Technical Assistance Report Project Number: VIE: 40080 December 2006 Socialist Republic of Viet Nam: Preparing the Hanoi Metro Rail System Project The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature. CURRENCY EQUIVALENTS (as of 31 October 2006) Currency Unit – dong (D) D1.00 = $0.00006222 $1.00 = D16,070.0000 Currency Unit - Euro (€) €1.00 = $1.2773 $1.00 = €0.7829 ABBREVIATIONS ADB – Asian Development Bank AFD – Agence Française de Développement HAIDEP – Hanoi Integrated Development and Environment Program HATD – Hanoi Authority for Tram and Public Transport Development Management JBIC – Japan Bank for International Cooperation JICA – Japan International Cooperation Agency LRT – light rapid transit MRT – mass rapid transit ODA – overseas development assistance PPTA – project preparatory technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Targeting Classification – General intervention Sector – Transport and communications Subsector – Multimodal transport and sector development Themes – Private sector development, sustainable economic growth, capacity development Subthemes – Fostering physical infrastructure development, developing urban areas NOTES (i) The fiscal year (FY) of the Government and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars. Vice President C. Lawrence Greenwood, Jr., Operations Group 2 Director General R. Nag, Southeast Asia Department (SERD) Director J. Cooney, Infrastructure Division, SERD Team leader H. Jenny, Senior Urban Development Specialist, SERD Team members G. Atay, Principal Counsel, Office of the General Counsel C. Bellinger, Senior Guarantee and Syndication Specialist, Office of Cofinancing Operations H. Brooke, Senior Counsel, Office of the General Counsel E. Cudilla, Senior Project Assistant, SERD J. Everett, Young Professional, SERD Y.L. Feng, Principal Environment Specialist, SERD M. Huddleston, Senior Social Development/Resettlement Specialist, SERD J. Leather, Transport Specialist, Regional and Sustainable Development Department (RSDD) A. Mehta, Financial Management Specialist, RSDD A. Samoza, Associate Project Analyst, SERD M. Sultana, Social Development Specialist, SERD Le Dinh Thang, Project Implementation Officer, Viet Nam Resident Mission I. INTRODUCTION 1. The Government of Viet Nam (the Government) sees public transport and inter-modal transport as key elements of its urban transport strategy that will help restrain the use of private vehicles and improve urban livability and the urban environment. 2. During the 2006 Country Programming Mission, the Government requested the Asian Development Bank (ADB) for a project preparatory technical assistance (PPTA) to identify project financing arrangements to complement ongoing and anticipated financing provided under French bilateral assistance for the Hanoi Metro Rail System Project. 1 The PPTA is included in the 2007–2010 country partnership strategy for Viet Nam. 3. ADB pre-fact-finding missions 2 visited Hanoi in May and July 2006. The missions reviewed the feasibility study for the Hanoi light rapid transit (LRT) pilot line prepared under French Government assistance and confirmed the rationale for a LRT system in Hanoi. A mission was fielded in August 2006 to undertake fact-finding for the PPTA. Preliminary environmental and social and resettlement reviews were undertaken, resulting in an initial classification as category A for resettlement, A/B for environment, and C for indigenous people. The latter mission held discussions with various government agencies,3 the French Economic Mission, Agence Française de Développement (AFD), World Bank, and the Hanoi Integrated Development and Environment Program (HAIDEP). A memorandum of understanding between the Hanoi Authority for Tram and Public Transport Development Management (HATD) of the Hanoi’s Peoples Committee and ADB was signed on 21 September 2006. This reflected the latest findings of the mission and the understandings reached with the Government on the objectives, impact, outcome, output,4 scope, cost, implementation arrangements, and terms of reference for the PPTA. II. ISSUES 4. The Project for the Development of Transport in the Capital Hanoi by 2020, approved by the Prime Minister in 1998, states the Government’s intention to raise the share of public transport in all transport to 30% by 2010 (of which 5–10% is to be urban rail) and 50% by 2020. It has set the goal of implementing a first urban transit rail line by 2010. HATD is responsible for planning and implementing the system. 5. A feasibility study 5 for a Hanoi LRT pilot line, prepared under French financing, was completed in October 2005. A consultant financed under an overseas development assistance loan from the French Government will start detailed design of the pilot line in the first quarter 2007. The line extends 12.5 kilometers (km) from Hanoi Station in the city center to Nhon Depot west of the city. About 3 km in the city center will be underground, and the remaining 9.5 km will be elevated. The number of stations is anticipated to be 15. The feasibility study conducted alternatives analyses and demonstrated the rationale for such an LRT in Hanoi. Additionally, the ongoing comprehensive urban development program, HAIDEP, which includes a section on urban transport financed by the Government of Japan through the Japan International 1 The PPTA first appeared in ADB Business Opportunities on 12 May 2006. 2 Comprising Hubert Jenny, senior project engineer and mission leader; Jeanne Everett, young professional; and Le Ding Thang, program implementation officer. 3 Including the Hanoi Authority for Tram and Public Transport Development Management, Ministry of Planning and Investment, and State Bank of Viet Nam. 4 A project design and monitoring framework is provided in Appendix 1. 5 Two feasibility studies of about 6 months each were conducted in 2004 and 2005. 2 Cooperation Agency (JICA), is due for completion at the end of 2006. The World Bank is preparing the Hanoi Urban Transport Project which would primarily focus on the development of a bus rapid transit system for the city. This initiative follows a 2004 study financed by the Public- Private Infrastructure Advisory Facility, which examined institutional issues and opportunities for private sector participation in the bus sector and supported the successful allocation of operating franchises to two new bus operators in 2004. The European Union funded in large part the Asia Trans project which took place between 2002 and 2005 aimed at improving the public transport in Hanoi and the existing bus transit network in particular, through the development of three pilot bus lines. 6. Increased Mobility and Demand for Urban Transport. Viet Nam is among the world's fastest-growing economies, registering 7.5% growth in 2004 and 8.1% in 2005. It has caught the eye of investors with its strong economic performance, political stability, and ambitious and industrious workforce. Investments and exports are driving growth in Viet Nam, leading to higher incomes and rapidly improving living standards. Its capital city, Hanoi, has recorded an average economic growth of 11% per annum in recent years, and this growth is expected to remain in the range of 11–12% until 2020. Per capita gross domestic product (GDP) in Hanoi is expected to continue growing well above 5% per annum up to 2025. Hanoi is a metropolis of 3 million whose growth is spurred by rural-to-urban migration, the opening of its economy, and a growing real estate sector, and whose population is forecast to reach 3.2–4 million by 2010, perhaps doubling by 2020. 6 The Hanoi Peoples Committee has to balance the pressure of growing demand for mobility with a desire to preserve the historic city center with its many monuments and lakes. Reflecting this, the city has developed a plan to expand to new urban developments on the outskirts of the city, all of which will require transport links to the city center, and within and among themselves. 7. Rising Private Vehicle Ownership in a Congested Road Network. Recent traffic surveys 7 show that motorcycles account for 83% of vehicles in the city and bicycles, used mainly by the poor, account for 12%. Cars account for 4.5% and buses for less than 1%.8 Car ownership has been low historically, relative to comparable economies in the region, but will rise.9 Expected growth in household income will make a car affordable to many more families, particularly as prices have fallen recently following the Government’s decision to again allow the importation of used vehicles. If current trends are not met by better transport infrastructure and public transport systems, Hanoi faces worsened congestion, road safety deterioration, and increasing air pollution in the coming years, which will be exacerbated in the narrow streets of the city center. Existing examples of congestion and air pollution in such large Asian cities as Bangkok, Beijing, Jakarta, and Manila compounds the pressure on the Government to adopt preventive measures and prioritize investments in urban transport infrastructure. 8. Hanoi Needs an Ambitious Urban Transport Investment Plan. To achieve its goals, the Hanoi People’s Committee envisages (i) expanding a high-capacity road network with three ring roads, (ii) constructing new bridges across the Red River which divides the city, (iii) developing an urban rail network of eight lines, and (iv) implementing complementary urban and inter-urban bus networks allowing for inter-modal transfers with the rail system. The overall urban transport network is being examined under the JICA-funded HAIDEP study. According to 6 Population figures from the Hanoi Statistics Office. 7 Conducted by Intitut des Metiers de la Ville, Hanoi, in April 2004 and available at www.hanoibus.com/transp_0EN.htm. 8 Share distribution in passenger terms are 74% for motorbikes, 8% for bicycles, 4% for cars, and 14% for buses. 9 By mid-2005, only one in 145 people had a car, compared with one in 4–5 in Malaysia, 9–10 in Thailand, and 30– 32 in the Philippines (Source: People's Daily, 20 March 2006). 3 the preliminary feasibility study for the Hanoi LRT pilot line, its estimated total investment of $600 million will be financed in part (about 60%) through a concessional bilateral loan from the Government of France combining tied financing of about $250 million for the rolling stock and equipment and untied financing from AFD of about $100 million 10 for part of the line’s infrastructure. The balance of about $250 million (about 40%) will be the responsibility of the Hanoi Peoples Committee. The PPTA will provide a mechanism to define how innovative financing schemes can be applied to public, and possibly public-private, investments in the mass transport sector in Viet Nam. In the case of the LRT pilot line, it will help the Hanoi Peoples Committee define options for financing its share of the project cost. III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 9. The PPTA will advise the Hanoi People’s Committee on options available for financing its share of the cost of the LRT pilot line which, combined with the already-committed financing from France, will contribute to a safe, clean, and efficient urban transport system. It will reduce reliance on private modes of travel, contributing to urban livability and accommodating sustainable growth. A design and monitoring framework is in Appendix 1 and an initial poverty and social assessment is in Appendix 2. B. Methodology and Key Activities 10. The objective of the PPTA is to assist the Hanoi Peoples Committee with developing a project that is suitable for financing and has a viable financing plan, covering both the committed bilateral financing and the additional financing required to complete the LRT pilot line’s physical infrastructure. The PPTA, for which terms of references are provided in Appendix 3, will be implemented in two parts over a 5-month period: (i) Part 1: assisting the Hanoi Peoples Committee with developing an approach for financing its share of the cost of the LRT pilot line, about $250 million, using various financing schemes including but not limited to ADB-financed products and instruments for credit enhancements, multi-tranche financing, and local currency financing on a sovereign, sub-sovereign, or non-sovereign basis,11 and a benchmarking exercise with alternative products available in the market, and (ii) Part 2: due diligence on technical, financial, institutional, and safeguard compliance, the latter with respect to ADB’s policies and procedures for the environment, resettlement, and social development. C. Cost and Financing 11. The cost of the PPTA is estimated at $490,000 equivalent, of which the foreign exchange cost is $300,000 and the local currency cost is $190,000 equivalent. ADB will finance $400,000, comprising the entire foreign exchange cost and a portion of the local currency cost amounting to $100,000 equivalent. The PPTA will be financed as a grant from ADB’s technical assistance funding program. The detailed cost estimates and financing plan are in Appendix 4. 10 The official figures are denominated in euros: €200 million of tied financing and €80 million from AFD. 11 The products proposed will take account of recent developments in the context of ADB’s Innovation and Efficiency Initiative. 4 12. The Hanoi Peoples Committee will finance the remaining $90,000 equivalent of local currency costs though in-kind contributions of office space for up to five consultants and connections to international telephone and Internet lines (with usage paid through the PPTA consultants’ contract); counterpart staff about 30 person-months to support the international consultants and allow the transfer of practical experience and knowledge; vehicles for site visits; topographic survey data to confirm resettlement impacts; and any other information that may be identified as essential during PPTA implementation. The Government has been informed that approval of the PPTA does not commit ADB to finance any ensuing project. D. Implementation Arrangements 13. HATD will be the Executing Agency for the PPTA with overall responsibility for the Hanoi Peoples Committee’s contribution. HATD will provide counterpart personnel to work with the PPTA consultants as well as with other government agencies and stakeholders, and will also provide documents, reports, etc, relevant to the project prepared by other consultants and agencies. 14. The PPTA will have duration of 5 months, expected to commence on 1 March 2007 and end on 31 July 2007. It will require an estimated 30 person-months of consulting services, 14 of international consultants and 16 of national consultants. All consultants will be engaged by ADB in accordance with Guidelines on the Use of Consultants (April 2006, as amended from time to time). 15. Part 1 will be implemented by a team of three international consultants (7 person- months) and two national consultants (4 person-months), who will be engaged as individuals: one specialist in capital market development for 3 person-months, one specialist in guarantees and insurance for 2 person-months, and one legal adviser for 1 person-month, supported by a national legal counsel for 2 person-months and a project adviser for 2 person-months. One of the three individual international consultants selected for Part 1 will be designated as team leader for Part 1 and will be allocated an additional person-month to consolidate the reports from the other two consultants for submission to the Hanoi Peoples Committee and to ADB. The team leader will submit an inception report and detailed work plan for Part 1 within 1 month of the commencement of the PPTA, a midterm report at the end of the third month, and a draft final report in the fifth month. 16. Part 2 of the PPTA will be carried out by individual consultants (about 7 person-months of international and 12 national) for conducting due diligence of the project feasibility study and safeguard compliance. The consultants will be specialized in (i) environmental assessment (1.5 person-months international and 3 national); (ii) social development and resettlement (3 person- months international and 9 national); (iii) urban transport planning and rail civil engineering and investment planning and operations (1.5 person-months, international); and (iv) institutional, financial, and economic analysis (1.5 person-months, international). Each consultant for Part 2 will be responsible for his/her individual output, and will be coordinated by ADB’s task manager for the project. IV. THE PRESIDENT'S DECISION 17. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance not exceeding the equivalent of $400,000 on a grant basis to the Government of Viet Nam for Preparing the Hanoi Metro Rail System Project and hereby reports this action to the Board. Appendix 1 5 DESIGN AND MONITORING FRAMEWORK Design Performance Data Assumptions Summary Targets/Indicators Sources/Reporting and Risks Mechanisms Impact Assumptions Safe, clean, and Reduced travel time in project Government and • Ongoing government and efficient urban corridor transport sector private sector commitment transport system in statistics and resources to operate Hanoi, including Reduced traffic congestion, and maintain the system light rapid transit accidents, and environmental Traffic surveys, • User adoption is in line (LTR), pollution accident and hospital with forecasts. accommodates records, and • Detailed design, sustainable growth Increased share of travel by environmental records construction, and and improves public transport modes operation occur as urban livability Public opinion and planned and in line with Service perceived by consumers customer surveys ADB due diligence to be affordable, high quality, and recommendations. largely free of fraud Official reports and feedback from Hanoi Risks Achieved ridership meets or People’s Committee • Complementary and inter- exceeds level expected under and Ministry of modal urban transport conservative scenarios Transport services to be integrated with the line are not Asian Development implemented efficiently or Bank (ADB) country effectively or compete with monitoring of baseline the service. Indicators • Public transport service operations and financial Operator records structure are not sustainable in the long term. Outcome Enduring institutional and Consultant’s working Assumptions Government of Viet implementation arrangements for papers and reports • Overseas development Nam able to mass transit development and assistance financing manage operation Project preparatory arrangements and competitive and technical assistance supporting conditions for Optimal and affordable sustainable (PPTA) completion the line are appropriate, counterpart financial financing and report economic, competitive, arrangements for LRT pilot line, in institutional secure, and timely the short and long term, relative arrangements for to comparable projects in the Official reports and • Cooperation and urban LRT project feedback from Hanoi commitment of concerned region in Hanoi in People’s Committee government agencies and agreement with key Risks are allocated to parties and Ministry of participating sponsors, partners and ADB most able to manage them, priced Transport financiers, and guarantors fairly, and met with effective to coordinate and mitigation strategies Industry and financial implement sector data including recommendations Project design satisfies scrutiny of that from similar ADB due diligence projects Long-term financial and passenger records of LRT operations 6 Appendix 1 Design Performance Data Assumptions Summary Targets/Indicators Sources/Reporting and Risks Mechanisms Outputs By month 3: Assumptions 1. Optimized and Consultant working • Government commitment Matrix of financing alternatives finalized 40% papers, key outputs, to the project and prepared that articulates available counterpart funding and reports willingness to take on a financing options and identifies a of the project share of the risk and preferred option. reflects fair risk, Output and minutes of provide a degree of return, and By month 5: PPTA dissemination comfort regarding political responsibility and workshop risk, etc., to financial serves as a model Project risk management strategy partners. and institutional and financial for innovative Financial • Cohesion and good financing of arrangements prepared documentation cooperation among municipality An outline of financial contracts prepared for the relevant government investment in and documentation required for project agencies and ministries infrastructure. the project is drafted and • Project attracts significant undergoes initial reviews. Industry and financial interest from potential 2. All standard sector data including financiers Elements of draft ADB Board documentation document for ensuing investment that from similar • Absence of conflicting or required as part of projects contradictory assistance ADB due diligence loan or other financial product by ADB (if ADB product is relevant) from stakeholders prepared and independent of PPTA compliance and Letters of interest with terms and feasibility of the conditions from financial sources Risks proposed line for counterpart funding • Government confirmed, with any understanding is lacking necessary Standard ADB due diligence, financial and economic analysis, on the needs of major supporting infrastructure project recommendations and safeguard documentation submitted development and implementation. Application for Clean • Ability to forge consensus Development Mechanism funding among vested interests of submitted numerous stakeholders lacking Appendix 1 7 Activities with Milestones Inputs 1. Optimize the project financing plan for the local counterpart funding. • ADB to provide 14 1.1. Present and examine various forms of financing options for the counterpart persons-months of funding portion of the project. international consultancy 1.2. Analyze credit enhancement and guarantee solutions for each option. and 16 person-months of 1.3. Examine laws and regulations to accommodate financing scenarios. national consultancy 1.4. Organize dissemination and capacity building workshop, plan and initiate • Government in-kind implementation of financing, and draft board documents of any ensuing ADB contributions to include financial product, if relevant. office space, local transportation, and 2. Perform due diligence and prepare necessary documentation for relevant counterpart staff. aspects of the project. • PPTA budget of $490,000, 2.1. Review environmental information available for the project, prepare any consisting of $400,000 complementary documentation (including an initial environmental evaluation financed by ADB and an and an environmental management plan) needed to meet ADB in-kind contribution of requirements, and prepare a project idea note on urban transport in Hanoi $90,000 from the for the Clean Development Mechanism. Government 2.2. Prepare a full resettlement plan and poverty and social impact assessment. Milestones 2.3. Review and comment on traffic and demand forecast, capital cost estimates, • Month 1 Part 1 Inception and design and engineering plans. Report 2.4. Comment on the institutional framework and implementation arrangements • Month 3 Part 1 Interim and carry out economic and financial analyses. Report • Month 5 Part 1 Draft Final Report, and Part 2 individual due diligence reports 8 Appendix 2 INITIAL POVERTY AND SOCIAL ANALYSIS A. Linkages to the Country Poverty Analysis Is the sector identified as a national Yes Is the sector identified as a national Yes priority in country poverty analysis? priority in country poverty partnership No agreement? No Contribution of the sector or subsector to reducing poverty in Viet Nam: The Country Strategy Program 2006–2009 stresses the importance of maintaining sustainable, equitable economic growth to achieve further reductions in poverty. Viet Nam’s success in bringing down the poverty rate from 70% in 1990 to 27% in 2005 is based on the rapid and equitable economic growth recorded during this period. The Government’s strategy for Hanoi is to actively develop public transport and road infrastructure to alleviate congestion and open up new areas for urbanization. Linkage between public transport and new urban areas will provide better access to services and employment opportunities. The proposed project is expected to support the development of a pilot light rapid transit (LRT) line in Hanoi to provide convenient, comfortable, safe, affordable, and clean urban travel. Introducing LRT lines will provide cheaper transportation than by motorbike and car. The new metropolitan railway will bring time savings to people now using motorcycles, cars, buses, etc. The saved travel time will be available for more productive activities. An urban public transport system will help address growing pressures on roads and the environment that result from rapid growth in high-density areas such as Hanoi that would otherwise damage the project area’s quality of life, working environment, and ability to attract investment. Investment and better access to services will reduce poverty. The Government’s poverty reduction strategy will be reviewed to identify the role and impact of large-scale infrastructure projects such as the proposed project in overall poverty reduction in Viet Nam. B. Poverty Analysis Targeting Classification: General Intervention What type of poverty analysis is needed? Following the Enhanced Poverty Reduction Strategy (December 2004) of the Asian Development Bank (ADB), projects classified as general intervention no longer require project-wide poverty assessments. However, social assessments will be prepared for resettlement, HIV/AIDS, and the personal safety and security of passengers and staff as they represent risks in implementing the project. The resettlement plan will have mitigation measures to address impoverishment from displacement and land acquisition. The terms of reference for social development and resettlement specialists are included in the consulting services. C. Participation Process Is there a stakeholder analysis? Yes No Project preparatory technical assistance (PPTA) consultants will conduct the stakeholder analysis as part of due diligence. Is there a participation strategy? Yes No PPTA consultants will prepare a participation strategy for the duration of the PPTA, as well as a participation strategy for project implementation, as part of due diligence. D. Gender Development Strategy to maximize impacts on women: The consultants will conduct a brief gender assessment of the households affected by resettlement. In addition, an assessment will be done on the impact of rapid transit lines on male and female user groups for private and public transportation in terms of safety, time savings, and transport costs, etc. Required services and facilities in stations for men and women will be also identified. A gender plan for addressing gender concerns in the project related to resettlement, HIV/AIDS, safety measures, facilities in stations, and capacity building in the Executing Agency and relevant stakeholders will be prepared for the proposed project. Has an output been prepared? Yes No Appendix 2 9 E. Social Safeguards and Other Social Risks Item Significant/ Plan Required Not Significant/ Strategy to Address Issues None Significant Relocation will be required in the core urban center to Full Resettlement allow access to metro stations. A resettlement plan will be Not significant prepared during PPTA in compliance with ADB’s Short Involuntary Resettlement Policy (1995). It will address None resettlement impacts during construction and operations, None including but not limited to the LRT pilot line, stations, and depot. Significant The LRT operations plan will include a public service Yes Affordability obligation approach. Not significant No None Significant People affected by the project will be given opportunities Yes Labor for project-related construction work. Standard clauses Not significant with respect to international labor standards and national No labor legislation will be included in the Loan Agreement. None Significant Yes Indigenous Peoples Not significant No None Significant To be determined Yes Other Risks and/or Not significant No Vulnerabilities None 10 Appendix 3 TERMS OF REFERENCE1 A. Objective 1. The project preparatory technical assistance (PPTA) will help the Hanoi Authority for Tram and Public Transport Development Management (HATD) to optimize the plan for counterpart funding to finance the implementation of the Hanoi light rapid transit (LRT) pilot line. Due diligence will also be undertaken as part of this work. B. Detailed Tasks 2. The PPTA will have a duration of about 5 months, commencing in March 2007 and requiring an estimated 14 person-months of international consultancy supported by 16 person- months of national consultancy. The objective of the PPTA is to optimize Viet Nam counterpart financing (estimated to about $220 million) through bonds issues, local currency financing, and loans supported by various Asian Development Bank (ADB) financing instruments and credit- enhancement products for the Hanoi Metro Project. The project is cofinanced by bilateral overseas development assistance loans of €280 million, €200 million of which is tied and €80 million untied. A feasibility study has been completed, and a bilateral consultant financed under the bilateral loans will start the detailed design in first quarter 2007. The PPTA will be articulated in two parts: (i) optimizing the counterpart financing plan using various financing schemes including but not limited to various ADB financing products and instruments for credit enhancements, multi-tranche financing, and local currency financing on sovereign, sub-sovereign or non-sovereign basis, and a benchmarking exercise with alternative products available in the market, and (ii) due diligence on technical, financial, institutional, and safeguard compliance with ADB procedures regarding the environment, resettlement, and social development. 1. Part 1: Alternative Financing for Local Counterpart Funding 3. Part 1 will be implemented by a team of three international consultants (7 person- months) and two national consultants (4 person-months), who will be engaged as individual consultants: One specialist in capital market development (3 person-months), one specialist in guarantees and insurance (2 person-months), and one legal adviser (1 person-month), supported by a national legal counsel (2 person-months) and a project adviser (2 person- months) to disseminate the results and outcomes of the PPTA to stakeholders. One of the three international consultants selected for Part 1 will be designated as team leader of Part 1 and will be allocated an additional person-month to consolidate the report from the other two consultants for submission to the Hanoi People's Committee and ADB. The consultant will have expertise in project finance and structured trade finance; a proven track record in financing infrastructure projects in the region, specifically in the transportation sector (with Viet Nam experience preferred); and demonstrated knowledge of ADB financing instruments and credit-enhancement products including but not limited to local currency financing, guarantees to support lending, and bond issues in local or foreign currency. Experience in dealing with export credit agencies, multilateral development banks, investment banks, public-private guarantee instruments, local currency funding, public finance, and capital markets will be key selection factors. 1 More detailed individual terms of reference generated through the ADB individual consultant recruitment system will be provided when individual consultants are contracted. Appendix 3 11 (i) Project finance (capital market). The consultant will look at the options to raise counterpart financing, in particular through the capital market, and define strategies for capital market enhancements, including using ADB financing instruments. He or she will examine issues associated with local currency financing versus foreign exchange financing, including commercial and concessional lending and bonds in local or foreign currencies with and without central or local government guarantees. The consultant will liaise with the other consultants to review the use of various financial products in the current legal framework. The output will be a matrix presenting the different financing schemes that provide for limited recourse financing in respect of the maximum amount of the capital cost of the project, with terms and conditions and comments from the consultant. (ii) Project finance (guarantee). The consultant will look at the different financial and credit-enhancement products available on the market for Viet Nam including but not limited to ADB financing instruments and guarantees with and without central or local government guarantees and counter-indemnity, supplier financing, export credit agency financing and guarantees, and private sector guarantees (commercial and political risk insurance). He or she will liaise with the other consultants to optimize the counterpart financing plan in the current legal framework. The output will be a matrix showing the implications of the several financing schemes evaluated as suitable for Viet Nam, with comments from the consultant. (iii) Legal advisor. The consultant will define for the other consultants the legal framework for project financing in Viet Nam. The consultant will liaise with Part 2 consultants to look into the institutional framework and will recommend ways to optimize the legal structure of the operating entity. He or she will review with each of the consultants their proposed financing options and comment on and confirm their possible implementation in the current legal context of Viet Nam. The consultant will be supported by a national consultant. The output will be a report comprising comments on the matrices for project financing proposed by the other consultants and a matrix with comments on a possible structure for the operating entity. (iv) Team leader. The team leader, who will be one of the three international consultants on the team, will consolidate the output of the whole team for Part 1 of the PPTA and finalize one matrix to be presented to the Hanoi Authority for Tram and Public Transport Development Management (HATD, the Executing Agency), ADB project officers, and other stakeholders. To support the study, the team leader, assisted by the project team, will outline financial structures that have been recently used in similar projects, subject to confidentiality concerns. He or she will outline as case studies the financing schemes used for the Channel Tunnel, Kuala Lumpur Mass Rapid Transit, Bangkok Transit System Corporation, Bangkok Mass Rapid Transit Authority, Manila Mass Rail Transit, and the High Speed Rail System in Taipei. This will serve as background to the Hanoi People’s Committee and help it evaluate the likely advantages and disadvantages of the proposed options. The consultant should also identify the extent to which its proposed financing will rely on conditions in the concession contract that is awarded to the developer and evaluate leasing arrangements as a means of raising funds. The team leader, assisted by the project team, will 12 Appendix 3 assess the Government’s and financial sector’s capacity to implement the proposed financing schemes and propose and initiate capacity-building interventions. He or she will draft a training program to build capacity in the local government to implement financial arrangements and will organize a dissemination workshop in Hanoi with relevant stakeholders with support from the national project advisor. During the workshop, the various stakeholders and counterparts will discuss the presented options and select one or several preferred options that may or may not involve ADB financial products. The team leader will manage a provisional lump sum of $5,000 to organize the dissemination workshop. Afterwards, the consultant will finalize a time-bound action plan to implement the selected option for counterpart financing and, if an ADB financial product is seen most suitable, prepare a draft Board document including a design and monitoring framework for the ensuing project. 4. The proposed financing options are expected to apply specifically to the Hanoi Metro Rail System project but also be generally adaptable to structure financing of larger infrastructure projects by the Government of Viet Nam. This effort will be in the context of ADB's recent undertaking for more liberalized credit-enhancement products. ADB will play the role of facilitator for these agreements and, by providing its endorsement, provide the necessary quality guaranty to attract the interested of appropriate financial partners. 2. Part 2: Due Diligence 5. Part 2 will be awarded to individual consultants (about 7 person-months of international consultancy and 12 of national) for conducting due diligence on the project feasibility study and safeguard compliance. The consultants will be specialized in (i) environmental assessment (1.5 person-months international and 3 national); (ii) social development and resettlement (3 person-months international and 9 national), (iii) urban transport planning and rail civil engineering and investment planning and operations (1.5 person-months international); and (iv) institutional, financial, and economic analysis (1.5 person-months international). Individual consultants will review the preparatory work done for the project and perform the necessary due diligence to ensure that the project is being prepared to standards that meet ADB’s compliance requirements. Each consultant for Part 2 will be responsible for his/her individual output, and will be coordinated by ADB’s task manager for the project. Specifically, the consultant’s will be required to review the following aspects of the project in cooperation with the consultants conducting the detailed design and HATD: (i) Environment. The project has been classified category A. The consultant will review environmental assessment documents that are readily available, including work undertaken for the project feasibility study and the detailed design study and requirements under Viet Nam regulations. Based on this information, the consultant will confirm the categorization or recommend a change of category. He or she will provide as output an initial environmental examination and a summary of it according to ADB's Environment Policy (2002) and Operations Manual F1/BP and F1/OP (2003) to confirm any significant environmental impacts. This will also be the initial step towards preparing an environment impact examination, which will be required for the project but prepared outside of the scope of this PPTA, only after ADB participation in project financing is confirmed. The consultant will specify the gaps between past and ongoing studies conducted by national and international consultants and ADB requirements. He or she will also prepare an environmental management plan, in Appendix 3 13 close coordination with the bilateral consultant and the project management office, and a draft registration to the ADB Carbon Market Initiative for urban transport in Hanoi based on the HAIDEP financed by JICA, which is to be completed in December 2006. (ii) Resettlement and social development. The project has been classified category A, which the consultant will confirm. In consultation with affected people, host communities, and other key stakeholders, the consultant will (a) write a full resettlement plan and its summary and/or framework based on the field survey done by the national consultants and the information provided by the bilateral consultant, in line with ADB standard guidelines; (b) finalize the social poverty assessment, based on information from the initial social poverty assessment and the bilateral consultant; and (c) write a summary poverty reduction and social strategy in line with ADB Board documentation guidelines. The full resettlement plan and the social poverty assessment will follow ADB latest guidelines such as ADB's policy on Involuntary Resettlement (1995), provisions in its Operations Manual (section F2/BP), Handbook for Resettlement, Handbook on Poverty and Social Analysis, Policy on Involuntary Resettlement, Gender and development (1998), and Public Communications Policy (2005). The consultant will receive a provisional lump sum of $15,000 for field surveys on inventory losses and census and a socioeconomic survey that will serve as the baseline assessment and reference for impact surveys done upon completion and after several years of operation. (iii) Urban transport planning. The consultant will review the feasibility study and the HAIDEP and liaise with the bilateral consultant, municipality of Hanoi, and co- financiers to summarize the urban transport sector review and roadmap for Hanoi, as well as to define the project rationale. He or she will confirm the technical proposal and the accuracy and appropriateness of investment cost estimates and confirm alignment with industry trends. The output will be a report no longer than 20 pages summarizing the conclusions of the due diligence and sector review. The consultant will assist the Part 1 consultant with the dissemination workshop and provide guidance to HATD and the larger project team to address planning and implementation issues. (iv) Institutional, finance, and economic analysis. The consultant will review the proposed institutional framework for urban transport in Hanoi and liaise with the Hanoi municipality, bilateral consultant, and co-financiers. He or she will finalize a financial analysis and an economic analysis based on the data from the feasibility study according to ADB’s latest Guidelines for the Economic Analysis of Projects (1997) and Guidelines for the Financial Management and Analysis of Projects (2005). The output will be a report of no more than 50 pages that will include a (a) summary of the recommendation for the institutional framework for urban transport in Hanoi, (b) financial analysis and economic analysis for the project, and (c) summary financial and economic analysis as standard appendixes to an ADB Board document. The consultant will assist the Part 1 consultant with the dissemination workshop and provide guidance to HATD and the larger project team to address institutional and implementation issues. 3. Reporting 6. Reports will be prepared in English, with summaries translated into Vietnamese to facilitate government understanding and decision making. Reports will be submitted in both 14 Appendix 3 electronic and paper form. All data and analyses will be consolidated and provided to the government in electronic form. 7. Concerning Part 1 of the PPTA, an inception report and detailed work plan will be submitted within 1 month of the commencement of the PPTA. An interim report will be prepared, initially in draft form, and submitted before the end of the third month. It should focus on the findings of the study and actions needed to implement the financing plan. Five copies of the draft interim report and ten copies of the final version shall be provided. The reports will present the consolidated outputs of the three international consultants as described in section B.1 above. The final report will be submitted in draft form in the first half of the fifth month in the same number of copies as the interim report. 8. For Part 2 of the PPTA, each consultant will have independent output as described in paragraph 5 above. In addition, the consultant will draft, using standard ADB Board document formats and guidelines, the following: (i) ADB safeguard documents (resettlement, social, and environment) and (ii) relevant summaries formatted in such a way as to be directly incorporated into drafts of the report and recommendation from the President to the Board of Directors. 9. Finally, with the assistance of the whole project team, parts 1 and 2, the team leader will organize a dissemination workshop in Hanoi with the Hanoi People's Committee, Ministry of Planning and Investment, Ministry of Finance, State Bank of Viet Nam, and other stakeholders 1 month before the completion of the PPTA, to present and discuss the study findings and implement initial capacity-building activities for the Government. C. Study Schedule 10. The PPTA will have duration of 5 months, commencing on 1 March 2007 and ending on 31 July 2007. Parts 1 and 2 of the PPTA will be implemented simultaneously. The consultants will operate in an office provided by the project management office and located at HATD, of the Hanoi People's Committee. D. Consultancy requirements 11. Individual consultants will provide an estimated 30 person-months distributed as 14 person-months of international consultancy, supported by 16 person-months of national consultancy. The study will require seven international experts with expertise in (i) capital markets, (ii) guaranties, (iii) legal issues, (iv) environmental assessment, (v) social development and resettlement, (vi) urban transport planning, and (vii) institutional financial and economic analysis. Five national consultants will be recruited with expertise in (i) legal issues, (ii) the environment, (iii) general project advisory, (iv) social development, and (v) resettlement. Part 1 will have a team leader chosen from among the three international consultants recruited for it, and he or she will be responsible for efficiently and effectively undertaking the study. Part 2 will be implemented by individual consultants coordinated directly by ADB’s task manager for the project. The consultants will be engaged by ADB in accordance with Guidelines on the Use of Consultants (2006). Appendix 4 15 COST ESTIMATES AND FINANCING PLAN ($'000) Total Item Cost A. Asian Development Bank (ADB) Financinga 1. Consultants a. Remuneration and Per Diem i. International Consultants 300.0 ii. National Consultants 40.0 b. International and Local Travel 20.0 c. Reports and Communications 0.0 2. Equipment 0.0 3. Training, Seminars, and Conferences a. Training and Dissemination Workshop 5.0 4. Surveys 15.0 5. Miscellaneous Administration and 0.0 Support Costs 6. Contingencies 20.0 Subtotal (A) 400.0 B. Government Financing 1. Office Accommodation and Transport 12.0 2. Remuneration and Per Diem 30.00 of Counterpart Staff 3. Survey 48.0 Subtotal (B) 90.0 Total 490.0 a Financed by ADB’s technical assistance funding program. Source: ADB estimates.
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