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

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

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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Regions and Countries C. Improved Organizational Effectiveness C. Guidance on the Multitranche Financing Facility modality B. Evaluation Methodology Chapter 2: The Portfolio A. Objectives D. ADB’s Funding Sources E. Cofinancing D. Approvals B. Long-term Support to Clients B. Developing Member Country Perspectives B. Peer Review D. Flexibility Aspects Chapter 5: Quality Assessment and Review A. Due Diligence and Viability Analysis C. Monitoring and Reporting Arrangements Chapter 6: Implications for Operations A. Oversight.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. 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 . Background and Rationale B. Instruments Chapter 3: Expected Benefits A. Project Readiness E. Justification of the Multitranche Financing Facility modality B. About the Multitranche Financing Facility C. ADB Support for Project Preparation D. Study Period E. Decision-making filters C. Reduced Commitment Charges Chapter 4: The Working of the Modality A.

Chapter 7: Key Findings. Key Findings B. 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 . and Recommendations A. 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. Lessons C. Lessons.

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

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

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. on the basis of its attractiveness to clients as well as its potential impact on development effectiveness when implemented well. Within such a forward looking framework. . the review stresses recommendations for strong action to direct the instrument towards enhancing the development impact of the operations.

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

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

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

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

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

The original guidance given implied the need for good institutional capacities and policy frameworks. whether or not they are in an environmentally or socially sensitive category. Up-front Due Diligence Up-front assessments of MFF prerequisites ought to be comprehensive and rigorous. and ADB reviews safeguards requirements during the early stages of tranche project preparation. as this study learned. the road map did not have a detailed assessment of physical and nonphysical investments. As ADB often interfaces closely with consultants and executing agencies when PFRs are being prepared. ADB staff are expected to comment on technical matters during this 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. At the initial design stage. In other cases. and noted that (i) feedback on technical design or cost-effective technical alternatives seems to be an exception. including bottlenecks. ADB also supports safeguards capacity development in a large number of approved MFF programs. In some cases that were investigated. the appraisal cost estimate of a major road project was made without finalizing the highway alignment. and competition. risks. In some cases. Given that ADB promotes diligent safeguard implementation and the capacity of many executing agencies is lacking in this regard. Nonphysical Investment components need to be designed on the basis of upfront institutional capacity assessments. such feedback is often via email. sustainability. For instance. Weak institutional capacities that are very likely the underlying reason for such occurrences need to be addressed up front. the policy framework did not focus on the main challenges of the particular sector. the available documentation (RRPs. MFFs in some Central-West Asian countries). for a transport sector MFF in Azerbaijan. Project-level Due Diligence Safeguards due diligence is conducted for all projects. Most MFFs have allocated and incurred nonphysical expenditures (such as for capacity development) only in the first tranche. Sector strategies. technical due diligence seems not to have been conducted rigorously. which meant that the stated road map could not be used to filter investment opportunities.xiv Real-Time Evaluation Study of Multitranche Financing Facility orientation of the MFF. IED could access such records only for some MFFs. such as efficiency. 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. FFAs. 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. and records are not kept systematically. 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. . However. even though the MFF modality allows for this. 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. cost recovery. and mitigation measures. road maps. concept papers for . However. and only a few MFFs have done so in second and subsequent tranches.

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

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

The adequacy of such due diligence and preparation must be reconfirmed through monitoring arrangements in subsequent recommendations. Towards this goal. there needs to be a realistic discussion on institutional capacities and the suitability and stability of a policy framework. and on the basis of the study’s findings and lessons. Owing to concerns that arise because the MFF modality has been amenable to diversified uses and interpretations beyond what was originally envisaged. recommendation 2 suggests a way to ascertain that the provisions of the Project Administration Instructions of December 2011 are complied with. and the need for ADB to maintain its ability to respond to crisis situations. Similarly. Recommendation 3 seeks a correction of the midterm review and monitoring system. Recommendation 1 is consistent with the key MFF requirements articulated in the internal Staff Instructions of July 2011. 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. and the design of physical investment programs that conform to MFF prerequisites.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 5 deals with issues related to access to data and documentation. To ensure development effectiveness. however. as well as results-based financing and other modalities currently under consideration). which is based on stand-alone modes rather than a long-term multitranche facility. 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. 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 suggests a way forward to ensure that such requirements are met. which could be integrated with the country programming strategy formulation process. such as the MFF prerequisites. Recommendation 4 is in recognition of the crowding-out effects. To facilitate adherence to other provisions of the Operations Manual. In responding to the Board request. The five recommendations presented below build on the lessons learnt and are intended to strengthen the MFF modality. 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). strong actions are recommended to improve the development effectiveness of upcoming MFF programs and tranches. this evaluation recommends that Management continue to address the weaknesses in the MFF approval and implementation processes that have been experienced thus far. In recognition of the MFF’s potential advantages and the fact that the instrument is appreciated for its flexibility by clients. 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. 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. provided a number of prerequisites are adhered to.

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

25. As recognized by the SES. General Comments 1. 178). 81. 75.Management Response On 15 January 2013. inferring that ADB is approvals driven (Executive Summary). Foreword. However. MFFs were developed to provide DMC clients with a greater choice of lending modalities to better address their needs and ii. The important role of the MFF in making ADB more relevant through innovation of new products is well recognized. . data was requested but not available. We believe that the Report’s negative and unbalanced tone fails to fairly reflect these aspects. 4. 71. 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. As discussed below. The MFF is an innovative and demand driven financing modality developed by ADB to better address DMC client needs. incorrect assumptions are presented as conclusive: i. The Report implies that MFF documentation may have been withheld by repeatedly stating adequate data is incomplete or not readily available or accessible (e. the Director General. or data was available but not reviewed by IED. It is not clear whether documentation was requested from ADB staff and available but not provided or withheld. this unique lending modality enables longer term engagement (policy and capacity development) with DMC clients. The Report incorrectly implies that MFFs were designed to expand ADB lending.g. Since no MFFs were closed during the Report period and only a few of tranche completion reports have been prepared (Paras 12 and 170). we agree with the need for further evaluation of effectiveness at an appropriate time after a critical number of MFF projects are complete. including those in fragile and conflict-affected situations as appropriate. The MFF provides greater flexibility in design and a longer term platform for cofinancing partnerships. These features enable a more customized approach to address the needs of different DMC clients and have led to increased demand for MFFs. 3. 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. Paras 20. Executive Summary. While the Report refers to some of the benefits of the MFF. 2. 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). This is not correct. the MFF is a relatively new instrument and still evolving. received the following response from the Managing Director General on behalf of the Management: I. Independent Evaluation Department.

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

6. Many specific recommendations disregard recent MFF governance improvements under the new Staff Instructions. The main drivers of growth in lending volumes in 2009 and 2010 were programs loans and counter cyclical support. The Report indicates that ADB’s rapid increase in lending volumes after 2009 was based in part on the MFF modality (Executive Summary). The example given in Box 5 is on the energy and transport sectors in Pakistan. Report findings also ignore relevant information. . while other sections of the report (Para 43) confirm that MFFs provide clients with “the comfort of longer term support” than other modalities. 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). There is a disconnect between Report conclusions and analysis/data. v. . and states that findings are “sufficiently robust” (Foreword). including views from unnamed sources. We believe that such findings should have been anchored on more facts. 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. The Report questions the expected savings in staff time for processing under the MFF (Executive Summary. The GCI V enabled ADB to meet this demand. 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). II. co-financing is mentioned). iii. i. Comments on Specific Recommendations 7. raising questions about the credibility of the findings. Instead the Report relies on anecdotal evidence. If adequate information is not available the findings cannot be sufficiently robust and provide adequate grounds for evaluation. This statement is incorrect. 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.Management Response most MFFs (Para 20). The Report questions whether MFFs allow clients to plan more systemically and mobilize co-financing for investment plans or individual projects. Specific recommendations under the Report are very general and based on good practices for the processing of loan financing modalities. and program policy support that was provided earlier has been discontinued in sectors where MFFs have penetrated the most (Para 79). the Report states that the envisaged opportunities for policy dialogue have not been realized. and greater opportunities for co-financing (Para 56 notes that in 48 of 68 MFFs. xxi ii. The two points are inconsistent. iv.

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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.

381-12) on 17 January 2013. and tranche level changes have often been classified as minor at least prior to the clarification issued in late 2011. (ii) MFFs have been used flexibly over long utilization periods. Advantages of MFF and perceived gaps. in order to compare different modalities and justify . an innovative facility favored by DMCs because of its greater flexibility.Chair’s Summary: Development Effectiveness Committee The Development Effectiveness Committee considered the Independent Evaluation Department report. 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. 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. technical. namely: (i) the evidence is unclear in regard to expected efficiency on staff processing time. The report found that the MFF’s flexibility is its most attractive feature. and (iii) the role of the panel of experts which serves as independent confirmation that eligibility requirements are met. The report flagged some key observations. enabling clients to adjust their project pipeline without need for additional approval from top decision makers. 3. DEC members agreed that the MFF is 2. (iii) MFF prerequisites. DEC discussed (i) the MFF’s approval process noting that the concept paper is signed off by a Vice President. DEC welcomed the real-time evaluation study of the multitranche financing facility (MFF) which found the facility increasingly favored by developing member countries (DMCs). The report also highlighted MFF’s potential to crowd out other lending and diminish crisis response operations. noting that the advantages and disadvantages of mainstreaming were presented to the Board and the Board had favored the move to mainstream the modality. Some DEC members suggested that Management may consider appending the comparative matrix in the report and recommendation to the President. 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. The following is the Chair’s summary of the Committee discussion: 1. Special Evaluation Study: Real-Time Evaluation Study of the Multitranche Financing Facility (IN. (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. DEC discussed whether there was a comprehensive assessment done before the decision to mainstream MFF. and economic due diligence was less rigorous. Mainstreaming MFF. Some DEC members inquired about fragile and conflict afflicted countries where governments and priorities could change often.

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

CHAPTER 1 Evaluation Focus 1. Manila. 5 and (ii) free up ADB staff time spent on processing for Board approval.4 The MFF aimed to strengthen ADB’s capacity to mobilize development finance 3. the evaluation focuses on the requirements that were applicable to the modality and the implementation of these requirements and procedures. and a broader range of financial instruments and modalities. In August 2005. New York. Innovative and Efficiency Initiative: Pilot Financing Instruments and Modalities. 2005. 2008.6 and recommended an evaluation of the performance and effectiveness of the modality to be conducted after 3–4 years. making ADB more compatible with existing and evolving market practices. Manila. increased flexibility. a modality introduced in the Asian Development Bank (ADB) in 2005. 2000. 4. Sufficient time has not elapsed to fully evaluate its development outcomes in client countries. United Nations. 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. the Board approved in July 2008 the mainstreaming of the MFF. In line with this strategy. 6 . 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. a more appropriate skill base. the introduction of the MFF. and to meet the large financing gaps that persisted in many DMCs and that posed challenges to them for achieving the Millennium Development Goals. 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. Background and Rationale 2. Therefore. Manila. Manila. the Board therefore approved the proposal to pilot test the MFF. ADB. 2001. streamlined processes. This report provides a real-time evaluation of the multitranche financing facility (MFF). and helping ADB to work better with other development partners. 3 ADB in 2005 launched the innovative and efficiency initiative (IEI). 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). Mainstreaming the Multitranche Financing Facility. as preconditions that need to met to enable the achievement of development effectiveness. ADB. United Nations Millennium Declaration. and savings on commitment charges. Moving the Poverty Reduction Agenda Forward in Asia and the Pacific: The Long-Term Strategic Framework of the Asian Development Bank (2001–2015). among other instruments and modalities. 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. by enhancing the flexibility and client orientation of its financial products. ADB. 2001. Medium-Term Strategy. It enabled ADB to complement modes of assistance of other development partners and accelerate the approval process. Following a 3-year pilot period. A. which proposed.

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. As originally conceptualized. (iv) assuring clients that ADB is a committed partner for their long-term financing plans in specific sectors.2 Real-Time Evaluation Study of the Multitranche Financing Facility B. Only approved loans under the MFF umbrella enter the balance sheets. ADB’s Treasury Department models projected PFRs beyond the work program and budget framework (WPBF) period. and thereby encouraging cofinancing. . (iii) increasing operational flexibility in response to client needs. road map. However. a separate loan agreement is signed. these are collectively referred to as the MFF prerequisites. 8. 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. in its own financial projections. With the MFF facility. Since 2005. This includes the strategic context. investment program. over a time frame of up to 10 years or even more. that avoids repetitive processing tasks. such as (i) a series of similar projects with cost over-run financing included in some tranches. (vi) reducing commitment fees for the clients. Such a standby letter of credit is formalized through a framework financing agreement (FFA) between ADB and the client. 6. and financing plan accompanied by suitable undertakings or commitments. and allows staff to spend more time on implementation administration and management. The individual loans are approved and signed in response to specific requests (referred to as periodic financing requests [PFRs]) received from the client. and (ii) similar projects but with different executing agencies. and (vii) registering contingent liability only to the extent loans are signed in response to PFRs received from clients. the MFF modality has been applied to increasingly varied situations. 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. 7. Appendix 4 of the IEI Document (footnote 4). About the Multitranche Financing Facility MFF modality is unique among the lending modalities offered by development partners 5. 7 Refer to para 9.” The FFA also spells out a long-term planning perspective for the particular sector the MFF is supporting. Although the MFF modality was anticipated to be applicable to large and stand-alone projects with discrete and sequential components. (ii) allowing ADB and clients to engage in constructive policy dialogue. for each such loan. capacity development. reduces the need for separate Board approvals except for the facility as a whole and for the first tranche. ADB can thus support longer term investment programs that are structured and staggered into multiple loans under the umbrella of the MFF commitment. With the FFA. 7 However. the MFF modality embodies certain major benefits over existing lending modalities. it is especially suited to sector investment programs. The MFF is neither a balance-sheet commitment nor an off-balance-sheet item for the ADB and its client. reduces staff time for processing. and improving governance. (v) facilitating the preparation of a series of investments with planning for safeguards and other concerns. These include (i) financing a series of projects or phases. 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). 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. and/or (iii) projects that cut across subsectors. policy framework.

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

Components of the Real-Time Evaluation 15. and specific questions pertaining to them are provided in Appendix 2. as well as the implications for ADB’s policy dialogue and the ability to respond to emergency situations. as well as reporting and oversight arrangements. 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.5-year period after mainstreaming. 1. how they are deriving benefit from it. 19. The extent to which such premises have held true thus far is examined in chapter 3. The main chapters of this study will discuss the MFF portfolio. 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 study period begins with the proposal to introduce the MFF (mid-2005) until December 2011. was designed to support clients’ long-term sector plans through a long-term commitment. Study Period 13.4 Real-Time Evaluation Study of the Multitranche Financing Facility D. and seasonal bunching of MFF and tranche approvals are also examined in chapter 2. How DMC governments and 18. MFF modality. lessons and recommendations related to these components and chapters are pulled together in chapter 7. Examining the MFF portfolio. The evaluation considers the merits and demerits of a programmatic approach and promise of long-term assistance to DMC clients. and development effectiveness. The components of the evaluation methodology are described in this chapter. insufficient clarity of criteria and decision-making filters for use of the modality. and increasing ADB’s organizational effectiveness (through reduced transaction costs. headroom. additionality of the MFF modality. While all such . 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. This comprises two sub-periods. including reduced ADB and client staff time in preparation and processing of investment interventions). clients perceive the benefits of the MFF modality. the working of the modality. a quality assessment and review. and their decision-making processes for MFF and tranche approvals are discussed in chapter 6. 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. minimizing the impact of borrowing from ADB or committing to borrow from ADB. and a 3. Examining the premise on which MFF was piloted and mainstreamed: The MFF 16. The number of MFFs approved during the two sub-periods was 20 and 46. a nearly 3-year span up to the mainstreaming in mid-2008. Evaluation Methodology 14. Examining the working of the MFF modality: After the mainstreaming of the 17. the Board has continued to express concerns regarding the increasing size of the MFF portfolio. and implications for operations. E. certain changes in documentation and other requirements have been instituted from time to time. respectively. Issues related to funding sources. In response. the expected benefits.

2. Triangulation of information at various levels gives the evaluation confidence about its key findings. The information so gathered forms the basis for addressing the evaluation issues listed in Appendix 2 (Table A2. technical aspects and funds flow).Evaluation Focus factors influence ADB’s potential for impact and thereby the development effectiveness of the MFF modality. and (iii) Loan 2296 of MFF08 (PRC: Gansu Heihe Rural Hydropower Development Investment Program). 23. Evaluation Limitations Sector focus. A first completion report for an MFF was posted on ADB’s website in December 2012: ADB. which are 62% of the total number of MFFs approved by end-2011.8 No approach for evaluating an MFF program was firmed up at the MFF design stage. A mix of MFFs in these sectors (which cut across subsectors.1). the most common type of MFF investment programs. 2012. 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. For many transport and energy sector MFFs. interviews with ADB staff. sectorspecific issues are not the focus. and extent of progress as documented) is studied. and there is no readily available. A mix of desk studies. although certain sector-specific aspects do need to be considered in the analysis (for instance. the . it is expected that for sector investment programs. the analysis has given more attention to the transport and energy sector MFFs. a more thorough assessment of results on the ground is deferred to a later stage. the RTE relies on case studies. when adequate experience will have been gathered to develop plausible counterfactuals for various circumstances in which the MFF modality has been used. some gaps do remain for nearly all MFFs and tranches. only a few tranche level self-evaluations are available. November. as not all necessary information sources (see Appendix 2) were available to the study team. Nonetheless. India Infrastructure Project Financing Facility. 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). covered in the report. tested and widely accepted approach to evaluating an entire MFF program. Manila. As no MFFs had been reported completed at the time of data collection. early indications of effectiveness. Although the inferences are drawn for the MFF modality. the Independent Evaluation Department (IED) study team has tried to fill some information gaps through interactions with ADB staff and meetings with incountry stakeholders. Although all 66 MFFs approved between 2005 and 2011 are 22. Evaluation Approach 5 20. The desk study included a review of relevant ADB documents and databases. and interactions with incountry stakeholders provided the information for the evaluation. Efficiency and effectiveness of MFF in achieving facility level outcomes and outputs cannot be fully evaluated at this state. (ii) Loan 2248 of MFF01 (IND: Rural Road Sector II Investment Program).9 Therefore. At the end of 2012. tentatively. 23). countries. the supporting backup evidence comes from approved MFFs. 21. and account for 69% of the total MFF approved amounts as of December 2011. Given that this is an evaluation of the MFF modality. the study focuses on project readiness and implementability (such as institutional arrangements. Timing. No independent evaluation or validation of a tranche project completion report has been conducted to date. 3. as well as an online survey of selected ADB personnel (see Appendix 2 for details). Although no guidelines for evaluating MFFs have been firmed up (as of December 2012). those related to the network nature of roads or power distribution systems).

However. Data access. including recorded rationales for tranche scope and other course changes. all required data and information. However. inconsistencies. IED conducted a survey of staff engaged in preparing. IED needed access to such documents for a few selected MFFs. MFF portfolio-level analysis also shows gaps. For instance. consultants. IED is granted access for a limited time period. Access to such data would have allowed IED to compare the efficiency of the modality better. which are specific to MFFs should also be assessed in a similar manner. IED also requires the email records. or implementation arrangements adds to the need to fully understand the sequence of changes that take place. financing requirements. The fact that approved tranche projects can change in terms of scope. . A large number of documents are required to fully understand 24. was not available for preparation of this report. as originally envisaged in the IEI document (footnote 4). 26.6 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. Upon special request to the concerned staff. 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. However. many scope change documents approved in 2012 were not yet uploaded in e-STAR by the time this study checked. which included 1 year of data from May 2011 to May 2012 for all regional departments. Appendix 2 provides a list of required documents. The time-sheet management system (TMS). and the necessary information can be gauged only from documents that are prepared after MFF approval. are difficult to find for any MFF. Instead. and inaccuracies of data in certain official ADB databases. processing. the email records are not easily retrievable. 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. 25. The design and implementation characteristics. which indicates the need for instituting systems to ascertain that (i) all requisite data are entered. Therefore. 27. where ADB would have better record-keeping owing to greater ADB involvement in project preparation. no document consolidates the information or provides reference or links to other relevant documents. IED and other departments (other than the owner department) normally do not have access to relevant MFF. 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. It also appears that all MFF and tranche-related documents are not necessarily uploaded onto e-STAR in a timely fashion. 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. Although most documents can be available on ADB’s electronic document storage system e-STAR. Other modalities usually allow greater access to data and progress statements. MFF-level completion reports should generally follow sector assessment guidelines. To the extent that project viability analysis and due diligence review work entail email communications among ADB staff. For the purposes of the RTE of the MFF modality. and (ii) data once entered are verified for correctness and accuracy.related folders on e-STAR. and/or clients. All such documents and data are required by IED for an evaluation of a particular MFF investment program. how an MFF has progressed since approval.

2 40% 35% 30% 3.2 6 5 4 3 2 1 5.6 25% 20% 15% ($ billion) 1.0 0% 1. to 27% in 2009 and 37% in 2011.7 0. Technical Assistance.2 billion in 2011. a total of (i) 66 MFFs had been approved with a combined approved amount of nearly $32 billion.1 3. MFF tranche approvals had risen from 17% of total approvals for ADB sovereign lending in 2006. two MFFs were approved in December 2005.8 billion in 2006 to more than $6.5 1. refer to Appendix 3.5 billion in 2011 (see Fig. Approvals 28. of which 66 were SSTs. By 2011. 13 MFFs had fully allocated . the approved MFF envelopes increased from $1. As of 31 December 2011. Source: Asian Development Bank database for Loan. Figure 1: MFF and Tranche Approval Trends 7 6. 1). Until December 2011. and (ii) 126 tranches had been approved.5 4.8 4.7 34% 37% 6.CHAPTER 2 The Portfolio A. Simultaneously. More than one quarter of ADB’s active portfolio is in MFF tranches. For details. Since then. 29. while approved tranche amounts increased from about $180 million in 2005 to nearly $4. Grant.4 4.2 10% 5% 0% 0 2005 2008 2009 2010 2011 Approved MFF Resource Envelope during the year ($ billion) Approved MFF Tranche Amount during the year ($ billion) % MFF Tranche Amount approvals to Total Loan approvals MFF = multitranche financing facility. and Equity Approvals. Following acceptance of the proposal to begin piloting the MFF.5 billion in 2005 and $3.0 2006 2007 2. the number of MFF approvals has increased from eight in 2006 (the first complete calendar year that ADB processed MFF interventions) to 13 in 2011.0 23% 20% 17% 27% 4.

44. appraisal. and (iv) Viet Nam in Southeast Asia. 47-54. 24. 19. 16. MFFs and the combined resource envelopes. Papua New Guinea (PNG) is the only country where ADB approved an MFF intervention.906 All Tranches 126 50 16.938 10. ADB introduced MFFs in six DMCs that were spread across four ADB regions: (i) Azerbaijan and Pakistan in Central-West Asia. 12 29 MFFs (MFFs 12. Regions and Countries Central West and South Asia regions account for more than 75% of 66 MFFs approved 31. 29. TA loans. while the 26 MFFs approved in Central-West Asia are spread across seven countries (the maximum being 8 MFFs in Pakistan).889 8. 2012. 20. 8. 41.846 4. 56. Since July 2008. and guarantees) approved from 2005 to 2011 in the 14 countries where MFF investment programs have been approved. (iii) Bangladesh and India in South Asia. sector loans. is that 25 of the 26 approved MFFs in South Asia are in one country (India). 17.8 Real-Time Evaluation of Multitranche Financing Facility MFF resource envelopes into tranches. the MFF modality had been extended to 14 DMCs. Multitranche Financing Facility Annual Report 2011. 11. A key difference. and ADB. The standalone loans include all sovereign loans (project loans. nearly 50% of all SSTs were approved during that month. 57) have fully allocated MFF resource envelopes into tranches/loans. while only in Bangladesh have no further MFF’s been approved. 58-66) have only one approved tranche. one in energy and the other in the transport sector) have five or more approved tranches. In the Pacific.317 Second and Subsequent Tranches 60 29 8. however. South and South-East Asia regions. Figure 2 shows the regional and country mix in terms of number of approved 32. it may also mean tight deadlines for ADB staff and the consultants to conduct research (fact-finding. mostly in Central-West Asia. program loans. 14 This trend appears to have continued in 2012.13 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.11 while 29 MFFs had only one approved tranche. 33. Considerable acceleration is observed in the fourth quarter. 37. only four MFFs and seven PFRs were approved. During the piloting stage (mid-2005 to 11 July 2008). 39. 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. 13 In comparison.306 First Tranches 66 21 8. 11 Two MFFs (MFFs 1 and 11. MFFs have been approved in two countries each. 13. By the end of 2011. B. 31. 43. 28. 14 Table 2: Bunching of MFF and Tranche Approvals in December MFFs 66 19 31. Manila. 15. . 12 30. Table 2 shows that. 10 13 MFFs (MFFs 1. 38. In the first three quarters of 2012. financial intermediation loans. 25. both in India.) and prepare necessary documentation under some time pressure. 22. etc. the most recent addition being Mongolia.042 3. 30% (84 of 277) of stand-alone loans were approved in the month of December. several more countries have been added. although less than one third of the MFFs and first-tranches were approved during the month of December. In the East.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.10 2 had five or more approved tranches. (ii) Peoples Republic of China (PRC) in East Asia. Sources: Asian Development Bank database.

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

5 1 5 0 Multisector Public Sector MFF Resource Envelope ($billion) Number of MFFs MFF = multitranche financing facility.4 Natural Resources ($ billion) 13.7 4. The study is aware that in 2012. Kazakhstan. at least one operations department is also preparing and processing an MFF in the education sector. and Equity D. (ii) PRC. Source: Asian Development Bank database for Loan. and Viet Nam—the four DMCs where ADB provides assistance only from ordinary capital resources (OCR). ADB’s Funding Sources 35. 7. Technical Assistance. MFF = multitranche financing facility.9% ADF loans.3 billion from OCR sources (85. India.1 billion ADF only OCR ADF & OCR ADF = Asian Development Fund. Grant. including but not limited to Asian Development Fund (ADF) grants.10 Real-Time Evaluation of Multitranche Financing Facility approved also for public sector management and financial sector interventions.8 billion $16.3 10 4 1.6 1 Finance 0. total MFF approvals through December 2011 comprised $27. OCR and Mixed financing $2. . Figure 4: MFF Financing Envelope Approved for Countries that Receive Concessional.5% grants. Figure 4 shows the combined MFF financing envelope for these three country groups.7% of all MFF approvals).5 Transport Energy Urban/Water 25 20 15 12 7 2. comprise (i) Afghanistan—a DMC where ADB extends all assistance from grant sources. The 14 DMCs where the MFF modality has been used. Grant. Technical Assistance. and (iii) nine DMCs that receive a mix of OCR and ADF loans from ADB.9 0. OCR = ordinary capital resources. and 6. and Equity Approvals. Overall. Figure 3: MFF approvals by Sector 14 12 10 8 6 4 2 0 30 26 17 8.1 billion $13. Source: Asian Development Bank database for Loan.

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

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

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

but energy tranches are about 10% smaller. coupled with (ii) increased staff availability for implementation monitoring and administration.Approval to effectivity .56 431 47. and the equivalent time for a standalone project is 75 weeks. address policy gaps. SSTs = second and subsequent tranches. Processing a tranche was typically expected to take 40% of staff time vis-à-vis a standalone project (see Appendix 5 for further details). = not applicable. and Equity Approvals. Nos.a. Increased organizational effectiveness of ADB was cited as an intended outcome of the entire IEI program. of tranches/projects . Grant. TC = transport and communications. B.a. $ billion % $ million days days days days years 135 105 107 84 179 4. However. However. for other sectors the difference is less than 10%. 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.PFR submission and approval for SSTs . with associated benefits such as more opportunities to understand sector issues. including the MFF 44.30 93 12.74 108 ADB = Asian Development Bank. MFF = multitranche financing facility.76 All Sectors 66 126 56 16. 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.a. wherein 45. The Board Paper provides quantitative estimates of staff time savings. an MFF processing time is typically 90 staff-weeks.17 91 92 182 4. PFR = periodic financing request. 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.6 65% 136 n. Overall.8 35% 157 86 92 85 169 4. Whether or not a time-sheet system had been tried or piloted in .Approval to LA signing . LA = loan agreement. which piloted several financing instruments and modalities. EN = Energy. Technical Assistance. while transport tranches are about 15% larger. 125 110 232 5. of MFFs No.7 Stand-alone Projects All EN TC Sectors 39 6. Source: Asian Development Bank database for Loan.LA signing to effectivity . 101 141 235 5. the average approved amounts of MFF tranches are about 25% larger than for stand-alone loans. owing to substantive staff time savings while processing tranches.14 Real-Time Evaluation Study of Multitranche Financing Facility period for stand-alone energy loans. n. at 354 staff-weeks.0 53% 155 n.5 47% 140 147 81 95 176 4. 43.Approval to closing (implementation period) Nos. including the MFF. Stand-alone Projects MFF EN 17 39 22 5. Table 3: Comparison of Loan Amounts and Timelines for MFF vs. Improved Organizational Effectiveness Increased n organizational effectiveness of ADB was an intended outcome of the entire IEI program. and make mid-course corrections. 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.7 No.of which SSTs Approved total loan amount Approved loan amounts of total Sector interventions Average tranche/loan size Elapsed time between .54 TC 23 43 20 6.

to gauge the extent of staff resource utilization and savings associated with the preparation and processing of at least some MFFs and tranches. approval of the RRP of the proposed MFF. the findings of which had been used for staff allocation and budgeting purposes. and approval of the PFR of the proposed tranche were compiled from these databases. which also incorporates some data previously compiled in the project performance report and project information documents. and that certain departments had still to make efforts to assess the quality and consistency of data entered by the staff.25 Elapsed time estimates. ADB databases include data on time elapsed during 47. In May 2011. the eOps database for tranche preparation and processing is not complete and shows wide variations in the estimated elapsed times (Box 1). 15 24 25 26 During the early 2000s. ADB instituted a pilot TMS. The eOps database also does not specify when action on the second tranche (or a subsequent tranche) was first initiated. Nonetheless.Expected Benefits ADB—albeit on a limited basis—during the MFF pilot period is not specified in the Board Paper. Similarly. however. just over 200 days for MFF processing. and more than 1-year of timesheet data had been compiled by the third quarter of 2012. tranche loans. IED was unable to access the TMS data pertaining to specific MFFs. 26 Further data analysis is given in Appendix 5. a TMS established the parameters for processing and administering stand-alone projects and technical assistance. as it was felt that the TMS was still in an initial phase. Such information may be documented in a related back-to-office report of a review mission for a preceding tranche. 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.24 46. but with averages that are lower: less than 400 days on MFF preparation. and stand-alone loans. However. . but there is no central database that compiles such information. The findings from the IED survey also show wide variations. preparation and processing. 48. IED could not obtain the TMS data. as well as a wide variation in the estimated elapsed time for MFF preparation and processing (Box 1). 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. Available data on milestone dates toward finalization of the project preparatory technical assistance (PPTA) work. as obtained from the e-Operations (eOps) database. Supplementary Appendix B provides the survey forms). and detailed data are in Supplementary Appendix A. A brief analysis shows the paucity of data on milestone dates in these databases. and less than 200 days for tranche processing (see Appendix 5 for further analysis of survey data).

with milestone dates for MFF fact-finding. 6) compared with 20% more time assumed in the Board Paper. the LOE for tranche processing time is less than that for stand-alone projects. However. Regarding tranche preparation and processing: a. MFF = multitranche financing facility. as well as the credibility of a system to audit and verify data once entered.800 days to process an MFF (average of 270 days). 19 agreed that the LOE for preparing and processing an MFF is higher than that for a stand-alone project.27 51. Processing and Implementation of MFFs and Their Tranches 1. and (ii) 4 of the 7 tranches approved after June 2011 (i. Regarding MFF preparation and processing: a. it is also acknowledged that.300 days for work on a PPTA (average of 600 days) ii) from about 100 to about 1. Although it is difficult to determine the linkage between flexibility and increased time required for preparation and processing of an MFF and its tranches. Operations Manual. it is interesting to note the perceptions of the MFF team leaders: (i) of the 26 responses received from a total of 66 enquiries. while PFR receipt dates are available for about 30% (39 of 126). the wide variations in MFF and tranche preparation and processing times raise concerns about the timeliness and quality of data entered in eOps. Loan fact-finding dates are available for less than 45% of the tranches (54 of 126). 49. Source: Independent Evaluation Department. OM Section D14/BP and D14/OP. 2008.800 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). PFR = periodic financing request. owing to some sector-related issues (such as in water resources or agricultrure . 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.e. Survey findings regarding LOE show wide variations of one order of magnitude or more. in many cases. Level of effort estimates.29 27 ADB. Other than TMS. no official ADB database contains 50. Bank Policies and Operations Procedures. 2. Data availability for MFF processing is somewhat better. PFRR = periodic financing request report. Manila.16 Real-Time Evaluation Study of Multitranche Financing Facility Box 1: Elapsed Time Estimates for Preparation. c. after MFF prerequisites had been codified in the ADB OM in 2008).e. 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. and (iii) 16 of the 19 MFFs were approved after mainstreaming (i. b. 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. across a relatively small number of MFFs and tranches. Dates for PPTA fact-finding and receipt of draft final report are available for less than one-third of the MFFs (21 of 66). The data show wide variations: i) from 300 days to more than 1. The elapsed time also varies widely. concept approval and RRP approval available for about 60 of the 66 MFFs.28 The tranche survey data tend to show that. 29 Notwithstanding the fact that all survey data are based on the memory of the concerned team leaders.. data on level of effort (LOE). i) from about 40 days to more than 1.. RRP = report and recommendation of the President. 28 Refer to Table 10. b. PPTA = project preparatory technical assistance.

half of the team leaders had sectors). or (ii) within the same regional department at the headquarters or in a resident mission. provided a sufficient number of tranches are included in the MFF. Such staff movements can be (i) within the same sector but across regional or operations departments. and stand-alone projects. project is less than that for an MFF but more than that for a tranche.50 to 1. as the survey data relied on the memory of team leaders rather than any written record or database of LOE. As yet.0 Ratio of LOE for MFF to Standalone Projects LOE = level of effort. it appears that changes introduced through the internal staff instructions issued in July 2011 led to an increase in tranche processing time. so that ADB staff can (i) gather and share knowledge with the client on sector issues and trends. more time would be required to conceptualize an MFF investment program. 30 . Besides. and (iii) change implementation plans while work is in progress. Staff continuity. (ii) address policy issues and procedural gaps. Source: Independent Evaluation Department. which appears to be consistent with the original premise that the MFF modality improves organizational effectiveness. Table 4 shows that as of mid-2012. where distinct types of interconnected projects would comprise each tranche. processing. and implementation of MFFs and their tranches. there is no conclusive evidence of staff time savings over the entire MFF cycle 32% 11% 0% 11% >2.0 53. perhaps with higher responsibilities. However. the survey data therefore tend to show that the LOE for a stand-alone 52.25 to 1.Expected Benefits 17 Overall. 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. this inference is based on a small number of observations—and then too.75 1. it does not conform to the “staff continuity” requirements as spelled out in the MFF Board Paper.75 to 2.30 Although staff movement within the same regional department does not lead to a loss of expertise to the department as such. for example through access to TMS data. MFF = multitranche financing facility. Staff continuity issues are a matter of human resources policy. The Board Paper (footnote 6) recognized that greater staff continuity is required in the preparation. which occur more frequently than desired as per MFF policy. The MFF modality was also thought to help regional departments plan better their people and skill requirements. and potentially change the normal practice of staff movements. which is 54.50 1. 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. Management driven. this observation cannot be considered conclusive. or (iv) any other movement. or (iii) form a regional department to a knowledge or support department. This is perhaps one of the reasons that have contributed to the difficulty in reducing the LOE for tranche processing.25 1. tranches.

If EIB cofinancing does not come through. 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.18 Real-Time Evaluation Study of Multitranche Financing Facility not changed divisions or departments after processing an MFF and getting it approved. and it was recognized that. Tranche 2 Cofinancing Particulars A guarantee facility of $200 million to mobilize commercial debt for wind and other renewable energy projects ADB: $38 million. there is no particular notice or announcement to indicate that the introduction of the MFF has changed the deployment pattern of staff.5 million Remarks Commercial cofinancing amount not known (as of October 2012) MFF05 (PAK). 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 cofinancing database is expected to capture donor commitments and actual contributions.2 million (initially) ADB: reduced MFF financing envelope to $157. 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. and financial intermediation loans) have on the client’s balance sheet and cofinancing capabilities (footnote 4). of which: for the 25 MFFs approved during 2010–2011 for the 41 MFFs approved during 2005–2009 MFF = multitranche financing facility. EIB: $40 million. Number of Staff 14 6 7 6 33 18 15 C. 31 For overall MFF investment program: Cofinancing possibility known at MFF approval stage. Tranche 3 Leverage of 100%. Table 5: Cofinancing in Selected Multitranche Financing Facility Investment Programs MFF Number and Tranche Reference MFF05 (PAK). Source: Independent Evaluation Department. Cofinancing Adequate information is not available to analyze level of cofinance achieved through MFFs As originally envisaged. . All tranches MFF24 (KAZ). the MFF modality provides to clients the comfort of 55.31 Table 5 shows information on cofinancing arrangements for selected MFFs. then ADB’s support will increase to $78 million For overall MFF investment program: ADB: $188. sector loans. to be firmed up MFF22 (IND). or on special leave without pay No movement (within same division and same department). Such factors do contribute to the MFF’s rising use. 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. the MFF modality is potentially more conducive to cofinancing than other modalities and instruments. However. to provide sufficient information to project processing and administration teams as well as concerned development partners.

the MFF documents simply mention that cofinancing will be pursued upon the specific request of the concerned government. All tranches Cofinancing Particulars Original cofinancing arrangements for projects expected to be financed through the MFF: ADB: $700 million. no cofinancing expected in Tranche 1. even though it was to use up nearly 50% of the approved ADB financing envelope. 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). VIE = Viet Nam. 32 In 15 MFFs. and 220% for tranche 2 ADB = Asian Development Bank. EIB: $195 million For overall MFF investment program: ADB: $636 million. However. IND = India. For instance. Japan: $634 million Remarks expected upfront at MFF approval stage is reduced to less than 30% (as per updated information as of June 2012). 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.4 million For Tranche 2: ADB: 500 million. Updated cofinancing arrangements for projects expected to be financed through the MFF: ADB: $812 million. Appendix 6 shows that in the RRPs and/or FFAs for 48 of the 66 MFFs. IsDB = Islamic Development Bank. either both the RRP and the FFA referred to cofinancing. PAK = Pakistan. KfW: $36. IsDB: $414 million. but not in both. . referred to. Whether or not this pertains to joint or parallel cofinancing is not clarified. All tranches MFF53 (VIE). the Rural Electrification Corporation. Japan: $150 million. or considered in some manner. either both the RRP and the FFA referred to cofinancing. Japan: $634 million For tranche 2: ADB: $286 million. As per RRP. and (ii) for 26 of the 46 MFFs after mainstreaming to end of 2011 (56%). In three MFFs. Source: Independent Evaluation Department. or that the borrower or the executing agency will explore the soliciting of cofinancing from other development partners and/or private entities. To the extent that funding from these sources is secured as part of the MFF investment program. OPEC = Organization of Petroleum Exporting Countries. IsDB: $170 million. 56.Expected Benefits MFF Number and Tranche Reference All tranches 19 MFF52 (VIE). EIB: $195 million For Tranche 1: ADB: $40 million. KfW: $313 million. cofinancing is mentioned or considered either in the MFF or the FFA. or both did not. KAZ = Kazakhstan. Available documentation does indicate some attention to cofinancing in some MFFs (see Appendix 6). KfW: $276.6 million. MFF = multitranche financing facility. Leverage of about 100% overall. RRP = report and recommendation of the President. Japan: $68 million For overall MFF investment program: ADB: $540 million. EIB = European Investment Bank. or both did not. A significant improvement is observed in the level of consistency after mainstreaming: (i) for 7 of 20 MFFs in the pilot period (35%). it is considered that the long-term support offered through the MFF has not affected this cofinancing. certain power sector utilities in India routinely borrow from the Power Finance Corporation.33 In many cases. Leverage of more than 90% Parallel cofinancing for other similar urban mass rapid transit lines also expected. the documentation also indicates that specific attention to mobilizing cofinancing has not been given in many MFFs approved thus far. or the State Bank of India to fund their transmission and distribution capacity expansion programs. KfW = Kreditanstalt für Wiederaufbau Bank. cofinancing is mentioned.

Since the MFF modality was piloted. c In some instances. which were normally at variance with procedures and processes followed by borrowers. Proposed Multitranche Financing Facility and Administration of Cofinancing. (ii) slices (or tranches) of sector investment programs over a longer time frame of 7–10 years. the commitment charge rates have been reduced (Box 2). 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. of the 66 MFFs approved until end-2011. However. Box 2: Reduction of Commitment Charge Rates When the MFF modality began to be piloted in the latter half of 2005. sequential components or large stand-alone projects. 2009. the Board eliminated the waiver and approved a reduction of annual commitment charges for sovereign project loans to 0. Such reductions of commitment charges are not related to the introduction of the MFF modality in 2005. This commitment charge rate has remained unchanged since. 36 D.b it was considered complex by many borrowers. a The commitment fee was applied to the following amounts (less amounts withdrawn from time to time).c In October 2005. Loan commitment charges cover ADB’s cost of carrying liquidity for loans prior to disbursement.15% of the undisbursed balance. ADB charged its project loan borrowers an annual commitment fee of 0. In December 2007. but they diminish somewhat the benefits associated with the MFF rationale.35% per annum on the undisbursed balance of sovereign project loans negotiated after 1 January 2007. Source: Independent Evaluation Department. 36 Refers to MFF05 (Renewable Energy Sector Development Investment Program). such as (i) the normal rate at which project construction can proceed on a best-efforts basis. and (iv) the entire loan amount thereafter.34 Guarantees that cover political or credit risks are often intended to mobilize cofinancing. it may be important to hold close consultations with other development partners during the MFF processing stage itself. and (iii) financial intermediary credit lines. In any event. 34 35 These include (i) discrete. the borrowers were not able to calculate commitment charges properly and had to rely on ADB’s accounting records. The MFF modality was conceived as a debt-financing facility to offer guarantees along with other instruments. approved in December 2006.1% waiver (on the undisbursed balance of sovereign project loans negotiated after 1 January 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. Manila (approved 17 September 2009. a Although the progressive structure allowed borrowers to pay lower commitment fees overall.75% on a progressive percentage of the undisbursed loan balance. and (ii) ADB’s contracting and procurement requirements. Islamic Republic of Pakistan: Energy Efficiency Investment Program. (iii) 85% of the loan amount during the third 12-month period. 57.20 Real-Time Evaluation Study of Multitranche Financing Facility amount of cofinancing) is also not clear. the Board agreed on a further reduction of commitment charge through a 0. only one explicitly offers the option of a guarantee cover in the initial documentation. MFF = multitranche financing facility. 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. the Board approved a simpler flat structure with a commitment fee rate of 0. Reduced Commitment Charges 58. Report and Recommendation of the President to the Board of Directors. 35 Although the guarantee option in this particular MFF appears to have been dropped. if the MFF investment program requires a substantial amount of cofinancing. MFF31). ADB. . In April 2007.

However. wherein even a small delay in the signing/effectivity of successive tranches can lead to some commitment fee savings.25 0.year time span. Source: Independent Evaluation Department. as the last tranche loan was approved much later than originally planned. The commitment fee savings are evident but can be considered negligible (Table 6). and less than 0. it is likely that commitment fee savings from MFFs would come 59. 37 In the same countries and sectors where ADB has approved MFF interventions. commitment fee savings are likely to reflect improvements in disbursal rates in SSTs—should SSTs be actually disbursed more quickly. Appendix 7 illustrates commitment fee savings in a few cases where the 60. counterfactual assumed for an MFF with “n” tranches (one stand-alone loan that equals the size of the MFF) is meaningful.14% Small commitment fee savings are evident for some MFFs MFF Number/ Country MFF13. c The MFF has a small financing envelope of $100 million. which would otherwise be financed through one stand-alone loan. Most large MFFs cannot be viewed as one project comprising several subprojects. PRC = People’s Republic of China.25% 0. with each tranche being like one project.2 0. the detailed computations and assumptions are given in Appendix 7. commitment fee savings from such large MFFs would relate more to timing of tranche approvals and tranche disbursal rates vis-à-vis the counterfactual string of stand-alone (corresponding to tranches) loans. and during the same time period (2005 –2011). a Loan agreements have been signed for the entire MFF financing envelope for the 3 selected MFFs. the available evidence (on changes in disbursal rates with each subsequent tranche) is mixed. or (ii) the MFF financing envelope is comparable to a stand-alone project. and where commitment fee savings come from phasing of the approval/effectivity of a stand-alone loan through tranches. the available evidence is mixed. Therefore. and (b) three tranches were approved and made effective in quick succession during the 2.28 Commitment Fee savings (% of MFF resource envelope)a 0. 37 most large MFFs can be viewed as a cluster of projects. only when (i) a large MFF is used to finance one large project. . at this time. 61. The commitment fee savings reflects the time difference between the loan signings of the first and second tranches.45% 0. Indiad MFF = multitranche financing facility. Table 6: Commitment Fee Savings Estimates for Selected MFFs Number of Tranches Approved p 2 3 3 Total MFF Resource Envelope ($ million) 931 100 200 Commitment Fee Savings ($ million) 4. However. b The second tranche comprises more than 95% of the MFF resource envelope. 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). the fee savings are small. The estimates in Table 6 are for MFFs for which sufficient data (particularly on loan amounts and loan signing dates for each tranche.Expected Benefits 21 Nonetheless. Either of these conditions holds only for few MFFs. PRCc MFF38. In most cases. in addition to loan envelope size) are available.5% of the approved MFF financing envelope. In all these cases. but the MFF utilization period actually got extended by 12 months. Given that the average MFF financing envelope is $480 million compared with an average stand-alone project of about $100 million (Appendix 7). at this point. Viet Namb MFF20.

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.

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

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

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

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

the government developed a comprehensive policy matrix to facilitate program implementation. 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. 77. which emphasizes environmental sustainability. The MFF eventually covered five states. . safeguards. road safety and sustainability. to be supported by enhancing railway capacity on over-saturated critical routes. ADB is supporting the introduction and implementation of a new accounting system for efficient management practices. ADB = Asian Development Bank. Although the total allocations were small. PRC = People’s Republic of China. for sale of certified emission reductions. 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. IND: North Eastern State Roads Investment Program (MFF58) This is aligned to the Special Accelerated Road Development Program for India’s northeastern region. NPI = nonphysical investment. TA = technical assistance.The Working of the Modality 29 IND: Railway Sector Investment Program (MFF60) The MFF investment program is embedded in the Railway Vision 2020. MFF = multitranche financing facility. In supporting the institutional strengthening action plan. Source: Independent Evaluation Department. 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. World Bank. Japan). and supports the construction of high-quality roads in the northeast. IND = India. and (ii) implement road asset management and road safety systems. A capacity development component of the NPI included implementation assistance to concerned state agencies for properly addressing policy issues such as procurement. 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. In coordination with funding agencies (ADB.

The Government of Pakistan also requested ADB to provide TA to support the executing agency for work on policy formulation. NPI = nonphysical investment. . creates an impression that skill levels are low. as of March 2012. electrification of rural areas. capacity development at the federal level had not progressed. Only 0. ADB = Asian Development Bank. improved modal integration. 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). From the perspective of policy dialogue and capacity development at least. However. Available information on NPIs also suggests that actual progress in capacity development remains short of initial plans. and capacity development in one of the provinces was expected to be cancelled. That a large number of international consultants were to be appointed to train the utility staff on planning and project management. it appears that enabling regulations. introduction of management information systems. and logistics. subsequent progress (or lack thereof) indicates the need for a better understanding of the priorities of the concerned federal and provincial stakeholders. improved metering and billing. and program management. for instance. IND = India. As per the RRP. and institutions need to be developed and strengthened. where the official road development plan lists mainly the planned physical investments. PAK = Pakistan. guidelines. TA = technical assistance. emissions control. the state-level policy dialogue relates to enforcement of traffic laws. etc. it is difficult to justify the MFF modality.3% of the total MFF financing envelope is allocated for NPIs. Source: Independent Evaluation Department. and organization for development of policies. better planning. MFF = multitranche financing facility. improved sector governance. This situation indicates a lot of scope for long-term engagement of ADB. However. there is no indication that consultants to enable the utility staff to improve their distribution system planning skills have been engaged. as well as the need for capacity development. although the existing policy framework and capacity development related MFF design aspects do appear to justify the MFF modality. This statement does not qualify as a viable energy policy framework. AFG = Afghanistan. In this case. PAK: Renewable Energy Sector Development Investment Program (MFF05) Although a policy framework and government commitment exist. and investment in new capacity. which focuses on enabling the concerned state government department to sustain the investment by strengthening staff capacities. 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. these areas are not covered in the NPIs under the MFF.

as a percentage of all loan and grant assistance for physical investments.70 million per year during 2006–2011. 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.65 million per year during 2006–2011. Manila. trends can be discerned only in India and Pakistan (Box 5 and Appendix 10). Available MFF documents (whether periodic financing requests.3 billion to support India’s and Pakistan’s energy and transport sectors. it is reasonable to expect that the sum of NPI allocations for MFFs and TA resources for capacity development should increase. finance. Refer to ADB. and (iv) excluding support for ports and rail sectors. 2012. 2–5 May (45th Annual Meeting). a Over a longer time horizon from 2000 to 2011. which was last approved in 2002. MFF = multitranche financing facility. 79. It appears therefore that the originally envisaged opportunities for policy dialogue have not been realized. NPI = nonphysical investment. 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. this increase reflects inclusion of support for sector-wide planning as well as coal utilization strategy. even though overall TA resources (for project preparatory work plus advisory. 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. (iii) a more than 10% increase in the approval for support to Pakistan’s energy sector from $0. Source: Independent Evaluation Department. Since the MFF modality began to be piloted. a marginal reduction in the annual average approvals for support to India’s and Pakistan’s road transport sectors. 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. TA = technical assistance. public sector management. Regarding program loans in sectors where MFF investment programs have penetrated most (energy and transport). public health. industry and trade. By the time the MFF modality began to be piloted. total TA resources show a declining trend. It is noted that (i) ADB supported power sector reform and restructuring through program loans from the mid-1990s to the early2000s. Asian Development Bank Annual Report 2011.77 million per year during 1990–2005 to $0. etc. a Total TA grants disbursements declined from $189 million in 2008 to $148 million in 2011 (with a peak of $202 million in 2009). 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. there have been no program loan approvals for these sectors in the two countries. periodic financing request reports. education.) appear to show an increasing trend. However. . (ii) a reduction in the average annual approvals for support to India’s power sector by 10% after 2005—from $0. program loans were being extended more for agriculture and natural resources management. and social protection. The use of preparatory TA resources also appears to be declining although the decline is not so pronounced. Given the recent emphasis on improving project readiness.57 million per year during 1990–2005 to $0.The Working of the Modality 78. the causality between a fall in the energy sector program loan volumes and the rise in penetration of MFFs is difficult to decipher. ADB approved program loans for about $1. capacity development. while policy support that was provided earlier has been discontinued in sectors where MFFs have penetrated the most.

and governance aspects could possibly provide useful inputs for screening the use of the MFF modality. In many RRPs. Prerequisites as Decision-making Filters Consistency in presenting financing plans needs to improve In most DMCs. however. 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. capacity development objectives. it indicates commitment from the client side.53 As a result. To the extent that the financing plan includes counterpart funds from the client or other DMC sources. policy framework. the extent to which the investment program and financing plan can be considered sacrosanct.51 (ii) combining project management with project preparation and construction supervision. as in MFF47. and other indicators of government commitment. 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. Refer to para 68 of Board Paper (footnote 6). is the very basis on which the MFF modality enables ADB to support a client. financing plan. is in doubt. a financing plan for the entire MFF does not carry much significance. Yet the implicit assumption while approving any MFF investment program is that institutional capacities are strong and contribute to a stable policy environment. rather than in project cost. institutional performance. capacity constraints exist in most sectors and in the institutions 83. The investment program includes physical and nonphysical components. as in MFF58. useful to reconsider the importance to be given to such an underlying assumption in justifying the choice of the MFF modality. is presented differently. policy framework. Given the proliferation of MFFs across many countries and sectors. overseeing them. 52 and (iii) including construction supervision in capacity development. AZE: Road Network Development Program. Undertakings are normally stated in the FFA and can be 82. A case in point is the combination of different types of NPIs. it would be 84. undertakings can be assessed in terms of the quality of strategic context. as in MFF14. However. Other Prerequisites Investment program and financing plans. The 81. as subsequent tranches are often not defined in the MFF. Under such circumstances.32 Real-Time Evaluation Study of Multitranche Financing Facility 3. KAZ: Central Asian Regional Economic Cooperation Corridor-2 (Mangystau Oblast Sections). 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. considered a commitment to the agreed-upon road map. the financing plan makes a distinction between the investment component and capacity development support. as outlined in the FFA. Even if ADB provides support to define strategies and road maps.54 Therefore. 4. Suitable databases that provide information on policy. etc. An agreed-upon investment program 80. road map. Consistency in presenting the financing plans needs to improve. . or the undertakings considered firm. or investment plan (for single large projects) as presented in the FFA and RRP. for instance (i) combining project management and other capacity development activities. the extent to which DMC governments and clients can prepare sector strategies and road maps of the requisite quality is uncertain. Undertakings. client-side ownership and buy-in are difficult to sustain. In that sense.

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

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

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

KfW = Kreditanstalt für Wiederaufbau Bank. the first contract was awarded nearly two months prior to loan effectiveness date for the second tranche. Each has different rules and regulations for procurement and evaluation process. ADB = Asian Development Bank. 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. 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. with capacity building support provided through a parallel TA. The situation has improved since then. VIE = Viet Nam. PAK = Pakistan. MFF = multitranche financing facility.36 Real-Time Evaluation Study of Multitranche Financing Facility effectiveness of the first tranche loan. CFL = compact fluorescent light. EIB = European Investment Bank. TA = technical assistance. . IND = India. 39% 24% 41% 42% 21% 14% 12% 8% Tranches Approved up to 31 December 2010 Source: Independent Evaluation Department. 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 . Source: Independent Evaluation Department. and there was only a onemonth time lag between loan effectiveness and date of first contract award for the third tranche. EIB and KfW).

IEI document (footnote 4). regarding the types of scope changes Refer to paras.02. to be coupled with long-term and programmatic investments.02 as revised in December 2011. the time span between approvals of successive tranches will increase. Manila. 13 (28%) did not provide this information. Change of Loan and/or Grant Funded Projects.approved project financing. and (iii) different debt finance structures to be applied in each tranche. and (ii) DMC governments and clients review agreed-upon scopes even for approved tranches. 64 ADB. within the ADB. Manila. Therefore. Until December 2011. For this reason. 2008. 5. 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. Manila. however. 2008. therefore. those that can be approved by ADB Management. approval and effectivity. project readiness is expected to reduce the time lag between loan 93. As envisioned in the IEI document.04. part. and projects are expected to get implemented with smaller delays. Besides.62 96. a lack of clarity in the relevant project administration instruction until 2011.60 In practice. 61 It is acknowledged that the need for flexibility can also arise due to the occurrence of emergency situations. E. 34–43 and Appendix 4. overall. Emergency situations may arise from natural disasters. 64 clearly stated that 59 60 The flexibility offered by MFF has reflected in part. 59 It allows (i) sound balance sheet management on the client side. Some improvement is noted since mainstreaming in mid-2008. The PAI of January 2011. Of the next 46 MFFs approved until the end of 2011. given the long utilization periods. 5. unless DMC governments and clients adopt measures to accelerate the achievement of project readiness by appropriate institutional capacity development measures. Project Administration Instructions No. the MFF modality provides financial and operational flexibility to clients and ADB. conflict situations. 61 The required clarity came about through PAI 5. 2011. 63 Refer to: (i) ADB. about 30% of all approved MFFs do not even indicate upfront the number of tranches. it is unlikely that all projects for all tranches will be identified and known upfront in all MFFs. Change in Project Scope or Implementation Arrangements. that with increased attention to project readiness and without commensurate efforts to build institutional capacities. . It is likely. Of the first 20 MFFs approved during the pilot period. the MFF utilization periods can get exhausted without accomplishing the full intended scope of the MFF. 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. Operations Manual: Bank Policies and Operational Procedures (Section D14).The Working of the Modality 37 In general. the relevant PAI’s did not explicitly mention the MFF modality. Besides. and (ii) ADB. 2011. Flexibility Aspects 94. the flexibility offered by the MFF modality reflected in 95. which was retracted within less than a year. (ii) financial approvals as and when projects are ready and PFRs are submitted. 62 ADB. 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. even if the precise number is not known. 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. Project Administration Instructions No. more MFFs indicate at least a range for the number of tranches in the RRP. Project Administration Instructions. introduced the idea that a major change is a change in the project outcome and target values of outcome indicators. 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. Change in Scope of Loan and/or Grant Funded Projects. the RRPs of 7 (35%) did not provide the number of tranches or indicated only a range.

66 67 . Data available with IED show that about 85% of the tranche project changes approved in or before December 2011 had been classified as minor. and/or (v) reporting arrangements. Only 6 of 46 tranche project changes affected in 2011 or before were classified as major. due to such factors as the study’s data collection during mid year. energy transport. The Board has delegated to the President. Project Changes What constitutes a minor change has been clarified in December 2011 Tranche project changes. it can be approved by the concerned head of department. Table 9 describes some tranche project changes. (ii) a change in the policy framework that negatively affects the viability or sustainability of the investment program or investment plan.02. including changes in executing and/or implementing agencies. 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. and (iv) a substantial and material change in the type of investments contemplated under the investment program or investment plan. effected in various MFF tranche projects. including project performance monitoring and evaluation. (ii) financing plan. urban. procurement. changes have also been 97. As for stand-alone projects. 2011. which refers to changes among the existing categories of project cost and finance tables. (iii) a change in the sectors covered by the investment program. “Minor” changes to individual projects under an MFF are approved by the 98. Manila. 5.65 Any one or a combination of these changes results in a “minor” tranche project change. and disbursement arrangements. 1. Change of Loan and/or Grant Funded Project. unless they fundamentally affect the scope and project outcome—in which case they constitute a “major” change. implementation period. any change at the tranche level does not require approval from the Board. limited response by regional departments to data requests. (iv) implementation arrangements.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. for practical purposes. Project Administration Instructions (PAI) No. 67 About 85% of the tranche project changes approved in or before December 2011 had been classified as minor 65 ADB. It appears from Table 9 that at least until December 2011. consulting services. the flexibility offered by the MFF modality had been related to the fact that if a change is considered a minor change.” Supplementary Appendix C includes a description of tranche project changes to the extent IED could obtain such information. the authority to approve “major” changes. concerned Director General (who may in turn delegate in writing the approval authority to an authorized director). and other sectors to date have been categorized as “minor. the late approval of many scope changes over 2012. Tranche project scope change description and classification information was available only for four of the 37 tranche scope changes approved upto 3rd quarter 2012. which means changes in the mix of currency and sources of finance. Appendix 12 shows that most changes that have been made in tranche projects across agriculture. and late uploading of scope change memoranda in e-STAR. 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. Therefore. (iii) project outputs or performance targets.

and (iii) the deleted Kobuleti-bypass section from tranche 1 was included in an unscheduled tranche 3. Cost overruns after detailed design in tranche 1 and tranche 2 went beyond their financial. IND = India. Other types of changes constitute “minor” changes. 99. and are approved by the President.a and rehabilitation or one hydropower plant was included. and 3 of MFF34 (GEO: Road Corridor Investment Program) Minor More than 100% cost overrun in capital cost of tranche 1 Kobuleti bypass. Therefore (i) a section of the Kobuleti bypass from tranche 1 was deleted. As per the MFF policy. 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. Source: Independent Evaluation Department. Scope changes in MFFs. designing of a hydrological monitoring and information system. major MFF level changes that affect the outcomes of an MFF as originally approved by the Board. the Qila Saifullah-Zhob road section was to be widened and improved in tranche 1.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. and consulting services in design and construction management. require Board consideration and Board approval (para. 2. 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. This section was shifted to tranche 2. PAK = Pakistan. a After it was realized that the hydrological data collection is in the purview of the central government. 95). tranche 1 included a 29km bypass around Kobuleti to be implemented in three contracts. Originally. and cannot be implemented by a state government agency. In reality the design of the hydrological monitoring and information system was dropped. (ii) an undetermined postponement of the Batumi-bypass and withdrawal of government support for border facilities effectively cancelled tranche 2. hardware and software for transmission planning and operations. Originally. along with other projects. . 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. MFF = multitranche financing facility.

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

075 ($3 million) from Special Funds resources. 41 Although the inclusion of additional financing mechanism is feasible under MFF. OM Section H3/BP and H3/OP. 2012.72 103. 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. SDR2. MFF = multitranche financing facility. 2011. the tranche 1 scope was reduced by 40 km. The four-laning of the Ganja-Qazakh road was listed in the RRP. a Loans 2205-AZE and 2206-AZE. it has led to some situations where sufficient attention may not have been given to project design. Cost sharing. OM Section H5/BP and H5/OP. The East-West Highway Improvement Project. 66 of OM Section H5. so that its scope had to be reduced by the 39 kmlong Ganja-Bypass. and has been welcomed by clients. AZE = Azerbaijan. are also included as eligible expenditures for ADB financing in MFFs as well as other stand-alone modalities (other than policy-based lending. Manila. This was transferred to MFF14 under Tranche 2. ADB’s share in project cost may exceed the country cost-sharing ceiling for a particular project. In addition to other project-related expenditures. 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. By way of an example. Owing to the cost overruns. The highway sections deleted from tranche 1 were processed under a new tranche 3.The Working of the Modality existing MFF to raise its financing envelope. also experienced high cost overruns. Additional Financing. Although the inclusion of additional financing provided by ADB within the MFF modality is consistent with. and limited or nonrecourse financing to subsovereign or nonsovereign public sector entities). Cost Sharing and Eligibility of Expenditures for ADB Financing.4 million to replace the Ganja-Qazakh road. approved 8 December 2005 in the amount of $49 million OCR. 71 and for individual tranches within the MFF. Box 8 provides illustrative examples.a a stand-alone project previously supported by ADB. Manila. with an allocation of around $56. ADB. Refer to para. Operations Manual. The appraisal cost estimates were made without finalizing the highway alignment. 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). RRP = report and recommendation of the President. Source: Independent Evaluation Department. 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. Bank Policies and Operational Procedures. ADB = Asian Development Bank. 73 Allocations or expenditures to cover taxes and duties are included for computing ADB’s share in the project cost. taxes and duties 104. A grant 71 Refer to para. 74 This provides additional and convenient flexibility when preparing the MFF investment and financing plans. as possible under tranche 2 under the MFF. among others. ADB is financing taxes and duties for a transport MFF in Afghanistan. Operations Manual. and leverages the programmatic orientation of the MFF. 65 of ADB. East-West Highway Improvement Project. 72 73 74 .

Report and Recommendation of the President to the Board of Directors. Proposed Multitranche Financing Facility.75 75 ADB. 2011. Manila. Islamic Republic of Afghanistan: Transport Network Development Program.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). .

as applicable. 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). specify documentation requirements at the MFF and/or tranche levels. ADB requires the client to undertake a strategic environmental assessment to identify mitigation measures to be built into MFF design. 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. and (iii) introduce measures for quality assurance of the MFF investment programs and tranche level investments. and introduce measures for quality assurance OM (2010) OM (2010) Compliance . clarify and provide guidance on the structuring of the MFF and MFF prerequisites. (ii) specify documentation requirements at the MFF and/or tranche levels.CHAPTER 5 Quality Assessment and Review The general guidance provided by the IEI document (footnote 4) had left many 105. a sector or regional assessment will be prepared and submitted to the Board together with other MFF documents for Board consideration. 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. Guidance on the MFF Modality 106. gaps related to the design and functioning of MFF investment programs. Such changes have been effected particularly to (i) improve the clarity on the structuring of MFF and MFF prerequisites. and project readiness. Coupled with this are quality assurance measures that include peer reviews. The provisions that call for additional documentation also in many cases help 107. Where significant sector or regional environmental impacts from the investments under an MFF are anticipated. but consumes more staff time. safeguard categorization. Table 10 provides a brief overview of the major changes since the MFF modality was introduced. A. 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. Among the more salient additional documentation requirements are ones that reflect rising concerns about safeguard compliance. 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. Additional documentation also facilitates third-party review and quality assurance.

economic and social dimensions (as applicable). and social dimensions. and measuring results For individual tranches. frameworks addressing environmental. safeguard issues. as necessary. any required policy refinements. anticorruption aspects. Gender mainstreaming project categorization is to be done for each PFR. sustainability. and revisions incorporated into the PFR submitted to Management. Each tranche is to undergo a separate risk categorization and to be processed accordingly. 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. through the Environment and Safeguards Division. 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. involuntary resettlement. 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. capacity. The operations department is to be responsible for proposing the categorization of all tranches and submitting the checklist and categorization results. financial. policy framework. investment program or investment plan. due diligence is to cover: MFF prerequisites (road map. 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 . governance. For each MFF. indigenous peoples. Regional and Sustainable Development Department to the chief compliance officer for concurrence or further discussion (as required). The SPRSS is to be updated for SSTs. due diligence is to cover: technical. fiduciary oversight. regulatory. action plans on given themes. Safeguard categorization is to be made at the level of individual tranches. procurement. strategic context. corresponding undertakings. and management of social risks. implementation. safeguards. 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 mechanisms for monitoring. legal.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 financing plan). planning and phasing of interventions. commercial. and other matters. Project readiness is to be reviewed and discussed in the PFRR. Upon receiving a signed PFR from the Government requesting a new tranche approval. evaluating. reporting requirements.

It should describe the client’s compliance with the undertakings. as well as any representations and warranties included in the FFA. FFA = framework financing agreement. 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. and other matters. SPD= Strategy and Policy Department. intensive and professional as for stand-alone projects. fiduciary oversight. procurement up to the contract award should be sought for SSTs). . 109. some Board members had noted that the modality poses some risks to proper implementation and accountability. procurement. Due Diligence and Viability Analysis It is generally desirable that due diligence of MFF tranche projects should be as 108. (iii) procurement for packages (including consultancies) planned in the first year of implementation is sufficiently advanced before tranche approval (wherever possible. safeguards. OM = Operations Manual. 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. 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. financial. anticorruption. DMF = design and monitoring framework. capacity. economic. social. governance. and quality of. commercial. 45 SI (2006) Quality assurance SI (2011) Quality assurance SI (2006) Peer review and advice SI (2011) Peer review and quality assurance B. PFRR = periodic financing request report. For the MFF: A checklist signed by the project team leader. (ii) safeguard actions are taken. regulatory. MRM = management review meeting.Quality Assessment and Review SI / OM Area of concern Details and implementing agencies is built upon. PFR = periodic financing request. Source: Independent Evaluation Department. SST = second and subsequent tranche. implementation. The IEI team will also provide advice on demand at all stages of the MFF processing cycle during the pilot period. The PFR is to confirm that the general understandings under the FFA remain valid. At the time of mainstreaming. SRM = staff review meeting. due diligence. legal. However. and had requested ADB Management to supervise adherence to. director. The IEI team is required to review and comment on MFF proposals before they are submitted to Management and the Board. 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. 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. 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. IEI = innovation and efficiency initiative. 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. MFF = multitranche financing facility. SI = staff instruction.

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. project management. 77 78 In one case (MFF34 in Georgia). take on by providing too much input or advice on technical and engineering matters during project preparation. including technical and engineering. whether on the MFF/tranche team or 113. and are often irretrievable makes it difficult to obtain a complete picture. the fact that discussions with consultants and clients are often via email. 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. do not emphasize project design and engineering aspects. upon request. The sector specialists are normally required to work on strategy and planning. The supplementary appendixes are not circulated but can be provided by the team. In general. . on the COP. 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. Details are presented in the supplementary appendixes. normally during project preparation missions or review missions. However. 111.46 Real-Time Evaluation Study of Multitranche Financing Facility 1. are seen relatively infrequently. are not systematically stored. The ADB team provides inputs on all aspects of project preparation. noting that limited planning and detailed design work prior to starting construction resulted in increased costs and delays. knowledge sharing. the new streamlined business processes allow documents to contain minimal and sometimes selective information. ADB job descriptions of sector specialists. and staff supervision. it is evident that discussions on technical designs or on technical alternatives that may be more cost effective. ADB staff review the reports prepared by the project preparation consultants. which determines the extent to which the technical and engineering aspects need to be discussed. and not specific to MFFs per se. ADB Management has a genuine concern regarding the liability that ADB may 114. the ADB team had commented on the alignment of a road bypass. By the time ADB receives a signed PFR with all its required attachments and appendixes for approval. An example comes from advice given to staff on a transport sector MFF. 112. processing. After PFR submission. technical due diligence normally comes about when the team has prepared and circulated a draft PFRR for inter-departmental comments and feedback. 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. However. The extent to which supplementary appendixes are suitably updated or verified for correctness and accuracy is uncertain. The sector community of practice (COP) is the most qualified to perform technical due diligence—although it is not mandated to receive all PFRRs. In addition. the client is normally assisted by a consultant.77 This process is similar to that for a standalone project. the BTORs showed that ADB teams provided significant inputs on issues related to ADB’s procurement rules and safeguards. When preparing an MFF tranche. On the basis of a review of a few BTORs that are available to IED. sector COPs comprise mostly staff from the sector specialist stream from operations departments and other relevant specialists from knowledge departments. 78 These are issues of internal control. and concerns for timely submissions of the required documents were also expressed.

. when it becomes difficult to address discrepancies or problems with the economic analysis. The Economics and Research Department (ERD). The entire SST preparation process is managed by the team leader and other team members. whether 117. including substantiating overly optimistic assumptions.nsf/webview!OpenView& Start=1&. Strategy and Policy Department (SPD). In many cases.asiandevbank.02 (refer to footnote on this PAI). RRPs do not define all tranches up front. or where unvalued costs are expected to be significant. or with an EIRR in the 10%–12% range if relevant additional but unquantifiable benefits can be identified.80 In many cases. is circulated to Central Operations Services Office (COSO). Further. several road sector feasibility studies use the HDM IV model to establish the benefits from new. It appears that ADB staff is readily accepting the results. 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.org/edr0015p. As per PAI 5. and (ii) reject projects with an EIRR below 10%. and (ii) undertaking methodology research.Quality Assessment and Review 2. Economic viability of all tranche projects is required to be established as per the ADB guidelines for economic analysis. particularly when the EIRR is above the threshold. and other relevant departments. Against this background. The HDM IV model works like a black-box where the user provides relevant project data. This is a very late stage in the tranche processing cycle. This ERD competence is in line with its various mandates. the draft memorandum defining and detailing the scope change. For instance. which include (i) advising on the sound application of appraisal methods for lending services. they are considered indicative and are subject to change. 82 ERD is not explicitly mentioned in this list. Office of the General Counsel (OGC). Economic Viability and Due Diligence 47 115. it appears that economic viability analysis and due diligence may not be accorded the importance they are due. “major” or “minor. 81 gets the opportunity to review the economic analysis only when a draft PFRR is circulated across departments to seek comments. reconstructed and rehabilitated highways or roads. and the model automatically calculates the EIRR. 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. To the extent that tranche project changes are to be introduced. Even where SST 116.” the authorized director is required to obtain inputs from other departments on a draft memorandum that provides relevant details on the changes. to (i) reject projects with EIRR between 10% and 12% if no additional unvalued benefits can be demonstrated. projects are defined in the RRP. Controller’s Department (CTL). see http://lnadbg1. and distilling good practices of economic analysis of projects and programs. 79 The standard ADB practice is to use the economic internal rate of return (EIRR) criterion.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. A review of the MFF and PFRR documents and discussions with stakeholders of 118. These departments are required to provide comments within five working days of receipt of the draft memorandum. and available tranche project change memoranda indicate that it does not receive these memorandums for comments. and to accept projects and subprojects with an EIRR of more than 12%. and the tranche project information remains within the division and department until the PFRR is to be circulated to other departments for comments. which has the expertise and competence to comment on economic evaluation issues.

the revised EIRR was shown as 12. Safeguards Compliance and Due Diligence For safeguards due diligence.3%. RRP = report and recommendation of the President. (ii) 12 fold increase in avoided accidents-related benefits. After more than doubling the cost from $2. the recalculated EIRR for the Kobuleti bypass is estimated at 12. 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. ADB has supported capacity development related to safeguards in client organizations or program management units in about 50% of the approved MFF investment programs.6 million per kilometer to $6. the $70 million spent in tranche 1 is considered a “sunk cost. 2009. the estimated increase in other benefits is questionable. EIRR = economic internal rate of return. while the EIRR is only a little above the threshold.” 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. Policy Paper. 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. in this recalculation. However.8%.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. MFF34 GEO: Road Corridor Investment Program Tranche 1 originally included the bypass around Kobuleti. As part of the nonphysical investment component. rather than pushing for a deepening of the analysis. and (iii) a traffic increase from 3775 vehicles per day (base year 2006) to 7. ADB either provides the necessary expertise or 120. GEO = Georgia. MFF = multitranche financing facility. . Manila. It is noteworthy that passenger time savings account for a large share of the total benefits.9%. Source: Independent Evaluation Department. 119. After additional financing through tranche 3. the EIRR for tranche 1 scope. it suffered cost overruns. In some cases. Safeguard Policy Statement. and a part of the bypass was then to be funded through tranche 3.48 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. This is due largely to the fact that ADB’s own safeguards requirements are more stringent than those followed by its DMCs. or when concerned about the overall viability of the project. After detailed design and realignment. 84 ADB. 3. In some cases. was 12.254 vehicles per day (base year 2008) in one of the highway sections. the new Masali-Astara expressway.4 million per kilometer. This reflected increase benefits in terms of (i) about 100% increase in time savings benefits. While the revised traffic estimates are based on new traffic counts. sources it externally by engaging consultants.

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

and to identify the total amount of TA along with its funding source. Likewise. 91 For instance. No matter how rare such occurrences are. other inputs. Monitoring. whether or not advance and retroactive financing will be considered. recognized that the DMFs needed to be improved significantly. Although linkages between the MFF and tranche-level MFFs improved overall from 2009 to 2011. DMFs are intended to generate the right information for decision making and oversight. and each tranche was to have its own DMF and be monitored in the same way as a stand-alone project.93 89 The design and monitoring frameworks need to be improved significantly For instance. Similarly. At the time of switching to the eOps platform in early 2011. 92 Each MFF was required to have a facility-wide DMF. which was to help track the direction of the roadmap. Oversight. and perhaps of the third type. directors noted that. 90 For instance. policy framework. 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. and outcomes. and to form a basis for tracking and reporting performance at the MFF and tranche levels. 2010. tranches and other projects approved in 2009. and actions being taken to mitigate the risks and resolve the issues. and to provide estimates for consultant and staff time requirements. or/and that question the veracity of MFF prerequisites. (ii) risks and issues. further improvement is desirable. financing plan. it appears that there have been some lapses in the quality of due diligence of MFF tranche projects (see Box 6 and Table 11). 93 Refer to the COSO Portfolio Management Unit’s DMF quality assessment reports which analyze DMFs of MFFs. several 127. At the time of mainstreaming. At mainstreaming in mid-2008. 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. and 2011. including progress made on each tranche output. and Reporting Arrangements Board concern on due diligence. noting that the financing plan does not bring out the availability of finances for subsequent tranches. The DMF-based tracking and reporting mechanism required MFF and tranche teams to do adequate data and information gathering. it appears that the POE is making a useful contribution. it was noticed that 129. 89 (iii) on compliance with procedural issues or nomenclature. investment program. 92 Such reporting was supposed to provide (i) statistical information on the MFF. the quality of MFF and tranche level DMFs is assessed as being variable by the Central Operations Services Office (COSO) Portfolio Management Unit. several PFRRs did not contain a separate DMF for the particular tranche. to indicate that due diligence will be carried on tranche1 projects. to indicate which outputs constitute physical investments and which constitute nonphysical investment. as well as possible barriers and issues. (iii) DMF updates. 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. 91 To the extent that comments are of the first and second type. safeguards framework. and (v) any changes in circumstance or material facts relating to the investment program/plan.50 Real-Time Evaluation Study of Multitranche Financing Facility prerequisites. although the conceptual framework for MFFs was sound. However. outputs. there were risks to implementation and accountability—and they specifically requested ADB Management to supervise adherence to and quality of due diligence. (iv) status of compliance with undertakings. D. Nonetheless. suggesting a way to relate institutional capacity strengthening requirements with the budget for nonphysical investments. Design and monitoring frameworks. the Board 128. . to discuss indicative procurement methods. 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. which enabled regional departments to report on the performance of each MFF in each country on an annual basis.

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

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

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

They added to their skill base to be able to improve other urban services. DMC Experience with the MFF Modality The flexibility associated with MFFs has made the modality attractive 141. India: Madhya Pradesh Efficiency Improvement Investment Program (MFF57). the urban local bodies had mostly sanitation engineers and workmen. On the contrary. In India. MFF57 was approved although a stand-alone project loan could have been structured instead. or a different MFF. associated with the MFF. 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. However. The difference. while ADB’s fiscal year coincides with the calendar year. but without having to pay commitment fees (no matter how small) on the entire MFF envelope. some borrowing entities for urban sector MFFs in India took decisions to strengthen their capacities to manage urban projects. 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. 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. the MFF modality is favored as the government considers the FFA as a 143. 98 With such a long-term commitment as a basis. there are indications that the MFF in India has led to greater appreciation of ADB funded investment programs than in most other countries. 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. Previously. full commitment from ADB.101 Constraining features of the MFF modality. of approving the second tranche in December of a certain year or the first 3 months of the following year was very little. as per the requirements of the MFF policy. . In countries such as Armenia. or a stand-alone project. 99 Overall. 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. and that specific tranche loans can be signed as and when project readiness is achieved. Towards increasing acceptance of the MFF modality. To the extent MFF tranches have financed cost over-runs of MFF projects included in previous tranches of the same MFF. when it became evident that resources would become available within 2011. 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 is considered an additional element of flexibility of the MFF in many cases. that relevant agencies appreciate the programmatic design and predictable financing associated with the modality. In Papua New Guinea. and all tranche projects can be implemented without having to draw down the entire tranche loan amount. For instance. executed efficiently.54 Real-Time Evaluation Study of Multitranche Financing Facility 2. This type of accommodation is possible. certain cost savings can be achieved. it was expected that ADB would be able to approve the second tranche only in the first quarter of 2012. the study is informed by the concerned regional department. and can make minor adjustments to accommodate ADB’s changing liquidity position. In such a case. Azerbaijan. where the MFF modality has been used in the transport sector. because the fiscal year in India runs from 1 April to 31 March. and Georgia. The Government of India also recognizes and understands the flexibility 144. Where all projects in a tranche are 145. the second tranche was quickly processed and approved by December of that year. 142. from the Government of India’s perspective.

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

the government concedes it still prefers stand-alone projects. General Capital Increase V 152. ADB’s operations (including OCR and Special Funds resources for loans. The second tranche supports the remainder of civil works and consulting services. ADB’s comparative strengths. . grants. to the $13. equity investments. the opportunity to reduce commitment fee payment obligations (no matter how small) in the coming years will make the MFF modality generally more attractive. The full CPS cycle is shorter than the MFF utilization period. mainly through the CPS which is 153. but it does reduce the maneuverability of including interventions to manage unforeseen stress.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. This was made possible by the fifth general capital increase (GCI V). and consulting services. and construction supervision. 107 MFF52: Ho Chi Minh City Urban MRT Line 2 Investment Program. Manila. and trade finance) have increased significantly. aligned with Strategy 2020. Country Programming Any MFF program necessarily straddles more than one CPS cycle ADB delivers its strategic agenda to a DMC. A CPS is normally implemented through rolling 3-year COBPs. guarantees. 151. Since MFF was first piloted. depot. 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. programs.5 billion range during the next 3 years. and technical assistance to the particular DMC over a 5-year period. Table 12 shows that all countries and sectors with MFF interventions 106 MFF12: Viet Nam: Mong Duong 1 Thermal Power Investment Program. The second tranche supports the construction of the underground and elevated line. technical assistance grants. Annual Report 2011. B. depot equipment. The first tranche supports site preparation. the DMC’s development strategy. and narrows the focus further within these areas. procurement. 2–5 May (Forty-fifth annual meeting of ADB Board of Governors). 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. which define a pipeline of interventions that fit the agenda spelled out in the CPS. A CPS identifies operational areas from the menu of options provided in Strategy 2020 within the framework of the DMC government’s development plan. and construction contracts. 109 Following adoption of Resolution number 336 by the ADB Board of Governors in April 2009.56 Real-Time Evaluation Study of Multitranche Financing Facility approvals for each tranche—although as noted above. A CPS normally defines a program of assistance that identifies areas of investment projects. At present. each tranche of an MFF investment program and all other investment projects need to be approved by the Prime Minister’s office. civil works. plus engineering. there is little savings in terms of time and effort. 108 ADB. 2012. In Viet Nam. This may not be critical for those countries and sectors where the combined MFF tranche financing envelope is lower than the CPS financing envelope. and efforts by other development partners. from the $8 billion–$11 billion per year range during 2006–2008. As a result.5 billion–$15. Any MFF 154. 2. The first tranche provides system development and implementation support. ADB Perspectives 1. 2009–2011. although it recognizes that with OCR loans.

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

it may be useful to consider other options for strengthening policy dialogue for such sectors and countries. PRC = People’s Republic of China. c Refers to all sovereign lending operations. 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 1.279 43% Water 897 1. Please note that the actual MFF tranche approvals fell short of the projected levels. Capital Headroom ADB’s Treasury Department (TD) models MFFs in the OCR balance sheet on the 158. it may also be useful to understand the implications for policy dialogue and capacity development.711 14% Water 138 311 44% ADB = Asian Development Bank.269 71% Indonesia Water 4 200 2% Kazakhstan Transport 980 1.315 1. MFF portions that are not converted to tranches. In some sectors and countries where the MFF modality has penetrated rapidly and accounts for a major share (say. To the extent necessary. Source: Independent Evaluation Department. including MFF tranche approvals. 157.074 51% Transport 390 2. basis of actual and projected data provided by other ADB departments. In addition to approvals for physical investments.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. also includes approvals for nonphysical components. MFF = multitranche financing facility.201 12% Uzbekistan Transport 486 658 74% Water 258 313 82% Viet Nam Energy 1. c MFF tranches account for 100% of the pipelined approvals projected in the CPS/COBP documents. and that all actual approvals during the 2009–2011 period are MFF tranche approvals. more than 75%) of all approved assistance since MFF began to be piloted (see Table 13).051 2.467 72% Transport 1. are not included.485 3. b a 3.004 28% Georgia Transport 347 377 92% Urban 118 118 100% India Energy 2. PNG = Papua New Guinea. Refers only to tranche approvals.142 66% Water 90 113 80% Armenia Transport 277 324 85% Azerbaijan Transport 455 496 92% Water 375 375 100% Bangladesh Transport 281 1.075 91% Mongolia Transport 44 146 30% Pakistan Energy 1. then the projected/planned tranche approval amount is taken from the most recent CPS/COBP. as follows: (i) .396 3.58 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). During 2005–2011. Source: Independent Evaluation Department.

as well as additional MFFs that are projected to be approved over the coming years. Figure 8: MFF Portion Not Converted into Tranche (as of 31 December 2011) 16 14 12 ($ billion) 10 8 6 4.4 4 2 2006 2007 2008 2009 2010 2011 6. Most of this accumulation is from OCR resources—as 85% of the combined approved MFF envelope is from OCR resources.7 10. Figure 9 shows that some MFFs contribute more to this accumulation. Source: Independent Evaluation Department. especially those in which the remaining portion of the MFF financing envelope is significantly greater than the remaining MFF utilization period. . (iii) beyond the WPBF period. 59 A portion of the MFF financing envelope that is not converted into tranches is 159. (ii) projected tranche approvals in the 3-year WPBF from SPD. in view of portions of existing MFFs that are not converted to tranche loans.Implications for Operations actual tranche approvals from the Controller’s Department. 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.3 15 Undisbursed Balance ($ billion) MFF = multitranche financing facility.3 12. which for 2013–2015 is about 40% of sovereign lending. accumulating each year (see Figure 8). the share of tranche approvals to sovereign lending approvals is assumed to be 35% per year.9 13.

etc. and contribute to the depletion of capital headroom Where the MFF is from OCR resources. However. annual OCR lending approvals could be restricted to less than the levels approved in 2009–2011.113 This could diminish ADB’s ability to mount crisis-response operations. and contribute to the depletion of capital headroom. direct cost implication on an OCR-financed MFF from the portion that has not been converted into a tranche loan. Effectively then.7 billion was paid as of 31 December 2011.2 billion was for paid-in of which $4. Crisis161. or nuclear reactor leaks. revitalize basic services (such as education and healthcare). valued at $162. 114 so as to address rehabilitation of priority physical and social infrastructure. hurricanes. or epidemics: (ii) technological or industrial accidents such as explosions. it is anticipated (as of end-November 2012) that within a few years. the DMC has little reason to cancel or state that it will not avail of any leftover portion of an approved MFF envelope. 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%.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. guarantees. $8.5 million shares. tidal waves. and catalyze economic activity. cyclones. At the conclusion of the subscription to the fifth general capital increase in 31 December 2011. or (iii) conflicts of any type. and/or is projected to continue falling over the next few years.5 billion. response includes needs for emergency assistance quickly following a disaster. 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. . This need not be a cause for concern during times when ADB’s capital adequacy is high and rising. crowd out other financial products from OCR lending. chemical mishaps. Therefore. widespread community violence. crowd out other financial products from OCR lending. droughts. and loan loss reserve. volcanic eruptions. there is no commitment charge or any 160. flooding. in addition to projections for loan repayments. 112 Inspite of subscriptions to General Capital Increase V. equity. oil spills. Source: Independent Evaluation Department. such as regional/national civil wars.2 billion by December 2011. the subscribed capital had increased to over 10. Disasters may be caused by (i) natural events such as earthquakes. MFF investment programs lock up future finances. and increase in paid-in capital to $8. MFF investment programs lock up future finances. ADB’s capital adequacy has been declining over the past few years. In addition.

IED reviewed ADB’s crisis-lending response. 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. MFF enablers and undertakings that constitute the FFA are in fact a binding commitment on the DMC governments and clients. and economic. 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). This reduction was part of an effort to free resources to launch emergency relief measures. 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. ADB responded through the establishment of a new budget support instrument. 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. and economic. 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. postponed. IED. and technical aspects. capacity. sector policies.Implications for Operations limit. More specifically. In 2011. sector policies. only one tranche had been approved in 2006 for $227. . Such reductions or cancellations may also give ADB greater leverage over some reforms and enhance the credibility of the MFF modality. 2009. the incidence of approved MFF programs in the country assistance portfolio can make it relatively difficult to accommodate newly arising financial assistance requirements. and recommended more flexible repayment terms going forward. capacity. The MFF and its PFRs can be rejected. 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. legal and technical aspects. Manila. the ADF component of MFF09 was enhanced from $10 million to $280 million. 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. or terminated if conditions described in the FFA and legal agreements are not met. However. Real-time evaluation of Asian Development Bank’s response to the Global Economic Crisis of 2008–2009. the financing envelope was reduced for only one approved MFF investment program. governance. and not attributed to poor performance of the MFF. Until November 2012. 2011. the policy paper that mainstreamed the MFF. the countercyclical support facility. 115 However. governance. Enhancing ADB’s Response to the Global Economic Crisis—Establishing the Countercyclical Support Facility. financial. financial. 117 Existing documentation— including the proposal document for the MFF modality. in view of headroom considerations. Manila. to extend short-term loans (of 5-year maturity including a 3-year grace period) to DMCs. 117 The MFF modality binds clients to the delivery of specific warranties and representations that cover safeguards. Such actions (reductions or cancellations) require commitment by the Board and the Management. 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. legal.8 million. social. Table 14: Documented Provisions to Terminate. 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. in view of the urgency for investing in infrastructure to support the rural poor. which included the entire MFF allocation at the time). 118 However. In 2009.116 162. as well as the establishment of some suitable triggers. social.

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

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

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

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

appropriate attention is given to the nonphysical investment component of the MFF investment program. Whether or not such a road map has been made remains unclear. In most MFFs. a list of success factors for better performance. this also means insufficient attention to a constructive and useful policy dialogue during a part of the MFF utilization period. it appears that this requirement has been followed in only 5% of them. However. (ii) the MFF’s strategic context comes from the relevant CPS. From the concept papers available to IED. the concept paper is required to include a matrix to justify the MFF modality vis-à-vis other instruments. MFF Prerequisites 176. among other things. 5.66 Real-Time Evaluation Study of Multitranche Financing Facility 4. the flexibility thus accorded to the MFF program can compromise the programmatic approach. capacity development can be incorporated into SSTs is seldom followed. years. Guidance provided on the required strategic context and road map through the Board Paper. The quality of strategic context and road map. . as well as risks and mitigation measures. the FFAs and RRPs in particular do not provide enough insight into the quality of the roadmap and strategic context of the MFF. the flexibility accorded by MFFs is one of the key reasons for their increased acceptance in many DMCs. available documentation does not normally provide adequate information on the rigor of due diligence performed. there is significant scope to improve institutional capacities across a range of sectors. a nonphysical investment component is financed largely through the first tranche. Such built-in flexibility is necessary for MFFs. and (ii) a mere discussion of all MFF prerequisites is considered sufficient and appropriate justification for choosing the MFF modality. Although there is some improvement in the upfront documentation in this respect. documentation. As per the Board paper and the relevant OM section introduced at the time of MFF mainstreaming in 2008. where necessary. Where the policy framework is weak. 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. It appears that. Adequate due diligence on institutional capacity is required to ascertain that 178. because at MFF approval. Flexibility MFFs are used highly flexibly over long utilization periods that average about 8 179. For this reason. such due diligence is necessary. and (iii) a road map should include. and its subsequent revision in 2010. OM updates and internal staff instructions clearly states that (i) the MFF should be consistent with an agreed-upon strategy and sector road map. Given that in many countries. The choice of the MFF modality is seldom properly justified in the concept papers and RRPs. in many cases. as evident from available MFF 177. 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. For many MFFs. is highly variable. about 30% of all approved MFFs do not indicate a firm number of tranches or a range up front. nor on the link between the due diligence findings and the scope and budgets of the nonphysical component. Along with greater certainty for long-term funding. a detailed assessment of bottlenecks and constraints to achieving the roadmap. In many cases (i) the RRPs also do not include a proper justification of the choice of the MFF modality. it is unlikely that all projects for all tranches would even be identified. and a recommendation that.

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

the CPS and COBP do not provide a good basis for advance information to the Board on MFF-related matters. MFF RRP. COBP. The scorecard system used to rate MFFs can also be refined in the coming years with the introduction of more sophisticated approaches for evaluating. Tranches are comparable to stand-alone projects in terms of implementation time lines (time lapsed between approval and closing) as well as approved amounts. tranche performance. Lending Planning and Financial Projections 188.68 Real-Time Evaluation Study of Multitranche Financing Facility 184. MFF investment programs span two or three CPS periods. on a regular basis. information for Board oversight. A coherent set of performance indicators may not be used to track performance across tranches and at the facility level. 7. for some sectors and some countries. MFF performance reports to the Board can be improved to provide adequate 186. However. Therefore. However. and to form a basis for tracking and reporting performance at the MFF and tranche levels. Where a minor or major change is effected in tranche projects. MFF delays. with an average of about 7. Dovetailing of tranche approvals for approved MFFs within the country annual 187. which is part of the team processing an MFF tranche. and compliance with undertakings. Board Oversight over Long MFF timelines Time lines of MFFs are significantly longer and the MFF financing envelope is 185. Portions of MFF financing envelopes that are not converted to tranche loans have increased each year. In addition to inputs from an economist. and PFRR preparation—in dovetailing MFF-related data into the CPS and COBP preparation process. the median utilization period is 7. when the PFR report is nearing finalization. The utilization period of nine approved MFFs is 10 years or more. Self-evaluations and independent evaluations of completed MFFs will necessarily have to take place very long after their approval. In many cases. the MFF time lines are longer than for stand-alone projects. have been approved in the December bunching season means the Management does not have sufficient time for review and oversight. the linkages between MFF and tranche-level DMFs continue to be weak (although there has been some improvement since 2009).8 years. although in many instances. The fact that nearly 50% of all second and subsequent tranches approved thus far. and the MFF financing envelope is normally significantly larger. 8. across all MFF investment programs. significantly larger than for other lending modalities. the Economics and Research Department obtains a PFR report for commenting at a late stage. At this stage. the Economics and Research Department also reviews the economic analysis.6 years. by themselves. the memorandum is not required to be circulated to the Economics and Research Department for comments. Economic due diligence of tranche projects must be rigorous. resource envelope has been difficult. only one or two tranches have been approved thus far. For the 66 MFFs approved until December 2011. Even though some tranches overlap. and MFF approvals have an impact on headroom . However. a re-examination of economic viability would most likely lead to significant delays in tranche approval and is therefore not done. The required facility-wide and tranche-level DMFs are intended to generate the right information for oversight. MFFs have contributed to difficulties in lending planning and financial projections. Each MFF is usually expected to have three or more tranches. the projected MFF tranche approvals in a given year can exceed the CPS financing envelope for that sector. This situation highlights the difficulties—under existing or generally accepted practices and processes for CPS.

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

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

201. 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. while the evidence for 199. it would be useful for ADB to consider ways to be able to exercise the option. In view of the extent to which flexibility mechanisms have led to project changes in approved tranches in the past. 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. Besides. Towards this goal. on the basis of the study’s key findings. it is essential to augment the existing peer review mechanism with: (i) use of suitable MFF readiness filters for specific ADB regions or DMCs. 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. as well as results based financing and other modalities currently under consideration). A suitable arrangement can also be worked out to ensure uniform interpretation of guidelines across regional departments. C. procedural and other changes . Another recommendation deals with the issues related to access to data and documentation. To facilitate adherence to other provisions of the Operations Manual. To ensure proper scrutiny of the MFF prerequisites.Key Findings. such as the MFF pre-requisites. there needs to be a realistic discussion on institutional capacities and the suitability and stability of a policy framework. the benefits of the MFF modality. of terminating or cancelling ongoing MFFs midstream. Recommendations 200. and Recommendations achievements through the MFF program may deviate significantly from what was stipulated in the Board-approved documentation upfront. Lessons. without compromising other intended benefits of the 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. The adequacy of such due diligence must be reconfirmed through monitoring arrangements in subsequent recommendations. improved development effectiveness remains tentative. Four recommendations. if necessary. Recommendation 2: Manage the use of flexibility during the MFF 202. are presented below to strengthen the approval and implementation process for the MFF modality. or with the strengthening of. implementation period without compromising. 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 the design of physical investment programs that conform to MFF prerequisites. Controller and COSO) to consistently and uniformly interpret guidelines that define minor and major tranche project change categorization. which could be carried out as part of the CPS process. 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. Office of the General Counsel.

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

Lessons.Key Findings. and Recommendations 73 Appendixes .

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

7. This was approved along with MFF02 “National Highway Development Sector Investment Program. for institutional strengthening.520 2006 8 3. Earlier tranches can be designed to facilitate the implementation of subsequent tranches.5 22.810 2007 7 4. ADB Management expects that the MFF potentially provides ADB and its clients with multiple entry points for policy dialogue within a specified utilization period. Some MFF tranches have also been used to finance cost overruns from other ADB interventions. undertakings.5 26.28a 971 1670 2160 3571 4051 4462 16. The first tranche can include (but is not limited to) the financing of advisors for the implementation of the first project. 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). MFF = multitranche financing facility.024 2008 12 5.1: Multitranche Financing Facility Approvals Approved MFF Financing Envelope Number of Amount Year MFF Approvals ($ million) 2005 2 1.. preparation of subsequent projects.7 37. (iii) financial intermediary credit lines.193 2010 12 4.718 2009 12 6. 6. 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. and safeguard frameworks adjusted to consider specific issues.889 % MFF Tranche Amount Approvals to Total Loan Approvals -17.938 Approved MFF Tranche Amount ($ million) 3. Policies can be refined.6 33.6 32. Multitranche Financing Facility Annual Report 2011. in turn. a Refers to Asian Development Fund (ADF) Loan 2210-PAK from Special Fund Resources. . About the MFF 5. only the converted loans are. approved on 13 December 2005. and capacity development.4 Tranches of sector investment programs.g. MFF interventions are broadly classified as follows: (i) discrete. The MFF modality was originally meant only for investment projects—although a few policy-based loans have also been included in recent years. the Board approves a maximum amount for each proposed MFF. urban infrastructure projects).7 -. Under this facility.237 Total 66 31. 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. 2012. eligibility criteria and decision making filters. An MFF is a financing modality made available by ADB to its clients to support their medium.to long-term investment programs or investment plans. and (iv) guarantees. and reporting arrangements. Manila. Following Board approval. 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.= not available. 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. sequential components of large stand-alone projects. risks addressed. The overall facility amount is not a legally binding commitment on ADB or its clients.Overview of the Multitranche Financing Facility Modality 75 Table A1. B.436 2011 13 6.3 19. As originally conceived in the IEI document.” Sources: Asian Development Bank database and ADB. and (ii) a number of discrete but same type of projects that are repeated at different locations with different executing/implementing agencies (e. (ii) tranches of sector investment programs over a long time frame.

. which can be made available during the implementation phase.e. This would come with other associated benefits. and (iii) more opportunities to modify implementation plans while work is in progress.5 freeing staff time. ADB and its clients can expect significant time and related resource savings vis-à-vis stand-alone projects.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. MRM = management review meeting. (ii) more opportunities to address policy and procedural gaps. ADB believes that in the processing of an MFF and its multiple tranche loans. Figures A1.76 Appendix 1 8.1 and A1. RRP = report and recommendation to the president. and related legal Agreements •Sign FFA – DG/CD •Sign FFA & PFR Client •Finalize RRP CD = country director. and (ii) second and subsequent PFRs. 5 Refer to footnote 2 (paras.2. MFF = multitranche financing facility. Mainstreaming the Multitranche Financing Facility.g.2 present respectively process flow diagrams for (i) the MFF and the first periodic financing request (PFR). PFR.. 2008. a fact-finding mission may be combined with completion of PPTA work (i. 52 and 53). It is important to note that the new business processes introduced in 2010 entail the same steps as outlined in Figures A1. such as (i) more opportunities for interaction with clients on sector issues and trends. To what extent this belief is justified is at best unclear even today. FFA = framework financing agreement. SRC = staff review committee. Figure A1. DG = director general. project feasibility study). . Manila. PFR = periodic financing request. Source: ADB. 9.1 and A1. some of the steps are now normally carried simultaneously (e. VP = vice president.

CTL. OGC = Office of the General Counsel. Manila. CTL. CTL = Controller’s Department.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. VP = Vice President. OED. status of compliance. RSES = Environment and Safeguards Division. policy issues. OGC. etc. capacity. Circulation of PFR Report to COSO. 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. RSES. progress on previous tranches. and RSES for comments within 5 working days •Management reviews PFR Report. 2008. . and circulates to COSO. COSO = Central Operations Services Office. Source: ADB. OED = Operations Evaluation Department. PFR = periodic financing request. safeguard policy compliance memo •VP may convene MRM if deemed appropriate OGC drafts legal agreements. OED.Overview of the Multitranche Financing Facility Modality 77 Figure A1. PFR. Mainstreaming the Multitranche Financing Facility. 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. governance.

Operational Manual Section D14 issued on 18 May 2010. etc. .2 lists the key requirements for MFF design at present. The tranche must have a physical investment component (Note: if nonphysical investment alone is required. Besides. 14–24). as of now.) that is sufficient to understand the scope and financing of subsequent tranches. director. 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.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. 1 2 3 4 5 B. contractors’ unresponsiveness. 2010. and that infrastructure projects normally take 3–5 years or more to complete. type of investment.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. 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. subsector. and merits of the proposed MFF The first tranche should not exclusively finance detailed design. financing plan. undertakings. past implementation records. given that the first MFF approvals occurred in December 2005. policy framework. and decision-making criteria and filters.78 Appendix 1 10. 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. etc. Manila. 1. Much of the information regarding progress of approved MFFs and their tranches is available through the project performance information system and e-Operations. 6 Facility completion reports are also expected to be prepared as and when ongoing MFF’s begin to close. 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. Factors Affecting MFF Performance 11. the MFF tranche projects are also affected by factors such as insufficient institutional capacities. then other modalities should be used. Table A1. etc. Table A1. Refer to footnote 9 (paras. few tranches have closed and few tranche completion reports are available. as for investment projects funded supported by ADB through other modalities. start-up delays. ADB. Manila. Otherwise. Although there should be a completion report for each MFF tranche. such as TA loan or a project design advance (PDA) A. due diligence services. the RRP should contain indicative information (geography. ADB. 2011. capacity development. strategic context. An investment program proposed for MFF should first be checked for eligibility on this basis. Staff Instructions for the Multitranche Financing Facility. 6 7 6 7 8 9 This is not unusual. investment program.

policy framework. to secure safeguards compliance (i. 2008. outcomes. compliance with Operations Manual Sections F1 and D14). may also be at later stages DMF = design and monitoring framework. and other matters. The MFF modality also calls for (i) continuity of ADB staff and significant reallocation of ADB resources from processing to implementation. Manila. financing plan. Source: Compiled by the Independent Evaluation Department. Simultaneously. warranties and representations. although some members expressed concern about the increasing size of the MFF portfolio.Overview of the Multitranche Financing Facility Modality 79 8 9 10 11 12 13 C. 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. RRP = report and recommendation of the President. 10 2. 14 Description The first tranche projects should be representative of the entire MFF from a safeguards perspective. broad investment program. economic. the Board expressed concerns that related mostly to (i) the strategic context of the MFF. 2011. MFF = multitranche financing facility. and results b) DMF for each Tranche should focus on project level outcomes. 2010. IA = implementing agency. PPTA = project preparatory technical assistance.. At the end of the pilot phase. (iii) ADB. and the application of ADB policies and procedures. safeguards. Manila. legal. Staff Instructions for Multitranche Financing Facility. 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. The 10 Refer to footnote 2. Issues 13. Manila. (ii) ADB. EA = executing agency. Operations Manual Section D14. If not. Staff Instructions for the Multitranche Financing Facility. 2006. and (iii) risks to implementation and accountability. loan amounts. the nature of investment and financing plans. Manila. This may be explained in the FFA. 12. should be included in the facility administration manual (FAM). from: (i) ADB. etc. (iv) ADB. (Note: similarly. FFA = framework financing agreement. 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. TA = technical assistance. (ii) appropriate management information systems and good management and application of such information. safeguards framework. MFF size should be justified within the context of: a) client’s financing needs and readiness of the investments b) technical. inputs. 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. 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. the Board was generally supportive of the MFF modality. and (iii) well equipped advisory and support teams for procurement. . and on the basis of experience gathered during the pilot phase. (ii) clarity and consistency on the criteria for the MFF and its application—which refers to the quality of road maps and policy frameworks. PFR reports submitted for President’s approval should specify which expenditures are to be financed from ADB sources.e. Operations Manual. Section D14.

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

and private entities Guarantee Amounts guaranteed and DMCs. public sector nonsovereigns Private sector. against completion of agreedupon conditions Two loans up front (one a Policy-based program policy-based program loan. the loan: in tranches against other a project loan) completion of agreedupon conditions. against agreed-upon conditions Nonsovereign Loan (without a sovereign guarantee) Policy-based Program Loan To finance a reform program One loan up front DMCs. 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.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. and private entities DMCs. public sector nonsovereigns. against project cost In amounts requested. public sector nonsovereigns. and private entities Guarantee Amounts guaranteed and DMCs.Table A1. 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 . Loans Project Loan (sovereign) In amounts requested. adjustment costs or budget requirements. 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. adjustment costs. public sector proven as owed subsovereigns. and budget requirements Cost of reforms. and project costs DMCs Sector Loan Cost of subprojects In tranches. and private entities Overview of the Multitranche Financing Facility Modality B.

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

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. 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. and the dynamic among ADB. financing plan. indicating a weak sector strategy or roadmap? Does the flexibility accorded by the MFF allow for relaxation of standards for project design. investment program. etc.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.APPENDIX 2: EVALUATION ISSUES AND INFORMATION REQUIREMENTS Table A2. due diligence.? 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 . sector roadmap. 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. policy framework. the client. 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.

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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

a Assuming IED does not have access to documents uploaded on e-STAR. SRC = staff review committee. MRM = management review meeting. SST = second and subsequent tranches. EA = executing agency. .7 8. FAM = facility administration manual. PFR = periodic financing request. EIA = environmental impact assessment. 5 above ADB = Asian Development Bank. RRP = report and recommendation of the President.Evaluation Issues and Information Requirements 87 Normally available Normally not available Difficult to obtain Generally not obtainable 7.6 7. PFRR = periodic financing request report. PAM = project administration manual. 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. MFF = multitranche financing facility. FFA = framework financing agreement. Source: Independent Evaluation Department.

APPENDIX 3: MULTITRANCHE FINANCING FACILITY APPROVED BY SECTOR Table A3.1: 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 .

Source: Asian Development Bank database on Loan. GEO = Georgia.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 - . 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. MFF = multitranche financing facility. Grant. IND = India. PRC = People’s Republic of China. BAN = Bangladesh. MON = Mongolia. Table A3. VIE = Viet Nam.Multitranche Financing Facility Approved by Sector MFF No. AZE = Azerbaijan. UZB = Uzbekistan. ARM = Armenia. and Equity Approvals. PAK = Pakistan. KAZ = Kazakhstan. PNG = Papua New Guinea.2: MFFs Approved by Sector (2005–2011) MFF Total OCR No. Technical Assistance.

ADF = Asian Development Fund.3: MFF Tranche Approved Amount per Sector for Years 2005–2011 – ($ Million) Country/ Region PRC India VIE PNG CWRD Others Total Total 800 6. W & WSS = water and water supply and sanitation.709 252 6.750 . PNG = Papua New Guinea. AZE = Azerbaijan.000 55 GEO 500 250 250 64 IND 200 200 0 Total 31. ARM = Armenia. MFF = multitranche financing facility. AFG = Afghanistan. and Equity Approvals. Grant. UZB = Uzbekistan.188 Multisector 1. VIE = Viet Nam. PRC = People’s Republic of China. DMC = developing member country.= not available. Table A3.804 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 2.561 1.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. AITF . BAN = Bangladesh.074 2.= not available. GEO = Georgia. VIE = Viet Nam. OCR = ordinary capital resources. PRC = People’s Republic of China. Source: Asian Development Bank database on Loan. MON = Mongolia. PAK = Pakistan. Source: Asian Development Bank database on Loan.938 27.060 Grant Source 400 ADF 787 ADF.000 1. MFF = multitranche financing facility.559 Finance 150 150 Transport 650 1. Technical Assistance. and Equity Approvals.051 57 1. PSM = public sector management.90 Appendix 3 MFF Total OCR ADF No. Grant.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 1.476 325 6.359 200 1.000 1. CWRD = Central and West Asia Department.1 for the approved MFF Investment Programs.787 ANR 217 498 50 765 PSM 130 130 Energy 150 2. PNG = Papua New Guinea.368 5.483 375 15. Technical Assistance. IND = India. ANR = agriculture and natural resources. AITF = Afghanistan Infrastructure Trust Fund. KAZ = Kazakhstan.246 W & WSS and Others 821 138 791 1. . a Refer to Table A3.167 1.210 390 195 3.

213 W& WSS 1.226 332 780 2. PSM = public sector management. Source: Asian Development Bank database on Loan.017 0.851 Transport 4.555 5. W & WSS = water and water supply and sanitation.= not available. Grant. MFF = multitranche financing facility.973. Technical Assistance.0 760 2.626 5. VIE = Viet Nam.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 . PRC = People’s Republic of China.050 135 13 886 1. PSM = public sector management. CWRD = Central and West Asia Department. .6 Others 0 150 561 45 315 1.0 2.792 390 7.803 Energy 605 732 1.5 3. and Equity Approvals. Source: Asian Development Bank database on Loan.955 2. W & WSS = water and water supply and sanitation.698 7. PNG = Papua New Guinea.0 0. PRC = People’s Republic of China. Table A3. PNG = Papua New Guinea.166 372 45 0 151 928 2. ANR = agriculture and natural resources. W & WSS = water and water supply and sanitation.996 19. Technical Assistance.049. Grant.758 1.861 48. Grant. MFF = multitranche financing facility. CWRD = Central and West Asia Department.Multitranche Financing Facility Approved by Sector 91 Table A3.152 2. and Equity Approvals. Source: Asian Development Bank database on Loan.596 4.1 120. PRC = People’s Republic of China.669 Multisector 1.261 ANR 1. VIE = Viet Nam.834.128 PSM 0 200 690 0. MFF = multitranche financing facility.266 46 819 0 368 629 3. Table A3. PSM = public sector management. and Equity Approvals. VIE = Viet Nam.6: Non-MFF Approved Amount per Sector during 2005–2011 ($ Million) 2 Country/ Region PRC India VIE PNG CWRD Others Total Total 9.5: 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 - . PNG = Papua New Guinea.216 10. Technical Assistance. CWRD = Central and West Asia Department.162 12.5 Finance 0 1.0 175.223 ANR = agriculture and natural resources.768 3.662 Urban 285 0 125 0 67 400 877.516.= not available.0 1. ANR = agriculture and natural resources.9 6.

VIE = Viet Nam. Grant. Grant. PRC = People’s Republic of China. . PNG = Papua New Guinea. MFF = multitranche financing facility. CWRD = Central and West Asia Department. Table A3. W & WSS = water and water supply and sanitation. PSM = public sector management. W & WSS = water and water supply and sanitation. MFF = multitranche financing facility.92 Appendix 3 Table A3. and Equity Approvals.6 Others 0 150 43 23 63 48 49 ANR = agriculture and natural resources. Source: Asian Development Bank database on Loan. 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 51.7: 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. CWRD = Central and West Asia Department. PSM = public sector management. Technical Assistance. VIE = Viet Nam. Source: Asian Development Bank database on Loan. PNG = Papua New Guinea. and Equity Approvals. Technical Assistance.

200 1.671 2.329 2.373 1.904 3.116 1.287 3.285 1.799 3.166 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.242 1.016 1.280 1.934 1.049 1.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) 1.026 2.220 2.006 1.443 1.614 1.645 2.915 1.036 2.828 1.132 1.775 2.621 2.208 3.976 2.098 1.588 2.539 1.090 3.026 1.208 648 1.APPENDIX 4: TRANCHE IMPLEMENTATION PERIODS Table A4.347 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 .206 1.652 4.800 2.269 2.878 1.221 2.570 1.652 2.836 4.823 1.836 2.939 3.486 1.

306 2.827 2.016 1.061 1.202 3.646 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 .610 2.092 1.300 1.945 1.373 1.387 1.113 2.111 848 3.142 1.981 1.441 757 913 2.316 1.664 1.495 1.291 1.838 3.830 2.559 1.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) 1.132 2.210 1.374 2.795 1.94 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.920 1.670 921 5.658 3.578 1.036 1.751 3.544 2.988 1.487 2.665 2.477 1.895 1.915 1.078 2.387 1.519 2.426 3.666 1.651 2.409 3.660 3.

868 1.093 2.645 2.177 1.052 3.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) 1.085 2.652 3.860 656 2.390 2.153 3.041 1.554 1.883 1.307 2.151 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 .208 2.263 2.172 2.373 1.836 1.091 2.093 2.187 2.728 1.596 2.643 1.201 1.355 2.851 1.508 1.470 3.728 353 1.187 3.384 1.754 2.355 2.682 1.390 1.043 3.109 2.017 3.461 2.473 3.389 2.008 1.152 1.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.111 1.557 2.836 2.258 1.

879 1. TC = transport and communications.958 2.524 1. Source: Asian Development Bank database on Loan.037 941 2.201 2.850 2.1 for the approved MFF Investment Programs. a Refer to Table A3.990 1.447 2.302 1.272 2. PAK = Pakistan.324 1.463 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.96 Appendix 4 Tranche Implementation Period as % of MFF Utilization Period 59 100 108 100 50 69 70 53 MFF No.017 3.676 1. KAZ = Kazakhstan. AZE = Azerbaijan.447 1.440 1. EN = Energy.990 1.324 1. UR = urban .324 1. BAN = Bangladesh.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) 2.910 1. MFF = multitranche financing facility. INO = Indonesia.272 2. GEO = Georgia.447 2. UZB = Uzbekistan. VIE = Viet Nam. Technical Assistance. and Equity Approvals. ANR = agriculture and natural resources. .566 3. PRC = People’s Republic of China.436 1. Impl = implementation.998 2. PNG = Papua New Guinea.290 1.631 2.302 2. IND = India.324 1.566 2.940 844 2.990 1.416 3. MON = Mongolia. WSS = water supply and sanitation. Grant.046 3.416 2. ARM = Armenia.382 2.478 2.

power distribution. 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.Tranche Implementation Periods 1. If the projects in different tranches of the same MFF cover different subsectors (for instance. 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).. urban roads. For instance: The extent of similarity of projects across tranches in the same MFF. 04. or efficient household lighting in one tranche and power plant efficiency improvement in the next tranche).g. and the actual date of effectivity of the same grant or loan. water distribution pipelines. the utilization period has been (or is being) extended. Besides. The large variation in time-lag between actual approval of a grant or loan. it is considered that each tranche has dissimilar projects. given that in a significant number of MFFs nearing completion (MFF numbers 01. 03. 20). . given that scope changes have been affected for a large number of tranches. national highways). 1 The extent to which attention has been paid to project readiness at approval across countries and sectors. power transmission in one tranche and power distribution in another. To what extent the projected end of the MFF utilization period can be considered reliable. these projects were reasonably well prepared by the time MFF63 was approved. 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 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). 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 at approval across tranches in the same MFF. it has similar projects. 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.

1% 63.380 112 579 277 1.0% 42.7% 2.6% 18.3% 6.8% Time Elapsed between 30% Disbursement and Effectivity (% of Tranche Duration) 38.9% 102.5% -52.5% 19.0% 3.9% 14.1% 26.3% 16.7% 50.8% 11.6% 20.1% 41.2% 24.4% 24.566 998 121 959 773 1.5% 50.644 -452 653 1.5% 20.003 25 118 720 118 686 138 232 532 547 45 Time Elapsed between 10% Disbursement and Effectivity (% of Tranche Duration) 21.6% 40.8% 42.146 --609 793 1.4% -10.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 1.1% 10.7% -12.177 333 548 516 -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 -1.2% 40.9% 34.4% 41.7% 26.9% -29.9% 73.6% 35.345 423 673 631 --812 910 -140 152 1.086 124 940 390 573 703 921 197 Time Elapsed between 20% Disbursement and Effectivity (% of Tranche Duration) 31.3% 6.9% 138.9% 9.4% 42.6% 8.1% 4.3% 47.4% 50.6% 17. 20% and 30% disbursements for selected MFFs and Tranches Loan No.4% 60.4% 45.6% 103.8% -4.2: Time elapsed from Effectivity to 10%.9% 3.6% 42.5% .2% 13.2% 30.9% 59.2% 38.3% -18.4% 9.4% 68.3% -39.2% 39.654 317 318 847 233 289 460 1.2% 28.98 Appendix 4 Table A4.609 109 1.5% Time Elapsed between 20% Disbursement and Effectivity (days) 587 50 -439 -126 -1.1% -45.1% --39.1% 43.1% 40.4% 29.5% 35.212 313 1.4% 26.5% 11.5% 8.1% 12.1% 19.9% -63.7% 10.0% 53.2% --26.1% 49.0% 30.464 956 1.299 515 1.8% 59.6% -76.3% 48.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.7% --39.8% 28.640 1.1% 102.6% 42.0% 11.1% 21.

PNG = Papua New Guinea.7% -29.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% --28.7% -- Tranche Implementation Periods ARM = Armenia.6% 9.1% 5.2% 49.9% 30.8% 37.2% 35.7% 26. UZB = Uzbekistan. 20% and 30% disbursement.5% 8.8% 15.4% 51.0% 11.2% 16.3% 14.5% 27.6% 0.9% 13. b Refer to Table A3.8% 45.3% -25.6% 31. IND = India.5% 10.4% -15.6% 63.1% 18. AZE= Azerbaijan. MFF = Multitranche Financing Facility. a As per information available from COSO.8% 2.1 for the approved MFF Investment Programs.3% 14.6% 29.9% 22. GEO = Georgia.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) 30.7% Time Elapsed between 30% Disbursement and Effectivity (% of Tranche Duration) 40.1% 24.5% 46.4% 17.0% 63.6% ---26.5% 35.2% --0.7% 26.0% -15.3% 11.5% 12.6% 24. INO = Indonesia. 99 . PRC = People's Republic of China.6% 42.9% 53. Source: Based on data provided by Central Operations Services Office.5% 42.2% 31.7% -23.8% 9.3% 13. KAZ = Kazakhstan.2% 31.4% 0.0% 31.2% -33.Loan No.8% 19.6% 49.5% 33.1% 26.6% 13.3% 48.3% 33.2% -33. time value dates for MFF loans not listed above. BAN = Bangladesh.5% 36. are not available for when those loans first reached 10%. VIE = Viet Nam.3% 39.9% -20.6% 7. PAK = Pakistan.8% 32.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) 25.8% 27.0% -17.2% 39.6% 12.6% 48.1% 36.8% 3.

. as well as relevant tranche loan projects and MFFs that were prepared and/or processed during the 12-month period. (ii) more entry points to address policy and procedure gaps. IED tried to access 12 months of data (from 1 June 2011 to 31 May 2012) for selected stand-alone projects. coupled with (ii) increased staff availability for implementation monitoring and administration. In contrast. Box A5: Resources for Processing and Implementation 52. Source: ADB. This represents considerable time and related resource savings for clients and Asian Development Bank (ADB). 53. an MFF on average is equivalent to four stand-alone projects.APPENDIX 5: RESOURCES FOR PREPARATION. For instance. The TMS does not record staff time spent on sub-activities such as concept paper finalization. all five regional departments have been filling out the TMS. an MFF reaches its break-even point vis-à-vis a stand-alone project at the time of the second periodic financing request. The basis for these estimates is not clear.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. with associated benefits such as more opportunities to understand sector issues. AND IMPLEMENTATION OF MULTITRANCHE FINANCING FACILITIES A. In addition to spending time managing MFFs. At the time of mainstreaming of the multitranche financing facility (MFF) modality in mid-2008. For purposes of this evaluation. address policy gaps. This is based on the projected number of conversions of tranches over the utilization period of an approved MFF. 3. It is important to note that ADB began to roll out the timesheet management system (TMS) a few years later. Manila. 13 person-weeks are budgeted annually for project administration. etc. As such. Since 1 June 2011. (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. and (iv) loan/grant supervision and implementation. Box A5 and Table A5. ADB staffs are also required to go to the field more often. compared with about 20 personweeks for MFF implementation. and 20 person-weeks for each subsequent tranche. The extra time spent on implementation is a strong and positive feature of MFFs. First. in view of the general perception that they were not reliable or complete for the purpose at hand. in April 2011. and implementation administration actually fill timesheets yet (e. However. MFF = multitranche financing facility. such data were not available. PROCESSING. and make mid-course corrections. 2008. Other benefits of the MFF include (i) more opportunities for knowledge gathering and knowledge sharing on sector issues and trends. a comparison of multitranche financing facilities (MFFs) with stand-alone projects requires different assumptions.. Relevant activities by international staff and national staff that are recorded in the TMS are (i) TA processing. (iii) loan/grant processing. ADB = Asian Development Bank. Timesheet Management System 2. Implementation of MFFs entails strong program management and additional time in the field. the Central Operations Services Office [COSO]). processing. 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. Mainstreaming the Multitranche Financing Facility.g. 15 person-weeks for due diligence of the MFF as a whole. B. framework financing agreement (FFA) preparation. However. Multitranche Financing Facilities Board Paper 1. the MFF processing cycle with four tranches requires 150 personweeks—the standard 75 person-weeks for the first tranche. fact finding. which implies higher travel costs. (ii) TA supervision and implementation. For stand-alone projects. not all departments that have a role in preparation. Four stand-alone projects require 300 person-weeks (75x4).

Policy Paper: Mainstreaming the Multitranche Financing Facility. the use of PPTAs to prepare subsequent PFRs is discouraged. Processing and Implementation of Multitranche Financing Facilities MFF = multitranche financing facility. Manila.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. PPTA = project preparatory technical assistance. d These numbers represent the aggregate budget coefficient for processing and implementing a PPTA (10 and 8 staff weeks. Under MFFs. which will not be provided to prepare PFRs. e On average. The annual budget coefficient to implement a normal infrastructure project is 13 staff weeks. 101 . Each PFR is the functional equivalent of one normal infrastructure project. and to monitor and administer them. respectively). and processing a normal infrastructure project (75 staff weeks). Since the use of PPTAs to prepare subsequent PFRs is discouraged. c The budget coefficient for PPTAs is added here to reflect savings generated out of PPTAs. 2008. a The budget coefficient for staff time to process a normal infrastructure project is 75 staff weeks. the budget coefficients for PPTA processing and implementation have not been added to the numbers in this column. PFR = periodic financing request. Source: ADB. one MFF has about four PFRs.Table A5. b The numbers in this column are estimates of the actual number of staff weeks needed to process an MFF and its PFRs.

A quick analysis also reveals the wide variations in the data. where the MFF fact-finding and negotiations were concluded on 19 August 2011. RRP = report and recommendation of the President. In yet another instance. negotiations completed a day earlier on 11 April 2011.2: 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. and even the incidence of negative elapsed time between two milestones or other seemingly inexplicable sequences of events. a second MRM/SRM convened on the same day. However. 6. D. Online Survey Database 8. eOps only provides data on elapsed time. while the RRP is reported to have been circulated to the Board on 7 September 2010. for MFF47 for the transport sector in Kazakhstan. eOperations Database 4. MFF58. For instance.102 Appendix 5 C. 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. the fact-finding mission is reported to have been finished in July 2006 and the MRM/SRM was in March 2007. IED conducted an online survey on team leaders that had prepared and processed MFFs and tranches. Source: Independent Evaluation Department.2). Another example is MFF66 for the energy sector in Viet Nam. The eOps database also includes corresponding activities for preparation and processing of stand-alone project loans. Table A5. MFF fact-finding is reported to have been completed on 12 April 2011. With a view to obtaining some information on the level of effort (LOE) in preparing and processing MFFs and tranches. and does not include any information on staff time actually spent or allocated for specific activities and sub-activities. MFF = multitranche financing facility. MRM = management review meeting. the elapsed time required between certain milestones. FFA = framework financing agreement. PFR = periodic financing request. while FFA negotiations were concluded in June 2011. PPTA = project preparatory technical assistance. SRM = staff review meeting. while MRM/SRM was held a month later on 20 September 2011. The eOperations (eOps) database covers all sub-activities that go into preparing and processing of MFFs as well as individual tranches. such as timeline for performing various tasks and achieving specific . A cursory glance at the compiled data shows a large number of gaps (see Supplementary Appendix A). The evaluation team also took this opportunity to compile other useful information through the survey. 5. 7. 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.

and skill sets available on a team. regarding the elapsed time for preparation of MFF plus Tranche1 (i. However. while others may not have. Similarly. 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. For reasons mentioned above (para. (ii) a change in team leader for each subsequent tranche of an MFF is the norm.) would not be available through these surveys. 9. the same is also generally true also for elapsed time estimates for preparation and processing of tranches. It appears that some may have included the person-days of consultants in arriving at these estimates. team composition. sector strategy and policy. rather than the exception.7 and A5. 1 The survey also included questions on ownership. the survey shows a shorter elapsed time for preparation and processing of MFFs plus Tranche 1 in nearly all cases. To a somewhat lesser degree. Regarding LOE for preparation of MFF plus Tranche1. the evaluation team could not be too precise in asking the questions either. etc. the level of effort data also reveal vast ranges of one order of magnitude or more (see Tables A5. the approval of the PPTA concept note.e. Findings of Elapsed Time and Level of Effort 12.1 The online survey questionnaires are in Supplementary Appendix B. whether or not there was a PPTA is left open. Table A5.5. where the respondents were expected to fill out the survey forms from memory. 10. and A5. Likewise. and certain institutional development aspects (such as whether or not institutional capacity was assessed up front. it was hoped that it would improve the judgment of the concerned team leaders. and Implementation of Multitranche Financing Facilities milestones. it could have been the start of a PPTA factfinding mission.4.8).6 also reveals the large variations in elapsed time for preparation and processing of stand-alone projects. a PMO set up. capacity development support identified up front. While this by itself does not in any way ascertain that precise information/data will be provided.Resources for Preparation. 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.. the starting point of the elapsed time is not specified. 103 E. 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). . 14. in spite of the rather small sample size. regarding elapsed time for processing of MFF plus Tranche 1. 11). A5. Processing. 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. The evaluation team recognized up front that precise information on any aspect (elapsed time. 11.3. Owing to that reason alone. 13. Compared with the data from eOps. etc. For instance. and relied on an approach of asking respondents to provide qualitative comments in addition to quantitative data. The large variations in the data compiled from eOps and the online survey are evident from Tables A5.). or some other. up to the finalized PPTA report). level of effort.

Table 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. UR = urban. The online survey of team leaders that prepared and processed MFFs yielded 23 responses with elapsed time-related data. IND = India. a From eOps. MFF = multitranche financing facility. TC = transport and communications. and (ii) 17 MFFs for elapsed time between fact-finding and submission of final report.4: Elapsed Time for Processing of MFF along with Tranche 1 Elapsed Time. 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) .104 Appendix 5 Table A5. b From eOps. 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. PPTA = project preparatory technical assistance. EN = energy.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. c From online survey. Source: Independent Evaluation Department.

IND = India. RRP = report and recommendation of the President.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. UR = urban. The online survey of team leaders that prepared and processed MFFs yielded 25 responses with elapsed time-related data. from end of Fact-Finding to RRP Approval (days)a 71 290 1117 114 374 Elapsed Time. (ii) 81 for elapsed time between concept paper approval and PFRR approval. TC = transport and communications. b From online survey. PFR = periodic financing request. 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. a From eOps.Resources for Preparation. Note: Data drawn from the following number of tranches from eOps: (i) 54 for elapsed time between end of fact-finding and PFRR approval. VIE = Viet Nam. Source: Independent Evaluation Department. b From online survey. UR = urban. IND = India. and Implementation of Multitranche Financing Facilities Elapsed Time. TC = transport and communications. . EN = energy. a From eOps. and (iii) 39 for elapsed time between PFR receipt and PFRR approval. PFRR = periodic financing request report. Processing. Table A5. The online survey of team leaders that processed tranche loans yielded 31 responses with data on elapsed time-related queries. EN = energy. Source: Independent Evaluation Department. (ii) 59 MFFs for elapsed time between concept approval and RRP approval. PAK = Pakistan. 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. Source: Independent Evaluation Department. Source: Compiled by the Independent Evaluation Department from survey responses. Post-MS = post mainstreaming. IND = India.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. Table A5. 26 responses received contained relevant data.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. PRC = People’s Republic of China. Note: Data drawn from survey of MFF team leaders. MS = mainstreaming. and 19 thereafter. that included 7 MFFs in the pilot stage. VIE = Viet Nam.106 Appendix 5 Table A5. p-d = person-day. TC = transport and communications. . Note: Data drawn from 26 transport and energy sector stand-alone loans in selected countries where MFFs have also been approved. MFF = multitranche financing facility. PPTA = project preparatory technical assistance. PAK = Pakistan.

Processing. Source: Compiled by the Independent Evaluation Department from survey responses.Resources for Preparation. Note: Sample size in parentheses. p-d = person-day. EN = energy. . MFF= multitranche financing facility. TC = transport and communications. and Implementation of Multitranche Financing Facilities Table A5. UR = urban. IND = India.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.

other sources of financing include sub–borrowers.e. other sources of financing include the private sector and other financial institutions In the DMF and FFA. cofinancing is being sought for SSTs. In the DMF. "Others.. In the DMF." In the RRP (main text)." In the RRP (main text). cofinancing was referred to as a possibility. in the DMF.e. Other sources of financing include local market and foreign borrowing." In the RRP (main text). cofinancing for SSTs was "actively being sought. i. "Other International Financial Institutions or Bilateral Financial Institutions" was identified as another financing source for the Investment Program. cofinancing was referred to as a possibility. but there was no further clarification on who they might be. domestic banks were identified as one of the financing sources. i. In the RRP. other sources of financing for the Investment Program include "other financial institutions.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. other sources of financing identified include "Other Financiers". In the RRP. In the DMF: "Other external financiers" for the Investment Program was identified as another financing source. In the RRP. In the DMF." In the RRP. "Other Funding Agencies" and "Private Sector" were identified. "if the Government requests." In the DMF.APPENDIX 6: COFINANCING Table A6: References to Cofinancing in RRPs and FFAs of Approved MFFs MFF No. cofinancing under Carbon Market Initiative is a possibility. but there was no further clarification on what these agencies might be. "India may request. In the RRP (main text). In the main text. 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 . cofinancing for energy efficiency and alternative energy projects was deemed possible under the Kyoto Protocol. The latter include bilateral and multilateral contributions and funds that will be raised from international capital markets. in the DMF.. cofinancing was referred to as a possibility—"may be mobilized in the future" "Others" was identified as one of the financing sources. "other agencies" were identified as one of the financing sources. "private institutions" were identified as another financing source.

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

MFF22). following agreed-upon procurement guidelines. but included during implementation phase as Tranche 2. for instance in the power transmission and distribution system investment programs in Pakistan (MFF07 and MFF21. the prospect of parallel cofinancing is simply highlighted in the MFF documents. that may be so because of longterm ADB support. Manila. Proposed Multitranche Financing Facility. Ho Chi Minh City Urban Mass Rapid Transit Line 2 Investment Program (Viet Nam). 23 November (approved 14 December 2010. Power Distribution Enhancement Investment Program (Pakistan). which includes pricing policies. Renewable Energy Development Sector Investment Program (Pakistan). Therefore.2 The need for cofinancing is not a consequence of the ADB-supported MFF. Manila. a development partner or another financier may choose to complement ADB’s financing (after Board approval of the MFF) through cofinancing administered by ADB. the project sponsors and their commercial lenders are encouraged to pursue debt financing from export credit agencies and other bilateral or multilateral sources. MFF52). ADB. 2010. Report and Recommendation of the President. ADB and other cofinanciers cofinance expenditures related to a common list of goods and activities in agreed-upon portions. it is most likely to be influenced by the policy framework. and ADB. 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. 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. ADB. MFF53). Proposed Multitranche Financing Facility. 2006. MFF07). 28 August (approved 18 September 2008. The guarantee facility is not mentioned in the RRP.7 In this case. To the extent that the private sector participates in implementing a sector roadmap during or after the MFF utilization period. 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). 2008.110 Appendix 6 1. 2008. Report and Recommendation of the President. 2010. It is noted that in some cases. 6 and (iv) at the appraisal stage. Manila. the cofinanciers follow their own procedures to finance different goods or activities that are integral to the MFF investment program. Greater Mekong Subregion Ben Luc-Long Thanh Expressway Project (Viet Nam). Power Transmission Enhancement Investment Program (Pakistan). 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. In some cases. but that should some cofinancier come forward. MFF21). 2006. ADB. 1 Whether or not an ADB-supported MFF investment program has in fact contributed to such cofinancing is difficult to ascertain. respectively). . 21 November (approved 12 December 2006. Manila. parallel cofinancing from a potential cofinancier was expected in the second tranche. 10 November. 5 (iii) a $200 million guarantee facility set up to mobilize commercial debt for wind and renewable energy projects in Pakistan. In joint cofinancing. Report and Recommendation of the President. Manila. 3 4 5 6 7 In parallel cofinancing in this case. institutional structures. Report and Recommendation of the President. Proposed Multitranche Financing Facility. Report and Recommendation of the President. Proposed Multitranche Financing Facility. Manila. 3. Such cofinancing administered by ADB may be parallel or joint. it was known that ADB would cancel the relevant portion of the ADB loan if cofinancing from OFID were to become available. Proposed Multitranche Financing Facility. Report and Recommendation of the President. ADB. 13 August (approved 3 September 2008. To the extent that commercial cofinanciers (commercial banks) participate. 1 2 Cofinanciers follow their own procedures to finance different goods or activities that are integral to the sector roadmap. another development partner can cofinance another portion of the sector roadmap in parallel. and other aspects—which is unlikely to have been duly influenced by the MFF investment program. 2. As a MFF investment program is often a part of a sector roadmap or strategy. Proposed Multitranche Financing Facility. ADB. 4 (ii) at the MFF approval stage for an expressway in Viet Nam. Orissa Integrated Irrigated Agriculture and Water Management Investment Program (India). 23 November (approved 17 December 2010.

especially in infrastructure and utilities. Georgia. But given that commitment fees begin accruing only on loan signing/effectivity in both cases. Papua New Guinea. Grant. Transport. It is noted from Table A7. Finance. Water Supply and Sanitation. Public Sector Management. Source: Asian Development Bank database on Loan. Multisector. However. Azerbaijan. and technical assistance) are indeed relevant. By agreeing (through the framework financing agreement) to provide financing only when needed. Note: All data are for the period 2005–2011. Armenia. commitment fee savings are likely to reflect improvements in disbursal rates. and Urban. Energy.1 that the average MFF financing envelope in all countries has exceeded the average stand-alone project approval amounts substantially. simply because they have entered into long-term partnership arrangements. Kazakhstan. 3. PRC = People’s Republic of China. Other than those listed. includes the following countries where ADB has approved MFFs: Afghanistan. grants. 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. It is difficult to establish such a long-term partnership if clients’ financial liabilities increase. Technical Assistance. equity. However. and if the approved amount is large. 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). at this time. wherein even a small delay in the signing/effectivity of successive tranches can lead to some commitment fee savings. the MFF modality helps ADB to address this problem. Bangladesh. and Uzbekistan. Indonesia. In most cases. 2. 4. . 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. and Equity Approvals.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. Mongolia. and for countries and sectors where ADB has approved MFFs. Definition of Counterfactual Scenario 1. this is just a matter of conjecture. The Board paper 1 noted that many ADB clients require long-term and large investments. and where commitment fee savings come from phasing of the approval/effectivity of a stand-alone loan through tranches. Includes the following sectors: Agriculture and Natural Resources. such an MFF facility cannot lead to commitment fee savings. this leads to sizeable commitment fees for the client and tighter lending headroom for ADB. such ADB financing products generate a balance sheet commitment for clients.APPENDIX 7: COMMITMENT FEE SAVINGS A. Either of these conditions holds only for a few MFFs. 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. And ADB’s traditional financing instruments (loans. Table A7. guarantees. or (ii) the MFF financing envelope is comparable to a stand-alone project.

7. .3 shows the commitment fee savings for selected MFFs where (i) more than one tranche loan has been approved under the MFF investment program. For sake of simplicity. are not available. all commitment fee savings estimates are for tranche loans. one for detailed project design and the other for project construction.. when a flat commitment fee rate began to be applied. the commitment fee savings are negligible. particularly the tranche loan approval amounts and tranche loan signing dates for all tranches that have been approved thus far.2. 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. and actual or scheduled disbursement dates. i.2 shows that in all scenarios.112 Appendix 7 B. Table A7. the most important being that (i) the alternative scenario remains a large stand-alone loan. Scenario 2 is similar to Scenario 1. In Scenario 1. In Scenario 3. the MFF comprises two tranches. Although this threshold for project readiness may vary vastly across executing agencies in different sectors and countries. 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). the MFF comprises four tranches to finance four similar projects.e.. the four are financed through one loan. these are financed through a single loan. it becomes possible to arrive at a reasonable estimate of commitment fee savings even if data on actual disbursements. the loan disbursal pattern will remain the same (i. any particular executing agency continues to function essentially in the same way. and (ii) MFF20 and MFF38. 6. the underlying assumptions effectively are that (i) during the time the MFF is being implemented. 2 As ADF grants do not come with any commitment fees. which supports one large project. Commitment fee savings are estimated for three hypothetical scenarios in Table A7. 2 and (ii) all required data are available. With such assumptions. Table A7. Computations are shown for three MFFs that include (i) MFF13. This effectively means that any executing agency would prefer to sign a loan agreement only when a certain level of project readiness is achieved. disbursal amounts vs elapsed time profile will not vary with the loan signing date). the commitment fee savings are estimated for MFFs under which all tranche loans were negotiated after January 2007. while in the alternative mode. which are smaller than the average size of stand-alone projects in those countries.e. in the alternative stand-alone mode. except that the design phase gets extended. Commitment Fee Savings Estimates 5. Commitment fee savings estimates presented in Table A7.3 entail some simplifying assumptions.

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

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

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

T3 = third tranche. SST = second and subsequent tranches. RRP = report and recommendation of the President.25 0. and Equity Approvals. Technical Assistance.18 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 0.25 0. Source: Asian Development Bank database on Loans.3: Commitment Fee Savings Estimates for Selected Energy MFFs MFF Tranche Country Loan/ Grant No. MFF = multitranche financing facility. VIE = Viet Nam. a Refer to Table A3. T2 = second tranche.1 for the approved MFF investment programs.a Energy 13 13 20 20 20 38 38 38 VIE VIE PRC PRC PRC IND IND IND 0.14 IND = India. .116 Appendix 7 Table A7. PRC = People’s Republic of China. Grant.45 MFF No. 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. T1 = first tranche.

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

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

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

Urban development Pollution of the watershed: 1. capacity development. disaster preparedness plan. the problems faced in the Citarum River Basin (CRB) are complex. Management of water disasters Community empowerment: 1. Reforestation 5. Tariffs/allocation Sector Assessment Issues Problem Tree Issues Undesirable Flow Regime: 1. Household effluent 2. Land use Roadmap 4 Water Pollution. Information/education/ awareness for capacity development of community Data. Water quality improvement 2. Erosion and Sedimentation Enhancing capacity for environment protection of rivers. Sediment 2. decision support system and modeling Disaster management: 1. IWRM = integrated water resources management. research. community part in integrated water resources management. awareness. On-line flow forecasting 8 Program management: 1. Salinity 2. drought management plan Education. information decision support: 1. Wastewater Saguling Dam 3. data sharing. Tides 4. IME = independent monitoring and evaluation. Solid waste 3. The interventions were prioritized in consultations with water resources organizations and stakeholders. forests. Slope failure Flooding: 1. Information Water quality and hydrology monitoring. Source: Independent Evaluation Department. Community participation 2. Logging 2. Limited drainage 3. wetlands. 12. water resources information technology. lakes. Fisheries 4. Land uses Low water quality: 1. Citarum flood management 2. While it is desirable that the roadmap gain wide support in the community and government. Logging 2. PCR DMF = design and monitoring framework. information. Management 2. community self-help 7 Irrigation and Drainage Lack of decision support tools: 1. Farming 3. IME 3. Environment protection: 1. Coastal zone management 4. Protected area management 5 Flooding 6 Planning and construction. Peak flows 2. O&M = operations and maintenance.120 Appendix 8 Investment Plan Components + Outputs/ Activities in DMF 3. and it is unlikely that suitable selection of interventions can be developed and prioritized through such a consultative process . Tide / sediment High sediment loads: 1. Fertilizers / chemicals 3. Pollution Sedimentation in river mouths: 1. Industry Mudflow and landslides: 1. PCR = project completion report.

After MFF approval in September 2009. 121 D. such an optimization analysis was planned to be attempted in 2012.5 million). 13. 14. 16. 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). which should help define the roadmap. Although the RRP claimed that a sector roadmap was in place. The intended objective of this stand-alone grant was to help the government strengthen sector planning and management by developing (i) a sector strategy. basin mapping for modeling purpose with nodes. 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.Strategic Context of Multitranche Financing Facilities alone as is stated in the RRP. There appear to be no quantitative links between the sector assessment and the MFF interventions. 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. a properly detailed sector roadmap was prepared. 1 Ideally. As per the RRP. the sector roadmap should have been approved and ready at the time of MFF processing. The grant served as a “PPTA” for the whole MFF. and to achieve poverty reduction. there was no detailed sector roadmap as described in the relevant Operations Manual Section (D14). immigration patterns. (ii) a road map. nor optimization of allocation and consequences for social and economic factors. it had not been finalized and accepted by the government. hydrology. There is no detailed quantitative basin planning. Moreover. trends in industry and different sectors. However. A formal water sector optimization analysis is needed. UZB: Water Supply and Sanitation Services Investment Program (MFF36) 15. the RRP acknowledges that the capacity of water resources organizations and stakeholders in the CRB is low.. and (iii) an investment program. but as of October 2012. usage or allocation of water by sectors over time. but it is still being debated and negotiated between ADB and the government. so that optimization modeling can take place under different climatic probability scenarios. 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. no water resources study. Therefore. exposure of the hydrologic problems quantitatively explained with rainfall/runoff. population growth. There are also no economic data. there appears to be no detailed analysis required to define sufficiently the MFF projects as outlined in the financing plan and implementation schedule. In other words. transfers. 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. more than 3 years after MFF approval. net and gross withdrawal amounts. . etc. There is also no institutional study and capacity assessment for implementation of the investment plan.

maintenance. and maintenance. 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. which now focuses only on transmission capacity expansion. 2 The MFF supports capacity development and strengthening of the institutional framework within the Government of Uttaranchal (GOU). generation. (v) improving the targeting of subsidies to specific customer categories (such as farmers and low income households). Uttaranchal Electricity Department (UED). (ii) creating a grid-operating entity by unbundling the grid operations function from the central transmission utility. operation. corporatization. (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). relevant information on the Uttarakhand Power Sector Investment Program is presented below. Report and Recommendation of the President. (v) encouraging power plants to sell power to more than one state by entering into power purchase agreements with the grid-operating entity. one to support a central transmission utility (PowerGrid). Manila. 2006. Himachal Pradesh. Uttaranchal (Uttarakhand) Power Sector Investment Program (India). (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. MFF03). and the implementing agencies to undertake power system expansion activities in a cost-effective manner. 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 two each to support power sector entities in two states (Himachal Pradesh and Madhya Pradesh). As an example. (iv) encouraging private participation in transmission to augment transmission system and compete against the central transmission utility. (ii) encouraging competition in generation through investment in central sector power generating corporations. and Uttarakhand. . privatization of power stations in the unbundled state-level generation entities.APPENDIX 9: POLICY DIALOGUE AND CAPACITY DEVELOPMENT (SELECTED CASE STUDIES) A. All states have committed to this policy framework and are at various stages of enacting and implementing the unbundling. 2. Capacity Development Support 3. The central level policies also mirror the state-level policies and encompass (i) increasing commercial orientation of all central sector power corporations. transmission. Policy Framework 1. Madhya Pradesh. the key aspects of the policy framework are (i) unbundling of the vertically integrated state electricity boards into distinct generation. and rehabilitation design and operations. These include the four states where ADB has MFF interventions: Assam. Proposed Multitranche Financing Facility. ADB. (iii) encouraging distribution companies to improve their performance through reduction in technical and nontechnical losses. (vi) encouraging merchant power plants by guaranteeing off-take for a part of the generation. and (vi) corporatizing and improving financial management and governance of all state-level power sector entities. and regulating central generating station tariffs. and distribution 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. (ii) consulting services for design and construction management. (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. and privatization program. Energy MFF Interventions in India1 1. 2. At the state level. and facilitating private investment in power generation.

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

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

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

(i) No progress has been made to date in capacity development at the 22. It will also define and execute a program to help improve strategy and policy formulation and planning. and business regulation. operational. better planning. accounting and auditing. and corruption). The government requested ADB to provide a technical 21. and monitoring at the top level with project preparation. The executing agency for the TA will be AEDB. anticorruption. monitoring and reporting. targeting efficient project evaluation. The TA fits over and above the capacity development component accompanying the MFF. (iii) expert support and training of staff in relation to best practice project preparation work —in essence covering due diligence on technical. and program oversight or management. accountability. planning. policy.126 Appendix 9 19.000 on a grant basis. The total cost is estimated at $980. ADB will finance $800. 20. and reporting systems at the federal. finance. evaluation. Capacity development. commercial. 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. This will support establishment of new evaluation. and (ii) governance of public sector enterprises. Capacity development will cover (i) planning and formulation of policy. The capacity component combines “big picture” strategies. governance. legal.000. sustainable growth. (ii) development of adequate management and financial systems. management. Related/parallel technical assistance. capacity development consultant engagement is almost complete. this compilation may not be suitable for the purpose of understanding institutional capacity strength from the viewpoint of suitability for administering the MFF. building human resources. 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. The program will also work on institutional strengthening. federal level. quality of public administration. safeguards. and effective use of concessional assistance. Given that the basic purpose of compiling this information is to understand the DMC’s policy and institutional framework for promoting poverty reduction. including regulatory and legal framework. no commitment has been made to date. financial. and incentives to facilitate private sector investment. labor. 24. (iii) degree to which its policies and institutions promote equity and inclusion (covering gender equality. and project implementation matters. D. Capacity development. revenue mobilization efficiency. rule-based governance. knowledge management (regarding sector development issues and project best practice worldwide). (ii) coherence of its structural policies on trade. fiduciary oversight. financial management systems and practices. social protection. procurement. ADB conducts country performance assessments for all DMCs with access to the ADF. financial management. Institutional Capacity Assessment 23. Clean Development Mechanism (CDM) consultant is to be engaged by the executing agency for registration of projects for Certified Emission Reduction (CER). monitoring. equity of public resource use. The government will finance the balance. and (iv) establishment of systems and procedures. staff coaching and training. Table A9 shows the scores for (i) policy and institutional rating. transparency. and environmental sustainability). and implementation agency levels. . and reporting at the investment and implementing agency level. fiduciary oversight. and financial reporting. (iii) Capacity development in Punjab will be cancelled due to the executing agency’s inaction. and (iv) quality of governance and public sector management (covering property rights. procurement of durable goods is ongoing (contracts awarded). provincial. (ii) SHYDO building construction is completed. monitoring. assistance (TA) package to support AEDB to cater for work on policy formulation. backed by training and computer software and hardware to set up modern management and financial information systems.

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.3 Structural Policies 2.6 3.3 4.5 4.4 2.7 4.4 4.5 4. For instance.5 4.2 4. and policies for social inclusion and equity.1 4.0 4.9 3. it would be useful to consider developing suitable indicators from a range of available databases. and (vi) control of corruption.8 3.5 3. (ii) political stability and absence of violence. Table A9: Institutional Capacity Ratings of Selected ADF Eligible Countries Economic Management 3. (iv) regulatory quality. structural policies.8 4.2 4.1 4.7 3. (iii) government effectiveness.7 4. 2012. (v) rule of law. the World Bank Institute compiles Worldwide Governance Indicators that cover all 14 countries where ADB has supported MFF investment programs.6 3.8 4.0 3.4 3.4 Governance of Public Sector Enterprises 2.3 127 Country Afghanistan Armenia Bangladesh Georgia Mongolia Pakistan Papua New Guinea Uzbekistan Viet Nam a Averaged over scores for economic management.8 4.5 4. Manila.9 4.8 Policy and Institutional Ratinga 2.0 4.Policy Dialogue and Capacity Development (Selected Case Studies) 25.3 5.5 4.9 4.6 3.0 3.2 Policies for Social Inclusion and Equity 2. Source: ADB. These are composite indicators that rely on data from more than 100 databases on the following broad themes: (i) voice and accountability.2 3.0 4.6 3.5 4.8 4. Therefore. .3 3.9 3.9 3.

and Equity Approvals Database.5% 0.7% 0.7% 0.1% 1.2% 0.9% 1.5% 0.5% 0.3% 2008 1.0% Country PRC India Viet Nam Papua New Guinea Pakistan Other MFF countries Afghanistan Armenia Azerbaijan Georgia Kazakhstan Uzbekistan Bangladesh Indonesia Mongolia 1.0% 0.3% 0.8% 7.5% 0.1% 3.8% 3.0% 1.0% 2.4% 0.1% 1.3% 1.4% 0.4% 1.2% 0.6% 1.4% 0.0% 0.3% 0.4% 1.6% 1.1% 0.6% 0.8% 2005 1.0% 0.6% 1.7% 13.6% 1.1% 6.2% 1.7% 2.1% 0.5% 0.9% 2.7% 1.1% 1.3% 0.4% 0.7% 0.7% 0.2% 1.4% 1.3% 0.0% 8.2% 0.0% 0.3% 0.6% 0.6% 3.9% 0.1% 0.4% 2011 1.6% 2009 1.2% 1.0% 1.1% 0.2% 0.6% 0.1% 5.3% 3.9% 2.5% 0.9% 0.5% 2.0% 0.4% 0.0% 2008 0.4% 0.6% 3.8% 1.4% 1. and Equity Approvals Database.5% 0.6% 2.8% 0.8% 1.8% 2004 1.5% 3.5% 3.2% 0.0% 0. Technical Assistance.2% 5.6% 0.7% 0.7% 7.2% 1.6% 0.2% 10. .1% 1.8% 1.5% Total 1.7% 1.8% 3.1% 0.2% 0.7% 0.1% 0.8% 1.8% 0.8% 1.9% 3.1% 1.3% 0.6% 3.1% 3.5% 0.0% 1.0% 0.8% 1.6% 0.0% 0.3% 1.3% 3.7% 0.3% 7.1% 1.3% 2009 0.8% 0.0% 1.9% 1.7% 2.6% 6.2% 2004 0.4% 2.2: Ratio of PPTA Support to Loan and Grant Approvals 2000 0.6% 4.5% 0.3% 1.5% 1.5% 26.1% 2002 0.5% 0. PPTA = project preparatory technical assistance.5% 0.6% 0.1% 0.9% 0.6% 0.1% 5.2% 0.2% 0.7% 0.0% 1.5% 0.5% 4.4% 0.7% 0.2% 2. PRC = People’s Republic of China.APPENDIX 10: TRENDS OF TECHNICAL ASSISTANCE AND PROGRAM LENDING SUPPORT Table A10.0% 4.6% 1.2% 2010 0.0% 0.7% 8.2% 0.0% 1.5% 2.3% 0.0% 2.4% 1.6% Total 2.7% 5.4% 10.8% 0.1% 0. Source: Loan.1% 6.4% 2005 0.2% 1. PRC = People’s Republic of China.6% 2.2% 3.2% 0.0% 0. Technical Assistance. TA = technical assistance.4% 1.5% 0.1% 5.0% 0.2% 0.0% 0. Grants.2% 2.0% 28.6% 0.5% 2.2% 1.7% 2002 1.1: Ratio of All TA Support to Loan and Grant Approvals 2000 1.4% MFF = multitranche financing facility.2% 0.8% 0.6% 3.5% 3.7% 5.3% 0.9% 7.3% 6.9% 15.5% 0.7% 3.0% 1.5% 7.8% 4.1% 0.3% 0.4% 1.8% 2.2% 0.8% 1.5% 0.5% 0.0% 1.7% 1.2% 5.5% 5.5% 0.2% 0.9% 1.3% 0.7% 0.3% 0.2% MFF = multitranche financing facility.4% 0.4% 0.4% 2.1% 3.3% 0.2% 0.3% 0.4% 0.0% 3.4% 0.4% 2001 1.0% 0.5% 1.3% 2003 0.7% 2.3% 0.0% 2011 0.9% 5.0% 2001 0.7% 0.3% 0.4% 0.7% 1.8% 0.7% 8.1% 5. Table A10.3% 1.0% 1.6% 1.3% Country PRC India Viet Nam Papua New Guinea Pakistan Other MFF countries Afghanistan Armenia Azerbaijan Georgia Kazakhstan Uzbekistan Bangladesh Indonesia Mongolia 5.4% 1.1% 0.7% 1.6% 1.1% 2.5% 9.1% 1.6% 1.3% 0.0% 2006 0.0% 0.9% 2.4% 2.8% 2.7% 0.3% 4.2% 2. Grants.0% 0.8% 0.3% 2010 1.8% 1.6% 0.3% 0.5% 2006 0.0% 0.0% 28.7% 3.2% 1.6% 11.1% 2007 0.5% 3.8% 0.7% 0.0% 1.4% 0.4% 0.1% 0.5% 0.3% 0. Source: Loan.5% 4.5% 1.7% 2003 0.9% 8.0% 1.8% 0.5% 2007 1.0% 1.8% 44.

9% 0.3% 0.4% 1.6% 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. Technical Assistance.3% 2.3% 0.0% 2.3% 2.5% 0.2% 6.0% 8. 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 .8% 1.9% 0. Source: Loan.1% 1.3% 2.0% 3.1% 0.5% 1. and Equity Approvals Database.3% 1.2% 0.9% 1.7% 1.0% 8.1% 0.1% 2006 0.2% 1.5% 2002 1.1% 0.3% 0.5% 1.6% 0.3% Country PRC India Viet Nam Papua New Guinea Pakistan Other MFF countries o Afghanistan Armenia Azerbaijan Georgia Kazakhstan Uzbekistan Bangladesh Indonesia Mongolia 4.2% 0.0% 1.5% 1.7% 2.0% 2001 0.6% 1.5% 2.5% 0.4% 2005 0.7% 7. 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.9% 0.0% 0.5% 2.8% 2.4% 0.9% 2.Table A10.8% 2004 1.8% 1.9% 4. PRC = People’s Republic of China.8% 1.7% 0.6% 10.7% 1.9% 2.3% 1.0% 0.4% 0.3% 0.4% 4.0% 0.9% 0.0% 0.0% 0.4% 0.3% 2007 0.4% 0.3% 4.6% 1.2% 0.0% 0.0% 1.7% 2.9% 9.5% 0.2% 1.0% 1.3% 1.5% Total 0. Ltd.8% 3.1% 0.7% 1.3% 0.7% 0.0% 1. Trends of Technical Assistance and Program Lending Support Table A10.8% 0.8% ADTA = advisory technical assistance.2% 1.7% 1.1% 2011 1.9% 2.9% 0.0% 1. 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.3% 2009 0.5% 0.9% 0.0% 0.2% 1.4% 0.5% 0.3: Ratio of ADTA Support to Loan and Grant Approvals 2000 1.5% 1.3% 2003 0.3% 0.6% 0.2% 2008 0.2% 0.4% 5.6% 0.9% 0.1% 2010 1.4% 0.1% 0.6% 3.1% 0.1% 2.5% 11.3% 0.6% 0.3% 3. Grants.3% 4.3% 18.6% 6.9% 0.6% 3.8% 1.7% 0. MFF = multitranche financing facility.0% 4.7% 0.1% 5.2% 0.5% 5.3% 2.6% 0.1% 4.9% 3.1% 5.9% 0.1% 0.1% 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 1.588 1.000 600 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.130 Appendix 10 TA No.000 400 700 500 1.700 900 24 20.000 1.000 600 600 50 450 400 150 150 500 1.214 600 400 600 100 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 .

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

Tranche 1 Loan Tranche 1 Loan Not identified in the RRP and PFRRs ADTA The TA is not attached to the program.APPENDIX 11: FINANCING SOURCES FOR PREPARATION OF SECOND AND SUBSEQUENT TRANCHES MFF No. .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. 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. which will be implemented under each tranche Tranche 1 Grant Tranche 1 Loan Tranche 1 Loan Tranche 1 Loan The MFF provides FIL. the sub-borrowers prepare the subprojects. 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. Tranche 1 Loan Tranche 1 Loan Implementation support component under each tranche Tranche 1 Loan The MFF provides FIL. 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. The TA is not attached to the program.

Financing Sources for Preparation of Second and Subsequent Tranches MFF No. under the Project Implementation component of the MFF) 61 62 63 64 65 66 UZB IND AFG IND MON VIE ADTA = advisory technical assistance. Technical Assistance. RRP = report and recommendation of the President. Sources: Asian Development Bank database on Loan.1 for the approved MFF investment programs. a Refer to Table A3. MFF = multitranche financing facility. Grant. and Equity Approvals. piggy-backed to the MFF) PPTA for the MFF Tranche 1 Loan (or. PFRR = periodic financing request report. Each contract package is time-sliced in line with the indicative tranching plan.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. . SST = second and subsequent tranche. CDTA = capacity development technical assistance. The MFF provides FIL CDTA attached to the MFF Tranche 1 Grant Tranche 1 Loan CDTA (for safeguards compliance. FIL = financial intermediary loan. 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. EA = executing agency. PPTA = project preparatory technical assistance.

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. 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 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 .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. 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.

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 .

Southeast Asia Department. ** = MFF 44 is Not Allocated. 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. Y = yes. a Refer to Table A3. INRM = India resident mission. South Asia Department. Natural Resources. ADF = Asian Development Fund. UZB = Uzbekistan.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. CWPF = Public Management. N = no. SEER = Environment. Energy and Natural Resources divisions. Southeast Asia Department. Central and West Asia Department . VIE = Viet Nam. UK = United Kingdom. Financial Sector. SAPF = Public Management. SEUW = Urban Development and Water division. SEPF = Public Management. *** = in MFF 51 is Transport. GEF = Global Environment Facility. EATC = Transport and Communications division. Central and West Asia Department. Southeast Asia Department. all information in the table are from LFIS. PAK = Pakistan. Grant. AFRM = Afghanistan resident mission. CWUW = Urban Development and Water division. TA. Financial Sector. and Trade division. Central and West Asia Department. LFIS = loan financial information system. Source: Asian Development Bank database on Loan. and Equity Approvals. CWTC = Transport and Communications division. BAN = Bangladesh. PNG = Papua New Guinea. South Asia Department. Financial Sector. SAUW = Urban Development and Water division. MFF = multitranche financing facility. and Agriculture division.1 for the approved MFF investment programs. SATC = Transport and Communications division. East Asia Department. and Equity Approvals (LTA) of COSO. ARM = Armenia. Technical Assistance. AZE = Azerbaijan. Southeast. South Asia Department. SAEN = Energy division. Southeast Asia Department. 139 . Note: Unless otherwise stated. IRM = Indonesia resident mission. Grant. CWEN = Energy and Natural Resources division. South Asia Department. and Trade division. South Asia Department. SEEN = Energy division. and Agriculture division. PRCM = People’s Republic of China resident mission. GEO = Georgia. SAER = Environment. AFG = Afghanistan. Natural Resources. PRC = People’s Republic of China. MFF 0063 was sourced from Loan. PNRM = Papua New Guinea resident mission. 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. MON = Mongolia. KAZ = Kazakhstan. IND = India. Central and West Asia Department. SETC = Transport and Communications division. and Trade.

then “on track” o n/N >= 0. Source: Independent Evaluation Department. and IP covenants are not complied with. SCO = original/projected contract award curve. online billing and collection systems. computerized accounting and MIS. etc. then “potential problem” o SCA/SCO <0. RES.75 but <0. SDO = original/projected disbursement curve. RES = resettlement. then “at risk” Let original/projected contract award curve (from effectiveness to closing) be denoted by “SCO. PAM = project administration manual. then “potential problem” >=3 ENV. then “on track” 2 ENV.9. as per ADB’s safeguard policy. etc.7 but <0.7.) 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. and indigenous peoples (IP) safeguards. Safeguards. SCA = actual contract award curve.75 but <0.” This can be derived from PAM Let actual disbursement curve (from effectiveness to closing) be denoted by “SDA. then “at risk” Disbursements Financial Management. LFIS = loan financial information system. SDA = actual disbursement curve.9. then “potential problem” o >=3 financial covenants are not complied with. implementation arrangements.75. RES. cost overruns. then “at risk” If: o 0 or 1 financial covenants are not complied with. then “on track” o SDA/SDO >=0.9. then “at risk” ENV = environment. If: o o o 0 or 1 ENV.” This can be derived from LFIS If: o SDA/SDO >= 0.75. and IP covenants are not complied with.9. then “on track” o SCA/SCO >=0.APPENDIX 13: TRANCHE PERFORMANCE RATINGS Criteria Technical Rating Are problems (such as key project conditions.9. RES.” This can be derived from LFIS If: o SCA/SCO >= 0. then “potential problem” o n/N < 0. IP = indigenous peoples. then “at risk” Let original/projected disbursement curve (from effectiveness to closing) be denoted by “SDO. . Basically. resettlement (RES). Such financial covenants normally deal with accounts receivables. consistency of internal controls with international standards. then “potential problem” o SDA/SDO <0.” This can be derived from PAM Let actual contract award curve (from effectiveness to closing) be denoted by “SCA. then “on track” o 2 financial covenants are not complied with. This covers documentation requirements for environmental (ENV).9. this reflects a count of number of financial and related covenants that are not complied with. and IP covenants are not complied with.

The study also provides insights into the future design of multitranche financing facility interventions. it remains home to two-thirds of the world’s poor: 1.25 a day.8 billion people who live on less than $2 a day. operations. with 903 million struggling on less than $1. Despite the region’s many successes. Its main instruments for helping its developing member countries are policy dialogue. ADB is committed to reducing poverty through inclusive economic growth. Contact Information Independent Evaluation at the Asian Development Bank 6 ADB Avenue. ADB is owned by 67 members. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. equity investments. grants. 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. Mandaluyong City Philippines 1550 www. strategies. environmentally sustainable growth. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty.org Telephone: (63-2) 632 4100 Fax: (63-2) 636 2161 Printed on recycled paper .Real-time Evaluation Study of the Multitranche Financing Facility This evaluation examines the costs and benefits associated with the multitranche financing facility modality. by considering efficiency gains or cost reductions as well as gains in development effectiveness.adb. and technical assistance. and special concerns of the Asian Development Bank relating to organizational and operational effectiveness. including 48 from the region. It contributes to development effectiveness by providing feedback on performance and through evaluation lessons. guarantees.org/evaluation Email: evaluation@adb. Based in Manila. loans. About the Independent Evaluation at Asian Development Bank The Independent Evaluation Department evaluates the policies. and regional integration.

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