Government of Vietnam by iOWyqU

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									                                  Government of Vietnam
Australian Agency for International Development, AusAID
            Ministry of Foreign Affairs, Denmark, Danida
   Directorate General for International Cooperation, The
                                             Netherlands




            Sector Programme Support to
       Water, Sanitation and Hygiene Promotion
                       Vietnam




                                           November 2006
Cover sheet

Country                   Vietnam
Programme Title           Multi-donor Sector Programme Support to
                          Water, Sanitation and Hygiene Promotion
National Agencies         Ministry of Agriculture and Rural Development (MARD)
                          Ministry of Health (MOH)
                          Ministry of Education and Training (MOET)
                          Ministry of Natural Resources and Environment (MONRE)
                          Ministry of Finance (MOF)
                          Ministry of Planning and Investment (MPI)
Starting Date             December 2006
Duration                  5 years
Overall Budget            USD (M) VND (B)             A$ (M)        DKK (M)     Euro (M)
GOV                              190          2,996            265        1,193      155
AusAID                            34            537             48          214       28
Danida                            66           1043             92          415       54
The Netherlands                   25            395             35          157       21
Sub total donor                  125          1,975            175          786      103
Total                            315          4,971            440         1979      258

Summary
The programme will support the National Target Programme (NTP) for Rural Water Supply
and Sanitation (RWSS) Phase II based on the ‘National Rural Clean Water Supply and
Sanitation Strategy (NRWSSS). The main component of financial support will be delivered
through Government of Vietnam’s (GoV’s) NTPII as ‘Targeted Programme Budget Support
(TPBS)’. This approach represents a major commitment of support through GoV’s own
financing and implementation structures, consistent with the principles established by the
Hanoi Core Statement on Aid Effectiveness1. This approach simplifies, harmonizes and aligns
donor support to a much greater extent than previous support from Denmark, Australia and
Netherlands for water supply and sanitation. The programme (through Danida support) also
proposes to assist Water Resources Management (WRM), once the division of WRM roles is
clarified.

The development objective of the assistance is improved health and living conditions of the
rural poor including ethnic minorities through provision of clean water, sanitation, hygiene
promotion and protection of the environment. This objective corresponds to the development
objective of NTPII and also incorporates the possible future support to WRM. Immediate
objectives for the TPBS to the NTPII are i) Improved RWSS NTPII performance and
effectiveness and ii) Increased coverage of water supply and sanitation facilities and hygiene
promotion amongst the poor.


A pilot phase of two years will provide TPBS, through government channels, to nine
provinces and in so doing identify the necessary safeguards and trial approaches to
strengthening NTPII implementation with a view to the donors subsequently providing TPBS
on a national scale. During the pilot phase, technical assistance will be provided at both

1
  The Hanoi Core Statement is the expression of the mutual commitment between the Government of
Vietnam and the Donor Community in Vietnam to increase the impact of aid and enhance its
effectiveness. The HCS is based on the principles set out in the Paris Declaration on Aid Effectiveness.
These principles were endorsed by donors and partner countries at the High Level Forum on Aid
Effectiveness held in Paris in March 2005 and at the Summit Meeting of the UN General Assembly in
September 2005.


                                                     i
national and provincial level and will focus on strengthening the institutional, management
and technical capacities required for effective implementation of RWSS NTPII. A number of
clear triggers and benchmarks have been agreed with GoV. These are defined in the
programme document and will provide a joint GoV and donor framework for assessing
progress in strengthening NTPII service delivery, and for guiding decision-making on
‘rolling-out’ TPBS support for NTPII from the nine pilot provinces to the country as a whole.

According to the RWSS NTPII document, approximately 7.4 million people will be served
with water and will have had the opportunity to improve hygiene practices, more than 10,000
school and institutional latrines will have been built and some 1.3 million households will
have hygienic latrines as a result of the AusAID/Danida/Netherlands support.

The mandated Vietnamese agencies will manage the NTPII, including the funds provided by
AusAID/Danida/Netherlands. No additional procedures, reporting, coordination or
management structures will be created as a result of the external assistance provided.



Signatures:

Date:
For the Government of Vietnam:

Name:                                        Title:

Signature:

Date:
For the Government of Australia

Name:                                        Title:

Signature:

Date:
For the Government of Denmark:

Name:                                        Title:

Signature:

Date:
For the Government of the Netherlands:

Name:                                        Title:

Signature:




                                               ii
ABBREVIATIONS

ADB        Asian Development Bank
AusAID     The Australian Agency for International Development
BARD       Bureau of Agriculture and Rural Development (District Level)
BOET       Bureau of Education and Training (District Level)
BOF        Bureau of Finance (District Level)
BOH        Bureau of Health (District Level)
CBO        Community Based Organisation
CERWASS    Centre for Rural Water Supply and Sanitation
CPRGS      Comprehensive Poverty Reduction and Growth Strategy
CU         Coordination Unit (for the RWSS Partnership)
Danida     Danish International Development Assistance
DFID       Department for International Development (Britain)
DKK        Danish Krone (approx. equal to 15 cents of a US Dollar)
DARD       Department of Agriculture and Rural Development (Provincial Level)
DGIS       Directorate General for International Cooperation, Netherlands
DOET       Department of Education and Training (Provincial Level)
DOF        Department of Finance (Provincial Level)
DOH        Department of Health (Provincial Level)
DONRE      Department of Natural Resources and Environment
DPI        Department of Planning and Investment (Provincial Level)
DWRM       Department of Water Resources Management
EIA        Environmental Impact Assessment
EU         European Union
GOV        Government of Vietnam
GSO        General Statistics Office
HIV/AIDS   Human Immune Deficiency Virus/ Acquired Immune Deficiency Syndrome
HWI        Hand washing Initiative
IDE        International Development Enterprises (NGO)
IEC        Information, Education and Communication
IWRM       Integrated Water Resources Management
LWR        Law on Water Resources
MARD       Ministry of Agriculture and Rural Development
M&E        Monitoring and Evaluation
MDG        Millennium Development Goals
MOET       Ministry of Education and Training
MOF        Ministry of Finance
MOH        Ministry of Health
MOLISA     Ministry of Labour, War Invalids and Social Affairs
MONRE      Ministry of Natural Resources and Environment
MOU        Memorandum of Understanding
MPI        Ministry of Planning and Investment
NAPA       National Academy for Public Administration
NGO        Non Government Organization
NTP        National Target Programme
NTPII      National Target Program for Rural Water Supply and Sanitation (2006-2010)
NRWSSS     National Rural Clean Water Supply and Sanitation Strategy
NWRC       National Water Resources Council
PAR        Public Administration Reform
PPC        Provincial People’s Committee
PRSC       Poverty Reduction Support Credit
PSC        Partnership Steering Committee
RBMO       River Basin Management Organizations
RNE        Royal Netherlands Embassy
RWSS       Rural Water Supply and Sanitation
SEDP       The Five-Year Socio- Economic Development Plan (2006-2010)
SBV        State Bank of Vietnam
SDC        Swiss Development Corporation


                                       iii
SIDA     Swedish International Development Assistance
SPB      Social Policy Bank
TA       Technical Assistance
TAG      Technical Advisory Group
TPBS     Targeted Programme Budget Support
TFG      Task Force Group
TOR      Terms of Reference
UNDP     United Nations Development Programme
UNICEF   United Nations Children’s Fund
VDG      Vietnam Development Goals
VFM      Value for Money
VDG      Vietnam Development Goals
VND      Vietnam Dong. In January 2006, 1 USD equalled 15,800 VND.
VWU      Vietnam Women’s Union
WRM      Water Resources Management




                                    iv
        MAP

                                      Map showing Provinces of Vietnam and
                                      the 9 pilot provinces


Lao Cai
Lai Chau
Dien Bien




                         Phu Yen
                         Dak Lak
                         Ninh Thuan
                         Dak Nong



              An Giang
              Tra Vinh




                                        v
0        EXECUTIVE SUMMARY
Background
The proposed sector programme support is a continuation of the cooperation between
Vietnam, Australia and Denmark in the water sector that commenced in the early
1990s; and is the start of cooperation between Vietnam and the Netherlands in the
rural water supply and sanitation sector. Previous assistance from the three donors
involved has been provided in parallel with, rather than through- government systems.
However, with significant improvements in the national sector frameworks 2,
improved donor coordination and greater transparency on financial information; there
is now an opportunity to deliver support through government structures and systems.
This program document outlines arrangements to deliver support through GoV’s
National target program (NTP) II on Rural Water Supply and Sanitation (RWSS).
Objectives of the support to the RWSS NTPII
The development objective of the joint donor support corresponds to the development
objective of NTPII (see below) but also incorporates broader environmental
management:

     Improved health and living conditions of the rural poor including ethnic minorities
      through provision of clean water, sanitation, hygiene promotion and protection of
      the environment.

Immediate objectives for the TPBS to the NTPII are:

     Improved RWSS NTPII performance and effectiveness;
     Increased coverage of water supply and sanitation facilities and hygiene
      promotion amongst the poor including ethnic minorities.

The largest part of the programme is support to the NTPII for Rural Water Supply and
Sanitation with a minor amount (less than 5%) assigned to Integrated Water
Resources Management (IWRM). In terms of budget, most support will be delivered
‘on budget’ through NTPII, with a much smaller proportion earmarked for ‘off
budget’ support for technical assistance, research and studies.
0.1      The National Sector Framework
Sector context
Increased coverage of RWSS is a priority for the Government of Vietnam (GOV).
The RWSS NTP is one of seven nationally funded targeted programs under phase one
(2001-2005), and one of ten NTPs under phase two (2006-2010), established by the
GOV to serve areas considered urgent, inter-sectoral, inter-regional and important for
national socio-economic development. In 2000, with the support of Danida, the GOV
introduced the ‘National Rural Water Supply and Sanitation Strategy (NRWSSS) up to
the year 2020’ to improve the impact and sustainability of GOV investments. Reviews
of the first target program for RWSS – NTPI (2000-2005), concluded that the

2
  Including the Comprehensive Poverty Reduction and Growth Strategy 2001-2005 (CPRGS); the
National Socio-Economic Development Plan 2006-2010 (SEDP); a National Rural Water Supply and
Sanitation Strategy (NRWSSS); and the introduction of National Target Programs (NTPs);


                                              vi
approach and objectives of the national strategy are relevant but the principles are
inconsistently implemented in practice. Design of NTPII (2006-2010), led by
CERWASS, has tried to take on board some of the key lessons from NTPII.
Poverty context
Access to clean water and sanitation is a crucial part of the government’s fight against
poverty. Lack of water and sanitation and the continuation of poor hygiene practices
hold back economic growth and place an unacceptable and preventable health burden
on Vietnamese health care systems. Individuals and communities that suffer from
inadequate water and sanitation and poor hygiene practices have a very poor quality
of life.

Access to water and sanitation is mainly a problem of the poor in Vietnam. The
poorest 20% only have 22% access to clean water compared to 78% access for the
richest 20%. In sanitation the picture is even worse: the poorest 20% only have 2%
access compared to an access level for the richest of 20%. NTPII supported by this
programme will have a measurable and direct impact by providing funds for pro-poor
subsidy of water, sanitation and hygiene; and equally importantly by contributing to
increasing the effectiveness of government and private sector investments in the
sector.

Women will benefit directly since they have the main responsibility for household
water use management and family health; children will benefit from long term
improvements in the sector; and the environment will be improved through a greater
focus on water quality, environmental sanitation and hygiene as well as increased
attention given to issues related to water abstraction, livestock waste and trade
villages. HIV/AIDS will be integrated into the programme in accordance with
national HIV/AIDS initiatives and strategies.

Private sector participation will be encouraged through more market-based solutions
in accordance with the NWRSSS. The separation of state management and service
provision will also tend to improve prospects for the private sector. Civil society
NGOs and Community-Based Organizations (CBOs) will, through the information
and communication programmes of the NTPII, take an active role in creating demand
and promoting informed decision making.

Ethnic communities tend to live in the provinces with the lowest access to water
supply and sanitation services. Since the focus of NTPII is on people who live in
remote areas, ethnic communities will be major beneficiaries.
RWSS NTPII goals and objectives
The Development Goals of the RWSS NTPII (2006-10) reflect the poverty reduction
goals of the Comprehensive Poverty Reduction and Growth Strategy (CPRGS) and
the Socio Economic Development Plan (SEDP):

      Living conditions of rural people improved by improving rural water supply
       and sanitation services and raising community awareness of environment
       protection.




                                            vii
       Negative impacts on rural people’s health due to poor water supply and
        sanitation conditions reduced and environment pollution in the community
        minimized.

The NTPII objectives to be achieved by 2010 are:
Water supply
    85% of the rural population use hygienic water, among whom 50% use clean
        water that meets MOH Standard 09/2005/QD-BYT issued on 11/3/2005 with
        60 litres/capita/day.3
Environment sanitation
    70% of rural households have hygienic latrines and
    70% of rural households have hygienic livestock pens
Public facilities
    All rural primary schools, kindergartens, nurseries, clinics and commune
        people’s committees have access to clean water and hygienic latrines and
    Minimize environment pollution in trade villages, especially in food
        processing villages.

The NTPII reflects the need for a greater focus on sanitation and hygiene, the need for
better targeting of subsidies for the poor, greater emphasis on sustainability, improved
operation and maintenance and further decentralisation of implementation. The
expected outcome is that some 7.4 million people will be served with water and will
have had the opportunity to improve hygiene practices. Some 10,000 school and
institutional latrines will have been built and some 1.3 million households will have
hygienic latrines.

The projected NTPII budget is VND 22,600,000 million, comprising about 40% for
water supplies; 21% for sanitation; 30% for livestock waste treatment; and 9% for
IEC, management and monitoring. The State budget is projected to account for 14%
of expenditure; local government about 10%; community contributions about 36%;
preferential loans about 25%; and donor support about 15% (this includes funding
channelled through government systems as well as more traditional RWSS project
assistance).

The projected NTPII budget is based on reaching targets and not on committed and
available funds. The analysis in this document indicates that on current estimates
available funds will be around half the projected level needed to reach targets. This
does not necessarily mean that targets will not be reached but simply that consumers
will need to provide a greater proportion of the funding themselves. Thus it is vitally
important that the limited subsidies are directed towards the poor.

A National Steering Committee is broadly responsible for overall management of the
NTPII, supported by a Standing Office (secretariat). A similar structure applies at
each province.
Integrated Water Resources Management


3
   This is even more ambitious than the goal of the SEDP, which is that 75% of the rural population
shall have access to clean water in 2010 (up from an estimated 62% in 2005).


                                                 viii
The aim of the assistance for IWRM is to support Vietnam obtain better knowledge,
protection, regulation and utilization of water resources in order to prevent water
scarcity and pollution, protect the quality of ground and surface water, and strengthen
the national and local capacity for IWRM. AusAID and the Netherlands do not intend
to co-fund this component. The state responsibility for water resources management
was in November 2003 officially transferred from the Ministry of Agriculture and
Rural Development (MARD) to the Ministry of Natural Resources and Environment
(MONRE). There is however still uncertainty concerning the precise division of roles
especially in relation to River Basin Management Organizations (RBMOs).

The assistance to IWRM will depend on the clarification of current uncertainties.
Triggers for Danida support include a decision on the roles and mandates of MONRE
and MARD regarding RBMOs and the establishment of a common programme for co-
funding by GOV and key donors. The support to WRM will not start at the beginning
of the programme.
0.2     Programme preparation
Programme preparation was led by a Task Force Group (TFG) established in
November 2004 with members from relevant ministries and the donors. The
preparation process included thematic studies on water resources management and
sanitation, documentation of lessons learned from the first earlier phase of support and
a number of studies undertaken by other partners on assessment of issues such as
financial management, procurement, gender mainstreaming, micro financing
modalities and poverty targeting mechanisms.

An assessment of the suitability of providing Targeted Programme Budget Support
(TPBS) took place in November 2005 following the first draft of the NTPII. GoV
accepted the findings of this assessment and incorporated most of the suggested
amendments into the third draft of the NTPII (December 8, 2005). A workshop was
held in March 2006 to discuss the draft programme document and recommend final
adjustments prior to submission for appraisal.

          A joint GoV-Donor appraisal was undertaken in May 2006. The appraisal
           in general terms recommended to go forward with the planned TPBS to
           NTPII, but also recommended some changes to the Programme Document,
           which have been included in the present, final version.
0.3     Strategy
The new approach
The feasibility assessments undertaken as part of program preparation recognised that
an improved sector policy framework, financial transparency and donor coordination
have provided an opportunity to move towards sector support modalities for RWSS.
Provision of sector support is a significant change in approach for the three donors
involved in Vietnam. The change in strategy is a recognition of concerns over the
institutional sustainability and impact of project based assistance, and a desire to
promote donor harmonization and alignment and reduce transaction costs, consistent
with the Hanoi Core Statement on Aid Effectiveness (HCS). The feasibility
assessments recognized that the principles and strategies outlined in the NTPII are
sound but identified risks concerning implementation capacity, particularly the




                                            ix
capacity to respond to lessons learned from NTPI, to strengthen procurement practices
and to minimize fiduciary risks.

Phasing of the support
Recognizing that TPBS is a ‘learning process’ for both GoV and donors, and given
the inherent risks identified during the preparation process, a phased approach has
been adopted. Pre-pilot activities (Box 1) are ongoing and seek to improve
understanding of key features of NTP implementation and to improve awareness.
Pilot activities will then allow the potential system risks to be further investigated in
nine provinces, for safeguards to be identified, and for piloting of options for
strengthening NTPII implementation. During this phase, technical assistance will be
provided in kind at both provincial and national level, accompanied with substantial
additional funds provided ‘on budget’ through NTPII to enable significant
improvements in coverage and sustainability of rural water supply and sanitation
facilities to be achieved. From the pilot phase onwards, it will not be possible to
distinguish donor funds at provincial level from government funding. Based on a
joint assessment of five triggers at the end of the pilot phase, and good progress
against a range of benchmarks, the three donors subsequently intend to provide
‘scaled-up’ support to enable roll-out of TPBS during a national program phase.
Box 1. On-going pre-pilot Activities:

   Establishment of cooperation agreements between MPI/MOF, the bilateral donors
    and the involved provinces including specific arrangements for the transfer of
    funds and signing of Memorandums of Understanding with the pilot provinces.
   Preparatory briefings/awareness raising on NWRSS and NTP II in the pilot
    provinces.
   Selection and recruitment of national and international advisers and consultants
   Provision of technical assistance to MPI in their planned review of performance,
    guidelines and procedures governing the implementation of all NTPs
   Support provided to MPI for implementation of the new procurement law passed
    in November 2005.
   Review of subsidy and credit policies as proposed in the NTP II document.
   Further development of RWSS Monitoring and Evaluation.
   Development of the options for use of the research funds.
   Definition of relationship between the RWSS partnership and the NTPII steering
    committee.
   Assistance to MARD and MOF in the development of an inter-ministerial circular
    to guide the NTP II.
   Elaboration of a Water Quality Monitoring action plan.
   Study on technical design for RWSS facilities (low-cost options).
   A sector specific fiduciary risk assessment for the proposed TPBS to RWSS.
   Baseline study.


The pilot provinces
The additional funding for pilot provinces will be complemented with technical and
capacity-building support to help identify and address current weaknesses in NTP2



                                             x
service delivery, improve the effectiveness of RWSS expenditure and make progress
towards achieving the national targets set out in the NTP2 document.

Nine provinces (three in the north; four in the central area; and two in the Mekong
delta) have agreed to participate in the pilot program. The northern cluster comprises
Lao Cai, Lai Chau and Dien Bien. The central cluster comprises Ninh Thuan, Phu
Yen, Dak Lak and Dak Nong. The Mekong delta cluster comprises Tra Vinh and An
Giang.
0.4    Triggers and benchmarks
The expected national program of TPBS to NTPII will last 3 years, commencing in
the last quarter 2008, subject to assessment of pilot phase performance against
specific triggers and benchmarks. Triggers and benchmarks have been designed to
provide a framework for assessing progress in strengthening NTPII service delivery
and implementation, to be undertaken by the national RWSS steering committee
(assuming the latter includes donor representation).

Triggers have been defined from the outset of TPBS support and must be met prior to
disbursements being made for the national program phase. There are five triggers for
RWSS NTPII performance in the pilot provinces. Triggers relate to:

   a. Transparency and efficiency of the financial management under the NTPII
   b. Quality of supervision of NTPII water supply and sanitation works
   c. Value-for-money of NTPII investments in pilot provinces
   d. Agreement on management arrangements for the operation and maintenance
      of piped water supply schemes prior to construction
   e. Adequate funds allocation to sanitation and hygiene at all levels

Benchmarks also provide a framework for assessing progress and will be adjusted on
an ongoing basis in response to progress and the emergence of new implementation
challenges. Initially, 15 benchmarks have been identified for assessing RWSS
performance in the pilot provinces, and some of these will continue to be assessed
during the national program phase. Benchmarks relate to a range of issues relevant to
effective NTP2 management, ranging from financial information provision, cost norm
revision, procurement compliance, budget allocations for sanitation and hygiene,
capacity building, poverty targeting and achieving health outcomes.

Detailed joint assessment of pilot phase performance against the triggers; and the
design of the national program, particularly in relation to provision of TA for capacity
building, will be undertaken towards the end of the pilot phase.
0.5     Technical Assistance
Technical assistance will play a key role during the pilot phase of TPBS for RWSS,
specifically to assist pilot provinces to improve the effectiveness of RWSS
expenditure, and to ensure this experience is shared amongst provinces and integrated
into plans, policies and guidelines for NTPII prepared at national level.

Technical assistance at the national level will comprise:
 One international adviser based within the standing office in MARD for NTPII
   tasked with providing technical assistance to the standing office, particularly


                                            xi
    within programme monitoring, management and reporting. The TA will further
    support the standing office in liasing with provincial TAs.
   One international adviser placed within the Department of Preventive Medicine,
    MoH. Tasked with promoting hygiene and sanitation in all aspects of RWSS,
    including promotion of the use of health data and indicators for targeting NTPII
    investments in IEC, water supply and sanitation to areas of greatest need.
   Short term consultants will be mobilised for technical assistance to MOF on needs
    based requirement

Technical assistance at provincial level will comprise:
 One international adviser in each of the 3 provincial clusters, each of which will
   work with the provincial governments and the provincial RWSS steering
   committees. The adviser will support the district and commune agencies
   responsible for implementation of the NTPII financed projects to develop, test and
   introduce approaches and conduct training, covering all aspects of the NRWSSS.
 National consultants will be mobilized on a demand-led basis, for up to 2 person
   years per cluster throughout the pilot phase.
0.6    Budget
The proposed budget for AusAID, Danida and the Netherlands support is USD 125
Million subdivided as shown in the table below:
           Summary Budget                                     Years
               (000 USD)                        1         2        3        4        5   Total
Support to NTP II                          13,558    14,347   26,732   32,146   24,311   111,094
Programme studies, auditing and research      516       566      326      216      116     1,740
Unallocated funds                           1,217     1,825    3,042    3,042    3,040    12,166
                                   Total   15,291    16,738   30,100   35,404   27,467   125,000
           Source of funding
Ausaid disbursement                         1,700     2,700    8,600   12,000    9,000    34,000
Netherlands                                 1,591     2,038    7,500    9,404    4,467    25,000
Danida disbursement                        12,000    12,000   14,000   14,000   14,000    66,000

The Danida commitment will be made in DKK. The AusAID commitment will be
made in Australian dollar. The Netherlands commitment will be made in euro.
0.7    Management and organisation of the support
The mandated Vietnamese agencies will manage the NTPII including the funds
provided by AusAID/Danida/Netherlands. No additional procedures, reporting,
coordination or management structures will be created as a result of the external
assistance provided.

There will however be a need for close dialogue between the donor agencies and the
Vietnamese lead agencies in order to adjust plans for cooperation year by year and
deepen the sector dialogue. This will take place through the National Steering
Committee of NTP II in which the funding partners will be represented. Furthermore,
a RWSS partnership has been established by MARD for information sharing,
coordination and harmonisation.

MARD is the designated lead national agency for the NTPII (standing office)
although MOF, MOH and MOET will play a significant role in their respective areas.
At provincial level, the Provincial People’s Committee (PPCs) will designate lead


                                                    xii
agencies (standing office) and implementing agencies (budget holders) in line with
decentralization (down to district or commune level) and the mandate of different
departmental line agencies responsible for different areas of the NTP.

The WRM component will be managed by the Vietnamese agency that has the
mandate for water resources management, once the government clarifies this.
0.8     Monitoring and evaluation
Monitoring and evaluation will be based on Government systems. Currently
Government systems for monitoring the sustainability of facilities are weak. The
intention is to work with the Government to strengthen these systems.

In addition, donor supervision missions and a range of reviews will be undertaken
during the pilot phase as essential safeguard mechanisms and to confirm the
conditions under which TPBS can be provided to the national program following
completion of the pilot phase. Annual supervision events will include representation
from the national standing office and provide a link to the mid term review proposed
in the NTPII work-plan (end 2007). A joint assessment will be undertaken towards the
end of the pilot phase to determine if TPBS can be provided on a national scale.
0.9     Assumptions and risks
The main risks are that:
 The constructed facilities (both for water supply and sanitation) will have a too
    short useful service life, because of: (i) poor design and construction quality, (ii)
    insufficient emphasis put on IEC, involvement of the users and the setting up and
    training for O&M.
 It is found too difficult/complicated to subsidise the poor as they are further from
    the decision makers, less able to meet the necessary conditions and less aware of
    the support on offer.
 There will not be sufficient National and provincial commitment to transparent
    procurement and anti-corruption measures.

The main assumptions are that:
 There is a political commitment and priority to investing in hygiene promotion
 The evidence for introducing changes in the pilot provinces is sufficiently
   compelling in terms of visibly better results, for national and provincial agencies
   to adopt the changes in the time span allowed .
 Improved approaches and capacity developed during the pilot phase can be
   replicated in provinces to ensure that the improvements in water, sanitation and
   hygiene promotion are sustained.
 Considerable national funding for NTPII is made available from the GoV and the
   Provinces, and that the end-users also are willing to make substantial
   contributions.
 Decision is taken regarding the lead and supporting agencies for IWRM,
   particularly for RBMOs.

The assumptions, risks, mitigating actions and the monitoring of these are described
in Chapter 9.




                                             xiii
Table of Contents


ABBREVIATIONS ................................................................................................... III
MAP ............................................................................................................................. V
0      EXECUTIVE SUMMARY .............................................................................. VI
1      INTRODUCTION................................................................................................ 1
2      NATIONAL SECTOR FRAMEWORK ............................................................ 3
    2.1 KEY POLICIES, STRATEGIES AND TARGETS ............................................................ 3
    2.2 KEY SECTOR INSTITUTIONS ................................................................................... 5
       2.2.1   Summary of Roles and mandates ........................................................... 5
       2.2.2   Institutional Assessment ......................................................................... 6
    2.3 RWSS NTPII ........................................................................................................ 7
    2.4 DONOR INVOLVEMENT .......................................................................................... 9
    2.5 POVERTY REDUCTION IN VIETNAM’S NATIONAL SECTOR FRAMEWORK ............. 10
    2.6 CROSS CUTTING ISSUES IN VIETNAM’S NATONAL SECTOR FRAMEWORK ............ 13
3      AGREED ASSISTANCE .................................................................................. 15
    3.1      OBJECTIVES OF THE AGREED ASSISTANCE .................................................... 15
    3.2      STRATEGIC AND METHODOLOGICAL APPROACH OF THE AGREED ASSISTANCE
             16
       3.2.1      Sector support versus project support ................................................ 16
       3.2.2     The Role of Triggers and Benchmarks................................................. 17
       3.2.3     Phasing ................................................................................................ 23
       3.2.4     National program of TPBS to NTPII ................................................... 26
       3.2.5     Programme level support ..................................................................... 26
    3.3      STRATEGY FOR TECHNICAL ASSISTANCE ....................................................... 28
       3.3.1     The role of technical assistance ........................................................... 28
       3.3.3     Contracting and reporting ................................................................... 29
    3.4      CONTRIBUTION OF THE AGREED ASSISTANCE TO VIETNAM’S POVERTY
    REDUCTION EFFORTS ................................................................................................ 30
       3.4.1     Alignment to Vietnamese policies and strategies for poverty alleviation
                 30
       3.4.2     Contribution to the MDGs ................................................................... 30
       3.4.3     Lessons learnt from past cooperation .................................................. 30
       3.4.4     Potential contributions to an enhanced pro-poor focus in the water and
       sanitation sector ................................................................................................... 31
    3.5 CONTRIBUTION TO CROSS CUTTING AND PRIORITY ISSUES TO VIETNAM’S EFFORTS
    IN THESE AREAS ........................................................................................................ 33

4      COMPONENT LEVEL SUPPORT TO THE NTPI II .................................. 37
    4.1        IMMEDIATE OBJECTIVES ................................................................................ 37
    4.2        OUTPUTS ....................................................................................................... 41
    4.3        DETAILED STRATEGY .................................................................................... 43
    4.4        INPUTS – TPBS TO THE NTPII ...................................................................... 45
5      BUDGET ............................................................................................................. 48
    5.1        OVERALL BUDGET......................................................................................... 48


                                                                 xiv
    5.2        BUDGET DETAILS FOR TECHNICAL ASSISTANCE............................................. 51
    5.3        BUDGET FOR SUPERVISION INPUTS ................................................................ 52
    5.4        PROGRAMME LEVEL BUDGET ........................................................................ 53
    5.5        UNALLOCATED BUDGET ............................................................................... 53
6      MANAGEMENT AND ORGANIZATION .................................................... 54
    6.1        PROGRAMME MANAGEMENT PRINCIPLES ...................................................... 54
    6.2        MANAGEMENT FUNCTIONS AND ROLES – NTPII COMPONENT ....................... 54
    6.3        MANAGEMENT FUNCTIONS AND ROLES – WRM ........................................... 55
    6.4        PARTNERSHIP ARRANGEMENTS AT PROGRAM LEVEL ..................................... 56
       6.4.1 Partnership for rural water supply and sanitation sector .......................... 56
       6.4.2 Operational coordination between GOV and donors supporting the NTPII
       .............................................................................................................................. 56
7      FINANCIAL MANAGEMENT ........................................................................ 57
    7.1        BUDGETING................................................................................................... 57
    7.2        FUNDS TRANSFER ......................................................................................... 57
    7.3        DISBURSEMENT ............................................................................................. 58
    7.4        ACCOUNTING AND REPORTING ...................................................................... 58
    7.5        PROCUREMENT.............................................................................................. 59
    7.6        AUDITING ..................................................................................................... 59
8      MONITORING, REPORTING, REVIEWS AND EVALUATION ............. 60
    8.1        ORGANISATIONAL SET-UP OF THE MONITORING SYSTEM ............................... 60
    8.2        KEY TARGETS, OUTPUT, OUTCOME AND IMPACT INDICATORS. ...................... 61
    8.3        REPORTING SYSTEM OF THE PROGRAMME AND ITS COMPONENTS.................. 62
9      ASSESSMENT OF KEY RISKS AND ASSUMPTIONS .............................. 63
    9.1      MAIN RISKS ................................................................................................... 63
       9.1.1    Operation and Maintenance ................................................................ 63
       9.1.2    Subsidies to the poor. ........................................................................... 64
       9.1.3    Transparent procurement and anti-corruption .................................... 64
    9.2      MAIN ASSUMPTIONS ................................................................................ 65
       9.2.1    Political commitment and priority assigned to investing in hygiene
       promotion ............................................................................................................. 65
       9.2.2    Changes in the pilot provinces stimulate changes during national roll-
       out      65
       9.2.3    Replications during national roll-out .................................................. 66
       9.2.4    The funding for NTPII .......................................................................... 66
       9.2.5    Responsibilities for IWRM ................................................................... 67
10         IMPLEMENTATION PLAN ....................................................................... 67

Volume 2: Annexes
A) TOR for pre-pilot activities
B) TOR for Pilot phase evaluation studies
C) Job descriptions for long-term technical advisers
D) Detailed budget and cash flows
E) Strategy considerations and Lessons learnt from NTPI
F) NTP management arrangements and diagram of financial flows
G) Indicators


                                                                    xv
H) Details on Poverty reduction impact.
I) Environmental screening note
J) MOU for the RWSS partnership
K) A possible strategy for the RWSS component
L) References
M) Public Administration Reform
N) Summary of Action Plans for the Nine Provinces




                                        xvi
1      INTRODUCTION

Vietnam has cooperated with Australia and Denmark in the water sector since the
early 1990s. The first sector programme with Denmark was launched in 2000 and will
draw to a close in mid 2006; current Australian assistance to the water sector will stop
in 2007. Australian and Danish assistance to the water sector has adopted similar
approaches in the past. Netherlands has provided considerable support for water
resources management in Vietnam and increasingly seeks to focus delivery through
harmonized, sector-support modalities. For the Netherlands, this will be the first
support provided for RWSS.

The external assistance so far has acted alongside rather than within government
structures, partly as a response to the lack of a consolidated national sector framework
at the time. The Comprehensive Poverty Reduction and Growth Strategy (CPRGS),
the Five-Year Socio- Economic Development Plan (2006-2010) (SEDP), the
NRWSSS, introduction of a National Target Program (NTP) and improved donor
coordination provide the opportunity in this proposed second phase to simplify, to
better align and to harmonise the modalities of cooperation.
Rural Water Supply and Sanitation (RWSS)
Achieving universal coverage of RWSS is a priority for the Government of Vietnam
(GOV). Since 1998, provision of RWSS has been one of seven NTPs established by
the GOV to serve areas considered urgent, inter-sectoral, inter-regional and important
for national socio-economic development. In 2000, with the support of Danida, the
GOV introduced the ‘National Rural Water Supply and Sanitation Strategy
(NRWSSS) up to the year 2020’ in order to improve the impact and sustainability of
GOV investments. The national strategy, which is based on international good
practice, is supported by donors active in the sector. Reviews of the first NTP for
RWSS concluded that the approach and objectives of the national strategy are
relevant but the principles are inconsistently implemented in practice.

New opportunities have recently emerged for enhanced sector cooperation including:

   A GOV, civil society and donor consensus has developed on how the NTP can be
    improved, which gives a strong departure point for future cooperation between
    implementing agencies and international donors;
   Joint approaches are becoming more readily accepted by key donors potentially
    reducing transactions costs and increasing harmonisation;
   The new NTPII (2006-2010) allows for introduction of new modalities of
    cooperation and implementation practices to better follow policy;
   Information, Education and Communication (IEC) tools and methods are
    becoming more effective leading to greater sustainability of benefits,
   Lessons on how to integrate with and mobilise Ministry of Health (MOH) and
    Ministry of Agriculture and Rural Development (MARD) rural extension
    networks could bring huge new resources as active partners in RWSS, and
   The information gaps and uncertainty of demand that have hampered private
    sector development of the sector could potentially be solved within the next 5
    years.



                                             1
   The GOV has made available much more information on its internal budgets and
    allocation of funding.
Integrated Water Resources Management (IWRM)
In November 2003, the state management of water resources management was
officially transferred from MARD to the Ministry of Natural Resources and
Environment (MONRE), through its Department of Water Resources Management
(DWRM) although there is still uncertainty in the precise division of roles. The
National Water Resources Council (NWRC) needs to function well so that MONRE
is able to ensure that regulation of the sector is supported across the various ministries
involved. The Law on Water Resources (LWR) opens up for broader participation in
the management of water resources e.g. through participation of water users in the
River Basin Management Organizations (RBMOs) and the establishment of the rule
of law (registration of water rights, licensing etc.) International donors, including
Denmark, could play a catalytic and strategic role in assisting Vietnam to consolidate
the significant advances made so far in sustainable water resources management.
Advances in sustainable water resources management are necessary for economic
growth and also for satisfactory progress in environment, agricultural, fishery and
other sectors.
Preparatory process
A Task Force Group (TFG) for programme preparation was established in November
2004 led by MARD with members from the Ministry of Planning and Investment
(MPI), Government’s Office, Ministry of Finance (MOF), MARD, MONRE, MOH,
and Embassy of Denmark.Denmark and the Australian Agency for International
Development (AusAID) (the two major bilateral donors to the RWSS sub-sector) later
agreed to join forces in order to prepare a common programme for co-funding.
Subsequently, the government of the Netherlands, following talks with the GOV,
decided to merge its proposed financing for RWSS with the same programme of
support.

Thematic studies on water resources management, sanitation and mainstreaming of
HIV/AIDS prevention have been undertaken as a part of the preparatory process. A
document on lessons learnt from the first phase of support has also been prepared. A
number of studies from the World Bank, Asian Development Bank (ADB),
Department for International Development (DFID), United Nations Development
Programme (UNDP) and others on assessment of issues such as financial
management, procurement, gender mainstreaming, micro financing modalities and
poverty targeting mechanisms, have been useful.

In November 2005 an assessment on the suitability of the NTPII for AusAID/Danida/
Netherlands financing was made. Most of the recommendations were incorporated in
the updated NTPII. The detailed formulation of proposed donor support follows
closely the agreed recommendations of the Assessment Report. A workshop was held
in March 2006 to discuss the draft programme document and recommend final
adjustments prior to submission for appraisal.




                                              2
2       NATIONAL SECTOR FRAMEWORK

2.1 KEY POLICIES, STRATEGIES AND TARGETS
The key framework document for poverty reduction in Vietnam is the Comprehensive
Poverty Reduction and Growth Strategy (CPRGS) and the Five-Year Socio-
Economic Development Plan (2006-2010) (SEDP). These documents set out goals
for poverty reduction in 2005 and 2010 based on the Millennium Development Goals
(MDG).

Many of the poverty reduction objectives of the CPRGS and the SEDP can be related
directly or indirectly to the provision of adequate clean water and sanitation facilities.
Access to water and sanitation is essential for the reduction of poverty.

Safe water and environmental sanitation are basic needs of people’s daily life and
they have become urgent requirements for protection and improvement of people’s
health and living conditions, as well as for the cause of national industrialization and
modernization4.

The Party and the Government, through Resolutions adopted by the VIII and IX Party
Congress and through commitments contained in the CPRGS gives prominence to the
water sector in achieving the Vietnam Development Goals (VDG) and the
Millennium Development Goals (MDG).

The National Strategy for Rural Clean Water Supply and Sanitation for 2000-2020 is
designed to improve the impact and sustainability of RWSS investments. It was
developed with the assistance of Danida and approved by the GOV in August 2000.
Key targets of the strategy include:

   By 2005 – all kindergartens, schools, training centres, hospitals, markets and
    public facilities in rural areas will have adequate clean water and hygienic latrines
   By 2010 – 85% of the rural population will have access to at least 60
    litres/capita/day of clean water and 70% of rural households will have hygienic
    latrines5
   By 2020 – full water and sanitation coverage with all rural households adopting
    good hygiene and sanitation practices.

The national strategy is underpinned by the principles of demand responsiveness;
managing water as an economic as well as a social good; and basing decision-making
and management at the lowest appropriate level. The strategy aims to promote the
participation of private service providers and development of community based needs
identification and systems of operation and maintenance. As a general principle,
users are expected to co-finance construction and pay the full operating costs of water
and sanitation facilities.

Since 1999 provision of central funding for RWSS has been channelled through a
National Target Program6. The experience and lessons learned from RWSS NTPI

4
 National Rural Water Supply and Sanitation Strategy (2000).
5
  The target for access to clean water in rural areas in 2010 is in the SEDP somewhat lower (and
probably more realistic): 75%, up from an estimated 62% in 2005.


                                                 3
(1999-2005) were assessed in a Review Report prepared by MARD in late 2004 and
again in a Joint Government-Donor Sector Review completed in April 2005. The
findings of the reviews were similar. The key conclusion of the Joint Government-
Donor review was that:
 Rural water targets for 2010 and 2020 are likely to be met if existing efforts are
    maintained, but coverage, technologies and trends differ between regions and
    provinces. While some 62% of rural families had adequate water supplies in 2005,
    many of those without good water are poorer and live in more remote parts of the
    country (northern and central highlands) or in the densely settled coastal and delta
    areas. More locally based approaches and targeting are needed to reach the poor.
 Sanitation targets for 2010 and 2020 are unlikely to be met without significant
    changes in approaches to sanitation promotion and development that recognise
    cultural preferences.
Issues and challenges
Communicable diseases represent nearly half the visits to health clinics and hospitals
in Vietnam. Half of these diseases result directly from water and environmental
sanitation problems – consuming a high proportion of the health budget on
preventable illness. Children and ethnic minority communities are the most
vulnerable groups.

Over the past 10-15 years various GOV economic and reform initiatives have
contributed to sustained economic growth and poverty reduction in Vietnam. But the
GOV also recognizes a need to provide targeted assistance to the poor, in particular,
to channel investments and development efforts to rural areas lagging behind the rest
of the country.

This is true of the water and sanitation sector as it is of other sectors. More than 75%
of Vietnam’s poor reside in rural areas, but over the past decade, investment in water
supply and sanitation infrastructure has focused disproportionately on urban centres.
Rural access to safe water supply and sanitation facilities are among the lowest in
South-East Asia.

Many challenges need to be addressed. In particular, national development policies
assign primary responsibility for RWSS development to provincial level. Hence
success in targeting poverty reduction in RWSS needs to focus on developing
capacity to plan, implement, manage and monitor RWSS facilities at provincial level.

The sector reviews identified a number of issues that need to be addressed to improve
efficiency of RWSS development and poverty reduction (a more detailed summary is
provided in Annex E)

   Implementation approach – there is a strong target driven construction focus at the
    expense of application of demand responsive approaches through community
    consultation, health education and establishment of effective institutional and
    decision making systems enabling rural people to choose the type and level of
    service they want. Appropriate technologies are often ignored and piped water

6
  Seven National Target programs have been established during the 1990’s by the GOV in areas
considered important for national socio-economic development. Most have a poverty focus.


                                               4
      schemes developed where consumption does not warrant it, resulting in high and
      unsustainable cost recovery rates
     Operational environment – there are gaps in the policy, legal and institutional
      framework and lack of coordination between different institutions engaged in the
      sector, including at the national-provincial level, resulting in fragmented and
      inefficient planning and implementation.
     Funding priorities – insufficient financial and institutional resources have been
      made available to support IEC strategies to improve awareness of health and
      environmental issues, promote behavioural change and support community
      management and cost recovery
     Water and sanitation management – there is a need to balance the roles and
      responsibilities of different levels of government, the private sector and local
      communities.
     Monitoring and evaluation – currently monitoring is limited and provides
      inadequate information for effective planning or decision-making. There is a need
      for a coherent national system, unifying existing initiatives (especially those being
      coordinated by United Nations Children’s Fund (UNICEF)) and further
      developing the system to encompass performance measures and feedback
      mechanisms. Roles and responsibilities need to be clarified.

The institutional and capacity constraints and the failure of sector agencies at all
levels to follow the principles of the NRWSSS prevented the full potential of user
investments in RWSS from being achieved.


2.2 KEY SECTOR INSTITUTIONS

2.2.1 Summary of Roles and mandates

The institutional structure of the RWSS sector is complex. There are a number of
different agencies and programs in addition to the RWSS NTP that are part of
national efforts to achieve targets of the NRWSSS, the SEDP and the CPRGS7.
Additionally, under decentralization provinces have substantial autonomy with regard
to budgets and responsibility for planning and activity implementation.

A National Steering Committee and standing office and similar structure at provincial
level provides rudimentary coordination of the RWSS NTP. The provincial steering
committees will report to the National Steering Committee.
Ministry of Planning and Investment
MPI is responsible for the overall management and supervision of NTPs; coordination
of budgets and evaluation of effectiveness. MPI in consultation with MOF proposes
budget allocations for approval by the Prime Minister and the National Assembly,
based on requests submitted by line agencies.
Ministry of Finance
MOF is responsible for recurrent budget allocations to NTPs, financial controls and
the release of funds to provinces.


7
    Annex F gives more details on the NTP implementation arrangements


                                                    5
Ministry of Agriculture and Rural Development
MARD is the designated lead agency for the RWSS NTPII and is responsible for
coordinating with relevant ministries. MARD has delegated responsibility for the
NTP II program document preparation to the Centre for Rural Clean Water and
Environmental Sanitation (CERWASS). The national standing office of the NTP II
will be based in the Department for Water Resources Management in MARD that will
also assume responsibility for the elaboration of the NTP II implementation
guidelines.
Ministry of Health
MOH is responsible for developing awareness on hygiene and health and for setting
and monitoring water quality standards.
Ministry of Education and Training
Ministry of Education and Training (MOET) is responsible for health and hygiene
programs in schools including provision of water and sanitation facilities.
Ministry of Natural Resources and Environment
Ministry of Natural Resources and Environment plays a role in relation to
environment, water quality and water resources management.
Committee for Ethnic Minorities in Mountainous Areas
Committee for Ethnic Minorities in Mountainous Areas is responsible for
implementation of Program 135, which has a focus on poor and marginalized
communities. Program 135 includes rural water (but little in the way of sanitation). In
some provinces Program 135 is a larger source of funding than RWSS NTP.
People’s Committees
The Provincial People’s Committee is responsible for managing resources and
coordinating the implementation of the RWSS NTP. Typically this is devolved to the
provincial office of CERWASS (pCERWASS). Various agencies are delegated as
budget holders to manage the different components of the NTP.

2.2.2 Institutional Assessment

A detailed institutional assessment of the RWSS sector is provided in the joint donor
review (see Annex L). A brief overview is given below:
Provincial authorities
The provincial authorities are key executing agencies. The main institutional
constraints are: lack of familiarity with the NWRSSS and key principles affecting
sustainability; a tendency to focus on water and ignore sanitation; lack of technical
supervision capacity and unwillingness to engage the private sector to provide
technical inputs when needed; a focus on meeting construction rather than
functionality targets; the fact that pCERWASS only extends to the provincial level;
conflict of interest between service provision and state management and, unfamiliarity
with the demand managed approach.
National standing office for the NTP
The national standing office for the NTP II will be based in the Department for Water
Resources Management in MARD. In NTP I, CERWASS was the standing office but


                                            6
as it did not have a departmental status its inter-ministerial role was made difficult (it
could not officially contact other ministerial departments). Expertise in the MOH was,
as a consequence, not fully utilized. Over the years, many people have been trained in
CERWASS and currently it represents the greatest concentration of sector expertise in
the country, so it may well support the Department of Water Resources Management
in certain tasks.
MOH – preventative health centres
Preventative health, hygiene promotion and sanitation do not feature prominently in
national health strategies and development plans. The preventive health system is
organized from central to communal level in all 64 provinces. One mandate of the
system is to promote sanitation and hygiene, and to monitor water quality. The
preventative health approach is gaining increasing acceptance and the priority and
capacity in this area is likely to increase in the future.
Public Administration Reform
Vietnam is undergoing a series of public administration reforms aimed at institutional
strengthening of government and the civil service as well as capacity building. These
reforms are highly relevant as the performance of the NTPII is ultimately dependent
on the performance of government as a whole. Annex m provides a brief overview.

2.3 RWSS NTPII
The RWSS NTP is one of seven nationally funded targeted programs. NTPs are
typically poverty focused and usually governed by guidelines defining their purpose,
scope, key strategies and accounting, reporting and auditing arrangements8.

NTPs are nationally funded programs. Conceptually, the RWSS NTPII applies to
Targeted Programme Budget Support (TPBS) provided through the State budget.
However, targets and budgets in the NTPII plan (2006-10) refer to sector objectives
and anticipated sector support (both through TPBS and other funding sources).

The preparation of RWSS NTPII was supported financially and through provision of
comments by a number of donors. Given the late start to preparation, the process of
internal approval, including appraisal by MPI and other concerned agencies, prior to
submission to the Prime Minister, GOV approval is expected only during the third
quarter of 2006. However, provincial allocations for the first year of the program were
determined in November 2005.

The key features of the RWSS NTPII (2006-10) include:
Development goals
The sector development goals reflect the poverty reduction goals of the CPRGS and
the SEDP:

   Living conditions of rural people improved by improving rural water supply and
    sanitation services and raising community awareness of environment protection.
8
 The national framework combined with expenditure control by Treasury gives the central authorities
some influence over NTP programming on the ground. However, in accord with the Budget Law and
autonomy of provinces under decentralization, the specific allocation of funds once transferred to the
province is the prerogative of people’s committees at each level.


                                                    7
    Negative impacts on rural people’s health due to poor water supply and sanitation
     conditions reduced and environment pollution in the community minimized.
Objectives
The following objectives are to be obtained by 2010:

a. Water supply:
 85% of the rural population use hygienic water, of whom 50% use clean water by
    MOH standard 09/2005/QD-BYT with 60 litres/capita/day9

b. Environment sanitation:
 70% of rural households have hygienic latrines,
 70% of rural households have hygienic livestock pens,

c. Public facilities
 All rural primary schools, kindergartens, nurseries, clinics and commune people’s
    committees have access to clean water and hygienic latrines;
 Minimize environment pollution in trade villages, especially in food processing
    villages.

Construction targets have been projected to achieve these clean water, household
sanitation, livestock and trade village objectives10.
Key strategies
Key strategies reflect lessons learned from the reviews of NTP Phase I. In particular
efforts are to be focused on poor and under-served communities supported by
demand-driven approaches, private sector involvement, increased attention to IEC and
capacity building.
Various pilot activities and studies are proposed to examine appropriate technologies,
approaches to financing, integration with the private sector, animal waste treatment,
etc.
NTPII extends from 2006 to the end of 2010. A mid-term evaluation workshop will
be organized at the end of 2007 to review implementation, synthesize lessons-learnt
and recommend adjustments.
Budget
The projected budget is VND 22,600,000 million, comprising about 40% for water
supplies; 21% for sanitation; 30% for livestock waste treatment; and 9% for IEC,
management and monitoring.
The State budget is projected to account for 14% of expenditure; local government
about 10%; community contributions about 36%; preferential loans about 25%; and
donor support about 15% (this includes funding channelled through government
systems as well as more traditional RWSS project assistance).
Management

9
  The target in the SEDP is 75%
10
  Livestock and trade village objectives relate to commercial activities. They are not relevant to MDG
goals and not included in the donor assistance.


                                                    8
A National Steering Committee is broadly responsible for overall management of the
NTPII, supported by a Standing Office (secretariat). A similar structure applies at
each province. The provincial steering committee will report to the National Steering
Committee. The funding partners will be represented in the National Steering
Committee.


Capacity development
The NTPII plan identifies human resource development as essential if investment is to
be sustainable and objectives and targets achieved. Additionally, there is a need to
clarify institutional roles and responsibilities.

Capacity building is required at all levels and all aspects of planning, implementation
and operation. In particular, training should be practical and focus on:
 Planning, management and coordination
 IEC skills and their application
 Appropriate technologies and technical construction of facilities
 Monitoring and evaluation
Linkage to other sector relevant investments
In many provinces the spending on RWSS in P-135 and other programs has been
much greater than through the NTP I. It is important to note that the NTP II funding
will be a subset of the RWSS sector investments. Apart from P-135, provinces
contribute their own funding, as do consumers and NGOs. Additionally, some donors
e.g. the World Bank Red River project and the ADB integrated development
interventions provide support for water supply and sanitation funded outside the
NTPII. The boundary between rural and urban and the role of the Ministry of
Construction in the urban areas is also relevant as is a number of preventative health
initiatives.

It is essential that the NTP II does not ignore these other initiatives and seeks to
integrate and coordinate approaches to ensure sustainability within the sector as a
whole.

2.4 DONOR INVOLVEMENT
Official external support
UNICEF’s involvement dates from the early 1980’s. The focus has shifted from
infrastructure construction to developing technical, managerial and policy capacity in
relevant national agencies, mass organizations and communities.

The World Bank is supporting the sector primarily through the Red River Delta Water
Supply and Sanitation Project. The project focus is on piped schemes as the
population density in those areas is high, but follows the demand responsive approach
and principles of the NRWSSS. Other World Bank rural sector projects also include
some assistance to water and sanitation.

The ADB provides support for rural water and sanitation through broad based rural
infrastructure projects. The ADB is committed to the principles of the NTPII in the
preparation of future RWSS interventions.


                                            9
The two main bilateral donors in the RWSS sector have been Danida and AusAID.
Both Danida and AusAID place emphasis on targeting poor households, demand
responsive approaches, user pays principles and community participation.

Danida has provided support at central, provincial, district and commune level
through the Water Sector Program Support (Water SPS) due for completion in 2006.
Recent AusAID assistance has been focused in five Mekong delta provinces.

Japanese International Cooperation Agency (JICA) provides assistance in
groundwater resource development and the European Union (EU) supports RWSS
through integrated rural development projects. Other bilateral donors that have
expressed interest or currently provide small assistance in RWSS include Swedish
International Development Assistance (SIDA) and DFID. The Netherlands is
planning to provide up to USD 25 million to co-fund the NTPII during a five-year
period from 2006-2011 and is integrated into this programme support document.
NGOs
Over 40 Non-Governmental Organisations (NGOs) are active in the sector in about 40
provinces – more so in water than sanitation and often as an element of broader based
development support than focused projects. NGOs have been successful in fostering
community participation and demand responsive approaches but because of relatively
small scale and local focus, lessons have only to a limited degree been mainstreamed
into national level programs.
Coordination and partnership
Under the leadership of MARD, a Partnership for Rural Water Supply and Sanitation
involving almost all donors was formally established in May 2006. The Memorandum
of Understanding (MOU) for the Partnership is included in Annex J.

The Partnership MOU states that “Signatories to the Partnership share a commitment
towards sustainable development of RWSS in Vietnam. By collaborating, fostering
harmonisation of policies and programmes and by promoting sector-wide approaches
with reference to the principles laid out in the June 3, 2005 Hanoi Core Statement on
Aid Effectiveness, Ownership, Harmonisation, Alignment and Results, the GoV and its
international partners aim to maximize effectiveness and efficiency of resource
utilization within the sector.”


2.5 POVERTY REDUCTION IN VIETNAM’S NATIONAL SECTOR
FRAMEWORK
The coverage of clean water and hygienic latrines varies greatly between the poor and
the rich and between different geographical areas. The coverage of the poorest 20% is
compared with the richer segments of society in Table 2.1 across different regions.
The overwhelming conclusion is that the poor have significantly lower access to
water and sanitation. The discrepancy between poor and rich is particularly strong for
sanitation (the poorest 20% are 35 times less likely to have hygienic latrines than the
richest 20%). Three regions stand out as particularly poorly served: North East, North
West and the central highlands.



                                            10
Table 2.1: Clean Water Supply and Hygienic Latrines by Income Group (2003,
VLSS data, quoted by Joint Sector Review, 2005)

                      Clean Water Supply                Hygienic Latrines
 Region               Poorest    Middle      Richest    Poorest     Middle     Richest
                      20%        20%         20%        20%         20%        20%
 Red River Delta      54.7       73.1        93.2       2.5         11.9       71.1
 North East           5.3        11.6        47.3       0.5         3.6        51.0
 North West           5.3        11.6        47.3       0.5         3.6        51.0
 N. Central Coast     12.9       30.1        65.1       2.6         7.5        57.1
 S. Central Coast     16.0       21.7        63.9       4.0         19.4       83.0
 Central Highlands    4.3        9.4         43.9       1.3         16.9       76.7
 South East           27.7       37.8        87.6       6.5         23.1       86.7
 Mekong Delta         41.1       48.8        75.3       1.0         4.9        44.8
 All Viet Nam         22.7       42.7        78.8       2.0         10.7       69.6

The conclusion is that access to water supply and sanitation is an issue that
disproportionately affects the poor. Significant interventions are needed to ensure that
the welfare, quality of life, health and economic possibilities for the poorest 20% do
not continue to be compromised by inadequate access to water and sanitation.
Policies, strategies and programmes
The CPRGS11 is together with the SEDP the guiding Vietnamese document for
poverty reduction. The CPRGS links all government plans and strategies to their
poverty alleviation impact. The approach includes 7 National Target Programmes,
which include sectoral interventions, and integrated programmes aimed at specific
groups of poor people or geographical locations.

The government in recognition of the poverty reducing impact of improved water
supply and sanitation and the fact that so many poor in Vietnam lack access to clean
water and hygienic latrines (as demonstrated by Table 2.1 above) has decided that
RWSS should be one of the target programmes.

The integrated approach of the Programme 135 and 134 acknowledges the complex
nature of poverty and that in predominantly poor Districts, individual interventions
such as an improved water supply are not sufficient in reducing poverty. The
Programme 135 for Socio-Economic Development of Particularly Difficult
Communes in Remote and Mountainous Areas has a significant water supply
component. In some provinces e.g. Lao Cai it funds more than 10 times the number of
water schemes than the RWSS NTP (Danida 2005).

The RWSS-NTP is designed to increase water and sanitation supply coverage, and
due to limited funding and the need to prioritise it focuses specifically on

     the “remote” areas where the entire communes are classified as poor and
     the “difficult” areas where even if the commune as a whole is not poor, the people
      are not rich enough to compensate for geographical disadvantages (deep boreholes
      required due to saline intrusion, unreliable or polluted surface water sources etc).



11
     2685/VPCP-QHQT, 21st May 2002


                                              11
These criteria have focussed the NTP programme mainly (but not exclusively) into
areas where piped schemes are required i.e. where household water demand cannot be
met on an individual basis e.g. by constructing dug, drilled or tube wells or rainwater
harvesting systems.

In ensuring that the poorest are able to access improved water supply and sanitation
facilities, Vietnam benefits from having in place a national system under the Ministry
of Labour, Invalids and Social Affairs (MOLISA). This system reaches down through
province, district, commune to village levels and below, and enables poor households
to be registered. Different poverty levels are set for highland, lowland and urban
areas. Households on these poverty lists are able to access assistance in areas such as
health care and education.

In a decision by the Prime Minister No. 170/2005/Q§-TTg dated 8th July 2005 on
poverty criteria to be applied for period 2006 – 2010, the poor are defined as follows:

   In rural areas: those households who have average income that is less than
    200.000 VND per capita per month (2.400.000 VND per capital per year).
   In urban areas: those households who have average income that is less than
    260.000 VND per capita per month (3.120.000 VND per capital per year).

The Vietnam Development Goals (VDGs), which were developed in response to the
UN MDGs, reinforce the Vietnamese commitment to improving water and sanitation.
The VDGs were based on the CPRGS targets for the poor.

The VDGs for safe water and hygienic sanitation are:

   60% of the rural population will have access to clean safe water by 2005 and 85%
    by 2010. In urban areas 80% will have clean water by 2005.
   All wastewater in town and cities should be treated by 2010.
   All solid water is collected and disposed of safely in towns and cities by 2010.

The VDGs do not include targets for rural sanitation, although these are included in
the CPRGS and NTP.
Implementation and coordination of the policies and strategies on poverty
The MPI leads and co-ordinates the CPRGS and heads the inter-ministerial Working
Unit. The water sector is well represented in the CPRGS with implementation of the
Law on Water Resources as an important indicator and the NTP for RWSS taking a
significant role in the poverty alleviation efforts. The General Statistical Office (GSO)
and the MOLISA are responsible for monitoring the CPRGS progress.

MARD with donor support under the International Support Group leads a Technical
Advisory Group 3 (TAG3) to improve the poverty focus by integrating the CPRGS
further into the RWSS sectoral policies. TAG3 has three key objectives:

   Raising awareness for CPRGS implementation in the agriculture and rural
    development sector.
   Support MARD to integrate priorities for CPRGS implementation into the annual
    work plan of MARD


                                             12
   Collective inputs for CPRGS implementation in the agriculture and rural
    development sector

2.6 CROSS CUTTING ISSUES IN VIETNAM’S NATONAL SECTOR
FRAMEWORK
Gender
Gender mainstreaming is Vietnamese government policy. In comparison with
countries at similar levels of development, Vietnam has made considerable progress
including in areas such as education, economic participation and political leadership.
Notably, Vietnam performs relatively well in both the United Nations’ Human
Development Index and its Gender Development Index. Vietnam has developed a
National Strategy for Women’s Advancement of Vietnam (2001-2005).

The NTPII recognizes that gender equality plays an important role in water and
sanitation. Under NTPII, the involvement of women in decision making at all stages
is supported. Government policy is to seek gender balance in water user groups and to
encourage women to join water user groups and water user associations. MARD has
developed a gender strategy for the water and sanitation sector.
Good Governance
Good governance covers human rights, child rights, democratisation, rule of law, and
public administration including the fight against corruption.

Vietnam’s constitution recognises rights to political, economic, legal and cultural
equality. Specifically, human rights are incorporated into citizens’ rights, which are in
turn linked to duties that must be ‘fulfilled to the State and society’.

Vietnam is a signatory to five of the six major international treaties on human rights.
While more work is required to incorporate international commitments into domestic
legislation, there is a broad consensus that the area of greatest need is the practical
implementation of government policies and legislation – in particular, raising
awareness among state officials and the public of Vietnam’s domestic and
international obligations in relation to human rights.

Grassroots Democracy has been promoted in Vietnam since 1998 with the
promulgation of a Grassroots Democracy Decree on implementation of democracy at
communal-level, subsequently updated in 2003.

Notably, both decrees were issued pursuant to the Resolutions and Directives of the
Politburo of the Communist Party, not by the National Assembly.

The Regulations specifically identify a range of matters requiring participation of the
people, including the right (normally via their representative in the People's Council)
to discuss and participate in decision making on public works in the locality; to
supervise the planning/budgeting and acquittal of the local budget; as well as have a
say in the level of local fees and charges.




                                             13
To enhance the implementation of grassroots democracy, the Government also issued
a Resolution on Decentralization in 2004, which provides directives on relevant issues
to administrative bodies at local-level.

Corruption is recognized as a significant issue in Vietnam, but there are signs of a
willingness by Government to begin to address the problems, including the opening of
a dialogue with the donor community and the issuance by the National Assembly in
2005 of an Anti Corruption Law (as an agreed policy action of the CPRGS). The
GOV has also committed to present an action plan on fighting corruption by end of
2006.
HIV/AIDS
MOH estimates for 2003 indicate there were 215,000 people living with HIV/AIDS in
Viet Nam (on average, one in 75 households has a family member living with
HIV/AIDS). Most of those infected are young, in their 20’s.

The GOV through the National HIV/AIDS Strategy recognizes the need to address
discrimination particularly in employment, education and health services and to
mainstream responses. Each ministry and sector is required to develop its own work
plan to strengthen the national response to the epidemic. This is in recognition that the
health sector alone cannot reverse the epidemic and that there is a need to broaden the
awareness and responsibilities of Party cells and government officials.
Environment
The National Strategy for Environmental Protection 2001-2010 defines priority
programmes for a 10 year time frame and sets out basic premises and overall guiding
principles, as well as three strategic objectives: i) to protect and improve the quality of
the environment with a view to enhance the quality of life and health of the people ii)
to protect natural resources as the basis for sustainable development, improve and
rehabilitate degraded natural resources, conserve and make judicious use of non-
renewable resources iii) to strengthen the environmental management capacity for
sustainable development in the industrialisation and modernisation of the nation.

On the 29th November 2005, Vietnam’s National Assembly passed the revised Law
on Environmental Protection. The law will be effective from 1st July 2006. The Law
outlines the overall principles for prevention and combat against environmental
degradation, environmental pollution and environmental incidents in general. A range
of measures applicable to organisations and individuals aiming at securing sound use
of the natural resources and avoidance of environmental damage are specified. Article
18 of the Law stipulates that projects of national importance and projects that impose
potential risks of adverse impacts on the environment are subject to Environmental
Impact Assessment (EIA). This includes impacts on natural reserves, national parks,
historical-cultural relics, natural heritage, water resources and areas with protected
eco-systems. A Decree is currently being drafted including a list of projects subject to
EIA.EIAs and auditing are required for existing and new operations against certain
thresholds – in general rural water supplies and sanitation do not require EIAs. The
Law includes, for the first time, provisions requiring the undertaking of Strategic
Environmental Assessment (SEA). In Chapter 3, Article 14 of the Law it is stated
that: “sectoral development strategies, long and short-term plans countrywide” are
subject to strategic environmental assessment. The revised law was passed after the


                                              14
preparation of the NTP II. SEA was therefore not required as part of the preparation
of NTP II. However, the programme will conduct SEA at provincial level during the
early stages of implementation. The SEA will help assess the environmental effect of
the programme.
Private sector
Public administrative reforms have created greater opportunities for private sector
development and the private sector contributes to varying degrees in the RWSS sector
in areas including financing, construction and management. Currently inconsistent
promulgation and application of policy and regulations inhibit enhancement and
expansion of the role and contribution of the private sector.
Ethnic minorities
The general principles related to ethnic issues, as identified in the present Constitution
of Viet Nam and its basic laws, include the following (Ref: ADB, 2002):

     Viet Nam is a united nation of all ethnic groups living within the country.
     The State protects, strengthens, and consolidates the unity of all ethnic groups and
      prohibits any behaviour that looks down upon and sows division among them.
     All ethnic groups are in a position of equality.
     All persons of all ethnic groups should automatically be citizens of the
      Vietnamese State.
     They are equal in their rights and obligations.
     All ethnic groups have the right to use their own languages and writing systems,
      and to encourage their traditional customs and culture.
     The State should carry out plans to narrow the gap between ethnic groups in terms
      of their economic and cultural development

An in depth analysis of the laws, policies and programmes that are relevant for
indigenous peoples and protection of their rights and socio-economic development is
provided in ADB (2002). Although the overall policy and programmes (e.g. the P
135) is important in terms of safeguarding rights and providing material support, the
great differences between ethnic minorities mean that local flexibility is the most
crucial factor in ensuring that poverty alleviation efforts reach indigenous peoples and
respond to their value systems.


3        AGREED ASSISTANCE

3.1      OBJECTIVES OF THE AGREED ASSISTANCE
The development objective is improved health and living conditions of the rural poor
including ethnic minorities through provision of clean water, sanitation, hygiene
promotion and protection of the environment.

This objective corresponds to the development objective of NTPII12 but in a broad
sense also incorporates the proposed support to Integrated Water Resources
Management (IWRM).

12
 Shortened and combined version of the 2 development objectives presented in NTP II 2006-2010,
March 2006, page 10.


                                               15
Immediate objectives for the TPBS to the NTP are:

   Improved RWSS NTPII performance and effectiveness
   Increased coverage of water supply and sanitation facilities and hygiene
    promotion amongst the poor including ethnic minorities.

The TPBS will not cover waste water treatment for livestock, aquaculture, trade
villages and agro-product processing.

3.2 STRATEGIC AND METHODOLOGICAL APPROACH OF THE
AGREED ASSISTANCE

3.2.1 Sector support versus project support

Denmark and the Netherlands have been providing general budget support via the
Poverty Reduction Support Credit (PRSC) process. However, the provision of
Targeted Programme Budget Support (TPBS) is a significant change in approach for
Danida, AusAID and the Netherlands in Vietnam. This change reflects concerns over
the institutional sustainability and impact of project based assistance. Many donor
projects have piloted the approaches and principles of the national RWSS strategy
with positive results, but there has been limited progress in scaling-up and
mainstreaming local experiences in the context of national programs.

The desire to promote donor harmonization, alignment and reduce transaction costs,
consistent with the Hanoi Core Statement on Aid Effectiveness, has also encouraged a
shift towards more harmonized aid delivery modalities.

Targeted programs and budget support are not new donor modalities in Vietnam.
Nevertheless, TPBS has not previously been provided in RWSS. Whilst the principles
and strategies outlined in the NTPII are sound, a number of reservations remain about
Vietnamese implementation capacity, particularly the capacity to respond to lessons
learned from NTPI as well as concerns about procurement and fiduciary risk.

Hence some caution is justified. To that end, a Pilot Program, under which nine
provinces will be supported with Technical Assistance (TA) as well as additional
donor funded NTPII budget is initially proposed. This will allow:

   The potential system risks of programme budget support to be further investigated
    and safeguards identified
   Approaches to supporting/strengthening NTPII implementation to be identified
    and piloted with a view to the donors subsequently providing TPBS on a national
    scale

Donor funds will be provided through government channels and it will not be possible
to distinguish donor funds at provincial level from government funding. TA will have
no control over expenditure. In accordance with MOF circulars of 2004, funding
allocations for NTPII rural water and sanitation will be ring-fenced at national and
provincial level in the sense that it cannot be spent on other NTPs.




                                            16
3.2.2 The Role of Triggers and Benchmarks

The expected national program of TPBS to NTPII will last 3 years, commencing in
the last quarter 2008, subject to joint assessment of pilot phase performance against
specific triggers and benchmarks. Triggers and benchmarks have been defined and
included in program design to provide a framework for assessing progress in
strengthening NTPII service delivery and implementation, to be undertaken by the
national NTP II steering committee (assuming the latter includes donor
representation).

Triggers will be fixed from the outset of TPBS support and must be assessed jointly
prior to disbursements being made for the national program phase. There are five
triggers for RWSS NTPII performance in the pilot provinces. Triggers relate to:

   1. Transparency and efficiency of the financial management under the NTPII
   2. Quality of supervision of NTPII water supply and sanitation works
   3. Value-for-money of NTPII investments in pilot provinces
   4. Agreement on management arrangements for the operation and maintenance
      of piped water supply schemes prior to construction
   5. Adequate funds allocation to sanitation and hygiene at all levels

Benchmarks also provide a framework for assessing progress and will be adjusted on
an ongoing basis in response to progress and the emergence of new implementation
challenges. Initially, 15 benchmarks have been identified for assessing RWSS
performance in the pilot provinces, and some of these will continue to be assessed
during the national program phase. Benchmarks relate to a range of issues relevant to
effective NTPII management, ranging from financial information provision, cost
norm revision, procurement compliance, budget allocations for sanitation and
hygiene, capacity building, poverty targeting and achieving health outcomes.

The triggers cannot be mechanically assessed and for this reason a national rollout
assessment review will be undertaken. The key objective of the national rollout
assessment review will be to assess: i) the degree to which the triggers and
benchmarks have been achieved in the pilot provinces, ii) evidence on the willingness
and capacity to replicate in other provinces the improvements in NTP II performance
that is observable in the pilot provinces. Based on this assessment review, GOV and
the three involved donors will jointly make the final assessment of moving to the
national programme phase.




                                           17
    Table 3.1: Proposed triggers and benchmarks for assessing improvements in RWSS NTPII service delivery


Institution      Issue                Current status              Proposed action and                   Year                           Outcome
                                                                  intervention                  1   2    3   4   5       Benchmark                Trigger
                                                                                                √        √   √   √
                                                                                                    √
MOF/DOF/         Fiduciary risk       External audits once        Intensify audit and                                Annual audits          Independent external
State Audit of                        every 3 years and only      institutionalise sufficient                        undertaken by SAV      audit at end of pilot
Vietnam                               at PPC level i.e. they do   recurrent budget for this                          are up to acceptable   phase shows
                                      not penetrate down to       purpose.                                           standards.             transparent, judicial,
                                      district and commune                                                                                  and efficient
                                      level.                                                                                                management of
                                                                                                                                            funds.

MPI/DPI          Procurement          Various problematic         Introduce training and            √                Procurement practice
                                      practices e.g.              greater precision in rules                         follows the new
                                      aggregating the             (procurement to follow the                         procurement law
                                      contracts to prevent        new law) and introduce                             based on sample
                                      district management         sample auditing. It shall                          audits.
                                      followed by splitting       be secured that
                                      contracts to avoid open     procurement proceedings
                                      tender                      do not in practice exclude
                                                                  local masons.
MOF/MPI/M        Financial and        Financial and               Improve contract                  √    √   √   √   An implementation
ARD              implementation       implementation              management and provide                             planning and
DPI/DARD         progress reporting   progress reporting out      multi year linkage (regular                        monitoring system
                                      of synchronization          financial reports)                                 established and
                                                                                                                     implemented that
                                                                                                                     integrates financial
                                                                                                                     and progress reports
                                                                                                                     as part of NTP2
                                                                                                                     reporting systems
MOF/DOF          GOV cost norms       GOV cost norms out of       GOV cost norms revised            √                GOV cost norms
MOC                                   date and often              to allow quality works to                          revised to allow
MOET                                  insufficient to enable      be constructed, based on                           sustainable quality
                                      the construction of high    price levels appropriate to                        works to be




                                                                                18
Institution   Issue               Current status               Proposed action and                  Year                            Outcome
                                                               intervention                 1   2    3   4   5       Benchmark                  Trigger
                                  quality works                the individual provinces.                         constructed.

                                                                                                √
              Supervision         Construction                 Modify regulations to                                                      GoV regulation
                                  supervision during           enable increased NTP                                                       makes it possible to
                                  NTP1 was inadequate          funding of construction                                                    assign external MOC
                                  and constrained by lack      supervision.                                                               certified construction
                                  of resources.                                                                                           supervisors for
                                                                                                                                          schemes
MOF/DOF/M     Financial           Detailed financial           Ensure funds flow            √   √    √   √   √   Budget allocation
PI/DPI        information         information (e.g. funds      information is shared with                        and funds flow
                                  flow maps) not               donors for review and                             information available
                                  available                    analysis                                          for review and
                                                                                                                 analysis
MOF/DOF       Recurrent budget    Recurrent budget             Increase recurrent budget    √   √    √   √   √   A higher ratio of
                                  especially for i) IEC; ii)   but with inbuilt annual                           funds allocated to
                                  hygiene promotion; iii)      productivity checks e.g.                          recurrent financing to
                                  capacity building set        use of outsourcing to                             enable greater
                                  too low                      ensure that in house                              attention to hygiene
                                                               operations do not become                          and IEC.
                                                               bloated.
                                                                                            √        √   √   √
                                                                                                √
MPI/DPI       Budget allocation   Budget not allocated to      Align budget allocation to                                                 Budget allocations
                                  DoH/DOET to enable           attainment of targets                                                      for sanitation and
                                  sufficient progress on       (budget allocation to DoH                                                  IEC improve as an
                                  sanitation, hygiene and      and DOET)                                                                  overall ratio of total
                                  IEC                                                                                                     in provincial plans
                                                                                                     √   √   √
                                                                                                √
MOF/DOF       Value for money     Value for money of           Institutionalise and                              Value for money          The majority of
MARD/                             existing supply and          undertake value for money                         audits continue to be    value-for-money
DARD                              sanitation investments       audits on sample basis.                           implemented              audits of RWSS
MOET/                             is unclear.                                                                    nationally on a          NTPII in pilot
DOET                                                                                                             sample basis             provinces concludes
MOH/DOH                                                                                                                                   that investments are
                                                                                                                                          economical and have
                                                                                                                                          acceptable levels of
                                                                                                                                          efficiency and




                                                                            19
Institution   Issue              Current status               Proposed action and                     Year                            Outcome
                                                              intervention                    1   2    3   4   5       Benchmark                   Trigger
                                                                                                                                             effectiveness
PPC/DARD/     Priority           Many schools and             Target early NTPII efforts      √   √    √           WSS to hygienic and
MOET/DOET     investments        clinics do not have          in pilot provinces to install                        adequate standards
MOH/DOH                          water supply and             or renovate facilities in all                        completed or
MOC                              sanitation facilities or     schools and clinics                                  approved in place for
                                 exiting facilities require                                                        all schools – existing
                                 renovation -,                                                                     and new (including
                                 undermining IEC                                                                   satellites) and clinics
                                 efforts to promote                                                                in pilot provinces;
                                 sanitation and hygiene                                                            and design standards
                                                                                                                   for schools and
                                                                                                                   clinics adjusted to
                                                                                                                   include WSS
                                                                                                                   facilities for all new
                                                                                                                   builds.
MPI/PPC       Decentralisation   pCerwass is in most          The provinces should            √   √    √   √   √   Districts are the main
                                 provinces directly           delegate the                                         focal point for RWSS
                                 implementing the             implementation role of the                           implementation, and
                                 RWSS schemes, while          RWSS NTPII to the                                    the communes and
                                 other programmes as          districts and communes,                              villages play an
                                 135 have been                according to the national                            active role in the
                                 decentralised to the         policy on decentralisation                           definition and
                                 districts and communes.      to lowest possible level.                            supervision of the
                                                                                                                   investments.
              Demand-driven      Potential for much           Build on experience from            √                Market-based
              sanitation         greater household            pilot approaches to extend                           sanitation pilots
                                 investment on                access to affordable                                 rolled out across all
                                 sanitation constrained       sanitation options and                               pilot provinces.
                                 by lack of affordable        marketing information,
                                 latrine options and poor     and expand this in pilot
                                 IEC/marketing                provinces
                                                                                              √
                                                                                                  √
MARD          Management and     Lack of sufficient           Systematic attention                                                           For piped schemes to
/DARD         ownership          attention to ownership       needed to ensuring clear                                                       be implemented




                                                                            20
Institution   Issue               Current status             Proposed action and                  Year                            Outcome
                                                             intervention                 1   2    3   4   5       Benchmark                  Trigger
MOH/ DOH      arrangements for    and management             management or ownership                                                    during year 1 and 2,
MOET/         piped water         arrangements               arrangements in place                                                      a well-trained
DOET          schemes                                        prior to planning and                                                      management
                                                             design                                                                     organization for
                                                                                                                                        operation and
                                                                                                                                        maintenance,
                                                                                                                                        including a system
                                                                                                                                        for tariff collection,
                                                                                                                                        is ensured prior to
                                                                                                                                        commissioning.
MARD,         Monitoring and      M&E system under           Simplify design and              √                Simplified M&E
MOH, MOET,    evaluation          development and will       enable disaggregation of                          system rolled-out to
MPI                               require piloting.          gender/ethnic group                               all pilot provinces by
                                  Currently builds largely   impacts and completion of                         end of year 2 and
                                  on existing systems for    piloting process by end of                        approved formally by
                                  data collection and        year 2                                            MARD/MOET/MoH
                                  reporting but does not                                                       - including collation
                                  disaggregate data on                                                         and synthesis of
                                  gender and ethnicity                                                         baseline data
MARD          Capacity building   There is no coherent,      Preparation, approval and        √                Capacity building
/DARD                             national action plan for   budget allocation for a                           action plan with
MOH/ DOH                          capacity building for      national capacity building                        explicitly defined
MOET/                             the RWSS NTPII             action plan, and                                  skills development
DOET                                                         integration into                                  for local
                                                             implementation decrees                            government—agreed,
                                                             and annual and multi year                         resourced and
                                                             implementation plans                              integrated into NTP2
                                                                                                               implementation
                                                                                                               guidelines and
                                                                                                               annual
                                                                                                               implementation plans
MARD/         Guidance and        Revised planning and       Development and formal       √   √                NTPII guidelines,
NTPII         poverty targeting   implementation             approval of guidance                              circulars and




                                                                          21
Institution   Issue                Current status             Proposed action and                   Year                            Outcome
                                                              intervention                  1   2    3   4   5       Benchmark                Trigger
national                           guidance required for      decrees/implementation                             manuals approved at
standing                           provinces, districts and   circulars to ensure                                ministerial level
office/MOF                         communes                   effective implementation                           adequately reflect the
                                                              and poverty targeting                              principles outlined in
                                                                                                                 the NTPII
                                                                                                                 programme
                                                                                                                 document and are
                                                                                                                 adhered to during
                                                                                                                 planning, design,
                                                                                                                 implementation, and
                                                                                                                 supervision
MARD          Strategic planning   Lack of strategic          More attention needed to          √    √   √   √   Five-year and annual
                                   planning at national       strategic planning at                              strategic plans are
                                   level to guide             national level                                     prepared and updated
                                   implementation                                                                annually to improve
                                                                                                                 implementation of
                                                                                                                 NTP2.
All           Health outcomes      Much greater focus         Use of environmental                   √   √   √   Monitoring data
                                   needed on health           health indicators to                               available to show
                                   outcomes of RWSS, at       evaluate outcomes of                               improvements in
                                   all levels                 NTPII                                              health outcomes, as
                                                                                                                 measured by M&E
                                                                                                                 system
MOH           HIV/AIDS             Need for further           Mainstream HIV/AIDS           √   √    √   √   √   HIV/AIDS
              prevention           attention to the           prevention into NTPII                              prevention
                                   prevention of              activities, particularly                           mainstreamed into
                                   HIV/AIDS and               through the involvement                            the NTPII activities
                                   stigmatisation             of the health workers
All           Gender               MARD has developed a       Ensure that gender aspects    √   √                Gender aspects
                                   gender strategy for        are adequately reflected in                        adequately reflected
                                   RWSS                       the NTPII guidelines and                           in the NTPII
                                                              in the development of the                          activities and M&E
                                                              RWSS M&E system




                                                                           22
3.2.3 Phasing

Pre-pilot phase
 The pre-pilot activities are separately funded and designed to maintain momentum
   and ensure smooth introduction of the pilot phase following expected approval in
   the last quarter 2006. They are being undertaken over a 9-month period, starting
   January 2006.
Table 3.2: Pre-pilot activities

    Establishment of cooperation agreements between MPI/MOF, the bilateral donors
     and the involved provinces including specific arrangements for the transfer of
     funds and signing of Memorandums of Understanding with the pilot provinces.13
    Preparatory briefings/awareness raising on NWRSS and NTP II in the pilot
     provinces14
    Selection and recruitment of national and international advisers and consultants
    Provision of technical assistance to MPI in their planned review of performance,
     guidelines and procedures governing the implementation of all NTPs *)
    Support provided to MPI for implementation of the new procurement law passed
     in November 2005.
    Review of subsidy and credit policies as proposed in the NTP II document *)
    Further development of RWSS Monitoring and Evaluation *)
    Development of the options for use of the research funds
    Definition of relationship between the RWSS partnership and the NTPII steering
     committee
    Assistance to MARD/CERWASS and MOF in the development of an inter-
     ministerial circular to guide the NTP II
    Elaboration of a Water Quality Monitoring action plan
    Study on technical design for RWSS facilities (low-cost options)
    A sector specific fiduciary risk assessment for the proposed TPBS to RWSS.
    Baseline study




13
     Three documents are envisaged:
i) A partnership agreement will be drawn up between AusAid/ Danida/ Netherlands and the GOV
(MPI) as is the normal practice for external cooperation in Vietnam. The agreement will outline the
obligations and commitments of each party. One of the stipulations recommended is the separate
registration of water and sanitation expenditure at provincial level within the NTPII.
ii) A memorandum of understanding between AusAID, Danida and the Netherlands will be a statement
of cooperation between the donors and outline the particular obligations of AusAID, Danida and the
Netherlands e.g. the detailed disbursement from each donor and which donor will recruit TA and the
procurement model to be followed.
iii) An agreement between MPI/MOF and the participating provinces that outlines the provincial
participation, responsibilities and obligations e.g. on following the approaches of NTPII and NWRSSS,
on ensuring the additionality of the extra funds, strengthening government systems, access to data for
evaluation and supervision missions, use of TA, provision of office space. The format will depend on
what the GOV find most suitable. It could be an exchange of letters between provinces and MPI/MOF
or a circular issued by MOF.
14
    Including an information and mobilization start up package for pilot provinces/districts.


                                                   23
TOR for those activities marked *) are provided in Annex A. Responsibility for
implementation of the pre-pilot phase activities will rest with the relevant Vietnamese
agencies and AusAid/Danida/Netherlands.
Pilot phase.
The overall objective of the pilot phase is two fold: Firstly to improve the
performance of the NTP i.e. its sustainability and cost effectiveness; and secondly to
physically increase the coverage of water and sanitation amongst the poor and ethnic
minorities. The pilot phase will be 2 years, commencing last quarter 2006
Overall strategy
While the NTPII provides guidance concerning the purpose, scope and strategies to be
adopted, the state Budget Law gives ultimate autonomy to the budget recipient in the
management and use of funds. The joint donor-government review of NTPI identified
capacity and institutional constraints, particularly at provincial and district level as the
key factors impacting the effectiveness of implementation in the RWSS sector.
The importance and responsibility of provincial and district officials in NTPII
implementation is emphasized by the MOF/MPI. Consequently, the pilot program will
focus on identifying key capacity constraints and ways in which they can be
addressed. This will comprise adherence to financial management processes including
procurement; technical implementation issues including application of appropriate
design standards; attention to operation and maintenance; participatory planning; and
quality assurance and monitoring issues.

TA will be provided to assist pilot provinces identify and address current weaknesses
and improve the effectiveness of RWSS expenditure.

Nine provinces have agreed to participate in the pilot program, grouped as follows:
three in the north; four in the central area; and two in the Mekong delta. 15 The pilot
provinces were selected on the basis of:

    Poverty ratings
    Need for improved water and sanitation services and ability to absorb more
     intensive support
    Demonstration value and degree to which the provinces are representative of
     Vietnam
    Geographical focus areas of the bilateral cooperation agreements between
     Australia-Vietnam and Denmark-Vietnam

Key features of the pilot program include:

    Additional funding (capital and recurrent) for rural water supply and sanitation
     provided to participating provinces through existing government systems
    TA provided in kind for capacity building at national and provincial level and
     evaluation of issues impacting effective implementation of the pilot phase.
    Capacity building will be provided by an international adviser and local
     consultants based in each of the 3 provincial clusters (total of 3 international

15
   The nine pilot provinces are: Lao Cai, Lai Chau, Dien Bien, Ninh Thuan, Phu Yen, Dak Lak, Dak
Nong, Tra Vinh, An Giang.


                                                24
    advisers at provincial level) and international advisers in MARD, MOH and MOF
    based at the national level (total of 3 international advisers at national level).
   Evaluation of fiduciary risks, value for money and financial management as well
    as independent audits and expenditure tracking and verification will be undertaken
    through a number of studies to be carried out by short-term consultants/auditing
    companies.
   Supervisory reviews will assess how well the pilot is progressing and how and
    under what safeguards the broader rollout to all the provinces can be undertaken.
   Targeting early NTPII efforts in pilot provinces to install or renovate WSS
    facilities in all schools and clinics
   Preparation of full national scale TPBS of the NPTII

The in-kind capacity building provided by the advisers and national consultants at
provincial level will assist the pilot provinces to access national funding through the
NTPII for the more routine training and capacity building needs.
Objectives of the pilot phase and the triggers for the rollout phase
The immediate objectives of the pilot phase and their relation with the expected
outputs and their indicators is defined in chapter 4 and annex G. The overall purpose
is as mentioned two fold: Firstly to improve the performance of the NTP i.e. its
sustainability and cost effectiveness and secondly to physically increase the coverage
of water and sanitation amongst the poor and ethnic minorities.

The vast majority of the resources are directed towards the second purpose and the
estimated increase in coverage that can be expected is quantitatively defined in
section 4.1.2. The first purpose is much more difficult to define quantitatively.

The priorities vary in each province and the pilot phase needs to retain sufficient
flexibility to respond to different needs. Because of the present imprecision in
defining the province specific priorities and difficulties in measuring performance
improvement, the international adviser will assist the counterparts to produce the
following outputs, in each pilot province, within the initial 6 months:

   An updated coverage and institutional baseline
   A diagnosis of the main constraints and opportunities
   A capacity building and institutional strengthening plan agreed with the PPC and
    provincial standing office

This task has already been partly initiated during the pre-pilot activity regarding
preparatory briefings/awareness raising on NWRSS and NTP II (please refer to annex
N).

By the end of the pilot phase, the pilot provinces will be expected to have achieved
the triggers and to have made good progress towards the benchmarks set out in Table
4.

A province-by-province review mission will provide important inputs into the
decision-making for rollout to the national program phase. The purpose of the
evaluation is to assess the areas of uncertainty that still exist around the provision of
TPBS to the NTP II. This evaluation work will be linked to and serve as input to the


                                            25
planned mid term evaluation (end of 2007) of the NTPII mentioned in the NTPII 5
year plan..

Key issues to be addressed by the review and assessment are:

   Continuing areas of weakness so that they are in a better position to reform and
    adjust their approach
   Safeguards for effective use of funds

The evaluation will focus on the following aspects of NTP II:
 Poverty targeting
 Financial controls and accountability
 Procurement efficiency
 Promotion of hygiene and sanitation;
 Enhancement of the involvement of private sector and use of market systems;
 Use of the demand responsive approach;
 Informed choice by the users of sustainable technologies;
 Cost recovery systems;
 Institutional solutions for management of shared facilities;
 Capacity building of the implementing and managing agents.

In order to do this a series of core studies will be carried out in the nine pilot
provinces during the pilot phase and (it is anticipated) in a sample of provinces during
the (initial) rollout phase. The core studies will comprise:

   An expenditure tracking and verification study
   A value for money study
   Additional audits
   Studies on the financial management, planning and implementation processes
   Procurement assessment

Draft TOR for the studies are given in annex B. Other specialist studies may be
undertaken as required.

3.2.4 National program of TPBS to NTPII

The national programme of TPBS to NTPII will last three years commencing in the
last quarter 2008. Detailed design of the national program, particularly in relation to
provision of TA for capacity building, will be undertaken towards the end of the pilot
phase. It is envisaged that TA will be more focused nationally in monitoring and
evaluation and assisting relevant ministries implement improvements identified and
agreed during the pilot phase.

3.2.5 Programme level support

At the programme level further support will be provided in the form of funds for
further studies and research. There will also be funds set aside for audits. The studies
are not yet identified and will depend on the needs as they arise. Support for research
is intended to support the programme and help establish the basis for sustainability in
the longer term.


                                            26
Research
The role of operational research remains important in the RWSS sector. During
implementation of NTP II, AusAID, Danida and the Netherlands will fund
consultancies and operational research with relevance to rural water supply and
sanitation through a separate budget line managed at programme level, earmarked for
this purpose.

During the pilot phase, the newly established RWSS Partnership will be the focal
point for the support. The RWSS Partnership will take the decisions regarding the
themes to be researched, probably in a specific committee for this purpose, while the
actual research will be undertaken as a sort of minor projects by institutions or
organisations working in Vietnam. No particular secretariat will be established to
manage the support, and the funds for the research projects will be paid out directly
by the involved embassies. The outcome of the research projects will be discussed and
analysed in the RWSS Partnership.

Priority will be given to research in (and piloting of) new and innovative approaches,
which can be of practical use within the RWSS sector, particularly in addressing the
needs of the poor and the ethnic minorities, and of people living in areas with
particularly difficult access to water.

During the general assessment of the pilot phase planned to take place towards the
end of the pilot phase, also this component will be assessed, and possible changes to
the set up will be proposed.

The tasks of the possible research committee under the RWSS Partnership will
comprise:

    Draw up a research agenda indicating priority areas for operational research which
     are relevant in a Vietnamese RWSS context16 and likely to have a significant
     impact on public health in general and the outcome of the NTP II in particular
    Establish a set of simple guidelines for the work of the committee and for research
     applications and communicate the latter to relevant institutions and the general
     public
    Scrutinise and approve or reject applications for research funds.17
    Ensure that the quality of the research is to international standards
    Ensure that results are publicised to the development community, the research
     community and all relevant stakeholders with a view to maximising the impact of
     the research




16
   The agenda should reflect relevant research areas in a broad sense and comprise not only biomedical
subjects (epidemiological studies, water quality, pathogens in compost, faecal contamination) but also
subjects related to IEC (perceptions of health and disease, behaviour change), organisation of effective
sanitation (making market mechanisms work, appropriate ways of ensuring safe emptying of latrines),
poverty targeting (financing, effects of subsidies and incentives) and KAP studies.
17
    In the case of Netherlands, there are additional opportunities to apply for support through the
NUFFIC program.


                                                    27
3.3      STRATEGY FOR TECHNICAL ASSISTANCE

3.3.1 The role of technical assistance

Technical assistance will play a key role during the pilot phase of TPBS for RWSS,
specifically to assist pilot provinces to develop capacity to improve the effectiveness
of RWSS expenditure, and to ensure this experience is shared amongst provinces and
integrated into plans, policies and guidelines for NTPII prepared at national level.
Technical assistance will focus on: i) working with provinces, districts and communes
to identify key capacity constraints, ways in which these can be addressed, and
ensuring these are integrated fully into provincial RWSS plans, including adherence
to financial management processes; ii) working with all levels to strengthen
procurement practices; iii) addressing technical implementation issues including
application of appropriate design standards and attention to operation and
maintenance; iv) participatory planning and, v) quality assurance and monitoring
issues. The international advisers may also assist the counterparts in preparing terms
of reference and requesting short-term consultancy inputs.

TA will also have an important role in undertaking regular supervision (technical
reviews and joint annual GOV-donor reviews). Towards the end of the pilot phase a
more substantial review will be required to confirm the programme design and GOV-
donor understandings and requirements before progressing to the national rollout
phase. The supervision inputs are described under the chapter dealing with
monitoring, review and supervision.

TA will actively support the sharing of experiences between provinces, districts, and
communes, e.g. through the organization of workshops, and facilitate communication
between the central and local levels.

3.3.2 Delivery of the technical assistance

Technical assistance at the national level will comprise:

     One international adviser based within the standing office in MARD for NTPII
      and reporting to the Vice chairman of the national standing office. Tasked with
      providing technical assistance to the standing office, particularly within
      programme monitoring, management and reporting. The TA will further support
      the standing office in liasing with provincial TAs.
     One international adviser placed within the Department of Preventive Medicine,
      MoH, reporting to the General Director of the department. Tasked with promoting
      hygiene and sanitation in all aspects of RWSS, including promotion of the use of
      health data and indicators for targeting NTPII investments in IEC, water supply
      and sanitation to areas of greatest need.
     Short term consultants will be mobilised for technical assistance to MOF based on
      identified needs .

Technical assistance at provincial level will comprise:

     One international adviser in each of the 3 provincial clusters, each of which will
      work with the provincial governments and the provincial RWSS steering


                                              28
     committees. The adviser will support the district and commune agencies
     responsible for implementation of the NTPII financed projects to develop, test and
     introduce approaches and conduct training, covering all aspects of the RWSS
     Strategy. They will report to the Vice-Chairmen of the provincial steering
     committees and, to ensure that lessons and experience from provincial level are
     communicated to national level, will be expected to liase effectively with the
     Standing Office in MARD. The international adviser will in each cluster be
     stationed within the standing offices of the NTP, DPI, DARD or DOH depending
     on the preferences of each province and the relative needs. The adviser will be
     located in one province but serve also the other provinces in the cluster. It is
     intended this approach should help to enhance the advisory role of TA rather than
     it being viewed as an implementation or project role. 18
    National consultants will be hired for up to 2 person years per cluster throughout
     the pilot phase to assist in the capacity building. The combination of international
     and national consultants will provide both the language and familiarity of the
     national with the external insight and experience of the international person.

In principle TA should be provided through the NTP itself rather than in-kind to
ensure ownership, utilization and accountability. However, there are limitations on
government capacity to identify and procure appropriate technical assistance in a
timely manner during the short pilot phase, particularly international inputs. Further,
TA for the evaluation of implementation issues in pilot provinces needs to be
recruited flexibly and augmented as needed. For these reasons it has been agreed with
the GOV that the recruitment and management of TA will be undertaken by the
donors in the pilot phase.

Donor supervision is better suited, by its nature, for in-kind delivery of expertise.

The advisers will preferably be hired as individuals by AusAid, Danida and the
Netherlands. The GOV will participate in the formulation and approval of the job
descriptions and be represented in the selection committees. Individual advisers rather
than company advisers are preferred, as the advisers are not assuming responsibility
for any technical works that would need a home office back up. If it is found difficult
to recruit suitably qualified advisers as individuals, it might be considered to hire
them via a company. The job descriptions of the advisers are given in Annex C.

Routine training will be procured through the NTP. The NTP II document makes
provision for supportive activities including training and capacity building.

3.3.3 Contracting and reporting

The in-kind TA will be recruited and contracted by AusAid/Danida/Netherlands in
close coordination with the province and national level (standing office) as
appropriate. Job descriptions and recruitments will be jointly approved by donors and
relevant ministries/agencies/provinces.The in-kind TA will report to and be
responsible to the relevant NTP steering committees, standing offices and line

18
   The main departure point for capacity building should be the PPC (office of the vice chairman for
infrastructure) because the PPC is at the accountability apex. If the PPC is aware of the needs and of
the action that should be taken, they have the mandate, power and can create the incentives to make
sure the required action is taken.


                                                   29
agencies as appropriate. None of the advisers will be responsible for expenditure of
AusAid/Danida/Netherlands funds, since donor funds for implementation are all
transferred via TPBS to the NTP II.

Bearing in mind the different contracting modalities and the disbursement plan,
Danida should recruit and contract the international advisers/consultants, and AusAid
should recruit and contract locally engaged national consultants. Both Danida and
AusAID follow untied open tendering processes.

The advisers will need to have access to vehicles, interpreters and a well functioning
office environment if they are to be effective (details of the support provided is given
in the draft job descriptions in Annex C).

3.4 CONTRIBUTION OF THE AGREED ASSISTANCE TO VIETNAM’S
POVERTY REDUCTION EFFORTS

3.4.1 Alignment to Vietnamese policies and strategies for poverty alleviation

Section 2.6 outlines the Vietnamese poverty alleviation policies and practices. The
support programme proposed in this document is fully aligned to the NTP. Unlike
prior donor sector assistance in the RWSS sector, funding is provided through NTP
structures and is managed by those structures. For this reason the main poverty related
issues are the extent to which i) the Vietnamese approaches are consistent and
effective and ii) the additional donor assistance can stimulate improved poverty
targeting and effectiveness.

3.4.2 Contribution to the MDGs

Co-funding and provision of technical assistance to the NTP for RWSS will impact
most directly on Goal 7: “Ensure Environmental Sustainability” and most specifically
it will contribute towards Target 10: “Halve, by 2015, the proportion of people
without sustainable access to safe drinking water and basic sanitation.” With the two
major indicators: “Indicator 30: Proportion of the population with sustainable access
to an improved water source, urban or rural and Indicator 31: Proportion of the
population with access to improved sanitation. “

The contribution will arise as a result of i) a greater access to water and sanitation and
ii) better managed water supplies and sanitation facilities.

The support to IWRM will contribute very directly towards the achievement of the
World Summit on Sustainable Development (WSSD) target (2005) that half of all
river basins should have integrated water resource management and water efficiency
plans.

Improvements in water resources management and access to water supply and
sanitation will also be critical in achieving other goals as indicated in Annex G.

3.4.3 Lessons learnt from past cooperation

A major study by the Asian Development Bank on poverty and the water sector in
Asia came to a number of conclusions that have relevance for the NTP and the


                                             30
support being provided by AusAID, Danida and the Netherlands (see annex G). They
include:

   Water sector approaches that don’t specifically aim at reaching the poor end up
    serving the richer sections of the community
   Although government agencies have a poor reputation for serving the poor they
    have demonstrated that they can.
   Placing power in the hands of the stakeholders (consumers) is a key to poverty
    reduction in the water sector
   Women are important agents for change but men should not be excluded

The design of the NTPII and the AusAid/Danida/Netherlands support reflects these
important findings.

A number of studies have been done on the poverty impact of water supply and
sanitation in Vietnam including a joint donor review, a review of the NTP by MARD,
a study of lessons learnt on the Danida support programmes and a recently conducted
poverty targeting study. These documents point to a number of pro-poor relevant
conclusions and lessons learnt which have implications for the NTP II and how
support can best be provided. The key points are:

   Grant funds need strict control if abuse is to be avoided.
   Grant funds reach very few of the poor if both poor and rich have access to the
    funds.
   Many schemes fail due to lack of operation and maintenance, particularly in poor
    communities and communities that did not demand the schemes.
   Poor coordination, centralized decision making and ignoring the consumers are
    systematic errors that reduce the poverty reduction impact
   There is a tendency only to fund physical construction and not the necessary
    capacity building for operation and maintenance, sanitation promotion and
    hygiene promotion.
   Targeting difficult as well as remote areas will tend to reach those that are “water
    poor” but not necessarily income poor.
   Loans and self-financing are extremely important, sustainable and self
    perpetuating mechanisms for reaching sector coverage, however it is not easy for
    the poor to make use of them.

Annex G details these findings and outlines the implications for the NTP II and the
AusAid/Danida/Netherlands support. The conclusion from these and other findings is
that it will not be easy to improve the pro-poor impact of RWSS interventions.
Innovative and experimental approaches will be needed and there is a high reliance on
political will and on good communication.

3.4.4 Potential contributions to an enhanced pro-poor focus in the water and
      sanitation sector

As concluded earlier, the selection of a number of pilot provinces amongst the poorest
provinces in Vietnam and the targeting of technical assistance among these provinces
will provide an opportunity to work within the NTP to enhance its pro-poor focus and
impact. Tangible efforts at improving the impact on the poor that could potentially be


                                             31
introduced or further emphasized in the NTPII, can be grouped into 6 categories and
include19:

      Information and focus on poverty
              o Inclusion and collection of data relating to 'water poverty’ within
                 provincial reporting and evaluation of sector performance which
                 enables the understanding of water-related poverty issues to be
                 expanded beyond service coverage;
              o A specific focus on populations 'at water risk': those vulnerable to
                 drought, water scarcity, and flood;
              o Orientation of those professionally involved in providing and running
                 services concerning the specific needs of socio-economically
                 vulnerable groups, including women, children, those affected by
                 HIV/AIDS or other similar condition, indigenous and minority groups;
              o HIV/AIDS training/sensitisation should be included in all contractual
                 obligations with contractors winning tenders and employing workers
                 from outside the village where construction is to take place. This
                 includes providing access to condoms. It is well known that workers
                 living away from their families are an “at risk” group – both as regards
                 contracting as well as transmitting the virus.
              o A strategy for HIV/Aids sensitisation/training should be incorporated
                 in the NTPII guidelines. Donor off-budget support will be used to
                 support this activity.
              o Advocacy of pro-poor approaches towards subsidies and pricing
                 mechanisms;
              o The active use of existing assessment and data-collecting tools that
                 enable disadvantage, discrimination and demand patterns to be
                 captured (environmental impact assessment, gender assessment, social
                 impact assessment, participatory rural appraisal).
          Coordination
              o Coordinating the RWSS NTP with the water and sanitation efforts of
                 the NTP 135 and 134, which focus on ethnic and remote communities.
              o Coordinating the RWSS NTP with the primary health care initiatives
                 of the DOH and BOH and village health workers.
              o Coordinating with the MoLISA and DoLISA on the impact on poor
                 groups.
              o Coordinating with the Social Policy Bank for the Poor on the dual
                 approach of grants for the poorest and loans for the non-poor.
              o Coordinating better between the health and water functions.
              o Integrating the NTP, CPRGS, SEDP and the National Rural Water
                 Supply and Sanitation Strategy (NRWSSS).
              o Separating state management functions and service provision,
                 especially at province, district and local levels (Joint Sector Review,
                 p14)
              o developing partnerships between different sectors, and different types
                 of implementing bodies – public, private, NGO – to secure
                 communality of interests and synthesis of pro-poor policies;
              o preventing conflict and establishing of patterns of cooperation; and

19
     Derived in part from GWP, 2002


                                              32
           o harnessing the comparative advantages of different organisations and
               groups through cooperation and sharing of data.
      Sanitation and hygiene
           o A distinctive programme for sanitation, with dedicated budget
               provisions and institutional capabilities, to address the sanitation
               challenge (Joint Sector Review, p13).
           o Focusing on changing sanitation and hygiene behaviour of ethnic
               communities, especially in the remote regions, who are the most at risk
               from poor hygiene and sanitation.
      Capacity building
           o capacity building of professionals in the full range of low-cost and
               appropriate technologies for water and sanitation;
           o capacity-building at all levels for democratic and demand-responsive
               approaches, especially at the community level to which local planning
               of resource use, and management and maintenance of services, will
               increasingly be devolved;
           o Outline the minimum capabilities needed at central level and in
               provinces/districts to ensure all people have access to sustainable and
               affordable water supply and sanitation. Establish the capacity
               development process needed to ensure that these minimum capabilities
               are built in a timely and appropriate manner. (Joint Sector Review,
               p14)
           o a stronger policy emphasis on information, education and
               communications campaigns to inform people of the links between
               water, sanitation and health, and to promote hand washing and other
               key elements of a hygienic way of life;
      Gender
           o a special emphasis on the involvement of women in community
               management mechanisms and in policy development
      Private Sector
           o Promoting the private sector within water supply and also within
               sanitation following and inspired by the approaches developed by IDE
               in Vietnam.


3.5 CONTRIBUTION TO CROSS CUTTING AND PRIORITY ISSUES TO
VIETNAM’S EFFORTS IN THESE AREAS
Chapter 2 summarises the Vietnamese national framework and policies on cross
cutting issues. This section presents how the proposed programme contributes in these
areas.

Good governance, democracy and human rights are at the core of proposed
cooperation between AusAid/Danida/Netherlands and the Government of Vietnam.
The improvement of the NTP for RWSS will help to reform institutions serving the
water and sanitation sector so that they operate effectively at a more decentralised
level and increase the participation of the user groups. The support will assist the
Vietnamese government in its declared aim of separating state management and
service provision and in eliminating conflicts of interest (e.g. in procurement). The
support will build capacity for more efficient information, education and


                                           33
communication that will tend to give a voice to all actors in the water and sanitation
sector. The support aims at improving coordination between government functions
(most notably the health and water function) but also between central and provincial
levels and between the public sector and the private sector. The support will also,
under the direction of the NRWSSS, help to establish a better enabling environment
for self-financing of water supplies and sanitation and thus help market mechanisms.
These interventions will be accompanied by improvements in regulations to ensure
that market practices are fair and efficient.

Decentralisation should be a guiding principle for the implementation of the
programme. The actual division of roles and responsibilities of the different actors at
local levels will be decided by the PPCs. The donors expect that the implementation is
decentralised to the district, and when possible, commune level. This will increase the
local ownership and the social control.

The possible support within integrated water resources management aims at
improving the governance of water, which is a key natural resource of Vietnam and
essential for its food production as well as drinking water. The improvement of
cooperation across administrative boundaries and the sharing of water resource
information will empower ordinary water users20 and their associations where these
exist.

The focus on increasing the effectiveness of basin level cooperation will encourage
approaches at the national level that integrate the interests of upstream and
downstream users as well as the interests across different sectors e.g. livestock,
agriculture, hydropower development, wildlife and tourisms etc.

The activities will in a small way assist in creating a regional enabling environment
for genuine democratic and power sharing systems and structures to emerge at the
national level. This will impact not only by leading to more equitable and efficient
water services but will also trigger wider understanding, demand and capacity for
implementing democratic structures in other areas of socio-economic activity. Water
will thus be a channel and entry point for significant changes in the rural power
balance and the prospects for equitable and prosperous development.

Gender equality will be enhanced. Equitable access to and control over water
resources, water services and improved sanitation will be the area where women will
benefit most directly from the cooperation. Women hold the main responsibility for
household water use management and family health, which should be improved
through access to clean water supply, better sanitation and hygiene promotion. The
cooperation, through its support in the pilot provinces, will seek to develop examples
and scale up best practice on how gender equality concerns can be mainstreamed in
the sector by developing replicable strategies for enhancing gender sensitive
approaches to capacitate and empower women through access to and control over
water and sanitary facilities and technical skills.




20
  Ordinary users including women, girls, boys and other less visible groups as well as civil society
groupings especially those who lobby for marginalized sectors of society.


                                                  34
Review and support of IEC activities will focus on the poor, ethnic groups, women
and children who normally have little access to information. Assistance in developing
M&E will include the collection of gender-disaggregated data where relevant.

The environment will be improved as a result of the cooperation between AusAid/
Danida/Netherlands and the GOV. Within RWSS, there will be i) a greater focus on
monitoring water quality and on controlling the sources of water quality pollution, ii)
an improvement in the environmental sanitation at household level, public places and
schools, iii) a greater awareness of personal and environmental hygiene, iv) more
attention placed on the hydrological and environmental constraints of water
abstraction and disposal of human waste and, v) strengthening of the environmental
regulations around waste disposal particularly human waste and livestock waste
around the household and in trade villages. The trade village and livestock
interventions are planned within the NTPII with support through soft loans. The TA
provided by AusAid/Danida/Netherlands may support the regulatory aspects.

As outlined in the environmental screening note (Annex I), there are significant
environmental improvement opportunities. While the impact on the environment in an
ecological sense will be minimal, the increased focus on hygiene promotion especially
in schools is expected to lead to permanent changes in attitude and practice within
personal hygiene and the enforcement of standards at home, at schools, in private
businesses and at public institutions. This will tend to improve health particularly of
children.

The programme will support the adoption of people friendly, low cost and
environmentally effective latrines and methods of waste treatment and disposal. The
main impact will be health rather than the environment. There is also an intervention
to improve management of livestock waste and the waste from trade villages. Here a
dual impact on health and environmental is foreseeable.

The environmental risks are minimal and relate to:
 Over exploitation of water resources;
 Water quality is not monitored and people are provided with unhealthy water e.g.
   containing pesticides;
 Latrines concentrate the waste and pollute the nearby groundwater being used for
   drinking water e.g. through dug wells;
 Emptying of latrines.
 Increased water availability leads to greater use of livestock and damage to fragile
   ecosystems.

It is possible by introduction and use of proper standards to avoid and mitigate all of
these risks. These standards generally speaking exist in Vietnam although their
application is not always practiced, in part due to lack of resources.

Within WRM, the improved regulation of water resources is likely to lead to a more
sustainable use of water resources such that they remain useable for future
generations. Water practices will be introduced that will tend to increase the
efficiency of water use both in terms of quantity and quality. The support will
contribute to ensuring that long term ecological aspects and the needs of nature are
taken into account when planning major water development works.


                                           35
HIV/AIDS will be integrated into the cooperation in accordance with national
HIV/AIDS initiatives and strategies. The main opportunities will arise from
participatory efforts to improve sanitation services in rural, urban and peri-urban
communities. The HIV/AIDS focal points in the counterpart ministries and at
provincial level can be empowered to guide the work and put them in contact with
NGOs and other actors at the forefront of HIV/AIDS initiatives. Preventative
activities to curtail the spread of HIV/AIDS among staff working within the water
related organisations and the focal points will be given priority.

HIV/AIDS training/sensitisation should be included in all contractual obligations with
contractors winning tenders and employing workers from outside the village where
construction is to take place. This includes providing access to condoms. It is well
known that workers living away from their families are an “at risk” group – both as
regards contracting as well as transmitting the virus. Furthermore, a strategy for
HIV/Aids sensitisation/training should be incorporated in the NTPII guidelines and
implemented at all levels. Donor off-budget support will be used to support this
activity within an estimated budget of at least 500.000 USD.

It is important that village health workers/motivators are able to respond to questions
related to HIV. The pilot phase will work with agencies to ensure that village health
workers develop knowledge and can inform villagers on how to avoid becoming
infected and counter misconceptions (e.g. that the transmission of HIV/AIDS may
spread through the use of common water source or drinking from the same glass as
infected patients).

Children will be a major beneficiary of the cooperation – indirectly from the long
term efforts of improving sector governance and directly from health benefits of
improved environmental sanitation, improved water services and improved
management of scarce water resources. Children in poor communities will need
special attention to ensure that they learn about their rights and participate in design of
community initiatives.

Child rights can be enhanced through successful implementation of the NTPII, since
children are more susceptible to potentially fatal diseases caused by poor hygiene.
Lack of water and sanitation facilities can hinder children from participating in school
(especially girls and those from ethnic communities). School sanitation is an integral
part of the NTPII and the pilot program will specifically examine ways of enhancing
implementation and coverage, including access for handicapped children.

Private Sector participation will be encouraged since the approaches of the NWRSSS
will open up a number of opportunities for more market based solutions. The
separation of state management and service provision will also tend to improve the
prospects for the private sector. Improved procurement will also help the private
sector, as it will create fairer and more transparent competition.

Civil society NGOs and Community-Based Organizations (CBOs) will through the
information and communication programmes of the NTPII take an active and crucial
role in creating demand and contributing to informed decision making. Both local
level water resource management, water services and the provision of improved


                                             36
environmental sanitation depend on and will need to stimulate active civil society
participation.

Ethnic communities live in the provinces with the lowest access to water supply and
sanitation services. The focus of the NTP is on people who live in remote areas, which
will in many cases cover the ethnic communities. There is a relatively large funding
allocated to water supply and sanitation within the NTP 135 programme which is
wholly targeted at ethnic communities. Thus there is an opportunity with increased
coordination between the NTP 135 and the NTPII to ensure that common and
improved implementation practices are followed. Key challenges include: i) ensuring
that ethnic communities are able to operate and maintain their water supply systems
which are often small and communal in nature and ii) ensuring that hygiene
promotion messages are adapted to the cultural value systems and in the language of
the ethnic communities.



4          COMPONENT LEVEL SUPPORT TO THE NTPI II

As outlined in chapter 3, the overall strategy of the support to RWSS is to provide
TPBS to the NTPII21 rather than channel support via projects. The guiding document
is therefore the NTPII five-year plan (latest draft December 2005) and the subsequent
1 year annual work plans and budgets once they are approved. The 5-year plan has
undergone significant improvement since the first version presented in August 2005
and is likely to be further adjusted as part of the GOV appraisal and approval
processes. A brief assessment of the suitability of the NTPII for
AusAid/Danida/Netherlands funding was undertaken in November 2005. The report
concluded that the NTPII was suitable provided significant effort was put into
improving the NTP implementation processes. The report also recommended that the
level of subsidies and a number of other clarifications should be made. Most of these
suggestions are incorporated as planned activities in the latest draft of the NTPII five-
year plan and some are supported as part of the 2006 pre-pilot activities.

The NTPII, as for all NTPs, will be implemented at the provincial level. The precise
implementation arrangements, targets and strategies are therefore left to provincial
decision making processes so long as they follow the overall guidelines in the NTPII
five year plan, the various decrees, ministerial circulars and the NRWSSS.

The development objective of the support to the NTP II is:

Improved health and living conditions of the rural poor including ethnic minorities
through provision of clean water, sanitation, hygiene promotion and protection of the
environment

4.1        IMMEDIATE OBJECTIVES
Support to the NTPII will consist of a pilot phase covering 9 provinces in 3 clusters
over 2 years, followed by a 3-year national rollout phase where all provinces will be
supported.

21
     Following option 1 for the transfer of funds as defined in the NTP II plan dated December 2005.


                                                      37
The immediate objectives of the two phases focus on 2 main areas:

i) Improving the performance of the NTPII i.e. the sustainability and cost
effectiveness of the investments and,
ii) Increasing the physical coverage of water supply and sanitation and the adoption
of hygiene practices.

The first area is related to TA, which in the pilot phase will be provided mainly in-
kind. In the rollout phase, TA will be provided mainly through the NTPII transfers
themselves (i.e. via the TPBS). The second area, in both phases, is related to the direct
funding of the NTPII itself via TPBS i.e. funds are made available to build facilities
and promote hygiene.

Immediate objectives for the pilot phase are:
1. Improved RWSS NTPII performance and effectiveness in the pilot provinces
2. Increased coverage of water supply and sanitation facilities and hygiene
   promotion in the pilot provinces amongst the poor including ethnic minorities.

Immediate objectives for the rollout phase are:
3. Improved RWSS NTPII performance and effectiveness, nationally
4. Increased coverage of water supply and sanitation facilities and hygiene
   promotion, nationally amongst the poor.

The TPBS will not cover waste water treatment for livestock, aquaculture, trade
villages and agro-product processing.

The table below summarizes the 4 immediate                                 objectives      of     the
AusAid/Danida/Netherlands support to the NTPII.

Table 4.1 Immediate objectives
Area            of Pilot phase                                    Rollout phase
intervention
Improved    NTP      II   1) Improved RWSS NTP II                 3) Improved RWSS NTP II
performance               performance and effectiveness in the    performance and effectiveness,
                          pilot provinces                         nationally
Increased coverage and    2) Increased coverage of water supply   4) Increased coverage of water
hygiene       promotion   and sanitation facilities and hygiene   supply and sanitation facilities and
amongst     the    poor   promotion in the pilot provinces        hygiene promotion, nationally
including        ethnic   amongst the poor                        amongst the poor
minorities.

Figure 4.1 below shows the relationship between the NTPII development objectives
and the development and immediate objectives of the AusAid/Danida/Netherlands
support. Essentially the development objective of the donor support is identical to the
NTPII development objectives except that it is formulated as a single rather than a
dual objective. The AusAid/Danida/Netherlands immediate objectives 1 and 2 (related
to improvement of the performance of the NTPII itself) are linked to NTPII
immediate objectives 6 and 7, which aim at improving the legal decrees and other
managerial tools of the NTPII. The AusAid/Danida/Netherlands immediate objectives




                                                  38
1 and 2 represent the value added by the AusAid/Danida/Netherlands support over
and above the simple channelling of extra funds.

The AusAid/Danida/Netherlands immediate objectives 3 and 4 (related to increased
coverage) are directly linked to the NTPII immediate objectives 1 to 4. Immediate
objective 5 (demonstration of waste management facilities in trade villages) and
immediate objective 3 (livestock pens) will not be directly supported by the
AusAid/Danida/Netherlands grant funds channelled via TPBS (as it is understood
such investments will be loan based). TA will, however, be available to support the
regulatory and promotion measures aimed at improving the household level livestock
pens. The Danish support to the environment sector is providing support to waste
management in trade villages.




                                         39
Figure 4.1 Relation between NTPII and AusAid/Danida/Netherlands support objectives


                                    Development objectives                                    Immediate objectives


                                                                              1.Water supply:85%        2.     Environment       3.70% of rural           4       All rural
                                1)           Living     2)         Negative   of       the      rural   sanitation:70% of        households have          primary schools,
                                conditions of rural     impacts on rural      population use clean      rural households         hygienic livestock       kindergartens,
NTP II obejectives




                                people improved         people’s     health   water      with     60    has        hygienic      pens*                    nurseries, clinics
                                by       improving      due to poor water     liters/capita/day         latrines…                                         and      commune
                                rural water supply      supply         and                                                                                people’s
                                and       sanitation    sanitation                                                                                        committees have
                                services        and     conditions                                                                                        access to clean
                                raising                 reduced        and    5 Demonstration of        6.Legal                  7.New     Legal          water           and
                                community               environment           models for waste          documents     for        documents                hygienic latrines;
                                awareness         of    pollution in the      treatment                 NTP reviewed and         developmed and
                                environment             community                                       supplimented             issued
                                protection.             minimized.
Objectives of AusAid / Danida




                                                                              1) Pilot phase Improved         2) Pilot phase Increased
                                Improved     health   and      living         RWSS NTP II performance         coverage of water supply and
     support to NTP II




                                conditions of the rural poor                  and effectiveness in the        sanitation facilities and hygiene
                                including ethnic minorities through           pilot provinces                 promotion      in      the   pilot
                                provision of clean water, sanitation,                                         provinces amongst the poor
                                hygiene promotion and protection of
                                the environment
                                                                              3) Rollout phase Improved       4) Rollout phase Increased
                                                                              RWSS NTP II performance         coverage of water supply and
                                                                              and          effectiveness,     sanitation facilities and hygiene
                                         Immediate objectives 1), 3) are      nationally                      promotion, nationally amongst           *         AusAid/Danida/
                                         additional to the NTPII and                                          the poor.                               Netherlands support to
                                         represent the value added by                                                                                 pens at household level.
                                         the external support                                                                                         N.B loans rather than
                                                                                                                                                      grants



                                                                                         40
4.2      OUTPUTS
The outputs related to each immediate objective are given in the table below:

Table 4.2 Objectives and outputs/targets22
 Immediate         Outputs/targets
 Objectives
 1) Improved       1.1    Improved financial management of NTP II in pilot provinces in the areas of
 NTP                      audit and inspections, procurement and financial reporting
 performance       1.2    Improved planning and budgeting of NTP II in pilot provinces allocating
 in        pilot          adequate funding for DOH, DOET and for IEC and sanitation
 provinces
                   1.3    Improved practices in the DARD, DOH and DOET in pilot provinces related to
                          cost norms, subsidy practices, facility sustainability, technical auditing,
                          integrated planning and monitoring.
 2) Increased      2.1    1.6 million rural people having access to clean water in the pilot provinces
 water supply,     2.2    0.3 million households having hygienic latrines in the pilot provinces
 sanitation
                   2.3    households having hygienic livestock pens in the pilot provinces
 facilities and
 hygiene           2.4    2200 schools and institutions having clean water and hygienic latrines in the
 during      the          pilot provinces
 pilot phase       2.5    1.6 million people having improved hygiene practices in the pilot provinces
 3) Improved       3.1    Improved financial management of NTP II in the areas of audit and inspections,
 NTP                      procurement and financial reporting
 performance,      3.2    Improved planning and budgeting of NTP II allocating adequate funding for
 nationally               Health, Education and for IEC and sanitation
                   3.3    Improved practices in the MARD, MOH and MOET and provincial
                          departments related to cost norms, subsidy practices, facility sustainability,
                          technical auditing, integrated planning and monitoring.
 4) Increased      4.1    5.8 million rural people having access to clean water
 water supply,     4.2    1.0 million households having hygienic latrines
 sanitation        4.3    households having hygienic livestock pens
 facilities and
 hygiene           4.4    8200 schools and institutions having clean water and hygienic latrines
 during      the   4.5    5.8 million people having improved hygiene practices
 rollout phase

The number of households to be served and facilities to be built as a result of the
AusAid/Danida/Netherlands contribution can be estimated by comparing the size of
the AusAid/Danida/Netherlands contribution with the NTPII budget itself.

Table 4.3 shows the NTPII budget and expected outcome in terms of people served
and facilities built as well as the contribution that will be made by
AusAid/Danida/Netherlands during the pilot and rollout phases bearing in mind that
AusAid/Danida/Netherlands funds are grants and will not contribute directly to loans
used for the livestock pens (although the TA will contribute to the process of
regulation and promotion that will drive the investment in livestock pens).

22
  The outputs related to immediate objectives 3 and 4 are directly aligned to the wording of the NTPII.
This wording refers to “access” rather than “use”. There is a danger that too narrow a focus on “access”
could lead to the quality aspects being overlooked e.g. latrines that are built but not used. It has
nevertheless been decided to retain the wording used in NTP II to avoid too many different versions
and avoid a tendency to make parallel monitoring. Meaningful access is the same as use. As a result of
the monitoring and evaluation efforts suggested as a pre-pilot activity (see Annex A) it might be that
the indicators are changed to better reflect the desired outcomes.


                                                    41
Table 4.3 NTPII budget and physical outcomes and AusAid/Danida/Netherlands
contribution
                                                                       NTP II five year plan                               AusAid/Danida/Neth. contribution
                                                                                                                                                                      Total
                                                                                                                                          Pilot         Rollout       AusAid/
                                                                                                                                          project       phase         Danida/
                                                                                Total                                       % without     budget for    budget for    Neth.
  reference                                              # house                estimated                    State budget contribution    TPBS to       TPBS to       budget for
   Table in                                    # people  holds                  Cost B                       allocation    to livestock   NTP (B        the NTP       TPBS (m
   NTP II          Budget lines of the NTP II served     served    # facilities Vnd                  %       Vnd               pens       VND)          (B VND)       USD)
          6, 8   Additional water supply         14730000 2455000                     8982             40%           1787           57%          193           709             57
             9   Additional household latrines             2601000                    4274             19%            850           27%            92          337             27
           15    Additonal school latrines                              20643          487              2%              97           3%            10           38               3
           16    Additional clinic latrines                              4165           12           0.05%               2        0.08%           0.3             1          0.08
           17    Additional CPC latrines                                 2742            8           0.03%               2        0.05%           0.2           0.6          0.05
           18    Additional market latrines                              2474           58           0.26%              12        0.37%             1             5          0.37
           19    Livestock pens                                    n/a                6800             30%           1353         0.00%             0             0              0
                 Software                                                             2000              9%            398           13%            43          158             13
                 Total                                                              22621            100%            4500         100%           340         1,248            101



Table 4.4 shows estimates of the physical achievements likely to result from the
AusAid/Danida/Netherlands contribution of USD 101 million in TPBS (equivalent to
VND 340 Billion in the pilot phase and VND 1248 Billion in the rollout phase) if the
NTPII proceeds as planned and assuming that the external funds leverage others
sources of funding in the same way as the NTP state budget funds are planned to do23.

Table 4.4 Estimated contribution of the pilot and rollout phase to physical
targets
                              Estimated contribution of the pilot phase to     Estimated contribution of the rollout phase to           Estimated total contribution
                                         # house                 Estimated                                           Estimated             # house                  Estimated
          Impact of           # people   holds                   Cost B       # people # house                       Cost B     # people holds                      Cost B
 AusAid/Danida/Neth. TPBS served         served     # facilities Vnd          served     holds served # facilities Vnd          served     served      # facilities Vnd
Additional water supply         1,589,884 264,981                       193    5,841,901      973,650              0        709 7,431,785 1,238,631               0        902
Additional household latrines               280,739                      92                 1,031,554              0        337              1,312,293            0        429
Additonal school latrines                                2,228           10                                    8,187         38                            10,415           49
Additional clinic latrines                                  450           0                                    1,652          1                             2,101            1
Additional CPC latrines                                     296           0                                    1,087          1                             1,383            1
Additional market latrines                                  267           1                                      981          5                             1,248            6
Livestock pens                                      n/a                   0                           n/a                     0                                              0
Software                                                                 43                                                 158                                            201
Total                                                                   340                                               1248                                           1,588



Assuming that the NTPII proceeds according to plan, Table 4.4 gives an estimate of
the quantities that will be achieved for the outputs shown in table 4.2. These are
summarised below:

Outputs related to immediate objective 2 (pilot phase)                                                                                      Estimates
Output 2.1 rural people having access to clean water in the pilot provinces                                                                       1,589,884
Output 2.2 households having hygienic latrines in the pilot provinces                                                                               280,739
Output 2.3 households having hygienic livestock pens in the pilot                                                                          To be determined
provinces
Output 2.4 schools and institutions having clean water and hygienic                                                                                                     2228
latrines in the pilot provinces
Output 2.5 people having improved hygiene practices in the pilot                                                                                         >1,589,884
provinces


23
   The state funds are 3.2 Trillion (approximately USD190m) Vnd out of a total planned cost of the
NTPII of 22.6 Trillion Vnd (i.e. 14%). The other sources are to some extent built into the subsidy
considerations, which are not explicit (consumer contribution and loan finance) and partly built into the
expectations on donor and provincial funding. The figures in this analysis are thus dependent on a
number of factors; at least 3 are crucial: the exact subsidy rules, the degree to which credit
arrangements function as expected and the funding that might come from other donors. Particularly the
assumed allocation of funds to the household sanitation would need to be looked at once the subsidy
rules are better defined.


                                                                                        42
Outputs related to immediate objective 4 (rollout phase)               Estimates
Output 4.1 rural people having access to clean water                         5,841,901
Output 4.2 households having hygienic latrines                               1,031,554
Output 4.3 households having hygienic livestock pens                  To be determined
Output 4.4 schools and institutions having clean water and hygienic               8187
latrines
Output 4.5 people having improved hygiene practices                          >5,841,901

Thus the expected physical outcomes for the combined pilot and rollout phases arising
from the AusAid/Danida/Netherlands contribution are summarised below:

Total outcome of pilot and rollout phases                              Estimates
                                                                       (rounded)
Rural people having access to clean water                                     7,400,00
Households having hygienic latrines                                          1,300,000
Households having hygienic livestock pens                             To be determined
Schools and institutions having clean water and hygienic latrines               10,400
People having improved hygiene practices                                    >7,400,000

Nearly 7.4 million people will be served with water and will have had the opportunity
to improve hygiene practices. More than 10,000 schools and other types of
institutional latrines will have been built and some 1.3 million households will have
hygienic latrines.

However, it should be emphasised that these estimates are based on the NTPII targets,
which are in turn based on the needed achievements to reach the national targets and
MDGs. This approach may lead to optimistic targets, since the actual GOV
programme funding may prove to become somewhat lower than expected (but still
substantial) and since the baseline data are uncertain, especially for sanitation. Hence,
it has been agreed that specific targets should be set for the pilot provinces in the
annual work plans, and that the overall NTPII target should be reassessed in
connection with the assessment review after 1½ years of implementation.

4.3      DETAILED STRATEGY
The single most important element of the strategy is to work within the NTPII rather
than applying donor specific conditions that only apply to the pilot provinces. Various
reviews have shown that the NTPI had many areas where improvements are needed. It
will be necessary to detail the weaknesses and then encourage internal mechanisms
for addressing these weaknesses. The pilot phase will ensure that sufficient focus is
given to a number of representative provinces so that simple clear directions for
improvement emerge that can be applied nationwide. The overall strategy presented
in chapter 3 outlines the main content of the pilot and rollout phase and also the role
of the TA in promoting Vietnamese learning processes.

Table 3.1 in section 3.3 indicates the main areas of weakness of the NTPI systems
identified by the various reviews and evaluations. A strategy to address the
weaknesses listed in section 3.3, could comprise the following elements:



                                                    43
   Planning based on solid baseline information;
   Implementation based on demand and user preferences;
   Increased focus on sanitation and hygiene promotion;
   Due attention to operation and maintenance;
   Monitoring and evaluation based on useful, standardised indicators.

Each of these is expanded on below:
Planning data
The importance of good baseline data (both financial and physical) is emphasized in
all the review reports of NTPI and also in the NTPII five-year plan. In one or more
pilot provinces, systematic templates could be developed that record achievements to
date as well as work in progress and outstanding payments to contractors etc. These
can be evaluated for wider adoption if found useful. Such planning data will help the
Provincial Peoples Committee (PPC), the NTP standing office at national level and
donors ensure additionality to the RWSS sector and the ultimate purpose of defining
the RWSS as a NTP.
Demand and user preferences.
The reviews have all pointed to the difficulties in implementing the demand
responsive and consumer led approach. The steps and techniques are known in
Vietnam. But the awareness and capacity at all levels as well as the acceptance by
decision makers and practitioners that this approach is the best and most effective
means of achieving the overall aims has not taken root in all provinces. The pilot
provinces can make use of the TA in the form of the advisers to guide the
implementation and develop experience and routine in implementing these
approaches, which are supported by the NWRSSS. Annex K provides details and
practical suggestions for typical approaches.
Operation and maintenance
The number of defunct water and sanitation facilities (especially the piped schemes) is
a grave concern to all, most importantly the consumers and the provincial and national
authorities who have invested the majority of the funds. A key strategy outlined in the
NTPII five-year plan is to redress the previous oversight on operation and
maintenance. A sub-strategy that could be discussed, and if found suitable tested and
applied, is for a province not to invest in new schemes until the existing schemes are
operating satisfactorily. This will at least assure the PPC and those politically
responsible that the very limited grant funds are not wasted on infrastructure that does
not work. Further details can be found in Annex K
Increased focus on sanitation and hygiene promotion
The NTPII five-year plan has taken the radical and necessary step, in response to the
findings of the MARD and Joint Sector Review, to allocate the responsibility and
budget for sanitation and hygiene promotion to the DOH/DOET at provincial and
district level. This will be the single most important factor in ensuring that the full
capacities of the Vietnamese system are used. The engagement of the DOH/Bureau of
Health (BOH) and DOET/Bureau of Education and Training (BOET) is new for the
NTP and teething problems are expected. The standing office and the DOH/DOET
can, in the pilot provinces, call on health dedicated advisers provided by
AusAid/Danida/Netherlands. One of the issues that will require early resolution and


                                            44
which might need national endorsement is how cost of sanitation and hygiene
promotion is funded and accounted for. That is, whether they should be booked as
part of capital expenditure or booked as recurrent expenditure (e.g. for areas where
communities are already served by water) and if so whether the amount of recurrent
expenditure foreseen by the NTPII (less than 10%) is enough.

Standard sanitation designs have apparently been made with quality in mind, and the
construction costs have received less attention. The cost of household latrines is,
however, an important factor in household decisions on whether to construct latrines,
and the need for subsidies is lower if low-cost latrines are available. In the pilot phase,
the international adviser within MOH will therefore propose and facilitate a latrine
design study with a view to finding ways of reducing cost of latrines. Further details
on especially the technology options for sanitation are given in annex K.
Monitoring
Simple, pragmatic indicators are essential at the operational level of the implementing
and budget holding agencies but also for the political level (PPC). This is an area
where the pilot phase can help since the indicators once arrived at and tested are likely
to be generic and useful for all provinces. Further details can be found in Annex K
and also in the pre-pilot TOR in Annex A.

4.4    INPUTS – TPBS TO THE NTPII
The AusAid/Danida/Netherlands contribution will be in the form of in-kind TA and
funds channelled as TPBS to the NTPII. TA is described in detail in chapter 3 and
also in chapter 5. This chapter will focus on how the majority of the funds, namely the
TPBS to the NTPII, will be utilised.

Since the overall strategy is to provide TPBS to the NTPII rather than set up
independent projects, it will not be possible to distinguish or trace the
AusAid/Danida/Netherlands contribution. Funds will be directed at the pilot provinces
for the first 2 years and, subject to performance, at all provinces thereafter. The TPBS
will therefore be used in the same way as the NTPII funds themselves, with the
exception that since the TPBS is only in grant form, those areas of expenditure which
are loan based will not be directly supported by the AusAid/Danida/Netherlands
contribution e.g. support to livestock pens and support to non-poor segments of the
population.

The NTPII 5 year plan gives the following estimated distribution of expenditure
between budget lines based on calculations on how to most effectively meet the
national RWSS targets (see Table 4.5).




                                             45
Table 4.5 NTPII Budget

tablesItem                  B Vnd                   %
    8 Water supply systems      8982               40%
   14 Household latrines        4274               19%
   15 School latrines            487                2%
   16 Clinic latrines             12              0.05%
   17 CPC latrines                 8              0.03%
   18 Market latrines             58              0.26%
   19 Livestock                 6800               30%
V.2.1 Software                  2000                9%
                      Total    22621              100%

The sources of the funding is detailed in Table 4.6


Table 4.6 Source of funding for the NTPII
Source of funding           B Vnd         %
State government                  3200     14%
Local government                  2300     10%
International support             3400     15%
People's contribution             8100     36%
Preferential loans                5600     25%
                      Total     22600     100%


One of the complications is that the total budget of VND 22,600 Billion shown in
table 4.5 is not yet secured and in reality might not be obtained24. On the basis of the
approved 2006 NTPII budget of VND 353 Billion and assuming a 10% escalation
every year a more realistic projected state government budget 25 are shown in Table
4.7.

Table 4.7 Projected state government budget based on the 2006 approved NTPII
budget

NTP II GOV              2006    2007      2008     2009     2010      2011     2012 Total      Total
expenditure                0       1         2        3        4         5        6 2006-      2007-
Capital (B Vnd)          333     366       403      443      488       536      590       2033       2826
Recurrent (B Vnd)         20      22        24       27       29        32       35        122        170
               Total     353     388       427      470      517       569      625       2155       2996
Capital (USD 000)      21076   23184     25502    28052    30857     33943    37337 128671 178875
Recurrent (USD 000)     1266    1392      1532     1685     1853      2039     2242       7728     10743
               Total   22342   24576     27034    29737    32711     35982    39580 136399 189618

24
   MARD believe that once the NTPII is approved the budgets for 2007 and subsequent years will be
substantially increased so that the full 3.2 Trillion VND (14% of 22.6 trillion VND) are available. The
analysis presented in this document is based on a more conservative assumption that the 2006 budget
levels will continue. If MARD expectations are shown to be correct the impact and leverage of the
external funds will only be greater.
25
   State government budget is the budget allocated by the MOF under instruction by Prime Ministers
office and approved by the National Assembly for use on the NTP II. Of this amount 97% is allocated
directly to the provinces.


                                                    46
The projected state government budgets which show a total of VND 2155 Billion for
the period 2006-2010 imply a reduced total NTPII expenditure (assuming local
funding, loans, external grants and people’s contribution are scaled back pro rata to
the reduced state government budget) is likely to be available in practice.

Table 4.8 Pro rata funding levels based on approved and projected state
government budget for the NTPII

Source of funding               B Vnd              %
State government                    2155            14%
Local government                    1101            10%
International support               1628            15%
People's contribution               3257            36%
Preferential loans                  2682            25%
                          Total    10823           100%


Table 4.8 implies that in the period 2006-2010 only half the national targets will be
met (expenditure of VND 10823 billion rather than VND 22600 billion). The
calculations on targets depend crucially on the unit costs, the rates of subsidy and the
use of loans. There is also a consideration concerning the balance between the
recurrent and capital budgets since the demands on sanitation, hygiene promotion as
well as training might outstrip the available recurrent budget. All these aspects will
need review and attention during the preparation of the first annual budget for the
NTPII.

Table 4.9 shows the overall share of the AusAid/Danida/Netherlands contribution to
the NTPII by comparing the funds provided as TPBS (USD 101 million) to the other
sources of funds such as the state and local government, loans and people’s
contribution.26 The table indicates that the AusAid/Danida/Netherlands contribution
will be around 15% of the total expenditure.

Table 4.9 Overall share of the AusAid/Danida/Netherlands contribution to the
NTPII
Source of funding            USD m    B Vnd      %
State government                  136     2155    14%
Local government                   70     1101    10%
     AusAid/Danida/netherlands    101      1588   15%
                 Other donors       3        40    0%
International support total       103     1628    15%
People's contribution             206     3257    36%
Preferential loans                170     2682    25%
                       Total      685    10823  100%



26
   As for the earlier tables the level of state government budget is based on the approved 2006 NTP
budget escalated by 10% and assuming that the other sources of funding such as local government,
loans and people’s contribution are held in proportion to the state government


                                                  47
5          BUDGET

5.1        OVERALL BUDGET
A summary of the overall budget is shown in Table 5.1.

Table 5.1 Summary budget

           Summary Budget                                              Years
               (000 USD)                            1            2              3           4           5     Total
Support to NTP II                              13,558       14,347         26,732      32,146      24,311     111,094
Programme studies, auditing and research          516          566            326         216         116       1,740
Unallocated funds                               1,217        1,825          3,042       3,042       3,040      12,166
                                   Total       15,291       16,738         30,100      35,404      27,467     125,000
           Source of funding
Ausaid disbursement                             1,700        2,700          8,600      12,000       9,000         34,000
Netherlands                                     1,591        2,038          7,500       9,404       4,467         25,000
Danida disbursement                            12,000       12,000         14,000      14,000      14,000         66,000

This budget includes the provision of TA including 5 international advisers for 2 years
each. The budget shows that close to 90% of the funds are directed towards
supporting the NTPII, 1.7% for research and programme related activities such as
auditing and studies. Approximately 10% is set aside as unallocated funds. The
disbursement mechanism for unallocated funds which include potential support to
Water Resources Management (5 million US dollars) is subject to agreement between
GoV and donor(s) and will depend on the purpose of the expenditure. The remaining
funds will be spent on other activities of the RWSS sector as identified.

Danida will provide 66 million USD, AusAID 34 million USD and the Netherlands
25 million USD. The programme will start in December 2006 and last for 5 years. A
more detailed version is given in Table 5.2

Table 5.2 Detailed budget
                                                    Annual budget (000 USD)
                Detailed budget                1        2          3        4                   5 Total       %

                  NTPII - TPBS             11,200   11,700      24,108        30,000     23,317     100,325         80%
                  NTPII - in kind TA        2,199    2,164       1,988         1,510        676       8,537          7%
    NTP II
                  Supervision                 159      483         636           636        318       2,232          2%
                  Total NTP II component   13,558   14,347      26,732        32,146     24,311     111,094         89%

           Auditing                           66          66         126         66         66          390        0.3%
           Studies                            50         100         100         50         50          350        0.3%
 Programme
           Research                          400         400         100        100          0        1,000        0.8%
           Total programme                   516         566         326        216        116        1,740        1.4%

      Total without Unallocated funds      14,074   14,913      27,058        32,362     24,427     112,834         90%

                  Unallocated funds         1,217       1,825    3,042         3,042      3,040      12,166         10%

                  Total                    15,291   16,738      30,100        35,404     27,467     125,000        100%

                  AusAid                    1,700    2,700       8,600        12,000      9,000      34,000         27%
    Source of     Netherlands               1,591    2,038       7,500         9,404      4,467      25,000         20%
     funding      Danida                   12,000   12,000      14,000        14,000     14,000      66,000         53%




                                                          48
Table 5.2a shows the distribution of the TPBS to the pilot provinces only and to all
the provinces. During the pilot phase the TPBS will be concentrated only in the pilot
provinces. During the rollout phase the TPBS will be distributed to all provinces. A
reserve budget line is made available to allow extra funding during the pilot provinces
to those provinces that demonstrate a greater capacity to implement schemes
sustainably.

Table 5.2.a Distribution of TPBS in pilot and other provinces over the 5 years

                                                                   Years
                            Figures in 000 USD       1        2            3        4        5 Total
# provinces                                      9         9          64       64       64
TPBS expenditure at pilot provinces only          8,500    9,000          0         0        0    17,500
TPBS at national level                                0        0     24,108    30,000   23,317    77,425
Reserve budget                                    2,700    2,700                                   5,400
Total TPBS                                       11,200   11,700     24,108    30,000   23,317   100,325


The intensity of funding in the pilot provinces will be much greater than the previous
NTP spending. A careful monitoring of the implementation capacity of the pilot
provinces will be needed to ensure that the funds do not exceed the capacity to
implement quality facilities using the principles of the NWRSSS. The capacity to
physically implement facilities is usually much greater than NTP I expenditure
implies because in many of the poorer provinces there has been water and sanitation
spending under P 135 and P 134, which in some cases has been more than 10 times
the NTP levels. The main concern is that there will be sufficient capacity to use the
demand responsive approach. Addressing the backlog in school sanitation through a
supply-driven approach is one strategy that provinces should use in order ensure that
needs are met whilst capacity is being built up (please refer to the benchmark on
priority investments in section 3.2.2).

Table 5.3a gives a summary of the donor and government contributions divided into
the cost categories of capital, recurrent and technical assistance over the 5-year period
from 2007 to 2011.27




27
  This period corresponds to the period for AusAid/ Danida/ Netherlands support. The NTPII itself
runs from 2006-2010.


                                                     49
Table 5.3a Summary of donor and state government contribution (2007-2011)

                                      AusAid/Danida/Netherlands                    %
 Summary Budget (000 USD) Capital        recurrent TA         Total

NTP                              94,470    6,030      10,594             111,094
Programme expenditure                 0     1740           0                1740
Unallocated                      10,186      838       1,142              12,166
        Total AusAid/Danida     104,656    8,608      11,736             125,000   40%
                                      GOV (state government)
NTP                             178,875   10,743           0             189,618
Programme expenditure                 0         0          0                   0
Unallocated                           0         0          0                   0
                Total GOV       178,875   10,743           0             189,618   60%
                                Total GOV (state) and AusAid/Danida/Netherlands
NTP                             273,345        16,773        10,594      300,712
Programme expenditure                 0         1,740             0        1,740
Unallocated                      10,186           838         1,142       12,166
                        Total   283,531        19,351        11,736      314,618   100%

Table 5.3a is based on a number of assumptions, which are explained in the annexes28.
It shows that the donor support is about half of the government expenditure. In reality
the proportion of donor support is much less as the recurrent salary and managerial
costs borne by the state government is not shown and the provincial government
expenditures are not included above. Table 5.3a also shows that nearly 80% of the
donor funds are used for capital expenditure with 8% on recurrent expenditures and
12% on TA (provided in kind).

Table 5.3b shows the cost sharing just within the NTPII component.

Table 5.3b Source of funding for the NTPII (assuming expenditure projected at
the 2006 NTP approved budget level)

Source of funding            USD m    B Vnd                             %
State government                  136     2155                           14%
Local government                   70     1101                           10%
     AusAid/Danida/netherlands    101      1588                           15%
                 Other donors       3        40                            0%
International support total       103     1628                           15%
People's contribution             206     3257                           36%
Preferential loans                170     2682                           25%
                       Total      685    10823                          100%


The AusAid/Danida/Netherlands direct contribution to TPBS for the NTPII, from
table 5.3b, amounts to only 15% of the total expenditure and this is not including
recurrent costs such as salaries of government staff. Even so, the total


28
  The state government budget is based on the 2006 NTP II approved budget escalated at 10% per
year.


                                                     50
AusAid/Danida/Netherlands budget (including TA, contingencies and unallocated
funds) is still only USD 100 million out of almost USD 700 million29 or around 15%.

5.2     BUDGET DETAILS FOR TECHNICAL ASSISTANCE
Technical assistance is provided in-kind and is of two types: advisers and consultancy
inputs.
Technical assistance - advisers
Two international advisers are stationed at the central level for the first two years with
a budgetary provision for extension if found necessary. One adviser will be based in
MOH and one in the NTP Standing Office in MARD.

At the provincial level there will be 3 international advisers who will be
complemented by local consultants. Each cluster of provinces will have one
international advisor. The international advisers will be contracted for 2 years with a
budgetary provision for extension if found necessary.

The advisers at province level will each have a 4-wheel drive programme vehicle with
a driver and an office with adequate space including a meeting table to be provided by
the GOV at the provincial DARD or DOH as appropriate. The programme will cover
the costs of running the vehicles, internet broadband, telephones including mobile
phones, travel according to Danida rules, and office utilities such as laptop,
photocopier, printer and fax machine including consumables. Interpreter services will
also be necessary.
Technical assistance - consultancy inputs
At the provincial level, there will be funding available for financing short-term
consultancy inputs to assist in the capacity building tasks. Consideration will be given
towards the end of the pilot phase to continue local consultancy inputs with a gradual
withdrawal over the first two years of the national rollout.

At the national level, there is funding available for financing expenditure tracking
studies, value for money and other relevant studies. Allowance is included for
unspecified inputs to be made available for flexible responses during the pilot phase
and to assist with the rollout out phase. TOR for the flexible response and assistance
with the rollout phase will be made during the programme execution.

Table 5.4 summarises the TA budget. The unit costs of advisers and consultants are
based on cost norms and market levels.

Table 5.4 Summary of TA budget




29
  The exact Table will depend on data on the government contribution to WRM and the cost of the
recurrent and managerial functions provided by the government.


                                                51
                        Institution/                                               Input table (person months)
Location Input type      function  Recruitment           y ear 1         year 2          year 3       year 4          year 5       Total
                       MOH        International                    12             12            12            0                0            36
           Adviser     MARD       International                    12             12            12           12                6            54
                       Finance    National                         20             20             5            3                1            49
                                  International                     2              2             2            1                              7
                    Health        National                         15             10             5            1                             31
                                  International                     2              2             1            2                              7
 Central
         Mobile     Water         National                         15             10             5            1                             31
         team                     International                     2              2             1            1                              6
                    Institutional National                          8              4             3            1                             16
                                  International                     2              1             1            1                              5
                    Monitoring National                             8             12             8            4                2            34
                                  International                     4              2             2            2                             10
         Adviser                  International                    36             36            36           18                0           126
Province
         Consultant DPI/ DOH National                              36             36            18            9                0            99


                        Institution/                                                     Cost table (USD)
Location Input type      function      Recruitment       y ear 1         year 2           year 3      year 4          year 5   Total
                       MOH            International        193,548         193,548         193,548           0               0      580,645
            Adviser    MARD           International        193,548         193,548         193,548     193,548          96,774      870,968
                       Finance        National              90,000          90,000          22,500      13,500           4,500      220,500
                                      International         60,000          60,000          60,000      30,000               0      210,000
                       Health         National              67,500          45,000          22,500       4,500               0      139,500
                                      International         60,000          60,000          30,000      60,000               0      210,000
 Central
                       Water          National              67,500          45,000          22,500       4,500               0      139,500
                                      International         60,000          60,000          30,000      30,000               0      180,000
                       Institutional National               36,000          18,000          13,500       4,500               0       72,000
                                      International         60,000          30,000          30,000      30,000               0      150,000
          Mobile       Monitoring National                  36,000          54,000          36,000      18,000           9,000      153,000
          team                        International        120,000          60,000          60,000      60,000               0      300,000
          Adviser                     International        580,645         580,645         580,645     290,323               0    2,032,258
Province
          consultant     DPI/DOH National                  162,000         162,000          81,000      40,500               0      445,500
         Total identified advisers and consultants       1,786,742       1,651,742       1,375,742     779,371         110,274    5,703,871
          Logistic support for advisers                    162,000         162,000         162,000      81,000          16,200      583,200
                                 Flexible response         250,000         350,000         450,000                                1,050,000
                    Allowance for rollout support                                                      650,000         550,000    1,200,000
                              Total all in-kind TA       2,198,742       2,163,742       1,987,742 1,510,371           676,474    8,537,071
                      As percentage of TPBS (%)               20%             18%               7%          5%             3%           8%


                                                                   Unit Cost Table
           Item                                       unit          rate          Notes
                                                                    usd/month
           international adviser                      month                16129 based on DKK 1.2 million per year, salary + expenses
           Short term national consultant             month                  4500 based on cost norms in vietnam including all expenses
           International short term consultant        month                30000
           Logistic support for advisers
           vehicle(deprecitation/running)             month                   1,500 based on 0.5usd/km for 3000km per month
           office running                             month                     700
           other (interpretation etc)                 month                     500
                                              Total   month                   2,700
Table 5.4 shows that the TA as a percentage of the TPBS decreases from 20 % in the
first year to 3% in the last year and in total constitutes 8% of the TPBS. International
advisers account for 51% of the TA expenditure (including logistic support).

5.3       BUDGET FOR SUPERVISION INPUTS
Table 5.5 shows the expected number of supervision events during the 5-year
programme as well as the expected costs based on assumed unit costs (shown in
annex). In all years there will be a technical supervision event, which will provide
technical working reports for consideration by an annual sector review, which will be
a joint review by all those financing the NTPII.


                                                                   52
There will be a more detailed national rollout assessment review at the end of the pilot
phase to provide the inputs for the decision on whether to proceed with the rollout of
AusAid/Danida/Netherlands support to the entire NTPII in all provinces. The national
rollout assessment review will take place towards the end of the pilot phase.

Supervision missions and reviews will be carried out jointly by GoV and the donors
based on mutually agreed terms of reference and time schedule.


Table 5.5 Number of supervision events and budget

                                                           Number of supervision events
       Summary of supervision events           y ear 1      year 2    year 3    year 4      year 5       Total
            Technical supervision                        1         1                                             2
Pilot phase National rollout assessment                            1                                             1
 Roll out Technical supervision                                              1         1             1           3


                                                                     Cost of supervision (USD)
       Summary of supervision costs            y ear 1        year 2      year 3     year 4    year 5 Total
            Technical supervision                79,500        79,500                                   159,000
Pilot phase National rollout assessment                0      324,000            0          0        0  324,000
 Roll out Technical supervision                                          318,000 318,000 318,000        954,000
                                       Total    79,500        403,500 318,000 318,000 318,000 1,437,000
Supervision cost as percentage of TPBS (%)         1%              3%          1%         1%        2%      1%


As shown in Table 5.5, the supervision costs are around 1 % of the total TPBS.

5.4      PROGRAMME LEVEL BUDGET
At the programme level there is a budget set aside for audits, studies and research as
shown in table 5.6 below:

Table 5.6 Programme level budget

                                           year 1  year 2  year 3  year 4  year 5       Total
Programme                                 USD (m) USD (m) USD (m) USD (m) USD (m) USD (m)
Auditing                                    66,000  66,000 126,000  66,000  66,000 390,000
Studies                                     50,000 100,000 100,000  50,000  50,000 350,000
Research                                   400,000 400,000 100,000 100,000        0 1,000,000
Total                                      516,000 566,000 326,000 216,000 116,000 1,740,000


This budget will be managed by the Embassy of Australia and Denmark (the
Netherlands will participate on request). The audits are intended to support the state
audit function and the studies are intended to supplement the ongoing efforts at
developing innovative solutions and in-depth diagnosis of present constraints. The
allocation to research is not yet designed in detail but will be developed during the
pre-pilot phase.

5.5      UNALLOCATED BUDGET
The unallocated budget is under 10% of the total budget. Around USD 5 million is
expected to be used for IWRM if the institutional conditions allow.


                                                         53
Some amount is also likely to be used in support of the second phase of a national
hand washing campaign, called the Hand Washing Initiative (HWI), which is being
developed by the Water and Sanitation Program (WSP) of the World Bank, MOH and
local and international soap companies, in collaboration with other partners. The
overall objective is safeguarding the health of populations at risk of diarrhoea and
acute respiratory infections through a strategic communications campaign aimed at
encouraging hand washing with soap. This public-private partnership will harness the
complementary abilities and resources of the many actors interested in this issue in
Vietnam. The initiative will utilize both national and community level behaviour
change communications techniques to influence the behaviour of mothers of children
under five and primary school children.

The overall goal of the HWI is to reduce morbidity and mortality from diarrhoea
diseases by 2009 through increased hand washing with soap at critical times by
mothers of children under 5 and primary school children. The precise target will be
established based on a baseline survey.

The Department of Preventive Medicine of the MOH will be the lead agency in
providing technical direction and in implementing the HWI. The campaign will be
carried out both through the mass media and by campaigns at community level. The
total cost is estimated to be around 1.4 million USD for the first phase, which has
already been committed from other sources, and a similar amount for the second
phase.


6      MANAGEMENT AND ORGANIZATION

6.1    PROGRAMME MANAGEMENT PRINCIPLES
Vietnamese organizations and implementing agencies that have a mandate and are
responsible for the respective areas will manage the NTPII including the funds
provided by AusAid/Danida/Netherlands. No additional procedures, reporting,
coordination or management structures will be created as a result of the external
assistance. If practice shows that changed management procedures are needed to
make the sector function better then such changes will only take place if the evidence
leads to the national and/or provincial agencies to issue the relevant decrees,
instructions and circulars effecting the changes. One of the purposes of the pilot phase
is to test if any such improvements are justified.

There is a need for a close dialogue between the donor agencies and the Vietnamese
lead agencies in order to adjust plans for cooperation year by year and deepen the
sector dialogue. This will take place through the National Steering Committee of NTP
II in which the funding partners will be represented. Furthermore, a RWSS
partnership has been established by MARD for information sharing, coordination and
harmonisation.

6.2    MANAGEMENT FUNCTIONS AND ROLES – NTPII COMPONENT
MARD is the designated lead national agency for the NTPII (standing office)
although MPI, MOH and MOET will play a significant role in their respective areas.


                                            54
The implementing agencies of the NTPII are the PPCs in the provinces which will in
turn designate lead agencies (standing office) and implementing agencies (budget
holders) according to normal provincial mandates which govern the degree of
decentralization (down to district or commune level) and the departmental line
agencies responsible for different areas of the NTP. The detailed management
functions and roles are described in chapter 2 and within the relevant decrees that
govern NTPs (see Annex F.)

A summary of the implementing agents and their overall roles is given below:

Table 6.1 Implementing agents and roles
Functional                 National                                 Provincial/local level
area         NTP         Policy,         guidelines,    PPC                 Implementation of the
             Steering    supervision, channelling                           NTPII
             Committee   of national funds
Planning     MPI         Provincial      allocation,    DPI – BPI          Approval            and
                         supervision of adherence                          coordination         of
                         to effectiveness of NTP                           provincial NTP plans
                         planning guidelines
Finance      MOF         Channelling of funds,          DOF – BOF          Channelling of capital
                         supervision of adherence                          funds. Internal audit
                         to financial norms and
                         guidelines, Audit.
Water        MARD        Sector             strategy,   DARD – BARD        Implementing agency
             (standing   implementation guidelines                         for water supply
             office)     and standards – water
Health       MOH         Sector             strategy,   DOH – BOH          Implementing agency
                         implementation guidelines                         for hygiene promotion
                         and standards – hygiene                           and sanitation
                         and sanitation
Education    MOET        Sector             strategy,   DOET – BOET        Implementing agency
                         implementation guidelines                         for   schools     water,
                         and standards – schools                           hygiene and sanitation
                         water,     hygiene       and
                         sanitation


Standing Office of NTP
A Standing Office shall provide assistance to the National Steering Committee.
Working statutes of the Standing Office shall be decided by the Minister of MARD.
Personnel of the Office will include full time staff from MARD, and possibly other
ministries, supported by an international adviser and short-term consultants as
appropriate.

6.3        MANAGEMENT FUNCTIONS AND ROLES – WRM
The management of the WRM (should it be approved) will be the Vietnamese agency
that has the mandate for water resources management. At the present time this is
MONRE following the decision in 2002 to separate state management of water
resources and development of water resources. It is however unclear at the present
time whether this decision will be fully implemented. The management set up under
which any future potential component will operated will thus need to await the
decision of the government.




                                                 55
The level of assistance to IWRM will depend on the commitment and institutional
framework on Vietnamese side. The aim is to support Vietnam in obtaining better
knowledge, protection, regulation and utilization of water resources in order to
prevent water scarcity and pollution, protect the quality of ground and surface water,
and strengthen the national and local capacity for IWRM. AusAID does not intend to
co-fund this component. Triggers for the Danida support will be a decision on the
roles and mandates of MONRE and MARD regarding RBMOs and the establishment
of a common programme for co-funding by GOV, ADB, The Netherlands, Denmark
and possibly other donors. It is unlikely this support will commence at the same time
as the RWSS component of the programme.

6.4    PARTNERSHIP ARRANGEMENTS AT PROGRAM LEVEL

6.4.1 Partnership for rural water supply and sanitation sector

A partnership for RWSS has been set up in order to provide a broad forum for
discussion and harmonization of external support under the leadership of MARD and
involving all donors to the sector (both those that support the NTPII through TPBS
and those that support via projects). The partnership is described in a Memorandum of
Understanding, signed on May 15, 2006. The partnership will not be the channel
through which the donors funding the NTP II interact with the NTP II. However, the
partnership will have a role in discussing the TOR and support that is provided to the
sector as a whole e.g. the TOR that are shown in annex A and B. It will also have a
central role in defining the use of the funds for research.

6.4.2 Operational coordination between GOV and donors supporting the NTPII

The RWSS Partnership will provide a sound foundation for sector wide discussions
involving all donors, but there is also a need for an operational dialogue and
coordination between the GOV and those donors actively supporting the NTPII. It is
expected that the donors will become part of the NTPII steering committee, which
will avoid the need for establishing a new committee and ensure all relevant
discussions are undertaken together. This approach is endorsed in the NTPII
document of December 2005.

It is thus expected that the donors directly supporting the NTPII via TPBS would take
part in the NTPII steering committee meetings. The role of donor participation in the
steering committee would be to:
        Gain access to all relevant information;
        Participate in policy discussions relevant to the functions of the steering
         committee (described in section 6.2) and raise issues of concern;
        Ensure early discussion on the outcome and progress of the pilot provinces;
        Present the conditions under which continued and/or increased donor
         commitment is possible e.g. the use of unallocated funds.

Besides regarding the donor funding, the donor representatives would not have any
decision-making role.




                                           56
7        FINANCIAL MANAGEMENT

7.1      BUDGETING
Donor funding will comprise:
    Additional funding to supplement national and provincial allocations for water
       and sanitation. Donor funds will be available to support the capital and
       recurrent budgets established under the NTPII. Management costs for NTPs in
       the sense of the recurrent budget for salaries and supportive costs are funded
       from the regular State budget. Government (and donor funds) will be
       registered separately for water and sanitation (including IEC activities)30, and
       transferred to provinces in accord with normal government processes and
       procedures for disbursement, reconciliation and reporting.
           o NTP II expenditure will be monitored through tracking studies and
               audits to ensure funds are utilized for the purposes for which they are
               allocated in accord with applicable regulations;
           o Opportunities/need for strengthening financial processes and
               procedures will be assessed and discussed with MOF as part of a joint
               financial management assessment study in the pilot phase.
    Funding of TA to support sector analysis and capacity building. TA will be
       provided in kind and managed by Danida and AusAID in-country (the
       Netherlands will not actively manage the TA but will receive all reports).

During the pilot phase, the donor funds will be allocated to the 9 pilot provinces, in
proportion to the national allocation for these provinces. The national allocation to
provinces for 2006 was determined in November 2005 (see detailed budget figures).
In the subsequent national rollout phase, the allocation of funds will follow the GOV
allocation to provinces unless otherwise decided.

7.2      FUNDS TRANSFER
The GOV will establish a dedicated foreign exchange account at the State Bank of
Vietnam (SBV). The donors will deposit funds on a semi-annual basis, initially to
support pilot provinces and subsequently to be distributed on a national basis subject
to assessment of agreed triggers and benchmarks for progress.

The SBV will convert to VND and transfer donor funds to a special account
established by the MOF at the SBV as additional resources for the RWSS NTPII.
Upon direction by MOF the State Treasury will transfer funds to provincial treasuries
participating in the pilot program in accord with normal procedures (quarterly basis)
for implementation of provincial RWSS plans approved by PPCs. Donor and

30
   A MOF circular of 2004 ensures that funds allocated to a particular NTP must be used for that NTP
and not for other NTPs or other purposes. It is not possible within the decentralisation rules of Viet
Nam for the central government to specify how funds should be spent within an NTP. That is, it is not
possible to ring fence separately for water and sanitation from the central level. It is a provincial
responsibility to allocate budgets within the NTP and thus ring fencing separately for water and
sanitation is possible at provincial but not national level. The MOF are able however to insist on how
expenditure within an NTP is registered in the accounts. It is therefore possible for the MOF to issue a
circular stating that expenditure on water and sanitation should be registered separately. This will allow
an ex post assessment of the adequacy of expenditure in these two areas and could help explain the
relative attainment of water and sanitation targets. It is recommended that such a stipulation be put in
the agreements mentioned in section 3.2.2.


                                                     57
government funds at this point will be indistinguishable. MOF will advise Danida,
AusAID and the Netherlands of the release of funds to provinces.

Detailed arrangements for the receipt of donor funds and transfer to provincial
treasuries will be specified as part of the negotiation of partnership arrangements
between the GOV (province and national level) and donors as part of the pre-pilot
activities.

Similar procedures will be used for the national rollout phase with adjustments made
to learn from experiences of the pilot phases.

7.3    DISBURSEMENT
Under the State Budget Law provinces are responsible for the management of NTP
expenditure. NTP funds allocated for RWSS are not fungible (in line with the most
recent decrees) and must be utilized by provinces for the purposes allocated and under
the stipulated budget lines.

TA will be available to provinces to support implementation of RWSS plans in accord
with NTPII principles for ensuring the effectiveness of expenditure. TA will have no
control or authorization over disbursement or use of provincial RWSS expenditure.

Participation of provinces in the pilot phase is predicated on their agreement to work
with TA to support implementation of the RWSS NTPII and participate in agreed
assessment and financial tracking studies. This may, if appropriate, be supported by a
ministerial circular issued by the MOF outlining expectations of provincial
cooperation during the pilot phase.

7.4    ACCOUNTING AND REPORTING
NTPII funds are processed and accounted for through standard GOV financial
management systems. Funds are allocated by decision of the People’s Committee at
each level following recommendations by the equivalent level finance agency (MOF,
Department of Finance (DOF) at provincial level, Bureau of Finance (BOF) at district
level) responding to proposals made by the relevant level agency (MARD/Department
of Agriculture and Rural Development (DARD), MOH/ Department of Health
(DOH)) and also involving the planning agencies, MPI/ Department of Planning and
Investment (DPI).

Funds are held in the Treasury system at each level and released subject to
documentation being in accord with regulations. Treasury does not have an audit
function.

The Treasury accounting system links vertically from district to province to national
level. It codes and records expenditure (this can be shown separately for water and
sanitation investments). Financial reports are produced on a monthly, quarterly and
annual basis.

MOF and the relevant PPC are responsible for ensuring DOFs in pilot provinces
provide adequate and timely reporting in accord with government procedures. Copies
will be made available to the TA, Danida, AusAID, and the Netherlands).


                                           58
Additionally, MOF and pilot provinces will cooperate in independent financial
tracking and financial management assessment studies.

Draft TOR for the Expenditure Verification and Tracking Study and the Financial
Management Assessment Study are in Annex B.


7.5       PROCUREMENT
Procurement of TA will be managed by the donors in accord with the established
procedures of the particular donor selected to contract the TA. Danida will contract
the international advisers at national and provincial levels and AusAID will contract
the local consultants at provincial level and the short-term local consultants for the
tracking and other relevant studies.

Procurement in relation to implementation of provincial RWSS plans funded by
NTPII (and supported by AusAid/Danida/Netherlands) will be undertaken in accord
with GOV procedures.

A new Procurement Law was passed by the National Assembly in November 2005
and is due to come into effect in April 2006. MPI is responsible for preparing
implementation decrees and guidelines.

The new law seeks to establish:

         decentralised approaches;
         consistency with international processes – competitive tendering,
          transparency, disclosure, increased professionalism;
         criteria for tender boards, training and certification of staff;
         options for use of specialised procurement agencies;
         protection against and ultimately elimination of conflict of interest;
         mechanisms for solving disputes, lists of prohibited activities, applicable
          penalties/sanctions.

Institutional reform and capacity building will be required to achieve the objectives of
the new law.

MPI, with the support of TA and cooperation of pilot provinces will test and apply
new procurement procedures; and work to develop a set of specific procurement
guidelines/ manual for RWSS sector procurement. These efforts will start already in
the pre-pilot phase.

7.6       AUDITING
Audit and inspection reports prepared by GOV in the pilot provinces will be made
available to the TA (and Danida, AusAID and the Netherlands). Donors will engage in
dialogue with GOV about any planned action that may be undertaken if there are
adverse results in such audits.




                                            59
In addition, in order to enhance decentralisation procedures independent audits will be
undertaken preferably with the State Audit to help develop national capacity and/or in
cooperation with an independent auditing agency. Article 73 of Decree 60 allows
independent external auditors to be used to audit special programs, including NTPs.

The audits will both assess performance and create an environment where there is an
expectation that improper practices may be exposed. The audit will cover:

     The Treasury accounting system and adherence to regulations and procedures;
     Propriety with regards to procurement, contracting and payment.

 Draft TORs are included in Annex B.


8        MONITORING, REPORTING, REVIEWS AND EVALUATION

8.1      ORGANISATIONAL SET-UP OF THE MONITORING SYSTEM
NTPII monitoring of rural water supply and sanitation physical targets is relatively
straightforward and the responsibility of communes, districts and provincial
government. Data is aggregated at each level and submitted by provinces to MARD.
MARD is responsible for checking data sources and the reliability of data and
providing guidance to provinces on the collection of data.

Data required to be collected is detailed in the NTPII document and covers the
percentage of rural people and public facilities having access to clean water by type of
water source; and the percentage of rural households and public facilities using
hygienic latrines31. Some information is also collected on whether government
standards for the provision of clean water are being achieved.

The joint GOV-Donor review expressed concern about the consistency of data
collected from different provinces and capacity limitations which impact on the
reliability of data collected. Differing data on RWSS coverage from different sources
adds to the uncertainty about the quality of monitoring.

Some initial work, including piloting approaches, has been undertaken by CERWASS
in conjunction with UNICEF to adopt uniform performance indicators and strengthen
approaches to the collection of data32. This will require further development including
consultation with provinces and assessment of integration with other approaches
being developed by government (e.g. MPI M&E project). During this development, it
should be secured that data is disaggregated on gender and ethnicity.

Continuing investment is required to meet sector targets for the provision of clean
water supply and hygienic sanitation facilities, but investments alone are insufficient.
The sustainability of water supply and sanitation facilities and achievement of


31
  Data collected relates to sector information, not just facilities provided through NTPII funding.
32
   For a status report on progress see “A brief overview note on monitoring in rural water supply and
sanitation”, Danida, May 2005.



                                                   60
improved health outcomes is also critically dependent on how government assistance
is provided and how implementation is undertaken.

The NTP II incorporates new strategies and principles directed at improving the
effectiveness and sustainability of investments. However, there is less clarity on how
improved planning and implementation strategies will be applied in practice; how
relevant agencies can be engaged; and how government will know that funds provided
to the sector are used in the most effective way.

There are many competing demands for scarce government funds and there is a need
to ensure government funds are spent effectively for the benefit of the Vietnamese
people.

A range of factors will influence how government allocates state funding within the
water and sanitation sector and between provinces, but at some stage government may
wish to consider providing priority funding and support to those provinces willing to
adopt new and more sustainable approaches to planning and implementation.

Monitoring of outcomes, behavioural change, sustainability, adherence to community
based planning and implementation approaches, development of capacity and
adequacy of systems and processes etc is more difficult and not adequately addressed
in the NTPII. There is little consideration of performance feedback to higher levels of
government; and this is little attention given to learning from and adapting experience.
These indicators need to be developed along with approaches to evaluation.

Central agencies have a role in monitoring that the NTP is implemented in accord
with national guidelines. There is a need to confirm roles and responsibilities and the
relevant entities within MARD/MOH/MOF/MPI. Developing assessment capacity
and response to shortcomings identified will take time and is an area in which
technical assistance can provide support over time.

The NTPII document notes support from donors would be welcome in assisting the
government in further developing monitoring and evaluation approaches.

Terms of Reference for the development of monitoring and evaluation are included in
Annex A. The study is already ongoing as part of the pre-pilot activities.

Financial monitoring is a Treasury responsibility. Current evidence suggests the State
Treasury accounting system records and provides reliable semi-annual financial
reports of NTP expenditure at central, provincial and district level by source of funds
and type of expenditure. The adequacy of the financial monitoring system will be
further assessed during the pilot phase.

8.2    KEY TARGETS, OUTPUT, OUTCOME AND IMPACT INDICATORS.
The NTPII objectives for water supply and sanitation coverage by 2010 are outlined
in section 2.4. Projected construction targets necessary to achieve these objectives are
listed in the NTPII plan.
The estimated contribution of donor TPBS in the pilot phase and subsequently the full
national program in achieving these objectives and targets is presented in section 4.


                                            61
Importantly, donor support also seeks to address sustainability of investments.
Planned evaluations will address process issues (appropriate application of NTPII
principles and strategies), which impact more on quality and sustainability.

8.3      REPORTING SYSTEM OF THE PROGRAMME AND ITS
         COMPONENTS
Government systems for monitoring and evaluation are weak and incomplete. There is
some capacity to monitor physical targets but virtually no capacity to assess quality
and process issues that affect sustainability. There is a lack of clarity about roles and
responsibilities, particularly in terms of the national role.

Assistance will be provided to strengthening government monitoring and evaluation
in the RWSS sector. This will involve both specific TA in the pre-pilot phase as well
as a number of evaluative studies during the pilot phase including financial tracking
studies and assessment of planning processes, etc.

Given the limitations of existing systems, donor supervision and a range of reviews
will be undertaken during the pilot phase. These are essential safeguard mechanisms
but also necessary to confirm the conditions under which TPBS can be provided to the
national program following completion of the pilot phase. These include:

      a) Annual technical supervision events. In accord with normal donor practice,
         supervision missions will assess progress of the pilot phase and subsequently
         of TPBS assistance to the national program, with emphasis on selected
         technical issues.

      b) Annual review missions will assess the progress of the assistance and will
         build on the findings of the annual technical supervision events and other
         studies performed during the year. The review missions will include
         representatives of the three donors and the national standing office and will
         link with the mid term review proposed in the NTPII work-plan (end 2007).

      c) National rollout assessment review. This will be undertaken towards the end
         of the pilot phase to provide an input to the assessment of the National
         Steering Committee (including the funding partners) whether criteria have
         been met that will enable TPBS to be provided on a national scale. Key criteria
         should focus mainly on issues affecting sustainability of investments and
         include:
          Progress in adoption of the principles and strategies outlined in the
             NRWSSS and NTPII, particularly in relation to planning, community
             participation and poverty focus;
          Extent of coordination and cooperation between key stakeholders at all
             levels (MARD/MOH/MOET/MONRE/MPI/MOF) as represented in the
             steering committee and at provincial level through appropriate assignment
             of implementation responsibilities;
          Extent of commitment to donor dialogue;
          Outcome of studies assessing fiduciary risk and procurement risk;
          Progress in the development and introduction of M&E strategies;
          An increased focus on sanitation and hygiene promotion;


                                             62
            Willingness to address system weaknesses and introduce change.

The national rollout assessment review will address the progress with regard to the
benchmarks and triggers (please refer to section 3.2.2) and make an overall
assessment based on input from supervision missions, annual reviews and evaluation
studies conducted during the pilot phase.


9        ASSESSMENT OF KEY RISKS AND ASSUMPTIONS

9.1      MAIN RISKS

9.1.1 Operation and Maintenance

Based on the experiences from NTPI, it is considered that the main single risk is that
the constructed facilities (both for water supply and sanitation) will have a too short
useful service life, because of: (i) poor design and construction quality, (ii)
insufficient emphasis put on IEC, involvement of the users and the setting up and
training for O&M.33 The avoidance of this risk is one of the main challenges of the
NTPII. Among the mitigating measures taken in the design of the RWSS NTPII
should be mentioned:

     The necessary guidelines and manuals for technical design and construction of
      RWSS facilities have been developed during the previous phase;
     More funding (8.9%) is available for implementation, IEC activities, capacity
      building and other software activities than in NTPI;
     There are funds available within the NTPII for capacity building, and in the pilot
      provinces TA will be provided in kind by the donors, aimed mainly at supporting
      the capacity building effort. It is a risk, however, that the funding available within
      NTPII is not sufficient;
     If it is decided to decentralise the implementation of the NTPII to district and
      commune level, this can bring the decisions closer to the end-users and create a
      higher degree of ownership;
     Guidelines for the implementation of NTPII to be elaborated before programme
      start can emphasis the need to follow the National RWSS Strategy, and hence put
      more emphasis on community involvement and the setting up of O&M
      organisations;

Despite these measures, the risk remains, however, and the O&M of the RWSS
schemes will therefore be one of the important indicators that have to be monitored
closely during programme supervision. The relevant indicators are (i) process
indicators related to the NRWSS strategy actually being followed, and (ii) the actual
state of the O&M of the constructed systems. The compliance with the process
indicators will be one of the triggers to be considered at the end of the pilot phase,
when it is decided whether to start with the national roll-out of the TPBS.


33
   It may be noted that there was little useful O&M experience from NTPI in respect of sanitation, as
the tendency under NTPI was to focus on water supply. Although the risks may be less for household
sanitation because structures will be maintained by the households, issues around design and IEC are
also factors for household sanitation and for institutional sanitation.


                                                   63
Should the mitigating measures not be sufficient, the implication for the programme is
that even if the RWSS facilities are constructed as expected, part of these will after a
couple of year be functioning at low capacity, or not at all, and rehabilitation will have
to be undertaken, resulting in a waste of resources.

9.1.2 Subsidies to the poor.

There is a risk that it is found too difficult/complicated to subsidise the poor as they
are further from the decision makers, less able to meet the necessary conditions and
less aware of the support on offer.

This risk is critical to achievement of the objectives because the purpose of the NTPII
and the support from AusAID/Danida/Netherlands is to reduce poverty. Subsidies to
richer sections of the population potentially distort the market for water and sanitation
services as well as reducing the number of poor that can be served. It should be noted
that under the Vietnamese system subsidies are also targeted at those who live in
difficult or water scarce areas even though they may not be poor in an income sense.
The same holds true for those affected by natural disasters and excessive pollution.
The risk factors relate to the fact that it is much easier to subsidize the well off; they
are nearer to the decision makers; they tend to be able to meet the necessary
conditions and, they are more aware of the support on offer. Pro-poor subsidy
targeting is complicated by the fact that improved water and sanitation may not be the
highest demand of the extremely poor who are more likely to be in need of food,
shelter and a source of sustainable income. The mitigating action is already in place in
terms of adherence to the MOLISA poverty criteria and the provision of loans and
other more market based instruments for the better off. The NTPII for water and
sanitation will better ensure that the subsidies reach the poor if it works closely with
Program 135 and other similar programs that provide more integrated support for
rural development. The use of the demand responsive approach will improve subsidy
targeting so that only technologies and interventions appreciated by and capable of
being sustained by the poor are provided. The proposed study mentioned in the NTPII
document on revision of the subsidy criteria also offers an opportunity to improve the
pro-poor targeting. The risk will be monitored as part of the technical supervision
reviews or by independent surveys.

9.1.3 Transparent procurement and anti-corruption

There is a risk that there will not be sufficient national and provincial commitment to
transparent procurement and anti-corruption measures.

This risk is critical to achievement of the objectives because inefficient procurement
and corruption tends to increase the unit costs and can lead to inappropriate
installations being built. Although fiduciary risk in the sense of tracking expenditure
and the procurement systems are considered acceptable by third party reviewers there
are considerable residual concerns because the capacity and willingness to implement
the systems is not always in place. The risk factors relate mainly to procurement, both
in terms of capacity to implement the systems and willingness to inspect and enforce
the system to eliminate collusion between suppliers and decision makers. The
mitigating action that can be taken is to institutionalise the practice of undertaking
financial audits and technically based value for money audits as well implementing
the new procurement law. I should be added that decentralisation and more


                                             64
involvement of the end-user, as indicated in the NRWSS strategy, has the potential to
increase social control/local supervision and hence reduce the scope for corruption.
TA can be provided to assist provincial and district authorities establish open and
transparent information channels. The main instrument for monitoring this risk are the
tracking studies and the value for money audits, which will look at both unit costs and
adherence to construction and serviceability specifications.

9.2 MAIN ASSUMPTIONS

9.2.1 Political commitment and priority assigned to investing in hygiene
      promotion

It is assumed that there is a political commitment and priority to investing in hygiene
promotion.

This assumption is critical to achievement of the objectives because the health
benefits of the NTPII will largely come from changes in hygiene behaviour. Without
extra commitment and priority assigned to hygiene promotion it is unlikely that the
existing preventative and promotive health networks will be able to make sufficient
impact to match the physical investments. The risk factors relate to the fact that
improvements in hygiene are not immediately visible and measurable and need to
compete for scarce recurrent budget. There are also institutional barriers as the funds
will be channelled via the NTPII for water and sanitation, which has in the past been
dominated by the water supply function within DARD at provincial level. The
mitigating action that can be taken is to assign the budget for sanitation and hygiene
promotion in the Provinces to the DOH, a decision at least some of the provinces
seem to have taken. It is possible to encourage the Provinces that have not done so
already by including the recommendation in the NTPII guidelines to be prepared
before programme start up, and it could be included in the MoUs to be signed with the
pilot provinces. It is further important to ensure that water and sanitation expenditure
is registered separately in the accounts so that the expenditure can be examined ex
post and to ensure that the recurrent budget is adequate. Proper monitoring and
introduction of hygiene behaviour indicators into provincial targets will also help. The
assumption can be monitored on the surface by the expenditure on hygiene promotion
but will need to be investigated in depth by studying actual change in practice.
Monitoring reduced disease incidence is normally regarded as too problematic as
there are numerous other factors that affect common water related diseases.

9.2.2 Changes in the pilot provinces stimulate changes during national roll-out

It is assumed that the evidence for introducing changes in the pilot provinces is
sufficiently compelling in terms of visibly better results, for national and provincial
agencies to adopt the changes in the time span allowed for.

This assumption is critical to achievement of the objectives because the reviews done
of NTPI show that significant improvements are necessary in normal practice if the
poor are to be reached and the sector is to function efficiently and sustainably. The
risk factors are that: the evidence that changes are necessary and more effective than
past practice are not convincing to decision makers whose main concern will be
attainment of physical targets. There may also be persons with vested interests who
stand to lose by the introduction of changes. The time scale for observing the


                                            65
evidence first hand, determining the best course of action and then implementing what
might be unpopular measures is very short. There is a risk that the TA at provincial
level will lead to the entire pilot being perceived as a project and that the changes
made do not spread outside what is considered as donor supported areas. The
authority of the standing office at national level is important if the problems of the
first phase are to be avoided (CERWASS did not have sufficient authority to directly
deal at departmental level with other ministries). The mitigating action that can be
taken is to ensure that the proposed changes are well based in solid evidence and are
presented and communicated well at the highest level; and the forum for donor and
government interaction is well conceived and capable of ensuring a frank and
transparent dialogue. The assumption can be monitored through reviews of the impact
of the pilot efforts.

9.2.3 Replications during national roll-out

It is assumed that improved approaches and capacity developed during the pilot phase
can be replicated in provinces to ensure that the improvements in water, sanitation and
hygiene promotion are sustained.

This assumption is critical to achievement of the objectives because the justification
for supporting through the NTPII as opposed to projects is that external funding will
have a broad influence in mainstreaming pro-poor financing of the entire sector. The
risk factors are that: the time scale between demonstrating solutions to the observed
problems and those identified in the recent sector reviews and replicating to all
provinces is too short; provincial variation will be such that it is very difficult to apply
generic solutions; the capacity building task will become overwhelming in relation to
the urgency for physical results; inefficient practices are locked into place and
protected by vested interests; the proposed changes arising from the pilot provinces
are not internalised in the government systems and, the political drive to increase
coverage reduces the attention paid to sustainability. The mitigating action that can be
taken is careful planning of the rollout process based on better awareness of
constraints identified in the pilot phase; ensuring influence at national levels and
allowing flexibility in the financing of external assistance to the process. The
assumption can be monitored by the improved M&E system that will be established
which will include indicators on functionality, water and sanitation coverage of the
poor as well as the adoption of more hygienic behaviour.

9.2.4 The funding for NTPII

It is assumed that considerable national funding for NTPII is made available from the
GoV and the Provinces, and that the end-users also are willing to make considerable
contributions.

There are some doubts regarding the amount of funds that will actually be available,
as the draft NTPII has been elaborated by backwards calculation of the investments
needed to achieve the NRWSS strategy goals, possibly leading to too optimistic
assumptions regarding funding. There are indications that the funding assumed in the
NTPII draft document to be made available by the central government is too high.
This has already been reflected in the present document, however, as a more
conservative estimate has been used, making a projection based on the present NTP
expenditure.


                                              66
9.2.5 Responsibilities for IWRM

It is assumed that decision is taken regarding the lead and supporting agencies for
IWRM, particularly for RBMOs.

This assumption is critical to the possible future support for IWRM, as the detailed
formulation of the IWRM components cannot proceed before this decision has been
taken.


10     IMPLEMENTATION PLAN

An outline implementation plan is shown in figure 10.1. The implementation plan
shows 3 main periods:

Pre Pilot preparation                 February – November 2006
Pilot phase                           December 2006- December 2008
National rollout phase                January 2009- December 2011

The NTPII itself will run from January 2006- December 2010. The last year of TPBS
support will fall out of the current RWSS NTPII period (2006-2010). This last year is
thus conditional on the RWSS NTP II being extended or carried into a next phase or
alternative arrangements made and agreed between GOV and TPBS donors for
implementing RWSS that are compatible with the RWSS NTPII.

Among the pre-pilot activities there is support to the provinces to prepare for the start-
up of the NTPII. Each province was in the first half of 2006 visited three times by a
team of national and international consultants. Among the activities carried out was
information and awareness raising regarding the NRWSSS and the central role of a
demand driven approach in this strategy. The provinces were further supported in the
preparation of a draft action plan for the development of RWSS. A short one-page
summary of the action plans for each province is included as Annex N.

It is planned to carry out a similar awareness raising campaign covering the rest of the
provinces in the second year of the programme to prepare for the national rollout of
the TPBS.




                                             67
 Figure 10.1 Implementation plan


                                         Tentative implementation plan                                                      2006                 2007                 2008         2009   2010   2011
Phase               Activity area                                                                                  Jan    Apr July Oct   Jan   Apr July Oct   Jan   Apr July Oct
                    Confirmation of proposed pilot provinces willingness to participate
                    Preparatory briefings/awareness raising on NTP II in pilot provinces
                    Negotiation of a tri-party agreement involving national authorities, participating provinces
                    and donors; issuance of ministerial circular
                    Selection and recruitment of international advisers and consultants (Job
                    Description/TOR)*
                    selection, recruitment and training of national advisers and consultants (Job
    Pre-Pilot       Description/TOR)*
                    Technical assistance provided to MPI in their planned review of performance and
                    guidelines and procedures governing the implementation of all NTPs (TOR)*
                    Technical assistance provided to MPI for developing procurement norms for the water
                    and sanitation sector based on new procurement law.
                    Undertake review of subsidy and credit policies (see NTPII document)
                    Further development of M&E (TOR)*
                    Improved financial management of NTP II in pilot provinces in the areas of audit and
                    inspections, procurement and financial reporting
                    Improved planning and budgeting of NTP II in pilot provinces allocating adequate
                    funding for DOH, DOET and for IEC and sanitation
                    Improved practices in the DARD, DOH and DOET in pilot provinces related to cost
                    norms, subsidy practices, facility sustainability, technical auditing, integrated planning
        pilot       and monitoring.
                    x number of rural people having access to clean water in the pilot provinces
                    y number of households having hygienic latrines in the pilot provinces
                    z number of households having hygienic livestock pens in the pilot provinces
                    v no of schools and institutions having clean water and hygienic latrines in the pilot
                    provinces
                    w no of people having improved hygiene practices in the pilot provinces
                    Improved financial management of NTP II in pilot provinces in the areas of audit and
                    inspections, procurement and financial reporting
                    Improved planning and budgeting of NTP II in pilot provinces allocating adequate
                    funding for DOH, DOET and for IEC and sanitation
                    Improved practices in the DARD, DOH and DOET in pilot provinces related to cost
                    norms, subsidy practices, facility sustainability, technical auditing, integrated planning
 National rollout   and monitoring.
                    x number of rural people having access to clean water in the pilot provinces
                    y number of households having hygienic latrines in the pilot provinces
                    z number of households having hygienic livestock pens in the pilot provinces
                    v no of schools and institutions having clean water and hygienic latrines in the pilot
                    provinces
                    w no of people having improved hygiene practices in the pilot provinces
                    Supervision - reviews
                    Partnership meetings
  Programme         NTP steering committee meetings
  management        Approval of annual budgets and plans for NTP II
                    National rollout assessment review
                    Annual consultations (once per year, for each Danida and AusAid) - not shown

                    National Target Progreamme II




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