ABBREVIATIONS

ADB DAWACO DMC DMF IED IWRM MFF NRW OBA PDA PPTA PRC PSP RETA SAWACO SDC TA WFP WFPF WOPs

– – – – – – – – – – – – – – – – – – – –

Asian Development Bank Da Nang Water Company developing member country design and monitoring framework Independent Evaluation Department integrated water resources management multitranche financing facility non-revenue water output-based aid pilot and demonstration activity project preparatory technical assistance People's Republic of China private sector participation regional technical assistance Saigon Water Corporation Swiss Agency for Development and Cooperation technical assistance Water Financing Program Water Financing Partnership Facility Water Operators Partnerships Program

NOTES (i) In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. (ii) In this report, "$" refers to US dollars.

Water Financing Partnership Facility (WFPF) Steering Committee

Governance of the Water Financing Partnership Facility CONTENTS Xianbin Yao, Director General, Regional and Sustainable Development Department (RSDD), concurrently Chief Compliance Officer – Chair Juan Miranda, Director General, Central and West Asia Department (CWRD) Klaus Gerhaeusser, Director General, East Asia Department (EARD) Robert Wihtol, Director General, Pacific Department (PARD) Philip Erquiaga, Director General, Private Sector Operations Department (PSOD) Sultan Rahman, Director General, South Asia Department (SARD) Kunio Senga, Director General, Southeast Asia Department (SERD)
Amy Leung, Director, Social Sectors Division, EARD - Chair Michael Peter Barrow, Director, Infrastructure Finance Division 1, PSOD – Co-Chair Gil-Hong Kim, Sustainable Infrastructure Division, RSDD – Co-Chair

Water Committee Chair and CoChairs Members

In-Ho Keum, Lead Urban Development Specialist, CWRD Randall Jones, Natural Resources and Agriculture Economist, CWRD Plamen Bozakov, Principal Portfolio Management Specialist, Uzbekistan Resident Mission, CWRD Maria Theresa Villareal, Head, Portfolio Management Unit, PRC Resident Mission, EARD Qingfeng Zhang, Principal Water Resources Management Specialist, EARD Gyongshim An, Urban Development Specialist, EARD Steven Blaik, Senior Water Supply and Sanitation Specialist, PARD Siddharta Shah, Senior Investment Specialist, PSOD Sherwin Pu, Unit Head, Project Administration, PSOD Jane Brett, Investment Specialist, PSOD Frederic Thomas, Senior Investment Specialist, PSOD Wouter Lincklaen Arriens, Lead Water Resources Specialist, RSDD Anand Chiplunkar, Principal Water Supply and Sanitation Specialist, RSDD Alan Baird, Senior Water Supply and Sanitation Specialist, RSDD Kenichi Yokoyama, Principal Water Resources Specialist, SARD Sangay Penjor, Principal Urban Development Specialist, SARD Hubert Jenny, Principal Urban Development Specialist, SERD Rudolf Frauendorfer, Principal Urban Development Specialist, SERD Ian Makin, Senior Water Resources Management Specialist, SERD Thomas Panella, Principal Water Resources Management Specialist, Indonesia Resident Mission, SERD Gil-Hong Kim, Director, Sustainable Infrastructure Division, RSDD Ma. Victoria dela Cruz, Assistant Sector Analyst, RSDD Ellen Pascua, Consultant, RSDD Francisco Roble, Consultant, RSDD Tadashi Kondo, Head Hua Du, Director Karen Decker, Principal Financing Partnerships Specialist Toshimasa Dojima, Principal Financing Partnerships Specialist Heeyoung Hong, Financing Partnerships Specialist Lucila S. Chan, Confinancing Officer

Facility Manager Secretariat

Office of CoFinancing Operations (OCO)

CONTENTS Page I. II. III. INTRODUCTION HIGHLIGHTS AND KEY ACHIEVEMENTS PROGRESS FOR 1 JANUARY TO 30 JUNE 2010 A. Progress on Planned Activities B. Progress Towards Outputs C. Progress Towards Impact and Outcomes IV. FINANCIAL STATUS A. Financing Partner Contributions and Status of Grant B. Resource Utilization V. PLANNED ACTIVITIES FOR 1 JULY TO 31 DECEMBER LEADING TOWARD OUTPUTS 11 11 14 6 8 10 1 1

APPENDICES 1. 2. 3. 4. 5. WFPF Overview and Governance Structure Current Version of WFPF Design and Monitoring Framework Revised Version of WFPF Design and Monitoring Framework List of January-June 2011 Approved Allocations Status of Grant 16 20 28 34 35

I.

INTRODUCTION

1. Established on 29 November 2006, the Water Financing Partnership Facility (WFPF) aims to provide additional financial and knowledge resources from development partners to support the implementation of Asian Development Bank's (ADB) Water Financing Program and help achieve the following targeted outcomes: (i) 200 million people with sustainable access to safe drinking water and improved sanitation; (ii) 100 million people with reduced risks to floods; (iii) 40 million people with more productive and efficient irrigation and drainage services; (iv) integrated water resources management (IWRM) introduced in 25 river basins; and (v) improved water governance through national water reforms and capacity development. The Facility now comprises two funds: (i) the Multidonor Trust Fund with contributions from Australia, Austria, Norway, and Spain, and (ii) the Netherlands Trust Fund. Appendix 1 presents the Facility’s overview and governance structure. 2. This 2011 Semiannual Progress Report covers the period January to June 2011 and presents the overall implementation progress and results against the 2011 Annual Work Program and the Facility’s Design and Monitoring Framework (DMF) presented in Appendix 2. 3. The original DMF is used as basis for this report. The revised DMF is attached as Appendix 3 and will be used in the subsequent report upon approval by financing partners. The original targeted outcomes of the Water Financing Program referred to in para 1 above are also used for this report while the revised targets are still being discussed by the Water Committee following extension of the Program to 2020 as provided for in the draft Water Operational Plan 2011-2020. II. HIGHLIGHTS AND KEY ACHIEVEMENTS

4. With the expected approval of the Water Operational Plan 2011-2020 within the year, the first semester of 2011 was a period of defining further the role that WFPF is going to play in advancing the objectives of the Plan and in influencing the direction of ADB’s water operations in the next ten years. The revision of the Facility’s DMF during the same period to address the recommendations from the recently completed special evaluation study of Financing Partnership Facilities (FPFs) was also an opportune time to incorporate in the DMF the key elements and priorities of the draft Water Operational Plan. 5. It was also during the first semester that the Facility’s resources were substantially replenished. For the last two years, the Facility was operating under limited resources. Summarized in the succeeding presentations are highlights from the reporting period. 6. Additional contribution received from Australia. An additional contribution of $15.52 million equivalent was received from AusAID in April 2011, bringing to $24.21 million the total contribution from the Government of Australia into the Facility’s Multidonor Trust Fund. As of this writing, the total committed contributions stand at $63.63 million against the initial target of $100 million. Indication of additional contribution from the Government of Austria in the amount of Euro 2.6 million has also been conveyed to ADB. As of this writing, the signing of Instrument of Contribution is being processed. Discussions with the Government of Switzerland are also underway for a possible initial contribution of about US$5.0 million through the Swiss Agency for Development and Cooperation (SDC). 7. ADB’s Water Operational Plan 2011–2020 expected to be approved soon. Further internal consultations on the draft Water Operational Plan 2011–2020 took place during the

2 reporting period, including the meetings of heads of departments and management committee. The final consultation process is through the informal Board seminar scheduled on 12 August 2011. Approval by the President is expected within the month of August. The Plan, which seeks to guide the overall direction of ADB’s water operations in the next ten years, provides for the continuation of the Water Financing Program during the period 2011–2020 as a vehicle for implementing the intent and objectives of the Plan. It also provides for the continuation of WFPF to support the Program implementation. The Plan recognizes that sustainability of WFPF needs to be addressed and implementation of a resource mobilization drive for the continuing replenishment of the Facility’s resources is one of the priority actions embodied in the Plan.   8. WFPF Design and Monitoring Framework revised. Revision of the Facility’s DMF was recommended by the special evaluation study conducted by ADB’s Independent Evaluation Department (IED) to allow better tracking of the Facility’s performance. The evaluation study commented on the choice of impacts and outcomes. The current DMF for the Facility has the same impacts, outcomes, and outputs as that of the Water Financing Program, the rationale being that the Facility was established to provide additional financial and knowledge resources to support the Program implementation and should therefore be targeted at the same impacts and outcomes, thus avoiding confusion. The special evaluation study commented on the need for setting intermediate targets for the Facility so that its progress could be judged before waiting for the Water Financing Program to end. The specific suggestions are for outcomes to be shifted to impacts and for new outcome statements to be formulated. The proposed revised version (attached as Appendix 3) has incorporated these suggestions and has also captured the key elements of the draft Water Operational Plan as indicated in para 4 above. Approval by the financing partners of the revised DMF is sought. 9. Allocation to six projects approved. Six applications for funding were approved during the reporting period, amounting to $0.4 million, covering Pacific (one with regional scope and one specific for Samoa), Southeast Asia (Viet Nam) and East Asia (People’s Republic of China or PRC). All six applications used the direct charge modality, spread across rural, urban, and basin water. In allocating resources during the reporting period, the Water Committee has emphasized, as its guiding principle, the need to “focus on value for money: bigger impact with less resources”.
Box 1: ADB’s Water Operators Partnerships (WOPs) Program ADB is the first multilateral development bank to implement a concrete WOPs Program in response to the 2007 Hashimoto Action Plan, aimed at lifting the capacity and improving the performance of water utilities in the region. ADB’s WOPs Program includes: (i) twinning, (ii) technical training, (iii) benchmarking, and (iv) establishment of network of utilities. The twinning program, in particular, is progressing well. Eight twinning partnerships have been completed to date and nine are on-going. The program is targeted at specific aspect of utility operations such as non-revenue water reduction, asset management, water quality monitoring, financial management, business planning, human resources management, etc. and supports overall business effectiveness.

10. Approved allocations during the reporting period included the Facility’s support to the Water Operators Partnerships Program or WOPs, by way of bridge financing for the continuation of ongoing twinning partnerships and commencement of newly approved partnerships in the Pacific and in PRC. Bridge financing for twinning partnerships in Cambodia, Lao PDR, Philippines, and Uzbekistan are expected to be approved within the second half of the year. 11. WOPs is one of the big ticket initiatives that WFPF is expected to provide significant support to as presented by ADB to financing

3 partners during the March 2011 Annual Consultation Meeting and consistent with the intent of the draft Water Operational Plan. Non-revenue water (NRW) reduction, which is one of the priority thrusts under the Plan to increase efficient water use in urban water supply, is one aspect of utility operations that the twinning partnerships have focused on. Furthermore, the intent of the Plan to promote corporatization of public utilities can also be supported under WOPs. The approved allocations will finance the following twinning partnerships:
Region/Country Pacific Region Activity Completion of ongoing twinning partnerships Twinning Partners Expert Utility Recipient Utility City West Water Eda Ranu (Australia) (Port Moresby, PNG) Manukau Water Tonga Water Board (New Zealand) Hunter Valley Water PNG Water Board (Australia) City West Water Zheng Zhou Water (Australia) Supply Corporation To be identified Baotou Water Supply To be identified Chongqing Sanxia Water Utility Company

PRC

Commencement of new partnership Completion of ongoing twinning partnerships Commencement of new partnerships

12. The draft Water Operational Plan is also driving enhanced participation of the private sector to benefit from increased private financing and also to maximize adoption of their managerial and technological expertise. The approved allocations during the reporting Box 2: Development of Private Sector Development Framework for Ho Chi Minh period included the development of private and Da Nang sector development framework for the cities of Da Nang and Ho Chi Minh in Viet Nam. One of SAWACO has initiated a restructuring of its the objectives of the recently approved water operations following the enactment of a $1.0 billion multitranche financing facility Decree in 2007 reforming the water sector in (MFF) loan for Viet Nam’s Water Sector is to Viet Nam, and a Decision on equitization of all leverage private financing. The first tranche water companies by 2010. SAWACO has covers Ho Chi Minh City through Saigon prepared a policy statement on PSP. Water Corporation (SAWACO) while Da Nang, through Da Nang Water Company (DAWACO) DAWACO, on the other hand, has equitized its operation into one member limited company and will be covered under the second tranche is considering options for PSP. scheduled for approval in September 2011. During the project preparatory technical Both companies have significantly increased assistance (PPTA) for the MFF loan, an tariff in 2010 (DAWACO by 85% and SAWACO outline of the framework for private sector by 48%), resulting in improved financial development for SAWACO and DAWACO was performance and more robust sustainability. completed to identify which areas within these two water companies are more suitable for private sector participation (PSP). The WFPF funding will facilitate the preparation of a more detailed framework, covering the following PSP options: joint-venture arrangements, concession, build-own-operate, build-operate-transfer, divestiture, and leasehold. 13. WFPF on-track vis-à-vis priority activities for 2011. The Facility is on track with respect to the priority activities set out in the 2011 Annual Work Program in terms of the overall Facility management and other milestones. The progress is summarized in Table 1 below.

4
Table 1: WFFP Progress Against 2011 Annual Work Program Priority Activities Revision of Facility DMF Progress The revised version of the DMF has been completed and is attached to this semiannual progress report for review and approval by financing partners. During the first quarter of 2011, the Water Committee has issued revised guidelines on the allocation of funding. The inclusion of no-objection approval by the Water Committee of applications for direct charges has also been adopted. Further internal consultations were conducted during the first semester of 2011 including the heads of departments meeting, and management committee meeting. An informal Board seminar is scheduled on 12 August 2011 and approval by the President is expected thereafter. The major accomplishments include: (i) receipt of additional contributions from the Government of Australia in the amount of US$15.52 million, (ii) indication of additional contribution from the Government of Austria in the amount of Euro 2.6 million, (iii) indication of initial contribution from the Government of Switzerland through SDC in the amount of US$5.0 million, and (iv) positive outcomes from discussions between ADB and the Government of Netherlands on the $11.11 million unremitted contributions. The ADB and Financing Partners Annual Consultation Meeting was held on 22–24 March 2011 at ADB headquarters. The WFPF secretariat was able to comply with the required submission of the following documents within agreed timetable: (i) 2011 Annual Work Program, and (ii) 2010 Annual Report. In connection with the Annual Consultation Meeting, the summary of discussion was also submitted to financing partners within agreed timetable The Dialogue took place on 23-25 May 2011 with the theme: “Making Sanitation a Sustainable Business”. It was attended by 293 participants from 42 countries.

Review and further refinement of Water Committee guidelines for allocation of WFPF resources Finalization and approval of Water Operational Plan 2011-2020

Mobilization of resources

Annual Consultation Meeting Managing relationship with financing partners

Holding of 2nd ADB-DMC and Partners Sanitation Dialogue

14. Contributions toward output and outcome of approved allocations tracked. The allocations made during the reporting period for direct project support are expected to facilitate processing and influence the design of a $250 million loan for addressing non-point source pollution in PRC, $400 million loans for three flood management projects, also in PRC, and a grant-funded community sanitation project in Samoa which is designed to pilot test provision of sanitation subsidy, using schemes such as output-based aid (OBA). In Viet Nam, as indicated in para 12 above, WFPF is supporting the development of a PSP framework in Ho Chi Minh and Da Nang to facilitate PSP under the $1.0 billion loan for Viet Nam Water Sector for which project preparation technical assistance (PPTA) was co-financed by the Facility. Data on expected project beneficiaries of the PRC projects are not yet available, whereas the community sanitation project in Samoa is targeted at some 5,000 beneficiaries. Figure 1 below shows how allocations made during the reporting period and cumulative allocations to date are contributing toward outputs and outcomes targeted under the Facility’s DMF.

5

Figure 1: WFPF Activities Contributing Toward Outputs and Outcomes

January-June 2011
Activities (Project Development) Output (Increased Investment Level) Outcomes (No. of People to Benefit) 5,000 people with access to safe water supply and improved sanitation

Total January 2006-June 2011
Activities (Project Development) Output (Increased Investment Level) Outcomes (No. of People to Benefit) 32 million people with access to safe water supply and improved sanitation 4 million people with access to more efficient irrigation services

PPTAs $0.00 M

PPTAs $10.49 M

Grant Component of Loans/ TAs Attached to Loans

   

$650 million in investment projects

No irrigation projects approved during the reporting period

Grant Component of Loans / TAs Attached to Loans $9.87 M

$4.6 billion in investment projects

$0.00 M   Other   Project Dev.   Activities $0.32 M No data on expected number of people to benefit from reduced flooding

Other Project Dev. Activities $2.20 M

 

13 million people with reduced risk to floods

15. Fifteen projects/activities completed and financially closed. During the reporting period, a total of 15 projects and activities were completed and financially closed, comprising 8 technical assistance (TA), 1 TA attached to loan, and 6 direct charges. This brings to 58 the total number of projects and activities completed and financially closed to date, out of the 108 total allocations approved, thus leaving a total of 50 ongoing projects/activities. Furthermore, WFPF allocations for 4 out of the 50 ongoing projects/activities have been fully disbursed. This is in line with agreement reached with project officers to prioritize disbursement of WFPF funds in the case of co-financed TAs to continuously improve the Facility’s disbursement performance. 16. One of the activities completed during the reporting period is the “Formulation (Scoping) of Output-Based Aid (OBA) Mechanism under the Second Small Towns Water Supply and Sanitation Sector Project” in Nepal. The scoping work covered the following:    determining how best to target grant support to poor and vulnerable groups to improve their access to water supply and sanitation services,  assessing what level of grant is deemed appropriate, considering their willingness and ability to pay for the services,  designing the methodology for identifying eligible households,  firming up the institutional mechanism and fund flow, and  developing the monitoring and verification system.

6

17. Following completion of the scoping work, ADB is now set to undertake its first OBA initiative in the water sector. The OBA approach itself is not new but since this is ADB’s and Nepal’s first in the water sector, it makes the initiative a potentially rich source of lessons that future projects could draw from. The scheme will be initially piloted in 12 out of 20 small towns covered by the Project and will have two major outputs—house or yard connections to piped water supply and private latrines.
Box 3: Reaching More Poor and Vulnerable Groups in Nepal through OBA OBA uses performance-based grants to support delivery of basic services to traditionally marginalized poor households. Unlike traditional subsidies which are normally in the form of “inputs” and which have already been tried in previous projects in Nepal, the OBA scheme provides subsidy or aid only after successful delivery of “output”. Approximately 69% of Nepal’s total population still has no access to improved sanitation, with more than half practicing open defecation. On the other hand, while water supply coverage is reported to be at 12%, water availability is intermittent in most areas, half of the gravity-fed water systems in the hills need major repairs, and more than half of the tube wells are contaminated. Once implemented, the OBA scheme is expected to provide 17,000 people with access to safe drinking water supply and 32,000 with improved sanitation.

III. A.

PROGRESS FOR 1 JANUARY TO 30 JUNE 2011

Progress on Detailed Planned Activities

18. Evaluation and approval of applications. During the reporting period, there were no applications for TAs, TAs attached to loans, and grant component of investments. This was mainly because only limited resources were available during the first three months of 2011. As of this writing, however, at least three proposals for TAs have been presented to and discussed with the Facility Secretariat which are targeted for 31 July 2011 and 30 September 2011 submission deadlines. 19. Six applications for direct charges were approved during the reporting period with a total amount of $0.4 million. The list of approved allocations is provided in Appendix 4. Following agreement reached with financing partners during the Annual Consultation Meeting, a noobjection approval by the Water Committee has been included in the direct charge approval process to further tighten the Facility’s governance structure. This is now reflected in the slightly revised governance structure attached as Appendix 1. It should be noted that even with the inclusion of such additional process, the 7 working-day duration for approval of each direct charge application has been adhered to. Continuing feedback from user department confirms that direct charge remains to be an effective modality for financing critically-timed activities that support project development, facilitate policy and investment dialogues, and promote capacity building, networking, and knowledge exchange. 20. Spring cleaning exercise. The mandatory spring cleaning exercise is continuously being implemented. During the reporting period, no allocation was cancelled, however, as a regular feedback mechanism, slow moving activities are being brought to the attention of project officers, and regular updates are required to be communicated to the Facility Secretariat.

7 21. Financial closing of completed projects and activities. Through sustained coordination between the Facility’s Secretariat, user departments, and Controllers, prompt financial closing of a total of 15 TAs and direct charges was facilitated during the reporting period. This resulted in a total of $194,365 being freed up and made available for allocation to other eligible applications. During the same period last year, savings were also realized from financially closed accounts totaling approximately $400,000. Close monitoring of project completion and prompt financial closing of accounts will continue to be a priority task of the Secretariat to make unspent amounts immediately available for allocation to other applications. 22. Tracking funding ratio between project support and program quality and commitment to sanitation. The share of project support from approved allocations during the reporting period stood at 76% against the intended share of 70%. Program quality, on the other hand, got 24% out of 30% intended share. In terms of the cumulative allocations to date, the ratio is 67% for project support and 33% for program quality. 23. In terms of the commitment to allocate 20% of the Facility’s resources to sanitationrelated projects and initiatives, including river clean-up, the achievement during the reporting period stood at 29% while the cumulative share to date is at 25%. Increased investments in sanitation and wastewater management is one of the priorities under the draft Water Operational Plan. The target is to increase the share of sanitation and wastewater management from 14% to 25% of ADB’s total water lending. Reuse of treated wastewater which is increasingly seen as a viable business will also be supported and maximizing technological advancements will be promoted.   24. Annual Consultation Meeting. The  4th Annual Consultation Meeting with financing partners was held on 23-24 March 2011 at ADB headquarters, participated in by existing financing partners for WFPF, Clean Energy Financing Partnership Facility and Urban Financing Partnership Facility. Among the major topics discussed and agreements reached during the meeting included: (i) Leveraging effect of WFPF. The 2010 Annual Report indicated an enormously high leveraging effect, i.e. $4.32 million allocations leveraging $1.0 billion in investments. It was explained that this is due to the $300K PPTA top-up funding provided by the Facility which enabled the processing of $1.0 billion MFF loan for Viet Nam. It was agreed that for future reporting, distinction should be made between “leveraging” and “influencing or facilitating”. Explanation could be added, for example, as to what could have happened if WFPF resources were not available. This semiannual progress report has reflected the suggested distinction (see para 14 above referring to how WFPF resources will “facilitate” processing of proposed projects in PRC and Samoa and “influence” the way they will be designed). Prioritization Between Rural and Urban Water Sector. The share of rural water has remained low at 7% against urban water at 50%. This imbalance is partly due to low demand. However, it should be noted that while some projects are labeled basin or urban water, they do include rural components such as flood management projects which typically include rural water (irrigation) or urban water supply projects which are normally targeted at 70%–80% of urban population and 10%–20% is catering to rural population. It is also important to note that rural water projects are more complex and take time to develop. This notwithstanding, investment in rural water, specifically irrigation, is expected to increase because of

(ii)

8 its strong connection to food security which ADB, along with other multilateral development banks (MDBs), is closely monitoring. (iii) Geographic Prioritization. As noted by financing partners from previous reports, although there has been support to Pacific, the level has been very limited. As reflected in this report, allocations were approved during the reporting period for two projects in Pacific—one on sanitation in Samoa and one on twinning partnerships in Tonga and Papua New Guinea. As of this writing, another funding application has been approved for supporting the 2011 Pacific Water Conference which has been instrumental in advancing the WOPs Program, specifically twinning. Flexibility in Direct Project Support and Program Quality Support Ratio. Both the Annual Work Program and the draft Water Operational Plan made mention of the need for flexibility in the ratio between project support (currently at 70%) and program quality (now at 30%). This is to allow additional resources to be available for program quality to support expanded analytical and knowledge work, reforms and capacity development which are designed to influence DMCs decision not only to prioritize water investments but also to implement better-designed projects, particularly those that promote water use efficiencies as envisioned in the draft Water Operational Plan. But more than just making more resources available for program quality, this flexibility is being proposed to allow the Facility to become even more responsive to emerging priorities and demands of DMCs particularly when decision has to be made where to put limited resources for greater results. While financing partners generally supported the need for such flexibility, they expressed the need to check how big a shift in ratio would be acceptable to them. As indicated in para 22 above, the actual ratio based on cumulative allocations to date is still well within the target of about 70%–30%. Should actual needs in DMCs eventually require significant change in allocation ratio, ADB will consult with financing partners. Non-Monetary Contributions. The financing partners expressed support for WFPF’s effort to further facilitate non-monetary contributions such as through knowledge partnerships and expert exchange or secondment as has been demonstrated by Austria and Spain. Paras 10 and 11 above are showcasing ADB’s WOPs Program, particularly twinning, which is an area where non-monetary contribution could also be further explored by other financing partners. The Program is searching for expert utilities who could join the twinning partnerships.

  (iv)

(v)

B.

Progress Towards Outputs Output 1: Increased Levels of Water Investment

25. During the reporting period, as indicated in para 14 above, the Facility has allocated funding for project development support that is expected to facilitate the processing and influence the design of a total of $650 million loans for PRC on non-point source pollution control project ($250 million scheduled for approval in 2012) and three urban flood management projects ($400 million scheduled for approval in 2013). Cumulatively up to end-June 2011, the total water investments that the Facility has helped develop is approximately $4.6 billion. The Facility’s achievement to date under this target output is summarized in Table 2 below.

9 Table 2: Water Investments Facilitated by WFPF (in US$ Billion)
Sub-Sector Water Supply, Sanitation and Wastewater Management Irrigation and Drainage Flood Management Water Resources Management (including river clean-up) Jan-June 2011 0.00 0.00 0.40 0.25 0.65 As of June 2011 2.56 0.36 0.80 0.88 4.60

26. Out of the $4.6 billion investments that WFPF resources have helped facilitate to date, $3.48 billion have been approved as of end-June 2011. Output 2: Policy and Institutional Reforms Accelerated 27. During the reporting period, no project or activity supporting policy and institutional reforms was funded. Thus, the cumulative achievement to date under this output is still as was presented in the 2010 Annual—a total of seven TAs and five direct charges—supporting policy, regulation, and legislation and covering transboundary water resources management, flood and drought management, ecological compensation in river basins, water allocation, wastewater reuse, private sector participation in urban water supply, and use of renewable energy in irrigation. Output 3: Institutional Capacity Strengthened and Knowledge Base Expanded 28. The approved allocations for the continuation of twinning partnerships in PRC and the Pacific under WOPs take the form of water sector organizations capacity development support. Water utilities are among the key sector organizations that the Water Financing Program and WFPF are targeting if improved and more sustainable delivery of water supply and sanitation services in the region is to be achieved. Under the draft Water Operational Plan, corporatization of public utilities is strongly supported to promote adoption of corporate principles in the operation of these utilities. 29. To date, the Facility has supported a number of projects and activities covering capacity development support not only to utilities, but also to river basin organizations and water users associations, as well as to sector agencies involved in sanitation, rural development, irrigation, and water resources management. 30. Support has also been provided for knowledge product development and dissemination. During the reporting period, a knowledge product showcasing the WFPF-funded Facility for Pilot and Demonstration Activity (PDA) was developed, entitled: “Smart Water Solutions in Small Packages: Stories from PDAs”. It puts together impact stories on pilot and demonstration projects completed to date, showing how a small amount, of not more than $50,000 per project, can go a long way—from enhancing policy for tariff setting, to bringing various stakeholders to the negotiation table to resolve conflicts, to mobilizing communities for sanitation, hygiene, and river clean-ups, to assessing technology options and testing their applications, to empowering women and disadvantaged farmers for improved irrigation services. The stories reveal that innovative ideas can be low-cost and readily available.

10

Box 4: The PDA Facility The PDA Facility is a small grants program (up to $50K per project) for the water sector which has introduced a quick way of getting small but adequate amounts of money to ADB operations departments, government clients, and development partners to fund innovative small-scale water projects. Specifically, the Facility was designed to test and validate new or innovative strategies and approaches to improved water services delivery and water resources management. It was first introduced under the WFPF predecessor—the Cooperation Fund for the Water Sector financed by Netherlands and Norway—and has been sustained under the WFPF. It has supported research and development in the water sector, thereby complementing ADB’s lending and non-lending assistance which take much longer to process and implement. PDA projects should directly support either an ADB project or sector work. They are meant to be fastmoving and quick disbursing activities, thereby producing quick results on the ground. What has kept the Facility relevant and flexible is that the projects are spread out across five themes: (i) policy, legislation, and regulatory reforms, (ii) institutional arrangements, (iii) public awareness and water education, (iv) appropriate technology, and (v) participation, inclusive approaches, and multistakeholder representation.

C.

Progress Towards Impact and Outcome

31. The Facility’s performance in the first half of 2011 and cumulatively as of end-June 2011 with respect to the target impact and outcome is summarized in Table 3 below. Table 3: WFPF Progress Towards Impact and Outcome
WFPF and WFP Design Summary Impact Healthy people and environment Performance Indicators MDG goals on water and sanitation Reduction in the incidence of water related fatalities and diseases Increase in the number of countries implementing IWRM 200 million people with increased access to safe water supply and improved sanitation 100 million people with reduced risk to floods 40 million people with more efficient and effective irrigation and drainage services IWRM introduced in 25 river basins none 9 countries WFPF Contributions from Jan-June 2011 Allocations 5,000 people WFPF Cumulative Contributions as of June 2011 32 million people

Outcome Improved coverage, quality and continuity of water service delivery within a framework of sustainable management of natural resources

5,000 people

32 million people

Estimated beneficiaries not yet available none

13 million people

4 million people

none

22 rivers basins

11 IV. FINANCIAL STATUS

32. Financing Partners Contribution. Out of the $100 million initial target, the committed contributions to date stand at $63.63 million, of which $52.52 million has been remitted to ADB. The status of partner contributions as of June 2011 is summarized in Table 4 below. Table 4: Status of Partner Contributions (in $ Million)
Financing Partners Multi-Donor Trust Fund Australia Norway Austria Spain Netherlands Trust Fund Total
a

Committed 43.88 24.21 4.67 5.00 10.00 a 19.75 63.63

Received by ADB 43.88 24.21 4.67 5.00 10.00 8.64 52.52

Receivable 0 0 0 0 0 11.11 11.11

This includes the $0.5 million earmarked for a water expert

33. Resource Utilization. With the receipt of additional contributions from the Government of Australia, the resources available for allocation in 2011 amounted to $16.31 million, of which $0.43 million was allocated during the reporting period, leaving a balance of $15.87 million available for allocation from the second half of 2011 onwards. Furthermore, with the financial closing of completed projects and activities, an additional amount of $0.19 million was freed up. Thus, the total balance available for allocation after 30 June 2011 is roughly $16 million. Table 5 below summarizes the overall status of fund utilization against total available resources. Table 5: Summary of Utilization Against Resources Available for Allocation (in $ Million)
Resources Available for Allocation Item Multidonor Trust Fund Australia Norway Austria Spain Netherlands Trust Fund Total
a

Utilization
Projects Fees and Other Charges Total

Remittances

Interests and Other Incomes

Total

Balance for Future Allocation

43.38 24.21 4.67 5.00 9.50a 8.64

0.54

43.92

26.77

1.15

27.92

16.00

0.19

8.83

8.50

0.28

8.78

0.05

52.02

0.73

52.75

35.27

1.38

36.70

16.05

Net of the $0.5 million earmarked from the 2nd contribution for engagement of a water expert

12

34. Commitment and Disbursement. The 30 June 2011 Status of Grants indicates that out of the $35.27 approved allocations to date, $34.03 million is already committed (approved by ADB management for implementation), and $19.06 million disbursed (or 56% of committed amount). See Table 6 below for the summary of status. Table 6: Status of Allocation, Commitment, and Disbursement (in $ Million)
Resources Available for Allocation 43.38 24.21 4.67 5.00 9.50 a 8.64 52.02 Allocated to Projectsb (WFPF Funding Approved) 26.77 Committedc (Project Approved) 25.23

Financing Partners

Effectived

Disbursede

Multi-Donor Trust Fund Australia Norway Austria Spain Netherlands Trust Fund Total
a b c

25.23

14.35

8.50 35.27

8.50 34.03

8.50 34.03

4.71 19.06

d e

Net of the $0.5 million earmarked from the 2nd contribution for engagement of a water expert Projects approved by Steering Committee for WFPF allocation. Projects approved by Steering Committee for WFPF allocation and by ADB management for implementation, including those approved but not yet effective. Projects approved and effective Inclusive of service fees, audit fees and financial expense-bank charges

35. The detailed information on commitment and disbursements is presented in the unaudited copies of Status of Grants provided as Appendix 5. 36. Resource Allocation Ratio. In terms of the targeted allocation ratio of 70%–30% between project support and program quality support windows, as envisioned in the Board paper establishing the Facility, the actual ratio as of 30 June 2011 stood at 67% and 33%. Table 7 below summarizes the distribution of approved allocations between the two windows against the targeted ratio. Table 7: Summary of Use of Funds by Window
Use of Funds Project Support Window Program Quality Window  Knowledge, Capacity and Innovation Services  Engaging Civil Society  Regional Cooperation Total Target Ratio 70% 30% Allocations (in US Million) 23.46 11.81 Actual Ratio 67% 33%

100%

35.27

100%

13 37. Distribution of Resources by Sector. The highest share from approved allocations during the reporting period went to urban water, at 71%, although its share from the cumulative allocations to date went down slightly from 52% in end-December 2010 to 50% as of end-June 2011, as shown in Figure 2 below. Figure 2: Sectoral Distribution of Approved Allocations
Sectoral Distribution – January to June 2011 Allocations (in Million Dollars)

Sectoral Distribution of Cumulative Allocation to Date (in Million Dollars)

Basin 12% (0.05M)

Rural 18% (0.07M)

Basin 24% (8.5M)

Multisector 19% (6.6M) Rural 7% (2.3M)

Urban 71% (0.3M)

Urban 50% (17.7M)

38. Distribution of Resources by Region. While the share of Pacific from the cumulative allocations to date is still very low, at 1%, it registered the second highest share from the approved allocations during the reporting period. No applications were received from South Asia and Central West Asia during the first semester. However, as of this writing, both regional departments have already submitted their respective applications which will form part of second semester applications. Figure 3 below show the details on regional distribution. Figure 3: Regional Distribution of Approved Allocations
Regional Distribution – January to June 2011 Allocations (in Million Dollars)

Regional Distribution of Cumulative Allocation to Date (in Million Dollars)

Southeast Asia 12% (0.05M)

South Asia 0% Inter Regional 0% Central West 0%

Southeast Asia 33% (11.8M)

Central West 14% (4.8M) East Asia 13% (4.7M) Inter-regional 22% (7.9M)

Pacific 29% (0.1M)

East Asia 59% (0.2M)

South Asia 17% (5.8M)

Pacific 1% (0.2M)

14 39. Use of Funds by Modality. All approved allocations during the reporting period used the direct charge modality. Thus, the share of direct charge from the cumulative allocations to date slightly moved up by 1%. Figure 4 below shows the amounts allocated per modality. Figure 4: Use of Funds by Modality
Use of Funds by Modality – January to June 2011 Allocations (in Million Dollars) Use of Funds by Modality – Cumulative Allocation to Date (in Million Dollars) Direct Charges 12% (4.2M) TA Attached to Loan 9% (3M) Grant Component of Investment 19% (6.7M)

Grant Component of Investment 0%

TA attached to Loan 0%

Technical Assistance 0%

Direct Charges 100% (0.4M)

Technical Assistance 60% (21.2M)

V.

PLANNED ACTIVITIES FOR 1 JULY TO 31 DECEMBER 2011 LEADING TOWARD OUTPUTS

40. Water Learning Week, November 2011. A Water Learning Week is planned for November 2011 to provide an opportunity for Asia’s leading water practitioners, researchers, knowledge and funding partners, and ADB staff to share innovative practices and lessons learned on the following priority topics:      improving water quality and river basin health (showcasing experiences of India, PRC and other countries) lowering disaster risks and building resilience (learning from the experiences of Bangladesh, lower Mekong basin, and others) preparing our river basins for the future through the IWRM process (examples of ongoing work on performance benchmarking, IWRM roadmaps, water security studies and leadership development in Cambodia, Indonesia, Nepal, Sri Lanka, Uzbekistan and Viet Nam) leveraging regional knowledge networking for capacity development (through site visits and interaction with Asia-Pacific Water Forum’s Steering Group on Water and Climate Change)

 

41. Processing of 2nd Semester Applications. The Facility expects to process a number of applications during the second half of 2011, judging from the number of proposals that been subjected to preliminary discussions between the user departments and the Facility Secretariat. The allocation of resources will continue to be guided by the priorities set out in the Annual

15 Work Program and by the allocation guidelines formulated by the Water Committee in May of this year. 42. Project Pipeline Management. Coordination with operations departments will be sustained to ensure that they are properly guided on the kinds of projects and activities that they can prepare for funding consideration under WFPF. Such guidance is important in managing their demands and expectations, on one hand, and in making sure that WFPF priorities are addressed, on the other. 43. Spring Cleaning Exercise and Financial Closing of Completed Activities. Regular spring cleaning exercise will continue to be undertaken. Close coordination with Controllers and user departments will also be sustained to ensure timely financial closing of completed activities. 44. Improving Disbursement Performance. The Facility Secretariat will continue its close coordination with Controllers and user departments to expedite contracts award and payments. The Secretariat is regularly communicating this message to user departments and there is general support and commitment to continue improving disbursement performance. 45. Resource Mobilization and Coordination with Financing Partners. As mentioned in para 6 above, the prospects are good in terms of additional contributions. ADB, through the Office of Cofinancing (OCO), as well as the Water Committee, is increasing its efforts to promote the Facility which support the continuation of the Water Financing Program during the period 2011–2020.

16

Appendix 1

WATER FINANCING PARTNERSHIP FACILITY (WFPF) OVERVIEW AND GOVERNANCE STRUCTURE

I.

OVERVIEW

1. In December 2006, the Board of Directors of the Asian Development Bank (ADB) established the Water Financing Partnership Facility (WFPF) to provide additional financial and knowledge resources from development partners for the implementation of ADB’s Water Financing Program (WFP) to help achieve the targeted outcomes. 2. The WFPF includes: a. A multidonor water trust fund (WTF); b. Single-donor water trust funds (WTFs); c. Framework agreements with partners for: (i) Cofinancing, i.e., parallel or joint financing of lending and non-lending assistance to ADB’s developing member countries (DMCs); (i) Knowledge sharing, i.e. secondments, networks, etc. (ii) Risk sharing, i.e., credit enhancement, performance guarantees, etc. d. Other forms of assistance. 3. The WFPF has two windows, the first for project support, and the second for program quality support. Project support (about 70% of WFPF) are provided for demonstration projects in the three key areas of WFP (rural water, urban water, and basin water) through in-country work for project preparation, implementation, reforms, and capacity development in the organizations concerned. Program quality support (about 30% of WFPF) are for facilitating reforms and strengthening capacity, and helping ensure quality, synergy, and innovation in the implementation of WFP, with priority given to reducing poverty, improving governance, and conserving the environment. 4. The WFPF's support for demonstration projects in the three key areas of the WFP take place through in-country work for project preparation, implementation, reforms, and capacity development in the organizations concerned: a. Rural Water Service Projects aim to improve health and livelihoods in rural communities. Projects may include investments in water supply and sanitation, irrigation and drainage, and multiple uses of water in rural communities. Urban Water Service Projects support sustained economic growth in cities, and may include investments in water supply, sanitation, and wastewater management, and environmental improvement. Basin Water Management Projects in River Basins promote integrated water resources management (IWRM) and healthy rivers. They may include investments in the infrastructure and management of multifunctional water regulation and hydropower facilities developed in a basin context, flood management, and the conservation and improvement of watersheds, wetlands, and ecosystems.

b.

c.

Appendix 1

17

5. WFPF resources for program quality support are provided for facilitating reforms and strengthening capacity. They are aimed at helping ensure quality, synergy, and innovation in the implementation of the WFP, with priority given to reducing poverty, improving governance, and conserving the environment. The scope is outlined below: a. Knowledge, Capacity, and Innovation Services. WFPF supports investment in (a) knowledge and policy services for ADB's operations departments and its clients, (b) expert services through a pool of contracted and seconded specialists to supplement ADB's own staff resources, (c) pilot and demonstration activities building on a similar program under the Cooperation Fund for the Water Sector, and (d) innovative approaches to empower water organizations. Engaging Civil Society. Engaging civil society organizations in water reforms and investment is an important part of the Agenda for Change adopted at ADB's Water Week in 2004. WFPF supports three ways for civil society organizations engagement in ADB-financed water projects in consultation with ADB's regional departments: (a) project preparation support, (b) independent monitoring of project progress and results by civil society organizations where appropriate, and (c) capacity development to improve collaboration between ADB and civil society organizations. Regional Cooperation. WFPF supports regional cooperation activities that increase water financing, catalyze reforms, share knowledge and experience, and build capacity in critical water sector organizations, including the introduction of performance benchmarking services and peer review processes. In supporting regional cooperation, ADB is partnering with the Asia-Pacific Water Forum (APWF), the Global Water Partnership, the United Nations Secretary-General's Advisory Board for Water and Sanitation, UN Habitat, the Water and Sanitation Program, and others. Partnerships are guided by the five key result areas of APWF: (a) developing knowledge and lessons on priority water sector topics through a network of knowledge hubs, (b) increasing local capacity through networking among practitioner organizations, (c) increasing public outreach and awareness, (d) monitoring water investments and results, and (e) organizing Asia-Pacific Water Summits. ADB has accepted the responsibility of serving as lead organization for APWF's theme of water financing and for its key result area of increasing public outreach and awareness.

b.

c.

6. All DMCs are eligible for project support1, and program quality support activities may be implemented in DMCs or in other countries as needed. Project proposals for WFPF support should:
1

For the Netherlands contribution under WFPF (through single donor trust fund), support for water supply and sanitation projects will be limited to ADF countries. The Netherlands support for other water projects is available to all DMCs. For the Australian contribution under WFPF (through multidonor trust fund), there are no country restrictions. However, Australia’s policy seeks to demonstrate that investments in IWRM will contribute to sustainable economic growth, especially in Southeast Asia and the Pacific. For the Austrian contribution under WFPF (through multidonor trust fund), there are no country restrictions. However, Austria would like to support activities in the listed Central Asian Republics and South Caucuses (Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan) as a priority.

18

Appendix 1

a. b. c. d. e. f. g.

be consistent with ADB’s Water for All policy; contribute significantly to WFP targets2; introduce innovative solutions; adopt a participatory approach; have high demonstration value in the sector; have good potential for replication in the country and/or region; and link with CPSs and results frameworks. II. GOVERNANCE STRUCTURE OF WFPF

7. The Financing Partners and ADB jointly steer the implementation of WFPF and meet annually to review progress, administration matters, Annual Work Programs, and strategic directions of WFPF. 8. A Steering Committee for WFPF (WSC) provides strategic direction for WFPF. The Chair of the SC is the designated authority for approving the allocation of WFPF resources for specific projects. Chair: Director General, Regional and Sustainable Development Department (RSDD); and Members: Director Generals of user departments (UDs). 9. ADB’s Water Committee (WC) reviews and makes recommendations on project proposals for assistance from WFPF, and makes policy and procedural recommendations to the WSC regarding WFPF operations. 10. The Sustainable Infrastructure Division (RSID) of RSDD manages WFPF. Director, RSID or his/her designate acts as the Facility Manager for WFPF and oversees the day to day operations, monitoring and evaluation, and reporting of WFPF, with assistance from a team of consultants who have technical and administrative expertise serving in a management unit. The Facility Manager serves as the secretariat for WFPF operations, prepares semi-annual progress reports on WFPF and serves as the focal point for WFPF partners for technical matters. 11. The Office of Cofinancing Operations (OCO) facilitates contributions to the WTF and WTFs, and act as the official channel of communication for financial issues between ADB and WFPF partners. OCO also leads negotiations and discussions with such partners on procedural agreements for contributions and framework agreements, where applicable. 12. The organization structure for WFPF governance is shown on the attached sheet.

2

Through project implementation or through reforms or capacity development.

Appendix 1

19

The WFPF Governance Structure Party Members: WFPF contributors Responsibilities Financing Partners (i) Provide strategic direction to WFPF (ii) Meet with ADB for Annual Consultation (iii) Review progress and administration and Annual Work Program

WFPF Steering Committee (SC) (i) Provide strategic direction to WFPF Chair: DG, RSDD (ii) Approve allocation of funds to applications Members: DGs of User Departments (UDs) for TAs, TAs attached to loans, and grant components of investments Water Committee (WC) (i) Review and endorse proposals for WFPF Chair and Co-Chair: Directors, SEUW, funding allocation to TAs, TAs attached to RSID and PSIF1 loans and grant component of investments (ii) Approve, on no-objection basis, Secretariat: RSID applications for direct charges Members: Water specialists nominated by (iii) Advise SC on strategic direction policy & the Chair as members procedures of WFPF to support WFP implementation Facility Manager Manager: Director, RSID Assistant: A team of consultants

(i) (ii) (iii)

(iv) (v) (vi)

Serve as Secretariat and oversee WFPF day-to-day operations Oversee review process for applications Review applications for compliance with Implementation Guidelines for use of funds and eligibility criteria Guide preparation of Annual Work Program and progress reports Serve as focal point for WFPF partners for technical matters Approve applications for direct charges

Contact: Designated by Head, OCO

OCO (i) Facilitate partner contributions to WFPF (ii) Communicate on financial issues among the partners (iii) Lead negotiations with partners on financial and procedural agreements for WFPF contributions and framework agreements

20

Appendix 2

WATER FINANCING PARTNERSHIP FACILITY ORIGINAL DESIGN AND MONITORING FRAMEWORK (DMF) Introduction 1. Since the Water Financing Partnership Facility (WFPF) was established to provide additional financial and knowledge resources for the implementation of ADB’s Water Financing Program (WFP), it is thought sufficient to have one design and monitoring framework (DMF) to cover the objectives of both WFP and one of its critical funding sources—the WFPF. This also avoids confusion in having two separate DMFs that are targeted ultimately at the same impacts and outcomes. 2. The key points to note are: a. The DMF for the WFP has been expanded to add more detail on specific outputs that fall within its three major output components as these outputs are financed from the WFPF; b. The “outputs” section of the WFP DMF is defined using as basis the $100 million expected total contributions from the WFPF financing partners and using 2008–2010 as the period covered since full operationalization of WFPF began in January 2008 and committed contributions to date are up to 2010. 3. A pictorial version of the objectives tree is attached.

4. The Water Financing Program aims to double ADB’s investments in water during the period 2006–2010, thus resulting in significant increase in the number of people in Asia-Pacific region with access to safe and water supply and sanitation services, higher productivity and efficiency of irrigation and drainage services, coupled with the integrated management of water resources in river basins for sustained economic growth and environmental improvement. With these as targeted outcomes, the activities to be supported by the resources from WFPF are those directly contributing to the achievements of such outcomes as described below. How WFPF Resources will help achieve WFP Targeted Outcomes: Rationale for Choice of Indicators 5. The specific output indicators used in the proposed DMF for WFPF are those that directly reflect the activities to be financed from WFPF resources and directly contribute to the following 3 major outputs of WFP: a. Component 1: Increased levels of water investment – to be supported by WFPF in terms of additional resources to: (i) (ii) prepare projects (through PPTAs) resulting in fundable investment proposals, finance grant components of investments that support either works, goods and services designed to enhance project design and implementation, and

Appendix 2

21

(iii)

finance specific activities that directly support project preparation

Furthermore, it is envisaged that the WFPF will not only provide additional resources to produce the outputs described above but also provide added value such as: (i) greater assurance of outcomes by increasing country commitments through sector assessments and investment dialogues with government. greater reach to underserved by facilitating preparation of additional projects and leveraging more resources from partners. faster decision making by means of: WFPF-financed activities such as water services expert pool that makes possible provision of incremental experts to help in project design and implementation; knowledge products and tools; or use of direct charge as a modality to access WFPF resources in addition to loans and TAs. boosting innovation and business unusual by supporting activities like pilot and demonstration, development of knowledge products and organization of knowledge events. being more strategic by addressing specific and priority issues such as gender, climate change, environment and sanitation.

(ii)

(iii)

(iv)

(v)

b. Component 2: Policy and institutional reforms accelerated – supported by WFPF in terms of additional resources to fund loans, TAs or other modalities that address policy, legislation, regulation and institutional arrangements; and related undertakings such as: support to reform assessments and studies; support to strengthening coordination mechanism and facilitating reform process such as assistance in establishing or strengthening national water sector apex bodies; and engagement of civil society. c. Component 3: Institutional capacity strengthened and knowledge base expanded – supported by WFPF in terms of additional resources for pilot and demonstrations that produce new and innovative approaches, strategies and technologies; capacity development interventions targeted at key water sector organizations such as water utilities, river basin organizations, water users associations/irrigators association and apex bodies as well as implementing/executing agencies, knowledge products development, establishment of knowledge partnerships, regional cooperation, and civil society participation.

22

Appendix 2

WFP Design Summary
Impact Healthy people and environment

Performance Targets/Indicators
MDG goals on water and sanitation Reduction in the incidence of water related fatalities and disease Increase in the number of countries implementing IWRM

Data Sources/Reporting Mechanisms
Country-level and UN progress reports on MDGs. UNDP/WHO country reports. Country water sector strategies and reports of Global Water Partnership

Assumptions and Risks

Outcome Improved coverage, quality and continuity of water service delivery within a framework of sustainable management of natural resources

200 million with increased access to safe water and sanitation

Country sector reports and analysis prepared by ADB (e.g. Water Utilities Data Handbook). Reports of UN and other agencies. Reports of research bodies e.g. IWMI. Projects and TA Reports Governance surveys in targeted countries

100 million with reduced risk to floods 40 million with improved irrigation IWRM introduced in 25 river basins Improved water governance as demonstrated by the outcome achievement on policy and reform measures In terms of investments: Between 2006-2010, 25% of ADB lending is in water, over $10 billion in ADB funds invested in water, and $8 billion additional investments leveraged from other donors, government and private sector. Output Component 1 Increased levels of water

Assumptions  Governments make achievement of water MDGs a priority  Sustained emphasis on water investment to keep pace with increased demand -population and economic growth  Financial mechanisms for sustainable maintenance programs in place  IWRM policies adopted in line with WSSD commitments Assumptions  Leadership of key agencies and utilities  Implementation of governance reforms for resource management and service delivery  Community involvement  Application of IWRM principles Risks  Intensified opposition to private sector involvement in water service delivery  Budgetary constraints

Project documents

70% or $70 Million of

Published ADB data

Assumptions  ADB investment products are attractive to DMCs  Replenishment of

Appendix 2

23

WFP Design Summary
Investment (infrastructure) 

Performance Targets/Indicators
WFPF resources spent on project investment support At least 303 PPTAs either funded in full or cofinanced with other sources, of which no less than 50% translate to investment projects At least 154 loans provided grant support for either goods, works or services At least 305 applications for direct charges add value to project development through improved design and implementation, better communication with stakeholders, etc.

Data Sources/Reporting Mechanisms
on past and future public and private sector investments and technical assistance. Water Information System using as source data CSPs, PPRs and reports of individual funded outputs. ADB databases

Assumptions and Risks

Fundable investment projects

Loans supported with grants

OCR/ADF to support increased water investment  Internal resources allocated to deliver increased water program  WFPF contributions are received based on the committed date of contirbutions Risks  Low DMC demand for increased investment in the sector

Project development support

Such increase in investment level is supported by the added value provided by WFPF in terms of: Faster decision making by means of:  WFPF governance and approval processes, including use of templates and tools 

Applications for TAs and GCIs are approved within 1 month upon receipt of bimonthly applications that meet qualification criteria Applications for direct charges are approved within one week upon receipt of applications that meet qualification criteria

WFPF reports on approved applications WFPF financing proposals screening analyses

Assumption That ADB existing processes are not applied in each case but are able to be modified to enable these features to speed up processing

Use of direct charge modality support for short-term and stand alone activities with specific outputs and outcomes is made possible without need for RETA

3 4

30 PPTAs is based on average cost of $800K per TA or a total of $24M during the period 2008-2010 15 grant component of loan is based on average cost of $1M per project or a total of $15M during 2008-2010 5 30 applications for direct charges is based on average cost of $100K each or a total of $3M during 2008-2010 Since these are the minimum targets, the balance of $28M are to be allocated to applications beyond these targets and beyond the period of 2010 if partner contributions extend beyond 2010.

24

Appendix 2

WFP Design Summary
Greater assurance of outcomes by increasing country commitment  Investment Dialogues  Use of knowledge products Greater reach to underserved by  More PPTAs  More knowledge products  More partners Boosts innovation and business unusual  PDA financing  Knowledge products  Knowledge events  Take up of new products Being more strategic by  Funding climate change

Performance Targets/Indicators
Dialogues conducted in each of six priority countries that produce updated water priorities

Data Sources/Reporting Mechanisms
BTOR on dialogues

Assumptions and Risks

At least 50 million population of WFP targeted outcomes directly traceable to WFPF funding

ADB water database Post evaluation study of PPTAs and subsequent loan project design Post evaluation of approved technical assistance projects

Post evaluation confirms new ideas, methods, technology and approaches taken up and applied from WFPF financed initiatives

At least 15 projects demonstrating climate change adaptation measures At least 15 projects demonstrating increased investment in sanitation At least 15 projects demonstrating environmental protection and preservation At least 10 projects demonstrating gender mainstreaming At least 10 projects demonstrating greater involvement of civil society both at policy and project levels

ADB project documents (loans and TAs); WFPF application documents Project documents, WFP/WFPF reports

Funding sanitation

Funding environment

Project documents, WFP/WFPF reports

Funding gender initiatives

Project documents, WFP/WFPF reports

Funding initiatives that help strengthen partnership with or empower civil society

Project documents, WFP/WFPF reports

Component 2 Policy and institutional reforms accelerated

At least 15% or $15M of WFPF resources allocated to this component

Appendix 2

25

WFP Design Summary
 Nonlending assistance addressing reforms in the areas of:  policy,  legislation  regulation  institutional arrangements

Performance Targets/Indicators
At least 15 TAs (ADTAs, piggy-backed TAs, SSTAs, RETAs) or direct charge applications are designed to advance reform measures in each of the areas of policy, legislation, regulation or institutional arrangements

Data Sources/Reporting Mechanisms
TA documents, reports on sector work dealing with policies and legislation

Assumptions and Risks

Component 3 Institutional capacity strengthened and knowledge base expanded  Pilot and demonstration projects

At least 15% or $15M of WFPF resources allocated to this component

80% of approved projects completed within schedule and replication /upscaling occurring for at least 40%

PDA Project Completion Reports

Water sector organizations capacity improvement  Water Utilities Improvement in utilities performance using as basis the adopted utility performance indicators Implementation of benchmarking and peer review process in RBOs in Asia-Pacific Region Reports and benchmarking activities

 River Basin Organizations (RBOs)

Benchmarking reports, Reports by NARBO (Network of Asian River Basin Organizations) Benchmarking reports, project reports

 Irrigation Water Users Association (WUA)  Sector Apex Bodies

Implementation of benchmarking and peer process in apex bodies completed for all regions. Program for benchmarking irrigation service providers developed and implemented Capacity building of sector agencies supported either as part of loans and TAs or as stand alone activities Knowledge products developed on schedule

Benchmarking reports

 Water sector agencies

Water Committee and WFPF reports

Knowledge products

Water Committee reports

26

Appendix 2

WFP Design Summary

Performance Targets/Indicators
and achieve targeted distribution levels

Data Sources/Reporting Mechanisms

Assumptions and Risks

Knowledge hubs

At least 5 regional knowledge hubs operational by end 2010 At least 2 annual major water events participated in, i.e. World Water Week, Singapore International Water Week.

Water Committee reports

Knowledge sharing events

Events-related reports, back-to-office reports (BTORs)

Water Committee Scheduled outputs Regional cooperation reports completed on time. engaging with selected regional entities such as Global Water Partnership, Netherlands Water Partnership, Asia Pacific Water Forum Activities Investment  Demonstrate expansion in investment  Mobilize private finance  Build momentum for water investments Reforms  Intensify support for national water sector reforms  Support development of regulatory frameworks  Extend support for IWRM into the targeted 25 basins Capacity Development  Develop new and innovative approaches, methodologies  Strengthen institutional capacity  Enhance the knowledge base and knowledge products  Strengthen regional partnerships

Inputs: ADB TA grant resources ADB Lending ADB staff resources Water Financing Partnership Facility approx $100 million  Project Support Window (70%)  Program Quality Window (30%) Government resources Private sector resources NGO resources

Acronyms ADF ADTA CASCWUA DMC DMF IWRM KP MDG NARBO OCR PDA Asian Development Fund Advisory Technical Assistance Central Asia and South Caucasus Water Utilities Association Developing Member Country Design and Monitoring Framework Integrated Water Resources Management Knowledge Product Millennium Development Goal Network of Asian River Basin Organizations Ordinary Capital Resources Pilot and Demonstration Activities

Appendix 2

27

PPTA RETA SAWUN SEAWUN SSTA TA UN UNDP WFP WFPF WHO WSSD WUA

-

Project Preparation Technical Assistance Regional Technical Assistance South Asia Water Utilities Network Southeast Asia Water Utilities Network Small Scale Technical Assistance Technical Assistance United Nations United Nations Development Program Water Financing Program Water Financing Partnership Facility World Health Organization World Summit on Sustainable Development Water Users Association

28

Appendix 3

WATER FINANCING PARTNERSHIP FACILITY REVISED DESIGN AND MONITORING FRAMEWORK (DMF) Introduction 1. This revised DMF addresses the recommendations from the special evaluation study of financing partnerships facilities conducted between late-2010 to early 2011 by ADB’s Independent Evaluation Department and incorporates the key elements of the draft Water Operational Plan 2011-2020. 2. It allows for setting of intermediate targets, as suggested by the special evaluation study, particularly outcome targets, against which the Facility’s achievements can be gauged without having to wait for the completion of the Water Financing Program. 3. The initial target of $100 million contributions from financing partners is used in setting the performance targets. WFPF Design Summary
Impact Achieved Water Financing Program targeted outcomes

Performance Targets/Indicators
340 million people are benefitted by ADB’s water investments:  200 million people provided access to improved water supply and sanitation 100 million people with more efficient and productive irrigation and drainage services 40 million people with reduced risk of flooding

Data Sources/Reporting Mechanisms
Water Financing Program reports, project documents, project completion reports

Assumptions and Risks

Assumptions  Governments are committed to prioritizing water investments  Strong buy-in from governments on the priority thrusts promoted under the Water Operational Plan 20112020 Risk  Appropriate investments are not prioritized by governments

(Note: 340 million people was the original targeted outcome of the Water Financing Program. This figure will be adjusted once the draft Water Operational Plan is approved and revised targets are set by the Water Committee for the extension of the Program to 2011-2020

At least 50 million people targeted to benefit from ADB’s water projects under the Water Financing Program are attributable to WFPF resources

Appendix 3

29

WFPF Design Summary

Performance Targets/Indicators
(Note: 50 million people was the figure used in the original DMF which represents 15% of the 340 million people targeted by the initial phase of Water Financing Program during the period 20062010. This figure will be adjusted once new targets are set)

Data Sources/Reporting Mechanisms

Assumptions and Risks

Outcome Enhanced engagement in strategic water sector investments

No less than 75% of projects and activities financed by WFPF translate to approved investment projects or reforms and capacity development program

PPTA reports, project/ loan documents, ADB lending reports, WFPF reports, WFPF application documents

Assumption  Expected contributions from financing partners are received Risk  WFPF resources are not replenished on time  Further reduction in ADB’s own TA resources Assumptions  ADB investment products are attractive to DMCs  Replenishment of OCR/ADF to support increased water investment Internal resources allocated to deliver increased water program WFPF contributions are received based on the committed date of contributions Risks Low DMC demand for increased investment in the sector

Output Component 1 Increased levels of water Investment (infrastructure)  About 70% or $70 Million of WFPF resources spent on project development support At least 456 fundable investment projects (PPTAs) are supported by WFPF Published ADB data on past and future public and private sector investments and technical assistance, loan/project documents Published ADB data on past and future public and private sector investments and technical assistance WFPF reports, direct charge outcome monitoring reports, project documents, TA

Fundable investment projects

Loans supported with grants

At least 207 loans are provided WFPF grant support through either works, goods, or services At least 1008 applications for direct charges add value to project development through

Project development support

6

The original target for PPTA was 30 and actual achieved to date is 16. The revised target is being set at 45. This means that the balance of 29 PPTAs are to be achieved during the period 2011–2020. The original target for grant component of investment was 15 and actual achieved to date is 13. The revised target is set at 20. The reason for a modest increase in target is because of the Water Committee decision to use this modality sparingly because this is what has slowed down the Facility’s disbursement. The original target for direct charges supporting project development was 30 and actual achieved to date is 27. The revised target is being set at 100. The reason for setting higher target is because the direct charge modality has shown to be more responsive to emerging needs of user departments and is in line with Water Committee-adopted principle of supporting projects and activities that cost less but have greater impacts.

7

8

30

Appendix 3

WFPF Design Summary

Performance Targets/Indicators
improved quality of design and implementation, better communication with stakeholders, etc. At least 20% of WFPF resources are allocated to sanitation-related projects and activities WFPF supported projects and activities demonstrate  Climate change adaptation, including flood and drought mitigation, and other water-related disaster management measures (at least 20 projects)  Increased focus on sanitation and wastewater management, including river clean-up (at least 30 projects)    Environmental protection and preservation (at least 30 projects)    Gender mainstreaming (at least 15 projects)    Greater involvement of civil society (at least 15 projects    Efficient water use in urban water supply, or agriculture, or industry (at least 30 projects)    Enhanced participation of private sector (at least 20 projects)

Data Sources/Reporting Mechanisms
papers

Assumptions and Risks

WFPF reports on approved applications

WFPF reports on approved applications

Such increase in investment level is

Assumption

Appendix 3

31

WFPF Design Summary
supported by the added value provided by WFPF in terms of: Faster decision making by means of:  WFPF governance and approval processes, including use of templates and tools 

Performance Targets/Indicators

Data Sources/Reporting Mechanisms

Assumptions and Risks

That ADB existing processes are not applied in each case but are able to be modified to enable these features to speed up processing Applications for TAs and GCIs are approved within 5 week upon receipt of bimonthly applications that meet qualification criteria Applications for direct charges are approved within one week upon receipt of applications that meet qualification criteria WFPF reports on approved applications WFPF financing proposals screening analyses

Use of direct charge modality support for short-term and stand alone activities with specific outputs and outcomes is made possible without need for RETA

Greater assurance of outcomes by increasing country commitment    Investment Dialogues Use of knowledge products Country water assessments Dialogues conducted in countries that produce updated water priorities based on updated country water assessments BTOR on dialogues ADB water database

Greater reach to underserved by  More PPTAs  More knowledge products  More partners Boosts innovation and business unusual  PDA financing  Knowledge products  Knowledge events  Take up of new products

At least 50 million population of WFP targeted outcomes directly traceable to WFPF funding

Post evaluation study of PPTAs and subsequent loan project design

Post evaluation confirms new ideas, methods, technology and approaches taken up and applied from WFPF financed initiatives About 15% or $15M of WFPF resources allocated to this component

Post evaluation of approved technical assistance projects

Component 2 Policy and institutional reforms accelerated  Nonlending assistance

32

Appendix 3

WFPF Design Summary
addressing reforms in the areas of:  policy,  legislation  regulation  institutional arrangements

Performance Targets/Indicators
At least 30 TAs (ADTAs, piggy-backed TAs, SSTAs, RETAs) or direct charge applications are designed to advance reform measures in each of the areas of policy, legislation, regulation or institutional arrangements About 15% or $15M of WFPF resources allocated to this component 80% of approved projects completed within schedule and replication /upscaling occurring for at least 40%

Data Sources/Reporting Mechanisms
TA documents, reports on sector work dealing with policies and legislation

Assumptions and Risks

Component 3 Institutional capacity strengthened and knowledge base expanded  Pilot and demonstration projects

PDA Project Completion Reports

Water sector organizations capacity improvement  Water Utilities Improvement in utilities performance using as basis the adopted utility performance indicators and the twinning partnerships work plan Implementation of benchmarking and peer review process in RBOs in Asia-Pacific Region Reports and benchmarking activities, WOPs reports on twinning partnerships

 River Basin Organizations (RBOs)

Benchmarking reports, Reports by NARBO (Network of Asian River Basin Organizations) Benchmarking reports, project reports

 Irrigation Water Users Association (WUA)  Sector Apex Bodies

Program for benchmarking irrigation service providers developed and implemented Program of support to the regional cooperation among apex bodies, including implementation of benchmarking and peer process Capacity building of sector agencies supported either as part of loans and TAs or

Benchmarking reports

 Water sector agencies

Water Committee and WFPF reports

Appendix 3

33

WFPF Design Summary

Performance Targets/Indicators
as stand-alone activities

Data Sources/Reporting Mechanisms
Water Committee reports

Assumptions and Risks

Knowledge products

Knowledge products developed on schedule and achieve targeted distribution levels At least 15 regional knowledge hubs operational by end 2020 At least 2 annual major water events organized or participated in by ADB, i.e. ADB Water Week, ADBDMC Sanitation Dialogue, Asia Irrigation Forum, Stockholm World Water Week, Singapore International Water Week, World Water Forum Scheduled outputs completed on time as indicated in relevant agreements

Knowledge hubs

Water Committee reports

Knowledge sharing events

Events-related reports, back-to-office reports (BTORs)

Regional cooperation / partnerships

Agreements, joint projects, web references

Activities Investment  Sustain ADB’s investments at $2.0-$2.5 billion annually  Mobilize private finance Reforms  Intensify support for national water sector reforms  Support development of regulatory frameworks  Extend support for IWRM into the targeted 25 basins Capacity Development  Develop new and innovative approaches, methodologies  Strengthen institutional capacity  Enhance the knowledge base and knowledge products  Strengthen regional partnerships

Inputs: ADB TA grant resources ADB Lending ADB staff resources Water Financing Partnership Facility approx $100 million  Project Support Window (About 70%)  Program Quality Window (About 30%) Government resources Private sector resources NGO resources

34

Appendix 4

Water Financing Partnership Facility (WFPF) Project Database List of January–June 2011 Approved Allocations
Date of Approval of WFPF Funding Allocation Modality for Accessing WFPF Resources

No.

Country

Project Name

Amount

Source of Funds

EAST ASIA Assessment of Non-Point Source Pollution and Needs for Capacity Development to Reduce Non-Point Source Pollution in Chao Lake Basin Upstream Work for Assessing New Approaches for River Rehabilitation and Flood Management in Chuxiong Prefecture, Chongqing Municipality and Jiuquan Municipality WOPs Asia: Continuing Twinning Initiatives in PRC

1

PRC

5-May-11

Direct Charge

50,000.00

Multidonor Trust Fund

2

PRC

7-Jun-11

Direct Charge

149,350.00

Multidonor Trust Fund

3 PACIFIC

PRC

16-Jun-11

Direct Charge

50,000.00

Multidonor Trust Fund

4

Samoa

Development of a Community Sanitation Project WOPs Asia: Supporting Twinning Initiatives in the Pacific

8-Mar-11

Direct Charge

75,000.00

Multidonor Trust Fund

5

Pacific countries

15-Jun-11

Direct Charge

50,000.00

Multidonor Trust Fund

SOUTHEAST ASIA Preparation of PSP Framework for Da Nang and Ho Chi Minh Netherlands Trust Fund

6

Viet Nam

1-Mar-11

Direct Charge

50,000.00

TOTAL JANUARY-JUNE 2011 ALLOCATIONS

424,350.00

Appendix 5

35

Appendix 5

36

Appendix 5

37

38
Appendix 5

Appendix 5

39

40
Appendix 5

Appendix 5

41

42
Appendix 5

43

Appendix 5

44
Appendix 5

Appendix 5

45

46
Appendix 5

Sign up to vote on this title
UsefulNot useful