AFRICAN DEVELOPMENT FUND Language: English Original: English

REPUBLIC OF SIERRA LEONE

INSTITUTIONAL SUPPORT PROJECT TO STRENGTHEN THE PUBLIC FINANCIAL MANAGEMENT AND THE ENERGY SECTORS

APPRAISAL REPORT

NB: This document contains errata or corrigenda (see Annexes)

COUNTRY OPERATIONS DEPARTMENT OCCW WEST REGIONS SEPTEMBER 2004

SCCD: N.G.

Table of Contents PROJECT INFORMATION SHEET, CURRENCY EQUIVALENTS, WEIGHTS AND MEASURES, LIST OF TABLES, LIST OF ANNEXES, LIST OF ABBREVIATIONS, BASIC DATA SHEET, PROJECT MATRIX AND EXECUTIVE SUMMARY i-ix

I. ORIGIN AND HISTORY OF PROJECT .....................................................................1 II. CAPACITY BUILDING NEEDS IN POST-CONFLICT SIERRA LEONE ...............2

2.1 Current Capacity Constraints in Public Sector ......................................................2 2.2 Policy Orientation of Capacity Building................................................................4 2.3 Past Effort to Rebuild Institutional and Human Capacity .....................................5

III. INSTITUTIONAL FRAMEWORK ..........................................................................6

3.1 Overview................................................................................................................6 3.2 Institutional Arrangement in Public Debt Management ........................................6 3.3 Office of the Auditor General (OAG)....................................................................7 3.4 Office of the Accountant General (ACG)..............................................................8 3.5 Ministry of Energy and Power...............................................................................9

IV. THE PROJECT........................................................................................................11

4.1 Project Concept and Rationale.............................................................................11 4.2 Strategic Context..................................................................................................12 4.3 Objective of Project .............................................................................................12 4.4 Project Description...............................................................................................13 4.5 Gender Impact......................................................................................................16 4.6 Social and Economic Impact ...............................................................................16 4.7 Environmental Impact..........................................................................................17 4.8 Project Cost..........................................................................................................17 4.9 Source of Financing .............................................................................................18

V. PROJECT IMPLEMENTATION................................................................................20

5.1 Executing Agency (EA).......................................................................................20 5.2 Institutional and Supervision Arrangements........................................................20 5.3 Implementation Schedule.....................................................................................20 5.4 Procurement Arrangements .................................................................................21 5.5 Disbursement Arrangements................................................................................22 5.6 Financial Reporting and Auditing........................................................................22 5.7 Aid-Coordination .................................................................................................23 5.8 Monitoring and Evaluation ..................................................................................23

VI. SUSTAINABILITY AND RISKS...........................................................................24

6.1 Recurrent Costs....................................................................................................24 6.2 Project Sustainability ...........................................................................................24 6.3 Risks and Mitigating Measures............................................................................24

VII. PROJECT BENEFITS.............................................................................................25 VIII. CONCLUSIONS AND RECOMMENDATIONS ..................................................25

8.1 Conclusions..........................................................................................................25 8.2 Recommendations and Conditions for Disbursement..........................................25

This report is based on the findings of the preparation and appraisal Missions that visited Sierra Leone in March and May 2004, respectively. The Missions comprised Mr. James Wahome, Principal Country Economist, OCCW, Mr. Mohamoud Ibrahim, Principal Financial Analyst, OCIN.2, Ms. Angela Nalikka, Systems Analyst and Mr. Noel Koffi, Consultant, GECL. Enquiries concerning the document may be addressed to Mr. J.M.Gharbi, Director, OCCW (Ext 2060), Mr. G. Mbesherubusa, Director, OCIN (Ext 2034), Mr. M. Doumbia, (Ext.2190) Manager, OCIN.2 and Mr. Alieu A.O. Jeng (Ext. 2172), Country Programme Manager, OCCW.

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TABLES 4.1 Summary of Project Cost by Component 4.2 Summary of Project Cost Estimates by Category of Expenditure 4.3 Source of Finance 4.4 Source of Finance by Component 4.5 Source of Finance by Category of Expenditure 4.6 Expenditure Schedule by Source of Finance 4.7 Expenditure Schedule by Category and Source of Finance 5.1 Implementation Schedule 5.2 Procurement Arrangements

ANNEXES 1. Map of Sierra Leone 2. Detailed Cost of Project Components /List of Goods and Services 3. Terms of Reference of the Project Coordinator 4. Terms of Reference for the Project Accountant 5. Terms of Reference for the IT Officer 6. Terms of Reference for the Consultancy Services for the DMU 7. Terms of Reference for the Consultancy Services for MEP 8. Organizational Charts of Beneficiary Institutions 9. Bank Group Operations

CURRENCY EQUIVALENTS (May 2004)

Currency Unit: Leones

UA 1 = 1 SDR UA 1 = 3954.06 Leones UA 1 = 1.45183 USD

WEIGHTS AND MEASURES

Metric System

GOVERNMENT FINANCIAL YEAR

January 1 - December 31

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ABBREVIATIONS AND ACRONYMS ACC Anti-Corruption Commission ACG Accountant General Department ADB African Development Bank ADF African Development Fund ADF/TAF African Development Fund/Technical Assistance Fund AFRC Armed Forces Revolutionary Council ARGD Administrator and Registrar General Department ACCA Association of Certified Chartered Accountants BSL Bank of Sierra Leone CBOC Community Budget Oversight Committee CS-DRMS Commonwealth Secretariat Debt Recording and Management System CSO Central Statistics Office DACO Donor Assistance Coordinating Office DDR Disarmament, Demobilization and Reintegration DFID/UK Department for International Development (United Kingdom) EA Executing Agency DMU Debt Management Unit ECOMOG ECOWAS Military Observer Group ECOWAS Economic Community of West African States EPRU Economic Policy and Research Unit FID Factory Inspectorate Division GoSL Government of Sierra Leone BHEP Bumbuna Hydroelectric Power Project HIPCs Highly Indebted Poor Countries Initiative IBRD International Bank for Reconstruction and Development IDA International Development Association IMF International Monetary Fund IPAM Institute of Public Administration and Management I-PRSP Interim Poverty Reduction Strategy Paper IRCBP Institutional Reform and Capacity Building Project LOD Law Officers’ Department MDAs Ministries, Departments, and Agencies MEP Ministry of Energy and Power MOF Ministry of Finance NRA National Revenue Authority NSGG National Strategy for Good Governance OAG Office of the Auditor General PASCO Poverty Alleviation Strategy Coordinating Office PC Project Coordinator PEM Public Expenditure Management PFM Public Financial Management PIU Project Implementation Unit PRSP Poverty Reduction Strategy Paper PS Parliamentary Secretariat PSC Project Steering Committee PSMS Public Sector Management Support PSR Public Sector Reform PFM Public Financial Management RRR Reintegration, Rehabilitation and Reconstruction Programs RUF Revolutionary United Front SAPA Social Action for Poverty Alleviation SRP Social Rehabilitation Project TNA Training Needs Analysis UNAMSIL United Nations Assistance Mission to Sierra Leone UNDP United Nations Development Program

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SIERRA LEONE: BASIC DATA SHEET

Comparative Socio-economic Indicators

Year SierraLeone Africa

Develo-ping

Countries

Develo-ped

CountriesBasic Indicators Area ( '000 Km²) 72 30 061 80 976 54 658Total Population (millions) 2002 4,8 831,0 5 024,6 1 200,3Urban Population (% of Total) 2002 40,6 38,6 43,1 78,0Population Density (per Km²) 2002 66,4 27,6 60,6 22,9GNI per Capita (US $) 2002 140 650 1 154 26 214Labor Force Participation - Total (%) 2002 37,2 43,1 45,6 54,6Labor Force Participation - Female (%) 2002 37,1 33,8 39,7 44,9Gender -Related Development Index Value 1999 … 0,484 0,655 0,905Human Develop. Index (Rank among 174 countries) 2001 175 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 1989 57,0 46,7 23,0 20,0

Demographic IndicatorsPopulation Growth Rate - Total (%) 2002 4,1 2,2 1,7 0,6Population Growth Rate - Urban (%) 2002 4,2 3,9 2,9 0,5Population < 15 years (%) 2002 46,2 43,2 32,4 18,0Population >= 65 years (%) 2002 3,0 3,3 5,1 14,3Dependency Ratio (%) 2002 88,8 86,6 61,1 48,3Sex Ratio (per 100 female) 2002 96,5 98,9 103,3 94,7Female Population 15-49 years (% of total population) 2000 … 24,0 26,9 25,4Life Expectancy at Birth - Total (years) 2002 34,2 50,6 62,0 78,0Life Expectancy at Birth - Female (years) 2002 35,5 51,7 66,3 79,3Crude Birth Rate (per 1,000) 2002 49,6 37,3 24,0 12,0Crude Death Rate (per 1,000) 2002 29,3 15,3 8,4 10,3Infant Mortality Rate (per 1,000) 2002 177,2 81,9 60,9 7,5Child Mortality Rate (per 1,000) 2002 307,0 135,6 79,8 10,2Maternal Mortality Rate (per 100,000) 1992 1 800 641 440 13Total Fertility Rate (per woman) 2002 6,5 4,9 2,8 1,7Women Using Contraception (%) 1990-99 … 40,0 59,0 74,0

Health & Nutrition IndicatorsPhysicians (per 100,000 people) 1995 7,3 57,6 78,0 287,0Nurses (per 100,000 people) 1984 93,4 105,8 98,0 782,0Births attended by Trained Health Personnel (%) 1998 25,0 38,0 56,0 99,0Access to Safe Water (% of Population) 2000 28,0 60,3 78,0 100,0Access to Health Services (% of Population) 1985 36,2 61,7 80,0 100,0Access to Sanitation (% of Population) 2000 28,0 60,5 52,0 100,0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2001 7,2 5,7 1,3 0,3Incidence of Tuberculosis (per 100,000) 2000 85,4 198,0 144,0 11,0Child Immunization Against Tuberculosis (%) 2002 70,0 76,4 82,0 93,0Child Immunization Against Measles (%) 2002 60,0 67,7 73,0 90,0Underweight Children (% of children under 5 years) 1990 28,7 25,9 31,0 …Daily Calorie Supply per Capita 2001 1 913 2 444 2 675 3 285Public Expenditure on Health (as % of GDP) 1998 0,9 3,3 1,8 6,3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2000 65,3 89,2 91,0 102,3 Primary School - Female 2000 62,7 83,7 105,0 102,0 Secondary School - Total 2000 26,0 40,8 88,0 99,5 Secondary School - Female 2000 24,0 38,2 45,8 100,8Primary School Female Teaching Staff (% of Total) 1988 29,4 49,9 51,0 82,0Adult Illiteracy Rate - Total (%) 2000 … 37,9 26,6 1,2Adult Illiteracy Rate - Male (%) 2002 … 29,2 19,0 0,8Adult Illiteracy Rate - Female (%) 2000 … 46,4 34,2 1,6Percentage of GDP Spent on Education 1998 1,0 3,5 3,9 5,9

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2002 6,8 6,2 9,9 11,6Annual Rate of Deforestation (%) 1995 3,0 0,7 0,4 -0,2Annual Rate of Reforestation (%) 1990 3,0 4,0 … …Per Capita CO2 Emissions (metric tons) 1998 0,1 1,1 1,9 12,3

Source : Compiled by the Statistics Division from ADB databases; UNAIDS; World Bank Live Database and United Nations Population Division.Notes: n.a. Not Applicable ; … Data Not Available.

Infant Mortality Rate ( Per 1000 )

020406080

100120140160180200

1994

1995

1996

1997

1998

1999

2000

2001

2002

Sierra Leone Africa

GNI per capita US $

0

200

400

600

800

1994

1995

1996

1997

1998

1999

2000

2001

2002

Sierra Leone Africa

Population Growth Rate (%)

-0,50,00,51,01,52,02,53,03,54,04,5

1994

1995

1996

1997

1998

1999

2000

2001

2002

Sierra Leone Africa

111213141516171

1994

1995

1996

1997

1998

1999

2000

2001

2002

Sierra Leone Africa

Life Expectancy at Birth (Years)

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AFRICAN DEVELOPMENT FUND ANGLE des TROIS RUES

AVENUE DU GHANA, RUE PIERRE DE COUBERTIN, RUE

HEDI NOUIRA BP. 323, 1002 TUNIS BELVEDERE

TUNISIA TELEPHONE : (216) 71102804 FAX : (216) 71332210 E-MAIL : afdb@afdb.org

PROJECT INFORMATION SHEET

Date: September 2004

The information given hereunder is intended to provide some guidance to prospective

suppliers, contractors and consultants and other persons interested in the procurement of goods and services for projects approved by the Board of Directors of the Bank Group. More detailed information may be obtained from the Executing Agency (EA). 1. COUNTRY : Republic of Sierra Leone 2. PROJECT : Institutional Support Project to

Strengthen Public Financial Management (PFM) and the Energy Sectors

3. GRANT RECIPIENT : Republic of Sierra Leone 4. EXECUTING AGENCY : Ministry of Finance, Ministerial Building, National Bank Building, Siaka Stevens Street,

Freetown, Sierra Leone E-Mail: epru@sierratel.sl Minfin@sierratel.sl Fax: 228472 Tel: 222211 5. THE PROJECT: 5.1 Objectives: The objectives of the project are to (i) strengthen the productive capacity of the institutions involved Public Financial Management (PFM); (ii) Strengthen the capacity of the public sector to manage the national debt and to establish a country-wide tracking system to capture and reconcile data on all external loans and grant; (iii) to rebuild the destroyed management, policy-making and implementation capacity of the Ministry of Energy and Power (MEP); and (iv)improve the performance of the ADB portfolio in the country through the enhancement of the management capacity of the Project Implementation Units responsible for the on going projects. (a) Description: The project will have the following three (3) component (i) Capacity Building Component: Under the capacity building component, the project will strengthen the institutional and human resources base in Public Financial Management, and assist in building the required capacity in Ministry of Power and Energy/Bumbuna Hydroelectric Project.

v (ii) Project Management Component: This component involves the establishment of the Project Implementation Unit (PIU) to ensure proper and timely execution of the project and assist in undertaking the procurement of basic equipment provided by the project. The establishment of the Unit is fully justified given the weak project implementation capacity in the entire public sector in Sierra Leone; and a) Audit: This component involves the proper auditing of the ADF Institutional Support project. The audits will be conducted annually and will include the proper scrutiny of all expenses related to the activities of the project. 7. TOTAL PROJECT COST : UA 2.94 million Foreign Exchange : UA 2.67 million Local Currency : UA 0.27 million 8. BANK GROUP FINANCING ADF Grant : UA 2.79 million 9. OTHER SOURCES OF FINANCING Government of Sierra Leone : UA.0.15 million 10. DATE OF APPROVAL : October 2004 11. ESTIMATED START-UP DATE : January 2005 12. DURATION : Three (3) years 13. PROCUREMENT OF GOODS:

All procurement of goods and acquisition of consulting services financed by the Bank will be in accordance with the Bank Rules of Procedure for Procurement of Goods and Works, or as appropriately, the Rules of Procedure for the Use of Consultants, using the relevant standard bidding documents. The procurement of equipment will be grouped into two lots: (i) Computer Equipment and Accessories; (ii) Office Equipment; National Competitive Bidding (NCB) will be used in their procurement because there are local suppliers sufficiently qualified and in a number sufficient to ensure competitive bidding. The procurement of materials relating to the office running costs will be procured in accordance with the government rules and procedures 14. CONSULTANCY SERVICES REQUIRED: The acquisition of consulting services will be in accordance with the Bank Group’s Rules of Procedure for the Use of Consultants. Services will be grouped into two (2) items: i) Technical Assistance for the MOF, the OAG, the ACG, and the PIU; and (ii) Project Audit. The procurement of training financed by the Bank shall be done by using reputable institutions acceptable to the Bank which provide the specialist training.

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SIERRA LEONE: INSTITUTIONAL SUPPORT FOR CAPACITY BUILDING TO STRENGTHEN PUBLIC FINANCIAL MANAGEMENT (PFM), THE LEGAL AND THE JUDICIAL SECTOR

MPDE MATRIX Narrative Description Verifiable Indicators Means of Verification Important Assumptions Sector Goals 1. Assist in implementing the National Strategy for Good Governance (NSGG)

1.1 Reduce the estimated US$ 40 million that is annually lost through loopholes in the fiscal budget owing to current weak financial management controls.

1.1 Annual Public Expenditure Tracking Surveys (PETS) 1.2 Annual fiscal budget and Economic Review Reports 1.3 Macroeconomic statistics, including the annual budget statement 1.4 Review reports by the country’s key development partners, 1.5 Annual Anti-Corruption Reports

1.1 Sustained commitment by Government to pursue policy reforms 1.2 Continued support by development partners as the country transits through the difficult post-conflict phase 1.3 Continued consolidation of the peace process country-wide, and decentralization of core public functions 1.4 Government’s increased commitment to fight and punish corruption

2. Project Objectives 2.1 Strengthen the capacity of the institutions involved in the PFM: the office of the Auditor General, the Accountant General Department and the MOF 2.2 Strengthen the capacity of the public sector to manage the national debt and to establish a country-wide tracking system to capture and reconcile data on all external loans and grants . 2 3 St to rebuild the destroyed management, policy-making and implementation capacity of the Ministry of Energy and Power (MEP) 2. 2.4 Improve the Implementation performance of the of the Bank Group portfolio

2.1 Reduction of the “unaccounted for items” in the fiscal budgeting from Le.8.5 billion, or around 0.5 percent of GDP, to below Le. 3.0 billion by December 2005, and eventually eliminating it by 2007. -- Reduce the Government’s domestic arrears from Leone3.2bn in 2003 to Leone 2.0 Bn by 2005 and further by below 1.0 bn by 2007. - 2.2- Improve the country’s capacity to effectively monitor and manage the country’s huge external debt stock currently estimated at US$ 1.637 billion ---Ensure that the Net Present Value of debt to export ratio is maintained at below the sustainability threshold of 150 percent throughout 2004-2007 ----Establish a country-wide tracking system to capture and reconcile all external debts and monitor disbursements 2.3 Improve power supply in the Western Province, Makeni and Lunsar towns by additional GHW 325 and providing 24-hour service to these areas. --- Implementation of environmental guidelines of BHEP ---Resettlement of PAP 2.4.1 Increase the disbursement rate of the fifteen (15) on-going operations from 52 percent of total commitment of UA 139.88 million to above 65 percent

2.1 Annual Statement of Economic and Financial Policies --Annual Report of the Office of the Auditor General - Macroeconomic Statistics, including the Government’s monetary and fiscal accounts --Reports of the annual Public Expenditure Reviews undertaken by Government/donors - Annual report of the Office of the Auditor General and Bank of Sierra Leone publications 2.2 Debt Sustainability Analysis Report. -- Annual Statement of ---Economic and Financial policies 2.3 NPA statistics --- NPA Progress Reports PCR findings . 2.4 Central Bank Statistics --- Annual Government of Sierra Leone/ADB Portfolio Review Report, Supervision Mission, and disbursement statistics from FFCO

2.1 .Government’s commitment to implement the NSGG and to pursue reforms ----Government continued commitment to the decentralization process and the willingness to continue e extending discussions of the budget to various local authorities ----Government’s strong commitment ffacilitate broad based participation in budgetary process through increased coverage of the budget oversight committees 2.2 -Government’s strong commitment to pursue fiscal an d monetary policy reforms --- improved capacity for PFM --- Undertaking Civil Service reforms as outlined in the Presidential Commission on the --- Restructuring of the Senior Civil Service, March 2004 --- commitment to reforming the civil service 2.3---Continued donor support to the Energy Sector and BHEP --- Timely recruitment of Consultants --- Timely re-start of work by first quarter of 2005 2.4Timely Increase training for all staff managing Bank Group financed projects

3. Project Output By October 2007

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3.1 Preparation and Submission of annual GoSL accounts 3.2 Preparation and submission annual Audit Report 3.3 Country-wide tracking system for all loans and grants established 3.4 Operations Manual 3.5 Relevant IT (software and hardware) and office provided and staff trained to how to use them 3.6 Completion at cost of BHEP 3.7 –Environmental, resettlement and Financial Policies and procedures 3.8 Project Management System for BHEP completed and implemented 3.9.. Conducting of 3 week workshop to improve the Implementation of the Bank Group Portfolio

3.1 Annual financial statements of GoSL finalised by March every year .2 Annual Audit Reports available by end of June every year. 3.3 Tracking system report available within one month after end of evry ququrter.. 3.4Operations Manual prepared for the Debt Management Units and inter-net linkage established 3.5 Computer equipment and software; and office equipment consisting of 35 computers, and accessories, one audit software, 6 heavy duty printers, 11 photocopiers, 5 fax machines, 2 binders, one digital camera, one computer network and software, a fire proof safe and a megaphone provided 3.6 Commissioning of BHEP by October 2007 3.7 About 1000 PAP are resettled -- Environmental guidelines implemented 3.8 Manual of operations; ---3 Engineers and one financial counterpart staff trained in project management 3.9 Training of forty (40) PIU staff in ADB funded projects

3.1 Quarterly Progress Reports by the PIU 3.2 Supervision Missions and Annual Audit Reports 3.3---Quarterly progress and Bank supervision reports 3.4--- Quarterly progress and Bank supervision reports 3.5 Operations Manual prepared for the Debt Management Units and inter-net linkage established 3.6NPA progress Reports , Supervision and PCR reports 3.7 Quarterly and Supervision reportgs 3.8 Quarterly and supervision mission reports 3.9 Review of the Annual Audit Reports for various projects

3.1 Improved capacity for project implementation 3.2 Undertaking Civil Service reforms as outlined in the Presidential Commission on the Restructuring of the Senior Civil Service, March 2004 3.3 Regular provision by Government of counterpart funding. 3.4 Timely Recruitment of consultants 3.5 Timely procurment of equipment and training of stgaff 3.6 Commencement of work on January 2005 37 Government implementation of recommendations of consultants 3.8 Timely recruitment of consultnats 3.9 Low turnover of staff in PIUs

4. Project Activities 4.1 Training of 289 or 15% of the main steam civil service staff as follows: -160 senior staff from MOF -89 Senior Staff from OAG - 40 Senior project Mangers 4.2 Technical Assistance 4.2 Procurement of

Computer and office equipment,

4.3 Installation of Network for the MOF

4.4 Recrutiment of Consultnaltnts fo the Technical Assistance

Inputs/Resources (UA million) ADF: 2.79 million GoSL 0.15 million Total 2.94 million (Input in UA ‘000) Equipment 504 Training 359 Tech. Assist 1973 Audit 22 Others 82 Total 3938

-Disbursement Ledger -Quarterly progress report - Supervision Mission reports - Annual Audit Report

4 Timely effectiveness of the grant --PIU constituted and training undertake for project coordinator and accountant - Undertaking Civil Service reforms as outlined in the Presidential Commission on the Restructuring of the Senior Civil Service, March 2004

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EXECUTIVE SUMMARY 1. Background 1.1 The ultimate objective of the project is to strengthen the productive capacity of the institutions involved Public Financial Management (PFM), as well as rebuilding the destroyed management, policy-making and implementation capacity of the Ministry of Energy and Power (MEP). The project also aims to enhance the management capacity of the Pies implementing projects in the ADB portfolio. The need to strengthen the capacity of PEM institutions is derived from the 2001 Country Financial Accountability Assessment (CFAA) Report and the May 2004 Sierra Leone’s Heavily Indebted Poor Countries (HIPC) Expenditure Tracking Assessment and Action Plan (AAP), undertaken by the world Bank and other development partners, which revealed serious weaknesses that create high fiduciary risks in the current PEM system. The energy sector is included as a component of the project because the lack of regular electricity supply is severely hampering the revival of the economy and slowing down the pace of the implementation of the governments poverty reduction programme. 2. Purpose of Grant The purpose of the ADF-IX grant of UA 2.79 million is to assist the Government in strengthening the capacity of the institutions involved in Public Financial Management (PFM), as well as rebuilding the destroyed management, policy-making and implementation capacity of the Ministry of Energy and Power (MEP). The need to strengthen the capacity of PEM institutions is derived from the 2001 Country Financial Accountability Assessment (CFAA) Report and the May 2004 Sierra Leone’s Heavily Indebted Poor Countries (HIPC) Expenditure Tracking Assessment and Action Plan (AAP), undertaken by the world Bank and other development partners, which revealed serious weaknesses that create high fiduciary risks in the current PEM system. 2.2 The support intended to enhance the institutional capacity of the energy sector is included as a component of the project because the lack of regular electricity power supply is severely hampering the revival of the economy and slowing down the pace of the implementation of the governments poverty reduction programme. To this end, the project will assist in strengthening the management and technical capacity of the Ministry of Energy and Power (MEP), which is responsible for managing all the investment being undertaken by the Government and some development partners, including the Bank and the World Bank, in the sector. Of particular concern is the revival and completion of the Bumbuna Hydroelectricity Power Project BHEP, which is considered as the cornerstone of the Government’s electricity power generation strategy. On completion in 2006, BHEP is expected to boost electricity power supply in Sierra Leone, where currently, only nine (9) percent of the population has access to electricity from the National Power Authority (NPA). 2.3 The project is derived from the Government’s Interim Poverty Reduction Strategy Paper (I-PRSP), and the National Strategy for Good Governance (NSGG). The project is consistent with the 1999 African Development Bank Group’s Good Governance Policy and the overarching objective of reducing poverty in all Regional Member Countries (RMCs). 3. Project Output 3.1 The project will provide specialized training to 289 Senior Civil Servants or about 15 percent of the 1,972 mainstream civil servants (excluding police and military) drawn from the Ministry of Finance (MOF), Ministry of Energy and Power (MEP), the office of the Auditor General (OAG) and the ongoing Bank Group financed projects in the country. The project will provide 636 man-months of technical assistance (TA), which is desperately needed to revive the capacity of the above-mentioned beneficiaries. In addition, the project will provide relevant IT (software and hardware), internet connections, local area network and other essential research materials and office equipment, and train staff in the use of these equipment. The provision of

ix equipment, along with the training provided will significantly increase the productivity of the trained personnel. 3.2 The training that is focused on the staff managing ADB projects is considered crucial in reviving the pre-war standards of project implementation and management, particularly in line Ministries, and in improving the soundness and development effectiveness of ADB portfolio in the years ahead. The training will essentially focus on short term (3-weeks) training in all aspects of project cycle, including project identification, preparation and appraisal, as well as project monitoring and evaluation. The Bank is expected to supplement this training with the usual courses that are focused on acquainting staff of the Pies with the Bank’s rules and procedures for accounting and auditing, procurement, disbursement and general policies on portfolio improvement and management. Such an integrated training programme is expected to have a higher pay-off in term of project management in Sierra Leone. 3.3 The Technical Assistance component of the project for OAG, the MOF and the MEP will enhance the capacity of these institutions through the introduction of modern management systems and raise the skills of staff by way of on-the –job training. 4. Cost of the Project and Sources of Finance

4.1 The project will be co-financed through grant resources of the ADF and the Government of Sierra Leone (GoSL). The total cost of the project is estimated at UA2.94 million, of which UA 2.67 million or 91 percent will be in foreign cost, while the balance of UA 0.15 million or 9 percent will the local cost. The ADF is expected to bear all the foreign cost of the project and part of the local cost, while the GoSL is expected to contribute the remaining balance as counterpart funding. 5. Project Implementation 5.1 The Ministry of Finance will be the Executing Agency (EA) of the Project, but its implementation will take place under the overall supervision and guidance of the project’s Steering Committee (PSC). A Project Implementation Unit (PIU) is to be established within the Ministry of Finance to manage the day-to-day implementation of the project and shall be headed by the Project Coordinator (PC), assisted by a professional accountant, who will be recruited through short-listing. Establishment of the PIU to manage the project is fully justified on account of the weak implementation capacity in post-conflict Sierra Leone. The project will be implemented over a period of three years after effectiveness, which is expected in March 2005. 6. Conclusion 6.1 The project focuses on assisting the Government implement its Poverty Reduction Programme and National Strategy for Good Governance (NSGG). The thrust of the programmes relates to reviving the war-ravaged economy and to fight the pervasive poverty. The project is inconformity with the 1999 African Development Bank Group’s Good Governance Policy and the overarching objective of reducing poverty in all Regional Member Countries (RMCs). 7. Recommendation

Given the sustained efforts by the Government of Sierra Leone to deal with the difficulties of transiting through the post-conflict phase, and the fact that the proposed project could greatly augment these efforts, it is recommended that an ADF grant not exceeding UA 2.79 million be extended to the Government of Sierra Leone on terms and conditions set out at the end of this appraisal report.

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I. ORIGIN AND HISTORY OF PROJECT 1.1.1 Sierra Leone can lay claim to a record of truly impressive post-conflict achievement. The years 1990-1999 were characterized by a brutal civil conflict that displaced half the country’s population, disrupted the economy, and badly damaged infrastructure, including the generation and supply of electricity power. By contrast, since the official announcement of the end of the civil conflict in January 2000, the country has embarked on the difficult transition from the post-conflict phase, while coping with the abject poverty, rehabilitating and reconstructing the destroyed social and physical infrastructure, resettling the displaced population and rebuilding the weakened capacity of the public sector. 1.1.2 Owing to the inability of the economy to generate funds, most of the on-going rehabilitation and reconstruction is being supported by the enormous goodwill of the international community. The rationale behind this support is that poverty reduction can only occur when the current gains in security are augmented by increased Government and private sector investments in infrastructure, agriculture, mining and in strengthening the country’s institutional and human resources base. 1.1.3 This project focuses on strengthening the productive capacity of the institutions involved Public Financial Management (PFM), as well as rebuilding the destroyed management, policy-making and implementation capacity of the Ministry of Energy and Power (MEP). The desire to strengthen the capacity of institutions involved in PEM is derived from the 2001 Country Financial Accountability Assessment (CFAA) and the May 2004 Sierra Leone’s Heavily Indebted Poor Countries (HIPC) Expenditure Tracking Assessment and Action Plan (AAP), undertaken by the world Bank and other development partners, which revealed serious weaknesses that create high fiduciary risks in the current PEM system. The energy sector is included as a component of the project because the lack of regular electricity power supply is severely hampering the revival of the economy and slowing down the pace of the implementation of the governments poverty reduction programme. 1.1.4 The Government, with the support of the Bank, the World Bank, and the Italian Government has therefore embarked on the rehabilitation and reconstruction of the Bumbuna Hydroelectric Power (BHEP) Project. The BHEP, whose completion was stalled by the civil conflict, is considered the cornerstone of the Government’s electricity power generation strategy. On completion, the project is expected to boost electricity power supply in Sierra Leone, where currently, only nine (9) percent of the population has access to electricity from the National Power Authority (NPA). Access of electricity outside Freetown, the capital city, is limited to just two of the twelve districts centers in the country. Most business, including the small-scale and informal sector activities have to rely on their generators or endure prolonged blackouts, greatly increasing their costs of production. When completed, BHEP will ensure twenty-four hour power supply, (at reduced cost to the population) to the Western Province (Freetown and its environs), as well as Makeni (capital of the Northern Province), Lunsar and villages along the transmission line from Bumbuna Dam. 1.2 Performance of Similar Operations in the Country 1.2.1 The Bank has implemented similar capacity building projects in Sierra Leone that broadly focus on improving macroeconomic management and in strengthening the capacity for implementing sector projects. On macroeconomic management, the Programme of Debt Management, was approved on 02 October 1992, and had resources in the amount of UA 0.451 million. The programme focused on providing training for staff and computerization for the debt database at both the Bank of Sierra Leone and the Ministry of Finance. The implementation of the programme was severely interrupted by the civil conflict. Despite the difficulties, the programme managed to train at

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least 7 staff members on almost all aspects of external debt management. Some computer software, the Common Wealth Debt Recording and Management system (CS-DRMS) was installed in the Ministry of Finance and the staff provided with hand-on-hand training in the debt management software. However, the violent coup d’état of May 25, 1997 and the rebel attack on Freetown virtually destroyed all the achievements in terms of institutional capacity. In particular, equipment, including documents was destroyed and trained staff fled the country owing to insecurity. The coup also led to the suspension of the ongoing donor financed projects as both contractors and government employees working on these projects have left the country. Since the restoration of the Elected Government in 1998 and up to November 2002, the Debt Management Unit, Ministry of Finance, functioned with only two staff members. 1.2.2 The Board approved the second capacity building project in Sierra Leone in July 2001. The ADF-VIII project had resources in the amount of UA 0.96 million, of which UA 0.32 million or 34.0 percent of the resources were earmarked for assisting in the preparation of the full PRSP. The project was designed as emergency operations that focused on addressing pressing needs in the public sector immediately after the cessation of conflict. The project had three broad objectives: (i) to provide capacity to enable the public sector to carry out, co-ordinate, and monitor the evolving macroeconomic developments; (ii) to enable the Auditor General’s Department to undertake in a timely manner the audit of all Ministries and Government’s Departments as mandated by the constitution. Despite the delays in attaining effectiveness, the project is being implemented smoothly. Most of the local training components have already been completed and the support to the PRSP is fully utilized. The working equipments are currently being procured. 1.2.3 The design of the proposed project is influenced by the lessons learnt over the past from the experience, preparation and implementation of capacity building projects in Sierra Leone. The first of such lessons relate to country ownership of the project, which is extremely essential in ensuring continuity. The Government’s ownership of the project was strengthened during the various consultations held with line Ministries and Departments. These consultations culminated in the deliberations that were held between the Government and its key development partners, including the Bank Group, during the 5th and 7th DEPAC meetings. 1.2.4 The second lesson relates to the fact that capacity building is more effective if there is thorough learning by doing. This lesson has been incorporated into the proposed training programmes supported by the project. Third, and perhaps most important, the successful implementation of a capacity building project, especially in post conflict country like Sierra Leone, require strong leadership and an efficient implementation agency. This aspect will be addressed through the recruitment of a Project Coordinator (PC) (see terms of reference in Annex III and IV) who is well acquainted with the training needs of the civil service in Sierra Leone. The selected PC will further receive specialized training in project management skills and in the procurement and disbursements rules of the Bank Group. The specialized training will be extended to all staff managing ADB funded projects in Sierra Leone. The Bank expects project implementation to improve after this training, which will be conducted annually during the life cycle of the project. II. CAPACITY BUILDING NEEDS IN POST-CONFLICT SIERRA LEONE 2.1 Current Capacity Constraints in Public Sector 2.1.1 The decade-long conflict caused tremendous damage to the country’s public and private sector institutions, following the systematic, large-scale destruction of Ministries and other administrative, education and health institutions. Office equipment, including vehicles, were destroyed or stolen and building that housed some key Ministries of Government, including the Ministry of Finance, the Criminal Investigation Department, the Police Station and the Law Courts Building, in and outside of Freetown, were burnt down. There was also extensive damage to the building occupied by the Ministry of Energy and Power and National Power Authority (NPA).

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2.1.2 The current capacity of Government Ministries and Institutions to deliver essential services at all levels has been severely reduced, resulting in remarkable overcrowding in existing institutions such as health and education, water supply and sanitation, electricity, and in substantial delays in the delivery of justice and other governance related functions of the public sector. Shortages of resources, equipment and working tools have further compounded the problem, as has the irregular payment of salaries and allowances, the level of which have fallen way behind the cost of living. The status of the public sector at the moment is that it is understaffed with qualified staff. Owing to the large budgetary requirements occasioned by the huge economic, political, and social reconstruction activities, the Government has not been able to rehabilitate most of the destroyed institutional and human resources capacity in the public services. 2.1.3 The fact that the civil service has degenerated into an ineffective institution characterized by a host of problems prominent among which are the paucity of skilled managerial, professional and technical personnel, weak accountability and transparency compound the challenges. The on-going donor-funded capacity building projects, while making efforts to respond to these challenges, are still insufficient to address the demonstrated capacity building needs of post-conflict Sierra Leone. Consequently, the weak institutional capacity in the public sector has been clearly identified as one of the most serious and urgent challenges in advancing the government’s post-conflict economic and poverty reduction agenda. Capacity building constraints are also affecting the Bank’s on-going operations in Sierra Leone, causing a considerable slow-down in project implementation, and the slow disbursement of funds. 2.1.4 Training of the civil service has also been neglected for a long time. Since the 1970s, training of the civil service has been rather irregular and ad hoc. Such training used to be carried out by the Institute of Public Administration and Management (IPAM), the Civil Service Training College, and the University of Sierra Leone, before they were discontinued in the early 1990s owing to insecurity and lack of funding from the central Government. The consequence of this has been that almost all the civil servants have not received any form of training, either locally or abroad, for a very long time. Local training institutions have also grounded to a halt, and substantial capacity building is required to rehabilitate them to the pre-war standards. 2.1.5 It is against this difficult and compelling background that the Government of Sierra Leone, in November 2002, requested the ADB to consider providing another institutional support project for the country in the course of ADF-IX lending cycle. The Government reiterated the request at the 5th and 7th Development Partners Committee (DEPAC) Meetings that were held in December 2003 and March 2004 respectively. The 5th DEPAC Meeting focused on reviewing the current status, institutional constraints, and capacity building needs in Sierra Leone’s legal and the judicial sector, while the 7th meeting focused on strengthening Public Financial Management (PFM), developing micro-finance institutions and reviewing the progress made in privatization. 2.1.6 A special DEPAC Meetings on BHEP was also held on September 2003. The Meeting focused on reviewing the capacity constraints in the Ministry of Energy and Power (MEP), which is responsible for policy formulation and the drawing up of investment programmes as well as managing the publicly financed investment projects in the energy, water and sanitation sectors. The meeting concluded that the MEP does not have the technical capacity to plan and manage the largest energy investment project, the BHEP, which the Government is in the processing of restarting with the assistance of donors, including the World Bank, OPEC Fund, and the Italian Government. The meeting recommended that there is an urgent need to reinforce and rebuild capacity in the MEP in order to strengthen its management and technical work.

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2.2 Policy Orientation of Capacity Building 2.2.1 The proposed ADF Project focuses on strengthening the Government’s ability to implement its Poverty Reduction Programme and the National Strategy for Good Governance (NSGG). The NSGG constitutes an integral part of the Interim Poverty Reduction Strategy paper (I-PRSP) that was launched by the Government in July 2001. The focus of the I-PRSP is to tackle the abject poverty in Sierra Leone by addressing the immediate post-war needs of the population, including the consolidation of peace, resettlement of the displaced population, providing basic services to the most vulnerable, rebuilding the social and physical infrastructure, and maintaining macroeconomic stability. Since 2001, the Government has embarked on preparing the full PRSP. Current expectation is that the full PRSP will be finalized by the third quarter, 2004. The full PRSP is expected to be more comprehensive in addressing the country’s immediate post-war problems, including the further consolidation of peace and security, reviving the war-ravaged economy, while concomitantly improving the provision of essential services to the poor and the vulnerable war victims. 2.2.2 To operationalize Sierra Leone’s NSGG, a Governance Reform Secretariat was established in 2001 under the Office of the President. The key elements of the Sierra Leone’s NSGG included: (i) reactivating the local government administration and decentralizing the central government authority through the restoration of the Paramount Chiefs system and the conducting of democratic elections in vacant chiefdoms and districts; (ii) raising awareness among the populace about their rights, privileges and obligations and enhancement of the role of the media through improved information and communication infrastructure; (iii) public sector reform and capacity building for efficient and effective service delivery through reorganizing and downsizing the civil service and enhancement of economic management capacity; (iv) reinforcing the judiciary and the legal system for safeguarding the rule of law and human rights; (v) restructuring of the military and the police; (vi) enhancing accountability in the use of public funds; and (vii) strengthening capacity of the Anti-Corruption Commission (ACC). 2.2.3 Focusing on Public Financial Management (PFM), which constitutes part of the NSGG, the Government is keenly aware that the current PFM systems have to be considerably improved in order to effectively serve as the vehicle for implementing the ambitious pro-poor policies contained in its poverty reduction agenda. The key areas of concern in Sierra Leone’s PEM systems were identified by the Country Financial Accountability Assessment (CFAA), which was conducted in December 2001. In response to these concerns, the Government has been able to gradually improve financial management. The Medium term expenditure framework, for example, was adopted in 2001 and is gradually being introduced to all line ministries in an effort to: (i) improve effectiveness and efficiency of the public sector in the allocation and utilization of the scarce public sector resources; and (ii) enhance firm adherence to the established expenditure control and commitment levels to prevent the recurrence of domestic and external payments arrears, and to limit the need for external borrowing to sustainable levels. 2.2.4 To enhance the participatory nature of the budgetary process, the Government has established budget committees in all line Ministries, Departments and Agencies (MDAs). These committees internally review and endorse the development objectives and policies, as stated in the strategic plans, of all MDAs. Furthermore, the Government has established Community Budget Oversight Committees (CBOC) in all districts. These committees participate in the annual budget deliberations and defend their budget proposals, as well as monitor budget implementation in their respective regions and districts.

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2.2.5 The Public Expenditure Tracking Surveys (PETS), another innovation in managing public resources, was introduced in 2001. The purpose of PETS is to monitor the effective and accountable use of public funds. In order to ensure that the expenditure-tracking surveys are consistent with best practices, a review of the PETS process was carried out during 2003. The review resulted in the development of a Generic Resource Flow Model, which was tested in a pilot survey by the United Nations Development Programme (UNDP) in education sector. 2.2.6 To improve the utilization of public funds the Government has also initiated the procurement reform programmes. The first phase of the programme intends to develop a new public procurement policy, legislation, and regulation, which embrace the principles of transparency, accountability, and efficiency. The legal and regulatory framework is to replace the existing outdated 1963 regulations, which was plagued by controversies and allegations of unfairness, lack of transparency and wastage of public funds and frauds. 2.2.7 Despite these efforts, the May 2004 Sierra Leone HIPC Expenditure Tracking Assessment and Action Plan (AAP), identified serious weaknesses that still remain in public financial management, including the findings that: (i) the budget system does not yet present a real and comprehensive view on planning; (ii) the current accounting system has not yet progressed to produce reliable financial statement or meaningful figures for the purpose of the budgetary control; (iii) the system of internal control and audit is inefficient in line ministries; (iv) serious human resources constraints hamper effective financial management; and (v) the management of assets, liabilities and internally generated revenue is very weak. The ADF Institutional Support Project will address some of these issues, particularly improving PEM in the Office of the Auditor General, the Account General Department (ACG), and the Debt Management Unit. Completion. 2.3 Past Effort to Rebuild Institutional and Human Capacity 2.3.1 The Government with the support of the World Bank launched the first Public Sector Management Support (PSMS) project in 1993. The chaotic political and security situation in the 1990s, however, impeded the implementation of the project. Evidence of setback include the unfinished or abandoned project activities, destruction of structures and systems and the loss of over 60 percent of the equipment and materials supplied to the project beneficiaries. 2.3.2 In March 2001, the World Bank embarked on the second phase of the PSMS project, which primarily focused on rebuilding and strengthening structures with a view to improving efficiency in the management of the country’s economic recovery and rehabilitation programme. The project has three main components: (i) strengthening the technical base for economic policy-making by providing training and equipment to the Ministry of Finance, the Economic Planning and Research Unit (EPRU), the Bank of Sierra Leone, the Central Statistics Office and the Office of the President; (ii) assist in the formulation of long-term strategy for public sector management, the expected privatisation of public enterprises and finance the preparation of the full PRSP; and (iii) provide Information, Education, and Communication (IEC) campaign designed to assist in the prevention and control of HIV/AIDS. 2.3.3 The IMF is also providing capacity building support to the banking and financial system. The support involves assisting the Central Bank of Sierra Leone to improve its operations and policy analysis as well as to strengthen data collection and processing in the areas of balance of payments and monetary statistics. In additional, it provided support to the Central Statistics Office (CSO) to strengthen the national accounts database. Over the recent past, Sierra Leone’s macroeconomic database has been severely compromised and despite efforts by the Government to revive earlier standards, serious deficiencies persist. The CSO has now been restructured, with a

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view to improving efficiency and output, and has been made an autonomous agency of the Government. The technical support from the Fund and the World Bank will help in rebuilding the required institutional capacity, thus making the CSO more responsive to the statistical needs of the post-conflict country. 2.3.4 The public sector is also receiving support from the European Union in the area of financial management and accounting. Various training programmes are also underway and the civil service training centre has been rehabilitated. Finally, The Government has further embarked on the public sector reform and divestiture programme under the Public Enterprises (PE) Reform Act of 1993. Under the programme, many enterprises have been privatised or liquidated and several others were leased (hotels) or put under management. The Government has established the Privatisation Commission, which is entrusted with privatising the remaining public enterprises. 2.3.5 Given the capacity building needs of post conflict Sierra Leone, the on-going donor funded capacity building projects are insufficient to address the demonstrated capacity building needs of post conflict Sierra Leone. The problem of the weak capacity in the public sector is further compounded as the Government extends its authority to the larger areas of the country that were previously under rebel control. Of particular concern is the need to revive the provision of essential public services in the provinces as well as address the weak capacity in key ministries and Government institutions. Given the huge budgetary requirements in post-conflict Sierra Leone for social and economic activities, and the on-going decentralization programme, it is appropriate that more and well-targeted donor support is provided to rebuild the destroyed capacity in the public sector. In addition, to sustain the peace process there is a need to restore the productive capacity of the economy by providing essential power supply and water to industries and services. 2.3.6 The proposed ADF Project intends to complement the on-going capacity building initiatives being provided by other donors. The project is parallel financed with World Bank’s Institutional Reform and Capacity Building Project (IRCBP), which was approved in May 2004. The IRCBP focuses on assisting Sierra Leone implement its decentralization programme. The World Bank Power and Water Project (PWP) that has been recently apprised has an institutional a capacity component to strengthen these two sectors. The ADF Project will focus in providing high quality training and working equipment to the top cadre of the civil service. The Fund will also provide technical assistance to build capacity in the institutions covered. III. INSTITUTIONAL FRAMEWORK 3.1 Overview 3.1.1 The proposed Institutional Support project will enhance the capacity of the following institutions dealing in Public Financial Management (PFM) namely: (i) Public Debt Management Units; (ii) the Accountant General Department (ACG); (iii) and the Office of the Auditor General (OAG). The project will further assist the country in building the capacity of the Ministry of Energy and Power/Bumbuna Hydroelectric Power Project (MEP/BHEP). The respective institutional arrangement of these entities is provided below. A. PUBLIC FINANCIAL MANAGEMENT 3.2 Institutional Arrangement in Public Debt Management 3.2.1 Proper management of the public debt constitutes an important element of public financial management and contributes significantly in investment planning and programming. In Sierra Leone, the management of external assistance is the joint responsibility of the Ministry of Finance (MOF) and the Bank of Sierra Leone (BSL). Under the MOF, the Debt Management Unit is entrusted with the

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responsibility of formulating, implementing and coordinating the country’s external assistance and overall debt strategy. The Unit is also responsible for ensuring that potential debt reduction under the HIPC Initiative is targeted to the intended beneficiary. In collaboration with other Departments, the unit is making an effort to ensure that substantial debt relief is obtained to facilitate the medium term poverty reduction programme that the Government has embarked on. Over the medium term, the Government intends to have a clearly defined public borrowing policy as well as review the donor–funded project cycles including the duties and responsibility of all institutions involved in loan contracting and utilization. This proposed institutional support project will assist in undertaking this exercise, which will be coordinated by the newly established Donor Assistance Coordinating Office (DACO). 3.2.2 In November 2001, the Debt Management Unit received technical assistance under the ADF-VIII Institutional Support for Capacity Strengthening, Governance and Poverty Reduction Project. The assistance mainly covered the provision of the services of four (4) consultants to reconstitute the database of the unit and to assist in carrying out the external debt management functions of the Ministry of Finance. The support was modest and is coming to an end in December 2004. It is therefore imperative that additional support is provided in order to sustain and consolidate the gains that were achieved through the 2001 Institutional Support for Capacity Strengthening, Governance, and Poverty Reduction project. 3.2.3 The support provided in the past has not been sufficient to transform the DMU into an efficient organization capable of adequately monitoring the country’s public debt. The capacity constraint has translated into inaccurate and incomplete records of obligations, and the inability to coordinate and monitor disbursements of loans and re-payment of debt. This serious shortcoming of the DMU is compounded by the lack of clear operational guidelines, inadequate staffing, and equipment, particularly for data processing facilities. In addition, the unit has (i) an inadequate institutional structure and unclear terms of reference; and (ii) lacks clear policy guidelines, strategic plan and responsibilities on advising on external borrowing and management. Besides these problems, coordination with other debt entities in Government remains poor, resulting in inaccurate and incomplete debt data from the various debt management units. The proposed ADF Institutional support project will assist in addressing some of then above-mentioned constraints. 3.3 Office of the Auditor General (OAG) 3.3.1 An Act of Parliament established the Office of the Auditor General (OAG) in 1962. An Auditor General (AG), assisted by four deputies, manages the Department. The OAG acts as a watchdog over the utilization of public resources in all Government Ministries, Departments, Parastatals, Diplomatic Missions, Educational Institutions and others. The role of the OAG is fundamental in the promotion of good governance, and typically involves the preparation of the Annual Audit Report for the public sector, which is reviewed by the Parliamentary Finance Committee. The reports usually highlight cases of misuse of public funds and centres, inter alia, on inappropriate tendering, overpayment of salaries and other advances. 3.3.2 As is the case with other public institutions; the OAG has been weakened by the civil war, a lack of resources and a deterioration of Government accountability system. Weak financial management and information system, shortage of qualified staff, and a weakened Parliament have constrained its ability to act as an independent assessor of Government financial activities. A particularly worrisome concern is the poor legislative framework within which the OAG operates, following the 1996 Military Decree that completely eroded the legal authority of the organization. This problem is being corrected through the amendment of the Budget and Accounting Act. The other institutional and staffing problems have been recognized by Senior Members of the Office who are keen to improve the standing and functions of the office. A number of changes have occurred in the office over the past few years, including:

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- The passing of the Audit Service Act in 1998. The Act provides for the establishment of an Audit Service board to appoint the members of the audit service and to advise the Auditor General on the administration of the office; and

- The provision of separate terms and conditions of service for its Audit employees. These new

Terms and Conditions of service were implemented starting from January 2004. There has also been a significant increase in funding from the Government of Sierra Leone, within the context of the Medium Term Expenditure Framework (MTEF).

3.3.3 The OAG has been operating under difficult circumstances over the past few years. It has been producing the Annual Audit of all Government entities. However, due to human and financial resource constraints, the reports have always been limited in coverage. These reports mainly focus on auditing official transactions but not value for money, performance, systems, or environmental audit. 3.3.4 The OAG Report is submitted to the Public Accounts Committee of Parliament, which is entrusted with the responsibility of pursuing those implicated with financial irregularities in a court of law. The weak judicial system in Sierra Leone hampers the effectiveness of this arrangement. The Anti-Corruption Commission (ACC) works in close cooperation with the OAG and it is expected that it will follow up on any irregularities uncovered in the latter’s report (the ACC can only pursue cases that took place after 2000, the year in which the Anti Corruption Act was passed). There is no doubt therefore, that the OAG will play a pivotal role in the fight against corruption and efforts must be made to reinforce its institutional and human capacity. The proposed project will contribute in strengthening the OAG. 3.4 Office of the Accountant General (ACG) 3.4.1 The Ministry of Finance has a current organizational structure where the main functions of budget planning, revenue collection, expenditure controls and monitoring as well as financial accounting and reporting are split into two Departments. The Departments, Office of the ACG and the Budget Bureau (BB), report directly to the Financial Secretary. The Accountant General is the Chief accounting officer of the Government and is assisted by a team of accounting personnel as well as accounting staff stationed in other Government accounting units such as line Ministries, Departments Accounting staffs placed within an accounting unit are accountable to their Accounting Officers (AO), but have professional reporting obligations to the ACG. Their role includes both the accountability functions i.e., ensuring institutional compliance with the financial statutes, rules and regulations and in responding to requests of the Accounting Officers (AO) in the provision of basic reports and data. With the exception of the payroll and general ledgers, accounting records are manual. 3.4.2 In addition, the ACG has the obligation to prepare annual financial statements, a budget variance report, and a monthly payroll and advances reports. Monthly extracts of the general ledger are supposed to be prepared but this is currently not being done because current electronic accounting system has hardware constraints. In addition, bank reconciliation should ideally be performed on a quarterly basis for a variety of reasons, including delays in receiving bank statements and detail of entries. The AG has also the responsibility of verifying public debt, reconciling and raising the necessary vouchers for repayment of loans and making payment. However, the Central Bank of Sierra Leone, owing to the weak capacity in the AG, is now performing this crucial role. 3.4.3 Capacity Constraint in OAG and ACG: The work of both the OAG and ACG is hampered by three critical constraints, namely: (i) financial constraints; (ii) limited infrastructure; and (iii) lack of adequately trained staff. 3.4.4 Financial Constraints: Both institutions suffer from inadequate budgetary funding, which severely constrains the ability to perform audit services countrywide. An increase in funding was approved for the OAG during the 2002-2005 budget but resources are still insufficient to improve the

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situation. Unless the Government undertakes urgent remedial measures, this problem is expected to persist with severe implications on the performance and output of both the OAG and ACG. 3.4.5 Limited Infrastructure: The OAG and ACG suffer from the lack of suitable accommodation, vehicles to facilitate the transportation of staff required to undertake audit outside of Freetown, and IT infrastructure such as computers and audit software. This has come about because several offices outside of Freetown were damaged during the civil conflict, and the Headquarters in Youyi Building lacks appropriate filing facility. To facilitate mobility, the Government has promised to provide some vehicles to the OAG. 3.4.6 Lack of Qualified Staff: Both the OAG and the ACG suffer from an acute shortage of qualified manpower. They are understaffed both in terms of staff in approved positions required to fully audit the Government’s financial system. A recent review of the OAG suggested that 126 auditors and 47 support staff were required. However, the current set of approved positions is 52 and 25, respectively. Resources and salary levels limit staff recruitment, as both the OAG and the ACG have to compete with the private and non-governmental sectors for the limited number of trained and qualified accountants in Sierra Leone. Staff retention is also a serious issue, particularly for the audit staff. For example, over the last five years, a total of fifteen (15) staff qualified as accountants with the OAG, but at present only three (3) work for the organization. The attrition rate is therefore extremely high and the situation is expected to worsen as private sector activities are revived. There is the need to train a critical mass of highly qualified accountants, to serve both the public and the private sector. The OAG will be required to fill current managerial oppositions latest by next year. 3.4.7 On account of the above-mentioned capacity constraints, both the OAG and the ACG are unable to effectively discharge their mandated obligation in a satisfactory manner. The OAG, for instance, cannot therefore audit satisfactorily all the government entities on an annual basis, as is required. This creates problems of expenditure control and accountability within the Government. Particularly of concern is the scope of the audit undertaken by the OAG, which is usually limited and extremely shallow in scope in that there are no documented policies and procedures. As clearly indicated in section 3.3.1, the OAG conduct only transactions and regularity audit and does not undertake value for money, performance, systems or environmental audit. B. THE ENERGY SECTOR

3.5 Ministry of Energy and Power 3.5.1 The Ministry of Energy and Power is responsible for policy making and supervision of the water supply and sanitation, and energy sectors in the country. Its mandate specifically include the formulation of development policies and programmes as well as the supervision of the execution of projects falling under energy, and water supply & sanitation sectors. The MEP is also responsible for the interacting with the donor community on all aspects of its work on water supply and energy sectors. Further, the MEP is vested with the task of vetting and approving investments under the two sectors which being promoted by the private sector. Finally, the Ministry also supervises several parastatals including Guma Water Company and Sierra Leone Water Company, which are respectively responsible for the provision of water supply and Sanitation facilities to Freetown and the rural areas; as well as the National Electricity Authority (NPA), which provides electricity to Freetown City. 3.5.2 The activities of the MEP are constrained by the following:

Lack of technical capability: The Ministry presently does not have any technical personnel to carry out its mission, especially in the energy sector. It does not have a technical unit for policy and programme formulation, sector regulation, and setting up of standards equipment, and supervision of the functions of its parstatals. It relies on the National Power Authority (NPA) to formulate policies and plans for the electricity sub-sector. This state of affairs is not satisfactory

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as NPA is assumes the roles of both and executing agency and the supervisor of projects in the sub-sector.

Lack of infrastructure facilities: The MEP has limited office space, furniture and office equipment in a general are in general state of disrepair and only one vehicle. The Ministry has limited communication facilities consisting of a fax and three phone lines; it lacks Internet connectivity.

Lack of recurrent funding: The MEP’s annual budget does not allow it to perform its duties and to adequately staff the PIU.

Implementation of BHEP

3.5.3 presently, the largest ongoing electricity project in the country is Bumbuna Hydroelectric Project Implementation (BHEP). The implementation of BHEP was suspended during the civil war in 1997, 18 months before it’s commissioning. When completed, BHP would provide the country with a 50 MW hydroelectric power station at Bumbuna and a 200 km transmission line to transport the energy produced to the Western Area (where Freetown is situated) and the towns of Makeni and Lunsar. Presently, a power station with a nominal capacity of 27.2 MW supplies electricity to the Western Area. Prolonged massive blackouts occur daily because the machines in the power station are old and unreliable. Affordability of electricity is low as tariffs are very high (19 US cents/kWh, compared to US$ 0.10 cents /kWh in the region) since the machines run on imported petroleum products. It is estimated that one kWh of electricity from the BHP would cost 0.05 US cents. 3.5.4 The present lack of regular power supply is hampering the economic growth of Sierra Leone and is directly contributing towards the widespread poverty in the country. To overcome these problems, GoSL is in the process of restarting the execution of the BHP. A Technical and Financial Audit (TFA), financed by the Bank, has found that the project installations have suffered minor damages during the civil war and that the project could be completed in 24 months. The Government has obtained a grant from the Government of Italy and loans from the OPEC Fund and IDA to finance the project cost overruns. In addition, the World Bank will provide a Partial Risk Guarantee (PRG) for a commercial loan to close the financing plan. All the contractors were in the process of re-mobilizing at the time of the appraisal mission. The restart of the implementation of the project is scheduled January 2005 and will be completed by October 2006. Despite the completion of the financing plan of the project, its smooth implementation will not be assured without addressing the management capacity of the MEP needed to realize the completion of the BHEP. 3.5.5 Technical Expertise – At the first commencement of BHEP, the Ministry had set up a Project Implementation Unit (PIU) within its structure in order to ensure closer supervision of the project. The PIU staff recruited at the commencement of the project have left the country during the civil war and have not come back. The PIU therefore presently lacks adequate technical expertise to ensure proper supervision of the project. The Unit does not have the requisite number of engineering and financial staff to properly shoulder its responsibility. The PIU also lacks capacity in the areas of environment planning and management, and in resettlement of the population to displaced by the project. The BHEP is an environmentally sensitive project has been classified as Category I project since it involves resettlement of more than one thousand people in several communities as a result of the inundation of their lands. Presently, apart from the former Coordinator who has been elevated to an advisory capacity, there is not a single professional staff in the Unit to bear the responsibility of the management of the project at the government level. In the past, this lack of technical capacity at the PIU led to unsatisfactory performance of its activities especially on the areas of contract administration. Because of the complexity of the project, there is a need for a provision of high-level technical capacity (in the form of technical assistance) for proper supervision of the project to ensure its successful and timely completion. 3.5.6 Basic Equipment- The PIU lacks the basic resources to do its work. Funding of the unit is nearly non-existent. Because the unit reports to the Ministry, it gets budgetary support from the

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government whose finances are presently in a very difficult position. The unit lost most of its equipment and its offices were burnt down. The premises the unit occupies is not conducive to healthy working environment. These problems need to be addressed as soon as possible so that the PIU could satisfactorily perform its responsibilities. 3.5.7 The Technical and Financial Audit highlighted the deficiencies of the PIU and recommended that the unit should be reinforced to ensure proper control of the implementation of the remaining work, especially with respect contractor performance and cost control aspects of the project. The Technical and the Financial Audit also recommended the recruitment of external expert consultants for the assignment and suggested that funding should be sourced for this component.

Support from other donors 3.5.8 The World Bank is assisting the MEP in setting up an Energy Policy and Coordination Unit, which will produce comprehensive policies and plans for the sector. The Unit will also coordinate policies and activities in the sector. Its Head will report directly to the Minister of Energy and Power and will be seconded by four planners with expertise in traditional/renewable energy, power, water and petroleum. At the inception stage, a Consultant Policy Advisor will be engaged to guide the Head of Unit and four experienced consultants will be recruited to train and work with the planners in preparing the initial set of policies and plans. The assistance will be supplemented by the recruitment of short-tern consultants as and when required. Finally, the World Bank will also provide funding for the procurement of vehicles and some basic equipment on emergency basis for the PIU. IV. THE PROJECT 4.1 Project Concept and Rationale 4.1.1 The rationale of the project is to provide resources for strengthening the PEM system and the technical and management capacity of the MEP to formulate policies for the sector and implement the BHEP. The project has three components: (i) Capacity Building; (ii) Project Management; and (iii) Audit. Under the capacity building component, the project will provide support to augment the current weak capacity in Public Financial Management (PFM) and in the Energy sector. The beneficiary institutions include the Ministry of Finance (MOF), Ministry of Energy and Power/ Bumbuna Hydroelectric Power Project (MEP/BHEP) and the Office of the Auditor General. 4.1.2 The need to strengthen the capacity of PEM institutions is derived from the 2001 Country Financial Accountability Assessment (CFAA) Report and the May 2004 Sierra Leone’s Heavily Indebted Poor Countries (HIPC) Expenditure Tracking Assessment and Action Plan (AAP), undertaken by the world Bank and other development partners, which revealed serious weaknesses that create high fiduciary risks in the current PEM system. In selecting the beneficiaries, consideration was given to Ministries and Institutions actively involved in implementing the Government’s poverty programme, as outlined in the I-PRSP and the NSGG. The selection of beneficiaries was such that consideration was also given to not supporting the institutions already receiving substantial funding from other donors. The OAG and ACG were selected because of their constitutional mandate in ensuring good economic governance throughout the public sector. The project will assist in improving the capacity of the country to effectively monitor and manage the country’s huge external debt stock, which currently stands at US$ 1.637 billion or about 110 percent of GDP, and 707 percent of exports of goods and services. Prudent management of this stock of debt is crucial, especially when viewed in the context of other pressing post conflict rehabilitation and reconstruction needs.

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4.1.3 Support to the energy sector was included a component in order to strengthen the capacity of the energy sector in policy formulation, and the implementation of BHEP, a vital project for the economic recovery of the country in which the Bank had already made substantial investments. The present lack of regular electricity power supply is severely hampering the revival of the economy and slowing down the pace of the implementation of the governments poverty reduction programme. To this end, the project will assist in strengthening the management and technical capacity of the Ministry of Energy and Power (MEP), which is responsible for managing all the investment being undertaken by the Government and some development partners, including the Bank and the World Bank, in the sector. Of particular concern is the revival and completion of the Bumbuna Hydroelectricity Power Project BHEP, which is considered as the cornerstone of the Government’s electricity power generation strategy and in which the Bank had already made substantial investments. On completion in 2005, BHEP is expected to boost electricity power supply in Sierra Leone, where currently, only nine (9) percent of the population has access to electricity from the National Power Authority (NPA). 4.2 Strategic Context 4.2.1 The 2002-2004 Bank Group Strategy for Sierra Leone focuses on assisting to revive the war ravaged economy, through the rehabilitation of the destroyed economic, social and physical infrastructure. The strategy is being operationalized through the implementation of a Social Rehabilitation Programme (SRP) that has the following mutually reinforcing sub-components: (i) contribute in consolidating Sierra Leone’s fragile macroeconomic environment, support policy reforms and balance of payments financing needs for 2003-2005; (ii) implementing a Social Action Support Project (SASP) that focuses on the utilization of labour-intensive techniques in rehabilitating the destroyed infrastructure, resettling the displaced population, and other vulnerable war-victims; (iii) rehabilitating the destroyed educational infrastructure with a view to responding to the I-PRSP targets and Millennium Development Goals (MDGs) of increasing enrolments rates, especially for girls, and to cater for the over 500,000 children estimated to have missed several years of schooling; and (iii) rebuilding the institutional capacity in key Ministries and Institutions. The Interim PRSP aims to revive the economy through implementation of sector programs, among them power. This program is to be complemented by the inclusion of carefully targeted electrification interventions to facilitate the delivery of projects in education and health as well as assist the development of small enterprise 4.2.2 This proposed ADF Institutional Support Project is therefore fully consistent with the Government’s development agenda, 2004-2007, the NSGG and the March 2004 Presidential Report on Restructuring the Senior Civil Service. The project is consistent with the Bank Group’s medium term development strategy, as outlined in the 2002-2004 CSP, and the Strategic Plan, 2003-2007, which emphasizes the promotion of good governance in all Regional Member Countries (RMCs). Improving economic governance, to which this project would contribute, is considered as an essential precondition in the fight against poverty and in combating corruption. 4.3 Objectives of Project 4.3.1 The objectives of the project are to (i) strengthen the productive capacity of the institutions involved Public Financial Management (PFM); (ii) Strengthen the capacity of the public sector to manage the national debt and to establish a country-wide tracking system to capture and reconcile data on all external loans and grant; (iii) to rebuild the destroyed management, policy-making and implementation capacity of the Ministry of Energy and Power (MEP); and (iv) improve the performance of the ADB portfolio in the country through the enhancement of the management capacity of the Project Implementation Units responsible for the on going projects..

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4.4 Project Description 4.4.1 The project has three components: (i) Capacity Building; (ii) Project Management; and (iii) Audit. The capacity building component has two sub-components: (i) Strengthening PFM; and (ii) Strengthening of the Energy Sector. Under the capacity building component, the projects will provide training (local and overseas), Technical Assistance, operational equipment, sponsor workshops and study tours, and undertake consultancy services that are geared towards the acquisition of skills. Project Management is the second component of the project and involves the day-to-day management of the project, which has the additional mandate of acting as the focal point for organising training courses to acquaint all the forty (40) project coordinators and accountants managing ADB financed project in Sierra Leone, with the Bank rules of procedures for auditing, procurement, disbursement and general policies on portfolio management. The objective of such training is to improve on the soundness of the Bank Group Portfolio, which continues to suffer from very low disbursement rates. The final component of the project is Audit to verify that the ADF funds have been judiciously utilised by the Government of Sierra Leone..

Detailed Description of Project Components A. Component I: Capacity Building Component 4.4.2 The project will strengthen the capacity of the Public Financial Management system in Sierra Leone in four key areas: (i) the Debt Management Unit (DMU); (ii) the Accountant General Department (ACG); (iii) Office of the Auditor General (OAG). The project will also support the Energy Sector by strengthening the capacity of the Ministry of Energy and Power to enable it to formulate policies as well as to properly implement the Bumbuna Hydroelectric Power Project (BHEP). The project will improve the performance of the Bank portfolio through training of PIU staff responsible for the implementation of these projects.

Public Financial Management (PFM)

Support to the Debt Management Unit 4.4.3 This sub component will involve training in short term courses, normally lasting for three (3) weeks, in areas of general macroeconomic management, external aid and debt management techniques, debt reporting and debt sustainability analysis, policies and management of the domestic debt, and impact and effect of external and domestic debt on key macroeconomic aggregates. The training is crucial in improving PFM, especially in the crucial area of external Aid and Debt Management, and also in the overall management and implementation of the Government economic and poverty reduction programme. The programme of training for debt management will have a local and an overseas component, and will be organized throughout the three (3) years life cycle of the project. Nine professional staff will be trained in debt management. Local courses will be conducted locally at the Central Bank of Sierra Leone Training Complex or the IPAM. 4.4.4 Apart from the local courses, an additional thirty (30) senior civil servants drawn from the Debt Management Units, MOF, the Bank of Sierra Leone, the Central Statistics Office, and other relevant units in sector Ministries are expected to benefit from specialized training in debt management and macroeconomic management courses provided by relevant overseas training institutions. The provision agreed with the Government is to train at least three (3) individuals every year for the Debt Management courses. The project will therefore provide overseas training opportunities on debt management issues to three (3) Senior Executive and professional staff carefully selected from the benefiting institutions. Those who receive the specialized training will be utilized for in-house training programmes in the years ahead.

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4.4.5 The justification for providing overseas training is to acquaint participants with the latest updates of Debt Recording and Management System. Each participant for the overseas courses will be required to sign a bond agreeing to serve the Government for a minimum period of one–year, which is in accordance with the Government’s sponsored training programmes. Apart from the requirement of prior approval of the ADF, those selected for external training must provide an official Government letter granting them leave-of-absence that is required to pursue the study. The selected training is expected to provide the public sector with highly qualified debt management professionals to replace those that left the country during the civil conflict. 4.4.6 Information Technology (IT) and Office Equipment: The project will further provide logistical support to update the existing facilities. The computer equipment currently in use at the DMU has become obsolete and cannot coupe with the computing required in the DMU. Five desktop computers and accessories, a fax machine will also be provided. The DMU unit requires a fireproof safe to store backup tapes and diskettes. The equipments are required in order to enhance the operational efficiency and effectiveness of the beneficiary institutions. The fireproof safe is necessary given that all the records of the unit were burned down during the civil conflict. The project also makes a provision for the maintenance of these equipments. 4.4.7 An important component of the assistance to be provides is a computer network to interconnect all the staff of the Ministry of Finance. The new system will connect nearly two hundred staff of the ministry and will facilitate staff to work more closely and exchange information rapidly. The provision of the system will enhance the productivity of the ministry and increase its efficiency and effectiveness. The design and the installation of the system is part of the project. 4.4.8 Technical Assistance- Finally, the project will earmark resources to finance a total of 108 man-months of consultancy services to establish a government-wide tracking system to capture all loans and grants provided to the Government through the MOF, line Ministries, Government Departments and other Non-Governmental organization. Such a consultancy service will ensure full reconstitution of all loans and grants records and transactions, which are currently not being captured by the present database. The terms of reference for this consultancy are provided in Annex IV. Support to the OAG and ACG: 4.4.9 Training The Training Needs Analysis (TNA) conducted by the GoSL indicated that both the OAG and the ACG have identical training needs. The needs also take into account the evolving decentralisation of the financial management systems of the country that is geared towards meeting the medium term requirements for the two organizations. The project will address these needs by offering relevant training programmes for the staff of the two institutions. The programmes are aimed at upgrading the skills of staff by providing relevant professional courses in accounting methods and systems, systems audit, certificate audit, fraud and irregularity audit, performance audit, computer audit, and personal effectiveness skills. Because of the skills required, the envisaged training programme is expected to have both the overseas and a local component. 4.4.10 The overseas training component will mainly focus in providing Senior Audit/Accounting Staff skills with new audit methodologies and techniques, value-for-money audit, and methodologies and techniques on new audit, including IT systems, such as Financial Management Information Systems. The overseas training courses are justified on the ground that such training is not available in the country and there are currently too few professionally qualified nationals to respond to the growing public and private sector demand for accounting and auditing services. There is also a shortage of suitable local institution to conduct specialized audit training that is required by the two institutions. The project will therefore provide overseas training for Senior Members of staff each year drawn from the two institutions during the three-year life cycle of the project. For the OAG, the project will provide 2 long-term and 4 short-term overseas training courses in auditing practices. Three local training

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sessions will also be held during the implementation of the project. As far as the ACG is concerned, the project will train 8 staff overseas in new accounting methodologies and systems. 4.4.11 The provision of local training is an important input from the project for both institutions. A total of two hundred and sixty two (262) Senior Staff will undertake local courses and in- house training. The training will, inter alia, be expected to offer the requisite knowledge and skills for improving the accounting auditing efficiency and effectiveness of the staff at the OAG and the ACG. The OAG will benefit from three training sessions for the staff of the OAG, while the ACG will profit from two local training sessions during the implementation of the project 4.4.12 Training the Trainers: In order to ensure the sustainability of the project, strengthen training activities of the beneficiary institutions, and ensure efficient and effective human resources development initiative that are commensurate with the requirements for post-conflict Sierra Leone, a training-the-trainers component, is required. A carefully selected group of eight (8) staff members (within each beneficiary) will be trained on the design, organization and execution of training programmes. The selected and trained staff will be beneficial for in-house training programmes. The same will be done for training-the-trainers in public debt management. 4.4.13 IT and Office Equipment- The project will provide IT technology (both software and hardware). A consultant will be hired competitively to advise on the IT technology that is relevant for both the OAG and AGD. For OAG, eleven (11) desktop computers, one package of Audit software (1), three (3) photocopiers, three fax machines, and two binding machines will be provided. The ACG will be provided with ten (10) desktop computers, one (1) heavy-duty printer, and three photocopiers. The two institutions will also be linked to facilitate easy access and sharing of information and financial data. 4.4.14 Technical Assistance- The project will provide three (3) consultants, one (1) engineer, one (1) performance audit specialist, and one (1)-computer audit specialists for a period of thirty six (36) man-months for each consultant. These consultants will provide the much needed in-house training for all members of staff. B- Support to the Ministry of Energy and Power 4.4.15 Technical Assistance: The technical assistance is aimed at supporting the MEP and the BHEP and the training of local counterpart staff in project management. The assistance will also build up the capacity of the Ministry in the areas of policy formulation and project management. The project will provide the services of a Contract Specialist, a Financial Controller/Administrator, a Resettlement/Social Expert and an Environmental Specialist to the PIU of the BHEP over a period of twenty-four months until its completion of the BHEP. A total of 57 man-months of consultancy services will be provided by a reputable firm. The TOR of the consultants is summarized in Annex VII. The ADF assistance will be supplemented by an internationally recruited Hydropower Engineer, whose services are being financed by the World Bank and the Government of Italy. Three engineers (one civil, one mechanical and one electrical) from the NPA will assist the Hydropower Engineer and, at the same time, benefit from the process of “learning by doing. The internationally recruited firm shall also provide on-the job training to the PIU staff of BHEP. 4.4.16 IT and Office Equipment: The project will also provide some basic equipment to the BHEP consisting of 7 desktop computers and accessories, a video and a digital camera, a fax machine and a digital megaphone. The project will also provide the operations and maintenance costs the equipment of the PIU during its implementation. The World Bank is financing the procurement of some basic office equipment and vehicles for the project.

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Component II Project Management 4.4.17 The component consists of providing 72 man-months of technical assistance to the Project Implementation Unit to assure day-to-day management of the project. The experts to be recruited include the project manager and the accountant for the entire duration of its execution. The project will also provide basic equipment consisting of two desktop computers, a fax machine and telephone connection for the unit. 4.4.18 Training of PIU Staff Managing ADB Group Funded Projects and Programmes: Under this sub component, the project will train all the project coordinators and accountants managing Bank financed projects and programmes. This training is crucial in reviving the pre-war capacity for project implementation and management in line ministries, and also in improving the quality and development effectiveness of the ADB Portfolio in the years ahead. The training will essentially focus on short term (3-weeks) training in all aspects of project cycle, including project identification, preparation and appraisal, as well as project monitoring and evaluation. In addition, they will receive the normal training on Bank rules of procedures for auditing, procurement, disbursement and general policies on portfolio management. The training for the PIU will mainly be conducted with the assistance of the Bank and is expected to be offered once during the life cycle of the project. Component III: Audit 4.4.19 This component involves the proper auditing of the ADF Institutional Support project. The audits activities will be conducted annually and will include the proper scrutiny of all expenses related to the activities of the project. At least one technical audit will be carried out during the implementation of the project. 4.5 Gender Impact 4.5.1 Due to cultural, social and customary norms and practises, women continue to have a lower social status than men. They have unequal access to education, control over assets and decision-making. This imbalance is amply reflected in the distribution of income-earning skills in the labour-force, which reveals that women constitute a majority of the unskilled labour force, representing over 65 percent, and working mainly in the agriculture sector, which is characterized by low productivity and incomes. Women also constitute about 15 percent of the entire skilled labour-force in the public sector. The project will address the gender imbalance by aiming to ensure that at least 40 percent of the participants of each course offered by this institutional support project are women. 4.6 Social and Economic Impact 4.6.1 Strengthening PEM system and improving the capacity of the MEP would significantly contribute in the fight against poverty and in reviving the war-ravaged economy. The net effect of strengthen the PEM is that more resources will ultimately be available that could benefit the poor directly through increased budgetary allocation for the social sectors of health, education, and rural infrastructure. The project will further assist Sierra Leone to carry out satisfactory tracking of the impact and development effectiveness of its expenditure on poverty reduction projects and programmes, including those from HIPC. In addition, as donors move towards providing general budget support, and overall improvement in PFM system would provide the required assurance that Public Resources are being used for their intended purposes. 4.6.2 Supporting the MEP will lead to the completion of BHEP which will in turn improve the electricity situation in the country within the coming two years. The availability of regular power

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supply will have substantial economic and social benefits including the establishment of more small and medium sized enterprises (SMEs) that directly employ the poor. 4.7 Environmental Impact

4.7.1 The project was reviewed and classified as category III under the Bank’s Environmental Classification of projects. The category III classification implies that the project is not expected to have any adverse environmental impacts, for which environmental assessment is normally necessary. Indeed, the project will positively impact on the environment through the enhancement of the capacity of the Ministry of Energy and Power to deal with the environmental issues arising from the implementation of energy projects in Sierra Leone. The project will formulate guidelines and action plans for the implementation of the environmental mitigating measures already identified. It will also draw up policies and procedures for dealing with resettlement of Project Affected Persons in the project area.

4.8 Project Cost 4.8.1 The estimated total cost of the project, net of taxes and duties, is UA2.94 million, of which UA 2.67 million is foreign costs and the balance of UA 0.27 million is the local cost. The detailed costing of the project is provided in Table 4.2 and Annex II and summarized in Table 4.1 below.

TABLE 4.1 Summary of Project Cost By Component

(Thousand Leone/UA)

Component Foreign

Exchange Leone Local Cost

Leone Total Cost

Leone Foreign Exchange

UA Local Cost

UA Total Cost UA

Capacity Building

9,662,691 661,174 10,323,865 2,443.74 167.21 2,610.95

Project Management

- 291,600 291,600 73.75 73.75

Project Audit

81,000 81,000 20.49 - 20.49

Base Cost

9,743,691 952,774 10,696,465 2,464.22 240.96 2,705.19

Physical Contingencies

117,614 45,148 162,762 29.75 11.42 41.16

Price Escalation

686,123 66,842 498,634 173.52 16.97 190.49

Total Project Cost

10,547,429 1,064,763 11,357,861 2,667.49

269.35 2,937.83 % 91% 9% 100%

4.8.2 The costs estimates are based on the quotations provided by the Government during the preparation, appraisal and re-appraisal missions, which were undertaken in March, May, and July2004 respectively. The costs have been adjusted by including a 5.0 percent physical contingency for equipment and an allowance of 3.5 percent for price escalation for all items. The capacity building component takes 96.8 percent of the total cost of project. The Project Management component, costing 2.8 % of the total project cost, will be utilised for the running costs of the project as well as the training the various PIU staff managing Bank Group financed projects in Sierra Leone.

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Table 4.2: Summary of Project Cost By Category of Expenditure (Thousand Leone/ UA)`

Category of Expenditure

Foreign Exchange

Leone Local Cost

Leone Total Leone Foreign Exchange UA Local Cost UA Total UA

A.1 Equipment 1,217,969 550,904 1,768,873 308.03 139.33 447.36

A. Subtotal 1,217,969 550,904 1,768,873 308.03 139.33 447.36

B. Services -

B.1 Training 1,158,618 110,270 1,268,888 293.02 27.89 320.91

B.2 Technical Assistance 7,286,105 - 7,286,105 1,842.69 - 1,842.69

B3. Audit 81,000 - 81,000 20.49 - 20.49

Sub-total 8,525,722 110,270 8,635,992 2,156.19 27.89 2,184.08

C. Miscellaneous -

C.1 Support Staff 48,600 48,600 - 12.29 12.29

C.2 Office Running Costs 243,000 243,000 - 61.46 61.46

Sub-total 291,600 291,600 - 73.75 73.75

Base Cost 9,743,691 952,774 10,696,465 2,464.22 240.96 2,705.19

Physical Contingencies 117,614 45,148 162,762 29.75 11.42 41.16

Price Escalation 686,123 66,842 498,634 173.52 16.97 190.49

Total Project Cost 10,547,429 1,064,763 11,357,861 2,667.49 269.35 2,936.84 4.8.3 The detailed cost estimates by category of expenditure are given in Table 4.2. As shown in the table, training and technical assistance (TA), take UA 2.16 million (excluding contingencies) or 81.0 percent of the total cost of project. The provision of equipment takes another UA 0.45 million or 17.0 percent of the total project cost. 4.9 Source of Financing 4.9.1 The project will be co-financed by the grant resources of the ADF-IX and the Government of Sierra Leone as shown it Table 4.3 below. The total contribution of the ADF grant will be UA 2.79 million or 95 percent of the total cost of project. The ADF financing of the project is justified on the grounds that the capacity building component accounts for more than 96.0 percent of the total cost of project.

Table 4.3: Sources of Financing (Thousand of UA)

Source of Finance Foreign Exchange Local Cost Total % ADF 2667.49 122.50 2790.00 95%GoSL 146.84 146.84 5%Total 2667.49 269.35 2936.84 100% 4.9.2 Tables 4.4 and 4.5 respectively show the project financing by component and category of expenditure. As shown in the table, the ADF will finance all the foreign exchange of all components and the UA 0.122 million of the local cost of the equipment. The GoSL will finance the local cost portion of all other components.

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Table 4.4: Financing by Components of the Project (Thousand UA)

Component ADF GoSL Grand Total

Foreign Exchange Local Cost Total

Foreign Exchange Local Cost Total

I-Capacity Building 2645.57 122.50 2768.07 64.83 64.83 2832.90II- Project Management 0.00 0.00 0.00 82.01 82.01 82.01III- Project Audit 21.93 21.93 21.93Total 2667.49 122.50 2790.00 0.00 146.84 146.84 2936.84

Table 4.5: Project Financing by Category of Expenditure (Thousand UA)

Category of Expenditure ADF GoSL Grand Total

Foreign Exchange Local Cost Total Foreign Exchange Local Cost Total A 1 Equipment 345.12 122.50 467.63 33.60 33.60 501.23 B. Services - - - - - -B.1 Training -B.2 Technical Assistance 328.00 - 328.00 31.23 31.23 359.23 B3. Audit 1,972.45 1,972.45 - - 1,972.45 Sub-total 21.93 21.93 - - 21.93 c. Miscellaneous -C.1 Support Staff -C.2 Office Running Costs - 13.16 13.16 Total - 68.86 68.86 68.86 Total Cost 2,667.49 122.50 2,790.00 0.000 146.84 146.84 2,936.84

4.9.3 Table 4.6 presents the annual financing of the project by source of finance

Table 4.6: Expenditure Schedule By Source of Financing (In UA 000)

Source of Finance 2005 2006 2007 Total ADF 697.50 1,478.70 613.80 2,790.00 GoSL 36.71 77.83 32.31 146.84 Total 734.21 1,556.53 646.10 2,936.84 4.9.4 Table 4.7 shows the annual expenditure schedule by source of finance

Table 4.7: Annual Expenditure Schedule by Category (UA’000)

Category 2005 2006 2007 Total

A. Equipment and Materials

A 1 Equipment 125.31 265.65 110.27 501.23B. Services B.1 Training 89.81 190.39 79.03 359.23B.2 Technical Assistance 493.11 1045.40 433.94 1972.45B3. Audit 5.48 11.62 4.82 21.93D. Miscellaneous C.1 Support Staff 3.29 6.97 2.89 13.16C.2 Office Running Costs 17.21 36.49 15.15 68.86Total Expenditure 734.21 1556.53 646.10 2936.84

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V. PROJECT IMPLEMENTATION 5.1 Executing Agency (EA) 5.1.1 The Ministry of Finance will be the Executing Agency (EA) of the Project and the overall implementation will take place under the overall supervision and guidance of the project’s Steering Committee (PSC). A Project Implementation Unit (PIU) is to be established within the Ministry of Finance to undertake actual implementation of the project and shall be headed by the Project Coordinator (PC). A professional accountant will be recruited to strengthen the PIU because of the weak implementation capacity in post-conflict Sierra Leone. The establishment of the PIU will be a condition of the Grant 5.2 Institutional and Supervision Arrangements 5.2.1 The number of beneficiary agencies/institutions will be three: Ministry of Finance (MOF); Office of the Auditor General (OAG); and the Ministry of Energy and Power. A Project Steering Committee (PSC) shall be established to co-ordinate and supervise the implementation of the project by the PIU. The Steering Committee will consist of seven members, namely the Coordinator of the PIU, the Financial Secretary, Ministry of Finance, appointed representatives of the beneficiary agencies/institutions mentioned above, and a representative from the Ministry of Economic Development and Planning. The appointment of the Steering Committee will be approved by the Fund. The Chairman of the PSC shall be the Financial Secretary, Ministry of Finance. The formation of the Steering Committee will be one of the conditions precedent to first disbursement. The establishment of the PSC shall be a condition of the Grant. 5.2.2 The PSC will meet once every three months to review the progress of implementation and resolve any attendant problem. The PSC, through the PC, will facilitate, co-ordinate and monitor the implementation of the project. The PC will forward the minutes of the meetings to the Bank. Under the authority of the PSC, the PC will undertake timely preparation and transmission of the quarterly report and other documents required under the project. The PC will also keep accounts, to be prepared by the accountant, that will enable the monitoring and control of expenditure by category to be performed effectively. During the course of implementation of the project, the PC will work closely with beneficiary agencies/institutions. The beneficiary agencies will regularly report implementation progress to the PC. A suitable qualified external auditor, whose report will be submitted to the ADF, will audit the project annually. 5.3 Implementation Schedule 5.3.1 The project will be implemented over a period of thirty-six months starting immediately after its effectiveness in March 2004. The critical dates for ensuring timely implementation of the project are provided in Table 5.1 below.

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Table 5.1: Implementation Schedule ACTIVITY RESPONSIBLE AGENCY TARGET DATE

Board Presentation ADF October 2004 Signing of Grant Protocol ADF/GoSL December 2004

Establishment of PSC/PIU GoSL February 2005

Declaration of Grant Effectiveness/Launching of Project

ADF/GoSL March 2005

Recruitment of Consultants for BHP GoSL/ADF March 2005

Recruitment of Project Coordinator and Accountant GoSL March 2005

Commencement of Training Activities GoSL May 2005

Commencement of Procurement of Goods GoSL/ADF July 2005

Project Supervision

ADF/GoSL October 2005

Recruitment of Auditor

ADF/GoSL October 2005

Mid-term Review

ADF/GoSL February 2006

Submission of First Audit Report, which will be GoSL/ADF March 2006

Completion of Equipment Installation GoSL & Executing Agency July 2007

Completion of Training Programme GoSL/Beneficiary Institutions December 2007

Submission of Project Completion Report

GOSL March 2008

Preparation of Bank’s Completion Report

ADF April 2008

5.3.2 Supervision: Given the scope of the project and the number of beneficiaries, the project will be supervised at least twice in the first eighteen months after loan effectiveness. The Bank and the borrower will undertake a mid-term review of the project to review its progress in the implementation of its sub-components and assess its overall performance. 5.4 Procurement Arrangements 5.4.1 All procurement of goods and acquisition of consulting services financed by the Bank will be in accordance with the Bank Rules of Procedure for Procurement of Goods and Works, or as appropriately, the Rules of Procedure for the Use of Consultants, using the relevant standard bidding documents. The procurement arrangements for the project are summarized in Table 5.3 below.

Table 5.2 Procurement Arrangements

(In UA ‘000)

Category of Expenditure NCB Shortlist Other ADF Financing Gov Financing Total A .Goods A.1 Equipment 501.23 467.63 33.60 501.23B. Services 0.00B.1 Training 359.23 328.00 31.23 359.23B.2 Technical Assistance 1972.45 1972.45 1972.45C. Project Audit D. Support Staff 21.93 21.93 0.00 21.93Others 13.16 13.16 13.16

F. Office Running Costs 68.86 68.86 68.86Total 501.23 1994.37 441.24 2790.00 146.84 2936.84

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5.4.2 Goods: The procurement of equipment amounting to a total of about UA 0.501 million will be grouped into two lots: (i) Computer Equipment and Accessories; and (ii) Office Equipment. (UA 0.501 million); National Competitive Bidding (NCB) will be used in their procurement because there are local suppliers sufficiently qualified and in a number sufficient to ensure competitive bidding. Materials for office running costs will be procured in accordance with SoSL rules and procedures. 5.4.3 Consulting Services and Training: Services will be grouped into two (2) lots (i) Technical Assistance for the MOF, OAG, the ACG, and the PIU (UA 1.972 million); and (ii) Project Audit. (UA 0.022 million) Overseas training (amounting to 0.328 million will be procured through reputable institutions acceptable the Bank. The Institute of Public Administration and Management (IPAM) will conduct all the local training, amounting to UA 0.031 million. The selection is based on the fact that the institution has the capacity to provide the required training. 5.4.4 Project Management and Miscellaneous: The recruitment of local staff for the project will be carried out in accordance with the GoSL rules and procedures. 5.4.5 National Procedures and Regulations: Sierra Leone’s recently reformed national procurement laws and regulations have been reviewed and were determined to be acceptable. 5.4.6 Executing Agency: The Project Implementation Unit (PIU) will be responsible for the procurement of goods, consulting and training services. 5.4.7 General Procurement Notice: The text of the General Procurement Notice (GPN) will be agreed with the Government of Sierra Leone (Ministry of Finance, which is the executing agency) and will be issued for publication in Development Business, upon approval by the Board of Directors of the Loan Proposal. 5.4.8 Review Procedures: The following documents are subject to review and approval by the Bank before promulgation: (i) Specific Procurement Notice; (ii) Tender Documents or Request for Proposals; (iii) Tender Evaluation Reports or Reports on Evaluation of Consultants’ Proposals, including recommendations for Contract Award; and (iv) draft contracts, if these have been amended from the drafts included in the tender invitation documents. 5.5 Disbursement Arrangements 5.5.1 The beneficiary will be required to open a convertible foreign currency account in a bank acceptable to the ADF for this project. The grant resources required to meet the ADF's share will be deposited in this special account. The ADF will replenish the special account, at the request of the Executing Agency, after sufficient justification for the use of at least 50% of the previous deposit has been provided. The beneficiary will also open a separate local currency account in a bank acceptable to the ADF, to be operated by the PIU, into which the Government of Sierra Leone will pay its local counterpart funds contribution for the project. Direct Payment and Special Account method shall be used for withdrawal of funds under this project. All disbursement methods, such as direct payment, reimbursement method, reimbursement guarantee, and revolving fund, will be available for utilisation as appropriate. 5.6 Financial Reporting and Auditing The PIU will maintain the accounts of the project and control all expenditures. The Executing Agency (EA) will be required to submit to the Fund an external audit report covering the project's operations in the previous year. An independent external auditor acceptable to the ADF will carry out the audit and provisions have been made in the project budget for the cost of the audits. The annual audit report and accompanying financial statements, including bank statements and statements of

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expenditure will be submitted to the ADF for review no later than six months after closure of the financial year. 5.7 Aid-Coordination 5.7.1 The project has been prepared and appraised within the framework of the Government of Sierra Leone’s I-PRSP and NSGG. The World Bank, the Department for International Development of the United Kingdom (DFID-UK), the European Union, the International Monetary Fund (IMF), the UNDP, and some bilateral development partners, such as the United States Agency for International Development (USAID), are the main supporters of capacity building initiatives in post-war Sierra Leone. 5.7.2 In order to enhance donor co-ordination and avoid wasteful duplication of capacity building efforts, the project’s preparation, appraisal and post-appraisal missions held detailed consultation and joint meetings with the following donors: World Bank, EU, DFID, IMF and UNDP. As mentioned in Para 1.5, the mission participated in the 5th, 7th and the Special DEPAC meeting that was convened to rally support for the completion of the BHEP. All the meetings were well attended by Sierra Leone’s key development partners and were co-chaired by the Vice-President of Sierra Leone, the UNDP Resident Coordinator and the World Bank Country Director. The Bank will strive to work closely with these development partners in the implementation of the project and in monitoring and evaluation capacity building projects in the country in the years ahead. Regular consultations and exchange of information on the progress and experience of partners financing projects being implemented in the country will be maintained on regular basis. The Bank will continue to attend the DEPAC meetings held regularly in Freetown where proper aid coordination of future and ongoing projects are discussed and planned. 5.8 Monitoring and Evaluation 5.8.1 On account of the current post-war situation in Sierra Leone, it is appropriate that the project is monitored closely. The Executing Agency (EA) will be required to submit to the ADF Quarterly Progress Reports containing the status of the project execution in terms of physical progress and highlighting any problems that might be hampering the implementation of the project. The EA will also propose viable solutions to tackle the emerging problems. The report will have monitor-able indicators prepared and approved for reporting on the progress of the project. In addition, the progress reports will provide up to date data on the financial implementation of the project including the disbursement status of each component as well as the invoices submitted but not paid by the ADF. 5.8.2 The implementation of the project will be monitored through the ADF’s regular field supervision missions and a mid-term review during the first quarter of 2006. The supervision and review process will involve thorough assessment of the project’s achievements against targets set out in the implementation schedule. The project will also be reviewed six (6) months after its commencement to ensure the timely implementation of the different activities under the components of the project, followed by regular supervision until its completion. The EA will also be required to prepare and submit to the Fund a Project Completion Report (PCR) within six months after its completion. The ADF will prepare its own PCR thereafter.

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VI. SUSTAINABILITY AND RISKS 6.1 Recurrent Costs 6.1.1 Total recurrent cost of the project for the entire period of implementation amounts to UA 0.069 million or 3.0 percent of the total project cost. The recurrent costs are expected to steadily decline from a peak of UA 0.036 million in 2006 to UA 0.015 million by 2007. The recurrent costs will continue to be incurred by GoSL as they are essential for the project’s sustainability. The Government will undertake to continue to meet these recurrent costs after the project’s implementation, thus ensuring continued adequacy of capacity for economic management. 6.2 Project Sustainability 6.2.1 The project is sustainable because it is dealing with the key issue of human resources development. The project is also tackling the wider poverty reduction and economic governance issues, which the GoSL has committed itself to improve over the medium term. It is recognised that maintaining sustainability once the project is over, is particularly important for institutional support projects. Besides the specific measures to enhance sustainability included in the project design, the Bank will continuously engaged dialogue with beneficiaries on measures relating to governance issues in order to bring about a lasting impact in the country. This dialogue will aim at resolving some of the governance problems that continue to constrain development in Sierra Leone. To enhance sustainability, the GoSL will provide adequate funds for maintenance of operational equipment purchased for beneficiary institutions and this will form part of the grant conditions. The Government will also firmly commit itself to ensuring that the benefits of the project are sustained. The civil service reforms being carried out by the Government will contribute towards the sustainability of the project. The reforms are will improve the conditions of services of civil servants which will ensure the attraction and retention of qualified people into the service. 6.3 Risks and Mitigating Measures 6.3.1 The implementation of the project is confronted by several risks. First, given the high turnover among government employees, particularly in post conflict countries, there is the risk that the project may not succeed. Attrition may make it difficult to fully achieve capacity building targets and even more difficult to sustain achieved levels. The training of a large number of people per beneficiary institution together with pursuing the above-mentioned dialogue with the GoSL will help mitigate this risk. Moreover, the Government is currently embarking on a comprehensive programme of reforming and restructuring the civil service. The programme is outlined in the March 2004 Report of the Presidential Commission on Restructuring the Senior Civil Service, who will be posted in strategic areas of the civil service. On account of this restructuring, this ADF Institutional Support Project will focus on training the new Cadre of the Senior Civil Service that will be created from the restructuring, thus mitigating the attrition risk and ensuring continuity. 6.3.2 Second, in view of the extensive economic and social dislocation caused by the war and the recent establishment of peace, the worsening of economic environment, delays in providing basic social services, and in reviving economic activities in the newly re-settled areas could exacerbate poverty leading to social unrest that undermines the implementation of the project. By supporting the improvement of services delivery mechanism as well as strengthening public expenditure management, the programme contains elements to help reduce tension and avoid recurrence of social unrest. 6.3.3 Third, there are risks that macroeconomic stability could prove difficult to maintain either due to failure to achieve fiscal discipline, delays in recovery of rutile mining or a shortfall in donor funding, thereby impeding the implementation of the poverty reduction strategy and delaying the revival of the economy. Government’s demonstrated commitment to pursue a sound medium term economic

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framework, supported under the IMF’s PRGF, and its past track record of fiscal discipline in the face of huge expenditures demands, mitigate this risk. 6.3.4 Finally, there is the risk that as the country moves from being in the post conflict phase to the more normal situation, interest and support from development partners might wane, thus reducing the extra-ordinary support that Sierra Leone was able to mobilize over the past. The commitment made by donors at the CGM held in Paris in November 2002, along with the understandings reached in the various bi-monthly DEPAC meetings mitigate this risk. VII. PROJECT BENEFITS This project will benefit the Government and the people of Sierra Leone in several ways. First, the project will significantly assist in building the weakened human and institutional capacity in the public sector. Second, the project will contribute in promoting economic governance, and in the fight against the abject poverty. Third, because of the improved infrastructure in Sierra Leone, economic agents will feel more confident to conduct their business and this will reflect, sooner or later, in enhanced and sustained economic activity. Further, the project will assist the power sector by helping in the completion of BHEP, which will in turn improve the electricity situation in Sierra Leone. The availability of regular power supply will raise the productive capacity of both the public and private sector in the country. Finally, the implementation of the project is expected to contribute to the restoration of the weak investor confidence in the country will be restored; corruption in the financial system is minimized through strengthened PFM. But, perhaps more than anything else, this project is ultimately advancing the cause of peace in the country. Poor governance and neglect of certain areas of the country (and the resulting dire consequences on the poverty situation) were among the root causes of the rebel movement. In helping the Government to deal with the poverty situation and to improve governance, the project contributes meaningfully in restoring durable peace, which the country desperately needs. VIII. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The project focuses on strengthening the Government’s capacity to implement its National Strategy for Good Governance (NSGG). The thrust of the programme relates to the long-term reform and reconstruction of the public sector in post-war Sierra Leone. It will also assist GoSL’s ongoing efforts in rebuilding of the economy of the country by restoring and enhancing its productive capacity, leading to improved economic growth. The project is inconformity with the Poverty Reduction Programme of Government, as outlined in the I-PRSP, and with the March 2004 Report of the Presidential Commission on Restructuring the Senior Civil Service. The project is justified by the many years of neglect, political intrusion, lack of training, and working equipment that characterize the public sector. 8.2 Recommendations and Conditions for Disbursement Sierra Leone has made commendable effort in consolidating peace, reviving the war-ravaged economy and addressing the desperate poverty situation during the post-war phase. In order to sustain this momentum, it is recommended that a grant of UA 2.79 million be provided to the Government of Sierra Leone, within the standard ADF terms, to finance all the foreign costs of implementing the proposed Institutional Support Project to Strengthen Public Financial Management (PFM) and the Ministry of Energy and Power. The grant should be subject to the following specific conditions.

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A. Conditions of Effectiveness

The entry into force of the Protocol Agreement shall be subject to the fulfilment by the Recipient of the provisions of Section 4.01 of the General Conditions Applicable to the Loan Agreement and Guarantees of the ADF.

B. Conditions Precedent to Disbursement Prior to first disbursement, the Government of Sierra Leone shall have: i) Provided evidence satisfactory to the Fund of the establishment of a Project Steering Committee

(PSC) comprising representatives from the Ministry of Finance (MOF); Ministry of Energy and Power Office (MEP); Office of the Auditor General (OAG); the Accountant General (AG); and the Ministry of Economic Planning and Development (Para 5.2.1);

ii) Provided evidence satisfactory to the ADF that the Project Implementation Unit (PIU) made up

of a Project Coordinator (PC), a Project Accountant and a Secretary has been constituted and submit the CVs of the Project Coordinator (PC) and the Accountant to the Fund for review and approval (Para 5.1.1);

iii) Provided evidence satisfactory to the Fund of the opening of (a) a convertible foreign currency

account in a bank acceptable to the Fund for the deposits of the grant resources, and (b) a local currency account in a bank acceptable to the ADF, to be operated by the PIU, into which Government of Sierra Leone will pay its local counterpart funds contribution for the project. (Para 5.5.1);

iv) Provided an undertaking to the Fund that all the Management Positions presently vacant at

the Office of the Auditor General have been filled by 30 June 2005(Para 3.4.6); v) Provided an undertaking to submit to the Fund documentary evidence that each person

selected for external training has signed a bond agreeing to serve a minimum period of one year in the relevant Government employment or to reimburse the full cost of his/her training in case of failure to honor the bond (Para 4.4.5); and

C. Other Conditions The Government shall: (i) Provide, not later than 30th June 2005, evidence satisfactory to the Fund of having enacted

the Government Budgeting and Accounting Act that ensures that the powers of the Office of the Auditor General (OAG) are consistent with the constitutional mandate of the Office (Para 3.3.2)

(ii) Through the PIU submit to the Fund for its prior approval, at least three (3) months before

the commencement of any training course, the list of proposed participants, giving their names, qualifications and experience, and place of employment. Those selected for external training must also provide a formal letter from the Government giving them the leave- of-absence required to undertake the study, course or study tour (4.4.5).

Annexe 1

Sierra Leone Institutional Support Project

Map of Sierra Leone

This is intended exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

Sierra Leone Annex 2

Institutional Support Project Detailed Cost Estimates

Institution/ Expenditure Item Thousand Leone Thousand UA Units Unit cost Foreign Local cost Total Foreign Local cost Total Exchange Cost Exchange Cost ACCOUNTANT GENERAL Staff Training In-House Training 1 8,100 - 8,100 8,100 - 2.05 2.05 Senior Training – IPAM 1 13,530 - 13,530 13,530 - 3.42 3.42 Junior Training IPAM 1 30,590 - 30,590 30,590 - 7.74 7.74 Overseas Long-term training- senior Staff 3 66,667 200,000 - 200,000 50.58 - 50.58 Overseas Short term training- senor Staff 5 40,000 200,000 - 200,000 50.58 - 50.58 Base Cost - Staff Training 400,000 52,220 452,220 101.16 13.21 114.37 Physical Contingencies 20,000.000 2,611.000 22,611.000 5.06 0.66 5.72 Price Escalation 28,167 3,677 31,844 7.12 0.93 8.05 Total-Training Accountant General 448,167 58,508 506,675 113.34 14.80 128.14 Computers and Office Equipment - Computers and Accessories 10 8,000 80,000 4,000 84,000 20.23 1.01 21.24 Heavy-Duty Printer 1 32,000 32,000 1,600 33,600 8.09 0.40 8.50 Photocopy machines 3 67,500 202,500 10,125 212,625 51.21 2.56 53.77 Base Cost- Equipment 314,500 15,725 330,225 79.54 3.98 83.52 Physical Contingencies 15,725 786 16,511 3.98 0.20 4.18 Price Escalation 22,146 1,107 23,254 5.60 0.28 5.88 Total Equipment-ACC General 352,371 17,619 369,990 89.12 4.46 93.57 Accountant General- Base Cost 714,500 67,945 782,445 180.70 17.18 197.88 Physical Contingencies 35,725 3,397 39,122 9.04 0.86 9.89 Price Escalation 50,313 4,784 55,098 12.72 1.21 13.93 Total Accountant General 800,538.08 76,126.75 876,664.82 202.46 19.25 221.71

2 AUDITOR GENERAL'S OFFICE Staff Training Long-term overseas Training 2 67,500 135,000 - 135,000 34.14 - 34.14 Short-term overseas Training 4 42,400 169,600 - 169,600 42.89 - 42.89 Short-term overseas Training-Regional 4 23,028 92,111 - 92,111 23.30 - 23.30 Local Training 3 8,000 - 24,000 24,000 - 6.07 6.07 Base Cost- Training 396,711 24,000 420,711 100.33 6.07 106.40 Physical Contingencies 19,836 1,200 21,036 5.02 0.30 5.32 Price Escalation 27,935 1,690 29,625 7.06 0.43 7.49 Total staff Training 444,482 26,890 471,372 112.41 6.80 119.21 Technical Assistance Base Cost 108 16,200 1,749,600 - 1,749,600 442.48 - 442.48 Physical Contingencies - - - - - - Price Escalation 123,202 - 123,202 31.16 - 31.16 Total Technical Assistance 1,872,802 - 1,872,802 473.64 - 473.64 Computer and Office Equipment Computers and accessories 11 8,000 88,000 4,400 92,400 22.26 1.11 23.37 Audit Software 1 26,000 26,000 1,300 27,300 6.58 0.33 6.90 Photocopiers 3 27,000 81,000 4,050 85,050 20.49 1.02 21.51 Fax Machine 3 1,350 4,050 203 4,253 1.02 0.05 1.08 Binding Machines 2 1,590 3,180 159 3,339 0.80 0.04 0.84 Base Cost- Equipment 202,230 10,112 212,342 51.14 2.56 53.70 Physical Contingencies 10,112 506 10,617 2.56 0.13 2.69 Price Escalation 14,240 712 14,952 3.60 0.18 3.78 Total- Equipment Auditor General 226,582 11,329 237,911 57.30 2.87 60.17 Auditor General- Base Cost 2,348,541 34,112 2,382,653 593.96 8.63 602.58 Physical Contingencies 29,947 1,706 31,653 7.57 0.43 8.01 Price Escalation 165,378 2,402 167,780 41.82 0.61 42.43 Total Auditor General 2,543,866 38,219 2,582,085 643.36 9.67 653.02

3 MINSITRY OF ENERGY AND POWER Technical Assistance 57 38,180 2,176,283 - 2,176,283 550.39 - 550.39 Per Diem etc 57 23270 1,326,370 - 1,326,370 335.45 - 335.45 Transport 4 7,275 29,102 - 29,102 7.36 - 7.36 Sub-total - Base Cost 3,531,755 - 3,531,755 893.20 - 893.20 Physical Contingencies - - - - - - Price Escalation 248,696 - - 62.90 - 62.90 Sub-total Technical Assistance 3,780,451 - 3,531,755 956.09 - 956.09 Computers, Office Equipment & RCs Computers and Accessories 7 8,000 56,000 2,800 58,800 14.16 0.71 14.87 Fax Machine 1 1,350 1,350 68 1,418 0.34 0.02 0.36 Digital Camera 1 1,350 1,350 68 1,418 0.34 0.02 0.36 Video Set 1 1,350 1,350 68 1,418 0.34 0.02 0.36 Digital Megaphone 1 1,350 1,350 68 1,418 0.34 0.02 0.36 Operating Costs - 490,005 490,005 - 123.92 123.92 Base Cost - Equipment 61,400 493,075 554,475 15.53 124.70 140.23 Physical Contingencies 3,070 24,654 27,724 0.78 6.24 7.01 Price Escalation 4,324 34,721 39,045 1.09 8.78 9.87 sub-total -Equipment & Running Costs 68,794 552,450 621,244 17.40 139.72 157.12 Ministry of Energy and Power- Base Cost 3,593,155 493,075 4,086,230 908.73 124.70 1,033.43 Physical Contingencies 3,070 24,654 27,724 0.78 6.24 7.01 Price Escalation 253,020 34,721 39,045 63.99 8.78 72.77 Total Ministry of Energy and Power 3,849,244 552,450 4,152,998 973.49 139.72 1,113.21 MINISTRY OF FINANCE Staff Training Debt Management Unit -Long-Term 3 47,580 142,740 - 142,740 36.10 - 36.10 Local Training 1 30,000 - 30,000 30,000 - 7.59 7.59 Overseas Training- Short-Term 6 23,028 138,167 - 138,167 34.94 - 34.94 Base Cost Training 280,907 30,000 310,907 71.04 7.59 78.63 Physical Contingencies 14,045 1,500 15,545 3.55 0.38 3.93 Price Escalation 19,781 2,113 21,893 5.00 0.53 5.54 Total -Staff Training 314,732 33,613 348,345 79.60 8.50 88.10 Computers and Office and Equipment Computers & Accessories 5 8,000 40,000 2,000 42,000 10.12 0.51 10.62 Heavy- Duty Server 1 27,000 27,000 1,350 28,350 6.83 0.34 7.17 Network Installation 1 469,939 469,939 23,497 493,436 118.85 5.94 124.79

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Fireproof Safe 1 9,450 9,450 473 9,923 2.39 0.12 2.51 Photocopiers & Fax Machines 5 14,950 74,750 3,738 78,488 18.90 0.95 19.85 Base Cost - Equipment 621,139 31,057 652,196 157.09 7.85 164.94 Physical Contingencies 31,057 1,553 32,610 7.85 0.39 8.25 Price Escalation 43,739 2,187 45,926 11.06 0.55 11.61 Total- Equipment MF 695,935 34,797 730,731 176.01 8.80 184.81 Technical Assistance- Consultancy Services Debt Management Experts 288 4,050 1,166,400 - 1,166,400 294.99 - 294.99 IT Experts 108 4,050 437,400 - 437,400 110.62 - 110.62 Network Experts 3 4,050 12,150 - 12,150 3.07 - 3.07 Base Cost- Technical Assistance 1,615,950 - 1,615,950 408.68 - 408.68 Physical Contingencies - - - - - - Price Escalation 113,791 - 113,791 28.78 - 28.78 Total- Technical Assistance-MF 1,729,741 - 1,729,741 437.46 - 437 Ministry of Finance- Base Cost 2,517,995 61,057 2,579,052 636.81 15.44 652.25 Physical Contingencies 45,102 3,053 48,155 11.41 0.77 12.18 Price Escalation 177,310 4,299 181,610 44.84 1.09 45.93 Total- Ministry of Finance- 2,740,408 68,409 2,808,817 693.06 17.30 710.36 PROJECT MANAGEMENT Training of Project Staff- staff 40 2,025 81,000 4,050 85,050 20.49 1.02 21.51 Physical Contingencies 2,835 142 2,977 0.72 0.04 0.75 Price Escalation 5,704 35 104 1.44 0.07 1.51 Training of Project Staff- 89,539 4,227 88,131 22.64 1.13 23.78 Base Cost-Technical Assistance-mm 72 5,400 388,800 - 388,800 98.33 - 98.33 Physical Contingencies - - - - - - Price Escalation 27,378 - 27,378 6.92 - 6.92 Sub-total - Technical Assistance 416,178 - 416,178 105.25 - 105.25 Support Staff Base Cost- Personnel Cost 36 1,350 - 48,600 48,600 - 12.29 12.29 Physical Contingencies Price Escalation - 3,422 3,422 - 0.87 0.87 Sub-total - Local Personnel - 52,022 52,022 - 13.16 13.16 Computer and Office Equipment Computers and accessories 2 8,000 16,000 800 16,800 4.05 0.20 4.25 Photocopier and Fax 2 1,350 2,700 135 2,835 0.68 0.03 0.72 Base Cost -Equipment 18,700 935 19,635 4.73 0.24 4.97 Physical Contingencies 935 47 982 0.24 0.01 0.25

5Price Escalation 1,317 66 1,383 0.33 0.02 0.35 Total Equipment 20,952 1,048 21,999 5.30 0.26 5.56 Office Running Costs Office Rent 36 1,350 - 48,600 48,600 - 12.29 12.29 Running Costs 36 5,400 - 194,400 194,400 - 49.16 49.16 Base Cost- Operating costs - 243,000 243,000 - 61.46 61.46 Physical Contingencies - 12,150 12,150 - 3.07 3.07 Price Escalation - 17,111 17,111 - 4.33 4.33 Sub-total -Operating costs - 272,261 272,261 - 68.86 68.86 Project Management-Base Cost 488,500 296,585 785,085 123.54 75.01 198.55 Physical Contingencies 3,770 12,339 16,109 0.95 3.12 4.07 Price Escalation 34,399 20,635 49,399 8.70 5.28 13.98 Total-Project Management 526,669 329,558 850,592 133.20 83.41 216.61 Project Audit- Base Cost 3 27,000 81,000 - 81,000 20.49 - 20.49 Physical Contingencies Price Escalation 5,704 - 5,704 1.44 - 1.44 Total-Project Audit 86,704 - 86,704 21.93 - 21.93 Total Project- Base Cost 9,743,691 952,774 10,696,465 2,464.22 240.96 2,705.19 Physical Contingencies 117,614 45,148 162,762 29.75 11.42 41.16 Price Escalation 686,123 66,842 498,634 173.52 16.97 190.49 Total Project 10,547,429 1,064,763 11,357,861 2,667.49 269.35 2,936.84

ANNEX III

TERMS OF REFERENCE OF THE PROJECT COORDINATOR

Objective:

The project coordinator will ensure the effective management, monitoring and co-ordination of all the project-related activities and will be the main point of contact for the Bank and Government on all issues concerning the project. The establishment of the PIU is fully justified on account of the weak implementation capacity in Sierra Leone.

Duties 1. To handle the day-to-day management of the project, in accordance with the provisions of the

appraisal report and to co-ordinate actions with the institutions concerned. 2. To make concrete proposals for the solution of any problems encountered during the

implementation of the project. 3. To perform all functions related to the procurement of goods and services 4. To ensure the compliance with the Bank’s rules of procurement on behalf by government agencies

under the project. 5. To report regularly to the Chairman of the Project Steering Committee on the progress made in the

execution of the project and advise him on any problems encountered that require the attention and guidance of the PSC for solution.

6. To submit Quarterly Progress Reports (including the minutes of the PSC) to the Bank and

Government on the status of the execution of the project. 7. To ensure that a proper accounting system is maintained to account for the use of the resources of

the Grant. 8. To ensure that the project accounts are audited on annual basis and the audit reports are submitted

to the Bank within three months after the closure of the financial year. 9 To participate in any meeting or working sessions convened by the Government, the Bank or other

donors capable of contributing to the improved monitoring of the project in the country.

Required Qualifications and Experience

The candidates for this position must have at least a first degree from a recognized university. The candidate must be below 45 years of age. He/she must also have at least five years professional experience in implementing projects financed by development partners and must have sound knowledge in procurement rules and specific recruitment procedures of government and development partners, especially the African Development Bank. The candidates must have excellent skills in writing in the English language. The candidate must also have good knowledge of the common computer programs both in word processing and spreadsheets.

Duration of the Contract Three Years Location Ministry of Finance, Freetown, Sierra Leone

ANNEX IV

TERMS OF REFERENCE OF THE PROJECT ACCOUNTANT

Objectives

Under the direct supervision of the Project Coordinator, the Accountant will be responsible for managing the finances of the Project Implementation Unit (PIU) by providing technical and professional advice through the development, implementation and monitoring of the sound financial systems and procedures in line with the African Development Bank (ADB) procedures.

Duties

1. Provide advice on all matters relating to the Financial Management of the PIU

2. Ensure that appropriate accounting systems are put in place in the PIU to facilitate

Financial Monitoring and Control in line with the (ADB) procedures. These will cover loan disbursements, procurement, payment of Suppliers, consultants etc.

3. Assist in the preparation of the operating budget, monitor and control of expenditures

4. Ensure that all assets are properly accounted for

5. Ensure that supporting documents are maintained in respect of all financial transactions

6. Perform any other duties as may be assigned from time to time

Minimum Qualification

1. A degree in Accounting or a Professional Accounting Qualification with at least 5 years working experience

2. Familiarity with ADB financial management, controlling and procurement procedures.

3. Proven Competence in the use of Computer Software Application including Accounting

Software.

Duration of the Contract Three (3) Years Location Ministry of Finance, Freetown, Sierra Leone

Annex V Terms of Reference for an Information Technology Officer

Functions: Under the general guidance and supervision of the Coordinator, 1. , provides support and assistance to substantive staff of the Ministry in the

development and maintenance of databases and assures the integrity and recovery of data;

2. ensures the smooth operation and maintenance of the Ministry’s computer system including procurement and installation of network equipment; system software and hardware support;

3. provides training in software use as required, 4. installs, maintains and supports mobile computer systems at the site of and 5. during meetings, manages and updates the Ministry web page. Requirements: Advanced University degree in Computer Sciences, or equivalent training, together with at least four years related experience; familiarity with Government, procedures and processes; experience in electronic network management would be an asset; NT experience MSCE; LINUX/UNIX (free BSD) experience. Fluent in oral and written English.

ANNEX VI Page 1 of 2

PROPOSAL FOR CONSULTANCY SERVICE TO UNDERTAKE STUDY TO CAPTURE GRANTS RECORDING, DISBURSEMENT AND RECONCILE AND RECONSTITUTE

ALL LOANS AND GRANTS CONTRACT BY THE GOVERNMENT OF SIERRA LEONE

1. Introduction

Given the weak revenue generation capacity of the war-ravaged economy, Loans and grants, from both bi-lateral and multi-lateral development partners have been the main source of financing the post-conflict rehabilitation and reconstruction expenditures in Sierra Leone. The management of such inflows into the country is therefore crucial and should remain an integral part of the overall macroeconomic management in Sierra Leone. The Debt Management Unit (DMU), Ministry of Finance (MOF) and the Central Bank of Sierra Leone, is mandated with the responsibility relating to formulation of policies and strategies, debt -negotiation and re-scheduling (Debt Management).

2. Weaknesses of the DMU

As is the case with other Public Sector Institutions, the capacity of the unit has been

severely constrained, leading to incorrect and incomplete records of the country’s external obligations as well as difficulties in coordinating and monitoring disbursements of loans and re-payment of debt. In an attempt to remedy this serious situation, the Government created an independent body, the Development Partners Coordinating Office (DACO). However, the linkages between DACO and other Public Debt Units is extremely poor, meaning that the issues of external inflow might not be sufficiently addressed

3. Specific Terms of Reference for Consultancy Services

It is on account of this realization that we seek to recruit two consultants to prepare clear

operational and policy guidelines of the DMUs both in the Ministry of Finance and the Bank of Sierra Leone. The operational guidelines should specify the role of each debt entity with regard to the monitoring and managing the country’s external inflows and obligations. They should also propose the relevant institutional structure and clear terms of reference for the Units.

The consultants should also reconstitute the key elements of all loans and grants,

including those from the Non-Governmental Organization, which are not being captured by the present database. The specific responsibilities of the consultants are as follows: (i). Prepare a manual and policy guidelines for coordinating information flow between the MOF, the Bank of Sierra Leone, and Development Partners Coordinating Office (DACO), and other institutions dealing with such inflows, including the Accountant General’s Department; (ii). Review existing policy guidelines and strategies for the management of all external inflow to

Sierra Leone; (iii). Prepare a programme to record disbursements and full reconciliation and reconstruction

of all external inflows and payments;

Annex VI Page 2 of 2

(iv). Develop policy guidelines for contracting loans and grants, which should take into

accountant Sierra Leone current obligations; and (v). Provide technical guidelines and an operations manual on the preparation of Sierra Leone

annual budget and grants estimates for inclusion into future fiscal budget; (vii). Along with any other duties that might be specified by the GOSL and the PIU. 4. Consultants Profile: The consultant: • Should have at least a postgraduate degree in Economic and six (6) years of experience in

governance-related issues, including Public Sector Reform, and/or Legal and Judicial matters and/or Decentralized and Participation;

• Competence in the use of the standard software application; and • Ability to communicate and write effectively in English. 6. The final report should be in conformity with the requirements of the GoSL and the Bank.

Annex VII Page 1 of 4

Terms of Reference for Consultancy Services

Ministry of Energy and Power 1. Introduction 1.1 The team of experts will reinforce the Project Implementation Unit (PIU), which manages the day-to-day implementation of the Bumbuna Hydroelectric Project (BHP). The team will provide assistance in five areas namely (i) leadership/coordination, (ii) finance, (iii) contract administration, (iv) environmental management, and (v) resettlement action plan. The PIU presently consists of a Project Engineer/Manager, an internationally recruited Hydropower Engineer and support staff. 1.2 The BHP, located in Sierra Leone, consists of a 88 metres high asphalt faced rock-fill dam with a crest length of 440 metres, a water intake structure, two spillway structures, associated tunnels, a power station housing two turbine-generator units of 25 MW each and a 205 km 161 kV transmission line from the power station to the capital city, Freetown. The main works are being undertaken through three contracts namely: (i) civil works and hydraulic structures, (ii) electromechanical equipment, and (iii) transmission line and substation, and are being supervised by the project Consultant. 2. Terms of Reference 2.1 One expert from the consulting firm shall be appointed as a full time Coordinator and shall be the leader of the PIU. The tasks assigned to the team of experts in each area where the PIU needs to be reinforced are described below. Leadership/Coordination 2.2 The team of experts shall: (i) Liase with the Donors of the project namely the World Bank, the African Development Bank, the Government of Italy and OPEC Fund. This includes preparing and submitting periodic progress reports; organizing donor meetings; and facilitating donor supervision, audit and other missions. (ii) Oversee the condition assessment to be carried out on erected and stored equipment of the three works contracts by the contractors under the supervision of the Consultant. Review and approve the results of the assessment. (iv) Negotiate the restart of the three works contracts. (v) Implement the project according to schedule while ensuring that the contractors adhere to contract specifications. (vi) Approve payment certificates of the project Consultant and contractors, and arrange for disbursements by the Government of Sierra Leone and Donors.

Annex VII Page 2 of 4

(vii) Organise the training for staff skilled in meteorology and hydrology to ensure that the BHP is optimally managed after completion. (viii) Prepare and oversee the management of the PIU budget (ix) Take adequate measures to address project environmental and resettlement issues. These include review and approval of studies being undertaken by the project Consultant as well as resettlement of population and other actions to comply with Donor environmental policies. (x) Approve procurement of additional goods, works and services necessary for project completion in accordance with relevant Donor Rules. (xi) With the assistance of the project consultant, organize meetings of the Dam Safety Panel and the Environmental and Social Panel. (xii) Train local staff in project implementation. Finance 2.3 The team of experts shall: (i) Provide advice on all matters relating to the financial management of the PIU. (ii) Assure that appropriate reporting systems are put in place in the PIU to facilitate financial monitoring and control, in line with the norms of international financing agencies (IFIs). These will cover procurement, payment of consultants and contractors and loan disbursements. (iii) Manage the support staff of the PIU. (iv) Develop procedures to assure that all covenants of the lending agencies are complied with. (v) Assist with the implementation of a training program for the PIU staff. Contract Administration 2.4. The team of experts shall: (i) Assist during the evaluation and negotiations, as relevant, the following contracts: (a) undertaking an update of the environmental assessment of the project; (b) preparation of the resettlement action plan for the project (two contracts); (c) undertaking an institutional study of the project; (e) undertaking a retrospective options assessment of the project; and (f) hiring of experts for the dam safety and environment and social panels of experts (approximately 8 individual contracts).

Annex VII

Page 3 of 4 (iii) Administer the contract for consultancy services for project supervision and other contracts awarded by the PIU. (iv) Oversee the three works contracts, which are being administered by the project consultant. (iv) Prepare bidding documents and procure additional goods, works and services necessary for project completion in accordance with relevant Donor Rules. (vi) Review payment certificates of the project Consultant and contractors, and arrange for disbursements by the Government of Sierra Leone and Donors. Environmental Management 2.5 The team of experts shall: (i) Ensure that Donor Safeguard Policies related to Environment and Social Impacts are fully

complied with. (ii) Manage the process of establishing an environmental offset to compensate for the loss of

lands due to reservoir inundation. (Possibly the Loma Mountains and the adjacent Tingi Hills).

(iii) Oversee the Consultant responsible for the Updating of the Environmental Impact

assessment, including ensuring that Rapid Biodiversity Survey (RBS) Techniques are employed.

(iv) Ensure that the provisions of the Sierra Leone Biodiversity Strategy and Action Plan

(2003) are taken into account during the implementation of the project. (v) Assist in the establishment of the Environment and Social Panel of Experts (POE) and

participate in their deliberations, as well as ensuring that the panel’s recommendations are implemented.

(vi) Oversee the development of an Environmental Management Plan for operations. (vii) Ensure that required public consultations take place and are coordinated with the project

communication strategy. (viii) Be responsible for coordination of any institutional capacity strengthening initiatives

elaborated on in the EIA Upgrade Study. (ix) Be responsible for coordinating the implementation a Community Development Program

to mitigate the impacts of the Bumbuna Project.

Annex VII Page 4 of 4

Resettlement Action Plan (RAP) 2.6 The team of experts shall: (i) Ensure that Donor Safeguard Policies related to Involuntary Resettlement are fully

complied with. (x) Oversee the Consultant responsible for the preparation of the Resettlement Action Plans

for the Bumbuna Reservoir and Transmission Line. (xi) Oversee and coordinate the resettlement and compensation programs (xii) Oversee the budget and schedule developed by the RAP Consultant (xiii) Assist in the establishment of the Environment and Social Panel of Experts (POE) and

participate in their deliberations, as well as ensuring that the panel’s recommendations are implemented.

(xiv) Ensure that required public consultations take place and are coordinated with the project

communication strategy. (xv) Be responsible for coordination of any institutional capacity strengthening initiatives

elaborated on in the RAP Studies. (xvi) Be responsible for coordinating the implementation a Community Development Program

to mitigate the impacts of the Bumbuna Project. (xvii) Be responsible for the management of a monitoring and evaluation system (M&E)

ANNEX VIII Page 1 of 3

OFFICE OF THE AUDITOR GENERALSIERRA LEONE ORGANIZATIONAL CHART AS AT MARCH 2004

PA WORKS

D.A.G.FINANCE

PA EX-B PA EAST.B

D.A.G.TR. & RES

PAPUB. ENT.

PA W/AREA

D.A.G.ADMIN/PUB.ENT

PA RSB PA SCHOOLS

D.A.G.PENSIONS

AUDITOR GENERAL

ANNEX VIII Page 2 of 3

Executive Engineer/Senior Adviser

Environmental Specialist Resettlement/Social Expert

Existing and Additional Support StaffSecretaries (2), Drivers (2), Security

(Additional on secondment from NPA)

Financial Controller/Administrator

Engineers(On secondment from NPA

on an ad-hoc basis and/or recruited)

Hydropower Engineer Short Term Consultancies

Coordinator/Contract Specialist

Technical Committee(The Permanent Secretary, Ministry of

Energy and Power, is a Member of the Committee)

Cabinet Sub-Committee

ANNEX VIII

Page 3 of 3

ORGANIGRAM OF THE MINISTRY OF FINANCE

DEPUTY SECRETARYADMINISTRATION

DEPUTY FINANCIAL SECRETARYADMINISTRATION

DEPUTY SECRETARYDEBT DIVISION

DEPUTY FINANCIALSECRETARY

DEBT DIVISION

DEPUTY DIRECTOREPRU

DIRECTOREPRU

DEPUTY DIRECTORBUDGET BUREAU

DIRECTORBUDGET BUREAU

PRINCIPAL DEPUTY FINANCIAL SECRETARY

FINANCIAL SECRETARY

DEPUTY MINISTER OF FINANCE

MINISTER OF FINANCE

ANNEX IX Page 1 of 2

SIERRA LEONE – SUMMARY OF BANK GROUP OPERATIONS (as at March 2004)

(in thousands of UA)

Sector/Project FinanceSource

Date Approved

Date signed Effective date Deadline last disbursement

Amount approved

Amount disbursed

Amount cancelled

Balance to

disburse

Percent disbursed

AGRICULTURE Gambi-Mattru Oil Palm Gambi-Mattru Oil Palm Torma Bum Rice Dev Moyamba Integrated Rural Dev. Northern Integrated Agr. Dev. Master Plan Study for Agr Sector Line of Credit to NDB Institut. Support NDB Agric. Sector Studies for Irrigation in Rokalo and Rhombe Artisanal Fisheries Project

ADB ADB ADF ADF ADF ADF ADF ADF ADF

ADF ADF

15/05/73 19/12/74 19/10/78 30/08/79 25/06/81 22/01/85 18/06/91 25/11/91 25/11/91 02/10/92 14/05/97 15/10/01

5/7/73 6/3/75 8/2/79

26/10/79 28/07/81 21/02/92 21/02/92 21/02/92 06/11/92

04/08/98 15/01/02

10/08/73 06/05/75 28/10/79 26/03/81 07/10/81 22/04/92 25/01/93 12/10/92 21/06/93

22/06/99 07/01/03

31/07/81 31/12/87 31/12/98 31/12/96 31/12/94 31/12/00 31/12/98 31/12/96 31/12/00

31/12/01 31/12/07

3,100.0 1,400.0 4,421.1 7,368.4 6,723.7 1,676.3 9,210.5 1,842.1

18,421.0

1,650.0 10,000.00

3,100.0 1,390.5 4,098.4 7,368.4 6,723.7 1,375.8 7,560 274.3

18,421.3

0.0 450.203

0.0 9.5 0.0 0.0 0.0 0.0 0.0

1,567.8 0.0

0.0 0.00

0.0 9.5

322.6 0.0 0.0

300.5 1,652 1567.8

0.0

1650.0 9,549.79

100.0 100.0 92.7 100.0 100.0 82.1 82.3 100.0 100.0

0.0

0.045 Sub-total I

69,483.1

50,330.4

1,577.3

10, 152.7

86..9

TRANSPORT Highway Maintenance Matotoka-Sefadu Rd Rahab Project Matotoka-Sefadu Rd Rahab Project

ADF ADF FSN

28/08/81 14/12/93 14/12/93

22/09/81 28/02/94 28/02/94

12/10/82 31/03/95

/ /

31/12/95 31/12/99 31/12/99

6,447.4 9,200.0 6000.0

6,445.8 8,014.9

0.0

1.5 0.0

6,000.0

1.5

1,185.1 6,000.0

100.0 87.1 0.0

Sub-total II

21,647.4

14,460.8

6,001.5

7,186.6

92.4

PUBLIC UTILITIES Extension of Water Supply Network Freetown Sewerage Freetown Water Supply

ADB ADF ADB

15/11/69 29/06/78 17/10/78

27/05/70 31/07/78 02/05/79

27/06/70 31/03/79 07/02/80

31/01/73 31/12/80 31/10/81

1,500.0 414.5

1,400.0

1,321.8 343.3

1,083.9

178.2 71.2

316.1

178.2 71.2

316.1

100.0 100.0 100.0

Sub-total III 3,314.5

2,749.0

565.4

565.4

100.0

ANNEX IX Page 2 of 2

Sector/Project Finance

Source Date

Approved Date signed Effective date Deadline last

disbursement Amount

approved Amount

disbursed Amount cancelled

Balance to disburse

Percent disbursed

ENERGY Bumbuna Falls Hydro-Electric Bumbuna Hydro-Electric

ADF ADF

18/12/90 18/12/90

21/01/91 21/01/91

20/05/91 22/03/91

31/12/98 31/12/98

2,542.1

32,107.9

2,458.8

27,072.4

0.0 0.0

83.6

5,035.5

96.7 84.1

Sub-total IV

34,650.0

29,449.8

0.0

5,200.2

85.0

FINANCE Line of Credit I Line of Credit II

ADB ADB

22/11/74 31/12/77

06/01/75 30/01/78

06/02/75 19/04/78

31/12/77 31/12/80

1,000.0 3,000.0

1,000.0 2,015.3

0.0

984.7

0.0

984.7

100.0 100.0

Sub-total V

4,000.0

3,015.3

984.7

984.7

100.0

SOCIAL Bunumbu Teachers College Health Sector Study Quality Improve. for basic Educ. Health Services Rehab Project Humanitarian Emergency Relief Education III Rehabilitation Proj.

ADF ADF ADF ADF ADB ADF

27/06/77 17/10/89 24/09/91 06/03/97 30/11/00 2/10/2002

05/08/77 19/03/90 21/02/92 04/08/98

/ / 16/01/03

18/12/78 13/11/90 04/08/92 16/12/99

/ / NYF

31/12/98 30/06/97 31/12/01 31/12/02

/ / 31/12/07

4,605.3 1,086.8

13,576.3 10,500.0

390..0 16,000

4,604.5 1,018.7

12,142.96 3,253.6 390.0 0.00

0.8 0.0 0.0 0.0 0.0 0.0

0.0

68.2 1,433.33 7,246.4

0.0 16,000

100.0 93.7 89.44 30.99 100.0 0.00

Sub-total VI

46,659.2

21,519.4

0.8

24,747.93

69.02

MULTI-SECTOR Program for Debt Management Social Action Program Rehab and Reconstruction Project Rehab and Reconstruction Project Economic Rehab and Reconstruction Institutional Support Project

ADF ADF ADF ADF ADF

ADF

25/02/91 02/10/92 09/12/99 09/12/99 04/04/01

04/11/01

09/05/91 06/11/92 11/02/00 11/02/00 13/06/01

4/01/02

24/02/92 12/01/94 20/06/00 20/06/00

/ /

07/08/02

30/06/00 30/06/02 31/03/04 31/03/04 01/05/02

31/12/05

451.3

5,526.3 9,210

12,000.0 10,000.0

960.00

185.2

5544.0 9173.7

0.0 0.0

198..0

0.0 0.0 0.0 0.0 0.0

0.0

266.1

282..31 36.3

12,000 10,000.0

960.0

41.0 94.89 99.6 0.0 0.0

20.6

Sub-total VII

26.147.0

3,051.8

0.0

22,135.9

12.1

TOTAL

195894.8

119,697

9,130

83606.7

57.3

Annexe

SCCD: G.G.

CONFIDENTIAL

AFRICAN DEVELOPMENT FUND ADF/BD/WP/2004/121/Corr.119 October 2004Prepared by: OCCW/OCINOriginal: English

Probable Date of Board Presentation20 October 2004 FOR CONSIDERATION

MEMORANDUM

TO : THE BOARD OF DIRECTORS

FROM : Cheikh I. FALLSecretary General

SUBJECT : SIERRA LEONE – PROPOSAL FOR AN ADF GRANT OF UA 2,790,000 TOFINANCE THE INSTITUTIONAL SUPPORT PROJECT TO STRENGTHEN THEPUBLIC FINANCIAL MANAGEMENT AND THE ENERGY SECTORS

CORRIGENDUM *

Please find attached a corrigendum relating to the above-mentioned document.

This corrigendum provides the correct updated summary data on Sierra Leone: BankGroup Operations, as at 30 September 2004. The attached Table replaces Annex IXof Sierra Leone’s Institutional Support Project to Strengthen Public ExpenditureManagement & the Energy Sector.

Attach:

cc: The President

* Questions on this document should be referred to:

Mr. J.M. GHARBI Director OCCW Extension 2060Mr. G. MBESHERUBUSA Director OCIN Extension 2034Mr. A. O. JENG Country Programme Manger OCCW Extension 2172Mr. M. DOUMBIA Division Manager OCIN.2 Extension 2190

ANNEX IXPage 1 of 2

SIERRA LEONE – SUMMARY OF BANK GROUP OPERATIONS(as at 30 September 2004)

(in thousands of UA)

Sector/Project FinanceSource

DateApproved

Date signed Effectivedate

Deadline lastdisbursement

Amountapproved

Amountdisbursed

Amountcancelled

Balance todisburse

Percentdisbursed

Remarks

AGRICULTUREGambi-Mattru Oil PalmGambi-Mattru Oil PalmTorma Bum Rice DevMoyamba Integrated Rural Dev.Northern Integrated Agr. Dev.Master Plan Study for Agr SectorLine of Credit to NDBInstitut. Support NDB Agric. SectorStudies for Irrigation in Rokalo andRhombeArtisanal Fisheries Project

ADBADBADFADFADFADFADFADFADF

ADFADF

15/05/7319/12/7419/10/7830/08/7925/06/8122/01/8518/06/9125/11/9125/11/9102/10/9214/05/9715/10/01

5/7/736/3/758/2/79

26/10/7928/07/8121/02/9221/02/9221/02/9206/11/92

04/08/9815/01/02

10/08/7306/05/7528/10/7926/03/8107/10/8122/04/9225/01/9312/10/9221/06/93

22/06/9907/01/03

31/07/8131/12/8731/12/9831/12/9631/12/9431/12/0031/12/9831/12/9631/12/00

31/12/0131/12/07

3,100.01,400.04,421.17,368.46,723.71,676.39,210.51,842.1

18,421.0

1,650.010,000.00

3,100.01,390.54,098.47,368.46,723.71,375.87,560274.3

18,421.3

1,430.0450.203

0.009.5

322.60.000.00

0.30151,650

1,567.80.00

0.000.00

0.000.000.000.000.000.000.000.000.00

2209,549.79

100.0100.0100.0100.0100.0100.0100.0100.0100.0

86.70.045

CompleteCompleteCompleteCompleteCompleteCompleteCompleteCancelledComplete

On-goingOn-going

Sub-total I 65,813.1 52,192.6 1,1974 9,769.8 79.3

TRANSPORTHighway MaintenanceMatotoka-Sefadu Rd Rahab ProjectMatotoka-Sefadu Rd Rahab Project

ADF

ADF

FSN

28/08/81

14/12/93

14/12/93

22/09/81

28/02/94

28/02/94

12/10/82

31/03/95

31/03/95

31/12/95

31/12/99

31/12/99

6,447.4

9,200.0

6000.0

6,445.8

8,014.9

3250.0

1.5

1,185.0

2,750.0

0.00

0.00

0.00

100.0

100.0

84.6

Complete

Complete

Complete

Sub-total II 21,647.4 17,710.7 3,936.5 0.00 66.8PUBLIC UTILITIESExtension of Water Supply NetworkFreetown SewerageFreetown Water SupplyLungi-Freetown Road Link Study

ADBADFADBADF

15/11/6929/06/7817/10/7816/07/03

27/05/7031/07/7802/05/7926/09/03

27/06/7031/03/7907/02/8026/09/03

31/01/7331/12/8031/10/8131/12/06

1,500.0414.5

1,400.01260.00

1,321.8343.3

1,083.90.00

178.271.2

316.10.00

0.000.000.001260

88.882.877.90.00

CompleteCompleteCompleteOn-going

Sub-total III4,574.5 2,749.0 565.4 1260.0 60.1

ANNEX IX

Page 2 of 2

Sector/Project FinanceSource

DateApproved

Date signed Effectivedate

Deadline lastdisbursement

Amountapproved

Amountdisbursed

Amountcancelled

Balance todisburse

Percentdisbursed

Remarks

ENERGYBumbuna Falls Hydro-ElectricBumbuna Hydro-Electric

ADFADF

18/12/9018/12/90

21/01/9121/01/91

20/05/9122/03/91

31/12/9831/12/98

2,542.132,107.9

2,458.827,072.4

0.000.00

83.65,035.5

96.784.3

On-goingOn-going

Sub-total IV 34,650.0 29,531.2 0.00 5,119.2 85.2FINANCELine of Credit ILine of Credit II

ADBADB

22/11/7431/12/77

06/01/7530/01/78

06/02/7519/04/78

31/12/7731/12/80

1,000.03,000.0

1,000.02,015.3

0.00984.7

0.000.00

100.067.2

CompleteComplete

Sub-total V 4,000.0 3,015.3 984.7 0.00 75.4SOCIALBunumbu Teachers CollegeHealth Sector StudyQuality Improve. for basic Educ.Health Services Rehab ProjectEmergency Health GrantEducation III Rehabilitation Proj.Rehabilitation and RecoveryProjectRehabilitation and Recovery GrantSocial Action Support Project

ADFADFADFADFADBADF

ADF

ADFADF

27/06/7717/10/8924/09/9106/03/9730/11/0016/10/02

09/12/99

09/12/9911/06/2003

05/08/7719/03/9021/02/9204/08/984/01/02

16/01/03

11/02/00

11/02/0017/07/2003

18/12/7813/11/9018/08/9216/12/9904/01/0225//08/03

20/06/00

20/02/0017/05/2004

31/12/9830/06/9731/12/0631/12/0531/12/0531/12/07

31/10/04

31/10/0431/12/2009

4,608.31,086.812,556

10,500.0390..016,000

8,000

1,210.012000.0

4,608.31,018.7

12,142.964,590.0390.0680.0

7,912

822.8600.0

0.868.1

413.00.000.000.00

0.00

0.000.00

0.000.000.005,9100.0

15,320

88.0

387.211,140.0

100.0100.0100.043.7100.0100.0

98.9

68.59.5

CompleteCompleteBalance

cancelledOn-goingCompleteOn-going

On-going

On-goingOn-going

Sub-total VI 66,351.1 32,764.8 481.9 33,105.0 60.2MULTI-SECTORProgram for Debt ManagementSocial Action Program (SAPA)Economic Rehab andReconstruction (ERRL-I)Economic Rehabilitation &Recovery Loan (ERRL-II)Institutional Support forGovernance and Poverty reduction

ADFADF

ADF

ADF

ADF

25/02/9102/10/92

04/04/01

10/12/03

04/11/01

09/05/9106/11/92

13/06/01

20/01/04

4/01/02

24/02/9212/01/94

20/06/01

18/04/04

07/08/02

30/06/0030/06/02

31/12/05

31/12/06

31/12/05

451.35,526.3

10,000.0

17,280

960.00

185.25,544.0

9,880.0

10,000

600.0

266.1282.3

20.00

0.00

0.00

0.000.00

0.00

7280.0

360.0

100.0100.0

100.0

57.8

65.2

CompleteBalance cancelled

Complete andbalance cancelled

On-going

On-going

Sub-total VII 34217.6 26,209.2 568.4 7,640.0 76.6

TOTAL 231,250.7 164,172 7,734.3 56,894 70.9