Document of The World Bank FOR OFFICIAL USE ONLY Report No: 66501-VN PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR188.3 MILLION (US$292 MILLION EQUIVALENT) TO THE SOCIALIST REPUBLIC OF VIETNAM FOR THE MEKONG DELTA REGION URBAN UPGRADING PROJECT February 27, 2012 Vietnam Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2012) Currency Unit = Vietnamese Dong (VND) VND20,850 = US$1 US$ 1 = SDR 0.64471207 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AAA Analytic and Advisory Activities AMT Aligned Monitoring Tool CA Cities Alliance CPRA Country Procurement Risk Assessment CPS Country Partnership Strategy DONRE Department of Natural Resources and Environment EIA Environmental Impact Assessment EMP Environmental Management Plan FA Financing Agreement FM Financial Management FMM Financial Management Manual GoV Government of Vietnam GTAP Governance, Transparency and Accountability Plan IBRD International Bank for Reconstruction and Development IDA International Development Association IFR Interim Financial Report IMA Independent Resettlement Monitoring Agency IPP Indigenous People's Plan (Ethnic Minority Plan) KfW Kreditanstalt fuer Wiederaufbau LIA Low Income Area MDR Mekong Delta Region MDR-UUP Mekong Delta Region Urban Upgrading Project MDUDP Management Division of Urban Development Projects MoC Ministry of Construction MPI Ministry of Planning and Investment NPV Net Present Value NUUP National Urban Upgrading Program O&M Operations and Maintenance ORAF Operational Risk Assessment Framework PAD Project Appraisal Document PAH Project Affected Household PCA Procurement Capacity Assessment PCU Project Coordination Unit PMU Project Management Unit PPU Project Preparation Unit PSC Provincial Steering Committee RP Resettlement Plan RPF Resettlement Policy Framework TA Technical Assistance TOR Terms of Reference UDA Urban Development Agency Regional Vice President: Pamela Cox Country Director: Victoria Kwakwa Sector Director: John A. Roome Sector Manager: Jennifer J. Sara Task Team Leader: Andre Bald Co-Task Team Leader Hoa Thi Hoang Mekong Delta Region Urban Upgrading Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ............................................................................................................ 1 B. Sectoral and Institutional Context ................................................................................. 2 C. Higher Level Objectives to which the Project Contributes .......................................... 3 II. PROJECT DEVELOPMENT OBJECTIVES ................................................................4 A. PDO............................................................................................................................... 4 B. Project Beneficiaries ..................................................................................................... 4 C. PDO Level Results Indicators ....................................................................................... 4 III. PROJECT DESCRIPTION ..............................................................................................5 A. Project Components ...................................................................................................... 5 B. Project Financing .......................................................................................................... 6 Lending Instrument ............................................................................................................. 6 Project Cost and Financing ................................................................................................. 6 C. Lessons Learned and Reflected in the Project Design .................................................. 6 IV. IMPLEMENTATION .......................................................................................................7 A. Institutional and Implementation Arrangements .......................................................... 7 B. Results Monitoring and Evaluation .............................................................................. 8 C. Sustainability................................................................................................................. 8 V. KEY RISKS AND MITIGATION MEASURES ............................................................9 A. Risk Ratings Summary Table ....................................................................................... 9 B. Overall Risk Rating Explanation .................................................................................. 9 VI. APPRAISAL SUMMARY ..............................................................................................10 A. Economic and Financial Analyses .............................................................................. 10 B. Technical ..................................................................................................................... 11 C. Financial Management ................................................................................................ 12 D. Procurement ................................................................................................................ 12 E. Social (including Safeguards) ..................................................................................... 12 F. Environment (including Safeguards) .......................................................................... 14 G. Other Safeguards Policies Triggered .......................................................................... 15 Annex 1: Results Framework and Monitoring .........................................................................16 Annex 2: Detailed Project Description .......................................................................................19 Annex 3: Implementation Arrangements ..................................................................................29 Annex 4: Operational Risk Assessment Framework (ORAF) .................................................42 Annex 5: Implementation Support Plan ....................................................................................46 Annex 6: Economic and Financial Analysis ..............................................................................49 Annex 7: Maps..............................................................................................................................59 PAD DATA SHEET VIETNAM MEKONG DELTA REGION URBAN UPGRADING PROJECT PROJECT APPRAISAL DOCUMENT . EAST ASIA AND PACIFIC REGION Vietnam Sustainable Development Unit Sustainable Development Department . Basic Information Date: February 27, 2012 Sectors: General water, sanitation and flood protection sector (40%); General transportation sector (40%); Sub-national government administration (20%) Country Director: Victoria Kwakwa Themes: Urban services and housing for the poor (67%); Participation and civic engagement (33%) Sector Manager/Director: Jennifer Sara/ John Roome EA Category: B Project ID: P113904 Lending Instrument: Specific Investment Loan Team Leader(s): Andre Bald, TTL Hoa Thi Hoang, Co-TTL Joint IFC: No . Borrower: Socialist Republic of Vietnam Responsible Agency: Contact: MOC: Mr. Duong Quoc Nghi Title: MOC: Director of MDUDP Cao Lanh: Mr. Nguyen Thanh Hai Cao Lanh: Director, PPU Can Tho: Mr. Le Hong Phat Can Tho: Director, PPU Ca Mau: Mr. Nguyen Huu Do Ca Mau: Deputy Director, PPU My Tho: Mr. Nguyen Hoang Dam My Tho: Director, PPU Rach Gia: Mr. Huynh Ba Trung Rach Gia: Director, PPU Tra Vinh: Mr. Diep Van Thanh Tra Vinh: Director, PPU Telephone No.: MOC: 84 (0) 913364382 Email: MOC: planning_gis@yahoo.com Cao Lanh: 84 (0) 913813844 Cao Lanh: nguyenthanhai065@gmail.com Can Tho: 84 (0) 913973226 Can Tho: hnguyenkimhoang@yahoo.com.vn Ca Mau: 84 (0) 913986420 Ca Mau: ktsnguyenhuudo@gmail.com My Tho: 84 (0) 913958679 My Tho: nguyenhoangdam@tiengiang.gov.vn Rach Gia: 84 (0) 982449949 Rach Gia: pmurachgia@yahoo.com.vn Tra Vinh: 0919253519 Tra Vinh: diepvanthanhtv . Project Implementation Period: Start Date: June 22, 2012 End Date: December 31, 2017 Expected Effectiveness Date: August 1, 2012 Expected Closing Date: December 31, 2017 . Project Financing Data(US$M) [ ] Loan [ ] Grant [ ] Other [x] Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost : 398.0 Total Bank Financing : 292.0 Total Co-financing : 106.0 Financing Gap : 0 . Financing Source Amount(US$M) BORROWER/RECIPIENT 106.0 IBRD - IDA: New 292.0 IDA: Recommitted - Others - Financing Gap - Total 398.0 . Expected Disbursements (in USD Million) Fiscal Year 2012 2013 2014 2015 2016 2017 2018 Annual 0.0 20.0 60.0 60.0 60.0 60.0 32.0 Cumulative 0.0 20.0 80.0 140.0 200.0 260.0 292.0 . Project Development Objective(s) To improve infrastructure services in Low Income Areas in Project Cities in the Mekong Delta Region. . Components Component Name Cost (USD Millions) The Project has seven parts consisting of six cities (Can Tho, My Tho, Cao Lanh, Ca Mau, Rach Gia, and Tra Vinh) and the Ministry of Construction (MoC). Each city has four components (below), the MoC has one. Component 1: Tertiary Infrastructure Upgrading in Low Income Areas Component 2: Supporting Primary and Secondary Infrastructure Component 3: Resettlement Sites Component 4: Implementation Support and Project Management Component 5: Technical Assistance to the Ministry of Construction to Implement the National Urban Upgrading Program Ministry of Construction 7.7 Cao Lanh 50.7 Can Tho 69.9 Ca Mau 41.2 My Tho 39.6 Rach Gia 40.2 Tra Vinh 42.7 . Compliance Policy Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [√] . Does the project require any waivers of Bank policies? Yes [√ ] No [] Have these been approved by Bank management? Yes [ √ ] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [√ ] Does the project meet the Regional criteria for readiness for implementation? Yes [√ ] No [ ] . Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 √ Natural Habitats OP/BP 4.04 √ Forests OP/BP 4.36 √ Pest Management OP 4.09 √ Physical Cultural Resources OP/BP 4.11 √ Indigenous Peoples OP/BP 4.10 √ Involuntary Resettlement OP/BP 4.12 √ Safety of Dams OP/BP 4.37 √ Projects on International Waterways OP/BP 7.50 √ Projects in Disputed Areas OP/BP 7.60 √ . Legal Covenants Name Recurrent Due Date Frequency N.a. Condition of Credit N.a effectiveness Description of Covenant The Additional Conditions of Effectiveness consist of the following: (a) The Recipient‟s Prime Minister has approved the Resettlement Policy Framework. (b) Each Project Province has adopted its respective Resettlement Action Plan. Name Recurrent Due Date Frequency Yes N.a N.a Description of Covenant The Recipient shall cause MOC to maintain, throughout the implementation of the Project, a Project Coordination Unit (“PCUâ€?) under the direction of qualified management provided with sufficient resources and staffed with competent personnel in adequate numbers including, among others, a Project director, an accountant, a procurement officer, an environment and social safeguard officer, and a quality assurance officer, in each case with qualifications, experience and under terms of reference acceptable to the Association. Name Recurrent Due Date Frequency No October 30, 2012 N.a Description of Covenant The PCU shall establish, by no later than October 30, 2012, a field office to be located in Can Tho City, and shall assign some of the PCU personnel to that office including, among others, the procurement officer, the environment and social safeguard officer, and the quality assurance officer. Name Recurrent Due Date Frequency Yes N.a N.a Description of Covenant The Recipient shall cause each Project Province to maintain, throughout the implementation of the Project, a Provincial Steering Committee (“PSCâ€?) with composition and under terms of reference satisfactory to the Association to be headed by the chairman or vice chairman of the Provincial People‟s Committee of the respective Project Province. Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall cause each Project City to maintain, throughout the implementation of the Project, a Project Management Unit (“PMUâ€?) under the direction of qualified management provided with sufficient resources, and staffed with competent personnel in adequate numbers including, among others, a Project director who should also be a member of the PSC, a technical staff, a financial management officer, a procurement officer, a contract management officer, a environment and social safeguard officer, and an accountant, in each case with qualifications, experience and under terms of reference acceptable to the Association Name Recurrent Due Date Frequency Yes N.a N.a Description of Covenant The Recipient shall: (a) cause each Project City to carry out its Respective Part of the Project in accordance with the Project Operations Manual (“POMâ€?), setting forth guidelines and procedures for the implementation of the Project, including: (i) guidelines, policies, procedures and requirements under the Project in regard to financial management, flow of funds, definition of roles and responsibilities, internal control and reconciliation, record keeping, reporting and auditing; (ii) guidelines and procedures for procurement consistent with the provisions of Section III of this Schedule 2, as well as the allocation of roles and responsibilities for procurement review and approval; and (iii) the Governance and Transparency Action Plan; and (b) not amend, revise or waive, nor allow to be amended, revised or waived, the provisions of said POM or any part thereof, without the prior written agreement of the Association. Name Recurrent Due Date Frequency Yes N.a. N.a Description of Covenant The Recipient shall cause each Project Province to promptly take all actions as shall be necessary to provide the counterpart funding necessary for implementing the relevant Project City‟s Respective Part of the Project in accordance with a schedule of payment plan acceptable to the Association, as said plan may be revised from time to time with the prior written agreement of the Association. Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall ensure that the Project is carried out in accordance with the provisions of the Anti- Corruption Guidelines Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall cause each Project City to:(a) take all necessary actions to minimize to the extent possible any involuntary relocation of persons, or their loss of shelter, assets, or access to assets, or loss of income sources or means of livelihood, temporarily or permanently; and (b) in the event that Project activities give rise to Affected Persons, prior to the commencement of such activities: (i) implement the respective Resettlement Action Plan (“RAPâ€?) already in place for such activities in accordance with the guidelines and procedures set forth in the Resettlement Policy Framework (“RPFâ€?) as approved by the Association; or (ii) if a RAP is not already in place for such activities, then prepare or cause to be prepared a RAP acceptable to the Association in accordance with the guidelines, requirements and procedures set forth in the RPF, and thereafter implement in a timely manner said RAP as approved by the Association. Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall cause each Project City to: (a) carry out its Respective Part of the Project in accordance with the provisions of its respective Environmental Management Plan (“EMPâ€?) already in place; or (b) if an EMP for a Project activity is not in place, then prepare, or cause to be prepared, an EMP in accordance with the guidelines, requirements and procedures acceptable to the Association, and thereafter implement in a timely manner said EMP as approved by the Association. Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall cause each of Can Tho City, Ca Mau City, Rach Gia City, and Tra Vinh City to carry out its Respective Part of the Project in accordance with the provisions of its respective Ethnic Minorities Development Plan. Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 4.09 of the General Conditions. Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall prepare and furnish to the Association not later than forty five (45) days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Association. Name Recurrent Due Date Frequency Yes N.a. N.a. Description of Covenant The Recipient shall have its Financial Statements audited in accordance with the provisions of Section 4.09 (b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than six months after the end of such period. . Team Composition Bank Staff Name Title Specialization Unit UPI Andre Bald TTL, Senior Infrastructure Specialist Infrastructure EASVS 249787 Hoa Thi Hoang Co-TTL, Senior Urban Specialist Urban and Social EASVS 18384 Dean Cira Lead Urban Specialist Urban EASVS 150211 Hisham A. Abdo Kahin Sr. Counsel Legal LEGES 225681 Huong Thi Mai Nong Jr. Counsel Legal EACVF 407948 Ha Thuy Tran Financial Management Specialist Financial Management EAPFM 360402 Kien Trung Tran Senior Procurement Specialist Procurement EAPPR 20115 Douglas J. Graham Senior Environmental Specialist Environmental Safeguards EASVS 75790 Peter Leonard Lead Safeguards Specialist Environmental Safeguards EASSD 277420 Josefo Tuyor Senior Operations Officer Environmental Safeguards EASPS 240026 Phuong Thi Thanh Tran Senior Environmental Specialist Environmental Safeguards EASVS 185904 Pilar Larreamendy Senior Social Development Specialist Social Safeguards EASVS 199052 Hoa Thi Mong Pham Senior Social Development Specialist Resettlement EASVS 350292 Toko Kato Operations Officer Safeguards EASIN 324673 Zoe Trohanis Senior Infrastructure Specialist Infrastructure and M&E EASIN 191491 Patricia Maria Fernandez Social Specialist Social and M&E EASER 332203 Dzung Huy Nguyen Disaster Risk Management Specialist Urban Resilience EASVS 382181 Hien Minh Vu Program Assistant Processing EACVF 187048 Demilour Reyes Ignacio Program Assistant Processing EASIN 305985 Non Bank Staff Name Title Location Christopher Banes Municipal Engineer Ho Chi Minh City, Vietnam Andre Oosterman Economic and Financial Analyst Ho Chi Minh City, Vietnam Gottfried Roelcke Urban Specialist Ho Chi Minh City, Vietnam Heinz Unger Environmental Specialist Canada . Locations Country First Administrative Location Planned A Comments Division ct u al Vietnam Provincial status Can Tho City √ Per plan Tien Giang Province My Tho √ Per plan Dong Thap Province Cao Lanh √ Per plan Ca Mau Province Ca Mau √ Per plan Kien Giang Province Rach Gia Per plan Tra Vinh Province Tra Vinh √ Per plan √ . I. STRATEGIC CONTEXT A. Country Context 1. Vietnam is a rapidly developing country. Political and economic reforms launched in 1986 have transformed the country from one of the poorest in the world, with per capita income below US$100, to a lower middle-income country within a quarter of a century. Per capita income at the end of 2010 was US$1,130. The poverty headcount ratio has fallen by 80 percent reaching 14.5 percent in 2008, and most indicators of welfare have improved. Vietnam has already attained five of its ten original MDG targets. These socio-economic developments have encompassed fundamental changes in the quality of people‟s lives. 2. Transition from a rural to urban society. Vietnam has a low level of urbanization (30% of the population in 2008) compared to most countries in the region. Yet since the 1986 Doi Moi reforms, Vietnam‟s urban population growth rate has averaged 3.4% annually. The fastest growth has been in the larger cities, particularly in Hanoi and Ho Chi Minh City (HCMC). With 50 percent of Vietnam‟s population estimated to be urban by 2025 – keeping up with the demands of this demographic change is a key government priority and challenge. 3. Cities are the drivers of growth generating more than half of GDP. Overall economic growth is largely from manufacturing and construction sectors. Vietnam‟s trend in high growth and industrial concentration in large cities is similar to the urbanization experience in China and India. While economic development is uneven and concentrated in the regions of Ho Chi Minh City and Hanoi, welfare improvements have been more widespread by the government‟s focus on inclusive social development and spillover from the strong growth of core metropolitan cities. Regional income disparities have narrowed over the last ten years. However, there are still large areas of poverty throughout Vietnam, and increasing pockets associated with urban-rural migrants in cities. 4. Vietnam is taking a strategic approach on urbanization. The Government‟s policy framework for urbanization is the “Framework Master Plan for Urban Development in Vietnam to 2020â€?, recently updated through the “Adjustment of the Master Plan for Urban Development in Vietnam to 2025 and Vision to 2050.â€? This plan sets out a strong emphasis on Vietnam‟s urban transition, with a well-structured understanding of the role Vietnam‟s cities are playing in integrating the country‟s economy into the international economic system, while also propelling growth at a more focused regional scale within the country. 5. The National Urban Upgrading Strategy and the Overall Investment Plan for Urban Upgrading up to 2020 was financed by the Vietnam Urban Upgrading Project (VUUP) and approved by the Prime Minister‟s Decision 758/QD-TT in 2009. Besides the physical upgrading of basic infrastructure and housing in Low Income Areas (LIAs) in urban centers, the program aims to institutionalize comprehensive pro-poor planning measures with community participation in the upgrading process. A specific component of the Mekong Delta Region Urban Upgrading Project (MDR-UPP, or Project) will support the Ministry of Construction (MoC) to make a National Urban Upgrading Program (NUUP) operational. 1 B. Sectoral and Institutional Context 6. The Mekong Delta is a strategic economic region. The Mekong Delta Region (MDR) covers about 12 percent of the country‟s land while producing 40 percent of agricultural gross domestic product (GDP) and over half of the country‟s agro-food exports. Roughly three- quarters of the population derive their primary income from agriculture. Growing industrial investment, tourism, increases in agricultural productivity, and improved connectivity have led to significant reduction in the incidence of poverty. The poverty rate in the MDR is 12.3 percent (2008), compared to the national average of 14.5 percent – though the absolute number of poor people is higher than any other region. Recent road improvements have cut down the travel time from Can Tho to HCMC from 4 to 2.5 hours; improving economic integration, access to global markets, and regional competitiveness. 7. The Mekong Delta is a rural area starting to urbanize. Roughly 80 percent of the population lives in rural areas, though the area is rapidly urbanizing. The population increase around Can Tho (which grew at twice the national rate from 1999 to 2009) suggests its increased competitiveness and importance as a regional economic hub. The MDR is one of the most densely populated regions in Vietnam, and considering its urbanization trends, there is a high demand for infrastructure improvements and urban upgrading. 8. The project cities have typical characteristics of small and medium-sized cities in Vietnam. Can Tho is the largest city in the MDR, and the regional center for education, trade, and industry. The other five cities are the provincial capitals and also economic hubs for trade, services, and industry. All of the cities have substantial numbers of Low Income Areas (LIAs) with high residential densities, and generally poor water supply and drainage. The cities have had average annual economic growth rates between 13-20 percent (2006-2010). Meanwhile, between 14 to 30 percent of the population in the Project cities consists of low-income households. Apart from individual septic tanks, there are virtually no wastewater management systems. The poor environmental conditions, coupled with low-quality housing and a lack of social infrastructure, contribute to the generally low living standards and quality of life in the Low Income Areas of the Project cities. Table 1. City Profiles* Can Tho Ca Mau My Tho Cao Lanh Tra Vinh Rach Gia Population (2010) approx. 1,190,000 220,000 214,000 162,000 104,000 223,000 Area (square kilometers) 1,401 250 82 107 68 104 Overall Population Density (persons/square km) 849 880 2,610 1,514 1,529 2,144 Average Annual Economic Growth Rate 2006-2010 20% 14% 13% 20% 13% 14% Average Monthly Household Income (million VND) 4.9 4.2 3.9 5.3 n/a n/a Low-Income Households (<0.5 mill.VND / month)** 24% 17% 15% 14% 30% 30% Percentage of Ethnic Minorities 4% 5% 1% 1% 26% 12% Percentage of „Make-shift‟/temporary houses 9% 43% 9% 21% 17% 13% Households with access to piped water 83% 85% 95% 88% 69% 61% Direct Project beneficiaries, estimated (persons) 45,700 37,700 49,700 102,000 18,800 22,000 Indirect Project beneficiaries, estimated (persons) 959,000 176,000 167,000 58,000 82,000 134,000 * Source: Ministry of Construction –Socio Economic Profiles of MDR-UUP Cities and Summary Report for MDR-UUP, January 2012. ** Percentage of low-income households would be larger using WB (international) poverty threshold of a dollar a day. 2 9. The magnitude and concentration of slums and squatter communities in Vietnam and in the MDR is small relative to other developing countries. Reasons for this include the government‟s permissive and pro-active regulatory approach towards customary and affordable housing development (allowance of low lot sizes and increased floor to area ratio), coupled with an innovative and entrepreneurial informal housing sector. All cities in Vietnam do however have concentrations of Low Income Areas with slum characteristics. In the context of the MDR, these communities are often located along river or canal embankments, and in low-lying areas vulnerable to flooding and at risk to sea level rise. 10. The Project area is among the most at-risk globally to climate change impacts. The MDR‟s average elevation is less than three meters above sea level, while various models project sea level increases between 30-70 cm by 2050. The Project will utilize the urban resilience work in the region (particularly in Can Tho) carried out by the Bank and other donors. 11. Vietnam has experience with urban upgrading and plans to further expand the approach nationally. This project builds on the success of its precursor, VUUP, which has benefited over 700,000 people in Ho Chi Minh City, Hai Phong, Can Tho, and Nam Dinh. Key aspects of VUUP integrated into this project include: (i) a focus on community participation throughout the project cycle, (ii) targeting Low Income Areas, and (iii) limiting resettlement impacts by adopting flexible technical standards. C. Higher Level Objectives to which the Project Contributes 12. The project contributes to Vietnam’s higher-level objectives in the urban sector and for poverty alleviation. The Government of Vietnam (GoV) has emphasized the need to reduce urban poverty as part of its national economic development and poverty reduction strategies over the past decade, including the Comprehensive Poverty Reduction and Growth Strategy of 2003. This strategy included the objectives of “Provision of Basic Infrastructure to Urban Poor Peopleâ€? and “Environmental Sustainability Protectionâ€?. The latter included the still unattained target to “Ensure that there are no slums and temporary houses in all towns and cities by 2010â€?. The Socio Economic Development Plan 2011-2016 (SEDP) states the government will continue its policies toward a socialist oriented market economy and toward sustained economic growth, linked with continued efforts to alleviate poverty. The target is to reduce poverty to 2-3% by 2015.1 The goal is for Vietnam to be an industrialized country by 2020. 13. The project’s objectives and engagements are aligned with the Country Partnership Strategy 2012-16 (CPS) and SEDP. The Project is also in-line with the pillars of core and transformational engagements outlined in the World Bank Group Infrastructure Strategy Update, FY12-15. The CPS supports initiatives and policies aimed at: (i) strengthening Vietnam‟s competitiveness in the regional and global economy; (ii) increasing the sustainability of its development; and (iii) broadening access to economic and social opportunity. 1 Vietnam‟s poverty line is lower than the international standard. Anticipated upward revisions of the poverty line will change these numerical targets. 3 14. The Project also responds to the three cross-cutting themes of the CPS. The first is improving resilience to external economic shocks, natural hazards, and climate change impacts. The Project includes urban resilience measures in designs and support to city governments for urban resilience planning. The second theme is strengthening governance – the Project includes a Governance and Transparency Accountability Framework and integrates community participation through the use of Community Upgrading Plans (CUP). The third theme is addressing gender issues more effectively and improving data collection of gender disaggregated indicators. This is also realized through the CUP process, (and found effective in VUUP) which involves women throughout the project cycle and ensures they are equal participants and beneficiaries. The key monitoring and evaluation indicators (including user satisfaction surveys) are disaggregated by gender. II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 15. The Project Development Objective is to improve infrastructure services in Low Income Areas in the Project Cities in the Mekong Delta Region. B. Project Beneficiaries 16. There are an estimated 275,900 direct beneficiaries from the six cities covered by the Project. This comprises the persons living in the targeted Low Income Areas and those located near the project-financed primary and secondary infrastructure. Roughly 1,576,000 persons are considered indirect beneficiaries of the Project. These include the residents outside of the Low Income Areas who will benefit from the citywide infrastructure improvements and the new social and economic facilities. C. PDO Level Results Indicators 17. At the PDO level there will be three results indicators: (a) People with access to improved basic urban infrastructure facilities and services in targeted low income areas (men/women); (b) Increased user satisfaction with quality of basic urban infrastructure facilities and services in targeted low income areas (men/women); and, (c) Percentage of Low Income Areas with Community Upgrading Plans prepared and implemented in accordance with the participatory process. 18. The project will participate in the Bank‟s Impact Evaluation Program (DIME), which provides technical assistance to the client to better design and monitor project impacts. Through DIME, the project will evaluate the impacts on property value in Low Income Areas participating in the Project, and assess: (i) possible impacts on housing affordability to the urban poor, particularly migrants: and (ii) urban upgrading effects on educing private investment in home improvements. These indicators are important, but have proved challenging to measure in past projects, thus requiring added attention and expertise. 4 III. PROJECT DESCRIPTION A. Project Components 19. The Project has seven parts consisting of six cities (Can Tho, My Tho, Cao Lanh, Ca Mau, Rach Gia, and Tra Vinh) and the Ministry of Construction (MoC). Each city has four components (below), the MoC has one. Component 1 – Tertiary Infrastructure Upgrading in Low Income Areas 20. Component 1 includes provision of support to upgrade tertiary infrastructure in Low Income Areas including: (i) construction, rehabilitation, and upgrading of roads and lanes; (ii) construction and rehabilitation of drains; (iii) improvements to environmental sanitation by rehabilitating or constructing public sewers, fostering the construction of septic tanks, providing access to septic management services, and house connections to public sewers; (iv) improvement of water supply including the installation of meter connections; (v) provision of metered house connections for electricity and public lighting in residential lanes and streets; and (vi) construction and rehabilitation of social infrastructure facilities such as schools, markets, community halls, and green spaces. Component 2 – Supporting Primary and Secondary Infrastructure 21. Component 2 includes Provision of support to improve primary and secondary infrastructure serving and benefiting LIAs including: (i) roads; (ii) water supply lines; (iii) drains and sewers; (iv) electrical power lines; (v) river and canal embankments; and (vi) social infrastructure facilities such as schools, markets, community halls, and green spaces. Component 3 - Resettlement Sites 22. Component 3 comprises provision of support to prepare resettlement areas for Affected Persons, including construction of tertiary, primary, and secondary infrastructure. Component 4 – Implementation Support and Project Management 23. Component 4 activities will focus on Provision of support for Project implementation, management, supervision, and monitoring and evaluation, including audits. Component 5 – Technical Assistance to the Ministry of Construction to Implement NUUP 24. Component 5 includes provision of support to MOC for: (i) development of a national urban upgrading program; (ii) designing an operational national urban database on key urban indicators; (iii) formulation of climate change adaptation strategies for coastal cities particularly in the Mekong Delta Region; and (iv) other support for Project coordination and implementation. 5 B. Project Financing Lending Instrument 25. The lending instrument will be a Specific Investment Loan. Project Cost and Financing 26. The total estimated project cost is US$398 million, which includes investments, land acquisition and resettlement, equipment, and technical assistance (detailed engineering designs, supervision, audits, program management, and capacity building). US$292 million will be financed from IDA; the total counterpart-funding requirement is estimated at US$106 million. The GoV will finance all land and compensation for resettlement. Table 2. Project Financing Table 1. Project Financing ($US million) My Tho Can Tho Ca Mau Cao Lanh Rach Gia Tra Vinh MoC TOTAL Total IDA GoV Total IDA GoV Total IDA GoV Total IDA GoV Total IDA GoV Total IDA GoV Total IDA GoV IDA GoV C1: Tertiary Infra Upgrading in LIAs 20.25 12.99 7.26 22.17 16.46 5.71 20.77 14.96 5.80 20.61 12.63 7.98 7.65 4.65 3.00 22.37 18.30 4.07 0.00 0.00 0.00 79.99 33.81 C2: Primary and Secondary Infra 11.28 9.91 1.37 31.77 24.29 7.47 8.39 5.24 3.15 18.18 14.08 4.10 18.23 11.64 6.59 6.63 5.90 0.73 0.00 0.00 0.00 71.06 23.41 C3: Resettlment Sites 6.73 2.73 4.00 7.65 3.43 4.22 8.39 5.61 2.78 9.12 5.13 3.99 15.87 9.66 6.21 3.87 2.35 1.52 0.00 0.00 0.00 28.92 22.71 C4: Implementation and Project Mngt * 8.06 4.40 3.66 11.42 8.77 2.65 7.68 5.40 2.28 10.36 6.58 3.78 8.43 4.62 3.81 9.69 5.84 3.85 2.23 2.23 0.00 37.83 20.03 C5: TA to MoC for NUUP & Coordination 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.81 4.12 0.69 4.12 0.69 Base Cost 46.32 30.03 16.29 73.00 52.96 20.05 45.23 31.21 14.01 58.27 38.43 19.84 50.17 30.57 19.61 42.55 32.39 10.17 7.38 6.35 1.03 221.93 100.99 Contingency 6.06 6.01 0.06 10.91 10.59 0.32 9.04 6.24 2.80 8.25 7.69 0.56 6.66 6.11 0.55 7.03 6.48 0.55 0.74 0.64 0.10 43.75 4.94 Physical Contingency 3.03 3.00 0.03 5.45 5.30 0.16 4.52 3.12 1.40 4.12 3.84 0.28 3.33 3.06 0.27 3.52 3.24 0.28 0.00 0.00 0.00 21.56 2.42 Price Contingency 3.03 3.00 0.03 5.45 5.30 0.16 4.52 3.12 1.40 4.12 3.84 0.28 3.33 3.06 0.27 3.52 3.24 0.28 0.74 0.64 0.10 22.19 2.52 Taxes 3.75 3.60 0.15 6.44 6.35 0.09 4.02 3.75 0.27 4.73 4.61 0.12 3.89 3.67 0.22 3.98 3.89 0.09 0.45 0.45 0.00 26.32 0.94 TOTAL 56.14 39.64 16.50 90.35 69.90 20.45 58.29 41.20 17.08 71.25 50.72 20.52 60.72 40.35 20.38 53.56 42.75 10.81 8.57 7.44 1.13 292.00 106.87 C. Lessons Learned and Reflected in the Project Design 27. The project design (for a multi-sector multi-city project) should find opportunities to reduce the complexity, lessen transactions, and improve efficiency of Bank supervision. Though MDR-UUP has two more cities than its predecessor VUUP, the cities are geographically clustered and the project has two fewer components. Cities will also bundle TA packages to reduce the number of transactions and the complexity of contract management. Further, the introduction of the MoC Project Coordination Unit (with its mandate for top-level coordination, monitoring, quality assurance, and training) will improve the overall efficiency and quality of implementation and supervision. 28. There are strategic benefits to conduct an operation with a regional focus. Focusing the upgrading approach in one region is expected to strengthen the community of practice between cities, and enhance the demonstration effects to neighboring areas. Five of the six cities (all but My Tho) were already involved in such a community of practice under the EU funded Urban Environmental Planning Programme (2004-2009). The cluster approach is also more efficient for operations and supervision. 29. Seek to minimize resettlement through in-situ upgrading (instead of clearance and redevelopment) and by adopting flexible technical standards. The cities‟ often rigid application 6 of technical standards and propensity to design strictly per the master plan (irrespective of feasibility and demand) are often counter to the upgrading approach. This Project adopts flexible standards to optimize coverage, reduce resettlement needs and project costs, and better reflect community preferences. This approach is more cost effective, has fewer negative environmental and social impacts, and is a more economic means to service the urban poor. By adopting this approach, the cities reduced estimated concept stage resettlement needs by 75 percent. The project also includes technical support to the MoC to scale-up the upgrading approach nationally. 30. Experience from VUUP showed that quality-resettlement areas are critical to gain the community’s support for the project and avoid delays. Like VUUP resettlement areas, the goal is for residents to live near their original community, with schools, markets, and green space. To ensure resettled households understand their entitlements under the project and grievance mechanisms, the PMUs will conduct an information campaign and distribute a summary of the RPF to all project areas. 31. Urban infrastructure projects are complex and require strong project management, technical teams, and significant consultant resources. Urban upgrading requires good coordination among government departments, effective communication strategies, tailored solutions for each investment, and strong interaction with communities. This will be a new way of working for many cities, so sufficient consultant resources are included (FM, procurement, technical, safeguards, etc.,) to support each PMU, and for programmatic quality assurance and trainings conducted through the MoC. 32. Quality consultant services are needed given the volume and complexity of transactions, and capacity constraints of local government. The Project includes plans and allocates sufficient resources for mobilizing comprehensive packages of consultant support to the PMUs and PCU. The size of the packages is expected to attract international firms. 33. Community participation is essential and requires sufficient time. Ownership and active support from communities is a necessity for sustainability. The added time required for intensive consultation has been incorporated throughout the project cycle. 34. Cost estimates should be realistic. There are risks of future cost overruns if estimates are based on cost norms and do not reflect inflationary trends. All cities have prioritized their investments and identified those to be omitted in the event of insufficient project financing. Current cost estimates factor physical and price contingencies. A related implementation risk is the possibility of insufficient counterpart budget for land acquisition for resettlement areas. In addition to the central government support to the cities for their counterpart contribution, all cities have committed to cover any counterpart financing gaps for resettlement. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 35. Decentralized implementation. The Project will be implemented in a decentralized manner, with city administrations being the main actors under the supervision of provincial level 7 administrations, with strategic guidance and oversight from the MoC. Cities are the Project Owners. 36. Project Management Units. In each participating city, the respective People‟s Committee has formed a Project Management Unit (PMU) whose staff is recruited from the city administration. Their tasks will be to manage the implementation of Components 1, 2, 3, and 4. 37. Project Steering Committees. For each participating city, Provincial People‟s Committees have formed a Project Steering Committee (PSC) comprised of the multi-sector departments to guide, support, and supervise the respective PMU. 38. Project Coordination Unit. The MoC Management Division of Urban Development Projects (MDUDP) will have the role of a Project Coordination Unit (PCU) with responsibility for (i) coordination, quality assurance, monitoring, and training functions of the Project, and (ii) making the National Urban Upgrading Program (NUUP) operational. 39. Communities. Based on the experiences of VUUP, the concerned communities have been involved in all phases of the project. Intensive community consultations were a cornerstone of project preparation, and the communities will also be involved during the subsequent implementation and monitoring and evaluation stages. B. Results Monitoring and Evaluation 40. The monitoring and evaluation (M&E) framework with indicators based on the IDA core indicators is presented in Annex 1. The project will participate in the Bank‟s Impact Evaluation Program (DIME), which provides technical assistance to the client to better design and monitor key indicators. Each PMU will collect and compile data to assess progress per the M&E framework. The PCU will consolidate this data at the project level. The MoC, with support from a consultant, will be responsible for reporting the progress of project implementation and outcomes to the Bank on a quarterly and annual basis. The Quality Assurance & Quality Control (QAQC) team under the PCU will have a strong field presence and will conduct roving spot- checks of construction practices, safeguards compliance, and other issues for immediate feedback to the cities and to the Bank. 41. The consultant to the MoC PCU will play a key role in monitoring the implementation progress and ensuring that the Bank‟s procedures are followed. Information to be reported will include the indicators for the key outcome results and the intermediate results. A description of the process for results monitoring is summarized in Annex 3. C. Sustainability 42. The project design addresses the issue of sustainability in several ways: (i) intensive consultations with beneficiary communities will ensure that technical designs, especially in Components 1 and 3, present optimum solutions for real needs (ii) the project design interlinks Components 1, 2 and 3 closely with one another, ensuring maximum technical complementarities and benefit, and hence sustainability; (iii) intensive capacity building efforts at the local level will facilitate the continuation of urban upgrading efforts in each participating 8 city; and (iv) capacity building efforts and policy formulation support at national level will facilitate the replication of the project‟s approach in other cities in Vietnam. The recurrent costs of the services being provided will be financed so services can be sustained through user fees, government revenue, or transfers. V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Table Stakeholder Risk Substantial Project Risk Implementing Agency Risk - Design Substantial - Capacity Substantial - Social and Environmental Substantial - Governance Substantial - Program and Donor Low - Delivery Monitoring and Sustainability Substantial Overall Implementation Risk Substantial B. Overall Risk Rating Explanation 43. The project concept is based on the on-going VUUP. Therefore many of the risks are well known. Despite the generally good outcomes of the VUUP, there are some operational risks that are inherent in any large decentralized urban project in Vietnam. The highest risks are at the operational level and include the (i.) potential lack of timely counterpart funds, particularly to support compensation and/or resettlement (ii.) limited implementation capacity of the PMUs, particularly to effectively involve communities in the project cycle, and to follow World Bank fiduciary, safeguards, and operational policies, and (iii.) coordination between PMUs and the PCU. Though overall, the technical approach and portfolio of works is not complex, and their implementation is within the capacity of local contractors. 44. The overall risk for the project is rated as Substantial, resulting from specific risks pertaining to institutional capacity and delivery quality. The project will include robust supervision resources to improve the capacity of implementing agencies. In addition, the project (unlike VUUP) will include a PCU for quality assurance, training, and program monitoring. 45. Significant risks are also foreseen in the fields of governance including fraud and corruption, design, and the management of the required safeguards. These risks, as well as proposed mitigation measures, are elaborated in the Operational Risk Assessment Framework (ORAF) shown in Annex 4. To address the specific risks and mitigation in the field of governance, a Governance and Transparency Accountability Plan (GTAP) is included in the Project Operations Manual. 9 VI. APPRAISAL SUMMARY A. Economic and Financial Analyses 46. Economic feasibility analysis. The economic benefits of the proposed subprojects are significant, especially in the Low Income Areas and other densely populated parts of the six cities, where population pressures are high and surface and groundwater pollution is a major public health hazard. The expected benefits largely consist of increased property values, avoided health costs, the avoided costs of flood damage, and avoided costs of water treatment and of sourcing water from non-polluted sources. These benefits were measured based on the estimated incremental increase in land prices resulting from the proposed investments. Economic feasibility analysis was undertaken for two types of sub-projects: (a) LIA-based subprojects. These are sub-projects consisting of tertiary infrastructure investment in a Low Income Area, including any supporting higher-level infrastructure (typically from Component 2), such as an access road or a water distribution main. (b) Higher-level sub-projects. These consist of investments in higher-level infrastructure not directly focused on LIA upgrading. Because the focus of MDR- UUP is urban upgrading, only two such subproject were included: the Bun Xang Lake rehabilitation in Can Tho, and the embankment of the Kien River and Hien Canal in Rach Gia. 47. Cost Benefit analysis was undertaken for a representative sample of 24 of 110 Low Income Areas to be upgraded with MDR-UUP support. The economic internal rate of return (EIRR) of all these subprojects exceeded a threshold of 12% (in real terms), usually by a significantly margin. A separate feasibility analysis was undertaken for the Bun Xang Lake rehabilitation in Can Tho, which was also deemed feasible. 48. Financial feasibility and fiscal analysis. Two types of MDR-UUP-financed investments are expected to generate incremental financial revenue: (i) the installation of piped water connections (through increased water tariff revenue): and (ii) minor expansions of the solid waste collection system (which will increase revenue from garbage collection fees). At present, city governments typically set water tariffs and garbage collection fees below full cost-recovery rates. As a result, few of the proposed water supply projects and none of the solid waste management sub-projects are financially feasible without some form of external financial assistance, which is proposed in the form of GoV-financed capital grants and counterpart fund contributions from the city governments themselves (usually with financial support from provincial governments). A fiscal analysis of provincial and city government finances demonstrates that each participating sub-national government is financially capable of providing counterpart funds as required. 49. Poverty impact. The economic benefits of the proposed projects mainly consist of avoided health costs, and the avoided costs of flood damage and water treatment. These benefits accrue disproportionately to the poor, who are more likely to fall ill than more affluent citizens and often do not have the means to finance essential health care costs. They also live in the most flood-prone areas (where land prices are lower), and have to pay a much higher price (per cubic 10 meter) for drinking water from water vendors than citizens with a piped water connection. To ensure that the proposed infrastructure services remain affordable to the poor, all six cities will provide water supply and drainage connections at no charge to poor households. Affordability analysis shows that the monthly cost of piped water and solid waste collection will not exceed 5% of average monthly household expenditure, in accordance with GoV guidelines. B. Technical 50. In general, the designs for the project follow current GoV standards for the urban sector. Relevant technical options were compared and analyzed during feasibility study preparation, and the outcome is reflected in the works that have been selected for project financing. 51. Component 1. This component contains a wide range of activities focusing on tertiary infrastructure elements in the selected Low Income Areas in the participating cities. The works are made up of relatively simple activities, such as widening, straightening and/or surfacing access lanes and residential roads, typically in combination with improvements to local drains/sewers, water supply lines, electricity supply lines, street-lighting and limited social infrastructure, etc. There are no challenging technical issues, and the works can be satisfactorily implemented by available national contractors. The challenge lies more in the design and contracting of appropriately comprehensive packages that integrate all of the above elements in one relatively small area. As these are densely developed residential areas, combined sewers/drains have been found to be the more technically appropriate solutions, rather than the construction of separate systems. 52. Soft infrastructure elements to be included in Component 1 will include kindergartens, markets, community halls and/or small public parks / open spaces. None of these elements poses a technical challenge; they can all be easily implemented as parts of the comprehensive multi- sector contract packages for which suitable national contractors will be invited to bid. 53. Component 2. Most of the elements under this component will be collector roads for access, canal/drainage channel embankment improvements and primary/secondary drains/sewers. The works are typically larger in physical volume than the elements of Component 1 but fairly straightforward without difficult technical issues, and typically less multi-faceted than those of Component 1. New roads have been designed in accordance with relevant GoV standards, generally those issued by the Ministry of Transport for the road specific parameters, or by the Ministry of Construction for urban features. The designs have been reviewed and adjusted during the feasibility studies and found to be the most cost effective and appropriate solutions for their intended purposes. They make adequate provision for pedestrian and non-motorized vehicles and road safety requirements according to current GoV standards. 54. Component 3. The works under this component focus on preparing sites for resettling people displaced by the project, including all necessary infrastructure with service levels that are at least equivalent to those under Component 1. An estimated 2,288 households will need to be resettled as a result of the project. 11 C. Financial Management 55. During preparation mission, the task team met with the management and proposed accounting staff at Ministry of Construction (MOC) and six provinces of Ca Mau, Can Tho, Cao Lanh, My Tho, Rach Gia, Tra Vinh to conduct financial management (FM) assessment of the Project. Except Can Tho, none of the other five cities has experience with Bank-financed Projects. In order to meet the minimum Bank financial management requirements, as stipulated in OP/BP 10.02, a proposed FM action plan will be implemented by the MOC and the provinces to ensure that an adequate financial management arrangement acceptable to the Bank will be maintained to provide reasonable assurance that the proceeds of the Bank‟s loan and credit will be used for intended purposes. Major FM actions include: (i) appointment of accounting staff with qualification and experiences acceptable to the Bank at both MOC and PPMUs; (ii) development of a Project Financial Management Manual (FMM) and dissemination for application in all implementing agencies; (iii) Selection of appropriate accounting software for the Project accounting and reporting requirements; (iv) preparation of an internal audit TOR to build capacity of the inspectorate agencies and submit it to the Bank for review; and (v) Training for the FM staff of the PCU and PPMUs on Bank FM and disbursement requirements and procedures. The FM requirements in (i) and (ii) were completed by the Project Negotiations. D. Procurement 56. Procurement for the proposed project will be carried out in accordance with the World Bank‟s “Guidelines: Procurement Under IBRD Loans and IDA Creditsâ€? dated May 2004, revised in October 2006 and May 2010: and “Guidelines: Selection and Employment of Consultants by World Bank Borrowersâ€? dated May 2004 revised in October 2006, and May 2010: and the provisions stipulated in the Financing Agreement. 57. Procurement implementation is highly decentralized to six PMUs at city level (Ca Mau, Can Tho, Cao Lanh, My Tho, Rach Gia and Tra Vinh) and MoC‟s PCU at national level. The procurement capacity of these implementing agencies was assessed to be very weak. To mitigate the identified risk, specific mitigation measures including intensive training, provision of a hands-on procurement manual, hiring of procurement and contract management consultants are being implemented. The results of the PMUs‟ procurement implementation capacity assessment, general arrangements for project procurement, proposed risk mitigation measures, and Bank review procedures are presented in Annex 3. The agreed Procurement Plan and all subsequent updates will be published in the Bank‟s external website and the Borrower‟s appropriate publications. E. Social (including Safeguards) 58. The socio-economic survey, social impact assessment and poverty mapping exercises were conducted in all six cities during the project preparation as a part of the project‟s feasibility studies. The recommendations have been taken into account in the technical designs as well as in developing social safeguards. The project is expected to have significant positive social impacts by developing policies for ensuring consultation and participation and promoting social inclusion of the poor and vulnerable people living in the project area as well as by upgrading urban infrastructure (roads, drainage, water supply and sanitation, public facilities, and power 12 supply) based on community priorities. Adverse impacts of the project will be caused by unavoidable land acquisition in all six project cities, including impacts on Khmer ethnic minority peoples in four of the six cities. As a result, OP 4.12 on Involuntary Resettlement and OP 4.10 on Indigenous People are triggered. 59. Involuntary Resettlement. The total permanent land acquisition for the six cities is about 111 hectares. There are 14,834 affected households (64,601 persons), of which 2,288 are to be relocated. A Resettlement Policy Framework (RPF) for the whole project and six Resettlement Plans (RPs) for all subcomponents that require land acquisition were prepared to ensure all affected people will be able to improve or at least to restore the lost assets and livelihood to pre- project level. During project preparation a thorough screening of non-Bank financed and potentially linked projects along with due diligence reviews carried out in all six cities confirmed that compensation and livelihood restoration are consistent with World Bank‟s policy and that there is not any legacy issues. 60. Eight resettlement sites (67.7 ha) will be constructed to accommodate the needs of about 2,288 relocated households. Five of the six cities will allocate land plots in the project resettlement sites for those households losing much of their agricultural land due to project land acquisition. In the sixth, Cao Lanh city, agricultural land is available in the market so the DPs can buy it to continue farming if they wish to do so. 61. RPs cover all project land acquisition with the exception of eleven possible additional resettlement sites in eleven LIAs of Ca Mau city, to be identified during project implementation. These sites would accommodate about 341 displaced people (DPs), including 11 Khmer DPs enabling them to remain in the same vicinity, according to their preferred option, ensuring their livelihood restoration. The estimated total area of these eleven sites is 5.45 ha and RPs will be prepared during project implementation to ensure they comply with the requirements of OP4.12 and the OP4.10. Social accountability will be supported by the project to ensure participation and timely information is provided to DPs, thus enabling DPs‟ oversight. 62. Indigenous Peoples OP 4.10 is triggered for the cities of Ca Mau, Can Tho, Tra Vinh and Rach Gia. There are 1,059 Khmer households with 5,267 persons living in a fully integrated manner with the majority Kinh population. During the free, prior and informed consultations carried out during project preparation, the support of EM to the project was confirmed as an opportunity to improve their living conditions. The four cities have developed Ethnic Minority Development Plans to mitigate adverse impact and enhance project benefits in a culturally appropriate manner. These are summarized in Annex 3. 63. Grievances Redress Mechanisms (GRM) will ensure access for project-affected people to freely pose their questions, concerns and problems, and also enable their participatory monitoring. GRM procedures will ensure both recording and processing of grievances and documenting all official responses, and undertaking coordinated action for resettlement implementation. The project GRM will also manage all other Project complaints. 13 F. Environment (including Safeguards) 64. A Consolidated EIA was prepared based on the comprehensive EIAs prepared by each city, and was used as basis for assessing the project wide impacts and preparing Environmental Management Plans (EMPs). 65. The findings of the individual EIAs show that environmental and social impacts of the project will be positive - particularly by improving infrastructure services, and living and environmental conditions. Residents in Low Income Areas will be the key benefactors. Positive project impacts include improved road conditions, reduced traffic congestion and traffic-related accidents, improved water supply, improved capacity of the drainage system, collection and treatment of wastewater and solid waste, and sanitation conditions, improved quality of waterways and improved living conditions in LIAs. 66. The Project will cause some negative impacts to the local environment and population. Most of the negative impacts, however, are localized, reversible and manageable and limited only to the urban areas during construction and upgrading works. These impacts can be addressed through proper design, site and construction management; stringent application of Environmental Codes of Practice (ECOP); and proper implementation of site-specific measures, as proposed in the individual EMPs. 67. A review of linked or associated projects and ancillary facilities, which will not be financed by the project (as part of the EIA and due diligence) showed that most of the linked or associated projects are treatment systems for wastewater collected from LIAs to be upgraded under the project, while ancillary facilities are mainly city landfills, which will receive non-toxic dredged materials from the project, construction waste and solid waste from LIAs. 68. Landfills already exist. The An Xuyen landfill in Ca Mau City will be expanded using local funds. All landfills have the required lining to prevent groundwater contamination and leachate collection and treatment systems. They are also all covered by EIAs reviewed and approved by DONRE/MONRE. For the expansion of An Xuyen landfill, proper lining and leachate collection and treatment system are part of the design. All landfills are incorporated into each of the city EMP as the disposal sites for dredged materials and will be monitored during project implementation. The wastewater treatment systems, which are financed by KfW and NORAD, are also covered by EIAs which were reviewed and approved by MONRE, and reviewed by the funding agencies. Based on the assessment and due diligence review, cumulative impacts from linked or associated projects and ancillary facilities are deemed insignificant because most of them are either existing or completed by the time the MDR-UUP subprojects will commence implementation, while a few are unlikely to be implemented during the MDR-UUP implementation because financing for these projects have not been secured yet. 69. To facilitate effective implementation of the EMPs and ECOP, the city PMUs will: (a) establish an Environmental and Social Unit (ESU) responsible for ensuring the timely implementation of the EMP, including monitoring, reporting, and capacity building related to safeguards; (b) assign the Construction Supervision Consultant (CSC) to be responsible for supervision of the contractor‟s safeguard performance as part of the construction contract and this requirement will be included in the CSC terms of reference (TOR); and (c) hire qualified 14 consultants to assist the ESU in performing these tasks. The cities‟ utility companies, as appropriate, will be responsible for implementing the mitigation measures during the operation stage of the project, and will ensure that the mitigation measures are implemented and adequate budgets are provided. 70. The Provincial Steering Committee (PSC) chaired by the Chairman or Vice Chairman of the Provincial People‟s Committee (PPC) of the respective province will provide the overall policy guidance and oversight for project implementation, including the EMP. Training and capacity building will be supported by the project. The PCU quality assurance consultants will have the mandate to assess compliance and practices of the contractors and CSC in safeguards oversight and carrying out the EMPs. G. Other Safeguards Policies Triggered 71. OP 7.50 on International Waterways is triggered as four of the six cities are located on an international waterway. The project will upgrade, improve, or rehabilitate existing urban schemes for storm-water drainage, wastewater sewerage, water supply, and canal embankments. Given the general scope of work, the task team has assessed that the project will not adversely affect the quality and quantity of water flows to the other riparians and it will not be adversely affected by other riparian‟s water use. The Regional Vice President provided a no objection to applying the exemption to the notification under OP7.50. Per paragraph 7 of OP 7.50, the Project is exempt to the Bank requirement that the other riparian states be notified of the projects. 15 Annex 1: Results Framework and Monitoring VIETNAM: Mekong Delta Region Urban Upgrading Project Project Development Objective (PDO): To improve infrastructure services in Low Income Areas in the Project Cities in the Mekong Delta Region. Core Indic. Responsibility Basel Cumulative Target Values** Data Source/ Description (indicator PDO Level Results Indicators* Unit of Measure Frequency for Data ine YR 1 YR 2 YR3 YR 4 YR5 Methodology definition etc.) Collection Indicator One: 0 Estimate of direct 66,158 79,200 113,700 146,200 beneficiaries of People with access to improved (total) infrastructure services in the Project Component 1. PMUs Low Income Areas developed 0 Men/Women based on Number of 34,642 40,300 57,700 74,000 (collection) - 0 (men) YR1-2-3-4-5 PMUs estimates of gender through the project (men/women) persons MOC ratio from 2009 (consolidation) 0 census. Year 1 is year 31,516 38,900 55,900 72,200 ending 2013. Year 5 is ( women) end of Project Indicator Two: beginning, Social sample User satisfaction with infrastructure year 3 (for PMUs survey and services developed through the Percent of 75% 90% Phase I), and (collection) - respondents 0 NA NA 75% NA 90% end of the focus groups, MOC Data collection Project. including by project for (consolidation) disaggregated by sector (men/women) Phase II gender and gender Indicator Three: Percentage of Low Income Areas Percent PMUs At least 60% with Community Upgrading Plans change/numbe 0% 40% 56% 79% 100% Year 1-2-3- (collection) participation from - r of low 0 0 41 60 86 110 4-5 PMUs, MOC prepared and implemented in communities, at least accordance with the participatory income areas (consolidation) 45% of which are process. women 16 Core Indic. Responsibility Basel Cumulative Target Values** Data Source/ Description (indicator PDO Level Results Indicators* Unit of Measure Frequency for Data ine YR 1 YR 2 YR3 YR 4 YR5 Methodology definition etc.) Collection INTERMEDIATE RESULTS Intermediate Results (Component 1): Tertiary Infrastructure Upgrading in Low Income Areas PMUs Generally corresponds Construction (collection) to land widening and/or 1. Length of new or improved lanes meters 0 0 83,471 94,156 124,719 146,535 YR0-2-3-4-5 Reports MOC surfacing (consolidation) improvements PMUs 2. Persons provided with access to Number of Construction (collection) Calculated based on X persons 0 0 74,000 85,100 113,200 139,500 YR0-2-3-4-5 Reports/CUPs MOC average household size an upgraded lane/road (consolidation) PMUs Construction (collection) 3. Length of new or improved drains meters 0 0 133,200 160,700 209,200 239,300 YR1-2-3-4-5 Reports MOC (consolidation) Calculated based on 4. Households served by new or PMUs average household size, Number of Construction (collection) based on new or improved metered water supply X households 0 0 9,600 12,500 18,500 25,900 YR1-2-3-4-5 Reports/CUPs MOC improved household connections (consolidation) metered water connections 5.Households served by new or PMUs Number of Construction (collection) Calculated based on improved household connections to X households 0 0 10,800 13,000 17,300 18,900 YR1-2-3-4-5 Reports/CUPs MOC average household size septic tanks or sewer lines (consolidation) Intermediate Results (Component 2): Primary and Secondary Infrastructure Upgrading PMUs Roads and drainage 1. Length of new or improved (a) Construction (collection) - meters 0 0 10,300 19,300 21,900 29,300 YR1-2-3-4-5 Reports MOC combined (primary and roads and (b) drainage secondary) (consolidation) PMUs This also includes the 2. Length of new or rehabilitated Construction (collection) - meters 0 0 0 10182 17,200 34,300 YR1-2-3-4-5 Reports MOC lake upgrading in Can canals Tho (consolidation) 17 Core Indic. Responsibility Basel Cumulative Target Values** Data Source/ Description (indicator PDO Level Results Indicators* Unit of Measure Frequency for Data ine YR 1 YR 2 YR3 YR 4 YR5 Methodology definition etc.) Collection Intermediate Results (Component 3): Resettlement Sites PMUs YR1-1-2-3- Construction (collection) Based on estimated 1. New serviced plots constructed/ - number 0 0 1,620 1,750 2,420 3,410 4-5 Reports MOC plots to be constructed (consolidation) plus a contingency PMUs Based on estimated 2. New serviced plots provided to YR1-1-2-3- Construction (collection) affected households to - number 0 0 1,165 1,060 2,000 3,410 4-5 Reports MOC be resettled plus a affected households (consolidation) contingency Intermediate Results (Component 5): Technical Assistance for the Urban Development Agency in the Ministry of Construction 1. Operating framework for a Mid-Term Mid-Term National Urban Upgrading Program - Yes/no Yes/no YR3 Review Report Review Team finalized 18 Annex 2: Detailed Project Description VIETNAM: Mekong Delta Region Urban Upgrading Project Project Overview 1. The project cities have typical characteristics of small and medium-sized cities in Vietnam. Can Tho is the largest city in the MDR, and the regional center for education, trading, and industry (agriculture and aquaculture processing). The other five cities are the provincial capitals and economic hubs for trade, services, and industry. All of the cities have substantial numbers of Low Income Areas with high residential densities, and generally poor water supply and drainage. Apart from individual septic tanks, there are virtually no wastewater management systems. The poor environmental conditions, coupled with low-quality housing and a lack of social infrastructure, contribute to the low living standards and quality of life in Low Income Areas. Table 1. City Socio Economic Profiles Can Tho Ca Mau My Tho Cao Tra Vinh Rach Gia Lanh Population (2010) approx. 1,190,000 220,000 214,000 162,000 104,000 223,000 Area (square kilometers) 1,401 250 82 107 68 104 Overall Population Density (persons/square km) 849 880 2,610 1,514 1,529 2,144 Average Annual Economic Growth Rate 2006-2010 20% 14% 13% 20% 13% 14% Average Monthly Household Income (million 4.9 4.2 3.9 5.3 n/a n/a VND) Low-Income Households (<0.5 mill.VND / month) 24% 17% 15% 14% 30% 30% Percentage of Ethnic Minorities 4% 5% 1% 1% 26% 12% Percentage of „Make-shift‟/temporary houses 9% 43% 9% 21% 17% 13% Households with access to piped water 83% 85% 95% 88% 69% 61% Source: Ministry of Construction –Socio Economic Profiles of MDR-UUP Cities and Summary Report for MDR-UUP, January 2012. Table 2. City Project Data Can Tho Ca Mau My Tho Cao Lanh Tra Vinh Rach Gia Population (2010) approx. 1,190,000 220,000 214,000 162,000 104,000 223,000 Number of Wards in City 44 10 11 8 9 11 Number of Communes in City 36 7 6 7 1 1 Low Income Areas (LIAs) included in 31 18 17 14 23 7 Project Population in LIAs 26,100 27,500 21,900 22,800 18,800 8,400 Area of LIAs (ha) 494 104 126 170 398 142 Population density of LIAs (persons/ha) 53 264 174 134 47 59 Number of Component 2 Sub-projects 6 6 6 13 5 3 Direct project beneficiaries (persons) 45,700 37,700 49,700 102,000 18,800 22,000 Indirect project beneficiaries (persons) 959,000 176,000 167,000 58,000 82,000 134,000 Partially Affected Households (est) 2,916 3,180 2,077 2,333 1,821 2,507 Fully Affected (Resettled) Households (est) 133 715 287 324 126 703 Source: Ministry of Construction –Socio Economic Profiles of MDR-UUP Cities and Summary Report for MDR-UUP, January 2012. 19 2. There is demand and need in all cities to strengthen capacity and coordination for urban management, planning, asset preservation and maintenance, and implementing projects to the standards and policies of foreign donors. This Project addresses these capacity building needs through direct support to the PMUs and through targeted trainings to the cities carried out by the PCU. 3. The Project has six Parts: (a) Ca Mau; capital of Ca Mau Province, (b) Can Tho; a city of provincial status, (c) Cao Lanh; capital of Dong Thap Province, (d) My Tho; capital of Tien Giang Province, (e) Rach Gia; capital of Kien Giang Province, (f) Tra Vinh; capital of Tra Vinh Province. 4. There are five project Components - one (Component 5) is focused on technical assistance and operational support to the MoC; and the remaining four are implemented by each city. The five components and budgets are highlighted below. Table 3. Project Financing by Component IDA Share GoV Share Total C1: Tertiary Infra Upgrading in LIAs 80.0 70% 33.8 30% 113.8 C2: Primary and Secondary Infra 71.1 75% 23.4 25% 94.5 C3: Resettlment Sites 28.9 56% 22.7 44% 51.6 C4: Implementation and Project Mngt 37.8 65% 20.0 35% 57.9 C5: TA to MoC for NUUP & Coordination 4.1 86% 0.7 14% 4.8 Base Cost 221.9 69% 101.0 31% 322.9 Contingency 43.8 90% 4.9 10% 48.7 Physical Contingency 21.6 90% 2.4 10% 24.0 Price Contingency 22.2 90% 2.5 10% 24.7 Taxes 26.3 97% 0.9 3% 27.3 TOTAL 292.0 73% 106.9 27% 398.9 Table 4. Project Financing by City/‘Part’ My Tho Can Tho Ca Mau Cao Lanh Rach Gia Tra Vinh MoC TOTAL IDA CP IDA CP IDA CP IDA CP IDA CP IDA CP IDA CP IDA CP Component 1 12.99 7.26 16.46 5.71 14.96 5.80 12.63 7.98 4.65 3.00 18.30 4.07 0.00 0.00 79.99 33.81 Component 2 9.91 1.37 24.29 7.47 5.24 3.15 14.08 4.10 11.64 6.59 5.90 0.73 0.00 0.00 71.06 23.41 Component 3 2.73 4.00 3.43 4.22 5.61 2.78 5.13 3.99 9.66 6.21 2.35 1.52 0.00 0.00 28.92 22.71 Component 4* 4.40 3.66 8.77 2.65 5.40 2.28 6.58 3.78 4.62 3.81 5.84 3.85 2.23 0.00 37.83 20.03 Component 5 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.12 0.69 4.12 0.69 Total Investment 30.03 16.29 52.96 20.05 31.21 14.01 38.43 19.84 30.57 19.61 32.39 10.17 6.35 0.69 221.93 100.65 Physical Contingency 3.00 0.03 5.30 0.16 3.12 1.40 3.84 0.28 3.06 0.27 3.24 0.28 0.00 0.00 21.56 2.42 Price Contingency 3.00 0.03 5.30 0.16 3.12 1.40 3.84 0.28 3.06 0.27 3.24 0.28 0.64 0.07 22.19 2.49 Total Contingency 6.01 0.06 10.59 0.32 6.24 2.80 7.69 0.56 6.11 0.55 6.48 0.55 0.64 0.07 43.75 4.91 Total Taxes 3.60 0.15 6.35 0.09 3.75 0.27 4.61 0.12 3.67 0.22 3.89 0.09 0.45 0.00 26.32 0.94 TOTAL 39.64 16.50 69.90 20.45 41.20 17.08 50.72 20.52 40.35 20.38 42.75 10.81 7.44 0.76 292.00 106.50 20 5. Component 1: Tertiary Infrastructure Upgrading in Low Income Areas upgrades tertiary infrastructure in Low Income Areas including: (a) construction, rehabilitation, and upgrading of roads and lanes; (b) construction and rehabilitation of drains; (c) improvements to environmental sanitation by rehabilitating or constructing public sewers, fostering the construction of septic tanks, providing access to septic management services, and house connections to public sewers; (d) improvement of water supply including the installation of metered house connections; (e) provision of metered house connections for electricity and public lighting in residential lanes and streets; and (f) construction and rehabilitation of social infrastructure facilities such as schools, markets, community halls, and green spaces. 6. Low Income Areas were identified by the cities during project preparation through a methodology adopted from VUUP. Social surveys and community consultations were conducted in each Low Income Area to identify priority investments. The cities developed Community Upgrading Plans (CUPs) for each Low Income Area in consultation and agreement with the communities. The consultation process and updating of CUPs is on-going throughout the project cycle, from upstream identification through to construction. Investments are designed with flexible standards and screened to minimize social and environmental impacts. Communities will make modest contributions similar to arrangements in VUUP.2 7. Component 2: Supporting Primary and Secondary Infrastructure comprises the improvements to primary and secondary infrastructure serving and benefiting Low Income Areas including: (a) roads; (b) water supply lines; (c) drains and sewers; (d) electrical power lines; (e) river and canal embankments; and (f) social infrastructure facilities such as schools, markets, community halls, and green spaces. 8. Component 2 investments have clear linkages to Component 1 investments. In exceptional cases, investments can be stand-alone if they demonstrate substantial and tangible city-wide benefits. The elements of Components 1 and 2 are consistent with the current master plans of each city. The design and implementation of these components will be screened for enhancing urban resilience. 9. Component 3: Resettlement Sites comprises the provision of support to prepare resettlement areas for Affected Persons, including construction of tertiary, primary, and secondary infrastructure. 10. On the basis of the Resettlement Policy Framework (RPF) consistent with Bank safeguards policies, local governments have identified suitable areas for resettlement and developed appropriate site plans. They will carry out resettlement on the basis of Bank reviewed Resettlement Plans (RPs). Component 3 will be implemented in all six cities, managed by the city PMUs. 2 Communities in Low Income Areas will make contributions (cash and voluntary land) to the Project to increase ownership and accountability, while supporting maintenance. This follows similar to arrangements under VUUP, and is consistent with local government practices. Cities have agreed that communities will contribute 3 percent of the cost of road works for upgrading alleys – poor families can be exempted. The Project Operations Manual includes details of how funds are collected and managed. The process is carried out by community leaders as part of the Community Upgrading Plan. 21 11. Component 4: Implementation Support and Project Management activities will provide support for Project implementation, management, supervision, and monitoring and evaluation, including audits. 12. The activities will focus on (i) implementation and project management support to the cities‟ project management units (PMUs), and (ii) program quality assurance, monitoring, and training carried out by the MoC Management Division of Urban Development Projects (MDUDP). The MDUDP will function as the Project Coordination Unit (PCUPCU). 13. PMU Consultant Services: Robust packages of implementation and project management support are required given the existing capacity of city PMUs, the transaction intensive nature of the project, and the inherent complexity of multi-sector urban infrastructure projects. Each city PMU will have a package of consultant services that covers planning, detailed design, procurement support, construction supervision, safeguards, financial management, and monitoring and evaluation. Additional services, particularly for training and further community engagement, are expected. The component will also cover expenses for related goods, equipment, trainings, and travel. 14. PCU Consultant Services: The PCU will be responsible for overall quality assurance and quality control, program monitoring and evaluation, and consolidated program reporting. Responsibilities also include independent monitoring of environmental management and resettlement practices; operations focused trainings and technical assistance (for procurement, safeguards, financial management, etc), capacity building for the six cities, and strengthening the community of practice between cities. The PCU will also be responsible for audits (financial and technical) for all cities, and independent safeguard monitoring of Resettlement Action Plans and Ethnic Minority Development Plans. 15. Component 5 – Technical Assistance to the Ministry of Construction to Implement NUUP includes provision of support to MOC for: (a) development of a national urban upgrading program; (b) designing an operational national urban database on key urban indicators; (c) formulation of climate change adaptation strategies for coastal cities particularly in the Mekong Delta Region; and (d) other support for Project coordination and implementation. 16. The Component will develop the National Urban Upgrading Strategy (prepared under VUUP and endorsed by the Prime Minister) into an operational National Urban Upgrading Program (NUUP). This TA will build on complementary support provided to the UDA through the Cities Alliance. 22 Part 1: Ca Mau City - Summary of Project Investments (Base Cost, US$ million) No. Phase Description Cost IDA IDA % portion 1. Tertiary Infrastructure Upgrading in Low Income Areas 20.77 14.96 72% 1.1 1 Comprehensive upgrading of 5 LIAs) 8.60 6.30 1.2 1 Purchase of sanitation equipment 0.15 0.15 1.3 2 Comprehensive upgrading of 13 LIAs 12.02 8.51 2. Supporting Primary and Secondary Infrastructure 8.39 5.23 62% 2.1 1 Tinh Doi road 1.33 1.27 2.2 2 Roads and embankment along river at Lia 9 (Truong Phung Xuan 1.40 0.78 road) 2.3 2 Roads and embankment along river at Lia 10 (No.1 road) 1.01 0.62 2.4 2 Roads and embankment along river at Lia 12 (Xang Ca Mau – 0.78 0.37 Bac Lieu road) 2.5 2 Roads and embankment along river at Lia 17 (Ganh Hao road) 1.89 1.21 2.6 2 Roads and embankment along river at Lia 18 (Xang Ca Mau – 1.98 0.98 Bac Lieu road) 3. Resettlement Sites 8.39 5.61 67% 3.1 1 & 2 Development of consolidated new resettlement site 5.02 4.63 3.2 1 & 2 In-filling of undeveloped pockets within existing Lias 3.37 0.98 4. Implementation Support and Project Management 7.60 5.27 69% 4.0 Cost of project preparation documents 0.49 0 4.1 1 Project Launch TA and initial implementation support 0.17 0.17 4.2 1 & 2 Program Management, Design, and Implementation 2.26 1.63 4.3 1 Independent Appraisal of Phase 2 0.05 0.05 4.4 1 Construction Supervision of Phase 1 Works (Comp. 1, 2, & 3) 0.77 0.77 4.5 2 Construction Supervision of Phase 2 Works (Comp. 1, 2, & 3) 1.36 1.36 4.6 1 & 2 Financial Management and Accounting 0.15 0.15 4.9 1 & 2 Support to PMU 1.06 0.92 4.10 1 & 2 PMU operational costs. To be fully GoV financed. This includes 0.78 0.05 PMU staff salaries, office costs and other expenditures required for project management. 4.11 1 & 2 Fees and other costs 0.51 0.17 Total Base Cost of the Four Components 45.15 31.07 70% 23 Part 2: Can Tho - Summary of Project Investments (Base Cost, US$ million) No. Phase Description Cost IDA IDA % portion 1. Tertiary Infrastructure Upgrading in Low Income Areas 22.17 16.46 74% 1.1 1 Comprehensive upgrading of 11 LIAs 8.91 6.23 1.2 2 Comprehensive upgrading of 20 LIAs 13.12 10.09 1.3 2 Purchase of sanitation equipment 0.14 0.14 2. Supporting Primary and Secondary Infrastructure 31.77 24.29 76% 2.1 1 Water distribution pipeline for LIA 1 0.11 0.11 2.2 2 Upgrading and expanding roads in Cai Rang District 3.30 2.51 2.3 2 Upgrading Bun Xang Lake and canals in Bun Xang Lake 24.26 17.93 drainage basin 2.4 2 Construction of drain/sewer in Nguyen Viet Hong Street 0.18 0.18 2.5 2 Sao Canal 3.10 2.75 2.6 2 Sanitation equipment and wastewater management investments 0.81 0.81 3. Resettlement Sites 7.65 3.43 45% 3.1 1 & 2 Compensation and assistance 1.95 0 3.2 1 Development of Binh Thuy resettlement site 3.43 3.43 3.3 1 & 2 Unallocated budget for compensation under components 1, 2, and 2.27 0 3 4. Implementation Support and Project Management 11.28 8.78 78% 4.0 Cost of project preparation documents 1.43 0 4.1 1 Initial implementation support 0.29 0.29 4.2 1 & 2 Program Management, Design, and Implementation 4.02 4.02 4.3 1 Independent Appraisal of Phase 2 0.09 0.09 4.4 1 Construction Supervision of Phase 1 Works (Comp. 1, 2, & 3) 1.31 1.31 4.5 2 Construction Supervision of Phase 2 Works (Comp. 1, 2, & 3) 2.33 2.33 4.6 1 & 2 Financial Management and Accounting 0.26 0.26 4.9 1 & 2 Support to PMU 0.35 0.35 4.10 1 & 2 PMU operational costs. To be fully GoV financed. This includes 1.20 0.13 PMU staff salaries, office costs and other expenditures required for project management Total Base Cost of the Four Components 72.87 52.96 73% 24 Part 3: Cao Lanh City - Summary of Project Investments (Base Cost, US$ million) No. Phase Description Cost IDA IDA % portion 1. Comprehensive upgrading of 14 Lias, purchase of sanitation 20.61 12.63 61% equipment 1.1 1 Comprehensive upgrading of 5 LIAs 6.45 4.10 2 Purchase of sanitation equipment 0.21 0.21 1.2 2 Comprehensive upgrading of 9 LIAs 13.95 8.32 2. Upgrading of primary and secondary infrastructure 18.18 14.09 77% 2.1 1 Nguyen Thi Luu Road & bridge& Lo Hoa Road and bridge 2.41 2.05 2.2 2 Tran Hung Dao Road 1.54 0.67 2.3 2 Nguyen Dinh Chieu Road 0.36 0.36 2.4 2 Tran Thi ThuRoad 0.54 0.38 2.5 2 Dinh Bo Linh Road 0.96 0.57 2.6 2 Nguyen Thai Hoc Road 3.11 2.73 2.7 2 Cao Lanh River Embankment Improvement 3.08 1.85 2.8 2 Xang Dao (no. 16) Canal Improvement 1.64 1.50 2.9 2 Ken Cho Embankment Improvement 0.38 0.38 2.10 2 Replacement of water mains in city center 0.43 0.43 2.11 2 Cach Mang Thang Tam Road 0.78 0.66 2.12 2 Ton Duc Thang Road Extension 1.87 1.43 2.13 2 Environmental Sanitation Equipment 1.08 1.08 3. Development of resettlement areas 9.12 5.13 56% 1 & 2 Compensation and assistance 3.99 0 3.1 1 Development of consolidated new resettlement site at Hoa An 5.13 5.13 4. Project management support and technical assistance 10.33 6.566 64% 4.0 Cost of project preparation documents 1.31 0 4.1 1 Initial implementation support 0.21 0.21 4.2 1 & 2 Program Management, Design, and Implementation 2.90 2.90 4.3 1 Independent Appraisal of Phase 2 0.06 0.06 4.4 1 Construction Supervision of Phase 1 Works (Comp. 1, 2, & 3) 0.95 0.95 4.5 2 Construction Supervision of Phase 2 Works (Comp. 1, 2, & 3) 1.68 1.68 4.6 1 & 2 Financial Management and Accounting 0.19 0.19 4.9 1 & 2 Support to PMU 0.57 0.57 4.10 1 & 2 PMU operational costs. To be fully GoV financed. This 2.46 0 includes PMU staff salaries, office costs and other expenditures required for project management Total Base Cost of the Four Components 58.24 38.41 66% 25 Part 4: My Tho City - Summary of Project Investments (Base Cost, US$ million) No. Phase Description Cost IDA IDA % portion 1. Tertiary Infrastructure Upgrading in Low Income Areas 20.24 12.99 64% 1.1 2.96 2.23 1 Comprehensive upgrading of 6 LIAs 1.2 1 Provision of 9 social infrastructure facilities in LIAs 4.18 4.18 1.3 2 Comprehensive upgrading of 11 LIAs 12.75 6.23 1.4 2 Purchase of sanitation equipment 0.35 0.35 2. Supporting Primary and Secondary Infrastructure 11.28 9.91 88% 2.1 1 Bach Nha Canal rehabilitation 1.94 1.69 2.2 1 Lo Me Road rehabilitation 0.82 0.59 2.3 2 Tien River Embankment 6.16 5.52 2.4 2 Road rehabilitation in Area 12, Ward 6 1.37 1.12 2.5 2 Drainage improvement in Areas 5 and 6, Ward 3 0.37 0.37 2.6 2 Purchase of sanitation equipment 0.62 0.62 3. Resettlement Sites 6.73 2.73 41% 3.1 1 Development of My Phong resettlement site 2.73 2.73 1&2 Compensation 4.00 0 4. Implementation Support and Project Management 8.06 4.40 55% 4.0 Cost of project preparation documents 1.21 0 4.1 1 Project launch TA - Interim implementation support 0.13 0.13 4.2 1&2 Program Management, Design, and Implementation 1.77 1.77 4.3 1 Independent Appraisal of Phase 2 0.04 0.04 4.4 1 Construction Supervision of Phase 1 Works (Comp. 1, 2, & 0.58 0.58 3) 4.5 2 Construction Supervision of Phase 2 Works (Comp. 1, 2, & 1.02 1.02 3) 4.6 1&2 Financial Management and Accounting 0.11 0.11 4.9 1&2 Support to PMU 0.71 0.71 4.10 1 & 2 PMU operational costs. To be fully GoV financed. This 2.46 0 includes PMU staff salaries, office costs and other expenditures required for project management Total Base Cost of the Four Components 46.32 30.03 65% 26 Part 5: Rach Gia City - Summary of Project Investments (Base Cost, US$ million) No. Phase Description Cost IDA IDA % portion 1. Tertiary Infrastructure Upgrading 7.65 4.65 61% 1.1 1 Comprehensive upgrading of 3 LIAs 5.24 3.00 1.2 2 Comprehensive upgrading of 4 LIAs 2.41 1.65 2. Supporting Primary and Secondary Infrastructure 18.23 11.64 64% 2.1 1 Improvement of Rach Meo Canal 2.88 2.15 2.2 2 Improvement of Kien River and Hien Canal 13.58 8.45 2.3 2 Improvement of Nguyen Truong To Street 1.77 1.04 3. Resettlement Sites 15.87 9.66 61% 3.1 1 Development of Vinh Quang resettlement site 4.66 4.66 3.2 1 Development of An Hoa resettlement site 5.00 5.00 3.3 1 Compensation and assistance 6.21 0 4. Implementation Support and Project Management 8.36 4.55 54% 4.0 Cost of project preparation documents 1.42 0 4.1 1 Initial implementation support 0.16 0.16 4.2 1&2 Program Management, Design, and Implementation 1.78 1.78 4.3 1 Independent Appraisal of Phase 2 0.05 0.05 4.4 1 Construction Supervision of Phase 1 Works (Comp. 1, 2, & 3) 0.70 0.70 4.5 2 Construction Supervision of Phase 2 Works (Comp. 1, 2, & 3) 1.25 1.25 4.6 1&2 Financial Management and Accounting 0.14 0.14 4.9 1&2 Support to PMU 0.47 0.47 4.10 1 & 2 PMU operational costs. To be fully GoV financed. This includes 2.39 0 PMU staff salaries, office costs and other expenditures required for project management Total Base Cost of the Four Components 50.11 30.50 61% 27 Part 6: Tra Vinh City - Summary of Project Investments (Base Cost, US$ million) No. Phase Description Cost IDA portion IDA % 1. Tertiary Infrastructure Upgrading 22.36 18.30 82% 1.1 1 Comprehensive upgrading of 12 LIAs 10.68 9.92 1.2 2 Comprehensive upgrading of 11 LIAs 11.68 8.38 2. Supporting Primary and Secondary Infrastructure 6.63 5.91 89% 2.1 2 Access roads to LIA 1 0.94 0.94 2.2 2 Extension of Nguyen Dang Road 1.34 0.61 2.3 2 Extension of water supply system 0.26 0.26 2.4 2 Extension of drainage/sewerage system 1.99 1.99 2.5 2 Ben Xuong canal embankment 2.11 2.11 3. Resettlement Site 3.87 2.35 61% 1 Compensation 1.52 0 3.1 1 Development of consolidated new resettlement site 2.35 2.35 4. Implementation Support and Project Management 9.68 5.82 60% 4.0 Cost of project preparation documents 1.40 0 4.1 1 Initial implementation support 0.18 0.18 4.2 1&2 Program Management, Design, and Implementation 2.42 2.42 4.3 1 Independent Appraisal of Phase 2 0.09 0.09 4.4 1 Construction Supervision of Phase 1 Works (Comp. 1, 2, & 3) 0.78 0.78 4.5 2 Construction Supervision of Phase 2 Works (Comp. 1, 2, & 3) 1.40 1.40 4.6 1&2 Financial Management and Accounting 0.16 0.16 4.9 1&2 Support to PMU 0.18 0.18 4.10 1 & 2 PMU operational costs. To be fully GoV financed. This 2.46 0 includes PMU staff salaries, office costs and other expenditures required for project management 4.11 1 & 2 Environmental program 0.61 0.61 Total Base Cost of the Four Components 42.54 32.38 76% 28 Annex 3: Implementation Arrangements VIETNAM: Mekong Delta Region Urban Upgrading Project Project Administration Mechanisms 1. The project will be implemented in a decentralized manner by the cities under the supervision of the relevant provincial level administrations. In addition, the MoC will provide top-level coordination for program quality assurance, monitoring, and training functions; the MoC will also implement the larger urban upgrading agenda at the national level. 2. The six cities are responsible for implementation at the local level. The City People‟s Committees will be the owners of the respective sub-projects, as defined in Decree 131 of 2006. Each participating city has established a Project Management Unit (PMU) to manage the day-to- day activities of its works portfolio and consulting services. 3. Provincial Steering Committees (PSC), chaired by the Chairman or Vice Chairman of the Provincial People‟s Committee, have been established in each city. However, in Can Tho City the PSC has been established at city level because the city has provincial status. The PSCs include representatives of relevant provincial agencies, such as the Departments of Planning and Investment, Natural Resources and Environment, Finance, Construction, and Transport. The PSCs are responsible for guidance, support and supervision of the sub-projects and the PMU. 4. Project Management Units (PMUs) will work with relevant provincial and city agencies and will be the contracting agencies for all project-financed contracts. The PMU Director will be a member of the PSC. The PMUs, supported by consultant teams, will be responsible for the detailed design of the works that were not completed prior to credit negotiations, preparation of bidding documents, inviting and evaluating bids, contracting, supervising and documenting all construction works, managing contracts, and ensuring full compliance with the Bank‟s safeguards policies. The PMUs will also be responsible for the financial management aspects of the project. After the completion of works, the PMUs will transfer the sub-projects to the relevant city agency for operation and maintenance. 5. Project Coordination Unit (PCU). The MoC Management Division of Urban Development Projects (MDUDP) will be the PCU with responsibility for coordination, quality assurance, monitoring, audits, and training functions of the Project, and also to prepare an operational National Urban Upgrading Program (Component 5). The MDUDP has extensive experience implementing Bank-funded projects, including VUUP. 6. Capacity Constraints and Consultant Support. There is a general trend in the Bank‟s Vietnam portfolio of an initial learning curve and capacity constraints for city-level PMUs to effectively implement projects per the Bank‟s policies. The combination of low capacity and number of transactions under the Project is a potential implementation bottleneck requiring adequate controls and technical support. The fiduciary capacity assessments include plans to strengthen PMU capacity. Given the scope of resettlement and civil works, robust consultant support will be required for implementation and training to support the PMUs. In addition, the 29 MoC MDUDP will have a dedicated unit for quality assurance, monitoring, and training for all of the six cities. 7. Project Phases. The six cities financed the Feasibility Studies and basic designs for phases I and II. The cities will continue to finance, and are expected to complete by May 2012 the detailed designs and bidding documents for the first phase of the Project. The first phase is equivalent to 30 percent of the value of the portfolio, or the first 18-months of activities. Phase II preparation, and all implementation are financed through the Project. Financial Management 8. The Financial Management Assessment (FMA) identified the following key risks associated with the Project: (i) the proposed project implementing agencies, especially at the provincial levels have no prior experience in working with Bank funded projects and are not familiar with the Bank FM requirements; and (ii) the Project follows a decentralized design which on one hand can give more flexibility and autonomy to provinces but on the other requires more capacity and accountability of provinces especially in relation to funds flow monitoring and financial reporting requirements. These two factors require good management and coordination between the central level in PCU and the provincial levels in PMU. Therefore, a “Substantialâ€? FM risk before mitigating measures was assigned to the Project during preparation stage with potential to reduce to “Moderateâ€? after the mitigating measures have been implemented. The main actions required are: (i) acceptable FM staffing appointed at all implementing agencies to whom necessary training on Bank FM requirements and disbursement procedures will be provided; (ii) a Project FMM shall be developed as a part of the Project Operation Manual describing the roles and responsibilities of parties concerned and specifying the FM procedures and regulations of the Project; (iii) a Project accounting software installed and all accounting staff trained in its use; and (iv) an internal audit TOR to build up the capacity of the inspectorate agencies shall be developed and reviewed by the Bank. 9. Project staffing. The PCU and the PMUs will assign FM staff with acceptable accounting qualifications and experience to be responsible for Project‟s financial management and accounting at both central and provincial levels. Training on Bank FM requirements and disbursement procedures should also be provided to relevant FM personnel at proposed implementing agencies. 10. Budgeting and counterpart funding arrangement. Commitments on counterpart funding arrangements for the Project at both central and provincial levels will be needed to ensure Project counterpart funds are available during Project implementation. Budgeting procedures, including roles and responsibilities of each position within PCU/PMU, the budgeting process, and the link between the procurement plan, the physical plan, the financial plan, and the disbursement plan shall be developed in the Project FM Manual. 11. Accounting system. For the Project, a consistent accounting system including accounting policies and procedures follows the Accounting System for Investment Owner; Decision 214 of the Ministry of Finance (MoF) will be applied. The chart of accounts will be modified as necessary to meet the Bank FM requirements. 30 12. Accounting software. A computerized accounting system will be installed for use at all implementing agencies to provide a consistent accounting and reporting function and to ensure that the PCU can consolidate the Project financial reports. 13. Internal controls. Internal control procedures will be established in the Project FM Manual. 14. Financial reporting. Quarterly Interim Financial Reports (IFRs): The PCU in MOC will consolidated Project quarterly Financial Monitoring Reports (FMRs) prepared by the PMUs which will cover all Project activities, including counterpart funding. The FMRs will be based on the Aligned Monitoring Tool (AMT), which is regulated under the Decision 803 of the Ministry of Planning and Investment, and sent to the Bank within 45 days of the quarter end. 15. Annual Project Financial Statements. The PCU will prepare consolidate annual financial statements covering all Project components and activities. The audited annual Project financial statements should be submitted to the Bank within six months of the end of each financial year. 16. Internal Auditing. Under this Project, MOC and DOCs/PPCs will be responsible for the internal audit of the PCU and the PMUs. An internal audit consultant will be recruited by the PCU to conduct capacity building activities for the assigned internal auditors at both the central and provincial levels (either local inspectorate agencies or Department of Finance). The TOR of the internal auditors will be approved by the Bank, and the Internal Audit Consultant is to be engaged no later than six months after Credit effectiveness. The training provided by the Internal Audit Consultant will strengthen the internal audit functions at both the PCU and the PMUs and assure capacity of the internal auditors assigned to perform internal audits for the Project. 17. External Auditing. PCU will appoint independent auditors acceptable to the Bank. The Project financial statements will be audited annually in accordance with International Auditing Standards and an acceptable Terms of Reference. The auditors‟ reports will be made available to the Bank within six months of the close of the fiscal year. Disbursements 18. Disbursement. It is proposed that a total of seven Designated Accounts (one in the PCU and one at each of the six PMUs) for IDA will be opened in US dollars at commercial banks with terms and conditions satisfactory to IDA. The IDA Designated Accounts will have an authorized allocation as stated in the Disbursement Letter. Replenishment applications will be submitted monthly or when the account is drawn down to 50 percent of the authorized allocation, whichever occurs first. For credit disbursements other than through the DAs, such as by direct payment or for issuance of special commitments, a minimum application value of 20 percent of the authorized allocation of the DA will be observed. 19. Funds Flow Arrangements. The Project will use the following disbursement methods as stipulated in the Disbursement Letter: Advance, Reimbursement, and Direct Payment. For the Designated Accounts (DAs) the initial transfer will be based on six months estimate of funds 31 needed for Project activities, within the authorized allocation of the DA, as stated in the Disbursement Letter. The initial transfers will be made after receipt by the Bank of acceptable withdrawal applications. For payments made from the DAs, funds will transferred from the DAs and from state treasury accounts, for counterpart funding, to contractors, suppliers and other beneficiaries subject to verification procedures by the local state treasuries. The PCU/PMUs will report to the Bank on the operation of the DA on a monthly basis. Procurement 20. Procurement Capacity Assessment (PCA). A procurement capacity assessment was done for seven major project implementing agencies (including the six PMUs and the PCU). This assessment found that except for the PCU, all PMUs are newly established agencies and do not have prior procurement experience. The procurement staff generally have limited public procurement experience and no Bank procurement experience. Given (i) the high risk of the country‟s public procurement system according to the Country Procurement Risk Assessment (CPRA) conducted in 2002 and country procurement assessments updated subsequently, (ii) the substantial risk for the sector based on the past performance of similar projects, and (iii) the findings of the PCA presented above, the procurement risk for the proposed project is rated as High. The main risks identified by the PCA are presented in the ORAF at Annex 4. 21. To mitigate the identified procurement-related risks, the following actions have been agreed between the Bank and the PCU/PMUs. Actions Responsible Date of Completion 1 Designate staff to be appointed to the position of Procurement PCU and PMUs Completed by Negotiations Specialist having qualifications and experience acceptable to the Bank 2 Submit a draft Project Operations Manual (including inter alia a PCU Completed by Negotiations chapter on Procurement giving a hands-on step by step guidance for the procurement procedures applicable under the project) 3 Provide initial procurement training to PMUs Bank During implementation 4 Finalize and adopt the Project Operations Manual acceptable to PCU & PMUs Completed by Negotiations the Bank 5 Provide in-depth hands-on procurement training to PMUs Bank & PCU Conducted during preparation, to continue through implementation. Progressive sift in training responsibilities from Bank to PCU 6 Organize contract management/capital works management PCU & PMUs During implementation training/ English training for PMU staff 7 Prepare and adopt an Action Plan to Improve Fairness and PCU & PMUs By Credit Effectiveness Transparency in Procurement 8 Hire procurement and contract management consultants PCU & PMUs During implementation 9 Set up and operate an adequate procurement filing system PCU & PMUs During Implementation 10 Establish a project-wide effective complaint handling mechanism PCU & PMUs During Implementation 32 22. It is expected that after the above measures have been taken, the risk would be reduced to Substantial. 23. Applicable Procurement Rules. For contracts financed in whole or in part by the IDA Credit, procurement shall be carried out in accordance with the World Bank‟s “Guidelines: Procurement under IBRD Loans and IDA Creditsâ€? dated May 2004 (the Procurement Guidelines), revised in October 2006 and May 2010; the “Guidelines: Selection and Employment of Consultants by World Bank Borrowersâ€? dated May 2004, revised in October 2006 and May 2010 (the Consultant Guidelines); and the provisions stipulated in the Financing Agreement. 24. Procurement Methods. Works estimated to cost the equivalent or more than US$3 million per contract and goods estimated to cost the equivalent or more than US$0.3 million per contract shall be procured through International Competitive Bidding (ICB). For these ICB contracts, domestic preference may be applied in the case of goods, but no preference shall be given for works in accordance with paragraphs 2.55 and 2.56 of the Procurement Guidelines. Smaller contracts for works (estimated to cost less than US$3 million each) and goods & non- consulting services (estimated to cost less than US$0.3 million each) may be procured through National Competitive Bidding (NCB). The NCB procedures to be followed shall be those set forth in the Recipient‟s procurement laws and regulations, but subject to modifications, waivers, and exceptions as clarified in the NCB Annex to the Financing Agreement. Works and off-the- shelf goods of very small value (less than US$100,000 per contract in case of works and US$50,000 per contract in case of goods) may be procured through Shopping. Direct Contracting may also be used, but only in exceptional circumstances as stated in the Procurement Guidelines with the Bank‟s prior agreement. With regards to consulting services, Quality and Cost Based Selection (QCBS) would be used as the preferred method. Where QCBS is not suitable, other methods including Quality Based Selection (QBS), Least-Cost Selection (LCS), Selection based on Consultants‟ Qualification (CQS), and/or Individual Consultants may be used depending on the specific nature, value and complexity of the assignment. Single-Source Selection (SSS) may also be used but only in exceptional circumstances as described in the Consultant Guidelines with the Bank‟s prior agreement. 25. Procurement Plan. The Borrower has prepared a consolidated Procurement Plan for the first 18 months of implementation which was agreed with the Bank during Credit negotiations. The Procurement Plan will be updated annually by each PMU to reflect the project implementation needs and each update shall be subject to the Bank‟s prior review. Procurement under the project shall be carried out in accordance with the agreed Procurement Plan/s, as updated. 26. Review by the Bank. The Bank will carry out procurement prior review of the following: (a) any substantial revisions to and updates of the Procurement Plan; (b) each contract for works estimated to cost US$500,000 equivalent or more; (b) each contract for goods estimated to cost US$150,000 or more; (c) each contract with consulting firms estimated to cost US$100,000 equivalent or more; (d) each contract with individual consultants for long-term technical assistance, advisory services and procurement support; and (e) each contract procured and awarded under Direct Contracting or SSS method. The Procurement Plan will also carry 33 information concerning those contracts which are subject to the Bank‟s prior review. It is noted that the above prior review thresholds may be revisited and adjusted, with the Bank‟s prior review agreement, during the project implementation subject to the improvement of procurement capacity of PMUs and the residual procurement risk of the project. 27. Contracts other than those listed above shall be subject to the Bank‟s post review. The Bank will carry out procurement supervision missions to conduct post review of contracts that are not subject to the above prior review requirements on a frequency of every twelve (12) months. The Bank‟s procurement post-review will cover at least 20 percent of these post- reviewed contracts. Environment and Social 28. Environment. The six project cities contracted consultants to prepare comprehensive EIA reports that, as part of the environmental assessment process, gathered valuable, city-specific environmental and technical data and information. A consolidated EIA was also prepared based on the individual city EIA to present, in a more concise and consistent form, the various environmental impacts of the proposed project, and to set out environmental management plans (EMPs). Both the individual city EIAs and the consolidated EIA comply with both World Bank and Government of Vietnam (GoV) requirements. 29. The findings of the individual EIAs show that environmental and social impacts of the project will be positive particularly on living conditions, environmental conditions and infrastructure services in the project cities, in particular in the project LIAs. Key positive impacts of the project include reduction in traffic congestions and traffic-related accidents, improved water supply, improved capacity of the drainage system, collection and treatment of wastewater and solid waste, improved quality of waterways and improved living conditions in LIAs. 30. The project will cause some negative impacts on the local environment and on the local population. Most of the negative impacts, however, are assessed to be localized, reversible and manageable limited only to the urban areas during the construction phase. Negative impacts include air, noise and water pollution during construction, soil erosion and sediment deposition, generation of solid and construction wastes, generation and disposal of dredged materials from dredging and excavation, odors caused by materials dredged from canals and rivers, traffic disruption and congestion, temporary losses to local businesses, damage to existing infrastructure and public services, risks to public safety due to construction activities, occupational health and safety and overburdened local authorities. 31. The negative impacts can be addressed through proper design, site and construction management; stringent application of Environmental Codes of Practice (ECOP) and site–specific measures, as proposed in the individual EMPs. Mitigation measures will be incorporated into the bidding documents and contract for all civil works. Construction Supervision Consultants (CSCs), together with the PMUs, are responsible to ensure that contractors comply with the environmental provisions of their contracts. 34 32. A review of linked or associated projects and ancillary facilities, which will not be financed by the project, carried out as part of the EIA and due diligence work showed that most of the linked or associated projects are treatment systems for wastewater collected from LIAs to be upgraded under the project, while ancillary facilities are mainly city landfills, which will receive non-toxic dredged materials from the project, construction waste and solid waste from LIAs. Due diligence revealed that all landfills are existing with the exception of An Xuyen landfill in Ca Mau City, which will be expanded using local funds. All landfills have the required lining to prevent groundwater contamination and leachate collection and treatment systems. They are also covered by EIAs, which were reviewed and approved by DONRE/MONRE. For the expansion of An Xuyen landfill, proper lining and leachate collection and treatment system are part of the design. All landfills are incorporated into the city EMP as the disposal sites for dredged materials and will be monitored accordingly during project implementation. The wastewater treatment systems, which are financed by KfW and NORAD, are also covered by EIAs which were reviewed and approved by MONRE, and were reviewed by the funding agencies. Based on the assessment and due diligence review, cumulative impacts from linked or associated projects and ancillary facilities are deemed insignificant. 33. Various alternatives were considered during the preparation to avoid or minimize adverse environmental and social impacts. The EIAs presented a brief analysis of a theoretical “without projectâ€? case, clearly demonstrating the benefits of the project. In the course of the feasibility study and EIA preparation, a more detailed analysis of alternatives was undertaken – where appropriate – for some subcomponents, based on a combination of technical, economic, environmental, and social criteria. 34. To facilitate effective implementation of the EMPs and ECOP, the city subproject PPMUs will: (i) establish an Environmental and Social Unit (ESU) responsible for ensuring the timely implementation of the EMP, including monitoring, reporting, and capacity building related to safeguards; (ii) assign the Construction Supervision Consultant (CSC) to be responsible for supervision of the contractor‟s safeguard performance as part of the construction contract and include this requirement in the CSC terms of reference (TOR); and (iii) hire qualified national consultants as the Independent Environmental Management Consultant (IEMC) to assist the ESU in performing these tasks. The cities‟ water supply, drainage, and urban maintenance companies, as appropriate, will be responsible for implementing the mitigation measures during the operation stage of the project and for providing the required budgets. The Provincial Steering Committee (PSC) chaired by the Chairman or Vice Chairman of the Provincial People‟s Committee (PPC) of the respective province will provide the overall policy guidance and oversight for project implementation, including the EMP. Training and capacity building will be supported by the project. 35. Environmental Monitoring. The project will not include Independent Environmental Monitoring Consultants, as per VUUP. This decision is mainly due to a safeguards portfolio review conducted in December 2011. Environmental monitoring will be carried out through the CSC‟s regular progress reports to the PMU, which will be shared with the provincial Departments of Natural Resources and Environment (DONRE). 35 36. The PCU will have a „roving‟ Quality Assurance Quality Control Unit (QAQC), responsible for regular portfolio spot checks of construction quality and compliance with the EMPs. The objective of the QAQC Unit is to provide more frequent monitoring, maintaining independence from the city PMU, the ability to provide timely alerts and make recommendations for poor environmental management practices, while being able to also have a broader project- wide perspective. Other Safeguards Policies 37. OP 7.50 on International Waterways is triggered as four of the six cities are located on an international waterway. Two branches of the Mekong River split in Cambodia, becoming the Song Tien and the Song Hau Rivers. The Song Tien River crosses into Vietnam and runs through Cao Lanh, and splitting further into smaller branches running through My Tho and Tra Vinh. The Song Hau River crosses into Vietnam and runs through Can Tho. The project will upgrade, improve, or rehabilitate existing urban schemes for storm-water drainage, wastewater sewerage, water supply, and canal embankments. Given the general scope of work, the task team judges (i.) the project will not adversely affect the quality and quantity of water flows to the other riparians and (ii.) it will not be adversely affected by other riparian‟s water use. Per paragraph 7 of OP 7.50, the Project is exempt from the requirement that the other riparian states be notified of the projects. 38. OP 4.11 Physical Cultural Resources (PCR). In all a total of 474 graves will need to be relocated. Consultations during project resettlement preparation and planning held with all grave owners confirmed that all project-affected persons agreed with the proposed removal and compensation to be provided for undertaking the relocation of grave sites. Project implementation will marginally impact nine pagodas in Can Tho, one in Tra Vinh and two in My Tho (mainly pieces of land, fences, yards and columns). The consultations conducted with the pagoda owners provided them with information on the project‟s scope, adverse impacts and provisions for compensation measures, as relevant, that will ensure compensation at full replacement costs for the affected pagodas. During consultations the support of pagoda owners to the project was confirmed. Moreover, as there would be a possibility of finding cultural or archeological relics during project implementation procedures are incorporated into the standard environmental codes of practice, to be applied as needed. Social (including Safeguards) 39. Social Impact Assessment. The socio-economic survey, social impact assessment and poverty mapping exercises were conducted in all six cities during the project preparation as a part of the project‟s feasibility studies. The methods used in these exercises included participatory, focus group discussions, structured interviews, household visits and workshops, in each city. In addition, the assessment team sought to increase awareness of local beneficiaries and the project affected households on the project interventions and impacts. The recommendations from these social exercises have been taken into account in the project technical designs as well as for development of social safeguard documents, i.e., the Resettlement Policy Framework (RPF), the six Resettlement Plans (RPs), and the four Ethnic Minority Development Plan (EMDPs). 36 40. The six subprojects will directly benefit 322,000 persons living in the selected urban low- income areas (LIAs) in Ca Mau, Can Tho, Cao Lanh, My Tho, Tra Vinh and Rach Gia. In addition, about 1,948,000 persons will indirectly benefit from the project. The project is expected to have significant positive social impacts by developing policies for ensuring consultation and participation and promoting social inclusion of the poor people living in the project area as well as by upgrading urban infrastructure (roads, drainage, water supply and sanitation, public facilities, and power supply) based on community priorities. For the Khmer Ethnic Minority communities, this would provide with a way of integration to the main stream urban development and its benefits. In addition, new job opportunities will be introduced through additional job training as agreed in EMDPs. 41. Adverse impacts of the project will be caused by unavoidable land acquisition in all six Project cities, including impact on Khmer people as an ethnic minority group in four out of six cities. As a result, OP4.12 on Involuntary Resettlement and OP 4.10 on Indigenous People are triggered. 42. Involuntary Resettlement OP 4.12. During the preparation phase technical options were carefully analyzed in all cities to minimize the scope of land acquisition and its consequent impacts. A Resettlement Policy Framework for the project and Resettlement Plans (RPs) for six cities was prepared to ensure that all project-affected persons will restore their lost assets or at least restore their livelihoods to pre-project levels. 43. The elaboration of the RPs involved the collection of qualitative and quantitative information through: inventory of losses; survey of replacement cost; socio-economic survey of affected households, and qualitative information gathered during consultations. Consultations undertaken during project preparation with project-affected persons supported a meaningful participation. Project-affected persons‟ recommendations and perceptions were incorporated as part of the RPs, reaching agreements on the project‟s intervention scope, proposed components, and proposed compensation and rehabilitations measures for project‟s impacts. The project will establish independent land valuation expertise, responding to a shared concern among affected people, to ensure adequate land replacement costs. Activities proposed as part of the livelihood restoration strategy for poor and vulnerable affected persons included women-headed households with dependents, ethnic minorities (EMs) and people under the government preferred social policy. All RPs have been disclosed before appraisal, among the project- affected persons. 44. Per the RPs, the summary of the land area to be acquired and number of households and impacted persons follows: Land Acquired (HA) Affected Households Relocated City Residential Agriculture Total Households Persons Households Ca Mau 7.6 8.7 16.3 3,180 14,628 715 Can Tho 3.3 12.3 15.7 2,916 11,070 133 Cao Lanh 8.6 15.8 33.1 2,333 10,499 324 My Tho 2.8 4.0 8.0 2,077 9,463 287 Tra Vinh 1.5 4.5 6.2 1,821 7,108 126 Rach Gia 10.6 20.2 31.6 2,507 11,833 703 Total 34.4 65.5 110.9 14,834 64,601 2,288 37 45. A Resettlement Policy Framework (RPF) and six Resettlement Plans (RPs) for all subcomponents of the project that require land acquisition were prepared. The RPF and RPs have been developed in accordance with the Bank's OP 4.12 on Involuntary Resettlement, the latter has already been submitted to the Prime Minister for approval. 46. Eight resettlement sites (totaling of 67.7 ha) will be constructed to accommodate the needs of about 2,288 relocated households. Five out of six cities will allocate land plots in the project resettlement sites for those households losing much of their agricultural land. In Cao Lanh city, agricultural land is available for the farmers to buy if they wish to do so. RPs comprise all of the project‟s land acquisition with the exception of 11 possible additional resettlement sites in eleven LIAs of Ca Mau city, to be identified during project implementation. These sites would accommodate about 341 displaced people (DPs), including 11 Khmer DPs enabling them to remain in the vicinity of their original locations. The estimated total area of these eleven sites is 5.45 ha. CaMau will acquire land by applying a method that complies with voluntary sale to ensure the land is free of claims. 47. Voluntary Donations. The Project‟s direct beneficiaries, are expected to contribute to the upgrading as per the principles described below; these were determined based on consolations with the communities. Principles for voluntary land donation a. Households are provided full information on project compensation and resettlement policy. Information on compensation and voluntary donation will be disseminated in public places accessible to the community. b. Land donations by residents must be voluntary through informed consent and freely agreeing to participate in the project. They will have the option to agree or disagree on land acquisition without adverse consequences being imposed. c. Community households decide the scope of land acquisition for the Project and the scope of their voluntary land donation. d. The scope of affected land should be small (less than 10% of their land holding and DPs are not relocated). e. The project will provide with a suitable scheme for claims and problems resolution. Details of the process of voluntary land donation are described in the operations manual. 48. Tracking and monitoring. PMU has to report on the voluntary donation of land to the CPC and the World Bank for review before commencement of this exercise. Independent monitoring must be conducted for about 20% of the voluntary households. Details of the steps and protocol will be part of the operational manual. 49. Independent Land Appraisal. Each PMU will engage professional asset appraisers during the initial stages of the resettlement implementation to conduct a replacement cost survey for 38 each type of assets. The survey results will be used as a basis for the PMUs and the Provincial People's Committees to decide compensation rates at full replacement costs. 50. Independent Resettlement Monitoring. The MOC will contract an experienced independent resettlement monitoring agency (IMA) for external monitoring of the resettlement and ethnic minority plans implementation. The IMA will submit its reports bi-annually to the PMUs, MOC and to the Bank. The IMA will also conduct an evaluation of resettlement implementation 6-12 months after the completion of all resettlement activities to assess whether or not the DPs have been able to restore their lost assets, livelihoods and incomes to pre-project levels. 51. Grievances redress mechanisms (GRM) will ensure access for project-affected people to freely pose their questions, concerns and problems. The procedures will ensure both recording and processing of grievances and documenting all official responses. The project-affected people will be provided with on-going information on the authority of project officials in charge of solving project complaints on land, assets acquisition, physical relocation and income restoration. The project GRM will also be open for complaints related to the project. 52. Linked projects. During project preparation a thorough screening of potentially linked projects was conducted and due diligence reviews were carried out in all six cities. The due diligences included the following: a. Can Tho - the past land acquisition activities for the Waste Water Treatment Plan and Sewage funded by KFW. b. CaoLanh - a flood prevention embankment funded by the government which cleared the site for upgrading the NgoSiLien street to be funded by the proposed project. c. MyTho - past land acquisition activities for the BachNha channel upgrading project funded by the government, which will be connected directly with channels to be funded by the proposed project. 53. These above reviews confirmed that compensation, livelihood restoration and resettlement activities followed national policies considered to be consistent with Bank policy. The project will follow-up during implementation on the livelihoods restoration for DPs in Cao Lanh and My Tho. 54. In addition, in three other non-Bank financed projects linked to the proposed the MDR- UUP, land acquisition activities were completed in 2008 or earlier. A quick due diligence review for these subjects confirmed that there are no legacy issues. 55. OP4.10 Indigenous Peoples. Four Ethnic Minority Development Plan (EMDPs) were prepared to ensure that the proposed projects‟ impacts are mitigated/compensated and benefits enhanced. The project carried out meaningful and culturally appropriated consultations with affected EMs and key stakeholders to enabled EMs to pose their demands and preferences. EMDPs define the support required to strengthen the institutional capacities required for EMDPs implementation. The EMDPs budgets will assure adequate funding for their implementation. 39 56. Affected EM households‟ needs and concerns are reflected in the four RPs. The RPs include measures to mitigate the impacts and assist them to fully restore their lost assets and livelihoods. Special attention was given to ensure benefits to EMs from the project intervention. All relocated households will be provided land-based resettlements and RPs define special income restoration and development strategies for ethnic minority peoples. EMDPs were disclosed before project‟s appraisal in a culturally appropriate manner and accessible to EM peoples. 57. Gender. The project is expected to have significant social benefits by improving the living and environmental conditions of low-income communities. The Project‟s design and approach (using participatory planning tools, intensive community consultation, a focus on local disclosure, and the involvement of communities in monitoring) is based on the lessons from VUUP. The key monitoring and evaluation indicators (including user satisfaction surveys) are disaggregated by gender. 58. Implementation Arrangements. The People's Committees of the project cities, supported by provincial authorities, will assume overall responsibility for their respective resettlement and EMDPs. The Provincial People's Committees will give the final approval for land acquisition, allocation and compensation rates. All compensation and land acquisition costs, and the cost of EMDP implementation, will be financed by counterpart funds. 59. The PMUs will be responsible for the overall implementation of the resettlement and EMDPs plans; coordination among agencies (City peoples Committee and local government agencies); and elaboration of ongoing reports and project-related information, with the involvement of affected people. PMU have been provided with training on the Bank's social safeguard policies and practices and will continue to be trained, as part of the capacity building component, during project implementation. The PMU will also be in charge of monitoring the resettlement of the project. In addition, the MOC will support capacity building on the monitoring and evaluation activities of the PMUs. 60. Consultation and disclosure. Consultations with the project affected households and other stakeholders were carried out during development of the RPF, CUPs (Community Upgrading Plans for LIAs). Information on the project's objective, potential impacts, and relevant features of compensation and resettlement policy frameworks, and ethnic minority policy, were widely disseminated. A participatory approach was used to reach consensus on the resettlement policy and entitlements for various adverse impacts for the RPs and EMDPs. A similar participatory approach will be pursued during project implementation to ensure effective implementation of the project's RPF, RPs, CUPs and EMDPs. 61. The final drafts of the EIAs/RPF/RPs/EMDPs in Vietnamese have been disclosed locally (at each city's People's Committee office and project wards/communes) and in VDIC (both Vietnamese and English versions) in Hanoi on January 6, 2012. The English versions have been sent to InfoShop in Washington, DC on January 10, 2012. The final versions of the EIAs/RPF/RPs/EMDPs will be re-disclosed locally and at the Bank's InfoShop. 40 Monitoring and Evaluation 62. The PMUs, supported by consultants, are responsible to collect and interpret the Project‟s outcome and results indicators. The Project monitoring indicators were developed recognizing the capacity, availability of data, and costs of M&E. The MoC CPU consultant team will consolidate all M&E indicators to track project-wide results. 63. The Project will participate in the Bank‟s Impact Evaluation program, which provides technical assistance to the client to better design and monitor key indicators. The specific evaluation will assess the existing key indicator for increased property value, corrected for inflation, in low-income areas across all cities. Governance and Anti-Corruption 64. The project has a Governance and Transparency Action Plan (GTAP) that, together with the Bank‟s normal policies and practices, addresses the general governance environment in Vietnam and risks associated with urban infrastructure projects and smaller-scale works. The Project GTAP is pragmatic, focusing on actionable interventions in consideration of budgets and capacity resources. The GTAP has been discussed and agreed with the MoC and cities, and is included in the Project Operations Manual (POM). The GTAP comprises three parts: (i) the principles and actions already set out in the Bank‟s policies and guidelines; (ii) specific measures focused on Awareness and Capacity, Transparency and Disclosure; and (iii) Monitoring and Evaluation. 41 Annex 4: Operational Risk Assessment Framework (ORAF) VIETNAM: Mekong Delta Region Urban Upgrading Project 1. Project Stakeholder Risks Rating Substantial Description: Communities in Low Income Areas are the key Risk Management: The project developed Community Upgrading Plans (CUPs) based on robust project stakeholders. There is risk that despite the Project‟s consultation and engagement, transparent planning, and a means for communities to express their community consultation processes, it will be challenging to priorities. The CUPs will be updated throughout implementation. Cities will ensure that develop full consensus on all aspects of the project - particularly resettlement areas are built to quality standards with supporting social and economic infrastructure identification of priorities and sub-projects. – thus making these places an attractive area to relocate. All city PMUs will have consultant support for project management and tracking of complaints handling. The Governance, Transparency, and Accountability Plan emphasizes transparency and access to information to the public and project affected people on the expected scope of work and results of the portfolio. This approach will help stakeholders manage expectations, while keeping the PMUs accountable. The cities have aggressively reduced resettlement impacts and requirements during preparation by adopting more flexible design standards and by sub-project selection. Upgrading projects are proven to benefit from the involvement The methodology for developing CUPs ensures that women are well represented and involved in of women throughout the project cycle - particularly during every step of the Project. Further initiatives will be developed for women to have a specific role investment identification and implementation monitoring. The representing the community in monitoring the quality of works in respective Low Income Areas. Project needs to ensure women are effectivly involved to reduce implementation risks. Resp: Client Stage: Prep through Due Date : n/a Status: on- implementation going 2. Implementing Agency Risks (including fiduciary) 2.1 Capacity Rating: Substantial Description: Risk Management: Only one of the six cities has prior experience implementing Robust consultant support and trainings will be provided to all PMUs – particularly during the first Bank financed projects. All cities generally have low-capacity, two years of implementation. The six cities will benefit from the top-level coordinating role of the and will initially have difficulties applying Bank procedures and Ministry of Construction. The MoC will also have a project-level quality assurance and quality practices (safeguards, fiduciary, contract management, and control function, including consolidated project monitoring and reporting. 42 quality assurance). Procurement: Cities could have difficulties following Bank All cities will have detailed procurement trainings (carried out initially by the Bank, then by the procedures. Often in Vietnam, PMUs try to satisfy both Bank MoC, supported by their quality assurance consultants) for both works and consultant services at and GoV standards in parallel, or are reluctant to follow Bank the start of the project. Procurement consultants (individual consultants) for the city PMUs will be procedures that differ from the GoV‟s. QCBS evaluation is mobilized early to focus on QCBS contracts and the initial works packages. often challenging for PMUs. Financial Management: Project funds may not be used A Project Implementation Manual (PIM), which includes a financial management section, efficiently and economically and for the intended purposes; acceptable to the Bank has been prepared and will be used by the PMUs. Accounting software will payments may be made without goods and services being fully be used for accounting records and reporting purposes. Intensive training on World Bank financial delivered or without the outputs being achieved; slow approval and disbursement procedures, including preparation of financial reports, will be provided to all by government authorities may result in delays in disbursement related parties. Resp: Client Stage: Implementation Due Date : n/a Status: on-going 2.2 Governance Rating: Substantial Description: Risk Management : Due to its multi-city multi-sector nature, the project is complex, GoV paid special attention to ensure the inclusion of cities with a high-level of commitment to this involving of numerous line-agencies; which requires substantial project. Implementation arrangements ensure that all key stakeholders are consistently involved in efforts for timely coordination and a high level of local the project preparation and implementation process under the overall guidance of the steering government ownership. committees headed by the Chairman/Vice Chairman of each Provincial People‟s Committee. Further, cities have been selected in a geographic cluster to help strengthen the community of practice and coordination between cities. The Ministry of Construction MDUDP will have a top- level coordinating role and in supporting the community of practice to address common operational issues and policies for the six cities. Resp: Client Stage: Implementation Due Date : n/a Status: Not Yet Due 3. Project Risks 3.1. Design Rating: Substantial Description : Risk Management : Implementation Timing and Coordination: The project covers High-level steering committees that oversee planning and coordination for each city have been multiple sectors, thus requires close coordination and well- established by each provincial government. A capable PMU will execute the project at each city. timed procurement and implementation among various city The project includes intensive technical assistance on all relevant aspects, including infrastructure institutions. asset management, financial sustainability, beneficiaries‟ awareness raising, and community consultation. At the central level, the MoC will have an overall quality assurance role to provide timely feedback to the cities and the Bank on implementation results. Resp: Client Stage: Preparation Due Date : n/a Status: Not Yet and Implementation Due 43 Resettlement: The Project will resettle roughly 2,300 Risk Management: There will be sufficient consultant support for related capacity building and households. Any delays in carrying out resettlement would be a implementation of resettlement activities. bottleneck for the majority of the proposed portfolio. Resp: Client Stage: Preparation Due Date : n/a Status: Not Yet Due and Implementation Counterpart Co-financing Roughly 25 percent of Project Costs Risk Management : All six cities have requested support from central government, with indicative (US$100 million) are counterpart co-financing. All resettlement commitments accounting for between 40-90 percent of required counterpart financing. The land and associated compensation is paid by counterpart remaining funds are committed by the respective provinces. The Project cities, MoC, and MoF contribution. Any funding shortages or delays making funds will need to coordinate closely during implementation to ensure sufficient counterpart funds. available (particularly in 2012-14) will risk significant Resp: Client Stage: Preparation Due Date : n/a Status: Not Yet Due implementation delays. and Implementation Community Participation: Communities play a large role in Risk Management : Cities will utilize the CUP process for engaging communities. This selection/design of the tertiary infrastructure. Cities do not methodology was effective under the precursor VUUP program and isappropriate, given the typically have this level or intensity of community consultation capacity of the cities. – thus it will be important for PMUs to guide and help implement the process. There must be effective and clear procedures for collecting community counterpart contributions for future maintenance. Resp: Client Stage: Preparation Due Date : n/a Status: Not Yet Due and Implementation 3.2. Social & Environmental Rating: Moderate Description: The investments will have some environmental Risk Management : A Resettlement Policy Framework and Resettlement Action Plans were impacts, and require resettlement of roughly 2,300 households, prepared prior to appraisal for each sub-project in accordance with the Bank safeguard policies. which will need to be addressed according to the Bank‟s Independent external resettlement and indigenous people monitoring is included in the project. environmental and social safeguard policies. The city PMUs do not have significant experience carrying out The MoC Quality Assurance Group will carry out robust safeguards training programs, as well as Bank safeguards policies, and will need training and enhanced spot checks of implementation progress and safeguards. City PMUs will: (a) establish an supervision. Possible complications in land acquisition and Environmental and Social Unit (ESU) responsible for ensuring the timely implementation of the resettlement could cause delays affecting the larger works EMP,; (b) assign the Construction Supervision Consultant (CSC) to be responsible for supervision program. of the contractor‟s safeguards performance as part of the construction contract. The Provincial Steering Committee (PSC) chaired by the Chairman or Vice Chairman of the Provincial People‟s Committee (PCP) of the respective province will provide the overall policy guidance and oversight for project implementation, including the EMP. Stage: Preparation Resp: Client Due Date : n/a Status: ongoing and Implementation 3.3. Program & Donor Rating: Low Description: Most of the investments are stand-alone, and not Risk Management : Implementation progress of other, related projects will be continuously dependent on other donor or government investments to be fully monitored. Where indicated, the designs of affected sub-projects may be revised. functional. Resp: Client Stage: Preparation Due Date : n/a Status: Not yet and Implementation due 44 In Can Tho and in Cao Lanh there are complementary ODA investments (for waste water treatment) that would enhance the functionality and performance of MDR-UUP investments. If these other ODA investments are not completed, the impacts of these sub-projects would be affected. 3.4. Delivery Monitoring & Sustainability Rating: Substantial Description: Complex designs and rigid technical standards, Risk Management : During preparation, cities have selected portfolios of non-complex sub- strict adherence to the master plan, low-capacity contractor projects with appropriate basic designs. Construction supervision consultants will supervise the environment, technically challenging upgrading works in technical implementation of all sub-projects. Overall, the PMUs have adopted flexible standards densely populated areas, inadequate construction supervision, that reduce resettlement and environmental impacts, and demonstrated their willingness to apply and poor contract supervision practices. designs in a case sensitive manner. The Project will have a TA support to focus on improving PMU and contractor site supervision, materials handling, and safety practices. The cities will receive TA on developing mechanisms for sustainable O&M for the assets created Insufficient funds from the cities for proper O&M would reduce by the project. A series of training programs for all implementing agencies to strengthen staff or even endanger the sustainability. capacity will also be conducted. Resp: 6 Cities and Stage: Preparation Due Date : n/a Status: on-going MoC and Implementation Overall Risk Rating: Substantial The overall risk is rated Substantial as the project covers six cities, includes multiple components/implementing agencies, and is working primarily with cities that have limited experience implementing projects per Bank guidelines and procedures. The cities though have showed strong ownership and commitment during preparation. The project design was made less complex during preparation by reducing early estimates of resettlement requirements though more flexible designs and by removing two components originally in VUUP. The decision to deliver the project through a cluster of 6 cities has already demonstrated the start of a strong community of practice between cities, which is expected to strengthen during implementation. Adequate consultant support is designed into the project to help the cities with safeguards, FM, and procurement. Further, the MoC will have a top-level role for coordination, quality assurance, monitoring, training, and technical support to strengthen capacity, hasten implementation, and improve quality of results. MoC will establish a field office in the Mekong for training, supervision, and quality assurance/ quality control. 45 Annex 5: Implementation Support Plan VIETNAM: Mekong Delta Region Urban Upgrading Project Strategy and Approach for Implementation Support 1. Project Implementation Approach. The project will be implemented by the PMUs, with robust consultant inputs for implementation. In addition, the PCU will have a top-level role in overall quality assurance and quality control, monitoring, and focused operations training (project management, safeguards, procurement, FM, operations and maintenance, technical, etc) for the PMUs and contractors. 2. Supervision Approach. The Bank‟s general supervision approach consists of scheduled supervision and mentoring missions, site visits to project areas, and fiduciary compliance reviews. A Mid-Term Review conducted after approximately 36 months of implementation will identify and implement structural changes, such as amendments to the Credit Agreement, reallocation of credit proceeds, or modifications of the results framework. Guidance and recommendations will address the findings of the PCU quality assurance team. The Bank will work in partnership with the MoC, who through the project will also be able to provide additional technical assistance (operations focused, and to develop the community of practice between cities). Technical expertise will be retained for specific design reviews of more complex works projects. Implementation Support Plan 3. Implementation Support Plan (ISP) Approach. The ISP highlights the Bank‟s support to implement the risk mitigation measures in the ORAF and to facilitate achieving the PDO. The primary risks identified in the ORAF include: a. Low capacity of cities implementing Bank financed projects. The PMUs are not familiar with Bank fiduciary, safeguards, contract management, and operational practices. Further, the upgrading approach is not typical in Vietnam, and requires more intensive community consultation, flexible standards, and designs more tailored to the individual site. b. Procurement delays – could delay project implementation. c. Scope of a multi-sector, multi-city infrastructure project – including supervision demands this will put on the Bank task team. Vietnam is a low-capacity environment for contractor and consultant resources. d. Implementation of Resettlement Activities – delays with resettlement will cause downstream project wide implementation delays. e. Counterpart Financing – if counterpart financing is not sufficient or provided in a timely manner, it would affect resettlement activities, thus having project wide impacts and delays. 46 f. Environmental impacts – civil works will have minor negative environmental impacts g. Community Participation – The Upgrading approach requires community participation and consultation throughout the project cycle. This is a new approach for most cities. Ensuring community participation is a key Project performance indicator. h. Capacity of Contractor and Consultant Industry 4. Implementation Risk Reduction Approach. The common key implementation risks are due to the low capacity of the cities. The implementation support plan therefore focuses risk reduction initiatives on capacity building and institutional strengthening by: a. ensuring sufficient resources for consultant support; b. developing a robust training program (including classroom and „on the job‟ methods) targeting PMUs for procurement, FM, and safeguards; c. strengthening institutional arrangements (such as the role of the MoC PCU and communities) to improve effectiveness of implementation and supervision; d. developing responsive feedback mechanisms (spot checks, dedicated safeguards compliance support, EMP training for contractors, etc.,) for quality assurance, and monitoring. Much of this support would be field based for stronger engagement with PMUs; and e. strategic procurement packaging of TA to attract a larger pools of firms. Table 1. Implementation Support Plan Time Focus Skills Needed Est, Staff Partner Role week /year First Procurement Bank to provide guidance on review of bidding Bank 8 MoC and PMUs to pro 12 documents, TORs, Consultant RFPs, and Trainings Approach. procurement & month There will be a focus on larger and fewer TA packages to technical s reduce transactions and attract more firms. specialist Counterpart Funding Coordinate with 6 provinces, MoC, and Task team and 1 Counterpart ensure MoF to ensure counterpart budget sufficient and timely portfolio funds made available Support for Training and Rapid Mobilization of TA Project 8 MoC PCU to mobilize Consultants The immediate priority is to support the client to Management training consultants and mobilize its Project Start-up Consultant teams, and start and procurement support for procurement support activities for the major QCBS TA Procurement PMUs. PMUs to contracts (for PMU implementation and program management). conduct procurement Activities include a focused training program to all cities for and mobilize larger TA QCBS procurement and support for review of procurement packages. deliverables. Training PMUs The Bank will initially support the PMUs and Bank team 8 MoC PCU to rapidly MoC for training activities for fiduciary and safeguards. These composed of mobilize consultants for task will be phased over to the MoC (through its Project Start- procurement, procurement support up Consultants) - then once mobilized to the MoC‟s PCU‟s FM, and and training. PCU to field based Quality Assurance Consultants and the PMUs‟ safeguards. procure required TA Program Management Consultants. support. Program Management and Coordination The Bank will Project 4 MoC PMU to work with the MoC PCU and 6 city PMUs to ensure effective Management increasingly lead and 47 coordination and support roles are established between the PCU coordinate the project, and PMUs. This is important to help strengthen supervision provide oversight and practices, and increase the oversight and capacity support role support to PMUs. of the MoC (vis-à-vis the Bank) to the cities. 12-48 Environment, Social, and Technical: Strengthen focus on Safeguards n/a MoC PCU, with month implementation quality, improving counterpart and contractor Specialist consultants to s capacity, and compliance with resettlement and other safeguards implement training policies. program. Construction Supervision: Focus on implementation quality, Municipal n/a MoC Quality Assurance compliance with EMPs (including site safety and materials Engineers Team to conduct spot handling), and quality of works. checks & training. Community Participation: Focus on quality of preparation Project Mngt n/a PMU to carry-out, PCU and implementation of Community Upgrading Plans and Social to monitor 48 Annex 6: Economic and Financial Analysis VIETNAM: Mekong Delta Region Urban Upgrading Project 1. The first part of this annex summarizes the results of economic and financial feasibility analysis of sub-projects to be financed from the proceeds of an IDA Credit. The methodology used for preparing the analysis is described in detail in a manual prepared by the World Bank at the request of the Government of Vietnam (“the Manualâ€?). The purpose of the Manual was to provide the consultants of the six participating cities with a standardized method for preparing cost-benefit analyses that complies with the guidelines of the Government of Vietnam (Prime Minister‟s Decision No. 48/2008/QD-TTg), and those of the World Bank (the Handbook on Economic Analysis of Investment Operations, and OP 10.04 - Economic Evaluation of Investment Operations). The second part of this annex summarizes the results of the fiscal analysis of provincial and city governments participating in MDR-UUP. This analysis was undertaken to assess to what extent these sub-national governments would be able to provide counterpart funds needed for co-financing of the investment and O&M expenditure of proposed subprojects. Economic Feasibility Analysis 2. Scope of the economic analysis. Economic feasibility analysis was undertaken for a representative sample of physical investment subprojects. Physical investments in MDR-UPP are grouped in three components: (i) Tertiary Infrastructure in Low-Income Areas (LIAs), (ii) Supporting Primary and Secondary Infrastructure, and (iii) Resettlement Sites. A subproject was eligible for inclusion in MDR-UUP if it improved public infrastructure in a LIA. For this reason, a subproject consists, at the minimum, of investments in tertiary infrastructure upgrading in an LIA. If the tertiary infrastructure requires supporting infrastructure (such as an access road to newly constructed alleys) or a resettlement site (which would be needed if the new access road results in permanent resettlement), the higher-level infrastructure would form part of the subproject. The only exceptions to this design principle are: (i) the rehabilitation of the Bun Xang Lake in Can Tho and, (ii) the embankment of the Kien River and Hien Canal in Rach Gia. These “higher-level subprojectsâ€? were included in MDR-UPP because they are expected to result in major, albeit indirect, improvements to the living environment of the city. Table 1 present the economic investment cost by component for each of the six cities. Investments directly related to LIAs account for 81% of total physical investment cost of MDR-UUP. The remaining 19% consists of investments in the two large-scale projects to be undertaken by Can Tho and Rach Gia. 3. Selection of a representative sample of LIAs. By November 2011, the six participating cities had proposed physical investments for 110 LIAs. At the request of the Government, the cities had prepared economic and financial feasibility analysis for a representative sample of these LIAs. In any given city, a sample was considered representative if it met the following three conditions: (i) the sample consisted of at least three LIAs, (ii) the total physical investment 49 cost of LIAs in the sample was at least 25% of the total investment cost in all LIAs in the city; and (iii) the LIAs in the sample were geographically spread out over the city. 3 Table 1: Economic Investment Cost for Components 1-3 (VND billion) LIA-Based Subprojects Higher-Level % LIA- City TOTAL Component 1 Component 2 Component 3 Subprojects Based Ca Mau 471 192 192 – 856 100 Can Tho 506 170 62 615 1,353 55 Cao Lanh 473 416 175 – 1,064 100 My Tho 464 256 117 – 837 100 Rach Gia 176 106 170 489 941 48 Tra Vinh 508 150 69 – 728 100 TOTAL 2,598 1,291 786 1,104 5,779 81 Source: World Bank estimates, based on city government feasibility studies * Investment base cost in constant mid-2011 prices, including physical contingencies (net of taxes) 4. The six cities conducted economic and financial feasibility in a total of 24 LIAs, which were selected in accordance with the abovementioned three criteria when the first draft of their feasibility studies were submitted, in early November 2011. However, Ca Mau subsequently lowered the cost estimate of investments related to its sample LIAs, whereas Cao Lanh increased the cost of other investments so that in both cities the share of LIA-related investment dropped below the 25% threshold (Table 2). In addition, Can Tho had undertaken an economic feasibility analysis for the rehabilitation of the Bun Xang Lake. It is recommended that Rach Gia would undertake a separate analysis of the Kien River/Hien Canal embankment, because this subproject is not solely undertaken for the benefits of individual LIAs. Table 2: Sample Low Income Areas for Economic and Feasibility Analysis Economic Investment Cost Number of LIAs 1. City Directly Related to LIAs (VND b)* All Sample 2. All LIAs Sample Sample/Total** Ca Mau 18 3 856 183 21.4% Can Tho 31 4 738 205 27.7% Cao Lanh 14 3 1,064 176 16.5% My Tho 17 4 837 210 25.1% Rach Gia 7 3 452 261 57.8% Tra Vinh 23 7 728 205 28.2% TOTAL 110 24 4,675 1,240 26.5% Source: World Bank estimates, based on city government feasibility studies * Investment base cost in constant mid-2011 prices, including physical contingencies (net of taxes) ** Estimates provided by Ca Mau and Cao Lanh in draft FS received on in first week of November 2011: 29.2% and 25.6%, respectively. 3 This condition was imposed to avoid that cities would only analyze adjacent LIAs where increases in land prices would be similar, and therefore not representative for the city as a whole. 50 Methodology for economic feasibility analysis. 5. The Manual describes an approach to preparing economic benefit-cost analysis for subprojects with benefits that can, in principle, be quantified in monetary terms. This approach involves the following four steps: a. assess economic costs, b. assess economic benefits, c. determine the appropriate discount rate, and d. compare the net present value of discounted economic costs and benefits. 6. The method described in this annex refers to the economic feasibility analysis of subprojects in LIAs only, but is also applicable to the stand-alone subprojects proposed by Can Tho and Rach Gia. 7. Step 1: Assess economic costs. The economic cost of a sub-project consists of: (i) the investment cost in tertiary infrastructure upgrading in a LIA including (where relevant) related investments in supporting infrastructure and resettlement sites; and (ii) the O&M cost during the economic lifetime of the subproject. The investment cost, in turn, consists of: a. Investment base cost. This is the estimated cost of a subproject without taxes or contingencies, corrected for its residual value (if any). This is the estimated value of a sub-project at the end of its economic lifetime, expressed as a percentage of its investment base cost. b. Physical contingencies. These are allowances for uncertainties in the volume of units required for undertaking a sub-project (such as meters of pipe). Physical contingencies were calculated as a percentage of the base cost. For the feasibility analysis, 10% was added for all expenditure categories. 8. The annual O&M cost of a sub-project was estimated at 2-10% of the investment base cost throughout the economic lifetime of the investment. The percentages depended on the composition of the investment cost, with the O&M cost of equipment accounting for a higher percentage of the investment base costs than the O&M cost of civil works (Physical contingencies were not added to O&M costs.) 9. Because the criterion for accepting or rejecting a subproject (an EIRR of at least 12%; see Step 3) was expressed in real terms, all costs––as well as benefits––were also be expressed in real terms. For this reason, price contingencies did not form part of the economic cost. Taxes are transfer payments and were therefore also excluded from the economic cost. 51 10. Step 2: Assess economic benefits. The economic benefits of a proposed subproject were assumed to consist of: a. Financial benefits. These consist of incremental tariff revenue (net of any taxes) during the economic lifetime of the sub-project that generates the revenue. Two types of eligible subprojects are expected to generate such benefits: (i) the installation of piped water connections (through increased water tariff revenue): and (ii) the expansion of the solid waste collection system (which will increase revenue from garbage collection fees). b. Non-monetary benefits. These consist of expected increases of land prices caused by the proposed investment (i.e. incremental land prices increases over and above land price increases that would also have occurred in a “without projectâ€? scenario), accumulated during the economic lifetime of the subproject. To estimate the expected increase of land prices, the participating cities compared land prices in wards that: (i) were located in the vicinity of sample LIAs: and (ii) already enjoyed public infrastructure services that MDR-UUP would finance in the sample LIAs. 11. As described in the Manual, it is understood that the economic benefits of urban upgrading projects also include non-monetizable benefits (such as public health benefits) and non-quantifiable benefits (such as increased civic pride). Such benefits are difficult to estimate directly, but would be reflected in the expected increase of land prices. 12. Step 3: Determine the appropriate discount rate. The World Bank Handbook on Economic Analysis of Investment Operations requires the real economic rate of return (EIRR) of Bank-financed sub-projects to be equal or higher than the opportunity cost of capital to the country. The assumed cost of capital to Viet Nam is 12% p.a., the same rate that was used for the preparation of VUUP1. (Prime Minister‟s Decision No. 48/2008/QD-TTg does not contain any specific guidelines on the minimum required benefit/cost ratio of a subproject.) 13. Step 4: Calculate economic indicators to assess subproject economic feasibility. A subproject is deemed economically feasible if the economic net present value (ENPV) of the subproject‟s discounted (net) cash flows is at least zero, or if economic internal rate of return (EIRR) of these cash flows exceeds the discount rate of 12%. 14. Results of the economic feasibility analysis. The economic benefits largely consist of increases in land prices, which were assumed to reflect, inter alia, the benefits of improved public health, lower flood incidence, and a safer living environment. As shown in Table 3, all 24 subprojects (for which feasibility analysis was undertaken) were deemed economically feasible, in all cases by a significant margin. Because these LIAs were randomly selected, it is expected that investments in the remaining 86 LIAs are also economically viable. 52 Table 3: Economic Feasibility Indicators for Representative Sample of Subprojects Subproject Economic Cost ENPV EIRR Economically City Location (VND b) (VND b) (%) Feasible? Ca Mau LIA #1 43.0 151.8 52.6% Yes LIA #6 23.7 73.6 48.6% Yes LIA #9 116.3 293.4 43.0% Yes Can Tho LIA #1 40.7 24.5 21.2% Yes LIA #14 27.3 25.6 25.3% Yes LIA #28 79.4 19.8 15.9% Yes LIA #30 57.2 6.8 13.9% Yes Bun Xang 255.8 1588.2 73.7% Yes Cao Lanh LIA #2 114.4 96.3 24.2% Yes LIA #4 31.1 73.6 42.2% Yes LIA #12 29.9 8.7 16.6% Yes My Tho LIA #1 78.9 146.3 39.6% Yes LIA #7 72.9 132.7 39.1% Yes LIA #8 34.1 173.3 81.2% Yes LIA #12 24.2 369.5 187.1% Yes Rach Gia LIA #2 119.7 8.6 13.2% Yes LIA #3 53.2 22.4 18.4% Yes LIA #6 88.5 125.1 32.0% Yes Tra Vinh LIA #1 37.6 66.0 34.9% Yes LIA #3 15.5 79.9 55.8% Yes LIA #6 24.4 377.3 126.0% Yes LIA #10 19.0 43.2 45.5% Yes LIA #15 79.0 61.5 23.3% Yes LIA #17 17.6 41.7 41.6% Yes LIA #22 11.9 52.8 51.7% Yes Source: World Bank estimates, based on city government feasibility studies Financial Feasibility Analysis 15. Scope of the financial analysis. Financial feasibility analysis was undertaken for subprojects that: (i) are located in the sample LIAs listed in Table 3: (ii) constitute a physical investment project: (iii) will be co-financed from the proceeds of the proposed IDA credit: (iv) are economically feasible: and (v) generate incremental revenue. Two types of subprojects met these five criteria: water supply and solid waste management subprojects located in the 24 sample LIAs. 4 4 Although all six city governments impose a wastewater surcharge to the water bills to cover (part of) the cost of operating and maintaining urban drainage systems, drainage subprojects do––by themselves––not generate incremental revenue, and were therefore not covered by the financial feasibility analysis. 53 16. Methodology for financial feasibility analysis. The methodology for assessing the financial feasibility of a water supply or solid waste management sub-project is nearly identical to the methodology that was used for economic feasibility analysis. The approach involves the same four steps, but these steps are applied to financial (rather than economic) costs and benefits. The four steps are: a. assess financial costs (these are equivalent economic costs including taxes), b. assess financial benefits (these benefits are equivalent to the incremental revenue from water tariffs and solid waste collection fees, including taxes), c. determine the appropriate discount rate (the assumed rate was 5%, the average long-term real interest rate on five-year GoV bonds), and d. compare the net present value of discounted financial costs and benefits. 17. It is noted that the financial feasibility analysis was undertaken from the perspective of the Government of Vietnam (taking both investment and O&M costs into consideration), and not from the perspective of the city government (which would receive the investment as a grant from the central government). 18. Results of the financial feasibility analysis. The participating city governments have proposed water supply subprojects in 20 of the 24 sample LIAs (Table 4). Six of these subprojects were deemed financially feasible. Eleven of the remaining 14 sub-projects were expected to generate incremental revenue from water tariffs that would be sufficiently high to fully cover incremental O&M expenditure. Three water supply subprojects (two in Cao Lanh and one in Tra Vinh) would require a subsidy from the city government (or its water utility) to cover O&M expenditure. In contrast, none of the 21 solid waste collection sub-projects was deemed financially feasible, and only four of these sub-projects would generate sufficiently high incremental revenue from waste collection fees to cover the incremental O&M expenditure (one in Ca Mau, and three in Tra Vinh). The remaining 17 sub-projects would require subsidies from the city government to meet O&M financing requirements (which, for most sub-projects, would not exceed VND10 million per year). In most countries, sub-national governments do not recover the full cost of solid waste management services from user charges (usually because of limited willingness-to-pay), but subsidize these from the general budget because of the substantial economic benefits that such services generate. 54 Table 4: Financial Feasibility Indicators for Representative Sample of Subprojects Water Supply Solid Waste Collection Subproject City FIRR Financially O&M FIRR Financially O&M Location (%) Feasible? Recovery?* (%) Feasible? Recovery?* Ca Mau LIA #1 5.0% Yes Yes -6.5% No Yes LIA #6 21.1% Yes Yes #N/A No No LIA #9 3.9% No Yes #N/A No No Can Tho LIA #1 4.5% No Yes #N/A No No LIA #14 (no water supply subproject) #N/A No No LIA #28 (no water supply subproject) #N/A No No LIA #30 (no water supply subproject) #N/A No No Cao Lanh LIA #2 #N/A No No #N/A No No LIA #4 -7.3% No Yes #N/A No No LIA #12 #N/A No No #N/A No No My Tho LIA #1 (no water supply subproject) #N/A No No LIA #7 1.1% No Yes #N/A No No LIA #8 -5.8% No Yes #N/A No No LIA #12 -3.4% No Yes #N/A No No Rach Gia LIA #2 5.5% Yes Yes (no solid waste subproject) LIA #3 2.3% No Yes (no solid waste subproject) LIA #6 -0.1% No Yes (no solid waste subproject) Tra Vinh LIA #1 #N/A No No #N/A No No LIA #3 13.9% Yes Yes #N/A No No LIA #6 0.3% No Yes -13.4% No Yes LIA #10 42.4% Yes Yes #N/A No No LIA #15 3.7% No Yes #N/A No No LIA #17 -2.9% No Yes -6.8% No Yes LIA #22 5.8% Yes Yes -0.3% No Yes Source: World Bank estimates, based on city government feasibility studies * A subproject is defined as having “O&M Recoveryâ€? if the financial revenue of the subproject exceeds its O&M expenditure throughout its economic lifetime Affordability Analysis 19. Affordability of water tariffs and solid waste collection fees. At present, the national poverty line for urban households is set at VND500,000 per person per month, or VND2.5 million per household (assuming an average household size of five). At present, the minimum monthly cost of piped water and solid waste collection charges ranges VND27,500 in Tra Vinh to about VND52,000 in My Tho (Table 5). In all six participating cities, the cost of the two services accounted for not more than 2.1% of household expenditure. This was substantially lower than the affordability limit of 5% normally used by the Bank, including in the recently approved Medium Cities Development Project in Vietnam. In summary, the proposed water supply and solid waste management services are deemed affordable to the intended beneficiaries. 55 Table 5: Results of Affordability Analysis Waste Collection Minimum Monthly Water Minimum Water Minimum Monthly City Fee Cost (% poverty Tariff (VND/m3) Bill (VND/month)* Cost (VND/month) (VND/month) line) Ca Mau 2,500 25,000 15,000 40,000 1.6% Can Tho 4,500 45,000 5,000 50,000 2.0% Cao Lanh 4,500 45,000 5,000 50,000 2.0% My Tho 4,700 47,000 5,000 52,000 2.1% Rach Gia 4,500 45,000 5,000 50,000 2.0% Tra Vinh 2,250 22,500 5,000 27,500 1.1% Source: World Bank estimates, based on city government feasibility studies * Assuming a minimum volumetric consumption of 10m3 per month Fiscal Analysis 20. Financing principles. The central government will on-grant the proceeds of the IDA credit for MDR-UUP to finance eligible expenditures in the six participating cities. In addition, the central government will finance from its own resources a portion of the MDR-UUP investment cost that is not eligible for IDA financing; this applies to four cities that are eligible for such support according to Decree 60/2010/QÄ?-TTg (Ca Mau, Cao Lanh, Rach Gia and Tra Vinh). Provincial governments have committed themselves to co-finance investments in MDR- UUP not covered by central government grants. City governments will be required to finance, from their own resources: a. the portion of the investment cost of proposed subprojects not covered by central government or provincial government grants (these mainly consist of the cost of resettlement compensation and land acquisition): and b. the portion of the O&M cost of proposed subprojects not covered by revenue from water tariffs, solid waste collection fees, and a one-off charge that each city government intends to charge communities in LIAs covered by MDR-UUP. 21. Table 6 gives an overview of the proposed allocation of counterpart fund contributions for MDR-UUP investments as of 4 November 2011. By that time, all provincial and city governments (except the province of Ca Mau) had confirmed their commitment to these financing targets in writing to the PMUs. The central government intends to confirm its counterpart contributions to the four eligible cities once it considers the total project cost as final. 56 Table 6: Counterpart Fund Contributions for MDR-UUP Investments (% Total) Central Provincial City City Government Comment Government Government Ca Mau 50 25 25 Central Government (CG) contribution to be confirmed Can Tho – – 100 Does not qualify for CG support according to Decree 60/2010/QÄ?-TTg Cao Lanh 50 50 – CG contribution to be confirmed My Tho 70 0 – CG contribution to be confirmed Rach Gia 90 10 – CG contribution to be confirmed Tra Vinh 56 24 20 Does not intend to apply for a 90% CG contribution even though it qualifies according to Decree 60/2010/QÄ?-TTg Source: City governments, 31 October-3 November 2011. Figures are estimates, not commitments. 22. Fiscal analysis. The purpose of the fiscal analysis is to provide an estimate of the capability of provincial and city governments to meet their financing commitments for co- financing investment and O&M expenditures of MDR-UUP from their budgetary resources. Some budget revenue is earmarked for specific purposes. Furthermore, a city government uses part of its non-earmarked revenue to finance salaries, debt service charges and other so-called „obligatory expenditures‟. The remainder is, in principle, available to cover financing commitments. In formula: Maximum Financing Commitment = Non-Earmarked Revenue – Obligatory Expenditure 23. Definition of maximum financing commitment. Discussions with provincial and city government officials suggest that the city governments are generally unwilling to spend more than 25% of freely available revenue on expenditures related to MDR-UUP. This means that the following relationship should hold in any given year: Required Financing Commitment / Maximum Financing Commitment < 0.25 24. For purposes of presentation, the inverse ratio (Financing Commitment Coverage Ratio or FCCR) was used to illustrate the financial capability of a sub-national government. The city or provincial government was deemed capable to meet its financing commitments for MDR-UUP if, during the economic lifetime of the implementation of the proposed sub-projects: FCCR = Maximum Financing Commitment / Required Financing Commitment > 4 25. Results of fiscal analysis. During 2012-2018, the FCCR of all participating provincial and city governments (for which data were available) is substantially higher than the assumed minimum value of 4, except for Tien Giang province (Table 7). From 2014 to 2016, the FCCR of this province ranges from 2.0 to 2.5. This means that the estimated contribution of the province to MDR-UUP will account for up to (1/2.0 ≈) 50% of the maximum financing commitment in those years. In other words, the province remains financially able to provide counterpart funds to MDR-UUP, and has formally committed itself to do so. It is also worth noting that the FCCR of 57 the province of Tien Giang is relatively low, because it is the only province that has committed itself to provide 100% of required counterpart funds for MDR-UUP investments, and only requires the city of My Tho to cover O&M expenditures. Table 7: Financing Commitment Coverage Ratios, 2012-2018 2012 2013 2014 2015 2016 2017 2018 Ca Mau (province) 6.1 6.9 14.6 13.5 4.3 4.7 – Ca Mau (city) 7.7 11.7 28.1 31.8 9.4 10.6 16.6 Can Tho 4.7 5.1 9.0 11.6 24.9 148.0 185.7 Dong Thap 28.0 7.7 1.246.0 9.2 10.1 22.2 47.9 Cao Lanh 93.0 98.0 104.0 43.1 45.1 46.7 48.3 Tien Giang 5.5 5.0 2.1 2.5 2.0 9.6 32.8 My Tho 449.8 160.0 124.8 130.0 135.0 283.2 292.3 Kien Giang 5.6 8.8 10.1 10.6 – – – Rach Gia 33.9 73.8 98.9 86.3 130.7 118.0 158.1 Tra Vinh (province)* 13.0* Tra Vinh (city) 13.0 27.3 27.5 42.9 48.0 55.1 67.7 Sources: World Bank estimates (Rach Gia), city government feasibility studies (all other sub-national governments) * Minimum FCCR during 2012-2018 (annual FCCRs for Tra Vinh province not available) 58 Annex 7: Maps VIETNAM: Mekong Delta Region Urban Upgrading Project 59 IBRD 39054 C H I N A Binh Long CAMBODIA Ho Chi Minh City MYANMAR Kampot Tan An LAO Cao Lanh P.D.R. Thanh Vinh Dong Long Xuyen Lap Vo My Tho Vung Tau Cai San Cho Gao THAILAND VIETNAM Kien Luong Vinh Long Ben Tre Hon Dat CAMBODIA Tan Hiep Can Tho Tam Binh Rach Gia Tra On Tra Vinh Area of Map Hoa Luu Soc Trang Vinh Thuan Thoi Binh VIETNAM Bac Lieu Gulf Gia Rai MEKONG DELTA REGION URBAN of Ca Mau UPGRADING PROJECT Thailand PROJECT CITIES PROVINCE CAPITALS MAIN CITIES NATIONAL HIGHWAYS MAIN ROADS INTERNATIONAL BOUNDARIES Nam Can This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. JANUARY 2012 VIETNAM This map was produced by the N Map Design Unit of The World Bank. To Vinh Thuan CHINA MEKONG DELTA REGION URBAN The boundaries, colors, denominations and any other information shown on this map do UPGRADING PROJECT not imply, on the part of The World Bank Group, any judgment on the HANOI CA MAU legal status of any territory, or any endorsement or acceptance of such 0 0.25 0.5 LAO PEOPLE'S COMPONENT 1 boundaries. TERTIARY INFRASTRUCTURE IN LOW INCOME AREAS (LIA) KILOMETERS DEM. REP. COMPONENT 2 SUPPORTING PRIMARY AND SECONDARY INFRASTRUCTURE* (*MAJOR WORKS IDENTIFIED) COMPONENT 3 RESETTLEMENT SITE THAILAND RESETTLEMENT SITE MAIN ROADS SECONDARY ROADS To Nam Can CAMBODIA LIA 4 LIA 3 Ca Mau LIA 5 LIA 6 LIA 1 LIA 15 LIA 6 LIA 2 LIA 7 LIA 6 LIA 14 ROAD & EMBANKMENT ROAD NO. 1 LIA 8 To Bac Lieu LIA 17 LIA 13 LIA 9 LIA 10 LIA 11 LIA 18 LIA 12 TINH DOI CANAL & ROAD LIA 16 ROAD & EMBANKMENT FEBRUARY 2012 IBRD 39007 To Nam Can IBRD 39008 This map was produced by the CHINA VIETNAM Map Design Unit of The World Bank. The boundaries, colors, MEKONG DELTA REGION URBAN denominations and any other information shown on this map do HANOI UPGRADING PROJECT not imply, on the part of The World Bank Group, any judgment on the LAO legal status of any territory, or any PEOPLE'S CAN THO endorsement or acceptance of such boundaries. DEM. REP. COMPONENT 1 TERTIARY INFRASTRUCTURE IN LOW INCOME AREAS (LIA) H au COMPONENT 2 R SUPPORTING PRIMARY AND SECONDARY INFRASTRUCTURE* THAILAND iv (*MAJOR WORKS IDENTIFIED) er COMPONENT 3 N RESETTLEMENT SITE MAIN ROADS CAMBODIA SECONDARY ROADS 0 1.5 3 KILOMETERS Can Tho WATER MAIN LIA 5 LIA 11 To Thot LIA 1 LIA 13 Not LIA 15 LIA 2 LIA 6 LIA 14 LIA 12 LIA 3 LIA 16 Thoi Son Island LIA 4 LIA 8 LIA 7 LIA 9 LIA 10 SAO CANAL LIA 27 LIA 23 LIA 28 BUN XANG LAKE LIA 26 Con Au SOUTHERN CANAL Island To LIA 25 Vinh Long LIA 19 LIA 24 NGUYEN VIET HONG SEWER RESETTLEMENT SITE LIA 18 LIA 23 LIA 21 LIA 17 LIA 29 CAI RANG ROADS LIA 30 o Can Th River LIA 31 LIA 20 To Nga Bay JANUARY 2012 To Thanh Binh CHINA LIA 13 LIA 8 HANOI LAO LIA 14 PEOPLE'S Ca DEM. REP. oL anh Riv er RIVER EMBANKMENT LIA 12 TRAN HUNG DAO ROAD THAILAND LIA 5 NGUYEN THAI HOC ROAD CAMBODIA LIA 4 LIA 10 TON DUC THANG ROAD & BRIDGE WATER MAINS Cao Lanh LIA 3 Tien LIA 7 Riv LO HOA DONG + SAT VI BRIDGE er LIA 6 LIA 2 To An Thai Trung LIA 1 CANAL 16 EMBANKMENT Cao NGUYEN DINH CHIEU ROAD L a nh R i ve r RESETTLEMENT SITE LIA 9 CACH MANG THANG 8 C ao Lan h R ive r VIETNAM MEKONG DELTA REGION URBAN LIA 11 UPGRADING PROJECT CAO LANH COMPONENT 1 TERTIARY INFRASTRUCTURE IN LOW INCOME AREAS (LIA) Tan Thuan Dong Island COMPONENT 2 SUPPORTING PRIMARY AND SECONDARY INFRASTRUCTURE* N This map was produced by the (*MAJOR WORKS IDENTIFIED) Map Design Unit of The World Bank. The boundaries, colors, COMPONENT 3 denominations and any other information shown on this map do RESETTLEMENT SITE not imply, on the par t of The 0 0.75 1.5 World Bank Group, any judgment JANUARY 2012 MAIN ROADS IBRD 39009 on the legal status of any territory, KILOMETERS or anyendorsement or acceptance SECONDARY ROADS of such boundaries. This map was produced by the CHINA Map Design Unit of The World Bank. The boundaries, colors, N VIETNAM denominations and any other information shown on this map do MEKONG DELTA REGION URBAN HANOI not imply, on the part of The World Bank Group, any judgment on the UPGRADING PROJECT LAO legal status of any territory, or any 0 0.4 0.8 PEOPLE'S endorsement or acceptance of such MY THO boundaries. KILOMETERS DEM. REP. To Tan An COMPONENT 1 To Chau Thanh TERTIARY INFRASTRUCTURE IN LOW INCOME AREAS (LIA) To Chau Thanh COMPONENT 2 SUPPORTING PRIMARY AND SECONDARY INFRASTRUCTURE* (*MAJOR WORKS IDENTIFIED) THAILAND Bao COMPONENT 3 Di To Go Cong RESETTLEMENT SITE nh Ri ve MAIN ROADS r Xa Dao Thanh CAMBODIA SECONDARY ROADS LO ME ROAD UPGRADING My Tho To Go Cong Xami Phong RESETTLEMENT SITE Ward 10 LIA 5 LIA 12 LIA 6 Ward 5 Ward 7 RESETTLEMENT SITE LIA 14 LIA 15 LIA 7 BACH NHA CANAL Ward 4 LIA 13 B QUARTER 12 ROAD LIA 11 Ward 1 LIA 16 Ward 8 Ward 9 Ward 6 LIA 10 LIA 9 LIA 3 LIA 1 LIA 4 To Go Cong LIA 2 Ward 2 LIA 8 To Sung TIEN RIVER EMBANKMENT Hieu LIA 17 iver Tien R Tan Long Island JANUARY 2012 IBRD 39010 Thoi Son Island IBRD 39011 To Kien Luong To Long Xuyen Vinh Quang Ward VIETNAM Ra ch RESETTLEMENT SITE MEKONG DELTA REGION URBAN Gia -Ha UPGRADING PROJECT Tien a l an LIA 1 uy en C RACH GIA Canal gX on -L COMPONENT 1 ia c hG TERTIARY INFRASTRUCTURE IN LOW INCOME AREAS (LIA) Ra NGUYEN TRUONG TO ROAD COMPONENT 2 SUPPORTING PRIMARY AND SECONDARY INFRASTRUCTURE* (*MAJOR WORKS IDENTIFIED) LIA 2 COMPONENT 3 Vinh Thanh Ward RESETTLEMENT SITE LIA 3 MAIN ROADS KIEN-ONG HIEN EMBANKMENT SECONDARY ROADS Vinh Tanh Van Ward LIA 4 WARD BOUNDARIES r PROVINCE BOUNDARIES ive aR Gi ch Ra On Vinh Bao Ward g Hi en Ca n LIA 5 al Vinh Lac Ward RACH MEO CANAL Rach Gia Bay LIA 6 N On Xang 0 0.5 1 gH ien M KILOMETERS Ca oi Can na l l a RESETTLEMENT SITE CHINA An Hoa Ward HANOI An Binh Ward LAO PEOPLE'S DEM. REP. LIA 7 THAILAND To Lap Vo r ve Ri S oi Rach Gia Rach Airport This map was produced by the CAMBODIA Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the Vinh Loi Ward Rach Gia legal status of any territory, or any endorsement or acceptance of such boundaries. To Minh Luong To Minh Luong JANUARY 2012 IBRD 38996 To Mo Cay Nam VIETNAM MEKONG DELTA REGION URBAN UPGRADING PROJECT gR o ad No .3 R in TRA VINH ad Ward 4 Lo Hot Ro Be nX COMPONENT 1 uo ng TERTIARY INFRASTRUCTURE IN LOW INCOME AREAS (LIA) Ca RESETTLEMENT SITE n Long Bach Dang Road al COMPONENT 2 iver EMBANKMENT SUPPORTING PRIMARY AND SECONDARY INFRASTRUCTURE* To Huu Hoa Binh R (*MAJOR WORKS IDENTIFIED) Road To Huu Hoa COMPONENT 3 Le Loi Road Phu Ward 1 gu Lao H oa R RESETTLEMENT SITE oad N Pham MAIN ROADS ROAD TO LIA 1 Quang Trung Rd. SECONDARY ROADS LIA 4 LIA 3 To Hoa LIA 1 19 Thang 5 R Thuan d. LIA 6 Hung Vuong Road o.2 .3 No Ward 2 oad N oad gR Rin R in g R LIA 2 Ward 3 LIA 7 ong Road Tran Phu Road NGUYEN DANG ROAD EXTENSION LIA 12 Pham Thai Bu LIA 14 Road Road LIA 11 LIA 5 LIA 9 Ward 5 han Road ng LIA 15 inh Ph u Thi N Bach Dang LIA 10 Kien Phan D Dong Khoi Road To Cang Long Ward 6 d oa iR Nguyen ha D K ang Ro inh ad Ward 7 iM Th en uy Ng Dien Bien Phu Road LIA 8 LIA 8 WATER MAIN & TRUNK DRAIN/SEWER LIA 13 Ward 8 LIA 21 WATER MAIN WATER MAIN d Roa ng Tho S on LIA 20 LIA 17 LIA 22 Ward 9 LIA 19 LIA 16 To Tieu Can WATER MAIN & TRUNK DRAIN/SEWER CHINA TRUNK DRAIN/SEWER h River HANOI To Tieu Can LIA 23 Long Bin d Dien Bien Phu Roa Road L e Van Ta m LAO PEOPLE'S DEM. REP. ad Dong Khoi Ro THAILAND To Chau Thanh This map was produced by the N CAMBODIA Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World 0 0.5 1 Bank Group, any judgment on the Tra Vinh legal status of any territory, or any endorsement or acceptance of such KILOMETERS boundaries. JANUARY 2012