from the revenue budget to ensure livelihood restoration, agriculture rehabilitation, and rapid repair o f critical infrastructure and facilities. Some o f the activities undertaken include implementation o f a comprehensive agriculture rehabilitation program to assist farmers with recovery o f losses through provision o f free seed, seedlings and fertilizer, as well as provision o f cash grants and microcredit to affected families. It i s thus critical to ensure that commodities and goods requiredfor quick recovery are available inthe country. 14. Importantly, the resources redirected by GOB from the revenue budget to implement unexpected immediate rehabilitation needs have reduced the funds allocated for operations and maintenance (O&M) o f infrastructure and other assets. Specifically, nine line ministries redirected Tk12.45 billion (about US$210 million) from their FY05 allocations for regular O&M to carry out repair and immediate rehabilitation o f the damaged facilities and infrastructure. It i s necessary to helpclose this gap within this fiscal year, as expeditiously as possible, inorder to ensure sustainable recovery, which requires ensuring continued maintenance o f existing assets in addition to reconstruction o f critical infrastructure and facilities to improvedhazard-resistant standards. B. The ProposedPost-FloodRecovery Approach and Program 15. The proposed recovery program takes into consideration short-term rehabilitation, medium- term reconstruction and recovery, and long-term, multi-hazard risk management needs o f the country. The initial program (up to 24 months) will be financed through the reallocation o f US$200 million from the proceeds o f five Credits, as proposed in the Memorandum o f the President. These include: Post-Literacy and Continuing Education Project (Cr. 3467-BD); Female Secondary School Assistance Project I1(Cr. 3614-BD); Private Sector Infrastructure Development Project (Cr. 2995- BD); Municipal Services Project (Cr. 3177-BD); and Fourth Fisheries Project (Cr. 3276-BD). The Credits were selected because they faced imminent cancellations and/or had savings (see Annex 5 for a brief description o fthese credits). About 77 percent o f total reallocation amount will come from PSIDP. The respective Development Credit Agreements (DCAs) for these Credits will be amended 4 to add a component, or components inthe case o f PSIDP, covering activities to be carried out under the proposedprogram and to allow Credit proceeds to be used to fundthese activities. 16. As part of its overall assistance, the Bank also plans to support medium-term reconstruction and long-term hazard risk management. In relation to floods, the Bank is currently completing a Country Water Resources Assistance Strategy Paper and plans to finance the Water Management Improvement Project (WMIP) this fiscal year. The Strategy Paper took into account the National Water Management Plan (NWMP), which was prepared with Bank assistance and adopted by GOB in 2004. Moreover, in consultation with stakeholders, the Strategy Paper has helped identify priority issues related to water and flood management and potential areas for Bank support in the medium term. IDA lending under WMP will total US$101 million after a new component (US$20 million) for medium-term reconstruction of flood management infrastructure was added in response to the 2004 floods. WMIP i s designed to improve water resources management, reduce loss of life and property due to floods, and improve agricultural production. In addition to physical investments, WMIP will promote participatory water management through water management organizations (WMOs), improve operations and maintenance (O&M) to ensure sustainable flood management, and strengthen the two key water sector institutions, the Bangladesh Water Development Board(BWDB) and the Water Resources Planning Organization (WARPO). 17. Moreover, the Bank i s considering financing a Disaster Management Project (indicative lending o f about US$30 million), possibly inearly FY07,buildingupon the current efforts supported by UNDP and DFID, as well as other development partners. This project could help, inter alia, integrate hazard risk reduction into development planning; update the risk and vulnerability profile o f Bangladesh; enhance the reliability o f early warnings and weather forecasts; upgrade the emergency communication system; improve the enforcement process o f buildingcodes and land use planning and activities that exacerbate flooding; and explore the use o f financial risk management measures to mitigate financial and economic impacts of catastrophic risks. At the same time, the Bank will continue to explore opportunities to help address regional water issues, particularly sharing o f information on rainfall and river flows. 18. As agreed, the Bank's program is complemented by assistance from ADB, which has provided US$180 million, including U S $ l 3 million grant from the Government of Netherlands, through an emergency assistance loan covering rural infrastructure, roads, railways, water management infrastructure, and municipal infrastructure. In the medium term, ADB will likely finance a second phase o f the Secondary Towns Integrated Flood Protection Project (US$80 million). 19. Rationalefor Bank Intervention. Inline with the Country Assistance Strategy (CAS) and CAS Progress Report, as well as Bangladesh's interim Poverty Reduction Strategy Paper (I-PRSP), the proposed program will finance activities consistent with long-term disaster risk management, which i s critical to sustainable economic growth and poverty reduction. The initial program will directly support flood-resistant infrastructure rehabilitation, livelihood revival and vulnerability reduction. 20. Lessons Learned. The Bank has accumulated significant experience in supporting post- disaster recovery. This experience indicates, at the general level, that sustainable recovery not only requires timely implementation o f rehabilitation and reconstruction activities, but also preparation o f a program that places these activities properly within the longer-term goal o f reducing overall disaster vulnerability, and approaches them as development activities. Moreover, as cross-country experience also shows, achieving this objective requires government commitment and community and private sector involvement. In the medium-term, in a vulnerable country such as Bangladesh, 5 multi-hazard risk mitigation should be mainstreamed through the CAS and sector strategies, and through regular operations. 21. The successof emergency assistance depends on how fast sustainable results are obtained on the ground. Effective implementation o fpost-disaster assistance activities i s therefore critical. Inthis respect, the Bank has learnedthe following lessons: Emergency recovery operations should have a simple design, takmg into consideration local implementation capacity and the fact that this capacity may be hindered in the aftermath o f a disaster. Effective and simple implementation arrangements should be put inplace. Whenever possible, experienced and properly staffed implementing agencies should be relieduponto ensure smooth progress. These agencies should be empowered to take decisions in a timely manner, and to be able to access funds with as minimum bureaucratic requirements as possible while maintaining acceptable fiduciary controls, Complex multi-sectoral operations requiring major central oversight and protracted decision-making processes shouldbe avoided. Short-term rehabilitation activities should be implemented separately from medium to long-term hazard reduction activities and institutional capacity building, since these require additional preparation - often with inputs from international experts and technical studies - and longer implementation period, and are therefore better addressed through regular operations and AAA. Close management attention and adequate resources for supervision should be provided. Operation and maintenance (O&M) should be maintained at satisfactory levels during rehabilitation and reconstruction, and adequate O&M funding should be ensured afterwards. 22. ProgramObjective.The program objective is to support the speedy recovery of the country and o f the affected population, particularly the poor and vulnerable, while emphasizing disaster vulnerability reduction over the long-term. 23. ProgramDescription. Total program cost is estimated at US$233.09 million, of which the Bank will finance US$200 million or about 86 percent. Program components are summarized below (see Table A, and Annex 1and Annex 3 for further details). Outcomes and outputs for the Program are described inAnnex 2. (a) Livelihood Restoration(US%lO million) consisting o f a micro-credit program to deliver about 400,000 loans to disaster-affected households through the Palli Karma Sahayak Foundation (PKSF), the apex financing organization o f the microfinance sector, and its Partner Organizations (POs). The POs constitute a wide network of over 200 NGOs providing microfinance services across Bangladesh. Credit will be providedinconcessionary terms, which the recipient can use for post-disaster rehabilitation needs, including consumption, related to the 2004 floods, the monga lean season' and other major disasters, should they occur. The program will be'appropriately ring-fenced and targeted to avoid any deleterious impact on the sustainability o f the microfinance system inBangladesh. * The mongu ~~ lean season generally occurs between October and November in the Northwest of the country. This is a period preceding the December rice harvest when j o b opportunities are scarce and food stocks are low. 6 (b) Infrastructure Rehabilitation(US$178.09 million) including urban and rural roads and bridges, primary and secondary schools - emphasizing dual use as emergency shelters, municipal infrastructure, flood proofing o f all rehabilitation (especially water and sanitation facilities), and fish farms. In addition to ensuring reconstruction o f vital assets, the program will promote the use o fhazard-resistant standards and adequate O&M arrangements. (c) Quick Disbursing Support (US45 million) to help finance critically needed imports to ensure successful rehabilitation of affected population, infrastructure reconstruction, and economic recovery. The component will cover eligible imports based on a positive list for which payments were made after July 1,2004, the date o f the onset of severe f l ~ o d i n g . ~ TableA -ProgramCost andIDA Financingby Component 1Component Program Bank Source ofE inkFinancinn I cost Financing PSIDP Other Credits , n Equivalent ' I I (a) LivelihoodRestoration 10.0 10.0 10.0 j (b) InfrastructureRehabilitation 178.09 145.0 99.0 j j (c) Quick DisbursingSupport 45.00 45.0 45.0 I TotalAssistance inUS$ M 233.09 200.0 154.0 46.0 C. ProgramImplementation 24. ProgramOrganization and Management. To ensure rapid and effective implementation, the initial program will support sectors where the Bank is currently financing regular investments, and each concerned line ministryand department will be accountable for its respective infrastructure rehabilitation sub-component. Actual implementation will thus be assigned to existing project management units (PMUs) or project coordination units (PCUs) under these ministries, with the exception o f secondary school rehabilitation that will be implemented by the Education Engineering Department (EED) in the Ministry o f Education (MOE). EED has been implementing projects financed by other donors, including ADB, and will be supported in this case by a qualified consulting firm and by the existing financial management unit o f the IDA-financed FSSAP 11. Importantly, a substantial part o f the program will be implemented by the Local Government Engineering Department (LGED), which i s considered an "island o f excellence" in Bangladesh. As noted above, the livelihoodrestorationprogram will be implemented by PKSF, with which the Bank has a long and successful relationship, and PKSF's Partner organization^.^ The quick disbursing component will be implemented by the Bangladesh Bank on a reimbursementbasis against eligible imports. Bangladesh Bank has the required experience to ensure speedy disbursement and compliance with fiduciary requirements. 25. Implementation Plan. Implementation plans have been agreed for all relevant sub- components. These plans include preliminary details o f works and costs, project implementation The Bank successfully providedthis type o f support after the 1998 floods. IDA has financedthree projectsrelatedto microfinanceinBangladesh, all ofwhich havebeenimplementedby PKSF 7 arrangements, as well as financial management arrangements and procurement plans. The implementationplans may be reviewed and updatedperiodically, inagreement with the Bank. ProcurementArrangements 26. All procurement o fgoods, works and consultants shall be undertaken inaccordance with the Procurement Guidelines of the World Bank, including: "Procurement under IBRD Loans and IDA Credits" and "Selection and Employment o f Consultants by World Bank Borrowers" as stipulated in the Development Credit Agreements (DCAs) for the respective projects. In the case of imported goods and commodities under the quick disbursing component, procurement would be limited to eligible public and private sector imports included in the positive list and from countries that are eligible under the Bank's Procurement Guidelines. 27. The major portion of the infrastructure rehabilitation comprises works, including supply of furniture, and some consulting services to support implementation. Most works contracts are small in value and scattered throughout the country, which would be procured using national competitive bidding (NCB) procedures. Due to the emergency nature of the reconstruction program and the related need to minimize the time required to engage consultants, consulting services contracts will be procured using single-source selection method. Contracts may be awarded to consultants already engaged by the implementing agencies for their ongoing works. The terms o f reference and draft contracts for consulting services will be subject to prior review by the Bank. Irrespective o f value, the first two contracts for works, including fmiture, under EED will be subject to prior review by the Bank. Ingeneral, however, contracts below the threshold o f US$200,000 will be subject to post- review. Furtherdetails on procurement arrangements are provided inAnnex 4. FinancialManagementArrangements 28. A financial management assessment was carried out o fthe PMUs that will beresponsible for the Post-Flood Recovery Assistance Program, under the projects that are currently under implementation. The capacities o f the PMUs are found adequate for carrying out the additional work represented by the Program's activities. The PMUs will operate separate special accounts under PSIDP and other Credits, as detailed below, and maintain separate books and records, prepare financial statements, periodic Financial Monitoring Reports (FMRs) for the Program's components and have their financial statements audited. Simplified FMRs will be submitted 45 days after each quarter, showing receipts, uses and balances o f funds by IDA and GOB sources. Uses o f funds will bereportedby disbursement sub-categories. DisbursementArrangements 29, To implement the livelihood restoration component, the Bank funds o f US$10 million will be utilized by PKSF on a reimbursement basis over a period o f 24 months from the date o f effectiveness, under a Subsidiary Loan Agreement with terms and conditions satisfactory to IDA. Each o f the participating POs will receive funds from PKSF prior to the annual Monga lean season and/or duringnatural disasters. (See Annex 3 for details). 30. To ensure separate reporting for the Program's infrastructure rehabilitation component, while keeping reporting simple, the GOB, under all Credits except MSP (Cr. 3177-BD), will follow traditional disbursements and claim reimbursements against eligible expenditure. Accordingly, the standard disbursement percentages (SDPs) will generally apply: civil works, including furniture, 80 percent; consultant services, 100 percent (net o f taxes); goods, 100 percent o f foreign expenditures for equipment and materials; 100 percent o f local expenditures (ex-factory) for equipment and 8 materials; 80 percent o f local expenditures for other items procured locally. Disbursements will be made against Statement of Expenditure (SOE) for all contracts below the prior review limits o f the individual credits, as revised for the Program, including those contracts for employment o f consultant costing less than $100,000 for firms and $50,000 for individuals. See Annex 4 for specific disbursement arrangements under each sub-component. 31. For quick disbursingsupport, the Ministry o f Finance (MOF) will authorize the Bangladesh Bank, which will use import documents of eligible items from both the private and public sectors to request reimbursements. The World Bank will finance 100 percent o f the foreign exchange costs o f eligible imports as per the positive list detailed inTable 2 of Annex 1. Reimbursement applications will be submitted by the Bangladesh Bank against full documents for individual imports costing US$3.0 million or above. Below this limit, all reimbursement claims should be based on Statement o f Expenditures (SOEs). 32. Special Accounts. Implementation arrangements require that several agencies have a separate special account under PSIDP, while a few others will draw funds from two different credits to implement their respective sub-component under the program. Specifically, five new special accounts will be opened under PSIDP for the PMUs implementing rehabilitation o f primary roads, secondary roads, municipal infrastructure, primary schools and secondary schools. To ensure quick utilization of post-flood assistance resources, the allocation inthe special account under FSSAP will be increased. Moreover, a new Special Account will be opened under PLCE Credit with initial deposit o f US$1.4 million to utilize US$14millionreallocated for primary school rehabilitation. This special account will be operated by LGED, which will implement the program. (see Table 3 - Provisions for Special Accounts, inAnnex 4). 33. No special accounts will be required for the recovery loan program and the quick disbursing component. Inthe first case, PKSF will disburse funds to POs from its own resources and then seek reimbursement from IDA. No special account will be required for BangladeshBank since IDA funds will be disbursed on a reimbursement basis. Bangladesh Bank will forward the specimen signatures o f the authorizedpersons to IDA through ERD (MOF). 34. Audits. The program to be implemented by PKSFwill be audited by a private auditor to be appointed by PKSF at its cost. A Project Agreement will reflect this arrangement. The audit o f the quick disbursingsupport component will be carried out by the existingprivate auditor o f Bangladesh Bank at its own cost. Under the PSIDP credit, the existing audit covenant requires separate private auditors' reports for two implementing agencies, namely Infrastructure Development Company Limited (IDCOL) and Infrastructure Investment Facilitation Center (IIFC). As such, the Credit agreement will be amended to include the requirement of an additional consolidated audit report to be submitted to IDA within six months of the end of the fiscal year for the post-flood rehabilitation activities. This consolidated report will include the audit findings of the five different public sector units implementing the infrastructure rehabilitation components under PSIDP. The Comptroller and Auditor General would be accepted by IDA as Independent Auditor. All the agencies operating the Special Accounts related to infrastructure rehabilitation will be required to maintain separate books for their respective expenditures and prepare quarterly Financial Monitoring Reports (FMRs) and annual financial statements. 35. Annual audit on the other Credits from which funds have beenreallocatedwill be carried out under the existing audit covenant o f each credit. The audit report for each o f these credits will cover all the activities o f the project, with special exposure on post-flood rehabilitation component. Inthe case o f primary school rehabilitation financed under PLCE, however, the new Special Account operated by LGED will require a separate financial statement, while the audit report will be a 9 consolidated one covering the two implementing agencies under the project. Understandingwith the auditors will be reached at the entry meetings prior to commencement o f the respective audits to ensure special exposure onthe post-flood rehabilitation component. Environmentaland Social Safeguards Policies 36. In view o f the emergency nature of the Program (processed under OP 8.50), and the proposed areas for Bank financing, a full-fledged Environmental Assessment was not carried out. This is in accordance with the provisions o f OP 4.01 (Environmental Assessment). Nevertheless, a rapid environmental assessment was undertaken as part o f the damage and needs assessment exercise. 37. The potential environmental impacts of the program are low since it only supports rehabilitation and reconstruction o f damaged infrastructure and school facilities, and no new, major construction i s anticipated. The Bank i s financing projects in the sectors supported under the program - primary and secondary road networks, municipal infrastructure, and primary and secondary schools - which have adequate environmental and social assessments. Moreover, the program will be implemented through the PMUs implementing these projects, and thus have the necessary experience inmeeting the Bank's social and environmental safeguards requirements. 38. Reconstruction work under the Program i s not expected to have adverse social impacts. Land acquisition and resettlement are not foreseen during this initial stage. The rehabilitation o f infrastructure will be conducted on the basis o f the environmental and resettlement framework already agreed within the projects; therefore, the same principles, mitigation measures and compensation package would apply. These principles would also apply if land acquisition becomes unavoidable. 39. Ensuringcompliance will also befacilitated bythe fact that the Bankteams that are currently supervising the regular projects under each of the sectors supported by the Post-Flood Recovery Assistance Program would also be supervising the components or sub-components under the Program. D. ProgramBenefits andRisks 40. Benefits. The Program's benefits would come through the restoration of basic needs, rehabilitation o f infrastructure, and recovery o f livelihoods. The Program will build on the relief and recovery measures already initiated by the Government, and will complement assistance providedby the Asian Development Bank, various agencies of the United Nations, non-governmental organizations, and the private sector. The credit line will help families avoid costly informal borrowings, and will strengthen their coping ability after disasters. The infrastructure rehabilitation and housing construction program will generate employment, while the rehabilitation o f schools with emphasis on dual use as adequate emergency shelters will help improve disaster preparedness and response. The dissemination o f infomation and adoption of flood-resistant construction will reduce future damage to assets as well as productionlosses. 41. Risks. Although the program is supporting sectors where experienced PMUs exist and smooth implementation i s expected, slow disbursement pace o f investment credits, reflecting weak implementation capacity, i s an ongoing concern in Bangladesh. In this respect, program implementation arrangements have been kept as simple as possible, maintaining decision-making and accountability at the level o f the line ministry and implementing agency or department. 10 Moreover, post-flood rehabilitation activities will be closely monitored, relying heavily on country office staff. 42. Governance issues, especially potential opportunities for misappropriation o f resources or politicization o f recovery assistance, are of concern during the implementation o f emergency recovery programs. To mitigate this risk, close follow up i s planned, emphasizing due diligence in procurement and independent audits, coupled with periodic reviews o f Program accounts, statements o f expenditure, and close monitoring o f the targeting of investments. 43. Bangladesh was fortunate to escape the brunt o f the recent Asia Tsunami disaster, but it i s a vulnerable country and another disaster could occur at any time. This would not only derail the reconstruction program, but would also set back the recovery of the poor and the country at large. It i s thus critical to ensure that program implementation advances as fast as possible, while making sure that mitigationmeasures are taken into account and fiduciary responsibilities are met. 11 Annex 1 ProgramDescription Table 1-ProgramCost andIDA Financingby Component Activity I Sector Program Source of IDAFinancing Cost I Fi:Eing I PSIDP Other Credit Name Credits 3% Million luivalent 1.LivelihoodRestoration RecoveryLoanProgram 10.00 10.0 10.0 -- 2. Infrastructure Rehabilitation Primary RoadNetwork 40.00 32.0 32.0 -- Secondary RoadNetwork 31.25 25.0 25.0 -- MunicipalInfrastructure 30.33 26.0 11.0 15.0 MunicipalServices Fisheries 2.35 2.0 0 2.0 FourthFisheries Primary Schools 49.38 40.0 26.0 14.0 Post-Lit& Cont. Educ Secondary Schools 24.78 20.0 5.0 15.0 Female Sec. School Assistance I1 ................................................................................................................................................ .............................................. ........................................ ........................................ ...................................................................................................... Sub-Total inUS$m (1+2) 188.09 .............................................. 155.0 109.0 46.0 3. Quick Disbursing Support 45.00 45.0 45.0 ................................................................................................................................................. ............................................. .............................................. Sub-Total inUS%mf31 __ .............................................. 45.00 .............................................. 45.0 ...................................... 45.0 ........................................ Total inUS$m(1+2+3) 233.09 200.0 154.0 46.0 Overview As shown in Table 1, rehabilitation of primary and secondary road rehabilitation will be financed exclusively with PSIDP funds. For financing o f rehabilitation activities related to municipal infiastructure and primary and secondary schools, funds will come from two sources: an existing project inthe respective sector and PSIDP. Funds for the recovery loan program will also come from PSIDP, as i s the case with the provision o f quick disbursing support. Outcomes and outputs for the Program are summarized inAnnex 2. Component 1-LivelihoodRestoration(TotalCost: US$lO.O million) PKSF will administer the micro-credit program through the Disaster Management Fund(DMF), and its Partner Organizations (POs) will provide the loans to eligible families. Specifically, the program consists o f a credit line o f US$lO millionto provide about 400,000 loans to poor households affected by natural disasters and/or by the annual lean Mongu season. Average loans of about Tk 1,500 will be provided to eligible beneficiaries for rehabilitation needs. Recovered funds will be available for 12 lending in successive years. This component will be financed with funds from PSIDP. (See further details inAnnex 3). Component 2 -InfrastructureRehabilitation(TotalCost:US$178.09 million) PrimaryRoadNetwork(US$40 million). The existing PMU o f Third Road Rehabilitation and Maintenance Project (RRMP) will implement this sub-component, which includes rehabilitation and reconstruction o f 575 km o f roads and 300 meters o f bridges and culverts. Bank financing o f US$32 million for this sub-component will come from PSIDP. SecondaryRoadNetwork(US$31.25 million) The existing P M U of Rural Transport Improvement Project (RTIP) will implement the activities under this sub-component, which include rehabilitation o f 1,700 km o f Upazila roads, including rehabilitation and reconstruction o f bridges and culverts, and 13 growth center markets. Bank financing o f US$25 million for this sub-component will come from PSIDP. MunicipalInfrastructure(US$30.33 million) The existing P M U o f Municipal Services Project (MSP) will implement the activities under this sub-component, which has two sources of funds: US$15 millionreallocated under MSP, and US$11 million under PSIDP. The sub-component includesrehabilitation o f 1,350 kmof urban roads, 1,125 meters o f bridges and culverts, and 42 km o f drainage in 119 municipalities. PrimarySchools (US$49.38 million) Implementation o f this component will be carried out by LGED as per arrangements agreed between the Ministry o f Primary and Mass Education (MOPME) and LGED.The Bank will provide US$40 million to support rehabilitation activities, including repairs to 17,000 schools and reconstruction o f 918 fully damaged schools to be used as flood shelters in the future, as well as provision o f furniture. Bank financing will come from two sources: Post Literacy and Continuing Education Project (US$14 million) and PSIDP (US$26 million). Secondary Schools (US$24.78 million) This sub-component will be implemented by the Education Engineering Department (EED) under the Ministry o f Education (MOE). The Bank will provide US$20 million to help finance the construction of 181two-storied schools / flood shelters, vertical extension o f 179 schools providing a first floor, and sinking o f 360 tubewells (of 37 mm o f diameter), as well as supply o f furniture to 360 schools. Funds will come from two sources: Female Secondary School Assistance I1Project (US$15 million) and PSIDP (US$5 million). Fisheries(US$2.35 million) The Bank will support rehabilitation o f 31flood-affected fish farms under the Department of Fisheries (DOF), Ministry o f Fisheries and Livestock. This sub-component will be implemented by the Project Coordination Unit (PCU) in DOF, using US$2.0 million reallocatedunder the FourthFisheriesProject. 13 Component3 -QuickDisbursingSupport (TotalCost:US$45 million) An amount of US$45 million has been reallocated from PSIDP to provide quick disbursingsupport to finance eligible imports Erom a positive list of items (see Table 2) which have been urgently neededby the public and private sector for rehabilitation and reconstruction. The component will be implementedby the BangladeshBank on a reimbursementbasis. Table 2 -PositiveList ofItems Food Grains EdibleOil Fertilizer Seeds Agriculture equipment and inputs Cement and other construction materials Industrial machinery, spareparts and raw materials Petroleum and Fuel Products 14 Annex 2 ProgramOutcomes and Outputs ProgramObjective To support the speedy recovery o f the country and o f the affected population, ~ particularly the poor and vulnerable, while emphasizing vulnerability reduction over the long term Outcomes Sub-component Agency LineMinistryI Output by Sub-component Institution .................................................................................................................................................................................................. LivelihoodRestoration .......................................................... ............................................................................................................................................................................................................................ Chronic indebtedness IMicro-credit POS PKSF About 400,000 loans provided reduced after disasters; Program by POs to poor and vulnerable coping mechanisms o f households beneficiaries strengthened I InfrastructureRehabilitation Infrastructure and Primary Road RHD Communication Rehabilitation and facilities reconstructed Network reconstruction o f 575 kmo f with improved standards; roads and 300 meter o fbridges emergency shelter and culverts. capacity and quality Secondary Road LGED Local Gov., RD Rehabilitation o f 1,700 kmo f improved Network & Cooperatives Upazila roads and 13 growth ........................................................................... .................................................... .................................................................................................................................... center markets Municipal LGED Local Gov., RD Rehabilitationo f 1,350 kmo f Infrastructure & Cooperatives urbanroads, 1,125 meters o f bridges and culverts, and 42 kmofdrainage in 119 ..................................................... ........................................................................... municipalities ................................................................................................................................. Primary Schools LGED. Primary and Repairs to 17,000 schools and Mass Education recinstructioi o f 918 i ~ y damaged schools, as well as provision o f firniture Secondary EED Education Construction o f 181two-story Schools schools / flood shelters, vertical extension o f 179 schools providing a first floor, sinking o f 360 tubewells, and provision o f furniture to 360 schools Fisheries DOF Fisheries and Repair and rehabilitationo f 31 Livestock fishfarms Quick DisbursingSupport Availability o f critical I Financing o f I Bangladesh I Financeand I ~ ~ $ million to support 4 5 inputsfor rehabilitation imports Bank Planning financing o f eligible imports andreconstruction included inpositive list ensured disbursed ina timely and efficient manner 15 Annex 3 LivelihoodRestoration 1. Objective. The objective is to provide quick financial assistance to poor families to help them cope and recover from disasters based on a financial instrument with concessionary lending terms and minimal bureaucratic requirements. Specifically, the component will help prevent poor households affected by disasters from selling advance labor, becoming indebted to unscrupulous money lenders, and having to sale valuable assets on a distressed basis, and enable them to smooth out consumption, which will also help mitigate long-term nutritional consequences o f disasters and ensure speedy recovery. 2. The above objective will be achieved through the use o f PKSF and its Partner Organizations (POs), which have a proven track record of delivering microcredit services on a sustainable basis to the poor, including under programs financed by the World Bank. An alternative and preferable solution to implement this component would have been a cash grant facility outside the micro-credit system, but there is no adequate institutional mechanism inthe country to manage such aprogram. In the special context of Bangladesh, because o f the strength, soundness and experience o f the country's micro-credit system, it was decided, in consultation with the POs, that a second best alternative would be to establish a small ring-fenced and targeted concessionary credit program.' PKSF would closely monitor the implementation o f the program and take corrective action if problems arise or ifthe program i s not achieving its objectives. 3. OperationalPlan. GOB will utilize the services of PKSF, the country's apex microfinance agency with which the Bank has a long and successful partnership, as the administrator and financial intermediary to manage IDA proceeds, monitor lending and recovery performance, and exercise due diligence in the use and application o f the proceeds. PKSFmanagement will provide regular reports on the program to its existing Governing Board, composed of representatives from the Government, private sector and civil society. 4. The Bank will provide GOB the initial capital for the program to be administered through the Disaster Management Fund (DMF) of PKSF, which will be operated as a revolving facility. PKSF will on-lend the funds to its network o f Partner Organizations (POs) in the designated vulnerable areas, for lending to eligible beneficiaries. PKSF operates its microcredit financing through over 200 POs who have extensive grass roots contacts with communities. The POs will assess the needs o f the affected or vulnerable persons, and provide loans for post-disaster rehabilitation, in accordance with agreed guidelines and terms and conditions. 5. The initial capital is estimated to be adequate to provide about 400,000 loans, at an average loan size of Taka 1,500 each. As such, the loan will be o f a small size relative to regular micro-credit loans, which usually range from Tk 6,000 to 7,000. Annual interest rates are not expected to exceed 4 percent and the typical loan term will be between 12 to 24 months. Further details will be defined ina Subsidiary LoanAgreement betweenPKSF andPOs, satisfactory to IDA.The programwill only be activated as a response to disasters, and limited to (i) prone areas; (ii) flood perennially distressed areas; (iii)river-erosion affected areas; (iv) Char lands; and (v) marginal areas, such as the area affected by Monga annually. The design o f the component also takes into consideration lessons from successful experiences, in Bangladesh and other countries, of emergency loans provided after disasters. These experiences have shown that, with the appropriate safeguards and social mobilization, emergency loans do not have an adverse impact on normal micro-credit programs. 16 6. The POs will be the vehicle to identify, andmake loans to beneficiaries for activities eligible for support (see below). These POs will use'their knowledge, experience and good grassroots contacts with communities to assess requirements and repayment capacity. POs will also assess the needs, verify eligibility criteria, explain the terms and conditions of the loans to beneficiaries, conclude the loan documents, and set inmotion the loan recovery procedure. This program will be in addition to the POs regular micro-credit operations that are designed for income generation activities. Through their social mobilizationactivities, the POs will ensure that the credit culture they have strivedto promote i s maintained. 7. Flow of Funds. The Bank will make available to GOB US$10 million to be channeled through the Disaster Management Fund (DMF) operated by PKSF. Accordingly, there will be no need for a special account for PKSF. PKSF will on-lend the funds to POs charging an interest rate of about 0.5 percent. POs will be selected according to their location invulnerable regions on the basis o f a subsidiary loan agreement satisfactory to IDA. POs will on-lend the funds to beneficiaries, and recover the funds, which will be remitted back to PKSF for deployment insubsequent years. 8. Eligibility Criteriafor Use of DMF. The program will support post-disaster rehabilitation needs o f affected households. Eligible activities include, inter alia, repair o f houses, sinking or replacing tubewells, repair or replacement o f latrines, and other post-disaster needs, including consumption. The latter i s critical to mitigate long-term nutritional consequences o f disasters, minimize health risks related to lack o f adequate nutrition, and ensure quick recovery o f vulnerable householdmembers. 9. Disbursement of Funds to PKSF. The Bank fund of US$10 million will be disbursed to PKSF on reimbursement basis over a period o f 24 months. Each PO will receive funds from PKSF according to the criteria discussed above and specified in the subsidiary loan agreement. Following the passing of funds to individual POs, and submission of a reimbursement application with appropriate documents, the Bank will disburse the funds to PKSF. 10. Responsibilities of Financial Intermediary. The responsibilities o f the PKSF are to: (a) on-lend the funds to the eligible Partner Organizations (POs), which are part o f its network for managing microcredit funds, under a Subsidiary Loan Agreement; (b) decide on the POs that are eligible to receive DMF allocations, and the amounts o f funds to be disbursedto the POs each year, based on their experience and any criteria that PKSF will develop; (c) maintain a separate account for operations o f the DMF; (d) cause all POs to maintain separate accounts o f receipts, lending and loan recovery performance; (e) monitor on-lending activities by POs to ensure conformity with lending criteria; (f) monitor repayment performance andtake necessary action to ensure that POs maintain a satisfactory recovery performance; (g) submit semi-annual progress reports o f the operations o f the DMF to GOB and the World Bank; (h) submit to the World Bank annually audited financial statements, includingthe opinion o f the auditors, no later than six months after end of the financial year; and (i) the PKSFBoard appraised of developments conceming the DMF. keep 11. Responsibilities of POs. The POs will recover the loans and remit the recovered funds to PKSF, based on the terms o f their subsidiary loan agreement. The POs will be responsible for recording disbursement o f loans given to poor and vulnerable clients and the recoveries, and for reporting these to PKSF. 12. As noted, PKSF will prepare a consolidated report, indicating activities o f each PO. Both PKSF and POs will be answerable to audit queries. 17 Annex 4 ProcurementandDisbursementArrangements A. GeneralProcurementArrangements 1. All procurement o f goods, works and consultants services shall be undertaken inaccordance with the Procurement Guidelines of the World Bank, including: "Procurement under IBRD Loans and IDA Credits" and "Selection and Employment of Consultants by World Bank Borrowers" as stipulated inthe respective Development Credit Agreements (DCAs) for the projects. 2. Considering the varied size and scattered nature o f works, most o f the civil works contracts and contracts for procurement o f goods may be procured following national competitive bidding (NCB) procedures. Contracts estimated at less than US$20,000 equivalent, including sinking o f tubewells, may be procured by obtaining at least three (3) quotations from qualified contractors. Goods estimated to cost less than US$20,000 equivalent may be procured following national shopping procedures. Inview o f the urgency for selecting consultants to minimize time, consultants may be selected following single-source selectionprocedures. 3. Accordingly, works, including furniture, to be financed through the reallocation under the five Credits supporting the Post-Flood Recovery Assistance Program may be procured following National Competitive Bidding (NCB), and by obtaining at least three (3) quotations from qualified contractors for contracts estimated at less than $20,000 each. The Credits include: Post-Literacy and Continuing Education Project (Cr. 3467-BD), Female Secondary School Assistance Project I1(Cr. 3614-BD); Private Sector Infrastructure Development Project (Cr. 2995-BD); Municipal Services Project (Cr. 3177-BD); and FourthFisheries Project (Cr. 3276-BD). 4. Each contract for civil works, including furniture, estimated to cost the equivalent o f US$200,000 or more will be subject to prior review by the Bank. Irrespective o f value, the first two contracts procured by EED will also be subjected to prior review. Each contract for consulting firms estimated to cost the equivalent o f US$lOO,OOO or more and for contracts for individual consultants, if any, estimated to cost the equivalent of $50,000 or more will be subject to prior review by the Bank. All other contracts will be subject to post review. 5. Except for PSIDP, the improvement o f NCB procedures has already been incorporated into the respective DCAs. Inthe case o f MSP, this was done through a side letter. Inthe case o f PSIDP, the criteria for improvement o f N C B procedures will be incorporatedinto the legal agreement. 6. In the case of imported goods and commodities under the quick disbursing component, procurement would be limited to eligible public and private sector imports included in the positive list and from countries that are eligible under the Bank's Procurement Guidelines. B. GeneralFinancialManagementandDisbursementArrangements 7. As indicated inTable 3, five new Special Accounts will be opened under PSIDP to support implementation of the infrastructure rehabilitation component. Accordingly, funds from PSIDP will flow to a separate Special Account to be operated by the Project Director (PD) of each o f the PMUs receiving financing from PSIDP. Inthe case o f PLCE, a new Special Account will be opened, to be accessed by LGED. The concerned PD will be responsible for the actual disbursements, and for maintaining accounts and records, claiming replenishments, and financial reporting and external auditing. Under the Program, traditional disbursement method will be applicable for all activities 18 funded under PSIDP and other Credits. However, report based disbursement will be used for activities funded through MSP under Cr. 3177-BD. Since PKSF and BangladeshBank will withdraw funds from IDA on a reimbursement basis against eligible expenditures, no special accounts are required for these agencies. 8. Simplified Financial Monitoring Reports (FMRs) will be submitted by each agency that would disburse funds for the Program, showing receipts, uses and balances o f funds by IDA and GOB sources. Use of funds will be shown by disbursement sub-categories by all agencies except Bangladesh Bank, which will show its use o f funds by items o f the positive list. Amendments to DCAs will reflect such arrangements. Table 3 -Provisions for SpecialAccounts IiiIDA CreditNo. ImplementingAgency Amount to beReallocated , ' (US%millionequivalent) 1 ! 2995-BD (PSIDP) PKSF Not required RHD(PMU, 3rdRRMP) 3.20 LGED (PMU, RTIP) 2.50 !I LGED (PMU, MSP) 1.10 I i LGED (PIU, Primary) 2.60 EEDFSSAP 0.50 ~ i ~ i BangladeshBank Notrequired ~ 1 i 1 3614-BD(FSSAP 11) EEDFSSAP Allocation Increasedby 1.5 j ~ i 3467-BD (PLCE) i LGED(PIU, Primary) 1.40 C. DetailedProcurement,FinancialManagement andDisbursementArrangements for the InfrastructureRehabilitationComponent 9. PrimaryRoads(Roads and HighwaysDepartment) Procurement. Civil works and Consultant services (a) In view o f the scattered nature o f the works, civil works will be grouped into packages suitable for national competitive bidding. Bids for civil works will be invited from a list o f pre-qualified contractors, who have demonstrated satisfactory performance under the ongoing RRMP111. (b) In order to minimize the time required for engaging new consultants, single-source selection method will be used to select two (2) independent consulting firms already working on the ongoing project (RRMP 111). Each contract has an estimated cost o f about US$1.25 million. Financial Management and Disbursements.The P M U will operate a separate special account under PSIDP and maintain the books and records, prepare financial statements, prepare periodic FMRs, and have the financial statements audited. Amendments to D C A for PSIDP Credit will reflect such arrangements. ' 19 10. Secondary RoadsandBridges (Local Government EngineeringDepartment) Procurement. Civil works and Consultant services (a) Inview of the scattered nature of the works, civil works will be grouped into packages suitable for national competitive bidding. About 41 NCB contracts packages with about 195 slices are anticipated and they would be grouped in a manner to be attractive to both large and small contractors, following the `slice and package' method. (b) In order to minimize the time required for engaging new consultants, single-source selection method will be used to select two (2) consulting firms already working on the ongoing project (RTIP). Eachcontract has an estimated cost o f about US$500,000. Financial Management and Disbursements. The PMUwill operate a separate special account under PSIDP and maintain the books and records, prepare financial statements, prepare periodic FMRs, and have the financial statements audited. Amendments to DCA for PSIDP Creditwill reflect such arrangements. All post-flood assistance activities' records, books and accounts would be clearly separated from those o f the ongoing RTIP. 11. MunicipalInfrastructure(Local Government EngineeringDepartment) Procurement. Civil works and Consultant services (a) In view of the scattered nature of the works, civil works will be grouped into packages suitable for national competitive bidding. About 400 contracts have been tentatively identified. They would be grouped ina manner to be attractive to both large and small contractors, following the `slice and package' method. However, some very small works contracts equivalent to US$20,000 or less may be procured by obtaining at least three (3) quotations from qualified contractors. (b) In order to minimize the time required for engaging new consultants, single-source selection method will be used to select consultants already engaged under the ongoing MSP project. The total value o f consultant services contracts i s estimated to be US$l.O million. Financial Management and Disbursements. The P M U will (i) manage the activities under the reallocated amount (US$15 million) from the existing MSP special account through FMR- based disbursements; and (ii) operate a separate special account under PSIDP, and will maintain the books and records, prepare financial statements and periodic FMRs, and have the annual financial statements audited. Amendments to DCA for PSIDP Credit will reflect such arrangements. Existing financial covenants under MSP Credit would ensure accounting, reporting through PMRs and auditing o f all activities under the Credit, including the post- flood rehabilitation component. 12. PrimaryEducation(Local GovernmentEngineeringDepartment). Procurement. Civil works, FurnitureProcurement and Consulting Services (a) All contracts for civil works as well as supply of furniture under this component will be relatively small invalue and scattered throughout the country. 17,918 contracts for civil works as well as furniture supply under this sub-component will be awarded following NCB method. However, some very small contracts for works and furniture equivalent to US$20,000 or less for each contract may be procured by obtaining at least three (3) quotations from qualified contractors. (b) Since LGED will implement the procurement activities on behalf o f the Directorate of Primary Education (DPE) with its own staff, it will charge about US$0.99 million as professional fees. MOPME and LGED will sign an MOU with terms and conditions satisfactory to the Bank. 20 Financial Management and Disbursements. LGED will implement the activities through two separate Special Accounts (one under PLCE and a new one under PSIDP), one for each Credit and will maintain separate books and records, prepare separate financial statements and periodic FMRs, and have the financial statements audited for funds to be used from each Credit. Amendments to DCAs for both Credits will reflect such arrangements. Existing financial covenants under PLCE Credit will ensure auditing for all activities under the Credit, includingpost-flood rehabilitation component. 13. SecondaryEducation(EducationEngineeringDepartment,MOE) Procurement. Civil works, FurnitureProcurement, and Consulting Services (a) All the civil works as well as supply o f furniture under this component will be relatively small in value and scattered throughout the country. The 360 contracts for civil works as well as furniture supply under this sub-component will be awarded following NCB method. However, some very small contracts for works and furniture equivalent to US$20,000 or less for each contract may be procured by obtaining at least three (3) quotations from qualified contractors. (b) Inorder to minimize the time required for engaging new consultants, a consulting firm will be selected using single-source method from the firms already working with the Education Engineering Department (EED) to assist with design, preparation o f bidding documents, bid evaluation, construction supervision and contract management. The total value o f the consultant contract is estimated at US$l-19million. Financial Management and Disbursements. EED will submit their approved bills to FSSAP, which will operate the two Special Accounts, and be responsible for carrying out the payments, maintain separate books and records, prepare separate financial statements and periodic FMRs, and have the financial statements audited for funds to be used from each Credit. Amendments to DCAs for PSIDP Credit will reflect such arrangements. Financial covenants under FSSAP Credit will ensure accounting, reporting through PMRs and auditing for all activities under the Credit, includingthe post-flood rehabilitation component. 14. Fisheries (Departmentof Fisheries, DOF) Procurement. Civil works and Consulting Services (a) All the civil works for rehabilitation o f 31 fish farms will be done through national competitive bidding and by obtaining at least three (3) quotations from qualified contractors for contracts estimatedat less than US$20,000 equivalent. (b) In order to minimize the time required for engaging new consultants, the consulting firmalready working inthe project will be selected usingsingle-source methodto assist the Department o f Fisheries in design, construction supervision and management, at an estimatedcost o f US$O.lO million. Financial Management and Disbursements. DOF will use the existing Special Account operated by the Project Coordinating Director o f the PCU, and will maintain accounts and records, prepare and submit withdrawal applications, financial statements and periodical Project Monitoring Reports (PMRs), and have the financial statements audited for funds usedthrough the reallocation. Financial covenants under Fourth Fisheries Credit will ensure accounting, reporting through PMRs, and auditing for all activities under the Credit, includingthe post-flood rehabilitation component. 21 D. Detailed Procurement, Financial Management and Disbursement Arrangements for the QuickDisbursingComponent 15. Procurement would be limited to eligible public and private sector imports included in the positive list and from countries that are eligible under the Bank's Procurement Guidelines. No more than 50 percent o f the Credit would be used inthe aggregate for the import o f any single item on the positive list. To ensure that transactioncosts are manageable, public sector import contracts valued at less than US$50,000 and private sector import contracts at less than US$20,000 would be ineligible for financing under the program. 16. Commodities, such a food grains, fertilizer, and fuel, may be procured under the Program by both the public andprivate sector through established international commodity markets, or simplified procedures consistent with the Bank's procurement guidelines. 17. Goods other than commodities procured by both the public and private sector would follow simplifiedinternational competitive bidding. For contracts bypublic sector agencies valued less than US$3.0 million, international shopping procedures would be acceptable. In the case o f the private sector, contracts below US$5.O million may be procured through established commercial practices. 18. Prior review by the Bank will be applicable for imports costing at or above US$3.O million and US$5.0 millionfor public and private sector respectively. 19. Financial Management and Disbursements. The Bangladesh Bank will submit fully documented reimbursement requests for individual import costing US$3.O million or more. Below the threshold, reimbursement claims shall be, submitted on Statement o f Expenditures (SOE). Bangladesh Bank will maintain the books and records, prepare financial statements, periodic FMRs, and have the financial statements audited by its private auditor. Amendments to D C A for PSIDP Credit will reflect such arrangements. 22 Annex 5 Description of Ongoing Projects Female Secondary School Assistance Project II(FSSAP) BoardApproval: 03/12/2002 Age: 2.8 years Reallocatedto the Program: US$lS.O m Fundsleft for Regular Project Activities: US$81.7 m Project Development Objective: Improve the quality of, and girls' access to, secondary education in rural areas o f Bangladesh, through sustaining improved gender equity, adding activities and incentives to improve quality o f education in participating schools, and improving both the management capacity of the Ministry o f Education (MOE) and monitoring and accountability mechanisms at the community level. Impact of Reallocation: The reallocation of US$lS.O million equivalent is from savings due to SDR appreciation. The reallocation will not have any impact on the project objectives or activities, which remain the same as originally planned. Municipal Services Project (MSP) Board Approval: 03/16/1999 Age: 5.8 years Reallocatedto the Program: US$lS.O m Fundsleft for Regular Project Activities: US$69.6 m Project Development Objective: To improve urban environment, infrastructure and services, and, to that end, to: (a) strengthen the institutional capacity o f selected municipalities and city corporations; (b) improve resource allocation and fiscal discipline; and (c) support governmental efforts to reduce urbanpoverty and improve the environmental conditions o furban communities. Impact of Reallocation: Project development objectives have not been significantly affected by the reallocation. The Bank helped finance municipal infrastructure rehabilitation through MSP after the 1998 and 2000 floods. The reallocation o f US$lS.O million equivalent will support works that fall within the scope o f the project's development objectives. Decision on the reallocation amount took into account the estimated requirements for urban infiastructure sub-projects in municipalities to be funded by the Bangladesh Municipal Development Fund(BMDF) created under the project, and for the completion of ongoing works in the three Chittagong Hill Tracts towns executed by LGED. Project implementation was affected, inter alia, by delays in getting BMDF off the ground, but good progress has beenmade recently. Specific actions have been agreed to upgrade current unsatisfactory project ratings. 23 Post-Literacyand ContinuingEducation(PLCE) BoardApproval: 02/27/2001 Age: 3.8 years Reallocatedto the Program: US$14.0m FundsLeft for Regular Project Activities: US$29.7 m ProjectDevelopmentObjective: Support the neo-literate inmaintaining literacy skills and providing s h l l s training to strengthentheir capacities to earn income and improve their standard of living. ImpactofReallocation: The reallocation o f US$14.0 million equivalent will have no negative impact on achieving project development objectives, although its scope and impact will be less than initially envisaged. The reallocation will support rehabilitation o f primary school facilities which will allow GOB to continue pursuingits goal o f increasing education access and improvingeducation quality. Specific phases of post-literacy and continuing education courses have been planned until project closure in line with funds available following the reallocation. PrivateSector InfrastructureDevelopmentProject(PSIDP) BoardApproval: 10/28/1997 Age: 7.2 years Reallocated to the Program: US$154.0 m Fundsleft for Regular ProjectActivities: US$2.9 m ProjectDevelopmentObjective: To assist in the development o f a modem and efficient infrastructure system in Bangladesh by promoting private sector participation, inter alia, in the investment, operation, ownership and maintenance o f infrastructure facilities. ImpactofReallocation: Progress on the main project component (financing for private participation) has been unsatisfactory for several months before the floods due to the continued lack o f viable subprojectsn6The expectation that a large and fairly advanced infrastructure power investment would come on board during 2004 did not materialize. Under these circumstances, a reallocation o f most o f the undisbursed credit funds (US$154.0 million or almost 97 percent of total) was agreed with the Government. The original project development objective and project scope have thus changed due to the reallocation. The Credit will now be instrumental to meet the objective o f the Post-Flood Recovery Assistant Program, by supporting the rehabilitation of roads, schools and municipal infrastructure. No funds have been left for financing o f private sector initiatives, but the Bank will continue to support the Infrastructure Investment Facilitation Center (IIFC) createdunder the project. This would include IIFC's assistance to the new Private Infrastructure Committee (PICOM) in making operational the recent Private Sector Infrastructure Guidelines (PSIG). The Infrastructure Development Company Limited (IDCOL), created under the project, extended one loan o f US$80 million from the PSIDP fund in 2001 to the AES Meghnaghat power station. Main reasons for the lack o f sub-projects include the unexpected downtum in the international market for private infrastructure, slower than expected progress on legal and regulatory reform, and deficiencies inthe design o f the project. 24 Fourth Fisheries Proiect Board Approval: 07/20/1999 Age: 5.5 years Reallocated to the Program: US$2.0 m Funds left for Regular Project Activities: USS8.7 m Project Development Objective: To support sustainable growthinand equitable distribution of the benefits generated from increased fish and shrimpproduction for domestic consumption andexports. Impact of Reallocation: Scope, aim and priorities o f the project have evolved through a series o f reviews to address problems duringproject implementation, which has improved inthe past months. To respondto the post-flood needs, credit savings of about US$2.0 million have been reallocated to carry out rehabilitation o f flood-damaged fish farms. The reallocation i s expected to enhance project impact since the rehabilitated fish farms will be used mainly to produce improved broodstock and training o f private sector fish farm operators on improved fish seeds. Previous to the floods, the Bank had agreed to a selective extension o f the Credit up to June 30, 2006, and the remaining amount will be used to continue carrying out project activities. 25 Flood ResponseTeam Team Leaders Mohinder Mudahar Economic Adviser, SASAR Enrique Pantoja Sr Country Officer, SACBA Country Unit Farhana T. Sonia Operations Analyst, SACBD Kamla Pariadhaven Sr Country ProgramAssistant, SACBA Agriculture / RD Paul Dorosh Sr Rural Development Economist, SASAR S.A.M.Rafiquzzaman IrrigationEngineer, SASAR S. P. KhanTandra Program Assistant, SACBD F.Management Burhanuddin Ahmed Sr Financial Management Specialist, SASFM MohammadSayeed Disbursement Officer, SASFM Procurement AminulHaque Sr Procurement Specialist, SASPS HumanDev. Qaiser Khan LeadHuman Development Spec., SASHD Raphael A. Cortez Sr Economist, SASHD Infrastructure & Zahed H.Khan Sr Urb. Specialist, SASEI Energy M.Iqbal Sr Energy Specialist, SASEI Fabio Galli Sr Financial Analyst, SASEI Mitsuyoshi Asada Sr Transport Specialist, SASEI Mohi U.Z. Quazi Sr Transport Engineer, SASEI Sultana Reefat Project Analyst, SASEI Raihan Elahi Financial Analyst, SASEI Disaster Christoph Pusch Sr Urban Specialist, SASEI Management Jelena Pantelic Sr Operations Officer, SECPS Zoe Elena Trohanis Knowledge Management Analyst, TUDHM Water KarinKemper Sr Water Resources Specialist, SASES Khawaja Minnatullah Sr Water & Sanitation Specialist, EWDSA A.D.C.Godavitame Consultant SocialDevelopment Nilufar Ahmad Sr Social Scientist, SASES PSD & G.M.KhurshidAlam Sr Private Sector Dev. Specialist, SASFP Microfinance Marc Dutz Sr Private Sector Dev. Specialist SASFP Shamsuddin Ahmad Sr Financial Sector Specialist, SASFP Hassan Zaman Sr Economist, SASPR Macroeconomy Zahid Hussain Sr Economist, SASPR Joyce Mormita Das Program Assistant, SACBD ExternalRelations Subrata Dhar Sr Communications Officer, SAREX Legal Kishor Uprety Sr Counsel, LEGMS Bangladesh Post-Flood RecoveryAssistanceProgram Acronyms andAbbreviations AAA Analytical and Advisory Activities ADB Asian Development Bank AUSAID Australian Aid BCPR Bureauo f Crisis Prevention and Recovery BRAC BangladeshRural Advancement Committee (NGO) BWDB BangladeshWater Development Board CAS Country Assistance Strategy CIDA CanadianInternational Development Agency DER Disaster Emergency Response (an LCG sub-group) DFID Department for International Development (U.K.) DMF Disaster Management Fund(PKSF) DOF Department o f Fisheries DPE Directorate o fPrimary Education EED Education Engineering Department ERD Economic Relations Division, Ministry of Finance and Planning EU EuropeanUnion FMR Financial MonitoringReport FSSAP-I1 Female Secondary School Assistance Project I1 GDP Gross Domestic Product GOB Government o f Bangladesh IDA International Development Association IDCOL Infrastructure Development Company Limited IIFC Infrastructure Investment Facilitation Center I-PRSP InterimPoverty Reduction Strategy Paper JICA Japan International CooperationAgency LCG Local Consultative Group LGED Local Government Engineering Department MFA Multi-Fiber Arrangement MOE MinistryofEducation MOF MinistryofFinance MOPME MinistryofPrimary andMass Education MSP Municipal Services Project N C B National Competitive Bidding NGO Non-Governmental Organization NWMP NationalWater Management Plan O&M Operations and Maintenance OCHA Office for the Coordination o f Humanitarian Affairs PCU Project Coordination Unit PD Project Director PICOM Private Infrastructure Committee PIU Project ImplementationUnit PKSF Palli Karma Sahayak Foundation PLCE Post Literacy and Continuing Education PMR Project Monitoring Report PMU Project Management Unit 11 Acronyms and Abbreviations(Cont'd) PO Partner Organization o f PKSF PSIDP Private Sector Infrastructure Development Project PSIG Private Sector Infrastructure Guidelines RHD Roads and Highways Department RRMP-I11 ThirdRoadRehabilitation andMaintenance Project RTP Rural Transport Improvement Project SDP Standard DisbursementPercentage SIDA SwedishIntemational DevelopmentAuthority SOE Statement o f Expenditure UNDAC UNDisaster Assessment andCoordination UNDMT UNDisasterManagementTeam UNDP UNDevelopmentProgram USAID United States Agency for Intemational Development VGF Vulnerable Group Feeding WARP0 Water Resources Planning Organization WMIP Water Management Improvement Project WMO Water Management Organization