completion report - asian development bank...at appraisal at project completion (30 january 2015)...

Completion Report

Project Number: 43393-023 Loan Number: 3248 August 2020

Viet Nam: Ho Chi Minh City Third Ring Road Technical Assistance Project This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

CURRENCY EQUIVALENTS

Currency unit – dong (D)

At Appraisal At Project Completion (30 January 2015) (28 June 2018)

D1.00 = $0.0000468 0.0000436015 $1.00 = D21,355 D22,935

ABBREVIATIONS

ADB – Asian Development Bank CIPM – Corporation for Investment, Development, and Project

Management of Infrastructure COBP – country operations business plan DED – detailed engineering design DMF – design and monitoring framework HCMC – Ho Chi Minh City km – kilometer MOT – Ministry of Transport MTIP – medium-term investment plan PAM – project administration manual PPP – public–private partnership RR3 – third ring road TA – technical assistance

NOTES

(i) The fiscal year (FY) of the Government of the Socialist Republic of Viet Nam ends on 31 December. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2019 ends on 31 December 2019.

(ii) In this report, “$” refers to United States dollars.

Vice-President Ahmed Saeed, Operations 2 Director General Ramesh Subramaniam, Southeast Asia Department (SERD) Director Hiroaki Yamaguchi, Transport and Communications Division (SETC), SERD Team leader Chaorin Shim, Transport Specialist, SETC, SERD Team members Gemma T. Bade, Project Analyst, SETC, SERD Marie France B. Balawitan, Senior Operations Assistant, SETC, SERD Maria Lorena C. Cleto, Safeguards Specialist (Resettlement), SETC, SERD*

Margarita M. Javier, Senior Project Assistant, SETC, SERD Khoa D. Nguyen, Senior Project Officer (Transport), Viet Nam Resident Mission, SERD

Kyoko Uematsu, Safeguards Specialist, SETC, SERD* * Outposted to the Viet Nam Resident Mission. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page BASIC DATA i I. PROJECT DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 1

A. Project Design and Formulation 1 B. Project Outputs 2 C. Project Costs and Financing 2 D. Disbursements 3 E. Project Schedule 3 F. Implementation Arrangements 3 G. Technical Assistance 4 H. Consultant Recruitment and Procurement 4 I. Monitoring and Reporting 4

III. EVALUATION OF PERFORMANCE 5 A. Relevance 5 B. Effectiveness 5 C. Efficiency 6 D. Sustainability 6 E. Development Impact 6 F. Performance of the Borrower and the Executing Agency 6 G. Performance of the Asian Development Bank 7 H. Overall Assessment 7

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 7 A. Issues and Lessons 7 B. Recommendations 8

APPENDIXES 1. Design and Monitoring Framework 10 2. Project Cost at Appraisal and Actual 12 3. Project Cost by Financier 13 4. Disbursement of ADB Loan Proceeds 15 5. Project Organization Chart 17 6. Contract Awards of ADB Loan Proceeds 18 7. Status of Compliance with Loan Covenants 20

BASIC DATA A. Loan Identification 1. Country Viet Nam 2. Loan number and financing source 3248, concessional ordinary capital

resources 3. Project title Ho Chi Minh City Third Ring Road

Technical Assistance Project 4. Borrower Socialist Republic of Viet Nam 5. Executing agency Ministry of Transport 6. Amount of loan SDR8.475 million ($12.58 million) 7. Financing modality Technical assistance loan (special

operations) B. Loan Data 1. Fact finding – Date started – Date completed

4 November 2013 29 November 2013

2. Loan negotiations – Date started – Date completed

20 October 2014 20 October 2014

3. Date of Board approval 26 February 2015 4. Date of loan agreement 4 May 2015 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions

2 August 2015 4 November 2015 2

6. Project completion date – In loan agreement – Actual

30 June 2017 28 June 2018

7. Loan closing date – In loan agreement – Actual – Number of extensions

31 December 2017 28 June 2018 2

8. Financial closing date – Actual

17 December 2018

9. Terms of loan – Interest rate – Maturity (number of years) – Grace period (number of years)

2% per annum during the grace period and thereafter on the amount withdrawn from the loan account and outstanding from time to time 25 5

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10. Disbursements a. Dates

Initial Disbursement 15 Nov 2016

Final Disbursement 13 Dec 2018

Time Interval 25.27 months

Effective Date

4 Nov 2015

Actual Closing Date 28 June 2018

Time Interval 31.87 months

b. Amount (SDR million)

Category

Original

Allocation (1)

Increased during

Implementation (2)

Canceled during

Implementation (3)

Last Revised

Allocation (4=1+2–3)

Amount

Disbursed (5)

Undisbursed

Balance (6=4–5)

1A Consulting Services: Feasibility and Social/Safeguards Study (Ben Luc–NH22 and NH22–Binh Chuan sections)

1.718 0.000 0.000 1.718 1.398 0.320

1B Consulting Services: Detailed Design (Tan Van–Nhon Trach and Extension Road to NH1 section)

4.163 (4.163) 0.000 0.000 0.000 0.000

1B2 Consulting Services: Detailed Design (Ben Luc–NH22 section)

0.000 4.414 0.000 4.414 0.000 4.414

1C Consulting Services: Design Appraisal and Roads Safety Audit

0.283 0.000 0.000 0.283 0.000 0.283

1D Consulting Services: Independent Audit

0.034 0.000 0.000 0.034 0.003 0.031

2 Project management 0.593 0.000 0.000 0.593 0.014 0.578 3 Interest charges 0.559 0.000 0.000 0.559 0.022 0.537 4 Unallocated 1.125 (0.251)

0.874 0.000 0.874

Total 8.475 0.000 0.000 8.475 1.438 7.037

c. Amount ($ million)

Category

Original

Allocation (1)

Increased during

Implementation (2)

Canceled during

Implementation (3)

Last Revised


Amount

Disbursed (5)

Undisbursed

Balance (6=4–5)

1A Consulting Services: Feasibility and Social/Safeguards Study (Ben Luc–NH22 and NH22–Binh Chuan sections)

2.550 0.000 0.000 2.550 1.943 0.608

1B Consulting Services: Detailed Design (Tan Van–Nhon Trach and Extension Road to NH1 section)

6.179 (6.179) 0.000 0.000 0.000 0.000

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Category

Original

Allocation (1)

Increased during

Implementation (2)

Canceled during

Implementation (3)

Last Revised


Amount

Disbursed (5)

Undisbursed

Balance (6=4–5)

1B2 Consulting Services: Detailed Design (Ben Luc–NH22 section)

0.000 6.551 0.000 6.551 0.000 6.551

1C Consulting Services: Design Appraisal and Roads Safety Audit

0.420 0.000 0.000 0.420 0.000 0.420

1D Consulting Services: Independent Audit

0.050 0.000 0.000 0.050 0.005 0.046

2 Project management 0.880 0.000 0.000 0.880 0.020 0.860 3 Interest charges 0.830 0.000 0.000 0.830 0.031 0.799 4 Unallocated 1.670 (0.372)

1.298 0.000 1.298

Total 12.580 0.000 0.000 12.580 1.998 10.582 C. Project Data 1. Project cost ($ million)

Cost Appraisal Estimate Actual Foreign exchange cost 12.58 1.998 Local currency cost 0.63 0.195 Total 13.21 2.193

2. Financing plan ($ million)

Cost Appraisal Estimate Actual Implementation cost

Borrower financed 0.63 0.195 ADB financed 12.58 1.998

Total implementation cost 13.21 2.193 Source: ADB estimates.

3. Cost breakdown by project component ($ million)

Item Appraisal Estimatea Actual A. Base Cost 1. Consulting services 9.51 2.142

a. Feasibility and social/safeguards study 2.81 2.136 b. Detailed design 6.18 0.000 c. Design appraisal and roads safety audit 0.46 0.000 d. Independent audit of project finance accounts 0.06 0.006

2. Project management cost b 0.97 0.020 Subtotal (A) 10.48 2.162 B. Contingenciesc 1.90 0.000 C. Financing Charges During Implementationd 0.83 0.031

Total (A+B+C) 13.21 2.193 a Included taxes and duties of $0.96 million. The Asian Development Bank (ADB) was to finance 100% of the value-

added tax for the detailed design only ($0.56 million). Government funds (as a cash contribution) were to cover 100% of the value-added tax relating to consulting services for the feasibility study ($0.26 million), design appraisal and road safety audit ($0.04 million), independent audit of project finance accounts ($0.06 million), and the project management cost ($0.09 million).

b This included salaries of Cuu Long Corporation for Investment, Development, and Project Management of Infrastructure staff, transportation expenses, communication and reporting, office overhead costs such as electricity and water, and other administrative expenses. These expenditures were to be claimed through the reimbursement procedure against receipts for actual expenses.

c Physical contingencies computed at 10%. Price contingencies were computed at 1.9% in 2013, 2.2% in 2014, 1.9% in 2015, and 1.8% from 2016 onward on foreign exchange costs, and 7.5% in 2013, 8.2% in 2014, 8.0% in 2015, and 7.5% from 2016 onwards on local currency costs. Price contingencies were applied to all base cost items and include provision for potential exchange rate fluctuations under the assumption of a purchasing power parity exchange rate.

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4. Project schedule Contract Award Item Appraisal Estimate Actual A. Consulting services for feasibility and social/safeguards

study of Ben Luc–NH22 and NH22–Binh Chuan sections recruitment

Q2 2015 9 Sep 2016

B. Consulting services for detailed design of Tan Van–Nhon Trach and extension road to NH1A section recruitment

Q1 2016 None

C. Consulting services for detailed design appraisal and road safety audit recruitment

Q1 2016 None

D. Consulting services for independent audit recruitment Q1 2016 20 Jun 2018 5. Project performance report ratings

Implementation Period Single Project Rating From 1 October 2015 to 31 December 2015 On Track From 1 January 2016 to 31 March 2016 On Track From 1 April 2016 to 30 June 2016 On Track From 1 July 2016 to 30 September 2016 Actual Problem From 1 October 2016 to 31 December 2016 Actual Problem From 1 January 2017 to 31 March 2017 On Track From 1 April 2017 to 30 June 2017 Actual Problem From 1 July 2017 to 30 September 2017 Potential Problem From 1 October 2017 to 31 December 2017 Potential Problem From 1 January 2018 to 31 March 2018 Actual Problem From 1 April 2018 to 30 June 2018 Actual Problem From 1 July 2018 to 30 September 2018 Actual Problem From 1 October 2018 to 31 December 2018 On Track

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons

No. of Person-

Days Specialization of Members

Fact-finding 4–29 November 2013 7 83 a, b, c, d, e, f, Inception 2–4 July 2015 5 11 a, f, e, g, h Review 1 25–28 April 2016 6 24 a, f, h, h, i, k Review 2 7–9 November 2016 3 9 a, f, e Review 3 15–18 January 2018 4 12 a, b, f, j Review 4a 27 November 2018 2 2 a, l Project completion review 10 and 12 March 2020 4 7 a, e, f, l

a The mission was combined with other projects in the area. a = transport specialist, b = financial officer, c = environment officer, d = resettlement officer, e = program/project officer, f = project analyst, g = counsel, h = public–private partnership specialist, i = young professional, j = project administration officer, k = director, l = staff consultant.

I. PROJECT DESCRIPTION 1. The Ho Chi Minh City Third Ring Road Technical Assistance Project was planned to support the Government of the Socialist Republic of Viet Nam in preparing (i) a detailed design and detailed design appraisal of the environmental and social safeguards, as well as bidding and contract documents for the Tan Van–Nhon Trach section of the Ho Chi Minh City (HCMC) Third Ring Road (RR3) (section 1, 28.4 kilometers [km]) and an extension road to National Highway 1 (an extension of section 1A, 5.9 km); and (ii) detailed feasibility studies and environmental and social safeguards documents for the National Highway 22–Binh Chuan section (section 3, 17.5 km), and Ben Luc–National Highway 22 section (section 4, 29.2 km) of the HCMC RR3.1 The proposed HCMC RR3 is expected to facilitate the diversion of through traffic and reduce traffic congestion in HCMC, thereby improving connectivity with the surrounding cities and towns. 2. Planned to be constructed at a radius of about 25 km from the city center, HCMC RR3 was regarded as complex relative to its social and environmental, as well as technical and financial aspects. Some private sector involvement in its construction is anticipated. The government requested that Asian Development Bank (ADB), as the potential financier of the ensuing investment project, be engaged for project preparation with a technical assistance (TA) loan project.2 The project’s expected impact was enhanced construction of HCMC RR3, thereby contributing to reduced traffic congestion in HCMC and improved its connectivity with surrounding cities and towns.

II. DESIGN AND IMPLEMENTATION

A. Project Design and Formulation 3. HCMC is the largest city in Viet Nam. At appraisal, it had a population of 9 million and the city’s metropolitan area accounted for nearly 40% of the country’s gross domestic product. HCMC’s second ring road (RR2) had reached its capacity due to rapid traffic growth. Recognizing that HCMC’s growth is a major economic engine of the country, the government had therefore prioritized in its transport plans to construct two additional ring roads (i.e., the third and fourth ring roads [RR3 and RR4]) on the city’s periphery.3 An outline of the HCMC RR3 TA loan project was approved by the Prime Minister on 27 March 2013.4 4. Together with other development partners, ADB provided assistance to develop the key corridors that will be linked via the HCMC RR3. The project was designed to be in line with ADB’s country partnership strategy for Viet Nam, 2012–2015, which focused on assisting the country’s transport sector in improving its institutional, financial, and operational efficiency to maintain sufficient transport infrastructure (including provincial roads, national highways, and expressways) and to improve road safety.5

1 Section 2 between Binh Chuan and Tan Van of the HCMC RR3 had been completed under a build–operate–transfer

modality as of loan approval. 2 The ensuing loan was not immediately materialized. At the time of preparing this project completion report, it is

programmed for 2022 approval. 3 The HCMC Transport Master Plan was approved in Decision 568/QD-TTg by the Prime Minister on 8 April 2013. The

Detailed Master Plan for RR3 was approved in Decision 1697/QD-TTg by the Prime Minister on 28 September 2011 and corresponds with the HCMC Master Plan.

4 Government of Viet Nam. 2013. Document No. 459/TTg-QHQT. Ha Noi. 5 ADB. 2011. Country Partnership Strategy: Viet Nam, 2012–2015. Manila.

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5. The government requested ADB to provide support using a TA loan modality to ensure the ensuing loan’s design readiness, update cost estimates, and identify feasible financing options for subsections of HCMC RR3. The government explored various financing options and sources for each subsection of HCMC RR3. This resulted in yearly revision of subsections for ADB financing in the country operations business plan (COBP) for Viet Nam. In the COBP for 2015–2017, the pipeline included section 1A. This was changed to section 4 in the next COBP, and subsequently it was removed in the COBP for 2017–2019. Finally, section 4 of HCMC RR3 was brought back as part of the 2022 lending pipeline in the latest COBP (2020–2022). 6. While the project was designed to support detailed engineering design (DED) for section 1 and its extension, the Export–Import Bank of Korea was requested to finance the construction of section 1A, pending a final decision by the Prime Minister of Viet Nam. The project also supported feasibility studies for sections 3 and 4. This work provided a basis for preparing the ensuing loan project for section 4, programmed for 2022. B. Project Outputs 7. The two outputs planned in the design and monitoring framework (DMF) were as follows: (i) completed detailed feasibility and social safeguard studies for the Ben Luc–NH22 and NH22–Binh Chuan sections (sections 3 and 4); and (ii) updated due diligence, completed detailed design, and project and safeguard documents required to finance the construction of the Tan Van–Nhon Trach section and extension road to NH1 (section 1 and its extension). Output 1 was achieved as planned. Output 2 was not achieved after some revisions in the government’s direction on project implementation and financing sources. Originally, output 2 was to study and develop detailed design and safeguards documents for section 1 and its extension. However, the section to be studied was replaced with section 4, as the Prime Minister approved financing support from the Economic Development Cooperation Fund for part of section 1 (from provincial road 25B to HCMC-Long Thanh-Dau Giay Expressway, named as 1A) by Decision No. 1940/QD-TTg dated 29 Oct 2014. Subsequently, the rest of section 1 and the extension to NH1 (from HCMC-Long Thanh-Dau Giay Expressway to Thu Duc Interchange) were renamed as section 1B and it was decided to utilize a public–private partnership (PPP) scheme. That decision was issued after loan negotiation with ADB regarding the project. After signing the loan agreement on 4 May 2015, the government officially requested ADB to change the scope during its 2017 country programming exercise. In March 2017, ADB reallocated loan proceeds of (i) the output 2 for section 1 and its extension, and (ii) the unallocated category to support DED of section 4. 8. The revised output 2 was not achieved, because, in the end, the project was not included into the Medium-Term Investment Plan (MTIP) 2016–2020. The government had been unable to conclude a financing plan for the project due to introduction of the PPP modality and issues as to who would bear the land acquisition and resettlement costs. The Ministry of Transport (MOT) subsequently informed ADB of the change during a transport sector portfolio review mission in September 2017. No cancellation was made, however. The DMF was not revised and remained the same as at appraisal. The DMF, including a comparison of project achievements and project targets, is in Appendix 1. C. Project Costs and Financing 9. The actual project cost was $2.193 million, compared with the appraisal estimate of $13.21 million. The difference is mostly attributed to the exclusion of output 2, although other actual costs were also slightly lower than estimated at appraisal. Most of the project management costs were left unspent, as well. The project cost details are reported in Appendix 2. Due to the cancellation

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of output 2, the percentage of ADB financing decreased from 95.25% to 91.13% and that of the government financing increased from 4.75% to 8.87%. Details of changes in the financing plan are presented in Appendix 3. D. Disbursements 10. Loan proceeds were disbursed to consultants and suppliers in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time) under direct payment procedure. An advance account was established for the incremental administration costs. Statement of expenditures procedure was used to reimburse and liquidate eligible expenses. The actual disbursement took place over 25 months, slightly over the planned disbursement period of 24 months. Annual and total disbursement is broken down in Appendix 4.

E. Project Schedule 11. The loan was approved on 26 February 2015 and became effective on 4 November 2015, three months later than the envisaged loan effective date of 2 August 2015 due to delay in securing a legal opinion for the project agreement. That agreement was required because the implementing agency, Cuu Long Corporation for Investment, Development, and Project Management of Infrastructure (Cuu Long CIPM), is an independent legal entity and not a part of any ministries. It took time for Cuu Long CIPM to hire an independent law firm to issue the legal opinion since it was unable to manage the legal affairs function on its own. 12. At appraisal, the project was scheduled for completion by 30 June 2017, with an implementation period of 29 months. On 30 March 2017, ADB approved the extension of the TA loan from 31 December 2017 to 30 June 2019 based on a request from Cuu Long CIPM during a TA loan review mission in November 2016 and with the understanding that the government would send a formal written request to ADB. However, ADB received a letter dated 17 January 2018 from the State Bank of Viet Nam formally requesting a loan extension until 28 June 2018 only, instead of 30 June 2019 as requested earlier by Cuu Long CIPM. Based on the request, on 14 February 2018, ADB approved the revised loan extension until 28 June 2018. The extensions were due to delays in recruiting the consulting firm for the feasibility study and the prolonged decision-making process during the study. At appraisal, it was planned to apply advance contracting for recruiting both the detailed design and feasibility study while assuming the recruitment process for feasibility study would start during Q4 2014, as defined in the project administration manual. However, MOT officially approved the procurement plan only in January 2015, and the consultant terms of reference and cost estimates on 28 September 2015 after multiple revisions. The recruitment process took 19 months, resulting in the contract award only in August 2016. Initial planning envisioned 12 months to complete the feasibility study, but this took 21 months due to delays in local governments’ decision-making processes regarding technical solutions for alignment, right-of-way, and interchange design options. F. Implementation Arrangements 13. The executing agency for the project was MOT, and the implementing agency was Cuu Long CIPM. Cuu Long CIPM was responsible for day-to-day activities in implementing the project. An organization chart for Cuu Long CIPM is in Appendix 5. Cuu Long CIPM needed to consult with and report to MOT, as well as to obtain MOT’s approvals for recruiting consultants. The project involved provincial governments, because after construction the service roads were to be operated by HCMC, Dong Nai, Binh Duong, and Long An provinces. Cuu Long CIPM was responsible for coordination and consultation with all relevant provinces during implementation of

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the TA loan. Each of the concerned line agencies had its own group of specialists responsible for the project. This could have gone much more smoothly if Viet Nam’s government could have enforced a streamlined decision-making procedure, with each step having a defined timeline so as not to permit indefinite delays, and clearly established measures for reaching consensus among stakeholders. G. Technical Assistance 14. A small-scale project preparatory TA study provided by ADB had confirmed that RR3 is needed to support the ongoing economic growth led by HCMC and to improve the city’s hub function for the primary regional and national transport corridors, such as the Greater Mekong Subregion eastern and southern corridors and the national North–South Expressway. 6 Parts of those were financed by ADB, and the ADB-financed Greater Mekong Subregion Ben Luc–Long Thanh Expressway Project connects with the Ben Luc (ending point of the RR3) to Nhon Trach (starting point of the RR3). The TA confirmed basic commercial and technical features, as well as cost estimates, for the RR3. The findings formed the basis for subsequent project preparation such as the study using this TA loan. H. Consultant Recruitment and Procurement

15. Four consulting services contracts were planned at appraisal: (i) consulting services for feasibility and social/safeguards study of the Ben Luc–NH22 and NH22–Binh Chuan sections (output 1); (ii) consulting services for detailed design of the Tan Van–Nhon Trach section and the extension road to NH1 (output 2); (iii) consulting services for detailed design appraisal and road safety audit; and (iv) consulting services for independent audit. Among the four contracts, only (i) and (iv) were recruited. The other two contracts were meant to support output 2, which did not materialize. All contract awards were expected to be completed in 2016, whereas, the actual awards were delayed and accrued in 2016 and 2018 respectively, as described in para. 12.

16. The consulting services for feasibility and social/safeguards study of the Ben Luc–NH22 and NH22–Binh Chuan sections were awarded to a joint venture of KCI-Sambo-KEC-Hung Nghiep following the quality- and cost-based selection method. The recruitment process was in accordance with ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time). The service period originally planned for 12 months was revised and extended by 9 months to accommodate the delays caused by local authorities, as described in para. 12. The contract for (iv) consulting services for independent audit was signed with AASC Auditing Firm Company Limited on 20 June 2018 and the service was rendered without any significant issue. Appendix 6 summarizes the annual and cumulative contract awards. I. Monitoring and Reporting 17. The status of compliance with loan covenants is summarized in Appendix 7. Most of the covenants have been complied with. Of the total 41 covenants, only 6 were partially complied with. These covenants were related to timely project implementation, delays of which are described in para. 12. The first audited project financial statements for the period of 4 November 2015 to 31 December 2016 were submitted with the deferment request dated 25 May 2017. In addition, the implementing agency needed improvement with its financial management capacity,

6 ADB. 2010. Technical Assistance to the Socialist Republic of Viet Nam for Preparing the Ho Chi Minh City Outer

Ring Roads Project. Manila.

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such as timely submission of audited project financial statements and audited entity financial statements.

III. EVALUATION OF PERFORMANCE A. Relevance 18. The project is rated relevant. It is consistent with the objectives of ADB and the government for preparing HCMC RR3, even though the government revised the financing and implementation plan for each subsection of HCMC RR3 several times after the loan approval resulting in a minor change of project scope in March 2017. The unexpected change in the assessment of its project readiness occurred because the project’s implementation period overlapped with the introduction of MTIP, which guided public infrastructure investment projects in Viet Nam and imposed a more rigorous project preparation and approval process. At the initial stage of the MTIP, the new planning procedure and due diligence requirements under the MTIP were not clear to all government agencies in Viet Nam. Implementation of the DED for section 4 was held up until the ensuing construction of section 4 of HCMC RR3 can be included into the MTIP. During the process, the government considered pursuing PPP procurement for sections 3 and 4, thereby delaying confirmation of the final financing sources for section 4. With the government preferring PPP procurement options, ADB extended its support to the project by providing transaction advisory services to support the government in exploring applicable PPP options.7 Since DED preparation in advance of procuring a PPP concessionaire is typically not required, the government decided not to proceed with the DED for section 4, and the loan was closed without DED preparations. Even though DED was not prepared under the loan, ADB flexibly adjusted its supporting modality during the implementation to prepare the ensuing investment project, HCMC RR3 section 4, with close and timely collaboration between ADB’s Southeast Asia Department and its Office of Public–Private Partnership in accordance with the evolving needs of the government. B. Effectiveness 19. The project is rated less than effective. The outcome indicator, project documents for the HCMC RR3 project completed by Q2 2017, was partially achieved. The feasibility study of sections 3 and 4 of HCMC RR3 was completed under the project, but other project documents were not prepared as there was no ensuing loan immediately following the project closure. The project also had two outputs, of which only output 1 was achieved. Output 2 was not achieved in accordance with the government’s decision to wait for its final approval on financing sources for the relevant subsection of HCMC RR3 before proceeding to DED. At the time of this completion report, the implementing agency has prepared a project proposal and is in discussion with the executing agency on its proposal for section 4 while anticipating ADB’s financing (Letter No.512/CIPM, dated 30 March 2020). That proposal was largely based on the recommendations of output 1 under this project. The proposal is at the initial stage of government procedures for its inclusion into the next MTIP (2021–2025).

7 Transaction advisory services were provided to help the government in exploring the most feasible PPP financing

structure for sections 3 and 4 of RR3 while considering Viet Nam’s legal framework as well as market interest and potential for leveraging private sector participation. ADB’s Office of Public–Private Partnership provided such services during 2017–2018.

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C. Efficiency 20. The project is rated efficient. An economic analysis at appraisal was included to calculate the economic internal rates of return (EIRRs) for the ensuing loan project as a part of due diligence. Because EIRR calculation is not required for projects involving only studies for project preparations without physical investment, EIRR was not recalculated at completion. The TA loan supported the preparation of the ensuing loan project, even though there were implementing delays in output 1.8 The project had no cost overrun and was well managed to come in under the estimate. Despite low utilization of the funds due to non-delivery of output 2, the expenditures matched the delivery of output 1, which led to partial achievement of the expected outcome. Thus, the use of funds fully supports the rating. D. Sustainability 21. The project is rated likely sustainable. By the TA loan project’s nature, its outcome and outputs were designed to achieve project preparation, not to deliver infrastructures. The sustainability evaluation is with reference to the capacity improvement of the executing and implementing agencies in preparing investment projects and usability of the studies as outputs of the project. The TA loan’s outcome and output are likely sustainable because the feasibility study for sections 3 and 4 will be the basis for the ensuing project. The feasibility studies and subsequent support from ADB’s Office of Public–Private Partnership for PPP options studies provided key inputs to the intensive discussions between MOT and Cuu Long CIPM regarding the best financial arrangement to realize the project. E. Development Impact 22. The project impact is rated satisfactory while noting that the expected impact is partially achieved. The funding for HCMC RR3 had been secured from various sources at the time of completion, and all development partners remained supportive even as the financing plan was revised several times. At completion, section 1A was confirmed to be financed by Korea Economic Development Cooperation Fund and section1B will follow a PPP modality and had reached the request for proposal preparation stage. The project concept and feasibility studies for sections 3 and 4 have been prepared even though the project is delayed beyond the original envisaged 2021 completion. F. Performance of the Borrower and the Executing Agency 23. The performance of the borrower, executing agency, and implementing agency is satisfactory. All generally fulfilled their responsibilities in implementing the project. It took longer than anticipated during the feasibility study for the implementing agency to consult the relevant provinces for confirming the basic ideas of the project, and this caused delays in implementing output 1. Under the existing government procedure for collating comments to reach agreement for investment projects, both executing and implementing agencies performed satisfactorily. It should be noted that, due to the delay in recruiting the independent audit consultant, the first audited project financial statements were received only on 28 June 2018, which was 6 months after the approved (deferred) submission date. During this 6-month period, following project administration instruction 5.07, ADB withheld processing of requests for disbursements. As of the preparation of this completion report, the implementing agency had successfully prepared a

8 Loan effectiveness was delayed 3 months, and consultant recruitment took 19 months in total.

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project proposal based on the deliverables of output 1 and was in discussion with the executing agency to include the ensuing loan in the next MTIP (2021–2025). G. Performance of the Asian Development Bank 24. The overall performance of ADB was satisfactory. The outposting of the project team leader to ADB’s Viet Nam Resident Mission enabled ADB to provide close support to the implementation and preparation of the project scope to be financed by the ensuing loan. ADB provided timely support during implementation for critical decision-making points, such as in processing a minor change in scope. A collaborative relationship was maintained with the executing and implementing agencies throughout the project. H. Overall Assessment 25. The project is rated successful. It was generally implemented as envisaged, although some outputs were removed or changed relative to the original plan. ADB provided continuous guidance to ensure the project was completed in accordance with ADB’s guidelines and loan covenants. ADB supported the outcome’s achievement by mobilizing resources on a grant basis to provide PPP advisory services for preparing PPP options. The project had implementation delays, but appropriate actions were taken to adjust the project scope in accordance with changes in government policies and procedures in order to maximize the project’s benefits.

Overall Ratings Criteria Rating Relevance Relevant Effectiveness Less than effective Efficiency Efficient Sustainability Likely sustainable Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of ADB Satisfactory ADB = Asian Development Bank. Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS A. Issues and Lessons 26. The Viet Nam government is currently preparing the list of investment projects to be included in the next MTIP (2021–2025) and coordinating to prioritize project proposals, including for HCMC RR3. While studying PPP options, it became apparent that the existing legal framework for PPP does not allow for structuring bankable transport investment projects and adoption of new legal frameworks to create an enabling environment for PPP infrastructure development, which had been under government scrutiny for several years already. Under the circumstances and to expedite the project’s realization, Cuu Long CIPM is inclined toward obtaining assistance from development partners to finance HCMC RR3 with the exception of section 1B, which is at the procurement stage in applying the PPP modality. These discussions had neither been anticipated at appraisal nor were considered in the project design. The project offered an opportunity for the government agencies concerned to assess the best financing arrangement for the ensuing project

8

by flexibly adjusting the project scope and implementation schedule. Such flexibility was important for the upstream project preparations support. 27. The change in the government planning procedure with the introduction of MTIP caused confusion among the government officials until it became fully operational. That affected the decision-making process and timeline for large infrastructure projects, including HCMC RR3. When drastic change in government policies or procedures can be expected, their potential impacts and risks should be considered in the project design with adequate mitigation measures included.

28. When a minor change in scope to change the section for DED preparation was processed, the DMF was not updated accordingly. This caused confusion among stakeholders about the revised project scope and delayed the government’s internal consensus on that scope. The consistency with the documentation during project implementation is a crucial part of project administration and should be carefully maintained and managed in a timely manner.

29. These lessons should be considered in preparing the ensuing loan project supporting a part of the investment needs for HCMC RR3. They should be used in consultation with other development partners supporting other subsections of HCMC RR3, so that project preparation is well coordinated with the planning process of the next MTIP (2021–2025).

B. Recommendations

1. Project-Specific 30. Further action and follow-up. Cuu Long CIPM is preparing project proposals for sections 3 and 4 based on the feasibility studies prepared under the project and PPP options studies conducted by the Office of Public–Private Partnership. This is a part of the planning process to discuss projects to be included into the next MTIP (2021–2025). ADB will closely coordinate with the government in programming for the ensuing loan, section 4 of HCMC RR3, as described in the project proposal during the 2020 country programming mission. To enhance implementation readiness of the proposed project, the related agencies responsible for implementing land acquisitions and resettlement, including those responsible for budget allocation, should be determined along with the project proposal. These are key issues for ADB’s due diligence of the proposed project. All loan covenants should still be maintained. 31. Timing of the project performance evaluation report. An ensuing loan project to finance a part of the investment cost of HCMC 3RR is programmed for 2022. It is recommended that the project performance evaluation will be conducted once the proposed project is processed. The timing will allow for evaluating how the project contributed to formulation of the ensuing loan project. It will also provide more information on the progress of other subsections of HCMC RR3 for which the project outputs are being used.

2. General

32. Implementation was delayed mainly by the government’s change in policy and planning procedure. ADB should carefully examine and coordinate with the relevant government agencies to confirm the financing plan for the ensuing loan project when preparing project documents. It is also recommended that both parties reassess the decision-making procedures involving relevant provinces and agree among the concerned parties on a streamlined communication plan to prevent delays. The strategic procurement planning ADB had in place since 2017 identifies

9

procurement challenges in advance, including approval processes, and suggests ways of capacity building to achieve value for money. The right assessment and strategic planning for procurement may be able to facilitate procurement approval of the ensuing loan and any other projects in Viet Nam.

10 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Indicators and

Targets Project Achievements (2020) Impact Enhanced construction of the HCMC RR3, contributing to reduced traffic congestion in and improved connectivity of HCMC with surrounding cities and towns.

Funding for the RR3 secured from various sources secured by 2017 (Baseline data: as per ADB COBP, 2015-2017, $287 million from ADB and $200 million from cofinancing earmarked for HCMC RR3 in the 2017 pipeline) Completion of the Tan Van–Nhon Trach section including an extension road to NH1 by 2021 (Baseline data: 0 km completed in 2014)

Partially achieved Funding for the RR3 has been secured as follows while part of it is still awaiting final confirmation. Status of funding and completion of the Tan Van–Nhon Trach section including an extension road to NH1 by 2021: Tan Van-Nhon Trach section and an extension road to NH1 (Sections 1 and 2): · Section 1A is under EDCF; expect to

sign the loan agreement in 2020. · Section 1B (including the extension

road to NH1) is under a PPP modality. Expression of Interest has been launched and shortlisted firms (2 joint ventures) were approved by MOT. Bidding documents for the request for proposal stage was under preparation at the time of project completion.

· Section 2: Use of EDCF is under

discussion. It is proposed for inclusion in the MTIP (2021-2025).

Ben Luc–NH22 and NH22–Binh Chuan Sections (Sections 3 and 4): · Based on the feasibility study ADB

supported through this TA loan, MOT submitted a letter (No.192/TTr-BGTVT, dated 8 Jan 2019) to the Prime Minister at for approval of investment policy with investment plan in the form of PPP, and submitted a letter (No. 2373/TTr-BGTVT, dated 18 Mar 2019) to MPI for budget allocation.

· However, due to the constraints posed by the existing legal framework in Viet Nam, the government cannot provide availability payment to the concessionaire, which is considered essential.

· As such, Cuu Long CIPM has suggested to MOT to convert the financing modality from PPP to

Appendix 1 11

Design Summary Performance Indicators and

Targets Project Achievements (2020) sovereign financing and to consider EDCF for section 3 and ADB for section 4 (Letter No. 2308/CIPM-KHKT dated 13 Dec 2019). Both sections are planned to be included in the MTIP (2021-2025).

Outcome Design readiness of the HCMC RR3 project for financing

Project documents for the HCMC RR3 project completed by Q2/ 2017 (Baseline data: none)

Partially achieved Feasibility study of RR3 (section 3 & 4) was completed in August 2018, but other project documents to support the ensuing loan was not prepared due to the change of the government’s direction on the financing sources.

Outputs 1. Completed detailed feasibility and social safeguard studies for the Ben Luc–NH22 and NH22–Binh Chuan sections

Engineering, economic, and financial feasibility studies of the Ben Luc–NH22 and NH22–Binh Chuan sections completed by Q3/2016 Resettlement plan (and indigenous peoples plan as required) prepared and satisfactory to both ADB and the government by Q3/ 2016 (Baseline data: pre-feasibility study completed)

Achieved Engineering, economic, and financial feasibility studies of the Ben Luc–NH22 and NH22–Binh Chuan sections were completed in July 2018. Resettlement plan (and indigenous peoples plan as required) were prepared and submitted to ADB in July 2018.

2. Updated due diligence, completed detailed design, and project and safeguard documents required to finance construction of the Tan Van–Nhon Trach section and extension road to NH1

Detailed designs of RR3 and its auxiliary facilities for the section completed by end Q2/2017 (Baseline data: basic design completed in 2012) The project’s economic and financial assessment completed by end Q2/2017 EIA prepared by end Q2/2017 Resettlement plan (and indigenous peoples plan as required) prepared and satisfactory to both ADB and government by end Q2/2017

Not achieved The section was replaced with section 3 and 4, which was not included into the Medium-Term Investment Plan (MTIP) 2016–2020. The government had been unable to conclude a financing plan for the project due to introduction of the PPP modality and issues as to who would bear the land acquisition and resettlement costs. Therefore, the studies could not be started.

ADB = Asian Development Bank, CUU LONG CIPM = Corporation for Investment, Development, and Project Management of Infrastructure, EIA = environmental impact assessment, HCMC = Ho Chi Minh City, km = kilometer, MOT = Ministry of Transport, NH = national highway, Q = quarter, RR3 = third ring road Source: Asian Development Bank.

12 Appendix 2

PROJECT COST AT APPRAISAL AND ACTUAL ($ million)

Item

Appraisal Estimate a

Actual A. Base Cost 1. Consulting services 9.51 2.14 a. Feasibility and social/safeguards study 2.81 2.14 b. Detailed design 6.18 0.00 c. Design appraisal and roads safety audit 0.46 0.00 d. Independent audit of project finance accounts 0.06 0.01 2. Project management cost b 0.97 0.02 Subtotal (A) 10.48 2.16 B. Contingencies c 1.90 0.00 C. Financing Charges During Implementationd 0.83 0.03 Total (A+B+C) 13.21 2.19

a Includes taxes and duties of $0.96 million. The Asian Development Bank (ADB) will finance 100% of the value-added tax for the detailed design only ($0.56 million). Government funds will cover 100% value-added tax for consulting services for the feasibility study ($0.26 million), design appraisal and road safety audit ($0.04 million), independent audit of project finance accounts ($0.06 million), and the project management cost ($0.09 million) as a cash contribution.

b This includes salaries of Cuu Long Corporation for Investment, Development, and Project Management of Infrastructure staff, transportation expenses, communication and reporting, office overhead costs such as electricity and water, and other administrative expenses. These expenditures will be claimed through the reimbursement procedure against receipts for actual expenses.

c Physical contingencies computed at 10%. Price contingencies are computed at 1.9% in 2013, 2.2% in 2014, 1.9% in 2015, and 1.8% from 2016 onward on foreign exchange costs, and 7.5% in 2013, 8.2% in 2014, 8.0% in 2015, and 7.5% from 2016 onwards on local currency costs. Price contingencies are applied to all base cost items and include provision for potential exchange rate fluctuations under the assumption of a purchasing power parity exchange rate. Source: Asian Development Bank estimates.

Appendix 3 13

PROJECT COST BY FINANCIER

Table A3.1: Project Cost at Appraisal ($ million)

ADB Counterpart funda

Total Cost Amount % of Cost Category Amount

% of Cost Category

Item (A) (A/C) (B) (B/C) (C) A. Investment Costs 1 Consulting Services

a. Feasibility and Social/ Safeguards Study

2.55 90.76% 0.26 9.24% 2.81

b. Detailed Design (Tan Van - Nhon Trach and Extension Road to NH1 Section)

6.18 100.00% 0.00 0.00% 6.18

c. Design Appraisal and Roads Safety Audit

0.42 90.91% 0.04 9.09% 0.46

d. Independent Audit

0.05 90.91% 0.005 9.09% 0.11

Subtotal (A)

9.20 96.77% 0.31 3.23% 9.56 B. Recurrent Costs

Project Managementb

10.08 96.23% 0.39 3.77% 10.53

Subtotal (B)

0.88 90.91% 0.09 9.09% 0.97

Total Base Cost (A+B)

10.08 96.23% 0.39 3.77% 10.53 C. Contingencies

1.67 87.75% 0.23 12.25% 1.85

D. Financing Charges During Implementation

0.83 100.00% 0.00 0.00% 0.83

Total Project Cost (A+B+C+D)

12.58 95.25% 0.63 4.75% 13.21 % Total Project Cost 95.25% 4.75%

a Includes taxes and duties of $0.96 million. ADB will finance 100% VAT for detailed design only ($0.56 million). Government funds will cover 100% VAT for consulting services for FS ($0.26 million), design appraisal and road safety audit ($0.04 million), independent audit of project finance accounts ($0.005 million) and for project management cost ($0.09 million) as cash contribution.

b The Project Management Cost includes salaries of Cuu Long CIPM staff, transportation expenses, communication and reporting, office overhead costs such as electricity and water, and other administrative expenses. These expenditures will be claimed through reimbursement procedure against receipts of actual expenses paid.

Source: Project Administration Manual.

14 Appendix 3

Table A3.2: Project Cost at Completion ($ million)

ADB Counterpart fund

Total Cost Amount % of Cost Category Amount

% of Cost Category

Item (A) (A/C) (B) (B/C) (C) A. Investment Costs 1 Consulting Services a. Feasibility and Social/ Safeguards Study 1.9420 90.92% 0.1940 9.08% 2.136

b. Detailed Design (Ben Luc -NH22 Section) 0.0000 0.00% 0.0000 0.00% 0.000 c. Design Appraisal and Roads Safety Audit 0.0000 0.00% 0.0000 0.00% 0.000 d. Independent Audit 0.0050 90.91% 0.0005 9.09% 0.006 Subtotal (A) 1.9470 90.92% 0.1945 9.08% 2.142

B. Recurrent Costs Project Management 0.0200 100.00% 0.0000 0.00% 0.020 Subtotal (B) 0.0200 100.00% 0.0000 0.00% 0.020 Total Base Cost (A+B) 1.9670 91.00% 0.1945 9.00% 2.162

C. Contingencies 0.0000 0.00% 0.0000 0.00% 0.000 D. Financing Charges During Implementation 0.0310 100.00% 0.0000 0.00% 0.031

Total Project Cost (A+B+C+D) 1.9980 91.13% 0.1945 8.87% 2.193 % Total Project Cost 91.13% 8.87%

Source: Asian Development Bank and Cuu Long CIPM.

Appendix 4 15

DISBURSEMENT OF ADB LOAN PROCEEDS

Table A4.1: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million)

Annual Disbursement Cumulative Disbursement

Year Amount % of Total Amount % of Total 2015 0.0000 0.00% 0.0000 0.00% 2016 0.5891 29.49% 0.5891 29.49% 2017 0.8015 40.11% 1.3906 69.60% 2018 0.6074 30.40% 1.9980 100.00% Total 1.9980 100.00%

ADB = Asian Development Bank. Source: Asian Development Bank.

Figure A4.1: Projection and Cumulative Disbursement at Approval ($ million)

0

2

4

6

8

10

12

14

Year 2015 2016 2017 2018 Total

Disbursement Projection Actual Cumulative Disbursement

16 Appendix 4

Figure A4.2: Projection and Cumulative Disbursement after Change in Scope ($ million)

Appendix 5 17

PROJECT ORGANIZATION CHART

INDEPENDENT AUDITOR CUU LONG CIPMImplementing Agency (IA)

Investment – Business Division

___________________________________

For ProcurementFS and Safeguard Study

Project Management Division

___________________________________

forDetailed Design

Appraisal of Detailed Design and Road Safety Audit

Functional Divisions______________________

1. Human Resources Department2. Financing and Accounting3. Transportation and Construction Management

Representative Office in Ha Noi

FS and Safeguard Consultant Detailed Design ConsultantDD Appraisal Consultant

MINISTRY OF TRANSPORTExecuting Agency (EA)ADB

PEOPLE’S COMMITTEES OF HO CHI MINH CITY

Provinces: Dong Nai, Binh Duong and Loang An

Note:- FS and Safeguard Study: for Ben Luc-NH22 and

NH22- Binh Chuan Sections- Detailed Design, Appraisal of Detailed Design and

Road Safety Audit: for Tan Van – Nhon Trach and an extension road to NH1 section

18 Appendix 6

CONTRACT AWARDS OF ADB LOAN PROCEEDS

Table A6.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Annual Contract Awards Cumulative Contract Awards

Year Amount % of Total Amount % of Total 2015 0.0000 0.00% 0.0000 0.00% 2016 1.9620 99.75% 1.9620 99.75% 2017 0.0049 0.25% 1.9669 100.00% 2018 0.0000 0.00% 1.9669 100.00% Total 1.9669 100.00%

ADB = Asian Development Bank. Source: Asian Development Bank.

Figure 6.1: Projection and Cumulative Contract Awards at Approval ($ million)

0123456789

10

Year 2015 2016 2017 2018 Total

Amou

nt ($

milli

on)

Axis Title

Contract Award Projection Actual Cumulative Contract Award

Appendix 6 19

Figure 6.2: Projection and Cumulative Contract Awards after Change in Scope ($ million)

20 Appendix 7

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan/Project Agreement

Status of Compliance

Loan Agreement In the carrying out the TA Project, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to the Loan Agreement and the Project Agreement.

LA, Article IV, Section 4.01

Partially complied (The consultant recruitment takes time; Lengthened implementation of the feasibility study)

The Borrower shall enable ADB's representatives to inspect the TA Project and any relevant records and documents.


Complied

The Borrower shall (i) maintain separate accounts and records for the TA Project; (ii) prepare annual financial statements for the TA Project in accordance with accounting principles acceptable to ADB; (iii) have such financial statements audited annually by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB, in accordance with international standards for auditing or the national equivalent acceptable to ADB; (iv) as part of each such audit, have the auditors prepare a report (which includes the auditors’ opinion on the financial statements, use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest fund(s) and statement of expenditures) and a management letter (which sets out the deficiencies in the internal control of the TA Project that were identified in the course of the audit, if any); and (v) furnish to ADB, no later than 6 months after the end of each related fiscal year, copies of such audited financial statements, audit report and management letter, all in the English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request.

LA, Article IV, Section 4.03 (a)

Partially Complied (APFS for FY 2015 and FY 2016 were received/ uploaded to e-OPS with delay)

The Borrower shall enable ADB, upon ADB's request, to discuss the financial statements for the TA Project and the Borrower's financial affairs where they relate to the TA Project with the auditors appointed pursuant to subsection (a)(iii) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB. This is provided that such discussions shall be conducted only in the presence of an authorized officer of the Borrower, unless the Borrower shall otherwise agree.

LA, Article IV, Section 4.03 (c)

Complied

The Borrower shall take all actions which shall be necessary on its part to enable the Project Executing Agency to perform their obligations under the Loan Agreement and Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations.


Complied

Appendix 7 21

Covenant



Implementation Arrangements. The Borrower shall ensure and shall cause the Project Executing Agency and the Project Implementing Agency to ensure that the TA Project is implemented in accordance with the detailed arrangements set forth in the PAM, including ensuring timely recruitment and hiring of consultants and adequate staff resources to carry out the TA Project. Any subsequent change to the PAM shall become effective only after approval of such change by the Borrower and ADB. In the event of any discrepancy between the PAM and this Loan Agreement, the provisions of this Loan Agreement shall prevail.

LA, Schedule 5, Para 1

Partially complied (The consultant recruitment took longer than expected; Lengthened implementation period of the feasibility study)

Counterpart Support. The Borrower shall ensure through the MOT that the counterpart funds necessary for the TA Project are provided on a timely basis, including funds and resources necessary for the financing of the (i) value added tax of the Consulting Services for the feasibility studies, design appraisal, road safety audit, independent audit of the TA Project accounts and project management costs; and (ii) part of contingencies, as detailed in the PAM. The Borrower shall ensure that additional counterpart support is available to cover any shortfalls that may occur during the TA Project implementation.


Complied

Safeguards. The Borrower shall ensure and shall cause the Project Executing Agency and the Project Implementing Agency to ensure that the TA Project does not have any environmental, indigenous peoples or involuntary resettlement impacts, all within the meaning of the Safeguard Policy Statement. In the event that the TA Project does have any such impact, the Borrower shall take all steps required to ensure that the TA Project complies with the applicable laws and regulations of the Borrower and with the Safeguard Policy Statement.


Complied

Labor Standards; Health. The Borrower shall ensure and shall cause the Project Executing Agency and the Project Implementing Agency to ensure that bidding documents under the TA Project shall include specific provisions to comply with all applicable labor laws and core labor standards of the Borrower relating to (a) prohibition of child labor; (b) equal pay for equal work of equal value regardless of gender, ethnicity or caste; and (c) elimination of forced labor.


Complied

Gender and Development. The Borrower shall ensure that the principles of gender equity aimed at increasing TA Project benefits and impacts on women in the TA Project area consistent with ADB’s Policy on Gender and Development (1998) are followed during implementation of the TA Project, including (a) equal pay to men and women for work of equal value; (b) enabling working conditions for women workers; and (c) taking necessary actions to encourage women living in the TA Project area


Complied

22 Appendix 7

Covenant



to participate in the design and implementation of TA Project activities. Governance and Anticorruption. The Borrower, the Project Executing Agency, and the Project Implementing Agency shall (a) comply with ADB’s Anticorruption Policy (1998, as amended to date) and acknowledge that ADB reserves the right to investigate directly, or through its agents, any alleged corrupt, fraudulent, collusive or coercive practice relating to the TA Project; and (b) cooperate with any such investigation and extend all necessary assistance for satisfactory completion of such investigation.


Complied

The Borrower, the Project Executing Agency and the Project Implementing Agency shall ensure that the anticorruption provisions acceptable to ADB are included in all bidding documents and contracts, including provisions specifying the right of ADB to audit and examine the records and accounts of the Project Executing Agency and Project Implementing Agency and all contractors, suppliers, consultants, and other service providers as they relate to the TA Project.


Complied

Prohibited List of Investment. The Borrower shall ensure or cause the Project Executing Agency and the Project Implementing Agency to ensure that no proceeds of the Loan are used to finance any activities in the list of prohibited activities in Appendix 5 of the SPS.


Complied

Public Disclosure. The Borrower shall ensure through the Project Implementing Agency’s website, the public disclosure of information about the use of Loan proceeds and procurement of Consulting Services, including (i) contract awards, (ii) name of winning bidder, (iii) bidding procedures, (iv) amount of contract awarded, (v) list of services purchased, and (vi) intended and actual utilization of the Loan proceeds under each contracts. The website shall be updated within two weeks of each contract award.


Complied

Coordination and Agreement among Various Entities. The Borrower through the Project Executing Agency shall ensure coordination and agreement among the various entities, including the Project Implementing Agency, related local governments, cities and provinces, and any private entities throughout the preparation and implementation of the TA Project and before the commencement of the 3RR Project.


Partially complied (Due to delays in collecting comments for decision making points at every step of project preparation and implementation from local authorities to reach consensus amongst concerned parties: HCMC, Binh Duong, and Long An provinces)

Project Agreement Cuu Long CIPM shall carry out the TA Project with due diligence and efficiency, and in conformity with sound applicable technical, financial, business, and development practices.

PA, Section 2.01 (a)

Complied

Appendix 7 23

Covenant



In the carrying out of the TA Project, Cuu Long CIPM shall perform all obligations set forth in the Loan Agreement to the extent that they are applicable to Cuu Long CIPM, and all obligations set forth in this Project Agreement.

PA, Section 2.01 (b)

Complied

Cuu Long CIPM shall make available, promptly as needed, and on terms and conditions acceptable to ADB, the funds, facilities, services, and other resources as required, in addition to the proceeds of the Loan, for the carrying out of the TA Project.

PA, Section 2.02 Complied

In the carrying out of the TA Project, Cuu Long CIPM shall employ competent and qualified consultants, acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB.


Complied

Except as ADB may otherwise agree, Cuu Long CIPM shall procure all items of expenditures to be financed out of the proceeds of the Loan in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where any such item has not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB.


Complied

Cuu Long CIPM shall carry out the TA Project in accordance with plans, design standards, specifications and work schedules acceptable to ADB. Cuu Long CIPM shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.

PA, Section 2.04 Partially Complied (Lengthened implementation of feasibility study due to delays in local authorities’ comments)

To the extent applicable, Cuu Long CIPM shall take out and maintain with responsible insurers, or make other arrangements satisfactory to ADB for, insurance against such risks and in such amounts as shall be consistent with sound practice.


Complied

To the extent applicable and without limiting the generality of the foregoing, Cuu Long CIPM undertakes to insure, or cause to be insured, any goods to be imported for the TA Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair any such goods.


Complied

Cuu Long CIPM shall maintain, or cause to be maintained, records and accounts adequate to identify the items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the TA Project, to record the progress of the TA Project (including the cost thereof) and to reflect, in accordance with consistently


24 Appendix 7

Covenant



maintained sound accounting principles, its operations and financial condition. ADB and Cuu Long CIPM shall cooperate fully to ensure that the purposes of the Loan will be accomplished.


Complied

Cuu Long CIPM shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the TA Project, the performance of its obligations under this Project Agreement, or the accomplishment of the purposes of the Loan.


Complied

ADB and Cuu Long CIPM shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the TA Project, Cuu Long CIPM and the Loan.

PA, Section 2.07 (c)

Complied

Cuu Long CIPM shall furnish to ADB all such reports and information as ADB shall reasonably request concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the items of expenditure financed out of such proceeds; (iii) the TA Project; (iv) the administration, operations and financial condition of Cuu Long CIPM; and (v) any other matters relating to the purposes of the Loan.


Complied

Without limiting the generality of the foregoing, Cuu Long CIPM shall furnish to ADB periodic reports on the execution of the TA Project. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the period under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following period.


Complied

Promptly after physical completion of the TA Project, but in any event not later than 3 months thereafter or such later date as ADB may agree for this purpose, Cuu Long CIPM shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the TA Project, including its cost, the performance by Cuu Long CIPM of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan.


Complied

Cuu Long CIPM shall (i) maintain separate accounts and records for the TA Project; (ii) prepare annual financial statements for the TA Project in accordance with accounting principles acceptable to ADB; (iii) have such financial statements for the TA Project audited annually by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB, in accordance with international standards for auditing or the national equivalent acceptable to ADB; (iv) as part of each such audit, have the auditors prepare a


Complied

Appendix 7 25

Covenant



report (which includes the auditors’ opinion on the financial statements, use of the Loan proceeds and compliance with the financial covenants of the Loan Agreement as well as on the use of the procedures for imprest fund(s) and statement of expenditures, if such procedures are used) and a management letter (which sets out the deficiencies in the internal control of the TA Project that were identified in the course of the audit, if any); and (v) furnish to ADB, no later than 6 months after the close of the fiscal year to which they relate, copies of such audited financial statements, audit report and management letter, all in the English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request. ADB shall disclose the annual audited financial statements for the TA Project and the opinion of the auditors on the financial statements within 30 days of the date of their receipt by posting them on ADB’s website.


Complied

In addition to annual audited financial statements referred to in subsection (a) hereinabove, Cuu Long CIPM shall (i) provide its annual financial statements prepared in accordance with national accrual-based financing reporting standards; (ii) have its financial statements audited annually by independent auditors whose qualifications, experience and terms of reference are sound and generally acceptable in the relevant industry, in accordance with international standards for auditing or the national equivalent acceptable to ADB; and (iii) furnish to ADB, no later than 1 month after approval by the relevant authority, copies of such audited financial statements in the English language and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request.


Partially Complied (Per memo dated 25 May 2017, submission of the 1st APFS covering the period 4 November 2015 to 31 December 2016 was deferred from 30 June 2017 to 31 December 2017. However, due to the delay in the recruitment of the Independent Audit Consultant, the 1st APFS was only received on 28 June 2018, 6 months after the approved (deferred) submission date. During this 6-month period, following PAI 5.07, ADB withheld processing of requests for disbursements.)

Cuu Long CIPM shall enable ADB, upon ADB's request, to discuss the financial statements for the TA Project and its financial affairs where they relate to the TA Project with the auditors appointed by Cuu Long CIPM pursuant to subsections (a)(iii) and (c) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB. This is provided that such discussions shall be conducted only in the presence of an authorized officer of Cuu Long CIPM, unless Cuu Long CIPM shall otherwise agree.

PA, Section 2.09 (d)

Complied

Cuu Long CIPM shall enable ADB's representatives to inspect the TA Project and any relevant records and documents.


26 Appendix 7

Covenant



Cuu Long CIPM shall, promptly as required, take all action within its powers to maintain its corporate existence, to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the TA Project or in the conduct of its operations.


Complied

Cuu Long CIPM shall at all times conduct its operations in accordance with sound applicable technical, financial, business, development and operational practices, and under the supervision of competent and experienced management and personnel.


Complied

Cuu Long CIPM shall at all times operate and maintain its buildings, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound applicable technical, financial, business, development, operational and maintenance practices.


Complied

Except as ADB may otherwise agree, Cuu Long CIPM shall not sell, lease or otherwise dispose of any of its assets which shall be required for the efficient carrying on of its operations or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement or the Loan Agreement.


Except as ADB may otherwise agree, Cuu Long CIPM shall apply the proceeds of the Loan to the financing of expenditures on the TA Project in accordance with the provisions of the Loan Agreement and this Project Agreement, and shall ensure that all items of expenditures financed out of such proceeds are used exclusively in the carrying out of the TA Project.


Cuu Long CIPM shall promptly notify ADB of any proposal to amend, suspend or repeal any provision of its constitutional documents, which, if implemented, could adversely affect the carrying out of the TA Project. Cuu Long CIPM shall afford ADB an adequate opportunity to comment on such proposal prior to taking any affirmative action thereon.


completion report - asian development bank...at appraisal at project completion (30 january 2015)...

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