ASIAN DEVELOPMENT BANK PCR: CAM 27406

PROJECT COMPLETION REPORT

ON THE

SIEM REAP AIRPORT PROJECT (Loan 1503-CAM[SF])

TO THE

KINGDOM OF CAMBODIA

December 2004

CURRENCY EQUIVALENTS

Currency Unit – riel (KR)

At Appraisal At Project Completion (31 October 1996) (31 March 2004)

KR1.00 = $0.0004 $0.00025 $1.00 = KR2,600 KR4,000

ABBREVIATIONS

ADA – Airport Development Authority ADB – Asian Development Bank APSARA – Autorité pour la Protection, la Sauvegarde et l’Aménagement

de la Région d’Angkor BCT – build-cooperate-transfer BOT – build-operate-transfer CATS – Cambodia Air Traffic Services COM – Council of Ministers EA – executing agency EIRR – economic internal rate of return FIRR – financial internal rate of return GMS – Greater Mekong Subregion GOJ – Government of Japan ICAO – International Civil Aviation Organization ICB – international competitive bidding IDC – interest during construction JICA – Japan International Cooperation Agency JV – joint venture MPWT – Ministry of Public Works and Transport NAA – National Airport Authority OECF – Overseas Economic Cooperation Fund PAPI – precision approach path indicator PCSC – project coordination and steering committee PCSS – procurement contract summary sheet PIU – project implementation unit PPP – public-private partnerships RRP – report and recommendation of the President SARS – Severe Acute Respiratory Syndrome SCA – Société Concessionnaire de l’Aéroport SDR – special drawing rights SSCA – State Secretariat of Civil Aviation TA – technical assistance

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars.

CONTENTS Page

BASIC DATA ii

MAP vii I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 3 B. Project Outputs 4 C. Project Costs 5 D. Disbursements 5 E. Project Schedule 5 F. Implementation Arrangements 6 G. Conditions and Covenants 6 H. Related Technical Assistance 6 I. Consultant Recruitment and Procurement 7 J. Performance of Consultants, Contractors, and Suppliers 9 K. Performance of the Borrower and the Executing Agency 10 L. Performance of the Asian Development Bank 10

III. EVALUATION OF PERFORMANCE 11

A. Relevance 11 B. Efficacy in Achievement of Purpose 12 C. Efficiency in Achievement of Outputs and Purpose 12 D. Preliminary Assessment of Sustainability 13 E. Environmental, Sociocultural, and Other Impacts 13

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14

A. Overall Assessment 14 B. Lessons Learned 14 C. Recommendations 15

APPENDIXES 1. Chronology of Main Event in Project Implementation 16 2. Organization Chart 20 3. Civil Works and Equipment Procured under the Project 22 4. Projected Cost at Appraisal and Actual 23 5. Projected and Actual Disbursement 24 6. Project Implementation Schedule 25 7. Status of Compliance with Loan Covenants 26 8. Technical Assistance Completion Report 30 9. Economic and Financial Reevaluation 32 10. Quantitative Assessment of Project Overall Performance 38

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

Kingdom of Cambodia Loan 1503-CAM(SF) Siem Reap Airport Project Kingdom of Cambodia State Secretariat of Civil Aviation SDR10,372,000 PCR:CAM 873

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)

12 February 1996 23 February 1996 5 November 1996 6 November 1996 12 December 1996 14 March 1997 12 June 1997 13 June 1997 None 30 June 2000 17 April 2003 3 Fixed 40 10

8. Disbursements a. Dates Initial Disbursement

10 February 1998

Final Disbursement

17 April 2003

Time Interval

62 months

Effective Date

13 June 1997

Original Closing Date

30 June 2000

Time Interval

36 months

b. Amount ($ million)

Category

Original

Allocation

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balance Civil Works 6.50 4.26 0.00 4.26 4.26 0.00 Equipment 5.80 6.33 0.00 6.33 6.33 0.00 Consulting Services 1.50 3.11 0.19 2.92 2.92 0.00 Contingency 1.00 0.00 0.00 0.00 0.00 0.00 Service Charge 0.20 0.18 0.00 0.18 0.18 0.00 Total 15.00 13.88 0.19 13.69 13.69 0.00

9. Local Costs (Financed) - Amount ($) Nil - Percent of Local Costs - Percent of Total Cost C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 15.00 13.69 Local Currency Cost 2.60 0.86

Total 17.60 14.55

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 2.60 0.86 ADB Financed 14.80 13.51 Total 17.40 14.37

IDC Costs Borrower Financed 0.00 0.00 ADB Financed 0.20 0.18

Total 0.20 0.18

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

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3. Cost Breakdown by Project Component ($ million)

Component Appraisal Estimate Actual

Civil works 8.10 5.12 Equipment 6.50 6.33 Consulting services 1.60 2.92 Contingency 1.20 0.00 Service charge 0.20 0.18 Total 17.60 14.55

4. Project Schedule

Item Appraisal Estimate Actual

Date of Contract with Consultants Project Implementation Consultant Weidleplan Consulting GmbH 1 October 1996 11 December 1997 Louis Berger Group Inc. 4 May 2000 Domestic Architect 22 May 2000 Domestic Civil and Structural Engineer 22 May 2000 Domestic Drainage, Sanitary and Plumbing Engineer

22 May 2000

Domestic Electrical and Mechanical Engineer 22 May 2000 Domestic Quantity Surveyor 22 May 2000 PWD Consultant Pte Ltd. 2 November 2001 Domestic Architect 5 November 2001 Domestic Civil and Structural Engineer 5 November 2001 Domestic Drainage, Sanitary and Plumbing Engineer

5 November 2001

Domestic Electrical and Mechanical Engineer 5 November 2001 Domestic Quantity Surveyor 5 November 2001 International Airport Architect 16 July 2002 International Communications and Information Engineer

16 July 2002

International Electrical and Mechanical Engineer 16 July 2002 TA Consultant Airways Consulting Limited 1 January 1997 January 1999 Completion of Engineering Designs 31 January 1997 11 August 1997 Civil Works Contract Package I (China Guangxi Corporation) Date of Award 31 October 1997 18 January 1999 Completion of Work 31 March 1999 7 November 2000 Package VII (Castle Gold/PNCC JV) Date of Award 31 October 1997 16 July 2001 Completion of Work 31 March 1999 9 November 2002 Equipment and Supplies Package II (ETDE [France]) Date of Award 30 November 1997 16 October 1998 Completion of Work 31 March 1999 6 July 2000 Package III (R. M. Asia Co., Ltd.) Date of Award 30 November 1997 18 February 1999 Completion of Work 31 March 1999 23 December 2000

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Package IV (SOVAM [France]) Date of Award 30 November 1997 29 October 1998 Completion of Work 31 March 1999 7 May 2002 Package V (Airport Systems International) Date of Award 30 November 1997 20 November 1998 Completion of Work 31 March 1999 10 June 2000 Package VI (ETDE [France]) Date of Award 30 November 1997 16 October 1998 Completion of Work 31 March 1999 1 May 2000 Package VIII (R. M. Asia Co., Ltd.) Date of Award 30 November 1997 13 July 2001 Completion of Work 31 March 1999 29 November 2002 Dates First Procurement 1 January 1997 16 October 1998 Last Procurement 1 February 1997 16 July 2001 Completion of Equipment Installation 31 December 1998 29 November 2002 Start of Operations Completion of Tests and Commissioning 31 March 1999 9 August 2002 Beginning of Start-Up 1 April 1999 24 October 2002 Other Milestone Establishment of Airport Authority Prior to 1 July 1999 Not yet established 5. Project Performance Report Ratings

Ratings Implementation Period

Development Objectives

Implementation Progress

From 29 December 1997 to 31 December 1997 S S From 1 January 1998 to 31 December 1998 S S From 1 January 1999 to 31 December 1999 S S From 1 January 2000 to 31 December 2000 S S From 1 January 2001 to 31 December 2001 S PS From 1 January 2002 to 31 December 2002 S PS From 1 January 2003 to 31 December 2003 S PS From 1 January 2004 to 31 March 2004 S PS S = satisfactory, PS = partly satisfactory.

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D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Membersa

Fact-Finding 9–20 Oct 1995 4 48 b, d, g, k Appraisal 12–23 Feb 1996 4 48 b, c, d, g Inception 29 Jan–5 Feb 1998 2 16 d, l Review (1) 28 Apr–1 May 1998 1 3 d Review (2) 2–12 Feb 1999 1 11 d Review (3) 16–18 Mar 1999 2 6 d, d Midterm Review 6–14 Jul 1999 2 13 a, d Review (4) 6–8 Sep 1999 1 3 a Special Loan Administration (1) 20–24 Sep 1999 2 10 a, a Special Loan Administration (2) 6–9 Feb 2000 3 12 a, e, h Special Loan Administration (3) 13–22 Jul 2000 3 24 a, i, i Review (5) 2–9 Nov 2000 2 16 d, i Review (6) 11–13 Jun 2001 2 6 d, i Review (7) 24–29 Mar 2002 2 10 a, l Review (8) 17 Dec 2002 1 1 a Review (9) 10–13 Mar 2003 2 8 a, a Special Loan Administration (4) 15–17 Oct 2003 1 3 j Special Loan Administration (5) 1–3 Mar 2004 3 9 a, i, j Project Completion Reviewb 20–29 Oct 2004 2 15 j, m No. = number a a – project engineer, b – financial analyst, c – counsel, d – economist, e – procurement specialist, f – control

officer, g – programs officer, h – project management specialist, i – project specialis t, j – transport specialist, k – environmental specialist, l – operation analyst, m – civil aviation sector specialist. Manager, Transport and Communication Division (West) joined the Review Mission (3); Manager, Project Coordination and Procurement Division joined the Special Loan Administration Mission (2); the Review Mission (8) visited the Siem Reap Airport to confirm that the project components had been com pleted and the airport was in operation.

b The project completion report was prepared by Yasushi Tanaka, transport specialist, and a civil aviation sector specialist/staff consultant.

I. PROJECT DESCRIPTION

1. The Cambodian Government has identified the tourism industry as a major contributor to economic development. The well-known Angkor Wat historical sites are located in Siem Reap, and constitute the most important tourism resources of the country. Tourism development has been expected to create a significant number of new employment opportunities and to become the main source of income for the project area. Civil aviation sector development has been regarded as one of the measures to enhance the tourism industry in Cambodia, which also played a major role in supporting the Government’s strategy of international integration of the country into the Greater Mekong Subregion (GMS). The improvement of Cambodia’s airport infrastructure has been given a high-priority ranking in the civil aviation sector by the GMS countries. 2. The project objective was to provide the required infrastructure and improve the operational capacity of Siem Reap Airport to cater to the expected increase in tourists visiting the Angkor Wat historical sites. The Executing Agency (EA) for the Project is the State Secretariat of Civil Aviation (SSCA), responsible for control, regulation, and orderly development of the civil aviation sector as well as the operation of airports. To achieve the objective, the Project provided (i) civil works for aerodrome, operational buildings, and airport terminal; (ii) equipment for air traffic services, aeronautical communications, and navigational aids; and (iii) consulting services to assist in preconstruction activities (preparation of designs, tender documents, and bid evaluation), project management, and construction supervision. The Project upgraded the airport runway, taxiway, buildings, and equipment, and improved airport safety to comply with International Civil Aviation Organization (ICAO) standards. The Project also provided an attached technical assistance (TA) grant1 to transform the EA into a viable and market-oriented organization able to cope with the demands of economic competitive activity. However, institutional strengthening of the EA including improvement of the operational capacity for the airport was not achieved. 3. As shown in the Loan and Project Summary in the report and recommendation of the President (RRP),2 the Government of Japan (GOJ) planned for grant financing of the civil works component of the Project amounting to $7.5 million when the Project was appraised in December 1996. If the grant financing had been approved by GOJ, the civil works component under this loan from the Asian Development Bank (ADB) would have been canceled. GOJ decided in June 1999 not to offer the grant financing, and this loan was used for the civil works component. 4. The loan is the first to the civil aviation sector in Cambodia provided by ADB. The Project was appraised from 12 to 23 February 1996. On 12 December 1996, ADB approved a loan amounting to $15 million, inclusive of the civil works component. The Loan Agreement was signed on 14 March 1997 and was declared effective on 13 June 1997. The original loan closing date was extended three times from 30 June 2000 to 31 March 2004. A total of $13.69 million was disbursed. The loan was closed on 17 April 2003. The chronology of the major events in project implementation is provided in Appendix 1. 1 ADB. 1996. Technical Assistance to the Kingdom of Cambodia for Institutional Strengthening of the State

Secretariat of Civil Aviation. Manila (TA 2706-CAM, for $550,000). The total cost of the TA was $600,000 with the remaining $50,000 provided by the Government.

2 ADB. 1996. Report and Recommendation of the President to Board of Directors on a Proposed Loan and Technical Assistance Grant to the Kingdom of Cambodia for the Siem Reap Airport Project. Manila (CAM 27406, November 1996).

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II. EVALUATION OF DESIGN AND IMPLEMENTATION

5. The Project was intended to provide a reliable transport link between Phnom Penh and Siem Reap, and remove infrastructure constraints on the growth of domestic air services. However, the Government adopted its Open Sky Policy in December 1999, and direct international flights were allowed to land at and depart from Siem Reap Airport. This political interference has had a significant impact on project implementation, allowing operation of the airport by the private sector (para. 8). 6. During project implementation, the organization of the civil aviation sector and the EA shown in Appendixes 1 and 2 of the RRP changed to the structures as shown in Appendix 2 of this report. The Council of Ministers (COM) coordinates with the Cabinet as well as ministries in Cambodia and supervises SSCA. SSCA issues aviation permits as a regulatory body. Its responsibilities include setting civil aviation policy and formulating strategic plans. At appraisal, SSCA had 420 staff; currently, it has 505. This increase was made when the Government initiated a policy to increase the number of public servants to give more job opportunities to newly graduated students. The Inspection, Planning and Policies, and Electronic Engineering departments were created. Departments in charge of finance and logistics, air traffic regulation, and operations were strengthened. SSCA is also responsible for the management and operation of domestic airports and supervision of the air navigation service provider, Cambodia Air Traffic Services (CATS). The Ministry of Public Works and Transport (MPWT) sets the policy for road, rail, sea, and other forms of transport. The Airport Committee makes decisions on airport development plans at Phnom Penh Airport and Siem Reap Airport. The airport operator, Société Concessionnaire de l’Aéroport (SCA) is the private sector entity responsible for the management and operation of Phnom Penh Airport and Siem Reap Airport under a build-operate-transfer (BOT) agreement with the Government. At appraisal, air navigation services were provided by SSCA, but this role was transferred to CATS under a build-cooperate-transfer (BCT) agreement with the Government. CATS, in the private sector, is supervised by SSCA. Although SSCA is responsible for civil aviation in Cambodia, decisions regarding the nation’s two major airports are made by the Airport Committee comprising one representative each from of (i) COM and SSCA; (ii) MPWT; and (iii) Ministry of Land Management, Urban Planning and Construction. The Airport Development Authority was established to oversee all airport development in 1993. However, it was dissolved in 1998 as its duties overlapped with those of other ministries. An airport authority in charge of operation and maintenance of Siem Reap Airport as a separate legal entity with control over and responsibility for its own budget, which was covenanted for the Project, has not yet been established. 7. In July 1995, the Government concluded a BOT concession agreement on management and development of Phnom Penh Airport with SCA. In exchange for developing new facilities, SCA was granted the right to operate Phnom Penh Airport for a term of 20 years, after which the operating right would be returned to the Government. The term was later extended to 25 years caused by two major events in 1997. One was the financial crisis in Asia and the other was the civil disturbance in Cambodia. Both events resulted in a dramatic decrease in airport traffic and severely reduced revenue from Phnom Penh Airport. The BOT agreement stipulates that the concessionaire is entitled to be compensated by the Government in case the cause of revenue shortfall is the result of government actions. Given that the civil disturbance in 1997 affected the revenue stream of Phnom Penh Airport, a claim was made against the Government to compensate SCA. Since the Government did not have the resources to compensate SCA at that time, the Government extended the concession period for five years as an alternative solution to the compensation request.

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8. The financial crisis and the civil disturbance also seriously affected tourism. As tourism is a major revenue source for the country, the Government encouraged international flight operations at Siem Reap Airport to increase air traffic. The Government adopted its Open Sky Policy in December 1999, and Siem Reap Airport started international flights. But this action again conflicted with the BOT agreement, which indicated that Siem Reap Airport would not be improved and upgraded to an international airport until October 2005 so that the concessionaire might not lose the revenue from Phnom Penh Airport. Thus, the Government had to compensate SCA by giving it all operational rights for Siem Reap Airport. In April 2000, the Government concluded an additional concession agreement with SCA on the management and operation of Siem Reap Airport. These concession contracts were concluded by the Government, though SSCA was not included in discussions prior to signing of the agreement on management and operation of Siem Reap Airport, nor does it have any rights under the BOT agreement. 9. Initially, GOJ intended to offer grant assistance to Phnom Penh and Siem Reap airports. However, the Cambodian Government decided not to receive the grant for Phnom Penh Airport, but concluded the above BOT agreement with SCA, for which discussions were already at an advanced stage. While ADB continued lending to the Project, GOJ foresaw that the Siem Reap Airport would become an international airport and withdrew the grant assistance, because GOJ was concerned that the grant would simply help increase the revenue of SCA. GOJ finally decided in June 1999 not to offer the grant financing. 10. The Project was intended to upgrade operations at Siem Reap Airport as a domestic airport. However, in late 2000, the Government requested ADB to change the terminal design from a domestic to an international airport. At the same time, the Government requested ADB to review the additional concession agreement on management and operation of Siem Reap Airport from the legal and financial points of view and to recommend any necessary remedial actions. ADB agreed to the design change on condition that the Government considers ADB’s recommendations (para. 26). However, the Government refused them for reasons of sovereignty. ADB therefore decided not to finance the international passenger terminal, but agreed to finance construction of the domestic terminal building under the Project, as it considered that the domestic services were not relevant to compensation for the reduction of international services at Phnom Penh Airport caused by the Open Sky Policy. 11. After completion of the terminal building, the Government allowed SCA to use the terminal building for international passenger services without consultation with ADB. ADB noted this fact from a speech made by the Prime Minister at the inauguration ceremony of the terminal building in December 2002. ADB finally accepted interim use of the terminal building for international passenger services, because international passenger demand for Siem Reap Airport had grown. However, ADB still expects the Government to establish an airport authority to oversee operations of Siem Reap Airport by SCA. A. Relevance of Design and Formulation

12. Siem Reap Airport was designed as a domestic airport although the appraisal mission identified the need for an international airport at Siem Reap. At the project design stage, it was clear that the Government did not intend to open Siem Reap Airport as an international airport until October 2005, as shown in the BOT agreement with SCA. However, the Siem Reap area has many attractive tourist sites such as Angkor Wat and other ruins, and was expected to receive tourists mainly from outside the country. Irrespective of the operational issue caused by the concession agreement, Siem Reap Airport should have been designed according to

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international airport specifications, and ADB should have consulted with SCA at appraisal about demarcation of responsibility for operating Siem Reap Airport and revenue sharing between the airport authority as covenanted and SCA under a public-private partnership. 13. SSCA has responsibilities for setting civil aviation policy and formulating strategic plans. However, in the reality, SSCA does not have any decision-making authority over the civil aviation sector. It must first consult COM, and suffers from a lack of qualified staff and administration funding. ADB did not foresee that establishing an airport authority was difficult for SSCA under the present organizational structure. The Project did not include a TA component for establishing an airport authority. B. Project Outputs

14. Initially, procurement of the following six contract packages was undertaken: (i) civil works for the administration building and the control tower facility (package I), (ii) electrical equipment including switchboard and generators (package II), (iii) fire and rescue equipment (package III), (iv) ground handling equipment (package IV), (v) navigation equipment (package V), and (vi) airfield lighting equipment (package VI). After GOJ withdrew its grant financing in June 1999, ADB procured two additional contract packages, which covered the civil works for the passenger terminal building and the technical service building (package VII) and equipment for the passenger terminal building (package VIII). Appendix 3 summarizes civil works and equipment procured under the Project. 15. The project facilities were constructed within the land of Siem Reap Airport. There were no land acquisition or involuntary resettlement activities under the Project. 16. The project facilities designed according to ICAO safety standards were completed in November 2002. The 2,550-meter long and 45-meter wide runway and the taxiway were structurally strengthened, and surface markings were renewed, so that a wide-bodied aircraft such as a Boeing 737-400 or aircraft of similar size can land and take off. The seating capacity of the aircraft able to use the airport has doubled. To accommodate this increase at one time, a larger terminal building was built under the Project, and was opened in December 2002. Fire and rescue facilities and equipment, including fire and rescue vehicles, were installed. Navigation aids and the airport lighting system were upgraded, including distance measuring equipment, nondirectional radio beacon, precision approach path indicator, and approach guidance system. The airport facilities were refurbished to offer better service levels. 17. After the concession agreement with SCA, an airport authority responsible for operation and maintenance of Siem Reap Airport is expected to play a role to oversee SCA’s activities. SSCA has attempted to obtain approval from COM for the establishment of an airport authority. The minor change in the project scope and utilization of the loan savings in the amount of $180,000 to carry out the consulting services for establishment of a National Airport Authority (NAA), which is covenanted for the GMS: Mekong Tourism Development Project (Loan 1969-CAM),3 were approved in June 2003. However, SSCA did not recruit the consultants before the extended loan closing date. And since ADB did not approve any further extension to the loan 3 The covenant reads as follows: Within 24 months after the effective date, the Borrower shall have established an

autonomous airport authority, which shall be responsible for development, operation and maintenance of all airports in Cambodia. The airport authority shall be a separate legal entity with control over its budget and the fees generated by operating Cambodia’s airport. Within 12 months after establishment of the airport authority, the Borrower shall ensure that SSCA transfers to the autonomous airport authority the Project facilities, including all rights and legal titles. The Airport Authority for the Siem Reap Airport will become a branch office of NAA.

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closing date, the consulting services were not conducted under the Project (para. 23). An airport authority has not yet been established. C. Project Costs

18. Appraised and actual project costs are shown in Appendix 4. The actual foreign exchange and local currency costs were split based on actual expenditure. The actual project cost was $14.55 million—compared with an estimate of $17.6 million—comprising $13.69 million in foreign exchange cost and $0.86 million equivalent in local currency cost. There was a high risk for cost overrun of ADB’s loan during the project implementation caused by the depreciation of Special Drawing Rights (SDR) and increasing consulting service costs . To avoid any cost overrun, the percentage of ADB financing for the civil works component (package VII) was reduced from 85% to 75%. While the appraised estimate for the consulting services was $1.6 million, the actual cost for the consulting services was $2.92 million, which shares 20.1% of the total project cost. After the adoption of the Open Sky Policy, the Government requested the consultant to make a design review and update of the passenger terminal building. The discussion between ADB and the Government on the design change from domestic to international specifications prolonged the consulting services period, and increased the cost for consulting services. D. Disbursements

19. A total of $13.69 million was disbursed under the Project. The loan was used only to finance the foreign exchange cost of the procurement and the consulting services. An imprest account was not used. Projected and actual disbursements are shown in Appendix 5. The projected disbursement schedule was not followed. Disbursement was stagnant in 2000 and 2001, because procurement for the passenger terminal and technical services buildings (packages VII and VIII) was delayed, starting only in July 1999 and February 2000, respectively. At the loan closing date, $0.19 million was canceled. E. Project Schedule

20. Appendix 6 shows the actual project implementation schedule compared with that at appraisal. The contract for the civil works and equipment (packages I to VI) was scheduled to commence in December 1997 at appraisal; however, commencement was delayed by about 1 year. This delay was caused by the civil disturbance in the country from 1997 to 1998 and waiting for GOJ’s decision on grant financing. After GOJ finally withdrew grant assistance, the additional procurement (packages VII and VIII) started in July 1999 and was completed in November 2002. To implement the additional procurement, the first extension of the loan closing date, of 18 months from 30 June 2000 to 31 December 2001, was approved in April 2000; the second, of 15 months from 31 December 2001 to 31 March 2003, was approved in August 2001. The second extension was required by prolonged discussions on the design change of the terminal building between ADB and the Government and delay in the additional procurement of packages VII and VIII. All the physical works were completed in November 2002 and operation of all project facilities started immediately after project completion. 21. Although construction of the project facilities was completed in November 2002, the airport authority responsible for Siem Reap Airport had not yet been established. The third extension of the loan closing date to 31 March 2004 was approved in June 2003 to carry out the consulting services for establishment of NAA (para. 17). It was agreed that the airport authority responsible for Siem Reap Airport would become a branch office of NAA. While recruitment of

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the individual consultants was prepared to implement the consulting services, SSCA was not successful in recruiting the consultants by the extended loan closing date. The main reasons why SSCA did not recruit consultants for establishment of an NAA were (i) delay in formation of a Government after the national election in July 2003, (ii) work overload of the project director of SSCA, and (iii) lack of experienced domestic consultants. Notwithstanding, SSCA was still concerned that it would have difficulties in controlling an NAA as a regulatory and policy-making agency, and therefore hoped to undertake consulting services for strengthening its own role as such an agency, in addition to establishing an NAA. ADB received a request for a fourth extension of the loan closing date to 31 March 2005 to implement the necessary consulting services. However, the justification for the requested extension was not strong enough to convince ADB Management of a need for further extension. The loan was closed retroactively. F. Implementation Arrangements

22. The project cost estimated at appraisal was adequate, though the Project was at risk of a cost overrun due to SDR depreciation. SSCA avoided the cost overrun by reducing the financing percentage of the civil works (package VII). There were some delays in project implementation due mainly to external reasons, e.g., (i) civil disturbance and financial crisis in 1997 and 1998, and (ii) a need for design changes from a domestic airport to an international airport after announcement of the Open Sky Policy. The Project would have been implemented according to the project schedule at appraisal had it not been for these external factors. 23. In response to a request from the Government, ADB approved in December 2001 a major change in scope of TA 3414-CAM: Capacity Building in Public-Private Partnerships for Transport4 and utilization of the TA fund savings for establishing an airport authority. However, no tangible development is so far evident. The consulting services for strengthening SSCA’s role and establishing an NAA will be implemented under Loan 1969-CAM (a minor change in that project’s scope has been approved). G. Conditions and Covenants

24. Details of loan covenant compliance are given in Appendix 7. Due to the delay in the decision on grant financing by GOJ, ADB approved a 1-year extension of the date for compliance with the covenants on operation and maintenance, establishment of an airport authority, protection of the environment and cultural zones, and midterm review in February 1998. Two major loan covenants regarding operation of Siem Reap Airport and establishment of an airport authority have still not been complied with, which shows that governance of the civil aviation sector needs to be improved. H. Related Technical Assistance

25. The TA study attached to the loan commenced with a 2-year delay because of the civil disturbance in Cambodia in 1997. The TA consultant generated a final report in September 2000 in line with the terms of reference. The TA completion report is attached as Appendix 8. The TA study recommended that (i) civil aviation legislation should be established so that SSCA

4 ADB approved a small-scale TA for $150,000 to Cambodia on 15 March 2000. The objective of the TA is to assist

the Government in developing necessary policies, strategies , and appropriate models to be used in the bidding process to establish public-private partnerships (PPP) for transport sector operations and management. The scope of the TA covers (i) assistance to develop a policy on PPP for transport; and (ii) activities in relation to planning, organizing, and executing a series of workshops for PPP. The Ministry of Public Works and Transport is the EA for the TA.

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can have legal authority for its actions; (ii) SSCA should be split into three functions: regulatory body, air navigation provider, and airport operating organization; (iii) a new management information system should be installed, introducing a new computer system or upgrading network environments; (iv) a feasible business plan should be required in the civil aviation sector to enable efficient financial operation and to enhance financial performance; and (v) a human resource training program should be developed to improve capacity of staff and foster effective management. Three of the recommendations of the TA study were achieved. First, air navigation service functions were transferred to CATS from SSCA. The Government made a BCT contract with the company under the supervision of SSCA. Second, computerized systems were introduced to manage the finance function. Third, skills of SSCA staff were somewhat improved through a human resource training program. However, the situation changed after the Open Sky Policy was announced in December 1999. All the rights to develop, operate, and maintain Siem Reap Airport were transferred to SCA. In addition, the Civil Aviation Code has not yet been enacted, partly because the government formation after the National Election was delayed. The other recommendations of the TA study were not achieved effectively due to those external negative factors. Accordingly, the overall assessment of the TA is partly satisfactory. 26. COM requested ADB’s assistance to review the additional concession agreement from the legal and financial points of view and to recommend necessary remedial actions (para. 10). ADB employed a staff consultant to pursue this in August 2000, and the consultant recommended three possible options: (i) improvement of the additional concession agreement; (ii) immediate cancellation of the additional concession agreement and payment of monetary compensation; and (iii) termination of the additional concession agreement as of October 2005. However, COM did not agree with any of the proposed options for the reason that the issue is under the sovereignty of the Government. For its part, SSCA felt that the recommended options were not feasible, because the consultant did not discuss matters with the airport stakeholders. Also, it would go to the international court if the Government takes actions following one of the options. If the Government lost the arbitration, it would be unable to pay the resultant arbitration process. Therefore, the Government finally decided not to follow ADB’s recommendations so as to avoid arbitration. Recommendations by the consultant may have been reasonable, but they were not feasible. This TA was not effective. I. Consultant Recruitment and Procurement

27. In December 1995, ADB approved advance recruitment action and direct selection of the consulting firm for detailed designs and project implementation to expedite project implementation in accordance with its Guidelines on the Use of Consultants. The selected firm was the lead consultant engaged for the project preparation study under TA 2197-CAM: Airports Improvement Project.5 Some local engineers were introduced to the consultant by SSCA at the consultant’s request and subsequently employed by the consultant. The draft contract was agreed between SSCA and the consultant in April 1996. However, the contract award was substantially delayed, as the project scope was uncertain while GOJ made a decision on the grant financing. Eventually, the contract was concluded in December 1997. The approved advance recruitment action and direct selection were of no effect. The consulting services ended in April 2000 in accordance with the contract. Although the Project was ongoing, SSCA did not extend the contract as SSCA and the consultant failed to build a good relationship (para. 32).

5 ADB approved the TA to Cambodia for $500,000 on 3 November 1994.

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28. A project implementation consultant for supervising ongoing procurement was immediately needed. Also, as the traffic forecast at appraisal did not include projections for international passengers, the design of packages VII and VIII had to be updated. ADB suggested that SSCA select an expert from one of the three international consultant firms that had been already operating in Cambodia to serve as the project manager. While this consultant selection was not in accordance with ADB’s Guidelines on the Use of Consultants, it was accepted as an exceptional case. The project manager from a firm and five domestic individual consultants were engaged for 1 year from May 2000. Despite delays in procurement of the civil works and delivery of the equipment, SSCA did not extend the contract of either the project manager or the five domestic consultants, in order to keep loan costs down. 29. After the bidding for packages VII and VIII was completed, SSCA recruited another project manager and reemployed the same five domestic consultants in November 2001 to supervise the works of these packages. Further, three international consultants, including an airport architect, a communications and information engineer, and an electrical and mechanical engineer, were recruited to assist the project manager in July 2002. Recruitment of these consultants was carried out in accordance with ADB’s Guidelines on the Use of Consultants. 30. Procurement of packages I and VII (the civil and building works) was conducted following a two-envelope procedure: one envelope to contain qualification information, and the other, the priced bid, under international competitive bidding procedures. The envelopes were submitted concurrently. Only the envelopes containing the priced bids of bidders who met the defined qualification criteria were opened and evaluated. This procedure was not in accordance with ADB’s Guidelines for Procurement. While the prequalification exercise is usually to be undertaken before the bidding exercise under ADB’s standard procurement procedure for civil works, ADB’s Procurement Division approved application of the two-stage two-envelope procedure for civil works procurement. Procurement of packages II, III, IV, V, and VIII (the airport equipment) was conducted following the single-stage one-envelope procedure under international competitive bidding procedures in accordance with ADB’s Guidelines for Procurement. Procurement of package VI (the air navigation and airfield lighting facilities) was conducted following international shopping procedures in accordance with ADB’s Guidelines for Procurement. As the facilities are highly technical, an invitation to bid was sent to only 13 prospective suppliers. 31. After ADB approved SSCA’s recommendation for the award of contract for package III, ADB received representation from the lowest-priced bidder against the decision that it was disqualified due to its failure to meet the technical specifications. A detailed review by ADB found that the lowest-priced bidder did indeed meet the technical specifications. ADB canceled the previous approval, and recommended the award of contract to the lowest-priced bidder. SSCA followed ADB’s recommendation and awarded the contract to the lowest-priced bidder. Furthermore, after ADB approved SSCA’s recommendation for the award of contract for package V, ADB received representation from one of the unsuccessful bidders indicating that the technical proposal provided by the successful bidder might not meet the required technical specifications. Reviewing the position, ADB’s Procurement Committee found that the technical proposals submitted by several bidders did not comply with the required technical specifications, and also found that there were some weakness and deviations in the bidding process. However, these were not so important as to affect the ranking. Therefore, ADB’s approval remained unchanged.

9

J. Performance of Consultants, Contractors, and Suppliers

32. The performance of the first project implementation consulting firm was partly satisfactory. The consulting firm and SSCA failed to build a good working relationship. Although the performance of the consulting firm was highly satisfactory during the project preparation study, SSCA had the following complaints about its performance during project implementation. First, the consulting firm replaced the expected team leader, who was in charge of the project preparation study, just after the project implementation consultancy contact was signed. The two replacement team leaders had little experience in the civil aviation sector, especially in the region, and had even less understanding of ADB’s procurement procedures. Second, the consulting firm often had direct communication with ADB without consulting SSCA. The progress reports were directly sent to ADB without review by SSCA. On the other hand, the consulting firm had complaints about too much participation by SSCA in its concerns. For instance, the consulting firm proposed replacing the domestic consultants who were introduced by SSCA due to their unsatisfactory performance, though this proposal was refused by SSCA. Those conflicts between SSCA and the consulting firm resulted in mutual distrust. ADB fielded five review missions in 1999 seeking to improve the situation—but it did not. 33. After the consulting firm was demobilized, a team of individual consultants comprising international and domestic experts was engaged mainly to prepare detailed design and procurement for packages VII and VIII. The team leader of this second project implementation consultant was selected from a consulting firm that was also working as an advisor to the Airport Committee. The performance of the individual consultant team was satisfactory. However, SSCA was annoyed that the team leader often proposed contract variations in an attempt to ensure that the Project would proceed in accordance with the advice to the Airport Committee. 34. Another team of individual consultants comprising international and domestic experts was recruited to carry out the construction supervision for packages VII and VIII. This third project implementation consultant team performed highly satisfactorily. They provided professional civil aviation skills and their work was accurate and reliable. 35. The performance of the contractor for package I was partly satisfactory. The civil works with a 12-month contract period was delayed by about 10 months mainly due to poor performance of the subcontractors, very wet monsoon season, and cash-flow problem of the contractor. Also, the finishing works of the building was poor, but the contractor remedied these works. 36. The performance of the suppliers for packages II, V, VI, and VIII was satisfactory. They supplied, delivered, and installed the equipment as scheduled. 37. The performance of the supplier for package III was partly satisfactory. There was a major accident of a fire and rescue vehicle during training and commissioning. Subsequent discussions with the supplier and its insurer, and repair of the vehicle, took about 6 months. However, as delivery of the vehicle was earlier than the contract schedule, this accident did not cause any major delay in procurement. 38. The performance of the supplier for package IV was unsatisfactory. On delivery, several items of equipment, accessories, and spare parts were damaged. Some of the equipment also had signs of rusting, probably due to improper padding and handling during sea transport. The supplier had difficulty in getting its insurance company to rectify damages and replace the

10

equipment. The final shipment of replacements for the equipment was received with about an 18-month delay. 39. The performance of the contractor for package VII was partly satisfactory. The contractor had two weak points. First, its in-house design team was too inexperienced and thus unable to execute the final detailed design required under the contract. The project implementation consultant undertook a substantial portion of the design. Second, the contractor employed low-cost and semiskilled laborers, thereby resulting in slow progress in the civil and building works. K. Performance of the Borrower and the Executing Agency

40. The draft Civil Aviation Code, which is a fundamental legal item in the civil aviation sector, was submitted to the National Assembly for deliberation in December 2001. As of October 2004, the Code had not yet been enacted. The loan covenant pledges that the airport authority in charge of operation and maintenance of Siem Reap Airport should be established prior to 1 July 1999. In response to a request from the Government, ADB provided TA to the Government for the purpose. However, no tangible development is so far evident. In spite of the absence of legal infrastructure and insufficient managing capability of the public sector, the Government adopted the Open Sky Policy in December 1999. The Policy indeed contributed to development of tourism in the project area, and international tourists enjoy benefits accrued from direct international flights to and from Siem Reap Airport. However, the policy also generated negative impacts: (i) a substantial part of the revenue from Siem Reap Airport is paid to SCA, (ii) the authority of SSCA has weakened, and (iii) establishment of an airport authority was made more complicated. The major loan covenants with respect to the operation of Siem Reap Airport and establishment of an airport authority have still not been complied with. Taking the above facts into account, the performance of the Borrower in the civil aviation sector is unsatisfactory. 41. The Project’s physical completion was delayed by about 2 years from the implementation schedule at appraisal. This was partly caused by the uncertainty over whether GOJ would provide grant financing to the Project and for design change of the passenger terminal service building resulting from the adoption of the Open Sky Policy. In spite of this, SSCA completed the project facilities at reasonable cost. Therefore, the performance of SSCA in respect of physical project implementation is satisfactory. However, SSCA did not consult ADB when the Project encountered the following serious issues: (i) operation of Siem Reap Airport was committed to SCA, and (ii) the completed passenger terminal building was used for international passenger services. These issues conflict with the loan covenants, the project scope, and agreements with ADB. Also, the first project implementation consultant pointed out that SSCA did not show enough interest to have its own staff instructed and their knowledge expanded. In addition, all activity was suspended during absence of the project director. Further, SSCA did not conduct consulting services for establishing an airport authority. For the above reasons, the overall performance of SSCA is considered partly satisfactory. L. Performance of the Asian Development Bank

42. ADB sent nine regular review missions and five special loan administration missions during project implementation. Specifically, ADB sent five missions in 1999 and three missions in 2000, in order to solve some issues raised between the first project implementation consultant and SSCA, and to improve the situation under the additional concession agreement on operation of Siem Reap Airport. The Cambodia Resident Mission also encouraged the creation of more opportunities to communicate and exchange views among concerned parties.

11

ADB provided two additional TAs for setting up an airport authority and for legal and financial analyses of the new concession agreement for Siem Reap Airport. Further, for strengthening SSCA and establishing an airport authority, the project, procurement, and legal divisions of ADB have often given financial, administrative, and technical support to the Borrower and SSCA. The project facilities were eventually delivered as designed at appraisal. However, the project implementation arrangements at appraisal were inadequate for the following reasons. First, the project scope included the uncertainty of the grant financing from GOJ. The late decision by that Government resulted in delayed project implementation and increased consulting services costs. The project implementation consultant pointed out that ADB should have had an alternative plan during project implementation in the event that GOJ withdrew its grant assistance. Second, Siem Reap Airport was designed as a domestic airport, although ADB regarded this Project as an international program among the GMS countries. Irrespective of the operational issue caused by the BOT agreement, the project scope should have included upgrading Siem Reap Airport to international airport standards. It was acknowledged at appraisal that Siem Reap Airport would handle international traffic in the future, as shown in the economic evaluation in Appendix 10 of the RRP. ADB should have consulted with the concessionaire at appraisal to implement this Project under a public-private partnership. For its part, SSCA requested ADB, via the project completion review mission, to be more flexible about applying the loan covenants and some requirements during the project implementation period. The conditions surrounding the Project have frequently and substantially changed, and it was difficult for SSCA to stay abreast of the changes caused by the Government’s decisions. Taking the above into consideration, the overall performance of ADB is partly satisfactory.

III. EVALUATION OF PERFORMANCE

A. Relevance

43. Siem Reap Airport has serious operational restrictions, such as one-way runway operation and a limit on the number of aircraft movements, because it is located close to a World Heritage site. Introducing larger aircraft is the most appropriate way to enable the airport to handle more passenger traffic. The Project upgraded the runway and other fundamental airport facilities to accommodate larger, wide-bodied aircraft. Also, as the result of the Project, the airport facilities now meet ICAO safety standards. In light of this, the Project was relevant to the Government’s strategy in the civil aviation sector. At appraisal, it was difficult to foresee that Siem Reap Airport would be an international airport. However, when the situation dramatically changed with the advent of the Open Sky Policy and airport operations were handed over to SCA, ADB should have taken a more flexible approach to the Project’s administration. Siem Reap Airport had, in fact, a pressing need to improve its facilities to meet the huge expected growth in international passengers. During project implementation, ADB and SSCA argued over the design of the passenger terminal building—for domestic passenger services as provided in the project scope or for international passenger services as demanded by tourists. ADB and the Government concluded that the passenger terminal building would be designed according to domestic airport specifications. However, ADB eventually agreed that the passenger terminal building be used temporarily for international passenger services until SCA provided a permanent international passenger terminal building. Further, a TA component for establishing an airport authority was not included in the project scope. From the above point of view, the Project is rated partly relevant.

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B. Efficacy in Achievement of Purpose

44. Number of passenger arrivals and departures at Siem Reap Airport was approximately 146,000 in 1995 and increased to 345,171 in 2000, 442,059 in 2001, 578,949 in 2002, and 541,620 in 2003 (Table A9.1 of Appendix 9). By the adoption of the Open Sky Policy in December 1999, the number of international visitors to Siem Reap increased from 77,143 in 1999 to 154,680 in 2000.6 Due to the outbreak of Severe Acute Respiratory Syndrome (SARS), the number of passengers temporarily decreased in 2003. It is, however, in no doubt that the number of passengers will continue to increase from 2004. To accommodate the growth in passenger traffic, the passenger terminal building, which was designed for domestic passenger services, is being temporarily used for international passenger services until SCA constructs and operates an international passenger terminal building. Therefore, the major project objective, which is to provide the requisite infrastructure to cater for the expected increase in tourists visiting the Angkor Wat complex, was fully achieved. However, operation of the airport was transferred to SCA and no airport authority has been established yet. The objective of strengthening the institutional capacity of SSCA as the airport operator was not accomplished and detracted from the efficacy of goal achievement in the Project. Therefore, the Project’s achievement of purpose is rated partly efficacious. C. Efficiency in Achievement of Outputs and Purpose

45. The economic viability of the Project is high. The estimated economic internal rate of return (EIRR) for the Project based on the same methodology as at appraisal improved from 21.6% at appraisal to 23.9% at project completion. The detailed calculation for the economic cost and benefit streams of the Project is shown in Table A9.4. The financial sustainability of the Project is also rated high. The financial internal rate of return (FIRR) for the Project is recalculated at 14.9% as compared with the estimated FIRR of 13.8% at appraisal. The detailed calculation is shown in Table A9.5. The main reasons for the increase in the EIRR and the FIRR are the rapid passenger growth at Siem Reap Airport with the influx of international flights after the Government announced the Open Sky Policy in December 1999, and an increase in passenger charges after the operation of Siem Reap Airport was turned over to SCA. The Project’s efficiency in achievement of outputs and purpose is rated high. 46. However, passenger charges of $25 at Siem Reap Airport and Phnom Penh Airport are the highest in comparison with major world airports, as shown in Table A9.6. This has generated considerably more revenue than was expected at appraisal. The operation of Siem Reap Airport was handed over from SSCA to SCA and, as a result, SCA became the prime beneficiary of the Project as shown in Table A9.4. In 2003, SCA received $24.75 million from Phnom Penh Airport and Siem Reap Airport, and the Government received $1.6 million from SCA, which represented around 7% of the total revenue. Assuming that Siem Reap Airport accounts for 31% of the total revenue of the BOT contract, the revenue from Siem Reap Airport in 2003 amounts to $7.67 million, out of which $0.54 million goes to the general account of the Government and $7.13 million is the share of SCA. If an airport authority operated Siem Reap Airport, the current passenger charge of Siem Reap Airport could be reduced to $15, similar to Hanoi and Bangkok Airports. The EIRR and FIRR under the operation of an airport authority would be 22.6% and 14.7%, respectively. The economic and financial viability would be slightly lower than in the case that SCA operated Siem Reap Airport. However, it is still high enough that operation of Siem Reap Airport by an airport authority is economically and financially viable. In that case, the airport authority would be the prime beneficiary of the Project.

6 SSCA. 2003. Project Completion Report for the Siem Reap Airport Project

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D. Preliminary Assessment of Sustainability

47. The reported large increase in passenger throughput and the probability of additional increases ensure the financial sustainability of the Project. The airport operation and maintenance skills of SCA are considered higher than those of SSCA. Systematic training programs including regular maintenance programs of airport buildings and facility, as well as technical and English language skills for local airport staff, are also contributory factors to sustainability of airport operations. In the short term, the introduction of international air traffic at Siem Reap Airport and its operation by SCA indicate adequate sustainability for continued operation and maintenance of the airport. Accordingly, project sustainability is rated most likely. 48. However, the sustainability of the Project in the long term is questionable because of the lack of governance in the civil aviation sector and the public interest. SSCA still has no legal authority to take any action in the civil aviation sector and, in reality, has little institutional capacity for operating airports due to lack of qualified staff and financial resources. It is a concern that if the current situation continues unchecked, the public sector in Cambodia may not be able to accumulate knowledge and experience in airport operation and management until the concession agreement expires in 2025. Further, it should be noted that APSARA (Autorité pour la Protection, la Sauvegarde et l’Aménagement de la Région d’Angkor), which was created by Royal Decree in February 1995 as an independent public organization for the protection and management of the Siem Reap/Angkor region, advanced the point that Siem Reap Airport should be relocated if the number of passengers exceeded 2.2 million a year. According to the traffic forecast in this report, the number of passengers at Siem Reap Airport will exceed 2.2 million in 2014. The Government should consider whether SCA should be allowed to expand the present Siem Reap Airport, a new international Siem Reap Airport should be constructed at another site, or the number of tourists entering the Angkor region should be restricted (if there is no expansion of the airport). Taking these factors into consideration, evaluation of project sustainability is likely. E. Environmental, Sociocultural, and Other Impacts

49. The environmental impact assessment approved by ADB showed that the project development as designed at appraisal would have no significant adverse impact. The development of tourism infrastructure in Siem Reap/Angkor region is strictly monitored and controlled by APSARA. APSARA’s area of protection is defined by a zoning regulation that classifies the protected zones in five categories with corresponding levels of protection: Zone 1 is closest to the ruins, while Zone 5 covers the entire Siem Reap district. Since Siem Reap Airport falls in Zone 1, the airport is required to take utmost care to protect the ruins. SSCA held discussions with APSARA and agreed in October 1997 to place operational restrictions on landing and taking off of aircrafts at Siem Reap Airport. Since then, SSCA has enforced operational restrictions of aircraft. 50. With respect to tourism industry development, the Project resulted in a dramatic increase in employment and economic benefits, including in airlines, hotels, restaurants, shops, travel agencies, travel guides, and taxis. According to ADB estimates, this Project is estimated to have earned $120 million in 2003 (para. 12 of Appendix 9). The Project has facilitated the promotion and development of circuit tours involving key GMS tourist sites, e.g., Siem Reap–Bangkok–Chiang Mai–Luang Phrabang–Hue–Ho Chi Minh City. The Project has also provided much improved access to a key GMS tourism jewel, the Angkor ruins, helping promote the GMS as a single tourist destination. The sociocultural impact of the Project is rated high.

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IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

51. Appendix 10 shows a quantitative evaluation of the overall project performance based on Section III. Overall, the Project is rated partly successful. B. Lessons Learned

52. Development Partner Coordination. Two years spent by GOJ to reach a conclusion on withdrawal of the grant assistance constituted an unnecessarily long time. Much earlier cut-off date for the cofinancing arrangement should have been established between GOJ and ADB. 53. Covenants. The circumstances around SSCA changed dramatically from the time of loan appraisal. As the Government has given all the rights for management, operation, and development of Siem Reap Airport to SCA, SSCA has no authority to manage Siem Reap Airport at the moment. Under such a substantial change in SSCA’s function, the loan covenants and due compliance should have been revised as appropriate, and additional loan covenants should have been agreed with the Borrower as a conditionality to continue project implementation. Further, to strengthen government organizations and undertake sector reform, it is important to reserve sustainable funds to develop a sector. It is highly recommended that an airport development special account be set up in Cambodia. The TA consultant for establishing an NAA found that only about 25% of the aeronautical revenue is being used for the civil aviation sector and the remaining 75% is transferred to the government general account, and pointed out that financial sustainability of an NAA is highly questionable under the current financial mechanism.7 The loan covenants should have included establishment of an airport development special account, prior to setting up an airport authority. 54. Consultant Selection. The contractual dispute between SSCA and the first project implementation consultant was partly caused by the direct consultant selection procedure (para. 32). If consultant recruitment had been carried out following ADB’s standard consultant selection procedure, the terms of reference, engineering inputs, and costs would have been clearer. Further, SSCA requested ADB to approve direct selection of international members of the construction supervision consultant team for packages VII and VIII because of urgent need, although ADB did not approve this method. SSCA counted on the direct selection approach to save time and avoid the cumbersome nature of the standard consultant selection procedure. Direct selection is the easiest way to engage consultants, but strong justification is required to secure transparency and ensure performance of the selected consultant. One of the reasons that SSCA failed to recruit individual consultants for establishment of an NAA was unfamiliarity of methodology and requirements for the standard consultant selection procedure. When ADB is requested to consider the direct selection of consultants, very careful examination is required. Direct selection should only be used with a strong justification, and ADB should carry out a careful review of the minutes of contract negotiation meetings and the contract document. It is not appropriate to apply direct selection for the purposes of time savings only. 55. Procurement. The Project procured eight contract packages, comprising two for civil works and six for facility installation and equipment delivery. Irrespective of estimated costs, SSCA, the consultants, and ADB staff spent much time in preparing bidding documents, reviewing the bidding documents, evaluating technical and financial bids, and solving issues

7 ADB. 2004. Draft Final Report of TA 3414-CAM: Capacity Building in Public-Private Partnership for Transport.

15

that occurred during procurement—for each contract package. This had a detrimental effect on project implementation. In similar projects in the future, the number of contract packages should be minimized as much as possible. In the case of the Project, it may have been better to combine packages I and II, packages III, IV and V, and packages VII and VIII. Since package VI is highly technical, it was adequate to procure it separately. C. Recommendations

56. Legal Entity. In Cambodia, due to SSCA’s lack of legal authority, it cannot effectively provide public control and supervision of the main international airports. Although the draft Civil Aviation Code has been submitted to the National Assembly, it has not been enacted. Each country enacts a civil aviation law and other legislation based on ICAO standards. The civil aviation law must be formulated to ensure aviation safety, airport development, aircraft certification and maintenance, qualifications for civil aviation employees, and the maintenance of aeronautical navigation aid facilities. The preparation and updating of the civil aviation law is the responsibility of the public sector. ICAO states that an unregulated monopoly in the operation of airports by the private sector can be more harmful than a relatively inefficient public monopoly, and it must be ensured that monopoly power is not misused, therefore the Government needs to retain an ability to inspect the airport company’s accounts to the extent necessary to prevent potential abuse of monopoly power. 8 In this connection, the Government is encouraged to enact the Code as soon as possible, providing legal personality to SSCA. 57. Sector Reform and Capacity Building. Additional assistance is necessary to reform the civil aviation sector to establish an NAA as an operation and maintenance authority of airports and to strengthen the institutional capability of SSCA as a regulatory authority with adequate legal authority. In addition, overall reform in the transport sector should be further discussed with the Borrower, SSCA, and other relevant organizations. Weaknesses in the civil aviation sector are caused by SSCA's position under the supervision of COM and the lack of authorized officials and qualified staff in SSCA. Reorganization from SSCA under supervision of COM to Civil Aviation Bureau under supervision of MPWT, which needs to be newly established, is considered an adequate option to develop the nation’s air transport network under the national transport policy. Even though the TA study reports are completed, SSCA has been unable to implement the outputs of the study. SSCA is encouraged to look for long-term experts to advise SSCA management and train its staff through bilateral assistance, such as Japan International Cooperation Agency experts mobilized in the Government. After SSCA is able to function properly, ADB may consider financing future airport projects. 58. Further Action or Follow-Up. To observe the future development of the civil aviation sector in Cambodia, ADB should keep in touch with the Borrower and SSCA, and request that they submit progress reports on a regular basis. Progress reports on (i) enactment of the Civil Aviation Code, (ii) establishment of an NAA, and (iii) sector reform should be submitted to ADB quarterly. SCA has started construction of a new international terminal building at Siem Reap Airport. Foundation works have started and the building is scheduled for completion by 2006. SCA’s plans for the expansion of airport facilities include a new runway. Progress reports on (i) airport development and renovation information and (ii) cash flow in the civil aviation sector to ensure that adequate reserves can be generated for use by the sector should be submitted to ADB annually. It is recommended that a project performance audit report be carried out no later than two years to enable ADB to ensure the fulfillment of all covenants.

8 ICAO. 2002. Privatization in the Provision of Airports and Air Navigation Services

16 Appendix 1

CHRONOLOGY OF MAIN EVENTS IN PROJECT IMPLEMENTATION

Date Event 1995 9–20 Oct Fact-finding mission fielded. 19 Dec ADB approves advance procurement action and direct selection of the project

implementation consultant, Wiedleplan. 1996 23 Jan ADB receives the EA’s draft documents for the engagement of project

implementation consultants. 2 Feb Management review meeting held. 12–23 Feb Appraisal mission fielded. 1 Mar Summary environment impact assessment circulated to ADB Board. 26 Apr ADB receives a copy of draft negotiated consultancy contract. 23 May First staff review committee meeting held. 5 Jul Minister of Economy and Finance requests Japanese Ambassador in Cambodia

for cofinancing from OECF to the Project. 11 Oct Second staff review committee meeting held. 21 Oct Authorization for loan negotiations approved. 21 Oct Minister of Economy and Finance again requests Japanese Ambassador for

cofinancing of $7.5 million loan from OECF to the Project. 5–6 Nov Loan negotiations held. 15 Nov Circulation of Report and Recommendation to the President and Loan

Agreement to the Board approved. 12 Dec ADB Board approves the loan. 19 Dec ADB informs Ministry of Finance in Japan that ADB loan for $15 million was

approved, and once the Government of Japan decides to assist the Project, ADB would reduce the loan to $7.5 million.

1997 14 Mar Loan Agreement signed. 27 Mar JICA and SSCA agree that JICA will conduct basic design study of Siem Reap

Airport, which will be subsequently postponed due to the civil disturbance in July 1997.

4 Jun Legal opinion received. 13 Jun ADB declares loan effective. 11 Aug ADB receives a copy of discussions on design modification options for passenger

terminal building. 11 Dec The project implementation consultancy contract signed. 1998 29 Jan–5 Feb Inception mission fielded. 20 Feb JICA informs ADB that no decision on the cofinancing will be provided until

August 1998 at the earliest. 23 Apr ADB sends to the EA comments on the draft tender documents for the civil

works. 28 Apr–1 May Review mission fielded. 11 May Bid for package VI invited. 15 May ADB sends its comments on the draft tender documents for procurement of

equipment. 18 May Bids for packages I to V invited. 25 May ADB receives preliminary drawings for passenger terminal building. 27 Aug ADB approves the EAs’ recommendation for the award of contract for package V

to Airport Systems International. 28 Aug ADB receives representation from Alcatel regarding bid for package V.

Appendix 1 17

Date Event

31 Aug ADB requests the EA to defer signing of the contract for package V. 4 Sep ADB approves the EA’s recommendation for the award of contract for package VI

to ETDE (France). 22 Sep ADB approves the EA’s recommendation for the award of contract for package II

to ETDE (France). 7 Oct ADB receives the EA’s position on the bid evaluation for package V. 15 Oct ADB approves the EA’s recommendation for the award of contract for package III

to SIDES (France) and package IV to SOVAM (France). 11 Nov ADB sends its concurrence to its earlier communication approving the award of

contract for package V to Airport Systems International. 27 Nov ADB receives representation from R. M. Asia for package III. 1999 14 Jan Procurement Committee meeting held to discuss the issue on the award of

contract for package III. 18 Jan The contract for package I signed. 2–12 Feb Review mission fielded. SSCA agrees that the pending cofinancing from the

Government of Japan to a new terminal building would not be forthcoming. 19 Feb ADB withdraws its earlier approval for the award of contract for package III to

SIDES (France) due to its unresponsive bid and approves the award of contract to R. M. Asia Co., Ltd.

16–18 Mar Review mission fielded. 24 Jun JICA informs ADB of withdrawal of the pending cofinancing. 6–14 Jul Midterm review mission fielded. 6–8 Sep Review mission fielded. 20–24 Sep Special loan administration mission fielded. 12 Dec The Government of Cambodia adopts open skies policy. 2000 2–9 Feb Special loan administration mission fielded. 3 Mar ADB receives Borrower’s request for the extension of loan closing date to 31

December 2001, which was approved on 14 April 2000. 18 Apr ADB receives advice from the EA on cancellation of opening of the

prequalification to the civil works (package VII) due to court injunction requested by Muhibbah Engineering.

19 Apr ADB approves the EA’s recommendation to award the project management consultancy contract for a consultant at Louis Berger.

25 Apr ADB confirms approval on the direct selection of individual domestic consultants. 1 May Package VI completed. 16 May ADB receives a copy of the concession Agreement between the Government and

Societe Concessionnaire de L’Aeroport. 2 Jun ADB sends a fax to the Government expressing its views in entering into the

agreement with a third party without consultation with ADB. 10 Jun Package V completed. 6 Jul Package II completed. 13–22 Jul Special loan administration mission fielded. 22 Aug ADB sends its offer to engage a lawyer to review the concession agreement,

which was accepted on 24 August 2000. 28 Aug ADB advises the EA that review of the bid evaluation report for packages VII and

VIII, and approval of contracts awards can be determined only when the air traffic forecast for Siem Reap Airport has been firmed up and modification of scope of works and engineering design has been finalized and approved by the Government.

18 Appendix 1

Date Event

29 Aug ADB requests the EA on the status of the updating of air traffic forecast required

for modifying the scope of works for passenger terminal building. 12 Sep ADB receives air traffic forecast for Siem Reap Airport. 20 Sep ADB receives draft report and recommendations on the concession agreement from the lawyer. 3 Oct Discussion with the lawyer and ADB staff of the draft report and

recommendations on the concession agreement held in Manila. 31 Oct Final report on design modification options received from the EA. 2–9 Nov Review mission fielded. 7 Nov Package I completed. 22 Dec ADB rejects Borrower’s idea of using loan funds for the construction of

international terminal building. 23 Dec Package III completed. 2001 11–13 Jun Review mission fielded. 15 Jun ADB received EA’s bid evaluation reports for packages VII and VIII 18 Jun ADB approves the EA’s recommendation for the award of contract for package

VII to Castle Gold/PNCC JV. 27 Jun ADB receives the Borrower’s request for the second extension of loan closing

to 31 March 2003 and reduced percentage of ADB’s portion for the civil works from 85% to 75%, which was approved on 31 August 2001.

28 Jun ADB approves the EA’s recommendation for the award of contract for package VIII to R.M. Asia Co., Ltd.

31 Jul ADB receives the EA’s request for reallocation of funds to be used for the extension of project management consultancy contract.

7 Aug ADB rejects the EA’s request for extension of project management consultancy contract due to long break in construction activity.

22 Aug ADB advises the EA to engage individual experts for project management consultancy due to budget constraints.

1 Oct ADB approves the draft terms of reference for project management consultancy and the available amount to finance the consultancy.

2 Oct ADB, on the EA’s request, sends draft terms of reference for consulting services for establishing airport authority.

22 Oct ADB receives the EA’s recommendation for the engagement of a consultant at PWD as a construction supervision consultant, which was approved on 26 October 2001.

21 Nov ADB approves the draft consultancy contracts for domestic individual consultants.

2002 19 Mar ADB receives request for reallocation of funds under the loan and contract

variation for package VIII, which was approved on 16 April 2002. 24-29 Mar Review mission fielded. 26 Mar ADB receives the EA’s request for the engagement of international consultants

(airport architect, communication and information engineer, and electrical and mechanical engineer), which was approved on 15 April 2004.

7 May Package IV completed. 28 Jun ADB receives the EA’s evaluation report for the engagement of the international

consultants, which was approved on 1 July 2002. 9 Aug Test of the project facilities completed (passenger terminal building and technical

service building)

Appendix 1 19

Date Event 24 Oct Start operation of the project facilities (passenger terminal building and technical

service building). 9 Nov Package VII completed. 29 Nov Package VIII completed. 6 Dec Inauguration ceremony of the new passenger terminal building held. 17 Dec Review mission fielded. 2003 15 Feb ADB receives two copies of the EA’s project completion report. 10–13 Mar Review mission fielded. 1 Apr ADB receives official request from the Borrower for the interim use of the new

terminal building for international passengers. 2 Apr ADB receives Borrower’s request for the third extension of loan closing date to

31 March 2004 to undertake consulting services for establishment of the airport authority and utilization of loan savings for the consulting services.

30 Jun ADB approves the third extension of loan closing date to 31 March 2004 and the utilization of loan savings for the consulting services.

26 Sep ADB sends a reminder to the EA to expedite recruitment of consultants for the establishment of the airport authority.

15–17 Oct Special loan administration mission fielded. 8 Dec ADB sends a follow-up reminder on the recruitment of consultants for the

establishment of the airport authority. 2004 6 Jan ADB receives terms of reference, evaluation report, and draft negotiated

consulting services contracts for establishment of the airport authority, which was rejected on 8 January 2004.

21 Jan ADB advises the EA to discontinue with the recruitment of consultants due to time constraints—cannot be completed by the loan closing date.

1-3 Mar Special loan administration mission fielded. 2 Apr ADB receives the Borrower’s request for the fourth extension of the loan closing

date to 31 March 2005 to undertake the consulting services for establishment of the airport authority.

20 May ADB informs the Borrower to close the loan and cancel the undisbursed amount of the loan proceeds.

26 May ADB informs the Borrower that loan account will be closed retroactive 17 April 2003, and an amount of SDR135,558.54 will be canceled, effective that date.

ADB = Asian Development Bank, EA = Executing Agency, JICA = Japan International Cooperation Agency, JV = joint venture, OECF = Overseas Economic Cooperation Fund, SDR = special drawing rights, SSCA = State Secretariat of Civil Aviation. Source: Asian Development Bank

ORGANIZATION CHARTS

Figure A2.1: Sector Organization

Office of Council of Ministers

Build-Operate-Transfer

State Secretariat of Civil Aviation

Air Navigation Services Provider

(Private Sector)

Build-Cooperate- Transfer

Airport

Committee

Airport Operator

(Private Sector)

Royal Government of Cambodia

Airport

Authority

20 A

ppendix 2

Figure A2.2: Structure of State Secretariat of Civil Aviation

Kang Keng Airport

Mondolkiri Airport

Phnom Penh Airport

Siem Reap Airport

Battambang Airport

Steung TrengAirport

Koh Kong Airport

Rattanakiri Airport

State Secretariat of Civil Aviation Secretary of State

Undersecretary of State

Director General Deputy Director General

Inspection Department

Administration

and Personnel

Department

Finance

and Logistics

Department

Planning

and Policies

Department

Electric

Engineering Department

Air

Transport Department

Airport

Engineering Department

Security Department

Flight

Operation and

Air Safety Department

Appendix 2

21

CIVIL WORKS AND EQUIPMENT PROCURED UNDER THE PROJECT Package

No. PCSS No.

Procurement Mode

Description Contractor Contract Date Contract Amount

($) I 0007 ICB Civil and Building Works China Guangxi

Corporation 18 Jan 1999 2,439,682.55

II 0002 ICB Supply and Installation of Generating and Water Purification Facilities

ETDE (France) 16 Oct 1998 1,112,488.54

III 0005 ICB Supply and Installation of Crash/Fire/Rescue Equipment

R.M. Asia Co., Ltd.

18 Feb 1999 980,229.98

IV 0004 ICB Supply and Installation of Ground Handling and Maintenance Equipment

SOVAM (France) 29 Oct 1998 1,338,541.99

V 0006 ICB Supply and Installation of Navigational Aides and Communication Equipment

Airport Systems International

20 Nov 1998 1,401,621.23

VI 0003 IS Supply and Installation of PAPI and Airfield Lighting

ETDE (France) 16 Oct 1998 452,207.19

VII 0015 ICB Civil and Building Works for Passenger Terminal Building and Technical Service Building

Castle Gold/PNCC JV

16 Jul 2001 2,683,583.49

VIII 0016 ICB Supply, Delivery and Installation of Commissioning of Equipment, Telecom and Information System

R.M. Asia Co., Ltd.

13 Jul 2001 1,047,450.11

ICB = international competitive bidding, IS = international shopping, PAPI = precision approach path indicator, PCSS = procurement contract summary sheet. Note: The packaging proposed at appraisal as shown in Appendix 6 of the Report and Recommendation of the President was made based

on the assumption that the Government of Japan would provide grant assistance for the civil works component, that Asian Development Bank would finance the equipment component, and that procurement of the civil works and equipment components would be conducted at a time. This is because the civil works and the equipment components were interrelated. However, as it was decided that procurement of the passenger terminal and technical services buildings to be financed by the Government of Japan would be carried out later, the actual packaging was modified from the original plan so that the procured building and equipment could function without the passenger terminal and technical services buildings.

Source: Asian Development Bank

22 A

ppendix 3

Appendix 4 23

PROJECT COST AT APPRAISAL AND ACTUAL ($ million)

Appraisal Actual Item

Foreign Exchange

Local Currency

Total Cost

Foreign Exchange

Local Currency

Total Cost

A. Base Costs 1. Civil Works 6.50 1.60 8.10 4.26 0.86 5.12 2. Equipment Charge 5.80 0.70 6.50 6.33 0.00 6.33 3. Consulting Services 1.50 0.10 1.60 2.92 0.00 2.92 Subtotal (A) 13.80 2.40 16.20 13.51 0.86 14.37 B. Contingency 1.00 0.20 1.20 — — — Subtotal (B) 1.00 0.20 1.20 — — — C. Service Charge During

Construction 0.20 — 0.20 0.18 — 0.18

Subtotal (C) 0.20 — 0.20 0.18 — 0.18 Total 15.00 2.60 17.60 13.69 0.86 14.55

— = not available. Source: Asian Development Bank estimates.

24 Appendix 5

PROJECTED AND ACTUAL DISBURSEMENT

Table A5.1: Disbursement

Year Projected ($ million)

Actual ($ million)

1996 0.000 0.000 1997 1.000 0.000 1998 8.000 3.306 1999 12.000 7.672 2000 15.000 9.386 2001 10.234 2002 13.454 2003 13.687

Source: Asian Development Bank

Table A5.2: Disbursement Details ($ million)

0.00

2.00

4.00

6.00

8.00

10.000

12.00

14.000

16.000

1996 1997 1998 1999 2000 2001 2002 2003

Projected

Actual

Year

Dis

burs

emen

t ($

mill

ion)

PROJECT IMPLEMENTATION SCHEDULE

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Prequalification Bidding Contract Package I Prequalification Bidding Contract

Package VII Prequalification Bidding Contract

Equipment Bidding Contract

Package II Bidding Contract

Package III Bidding Contract

Package IV Bidding Contract

Package V Bidding Contract

Package VI Bidding Contract

Package VIII Bidding Contract

At appraisal Actual

2000 2001 Civil and Building Works

2002 Activity 1996 1997 1998 1999

Appendix 6

25

26 Appendix 7

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Reference

in Loan Agreement

Status of Compliance

The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental, and airport practices.

Section 4.01 (a)

Complied with.

The Borrower shall make available, promptly as needed, the funds, facilities, services, land and other resources, which are required, in addition to the proceeds of the Loan, for carrying out the Project and for the operation and maintenance of the Project facilities.

Section 4.02

Partly complied with. The funds for the operation and maintenance of the project facilities are not provided.

In the carrying out of the Project, the Borrower shall cause competent and qualified consultants and contractors, acceptable to the Borrower and the Bank, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and the Bank.

Section 4.03(a)

Complied with.

The Borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

Section 4.04

Not complied with. SSCA did not involve administration of the operation and maintenance of the project facilities.

The Borrower shall make arrangements satisfactory to the Bank for insurance of the Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice.

Section 4.05 (a)

Partly complied with. The project facilities are insured by the private company operating the facilities under the concession agreement.

The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience, and terms of reference are acceptable to the Bank; (iii) furnish to the Bank, as soon as available but in any event not later than twelve (12) months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the covenants of this Loan Agreement), all in the English language; and (iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request.

Section 4.06 (b)

Complied with.

Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, in such form and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the Borrower of its obligations under the Loan Agreement and the accomplishment of the purposes of the Loan.

Section 4.07 (c)

Complied with.

Appendix 7 27

Covenant Reference

in Loan Agreement

Status of Compliance

The Borrower shall ensure that the Project facilities are operated, maintained and repaired in accordance with sound administrative, financial, engineering, environmental, and maintenance and operational practices.

Section 4.09

Partly complied with. The Project facilities are operated, maintained, and repaired under the concession agreement.

SSCA shall be responsible for the planning, implementation, management, and coordination of the Project. The PIU within SSCA shall be responsible for the day-to-day Project implementation and liaison between SSCA, the PCSC, contractors and suppliers, and the Bank. The PIU shall be headed by the Director General of SSCA and shall further comprise staff from SSCA, MPWT, and the ADA as well as the Project management consultants.

Para.1, Schedule 6

Complied with.

The PCSC shall have the following responsibilities: (i) to oversee all Project activities and to coordinate among all agencies of the Borrower involved in Project implementation; (ii) to provide guidance to the PIU; (iii) to help clear any bottlenecks; and (iv) to serve as a forum for discussion and review of the impact of the Project on regional development.

Para. 2(a), Schedule 6

Partly complied with. The PCSC discussed design of the project facilities only.

The PCSC shall meet at least twice a year and more frequently, if required. The PCSC shall be co-chaired by the Undersecretary of State in charge of Civil Aviation and the Vice President of ADA and shall include the Director General of SSCA and representatives from the Office of the Prime Minister, the Ministry of Economy and Finance, MPWT, APSARA, and other agencies as required.

Para. 2 (b), Schedule 6

Partly complied with. The PCSC met less than twice a year.

The Borrower and SSCA shall ensure that during Project implementation as well as after Project completion, SSCA’s annual budget shall provide for sufficient funding for operations, maintenance and repairs of the Project facilities in accordance with ICAO standards. SSCA shall prepare annual operation and maintenance programs and budgets. During Project implementation, SSCA shall provide to the Bank for its comments, at least two months before the end of each fiscal year and prior to finalization, drafts of the annual operation and maintenance programs and budgets, including staffing and equipment allocations and details on equipment and materials to be purchased.

Para. 3, Schedule 6

Not complied with. The private company has all the right to develop, operate, and maintain the project facilities under the concession agreement.

The Borrower shall ensure, if necessary through allocation from the national budget, that SSCA has sufficient funds to cover at least (i) its operating and maintenance expenses; (ii) depreciation of its assets calculated in accordance with generally accepted accounting standards; and (iii) financial charges. The Borrower shall ensure that the tariffs of SSCA are set at levels at least sufficient to cover such costs.

Para. 4, Schedule 6

Not complied with. The private company has a right to set the tariffs under the concession agreement.

Prior to 31 December 1998, SSCA shall (i) permanently station at Siem Reap Airport adequate numbers of suitably qualified personnel and equipment for the operation and maintenance of the airport facilities in compliance with ICAO standards, and (ii) establish and undertake implementation of a program for regular operational training in line with sound engineering and civil aviation practices.

Para. 5, Schedule 6

Change in the date for compliance to 31 December 1999 was approved in February 1998. Not complied with. The private company has all the right to develop, operate, and maintain the project facilities under the concession agreement.

28 Appendix 7

Covenant Reference

in Loan Agreement

Status of Compliance

Prior to 1 July 1999, the Borrower shall establish an Airport Authority, which shall be in charge of operation and maintenance of Siem Reap Airport. The Airport Authority shall be a separate legal entity with control over and responsibility for its own budget.

Para. 6, Schedule 6

Change in the date for compliance to 1 July 2000 was approved in February 1998. Not complied with.

Upon establishment of the Airport Authority, the Borrower shall transfer to the Airport Authority the Project facilities, including all rights therein and legal titles thereto, on terms and conditions satisfactory to the Bank and the Airport Authority shall pay to the Borrower compensation, which shall cover an appropriate portion of the value of the assets provided under the Project. If the Airport Authority is not in a position to pay the total compensation amount immediately upon transfer of the Project facilities, the Airport Authority shall be allowed to pay the sum in installments and at a floating interest rate equivalent to no less than the Bank’s then prevailing ordinary capital resources lending rate and on other terms and conditions satisfactory to the Bank.

Para. 7, Schedule 6

Not complied with.

The Borrower shall, prior to 30 June 1997, submit to the National Assembly a draft Civil Aviation Code, which shall include provisions to ensure safety and security of air traffic.

Para. 8, Schedule 6

Complied with. However, the National Assembly has not yet deliberated on the draft Code.

Prior to undertaking any works at the Project airport, SSCA shall obtain clearance from APSARA.

Para. 9, Schedule 6

Complied with.

During Project implementation, SSCA shall ensure that an appropriate system is in place to control siltation caused by construction works. SSCA shall also ensure that, prior to 31 December 1999, appropriate waste management and storm water drainage systems and oil separators for removal of oil waste within the Project area are established.

Para. 10, Schedule 6

Change in the date for compliance to 31 December 2000 was approved in February 1998. Complied with.

Prior to 31 December 1997, the Borrower shall, in consultation with SSCA, the provincial government and APSARA, establish a zoning regulation to restrict development in the area surrounding the airport to development in support of the airport operations.

Para. 11, Schedule 6

Complied with.

SSCA shall, at the beginning of Project implementation, establish a system for recording data and statistics for the monitoring of the impact of the Project. Using such sys tem, SSCA shall monitor and assess the physical, financial, and social impact of the Project continuously and report its findings to the Bank as an annex to the quarterly progress reports referred to in Section 4.07 (b) of this Loan Agreement.

Para. 12, Schedule 6

Partly complied with. The quarterly progress reports were not submitted to ADB recently.

During the second half of 1997, the Borrower and the Bank, with participation of experts from ICAO, shall conduct a midterm review of the Project implementation. The terms of reference for the review shall include: (i) undertaking a comprehensive review of the Project implementation, including environmental issues and compliance with relevant ICAO standards; (ii) reviewing traffic forecasts and projections; (iii) determining compliance with the Loan Agreement; (iv) reexamination of the institutional and policy framework of the sector and the Borrower’s progress in implementing policy reforms; (v) examination of the progress and results achieved for the institutional strengthening of SSCA; and (vi) make recommendations for the rectification of any

Para. 13, Schedule 6

Late compliance. Change in timing of the midterm review to at the end of 1998 was approved in February 1998. The midterm review was fielded in July 1999.

Appendix 7 29

Covenant Reference

in Loan Agreement

Status of Compliance

and (vi) make recommendations for the rectification of any identified shortcomings in the implementation of the Project. ADA = Airport Development Authority, APSARA = Autorité pour la Protection, la Sauvegarde et l’Am énagement de la Région d’Angkor, ICAO = International Civil Aviation Organization, MPWT = Ministry of Public Works and Transport, PCSC = project coordination and steering committee, PIU = project implementation unit, SSCA = State Secretariat of Civil Aviation. Source: Asian Development Bank

30 Appendix 8

TECHNICAL ASSISTANCE COMPLETION REPORT Division: Infrastructure Division, Mekong Department

Amount Approved: $550,000 TA No. and Name

TA 2706-CAM: Institutional Strengthening of the State Secretariat of Civil Aviation

Revised Amount:

Executing Agency: State Secretariat of Civil Aviation

Source of Funding: Japan Special Fund

TA Amount Undisbursed $25,094.98

TA Amount Utilized $524,905.02

Date Completion Date Original 31 Dec 1999

Actual 8 Sep 2000

Closing Date

Approval 12 Dec 1996

Signing 14 Mar 1997

Fielding of Consultants

Jan 1999 Original 30 Jun 2000

Actual 14 Dec 2000

Description In view of the policy reform and in-house capacity building required to be undertaken by the State Secretariat of Civil Aviation (SSCA) during and subsequent implementation of the Siem Reap Airport Project (Loan 1503-CAM), the Government requested the technical assistance (TA) to guide it through the implementation of key aspects of this process. Objectives and Scope The objective of the TA was to assist the Government to transform SSCA into a viable and market-oriented organization able to cope with the demands of economic competitive activity. The TA study included (i) identification of the organization’s goals, (ii) preparation of a five-year business plan, (iii) introduction of comprehensive financial recording and reporting systems, (iv) implementation of a management information system, and (v) identification of the financial and managerial training needs of the sector. Evaluation of Inputs The TA was envisaged to require 15 person-months of international consultants who have expertise in corporate planning, financial accounting and computer technology, and human resources development. The expected duration of the assignment was amount 5 months from early January 1997. The selected consulting firm, Airways Consulting Limited commenced the consulting services in January 1999 and completed in September 1999. The consulting firm consisted of a Business Planning Specialist (Team Leader), a Financial Specialist, a Computerization Specialist, and a Training Specialist. SSCA established a steering group headed by project director for the Siem Reap Airport Project, and comprising staff from policy and planning, finance, administration, air transport and flight operation departments. During the TA study, ADB sent two review missions to join the tripartite meeting in February 1999 and to review major outputs of the TA study and discuss the future actions with SSCA in July 1999. Performance of the consultants was satisfactory. Evaluation of Outputs The TA consultant generated a final report in September 2004 in line with the terms of reference. Management and senior staff of SSCA understood the basic concept of the necessity to strengthen SSCA’s functions from recommendations of the TA consultants, which are (i) civil aviation legislation should be established so that SSCA can have legal authority for its actions; (ii) SSCA should be separated into three functions, regulatory body, air navigation provider and airport operating organization; (iii) the new Management Information System should be installed introducing new computer system or upgrading network environments; (iv) a feasible business plan should be required to enable the efficient financial operation and enhance the financial performance; and (v) human resource training program should be developed to improve the staff workability and foster the manager where the core function of organizational management and decision-making. The consulting firm provided excellent outputs of the TA study. SSCA requested further support by ADB to sustain these benefits of the TA and maximize developmental impact.

Continued next page

Appendix 8 31

Overall Assessment and Rating As stated in the above Evaluation of Outputs, performance of the TA consultant was satisfactory. Three of the recommendations of the TA study were achieved. First, air navigation service functions were transferred to the air navigation service company from SSCA. The Government made a Build-Cooperate-Transfer contract with the company under supervision of SSCA. Second, computerized systems were introduced to management of the finance function. Third, skill of SSCA staff was improved through the human resource training program. However, situation has been changed after Open Sky Policy was announced in December 1999. All the right to develop, operate and maintain Siem Reap Airport was transferred to another private company. SSCA has still no legal authority for its actions, as deliberation of the draft Civil Aviation Code by the National Assembly has been delayed due to the political disturbance after the National Election in July 2003. The other recommendations of the TA study were not achieved effectively due to those external negative factors. Accordingly, the overall assessment of the TA is partly satisfactory. Major Lessons Learned There are multiple airport development and operation formats in the civil aviation sector in Cambodia, and this in turn has generated a complex control, jurisdiction and command system encompassing the various organizations. As a result, public control and supervision of the main airports by the SSCA cannot function effectively. During the TA study, Siem Reap Airport was supposed to be operated by SSCA, however, immediately after the TA implementation period, all the operating rights of Siem Reap Airport were transferred to the private sector as the result of the signing the concession agreement between the Council of Ministers and the private sector. It is important that TA study should involve all the parties who have legal authorities relevant to the sector. In this case, Office of the Council of Ministers should have participated in the TA study. Likewise, in case that the TA study aims at improvements of financial schemes and mechanisms, not only SSCA but also Ministry of Economy and Finance have to be invited to the TA study. Recommendations and Follow-Up Actions Any tangible outputs on the institutional strengthening in SSCA functions have not come up since December 1999. The objective outlined under this TA is extremely important for development of the civil aviation sector in Cambodia as well as compliance with the loan covenant on establishment of the Airport Authority for Siem Reap Airport. Technical assistance for the establishment of the Airport Authority is being undertaken under TA 3414-CAM: Capacity Building in Public-Private Partnerships for Transport. Furthermore, the subsequent technical assistance to strengthen SSCA as a regulatory function is planned under Loan 1969-CAM: Greater Mekong Subregion: Mekong Tourism Development Project. Aggressive dialogue with the Government is required to ensure that institutional strengthening of SSCA is proactively performed. Prepared by

Yasushi Tanaka

Designation

Transport Specialist

SSCA = State Secretariat of Civil Aviation, TA = technical assistance

32 Appendix 9

ECONOMIC AND FINANCIAL REEVALUATION A. Introduction 1. The methodology used in the economic and financial reevaluation was similar to that used at appraisal. The economic analysis of the Project was undertaken by comparing the costs and benefits under the “with” and “without” project bases. The “without” project scenario referred to the continuation of the existing situation without physical improvement to the project facilities. The “with” project case was established by appraising the costs and benefits of airport improvement in terms of incremental airport operating revenues, aircraft operational cost savings, and incremental net tourist expenditure. This economic reevaluation is a recalculation of the appraisal analysis by updating to current prices and reflecting changes during project implementation relative to expectation at appraisal. 2. The Project was evaluated over a period of 25 years with no salvage value assumed thereafter. The project implementation started in 1998 and was completed at the end of 2002. In the project completion review, the evaluation period runs from 1998 to 2022. All financial costs and revenues were converted to economic costs and revenues by applying a standard conversion factor of 0.86 to the nontraded cost and benefit components after excluding taxes and subsidies. All prices and costs were set in 2004 prices. 3. During project implementation, two major changes happened to Siem Reap Airport. First, the Open Sky Policy was adopted in December 1999 and foreign tourists can take international flights to and from Siem Reap Airport without transit through Phnom Penh Airport. Second, operation of Siem Reap Airport was transferred from the State Secretariat of Civil Aviation to the private company that entered into the build-operation-transfer (BOT) contract for Phnom Penh Airport with the Government. B. Air Traffic Forecast 4. The actual number of departing and arriving passengers at Siem Reap Airport is shown in Table A9.1. A high growth rate of international passengers has been recorded since the adoption of the Open Sky Policy. The growth rate of both international and domestic passengers is close to the medium scenario forecast at appraisal. Number of passengers decreased in 2003 due to the outbreak of Severe Acute Respiratory Syndrome (SARS). However, there is no doubt that the number of passengers after 2004 will increase continuously until it reaches handling capacity of the passenger terminals.

Table A9.1: Actual Number of Departing and Arriving Passengers Item 2000 2001 2002 2003 International 176,499 270,826 (53.4%) 384,170 (41.9%) 372,736 (- 3.0%) Domestic 161,423 171,233 ( 6.1%) 194,779 (13.8%) 168,884 (-13.3%) Total 345,171 442,059 (28.1%) 578,949 (31.0%) 541,620 (- 6.4%)

( ) = percentage growth rate compared with the previous year. Source: State Secretariat of Civil Aviation. 5. The low traffic forecast scenario was adopted in the evaluation of the “without” project case. It is assumed that both international and domestic passengers use the old passenger terminal building only. Handling capacity of the old passenger terminal building is estimated at 800,000 passengers per year. The medium traffic forecast scenario was adopted in the

Appendix 9 33

evaluation of the “with” project case as the improvement will alleviate the facility constraint under the “without” project scenario. The old passenger terminal building is used for domestic passengers, and the new passenger terminal building constructed under the Project is used for international passengers. The total handling capacity is estimated at 2,300,000 passengers per year. The annual growth rates of passenger traffic at appraisal and at project completion review are summarized in Table A9.2. The growth of passenger traffic will stop in 2015 under the “with” project case, and in 2007 under the “without” project case, because of capacity constraints of the passenger terminals.

Table A9.2: Annual Growth Rates of Passenger Traffic (%)

A. Appraisal Scenarios 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Low 24 16 10 8 7 7 7 7 7 7 0 0 Medium 34 30 24 19 16 13 11 9 8 7 0 0 High 35 25 22 22 21 21 13 11 10 9 0 0 B. Project Completion Review With 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 International 48 38 18 8 8 8 8 8 8 8 8 0 Domestic 10 10 10 5 5 5 5 5 5 5 5 0 Without 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 International 24 19 14 0 0 0 0 0 0 0 0 0 Domestic 3 3 3 0 0 0 0 0 0 0 0 0 Source: Asian Development Bank estimates C. Project Costs 6. The economic costs of the Project include the costs for the civil works for airfield and building improvement, the equipment and its installation, the consulting costs for detailed design, and construction supervision. The project cost was estimated at $17.6 million at appraisal. The actual project cost was $14.5 million and it was converted to 2004 current prices. Operating costs of the airport facilities under the “with” project case were estimated and compared with the costs in the “without” project case. D. Economic Benefits 7. Like the economic evaluation at appraisal, the benefits of the Project considered in the economic analysis include incremental airport operating revenues, aircraft operational cost savings, and incremental net tourist expenditure. There are other types of benefits although they were not quantified at economic evaluation. First are generated job opportunities (para.12). Second are airport user benefits (para.13). International travelers can benefit from time and cost savings by using direct international flights between Siem Reap and major cities in cities in close countries such as Ho Chi Minh City; Singapore; Bangkok; and Hong Kong, China, instead of being routed through Phnom Penh. Also, the direct international flights can save aircraft operational costs. However, these benefits were not included in the economic reevaluation, as it is difficult to assume the future trend of job opportunities or flight schedules, and also these benefits were not considered at appraisal.

34 Appendix 9

8. The operating revenues comprise landing charges, passenger charges, commercial charges, and other miscellaneous incomes. The operating costs comprise staff costs, maintenance costs , and other operational expenses. The BOT contractor provided the information on total revenues and expenses at Siem Reap Airport for the years from 2001 to 2003, but did not provide detailed revenue categories and expenses categories. According to the provided information, total revenue of Siem Reap airport was $4.39 million and $7.67 million in 2001 and 2003, respectively. Total operating expenses of Siem Reap Airport were $2.8 million and $4.0 million in 2001 and 2003, respectively. It was assumed that growth of the operating revenues is proportionally related to growth of the number of passengers. Therefore, the operating revenues from Siem Reap Airport were estimated based on the percentage of passengers using Siem Reap Airport. 9. Revenue from Phnom Penh Airport and Siem Reap Airport is retained by the BOT contractor and the amount of tax payable is calculated against the projected amount under a revenue-sharing scheme. In 2003, the BOT contractor received $24.75 million and the Government received $1.6 million from the BOT contractor, which represented around 7% of the total revenue from Phnom Penh Airport and Siem Reap Airport. Siem Reap Airport represents 31% of total revenue of the BOT contract. Therefore, the Government’s revenue from Siem Reap Airport represents around 2% of total revenue of the BOT contract. 10. Aircraft operating cost savings were included in the benefits at appraisal by calculating the difference between cost per seat block hours used for ATR72s and B737-400 or similar aircraft. This benefit was not calculated in the economic reevaluation because ATR72s are still operating between Siem Reap Airport and Phnom Penh Airport. Airlines may be able to reduce operating costs by using larger aircraft than the ATR72. 11. At appraisal, incremental net tourist expenditure was calculated on the assumption that 74% of airline passengers arriving in Siem Reap were tourists, and the benefit from those tourists was estimated at $20 per tourist per visit. Table A9.3 shows the trend of estimated spending per tourist for 1995–2003. The percentage of tourists was assumed at 74%. The estimated spending per tourist varies from $612.1 in 1996 to $774.8 in 1998, and shows an 8.5% increase from 1995 to 2003. In contrast, a Ministry of Tourism officer in charge of tourism statistics has the view that the percentage of tourists among international arrivals has been gradually increasing. Based on the officer’s view, the actual number of tourists recently may be higher than the figures in Table A9.3, and thus the estimated spending per tourist may be lower than that in Table A9.3. It is therefore reasonable to assume that the incremental net tourist expenditure of $20 per visit per tourist remains unchanged conservatively. 12. According to the Government’s estimate, the tourism and related industries generated 100,000 local jobs and earned $526 million in 2003 in the country, which amounted to 12.7% of the gross domestic product of Cambodia. Number of passenger traffic at Siem Reap Airport shares about 30% of Cambodia. Assuming that 74% of passengers using Siem Reap Airport are tourists, this Project is estimated to have earned $120 million in 2003. 13. Ministry of Tourism statistics show that Siem Reap Airport had 87,012 arrivals on direct international flights in 2000 and 133,688 in 2001. This increased greatly to 186,298 in 2003 (an increase of 39.4%) despite the outbreak of SARS. Arrivals reached 129,590 for the first 6 months of 2004. For example, tourists from Ho Chi Minh City had to fly from Ho Chi Minh City to Phnom Penh and then from Phnom Penh to Siem Reap before the Project. But since the Project was completed, tourists have been able to fly directly from Ho Chi Minh City to Siem Reap. By using direct flights, they can save $130 on airfare, 80 minutes flying time, and at least 80

Appendix 9 35

minutes for transit time at Phnom Penh Airport. Tourists from Singapore can save the same amount of time and money. The number of tourists from Ho Chi Minh City and Singapore was about 95,000 in 2003. This annual benefit amounts to about $15 million.

Table A9.3: Major Tourist Data for 1995–2003

Visitor Arrivals Year Total Estimated

Tourist s

Estimated Tourism Expenditure

($ million)

Estimated Spending per Tourist ($)

1995 219,680 162,563 100 615.1 1996 260,489 192,761 118 612.1 1997 218,843 161,943 103 636.0 1998 289,524 214,247 166 774.8 1999 367,743 272,129 190 698.1 2000 466,365 345,110 228 660.6 2001 604,919 447,640 304 679.1 2002 786,524 582,027 379 651.1 2003 701,014 518,750 346 666.9

Sources : Total visitor arrivals and estimated tourism expenditure are quoted from Ministry of Tourism. 2004. Tourism Statistical Report Year Book 2003. Phnom Penh, Cambodia. Estimated tourists and estimated spending per tourist are Asian Development Bank estimates. E. Economic Reevaluation 14. The cost and benefit streams of the economic analysis are shown in Table A9.4. The resulting economic internal rate of return (EIRR) for the Project is 23.86%. The EIRR for the Project at appraisal was 21.6%. The main reason for increase in the EIRR is the significant revenue increase due to the start of international flight services. Under varying scenarios, the EIRRs are 22.73%, 23.28%, and 21.43%, respectively, in the cases of (i) decrease in the benefit by 10%, (ii) increase in the operating cost by 10%, and (iii) combination of (i) and (ii). The Project remains economically viable under the sensitivity tests. F. Financial Reevaluation 15. While the State Secretariat of Civil Aviation does not pay income tax, the BOT contractor must pay income tax incurred for its total revenue. It is assumed that income tax to be paid is 10% of the total revenue, and it is also assumed that 5% of the capital cost is salvageable value. Details of the financial internal rate of return (FIRR) calculation are provided in Table A9.5. On the basis of the above benefits and costs, the FIRR is estimated to be 14.94% as compared with the estimated FIRR of 13.6% at appraisal. The main reason for the increase in the FIRR is same as the EIRR. Pursuant to the concession agreement, the BOT contractor can control revenue and expenditure so that not less than 13.5% of FIRR for its business activities at Phnom Penh and Siem Reap Airports can be guaranteed. 16. The current passenger charge for Siem Reap Airport is $25 for international passengers and $10 for domestic passengers, inclusive of security charge. Passenger charges for the major airports in the GMS countries and the principal airports in the world are provided in Table A9.6. The passenger charges for Siem Reap Airport are more than double of those for the major airports in the GMS countries, and are higher than those for the principal airports in the world.

36 Appendix 9

G. Economic and Financial Reevaluation under Operation by an Airport Authority 17. In the above economic and financial reevaluation, the high passenger charges at Siem Reap Airport resulted in a high EIRR and FIRR of the Project. If an airport authority operates Siem Reap Airport, the current passenger charge of Siem Reap Airport could be reduced to a level of $15, similar to Hanoi and Bangkok Airports. The EIRR and FIRR were calculated under the assumption that an airport authority would operate Siem Reap Airport and the passenger charges for international passengers are $15. For the projection, it is assumed that the airport authority does not pay income tax. The EIRR and FIRR under these assumptions are 22.62% and 14.70%, respectively. It seems that the economic and financial viability are both lower than if the BOT contractor operated Siem Reap Airport. However, they are still high enough such that operation of Siem Reap Airport by an airport authority is both economically and financially viable.

Table A9.4: Calculation of Economic Internal Rate of Return ($ million)

Notes: Item A = Incremental Airport Operating Revenue Item B = Airport Operational Cost Savings Item C = Incremental Tourist Expenditure

Year Capital Costs

Operating Costs

Item A

Item B

Item C

Net Benefit

1998 3.49 -3.49 1999 4.62 -4.62 2000 1.70 -1.70 2001 0.76 -0.76 2002 3.54 -3.54 2003 0.29 -0.29 2004 0.65 1.23 0.00 0.64 1.22 2005 1.51 2.87 0.00 1.50 2.86 2006 2.47 4.71 0.00 2.47 4.71 2007 3.65 6.97 0.00 3.65 6.97 2008 4.30 8.21 0.00 4.32 8.23 2009 5.01 9.57 0.00 5.03 9.59 2010 5.77 11.03 0.00 5.79 11.05 2011 6.59 12.60 0.00 6.62 12.63 2012 7.47 14.28 0.00 7.50 14.31 2013 8.42 16.09 0.00 8.46 16.13 2014 9.46 18.03 0.00 9.49 18.06 2015 9.46 18.03 0.00 9.49 18.06 2016 9.46 18.03 0.00 9.49 18.06 2017 9.46 18.03 0.00 9.49 18.06 2018 9.46 18.03 0.00 9.49 18.06 2019 9.46 18.03 0.00 9.49 18.06 2020 9.46 18.03 0.00 9.49 18.06 2021 9.46 18.03 0.00 9.49 18.06 2022 9.46 18.03 0.00 9.49 18.06

Economic Internal Rate of Return

23.86%

Appendix 9 37

Table A9.5: Calculation of Financial Internal Rate of Return ($ million)

Year Capital Costs Operating Costs Revenue Net Benefit

1998 3.77 -3.77 1999 4.94 -4.94 2000 1.84 -1.84 2001 0.82 -0.82 2002 3.82 -3.82 2003 0.31 -0.31 2004 0.89 1.43 0.54 2005 2.08 3.34 1.26 2006 3.42 5.48 2.06 2007 5.05 8.11 3.06 2008 5.95 9.55 3.60 2009 6.94 11.13 4.19 2010 7.99 12.83 4.84 2011 9.13 14.65 5.52 2012 10.35 16.61 6.26 2013 11.66 18.71 7.05 2014 13.07 20.97 7.90 2015 13.07 20.97 7.90 2016 13.07 20.97 7.90 2017 13.07 20.97 7.90 2018 13.07 20.97 7.90 2019 13.07 20.97 7.90 2020 13.07 20.97 7.90 2021 13.07 20.97 7.90 2022 -0.77 13.07 20.97 8.67

Financial Internal Rate of Return 14.94%

Table A9.6: International Passenger Charges

Airport(s) $ Equivalent Phnom Penh, Cambodia 25.00 Siem Reap, Cambodia 25.00 Vientiane, Lao People's Democratic Republic 10.00 Yangon, Myanmar 10.00 Bangkok, Thailand 12.25 Hanoi, Viet Nam 12.00 Tokyo, Japan 18.55 Hong Kong, China 14.50 Singapore 8.00 Paris, France 5.00–14.20 Amsterdam, Netherlands 5.40–15.50 Berlin, Germany 12.41–13.85 London, United Kingdom 11.30–19.30 New York, United States 13.70 Source: Narita International Airport Corporation

38 Appendix 10

QUANTITATIVE ASSESSMENT OF PROJECT OVERALL PERFORMANCE

Table A10.1: Project Rating

Criterion (a) Weight (b) (%)

Assessment (c) Rating Value (d)

Weighted Rating (b x d)

Relevance 20 Partly relevant 1 0.20 Efficacy 25 Partly efficacious 1 0.25 Efficiency 20 Efficient 2 0.40 Sustainability 20 Likely 2 0.40 Institutional

Development 15 Negligible 0 0.00

Overall Rating Partly Successful 1.25 Relevance: Project objectives and outputs were relevant to strategic objectives of the Government

and the Asian Development Bank. Efficacy: Project achieved its target and objectives. Efficiency: Project achieved objectives in an efficient manner. Sustainability: Project benefits and development impacts are sustainable. Institutional Development: Project had beneficial impacts on government policy and institutional capacity, and other

positive social impacts. Overall rating: > 2.5 = Highly Successful, 1.6–2.5 = Successful, 0.6–1.6 = Partly Successful, < 0.6 = Unsuccessful. Source: Asian Development Bank

Table A10.2: Rating Value

Rating Value

Relevance Efficacy Efficiency Sustainability Institutional Development

3 Highly

Relevant Highly Efficacious

Highly Efficient

Most Likely Substantial

2 Relevant

Efficacious Efficient Likely Significant

1 Partly Relevant

Partly Efficacious

Partly Efficient

Less Likely Moderate

0 Irrelevant

Inefficacious Inefficient Unlikely Negligible

Source: Asian Development Bank