Project Number: 49253-003 Loan and TA Numbers: Loan 3621, TA 9459 February 2020

Uzbekistan: Power Generation Efficiency

Improvement Project

Updated Project Administration Manual

ABBREVIATIONS

ADB AEFS APFS CAP CCGT EIA EMP EPC GWh IFRS ISA JFPR JSC Talimarjan TPP kWh MW NAS PMSC PMU SPS TA TPP UFRD

- - - - - - - - - - - - - - - - - - - - - -

Asian Development Bank audited entity financial statement audited project financial statement corrective action plan combined cycle gas turbine environmental impact assessment environmental management plan engineering, procurement and construction gigawatt hour international financial reporting standards international standards on auditing Japan Fund for Poverty Reduction Joint Stock Company Talimarjan Thermal Power Plant kilowatt hour megawatt National Accounting Standards project management and supervision consultant project management unit Safeguard Policy Statement technical assistance thermal power plant Uzbekistan Fund for Reconstruction and Development

CONTENTS

I. PROJECT DESCRIPTION 1

II. IMPLEMENTATION PLANS 3

A. Project Readiness Activities 3

B. Overall Project Implementation Plan 4

III. PROJECT MANAGEMENT ARRANGEMENTS 5

A. Project Implementation Organizations: Roles and Responsibilities 5

B. Key Persons Involved in Implementation 5

C. Project Organization Structure 6

IV. COSTS AND FINANCING 8

A. Cost Estimates Preparation and Revisions 8

B. Key Assumptions 8

C. Detailed Cost Estimates by Expenditure Category 9

D. Allocation and Withdrawal of Loan Proceeds 9

E. Detailed Cost Estimates by Financier 10

F. Detailed Cost Estimates by Outputs and/or Components 11

G. Detailed Cost Estimates by Year 12

H. Contract and Disbursement S-Curve 13

I. Fund Flow Diagram 13

V. FINANCIAL MANAGEMENT 13

A. Financial Management Assessment 13

B. Disbursement 19

C. Accounting 20

D. Auditing and Public Disclosure 21

VI. PROCUREMENT AND CONSULTING SERVICES 22

A. Advance Contracting and Retroactive Financing 22

B. Procurement of Goods, Works, and Consulting Services 22

C. Procurement Plan 22

D. Consultant's Terms of Reference 22

VII. SAFEGUARDS 22

VIII. GENDER AND SOCIAL DIMENSIONS 25

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 25

A. Project Design and Monitoring Framework 25

B. Monitoring 27

C. Evaluation 28

D. Reporting 29

E. Stakeholder Communication Strategy 29

X. ANTICORRUPTION POLICY 30

XI. ACCOUNTABILITY MECHANISM 30

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 30

APPENDIXES 1 – Updated Financial Management Action Plan 2 – Updated Procurement Plan 3 – Terms of Reference of Project Management and Supervision Consultant 4 – Updated Gender Strategy Action Plan

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and

management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. At loan negotiations, the borrower and ADB agreed to the PAM and ensured consistency with the loan/grant agreements. Such agreement was reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan/grant agreement, the provisions of the loan/grant agreement shall prevail.

After ADB Board approval of the project's report and recommendations of the President (RRP), changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions and Staff Instructions) and upon such approval, they will be subsequently incorporated in the PAM. This updated PAM reflects various changes following the (i) change in executing agency, and (ii) cofinancing by the European Bank for Reconstruction and Development (EBRD) in 2019. The original executing agency, Uzbekenergo Joint Stock Company (JSC), was replaced by JSC Talimarjan Thermal Power Plant (TPP). The responsibilities and functions of the implementing agency, Unitary Enterprise Talimarjan TPP, were also transferred to JSC Talimarjan TPP. JSC Talimarjan TPP is wholly responsible for project implementation, as agreed jointly between the borrower and ADB, and following the policies and procedures of the government and ADB. ADB staff are responsible for supporting implementation including compliance by JSC Talimarjan TPP of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

I. PROJECT DESCRIPTION

1. The proposed project will support Uzbekistan to address the issues of unreliable energy supply and energy inefficiency. Through the installation of most efficient and environmental-friendly combined-cycle gas turbine units, the project will contribute to more affordable and reliable power supply in Uzbekistan, improved energy efficiency. The project includes sectoral and institutional development components to improve sector performance to improve sector financial operation and performance. 2. As one of the fastest-growing economies in the Central Asia, Uzbekistan’s economy grew rapidly over the past decade at an average rate of 8%, lifting significant number of the population out of poverty. The recent weakening external environments in commodity trading which has backed the economic growth suggests Uzbekistan need to find new drivers for sustainable economic growth. In response, Uzbekistan adopted an ambitious program to promote structural transformation and industry diversification to pursue an industrialized, upper middle-income country by 2030.1-2 The capacity addition to meet the growing electricity demand was insufficient and untimely, leaving unserved power demand, mainly due to the delayed project implementation, the constraints in the pubic budget for huge investment needs, and insufficient cash generating capacity of the sector to invite the private investments.3 3. Of the installed capacity of 13,500 megawatts (MW), the available capacity to cover the peak demand is estimated to remain approximately 7,800 MW, against the peak demand of 8,400 MW. Blackouts are still occasional for a few hours a day in both rural area and big cities during winter seasons when electricity demand is highest. Hardest hit are socially vulnerable people in the southern and western region of Uzbekistan. Schools and hospitals are unable to fully operate in late autumns and winters due to lack of affordable and reliable electricity, putting educational and healthcare systems at risk. Until 2022, 450MW peak demand will remain unmet in the southern region.4 To ensure the reliable and affordable grid-connected power to the southern region and back the investment plan to develop natural gas resources in the region, the government identified the proposed project as a priority. 4. In April 2010, the Asian Development Bank (ADB) approved the Talimarjan Power Project, as the first energy project in Uzbekistan, to install a 900 MW combined cycle gas turbine (CCGT) power plant. 5-6 In August 2017, the CCGT units designed to generate annually about 6.5 terawatt hours of electricity were successfully put in to operation alleviating some of the existing electricity shortages7. The reform elements under that project included introduction of financial reporting following International Financial Reporting Standard (IFRS) at the original executing agency,

1 Government of Uzbekistan. 2015. Decree of the President of the Republic of Uzbekistan No UP-4707 dated 4 March

2015 on the Program of Measures to Promote Structural Reforms, Modernization and Diversification of Production in 2015–2019. Tashkent.

2 Government of Uzbekistan. 2015. Decree of the President of the Republic of Uzbekistan No UP-4947 dated 7 February 2017 on the Strategy of Actions on Further Development of Uzbekistan. Tashkent.

3 Based on the data from World Bank’s estimate, electricity supply gap is estimated to be 2,085GWh (3.5 percent of demand) in 2016 and reach 14,624 GWh by 2020, if the required investments are not made.

4 JICA. 2016. Preparatory Survey for Tashkent Thermal Power Cogeneration Plant Construction Project and Master Plant Study in the Republic of Uzbekistan. Tokyo.

5 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Loans and Administration of Loan to the Republic of Uzbekistan for the Talimarjan Power Project. Manila.

6 The propose project is sixth energy project in Uzbekistan. ADB’s assistance is ongoing for all aspects of energy including, power generation, transmission modernization, advanced metering project in distribution side, and solar power project for renewable energy.

7 After initial delays in finalizing the turnkey contract for the CCGT units, a complex and high value procurement, the project was implemented smoothly.

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Uzbekenergo. This helped Uzbekenergo generate its first IFRS consolidated financial statements for fiscal year (FY) 2015,8 and adopt external audits based on the International Standards of Auditing (ISA) starting from FY 2011, contributing to the improvement of accountability, transparency and good governance. Under the Talimarjan Power Plant Project, the following main activities were completed on gender equality: (i) 90% of the community complex center’s construction work completed, (ii) network of gender focal points in Talimarjan thermal power plant (TPP) created and operational, (iii) TPP employee spouses association created and operational, (iv) sex-disaggregated data collected and available, and (v) gender capacity building activities conducted.

5. The project impacts, which is aligned with the government strategies (footnotes 1 and 4) will be more reliable power supply in Uzbekistan. The outcome will be increased energy efficient power supply and lowered greenhouse gas emission.

6. The project will have three main outputs: (i) Joint Stock Company Talimarjan Thermal Power Plant (JSC Talimarjan TPP) capacity increased, (ii) JSC Talimarjan TPP financial operation and performance improved, and (iii) institutional capacity enhanced. 7. Output 1 is the expansion of JSC Talimarjan TPP to add a new cogeneration CCGT plant. A modern, high-efficiency, low-emission CCGT power plant will comprise two 300–350 MW gas turbine units, steam turbines with electrical generators, heat recovery steam generators (HRSG), electrical systems, instrument and control systems, and a hybrid cooling system of one-through and recirculation using cooling towers as climate change adaptation measures. Output 2 under the Japan Fund Poverty Reduction (JFPR) technical assistance (TA) will (i) prepare a power sector master plan, (ii) develop a tariff methodology and regulatory framework reform roadmap, (iii) prepare financial statement for JSC Talimarjan TPP based on IFRS and audited in compliance with ISA, and (iv) prepare and implement detailed financial recovery action plan for Uzbekenergo/JSC Talimarjan TPP. Output 3 will ensure institutional strengthening for the operation and maintenance of the plant and technical support for the timely and adequate maintenance of gas turbines. Under the project, an operational plan for the community social center will be developed and implemented to strengthen ongoing gender actions. These capacity development activities are being carried out as part of the already approved transaction technical TA for the project to urgently support the preparation of detailed financial viability improvement plan. 8. On 27 March 2019, following the Presidential Resolution No. PP-4249 “On the strategy for further development and reform of the electric power industry of the Republic of Uzbekistan”, Uzbekenergo was unbundled into three companies: (i) Joint Stock Company (JSC) Thermal Power Plants will manage thermal power plants in Uzbekistan as a holding company; (ii) JSC National Electrical Networks of Uzbekistan will own and operate the transmission systems, and function as a single buyer of electricity from generators; and (iii) JSC Regional Electrical Power Networks will manage 14 territorial electric network enterprises that distribute and sell electric energy to end-users. 9. On 4 July 2019, the Ministry of Finance issued a notice of change of executing agency designating JSC Talimarjan Thermal Power Plant (TPP) as Uzbekenergo’s legal successor for both the Talimarjan Power Project, and the Power Generation Efficiency Improvement Project.

8 The submitted IFRS consolidated financial statements for FY2015 is unaudited. Audit is ongoing by a renowned

international firm.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

CCGT = combined cycle gas turbine, EOI = expression of interest, EPC = engineering, procurement and construction, JFPR = Japan Fund for Poverty Reduction, RFP = request for proposal, TA = technical assistance Source(s): Asian Development Bank

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B. Overall Project Implementation Plan

ADB = Asian Development Bank; EPC = engineering, procurement, construction; GOU = Government of Uzbekistan, JSC Talimarjan TPP = Joint Stock Company Talimarjan Thermal Power Plant; PMSC = project management and supervision consultant; PPTA = project preparatory technical assistance, RFP = request for proposal Source: Asian Development Bank

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Table 1: Management Roles and Responsibilities

Project Implementation Organizations Management Roles and Responsibilities Ministry of Finance Borrower

JSC Talimarjan TPP (formerly Uzbekenergo)

Executing agency • Supervise implementing agency • Monitor and coordinate project activities • Procure contracts • Closely monitor contract execution, implement the

environmental management plan, and ensure that implementing agency complies with all other safeguard requirements

• Report on project progress to Ministry of Finance and ADB

JSC Talimarjan TPP Implementing agency • Manage contract for the construction of the power unit • Manage contract and supervise the project management

and supervision consultant • supervise and ensure safeguards compliance related with

construction, installation of new equipment and implementation of the Environmental Management Plan and Environmental Monitoring Plan

• Implement all aspects of the project and report to JSC Talimarjan TPP and ADB

Asian Development Bank Main project financier

European Bank for Reconstruction and Development, and Uzbekistan Fund for Reconstruction and Development

Project cofinanciers

ADB = Asian Development Bank, JSC Talimarjan TPP = Joint Stock Company Talimarjan Thermal Power Plant. Source: Asian Development Bank

B. Key Persons Involved in Implementation

Executing Agency Joint Stock Company Talimarjan Thermal Power Plant

Abdusami Normuminov Director Telephone: +99891 457 7050 taltes@mail.ru

Project Management Unit

6 Khorezmskaya St., Tashkent, 100000 Olim Yusupov PMU Manager +99871 236 2262 pmutpp2p@gmail.com 6 Khorezmskaya St., Tashkent, 100000

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Asian Development Bank Energy Division Central and West Asia Department Mission Leader

Ashok Bhargava Director +632 632 6113 abhargava@adb.org 6 ADB Avenue, Mandaluyong City, Metro Manila Seung Duck Kim Energy Specialist +632 632 6172 seungduckkim@adb.org ADB Uzbekistan Resident Mission, 1 A. Khodjaev Street,

Tashkent 100027 C. Project Organization Structure

10. JSC Talimarjan TPP will establish a dedicated full-time project management unit (PMU) to manage the project. The PMU will manage the procurement and consulting contracts on behalf of JSC Talimarjan TPP. It will be responsible for preparing project plans, bid evaluation reports, progress reports, withdrawal applications of funds, and any other required reports to ADB. The PMU will include the following positions:

11. PMU will be responsible for ensuring safeguards compliance related with the construction, installation of new equipment and the implementation of the Environmental Management Plan (EMP) and Environmental Monitoring Plan. 12. The PMU project manager staff will be required to have appropriate academic qualifications with experience in large investment projects. The director and the project manager will be senior power plant engineers with experience in construction and/or operations. The project accountant, financial specialist, power plant engineers, civil works engineer, social and gender specialist, and environmental specialist will have relevant experience and academic qualifications in their specialty areas. The procurement specialist will have required academic qualifications with experience in procurement of consultants and contractors. The terms of reference of the PMU project manager and staff are in Table 2.

PMU Manager

Power Plant Engineer

Finance Manager

Structural Engineer

Procurement Specialist

Director Safeguards

Mechanical Engineer

Electrical Engineer

Chemical Engineer

Control and Instrumentation Engineer

Accountant Contract Management

Specialist

Environment Specialist

Social/ Gender

Specialist

Project Admin

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Table 2: Terms of Reference of Project Management Unit (PMU) Position Terms of Reference

Project Manager • Provide overall direction and management of PMU. • Ensure project is delivered on schedule to budget and specification • Manage relationships with financiers, consultants, and contractors • Ensure appropriate reporting to financiers • Ensure JSC Talimarjan Thermal Power Plant management is regularly

appraised of project developments • Manage project management and supervision consultant and contractors • Manage PMU staff

Project Accountant • Maintain project financial statements • Manage disbursement related issues and the withdrawal applications • Prepare project financial reports • Manage external audit of project financial statements • Coordinate external audit for entity

Finance Specialist • Assist Project Accountant in maintaining project financial statements and preparing project financial reports

• Monitor cashflow movement and prepare trend analysis of key operating and financial ratios

• Monitor loan covenants Procurement Specialist (3 positions)

• Manage consultant recruitment • Manage the turnkey contract • Prepare Request for Proposal for consultant services • Prepare bid evaluation reports • Monitor compliance of consultants and contractors with contract

requirements • Prepare overall project progress report • Prepare contract award and disbursement projections

Power Plant Engineer (Mechanical)

• Monitor consultants and contractors progress and delivery to contract • Review submission by consultants in area of specialty • Prepare progress reports

Power Plant Engineer (Mechanical secondary)

As above

Power Plant Engineer (Electrical engineer)

As above

Power Plant Engineer Control & Instrumentation

As above

Civil Engineer As above Social and Gender Specialist

• Ensure the implementation of the social and gender activities • Ensure the completion and operational work of the community complex

center in Nuristan village including training modules • Monitor and report on the implementation of gender related activities • Prepare and carry out of gender sensitization workshops

Environmental Specialist • Ensure implementation of the environmental management plan • Prepare semi-annual environmental reports • Monitor consultants and contractors progress and delivery to contract • Review submission by consultants in area of specialty

13. The JFPR TA for the investment master plan and tariff policy reform roadmap was led by the Deputy Chairman (Economic/Finance or Investment) of Uzbekenergo. For other capacity development components, a program manager will be appointed to implement the program of the Power Generation Efficiency Improvement project and coordinate with other capacity

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developments activities under other ADB-financed projects and other projects financed by international financial institutions.

IV. COSTS AND FINANCING

14. The project costs consist of: (i) engineering, procurement and construction (EPC) contract for the power plant and ancillary facilities, (ii) project management and supervision consultant (PMSC), (iii) capacity development component, (iv) recurrent cost of project management, (v) taxes and duties, and (v) financing charges.

(i) EPC contract. This will be financed by ADB’s ordinary capital resources, European Bank for Reconstruction and Development, Uzbekistan Fund for Reconstruction and Development (UFRD), JSC Talimarjan TPP and the government of Uzbekistan. UFRD is a local financial partner contributing to counterpart funding together with JSC Talimarjan TPP and the government. The government and European Bank for Reconstruction and Development will provide financing for the construction works.9 The government will finance the taxes and duties, while the remaining will be financed by ADB, UFRD, and JSC Talimarjan TPP on a pro-rata basis determined by the ratio described in the loan agreement.

(ii) Project management and supervision consultant. The PMSC (a firm) will be recruited by JSC Talimarjan TPP to assist PMU in project management. This contract will be financed by ADB’s ordinary capital resources.

(iii) Institutional strengthening, including audit, asset and debt managements. These capacity development activities were carried out as part of the approved transaction TA for the project to support the preparation of detailed financial viability improvement plan.

(iv) Master plan, tariff reform roadmap and capacity development component for power development planning. This component is being financed by ADB (JFPR) on grant basis.

(v) Recurrent cost of the PMU are to be financed by JSC Talimarjan TPP. (vi) Taxes and duties will be covered under government contribution as their share of

the project cost. (vii) Financing charges. JSC Talimarjan TPP will finance the financing charges,

including interest during construction and commitment charges, without capitalizing them into respective loans.

A. Cost Estimates Preparation and Revisions

15. The cost estimates for the project were prepared based on the technical analysis and a market assessment by the project preparatory consultants. These estimates were reviewed by ADB, and endorsed by Uzbekenergo, and later JSC Talimarjan TPP. B. Key Assumptions

16. The following key assumptions underpin the cost estimates and financing plan (Table 3): (i) Exchange rate: Uzbekistan SUM8,100.00 as of 5 September 2017 = $1.00 (ii) Price contingencies based on expected cumulative inflation over the

implementation period are as follows:

9 On 14 January 2019, GoU signed $240 million loan agreement with EBRD to finance expansion of the Talimarjan

thermal power plant by at least 900 MW.

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Table 3: Escalation Rates for Price Contingency Calculation

Source(s): ADB staff estimates C. Detailed Cost Estimates by Expenditure Category ($ million)

a In mid-2017 prices. Base cost includes Environment Management Plan estimated at 0.6 million (0.1 million in Turnkey, 0.2 million in Project Implementation and 0.3 million in Project Management).

b Includes external auditor cost. c Physical contingencies computed at 5% for equipment. Price contingencies computed at 1.5% on foreign exchange

costs and 10.3% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d Includes interest and commitment charges. Interest during construction for ADB's ordinary capital resources (OCR) loan has been computed at the 5-year forward London interbank offered rate plus a spread of 0.5% and 0.1% of maturity premium. Commitment charges for ADB's OCR loan are 0.15% per year to be charged on the undisbursed loan amount.

Source: Asian Development Bank staff estimates.

D. Allocation and Withdrawal of Loan Proceeds

Number tem Amount Allocated ($) Percentage of ADB Financing

1 Turnkey Contract ** 423,000,000 44.1 percent of total amount due * 2 Consulting Services 8,000,000 100.0 percent of total amount due * 3 Unallocated 19,000,000 -

Total 450,000,000 ADB = Asian Development Bank * Exclusive of taxes and duties imposed within the territory of the Borrower. ** Subject to the execution and effectiveness of the loan agreement between Uzbekistan Fund for Reconstruction and

Development and the eligible commercial bank and the related subsidiary loan agreement between such bank and JSC Talimarjan Thermal Power Plant.

Source: Asian Development Bank estimates.

Item 2018 2019 2020 2021 2022 Average

Foreign rate of price inflation 1.40% 1.50% 1.50% 1.50% 1.50% 1.5%

Domestic rate of price inflation 12.0% 10.0% 9.7% 10.0% 10.0% 10.3%

Item

A.

1 Turnkey 617.2 136.7 753.9

a. Civil Works 7.3 29.0 36.3

b. Mechanical and Equipment 610.0 107.6 717.6

2 Project Implementation b 6.4 1.6 8.0

3 Project Management - 4.0 4.0

4 Taxes and duties - 150.6 150.6

623.6 292.9 916.5

B. Contingencies c

1 Physical 27.8 6.1 33.4

2 Price 32.2 37.8 69.7

Subtotal (B) 60.0 43.9 103.1

C. Financing Charges During Implementation d

1 Interest 41.4 - 41.4

2 Commitment Charges 5.3 - 7.5

Subtotal (C) 46.7 - 48.9

Total (A+B+C) 730.3 336.8 1,068.5

Base Cost a

Subtotal (A) : (1 + 2 + 3 + 4)

Foreign

Exchange

Local

Currency

Total

Cost

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E. Detailed Cost Estimates by Financier ($ million)

Total Cost

OCR

Amount

% of cost

category Amount

% of cost

category Amount

% of cost

category Amount

% of cost

category

Taxes and

Duties

% of cost

category

Item (A) (A)/(F) (B) (B)/(F) (C) (C)/(F) (D) (D)/(F) (E) (E)/(F) (F)

A. Base Cost a

1 Turnkey 384.3 42% 238.0 26% 131.6 15% - 0% 150.6 20% 904.5

a. Civil Works 18.9 43% 17.4 40% - 0% - 0% 7.6 0% 43.9

b. Mechanical and Equipment 365.4 42% 220.6 26% 131.6 15% - 0% 143.0 0% 860.6

c. Environment and Social Mitigation - - - - 0% - 0% - 0% -

2 Project Implementation 8.0 100% - - - 0% - 0% - 0% 8.0

a. Project Implementation 8.0 100% - - - 0% - 0% - 0% 8.0

b. Master Plan, Tariff Roadmap, capacity building - - - - 0% - 0% - 0% -

3 Project Management - 0% - - - 0% 4.0 100% - 0% 4.0

Subtotal (A) : (1 + 2 + 3) 392.3 43% 238.0 26% 131.6 14% 4.0 0% 150.6 17% 916.5

B. Contingencies c

1 Physical 19.0 57% - - 14.4 43% 0% - 0% 33.4

2 Price 38.7 56% - - 31.0 44% - - - 0% 69.7

Subtotal (B) 57.7 56% - - 45.4 44% - - - 0% 103.1

C. Financing Charges During Implementation d

1 Interest - 0% - - - 0% 41.5 100% - 0% 41.5

2 Commitment Charges - 0% 2.0 27% - 0% 5.5 73% - 0% 7.5

Subtotal (C) - 0% 2.0 4% - 0% 47.0 96% - 0% 49.0

Total (A+B+C) 450.0 42% 240.0 22% 177.0 17% 51.0 5% 150.6 14% 1,068.6

Source: Asian Development Bank staff estimates.

ADB = Asian Development Bank, EBRD = European Bank for Reconstruction and Development, UFRD = Uzbekistan Fund for Reconstruction and Development.a In mid-2019 prices. Base cost includes Environment Management Plan estimated at 0.6 million (0.08 million by EPC, 0.2 million by Project Implementation and 0.3 million by Project Management)

b Includes external auditor cost.

c Physical contingencies computed at 5% for equipment. Price contingencies computed at 1.5% on foreign exchange costs and 10.3% on local currency costs; includes provision for potential exchange rate fluctuation

under the assumption of a purchasing power parity exchange rate.

d Includes interest and commitment charges. Interest during construction for ADB's ordinary capital resources (OCR) loan has been computed at the 5-year forward London interbank offered rate plus a spread of 0.5%

and 0.1% of maturity premium. Commitment charges for ADB's OCR loan are 0.15% per year to be charged on the undisbursed loan amount.

ADB EBRD UFRD Uzbekenergo Government

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F. Detailed Cost Estimates by Outputs and/or Components ($ million)

a In mid-2017 prices. Base cost includes Environment Management Plan estimated at 0.6 million (0.08 million by EPC, 0.2 million by Project Implementation and

0.3 million by Project Management) b Includes external auditor cost. c Physical contingencies computed at 5% for equipment. Price contingencies computed at 1.5% on foreign exchange costs and 10.0% on local currency costs;

includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB's ordinary capital resources (OCR) loan has been computed at the 5-year forward

London interbank offered rate plus a spread of 0.5% and 0.1% of maturity premium. Commitment charges for ADB's OCR loan are 0.15% per year to be charged on the undisbursed loan amount.

Source: Asian Development Bank staff estimates.

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G. Detailed Cost Estimates by Year ($ million)

a In mid-2017 prices. Base cost includes Environment Management Plan estimated at 0.6 million (0.08 million by EPC, 0.2 million by Project Implementation and 0.3 million by Project Management).

b Includes external auditor cost. c Physical contingencies computed at 5% for equipment. Price contingencies computed at 1.5% on foreign exchange costs and 10.3% on local currency costs;

includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB's ordinary capital resources (OCR) loan has been computed at the 5-year forward

London interbank offered rate plus a spread of 0.5% and 0.1% of maturity premium. Commitment charges for ADB's OCR loan are 0.15% per year to be charged on the undisbursed loan amount.

Source: Asian Development Bank staff estimates.

Year 1 Year 2 Year 3 Year 4 Year 5

Item 2019 2020 2021 2022 2023

A.

1 Turnkey 753.9 - 176.0 342.8 150.8 84.3

a. Civil Works 36.3 - 10.9 12.7 7.3 5.4

b. Mechanical and Equipment 717.6 - 165.1 330.1 143.5 78.9

2 Project Implementation b 8.0 1.6 1.6 1.6 1.6 1.6

3 Project Management 4.0 0.4 1.0 1.0 0.8 0.8

4 Taxes and duties 150.6 - 35.1 68.5 30.1 16.9

916.5 2.0 213.7 413.9 183.3 103.6

B. Contingencies c

1 Physical 33.4 - - - - 33.9

2 Price 69.7 - - - - 70.0

Subtotal (B) 103.1 - - - - 103.9

C. Financing Charges During Implementation d

1 Interest 41.4 0.40 2.3 7.0 11.9 15.7

2 Commitment Charges 7.5 1.8 1.6 1.1 0.6 0.2

Subtotal (C) 48.9 2.2 3.9 8.1 12.5 15.9

Total (A+B+C) 1,068.5 4.2 217.6 422.0 195.8 223.4

Base Cost a

Subtotal (A) : (1 + 2 + 3 + 4)

Total Cost

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H. Contract and Disbursement S-Curve

Year Contract Awards Disbursements Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2019 0.0 0.0 6.0 0.0 6.0 0.0 0.0 0.0 0.6 0.6 2020 0.0 0.0 0.0 332.0 332.0 0.0 0.0 0.0 33.2 33.2 2021 0.0 0.0 0.0 0.0 0.0 20.0 31.5 32.3 37.0 120.8 2022 0.0 0.0 0.0 0.0 0.0 22.7 29.4 38.1 40.2 130.4 2023 0.0 0.0 112.0 0.0 112.0 25.9 26.1 113 165.0 Total 450.0 450.0

I. Fund Flow Diagram

ADB = Asian Development Bank, EBRD = European Bank for Reconstruction and Development, JSC = Joint Stock Company, UFRD = Uzbekistan Fund for Reconstruction and Development. Source: Asian Development Bank.

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

1. Financial Management Assessment of Uzbekenergo

0

75

150

225

300

375

450

525

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2019 2020 2021 2022 2023

Contract Award

Cumulative Disbursements

$ million

Repayment

UFRD

Commercial Bank

Republic of

Uzbekistan

Loan Repayment

Loan

Repayment

ADB

Subsidiary Loan Repayment

JSC Talimarjan Thermal Power Plant

EBRD

Loan

Repayment

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17. The financial management assessment was conducted in January 201710 in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The financial management assessment considered the capacity of the Uzbekenergo (executing agency) and Unitary Enterprise Talimarjan Thermal Power Plant (implementing agency), including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. 18. Uzbekenergo. Uzbekenergo is a 100% state-owned holding company for power generation, transmission, and distribution in Uzbekistan. It was established in August 2001 after public sector reorganization and is the legal successor of the former Ministry of Energy and Electrification. Incorporated as an open joint-stock company, Uzbekenergo has 45 subsidiaries with its shares ranging from 51% to 100% in each subsidiary. These subsidiaries include thermal power generation11, transmission, and distribution and supply companies. Most of those subsidiaries are incorporated as separate joint-stock companies or unitary enterprises12. Corporate governance and related measures are maintained by Uzbekenergo and its subsidiaries in compliance with the Government’s regulation.13 19. Uzbekenergo’s financial management risk is considered high, and Uzbekenergo needs to strengthen its financial management capacity.14 Uzbekenergo’s accounting policies, procedures, and financial reporting have followed the National Accounting Standards (NAS) of Uzbekistan and National Standards on Auditing. Financial statements are prepared on a quarterly and annual basis, consistent with NAS. In addition to statutory annual reporting Uzbekenergo develops income statements on a quarterly basis and monitors cash flows on a daily basis.

20. Since 2015, Uzbekenergo is required to prepare its consolidated accounting and financial reporting in accordance with IFRS. However, the company was able to prepare its first IFRS compliant consolidated accounts for FY 2015 in 2017 due to complexity of subsidiaries’ accounts and insufficient accounting skills and capacity for consolidation. Uzbekenergo’s accounts aggregation is processed mostly manually with significant delay in consolidation. To improve the quality of accounting practice, Uzbekenergo contracted an international consulting firm to support in preparation of annual consolidated IFRS-based accounts.

21. Under existing legislation15 the ISA are officially recognized by the law and the audit companies are required to apply ISA in audit practice accordingly. An international audit firm was appointed to prepare an ISA compliant audited report on consolidated IFRS accounts of the Uzbekenergo for FY 2015 and 2016. Due to delay in first time adoption of IFRS and changes in

10 Given scale of impact of foreign currency rate unification, ADB project team had additional assessment of

Uzbekenergo’s sustainability and operations and updated FMA for Uzbekenergo and Talimarjan TPP in September 2017.

11 Presidential Decree (#2972) on establishing of Uzbek Hydro Energy and transferring all hydropower generation plants from Uzbekenergo to Uzbek Hydro Power Company (18 May 2017).

12 A joint stock company has property rights and the decision-making authority belongs to stakeholders, while a unitary enterprise does not have independent property rights and Uzbekenergo has authority over the business activities of the entity. More detailed analysis of legal differences between unitary enterprise and joint stock company is provided in Appendix 3.

13 Presidential Decree (#4720) on adoption of corporate governance practice in joint stock companies. 14 Detailed assessment is available from Supplementary Document: Financial Management Assessment (accessible

from the list of linked documents in the Appendix 2 of the RRP). 15 Presidential Resolution 48 article 442 of 2010; the amendments to the law “On Auditing Activities” as of 1st of May

2013.

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Uzbekenergo’s asset base16, the expected date of completion of audit of IFRS consolidated accounts is February 2018. 22. The capacity development plan under other ADB loan projects17 will address the training of the IFRS specialists as well as the strengthening of Uzbekenergo’s information systems with the objective of improving its financial management capability. 23. Talimarjan Thermal Power Plant. Established in 2004 as a Unitary Enterprise owned by Uzbekenergo, Talimarjan TPP is not a branch within Uzbekenergo but has a special status of a separate legal identity. Talimarjan TPP maintains its own financial accounts and reports. Uzbekenergo has full legal authority to control the activities of Talimarjan TPP and although there is a management structure in place, Talimarjan TPP is managed as part of Uzbekenergo and currently has no management autonomy to act financially or operationally on its own.

24. While the parent company Uzbekenergo’s financial management risk is considered high, Talimarjan TPP’s financial management risk is considered moderate with is focused mandate of maintaining and operating power plants. However, as Uzbekenergo completes its preparation of full set of IFRS-based consolidated financial statements (FY 2015 and FY2016), Talimarjan TPP is also expected to adopt international accounting and auditing standards, for which Talimarjan TPP will require capacity development.

25. Similar to all other generation plants, Talimarjan TPP is required to sell all produced electricity to Uzbekenergo’s branch in charge of wholesale of generation (“Energo Shotish”) to the 14 distribution entities. Tariffs are nominally set on a cost-recovery basis estimated to cover (i) fuel cost; (ii) operational and maintenance and (iii) administrative expenses. Although finance expenses are included in the tariff calculation, these represent the interest expense and foreign currency gain or losses incurred on domestic loans to finance working capital. Loans taken to finance investment in generating assets are retained on Uzbekenergo’s balance sheet and are not transferred to Talimarjan TPP’s balance sheet. 26. Talimarjan TPP’s financial statements are prepared on a quarterly basis under National Accounting Standards of Uzbekistan and submitted to Uzbekenergo. All accounting and financial data are being generated from accounting software and presented in hard copies endorsed by Talimarjan TPP’s management. The information submitted to Uzbekenergo contains a balance sheet, income statement, cash flow statements and detailed analysis of fixed assets, accounts receivables and payables. Talimarjan TPP’s fixed assets are recorded in a Fixed Asset Register maintained by the Asset Control and the physical existence of assets is checked annually. As a national strategic asset, the power plant itself has a very high level of physical security and access to the plant is strictly controlled. Talimarjan TPP’s investment planning is prepared on a project-by-project basis and controlled centrally by Uzbekenergo. Operating budgets are prepared by Talimarjan TPP on an annual basis with adjustments in April and October for tariff increase, which are determined by the Ministry of Finance separately from the end-user tariffs Uzbekenergo applies.

16 Presidential Decree (#2972) on establishing of Uzbek Hydro Energy and transferring all hydropower generation

plants from Uzbekenergo to Uzbek Hydro Power Company. 17 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Loans and

Administration of Loan to the Republic of Uzbekistan for the Talimarjan Power Project. Manila. (Loans 2629-UZB, 2630-UZB, and 8944-UZB); ADB 2014. Report and Recommendation of the President to the Board of Directors: Proposed Loans and Administration of Loan to the Republic of Uzbekistan for the Takhiatash Power Plant Efficiency Improvement Project. Manila. (Loan 3141-UZB).

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27. Talimarjan TPP’s internal audit division was established in 2007 and has two major objectives: (i) analysis of financial and performance variances and (ii) control over procurement and payment practice. The internal audit is in charge of review of contracts and payments performance delegated by Uzbekenergo.

28. Talimarjan TPP’s financial statements are audited under Uzbekistan National Auditing Standards. UET does not prepare IFRS-based statements and is not audited under ISA. The financial statements for 2012 - 2015 were audited by local audit firms with unqualified opinions.

29. Uzbekenergo’s accounting policies, procedures, and financial reporting have followed Uzbekistan’s accounting and auditing standards. The company has approved a comprehensive financial recovery action plan backed by Government’s commitment to strengthen Uzbekenergo’s financial management and sustainability (Table 4). Furthermore, the capacity development plan under other ADB loan projects will strengthen Uzbekenergo’s accounting and information systems with the objective of improving its financial management capability.

Table 4: Financial Recovery Action Plan as of Inception Mission (May 2019)

Action Key

Stakeholders Completion

Date Status

1. Strengthening debt sustainability 1a. Development and approval of sustainable debt financing strategy for 2018-2022.

MoF, UFRD, UE

December 2018

Completed.

1b. Restructuring UFRD loans and commercial loans guarantee by the government.

MoF, UFRD, UE

November 2017

Completed.

2. Improving business profile 2a. Revaluation of UE's fixed assets and preparation of impairment model.

SCRUAPEDC, MoF, UE

December 2019

Ongoing. Status is as follows: - Generation: Completed. - Distribution: to be completed by

August 2019. - Transmission: to be completed by

August 2019. 2b. Undertaking external audit of UE's IFRS compliant consolidated statements by independent auditor.

July 2018 Ongoing. Status is as follows: - 2015: audit completed. - 2016: audit completed. - 2017: FS prepared

2c. Undertaking UE’s corporate diagnostics of UE and all its subsidiaries, associates and Joint Ventures with over 50% shares owned by UE and preparing new governance framework for measuring and monitoring key performance indicators in UE's subsidiaries (generation, transmission, distribution), its associates and Joint Ventures.

UE, MoF January 2019

Completed. Corporate Governance Assessment Report and Action Plan prepared, February/March 2019.

2d. Developing financial sustainable model for UE and cost accounting for correct cost allocation in generation, transmission and distribution of UE.

UE, MoF December 2018

Ongoing.

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Action Key

Stakeholders Completion

Date Status

2e. Divestment of UE's non-core assets (UE and MoF need to provide list of companies for divestments).

SCRUAPEDC, MoF, UE

December 2018

Ongoing. Initiated based on Presidential Resolution No. 4249, dated 27 March 2019, On the Strategy of Further Development and Reform of the Electricity Industry of the Republic of Uzbekistan, Appendix 2.

2f. Prepare financial recovery roadmaps for UE and its subsidiaries - generation, transmission and distribution.

UE, MoF December 2018

Ongoing. To be completed by June 2019.

3. Strengthening Uzebkenergo's corporate and operational efficiency 3a. Corporate capacity building (IFRS consolidation, budgeting, financial planning and risk management).

UE December 2018

TBD. Status is as follows: - IFRS consolidation: Completed for

UE. - Budgeting: TBD - Financial planning: Completed for UE. - Risk management: TBD

3b. Implementing working capital management program (AR/AP) including: (i) undertaking inventory of AR/AP; (ii) write off AR/AP (bad debts) accumulated up to 01.07.2017; (iii) write off of receivables from liquidated farms in 2016.

MoF, UE November 2017

Completed. Undertaking an inventory of AR/AP and writing off bad debt accumulated up to 31 December 2016 was written off based on Presidential Resolution (dated 25 January 2017). Bad debt accumulated up to 1 July 2017 was written off based on Presidential Resolution (dated TBD).

4. Designing and implementing sustainable investment strategy 4a. Preparation of energy sector master plan and investment plan for 2018-2028.

MoF, UE December 2019

Ongoing. Being prepared as Output 1 under the Power Sector Reform and Sustainability Support Program. Final draft has been submitted and presentation to the MoE planned for May 2019.

5. Implementing efficient cost-based tariffs 5a. Development of full cost recovery tariff mechanism for UE.

MoF, UE December 2018

Ongoing. Being prepared as Output 2 under the Power Sector Reform and Sustainability Support Program. Draft report was prepared in early 2019 and submitted to the MoE for commenting.

5b. Introducing new full cost recovery tariff setting for UE.

MoF, UE December 2023

Ongoing.

AR/AP = accounts receivable/accounts payable, IFRS = International Financial Reporting Standards, MoE = Ministry of Energy, MoF= Ministry of Finance, SCRUAPEDC = State Committee of the Republic of Uzbekistan for Assistance to Privatized Enterprises and Development of Competition, UE = Uzbekenergo, UFRD = Uzbekistan Reconstruction and Development Fund. Notes: Action 1a is negotiated with the government and Uzbekenergo, and included in the Policy Action Plan under ADB policy based lending to the government. Actions 4 and 5 are supported by Japan Fund for Poverty Reduction assistance (development of new cost recovery tariff mechanism). Action 5b is negotiated with Uzbekenergo as a covenant.

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2. Financial Management Assessment of JSC Talimarjan TPP 30. Institutional aspects. JSC Talimarjan TPP was incorporated as a JSC in September 2019 and has become a separate legal entity with its own supervisory board. The entity was previously Unitary Enterprise Talimarjan TPP, a unitary enterprise that was part of the Uzbekenergo. It had no separate legal status and no statutory annual financial reporting requirements. Nevertheless, Talimarjan TPP has been preparing annual financial statements for consolidation into Uzbekenergo’s consolidated annual financial statements. With ownership transfer from Uzbekenergo, it is now a wholly owned subsidiary of JSC Thermal Power Plants. 31. Staffing. JSC Talimarjan TPP is adequately staffed with all positions in the Accounting Department filled. The departments recruit staff with tertiary education (minimum bachelor’s degree in accounting, finance or economics) and/or relevant work experience. While the staff have competency to fulfil requirements based on NAS, there is lack of capacity for compliance with IFRS. As discussed below, a training program is being planned to overcome this limitation. 32. Planning and budgeting. JSC Talimarjan TPP, being a newly independent entity, will need to set up internal procedures for preparation, consolidation, review and approval of their own annual budget. Whereas previously the budget was reviewed and approved by Uzbekenergo’s Supervisory Board, for 2020, approval be done by its own newly set up Supervisory Board. The practice within Uzbekenergo of not currently generating management reports that conduct variance analysis with budget against actuals to track budget performance and take corrective actions may need to be changed by JSC Talimarjan TPP. It would need to consider the practice of periodically monitoring budget performance to more efficiently manage operating costs and to meet budget targets. 33. Accounting and financial reporting. While all in-year (quarterly) financial statements are prepared based on NAS, the annual financial statements are prepared based on NAS as well as on IFRS, with the latter accounts being prepared with the assistance of external accountants. All annual financial statements will be subject to external audit. 34. In order to facilitate consolidating and converting NAS-based accounts into IFRS-compliant financial statements, JSC Talimarjan TPP plans to become integrated, through the main server, with TPPs headquarters’ centralized accounting system that supports automated conversion. They will also send 2 staff to undergo training in IFRS as part of a capacity building program since it currently does not have any in-house IFRS expertise. An external consultant will be hired to conduct the training program. The training is expected to take place in September 2019.

35. The accounting approach by JSC Talimarjan TPP (previously Talimarjan TPP) has been a mixture of manual bookkeeping and application of accounting software (1C Enterprise) with some limited integration and customization of selected accounting and reporting functions. The software enables limited recording of transactions, undertaking operational and project-related queries on specific accounts. They plan to undertake further customization, as necessary, to reduce manual intervention that should lead to fewer errors and hence more reliable financial analyses. However, because an integrated enterprise resource planning or financial management information system is not in place, management accounting reports will continue to be prepared partly manually using spreadsheets.

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36. Fixed asset management. Based on the independent assets revaluation by a consulting firm in 2019, the restated values will be used for IFRS-based reporting purposes. The current accounting software module for fixed assets which is based on NAS is expected to be updated.

37. Internal audit and control system. The internal audit function has not been set up yet within Talimarjan TPP. The recruitment process for internal auditors will start with selection of candidates, subject to the approval of the Supervisory Board.

38. External audit. The general aspects and issues for external audit in JSC Talimarjan TPP are similar to that of Talimarjan TPP. JSC Talimarjan TPP appointed a local auditing company as the independent auditor to audit their annual financial statements for FY 2019 in compliance with NAS. An audit company will also be engaged for auditing under ISA.

39. Risk rating. The overall fiduciary risk for JSC Talimarjan TPP is considered to be high. This is a result of a moderate risk rating for the country system and high rating for the agency-specific risks. When the proposed mitigation measures in the financial management action plan (Appendix 1) are taken into account, the overall fiduciary risk is considered to be substantial. B. Disbursement

1. Disbursement Arrangements for ADB Funds

40. The loan proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook (2017, as amended from time to time)18 and detailed arrangements agreed upon between the Ministry of Finance, JSC Talimarjan TPP, and ADB. Direct payment and reimbursement will be used for all expenditure categories. Online training for project staff on disbursement policies and procedures is available.19 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 41. The project primarily uses direct payment method for the EPC contract. Each claim by the EPC contractor will be financed on a pro rata basis by respective financiers in accordance with the ratio determined in the loan/grant agreements. For the consulting services, direct payment method will be used. Reimbursement method may be used when necessary. The PMU, assisted by project implementation and supervision consultants, will prepare disbursement projections, collect supporting documents, and prepare and send withdrawal applications to ADB. JSC Talimarjan TPP will ensure necessary budgetary allocations for counterpart funds. The disbursement mechanism will be as follows:

18 Available in http://www.adb.org/documents/ loan-disbursement-handbook. 19 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning

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42. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is stipulated in the Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid by JSC Talimarjan TPP and subsequently claimed to ADB through reimbursement, unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Once applicable, use of ADB’s Client Portal for Disbursements20 system is encouraged for submission of withdrawal applications.

43. Conditions for withdrawals from loan account. No withdrawals shall be made from the loan account for the turnkey contract until a loan agreement between UFRD and an eligible commercial bank, and a related subsidiary loan agreement between such bank and JSC Talimarjan TPP, both for the purposes of the Project and in form and substance satisfactory to ADB, shall have been duly executed and become effective in accordance with their terms. C. Accounting

44. JSC Talimarjan TPP will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project following the International Financial Reporting Standards. JSC Talimarjan TPP will prepare consolidated project financial statements in accordance with {the government's accounting laws and regulations which are consistent with international accounting principles and practices. PMU to maintain separate books and records by funding source for all expenditures incurred on the project. The PMU will prepare consolidated project financial statements in accordance with the government’s accounting laws and regulations which are consistent with international accounting principles and practices21.

20 The Client Portal for Disbursement facilitates online submission of WA to ADB, resulting in faster disbursement. The

forms to be completed by the Borrower are available online at https://www.adb.org/documents/client-portal-disbursements-guide.

21 For details, see ADB (2013) Financial Management Technical Guidance Note: Project Financial Reporting and Auditing, Manila, available at: http://www.adb.org/sites/default/files/project-financial-reporting-auditing.pdf.

Project Management and Supervision Consultant

Invoice

EPC Contractor

JSC Talimarjan TPP

UFRD

Commercial Bank

Withdrawal Application (with invoice)

Commercial Bank’s share of payment

ADB/EBRD’’s share of payment

Withdrawal Application

Invoice Invoice

UFRD's share of payment

ADB/EBRD Capacity

Development Consultants

under TA 9459

Invoice

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D. Auditing and Public Disclosure

45. JSC Talimarjan TPP will cause the detailed consolidated project financial statements to be audited in accordance with International Standards on Auditing and with the government's audit regulations, by an independent auditor acceptable to ADB. The audited project financial statements (APFS) together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by the JSC Talimarjan TPP. 46. The audited entity financial statements (AEFS), together with the auditor’s report and the management letter including opinion on compliance with financial covenants, will be submitted in the English language to ADB within 1 month after their approval by the relevant authority. 47. The APFS will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; (ii) whether the proceeds of the loan/grant were used only for the purpose(s) of the project; and (iii) whether the borrower or EA was in compliance with the financial covenants contained in the legal agreements (where applicable). 48. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor. 49. The government and JSC Talimarjan TPP have been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the APFS.22 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures.

50. Public disclosure of the APFS, including the auditor’s opinion, will be guided by ADB’s Public Communications Policy 2011.23 ADB will disclose the APFS and opinion no later than 14 days of ADB’s confirmation of their acceptability on ADB’s website. The management letter, additional auditor’s opinions, and AFS will not be disclosed.24

22 When APFS are not received (i) by the due date, ADB will write to the executing agency advising that (a) the audit

documents are overdue, and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as processing of new reimbursement will not be processed; (ii) within 6 months after the due date, ADB will withhold processing requests for new contract awards and disbursement such as processing of new reimbursement. ADB will (a) inform the executing agency of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next 6 months; and (iii) within 12 months after the due date, ADB may suspend the loan.

23 Public Communications Policy: http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications. 24 This type of information would generally fall under public communications policy exceptions to disclosure. ADB. 2011.

Public Communications Policy. Paragraph 97(iv) and/or 97(v).

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VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing

51. Advance Contracting. All advance contracting and retroactive financing will be undertaken in conformity with ADB Procurement Policy25 (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers.26 52. Retroactive financing. Retroactive financing was requested for consulting services and will not exceed 20% of the loan amount, incurred before loan effectiveness but not earlier than 12 months before the signing of the loan agreement. 53. Advance contracting was undertaken by PMU for recruiting the PMSC. The issuance of invitations to bid under advance contracting and retroactive financing was subject to ADB approval. The borrower and JSC Talimarjan TPP have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. B. Procurement of Goods, Works, and Consulting Services

54. All procurement of goods, works and consultants will be undertaken in accordance with ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (footnotes 23 and 24). 55. EPC contract. JSC Talimarjan TPP will employ a single EPC turnkey contractor to construct the CCGT units in Talimarjan TPP. The procurement will follow open competitive bidding procedure using ADB's two-stage bidding method without prequalification. ADB's standard bidding document for Plant: Design, Supply, Install will be used. 56. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Appendix 2. The terms of reference for all consulting services are in Appendix 3.

58. Project management and supervision consultant. The PMSC was engaged to support JSC Talimarjan TPP during project implementation with 612 person-months of key expert inputs. Quality- and cost-based selection method was used with a standard quality: cost ratio of 90:10 due to the complexity of the technology adopted in the project.

59. External audit consultant. An auditing firm will be engaged to prepare the APFS, and AEFS of JSC Talimarjan TPP for the entire duration of the project. Consultants qualification selection (CQS) method will be used since it is a routine assignment with well-established standard of performance.

VII. SAFEGUARDS

60. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (SPS 2009), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the Safeguard Policy Statement (2009).

25 Available at: https://www.adb.org/documents/adb-procurement-policy 26 Available at: https://www.adb.org/documents/procurement-regulations-adb-borrowers

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61. Environment. The PMU will ensure that all safeguard requirements prescribed in the environmental impact assessment (EIA) are implemented. Following SPS 2009, the project is categorized as “A” for environment, which requires regular environmental review by ADB at least every 6 months. The EIA identified potential impacts, and includes the EMP and due diligence assessment with a corrective action plan (CAP) for the existing power plant (TPP0) and commissioned power plant (TPP1) which have been in operations and are out of the project scope. The EMP consists of mitigation measures, monitoring plan, and arrangements for EMP implementation and will be a part of the bidding documents. 62. Impacts from the project are expected to be during both construction and operation phases, taking place in a disturbed airshed of the Talimarjan Thermopower complex due to the operations of TPP0 and TPP1. The main concerns include impacts of additional pollution from emission on air quality and noise level at project site and in the residential areas of Nuriston and Mekhnatabad, discharge of heated water, wastewater from sewer and the TPP chemical treatment plant, solid waste and construction waste, occupational safety. With the adopted emission control technology and the gas fuel quality, air quality dispersion modelling confirmed the NOx emission will comply with International Finance Corporation’s Environmental, Health and Safety Guidelines, while SO2 and PM will be negligible. Noise generated from TTP2 will be within the World Health Organization’s (WHO) standards. As a climate change adaptation measure, the project is designed to use a hybrid of one-through cooling and recirculation cooling using cooling towers. The recirculation cooling mode will be switched to ensure sufficient flows in the cooling canal and to limit the temperature increase caused by the discharged water within 3°C to be compliant to International Finance Corporation’s guidelines, considering cumulative discharge of heated water from TPP0 and TPP1. Social survey and fish survey confirmed insignificant risk to human health and economic activities as the water in the canal downstream is used only for irrigation. Health impact assessment was conducted to establish a baseline for future monitoring and ensure the project has no adverse impact on the human health. 63. JSC Talimarjan TPP is responsible for CAP implementation using their resources. It is mandatory to prepare ZVOS (Uzbekistan EIA) and obtain approvals from Glavgosecoexpertiza of Goskompriroda before commencing project activities. The Provincial Nature Protection Committee will receive the project’s semi-annual environmental monitoring reports from the PMU.

64. The PMU will be responsible for implementing the EMP to comply with SPS 2009, the environment-related loan covenants, and national environmental regulations. The PMU will hire a national environmental consultant to work together with the TPP environmental manager27 in the capacity of PMU staff. The PMU will also be assisted by the environmental specialists of the PMSC (Engineer). The costs for (i) implementing the mitigation measures in the EMP will be included in the EPC contract, (ii) environmental instrumental monitoring and supervision are included in the PMSC’s contract, and (iii) the environmental consultant and capacity building are included in the PMU’s budget. The PMU’s responsibilities include, but are not limited to, the following:

(i) Implement the EMP developed within the EIA, and follow up with JSC Talimarjan TPP on CAPs for associated and existing facilities.

(ii) Ensure the bidding documents of the EPC contract includes all tasks as described in the EMP.

27 TPP0 has a functioning Environmental Manager whose responsibilities will also include TPP1 and TPP2. The EIA

recommends that JSC Talimarjan TPP prepares an Environmental and Social Management System for the power complex during the operational phase, and hires additional staff for environmental management.

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(iii) Ensure all necessary government permits and licenses, including ecological expertise opinion, for all civil works will be obtained.

(iv) Approve site-specific EMPs which will be prepared by the EPC contractor and endorsed by the PMSC.

(v) With the PMSC, prepare and submit semi-annual environmental monitoring reports to JSC Talimarjan TPP and ADB, and disclose them on the ADB website and in Uzbekistan.

(vi) Report in a timely manner to ADB of any non-compliance or breaches with SPS 2009 and take corrective actions promptly.

(vii) Update the EIA in case of technical design changes or unanticipated impacts. (viii) Establish a grievance redress mechanism (GRM) ,and act as the GRM secretary

to make sure that the GRM effectively handles environmental and social concerns of project affected persons.

(ix) Build institutional capacity in environmental management and railway safety, including conducting public awareness programs.

65. The EPC contractor will also be responsible for implementing mitigation measures. Within 30 days after contract award and prior to commencing any physical works, they will develop site-specific EMPs which will be endorsed by the PMSC before submission to PMU for approval. The site-specific EMP will outline how the EPC contractor intends to implement the EMP at a specific site or for a specific issue to ensure that all mitigation measures are implemented. They should hire a full-time environmental officer to prepare weekly environmental checklists and an environmental section of the EPC contractor’s monthly progress reports28 that shall be submitted to the Engineer for review. The environmental officer shall provide daily toolbox training at the construction camp and construction sites, and keep a record of all monthly and toolbox trainings. 66. PMSC (Engineer) is responsible for reviewing designs, conducting environmental instrumental monitoring. including of the public health monitoring plan, and providing guidance and ensuring safeguard compliance of civil works by the EPC contractor. The PMSC shall have the right to suspend works or payments if the EPC contractor violates any of his obligations under the EMP and site-specific EMPs. The PMSC will prepare a section on environment, health and safety in its quarterly progress reports, and assist PMU in preparing the semiannual and final environmental reports. They include a part-time international environmental specialist, and full-time national environmental specialist to assist the PMU and TPP Environmental Manager to implement the EMP and CAPs. The PMSC’s terms of reference are in Appendix 3. 67. Involuntary resettlement. The project is categorized as C for involuntary resettlement impacts. The resettlement due diligence based on the project’s preliminary design suggests that there will be no land acquisition and resettlement impacts, as the construction works will be located within the boundaries of the Talimarjan TPP. 68. If any changes or additional land requirements or involuntary resettlement impacts are identified based on the detailed design or during implementation, a land acquisition and resettlement plan will be prepared following the land acquisition and resettlement framework and

28 The monthly reports, which will include the weekly environmental checklists, shall contain sections relating to (i)

general progress of the project; (ii) environmental Incidents (e.g. spills of liquids, accidents); (iii) progress of any environmental initiatives (e.g. energy savings, recycling); records of any environmental monitoring, both observational and instrumental; and (iv) conclusions and recommendations.

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SPS 2009. The plan should be approved by ADB before awarding the EPC contract and implemented before works commence.29 69. The GRM will handle social safeguard issues. Consultations were carried out during project preparation and resettlement due diligence. JSC Talimarjan TPP, through the PMU, shall ensure continued meaningful consultations with the stakeholders during project implementation. 70. Indigenous peoples. The project will not impact any indigenous people as defined in SPS 2009, and so the project is categorized as C for indigenous peoples impacts.

VIII. GENDER AND SOCIAL DIMENSIONS

71. The Gender Strategy Action Plan (Appendix 4) will be implemented by JSC Talimarjan TPP. Specific gender actions are budgeted at $30,000 from the ADB loan as consulting services, unless otherwise stated.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Project Design and Monitoring Framework

Impact the Project is Aligned with

Reliable energy supply increased and energy intensity reduced (Decree of the President of the Republic of Uzbekistan No UP-4707 and 4947)

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Risks Outcome Efficiency and reliability of clean power supply improved

a. By 2024, total power generation increased to 65.3 TWh (2016 baseline 58.6 TWh per year)

a-c. annual business performance report

Change in government policy or commitment shifts resources away from clean power sector development

b. By 2023, weighted average thermal efficiency of Talimarjan TPP increased to 52% (2017 baseline: 48.00%)

c. By 2023, greenhouse gas emission factor of Talimarjan TPP reduced to 0.4000 tCO2/MWh (2017 baseline: 0.4268 tCO2/MWh, 2012 baseline: 0.516 tCO2/MWh)

Outputs

1. Talimarjan TPP capacity increased

Two combined heat and power CCGT units of 450MWa capacity

operational acceptance certificate

Delay in procurement and consultant recruitment by the

29 JSC Talimarjan TPP will ensure that the final land acquisition and resettlement plan, if required, (i) adequately

resolves all involuntary resettlement issues, (ii) describes specific mitigation measures that will be taken to address the issues, and (iii) ensures sufficient resources to do so. No physical and economic displacement will occur until full compensation at replacement cost and all other entitlements are paid to the displaced persons.

26

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Risks commissioned by 2023 (2017 baseline: 0)

contract registration by relevant government authorities

2.JSC Talimarjan TPP financial operation and performance improved

By 2019,

2a. Power sector master plan for peak demand management prepared and adopted by the government (2017 baseline: not adopted)

2b. Tariff structure and regulatory framework reform roadmap prepared and adopted by the government (2017 baseline: not adopted)

2a. Power sector master plan

2b. tariff reform roadmap

Change in government commitment for tariff reform and continued tariff increase

2c. Detailed financial recovery action plan prepared and implemented by Q4 2019

2c. financial recovery plan

2d. JSC Talimarjan TPP financial reports adopt international accounting and auditing standards (2017 Baseline: Not adopted)

2d. IFRS financial statements of JSC Talimarjan TPP

2e. At least 20 JSC Talimarjan TPP staff, of which at least 5 are female, have increased knowledge on power development planning (2017 baseline: 0)

2e. training completion report

3. Institutional capacity enhanced

3a. By 2023, at least 100 JSC Talimarjan TPP staff, of which at least 20 are female, hired and reporting increased knowledge on operations and maintenance of CCGT (2017 baseline: 0)

3b. By 2023, Maintenance technical advisory service agreement for CCGT is secured. (2017 baseline: 0)

3c. By 2023, community social center operation plan developed and implemented (2017 baseline: Not implemented)

3a. Training completion report

3b. Maintenance service agreement

3c. Progress report

27

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Risks

Key Activities with Milestones

1. Talimarjan TPP capacity increased 1.1 Issue bidding documents to procure CCGT plant (Q1 2020)

1.2 Complete recruitment of the project implementation consultant (Q3 2019) 1.3 Award EPC contract for CCGT plant (Q1 2021) 1.4 Commission the first CCGT unit (Q1 2022) 1.5 Issue operational acceptance for CCGT plant (Q4 2022)

2. JSC Talimarjan TPP financial operation and performance improved 2.1 Prepare power sector master plan (Q4 2018) 2.2 Develop a tariff methodology and regulatory framework reform roadmap (Q1 2019) 2.3 Prepare financial statement for Talimarjan TPP based on IFRS, audited in compliance with ISA (Q4

2019) 2.4 Prepare and implement detailed financial recovery action plan for JSC Talimarjan TPP (Q4 2019)

3. Institutional capacity enhanced 3.1 Train JSC Talimarjan TPP staff for financial management, revaluation and debt management,

institutional strengthening of consolidated IFRS reporting (Q4 2023) 3.2 Secure a maintenance technical advisory service agreement for CCGT (Q2 2023) 3.3 Complete recruitment of social development consultant (Q3 2019) Project Management Activities

Recruit qualified staff for project management unit

Prepare training program for project management staff in procurement, project management, safeguards, financial management, and power plant operation and maintenance

Conduct training and evaluate the results

Inputs Asian Development Bank (regular OCR loan): $ 450 million (loan) European Bank for Reconstruction and Development cofinancing: $240 million (loan) JSC Talimarjan TPP cofinancing: $51 million Uzbekistan Fund for Reconstruction and Development cofinancing: $ 177 million (loan) Government: $150.6 million Assumptions for Partner Financing Not applicable

CCGT = combined cycle gas turbine; EPC = engineering, procurement, and construction; IFRS = international financial reporting standards; ISA = international standards on auditing; JSC = Joint Stock Company, MW = megawatt; Q = quarter; TPP = thermal power plant; tCO2/MWh = ton carbon dioxide equivalent per megawatt hour; TWh =terawatt hour. a The indicated output is nominal Source: Asian Development Bank.

B. Monitoring

72. Project performance monitoring. The status of the following project performance indicators will be updated in the quarterly progress reports, semi-annual review missions, and the midterm review mission expected in two years from loan effectiveness:

(i) installed generation capacity by power plants (MW), (ii) power supply by power plants and power consumption by region and type

(gigawatt hour[GWh]/year), (iii) power tariff structure and level for Talimarjan TPP (sum/kilowatt hour [kWh]), (iv) power trade volume (GWh/year) and amount ($ million), (v) power supply by each power plant (GWh/year), and

28

(vi) power tariff structure and level for each power plant and to end-consumers (sum/kWh), and

(vii) power consumption by region and type (GWh/year)

73. Compliance monitoring. Loan covenants—policy, legal, financial, economic, environmental, and others—will be monitored through quarterly progress reports and review missions. 74. Environmental monitoring. The EPC contractor’s environmental officer will prepare weekly environmental checklists, and the environmental section in monthly progress reports that shall be submitted to the PMSC for review. 75. Instrumental monitoring for environmental quality such as air, noise, vibration, and water will be performed monthly by the PMSC. Schedules, parameters, and locations in the EMP and shall be updated. Based on site inspections and the EPC contractors’ reports, the PMSC will then prepare the environmental section of the quarterly project progress reports to be submitted to the PMU. They will also assist the PMU in preparing the semi-annual and final environmental monitoring reports, including post-construction environmental audits.

76. In January and July every year, the PMU will submit semi-annual environmental monitoring reports to ADB and relevant government authorities, which will be disclosed in JSC Talimarjan TPP’s website in Uzbek or Russian, and ADB’s website in English. After project commissioning, JSC Talimarjan TPP will submit to ADB an annual environmental monitoring report until the PCR is issued. As required by SPS 2009 for category A projects, third-party monitoring will be arranged through the local environmental authority. This agency will undertake regular site visits to calibrate and validate the monitoring results. 77. Gender and social dimensions monitoring. The status of implementing the Gender Strategy Action Plan will be included in JSC Talimarjan TPP's quarterly progress reports, and during the semi-annual review missions, and midterm review mission. C. Evaluation

78. Inception mission. ADB fielded an inception mission after loan effectiveness to re-establish the working relationship between ADB and JSC Talimarjan TPP, update the project implementation schedule and contract award and disbursemet projections, and refresh the government’s understanding on ADB's procedures. 79. Review missions. ADB will field semi-annual review missions to check overall project implementation, and update the project implementation schedule. 80. Midterm review mission. ADB will field a midterm review mission within two years after loan effectiveness or after completion of procurement, whichever is later, to assess whether the project objectives in the design and monitoring framework are still achievable. 81. Project completion review mission. ADB will field a review mission to prepare a project completion report. JSC Talimarjan TPP will also submit its own project completion report to ADB within 3 months of project completion.30

30 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-Sector-

Landscape.rar.

29

D. Reporting

82. JSC Talimarjan TPP will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for the next 12 months; and (iii) a project completion report. To ensure that the project will continue to be both viable and sustainable, the APFS and AFS, together with the associated auditor's report, should be adequately reviewed.

E. Stakeholder Communication Strategy

83. Project information will be strategically disseminated through media at main milestones including contract awards and project completion. A GRM is established at the project site gate, by phone and email, and through public consultation events. In compliance with the minimum requirements of ADB’s Public Communications Policy (2011), JSC Talimarjan TPP will designate an officer as focal point for regular contact with project-affected people and other stakeholders. The designated officer will be responsible for obtaining the information from the complainant to identify source of problem and verify the complaint. The PMU shall provide project performance updates on progress every 6 months. 84. Project documents will be disclosed on the ADB website. Table 5 outlines the framework communication strategy to be implemented by ADB.

Table 5: ADB’s Disclosure of Project Documents Project Documents

[language] Frequency Audience(s)

Project Data Sheet (PDS) [English/Russian]

initial PDS within 30 days of approval of the concept paper; quarterly afterwards

General Public

Design and Monitoring Framework (DMF) [English]

draft DMF after post fact-finding mission General Public

Environmental Impact Assessment [English/Russian]

at least 120 days before Board consideration General Public, project-affected people in particular

Resettlement Planning Documents [English/Russian]

before approval General Public, project-affected people in particular

Report and Recommendation of the President [English]

within 2 weeks of Board approval General Public

Legal Agreements [English] within 2 weeks of Board approval General Public

Initial Poverty and Social Assessment [English]

within 2 weeks of Board approval General Public, project

Project Administration Manual [English]

within 2 weeks of Board approval General Public

Environmental Monitoring Reports [English]

Semi-annually during implementation General Public, project-affected people in particular

Major Change to Project [English] within 2 weeks of approval of the change General Public

Project Completion Report [English]

within 2 weeks of circulation to the Board for information

General Public

Business opportunities, bidding process and guidelines, results of bidding process,

per project progress General Public

Annual audited project financial statements [English]

Within 30 days of ADB’s receipt or 14 days of ADB’s confirmation of their acceptability

Evaluation reports [English] Routinely disclosed, no specific requirements

30

X. ANTICORRUPTION POLICY

85. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.31 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of JSC Talimarjan TPP and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.32 86. To support these efforts, relevant provisions are included in the loan/grant agreement/regulations and the bidding documents for the project. Procurement will follow ADB's Procurement Guidelines, consultant selection will adopt ADB's Guidelines on the Use of Consultants, and disbursement will follow ADB's disbursement policies, guidelines, practices, and procedures.

XI. ACCOUNTABILITY MECHANISM

87. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.33

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

88. All revision/updates during course of implementation should be retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the Project Administration Manual.

Table 6: Updates to Project Administration Manual Date PAM Section Revision/Updates

June 2019 Various Updates after inception mission mainly to reflect EBRD financing

February 2020 Various Updates following change in executing agency from Uzbekenergo to JSC Talimarjan TPP

Procurement Plan

Replaced international competitive bidding with open competitive bidding for the EPC contract

EBRD = European Bank for Reconstruction and Development; EPC = engineering, procurement and construciton; JSC Talimarjan TPP = Joint Stock Company Talimarjan Thermal Power Plant

31 Anticorruption Policy: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 32 ADB's Integrity Office web site: http://www.adb.org/integrity/unit.asp 33 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.

Appendix 1 31

UPDATED FINANCIAL MANAGEMENT ACTION PLAN

Risk Type Risk Description Risk

Assessment

Management Plan/

Mitigation Measures

Timeline Responsibility

Inherent Riska

Country-level risks

Similar to TPPs JSC Moderate Similar to TPPs JSC

Entity-specific risks

Similar to TPPs JSC High Similar to TPPs JSC 2019-2022 EBRD and JSC Talimarjan TPP

Overall Inherent Risk Substantial

Control Riskb

Planning and budgeting

JSC Talimarjan TPP does not generate management reports that conduct variance analysis of budget against actuals to track budget performance and, if required, to take corrective actions during the year.

As an entity with greater independence after unbundling, robust medium to long term business plan that includes annual investment and financing plans and KPIs, for effective management and financial stewardship of the company is needed.

Moderate

High

Consider developing management reporting that includes tracking budget performance against actuals, conducting budget variance analysis and initiating corrective action if required to maintain budget discipline

Develop annual business plan for investments, financing and KPIs.

2020

JSC Talimarjan TPP

Funds flow Party to the SLA with MoF will change from Uzbekenergo to JSC Talimarjan TPP with possible inherent initial transition issues. However, the funds flow mechanism will essentially remain unchanged with continued direct payments to the EPC contractor and consultants and the existing PMU will continue to function as previously.

Moderate Ensure that proper and documented hand over takes place to avoid any initial teething problems after the loans are reassigned.

Staffing The organization and accounting function for both entities are adequately staffed.

Low

Accounting There are a number of weaknesses with regard to the recording of property, plant and equipment, including that it is not in line with international standards, which materially affects the financial statements.

High

The generation asset revaluation report, including impairment models and relevant assets management procedures to be reflected in the accounting records including depreciation of the individual assets that have been revalued.

2019 JSC Talimarjan TPP

32 Appendix 1

Risk Type Risk Description Risk

Assessment

Management Plan/

Mitigation Measures

Timeline Responsibility

Internal audit There is currently no internal audit function within JSC Talimarjan TPP. This could result in the lack of checks and balances to ensure compliance with policies and procedures and to reduce the risk of organizational inefficiencies, misappropriation and waste.

The new internal auditors need to be provided with the appropriate training and familiarization with the organization’s operations.

Audit committees have not yet been set up to provide proper guidance and supervision of the internal audit function.

High

High

High

Recruit the internal auditors as per the establishment strength as soon as possible.

A program for familiarization of the new internal auditors with ’the respective entities’ operations and procedures needs to be put in place in order for the internal auditors to function effectively as soon as possible following their recruitment.

Set up Audit Committees in each of the entities to which the internal auditors will report.

2019

JSC Talimarjan TPP

Financial reporting

JSC Talimarjan TPP lacks the capacity and skills to prepare financial statements in accordance with IFRS.

IFRS-compliant financial statements prepared under Uzbekenergo have been significantly delayed.

High Complete training program on IFRS for two accountants.

2019 JSC Talimarjan TPP

Information systems

The information systems for accounting in the companies are based on manual bookkeeping and application of accounting software 1C Enterprise with some limited customization of selected accounting and reporting functions.

The current accounting module for fixed assets is based on NAS and is not IFRS compliant.

High

High

Complete on-going efforts to migrate all TPP entities to the same version/ platform of the 1C software, which will enable system-based consolidation of financial data, leading to fewer errors and hence more reliable financial analysis.

Update the fixed asset software module to become IFRS compliant once asset

2020 JSC Talimarjan TPP

Appendix 1 33

Risk Type Risk Description Risk

Assessment

Management Plan/

Mitigation Measures

Timeline Responsibility

revaluation is completed.

External audit

National auditing standards are not fully aligned with ISA and audit reports based on national standards are somewhat limited in terms of detail as compared to international disclosure standards.

High

Ensure that JSC Talimarjan TPP’s annual financial statements will be audited by independent auditors in accordance with ISA.

2020 JSC Talimarjan TPP

Overall Control Risk High -

Overall Risk High -

ADB = Asian Development Bank, EBRD = European Bank for Reconstruction and Development, FMIS = financial management information system, IFRS = International Financial Reporting Standards, ISA = International Standards on Auditing, KPI = key performance indicator, JSC = Joint Stock Company, NAS = National Accounting Standards, PMU = project management unit, SLA = subsidiary loan agreement, TPP = Thermal Power Plant. a Inherent risk is the susceptibility of the program financial management system to factors present in its operating

environment, such as country- or sector-level rules and regulations, and the agency’s working environment (assuming absence of any checks or internal controls).

b Control risk is the risk that the program’s accounting and internal control framework are inadequate to ensure program funds are used economically and efficiently and for the purpose intended, and that the use of funds is properly reported.

Source: Asian Development Bank.

34 Appendix 2

UPDATED PROCUREMENT PLAN

Project Name: Power Generation Efficiency Improvement Project Project Number: 49253-003 Approval Number: Loan 3621/JFPR TA 9459 Country: Uzbekistan Executing Agency: Joint Stock Company Uzbekenergo/

Talimarjan TPP

Project Procurement Classification: Category A Implementing Agency: Uzbekenergo-Talimarjan

Project Procurement Risk: Medium Project Financing Amount: US$ 1,068,600,000

ADB Financing: US$ 450,000,000 Cofinancing (ADB Administered): Non-ADB Financing: US$ 618,600,000

Project Closing Date: 30 June 2023

Date of First Procurement Plan: 12 December 2017 Date of this Procurement Plan: __ December 2019 Advance Contracting: No e-GP: No

A. Methods, Thresholds, Review and 18-Month Procurement Plan

1. Procurement and Consulting Methods and Thresholds

Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works Method Threshold Comments

Open Competitive Bidding for Works US$ 5,000,000 and Above Prior review

Consulting Services Method Comments

Consultant's Qualification Selection for Consulting Firm Prior review Quality- and Cost-Based Selection for Consulting Firm Prior review

2. Goods and Works Contracts Estimated to Cost $1 Million or More

The following table lists goods and works contracts for which the procurement activity is either ongoing or expected to commence within the next 18 months.

Package Number

General Description

Estimated Value

Procurement Method

Review (Prior/Post)

Bidding Procedure

Advertisement (quarter/year) Comments

PC-001 Construction of two combined cycle gas turbine units

753,900,000

Open Competitive Bidding

Prior Two-Stage

Q4 / 2019 Prequalification of Bidders: N Domestic Preference Applicable: N Bidding Document: Plant Comments: to be financed by ADB, EBRD and UFRD. Excludes taxes and duties to be financed by the government.

3. Consulting Services Contracts Estimated to Cost $100,000 or More

The following table lists consulting services contracts for which the recruitment activity is either ongoing or expected to commence within the next 18 months.

Appendix 2 35

Package Number

General Description

Estimated Value

Recruitment Method

Review (Prior/Post)

Advertisement (quarter/year)

Type of Proposal Comments

CS-004 External audit (three multi-year contracts)

600,000 Cost-Quality Selection

Prior Q1 / 2020 Simplified Technical Proposal

Assignment: International Comments: to be financed by ADB

B. List of Awarded and Ongoing, and Completed Contracts

The following tables list the awarded and ongoing contracts, and completed contracts.

Goods and Works Package Number

General Description

Estimated Value

Awarded Contract

Value Procurement

Method Advertisement

(quarter/year) ADB Approval

of Contract Award

Comments

None

Consulting Services Package Number

General Description

Estimated Value

Awarded Contract

Value Recruitment

Method Advertisement (quarter/year)

ADB Approval of Contract

Award Comments

CS-002 Power sector reform and sustainability support program

1,000,000 999,800 Quality and Cost-Based Selection

Q4 / 2017 20-AUG-2018

Financed under JFPR TA 9459. Contract signed with Mott MacDonald Limited (UKG) in association with Corporate Solutions Consulting Limited (UKG) on 20 August 2018.

CS-001 Project management and supervision consultant

8,000,000 7,967,550 Quality and Cost-Based Selection

Q4 / 2018 06-SEP-19 Contract signed with JV AF-Consult Ltd (Switzerland)/BC Business Consulting GmbH (Germany) on 12 September 2019.

CS-003 Roadmap for tariff reform for improved sector sustainability

1,000,000 900,000 Quality and Cost-Based Selection

Q4 / 2017 10-MAY-18 Financed under JFPR TA 9459. Contract signed with Corporate Solutions Consulting Limited (United Kingdom) on 10 May 2018.

Appendix 3 43

TERMS OF REFERENCE OF PROJECT MANAGEMENT AND SUPERVISION CONSULTANT

A. Background 1. Under the Power Generation Efficiency Improvement Project, two combined cycle gas turbine (CCGT) units with the total capacity of at least 900 MW will be built at the Talimarjan TPP, located in Kashkadarya region, contributing to energy saving, greenhouse gas emission reduction, and reliable power supply in Uzbekistan. 2. Joint Stock Company Talimarjan Thermal Power Plant (JSC Talimarjan TPP), the project executing agency obtained ADB and EBRD (European Bank for Reconstruction and Development) financing for the EPC (Engineering, Procurement and Construction) “turnkey” contract and ADB financing for the project management and supervision consultant. B. Objective of the Assignment 3. JSC Talimarjan TPP requires a multidisciplinary team of international and national consultants to assist them in project management, procurement, supervising CCGT construction, testing and commissioning, and capacity development. C. Scope of Work 4. Project management. The consultant will prepare necessary project plans, progress reports, payment certificates, provisional and final take over certificates, claims evaluation reports, project final report and any other project management documents following good practice and JSC Talimarjan TPP and ADB requirements. The consultant will take any action under the EPC contract designating the Consultant as “Engineer”, for which action, pursuant to such EPC contract, the written approval of the Client as “Employer” is required. 5. The consultant will provide services to the Project Management Unit (PMU) under JSC Talimarjan TPP related to preparing and implementing a Project Performance Monitoring System (PPMS) to evaluate effectiveness of the project. The PPMS will measure project performance against the parameters as set out in the Design and Monitoring Framework of the Report and Recommendation of the President. The PPMS will establish baseline data and benchmarks, collect necessary information, monitor progress, identify benefits and evaluate social impact. 6. Procurement. The consultant shall provide the following services to JSC Talimarjan TPP and PMU: (i) the preparation and finalization of the bid documents for the EPC contract; (ii) the evaluation of the bid proposals and preparation of bid evaluation reports under the EPC contract bid (tender), including, but not limited to, carrying out the required bidding procedures such as the preparation of clarification letters and other necessary documents under the bid;(iii) conducting the EPC contract negotiations and discussion of the contract terms. The bid on the EPC contract will be conducted under the ADB’s two-stage procurement procedure and will follow ADB’s Procurement Policy and Procurement Regulations (2017, as amended from time to time). 7. Review of project technical (engineering) documents and construction supervision. The consultant shall provide services on the supervision (control) of all aspects of the EPC contractor's works, including commissioning of the CCGT units. This services will include, but not will be limited to (i) review and approval of the contractor's designs; (ii) developing and implementing a construction quality assurance program;(iii) monitoring contractor's work

44

schedule; (iv) inspecting materials before shipment upon arrival and upon erection; (v) comparing as-built drawings to design;(vi) monitoring implementation of health, safety and environmental (HSE) measures, including the environmental management plan, and providing early warning of any potential HSE risks; and (vii) mitigating shortcomings in any of these areas.

8. The Consultant shall ensure the development and implementation of a document flow between the EPC Contractor, Consultant, PMU, JSC Talimarjan TPP and all other parties involved in the project implementation in order to ensure quality in the control, transfer, execution, approval, distribution and control of project documentation execution deadlines; ensure the verification of the work done by the contractor and the issuance of a certificate (interim certificates) for the work performed and for the goods supplied by the contractor that are mandatory for payments from ADB; prepare quarterly reports on payments, work on claims management, manage project accounts and analyze the causes of delays.

9. Testing, pre-commissioning and commissioning. For each CCGT component subject to pre-commissioning and commissioning works, the consultant will witness selected tests and review the test results and submit a report; will assist the EPC contractor and JSC Talimarjan TPP in carrying out the pre-commissioning and commissioning works in order to review for their compliance with the manufacturer's requirements and the criteria of the initial project design. 10. The EPC contractor will provide training on the operation of the power plant and all its systems. The consultant will assist JSC Talimarjan TPP in this phase of the project and coordinate its work as required with JSC Talimarjan TPP and the EPC contractor. 11. Provision of additional services within reasonable limits requested by JSC Talimarjan TPP in order to complete the project successfully. 12. Capacity development. The consultant shall work with JSC Talimarjan TPP counterpart staff and provide on-the-job training on procurement, new technology management, CCGT operation and maintenance, HSE and environmental safeguards, project financial control, and gender. D. Required Qualifications and Inputs

13. The consultant shall have provided consulting engineering services, including evaluation of bid proposals for similar EPC contracts, and construction supervision on at least two completed projects involving a CCGT with the total capacity of at least 300 MW in the last 10 (ten) years. 14. It is expected that 208 person-months of international consulting services will be needed from a firm specializing in project management, audit and construction supervision of CCGT power plants. The consultant will be supported by 304 person-months of national consulting services with expertise in similar areas.

Table 1: Summary of Key Expert Positions and Person-Months Key Expert (Consultant)Position Number of Person-Months

International National 1. Power Plant Engineer-Team Leader (international) 42 - 2. Deputy Team Leader (national) - 42 3. Mechanical Engineer 30 36 4. Electrical Engineer 30 36 5. Control and Instrumentation Engineer 20 24

Appendix 3 45

Key Expert (Consultant)Position Number of Person-Months International National

6. Civil Engineer 20 36 7. Commissioning Engineer 18 14 8. Procurement Specialist 6 6 9. Contract Administrator 24 36 10. Environmental Safeguards Specialist 12 28 11. Social Safeguards and Gender Specialist - 10 12. Technical Expert (back office) 6 -

13. Office Administrator (non-key expert) - 36 Total 208 304

Table 2: Key Experts’ Qualifications and Tasks

Expert (Consultant)

Preferred Minimum Qualifications

Tasks

For all international positions, Russian language skills are desirable and English language skills are compulsory. For all national positions, English language skills are desirable and Russian language skills are compulsory.

International Experts Power Plant Engineer -Team Leader

• University degree in engineering. • 20 years of professional

experience, including design and project management of power plant projects.

• 10 years of professional experience on CCGT projects in the field of energy, of which at least 1 year as Team Leader.

• Develop a comprehensive project work program and implementation schedule.

• Prepare and finalize bidding documents and bid evaluation reports and support the entire process of procurement of EPC contract.

• Attend and assist the Client in undertaking factory inspection tests of key equipment in accordance with inspection plan.

• Monitor project progress against plan, report on progress, and propose remedial measures as necessary.

• Coordinate activities of the consultant team including both field and home office staff.

• Ensure contractor's designs and works are executed following project requirements.

• Review CCGT design (technical characteristics) prepared by the PPTA consultants;

• Develop and maintain a project safety plan. Ensure compliance with plan.

• Develop and maintain a project Quality Assurance plan. Ensure compliance with plan.

• Develop, implement and upgrade a document flow between the EPC Contractor, Consultant, PMU, JSC Talimarjan. TPP and all other parties involved in the project implementation.

• Ensure training of client counterpart staff through on-the-job training and classroom training programs.

• Review and update project schedule based on the contract using project management software such as ”primavera” or equivalent.

46

Expert (Consultant)

Preferred Minimum Qualifications

Tasks

For all international positions, Russian language skills are desirable and English language skills are compulsory. For all national positions, English language skills are desirable and Russian language skills are compulsory.

• Set work program and target milestones for each phase based on the project plan.

• Monitor critical activities based on the project schedule and advise PMU.

• Prepares and submit updated work program and cash flow curve showing actual progress and identify areas of weakness and establishes means and methods for recovery, if any, as well as new critical activities.

• Monitor day to day work progress and prepare the periodic program and report.

• Maintain and record update of site work. progress obtained from EPC contractor.

• Prepares monthly report reflecting work progress summary.

• Report to PMU about the current work progress and make comparison between plan and actual progress and study impact of alternative approaches to work.

• Participate in project meetings and discussions with PMU as required.

• Assists in preparing work program, cash flow and manpower histogram for Client and ADB

• Performs other duties and responsibilities as may be assigned from time to time.

Mechanical Engineer

• University degree in engineering. • 10 years of professional

experience, including design and project management of power plant projects, including at least one CCGT project.

• Contribute to the preparation and finalization of bidding documents and bid evaluation reports, and support the entire process of procurement of EPC contract.

• Attend and assist the Client in undertaking factory inspection tests of key equipment in accordance with inspection plan.

• Review contractors’ design submissions. • Supervise contractors’ works. • Monitor progress against plan. • Certify progress payments. • Contribute to training of client counterpart

staff through on-the-job training and classroom training programs.

• Ensure adherence to project safety plan. • Certify As-Built drawings. • Ensure adequacy of operation and

maintenance manuals. Electrical Engineer

As above As Above

Control and Instrumentation Engineer

As Above As Above

Civil Engineer As Above As Above

Appendix 3 47

Expert (Consultant)

Preferred Minimum Qualifications

Tasks

For all international positions, Russian language skills are desirable and English language skills are compulsory. For all national positions, English language skills are desirable and Russian language skills are compulsory.

Commissioning Engineer

• University degree in engineering • 10 years of professional

experience, including design and project management of power plant projects.

• Experience as Commissioning Engineer on at least 2 CCGT power plants.

• Develop an inspection and testing plan covering factory and site tests.

• Review and approve all final procedures/methods for pre-commissioning and commissioning works in accordance with applicable international standards.

• Supervise testing, pre-commissioning and commissioning works from the consultant’s side.

• Review contractor’s reports on testing and pre-commissioning works.

• Review and ensure that calibers/certificates of the tested equipment meet current standards.

• Prepare a report for the Client on issuing the final acceptance certificate.

• Ensure training of client counterpart staff through on-the-job training and classroom training programs.

• Ensure adherence to project safety plan. • Ensure adequacy of operation and

maintenance manuals. Procurement Specialist

• University degree. • 15 years professional

experience in procurement for power plant projects.

• Advance knowledge of international organizations’ procurement regulations and procedures.

• Experience in procurement for projects financed by international financial organizations (IFIs), especially ADB-funded projects.

• Direct experience in public sector procurement (legislation, institutional framework, systems and training).

• Experience in developing countries in the region.

• Assist JSC Talimarjan TPP in creating a bidding committee on the EPC contract bid and with the committee’s work.

• From the consultant’s side together with the Team Leader of the consultants lead the preparation and finalization of bid evaluation reports and other documents on the EPC contract bid in accordance with procurement regulations and procedures of Government and ADB.

• Directly help with other activities of the EPC contract bid.

• Develop PMU’s procurement capacity.

Contract Administrator

• University degree or professional qualification in accounting and/or business or equivalent.

• 10 years of professional experience, including experience as Contract Administrator on infrastructure projects.

• Prepare an overall project disbursement plan, monitor costs, and maintain project accounts following accounting standards acceptable to JSC Talimarjan TPP and ADB.

• Develop payment certification procedures. • Help PMU prepare withdrawal applications and

disbursement projections. • Establish a computerized monitoring program

using off-the-shelf software packages.

48

Expert (Consultant)

Preferred Minimum Qualifications

Tasks

For all international positions, Russian language skills are desirable and English language skills are compulsory. For all national positions, English language skills are desirable and Russian language skills are compulsory.

• Evaluate contractor claims for additional costs and extensions of time.

• Help PMU prepare contract amendments and/or variation orders.

• Help PMU prepare Requests for Proposals for additional consulting services as required.

• Provide specialized technical and administrative support to PMU as required.

Environmental Safeguards Specialist

• University Degree in Environmental Engineering/Science or equivalent.

• 10 years of professional experience, including experience in carrying out environmental studies of infrastructure projects and ensuring their delivery.

• Ensures the inclusion of an EMP into the bidding documents as needed, and assesses the bid proposals on the environmental safeguards part during the EPC contract bid.

• Ensure compliance with the Corrective Action Plan and Environmental Management Plan (EMP).

• Ensure compliance with environmental safeguards during the CCGT construction.

• Prepare an updated Environmental Action Plan report and semiannual environment monitoring reports acceptable to Government and ADB.

• Ensure training of client counterpart staff through on-the-job training and classroom training programs.

• Develop PMU’s capacity in environmental safeguards.

• Assist the PMU Environmental Specialist.

Technical Expert (back office)

• University degree in engineering.

• 15 years of professional experience, including construction planning and management of power plant projects, including at least one CCGT project.

• In home office provide specialized technical-engineering and other support as required.

• In home office execute other tasks related to the project implementation.

National Experts Deputy Team Leader

• University degree in engineering. • Professional experience in the

field of energy related to CCGT. • Familiar with Uzbekistan

legislation. • Experience with designing power

plants is preferred. • Experience with ADB and/or

other IFIs is preferred.

• Assist during the EPC contract bid. • Coordinate and help develop a

comprehensive project work program and implementation schedule.

• Help monitor and report on project progress against plan.

• Help coordinate activities of consultant team, including both field and home office staff.

• Help ensure that contractor's designs and works are executed in line with project requirements.

Appendix 3 49

Expert (Consultant)

Preferred Minimum Qualifications

Tasks

For all international positions, Russian language skills are desirable and English language skills are compulsory. For all national positions, English language skills are desirable and Russian language skills are compulsory.

• Help develop and maintain a project safety plan. Ensure compliance with plan.

• Help develop and maintain a project Quality Assurance plan. Ensure compliance with plan.

• Advise PMU staff on energy project management and administration.

• Coordinate with relevant government authorities and ADB to accelerate the approval process of relevant project documents.

• Advise the PMU and help coordinate the documentation and other requirements for registering the international consultants with the government.

• Develop, implement and upgrade a document flow between the EPC Contractor, Consultant, PMU, JSC Talimarjan TPP and all other parties involved in the project implementation.

• Help obtain customs clearance for equipment.

• Performs other duties and responsibilities as may be assigned from time to time.

Mechanical Engineer

• University degree in engineering.

• Professional experience in the field of energy related to CCGT.

• Experience in design and management of power plant projects in the power sector.

• Assist during the EPC contract bid. • Help review contractors, design submissions. • Help supervise contractors, works. • Monitor progress against plan. • Support with certifying progress payments. • Support with training of client counterpart

staff through on-the-job training and classroom training programs.

• Ensure adherence to project safety plan. • Support with certifying As-Built drawings. • Ensure adequacy of operation and

maintenance manuals. Electrical Engineer

As above As above

Control and Instrumentation Engineer

As above As above

Civil Engineer As above As above Commissioning Engineer

• Professional experience in the field of energy related to CCGT.

• Experience in design and management of projects in the power sector.

• Experience as a commissioning engineer.

• Help develop an inspection and testing plan covering factory and site tests.

• Help review contractors’ testing and commissions submissions.

• Support with supervising testing and commissioning as required.

50

Expert (Consultant)

Preferred Minimum Qualifications

Tasks

For all international positions, Russian language skills are desirable and English language skills are compulsory. For all national positions, English language skills are desirable and Russian language skills are compulsory.

• Support with training of client counterpart staff through on-the-job training and classroom training programs.

• Ensure adherence to project safety plan. • Ensure adequacy of operation and

maintenance manuals. Procurement Specialist

• University degree. • Knowledge of international

organizations’ and national agencies’ procurement regulations and procedures.

• 5 years of experience in procurement for projects financed by international financial organizations, preferably in ADB-funded projects.

• Assist JSC Talimarjan TPP in creating a bidding committee on the EPC contract bid and with the committee’s work.

• Help the International Procurement Specialist and PMU with the preparation and finalization of bid evaluation reports and other documents on the EPC contract bid in accordance with procurement regulations and procedures of Government and ADB.

• Develop PMU’s procurement capacity. • Execute different project procurement tasks

on PMU’s request if necessary. Contract Administrator

• University degree or professional qualification in accounting and/or business or equivalent.

• Experience as Contract Administrator on infrastructure projects.

• Assist during the EPC contract bid. • Help prepare an overall project disbursement

plan, monitor costs, and maintain project accounts following accounting standards acceptable to ADB.

• Help develop payment certification procedures.

• Help PMU prepare withdrawal applications and disbursement projections.

• Help establish a computerized monitoring program using off-the-shelf software packages.

• Help evaluate contractors’ claims for additional costs and extensions of time.

• Help PMU prepare Variation Orders. • Help PMU prepare Requests for Proposals

for additional consulting services as required. Environmental Safeguards Specialist

• University degree in Environmental Engineering/Science or equivalent

• Experience in carrying out environmental studies of infrastructure projects (including CCGT projects) and ensuring their delivery.

• Assist during the EPC contract bid. • Help ensure compliance with Environmental

Management Plan. • Help ensure training of client counterpart

staff through on-the-job training and classroom training programs.

• Assist PMU environmental specialist.

Social Safeguards and Gender Specialist

• University degree in sociology and/or gender or equivalent.

• Experience in carrying out social development and/or gender activities associated with infrastructure projects.

• Help ensure compliance with Gender Action Plan.

• Help ensure training of client counterpart staff through on-the-job training and classroom training programs.

• Assist PMU Social and Gender Specialist.

Appendix 3 51

Expert (Consultant)

Preferred Minimum Qualifications

Tasks

For all international positions, Russian language skills are desirable and English language skills are compulsory. For all national positions, English language skills are desirable and Russian language skills are compulsory.

Office Administrator (non-key expert)

• University degree and/or a professional qualification.

• 4 years of professional experience in a business environment.

• Fluent in Uzbek and Russian languages. Working level of English language required.

• Translate English/Russian/Uzbek documents as required.

• Provide secretarial support as required. • Make a list of contract and other documents

and archive them. • Assist with addressing applicable project

issues as required. • Records and updates information on

construction works received from the EPC contractor.

E. Reporting Requirements 15. Consultant shall prepare and submit to JSC Talimarjan TPP the required reports (documents) in English and Russian languages, each in two copies, including but not limited to Bid Evaluation Reports on the EPC bid, Inception Report, Monthly Monitoring Report, Quarterly Progress Report, Draft Final Report and Final Report as follows:

(i) Bid Evaluation Reports on the EPC bid with recommendations on the qualified bidders and award of the EPC turnkey contract must be submitted to JSC Talimarjan TPP within 3 months from the opening date of the proposals of each stage of the bid;

(ii) Inception Report on the provision of services shall be submitted to JSC Talimarjan TPP within the first month after the start of work at the site. The initial report should reflect the proposed work program and any existing obstacles to the successful completion of the project;

(iii) Quarterly Progress Reports shall be submitted to JSC Talimarjan TPP" within 10 days after each quarter, reflecting the progress achieved and problems encountered during the project implementation;

(iv) Semi-annual environmental reports during the construction period, as well as annual reports on the environmental monitoring during the operational period, should be submitted to "JSC Talimarjan TPP" within 10 days after each half-year/year;

(v) In addition to the Quarterly Progress Reports, within 10 days after each month Monthly Monitoring Reports shall be submitted to JSC Talimarjan TPP to inform the about the project progress and the current problems. JSC Talimarjan TPP in conjunction with ADB will review the project progress as well as monitor the achievement of the targets set;

(vi) Draft Final Report shall be submitted upon the project completion. Within one month from the date of submission of this report, a tripartite meeting will be organized with the participation of JSC Talimarjan TPP and the Consultant to discuss the Draft Final Report and review the issues identified in the report;

(vii) Final Report shall be submitted within one month after receiving comments from JSC Talimarjan TPP and ADB.

In addition, Consultant shall deliver the following documents:

52

Table 3: Required Documents No. Document name Due by Month of

Service # 1 Project Work Program and Implementation Schedule 3 2 Project Performance Measuring System 3 3 Safety Plan 3 4 Quality Assurance Plan 3 5 Counterpart Training Plan 6 6 Withdrawal Applications As required 7 Claims Evaluation As required

Further, the Consultant shall prepare any reports as required under the respective Loan Agreement and/or Project Agreement signed with EBRD. See for details: https://www.ebrd.com/work-with-us/projects/psd/talimarjan-power-project.html. Additional requirements, if any, to the above reports (documents) shall be agreed upon during the contract negotiations with the Consultant. 16. The engagement period of the consultancy contract is 44 months, expectedly from October 2019 to June 2023 on an intermittent basis. F. Counterpart Support

17. JSC Talimarjan TPP will provide and make available to the consultants, free of charge, the following to help the consultant carrying out the assignment:

(i) counterpart (local) staff and technical support; (ii) office space for the consultant team: sufficient office space with electricity and air

conditioning/heating and connections points for national and international telephone lines and internet. (Monthly telephone and internet expenses will be financed under the consultancy contract);

(iii) office furniture: desks, office chairs, and bookshelves/cabinets adequate to accommodate the full complement of international and local consultants;

(iv) organizational support: assistance in all arrangements for workshops, meetings, and field visits; and access to required data, maps and other relevant information.

18. The consultants will be responsible for their personal computers and other facilities for producing reports.

Appendix 4 43

UPDATED GENDER STRATEGY ACTION PLAN

Outcome: The Updated Gender Strategy Action Plan (GSAP) will contribute to the achievement of the overall outcome of the project, which is an improved power sector performance. Outputs: The updated GSAP will complement and strengthen ongoing gender actions under the first phase project. The updated GSAP will help enhance management and strengthen operational capacity by establishing women-friendly facilities and policies that promote women’s empowerment and gender equality, strengthen human resource capacity, and thus result to optimum productivity of the power plant employees.

Activities Indicators and Targets Baseline Responsibility Timeline

Output 1: JSC Talimarjan TPP capacity and efficiency increased 1.1. JSC Talimarjan TPP provides adequate and gender sensitive sanitation facilities for its employees.

• By the end of 2020, 2 separate toilets and 2 showers area available for each 100 female employees, by the end of 2020 4/4 and by 2021 5/5.

Shower rooms: currently 32 of 46 needed, toilets - 62 out of 101 needed (Source: Letter from Talimarjan power plant to PMU no 1459, 15 April 2013) 2 shower rooms out of 14 planned – constructed in June 2015. 39 toilets in the engineering and laboratory building to be completed in 2016.

JSC Talimarjan TPP

Ongoing

1.2. JSC Talimarjan TPP provides a gender sensitive working space for its employees

• By the end of 2020, 50% and by the end of 2020 75% of the female workers are satisfied with the break room, facilities

Spouse association room and 1 cafeteria offering hot food for ~1,500 workers

JSC Talimarjan TPP

Ongoing

Output 2: JSC Talimarjan TPP’s financial viability and performance improved 2.1. JSC Talimarjan TPP shares its profits through a Corporate Social Responsibility Program with the population in a gender sensitive manner

• By the end of 2020, a CSR program has been established.

• By the end of 2021, 0.1% of profits are used for activities benefiting women

No CSR program exists JSC Talimarjan TPP

Ongoing

Output 3: Enhanced Institutional capacity to foster sustainability 3.1. The PMU uses a Gender Specialist to manage and follow up GAP implementation

• A qualified gender and social specialist is recruited by the PMU within 3 months after the loan becoming effective.

JSC Talimarjan TPP

Ongoing

3.2. The PMU Gender Expert strengthens the capacity of all project staff in gender-responsive project management/ implementation

• Sensitization workshops for all project staff of PMU on implementation of GAP are delivered by PMU Gender Expert

PMU Gender Expert

Year 1 and refresher at Year 3

3.3. The PMU Gender Expert revitalizes gender sensitization and training of Talimarjan TPP and Uzbekenergo employees

• 100 employees are trained per year

• Half day gender sensitization/training for each new employee as part of induction

As of November 2016 - there were 404 women out of 1807 employees in TPP (22,36%); in Q4 2016 - 411 women out of 1816 (22.63%); in Q1 2 2017- 311 women -1520 (20 %)

accordingly.

PMU Gender Expert

Ongoing

44

Activities Indicators and Targets Baseline Responsibility Timeline 3.4. The PMU Gender Expert enhances the capacities of existing Gender Focal Points

• By the end of 2020, the Gender Focal Points consider themselves fully capable to perform task and have established department related GAP

• By the end of 2020, the Gender Focal Points are perceived by female employees as helpful in addressing challenges

• By the end of 2020, 50% of the male employees appreciate the work of the Gender Focal Points

In June 2014: Kurbanova Rayhon - Chairperson of Women’s Council at Talimarjan TPP, Ashurov Anvar -Trade Union, Xusanov Xakim - HR Department, Muxammadiev Baxodir, Deputy Director of Capital Construction and Khudaykulova Ozoda, Inspector on Gender Issues.

PMU Gender Expert

Ongoing

3.5. The Gender Focal Points offer a quality mentoring service for female employees

• By the end of 2020, a participatory need assessment has been completed for 90% of the female employees

• Each year 10% of the female employees benefit from mentoring and are satisfied with services

Gender Focal Points with support from PMU Gender Expert

Ongoing

3.6. JSC Talimarjan TPP provides equal opportunities for women to benefit from the employment opportunities related to the project

• Encourage EPC contractor to provide equal opportunities for women following principles of “equal pay for equal work” and comply with national labor standards, during the construction period (800 construction workers hired during project implementing phase)

• At least 20% of the 100 operation and maintenance permanent employees hired because of this project are women

In Nov. 2016 – 404 out of 1,807 employees of JSC Talimarjan TPP (22.4%) are women

JSC Talimarjan TPP

Ongoing

3.7. The Community Complex Center (CCC) is used to empower women and to expand opportunities for women’s income generation activities through a consultant

• In 2020, operation plan developed for the effective operation of CCC

Construction to be completed in 2018

JSC Talimarjan TPP

Ongoing

3.8. Gender-inclusive governance and management of the CCC with an operational plan that aims to empower women

• At least 1/3 of the management positions of the CCC are held by women by the end of 2020

• The management/ • operation plan is

evaluated once a year by an independent management consultant and at least rated as satisfactory with increasing rating

Community Development Business Plan to be completed in 2017

JSC Talimarjan TPP

Ongoing

Appendix 4 45

Activities Indicators and Targets Baseline Responsibility Timeline 3.9. The PMU Gender Specialist monitors and reports on GAP progress including in regular project monitoring reports based on gender key performance indicators

• Quarterly reports are considered satisfactory by ADB Gender Expert

• Monitoring tool developed. • Quarterly monitoring on

quantitative baseline data

PMU Gender Expert

Ongoing

3.10. JSC Talimarjan TPP operates an employee grievance management system that - among other issues - identifies employees that require additional gender sensitization training etc.

• By the end of 2020, the gender balanced grievance management system is operational

Gender Focal Points with support from PMU Gender Specialist

Ongoing