LPTAP Operational Manual PSC APPROVED 01MAR07

LIGNITE POWER TECHNICAL ASSISSTANCE PROJECT ‐LPTAP‐

OPERATIONAL MANUAL 2007

PSC MEETING APPROVED:

Original Version 9 November 2006

Revision 1: 1 March 2007

IDA Approved:

Revision 1: 5 March 2007

Operational Manual

‐ Contents ‐

Acronyms used............................................................................................... 4 Preamble: ....................................................................................................... 5

INTRODUCTION ........................................................................... 6 PART 1

PART 2. PROJECT IMPLEMENTATION ARRANGEMENTS ........................... 7 Chapter 2.1 Short Project description ........................................................... 7 Chapter 2.2 Project Implementation Arrangements ................................... 8 2.2.1 Identification of Project stakeholders ................................................................... 8

2.2.1.1 Ministry of Energy and Mining ................................................... 9 2.2.1.2 Ministry of Finance and Economy (MFE) ................................. 10 2.2.1.3 Ministry of Environment and Spatial Planning (MESP) ............ 10 2.2.2 2.2.3

The Project Steering Committee (PSC) ........................................................... 11 LPTA Project Office ......................................................................................... 21

2.2.3.1 LPTA Project Office functions ................................................... 22 2.2.3.2 Project Manager ................................................................. 26 2.2.3.3 Task Managers .................................................................... 28 2.2.3.4 Project Assistant ................................................................. 33 2.2.3.5 International Procurement Advisor .................................... 35 2.2.3.6 Local Procurement Specialist .............................................. 35 2.2.4

Terms of engagement ..................................................................................... 36

Chapter 2.3 Project Cycle Management .................................................... 37 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5

Up‐front activities until effectiveness ............................................................ 37 Project Launch ................................................................................................ 37 Implementation .............................................................................................. 38 Monitoring and Evaluation ............................................................................. 38 Project Closure................................................................................................ 40

FIDUCIARY RESPONSIBILITIES .................................................... 41 PART 3 Chapter 3.1 Procurement .......................................................................... 41 3.1.1 General Provisions .............................................................................. 41 3.1.2 Main Principles ................................................................................ 41 3.1.3 Conflict of Interests ......................................................................... 43 3.1.4 Eligibility of Government‐owned Enterprises .................................. 44 3.1.5 Misprocurement .............................................................................. 44 3.1.6 Procedural Matters ......................................................................... 45 2

3.1.7 Roles and Responsibilities of the PO ............................................... 48 3.1.8 Roles and Responsibilities of the Implementing Ministry ............... 48 3.1.9 Procurement of Works .................................................................... 49 3.1.10 Procurement of Goods ................................................................. 49 3.1.11 Procurement of Non‐Consulting Services .................................... 50 3.1.12 Selection of Consultants ............................................................... 51 3.1.13 Training Activities ......................................................................... 59 3.1.14 Incremental Operating Costs ........................................................ 60 3.1.15 Documents clearance/Prior and Post Review by the World Bank 60 3.1.16 Records Management/Filing ........................................................ 61 3.1.17 Standard Bidding Documents ....................................................... 63 Chapter 3.2 Financial Management ........................................................... 63 3.2.1 3.2.2 3.2.3 3.2.4 3.2.10 3.2.11 3.2.12

Implementing Scheme .................................................................................... 63 Flow of funds .................................................................................................. 65 Accounting Policies and Procedures............................................................... 66 Petty cash procedures. ................................................................................... 69 Terms of Reference for the PO Financial Management Staff ........................ 74 Terms of Reference for the Audit ................................................................... 75 Supervision Plan: ............................................................................................ 80

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Acronyms used

EA

Environmental Assessment

ERO

Energy Regulatory Office

ESSF

Environmental and Social Safeguards Framework

FMIS

Financial Management Information System

IBRD

International Bank for Reconstruction and Development

ICMM

Independent Commission of Mines and Minerals Board

IDA

International Development Association

LPTAP

Lignite Power Technical Assistance Project

KTA

Kosovo Trust Agency

MEM

Minister of Energy and Mining

MESP

Ministry of Environment and Spatial Planning

MFE

Ministry of Finance and Economy

MLSW

Ministry of Labor and Social Welfare

OM

Operational Manual

PISG

Provisional Institutions of Self‐Government

PIP

Project Implementation Plan

PO

Project Office

PM

Project Manager

PPWG

Project Procurement Working Group

PSC

Project Steering Committee

SESA

Strategic Environmental and Social Assessment

SRSG

Special Representative of the Secretary‐General of the United Nations

TA

Technical Assistance

UNMIK

United Nations Interim Administration Mission in Kosovo

WB

The World Bank

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Preamble:

This Operational Manual (OM) sets out the principles and working procedures for all stakeholders involved with the Kosovo Lignite Power Technical Assistance Project (LPTAP, LPTA Project or the Project), pursuant to a grant (the Grant), funded by the International Development Association (IDA or the Association), which is part of the World Bank (WB or Bank), made to the United Nations Interim Administration Mission in Kosovo (UNMIK), for the benefit of the Kosovo Provisional Institutions of Self‐Government (PISG).

This OM must be used in connection to a series of other primary documents, including: the Financing Agreement, the Project Appraisal Document (PAD), the Annual Work Plan derived from the Project Implementation Plan, and the relevant World Bank Guidelines with regard to procurement and financial management of projects funded by the Bank.

How does the OM help and how should it be used?

First, the OM is designed to guide the main organizers involved in the management, implementation, monitoring and review of the Project, namely the Ministry of Energy and Mining (MEM), the Project Steering Committee (PSC), and the Project Office (PO).

Second, the OM represents a guiding map for other parties involved or affected, including members of the public. Therefore, the OM should be publicly disclosed on the MEM website and the Project website.

Third, the development and use of the OM as main working tool in the implementation of the LPTA Project will ensure transparency in the implementation of the Project.

Moreover, this OM must be seen as a framework‐providing document that lays the foundation of development by the PO of other materials and working tools, as well as a detailed explanation of the provisions contained herein.

In summary, the OM is a framework planning tool for the organization of work of the Project stakeholders and the PO. It should be kept as a “living document”, not as a document “to be

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stored away in a drawer or in an archive”. Therefore, the OM should be revised periodically, as required, and the PSC and PO should consult the OM regularly. The initial version of the OM, as well as all revised versions, require the approval of the PSC. In addition, all versions of the OM must be approved by the IDA, and the initial approval by the IDA of the OM is a condition of effectiveness of the IDA funding of the Project.

PART 1

INTRODUCTION

Chapter 1.1

Country Context and Project Objectives

UNMIK and the PISG have developed a comprehensive strategy for the Kosovo energy sector (Energy Strategy of Kosovo, 2005‐2015, July 2005) which aims to address the short‐to‐medium‐ term issues and challenges, and put the energy sector on a path of long‐term growth in line with EU Directives and Standards. Donor assistance and support for several elements of the strategy are ongoing, and further assistance is also being discussed.

The World Bank is providing support to the implementation of certain aspects of the Energy Strategy through the proposed Lignite Power Technical Assistance Project with grant funds of USD $8.5 million.

The objectives of the proposed LPTAP are to: i)

help the PISG strengthen the enabling policy, legal and regulatory frameworks conducive to new investments in the energy sector; and

ii) Assist the PISG in a pilot transaction for attracting private investment into building new capacity for lignite thermal power generation guided by principals of environmental and social sustainability.

The LPTAP objectives will be attained through: a) Developing various policies, legal and regulatory instruments in the energy consistent with international good practices; b) Developing technical assistance for organizing bidding and negations leading to financial close on new sector investment.

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PART 2.

PROJECT IMPLEMENTATION ARRANGEMENTS

Chapter 2.1 Short Project description

The LPTAP includes 4 components, and various subcomponents, as follows: •

•

Component 1: Sector Policy, Legal, Regulatory and Safeguards Advice o

Subcomponent 1‐ Sector Policy, Legal and Regulatory Advice

o

Subcomponent 2‐ Safeguards Framework

Component 2: Mine and Power Plants Analyses: o

Subcomponent 1‐ Investment Options Review

o

Subcomponent 2 – New Power Plant Development and Technical Analysis

o

Subcomponent 3 – Renewable Energy, cogeneration and energy efficiency

•

Component 3: Capacity Building.

•

Component D: Transaction Advisor.

Full descriptions of these components and subcomponents are found in the Financing Agreement and the Project Appraisal Document.

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The overall presentation of the Project components is shown in the following table.

Table 2.1: LPTA Project Overview seen through the outcomes indicators Component 1. Sector Policy, Legal, Regulatory Component 2. Technical Studies and Safeguards Framework;

2.1. Assessment of the Sibovc Mine

1.1.1. Strategic Environmental and Social

Development Plan

Assessment (SESA) Draft Regulation

2.2. Assessment Study from New Power Plant

1.1.2. Draft Resettlement Policy Framework

and Associated Facilities

1.1.3. Draft Land Acquisition legislation

2.3. Policies and Strategies for Renewable Energy

1.1.4. Draft regulatory instruments and other

Options

required draft legislation

Component 3. Capacity Building for key

1.1.5.Draft Contractual agreements and legal

ministries and PO

opinions

3.1. Setting up and functioning PSC and PO, and

1.2.1. Development of SESA sector specific EAI

training of MEM, ERO and ICMM in major

Handbook (TOR preparation for SESA, Social

project development procedures

Assessment and Resettlement action plan)

3.2. Communication and outreach strategy for

1.2.2. Baseline Monitoring and Data Collection

MEM to facilitate consultations

and implementation of environmental data

Component 4. Transaction Advisor

registration and reporting system

4.1. Assistance of Kosovo authorities in

1.2.2..Training of MESP staff in involuntary

preparing the bidding process and negotiations

resettlement and environmental protection.

with the selected strategic investor(s).

Chapter 2.2

Project Implementation Arrangements

2.2.1 Identification of Project stakeholders

A comprehensive list of local institutional stakeholders, relevant line‐ ministries, agencies will contribute with significant effort and commitment in the successful completion of this Project.

Nevertheless, within the implementation arrangements scheme the leading role will be played

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by two ministries, respectively the Ministry of Finance and Economy (MFE) and the Ministry of Energy and Mining (MEM). Thus, these ministries will have a set of distinguished responsibilities (as detailed below), although a very close cooperation is crucial in order to ensure a timely and efficiently implementation of the Project.

2.2.1.1 Ministry of Energy and Mining

The MEM will be responsible for the implementation of the Project through the Project Office.

The following responsibilities fall under its direct coordination: •

Act as counter partner for the World Bank/IDA and the co‐financiers;

•

Chair the Project Steering Committee (whose tasks and responsibilities are further detailed) convene, and lead monthly regular meetings or whenever will be necessary;

•

Host the PSC meetings within its premises or arrange an adequate meeting venue;

•

Initiate and maintain communication with the PSC members through the PO which acts as technical secretariat during and between PSC meetings;

•

Set the Project office under its subordination and offer the minimum office premises for its proper functioning at start up (office room, communication infrastructure);

•

Selection by MEM of a suitable Project Manager and key PO staff on competitively basis, based on terms of reference satisfactory to the World Bank in accordance with the World Bank services procurement procedures;

•

Conduct communication and outreach events within the specific strategy developed under the Project in order to build a consultative mechanism for stakeholders and civil society inputs;

•

Develop in close collaboration with MFE specific procedures aim to ensure proper financial accountability of the Project.

•

Ensure that the Project Office is established, and maintained during the entire duration of the Project implementation, with appropriate resources and with suitable qualified staff as per the provisions of the OM.

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2.2.1.2 Ministry of Finance and Economy (MFE)

The MFE will be responsible to: •

Appoint its duly authorized representative in the Project Steering Committee;

•

Make the disbursement, financial reporting and selection of the annual auditors as per the TOR approved at negotiations;

•

Assign a staff member as LPTA grant officer in the Grant Unit to be focal point for processing and control payments, withdrawal applications and the quarterly and annual financial statements of the Project;

•

Make all payments based on the documents prepared by PO within MEM;

•

Prepare all relevant needed documents in support for applications for withdrawal and ensure to be co‐signed be the duly authorized persons representing MFE and MEM as stipulated in the Financing Agreement;

•

Submit through UNMIK to the World Bank the withdrawal supporting documents for review and approval;

•

Work in close cooperation with the duly established financial unit within MEM in order to secure proper financial management of the Project;

•

Submit quarterly interim un‐audited financial reports, annual financial statements to the World Bank;

•

Maintain accounting books and records based on the documentation provided by MEM through PO including additional commitment information with regard to the signed contracts;

•

Set a set of appropriate accounting procedures and internal controls including authorization and segregation of duties for the Project;

•

Appoint the annual auditors based on agreed TOR acceptable to the World Bank.

2.2.1.3 Ministry of Environment and Spatial Planning (MESP)

Besides close coordination between MEM and MFE, it is expected that, for smooth Project implementation the Ministry of Environment and Spatial Planning (MESP) is going to play an important role. Therefore, its involvement implies following major responsibilities:

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•

Assign a duly authorized representative in the newly set up PSC, and participate in PSC meetings;

•

Participate in communication and outreach events aim to ensure public disclosure of the findings and recommendations of various studies to various potential affected groups of interest and process feedback before taking the necessary measures and the executive decisions;

•

Develop and implement of EIA procedures including the preparation of a sector specific;

•

Prepare the EIA Handbook;

•

Deliver in collaboration with subordinated institutes, and assisted by the PO of a training program for the environmental assessment and monitoring of environmental assessment procedures.

2.2.2

The Project Steering Committee (PSC)

The Project management structure is comprised of the following managing bodies:

a) The Inter‐ministerial Project Steering Committee (PSC) b) The Project Office (PO) set up under the MEM subordination

For policy level intervention, an inter‐ministerial body Project Steering Committee is established based on the Executive Decision no.2006/6 issued by the Special Representative of the Secretary‐General (SRSG) at March 17th 2006 in order to support management and supervision and ensure effective implementation of the LPTA Project.

The PSC is set and functions during the entire duration of the Project implementation with the same composition, resources and assigned tasks and responsibilities.

The managing body of the Project is the Project Steering Committee whose overall responsibility is to coordinate and supervise all LPTA Project operations.

The Project Steering Committee is comprised of 10 (ten) members representing the Office of SRSG’s, the Head of UNMIK Pillar IV, the Prime Minister Office, the Ministry of Energy & Mining

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(MEM); the Ministry of Finance and Economy (MFE), the Ministry of Labor and Social Welfare (MLSW), the Ministry of Environment and Spatial Planning (MESP), the Energy Regulatory Office (ERO), the Independent Commission of Mines and Minerals Board (ICMM), and Kosovo Trust Agency (KTA).

The representation in the PSC is designed to ensure participation from all key ministries and agencies that have responsibility for one or more of the aspects of the Project implementation.

The Project Steering Committee (PSC) is chaired by the Minister of Energy and Mining (MEM) or his registered designee.

The PSC members desired profile and appointment procedures As an inter‐ministerial body the PSC will have a diversity of background, knowledge, experience, and competencies.

All the above mentioned institutions and governmental entities are required to provide a duly registered, permanent representative to the PSC. Should that individual be unable to attend for any reason, the relevant institution must nominate a designated replacement in writing twenty‐ four hours prior to the meeting.

Only the Chairman may invite observers to a meeting; observers have no voting power.

All Members and Observers must be party to a confidentiality agreement.

Members of the PSC practice their mandate with diligence and high professionalism.

The membership of the PSC assigned by their institutions ceases in the following cases: a) at the expiry of the mandate, if the appointing authority propose a time limited mandate; b) by resignation; c) by death; d) by revocation of the appointing authority e) upon the occurrence of some incompatibilities as conflict of interest arisen.

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The finding of the cease of membership of the PSC under the circumstances set forth at paragraph above is done by the chairman; if it is chairman’s mandate that cease, than the finding will be done by the eldest member of the PSC. The finding act is sent to the authority that appointed the respective member of the PSC, so that new appointments should be made accordingly to the provisions of the Financing Agreement and this OM.

The resignation is submitted in written to the chairman consideration, and a copy of it is sent to the appointing authority, and it has a irrevocable feature; the resignation is registered at the PO and handed in to the chairman, 30 days before it comes into force. If it is the case of chairman resignation, then it is submitted to the eldest member of the PSC, based on the seniority principle.

The PSC tasks and responsibilities The PSC will be responsible for the coordination, supervision and monitoring of the Project Office proper functioning in order to ensure the proper implementation, ensuring compliance with Bank requirements.

In relationships with all the public authorities, as well as in the ones with any individuals or entities, the Project Steering Committee is an independent managing body and it is subject only to the law, and LPTA Project provisions.

The key responsibilities of the PSC are to: •

Coordinate the activities and responsibilities of various ministries and agencies involved in the Project implementation, particularly those dealing with environmental and social aspects (MEM, MFE, MESP, ERO, ICMM, etc.)

•

Oversee the Projects Office functions and review their quarterly progress reports;

•

Approve the draft OM and submit it to the World Bank for review and approval;

•

Approve the updated major Project development procedures whenever the Project implementation requires;

•

Approve the organizational chart of the PO and establish the remuneration for its employees in accordance with the legislation in force applicable to consultants, and within the ceilings of the allocated Project budget lines; 13

•

Review and approve of the Project annually reviewed staff training plan;

•

Review terms of reference prepared by PO staff for hiring on competitively basis of the key consultants and Project advisors, and ensure the submission to the World Bank for its prior review and approval as per the procurement management guidelines;

•

Review and approval of the annual updated procurement plan in order to reflect the Project implementation status and improvements in institutional capacity;

•

Review the findings of the assigned consultants’ reports and their recommendations, especially those requiring legislative and regulatory government actions and decisions as well as those implying environmental and social aspects;

•

Ensure that policy decisions with regard to the Project completion, and actions as appropriate are taken in a timely manner;

•

Approve the development of a communications and outreach strategy in order to facilitate consultations;

•

Coordinate consultations with local institutions, donors and other stakeholders as appropriate, based upon recommendations from the PO;

•

Ensure overall satisfactory implementation of energy sector strategy articulated in the Letter of Energy Sector Development Policy jointly addressed by UNMIK and the PISG to the International Donors Community;

•

Approve the short list of bidders eligible to receive the Request for Proposal. In order to issue the short‐list bidders the PSC will be assisted by the Transaction Advisor whose recommendations will be considered by PSC.

•

Approve and select the strategic investors.

•

The chairman, or, in his/her absence, a representative appointed in written by the chairman, represents publicly the LPTA Project. In this capacity, he may participate, inside the country and in foreign countries, at public events for LPTA Project representation, in order to promote the Project objectives and to attract potential financial investments

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PSC Meetings and Agenda The quorum of the PSC is the least number of members that must be present in order for its business to be legally transacted. The PSC consists of the ten members, therefore the quorum required to attend each meeting will be a minimum of at least six members. The quorum will always consist of the four mandatory members of the PSC, plus at least two other attendees, or their designated representatives. The quorum refers to the number present and not to the number voting.

The PSC works based on meetings and it holds ordinary timely scheduled meetings. In order to carry out its established functions, the PSC will meet at least monthly. The chairman will invite specific attendance at the meetings, depending on the topic(s) to be discussed, but no meetings will be held without the agreed minimum quorum and the presence of topic interested parties, if so applicable. The chairman will indicate the mandatory attendance, and the optional attendance, for each meeting in accordance with the topics on the agenda. Attendance by representatives of the MEM, MESP, the ERO and the ICMM will be mandatory. Whenever the Project requires, the PSC can hold extraordinary meetings. The extraordinary meetings, as well as the tentative agenda, are announced as necessary, with 2‐3 days notice before such a meeting is scheduled, except in an emergency, when no advance notice is required.

If required by the Project completion status, the Project Manager will inform, in writing, by normal electronic transmission, those persons necessary, as the above paragraph, in order to convoke extraordinary working meetings.

The convocation of all working sessions will be transmitted, in writing, through normal electronic transmission means, with a return confirmation of its reception The convocation act is signed by the chairman, or the Project Manager, and will necessarily include the working session’s appointed hour, the draft agenda and where possible working papers.

With the assistance of the PO, the chairman of the PSC or his designees sets the preliminary agenda. A tentative agenda listing the topics to be covered at the meeting should be drafted by the PM and approved by the Chairman. Also the PM with the understanding that the PSC shall periodically review certain items, and when applicable, shall make suitable proposal(s) to be

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included on the agenda. The PM knows that certain responsibilities fall under PSC examination and final approval, for example, such as: the annual updated Procurement Plan; the annual budget to be reviewed and approved by the board etc. Any member of the PSC may also request that an item/subject be included on the agenda. Their request will be either prior communicated to the PM in order to be included in the draft agenda for PSC consideration or the issue will be raised at the beginning of the PSC meeting to be added to the current meeting agenda.

The preliminary/draft agenda should specify the dates and time of the meetings, subjects to be covered, and material to be provided to members for preparation before each meeting. Copies of the background materials will be delivered to the PSC members as available, and in advance, when at all practicable. All related materials and proper documentation shall be made available electronically, or in printing. The PSC member will confirm against signature, or e‐mail reply.

The receipt of the materials and documentation prepared for the meeting.

The members of the PSC whose attendance is not mandatory, and who cannot attend the scheduled meeting due to objective reasons are compelled to inform in writing to the PM, in order to notify him/her of their absence, as soon as practical and with the reason of their absence reasons.

If, 24 hours before the meeting’s scheduled date and time, and on the basis of the notification mentioned at paragraph above, the Project Manager finds that the quorum conditions are impossible to be met, then he/she will immediately communicate to all members of the PSC the fact that the meeting cannot be held, as scheduled. As a consequence, a new working meeting will be re‐scheduled following the convocation procedure set forth in this OM.

The PSC’s meetings are not opened to the public.

With the prior written agreement of the chairman, selected persons can be invited from the relevant line‐ministries’ staff, as well as any other persons whose presence is required, by the nature of the problems to be discussed, the exception being when the position of the Project Manager and his/her activity is discussed.

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The PSC Meetings Chairmanship:

The meetings of the PSC are chaired by the chairman or, in his absence, by his designee. The nomination of his designee is done in writing and conveyed electronically members of the PSC

The Development of the PSC Meetings

The chairman opens the working meeting at the hour established through convocation and verifies the compliance with quorum conditions as required by the provisions of this OM.

If the formal established conditions of the quorum are (found to be) fulfilled, the chairman will ask PSC members to vote on the acceptance of the minutes of the previous meeting, and then the acceptance of the draft agenda. On this occasion, other proposals regarding the agenda can be considered.

Decisions of the PSC shall be made by a majority vote of those members present at the meeting when the vote is taken, provided that no decision may be made without the unanimous consent of the four mandatory members of the PSC, namely the representatives of the MEM, MESP, ERO and ICMM. Should there be a disagreement among the four mandatory members, the chairman shall use his/her best endeavors to facilitate an agreement between them. In the absence of such an agreement, the chairman may request the assistance of an independent expert facilitator, as discussed below.

If a mandatory member is absent for all or part of a meeting of the PSC, then the entity that is not represented will be deemed to have consented to the position taken by the majority of members casting votes in the absence of the mandatory member.

At the outset of each PSC meeting, the chairman is obliged to notify the PSC’s members that, if a member has a conflict of interests in regard to an issue on the agenda of that meeting, then that member shall be compelled to leave the room when discussion begins on the issue giving rise to the conflict, and the member shall take no further part in the discussion and the vote on that

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issue. The member with a conflict shall not be allowed to know the contents of the discussion, or who said what, or how individual members voted. Failure to comply with such an obligation can cause the revocation of the appointment of the member with a conflict, and the annulment of the relevant decision.

An abstention from voting is not classed as a diminution of the quorum of either the mandatory or other voting attendees. As noted above, a quorum of 6 members is necessary to conduct a meeting.

The Decision‐Making Process and the Dispute Resolution Mechanisms:

Votes taken by the PSC shall be by a show of hands, through an open voting procedure.

Where the PSC mandatory members are unable to unanimously consent to a decision, the chairman may choose to achieve such consent through further debate. If this is unsuccessful, the chairman may choose to assign an independent expert to play the role of a facilitator for the mandatory members, whose appointment must be agreed upon by the majority of the mandatory members.

The external invitees do not have the right either to vote or to attend when a vote is taken by the PSC.

Follow up Procedures The PO acts as the secretariat for the PSC during its meetings and between its meetings. The PO shall assist in the preparation of the PSC meetings and shall ensure that proper minutes are kept of the PSC meetins, which minutes shall include the agenda, summary of the discussions held, findings and decisions made. All decisions made by the PSC should be registered by the PO in a PSC Meetings’ Register. The minutes should be drafted, as soon as is practically possible, following the agreed outline, and approved and signed by the chairman. After each working meeting, the Project Manager will ensure the preparation of a final draft minutes of the PSC meeting, which will include:

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a) issues on the agenda; b) the persons who attended the meeting (PSC members and invitees); c) the status of the debated decisions; d) vote configuration; e) separate opinions (at the explicit request of the PSC members who formulate those opinions).

The final draft Minutes is submitted to the chairman who chaired that meetings for review and signature, and to the members who attended the working meeting for the information purposes until the next PSC meeting is held

Copies of the minutes are then transmitted by electronic transfer with confirmation of reception, to all the members of the PSC.

In order to draft the content of the adopted decisions, the observations and the points of view expressed during the working meeting are registered, thanks to the PO staff.

The minutes, together with all the materials presented or prepared during the meeting, will be kept in the care of the PO and shall be archived and numbered, with all their associated materials.

For the decisions regarding regulations meant for the public disclosure, the Project Manager will take the measures for an appropriate dissemination.

The operations described at paragraph above must be accomplished as soon as is practical.

Code of Conduct

PSC members are committed to: a) fulfill their mandate with impartiality, high professionalism, and in accordance with the provision of the OM and LPTAP Financing Agreement;

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b) respect the confidentiality of the debates and of the votes and not to take public action against PSC’s decisions. They have the right to share the information only with the appointing authority leadership and management, on behalf of whom they act. c) inform the chairman about any activity that could attract incompatibility/conflict of interest with the mandate he/she is exercise; d) not to use their position for commercial advertising or political propaganda purposes. e) To sign a letter of impartiality and confidentiality

PSC members must refrain from speaking to the public or press with regard to the LPTAP implementation. All public communications will be handled by the Chairman.

Voluntary feature of PSC attendance The participation in the PSC meetings is done on voluntary basis. Therefore, the chairman of the PSC will send annually a <thank you letter> to all members who served the LPTA Project and its PSC as well as to their appointing authority. The PO will organize a public event (such as a press conference) with the same purpose.

Projects Office and Steering Committee Chair: Minister of Energy and Mining Project Steering Committee

• SRSG’s office • Head of UNMIK Pillar IV (EU Pillar) • Minister of Environment and Spatial Planning • Chair, Energy Regulatory Office

• • • •

Prime Minister’s Office Minister of Economy and Finance Minister of Labor and Social Welfare Chair, Independent Commission of Mines and Minerals Board

MEM

DSRSG

Project Manager Assistant Technical Assistance to the LPPO

Mines Task Manager Power Task Manager

Environmental and Social Task Manager

MEF Grant Unit

Administration and Accounting Task Manager Local short term personnel

Kosovo Lignite Power Development Project

1

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2.2.3

LPTA Project Office

In order to manage and coordinate the overall Project implementation, a Project Office will be established by MEM. The organization chart for the PSC and PO is presented above. The newly set up PO will will be responsible to the PSC. The PO will be fully involved in the preparation of the mid‐term report on progress in implementation (March 31, 2008), and final completion report preparation.

The LPTAP will finance equipment and incremental operating costs necessary for the Project implementation and management as well as provision of the institutional development and capacity building for the key ministries and agencies involved in the Project.

The PO will be staffed with a Project Manager, Mines Task Manager, Power Task Manager; Environmental and Social Task Manager, Administrative and Financial Task Manager. The PO will also have a permanent local procurement specialist on staff and, initially, the PO will be assisted by an International Procurement Advisor, to assist in the procurement of the three large‐value consultancies. In addition, the PO will have local staff as part‐time associated personnel as required. The PO will be responsible for the day‐by day Project management including preparation of annual work plans and detailed work plans, budget and progress reports, all procurement, administration of and accounting for grant funds and overall coordination of Project implementation activities.

The PO will also be responsible for the preparation of the communication and outreach strategy for MEM to facilitate public transparency and consultations.

As mentioned above, the PO is accountable to the PSC and carries out its functions and responsibilities in accordance with the agreed Terms of Reference and the provisions of this OM. The chairman of the PSC shall be kept informed about the operations of the PO and shall be consulted as necessary.

The PO will serve as the secretariat for the PSC and prepare and distribute the Minutes/Agenda for each PSC Meeting.

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2.2.3.1 LPTA Project Office functions

a. Overall Project management In addition to providing administrative support for Project development activities as indicated, the PO will prepare quarterly and annually reports in order to mirror the progress in accordance with the agreed implementation plan and subsequent detailed work plans. It will also prepare annual and quarterly Project budget to be considered by MEM and PSC. The PO hired staff will coordinate the planning and implementation of the technical assistance purchased under the Project, including envisaged training, manage the procurement of consultancy services and other goods, provide logistical support for Project components, draft and handle justified documents for disbursement and maintain Project financial accounts.

The PO is responsible to prepare the annual and quarterly work plans, including the procurement plan, and its corresponding operating budget for the Project. This aims to ensure that all Project activities are carried out and operated in a coordinated manner with all stakeholders involved. The PO will coordinate scheduling of all Project activities to ensure that they are mutually supporting by all parties involved and implemented in such a way as to engender efficient use of human and financial resources.

The PO will also coordinate activities among other internal agencies and it will undertake the following functions: •

Draft Terms of Reference for the consultants assignments and submit them to the WB for prior review and approval;

•

Prepare the annual work plan, including the procurement plan, and its corresponding operating budget for the Project;

•

Draft the communication and outreach strategy for MEM in order to build a consultative mechanism for public opinion inputs and aim to ensure transparency and accountability;

•

Arrange and participate in public consultations (workshops, round tables, public hearings) and other type of outreach and consultations events, as specified in the communication and outreach strategy.

•

Organize the public debates of discussion papers, drafts and final reports of the studies carried out by assigned consultants; 22

•

Serve as the Secretariat of the Project Steering Committee and assist in follow up of activities approved by the PSC;

•

Conduct procurement procedures for assigning consultants as per the WB procurement guidelines;

•

Draft consultants contracts and any other contractual agreements and related materials on behalf of MEM and submit to MFE and UNMIK for signature;

•

Conclude the award contracts with the consultants assigned based on a competitive selection and evaluation procurement process;

•

Maintain communication with the consultants working on various studies, and provide additional technical guidance and local support;

•

Review consultants’ reports and arrange for presentations of the recommendations of the reports to relevant ministries and the PSC.

b. Collection of data and analysis of Project information The PO will initiate and manage the collection and ensure processing of Project performances indicators (process and output indicators) an a periodic basis as agreed with the World Bank in order to allow the regular progress reports drafting and their submission for PSC consideration and approval. These periodic reports (quarterly and annually issued reports) will be provide to the chairman of the PSC, to various ministries and agencies represented in the PSC, and forwarded to relevant departments of MEM for their general information on implementation process and for substantiating future Project‐linked activities and resources allocation as needed. Formal Project reporting will also include the submission of the quarterly progress reports to the PSC and to the Bank. The annual draft progress report will follow the same route.

These reports will allow for periodic evaluation of implementation activities within the Project components, and provide a basis for early warning signals with regard to potential deficiencies and delays in the Project implementation plan.

c. Monitoring, Evaluation and Reporting The PO will prepare detailed implementation progress reports, stating implementation achievements against scheduled implementation plan making suggestions in order to mitigate impeding factors, if needed. A Project mid‐term review will be carried out in March 2008 jointly 23

by the PO in consultation with various stakeholders involved. A copy of the mid‐term progress report, including recommended actions for improvement, will be submitted to MEM, the PSC, UNMIK and Bank management for review, comments and approval.

Monitoring and Evaluation function, which implies the accomplishment of the following: •

Review inception reports, draft discussion reports and final reports issued by the assigned Consultants, and arrange for presentation of the studies findings and recommendations to the relevant line‐ministries and PSC;

•

Monitor the progress of the consultants work against agreed performances and timing as per the concluded contracts and produce the contract monitoring information report based on commitment/obligations analysis report in each assigned contract.

•

Track records and monitor the annual work plan completion as approved by PSC and the WB in order to measure the outcomes and results as well as process indicators;

•

Collect and maintain files with the procurement documentation subject to post Bank review and supervision;

•

Prepare quarterly report on Project implementation and submit to MEM for review and approval, and through UNMIK to the World Bank as per formats and standards requested by the Bank;

•

Assist MEM in reviewing of consultants inception reports, mid‐term reports and final reports as per the concluded contracts;

•

Present reports regularly to the Project Steering Committee/MEM with regard to the physical progress and financial records of the grant.

•

Prepare and submits quarterly progress narrative reports to the WB in order to reflect the Project implementation status, and;

•

Prepare and submit to the WB, on or about 31st of March 2008, a report, endorsed by the PSC, integrating the results of the monitoring and evaluation performed and the progress achieved in carrying out the Project activities and setting out the measures to be taken in order to ensure the full completion of the Project by the scheduled closure date.

Work closely with the Grant Unit in MFE in order to ensure that the financial reports fully mirror the completion status of the Project activities

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d. Administrative, Reporting and Financial Activities:1 •

Report to the chairman of the PSC and be responsible to PSC ;

•

Procure the office equipment, vehicles and other goods as per the World Bank Guidelines;

•

Process payments through the MFE and UNMIK, and prepare needed justifying documents for the payment ;

•

Prepare draft TOR for the annual auditors assignment and send it to MFE and the World bank for review and prior approval;

•

Maintain records of grant implementation and prepare corresponding reports as per the reporting requirements;

•

Ensure that procurement and financial management are carried out in accordance with World Bank procedures and that the annual financial audit is submitted to the World Bank within 6 months of the close of the financial year;

•

Safeguard the assets procured under the LPTA Project;

e. Human Resource Development Activities: •

Select and employ the Project’s full time staff as well as short term (part time) associated personnel, on competitively basis;

•

Train and strengthen the Project team’s capacity to perform their duties as per job descriptions in this OM.

•

Ensure the evaluation of the annual staff members’ performances against job descriptions and contractual performance indicators.

PO staffing

The above‐listed activities will be carried out by the PO staff, who will provide general technical support and professional guidance as indicated below, and in accordance with any specific terms of reference applicable to individual staff members:

1 Taking into account the fact that the PO does not have legal entity and it will be placed under the MEM subordination, and the fact that MFE will be entitled to make the entire payments as well as disbursement, the PO plays a role in preparing the proper documentation, keeping statistical records for the reporting, and maintaining communication with MFE Grant Unit.

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2.2.3.2

Project Manager

Rationale: The Project office is run by a Project manager (PM) procured on competitive basis. The PM will be responsible for overall coordination and implementation from the technical and administrative point of view of the activities of the LPTA Project under the guidance and supervision of the MEM.

A project of this nature, with several components and unprecedented features, requires strong and effective leadership and day‐by day project management, with special focus on a high degree of coordination among line‐ministries, governmental agencies and public authorities, in order to be successfully implemented. The PO is set up the hub of Project activity and the Project Manager is the key person in ensuring the success of the Project. The person who is selected for this position must have a strong background in the implementation of projects which are financially supported by international organizations (training in this field and work experience with project teams, including international short‐term consultants, along with experience in the interaction with governmental and international organizations located in Kosovo) and a relatively high level of experience in managing complex operations which include both product outputs and personnel functions.

Purpose of employment: Assist the PSC in the detailed planning, coordination, implementation and monitoring of the forthcoming LPTA Project activities in accordance with the signed Financial Agreement.

Minimum requirements: The minimum requirements for the person who will take up this position are as follows: university degree in management or engineering, at least 5 years of professional experience from which 3 years experience in the position dealing with management, including cash and supply, good knowledge of the energy and mining system and relevant social policies, strong experience in working with state owned institutions, senior officials from international organizations and local authorities in power, extensive experience in project implementation, team leader skills and team work abilities, excellent analytical, negotiation, and communication

26

skills, including advocacy and lobby skills, and last but not least, fluency in English and good computer skills (Microsoft Office).

The Project Manager tasks and responsibilities are summarized below. He/she will: •

Coordinate the small team of specialized professionals and a minimum support staff in performing the Project objectives as well as the day‐ by‐ day administrative and logistical issues with regard to Project activities and office;

•

Coordinate the implementation of the Project’s components;

•

Coordinate the preparation of the terms of reference for the Consultants assignments;

•

Prepare the annual strategy/plan and the annual operating budget for the Project and ensures its submission for review and approval to MEM/PSC/WB;

•

Coordinate the preparation of the annual Procurement Plan and submit it for PSC and Bank review and approval;

•

Conclude short term service contracts with external local collaborators, individuals for services such as interpretation, printing, etc.;

•

Conclude any kind of legal documents related to the purpose of the Project and submit it for MEM review and approval;

•

Coordinate and supervises the procurement of the Consultants in charge with various studies to be carried out under the LPTA Project;

•

Interact with the financiers and donors community, and keeps communication with the Project’s stakeholders;

•

Coordinate the preparation of all Project payments and disbursement documents for the MFE to be considered;

•

Prepare Project quarterly reports and present to MEM, PSC and the World Bank;

•

Coordinate needed technical support to the PSC’s meetings, including needed follow up actions in order to enforce PSC decisions;

•

Supervise the procurement of all needed materials, equipment, vehicle, work stations and other office supplies as per the needs of a functional office and within the budget allocated;

•

Coordinate organization and participates in communication and outreach activities;

•

Provide orientation and other needed guidance to the assigned Consultants;

27

•

Keep liaison with MEM officials and staff, as well as with other Project stakeholders, including financier and donors;

•

Report to the PSC chairman and to MEM management team for administrative point of view.

Taking into account the above listed tasks and responsibilities assigned to the PM, this person needs to be local expert in all aspects related to Project implementation, as follows: importance of meeting deadlines, reporting, planning, organizing, scheduling and coordination of development of procurement bidding documents, setting and managing a budget, problem analysis, evaluation etc. This person must be an individual who is energetic and dynamic and one who relates well both to governmental officials, international organizations operating in Kosovo, and local affected communities. He/she must be a person who understands and respects the intricacies of governmental bureaucracy and knows how to work within the system to get things done. The person who is selected for this position must be one who appreciates high quality work, who has respect for schedules and deadlines and who takes pride in completing productive tasks in a timely manner. Also, this person needs to have the opportunity to be involved in Project preparation and to have an overall understanding on Project activities.

The World Bank and MEM as formal employer reserve the right to comment on the credentials of the person proposed for appointment to the Project Manager position and to concur with his/her appointment.

2.2.3.3

Task Managers

In carrying out his/her duties the PM will be assisted by a small team of professionals comprised of: i) Mines Task Manager; ii) Power Task Manager; iii) Environmental and Social Task Manager; iv) Administration and Financial Task Manager. This team will also be assisted by, initially (during the procurement of the three main groups of consultants), an International Procurement Advisor and by a local procurement specialist.

The PO staff shall perform activities stipulated in the terms of reference and scope of activities presented below:

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Rationale: The three tasks managers assigned for each Project component are key for the timely PO functions and responsibilities. Secondly, due the fact that each assigned component implies significant procurement process, these persons must know the World Bank procurement guidelines and procedures in order to be able to manage procurement under the Project. All procurement actions will be consolidated under the responsibility of the PO, in compliance with the World Bank procurement guidelines and procedures for goods, works and, especially consultant services which are linked with the TA feature of the Project. As noted above, these persons will work at the inception under the professional guidance of an International Procurement Advisor whose tasks are to assist in carrying out all activities of procurement nature for the first three major contracts and will advise and coach the PO staff in all procurement matters.

Minimum requirements: The minimum requirements for the persons in this position within the PO are as follows: university degree in one of the following fields: mining, power generation, environmental and social issues, public administration; previous work experience in public procurement, business or public administration; knowledge of international organizations/agencies’ and national public procurement regulations and procedures; previous work experience in projects financed by international financial organizations; familiarity in World Bank procurement guidelines for works, goods, and consultant services; working knowledge of English (both written and oral).

Their specific responsibilities are detailed below.

Mines Task Manager responsibilities are as follows: He/she will: •

Coordinates and monitors the mining aspects of the Project;

•

Provide available data, guidance and any other needed support to the Consultants in charge with the preparation of various studies;

•

Participate in field missions at the mines’ sites as necessary;

•

Keep communication with the assigned Consultants along the entire tenure of their assignments;

29

•

Monitor the physical progress of the Consultants as per contracts signed and provides early warning signals and propose remedial actions to Project Manger;

•

Participate in the PSC meetings where the findings and recommendations of the corresponding studies are considered;

•

Introduce data into the computerized recording system;

•

Organize under PM coordination communication and outreach events aimed at improving public consultation;

•

Participate in training programs and study tours;

•

Report to the PM and if required directly to the PSC

Power Task Manager is in charge with following responsibilities: •

Coordinates and monitors the power aspects of the Project;

•

Provides available data, guidance and any other needed support to the Consultants in charge with the preparation of various studies;

•

Keeps communication with the assigned Consultants along the entire tenure of their assignments;

•

Monitors the physical progress of the Consultants as per contracts signed and provides early warning signals and propose remedial actions to Project Manger (PM);

•

Participates when is asked in the PSC meetings where the findings and recommendations of the corresponding studies are considered;

•

Introduces data into the computerized recording system;

•

Organizes under PM coordination and participates in communication and outreach events aimed at improving public consultation;

•

Participates in training programs and study tours and field mission as necessary;

•

Reports to the PM and if required to the PSC

The Environmental and Social Task Manager responsibilities are highlighted below: •

Coordinates and monitors the environmental and social aspects of the Project;

•

Provide available data, guidance and any other needed support to the Consultants in charge with the preparation of the assigned studies;

30

•

Provide logistics support in organizing focus groups and other type of public consultations aimed at ensuring involvement of the target public opinion;

•

Coordinate participation of local target authorities in the planning process and preparation of SESA;

•

Organize the initial and concluding public consultations aimed at disclosing public information to the Project affected groups and NGOs;

•

Participate in field missions on mine and power generation sites as required;

•

Keep communication with the assigned Consultants along the entire tenure of their assignments;

•

Monitor the progress of the Consultants as per contracts signed and provides early warning signals and propose remedial actions to Project Manger;

•

Participate in the PSC meetings where the findings and recommendations of the corresponding studies are considered;

•

Introduce monitoring data into the computerized recording system;

•

Organize under PM coordination communication and outreach events aimed at improving public consultation;

•

Participate in training programs/workshops and study tours;

•

Report to the PM and carry out any other activities as requested by the PSC.

Administration and Financial Task Manager

Rationale: Project accounts and records must be maintained in a very professional manner with attention to accuracy and precision, in compliance with the Bank’s guidelines for project accounting. The accounts must be kept in such a way as to meet standard auditing requirements. Since the persons employed within the PO have the status of consultants for MEM, the fiduciary accountability for the Project’s financial management belongs to the Economic‐Financial Department within the MEM, as authorized entity acting on behalf of UNMIK. The person selected for this position must provide the necessary support under the form of documentation, expertise, documents and reports to the UNMIK and MEM Department in charge, although administratively this person is subordinated to the Project Manager. This person’s understands of and compliance with such work relations is crucial, since it leads to a working relationship of 31

collaboration, avoidance of parallel tasks and lack of financial indiscipline in Project implementation. Therefore, the person selected for this position must be well trained and experienced in accredited bookkeeping and accounting methods and knowledgeable of standard international auditing procedures. The person must be proficient in the use of computers and modern accounting software or be receptive to participating in a training program for this purpose. Since the workload for this position is large enough, he/she will be employed on a full and exclusive basis for the entire duration of the Project.

Minimum requirements: The requirements for this position are as follows: higher education in accounting/finance; previous work experience in accounting/financial management; knowledge of international and national accredited accounting standards; proficiency in the use of an accounting software or EXCEL; previous work experience in projects financed by international financial organizations; good knowledge of English (both written and oral); knowledge of energy and mining sector will be an advantage.

Under the responsibility of the Administration and Financial Task Manager are following activities: •

Manage daily administrative and financial issues with regard to Project activities and office, including monitoring the financial aspects of the procurement plan implementation;

•

Ensure in cooperation with the entire staff the proper functioning and maintenance of office supplies and equipment provided within the Project;

•

Ensure that all financial records are up‐to‐date using Government Financial Management information System in order to help in preparing narrative and financial reports as per the World Bank reporting requirements;

•

Check the financial related issues of the contracts to be concluded with the winning Consultants;

•

Process the invoices issued by providers only upon assurance in close collaboration with task mangers that services were delivered accordingly;

•

Draft Commitment Payment Orders on behalf of MEM and submit to MFE for approval;

32

•

Monitor the approved payments to the providers, contractors and consultants are made in timely manner either through single Treasury System or are paid directly by the Bank in accordance with Development Financing Agreement stipulations;

•

Maintain a computerized records’ system in order to meet the World Bank reporting requirements;

•

Draft, in close coordination with MFE’s Grant Unit , at every quarter and annually the Financial Management Reports (FMRs) on uses of Project funds;

•

Make needed arrangements as support to MEF for the appointment of the independent auditors or such auditors. Assessing audit reports from independent hired auditors, and following up any audit queries/management letters;

•

Assist the counterpart Grant Unit department within MFE in financial and budget planning for the Project;

•

Keep communication with MFE and provides additional commitment info with regard to signed contracts to be recorded and maintained at MFE/Grant Unit;

•

Participate in training programs/workshops;

•

Report to the PM and carry out any other activities as requested by the PSC.

•

Assist the Head of Financial Department of MEM and MFE Grant Officer within Grant Unit in all related financial and accounting Project activities.

2.2.3.4

Project Assistant

Rationale: The PO needs a capable and experienced assistant with fluency in English to carry out including translations and interpreting tasks for the decision‐making factors in the MEM and PSC, and office support functions in the PO and for selected local consultants, as well as for international consultants being in the field. Because the assistant is the first point of contact for visitors and communications with the World Bank and other important organizations, must of which will be in English, he/she must be proficient in English and must have prior experience with oral and written translation to and from English, as well as with preparing correspondence in English. The person selected for this position must therefore be experienced in the use of modern office technology, i.e. computer applications (particularly word processing, database, and spreadsheet work), as well as the preparation and sending of faxes and electronic mail, and the operation of 33

copy machines. Also, this person must be an experienced keyboard user who can prepare high quality reports and minutes of various meetings of the PSC in a timely manner.

Purpose: Administratively, this person will be directly subordinated to the Project Manager and will help implement Project activities, in compliance with the concluded detailed work plans.

Minimum requirements: The main requirements are as follows: university degree in foreign languages or administrative related fields; experience in administrative work, preferably in an international organization; experience in organizing public events; proved ability in liaising and cooperating with Government officials, international organizations, mass media; excellent knowledge of English, Albanian with proven drafting and interpretation/ translation abilities; excellent communication skills, including interpersonal skills; excellent computer literacy.

The Project team is assisted in carrying out its duties by a Project Assistant whose major tasks are as follows: •

Organize the logistics of the PO aimed at ensuring its current operations;

•

Provide back stopping support to the PM and other Project staff (especially when they’ll be on the field) as well as to the Consultants working on various studies;

•

Prepare minutes of the PSC meetings and keep needed correspondence registers;

•

Assist Administration and Financial Task Manager in carrying out small office procurement under the PM supervision of all needed materials, furniture and other office supplies;

•

Manage phone calls and administers Project correspondence files;

•

Assist in organizing logistics for the communication and outreach activities to be held;

•

Report to the PM and carry out any other activities as requested by the PSC.

34

2.2.3.5

International Procurement Advisor

Initially, during the procurement of the three main consultancies, the PO will be assisted by an International Procurement Advisor, who will provide professional guidance and participatory supervision in connection with these three large value contracts. During this period, the International Procurement Advisor will: •

Assist (through knowledge, technical support and guidance) the PM and the assigned staff handling public procurement on all matters related to procurement using Bank’s Standard Bidding Documents and Request for Proposals and ECA’s sample formats for small office procurement (equipment, vehicle, supplies, etc.);

•

Review drafts terms of reference for the consultant assignments;

•

Review regularly and updates together with the PM the Project implementation the Project Procurement Plan which provides basis for the acquisition including methods to be used, and submit to the World Bank for prior review and approval;

•

Work closely with the PM and tasks managers to carry out the procurement activities for the first three large value acquisitions within the Project framework, in compliance with the WB rules, such as: preparation of documents regarding procurement, in full compliance with the WB procedures and requirements, organization of tenders and review of bids, interaction with bidders and follow‐up corresponding actions; and

•

Assist in the training, as required, of the local procurement specialist.

2.2.3.6

Local Procurement Specialist

The local procurement specialist will: •

Take actions for the finalization of technical specifications on the office equipment to be procured, and to make sure such technical specifications are neutral in terms of bidders and in fully compliance with the World Bank procurement procedures guidelines with regard to goods, works and services;

•

Provide guidance in keeping detailed records of procurement, for compliance purposes and in order to help the checks during WB monitoring and supervision missions;

•

Develop in cooperation with the PM and with the staff in other MEM staff the regular monitoring reports; and 35

•

Support the fulfillment of other procurement related activities as identified by Project management team.

2.2.4

Terms of engagement

The staff in the PO will be recruited as local consultants and paid from the capacity building component of the Grant. Consultants would be recruited competitively, based on qualifications and prior experience requirements. In order to carry out competition for hiring PO staff, the following steps are to be taken: draft detailed job description for each position, place recruitment advertisements in at least two major newspapers, conduct interviews and hire the most suitable candidate under the provisions of the Kosovo labor legislation, and the World Bank requirements and procurement procedures referring to consulting services, and those of this OM. The civil servants interested to compete for the vacancies with PO will be required to resign from the civil service before accepting a position in the Project Office.

The Project Manager (PM) is selected on a competitive basis based on the terms of reference acceptable to the World Bank by a Selection and Recruitment Committee set by MEM and headed by the Deputy Minister. Further selection process of the PO staff will be conducted by the assigned PM, and the Selection and Recruitment Committee will be involved only for the final consideration of the most suitable candidates.

In order to remunerate the assigned Project staff the MFE shall pay an amount not exceeding the ceilings established in the corresponding Project budget lines. The payments made to the assigned PO staff consist of Consultant’s monthly remuneration and the reimbursable expenses to cover expenditure for domestic and international travel, hotel accommodation, daily allowance, local transport, training attendance fees and other courses/seminars/workshops related direct costs.

The employment contracts are concluded between the Ministry of Energy and Mining (MEM) hereinafter (the Employer) and the assigned Consultants.

36

The necessary amounts of reimbursable expenses shall be paid in advance to the PO staff in order to allow them to cover the above indicated reimbursable expenditures, and the Project staff shall submit their back to office reports within five (5) days from their returns from travel, the evidences required to document the reimbursable expenditures as per the applicable provisions of relevant laws governing UNMIK staff.

The selected PO staff will benefit by an insertion intensive training program, including on procurement procedures organized by the Bank. A joint retreat of the PO staff, PSC, the WB preparation team should be also considered aims to ensure the proper PO start up and team building. The appropriate training programs will be also delivered to major Project stakeholders’ staff: MEM, MESP, ICMM and ERO within the Capacity Building Component.

Chapter 2.3

Project Cycle Management

2.3.1

Up‐front activities until effectiveness

As established, the LPTA Project will be implemented starting with September 2006 (scheduled effectiveness) until December 31, 2009. Before grant effectiveness following aspects have to be considered as up –front activities: i)

Setting up the PSC;

ii) Setting up of a functional PO under MEM; iii) Selection of the Project Manager on a competitively basis; iv) Completion of the PO staff as per the organizational chart approved by PSC; v) Approval of the OM after PSC consideration, and vi) Joint retreat of the PSC/Project preparation team, and newly assigned PO staff.

2.3.2

Project Launch

In the preparation of the Project launch event several aspects have to be included on a check list as follows: list of organizers, including the nomination of the chair, list of speakers, panelists and invitees, event format, envisaged date, venue and logistics, press releases and press conference, background materials to be spread to the audience.

In terms of event format might be considered either a half day conference or a workshop.

37

The list of invitees shall be developed and it should target following key audience: governmental officials, international donors community representatives, the World Bank officials, Project preparation team, PSC assigned members, PO staff, active NGOs, public policy institutes and other think tanks, academia, media, corporate invitees etc.

The key speakers and panelists will be identified and asked to deliver introductory speeches and brief background presentations.

A Power Point Project presentation will be prepared and presented in the Conference/workshop. The summary of panelist’s presentations as well as the Project summary will be delivered in printing to the participants as handouts.

A press conference could be held during or immediately after the conference/workshop is held.

One week prior to the press conference and the event itself a press release will be sent to the press and other media aimed at raising public awareness. Press kits will be also delivered to the journalists. The organizers in charge will be also paying attention to the visibility policy aspects of the Project and its launching event.

After completion of the event an updated press release is disseminated to the same target media. The event’s media coverage will be monitored in the next days after the event was held, and a press clips file will be prepared in order to document how the Project was received by the media.

2.3.3

Implementation

The Project Implementation Plan (PIP) is detailed (in a Gantt Chart) in Annex 4 of the Project Appraisal Document (PAD). Based on the PIP, the PM will coordinate the preparation of the corresponding annual detailed work plans. The draft Annual Work Plan is submitted to PSC for consideration and approval. The approved Annual Work Plan is sent to the World Bank for its review.

2.3.4

Monitoring and Evaluation

The PO under the MEM subordination is managing the LPTA Project playing the role of a Project implementation unit (PIU) under the guidance and supervision of the Inter‐ministerial PSC. The PO prepares quarterly reports, which will include both descriptive notes about the progress made and quantitative summarized updates on Project activities development.

38

The comprehensive annual reports prepared by the PO are submitted to the PSC for the consideration and approval and than sent to the World Bank.

If considered appropriately within the communication and outreach strategy a summary of these report will be published and disseminated to the stakeholders and to a broader audience, including media.

The progress narrative reports shall contain information at least about following key performance indicators: •

LPTAP Projects Office established and fully operational;

•

Inter‐ministerial Project Steering Committee set and fully operational;

•

Various policies, legal and regulatory draft instruments, consistent with international good practice submitted to the PISG;

•

Bidding and Negotiation leading to financial close on new sector investment;

•

SESA draft regulation;

•

Draft Resettlement Policy Framework;

•

Draft land acquisition legislation;

•

Other required legislation drafted and submitted for the PISG consideration;

•

Draft regulatory instruments;

•

Draft contractual agreements and legal opinions;

•

Development of the SESA;

•

Sector Specific EIA Handbook;

•

TOR for the Social Assessment and the Resettlement Action Plan;

•

Baseline Environmental Monitoring Data Collection;

•

Implementation of an environmental monitoring data registration and reporting system;

•

Numbers of MESP staff trained in involuntary resettlement and environmental protection;

•

Numbers of MEM, ERO and ICMM staff trained in major project development procedures;

•

Communications and outreach strategy for MEM to facilitate consultations development;

39

•

Numbers of workshops, public hearings and other type of public consultation events held;

•

Number of Project targeted stakeholders (MEM, MESP, ICMM, and ERO) participating in training programs delivered;

•

Numbers of people participating in workshops, public hearings and other public consultation events;

•

Assistance to Kosovo authorities in preparing for the bidding process and in negotiations with the strategic investor(s);

•

Strategic investor(s) selected.

The financial monitoring software will be customized in order to be able to provide information in accordance with the reporting requirements.

2.3.5

Project Closure

The scheduled date for completion of the Project is 31st of December, 2009.

The Project is completed if the proposed objectives were reached and the most preferred bidding investor(s) has (have) been selected based on a competitive bidding under the transaction advisor close guidance and supervision.

The Project office prepares on behalf of MEM and sends to the World Bank an overall final report, endorsed by PSC and integrating the results of monitoring and evaluation performed and the progress achieved in carrying out the Project activities.

The Project closure implies three different stages: physical completion (as mentioned above), financial and administrative closure, and legal.

The Project is considered closed from the financial and administrative point of view when the use of the received grant amount has been audited and all closing formalities were carried out.

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PART 3

FIDUCIARY RESPONSIBILITIES

Chapter 3.1

Procurement

3.1.1 General Provisions

Procurement for the project will be carried out in accordance with the procedures set out in the World Bank’s "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May, 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May 2004, and the provisions stipulated in the Financing Agreement. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the IDA Project team in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Any activity before its implementation should be included in the procurement plan. Any change in the procurement plan should be agreed and approved by the Association.

3.1.2

Main Principles

The Bank’s principal objective for procurement is an open and fair competition policy to all suppliers providing goods, contractors providing works, and consultants providing services from all member countries of the Bank in order to achieve the highest quality with the minimal price.

The WB policy in procurement is as follows:

• use of funds only for intended purposes; • economy and efficiency; • advance notice to all parties; • competitive selection; • appropriate evaluation criteria; • appropriate technical specifications/ terms of reference; • open and transparent process; and

Principles of the World Bank goods procurement guidelines are:

• need for economy and efficiency; • need to give all eligible bidders opportunity to compete; • encourage development of local industries in borrowing countries; and • importance of transparency.

41

Principles of the World Bank consultant guidelines are:

• need for high quality service; • need for economy and efficiency; • need to give qualified consultants from all eligible countries opportunity to compete; • encourage development of national consultants in developing member countries; and • importance of transparency.

Confidentiality

The contents of any bidding documents or bids must not be discussed outside of the procurement team or the evaluation committees. Documents with sensitive or confidential information should be locked in a safe place at all times, unless being worked with. Total confidentiality is required until an announcement of the award of contract to the successful bidder is made.

Fraud and Corruption

The Bank’s standard documents warn bidders that any attempt to influence the Implementing Ministry in bid evaluations may result in rejection of the bid, outlining the policy on Fraud and Corruption on this issue. It is the WB policy to require that borrowers (including beneficiaries of Bank loans/credits), as well as Suppliers/Contractors/Consultants under Bank‐financed contracts, observe the highest standard of ethics during the procurement and execution of such contracts. In pursuance of this policy, the WB:

(a) defines, for the purposes of this provision, the terms set forth below as follows:

(i) “corrupt practice” means the offering, giving, receiving, or soliciting of, directly or indirectly, any thing of value to influence the action of a public official in the selection/procurement process or in contract execution; (ii) “fraudulent practice” means a misrepresentation or omission of facts in order to influence a selection/procurement process or the execution of a contract; (iii) “collusive practices” means a scheme or arrangement between two or more bidders/consultants, with or without the knowledge of the Recipient, designed to establish bid/proposal prices at artificial, non‐competitive levels; and (iv) “coercive practices” means harming or threatening to harm, directly or indirectly, persons, or their property to influence their participation in a procurement process, or affect the execution of a contract (b) will reject a proposal for award if it determines that the bidder/consultant recommended for award has engaged in corrupt ,fraudulent, collusive or coercive practices in competing for the contract in question; (c) will cancel the portion of the grant allocated to a contract for goods or works/to a consultants contract, if it at any time determines that representatives of the Borrower or of a beneficiary of the grant, engaged in corrupt, fraudulent, collusive, 42

(d)

(e)

or coercive practices during the selection/procurement or the execution of that contract, without the Borrower having taken timely and appropriate action satisfactory to the Bank to remedy the situation; will sanction a firm or individual including declaring ineligible, either indefinitely or for a stated period of time, to be awarded a Bank‐financed contract if it at any time determines that the firm has directly or through an agent ,engaged in corrupt, fraudulent, collusive , or coercive practices in competing for, or in executing, a Bank‐financed contract; and will have the right to require that, in contracts financed by a Bank loan/credit/grant, a provision be included requiring Suppliers and Contractors/ Consultants to permit the Bank to inspect their accounts and records relating to the performance of the contract and to have them audited by auditors appointed by the Bank.

With the specific agreement of the Bank, an Implementing Ministry may introduce into bid/request for proposal forms for large contracts financed by the Bank, an undertaking of the bidder/consultant to observe, in competing for and executing a contract, the country's laws against fraud and corruption (including bribery), as listed in the these documents. The WB will accept the introduction of such undertaking, at the request of the Implementing Ministry, provided the arrangement governing such undertaking are satisfactory to the Bank:

For specific information on the possible ineligibility, the PO will regularly check the list at www.worldbank.org/html/opr/procure/debarr.html.

3.1.3 Conflict of Interests

World Bank policy requires that consultants provide professional, objective, and impartial advice and at all times hold the client’s interests paramount, without any consideration for future work, and strictly avoid conflicts with other assignments or their own corporate interests.

Consultants shall not be hired for any assignment that would be in conflict with their prior or current obligations to other clients, or that may place them in a position of not being able to carry out the assignment in the best interest of the recipients of this grant. Without limitation on the generality of this rule, consultants shall not be hired under the circumstances set forth below:

A firm that has been engaged by an Implementing Ministry to provide goods, works or services ( other than the consulting services covered by the Guidelines) for a project, and any of its affiliates, shall be disqualified from providing consulting services for related to those goods, works or services. Conversely, a firm hired to provide consulting services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods, works or services (other than consultancy services covered by the guidelines) related to the initial assignment (other than a continuation of the firm’s earlier consulting services) for the same project.

Consultants or any of their affiliates shall not be hired for any assignment that, by its nature, may be in conflict with another assignment of the consultants. As an example, consultants assisting a client in the privatization of public assets shall not purchase, nor advice purchasers

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of, such assets. Similarly, consultants hired to prepare Terms of Reference (TOR) for an assignment shall not be hired for the assignment in question

Consultants( including their personnel and sub‐consultants) that have a business or family relationship with a member of UNMIK, the PISG, or any beneficiary of the grant who are directly or indirectly involved in any part of :(i) the preparation of the TOR of the contract, (ii) the selection process for such contract, or (iii) supervision of such contract may not be awarded a contract, unless the conflict stemming from this relationship has been resolved in a manner acceptable to the Bank. In cases of permanent staff or associates of a consulting firm who may be available as individual consultants, the conflict of interest provisions shall apply to the parent firm.

3.1.4 Eligibility of Government‐owned Enterprises

PISG‐owned enterprises in Kosovo are eligible for contracts to be financed from the project only if they can demonstrate that they are legally and financially autonomous and operate under commercial law. No dependent agency of the Implementing Ministry of the project or their employees shall be permitted to bid or submit or participate in a proposal for the procurement of goods or works or provision of consulting services under the project.

As an exception to the above when the services of the government‐owned universities or research centers in Kosovo are of unique or special nature, and their participation is critical to project implementation, the Bank may agree to the hiring of those institutions on a case‐by‐case basis. On the same basis, university professors or scientists from research institutes can be contracted individually under Bank Financing.

Government officials and civil servants may only be hired under consulting contracts, either as individuals or as members of a team of consulting firm, if they (i) are on leave of absence without pay;(ii) are not hired by the agency they were working for immediately before going on leave; and (iii) their employment would create a conflict of interest

3.1.5 Misprocurement

The Bank does not finance expenditures for goods, works or consulting services which have not been procured or selected in accordance with the agreed provisions of the grant agreement and the procurement plan approved by the Bank

Anytime during the term of the grant agreement, the World Bank has the authority to review the project documents. If during this review, the WB determines that all or portions of the goods or services were not procured in accordance with the agreed procedures in the grant agreement, the Bank will declare misprocurement. In such case, the Bank may cancel that portion of the grant to those goods, works, or services procured in non‐compliance. Even once the contract is awarded after obtaining “no‐objection” from the Bank, the Bank may still declare misprocurement if it concludes that the “no‐objection” was issued on the basis of incomplete, inaccurate, or misleading information furnished by the Implementing Ministries or that terms and conditions of the contract had been modified without Bank’s approval.

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3.1.6

Procedural Matters

Advertisements: A General Procurement Notice (GPN) will be published in July 2006 issue of UN Development Business announcing goods and consulting services to be procured, and inviting interested eligible suppliers and consultants to express interest and to request any complementary information from the Borrower. Specific Procurement Notices (SPN) will be published in the on‐line edition of the Development Business for all ICB contracts, and in the printed edition at the option of the Borrower. For items to be procured through ICB, individual bidding opportunity will also be advertised in a major local newspaper on the same (or within 2) day(s) of the on‐line publication. The local advertisements will be in the English language and, at the option of the Borrower, will also be in the local language. For consultants’ contracts above US$100,000, Request for Expression of Interest will be advertised in on‐line edition of the Development Business and in at least one major national newspaper of wide circulation (in the national and English languages).

Short‐Listing: PO Procurement Specialist will prepare and lead the meeting for preparation of the Short Lists, based on an evaluation of expressions of interest (EOI) received. The short list of consultants for services estimated to cost less than $100,000 equivalent per contract may comprise entirely of national consultants.

Preparation of technical specifications and TORs: Technical specifications and TORs are normally drafted by specialists, who are either on the Borrower’s staff or consultants (local and/or international), in close collaboration with the responsible staff of the PO. The PO may not have the ability to prepare technical specifications and TOR’s. In such cases the PO or MEM could hire qualified consultants/specialists who will be able to help prepare satisfactory specifications and TOR’s. The PO procurement staff (the procurement specialist and the international procurement advisor) will guide the process of preparation of the technical specifications to ensure that the specifications satisfy WB requirements.

Issuing Bidding documents: The PO Procurement Specialist will, in accordance with the PAD and the Procurement Plan, prepare and issue the bidding documents/RFP, containing all the information necessary for a bidder to prepare a bid/proposal, including the selection criteria for awarding the contract. The bidding documents will be approved and signed by the PO Project Manager.

Bids/proposals evaluation: Evaluations will be carried out in accordance with WB guidelines and bidding documents. The implementing ministry will appoint the Evaluation Committees (comprising 3‐5 people). The PO Procurement Specialists will guide the work of all the bid/proposal Evaluation Committees. Evaluation committees will perform the evaluation of received bids or proposals and, with support of the PO Procurement Specialist, prepare the evaluation reports. Evaluation reports with proposal for contract awarding are to be signed by all the members of the Evaluation Committee and accompanied with a cover letter signed by the PO Project Manager.

Evaluation of Technical Proposals: After the Evaluation Committee has been appointed, the PO Procurement Specialist and PO Project Manager should familiarize its members with the RFP (in particular the TOR, evaluation criteria and sub‐criteria specified in the Data Sheet) and with all

45

related procedures. The Evaluation Committee should meet shortly before the deadline for submission of the proposals to achieve a common understanding of the evaluation method, the evaluation criteria and sub‐criteria, and a joint definition of the rating system, including the definition of the grades. If the rating system were defined after opening the technical proposals, the definition of the rating system and of the grades could be biased by the knowledge of the contents of the proposals. To minimize the risk of undue influence on any member of the Evaluation Committee, these meetings should take place shortly before the opening of the proposals. The members of the Evaluation Committee should confirm that: • they are not in any conflict of interest; • they understand the rating and scoring system; • they have been provided with evaluation worksheets; • they agreed on how to evaluate the proposals; • they have sufficient knowledge of English to be able to understand the proposal (PO will, at its request for appointment of the Evaluation Committee, in the first place ask for appointment of the committee members with sufficient knowledge of the English.

This might not be possible in all the cases, since some committee members, who might be required in the committee because of their technical knowledge, might not be skilled enough in English to participate in the evaluation. If this would be the case, translating services needed for successful evaluation would need to be provided. The request for hiring such translating services should be directed from the implementing agencies to the PO).

After the proposals have been received and opened, the evaluation process begins. Each evaluation should be carried out individually. Each member of the Evaluation Committee establishes, as part of the evaluation process, whether the proposals are substantially responsive, that is, if there are no material omissions or deviations from the stated objectives, TOR’s, or other key requirements of the RFP’s. The evaluation also establishes whether a proposal passes the minimum technical score if one is provided in the RFP. Results of individual evaluations are recorded on pre‐established worksheets. Depending on the complexity of the assignment, at least 4 to 12 hours should be allowed for the evaluation of each technical proposal.

Evaluation of Financial Proposals: The opening of financial proposals is public. After the Evaluation Committee verifies that financial proposals have remained sealed, the PO Procurement Specialist opens them. The name of the consultant, the quality scores, and the proposed prices are read aloud and recorded as each financial proposal is opened. No modifications to the financial proposals are permitted. The PO prepares the minutes of the public opening, which should be attached to the Financial Evaluation Report. The Evaluation Committee should first review the proposals for arithmetical errors and consistency between the financial and technical proposals (e.g. omissions of items included in the technical proposals). Arithmetical errors should be corrected, omitted items evaluated, and the corresponding adjustments made to the offered prices to obtain the final evaluated prices. For example, if a technical proposal indicates the presence of the team leader at the assignment site for 12 months and the financial proposal indicates only 8 months, an adjustment should be calculated by adding the corresponding amount of staff remuneration to the proposed amount.

In case of lump‐sum contracts, such adjustment should not apply and the price indicated in the financial proposal form should be taken into consideration. For the purpose of comparing proposals, evaluated prices should be converted to a single currency using the exchange rate, date, and source indicated in the RFP. For the purpose of the evaluation the “cost” shall exclude

46

local identifiable taxes on the contract and income taxes payable to the country of the Borrower on the remuneration of the non‐resident consultants.

The scores of the evaluated prices should then be calculated according to the formula provided in the RFP.

Preparations for negotiation: After the WB issues the no‐objection to the combined evaluation report and the Recommendation for Award, the PO will notify the winning consultant in writing and indicates the date and time set for negotiations. The implementing ministry will appoint a negotiation committee whose members should be fully familiar with the TOR, the consultants’ proposal, the comments and suggestions of the Evaluation Committee related to the technical and financial evaluation reports, and recommendations of the designated higher authorities.

Items subject to negotiation: Depending on the selection method and proposed type of contract, technical and financial items that may be negotiated include: scope of the work; technical approach and methodology; work plan and activity schedule; organization, staffing, and time schedule for key staff; deliverables; counterpart staff; counterpart facilities and equipment; contract conditions; staff unit rates; reimbursable expenses and proposed contract price. Under QCBS, FBS and LCS, unit rates such as staff remuneration or unit rates proposed for reimbursable expenses and proposal price cannot be negotiated unless there are exceptional circumstances.

Payment provisions: The Client should avoid delaying payments without due cause, to ensure that the consultants do not delay their assignment for lack of funds. In general, consultants will seek to be paid up front as much as possible for cash‐flow reasons. They may also prefer up front payment if there is a possibility that the Client will default on a payment. On the other hand, it is in the interest of the Client to retain a final payment (usually not more than 10 percent) until the final outputs have been delivered to the requisite standards.

Payment provisions, including amounts to be paid, schedule of payments, and payment procedures, will be agreed upon during negotiations. In WB‐funded assignments consultants are paid either at regular intervals, upon presentation of invoices under time‐based contracts, or in line with agreed outputs according to a contractual payment schedule under lump‐sum contracts.

The Negotiation Committee and the consultants should agree on the amount of the advance payments (for example, for mobilization costs). Such payments normally do not exceed 20 percent of the contract value. If the advance exceeds 10 percent of the contract amount, it must normally be backed by an advance payment security, generally a commercial bank guarantee or other suitable guarantee issued by a reputed financial institution acceptable to the PO. When payment is on a lump‐sum basis, payment should be made against the planned deliverable/report etc.

Contract signing: The PO Procurement Specialists will prepare the contracts in accordance with the bidding documents and accepted bid/proposal. Contracts are to be signed by (1) the person authorized by consultant/supplier/contractor and (2) the authorized representative(s) of the implementing ministry. Where necessary, contracts under the Project will be signed by an authorized representative of the MEM in the witness of authorized representatives of other relevant institutions that will participate in the implementation.

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Contract implementation: Once the contract is signed, authorized representatives of implementing agencies and working groups will monitor the contract performance, including the goods or services delivery and all other contract terms. End users of deliverables and the equipment will be responsible for their acceptance and issuing the acceptance reports.

3.1.7 Roles and Responsibilities of the PO

The PO will: • Ensure full compliance of the Project procurement procedures with the WB guidelines and requirements, including planning and reporting requirements; • Regularly update the Procurement Plan, based on inputs provided by the working groups; • Prepare and publish SPNs and advertisements, prepare bidding documents and all other documents required for procurement of consulting services and goods (based on the TORs for consulting services and training and technical specifications for goods prepared by the working groups); • Coordinate work of the Evaluation Committees and provide administrative support to their work, including organization of Evaluation Committee meetings, preparation of minutes on Evaluation Committees’ meetings, and provision of instructions and guidance to Evaluation Committee members on the applicable WB procurement guidelines and procedures; • Provide administrative support to implementing ministry during contract negotiation and contract signing; • Submit necessary procurement related reports to the WB and obtain necessary approvals of the WB (“No Objections”); • Furnish to the WB copies of the signed contracts; • Monitor progress in realization of procurement activities in comparison with the agreed Procurement Plan, determine variations and deviations from the Procurement Plan and inform implementing agencies and WB, in order to identify causes and take necessary measures for correction; • Prepare quarterly reports on procurement activities and status of procurement under the Project; • Maintain and keep complete procurement documentation; • Regularly communicate on procurement progress with the implementing agencies.

3.1.8

Roles and Responsibilities of the Implementing Ministry

As the ‘Implementing Ministry’, the MEM will: • Prepare key elements of the TORs for consulting services and training, and technical specifications for goods to be procured under the Project; • Appoint and, through the committee members from the institutions, actively participate in the Evaluation Committees and Negotiation Committees, which will work in compliance with the World Bank rules and procedures; • Provide technical inputs for preparation of bidding documents by PO; • Promptly review all the necessary procurement documents, prepared by the PO;

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• • • • • •

Promptly and timely make all the necessary procurement related decisions and provide necessary approvals; Negotiate and conclude the contracts for consulting services, training and goods; Furnish to the PO copies of the signed contracts; Provide approval for the PO operating costs; Provide inputs needed by PO for update of the Procurement Plan; Execute the contracts as a Client, including acceptance of the consultant reports and control of the quality of delivered goods.

3.1.9

Procurement of Works

Taking into account the project description and its TA features no procurement of works is envisaged within the LPTA project implementation.

3.1.10

Procurement of Goods

Goods procured under this project estimated at about US$ 0.1 million equivalent would include: office equipment and vehicles. These items are estimated to cost under US$100,000 equivalent per contract. The procurement will be done through shopping procedures and using ECA sample format for inviting price quotations for shopping of goods agreed with the IDA. These procedures will be based on comparing price quotations obtained from at least three (3) suppliers in accordance with the Procurement Guidelines. In compiling lists of suppliers (firms) which will be invited to submit quotations for information technology equipment under Shopping, the Implementing Ministry will include in the list only those firms which have been listed as eligible to participate in Procurement of Off‐the‐Shelf Information Technology, according to relevant website maintained by the Bank (www.worldbank.org/html/opr/shop_IT).

In addition to the companies taken from the IT shopping website some more companies could be added in order to receive at least three valid quotations. All firms that are not on the web site should be verified if they are authorized dealers of the manufactures and if they have manufacturers' authorizations for supply of the items included in the ITQ.

Steps in SH and responsibility for their completion Steps in SH Responsibility PO and implementing 1. Prepare technical specifications of goods. ministry Prepare the Invitation to Quote (ITQ), using regional sample format 2. for ITQ and the technical specifications prepared by implementing PO agencies.

Prepare the list of Suppliers, comprising of at least three suppliers. It PO and implementing 3. is recommendable to solicit quotations from more suppliers in order ministry to obtain at least three quotations.

4. Obtain the WB “No Objection” on the ITQ and list of Suppliers.

PO 5. Appoint committee for evaluation of bids.

Implementing ministry 6. Send ITQ to short‐listed Suppliers.

PO 49

Steps in SH Document any requests for clarification by potential bidders and the 7. respective answers. Respond to all potential bidders.

8. Receive quotations until the deadline and file them properly.

9. Open quotations immediately after deadline for submission.

Evaluate and compare bids using the shopping sample form of 10. evaluation report.

11. Prepare Evaluation Report with the recommendation for award.

Obtain the WB “No Objection” on the Evaluation Report and the recommendation for award.

Finalize the draft Purchase Order including Terms and Conditions of 13.

Supply and send to the selected supplier.

14. Obtain the Confirmation of Receipt of the Purchase Order.

15. Inform unsuccessful bidders.

12.

16. Sign the Contract with the supplier.

Responsibility PO and implementing ministry PO PO Evaluation Committee with support of the PO Evaluation Committee and PO PO PO PO PO PO and implementing ministry

Submit a copy of the signed Contract to the WB and assure PO appropriate registration of the contract.

Receive and inspect goods and make payments on invoices as per the PO and implementing 18. purchase order ministry

3.1.11 Procurement of Non‐Consulting Services 17.

The non‐consultant services procured under this Project would include: environmental sampling and analysis program. The procurement will be done using World Bank’s ICB Sample Bidding Documents for Procurement of Non‐Consultant Services agreed with the IDA. Steps in the ICB and responsibility for their completion Steps in ICB 1.

2.

3.

4.

5.

6.

7.

Prepare technical specifications of goods.

Prepare Bidding Documents (based on the SBD agreed with the Bank and using the technical specifications prepared by implementing agencies).

Obtain the WB “No Objection” on the Bidding Documents.

Send the Bank for publishing the Specific Procurement Notice (IFB) in on‐line edition of UN Development Business (in printed edition at the option of the implementing agencies) and publishing the IFB in the major local newspaper/s on the same (or within 2 days) of the on‐line publication.

Appoint committee for evaluation of bids.

Issue Bidding Documents to interested and eligible Bidders.

Convene the pre‐bid conference and arrange site visits (if specified so in the Bidding Documents).

Responsibility Working groups with support of PO PO and working groups PO

PO

Project Manager PO PO and implementing ministry 50

Steps in ICB Document any requests for clarification by potential bidders and the 8. respective answers. Respond to all potential bidders.

9. Receive bids until the deadline and file them properly.

10. Open the bids publicly immediately after deadline for bid submission.

Prepare the minutes of public opening of bids and promptly send it to 11. the WB and to all bidders who submitted bids in time.

Evaluate and compare bids using the standard form of evaluation 12. report.

13. Prepare Evaluation Report with the recommendation for award.

14.

15.

16.

17.

18.

19.

Obtain the WB “No Objection” on the Evaluation Report and the recommendation for award Issue the Notice of Award to the successful Bidder Publish information about the contract award in UNDB online and in dgMarket.

Finalize Contract with the successful Bidder Obtain performance security and release bid security Inform unsuccessful bidders and release their bid securities

20. Sign the Contract with the supplier 21.

Submit a copy of the signed Contract to the WB and assure appropriate registration of the contract.

22. Receive and inspect goods and process supplier’s payment requests

3.1.12

Responsibility PO and implementing ministry PO PO PO Evaluation Committee with support of the PO Evaluation Committee and PO PO PO PO PO PO PO PO and implementing ministry PO PO and implementing ministry

Selection of Consultants

Contracts for Consulting Services will be packaged to combine related skills and services in order to make them attractive for competition and reduce the number of contracts to be administered taking into consideration the implementation arrangements. To the extent practicable, training activities would be incorporated with consulting services contracts.

Consultant services consist of short and long‐term assignments to be contracted to firms and/or individuals (national and/or foreign or jointly) depending on the nature and duration of the assignments. The short lists for consultant services contracts with firms shall comprise six firms with a wide geographical spread, and with no more than two firms from any one country and at least one from a developing country unless qualified firms from developing countries are not identified.

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International and local consultants will be required for the accomplishment of the following major tasks: sector policy, legal and regulatory framework analysis including drafting legislation and regulations, develop resettlement framework, legal implementation including legal support for transaction advisor; environmental data register and reporting system; SESA; develop environmental assessment procedures and training in procedures; renewable energy options study; transaction advisor; financial audit; PO staff; international procurement advisor; other consultants’ services; and opinion. Short lists of consultants for services estimated to cost less than US$ 100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

The following methods for selection of consultants would be followed: i)

Quality and Cost‐based Selection (QCBS) procedures will be used for sector policy, legal and regulatory framework analysis including drafting legislation and regulations, develop resettlement framework, legal implementation including legal support for transaction advisor; environmental data register and reporting system; SESA; develop environmental assessment procedures and training in procedures; renewable energy options study; and transaction advisor.

Steps in the QCBS and responsibility for their completion Steps in QCBS 1.

Prepare the TOR compatible with available budget.

2.

4.

Obtain the WB “No Objection” on the TOR. Publish Specific Procurement Notice in the local newspaper(s) and send it to the Bank for publishing in on‐line edition of UNDB and dgMarket (for consultants’ contracts above US$ 100.000).

Appoint committee for evaluation of Expressions of Interest (EOIs).

5.

Prepare criteria for evaluation of Expressions of Interest.

3.

6.

7.

8.

9.

Collect the EOIs received and file/copy them properly. Prepare the minutes on receipt of EOIs and issue it to the World Bank and members of the Evaluation Committee.

Evaluate Expressions of Interest and prepare a short list of consultants who responded to the SPN. The short list shall include six firms ‐ out of them not more than two firms from one country and at least one firm from a developing country (if qualified).

Prepare the Request for Proposals (RFP), which includes a Letter of Invitation, Information to Consultants, ToR and proposed contract.

Obtain the approval of the implementing agencies and the WB “No Objection” on the short list and the RFP.

Responsibility Working groups with support of PO PO PO Implementing ministry PO and implementing ministry PO

Evaluation Committee with support of the PO PO and working groups PO

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10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

Steps in QCBS Provide the final short list to the firms who expressed interest, as well as to any other firm who specifically asked so.

Issue the RFP to the shortlisted firms.

Hold the meeting with the Consulting firms requesting to visit the PO or site, if specified in the RFP. Document any question for clarifications and their respective answers, and respond to all consulting firms without identifying the name(s) of the consulting firms requesting clarification.

If needed, modify the RFP through an Amendment approved by the WB and issue the Amendment to the shortlisted firms.

Appoint committee (3‐5 members) for evaluation of proposals.

Receive the proposals and mark the time and date when the proposal was received. Return unopened any proposal received after the deadline.

Open the technical proposals in presence of the Evaluation Committee immediately after deadline for proposal submission.

Prepare the minutes on receipt of proposals and opening of technical proposals, and send it to the World Bank and members of the Evaluation Committee.

Deposit the financial proposals with independent authority until they are opened publicly.

Evaluate quality of technical proposals on the basis of criteria/subcriteria and points specified in the RFP. Each member of the Evaluation Committee shall score independently.

Prepare the report on evaluation of technical proposals. Obtain the WB “No Objection” on Technical Evaluation Report.

Notify successful firms that they have secured the minimum qualifying mark and advise them on date, time and address for public opening of the financial proposals.

Open the financial proposals publicly in the presence of evaluation committee members and representatives of the successful consulting firms who choose to attend. Announce the names of successful consulting firms and their technical score, and the read aloud the proposed prices.

Prepare the minutes of the public opening of financial proposals and promptly send it to the WB and to all consultants who submitted proposals.

Evaluate financial proposals.

Complete the final evaluation report ranking the proposals according to their combined technical and financial scores (using the RFP assigned weights). Send the report as information to the WB. Invite to negotiations the firm scoring the highest combined technical and financial score.

Appoint the Negotiation Committee.

Responsibility PO PO PO and implementing ministry PO and implementing ministry PO and implementing ministry Implementing ministry PO

PO

PO Evaluation Committee with support of the PO Evaluation Committee and PO PO

PO

PO Evaluation Committee with support of the PO Evaluation Committee and PO PO I implementing ministry

53

Steps in QCBS 28.

Hold the negotiations with the highest ranking consulting firm.

If negotiations with the highest ranking firm fail to result in an acceptable contract, the next ranked firm will be invited for negotiations. Consult with the WB prior to taking this step.

Incorporate results of the negotiations in a draft Contract.

Present to and agree draft Contract with the implementing agencies.

Obtain the WB “No Objection” on Contract to be signed.

Inform unsuccessful bidders about successful completion of the negotiations.

Sign the Contract with the consultant.

Submit a copy of the signed Contract to the WB and assure appropriate registration of the contract.

Return unopened financial proposals of firms who have not secured minimum qualifying mark during evaluation of quality of the proposals.

Publish information about the contract award in UNDB online and in dgMarket. Send the same information to all consultants who have submitted proposals.

Provide explanation to any consultant who wishes to ascertain the ground on which its proposal was not selected.

Receive the invoice for advance payment (if so specified in the Contract) and the bank guarantee by the contracted consultant, and pay the amount promptly to enable the work to begin.

29.

30.

31.

32.

33 34.

35.

36.

37.

38.

39.

Responsibility Negotiation Committee with support of the PO PO and Negotiation Committee PO PO PO PO Implementing ministry PO PO

PO PO Implementing ministry and PO

ii) Least Cost Selection (LCS) procedures will be used for selection of auditing firm for annual audits throughout the life of the Project.

Steps in LSC and responsibility for their completion Steps in LCS 1.

Prepare the TOR compatible with available budget.

2.

Obtain the WB “No Objection” on the TOR. Establish “minimum” qualifying mark for the “quality” that would be stated in the LOI, keeping in mind that all proposals above the minimum compete only on “cost”.

Preparation of short list and the RFP. Before composing the short list, the firms should confirm their interest in the assignment.

Obtain the approval of the implementing agencies and the WB “No Objection” on the short list and the RFP. Send the RFP to the shortlisted firms, requesting technical and financial proposals to be submitted in two envelopes.

3.

4.

5.

6.

Responsibility Working groups with support of PO PO PO and implementing ministry PO and implementing ministry PO PO

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Steps in LCS Document any question for clarifications and their respective 7. answers, and respond to all consulting firms without identifying the name(s) of the consulting firms requesting clarification.

8. Appoint committee for evaluation of proposals.

Receive the proposals and mark the time and date when the proposal 9. was received. Return unopened any proposal received after the deadline.

Open the technical proposals in presence of the Evaluation Committee immediately after deadline for proposal submission.

10. Prepare the minutes on receipt of proposals and opening of technical proposals, and issue it to the World Bank and members of the Evaluation Committee.

Deposit the financial proposals with independent authority until they 11. are opened publicly.

12. Evaluate “quality” of technical proposals.

Responsibility PO and implementing ministry Implementing ministry PO

PO

PO Evaluation Committee with support of the PO Evaluation Committee and PO

Prepare the report on evaluation of “quality” of technical proposals.

Obtain the WB “No Objection” on Technical Evaluation Report.

Notify successful firms that they have secured the minimum 14. qualifying mark and advise them on date, time and address for public PO opening of the financial proposals.

Open the financial proposals publicly in the presence of evaluation committee members and representatives of the successful consulting 15.

PO firms who choose to attend. Announce the names of successful consulting firm and the read aloud the proposed prices.

Prepare the minutes of the public opening of financial proposals and 16. promptly send it to the WB and to all consultants who submitted PO proposals.

Evaluation Committee 17. Evaluate financial proposals. with support of the PO Complete the Financial Evaluation Report. Send copy of the Evaluation Committee 18.

Financial Evaluation Report to the WB for information. and PO 19. Invite firm with the lowest price to negotiations.

PO 20. Appoint the Negotiation Committee.

Implementing ministry Negotiation Committee 21. Hold the negotiations with the consulting firm with the lowest price with support of the PO 22. Incorporate results of the negotiations in a draft Contract; PO 23. Present to and agree draft Contract with the implementing agencies. PO 24. Obtain the WB “No Objection” on Contract to be signed.

PO Inform unsuccessful bidders about successful completion of the PO 25. negotiations.

Implementing agencies 26. Sign the Contract with the consultant. with support of PO Submit a copy of the signed Contract to the WB and assure 27.

PO appropriate registration of the contract.

13.

55

Steps in LCS Return unopened financial proposals of firms who have not secured minimum qualifying mark during evaluation of “quality” of the proposals.

Publish information about the contract award in UNDB online and in dgMarket. Send the same information to all consultants who have submitted proposals.

Provide explanation to any consultant who wishes to ascertain the ground on which its proposal was not selected.

Receive the invoice for advance payment (if so specified in the Contract) and the bank guarantee by the contracted consultant, and pay the amount promptly to enable the work to begin.

28.

29.

30.

31.

Responsibility PO

PO PO PO and implementing ministry

iii) Selection Based on Consultants’ Qualifications (CQ) procedures would be used for very small consulting assignments at the amount of less than US$ 100,000.

Steps in CQ and responsibility for their completion Steps in CQ

Responsibility Working groups with support of PO PO

1.

Prepare the TOR compatible with available budget.

2.

Obtain the WB “No Objection” on the TOR. Publish Specific Procurement Notice, requesting information on the PO consultants’ experience and competence relevant to the assignment.

Appoint committee for evaluation of Expressions of Interest.

Implementing ministry Evaluation Committee Prepare criteria for evaluation of Expressions of Interest. with support of P Collect the EOIs received and file/copy them properly. Prepare the minutes on receipt of EOIs and issue it to the World Bank and PO members of the Evaluation Committee.

Evaluate Expressions of Interest and prepare the EOI Evaluation Evaluation Committee Report with the short list. Ask for additional qualification with support of the PO information (if needed) Obtain the approval of the implementing agencies and the WB “No PO Objection” on the EOI Evaluation Report and the RFP. Prepare the Letter of Invitation, which will ask the selected firm to PO and working groups submit a combined technical‐financial proposal.

Issue the LOI to top‐ranked consulting firm from the short list.

PO PO and implementing Provide clarifications as requested by selected consulting firm. ministry Appoint committee for evaluation of proposals.

Implementing ministry Receive combined technical‐financial proposal.

PO Review the proposal and prepare the Minutes on the Proposal Evaluation Committee Review. with support of the PO Invite the selected consulting firm to negotiations.

PO PO and implementing Appoint the Negotiation Committee. ministry

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

17.

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Steps in CQ 18.

Hold the negotiations with the selected consulting firm.

If negotiations with the first‐ranked consulting firm fail to result in an acceptable contract, the second‐ranking firm will be asked for combined technical and financial proposal and invited for negotiations. Ask for the WB prior approval before taking this step.

Incorporate results of the negotiations in a draft Contract.

Present to and agree draft Contract with the implementing agencies.

Obtain the WB “No Objection” on Contract to be signed.

Sign the Contract with the consultant.

Submit a copy of the signed Contract to the WB and assure appropriate registration of the contract.

Publish information about the contract award in UNDB online and in dgMarket. Send the same information to all consultants who have submitted EOIs. Provide explanation to any consultant who wishes to ascertain the ground on which its proposal was not selected.

Receive the invoice for advance payment (if so specified in the Contract) and the bank guarantee by the contracted consultant, and pay the amount promptly to enable the work to begin.

19.

20.

21.

22.

23.

24.

25.

26.

27.

Responsibility Negotiation Committee with support of the PO PO and Negotiation Committee PO PO PO Implementing ministry PO PO PO Implementing ministry and PO

iv) Individual Consultants (local and international) would be hired in accordance with Section V of the Consultants’ Guidelines. Many specialized activities where specific skills are needed for short period of time at scattered intervals and which would not be practical to package with the assignments for consulting firms described above, would be best served through the recruitment of individual consultants (both foreign and national) to: (i) assist in training, retreats, and study tour’s preparation and outreach campaign, revision of current materials for printing and dissemination; (ii) assistance in designing the technical aspects of the dissemination and outreach strategy (iii) any needed assistance in project implementation. Selection of individual consultants will be carried out in accordance with Section V of the Consultant Guidelines. Individuals will be selected on the basis of their qualifications for the assignment by comparing the CVs obtained in response to an advertisement in the national press or Development Business.

Steps in IC 1.

Prepare the TOR compatible with available budget.

2.

Obtain the WB “No Objection” on the TOR.

Responsibility Working groups with support of PO PO

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4.

Steps in IC Publish advertisement in the national press and in Development Business (if needed), asking for CVs of individual consultants to be submitted as a part of the EOI. Appoint committee for evaluation of EOIs of individual consultants.

5.

Prepare criteria for evaluation of CV’s/EOIs of individual consultants.

3.

Collect the EOIs and CV’s and file/copy them properly. Prepare the minutes on receipt of EOIs of individual consultants and issue it to the World Bank and members of the Evaluation Committee.

Evaluate CVs of individual consultants and prepare the Evaluation 7.

Report.

Obtain the approval of the implementing agencies and the WB “No 8.

Objection” on the Evaluation Report.

9. Invite the first‐ranked individual consultant to negotiations.

10. Appoint the Negotiation Committee.

11. Prepare the draft Contract.

6.

12. Hold the negotiations with the selected individual consultant.

If negotiations with the first‐ranked consulting firm fail to result in an 13. acceptable contract, the second‐ranking consultant will be invited for negotiations. Ask the WB for approval prior to taking this step.

14. Incorporate results of the negotiations in a draft Contract.

15. Present to and agree draft Contract with the implementing agencies.

16. Obtain the WB “No Objection” on Contract to be signed.

17. Sign the Contract with the consultant.

Submit a copy of the signed Contract to the WB and assure appropriate registration of the contract.

Inform unsuccessful consultants about successful completion of the 19. negotiations.

Provide explanation to any consultant who wishes to ascertain the 20. ground on which she/he was not selected.

Receive the invoice for advance payment (if so specified in the 21. Contract) by the contracted consultant and pay the amount promptly to enable the work to begin.

18.

Responsibility PO Implementing ministry Evaluation Committee with support of PO PO Evaluation Committee with support of the PO PO PO Implementing ministry PO Negotiation Committee with support of the PO PO and Negotiation Committee PO PO PO Implementing agencies with support of PO PO PO PO Implementing agencies and PO

v) Single Source Selection (SSS) would be used, subject to the IDA’s prior approval, for very specialized low value contracts which meet requirements for SSS of the Consultants’ Guidelines.

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Steps in SSS and responsibility for their completion Steps in SSS 1.

Prepare the TOR compatible with available budget.

2.

6.

Obtain the WB “No Objection” on the TOR. Prepare a letter of justification for the single source selection of the consultant Prepare the Letter of Invitation, which will ask the selected consultant to submit a combined technical‐financial proposal.

Obtain the approval of the implementing agencies and the WB “No Objection” on the Letter of justification for the single source selection and the LOI. Issue the LOI to selected consultant.

7.

Provide clarifications as requested by the selected consultant.

3.

4.

5.

8.

9.

Appoint committee for evaluation of proposals.

Receive combined technical‐financial proposal.

Review the proposal and prepare the Minutes on the Proposal 10.

Review.

11. Invite the selected consultant to negotiations.

12. Appoint the Negotiation Committee.

13. Hold the negotiations with the selected consultant.

14.

15.

16.

17.

Incorporate results of the negotiations in a draft Contract.

Present to and agree draft Contract with the implementing agencies.

Obtain the WB “No Objection” on Contract to be signed.

Sign the Contract with the consultant.

Submit a copy of the signed Contract to the WB and assure 18. appropriate registration of the contract.

Publish information about the contract award in UNDB online and in 19. dgMarket.

Receive the invoice for advance payment (if so specified in the 20. Contract) and the bank guarantee by the contracted consultant, and pay the amount promptly to enable the work to begin.

3.1.13

Responsibility Working groups with support of PO PO PO PO PO PO PO and implementing ministry Implementing ministry PO Evaluation Committee with support of the PO PO Implementing ministry Negotiation Committee with support of the PO PO PO PO Implementing ministry PO PO Implementing ministry and PO

Training Activities

The trainings and study tours will be carried out according to a Training Plan, which the PO will revise semi‐annually and submit to the Bank for approval prior to implementation. Estimated budget, list of participants, and draft agenda for the training events and study tours will be subject to Bank prior review. Expenditure items for training activities, including study tour, would be also reported under progress reports. The status of the training in progress would be

59

included as part of the quarterly progress reports, and would be updated within the Annual Work Plan.

3.1.14

Incremental Operating Costs

Reasonable incremental expenses incurred on account of Project implementation, management and monitoring, including office supplies, publication of procurement notices, vehicle operation, office and equipment maintenance and repair, communication, translation and interpretation, travel and supervision costs, and other miscellaneous costs directly associated with Project, but excluding salaries of officials and employees, will be financed under the Grant for the duration of the Project.

3.1.15

Documents clearance/Prior and Post Review by the World Bank

When procurement documentation that requires WB’s prior clearance/approval is ready for sending to the WB, the following procedure will be applied: • The documentation is verified by PO Project Manager and then sent to the WB Task Manager for the Project. Signed copy is kept in the files of the PO procurement staff.

• The clarifications are given to WB for questions/comments as soon as possible.

• If the documentation does not satisfy the relevant WB Procedures, the WB Task Manager will inform the PO, stating what is incorrect and giving recommendations as to how documents can be corrected.

• The PO procurement staff will be responsible for promptly making necessary corrections to the documents before revised documentation is re‐submitted to the WB. • When the documentation satisfied the relevant WB Procedures, the WB Task Manager will inform the PO on the documents clearance.

• The document is considered cleared only when the written No Objection from the WB Task Manager for the Project is received by PO. Only after that PO can proceed with further activities.

After award of contracts, should any material modifications or waiver of terms and conditions of a contract resulting in an increase or decrease above 15 percent of the original amount, IDA would undertake a prior review of such modifications (including modifications to contracts for consulting services).

With respect to prior review of goods contracts and of consultant contracts, the procedures set forth in Appendix 1 of the respective guidelines will be applied. Full documentation should be submitted to IDA for prior review of: a) all contracts awarded through ICB; b) first 2 goods contract awarded through SH; c) TORs for all consulting contracts; d) all consultant contracts awarded through QCBS, FBS and SSS; e) first 2 consulting contracts and all consulting contracts over US$50,000 awarded through CQ; f) first two individual contracts and all individual contracts over US$25,000; g) the consultant contract for audit awarded through LCS; 60

h) after contract award any material modifications or waiver of terms and conditions of a contract resulting in an increase above 15% of the original contract amount, or any modifications to contracts for consulting services.

All other contracts will be subject to post reviews in accordance with the procedures described in Appendix 1 of the Procurement and Consultant Guidelines.

IDA prior review of procurement documentation will cover the following: • Terms of reference for consulting services; • Equipment lists, schedules of requirements and technical specifications; • Packaging of bids and updated cost estimates; • SPNs and advertisements; • Bidding documents for non‐consulting services; • EOI evaluation criteria, EOI evaluation reports and Shortlists of consultants; • Requests for Proposal for consultant services; • Technical and combined evaluation reports; • Draft contracts and recommendations for award; and • Estimated budget, list of participants and draft agenda for each training 3.1.16

Records Management/Filing

The PO will maintain complete procurement files which will be reviewed by WB supervision missions. The filing system will, inter alia, encompass the following documents:

1. Documents related to procurement of consulting services: • GPN • Terms of Reference for the assignments • Requests for No Objection and NO on the TOR • SPNs and/or local advertisements • EOIs of consultants who responded to notices/advertisements • Minutes on receipt of EOIs • Appointments of committees for evaluation of EOIs • Approvals of the EOI evaluation criteria by the WB • EOIs evaluation reports • Short Lists • Requests for NO and NO on the Short Lists • Approval of the RFPs by the implementing agencies • Request for NO and NO on the RFPs • Notices on establishment of the short list for the firms who expressed their interest • Final RFPs/LOIs, as issued to selected consultant(s), together with documentation related to their issuing • Records of RFP receipt by the shortlisted firms • Questions by consultants, clarifications and Amendments to the RFPs • Pre‐proposal conference minutes • Proposals receipts/signatures • Consultants proposals (technical‐financial or technical and financial) • Appointments of proposal evaluation committees

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• • • • • • • • • • • • • • • • •

Proposals opening minutes (for technical‐financial proposal or for technical and financial proposals) Reports on technical, financial and combined evaluations and individual scoring sheets Request for NO and NO on the proposal evaluation reports Different notifications to and by the consultants and records on their receipts Notifications of successful consultants and invitations to negotiations Negotiation Committees appointments Minutes of negotiations Draft Contracts Approval of the draft Contracts by the implementing agencies Requests for NO and NO on the draft Contracts Signed contracts Signed Contract amendments, if any Bank guarantees, where needed Notifications and explanations provided to unsuccessful bidders Consultant reports, including progress reports Acceptance of the consultant reports by implementing agencies Assignment completion reports

2. Documents related to procurement of goods and non‐consulting services: • GPN • Technical specifications • Bidding Documents and ITQs • Requests for NO and NO on the Bidding Documents • Requests for NO and NO on ITBs and ITQs • Final ITBs and ITQs • Record of ITB receipts (such as DHL documents) • Lists of suppliers • Request for NO and NO on the lists of suppliers • SPN and/or local advertisement • Responses to the notice/advertisement • Appointment of committees for bids evaluation • Bidders questions and clarifications/answers • Pre‐bid conference minutes • Bids receipts/signatures • Received bids • Bid opening minutes • Evaluation Committees reports • Request for NO and NO on evaluation reports and recommendations to award • Notifications of successful firms • Signed Contracts • Purchase orders • Confirmations of receipt of purchase orders • Signed Contract amendments, if any • Bids securities • Performance securities • Contract deliverables receipts 62

• • •

3.1.17

Final hand receipts Acceptance reports and reports on goods inspection Guarantee documentations Standard Bidding Documents

For procurement under the Credit, the PO will use the WB's latest Standard Bidding Documents (SBD), Standard Form of Consulting Contracts and Request for Proposals, and Standard Bid Evaluation Report Forms. ECA Region’s standard/small‐value bidding and contracting documentation will also be utilized. The PO will stay updated on the actual situation regarding the latest SBD by checking the WB web site on the regular basis: www.worldbank.org/html/opr/procure/sbd.html .

Chapter 3.2

Financial Management

The Grant Agreement for the Lignite Power Technical Assistance Project (Grant No. H254‐0‐KOS) (the Agreement) provides that “The Grant Recipient shall maintain a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the World Bank, adequate to reflect the operations, resources and expenditures related to the Project”. 2

The present chapter describes the features of the Project’s financial management system and the actions to be taken for its proper implementation.

3.2.1

Implementing Scheme

The LPTA Project will be implemented over a four year period, ending in the second half of 2009.

The overall management responsibility for the Project lies under the direction of the Project Steering Committee, assisted by the Project Office management and staff. A Project Steering Committee (PSC) is established to coordinate Project implementation. Day‐to‐day Project implementation will be the responsibility of the Project Office, under the Ministry of Energy and Mining. The Project Office will be staffed by four experts who will carry out day‐to‐day Project implementation activities and also play a lead role in the monitoring and evaluation progress.

2

Financial reporting, as well as progress reporting, shall be done using the Progress Reporting Basic Template, attached as Annex 1 () to this Operational Manual

63

(Specific roles and responsibilities are described in Chapter 2 of this OM). The PO would be responsible for the preparation of the background financial supporting documents.

The Grant Unit of the MFE will be responsible for disbursement, financial reporting and auditing of the Project, while the Project Office will ensure that payments are approved by appropriate staff only after services have been delivered before payment requests are forwarded to the MFE. The Grant Unit will work in close cooperation with the MEM to secure proper financial management. The MEM will be responsible for the implementation of the Project through the Project Office. The PPA will oversee the procurement of all goods and services for the Project in compliance with IDA procurement guidelines and procedures.

The MEM Finance and Economics Department with fully assistance of the PO will coordinate the Project’s overall financial management arrangements, develop the Project’s financial procedures manual, analyze and complete the Project’s financial monitoring reports prepared by the Administrative and Financial Task Manager within PO under the coordination of the Project manager, organize the Project’s audit, and provide ad hoc advice to the Project’s other implementing entities as required.

The MFE will ensure that the Project will be implemented according to the Kosovar laws and the EAR as counter partner in the Project will ensure its financial contribution to the Project.

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3.2.2 Flow of funds

The flow of funds for the Project is illustrated in the following diagram: Diagram 3.2.1: General sequence and flow of documents and funds

The World Bank/IDA 5

6

UNMIK

PISG (12) USD funds

4 Treasury

7

MFE Grant

3

MEM/ PSC 2

PO

Consultant

s/Provider

The above flow of funds chart shows following steps to be made:

Step 1 – Consultants make request for payment (issuance of invoices)

1

Step 2 – PO processes payment requests (and review physical progress) and draft disbursement application to submission to MEM/MFE/UNMIK as Implementing Agency Step 3 – The MFE Grant Unit approves payments and prepares withdrawal applications based on UNMIK power of authority Step 4 – MEM processes the Commitment and Payment Orders (CPO) and either decide if pays from its own sources through the Single Treasury Account or it asks The World Bank to pay directly Step 5 – Approval and submission to the World Bank Step 6 – Payments are made by the World Bank directly to the providers/consultants

65

Step 7 – Approved payments are made by Treasury System from a single account in the Banking and Payment Account of Kosovo (BPK) based on CPO prepared by MEM.

The IDA grant is not used for pre‐finance other sources of funds.

3.2.3 Accounting Policies and Procedures

The accounting books and records are maintained on a cash basis by MFE based on the documentation provided by the MEM, including additional commitment information for signed contracts. Quarterly and yearly Project financial statements are presented in EUR. MFE has instituted a set of appropriate accounting procedures and internal controls including authorization and segregation of duties for this Project based on previous similar projects.

Additional information on these procedures and controls can be found in the March 2005 Procedures for the Management of Designated Donor Grants in Kosovo, attached as Annex 2 to this Operational Manual.

All payments will be made by the MFE from its own sources of funds or by direct payment by the IDA, and no designated account will be needed. Based on the documents prepared by the Project Office, all relevant documents will be processed by the Grant Unit in the MFE, either to be paid by the Treasury or by direct payments. The MFE will prepare all relevant documents in support of applications for withdrawal, sign the applications, and forward them to the IDA through UNMIK.

All bank and accounting transactions must be completed based on legal documentation and forms used by WB rules, local bank system, accounting standards and Kosovar Treasury system.

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3.2.3.1

General Provisions

The accounting policy is elaborated in accordance with: •

Government Financial Management System (FMIS)

•

Chart of accounting accounts as per FMIS

All Project related accounts will be maintained as part of the MEF's accounting system. Based on monthly reports from this system (Freebalance), the MEF will, in cooperation with the Secretariat in MEM, produce the quarterly and annual financial reports required mainly through reports from the Freebalance system. The consolidated reports on Statement of Sources and Uses of Funds, on uses of funds according to organizational code, the uses of funds according to sub‐component, and the commitment/obligation analysis report with commitment and actual data, will all be produced by the Freebalance system on request of the MEF Grant Unit.

The PM will sign the acts which are the basis for receiving and transferring of goods, cash, as well as for liabilities to be paid (to the suppliers).

The Administrative and Financial Task Manager within the PO, responsible with the supporting documentation has no right to receive for execution the documents for transactions, which are illegal and are not in compliance with financial and contracting discipline.

Financial reports for statutory purposes, excluding cash flow statement, are prepared in accordance with accrual method. Financial Reports prepared for the WB/GRM purposes are prepared in accordance with cash basis method (on sources received and using of funds).

3.2.3.2

Staff remuneration procedures

Local staff remuneration is computed monthly, or as required by the contract, by the Administrative and Financial Task Manager of PO which gives professional support to MEM, preparing a single spreadsheet for all local consultants involved in the Project which is sent/ countersigned by PSC Chairman. Individual employee calculations and payment orders are prepared by the Administrative and Financial Task Manager under the PM supervision. Due

67

amounts are paid in local currency/EUROs via Treasury system to the relevant employees/consultants via transfer to a banking account (card or simple bank account).

3.2.3.3

Contract monitoring procedures

For each contract, the following Contract monitoring sheet will be filled in by each entity: i)

date of the contract;

ii) number of the contract; iii) name of the contractor; iv) contracted start date; v) contracted end date; vi) name of the assigned resident inspector for works or recipient for goods or services, where relevant; vii) name of the assigned contract monitoring staff within the Project implementing entity; viii) contract value; ix) list of invoices received for the contract; x) amounts paid in respect of the contract; xi) the date of the last inspection, where relevant; and xii) record of procurement complaints.

3.2.3.4

Payment monitoring procedures

For each payment, the following Standard checklist will be filled in by each entity prior to the payment of any invoice to ensure that all appropriate contract monitoring procedures have been performed, confirming: i)

that the invoice was accompanied by an appropriate certified completion certificate by the assigned resident inspector or other goods received note or acknowledgement of receipt of the goods or services;

ii) the mathematical accuracy of the invoice; iii) that the invoice agrees to the terms of payment as specified in the contract; iv) that the works described in the invoice and resident inspector's report are those contracted for; v) the approval by the relevant staff member; vi) the approval by the General Project Director;

68

vii) the date of payment of the invoice; and viii) confirmation that the contract monitoring sheet has been updated.

3.2.3.5

Other procedures

Other procedures that will be performed by each entity will consist of the following: •

Close the monthly Project accounting books no later than the 15th of the following month;

•

Close the yearly Project accounting books no later than the 31st of January of the following year;

•

Check the mathematical accuracy of the FMRs inputs with the accounting records;

•

Check the opening figures of the quarterly FMRs with the closing figures of the previous quarter;

•

Check the quarterly FMRs figures for consistency between the various reports (Statement of Sources and Uses of Funds, Uses of Funds by Project Activities, Special Accounts Statements, Physical Progress Reports, Procurement Reports and Contract Monitoring);

•

Monthly bank accounts statements reconciliation with Project accounting records;

•

Monthly reconciliation of WB disbursement records with Project accounting records;

•

Inventory and fixed assets stock taking at least once per year and more often as needed;

3.2.4

Petty cash procedures.

Project team should attempt to minimize the usage of petty cash. But it will persist in some accounting procedures such as: •

Study tours abroad;

•

Unexpected operational costs.

Estimated international travels costs are authorized by the PSC Chairman. Calculations are made based on provisions approved by the World Bank. These estimates are submitted as an Order for trip to the MFE/Treasury System as referral for petty cash delivery.

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As regards local business trips and unexpected operational expenses, each member of the Project team uses its own money/ or receives advance payment. The expenses are reimbursed upon submitting of the travel / expenses back to office report. Reimbursement is made by MFE from its own sources, and then included in the monthly Summary Report.

3.2.5

Disbursements

Disbursements from the Grant will be made based on the transactional disbursement method, reimbursing the Recipient based on Summary Reports, as well as using direct payments from the Grant, although only in exceptional cases as initiated by the MFE. No designated/MFE own sources will be opened. Reimbursement will be made monthly throughout the Project period.

There is no plan to move to report‐based disbursement.

Allocation of Grant Proceeds

Amount of the Financing

Percentage of Expenditures to

Category

Allocated (expressed in SDR)3

be Financed

3,800,000

100%

(1) Goods, consultants’ services and Incremental

Operating Costs for Parts A, B

and C of the Project.

(2) Consultant’s services for

2,000,000

100%

Part D of the Project TOTAL AMOUNT

5,800,000

3.2.6

Staffing

All Commitment and Payment Orders (CPOs) produced by the MEM will be submitted to the MFE. The MEM has a duly established finance unit with adequate staffing, and the processing of the Project invoices will follow the normal procedures this unit is already using.

3

US dollar equivalents will be provided at negotiations by the Disbursement Officer.

70

The Grant Unit of the MFE will assign a staff member in the Grant Unit to be the focal point for processing and control of payments, production of withdrawal applications, as well as producing quarterly and annual financial statements for the Project.

The Project Office in MEM will work closely with the MEM and MFE to ensure that quarterly interim un‐audited financial reports (previously called Financial Monitoring Reports or FMRs), annual financial statements and other progress reports are submitted timely to the IDA reflecting the implementation status of the Project.

3.2.7

Auditing

The Grant Recipient is obligated to follow all audit conditions stipulated for the WB financed Project.

As there is no internal audit function within the MEM, no reliance would be placed on the internal audit function for this Project. Therefore, the Project will be audited annually by an audit firm and on terms of reference acceptable to the Bank. The audit scope will include the Project’s books and records as maintained by the MEM team, all withdrawal applications, and Summary Reports. The audited Project financial statements together with the auditor’s opinion thereon will be provided to the Bank within six months of the end of the reporting period, being the fiscal year.

In addition, the Office of the Auditor General will perform ad hoc external audits of the MEM, including of this Project. An operational review of the Project would be conducted annually, based on terms of reference acceptable to the Bank.

The audit contract will be financed by the Grant and be awarded by a competitive bidding process – normally for the three year life of the Project, subject to satisfactory performance. The MFE Grant Unit team (assigned grant officer) will coordinate the auditing and will sign the audit contract for the entire Project.

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The standard Samples of TORs for the auditing of Bank‐funded projects will be used. Before the auditor is engaged, the TOR for the auditor should be reviewed by the Bank’s Financial Management officer for Kosovo..

3.2.8

Accounting procedures

The chart of accounts is based on the government’s Financial Management Information System (FMIS). This system was assessed in the Operational Financial Accountability Report and found to be acceptable for the purpose of registering the necessary financial information. As the participants under the Project fall under the umbrella of the Kosovo Consolidated Budget, all Project‐related payments would be made via the Single Treasury Account (STA) unless direct payments on an exceptional basis are chosen, and the accounts would be maintained as part of the MFE’s accounting system

MEM is currently using EXCEL spreadsheets for the accounting and reporting using the various formats required by the MFE under the Kosovar applicable accounting regulations. It is anticipated that until the completion of the Project most line ministries, including MEM, would have in place modern informational systems with the assistance of the PFM.

MEM through its PO would continue, for the time being, to use the existing EXCEL spreadsheets for the accounting and reporting of the Project, by creating Project‐specific accounting ledgers to allow recording accurately the Project operations, by disbursement categories, by Project components, subcomponents and activities, using the statutory chart of accounts as per FMIS.

A number of simple procedures to strengthen the data security and reduce the risk of accidentally or intentionally altering data would be introduced, such as saving the Project EXCEL files with different file names monthly and archiving promptly after each month’s end, regular back up of files, stricter password protection and others. Also daily backup facilities required – integrity methodology.

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3.2.9

Reporting requirements

MFE will produce all financial reports and Summary Reports (previously known as Statement of Expenditures or SOE) for the IDA. The formats of the quarterly interim un‐audited financial reports similar to the ESTAP III FMRs will be agreed upon for Project monitoring and supervision and the formats of these will be included in the FM manual. The MFE will produce a full set of interim un‐audited financial reports every three months throughout the life of the Project.

In addition for statutory purposes the Project team will prepay and submit the following: Reports to national fiscal authorities •

Annual Income tax Statement for the payroll tax paid from local consultants salaries;

•

Monthly income tax report for the payroll tax paid from salaries;

•

Quarterly report on paid medical insurance.

Reports to national social insurance authorities on social charges •

Quarterly and annual report on paid social payments.

Reports to MFE •

Monthly 2PI report and disbursements report.

Financial Monitoring Reports The following basis FMRs will be completed by Project team during each Project implementation year: •

1‐A Sources and uses of funds

•

1‐B Uses of funds by Project components

•

2‐A Review of Physical Progress

•

3‐A Procurement Monitoring Report (Goods, and non consulting services)

•

3‐B Procurement Monitoring Report (Consulting Services)

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3.2.10

Terms of Reference for the PO Financial Management Staff

Objectives of the Assignment Duties and responsibilities The Administrative and Financial Task Manager’s specific responsibilities will include: •

develop the Project accounting system in accordance with World Bank and Government accounting, reporting and auditing requirements, subsequently operate and update the system as necessary;

•

keep detailed Project accounts for the grant funds in accordance with the World Bank and Government accounting and auditing requirements, using the FMIS;

•

prepare quarterly and monthly Project budgets;

•

prepare regular (quarterly and monthly, as appropriate) grant financial statements in accordance with the World Bank and MFE reporting requirements;

•

prepare all financial monitoring reports;

•

prepare draft Commitment Payment Orders for MEM/MFE consideration and approval;

•

set up and keep detailed financial records in accordance with international accounting and auditing standards for easy access by IDA supervision mission and auditors;

•

Assist the Head of Financial Department of MEM and MFE Grant Officer within Grant Unit in all related financial and accounting Project activities.

Outputs and reporting The outputs of the consultancy fully comply with the above described consultant’s responsibilities. The Administrative and Financial Task Manager will report directly to the Project Manager about performed activities, and he/she is responsible towards PSC.

Qualification and Requirements The Administrative and Financial Task Manager will be selected competitively, based on the Procurement Guidance of the World Bank for Selection and Employment of consultants. The Administrative and Financial Task Manager will be expected to start the assignment in the September 2006.

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The Administrative and Financial Task Manager should have the following qualifications: •

Education: University degree on accounting and finance or equivalent

•

Possess at least 5 years accounting experience and some knowledge of the World Bank financial procedures in the field of loans/grants

•

Ability to work at different levels including with the local beneficiaries and banks

•

Albanian mother tongue is a must and fluency/working knowledge in English is an advantage

•

Ability to work with computer and knowledge of Word, Excel and accounting software packages

3.2.11

Terms of Reference for the Audit

As of the date of this report, the grant receiver is in compliance with its audit covenants of the existing IDA‐financed projects. Current project financial statements and auditing arrangements for the previous projects managed by MFE and MEM are acceptable and it has been agreed that these arrangements will be replicated for the proposed Project. The audit will only cover the Project activities. The auditor will be appointed by the MFE. The audits are conducted in accordance with International Standards on Auditing. The annual cost of the audits will be covered by the grant. The specific terms of reference has been agreed with IDA, and are presented below

Background The TOR should provide appropriate background information of the Project, including: a) a brief description of the Project including information on Project sources of funding; b) a general description of implementation arrangements, including the organizational c) structure of all implementing entities (if more than one); d) list the source and total amount of funds for the period subject to audit under this TOR (Bank’s loan/credit, trust funds, counterpart funds, etc); and total disbursements / expenditures for the period subject to audit

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Objective The objective of the audit is to enable the auditor to express an opinion on the financial statements of the Project as of year‐end 2007 and for the fiscal year then ending as reported in the Project Financial Statements (PFS).

The Project’s accounting system (books and records) provides the basis for the preparation of the PFS, was established to record the financial transactions of the Project. This accounting system is maintained by the PO assigned staff.

Scope of works The audit will be conducted in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants. Those Standards require that the auditor plan and perform the audit to obtain reasonable expectation (although responsibility for preventing irregularity, fraud, or the use of loan proceeds for purposes other than as defined in the legal agreement remains with the borrower) of detecting material misstatements in the entity financial statements. An audit includes carry out tests of transactions as are necessary, and will obtain an understanding of the entity accounting system, to assess its adequacy as a basis for the preparation of the Project financial statements and to establish whether adequate records have been maintained. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In conducting the audit, special attention should be paid to the following: a) External funds have been used in accordance with the conditions of the relevant financing agreements, with due attention to economy and efficiency, and only for the purposes for which the financing was provided. Relevant financing agreement is the Development Financing Agreement as of April 5, 2006 ; b) Counterpart funds have been provided and used in accordance with the relevant financing agreements, and only for the purposes for which they were provided; c) Goods and services financed have been procured in accordance with the relevant financing agreements;

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d) Necessary supporting documents, CPOs, records, and accounts have been kept in respect of all Project ventures including expenditures reported via Statement of Expenditures (SUMMARY REPORTs). Clear linkages should exist between the accounting records and the financial reports presented to the Bank. e) Where Special Accounts have been used, they have been maintained in accordance with the provisions of the relevant financing agreements. f)

The PFS have been prepared in accordance with generally accepted accounting principles and practices, and give a true and fair view of the financial position of the Project as of 2007 and of the resources and expenditures for the fiscal year then ending.

Project Financial Statements (PFS) The financial statements have been prepared in accordance with International Public Sector Accounting Standards issued by the Public Sector Committee of the International Federation of Accountants, and expenditures have been applied to the purposes intended in Development Financing Agreement. The Project Financial Statements should include a)

the cash receipts and payments of the Project during the years [or periods] ended 2007, 2008, 2009, 2010, showing the World Bank, Project funds from the EAR, and counterpart funds separately, and

b)

a Balance Sheet showing Accumulated Funds of the Project, bank balances, other assets of the Project, and liabilities, if any.

As an annex to the Project Financial Statements, the auditor should verify that the reconciliation, prepared by the Project staff, between the amounts shown as "received by the Project from the World Bank" and that shown as being disbursed by the Bank.

Audit Reports The auditor will issue an audit opinion on the Project Financial Statements, indicating that these financial statements present fairly the cash receipts and payments of the Project during the years [or periods] ended 2007, 2008, 2009, 2010, in accordance with International Public Sector Accounting Standards issued by the Public Sector Committee of the International Federation of Accountants.

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In addition to the audit opinion, the auditor will prepare a "management letter," in which the auditor will: a) give comments and observations on the accounting records, systems, and controls that were examined during the course of the audit; b) identify specific deficiencies and areas of weakness in systems and controls and make recommendation for their improvement; c) report on the compliance of each financial covenant in the relevant financing agreement, d) communicate matters that have come to attention during the audit which might have a significant impact on the implementation of the Project; and e) bring to the borrower's attention any other matters that the auditors considers pertinent, and f)

include management's comments in the final management letter

The financial reports, including the audit opinion, and management letter should be received by PO/MEM, no later than three months after the end of the audited fiscal year. The UNMIK as Project’s implementing agency should then promptly forward two copies of the audited financial statements (including audit opinion) and management letter to the Bank.

Attachment 3 of the Audit Guidelines: Annual Financial Reporting and Auditing for World Bank‐ Financed Activities provide specimen auditor’s opinion on the Project financial statements.

General The preparation of financial statements including adequate disclosure to the Project stakeholders falls under the MEM/PSC responsibility with the assistance of PM and PO staff. This includes the maintenance of adequate accounting records as per the Government Financial Management Information System requires, the selection and application of accounting policies, and the safeguarding of the assets of the PO. As part of the audit process, the auditor will request from management written confirmation concerning representations made to the auditor in connection with the audit.

The auditor should be given access to all documents, including the Bank’s Project Appraisal Document, the relevant legal agreements, and a copy of the Bank’s Financial Management Assessment of the Project entity, correspondence, and any other information associated with the Project and deemed necessary by the auditor. Confirmation should also be obtained of

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amounts disbursed and outstanding at the Bank and of amounts disbursed under Development Financing Agreement. Review the compliance on each of the financial covenants in the Financing Agreement.

It is highly desirable that the auditor become familiar with the relevant World Bank guidelines, which explain the Bank's financial reporting and auditing requirements.

These guidelines include: •

Audit Policies and Practices for World Bank‐Financed Activities – Proposed Changes dated January 24, 2003;

•

Guidelines: Annual Financial Reporting and Auditing for World Bank‐Financed Activities dated June 30 2003;

•

Loan Administration Change Initiative (LACI) Implementation Handbook;

•

Loan Administration Change Initiative (LACI) – Changes in Implementation dated June 28, 2001; and

•

Financial Monitoring Report (FMR) ‐ Guidelines to Borrowers dated November 30, 2001.

Personnel from MEM and the PO team will co‐operate fully with the auditor and will make available to the auditor whatever records, documentation and other information is requested by the auditor in connection with the audit.

This term of engagement will remain effective for future fiscal years unless it is terminated, amended or superseded.

The auditor should understand that its working papers can be subject to the review by authorized Bank staff.

Yearly audit timetable: Appointment of auditors – by 21st December; First draft of the audit reports – by 21st February; Final audit reports and management letters – by 21st March;

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3.2.12

Supervision Plan:

During Project implementation, the IDA will supervise the Project’s financial management arrangements in two main ways: i)

review the Project’s quarterly interim un‐audited financial reports as well as the Project’s annual audited financial statements and auditor’s management letter; and

ii) during the IDA’s supervision missions, review the Project’s financial management and disbursement arrangements to confirm that satisfactory financial management arrangements have been maintained.

As required, an IDA‐accredited Financial Management Specialist will assist in the supervision process.

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Annex 1

Draft Progress Reporting Basic Template

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Note: This template proposes (i) an overall assessment of results and progress toward each broad objective of the Grant; (ii) a progress report by activity or cluster of activities (Table A); and (iii) a financial reports on allocations and disbursements by activities or clusters of activities as the case may be (Table B).

Overall Assessment of Results and Implementation Progress: [describe briefly]

Table A. Details of Implementation Results, Progress and Critical Issues

Activities or clusters of Implementation Progress Critical Issues and Pending activities by sub‐components Actions

1.

2.

3.

4.

Table B. Allocations and Disbursements by Activity or Clusters of Activities in USD Based on the detailed budget

Grant Activity Allocation Disbursement I. Sub‐component 1

(i) Activity/cluster 1

(ii) Activity/cluster 2 (iii) Activity/cluster 3 (iv) Activity/cluster 4 (v) Etc. II. Sub‐component 2

(i) Activity/cluster 1

(ii) Activity/cluster 2 (iii) Activity/.cluster 3 (iv) Activity/cluster 4 (v) Etc. III. Sub‐component 3

(vi) Activity/cluster 1

(vii) Activity/cluster 2 (viii) Activity/cluster 3 (ix) Activity/cluster 4 (x) Etc. IV. Sub‐component 4

(xi) Activity/cluster 1

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(xii) Activity/cluster 2 (xiii) Activity/cluster 3 (xiv) Activity/cluster 4 (xv) Etc. Total Project

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Annex 2.

Procedures for the Management of Designated Donor Grants in Kosovo

July 2005

Treasury Department Grant Management Unit

Having regard to:

1. United Nations Security Council Resolution 1244 (1999) of 10 June 1999.

2. The Law on Public Financial Management and Accountability adopted by the Assembly of Kosovo on 23 January 2003 (Law 2003/2), as promulgated by UNMIK Regulation No. 2003/17.

3. Regulation No 2005/12 on the approval of the Kosovo Consolidated Budget.

4. The responsibilities of the SRGS and Provisional Institutions of Self‐Government under the Constitutional Framework for provisional Self‐Government in Kosovo (PISG).

1 Application of these Procedures

1.1 These procedures shall apply to all new Designated Donor Grants (DDG) established between the United Nations Interim Mission in Kosovo (UNMIK) and a donor. Donors are also encouraged to apply these procedures to existing grant agreements.

1.2 Under section 6.4 of UNMIK Regulation 2005/12 donors may, by approval of the SRSG, seek a waiver from part or all of this instruction.

1.3 In general these procedures only apply to public money. Article 10.1 of UNMIK Regulation 2003/17, The Law on Public Financial Management and Accountability, defines public money as money of financial assets in custody or under the control of any budget organization irrespective of whether the money is to be used for the activities of that budget organizations for some other purpose.

1.4 In some cases donors will choose to make payments which do not constitute public money. To ensure proper accountability and planning regarding donor support in Kosovo, Donors and Implementing Agencies are requested to provide a schedule of all donor contributions which do not constitute public money each year. This schedule should be received by 31 January each year regarding contributions from 1 January to 31 December of the previous year. This timeframe will enable the inclusion of this information in annual reports.

Schedule 1 to these procedures provides a uniform method for reporting these donations.

1.5 Grants represent an important source of supplementary funding for Kosovo.

Grant management should therefore ensure an appropriate balance between local needs and the Donor’s requirements. As such all parties to grant processes should ensure that where possible the specific expectations and requirements of donors are met.

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2

Definitions

2.1

2.2

A designated Donor Grant is defined as a provisional of non repayable funds or goods provided by a foreign government, international organization, or any other source, for a specific activity, function or purpose. The term designated donor grant excludes: • any loan or other fully repayable financial provision; and • any general budget support grant, being a grant that is not provided for a specific purpose but rather to provide financing support to general government expenditure.

All other definitions of terms n this document are the same as those used in the Law on Public Financial Management.

3.

3.1

3.2

3.3

3.4

3.5

3.6

Establishment of Grant Agreements DDGs involve five parties. The donor, providing the grant funds; UNMIK the recipient of the funds; the Treasury Department of the Ministry of Finance and Economy as the body assigned responsibility for management of the Kosovo Consolidated Fund; the implementing agency, the budget organization which oversees the processes to which the grant funds shall be applied; and where the implementing agency is a reserved power; the competent authority in the Provisional Institutions of Self Government (PISG). MFE may also be an implementing agency.

In some instances a non governmental body may be involved in the execution of processes in a relation to a Grant. These bodies may not be an implementing agency.

The implementing agency shall ensure that where a Grant involves execution by another party such arrangements adhere to the laws of both Kosovo and Donor and that the arrangements are properly defined in separate written arrangements from an adjunct to the Grant Agreement.

All Designated Donor Grants should have a grant agreement specifying issues such as purpose, amount, timing, accounting, reporting, grant manager, auditing and treatment of residual funds.

Any agreement for the provision of a Designated Donor Grant to be received by budget organization is to be entered into between UNMIK and the Donor organization.

UNMIK undertakes to involve a representative of the Provisional Institutions of Self Government (PISG) in negotiations for the establishment of a designated donor grant. In the absence of any other body, or in cases where in the Implementing Agency is not PISG, the MFE shall be the PISG representative.

All grant agreements signed between UNMIK and a donor should be initialed by a representative of the PISG. In cases where the Implementing Agency is not PISG, and in

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the absence of any other competent authority, the MFE shall be the PISG representative.

3.7

3.8

4

4.1

4.2

5 5.1

5.2

5.3

5.4.

5.5.

6 6.1

Original signed grant agreement documents are to be held by the Office of Legal Adviser within UNMIK. Copies of a duly authorized designated donor grant agreements are to be lodged with the Grant Management Unit in the Treasury Department of MFE.

Handling of Funds Donor funds are to be deposited into an account approved by the Treasury. Unless otherwise specified in the grant agreement, funds should be deposited into the KCF Main Account at the Banking Payment Authority of Kosovo.

Advice of any proposed deposit should be provided to the Grant Management Unit so that funds can be identified on receipt and processed accordingly.

Financial Management of Grants

Once funds have been received in the Kosovo Consolidated Fund, and identified as being associated with a signed grant agreement, these funds will be entered into the Treasury General Ledger system.

Once funds have been received consistent with 4.1, and the requirements of these procedures have been executed, funds for a DDG will be deemed to be automatically appropriated for the specific purpose as defined in the grant agreement.

The SRSG shall be informed in writing quarterly regarding the appropriation for any DDG under Section 5.2.

Designated Donor Grants shall not be spent by a (Budget) Organization unless they have been appropriated and allocated.

(Budget) Organizations shall not spent designated donor grants unless they are processed through the Kosovo Consolidated Budget.

Budget Reporting

Designated Donor Grants appropriated through the process outline in Section 5 above shall be identified in a separate budget appropriation schedule, as required to be prepared from time as specified by the annual Budget Regulation.

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7

7.1

7.2

7.3

7.4

7.5

8 8.1

8.2

8.3

9 9.1

10 10.1

Grant Management and Reporting Processes The Treasury General ledger System should be used as the source for producing financial reports to donors.

In addition to the normal controls executed over public money in Kosovo, all payments from Designated Donor Grants, must also be checked in the Grant Management Unit of the Treasury prior to the payment being processed through the Treasury.

Unless instructed otherwise in writing by UNMIK, the Implementing Agency will be responsible for preparing all standard financial reports from the Treasury system and replenishment requests envisaged in a grant agreement on behalf of UNMIK. A copy of all reports will be provided to the Office of Legal Advisor and the Grant Management Unit in the Treasury Department of the Ministry of Finance and Economy.

Where an Implementing Agency does not have direct access to the Treasury general Ledger System, the Grant Management Unit shall prepare the reports on behalf of the Implementing Agency.

In so far as any request is consistent with international public sector accounting, the Treasury Department shall be responsible to ensure the Chart of Accounts properly supports the specific reporting requirements requested by donors in its designated Donor grant Agreement.

Changes to Grant Agreements

All changes to grant agreements are to be negotiated and agreed between UNMIK and the Donor.

UNMIK will inform the PISG in writing of any changes to a Designated Donor Grant agreement

Changes to designated grant agreements should be initialed by a representative of the PISG

Ministry of Finance to undertake Actions on Behalf of the PISG

The monitoring of program performance shall be performed by the Implementing Budget Organization. Responsibility for reporting on disbursement of and receipt of funds and for performance reporting shall be performed by the Implementing Agency in accordance with Section 7. The implementing Budget Organization is responsible to prepare performance reports and submit the reports to MFE, with a copy to UNMIK.

Vat and Designated Donor Grants

Section 11 (C) of UNMIK Regulation 2002/17, Value Added Tax In Kosovo states that imports or internal purchases funded from the proceeds of grants made to UNMIK or through UNMIK for the PISG Ministries and Departments (by governments, 88

10.2

10.3

11 11.1

12 12.1

governments agencies, governmental or non‐governmental organizations in support of humanitarian and reconstruction programs and projects in Kosovo) are excluded from the application of VAT.

To receive VAT exemption from imports of goods funded by Designated Donor Grants, the UNMIK Customs Service must be advised in advance.

In relation to internal purchases funded from designated donor grants, an “excluded purchase order” must be obtained from the Tax Administration of Kosovo and presented to the vendor to ensure VAT is not charged at the time the goods or servile is received.

Designated Donor Grants which are not public money

To ensure proper accountability and planning regarding donor support in Kosovo, Donors are requested to provide a schedule of all donor contributions which do not constitute public money each year. This schedule should be received by 31 January each year regarding contributions from 1 January to 31 December of the previous year. This timeframe will enable the inclusion of this information in annual reports. Schedule 1 to these procedures provides a uniform method for reporting these donations.

Nomination of Contact Officer for Grant management issues

Both UNMIK and PISG will have at all times a contact officer for grant management issues. Both parties should advise the other of the name and contact details of such officer and update these details if or when they change.

These procedures are issued by Treasury Department as Financial Rules according to Law on Public Financial Management and Accountability.

Approved and issued by:

Lulzim Ismajli Zilif Lufi Treasury Director Deputy Director of Treasury Ministry of Finance and Economy Ministry of Finance and Economy

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