Special Evaluation Study

Real-time Evaluation Study of the Multitranche Financing Facility

Evaluation

Independent

Special Evaluation Study
December 2012

Real-Time Evaluation Study of the Multitranche Financing Facility

Reference Number: SES: REG 2012-22 Independent Evaluation: SS-120

Senior Evaluation Assistant. “$” refers to US dollars. Guevara. Principal Evaluation Specialist. Independent Evaluation Division 2. Director General Director Team leader Team members V. or approving this report. IED M. In preparing any evaluation report. IED The guidelines formally adopted by the Independent Evaluation Department on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. IED T.NOTE In this report. Principal Evaluation Specialist. there were no conflicts of interest of the persons preparing. Thukral. Evaluation Officer. IED N. To the knowledge of the management of the Independent Evaluation Department. Thomas. Foerster. . Hettige. IED K. Fortu. Ueda. IED J. Independent Evaluation Department (IED) H. the Independent Evaluation Department does not intend to make any judgment as to the legal or other status of any territory or area. or by making any designation of or reference to a particular territory or geographic area in this document. reviewing. Evaluation Specialist.

Abbreviations ADB ADF ADTA AEDB BTOR COBP COP COSO CPS DMC DMF EA EIRR ELR eOps ERD FFA GaPG GCI IA IED IEI LOE MFF NEPS NPI OCR OM PAI PFR PFRR PMO POE PPTA PRC RRP RTE SPD SST TA TD TMS WPBF – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – Asian Development Bank Asian Development Fund advisory technical assistance Alternative Energy Development Board back-to-office report country operations business plan community of practice Central Operations Services Office country partnership strategy developing member countries design and monitoring framework executing agency economic internal rate of return equity to loan ratio e-operations Economics Research Department framework financing agreement Gansu Provincial Government general capital increase implementing agency Independent Evaluation Department innovative and efficiency initiative level of effort multitranche financing facility North East Power System nonphysical investment ordinary capital resources operations manual project administration instruction periodic financing request periodic financing request report project management office panel of experts project preparatory technical assistance People’s Republic of China report and recommendation of the President real-time evaluation Strategy and Policy Department second and subsequent tranches technical assistance Treasury Department time-sheet management system work program and budget framework .

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About the Multitranche Financing Facility C. Regions and Countries C. Monitoring and Reporting Arrangements Chapter 6: Implications for Operations A. Study Period E. Instruments Chapter 3: Expected Benefits A. Guidance on the Multitranche Financing Facility modality B. Peer Review D. Developing Member Country Perspectives B. Oversight. Decision-making filters C. ADB Perspectives v vii ix xix xxiii xxv 1 1 2 3 4 4 7 7 8 9 10 11 12 12 14 18 20 22 22 23 33 35 37 43 43 45 49 50 53 53 56 . Justification of the Multitranche Financing Facility modality B. Reduced Commitment Charges Chapter 4: The Working of the Modality A. Due Diligence and Viability Analysis C. Long-term Support to Clients B. ADB Support for Project Preparation D. Improved Organizational Effectiveness C.Contents Acknowledgements Foreword Executive Summary Management Response IED’s Clarification on the Management’s Response Chair’s Summay: Development Effectiveness Committee Chapter 1: Evaluation Focus A. Sectors D. Objectives D. Project Readiness E. Approvals B. Flexibility Aspects Chapter 5: Quality Assessment and Review A. ADB’s Funding Sources E. Evaluation Methodology Chapter 2: The Portfolio A. Background and Rationale B. Cofinancing D.

and Recommendations A. Processing and Implementation of Multitranche Financing Facilities 6 Cofinancing 7 Commitment Fee Savings 8 Strategic Context of Multitranche Financing Facilities 9 Policy Dialogue and Capacity Development (Selected Case Studies) 10 Trends of Technical Assistance and Program Lending Support 11 Financing Sources for Preparation of Second and Subsequent Tranches 12 Major and Minor Changes Approved in Multitranche Financing Facility Tranches 13 Tranche Performance Ratings 64 64 70 71 74 83 88 93 100 108 111 117 122 128 134 136 140 SUPPLEMENTARY APPENDIXES (available on request) A Multitranche Financing Facility and Tranche Data B Part 1: Survey Form for Multitranche Financing Facility Processes Part 2: Survey Form for Tranche Processing C Major and Minor Changes in Multitranche Financing Facility Projects D Multitranche Financing Facility Key Requirements and Processing (2005–2011) E Review of the Economic Evaluation of Multitranche Financing Facilities in the Transport Sector .Chapter 7: Key Findings. Lessons. Recommendations APPENDIXES 1 Overview of the Multitranche Financing Facility Modality 2 Evaluation Issues and Information Requirements 3 Multitranche Financing Facility Approved by Sector 4 Tranche Implementation Periods 5 Resources for Preparation. Key Findings B. Lessons C.

Division 1. The guidelines formally adopted by IED on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. executing agencies. The team gratefully acknowledges the feedback from external peer reviewers: Nils Fostvedt (formerly with the Independent Evaluation Group. This evaluation was prepared by a team led by Kapil Thukral. IED and Jean Foerster. or approving this report had no conflict of interest. The team also acknowledges the contributions from internal peer reviewers from IED: Henrike Feig and Toshiyuki Yokota. Eunica Aure.N. They all reviewed and commented on the approach paper and an earlier version of the draft report. Kolkma (Director. and implementing agencies who made time for interviews. Evaluation Specialist. IED. reviewing. IED) and Valerie Reppelin-Hill (Advisor. The team also wishes to thank ADB Board and Management who found time to be interviewed. Ellen Nunez and Aiken Rose Tafgar were the headquarters consultants. IED) for their contribution in giving the finishing touches to the report. M. Transport Specialist) worked closely with the team leader to provide insightful inputs through all stages of the evaluation. Hong Miao (PRC). IED. This evaluation was conducted under the overall guidance of Vinod Thomas. To the knowledge of the management of IED. . The team also wishes to thank ADB staff in Manila and in resident missions who made time to be interviewed and respond to a survey. the persons preparing. Director General. Raina (India) and Vu Hoang Hoa (Viet Nam). Principal Evaluation Specialist. D. Division 2. Technical and administrative support was provided by Lawrence Nelson Guevara and Myrna Fortu respectively. Principal Evaluation Specialist. Other in-country consultants engaged for the study included: Anna Gogokhia (Armenia). IED. World Bank) and Stephen Curry (formerly with ADB). The team wishes to thank officials of various developing member country governments. as well as making available relevant documents. IED and Hemamala Hettige. The team also thanks Walter A. Director. Karine Taslakyan (Georgia). Gunter Hecker (Consultant. Intermittent inputs were also obtained from Tomoo Ueda.Acknowledgments This real-time evaluation is a product of the Independent Evaluation Department (IED) of the Asian Development Bank (ADB).

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but not the benefits to development outcomes—or vice versa. The instrument is special in providing the comfort of long term programmatic support to a country without the commitment fee cost associated with subsequent segments in a financing envelope. say the cost of having due diligence or sound safeguards. as is the case sometimes. economic. so as to improve the modality’s efficiency and effectiveness without diluting ADB’s prudence in financial planning and exposure to reputational risk. they reflect the need for much better upfront screening and project selection. Yet. environmental. Management has incrementally introduced procedures to direct the implementation of the MFFs in the spirit with which ADB normally extends support. In essence. this evaluation tried to comment on both the costs and benefits. and conform to technical. as well as for tougher decision making with respect to exercising the option of discontinuing an ongoing but poorly performing MFF investment program. Management has assured that the process of such devolution. the rapidly growing acceptance of the MFF modality warrants more guidance and due diligence on practices regarding its preparation. Yet. and mainstreamed it in mid-2008. have been interpreted so liberally that their application potentially compromises the development goals and outcomes in varying degrees. and the putting in place of checks and balances – to ensure development effectiveness – are evolving. It would be a mistake. this evaluation finds that some guidance and directives that were aimed at streamlining the business processes. social and fiduciary perspectives. financial. processing and implementation. to consider just the cost side of an operation. MFF documentation is incomplete. it is vital to look at instruments within a framework that accounts for both the cost savings delivered by the approach and the development benefits it brings about. through field visits.Foreword Against the backdrop of the need for more innovative and efficient financing instruments to meet the large and growing financing gaps in many countries. This has a bearing on the modality’s contribution to development effectiveness. the study has come up with sufficiently robust findings and lessons. Both features have contributed to the attractiveness of the instrument to countries and to ADB. . However. The evaluation examines outstanding issues that need to be addressed. This process evaluation. is an opportunity to examine how things are going and what needs to be done. Despite data and timing limitations. interviews with staff and the triangulation of different types of information. for the enforcement of rigorous checks and balances during implementation. In evaluations such as this. Hardly any MFF has been completed as yet. The modality also has considerable in-built flexibility in its use. the Asian Development Bank (ADB) piloted the multi-tranche financing facility (MFF) from mid2005. as requested by the Board. The most significant change that needs attention is the impact of the devolution of decision-making from Board to Management on the needed adherence to a programmatic approach.

viii Real-Time Evaluation Study of Multitranche Financing Facility The study supports the continuation of the modality as one instrument in ADB’s tool kit. the review stresses recommendations for strong action to direct the instrument towards enhancing the development impact of the operations. Within such a forward looking framework. on the basis of its attractiveness to clients as well as its potential impact on development effectiveness when implemented well. .

enabling clients to adjust and modify their project pipeline. some Board members noted some lapses in due diligence and risks to implementation and accountability. in 3–4 years time. and helping ADB to work better with other development partners. relying on government agencies to submit tranche proposals only if and as soon as new tranche projects would be ready. After approval of an MFF. A key difference. MFF use has been significantly less in DMCs of East and Southeast Asia as well as in the Pacific. the MFF modality was mainstreamed in mid2008 by ADB’s Board of Directors. In Armenia. however. This presented the advantage to clients that they would be assured of a stable financing source. Favored Modality ADB’s generation of a large pipeline of MFF investment programs year after year is indicative that the MFF is becoming a favored modality in many developing member countries (DMCs). and requested ADB Management to closely supervise due diligence. without a liability to pay commitment fees on the entire MFF envelope. The MFF modality aimed to strengthen ADB’s capacity to mobilize development finance by enhancing the flexibility and client orientation of its financial products. which has the biggest MFF portfolio and which was visited by the study team. making ADB more in tune with existing and evolving market practices. The incentive structure of the MFF. with a need to pay commitment fees only on the approved loan tranches or guarantees. the modality of the multitranche financing facility (MFF) was intended to facilitate the programming of a set of individual loan tranches in a sector and country in an efficient and sequential way. the MFF’s flexibility is viewed as its most attractive feature. which together account for more than 75% of the number and amounts of the MFFs approved until the end of 2011. and without the need for the processing of each such tranche for ADB Board approval after the facility itself would be approved. The advantage would also be that only tranches approved would burden the clients’ balance sheet and its cofinancing abilities. At the time. the utilization period could extend up to 10 years or longer. and Georgia. The .Executive Summary Introduced at the Asian Development Bank (ADB) in mid-2005. In India. not the entire amount of the MFF approved. Following a 3-year pilot period. also provided ADB with a way to expand its lending without the need for commensurate increase in staff resources for processing. other countries that IED teams visited over the year. is that 25 of 26 approved MFFs in South Asia are in one country (India). Azerbaijan. the MFF in the context of its development effectiveness. the MFF modality is favored because of the government’s appreciation of the framework financing agreement (FFA) of the MFF as a long-term ADB commitment. This real-time evaluation is in keeping with this request. while the 26 MFFs approved in CentralWest Asia are spread across seven countries. not the entire MFF financing envelope from the day of its approval. The Board also asked the Independent Evaluation Department (IED) to evaluate. There is also appreciation of the fact that the signing of specific tranches can be timed for the moment when project readiness is achieved. It has been used extensively in Central-West and South Asia.

if implementation of the first project was satisfactory. the multiphase or multi-country series of projects. reflecting the priorities outlined in Strategy 2020. however. which. which raised ADB’s ordinary capital resources for lending. the loan covenants were substantially complied with. The transport and energy sectors account for 62% of the total number and 69% of the total MFF amounts approved until December 2011. For the second lending modality.8 billion in 2006 to $6. Unique Modality The MFF is unique among the lending modalities offered by development partners in that it provides the comfort of long-term programmatic support to a DMC client but without entailing an additional cost burden on the client. In conclusion. The evaluation notes that. at the time of conducting this study in 2012. additional financing. by considering efficiency gains or cost reductions (relating to transaction costs. prerequisites of alignment of MFF tranches with road maps. The continued increase in MFF and tranche approvals after 2009 was facilitated by the General Capital Increase V. The World Bank has two similar investment lending modalities. many governments like the MFF for financial and flexibility reasons. and the additional loan was economically justified.x Real-Time Evaluation Study of Multitranche Financing Facility attraction is viewed as higher where the clients do not need to seek specific approval from top decision makers in the country for a new project under the same MFF umbrella. ADB’s Innovation and Efficiency Initiative in 2005. with a combined financing envelope of about $32 billion. The regional departments had also not yet conducted any self-evaluations for the completed MFF programs. another country visited by the study team. flexibility.2 billion in 2011. and streamlined approval of subsequent tranches) as well as gains in development effectiveness (relating to programmatic approach. These factors made it . Evaluation Framework This evaluation takes into account both the costs and benefits associated with the MFF modality. and without Board approval. This appears to be the case in Pakistan also. The number of countries in which the MFF modality had been introduced had increased from 6 in the pilot period to 14 by the end of 2011. For one lending modality. of which the MFF was a part. Annual approvals at the facility level had risen from $3. the World Bank’s Board approves the first project under regular procedures and succeeding replication projects on a no-objection basis. the Board would have to convene to approve such a replication project. do not announce a financing envelope up front. a follow-on project is supported through additional financing only. Simultaneously. the Board had approved 66 MFF investment programs. The MFF has been used predominantly in the infrastructure sectors. relying in part on the MFF modality to do so. tranche approvals had grown from 17% of total loan/grant approvals in 2006 to 27% in 2009 and 37% in 2011. unless there are significant modifications. By the end of 2011. In such cases. ADB increased lending volumes rapidly. These checks were built in to safeguard the development effectiveness of the lending programs. had a results framework that stated as impact: demonstrable improvements in the development impact of ADB operations in reducing poverty in DMCs. and institutional capacity needed for ensuring both quality implementation and sustainability). very few MFF programs had been completed.

The lack of documentation and data or their availability to independent evaluation itself. However. Nevertheless. so as to clarify the . is a finding that needs to be addressed. and stating that they needed strict compliance. Relevant information for case studies. As a result. in the concept papers and reports and recommendations of the President (RRPs). staff efforts. and implications for financial planning. xi Study Findings The MFF is a relatively new instrument. and implementation made subsequent to the mainstreaming of the MFF also apply to other lending modes. however. to explore the opportunities available for improving the efficiency and effectiveness of the modality midstream. this real-time evaluation focuses on reviewing processing timelines. The evaluation is also influenced by the fact that a large number of documents are required to fully understand how a particular MFF investment program has progressed since approval. Many of the procedural changes for the preparation. (ii) the peer review process. Management issued its first Operations Manual section on MFFs (Section D14). and it has gradually closed some of them. A more thorough evaluation of the development effectiveness of the MFF modality can be done at a later stage. saving of commitment charges. IED did not have access to all required documents and data as needed and requested for this evaluation. Triangulation of information at various levels gives the evaluation confidence about its key findings. Management realized that the initial guidance on the design and functioning of MFF programs had gaps. The inability to trace the documentation trail of the MFF process tends to compromise transparency and the accountability associated with its use. India. (iii) clarification on what constitutes major and minor changes in scope at the MFF and tranche levels. the evaluation focuses on improving these aspects to contribute to the learning about greater development effectiveness of the MFF modality as well as other modalities. Instead.Executive Summary very difficult to test any particular MFF’s development effectiveness in detail. In August 2008. particularly where tranche project changes are affected. In 2011. Georgia. the discussion on many aspects of the MFF cycle involves steps that are similar to those of stand-alone modes. People’s Republic of China. was obtained through interactions with ADB staff as well as in-country stakeholders for selected MFF programs in Armenia. when adequate experience has been gathered to develop plausible counterfactuals for various circumstances in which the MFF modality has been used. Azerbaijan. as seen in this evaluation and sometimes elsewhere. Management issued Staff Instructions to introduce significant changes related to (i) reinforcement of the August 2008 provisions of the Operations Manual section on MFFs. and Viet Nam. and the quality of the MFF prerequisites. specifically regarding justification of the choice of the modality. except for devolvement of decision making related to second and subsequent tranches from the Board to Management. This has adverse implications for fiduciary control on the resources provided in the MFF. flexibility. During its early implementation. the evaluation does provide some early indication of the MFF modality’s likely contribution to development effectiveness on the basis of proxies for development effectiveness (such as the quality of due diligence). processing. The MFF essentially follows the same procedures as ADB’s other sovereign lending instruments. which was strengthened with the creation of a Panel of Experts (POE) to advise at the MFF preparation and processing stages.

leaving more time for ADB staff for policy dialogue during implementation. The linkages between design and monitoring frameworks (DMFs) at the MFF level and at the tranche level have improved. which increased to 72% from mainstreaming in 2008 to the end of 2011. and implementation of MFFs. Some improvements have been observed in response to the guidance given over the years. Likewise. on the classification of scope changes. Organizational Effectiveness The evidence is not clear on expected savings in staff time for processing. the Board appreciated the elaboration of such a good road map and sector strategy for an MFF on roads in Azerbaijan. and reporting arrangements. processing. However. . in the required approval documentation. monitoring. modality was intended to enhance ADB’s organizational effectiveness by saving staff resources for processing of repetitive tasks at the tranche level. Unclear is the trend in the quality of and adherence to the important MFF prerequisites. but there is a need to improve these further. a number of MFFs approved each year continue to be backed by weak road maps. The . Before and after mainstreaming. although a more sophisticated rating mechanism is expected to evolve to provide more detailed and evidence-based insights on performance-related matters. This evaluation identifies issues that need to be addressed to improve operational efficiency and development effectiveness associated with the modality. Reporting to the Board has also improved through the scorecard system.xii Real-Time Evaluation Study of Multitranche Financing Facility approval authorities for various types of changes. and provision of forward information to the Board in the form of a consolidated summary of periodic financing requests (PFRs) received for various approved MFFs. Low numbers of tranche scope change approvals post-2011 for which description and classification related information was available to IED. although the MFF modality can help regional departments to plan better their people and skill requirements. the small number of tranche approvals since December 2010 also makes the observation of any improvement in MFF tranche project readiness inconclusive. specifically through a scorecard system to rate the performance of each MFF. RRPs and FFAs have also become more consistent in terms of reflecting or considering cofinancing. and it was the basis for their approval of the second MFF in spite of problems encountered in implementing the first. Weaknesses in the quality of institutional capacities and policy frameworks also persist. Since mid-2011. from 15% in the pilot period to 28% after mainstreaming. Recently. However. there is no indication of greater staff continuity for preparation. For instance. (iv) improvement of oversight. 65% of the MFFs approved during the pilot period gave a firm number or a range for the number of tranches. available data on elapsed time and level of effort for processing do not provide clear evidence of savings in either. each year some high-quality road maps and sector strategies have been a basis for approval of some MFFs. after mainstreaming. which provides information on forthcoming tranche approvals. Besides. the Board has also begun to receive a consolidated statement that lists the PFRs received from DMCs. makes it difficult to conclude whether improvements have been made after the December 2011 guidance. Likewise.

The additional financing that is allowed within the MFF modality may have discouraged attention to proper tranche design or careful cost estimation. Although there is some improvement in up-front documentation in this respect (72% of MFFs have had tranching information up front since mainstreaming compared with 65% during the pilot period). the flexibility enabled by MFFs is one of the key reasons for their increased acceptance and support in many DMCs. simply shifting a certain project from one tranche to another was classified as a major change. Along with greater certainty for long-term funding. in 30% of the MFFs. but this study finds it difficult to gauge whether they are effective. The MFF modality is potentially more conducive to cofinancing than other lending modalities and instruments. The lack of an adequate information system and non-availability of data on cofinancing do not allow an analysis of the levels of cofinancing achieved through the MFF modality in comparison with other modes. as in an agriculture and water management MFF in India. in a few cases. Although extending the policy to the MFF modality is consistent with. In many cases. On the other hand. on the basis of the limited new information available to IED. the MFF documents only mention that cofinancing will be pursued upon the specific request of the concerned government. Changes were classified as minor in about 85% of the cases known to IED until December 2011. However. or that the client will explore cofinancing with other development partners. For this reason. This allowed the concerned department head to approve changes (of scope or financing or implementation arrangements) in an approved tranche until the end of 2011 if the change was classified as minor. It is often not clarified whether cofinancing will be incremental to the MFF financing envelope or a substitute. MFF flexibility is enhanced by the rules that govern additional financing. The clarifications introduced in December 2011 would seem to have reduced the scope for unwarrantedly excessive flexibility. it is unlikely that all projects for all tranches would even be identified. about 30% of all approved MFFs do not indicate a firm number of tranches or a range up front. Such built-in flexibility is necessary for MFFs. and leverages the programmatic . In some instances it would seem to be clarified. and cost overrun financing for a project previously not supported by an MFF. Such differences in interpretation were seen for transport sector MFFs across regional departments and also across countries within the same regional department. The lack of clarity on what constitutes a major or minor change at the tranche level has resulted in a situation where most changes in tranches have been categorized as minor changes. as it offers clients greater certainty and up-front agreement for long-term funding without the accompanying commitment charge payment obligations. Minor changes included cost overrun financing of some projects from a certain tranche through a subsequent tranche of the same MFF. because at MFF approval. Flexibility MFFs are used highly flexibly over long utilization periods that average about 8 years. Lack of clarity regarding the nature of scope changes that require Board approval has led to another questionable aspect of MFF flexibility. the RRPs and FFAs of more than 70% of the approved MFFs mention or consider cofinancing in some way. the documents are not consistent in their reference to cofinancing.Executive Summary Cofinancing xiii Cofinancing has been mentioned or considered in the approval documents of most MFF investment programs. the flexibility thus accorded to the MFF program can compromise the programmatic approach originally approved.

However. Project-level Due Diligence Safeguards due diligence is conducted for all projects. The original guidance given implied the need for good institutional capacities and policy frameworks. and only a few MFFs have done so in second and subsequent tranches. ADB also supports safeguards capacity development in a large number of approved MFF programs. Most MFFs have allocated and incurred nonphysical expenditures (such as for capacity development) only in the first tranche. a few MFFs recognized the need to evaluate institutional capacities and use that as a basis to allocate and incur nonphysical expenditures for capacity development. As ADB often interfaces closely with consultants and executing agencies when PFRs are being prepared. and ADB reviews safeguards requirements during the early stages of tranche project preparation. For instance. cost recovery. In some cases. which meant that the stated road map could not be used to filter investment opportunities. sustainability. the appraisal cost estimate of a major road project was made without finalizing the highway alignment. Nonphysical Investment components need to be designed on the basis of upfront institutional capacity assessments. for a transport sector MFF in Azerbaijan. including bottlenecks. even though the MFF modality allows for this. it has led to some cases where sufficient attention may not have been given to project design. MFFs in some Central-West Asian countries). technical due diligence seems not to have been conducted rigorously. the road map did not have a detailed assessment of physical and nonphysical investments. and noted that (i) feedback on technical design or cost-effective technical alternatives seems to be an exception. such feedback is often via email. and mitigation measures. and (ii) most technical contributions from ADB relate to ADB’s advice on procurement guidelines or certain aspects of environmental impact management. or policy frameworks are not of the requisite quality in more than 20% of the MFFs for which sufficient information was available to the study team—but this percentage can exceed 75% in some country groups (for instance. Weak institutional capacities that are very likely the underlying reason for such occurrences need to be addressed up front. ADB staff are expected to comment on technical matters during this stage. Up-front Due Diligence Up-front assessments of MFF prerequisites ought to be comprehensive and rigorous. In some cases that were investigated. In other cases.xiv Real-Time Evaluation Study of Multitranche Financing Facility orientation of the MFF. whether or not they are in an environmentally or socially sensitive category. and records are not kept systematically. IED could access such records only for some MFFs. and competition. risks. the policy framework did not focus on the main challenges of the particular sector. Given that ADB promotes diligent safeguard implementation and the capacity of many executing agencies is lacking in this regard. concept papers for . the available documentation (RRPs. . such as efficiency. as this study learned. FFAs. Insufficient sector expertise within the staff team and the relevant sector community of practice implies the need for ADB to engage consultants to comment on technical design and engineering aspects. Sector strategies. road maps. However. At the initial design stage. and others) of MFFs does not establish a link between the findings of such institutional capacity due diligence work and the design of nonphysical investment components.

and (ii) ADB retains the right to decline execution of any legal agreement for a tranche. were not converted into tranches rose from $4. across all MFF investment programs. Portions of MFF financing envelopes that . The fact that nearly 50% of all second and subsequent tranches approved thus far. and reduce headroom. when the PFR report is nearing finalization. However. ERD obtains a PFR report for commenting at a late stage. such as if the client does not meet the conditions described in the FFA and/or legal agreements. which is part of the team processing an MFF tranche. crowd out other lending.g. Self-Evaluation xv Subsequent MFFs and tranches may not benefit from the lessons of previous MFFs and tranches. impact ADB’s ability to manage contingencies.. it appears that. At this stage. where three electricity distribution companies in Madhya Pradesh are executing agencies in two MFFs). However. However. ADB is permitted to discontinue the MFF in midstream . a reexamination of economic viability would most likely lead to significant delays in tranche approval and is therefore not done. in some countries. wherein the second MFF was approved before the closure of the first MFF in that sector. being cognizant of reputational risk. Moreover.Executive Summary Economic due diligence of tranche projects must be rigorous. The lapses in technical and economic due diligence were corroborated by some departments during the stage of interdepartmental circulation of a draft for comments. Where a minor or major change is effected in tranche projects. ADB has multiple MFFs with the same clients (e. The rising number of MFFs adversely impacts ADB’s ability to manage contingencies and headroom considerations. the experience gained from the first MFF may not contribute to the design of the second MFF.4 billion at the end of 2006 to $15 billion by the end of 2011. This means that the findings and lessons from an earlier tranche do not have to be taken into account in the design of tranches approved before its closure. and will provide financing only if the borrower and client are in compliance with the MFF prerequisites. Lending Planning and Financial Projections Empirical experience regarding MFF discontinuation is different from what the modality in principle allows. have been approved in the December bunching season means that Management does not have sufficient time for review and oversight. the memorandum is not required to be circulated to ERD for comments. MFF investment programs thus lock up future finances. ADB’s Treasury Department models MFFs in the ordinary capital resources balance sheet on the basis of historical and projected data provided by other ADB departments. in spite of situations where some binding commitments in the FFA are not met. By design. the MFF modality allows for the approval of a subsequent tranche before closure or completion of a previous tranche. under certain conditions. and the MFF approach is evolving as a consequence. ADB Management has preferred not to discontinue any MFF program thus far (except to divert a small part of the financing envelope to an emergency loan in Pakistan). Specific FFAs also reinforce this view. In such instances. the Economics and Research Department (ERD) also reviews the economic analysis. their major thrust being that (i) the FFA does not constitute a legal obligation on the part of either the DMC or ADB. In addition to inputs from an economist. and notes that ADB’s capital headroom has been falling over the past few . this study is encouraged by positive feedback from several departments that such lesson learning is now taking place. and that either side can exercise its right to cancel the MFF or any uncommitted portion thereof. in India.

the facility-wide and tranchelevel DMFs can form a basis for tracking and reporting performance at the MFF and tranche levels by further improving the linkages between MFF and tranche-level DMFs. technical. and the evidence for improved development effectiveness remains tentative. This will diminish ADB’s ability to mount crisis-response operations. Such documents have been difficult to obtain for this evaluation. with the possible exception of certain types of investments (such as a long highway that can be financed through a series of tranches). the country strategies and rolling business plans are not a sufficient basis for advance MFF-related information to the Board. social. Lessons on Documentation and Monitoring Lesson 1: Where the development effectiveness of a specific MFF investment : program is to be assessed. Lessons towards Rationalizing the Use of the Multitranche Financing Facility Modality Lesson 4: Where capacity constraints exist.xvi Real-Time Evaluation Study of Multitranche Financing Facility years and is projected to fall to the minimum acceptable and prudent level over the next few years. gender. While the devolvement of tranche approval processes encourages flexibility in many ways. financial. Lesson 6: Where lending constraints are increasing. In short. and undertakings cannot be considered firm. and equity objectives along with improving operational efficiency and minimizing the environmental footprint. if prepared. The scorecard system can also provide a better basis for gauging and comparing performance across MFFs when the performance rating system is improved. to ascertain client ownership and buy-in. financial.. Equally important is the rigor of due diligence on legal. governance. and safeguards due diligence is important. fiduciary oversight and other aspects. the achievements through the MFF program may deviate significantly from what was stipulated in the Board-approved documentation upfront.g. of terminating or cancelling ongoing MFFs in midstream. Lesson 3: Where actual tranche approvals in a given year exceed the country : financing envelope for that sector. where institutional capacities are weak. social. the energy sector MFF in Afghanistan). It is also difficult to institute policy frameworks that encourage a judicious mix of commercial. the investment plans. as well as when a specific MFF investment program is to be independently evaluated. financing plans. the MFF prerequisites of the desired quality are not likely to be easily achieved (e. if necessary. Such information will be needed at MFF closure. Lesson 5: The rigor of economic. regulatory. Lesson 2: Improved monitoring can serve to give early warnings on the : performance of large and long-term MFFs. For instance. it is difficult to prepare credible : strategies and road maps—or. . Under such circumstances. when an MFF completion report is to be prepared. data and documents that shaped the MFF implementation need to be accessible. it would be useful for ADB to consider ways to be able to exercise the option.

Recommendation 5 deals with issues related to access to data and documentation. The five recommendations presented below build on the lessons learnt and are intended to strengthen the MFF modality. however. which could be integrated with the country programming strategy formulation process. In responding to the Board request. it is crucial that the delegation of authority by the Board to Management to approve and adjust subsequent tranches of MFFs be supplemented and underpinned by meaningful and monitorable due diligence exercised by Management. such as the MFF prerequisites. Owing to concerns that arise because the MFF modality has been amenable to diversified uses and interpretations beyond what was originally envisaged. it is essential to augment the existing peer review mechanism with (i) use of suitable MFF readiness filters for specific ADB regions or DMCs. and on the basis of the study’s findings and lessons. as well as results-based financing and other modalities currently under consideration). To ensure development effectiveness. strong actions are recommended to improve the development effectiveness of upcoming MFF programs and tranches. The adequacy of such due diligence and preparation must be reconfirmed through monitoring arrangements in subsequent recommendations.Executive Summary xvii Recommendations The MFF modality has attractive features that have the potential to help improve operational efficiency as well as development effectiveness. Recommendation 4 is in recognition of the crowding-out effects. Recommendation 1 is consistent with the key MFF requirements articulated in the internal Staff Instructions of July 2011. this evaluation takes a broad view that the MFF modality needs to continue as one of the financing instruments in ADB’s toolkit (which includes additional financing and other existing modalities. which is based on stand-alone modes rather than a long-term multitranche facility. and the need for ADB to maintain its ability to respond to crisis situations. there needs to be a realistic discussion on institutional capacities and the suitability and stability of a policy framework. and the design of physical investment programs that conform to MFF prerequisites. To facilitate adherence to other provisions of the Operations Manual. Towards this goal. this evaluation recommends that Management continue to address the weaknesses in the MFF approval and implementation processes that have been experienced thus far. Recommendation 1: Apply the standards for the needed quality of MFF prerequisites for MFF investment programs in countries and sectors as designed at the time of mainstreaming. Similarly. provided a number of prerequisites are adhered to. Recommendation 3 seeks a correction of the midterm review and monitoring system. . and (ii) training of staff on the conduct of due diligence for institutional capacity (which can help improve the design of nonphysical investments and the content of policy dialogue) as well as for enhancing understanding of various MFF prerequisites (as per the relevant Operations Manual sections). recommendation 2 suggests a way to ascertain that the provisions of the Project Administration Instructions of December 2011 are complied with. ADB must ensure that future MFF programs are consistent with the provisions of the relevant Operations Manual section (D14) and that the comparative advantages of the MFF modality vis-à-vis other lending modalities are highlighted at the concept stage. In recognition of the MFF’s potential advantages and the fact that the instrument is appreciated for its flexibility by clients. and suggests a way forward to ensure that such requirements are met.

It is useful to weigh the pros and cons of conducting annual reviews versus midterm reviews during the MFF utilization period. and Central Operations Services Office) to consistently and uniformly interpret guidelines that define minor and major tranche project change categorization. in relation to remedial actions required. economic and safeguards due diligence of tranche projects also need to be considered. in relation to the country programming financing envelope. it is important to institute systems and procedures that allow for sufficient flexibility for DMC governments and clients. Office of the General Counsel. the MFF modality. it would be useful to devise criteria for their cancellation or discontinuation. . The results of the formal reviews ought to be reported to the Board in a timely manner. in relation to levels achieved so far. In view of the extent to which flexibility mechanisms have led to project changes in approved tranches in the past. without compromising on other intended benefits of the modality. the MFF modality currently does not require a facility-wide midterm review. Management can also initiate suitable awareness-creation activities. Recommendation 4: Regularly monitor MFF portions not converted to tranches. and take necessary steps that will help ensure prudent lending planning and financial projections. and to facilitate learning and accountability. Should it be necessary to avoid reputational risk. Controller. The use of all these databases (including eOperations and the time-sheet management system) can also be encouraged to help obtain feedback for improving them further. This can be achieved by having an online searchable repository on the intranet. or (iii) activities to overcome deficiencies found in midterm reviews. or coinciding the timing of such reviews with the country partnership strategy preparation process.xviii Real-Time Evaluation Study of Multitranche Financing Facility Recommendation 2: Manage the use of flexibility during the MFF implementation period without compromising. or with the strengthening of the benefits of. Options for such criteria can comprise suitable triggers that relate to (i) the required rate of tranche approvals and amounts in the remaining MFF utilization period. Given that ADB DMCs increasingly demand knowledge products and services. Although it can span two or more country partnership strategy cycles. as well as ensure proper scrutiny of the MFF prerequisites. A suitable arrangement can also be worked out to ensure uniform interpretation of guidelines across regional departments. (ii) a cap on the MFF financing envelope not converted to tranches. It is important to institute a system of one or more facility-wide formal reviews during the term of the MFF to facilitate Management decision making. ADB needs to maintain adequate record keeping and provide easy access to all relevant documentation. and that data. procedural and other changes required to improve technical. The design and due diligence of other stand-alone modes will also benefit from such measures. Recommendation 5: Ask for regular submission of necessary documentation from clients and make all relevant documentation and data on implementation of an MFF immediately accessible within ADB. Each regional department can have a focal person who guides other ADB staff (in consultation with the Strategy and Policy Department. Given the concerns that result from continuously rising portions of MFF financing envelopes that are not converted to tranches. Recommendation 3: Conduct facility-wide mid-term reviews of ongoing MFF programs and formal reviews at any time deemed appropriate. once entered. Besides. are audited and verified to ascertain correctness. It is also essential to establish systems to ascertain that all official online databases are regularly updated. or postponement of tranche approval. and the fact that the additional financing mechanism has led to unwarranted flexibility in project design.

including those in fragile and conflict-affected situations as appropriate. Since no MFFs were closed during the Report period and only a few of tranche completion reports have been prepared (Paras 12 and 170). These features enable a more customized approach to address the needs of different DMC clients and have led to increased demand for MFFs.g. received the following response from the Managing Director General on behalf of the Management: I. Foreword. or data was available but not reviewed by IED. The important role of the MFF in making ADB more relevant through innovation of new products is well recognized. The MFF is an innovative and demand driven financing modality developed by ADB to better address DMC client needs. 3. inferring that ADB is approvals driven (Executive Summary). While the Report refers to some of the benefits of the MFF. It is not clear whether documentation was requested from ADB staff and available but not provided or withheld. Another key benefit of the MFF is that it provides predictable financing for clients without liability to pay commitment fees on the entire MFF envelope. 25. General Comments 1. the Report contains sweeping generalizations which are not evidence based and fails to adequately take into account the evolution of this instrument and recent governance improvements under Staff Instructions which became effective in July 2011.Management Response On 15 January 2013. The Report implies that MFF documentation may have been withheld by repeatedly stating adequate data is incomplete or not readily available or accessible (e. Independent Evaluation Department. The MFF provides greater flexibility in design and a longer term platform for cofinancing partnerships. We welcome the Special Evaluation Study on Real-Time Evaluation of the Multitranche Financing Facility (MFF) as a way to take stock of progress in implementing the MFF in developing member countries (DMCs). We believe that the Report’s negative and unbalanced tone fails to fairly reflect these aspects. Executive Summary. 71. Paras 20. incorrect assumptions are presented as conclusive: i. 75. this unique lending modality enables longer term engagement (policy and capacity development) with DMC clients. the Director General. 4. the MFF is a relatively new instrument and still evolving. The Report incorrectly implies that MFFs were designed to expand ADB lending. . As discussed below. However. MFFs were developed to provide DMC clients with a greater choice of lending modalities to better address their needs and ii. we agree with the need for further evaluation of effectiveness at an appropriate time after a critical number of MFF projects are complete. This is not correct. As recognized by the SES. data was requested but not available. 2. 178). 81.

The Report states that adequate information required for a “reasonable evaluation” of the MFF modality is not readily available or accessible for ii. The Report assumes that the rapidly growing acceptance of the MFF warrants additional requirements. The Report does not compare the performance of MFFs with other lending modalities. but enable ADB to provide long term commitment. in contrast to stand alone projects. raising due diligence concerns. MFFs not only help DMCs avoid unduly high commitment charges. We disagree with this conclusion. which will enable more concrete findings and recommendations to improve MFF performance. For example. 201). which led to the fifth General Capital Increase (GCI). bunching and loan cancellation. (Foreward). These recommendations do not adequately acknowledge recent improvements in MFF governance under Staff Instructions. v.xx Real-Time Evaluation Study of Multitranche Financing Facility are anchored in the Country Partnership Strategy (CPS). was expected to generate such savings. This is not correct. when the design of the MFF. iii.g. which follows specific business processes and stakeholder consultations. iv. e. and not because of ADB’s desire to expand lending. due diligence. Periodic Financing Report (PFR) approvals in a given year are equal to approvals that can be done through stand alone projects based on overall annual approval ceilings arising from equity to loan ratio constraints. for example. We disagree. For example. . adoption of MFF readiness filters for specific ADB regions or DMCs (Para. As a matter of fact. the Report claims that the liberal interpretation of guidance and directives aimed at streamlining the business processes potentially compromises MFF development goals and outcomes in various degrees. The Report concludes that there has been not much savings in commitment charges (Para 175). The Report does not compare MFF implementation over time to clarify improvements after 2008 mainstreaming and adoption of 2011 Staff Instructions. The Report implies that the new streamlined business processes result in less disclosure of key information. OM D14 and Staff Instructions provide clear guidance on MFF information requirements. iii. Adoption of the Staff Instruction clarifying this requirement and including new quality control procedures (MFF Panel of Experts) has addressed this concern. This is incorrect. ADB lending has grown because of client needs and their appreciation of ADB products that respond to their needs. institutional capacity. We believe that there are flaws in the evaluation methodology: i. 5. the Report (Para 64) states that the requirement to include a comparative matrix on the choice of the MFF modality in the concept paper is not met in most cases. Many of the issues discussed in the report are relevant to processing of all lending modalities. The Report covers the period through December 2011 and the new Staff Instructions became effective in July 2011 to strengthen the quality of MFFs and address this concern. The scale of DMC needs was recognized by ADB’s shareholders.

Instead the Report relies on anecdotal evidence. The Report questions the expected savings in staff time for processing under the MFF (Executive Summary. This statement is incorrect. and program policy support that was provided earlier has been discontinued in sectors where MFFs have penetrated the most (Para 79). II. The Report questions whether MFFs allow clients to plan more systemically and mobilize co-financing for investment plans or individual projects. the Report states that the envisaged opportunities for policy dialogue have not been realized. ADB has not been able to provide program lending in Pakistan in the absence of an IMF program – this important factor underlying the shift in approach is not mentioned. and states that findings are “sufficiently robust” (Foreword). raising questions about the credibility of the findings. The Report indicates that ADB’s rapid increase in lending volumes after 2009 was based in part on the MFF modality (Executive Summary). The two points are inconsistent. The Report refers to two MFF projects to conclude that insufficient attention “may” not have been given to cost estimates in project design based on cost overruns and the use of MFF tranches to address such overruns (Para 103 and box 8). The Report states (Para 181) that additional financing that is allowed in the MFF modality “may” be leading to less attention to proper project design. The example given in Box 5 is on the energy and transport sectors in Pakistan. i. Comments on Specific Recommendations 7. Many specific recommendations disregard recent MFF governance improvements under the new Staff Instructions. including views from unnamed sources. Report findings also ignore relevant information. . Specific recommendations under the Report are very general and based on good practices for the processing of loan financing modalities. 6. while other sections of the report (Para 43) confirm that MFFs provide clients with “the comfort of longer term support” than other modalities. and greater opportunities for co-financing (Para 56 notes that in 48 of 68 MFFs. We believe that such findings should have been anchored on more facts. iv. There is a disconnect between Report conclusions and analysis/data. . co-financing is mentioned). xxi ii.Management Response most MFFs (Para 20). iii. Para 172) and ignores and contradicts the results of a survey of MFF team leaders under which 29 out of 36 (81%) responded that tranche processing took less time than a standalone project (Para 51). v. The main drivers of growth in lending volumes in 2009 and 2010 were programs loans and counter cyclical support. If adequate information is not available the findings cannot be sufficiently robust and provide adequate grounds for evaluation. The GCI V enabled ADB to meet this demand.

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Real-Time Evaluation Study of Multitranche Financing Facility
8. Recommendation (i): Apply the standards for the needed quality of MFF requisites for MFF investment programs in countries and sectors as designed at the time of mainstreaming. While we agree with the rigorous application of MFF prerequisites, we disagree with the recommendation to adopt and implement MFF readiness filters at the country/sector level. OM D14 and 2011 Staff instructions clarify the preconditions for using the MFF. As per usual practice, the modality selection should be done and justified on a case by case basis in line with sector/subsector assessments and institutional capacity assessments. We agree with the need to continually improve quality control procedures, including documentation, for all ADB products, including the MFF. We disagree with the recommendation for specific MFF related training and instead propose that project related training be strengthened and supplemented to strengthen skills in selecting and designing investments, including MFFs, consistent with institutional capacity. 9. Recommendation (ii): Manage the use of flexibility during the MFF implementation period without compromising, or with the strengthening of the benefits of the MFF modality. We agree with the general recommendation. However, we disagree with the recommendation to nominate department focal persons for the MFF to strengthen the peer review process and MFF quality. Adding another layer to the review process seems redundant. 10. Recommendation (iii): Conduct facility-wide mid-term reviews of ongoing MFF programs and formal reviews at any time deemed appropriate. We disagree with the recommendation to mandate a “facility-wide midterm review.” While this recommendation has appeal in principle, it is redundant with respect to MFFs. During MFF tranche preparation, teams review the progress of the facility, which is reported to Management. 11. Recommendation (iv): Regularly monitor MFF portions not converted to tranches, and take necessary steps that will help ensure prudential lending, planning and financial projections. This is already being done. MFF reviews form part of the CPS preparation process. The Annual Work Program and Budget Framework provides a process for planning and financial projections. Future MFF portions not converted to tranches are regularly reported to the Board through MFF annual reports. However, we welcome the Report’s recommendation to devise criteria to cancel remaining MFF tranches. 12. Recommendation (v): Ask for regular submission of necessary documentation from clients and make all relevant documentation and data on implementation of an MFF immediately accessible within ADB. This recommendation is not unique to MFFs. While the Report mentions cases of incomplete information, it is not clear whether this is an issue of incomplete processing documents, missing documents, failure to request all relevant documents, or failure to provide such documents upon request, and it is thus difficult to clarify the problem. The Report notes that “it appears that all MFF and tranche related documents are not necessarily uploaded into e-Star in a timely manner” (para. 24). Project related documentation and project related data management might, in general, need improvement. Management will conduct a review on the quality of project documentation (quality of entry review) and project related data management/eStar generally.

IED’s Clarification on the Management’s Response
1. Doing a real time evaluation (RTE) is in keeping with the Board’s requirement that this evaluation be conducted about four years after mainstreaming. Since none of the multitranche financing facility (MFF) investment programs had closed and no completion reports were available (para 12), the RTE is not intended to be a final judgment, but a review of the experience in design and implementation, to obtain feedback for mid-course corrections. Comparisons of MFF with other long standing modalities (eg. program loan, sector loan) on the other hand, would only be warranted in a few years when some MFFs have been completed.

On progress being made, the RTE covers mid-2005 to end-2011 (para 13), 2. although some information for 2012 was also gathered. Incremental changes, including in 2011, in requirements for documentation, reporting and quality assurance, were made by Management (para 106, Table 10). But the information available to IED for 2012 is inadequate to show any significant improvement following the guidelines of 2011. For instance: (i) IED notes lapses in the follow up to the requirements of the OM of August 2008, on the inclusion of a comparative matrix in MFF concept papers (para 63, 64). Staff Instructions of July 2011 tried to reinforce this requirement; but IED normally does not have access to concept papers (Table A2.3) to allow further comment. (ii) Until Project Administration Instructions were revised in December 2011, there was lack of clarity on the classification of tranche level scope changes as minor or major (para 96). Of the 37 tranche level scope changes from January to September 2012, IED had access to only four, which does not allow an assessment of progress (para 98). On the robustness of the findings, the report gives evidence from 3. documentation on 20 MFFs triangulated with information in ADB databases, and discussions with ADB staff, client personnel, and consultants (paras 23–27, Chapters 4 and 5). Information on some aspects of organizational efficiency was also gathered from a survey of MFF and tranche team leaders. For example, IED was able to verify issues related to classification of significant changes in tranche scope as minor, upfront institutional capacity assessment, and physical completion such as for highway construction or additional financing requirements for highway construction upon proper alignment after approval — that reflect upon upfront technical due diligence (paras. 98, 75, 102–103). On MFF and lending volumes, IED notes that rapid increase in lending volumes 4. after 2009 was in part driven by MFF modality (Executive Summary). During 2009-2011, program loans and counter-cyclical facility approvals were $7.1 billion while MFF investment program and MFF tranche approvals $17 billion and $12 billion respectively.

1.

Special Evaluation Study: Real-Time Evaluation Study of the Multitranche Financing Facility (IN. DEC discussed whether there was a comprehensive assessment done before the decision to mainstream MFF.381-12) on 17 January 2013. Mainstreaming MFF. enabling clients to adjust their project pipeline without need for additional approval from top decision makers.Chair’s Summary: Development Effectiveness Committee The Development Effectiveness Committee considered the Independent Evaluation Department report. DEC discussed (i) the MFF’s approval process noting that the concept paper is signed off by a Vice President. and tranche level changes have often been classified as minor at least prior to the clarification issued in late 2011. DEC members agreed that the MFF is 2. an innovative facility favored by DMCs because of its greater flexibility. and economic due diligence was less rigorous. The case of Afghanistan was cited where the MFF allows ADB to engage the country on a long term basis while allowing room to adjust when assumptions and expectations change. (ii) MFFs have been used flexibly over long utilization periods. and (iv) subsequent tranches may not benefit from lessons of the first tranche because the modality allows the approval of subsequent tranches before closure or completion of the previous tranche. 3. The following is the Chair’s summary of the Committee discussion: 1. The report flagged some key observations. in order to compare different modalities and justify . (ii) the insufficient evidence on improvement in the concept paper regarding inclusion of a justification on the use of the MFF vis-à-vis other modalities after the guidance issued in mid-2011. technical. Some DEC members suggested that Management may consider appending the comparative matrix in the report and recommendation to the President. noting that the advantages and disadvantages of mainstreaming were presented to the Board and the Board had favored the move to mainstream the modality. namely: (i) the evidence is unclear in regard to expected efficiency on staff processing time. Advantages of MFF and perceived gaps. although some members voiced concerns about due diligence on prerequisites. Management confirmed that the MFF is a preferred modality not only due to flexibility but also in terms of continuity for policy reform and capacity development. (iii) MFF prerequisites. The report found that the MFF’s flexibility is its most attractive feature. The report also highlighted MFF’s potential to crowd out other lending and diminish crisis response operations. and (iii) the role of the panel of experts which serves as independent confirmation that eligibility requirements are met. DEC welcomed the real-time evaluation study of the multitranche financing facility (MFF) which found the facility increasingly favored by developing member countries (DMCs). Some DEC members inquired about fragile and conflict afflicted countries where governments and priorities could change often.

DEC discussed the use of MFF 4. DEC should receive the Management’s response 5 working days before a DEC meeting. envelope. DEC also noted that since MFF constitute almost a third of ADB’s resource envelope. In the next uploading of the report which contains this DEC Chair’s Summary. DEC also reviewed IED’s observations on some prerequisites such as the quality of road maps and sector assessments. The following time frames were agreed to by IED and Management: Circulation of IED documents to the Board (and DEC) would continue to be 21 calendar days. particularly in South and Central West Asia and noted that a country’s capacity to meet the requirements of the MFF is a factor for the uptake on the facility. To enable DEC members to prepare appropriately. Since ADB does not expect any significant increase in its resource envelope in the near future. . this factor should be considered in partnership strategies and business plans of countries which use the MFF extensively. Other concerns. Since the MFF occupies a substantial portion of the resource 5. Country concentration and proposed review. which is a broader problem not exclusive to MFF projects. DEC Chair proposed to have further discussion after 60 days when Management has included its action plan in the Management Action Record System (MARS). Headroom. DEC agreed that the SES warrants further discussion. IED indicated that it will include clarifications on the concerns raised in the Management Response. There was discussion on the difficulty in acquiring and 6. so it could not be concluded whether cofinancing is incremental or substitutes a portion of the MFF. verifying data to assess the level of effort involved in preparing and processing MFF loans as opposed to standalone loans. as in the case of India. some DEC members were concerned that the facility locks in resources leaving little room for other projects. I. and (iii) the importance of the subject.xxvi Real-Time Evaluation Study of Multitranche Financing Facility the use of the MFF. (ii) diverging views of the success of the program between IED and Management. which made the evidence related to staff efficiencies in relation to MFF inconclusive. It was noted that although a large part of future approvals are already earmarked. Due to (i) insufficient time between the 7. Time Period for Circulation of Documents to DEC 8. The lack of a comprehensive database on cofinancing was also raised. the quality of projects will have a considerable impact on the effectiveness of ADB’s operations. Further discussion on the report. DEC also discussed the differentiation between major or minor changes. the DEC Chair indicated that IED and Management should provide sufficient lead time for DEC to review evaluation reports and the Management’s response. not all countries utilize MFF. DEC members agreed that a review of the MFF in 2014 or 2015 should be conducted. DEC appreciated that the report would be shared among staff working actively on MFF. and given that one DEC member indicated there were only four members present at the meeting and she would not intervene as there had not been sufficient time to reflect and conduct due diligence between the circulation of Management's response and the DEC meeting. circulation of Management’s response to the report and the DEC meeting.

An issue that becomes relevant to countries as they graduate from receiving only Asian Development Fund (ADF) support to a mix of support from ADF and ordinary capital resources (OCR). It enabled ADB to complement modes of assistance of other development partners and accelerate the approval process. Medium-Term Strategy. 2001. making ADB more compatible with existing and evolving market practices.4 The MFF aimed to strengthen ADB’s capacity to mobilize development finance 3. United Nations Millennium Declaration.CHAPTER 1 Evaluation Focus 1. ADB. streamlined processes. A. 2001. Manila. the evaluation focuses on the requirements that were applicable to the modality and the implementation of these requirements and procedures. the introduction of the MFF. 6 . The MFF modality was also anchored on the expectation that sovereign guaranteed lending would remain the predominant type of development finance for many DMCs in the foreseeable future. which proposed. 2000. Following a 3-year pilot period. Manila. Therefore. Background and Rationale 2. United Nations. a more appropriate skill base. New York. the Board approved in July 2008 the mainstreaming of the MFF. increased flexibility. and to meet the large financing gaps that persisted in many DMCs and that posed challenges to them for achieving the Millennium Development Goals. ADB. In August 2005. This report provides a real-time evaluation of the multitranche financing facility (MFF). a modality introduced in the Asian Development Bank (ADB) in 2005. 1 The MFF was designed to facilitate greater certainty and upfront agreement with a client and free up ADB staff time spent on processing for Board approval 2 3 4 5 ADB. 3 ADB in 2005 launched the innovative and efficiency initiative (IEI). and helping ADB to work better with other development partners. Innovative and Efficiency Initiative: Pilot Financing Instruments and Modalities. among other instruments and modalities. 4. Manila. 2005. ADB. and a broader range of financial instruments and modalities. 5 and (ii) free up ADB staff time spent on processing for Board approval. Moving the Poverty Reduction Agenda Forward in Asia and the Pacific: The Long-Term Strategic Framework of the Asian Development Bank (2001–2015). as preconditions that need to met to enable the achievement of development effectiveness.6 and recommended an evaluation of the performance and effectiveness of the modality to be conducted after 3–4 years. by enhancing the flexibility and client orientation of its financial products. the Board therefore approved the proposal to pilot test the MFF. and savings on commitment charges. Mainstreaming the Multitranche Financing Facility. Manila. In line with this strategy. The MFF was designed to (i) facilitate “greater certainty and upfront agreement with a client through financing that fits within the client’s longer term plan” particularly since there was a felt need for longer term commitment. 2008. Sufficient time has not elapsed to fully evaluate its development outcomes in client countries. ADB’s corporate-wide long-term strategic framework 2001–2015 1 and its associated first medium-term strategy 2001–20052 called on ADB to respond better to the needs of its developing member countries (DMCs) by improving organizational effectiveness through greater flexibility in its structure.

8. With the FFA. (v) facilitating the preparation of a series of investments with planning for safeguards and other concerns. An MFF thus has features similar to a cluster loan or sector loan—as all except the first tranche project need to be identified only broadly up front. Since 2005. such as (i) a series of similar projects with cost over-run financing included in some tranches. it is especially suited to sector investment programs. The MFF thus has characteristics that are similar to a standby letter of credit in the commercial banking sector—an important difference being that the MFF umbrella financing envelope entails no cost. and (ii) similar projects but with different executing agencies. The individual loans are approved and signed in response to specific requests (referred to as periodic financing requests [PFRs]) received from the client. 7. the MFF modality has been applied to increasingly varied situations. and (vii) registering contingent liability only to the extent loans are signed in response to PFRs received from clients. these are collectively referred to as the MFF prerequisites. . The MFF modality is unique among the lending modalities offered by development partners in the sense that it strengthens comfort for long-term programmatic support to a DMC client but does not entail an additional commitment fee burden on the client. (iii) increasing operational flexibility in response to client needs. investment program. and allows staff to spend more time on implementation administration and management. capacity development. Although the MFF modality was anticipated to be applicable to large and stand-alone projects with discrete and sequential components. With the MFF facility. As originally conceptualized. These include (i) financing a series of projects or phases. Such a standby letter of credit is formalized through a framework financing agreement (FFA) between ADB and the client. About the Multitranche Financing Facility MFF modality is unique among the lending modalities offered by development partners 5. Only approved loans under the MFF umbrella enter the balance sheets. The MFF is neither a balance-sheet commitment nor an off-balance-sheet item for the ADB and its client. for each such loan. 7 Refer to para 9. and improving governance. ADB’s Treasury Department models projected PFRs beyond the work program and budget framework (WPBF) period. the MFF modality has undergone significant changes that Management effected through the issue and revision of internal staff instructions and Operations Manual (OM) sections (Table 1). and/or (iii) projects that cut across subsectors.” The FFA also spells out a long-term planning perspective for the particular sector the MFF is supporting. reduces staff time for processing. a separate loan agreement is signed. in its own financial projections. policy framework. (vi) reducing commitment fees for the clients. 7 However. the MFF modality embodies certain major benefits over existing lending modalities. ADB conveys its intention to provide a maximum amount of financing (the MFF financing envelope) to a client over a specified time period under a set of detailed pre-negotiated “warranties and representations. (ii) allowing ADB and clients to engage in constructive policy dialogue.2 Real-Time Evaluation Study of the Multitranche Financing Facility B. This includes the strategic context. over a time frame of up to 10 years or even more. Appendix 4 of the IEI Document (footnote 4). that avoids repetitive processing tasks. and thereby encouraging cofinancing. ADB can thus support longer term investment programs that are structured and staggered into multiple loans under the umbrella of the MFF commitment. reduces the need for separate Board approvals except for the facility as a whole and for the first tranche. However. (iv) assuring clients that ADB is a committed partner for their long-term financing plans in specific sectors. and financing plan accompanied by suitable undertakings or commitments. road map. 6.

and provides predictability and continuity to clients. The MFF modality essentially follows the same procedures as ADB’s other sovereign lending modes (project loan. The most significant change is the devolvement of decision-making on matters related to second and subsequent tranches. 11. Effectively. Appendix 1 provides a brief history and overview of the MFF modality. the Board also stressed the need to introduce quality assurance systems and improve reporting. Objectives 12. the Board requested it to be evaluated in 3–4 years time to identify any unforeseen developments. OP = operational procedure. from the Board to Management. sector loan. In deciding on the mainstreaming of MFFs. the RTE will revisit the raison d’être for introducing the MFF modality as well as examine (i) the extent to which the Board’s concerns are justified. MFF = multitranche financing facility. No MFF had closed by mid-2012. b This is an internal ADB document. 66 MFFs had been approved with a combined approved amount of nearly $32 billion (further details are in chapter 2). Source: Independent Evaluation Department. With increasing use. financial intermediary loan. Use of the s MFF has increased significantly over the years C. Besides. BP = business process. second and subsequent tranches (SSTs) have one less layer of supervision compared with stand-alone modes. the discussion on many aspects of MFF preparation. and (ii) efforts that ADB may need to make to steer the use of the MFF modality in a manner that would improve its development effectiveness. Multitranche Financing Facility Staff Instructions for the Multitranche Financing Facility b a Date 12 October 2006 6 August 2008 18 May 2010 15 July 2011 This is an internal ADB document. cuts the financial and nonfinancial costs of doing business. This study is therefore a real-time evaluation (RTE) with the objective of identifying issues that need to be addressed. Multitranche Financing Facility Operations Manual Bank Policies (Section D14/BP) and Operational Procedures (Section D14/OP). Consequently. In fact. processing. . The Board’s concerns are further elaborated in Appendix 1. 9. and some of the findings and inferences are not specific to the MFF modality as such. and implementation involves steps that are the same or similar to stand-alone modes. the Board expressed that the MFF modality enables ADB to invest programmatically. reduces overreliance on stand-alone project approaches that often involve repetitive and cumbersome business processes. In Board meetings held during 2010–2011.Evaluation Focus 3 Table 1: Multitranche Financing Facility-related Staff Instructions and Operations Manual Sections Title Staff Instructions on the Use of the Multitranche Financing Facility a Operations Manual Bank Policies (Section D14/BP) and Operational Procedures (Section D14/OP). 10. although the ADB Board endorsed the mainstreaming of the MFF modality in mid-2008. as well as a comparison of the MFF with other modalities as understood at the time of mainstreaming in July 2008. Use of the MFF has increased significantly over the years. many of the procedural changes introduced subsequent to mainstreaming of the MFF also apply to stand-alone modes. In so doing. opens the way for more structured cofinancing. so as to improve the modality’s effectiveness and efficiency without compromising ADB’s prudence in financial planning. As of December 2011. the development effectiveness aspects of the MFF modality are becoming more important.

minimizing the impact of borrowing from ADB or committing to borrow from ADB. Examining the premise on which MFF was piloted and mainstreamed: The MFF 16. In response. 1. Evaluation Methodology 14. The medium-term implications for ADB’s operations of the increasing use of the MFF modality are also discussed in the context of country programming. Components of the Real-Time Evaluation 15. Issues related to funding sources. respectively. and a 3. clients perceive the benefits of the MFF modality. the expected benefits.4 Real-Time Evaluation Study of the Multitranche Financing Facility D. and seasonal bunching of MFF and tranche approvals are also examined in chapter 2. and implications for operations. The study period begins with the proposal to introduce the MFF (mid-2005) until December 2011. lessons and recommendations related to these components and chapters are pulled together in chapter 7. was designed to support clients’ long-term sector plans through a long-term commitment. The extent to which MFF and tranche approvals have increased since the modality was first piloted in 2005 is analyzed in terms of country and sector coverage. insufficient clarity of criteria and decision-making filters for use of the modality. Study Period 13. While all such . as well as reporting and oversight arrangements. additionality of the MFF modality. the working of the modality. Examining the working of the MFF modality: After the mainstreaming of the 17. The extent to which such changes address the Board’s concerns and enhance development effectiveness of the MFF portfolio is examined in chapters 4 and 5. The extent to which such premises have held true thus far is examined in chapter 3. 19. as well as the implications for ADB’s policy dialogue and the ability to respond to emergency situations. The key findings. The evaluation methodology gives due recognition to the MFF modality’s increasing use and examines the underlying causes (such as benefits of long-term commitment and increased flexibility). DMC and ADB concerns about the MFF modality. a quality assessment and review. The evaluation considers the merits and demerits of a programmatic approach and promise of long-term assistance to DMC clients. headroom. How DMC governments and 18. the Board has continued to express concerns regarding the increasing size of the MFF portfolio. certain changes in documentation and other requirements have been instituted from time to time. how they are deriving benefit from it. and their decision-making processes for MFF and tranche approvals are discussed in chapter 6. and development effectiveness. a nearly 3-year span up to the mainstreaming in mid-2008.5-year period after mainstreaming. The components of the evaluation methodology are described in this chapter. and increasing ADB’s organizational effectiveness (through reduced transaction costs. including reduced ADB and client staff time in preparation and processing of investment interventions). This comprises two sub-periods. The number of MFFs approved during the two sub-periods was 20 and 46. The main chapters of this study will discuss the MFF portfolio. E. Examining the MFF portfolio. and specific questions pertaining to them are provided in Appendix 2. MFF modality.

No independent evaluation or validation of a tranche project completion report has been conducted to date. as not all necessary information sources (see Appendix 2) were available to the study team. For many transport and energy sector MFFs. 2012. as well as an online survey of selected ADB personnel (see Appendix 2 for details). the . tested and widely accepted approach to evaluating an entire MFF program. only a few tranche level self-evaluations are available. which are 62% of the total number of MFFs approved by end-2011. some gaps do remain for nearly all MFFs and tranches. (ii) Loan 2248 of MFF01 (IND: Rural Road Sector II Investment Program). and there is no readily available. India Infrastructure Project Financing Facility. and extent of progress as documented) is studied. 23. and account for 69% of the total MFF approved amounts as of December 2011. A mix of desk studies. the analysis has given more attention to the transport and energy sector MFFs. the RTE relies on case studies. Manila. and (iii) Loan 2296 of MFF08 (PRC: Gansu Heihe Rural Hydropower Development Investment Program).Evaluation Focus factors influence ADB’s potential for impact and thereby the development effectiveness of the MFF modality. technical aspects and funds flow). the supporting backup evidence comes from approved MFFs. 23). although certain sector-specific aspects do need to be considered in the analysis (for instance. Timing. 3. and interactions with incountry stakeholders provided the information for the evaluation. a more thorough assessment of results on the ground is deferred to a later stage. November. 2. sectorspecific issues are not the focus. Efficiency and effectiveness of MFF in achieving facility level outcomes and outputs cannot be fully evaluated at this state. Although all 66 MFFs approved between 2005 and 2011 are 22. Evaluation Limitations Sector focus.9 Therefore.8 No approach for evaluating an MFF program was firmed up at the MFF design stage. it is expected that for sector investment programs. those related to the network nature of roads or power distribution systems). The desk study included a review of relevant ADB documents and databases. A mix of MFFs in these sectors (which cut across subsectors. when adequate experience will have been gathered to develop plausible counterfactuals for various circumstances in which the MFF modality has been used. 21. the Independent Evaluation Department (IED) study team has tried to fill some information gaps through interactions with ADB staff and meetings with incountry stakeholders. At the end of 2012. early indications of effectiveness. interviews with ADB staff. 8 9 Only three tranche completion reports were available as of September 2012: (i) Loan 2231 of MFF02 (PAK: National Highway Development Sector Investment Program). The information so gathered forms the basis for addressing the evaluation issues listed in Appendix 2 (Table A2. the most common type of MFF investment programs. Nonetheless. All MFF and tranche-level information that is required for a reasonable evaluation of the MFF modality is not readily available from these sources for most MFFs (para. Although the inferences are drawn for the MFF modality. A first completion report for an MFF was posted on ADB’s website in December 2012: ADB. countries. covered in the report. Evaluation Approach 5 20. As no MFFs had been reported completed at the time of data collection. Although no guidelines for evaluating MFFs have been firmed up (as of December 2012).1). Triangulation of information at various levels gives the evaluation confidence about its key findings. tentatively. Given that this is an evaluation of the MFF modality. the study focuses on project readiness and implementability (such as institutional arrangements.

or implementation arrangements adds to the need to fully understand the sequence of changes that take place. IED also requires the email records.6 Real-Time Evaluation Study of the Multitranche Financing Facility and proxy indicators as well as triangulation of information from multiple sources in support of its evaluation findings. 25. MFF-level completion reports should generally follow sector assessment guidelines. A large number of documents are required to fully understand 24. Although most documents can be available on ADB’s electronic document storage system e-STAR. The time-sheet management system (TMS).related folders on e-STAR. all required data and information. which indicates the need for instituting systems to ascertain that (i) all requisite data are entered. Documents that would be prepared by the client or its consultants (such as project feasibility studies for second and subsequent tranche projects) were also required but proved difficult to access. financing requirements. 27. Therefore. To the extent that project viability analysis and due diligence review work entail email communications among ADB staff. IED and other departments (other than the owner department) normally do not have access to relevant MFF. was not available for preparation of this report. inconsistencies. and administering MFFs and their tranches to gauge whether or not staff resource use efficiency did actually improve with the use of the MFF modality. It also appears that all MFF and tranche-related documents are not necessarily uploaded onto e-STAR in a timely fashion. processing. the email records are not easily retrievable. and/or clients. IED needed access to such documents for a few selected MFFs. Upon special request to the concerned staff. no document consolidates the information or provides reference or links to other relevant documents. many scope change documents approved in 2012 were not yet uploaded in e-STAR by the time this study checked. Instead. and (ii) data once entered are verified for correctness and accuracy. consultants. where ADB would have better record-keeping owing to greater ADB involvement in project preparation. . are difficult to find for any MFF. Access to such data would have allowed IED to compare the efficiency of the modality better. IED is granted access for a limited time period. However. However. which included 1 year of data from May 2011 to May 2012 for all regional departments. For instance. However. which are specific to MFFs should also be assessed in a similar manner. as originally envisaged in the IEI document (footnote 4). 26. IED conducted a survey of staff engaged in preparing. including recorded rationales for tranche scope and other course changes. Appendix 2 provides a list of required documents. Other modalities usually allow greater access to data and progress statements. MFF portfolio-level analysis also shows gaps. Sufficient information on the content and sequencing of all tranches is not provided in the report and recommendation of the President (RRP) or the FFA. anecdotal evidence and discussions with staff and clients on various MFF investment programs was also relied on in order to understand the working of the MFF modality. The design and implementation characteristics. All such documents and data are required by IED for an evaluation of a particular MFF investment program. and inaccuracies of data in certain official ADB databases. and the necessary information can be gauged only from documents that are prepared after MFF approval. For the purposes of the RTE of the MFF modality. Data access. how an MFF has progressed since approval. The fact that approved tranche projects can change in terms of scope.

6 25% 20% 15% ($ billion) 1. to 27% in 2009 and 37% in 2011. Since then. Technical Assistance.5 billion in 2011 (see Fig. two MFFs were approved in December 2005.8 billion in 2006 to more than $6. of which 66 were SSTs.7 34% 37% 6.0 2006 2007 2. a total of (i) 66 MFFs had been approved with a combined approved amount of nearly $32 billion.5 4. For details.5 billion in 2005 and $3.0 23% 20% 17% 27% 4.2 10% 5% 0% 0 2005 2008 2009 2010 2011 Approved MFF Resource Envelope during the year ($ billion) Approved MFF Tranche Amount during the year ($ billion) % MFF Tranche Amount approvals to Total Loan approvals MFF = multitranche financing facility.CHAPTER 2 The Portfolio A. and Equity Approvals. Until December 2011. By 2011. 13 MFFs had fully allocated . while approved tranche amounts increased from about $180 million in 2005 to nearly $4. Following acceptance of the proposal to begin piloting the MFF. 1).5 1. Approvals 28.4 4. the approved MFF envelopes increased from $1. and (ii) 126 tranches had been approved.8 4.2 6 5 4 3 2 1 5.2 40% 35% 30% 3. MFF tranche approvals had risen from 17% of total approvals for ADB sovereign lending in 2006. Figure 1: MFF and Tranche Approval Trends 7 6. the number of MFF approvals has increased from eight in 2006 (the first complete calendar year that ADB processed MFF interventions) to 13 in 2011.7 0.2 billion in 2011. 29.1 3. Grant. Simultaneously. As of 31 December 2011. refer to Appendix 3.0 0% 1. Source: Asian Development Bank database for Loan. More than one quarter of ADB’s active portfolio is in MFF tranches.

Manila.306 First Tranches 66 21 8. 38. 15. TA loans. sector loans. Figure 2 shows the regional and country mix in terms of number of approved 32. 8. several more countries have been added. 31. MFFs and the combined resource envelopes.889 8. (ii) Peoples Republic of China (PRC) in East Asia. 28. During the piloting stage (mid-2005 to 11 July 2008). Table 2 shows that. South and South-East Asia regions. and ADB. Since July 2008. 17.906 All Tranches 126 50 16. nearly 50% of all SSTs were approved during that month. 10 13 MFFs (MFFs 1. 44. 14 Table 2: Bunching of MFF and Tranche Approvals in December MFFs 66 19 31.13 The apparent concentration of MFF and tranche approvals during the last month of the calendar year most likely means increased work load for the approving authorities—both the Board and Management—during November and December. the MFF modality had been extended to 14 DMCs. (iii) Bangladesh and India in South Asia.989 Until 2011 66 MFFs s had been approved with a combined amount of $32 billion Total number Number approved in December Total approvals ($ million) December approvals ($ million) MFF = multitranche financing facility. the most recent addition being Mongolia. 24. 43. only four MFFs and seven PFRs were approved. In the Pacific. 25.10 2 had five or more approved tranches. By the end of 2011. 47-54. while only in Bangladesh have no further MFF’s been approved. while the 26 MFFs approved in Central-West Asia are spread across seven countries (the maximum being 8 MFFs in Pakistan). 16. The standalone loans include all sovereign loans (project loans. mostly in Central-West Asia. 11 Two MFFs (MFFs 1 and 11. 57) have fully allocated MFF resource envelopes into tranches/loans. In the East. 30% (84 of 277) of stand-alone loans were approved in the month of December.938 10. 22. Regions and Countries Central West and South Asia regions account for more than 75% of 66 MFFs approved 31. 41. MFFs have been approved in two countries each. although less than one third of the MFFs and first-tranches were approved during the month of December.8 Real-Time Evaluation of Multitranche Financing Facility MFF resource envelopes into tranches. is that 25 of the 26 approved MFFs in South Asia are in one country (India). 29. 12 29 MFFs (MFFs 12. B. 19. Multitranche Financing Facility Annual Report 2011. A key difference.11 while 29 MFFs had only one approved tranche. In the first three quarters of 2012. 14 This trend appears to have continued in 2012. 33. appraisal. 58-66) have only one approved tranche. 11. 2012.317 Second and Subsequent Tranches 60 29 8. Papua New Guinea (PNG) is the only country where ADB approved an MFF intervention. 13. and (iv) Viet Nam in Southeast Asia. however. 13 In comparison. financial intermediation loans. Considerable acceleration is observed in the fourth quarter.846 4. 12 30. etc. and guarantees) approved from 2005 to 2011 in the 14 countries where MFF investment programs have been approved. it may also mean tight deadlines for ADB staff and the consultants to conduct research (fact-finding. . 39. 37. 20. both in India. program loans. The Central-West and South Asia regions account for more than 75% of the number and amounts of the 66 MFFs approved until December 2011. one in energy and the other in the transport sector) have five or more approved tranches.) and prepare necessary documentation under some time pressure. 56.042 3. ADB introduced MFFs in six DMCs that were spread across four ADB regions: (i) Azerbaijan and Pakistan in Central-West Asia. Sources: Asian Development Bank database.

The two sectors in which MFFs were first approved are (i) transport. ARM = Armenia. but since mainstreaming. of MFFs approved AFG = Afghanistan. Since mainstreaming however. KAZ = Kazakhstan. Initially in the pilot phase.6 5.0 0 EARD 4 MFFs PARD 3 MFFs MFF env. PARD = Pacific Department. IND = India. CWRD = Central and West Asia Department. SERD = Southeast Asia Department. amount approved ($ billion) No. Technical Assistance. and account for more than 60% by number and nearly 70% of the total resource envelope of all MFFs approved until December 2011. MFF = multitranche financing facility. Furthermore: (i) the average resource envelope approved per MFF is above $700 million in Pakistan. (iii) in the remaining three Central-West Asian countries where MFFs have been approved. BAN = Bangladesh. Grant. and above $500 million each in Afghanistan. AZE = Azerbaijan. SARD = South Asia Department. and (iv) in large countries such as PRC and India. Azerbaijan. beginning in December 2005. and (ii) energy. MFFs for urban and water-wastewater-sewerage infrastructure. Although the same number of MFF interventions are approved in Central-West and South Asia regions. GEO = Georgia. PAK = Pakistan. respectively). C. each has an average resource envelope in the $400 million–500 million range. the total amount approved for MFF interventions in Central West Asia (at a little more than $15 billion) is more than 50% greater than that for South Asia (where it less than $10 billion). natural resource management. and Kazakhstan. 9 Figure 2: MFF Approvals by Regional Department 25 24 20 ($ billion) 16 12 8 4 0 CWRD 26 MFFs UZB PAK 20 IND 15. 3). MFF interventions were approved only for physical infrastructure. it has penetrated other sectors . (ii) Viet Nam is the only country outside the Central West Asia region where the average resource envelope approved per MFF exceeds $700 million. from March 2006. These two sectors remain the mainstay of the MFF modality (Fig.3 PNG 1. and multisector projects were approved later in the pilot phase. UZB = Uzbekistan. EARD = East Asia Department. PRC = People’s Republic of China.0 VIE INO SERD 7 MFFS 10 5 MON PRC 1.0 KAZ GEO AZE ARM AFG BAN SARD 26 MFFs 15 9.The Portfolio 33. the average resource envelope per MFF is less than $400 million (although the maximum MFF sizes are $1 billion and $800 million. before December 2007. and Equity Approvals. PNG = Papua New Guinea. one MFF each has been During the pilot phase MFF approvals focused on infrastructure. Sectors 34. VIE = Viet Nam. MON = Mongolia. Source: Asian Development Bank database for Loan.

5% grants. India. Source: Asian Development Bank database for Loan.8 billion $16. Grant. Figure 3: MFF approvals by Sector 14 12 10 8 6 4 2 0 30 26 17 8. OCR = ordinary capital resources. OCR and Mixed financing $2.7 4. and (iii) nine DMCs that receive a mix of OCR and ADF loans from ADB. Technical Assistance.6 1 Finance 0. 7. Figure 4: MFF Financing Envelope Approved for Countries that Receive Concessional.7% of all MFF approvals). and Viet Nam—the four DMCs where ADB provides assistance only from ordinary capital resources (OCR). comprise (i) Afghanistan—a DMC where ADB extends all assistance from grant sources. The study is aware that in 2012. . and 6. and Equity Approvals. and Equity D.5 Transport Energy Urban/Water 25 20 15 12 7 2. at least one operations department is also preparing and processing an MFF in the education sector. ADB’s Funding Sources 35.3 billion from OCR sources (85. Technical Assistance.1 billion ADF only OCR ADF & OCR ADF = Asian Development Fund. Source: Asian Development Bank database for Loan.9% ADF loans. total MFF approvals through December 2011 comprised $27. Grant. MFF = multitranche financing facility.1 billion $13.9 0. including but not limited to Asian Development Fund (ADF) grants. Figure 4 shows the combined MFF financing envelope for these three country groups. The 14 DMCs where the MFF modality has been used.3 10 4 1. (ii) PRC.10 Real-Time Evaluation of Multitranche Financing Facility approved also for public sector management and financial sector interventions. Overall.4 Natural Resources ($ billion) 13.5 1 5 0 Multisector Public Sector MFF Resource Envelope ($billion) Number of MFFs MFF = multitranche financing facility. Kazakhstan.

This is the Renewable Energy Sector Development Investment Program in Pakistan (MFF05). The MFF modality was conceptualized as a debt financing facility that would use loans or grants. lines of credit run by financial intermediaries. (ii) Second India Infrastructure Project Financing Facility (MFF37). 15 and only one MFF investment program explicitly mentions the guarantee option. and (iii) Guangdong Energy Efficiency and Environment Improvement Investment Program (MFF20). and guarantee instruments. most MFF interventions comprise straight loans and grants to the concerned DMC. 16 although the guarantee facility has been set up in at least one other MFF. . at the request of the government of Pakistan. Instruments 36.The Portfolio 11 E. ADB is providing $200 million equivalent in guarantees to help mobilize commercial debt to finance wind and other renewable energy projects. The RRP for the Energy Efficiency Investment Program in Pakistan (MFF31) explicitly mentions the option of converting a part of the MFF resource envelope to a guarantee instrument for some tranches. A few MFFs have extended loans to financial intermediaries to support certain types of projects.17 15 16 17 These include (i) India Infrastructure Project Financing Facility (MFF17). However.

Most of the approved MFF investment programs are to enhance transport. ADB. This sets the maximum MFF utilization period at 10 years. although in many instances. ADB will employ its financial and institutional resources in five core areas” that include infrastructure.e. which possibly allows the clients to plan more systematically and mobilize cofinancing for the investment plans or individual projects. 20 . and urban physical infrastructure across various DMCs. Defined as the number of days (or months or years) elapsed between tranche approval date and loan closing date. finance sector development. A. Each MFF is expected to have multiple tranches (usually 3 or more). the intended duration of the MFFs plus extensions granted for those that have exceeded this period or are nearing the end and anticipated to slip). Manila. The MFF modality was proposed with the objective of providing to clients the comfort of long-term support by ADB. A frequency distribution of tranche implementation periods 20 (see Fig. 40. By design. The country partnership strategies (CPSs) are set up to do the same.8 years. only one or two tranches have thus far been approved. Operations Manual: Bank Policies and Operational Procedures. which came into effect in 2008. energy. In keeping with the long-term strategies that have been in effect since the MFF modality was first piloted in 2005. and education. Manila. Compared with a series of similar stand-alone projects. energy. efficiency and impact. albeit for a shorter period (usually 5 years). For the 66 MFF investment programs approved until December 2011. 5) 18 19 ADB.6 years (i. 2008.7 years and the average utilization period across all 66 MFFs is 7. Long-term Support to Clients 38. These assumptions were considered as holding true at mainstreaming. Yet 3 MFFs approved after August 2008 have utilization periods in excess of 10 years. The need for ADB to provide long-term support for physical and social infrastructure (including urban infrastructure) was explicitly recognized in the late 1990s. 18 also emphasized that to “maximize results. ADB’s new long-term strategy. most of the approved MFF investment programs are to enhance transport. or as revised thereafter during the implementation period) is used. the MFF modality was intended to reduce staff resources required for processing. environment. 2008.CHAPTER 3 Expected Benefits 37. and resulted in the formulation of ADB’s first long-term strategic framework (footnote 1). Nine of the 66 MFFs have a utilization period of 10 years or more. Where actual loan closing dates are not available. 19 The shortest utilization period is about 3. the median utilization period is about 7. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank (2008– 2020). and country operations business plans (COBPs) continue to update the list of projects that ADB is anticipated to support in a 3-year period. and urban physical infrastructure across various DMCs 39. and to that extent contribute towards achieving the objectives of ADB’s long-term strategies. the MFF investment programs have a longer time span than stand-alone investment projects. as well as the clients’ commitment fee payment obligations. then projected closing date (as at time of approval.

Expected Benefits reveals that (i) first and second tranches span 60% or less of the MFF utilization period for about 45% of the tranches. Rather than entire MFF investment programs. Source: Asian Development Bank database for Loan. Grant. Available data on disbursement rates (i. tranche implementation periods have been extended beyond the originally stated end of the MFF utilization period. it is more appropriate to compare MFF tranches with stand-alone loans. which comprise mostly actual tranche approval dates for all tranches.21 while in other cases.e. Table 3 shows a comparison of approval amounts and various measures of elapsed time between MFF tranches and stand-alone loans for all sectors.2). (iii) as per available data. 41. 42. and projected tranche closing dates for most tranches (the exceptions being the few first tranches that have actually closed thus far) reveal no clear trend in the shortening or lengthening of second tranche compared with the first tranche—although it is somewhat more likely that second tranches have shorter implementation periods than first tranches (see Appendix 4.. IED has no documents that show that the MFF utilization period has been extended. MFF57 (IND: Madhya Pradesh Energy Efficiency Improvement Investment Program).>=100% 100% Implementation period as % of MFF utilization period Tranche 1 Tranche 2 MFF = multitranche financing facility. and Equity Approvals. some tranche implementation periods are 100% or more.. Table A4. stand-alone loans are considered only in sectors and countries in which MFF interventions have been approved. Table A4. However. A sample of 431 stand-alone projects approved from 2000 through 2011 is thus compared with 126 MFF tranches approved up to 2011. 20% and 30% of approved loan amounts) also reveal no clear trend (see Appendix 4. . time taken from loan effectivity to achieve 10%.1).g. In some cases this is because the first tranche extends the entire MFF utilization period. 23 The average energy sector tranche implementation period is within 15% of the average implementation 21 22 23 e. Technical Assistance. and for transport and energy sectors in particular.22 Figure 5: Frequency Distribution of Tranche 1 and Tranche 2 Implementation Periods as Percent of MFF Utilization Period 13 35% 30% % Number of tranches 30% 25% 20% 15% 10% 5% 27% 24% 17% 12% 11% 8% 5% 0% 2% 3% 0% 30%40% 40%50% 50%60% 60%70% 70%80% 80%90% 17% 14% 12% 8% 5% 5% 0% 3% 0% 0%-20% 20%30% 90%. Available data on tranche implementation periods. such analysis does not capture the underlying assumptions for each data point (Appendix 4). (ii) about 75% of first tranches and 90% of second tranches span up to 80% of the MFF utilization period. For comparative purposes.

of which SSTs Approved total loan amount Approved loan amounts of total Sector interventions Average tranche/loan size Elapsed time between . 125 110 232 5.56 431 47.7 No.8 35% 157 86 92 85 169 4. of MFFs No. Increased organizational effectiveness of ADB was cited as an intended outcome of the entire IEI program. and make mid-course corrections. for other sectors the difference is less than 10%. but energy tranches are about 10% smaller. However. TC = transport and communications. of tranches/projects .Approval to LA signing . The Board Paper provides quantitative estimates of staff time savings.17 91 92 182 4.30 93 12. the overall level of effort for a MFF program with four tranches (180 staff-weeks) would be significantly less than for four corresponding standalone projects. LA = loan agreement. Table 3: Comparison of Loan Amounts and Timelines for MFF vs. n. Nos. Improved organizational effectiveness was considered as being a consequence of (i) reduced staff time for processing a number of tranches under an MFF vis-à-vis the same number of stand-alone investment projects. Whether or not a time-sheet system had been tried or piloted in . Improved Organizational Effectiveness Increased n organizational effectiveness of ADB was an intended outcome of the entire IEI program.76 All Sectors 66 126 56 16. EN = Energy. Stand-alone Projects MFF EN 17 39 22 5. 101 141 235 5. PFR = periodic financing request.14 Real-Time Evaluation Study of Multitranche Financing Facility period for stand-alone energy loans.PFR submission and approval for SSTs .0 53% 155 n. Grant.Approval to closing (implementation period) Nos. whether or not these estimates are based on time-sheet data and the source of data on person-weeks expended for processing and administering MFFs and tranches is unclear.a. SSTs = second and subsequent tranches. an MFF processing time is typically 90 staff-weeks. Figure 5 and Table 3 therefore indicate that the MFF modality does provide to clients the comfort of support that is significantly longer than with other modalities that comprise stand-alone loans. address policy gaps.5 47% 140 147 81 95 176 4. $ billion % $ million days days days days years 135 105 107 84 179 4. the average approved amounts of MFF tranches are about 25% larger than for stand-alone loans. at 354 staff-weeks. However. Nos. and the equivalent time for a standalone project is 75 weeks. which piloted several financing instruments and modalities. wherein 45. B.Approval to effectivity .a.LA signing to effectivity . coupled with (ii) increased staff availability for implementation monitoring and administration.7 Stand-alone Projects All EN TC Sectors 39 6.a. including the MFF. Source: Asian Development Bank database for Loan. Processing a tranche was typically expected to take 40% of staff time vis-à-vis a standalone project (see Appendix 5 for further details). including the MFF 44. owing to substantive staff time savings while processing tranches. Overall.54 TC 23 43 20 6. while transport tranches are about 15% larger. MFF = multitranche financing facility.6 65% 136 n. with associated benefits such as more opportunities to understand sector issues. Technical Assistance. and Equity Approvals.74 108 ADB = Asian Development Bank. 43. = not applicable.

Nonetheless. as obtained from the e-Operations (eOps) database.Expected Benefits ADB—albeit on a limited basis—during the MFF pilot period is not specified in the Board Paper. Available data on milestone dates toward finalization of the project preparatory technical assistance (PPTA) work. . IED’s inability to obtain the TMS data effectively meant that IED had to rely on other ADB databases and an email-based survey of selected staff (team leaders for MFF and tranche processing. In May 2011. as it was felt that the TMS was still in an initial phase. However. as well as a wide variation in the estimated elapsed time for MFF preparation and processing (Box 1). IED was unable to access the TMS data pertaining to specific MFFs. tranche loans. preparation and processing. ADB instituted a pilot TMS. which also incorporates some data previously compiled in the project performance report and project information documents. 15 24 25 26 During the early 2000s. Supplementary Appendix B provides the survey forms). A brief analysis shows the paucity of data on milestone dates in these databases. and that certain departments had still to make efforts to assess the quality and consistency of data entered by the staff. and less than 200 days for tranche processing (see Appendix 5 for further analysis of survey data). a TMS established the parameters for processing and administering stand-alone projects and technical assistance. the TMS tried in the early 2000s could not have provided a the basis for estimating staff inputs for processing and administering MFFs and tranches as given in the Board Paper. just over 200 days for MFF processing. but there is no central database that compiles such information. The findings from the IED survey also show wide variations. ADB databases include data on time elapsed during 47. the eOps database for tranche preparation and processing is not complete and shows wide variations in the estimated elapsed times (Box 1). to gauge the extent of staff resource utilization and savings associated with the preparation and processing of at least some MFFs and tranches. and approval of the PFR of the proposed tranche were compiled from these databases. 26 Further data analysis is given in Appendix 5. and stand-alone loans. and detailed data are in Supplementary Appendix A. Such information may be documented in a related back-to-office report of a review mission for a preceding tranche. 48. the findings of which had been used for staff allocation and budgeting purposes.25 Elapsed time estimates. Similarly. and more than 1-year of timesheet data had been compiled by the third quarter of 2012.24 46. IED could not obtain the TMS data. approval of the RRP of the proposed MFF. however. but with averages that are lower: less than 400 days on MFF preparation. The eOps database also does not specify when action on the second tranche (or a subsequent tranche) was first initiated.

Level of effort estimates. b. Of the 36 SSTs for which survey responses were received from the 60 enquiries made (i) 29 noted that tranche processing calls for a lower LOE than a stand-alone project. 28 Refer to Table 10. Bank Policies and Operations Procedures. and (iii) 16 of the 19 MFFs were approved after mainstreaming (i. data on level of effort (LOE). 2.28 The tranche survey data tend to show that. However. The data show wide variations: i) from 300 days to more than 1. 49. in many cases. Regarding tranche preparation and processing: a.e. it is interesting to note the perceptions of the MFF team leaders: (i) of the 26 responses received from a total of 66 enquiries. no official ADB database contains 50. i) from about 40 days to more than 1. Survey findings regarding LOE show wide variations of one order of magnitude or more. it is also acknowledged that.300 days for work on a PPTA (average of 600 days) ii) from about 100 to about 1. while PFR receipt dates are available for about 30% (39 of 126). Regarding MFF preparation and processing: a. RRP = report and recommendation of the President. Operations Manual. concept approval and RRP approval available for about 60 of the 66 MFFs. 29 Notwithstanding the fact that all survey data are based on the memory of the concerned team leaders. PFR = periodic financing request. 19 agreed that the LOE for preparing and processing an MFF is higher than that for a stand-alone project. Other than TMS. c. and (ii) 4 of the 7 tranches approved after June 2011 (i.16 Real-Time Evaluation Study of Multitranche Financing Facility Box 1: Elapsed Time Estimates for Preparation. PPTA = project preparatory technical assistance. owing to some sector-related issues (such as in water resources or agricultrure . MFF = multitranche financing facility. with milestone dates for MFF fact-finding. and (ii) 15 of the 19 MFFs required up to 50% more time for preparing and processing an MFF (along with Tranche 1) than a stand-alone project (Fig. Loan fact-finding dates are available for less than 45% of the tranches (54 of 126). the LOE for tranche processing time is less than that for stand-alone projects. Data availability for MFF processing is somewhat better.800 days from loan fact-finding to periodic financing request report (PFRR) approval ii) from 15 days to nearly 900 days to process a PFR and obtaining approval of the PFRR (average of about 120 days).800 days to process an MFF (average of 270 days). b. as well as the credibility of a system to audit and verify data once entered. after the most recent internal staff instructions were issued that sought increased documentation and other requirements prior to SST approval) required more LOE than a stand-alone project. Manila. Although it is difficult to determine the linkage between flexibility and increased time required for preparation and processing of an MFF and its tranches. across a relatively small number of MFFs and tranches.. Source: Independent Evaluation Department. PFRR = periodic financing request report. after MFF prerequisites had been codified in the ADB OM in 2008).27 51. 2008. Dates for PPTA fact-finding and receipt of draft final report are available for less than one-third of the MFFs (21 of 66).e. The elapsed time also varies widely. 6) compared with 20% more time assumed in the Board Paper.29 27 ADB.. OM Section D14/BP and D14/OP. the wide variations in MFF and tranche preparation and processing times raise concerns about the timeliness and quality of data entered in eOps. Processing and Implementation of MFFs and Their Tranches 1.

Management driven.0 Ratio of LOE for MFF to Standalone Projects LOE = level of effort. Figure 6: Frequency Distribution of Ratio of Level of Effort for MFFs e f to Level of Effort for Stand-alone Projects 47% 50% % of MFF's 40% 30% 20% 10% 0% Up to 1. Table 4 shows that as of mid-2012. which appears to be consistent with the original premise that the MFF modality improves organizational effectiveness.75 to 2. However. or (ii) within the same regional department at the headquarters or in a resident mission. or (iv) any other movement.50 1. and stand-alone projects.Expected Benefits 17 Overall. and implementation of MFFs and their tranches. as the survey data relied on the memory of team leaders rather than any written record or database of LOE.75 1. The MFF modality was also thought to help regional departments plan better their people and skill requirements.25 to 1. which is 54. more time would be required to conceptualize an MFF investment program. processing. it does not conform to the “staff continuity” requirements as spelled out in the MFF Board Paper. this inference is based on a small number of observations—and then too. project is less than that for an MFF but more than that for a tranche.25 1. perhaps with higher responsibilities. The Board Paper (footnote 6) recognized that greater staff continuity is required in the preparation. (ii) address policy issues and procedural gaps. where distinct types of interconnected projects would comprise each tranche. As yet. It would be possible to have more conclusive evidence of the findings when more data on LOE for preparation and processing become available for more MFFs. Staff continuity issues are a matter of human resources policy. Staff continuity.30 Although staff movement within the same regional department does not lead to a loss of expertise to the department as such. the survey data therefore tend to show that the LOE for a stand-alone 52. Besides.50 to 1. for example through access to TMS data. This is perhaps one of the reasons that have contributed to the difficulty in reducing the LOE for tranche processing. it appears that changes introduced through the internal staff instructions issued in July 2011 led to an increase in tranche processing time. or (iii) form a regional department to a knowledge or support department. and (iii) change implementation plans while work is in progress. tranches. Source: Independent Evaluation Department. this observation cannot be considered conclusive. provided a sufficient number of tranches are included in the MFF. half of the team leaders had sectors). MFF = multitranche financing facility. 30 . Such staff movements can be (i) within the same sector but across regional or operations departments. there is no conclusive evidence of staff time savings over the entire MFF cycle 32% 11% 0% 11% >2.0 53. which occur more frequently than desired as per MFF policy. and potentially change the normal practice of staff movements. so that ADB staff can (i) gather and share knowledge with the client on sector issues and trends.

31 Table 5 shows information on cofinancing arrangements for selected MFFs. ADB reduced MFF commitment upon confirmation of cofinancing of about $30 million from the OPEC Fund for International Development Leverage of more that 80% ADB intends to strengthen the centralized information system that would include the cofinancing database. Source: Independent Evaluation Department. there is no particular notice or announcement to indicate that the introduction of the MFF has changed the deployment pattern of staff. to be firmed up MFF22 (IND). Table 5: Cofinancing in Selected Multitranche Financing Facility Investment Programs MFF Number and Tranche Reference MFF05 (PAK). . If EIB cofinancing does not come through. Such factors do contribute to the MFF’s rising use.18 Real-Time Evaluation Study of Multitranche Financing Facility not changed divisions or departments after processing an MFF and getting it approved.2 million (initially) ADB: reduced MFF financing envelope to $157. Cofinancing Adequate information is not available to analyze level of cofinance achieved through MFFs As originally envisaged. or on special leave without pay No movement (within same division and same department). EIB: $40 million. All tranches MFF24 (KAZ).5 million Remarks Commercial cofinancing amount not known (as of October 2012) MFF05 (PAK). sector loans. Tranche 3 Leverage of 100%. The cofinancing database is expected to capture donor commitments and actual contributions. the MFF modality is potentially more conducive to cofinancing than other modalities and instruments. then ADB’s support will increase to $78 million For overall MFF investment program: ADB: $188. building a long-term relationship with ADB and securing long-term funding but without the negative impact that several other modes of ADB financing (such as project loans. Table 4: Movements of MFF Team Leaders since obtaining MFF approval Type of Movement Change of department Within same department but to a different division Within same department but to a resident mission Not associated with ADB anymore. The lack of a comprehensive financial and performance information system and the non-availability of data on parallel and joint cofinancing do not allow a comprehensive analysis of the levels of cofinancing achieved through the MFF modality in comparison with other modes of ADB financing. 31 For overall MFF investment program: Cofinancing possibility known at MFF approval stage. the MFF modality provides to clients the comfort of 55. Tranche 2 Cofinancing Particulars A guarantee facility of $200 million to mobilize commercial debt for wind and other renewable energy projects ADB: $38 million. Number of Staff 14 6 7 6 33 18 15 C. to provide sufficient information to project processing and administration teams as well as concerned development partners. and it was recognized that. of which: for the 25 MFFs approved during 2010–2011 for the 41 MFFs approved during 2005–2009 MFF = multitranche financing facility. However. and financial intermediation loans) have on the client’s balance sheet and cofinancing capabilities (footnote 4).

PAK = Pakistan. IsDB: $170 million. A significant improvement is observed in the level of consistency after mainstreaming: (i) for 7 of 20 MFFs in the pilot period (35%). Leverage of about 100% overall. Updated cofinancing arrangements for projects expected to be financed through the MFF: ADB: $812 million. EIB: $195 million For Tranche 1: ADB: $40 million. the Rural Electrification Corporation. KfW: $36. Japan: $150 million.33 In many cases. IsDB = Islamic Development Bank. certain power sector utilities in India routinely borrow from the Power Finance Corporation. However. VIE = Viet Nam. Source: Independent Evaluation Department. and 220% for tranche 2 ADB = Asian Development Bank. Available documentation does indicate some attention to cofinancing in some MFFs (see Appendix 6). MFF = multitranche financing facility. the MFF documents simply mention that cofinancing will be pursued upon the specific request of the concerned government. and whether or not it will be incremental to the MFF financing envelope or lead to a reduction of the MFF financing envelope (by an amount equivalent to the 32 33 It is recognized that certain executing agencies normally raise investment capital from specific sources. Leverage of more than 90% Parallel cofinancing for other similar urban mass rapid transit lines also expected. KAZ = Kazakhstan. 32 In 15 MFFs. Appendix 6 shows that in the RRPs and/or FFAs for 48 of the 66 MFFs. 56. no cofinancing expected in Tranche 1. All tranches MFF53 (VIE). . or both did not. or both did not. EIB = European Investment Bank. the cofinancing option is not explicitly mentioned in the RRP and/or the FFA documents even if it is referred to in the design and monitoring framework (DMF). As per RRP. referred to. All tranches Cofinancing Particulars Original cofinancing arrangements for projects expected to be financed through the MFF: ADB: $700 million. either both the RRP and the FFA referred to cofinancing. or that the borrower or the executing agency will explore the soliciting of cofinancing from other development partners and/or private entities. Whether or not this pertains to joint or parallel cofinancing is not clarified. Japan: $634 million Remarks expected upfront at MFF approval stage is reduced to less than 30% (as per updated information as of June 2012). In three MFFs. Japan: $634 million For tranche 2: ADB: $286 million. or considered in some manner. EIB: $195 million For overall MFF investment program: ADB: $636 million. or the State Bank of India to fund their transmission and distribution capacity expansion programs. cofinancing is mentioned or considered either in the MFF or the FFA. and (ii) for 26 of the 46 MFFs after mainstreaming to end of 2011 (56%). To the extent that funding from these sources is secured as part of the MFF investment program. KfW: $276. the documentation also indicates that specific attention to mobilizing cofinancing has not been given in many MFFs approved thus far. cofinancing is mentioned.4 million For Tranche 2: ADB: 500 million.Expected Benefits MFF Number and Tranche Reference All tranches 19 MFF52 (VIE). IND = India. either both the RRP and the FFA referred to cofinancing. Japan: $68 million For overall MFF investment program: ADB: $540 million. KfW: $313 million. OPEC = Organization of Petroleum Exporting Countries. RRP = report and recommendation of the President. KfW = Kreditanstalt für Wiederaufbau Bank. IsDB: $414 million. even though it was to use up nearly 50% of the approved ADB financing envelope. but not in both.6 million. For instance. it is considered that the long-term support offered through the MFF has not affected this cofinancing.

ADB considered it appropriate to allocate a part of the approved MFF amount earmarked for loans to a guarantee for supporting physical investments in another MFF in the same country and sector. MFF31). 35 Although the guarantee option in this particular MFF appears to have been dropped. Since the MFF modality was piloted. ADB charged its project loan borrowers an annual commitment fee of 0.35% per annum on the undisbursed balance of sovereign project loans negotiated after 1 January 2007. if the MFF investment program requires a substantial amount of cofinancing. Box 2: Reduction of Commitment Charge Rates When the MFF modality began to be piloted in the latter half of 2005. 34 35 These include (i) discrete. Loan commitment charges cover ADB’s cost of carrying liquidity for loans prior to disbursement. 36 D.20 Real-Time Evaluation Study of Multitranche Financing Facility amount of cofinancing) is also not clear. In any event. such as (i) the normal rate at which project construction can proceed on a best-efforts basis. In December 2007. 57. ADB. 2009. the borrowers were not able to calculate commitment charges properly and had to rely on ADB’s accounting records. a Although the progressive structure allowed borrowers to pay lower commitment fees overall. the commitment charge rates have been reduced (Box 2). (ii) slices (or tranches) of sector investment programs over a longer time frame of 7–10 years. MFF = multitranche financing facility. Report and Recommendation of the President to the Board of Directors. In April 2007. during successive periods commencing 60 days after loan signing: (i) 15% of the loan amount during the first 12-month period (ii) 45% of the loan amount during the second 12-month period. . Source: Independent Evaluation Department.b it was considered complex by many borrowers. the Board agreed on a further reduction of commitment charge through a 0. b It was argued that it was unfair to charge the borrowers a commitment fee on the balances that could not be disbursed quickly for a variety of reasons. Such reductions of commitment charges are not related to the introduction of the MFF modality in 2005. Manila (approved 17 September 2009. of the 66 MFFs approved until end-2011.75% on a progressive percentage of the undisbursed loan balance. which were normally at variance with procedures and processes followed by borrowers. it may be important to hold close consultations with other development partners during the MFF processing stage itself.34 Guarantees that cover political or credit risks are often intended to mobilize cofinancing. sequential components or large stand-alone projects. (iii) 85% of the loan amount during the third 12-month period. only one explicitly offers the option of a guarantee cover in the initial documentation. Reduced Commitment Charges 58. and (ii) ADB’s contracting and procurement requirements. This commitment charge rate has remained unchanged since. and (iv) the entire loan amount thereafter.1% waiver (on the undisbursed balance of sovereign project loans negotiated after 1 January 2007). a The commitment fee was applied to the following amounts (less amounts withdrawn from time to time). the Board approved a simpler flat structure with a commitment fee rate of 0. Islamic Republic of Pakistan: Energy Efficiency Investment Program. and (iii) financial intermediary credit lines.15% of the undisbursed balance. the Board eliminated the waiver and approved a reduction of annual commitment charges for sovereign project loans to 0. Proposed Multitranche Financing Facility and Administration of Cofinancing. However.c In October 2005. 36 Refers to MFF05 (Renewable Energy Sector Development Investment Program). The MFF modality was conceived as a debt-financing facility to offer guarantees along with other instruments. c In some instances. but they diminish somewhat the benefits associated with the MFF rationale. approved in December 2006.

However.year time span. at this point. Viet Namb MFF20. Table 6: Commitment Fee Savings Estimates for Selected MFFs Number of Tranches Approved p 2 3 3 Total MFF Resource Envelope ($ million) 931 100 200 Commitment Fee Savings ($ million) 4. Given that the average MFF financing envelope is $480 million compared with an average stand-alone project of about $100 million (Appendix 7). PRCc MFF38. Either of these conditions holds only for few MFFs. in addition to loan envelope size) are available. 37 most large MFFs can be viewed as a cluster of projects. and less than 0. However. wherein even a small delay in the signing/effectivity of successive tranches can lead to some commitment fee savings. at this time.25% 0. c The MFF has a small financing envelope of $100 million. .Expected Benefits 21 Nonetheless. In most cases. d The low commitment fee savings reflects the facts that (a) the MFF financing envelope of $200 million is smaller than the average stand-alone loan size approved in India during the study period ($210 million). In all these cases. and during the same time period (2005 –2011). 61. commitment fee savings are likely to reflect improvements in disbursal rates in SSTs—should SSTs be actually disbursed more quickly. Therefore. Source: Independent Evaluation Department.45% 0.14% Small commitment fee savings are evident for some MFFs MFF Number/ Country MFF13.5% of the approved MFF financing envelope. the available evidence (on changes in disbursal rates with each subsequent tranche) is mixed. it is likely that commitment fee savings from MFFs would come 59. the detailed computations and assumptions are given in Appendix 7. Indiad MFF = multitranche financing facility. and (b) three tranches were approved and made effective in quick succession during the 2. a Loan agreements have been signed for the entire MFF financing envelope for the 3 selected MFFs. with each tranche being like one project. commitment fee savings from such large MFFs would relate more to timing of tranche approvals and tranche disbursal rates vis-à-vis the counterfactual string of stand-alone (corresponding to tranches) loans. b The second tranche comprises more than 95% of the MFF resource envelope. but the MFF utilization period actually got extended by 12 months. the available evidence is mixed.28 Commitment Fee savings (% of MFF resource envelope)a 0.2 0. or (ii) the MFF financing envelope is comparable to a stand-alone project. which would otherwise be financed through one stand-alone loan.25 0. The commitment fee savings reflects the time difference between the loan signings of the first and second tranches. PRC = People’s Republic of China. The commitment fee savings are evident but can be considered negligible (Table 6). the fee savings are small. as the last tranche loan was approved much later than originally planned. counterfactual assumed for an MFF with “n” tranches (one stand-alone loan that equals the size of the MFF) is meaningful. Appendix 7 illustrates commitment fee savings in a few cases where the 60. The estimates in Table 6 are for MFFs for which sufficient data (particularly on loan amounts and loan signing dates for each tranche. Most large MFFs cannot be viewed as one project comprising several subprojects. and where commitment fee savings come from phasing of the approval/effectivity of a stand-alone loan through tranches. 37 In the same countries and sectors where ADB has approved MFF interventions. only when (i) a large MFF is used to finance one large project.

CHAPTER 4

The Working of the Modality
Board approvals of most MFF investment program proposals have been 62. accompanied by concerns about certain aspects of the MFF modality—in addition to comments and feedback on the normal development effectiveness-related aspects of economic and financial viability, environmental and social safeguards, institutions, and governance. The Board’s concerns on the need to ascertain or enhance the development effectiveness of MFF proposals have also been evident—albeit indirectly— through numerous observations regarding the rapidly increasing MFF portfolio and approved amounts, coupled with (i) inadequate clarity of criteria and decision-making filters for using the MFF modality; and (ii) insufficiency of monitoring and reporting arrangements in place, and the need for better oversight. ADB Management has attempted to address such concerns through a series of revisions promulgated through updates of internal staff instructions and relevant operations manuals.

A.

Justification of the Multitranche Financing Facility modality

Concept and approval documents do not usually compare MFF modality with other options

63. The IEI document (footnote 4) required the client and ADB to agree upon a range of issues while firming up an FFA; such issues need not necessarily be helpful in justifying the choice of the MFF modality. 38 The internal Staff Instructions (2006) clarified that the MFF should be justified in the FFA. However, during the pilot period, it became clear that the justification should precede work on the FFA. Therefore, the Board paper (footnote 6) specified that the choice of the MFF modality should be justified in the MFF concept paper, and that a comparative matrix should be presented in the concept paper. This matrix should assess the merits or demerits of the MFF compared with other instruments and modalities. This requirement was repeated in the relevant OM section introduced in 2008 and revised in 2010, and was referred to in the relevant internal Staff Instructions (2011). For the MFF modality in particular, where ADB’s engagement with concerned executing and implementing agencies is likely to be long term, the justification for the MFF modality can also consider their risk profiling. 39 64. A review of the concept papers available to IED revealed that a comparative matrix was included in about 5% of the MFF concept papers since mainstreaming. The available FFAs and RRPs also do not compare the MFF modality with other options. Instead, they report that all MFF prerequisites are sufficiently covered. This implies that in most cases, ADB considers the presence of all MFF prerequisites as sufficient justification for the choice of the MFF modality. The stated requirement in the relevant OM section is not met in most cases.

38

These issues include tentative financing, utilization period, project and subproject eligibility criteria, fiduciary oversight arrangements, procurement plans, cost recovery and sustainability commitments, cofinancing arrangements, safeguards frameworks, disbursements, and implementation plans. 39 The risk profiling assessment regarding procurement and financial management can take into account the executing and implementing agencies’ previous experience with ADB or other international financial institutions. If the MFF modality is preferred, such an assessment can also provide inputs for design of capacity development support.

The Working of the Modality

23

B.

Decision-making Filters

65. The MFF prerequisites (para. 6) are not unique to MFFs. In reality, few standalone projects can be, or should be, processed and implemented without taking such criteria into consideration, i.e., being strategically aligned with broader development objectives, being an integral part of a sector roadmap, being supported by a suitable policy framework and suitable institutions, having realistic investment and financing plans, having a high level of commitment. A difference is that for stand-alone projects, progress improvement in the quality of such prerequisites becomes evident to the Board for each successive loan. 66. The IEI document had provided general guidance on the MFF modality. Much had been left unclear regarding the strategic context and basis for greater certainty and up-front agreement. The scope for policy dialogue had been left open. There was no word on client capacity or skills base, or on the monitoring and evaluation of outcomes. The Board Paper required that due diligence for the overall MFF should be an integral part of MFF processing.40 1. Strategic Context and Road Map

67. The MFF modality allows ADB to offer financial resources to clients with which ADB has an agreed-upon investment program or has agreed on a set of interrelated investments. Only with the issue of internal Staff Instructions (2006), did Management clarify that the MFF investment program should be consistent with an agreed-upon sector strategy and sector road map (wherein ADB supports, through loans and guarantees, the physical and nonphysical investments in programs, projects, project components, subprojects, and lines of credit). 41 Further guidance on the required strategic context and road map came in the 68. Board Paper. An MFF’s strategic context could come from the relevant CPS, and a roadmap was required to define (i) strategic directions for a sector, service, or industry; (ii) the importance it has for growth, poverty reduction, and inclusiveness (or the extent to which it is a binding constraint); and (iii) a list of success factors for better performance. Besides, as for any stand-alone project appraisal, a road map was also required to include a detailed assessment of bottlenecks to physical and nonphysical investments, as well as risks and mitigation measures. 69. Good strategic contexts need not be sufficient for ensuring good road maps, and inadequate road maps may not lead to bad MFFs,42 although the likelihood does increase as (i) strategic context and directions remain unclear; (ii) risks may not be assessed properly, with consequently inappropriate mitigation measures; and (iii) warranties and representations may be weak and unstructured. Available documents show that the quality of strategic context and road maps 70. has varied considerably across MFFs even after MFF mainstreaming. Boxes 3a and 3b present some examples that illustrate the quality variations of strategic contexts and road maps in MFFs (further details are provided in Appendix 8).

Available documents show that the quality of strategic context and road maps has varied considerably across MFFs even after MFF mainstreaming

40

41 42

To establish baseline conditions regarding the MFF prerequisites: policy framework, sector roadmap, investment and financing plans, and warranties and representations. Refer to paras. 13–14 of Board Paper (footnote 6). ADB. 2006. Staff Instructions on the Use of the Multitranche Financing Facility (MFF). Manila. Para. 45 (i), Board Paper (footnote 6).

24

Real-Time Evaluation Study of Multitranche Financing Facility

Box 3a: Broad Assessment of Strategic Context and Road Map of selected MFFs (Selected Examples of Good Strategic Context and/or Road Map)
PRC: Gansu Heihe Rural Hydropower Development Investment Program (MFF08) The MFF has a clearly established (i) development context (displacing polluting power generation options by clean hydropower, exploiting untapped hydropower potential, and reducing fossil fuel imports); (ii) consistency with national, provincial, and local government policies that signify the importance of investing in hydropower and other least-cost generation expansion options; and (iii) consistency with ADB strategic priorities (improving energy access, reducing tariffs for rural poor). The road map is also clear in that a large scheme of seven cascading hydropower projects has been identified, and the MFF is to finance two of these seven projects. With previous ADB support for one of the seven cascading projects to the executing agency, ADB recognized that the EA had a good and experienced team that: (i) was familiar with ADB procedures for procurement of consultants, contractors, and equipment; (ii) was familiar with ADB social and environmental safeguards; and (iii) was technically sound, given that they had increased the capacity of the previously supported Xiaogushan project during the construction phase, a and had succeeded in registering the project for sale of certified emission reductions. PAK: Energy Efficiency Investment Program (MFF31) The strategic context is clearly evident from (i) the need for reducing persistent energy shortages (the development context), (ii) the fact that energy security and affordability are high on the list of government priorities (consistent with government plans and priorities), and (iii) the fact that energy efficiency improvements necessarily deploy low-carbon technologies (consistent with ADB strategic priorities). Although there is a detailed road map for implementation of energy-efficiency measures across a range of sectors, and responsibilities are assigned to various institutions for achieving a large number of milestones, the road map does not appear to focus attention on resource allocation and institutional strengthening aspects. The stated time lines for beginning a range of demand-side measures appear to have been rather ambitious. The delay in implementing the first tranche (of compact fluorescent light distribution to households) is noted; and the need to switch the second tranche from an industrial energy-efficiency pilot (a demand-side energy-efficiency measure) to a more manageable thermal power plant loss reduction project (a supply-side energy efficiency measure) reinforces the observation that the road map was not backed by a sufficiently strong institutional framework. The fact that the program management office had to be relocated from the Planning Commission to the Ministry of Water and Power clearly shows the difficulties in implementing an energy-efficiency road map that goes beyond the traditional power supply side. GEO: Road Corridor Investment Program (MFF34) The ADB operational strategy at the time was centered on nurturing sustainable economic growth with governance, regional cooperation, and environmental protection as support themes; the core strategy areas of intervention included municipal infrastructure services, road transportation, and energy infrastructure. ADB also focused on main highways connecting Georgia to its neighbors, policy reform, and capacity. This was in sync with the government’s strategy to develop infrastructure and institutions to reinforce market integration, productivity, and competitiveness and to harness the country’s unique potential as a transit country between the Caspian and the Black seas. To achieve this, the government had endorsed the Joint Needs Assessment prepared by the United Nations together with the major aid agencies in Georgia that defined a road investment plan as well as a priority reform agenda: to focus on capacity development for better road asset management and maintenance, to provide sufficient financial and technical resources, and to set up a legal framework for the private sector to build and operate main roads.

PAK = Pakistan. (iii) renewal of man avenues in Kuatisi by introducing a 26-km bicycle network. Source: Independent Evaluation Department. and municipal heating) but not urban transport. MFF = multitranche financing facility. A new paradigm for sustainable urban transport". (iii) parking organization. The cost allocation in the RRP for tranche 1 has been kept highly flexible by giving only the consolidated figure for the physical intervention. MFF43 is consistent with the road map the government had identified as midterm interventions for (i) the urban road network (creation of missing links. the strategies and road maps allow any type of project to be included in the MFF investment program. sewerage networks. support for urban transport in Georgia in 2010 was in line with policy papers on sustainable transport. the “urban transport infrastructure. PRC = People’s Republic of China. redesigning main problematic crossroads.The Working of the Modality 25 The related road map itemizes the intended activities to alleviate certain bottlenecks to reach the strategic objectives including set targets and milestones for improving the surface conditions of the road network. "Changing Course. they also help divert heavy traffic from the new-to-develop tourist centers. upgrading existing road to improve safety. was changed soon after tranche 1 approval. It may so happen that in some DMCs. for reasons of changes in the priorities of the government. b ADB. 2009. This scope. January. and renovation of main roads). Box 3a and Appendix 8 show some MFFs where the stated requirement for good-quality strategy and road map is met. such as (i) removal of the bicycle lanes component in Kutaisi to allow for better coordination with ongoing water supply work. renovation of the rolling stock). and (ii) whether or not the river embankment development is to include a tunnel. Box 3b: Broad Assessment of Strategic Context and Road Map of Selected MFFs (Selected Example of Weak Strategic Context and/or Road Map) GEO: Sustainable Urban Transport Investment Program (MFF43) ADB’s operational strategy 2008–2009 in Georgia included support to municipal infrastructure (covering municipal services including piped water. Source: Independent Evaluation Department. While the two bypasses fit the objective of improving the subregional corridor. GEO = Georgia. (ii) redevelopment of the river embankment in Gorgasali/Tbilisi for providing access to pedestrians. however. b To a certain extent. Nonetheless. (ii) public transport (structuring and developing public transport. a The Xiaogushan hydropower project capacity was increased from 98 megawatts (MW) as per design to 102 MW (actual) by shortening the diversion tunnel by 300 meters and reducing the tunnel lining roughness factor. and (iv) upgrading of the urban Mestia area road network. promote pedestrian and other soft modes uses). Additional components are also being requested for inclusion by the government. do not serve the intended purpose. perhaps with assistance from ADB (during MFF implementation) or other development partners. Manila. Manila. MFF = multitranche financing facility. the identified components under tranche 1 include (i) extension of the underground metro in Tbilisi. GEO = Georgia. 71. In many cases. Georgia: Interim Operational Strategy 2008–2009. The investment components of the MFF relate to the new construction of bypasses around the coastal cities of Kobuleti and Batumi and improved infrastructure at the border crossing at Sarpi to Turkey. extension of refurbishing the metro network in Tbilisi. 2010. In line with this road map. Sustainable Transport Operational Plan. and ADB. the road maps. and monitoring the intended reform process. To the extent that this is indeed the case. as provided in available MFF documents. a ADB. good-quality strategic contexts have been analyzed and high-quality road maps have been prepared by the concerned DMC governments or relevant institutions. a However. waste treatment. and (iv) non-motorized transport (develop urban projects. 2008. reducing road accidents. integration of different public transport services. . but that such information is not included in the readily available MFF documents.” This allows for scope modifications but does not suggest a committed road map. Manila.

”45 This effectively limits the scope of an intensified policy dialogue. Boxes 4a and 4b provide examples of policy frameworks and NPIs on the basis of information given in readily available MFF documentation (further details are in Appendix 9). and long terms. and indicates that within the MFF. and safeguard frameworks adjusted to take into account specific issues. 11 and para. system expansion and investment planning. results management. policy formulation. The Board Paper states that if no such policy framework is available or if it is considered unsatisfactory. The policy dialogue should remain within the confines of a policy framework. (ii) program and/or project management. and institutional matters. 46 The first tranche of the MFF should therefore include NPIs that help the DMC governments. safeguards. and implementing agencies in implementing strategies and road maps. the selection of poor executing and implementing 75. institutional. and the link between due diligence findings and the scope and budgets for the NPI component. 9 of Board Paper (footnote 6). and facilitate their monitoring. which provides an overview of due diligence work carried out during the project preparation stage. and competition. regulatory. transparency etc. Such information should form the basis for reform actions over the short. and (iv) monitoring and evaluation. 44 As originally proposed. and policy implementation enablers such as improved financial management. 62 of Board Paper (footnote 6).). Policy Dialogue and Capacity Development 72. financial. commercial. executing agencies. and initial due diligence gaps can be corrected through regular reviews. . better governance. 74. available MFF documentation does not normally provide adequate information on the rigor of due diligence performed. Refer to para. NPIs include capacity development support to DMC governments and clients that relates to (i) project preparation. social equity. medium. and governancerelated matters. (ii) the principles of change (such as cost recovery. operational. which can be the nonphysical investment (NPI) component of the MFF scope. improved technical expertise and other aspects. Refer to para. Refer to para. Initial gaps in institutional capacity due diligence can be corrected through regular reviews As per the Board Paper. wherein “policies can be refined. opportunities for policy dialogue through the term of the MFF investment program. This is evident from Table 7. competition. economic. 43 44 45 46 A policy framework needs to spell out (i) the strategic vision for a sector (the road map). governance risks corrected. (iii) policy analysis. commercial. agencies reflects the inadequacies of due diligence on institutional capacities. However. 39 of Board Paper (footnote 6). sustainability. economic. cost recovery. legal. and reporting. including procurement and financial management capacity development where necessary. A policy framework focuses on the main challenges and operating conditions in the relevant sector to ensure efficiency. sustainability. regulatory. the policy dialogue pertains to the fine-tuning of regulations. efficient resource utilization. enterprise-wide resource planning.43 It should cover more than technical and operational matters and address financial.26 Real-Time Evaluation Study of Multitranche Financing Facility 2. some other financing modality should be used. Such policy dialogue then effectively focuses largely on capacity development. standards. the MFF modality is projected to provide multiple 73. guidelines. and institutional matters). legal. and (iii) the targeted changes and levels (regarding technical.

and then a second MFF approved several years later included a similar capacity development component in its first tranche. financial. In most MFFs. project-level due diligence only (on technical. governance. 2012. and social safeguards aspects) No due diligence of institutional capacities. 49 Two such examples are: (i) MFF09 (Punjab Irrigated Agriculture Investment Program. recommendation made in the Board Paper. PAK = Pakistan. poverty. governance. ADB. and (ii) for MFF71. 45 (iii). the first tranche also incorporates funding from ordinary capital resources to support the physical component of the investment program. where. Proposed MFF: Road Network Development Program. and indigenous people-related aspects) 27 VIE: MFF52 VIE: MFF53 ARM: MFF56 IND: MFF60 VIE: MFF66 In most MFFs. which will form a basis for proposals to mitigate the gaps No due diligence of institutional capacities. economic. where the capacity development component in tranche 1 included an on-farm water management system. economic. Refer to (i) for MFF14. project-level due diligence only (on technical. Report and Recommendation of the President to the . a NPI component is financed largely through the first tranche Where institutional commitment is weak there is a risk that inadequate attention will be paid to capacity development ARM = Armenia. Two subsequent tranches approved under this MFF in 2008 and 2012 did not include any capacity development. there are few MFFs where capacity development is included in the SSTs. 50 This implies that. 47 that. provincial. and social safeguards aspects) No due diligence of institutional capacities. where it adequately covers the nonphysical component in tranche 1 alone. Manila. gender. economic. A case in point is the two transport sector MFFs in Azerbaijain. further support to enhance computerization of some of the implementing agencies was extended through tranche 6. 50 The first tranche of a transport sector MFF in Azerbaijan (MFF14). India). plus tranches 2 and 3 provide further support for capacity development. 68 and 85 of the Board Paper (footnote 6). ADB. and social safeguards aspects plus legal aspects related to private sector participation) Project level due diligence confined to environmental and resettlement-related aspects No due diligence of institutional capacities. monitoring. in addition to various support offered to the various executing and implementing agencies. However. governance. approved in 2012.g. poverty. 2007.The Working of the Modality Table 7: Institutional Capacity Assessment Considered or Planned during Project Preparation Stage MFF Specifics PAK: MFF16 PAK: MFF21 Scope of Upfront Institutional Capacity Assessmenta and Other Comments Further development of executing agency’s capacity related to project management. and is normally expected to close much before the end of the MFF utilization period. an NPI component is financed largely through the first tranche. and implementation Evaluate capacity at all levels of government (federal. Report and Recommendation of the President to the Board of Directors. with the same executing agency. IND = India. Pakistan). 49 This may be due to the flexibility of the MFF. and (ii) MFF11 (Madhya Pradesh Power Sector Investment Program. financial. capacity development can also be incorporated into SSTs is seldom followed. VIE = Viet Nam. 48 Yet. Source: Independent Evaluation Department. where the second MFF (MFF71) includes some capacity development components that are same as in the first MFF (MFF14). there are instances when only the first tranche of an MFF in a particular country and sector included a capacity development component. governance. the first tranche of MFF71. project-level due diligence only (on technical. In such MFFs. approved in 2007. poverty. included capacity development assistance pertaining to issues related to road maintenance and road safety. financial. Possible exceptions are MFFs wherein the first tranche incorporates funding partly from the Asian Development Fund and continues until the end of the MFF utilization period (e. economic. groundwater management as well as institutional strengthening and modernization. MFF07 and MFF21). included these two same capacity development components (among others). MFF = multitranche financing facility. financial.. project-level due diligence only (on technical. and local) and the project level to identify gaps. where necessary. A 76. when a 47 48 Refer to paras. a As stated in the MFF concept papers. However. poverty. 39.

IND: Assam Power Sector Enhancement Investment Program (MFF38). as well as safety. Nevertheless. and NPI Components of Selected MFFs IND: Uttaranchal Power Sector Investment Program (MFF03). (ii) Himachal Pradesh to update the regulatory framework and upgrade skills to implement a multiyear tariff regime. IND: Madhya Pradesh Power Sector Investment Program (MFF11). human resource management. Perhaps a key area of least in some states. Parallel TA operations were also provided to improve the capacity of the power entities of (i) Assam to enhance capacity in the areas of corporate management. Both these are important considerations for ADB.000 is helping to deepen staff capacity along lines that were already part of the roadmap for the PRC railway system. is in line with the specific requirements of the clients. at least in Madhya Pradesh. . Himachal Pradesh. IND: Himachal Pradesh Clean Energy Transmission Investment Program (MFF62) In all these 7 MFFs. Board of Directors. the Government of Electricity Act (2003) and other policies implementing agencies have displayed a policy framework. IND: Himachal Pradesh Clean Energy Development Investment Program (MFF23). IND: Madhya Pradesh Energy Efficiency Improvement Investment Program (MFF57). the slow progress in reducing transmission and distribution losses and the continued financial deficit point to the need for further technical assistance support. An accompanying advisory TA grant of $600. For state-level agencies in Assam. India set the policy framework through the Indian and regulations. The MFF investment program fits the strategic context. Box 4a: Overview of Selected Examples of Good Policy Framework. and (iii) Uttarakhand to improve project readiness. Manila (approved by the Board on 4 October). including in some cases (such as the unbundled transmission and distribution entities in Madhya Pradesh) to enable commencement of commercially independent operations. other available MFF documents such as periodic financing request reports (PFRRs) and back-to-office reports (BTORs) provide little update. Although the respective RRPs provide good information on the type of capacity development support required and intended as part of NPIs for the various MFFs. the capacity development component is designed to improve the commercial orientation of the concerned entities. financial management. IND: National Power Grid Development Investment Program (MFF19). there is a risk that ADB will pay inadequate attention to a constructive and useful policy dialogue and capacity development during some years of the MFF utilization period. and Uttarakhand. PRC: Railway Energy Efficiency and Safety Enhancement Investment Program (MFF40) The MFF is structured to facilitate shopping for equipment to improve the energy efficiency of PRC railways. Policy Dialogue. Madhya Pradesh. or the policy framework is weak. The MFF will be implemented mostly in the relatively poor southwestern regions of the PRC.28 Real-Time Evaluation Study of Multitranche Financing Facility second MFF is not approved. and the concerned executing and high level of commitment on many aspects of this poor commitment relates to tariff rationalization at The capacity development support. distribution franchising. Proposed MFF: Second Road Network Development Investment Program: Azerbaijan. or where institutional commitment to a good policy framework is weak. as spelled out in the respective RRPs. and renewable energy development.

77. safeguards. The NPI component is to be implemented through two advisory TA operations to (i) strengthen state-level organizations in road management by introducing of modern road management practices and establishing road maintenance funds. to be supported by enhancing railway capacity on over-saturated critical routes. IND: North Eastern State Roads Investment Program (MFF58) This is aligned to the Special Accelerated Road Development Program for India’s northeastern region. the government developed a comprehensive policy matrix to facilitate program implementation. MFF = multitranche financing facility. and (ii) implement road asset management and road safety systems.The Working of the Modality 29 IND: Railway Sector Investment Program (MFF60) The MFF investment program is embedded in the Railway Vision 2020. which aimed to connect all villages with populations of about 500 with good all-weather roads by 2007. A separate advisory TA supports the preparation for and registration with the Clean Development Mechanism Executive Board. TA = technical assistance. ADB = Asian Development Bank. road safety and sustainability. A capacity development component of the NPI included implementation assistance to concerned state agencies for properly addressing policy issues such as procurement. Although the total allocations were small. NPI = nonphysical investment. . IND = India. which emphasizes environmental sustainability. Japan). IND: Roads Sector II Investment Program (MFF01) The MFF supported the government’s program for poverty reduction through enhancing the propoor National Rural Roads Program. for sale of certified emission reductions. In coordination with funding agencies (ADB. World Bank. The MFF eventually covered five states. ADB is supporting the introduction and implementation of a new accounting system for efficient management practices. and supports the construction of high-quality roads in the northeast. That emphasis on policy dialogue and advisory support has declined since the early 2000s is evident from the decline in the availability of overall TA resources as well as advisory TA resources as a percentage of total loan and grant approvals. the entire allocated amount has not been utilized for this purpose. Source: Independent Evaluation Department. In supporting the institutional strengthening action plan. PRC = People’s Republic of China.

better planning. as well as the need for capacity development. AFG = Afghanistan. capacity development at the federal level had not progressed. creates an impression that skill levels are low. PAK: Renewable Energy Sector Development Investment Program (MFF05) Although a policy framework and government commitment exist. it appears that enabling regulations. the state-level policy dialogue relates to enforcement of traffic laws. TA = technical assistance. MFF = multitranche financing facility. . there is no indication that consultants to enable the utility staff to improve their distribution system planning skills have been engaged. improved metering and billing. subsequent progress (or lack thereof) indicates the need for a better understanding of the priorities of the concerned federal and provincial stakeholders. ADB = Asian Development Bank. improved sector governance. and capacity development in one of the provinces was expected to be cancelled. PAK = Pakistan. That a large number of international consultants were to be appointed to train the utility staff on planning and project management. emissions control. From the perspective of policy dialogue and capacity development at least. introduction of management information systems. it is difficult to justify the MFF modality. and organization for development of policies. and investment in new capacity. and logistics. for instance. as of March 2012.3% of the total MFF financing envelope is allocated for NPIs. electrification of rural areas. although the existing policy framework and capacity development related MFF design aspects do appear to justify the MFF modality. IND = India. and institutions need to be developed and strengthened. As per the RRP. guidelines. improved modal integration. where the official road development plan lists mainly the planned physical investments. This statement does not qualify as a viable energy policy framework. this is mostly in the first tranche—although the PFR for tranche 2 indicates a continuation of the advisory component.30 Real-Time Evaluation Study of Multitranche Financing Facility Box 4b: Overview of Selected Examples of Weak Policy Framework and/or Policy Dialogue IND: Uttaranchal State Road Investment Program (MFF10) This MFF focuses on state roads in one state (Uttaranchal). This situation indicates a lot of scope for long-term engagement of ADB. However. etc. and program management. The Government of Pakistan also requested ADB to provide TA to support the executing agency for work on policy formulation. these areas are not covered in the NPIs under the MFF. In this case. Source: Independent Evaluation Department. AFG: Energy Sector Development Investment Program (MFF26) The energy policy framework is more of a statement of intent of a four-pronged approach that covers greater supply-side and end-use efficiencies. NPI = nonphysical investment. However. Available information on NPIs also suggests that actual progress in capacity development remains short of initial plans. which focuses on enabling the concerned state government department to sustain the investment by strengthening staff capacities. Only 0.

public sector management. Since the MFF modality began to be piloted. while policy support that was provided earlier has been discontinued in sectors where MFFs have penetrated the most. a Over a longer time horizon from 2000 to 2011. 2012. there have been no program loan approvals for these sectors in the two countries.3 billion to support India’s and Pakistan’s energy and transport sectors. program loans were being extended more for agriculture and natural resources management. periodic financing request reports. 2–5 May (45th Annual Meeting). and (iv) excluding support for ports and rail sectors.77 million per year during 1990–2005 to $0. Available MFF documents (whether periodic financing requests. (ii) a reduction in the average annual approvals for support to India’s power sector by 10% after 2005—from $0. 31 Box 5: Program Lending and Advisory Technical Assistance Support (the examples of energy and transport sectors in India and Pakistan) During the 1990s and up to 2003. MFF = multitranche financing facility. Asian Development Bank Annual Report 2011. it is reasonable to expect that the sum of NPI allocations for MFFs and TA resources for capacity development should increase. available data show that total TA grants from the TA Special Fund and other Special Funds resources appear to be declining since the MFF modality was mainstreamed. 79. Given the recent emphasis on improving project readiness. trends can be discerned only in India and Pakistan (Box 5 and Appendix 10). total TA resources show a declining trend. capacity development. etc.70 million per year during 2006–2011. Manila.57 million per year during 1990–2005 to $0. finance. Refer to ADB. Source: Independent Evaluation Department. which was last approved in 2002. and social protection. (iii) a more than 10% increase in the approval for support to Pakistan’s energy sector from $0.The Working of the Modality 78.65 million per year during 2006–2011. public health. It is noted that (i) ADB supported power sector reform and restructuring through program loans from the mid-1990s to the early2000s. and (ii) ADB support through program loans in transport and other infrastructure sectors was relatively less both prior to and after the introduction of the MFF modality. even though overall TA resources (for project preparatory work plus advisory. ADB approved program loans for about $1. The following observations on advisory TA in the energy and transport sectors in India and Pakistan are noteworthy: (i) no further approvals for support to India’s oil and gas industry after 1997. However. the causality between a fall in the energy sector program loan volumes and the rise in penetration of MFFs is difficult to decipher. By the time the MFF modality began to be piloted. back-to-office reports or other documents) also do not show policy dialogue and capacity development support (beyond program management and perhaps monitoring and loan and grant evaluation) in the respective NPI components. . a Total TA grants disbursements declined from $189 million in 2008 to $148 million in 2011 (with a peak of $202 million in 2009). this increase reflects inclusion of support for sector-wide planning as well as coal utilization strategy. The use of preparatory TA resources also appears to be declining although the decline is not so pronounced. education. industry and trade. It appears therefore that the originally envisaged opportunities for policy dialogue have not been realized.) appear to show an increasing trend. a marginal reduction in the annual average approvals for support to India’s and Pakistan’s road transport sectors. NPI = nonphysical investment. Regarding program loans in sectors where MFF investment programs have penetrated most (energy and transport). TA = technical assistance. as a percentage of all loan and grant assistance for physical investments.

client-side ownership and buy-in are difficult to sustain. considered a commitment to the agreed-upon road map. and governance aspects could possibly provide useful inputs for screening the use of the MFF modality. road map. undertakings can be assessed in terms of the quality of strategic context. . 52 and (iii) including construction supervision in capacity development. useful to reconsider the importance to be given to such an underlying assumption in justifying the choice of the MFF modality. To the extent that the financing plan includes counterpart funds from the client or other DMC sources. it would be 84. In that sense. institutional performance. Other Prerequisites Investment program and financing plans. as outlined in the FFA. overseeing them. However. The investment program includes physical and nonphysical components.54 Therefore. Even if ADB provides support to define strategies and road maps. Refer to para 68 of Board Paper (footnote 6). it is difficult to identify the volume of advisory assistance supported by ADB—albeit through a loan—without havings access to the terms of reference for various consultant contract awards. In many RRPs. or investment plan (for single large projects) as presented in the FFA and RRP. financing plan. however. 4. Given the proliferation of MFFs across many countries and sectors. a financing plan for the entire MFF does not carry much significance. and other indicators of government commitment. for instance (i) combining project management and other capacity development activities. rather than in project cost.51 (ii) combining project management with project preparation and construction supervision. as subsequent tranches are often not defined in the MFF. policy framework. A financing plan for the entire MFF and the first tranche is derived from the investment program (or investment plan) and presented in the RRP. as in MFF58. the financing plan makes a distinction between the investment component and capacity development support. Undertakings. Under such circumstances.53 As a result. is presented differently. is in doubt. as in MFF47. An agreed-upon investment program 80. is the very basis on which the MFF modality enables ADB to support a client. capacity constraints exist in most sectors and in the institutions 83. Consistency in presenting the financing plans needs to improve. AZE: Road Network Development Program. Suitable databases that provide information on policy. The 81. policy framework.32 Real-Time Evaluation Study of Multitranche Financing Facility 3. Undertakings are normally stated in the FFA and can be 82. Prerequisites as Decision-making Filters Consistency in presenting financing plans needs to improve In most DMCs. it indicates commitment from the client side. KAZ: Central Asian Regional Economic Cooperation Corridor-2 (Mangystau Oblast Sections). Appendix 9 provides a broad overview of the available databases and information that can be used as a basis for 51 52 53 54 UZB: Second Central Asian Regional Economic Cooperation Corridor-2 Road Investment Program. as in MFF14. Yet the implicit assumption while approving any MFF investment program is that institutional capacities are strong and contribute to a stable policy environment. etc. the extent to which DMC governments and clients can prepare sector strategies and road maps of the requisite quality is uncertain. capacity development objectives. A case in point is the combination of different types of NPIs. the extent to which the investment program and financing plan can be considered sacrosanct. or the undertakings considered firm.

be it project preparatory or advisory (MFF12. Many executing agencies require support on economic. MFF22. and other issues. while MFFs that relied on a financial intermediary to finance the ultimate subprojects effectively deployed the internal resources of the sub-borrowers. this guidance was introduced to enhance project ownership by the client and to steer the use of scarce TA funds towards strengthening institutions. reports to ADB on any emerging concerns. normally through a PPTA. In a few MFFs. and the cost of preparing SST projects is required to be financed from loans (or grants) of previous tranches. ADB Support for Project Preparation ADB has supported its clients in preparing the first tranche investment 85. for which funding is increasingly an issue. gender. 33 C. A PPTA is supposed to support only first tranche projects. while in some cases. the interface between the consultant and ADB is routed through the client. projects/subprojects. Without proper and necessary documentation that covers all these aspects. safeguards action plan execution and advanced procurement. While in the case of PPTA. Manila. as well as a review consultant to conduct due diligence on the reports of the monitoring consultant. safeguards. Nonetheless. governance. Such support often relates to the use of and compliance with ADB guidelines. This guidance also reflected the fact that the MFF includes a NPI component which can support (among other) design work. unless “exceptional circumstances” prevail. governance. Although some executing agencies may not need to be supported on financial or even technical aspects of feasibility studies. which go beyond the legal provisions in the respective DMCs and are not known to new executing agencies or officials who have not been exposed to these guidelines before. . gender. 55 86. ADB. 2011. and MFF64).The Working of the Modality deciding on the choice of the MFF modality. 56 Presumably. tranche loans have been used to support SST 87. Multitranche Financing Facility. ADB experience is varied. The internal Staff Instructions (2011) then reaffirmed that PPTA funds should not be used for preparation of investment projects for SSTs. However. project preparation in about 40 of the 66 MFFs (see Appendix 11). the preparation of SST projects was financed from the implementing agency’s internal resources. ADB documentation requirements can call for the engagement of a consultant to monitor implementation. Illustrative examples are in Table 8. ADB employs a consultant and the consultant 88. and other issues 55 56 For instance. for resettlement and compensation-related matters. ADB finds it difficult to deal with and interface on a day-to-day basis with consultants engaged by clients. MFF62. several MFFs approved after October 2006 financed SST project preparation from sources other than the first tranche loan (or grant). MFF58. which helps reduce the use of project preparatory TAs. For instance (i) the prefeasibility report for the tranche2 hydropower project in Gansu Province in the PRC (MFF08) was prepared under advisory TA. ADB positions itself to be the intermediary for communications between the consultant and the counterparties. and (ii) SSTs of five MFFs in India were supported through some TA. and that financing for preparation of SSTs should be incorporated in earlier tranches. fiduciary. However. The actual design of such decision-making or screening criteria is beyond the scope of this evaluation. safeguards. In some cases. as per available RRPs. many require support on economic. Staff Instructions. ADB does not consider project preparation to be complete. there are many instances wherein TA or some other concessional assistance from ADB has supported the preparation of SST projects. Thus far. fiduciary.

has been cancelled. The second tranche project was mentioned in the RRP. The client engages a consultant and pays for the consulting services. wherein the client had engaged the consultant.and Consultant The consultant deals directly with the client. and thus not needing to be reported to the Board. ADB = Asian Development Bank. In this particular case the RRP only mentions “upgrading” of the corridor for the subsequent tranches. RRP = report and recommendation of the President. which included a bypass around one city. suffered cost overruns after realignment to minimize environmental impact. ADB preferred to engage the consultant for tranche 4 after all parties (the client.34 Real-Time Evaluation Study of Multitranche Financing Facility Table 8: Client-Consultant-ADB Interfaces during Second and Subsequent Tranche Project Preparation Interface between ADB. MFF = multitranche financing facility. Source: Independent Evaluation Department. The client lets ADB take the lead in interfacing with the consultants. recommended a phased construction on account of low traffic volume. and ADB supports the client Illustrative Experience In the case of the North-South Road Corridor Investment Program (MFF35) in Armenia. although the client was supposed to prepare the project and PFR for tranche 2. high investment cost. Such difficulties can become amplified for MFFs with projects classified as social and/or environmental Category A. The ADB team therefore tended to generally support the client’s wishes. In the Road Corridor Investment Program (MFF34) in Georgia. This is one of the reasons that in MFF23. The client has no objection to this arrangement. which focuses on setting up hydropower projects in hilly terrain in India. it can encounter some difficulties in dealing with environmental and social safeguards-related issues. and the resulting poor economic viability. the second tranche. The consultant. . In the Georgia case. The acceptance of four-laning upfront in Armenia and the cost overrun scenario in Georgia eventually mean a reduction of the originally intended physical scope of the MFF. and the consultant experienced considerable friction with the client. however. Client . PFR = periodic financing request. In the case of the Ho Chi Minh City Mass Rapid Transit Line 2 Investment Program in Viet Nam (MFF52). with inputs from the consultant. PPTA = project preparatory technical assistance. and leaves the initiative to the ADB team. which included a bypass around a second city. the consultant. 89. the government preferred the whole road corridor to be four lanes. but seldom interfaces directly with the consultant. the ADB team found it more expedient to have this done under its own supervision. and ADB) were dissatisfied with the tranche 3 arrangement. ADB is not directly involved in the study process in the manner that it would be if the consultant were appointed by ADB through a PPTA. the first tranche. EA = executing agency. Should ADB not be able to interface sufficiently closely with the project preparation consultants for SST projects. but its cancellation was classified as a minor change in scope. SST = second and subsequent tranche.

ADB Management expects project implementation to start immediately upon approval. Given the emphasis on improved project readiness at approval since 2010. 57 and (ii) this prompted Management to begin adopting good project implementation practices. With these filters in place and by allowing advanced procurement action 12–18 months prior to project approval. 58 This is also likely to improve the performance of stand-alone projects and MFFs alike. 2010. IND: Uttaranchal Power Sector Investment Program (MFF03) There was a 9 month time lag between dates of Board approval of MFF03 and first tranche loan approval. as well as retroactive financing. which 91. without delay. . Although not specific to the MFF modality. (iii) availability of procurement documents. the time lag for MFF tranches approved before and after 31 December 2010 tends to have declined. Box 6 provides a few examples of delays experienced with MFF tranches thus 92. The time lag between subsequent steps for each MFF approved after 2010 tends to have declined Box 6: Illustrative Examples of Delays in Approval to Effectivity PAK: Energy Efficiency Investment Program (MFF31) The 11 month time lag between the first tranche loan approval of MFF31 in Pakistan and loan effectivity follows from the difficulties encountered in setting up a PMO and achieving other loan effectiveness conditions. In this case. with a small number of data points after 31 December 2010. far. This is also true for stand-alone projects (Figure 7b). it would appear that the time lags between subsequent steps necessary to begin and complete project construction should have declined since 2010. Available data (Figure 7a) shows that. and (iv) secured counterpart funding to cover MFF projects over a reasonable time period. for activities that are by-and-large under the control of DMC governments and clients. However. Manila. Among the key initiatives was one to ascertain total project readiness at approval so as to reduce execution start-up delays and completion delays. The regional departments set up country-specific project readiness filters. Development Effectiveness Review 2010 Report. this observation may not be considered conclusive. the project readiness filters at MFF approval by the Board are similar across all departments and include (i) availability of detailed design (or preliminary design in the case of a designbuild contract).The Working of the Modality 35 D. Good Project Implementation Practice. (ii) availability of all environmental and social safeguards-related documentation. Note: This is an internal ADB document. Report of the Project Implementation Working Group . it is noteworthy that (i) ADB recognized the low success rate of its completed operations and the need to manage the growing portfolio effectively. ADB. and 7 more months were required for first contract award following 57 58 As quoted in ADB. including in some cases a contract ready for award subject to PFR approval. Essentially however. such as time taken to reach loan effectiveness after loan approval. 2011. Project Readiness 90. Manila. the inadequate commitment of distribution utility and government personnel to incur costs upfront on distributing CFLs and insufficient awareness levels on the benefits of CFLs have contributed to execution delays. take into account the specific circumstances of the country. in addition to procurement related issues. and different project approving decision-making practices in the country.

Figure 7a: Frequency Distribution of Time Lag between Tranche Approval and Effectivity Percentage of Number of Tranches Approved 50% 40% 30% 20% 10% 0% ≤ 100 101-200 201-300 >300 Number of Days Tranches Approved from 1 January 2011 or later .36 Real-Time Evaluation Study of Multitranche Financing Facility effectiveness of the first tranche loan. KfW = Kreditanstalt für Wiederaufbau Bank. and there was only a onemonth time lag between loan effectiveness and date of first contract award for the third tranche. IND = India. VIE: Greater Mekong Subregion Ben Luc-Long Thanh Expressway Project (MFF 53) The 12 month time lag between approval and effectivity can be attributed largely to the fact that there three cofinanciers (ADB. EIB and KfW). EIB = European Investment Bank. VIE = Viet Nam. . Figure 7b: Frequency Distribution of Time Lag between Approval and Effectivity (Stand-alone Projects) 50% 40% 30% 30% 20% 10% 0% 13% 31% 24% 14% 11% Percentage of Number of Tranches Approved 41% 34% <101 <201 <301 Since 1 January 2011 >300 Number of Days Until 31 Dec 2010 Source: Independent Evaluation Department. with capacity building support provided through a parallel TA. MFF = multitranche financing facility. CFL = compact fluorescent light. 39% 24% 41% 42% 21% 14% 12% 8% Tranches Approved up to 31 December 2010 Source: Independent Evaluation Department. ADB = Asian Development Bank. PAK = Pakistan. Source: Independent Evaluation Department. Each has different rules and regulations for procurement and evaluation process. The situation has improved since then. TA = technical assistance. the first contract was awarded nearly two months prior to loan effectiveness date for the second tranche.

Of the next 46 MFFs approved until the end of 2011. part.approved project financing. Manila. 61 The required clarity came about through PAI 5.62 96. or other unforeseen events that cause turmoil. Manila. the need to have high-quality road maps upfront that inspire a high level of confidence may also have diminished. As envisioned in the IEI document. Operations Manual: Bank Policies and Operational Procedures (Section D14). within the ADB. Project Administration Instructions No. project readiness is expected to reduce the time lag between loan 93. and (ii) DMC governments and clients review agreed-upon scopes even for approved tranches. 2011. The PAI of January 2011. given the long utilization periods. the MFF modality provides financial and operational flexibility to clients and ADB. Change in Project Scope or Implementation Arrangements. the RRPs of 7 (35%) did not provide the number of tranches or indicated only a range. Project Administration Instructions No. Flexibility Aspects 94. 61 It is acknowledged that the need for flexibility can also arise due to the occurrence of emergency situations. Manila . 2011. a lack of clarity in the relevant project administration instruction until 2011. the MFF utilization periods can get exhausted without accomplishing the full intended scope of the MFF. however. Therefore. to be coupled with long-term and programmatic investments. 63 Refer to: (i) ADB. 13 (28%) did not provide this information.60 In practice. . 59 It allows (i) sound balance sheet management on the client side.04. Such lack of clarity is among the reasons that (i) project feasibility studies or costing of preliminary designs upfront is such that it later results in a reconfiguration of tranche projects to accommodate substantive cost over-runs. Emergency situations may arise from natural disasters. 63 This lack of clarity continued in spite of the fact that the relevant OM section issued in mid-2008 at the time of MFF mainstreaming. Besides. conflict situations. and (iii) different debt finance structures to be applied in each tranche. overall. 64 ADB. 62 ADB. The PAI of June 2008 defined a project change as being major in terms of the extent of change in the fundamental nature of the project and/or its cost implications. introduced the idea that a major change is a change in the project outcome and target values of outcome indicators. and projects are expected to get implemented with smaller delays. Manila.The Working of the Modality 37 In general. 34–43 and Appendix 4. the time span between approvals of successive tranches will increase. the relevant PAI’s did not explicitly mention the MFF modality. Besides. and (ii) ADB. 64 clearly stated that 59 60 The flexibility offered by MFF has reflected in part. regarding the types of scope changes Refer to paras. Of the first 20 MFFs approved during the pilot period. even if the precise number is not known. Until December 2011. which was retracted within less than a year. that with increased attention to project readiness and without commensurate efforts to build institutional capacities. unless DMC governments and clients adopt measures to accelerate the achievement of project readiness by appropriate institutional capacity development measures. 2008. the flexibility offered by the MFF modality reflected in 95.02 as revised in December 2011. Change in Scope of Loan and/or Grant Funded Projects. it is unlikely that all projects for all tranches will be identified and known upfront in all MFFs. Some improvement is noted since mainstreaming in mid-2008. approval and effectivity. IEI document (footnote 4). Project Administration Instructions. about 30% of all approved MFFs do not even indicate upfront the number of tranches. therefore. 5. (ii) financial approvals as and when projects are ready and PFRs are submitted.02. E. For this reason. a lack of clarity in the relevant project administration instruction (PAI) until 2011 regarding the types of scope changes that require approval from the Board vs. 5. 2008. those that can be approved by ADB Management. more MFFs indicate at least a range for the number of tranches in the RRP. It is likely. Change of Loan and/or Grant Funded Projects.

the late approval of many scope changes over 2012. Project Administration Instructions (PAI) No. implementation period. It appears from Table 9 that at least until December 2011. concerned Director General (who may in turn delegate in writing the approval authority to an authorized director). unless they fundamentally affect the scope and project outcome—in which case they constitute a “major” change.38 Real-Time Evaluation Study of Multitranche Financing Facility changes that require Board consideration would include (i) a substantial and material change in the strategic direction of the road map. procurement. the flexibility offered by the MFF modality had been related to the fact that if a change is considered a minor change. which refers to changes among the existing categories of project cost and finance tables. (ii) a change in the policy framework that negatively affects the viability or sustainability of the investment program or investment plan. (iv) implementation arrangements. “Minor” changes to individual projects under an MFF are approved by the 98. and/or (v) reporting arrangements. the authority to approve “major” changes. 66 Whether or not the PAI of December 2011 has made any significant difference in this trend of categorization is not evident from the small number of scope changes for which IED has data. Table 9 describes some tranche project changes. Data available with IED show that about 85% of the tranche project changes approved in or before December 2011 had been classified as minor.” Supplementary Appendix C includes a description of tranche project changes to the extent IED could obtain such information. 66 67 . urban. including project performance monitoring and evaluation. which means changes in the mix of currency and sources of finance. consulting services. As for stand-alone projects.65 Any one or a combination of these changes results in a “minor” tranche project change. including changes in executing and/or implementing agencies. (iii) project outputs or performance targets. limited response by regional departments to data requests. Appendix 12 shows that most changes that have been made in tranche projects across agriculture. (iii) a change in the sectors covered by the investment program. 1. for practical purposes. Project Changes What constitutes a minor change has been clarified in December 2011 Tranche project changes. any change at the tranche level does not require approval from the Board. and disbursement arrangements. (ii) financing plan. changes have also been 97. effected in various MFF tranche projects. Since December 2011 it has become clear that change to a tranche is considered “minor” if it is limited to change in (i) project cost estimates. 2011. Tranche project scope change description and classification information was available only for four of the 37 tranche scope changes approved upto 3rd quarter 2012. Manila. 5. 67 About 85% of the tranche project changes approved in or before December 2011 had been classified as minor 65 ADB. it can be approved by the concerned head of department. energy transport. and other sectors to date have been categorized as “minor. and (iv) a substantial and material change in the type of investments contemplated under the investment program or investment plan. and late uploading of scope change memoranda in e-STAR. due to such factors as the study’s data collection during mid year. Therefore.02. Only 6 of 46 tranche project changes affected in 2011 or before were classified as major. The Board has delegated to the President. Change of Loan and/or Grant Funded Project.

hardware and software for transmission planning and operations. MFF = multitranche financing facility. Therefore (i) a section of the Kobuleti bypass from tranche 1 was deleted. Originally. This section was shifted to tranche 2. . major MFF level changes that affect the outcomes of an MFF as originally approved by the Board. 99. tranche 1 included a 29km bypass around Kobuleti to be implemented in three contracts. the Qila Saifullah-Zhob road section was to be widened and improved in tranche 1. Originally. Source: Independent Evaluation Department. PAK = Pakistan. along with other projects. after detailed design and realignment to minimize environmental impact Tranches 1 and 2 of MFF02 (PAK: National Highway Development Sector Investment Program) Major Reduced civil works in tranche 1 by 26% of approved amount for tranche 1 GEO = Georgia. and are approved by the President. 95). require Board consideration and Board approval (para. a After it was realized that the hydrological data collection is in the purview of the central government. Other types of changes constitute “minor” changes. and (iii) the deleted Kobuleti-bypass section from tranche 1 was included in an unscheduled tranche 3. In reality the design of the hydrological monitoring and information system was dropped. and tranche 2 was to consist of a 14-km bypass around Batumi towards Sarpi at the border with Turkey and improvement of border infrastructure. and consulting services in design and construction management. As per the MFF policy. designing of a hydrological monitoring and information system. IND = India. Categorization of Project Change Minor Comments Is the hydrological information system not expected to contribute significantly to either hydropower system operations or planning and design of future hydropower expansion 39 Tranches 1. Cost overruns after detailed design in tranche 1 and tranche 2 went beyond their financial.The Working of the Modality Table 9: Tranche Project Changes MFF and Tranche particulars Tranche 1 of MFF03 (IND: Uttaranchal Power Sector Investment Program) Description of Tranche Project Change Originally included the setting up of four new small hydropower plants.a and rehabilitation or one hydropower plant was included. and cannot be implemented by a state government agency. (ii) an undetermined postponement of the Batumi-bypass and withdrawal of government support for border facilities effectively cancelled tranche 2. and 3 of MFF34 (GEO: Road Corridor Investment Program) Minor More than 100% cost overrun in capital cost of tranche 1 Kobuleti bypass. Scope changes in MFFs. 2.

Some sub-borrowers prefer not to wait that long. Operations Manual Changes that Support Flexibility 102. beyond the original MFF closing date. (ii) is for projects that are consistent with the strategic context and road map. any portion of the facility amount can be applied to provide financing of purely price or financing arrangement changes in prior ADB interventions. hold good through the entire MFF utilization period. Given that DMC governments normally make 5-year plans. a The scope covers improvement of a 20 km section of a 188-km road that links Sugidi to Mestia. and sometimes without first obtaining approval for extending the MFF utilization period. Box 7 provides an example of an urban sector MFF wherein a part of the investment was diverted to another sector (the transport sector).” does not reflect the intended or actual scope of work under the component—which is the improvement of a highway connecting to Mestia.. 70 Additional financing may also be processed for an 68 The ADB consultation mission in April 2012 agreed to extend the loan closing dates for tranches 1. and (iii) is accompanied by appraisal procedures that are consistent with both the MFF policy and the additional financing policy. as submitted to the Board. but this change was categorized as “minor. 2. .a This should have been considered a “major” change in scope of the MFF. provided that such a requirement (i) has been considered in the MFF preparation stage (i. 70 Refer to para. in assessments that lead up to the road map). “Upgrading of Mestia Urban Road Network. a financial intermediation arrangement for facilitating energy-efficiency investments in the PRC. and some governments remain in power for an even shorter period.. While Mestia was not listed in the main text of the RRP. GEO = Georgia.e. referred it as an urban sector or urban transport sector intervention.40 Changes at the MFF level have largely been in terms of extending the MFF utilization period Real-Time Evaluation Study of Multitranche Financing Facility 100.” Box 7: Example of a Change of Sector Covered by an MFF Investment Program The RRP for MFF43 (GEO: Sustainable Urban Transport Investment Program). Additional financing.e. MFF = multitranche financing facility. and extend the last date for PFR submission (for tranche 4) to July 2012. while most MFFs extend for 6 years or more. Source: Independent Evaluation Department. and the executing agency has to identify other suitable subprojects. There has been no systematic attempt by ADB to establish whether or not the original MFF prerequisites. As per the MFF policy paper. Until now. ADB agreed to extend the disbursement closing date by 12 months from December 2012 to December 2013. 68 In MFF20. 69 Such examples suggest that tranche closing dates are being extended beyond the original MFF utilization period. 78 of footnote 6. the MFF utilization period was required to be extended beyond its original closing date of January 2013. and 3 to June 2014 (i. 101. For instance. which means that more time is needed to exhaust the last tranche. the city appeared as a candidate for upgrading urban roads under tranche 1. changes at the MFF level have largely been in terms of extending the MFF utilization period. particularly the sector road maps. 69 The time lag between preparation of the PFR by the executing agency (along with details of candidate subprojects and sub-borrowers) and ADB approval is about 6 months. which constitutes a “minor” change. This will ensure year-round access to Mestia. given the delays in implementing some tranches of MFF03 in India. 2. MFF flexibility is enhanced by the rules that govern additional financing. which is a winter resort. it is important to review the government’s sector road map and policy framework at an appropriate time during the MFF utilization period. The title of this tranche 1 component.

66 of OM Section H5. a Loans 2205-AZE and 2206-AZE. approved 8 December 2005 in the amount of $49 million OCR. OM Section H3/BP and H3/OP. The East-West Highway Improvement Project. taxes and duties 104. Refer to para. The highway sections deleted from tranche 1 were processed under a new tranche 3. provided ADB’s share in the aggregate cost of the portfolio of projects in the concerned DMC does not exceed the country cost-sharing ceiling over the CPS period. among others.4 million to replace the Ganja-Qazakh road. This was transferred to MFF14 under Tranche 2. 65 of ADB. SDR2. Manila. 71 and for individual tranches within the MFF. 73 Allocations or expenditures to cover taxes and duties are included for computing ADB’s share in the project cost. Cost sharing. RRP = report and recommendation of the President. it has led to some situations where sufficient attention may not have been given to project design AFG: Road Network Development Investment Program (MFF25) Tranche 1 and Tranche 2 of this MFF address financing gaps in previously ADB supported road projects that would otherwise be stalled or curtailed due to increase in project costs. Operations Manual. By way of an example. Box 8 provides illustrative examples. ADB. Source: Independent Evaluation Department.075 ($3 million) from Special Funds resources. with an allocation of around $56. East-West Highway Improvement Project. ADB = Asian Development Bank. Bank Policies and Operational Procedures.72 103. and limited or nonrecourse financing to subsovereign or nonsovereign public sector entities). as possible under tranche 2 under the MFF. Cost Sharing and Eligibility of Expenditures for ADB Financing. Manila. The tranche 1 project (the 60-km Masalli to Astara expressway) had substantial cost overruns (from $211 million at appraisal to $373 million at bidding). 2011. In addition to other project-related expenditures.The Working of the Modality existing MFF to raise its financing envelope. ADB’s share in project cost may exceed the country cost-sharing ceiling for a particular project. 74 This provides additional and convenient flexibility when preparing the MFF investment and financing plans. Box 8: Examples of Cost Overrun Financing through MFF Tranches AZE: Road Network Development Project (MFF14) The RRP presented the construction of a new 60-km expressway from Masalli to Astara at the Iranian border as the main component of tranche 1. it has led to some situations where sufficient attention may not have been given to project design. and has been welcomed by clients. Additional Financing.a a stand-alone project previously supported by ADB. The four-laning of the Ganja-Qazakh road was listed in the RRP. OM Section H5/BP and H5/OP. The appraisal cost estimates were made without finalizing the highway alignment. Although the inclusion of additional financing provided by ADB within the MFF modality is consistent with. 72 73 74 . Operations Manual. the tranche 1 scope was reduced by 40 km. so that its scope had to be reduced by the 39 kmlong Ganja-Bypass. AZE = Azerbaijan. also experienced high cost overruns. 2012. Owing to the cost overruns. ADB is financing taxes and duties for a transport MFF in Afghanistan. are also included as eligible expenditures for ADB financing in MFFs as well as other stand-alone modalities (other than policy-based lending. and leverages the programmatic orientation of the MFF. MFF = multitranche financing facility. 41 Although the inclusion of additional financing mechanism is feasible under MFF. A grant 71 Refer to para.

42 Real-Time Evaluation Study of Multitranche Financing Facility of $33 million from the Afghanistan Infrastructure Trust Fund covers the business receipts tax (essentially a 2% value-added tax). 2011. Proposed Multitranche Financing Facility. Report and Recommendation of the President to the Board of Directors.75 75 ADB. Islamic Republic of Afghanistan: Transport Network Development Program. Manila. .

CHAPTER 5 Quality Assessment and Review The general guidance provided by the IEI document (footnote 4) had left many 105. Among the more salient additional documentation requirements are ones that reflect rising concerns about safeguard compliance. (ii) specify documentation requirements at the MFF and/or tranche levels. and project readiness. and introduce measures for quality assurance OM (2010) OM (2010) Compliance . Guidance on the MFF Modality 106. gaps related to the design and functioning of MFF investment programs. but consumes more staff time. Table 10 provides a brief overview of the major changes since the MFF modality was introduced. ADB requires the client to undertake a strategic environmental assessment to identify mitigation measures to be built into MFF design. The provisions that call for additional documentation also in many cases help 107. Compliance with social dimension and gender and development policies: Social dimensions are to be addressed in the DMF of the MFF and the DMFs of its tranches. risk categorization. Many gaps that have been closed since then have also helped to address some Board concerns such as quality assurance and Board supervision. Additional documentation also facilitates third-party review and quality assurance. Where significant sector or regional environmental impacts from the investments under an MFF are anticipated. a sector or regional assessment will be prepared and submitted to the Board together with other MFF documents for Board consideration. Coupled with this are quality assurance measures that include peer reviews. Table 10: Guidance on the MFF Modality since It Was Introduced in Mid-2005 SI / OM SI (2006) Area of concern Safeguards Details Where the potential exists for significant cumulative and induced environmental impacts from the entire MFF. clarify and provide guidance on the structuring of the MFF and MFF prerequisites. specify documentation requirements at the MFF and/or tranche levels. and (iii) introduce measures for quality assurance of the MFF investment programs and tranche level investments. safeguard categorization. The gaps have been closed through issuance of internal staff instructions as well as policies and operational procedures contained in the OM (see Supplementary Appendix D for further details). as applicable. The summary poverty reduction and social strategy The general guidance provided by the IEI document had left many gaps related to the design and functioning of MFF investment programs Many gaps have been closed since then which clarify the structuring of MFF prerequisites. Such changes have been effected particularly to (i) improve the clarity on the structuring of MFF and MFF prerequisites. A.

regulatory. corresponding undertakings. and financing plan). Upon receiving a signed PFR from the Government requesting a new tranche approval. as necessary. fiduciary oversight. and measuring results For individual tranches. anticorruption aspects. financial. through the Environment and Safeguards Division. For each MFF. frameworks addressing environmental. Risk categorization of the first tranche is to be simultaneously undertaken as part of the concept paper The PFRR submitted to Management is to clearly assign a suitable risk category to the specific tranche. and management of social risks. procurement. policy framework. involuntary resettlement. indigenous peoples. legal. It should set out the broad magnitude of the scope and criteria for carrying out further poverty and social analysis and developing more specific plans or measures in future. capacity. commercial. regional departments should complete the “tranche at a glance” template and submit it to SPD for consolidation and further communication to the Board no later than the last day of the month of receipt. strategic context. any required policy refinements. The operations department is to be responsible for proposing the categorization of all tranches and submitting the checklist and categorization results. Each tranche is to undergo a separate risk categorization and to be processed accordingly.44 Real-Time Evaluation Study of Multitranche Financing Facility SI / OM Area of concern Details (SPRSS) is to be prepared before approval of the MFF. and social dimensions. action plans on given themes. and revisions incorporated into the PFR submitted to Management. and other matters. evaluating. Gender mainstreaming project categorization is to be done for each PFR. implementation. planning and phasing of interventions. Project readiness is to be reviewed and discussed in the PFRR. due diligence is to cover: technical. Safeguard categorization is to be made at the level of individual tranches. economic and social dimensions (as applicable). reporting requirements. investment program or investment plan. SPD is to prepare an ADB-wide consolidated monthly PFRR and submit it to the Board within the first 6 working days of each month. sustainability. The SPRSS is to be updated for SSTs. safeguards. and mechanisms for monitoring. safeguard issues. governance. Project teams are to check that (i) capacity of executing OM (2008) Safeguard categorization OM (2010) Risk categorization at tranche level OM (2008) Scope of due diligence at MFF level OM (2008) Scope of due diligence at tranche level SI (2011) Board reporting SI (2011) Board reporting SI (2011) Project readiness . due diligence is to cover: MFF prerequisites (road map. Regional and Sustainable Development Department to the chief compliance officer for concurrence or further discussion (as required).

IEI = innovation and efficiency initiative. At the time of mainstreaming. and had requested ADB Management to supervise adherence to. Source: Independent Evaluation Department. some Board members had noted that the modality poses some risks to proper implementation and accountability. Due Diligence and Viability Analysis It is generally desirable that due diligence of MFF tranche projects should be as 108. and quality of. legal. regulatory. anticorruption. 76 Expectation from the MFF modality is a quicker processing of a sequence of projects—this may not allow for sufficient time to build on lessons from previous projects 76 Due diligence of tranche projects is performed on the following aspects: technical. and (iv) regional departments should consider taking early standalone approvals from Management for advance actions in order to achieve the levels of project readiness required. fiduciary oversight. capacity. procurement. (ii) safeguard actions are taken. governance. SI = staff instruction. SRM = staff review meeting. However. FFA = framework financing agreement. The IEI team will also provide advice on demand at all stages of the MFF processing cycle during the pilot period. economic. MRM = management review meeting. as well as any representations and warranties included in the FFA. safeguards. One expert would be assigned to review each new MFF proposal and provide comments to project team and management in the regional department in writing prior to concept paper clearance and MRM/SRM stages ADB = Asian Development Bank. SST = second and subsequent tranche. 45 SI (2006) Quality assurance SI (2011) Quality assurance SI (2006) Peer review and advice SI (2011) Peer review and quality assurance B. procurement up to the contract award should be sought for SSTs). (iii) procurement for packages (including consultancies) planned in the first year of implementation is sufficiently advanced before tranche approval (wherever possible.Quality Assessment and Review SI / OM Area of concern Details and implementing agencies is built upon. The IEI team is required to review and comment on MFF proposals before they are submitted to Management and the Board. and director general is to be submitted to the President with the department’s request to circulate an RRP for an MFF to the Board. It should describe the client’s compliance with the undertakings. financial. the declared expectation from the MFF modality is quicker processing of a sequence of projects— which may not allow for sufficient time to build on lessons from previous projects. 109. The PFR is to confirm that the general understandings under the FFA remain valid. OM = Operations Manual. PFRR = periodic financing request report. director. MFF = multitranche financing facility. due diligence. implementation. PFR = periodic financing request. intensive and professional as for stand-alone projects. SPD= Strategy and Policy Department. An MFF Panel of Experts is to review the following: the adequacy of the MFF as the choice of modality and compliance with MFF policies. and other matters. commercial. social. For SSTs: A checklist confirming compliance with procedural and content requirements is to be attached to the PFRR submitted to the President requesting tranche approval. . DMF = design and monitoring framework. For the MFF: A checklist signed by the project team leader.

After PFR submission. noting that limited planning and detailed design work prior to starting construction resulted in increased costs and delays.77 This process is similar to that for a standalone project. The supplementary appendixes are not circulated but can be provided by the team. and staff supervision. including technical and engineering. 77 78 In one case (MFF34 in Georgia). the new streamlined business processes allow documents to contain minimal and sometimes selective information. which determines the extent to which the technical and engineering aspects need to be discussed. do not emphasize project design and engineering aspects. project management. 111. By the time ADB receives a signed PFR with all its required attachments and appendixes for approval. processing. The sector community of practice (COP) is the most qualified to perform technical due diligence—although it is not mandated to receive all PFRRs. and are often irretrievable makes it difficult to obtain a complete picture. the BTORs showed that ADB teams provided significant inputs on issues related to ADB’s procurement rules and safeguards. normally during project preparation missions or review missions. 78 These are issues of internal control. However. and not specific to MFFs per se. it is evident that discussions on technical designs or on technical alternatives that may be more cost effective. the ADB team is expected to have discussed the various aspects of tranche projects with the consultants and clients and to be fully informed about the feasibility studies related to tranche projects. However. The staff were asked to provide a good understanding and assessment of what proper design works on the ground means and what duration it will take. or implementation. When preparing an MFF tranche. The sector specialists are normally required to work on strategy and planning. An example comes from advice given to staff on a transport sector MFF. However. the ADB team had commented on the alignment of a road bypass. upon request. on the COP. On the basis of a review of a few BTORs that are available to IED. the fact that discussions with consultants and clients are often via email. the client is normally assisted by a consultant. this study is of the view that ADB (along with its consulting engineers) must be in a position to identify major gaps in project design and ascertain project soundness and cost effectiveness.46 Real-Time Evaluation Study of Multitranche Financing Facility 1. . and concerns for timely submissions of the required documents were also expressed. 112. ADB Management has a genuine concern regarding the liability that ADB may 114. The extent to which supplementary appendixes are suitably updated or verified for correctness and accuracy is uncertain. sector COPs comprise mostly staff from the sector specialist stream from operations departments and other relevant specialists from knowledge departments. knowledge sharing. Technical Viability and Due Diligence Staff inputs and discussions on technical designs or on technical alternatives that may be more cost effective are seen on an exceptional basis 110. are not systematically stored. take on by providing too much input or advice on technical and engineering matters during project preparation. The ADB team provides inputs on all aspects of project preparation. Details are presented in the supplementary appendixes. In addition. technical due diligence normally comes about when the team has prepared and circulated a draft PFRR for inter-departmental comments and feedback. are seen relatively infrequently. ADB job descriptions of sector specialists. ADB staff review the reports prepared by the project preparation consultants. In general. whether on the MFF/tranche team or 113.

As per PAI 5. and (ii) undertaking methodology research. several road sector feasibility studies use the HDM IV model to establish the benefits from new. The Economics and Research Department (ERD). It appears that ADB staff is readily accepting the results. or with an EIRR in the 10%–12% range if relevant additional but unquantifiable benefits can be identified. The HDM IV model works like a black-box where the user provides relevant project data. Economic Viability and Due Diligence 47 115. Strategy and Policy Department (SPD). Controller’s Department (CTL). 82 ERD is not explicitly mentioned in this list. which include (i) advising on the sound application of appraisal methods for lending services. “major” or “minor.02 (refer to footnote on this PAI). To the extent that tranche project changes are to be introduced. For instance. and the model automatically calculates the EIRR. to (i) reject projects with EIRR between 10% and 12% if no additional unvalued benefits can be demonstrated.” the authorized director is required to obtain inputs from other departments on a draft memorandum that provides relevant details on the changes. and to accept projects and subprojects with an EIRR of more than 12%.nsf/webview!OpenView& Start=1&. This ERD competence is in line with its various mandates.Quality Assessment and Review 2.83 Table 11 provides a few examples that suggest that it would be useful for ADB staff to rerun the computer models and do sensitivity analyses as part of the economic due diligence exercise. reconstructed and rehabilitated highways or roads. and other relevant departments. This is a very late stage in the tranche processing cycle. which has the expertise and competence to comment on economic evaluation issues. including substantiating overly optimistic assumptions. Against this background. . A review of the MFF and PFRR documents and discussions with stakeholders of 118. the draft memorandum defining and detailing the scope change. is circulated to Central Operations Services Office (COSO). Office of the General Counsel (OGC). they are considered indicative and are subject to change.80 In many cases. 79 The standard ADB practice is to use the economic internal rate of return (EIRR) criterion. see http://lnadbg1. some MFFs reveals that the rigor with which a tranche project is assessed to establish its economic viability may not be commensurate with the size of the projects. projects are defined in the RRP. RRPs do not define all tranches up front. when it becomes difficult to address discrepancies or problems with the economic analysis. and available tranche project change memoranda indicate that it does not receive these memorandums for comments.asiandevbank. These departments are required to provide comments within five working days of receipt of the draft memorandum. and the tranche project information remains within the division and department until the PFRR is to be circulated to other departments for comments. or where unvalued costs are expected to be significant. The entire SST preparation process is managed by the team leader and other team members. particularly when the EIRR is above the threshold. Further. and (ii) reject projects with an EIRR below 10%. RRPs do not define all tranches upfront The rigor with which tranche projects are assessed to establish their economic viability may not be commensurate with the size of the projects 79 80 81 82 83 Economic Analysis of Projects. 81 gets the opportunity to review the economic analysis only when a draft PFRR is circulated across departments to seek comments. Economic viability of all tranche projects is required to be established as per the ADB guidelines for economic analysis. it appears that economic viability analysis and due diligence may not be accorded the importance they are due. Even where SST 116. whether 117. and distilling good practices of economic analysis of projects and programs.org/edr0015p. In many cases.

the $70 million spent in tranche 1 is considered a “sunk cost. sources it externally by engaging consultants.4 million per kilometer.6 million per kilometer to $6. and (iii) a traffic increase from 3775 vehicles per day (base year 2006) to 7.8%. After more than doubling the cost from $2. This is due largely to the fact that ADB’s own safeguards requirements are more stringent than those followed by its DMCs.9%. it suffered cost overruns. 3. It is noteworthy that passenger time savings account for a large share of the total benefits. the EIRR for tranche 1 scope. After detailed design and realignment. the new Masali-Astara expressway. (ii) 12 fold increase in avoided accidents-related benefits. RRP = report and recommendation of the President. while the EIRR is only a little above the threshold. MFF = multitranche financing facility. GEO = Georgia. While the revised traffic estimates are based on new traffic counts. or when concerned about the overall viability of the project.254 vehicles per day (base year 2008) in one of the highway sections. the tranche project consultants felt that ADB mission members were more concerned about how the submissions could be accelerated to meet a certain deadline for tranche approval. ADB either provides the necessary expertise or 120. 84 ADB. Source: Independent Evaluation Department. and a part of the bypass was then to be funded through tranche 3. ADB has supported capacity development related to safeguards in client organizations or program management units in about 50% of the approved MFF investment programs. Safeguards Compliance and Due Diligence For safeguards due diligence. However. rather than pushing for a deepening of the analysis. the consultants also felt they did not get the necessary support from the mission members when having conflicting views with the concerned executing agency regarding technical and design issues. As part of the nonphysical investment component. . the recalculated EIRR for the Kobuleti bypass is estimated at 12. was 12. In some cases. In some cases. After additional financing through tranche 3. EIRR = economic internal rate of return.48 Real-Time Evaluation Study of Multitranche Financing Facility Table 11: Economic Viability Assessment of Selected MFF Tranche Projects MFF Reference MFF14 Comments on Economic Viability Assessment AZE: Road Network Development Program In the RRP. the estimated increase in other benefits is questionable. the revised EIRR was shown as 12. This reflected increase benefits in terms of (i) about 100% increase in time savings benefits. in this recalculation.84 and the concern that nongovernmental organizations that are active in championing the cause of project-affected peoples may detect and publicize any lapses in ADBsupported projects. Policy Paper. Manila.3%.” ADB has supported capacity development related to safeguards in client organizations or program management units in about 50% of the approved MFF investment programs AZE = Azerbaijan. 119. 2009. MFF34 GEO: Road Corridor Investment Program Tranche 1 originally included the bypass around Kobuleti. Safeguard Policy Statement.

a peer review process was established. and as per internal Staff Instructions (2011). Safeguards related documents are prepared for all projects. and (ii) environmental management plan. When a PFRR is circulated across departments. indigenous peoples plans and environmental impact assessments) prior to PFRR circulation. these documents 123. Given further experience gained over the subsequent 3 years to mid-2011. . indigenous peoples impact assessment.87 This augmented the usual business processes for quality assurance. when the IEI team was mandated to review concept papers and other MFF proposal documents. (ii) regarding need for credible 85 The peer review process introduced through the establishment of a POE augments the usual business processes for quality assurance 86 87 88 Such documentation includes the (i) environmental impact assessment or initial environmental examination. 8. It is noteworthy that for industrial energy-efficiency subprojects supported through MFF20 in the PRC. peer review process was reintroduced through the establishment of a panel of experts (POE). and other documentation. the 125. Safeguards due diligence is also done thoroughly for all projects. For instance. One expert was to be assigned to each MFF from the concept stage. for which a full-fledged environmental impact assessment is not required. if necessary. and (ii) compliance with MFF policies. Division of RSDD reviews the compliance of tranche projects with ADB’s safeguard policy. Peer Review 124. IED has access to POE feedback on five MFF proposals. for industrial energy efficiency subprojects supported through MFF20 in PRC. Staff Instructions (2011) (footnote 70). This practice was discontinued when the MFF modality was mainstreamed in mid-2008. The POE was set up in mid-2011. the Environment and Safeguards 122. whether or not they are considered to be in an environmentally and/or socially sensitive category. They interface with the clients and/or consultants to ascertain (i) compliance with relevant safeguards at the project design stage. 49 C. are available on ADB’s external website.Quality Assessment and Review 121. approximately 20 MFFs had been approved from the time the POE was established. land acquisition and resettlement framework. its role is planned to be reviewed by end-2012. Safeguards specialists on the MFF/tranche preparation team are from within the operations departments. Until November 2012. depending on the environmental categorization of a project. and to provide written inputs to the MFF team prior to concept paper clearance and the Management review or staff review stages—although the expert may choose to provide inputs and guidance to the MFF team at any other stage as well. Following the internal Staff Instructions (2006).88 This limited sample 126. and (ii) incorporation of relevant safeguards-related aspects in the PFR documents that are submitted to ADB. land acquisition and resettlement plan.85 The safeguards specialists also contribute to firming up PFRRs. indicates that POE inputs have included a mix of comments (i) relating to the justification of the choice of the MFF modality.86 An assessment of the quality of the safeguards documents and how effectively the safeguards are actually followed during tranche project implementation is beyond the scope of this evaluation. The POE was set up with the purpose of reviewing all MFF proposals on matters related to (i) choice of the MFF modality. ADB provided inputs and comments on the quality of the initial environmental examination. Refer to para. ADB provided inputs and comments on the quality of the initial environment examination. the Environment and Safeguards Division of RSDD also reviews the safeguards documents (such as resettlement plans. Given the information disclosure requirements wherein safeguards documents are required to be posted on the internet for 120 days to invite feedback. for which a fullfledged environmental impact assessment was not required.

(ii) risks and issues. No matter how rare such occurrences are. The DMF-based tracking and reporting mechanism required MFF and tranche teams to do adequate data and information gathering. D. directors noted that. several PFRRs did not contain a separate DMF for the particular tranche. 90 For instance. Design and monitoring frameworks. At the time of switching to the eOps platform in early 2011.50 Real-Time Evaluation Study of Multitranche Financing Facility prerequisites. Likewise. it appears that there have been some lapses in the quality of due diligence of MFF tranche projects (see Box 6 and Table 11). and outcomes. 2010. Although linkages between the MFF and tranche-level MFFs improved overall from 2009 to 2011. investment program. although the conceptual framework for MFFs was sound. 89 (iii) on compliance with procedural issues or nomenclature. . 90 and (iv) on non-MFF related issues that would normally be expected to be made when the concept paper or RRP is circulated across departments to invite feedback and comments. an observation that inclusion of “further refinement of sector road map” as an output indicates that the available sector roadmap is not credible—in which case the choice of MFF as a modality can be questioned. further improvement is desirable. suggesting a way to relate institutional capacity strengthening requirements with the budget for nonphysical investments. financing plan. to discuss indicative procurement methods. and (v) any changes in circumstance or material facts relating to the investment program/plan. several 127. noting that the financing plan does not bring out the availability of finances for subsequent tranches. 92 Each MFF was required to have a facility-wide DMF. The concerned team leaders were given an opportunity to formulate a DMF by 31 March 2011 and get it endorsed from their client by November 2011. (iv) status of compliance with undertakings. outputs.93 89 The design and monitoring frameworks need to be improved significantly For instance. and to form a basis for tracking and reporting performance at the MFF and tranche levels. At mainstreaming in mid-2008. and each tranche was to have its own DMF and be monitored in the same way as a stand-alone project. including progress made on each tranche output. or/and that question the veracity of MFF prerequisites. Similarly. policy framework. there were risks to implementation and accountability—and they specifically requested ADB Management to supervise adherence to and quality of due diligence. However. the quality of MFF and tranche level DMFs is assessed as being variable by the Central Operations Services Office (COSO) Portfolio Management Unit. and 2011. and Reporting Arrangements Board concern on due diligence. tranches and other projects approved in 2009. 91 To the extent that comments are of the first and second type. 92 Such reporting was supposed to provide (i) statistical information on the MFF. 91 For instance. the Board 128. and actions being taken to mitigate the risks and resolve the issues. recognized that the DMFs needed to be improved significantly. to indicate that due diligence will be carried on tranche1 projects. At the time of mainstreaming. 93 Refer to the COSO Portfolio Management Unit’s DMF quality assessment reports which analyze DMFs of MFFs. DMFs are intended to generate the right information for decision making and oversight. as well as possible barriers and issues. which was to help track the direction of the roadmap. and to identify the total amount of TA along with its funding source. it appears that the POE is making a useful contribution. Monitoring. other inputs. safeguards framework. and to provide estimates for consultant and staff time requirements. (iii) DMF updates. whether or not advance and retroactive financing will be considered. to indicate which outputs constitute physical investments and which constitute nonphysical investment. Nonetheless. and perhaps of the third type. they have added to the Board’s concerns for increased oversight and supervision and have contributed to the need for ADB to institute safeguards against lapses in the due diligence process. it was noticed that 129. which enabled regional departments to report on the performance of each MFF in each country on an annual basis. Oversight.

94 the Board also obtains information on other important aspects. such as (i) compliance with undertakings. amounts mobilized. 96 The PFR Report is to be submitted for President’s approval at least 10 working days after the PFR monthly report has been received by the Board. 96 More sophisticated rating mechanisms are expected to p evolve to provide better insights to the Board on MFF performance 94 Such as listing of MFF and tranche approvals.. the MFF is to be rated on three distinct parameters: (i) MFF delays. committed and disbursed. noncompliance with two covenants means it is potentially problematic. A beginning has been made on tranche performance ratings through the use of a transparent mechanism (see Appendix 13). to check how they are performing. and other statistics. or on track. and (iv) issues. COSO also compiles quarterly portfolio updates. extent of staff inputs. potentially problematic.” but does not describe the change. and (iii) compliance with undertakings. on rating tranche performance with respect to compliance with all safeguards as per policy. The scorecard system was prepared through consultations between relevant ADB departments and the Board. 95 Board members can seek additional information on any PFR and its attachments and appendixes. also includes similar data on tranche project changes—but they are in the linked documents for each tranche. the internal Staff Instructions (2011) mandate that the Board should receive each month a consolidated PFR monthly report that SPD prepares on the basis of one-page summaries received from operations departments for any new PFRs submitted by governments. noncompliance with none or only one covenant means the tranche is rated to be on track. 95 Such a monthly PFRR was to be furnished to the Board by the 6th working day of each month. In addition to performance reports for MFF 130. . As per this system. more sophisticated rating mechanisms are expected to evolve in the coming years so as to provide better insights to the Board on MFF performance-related matters. The purpose is to identify and bring to the attention of the Board MFFs and tranches that can be considered to be at risk. The internal Staff Instructions (2011) required the inclusion of a scorecard 132. This means that with the exception of program lending where each tranche is to be approved by the Board. include a list of changes approved on all types of ADB financings (including MFF tranches) during the previous quarter. tranche projects and financings. forward information to the Board. (ii) tranche performance. and noncompliance with three or more covenants means it is at risk. if felt necessary.Quality Assessment and Review 51 Reporting and Board oversight. and mitigations. In response to a Board concern that the reporting system did not provide any 133. country etc. system to rate the performance of each MFF. SPD’s annual submission on MFFs. and not easily noticeable. (ii) changes in circumstance or material facts relating to investment program or investment plan. Such reports are compiled by Strategy and Policy Department (SPD). the MFF is the only modality that provides the Board with information on projects supported through it. and comment and provide feedback on the PFRR before the President’s approval. To what extent such reports provide insights for a comparison of MFF performance across countries or country groupings or sectors is not clear. among others. time lags between selected milestones. which 131. (iii) DMF updates. The listing specifies whether the change is “major” or “minor. are presented to the Board once every year. the template for which was prepared in consultation with relevant ADB departments and the Board. risks. For Board circulation. Without compromising on transparency. For instance. aggregation of number of MFF and tranche approvals by source of funds. cofinancing. and have thus far covered 2008–2011. and to contain consolidated data for all PFRs received from governments in the previous month.

It is expected that. The long MFF utilization period.52 Real-Time Evaluation Study of Multitranche Financing Facility 134. completion reports will be made 8–9 years after approval. Once guidelines are prepared. . This is much longer than the normal project cycle in ADB and spans more than two CPS cycles. once prepared. financial. from the pre-approval stage through to the end of the utilization period. and providing forward-looking information. As of the third quarter of 2012. which clearly enables the reviewer to gauge (among others) the following: (i) how the MFF modality is justified. (ii) the quality of the MFF prerequisites as articulated up front. (iii) the extent to which the sector road map or other prerequisites actually changed during the course of the MFF period. rating of MFFs and tranches. provided the MFF period is not extended.8 years. the guidelines will provide a basis on which selfevaluations can be conducted over the entire MFF cycle. guidelines and 135. templates for preparation of MFF completion reports had not been prepared. and their categorization. (v) how economic. averaging 7. there is scope for improving the reporting to the Board and facilitating Board oversight from the perspectives of monitoring of performance. Independent evaluations would be typically more than 10 years after approval. and technical viability of the tranche projects is justified. they will provide the basis for selfevaluation of the entire MFF envelope Review and evaluation of MFFs. and (vi) the extent to which ADB was actually engaged in policy dialogue during the MFF period. (iv) what (if any) tranche project changes were made. While the Board has endorsed the current reporting arrangement. implies that MFF 136. All necessary documentation would be required for such work.

Along with efforts to address structural issues and create required skill sets. and beyond the MFF utilization period. The pace at which the sector can develop depends on a mix of factors including (i) ownership and financial commitment by all levels of the government. and areas of skill sets needing improvement. A. and environmental and social safeguards. To avail of ADB support. structural impediments that need to be addressed include (i) high technical and nontechnical energy losses in the transmission and distribution systems. Developing a necessary skills base includes: (i) supporting the independent power regulator in managing billing-and tariff-related disputes. and setting operational efficiency improvement targets along various parameters. (ii) supporting the generation. DMC Perspectives 1. Interest in the MFF modality has varied significantly across countries and sectors. and other relevant disciplines necessary for project/program management and sustainable development. The NPI components of MFFs address issues related to development of requisite 140. Pace of Sector Development The MFF modality is used in countries and sectors where ADB is expected to be 139. which results in weak commercial viability of sector entities. (ii) structural impediments that affect the mobilization of domestic resources. Regional departments do not consider a signed FFA as a financial commitment. institutional capacities. the concerned institutions should also be familiar with ADB procedures for procurement and contracting. 138. such measures help to improve the pace at which projects in the sector can be developed. social. For instance. economic. and (iii) supporting all power sector entities for better progress monitoring and status reporting. financial. are specific to a country and sector contexts. Certain sector-specific or other constraints have influenced the pace of investment in some countries. . 97 The MFF modality is used in countries and sectors where ADB is expected to be engaged on a medium-to long termbasis 97 Structural issues that need to be addressed. the Treasury Department models MFF-related tranches beyond the WPBF period in its financial projections. Decision-making processes—or priorities of decision-making bodies—in some countries are also more amenable to an MFF than in others. and (ii) poor operational efficiency in various technical and business processes. and (iii) a critical mass of required skill sets across all relevant technical. and the extent to which the MFFs have been adopted thus far. engaged on a medium-to long-term basis. To the extent that policy dialogue during the course of an MFF contributes to improving and streamlining policies within an acceptable policy framework. transmission and distribution entities for system expansion and investment planning. it contributes to improving ownership and sector performance. in India’s power sector.CHAPTER 6 Implications for Operations 137. environmental. However.

or a different MFF. the approach of most clients in India is to wait until project readiness is achieved (as agreed upon between ADB and the Government of India) and to time tranche approval and loan signing with readiness. To the extent MFF tranches have financed cost over-runs of MFF projects included in previous tranches of the same MFF. However. from the Government of India’s perspective. The difference. In Papua New Guinea. of approving the second tranche in December of a certain year or the first 3 months of the following year was very little. the MFF modality is favored as the government considers the FFA as a 143. and (ii) the client need not seek specific approval for a project that is newly introduced under the MFF umbrella.100 At the time of MFF57 approval in July 2011. and all tranche projects can be implemented without having to draw down the entire tranche loan amount. For instance. They added to their skill base to be able to improve other urban services. In India. and can make minor adjustments to accommodate ADB’s changing liquidity position. full commitment from ADB. associated with the MFF. In countries such as Armenia. the study is informed by the concerned regional department. Previously. . In such a case.101 Constraining features of the MFF modality. no other project can be included in 98 99 100 101 The MFF modality provides a mechanism to reduce commitment charges without exerting any pressure to hasten project readiness. and Georgia. the following factors have contributed to making the MFF modality more attractive: (i) the flexibility associated with MFFs enables clients to adjust and modify the project pipeline. it was expected that ADB would be able to approve the second tranche only in the first quarter of 2012. when it became evident that resources would become available within 2011. On the contrary. or a stand-alone project. 98 With such a long-term commitment as a basis. but without having to pay commitment fees (no matter how small) on the entire MFF envelope. This type of accommodation is possible. executed efficiently. MFF57 was approved although a stand-alone project loan could have been structured instead. there are indications that the MFF in India has led to greater appreciation of ADB funded investment programs than in most other countries. Where all projects in a tranche are 145. India: Madhya Pradesh Efficiency Improvement Investment Program (MFF57). because the fiscal year in India runs from 1 April to 31 March. the second tranche was quickly processed and approved by December of that year. The Government of Papua New Guinea also recognizes that the MFF modality is fully in line with its effort to pursue a multi-year planned expenditure agenda. that relevant agencies appreciate the programmatic design and predictable financing associated with the modality. Azerbaijan. and that specific tranche loans can be signed as and when project readiness is achieved. The Government of India also recognizes and understands the flexibility 144. that is considered an additional element of flexibility of the MFF in many cases. as per the requirements of the MFF policy.54 Real-Time Evaluation Study of Multitranche Financing Facility 2. while ADB’s fiscal year coincides with the calendar year. It appears that operational flexibility is a key attractive feature in countries and sectors with a need to improve institutional capacities and quality of other MFF prerequisites. some borrowing entities for urban sector MFFs in India took decisions to strengthen their capacities to manage urban projects. certain cost savings can be achieved. 99 Overall. where the MFF modality has been used in the transport sector. Towards increasing acceptance of the MFF modality. the urban local bodies had mostly sanitation engineers and workmen. 142. DMC Experience with the MFF Modality The flexibility associated with MFFs has made the modality attractive 141.

the benefits of an MFF framework are not as significant. preparation of SST projects through previous tranche loans (barring exceptional circumstances). 150. This has proved problematic in India. where internal government policies make it difficult to engage international consultants.102 The amount saved is required to be cancelled from that particular tranche. the MFF modality is perceived as being useful. Azerbaijan. Special clearances are required to engage international consultants. In many countries. which mandates the 147. after once obtaining approval for an MFF from an apex body (such as the National Development and Reform Commission or the State Council). but preferred to switch back to using TA funds for tranche 4. where the President signs the loan agreement for each tranche under a previously approved MFF and FFA. relending arrangements. the executing agency does not need to obtain similar In many countries. . the tranche loan agreement. India: National Power Grid Development Investment Program (MFF19). In the PRC. their inherent investment decisionmaking and approval processes are amenable to MFFs. 105 the executing agency engaged international consultants (who had worked on previous tranches) for tranche 3. This is noted in Armenia. and a new tranche loan needs to be processed to finance another project. In the particular case of MFF23 in Himachal Pradesh in India. Where project approval processes are cumbersome or encourage government and client officials to go by precedence. effectively. 104 Good performance and project familiarity obtained through PPTA preceding the MFF are not decisive consultant selection criteria. retain authority for project approval or loan signing. 3. India: Himachal Pradesh Clean Energy Development Investment Program. Investment approval and decision-making processes normally incorporate a system of checks and balances. Executing Agencies in the PRC also observed no significant reduction in processing time or effort for a tranche 2 project. the MFF modality helps to the extent that. international consultants are required to pay taxes as per Indian tax laws (that are not applicable if they are engaged by ADB). the executing agencies are required to hire project preparation consultants under tranche loans.103 The executing agency for MFF20 also noted that to affect any amendment in 146. and India. and effectiveness requirements was nearly the same as for any type of loan. their inherent investment decision-making and approval processes are amenable to MFFs 102 103 104 105 This principle applies to stand-alone projects. Georgia. Government Decision-making Processes for MFF and Tranche Approvals 55 148.Implications for Operations the same tranche. In Pakistan the clear benefit is a saving in elapsed time and LOE of government and executing agency staff because an umbrella approval can cover subsequent tranche projects as well. the effort required was about the same as for any other modality. A case in point is Kazakhstan. The level of effort required for loan negotiations. When engaged by the executing agency or any local body. The difficulties relate mostly to the high consulting fees charged by international consultants. where loan or grant savings need to be cancelled before the savings return to ADB’s financing envelope. and as being just the same as for other modalities. that of obtaining clearance from the National Development and Reform Commission. it saved only one last step. This is viewed as a tedious and unnecessary process by the PowerGrid Corporation of India. Following the internal Staff Instructions of 2011. Where some high-level body or top-level country executive retains or intends to 149. even if it had been included in the approved pipeline for foreign capital investment. which thus forces grossed up fees.

and narrows the focus further within these areas. but it does reduce the maneuverability of including interventions to manage unforeseen stress. depot. programs. and trade finance) have increased significantly. mainly through the CPS which is 153. ADB Perspectives 1. Manila.5 billion range during the next 3 years.108 This reflects the increase in OCR lending approvals from the $6 billion–8 billion per year range during 2006–2008 to $9 billion–11 billion during 2009– 2011. 108 ADB. Table 12 shows that all countries and sectors with MFF interventions 106 MFF12: Viet Nam: Mong Duong 1 Thermal Power Investment Program. 151. A CPS identifies operational areas from the menu of options provided in Strategy 2020 within the framework of the DMC government’s development plan. technical assistance grants. and construction supervision. although it recognizes that with OCR loans. 109 Following adoption of Resolution number 336 by the ADB Board of Governors in April 2009. from the $8 billion–$11 billion per year range during 2006–2008. As a result. which define a pipeline of interventions that fit the agenda spelled out in the CPS. 107 MFF52: Ho Chi Minh City Urban MRT Line 2 Investment Program. 2009–2011. procurement. Since MFF was first piloted. The full CPS cycle is shorter than the MFF utilization period.56 Real-Time Evaluation Study of Multitranche Financing Facility approvals for each tranche—although as noted above. and efforts by other development partners. Country Programming Any MFF program necessarily straddles more than one CPS cycle ADB delivers its strategic agenda to a DMC. 2–5 May (Forty-fifth annual meeting of ADB Board of Governors). This was made possible by the fifth general capital increase (GCI V). Annual Report 2011. each tranche of an MFF investment program and all other investment projects need to be approved by the Prime Minister’s office. B. and construction contracts. . civil works. to the $13.5 billion–$15. 2. At present. Any MFF 154. equity investments. the DMC’s development strategy. plus engineering. The second tranche supports the construction of the underground and elevated line. the opportunity to reduce commitment fee payment obligations (no matter how small) in the coming years will make the MFF modality generally more attractive. A CPS normally defines a program of assistance that identifies areas of investment projects. depot equipment. the government concedes it still prefers stand-alone projects. The second tranche supports the remainder of civil works and consulting services. 2012. The first tranche supports site preparation. there is little savings in terms of time and effort. The first tranche provides system development and implementation support. grants. and consulting services. This may not be critical for those countries and sectors where the combined MFF tranche financing envelope is lower than the CPS financing envelope. only those MFFs that represent large-scale projects that have been tranched into phases (such as in MFF12 106 and MFF52 107) can benefit from the MFF modality in terms of obtaining investment approval. and technical assistance to the particular DMC over a 5-year period. In Viet Nam. aligned with Strategy 2020. ADB’s comparative strengths. ADB’s operations (including OCR and Special Funds resources for loans. A CPS is normally implemented through rolling 3-year COBPs. guarantees. 109 GCI V made it possible to increase investment lending through MFF and other investment lending modes. investment program therefore necessarily straddles more than one CPS cycle and impacts on the flexibility to incorporate new findings or to adjust to unexpected developments. General Capital Increase V 152.

Therefore. is observed in this respect: in the documents required for MFF approval. 111 Therefore. the CPS team needs to coordinate with all MFF teams for all MFFs under preparation. a To the extent available. and that large borrowers such as India and Pakistan have a better chance of maintaining it. . CPS and COBP updates are not a good source of advance information for the Board on MFFs. and (ii) COBP assumptions that the first few tranches of two yet-to-be-approved MFF investment programs will be approved. the last PFR submission date. 110 Only 46 of the 66 MFFs (70%) approved until December 2011 state in the RRP the number of tranches planned or envisaged. annual lending approvals from the COBP are considered as updates to CPS annual lending approvals. 110 111 The MFF envelope information in an RRP is normally limited to the MFF financing envelope. to arrive at average annual assistance for the particular sector and country. For another $900 million MFF (Lahore Urban Transport). the fact that the tranche approval amount for transport sector MFFs is 46% of the CPS envelope is largely due to (i) delays in the approval of certain tranches. CPS = country partnership strategy. To help correct this situation. in Pakistan. the country programming effort is also evident from other situations. projected tranche approval amounts for 2009. Manila. a $200 million tranche of a $450 million MFF (Punjab Urban Transport) was projected to be approved. WSS = water supply and sanitation. which increased to 72% of the 46 MFFs approved after mainstreaming to the end of 2011. Pakistan: Country Partnership Strategy (2009–2013). investment program may not be known up front. 2009. respectively. 8 RRPs do not give any indication. and $150 million. See ADB. Table 12: CPS and Pipelined COBP Approvals vs MFF Tranche Approvals Average Annual Assistance in Line with CPS Envelope ($ million)a 85 102 70 107 148 133 744 624 365 167 212 57 Country Afghanistan Armenia Azerbaijan India Reference Years 2008–2012 2009–2013 2011–2013 2010–2014 Pakistan 2009–2011 Sector Transport Energy Transport Energy Transport Urban/WSS Transport Energy WSS Transport Energy Average Actual / Planned Tranche Approvals (% of Average Annual Assistance as per CPS/COBP)b 151% 98% 123% 54% 109% 130% 41% 59% 92% 46%c 117% COBP = country operations business plan. The likely timing of future tranches is also not indicated in the RRPs. and implementation. and 11 others provide a minimum or maximum or a range for the number of tranches. the internal Staff Instructions (2011) require that an indicative tranching plan be given in the facility administration manual. $125 million. and 2011 were $150 million.Implications for Operations have not maintained CPS flexibility. when firming up a CPS or preparing COBP updates. In 2009. The number and timing of tranche approvals expected in a particular MFF 155. 65% of the 20 MFFs approved during the pilot period gave a firm number of a range for the number of tranches. many MFFs are approved with only limited envelope information in the RRP. The need for and the challenges in dovetailing MFF-related information with 156. Some improvement however. MFF = multitranche financing facility. 2010. For instance. and the MFF utilization period. processing. the tranche 1 approval amount. the RRP of one MFF states the number of components rather than number of tranches.

MFF portions that are not converted to tranches.396 3.279 43% Water 897 1. PRC = People’s Republic of China. c Refers to all sovereign lending operations.315 100% Transport 524 525 100% Water 40 54 73% PNG Energy 57 57 100% Transport 196 530 37% PRC Energy 151 774 20% Transport 650 5. basis of actual and projected data provided by other ADB departments. more than 75%) of all approved assistance since MFF began to be piloted (see Table 13).58 Real-Time Evaluation Study of Multitranche Financing Facility b If actual data on tranche approval for a particular year (from within the relevant reference years) are not available from ADB’s online database (Loan and Grants Financial Information System). also includes approvals for nonphysical components. Refers only to tranche approvals. To the extent necessary. MFF = multitranche financing facility. as follows: (i) . 157.467 72% Transport 1.269 71% Indonesia Water 4 200 2% Kazakhstan Transport 980 1. it may be useful to consider other options for strengthening policy dialogue for such sectors and countries.142 66% Water 90 113 80% Armenia Transport 277 324 85% Azerbaijan Transport 455 496 92% Water 375 375 100% Bangladesh Transport 281 1. and that all actual approvals during the 2009–2011 period are MFF tranche approvals. Please note that the actual MFF tranche approvals fell short of the projected levels.074 51% Transport 390 2.315 1. it may also be useful to understand the implications for policy dialogue and capacity development.075 91% Mongolia Transport 44 146 30% Pakistan Energy 1. b a 3. Source: Independent Evaluation Department. including MFF tranche approvals. c MFF tranches account for 100% of the pipelined approvals projected in the CPS/COBP documents.485 3.004 28% Georgia Transport 347 377 92% Urban 118 118 100% India Energy 2. Capital Headroom ADB’s Treasury Department (TD) models MFFs in the OCR balance sheet on the 158.201 12% Uzbekistan Transport 486 658 74% Water 258 313 82% Viet Nam Energy 1. then the projected/planned tranche approval amount is taken from the most recent CPS/COBP. In addition to approvals for physical investments. are not included. In some sectors and countries where the MFF modality has penetrated rapidly and accounts for a major share (say.711 14% Water 138 311 44% ADB = Asian Development Bank. PNG = Papua New Guinea. During 2005–2011. Source: Independent Evaluation Department. Table 13: Penetration of MFF Tranche Approvals in Selected Sectors and Countriesa MFF Tranche Total ADB % Share of MFF Approvals Support Tranche Country Sector ($ million)b ($ million)c Support u Afghanistan Energy 333 431 77% Transport 757 1.051 2.

Implications for Operations actual tranche approvals from the Controller’s Department. (ii) projected tranche approvals in the 3-year WPBF from SPD. which for 2013–2015 is about 40% of sovereign lending. accumulating each year (see Figure 8). Source: Independent Evaluation Department. the share of tranche approvals to sovereign lending approvals is assumed to be 35% per year. Figure 8: MFF Portion Not Converted into Tranche (as of 31 December 2011) 16 14 12 ($ billion) 10 8 6 4.3 12. The disbursement rate for MFF tranches is projected on the basis of a blend between historical tranche disbursement rates and disbursement of the fastest sector) irrespective of the evolving sector composition of the MFF. in view of portions of existing MFFs that are not converted to tranche loans. as well as additional MFFs that are projected to be approved over the coming years.7 10. especially those in which the remaining portion of the MFF financing envelope is significantly greater than the remaining MFF utilization period.3 15 Undisbursed Balance ($ billion) MFF = multitranche financing facility. .4 4 2 2006 2007 2008 2009 2010 2011 6.9 13. Figure 9 shows that some MFFs contribute more to this accumulation. 59 A portion of the MFF financing envelope that is not converted into tranches is 159. Most of this accumulation is from OCR resources—as 85% of the combined approved MFF envelope is from OCR resources. (iii) beyond the WPBF period.

and catalyze economic activity. revitalize basic services (such as education and healthcare). hurricanes. This need not be a cause for concern during times when ADB’s capital adequacy is high and rising. in addition to projections for loan repayments. Effectively then. oil spills.2 billion was for paid-in of which $4.7 billion was paid as of 31 December 2011. MFF investment programs lock up future finances. 112 Inspite of subscriptions to General Capital Increase V. and contribute to the depletion of capital headroom Where the MFF is from OCR resources. and loan loss reserve. annual OCR lending approvals could be restricted to less than the levels approved in 2009–2011. crowd out other financial products from OCR lending. crowd out other financial products from OCR lending. In April 2009 the Board of Governors adopted a resolution that provided for a fifth general capital increase in ADB’s capital stock and subscriptions by about 200%. and/or is projected to continue falling over the next few years. In addition. widespread community violence. At the conclusion of the subscription to the fifth general capital increase in 31 December 2011. and increase in paid-in capital to $8. Source: Independent Evaluation Department. $8. the DMC has little reason to cancel or state that it will not avail of any leftover portion of an approved MFF envelope. guarantees. etc. droughts. valued at $162.5 billion. tidal waves. ADB’s capital adequacy has been declining over the past few years. there is no commitment charge or any 160. volcanic eruptions. or (iii) conflicts of any type. .113 This could diminish ADB’s ability to mount crisis-response operations. it is anticipated (as of end-November 2012) that within a few years. Disasters may be caused by (i) natural events such as earthquakes. cyclones. where projected/actual approved tranche amounts equal or exceed the CPS envelope 112 113 114 As per projections for new loan approvals plus approval of tranches from existing and new MFF programs. 114 so as to address rehabilitation of priority physical and social infrastructure. flooding. Crisis161. However.2 billion by December 2011. such as regional/national civil wars. Therefore. MFF investment programs lock up future finances. the subscribed capital had increased to over 10. response includes needs for emergency assistance quickly following a disaster. or nuclear reactor leaks. equity. direct cost implication on an OCR-financed MFF from the portion that has not been converted into a tranche loan.60 Real-Time Evaluation Study of Multitranche Financing Facility Figure 9: MFF Portion Not Converted to Tranche vs Elapsed Time : n % MFF portion not converted into tranche (as of 31 Dec 2011) 95% 85% 75% 65% 55% 45% 35% 25% 15% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Elapsed Time as % of MFF Utilization period (as of 31 December 2011) MFF = multitranche financing facility. chemical mishaps.5 million shares. and contribute to the depletion of capital headroom. or epidemics: (ii) technological or industrial accidents such as explosions.

capacity. Real-time evaluation of Asian Development Bank’s response to the Global Economic Crisis of 2008–2009. Enhancing ADB’s Response to the Global Economic Crisis—Establishing the Countercyclical Support Facility. as well as the establishment of some suitable triggers. IED reviewed ADB’s crisis-lending response. legal and technical aspects. financial. to extend short-term loans (of 5-year maturity including a 3-year grace period) to DMCs. and technical aspects. 115 However. in view of headroom considerations. 117 Existing documentation— including the proposal document for the MFF modality. as well as available signed FFAs—allows for a discontinuation of the MFF mid-stream in the event the commitments are not kept (Table 14). and economic. 61 MFFs could diminish ADB’s ability to mount crisis-response operations ADB needs to use the option to terminate MFF when it is inadequately or improperly used MFF Policy Paperb 115 116 ADB. MFF enablers and undertakings that constitute the FFA are in fact a binding commitment on the DMC governments and clients. . only one tranche had been approved in 2006 for $227. 118 However. IED. social. However. MFFs can impose a binding constraint in a particular country context if emergency assistance is required to be extended quickly in response to a disaster that occurs just weeks before the final date for submission and approval of the last PFR under a specific MFF investment program. In 2011. Table 14: Documented Provisions to Terminate. Suspend or Cancel an MFF Investment Program Source IEI (2005)a Description of Relevant Provisions The use of MFF binds clients to the delivery of specific warranties and representations covering safeguards. ADB did not consider the trade-off between the countercyclical support facility (including longer lending terms) and the possibility of discontinuation of MFF levels to free up ADB’s risk-bearing capacity. and recommended more flexible repayment terms going forward. postponed.116 162. capacity. More specifically. 118 The MFF financing envelope for MFF09 (Punjab Irrigated Agriculture Invesment Program) was reduced from $900 million to $700 million in December 2011 as part of an ADB effort to respond to relief measures following floods in 2011. the policy paper that mainstreamed the MFF. legal. This reduction was part of an effort to free resources to launch emergency relief measures. the ADF component of MFF09 was enhanced from $10 million to $280 million. ADB responded through the establishment of a new budget support instrument. The MFF and its PFRs can be rejected. Manila. the countercyclical support facility. in view of the urgency for investing in infrastructure to support the rural poor. and not attributed to poor performance of the MFF.Implications for Operations limit. the incidence of approved MFF programs in the country assistance portfolio can make it relatively difficult to accommodate newly arising financial assistance requirements. Manila. The overall reduction in the financing envelope effectively represented a cancellation of a part of the MFF envelope that had not been converted into a tranche (since the MFF was approved in 2006. Until November 2012. In 2009.8 million. 2009. the financing envelope was reduced for only one approved MFF investment program. 117 The MFF modality binds clients to the delivery of specific warranties and representations that cover safeguards. social. which included the entire MFF allocation at the time). Such actions (reductions or cancellations) require commitment by the Board and the Management. sector policies. or terminated if conditions described in the FFA and legal agreements are not met. it is worthwhile considering a way for ADB to effectively retain the option of terminating an approved MFF or not approving another tranche without being exposed to reputational risk. No additional PFR will be approved for financing unless all key warranties and representations made by the client under the FFA and the previous approved periodic commitments have been met in full. Such reductions or cancellations may also give ADB greater leverage over some reforms and enhance the credibility of the MFF modality. 2011. governance. governance. and economic. sector policies. financial.

and the total ADF loans and grants committed during a 4-year replenishment period. 74. the combined approved MFF envelope is from ADF sources. ADB will provide loans and/or guarantees to finance projects under the MFF as and when the projects are ready for financing.62 Real-Time Evaluation Study of Multitranche Financing Facility Source Description of Relevant Provisions Noncompliance on matters such as non-existence of facility wide and tranche level DMFs or not monitoring the DMFs may trigger decisions by Management leading to termination or suspension of the MFF. The FFA does not constitute a legal obligation on the part of ADB to commit any financing. In addition. an approved MFF financing envelope is neither a binding commitment. and policy considerations. a Refer to paras. As a result. As there is no commitment charge for ADF financing. TD’s financial projections for ADF. ADF’s binding constraint is its financial resources. ADB may decline to authorize the negotiation and execution of any legal agreement for a tranche. In deciding whether to approve the SSTs. investment program. MFF = multitanche financing facility. The DMC government and ADB can exercise their respective rights to cancel the MFF or any uncommitted portion thereof. MFF65 (MON: Western Regional Road Corridor Investment Program). . MFF 31 (PAK: Energy Efficiency Investment Program). 119 119 The prudential minimum liquidity for ADF was lowered in June 2012 from 100% to 81% of the next year’s projected cash flows. compliance with the MFF undertakings. FFA = framework financing agreement. Total resource allocations must not exceed the commitment authority of the related ADF replenishment. as well as the status of the road map. Management will consider. and if found satisfactory. PFR = periodic financing request. The FFA does not constitute a legal obligation on the part of the DMC government to request any financing. as 15% of 163. The approved MFF envelope also does not affect ADF liquidity. The remaining portion of the MFF financing envelope that is not converted into a tranche is no consideration. the borrowing DMCs have no incentive to formally seek cancellation of any ADF allocations for the MFF modality. and 92 of Board Paper (footnote 6) c Refer to FFAs for MFF11 (IND: Madhya Pradesh Power Sector Investment Program). and the relevant projects are in line those same understandings. prepare the related legal agreements. For operational planning. ADB will review the PFRs. 4. among other things. which includes all PFRs approved during that period. the processing of a PFR is subject to the availability of resources allocated to a concerned ADF eligible country. FFAsc ADB = Asian Development Bank. DMC = developing member country. are limited by the commitment authority and its country allocations. DMF = design and monitoring framework. 164. which can be made available during a replenishment period (the commitment authority). or rejection of the PFRs. Source: Independent Evaluation Department. do not account for the unfunded balance of the MFF envelope. IEI = innovation and efficiency initiative. and provided the borrower and the clients are in compliance with the understandings in the FFA. nor does it pose a financing headroom issue. 25 and 44 of Appendix 4 of IEI document (footnote 4) b Refer to paras. which are also based on the commitment authority of the related ADF replenishment. or suspension or cancellation of the related tranche. 16. Asian Development Fund The ADF portion of the undisbursed MFF balance is significantly less.

Weak institutional capacities are very likely one of the underlying reasons for such occurrences. a definitive assessment of the modality’s contribution to meeting ADB’s development effectiveness agenda is not possible. all MFF investment programs approved thus far are still ongoing. The IEI document mentions that IEI was a core reform initiative under ADB’s reform agenda. the MFF modality would help to increase development effectiveness. . dynamic. believed that. and more sustainable projects with improved outcomes. (ii) important changes have been affected in projects or components of approved tranches. 120 it was 165. 166. Development Effectiveness Although less explicit either when proposed or when mainstreamed. However. At this time.Implications for Operations 63 5. efficiently delivered. Therefore. MFF modality would help to increase development effectiveness A definitive assessment of the modality’s contribution to meeting ADB’s development effectiveness agenda is not possible 120 IEI document (footnote 4) and Board Paper (footnote 6). and (iii) the rigor for conducting economic and/or technical due diligence of projects or components prior to tranche approval is not sufficiently thorough. itself a response to the Millennium Development Declaration and the 2005 Paris Declaration agenda. over a period of time. as more upfront planning would begin. it is useful to recognize the vast and diverse experiences accumulated through the 66 ongoing MFFs so far to gauge early indications. The reform agenda was to enhance ADB’s organizational effectiveness and to make ADB a more effective. Available evidence shows that there are some MFFs in which (i) sector 167. strategies or road maps are not of the requisite quality. including financing of cost over-runs of previously approved stand-alone project infrastructure. and results-driven catalyst for poverty reduction and prosperity in the region. or an appropriate policy framework does not exist. leading to better investment programs that comprise more relevant. All these certainly indicate the possibility for an improvement of the development effectiveness of the MFF modality in the coming years. in the context of which ADB had renewed its commitment to improve development effectiveness.

so the sequence of events related to tranche project changes cannot be readily traced. Tranche approvals also spiraled upwards to account for more than 37% of total investment project approvals in 2011. like in India. A large 171. Lessons and Recommendations This chapter presents key findings in 10 areas. In some cases. Clients consulted reported their preference for the perceived flexibility afforded by the MFF. which in turn makes it difficult to fix accountability. Key Findings 1. following which it discusses six 168. the Board had approved 66 MFF investment programs with a combined financing envelope of about $32 billion. is in keeping with this Board requirement. MFF interventions were approved in 14 countries to support investments in transport. at the time of compiling information for this evaluation report. no MFF-level self evaluations in MFF completion reports were available. During this period. and less than a handful of tranche completion reports. Substantial . number of documents are required to fully understand how an MFF has progressed since approval. No document consolidates or provides links to various tranche-level documents. At the time of mainstreaming in mid-2008. IED does not normally have access to the eSTAR repository of regional departments. All MFF related information is not readily available for any single MFF. and up to December 2011. However. the Board expressed the need for an evaluation of the MFF modality by IED (then the Operations Evaluation Department) in 3–4 years. 2. Favored Modality 169. but can obtain access to documents only for a specific MFF for a limited period upon special request. and the rigor of due diligence cannot be assessed. and other types of infrastructure. The inability to trace the documentation trail of MFF process compromises transparency. energy. The use of the MFF modality has increased rapidly. Such information can be obtained only from documents that are prepared after MFF approval. Access to Required Data 170. In Papua New Guinea. No MFF completion reports were available to provide inputs to this evaluation. and the financing conditions. This has adverse implications for fiduciary control on the resources provided for the MFF. the programmatic approach enabled by the MFF was appreciated. From the time the MFF modality was introduced in mid-2005. This evaluation study. agriculture. A. the MFF seemed to engender greater appreciation of ADB loan based investments. which is to be completed after 4 full years of mainstreamed MFF operation.CHAPTER 7 Key Findings. and other sectors. lessons and five key recommendations to fine-tune MFF operations. as well as finance.

The analysis shows that few MFF interventions can be considered to have resulted in commitment fee savings. which is Management driven (not modality driven). originally envisaged. Second. and implementation of MFFs and their tranches would help to increase organizational effectiveness. It was considered a consequence of (i) reduced staff time for processing an MFF and its tranches vis-à-vis a series of stand-alone investment projects. Cofinancing has been mentioned or considered in most MFF investment 174. In 48 of the 66 MFF documents (RRPs and/or FFAs). Available data on elapsed time and LOE for processing do not provide conclusive evidence of savings in either. At the time of mainstreaming. they simply mention that cofinancing will be pursued. 3. the Board recognized that greater staff continuity in the preparation. inconsistencies. and inaccuracies are observed in certain official ADB databases (e. and the entered data are audited. Expected Benefits 65 172. However. there is no particular indication that the introduction of MFFs has changed the deployment pattern of staff. and administering MFFs and their tranches. Staff continuity issues are a matter of human resources policy. Improved organizational effectiveness was the intended outcome of the IEI program. Whether or not the cofinancing so received will be incremental to the MFF financing envelope or substitute it may or may not be clarified. which piloted the MFF modality. It is also recognized that the MFF modality can help regional departments plan better their people and skill requirements. processing. address policy gaps. The evidence is not clear on expected savings in staff time for processing. IED did not have access to the TMS and instead conducted a survey of staff engaged in preparing. with associated benefits such as more opportunities to understand sector issues. and most large MFFs can be viewed as a cluster of projects. and Recommendations data gaps. Commitment fee charges on OCR loans were reduced within the MFF pilot period.g. which attenuated one of the perceived benefits of the MFF modality. cofinancing is mentioned or considered in some manner. Commitment fee savings associated with the MFF are not as significant as 175. Therefore. while the MFF umbrella which is larger. processing. In many cases. the RRPs and FFAs are sometimes not consistent. processing. coupled with (ii) increased staff availability for implementation monitoring and administration. Although as of mid-2012.Key Findings.. The lack of a comprehensive financial and performance information system and non-availability of data on cofinancing do not allow an analysis of the levels of cofinancing achieved through the MFF modality. attracts no front-end fees or commitment fees of any sort. Lessons. half of the team leaders had not changed their divisions or departments after processing an MFF and getting it approved. indicating the need for instituting systems to ascertain that necessary data are entered. It is recognized that the MFF modality is potentially more conducive to cofinancing than other modalities. programs. and implementation of MFFs. 173. There is no indication of greater staff continuity for preparation. eOps). it is not appropriate to claim commitment fee savings from use of the MFF modality in most cases. and make mid-course corrections. . tranches are comparable to stand-alone projects.

OM updates and internal staff instructions clearly states that (i) the MFF should be consistent with an agreed-upon strategy and sector road map. and its subsequent revision in 2010. the FFAs and RRPs in particular do not provide enough insight into the quality of the roadmap and strategic context of the MFF. years. Such built-in flexibility is necessary for MFFs. as well as risks and mitigation measures. a nonphysical investment component is financed largely through the first tranche. where necessary. From the concept papers available to IED. among other things. Guidance provided on the required strategic context and road map through the Board Paper. It appears that. In many cases (i) the RRPs also do not include a proper justification of the choice of the MFF modality. it appears that this requirement has been followed in only 5% of them. the flexibility thus accorded to the MFF program can compromise the programmatic approach. and (ii) a mere discussion of all MFF prerequisites is considered sufficient and appropriate justification for choosing the MFF modality. there is significant scope to improve institutional capacities across a range of sectors. Given that in many countries. such due diligence is necessary. because at MFF approval. The choice of the MFF modality is seldom properly justified in the concept papers and RRPs. documentation.66 Real-Time Evaluation Study of Multitranche Financing Facility 4. the strategies and road maps are so general and high level that it is possible to justify any type of project for inclusion in the MFF investment program. and (iii) a road map should include. As per the Board paper and the relevant OM section introduced at the time of MFF mainstreaming in 2008. 5. Where the policy framework is weak. (ii) the MFF’s strategic context comes from the relevant CPS. the concept paper is required to include a matrix to justify the MFF modality vis-à-vis other instruments. MFF Prerequisites 176. a list of success factors for better performance. in many cases. nor on the link between the due diligence findings and the scope and budgets of the nonphysical component. Although there is some improvement in the upfront documentation in this respect. this also means insufficient attention to a constructive and useful policy dialogue during a part of the MFF utilization period. it is unlikely that all projects for all tranches would even be identified. . However. the flexibility accorded by MFFs is one of the key reasons for their increased acceptance in many DMCs. For this reason. The quality of strategic context and road map. and a recommendation that. as evident from available MFF 177. Along with greater certainty for long-term funding. Whether or not such a road map has been made remains unclear. For many MFFs. a detailed assessment of bottlenecks and constraints to achieving the roadmap. capacity development can be incorporated into SSTs is seldom followed. In most MFFs. about 30% of all approved MFFs do not indicate a firm number of tranches or a range up front. Flexibility MFFs are used highly flexibly over long utilization periods that average about 8 179. available documentation does not normally provide adequate information on the rigor of due diligence performed. appropriate attention is given to the nonphysical investment component of the MFF investment program. One of the lessons from the piloting stage is that inadequate due diligence on institutional capacity has led to poor executing agency selection and insufficient mitigation measures. is highly variable. Adequate due diligence on institutional capacity is required to ascertain that 178.

although the conceptual framework for the MFF was sound. IED could access such records for some MFFs. regulatory.Key Findings. less attention to proper tranche design or proper project design. As ADB often interfaces closely with consultants and executing agencies during stages when periodic financing requests (PFRs) are being prepared. conducted rigorously. and records are not kept systematically. The lack of clarity on what constitutes a major or minor change at the tranche level has resulted in most changes in tranches having been categorized as minor changes. some Board members noted that. financial. safeguards. The clarifications introduced in December 2011 would seem to have reduced the scope for excessive flexibility. on the basis of limited information available to this study. technical due diligence seems not to have been 183. there were risks to implementation and accountability. Lack of clarity regarding the nature of scope changes that require Board approval has led to another questionable aspect of MFF flexibility. Additional financing that is allowed within the MFF modality may be leading to 181. implementation. ADB staff are expected to comment on technical matters during this stage itself. the MFF. economic. and other aspects. Due diligence of tranche projects is performed on technical. However. and other matters of concern to ADB. but this study finds it difficult to gauge whether they are effective. i. In some cases investigated. The Board had also specifically requested ADB management to supervise adherence to and quality of due diligence. and leverages the programmatic orientation of. safeguard. Minor changes included cost over-run financing of some projects from a certain tranche through a subsequent tranche of the same MFF. fiduciary oversight. Although extending the policy to the MFF modality is consistent with. ADB is responsible for determining whether or not investment projects are ready for financing. and Recommendations 180. social. as this study learned. anticorruption. 182. Insufficient sector expertise within the staff team and the relevant sector community of practice implies the need for ADB to engage consultants to comment on technical design and engineering aspects—which is seldom done. and noted that (i) feedback on technical design or cost-effective technical alternatives seems to be an exception. 6. or cost over-run financings for a project previously not supported by an MFF. and (ii) most technical contributions from ADB relate to ADB’s advice on procurement guidelines or certain aspects of environmental impact management. it has led to some cases where sufficient attention may not have been given to project design. in a few cases. commercial. Lessons.e. At the time of mainstreaming. such feedback is often via email. procurement. capacity. On the other hand. Such differences in interpretation were seen for transport sector MFFs across regional departments and also across countries within the same regional department. MFF flexibility is enhanced by the rules that govern additional financing. simply shifting a certain project from one tranche to another had been classified as a major change. This allowed the concerned department head to approve changes (of scope or financing or implementation arrangements) in an approved tranche if the change was classified as minor until the end of 2011. economic. Changes were classified as minor in about 85% of the cases until December 2011 known to this study. whether or not they have been suitably prepared and can be implemented in compliance with relevant ADB policies and agreed-upon criteria. .. legal. governance. Quality Assessment and Review 67 Due diligence for each tranche is required on technical.

information for Board oversight. Lending Planning and Financial Projections 188. For the 66 MFFs approved until December 2011. the median utilization period is 7. In addition to inputs from an economist. However. with an average of about 7. the projected MFF tranche approvals in a given year can exceed the CPS financing envelope for that sector. the Economics and Research Department also reviews the economic analysis. and the MFF financing envelope is normally significantly larger. The scorecard system used to rate MFFs can also be refined in the coming years with the introduction of more sophisticated approaches for evaluating. MFF performance reports to the Board can be improved to provide adequate 186. Tranches are comparable to stand-alone projects in terms of implementation time lines (time lapsed between approval and closing) as well as approved amounts. MFF investment programs span two or three CPS periods. Portions of MFF financing envelopes that are not converted to tranche loans have increased each year. the CPS and COBP do not provide a good basis for advance information to the Board on MFF-related matters. on a regular basis. the memorandum is not required to be circulated to the Economics and Research Department for comments. tranche performance. and to form a basis for tracking and reporting performance at the MFF and tranche levels. COBP. 8. A coherent set of performance indicators may not be used to track performance across tranches and at the facility level. However.68 Real-Time Evaluation Study of Multitranche Financing Facility 184. and PFRR preparation—in dovetailing MFF-related data into the CPS and COBP preparation process. across all MFF investment programs. only one or two tranches have been approved thus far. Self-evaluations and independent evaluations of completed MFFs will necessarily have to take place very long after their approval. a re-examination of economic viability would most likely lead to significant delays in tranche approval and is therefore not done.8 years. Even though some tranches overlap. Therefore. The required facility-wide and tranche-level DMFs are intended to generate the right information for oversight. the linkages between MFF and tranche-level DMFs continue to be weak (although there has been some improvement since 2009). At this stage. and MFF approvals have an impact on headroom . In many cases. have been approved in the December bunching season means the Management does not have sufficient time for review and oversight. significantly larger than for other lending modalities. which is part of the team processing an MFF tranche. Where a minor or major change is effected in tranche projects. for some sectors and some countries. This situation highlights the difficulties—under existing or generally accepted practices and processes for CPS. Dovetailing of tranche approvals for approved MFFs within the country annual 187. The fact that nearly 50% of all second and subsequent tranches approved thus far. when the PFR report is nearing finalization. The utilization period of nine approved MFFs is 10 years or more. MFF delays. 7. Each MFF is usually expected to have three or more tranches. MFF RRP. and compliance with undertakings. the MFF time lines are longer than for stand-alone projects. resource envelope has been difficult. although in many instances.6 years. Board Oversight over Long MFF timelines Time lines of MFFs are significantly longer and the MFF financing envelope is 185. the Economics and Research Department obtains a PFR report for commenting at a late stage. MFFs have contributed to difficulties in lending planning and financial projections. Economic due diligence of tranche projects must be rigorous. by themselves. However.

10. precisely because ADB prefers to treat MFFs and FFAs as binding commitments. and in that respect.Key Findings. with the major thrust being that (i) the FFA does not constitute a legal obligation on the part of either the DMC or ADB. Where some high-level body or top-level country executive retains or intends to retain authority for project approval or loan signing. as per MFF policy. (ii) From the perspective of some DMC governments and clients. conditions. crowd out other lending products. This will diminish ADB’s ability to mount crisis-response operations in particular. more efficiently delivered. and will provide financing only if the borrower and client are in compliance with the MFF prerequisites. ADB’s capital headroom has been falling over the past few years and is projected to fall over the next few years. the MFF modality is perceived as being useful. it was expected that. Besides. Increased development effectiveness was expected to result from the use of the MFF modality. Specific FFA’s have different clauses. road map and policy-related aspects would begin leading to better investment programs—comprising more relevant. At this time. More upfront planning and attention to strategy. Although less explicit in the IEI document or the Board Paper. the LOE required to effect . DMC Experience with the MFF Modality A DMC’s investment decision-making processes influence the acceptance for 191. the MFF modality requires that any savings in a tranche loan be cancelled and then processed as a separate tranche. and impact ADB’s ability to manage contingencies in the coming years. have been identified: (i) Regarding DMC approval of certain types of changes. the benefits of the MFF modality are not as significant. Development Effectiveness 69 190. a general reduction in ADB support to improve institutional capacities after the first tranche also precludes a high development effectiveness outcome of at least some MFFs. MFF documents allow ADB to discontinue the MFF midstream under certain 189. The Board Paper is more explicit in stating that an MFF and its PFRs can be rejected. (ii) ADB retains the right to decline execution of any legal agreement for a tranche. and Recommendations considerations. postponed. Where project approval processes are cumbersome or encourage government and client officials to go by precedence. Some constraining features of the MFF modality are also noted. Investment decision-making and approval processes normally incorporate a system of checks and balances. sometimes amounting to changes in goal posts. Three aspects 192. however. the MFF modality would help to increase development effectiveness (footnote 121). (ii) the economic and technical due diligence rigor is not sufficient. Lessons. The IEI document that proposed the MFF modality states that ADB need not approve another PFR for financing unless all key warranties and representations made by the client under the FFA and previous approved periodic commitments have been met in full. 9. The MFF investment programs are thus considered to lock up future finances. over a period of time. and (iii) many changes are effected in tranche projects from time to time. This is viewed as a tedious requirement by some efficiently performing clients. experience shows that there are some MFFs wherein (i) upfront planning work is not of the requisite quality. similar to other modalities. the MFF modality. and more sustainable projects with improved outcomes. or terminated if conditions described in the FFA and legal agreements are not met. There is no evidence that such issues were examined at the time of mainstreaming. and either side can exercise its right to cancel the MFF or any uncommitted portion thereof.

While the devolvement of tranche approval processes encourages flexibility in many ways. as well as when a specific MFF investment program is to be independently evaluated. the . the clients may find it difficult to gross up charge rates to compensate the consultant for tax payment liabilities that do not arise when the same consultant is engaged by ADB. but development experience indicates that weak institutions are strengthened over a period of several years or decades. strategies and road maps—or if prepared. Lesson 3: Where actual tranche approvals in a given year exceed the country : financing envelope for that sector. Lesson 2: Improved monitoring can serve to give early warnings on the : 195. B. the facility-wide and tranchelevel DMFs can form a basis for tracking and reporting performance at the MFF and tranche levels by further improving the linkages between MFF and tranche-level DMFs. and equity objectives along with improving operational efficiency and minimizing the environmental footprint. it is difficult to prepare credible : 197. Institutional capacity development is supported through NPIs. social. the investment plans. The achievement of such filters depends on to a large extent on institutional capacities. financing plans. (iii) Where the client is required to engage international consultants for preparation of projects for SSTs. For instance. Such information will be needed at MFF closure.70 Real-Time Evaluation Study of Multitranche Financing Facility any amendment in a tranche loan agreement. Lesson 5: The rigor of economic. technical. Attention to project readiness need not prevent delays in tranche approvals 193. financial. Lessons 194. Under such circumstances. As a result. when an MFF completion report is to be prepared. and undertakings cannot be considered firm. and extension of MFF utilization periods. important. delays occur in achieving the desired project readiness criteria. Equally important is the rigor of due diligence on legal. regulatory. financial. and safeguards due diligence is 198. gender. The scorecard system can also provide a better basis for gauging and comparing performance across MFFs when the performance rating system is improved.g. performance of large and long-term MFFs. such as extension of the tranche closing date. which implies delays in obtaining tranche approvals. MFF utilization periods can possibly be exhausted without accomplishing the intended scope. the MFF prerequisites of the desired quality are not likely to be easily achieved (e. Such documents have been difficult to obtain for this evaluation. then to ascertain client ownership and absorptive capacity. the country strategies and rolling business plans are not sufficient basis for advance MFF-related information to the Board.. Lesson 1: Where the development effectiveness of a specific MFF investment : program is to be assessed. Lesson 4: Where capacity constraints exist. is nearly the same as for any other stand-alone project modality. these filters are similar across all countries. with the possible exception of certain types of investments (such as a long highway that can be financed through a series of tranches). governance. 196. where institutional capacities are weak. Although country-specific project readiness filters account for the specific circumstances of different countries. In short. For instance. data and documents that shaped the MFF implementation need to be readily accessible. energy sector MFF in Afghanistan). the experience can vary on a case-to-case basis. Therefore. social. It is also difficult to institute policy frameworks that encourage a judicious mix of commercial. fiduciary oversight and other aspects.

To ensure proper scrutiny of the MFF prerequisites. Another recommendation deals with the issues related to access to data and documentation. C. A suitable arrangement can also be worked out to ensure uniform interpretation of guidelines across regional departments. it is essential to augment the existing peer review mechanism with: (i) use of suitable MFF readiness filters for specific ADB regions or DMCs. ADB must ensure that future MFF programs are consistent with the provisions of the relevant Operations Manual sections (D14) and that the comparative advantages of the MFF modality vis-à-vis other lending modalities are highlighted at the concept stage. and Recommendations achievements through the MFF program may deviate significantly from what was stipulated in the Board-approved documentation upfront. are presented below to strengthen the approval and implementation process for the MFF modality. this evaluation takes a broad view that the MFF modality needs to continue as one of the financing instruments in ADB’s tool kit (that includes additional financing and other existing modalities. while the evidence for 199. such as the MFF pre-requisites. In recognition that these attractive features are appreciated by clients and have contributed to the growth in MFF programs. and the fact that the additional financing mechanism has led to unwarranted flexibility in project design.Key Findings. implementation period without compromising. there needs to be a realistic discussion on institutional capacities and the suitability and stability of a policy framework. Recommendation 2: Manage the use of flexibility during the MFF 202. Office of the General Counsel. it would be useful for ADB to consider ways to be able to exercise the option. procedural and other changes . if necessary. Recommendations 200. The adequacy of such due diligence must be reconfirmed through monitoring arrangements in subsequent recommendations. 71 Lesson 6: When lending constraints are increasing. Recommendation 1: Apply the standards for the needed quality of MFF prerequisites for MFF investment programs in countries and sectors as designed at the time of mainstreaming. and (ii) training of staff on the conduct of due diligence for institutional capacity (which can help improve the design of nonphysical investments and the content of policy dialogue) as well as for enhancing understanding of various MFF prerequisites (as per the relevant Operations Manual sections). it is important to institute systems and procedures that allow for sufficient flexibility to DMC governments and clients. improved development effectiveness remains tentative. which could be carried out as part of the CPS process. on the basis of the study’s key findings. of terminating or cancelling ongoing MFFs midstream. as well as results based financing and other modalities currently under consideration). Besides. or with the strengthening of. To facilitate adherence to other provisions of the Operations Manual. Controller and COSO) to consistently and uniformly interpret guidelines that define minor and major tranche project change categorization. without compromising other intended benefits of the modality. 201. In view of the extent to which flexibility mechanisms have led to project changes in approved tranches in the past. Towards this goal. the benefits of the MFF modality. Four recommendations. Lessons. The MFF modality has attractive features that have the potential to help improve efficiency as well as development effectiveness provided a number of prerequisites are adhered to. each regional department can have a focal person that guides other ADB staff (in consultation with SPD. and the design of physical investment programs that conform to MFF prerequisites.

it is useful to devise criteria for their cancellation or discontinuation. from clients and make all relevant documentation and data on implementation of MFF immediately accessible within ADB. It is useful to weigh the pros and cons of conducting annual reviews versus midterm reviews during the MFF utilization period. The design and due diligence of other stand-alone modes will also benefit from such measures. ADB needs to keep adequate records and provide easy access to all relevant documentation. (ii) a cap on the MFF financing envelope not converted to tranches. and take necessary steps that will help ensure prudent lending planning and financial projections. Management can also initiate suitable awareness creation activities. Although it can span two or more CPS cycles. the MFF modality currently does not require a facility-wide midterm review.72 Real-Time Evaluation Study of Multitranche Financing Facility required to improve technical and economic due diligence of tranche projects also needs to be considered. in relation to the country programming financing envelope. Should it be necessary to avoid reputational risk. . and to facilitate learning and accountability. or postponement of tranche approval. Given the concerns that result from continuously rising portions of MFF financing envelopes that are not converted to tranches. The results of the formal reviews ought to be reported to the Board in a timely manner. The use of all these databases (including eOperations and TMS) can also be encouraged to help obtain feedback for improving them further. Recommendation 3: Conduct facility-wide mid-term reviews of ongoing MFF programs and formal reviews at any time deemed appropriate. and that data entered once are audited and verified to ascertain correctness. Recommendation 5: Ask for regular submission of necessary documentation 205. Options for such criteria can comprise suitable triggers that relate to (i) the required rate of tranche approvals and amounts in the remaining MFF utilization period. This can be achieved by having an online searchable repository on the intranet. It is important to institute a system of one or more facility-wide formal reviews during the term of the MFF to facilitate Management decision making. or coinciding the timing of such reviews with the CPS preparation process. and (iii) activities to overcome deficiencies found in midterm reviews in relation to remedial actions required. in relation to levels achieved so far. 203. Given that ADB DMCs increasingly demand knowledge products and services. It is also essential to establish systems to ascertain that all official online databases are regularly updated. Recommendation 4: Regularly monitor MFF portions not converted to tranches 204.

and Recommendations 73 Appendixes .Key Findings. Lessons.

Innovative and Efficiency Initiative: Pilot Financing Instruments and Modalities. although performance varied significantly across countries and sectors. reduces overreliance on stand-alone project approaches that often involve repetitive and cumbersome business processes. 3. although ADB did not finance a slice longer than 3– 5 years. the Board considered that the MFF modality enables ADB to invest programmatically.APPENDIX 1: OVERVIEW OF THE MULTITRANCE FINANCING FACILITY MODALITY A.1). Mainstreaming the Multitranche Financing Facility. opens the way for more structured cofinancing. MFF Annual Report 2011. cuts the financial and nonfinancial costs of doing business. ADB. Based on the experience gained in the pilot phase. Following a 3-year period of pilot testing the MFF modality. 4. and provides predictability and continuity to clients. but still retain flexibility and not burden the borrowers with high commitment charges. its products more innovative. DMC government clients normally preferred loans that financed smaller time slices of investments even though that supposedly increased the DMC government’s and executing agency’s time and resources required for processing. 3 The MFF modality has become increasingly prevalent since 2005. 2008.” and in the process frees up ADB staff time spent on processing for implementation. and tranche approvals have exceeded one-third of ADB’s total annual approvals since 2010 (Table A1. ADB. Manila. and its practices and procedures more efficient. and the commitment fee structure that discouraged large-scale investment programs. The rationale for introducing the MFF modality was ostensibly in response to a felt need for ADB to commit on a long-term basis. Along with approving the mainstreaming of the MFF modality. Historical Perspective 1. 2 The MFF modality was conceived to facilitate “greater certainty and upfront agreement with a client through financing that fits within the client’s longer term plan. . many transactions that ADB financed on a stand-alone project basis were part of a broader and often long-term investment program. Manila. the Board also opined that the MFF should be evaluated in 3–4 years. Manila. The multitranche financing facility (MFF) was introduced in 2005 1 and streamlined in July 2008 following approval from the Board of Directors. The MFF Annual Report published in 2012 observed that MFFs performed reasonably well during 2005–2011. This also supposedly increased ADB’s cost of doing business. The Innovation and Efficiency Initiative (IEI) document thus observed that the challenge and opportunity for ADB was to make its interventions more programmatic. particularly as due diligence and documentation were required to be repeated each time as if the project or sector operations were new. Until 2005. 2. the Board of Directors approved its mainstreaming in July 2008. 1 2 3 ADB. Given the balance sheet implications of ADB funding. 2005. 2012.

436 2011 13 6.4 Tranches of sector investment programs. urban infrastructure projects).6 33. risks addressed.237 Total 66 31. undertakings. B. 4 The financial intermediation option was included so as not to foreclose the possibility of financing a large number of small to mid-size investments through the MFF modality. An MFF is a financing modality made available by ADB to its clients to support their medium.7 -. MFF = multitranche financing facility. Earlier tranches can be designed to facilitate the implementation of subsequent tranches. Policies can be refined.28a 971 1670 2160 3571 4051 4462 16.6 32.193 2010 12 4. a Refers to Asian Development Fund (ADF) Loan 2210-PAK from Special Fund Resources. The guarantee mechanism was included so as to encourage cofinancing from commercial banks (given that one of the intended benefits of the MFF is to enable executing agencies to seek cofinancing once they are assured of long-term commitment from ADB). and safeguard frameworks adjusted to consider specific issues. MFF interventions are broadly classified as follows: (i) discrete.. sequential components of large stand-alone projects. The overall facility amount is not a legally binding commitment on ADB or its clients. This was approved along with MFF02 “National Highway Development Sector Investment Program. and reporting arrangements. 2012. .810 2007 7 4. 7. Manila. 6.= not available. and (iv) guarantees. The first tranche can include (but is not limited to) the financing of advisors for the implementation of the first project.” Sources: Asian Development Bank database and ADB. which is to be made available to the DMC only for an investment program that meets the preconditions approved for the use of the MFF: specific entry points. only the converted loans are. About the MFF 5. for institutional strengthening. Management converts this facility amount into a series of loans as and when the investments are deemed to be ready and the client requests financing. Under this facility. are of two types: (i) networks of highways or transmission lines where the same type of projects with the same executive agency or implementing agency are repeated at multiple locations. preparation of subsequent projects.3 19. (iii) financial intermediary credit lines. (ii) tranches of sector investment programs over a long time frame.889 % MFF Tranche Amount Approvals to Total Loan Approvals -17. and (ii) a number of discrete but same type of projects that are repeated at different locations with different executing/implementing agencies (e. As originally conceived in the IEI document.1: Multitranche Financing Facility Approvals Approved MFF Financing Envelope Number of Amount Year MFF Approvals ($ million) 2005 2 1. and capacity development.938 Approved MFF Tranche Amount ($ million) 3. Following Board approval. Multitranche Financing Facility Annual Report 2011.Overview of the Multitranche Financing Facility Modality 75 Table A1. in turn.5 26. The MFF modality was originally meant only for investment projects—although a few policy-based loans have also been included in recent years.718 2009 12 6. Some MFF tranches have also been used to finance cost overruns from other ADB interventions. approved on 13 December 2005.to long-term investment programs or investment plans. the Board approves a maximum amount for each proposed MFF.7 37.024 2008 12 5. eligibility criteria and decision making filters. ADB Management expects that the MFF potentially provides ADB and its clients with multiple entry points for policy dialogue within a specified utilization period.520 2006 8 3.5 22.g.

e. . 52 and 53).1: Flow Chart for Processing MFF and First PFR Concept Processing and Clearance Board Approval Post Approval Activities Concept clearance by VP Fact Finding • Draft RRP • Draft FFA • Draft PFR Submit to the Board •RRP •Signed FFA* •Signed PFR Memo to the President through VP requesting approval of the tranche and legal agreements Legal agreements to be signed by client and ADB within 12 months of Board approval of MFF Interdepartmental circulation MRM Appraisal •Update draft RRP •Update draft FFA •Update draft PFR Interdepartmental circulation SRC VP authorizes negotiation of legal agreements and execution of FFA •Negotiate FFA. This would come with other associated benefits.5 freeing staff time. Figure A1. MFF = multitranche financing facility. (ii) more opportunities to address policy and procedural gaps. and related legal Agreements •Sign FFA – DG/CD •Sign FFA & PFR Client •Finalize RRP CD = country director. Source: ADB. a fact-finding mission may be combined with completion of PPTA work (i.1 and A1.. project feasibility study). PFR = periodic financing request. and (ii) second and subsequent PFRs.2 present respectively process flow diagrams for (i) the MFF and the first periodic financing request (PFR). ADB and its clients can expect significant time and related resource savings vis-à-vis stand-alone projects.g.76 Appendix 1 8. To what extent this belief is justified is at best unclear even today. which can be made available during the implementation phase. some of the steps are now normally carried simultaneously (e. such as (i) more opportunities for interaction with clients on sector issues and trends. SRC = staff review committee. ADB believes that in the processing of an MFF and its multiple tranche loans. and (iii) more opportunities to modify implementation plans while work is in progress. 2008. Manila. MRM = management review meeting. 5 Refer to footnote 2 (paras. RRP = report and recommendation to the president. PFR. FFA = framework financing agreement. It is important to note that the new business processes introduced in 2010 entail the same steps as outlined in Figures A1.2. Figures A1. VP = vice president.. 9. DG = director general. Mainstreaming the Multitranche Financing Facility.1 and A1.

Circulation of PFR Report to COSO. PFR = periodic financing request. safeguard policy compliance memo •VP may convene MRM if deemed appropriate OGC drafts legal agreements. CTL.Overview of the Multitranche Financing Facility Modality 77 Figure A1. OED. and circulates to COSO. Manila. RSES = Environment and Safeguards Division. status of compliance. RSES. OGC = Office of the General Counsel. PFR. . and regional department VP authorizes negotiations of legal agreements ADB to Client: Notice of decision and invitation to negotiate legal agreements on PFR •Negotiation of legal agreements •If appropriate. progress on previous tranches. 2008. CTL. and RSES for comments within 5 working days •Management reviews PFR Report. capacity. OED. OGC. policy issues. CTL = Controller’s Department. Source: ADB. Mainstreaming the Multitranche Financing Facility. OED = Operations Evaluation Department. VP = Vice President.2: Flow Chart for Processing Second and Subsequent PFRs Monitors and Reviews Client/Executing Agency (EA) •implements project and program •prepares future projects •shares due diligence and preparatory work with ADB mission/teams ADB Project Team Client/EA submits PFR Project team drafts PFR Report •description of proposed tranche. etc. governance. minute changes to PFR or client signs new PFR Memo to President through VP requesting approval of the tranche and legal agreements Legal agreements signed by client and ADB ADB = Asian Development Bank. COSO = Central Operations Services Office.

and merits of the proposed MFF The first tranche should not exclusively finance detailed design. as of now. then must include other modalities for policy dialogue and development) d) Detailed investment program/plan strongly owned by the client e) Financing plan for the MFF f) Facility level undertakings that capture the basic principles and criteria under which the financing will be made available Good staff judgment to back the decisions regarding: a) Whether or not the EA or IA is suitable to implement an MFF b) The level of implementation complexity that can arise from a project involving multiple EAs and IAs can be managed (Note: consider EA/IA capacity. as for investment projects funded supported by ADB through other modalities.2: Key Requirements for Multitranche Financing Facility Design Description Documentation Justify choice of modality in Concept Paper All the following constituents are present and well defined: a) Sector strategy and associated road map b) Clear strategic context justifying ADB’s intervention c) A policy framework (if unsatisfactory or not available. Besides. past implementation records. contractors’ unresponsiveness. type of investment. 2011. etc. such as TA loan or a project design advance (PDA) A. The MFF modality should help staff to strategically design interventions to maximize their impacts 7 when the following constituents are in place: sector road map. Table A1. An investment program proposed for MFF should first be checked for eligibility on this basis. the MFF tranche projects are also affected by factors such as insufficient institutional capacities. 1. due diligence services. 1 2 3 4 5 B. Manila. financing plan. etc. ADB. 6 Facility completion reports are also expected to be prepared as and when ongoing MFF’s begin to close.) that is sufficient to understand the scope and financing of subsequent tranches. director. the RRP should contain indicative information (geography. strategic context. and decision-making criteria and filters. Manila. . 2010. etc. policy framework. Much of the information regarding progress of approved MFFs and their tranches is available through the project performance information system and e-Operations. Otherwise. Refer to footnote 9 (paras. policy and institutional mandate of EA/IA) Consistency of MFF support with priorities outlined in the country partnership strategy (CPS) at the time of approvals of MFF and each Tranche Checklist signed by project team leader. The tranche must have a physical investment component (Note: if nonphysical investment alone is required. capacity development. and director general to accompany departmental request for circulating MFF’s RRP to the Board MFF Structuring (towards maximizing impact) Design of Tranche 1 and its physical investment projects should be representative of the entire MFF to the extent possible. few tranches have closed and few tranche completion reports are available.8 The essential characteristics of such constituents are also well understood 9 and clearly show the need for the executing agency(ies) and implementing agency(ies) to have good in-house skill sets and capacity levels. ADB. subsector.2 lists the key requirements for MFF design at present. Table A1. investment program. and that infrastructure projects normally take 3–5 years or more to complete. Operational Manual Section D14 issued on 18 May 2010. 14–24). Staff Instructions for the Multitranche Financing Facility. Although there should be a completion report for each MFF tranche. undertakings. 6 7 6 7 8 9 This is not unusual. Factors Affecting MFF Performance 11.78 Appendix 1 10. then other modalities should be used. start-up delays. given that the first MFF approvals occurred in December 2005.

10 2. Simultaneously.Overview of the Multitranche Financing Facility Modality 79 8 9 10 11 12 13 C. although some members expressed concern about the increasing size of the MFF portfolio. Staff Instructions for Multitranche Financing Facility. PFR reports submitted for President’s approval should specify which expenditures are to be financed from ADB sources. the RRP should include: a) indicative/expected categorization for each tranche (which will be confirmed during implementation) b) Explain measures that will be put in place during tranche processing. PPTA = project preparatory technical assistance. Source: Compiled by the Independent Evaluation Department. the nature of investment and financing plans. IA = implementing agency. (ii) appropriate management information systems and good management and application of such information. EA = executing agency. 12. the Board was generally supportive of the MFF modality. The 10 Refer to footnote 2. 2010. (ii) clarity and consistency on the criteria for the MFF and its application—which refers to the quality of road maps and policy frameworks. should be included in the facility administration manual (FAM). 14 Description The first tranche projects should be representative of the entire MFF from a safeguards perspective. (Note: similarly. FFA = framework financing agreement. . from: (i) ADB. TA = technical assistance. safeguards framework. etc. Section D14. Manila. (iii) ADB. If not. inputs. Manila. outputs and inputs c) Need for consistency and clear linkages between the two List of eligible items for expenditure is determined in the MFF’s RRP as approved by the Board. policy framework. and results b) DMF for each Tranche should focus on project level outcomes.. (iv) ADB. Operations Manual. Staff Instructions for the Multitranche Financing Facility. and the application of ADB policies and procedures. At the end of the pilot phase. Manila. 2011. Operations Manual Section D14. to secure safeguards compliance (i. and (iii) well equipped advisory and support teams for procurement. safeguards.e. MFF = multitranche financing facility. the Board expressed concerns that related mostly to (i) the strategic context of the MFF. and other matters. 2008. 2006. Manila. broad investment program. This may be explained in the FFA. financing plan. loan amounts. economic. outcomes. The MFF modality also calls for (i) continuity of ADB staff and significant reallocation of ADB resources from processing to implementation. legal. RRP = report and recommendation of the President. and (iii) risks to implementation and accountability. and administrative efficiency factors c) EA/IA absorptive capacity d) ADB’s strategic intervention in the sector (Note: this contributes to maximizing development effectiveness) Information on tranche projects. each tranche should contribute to maximizing development effectiveness and optimizing resource use) PPTA should be used only for preparation of the MFF and Tranche1 (Note 1: unless exceptional circumstances prevail) (Note 2: financing of preparation of subsequent tranches should be incorporated in earlier tranches) Design and Monitoring Frameworks (DMFs) a) DMF for entire MFF should track the direction of the road map. and on the basis of experience gathered during the pilot phase. compliance with Operations Manual Sections F1 and D14). Issues 13. may also be at later stages DMF = design and monitoring framework. warranties and representations. (ii) ADB. MFF size should be justified within the context of: a) client’s financing needs and readiness of the investments b) technical. and be consistent with the approved list of eligible items Quality Assurance and Review (Processing stage) One expert from a Panel of Experts to review: a) adequacy of the MFF as the choice of modality b) compliance with MFF policies Note: certainly at the concept paper clearance stage.

ADB. 2011. for release of new staff Instructions for the MFF modality. this alone may not be sufficient. including the need to (i) strengthen the rationale for selecting the MFF modality. ADB. 12 15. 2011 (footnote 19). However. contractors’ unresponsiveness.80 Appendix 1 Board also wanted precise decision-making criteria. the Board raised further issues. Development Effectiveness Review 2010 Report. identifying areas that ADB should further emphasize to ensure successful achievement of its mandate. In Board meetings held during 2010–2011. 15 and (ii) improving project outcomes through all stages of the project cycle. streamlining of business processes. Manila. To this end. Multitranche Financing Facility Annual Report 2011. addressed these Board concerns. Note: This is an internal document. The operational performance of MFF tranches could be improved by adequate implementation of the action plans articulated by various regional departments. and tranche projects are still affected by factors such as insufficient institutional capacities. implementation challenges. Report of the Project Implementation Working Group. enhancing staff skills and organizational structuring matters. Improving Project Outcomes. 2011. start-up delays. Staff Instructions for the Multitranche Financing Facility. This would allow a closer look to identify the problems and causal factors that influence MFF performance. and its design. ADB. . and improved project monitoring and performance reporting. One expectation was that the MFF modality would face fewer hurdles in project implementation than conventional modalities for investment projects because (i) investments proposed for MFF are first checked for eligibility with respect to certain criteria and decision-making filters. (ii) introduce quality assurance systems. 16 February (15 MFFs have potential problems and one is at risk [para. as well as provide a sound basis for a conceptual framework to assess risks and performance and increase accountability. 11 12 13 14 15 16 17 Covering memo dated 1 July 2011. in certain sectors and country contexts. a tight alignment of the sector roadmap with the government strategy and the CPS would be required. better reporting arrangements. as well as the government’s ownership and commitment. finalized in July 2011 after discussions with the operations departments. and security concerns. Good Project Implementation Practice. 23 tranches have potential problems [para. and (ii) advisory services financed through previous tranches should also help address constraints in subsequent tranches. Manila. and mainstreaming the use of sector roadmaps/results frameworks through the project cycle. Salient among these are (i) stronger emphasis on project readiness. the MFF design does not appear to work as intended. reform delays. and other risks). The Board also requested for better benchmarking of sector issues that the MFF and other ADB financial instruments target. 2010. Serious assessments of fundamental elements would further be needed to ensure that the MFF will help ADB enhance sector development outputs and outcomes. and doability (addressing capacity challenges. and that substantial and material changes in the type of investments contemplated under the investment program/plan should require Board approval. Note: This is an internal document. For details of action plans by various regional departments. ADB. refer to Appendixes 1 through 6 of ADB. and its own oversight. 14]. 14.13 C. 2011. ADB. and (iii) improve reporting. A 2010 development effectiveness review (DEfR) showed that ADB had remained by-and-large on track toward achieving its 2009–2012 output targets. Manila. Manila (December). 11 New Staff Instructions for the MFF. 16 17. 17 However. 15]). although the delivery of core sector development outcomes had been on the decline. 2012. 14 This finding has spurred management and the regional departments to adopt a number of initiatives. MFF and Development Effectiveness 16. Manila (August).

public sector nonsovereigns Private sector. the loan: in tranches against other a project loan) completion of agreedupon conditions. and budget requirements Cost of reforms. adjustment costs. public sector nonsovereigns. and private entities Guarantee Amounts guaranteed and DMCs. and private entities DMCs. and project costs DMCs Sector Loan Cost of subprojects In tranches. public sector nonsovereigns. adjustment costs or budget requirements. and private entities Guarantee Amounts guaranteed and DMCs. against project cost In amounts requested. and private entities Overview of the Multitranche Financing Facility Modality B. public sector proven as owed subsovereigns. public sector nonsovereigns (IEI product) DMCs Sector Development Program To finance a reform Loan program and specific project linked to sector and program (normally small in size) Project costs and corporate operating or capital expenses Cost of reforms. Guarantees Partial Credit Guarantee (with To guarantee partial or without sovereign repayment of amounts guarantee to cover ADB risk) owed to lenders of ADB's client Political Risk Guarantee (with To guarantee or without sovereign repayment of amounts guarantee to cover ADB risk) owed to lenders of ADB's client where Guaranteed amounts 81 .Table A1. Loans Project Loan (sovereign) In amounts requested. Project loans: in amounts requested against project cost One loan Up front In amounts requested against cost of subprojects One loan up front In amounts requested to fund the credit lines In amounts requested against mandate cost In amounts requested against project cost DMCs Financial Intermediary Loan Financial intermediaries Technical Assistance Loan To finance numerous and comparatively small subprojects within a sector To finance directed investments of financial intermediaries To finance a technical assistance mandate Credit lines extended by the financial intermediary Mandate costs One loan up front To supplement Project costs financing of an ongoing project where original financing is insufficient Guaranteed amounts One loan up front Supplementary Loan DMCs. public sector proven as owed subsovereigns. against agreed-upon conditions Nonsovereign Loan (without a sovereign guarantee) Policy-based Program Loan To finance a reform program One loan up front DMCs.3: Comparison of Multitranche Financing Facility and Other Modalities Purpose To finance a project Project or corporate finance requirements One loan up front Project costs One loan up front What it pays for Form in which it is provided Disbursement Client Product A. against completion of agreedupon conditions Two loans up front (one a Policy-based program policy-based program loan.

guarantee. OCR and ADF financing possible. grant. availability. need.. OCR = ordinary capital resources. MFF = multitranche financing facility. . IEI = innovation and efficiency initiative. (c) slices of large contract packages. breach of contract. or guarantees are committed separately over a period of time for the estimated cost of projects as they become ready for financing. and allocation conditions. grants.82 Product What it pays for Form in which it is provided Disbursement Client Appendix 1 Purpose repayment fails due to political risk (e. FX repatriation risk. Mainstreaming the Multitranche Financing Facility. C. Source: ADB. 2008. expropriation) Amount for each financing committed out of available MFF amount against a financing request. Maximum amount approved under facility. As part of the above. FX = foreign exchange. ADF = Asian Development Fund. financing will also cover nonphysical investments. ADB = Asian Development Bank. the latter depending on eligibility. MFF Mainstreamed MFF DMCs. Each separate financing disbursed as a regular loan/grant. A series of loans.g. or administered cofinancing over time (a) multiple projects under an investment program in a sector or in various sectors. To finance through Investment costs loan. (b) large stand-alone projects with substantial and related individual components. FX conversion risk. Manila. public sector subsovereigns. DMC = developing member country.

is there any significant bunching of tranches for approval from Management towards the end of a calendar year? Has there been a major shift in the sectoral distribution of ADB’s portfolio since the MFF modality was introduced or was streamlined? Does the large MFF envelope crowd out other sector interventions? Does MFF crowd out interventions in sectors that may be more closely linked to poverty reduction? Is the MFF utilization period significantly different from that for stand-alone project loans/grants? Is the planned tranche term (approval to closure) similar to that for stand-alone projects? Does the MFF modality result in progressively quicker disbursements in successive tranches? Does the MFF modality lead to overall savings in ADB-staff time for processing (vis-àvis a string of stand-alone projects) Does the MFF enable staff to spend more time for implementation administration and policy dialogue? Has introduction of the MFF modality resulted in increased continuity for staff working on the MFF? Does the MFF modality result in commitment fee savings? Has the MFF modality encouraged or facilitated cofinancing? Are the MFF prerequisites (strategic context and roadmap. sector roadmap. investment program. due diligence. financing plan.APPENDIX 2: EVALUATION ISSUES AND INFORMATION REQUIREMENTS Table A2. and the consultant? Are policy reforms sufficiently well monitored during the MFF utilization period? Or is the focus essentially on preparation and processing of physical investment of subsequent tranches to reach the MFF financing envelope within the MFF utilization period? Does the flexibility and responsiveness to a client’s needs lead to frequent and adhoc changes in tranche scope. and undertakings) solid and stable enough to forego the need for further approvals from the Board on any aspect of the MFF during the MFF utilization period? Are the clients advanced or capable enough to take on the responsibility of preparing subsequent tranches? Is the MFF tranche content as per the roadmap—or does it reflect ad hoc and changing priorities? Are all advisory nonphysical investments (NPIs) listed in the MFF report and recommendation of the President (RRP) pursued? Or are they sometimes sacrificed to enable cost overrun management on the physical investment side? To what extent does NPI include construction supervision and project management support? If the client is sophisticated and capable so that no policy and institutional capacity development inputs are required. policy framework. and the dynamic among ADB.? Are there different standards for deciding on the classification of project scope changes across regional departments or divisions? Does the flexibility provided under MFF include cost overruns in subsequent The premise on which the MFF was piloted and mainstreamed The working of the MFF modality . indicating a weak sector strategy or roadmap? Does the flexibility accorded by the MFF allow for relaxation of standards for project design. does the MFF effectively reduce to a mere “standby line of credit” type facility? Does ADB revisit the policy agenda during the course of the MFF? Does increased use of the MFF modality have any implications for use of TA resources. etc. the client.1: Evaluation Issues and Questions Broad Evaluation Issue MFF Portfolio Related Evaluation Questions What is the growth of the MFF portfolio? How has MFF coverage increased to cover more countries and sectors? Is there any significant “bunching” of MFFs for approval by the Board towards the end of a calendar year? Likewise.

84

Appendix 2
Broad Evaluation Issue Related Evaluation Questions tranches, or does incorporating cost overruns of external projects into the fold of the MFF lead to reduced cost consciousness in the due diligence process on the engineering and economic sides? Is there any difference in intensity in economic and technical/engineering due diligence between the first tranche (which is normally approved with the MFF) and subsequent tranches? Does ADB have enough in-house expertise in technical/engineering fields to be at least at par with consultant experts, at least for the more common fields of engineering? Are there sufficient and credible control points in the due diligence process in ADB? Is it possible or likely that the due diligence for second and subsequent tranches (SSTs) is less rigorous than for the first tranche? Are the recently instituted measures for quality assurance helping to improve the quality of approved MFFs? Is there any implication for ADB’s development effectiveness from the fact that there is no mandate to revisit the basic assumptions under which the MFF has been approved? How do DMC governments and counterparts view the flexibility that is offered by the MFF modality? What is the fit of the MFF modality with the institutional setup in the DMC? How are DMC development investment decision-making processes aligned to derive benefits offered by the MFF modality? In other words, is DMC government and counterpart staff time saved because of the MFF modality? And is it perceived that way? Is the “nonfinancial commitment” character of MFF absolutely neutral to ADB’s lending headroom and liquidity requirements by the Treasury Department? Does MFF reduce the importance of the country programming exercise?

DMC- and ADB-related issues

ADB = Asian Development Bank, DMC = developing member country, MFF = multitranche financing facility, PFR = periodic financing request, RRP = report and recommendation of the President, SST = second and subsequent tranche. Source: Independent Evaluation Department.

Table A2.2: Information Sources for Evaluation of the MFF Modality
Type of Information Source Documents that present the genesis and evolution of the MFF modality Particulars of Information Source ADB-wide corporate strategy documents MFF proposal, policy paper, relevant staff instructions, and Operations Manual sections Concerns expressed by the Board at mainstreaming, and at approval of various MFF interventions ADB initiatives to improve core sector development outcomes ADB Annual Reports, IED Annual Reviews Relevant country partnership strategies and operational business plans for countries where MFF investment programs have been approved To the extent available, MFF-related documents such as reports and recommendations of the President (RRPs), framework financing agreements (FFAs), periodic financing requests (PFRs), PFR reports (PFRRs), facility administration manuals (FAMs), project administration manuals (PAMs), back-tooffice reports (BTORs), etc. e-Operations (e-Ops) Loan documents Loan and Grant Financial Information Service (LGFIS) Listing of Loan, Technical Assistance, Grant, and Equity Approvals (LTAA) Project Performance Management System (PPMS) Quarterly Portfolio Updates (QPU) Project Information Documents (PID) Project Performance Reports Interactions with ADB Management and/or staff engaged in: Processing and/or implementation of MFFs

Other documents

ADB databases

Interactions within ADB

Evaluation Issues and Information Requirements
Type of Information Source Particulars of Information Source Monitoring and reporting of MFF performance to the Board Due diligence of MFF tranches Legal and other compliance-related aspects Treasury management Interactions with the following categories of stakeholders for transport or energy sector MFFs in Armenia, Azerbaijan, People’s Republic of China, Georgia, India, Vietnam: Relevant national, provincial, and local government ministries Executing agencies and implementing agencies Consultants ADB personnel engaged in preparation and processing of: MFFs approved until December 2011 Tranches approved until December 2011

85

Interactions with incountry stakeholders

Online survey

ADB = Asian Development Bank, BTOR = back-to-office reports, e-Ops = e-Operations, FAM = facility administration manual, FFA = framework financing agreement, IED = Independent Evaluation Department, LGFIS = Loan and Grant Financial Information Service, LTAA = Listing of Loan, Technical Assistance, Grant, and Equity Approvals, MFF = multitranche financing facility, PAM = project administration manual, PID = project information document, PFR = periodic financing request, PFRR = periodic financing request report, PPMS = project performance management system, QPU = quarterly portfolio update, RRP = report and recommendation of the President. Source: Independent Evaluation Department.

Table A2.3: Documents for a Full Review of MFF and Tranches a
Normally not available Difficult to obtain Generally not obtainable

Normally available 1. 1.1 1.2 1.3 1.4 2. 2.1 Concept Paper Stage Interdepartmental Comments-Matrix on Draft Concept Paper Concept Paper Minutes of MRM BTOR of Appraisal Mission RRP-Preparation Stage Interdepartmental Comments-Matrix on Draft RRP,FFA,PFR

Remarks to become aware of the MFF issues contains justification for MFF contains guidance by Management

x x x x

x

2.2

Minutes of MRM Interdepartmental Comments on Updated Draft RRP,FFA,PFR

x

2.3

x

2.4 2.5 3. 3.1 3.2

Minutes of SRC Minutes of FFA Negotiations Board Presentation Stage MFF-RRP Linked Documents

x x

to become aware of the issues contains guidance by Management on how to deal with critical interdepartmental comments review how Management guidance has been followed contains guidance by Management on how to deal with critical issues interdepartmental comments obtain information on concerns of client

x x

documents needed as source of basic info on

86

Appendix 2

3.3

FFA

Normally available x

Normally not available

Difficult to obtain

Generally not obtainable

3.4 3.5 3.6 4. 4.1 4.2 4.3 5. 5.1

PFR1 Minutes of Board Discussions Minutes of Loan Negotiations on PFR1 Stage after Board Approval Loan Agreement FAM PAM Implementation Stage of Tranche 1 BTORs of Review Missions Interdepartmental Comments-Matrix on Tender Documents; Safeguard documents, EIA, etc. ADB-Comments on Tender Documents

x x x

Remarks MFF/tranche; not all important details are contained in RRP (due to page limit) to be aware of the Board's concerns obtain information on concerns of client

x x x

source of basic information not all necessary and important details are contained in RRP

x

to obtain information on implementation issues to obtain information on implementation issues, compliance with ADB rules, and ADB input into the implementation process obtain information on changes in project and judgment on arguments whether change is major or minor

5.2

x

5.3

x

5.4 6.

Memos on major and minor changes in scope including Comments-table Preparation Stage for PFR-SST Documentation of advice provided by ADB to EA during their preparation of PFR-SST regarding engineering, economic, financial, and safeguard aspects Official Comments of ADB to EA on Draft PFR-SST Approval Stage of PFRR-SST Interdepartmental Comments-Matrix on Draft-PFRR

x

6.1 6.2 7. 7.1

x x

to judge ADB’s overall contribution to project design and development

x

7.2 7.3 7.4

Minutes of MRM on PFRR PFRR & linked Documents Updated FAM

x x x

7.5

PAM of Approved Tranche/Project

x

to become aware of the issues contains guidance by Management on how to deal with critical issues interdepartmental comments documents needed as source of basic information on MFF/tranche; not all important details are contained in RRP (due to

5 above ADB = Asian Development Bank. RRP = report and recommendation of the President. PFR = periodic financing request. MRM = management review meeting.Evaluation Issues and Information Requirements 87 Normally available Normally not available Difficult to obtain Generally not obtainable 7. MFF = multitranche financing facility. Minutes of Loan Negotiations Loan Agreement on Approved Tranche Implementation Stage of subsequent Tranche(s) x Remarks page limit) obtain information on concerns of client source of basic information See No.6 7. PFRR = periodic financing request report. .7 8. FAM = facility administration manual. PAM = project administration manual. Source: Independent Evaluation Department. EIA = environmental impact assessment. SRC = staff review committee. a Assuming IED does not have access to documents uploaded on e-STAR. SST = second and subsequent tranches. EA = executing agency. FFA = framework financing agreement.

1: Approved MFF Investment Programs MFF No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Country IND PAK IND BAN PAK IND PAK PRC PAK IND IND IND VIE AZE IND PAK IND IND IND PRC PAK IND IND KAZ AFG AFG INO PAK PNG IND PAK AZE AFG GEO ARM UZB IND IND PNG PRC VIE UZB GEO IND IND IND KAZ KAZ IND IND PNG VIE Title Rural Roads Sector II Investment Program National Highway Development Sector Investment Program Uttaranchal Power Sector Investment Program Railway Sector Investment Program Renewable Energy Sector Development Investment Program North Karnataka Urban Sector Investment Program Power Transmission Enhancement Investment Program Gansu Heihe Rural Hydropower Development Investment Program Punjab Irrigated Agriculture Investment Program Uttaranchal State-Road Investment Program Madhya Pradesh Power Sector Investment Program Jammu and Kashmir Urban Sector Development Investment Program Mong Duong 1 Thermal Power Project Road Network Development Program Rajastan Urban Sector Development Investment Program National Trade Corridor Highway Investment Program India Infrastructure Project Financing Facility Uttarakhand Urban Sector Development Investment Program National Power Grid Development Investment Program Guangdong Energy Efficiency and Environment Improvement Investment Program Power Distribution Enhancement Investment Program Orissa Integrated Irrigated Agriculture and Water Management Investment Program Himachal Pradesh Clean Energy Development Investment Program CAREC Transport Corridor I (Zhambyl Oblast Section) [Western Europe-Western People's Republic of China International Transit Corridor] Investment Program Road Network Development Investment Program Energy Sector Development Investment Program Integrated Citarum Water Resources Management Investment Program Sindh Cities Improvement Investment Program Highlands Region Road Improvement Investment Program North Eastern Region Capital Cities Development Investment Program Energy Efficiency Investment Program Water Supply and Sanitation Investment Program Water Resources Development Investment Program Road Corridor Investment Program North-South Road Corridor Investment Program Water Supply and Sanitation Services Investment Program Second India Infrastructure Project Financing Facility Assam Power Sector Enhancement Investment Program Civil Aviation Development Investment Program Railway Energy Efficiency and Safety Enhancement Investment Program SOE Reform and Corporate Governance Facilitation Program Central Asia Regional Economic Cooperation Corridor 2 Road Investment Program Sustainable Urban Transport Investment Program National Capital Region Urban Infrastructure Financing Facility Agribusiness Infrastructure Development Investment Program Infrastructure Development Investment Program for Tourism Central Asia Regional Economic Cooperation Corridor 2 (Mangystau Oblast Sections) Investment Program Small and Medium Enterprise Investment Program Sustainable Coastal Protection and Management Investment Program Assam Integrated Flood and Riverbank Erosion Risk Management Investment Program Town Electrification Investment Program Ho Chi Minh City Urban Mass Rapid Transit Line 2 Investment Program .APPENDIX 3: MULTITRANCHE FINANCING FACILITY APPROVED BY SECTOR Table A3.

AZE = Azerbaijan. BAN = Bangladesh. PRC = People’s Republic of China.a DMC ($ mn) ($ mn) Agriculture and Natural Resources 9 PAK 900 890 22 IND 188 188 27 INO 500 470 33 AFG 303 45 IND 170 170 49 IND 250 250 50 IND 120 120 Energy 3 IND 300 300 5 PAK 510 500 7 PAK 800 790 8 PRC 50 50 11 IND 620 620 13 VIE 931 931 19 IND 600 600 20 PRC 100 100 21 PAK 810 800 23 IND 800 800 26 AFG 570 31 PAK 780 760 38 IND 200 200 51 PNG 120 60 57 IND 400 400 62 IND 350 350 66 VIE 730 730 Finance 48 KAZ 500 500 Multisector 17 IND 500 500 37 IND 700 700 44 IND 150 150 61 UZB 500 500 Public Sector Management 41 VIE 630 600 Transport and Communications 1 IND 750 750 ADF ($ mn) 10 30 303 10 10 10 570 20 60 ADF ADF/UK Grant ($ mn) Grant Source Guarantee ($ mn) Date Approved 13-Dec-06 18-Sep-08 04-Dec-08 23-Sep-09 16-Sep-10 29-Sep-10 19-Oct-10 30-Mar-06 01-Dec-06 12-Dec-06 13-Dec-06 29-Mar-07 21-Sep-07 28-Mar-08 04-Jun-08 03-Sep-08 23-Oct-08 28-Nov-08 17-Sep-09 18-Nov-09 25-Nov-10 07-Jul-11 30-Sep-11 16-Dec-11 29-Sep-10 14-Dec-07 17-Nov-09 10-Aug-10 31-Aug-11 14-Dec-09 20-Dec-05 30 - . UZB = Uzbekistan. MON = Mongolia. Source: Asian Development Bank database on Loan. IND = India. GEO = Georgia. Grant. 53 54 55 56 57 58 59 60 61 62 63 64 65 66 Country VIE VIE GEO ARM IND IND UZB IND UZB IND AFG IND MON VIE Title Greater Mekong Subregion Ben Luc-Long Thanh Expressway Project Water Sector Investment Program Urban Services Improvement Investment Program Sustainable Urban Development Investment Program Madhya Pradesh Energy Efficiency Improvement Investment Program North Eastern State Roads Investment Program Second Central Asia Regional Economic Cooperation Corridor 2 Road Investment Program Railway Sector Investment Program Housing for Integrated Rural Development Investment Program Himachal Pradesh Clean Energy Transmission Investment Program Transport Network Development Investment Program (SF) Assam Urban Infrastructure Investment Program Western Regional Road Corridor Investment Program Power Transmission Investment Program 89 AFG = Afghanistan.2: MFFs Approved by Sector (2005–2011) MFF Total OCR No. PNG = Papua New Guinea. VIE = Viet Nam. KAZ = Kazakhstan.Multitranche Financing Facility Approved by Sector MFF No. ARM = Armenia. PAK = Pakistan. MFF = multitranche financing facility. Technical Assistance. Table A3. and Equity Approvals.

W & WSS = water and water supply and sanitation. PNG = Papua New Guinea. VIE = Viet Nam.051 57 1. ARM = Armenia.000 55 GEO 500 250 250 64 IND 200 200 0 Total 31. MON = Mongolia. IND = India. AITF = Afghanistan Infrastructure Trust Fund.= not available.= not available. Source: Asian Development Bank database on Loan. Source: Asian Development Bank database on Loan.a DMC ($ mn) ($ mn) ($ mn) 2 PAK 770 770 4 BAN 430 400 30 10 IND 550 550 14 AZE 500 490 10 16 PAK 900 890 10 24 KAZ 700 700 25 AFG 400 29 PNG 400 400 34 GEO 500 381 119 35 ARM 500 440 60 39 PNG 480 140 340 40 PRC 1.359 200 1.167 1.483 375 15. OCR = ordinary capital resources. . PSM = public sector management.90 Appendix 3 MFF Total OCR ADF No. PNG = Papua New Guinea.938 27. Technical Assistance.060 Grant Source 400 ADF 787 ADF. and Equity Approvals.559 Finance 150 150 Transport 650 1. DMC = developing member country.787 ANR 217 498 50 765 PSM 130 130 Energy 150 2. AFG = Afghanistan. a Refer to Table A3. GEO = Georgia. UZB = Uzbekistan. AITF .561 1.188 Multisector 1.246 W & WSS and Others 821 138 791 1. MFF = multitranche financing facility. Grant. PRC = People’s Republic of China. Technical Assistance.210 390 195 3.476 325 6.368 5.1 for the approved MFF Investment Programs.000 1. and Equity Approvals.750 .074 2. KAZ = Kazakhstan.000 42 UZB 600 240 360 43 GEO 300 135 165 47 KAZ 800 800 53 VIE 636 636 52 VIE 540 540 56 ARM 400 220 180 58 IND 200 200 59 UZB 500 320 180 60 IND 500 500 63 AFG 787 65 MON 170 100 70 Water and Other Municipal Infrastructure Services 6 IND 270 270 12 IND 300 300 15 IND 273 273 18 IND 350 350 28 PAK 300 150 150 30 IND 200 200 32 AZE 600 600 36 UZB 300 300 46 IND 250 250 54 VIE 1.3: MFF Tranche Approved Amount per Sector for Years 2005–2011 – ($ Million) Country/ Region PRC India VIE PNG CWRD Others Total Total 800 6. Grant.804 Grant ($ mn) Guarantee ($ mn) Date Approved 13-Dec-05 10-Oct-06 18-Dec-06 28-Sep-07 10-Dec-07 12-Nov-08 28-Nov-08 16-Dec-08 29-Sep-09 29-Sep-09 24-Nov-09 08-Dec-09 20-Apr-10 19-Jul-10 28-Sep-10 17-Dec-10 17-Dec-10 19-Apr-11 21-Jul-11 23-Aug-11 31-Aug-11 20-Sep-11 09-Dec-11 06-Dec-06 31-May-07 31-Oct-07 24-Jan-08 03-Dec-08 01-Jun-09 23-Sep-09 29-Sep-09 28-Sep-10 22-Feb-11 30-Mar-11 30-Sep-11 2.000 1.709 252 6. ANR = agriculture and natural resources. PRC = People’s Republic of China. CWRD = Central and West Asia Department. MFF = multitranche financing facility. BAN = Bangladesh. Table A3. AZE = Azerbaijan. ADF = Asian Development Fund. PAK = Pakistan. VIE = Viet Nam.

834. Table A3.662 Urban 285 0 125 0 67 400 877.4: Number of MFF Loans Approved per Sector for Years 2005–2011 – Country/ Region PRC India VIE PNG CWRD Others Total Total 8 54 8 7 50 6 133 ANR 5 3 2 10 PSM 2 2 Energy 5 21 3 2 12 43 Multisector 7 1 8 Finance 1 1 Transport 3 9 2 5 25 4 48 W& WSS 12 1 8 21 Urban Others 0 . Source: Asian Development Bank database on Loan. Grant. CWRD = Central and West Asia Department.698 7. Technical Assistance.5 3. VIE = Viet Nam. PRC = People’s Republic of China.5: MFF Sectoral Approval Average Loan Size during 2005–2011 ($ Million) Country/ Region PRC India VIE PNG CWRD Others Total Total 100 114 214 36 130 63 119 ANR 43 166 25 77 PSM 65 65 Energy 30 122 350 29 114 121 Multisector 194 200 195 Finance 150 150 Transport 217 134 195 39 139 81 130 W& WSS 68 138 99 83 Urban Others - . Table A3.555 5.516.803 Energy 605 732 1.955 2. PRC = People’s Republic of China.216 10.768 3.6: Non-MFF Approved Amount per Sector during 2005–2011 ($ Million) 2 Country/ Region PRC India VIE PNG CWRD Others Total Total 9.166 372 45 0 151 928 2.996 19. and Equity Approvals.128 PSM 0 200 690 0. VIE = Viet Nam.669 Multisector 1.266 46 819 0 368 629 3.0 0. Technical Assistance.861 48. PNG = Papua New Guinea. Technical Assistance.017 0.= not available.626 5.6 Others 0 150 561 45 315 1.261 ANR 1. Source: Asian Development Bank database on Loan.5 Finance 0 1. and Equity Approvals.851 Transport 4.9 6. . PNG = Papua New Guinea. Source: Asian Development Bank database on Loan. W & WSS = water and water supply and sanitation.049. PSM = public sector management. Grant. W & WSS = water and water supply and sanitation.0 760 2. VIE = Viet Nam.596 4. ANR = agriculture and natural resources.758 1. CWRD = Central and West Asia Department. MFF = multitranche financing facility. ANR = agriculture and natural resources. and Equity Approvals.Multitranche Financing Facility Approved by Sector 91 Table A3.0 1. MFF = multitranche financing facility.1 120.0 175. CWRD = Central and West Asia Department.= not available. PRC = People’s Republic of China. Grant. MFF = multitranche financing facility.973.050 135 13 886 1.213 W& WSS 1. PSM = public sector management. PNG = Papua New Guinea.152 2. W & WSS = water and water supply and sanitation.223 ANR = agriculture and natural resources.162 12.792 390 7.0 2.226 332 780 2. PSM = public sector management.

PRC = People’s Republic of China. Source: Asian Development Bank database on Loan. CWRD = Central and West Asia Department. Table A3. MFF = multitranche financing facility.92 Appendix 3 Table A3. Source: Asian Development Bank database on Loan. VIE = Viet Nam. PSM = public sector management. Technical Assistance. and Equity Approvals. W & WSS = water and water supply and sanitation. and Equity Approvals.7: Number of Non-MFF Loans Approved per Sector during 2005–2011 – Country/ Region PRC India VIE PNG CWRD Others Total Total 66 22 57 11 85 226 467 ANR 16 1 13 0 12 21 63 PSM 0 3 5 0 19 35 62 Energy 5 3 4 0 8 25 45 Multisector 11 2 6 0 12 29 60 Finance 0 2 2 1 6 21 32 Transport 20 7 11 8 15 37 98 W& WSS 11 3 1 0 5 25 45 Urban 3 0 2 0 3 9 17 Others 0 1 13 2 5 24 45 ANR = agriculture and natural resources. VIE = Viet Nam. PNG = Papua New Guinea. MFF = multitranche financing facility. Grant. W & WSS = water and water supply and sanitation.6 Others 0 150 43 23 63 48 49 ANR = agriculture and natural resources. PNG = Papua New Guinea. . PRC = People’s Republic of China.8: Non-MFF Sectoral Approval Average Loan Size during 2005–2011 ($ Million) – Country Region PRC India VIE PNG CWRD Others Total Total 145 210 102 36 94 88 103 ANR 79 0 63 0 30 30 50 PSM 0 67 138 0 142 206 174 Energy 121 244 254 0 95 102 126 Multisector 138 60 29 0 164 105 114 Finance 0 525 68 13 148 84 120 Transport 238 279 202 42 52 58 125 W& WSS 106 124 45 0 30 37 59 Urban 95 0 63 0 22 45 51. PSM = public sector management. Technical Assistance. Grant. CWRD = Central and West Asia Department.

904 3.036 2.a 1 1 1 1 1 1 2 2 2 3 3 3 3 4 4 4 5 5 5 6 6 6 7 7 7 7 8 8 8 9 9 9 9 10 10 10 11 11 11 11 11 11 12 12 13 13 13 14 14 14 MFF# Tranche MFF01 MFF01 T1 MFF01 T2 MFF01 T3 MFF01 T4 MFF01 T5 MFF02 MFF02 T1 MFF02 T2 MFF03 MFF03 T1 MFF03 T2 MFF03 T3 MFF04 MFF04 T1 MFF04 T2 MFF05 MFF05 T1 MFF05 T2 MFF06 MFF06 T1 MFF06 T2 MFF07 MFF07 T1 MFF07 T2 MFF07 T3 MFF08 MFF08 T1 MFF08 T2 MFF09 MFF09 T1 MFF09 T2 MFF09 T3 MFF10 MFF10 T1 MFF10 T2 MFF11 MFF11 T1 MFF11 T2 MFF11 T3 MFF11 T4 MFF11 T5 MFF12 MFF12 T1 MFF13 MFF13 T1 MFF13 T2 MFF14 MFF14 T1 MFF14 T2 Country IND IND IND IND IND IND PAK PAK PAK IND IND IND IND BAN BAN BAN PAK PAK PAK IND IND IND PAK PAK PAK PAK PRC PRC PRC PAK PAK PAK PAK IND IND IND IND IND IND IND IND IND IND IND VIE VIE VIE AZE AZE AZE Sector TC TC TC TC TC TC TC TC TC EN EN EN EN TC TC TC EN EN EN UR UR UR EN EN EN EN EN EN EN ANR ANR ANR ANR TC TC TC EN EN EN EN EN EN UR UR EN EN EN TC TC TC Approval Date 31-Jul-06 31-Jul-06 17-Mar-08 26-Sep-08 07-Aug-09 06-Jul-10 13-Dec-05 13-Dec-05 26-Aug-09 02-Jan-07 02-Jan-07 23-Dec-08 08-Jan-09 13-Feb-07 13-Feb-07 22-Dec-11 13-Dec-06 13-Dec-06 13-Dec-10 26-Jan-07 26-Jan-07 14-Jun-10 13-Dec-06 13-Dec-06 17-Dec-07 22-Dec-11 18-Dec-06 18-Dec-06 28-Jan-08 18-Dec-06 18-Dec-06 22-Dec-11 22-Dec-11 02-Jan-07 02-Jan-07 22-Oct-08 04-Apr-07 04-Apr-07 21-Aug-07 21-Aug-07 13-Apr-09 21-Dec-10 04-Jun-07 04-Jun-07 02-Oct-07 02-Oct-07 21-Dec-09 04-Oct-07 04-Oct-07 22-Aug-08 Duration (days) 1.645 2.373 1.443 1.671 2.208 3.049 1.836 4.878 1.280 1.116 1.329 2.006 1.206 1.200 1.242 1.588 2.614 1.166 1.486 1.915 1.208 648 1.026 1.836 2.026 2.828 1.652 2.934 1.220 2.570 1.098 1.090 3.775 2.269 2.539 1.347 MFF/Loan Closing Date 31-Dec-10 09-Oct-09 07-Apr-11 30-Jun-12 31-Dec-12 30-Jun-13 30-Jun-15 31-Mar-11 31-Dec-13 31-Jan-13 30-Jun-12 30-Jun-12 30-Jun-12 30-Jun-13 31-Dec-14 30-Jun-16 31-Dec-17 30-Jun-12 29-Feb-16 30-Jun-16 31-Dec-11 30-Jun-16 31-Dec-16 30-Jun-12 31-Dec-13 30-Jun-16 31-Dec-13 01-Apr-10 31-Dec-12 30-Sep-17 30-Sep-15 30-Sep-13 31-Dec-16 31-Dec-17 31-Mar-12 31-Mar-13 31-Dec-14 31-Mar-12 30-Jun-12 31-Mar-13 30-Jun-13 30-Jun-14 31-Dec-15 31-Oct-12 30-Oct-13 30-Jun-13 31-Dec-14 31-Dec-14 31-Dec-13 30-Apr-12 .016 1.799 3.621 2.823 1.1: Tranche Implementation Period as Percentage of MFF Utilization Period Tranche Implementation Period as % of MFF Utilization Period 72 69 85 77 68 55 46 90 58 57 124 71 50 47 52 64 55 60 45 47 70 81 16 47 48 40 64 63 72 54 46 63 95 83 86 51 MFF No.APPENDIX 4: TRANCHE IMPLEMENTATION PERIODS Table A4.287 3.800 2.652 4.285 1.221 2.132 1.976 2.939 3.

495 1.113 2.300 1.559 1.132 2.795 1.111 848 3.426 3.895 1.988 1.210 1.751 3.660 3.387 1.651 2.374 2.306 2.016 1.945 1.036 1.202 3.578 1.373 1.665 2.920 1.610 2.409 3.092 1.658 3.94 Appendix 4 Tranche Implementation Period as % of MFF Utilization Period 42 79 76 64 67 53 63 62 52 75 76 47 78 67 51 39 49 56 68 58 72 77 88 48 59 39 66 65 53 29 37 26 50 47 105 70 MFF No.838 3.061 1.142 1.981 1.387 1.830 2.a 14 15 15 15 15 16 16 17 17 17 18 18 18 19 19 19 19 20 20 20 20 21 21 21 22 22 23 23 23 23 24 24 24 24 24 25 25 25 26 26 26 26 27 27 27 28 28 29 29 30 30 30 31 MFF# Tranche MFF14 T3 MFF15 MFF15 T1 MFF15 T2 MFF15 T3 MFF16 MFF16 T1 MFF17 MFF17 T1 MFF17 T2 MFF18 MFF18 T1 MFF18 T2 MFF19 MFF19 T1 MFF19 T2 MFF19 T3 MFF20 MFF20 T1 MFF20 T2 MFF20 T3 MFF21 MFF21 T1 MFF21 T2 MFF22 MFF22 T1 MFF23 MFF23 T1 MFF23 T2 MFF23 T3 MFF24 MFF24 T1 MFF24 T2 MFF24 T3 MFF24 T4 MFF25 MFF25 T1 MFF25 T2 MFF26 MFF26 T1 MFF26 T2 MFF26 T3 MFF27 MFF27 T1 MFF27 T2 MFF28 MFF28 T1 MFF29 MFF29 T1 MFF30 MFF30 T1 MFF30 T2 MFF31 Country AZE IND IND IND IND PAK PAK IND IND IND IND IND IND IND IND IND IND PRC PRC PRC PRC PAK PAK PAK IND IND IND IND IND IND KAZ KAZ KAZ KAZ KAZ AFG AFG AFG AFG AFG AFG AFG INO INO INO PAK PAK PNG PNG IND IND IND PAK Sector TC UR UR UR UR TC TC OTHERS OTHERS OTHERS UR UR UR EN EN EN EN EN EN EN EN EN EN EN ANR ANR EN EN EN EN TC TC TC TC TC TC TC TC EN EN EN EN WSS WSS WSS UR UR TC TC UR UR UR EN Approval Date 14-Dec-11 08-Nov-07 08-Nov-07 19-Jan-09 13-Dec-10 17-Dec-07 17-Dec-07 20-Dec-07 20-Dec-07 24-Feb-09 01-Feb-08 01-Feb-08 03-Nov-11 28-Mar-08 28-Mar-08 03-Mar-09 07-Dec-11 09-Jun-08 09-Jun-08 16-Dec-09 05-Sep-11 12-Sep-08 12-Sep-08 14-Dec-10 26-Sep-08 26-Sep-08 27-Oct-08 27-Oct-08 08-Dec-09 22-Oct-10 30-Dec-08 30-Dec-08 07-Oct-09 15-Nov-10 21-Feb-11 02-Dec-08 02-Dec-08 21-Dec-10 02-Dec-08 02-Dec-08 03-Dec-09 22-Dec-11 22-Dec-08 22-Dec-08 04-Aug-10 19-Dec-08 19-Dec-08 22-Dec-08 22-Dec-08 01-Jul-09 01-Jul-09 16-Dec-11 22-Sep-09 Duration (days) 1.666 1.441 757 913 2.646 MFF/Loan Closing Date 31-Dec-14 31-Dec-14 30-Jun-13 30-Jun-14 30-Jun-15 30-Aug-17 30-Jun-14 30-Nov-11 15-Jan-10 26-Aug-11 25-Jan-16 31-Dec-12 31-Dec-15 31-Mar-15 30-Jun-13 30-Jun-14 31-Mar-15 31-Dec-12 31-Dec-11 31-Dec-12 31-Dec-13 30-Jun-18 30-Jun-12 30-Sep-15 30-Sep-17 30-Sep-13 30-Sep-16 31-Mar-14 30-Jun-14 30-Jun-16 30-Jun-15 31-Dec-13 30-Jun-15 31-Dec-13 31-Dec-14 31-Dec-17 30-Jun-12 31-Dec-16 30-Jun-17 30-Jun-14 30-Jun-14 30-Jun-14 31-Dec-23 30-Jun-14 30-Jun-14 31-Dec-18 31-Dec-13 30-Jun-18 30-Jun-13 31-Dec-15 30-Apr-16 30-Jun-16 16-Sep-19 .477 1.519 2.544 2.827 2.670 921 5.078 2.487 2.915 1.291 1.664 1.316 1.

554 1.263 2.052 3.508 1.153 3.093 2.461 2.152 1.187 2.041 1.177 1.557 2.470 3.728 353 1.754 2.017 3.860 656 2.091 2.085 2.008 1.682 1.187 3.172 2.043 3.652 3.307 2.836 1.a 31 32 32 32 33 33 33 34 34 34 34 35 35 35 36 36 36 36 37 37 37 37 38 38 38 38 39 39 40 40 40 40 41 41 42 42 42 43 43 44 44 45 45 45 46 46 46 47 47 48 48 49 49 MFF# Tranche MFF31 T1 MFF32 MFF32 T1 MFF32 T2 MFF33 MFF33 T1 MFF33 T2 MFF34 MFF34 T1 MFF34 T2 MFF34 T3 MFF35 MFF35 T1 MFF35 T2 MFF36 MFF36 T1 MFF36 T2 MFF36 T3 MFF37 MFF37 T1 MFF37 T2 MFF37 T3 MFF38 MFF38 T1 MFF38 T2 MFF38 T3 MFF39 MFF39 T1 MFF40 MFF40 T1 MFF40 T2 MFF40 T3 MFF41 MFF41 T1 MFF42 MFF42 T1 MFF42 T2 MFF43 MFF43 T1 MFF44 MFF44 T1 MFF45 MFF45 T1 MFF45 T2 MFF46 MFF46 T1 MFF46 T2 MFF47 MFF47 T1 MFF48 MFF48 T1 MFF49 MFF49 T1 Country PAK AZE AZE AZE AFG AFG AFG GEO GEO GEO GEO ARM ARM ARM UZB UZB UZB UZB IND IND IND IND IND IND IND IND PNG PNG PRC PRC PRC PRC VIE VIE UZB UZB UZB GEO GEO IND IND IND IND IND IND IND IND KAZ KAZ KAZ KAZ IND IND Sector EN WSS WSS WSS ANR ANR ANR TC TC TC TC TC TC TC WSS WSS WSS WSS OTHERS OTHERS OTHERS OTHERS EN EN EN EN TC TC TC TC TC TC PSM PSM TC TC TC TC TC UR UR ANR ANR ANR OTHERS OTHERS OTHERS TC TC FIN FIN ANR ANR Approval Date 22-Sep-09 14-Oct-09 14-Oct-09 22-Dec-11 06-Oct-09 06-Oct-09 06-Oct-09 06-Oct-09 06-Oct-09 07-Dec-10 22-Dec-11 06-Oct-09 06-Oct-09 21-Dec-10 08-Oct-09 08-Oct-09 21-Apr-10 07-Dec-11 27-Nov-09 27-Nov-09 14-Dec-10 01-Dec-11 27-Nov-09 27-Nov-09 05-Oct-10 04-Nov-11 01-Dec-09 01-Dec-09 15-Dec-09 15-Dec-09 14-Dec-10 20-Jul-11 14-Jan-10 14-Jan-10 21-Apr-10 21-Apr-10 31-Mar-11 21-Jul-10 21-Jul-10 18-Aug-10 18-Aug-10 24-Sep-10 24-Sep-10 19-Dec-11 04-Oct-10 04-Oct-10 15-Dec-11 20-Dec-10 20-Dec-10 04-Nov-10 04-Nov-10 06-Oct-10 06-Oct-10 Duration (days) 1.151 1.111 1.643 1.473 3.390 2.851 1.093 2.208 2.384 1.868 1.836 2.355 2.373 1.389 2.355 2.883 1.596 2.201 1.109 2.Tranche Implementation Periods Tranche Implementation Period as % of MFF Utilization Period 29 43 64 57 57 65 13 56 57 55 66 66 58 35 128 60 76 56 56 35 87 87 79 58 57 54 76 64 100 52 69 62 78 56 46 95 MFF No.645 2.390 1.258 1.728 1.547 MFF/Loan Closing Date 31-Jul-12 31-May-18 30-Jun-13 30-Jun-17 29-Sep-19 30-Jun-15 30-Jun-15 31-Dec-16 30-Jun-14 25-Nov-11 31-Dec-15 31-Dec-17 30-Jun-14 30-Jun-15 30-Jun-18 30-Jun-15 31-Jan-16 31-Dec-16 31-Dec-14 14-Sep-11 30-Jun-17 14-Dec-14 30-Jun-15 28-Feb-14 30-Nov-13 31-Dec-14 31-Dec-19 30-Jun-13 30-Jun-17 30-Jun-16 30-Jun-17 30-Jun-17 31-Dec-15 30-Jun-13 30-Apr-16 30-Sep-13 30-Jun-14 31-Dec-18 31-Dec-16 30-Jun-17 31-Dec-14 30-Jun-18 30-Jun-18 31-Dec-15 30-Jun-20 30-Jun-17 31-Dec-17 30-Jun-17 31-Jan-16 31-Dec-15 21-Sep-13 31-Dec-19 31-Dec-14 .

MON = Mongolia.879 1.017 3. . ARM = Armenia. and Equity Approvals.324 1. WSS = water supply and sanitation.478 2.990 1.447 1.447 2.272 2.290 1. TC = transport and communications.96 Appendix 4 Tranche Implementation Period as % of MFF Utilization Period 59 100 108 100 50 69 70 53 MFF No.524 1. PNG = Papua New Guinea.416 3.324 1. MFF = multitranche financing facility.940 844 2. UZB = Uzbekistan.910 1.850 2. PRC = People’s Republic of China. ANR = agriculture and natural resources.037 941 2.990 1. AZE = Azerbaijan. EN = Energy.046 3.416 2. GEO = Georgia.447 2.440 1. Source: Asian Development Bank database on Loan. PAK = Pakistan. Impl = implementation.998 2. VIE = Viet Nam.324 1.1 for the approved MFF Investment Programs.676 1.272 2.436 1.a 50 50 51 51 52 52 53 53 54 54 55 55 55 56 56 57 57 57 57 58 58 58 58 59 59 60 60 61 61 62 62 63 63 64 64 65 65 66 66 MFF# Tranche MFF50 MFF50 T1 MFF51 MFF51 T1 MFF52 MFF52 T1 MFF53 MFF53 T1 MFF54 MFF54 T1 MFF55 MFF55 T1 MFF55 T2 MFF56 MFF56 T1 MFF57 MFF57 MFF57 T1 MFF57 T1 MFF58 MFF58 MFF58 T1 MFF58 T1 MFF59 MFF59 T1 MFF60 MFF60 T1 MFF61 MFF61 T1 MFF62 MFF62 T1 MFF63 MFF63 T1 MFF64 MFF64 T1 MFF65 MFF65 T1 MFF66 MFF66 T1 Country IND IND PNG PNG VIE VIE VIE VIE VIE VIE GEO GEO GEO ARM ARM IND IND IND IND IND IND IND IND UZB UZB IND IND UZB UZB IND IND AFG AFG IND IND MON MON VIE VIE Sector OTHERS OTHERS EN EN TC TC TC TC WSS WSS UR UR UR TC TC EN EN EN EN TC UR TC UR TC TC TC TC OTHERS OTHERS EN EN TC TC UR UR TC TC EN EN Approval Date 25-Oct-10 25-Oct-10 06-Dec-10 06-Dec-10 22-Dec-10 22-Dec-10 22-Dec-10 22-Dec-10 07-Jun-11 07-Jun-11 12-Apr-11 12-Apr-11 23-Nov-11 09-May-11 09-May-11 15-Jul-11 15-Jul-11 15-Jul-11 15-Jul-11 21-Jul-11 21-Jul-11 21-Jul-11 22-Aug-11 02-Sep-11 02-Sep-11 18-Oct-11 18-Oct-11 09-Sep-11 09-Sep-11 18-Oct-11 18-Oct-11 12-Oct-11 12-Oct-11 18-Nov-11 18-Nov-11 22-Dec-11 22-Dec-11 29-Dec-11 29-Dec-11 Duration (days) 2.201 2.324 1.382 2.958 2.302 2.631 2. IND = India. KAZ = Kazakhstan.463 MFF/Loan Closing Date 30-Jun-17 30-Sep-14 30-Jun-14 30-Jun-14 31-Dec-16 30-Jun-17 31-Dec-17 31-Dec-17 30-Jun-21 30-Jun-16 31-Mar-19 30-Sep-16 30-Jun-17 31-Dec-20 30-Jun-16 28-Feb-15 28-Feb-15 28-Feb-15 28-Feb-15 31-Dec-16 31-Dec-16 31-Dec-16 31-Dec-16 31-Mar-17 31-Mar-14 31-Dec-18 30-Jun-18 31-Dec-16 31-Dec-13 30-Jun-18 30-Jun-18 31-Dec-17 31-Dec-17 30-Jun-18 30-Jun-18 30-Jun-21 30-Jun-17 31-Dec-20 31-Dec-15 100 100 100 98 46 93 44 100 100 100 58 44 AFG = Afghanistan.566 3. Technical Assistance. Grant. BAN = Bangladesh.990 1.302 1. a Refer to Table A3. INO = Indonesia.566 2. UR = urban .

. To what extent the projected end of the MFF utilization period can be considered reliable. and at approval across tranches in the same MFF. urban roads. the extent to which actual tranche closing dates will be delayed from the projected ones (as is observed for many standalone projects) is also not considered. national highways). water distribution pipelines. 1 The extent to which attention has been paid to project readiness at approval across countries and sectors. 97 1 2 For analytical purposes. The range is very wide and varies between 19 days (for Tranche 1 of MFF63 in Afghanistan) to 515 days (for Tranche 1 of MFF47 in Kazakhstan). the utilization period has been (or is being) extended. or efficient household lighting in one tranche and power plant efficiency improvement in the next tranche). 20). Comparison of tranche implementation periods on the basis of available data on approval and closing dates does not capture the underlying differences across tranches and MFF’s.. and the actual date of effectivity of the same grant or loan. power transmission in one tranche and power distribution in another. 04. it is considered that if each tranche has projects in the same subsector (e. 2 To what extent the projected tranche closing dates can be considered reliable. given that in a significant number of MFFs nearing completion (MFF numbers 01. it has similar projects.Tranche Implementation Periods 1. The unusually long time lag in Kazakhstan is because of internal government procedures that require the country’s President to sign loan agreements (which can take a long time).g. it is considered that each tranche has dissimilar projects. If the projects in different tranches of the same MFF cover different subsectors (for instance. For instance: The extent of similarity of projects across tranches in the same MFF. Besides. 03. power distribution. The unusually short time lag for the first tranche of MFF63 in Afghanistan reflects the fact that this MFF picked up the road projects that were to have been included in the previous transport sector MFF in Afghanistan (MFF63). given that scope changes have been affected for a large number of tranches. The large variation in time-lag between actual approval of a grant or loan. these projects were reasonably well prepared by the time MFF63 was approved.

7% 2.2% 38.0% 30.1% 40.6% 8.086 124 940 390 573 703 921 197 Time Elapsed between 20% Disbursement and Effectivity (% of Tranche Duration) 31.4% 45.4% 29.177 333 548 516 -765 736 591 -35 152 912 124 770 250 329 626 795 113 Time Elapsed between 30% Disbursement and Effectivity (days) 721 153 -509 -146 --515 -1.9% 73.7% --39.0% 3.8% Time Elapsed between 30% Disbursement and Effectivity (% of Tranche Duration) 38.5% .9% 138.9% 14.8% 59.9% -29.1% 63.1% 49.4% -10.3% 6.4% 50.6% 40.9% 102.3% 16.6% 18.0% 53.0% 42.212 313 1.7% -12.6% 20.6% -76.1% 12.1% 19.6% 17.2% 13.609 109 1.b 2 1 5 7 7 8 9 9 10 3 6 4 4 11 11 12 11 11 13 14 14 15 7 16 17 8 18 1 19 20 14 21 22 1 Country PAK IND PAK PAK PAK PRC PAK PAK IND IND IND BAN BAN IND IND IND IND IND VIE AZE AZE IND PAK PAK IND PRC IND IND IND PRC AZE PAK IND IND Time Elapsed between 10% Disbursement and Effectivity (days) 410 34 1.4% 68.2% 24.0% 11.5% 19.6% 103.3% 48.1% 4.5% 20.4% 9.5% Time Elapsed between 20% Disbursement and Effectivity (days) 587 50 -439 -126 -1.2% 39.4% 24.1% 10.9% -63.1% 43.8% 28.2% 28.003 25 118 720 118 686 138 232 532 547 45 Time Elapsed between 10% Disbursement and Effectivity (% of Tranche Duration) 21.8% -4.2% 30.4% 41.6% 42.1% 102.299 515 1.5% 35.5% -52.1% --39.4% 60.9% 9.1% 26.7% 10.5% 50.8% 11.464 956 1.640 1.9% 3.2: Time elapsed from Effectivity to 10%.3% -18. 20% and 30% disbursements for selected MFFs and Tranches Loan No.5% 8.1% 41.2% 40.1% -45.4% 42.380 112 579 277 1.644 -452 653 1.a 2231 2248 2287 2289 2290 2296 2299 2300 2308 2309 2312 2316 2317 2323 2324 2331 2346 2347 2353 2354 2355 2366 2396 2400 2404 2408 2410 2414 2415 2426 2433 2438 2444 2445 Tranche No T1 T1 T1 T1 T1 T1 T1 T1 T1 T1 T1 T1 T1 T1 T2 T1 T3 T4 T1 T1 T1 T1 T2 T1 T1 T2 T1 T2 T1 T1 T2 T1 T1 T3 MFF No.2% --26.345 423 673 631 --812 910 -140 152 1.9% 59.5% 11.7% 50.6% 42.3% 47.146 --609 793 1.7% 26.98 Appendix 4 Table A4.3% 6.654 317 318 847 233 289 460 1.3% -39.9% 34.1% 21.4% 26.6% 35.8% 42.566 998 121 959 773 1.

8% 15.2% 31.1% 36.6% 24. IND = India. 99 .3% 14.2% 49. KAZ = Kazakhstan.5% 8. a As per information available from COSO.9% 30.6% 7.6% 29.6% 31.6% 0. UZB = Uzbekistan.6% 49.6% ---26.3% 14.5% 33.0% -17. PRC = People's Republic of China.5% 35.3% 11.a 2458 2461 2499 2501 2502 2503 2506 2509 2510 2520 2528 2535 2540 2560 2562 2571 2586 2596 2610 2611 2613 2635 2638 2651 2655 2687 2689 2697 2716 2717 2725 Tranche No T2 T1 T1 T1 T3 T1 T2 T2 T2 T5 T1 T4 T2 T1 T2 T1 T1 T2 T2 T2 T1 T1 T2 T5 T1 T3 T1 T3 T2 T2 T3 MFF No.2% 35. BAN = Bangladesh.7% -- Tranche Implementation Periods ARM = Armenia.5% 36.8% 2.5% 10.9% 22.2% 31.7% Time Elapsed between 30% Disbursement and Effectivity (% of Tranche Duration) 40.3% 13.1 for the approved MFF Investment Programs.8% 27.5% 42.4% -15.9% 13.0% 31.9% 53.8% 45.4% 51.9% -20.7% 26.3% 48.6% 13.3% 33. time value dates for MFF loans not listed above. INO = Indonesia.8% 32. AZE= Azerbaijan. PAK = Pakistan.Loan No. are not available for when those loans first reached 10%.2% --0.5% 27.6% 12.2% --28.8% 9. PNG = Papua New Guinea.4% 0.8% 19.2% -33.1% 18.4% 17.6% 63.5% 46.3% -25.6% 42.0% -15.0% 11. GEO = Georgia. MFF = Multitranche Financing Facility.3% 39.2% 16. 20% and 30% disbursement.9% -- Time Elapsed between 20% Disbursement and Effectivity (days) 496 844 936 861 -426 781 301 618 583 755 152 814 -528 667 204 299 -174 339 402 -189 345 257 2 -118 159 -- Time Elapsed between 30% Disbursement and Effectivity (days) 658 962 ---480 957 333 710 722 -214 --598 667 204 407 -174 339 575 -318 --2 -118 192 -- Time Elapsed between 20% Disbursement and Effectivity (% of Tranche Duration) 30.8% 37.6% 48.5% 12. b Refer to Table A3.0% 63.1% 26.1% 5.7% -29.1% 24.2% 39.b 10 23 28 27 3 24 15 17 19 11 30 1 2 34 24 32 37 23 13 20 41 42 6 1 43 23 48 24 34 37 15 Country IND IND PAK INO IND KAZ IND IND IND IND IND IND PAK GEO KAZ AZE IND IND VIE PRC VIE UZB IND IND GEO IND KAZ KAZ GEO IND IND Time Elapsed between 10% Disbursement and Effectivity (days) 415 493 784 706 807 143 549 269 533 274 495 97 634 381 240 483 204 88 207 145 339 196 213 151 324 54 2 188 118 131 62 Time Elapsed between 10% Disbursement and Effectivity (% of Tranche Duration) 25.7% 26.6% 9.7% -23. Source: Based on data provided by Central Operations Services Office. VIE = Viet Nam.8% 3.2% -33.

PROCESSING. Four stand-alone projects require 300 person-weeks (75x4). such data were not available. Implementation of MFFs entails strong program management and additional time in the field. ADB staffs are also required to go to the field more often. processing. Multitranche Financing Facilities Board Paper 1. a comparison of multitranche financing facilities (MFFs) with stand-alone projects requires different assumptions. (iii) opportunities to change implementation plans while work is in progress and (iv) more exposure by staff to sector and executing agency issues for longer periods. At the time of mainstreaming of the multitranche financing facility (MFF) modality in mid-2008. As such. In contrast. the Central Operations Services Office [COSO]). . Manila. with associated benefits such as more opportunities to understand sector issues. It is important to note that ADB began to roll out the timesheet management system (TMS) a few years later.. The extra time spent on implementation is a strong and positive feature of MFFs. For instance. AND IMPLEMENTATION OF MULTITRANCHE FINANCING FACILITIES A. Timesheet Management System 2.1 provide the underlying assumptions and quantitative estimates of staff time requirements for preparing and processing MFFs and the consequent increased staff availability for administration of implementation. Source: ADB. (iii) loan/grant processing. This is based on the projected number of conversions of tranches over the utilization period of an approved MFF. which implies higher travel costs. not all departments that have a role in preparation. as well as relevant tranche loan projects and MFFs that were prepared and/or processed during the 12-month period. and 20 person-weeks for each subsequent tranche. and implementation administration actually fill timesheets yet (e. etc. ADB = Asian Development Bank.APPENDIX 5: RESOURCES FOR PREPARATION. However. Since 1 June 2011. 15 person-weeks for due diligence of the MFF as a whole. in April 2011. 13 person-weeks are budgeted annually for project administration. MFF = multitranche financing facility. the Board noted that the MFF modality would help improve organizational effectiveness owing to (i) reduced staff time requirements for processing an MFF and its tranches vis-à-vis a series of stand-alone investment projects. 3. Relevant activities by international staff and national staff that are recorded in the TMS are (i) TA processing. the MFF processing cycle with four tranches requires 150 personweeks—the standard 75 person-weeks for the first tranche. The TMS does not record staff time spent on sub-activities such as concept paper finalization. 53. However. (ii) TA supervision and implementation. For stand-alone projects. and (iv) loan/grant supervision and implementation. an MFF reaches its break-even point vis-à-vis a stand-alone project at the time of the second periodic financing request. Box A5 and Table A5. Mainstreaming the Multitranche Financing Facility. This represents considerable time and related resource savings for clients and Asian Development Bank (ADB).g. in view of the general perception that they were not reliable or complete for the purpose at hand. IED tried to access 12 months of data (from 1 June 2011 to 31 May 2012) for selected stand-alone projects. (ii) more entry points to address policy and procedure gaps. In addition to spending time managing MFFs. The basis for these estimates is not clear. 2008. framework financing agreement (FFA) preparation. compared with about 20 personweeks for MFF implementation. fact finding. B. an MFF on average is equivalent to four stand-alone projects. Box A5: Resources for Processing and Implementation 52. coupled with (ii) increased staff availability for implementation monitoring and administration. and make mid-course corrections. all five regional departments have been filling out the TMS. Other benefits of the MFF include (i) more opportunities for knowledge gathering and knowledge sharing on sector issues and trends. address policy gaps. For purposes of this evaluation. First.

c The budget coefficient for PPTAs is added here to reflect savings generated out of PPTAs. 101 . b The numbers in this column are estimates of the actual number of staff weeks needed to process an MFF and its PFRs. Under MFFs. which will not be provided to prepare PFRs. The annual budget coefficient to implement a normal infrastructure project is 13 staff weeks. respectively). PFR = periodic financing request. Policy Paper: Mainstreaming the Multitranche Financing Facility. Processing and Implementation of Multitranche Financing Facilities MFF = multitranche financing facility. Each PFR is the functional equivalent of one normal infrastructure project. PPTA = project preparatory technical assistance. and to monitor and administer them. one MFF has about four PFRs. Manila. Source: ADB. the use of PPTAs to prepare subsequent PFRs is discouraged. d These numbers represent the aggregate budget coefficient for processing and implementing a PPTA (10 and 8 staff weeks.1: Multitranche Financing Facility Resource Implications Budget Coefficient for a Staff Weeks (a) Processing 90 30 30 30 180 174 63 63 63 (15) c c c Total Estimates on Required b Staff Weeks (b) Staff Weeks Saved (Additional) (a-b) Processing Project Project (+PPTA) Project (+PPTA) Project (+PPTA) e MFF & PFR 1 e PFR 2 e PFR 3 e PFR 4 Total 75 d 93 d 93 d 93 d 354 Administration and Monitoring 13 13 13 13 52 Total 80 20 20 20 20 Project (7) (7) (7) (7) (28) Project Project Project Administration and Monitoring e MFF & PFR 1 e PFR 2 e PFR 3 e PFR 4 Total Resources for Preparation. Since the use of PPTAs to prepare subsequent PFRs is discouraged. 2008. e On average. and processing a normal infrastructure project (75 staff weeks). the budget coefficients for PPTA processing and implementation have not been added to the numbers in this column.Table A5. a The budget coefficient for staff time to process a normal infrastructure project is 75 staff weeks.

RRP = report and recommendation of the President. Such observations indicate strongly the need for an improved system to ascertain timely data entry/updating and a credible system to audit and verify data. In yet another instance. MFF fact-finding is reported to have been completed on 12 April 2011. Online Survey Database 8. Table A5. Source: Independent Evaluation Department. Another example is MFF66 for the energy sector in Viet Nam.2: Major Milestones for which eOps is Structured to Have Data MFF Preparation (PPTA stage) PPTA fact finding Concept paper approval PPTA approval Shortlisting of consultants Beginning of study Receipt of draft final report Submission of final report MFF Processing Reconnaissance mission Concept paper approval Fact finding MRM/SRM FFA negotiations Circulation and approval of RRP Tranche Processing and Preparation r Concept paper approval Fact finding MRM/SRM Appraisal PFR receipt from EA Safeguard document receipt from consultant or borrower Negotiations Approval of PFR Report EA = executing agency. eOperations Database 4. With a view to obtaining some information on the level of effort (LOE) in preparing and processing MFFs and tranches. D. a second MRM/SRM convened on the same day. The eOperations (eOps) database covers all sub-activities that go into preparing and processing of MFFs as well as individual tranches. SRM = staff review meeting. However. The evaluation team also took this opportunity to compile other useful information through the survey. eOps only provides data on elapsed time. and does not include any information on staff time actually spent or allocated for specific activities and sub-activities. IED conducted an online survey on team leaders that had prepared and processed MFFs and tranches. A quick analysis also reveals the wide variations in the data. 5.102 Appendix 5 C. 6. A cursory glance at the compiled data shows a large number of gaps (see Supplementary Appendix A). while FFA negotiations were concluded in June 2011. negotiations completed a day earlier on 11 April 2011. PPTA = project preparatory technical assistance. the elapsed time required between certain milestones. MFF58. For instance. while MRM/SRM was held a month later on 20 September 2011. where the MFF fact-finding and negotiations were concluded on 19 August 2011. and even the incidence of negative elapsed time between two milestones or other seemingly inexplicable sequences of events. The eOps database also includes corresponding activities for preparation and processing of stand-alone project loans. FFA = framework financing agreement. the fact-finding mission is reported to have been finished in July 2006 and the MRM/SRM was in March 2007. MRM = management review meeting. PFR = periodic financing request. The eOps database is structured to include completion dates for a large number of milestones during MFF and tranche preparation and processing (see Table A5. while the RRP is reported to have been circulated to the Board on 7 September 2010.2). MFF = multitranche financing facility. such as timeline for performing various tasks and achieving specific . for MFF47 for the transport sector in Kazakhstan. 7.

13. the very large range of LOE estimates from a small sample size possibly indicates that different respondents made very different assumptions in their efforts to quantify the LOE.3.e. 9. regarding the elapsed time for preparation of MFF plus Tranche1 (i.7 and A5. The large variations in the data compiled from eOps and the online survey are evident from Tables A5. To a somewhat lesser degree. regarding elapsed time for processing of MFF plus Tranche 1. The process of identifying the names and current titles of team leaders revealed that (i) many team leaders who had prepared and processed MFFs were not engaged in processing subsequent tranches of the same MFF. 10. or some other. etc. up to the finalized PPTA report). and relied on an approach of asking respondents to provide qualitative comments in addition to quantitative data. 14. the survey shows a shorter elapsed time for preparation and processing of MFFs plus Tranche 1 in nearly all cases. etc. and certain institutional development aspects (such as whether or not institutional capacity was assessed up front. However.6 also reveals the large variations in elapsed time for preparation and processing of stand-alone projects. and (iii) there were very few team leaders who had prepared and processed two or more MFFs—and thus had firsthand experience in managing the evolving requirements (that evolved with as new staff instructions and operating procedures were issued). whether or not there was a PPTA is left open. the approval of the PPTA concept note. the starting point of the elapsed time is not specified.5. Table A5. while others may not have. the same is also generally true also for elapsed time estimates for preparation and processing of tranches. 11)..1 The online survey questionnaires are in Supplementary Appendix B. Similarly. level of effort. a PMO set up. Regarding LOE for preparation of MFF plus Tranche1. the level of effort data also reveal vast ranges of one order of magnitude or more (see Tables A5. 103 E. Owing to that reason alone. Findings of Elapsed Time and Level of Effort 12.) would not be available through these surveys. (ii) a change in team leader for each subsequent tranche of an MFF is the norm. there are sufficient prompts to enable the team leader to provide reasonable responses—for instance by specifying the team composition (by skill type) and person-months required from each skill type. For reasons mentioned above (para.4. Processing. team composition. Likewise. and A5. capacity development support identified up front. The evaluation team recognized up front that precise information on any aspect (elapsed time. in spite of the rather small sample size. it could have been the start of a PPTA factfinding mission. It appears that some may have included the person-days of consultants in arriving at these estimates. 11.Resources for Preparation. the evaluation team could not be too precise in asking the questions either. and Implementation of Multitranche Financing Facilities milestones. Compared with the data from eOps. While this by itself does not in any way ascertain that precise information/data will be provided. it was hoped that it would improve the judgment of the concerned team leaders. rather than the exception. sector strategy and policy.8). where the respondents were expected to fill out the survey forms from memory. and skill sets available on a team. .). For instance. 1 The survey also included questions on ownership. A5.

Note: Data drawn from the following number of MFFs from eOps (i) 21 MFFs for elapsed time between fact-finding and receipt of draft final report.3: Elapsed Time for Preparation of MFF along with Tranche 1 Elapsed Time between Fact-Finding and Receipt of Draft Final Report (days)a 1389 304 623 1389 465 577 629 336 522 522 304 433 1389 454 757 771 545 651 Elapsed Time between Fact-Finding and Submission of Final Report (days)b 1641 335 801 1641 654 721 764 482 659 654 335 521 1641 626 1033 907 572 740 Elapsed Time between MFF preparation up to Final Draft PPTA Report (days)c 1080 30 367 720 210 454 720 450 585 540 210 370 1080 30 260 630 180 405 All MFFs All MFFs All MFFs IND MFFS IND MFFs IND MFFs ANR MFFs ANR only ANR only EN only EN only EN only TC only TC only TC only UR only UR only UR only Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) ANR = agriculture and natural resources. The online survey of team leaders that prepared and processed MFFs yielded 23 responses with elapsed time-related data.4: Elapsed Time for Processing of MFF along with Tranche 1 Elapsed Time. c From online survey. a From eOps.104 Appendix 5 Table A5. Table A5. MFF = multitranche financing facility. and (ii) 17 MFFs for elapsed time between fact-finding and submission of final report. Source: Independent Evaluation Department. PPTA = project preparatory technical assistance. from end of Fact-Finding to RRP Approval (days)a 1828 61 271 1828 97 353 356 104 2174 476 61 235 1828 Elapsed Time. EN = energy. TC = transport and communications. UR = urban. from Concept Approval to RRP Approval (days)a 2317 84 479 2066 190 605 1779 84 615 722 89 362 2317 Elapsed Time from Fact-Finding to RRP Approval (days)b 720 60 206 360 120 182 150 135 143 240 120 180 720 All MFFs All MFFs All MFFs IND only IND only IND only ANR only ANR only ANR only EN only EN only EN only TC only Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) . b From eOps. IND = India.

PAK = Pakistan. (ii) 81 for elapsed time between concept paper approval and PFRR approval. UR = urban. IND = India. Note: Data drawn from the following number of tranches from eOps: (i) 54 for elapsed time between end of fact-finding and PFRR approval. Note: Data drawn from the following number of MFFs from eOps (i) 61 MFFs for elapsed time between fact-finding and RRP approval. RRP = report and recommendation of the President. a From eOps. IND = India.5: Elapsed Time for Preparation and Processing of Tranches End of FactFinding to PFR Approval (days)a 1860 39 304 1860 136 396 449 119 255 456 175 277 364 117 213 537 58 242 1860 39 352 319 113 226 Concept Paper Approval to PFR Approval (days)a 2443 62 687 2098 196 730 2296 148 1021 1544 257 569 1787 97 623 2296 109 769 2443 62 659 1962 133 912 PFR Receipt to PFRR Approval (days)a 884 15 119 234 29 94 884 51 346 NA NA NA 234 234 234 884 29 247 223 15 67 181 28 106 Survey of Tranche Processing Fact-Finding to Approval (months)b 510 45 194 360 90 200 420 150 290 240 240 240 210 180 195 510 120 281 270 45 140 360 210 280 All Tranches All Tranches All Tranches IND only IND only IND only PAK only PAK only PAK only VIE only VIE only VIE only ANR only ANR only ANR only EN only EN only EN only TC only TC only TC only UR only UR only UR only Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) ANR = agriculture and natural resources. and (iii) 39 for elapsed time between PFR receipt and PFRR approval. VIE = Viet Nam. b From online survey. from Concept Approval to RRP Approval (days)a 92 452 1329 133 808 Elapsed Time from Fact-Finding to RRP Approval (days)b 60 210 120 120 120 105 TC only TC only UR only UR only UR only Min (days) Avg (days) Max (days) Min (days) Avg (days) ANR = agriculture and natural resources. from end of Fact-Finding to RRP Approval (days)a 71 290 1117 114 374 Elapsed Time. TC = transport and communications. Source: Independent Evaluation Department. b From online survey. Processing. PFR = periodic financing request. EN = energy. Source: Independent Evaluation Department. The online survey of team leaders that prepared and processed MFFs yielded 25 responses with elapsed time-related data. TC = transport and communications. (ii) 59 MFFs for elapsed time between concept approval and RRP approval. a From eOps. PFRR = periodic financing request report. Table A5.Resources for Preparation. The online survey of team leaders that processed tranche loans yielded 31 responses with data on elapsed time-related queries. and Implementation of Multitranche Financing Facilities Elapsed Time. UR = urban. . EN = energy.

26 responses received contained relevant data. PAK = Pakistan. and 19 thereafter. TC = transport and communications. MS = mainstreaming. .106 Appendix 5 Table A5. PPTA = project preparatory technical assistance.7: Level of Effort for Preparation and Processing of MFFs MFF Preparation (up to draft final PPTA Report) 2220 180 650 2220 210 1055 990 180 500 840 240 540 990 180 507 MFF Processing (FF to approval) 1500 120 440 1500 180 623 750 180 390 660 120 306 750 120 372 All MFFs All MFFs All MFFs Pilot MFFs Pilot MFFs Pilot MFFs MS to July'11 MS to July'11 MS to July'11 Post-July'11 Post-July'11 Post-July'11 Post MS Post MS Post MS max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d FF = fact-finding. IND = India. PRC = People’s Republic of China. Table A5. Post-MS = post mainstreaming. that included 7 MFFs in the pilot stage. Note: Data drawn from survey of MFF team leaders. VIE = Viet Nam. RRP = report and recommendation of the President. MFF = multitranche financing facility. p-d = person-day. Source: Independent Evaluation Department. Source: Compiled by the Independent Evaluation Department from survey responses. Note: Data drawn from 26 transport and energy sector stand-alone loans in selected countries where MFFs have also been approved.6: Elapsed Time for Preparation and Processing of Stand-alone Projects End of FactFinding to Approval 685 86 243 488 90 197 190 181 186 619 96 315 685 132 262 685 86 218 619 89 255 Concept paper Approval to RRP Approval 1056 154 437 554 154 322 594 594 594 830 198 443 1056 207 447 1056 176 412 830 154 448 All All All IND only IND only IND only PAK only PAK only PAK only PRC only PRC only PRC only VIE only VIE only VIE only EN only EN only EN only TC only TC only TC only Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) Max (days) Min (days) Avg (days) EN = Energy.

Processing. EN = energy. p-d = person-day. TC = transport and communications.Resources for Preparation. MFF= multitranche financing facility. IND = India. UR = urban. . and Implementation of Multitranche Financing Facilities Table A5. Source: Compiled by the Independent Evaluation Department from survey responses. Note: Sample size in parentheses.8: Level of Effort for Processing of MFF Tranches Tranche Processing (Fact-Finding to Approval) 720 27 218 390 45 158 390 60 225 720 45 248 600 27 221 390 150 225 240 210 720 45 239 390 45 196 600 27 215 107 All Tranches (36) All Tranches All Tranches IND only (16) IND only IND only ANR only (2) ANR only ANR only EN only (11) EN only EN only TC only (12) TC only TC only UR only (5) UR only UR only Before Oct 2006 (1) Oct 2006 to June 2008 (1) July 2008 to May 2010 (11) July 2008 to May 2010 July 2008 to May 2010 June 2010 to June 2011 (9) June 2010 to June 2011 June 2010 to June 2011 After June 2011 (12) After June 2011 After June 2011 max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d p-d p-d max p-d min p-d avg p-d max p-d min p-d avg p-d max p-d min p-d avg p-d ANR = agriculture and natural resources.

" In the RRP (main text). Other sources of financing include local market and foreign borrowing. In the RRP. "if the Government requests. cofinancing was referred to as a possibility. in the DMF." In the RRP (main text).e. "private institutions" were identified as another financing source. cofinancing was referred to as a possibility—"may be mobilized in the future" "Others" was identified as one of the financing sources. other sources of financing identified include "Other Financiers". cofinancing was referred to as a possibility. "Others.. in the DMF.APPENDIX 6: COFINANCING Table A6: References to Cofinancing in RRPs and FFAs of Approved MFFs MFF No. In the RRP. cofinancing under Carbon Market Initiative is a possibility. "other agencies" were identified as one of the financing sources.a 1 2 Country IND PAK RRP (Main Text) Yes Yes RRP (DMF) No No FFA No No Remarks In the RRP (main text) and FFA. but there was no further clarification on what these agencies might be." In the DMF. other sources of financing include sub–borrowers. "Other International Financial Institutions or Bilateral Financial Institutions" was identified as another financing source for the Investment Program. but there was no further clarification on who they might be. 3 4 5 6 7 8 9 10 11 IND BAN PAK IND PAK PRC PAK IND IND Yes No No Yes Yes No Yes Yes Yes Yes No Yes No Yes Yes No No Yes * No Yes No Yes No * No Yes 12 13 14 15 16 IND VIE AZE IND PAK Yes No Yes No Yes No No Yes No No No No Yes No * 17 IND Yes No Yes 18 19 20 21 22 23 IND IND PRC PAK IND IND No No No Yes Yes Yes No Yes Yes Yes No Yes No No No Yes No No 24 25 26 27 28 29 30 KAZ AFG AFG INO PAK PNG IND Yes Yes Yes Yes No Yes No Yes Yes Yes Yes No Yes No Yes Yes Yes * No Yes No ." In the RRP. cofinancing is being sought for SSTs. The latter include bilateral and multilateral contributions and funds that will be raised from international capital markets. In the DMF. domestic banks were identified as one of the financing sources. In the RRP. In the DMF. other sources of financing include the private sector and other financial institutions In the DMF and FFA. cofinancing for energy efficiency and alternative energy projects was deemed possible under the Kyoto Protocol. i. other sources of financing for the Investment Program include "other financial institutions." In the RRP (main text). In the DMF: "Other external financiers" for the Investment Program was identified as another financing source. i. In the RRP (main text). In the main text. "Other Funding Agencies" and "Private Sector" were identified.. cofinancing for SSTs was "actively being sought. "India may request. In the DMF.e.

in the DMF. In the RRP. cofinancing was referred to as a possibility. private sector. The latter include bilateral and multilateral contributions and funds that will be raised from international capital markets.1 for the approved MFF investment programs. Other sources of financing include sub-borrowers. Commercial Domestic. PNG = Papua New Guinea. AFD = Agence Française de Développement. In the RRP. private sector participation was identified as a financing source. Source: Asian Development Bank database on Loan. Technical Assistance. RRP = report and recommendation of the President. other sources of financing identified include the private sector. GEO = Georgia. 38 39 IND PNG Yes Yes No Yes Yes No Sources of financing are local market and foreign borrowings. MFF = multitranche financing facility. cofinancing was identified for the Investment Program. a Refer to Table A3. In the RRP (main text). DMF = design and monitoring framework. cofinancing was referred to as a possibility that ADB will pursue. In the FFA. home buyers. BAN = Bangladesh. there was no cofinancing available. strategic investors. FFA = framework financing agreement. In the FFA. PRC = People’s Republic of China.a 31 32 33 34 35 36 37 Country PAK AZE AFG GEO ARM UZB IND RRP (DMF) Yes No Yes Yes Yes No No FFA Yes No * Yes Yes No Yes Remarks Cofinancing includes one or more sources (AFD and Others. cofinancing was referred to as a possibility that will be explored for the SSTs.Cofinancing RRP (Main Text) Yes No Yes Yes Yes No Yes 109 MFF No. ARM = Armenia. AZE = Azerbaijan. CAREC = Central Asia Regional Economic Cooperation. In the RRP. Cofinancing was referred to as a possibility in the RRP. SSTs = second and subsequent tranches. MON = Mongolia. cofinancing was forwarded as a possibility that ADB will pursue. but it indicated the possibility for SSTs. KAZ = Kazakhstan. * = no copy of FFA accessible to IED. In the FFA. Commercial External). PAK = Pakistan. JFPR = Japan Fund for Poverty Reduction. and Equity Approvals. Grant. . "Other financiers" was identified as financing source In the DMF. IND = India. VIE = Viet Nam. 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 PRC VIE UZB GEO IND IND IND KAZ KAZ IND IND PNG VIE VIE VIE GEO ARM IND IND UZB IND UZB IND AFG IND MON VIE No Yes No No No No No Yes Yes Yes No Yes Yes Yes Yes Yes Yes No No No Yes Yes No Yes No No No No Yes No No Yes No No Yes Yes No No No Yes Yes No No No No Yes No No Yes No Yes Yes No No No Yes No No Yes No No No Yes Yes No No Yes * Yes Yes Yes No * No No Yes No Yes Yes No Yes In the RRP. JFPR funds a TA attached to the MFF. Other sources of financing identified include general corporations. UZB = Uzbekistan. SOE = state-owned enterprise. AFG = Afghanistan.

ADB. 10 November. MFF22). ADB and other cofinanciers cofinance expenditures related to a common list of goods and activities in agreed-upon portions. Report and Recommendation of the President. the OPEC Fund for International Development (OFID) had expressed interest in providing $30 million cofinancing for an agriculture and water management investment program in India. Proposed Multitranche Financing Facility. ADB. ADB.2 The need for cofinancing is not a consequence of the ADB-supported MFF. . MFF07). a development partner or another financier may choose to complement ADB’s financing (after Board approval of the MFF) through cofinancing administered by ADB.7 In this case. Report and Recommendation of the President. 3 4 5 6 7 In parallel cofinancing in this case. 21 November (approved 12 December 2006. Such cofinancing administered by ADB may be parallel or joint. Proposed Multitranche Financing Facility. As a MFF investment program is often a part of a sector roadmap or strategy. Proposed Multitranche Financing Facility. Report and Recommendation of the President. Manila. Report and Recommendation of the President. Renewable Energy Development Sector Investment Program (Pakistan). 13 August (approved 3 September 2008. but that should some cofinancier come forward. Proposed Multitranche Financing Facility. 2. a case-by-case analysis of the progress made in implementing the MFF program is required to gain insights into the catalytic affect of the MFF on parallel cofinancing. and ADB. Therefore. 1 Whether or not an ADB-supported MFF investment program has in fact contributed to such cofinancing is difficult to ascertain. To the extent that the private sector participates in implementing a sector roadmap during or after the MFF utilization period. 4 (ii) at the MFF approval stage for an expressway in Viet Nam. 2010. Greater Mekong Subregion Ben Luc-Long Thanh Expressway Project (Viet Nam). 2006. Manila. it is most likely to be influenced by the policy framework. Power Transmission Enhancement Investment Program (Pakistan). To the extent that commercial cofinanciers (commercial banks) participate. The guarantee facility is not mentioned in the RRP. Proposed Multitranche Financing Facility. ADB. that may be so because of longterm ADB support. for instance in the power transmission and distribution system investment programs in Pakistan (MFF07 and MFF21. 23 November (approved 14 December 2010. following agreed-upon procurement guidelines. Manila. Report and Recommendation of the President. In joint cofinancing. ADB. another development partner can cofinance another portion of the sector roadmap in parallel. 6 and (iv) at the appraisal stage. Proposed Multitranche Financing Facility. the prospect of parallel cofinancing is simply highlighted in the MFF documents. 5 (iii) a $200 million guarantee facility set up to mobilize commercial debt for wind and renewable energy projects in Pakistan. Manila. Manila. MFF53). their participation in cofinancing is more likely to be influenced by sector pricing policies (which in turn may or may not be impacted by the MFF investment program). MFF52). Report and Recommendation of the President. the cofinanciers follow their own procedures to finance different goods or activities that are integral to the MFF investment program. it was known that ADB would cancel the relevant portion of the ADB loan if cofinancing from OFID were to become available. 2006. 2008. institutional structures. In some cases. 2010. which includes pricing policies. respectively). but included during implementation phase as Tranche 2. the project sponsors and their commercial lenders are encouraged to pursue debt financing from export credit agencies and other bilateral or multilateral sources. 23 November (approved 17 December 2010. Orissa Integrated Irrigated Agriculture and Water Management Investment Program (India). MFF21). 2008. 3 Some examples include (i) $313 million from German development cooperation through KfW and $195 million from the European Investment Bank for a mass rapid transit line in Ho Chi Minh City in Viet Nam. Ho Chi Minh City Urban Mass Rapid Transit Line 2 Investment Program (Viet Nam).110 Appendix 6 1. 28 August (approved 18 September 2008. and other aspects—which is unlikely to have been duly influenced by the MFF investment program. 1 2 Cofinanciers follow their own procedures to finance different goods or activities that are integral to the sector roadmap. It is noted that in some cases. Manila. 3. Power Distribution Enhancement Investment Program (Pakistan). parallel cofinancing from a potential cofinancier was expected in the second tranche.

APPENDIX 7: COMMITMENT FEE SAVINGS A. It is difficult to establish such a long-term partnership if clients’ financial liabilities increase. PRC = People’s Republic of China. Finance. Table A7. Energy. at this time. However. Either of these conditions holds only for a few MFFs. Transport. However. Multisector. The Board paper 1 noted that many ADB clients require long-term and large investments. Definition of Counterfactual Scenario 1. wherein even a small delay in the signing/effectivity of successive tranches can lead to some commitment fee savings. 4. such an MFF facility cannot lead to commitment fee savings. and where commitment fee savings come from phasing of the approval/effectivity of a stand-alone loan through tranches. Other than those listed. By agreeing (through the framework financing agreement) to provide financing only when needed. simply because they have entered into long-term partnership arrangements. guarantees. Armenia. Note: All data are for the period 2005–2011. A programmatic approach can possibly mitigate these problems but requires a partnership framework to be in place. and that individual tranche loan/grant approval amounts are comparable to stand-alone project amounts. Mongolia. and technical assistance) are indeed relevant. especially in infrastructure and utilities. Papua New Guinea. grants. Bangladesh. Technical Assistance. commitment fee savings are likely to reflect improvements in disbursal rates. It is noted from Table A7. But given that commitment fees begin accruing only on loan signing/effectivity in both cases. And ADB’s traditional financing instruments (loans. this leads to sizeable commitment fees for the client and tighter lending headroom for ADB. and if the approved amount is large. 2. Commitment fee savings come only when (i) a large MFF is used to finance one large project that would otherwise be financed through one stand-alone loan. . Public Sector Management. the MFF modality helps ADB to address this problem. Water Supply and Sanitation.1 that the average MFF financing envelope in all countries has exceeded the average stand-alone project approval amounts substantially. Source: Asian Development Bank database on Loan. or (ii) the MFF financing envelope is comparable to a stand-alone project. Azerbaijan. and for countries and sectors where ADB has approved MFFs. Grant. In most cases. Georgia. Kazakhstan. such ADB financing products generate a balance sheet commitment for clients. and Urban. and Equity Approvals. includes the following countries where ADB has approved MFFs: Afghanistan. Includes the following sectors: Agriculture and Natural Resources. This effectively assumes that the MFF is used to finance multiple investment projects that would otherwise be financed through a string of stand-alone projects—and that the tranche mechanism can somehow help reduce commitment fees. 1 An issue that becomes relevant to countries as they graduate from receiving only Asian Development Fund (ADF) support to a mix of support from ADF and ordinary capital resources (OCR). this is just a matter of conjecture. 3. equity. and Uzbekistan.1: Average MFF Financing Envelope vs Average Stand-alone Loan/Grant Size Average Approved MFF Envelope Country ($ million) PRC 383 India 368 Viet Nam 747 Pakistan 721 Others 473 All 483 Number of MFFs Approved 3 25 6 8 24 66 Average Average Approved Approved Number of Stand-alone Loan Tranche Amount MFF Tranches Amount ($ million) Approved ($ million) 100 8 145 114 54 210 214 8 102 119 14 178 110 42 81 119 126 103 Number of Stand-alone Loans Approved 66 22 57 28 288 467 MFF = multitranche financing facility. Indonesia.

7. . Commitment fee savings are estimated for three hypothetical scenarios in Table A7. Commitment Fee Savings Estimates 5. one for detailed project design and the other for project construction. Table A7.e. 2 As ADF grants do not come with any commitment fees.3 shows the commitment fee savings for selected MFFs where (i) more than one tranche loan has been approved under the MFF investment program. Computations are shown for three MFFs that include (i) MFF13. i. Commitment fee savings estimates presented in Table A7. which are smaller than the average size of stand-alone projects in those countries. while in the alternative mode.2 shows that in all scenarios. In Scenario 1. any particular executing agency continues to function essentially in the same way..3 entail some simplifying assumptions. the MFF comprises four tranches to finance four similar projects. the most important being that (i) the alternative scenario remains a large stand-alone loan. the commitment fee savings are negligible. in the alternative stand-alone mode.. except that the design phase gets extended. With such assumptions. disbursal amounts vs elapsed time profile will not vary with the loan signing date). Scenario 2 is similar to Scenario 1. and (ii) MFF20 and MFF38. Table A7. the loan disbursal pattern will remain the same (i. these are financed through a single loan. For sake of simplicity. all commitment fee savings estimates are for tranche loans. the MFF comprises two tranches.112 Appendix 7 B. This effectively means that any executing agency would prefer to sign a loan agreement only when a certain level of project readiness is achieved.2. are not available. Although this threshold for project readiness may vary vastly across executing agencies in different sectors and countries. 6. and actual or scheduled disbursement dates. In Scenario 3. the underlying assumptions effectively are that (i) during the time the MFF is being implemented. the commitment fee savings are estimated for MFFs under which all tranche loans were negotiated after January 2007. and (ii) the executing agency apparently has a sufficient skills base to be able to simultaneously manage the implementation of a large number of projects or subprojects.e. and (ii) no matter when an executing agency signs a loan agreement to borrow for implementing a particular project or subproject (identified to be implemented through the MFF). when a flat commitment fee rate began to be applied. 2 and (ii) all required data are available. it becomes possible to arrive at a reasonable estimate of commitment fee savings even if data on actual disbursements. which supports one large project. particularly the tranche loan approval amounts and tranche loan signing dates for all tranches that have been approved thus far. the four are financed through one loan.

2a: Commitment Fee Comparison vs. Stand-alone Project Commitment Fee Savings 113 .Table A7.

2b: Commitment Fee Comparison vs. Stand-alone Project Appendix 7 .114 Table A7.

Table A7.2c: Commitment Fee Comparison vs. Stand-alone Project Commitment Fee Savings 115 .

a Refer to Table A3. . Total MFF Envelope ($ million) Planned as per MFFRRP Actual Loan/ Grant Signing Date Elapsed Time between Loan Signing Dates of T1 and SSTs (days) Commitment Fee Savings for MFF ($m) Commitment Fee Savings from MFF (% MFF envelope) 1127 547 1141 336 742 4.14 IND = India. PRC = People’s Republic of China. MFF = multitranche financing facility. T3 = third tranche. T2 = second tranche. Technical Assistance. and Equity Approvals.18 0.1 for the approved MFF investment programs. Source: Asian Development Bank database on Loans.25 0.28 2353 2610 2426 2611 2773 2592 2677 2800 931 931 100 100 100 200 200 200 28 903 35 22 43 60 90 50 09-Oct-07 09-Nov-10 29-Sep-08 30-Mar-10 14-Nov-11 15-Feb-10 17-Jan-11 27-Feb-12 T1 T2 T1 T2 T3 T1 T2 T3 0. Grant. T1 = first tranche. RRP = report and recommendation of the President.a Energy 13 13 20 20 20 38 38 38 VIE VIE PRC PRC PRC IND IND IND 0. VIE = Viet Nam. SST = second and subsequent tranches.45 MFF No.116 Appendix 7 Table A7.3: Commitment Fee Savings Estimates for Selected Energy MFFs MFF Tranche Country Loan/ Grant No.25 0.

5 MW. which is a large infrastructure project with seven discrete run-of-the-river medium-sized hydropower projects with a combined capacity of 645. Consistency with ADB strategic priorities The energy sector has been a priority area of ADB since it started operations in the PRC in 1986. PRC: Gansu Heihe Rural Hydropower Development Program (MFF08) Approval dates (MFF: 13 Dec ‘06. The roadmap GaPG developed the Heihe River Cascade Hydropower Development Scheme in Zhangye City. Given its vast renewable energy resource base. Tranche 1: 18 Dec ‘06. . From 2000 to 2005. On the other hand. Development context In 2005. GaPG also wanted to increase access to power and reduce power tariffs to rural households (which had been previously connected to a stand-alone power supply system). Gansu was identified by the PRC Government as one of the key provinces to promote renewable energy development in the 11 th FYP period. 2.2 million. Consistency with government plans and priorities The PRC’s 11th Five Year Plan (FYP) 2006–2010 highlighted the significance of diversifying energy supply by providing increasing renewable energy including hydropower. From 2003 to 2005. and water sector strategies in the PRC.APPENDIX 8: STRATEGIC CONTEXT OF MULTITRANCHE FINANCING FACILITIES A. and promoting integrated water resource management have been part of ADB’s energy. Gansu’s GDP growth was about 10% per annum in real terms. ensuring sustainable use of natural resources. 4. in particular deterioration in air quality. The Zhangye City Government (ZCG) also included these projects in its investment program for the 11th FYP period.000 MW had been exploited. By the end of 2005. Gansu Province. Introduction of new initiatives to increase support to DMCs for low-carbon technologies and energy efficiency projects in Strategy 2020. one more hydropower project had been commissioned. The sixth cascade hydropower plant in the scheme. Tranche 2: 28 Jan ‘08) 1. Gansu has limited fossil fuel resources. which was met with an increase in quick gestation coal-fired power plants. Along with the entire scheme of cascading hydropower projects. At approval (and since then) developing clean energy resources. was supported by ADB under the Gansu Clean Energy Development Project (Loan 2032-PRC).000 MW and was rising rapidly. the 102 MW Xiaogushan Hydropower Project (XHP). the two selected MFF hydropower projects are an integral part of Gansu Province’s least-cost generation expansion plan. only 23% of Gansu’s hydropower potential of about 17. and in addition to XHP. however. had adverse environmental consequences. with 79% classified as rural. and relies mostly on imported coal for power generation. GaPG set priorities and made plans to promote hydropower development to meet growing electricity demand in an environmentally sustainable manner. 3. two of the seven hydropower projects were under construction. environmental. Coal-fired power capacity in 2005 exceeded 6. The Gansu Provincial Government (GaPG) thus wanted to accelerate hydropower development. Gansu experienced demand growth of more than 13% per year. Gansu had a population of about 26. This.

Energy efficiency investments represent the least-cost and quickest low-carbon solution to bridge the energy gap. industrial energy efficiency financing. the government agreed to a set of commitments aimed to (i) establish a dynamic business environment for sustained transformation of the energy efficiency market. and pricing regimes are right (RRP. first sentence). Consistency with government plans and priorities Energy security is the primary goal under Pakistan’s energy strategy. B. The government recognizes that an integrated institutional and resource allocation structure is required to implement this policy framework. Consistency with ADB strategic priorities New energy efficiency interventions increase support for low-carbon technologies. . A general recognition at appraisal that energy efficiency investments can be most effective when the policy. under the scheme) were next in line to be constructed and were to be supported through the (then) proposed MFF. The government has a policy framework that focuses on maximizing energy savings by rational and efficiency use in all energy-consuming sectors. ADB’s country partnership strategy for Pakistan has energy efficiency as a core intervention area. building retrofits. . plus transmission and distribution upgrades on the supply side. page iii. in line with Strategy 2020. respectively. Mainstreaming of energy efficiency is a critical component of the government’s climate change program. At appraisal. Energy security and affordability are priorities under the government's energy sector strategy and policies. PAK: Energy Efficiency Investment Program (MFF31) Approval dates (MFF: 17 Sep ‘09. Tranche 1: 22 Sep ’09) 5. and (ii) scale up deployment of proven technologies through public investments and fostering private investments. . the energy efficiency initiative in Pakistan was to begin in August 2009 and to progress rapidly. 4 and 5. As per the roadmap. A large number of initiatives were identified that included (i) thermal power plant rehabilitation. Philippines).16 million tons of oil equivalent) was 18% of primary energy use in 2008. and gas and electric appliance replacements.118 Appendix 8 In terms of project readiness. and (ii) compact fluorescent lamp diffusion. regulatory. Pakistan’s energy savings potential (estimated at appraisal at about 11. High energy intensity compared with countries at a similar stage of development (India. Development context Continued and increasing power and energy supply side shortages. 8. The roadmap included measures to increase energy efficiency on both the supply and demand sides. 6. the Erlongshan and Dagushan hydropower projects (nos. The roadmap The government had adopted a clear and sound strategic multisector roadmap for energy efficiency based on extensive consultations and inputs from all stakeholders. 7.

Strategic Context of Multitranche Financing Facilities 119 C. and decision-making support. Excess demand 3. and drainage. Irrigation Cisankuy 4. Unbalanced supply/ demand 2. environmental protection. 11. Free irrigation 2. disaster management. Water council 1 2 Degradation of Hydraulic Infrastructure. Limited alternatives Water pricing: 1. High stream flow Roadmap Organizational restructuring & capacity development. water supply and sanitation. Water conveyance Low reliability of water supply: 1. Table A8 attempts to link the sector assessment. The problem tree identifies problems and their causes. Citarum basin plan 3. Mini/micro hydro study 6. The roadmap development process identifies groups of activities that include integrated water resources management (IWRM). policy. Roadmap 2. and the roadmap with the investment plan plus outputs and activities in the DMF. Demand management 9. Urban water supply and sanitation Water sharing: 1. Licensing . tariffs. irrigation. Cirata dam raising 7. participatory irrigation Investment Plan Components + Outputs/ Activities in DMF Institutions and planning for IWRM 1. water pollution. Sand 2. Groundwater depletion 2. Coordination 2. Irrigation upper Cipunegara 3. problem tree. 10. sedimentation. 3 Water use conflict: 1. groundwater wells. allocation. efficient / effective use of water (not IED definition of the terms). Karawang 8. Problem Tree. and program management. A roadmap for integrated water resource development and management was prepared and endorsed following lengthy multistakeholder reviews. Roadmap. The summary roadmap captures issues of concern typical of many hydro basins and provides qualitative roadmap objectives to guide the design of MFF components. Mandates Water shortages: 1. and Investment Plan Sector Assessment Issues Groundwater Management (Falling Water Table). Bulk water for Bekasi. Water Supply and Sanitation Separate planning for river basin and infrastructure planning. information. legislation. of which the MFF is approved to finance $500 million.5 billion worth of investments over 15 years. Table A8: Reconciliation of Sector Assessment. it is not apparent how the activities in the DMF and financing plan were actually derived from the sector assessment or based on the problem tree. The sector assessment presented in the RRP covers groundwater. Water resources development and management 1. the activities are found broadly in line with the problems identified. Participation/education Water rights. planning. Water sources 2. O&M. water resources development and management. Apex body 3. regulations. community empowerment. water sharing. nor how the roadmap provides insight into the selection of the activities and their timing. The roadmap is intended to guide $3. INO: Integrated Citarum Water Resources Management Investment Program (MFF27) 9. Bandung water source 2. Low tariffs Degradation of hydraulic structures: 1. infrastructure construction. Optimization/ allocation 2. Curug run of river power project 5. However. The discussion is essentially qualitative. Overall. data. Surface Water Management (Demand) Problem Tree Issues Weak basin wide management capacity: 1. erosion.

O&M = operations and maintenance. Protected area management 5 Flooding 6 Planning and construction. Land use Roadmap 4 Water Pollution. Reforestation 5. Information/education/ awareness for capacity development of community Data. Industry Mudflow and landslides: 1. Water quality improvement 2. lakes. Fisheries 4. Land uses Low water quality: 1. PCR DMF = design and monitoring framework. disaster preparedness plan. Slope failure Flooding: 1. wetlands. community part in integrated water resources management. forests. the problems faced in the Citarum River Basin (CRB) are complex. On-line flow forecasting 8 Program management: 1. Source: Independent Evaluation Department. Tides 4. data sharing. Erosion and Sedimentation Enhancing capacity for environment protection of rivers. Coastal zone management 4. information decision support: 1. Household effluent 2. Citarum flood management 2. Pollution Sedimentation in river mouths: 1. capacity development. Community participation 2. 12. awareness. Tariffs/allocation Sector Assessment Issues Problem Tree Issues Undesirable Flow Regime: 1. IME 3. Sediment 2. Salinity 2. Urban development Pollution of the watershed: 1. Peak flows 2. decision support system and modeling Disaster management: 1. Logging 2. Information Water quality and hydrology monitoring. Environment protection: 1. and it is unlikely that suitable selection of interventions can be developed and prioritized through such a consultative process . Logging 2. water resources information technology. community self-help 7 Irrigation and Drainage Lack of decision support tools: 1.120 Appendix 8 Investment Plan Components + Outputs/ Activities in DMF 3. information. Management of water disasters Community empowerment: 1. PCR = project completion report. IWRM = integrated water resources management. Wastewater Saguling Dam 3. Limited drainage 3. Management 2. Solid waste 3. IME = independent monitoring and evaluation. Tide / sediment High sediment loads: 1. Fertilizers / chemicals 3. The interventions were prioritized in consultations with water resources organizations and stakeholders. Farming 3. research. drought management plan Education. While it is desirable that the roadmap gain wide support in the community and government.

nor optimization of allocation and consequences for social and economic factors. 1 This was prepared under ADB assistance under a different stand-alone grant-UZB-0131 Surkhandarya Water Supply and Sanitation Project (approved on 3 November 2008 with $1. In other words. The grant served as a “PPTA” for the whole MFF. There is no detailed quantitative basin planning. exposure of the hydrologic problems quantitatively explained with rainfall/runoff. 16. more than 3 years after MFF approval. Although the RRP claimed that a sector roadmap was in place. hydrology. 1 Ideally. There appear to be no quantitative links between the sector assessment and the MFF interventions. UZB: Water Supply and Sanitation Services Investment Program (MFF36) 15. 13. so that optimization modeling can take place under different climatic probability scenarios. but as of October 2012. and capacity development plans are included in the MFF. the government wanted to provide water supply and sanitation (WSS) services as a means of raising public health and hygiene standards. 121 D. basin mapping for modeling purpose with nodes. relying on agencies with low capacity to prioritize interventions to resolve complex and expensive basin-wide problems for the sake of participation seems risky in terms of outcomes. but it is still being debated and negotiated between ADB and the government. etc. immigration patterns. (ii) a road map. The intended objective of this stand-alone grant was to help the government strengthen sector planning and management by developing (i) a sector strategy.5 million). transfers. the RRP acknowledges that the capacity of water resources organizations and stakeholders in the CRB is low. no water resources study. there appears to be no detailed analysis required to define sufficiently the MFF projects as outlined in the financing plan and implementation schedule. population growth. and (iii) an investment program.. Therefore. 14. A formal water sector optimization analysis is needed. As per the RRP. such an optimization analysis was planned to be attempted in 2012. However. There are also no economic data. The available government strategy and roadmap at the time of processing the MFF did not (i) provide a sound technical assessment of WSS facilities and services in the country. there was no detailed sector roadmap as described in the relevant Operations Manual Section (D14). which should help define the roadmap. trends in industry and different sectors. net and gross withdrawal amounts. . nor (ii) provide sufficient clarity on the selection of town to be included in the ADB MFF (vis-à-vis support from other funding agencies active in the WSS sector). a properly detailed sector roadmap was prepared.Strategic Context of Multitranche Financing Facilities alone as is stated in the RRP. usage or allocation of water by sectors over time. There is also no institutional study and capacity assessment for implementation of the investment plan. Moreover. it had not been finalized and accepted by the government. the sector roadmap should have been approved and ready at the time of MFF processing. and to achieve poverty reduction. After MFF approval in September 2009.

2. Madhya Pradesh. and the implementing agencies to undertake power system expansion activities in a cost-effective manner. The policy framework for the power sector at the state and central levels is defined by the Indian Electricity Act (2003) and various other regulations at the state and central levels. maintenance. and regulating central generating station tariffs. Manila. ADB. (v) encouraging power plants to sell power to more than one state by entering into power purchase agreements with the grid-operating entity. transmission. 2 The MFF supports capacity development and strengthening of the institutional framework within the Government of Uttaranchal (GOU). 9 March (approved 30 March 2006. (iv) having independent regulators that are responsible for setting tariffs in a manner that encourages distribution companies to enhance their operational efficiencies. and maintenance. and (vi) corporatizing and improving financial management and governance of all state-level power sector entities. corporatization. (iii) encouraging private participation in generation to augment generation and compete against central sector power generation corporations. . Power Grid Corporation of India Limited (PowerGrid) is also fully committed to this policy framework. 2006. which now focuses only on transmission capacity expansion. relevant information on the Uttarakhand Power Sector Investment Program is presented below. Uttaranchal (Uttarakhand) Power Sector Investment Program (India). and privatization program. Policy Framework 1. (iii) encouraging distribution companies to improve their performance through reduction in technical and nontechnical losses. (vii) having an independent regulator that (among other roles) formulates a tariff mechanism with the objective of promoting competition and efficiency in the pricing of bulk power and transmission services. (iii) acquisition of computer hardware and software 1 2 There are seven energy sector MFF investment programs in India: one each to support power sector entities in two states (Assam and Uttarakhand). (ii) consulting services for design and construction management. one to support a central transmission utility (PowerGrid). (vi) encouraging merchant power plants by guaranteeing off-take for a part of the generation. (ii) encouraging competition in generation through investment in central sector power generating corporations. and facilitating private investment in power generation. (iv) encouraging private participation in transmission to augment transmission system and compete against the central transmission utility. 2. Energy MFF Interventions in India1 1. The central level policies also mirror the state-level policies and encompass (i) increasing commercial orientation of all central sector power corporations. As an example. and Uttarakhand. (v) improving the targeting of subsidies to specific customer categories (such as farmers and low income households). Proposed Multitranche Financing Facility. Report and Recommendation of the President. Himachal Pradesh. and rehabilitation design and operations. (ii) creating a grid-operating entity by unbundling the grid operations function from the central transmission utility. and two each to support power sector entities in two states (Himachal Pradesh and Madhya Pradesh). operation.APPENDIX 9: POLICY DIALOGUE AND CAPACITY DEVELOPMENT (SELECTED CASE STUDIES) A. At the state level. Uttaranchal Electricity Department (UED). generation. and distribution entities. All states have committed to this policy framework and are at various stages of enacting and implementing the unbundling. Capacity Development Support 3. privatization of power stations in the unbundled state-level generation entities. It focuses initially on implementation through the project management office (PMO) and includes (i) training of UED and implementing agency staff to transfer and implement international best practices in transmission. These include the four states where ADB has MFF interventions: Assam. the key aspects of the policy framework are (i) unbundling of the vertically integrated state electricity boards into distinct generation. MFF03).

7. Because Afghanistan is building its energy infrastructure from the ground up. (ii) preparation of subproject appraisal reports for the candidate (noncore) subprojects. While the national grid is important in transporting power from cheaper markets. (iii) implementation of management plans for environmental and social safeguards. addressing end-use efficiency now reduces overall costs. The Afghan energy strategy contains an implicit prioritization of energy subsector activities. The success of the energy sector will depend on energy utilities. 3 ADB.Policy Dialogue and Capacity Development (Selected Case Studies) for the PMO and the project implementation units. This affects most of the population. . and (iv) acquisition and installation of project-related information technology. monitoring. A multisector regulator would be a good start. and (v) corporate development. and regulatory base for business. Electricity is prioritized over other sectors. to improve capacity to comply with all relevant ADB policies and procedures. such as the Northeast Power System (NEPS). substations. operating independently and mobilizing private sector investment. capacity must be improved. and other activities to be defined in consultation between GOU. The aim is to pursue outsourcing. (iv) field supervision. In addition. To accomplish this. and coal. policy. By locating power generation closer to users. 2005. Energy MFF Intervention in Afghanistan 1. losses can be significantly reduced. coordination among the entities and aid agencies must be strengthened. originally proposed as a TA attached to the loan. Technical Assistance to India for the Uttaranchal Power Sector Capacity Building Project. gas. including the preparation of environmental and social assessments for subprojects introduced after the approval of the MFF. preparing an enabling legal. it can learn from the lessons in other countries. including hydro. and cheaper to gain a (i) megawatt of power from increasing efficiency than from building a new generation plant. Policy Context 6. Rural energy. 3 This advisory TA for capacity development. The strategy is based on a four-pronged approach: Greater efficiency from existing operations. and ADB. and efforts must be focused on a few large projects. UED. Related advisory TA provides project management support and develops capacity in the PMO and the implementing agencies during the first year of implementation. (iii) (iv) Investments in new capacity. including compliance with safeguards and external monitoring. small hydropower plants. New supplies must be rationalized. Progress in creating new supplies has been insufficient. It is easier. and for renovation. 123 B. including advisory services for restructuring. Implementation support includes (i) consulting services required for the design and construction of transmission lines. and the promotion of public– private partnerships. 5. initial design of an independent power trading company. faster. It can prioritize energy efficiency and renewable energy. and the commercialization of state-owned enterprises (SOEs). was processed separately to accelerate project readiness. decentralized power will prove more beneficial in the long run. In addition to addressing immediate and short-term needs. and upgrade. the country also needs to consider longer term issues. Moreover. Manila. The government wants to increase production from various sources. (ii) Improvement in sector governance and coordination. Most rural areas lack electricity. 4.

Nonphysical outputs of the Investment Program include (i) better system operation and maintenance. A program management office (PMO) was established to undertake (i) technical work (design and supervision). . 9. An MIS will be (ii) established in the PMO to improve efficiency. The consulting services also include identification and procurement of the required tools and spare parts for the maintenance of the 220 kV NEPS. (iv) finance and administration (to tighten up on systems. The contract will include an option for a 2-year extension in case the required capacity is not obtained in the initial contract period. Project management. In addition to the software provision and a demonstrative pilot system planning of one of the districts. and (ii) enhanced planning and project management. accuracy. The PMO has due diligence experts to prepare the next generation of priority investments. and implementing efficiencies in the collection system. The intention is to work on broad institutional matters while addressing day-to-day operational and project execution. The PMO will also have a communication function. a metering program. planning policy refinements. Project management and due diligence—consulting services. and investment program development. Scope of Nonphysical Investments (NPIs) 8. Establishment of revolving fund. and advisory services to its management and technical staff. (ii) legal services (contracts and bidding processes). analysis. audits. and transparency. (iii) safeguard management and gender mainstreaming. The project will support (ii) the PMO in conducting a feasibility study on hydropower and irrigation schemes in the Lower Kokcha River. Technical assistance will be provided for developing the specific mechanism of the revolving fund that will be generated by the recovery of the subloans provided under the MFF to be used to subsidize tariffs for the poor and vulnerable. This project will assist the utility (i) primarily with capacity development for its MIS. and results measurement. controls. 11. Tranche 1 North East Power System (NEPs) 220 kV system operation and maintenance. The PMO will have a special team to prepare due (iii) diligence work in support of projects evaluated for subsequent tranches. funding. A revolving pool of funds will be created for capturing (iv) MFF onlending repayment for use in the energy sector. including the introduction of a management information system (MIS) and better metering. procedures. billing. and cash management). evaluations. (v) reporting. including emergency restoration systems. The (i) component will assist the maintenance of the newly constructed 220 kV NEPS. 10. introduction or upgrading of the billing system. training of appropriate staff at the electric utility will be undertaken to ensure that the system will be effectively adopted and used in a sustainable manner.124 Appendix 9 2. This component is to build the electric utility’s capacity in distribution planning system in order to enable it to effectively engage in the planning of the distribution system. records. and collection of tariffs. Preparation of future tranches. (v) Distribution planning system. and (vi) technical assistance to train staff on project management. (iii) Electric utility’s management. as specified in the RRP. Consultants will be recruited to develop sufficient managerial and organizational capacity of the electric utility through provision of necessary training. Tranche 2 Electric utility’s institutional capacity development. Consultants will be recruited to support the PMO.

challenges. and safeguards. It covered each of the provinces and subsectors. namely technical. 16. fiduciary oversight. governance. 13. Status of Tranches 1 and 2 NPIs by Start of Tranche 3 125 Under Tranche 1. . North West Frontier Province (NWFP) and Punjab are developing new power generation policies that offer incentives for RE. PMO consultants have been mobilized. 12. operational. Policy Context 14. At the provincial level. The RE development road map places special emphasis on capacity development. Baluchistan and Sindh provinces are in the process of fine-tuning their policies targeting wind and solar energy. legal. At the federal level. including incentives and transparent rules and procedures for more private sector investment. and documentation for the clearance of project concepts in the internal government system. and teams for systematic evaluation. There is also a need for better systems. and policy formulation. Scope of Nonphysical Investments (NPIs) Feasibility studies and due diligence for new sites. The objective is to close the time gap between the approval dates for subproject finance and the start-up of their implementation. The policy framework will be backed by a comprehensive action plan. Tranche 2 is in an early stage of implementation focusing on supervision consultant recruitment for project implementation and procurement of contractors for civil works. The latter combines physical with nonphysical investments. reforms. private sector engagement. and opportunities. 2. experts to work on preparing eight new hydropower proposals in NWFP and Punjab. 17. there is a need for better strategic thinking. At the federal level. Tranche 2 improves and expands the Kabul distribution system and strengthens the capacity of the power sector. The first loan will finance the services of 18. The role of institutions and their functions also needs more clarity and simplification. Energy MFF Intervention in Pakistan 1. This work includes detailed due diligence on all standard project finance areas associated with ADB-financed transactions. The latter includes physical investments. regular monitoring. The Government of Pakistan was committed to developing the renewable energy (RE) sector. This covers actions at various levels. governance. management. 15. commercial. The roadmap covers the period 2006–2012. This RE development road map was prepared on the basis of various assessments undertaken over recent years.Policy Dialogue and Capacity Development (Selected Case Studies) 3. regulatory. The diagnostic work outlined key problems. The latter is an apex body charged with promoting RE nationwide. institutional change. a number of which were supported by institutions including ADB. procurement. in particular with regard to small to medium-size hydropower plants. procedures. The genesis of the policy framework and action plans for RE development is a road map for the sector. The RE policy fits with a broader clean energy and environmental policy in Pakistan. an RE Policy Framework had already been developed by the Alternative Energy Development Board (AEDB). These are to be sequenced and complementary. and capacity development. capacity. The work will also include preparing advance actions on consulting services. This work paved the way for developing a strategic vision for the sector and an investment program. planning. and reporting. financial management. One feature of this due diligence package is to ensure that all ADB operational policies and procedures are adhered to in full and at all times. C.

and business regulation. finance. and financial reporting. targeting efficient project evaluation. staff coaching and training. Capacity development. accountability. 20. social protection. This will support establishment of new evaluation. These performance assessments are based on a large number of measures that include (i) quality of its macroeconomic management including fiscal policy and debt policy. (i) No progress has been made to date in capacity development at the 22. (iii) Capacity development in Punjab will be cancelled due to the executing agency’s inaction. evaluation. Related/parallel technical assistance. federal level. legal. provincial. fiduciary oversight. quality of public administration. capacity development consultant engagement is almost complete. (ii) coherence of its structural policies on trade. and corruption). governance. and (iv) establishment of systems and procedures. procurement of durable goods is ongoing (contracts awarded). . equity of public resource use. including regulatory and legal framework. monitoring. Given that the basic purpose of compiling this information is to understand the DMC’s policy and institutional framework for promoting poverty reduction. The capacity component combines “big picture” strategies. operational. The TA fits over and above the capacity development component accompanying the MFF. anticorruption. The government requested ADB to provide a technical 21. sustainable growth. safeguards. and reporting at the investment and implementing agency level. Capacity development. rule-based governance. monitoring. and (ii) governance of public sector enterprises. Table A9 shows the scores for (i) policy and institutional rating. (ii) development of adequate management and financial systems.000. transparency. financial management. assistance (TA) package to support AEDB to cater for work on policy formulation. Institutional Capacity Assessment 23. backed by training and computer software and hardware to set up modern management and financial information systems. and incentives to facilitate private sector investment. Capacity development will cover (i) planning and formulation of policy. ADB will finance $800. and (iv) quality of governance and public sector management (covering property rights. D. The government will finance the balance. better planning. commercial. and monitoring at the top level with project preparation. financial. and environmental sustainability). The TA will be implemented over a period of 18 months as two major tasks: The first will cover capacity development of AEDB and the second will cover RE policy formulation. Clean Development Mechanism (CDM) consultant is to be engaged by the executing agency for registration of projects for Certified Emission Reduction (CER). The executing agency for the TA will be AEDB. management. ADB conducts country performance assessments for all DMCs with access to the ADF. The program will also work on institutional strengthening. and implementation agency levels. this compilation may not be suitable for the purpose of understanding institutional capacity strength from the viewpoint of suitability for administering the MFF. It will also define and execute a program to help improve strategy and policy formulation and planning. knowledge management (regarding sector development issues and project best practice worldwide). The total cost is estimated at $980. accounting and auditing. revenue mobilization efficiency. building human resources. 24. procurement. and program oversight or management.126 Appendix 9 19. labor. policy. planning. (ii) SHYDO building construction is completed. fiduciary oversight. monitoring and reporting. and reporting systems at the federal.000 on a grant basis. no commitment has been made to date. (iii) expert support and training of staff in relation to best practice project preparation work —in essence covering due diligence on technical. and project implementation matters. and effective use of concessional assistance. (iii) degree to which its policies and institutions promote equity and inclusion (covering gender equality. financial management systems and practices.

Table A9: Institutional Capacity Ratings of Selected ADF Eligible Countries Economic Management 3. These are composite indicators that rely on data from more than 100 databases on the following broad themes: (i) voice and accountability.9 3. it would be useful to consider developing suitable indicators from a range of available databases.6 3.Policy Dialogue and Capacity Development (Selected Case Studies) 25.0 3.9 3. (iii) government effectiveness.3 127 Country Afghanistan Armenia Bangladesh Georgia Mongolia Pakistan Papua New Guinea Uzbekistan Viet Nam a Averaged over scores for economic management.7 4.5 4. Source: ADB.3 Structural Policies 2. For instance. (iv) regulatory quality.0 4.9 4. (ii) political stability and absence of violence.5 4.8 4. and policies for social inclusion and equity. .8 Policy and Institutional Ratinga 2.3 5.0 3. 2012.2 Policies for Social Inclusion and Equity 2. (v) rule of law.9 4. Therefore.1 4.1 4.2 3.7 4.8 4.9 3.8 4.4 Governance of Public Sector Enterprises 2.4 2.0 4. structural policies.8 3.8 4.6 3. The design of an indicator or a suite of indicators that can be used to decide on whether or not to use the MFF modality in a particular country and sector context is beyond the scope of this evaluation. Annual Report on the 2011 Country Performance Assessment Exercise.4 4.6 3.2 4. and (vi) control of corruption.5 3.5 4.2 4.3 4.6 3.5 4. Manila.4 3.0 4.3 3.7 3.5 4. the World Bank Institute compiles Worldwide Governance Indicators that cover all 14 countries where ADB has supported MFF investment programs.5 4.

3% 1. Grants.3% Country PRC India Viet Nam Papua New Guinea Pakistan Other MFF countries Afghanistan Armenia Azerbaijan Georgia Kazakhstan Uzbekistan Bangladesh Indonesia Mongolia 5.0% 1.5% 0.7% 2003 0.3% 0.7% 2.8% 44.7% 1.2% 0.2% 0.3% 0.1% 0.9% 0.3% 0.0% 1.0% 0.2% 2.0% 2011 0.4% 1.6% 0.9% 1.2% 2.6% 2.5% 0.1% 0.4% 0.8% 2.0% 0.7% 3.9% 1.1% 6.8% 1.7% 5.8% 0.5% 0. Source: Loan.7% 0. Technical Assistance.7% 0.4% MFF = multitranche financing facility. PRC = People’s Republic of China.5% 0.1% 0.4% 1.1% 0.1% 5.4% 0.1% 1.2% 10.7% 7.4% 1.3% 0.8% 1.4% 0.8% 2005 1.7% 2.4% 0.8% 3.5% 0.2% 0.0% 8. Technical Assistance.2% 1.8% 4.4% 2011 1.6% 0.6% 1.3% 0.6% 0.0% 0.0% 0.9% 0.8% 1.8% 1.6% 1.5% 0.1% 5.7% 0.4% 1.9% 1.0% 0.2% 2004 0.0% 1.2% 0.4% 0. and Equity Approvals Database. PRC = People’s Republic of China.6% 1.4% 0.4% 0.3% 0.7% 0.9% 8.2% 0. PPTA = project preparatory technical assistance.6% 4.2% 0.3% 2003 0.6% 1.5% 4.5% Total 1.1% 2.6% 3.9% 2.3% 0.5% 3.3% 0.8% 0.1% 1.0% 0.5% 0.3% 1.0% 1.6% 0.2: Ratio of PPTA Support to Loan and Grant Approvals 2000 0.3% 0.0% 0.4% 0.2% 5.1% 5.5% 0.1% 0.5% 0.0% 0.1% 2007 0.0% 0.8% 0.7% 5.3% 7.0% 1.7% 0.4% 0.0% 0.1% 3.6% 0.7% 0.5% 0.0% 0.2% 1.7% 1.3% 0.9% 0.1% 1.4% 1.5% 0.7% 0.0% 2.7% 0.3% 0.9% 2.1% 1.4% 2005 0.7% 0.2% 1.6% 1.2% 0.2% 0.7% 8. TA = technical assistance.1% 0.8% 0. Table A10.2% 1.8% 1.9% 15.6% 0.3% 2010 1.8% 7.8% 3.2% 1.3% 1.8% 0.5% 7.7% 8.0% 1.5% 1.8% 1.0% 1.3% 0.1% 0.0% Country PRC India Viet Nam Papua New Guinea Pakistan Other MFF countries Afghanistan Armenia Azerbaijan Georgia Kazakhstan Uzbekistan Bangladesh Indonesia Mongolia 1.2% 0.2% 0.5% 0.2% 0.1% 1.4% 10.5% 2.0% 0.0% 3.7% 2002 1.3% 3.1% 0.1% 1.7% 13.7% 2. Source: Loan.3% 2009 0.8% 2004 1.3% 0.4% 0.0% 1.1% 1.7% 1.6% 1.7% 0.0% 4.3% 0.6% 3.4% 1.0% 1.5% 9.2% 0.4% 2.5% 3.1% 5.2% 1.1% 0.3% 4.0% 2008 0.0% 28.5% 1.3% 2008 1.6% 0.5% 1.1: Ratio of All TA Support to Loan and Grant Approvals 2000 1.0% 0.5% 0.3% 0.4% 2.6% 0.5% 3.4% 0.0% 0.3% 0.8% 0.2% 1.6% 6.2% 2010 0.4% 0.0% 2006 0.5% 2.2% MFF = multitranche financing facility.4% 1.3% 0.1% 6.8% 1.2% 0.7% 0.1% 2002 0.0% 28.8% 0.2% 3.6% 3.8% 0.2% 2.4% 2. Grants.5% 0.1% 3.4% 2001 1.2% 0.8% 2.3% 3.5% 0. .5% 2.8% 1.7% 0.5% 3.6% Total 2.7% 1.0% 0.5% 26.9% 5.7% 0.APPENDIX 10: TRENDS OF TECHNICAL ASSISTANCE AND PROGRAM LENDING SUPPORT Table A10.0% 2001 0.5% 0. and Equity Approvals Database.0% 1.5% 2007 1.1% 3.0% 1.6% 0.5% 4.9% 7.6% 0.4% 1.5% 0.5% 5.1% 0.7% 1.6% 1.4% 0.6% 2.1% 0.0% 0.3% 1.6% 3.2% 5.0% 1.6% 2009 1.4% 0.0% 2.6% 1.5% 0.2% 0.3% 6.6% 11.3% 0.9% 3.7% 3.9% 2.5% 2006 0.8% 0.

9% 2.7% 1.1% 0.3% 2007 0.5% 0.3% 2009 0.0% 8.5% 11.5% 1.7% 0.3% Country PRC India Viet Nam Papua New Guinea Pakistan Other MFF countries o Afghanistan Armenia Azerbaijan Georgia Kazakhstan Uzbekistan Bangladesh Indonesia Mongolia 4.3% 2003 0.0% 0.1% 0.9% 0.7% 7.9% 2.4% 5.1% 0.6% 0.9% 0.1% 0.Table A10.6% 0. Ltd.9% 0.3% 4.1% 2010 1.0% 1.3% 1.0% 0.0% 1.1% 2.7% 1.8% 1.6% 6.4% 0. and Equity Approvals Database.0% 4.2% 1.4: Approvals of Advisory Technical Assistance in Energy and Transport Sectors in India and Pakistan (1990–2011) TA Name Undertaking a Review of the Hydrocarbon Sector Operations Evaluation of Petroleum Exploration and Development Risk Contracts Safety and Environmental Management of ONGC's Activities Examination of Public Sector Oil Refining. Distribution and Marketing Activities Promotion of Private Sector Investment in Downstream Activities Regulatory Framework for the Gas Industry Preparation of Natural Gas Development Master Plan Hydrocarbon Exploration and Production Database and Archive System Tamil Nadu Electricity Board Operational Improvement Environment Monitoring and Pollution Control Training Workshop on Environmental Issues Related to Electric Power Generation Study of Bulk Power and Transmission Tariffs and Transmission Regulations Development of a Framework for Electricity Tariffs in Andhra Pradesh Institutional Strengthening of Indian Renewable Energy Development Agency. Technical Assistance. Preparation of a Power System Master Plan for the State of Gujarat Development of a Framework for Electricity Tariffs in Gujarat Review of Electricity Legislation and Regulations in Gujarat Approval Date 08-Nov-90 14-Nov-91 02-Jan-92 02-Jan-92 02-Jan-92 07-Dec-93 09-Dec-96 03-Apr-97 30-Aug-90 30-Aug-90 25-May-92 29-Sep-92 20-Dec-95 26-Sep-96 17-Dec-96 17-Dec-96 17-Dec-96 Approved Amount ($’000) 100 180 890 200 400 600 600 600 740 490 100 600 300 600 600 300 235 TA No.6% 0.5% 0.8% 2004 1.3% 0.9% 0.8% 0.1% 5.5% 2.7% 2.6% 3.3% 0. Source: Loan.0% 0.0% 1.3% 3.1% 2011 1.9% 0.2% 0.6% 1.6% 3. 1416 1598 1597 1645 1646 2008 2702 2775 1365 1366 1701 1756 2490 2648 2738 2739 2740 Country IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND Sector Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy 129 .9% 4.2% 2008 0.3% 0.9% 0.3% 0.1% 0.4% 0.4% 0.1% 1.2% 0.5% 1.3% 2.1% 0.7% 0.5% 2002 1.5% 1.6% 0. Trends of Technical Assistance and Program Lending Support Table A10.0% 2.9% 3.5% Total 0.2% 6.9% 0.7% 0.3% 18.5% 0.9% 1.2% 1.7% 0.6% 10.3% 1.8% 1.3% 4.3% 2.0% 2001 0.0% 8.9% 0.3: Ratio of ADTA Support to Loan and Grant Approvals 2000 1.6% 1.5% 2.4% 1.0% 0.8% ADTA = advisory technical assistance.0% 0.3% 2.3% 1.8% 3. Grants.6% 0.5% 0.6% 1.1% 4.1% 5.3% 0. PRC = People’s Republic of China.2% 0.7% 2.8% 2.5% 5.8% 1.4% 0.7% 1.4% 0.1% 0.0% 0.4% 0.1% 0.0% 1.5% 1.4% 4.9% 9.0% 3.2% 1.3% 0.2% 0.0% 1.4% 2005 0.0% 0.2% 0. MFF = multitranche financing facility.9% 2.5% 0.2% 1.3% 2.8% 1.1% 2006 0.7% 1.3% 0.9% 0.

Construction and Operation Road Construction Industry Study on Development and Implementation of MOST's Strategies for Deregulation and Policy Changes Road Safety Environmental Management of Road Projects Technical Standards of Highway Concrete Structures 29-Mar-90 29-Mar-90 27-Oct-92 12-Mar-97 29-Sep-97 05-Dec-91 05-Dec-91 05-Dec-91 19-Dec-96 19-Dec-02 30-Oct-90 30-Oct-90 30-Oct-90 27-Oct-92 29-Nov-93 29-Nov-93 29-Nov-93 Country IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND Sector Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Approval Date 17-Dec-96 17-Dec-96 07-Jan-98 24-Nov-99 28-Dec-99 13-Dec-00 13-Dec-00 13-Dec-00 14-Jun-02 14-Jun-02 05-Nov-02 24-Jan-03 10-Dec-03 10-Dec-03 17-Dec-04 11-Aug-05 16-Nov-07 04-Apr-08 13-Nov-08 26-Nov-08 02-Aug-11 Approved Amount ($’000) 580 375 1.214 600 400 600 100 1.000 400 700 500 1.050 560 325 800 500 760 500 340 670 210 240 350 1283 1284 1770 2768 2880 1620 1621 1622 2721 4053 1402 1403 1404 1771 2001 2002 2003 IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND IND Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport .700 900 24 20.000 600 600 50 450 400 150 150 500 1. 2741 2742 2980 3305 3380 3573 3574 3575 3882 3883 3972 4083 4241 4242 4496 4630 4992 7073 7172 7181 7073 TA Name Financial Management Support to Kheda & Rajkot Distribution Centers of the Gujarat Electricity Board Solicitation of Private Sector Implementation of the Chhara Combined Cycle Power Madhya Pradesh Power Sector Development Support to the Power Finance Corporation Private Sector Participation in Electricity Transmission Reorganization Plan for Gujarat Electricity Board Consumer Awareness and Participation in Power Sector Reforms Support to Gujarat Electricity Regulatory Commission Development of a Transfer Scheme for Madhya Pradesh Power Sector Reform Legal Support for Madhya Pradesh Power Sector Reform Strengthening Consumer and Stakeholder Communication for Madhya Pradesh Power Sector Reform Building the Capacity of Assam Electricity Regulatory Commission Reorganization of Assam State Electricity Board Institutional Development for Rural Electrification Capacity Building for Clean Development Mechanism Uttaranchal Power Sector Capacity Building Energy Efficiency Enhancement in the Power Generation Sector Developing the Power System Master Plan for Bihar Facilitating the Operations of the Energy Conservation Fund "Energy Smart" in Madhya Pradesh Capacity Building for Himachal Pradesh Power Sector Agencies Developing the Power System Master Plan for Bihar (Supplementary) All Operational and Financial Assistance for Bombay Ports Development of Ship Repair Facilities Planning and Management Advisory Services for Paradip Port Trust Ports Policy and Financing Opportunities Enhancement of India Ports Policy Implementation Enhancement of Operational Efficiency on Indian Railways Rationalization of Nonbulk General Cargo Traffic Improvement of Traffic Costing and Financial Management Reporting of Indian Railways Railway Sector Improvement Management Consulting Services to Indian Railways Pavement Management for National Highways Private Sector Participation in Expressway Financing.000 1.130 Appendix 10 TA No.000 600 1.588 1.

TA No. 22-Dec-99 25-May-00 20-Sep-01 05-Dec-02 18-Dec-03 29-Apr-05 23-Nov-05 12-Sep-06 31-May-07 18-Sep-08

Country

Sector

Approval Date

Approved Amount ($’000) 600 150 700 1,500 700 600 900 1,000 1,000 1,000 17,743

3361

IND

Transport

3445 3724 4013 4271

IND IND IND IND

Transport Transport Transport Transport

4013 4697 4836 4934 7130

IND IND IND IND IND IND

Transport Transport Transport Transport Transport Transport

1512 1616 1618 1619 2594 2809 3711 1447 1448 1625 1655 2162 2163 3409 3502

PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK

Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy Energy

TA Name Capacity Building for Contract Supervision and Management in the National Highways Authority of India Establishing a Public-Private Joint Venture for the West Bengal North-South Economic Corridor Development Enhancing the Corporate Finance Capability of National Highways Authority of India Institutional Strengthening and Capacity Building for Madhya Pradesh State Road Sector Development of High Density Corridors under the Public-Private Partnership Institutional Strengthening and Capacity Building for Madhya Pradesh State Road Sector (Supplementary) Development of Road Agencies in the North Eastern States Urban Transport Strategy Institutional Strengthening of Madhya Pradesh Public Works Department Institutional Strengthening of the Bihar Road Sector All Program for Safe Repair and Operation of the Gas Processing Plants Belonging to the Sui Southern Gas Company Hydrocarbon Sector Strategy Study Financial Restructuring and Management Strengthening of SSGC Environmental, Safety and Efficiency Improvement of SSGC's Operations Natural Gas Import Study Private Hydropower Policy Study Restructuring the Gas Sector Power and Institutional Study Development of a Management Information System for WAPDA Power Generation Coordination Improvement and Tariff Training KESC Organizational and Financial Restructuring Study KESC Restructuring and Privatization Study Demand-Side Management Study Capacity Building of the National Electric Power Regulatory Authority Support for Privatization of Karachi Electric Supply Corporation 15-Apr-91 20-Nov-91 03-Dec-91 03-Dec-91 26-Jun-96 11-Jun-97 29-Aug-01 20-Dec-90 20-Dec-90 02-Jan-92 13-Jan-92 22-Sep-94 22-Sep-94 06-Mar-00 22-Sep-00 20-Jun-03 17-Dec-04 14-Jul-05 23-Oct-06 17-Nov-06 01-Dec-06 25-Oct-07

100 600 860 680 600 100 1,000 788 415 585 75 300 90 1,000 1,000 600 150 150 150 950 800 2,000 12,993

Trends of Technical Assistance and Program Lending Support

4130 4500 4610 4852 4870

PAK PAK PAK PAK PAK

Energy Energy Energy Energy Energy

4881 4982

PAK PAK PAK

Energy Energy Energy

Institutional Capacity Building of the National Transmission and Despatch Company Limited Capacity Building of the Alternative Energy Development Board Operational Support to the Office of the Energy Advisor Formulation of Strategy for Development and Utilization of Coal Reserves at Thar and Badin Establishment and Commencement of Operations for the Central Power Purchasing Authority Renewable Energy Policy Formulation and Capacity Development of the Alternative Energy Development Board Integrated Energy Model All

131

132
Appendix 10

TA No. 1738 1938 1461 1870 2176 3675 3676 4221 4469 7008 TA Name Oil Terminal National Ports Master Plan and Management Study Ports Subsector Tariff Review Farm-to-Market Roads Private Sector Participation in Highway Financing, Construction and Operation Environmental Assessment Institutional Reform and Road Maintenance Financing Study Cross Border Development Road and Road Sector Assessment Study Development of the National Trade Corridor Highway Business Plan All

Country PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK PAK

Sector Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport Transport

Approval Date 24-Jul-92 24-Aug-93 07-Jan-91 21-Apr-93 29-Sep-94 03-Jul-01 03-Jul-01 20-Nov-03 09-Dec-04 10-Dec-07

Approved Amount ($’000) 900 100 105 475 50 150 500 150 500 2,930

IND = India, ONGC = Oil and Natural Gas Corporation, PAK = Pakistan, SSGC = Sui Southern Gas Company, TA = technical assistance. Source: Loan, Technical Assistance, Grants, and Equity Approvals Database.

TABLE A10.5: Program Loan Approvals in Energy and Transport Sectors in India and Pakistan
Loan Name Hydrocarbon Sector Program Gujarat Power Sector Development Madhya Pradesh Power Sector Development Program State Power Sector Reform Assam Power Sector Development Program Madhya Pradesh State Roads Sector Development Program Energy Sector Restructuring Program Energy Sector Restructuring Program Capacity Enhancement in the Energy Sector Road Sector Development Program Approval Date 17-Dec-91 13-Dec-00 06-Dec-01 12-Dec-02 10-Dec-03 05-Dec-02 14-Dec-00 14-Dec-00 14-Dec-00 19-Dec-01 Approved Amount ($ million) 250 150 150 150 150 30 300 50 5 50 Original Closing Date 30-Jun-95 31-Dec-02 28-Nov-03 30-Jun-08 30-Jun-05 30-Jun-05 30-Jun-04 30-Jun-04 30-Jun-04 30-Jun-07 Actual Closing Date 18-Sep-97 10-Dec-03 28-Nov-03 05-Sep-08 28-Jun-05 29-Mar-06 19-Jan-04 19-Dec-00 20-Jun-04 30-Jun-07

Loan # 1148 1804 1868 1968 2036 1958 1807 1808 1809 1891

Country IND IND IND IND IND IND PAK PAK PAK PAK

Sector Energy Energy Energy Energy Energy Transport Energy Energy Energy Transport

IND = India, PAK = Pakistan. Source: Loan, Technical Assistance, Grants, and Equity Approvals Database.

Trends of Technical Assistance and Program Lending Support

133

. which will be implemented under each tranche Tranche 1 Grant Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan The MFF provides FIL. Tranche 1 Grant Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan Under Program Management Facility component of the MFF. Tranche 1 Loan Tranche 1 Loan Not identified in the RRP and PFRRs ADTA The TA is not attached to the program. the sub-borrowers prepare the subprojects. Tranche 1 Loan EA's resources EPP sub-borrowers propose subprojects that will be reviewed by GFTC and EPP-PMO (this is a FIL) Tranche 2: TA Loan 2178 Subsequent tranches: Investment program support component of the MFF Tranche 1 Loan PPTA (TA Cluster) Tranche 1 Loan Tranche 1 Loan SSTs were used to finance existing ADB road projects only. Tranche 1 Loan Tranche 1 Loan Not identified in the RRP The MFF provides FIL Tranche 1 Loan Tranche 1 Loan The MFF provides subloans.APPENDIX 11: FINANCING SOURCES FOR PREPARATION OF SECOND AND SUBSEQUENT TRANCHES MFF No. The TA is not attached to the program. Tranche 1 Loan Tranche 1 Loan Implementation support component under each tranche Tranche 1 Loan The MFF provides FIL.a 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Country IND PAK IND BAN PAK IND PAK PRC PAK IND IND IND VIE AZE IND PAK IND IND IND PRC PAK IND IND KAZ AFG AFG INO PAK PNG IND PAK AZE AFG GEO ARM UZB IND IND PNG PRC VIE UZB GEO IND Preparation of Second and Subsequent Tranches Capacity development component of each tranche of the MFF EA's resources Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan Prefeasibility report for Tranche 2 was prepared under an ADTA. the sub-borrowers prepare the subprojects.

RRP = report and recommendation of the President. Each contract package is time-sliced in line with the indicative tranching plan. Technical Assistance. PFRR = periodic financing request report. a Refer to Table A3. MFF = multitranche financing facility. EA = executing agency. and Equity Approvals. PPTA = project preparatory technical assistance. piggy-backed to the MFF) PPTA for the MFF Tranche 1 Loan (or. . FIL = financial intermediary loan. SST = second and subsequent tranche.a 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 135 Country IND IND KAZ KAZ IND IND PNG VIE VIE VIE GEO ARM IND IND UZB IND Preparation of Second and Subsequent Tranches Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan The MFF provides FIL Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan PPTA for the MFF (The only physical output is in Tranche 2 only) PPTA for the MFF and TA loan and grants not attached to the MFF Various PPTAs not attached to the MFF Tranche 1 Loan Tranche 1 Loan There was no information on how the subprojects under the two tranches were prepared. Grant. under the Project Implementation component of the MFF) 61 62 63 64 65 66 UZB IND AFG IND MON VIE ADTA = advisory technical assistance. The MFF provides FIL CDTA attached to the MFF Tranche 1 Grant Tranche 1 Loan CDTA (for safeguards compliance.1 for the approved MFF investment programs. PPTA for the MFF and sector-wide CDTA Tranche 1 Loan PPTA for the MFF The MFF will finance slices of long-term contract packages. Sources: Asian Development Bank database on Loan. CDTA = capacity development technical assistance.Financing Sources for Preparation of Second and Subsequent Tranches MFF No.

37066 37066 37066 37066 37066 37559 37559 37559 37139 37139 37139 32234 32234 22-Jul-11 Y Y Y 04-Oct-11 07-Jun-11 22-Apr-09 Y Y 04-Aug-11 04-Aug-11 2006 2006 2010 2007 2010 2006 2006 2007 2011 2006 2008 2006 2006 2011 2007 2008 2007 2007 2007 2007 2009 2010 5 5 5 6 6 7 7 7 7 8 8 9 9 9 10 10 11 11 11 11 11 11 OCR ADF OCR OCR OCR OCR ADF OCR OCR OCR OCR OCR ADF ADF OCR OCR OCR OCR OCR OCR OCR OCR PAK PAK PAK IND IND PAK PAK PAK PAK PRC PRC PAK PAK PAK IND IND IND IND IND IND IND IND Loan Number 2248 2414 2445 2535 2651 2210 2231 2540 2309 2498 2502 2316 2317 2845 2286 2287 2726 (Guarantee) 2312 2638 2289 2290 2396 2846 2296 2408 2299 2300 2841 2308 2458 2323 2324 2346 2347 2520 2732 34339 34339 34339 38254 38254 37192 37192 37192 37193 39652 39652 37231 37231 37231 38255 38255 32298 32298 32298 32298 32298 32298 CWEN CWEN CWEN SAUW SAUW CWEN CWEN CWEN CWEN PRCM PRCM PRM PRM PRM INRM INRM INRM INRM INRM INRM INRM INRM 1 1 2 1 2 1 1 2 3 1 2 1 1 2 1 2 1 2 3 4 5 6 Y Y 22-Jun-10 31-Oct-07 .a 1 1 1 1 1 2 2 2 3 3 3 4 4 Country IND IND IND IND IND PAK PAK PAK IND IND IND BAN BAN Division SATC SATC SATC SATC SATC CWTC CWTC CWTC SAEN SAEN SAEN SATC SATC Fund OCR OCR OCR OCR OCR ADF OCR OCR OCR OCR OCR OCR ADF Project No.APPENDIX 12: MAJOR AND MINOR CHANGES APPROVED IN MULTITRANCHE FINANCING FACILITY TRANCHES Table A12: Major and Minor Changes Approved in MFF Tranches Tranches (LFIS) 1 2 3 4 5 Y Y 6-Oct-11 Any Major Change (Y/N) Y Y Any Minor Change (Y/N) Approval Date of Minor Change Approval Date of Major Change 29-Oct-08 29-Oct-08 21-Apr-09 Year 2006 2008 2008 2009 2010 2006 2006 2009 2007 2008 2009 2007 2007 1 2 1 2 3 1 1 Y Y 26-Jul-11 MFF No.

41116 39595 39595 39176 39176 39176 39176 40031 40031 40031 40075 40075 40655 40655 38272 38272 39630 39630 39630 39653 39653 39653 38456 38456 38456 38411 41627 41627 41627 41121 41121 41121 41121 42095 42095 42094 42094 Y 15-Feb-12 Y Y Y Y 37049 37049 3704908 37220 Y Y Y 03-Feb-11 14-Dec-11 11-May-11 02-Dec-11 09-May-11 09-May-11 05-Aug-10 Division INRM * * CWTC CWTC CWTC CWTC INRM INRM SAUW CWTC CWTC SAPF SAPF INRM INRM INRM INRM SAEN PRCM PRCM EAEN PRM PRM CWEN SAER INRM INRM INRM CWTC CWTC CWTC CWTC AFRM CWTC AFRM AFRM AFRM IRM IRM SEER CWUW Major and Minor Changes Approved in Multitranche Financing Facility Tranches Year 2007 2007 2009 2007 2007 2008 2011 2007 2009 2010 2007 2007 2007 2009 2008 2008 2008 2009 2011 2008 2009 2011 2008 2008 2010 2008 2008 2009 2010 2008 2009 2010 2011 2008 2010 2008 2009 2011 2008 2008 2010 2008 MFF No.Any Major Change (Y/N) Any Minor Change (Y/N) Y Y Y Y Y Y 18-Apr-08 07-Jan-11 10-Nov-08 01-Jun-10 05-Dec-11 15-Jun-11 Approval Date of Minor Change 22-Jun-10 Approval Date of Major Change Y Y 30-May-08 Y 13-Jul-10 Y 25-Mar-11 Project No.a 12 13 13 14 14 14 14 15 15 15 16 16 17 17 18 18 19 19 19 20 20 20 21 21 21 22 23 23 23 24 24 24 24 25 25 26 26 26 27 27 27 28 Country IND VIE VIE AZE AZE AZE AZE IND IND IND PAK PAK IND IND IND IND IND IND IND PRC PRC PRC PAK PAK PAK IND IND IND IND KAZ KAZ KAZ KAZ AFG AFG AFG AFG AFG INO INO INO PAK Loan Number 2331 2353 2610 2354 2355 2433 2831 2366 2506 2725 2400 2401 2404 2509 2410 2797 2415 2510 2823 2426 2611 2773 2438 2439 2727 2444 2461 2596 2687 2503 2562 2697 2735 135 244 134 184 280 2500 2501 216 2499 Fund OCR OCR OCR OCR ADF OCR OCR OCR OCR OCR OCR ADF OCR OCR OCR OCR OCR OCR OCR OCR OCR OCR OCR ADF OCR OCR OCR OCR OCR OCR OCR OCR OCR ADF grant ADF grant ADF grant ADF grant ADF grant OCR ADF GEF Grant ADF Tranches (LFIS) 1 1 2 1 1 2 3 1 2 3 1 1 1 2 1 2 1 2 3 1 2 3 1 1 2 1 1 2 3 1 2 3 4 1 2 1 2 3 1 1 2 1 137 .

a 29 29 30 30 31 31 32 32 33 33 34 34 34 35 35 36 36 36 37 37 37 38 38 38 39 39 39 40 40 40 41 41 42 42 43 44 45 45 46 46 47 Country PNG PNG IND IND PAK PAK AZE AZE AFG AFG GEO GEO GEO ARM ARM UZB UZB UZB IND IND IND IND IND IND PNG PNG PNG PRC PRC PRC VIE VIE UZB UZB GEO IND IND IND IND IND KAZ Loan Number 2496 2497 2528 2834 2552 2553 2571 2842 167 170 2560 2716 2843 2561 2729 2564 2633 2825 2586 2717 2822 2592 2677 2800 2588 2589 2590 2605 2724 2765 2613 2614 2635 2746 2655 2660 2669 2837 2676 2833 2728 Fund ADF ADF OCR OCR OCR ADF OCR OCR ADF grant UK Grant ADF OCR OCR ADF OCR ADF ADF ADF OCR OCR OCR OCR OCR OCR OCR ADF ADF OCR OCR OCR OCR ADF ADF OCR ADF OCR OCR OCR OCR OCR OCR Project No.138 Tranches (LFIS) 1 1 1 Y Y Y Y 18-Apr-10 16-May-11 19-Aug-10 11-Apr-11 Division PNRM PNRM SAUW SAUW CWEN CWEN CWUW CWUW Any Major Change (Y/N) Any Minor Change (Y/N) Approval Date of Minor Change Approval Date of Major Change Appendix 12 Y Y 26-Aug-10 11-Oct-11 Y Y Y 30-Mar-10 30-Mar-10 30-Mar-10 Year 2008 2008 2009 2011 2009 2009 2009 2011 2009 2009 2009 2010 2011 2009 2010 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2009 2009 2009 2010 2011 2010 2010 2010 2011 2010 2010 2010 2011 2010 2011 2010 CWTC CWTC CWTC CWTC CWTC CWUW CWUW CWUW SAPF SAPF SAPF SAEN SAEN SAEN PNRM PNRM PNRM EATC EATC EATC SEPF SEPF CWTC CWTC CWUW ** SAER SAER INRM INRM CWTC Y Y 1 1 1 2 1 1 1 2 3 1 2 1 2 3 1 2 3 1 2 3 1 1 1 1 2 3 1 1 1 2 1 1 1 2 1 2 1 07-Mar-12 27-Jul-11 MFF No. 40173 40173 35290 35290 42051 42051 42408 42408 42091 42091 41122 41122 41122 42145 42145 42489 42489 42489 41036 41036 41036 41614 41614 41615 43141 43141 43141 43332 43332 43332 39538 39538 42107 42108 42414 41598 37091 37092 40648 40649 43439 .

ARM = Armenia. IND = India. BAN = Bangladesh. IRM = Indonesia resident mission. SAEN = Energy division. Southeast Asia Department. PRCM = People’s Republic of China resident mission. East Asia Department. South Asia Department. and Equity Approvals (LTA) of COSO. and Agriculture division. AZE = Azerbaijan. Energy and Natural Resources divisions. and Agriculture division. South Asia Department. CWEN = Energy and Natural Resources division. South Asia Department. SAER = Environment. OCR = ordinary capital resources.Any Major Change (Y/N) Any Minor Change (Y/N) Approval Date of Minor Change Approval Date of Major Change Y 02-Feb-11 Project No. Central and West Asia Department. VIE = Viet Nam. Grant. PRC = People’s Republic of China. GEO = Georgia. MFF 0063 was sourced from Loan. PAK = Pakistan. and Equity Approvals. SEUW = Urban Development and Water division. GEF = Global Environment Facility. *** = in MFF 51 is Transport. SEEN = Energy division.1 for the approved MFF investment programs. and Trade division. Central and West Asia Department. Financial Sector. a Refer to Table A3. SEER = Environment. PNG = Papua New Guinea. Southeast Asia Department. Natural Resources. South Asia Department. Y = yes. CWPF = Public Management. Grant. Source: Asian Development Bank database on Loan. Technical Assistance. UK = United Kingdom. Natural Resources. 44060 40156 38412 41504 41504 39500 41414 42415 43405 43405 42417 43467 43467 37143 44483 36330 44318 43464 Y 02-Mar-12 Y 1 1 1 08-Dec-11 42265 41193 42039 Division CWPF SAER SAER *** *** SETC SETC SEUW CWUW CWUW CWUW SAEN SAEN SATC CWTC SATC CWPF SAEN CWTC SAUW EATC SEEN Year 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 MFF No. PNRM = Papua New Guinea resident mission. INRM = India resident mission. EATC = Transport and Communications division. SETC = Transport and Communications division. AFRM = Afghanistan resident mission. South Asia Department. Southeast. 139 . and Trade. SAPF = Public Management. ** = MFF 44 is Not Allocated. KAZ = Kazakhstan. LFIS = loan financial information system. AFG = Afghanistan. Central and West Asia Department . CWTC = Transport and Communications division. Central and West Asia Department. SATC = Transport and Communications division. SAUW = Urban Development and Water division. and Trade division. MFF = multitranche financing facility. ADF = Asian Development Fund. Financial Sector. CWUW = Urban Development and Water division. Note: Unless otherwise stated. N = no. TA.a 48 49 50 51 51 52 53 54 55 55 56 57 57 58 59 60 61 62 63 64 65 66 Country KAZ IND IND PNG PNG VIE VIE VIE GEO GEO ARM IND IND IND UZB IND UZB IND AFG IND MON VIE Loan Number 2689 2679 2684 2713 2714 2731 2730 2754 2749 2807 2752 2764 2830 2770 2772 2793 2775 2794 261 2806 2847 2848 Fund OCR OCR OCR OCR ADF OCR OCR OCR ADF ADF ADF OCR OCR OCR OCR OCR OCR OCR ADF OCR ADF OCR Tranches (LFIS) 1 1 1 1 1 1 1 1 1 2 1 1 2 1 1 1 1 1 Major and Minor Changes Approved in Multitranche Financing Facility Tranches * = in MFF 13 is Energy and Water divisions. SEPF = Public Management. Southeast Asia Department. MON = Mongolia. Southeast Asia Department. Financial Sector. all information in the table are from LFIS. UZB = Uzbekistan.

75.9. Such financial covenants normally deal with accounts receivables. Safeguards. This covers documentation requirements for environmental (ENV). SDO = original/projected disbursement curve. RES.9. . SCO = original/projected contract award curve. RES.9. and IP covenants are not complied with. SDA = actual disbursement curve.9. then “at risk” Disbursements Financial Management.9. resettlement (RES). and IP covenants are not complied with.APPENDIX 13: TRANCHE PERFORMANCE RATINGS Criteria Technical Rating Are problems (such as key project conditions. as per ADB’s safeguard policy. then “potential problem” >=3 ENV. and IP covenants are not complied with. then “at risk” If: o 0 or 1 financial covenants are not complied with.75.” This can be derived from LFIS If: o SCA/SCO >= 0.7 but <0. then “on track” 2 ENV. and indigenous peoples (IP) safeguards. then “potential problem” o SDA/SDO <0. online billing and collection systems. then “potential problem” o >=3 financial covenants are not complied with. then “on track” o SDA/SDO >=0.) identified by supervision consultants and/or ADB review missions being addressed? Contract Awards Rating system Let total number of problems be “N” Let total number of problems being addressed be “n” If: o n/N >= 0. then “on track” o n/N >= 0. PAM = project administration manual. etc. IP = indigenous peoples. LFIS = loan financial information system. this reflects a count of number of financial and related covenants that are not complied with. etc. Basically.9.7. RES = resettlement. then “at risk” Let original/projected disbursement curve (from effectiveness to closing) be denoted by “SDO. computerized accounting and MIS. If: o o o 0 or 1 ENV. SCA = actual contract award curve.” This can be derived from PAM Let actual disbursement curve (from effectiveness to closing) be denoted by “SDA.” This can be derived from PAM Let actual contract award curve (from effectiveness to closing) be denoted by “SCA. consistency of internal controls with international standards. RES.” This can be derived from LFIS If: o SDA/SDO >= 0. implementation arrangements.75 but <0. then “at risk” Let original/projected contract award curve (from effectiveness to closing) be denoted by “SCO. then “at risk” ENV = environment. then “on track” o 2 financial covenants are not complied with. Source: Independent Evaluation Department.75 but <0. then “potential problem” o n/N < 0. then “potential problem” o SCA/SCO <0. cost overruns. then “on track” o SCA/SCO >=0.

Despite the region’s many successes. equity investments. including 48 from the region. loans. The study also provides insights into the future design of multitranche financing facility interventions. Contact Information Independent Evaluation at the Asian Development Bank 6 ADB Avenue. It contributes to development effectiveness by providing feedback on performance and through evaluation lessons. grants. ADB is owned by 67 members. and regional integration. by considering efficiency gains or cost reductions as well as gains in development effectiveness. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Its main instruments for helping its developing member countries are policy dialogue.org/evaluation Email: evaluation@adb. and technical assistance.adb. About the Independent Evaluation at Asian Development Bank The Independent Evaluation Department evaluates the policies. The evaluation reviews whether lessons or initial outcomes before it was mainstreamed led to any changes in policy for the facility or operating requirements to improve its effectiveness. strategies. ADB is committed to reducing poverty through inclusive economic growth. and special concerns of the Asian Development Bank relating to organizational and operational effectiveness.Real-time Evaluation Study of the Multitranche Financing Facility This evaluation examines the costs and benefits associated with the multitranche financing facility modality. guarantees. with 903 million struggling on less than $1. Based in Manila. environmentally sustainable growth.org Telephone: (63-2) 632 4100 Fax: (63-2) 636 2161 Printed on recycled paper .25 a day. Mandaluyong City Philippines 1550 www. it remains home to two-thirds of the world’s poor: 1. operations. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty.8 billion people who live on less than $2 a day.

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