Emergency Assistance for Fighting the COVID-19 Pandemic (RRP PAK 54181-001)

Project Number: 54181-001 Loan and Grant Number: {LXXXX; GXXXX} May 2020

Islamic Republic of Pakistan: Emergency Assistance for Fighting the COVID-19 Pandemic

Project Administration Manual

http://www.adb.org/Documents/RRPs/?id=54181-001-3

ABBREVIATIONS

ADB = Asian Development Bank AGP = Auditor General of Pakistan AGPR = Accountant General Pakistan Revenue APFS = audited entity financial statements BISP = Benazir Income Support Programme BOD = board of directors COVID-19 = corona virus disease 2019 CPD = client portal for disbursement DMF = design and monitoring framework EARF = environmental assessment and review framework ERP = enterprise resource planning ESMS = environmental and social management system F&A = finance and account FIP = fund implementation partner FMA = financial management assessment GAP = gender action plan GDP = gross domestic product ICS = individual consultant selection ICT = Information communication technology M&E = Monitoring and evaluation MIS = management information system MNHSRC = Ministry of National Health Services, Regulation & Coordination MTR = mid-term review NADRA = National Database Registration Authority NDRMF = National Disaster Risk Management Fund NGOs = nongovernment organizations NTC = National Telecommunication Company OCB = open competitive bidding PAI = project administration instructions PAM = project administration manual PFM = project financial management PMU = project management unit PPE = personal protectives equipment QCBS = quality and cost-based selection RFQ = Request for quotations RRP = report and recommendation of the President to the Board SOE = statement of expenditure SOPs = standard operating procedures SPS = Safeguard Policy Statement PPRP = Pakistan Preparedness & Response Plan COVID-19 SPRSS = summary poverty reduction and social strategy TOR = terms of reference UCT = unconditional cash transfers WASH = water, sanitation and hygiene

CONTENTS

I. PROJECT DESCRIPTION 1 A. Rationale 1 B. Impact and Outcome 2 C. Outputs 2

II. IMPLEMENTATION PLANS 4 A. Project Readiness Activities 4 B. Overall Project Implementation Plan 5

III. PROJECT MANAGEMENT ARRANGEMENTS 6 A. Project Implementation Organizations: Roles and Responsibilities 6 B. Key Persons Involved in Implementation 7 C. Project Organization Structure 8

IV. COSTS AND FINANCING 9 A. Cost Estimates Preparation and Revisions 9 B. Key Assumptions 9 C. Detailed Cost Estimates by Expenditure Category 9 D. Allocation and Withdrawal of {Loan/Grant} Proceeds 10 E. Detailed Cost Estimates by Financier 11 F. Detailed Cost Estimates by Outputs and/or Components 12 G. Detailed Cost Estimates by Year 13 H. Contract and Disbursement S-Curve 13 I. Fund Flow Diagram 9

V. FINANCIAL MANAGEMENT 15 A. Financial Management Assessment 15 B. Disbursement 24 C. Accounting 25 D. Auditing and Public Disclosure 25

VI. PROCUREMENT AND CONSULTING SERVICES 26 A. Advance Contracting and Retroactive Financing 26 B. Procurement of Goods, Works, Nonconsulting and Consulting Services 27 C. Procurement Plan 29 D. Consultant's Terms of Reference 29

VII. SAFEGUARDS 43 A. Environment 43 B. Involuntary Resettlement 44 C. Indigenous Peoples 44

VIII. GENDER AND SOCIAL DIMENSIONS 44 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND

COMMUNICATION 45 A. Project Design and Monitoring Framework 45 B. Monitoring 46 C. Evaluation 47 D. Reporting 47 E. Stakeholder Communication Strategy 47

X. ANTICORRUPTION POLICY 49 XI. ACCOUNTABILITY MECHANISM 49 XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 50

Emergency Assistance for Fighting the COVID-19 Pandemic (RRP PAK 54181-001)

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

The executing agencies, the Benazir Income Support Programme (BISP) and the National Disaster Risk Management Fund (NDRMF), are wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance by BISP and NDRMF of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

At loan negotiations, the borrower and ADB shall agree to the PAM and ensure consistency with the loan and grant agreement. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan and grant agreement, the provisions of the loan and grant agreement shall prevail.

After ADB Board approval of the project's report and recommendations of the President (RRP),

changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

http://www.adb.org/Documents/RRPs/?id=54181-001-3

Emergency Assistance for Fighting the COVID-19 Pandemic (RRP PAK 54181-001)

I. PROJECT DESCRIPTION

A. Rationale

1. COVID-19 is an infectious disease caused by the recently discovered coronavirus from the same family that caused the Severe Acute Respiratory Syndrome outbreak in 2003 and the Middle East Respiratory Syndrome outbreak in 2012. Epidemiological evidence shows that COVID-19 can be transmitted from one individual to another, likely through droplets, personal contact, and contaminated objects. The World Health Organization (WHO) declared the COVID-19 outbreak a public health emergency of international concern on 30 January 2020 and a pandemic on 11 March 2020.1 Pakistan is highly susceptible to the spread of the COVID-19 given that it borders with the Islamic Republic of Iran and the People’s Republic of China, which were among the initial countries experiencing the COVID-19 epidemic, and also because Pakistan has large numbers of returning migrant workers, an over-crowded public transportation system, an under-financed and weak heath system, and densely populated urban and peri-urban settlements. Pakistan’s incidence of COVID-19 infection is quickly rising – from the first two cases and no deaths recorded on 26 February 2020 to 29,465 cases and 639 deaths by 10 May 2020.2 2. The International Monetary Fund (IMF) projected a sharp decline in the GDP growth rate for Pakistan, from 3.3% in FY2019 to –1.5% in FY2020.3 This downward revision of about 4% by the IMF for FY2020 is due primarily to the decline in consumption, investment, trade, remittances, and capital flows as the result of the COVID-19 outbreak. To stimulate the economy and protect the most vulnerable segments of the society from the adverse impact of COVID-19, the government of Pakistan launched on 24 March 2020 the largest socioeconomic stimulus program in the country’s history. The PRs1.2 trillion (about $7.2 billion equivalent) program covers emergency response, social safety net measures, and support to business and economy. Similarly, the State Bank of Pakistan has adopted a timely set of policy actions to both manage inflation and boost economic activity, including lowering the interest rate, providing new refinancing facilities to support the flow of credit, and introducing temporary regulatory relief measures such as increased borrowing limits for individuals and deferred principal payments on loan obligations. 3. Pakistan’s response to COVID-19 is being jointly coordinated by the federal health ministry and the National Disaster Management Authority (NDMA)—with close coordination with the provincial health departments. The National Security Committee of the Government of Pakistan constituted a National Coordination Committee on 13 March 2020, chaired by the Special Assistant to the Prime Minister on Health, to formulate and implement a comprehensive strategy to stop the transmission of the virus and mitigate its consequences. This committee is comprised of all relevant Federal Ministers, Chief Ministers and Provincial Health Departments and has designated the National Disaster Management Authority (NDMA) as the leading operational agency. A National Command and Control Centre within NDMA has been established to ensure effective coordination between the federal and provincial governments. In each province, a Task Force on COVID-19 has been formed, chaired by the Chief Minister, and the Provincial Disaster Management Authorities support NDMA in its operational role for COVID-19 response.

4. The Government has prepared various strategies and roadmaps for tackling the COVID-19 spread. The National Action Plan for Corona virus disease (COVID-19) Pakistan was published

1 https://www.who.int/emergencies/diseases/novel-coronavirus-2019. 2 WHO. COVID-19 Situation Report as of 10 May 2020. Pakistan. 3 IMF. 2020. World Economic Outlook, April 2020: The Great Lockdown. Washington, DC.

http://www.adb.org/Documents/RRPs/?id=54181-001-3https://www.who.int/emergencies/diseases/novel-coronavirus-2019https://www.who.int/home/search?query=COVID-19+Situation+Report+as+of+2+May+2020&page=1&pagesize=10&sortdir=desc&sort=relevance&default=AND&f.Countries.size=100&f.Lang.filter=en&f.RegionalSites.size=100&f.Topics.size=100&f.contenttype.size=100&f.doctype.size=101&facet.field=RegionalSites&facet.field=Topics&facet.field=doctype&facet.field=Countries&facet.field=contenttype&facet.field=Lang&tune=true&tune.0=3&tune.1=2&tune.2=2&tune.3=3&tune.4=180&tune.5=75

on 13 March 2020.4 Furthermore, The government and the UN country team, with support from key development partners, have developed the Pakistan Preparedness & Response Plan COVID-19 (PPRP) to help prevent and limit the spread of COVID-19, and to reduce the related morbidity and mortality due to the pandemic in the country.5 The Plan seeks $595 million as an overall funding requirement for a period of 9 months from April to December 2020, and builds on eight pillars of the WHO-COVID-19 Strategic Preparedness and Response Plan Guidelines.6 5. The Ministry of National Health Services, Regulations and Coordination, with WHO as its technical partner, leads the coordination and policy measures for the COVID-19 response together with development partners.7 It is working closely with provincial and federal entities to implement the PPRP. A COVID-19 donor coordinating group—ADB, the European Union, UN agencies, the World Bank, and bilateral partners—has met weekly since 24 March 2020. Regular updates on all new developments and changes in the COVID-19 response plans are discussed. The UN also constituted a crisis management team under the leadership of WHO and comprising the whole UN country team to work on critical issues, including the COVID-19 pandemic. It meets regularly to ensure adequate preparedness for and response to any humanitarian crisis. 6. On 25 March 2020, the government requested ADB to provide emergency financial support to manage the COVID-19 crisis. The $300 million EAL from ADB and the World Bank’s $200 million concessional loan for Pakistan to help the government respond to the COVID-19 pandemic which was approved on 2 April 2020 was a joint, coordinated effort under the project concept note "Pakistan National Emergency Preparedness and Response Plan for COVID-19," approved by the Planning Commission of the Government of Pakistan as an initial quick response to combating the COVID-19 crisis. B. Impact and Outcome

7. The project is aligned with the following impact: coping capacity of the country to deal with the COVID-19 pandemic and other public health emergencies improved by 2024. The project will have the following outcome: adverse health and socioeconomic impacts of the COVID-19 outbreak mitigated. C. Outputs

8. Public health emergency preparedness and response strengthened. The subprojects under output 1 will be delivered through contributions to the NDRMF and by using existing arrangements and oversight mechanisms for the screening and accreditation of public and nonpublic fund implementation partners (FIPs), and subproject selection. The overarching framework to be financed by this output aligns with the PPRP (footnote 5). The activities envisaged under this output include:8 (i) providing stockpiles of PPE, medicines, and medical supplies, along with inventory control,

to public health facilities to prepare them for any unexpected surge during the initial 3–6

4 Government of Pakistan, Ministry of National Health Services, Regulation & Coordination. 2020. National Action Plan for Corona virus disease (COVID-19). Islamabad. 5 Government of Pakistan, Ministry of National Health Services, Regulation and Coordination. 2020. Pakistan Preparedness & Response Plan COVID-19. 23 April 2020. Islamabad.

6 World Health Organization. Strategic Preparedness and Response Plan for the New Coronavirus. 2020. 7 Emergency Assistance Coordination (accessible from the list of linked documents in Appendix 2). 8 The list is indicative only; depending on the trajectory of the COVID-19 spread, changing requirements, and related

adjustments made to the PPRP, the output may change somewhat or new outputs could be added. The subproject eligibility criteria and approval procedures are detailed in Appendix 1 of the project administration manual.

months, and to equip them and their frontline health workers for the projected 9 months' duration of the COVID-19 crisis;9

(ii) upgrading or expanding public medical facilities—including but not limited to sex-segregated patient wards; intensive care units; separate changing and resting facilities for male and female health workers; facilities for managing COVID-19 medical waste (e.g., medium-size incinerators, autoclaves); clean energy supply and backup; communications systems; and water, sanitation, and hygiene facilities, as needed.

(iii) providing additional health staff for emergency surges and safeguarding essential health services; training new and current health staff on the management of COVID-19 cases, risk communication, and health management systems (such as inventory control, disease surveillance, and standard protocols); and exchanging knowledge with Pakistan's neighboring countries and other countries in the Central Asia Regional Economic Cooperation (CAREC) region;

(iv) strengthening disaster preparedness and quick response by providing multi-hazard rescue and relief capacity in remote border areas, including emergency response vehicles, equipment, training, and supplies (Rescue 1122);10

(v) supporting social distancing measures, and strengthening the outreach of COVID-19 communication by establishing a multipurpose communication and education interface in remote and marginal communities, especially in the border areas, that have limited television, cable, and internet coverage; and

(vi) providing safe community water supply and sanitation facilities for the general public in selected health facilities and public spaces, including in remote rural communities and urban informal settlements, to improve health and hygiene and reduce the rate of infections. This is expected to include public handwashing and toilet facilities.

9. Output 2: Social protection for poor and vulnerable women delivered. The project will finance the immediate additional cash transfers and provide support to the government to continue the expansion of cash transfers as the COVID-19 situation evolves. Through BISP, it will support the Ehsaas program of essential cash transfers to the poorest and most vulnerable families for minimum sustenance support. Under this output, the project will finance (i) the additional one-time cash transfers of PRs4,000 to 3.3 million women out of the 4.5 million BISP beneficiary women,11 and (ii) ongoing UCT installments of PRs2,000 per month to 2.5 million out of the 4.5 million BISP beneficiary women for the first 4 months of FY2021,12 to enable them to meet basic food needs and cover other necessary living expenses, and allow BISP to expand the coverage to the next level of poor families likely to be worse off from the socioeconomic impact of COVID-19. 10. The BISP beneficiaries were selected using the nationwide poverty scorecard survey that is regularly updated. The survey used the proxy means testing method. Based on the weighting given to each question about household assets, family size, income level, and other aspects, a score is given to the household to determine the poverty status. Only women from the targeted

9 Different systems are being used for the supply chain and inventory management of COVID-19 health supplies by

different federal and provincial stakeholders. These systems include the logistics management information system being used by the Ministry of National Health Services, Regulations and Coordination—which is not fully aligned and interfaced with other parallel systems being run by the NDMA and the provinces to effectively manage both demand and supply for the COVID-19 emergency response, and requires further work.

10 Rescue 1122 is an emergency service established at district level in all four provinces under an act of parliament to provide timely response, rescue and emergency medical treatment to persons affected by emergencies. This subcomponent will be financed by grant funding from the Government of Norway.

11 The World Bank also allocated $25 million to these one-time cash transfers from its $200 million COVID-19 Emergency Response and Effectiveness Project.

12 The 2.5 million eligible BISP beneficiary women to be financed under the proposed project will not overlap with ADB’s ongoing BISP project, which finances about 0.7 million eligible BISP beneficiary women.

families are eligible to receive the cash transfers. In addition, the cash transfers, through a targeted approach of disbursing funds to a specified or identified group of the poorest families, will also help stimulate local economies amid a countrywide economic slowdown.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Table 1: Project Readiness Activities and Responsibility

Indicative Activities Months

April May June Responsible Agency

Advance contracting action (Consultant recruitment) X NDRMF/ADB

Retroactive financing action X BISP

Establish project implementation arrangements X NDRMF/BISP

ADB Board approval X ADB

Loan signing X EAD/ADB

Government legal opinion provided X GOP

Government budget inclusion X GOP

Loan effectiveness X EAD/ADB ADB = Asian Development Bank, BISP = Benazir Income Support Program, EAD = Economic Affairs Division; GOP = Government of Pakistan; NDRMF = National Disaster Risk Management Fund. Source: Asian Development Bank

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B. Overall Project Implementation Plan

Table 2: Project Implementation Plan Outputs/Activities 2020 2021 2022

I II III IV I II III IV I II III IV

A. DMF

Output 1: Public health emergency preparedness and response strengthened

Re-appraise exiting FIP and Accredit new FIP with capacity in health and economic revival

Identify, appraise and approve first batch of subprojects

Deliver first batch of equipment and supplies or construct first batch of assets

Output 1 implementation

Output 2: Social protection for poor and vulnerable women delivered

Release additional emergency cash transfers to eligible BISP beneficiaries

Provide unconditional cash transfer payments to eligible BISP beneficiaries for July-October

Monitor timely delivery of cash transfers

B. Management Activities

Recruit individual consultants

Prepare project completion report

Table 3: Project Reviews, Reporting and Monitoring Schedule 2020 2021 2022

Reporting and Reviews Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Inception Mission Progress Reporting Safeguard Monitoring Reports Audit Report Project Reviews Mid-term Review Project Completion Review

Q = quarter Source: Asian Development Bank

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II. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Table 4: Roles and Responsibilities of Executing and Implementing Agencies

Project Implementation Organizations

Management Roles and Responsibilities

Project Steering Committee Chair: Secretary EAD Members: Secretary MOF Secretary PnD Secretary MOCC Secretary PASS Secretary NHRSC Secretary BISP

• Convenes meeting on semi-annual basis or as and when required.

• Provides necessary support on intergovernmental coordination to executing agencies for smooth project implementation.

• Provides guidance on and oversight to the overall implementation and performance of the project.

• Resolves project issues and conflicts that would compromise quality of results, investment cost or project completion time.

Executing Agencies:

(a) NDRMF for Output 1 - Emergency preparedness and economic revival strengthened

(b) BISP for Output 2 - Social protection for poor and vulnerable delivered

• Provides overall strategic planning, guidance and management support to the project.

• Coordinates with other concerned agencies on project issues under their jurisdiction.

• Ensures adequate and timely counterpart resources including personnel and funding.

• Responsible and accountable for management of the advance account in accordance with ADB process and policies; inclusive of management of FIP and supplier contracts

• Supports the overall project implementation. • Ensure project’s sustainability during post-implementation

stage and report to ADB on the achieved development impacts. • Assume overall responsibility for loan covenants compliance

Implementing Agencies: NDRMF for Output 1 and BISP for Output 2

• Directly manage and supervise the implementation of the project outputs.

• Responsible for the submission of withdrawal applications, retention of supporting documents, and any reporting requirements including the quarterly progress report (including the monthly and/or quarterly reconciliation of the cash transfer payments supported under the project, and progress against the project implementation plan), bi-annual internal audit reports for the program, annual audit reports and financial statements.

• Accountable and responsible for the management of project account and the proper use of the funds; proper disbursement and liquidation of funds to recipient.

• Proper recording and management of the contracts of FIP and subcontractors/suppliers (such as terms / share of the sub-contractors, payment made and corresponding withdrawal applications and contract balances etc.).

• Ensure timeliness of agreed counterpart funds and approval of higher authorities for project activities.

• Monitor and evaluate project activities and outputs, including conduct of periodic reviews, preparation of progress reports reflecting issues and time-bound plans, project completion

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Project Implementation Organizations

Management Roles and Responsibilities

report and their timely submission to NDRMF and BISP Management and ADB.

• Process and submit to ADB any request, when required, for reallocating the loan proceeds.

• Ensure compliance with all loan covenants and reporting requirements of NDRMF and BISP Management and ADB.

• ADB • Assist NDRMF and BISP in providing timely guidance at each stage of the project implementation in accordance with the loan agreement and the project administration manual.

• Review all documents that require ADB approval and conduct regular project review missions.

• Process withdrawal applications and release eligible funds. • Regularly update the project performance review reports with

the assistance of NDRMF and BISP. • Update and post on ADB website the project information for

public disclosure, and Monitor compliance with all loan covenants, including safeguards.

• Review annual audit reports and follow-up on audit recommendations.

ADB = Asian Development Bank; BISP = Benazir Income Support Program, EAD = Economic Affairs Division; NDRMF = National Disaster Risk Management Fund; MOF = Ministry of Finance; MOCC = Ministry of Climate Change; NHRSC = National Health Services, Regulation & Coordination; PASS = Poverty Alleviation and Social Safety Division; PnD = Planning and Development. Source: ADB, NDRMF and BISP.

B. Key Persons Involved in Implementation

Executing Agency Benazir Income Support Program

Syed Ahsan Mumtaz Additional Director General (International Cooperation and Coordination) Telephone No: +92 51 9246353 Email address: ahsanmumtaz27@gmail.com and adg.icc@bisp.gov.pk Office Address: BISP HQ., F Block, Pakistan Secretariat Islamabad

National Disaster Risk Management Fund

Lt. Gen. Nadeem Ahmad (Retd.) Position: Chief Executive Officer Telephone No: +92-51-9108300 Email address: nadeem.ahmed@ndrmf.pk Office Address: Fifth Floor, EOBI House Mauve Area, Sector G-10/4, Islamabad.

ADB Pakistan Resident Mission

Xiaohong Yang Position: Country Director Telephone No: +63 8 551 3301 Email address: xyang@adb.org

mailto:ahsanmumtaz27@gmail.commailto:adg.icc@bisp.gov.pkmailto:nadeem.ahmed@ndrmf.pkmailto:xyang@adb.org

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Mission Leaders Mian S. Shafi (Co-Mission Leader) Position: Senior Project Officer, PRM Telephone No: +63 8 551 3202 Email address: mshafi@adb.org

Zheng Wu (Co-Mission Leader) Position: PAU Head, PRM Telephone No. +63 8 551 3227 Email address: zhengwu@adb.org

C. Project Organization Structure

11. The flow chart below shows the reporting lines essential for the project implementation

Figure 1: Project Organization Structure

CONTRACTORS/SUPPLIERS BENEFICIARIES

PROJECT STEERING COMMITTEE

ADB

mailto:zhengwu@adb.org

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III. COSTS AND FINANCING

A. Cost Estimates Preparation and Revisions

12. The project cost estimates were prepared by the processing team in consultation with the implementation agencies of the Project. The unit rates have been obtained from the most recent estimates made by other development partners for their projects in response to the COVID-19 outbreak. These cost estimates are tentative which may vary during the project implementation. If need arises, ADB, on the request of the implementation agencies, will consider change in project costs and reallocation of loan and/or grant categories, as appropriate. B. Key Assumptions

13. The following key assumptions underpin the cost estimates and financing plan:

(i) Exchange rate: PKR166.625 = $1.00 (as of 15 April 2020) (ii) Physical contingencies are estimated at 10% of the base cost (net of the Cost of

Output 2) (iii) Price contingencies are calculated based on escalation rates for domestic and

international costs estimated for Pakistan. Annual escalation rate for international costs is estimated at 1.57% on average for the years 2020–2022 and annual escalation rate for domestic costs is estimated at 8.67% on average for the years 2020–2022, as shown below:

Table 7: Escalation Rates for Price Contingency Calculation

Item 2020 2021 2022 Average Foreign rate of price inflation 1.50% 1.6% 1.6% 1.57% Domestic rate of price inflation 12.00% 8.00% 6.00% 8.67%

Source(s): Asian Development Bank Estimat4es

C. Detailed Cost Estimates by Expenditure Category

Table 8: Detailed Cost Estimates by Expenditure Category ($ million)

Amount % of Total Base Cost Item FC LC Total A. Investment Costs 1. Social Protection a. Additional Cash Transfer to existing BISP Beneficiaries 80.632 80.632 27.5%

b. Unconditional Cash Transfer 121.230 121.230 41.3% 2. Project Management Consultants 1.018 1.018 0.3% 3. Strengthening COViD-19 Preparedness and Response 49.856 33.237 83.093 28.3% 4. Strengthening multihazard DRR Response Capacity 4.506 4.506 1.5% Subtotal (A) 49.856 240.623 290.479 99.0%

B. Recurrent Costs 1. Salaries 1.665 1.665 0.6% 2. Operational Expenses 1.377 1.377 0.5% Subtotal (B) 3.042 3.042 1.0% Total Base Cost 49.856 243.665 293.521 100.0%

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Amount % of Total Base Cost Item FC LC Total C. Contingencies 1. Physical 4.986 4.180 9.166 3.1%

2. Price 0.845 3.985 4.830 1.6% Subtotal (C) 5.830 8.166 13.996 4.8%

D. Financial Charges During Implementation 1. Interest during construction 3.547 3.547 1.2% 2. Commitment charges 0.479 0.479 0.2% 3. Grant Administration Fee 0.250 0.250 0.1% Subtotal (D) 4.276 4.276 1.5%

Total Project Cost (A+B+C+D) 55.686 256.107 311.792 ISP = Benazir Income Support Program. COVID-19 Corona virus diseases 2019, DRR = disaster risk reduction, LC = local currency, FC = foreign currency Notes: Numbers may not sum precisely because of rounding Source: Asian Development Bank Estimates

D. Allocation and Withdrawal of Loan/Grant Proceeds

Table 9: Category Allocation for ADB Loan Cat Ref. Category Description

Amount ($)

ADB Financing

% Remarks

01 Output 1 Subprojects* 83,093,044 100% 100% of the claimed expenditure 02 Output 2 – Cash Transfers 199,861,965 100% 100% of the claimed expenditure 03 Project Management Consultants 3,654,186 100% 100% of the claimed expenditure 04 Unallocated 13,390,805 Total 300,000,000

*Subject to condition for withdrawal provided in para 6 of Schedule 3 of Loan Agreement.

Table 10: Category Allocation for Norway Grant13

Cat Ref. Category Description

Amount ($)

Financing % Remarks

01 Strengthening DRR Response Capacity

4,506,000 100% 100% of the claimed expenditure

02 Unallocated* 774,769

Total 5,280,769

DRR = disaster risk reduction *Also covers ADB’s Grant Administration Fee and bank charges or any other charges pursuant to cooperation agreement between Government of Norway and ADB.

13 WA number through which Grant will provide parallel financing

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E. Detailed Cost Estimates by Financier

Table 11: Detailed Cost Estimates by Financier ($ million)

Amount ADB Government Norway Total

Item

Amount % of cost

Category

Amount % of cost

Category

Amount % of cost Category

Amoun

t

% of cost

Category A. Investment Costs

1. Social Protection a. Additional Cash Transfer to existing BISP Beneficiaries 79.832 99.0% 0.800 1.0% 80.632 100% b. Unconditional Cash Transfer 120.030 99.0% 1.200 1.0% 121.230 100% 2. Project Management Consultants* 0.916 90.0% 0.102 10.0% 1.018 100% 3. Strengthening COViD-19 Preparedness and Response 83.093 100.0% 83.093 100% 4. Strengthening multihazard DRR Response Capacity 4.506 100.0% 4.506 100% Subtotal (A) 283.871 97.7% 2.102 0.7% 4.506 1.6% 290.479 100%

B. Recurrent Costs 1. Salaries 1.498 100.0% - 1.498 100% 2. Operational Expenses* 1.239 90.0% 0.138 10.0% - 1.377 100% Subtotal (B) 2.738 90.0% 0.304 10.0% - 3.042 100% Total Base Cost 286.609 97.6% 2.406 0.8% 4.506 1.5% 293.521 100%

C. Contingencies 1. Physical 8.675 94.6% 0.041 0.4% 0.451 4.9% 9.166 100% 2. Price 4.716 97.6% 0.040 0.8% 0.074 1.5% 4.830 100% Subtotal (C) 13.391 95.7% 0.080 0.6% 0.525 3.7% 13.996 100%

D. Financial Charges During Implementation - 1. Interest during construction 3.547 100.0% 3.547 100% 2. Commitment charges 0.479 100.0% 0.479 100% 3. Grant Administration Fee 0.250 100.0% 0.250 100% Subtotal (D) - 4.026 94.2% 0.250 5.8% 4.276 100%

Total Project Cost (A+B+C+D) 300.000 96.2% 6.512 2.1% 5.281 1.7% 311.792 100% % Total Project Cost 96.2% 2.1% 1.7% 100%

BISP = Benazir Income Support Program. COVID-19 Corona virus diseases 2019, DRR = disaster risk reduction Note: Numbers may not sum precisely because of rounding. *ADB will disburse 100% of its 90% share for expenditure on Project Management Consultants, and operational expenses. Government share includes the in-kind contribution. Source: Asian Development Bank

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E. Detailed Cost Estimates by Outputs and/or Components

Table 12: Detailed Cost Estimates by Outputs and/or Components ($ million)

Item Total

Output 1: Public health preparedness

strengthened

Output 2: Social assistance package

delivered A. Investment Costs Amount Amount % of cost Category Amount

% of cost Category

1. Social Protection a. Additional Cash Transfer to existing BISP Beneficiaries 80.632 80.632 100.0% b. Unconditional Cash Transfer 121.230 121.230 100.0% 2. Project Management Consultants 1.018 1.018 100.0% 3. Strengthening COViD-19 Preparedness and Response 83.093 83.093 100.0% 4. Strengthening multihazard DRR Response Capacity 4.506 4.506 100.0% Subtotal (A) 290.479 88.617 30.5% 201.862 69.5%

B. Recurrent Costs 1. Salaries 1.665 1.665 0.0% 2. Operational Expenses 1.377 1.377 100.0% 0.0% Subtotal (B) 3.042 3.042 100.0% 0.0% Total Base Cost 293.521 91.659 31.2% 201.862 68.8%

C. Contingencies 1. Physical 9.166 9.166 100.0% 2. Price 4.830 4.830 100.0% Subtotal (C) 13.996 13.996 100.0%

D. Financial Charges During Implementation 1. Interest during construction 3.547 1.177 33.2% 2.370 2.9% 2. Commitment charges 0.479 0.261 54.5% 0.218 0.3% 3. Grant Administration Fee 0.250 0.250 100.0% Subtotal (D) 4.276 1.688 39.5% 2.588 60.5%

Total Project Cost (A+B+C+D) 311.792 107.343 34.4% 204.450 65.6% BISP = Benazir Income Support Program. COVID-19 Corona virus diseases 2019, DRR = disaster risk reduction Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank

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F. Detailed Cost Estimates by Year

Table 13: Detailed Cost Estimates by Year ($ million)

Item Total Cost Year 1 Year 2 Year 3 A. Investment Costs 1. Social Protection a. Additional Cash Transfer to existing BISP Beneficiaries 80.632 80.632

b. Unconditional Cash Transfer 121.230 77.000 44.230 2. Project Management Consultants 1.018 0.010 0.601 0.407 3. Strengthening COViD-19 Preparedness and Response 83.093 8.309 33.237 41.547 4. Strengthening multi-hazard DRR Response Capacity 4.506 0.676 2.704 1.126 Subtotal (A) 290.479 166.627 80.772 43.080 B. Recurrent Costs

1. Salaries 1.665 0.333 0.666 0.666 2. Operational Expenses 1.377 0.275 0.551 0.551 Subtotal (B) 3.042 0.608 1.217 1.217

Total Base Cost 293.521 167.236 81.988 44.297 C. Contingencies

1. Physical 9.166 5.222 2.560 1.383 2. Price 4.830 2.752 1.349 0.729 Subtotal (C) 13.996 7.974 3.909 2.112 D. Financial Charges During Implementation

1. Interest during construction 3.547 1.167 1.712 0.668 2. Commitment charges 0.479 0.319 0.127 0.033 3. Grant Administration Fee 0.250 0.125 0.125

Subtotal (D) 4.276 1.486 1.964 0.826 Total Project Cost (A+B+C+D) 311.792 176.696 87.861 47.235

BISP = Benazir Income Support Program. COVID-19 Corona virus diseases 2019, DRR = disaster risk reduction Source: Asian Development Bank

13

G. Contract and Disbursement S-Curve

14. The contract Awards and disbursement projections are presented in Figure 2 below.

Figure 2: Cumulative Contract Awards and Disbursement – ADB Loan

Table 14: Contract Awards and Disbursement Projections – ADB Loan

($ million) Contract Awards Disbursements

Year Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total 2020 - 80.63 40.00 90.00 210.632 - - 80.63 94.11 174.738 2021 29.02 15.00 20.00 10.01 74.025 54.82 8.92 8.93 8.85 81.513 2022 1.22 - - 14.13 15.343 5.90 3.86 10.98 23.02 43.749 Total 30.232 95.632 60.000 114.136 300.000 60.718 12.776 100.538 125.968 300.000

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

Q120

Q220

Q320

Q420

Q121

Q221

Q321

Q421

Q122

Q222

Q322

Q422

US$

mill

ion

Quarters

Contract Award and Disbursement(OCR Loan)

Accumulative Contract Awards Accumulative Disbursements

14

Figure 3: Cumulative Contract Awards and Disbursement – Norway Grant

Table 15: Contract Awards and Disbursement Projections – Norway Grant ($ million)

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

2020 2.000 1.000 3.000 0.451 0.225 0.676 2021 1.100 0.407 1.506 0.225 0.676 1.127 0.676 2.704 2022 0.524 0.525 0.222 0.202 0.178 1.299 1.901

Total 1.100 2.407 1.000 0.524 5.031 Total 1.328 1.304 2.201 5.280

-

1.0

2.0

3.0

4.0

5.0

6.0

Q120

Q220

Q320

Q420

Q121

Q221

Q321

Q421

Q122

Q222

Q322

Q422

US$

mill

ion

Quarters

Contract Award and Disbursement(Norway Grant Loan)

Accumulative Contract Awards Accumulative Disbursements

15

B. Fund Flow Diagram

Figure 4: Fund Flow Diagram

IV. FINANCIAL MANAGEMENT

A. Financial Management Assessment

NDRMF 15. The financial management assessment (FMA) on NDRMF was conducted in April 2020 in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The FMA considered the capacity of NDRMF, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. 16. NDRMF was assessed to possess sufficient financial management capacity and systems, however, it is inherently reliant upon the Fund Implementing Partners (FIPs) for efficient and effective utilization of ADB’s resources, the Internal Audit department is not adequately staffed, governance structure is not fully functional and the emergent nature of the Project activities poses significant risks to ADB funds, the overall pre-mitigation Financial Management Risk was assessed as “Substantial”.

16

17. NDRMF has demonstrated strong FM performance during the implementation of on-going ADB project, and the governance and management teams have implemented a strong accountability and controls framework complying with international best practice and financial reporting standards. While noting these strengths, the capacity to effectively manage the FIPs is not yet evidenced due to limited timeframe since the implementation of on-going ADB project, the Internal Audit function is not adequately staffed and governed, reflecting certain weaknesses within the governance and accountability systems. A financial management internal control and risk management assessment was conducted. The overall controls risk was assessed as Moderate, in view of strong history of compliance with ADB’s FM requirements under the existing loans, satisfactory governance, financial reporting and accountability arrangements. However, the Project’s emergent nature and involvement of FIPs enhance the risk profile of the project. NDRMF’s monitoring mechanisms over the FIPs are considered critical for ensuring that funds are efficiently utilized for intended purposes. As being followed under the on-going project, the statement of expenditure (SOE) procedure is considered appropriate to reimburse eligible expenditure while maintaining the prevailing ceiling. A Financial Management Action Plan (Table 17) has been agreed with the EA and IA to address the risks.

Table 16: Summary of Risks and Mitigating Measures Risk Type Risk

Assessment Risk Description Mitigating Measure

Inherent Risks Country specific

Substantial

As detailed under Section IV of the FMA report, the Project funds are susceptible to substantial risks due to fiscal challenges to the government and gaps in budgetary mechanisms.

ADB will continue to provide technical support and undertake policy-level initiatives to address systemic PFM issues to strengthen PFM system and procedures. Ministry of Finance (MOF) and NDRMF will ensure timely release of counterpart funds, proper recording of financial transactions, timely payments and facilitate annual audits of project financial statements.

Entity specific

Substantial NDRMF’s ability to effectively monitor the utilization of ADB’s resources for intended purposes shall depend upon the design and operating effectiveness of FIPs’ systems and the quality of monitoring and validation performed by NDRMF.

The existing FIP mandates are at initial stages of their mandates and thus NDRMF’s capacity to

A pre-audit of the selection and disbursement(s) to FIPs shall be performed by the Internal Audit. The Internal Audit team shall also perform periodic validation of the FIPs’ utilization of funds and resources under the Project.

17

Risk Type Risk

Assessment Risk Description Mitigating Measure

effectively monitor and manage the FIP contracts is not validated.

Entity specific

Moderate NDRMF’s treasury arrangements might not be sufficiently robust to ensure accelerated availability and tracking of funds for the Project.

A dedicated bank account shall be opened and maintained with a commercial bank, for managing the Project funds. NDRMF shall ensure that funds are timely released and made available for the Project activities. The draft Tripartite agreement for the use of Endowment Fund shall be finalized to regulate the use of the endowment funds and the profits accrued till date.

Overall Assessment

Substantial Rationale and Mitigation: NDRMF has sufficient FM capacity, however, it is significantly dependent upon the FIPs for actual utilization of ADB’s resources, and the efficiency of Country’s treasury systems for timely availability of sufficient funds. The Project team will ensure through integration of appropriate controls within the funds flow and validation mechanisms that ADB’s funds are efficiently and effectively utilized for the intended purposes.

Controls Risks Implementing entity

Moderate NDRMF’s governance structure is not fully operational due to delays in completion of the BoD and appointment of Chair of Audit Committee. While there are structures in place to govern the organization, the absence of key personnel might affect the quality of oversight function on the entity and thus the Project activities.

EAD/MOF and NDRMF to complete appointments at vacant directors’ positions. EAD/MOF and NDRMF to expedite the process of appointment/ nomination of an independent director as Chair of the Audit Committee.

Funds flow Low The Project funds might not be timely available for the Project, and trackable to validate their utilization for intended purposes.

NDRMF has sufficient treasury controls to track and monitor the funds flow, with assigned staff roles and documented policies and procedures. However, as a further mitigating measure, a dedicated bank account shall be opened and maintained with a

18

Risk Type Risk

Assessment Risk Description Mitigating Measure

commercial bank, for managing the Project funds. NDRMF shall ensure that funds are timely released and made available for the Project activities.

Staffing Moderate The Project might not have sufficient and adequately qualified FM and Accountability staff, thus affecting the implementation of segregation controls and timely completion of FM and accountability activities.

The FM function is adequately staff with experienced and qualified professional staff. Although there has been low staff turnover within the FMG, a severance might affect the segregation of duties and workload management. The FM activities are not expected to significantly increase due to the addition of the Project. The Internal Audit team is not considered to be adequately staffed. With the addition of the Project, the Internal Audit team might not have sufficient absorptive capacity. The project team shall require the entity’s management to ensure that adequate and sufficiently qualified staff shall remain allocated over the Project activities.

Planning and budgeting

Moderate The Project budgets might not be adequately monitored, resulting in adverse variances which might limit budget availability for key activities of the Project.

The organizational budgeting processes are not adequate which often result in significant variances. NDRMF shall strengthen the budgeting process and ensure that Project estimates are monitored and updated during the implementation.

Financial reporting and external audits

Low The Project might not have adequate accounting and reporting systems and controls to ensure timely and accurate

The entity and project level financial statements are prepared using IFRSs. Bank reconciliation statements of all bank accounts

19

Risk Type Risk

Assessment Risk Description Mitigating Measure

recording of the Project financial transactions, and generation of timely and reliable financial reports to provide true and fair view of the Project’s financial performance and position.

are timely prepared, reviewed and authorized. Dedicated bank accounts are used for management of project funds. The accounting system is capable of preparing and maintaining project wise separate books of account. Internal and external audit arrangements are in place. External audits are performed by a Big 4 (PWC) audit firm and the AGP. Historically, the external auditors have provided Unqualified audit opinions on entity and project level financial statements. While noting the above, the Project team will ensure that the submission of entity and project level financial statements is included as a covenant in the loan/ project agreement, pursuant to requirements of OM – J7.

Internal audit Substantial The Project might not be subject to sufficient and appropriate internal audit arrangements.

An independent internal audit function is in place which reports directly to the BoD, however, as noted above, the staffing of the function is not adequate. At the governance level, the Chair of Audit Committee has not yet been appointed. Further, the Internal Audit Manual has not yet been approved by the BoD. In addition to the proposed staffing arrangements discussed above (refer Staffing), the Project team shall reiterate the need for the appointment of the Chair of

20

Risk Type Risk

Assessment Risk Description Mitigating Measure

Audit Committee and approval of the Internal Audit manual.

Information systems

Moderate The information systems might not be sufficient to ensure accurate recording and reporting of the Project’s financial transactions.

An off-the-shelf accounting software is currently in place. The external auditors have not raised observation on the suitability of the existing software. However, the organization is in the process of developing an ERP package which will include Planning and Budgeting, and Accounting and Reporting modules.

Overall Assessment

Moderate Rationale and mitigation:

The overall controls risk is assessed as Moderate, in view of strong history of compliance with ADB’s FM requirements under the existing loans, satisfactory governance, financial reporting and accountability arrangements. However, the Project’s emergent nature and involvement of FIPs enhance the risk profile of the project. NDRMF’s monitoring mechanisms over the FIPs are considered critical for ensuring that funds are efficiently utilized for intended purposes.

L = low, M = moderate, S = Substantial, H = high Source: Asian Development Bank.

Table 17: Timebound Financial Management Action Plan Mitigating Measure Responsibility Timing

The draft Tripartite agreement for the use of Endowment Fund shall be finalized to regulate the use of the endowment funds and the profits accrued till date.

ADB/ NDRMF Not later than 31 December 2020

A pre-audit of the selection of and disbursement(s) to FIPs shall be performed by NDRMF’s Internal Audit.

Head of Internal Audit

Upon selection of FIPs

In respect of the Project activities till 31 December 2020, the NDRMF shall ensure that the Internal Audit report provides a comprehensive validation of the FIP’s selection process and a verification of the funds management and utilization of resources procured by the FIPs from the Project funds. Depending upon the results of such validation, the ADB may require further continuation of such validation by NDRMF’s Internal Audit on a periodic basis.

Head of Internal Audit

Not later than 31 March 2021

A dedicated bank account shall be opened and maintained with a commercial bank, for managing the Project funds.

NDRMF, EAD/MOF

Prior to implementation

21

Mitigating Measure Responsibility Timing EAD/MOF and NDRMF shall complete the process of appointments at vacant directors’ positions.

NDRMF, EAD/MOF

Not later than 31 December 2020

EAD/MOF and NDRMF to complete the process of appointment of an independent director as Chair of the Audit Committee.

NDRMF, EAD/MOF

Not later than 31 December 2020

The NDRMF’s management shall ensure that adequate and sufficiently qualified staff shall remain allocated over the Financial Management and Internal Audit functions, related to the Project activities.

NDRMF During the Project Implementation

NDRMF shall submit a report to ADB on the measures adopted to strengthen the budgeting process. The NDRMF shall provide quarterly budget vs. actual reports as a measure to demonstrate a robust budget monitoring mechanism during the Project implementation.

CFO – NDRMF Not later than 30 September 2020; within 45 days from the end of each quarter

NDRMF will coordinate activities with the selected vendor to ensure that ERP is tailored according to entity’s needs and deployed for all business functions.

NDRMF Not later than 30 June 2021

BISP 18. The financial management assessment (FMA) on BISP was conducted in July 2019 in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The FMA considered the capacity of NDRMF, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. The FMA assessed the pre-mitigation financial management risk as “Substantial”14. Since the Project is exposed to risks similar to the existing projects being implemented by BISP, and that the latest FMA was performed during July 2019, a fresh FMA was not considered necessary for the Project. Alternately, an update on BISP’s progress towards the implementation of financial management action plan was reviewed. As being followed under the on-going project, the statement of expenditure (SOE) procedure is considered appropriate to reimburse eligible expenditure while maintaining the prevailing ceiling. A Financial Management Action Plan (table 19) has been agreed with the EA and IA to address the project specific risks and validate progress reported by BISP against the prevailing financial management action plan. 19. In view of the progress as of 15 April 2020 reported by the management of BISP, summarized in Table 18 below, it was decided that the financial management action plan shall be retained for the Project. A timebound action plan to validate the progress reported by BISP and additional action areas, considered necessary during the risk assessment of BISP for the Project, was developed and provided in Table 19.

14 https://www.adb.org/projects/documents/pak-45233-006-pam

https://www.adb.org/projects/documents/pak-45233-006-pam

22

Table 18. Progress reported by the management of BISP Results based action Due

(Y/N) Status

Risk management framework developed and implemented Y Implemented Release of funds from the Finance division of GoP expedited N Implemented Budget Scrutiny Committee established Y Implemented Develop Roadmap for deployment of Integrated MIS solution N In-progress Service level agreements with banks signed Y Implemented Cash transfer manual approved by the Board of Directors Y In-progress Agreement with NADRA modified N Change needed Staffing needs assessment conducted N No progress Regular staff at key positions recruited N No progress Roadmap for conversion from cash to accrual basis developed N In-progress External auditors for FY 2019, 2020 and 2021 appointed Y Not implemented Government auditors’ observations settled Y In-progress Reconciliation with AGPR streamlined N Implemented IT policy approved N In-progress

Note: In view of processing timeline, the requirements falling due by 30 June 2020 have been considered as due for validation.

Table 19: Timebound Financial Management Action/ Validation Plan

Mitigating Measure Responsibility Timing In respect of implementation progress on risk management framework, the BISP shall provide: a) risk register maintained by the Monitoring and Evaluation (M&E) wing, updated till 30 June 2020; b) quarterly/ special payment monitoring report for the period ended 30 June 2020; quarterly progress report prepared by the Internal Audit wing on EFC framework for the period ended 30 June 2020.

DG (Internal Audit), ADG

(M&E)

Not later than 31 August 2020

In respect of release of funds from the MoF, the BISP shall provide a certificate that funds are being received in accordance with the policy approved by the MoF.

DG (F&A) Not later than 31 August 2020

In respect of establishment of budget scrutiny committee, the BISP shall provide notification/ officer order for the establishment of the committee and detail of meetings held by the committee till 30 June 2020.

Principal Accounting

Officer

Not later than 31 August 2020

Based on approved technical feasibility study, MIS wing under guidance from Board of Directors to develop a roadmap for the deployment and operationalization of the integrated solution.

DG (F&A), DG (Cash

Transfer), DG (Internal Audit) and DG (Tech./

Principal Technology

Adviser)

Not later than 31 December 2021

BISP Board to approve the cash transfer manual. DG (Cash Transfers)

Not later than 30 September 2020

23

Mitigating Measure Responsibility Timing BISP shall submit evaluation of the systems of National Telecommunication Company (NTC), providing assessment of NTC’s data recovery and back-up systems.

DG (Tech./ Principal

Technology Adviser)

Not later than 30 September 2020

BISP to conduct a study to identify the needs for recruitment of BISP’s regular employees for all key positions.

DG (Human Resources)

Not later than 31 March 2021

BISP to recruit regular employees for all key positions prioritizing F&A and internal audit staff.

DG (Human Resources)

Not later than 31 December 2021

BISP to develop a roadmap to migrate from cash basis to accrual basis of accounting system.

DG (F&A) Not later than 30 September 2020

BISP to hire audit firm with vast experience and high ratings for a period of three years covering audits for the FY 2019 and FY 2020.

DG (F&A) Not later than 31 May 2020

BISP to provide a status update on the resolution of audit observations raised by the Government auditors and pending till 30 September 2019.

DG (IA) Not later than 30 September 2020

In respect of strengthening the process of reconciliation with AGPR, the BISP shall submit the certified copy of reconciliation report for the months of April and May, 2020.

DG (F&A) Not later than 30 June 2020

In respect of approval of IT policy, the BISP shall submit the approved IT policy.

DG (Tech./ Principal

Technology Adviser)

Not later than 31 December 2020

In respect of retroactive financing, in addition to standard documentation required for the processing of Withdrawal Applications, the BISP shall provide a certificate signed by the concerned BISP management personnel that the Project funds allocated for retroactive financing were based on the list of beneficiaries generated from the entity’s MIS shared with the Partner Banks for disbursements to eligible beneficiaries.

DG (Cash Transfer)

Upon raising the withdrawal application

BISP shall obtain from the partner banks duly authorized and validated Reconciliation Certificates of Disbursements, duly supported by system generated bank statements.

DG (F&A) Upon raising the withdrawal application

24

B. Disbursement

1. Disbursement Arrangements for ADB and ADB-administered cofinancier Funds

20. The loan and grant proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time)15, and detailed arrangements agreed upon between the government and ADB. Online training for project staff on disbursement policies and procedures is available.16 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 21. Advance fund procedure. Separate advance accounts should be established and maintained by NDRMF17 and BISP for each funding source, ADB and co-financier. The co-financier’s funds will be fully administered by ADB and will provide parallel financing. The currency of the advance accounts is the US dollar. The advance accounts are to be used exclusively for ADB’s and ADB-administered cofinancier funds’ share of eligible expenditures. NDRMF, and BISP will be responsible for (i) collecting and retaining supporting documents, and (ii) preparing and sending withdrawal applications to ADB. The NDRMF and the BISP who administers the advance account is accountable and responsible for proper use of advances to the advance account including advances to sub-accounts if any.

22. The total outstanding advance to the advance accounts should not exceed the estimate of ADB’s share of expenditures to be paid through the advance accounts for the forthcoming 6 months. The NDRMF and the BISP may request for initial and additional advances to the advance accounts based on an Estimate of Expenditure Sheet18 setting out the estimated expenditures to be financed through the accounts for the forthcoming 6 months. Supporting documents should be submitted to ADB or retained by the executing agency in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) when liquidating or replenishing the advance accounts. 23. Statement of expenditure procedure.19 The Statement of expenditure (SOE) procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance account(s). The ceiling of the SOE procedure is the equivalent of $100,000 per individual payment for both NDRMF and BISP. Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB's disbursement and review missions, upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit. Reimbursement and liquidation of individual payments in excess of the SOE ceiling should be supported by full documentation when submitting the withdrawal application to ADB.

15 The handbook is available electronically from the ADB website (http://www.adb.org/documents/ loan-disbursement-

handbook 16 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning 17 ADB disbursement guidelines and procedures for financial intermediaries will apply for NDRMF advance account

procedure, in line with the on-going project. In event FIPs are unable to transact in foreign currencies, ADB may implement direct payment to FIP suppliers/subcontractor recorded in the grant agreement with NDRMF.

18 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as amended from time to time),

19 SOE forms are available in Appendix 7B and 7D of ADB’s Loan Disbursement Handbook (2017, as amended from time to time). SOE sheet for Financial Intermediation Loans/Grants Appendix 7D applicable for NDRMF advance account procedure.

http://wpqr4.adb.org/disbursement_elearning

25

24. Before the submission of the first withdrawal application (WA), the borrower should submit to ADB sufficient evidence of the authority of the persons who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per WA is stipulated in the Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid (i) by the executing agency and subsequently claimed to ADB through reimbursement, or (ii) through the advance fund procedure, unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for Disbursements (CPD)20 system is encouraged for submission of withdrawal applications to ADB. For tracking of payment to individual suppliers , it is required for the NDRMF to provide a worksheet with each WA – showing separate details of the concerned FIPs and sub-contractors i.e. the contract amount with FIP and subcontractor, payments already made and corresponding WA numbers, and the remaining balance left after processing the current applications. This will be reviewed as part of processing the WA. If a grant contract has multiple subcontractors, then separate sheet would be prepared for each subcontractor and attached to the withdrawal application as supporting document.

C. Accounting

25. NDRMF will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project by adopting the accrual-based accounting following the International Financial Reporting Standards. NDRMF will prepare project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. 26. BISP will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project. The BISP will prepare project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. 27. BISP currently is preparing financial statements on cash basis system of accounting. The existing system will not ensure in the long run the strengthening of the financial management system and effective safeguard of BISP assets. D. Auditing and Public Disclosure

28. NDRMF and BISP will cause the detailed project financial statements to be audited in accordance with International Standards on Auditing and with the Government's audit regulations, by an independent auditor acceptable to ADB. The audited project financial statements together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by the NDRMF and BISP, respectively. 29. The audited entity financial statements, together with the auditor’s report and management letter, will be submitted in the English language to ADB within 1 month after their approval by the relevant authority. 30. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate

20 The CPD facilitates online submission of WA to ADB, resulting in faster disbursement. The forms to be completed

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

https://www.adb.org/documents/client-portal-disbursements-guide

26

and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; (ii) whether the proceeds of the loan and grant were used only for the purpose(s) of the project; and (iii) whether the borrower or executing agency was in compliance with the financial covenants contained in the legal agreements (where applicable).

31. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor. 32. The government, NDRMF and BISP have been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements.21 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. 33. Public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements, will be guided by ADB’s Access to Information Policy.22 After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.23

V. PROCUREMENT AND CONSULTING SERVICES

34. The project procurement risk was assessed as high. The main weaknesses are: (i) NDRMF lacks prior health sector experience leading to week technical capacity; ii) no substantial GIA actual implementation experience; iii) limited role of NDRMF in implementation; iv) potential dealings with several new FIPs in health sector not having any prior experience with NDRMF; v) prolonged decision making by NDRMF resulting delay in concluding GIAs with FIPs; vi) constrained supply-chain market condition; and vii) no mechanism of post procurement reviews. 35. Proposed mitigation measures include the strengthening of NDRMF with individual health and procurement consultants; capacity building and hand-holding of NDRMF and FIPs; NDRMF’s representative (consultant) presence in the bid opening and bid evaluation committee as an

21 ADB’s approach and procedures regarding delayed submission of audited project financial statements:

(i) When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

(ii) When audited project financial statements are not received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (a) inform the executing agency of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When audited project financial statements are not received within 12 months after the due date, ADB may suspend the loan.

22 Access to Information Policy: https://www.adb.org/documents/access-information-policy 23 This type of information would generally fall under public communications policy exceptions to disclosure. ADB. 2011.

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

https://www.adb.org/documents/access-information-policy

27

observer for all contracts $ 1 million and above of FIPs and post procurement (sampling) of transactions by FIPs. 36. The proposed project procurement arrangements are decided based on “fitness for purpose” approach with due consideration to VFM to increase efficiency and flexibility measures suited to the context of emergency loans allowed under ADB Procurement Policy (2017,as amended from time to time), Procurement Regulations (2017, as amended from time to time), Guidance Note, FCAS 2018 and ADB Policy Paper April 2020, ADB’s Comprehensive Response to the Covid-19 Pandemic. A. Advance Contracting and Retroactive Financing

37. All advance contracting and retroactive financing will be undertaken in conformity with the Procurement Regulations for ADB Borrowers (2017, as amended from time to time). The borrower, NDRMF and BISP have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. BISP component does not involve any procurement activity, NDRMF and its prospective potential FIPs will make use of advance contracting. 38. Retroactive financing. The government has requested retroactive financing (subject to the ceiling of 30% of the loan amount) to cover the financing of additional cash transfer payments incurred after 30 March 2020 (The date of approval of budget allocations by the government of Pakistan to prepare for/respond to COVID-19) to the existing BISP beneficiaries. BISP and ADB will ensure that these expenditures incurred before loan effectiveness, are not more than 12 months before the signing of the loan agreement. Retroactive financing is not envisioned under NDRMF component. B. Procurement of Goods, Works, Nonconsulting and Consulting Services

39. NDRMF is a government-owned not-for-profit institution registered with the Securities & Exchange Commission of Pakistan under Section 42 of Companies Ordinance 1984, as a Public Limited Company. It was established as a government-owned sustainable mechanism to enhance Pakistan’s resilience to climatic and other natural hazards. The NDRMF will follow the Procurement Regulations for ADB Borrowers (2017, as amended from time to time) in engaging the consulting services of individual consultants as well as procurement of office equipment and supplies. Out of $ 100 million component of NDRMF, only $ 1.1 million worth of procurement shall be carried out by NDRMF while remaining amount of $ 98.9 million shall be used in procurement to be carried out by various FIPs. The potential public sector FIPs are respective provincial health departments, NDMA, Health Service Academy and nonpublic sector FIPs may involve Agha Khan Foundation, Muslim Aid and UN agencies. 40. Centralized procurement: NDRMF may explore an option of centralized procurement of common medical supplies and equipment, by selecting NDMA as public FIP, to achieve economy of scale. Open competition still remains preferred method of procurement, however, process can be expedited by use of simplified bid documents, shorten bid submission time, reduced qualification requirements, high percentage of advance payment, waive off requirement of bid security submission, flexible requirement of performance security. NDMA being federal public entity, shall use federal-PPRA. Other procurement method including use of RFQ (national/national advertisement) and direct contracting/negotiated contracts can also be explored with sufficient justification and documentary evidence, within provision of PPRAs. These

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provisions will be used on a case-by-case basis depending on the value and complexity of the scope of procurement and prevailing market conditions. 41. All public FIPs, will follow respective applicable PPRs and may exercise flexibilities mentioned above subject to justification. Procurement through UN agencies should be preferred wherever this approach gives clear advantage of efficiency, transparency and value for money compared to other procurement options. For non-public FIP, they should procure following commercial private practices by ensuring compliance with core procurement principles. 42. NDRMF representative (consultant) shall participate as an observer in bid opening and bid evaluation committee for all procurement transactions carried out by FIPs amounting to US $ 1 million or above. Each FIP shall prepare and upload monthly procurement activity report on its respective website and share with NDRMF. NDRMF shall upload consolidated procurement activity report on monthly basis for all FIPs on its website for public information. NDRMF will share this report with ADB and Project Steering Committee on monthly basis. The report shall include information namely i) name of the FIPs; ii) procurement description; iii) procurement method; iv) estimated value; v) contract amount; vi) supplier/contractor name; vii) agreed delivery schedule; viii) delivery status; and ix) distribution details/locations etc. The grant implementation agreement (GIA) with FIP shall include provision for the FIP to allow the post review of the procurement through third party individual consultant(s). NDRMF shall be responsible for organizing procurement post reviews (sampling) of all FIPs for at least 20% of number of the contracts valued not less 50% of total value of the procurement under each GIA reviewed within one month of completion of the procurement transaction(s) but not more than 6 months of completion of such activity/ies. The sample size must include various type and size of contracts. In case, the 20% of number of contracts do not comprise the 50% of the value of procurement under GIA, the sample size shall be increased to meet the requirement of 50% of the value of the procurement. The third-party consultant should never have been engaged in the same procurement process in any capacity, to avoid conflict of interest. Any gross violation of applicable procurement rules revealed through post procurement review (sampling) shall allow the NDRMF or ADB to declare it as “noncompliance” and take appropriate action as per loan agreement. ADB shall have the right to inspect accounts, records and any other procurement related documents and to have them audited by auditors appointed by ADB.

43. NDRMF has developed (i) a procurement procedural manual and put in place a procurement framework; and (ii) an accreditation mechanism for assessment of a recipient’s capacity to implement grants before signing the grant agreement and releasing Fund money. NDRMF should ensure during accreditation process, a robust procurement risk and capacity assessment is carried out of all existing and potential FIPs. Based on assessment, appropriate mitigating measures should be put in place to reduce risks and enhance capacity when needed. The procurement assessment for all FIPs should be reviewed and endorsed by ADB procurement staff, as part of accreditation/screening process, before selection of any FIP. The Fund will follow the foregoing processes (Appendix 1) for awarding grants to the recipients. In addition, the Fund will only consider the COVID-related grant subproject from those provinces/regions where a computer-based effective and functional inventory control system exists. The FIPs will be required to provide written assurance that the equipment and supplies requested in the proposal will be entered into that inventory control system to ensure systematic tracking of goods until they reach to the intended health facility. 44. The NDRMF maintains a roster of experts on retainer bases (individual consultants) to provide support in the preparation and review of the legal, procurement, institutional, finance, safeguard, gender and governance frameworks as well as sector proposals/sub-projects

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respectively for the NDRMF. Additional individual consultants shall be recruited to provide support to NDRMF including conducting post procurement review (sampling) for the FIPs transactions.

C. Procurement Plan

Basic Data Project Name: Emergency Assistance for Fighting the COVID-19 Pandemic Project Number: 54181-001 Approval Number: Country: Pakistan Executing Agency: Benazir Income Support Program,

National Disaster Risk Management Fund

Project Procurement Risk: High

Implementing Agency: Benazir Income Support Program, National Disaster Risk Management Fund

Project Financing Amount: US$ 311,800,000 ADB Financing: US$ 300,000,000 Cofinancing (ADB Administered): US$ 5,300,000 Non-ADB Financing: US$ 6,500,000

Project Closing Date: 30 November 2022

Date of First Procurement Plan: 5 May 2020 Date of this Procurement Plan: 5 May 2020

Procurement Plan Duration (in months): 18 Advance Contracting: Yes

e-GP: No

A. Methods, Review and Procurement Plan Except as the Asian Development Bank (ADB) may otherwise agree, the following methods shall apply to procurement of goods, works, and consulting services.

Procurement of Goods and Works Method Comments

Request For Quotation for Goods NDRMF Others for Goods Fund Implementation Partners (FIPs), both public and non-public, shall

be responsible to undertake the procurement activities as agreed in their respective Grant Implementation Agreement. Public FIPs shall carry out procurement in accordance with respective Public Procurement Rules (PPRs) using OCB (international or national advertisement), limited bidding, RFQ, direct contracting and negotiated tendering under extreme urgency, as applicable. Non-public FIPs will follow their own procurement procedures based on generally acceptable procurement principles, assessed during accreditation process by NDRMF.

Others for Works Fund Implementation Partners (FIPs), both public and non-public, shall be responsible to undertake the procurement activities as agreed in their respective Grant Implementation Agreement. Public FIPs shall carry out procurement in accordance with respective Public Procurement Rules (PPRs) using OCB (national advertisement), limited bidding, RFQ, direct contracting and negotiated tendering under extreme urgency, as applicable. Non-public FIPs will follow their own procurement procedures based on generally acceptable procurement principles, assessed during accreditation process by NDRMF.

Consulting Services Method Comments

Competitive for Individual Consultant The NDRMF will establish a roster of Individual experts for project implementation support. OCB (National)

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B. Lists of Active Procurement Packages (Contracts) The following table lists goods, works, non-consulting and consulting services contracts for which the procurement activity is either ongoing or expected to commence within the procurement plan duration.

Goods and Works

Package Number

General Description

Estimated Value (in US$)

Procurement Method Review

Bidding Procedure

Advertisement Date

(quarter/year) Comments

FIP/G-1 Personnel Protective Equipment (N-95 masks, Tyvek suits, surgical gowns, gloves, face shields, hand sanitizers, disposable head, shoe cover, waste bins biohazard bag, surgical masks disinfectants, ethanol etc.)

46,051,416.00

OTHERS Post (Sampling)

Q3 / 2020 Non-Consulting Services: No No. Of Contracts: 4 Advance Contracting: No High Risk Contract: No Comments: FIP contracts are not subject to ADB's review. The Post review (sampling) will be carried out by NDRMF. NDRMF will be present at the bid opening and bid evaluation for all contracts $ 1 million and above.

FIP/G-2 Equipment for

Clinical Management ((Ventilators, vital sign monitors, ICU beds, defibrillator, nebulizers, pulse oximeters,

9,531,396.00

OTHERS Post (Sampling)

Q3 / 2020 Non-Consulting Services: No No. Of Contracts: 2

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Goods and Works Package Number

General Description

Estimated Value (in US$)

Procurement Method Review

Bidding Procedure

Advertisement Date

(quarter/year) Comments

ultrasound machines, x-ray machines, hospital consumables etc.) (

Advance Contracting: No High Risk Contract: No Comments: FIP contracts are not subject to ADB's review. The Post review (sampling) will be carried out by NDRMF. NDRMF will be present at the bid opening and bid evaluation for all contracts $ 1 million and above.

FIP/G-3 Equipment for

Diagnostic Labs. (Tyvek suits, N-95 masks, biohazard bags, PAPR, hands sanitizers P CR kits, viral RNA kits, VTM, Real Time PCR, biosafety cabinets, autoclave, PCR chambers, refrigerators/freezers, vortex machine, etc)

25,807,877.00

OTHERS Post (Sampling)

Q3 / 2020 Non-Consulting Services: No No. Of Contracts: 4 Advance Contracting: No High Risk Contract: No

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Goods and Works Package Number

General Description

Estimated Value (in US$)

Procurement Method Review

Bidding Procedure

Advertisement Date

(quarter/year) Comments

Comments: FIP contracts are not subject to ADB's review. The Post review (sampling) will be carried out by NDRMF. NDRMF will be present at the bid opening and bid evaluation for all contracts $ 1 million and above.

FIP/G-4 Software

Systems for COVID-19 monitoring and Decision Support System

2,146,288.00

OTHERS Post (Sampling)

Q3 / 2020 Non-Consulting Services: No No. Of Contracts: 2 Advance Contracting: No High Risk Contract: No Comments: FIP contracts are not subject to ADB's review. The Post review (sampling) will be carried out by NDRMF. NDRMF will be present at the bid opening and bid evaluation for all contracts $ 1 million and above.

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Goods and Works Package Number

General Description

Estimated Value (in US$)

Procurement Method Review

Bidding Procedure

Advertisement Date

(quarter/year) Comments

FIP/G-5 IT Equipment for Community Outreach and Tele-education

4,800,000.00

OTHERS Post (Sampling)

Q3 / 2020 Non-Consulting Services: No No. Of Contracts: 2 Advance Contracting: No High Risk Contract: No Comments: FIP contracts are not subject to ADB's review. The Post review (sampling) will be carried out by NDRMF. NDRMF will be present at the bid opening and bid evaluation for all contracts $ 1 million and above.

FIP/W-1 WASH Facilities

1,262,755.00

OTHERS Post (Sampling)

Q4 / 2020 Non-Consulting Services: No No. Of Contracts: 4

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Goods and Works Package Number

General Description

Estimated Value (in US$)

Procurement Method Review

Bidding Procedure

Advertisement Date

(quarter/year) Comments

Advance Contracting: No High Risk Contract: No Comments: FIP contracts are not subject to ADB's review. The Post review (sampling) will be carried out by NDRMF. NDRMF will be present at the bid opening and bid evaluation for all contracts $ 1 million and above.

FIP/W-2 Upgrading

existing facilities for including, sex-segregated patient wards and changing and resting facilities

3,788,266.00

OTHERS Post (Sampling)

Q4 / 2020 Non-Consulting Services: No No. Of Contracts: 2 Advance Contracting: No High Risk Contract: No Comments: FIP contracts are not subject to ADB's review. The Post

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Goods and Works Package Number

General Description

Estimated Value (in US$)

Procurement Method Review

Bidding Procedure

Advertisement Date

(quarter/year) Comments

review (sampling) will be carried out by NDRMF. NDRMF will be present at the bid opening and bid evaluation for all contracts $ 1 million and above.

NDRMF/G-1

Office and IT Equipment )and Services

100,000.00

RFQ Post (Sampling)

Q2 / 2020 Non-Consulting Services: No No. Of Contracts: 10 Advance Contracting: No High Risk Contract: No Comments: 1S1E, multiple contracts

Consulting Services Package Number

General Description

Estimated Value (in US$)

Selection Method Review

Type of Proposal

Advertisement Date

(quarter/year) Comments

NDRMF/ICS-1

Epidemiologist 40,266.00 Competitive Prior

Q2 / 2020 Non-Consulting Services: No Type: Individual Assignment: National

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Consulting Services Package Number

General Description

Estimated Value (in US$)

Selection Method Review

Type of Proposal

Advertisement Date

(quarter/year) Comments

Expertise: epidemiology, medicine Advance Contracting: Yes

NDRMF/ICS-10

Procurement Expert 3 (oversight/capacity building)

40,266.00 Competitive Prior

Q2 / 2020 Non-Consulting Services: No Type: Individual Assignment: National Expertise: Procurement and Contract Management Advance Contracting: No

NDRMF/ICS-11A

Procurement Expert 1 (post review sampling)

40,266.00 Competitive Prior

Q2 / 2020 Non-Consulting Services: No Type: Individ