Completion Report

Project Number: 40364-013 Loan Number: 2609 August 2018

Viet Nam: Central Region Rural Water Supply and

Sanitation Sector Project

This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency unit – dong (D)

At Appraisal At Project Completion (7 Sep 2009) (9 May 2018)

D1.00 = $0.000056 $0.000439 $1.00 = D17,825 D22,755

ABBREVIATIONS

ADB – Asian Development BankCBA – community-based approachCPMU – central project management unitEARF – environmental assessment and review frameworkFIRR – financial internal rate of returnGAP – gender action planHSP – health and sanitation promoterIEC – information, education, and communicationLARP – land acquisition and resettlement planM&E – monitoring and evaluationMARD – Ministry of Agriculture and Rural DevelopmentNCERWASS – National Center for Rural and Clean Water and

Environmental SanitationO&M – operation and maintenancePIA – project implementation assistancePPC – provincial people’s committeePPMU – provincial project management unitRWSS – rural water supply and sanitationSRF – sanitation revolving fundTA – technical assistanceVWU – Viet Nam women’s unionWSCC – water and sanitation commune committeeWTP – water treatment plant

NOTE

In this report, “$” refers to United States dollars.

Vice-President Stephen P. Groff, Operations 2 Director General Ramesh Subramaniam, Southeast Asia Department (SERD) Director Vijay Padmanabhan, Urban Development and Water Division, SERD Team leader Diana G. Connett, Young Professional, SERD Team members Paulus B. van Klaveren, Principal Urban Development Specialist, SERD Jocelyn M. Narciso, Associate Project Analyst, SERD Eugenio Antonio E. Dig, Operations Assistant, SERD 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.

CONTENTS

Page

BASIC DATA i

MAP vi

I. PROJECT DESCRIPTION 1

II. DESIGN AND IMPLEMENTATION 1

A. Project Design and Formulation 1 B. Project Outputs 2 C. Project Costs and Financing 5 D. Disbursements 6 E. Project Schedule 6 F. Implementation Arrangements 7 G. Technical Assistance 7 H. Consultant Recruitment and Procurement 7 I. Gender Equity 8 J. Safeguards 8 K. Monitoring and Reporting 9

III. EVALUATION OF PERFORMANCE 9

A. Relevance 9 B. Effectiveness 10 C. Efficiency 10 D. Sustainability 11 E. Development Impact 11 F. Performance of the Borrower and the Executing Agency 12 G. Performance of the Asian Development Bank 12 H. Overall Assessment 12

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 12

A. Issues and Lessons 12 B. Recommendations 13

APPENDIXES

1. Design and Monitoring Framework 15

2. Project Cost at Appraisal and Actual 19

3. Project Cost by Financier 20

4. Summary of Cost Estimates and Financing Plan 22

5. Disbursement of ADB Loan Proceeds 23

6. Contract Awards of ADB Loan and Grant Proceeds 25

7. Summary of Outputs 27

8. Financial and Economic Evaluation by Subproject 42

9. Status of Compliance with Loan Covenants 58

10. Social, Poverty, Gender and Safeguards Performance 67

BASIC DATA A. Loan Identification

1. Country Viet Nam 2. Loan number and financing source 2609 and concessional loan 3. Project title Central Region Rural Water Supply and

Sanitation Sector Project 4. Borrower Socialist Republic of Viet Nam 5. Executing agency Ministry of Agriculture and Rural

Development 6. Amount of loan SDR28.079 million ($45.0 million

equivalent) 7. Project completion report number 1703 8. Financing modality Project loan

B. Loan Data

1. Appraisal – Date started – Date completed

8 September 2009 14 September 2009

2. Loan negotiations – Date started – Date completed

12 November 2009 13 November 2009

3. Date of Board approval 17 December 2009 4. Date of loan agreement 2 February 2010 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions

3 May 2010 2 June 2010 2

6. Project completion date – Appraisal – Actual

31 December 2016 31 March 2017

7. Loan closing date – In loan agreement – Actual – Number of extensions

30 June 2017 30 June 2017 None

8. Financial closing date – Actual

9 May 2018

9. Terms of loan – Interest rate

– Maturity (number of years) – Grace period (number of years)

1.0% per annum during the grace period and 1.5% per annum thereafter 32 8

10. Terms of relending (if any) – Interest rate

None

– Maturity (number of years) – Grace period (number of years) – Second-step borrower

ii

11. Disbursements

a. Dates

Initial Disbursement 13 Dec 2011

Final Disbursement 19 April 2018

Time Interval 76 months

Effective Date

2 Jun 2010

Actual Closing Date 30 June 2017

Time Interval 85 months

iii

b. Amount ($ million)

Category

Original Allocation

(1)

Increased during Implementation

(2)

Cancelled during Implementation

(3)

Last Revised Allocation (4=1+2–3)

Amount Disbursed

(5)

Undisbursed Balance (6 = 4–5)

A. Investment Costs 1. Civil works

a1. Water supply works 19.58 6.71 0.00 26.29 25.57 0.72 a2. Land resettlementa 0.00 0.00 0.00 0.00 0.00 0.00 b1. Household latrines – substructures 5.81 (3.27) 0.00 2.54 2.03 0.51 b2. Household latrines – superstructures 0.00 0.00 0.00 0.00 0.00 c. School and public latrines 0.55 0.31 0.00 0.86 1.23 (0.37) d. Minor drainage 1.49 (1.06) 0.00 0.43 0.00 0.43

2. Consultants a. Improved hygiene practices 1.89 (1.89) 0.00 0.00 0.00 0.00 b. Strengthening sector planning 2.21 (2.21) 0.00 0.00 0.00 0.00 c. Project management assistanceb 3.67 2.78 0.00 6.45 6.23 0.17

3. Workshops and training 1.30 (0.54) 0.00 0.76 0.36 0.40 4. Community funds for IEC 1.12 (0.51) 0.00 0.61 0.36 0.25

Subtotal (A) 37.62 0.32 0.00 37.94 35.78 2.11 B. Recurrent Costs

1. Incremental administration a. In cash 1.10 0.05 0.00 1.15 0.98 0.17 b. In kind 0.00 0.00 0.00 0.00 0.00 0.00

2. Audits 0.20 (0.09) 0.00 0.11 0.12 (0.01) Subtotal (B) 1.30 (0.04) 0.00 1.26 1.10 0.16

Total Base Cost 38.92 0.28 0.00 39.20 36.88 2.27 C. Contingencies 4.88 (4.88) 0.00 0.00 0.00 0.00 D. Financial charges during implementation 1.20 (0.14) 0.00 1.06 0.68 0.42 Total 45.00 (4.74) 0.00 40.26 37.55 2.69

Note: Numbers may not sum precisely because of rounding. a Resettlement and in-kind costs were included in government contributions. b Allocation for project management assistance was increased to cover activities under improved hygiene practices and strengthening sector planning. IEC = information, education and communication Source: Asian Development Bank

iv

C. Project Data

1. Project cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 50.00 41.50 Local Currency Cost - -

Total 50.00 41.50 Source: Asian Development Bank estimates.

2. Financing plan ($ million)

Cost Appraisal Estimate Actual Implementation cost Borrower financed 2.63 3.94 ADB financed 45.00 37.55 Beneficiariesa 2.37 0.00 Total investment cost 50.00 41.50

Interest during construction costs Borrower financed 0.00 0.00 ADB financed 1.20 0.68 Other external financing 0.00 0.00 Total interest during construction costb 1.20 0.68

Note: Numbers may not sum precisely because of rounding. a Beneficiaries’ contributions were not included in audited financial statements, and not available at project closing. b Note interest payments are included in actual cost and disbursement figures. Source: Asian Development Bank.

3. Cost breakdown by project component ($ million) Component Appraisal Estimate Actual A. Investment Costs

1. Civil works a1. Water supply works 21.75 28.41 b1. Land resettlementa 1.02 0.60 a2. Household latrines – substructures 5.81 2.03 b2. Household latrines – superstructures 1.28 0.29 c. School and public latrines 0.61 1.37 d. Minor drainage 1.66 0.00

2. Consultants a. Improved hygiene practices 1.89 0.00 b. Strengthening sector planning 2.21 0.00 c. Project management assistance 3.67 6.23

3. Workshops and training 1.30 0.36 4. Community funds for IEC 1.12 0.36

Subtotal (A) 42.32 39.65 B. Recurrent Costs

1. Incremental administration a. In cash 1.10 0.98 b. In kinda 0.30 0.07

2. Audits 0.20 0.12 Subtotal (B) 1.60 1.17

Total Base Cost 43.92 40.82 C. Contingencies 4.88 0.00 D. Financial charges during implementation 1.20 0.68 Total 50.00 41.50 IEC = information, education and communication. a Resettlement and in-kind costs were included in government contributions. In-kind contributions were not included in audited financial statements, and not available at project closing. Source: Asian Development Bank.

v

4. Project schedule Item Appraisal Estimate Actual Date of contract with consultants

Project implementation assistance consultants Dec 2010 Jul 2011 Auditing consultant Mar 2012 Apr 2013 Auditing consultant 2 Apr 2016 May 2016

Civil works contract Date of first award Apr 2013 Jun 2013 Completion of work June 2016 Mar 2017

Equipment and supplies Date of first procurement Aug 2012 Jan 2013 Date of last procurement Mar 2016 Mar 2016 Completion of equipment installation Mar 2016 Mar 2017

Start of operations Completion of tests and commissioning July 2013 July 2014 Beginning of start-up Dec 2013 Dec 2014

Start of workshops and trainings Sep 2011 Sep 2011 End of workshops and trainings Nov 2016 Nov 2016 Start-up for community funds for IEC Jul 2013 Aug 2013 IEC = information, education and communication. Source: Asian Development Bank.

5. Project performance report ratings

Implementation Period Ratings

Development Objectives Implementation Progress

From 2 Jun 2010 to 31 Dec 2010 Satisfactory Satisfactory Single Project Rating From 1 Jan 2011 to 30 Jun 2011 Actual Problem From 1 Jul 2011 to 30 Sep 2011 Potential Problem From 1 Oct 2011 to 31 Dec 2011 On Track From 1 Jan 2012 to 30 Jun 2012 Potential Problem From 1 Jul 2012 to 30 Sep 2012 On Track From 1 Oct 2012 to 31 Dec 2012 Actual Problem From 1 Jan 2013 to 31 Mar 2013 On Track From 1 Apr 2013 to 31 Dec 2013 Potential Problem From 1 Jan 2014 to 30 Sep 2014 On Track From 1 Oct 2014 to 31 Dec 2014 Potential Problem From 1 Jan 2015 to 30 Sep 2017 On Track From 1 Oct 2017 to 31 Dec 2017 Potential Problem From 1 Jan 2018 to 30 Mar 2018 On Track Source: Asian Development Bank.

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of Person-

Days Specialization of

Members

Fact-finding 13–28 Jul 2009 2 5 a, c Appraisal 8–14 Sep 2009 1 7 a Loan Review 27–30 Sep 2011 2 5 a, c Project Review 1 20–27 Mar 2012 1 3 a Project Review 2 26–30 Nov 2012 5 20 a, b, c Project Review 3 7–10 May 2013 2 8 a, c Project Review 4 28–29 Nov 2013 1 2 a Mid-term Review 20–29 May 2014 6 54 a, b, d, e Project Review 5 8–16 Dec 2014 4 32 a, b, d, f Project Review 6 15–25 May 2015 1 10 a Project Review 7 2 Dec 2015 2 2 a, g Project Review 8 29 Jun–7 Jul 2016 4 36 a, b, f, c Project Review 9 Nov 2016 1 1 a Project completion review 12–24 Mar 2017 3 30 a, b, c a = engineer, b = social development specialist, c = project analyst, d = resettlement specialist, e = consultant, f = environmental safeguards consultant, g = director. Source: Asian Development Bank.

Son LaDien Bien Phu

Thai Binh

Ninh Binh

Hoa Binh

Phu Ly

Hung Yen

Bac Giang

Ha Long

Hai DuongCam Pha

Vinh Yen

Dong Ha

Quang Ngai

Pleiku

Kon Tum

Tuy Hoa

Buon Ma Thuot

Ninh Hoa

Hue

Da Nang

Hai Phong

Thanh Hoa

Ha Tinh

Dien Chau

Thai Hoa

Dong Hoi

Tam Ky

Hoi An

Bong Son

Quy Nhon

Vinh

HA NOIHA NOI

QUANG NAM

HA TINH

NGHE AN

THANH HOA

QUANG BINH

BINH DINH

Project Province

National Capital

Provincial Capital

City/Town

National Road

Other Road

Railway

River

Provincial Boundary

International Boundary

Boundaries are not necessarily authoritative.

CENTRAL REGIONRURAL WATER SUPPLY AND

SANITATION SECTOR PROJECT

VIET NAM

(as completed)

This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, colors, denominations, or information.

10075

Kilometers

500 25

N

18-0542 ABV

103 00’Eo

108 00’Eo

108 00’Eo

20 00’No

14 00’No

14 00’No

20 00’No

MAIN MAP

Hai Phong

Ho Chi Minh City

Hue

Ha Noi

I. PROJECT DESCRIPTION 1. In 2006, only about 46% of the rural population of Viet Nam had access to clean water, and water was not continuously available throughout the year. About 83% of the rural population had latrines, but only 48% of these were classified hygienic.1 Knowledge of individual sanitation remained poor. In 2006, 2.3% of the rural population knew that handwashing with soap may prevent some communicable diseases, and only 13.0% of households and 11.0% of students washed their hands with soap before meals and after urination or defecation. 2. The Asian Development Bank (ADB) approved the Central Regions Rural Water Supply and Sanitation Sector Project in December 2009 as a sector loan to help Viet Nam have a better access to clean water and hygienic sanitation, including awareness on hygiene and sanitation.2 The project’s intended impact was better health and living conditions for people living in rural areas in six provinces in the central coastal region of Viet Nam: Binh Dinh, Ha Tinh, Nghe An, Quang Binh, Quang Nam, and Thanh Hoa. This was to be achieved through improved access to clean water and hygienic sanitation for about 200,000 rural people in about 30 communes. The outputs were (i) operational and sustainable piped water supply systems, (ii) improved household and public sanitation, (iii) improved hygiene awareness, (iv) strengthened sector planning and implementation capacity, and (v) improved project management capacity.

II. DESIGN AND IMPLEMENTATION A. Project Design and Formulation 3. The project design was relevant in terms of consistency with ADB’s country strategy and the country’s development objectives. The project was formulated to contribute to the achievement of the key goals of the ADB country strategy and program, 2007–2010:3 promoting socially equitable and balanced development, sustainable environmental management, and stronger institutions. It was designed to support the major targets of the Viet Nam’s Socioeconomic Development Plan, 2006–2010,4 including the poverty rate reduction. The project is also in line with the Comprehensive Poverty Reduction and Growth Strategy of the government which recognizes that access to clean and safe water and hygienic latrines is one of the preconditions for poverty reduction, particularly for Viet Nam’s rural population. 4. The project design was sound and the formulation process was adequate. The lessons learned from earlier projects were incorporated in the project design and extensive consultation with key stakeholder agencies at national and provincial levels were conducted during project formulation. The project had the following features: (i) key sector institutions were included as project partners, (ii) continuous learning through batched subproject preparation and implementation, (iii) increased resource allocation to community-based approaches in information, education, and communication programs, (iv) affordability by providing targeted subsidies and sanitation revolving funds, (v) intensive capacity building with government agencies, and (vi) establishment of water tariffs sufficient to recover full operation, maintenance, and depreciation costs.

1 Hygienic as defined by Government of Viet Nam. 1999. Rural Water Supply and Sanitation Strategy. Ha Noi. 2 Asian Development Bank (ADB). 2009. Report and Recommendation of the President to the Board of Directors:

Proposed Loan on Central Region Rural Water Supply and Sanitation Sector Project. Manila. (Loan 2609-VIE) 3 ADB. 2007. Country Strategy and Program: Viet Nam, 2007–2010. Manila. 4 Government of Viet Nam. 2006. Socioeconomic Development Plan, 2006–2010. Ha Noi.

2

5. The sector lending approach was relevant. The project was prepared and implemented in line with the National Rural Water Supply and Sanitation Strategy which set ambitious targets for 2010 (85% coverage for clean water supply and 70% for hygienic latrines) and 2020 (100% for both clean water supply and hygienic latrines).5 In order to achieve the targets set by the strategy, the government has implemented five-year national target program for rural water supply and sanitation since 2001. The second phase of the program was implemented at appraisal and currently the fourth phase is being implemented. The batched structure of the sector loan allowed for an incremental learning process by the stakeholders based on actual implementation experience. 6. Following the preparation of designs and contracting of the first batch of subprojects, it became clear that the original cost estimate was insufficient to achieve the original targets. The estimate did not consider the price inflation and foreign exchange risks sufficiently. During the midterm review in May 2014, ADB and the government agreed to reduce the outcome and outputs indicators.6 The revised project included the following reductions: (i) from 24 subprojects to 14, (ii) from 350,000 beneficiaries (65,000 households) to 200,000 beneficiaries (45,000 households), and (iii) from 60 units each in public and school latrines to 14 public latrines and 35 school latrines. B. Project Outputs 7. Output 1: Operational and sustainable piped water supply systems. The project aimed to construct 24 piped water supply systems supplying water to about 65,000 households or 350,000 people. The original targets were revised due to cost overrun caused by foreign exchange fluctuation and price inflation. The target population was reduced to 200,000 people or 45,000 households. 8. The project constructed groundwater and surface water intakes, water treatment plants (WTPs), transmission and distribution pipes, and household connections with individual water meters. Table 1 summarizes the achievements at completion against the targets at appraisal and the revised targets in all subprojects (Appendix 7).

Table 1: Outputs of Water Supply Works

Criteria Unit Original Target Revised Target Achievement

At Completion Total served population People 350,000 200,000 206,024 Total supply capacity cubic meters/day min. 16,000 min. 16,000 33,330 Average water billed Liters/person /day > 80 > 80 22–98 Total length of pipeline kilometers 2,500 1,139 1,212 Total connections households 65,000 45,000 48,424 Breakdowns per month number < 4 < 4 0.05 Average operating ratio costs/revenues 1 1 0.71 Average water tariff % monthly income < 3 < 3 0.60 Source: Executing agency and the Asian Development Bank calculations.

9. Although the project could not achieve the targets at appraisal, the revised targets were substantively met or exceeded at completion. More than the targeted 200,000 people (45,000 households) had connections and access to clean water supply. The lower-than-anticipated daily water use per capita (averaging less than the minimum 80 liters per person per day) is attributable

5 MARD. 2000. National Rural Water Supply and Sanitation Strategy to 2020. Ha Noi. 6 The agreement with the government was recorded in the memorandum of understanding for the midterm review.

However, inadvertently, ADB never processed internal approval of the change in project scope.

3

to the availability of alternative, but unhygienic, water sources in the communities. It is expected that information, education, and communication (IEC) campaigns will continue to increase consumption, as seen in batch 1 subprojects, where during 2015–2017 average billed volumes increased from 36 to 69 liters per capita per day. Because the number of household connections have already exceeded targets, primary opportunities for expansion are to increase the per capita use in order to utilize full system capacities. 10. The water quality7 and systems’ operations8 met targets, and average water tariffs were 0.6% of beneficiaries’ monthly income per capita in 2017, well below the threshold for affordability maximum of 3.0% for the communities (where the average income per capita per day is $3.18). Annual operation and maintenance (O&M) costs averaged D1,140.16 million per subproject in 2017, with revenues averaging D1,612.64 million, creating an average operating ratio (costs–revenues) of 0.71, which demonstrates strong cost recovery performance. Some subproject tariffs are insufficient to cover depreciation costs. The Quang Nam province subprojects are outliers as revenues are insufficient for general O&M (Appendix 8). 11. Output 2: Improved household and public sanitation. At appraisal, the project aimed to provide 65,000 household latrines with proper sullage facilities, 60 public and 60 school latrines with separate units for males and females, and 230 km of public drainage systems with proper discharge. The original target was revised due to cost overrun caused by foreign exchange fluctuation and price inflation. The target for household latrines was reduced to 45,000, public and school latrines to 14 and 35 respectively.

Table 2: Outputs of Sanitation Works Criteria Unit Target Achievements Total latrines constructed or upgraded number 45,000 52,368 Grants for construction of latrine substructures number 4,790 Public latrines number 14 16 School latrines number 35 36 Length of improved drainage system km 9.52 8.27

km = kilometer. Source: Executing agency.

12. Although the project could not achieve the targets at appraisal, the revised targets were exceeded with 52,368 household latrines, 16 public latrine units, and 36 school latrines constructed or upgraded. By 2018, 91.4% of the population in the subproject areas have access to hygienic latrines. The 52 public latrines have separate units for men and women, and 4,790 substructures of private latrines were financed under the Sanitation Revolving Fund (SRF). Public drainage systems totaled 8.2 km rather than 9.5 km because of lower-than-anticipated demand (Appendix 8). 13. Output 3: Improved hygiene practices. To complement the infrastructure improvement under outputs 1 and 2, community hygiene awareness would be raised to ensure that benefits were sustained following project completion. The project aimed that (i) at least 90% of the population in the project areas would be connected to water supply systems and would pay water bills on time, (ii) less than 30% of total water usage would be from alternative water sources, (iii) at least 90% of all latrines would be operational and well maintained, (iv) Provincial Center for Rural and Clean Water and Environmental Sanitation staff would be trained in community-based approach (CBA) and IEC, (v) at least 40% of newly formed water and sanitation commune

7 The water quality meets the National Technical Regulation on Drinking Water Quality QCVN 01:2009/BYT. 8 There are on average 0.5 breakdowns per month with an average duration of less than 2 hours.

4

committees (WSCCs) members would be women, and (vi) 500 health and sanitation promoters (HSPs) would be trained in CBA-IEC, of which 50% were to be women. Table 3 summarizes the achievements at completion against the targets at appraisal.

Table 3: Outputs Supporting Improved Hygiene Practices

Item Population Connected

Pays on Time

Latrines Maintained WSCCs HSPs

Households Trained in IEC

Target 90.0% 90% 90.0% 40.0% women

50.0% women

45,000

Achieved 83.3% 97% 87.3% 53.3% women

54.5% women

57,000

HSP = health and sanitation promoter, IEC = information, education, and communication, WSCC = water and sanitation commune committees. Source: Executing agency.

14. Targets were achieved that 83.3% of the population had access to piped water supply systems and 97.0% of households regularly paid for service on time. Total water usage from alternative sources was reduced, however, data is insufficient to prove the percentage of total water usage change from alternative sources at project closing. 15. The establishment and training of WSCCs and HSPs was a unique feature of the project. Five hundred and eighty-four HSPs were trained, and participation by women in both WSCCs and HSPs exceeded targets. Community participation and hygiene awareness were successfully tailored to each commune through knowledge, attitude, and practices assessments. HSPs and WSCC members made 146,088 household visits to raise awareness on hygiene and the importance of clean water (Appendix 7).

16. Output 4: Strengthened sector planning and implementation capacity. This was to be delivered through improved O&M of water supply facilities, improved monitoring and evaluation (M&E), the establishment of SRFs, and improved capacities for provincial and commune Viet Nam women’s unions (VWUs) to manage SRFs. The targets for this output were satisfactorily achieved as shown in Table 4.

Table 4: Planning and Implementation Activities

Criteria Unit Achievement at Dec 2016

Training in operation and maintenance for operators % 88 Training in monitoring and evaluation for operators % 100 6 provincial Viet Nam women’s unions trained participants 161 (73% women) 33 commune Viet Nam women’s unions trained participants 257 (79% women) Applications for sanitation revolving funds loans Number 10,262 Disbursed sanitation revolving funds loans Number 3,912 Source: Executing agency.

17. Training in O&M was conducted at the Central Region College of Technology–Economics and Water Resources, Nghe An province and offered by the project implementation assistance (PIA) consultants. Training courses included monitoring, evaluation, and reporting on safeguards issues, as well as financial and operational management. Because of a lack of resources, a water operators’ network was not established as originally planned. M&E reporting was consistent across subprojects. 18. SRFs were successfully established in five of the six provinces to provide loans for nonpoor households to construct or rehabilitate private latrines. The Quang Nam province executing agency opted to use its ongoing program with the Social Policy Bank. The maximum

5

loan, originally set to D4 million set per the SRF guidelines approved by the Ministry of Agriculture and Rural Development (MARD) in September 2013. It was revised to D6 million on 17 July 2015 by Government Office document no. 5595/VPCP-KTHT. Anecdotal evidence from the March 2018 mission found that demand is even greater, likely double, according to Binh Ding VWU. Underestimation of demand costs hampered initial progress. However, SRFs have continued beyond ADB project closing, in line with the project’s designed exit strategy, increasing from 3,912 loans issued in December 2016 to 4,455 loans issued by December 2017.

19. Output 5: Improved project management capacity. The project aimed for 100% of project orientation workshops to be carried out; 30 staff from the Department of Agriculture and Rural Development, Department of Health, and Ministry of Education and Training were to be trained; and at least 30% of provincial project management units (PPMU) were to be women.

20. Priority areas for training were identified by the needs assessments as follows: (i) rural water supply and sanitation (RWSS) engineering and contract management; (ii) financial appraisal and analysis; (iii) financial management; (iv) hygiene and sanitation awareness; (v) quality control; (vi) social and gender awareness; (vii) preparation, implementation, and monitoring of environmental, resettlement, and ethnic minorities safeguard plans; (viii) planning and budgeting; (ix) accounting; and (x) procurement. All project workshops were held and the targets for women PPMU members was exceeded (32.4%). Evidence of ongoing project management capacity improvements are seen through provincial training programs, expansion of subprojects, and development of further project proposals. The targets were achieved (Appendix 7). C. Project Costs and Financing 21. At appraisal, the ADB loan was SDR28.079 million ($45 million equivalent). The total project cost was estimated at $50 million, with ADB to finance $45 million including taxes and duties of $4.1 million. The government was to finance $2.63 million to cover resettlement and land compensation, 5% of the cost of the water supply infrastructure and 10% of the public latrines and drainage. The beneficiaries were to finance $2.37 million in cash and kind. 22. Costing challenges had surfaced during project preparation as the government’s strategy assumed investment costs of $34 per capita for water supply, despite common unit prices of $80–$100, and $20 per household for sanitation investment, despite common unit prices of $100–$150.9 Because of these cost underestimates as well as greater-than-anticipated exogenous price inflation, it was agreed in 2014 to increase the unit prices based on the updated feasibility studies and actual costs of the first six subprojects (batch 1), which was timely to inform the eight batch 2 subprojects. 23. The average cost of connecting one household to piped water supply in batch 1 was $475 ($107 per capita), up 42% from the $335 used in project design. Accounting for continued inflation, the cost for batch 2 subprojects was estimated at $500 per household ($112 per capita).

24. Challenges with original design costs estimates were exacerbated by project delay, foreign exchange fluctuations, and price inflation on materials and labor. Consumer goods inflation rates in Viet Nam peaked in 2008 at 23.1% and at 18.7% in 2011.10 Original project price contingencies of 5.00% in 2010 and 6.00% for 2011 onward on local currency and 0.45% foreign

9 ADB. 2009. Central Region Rural Water Supply and Sanitation Sector Project. Manila. (paragraph 17). Page 5. 10 World Bank and International Monetary Fund. 2018. International Financial Statistics. Washington, D.C.

6

exchange costs proved insufficient. The exchange rate of special drawing rights fell from SDR1.60 = $1 to SDR1.39 = $1, or by 14%, from December 2009 to loan closing, effectively reducing the ADB loan amount from about $45 million (December 2009) to $41.50 million at project completion. 25. At project closing, the investment cost for water supply per capita by subproject ranged from $66 to $173. Average investment cost for water supply per capita for batch 2 subprojects was $115. Government and beneficiary contributions for water supply and sanitation facilities support the sustainability. At the project’s financial closing date of 9 May 2018, the project’s total cost was $41.50 million, of which $37.55 million in ADB’s loan proceeds were utilized, and the government contributed $3.94 million. D. Disbursements 26. Disbursements were initiated 1.5 years after loan effectiveness. To facilitate disbursements, the MARD established a first-generation imprest account and the six PPMUs established second-generation imprest accounts at commercial banks. Independent auditing revealed satisfactory performance. This arrangement facilitated management at the provincial level, which helped drive decentralization in capacity and accountability. All project stakeholders reported satisfaction with the arrangements. Disbursements, while initially slow, would have been completed as scheduled, however, on 14 May 2015 the government limited annual development assistance disbursements. Limits for the project’s disbursements were capped in 2015 and 2016 resulting delays in the liquidation process. As requested by the government, the project winding-up period was extended to 31 January 2018 to allow them to complete their liquidation of all project expenses. 27. All civil works, services, and goods contracts were awarded and completed by 30 June 2017. As of financial closure, cumulative contract awards were $36.87 million (90.81% of net loan utilization), and cumulative disbursements were $37.55 million (102.74% of contracts awarded). E. Project Schedule 28. The loan closed at the original loan closing date without any extension required. The project was physically completed on 31 March 2017, having overcome initial delays as well as accommodating additional works. 29. ADB Management had approved advance recruitment of consultants but this was not pursued by the executing agency. Selection of the consultant was delayed because of PPMUs unfamiliarity with ADB procedures, slowing initial approvals. The firm was mobilized on 25 August 2011 (13 months after loan effectiveness). Further delays in batch 1 subprojects were attributable to the substandard quality of the feasibility studies, which required multiple rounds of corrections and rebidding. Project performance in 2012 was rated actual problem. The procurement plan was updated and a time-bound action plan was agreed in May 2013. The project initially accelerated but was positioned as potential problem from April 2013 until December 2013 due to construction delays caused by four typhoons. In June 2014, subproject safeguard noncompliances were found, causing delays. Land acquisition and resettlement plans (LARPs) were updated and approved, and civil works resumed within the year.

30. Batch 2 subprojects built on initial project lessons, including scheduled accelerations through design–build contracts, national competitive bidding, and ADB post-review procedures. For additional works, ADB made approvals conditional on a strict time frame, which was followed. By January 2015, the project was rated on track and was completed on time.

7

F. Implementation Arrangements 31. Implementation arrangements were as envisaged at appraisal. A central project management unit (CPMU) was established within the National Center for Rural and Clean Water and Environmental Sanitation (NCERWASS) of the MARD, serving as the executing agency. The provincial Departments of Agriculture and Rural Development set up PPMUs. The VWUs maintain management of the SRFs. At the commune level, WSCCs were established and HSPs ensured community participation in project implementation and hygiene awareness activities. Following project closure, few WTP operators have continued to fund the HSPs, though some WSCCs still function or have been subsumed in VWU activities. 32. The strong community involvement and women’s participation complemented the traditional top-down approaches to drive implementation of the project’s affordability and poverty focus. The establishment and training of WSCCs and HSPs was a unique project feature, which proved to be an effective means of driving information and engagement within each community. Affordability criteria ensured (i) free connections for poor and near-poor households headed by women, (ii) that water bills did not exceed 3% of average monthly income, and (iii) free latrine substructures by provision of the SRF funds for poor and near-poor households headed by women. By December 2016, the project had provided free water supply connections to 6,813 poor or near-poor households headed by women with sole income provided by a woman, water bills averaged 0.6% of monthly incomes, and 4,790 free latrine substructures were provided to poor households, of which 1,271 had females as the sole income provider. G. Technical Assistance 33. A project preparatory technical assistance (TA) of $600,000 financed from ADB’s Technical Assistance Special Fund was approved in September 2008.11 A total of $493,605 was utilized from the TA funds. The outcome of the TA was the sector project and a set of policy reform recommendations. During project implementation, it was confirmed that the feasibility studies were of poor quality, and the consulting team leader received an unsatisfactory rating on the project. H. Consultant Recruitment and Procurement 34. The consultant recruitment and procurement followed ADB’s Guidelines on the Use of Consultants and Procurement Guidelines (as amended from time to time). Quality- and cost-based selection was used for project consulting services and least-cost selection was used for local consulting services. As a sector project, the first two national competitive bidding procurement packages of each executing agency were subject to prior approval by ADB, and annual financial statements were audited by an independent auditing firm. The use of a single implementation consultant was a successful deployment of lessons learned. 12 Delays in recruitment and approval were largely attributable to a lack of familiarity with ADB’s procedures. To expedite the bidding and selection process for batch 2 subprojects, four PPMUs (Ha Tinh, Quang Binh, Quang Nam, and Binh Dinh) used provincial funds to prepare the feasibility study reports. Implementation consultants and large contractors performed well.

11 ADB. 2008. Preparing the Central Region Rural Water Supply and Sanitation Sector Project. Manila. 12 ADB. 2011. Project Completion Report: Viet Nam: Third Provincial Towns Water Supply and Sanitation Project

(28315). Manila.

8

I. Gender Equity 35. Gender was a strong focus for the project, which had a gender equity theme. A comprehensive gender action plan (GAP) was included in the project design, providing actions to enhance project benefits for women, which were integrated into all project components. Targets were set for the participation of women in all activities, including decision making. Specific subproject GAPs were developed to guide the integration into project activities, including the nomination of gender focal persons in PPMUs. By March 2017, 12 of the 15 GAP actions were completed, two were partially completed, and one was not completed. All four targets were achieved. GAP was successful as it exceeded the 70% threshold criteria of completed actions (80%) and achieved 100% of the targets.13 J. Safeguards 36. Land acquisition and resettlement. The project was classified category B for involuntary resettlement. The LARPs were prepared for all subprojects and implemented in accordance with ADB’s policies. One exception was during initial implementation in five pilot subprojects. In Quang Nam, Nghe An, Thanh Hoa, Ha Tinh, and Binh Dinh provinces, compensation payments to the affected households were made by the PPMU based on the originally approved LARPs rather than updated LARPs (due to design–build contracting). ADB instructed PPMUs to stop construction and suspended payments. Corrective actions were successful. The overall impacts on project implementation were minor, however the demonstration of leadership and commitment on safeguards compliance was an important outcome for the partners, beneficiaries, and ADB. Overall, resettlement impacts were as anticipated in the LARPs. Land acquisition and resettlement completion reports were prepared for all subprojects, and no pending issues remain. No complaints were received (Appendix 10).

37. Indigenous peoples. The project was classified category A for indigenous peoples and the ethnic minority development framework was prepared for the project. In cases where more than 50% of the population comprised ethnic minorities, an ethnic minority development plan was required for the subject subproject. Impacts were found only in one subproject: in Le Thuy (Thanh Hoa province).14

38. Environment. The project was classified category B for environment. Assessments for all batch 1 and 2 subprojects were undertaken in accordance with the environmental assessment and review framework (EARF). Safety, occupational health, and environmental measures were incorporated in all contracts. The project was implemented in accordance with applicable domestic and ADB safeguard requirements, and the loan covenants for environmental safeguards were complied with,15 strongly supported by active monitoring by ADB and the CPMU. Negative environmental impacts were short term, minor, and associated with construction activities. Safety was a key concern during project construction, though a poor safety culture with works contractors is systemic and not limited to the project. The required consents and permits to establish and operate were obtained. Overall, the project has improved the environment and public health in

13 GAP activities and achievements are summarized in Appendix 10. 14 Additional details of ethnic minority performance are available in Appendix 10. 15 Batch 1 Initial Environmental Examinations (IEEs) were prepared in accordance with national requirements and the

ADB Environment Policy (2002) and ADB Environmental Impact Assessment Guidelines (2003). The environmental assessment and review framework was updated in 2011, and batch 2 IEEs were prepared under the Safeguard Policy Statement (2009) requirements.

9

the subproject areas. The objectives of the EARF and the environmental management plans were fully realized, and there are no outstanding environmental safeguard issues.16 K. Monitoring and Reporting 39. Compliance with the loan agreement and covenants was monitored by the CPMU, PIA, and ADB missions, and the status was reported in quarterly progress reports, which were timely and sufficient. Safeguards reports were integrated into quarterly progress reports in 2014 to ensure visibility. Independent financial audits were performed, per requirements, and revealed no irregularities in provincial or national accounts. All conditions and covenants were substantially complied with.17

III. EVALUATION OF PERFORMANCE A. Relevance 40. The project is assessed relevant. The goals, objectives, and outputs of the project are consistent with the original and ongoing priorities, policies, and strategies of the government as well as ADB. The project was designed to align with the National Rural Water Supply and Sanitation Strategy 2010, which targeted 85% coverage for clean water supply and 70% for hygienic latrines and 100% coverage by 2020.18 In the six project provinces alone in 2018, more than 50% of rural residents remain without access to piped water supply. 41. The project design aligned with ADB’s Viet Nam country strategy and program, 2007–2010 (footnote 7) which identified poor rural communities’ lack of access to infrastructure as a key constraint in reducing poverty, and the government’s Socioeconomic Development Plan 2006–2010 (footnote 8) in reducing poverty to 10%–11% of households. The project was also in line with ADB’s Strategy 2020, pillar 2: inclusive social development.19 The project remains relevant to the National Rural Water Supply and Sanitation Strategy to 2020 (footnote 11) and the government’s Socioeconomic Development Strategy for 2011–2020 which defines three breakthrough areas: (i): promoting human resources/skills development, (ii) improving market institutions, and (iii) infrastructure development. 20 It aligns with ADB’s Viet Nam country partnership strategy (2016–2020) which supports increasing the inclusiveness of infrastructure and service delivery and improving environmental sustainability.21 as well as ADB Strategy 2030 which supports the strategic priorities of (i) poverty reduction and inclusive economic growth, (ii) infrastructure development, and (iii) middle-income countries.22

42. The design and sector loan modality were adequate to deliver the outputs and contribute to the intended outcome. The project adequately addressed TA deficiencies that had led to unrealistic targets, and the batched structure of the sector project allowed for flexible improvements quickly. The revised targets are commensurate with the intended impact and resources allotted. The output designs and budget allocations for CBA-IEC activities have proven transformational for communities. Subprojects have started expanding (scaling up), demonstrated by increased water supply connections and SRF loans in 2016–2017. The project design’s

16 Additional details of environmental performance are available in Appendix 10. 17 Status of loan covenant compliance is detailed in Appendix 9. 18 MARD. 2000. National Rural Clean Water Supply and Sanitation Strategy to 2020. Ha Noi. 19 ADB. 2008. Strategy 2020. Manila. 20 Government of Viet Nam. 2011. Socio-Economic Development Strategy for 2011–2020. Ha Noi. 21 ADB. 2016. Country Partnership Strategy: Viet Nam. Manila. 22 ADB. 2018. Strategy 2030. Manila.

10

innovative features, especially in tailored CBA-IEC activities, have led to continued improvements since project closure and increased demand for clean piped water supply in communities surrounding the subprojects. B. Effectiveness 43. The project is rated less than effective. The original outcome targets were not achieved. The outcome targets were reduced during project implementation due to cost overrun caused by foreign exchange fluctuation and price inflation that were much more substantial than expected during project preparation. However, other factors such as poor quality of cost estimates during project preparation and project implementation delays at start-up stage may have increased the impacts of foreign exchange fluctuation and price inflation. 44. The revised outcome targets were achieved at project completion. Through the WSCCs, HSPs, and VWUs, communities, women particularly, have benefitted from hygiene education and physical improvements in local sanitation. Water tariffs have been set above the estimated average incremental financial cost and are self-sustaining in 10 of the 14 water systems. Provincial people’s committee (PPCs) supplement operational budget deficits, however few O&M budgets include robust IEC activities. As of December 2017, tariff revenues covered O&M in 10 of the 14 subprojects, however capital depreciation updates could not be updated because of ongoing nonrevenue water assessments. Few of the subproject O&M budgets include IEC activities. 45. Implementation challenges in the sanitation components were found with the uniformity of standardized household latrine models. Models utilized standard design of the double vault composting and pour flush latrines endorsed by the Ministry of Education and Training, however some users prefer different styles, which may be a better fit for different environments. C. Efficiency 46. The project is rated efficient in achieving the outcome and outputs, as substantiated by the economic evaluation. According to the evaluation of water supply components at project completion, all subprojects have an economic internal rate of return higher than the economic opportunity cost of capital of 12.0%,23 ranging from 16.3% to 30.5%, and are thus economically viable and efficient. Despite reduction of the project scope, the project’s overall economic internal rate of return was 24.60%. Water supply investment cost per capita averaged $126 and ranged from $66 to $173 by subproject. These costs compare favorably with the World Bank service delivery assessment figure of $140 per capita for piped rural water supply systems.24 47. The project implementation was highly efficient. The project was completed on time without any extension of the closing date. The loan amount was substantially utilized. The delays at early stages of project implementation were caused by the substandard quality of the feasibility study which additional studies and rebidding, and the suspension of civil works because compensation payments to the affected households were based on the original LARP rather than the updated LARP. However, the initial delays were recovered after implementation of the second batch.

23 Because the project was approved in 2009, the EOCC hurdle of 12% was used. Updated ADB guidelines use 9%. 24 World Bank. 2014. Water Supply and Sanitation in Vietnam: Turning Finance into Services for the Future.

Washington, DC (Table A2.2).

11

D. Sustainability 48. The project is rated likely sustainable. Ten of the 14 subprojects have achieved financial viability, with financial internal rates of return (FIRR) ranging from 1.29% to 3.62%, which are greater than weighted average costs of capital. The subprojects that have not yet achieved FIRR greater than weighted average costs of capital are in Nghe An (Dien Yen), Ha Tinh (Loc Ha), Quang Nam (A Tieng), and Nghe An (Yen Thanh). The weighted average cost of capital at completion was 0.65%. Operating ratios averaged 0.71 in 2017 confirming that the entity-level financial sustainability was achieved. The project’s overall FIRR was 1.36%. 49. Financial sustainability is likely as operators have already demonstrated ability to generate sufficient revenues and manage their expenses (O&M, depreciation, and financial costs) as well as generate revenues to further expand systems in most subprojects in just 1–3 years of operation. The subprojects in Nghe An (Dien Yen and Yen Thanh), Ha Tinh (Loc Ha), and Quang Nam (A Tieng) should improve their financials, primarily through increased water consumption per person in the coming years. Water demand continues to increase anecdotally as well as demonstrated by the 454 additional household connections completed between 2016–2017, demonstrating ongoing demand and capacity to deliver. Tariffs are well below the affordability maximum threshold. In sanitation, the SRFs are fully managed by the VWUs, with sound financial reporting. Continued increases in SRF loans after project closure demonstrate sustainability, increasing from 3,829 in the fourth quarter of 2016 to 4,455 by the first quarter of 2018. 50. Operators have demonstrated during initial operation period that they have the technical capacity to operate and maintain the project facilities. Overall sustainability is also driven by a decentralized management approach, community involvement, strong IEC campaigns, and affordability. Female empowerment through HSP and WSCC participation, as well as VWU management, will help sustain local capacity development. E. Development Impact 51. The development impact is rated satisfactory. By providing improved water and sanitation facilities, the project has improved living conditions and health of people in the project areas. Cases of waterborne disease in the project area reduced by 46.9%, exceeding the target of 25.0%. Reported by commune health centers, this includes a 54% reduction of waterborne diseases in women and girls. Anecdotal evidence revealed fewer cases of diarrhea, lower incidence of skin disease, and lower health care costs. Handwashing with soap has increased from 42% in men and 40% in women to 70% in both populations. The project contributes to a reduced poverty rate by reducing expenditure for medical checks and income lost due to days off. 52. The project successfully mitigated negative environmental and resettlement impacts and has provided positive impacts through (i) more reliable and higher quality water sources, (ii) decreased flooding and waste effluent, and (iii) experience with international best practice and enforcement for safeguards. Vulnerable groups, including low-income households and households headed by women, have directly participated in and benefited from project interventions. The project has provided sustainable financial models for water supply and sanitation provision. Overall, the project delivered successfully on the development impact themes in social development (human development) and gender equity (human capabilities).

12

F. Performance of the Borrower and the Executing Agency 53. The performance of the borrower and executing agency was satisfactory. The MARD hosted the CPMU within the NCERWASS, ensuring high-level support with active guidance to the PPMUs and ADB, which was highly adequate, efficient, and timely. Financial and loan covenant performance was sound. PPMUs’ performance varied by province and by batch.

G. Performance of the Asian Development Bank 54. ADB performance was less than satisfactory. ADB project team conducted regular project review missions, consultations, and briefings with the CMPU and PPMUs as well as special administrative missions. Time-bound action plans helped the CPMU resolve project administration issues in a timely manner. However, project preparation did not ensure sound feasibility studies. Furthermore, during implementation, an important memorandum for ADB’s internal approval of the change in project scope was not prepared. H. Overall Assessment 55. The project is rated successful. It is relevant, less than effective, efficient, and likely sustainable, as summarized in Table 7. It contributed to the improvement of rural water supply and sanitation in line with the government’s strategy.

Table 7: Overall Ratings Criteria Rating Relevance Relevant Effectiveness Less than effective Efficiency Efficient Sustainability Likely sustainable Overall assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of the Asian Development Bank Less than satisfactory

Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons 56. Design and implementation. Quality feasibility study and realistic cost estimates are critical. Project preparation and ADB validation of the proposal were insufficient. Resources should be allocated to ensure quality consulting support and oversight for project readiness. 57. Pilot subprojects (batch 1) were effective in introducing new provincial agencies to ADB’s procedures, allowing for active learning and flexibility. The decentralization and capacity building accelerated progress and improved sustainability. A marked difference in progress and quality was seen in subprojects where experienced feasibility consultants, construction supervision, and competent contractors were recruited. For areas of known capacity needs, such as (i) construction safety, (ii) ongoing capacity building through partnerships, and (iii) user demand generation through IEC, sufficient resources should be allocated.

13

58. Improved sustainability of water supply systems. Compliance with subproject criteria-based selection ensured beneficiaries’ uptake, especially targeting locations where alternative drinking water sources are notably inferior. The Provincial Center for Rural and Clean Water and Environmental Sanitation model for O&M and the preparation of an O&M plan for each water supply system, including annual budget, was successful and should be replicated. Water tariffs should cover O&M and capital depreciation, but provincial authorities must adjust tariffs and supplement budgets when revenues fall short of production costs, especially in early years of operation, ramping up tariffs over time. 59. Water quality is a key feature for development outcomes and for giving beneficiaries incentive to switch from alternative sources to clean piped water. Coordinating with the provincial health centers in collecting and testing water samples and disseminating the test results drove public education and, thus, sustainability, where practiced. 60. Improved sustainability of public and private latrines. SRFs should not only provide funds but also advise on best practice in sanitation system construction that includes encouraging the installation of latrines closer to houses and with sufficient superstructure design. Capable management by VWUs was important to (i) ensure gender equity in water and sanitation access, (ii) drive ownership within communities, and (iii) ensure continued operation beyond project closure. SRFs would benefit from increased flexibility in (i) component design to be locally appropriate, and (ii) flexibility in maximum loan amount to reflect demand and local socio-economic conditions.

61. Enhanced communication and participation. CBA-IEC was effective in driving community participation in the project because it was sufficiently resourced. Water operators should continue to allocate budgets for awareness to drive increasing demand for services and expansion. Moreover, connection rates were faster where operators responded quickly to water users’ inquiries.

62. Improving human resources. Recruiting staff specialized in operating water systems and active management of work groups was critical. Training and continued partnerships with experienced operators to share knowledge can improve and expand project outputs as well as overcome sector constraints on service delivery.

63. Safeguards implementation. Thorough monitoring is required to ensure that the safeguard activities are implemented based on the updated safeguard documents. The executing agency made a quick decision to suspend the civil works and took corrective action on compensation payments to the affected households. B. Recommendations

1. Project Related 64. Future monitoring. The sustainability of Quang Nam water operations should be monitored by MARD. Further, the introduction and enforcement of local regulatory frameworks for water and sanitation were not project outputs but may be considered in future similar projects. 65. New institutional arrangements. Changes in institutional arrangements, especially in Quang Nam, likely require MARD’s support. For all subprojects, MARD may continue to support the provincial managers to mentor and improve operational skills by (i) monitoring operations; (ii) providing training to improve technical skills and formalize a water operator’s network or

14

partnership with provincial water supply companies, whereby newly appointed WTP managers and operators are able to visit, observe, and gain first-hand experience from successful water supply systems; and (iii) improving sustainability by continuing CBA-IEC programs.

2. General 66. Project duration. Project implementation period of seven years was realistic and appropriate. Provincial governments that do not have much experiences in preparing and implementing the projects financed by development partners normally need 3–4 years to start-up the project activities. After the start-up period, the project implementation was accelerated following the schedule. For urban projects implemented by the provincial governments in Viet Nam, the project duration should be 7–8 years. Further, following the Vietnamese regulations which allow advance actions,25 advance recruitment of PIA consultant should be commenced immediately after the feasibility study report approval by the government in order to reduce the start-up delays.

67. Additional assistance. A follow-up project has been requested by the NCERWASS as well as each province. The demand and development needs remain strong. Viet Nam will become ineligible to receive ADB concessional lending in January 2019, but even with new lending terms, MARD anticipates that the subprojects will remain economically and financially viable. 68. Timing of the project performance evaluation report. It is recommended to prepare the project performance evaluation report in 2018–2019.

25 Decree 38/2013/ND-CP and Decree 16/2016/ND-CP replacing Decree 38 on Managing and Utilizing ODA and Loans

from Donors.

Appendix 1 15

DESIGN AND MONITORING FRAMEWORK

Design Summary Original Performance Indicators and

Targets Revised Performance Indicators and Targets Project Achievements

Impact Improved health and living conditions for the rural population in the project provinces

By 2020: The occurrence of water-related diseases of the population in the project areas is reduced by 25%.

No change

Occurrence of water borne diseases of the total population reduced from 15.0% to 8.0%, representing a reduction of 47%. Occurrence of water borne diseases of women reduced from 18.9% to 8.5%, representing a reduction of 55%.

Outcome Access to clean water and hygienic sanitation for the rural population of selected communities in the project area

By 2016: Over the duration of the project implementation an additional 350,000 people living in rural areas in central coastal provinces of Viet Nam will have access to clean water supply and improved sanitation and apply hygienic practices. 100% of the population of 24 subprojects has access to clean water and hygienic sanitation. 90% of the population of 24 subprojects adopts proper personal hygiene practices. All poor households and near poor female headed households are connected to the water supply system without charge and receive grants for household latrine substructure construction

Over the duration of the project implementation an additional 200,000 people living in rural areas in central coastal provinces of Viet Nam will have access to clean water supply and improved sanitation and apply hygienic practices. 100% of the population of 14 subprojects has access to clean water and hygienic sanitation. 90% of the population of 14 subprojects adopts proper personal hygiene practices

Revised targets for access to clean water were met or exceeded. In December 2016, 224,360 people (56,710 households) or 99% of the population had access to clean water. This included 47,970 households or about 189,782 people who now have access to piped water built by the Project. Revised targets for improved sanitation were met or exceeded. In December 2016, 52,368 households (or 91.4% of the total) had access to hygienic latrines. 100% of poor households and near-poor households headed by women were connected to the water system free of charge and have received grants for latrine construction. Handwashing with soap has increased: a. for men from 42% to 70% b. for women from 40% to 70%

Outputs 1. Sustainable piped water supply systems

By 2016: 14 piped water supply systems are operational, providing water through 65,000 house connections. Total length of pipeline installed is 2,500km Each system: (i) provides continuous water at quantities not lower than 80 liters per capita per day;

14 piped water supply systems are operational, providing water through 45,000 house connections. Total length of pipeline installed is 1,139km

An additional 47,970 households have been provided with house connections through 14 new piped water supply systems. 1,212 km of pipeline have been installed.

(i) not applicable (ii) tap water is clean and safe and meets National Technical

Regulation on Drinking Water Quality QCVN 01:2009/BYT.

16 Appendix 1

Design Summary Original Performance Indicators and

Targets Revised Performance Indicators and Targets Project Achievements

(ii) tap water is clean and safe for human consumption without further treatment; (iii) there are fewer than four breakdowns per month and each lasts no more than 2 hours; (iv) water tariff covers operation, maintenance, and depreciation costs; and (v) the water bill per household, based on 80 liters per capita per day, is less than 3% of average monthly income.

(iii) average is 0.5 breakdowns per month and average duration exceeds 2 hours once in 3 months.

(iv) Partially achieved: water tariffs cover operation, maintenance, and depreciation costs in 10 out of 14 subprojects.

(v) water tariffs average 0.6% of average monthly income.

2. Improved household and public sanitation

By 2016: (i) 65,000 households, 60 public and 60 school latrine units and disposal systems upgraded and constructed; (ii) each public unit consists of two latrines each for men and women; (iii) each school latrine unit consists of male and female units containing several latrines (specified by MOET norms and depending on number of students); (iv) maintenance of public latrines is fully covered by user fees; (v) maintenance of school latrines is covered by the school budgets; (vi) all households with house connections have proper sullage facilities; (vii) at all public standpipes, spill water is properly discharged; and (viii) new public drainage systems have a total length of about 9.52 km

(i) 45,000 households, 14 public and 35 school latrine units and disposal systems upgraded and constructed;

(i) revised targets for households, public and school latrines

were exceeded with 52,368 household latrines, 16 public and 36 school latrine units have been constructed or upgraded.

(ii) all 52 new public toilets have separate compartments for men and women.

(iii) all 36 newly constructed school latrines meet MOET specifications of one latrine unit per 100-200 pupils per shift.

(iv) not applicable (v) 54.7% of schools have a specific budget for latrine

maintenance. (vi) 35.9% of households connected to the piped water supply

are properly discharged to public drains. (vii) no public standpipes were constructed during the project. (viii) partially achieved: 8.27 km of new public drains were

constructed.

3. Improved hygiene practices

By 2016: (i) at least 90% of population is connected to the water supply system and pays water bills on time; (ii) alternative water sources meet less than 30% of the total water usage of the community; (iii) in the 24 subprojects, communities are directly involved in monitoring the operation of the water supply system; (iv) at least 90% of all latrines are operational and maintained;

(iii) in the 14 subprojects, communities are directly involved in monitoring the operation of the water supply system;

(i) partially achieved: 83.3% of households are connected to

piped water supplies and 97% of connected households pay their water bills on time.

(ii) not applicable (iii) all subprojects enabled community participation in

monitoring of the water supply system through WSCCs and HSPs.

(iv) partially achieved: 87.3% of household latrines were reported to be operational and well maintained.

(v) PCERWASS staff were trained in CBA-IEC implementation in all six provinces.

Appendix 1 17

Design Summary Original Performance Indicators and

Targets Revised Performance Indicators and Targets Project Achievements

(v) staff of six PCERWASSs are trained in CBA and IEC implementation; (vi) 24 WSCCs are formed, adequately staffed and trained on CBA and IEC; (vii) at least 40% of the WSCC members are women; (viii) 24 KAP assessments are carried out and CBA-IEC action plans are approved by PPCs; (ix) about 380 HSPs are nominated and trained in CBA-IEC; (x) at least 50% of the HSPs are women; and (xi) about 65,000 households are trained in IEC.

(vi) 14 WSCCs are formed, adequately staffed and trained on CBA and IEC; (viii) 14 KAP assessments are carried out and CBA-IEC action plans are approved by PPCs; (xi) about 45,000 households are trained in IEC.

(vi) WSCCs formed for all subprojects and all 255 members trained on CBA-IEC.

(vii) all WSCC meet the requirements and overall, 53.3% of WSCC members are women.

(viii) KAP assessments were conducted and CBA-IEC action plans developed and approved by PPCs for all 14 subprojects.

(ix) 584 HSPs were nominated and most of them were trained in CBA-IEC.

(x) all HSP groups meet the requirement and overall, 54.5% of the HSPs are women.

(xi) approximately 57,000 households were trained in IEC through: Green Saturdays, VWU and community meetings, home visits, IEC campaigns, and loudspeaker broadcasts.

4. Strengthened sector planning and implementation capacity

By 2016: Improved O&M: (i) 14 Water supply schemes are operational and sustainable; and (iii) operators are well trained and receive support from experienced operators, and a water operators network has been established. Improved M&E: (i) six provincial M&E programs are operational: base data have been collected and further data collection is ongoing, (ii) two PCERWASS staff members of each province are trained in M&E training (three train-the-trainers workshops), and (iii) two district staff of about 14 districts (covering project areas) are trained in M&E (nine implementation workshops). Revolving funds operational: (i) six provincial women's unions trained; (ii) 14 commune women's unions trained.

No change

(i) partially achieved: all water supply schemes are operational and rated as technically and environmentally sustainable, though only 10 out of 14 are rated financially sustainable.

(ii) training in O&M was completed for 88% of operators and managers, however, water partnerships were not formally established. Informal networks were established through visits to other water supply systems.

(i) M&E trainings were conducted, and annual data collection was reported.

(ii) M&E trainings were conducted for 6 PCERWASS staff members in each province.

(iii) M&E trainings were conducted for 18 community members per commune.

(i) VWU trainings were conducted in six provinces for 161 participants (73% women).

(ii) Trainings were completed in all provinces for 257 participants (79% women) from 33 Commune Women’s Union units.

5. Improved project management capacity

By 2016: (i) six project orientation workshops carried out;

No change

(i) Orientation workshops were completed in six Provinces

with 548 participants (18% women).

18 Appendix 1

Design Summary Original Performance Indicators and

Targets Revised Performance Indicators and Targets Project Achievements

(ii) 30 staff from DARD, DOH, and MOET in six provinces are trained in a variety of project implementation disciplines; and (iii) at least 30% of the PPMU members are women.

(ii) Training of DOH and MOET staff was not necessary as project implementation was supported by PPMU, WSCC and HSPs – all of whom were fully trained.

(iii) all PPMUs met the requirement, and from an overall total of 102 PPMU members, 33 are women representing 32.4%.

ADB = Asian Development Bank; CBA = community based approach; DARD = Department of Agriculture and Rural Development; DOET = Department of Education and Training; DOH = Department of Health; HSP = health and sanitation promoter; IEC = information, education, and communication; KAP = knowledge, attitude, and practices; MARD = Ministry of Agriculture and Rural Development; M&E = monitoring and evaluation; MOET = Ministry of Education and Training; NTP = National Target Plan; PCERWASS = Provincial Center for Rural and Clean Water and Environmental Sanitation; PPC = provincial peoples committee; PPMU = provincial project management unit; PVWU = Provincial Viet Nam Women's Union; WSCC = water and sanitation commune committee; VWU = Viet Nam Women's Union. Source: Asian Development Bank

Appendix 2 19

PROJECT COST AT APPRAISAL AND ACTUAL ($'000)

Component Appraisal Estimate Actual A. Investment Costs

1. Civil Worksa1. Water supply works 21.75 28.41 a2. Land resettlementa 1.02 0.60 b1. Household latrines – substructures 5.81 2.03 b2. Household latrines – superstructures 1.28 0.29 c. School and public latrines 0.61 1.37 d. Minor drainage 1.66 0.00

2. Consultantsa. Improved hygiene practices 1.89 0.00 b. Strengthening sector planning 2.21 0.00 c. Project management assistance 3.67 6.23

3. Workshops and training 1.30 0.36 4. Community funds for IEC 1.12 0.36

Subtotal (A) 42.32 39.65

B. Recurrent Costs1. Incremental Administration

a. In cash 1.10 0.98 b. In kinda 0.30 0.07

2. Audits 0.20 0.12

Subtotal (B) 1.60 1.17

Total Base Cost 43.92 40.82 C. Contingencies 4.88 0.00 D. Financial charges during implementation 1.20 0.68

TOTAL 50.00 41.50 a Resettlement and in-kind costs were included in government contributions. In kind contributions were not included in audited financial statements, and not available at project closing. Sources: Asian Development Bank.

20 Appendix 3

PROJECT COST BY FINANCIER

Table A3.1: Project Cost at Appraisal by Financier ($ million)

Item

ADB Beneficiaries Government

Amount % of Cost Category

Amount % of Cost Category

Amount % of Cost Category

Total Cost

A. Investment Costs

1. Civil works

a1. Water supply works 19.58 90 1.09 5 1.09 5 21.75 a2. Land resettlement 0.00 0 0.00 0 1.02 100 1.02 b1. Household latrines – substructures 5.81 100 0.00 0 0.00 0 5.81

b2. Household latrines – superstructures 0.00 0 1.28 100 0.00 0 1.28

c. School and public latrines 0.55 90 0.00 0 0.06 10 0.61

d. Minor drainage 1.49 90 0.00 0 0.17 10 1.66 2. Consultants

a. Improved hygiene practices 1.89 100 0.00 0 0.00 0 1.89

b. Strengthening sector planning 2.21 100 0.00 0 0.00 0 2.21

c. Project management assistance 3.67 100 0.00 0 0.00 0 3.67

3. Workshops and training 1.30 100 0.00 0 0.00 0 1.30

4. Community funds for information,

education, and communication 1.12

100

0.00 0 0.00 1.12

Subtotal (A) 37.62 88 2.37 6 2.33 6 42.32

B. Recurrent Costs

1. Incremental administration

a. In cash 1.10 100 0.00 0 0.00 0 1.10

b. In kind 0.00 0 0.00 0 0.30 100 0.30

2. Auditsa 0.20 100 0.00 0 0.00 0 0.20

Subtotal (B) 1.30 81 0.00 0 0.30 19 1.60

Total Base Cost 38.92 89 2.37 6 2.63 5 43.92

C. Contingencies 4.88 100 0.00 0 0.00 0 4.88

D. Financial Charges during Implementation 1.20 100 0.00 0 0.00 0 1.20

Total Project Cost 45.00 90 2.37 5 2.63 5 50.00

% Total Project Cost 90 5 5 100.00 Note: Numbers may not sum precisely because of rounding. a Includes estimated audit fees of for the audit of the annual project financial statements for 2012–2016 to be financed by L2609.

Sources: Asian Development Bank.

Appendix 3 21

Table A3.2: Project Cost at Completion by Financier

ADB Beneficiaries Government

Item Amount

% of Cost Category

Amount % of Cost Category

Amount % of Cost Category

Total Cost

A. Investment Costs

1. Civil works

a1. Water supply works 25.57 100 0.00 0 0.00 0 25.57 a2. Land resettlement 0.00 0 0.00 0 0.60 100 0.60 b1. Household latrines – substructures 2.03 100 0.00 0 0.00 0 2.03

b2. Household latrines – superstructures 0.00 0 0.00 0 0.00 0 0.00

c. School and public latrines 1.23 100 0.00 0 0.00 0 1.23

d. Minor drainage 0.00 100 0.00 0 0.00 0 0.00 2. Consultants

a. Improved hygiene practices 0.00 0 0.00 0 0.00 0 0.00

b. Strengthening sector planning 0.00 0 0.00 0 0.00 0 0.00

c. Project management assistance 6.23 100 0.00 0 0.00 0 6.23

3. Workshops and training 0.36 100 0.00 0 0.00 0 0.36

4. Community funds for information,

education, and communication 0.36

100

0.00 0 0.00 0.36

Subtotal (A) 35.78 98 0.00 0 0.60 2 36.38

B. Recurrent Costs

1. Incremental administration

a. In cash 0.98 100 0.00 0 0.00 0 0.98

b. In kinda 0.00 0 0.00 0 3.34 100 3.34

2. Audits 0.12 100 0.00 0 0.00 0 0.12

Subtotal (B) 1.10 25 0.00 0 3.34 75 4.44

Total Base Cost 36.88 90 0.00 0 3.94 10 40.82

C. Contingencies 0.00 0 0.00 0 0.00 0 0.00

D. Financial Charges during Implementation 0.68 100 0.00 0 0.00 0 0.68

Total Project Cost 37.55 91 0.00 0 3.94 9 41.50

% Total Project Cost 91 0 9 100.00

Note: Numbers may not sum precisely because of rounding. a Final audited financial statements combined government and ADB contributions, thus expenditure categories could not be apportioned for government funds outside of jointly approved land acquisition and resettlement completion reports (LARC), which accounted for $0.60 million in expenditures.

Sources: Asian Development Bank.

22 Appendix 4

SUMMARY OF COST ESTIMATES AND FINANCING PLAN Table A4: Summary of Cost Estimates by Expenditure Categorya

Item

(D Billion) (US$ Million) % % Total

Foreign Base

Foreign Local Total Foreign Local Total Exchange Costs

A. Investment Costsb

1. Civil Works 79.7 53.1 132.8 4.5 3.0 7.5 60 16

2. Goods and Materials 0.3 0.2 0.6 0.0 0.0 0.0 60 -

3. Equipment 1.8 0.2 2.0 0.1 0.0 0.1 90 -

4. Project Management & Implementation Support 62.0 10.7 72.7 3.5 0.6 4.1 85 9

5. Land Acquisition and Resettlement - 3.9 3.9 - 0.2 0.2 - -

6. Capacity Building 8.9 5.9 14.8 0.5 0.3 0.8 60 2

7. Information Education Campaign (IEC) 2.2 1.5 3.6 0.1 0.1 0.2 60 -

8. Project Auditing and PCR 0.3 0.2 0.5 0.0 0.0 0.0 60 -

9. Credit Line for Household Latrines 50.0 33.3 83.3 2.8 1.9 4.7 60 10

10. Subsequent Subprojects 247.8 165.2 413.0 13.9 9.3 23.2 60 51

11. Recurrent Cost - 12.7 12.7 - 0.7 0.7 - 2

12. Duties & Taxes - 74.0 74.0 - 4.2 4.2 - 9

Subtotal (A) 453.0 360.9 813.9 25.4 20.3 45.7 56 100

B Contingencies

1. Physicalc 19.4 16.4 35.9 1.1 0.9 2.0 54 4

2. Priced 2.5 9.6 12.1 0.1 0.5 0.7 21 1

Subtotal (B) 21.9 26.0 47.9 1.2 1.5 2.7 5

C. Financial Charges During Implementatione

1. Interest During Implementation 29.0 - 29.0 1.6 - 1.6 100 4

Subtotal (C) 29.0 - 29.0 1.6 - 1.6 100 4

TOTAL PROJECT COST (A+B+C) 503.9 386.9 890.8 28.3 21.7 50.0 57 109 a Investment costs are in April 2009 market prices and include taxes of $4.2 million, separately listed. b ADB will finance 57% of foreign exchange costs plus a portion of local costs up to $45 million, inclusive of interest during implementation in the

amount of $1.6 million which will be capitalized. c Physical contingency is 5% of all expenditure categories. d Price contingencies computed at 1.9% for 2009, 1.0% for 2010, 0.0% for 2011, 0.3% for 2012, and 0.5% thereafter on foreign exchange costs; and

4.0% for 2009, 5.0% for 2010, 6.0% for 2011, and 6.0% thereafter on local currency costs. e ADB’s Interest during implementation is computed at 1% per annum.

Source: Asian Development Bank estimates.

Appendix 5 23

DISBURSEMENT OF ADB LOAN PROCEEDS

Table A5.1: Annual and Cumulative Disbursement of ADB Loan Proceedsa

($ million) Annual Disbursement Cumulative Disbursement

Year Amount

($ million) % of Total Amount

($ million) % of Total 2011 1.17 3.12 1.17 3.12 2012 1.00 2.66 2.17 5.78

2013 2.97 7.91 5.14 13.69

2014 9.39 25.01 14.53 38.70

2015 8.18 21.78 22.71 60.48 2016 9.97 26.55 32.68 87.03

2017 4.69 12.49 37.37 99.52

2018 0.18 0.48 37.55 100.00 Total 37.55 100.00%

ADB = Asian Development Bank. a Actualized from eOps. Source: Asian Development Bank.

Table A5.2: Annual and Cumulative Disbursement of ADB Loan Proceedsa

(SDR million) Annual Disbursement Cumulative Disbursement

Yeara Amount (SDR) % of Total

Amount (SDR) % of Total

2011 0.73 3.12 0.73 3.12 2012 0.62 2.66 1.35 5.78 2013 1.85 7.91 3.21 13.69 2014 5.86 25.01 9.07 38.70 2015 5.10 21.78 14.17 60.48 2016 6.22 26.55 20.39 87.03 2017 2.93 12.49 23.32 99.52 2018 0.11 0.48 23.43 100.00 Total 23.43 100.0% a Classified by contract signing dates. Source: Asian Development Bank.

24 Appendix 5

Figure A5: Annual and Cumulative Disbursement of ADB Loan Proceeds

($ million)

Source: Asian Development Bank. Source: Asian Development Bank.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

2010 2011 2012 2013 2014 2015 2016 2017 2018

$ m

illio

n

Annual and Cumulative Disbursements

Annual Disbursement ($) Cumulative Disbursement ($)

0.00

5.00

10.00

15.00

20.00

25.00

2010 2011 2012 2013 2014 2015 2016 2017 2018

SD

R m

illio

n

Annual and Cumulative Disbursements

Annual Disbursement (SDR) Cumulative Disbursement (SDR)

Appendix 6 25

CONTRACT AWARDS OF ADB LOAN AND GRANT PROCEEDS

Table A6: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Annual Contract Awards Cumulative Contract Awards

Yeara Amount

($ million) % of Total Amount

($ million) % of Total 2011 5.56 15.08 5.56 15.08 2012 0.00 0.00 5.56 15.08 2013 9.74 26.42 15.30 41.50 2014 0.65 1.76 15.95 43.26 2015 18.39 49.88 34.34 93.14 2016 0.15 0.41 34.49 93.54 2017 2.07 5.61 36.56 99.16 2018 0.31 0.84 36.87 100.00 Total 36.87 100.0% a Classified by contract signing dates. Source: Asian Development Bank.

26 Appendix 6

Figure A6: Projection and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Source: Asian Development Bank.

0

5

10

15

20

25

30

35

40

45

0

5

10

15

20

25

30

35

40

45

2010 2011 2012 2013 2014 2015 2016 2017 2018

Projection and Cumulative Contract Awards

Projections Contract Awards

Appendix 7 27

SUMMARY OF OUTPUTS

I. WATER SUPPLY FACILITIES DATA

A. Project Output 1: Sustainable piped water supply systems 1. 14 piped water supply systems were constructed supplying water for rural populations of approximately 200,000 people (or 45,000 households) in approximately 30 communes in the project provinces.1 By 2017, the population of 33 project communes was about 226,080 people or 56,748 households. By the end of 2016, 99% of the population had been provided with access to clean water supply, in which 83.8% or 47,970 households (189,782 people) had been provided continuous safe and clean water by 14 piped water supply systems. The systems are designed to accommodate a total population of 255,893 by 2025.

Table A7.1: Summary of Clean Water Sources in Sub-project areas2

Baseline By 2017

Source Population % of

Population Population

% of Population

Dug wells 20,601 9.1 8,514 3.8 Drilled wells 50,580 22.3 22,436 9.9 Clean piped water 147 <1 189,782 8.4 Open source water, rain water and treated surface water 17,103 7.6 3,628 1.6 Total population using clean water sources 91,788 40.6 224.360 99.0 Total population in project area 226,080 226,560

Source: Executing Agency as of December 2016.

2. The project provided free water supply service connections to 6,813 poor or near poor female headed households with sole income provided by a woman. The definition of “female headed household” was amended to “female headed household where the sole income earner is a woman” to differentiate female headed households where income is contributed from absent members. The households were also designated as “poor or near poor” according to Molissa criteria. 3. Water treatment plants are managed and operated by trained staff and major repairs are carried out by provincial maintenance teams under the Provincial Center for Rural Water Supply and Environmental Sanitation (PCERWASS) within Department of Agriculture and Rural Development (DARD). In the pilot subproject in Tien Loc Commune, Hau Loc District, Thanh Hoa Province the water supply had to be reduced below the design capacity because the yield of the ground water borehole was overestimated during project preparation. An additional borehole was drilled in order to be able to meet the water demand and design capacity of the water treatment plant using project cost savings in 2016. Construction of the additional raw water line and additional bore hole were completed and functional by the scheduled closing. 4. In all subprojects, the service connections are metered, and billing and revenue collection are operational. Water tariffs in all systems account for less than 3% of average monthly incomes. Summary data are below.

1 The number of project communes is 33, as there are many multi-communes water supply systems. 2 Baseline survey for batch 1 (pilot) subprojects was February to March of 2012. Baseline surveys for batch 2

subprojects was July to December of 2013, and quarterly progress reports were through Q3/2016 from PPMUs.

28 Appendix 7

Table A7.2 Summary of Water Supply works

Criteria Unit Target Achievement

2016 Achievement

2017 Total served population people 200,000 189,782 206,024 Total supply capacity m3/day minimum 16,000 33,300 33,330 Investment cost $ per capita n/a 126 126 Average water billed * liters/person/day > 80 35-68 22-98Operating capacity * % of capacity billed n/a 58 32Total length of pipeline kilometer 1,139 1,212 1,212 Total connections households 45,000 47,970 48,424 Breakdowns per month number < 4 0.5 ** Average operating ratio * O&M costs/revenues 1 0.71 0.72 Average water tariff * % monthly income < 3 0.62 0.60 * 2016 data figures include batch 1 subprojects only, while 2017 data include batch 1 and the first year of operation forbatch 2. These were calculated by ADB per subproject.** No update available for 2017 as of February 2018.Source: Executing Agency and ADB calculations

Subproject references in tables

Thanh Hoa Province

TL-TH Pilot subproject - Tien Loc

TD-TH Batch 2 subproject - Thieu Do

YD-TH Batch 2 subproject - Dinh Long

Nghe An Province

DY-NA Pilot subproject - Dien Yen

YT-NA Batch 2 subproject - Yen Thanh

Ha Tinh Province

LH-HT Pilot subproject - Loc Ha

TH-HT Batch 2 subproject - North Thach Ha

Quang Binh province

TT-QB Pilot subproject - Thanh Trach

TH-QB Batch 2 subproject - Tuyen Hoa

LT-QB Batch 2 subproject - Le Thuy

Quang Nam province

ATieng Pilot subproject - A Tieng

DB-QN Batch 2 subproject - Dien Ban

Binh Dinh province

TG-TT Pilot subproject - Tay Giang

HN-BD Batch 2 subproject - Hoai Nhon

Appendix 7 29

Table A7.3: Summary of 14 Subproject Water Supply Systems

Content Unit

Batch 1 Subprojects

TL-TH DY-NA LH-HT TT-QB ATieng TG-TT

Water source Ground

water (GW) Surface

water (SW) SW GW SW GW

Total design population up to 2025 People 9,600 14,600 29,000 13,000 2,900 14,500 Total served population (2016) People 8,201 13,906 13,934 9,317 1,096 12,609 Investment cost $ per capita 112 121 93 99 173 95 Average water billed liters/person /day 65 73 110 84 76 56 Capacity m3/day 1,200 1,700 4,000 1,500 500 1,500 Total length of pipeline Km 47.5 64.5 107 40 18.5 56.6 Total design connections HHs 2,800 3,583 5,192 1,865 217 3,249 Total connections (December 2016) HHs 2,073 3,515 3,522 2,355 277 2,935 Water connection fee thousand D 720,000 750,000 1,000,000 1,250,000 500,000 370,000 Water tariff D/ m3 6,600 6,100 4,500 6,000 3,700 5,500 Average Income D/hh/month 9,200,000 9,200,000 9,200,000 13,000,000 14,805,000 6,800,000 Average water bill D/hh/month 55,000 54,900 71,520 78,000 78,700 43,630 Annual operating costs Million D 432.36 1639.24 2197.21 1171.57 252.93 827.33 Annual operating revenues Million D 789.47 2211.10 2872.72 2250.36 377.62 1512.37

Average operating ratio O&M costs/revenues

0.57 0.77 0.93 0.60 0.80 0.59

30 Appendix 7

(continued Table A7.3: Summary of 14 Sub-Project Water Supply Systems)

Content Unit

Batch 2 Subprojects

TĐ-TH YĐ-TH YT-NA B.TH-HT TH-QB LT-QB ĐB-QN HN-BĐ

Water source SW GW SW SW SW SW GW GW

Total design population up to 2025 People 9,300 10,900 31,516 20,550 15,558 15,559 22,510 46,400 Total served population (2016) People 6,726 8,395 22,309 15,453 11,070 8,704 23,049 35,013 Investment cost $ per capita 131 118 160 128 132 110 126 66 Average water billed liters/person /day 59 62 43 75 37 36 51 59 Capacity m3/day 1,300 1,600 3,500 3,000 2,200 2,200 3,500 5,600 Average cost/capita USD 169.7 166.1 171.5 160.2 212.9 163.2 187.1 101.8

Total length of pipeline Km 35 59 134 107 111 63 129 240

Total design connections HHs 1,831 2,000 5,315 3,680 1,865 2,738 4,230 10,800 Total connections (December 2016) HHs 1,700 2,122 5,639 4,158 2,798 2,200 5,826 8,850 Water connection fee thousand D 650,000 650,000 933,000 1,300,000 770,000 875,000 711,000 461,000 Water tariff D/m3 6,600 6,600 6,100 4,500 6,000 6,000 6,300 5,500 Average Income D/hh/month 10,875,000 10,000,000 9,810,000 8,800,000 8,166,665 8,000,000 6,192,000 9,364,744 Average water bill D/hh/month 55,400 53,361 36,100 45,371 40,000 38,000 38,375 32,277 Annual operating costs Million D 329.04 429.28 1,964.84 1,520.81 787.25 712.42 1,001.92 2,696.06 Annual operating revenues Million D 585.55 467.49 2,231.46 2,106.66 1,130.07 774.67 2,255.04 3,012.32

Average operating ratio (2017) Revenues/O&M costs 0.92 0.88 0.72 0.70 0.92 0.44 0.90 0.55

Source: Executing Agency and ADB calculations.

Appendix 7 31

II. SUMMARY OF SANITATION FACILITES DATA

B. Output 2: Household and public sanitation

5. The target was that by 2016, 45,000 households, or 200,000 people, would (i) have accessto hygienic latrines, at home, at school, at commune health centers and at public places; and (ii)benefit from better drainage at home and public places. The output was to be achieved byprovision of in-kind grants for construction of a latrine sub-structure to poor and near poorhouseholds where a woman was the sole income provider; establishment of a SanitationRevolving Fund (SRF) to provide credit to non-poor households up to a maximum of the estimatedfull costs of a latrine; and provision of support to construct and rehabilitate small drainage worksat households and public areas; and latrines in schools, health centers and public areas.

6. During preparation of the Subproject Appraisal Reports (SAR) for each subproject,baseline surveys and assessment of existing public latrines were carried out and provisions weremade to improve the prevailing sanitation situation. The PAM stipulated that “The project will support double vault composting and pour flush latrines for household use,3 depending on culturalpreference, and the MOET-endorsed standard design.” The demand for vault composting and pour flush toilets was low and demand for septic tank latrine high, therefore, the Project also financed construction and rehabilitation of septic tank latrines.

Table A7.4: Total improvement in household latrines, by type4

7. A total of 52 new school and public latrines and 7,490 substructures of private latrines toall poor and near poor households where a woman was the sole income provider were providedby the project. In a few cases the poor households were not able to build the superstructure ofthe toilet immediately after the completion of the subproject. In total, 4,790 households weregranted free latrine substructures, 1,271 of which were near poor households where a woman isthe sole income earner, and 3,519 were poor households.

8. A SRF was established in five project provinces. The exception was in Quang Namprovince, where there was low demand for borrowing money to construct household latrines andthe VWU chose to use other support by Social Policy Bank loans to provide sanitation loans fornon-poor households. The PAM stipulates that: “Credit will be provided to non-poor householdsthrough a revolving fund, managed by the provincial and commune Viet Nam women's union (VWU). The maximum credit available will equal the estimated full costs of the latrine.”

3 Ventilated improved pit latrines are considered unsuitable for densely populated areas and septic tanks are too costly.

4 Baseline survey for Pilot Sub-projects in Feb-March 2012, Baseline survey for Batch 2 Sub-projects in Jul to Dec 2013 and Quarterly progress report for Q3/2016 of PPMUs.

Households with Hygienic Sanitation

Household Sanitation Facilities Baseline % of HH 2016 data % of HH

Hygienic underground dry latrines 665 1.2 1,451 5.3 Hygienic dry latrines 4,642 8.2 7,138 12.5 Hygienic flush latrines 5,816 10.2 2,174 3.8 Hygienic septic latrines 16,688 29.4 41,605 7.3 HH with hygienic latrines 27,811 49.0 52,368 91.4 Total number of households 56,748 57,266 Source: Project Implementation Consultant.

32 Appendix 7

9. As per the SRF guidelines approved by MARD in September 2013, the maximum loanwas originally set to D4 million only, which did not cover the full cost of latrine construction andthus reduced the demand of sanitation loans. The amount of maximum loan was raised to D6million on 17 July 2015 by Government Office document 5595/VPCP-KTHT.

10. The Provincial SRF Management Boards received about 10,260 applications forconstruction or rehabilitation of private latrines by 2017 and about 3,912 sanitation loans (about38.3%) have been issued.

11. By 2017, approximately 91.5% of households/population (52,368 out of 57,266households) in the project area have access to hygienic latrines. Thus, the output was onlypartially achieved. Non-poor households continue to access loans of the revolving fund and thusit is anticipated that output 2: household and public sanitation will be met in the comping years.By 2018, sanitations loans have continued to be issued, totaling 4,455 (a 13.8% increase fromthe end of 2016). The targets for household and public sanitation were satisfactorily achieved.

Table A7.5: Summary Results of Output 2 Content Total

Number of households receiving grants for construction of latrine sub-structures 4,790 The needed number of SRF loans 10,262 The number of disbursed SRF loans 3,912 Number of school and public latrines granted by the project 52 Length of improved drainage system 8.2

Source: Executing Agency.

Appendix 7 33

Table A7.6: Summary Results of Output 2 for Pilot Subprojects

Content Unit Pilot Subprojects

TL-TH DY-NA LH-HT TT-QB A Tieng TG-TT

Grants for construction of latrine sub-structures HHs 127 252 1200 176 19 286 Assessed need for SRF loans Loans 302 840 2,128 1,079 - 360Number of disbursed SRF loans Loans 220 789 528 439 - 220Number of school and public latrines granted by the project pieces - 6 6 3 - 7Length of improved drainage system Km 1.7 - 2.2 - - -

Source: Executing Agency.

Table A7.7: Summary Results of Output 2 for Batch 2 Subprojects

Content Unit Batch-2 Subprojects

TĐ-THYĐ-TH

YT-NA TH-HT TH-QB

LT-QB ĐB-QN

HN-BĐ

Grants for construction of latrine sub-structures HHs 21 66 453 545 750 401 100 394

Assessed need for SRF loans Loans - 323 1,570 530 680 350 - 2,100The number of disbursed SRF loans Loans - 254 299 210 420 317 - 216Number of school and public latrines granted by the project pieces - 1 9 4 6 3 5 2 Length of improved drainage system Km 0.8 0.5 - - - - 3 -

Source: Executing Agency.

34 Appendix 7

III. SUMMARY OF COMMUNITY BASED APPROACH INFORMATION, EDUCATION,AND COMMUNICATION (CBA-IEC) ACTIVITIES

D. Output 3: Improved Community Hygiene

12. In addition to providing the infrastructure under outputs 1 and 2, community hygieneawareness was raised to ensure that benefits were sustained following project completion. It wasexpected that by 2016 at least 90% of the population of the project areas would be connected towater supply systems and would pay water bills on time. Less than 30% of total water usagewould be from alternative water sources. At least 90% of all latrines would be operational and wellmaintained.

13. Community participation and hygiene awareness were promoted in subprojectimplementation and CBA-IEC action plans specific for each community involved in eachsubproject were developed and implemented. WSCCs were formed and trained to be directlyinvolved in sub-project implementation, including endorsing and monitoring the CBA-IEC actionplan, facilitating IEC activities, supporting HSPs, and monitoring contractors; voluntary HSPs wereselected and trained to mobilize the community for social preparation and to implement IECactivities including small-scale drainage works, eliminating unhygienic areas and “Green Saturdays.”

14. By 2017 the total population in the subproject service areas is 226,560 and total numberof service connections installed is 47,970, which means that 83.8% of the population have beenconnected to piped water supply systems. Based on data collection and information provided byWSCCs and PPMUs it is estimated that there is a reduction in total water usage from alternativesources, reducing from 59.4% (according to the baseline surveys) to 15.24% (by the end of 2016).In total, 99% of the population in subproject areas now has access to hygienic water sources.

15. A total of 52 school and public latrines has been provided for schools, health clinics,markets and administration offices in the subproject areas. Monitoring visits by PIA in 2015 and2016 to pilot subprojects revealed strong commitment to adequately maintain and take pride inthe facilities. However, particularly in schools, issues such as low quality workmanship, poorquality fittings, and damage or theft by students were common. Whilst security staff are generallymade responsible for cleanliness, budgets for maintenance and repairs were consideredinadequate and in several cases hand washing facilities could no longer be used.

16. HSPs and WSCC members made 146,088 household visits to raise awareness onhygiene and importance of clean water. Public awareness campaigns were carried out usingpublic meetings, competitions at schools, communal loudspeakers, broadcasting on local radioand national TV in providing information and improving awareness on hygiene, and relationsbetween unclean water and water borne diseases.

17. The targets for improved community hygiene were satisfactorily achieved.

Appendix 7 35

Table A7.8: Total Improvement of community hygiene via hand washing practices5 Baseline 2016

Handwashing practices Male Female Male Female Proportion of people usually washing hands with soap before meals

40% 39% 62.5% 61.5%

Proportion of people usually washing hands with soap after urination and defecation

44% 41% 77.2% 76.7%

Source: Executing Agency.

Table A7.9: Total reduction in cases of water borne disease Waterborne diseases6 Baseline 2016

Total number of disease cases 33,885 17,979 % of total population affected 15.0% 8.0% % of women affected 18.9% 8.5% Number of women affected by water borne diseases

21,047 9,766

Source: Executing Agency.

5 Baseline survey for Pilot Sub-projects in Feb-March 2012, Baseline survey for Batch 2 Sub-projects in Jul to Dec 2013 and follow-up survey for Pilot Sub-projects and Batch 2 Sub-projects in December 2015.

6 Based on cases reported by Commune Health Centers.

36 Appendix 7

Table A7.10: Total CBA-IEC activities in all 14 subprojects

Content Unit Batch 1

TL-TH DY-NA LH-HT TT-QB A Tieng TG-TT Green Saturday Times 378 306 734 209 36 36

participants 28,196 15,349 95,258 29,896 1,501 4,485 Village meeting/community meeting Times 138 189 293 107 13 46

participants 13,816 8,894 41,173 21,714 629 6,174 Visiting households for consultancy Number of visited HHs 2,188 7,735 33,568 5,874 198 1,409

Number of consulted people 5,688 18,720 51,890 9,399 526 2,930 Distributing leaflets to households Leaflet - 3,523 5,269 8,959 355 780 Promotion via loudspeaker Times 136 330 1,217 281 28 136 Hanging banners at public places times 18 9 118 10 - 28Length of dredged culverts and ditches m 12,318 2,636 65,158 8,301 600 217Eliminating unhygienic areas Area 89 276 481 126 25 66 Planting new trees Trees 1,231 55 53,844 47,824 60 219 Public Training Times 2 2 6 1 3 5

Participants 56 80 114 34 25 77 Meeting with WSCC and HSPs Times 9 22 65 23 20 36

Participants 267 446 1,591 467 277 414 Opening ceremony Times 1 1 3 1 1 2

Participants 367 3,015 3,147 395 284 610 Organizing art performances and contest

Times - 1 - - - 2 Participants - 28 - - - 430

WU’s meeting with project promotionintegrated into

Times 3 21 161 13 2 31

Participants 441 1,001 11,326 3,443 43 1,912 Conducting the selection and vote of exemplary households

Times - 1 1 1 - 3Participants - 515 9 73 - 106

Organizing talk show at schools Times - 1 - 5 2 8 Participants - 2,040 - 1,808 338 3,695

Awarding exemplary students Times - 1 - 3 2 8 Participants - 20 - 170 61 63

Organizing drawing contest at schools Times - 1 3 1 1 3 Participants - 35 619 280 58 747

Appendix 7 37

Continued from previous page

Content Unit Batch 2

TĐ-TH YĐ-TH YT-NA TH-HT TH-QB LT-QB ĐB-QN HN-BĐGreen Saturday Times 198 361 846 515 516 237 384 171

participants 6,484 23,349 54,051 59,813 71,518 40,769 55,919 9,618 Village meeting/community meeting Times 66 167 282 316 436 202 148 182

participants 2,711 18,373 21,596 42,421 50,622 27,171 23,402 24,879 Visiting households for consultancy Number of visited

HHs 3,508 1,994 27,497 16,339 12,171 10,700 22,263 12,834

Number of consulted people

5,745 5,196 80,844 26,619 17,013 16,359 37,364 20,188

Distributing leaflets to households Leaflet - 1,257 6,745 11,888 4,881 2,170 19,946 15,949 Promotion via loudspeaker Times 8 189 536 234 298 324 248 110 Hanging banners at public places times - 82 60 84 127 159 57 60 Length of dredged culverts and ditches

m 26,430 79,355 16,088 58,662 2,302 17,608 3,572 1,534

Eliminating unhygienic areas Area 105 223 835 502 825 462 398 135

Planting new trees Trees - 165 745 8,079 1,853 2,277 1,450 3,214

Public Training Times 2 3 10 9 7 7 8 9

Participants 68 63 199 169 125 107 86 256

Meeting with WSCC and HSPs Times 10 26 62 58 39 35 40 39

Participants 340 638 1,455 1,040 675 573 852 1,074

Opening ceremony Times 1 2 4 2 1 3 1 2

Participants 100 735 5,992 1,270 250 1,600 660 600

Organizing art performances and contest

Times - 2 - 2 8 2 2 4

Participants - 10,400 - 425 9,572 1,064 90 986

WU’s meeting with project promotion integrated into

Times 1 6 4 74 37 98 32 22

Participants 40 3,507 168 5,967 3,783 6,593 4,005 1,486

Conducting the selection and vote of exemplary households

Times 1 2 4 19 43 36 - 2

Participants 40 1,308 - 1,436 4,863 3,922 - 112

Organizing talk show at schools Times - 4 - 1 25 14 - 7

Participants - 1500 - 300 5,211 4,390 - 1,735

Awarding exemplary students Times - 2 - 3 10 8 - 7

Participants - 320 - 830 2,806 3,570 - 645

Organizing drawing contest at schools

Times - 5 - 2 2 6 - 4

Participants 0 715 0 256 265 1,973 0 1,220

Source: Executing Agency.

38 Appendix 7

IV. SUMMARY OF CAPACITY DEVELOPMENT AND TRAINING ACTIVITIES

18. Formalized capacity development, in addition to capacity developed through experience,were primarily delivered through Project outputs 3 and 5, as detailed below.

19. Output 4: Strengthened sector planning and implementation capacity. This output was tobe delivered through; (i) improvement of operation and maintenance (O&M) of piped water supplyfacilities, (ii) effective monitoring and evaluation (M&E) of water supply and sanitationinvestments, and (iii) capacity building of provincial and commune VWUs to manage sanitationrevolving funds.

20. PCERWASSs are responsible for operation and maintenance of the WTPs and haverecruited operators for each facility. Some of the operators have been working in other WTPs andrelocated to the new WTPs built under the project. New staff from the subproject area, to theextent possible and based on recommendations of WSCC, were recruited. Training of operationalstaff in O&M was done through course work at a centralized training institution.7 Training courseswere also delivered by the PIA consulting team and on-the job training was garnered throughexperienced co-workers and PIA Consultant working with new operators. Several training courseswere delivered to CPMU, PPMUs and WSCCs on monitoring, evaluation and reporting onsafeguards issues, finances, and general project management. WSCCs and PPMUs collecteddata, and the CPMU and PIA consultant consolidated quarterly and semi-annual reports for ADB,which included M&E indicators with gender disaggregated information, based on the projectdesign and monitoring framework (DMF).

21. The Project developed a Sanitation Revolving Fund Manual providing detailed informationon the management of the fund, assessment of loan applications, monitoring of the use of loans,and repayment terms of loans. Capacity building of provincial and commune VWUs was carriedout through training courses and follow-up support was provided. All provincial SRFs aremanaged well and households are paying the interest and principal, as per the provision.

22. The targets for strengthened sector planning and implementation capacity weresatisfactorily achieved.

23. Output 5: Improved project management capacity. This output was delivered through: (i)project orientation workshops in each province, and (ii) capacity development and trainingprograms for PCERWASS, DOH, DOET, PVWU, CPP, CVWU, WSCC and HSPs. Projectorientation workshops were held in each subproject to inform key stakeholders about the Projectdesign and eligibility criteria for communes to participate in the Project. Also the subprojectimplementation schedule, ADB’s safeguards policies on environment and land acquisition werediscussed.

24. The capacity development program was prepared based on training needs assessmentof CPMU and PPMUs. The training was delivered in several seminars, workshops covering: (i)RWSS engineering and contract management; (ii) financial appraisal and analysis; (iii) financialmanagement; (iv) hygiene and sanitation awareness; (v) water quality control; (vi) social andgender awareness training, (vii) preparation, implementation and monitoring of environmental,resettlement and ethnic minorities safeguard plans; (viii) planning and budgeting; (ix) accountingand bookkeeping, and (x) procurement.

7 Central Region College of Technology – Economics and Water Resources, Nghe An Province.

Appendix 7 39

During the implementation of pilot subprojects in Thanh Hoa, Nghe An, Ha Tinh and Quang Nam, which were procured as design-build packages, PPMUs compensated the Affected Households and gave notice to proceed with construction works based on the originally approved LARP documents not the updated LARPs that were developed under the design-build contracts. This constituted noncompliance to ADBs land and resettlement procedures and ADB instructed them to stop construction in these subprojects until NOL for updated LARPs were issued by ADB. All other subprojects have been implemented in accordance with national and ADB’s policies and regulations. Despite the delay in commencement of the Project all subprojects were completed within the original Project schedule and budget. No grievances on environmental or land acquisition and compensation issues have been reported during the Project implementation. Independent auditors have audited the accounts of PWUs, PPMUs and CPMU and no mismanagement of funds has been found.

25. The targets for strengthened sector planning and implementation capacity weresatisfactorily achieved.

40 Appendix 7

No. Training course/workshop No. of

courses

No. of participants CPMU PPMU Community

Total Male Female M F M F M F Year, Qtr

I 2011 8 179 104 75 9 5 51 18 69 27 2011

1 Project inception workshop 1 29 25 4 4 2 12 2 9 0 Q3 2 Project Orientation workshops for batch 1 pilot sub-

projects 6 100 51 49 3 1 22 5 51 18

Q3,Q4

3 Project integration workshop 1 50 28 22 2 2 17 11 9 9 Q4 II 2012 7 57 38 19 1 2 37 17 0 0 2012

1 Project financial management #1 1 20 9 11 1 2 8 9 0 0 Q4 2 Aligned MT reporting (for M&E) workshops 6 37 29 8 0 0 29 8 0 0 Q4 III 2013 26 1041 562 479 2 8 50 18 510 453 2013

1 Procurement and bid evaluation 1 24 18 6 0 2 18 4 0 0 Q1 2 CBA-IEC implementation and Gender for

CPMU,PPMUs 1 19 11 8 1 2 10 6 0 0 Q1

3 Project Orientation Workshops for batch 2 sub-projects

8 507 417 90 0 0 15 3 402 87 Q3,Q

4 4 SRF management 1 36 9 27 1 4 7 5 1 18 Q4 5 CBA-IEC action plan implementation for WSCC&

HSPs (Handbook volumes 1,2) 7 227 92 135 0 0 0 0 92 135 Q4

6 SRF management for CVWU and credit-saving group (at communal level)

8 228 15 213 0 0 0 0 15 213 Q3,Q

4

IV 2014 20 619 366 253 12 20 197 75 157 158 2014

1 Project Orientation Workshop for Tuyen Hoa Sub-project, Quang Binh (for Van Hoa commune)

1 41 32 9 0 0 4 0 28 9 Q1

2 Project progress reporting workshop 1 27 19 8 1 2 18 6 0 0 Q1 3 ADB social safeguard policy on environment and

resettlement 1 38 34 4 1 2 17 2 16 0 Q2

4 ADB’s social safeguard policies on Gender and Ethnic Minorities

1 33 14 19 1 2 8 6 5 11 Q2

5 Project financial management #2 1 17 7 10 1 2 6 8 0 0 Q3

6 Experience sharing workshop on CBA-IEC implementation and SRF operation

1 33 12 21 1 3 11 18 0 0 Q3

7 CBA-IEC action plan implementation for WSCC& HSPs (Handbook volumes 3, 4, 5)

9 237 101 136 0 0 0 0 101 136 Q3

8 Fieldtrip to learn from the experience of Indonesia

on Water management 1 18 16 2 4 2 12 0 0 0 Q4

9 Midterm Review workshop 1 75 42 33 2 3 40 30 0 0 Q4 10 Gender mainstreaming and GAP implementation 1 20 14 6 0 0 7 4 7 2 Q4

11 O&M of the water supply system 1 24 23 1 0 1 23 0 0 0 Q4

12 Sustainable investment management workshop 1 56 52 4 1 3 51 1 0 0 Q4

Appendix 7 41

(continued)

No. Training course/workshop No. of

courses No. of participants

CPMU PPMU Community

V 2015 73 2301 1033 1268 6 12 250 75 777 1181 2015

1 Contract and construction quality management (batch 2)

2 88 75 13 1 3 74 10 0 0 Q1

2 SRF management (batch 2) 2 92 23 69 2 4 5 16 16 49 Q2, 3

3 Project implementation review workshop (batch 2) 1 62 46 16 2 3 26 9 18 4 Q3 4 Experience sharing fieldtrips for PPMUs batch 1,2 4 62 49 13 0 0 49 13 0 0 Q2,3 5 Environment monitoring for batch 2 sub projects 7 187 135 52 0 0 0 0 135 52 Q2 6 CBA-IEC action plan implementation for WSCC&

HSPs (Handbook volumes 1, 2) 17 579 263 316 0 0 0 0 263 316 Q2,3

7 Gender awareness raising and GAP implementation (QB,NA,TH,BD,QN,HT)

5 148 75 73 0 0 27 10 48 63 Q3

8 Twinning exchange QN batch 1 to Binh Dinh 1 20 17 3 0 0 17 3 0 0 Q3 9 Twinning exchange QN batch 2 to Thanh hoa 1 22 18 4 0 0 18 4 0 0 Q4 10 Contract management and construction quality

monitoring (batch 2) 2 31 28 3 1 2 27 1 0 0 Q4

11 CBA-IEC action plan implementation for WSCC& HSPs (Handbook volumes 3, 4, 5)

15 517 222 295 0 0 7 9 215 286 Q4

12 SRF implementation (at communal level) 16 493 82 411 0 0 0 0 82 411 Q4

No. Training course/workshop #Courses

No. of participants CPMU PPMU Community

VI 2016 18 435 283 152 4 4 170 66 109 82 2016

1 SRF implementation (at communal level) for Yen Dinh Sub-project, Thanh Hoa

1 28 0 28 0 0 0 0 0 28 Q1

2 Experience sharing fieldtrips for PPMUs batch 1,2 1 62 49 13 0 0 49 13 0 0 Q1 3 Twinning exchange HT batch 1 to QN, BD 1 19 12 7 0 0 12 7 0 0 Q1 4 Monitoring and reporting resettlement activities 5 119 81 38 0 0 17 4 64 34 Q1, Q2 5 Gender awareness raising and GAP

implementation (Thach Ha, Ha Tinh) 1 28 15 13 0 0 3 1 12 12 Q2

6 Twinning exchange NA batch 1 to Nam Dinh 1 8 5 3 0 0 5 3 0 0 Q2 7 O&M On-job training (batch 2) 3 27 17 10 0 0 17 10 0 0 Q2, Q3 8 Twinning exchange NA batch 2 to QB, BD 1 12 9 3 0 0 9 3 0 0 Q2 9 Twinning exchange BD batch to TH, QB 1 15 11 4 0 0 4 3 7 1 Q3 10 Project closing workshop 1 82 60 22 3 3 31 12 26 7 Q4 11 Project settlement and asset valuation 1 15 8 7 1 1 7 6 0 0 Q4 12 Twinning exchange QB to Binh Thuan 1 20 16 4 0 0 16 4 0 0 Q4 No. Training course/workshop 1 43 37 6 2 0

1 43 37 6 2 0 35 6 0 0 Q1 Total 153 4675 2423 2252 36 51 790 275 1622 1901

% 51,83 48,17 41,38 58,62 74,18 25,82 46,04 53,96 Source: Executing Agency.

42 Appendix 8

FINANCIAL AND ECONOMIC EVALUATION BY SUBPROJECT

A. General

1. Following the approval of the Central Region Rural Water Supply and Sanitation Sector Project in 2009 and prior to its implementation, viability of the proposed water supply systems was determined by conducting economic and financial analyses of subprojects in six participating provinces in the central region of Vietnam, considered to be among the poorest in the country: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Nam and Binh Dinh. The project’s water supply component was implemented in two batches. Batch 1 consisted of six subprojects, one from each of these provinces. Batch 2 consisted of an additional eight subprojects. Batch 1 subprojects were completed in 2014 and Batch 2 subprojects in 2016. For the project completion review, the economic and financial internal rates of return for each of the subprojects were recalculated using actual data on costs, revenues, and other benefits. The methodology applied in the evaluation was based on the ADB Guidelines for the Economic Analysis of Projects (2017) and Handbook for the Economic Analysis of Water Supply Projects (2002). 2. Based on operational, financial and other data collected during the project completion

review mission, the investment costs, water tariffs, operating costs, water consumption levels, other benefits and financing plan were updated. B. Major Assumptions 3. The methodology and assumptions used in the economic and financial evaluation of the

subprojects aligns with those used in the subproject appraisal reports. 1 Costs and benefits were measured at border price equivalent values using domestic prices, and expressed at 2017 constant prices in D. The analysis was done for 20 years with salvage value estimated based on the assumed economic life for civil works and equipment. The economic opportunity cost of capital (EOCC) was assumed to be 12%. The weighted average cost of capital (WACC) or the financial opportunity cost of capital (FOCC) was estimated based on the updated financing plan of the capital investments, which was the same for all subprojects and in accordance with ADB Guidelines on Financial Management and Analysis of Projects. Operating and financial ratios were estimated to assess sustainability of the water supply investments. 4. The subprojects were designed to provide safe and reliable water supply services to the beneficiaries and are expected to replace alternative sources of domestic water supply without the project over the long term. Sources of domestic water include dug and drilled wells, rainwater, tankered/bottled water, rivers, and ponds. Water supply investments under this project consisted of development of raw water sources, pumping stations, clean water treatment plants, transmission and distribution pipelines, and service connections. Public sanitation investments consisted of public toilets in primary and secondary schools, and drainage improvement, where requested. The constructed piped water supply systems are being managed by the provincial

1 Note that the assumptions and methods used for economic analysis at completion are aligned with those used for

updated FSs. The assumptions used or appraisal, however, were not available in project files, including the Supplementary Appendix for Economic Analysis (SAEA) attached to the RRP, and therefore comparability cannot be determined. Moreover, the SAEA does not match the estimates cited in the RRP main text (para 19 of SAEA lists different EIRRs than para 83 of the RRP). Neither the SAEA nor the RRP identify a summary or weighted average EIRR for the project as a whole, opting instead for individual subproject EIRRs. All pilot subproject appraisal reports were redone during implementation, and thus economic analysis was designed to align with updated FS methods and assumptions.

Appendix 8 43

governments through their respective Provincial Centers for Environment, Rural Water Supply and Sanitation (PCERWASS). 5. Quantifiable economic benefits from improved water supply consisted of non incremental and incremental water. These were estimated using direct use benefits, consumer surplus from cost savings due to the lower cost of water to households, and consumer surplus from incremental supply. Direct use benefits were estimated based on sales revenues.2 Consumer surplus from cost savings was estimated based on the weighted average supply price3 of sources of domestic water before the project and compared to the water tariff that was implemented, then multiplied by the volume of water replaced (non incremental). Consumer surplus from incremental supply is the additional supply made available by the project to meet suppressed demand for clean water valued at the average demand price or the water tariff. In addition, health benefits in terms of avoided productivity loss and savings on medical expenses due to a reduction in water related diseases as a consequence of the project were estimated.4 Avoided productivity loss was estimated based on the assumption of 2.5 working days lost per year due to poor and unsafe water multiplied by the average income per capita,5 and savings on medical expenses.6 Real income was assumed to grow by 1% per annum.7 6. Economic investment costs were derived from the breakdown of the actual investment costs by primary project cost components of civil works and equipment. Taxes and duties were deducted from the financial costs, and then segregated into tradable and non tradable components. The cost figures were then converted to economic prices by applying the appropriate conversion factors for foreign costs and labor. O&M costs were adjusted to 2017 prices. 7. Investment costs for the water supply subprojects are summarized in Table A8.1 below. The investment cost is a function of the design, size, scope and technology adopted. The investment cost per capita ranged from D1.4 million to D3.6 million. For Batch 1, Ha Tinh – Loc Ha had the lowest investment cost per capita at D2 million (US $93), and Quang Nam – Tay Giang, the highest at D3.6 million D (US $173). For Batch 2, Binh Dinh - Hoai Nhon had the lowest investment cost per capita at 1.4 million D (US $66), and Nghe An – Yen Thanh, the highest at D3.4 million (US $160). Average investment cost per capita for Batch 1 is D2.2 million (or US $105), for Batch 2, D2.4 million (or US$ 115), and for all subprojects, D2.3 million (US $112). 8. The subprojects were financed with 90% grant from the central government and the provincial government provided the remaining 10% as counterpart funds. The grant and equity was utilized by the operating entities, the PCERWASS in each province. The opportunity cost of capital was thus assumed to be 6.5% on the equity contribution,8 while the FS analyses utilized a 0% opportunity cost for the 90% grant contribution. This methodology is not consistent with ADB’s 2017 Guidelines for the Economic Evaluation of Projects, however, for comparability purposes,

2 Billed volume multiplied by the average demand price or water tariff net of value added tax of 5%. 3 The average supply price of water without the project was estimated by the Project Implementation Consultant from

detailed surveys on existing sources of domestic water including consumption ratios and unit prices. 4 Surveys on the incidence of water related diseases in the subproject areas were part of the baseline surveys

conducted prior to project implementation and again, at the end of the project. The attribution in the reduction of incidence of water related diseases due to the project was limited to the served population.

5 Baseline income per capita data was disaggregated per subproject commune, as reflected in national statistics for the baseline year of the feasibility study. The classification of Ministry of Labour’s statistics for Invalids and Social Affairs was used for identifying households qualifying as poor.

6 The cost of doctors visits was calculated per subproject via baseline socio-economic surveys. 7 Real income growth assumptions were aligned with SARs. 8 The interest rate prevailing in Vietnam during the period of project implementation 2014 to 2016. (https://www.focus-

economics.com/country-indicator/vietnam/interest-rate).

44 Appendix 8

the FSs’ methodological assumptions were maintained for evaluation. Therefore, the estimated WACC across all subprojects is 0.65%. Table A8.1: Summary of Investment Costs for Water Supply, Design Capacity, Design Population and Investment Cost per capita

Batch 1 Province Thanh Hoa

Nghe An Ha Tinh Quang Binh

Quang Nam

Binh Dinh

Total

Subproject Tien Loc Dien Yen Loc Ha Thanh Trach

A Tieng

Tay Giang

Investment cost

At updated FSa million D 23,848 39,741 66,085 29,351

15,049 36,287

210,361

At completion million D 22,729

41,235

61,365

27,337

15,004

28,663

196,333

Design capacity m3/day 1,200

1,700

4,000

1,530

534

1,500

10,464

Design population

Persons 9,636

16,287

31,285

13,133

4,122

14,377

88,839

Investment cost per capita

'000 D/cap 2,359

2,532

1,962

2,082

3,640

1,994

2,210

US$/cap 112 121 93 99 173 95 105

Batch 2 Province Thanh

Hoa Thanh Hoa

Nghe An Ha Tinh Quang Binh

Quang Binh

Quang Nam

Binh Dinh

Total

Subproject Thieu Do

Dinh Long

Yen Thanh

Thach Ha

Tuyen Hoa

Le Thuy Dien Ban

Hoai Nhon

Investment cost

At updated FSa million D 29,983 26,528 90,768 48,981 44,679 36,862 64,158 64,158 406,118 At completion million D 24,053 25,309 104,602 55,843 46,877 36,863 59,407 65,931 418,886 Design capacity m3/day 1,300 1,600 3,500 3,000 1,530 2,200 3,500 5,600 22,230

Design population

Persons 8,727 10,255 31,129 20,718 16,922 15,910 22,514 47,472 173,647

Investment cost per capita

000 D/cap 2,756 2,468 3,360 2,695 2,770 2,317 2,639 1,389 2,412

US$/cap 131 118 160 128 132 110 126 66 115

Exchange rate: D21,000 = 1US dollar a 2013, Ministry of Agriculture and Rural Development (MARD), National Center for Rural Water Supply and Environmental Sanitation

(NCRWASS) (assisted by the Project Implementation Consultant), Sub project Appraisal Reports for Batch 1 sub projects; 2015, MARD, NCRWSS (assisted by the Project Implementation Consultant), Sub project Appraisal Reports for Batch 2 sub projects

Sources: PCERWASSs, Project completion review mission consultant’s estimates.

9. Water tariffs were set by the Provincial People’s Committees (PPCs) and are based on a

national policy of (i) cost recovery, (ii) providing at least 80 liters per capita per day of clean water to rural areas, (iii) water bills not more than 3% of the average monthly household income, and (iv) tariffs between D2,000 to 11,000 per cubic meter.9 Current water tariffs recover operation and maintenance costs, but capital investments could not be ascertained due to higher NRW than projected. The loan agreement specified that the water tariffs will cover operation, maintenance and depreciation costs; however, the tariffs may not meet full cost recovery. Each of the PPCs committed to supplement with budget resources any amount needed to cover operational deficits. The water tariffs by province are summarized below.

9 Circular No. 100 /2009/TT-BTC (tariff framework), issued by MOF on 20 May 2009.

Appendix 8 45

Table A8.2: Water Tariffs by Province, 2017 Thanh Hoa Nghe An Ha Tinh Quang

Binh Quang Nam Binh

Dinh

Consumption block, D per m3

< 10 m3 per month 6,930 6,100 5,062 (Batch 1) 6,175 (Batch 2)

7,000 3,700 (Batch1) 6,300 (Batch 2)

6,090

10 - 20 m3 per month 8,610

> 20 m3 per month 9,750

In US dollars per m3 0.33 0.29 0.24 (Batch 1) 0.29 (Batch 2)

0.33 0.18 (Batch 1) 0.30 (Batch 2)

0.29

Exchange rate: D21,000 = 1US dollar Source: Executing Agency.

C. Economic Analysis 10. The economic viability of the subprojects was assessed by computing the economic internal rate of return (EIRR) and comparing the results with the EOCC. Subprojects with EIRR higher than the EOCC of 12% were deemed economically viable. The net present value (NPV) of benefits and costs over the assumed horizon of 20 years were also calculated using the EOCC as discount rate. A positive NPV means that that discounted economic benefits exceed the discounted economic costs, while a negative NPV means that the discounted economic costs exceed the discounted economic benefits. The economic analysis was performed using the incremental costs (capital, operating and maintenance) of the water supply and sanitation components and benefits arising from these investments. To assess progress subprojects, the EIRR for each Batch 1 subproject was compared from completion to the estimates at PPTA stage and in the updated FSs. 11. The economic costs of the capital works were computed from the actual final costs of the facilities with the following adjustments: (i) taxes and duties were excluded; (ii) tradable inputs were valued at the domestic price numeraire using as shadow exchange rate of 1.31; (iii) unskilled labor was set at a shadow price of 0.70 of the market price to reflect the country’s level of unskilled labor unemployment; and (iv) land was valued at its local market price, which best reflect its opportunity cost. Economic life of civil works was assumed to be 25 years, equipment, 15 years, and other components, 20 years. 12. An important contribution of the project is providing safe (clean) water and reliable water supply services to the rural poor and vulnerable households in these poor communities which otherwise were relying on poor quality water, scarce supply (especially during dry season), as well as being expensive and time consuming. The project is also likely to result in greater quantities of water consumption per capita over time. Willingness to pay for improved services is manifested in the beneficiaries’ compliance with on-time water tariff payments.10 13. The EIRRs at completion of all subprojects are higher than the EOCC, which reconfirmed the economic viability of the subprojects. The EIRRs at completion range from 16.3% to 30.5%,

10 Willingness to pay was assessed via socio-economic surveys per subproject in each SAR. Regarding the water tariff,

surveyed households reported on ranges that they can afford to pay per cubic meter of water (generally between D3,500-5,000 /m3). This would mean average monthly expenditure for future water supply service per household would be less than the assessed baseline average monthly amounts that households pay to buy water. Taking into account the amount that the residents reported their willingness to pay and their actual baseline water supply expenditures, affordability was calculated for the piped water supply system per subproject.

46 Appendix 8

with an average of 23% for all subprojects.11 This is compared with the subproject EIRRs estimated during the PPTA and when FSs were updated (see Table A8.3). The EIRRs at completion are all above the hurdle rate of 12% and most are higher than estimated in FSs. When compared against the assumptions and estimates used for FSs, water tariffs were marginally lower at completion, averaging approximately 7.6% lower in 2017 in Batch 1 subprojects and 4.2% lower for Batch 2 subprojects, though notably lower in Quang Nam – A Tieng subproject. As anticipated, billed volumes have increased each year of operation, however, by 2017, consumption levels remain lower than anticipated - particularly in the first two years of operation (Batch 1), and non revenue water was marginally higher, though only notably higher in provinces where road construction was initiated (under the New Rural Development Program), which damaged the water supply pipelines (see Table A8.5). These revenue dynamics compensated by generally lower investment costs (Batch 1) and higher cost savings. The average supply price of existing sources of domestic water12 was recalculated when FSs were updated.

Table A8.3: Comparative Economic Internal Rates of Return, by Subproject At PPTARRPa At updated FSb At completionc

EIRR ENPV EIRR ENPV ENPV

Batch 1 (%) (million D) (%) (million D) (%) (million D)

Thanh Hoa - Hau Loc 18.1 10,110 12.8 952 16.3 7,681 Nghe An - Dien Chau 23.0 28,662 21.2 18,882 20.6 27,391 Ha Tinh - Loc Ha 19.1 20,696 18.9 25,932 21.2 49,307 Quang Binh - Bo Trach 21.6 16,136 20.8 13,033 22.3 21,821

Quang Nam – Tay Giang 16.7 3,050 14.0 1,500 27.4 19,005 Binh Dinh - Tay Son 18.2 11,001 22.0 19,143 20.8 22,096

Batch 2

Thanh Hoa - Thieu Hoa - - 15.6 4,187 23.5% 21,357

Thanh Hoa – Yen Dinh - - 13.1 1,381 21.3% 19,867 Nghe An - Yen Thanh - - 15.2 10,167 21.1% 67,683

Ha Tinh - Thach Ha - - 16.4 10,554 24.3% 49,895 Quang Binh - Tuyen Hoa - - 13.3 3,066 23.4% 48,916

Quang Binh - Le Thuy - - 14.2 4,063 20.7% 31,997 Quang Nam - Dien Ban - - 16.6 13,799 30.5% 89,658

Binh Dinh - Hoai Nhon - - 21.5 32,845 29.4% 94,659

Average, All subprojects - - - - 23.1% 484,851

EIRR = economic internal rate of return; ENPV = economic net present value a As a sector project, the PPTARRP prepares only batch 1/pilot projects. ADB. 2008. Preparing the Central Region

Rural Water Supply and Sanitation Sector Project. Manila. b 2013, Ministry of Agriculture and Rural Development (MARD), National Center for Rural Water Supply and

Environmental Sanitation (NCRWASS), Sub project Appraisal Reports for Batch 1 sub projects; 2015, MARD, NCRWSS (assisted by the Project Implementation Consultant), Sub project Appraisal Reports for Batch 2 sub projects.

c Project completion review mission consultant’s estimates. Source: Executing Agency.

11 While affecting EIRRs, the lower-than-anticipated water consumption per capita in some subprojects as compared

to subproject appraisal is more-than compensated by the lower-than-projected capital costs in the revised FSs. 12 The supply price of domestic water without the project consists of the following: well construction costs, cost of

rainwater tanks, maintenance and replacement of pumps, electricity costs, cost of purchased water, and time spent to obtain water. As no piped water supply system existed in the project areas, people mostly used water from drilled and dug wells for washing, watering, production and services. People purchase drinking water from containers at the price of approximately D 10,000 per container of 20 l (i.e. D500,000 /m3), depending upon the local market conditions in each subproject.

Appendix 8 47

D. Financial Analysis 14. The financial analysis establishes the financial viability of the individual subproject investment and involves calculating the financial internal rate of return (FIRR) and financial net present value (FNPV) and then comparing the FIRR result with the estimated WACC for the operating entity. An FIRR higher than the WACC indicates that the project is financially viable. The key financial indicators used in the analysis are the Financial Internal Rate of Return (FIRR) and the operating ratio, which relates to the entity‘s efficiency in using its workforce, materials, transport, and other factors of production. Based on the updated financing plan, the estimated WACC was 0.65% due to higher opportunity costs calculated at the provincial level at the time of completion (as compared to the FS WACC of 0.5) and is assumed the same for all subprojects. The grant received from the central government for capital investments had a zero cost to the operating entities and was meant to support economic and social objectives of poverty alleviation in rural areas including increasing access of the rural poor to clean water to meet national targets.13 15. Actual investment costs as reported by the implementing units, PCRWASSs, were incorporated into the analyses. Operation and maintenance costs for the years that the water supply systems have been operating were updated and adjusted to 2017 prices. Operation and maintenance costs include salaries and wages, electricity costs, costs of chemicals, and other operating and maintenance costs. 16. The revenues were updated to reflect actual water consumption levels for the years in operation and multiplied by the approved water tariffs. The water tariffs were held constant at 2017 levels. Any future adjustment in the water tariffs is subject to approval by the PPCs, who conduct annual reviews. 17. The FIRRs and financial NPVs at completion are summarized in Table A8.4, and they range from negative 3.4% to positive 3.5% per subproject, with an average of 1.4% for the project across all subprojects. For Batch 1, three were found to have higher FIRRs than the WACC of 0.65%, with FIRRs ranging from 1.3% to 2.5%. The remaining three subprojects (Nghe An – Dien Yen, Ha Tinh – Loc Ha, Quang Nam – A Tieng) had negative FIRRs. Primary contributing factors include: in Nghe An – Dien Yen, investment costs at completion were marginally (3.8%) higher than at updated FS,14 coupled with lower tariffs (16.4% lower) and billed volumes (42% lower); in Ha Tinh – Loc Ha, the number of connections, while increasing each year, was only 72% of anticipated by 2017; and in Quang Nam – A Tieng, the tariff is 61.2 of anticipated tariff at updated FS. Higher non revenue water than assumed during FS was a minor contributing factor. For Batch 2, seven of the eight subprojects had higher FIRRs than the WACC. One subproject in Nghe An – Yen Thanh had a negative FIRR, primarily due to lower-than-projected consumption with billed volumes approximate 57.8% of projected, despite exceeding service connection rates.

13 The estimation of WACC in updated FSs assumed zero opportunity cost for the grant from the central governments

with 90% contribution (see Subproject Appraisal Reports prepared 2012-2015), and so for consistency the assumption was maintained.

14 FIRRs were not reported in the PPTA or RRP’s Financial Analysis in 2009 for the project as a whole or subprojects, and so comparison at completion is assessed against the updated and batch 2 FS analysis.

48 Appendix 8

Table A8.4: Comparative Financial Internal Rates of Return, by Subproject At PPTARRP a At updated FS b At completion c

WACC FIRR FNPV WACC FIRR FNPV WACC FIRR FNPV

Batch 1 (%) (%) (million D) (%) (%) (million D) (%) (%) (million D)

Thanh Hoa - Hau Loc 0.5 1.27 2,340 0.65 2.36 5,567 Nghe An - Dien Yen 0.5 1.24 3,520 0.65 (2.70) (16,193) Ha Tinh - Loc Ha 0.5 0.97 3,562 0.65 (0.15) (6,882) Quang Binh - Bo Trach 0.5 0.93 1,419 0.65 2.46 7,168 Quang Nam – Tay Giang 0.5 1.27 378 0.65 (3.43) (6,405) Binh Dinh - Tay Son 0.5 0.97 1,834 0.65 1.29 2,552 Average for Batch 1 0.65 0.09 (14,929)

Batch 2

Thanh Hoa - Thieu Hoa 0.5 1.28 2,601 0.65 3.14 11,971 Thanh Hoa – Yen Dinh 0.5 1.20 3,091 0.65 3.62 11,935 Nghe An - Yen Thanh 0.5 1.30 8,143 0.65 (1.64) (28,942) Ha Tinh - Thach Ha 0.5 1.17 4,582 0.65 1.65 7,671 Quang Binh - Tuyen Hoa 0.5 1.17 4,174 0.65 2.27 10,729 Quang Binh - Le Thuy 0.5 1.19 3,510 0.65 3.26 14,769 Quang Nam - Dien Ban 0.5 1.29 6,737 0.65 3.32 22,685 Binh Dinh - Hoai Nhon 0.5 1.39 8,151 0.65 3.49 28,633 Average for Batch 2 0.65 1.94 76,350

Average, All subprojects 0.65 1.36 60,439

FIRR = financial internal rate of return, FNPV = financial net present value. a WACC, FIRR, and FNPV were not calculated for the PPTA or included in the RRP in 2009. b 2013, Ministry of Agriculture and Rural Development (MARD), National Center for Rural Water Supply and Environmental Sanitation (NCRWASS) (assisted by

the Project Implementation Consultant), Sub project Appraisal Reports for Batch 1 sub projects; 2015, MARD, NCRWSS (assisted by the Project Implementation Consultant), Sub project Appraisal Reports for Batch 2 sub projects.

c Project Completion Review mission consultant’s estimates. Source: Asian Development Bank.

Appendix 8 49

E. Financial Sustainability Analysis 18. Service coverage is over 90% in almost all subprojects except for Ha Tinh - Loc Ha in Batch 1, which averaged about 50% in the first three years of operation. For Batch 2, service coverage in Ha Tinh –Thach Ha is at 84%, Quang Binh – Tuyen Hoa, 83%, and Quang Binh – Le Thuy, 65% in year one of operation. Using Batch 1 as a guide for Batch 2, service connections are anticipated to continue to increase each year. 19. Water consumption in the initial years of operation is lower in all subprojects than projected at appraisal, primarily due to the number of household connections, which have increased annually. In a few subprojects, consumption is lower despite sufficient household connections. In these examples, it was observed that households tend to use existing water sources, primarily water pumps and drilled wells, to limit water bills, however, it is anticipated that as these assets depreciate and households experience reliable and safe piped water supply, coupled with increasing incomes and productivity, the households will increase water consumption from the piped system. 20. Operating capacity of Batch 1 subprojects is more than 50% at year 3 of operation with two subprojects (Nghe An – Dien Yen and Quang Binh – Thanh Trach) operating at more than 70% capacity; however, Thanh Hoa – Tien Loc is operating at 33%. It is likely that full capacity could be reached earlier than the 10-year design period and therefore new investments would be required. Examples are already seen in current system expansions as well as increased demand from surrounding communes, as reported by PPCs. 21. Table A8.5 presents a comparison of the assumptions on water tariff, served population, water production, and billed water at appraisal and at completion using actual figures for the years that the water supply systems have been operating, that is, 2015 to 2017 for Batch 1, and 2017 for Batch 2, as well as estimates of operating capacity.

50 Appendix 8

Table A8.5: Water Tariffs, Populations Served, Water Production, Consumption, and Operating Capacities by Subproject Batch 1 Province Thanh Hoa Nghe An Ha Tinh

District Hau Loc Dien Chau Loc Ha Commune(s) Tien Loc Dien Yen Thach Bang, Thach Ki, Thinh Loc

Parameter Unit Updated FS a Completion b Updated FSa Completion b Updated FSa Completion b

Water tariff D/m3

2015

5,273 5,300 6,800 5,500 6,200 5,062 2016

5,273 6,930 6,800 6,100 6,200 5,062

2017

5,273 6,930 6,800 6,100 6,200 5,062

Served population number

2015

8,550 8,245 12,931 13,301 24,455 13,584 2016

8,698 8,340 13,143 13,424 25,229 14,160

2017

8,848 8,540 13,358 13,569 26,018 15,780

Service coverage %

2015

95% 92% 95% 90% 90% 47% 2016

96% 92% 96% 90% 92% 50%

2017

96% 93% 96% 90% 93% 55%

Water production '000 m3

2015

166 130 270 319 733 109 2016

253 135 446 427 897 513

2017

343 142 518 483 1,057 759

Billed volume '000 m3

2015

137 102 223 255 579 38 2016

210 107 369 333 709 345

2017

284 114 429 362 836 568

WTP design capacity m3/day 1,200 1,200 1,700 1,700 4,000 4,000

Operating capacity c %

2015

38% 30% 44% 51% 50% 22% 2016

58% 31% 72% 69% 61% 35%

2017

78% 33% 83% 78% 72% 52%

Appendix 8 51

Batch 1 Province Quang Binh Quang Nam Binh Dinh

District Bo Trach Tay Giang Tay Son Commune(s) Thanh Trach A Tieng Tay Giang, Tay Thuan

Parameter Unit Updated FSa Completion b Updated FSa Completion b Updated FSa Completion b

Water tariff D/m3

2015

7,429 6,000 6,050 3,700 6,000 5,500 2016

7,429 6,000 6,050 3,700 6,000 5,800

2017

7,429 7,000 6,050 3,700 6,000 6,090

Served population number

2015

11,814 9,325 3,123 3,500 11,814 11,796 2016

11,995 11,730 3,383 3,566 11,995 12,000

2017

12,178 12,085 3,609 3,566 12,178 12,206

Service coverage %

2015

95% 80% 80% 98% 95% 91% 2016

96% 98% 85% 100% 96% 91%

2017

96% 99% 90% 100% 96% 92%

Water production '000 m3

2015

309 372 132 81 227 259 2016

407 439 142 92 290 299

2017

472 423 153 126 385 314

Billed volume '000 m3

2015

256 89 109 65 197 207 2016

337 329 118 74 251 238

2017

391 321 126 102 333 248

WTP design capacity m3/day 1,500 1,530 500 534 1,500 1,500

Operating capacity c %

2015

56% 67% 72% 42% 41% 47% 2016

74% 79% 78% 47% 53% 55%

2017

86% 76% 84% 65% 70% 57%

52 Appendix 8

Batch 2 Province Thanh Hoa Thanh Hoa Nghe An Ha Tinh

District Thieu Hoa Yen Dinh Yen Thanh Thach Ha

Commune(s) Theiu Do Dinh Long, Dien Lien Long Thanh, Kanh Thanh, Vinh Thanh, Trung Thanh

Thach Kenh, Thanh Lien, Viet Lien, Phu Viet

Parameter (2017 data)

Unit Updated FSa Completion b Updated FSa Completionb Updated FSa Completionb Updated FSa Completionb

Water tariff D/ m3

7,100 6,930 7,100 6,930 7,300 6,100 7,000 6,178

Served population no. 7,979 7,395 8,270 8,700 21,659 25,007 16,342 16,348

Service coverage % 95% 92% 84% 92% 77% 90% 85% 84%

Water production '000 m3 313 111 333 85 767 480 664 423

Billed volume '000 m3 256 89 266 71 664 384 525 358

WTP design capacity m3/day 1,300

1,300

1,600

1,600

3,500 3,500 3,000

3,000

Operating capacityc % 66% 23% 57% 15% 60% 38% 61% 39%

Batch 2 Province Quang Binh Quang Binh Quang Nam Binh Dinh

District Tuyen Hoa Le Thuy Dien Ban Hoai Nhon

Commune(s) Tien Hoa, Chau Hoa, Van Hoa Ngan Thuy, Son Thuy, Le Ninh Dien Quang, Dien Trung, Dien Phong

Hoai My, Hoai Hai, Hoai Xuan, Hoai Houng

Parameter (2017 data) Unit Updated FSa Completionb Updated FSa Completionb Updated FSa Completionb Updated FSa Completionb

Water tariff D/m3 7,260 7,000 7,260 7,000 6,500 6,090 6,300 6,090

Served population Number 11,401 12,790 11,271 9,270 18,939 20,596 39,758 40,172

Service coverage % 80% 83% 80% 65% 90% 98% 90% 93%

Water production '000 m3 463 253 458 166 749 486 1,475 675

Billed volume '000 m3 366 170 362 116 608 389 1277 519

WTP design capacity m3/day 2,200 2,200 2,200 2,200 3,500 3,500 5,600 5,600

Operating capacityc % 58% 32% 57% 21% 59% 38% 72% 33%

WTP = water treatment plant. a 2013, Ministry of Agriculture and Rural Development (MARD), National Center for Rural Water Supply and Environmental Sanitation (NCRWASS) (assisted by the Project

Implementation Consultant), Sub project Appraisal Reports for Batch 1 sub projects; 2015, MARD, NCRWSS (assisted by the Project Implementation Consultant), Sub project Appraisal Reports for Batch 2 sub projects.

b As submitted by PCERWASSs during the Project Completion Review mission. c Project Completion Review mission consultant’s estimates. Source: Executing Agency and Project Completion Review consultant’s estimates.

Appendix 8 53

22. Nonrevenue water (NRW) from technical losses in almost all subprojects is higher than at appraisal. In as much as a high NRW increases operating and maintenance costs, reduction measures will be needed. Personnel numbers vary between 1.7 and 3.3 per thousand connections, though Quang Nam – A Tieng under Batch 1 is an outlier with 15. Nghe An – Dien Yen appears to be the most cost efficient at 1.7 staff per thousand connections. For Batch 2, personnel numbers vary between 2 and 4.9 per thousand connections, with Binh Dinh - Hoai Nhon appearing to be the most cost efficient with 2 staff per thousand connections. The global benchmark is 3 to 5 staff per thousand connections, and so lower staff per connection may signal insufficient operation and maintenance coverage.

Table A8.6: Comparative Data on Nonrevenue water and Staffing Levels (2017) Non revenue water Staffing Levels

Batch 1 Updated

FSa Completionb Number of

Personnelc Number of

Connectionsc Staff per 1,000 connectionsb

Thanh Hoa – Tien Loc 15% 20% 6 2,115 2.8

Nghe An - Dien Yen 15% 25% 6 3,580 1.7

Ha Tinh - Loc Ha 15% 25% 10 3,945 2.5

Quang Binh – Thanh Trach 15% 24% 8 2,417 3.3

Quang Nam – A Tieng 15% 19% 6 395 15.2

Binh Dinh - Tay Giang 10% 21% 6 2,977 2.0

Batch 2

Thanh Hoa - Thieu Hau 14% 20% 6 1,700 3.5

Thanh Hoa – Yen Dinh 14% 17% 7 2,122 3.3

Nghe An - Yen Thanh 10% 20% 12 5,557 2.2

Ha Tinh - Thach Ha 15% 15% 10 4,087 2.4

Quang Binh - Tuyen Hoa 15% 33% 9 2,558 3.5

Quang Binh - Le Thuy 15% 30% 9 1,854 4.9

Quang Nam - Dien Ban 15% 20% 12 5,319 2.3

Binh Dinh - Hoai Nhon 10% 23% 20 9,798 2.0 a 2013, Ministry of Agriculture and Rural Development (MARD), National Center for Rural Water Supply and

Environmental Sanitation (NCRWASS) (assisted by the Project Implementation Consultant), Sub project Appraisal Reports for Batch 1 sub projects; 2015, MARD, NCRWSS (assisted by the Project Implementation Consultant), Sub project Appraisal Reports for Batch 2 sub projects.

b Project Completion Review mission consultant’s estimates. c As submitted by PCERWASSs during the Project Completion Review mission. Source: Asian Development Bank.

23. The operating costs and operating revenues of each subproject were reviewed. Operating ratios were estimated to be less than one which indicates that operating revenues is able to pay for the operating costs, and that some surplus is generated from operations. The lower the operating ratio the better. The global benchmark for operating ratios is 0.50. The average operating ratio for three years of operation for Batch 1 subprojects is 0.80 compared to 0.60 at updated FS which means that either operating costs are higher or operating revenues are lower than that projected at updated FS, or both. For Batch 2 subprojects which have been operating only for a year, operating ratio averaged 0.75 compared to 0.45 at updated FS. It appears that Nghe An and Ha Tinh provinces subsidized operations of their Batch 1 subprojects on the first year with a subsidy estimated at D78 and 190 million respectively, as required by their commitment letter to the project in the case of operating revenue shortfalls.

54 Appendix 8

Table A8.7: Operating Ratios Batch 1 Province Thanh Hoa Nghe An Ha Tinh

District Hau Loc Dien Chau Loc Ha Commune(s) Tien Loc Dien Yen Thach Bang, Thach Ki,

Thinh Loc

Parameter Unit Updated FS

Completion Updated FS

Completion Updated FS

Completion

Operating ratio

2015

0.94 0.80 0.75 1.06 0.82 2.04

2016

0.69 0.60 0.51 0.81 0.72 0.98

2017

0.57 0.58 0.50 0.78 0.65 0.80

Average

0.73 0.66 0.58 0.88 0.73 1.27

PPC subsidy operations

D million

2015

0

78

190

2016

0

0

0

2017

0

0

0

Batch 1 Province Quang Binh Quang Nam Binh Dinh

District Bo Trach Tay Giang Tay Son

Commune(s) Thanh Trach A Tieng Tay Giang, Tay Thuan

Parameter Unit Updated FS

Completion Updated FS

Completion Updated FS

Completion

Operating ratio

2015

0.44

0.71

0.61

0.95

0.69

0.39

2016

0.38

0.63

0.59

0.84

0.58

0.62

2017

0.36

0.55

0.57

0.70

0.49

0.57

Average

0.39

0.63

0.59

0.83

0.59

0.53

PPC subsidy operations

D million

2015

0

0

0

2016

0

0

0

2017

0

0

0

Appendix 8 55

Batch 2 Province Thanh Hoa Thanh Hoa Nghe An Ha Tinh

District Thieu Hoa Yen Dinh Yen Thanh Thach Ha

Commune(s) Theiu Do Dinh Long, Dien Lien Long Thanh, Kanh Thanh, Vinh Thanh, Trung Thanh

Thach Kenh, Thanh Lien, Viet Lien, Phu Viet

Parameter (2017 data)

Unit At updated FS

At completion

At updated FS

At completion

At updated FS

At completion

At updated FS

At completion

Operating costs

D million 1,091

329

1,184

429

2,013

1,965

2,074

1,521

Operating revenues

D million 1,733

586

1,796

467

4,617

2,231

3,499

2,107

Operating ratio

0.63 0.56 0.66 0.92 0.44 0.88 0.59 0.72

PPC subsidy operations

D million

0

0

0

0

Batch 2 Province Quang Binh Quang Binh Quang Nam Binh Dinh

District Tuyen Hoa Le Thuy Dien Ban Hoai Nhon

Commune(s) Tien Hoa, Chau Hoa, Van Hoa

Ngan Thuy, Son Thuy, Le Ninh

Dien Quang, Dien Trung, Dien Phong

Hoai My, Hoai Hai, Hoai Xuan, Hoai Houng

Parameter (2017 data)

Unit Updated FS Completion Updated FS Completion Updated FS Completion Updated FS Completion

Operating costs

D million 1,086

787

1,069

712

1,323

1,002

3,060

2,696

Operating revenues

D million 2,532

1,130

2,503

775

3,766

2,255

7,662

3,012

Operating ratio

0.43 0.70 0.43 0.92 0.35 0.44 0.40 0.90

PPC subsidy operations

D million

0

0

0

0

Source: Project Completion Review consultant’s estimates.

56 Appendix 8

24. Affordability ratios, as measured by the percentage of average monthly household income spent water, in all subprojects were estimated at less than 1%, indicating that current monthly water bills are significantly low relative to income levels. The ratios are lower than the 3% threshold for affordability set by the central government and 5% threshold globally.

Table A8.8: Affordability Ratios, 2017 Batch 1 Province Thanh

Hoa Nghe An Ha Tinh Quang

Binh Quang Nam

Binh Dinh

District Hau Loc Dien Chau

Loc Ha Bo Trach Tay Giang

Tay Son

Commune(s) Tien Loc Dien Yen Thach Bang,

Thach Ki, Thinh Loc

Thanh Trach

A Tieng Tay Giang, Tay Thuan

Average monthly water consumption per connection or per household

m3 8 9 13.6 13 21.3 7

Average monthly water bill per connection or per household

D 55,000 54,900 71,520 78,000 78,700 43,630

Number of connections

2,115 3,580 3,945 2,417 395 2,977

Number of persons per connection or per household

4 4 4 5 9 4

Average income per capita per day

D 76,667 76,667 76,667 86,667 54,833 56,667

Average income per household per month

‘000 D 9,200 9,200 9,200 13,000 14,805 6,800

Affordability ratio % 0.6% 0.6% 0.8% 0.6% 0.5% 0.6%

Source: Project Completion Review consultant’s estimates.

Batch 2 Province Thanh

Hoa Thanh Hoa

Nghe An Ha Tinh

District Thieu

Hoa Yen Dinh

Yen Thanh Thach Ha

Commune(s) Theiu

Do Dinh Long, Dien Lien

Long Thanh, Kanh Thanh, Vinh Thanh, Trung Thanh

Thach Kenh, Thanh Lien, Viet Lien, Phu Viet

Average monthly water consumption per connection

m3 8 7.7 6 9.3

Average monthly water bill per connection or household

D 55,400

3,361

36,100 45,371

Number of connections

1,700

2,122

5,557 4,087

Number of persons per connection or household

4

4 4.5 4

Average income per capita per day

D 83,333

83,333

72,667 73,333

Average income per household per month

‘000 D 10,875 10,000 9,810 8,800

Affordability ratio % 0.5% 0.5% 0.4% 0.5%

Source: Project Completion Review consultant’s estimates.

Appendix 8 57

Batch 2 Province Quang

Binh Quang Binh

Quang Nam Binh Dinh

District Tuyen Hoa Le Thuy Dien Ban Hoai Nhon

Commune(s) Tien Hoa,

Chau Hoa, Van Hoa

Ngan Thuy, Son Thuy, Le Ninh

Dien Quang, Dien Trung, Dien Phong

Hoai My, Hoai Hai, Hoai Xuan, Hoai Houng

Average monthly water consumption per connection

m3 5.7 5.6 6.1 5.3

Average monthly water bill per connection or household

D 40,000

38,000

38,375

32,277

Number of connections

2,558 1,854 5,319 9,798

Number of persons per connection or household

5

5

4

4

Average income per capita per day

D 54,444

53,333

53,333

76,136

Average income per household per month

‘000 D 8,167 8,000 6,192 9,365

Affordability ratio a % 0.5% 0.5% 0.6% 0.3%

a Project Completion Review consultant’s estimates. Source: PCERWASSs.

25. The affordability ratios show capacity to absorb higher water tariffs and higher consumption in all subprojects according to the standardized benchmarks. Further, because tariffs are structured in stepwise increases based on consumption levels, minimum volumes to meet basic needs are even more affordable, which encourages the number of connections and initial use, thus supporting sustainability of the systems. Measures could be taken by the provinces to increase water consumption per connected household, such as mainstreaming IEC programs on the benefits of clean water in operations. Promoting the use of sanitary toilets could also increase water consumption, while contributing to health and environmental benefits. Expanding access or increasing service coverage to the extent that the systems could accommodate is already being implemented in many subprojects to increase revenues and meet demand. In particular, Ha Tinh and Quang Binh provinces should intensify efforts to increase service coverage in their subprojects. Further, measures to address NRW, including synchronized planning with the New Rural Development Program and repair damaged pipelines as soon as possible may be pursed. Finally, personnel levels should be maintained, and given that currently most are below the global benchmark target, water suppliers may consider hiring personnel for IEC activities to continually increase demand. Operating ratios are very affordable already.

58 Appendix 9

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

MARD shall be the Project Executing Agency. The Borrower shall cause a CPMU to be established within NCERWASS, to coordinate Project implementation, and to: (a) provide technical support for Project implementation, supervision and training to the Project Provinces; (b) make withdrawal applications to ADB for disbursement of the Loan proceeds; (c) monitor withdrawals by the PPMUs from the SGIAs; (d) review, and submit Project financial reports from the provincial level; (e) review the Project performance monitoring data; (f) recruit an independent auditor and ensure that periodic Project audits are properly carried out in a timely manner; (g) coordinate all reporting activities, consolidate reports and ensure timely submission of semiannual reports to MARD and ADB; and (h) monitor and coordinate all Project-related procurement to ensure compliance with the requirements of the Borrower and ADB. The PPCs shall be responsible for carrying out the Project at the provincial level. DARD is responsible for implementing the Subprojects and shall set up a PPMU within the PCERWASS of the Project Provinces. Each PPMU shall consist of experienced professional staff from at least the relevant units within PCERWASS and a representative of the Subproject CPC. The PPMU shall be responsible for: (a) liaising with the CPMU, other PPMUs and CPCs; (b) selecting and proposing subprojects; (c) carrying out Subproject feasibilities studies and preparation of Subproject feasibility reports that shall include technical design, appraisal, bidding documents for civil works and safeguards reports; (d) procurement of civil works; (e) establishing a procurement committee, chaired by the PCERWASS director; (f) implementing land acquisition, resettlement, environmental, ethnic minorities and gender activities; (g) provision of technical advice to communities to develop water supply and sanitation facilities and their O&M; (h) implementing the awareness campaign on water use, sanitation and hygiene; (i) collecting M&E data and uploading it to a computerized database; and (j) report preparation.

Schedule 5, para. 1-2

CPMU and PPMUs were established. Size of PPMUs varied from 10 to 23 members. All PPMUs had female representation of 30% or more. Complied with, completed 2010.

The Borrower shall ensure that (a) revolving funds for household credit for sanitation investments and community funds for sanitation improvement are established and financed from Loan proceeds; and (b) the PPMUs are responsible for the implementation of the activities at Subproject level and are accountable

Schedule 5, para. 3-4

Complied with.

Appendix 9 59

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

for all related expenditure, including revolving funds and community funds. The Borrower shall cause its authorized agency to enter into appropriate agreements with the PVWUs, which shall set out the PVWU's responsibility to manage the revolving funds, promote public awareness about the credit scheme, identify poor households, process credit applications, channel payments and collect repayment, maintain accounts and records, and inspect and certify credit funded infrastructure. The Borrower shall ensure that implementing guidelines are developed and reviewed and approved by MARD and ADB within 12 months of the Effective Date. The Borrower shall cause MARD to ensure that the implementation arrangements and funds flow mechanisms agreed between the Borrower and ADB shall be fully complied with throughout the Project implementation period.

Schedule 5, para. 5

Complied with.

Without limitation to the overall application of Section 4.02 of this Loan Agreement, the Borrower shall cause MARD and the PPCs to ensure that (a) audit of the Project accounts by an independent auditor acceptable to ADB is timely undertaken using international accounting and auditing standards; (b) consolidated audit reports are submitted to ADB within 6 months of the close of the Borrower's fiscal year; and (c) the audit opinion includes: (i) an assessment of the adequacy of accounting and internal control systems regarding Project expenditures and transactions to ensure safe custody of Project-financed assets; (ii) a determination as to whether the Borrower, MARD, and all Project Provinces have maintained adequate documentation for all financial transactions, specifically including the statement of expenditure and imprest account procedures; and (iii) confirmation of compliance with the Project financial management system and ADB's requirements for Project management. During Project implementation, the Borrower shall apply, and cause MARD and the PPCs to apply, ADB’s Anticorruption Policy, it being understood that ADB reserves the right to investigate directly, or through its agents, any possible corrupt, fraudulent, collusive or coercive practices relating to the Project. To support these efforts, the Borrower shall ensure that (a) MARD and the PPCs include in the bidding documents for the Project, and in all contracts financed by ADB in connection with the Project, the provisions specifying the right of ADB to audit and examine the records and accounts of the Project Executing Agency,

Schedule 5, para. 6-7

Independent audits were conducted, per requirements, through project closure. Due to the extended winding-up period, all financial processing by the EA was finalized during the last audit period of Jan 2017-2018. The ensuing ADB financial processing to reach financial closure 9 May 2018 does not require additional independent audit. Complied with.

60 Appendix 9

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

CPMU, PPMUs, PVWUs, and all contractors, suppliers, consultants and other service providers as they relate to the Project; (b) periodic inspections of the contractors’ activities related to fund withdrawals and settlements under the Project are carried out; (c) the Project auditors have the right to conduct random or spot audits for contract implementation activities under the Project; and (d) the cost of this auditing is borne by the Project. The Borrower shall cause MARD to (a) use the NCERWASS website and the existing system at the CPC offices (notice board) to disclose information on the use of the Loan proceeds, including procurement data; (b) notify communities of the date and location of selected events in the procurement process (e.g., public bid openings, progress reviews, and hand over ceremonies); and (c) establish grievance redress mechanisms at the CPMU and PPMU levels in each Project Province to receive complaints from Project stakeholders in relation to either the Project, any of the service providers, or any person responsible for carrying out the Project. The procurement data to be disclosed includes, but is not limited to (i) list of participating bidders, (ii) name of the winning bidder, (iii) basic details on bidding procedures, (iv) contract award, (v) list of goods and services procured, and (vi) intended and actual utilization of Loan proceeds under each contract. The grievance redress mechanisms established at the CPMU and PPMUs shall set the threshold criteria and procedures for handling such grievances, for proactively responding to them, and for providing the stakeholders with notice of the chosen mechanism and/or action. The Borrower shall cause MARD to ensure that the CPMU or PPMUs provide a formal response to a grievance within 20 working days of its receipt, and report the status of such grievances in their progress reports to the Borrower and ADB.

Schedule 5, para. 8

Complied with.

The Borrower shall ensure that all Subprojects are prepared, selected and submitted for approval by ADB in accordance with the procedures and eligibility criteria agreed between the Borrower and ADB, as revised from time to time.

Schedule 5, para. 9

ADB gave NOL to all SARs on 3 June 2013. ADB gave NOL to 8 Batch 2 Subprojects on 16 December 2014. Complied with.

In order for proposed Subprojects to be eligible for financing, the Subproject area must meet one or more of the following criteria: (a) the communes in the Subproject area have relatively high population densities, and human and animal waste disposal are likely to contaminate shallow ground water layer; (b) shallow groundwater layers are polluted, making the water unfit for consumption or requiring extensive treatment;

Schedule 5, para. 10-14

The criteria and prioritization weights were used for selection. In addition, during the batch 2 subproject selection stage in early 2013, additional criteria of screening for potential environmental impacts. All subprojects submitted Subproject Appraisal Report, which met approval requirements, including the PPMU and CPC agreements. All final SARs were approved.

Appendix 9 61

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

and (c) suitable readily accessible drinking water sources are scarce. Eligible Subprojects shall be prioritized based on criteria regarding the Subproject area, weighted as follows: (a) poverty ratio (40%); (b) ethnic minority ratio (30%); and (c) RWSS coverage ratios (30%). The potential Subprojects ranked highest shall be further prioritized based on the lowest per capita investment costs and readiness for implementation. In order to be selected, the PPMU must prepare and submit to the CPMU and ADB a Subproject Appraisal Report, which shall contain: (a) a feasibility study; (b) financial and economic analyses; (c) required safeguard documents on environment and resettlement, and specific provisions related to ethnic minorities, if there are any in the Subproject area; (d) a baseline survey covering socioeconomic, health, and water supply and sanitation coverage data; and (e) a CBA-IEC plan, which shall contain: (i) demonstrated commitment of the community to the Project; (ii) an agreed community participation strategy, including benchmarks and timelines; and (iii) an agreed plan for IEC, including identification of required materials and training approaches. No Subproject shall be approved by ADB unless the Subproject Appraisal Report contains evidence of an agreement between the relevant PPMU and the Subproject CPCs on the level of customers' contribution and payment mechanism for the water supply works. The agreement shall set out the percentage of the investment costs to be paid by the customers to the provincial government, which shall not exceed 5%, and the collection arrangements. The collection arrangement may take the form of a connection fee, provided that (a) the connection fee may only be levied after the system is commissioned; (b) customers' payment(s), on top of the water bill, must not exceed 3% of average monthly household income; and (c) non-payment of the connection fee may not lead to disconnection of the customer's water supply. No Subproject shall be approved by ADB unless the Subproject Appraisal Report contains evidence of a commitment from the relevant PPC ensuring financial sustainability of the water supply system. Specifically, the commitment letter shall state (a) the projected full cost recovery tariffs for the first 3 years of operation of the water system; and (b) the PPC's approval of these tariffs or commitment to cover

Complied with, completed 2014.

62 Appendix 9

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

operational deficits with its own budget resources in the event it approves a lower tariff.

The Borrower shall cause MARD and the PPCs to ensure that the water systems (a) provide water continuously, e.g., 24 hours and 7 days a week, at quantities not lower than 80 liters per capita per day; (b) provide tap water which is clean and safe for human consumption without further treatment; and (c) shall not break down more than 4 times per month for less than 2 hours each time, except in case of force majeure such as typhoons and flooding.

Schedule 5, para. 15

Complied with, completed 2016.

The Borrower shall cause MARD and the PPCs to complete a comprehensive baseline source water quality monitoring survey before the water supply treatment process design is confirmed by the Government. The survey shall use government-regulated sampling and analytical methods and results shall be compared to relevant government standards. These results shall be clearly used and referred to in relevant design documents, management plans and maintenance plans and/or reports.

Schedule 5, para. 16

Complied with.

The Borrower shall cause MARD and the PPCs to ensure that the bill per household for water provided in the Subproject systems, based on 80 liters per capita per day, as well as any initial connection fee, is less than 3% of the average monthly household income.

Schedule 5, para. 17

PPC issued commitment letters specifying water tariffs and commitment to subsidize water tariffs and operational costs of the Batch 2 water supply systems to be built in October 2014. Complied with

The Borrower shall ensure that MARD and the PPCs (a) set water tariffs that will cover the cost of O&M and depreciation of the water supply facilities; (b) operate the systems efficiently; and (c) provide management and technical support to the operational staff of the water supply facilities to ensure continued O&M of the water facilities beyond the Project period.

Schedule 5, para. 18

Water tariffs were set at the provincial level to cover the expenses for O&M and depreciation of water supply systems. Provincial authorities agreed to compensate for WTPs if the water tariff revenues are lower than production costs (as stipulated in the governmental decrees). The A Tieng subproject in Quang Nam Province did not have tariff rates high enough for cost recovery at project closing. Substantially complied with.

The Borrower shall ensure that NCERWASS and PCERWASS provide backstopping support to the operators after commissioning of the water supply systems, including through assigning experienced staff to operate the system for at least 1 month continuously and 6 more months intermittently.

Schedule 5, para. 19

Complied with.

The Borrower shall ensure that the PPCs (a) raise O&M funds through either user fees or school fees, or provide them from provincial budgets; and (b) maintain school, health clinic and public latrines properly beyond Project period.

Schedule 5, para. 20

Compliance varies between subprojects in evidence of fees for O&M as well as maintenance quality of school and public latrines. Partially complied with.

The Borrower shall ensure that MARD and the PPCs support the PVWUs to manage the sanitation revolving funds effectively and efficiently beyond the Project period.

Schedule 5, para. 21

Complied with.

Appendix 9 63

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

The Borrower shall ensure that MARD and the PPCs facilitate the establishment of WSCCs and that their composition is as agreed between the Borrower and ADB. MARD and the PPCs shall support their continued existence and effective functioning beyond the Project period.

Schedule 5, para. 22

Evidence reveals that some WSCCs, while functioning to project closure, were no longer operating after project closures. Evidence also revealed the incorporation of some WSCC functions into VWU activities. Substantially complied with.

The Borrower shall ensure that within 15 days after the end of each quarter each PPMU submits quarterly reports and data to the CPMU, which shall include: (a) a narrative description of progress made during the reporting period; (b) modifications, if any, to the implementation schedule; (c) details of land use and resettlement; (d) information on the environmental screening; (e) major Project activities by CPMU, PPMUs and PVWUs; (f) financial and procurement-related information; (g) problems experienced and remedial actions proposed; (h) the work to be carried out during the upcoming reporting period; and (i) a summary of expenditures during the quarter, year-to-date expenditures, and total expenditures to date.

Schedule 5, para. 23

Complied with.

The Borrower shall ensure that MARD: (a) monitors and evaluates Project impacts according to a PPMS that shall be developed within 6 months after the Effective Date based on the Borrower's M&E system and implementation procedures, and expanded by parameters to ensure that it meets the performance and safeguard reporting needs of the proposed Project, including basic health indicators; (b) discusses and agrees with ADB on the indicators and baseline data prior to the commencement of Works; and (c) monitors and compares the data during Project implementation and at Project completion, using, to the extent possible, gender-disaggregated data and information. The Borrower shall ensure that annual PPMS reports are prepared by each PPMU, consolidated by the CPMU, and submitted to ADB within 6 weeks of year end. MARD and ADB shall conduct joint loan reviews at least twice a year and a comprehensive Project review about 30 months after the Effective Date to evaluate (a) the actual progress of each Project output in each province; (b) implementation arrangements and procedures; (c) role of CPCs and HSPs in furthering Project implementation; (d) procurement procedures; (e) progress and effectiveness of capacity development programs; (f) the functioning and performance of the CPMU, PPMUs, PVWUs, and consultants; (g) the financial performance and cost recovery of water supply schemes and revolving funds; (h) effectiveness of safeguard procedures; and (i) agreed remedial actions to address the problems identified.

Schedule 5, para. 24-25

Complied with.

64 Appendix 9

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

Gender. The Borrower shall ensure that the gender action plan prepared for the Project and agreed upon between the Borrower and ADB is implemented in the manner and timeframe agreed and in particular that: (a) 40% of members of WSCCs are women; (b) separate toilets facilities for girls and boys in school and separate toilets for males and females in the health centers and public places are constructed; (c) VWU manages the revolving loan fund for sanitation investments; (d) at least 50% of the HSPs are women; (e) both a men's and a women's group shall be formed in relevant villages under the Project's CBA-IEC activities; (f) under the EMDP, if any, women from ethnic minority households are trained in home gardening using compost from the sanitation program; (g) 30% of professional staff recruited for PPMUs are women; and (h) RWSS database and hygiene monitoring indicators are disaggregated by gender.

Schedule 5, para. 26

The Gender Monitoring Report showed that PPMUs have ensured that 30 % of the members are female; WSCC have been established with minimum 40 % representation of female; and HSPs had 50% female representation. The M&E indicators for water and sanitation assessment provide gender disaggregated data. The other requirements of the Agreement were strictly followed. Complied with.

Environment. The Borrower shall cause MARD and the PPCs to ensure that the construction and operation of each Subproject (a) are in accordance with the IEE approved by ADB, (b) comply with the Borrower's environmental laws and regulations, and (c) comply with ADB’s Environment Policy (2002). If there are any discrepancies between the Government laws and regulations and ADB's Environment Policy, the latter shall apply. Each PPMU shall conduct an environmental assessment for each Subproject based on the EARF. The Borrower shall cause MARD to ensure that environmental assessment (i) is based on the procedures set forth in the EARF, (ii) conforms with ADB’s Environment Policy requirements, and (iii) includes details of local consultation carried out.

Schedule 5, para. 27

Environmental Management Plans (EMP), Environmental Monitoring Plans (EMoP) and IEE Reports for all 14 Subprojects were prepared and approved by ADB and local authorities as required in the EARF. Environmental monitoring reports were prepared by CSC and PPMUs. The 8 batch 2 subproject IEEs and accompanying documentation met the updated Safeguard Policy Statement (2009). Complied with.

Land acquisition and resettlement. (a) The Borrower, MARD and the PPCs shall ensure that all Subproject Works are undertaken within existing easements, public rights of way and public lands, and that all Subprojects are screened in view of potential resettlement impacts in accordance with the RF to ensure that no land acquisition or resettlement is required. If land acquisition and resettlement are unavoidable, the Borrower, through MARD, shall engage and mobilize resettlement specialist consultants experienced in ADB resettlement, ethnic minority, and gender policies to assist in updating and implementing the RP and prepare RPs for Subprojects which are to date addressed by an RF. The Borrower shall cause MARD to ensure that (i) the RP is carried out promptly and efficiently in accordance with all laws and regulations of the Borrower and ADB’s Policy on Involuntary Resettlement and Ethnic Minority

Schedule 5, para. 28

(A) ADB gave NOL for six updated LARPs of pilot Subprojects. (i) PPMUs prepared LARP Completion Reports and PIA Consultant prepared Validation Reports for 6 Subprojects; (ii) all AHs were given the opportunity to participate in resettlement planning and there were no ethnic minority issues in the Subprojects implemented; (iv) compensations were paid prior to all Batch 1 AHs and detailed measurement surveys (DMSs) and Socio-Economic Surveys were carried out for 8 Batch 2 Subprojects; (v) grievance and redress mechanisms were established, M&E indicators were developed including gender disaggregated information; (vi) ADB gave approval to 8 Updated LARPs of Batch 2 Subprojects; (vii) all RPs were disclosed to affected people according to ADB policies.

Appendix 9 65

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

and Gender Policies; (ii) all affected people are given adequate opportunity to participate in resettlement planning and implementation; (iii) a focus is placed on the needs of the most vulnerable, including ethnic minorities, and on gender issues; (iv) the affected people are compensated and assisted prior to displacement from their land and assets such that they shall be at least as well off as they would have been in the absence of the Project; (v) implementation of the RP is monitored and M&E is undertaken using gender and ethnic group disaggregated indicators, and related reports are submitted to ADB as stipulated in the RP; (vi) the RPs for Subprojects which are to date addressed by an RF shall be prepared in accordance with the agreed RF, and submitted to ADB for review and approval; and (vii) all RPs are disclosed to the affected people in accordance with ADB policies. (b) MARD shall ensure that (i) funds needed for land acquisition and resettlement are allocated and disbursed in a timely manner; (ii) the preliminary RPs already drafted for the initial six projects are updated and submitted to ADB within 3 months of completing the detailed measurement surveys; and (iii) ADB is promptly advised of any substantial changes in resettlement impacts and, if necessary, a revised RP is submitted to ADB for approval. In the event of an inconsistency between the Borrower's laws and regulations and ADB's Social Safeguard Policies, ADB policies shall apply.

(B) the PPCs of six provinces; i) had approved RP budgets for all six pilot Subprojects and compensations were paid to AHs; RP budgets of 6 Batch 2 Subprojects were approved by PPCs; (ii) DMSs were completed for 6 Pilot Subprojects and LARPs were revised and approved by ADB; (iii) PIA Consultant carried out Due Diligence surveys for all Pilot Subprojects and Batch-2 Subprojects (except Thieu Do subproject due to the additional borewell and Thach Ha subproject due to construction of preliminary settling reservoir and land acquisition for distribution network expansion). The LARCs, including those for Nghe An and Quang Binh Subprojects were completed. (C) The DMSs, Socio-Economic Survey of Affected Persons (SES) of Batch-2 Subprojects were approved by ADB. The Compliance Assessment Report of Batch-2 Subproject were completed and submitted to ADB. Complied with, completed June 2017.

Ethnic minorities. The Borrower shall ensure that the PPMUs undertake social analysis for all the Subprojects. Based on the social analysis, the Borrower shall ensure that an EMDP shall be prepared and implemented for Project Provinces where ethnic minorities form more than 50% of the beneficiaries. The Borrower, MARD and PPCs shall ensure that (a) full participation of ethnic minorities is promoted in Project activities, including, among other things, the capacity development and training activities; (b) the needs of the ethnic and religious minorities are appropriately met, especially in the areas with a high proportion of ethnic minority people; (c) the WSCCs have reasonable representation from the ethnic minority groups; and (d) all activities are consistent with ADB’s Policy on Indigenous Peoples.

Schedule 5, para. 29

Social Analyses were prepared in each SAR. There were no Subprojects where ethnic minorities formed 50 % of the beneficiaries. Complied with, completed June 2014

Labor standards. The Borrower shall cause MARD and the PPCs to ensure that the construction contractors (a) provide timely payment of wages and safe working conditions to all workers and are monitored by the CPMU and PPMUs; (b) promote women’s employment, where appropriate; (c) pay equal wages to men and women employees for the same kind of

Schedule 5, para. 30

The construction works Design and Build contracts for all subprojects were signed in accordance with the standard bidding documents approved by ADB and were monitored by CPMU and PPMUs. Complied with, completed February 2014.

66 Appendix 9

Covenant Summary

Reference in Loan

Agreement

Status of Compliance

work; (d) do not employ child labor, as required by the relevant laws and regulations of the Borrower; (e) maximize the employment of local poor people who meet the job and efficiency requirements for construction and maintenance of the Project; and (f) include specific provisions to give effect to this clause in the Works contracts and strictly monitor their compliance. Health risks. The Borrower shall cause MARD and the PPCs to ensure that Works contractors disseminate information on the risks of socially and sexually transmitted infections, including HIV transmission, to their employees, temporary laborers, and subcontractors during Project implementation and that specific provisions are included in the Works contracts to give effect to this clause and are strictly monitored.

Schedule 5, para. 31

Included in the Environmental Management Plans of the standard bidding documents for Design and Build contracts. Complied with.

Appendix 10 67

SOCIAL, POVERTY, GENDER AND SAFEGUARDS PERFORMANCE

I. GENDER PERFORMANCE

A. Output 1: Operational and Sustainable Piped Water System 1. Gender Action Plans (GAPs) were prepared for each of the 14 sub-projects. GAPs for all sub-projects of Batch 1 and Batch 2 were prepared by PPMUs with PIA Consultant’s support and were approved by ADB. 2. Community people of the sub-project sites, both men and women, had the opportunity to consult with PPMUs regarding project design and implementation. Consultation meetings for each Sub-project commune were organized during the household surveys (in early 2012 for subprojects of Batch 1, late 2013 for subprojects of Batch 2 and in 2016 for Thach Ha commune in Ha Tinh). In total, 3,149 people participated in the meetings, of which 52% were women.

3. PPMUs identify number of poor HHs and near poor HHs with a woman being a sole income provider to benefit from the Sub-project’s social/gender inclusive assistance. All poor and near poor HHs with a woman being a sole income provider in all sub-projects were identified, registered with their needs assessed, with the support of commune Women Union. In total, 6,812 HH (5,112 poor HHs and 1700 near poor HH with a woman as the sole income earner) registered for free water connections and 4,790 HH (3,519 poor HHs and 1,271 near poor HH with a woman as the sole income earner) is registered for free toilet substructures.

4. Poor HHs and near poor HHs with a woman being a sole income provider received free water connection. All 6,812 HHs which were qualified to receive free water connections have been connected.

5. PPMUs facilitate the contractors to employ local men and women for construction work of water supply systems and sanitation works. Contractors’ representatives attended training courses on Gender Awareness and GAP Implementation and were sensitized and exposed to gender issues. As a result, 621 local people, out of which 175 women or 28%, have been employed by construction contractors.

6. PPMUs monitor construction compliance with safeguard and gender issues. PPMU’s GAP Monitoring Quarterly Reports have been prepared using the template prepared by PIA Consultant and agreed by ADB. PIA’ has prepared Summary GAP Monitoring Quarterly Reports based on the PPMU GAP Monitoring Quarterly Reports and other PIA reports on other aspects of the project where gender mainstreaming is included. B. Output 2: Improved Household and Public Latrines 7. Construction of hygienic latrines at schools, communal health centers, and public places with separate facilities for male and female was completed. All subprojects met their targets on public latrines. In total, 52 school and public toilets were built. All of them have separate compartments for women and men. 8. The sub-projects assigned VWUs to manage the Sanitation Revolving Fund (SRF) to lend to non-poor households to construct or rehabilitate their household latrines. Provincial SRF management units were established under each Provincial Women Union having female members, accounting for 95%. Only Quang Nam Provincial Women Union did not establish the

68 Appendix 10

SRF as the residents in the subproject areas did not have demands for loans. Communal Women Unions have also assisted to establish and conduct Credit – Savings Groups. Out of 10,262 HHs registered to borrow from the fund, 3,829 (37%) received loans by the end of 2016.

9. The PPMUs provided poor HHs and near poor HHs with sole income provided by a woman with free latrine sub-structures. All 4,790 HHs, including poor 3,519 HHs and 1,271 near poor HHs with a woman being the sole income provider, who qualified to receive grants for free toilets have received latrine substructures.

10. PPMUs facilitated the poor HHs and near poor HHs with sole income provided by a woman and ethnic minorities to select their appropriate type of latrines. Consultations were carried out with the residents, including the poor, women and ethnic minorities, during the base-line household surveys in each subproject area. Based on those findings, the PPMUs decided on the latrine model to be applied to all households in the area. For Batch 1, Nghe An province applied double-vault latrines while the remaining provinces applied septic tanks. For Batch 2, all subprojects applied septic tanks. PPMUs also ensured that the contractors in charge of sanitation employed women and men for construction works for latrines.

11. PPMUs ensured that, under EMDP, women of ethnic minorities HHs were trained in home gardening using compost from the sanitation program. There are a few ethnic minority households in Le Thuy subproject of Quang Binh, and a number in Tay Giang subproject, Quang Nam. Although PIA Consultants had developed relevant training materials in HSP Manuals, this activity was not implemented, since all latrines built in these areas were septic tanks, which are not suitable for composting. C. Output 3: Improved Hygiene Practices 12. A Water and Sanitation Commune Committee (WSCC) was established at each subproject with 40% of the members were females. At all the subprojects, there was at least one member of WSCC from the Commune’s WU. At all the subproject communes, more than 50% of WSCC’s members were females and the average percentage of female members was 53.3%. 13. Health and Sanitation Promoters (HSPs) were appointed at each subproject with 50% women. In all subprojects, there was at least one HSP selected for every 100 households in each village. In all project communes more than 50% of HSPs were women with an overall average of 54.5%.

14. The subprojects supported PPMU and schools to facilitate girls and boys in communicating “hygiene – hand washing with soap campaign” and protecting the environment. School activities, including school IEC activities, talk shows, painting competitions, award of active pupils etc. were carried out in most subprojects. In all, school programs involved 35,607 students, 56% of whom were girls.

15. WSCC and HSP mobilized women and men to be trained in hygiene and sanitation, including washing hands and protecting the environment. The project sponsored community training activities in hygiene and sanitation carried out by WSCC and HSPs, which have been mainstreamed into other community activities including markets, Green Saturdays and VWU, commune and hamlet meetings. Project deliverables included 78 training courses with 1,500 participants, in which 28.4% of them are females.

Appendix 10 69

D. Output 4: Strengthened Sector Planning and Implementation Capacity 16. The CPMU and PPMUs were given capacity building training on project design, consultation and implementation. 48 training/coaching/workshops/exchange events were organised in project design, consultation and implementation, attracting 1,190 participants, of which 31% were women. The PIA consultant provided further capacity building through mentoring and physical support to CPMU and PPMUs. 17. The project provided capacity building training on gender mainstreaming for CPMU and PPMUs focusing on ADB’s gender policy, gender mainstreaming, gender analysis, monitoring and reporting. 8 training/coaching events were organised, attracting 72 participants, of which 46% were women. The PIA consultant continued to provide onging support to PPMU’s gender focal staff following the training.

18. Capacity building training on SRFs with PVWU, PPMUs and CPCs was provided. Four training/coaching events on SRFs were organised, attracting 161 participants, of which 73% were women.

19. Training for CPCs, WSCCs and HSPs on awareness on sanitation and safeguard issues was provided via 13 training/coaching events, attracting 328 participants, of which 30% were women.

20. Training for HSP in IEC implementation was provided via 74 training/coaching events on IEC and Behaviour Change, attracting 719 participants, of which 30% were women.

21. Subprojects supported PPMUs in a campaign to encourage men to share more house chores with women, especially in water related work. No separate activities on this topic were carried out as the topic of gender awareness and shared responsibility for water related work was incorporated into different community activities.

22. The project facilitated women living in the subproject areas to participate in financial saving groups. 3,580 people participated in 235 credit savings groups in 11 subprojects. No credit savings groups were organised in Thieu Hoa of Thanh Hoa, Tay Giang and Dien Ban of Quang Nam due to lack of community demand. E. Output 5: Improved Project Management Capacity 23. M&E indicators for the project DMF for health and hygiene behaviour, including the number of poor households and near poor households with a woman being a sole income provider, were gender disaggregated. 24. Organizations in charge of the project outputs were established with the required gender balance in each province. All project organizations which have been established (including PPMU, WSCC and HSPs) meet or exceed the project requirements in terms of percentage of women amongst the members. In detail:

• PPMUs: 33 females out of 102 staffs;

• WSCCs: 136 females out of 255 staffs;

• HSP Teams: 318 females out of 584 staffs.

70 Appendix 10

25. However, although the required gender balance has been achieved, the leading positions in the PPMU, which is responsible for the water utility functioning, continue to be held by men. 26. Project orientation workshops were held at each subproject commune. Project orientation workshops were held at all project provinces of Batch 1 and at all project sites of Batch 2. The total number of participants was 548, of which 18% were women. It is noted that PPMUs did not specify the percentage of women participants to come to these workshops but did ask the commune Women Union to encourage the participation of women. 27. WSCCs carried out IEC meetings, campaigns, and consultations with both men and women. Community activities included: Green Saturdays, community meetings, home visits, IEC campaign launching, Women Union meetings, and voting for environmental sanitation advanced households, among others, were organised in all subprojects. In total over 1,173,300 face-to-face person events were arranged with 61.7% of participants being women. 28. PPMUs gave training to the provincial and commune women’s union (PVWU/CVWU) in management of sanitation revolving fund (SRF). 25 training/coaching events were organised, attracting 749 participants, of which 87% were women.

29. Selected demonstrative example:

30. The health and sanitation promoters (HSPs) have been selected from the staffs of the hamlets. If there were no requirement from the project that 50% of the HSPs should be female, most them would be men because the head of the hamlet authorities and organizations are male. However, as a result of the requirement of the Loan Agreement that 50% of HSPs should be women, the deputy head or other members in the hamlet authorities and organizations had opportunities to become HSPs. At the beginning of the project, the female HSPs were always very shy and inconfident. They were often silent in the meetings and at the beginning of the training courses. However, after the training on HSP Handbook training courses, they felt more confident, were more knowledgeable and had developed skills to carry out the tasks of HSPs, especially the practical exercises, games, role plays the female HSPs become more confident and active.

31. “At the beginning, I did not know how to do when I was invited to the training workshop as I had never talked anything in front of the crowd. So I thought that I would be only quiet during the whole training. But, there were so many activities in the workshop that required or encouraged me to participate in. It was funny and easy to understand. So, I recognise that the tasks of HSPs are not complicated, I can afford to do it, so I felt very excited and more confident to do that” (Ms Phan Thi Tam, a HSP in Thach Bang commune, Ha Tinh province).

32. “In the past, only some men from the hamlet authorities and organizations visited us at household and encouraged us to keep the environmental sanitation. But recently, there are many women to do that. Actually, I see that it is more effective when the women encourage us to participate in the sanitation activities such as community meetings or Green Saturdays, because the women are more patient to persuade something and speak more gently than men.”

33. Participation, access to project resources and practical benefits

34. The women in the project were encouraged to participate in all project activities. The percentage of women in WSCCs and HSPs is high 53.3% in WSCCs and 54% in HSPs. This has enabled women participation in implementing, monitoring and raising their voice and their rights

Appendix 10 71

in the project activities. The women manage and implement the SRF well at all levels. Up to now, all HHs that have received a loan from the SRF have been repaid on time. WU participate to select the poor HHs and near poor female headed households to receive the grants/loans from the project.

35. Moreover, the operation of savings group is very effective; this helps the women to get access to additional funds to improve their income generation activities. The women actively participate in the IEC activities: 61.8% of participants on the Green Saturday, 64.6% of participants in the IEC community meetings, 62% of consulted people in the HHs visiting conducted by HSPs, 61% of participants in the IEC opening ceremonies, 72.1% of participants in the contest/performances on water and sanitation, 70.5% of participants in the events of selecting to vote the best HHs on water use and sanitation are women. Women are invited and participated in the consultation meetings on environmental, resettlement issues and project orientation workshops. Especially, women have had a chance to participate in the capacity building activities of the project including workshops and training courses.

36. The participation of the women in the project activities brings the benefits to the women and their family.

37. Women have equal access to the project benefits. Beside the access to the hygienic water source and hygienic latrines, women have more opportunities to access other resources of the project.

38. Women Unions have played major role in management of the sanitation revolving funds (SRF) at the provincial level and commune levels. Managing the SRF helps the women not only to improve their skills on financial management but also helps each others to create more income from the savings groups. A total of 235 savings groups with 3,850 participants have raised a fund of about D192,500,000/month (or equivalent to USD 105,000/year). This fund helps the poor and non-poor women in the communities get access to the credits made by themselves to improve or generate their income.

39. The women have access to the trainings in the project to build up their capacity. The main training activities include:

- The CPMU and PPMUs have been trained on project design, consultation skills and project implementation: A total of 36 training/coaching events have been organised in project design and implementation and communication skills attracting 799 participants, of which 30% were women. The PIA Consultant provided further capacity building through mentoring and support to CPMU and PPMUs.

- Gender mainstreaming training for CPMU and PPMUs focusing on ADB’s gender policy, gender mainstreaming, gender analysis, monitoring and reporting: 8 training/coaching events have been organised, attracting 66 participants, of which 50% were women. The PIA Consultant continued to provide periodic support to PPMU’s gender focal staff following the training.

- Training on management of SRFs to PVWU, PPMUs and CPCs: 4 training/coaching events on SRFs have been organised, attracting 161 participants, of which 73% were women. Although the project training program has been completed, PIA Consultant continues to provide support to PPMUs and Women Unions.

- Training of CPCs, WSCCs and HSPs on awareness on sanitation and safeguards issues: 12 training/coaching events have been organised on sanitation and safeguard issues, attracting 306 participants, of which 29% were women. Although the project training

72 Appendix 10

program has been completed, PIA Consultant continues to provide periodic support to CPCs, WSCCs and HSPs.

- Training for HSPs on IEC implementation: 45 training/coaching events on IEC and Behaviour Change have been organised, attracting 1,499 participants, of which 56% were women. Although the project training were completed, PIA Consultant continued to provide on-going support to WSCCs and HSPs.

- PIA supported PPMUs in promotion campaigns to encourage men to share more house chores with women especially the water related work in family: No separate activities on this topic were carried out under the topic of gender awareness and shared responsibility for water related work but these activities have been incorporated into various community activities.

40. Women have access to a rich source of information in the project area. Beside the information on the knowlege and skills to implement the project activities, women have also a lot of information on water, sanitation, health issues that are available in each commune and hamlet in the project area. The information is also included in the HSP handbooks, leaflets, articles developed under the Project for sharing to the public. The women can have access to read, learn, share and check the information from these materials when they need for their lives. 41. The women have benefitted from the project to improve their living standard and their status in the community.

- The available tap water at house helps reduce women’s workloads, especially collecting

water during dry season. Moreover, the women feel more secured as they don’t need to worry about the unhygienic domestic water, so they don’t need to filter water before using. That saves time for women.

- Using hygienic latrines with separate units for men and women helps the women to be more confident. They don’t feel as shy as before when they had to defecate in the open air.

- Due to the new design of the latrines women don’t need to be in direct contact with human feces when they clean the latrines.

- The girls also feel more comfortable and confident when using school latrines with separate compartments for girls.

- Using cleanwater and hygienic latrine have reduced incidents of water borne diseases among women, especially the gynecological disease.

- During the construction phase of the subproject new working opportunities were created for women as the contractors were requested to employ local people. A total 175 women have been employed by the civil works contractor during the construction of the water supply and sanitation facilities. This helped the women have more opportunities to get extra income. Some female staffs have also been recruited as the permanent employees of the Operation Unit of the completed water treatment plants.

42. The task of SRF management and savings group establishment helps the solidarity among the women in the community become stronger. That makes the women’s prestige in the family and community higher and the women get more respect from not only the women but also the men in the community. 43. Strategic changes in gender relations

44. Effectively the project preparation started only about five years ago and the first six pilot water supply treatment systems stated to deliver water only about two years ago and the Batch 2

Appendix 10 73

subproject were completed in mid 2016, therefore, it is not easy to measure or evaluate the significant changes in gender relations as a result of the Project. However, there have been some initial changes in gender relations or the determinants to change the gender relations in the project area.

45. Gender relations at the institutional level: Although there will not be PPMUs after the project but the WSCCs and HSPs in all communes in the project areas will continue to operate with the roles of monitoring the water treatment plans operation and implementing the IEC activities on water and sanitation facilitated by the local authorities. Moreover, WU will continue to manage the SRFs at provincial and commune levels. The high rate of women in the WSCCs, HSPs and WU was a successful strategy to ensure the women’s access to the project resources through the improved funds management, monitoring and implementing community activities. These activities had a positive impact on gender relations in the community activities.

46. As a result of improved water supply and sanitation provided by the project, the women’s burden of in house chores and within the family have been reduced. Thus, women have more time to participate in the community activities, and therefore it is observed that the status of women among the members in the community has been raised and they have more influence on decision making especially on issues related to water supply and sanitation.

47. Lessons Learnt and Recommendations

48. The level of gender mainstreaming needs to be considered during project preparation and stipulated in the Loan Agreement and other legal documents of the project. In this project, the requirements on gender mainstreaming are quite detailed and clear in the project documents. Specific targets and activities for GAP were set; such as the support to the female headed households, the percentage of female in the project organizations, separate units for men and women in public latrines. This made the gender mainstreaming implementation easy and straight forward.

49. The women have capacity for the implementation of the community activities relating to water and sanitation, however they needed encouragement to get involved in these activities. In terms of the capacities and skills on decision making, planning, monitoring and community IEC for each target group women needed support and training to build up these capacities. For example, at the beginning of the project many female WSCC members were afraid to bring up their opinions in the meetings. Even in the meetings where the only participants were female, they said that they had to ask for the direction of the commune/village leaders (the leaders are often male) because they didn’t know whether their decisions were right; the female HSPs were afraid to implement IEC activities as they had never spoken in public, only local men did that before. Therefore, the training for WSCC members need to be focused on decision making, planning, monitoring, but the training for HSPs should be focused on IEC skills. Moreover, after capacity building, the women need to be encouraged coached in the early stages to implement project activities (IEC activities) by both men and women so that they can participate in the project more actively and proactively. It is important to acknowledge that the role and the level of involvement of women can be recognized determined within the community. 50. The provision of the in-kind grants in form of building substructure of latrines to the poor HHs and the near poor female headed HHs has been successful and have contributed to the achievement of poverty reduction in the Project. More than 98% of households, who received grants for latrine substructures, completed the latrine superstructures with latrines operational. However, there are a few HHs who received grants for latrine substructures but have not

74 Appendix 10

completed the superstructures yet. If the constructed latrine super structures are not completed soon, the sub structures will degrade rapidly. This can cause the waste of money and reduce the effectiveness of the investment. Some of the reasons are related to the lack of financing of the superstructure, therefore, new ways of support could be considered. For example, all HHs in the project area, including the poor and near poor female headed HHs could have access to the project sanitation revolving fund loans to complete the granted latrines; or the project could consider providing also free superstructure to those HHs, who qualify for the in-kind grant (especially the ethnic minority HHs) that can’t complete the latrines by themselves. 51. At the beginning of the project, mainly financial and technical issues were regarded by the PPMUs. Gender issues were not considered as important and in many PPMUs not even mentioned in the initial plan of PPMUs. The main reason for this was that the staff of PPMUs had not had experience to implement any gender mainstreaming project, so they thought that the gender issues were not important. There was no staff assigned to be the gender focal person in Quang Nam, Thanh Hoa, Nghe An and Quang Binh PPMUs. So, in the early stages of the project implementation, the gender actions were not well implemented in the commune level and quarterly reports on gender activities were not prepared. For example, the initial male percentage of WSCCs and HSPs at communes was more than 80%. The PPMUs and CPCs explained that they assigned the “important local persons” to be members of WSCCs and HSPs because they were afraid that local women did not have enough capacity and experience to implement the project activities. But after the capacity building training on ADB’s gender policy, gender mainstreaming, gender analysis, monitoring and reporting for CPMU and PPMUs, the understanding on importance of gender mainstreaming was internalized and the GAP implemented. The implementation of GAP and carrying out gender activities can’t be effective should the project staff have limited knowledge on gender equality, then they can defy the gender activities. So, raising awareness and practices on gender equality of the project staff (from the central and the provincial levels) is very important to implement the gender activities at all levels. 52. Also, the contractors’ awareness on gender equality needed to be raised. As per the requirements of the civil works contracts the contractors were encouraged to employ local men and women and provide separate showers and toilets female workers. In Ha Tinh, the contractors had employed three local women, however, no separate latrine for the female workers was provided. In addition, cases of unequal payment for men and women with the same position in the construction were observed by the PIA gender specialist during the review missions. Based on the instructions of CPMU and PPMUs the contractors were required to obey the project gender regulations/ requirements that the contractors often ignored or were not interested in before gender sensitization training. Moreover, the contractors’ compliance with the contractual requirements during the construction should be monitored closely by the PPMUs.

53. The loan agreement stipulates that the sanitation loan should cover the full cost of latrine construction (as per the standard design of MOH), but the local regulations originally limited the maximum loan amount to D4.0 million. During the implementation of the project them amount was increased to D6.0 million, but most of HHs in the project area wanted to have modern latrines including a bathroom/shower facilities. Therefore, the current of loan amount cannot cover full cost of a modern and beautiful latrine construction. Should the loan amount be bigger, the project could attract more HHs to borrow loans to build latrine, but due to limited fund capital the total number of loans would be less with current repayment period of 60 months. Therefore, the repayment period should be reduced from 60 months to 36 months/24 months (basing on the HHs’ demand of each community). It is also recommended that the repayment would be made more flexible i.e. early repayment of loan could be made possible.

Appendix 10 75

54. The good operation and management of the water supply services and constructed latrines is the key factor to ensure both the gender results from the project and the sustainability of the project impacts beyond the end of project. The loan agreement stipulates (Clause 21) that “The Borrower shall ensure that MARD and the PPCs support the PVWUs to manage the sanitation revolving funds effectively and efficiently beyond the Project period.” However, the current decrees or decisions do not clearly stipulate on how the sanitation revolving funds will be managed and operated after the project closure. Consequently, there is no legal basis for PPCs to assign the VWU to do that. Therefore, in some provinces (Thanh Hoa, Nghe An and Binh Dinh), the VWUs have not been assigned to manage the SRF after January 2017. Consequently, it is necessary to supplement some legal regulations for management and operation of SRFs on provincial level and authorize communal Women Unions and women to continue the activities in the community after the project. 55. Efficiency in Achieving Outcome and Outputs. Gender issues have been mainstreamed in all project activities rather than in separate activities, saving unnecessary expenses, except for a few gender training courses that were organised separately. Especially, the gender awareness building for community people and capacity building for women were incorporated in CBA-IEC activities. 56. Preliminary Assessment of Sustainability

• Women have obtained increased confidence and management capacity through having been involved in CPMU, PPMUs, WSCCs, HSPs, SRF management;

• Women and men become more aware of public health and environment protection issues and appropriate solutions; and

• School girls and boys have increased awareness of water and hygienic sanitation behaviours and will be able to do share the IEC messages with their family members at home.

57. Impact

• Since women in the family are involved more in water related activities, their health will be significantly improved when they are supplied with clean water and have hygienic latrines and they can save money for treating water related diseases. The M&E data from Commune Health Centers indicates a reduction in the incidence of women having water borne diseases from 18.9% to 8.5%, representing a reduction of 45%; and

• Inequality reduces when the poor HHs and near-poor HHs with a woman being the sole income provider have free connections to clean water and substructure of latrines, reducing the gap between them and the better-off.

58. Overall Assessment: The project’s gender component is rated as successful. 59. Below is a table summarizing GAP activity Monitoring and Results.

76 Appendix 10

1 Each latrine has 2 separated block for men/boy and women/girl.

Gender Activities Indicators Results/Outputs at Project Closing Issues and Challenges

Output 1: Sustainable Piped Water System Activity: Construction of water supply infrastructure

Establish water and sanitation commune committee (WSCC) for commune level planning (commune committee includes members from women's union, women leaders from the commune, female school teachers, female health care staff from district or commune health center, female village health and sanitation facilitators), at least 40% of the members of the committee should be women. TARGET 1

Water and sanitation commune committees (WSCCs) are established and at least 40% of the members of the committee should be women.

Achieved: This have been completed as part of the CBA-IEC action plan as well as a subproject‘s condition approval. Each commune of subproject established water and sanitation commune committee (WSCC) for commune level planning – equivalent 33 WSCCs of subprojects with 53.3% female (136 females in total 255 people).

Ensure that near poor female headed households with sole income provider and poor households receive free initial household connection. ACTION 1

Number of near poor female headed households with sole income provider and poor households receive free connection.

Completed: This have been completed as 100% poor households and near poor female headed households with sole income provider received free household connection.

Poor: 5,112 households

Near poor FHHs: 1,700 households

Output 2: Improved Household and Public Sanitation Activity: Construct hygienic toilets at homes, school and commune health centers, and public places

Construct separate toilets facilities for males and females in schools, health centers, and public places. ACTION 2

Number of hygienic public latrine is constructed in school, health centers and public places ensuring that (i) Each public unit consists of two latrines each for men and women (ii) Each school latrine unit consists of male and female units containing several latrines (specified by MOET norms and depending on number of students);

Completed: In total 52 school and public latrines1 were constructed. In which, 16 latrines for public places as commune health center, commune people committee, market and 36 latrines for school. All of them have the separate facilities for men/boys and women/girls.

- Each public unit consists of two latrines each for men and women;

Each constructed public latrine consist of two latrines each for men and women

- Each school latrine unit consists of male and female units containing several latrines (specified by MOET norms and depending on number of students).

Each constructed school latrine unit consists of male and female units containing several latrines (under the MOET norms and depending on number of students);

Provide the women's union with a revolving loan fund for household latrines. ACTION 3

Number of disbursed HH loans.

Completed: This has been completed as Sanitation Revolving Funds manual which approved by MARD. Q4/2016, 3,912 HH loans, were disbursed from SRF for construction/improvement of hygienic latrine.

Ensure all poor households and near poor female headed households with sole income

Number of poor households and near poor female headed households with sole income

Completed: 100% poor households and near poor female headed households with sole income provider

Appendix 10 77

provider receive grants for household latrines. Ensure women are consulted in the choice of household latrine. ACTION 4

provider received grants for HH latrines and theses HH were consulted on the choice of HH latrine.

received grants and were consulted on selecting hygienic latrine. Batch 1- Conduct community consulting at February 2012 for 9 communes; batch 2 - Conduct community consulting from July to December 2013 for 24 communes.

Poor: 3,519 HHs

Near poor FHHs: 1,271 HHs

Ensure that under the ethnic minority development plan, women from all village households are trained for home gardening using compost from sanitation program. ACTION 5

The proportion of village HHs were trained for home gardening using compost

Not completed: Although PIA Consultants had already developed relevant training materials in HSP Manuals, this activity could not implemented because all latrines built in these areas utilized septic tanks, which were not suitable for composting.

Output 3: Improved Hygiene Practices Activity: Information education communication campaign

Ensure that at least 50% of the HSPs are women. TARGET 2

The proportion of HSPs are women. Over achieved: This have been completed as part of the CBA-IEC action plan as well as a subproject’ condition for approval. Each subproject commune appointed Health Sanitation Promoter (HSP) and the project provided training to HSPs to be able to mobilize the community for implement CBA-IEC activities - equivalent 33 HSP teams of subprojects with 54.5% female (318 females in total 584 people).

Form one group for men and one for women in each village for community mobilization activities. ACTION 6

One group for men and one group for women in each village formed for community mobilization activities.

Partially Completed: At the village level, only women group formed, however, both men and women were mobilized to participate in community activities, including: - Opening ceremonies - Green Saturdays; - Organizing art performances and contest at community; - Conducting the selection and vote of exemplary household; and - Organizing communicating speech, competition about the environment at schools.

The men group was not formed at the village level because they are member of the social civil association such as Veteran Association, Youth Union and Famer Association.

Ensure that HSPs (including village women's union and village facilitators) will implement IEC activities. ACTION 7

Proportion of HSPs carry out IEC activities. Completed: 100% HSPs implemented IEC activities for community through many ways, including: - Village/community meetings - Visiting HHs for direct consultancy; - Communication through loudspeaker; and - Communication through leaflets; poster, banner.

Carry out IEC campaign targeting both women and men. Hold separate meetings for men and women to discuss health and sanitation related behavior.

IEC campaigns were participated/implemented by both women and men.

Partially completed: - Both men and women have been encouraged to participate in all IEC activities.

78 Appendix 10

2 The number of communes has changed from 24 to 33 due to change of project outcome.

ACTION 8 Meetings for men and women to discuss health and sanitation related behavior were organized.

- Although 195,999 females in total 303,575 participants (64.6%) participated in the IEC meetings in the project, there were the separated IEC meetings for only women under the Women Union, there weren’t separate IEC meetings for men.

Training of district women union (DWUs), WSCCs and HSPs for implementation of IEC. ACTION 9

Training courses for district women union, WSCCs and HSPs for IEC implementation were organized

Completed: all DWUs, WSCCs and HSPs were trained for implementing of IEC as follows: - DWUs: 07 training course: (i) 1 CBA-IEC training

course (ii) 2 workshops to share implementation experience and (iii) 4 SRF training courses on IEC mainstreaming.

- WSCCs and HSPs: 78 training courses on CBA-IEC implementation.

Output 4: Strengthened Sector Planning and Implementation Capacity Activities: (i) Improved operation and maintenance, effective monitoring, and evaluation; and (ii) Capacity building of commune level women's union to manage sanitation revolving fund.

Revolving funds operational: ACTION 10 (i) six provincial women's unions (PWUs) trained; (ii) 24 commune women's unions (CWUs) trained.2

Training courses on SRF for PWUs and CWUs were organized.

Completed: This have been completed as training activities as follows: - 05 PWUs and district women’s unions were trained on

SRFs with 4 training courses. - 29 CWUs were trained on SRFs in 25 training courses.

Only PWU’s Quang Nam did not establish SRF management unit because the subproject residents in in Quang Nam did not have loan demand. Four CVWUs in two subprojects in Quang Nam did not participate in the SRF because the aforementioned.

Incorporate health indicators in the RWSS database disaggregated by sex, incorporate monitoring indicators for hygiene behavior in the project monitoring system disaggregated by sex. ACTION 11

Number of water-borne disease and Percentage of hand washing with soap disaggregated by sex.

Completed: This have been completed as M&E indicator as follows: - The number of waterborne diseases reduced from:

13,028 cases (baseline survey data) to 4,287 cases (as of 4th quarter 2016), of which women reported cases reduced from 7,808 cases (baseline survey data) to 2,473 cases (as of 4th quarter 2016).

- Percentage of hand washing with soap before eating and after defecation increase on both man and woman. Details:

1. + For woman: From 39% and 41% (baseline survey data) to 62% and 77% with before eating and after defecation equivalent.

2. + For man: From 40% and 44% (baseline survey data) to 62.5% and 77% with before eating and after defecation equivalent.

Appendix 10 79

3 Professional female staff is defined as permanent staff. 4 Professional female staff is defined as permanent staff.

Develop gender-disaggregated monitoring indicators for IEC implementation and community mobilization activities for project monitoring system. ACTION 12

Number of women participated into IEC activities. Completed: This have been completed as M&E training courses for province level (PPMU) and CBA-IEC training courses for commune level. Details: - Green Saturday: 4,927 times with 306,775 female in

total 496,206 participants (61.8%); - Village/community meetings: 2,585 times with 195,999

female in total 303,575 participants (64.6%); - Visiting HHs for direct consultancy: 158,278 times with

185,410 female in total 298,461 consulted people (62%);

- Opening ceremonies: 25 events with 11,609 female in total 19,025 participants (61%);

- Organizing art performances and contest: 23 events with 16,578 female in total 22,995 participants (72.1%);

- WU’s meeting with project promotion integrated into: 505 times with 43,715 females; and

- Conducting the selection and vote of exemplary household: 113 events with 8,721 females in total 12,384 participants (70.5%).

Develop monitoring indicators on the number of women who receive grants for latrines and ensure households headed by women and poor households receive free water connections in the household. ACTION 13

Indicators on the number of women who receive grants for latrines and women and poor households receive free water connections are included in the project M&E indicator

Completed: Indicators on the number of women who receive grants for latrines and women and poor households receive free water connections were included in the project M&E and shown in CPMU’s quarterly report and PPMU’s quarterly report.

Ensure that all the members of the water and sanitation commune committee receive capacity building training on planning and monitoring. ACTION 14

Proportion of the members of the water and sanitation commune committee receive capacity building training on planning and monitoring.

Completed: 100% (255 persons) the members of the water and sanitation commune committee received capacity building training on planning and monitoring.

Output 5: Improved project management capacity

Ensure at least 30% of the PPMU members are women. TARGET 3

Proportion of PPMU member are women. Over achieved: This have been completed as part of loan agreement. Member of PPMUs: 33 females in total 102 people (equivalent 32.4%).

Carry out capacity building training of the project management, covering 30% of professional3 female staff from CPMU and PPMU level. TARGET 4

Training course on capacity building on the project management is organized and covering at least 30% of professional4 female staff from CPMU and PPMU level.

Over achieved: Provided capacity building training on project design, consultation and implementation for PPMUs and CPMU by PIA: 48 training courses with 371 females in total 1,190 participants (equivalent 31%).

80 Appendix 10

Ensure that district and commune women's unions receive training in management of sanitation revolving fund. ACTION 15

Training courses on management of sanitation revolving fund for district and commune women’s unions are organized.

Completed: 05 Province and district women’s unions were trained on SRFs with 4 training courses. 29 CWUs were trained on SRFs in 25 training courses.

Appendix 10 81

II. ENVIRONMENTAL PERFORMANCE

A. Environmental Safeguards Due Diligence 60. Categorization, due diligence. The Asian Development Bank (ADB) classified the project as environment category B. An environmental assessment and review framework (EARF) and 6 initial environmental examinations (IEE) including environmental management plans (EMP) for the 6 pilot subprojects were prepared in line with ADB’s Environmental Assessment Guidelines (2003) and the Environment Policy (2002) during project preparatory technical assistance (PPTA). Upon the PIA Consultant’s mobilization in July 2011, these IEE reports were updated by the PIA Consultant to reflect detailed design, include changes in demographic and social information, budget for environmental monitoring, public consultation and information disclosure, and the grievance redress mechanism, among others. The EARF was also updated by PIA Consultant and submitted with Initial Environmental Examination (IEE) reports. The EARF was approved by ADB together with the Bank’s approval of SARs of pilot subprojects. Environmental Protection Commitments required under Vietnamese law were submitted, registered, and accepted by the relevant district PCs and their environmental protection departments. 61. During the batch-2 Subproject selection stage in early 2013, the proposed subprojects were screened for environmental impacts as well as criteria such as: demographic characteristics, water supply and sanitation status, expected water sources for water supply and total cost. IEE reports were prepared for each of the 8 batch-2 Subprojects and included a new REA checklist with an added Checklist for Preliminary Climate Risk Screening, which was not available at the time of SAR preparation for pilot (batch 1) Subprojects. The environmental assessment procedure for batch-2 subprojects adhered to Safeguards Policy Statement (SPS) 2009. The IEE reports comprised the fourth volume among 7 volumes of the Subproject Appraisal Report (SAR). The IEE reports were reviewed by ADB and considered responsive to SPS (2009) requirements. The batch-2 subproject IEEs were disclosed on the project website in July 2016.

62. The quality and relevance of the environmental safeguard documents is considered satisfactory.

63. Scope changes. The original design scope proved to be sound for most of the components. However, two IEE reports and the corresponding EMPs required updating to address changes. For the pilot Subproject of Ha Tinh province, the booster pump station was relocated. In Quang Nam batch 1 Subproject, the location of the water treatment plant (WTP) was changed to another hamlet, where a new group of affected people was identified. The Environmental Protection Commitment (EC) of the Quang Nam pilot Subproject was also revised by the PPMU, re-registered and accepted by the District People’s Committee in compliance with environmental regulations of Viet Nam. All changes were updated in the final IEE reports of Ha Tinh and Quang Nam pilot Subprojects. Negligible changes applied for the other pilot Subprojects in Thanh Hoa, Nghe An, Quang Binh and Binh Dinh, which did not warrant an update of the IEE reports.

64. For batch-2 Subprojects, an IEE addendum was prepared for each IEE to reflect minor modifications made at the detailed design stage compared to the SAR preparation stage. These changes did not materially affect the findings of the IEE reports of the batch-2 subprojects. The updated IEEs were formally endorsed by CPMU and PPMU, and submitted to ADB. For the Thach Ha Subproject in Thanh Hoa Province, on 29th August 2016, the People’s Committee of Ha Tinh Province issued the Document No. 4293/UBND-NL to agree with the proposal of Ha Tinh

82 Appendix 10

Department of Planning and Investment to supplement and adjust the Subproject through building a preliminary settling pond to improve the raw water quality and extending the distribution network to Tam Long and Huong Dinh villages in Quang Loc commune, Can Loc district, Ha Tinh province. The IEE for Thach Ha Subproject was updated accordingly and submitted to the ADB in November 2016. The IEE for Hau Loc, Thanh Hoa subproject was updated and submitted to the ADB in February 2017 to reflect the additional borehole and related items. B. Institutional Setup for Environmental Management, Monitoring and Supervision 65. An environmental management system has been defined in each EMP, and was established under the guidance of the PIA Consultant. CPMU had overall environmental management coordination responsibility. CPMU assigned one environment officer (EO) to coordinate environmental management requirements, including securing required safeguard documents and domestic environment certificates, recruiting the PIA Consultant, and monitoring and reporting to ADB. Personnel at each PPMU were designated to undertake environmental management, monitoring, supervision and reporting for their respective components. Construction of the subprojects was supervised by construction supervision companies (CSCs). All civil works contractors had designated staff from their site management assigned to environment management, safety and internal monitoring. These took part in environmental training, conducted internal monitoring, and prepared periodic reports to the CSC and the PPMUs. 66. EMP Implementation by Works Contractors. During the construction phase, the implementation of the EMP was the responsibility of the works contractors which included the appropriate and timely application of the mitigating measures stipulated in the approved EMP. Separate works contracts were procured for each subproject. The application and implementation of the mitigation measures were to provide the safeguards that would control and reduce, if not eliminate unwanted effects during subproject implementation. The works contractors conducted raw water quality analysis during the Detailed Design (DD) phase to verify any changes of raw water quality and to determine necessary adjustment to the water treatment process. Another analysis of raw water quality was undertaken at the end of construction phase of each subproject to detect any changes in raw water quality. 67. Environmental supervision and monitoring by PPMUs. Each PPMU assigned one qualified environment officer to supervise and monitor environmental management requirements. Their performance is rated generally satisfactory, as they required substantial support from the PIA Consultant. During subproject preparation phase, the EO were responsible for ensuring that all EMP requirements were reflected in the bidding documents and the contracts were followed by the contractors. 68. Construction supervision consultant (CSC). During construction, the inspection, evaluation and recording of compliance with the EMP as implemented by the contractors were undertaken by the CSC, assisted by the PIA Consultant. CSCs were recruited separately for each subproject. The CSCs carried out weekly and monthly inspections and maintained records of the design and build (D&B) Contractor’s mitigation measures and activities, which were prescribed in the approved EMP of each subproject. The responsibilities of CSCs covered the period to the end of the commissioning stage including certification of construction materials, equipment and items and final checking and acceptance for handing over facilities for operation. The performance of the CSCs with regard to environmental protection and construction safety is rated generally satisfactory. No major non-compliance with the EMP were observed and/or reported. However, construction safety remained an issue throughout project implementation. Low safety culture on construction sites is a systemic issue in Viet Nam, especially on small works contracts where

Appendix 10 83

adherence to occupational safety standards (most importantly the provision and/or systematic use of personal protective equipment, PPE) is difficult to achieve. 69. Supervision and coordination activities carried out by the PIA consultant. The performance of the PIA consultant with regard to environmental safeguards is rated satisfactory. During SAR preparation, the PIA Consultant provided support to CPMU and PPMUs in terms of environmental safeguard due diligence; contributed to the bidding documents for the D&B construction packages and CSC packages. Environmental management and monitoring requirements were adequately reflected in all bidding documents, as well as all works contracts. 70. During the construction phase, the PIA Consultant provided support and advice to the CSC and D&B Contractors as well as the operating units (OUs) in implementing the EMP and assisted CPMU in compiling monitoring reports for submission to ADB. The PIA Consultant also carried out regular field visits for inspection of environmental performance during subproject implementation. 71. EMP Implementation by Operating Units. During the O&M phase, the plant operating units (OU) are responsible for adherence to mitigation measures and activities stipulated in the EMP which are primarily focused on safe operation of the WTP and distribution of treated water including: (i) testing of raw water quality and treated water quality, (ii) monitoring of the quality of effluent from the WTP sludge settling tank, and (iii) applying the health and safety regulations specified in the EMP. Raw water quality testing parameters included: pH, Hardness (calculating by CaCO3), Manganese (Mn), Chloride (Cl-), Flouride (F-), Permanganate index, Fe, Ammonium (NH4+), Coliforms, and E.coli. In addition to the raw water indicators, treated water quality analysis includes: color, odor, turbidity, and the chlorine residual. The OU are also required to carry out O&M procedures in accordance with the O&M manual. As of February, 2018, performance was varied across subprojects, with the majority performing as anticipated, however, the subprojects that are not able to cover their operations and maintenance costs, such as those in Quang Nam, did not provide evidence of regular water sampling. C. Environment Safeguards Measures Undertaken

72. The EMP in the subproject IEEs defined the environmental protection measures for the project. Overall, there has been no significant negative impact to environment, health and safety near the project sites during construction and early operation. 73. Overall, implementation of the EMP was satisfactory. The main anticipated construction-related impacts identified at subproject appraisal included dust from construction activities, noise from powered mechanical equipment, potential adverse impacts due to quarrying of construction material, siltation of adjacent water bodies during earthwork, construction wastewater and solid waste management, and temporary traffic disturbance during pipe laying. All civil works contracts made reference to the EMPs, and contained provisions on occupational and community health and safety, pollution prevention and abatement, emergency preparedness, and protection of cultural relics. The civil works contractors’ compliance with the EMPs was monitored daily by the CSCs, regularly by the PIA Consultant and periodically by ADB during review missions. It is concluded that adverse environmental impacts during construction were minor, and were mitigated to acceptable levels. 74. Mitigation measures for pollution control were generally effective. Contractors used low-noise equipment and applied noise mitigation measures at sensitive locations in accordance with the EMP requirements. No excessive siltation of nearby water bodies was observed. Construction

84 Appendix 10

materials were supplied from licensed quarries. Community safety was generally satisfactory. Construction sites were fenced where necessary, and signs were posted at construction sites to warn local residents about the construction hazards. However, the contractors’ compliance with occupational safety requirements was only partly satisfactory and remained an issue throughout the construction period. Despite the relatively low safety culture of contractors, no serious occupational accident occurred during project implementation. Workshops for traffic coordination were conducted, involving the PPMUs, CSCs, contractors, and the local traffic management department for the affected sections of some busy roads. No major construction accident occurred at the project sites. 75. One issue involved cracks detected on masonry walls, gates, concrete yards and other structures in the vicinity of borehole production well of Thanh Hoa pilot subproject. This issue arose one year after the WTP had been in operation. Hau Loc DPC approved the cost estimation to support the affected households in Tien Loc commune in Decision No. 14346/QD-UBND dated 28 December 2016, and the Department of Agriculture and Rural Development (DARD) reported to Thanh Hoa PPC on 7 March 2017 that funds were allocated for that purpose. 76. The project has had no significant adverse environmental impact during operation. Treated water quality is monitored by the OUs to ensure consumer health and safety, and compliance with the relevant quality standard is ensured (QCVN 01: 2009/BYT). Treatment methods vary by subproject. Sludge from the WTP is treated by, most commonly by lagoon or settling tank and drying beds prior to disposal at designated disposal sites. Safety equipment is provided at all WTPs, including ventilation fans for chemical mixing rooms, fire extinguishers, back-up water for fire extinguishing, access control and warning signs. Along the pipelines, fire hydrants have been installed and are always ready for using at any time.

D. Reporting, information disclosure 77. Reporting. During the construction phase, inspection and evaluation records were consolidated by the CSC in their Quarterly Environmental Monitoring Report. The CSC’s collation and synthesis of the Works Contractors’ compliance to the requirements of the EMP were summarized in a matrix attached with to reports submitted to CPMU and PIA Consultant within 15 days after the end of each quarter. During the operation phase, the OU consolidate records on raw and treated water quality, occupational health and safety, and submit quarterly reports to the CPMU and PIA Consultant. 78. Every quarterly progress report to ADB included an environmental section highlighting environmental concerns and follow-up on activities in compliance with environmental safeguards. Submission of environment monitoring reports to ADB was initially not satisfactory. Following the 2014 review mission, semiannual safeguards monitoring reports were prepared and submitted to ADB, covering the period January 2014 to December 2016. In total, 31 monitoring reports were submitted to ADB and disclosed on the project website. 79. Information disclosure. Information disclosure during project preparation and implementation is rated party satisfactory. As mentioned above, while all batch-2 subproject IEEs and the semi-annual safeguard monitoring reports were disclosed timely, the EARF and the IEEs for the pilot subprojects were disclosed late on the ADB website. However, all potentially affected people were provided access to safeguard documents through other channels. Summaries of the IEE reports of all 14 subprojects were disclosed at information boards of the concerned commune PCs for at least one month prior to construction. The soft copies of the full IEE reports were disclosed to any third party upon request. All final IEEs and their updates together with the

Appendix 10 85

updated EMPs (in Vietnamese language) were distributed to the related PPMUs and commune PCs for information dissemination and disclosure. Moreover, key information regarding each subproject was disseminated to potentially affected people and project beneficiaries through the loud speaker system of the Subproject communes. The semiannual safeguards monitoring reports were also translated into Vietnamese and distributed to PPMUs for disclosure to any third party upon request. 80. In addition, details on implementation status and lessons learnt from the project have been published and updated on the website of the National Centre for Rural Water Supply and Environmental Sanitation (NCERWASS) (http://ncerwass.mard.gov.vn/) since January 2014. E. Public Consultation, Grievance Redress 81. Per the approved EARF, two rounds of public consultations on environmental issues were required during IEE preparation and implementation for each subproject. The first round of public consultation was held during FS and IEE preparation to disclose information on all aspects of each subproject and to present and discuss initial findings of the IEE. The second round of public consultation was held at the time of construction commencement in order to inform potentially affected people about: (i) commencement time of construction, (ii) duration of construction, (iii) EMP requirements and responsibilities, and (iv) introduction of subproject site office, the grievance redress mechanism and contact details and telephone numbers of contractors, CSCs and PPMU staff. 82. For subprojects which did not involve new groups of affected people or beneficiaries after FS approval, two public consultation meetings were conducted; otherwise, additional consultation meetings were held as required. One additional public consultation meeting was conducted for the subproject in Tay Giang District, Quang Nam Province, after FS approval as the location of the WTP was changed, resulting in a new group of affected people and beneficiaries. For the case of Loc Ha district, Ha Tinh province, a supplementary public consultation meeting in Xuan Yen was carried out as it was included in the service coverage area during the construction phase. Public consultation during project preparation and implementation is rated meaningful and adequate. 83. Grievance Redress Mechanism. A Grievance Redress Mechanism were prepared at SAR stage and recommended for the pilot subprojects. The GRM was revised following ADB’s request to provide more detailed guidance on the procedure of filing written complaints from communal level to provincial level during SAR preparation of batch-2 Subprojects. For each Subproject, a site office was established to receive and resolve complaints and disclose relevant information to the public. The Subproject site offices were located at the construction sites. However, the GRM was never formally accessed by potentially affected people. There have been only oral enquires on the issues that local people did not fully understood or wanted the contractor to address urgently, and no written complaint has been received. These oral enquiries have been addressed and resolved by CSCs, PPMUs and OUs. F. Environment Training – Capacity Building 84. Environment training and capacity building was meaningful and help strengthen the capacity of key project stakeholders in ensuring compliance with the approved IEEs and EMPs. In total, 10 courses covering ADB’s safeguards policy requirements, GoV environmental laws and regulations, and environmental compliance and monitoring requirements were facilitated by the PIA Consultant. Participants included WSCCs and HSPs from the Subproject communes, FS

86 Appendix 10

Consultants and CSCs of pilot and batch-2 Subprojects, PPMU staff and CPMU staff in charge of environmental management of the project and subprojects. 85. In addition to the formal training courses, during field trips conducted on a quarterly or semiannual basis, the PIA Consultant provided hands-on training and guidance on checking compliance with approved EMPs, Occupational Safety and Health (OHS), and environmental policies and regulations of the ADB and GoV during construction and operation stages. Also, on-the-job support via phones and emails was provided by the PIA Consultant to clarify any queries from PPMU’s staff and WTP operators. Table A10.1: Summary of Training in Implementation and Compliance with Environmental

Safeguards Name of training course No. of

courses/ no. participants

Time Venue

Social safeguards policy of ADB (environment and resettlement) for PPMUs, CSCs and contractors of pilot Subprojects and FS consultants of batch-2 Subprojects

01/ 38 02/4- 04/4/2014

Tam Ky city- QN

Environmental monitoring during Subproject implementation for WSCCs and HSPs

02/ 42 26/5- 29/5/2015

Dong Hoi city- QB

01/ 30 23/6-24/6/2015

Vinh city, NA

01/ 34 26/6-27/6/2015

Thanh Hoa city, TH

01/ 34 6/7-8/7/2015 Quy Nhon city, QN

01/ 20 10/7-11/7/2015

Tam Ky city, QN

01/ 27 26-27/11/2015

Ha Tinh city

Supervision during construction for CPMU, PPMUs and CSCs of batch-2 Subprojects of Thanh Hoa, Nghe An, Quang Nam and Binh Dinh provinces

01/ 22 30/9-1/10/ 2015

Da Nang city

Supervision during construction for CPMU, PPMUs and CSCs of batch-2 Subprojects of Ha Tinh and Quang Binh provinces

01/ 9 26-27/11/2015

Ha Tinh city

Source: Asian Development Bank.

G. Conclusion 86. The overall performance of the project on EMP implementation, environmental monitoring and reporting is rated generally satisfactory. The overall implementation/compliance status of 14 Subprojects was rated from partially satisfactory to satisfactory in all reporting periods. Negative environmental impacts during construction and operation phases have been mitigated by proper measures implemented by the contractors and operators. The roles and responsibilities of the relevant institutions for environmental management, including the contractors, the PPMUs, the PIA Consultant were adequately fulfilled. Loan covenants on environmental aspects have generally been complied with. Local communities and the general public were adequately consulted during project preparation and implementation. There are no outstanding issues with regard to environmental safeguards. 87. Construction safety has been a key concern during project implementation, resulting primarily from a lack of safety culture by works contractors, and the inability of the CSC to enforce safety requirements. This issue is systemic and not limited to the project. Increased attention to construction safety is required for future projects, especially if these involve small works contracts

Appendix 10 87

which often recruit local workforce with very limited awareness on construction safety. Resources specifically dedicated to construction safety should be allocated in the project management support consulting services to allow for safety training, supervision and enforcement.

III. LAND ACQUISTION AND RESETTLEMENT PERFORMANCE A. Introduction

88. The project consisted of six batch 1 sub-projects and eight batch 2 sub-projects. The Project was categorized as B for involuntary resettlement. A Resettlement Framework and Draft Land Acquisition and Resettlement Plan (LARP) for Tien Loc commune, Hau Loc district, Thanh Hoa province sub-project were prepared in 2009 during project preparation. Final LARPs for all batch 1 sub-projects were prepared in 2015. LARPs were prepared in 2016 for eight Batch 2 sub-projects. B. Land Acquisition and Resettlement Impacts.

89. The project required land for access to water sources, for the construction of water treatment plants (WTP) and for raw water, transmission and distribution pipelines. Where possible, public land was accessed to minimize disruption and to avoid land ownership and resettlement issues. 90. The Project affected a total of 797 Households (approximately 3,263 affected persons) over 14 sub-projects. Of these, 45 households (212 persons) were severely affected. None of the sub-projects required relocation of any household. A total of 488,800 m2 of land was acquired for the project: 193.710 m2 of land was permanently acquired for construction of water treatment plant and auxiliary works, while 295.090 m2 was temporarily affected, mainly for installation of distribution pipelines. Permanent land acquisition affected 238 HHs (1 of which was ethnic minority), while 559 who temporarily lost land for construction and distribution pipelines, out of which 31 are ethnic minority. 91. LARPs were updated to reflect the actual resettlement impacts. Thus, the actual resettlement impacts are those reflected in the final resettlement planning documents. C. Compensation Policies and Standards 92. Project resettlement principles and entitlements as described in the agreed Resettlement Framework (September 2009) and LARPs served as the basis for computing levels of compensation and other entitlements, including various cash allowances. The project resettlement policy was based on Vietnamese laws (e.g., The Land Law No. 13/2003/QH11, Decree No. 197/2004/ND-CP, and Decree No. 17/2006/ND-CP) and ADB’s relevant policies ((i) Involuntary Resettlement (1995) and Operations Manual F2/BP (September 2006), and (ii) Indigenous People (1998) and Operations Manual F3/BP (September 2006)). 93. The entitlements of affected persons (AP) were presented in the Entitlement Matrix in the LARPs and corresponded to the impacts identified during the process of Detail Measurement Survey (DMS) that was carried out after the detailed design had been approved by competent authorities.

94. Costs and Budget for Resettlement: The compensation rate for affected assets to be applied in LARP was based on the results of the Market Replacement Cost Survey that was

88 Appendix 10

carried out by an Independent Appraisal Company during LARP updating. Once the total compensation budget for the sub-project was determined, the Provincial People’s Committee (PPC) had the responsibility to provide sufficient and timely funding for the payment of compensation. The Provincial Project Management Units (PPMU) and District Compensation and Resettlement Committees (CARC) were responsible for direct payments to the affected persons (APs). Total compensation paid was approximately $600,000 and is detailed below. D. Resettlement Implementation and Monitoring 95. Detailed Measurement Survey. DMS was carried out by the CARCs, with support from Project Implementation Assistance (PIA) Consultant, and the active participation of affected households. Public consultations were held after the DMS to discuss the findings with affected households. The consultations were led by PPMU, CARC, and Commune Peoples’ Committees (CPCs). Detailed compensation plans were disclosed on the notice board of CPC.

96. Consultation and Information Disclosure. Public meetings and consultations were held during which the following information was disclosed: (i) compensation policy, rehabilitation and assistance measures, and the project implementation schedule; (ii) the results of replacement cost survey results; and, (iii) entitlements of APs and the complaint and grievance redress mechanism. The opinions of the APs about compensation unit prices for affected assets were collected. A Project Information Booklet (PIB) was prepared and provided to APs and their communities. ADB-approved updated LARPs and Land Acquisition and Resettlement Completion (LARC) reports were disclosed to AHs.

97. Grievance Redress Mechanism. A four-stage grievance redress mechanism (GRM) was established to resolve the complaints and grievances of APs related to the land acquisition, resettlement and compensation, in a timely and satisfactory manner. APs had the right to lodge their complaints related to any aspects in the requirements of land acquisition and resettlement, compensation policy, entitlements, rate and compensation payment, strategies and procedures for resettlement and other rehabilitation assistance programs. In the grievance redress process, CPCs and CARCs play a role in reconciliation at the commune level while District People Committee (DPC) is responsible for redress of grievance at the district level, and Provincial People Committee PPC at the provincial level. The Court is the final level to resolve grievance of APs. The grievance redress mechanism was disclosed to APs during public meeting and consultation. Only one sub-project5 received questions/complaints related to resettlement and these were addressed at the commune level. There are no outstanding or unresolved resettlement issues.

98. Monitoring of LARP Implementation: A monitoring program was established for close monitoring of LARP implementation. This was to ensure that the project resettlement implementation complied with policies of resettlement as stated in the LARP and that the project key resettlement objectives were achieved. The PPMU was responsible for the overall internal monitoring, however, because the impact was minimal, the Resettlement Internal Monitoring Quarterly Report was merged into the project’s Quarterly Progress Report. Beginning 2016, the PIA Consultant prepared Semi-annual Safeguard Monitoring Reports

99. The major social safeguard issues experienced by the project included:

5 Tien Loc commune, Hau Loc district, Thanh Hoa Province.

Appendix 10 89

(i) Commencement of compensation payments and construction for five batch 1 sub-projects prior to approval of the updated resettlement plans. ADB instructed PPMUs to stop construction and suspended payments because of this compliance issue. Corrective actions were successful.6

(ii) additional mid-project land acquisition due to rerouting of pipe lines and geographical issues; and

(iii) extended negotiations on compensation with affected people and companies traversed by the subprojects.

100. Conclusion and recommendations. All required social safeguards documents, such as LARPs, due diligence reports, LARC reports and validation reports were completed for all the subprojects and approved by the ADB. After the initial abovementioned compliance issues, resettlement activities for the project were undertaken in accordance with the resettlement framework and LARPs. The livelihood restoration programs for the seriously affected households were conducted based on their desire. 101. As per the updated resettlement plans, the income restoration program involved provision of several types of support to eligible HHs (vulnerable and severely affected households). For example, in Loc Ha, Ha Tinh, the income restoration program included provision of transition subsistence allowance, cash support for job change, and support for vocational training. The sub-projects resulted in few severely affected households; and there were also only a small number of vulnerable AHs. Thus, those entitled to IRP support were limited in number.

102. All IRP support as mentioned in the updated RPs were provided. For some sub-projects, while vocational training courses were offered to eligible AHs as reported in the safeguards monitoring reports, the AHs indicated that they wanted to seek vocational training courses on their own. Thus, the Project provided them with additional cash assistance equivalent to the estimated cost of a training course.

103. Resettlement Due Diligence Reports and Land Acquisition and Resettlement Completion Reports confirmed satisfaction of AHs with compensation and support provided. 104. 105. Timely preparation and submission of safeguards documents would have improved project implementation and enabled the project to remain on schedule. Several issues affected project implementation: (i) stakeholders’ understanding of the scope and impacts of land acquisition on affected people, (ii) lack of experience of PPMU staff in charge of resettlement, and (iii) delays in communication of changes in resettlement plans; and (v) delays in the identification of the entitlements of affected people due to the difference between government and ADB policies.

106. Closer collaboration and timely communication among stakeholders could have resolved land acquisition issues more efficiently. The staff of PPMU should be aware of and well trained on the Donor’s social safeguard policy and resettlement implementation procedures to make sure that they conform with these policies and requirements.

107. Overall, people benefited from the development impacts of the project, and the manner in which challenges to social safeguards were managed, especially the cessation of construction

6 The PIA carried out Detailed Measurement Studies and updated the LARPs to ADB approval and certified payment

of compensations and resettlement activities by preparing Due Diligence Reports (DDR).

90 Appendix 10

activities and halting of payment transfers until corrective actions were successful in order to address updated resettlement plans, demonstrated strong learning and leadership in the project’s land acquisition and resettlement management.

Appendix 10 91

Table A10.2: Summary of Losses and Compensation

Province District

Permanent land loss

Temporary land loss

Compensation and allowances paid to AHs & CPC

Other costs and expenses7

Total amount

Subproject Area (m2) No. HH

Area (m2)

No. HH

D USD D USD D USD

Thanh Hóa

Hậu Lộc 4,910 81 23,900 0 683,599,000 32,550 39,441,000 1,880 723,040,000 34.340

Yên Định 4,150 14 36,930 5 657,150,000 30,090 45,273,000 2,070 702,423,000 32.160

Thiệu Hóa 16,960 56 19,400 0 2,659,378,000 126,650 127,939,000 6,090 2,787,316,000 132.700

Nghệ An Diễn Châu 37,070 3 0 0 2,086,899,900 99,380 50,243,000 2,390 2,137,143,000 101.770 Yên Thành 50,580 0 15,920 0 2,729,485,000 124,980 81,496,000 3,730 2,810,981,000 128.7010

Hà Tĩnh Lộc Hà 6,370 5 19,930 67 659,483,000 32,630 26,700,000 1,270 686,183,000 32.680 Thạch Hà 3,240 0 5,810 33 26,686,000 1,240 5,500,000 260 32,186,000 1.490

Quảng Bình Bố Trạch 16,830 0 25,260 0 0 0 0 0 0 0 Tuyên Hóa 10,330 5 30,690 0 945,080,000 43,270 106,958,000 4,970 1,052,038,000 48.170 Lê Thủy 10,010 8 31,860 0 771,613,000 35,330 84,653,000 3880 855,887,000 39.190

Quảng Nam Tây Giang 14,410 36 6,800 0 444,270,000 21,160 7,542,000 360 451,812,000 21.510 Điện Bàn 10,020 13 21,390 4 186,984,000 8,560 46,737,000 2,140 233,721,000 10.700

Bình Định Tây Sơn 1,900 14 35,000 160 88,514,000 4,220 0 0 88,514,000 4.220 Hoài Nhơn 6,930 3 22,200 290 220,955,000 10,040 53,000,000 2,410 273,955,000 12.453

Total 193,710 238 295,090 559 12,160,094,000 570,090 675,482,000 31,450 12,835,197,000 600,080

Source: Executing Agency.

7 Exclusive of the contingency cost.

92 Appendix 10

IV. INDIGENOUS PEOPLES AND ETHNIC MINORITY PERFORMANCE 1. The project provinces - Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Nam and Binh Dinh, are located in the coastal central region of Vietnam. In these provinces, the subprojects were located in areas with high demand for improved piped water supply systems and were selected based on the criteria of: (i) poverty ratio (40%); (ii) ethnic minority ratio (30%); and (iii) water supply coverage ratio (30%). 2. The project was classified as category A for indigenous peoples. According to the Project’s Ethnic Minority Development Framework (EMDF), a subproject-specific Ethnic Minority Development Plan (EMDP) for each subproject involving ethnic minorities more than 50% of the population was to be made. In all of the Subprojects ethnic minorities represented less than 50% of the total population. Therefore, all ethnic minority activities were incorporated in the overall subproject implementation. In all of the subprojects indigenous people had equal access to the Project benefits and adverse impacts were avoided. However, in the Le Thuy subproject in Thanh Hoa province free latrine substructures for 60 poor households were built, but only a few households completed the superstructure of the latrine. The majority of those households which did not complete the superstructure belong to the ethnic minority group.

3. The project’s baseline included a number of ethnic groups in the region, varying from 3 to 28%. The groups include the Ba-na, Bru-van-kieu, Ca Rai, Cham, Chut, Co Tu, Edo Nagi, Gia Rai, Gie Trieng, Hoa, Khemer, Moung, Nung, Tay, Thai, Tho Dao, and, Xe Dang. However, the percentage of ethnic minority people in the subproject ares is relatively small (ranging from 2% to 14%), except for the subproject area of Quang Nam Province, which has a population that is 80% Co Tu and a poverty rate of 60%. The ethnic minorities in the project provinces are integrated into the mainstream population in terms of language, schooling, and clothing. The subprojects did not have adverse cultural effects on these groups. The ethnic minority people benefited from both the water and the sanitation services provided by the project.

4. The PPMUs undertook social analysis for all the subprojects to ensure that: (a) full participation of ethnic minorities is promoted in project activities, including, among other things, the capacity development and training activities; (b) the needs of the ethnic minorities are appropriately met especially in the areas with a high proportion of ethnic minority people; (c) the WSS commune committee has reasonable representation from the ethnic minority groups; and (d) all activities all consistent with ADB’s Policy on Indigenous Peoples.

5. In terms of resettlement, the project affected 238 HHs, 1 of which was ethnic minority, who lost permanent land for construction of WTP and auxiliary works. There were 559 who temporarily lost land for construction and distribution pipelines, out of which 31 were ethnic minority.

6. Overall, ethnic minorities were not adversely or disproportionately affected and benefited in the same manner as other project beneficiaries.