Bangladesh: South Asia Tourism Infrastructure Development ...Bangladesh: South Asia Tourism Infrastructure Development Project The project administration manual is an active document,

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s Project Number: 39399 Loan Number: L2580 May 2010 Version 1.0

Bangladesh: South Asia Tourism Infrastructure Development Project The project administration manual is an active document, progressively updated and revised as necessary, particularly following any changes in project costs, scope, or implementation arrangements. This document, however, may not reflect the latest project or program changes.

Project Administration Manual

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Contents

ABBREVIATIONS 5

I. PROJECT DESCRIPTION 6

A. Rationale; 5 B. Impact and Outcome 5 C. Outputs 6

II. IMPLEMENTATION PLANS 8

A. Project Readiness Activities 8 B. Overall Project Implementation Plan 9

III. PROJECT MANAGEMENT ARRANGEMENTS 12

A. Project Stakeholders – Roles and Responsibilities 12 B. Key Persons Involved in Implementation 14 C. Project Organization Structure 14

IV. COSTS AND FINANCING 18

A. Cost Estimates by Expenditure Category 18 B. Allocation and Withdrawal of {Loan/Grant} Proceeds 19 C. Expenditure Accounts by Financier 19 D. Expenditure Accounts by Outputs/Components 20 E. Expenditure Accounts by Year 21 F. Contract and Disbursement S-curve 21 G. Fund Flow Diagram 21

V. FINANCIAL MANAGEMENT 23

A. Financial Management Assessment 23 B. Disbursement 23 C. Accounting 24 D. Auditing 24

VI. PROCUREMENT AND CONSULTING SERVICES 25

A. Procurement of Goods, Works and Consulting Services 25 B. Procurement Plan 25 C. Consultant's Terms of Reference 26

VII. SAFEGUARDS 26

VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION 27

A. Project Design and Monitoring Framework 27 B. Monitoring 27 C. Evaluation 28 D. Reporting 28 E. Stakeholder Communication Strategy 28

IX. ANTICORRUPTION POLICY 28

X. ACCOUNTABILITY MECHANISM 29

XI. RECORD OF PAM CHANGES 29

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List of Appendixes A. List of Reference Materials B. Loan Agreement C. Subproject Preparation Appraisal Criteria D. Report and Recommendations to the President (RRP) E. Detailed Cost Estimates F. Details on ADB Disbursement Procedures using Direct Payment, Commitment

Procedure, and Imprest Account Method G. Disbursement Letter H. Procurement Plan I. Procurement Process Flowchart for National Competitive Bidding (NCB) J. Contract Summary Sheet K. Consultants Recruitment (process flowcharts for QCBS and CRAM Sheet) L. Draft Outline TOR for the Project Management Design Supervision Consultant (PMDSC) M. Guidelines for Calculating Project Progress N. List of Major Loan Covenants O. Template for Executing Agency’s Quarterly Project Progress Report P. Auditing Requirements and Proposed Auditor's Terms of Reference Q. Project Completion Report Format

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Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. A list of reference materials is in Appendix A. The Department of Archaeology, Ministry of Cultural Affairs, executing agency, is wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by Department of Archaeology of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement, the provisions of the Loan Agreement (Appendix B) shall prevail. After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

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Abbreviations

ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements CQS = consultant qualification selection DMF = design and monitoring framework DOA = Department of Archaeology EARF = environmental assessment and review framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system GACAP = governance and anticorruption action plan GDP = gross domestic product ICB = international competitive bidding IEE = initial environmental examination IPP = indigenous people plan IPPF = indigenous people planning framework LAR = land acquisition and resettlement LIBOR = London interbank offered rate NCB = national competitive bidding NGOs = nongovernment organizations PAI = project administration instructions PAM = project administration manual PIU = project implementation unit PMIU = project management and implementation unit QBS = quality based selection QCBS = quality- and cost based selection RRP = report and recommendation of the President to the Board SBD = standard bidding documents SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement TOR = terms of reference UNESCO = United Nations Education, Scientific and Cultural Organization

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I. PROJECT DESCRIPTION

A. Rationale 1. The South Asia Tourism Infrastructure Development is a part of a regional project that will develop and improve tourism-related infrastructure in Bangladesh, India, and Nepal. It focuses on improving connectivity to and destination infrastructure and services in key nature and culture-based tourism sites on selected high-priority subregional tourism circuits in South Asia. The Bangladesh portion of the Project aims to improve access and on-site infrastructure and facilities in major cultural heritage sites along a heritage-rich geographic corridor ("heritage highway”) extending from north to the south in the western regions of Bangladesh, including Paharpur, Mahastangarh, Kantajee, and Bagerhat. 2. The Project is designed as a sector loan project. A detailed subproject was already prepared for Paharpur which builds on plans and studies conducted by UNESCO. The subproject serves as a sample to guide the design and feasibility of the other sites which will be confirmed as subprojects on the basis of the selection criteria set out in Appendix C. 3. The Department of Archaeology (DOA), Ministry of Cultural Affairs is the Project’s executing agency (EA) and implementing agency (IA). A project management and implementation unit (PMIU) will be established in the Department of Archaeology to execute, manage, guide, and monitor the implementation of the Cultural Heritage Site Improvements and the capacity building activities with the support of a team of project management and design and supervision consultants (PMDSC). A Project Implementing Unit will be formed in Bangladesh Parjatan Corporation (BPC) to undertake tourism marketing and promotion and community participation components.

B. Impact and Outcome

4. The expected impact of the Project is inclusive and sustainable development through enhanced protection and management and presentation of cultural heritage sites which are the primary attractions on which tourism depends. The expected outcomes of the Project will be nature and culture based tourism destinations of subregional importance with (i) improved connectivity, (ii) better quality environment and visitor services; (iii) enhanced natural and cultural heritage; and (iv) stronger linkages with communities. See Appendix 1 on Design and Monitoring Framework of the Report and Recommendation of the President (RRP)1 (Appendix D).

C. Outputs

5. Enhanced Connectivity: (i) improvement of an access road about 475 meter to Paharpur, (ii) development of a pedestrian road to avoid trespassing of the Paharpur heritage site, and (iii) improvement of last mile connectivity roads to other three key destinations in Bangladesh Heritage Highway 6. Destination Improvements: upgrading of at least four key cultural heritage sites, (Paharpur, Kantajee, Mahastangarh, and Bagerhat), including (i) conservation of cultural

1 ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loans and Asian

Development Fund Grant, and Administration of Loans for the South Asia Tourism Infrastructure Development Project in People's Republic of Bangladesh, India and Nepal. Manila.

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heritage structures, (ii) improvements to heritage sites environment and utilities, such as drainage, waste management, water supply, toilets, restrooms, and landscaping, (iii) managing tourist on-site circulation through provision of on-site walkways, car parking, lighting, commercial spaces for basic purchase, and (iv) enhancement of heritage interpretation and visitor information through construction of visitor centers, museum improvements, and onsite signages, and displays 7. Capacity Development, Fostering Community Participation, and Project Management: Capacity development outputs include: (i) Training of tourism related staff of ministries, board, and departments in tourism planning, coordination, monitoring and marketing; (ii) Prepare and implement a marketing and promotion program in conjunction with subregional marketing program under regional TA; (iii) Prepare and implement management and master plans for Bangladesh Heritage Highway’s cultural sites; (iv) Prepare and implement organizational and financial management measures for Department of Archaeology of Bangladesh, and train staff on planning, protecting, and managing the nature and culture based sites as well as world heritage sites; (vi) Establish stronger partnerships between communities, tourism industry and governments at destinations; (vii) Implement subregional action plan to promote subregional cooperation in tourism. Fostering Community Participation outputs include: (i) Conducting community awareness raising programs, (ii) Undertake value chain analyses to establish stronger links between tourism and local economies, (iii) Design and implement pilot schemes for tourism-based livelihood generation involving social mobilization and micro finance services; (iv) Prepare and implement tourism-related skill development activities in heritage management and hospitality-related skills among the communities; and (v) Establish partnerships between communities, private sector and public sector established for enhanced site management and viable community tourism product development. Project Management. This subcomponent supports funding the costs of the Project Management and Implementation, including incremental administration and operations associated with Project Management and Implementation Unit (PMIU) in the Department of Archeology, and Implementation Unit in BPC and site offices, and provision of equipment, logistics, as well as consulting services to assist PMIU. Consultancy support for project management and implementation will also include significant on-the-job training to build the capacity of the DOA in project management and implementation (technical, environmental and social aspects, and monitoring). Further description of the components is located in Supplementary Appendix C of the RRP.

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Activities (2010) Jan Feb Mar Apr May June July Remarks

Loan approval Completed 16 Nov 2009

Loan signing Completed 7 Dec 2009

Loan effectiveness Completed 21 Jan 2010

Approval of DPP

- Submitted on 7 February - Returned 24 February - Resubmitted on 14 March - Approved by ECNEC 11 May - 1st revision of DPP (at the soonest)

Appointment of Project Director

- Immediately after DPP approval

Formation of PMIU

Minimum staffing required after DPP approval: (i) Project Director (ii) procurement officer (iii) finance officer (iv) conservation officer

Recruitment of PMDSC By February 2011

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B. Overall Project Implementation Plan

2009 2010 2011 2012 2013 2014 Indicative Activities Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1 - Preparatory Activities

1.1 Site Surveys (all four sites)

1.2 Archaeological Impact Assessment (Parharpur only)

1.3 Initial Awareness Raising

1.4 Project Implementation Training

1.5 PMDSC recruited and mobilized

1.6. Establish Project Performance Monitoring System (PPMS)

1.7 Establish Grievance Redress Mechanism

2 - Output 1 (Enhanced Connectivity) and Output 2 (Destination Improvements)

2.1 Paharpur Subproject (Northern and Eastern Gate, Drainage Improvements Main Site)

2.1.1 Detailed Design and Bid Preparation

2.1.2 Consultation with Technical Approval Committee (UNESCO, DOA, BPC)

2.1.3 Update Safeguard Documents

2.1.4 Bidding and Contract Award for Civil Works

2.1.5 Conservation works

2.1.6 Construction

2.2 Kantajee, Mahastangarh, Bagerhat Subprojects

2.2.1 Subproject selection and preparation

2.2.2 Consultation with Technical Approval Committee (UNESCO, DOA, BPC)

2.2.3 Archaeological Impact Assessments

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2.2.4 Detailed Design and Bid Preparation

2.2.5 Design and approval including from UNESCO

2.2.6 Prepare Safeguard Documents

2.2.6 Bidding and Contract Award for Civil Works

2.2.7 Conservation works

2.2.8 Construction

3- Output 3: Capacity Development, Fostering Community Participation, and Project Management

3.1 Capacity Development

3.1.1 Design of Capacity Building and Training Programs

3.1.2 Implementation of Capacity Building and Training Activities

3.1.3 Prepare and implement a marketing and promotion program in conjunction with subregional marketing program under regional TA

3.1.4 Prepare and implement management and master plans for Bangladesh Heritage Highway’s cultural sites

3.1.5 Prepare and implement organizational and financial management measures for Department of Archaeology

3.2 Fostering Community Participation

3.2.1 Conducting community awareness raising programs

3.2.2 Undertake value chain analyses to establish stronger links between tourism and local economies

3.2.3 Design and implement pilot schemes for tourism-based livelihood generation involving social mobilization and micro finance services

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3.2.4 Prepare and implement tourism-related skill development activities in heritage management and hospitality-related skills among the communities

4- Management Activities

4.1 Mid-term review

4.2 NPSC meets twice a year

4.3 Project completion report

PCU = project coordination unit, PMDC = Project Management and Design Consultants, PMIU = project management and implementation unit, UNESCO = United Nations Educational, Scientific and Cultural Organization.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities Ministry of Finance Borrower Ministry representing for external borrowing

Member of the Subregional Task Force (STF) for purposes of the South Asia Tourism Infrastructure Development Project

Maintains a National Project Steering Committee (NSC)

Department of Archaeology (DOA),

Ministry of Cultural Affairs Executing Agency

Guides and supports the overall project implementation

Coordinates all project activities Engages project management support

consultant Point of contact with ADB (including reporting

requirements) Reviews documents submitted by PIUs to

ensure prepared documents are in order Ensures and monitors procurement of goods,

works and services Ensures and monitors compliance of loan

covenants Ensures adequate counter part funding Establish Project Management and

Implementation Unit (PMIU) within DOA Acts as secretariat to the NSC DOA Project Management and Implementation Unit Maintain project offices in Pharapur,

Mahastangarh, Kantajee, Bagerhat and other locations as may be required

Manage and monitor the Project and have overall responsibility for its implementation

Appoint project management and detailed design consultants

prepare master and management plans for each site

identify and prepare subprojects and appraise them

communicate with ADB on subproject selection and approvals

ensure land acquisition and other safeguards approve surveys, investigations, engineering

designs and bid documents prepared by Project Site Units

assist in the management and implementation and monitoring by Project Implementation Unit in BPC of marketing and promotion and community participation components

review and endorse procurement of works and goods;

oversee contract administration organize awareness campaigns and participation

programs organize and operate the program performance

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Project Stakeholders Management Roles and Responsibilities monitoring system

prepare disbursement requests and forward them ADB

prepare and submit timely reports to ADB; and prepare and provide biannual consolidated progress reports to NSC

review and facilitate the progress of the Sustainable Heritage and Tourism Action Plan and compliance with loan covenants

Submit audited account annually to ADB within 6 months of the end of the fiscal year

design and organize capacity building programs Project Site Offices in Paharpur,

Mahastangarh, Kantajee, Bagerhat, and others

Project Site Offices

All construction supervision works shall be carried out by site offices which will be assisted by PMDSC

Work under the guidance of and provide all necessary information to PMIU

Bangladesh Pujartan Corporation (BPC) Project Implementing Unit Undertake tourism marketing and promotion and

community participation components. Work under the guidance of and provide all

necessary information to PMIU Submit audited account annually to PMIU within

6 months of the end of the fiscal year National Project Steering Committee

(NSC) National Steering Committee

Reviews overall progress of the Project Recommends key policy decisions to ensure

successful implementation of the Project facilitating coordination and cooperation among

agencies involved in project implementation and release of resources

taking action to ensure that project management and implementation arrangements are in place

overseeing overall project progress biannually as well as the progress with the reform agenda and addressing key issues

providing policy guidance and support to project coordination, management, and implementation units

coordinating between the grant funded regional TA and Project activities

prepare annual progress reports for submission to STF

The Department of Archaeology will act as the Secretariat to NSC

Technical Review Panel (UNESCO, DOA,

and BPC)

Advises the PMIU and reviews the preparation of heritage site management and master plans

ADB Lender Supervises the overall project implementation Reviews and issues no-objection to procurement

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Project Stakeholders Management Roles and Responsibilities and disbursement documents

B. Key Persons Involved in Implementation

Executing Agency Agency Name Department of Archaeology

Officer's Name: Md. Safiqul Islam Position: Director General, Department of Archaeology Telephone No. +9902 8126817, +8802 812681 Email address: [email protected]

Office Address: Ministry of Cultural Affairs, Dhaka, Bangladesh ADB

Division Director Staff Name: Ms. KyeonAe Choe Position: Officer-in-Charge Telephone No. +632 632 6899 Email address: [email protected]

Mission Leader Staff Name: Mr. Ron Slangen

Position: Urban Development Specialist Telephone No. +632 632 4334 Email address: [email protected]

C. Project Organization Structure

8. The project organization chart is in Figure 1. The expertise and person-month requirements of the full team of the staff in the PMIU and Project Offices that will be put in place by May 2010 are presented below:

Table 1: Project Management and Implementation Unit

PMIU – DOA Person(s) 1. Project Director (on deputation) 1 2. Senior Engineer 1 3. Senior Conservation Officer (Archaeologist) 1 4. Senior Social & Environmental Officer 1 5. Senior Institutional Development Officer 1 6. Procurement /Account Officer 1 7. Sub-Assistant Engineer (Electrical) 1 8. Documentation Officer 1 9. IT Officer 1 10. Senior Draftsman 1 11. Computer Operator 1 12. Driver 2 13. MLSS 2 Total 15 PIU – BPC 14. Community Development officer 1 15. Tourism Marketing Officer 1 16. Data Entry Officer 1 Total 3 Site Offices (4 total) 17. Assistant Engineer 4 18. Sub Assistant Engineer 4 19. Work Assistant 4 20. Computer Operator 4 21. MLSS 4

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22. Driver (for Mahastangarh) 1 23. Driver (for Bagerhat) 1 24. Electrician (for Bagerhat) 1 Total 23

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Ministry of Culture

Project Management and Implementation Unit

Project Director

Core Staff

Procurement /Account Officer Senior Senior Conservation Officer

Senior Engineer Senior Social and Environment Officer

Senior Institutional Development Officer

Support Staff (see Table 1)

ADB

National Steering Committee •Secretary, Ministry of Tourism and Civil Aviation - Chair •Secretary, Cultural Affairs •Joint Secretary ERD •JS Finance Division • DG DOA •,Chair, BPC

Project Offices •Paharpur •Kantajee •Mahastangarh •Others

Staffing Assistant Engineer Sub assistant Engineer Support Staff (see Table 1)

(Reporting)

Expert Review Panel for World Heritage Site

Planning and Management DoA, UNESCO and

Tourism/BPC

SUB REGIONAL TASK FORCE Ministry of Tourism and Finance of Respective Countries

Key Project Agencies in each Country

Figure 1: Project Organization Chart

Project office BPC

• Tourism Marketing and Promotion Officer

• Community Development Officer

• Support Staff

Department of Archaeology Executing Agency

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ADB

Natio

nal P

roject S

teering

C

om

mittee fo

r Each

Co

un

try

(Reporting)

(Funds)

Su

breg

ion

al Task F

orce

Ministry of T

ourism and M

inistry of Finance and other K

ey Im

plementing A

gencies from each country

Government of Bangladesh EA – Department of

Archaeology

Project Implementation Unit - BPC


Department of Archaeology

Project Implementation Units •Paharpur •Kantajee, and etc

Government of Nepal EA- Ministry of Tourism and Civil

Aviation

Project Coordination Unit


CAAN-Kathmandu

Government of India EA- State Government of

Sikkim Department of TourismProject Implementation

Unit (South Sikkim)

Project Management and Implementation Unit (Gangtok)

Pro

ject Man

agem

ent an

d D

esign

Co

nsu

ltants

Project Implementation Unit (West Sikkim)

Project Management and Implementation Unit Lumbini Development

Trust-Lumbini

Project Implementation Unit (Gautam Buddha Airport)

Figure 2: Project Organization Chart – South Asia Tourism Infrastructure Development Project

State S

teering

C

om

mittee

Review Panel – UNESCO, LDT

Review Panel- UNESCO, BPC, DOA

ADB = Asian Development Bank, BPC = Bangladesh Pajartan Corporation, CAAN = Civil Aviation Authority of Nepal, DOA = Department of Archaeology, EA = executing agency, LDT = Lumbini Development Trust. UNESCO = United Nations Educational, Scientific and Cultural Organization.

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IV. COSTS AND FINANCING

9. The total cost of the Project is $15.0 million—$12 million loan (SDR7,698,000) from the Special Fund resources (SF) of the Asian Development Bank (ADB); and $3 million equivalent to be provided by the Government to help finance the Project. The SF loan will be provided to the People's Republic of Bangladesh, with a term of 32 years, including a grace period of 8 years, and with an interest charge of 1.0% per annum during the grade period and 1.5% per annum thereafter, on the amount of the Loan withdrawn from the Loan Account and outstanding from time to time. 10. Based on review of Paharpur and Kantajee, the average cost of improvement per site is estimated at around $ 2.5-3 million. The estimated Project completion date is 15 September 2014 and the period of utilization of loan proceeds is up to 15 March 2015. 11. The project costs consist of (i) land; (ii) civil works; (iii) training, workshops and conferences; (iv) consulting services, (v) equipment; (vi) tourism promotion; and (vii) incremental administration. Detailed cost estimates are in Appendix E.

A. Cost Estimates by Expenditure Category

($ Million)Foreign Total Foreign Total

Component Total Taxes Total Taxes

A. Cultural Heritage Site Improvements 1. Access Infrastructure 54.27 7.32 29.83 84.10 0.82 0.10 0.45 1.262. Site Infrastructure 403.25 53.66 170.71 573.96 6.06 0.80 2.57 8.63

Subtotal 457.52 60.98 200.54 658.06 6.88 0.90 3.02 9.90B. Support to Community Participation, Capacity Building

and Project Management1. Community Participation 24.06 0.00 2.67 26.73 0.36 - 0.04 0.402. Capacity Building and Project Management 7.75 0.00 115.42 123.17 0.12 0.00 1.74 1.85

Subtotal 31.81 0.00 118.09 149.90 0.48 0.00 1.78 2.25Total BASELINE COSTS 489.33 60.98 318.63 807.97 7.36 0.90 4.79 12.15

Physical Contingencies 43.21 7.23 35.20 78.41 0.65 0.11 0.53 1.18Price Contingencies 87.35 9.90 5.93 93.28 1.31 0.15 0.09 1.40

Total PROJECT COSTS 619.90 78.11 359.77 976.67 9.32 1.16 5.41 14.73Interest During Implementation - - 18.04 18.04 - - 0.27 0.27

Total Costs to be Financed 619.90 78.11 377.81 997.71 9.32 1.16 5.68 15.00

Local(Tk Million)

Local

a Includes physical contingencies at 12% for civil works and equipment and 10% for consulting services. Price

contingencies for civil works items and equipment were computed at 7.5% per year for domestic inflation and 0.8% for foreign inflation. Interest during implementation which will be capitalized was calculated based on the ADF loan term of 1% per year during the period of implementation and 1.5% thereafter. Also includes bank charges to be financed from the ADB loan proceeds.

Source: ADB estimates.

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B. Allocation and Withdrawal of Loan Proceeds

* Exclusive of taxes and duties imposed within the territory of the Borrower.

C. Expenditure Accounts by Financier

ADB Total

Excl. Taxes Expenditure Account Taxes Only Total % Amount % Amount %

I. Investment Costs A. Land 1.37 - 1.37 100.0 - - 1.37 9.1B. Civil Works 0.43 1.15 1.58 14.9 9.02 85.1 10.60 70.6C. Training, Workshops and Conferences 0.03 - 0.03 7.0 0.41 93.0 0.44 3.0D. Consulting Services - - - - 1.87 100.0 1.87 12.5E. Equipment - - - - 0.20 100.0 0.20 1.3F. Tourism Promotion 0.02 - 0.02 20.0 0.09 80.0 0.11 0.7G. Incremental Administration - 0.01 0.01 7.1 0.13 92.9 0.14 0.9

Total PROJECT COSTS 1.85 1.16 3.00 20.4 11.72 79.6 14.73 98.2Interest During Implementation - - - - 0.27 100.0 0.27 1.8

Total Disbursement 1.85 1.16 3.00 20.0 12.00 80.0 15.00 100.0

The GovernmentAmount

ADB = Asian Development Bank Source: ADB estimates.

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (South Asia Tourism Infrastructure Development Project – Bangladesh portion)

CATEGORY ADB FINANCING Amount Allocated

SDR Percentage of ADB Financing

from the Loan Account Number Item Category

1 Civil Works 5,789,000 85 percent of total expenditure claimed

2 Equipment, Vehicles and Furniture

128,000 100 percent of total expenditure claimed*

3 Training/Fellowships 263,000 93 percent of total expenditure claimed*

4 Consulting Services 1,200,000 100 percent of total expenditure claimed*

5 Incremental Administration

84,000 93 percent of total expenditure claimed

6 Tourism promotion and Others

58,000 80 percent of total expenditure claimed

7 Interest Charge 176,000 100 percent of amount due Total 7,698,000

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ADB Total

Excl. Taxes Component Taxes Only Total % Amount % Amount %


Subtotal C 1.79 1.16 2.95 24.0 9.34 76.0 12.29 81.9B. Support to Community Participation, Capacity Building

and Project Management1. Community Participation 0.03 - 0.03 7.0 0.37 93.0 0.40 2.72. Capacity Building and Project Management 0.03 0.00 0.03 1.5 2.01 98.5 2.04 13.6

Subtotal 0.06 0.00 0.06 2.5 2.38 97.5 2.44 16.3Total PROJECT COSTS 1.84 1.16 3.00 20.4 11.73 79.6 14.73 98.2

Interest During Implementation - - - - 0.27 100.0 0.27 1.8Total Disbursement 1.84 1.16 3.00 20.0 12.00 80.0 15.00 100.0

AmountThe Government

ADB = Asian Development Bank

D. Expenditure Accounts by Output/Components

Support to Community Participation, Capacity Building and Project Management

Cultural Heritage Site CapacityImprovements Building and

Access Site Community ProjectExpenditure Account Infrastructure Infrastructure Participation Management Total

I. Investment Costs A. Land - 1.37 - - 1.37B. Civil Works 1.58 9.02 - - 10.60C. Training, Workshops and Conferences - - 0.40 0.04 0.44D. Consulting Services - - - 1.87 1.87E. Equipment - 0.20 - - 0.20F. Tourism Promotion - - - 0.11 0.11G. Incremental Administration 0.01 0.11 0.00 0.01 0.14

Total PROJECT COSTS 1.59 10.70 0.40 2.03 14.73 Interest During Implementation 0.27Total Costs to be Financed 1.59 10.70 0.40 2.03 15.00 Note; Totals may not add due to rounding. Source: ADB estimates.

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E. Expenditure Accounts by Year (to be provided)

Year ADB Expenditure Account 2010 2011 2012 2013 2014 2015 Amount I. Investment Costs A. Land - B. Civil Works 1.66 7.36 9.02

C. Training, Workshops and Conferences 0.02 0.01 0.10 0.10 0.10 0.07 0.41

D. Consulting Services 1.85 0.02 1.87 E. Equipment 0.10 0.05 0.05 0.20 F. Tourism Promotion 0.01 0.02 0.06 0.09 G. Incremental Administration 0.13 0.13 0.25 1.91 1.84 7.48 0.16 0.07 11.72 Interest During Implementation 0.01 0.05 0.04 0.18 0.28 0.26 1.96 1.88 7.66 0.16 0.07 12.00

F. Contract Award and Disbursement S-curve (to be provided)

L2580

$0$1$2$3$4$5$6$7$8$9

$10$11$12

Nov-09

Mar

-10

Jul-1

0

Nov-10

Mar

-11

Jul-1

1

Nov-11

Mar

-12

Jul-1

2

Nov-12

Mar

-13

Jul-1

3

Nov-13

Mar

-14

Jul-1

4

Nov-14

Mar

-15

million

Contract Aw ard Disbursement

G. Fund Flow Diagram

12. Figure 3 shows how the funds will flow from ADB and the Borrower to implement project activities.

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Figure 3: Fund Flow Diagram

ADB

Project Management and Implementing Unit: Executing Agency-Department of Archaeology

SGIA- Local Currency Account (Account B)

ADB FGIA (Bangladesh Bank)Dollar Account) (Account A)

Provide government share for incurring expenditure- Thru Separate Account or Normal Treasury Mechanism

Pay 100% to suppliers and contractors

Consolidated liquidation/ replenishment in USD

Suppliers and contractors –deliver goods and services

BPC Components

Rei

mbu

rsem

ent C

laim

s

Government of Bangladesh

On request transfer advance/ replenishment in USD

Dis

bur

sem

ent b

y A

DB

Transfer Fund from Account A to B

FUND FLOW- ADB SHARE FUND FLOW- COUNTERPART SHARE

ADB

Project Management and Implementing Unit: Executing Agency-Department of Archaeology

SGIA- Local Currency Account (Account B)

ADB FGIA (Bangladesh Bank)Dollar Account) (Account A)

Provide government share for incurring expenditure- Thru Separate Account or Normal Treasury Mechanism

Pay 100% to suppliers and contractors

Consolidated liquidation/ replenishment in USD

Suppliers and contractors –deliver goods and services

BPC Components

Rei

mbu

rsem

ent C

laim

s

Government of Bangladesh

On request transfer advance/ replenishment in USD

Dis

bur

sem

ent b

y A

DB

Transfer Fund from Account A to B

FUND FLOW- ADB SHARE FUND FLOW- COUNTERPART SHARE

For Payment to Contractors and Consultants 1. Contractors/Consultants issue invoice to PMIU 2. PMIU makes payment 3. PMIU records evidence of payment 4. PMIU consolidates SOE form and requests for

replenishment (both contractors and consultants)

5. ADB makes replenishment 6. Consolidated expenditure statement from PMIU

to MOF on monthly basis

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

13. Financial management assessment of the EA found that it has basic financial and accounting policy following government stipulated accounting policies, and uses a cash-based accounting system. Since it uses a cash-based accounting system, it does not prepare Profit and Loss Account and Balance Sheets at the end of each fiscal year. However, for the proposed subproject, DOA will adopt and adhere to an accrual system of accounting. 14. The EA needs to develop capacity to provide comprehensive financial statements comprising income statements, balance sheets and cash flow statements and detailed supplementary information on its finances and accounts. Another aspect of capacity development need is in the foreign exchange risk management. The capacity development component may be used to finance appointment of experienced, international financial management consultants to assist the government to develop these functions and to train local staff. The specific scope will be identified by the need assessment. Financial management risks should be considered and updated throughout the life of the project. Risk mitigation measures should also be updated accordingly.

B. Disbursement

15. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),2 and detailed arrangements agreed upon between the Government and ADB.

16. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),3 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list to subprojects financed by ADB. 17. The PMIU will be responsible for (i) preparing disbursement projects, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications to ADB. Based on the withdrawal applications, ADB will fund the project imprest accounts on a reimbursable basis. Details on ADB disbursement procedures are in Appendix F. A disbursement letter is in Appendix G. 18. The Government will, immediately after loan effectiveness, establish (i) a first generation imprest account at Bangladesh Bank, and (ii) a second generation imprest account established by DOA at a commercial bank, acceptable to ADB. The imprest accounts shall be established, managed, replenished and liquidated in accordance with ADB’s Loan Disburement Handbook, and detailed arrangements agreed upon between the Government and ADB. Separate imprest accounts should be established and maintained by funding source. The maximum ceiling of the imprest accounts (in aggregate, if more than one imprest account) will not at any time exceed the estimated ADB financed expenditures to be paid from the imprest account for the next 6 months or 10% of the respective loan amount, whichever will be lower. The maximum ceiling of

2 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 3 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf

24

each SGIA will be equivalent to 6 months estimated expenditures to be funded from each SGIA or $1,200,000, whichever is lower. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet4 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the imprest account has been duly opened. For every liquidation and replenishment request of the imprest account, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the imprest account is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned bank statement against the EA’s records.5 19. The statement of expenditure (SOE) procedure will be adopted to reimburse eligible expenditures or liquidate advances provided into the imprest accounts. Any individual payment to be reimbursed or liquidated under SOE procedure will not exceed the equivalent $100,000. SOE records should be maintained and made readily available for review by ADB’s disbursement and review mission or upon ADB’s request for submission of supporting documents on a sampling basis, and for independent audit.6 20. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing.

C. Accounting

21. The DOA will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices or those prescribed by the Government's accounting laws and regulations.

D. Auditing

22. The DOA will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and/or in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest accounts, SGIA, and the SOE procedures (as applicable). The Government and DOA have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance

4 Available in Appendix 29 of the Loan Disbursement Handbook. 5 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook. 6 Checklist for SOE procedures and formats are available at:

http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls

25

with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Procurement of Goods, Works and Consulting Services

23. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Appendix H.

24. The upper limit for civil works to be procured through national competitive bidding procedures will be less than $2.0 million; and for equipment the upper limit will be $1.0 million. Shopping will be used for contracts for procurement of equipment and simple civil works of $100,000 or less. A procurement process flowchart for NCB is in Appendix I. Before the start of any procurement ADB and the Government will review the public procurement laws of the central and state governments to ensure consistency with ADB’s Procurement Guidelines. A contract summary sheet is in Appendix J. 25. All consultants and nongovernment organizations (NGOs) will be recruited according to ADB’s Guidelines on the Use of Consultants.7 Flowcharts for consultant recruitment are in Appendix K. Terms of reference for all consulting services are detailed in Appendix L. 26. The Project Management Design and Supervision (PMDSC) consultants under the project will assist the PMIU, to be based within the Department of Archaeology, Ministry of Culture in managing, detailed design and supervision, monitoring of the project and capacity development activities. A total of 208 person-months (25 person-months international and 183 person-months national) will be provided to (i) facilitate project management and implementation, and (ii) strengthen the institutional and operational capacity of the executing agency. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard quality:cost ratio of 80:20.} 27. For contract values of at least $200,000 and above, consultants will be selected following the quality- and cost-based selection method. For contracts valued at less than $200,000 and requiring highly specialized and boutique expertise, the consultants qualification selection method will be followed; for contracts valued at less than $100,000, consultants will be selected following the least-cost selection method.

B. Procurement Plan

28. See Appendix H.

7 Checklists for actions required to contract consultants by method available in e-Handbook on Project

Implementation at: http://www.adb.org/documents/handbooks/project-implementation/

26

C. Consultant's Terms of Reference

29. Outline terms of reference for all consulting services are shown in Appendix L.

VII. SAFEGUARDS

30. Environmental Safeguards: Environmental Management Plan (EMP) was prepared for Paharpur as part of the Initial Environmental Examination (IEE) reports, and an Environmental Assessment and Review Framework (EARF) was prepared to guide environmental assessment and reporting for subprojects, will be finalized and implemented by the PMIU. The following are institutional roles and responsibilities to ensure EMPs are implemented during design and construction stages: 31. Project Management and Implementation Unit. The Project Management and Implementation Unit (PMIU), with assistance of the Project Management and detailed Design and Supervision Construction consultants (PMDSC), will be established in the Department of Archaeology to (i) confirm IEEs/EMPs are updated based on detailed designs; (ii) confirm whether EMPS are included in bidding documents and civil works contracts; (iii) provide oversight on environmental management aspects of the Project and ensure EMPs are implemented by PIU, DSC consultants, and contractors; (iv) establish a system to monitor environmental safeguards of the project including monitoring the indicators set out in the monitoring plan of the EMP; (v) facilitate and confirm overall compliance with all Government rules and regulations regarding forest and environmental permits and clearances as well as any other approved environmental guidelines, as relevant; (vi) supervise and provide guidance to the DSCs to properly carry out the environmental assessments as per the EARF; (vii) review, monitor and evaluate the effectiveness with which the EMPs are implemented, and recommend necessary corrective actions to be taken as necessary; (viii) consolidate quarterly environmental monitoring reports from PIU and submit annual monitoring report to ADB; and (iv) ensure timely disclosure of final IEEs/EMPs in locations and form accessible to the public. 32. An environment and social advisory unit shall be established within the PMIU composed of the full time safeguards PMIU staff and the two fulltime consultants. The consultants shall be engaged in the PMIU for environment and other for social issues. An Environment Specialist (ES) shall provide overall direction for management of environmental issues. Also, the involvement of UNESCO in the review panel for design and review of the management plan shall ensure conformance to the safeguards and requirements of the UNESCO w.r.t WHS protection and management. 33. Project Implementing Units. The PIUs are to: (i) ensure IEEs and EMPs are updated by PMDSC during detailed design stage; (ii) ensure EMPs are included in bidding docuemtns and civil works contracts; (iii) ensure compliance with all Governemtn rules and regulations regarding forest and environmental permits and clearances; (iv) oversee implementation of EMPs including environmental monitoring by contractors; (v) take corrective actions when necessary to ensure no environmental impacts; and (vi) submit quarterly environmental monitoring reports to the PMIU. 34. Social Safeguards (involuntary Resettlement and Indigenous People): The Resettlement Framework (RF) for the Project outlined the objectives, policy principles, and procedures for land acquisition, compensation, and other assistance measure for affected persons (APs) The RF is based on the Government of Bangladesh’s (GOB) Acquisition and

27

Requisition of Immovable Property Ordinance of 1982 (ARIPO amended in 1993 and 1994), and ADB’s Policy on Involuntary Resettlement, 1995. It will serve as the guide for the Project Management and Implementation Unit (PMIU) in developing and implementing required resettlement plans (RPs) consistent with GOB and ADB policies. The basic objectives of the RF are to: (i) guide the executing agency (EA) in properly compensating project APs, (ii) serve as binding document to ensure APs will be paid compensation, and (iii) provide direction in preparing, implementing and monitoring sub-project RPs. The PMIUs will be responsible for ensuring the preparation and implementation of RPs in line with this RF. 35. Project Management and Implementation Unit. The PMIU is to (i) conduct internal monitoring of resettlement process to ensure smooth implementation; (ii) ensure PIUs with assistance from PMDSC update Resettlement Plans/Indigenous People Plans during the detailed design state; (iii) ensure timely payments of compensation and other entitlements as per the RPs and made before land acquisition and commencement of civil works; (iv) ensure ongoing consulting consultations with communities and affected persons; and (v) submit semiannual monitoring reports to ADB that describe the progress of the implementation of resettlement activities and any compliance issues and corrective actions. 36. Project Site Offices. Site offices are to (i) to ensure all RPs are updated based on detailed designs; (ii) engage in ongoing meaningful consultations with stakeholders and affected persons; (iii) implement resettlement plans with support from acquisition and commencement of civil works; (v) ensure all training and capacity building activities are provided to affected persons; (vi) ensure all grievances are addressed and when necessary activate the Grievance Redress Committee; (vii) take corrective actions where necessary; (viii) submit quarterly monitoring reports to PMIU and clearly communicate the implementation status of RPs and the status of APs throughout the project period; and (ix) provide relevant information to PMSC towards external monitoring. 37. Civil Works. The Government will ensure that civil works contracts and bidding documents under the Project include specific provisions requiring contractors to comply with all (a) applicable labor laws and core labor standards on (x) prohibition of child labor as defined in national legislation for construction and maintenance activities, on (y) equal pay for equal work and (b) the requirement to disseminate information on sexually transmitted diseases including HIV/AIDS to employees and local communities surrounding the Project sites.

VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION

A. Project Design and Monitoring Framework

38. See Appendix 1 of Appendix B.

B. Monitoring

39. Project performance monitoring: The PMIU will establish a project performance management system using the targets, indicators, assumptions, and risks in the DMF, including how beneficiaries will be involved in project monitoring and/or evaluation. Disaggregated baseline data for output and outcome indicators gathered during project processing will be updated and reported quarterly through the DOA's quarterly progress reports and after each ADB review mission. These quarterly reports will provide information necessary to update ADB's

28

project performance reporting system.8 Appendix M contains guidelines for calculating project progress.

40. Compliance monitoring: Status of compliance with loan covenants–policy (Appendix N), legal, financial, economic, environmental, and others—will be reviewed at each ADB review mission. All non-compliance issues, if any, will be updated in quarterly progress reports together with remedial actions.

41. Safeguards monitoring: Status of implementation of the EMP and EARF, and resettlement plan and resettlement framework, will be discussed at each ADB review mission and integrated into quarterly progress reports.

C. Evaluation

42. The Government and ADB will jointly review the Project at least twice a year. Within 6 months of physical completion of the Project DOA will submit a project completion report to ADB.9

D. Reporting

43. The DOA will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system (Appendix 0); (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency annual financial statements (AFS), together with the associated auditor's report, should be adequately reviewed (Appendix P). The borrower is to prepare a project completion report (Appendix Q) with the timing determined in consultation with ADB.

E. Stakeholder Communication Strategy

44. Project information will be strategically disseminated through media at main milestones including contract awards and project completion.

IX. ANTICORRUPTION POLICY

45. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.10 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.11

8 ADB's project performance reporting system is available at:

http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool 9 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar 10 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 11 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

29

46. To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the Project. In particular, all contracts financed by ADB in connection with the Project will include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all contractors, suppliers, consultants, and other service providers as they relate to the Project. 47. Furthermore, the Project intends to maximize transparency, as described in Section VIII. E above. Full information disclosure and participatory monitoring at both the central and the local levels are expected to be effective in reducing the risk of corruption and improving governance at central and local levels. Grievances regarding subprojects will be first addressed at PIUs, but if not completely redressed, they will then be discussed at the project management committees.

X. ACCOUNTABILITY MECHANISM

48. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.12

XI. RECORD OF PAM CHANGES

49. The first draft of PAM has been prepared and agreed upon at the loan fact-finding.

12 For further information see: http://compliance.adb.org/.

Appendix A

REFERENCE MATERIALS (downloadable from ADB’s website: www.adb.org)

A. Governance, Economics, and Finance

Ordinary Operations Loan Regulations Anticorruption Policy (July 1998) Harmonized Definitions of Corrupt and Fraudulent Practices (2006) Guidelines for Economic Analysis of Projects (revised February 1997) Guidelines for the Financial Governance and Management of Investment Projects

Financed by ADB (February 2003) B. Project Implementation

e-Handbook on Project Implementation C. Use of Consultants

Consulting Services Operations Manual (2008) Guidelines on the Use of Consultants by the ADB and its Borrowers (February 2007) Handbook for Users of Consulting Services

Volume I: Procedures and Practices (September 2002, 5th Edition) D. Procurement

Procurement Guidelines (revised February 2007) Guide on Bid Evaluation (updated May 2006) User’s Guide for Procurement of Goods (October 2006) Standard Bid Documents – Goods Standard Bid Documents – Works Standard Bid Documents – Plants Standard Prequalification document, User’s Guide Handbook on Problems in Procurement for Projects Financed by the Asian

Development Bank, 1995 Environmentally Responsible Procurement

E. Disbursement

Loan Disbursement Handbook (January 2007) F. Environment and Social Dimensions

Environment Policy (2002) Involuntary Resettlement (1995) ADB’s Policy on Indigenous People (1998)

F. Information Disclosure

ADB’s Public Communication Policy (2005)

Appendix C

LOAN AGREEMENT

Appendix C

SUBPROJECT PREPARATION APPRAISAL CRITERIA

1. The Project would finance only those subprojects, which meet the eligibility criteria described below. The subproject sites (heritage sites) have already been identified as part of the South Asia Tourism Circuit and Infrastructure Vision. A detailed subproject was already prepared for Paharpur which builds on plans and studies conducted by UNESCO. The subproject serves as a sample to guide the design and feasibility of the other sites which will be confirmed as subprojects on the basis of the below criteria. The other identified sites are Kantajee, Mahastangarh, and Bagerhat. However, if in the course of Project implementation, a need arises to identify new sites, the site identification will follow the criteria set below. The sites (heritage sites) will be identified by PMIU in DOA in consultation with BPC of Ministry of Civil Aviation and with support of the Project management and design consultants and with expert inputs from UNESCO. The subproject feasibility studies will be prepared by the PMIU again with assistance from the consultants; they will be appraised by the Technical Review Committee, and approved by ADB. A. Site Identification Criteria 2. The new site selection if needed will adhere to the following criteria under the Project. The heritage destination sites selected should

(i) be within the high priority multi-country circuits identified as part of the Subregional Circuit and Infrastructure Vision (in which Bangladesh is a participant) and its concept, objectives and priorities.

(ii) present the priority themes of subregional tourism as nature and culture based tourism including Buddhist circuits.

(iii) be able to contribute to subregional tourism. (iv) have been included as a priority site in the Government's national plans, and/or be a

site notified/or proposed to be nominated for World Heritage Site (WHS) by UNESCO.

B. General Subproject Preparation Criteria: 3. While preparing the subprojects following factors will be adhered to:

(i) The proposed subproject components will be in consonance with the detailed master plan for conservation /development and management of the site;

(ii) The subproject will be technically sound and preliminary designs will have been prepared;

(iii) The subproject will be designed and executed in total conformance to (a) the protocols agreed upon by the Government with the UNESCO on conservation and protection of heritage structures; (b) the findings and recommendations of the Archaeological Impact Statement (AIS) and (c) applicable legislative provisions of the GoB, including the Antiquities Act of 1968.

(iv) All necessary Government approvals will be in place, and land acquisition, if any would be completed in accordance with the resettlement framework.

Appendix C

C. Eligible Subproject Components: 4. The components that are eligible for inclusion in the subprojects are as follows:

(i) Heritage Protection and Management: Works relating to improvement of authenticity and integrity of heritage structures and assets and works that will protect heritage degradation,

(ii) Environmental and basic services: Works relating to provision of water supply, sanitation facilities, improved waste management, and drainage to improve the environmental conditions and site protection and overall experience of the tourists;

(iii) Enhancement of site image and visitor circulation and heritage interpretation: provision of pedestrian footpaths, landscaping (hard and soft) with choice of indigenous species, lighting, signages, and displays telling the story of the sites, and museum upgrading.

(iv) Access and traffic management in the entrance: Upgrading or developing new last mile connectivity roads and car parking facilities and other traffic management measures. Regional roads or through roads leading beyond the sub-project site will not be eligible.

(v) Visitor Services and Amenities: Works related to development of visitor centers, and spaces for commercial outlets, and etc.

D. Subproject Appraisal Criteria

1. Financial Economic and Institutional Criteria: 5. Subprojects must demonstrate financial and institutional sustainability; the projects should progressively aim at self sustainability through user charges or a committed support from GOB to bridge the deficit. The Master Plan should reflect the costs of O&M and possible revenue enhancement mechanisms. The proposals should be backed by commitment from GoB to set up resources for annual O&M and subsidies if it will be community managed to meet the gap in O&M. 6. The sub-project must be part of the overall master plan for the sub sector and it should have an EIRR of at least 12% or it should be the least cost technical option of providing the particular service. 7. Based on the institutional development and site management plan, the subproject should incorporate measures for ensuring: (i) adequate staffing and (ii) sustainable operations and management plan for the proposed site including (a) where possible community based site management program as an option in the event of limitations in manpower expansion and (b) training plan for on site staff, and (iii) site management costs and sources of funds to meet the cost. 2. Social and Environmental Criteria 8. The subproject will, to the extent possible, not require land acquisition or resettlement (which includes the displacement of squatters or encroachers from the rights of way). Projects with significant resettlement shall not be eligible for inclusion in the project. If land acquisition or

Appendix C

involuntary resettlement is required for a subproject, a Short Resettlement Plan will be prepared in accordance with the Resettlement Framework for this project. The sub-projects are not envisaged to have any adverse impacts on Indigenous Peoples. 9. The sub-project selection shall be in accordance with the Environmental sub-project selection criteria laid down in the Environmental Assessment and Review Procedures (EARP). Projects with significant environmental impacts (category A as per ADB categorization or Category Red as per GoB categorization) shall not be eligible for inclusion in the project. Environmental assessment of individual sub-projects will be carried out in accordance with EARP.

Table C1: Social and Environmental Criteria for Sub-project Selection Component Criteria

Overall selection criteria

Will avoid resettlement/relocation. If unavoidable the extent of resettlement will be minimized.

Will not result in destruction of or encroachment onto archaeological monuments/ heritage sites or sites identified as ecological critical zones (by the DoE, GoB)

Will be in line with the master plan proposals for the conservation and preservation of the cultural heritage site / monument

Will be in conformance to the findings and recommendations of the Archaeological Impact Assessment

Will not result in destruction/disturbance to historical and cultural places/values.

Will not involve major civil works requiring movement of materials and machinery within 200m of the monuments or the safe distance as identified in the master plan for the monument, to minimize any potential impacts on safety to the structures/monuments

Will reflect inputs from public consultation and disclosure for site selection

Will not introduce any elements or components that are invasive upon the sanctity and significance of the cultural heritage site, including large scale commercial activities or creation of new land uses with potential to trigger induced development and land use changes around the sites

Will introduce landscaping and other tourist infrastructure in line with the environmental quality of the site, such as landscaping in harmony with the natural vegetation and diversity of the site and not encourage introduction of species that are invasive

Will not result in development of physical infrastructure / tourism amenities that would impair the environmental conditions due to lack of management capacities or high O&M costs

Heritage protection and

Conservation measures

Will observe the principle of not altering the historic condition and shall involve treatment of damage caused by natural processes and human actions and prevention of further deterioration, using both technical and management measures.

Will promote insitu conservation and only in the face of uncontrollable natural threats and relocation is the sole means of saving elements of a site may they be moved in their historic condition.

Will ensure that intervention be minimal. The conservation measures and treatment shall include the following four categories13: regular maintenance; physical protection and

13 (i) Regular maintenance is a preventive measure to reduce damage from the cumulative effects of natural processes and human actions; it is applicable to all sites. An appropriate maintenance program, which includes continuous monitoring of potential problems and archiving of records, must be established and carried out in accordance with the relevant standards. (ii) Physical protection and strengthening measures are intended to prevent or reduce damage to a site or building. These measures themselves must not damage the original fabric and must as far as possible retain the original character of the setting. New protective structures should be simple, practical, and as unobtrusive as possible. (iii) Minor restoration comprises a general set of intervention measures which may be undertaken provided the original structure is not disturbed, new components are not added, and the existing condition is basically unaltered. This type of intervention most frequently involves rectifying components that are deformed, displaced, or collapsed; repairing a small number of damaged elements; and removing later additions that are without significance. (iv) Major restoration is an intervention involving the most impact to the original fabric. It includes returning a structure to a stable condition through the use of essential reinforcing elements and repair or replacement of damaged or missing components. The decision to restore through complete disassembly of the structure should be taken with caution. All problems revealed in the course of disassembly should be rectified so that the structure should need no further treatment for a considerable time. Restoration should,

Appendix C

Component Criteria strengthening; minor restoration; and major restoration. Every intervention should have clear objectives and use tried and proven methods and materials.

Will ensure that physical remains are conserved in their historic condition without loss of evidence. Respect for the significance of the physical remains must guide any restoration. Technical interventions should not compromise subsequent treatment of the original fabric. The results of intervention should be unobtrusive when compared to the original fabric or to previous treatments, but still should be distinguishable

Will ensure preservation of traditional technology and craftsmanship. New materials and techniques may only be used after they have been tried and proven, and should in no way cause damage to the site.

Will ensure that the setting of a heritage site be conserved. Natural and cultural landscapes that form part of a site’s setting contribute to its significance and should be integrated with its conservation

Will ensure that during archaeological excavation care be taken to conserve the physical remains. A practical plan for the conservation of a site–both during and after excavation–should be submitted for all sites programmed for excavation

Will ensure that treatment of the cultural heritage site and its environs is a comprehensive measure to prevent damage from natural processes and human actions, to reveal the historic condition of a site, and to allow its rational use. Treatment shall be taken up involves the provisions of facilities to service the public and to ensure site and visitor safety; and landscaping. Service buildings should be as far as possible from the principal area of the site. Exhibition and visitor facilities should be integrated in design and located in the same vicinity. Landscaping should aim to restore the site to its historic state and should not adversely affect the site; contemporary gardening and landscape concepts and designs should not be introduced.

Water supply Will not result in excessive abstraction of ground water or result in excessive groundwater pumping impairing ground water quality

Will ensure adequate protection from pollution of intake points

Will not result in unsatisfactory raw water supply (e.g. supply with excessive pathogens or mineral constituents)

Will ensure proper and adequate treatment and disposal facilitates for increased volumes of wastewater generation

Sanitation and toilet facilities

Will ensure that the site selection for the septic tank / or any other treatment method proposed is not close to water intake or water usage points, or areas prone to flooding or water logging

Will ensure that sanitation improvements proposed do not result in pollution of groundwater.

Will not interfere with other utilities and block access to buildings, cause nuisance to neighboring areas due to noise, smell, and influx of insects, rodents, etc.

Will not impair downstream water quality due to inadequate sewage treatment or release of untreated sewage.

Will not cause overflows and flooding of surroundings, especially around the heritage sites with raw sewage.

Solid waste management

Will ensure that the disposal of solid wastes will not result in degradation of aesthetics in the vicinity of the monument or proposed tourist areas

Will ensure buffer of greenbelt and earth works around the site to avoid nuisance to neighbouring areas due to foul odor and influx of insects, rodents, etc.

Roads Will ensure minimal clearing of vegetation

Will ensure no dislocation and involuntary resettlement of people living in right of way.

Will not lead to alteration of surface water hydrology of streams/waterways that may result in increased sediment load due to erosion from construction sites.

Drainage and flood protection

Will ensure improvements are identified to cater to the watershed or drainage zones and not individual drains

Will ensure adequacy of outfall of proposed drainage works, to avoid any impacts associated

as far as possible, preserve the vestiges and traces of periods judged to have significance. Both the design and materials for replacement elements should be consistent with the evidence provided by existing fabric.

Appendix C

Component Criteria with flooding in downstream areas, or areas not covered

Will ensure effective drainage of the monument area, and provide for improved structural stability of the monuments

Development of parking and other tourist infrastructure amenities

Will ensure security of the existing vendors/ leaseholders and their inclusion in the proposed facility

Will ensure no deterioration of surrounding environmental conditions due to population growth and increased waste generation resulting from improved infrastructure facilities

Will not create structures or buildings that are physically or visually intrusive, in terms of size, scale, location that shall have an adverse impact on the aesthetic quality of the site, through careful designs in terms of built form, construction materials etc.

Appendix D

REPORT AND RECOMMENDATIONS TO THE PRESIDENT (RRP)

h Report and Recommendation of the President to the Board of Directors

____________________________________________________________________________ Project Number: 39399 October 2009

Proposed Loans, Asian Development Fund Grant, and Administration of Loan People's Republic of Bangladesh, India, and Nepal: South Asia Tourism Infrastructure Development Project

CURRENCY EQUIVALENTS (as of 8 October 2009)

Currency Unit – taka (Tk)

1.00 = $0.0145 $1.00 = Tk68.3

Currency Unit – Indian rupee/s (Re/Rs)

Re1.00 = $0.0217 $1.00 = Rs46.08

Currency Unit – Nepalese rupee/s (NRe/NRs)

NRe1.00 = $0.0132 $1.00 = NRs75.20

ABBREVIATIONS ADB – Asian Development Bank BPC – Bangladesh Parjatan Corporation CAAN – Civil Aviation Authority of Nepal DOA – Department of Archaeology DOT – Department of Tourism EA – executing agency EARP – environmental assessment and review procedure EIA – environmental impact assessment EIRR – economic internal rate of return EMP – environmental management plan FIRR – financial internal rate of return GRC – Grievance Redress Committee IEE – initial environmental examination km – kilometer LDT – Lumbini Development Trust LIBOR – London interbank offered rate MOTCA – Ministry of Tourism and Civil Aviation MTR – mid term review NGO – nongovernment organization O&M – operations and maintenance OFID – OPEC Fund for International Development OPEC – Organization of Petroleum Exporting Countries PCU – project coordination unit PMIU – project management and implementation unit SASEC – South Asia Subregional Economic Cooperation SGIA – second-generation imprest account TWG – tourism working group UNESCO – United Nations Educational, Scientific and Cultural Organization

NOTES

(i) The fiscal year of the Government of Nepal and its agencies ends on 15 July; of India and its agencies on 31 March, and of Bangladesh and its agencies on 30 June.

(ii) In this report, "$" refers to US dollars.

Vice-President X. Zhao, Operations 1

Director General K. Senga, South Asia Department (SARD) Director H. Kim, Urban Development Division, SARD Team leader G. Cezayirli, Principal Urban Development Specialist, SARD Team members R. Barba, Safeguards Specialist, SARD S. N. Oh, Regional Cooperation Specialist, SARD J. Versantvoort, Counsel, Office of the General Counsel

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page

GRANT, LOANS, AND PROJECT SUMMARY i I THE PROPOSAL 1 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1

A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 2

III. THE PROPOSED PROJECT 7

A. Impact and Outcome 7 B. Outputs 7 C. Special Features 13 D. Project Investment and Financing Plan 14 E. Implementation Arrangements 17

IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS AND RISKS 21 A. Economic Analysis 21 B. Financial Analysis 22 C. Social Dimensions 22 D. Environment 23 E. Risks 24 V. ASSURANCES AND CONDITIONS 24 A. Specific Assurances 24 B. Conditions for Loan Effectiveness 25 C. Conditions for Disbursement 25 VI. RECOMMENDATION 26 APPENDIXES 1. Design and Monitoring Framework 27 2. South Asia Tourism Circuits and Infrastructure Vision and Sector Analysis 31 3. External Assistance for Tourism in Asia 41 4. Sustainable Heritage and Tourism Action Plan 42 5 Project Cost Estimates and Financing Plan 44 6. Project Organization Chart 50 7. Project Implementation Schedule 51 8. Procurement Plans 52 9. Economic and Financial Analysis 57 10. Summary Poverty Reduction and Social Strategy 62 11. Summary Resettlement Plans 65 12. Summary Initial Environmental Examinations 70

SUPPLEMENTARY APPENDIXES

A. Detailed Description of the Project Components - Nepal B. Detailed Description of the Project Components – India C. Detailed Description of the Project Components – Bangladesh D. Fostering Community Participation and Heritage Tourism Livelihood in Nepal E. Fostering Community Participation and Partnership in Heritage Tourism in India F. Fostering Community Participation and Heritage Tourism Livelihood in Bangladesh G. Detailed Cost Estimates and Financing Plan for Nepal H. Detailed Cost Estimates and Financing Plan for India I. Detailed Cost Estimates and Financing Plan for Bangladesh J. Detailed Description of Project Implementation Arrangements for Nepal K. Detailed Description of Project Implementation Arrangements for India L. Detailed Description of Project Implementation Arrangements for Bangladesh M. Terms of Reference for Project Management and Design Consultants Nepal N. Terms of Reference for Project Management and Design Consultants India O. Terms of Reference for Project Management and Design Consultants Bangladesh P. Detailed Economic and Financial Analysis Nepal Q. Detailed Economic and Financial Analysis India R. Detailed Economic and Financial Analysis Bangladesh S. Resettlement Planning Documents T. Environmental Assessment Documents U. Project Readiness

GRANT, LOANS, AND PROJECT SUMMARY Borrower and Recipient

The borrowers of the loans will be Nepal, India, and the People’s Republic of Bangladesh. Nepal will be the grant recipient.

Classification Targeting classification: General intervention

Sector(subsectors): Multisector (water supply and sanitation, waste management, air transport, and road transport) Themes (subthemes): Economic growth (widening access to markets and economic opportunities), regional cooperation and integration (other regional public goods), environmental sustainability (urban environmental improvement), capacity development (institutional development) Location impact: National (high impact), regional (medium impact) Partnerships: Organization of Petroleum Exporting Countries (OPEC) Fund for International Development; and United Nations Educational, Scientific and Cultural Organization (UNESCO)

Environment Assessment

Category B. The Project is not expected to have significant adverse environmental impacts. A summary of the initial environmental examinations (IEEs) conducted for the Project is provided as a core appendix. Full environmental assessment documents for subprojects in the three countries and environmental assessment and review procedures for Bangladesh are in a supplementary appendix.

Project Description

The Project will develop and improve tourism-related infrastructure in Nepal, India, and Bangladesh. It will focus on improving connectivity to and destination infrastructure and services in key nature and culture-based tourism sites on selected high-priority subregional circuits. Infrastructure interventions will include airport upgrading, last mile road connectivity, environmental improvements of destinations, such as water supply, sanitation, and solid waste management; and visitor management infrastructure and services. The physical interventions will be accompanied with a program of capacity building in each country to develop the capacities of sector agencies for sustainable protection and management of natural and cultural heritage of tourism importance. Moreover, the Project will implement a program in each country to better engage local communities in tourism to enhance the economic linkages between local populations and tourism, and increase benefits from tourism to the subregion’s communities.

Rationale South Asia, particularly the area which contains Nepal, north and

northeastern states of India, and Bangladesh (the subregion), is one of the poor regions of the world. However, the subregion has vast and diverse cultural and natural resources and contains many of the world’s major Buddhist sites, which potentially position it as a world destination for nature and culture-based tourism. Tourism plays a vital

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role in the subregion’s economy. During 1999 to 2006, international tourist arrivals grew at an average rate of 8%, higher than the world average. In 2007, tourism earnings from international visitors totaled $12.3 billion, representing a 150% increase from 2003; and tourism directly employed 13.76 million people in the three countries (including all of India). Tourism in the subregion, however, remains constrained by (i) inadequate connectivity and destination infrastructure; (ii) weak protection and management of heritage assets of tourism importance, which threaten the environmental and cultural sustainability; and (iii) inadequate community engagement. Together these limit the growth prospect and ability of tourism to significantly contribute to the economy and poverty reduction. The Project is required to address the infrastructure and management deficiencies, and foster community participation in nature and culture-based tourism by supporting integrated development of priority destinations in high-potential circuits of subregional importance.

Impact and Outcome The Project will promote sustainable and inclusive growth in South

Asia through tourism infrastructure development that will tap the economic potential of contiguous and complementary tourism assets of Nepal, India, and Bangladesh. The impact will be reflected as an increase in the contribution of tourism to the subregion’s economy and employment opportunities, including local livelihoods. The Project outcome will be several key tourism circuits (of subregional importance) of nature and culture-based destinations with (i) enhanced connectivity, (ii) better quality environment and visitor services, (iii) improved natural and cultural heritage and capacities for heritage management, and (iv) greater community engagement in heritage management and tourism benefits.

Project Investment Plan

The investment cost of the Project is estimated at $89.5 million, including taxes and duties of $7.35 million. The project cost for the Nepal component is $46.5 million; for the India component $28.0 million; and for the Bangladesh component $15.0 million.

Financing Plan The Asian Development Bank (ADB) will provide to Nepal a loan of

SDR8,234,000 ($12.75 million equivalent) from its Special Funds resources with a term of 32 years, including a grace period of 8 years, and with an interest charge of 1.0% per annum during the grace period and 1.5% per annum thereafter. A grant of $12.75 million equivalent from ADB's Special Funds resources will also be provided to Nepal. The Government of Nepal will provide $6.0 million equivalent as counterpart funds and the OPEC Fund for International Development will provide $15.0 million as cofinancing to finance part of the Nepal component of the Project.

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A loan of $20.0 million equivalent from ADB's ordinary capital resources will be provided to India under ADB’s London interbank offered rate (LIBOR)-based lending facility. The loan will have a 25-year term including a grace period of 5 years, an interest rate determined in accordance with ADB's London interbank offered rate (LIBOR)-based lending facility, a commitment charge of 0.15% per annum, and such other terms and conditions as set forth in the draft loan agreement. The Government of India will provide $8.0 million as counterpart funds.

A loan of SDR7,698,000 ($12.0 million equivalent) from the Special Funds resources of ADB will be provided to the People's Republic of Bangladesh, with a term of 32 years, including a grace period of 8 years, and with an interest charge of 1.0% per annum during the grace period and 1.5% per annum thereafter. The Government of Bangladesh will provide $3.0 million as counterpart funds.

Financing Plan

Source

Total ($ million)

%

1. Nepal Asian Development Bank

Asian Development Fund Grant 12.75 27.40 Asian Development Fund Loan 12.75 27.40

OPEC Fund for International Development 15.00 32.22 Government 6.00 12.90 Subtotal 46.50 100.00 2. India Asian Development Bank 20.00 70.00 Government 8.00 30.00 Subtotal 28.00 100.00 3. Bangladesh Asian Development Bank 12.00 80.00 Government 3.00 20.00 Subtotal 15.00 100.00 Project Total Asian Development Bank 57.50 64.00 OPEC Fund for International Development 15.00 16.00 Government 17.00 20.00 Total 89.50 100.00

OPEC = Organization of Petroleum Exporting Countries Source: Asian Development Bank estimates.

Period of Utilization From 16 November 2009 to 15 March 2015 Estimated Project Completion Date

15 September 2014

Executing Agencies Ministry of Tourism and Civil Aviation, Nepal; Department of Tourism,

Sikkim State, India; and Department of Archaeology, Ministry of Cultural Affairs, Bangladesh.

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Implementation Arrangements

A subregional task force with representatives of the ministries of tourism and finance and the executing and implementing agencies of each participating country will be established to meet annually and coordinate the progress of national projects. A national project steering committee will be established in each country to provide policy guidance and oversee project implementation. In Nepal, a project coordination unit will be formed in the Ministry of Tourism and Civil Aviation to undertake overall monitoring and progress reporting of activities of project management and implementation units to be set up in the two implementing agencies, i.e., Civil Aviation Authority of Nepal and the Lumbini Development Trust.

In India, a project management and implementation unit will be set up in the Sikkim State Department of Tourism that is designated as both project executing and implementing agency. In Bangladesh, similarly a project management and implementation unit will be set up in the Department of Archaeology, the project executing and implementing agency.

Procurement Goods and services financed by ADB and the OPEC Fund for

International Development will be procured in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time). International competitive bidding procedures will be used for civil works contracts estimated to cost $10.0 million or more in India, $2.0 million or more in Bangladesh, and $1.0 million or more in Nepal; and for supply contracts valued at $1.0 million or higher. The upper limit for civil works to be procured through national competitive bidding procedures will be less than $10.0 million in India, $2.0 million in Bangladesh, and $1.0 million in Nepal; and for equipment the upper limit will be $1.0 million. Shopping will be used for contracts for procurement of equipment and simple civil works worth $100,000 or less.

Consulting Services Teams of international and national consultants will be engaged to assist

in managing and implementing the Project in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). Services will be required in the areas of project management, detailed design, supervision, community participation, environmental and social safeguards, project performance monitoring, heritage planning and management, ecotourism, airport engineering, institutional development, and financial management. A total of 935 person-months consulting services is expected to be required for the Project; 417 person-months (30 person-months international and 387 person-months national) for Nepal; 333 person-months (12 person-months international and 321 person-months national) for India; and 185 person-months (25 person-months international and 160 person-months national) for Bangladesh.

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Project Benefits and Beneficiaries

The increased tourist arrivals, length of stay, and expenditure as a result of project interventions will enable each country to earn more foreign exchange, generate additional jobs, and improve total economic output. Preservation and effective management of natural and cultural heritage sites will help ensure continued benefits from the assets into the future. Improved environment and infrastructure in destinations will enhance the experience of tourists and the living conditions and public health of communities living in and around the sites. Enhanced air and road connectivity to the new tourism destinations in Nepal, Bangladesh, and India will benefit tourists while improving access and mobility of local residents living around these currently isolated locations. The Project’s approach, which favors expanding existing tourism patterns into remote areas and concepts like “greater Himalayan trail” or “village tourism,” will help spread tourism benefits to communities currently bypassed by tourism markets. Inclusive approaches will be reinforced by special efforts to raise awareness and develop skills of communities to increase tourism livelihood opportunities.

The Project is expected to benefit an overall 2.4 million people through increased income, employment, and health and environmental improvements; and reduced travel time. About 270,000 people will benefit from additional employment in the tourism industry and related industries. At least 5,000 local livelihoods will be created improving the lives of nearby communities. Capacity development activities will equip around 250 practitioners with skills for enhanced protection, management, and marketing of key destinations in the three countries.

Risk and Assumptions

The major risks of the proposed Project are related to (i) lower than expected market demand for the tourism destinations and passenger arrivals for Gautam Buddha airport, (ii) sustainability of heritage sites and tourism assets created, (iii) suboptimal benefits to local people from enhanced heritage and tourism growth, and (iv) poor project implementation performance resulting in delays and timely accrual of benefits. The Project addresses these risks through various measures. The conservative assumptions used in assessing the tourism market and passenger demands for the sites will mitigate the risk for lower than expected market demand. Moreover, the Project will support a marketing and promotion program for the sites and circuits developed to ensure that the projected market demand will materialize. Risk for sustainability of the heritage sites will be mitigated by (i) improving the protection, environment, and visitor infrastructure; (ii) enhancing capacity of public sector site managers; (iii) supporting preparation and implementation of management plans for the heritage sites; (iv) gaining community support for heritage management through awareness programs; and (v) implementing revenue generation reforms to create sustainable sources of funds for managing the sites.

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The Project will ensure that tourism will not bypass the communities. Its approach and concept to expand current tourism patterns to remote destinations will help spread tourism benefits more widely. Community awareness programs on potential benefits from tourism will be conducted. The Project will support community training and skills development, as well as schemes for village tourism and heritage-based tourism livelihood generation. Where available, the services of nongovernment organizations or other development partners with competence in similar programs will be sought for effective engagement of communities in tourism. The risk of slow project implementation will be mitigated by establishing project coordination units and project management and implementation units as efficient units with qualified staff supported by project management and design consultants. Moreover, a regional technical assistance commencing before the project effectiveness in each country will provide an up-front support to the project agencies in undertaking project start-up activities, recruiting consultants, and preparing the detailed design of first batch subprojects.

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I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on (i) proposed loans to Nepal, India and the People's Republic of Bangladesh, (ii) a proposed grant to Nepal, and (iii) proposed administration of a loan to be provided by the Organization of Petroleum Exporting Countries (OPEC) Fund for International Development (OFID) to Nepal for the South Asia Tourism Infrastructure Development Project. The design and monitoring framework for the Project is in Appendix 1.

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES

A. Performance Indicators and Analysis

2. South Asia is one of the poor regions in the world. Poverty is concentrated in the northeastern part of the region, including Nepal, the northeastern states of India, and Bangladesh (the subregion). However, the subregion is endowed with vast and diverse cultural and natural resources that give it the opportunity to build a globally competitive tourism sector. The subregion has an ancient cultural heritage of more than 5,000 years old, and is home to many natural and cultural heritage sites inscribed in the World Heritage List. The subregion contains the world’s highest mountain, the eastern Himalayan range. It has a rich diversity of ethnic groups with distinctive cultures. The subregion is also home to the “Buddhist heartland” —an area that contains many of the world’s major Buddhist sites.

3. In Nepal, Lumbini, the birthplace of Buddha is the icon of the Footsteps of the Lord Buddha circuit. The circuit follows the chronological steps of Buddha’s life, and links with the Buddhist attractions of Uttar Pradesh and Bihar states of India appealing to the growing number of international Buddhist pilgrims and spiritual tourists. The Footsteps of the Lord Buddha circuit is the jewel in the crown of Buddhist circuits that justifies the “Buddhist heartland" label for the subregion. The Sacred Garden in Lumbini, where Buddha was born, is inscribed as a World Heritage site due to its outstanding universal value.

4. In India, the Sikkim state, which is strategically located at the center of the subregion, has spectacular and picturesque nature, and is home to the well-known Kanchendzonga national park with hundreds of species of flora and fauna. The state also has a rich Buddhist heritage, including the world-renowned Rumtek Monastery which attracts visitors from all over the world. Sikkim is only 2 hours drive from the Indian city of Bagdogra, i.e., the subregional hub, with existing and potential links to Bangladesh, Nepal, and Bhutan. Located on the Himalayas, Sikkim forms part of the greater Himalayan trail1 —a development concept as well as a physical trail that extends the full length of the Himalayas through Nepal, India and Bhutan; linking the popular destinations with remote valleys. 5. Bangladesh, despite its relatively limited international recognition, has a very rich cultural heritage. The heritage sites concentrated along a corridor from north to south in the western regions of Bangladesh are especially important, and have existing and potential links to the northeast region of India in the north and West Bengal of India in the south. The corridor forms part of a potential multi-country circuit called the Bangladesh India Cultural Heritage Highway circuit. The four heritage sites along the Bangladesh Heritage Highway have outstanding universal cultural value and are popular visitor attractions among Bangladesh’s 391 cultural heritage sites. Paharpur, a world heritage site, is the single largest Buddhist Monastery built in the 8th century. Kantajee is the largest Hindu terracotta temple in the world. Mahastangarh is an

1 Greater Himalayan Trail was first proposed by The Mountain Institute and trekking entrepreneurs, and was included

in the 2004 South Asia Tourism Strategy as one of the key concepts and priority areas for development.

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ancient Buddhist city which is about to be inscribed in the World Heritage List. Bagerhat, another world heritage site on the southern part of the corridor, is a splendid mosque complex with a 77 domed mosque and eight other mosques nearby.

6. According to World Travel & Tourism Council statistics, during 2000–2007, international tourist arrivals in Nepal, India (northeastern states), and Bangladesh grew at an average rate of 8% reaching almost double the global average of 4.8%. Total international arrivals were about 5.7 million in 2007, representing a 73% increase from 2000. In 2007, tourism earnings from international visitors totaled $12.3 billion, representing a 150% increase from the tourism earnings of 2003, and tourism directly employed 13.76 million people in the three countries (including all of India). Growth in the region has been fuelled by India. While international arrivals to Bangladesh and Nepal have fluctuated in 2000–2006, demand has improved markedly in 2007 with an estimated increase in arrivals of at least 6% for Bangladesh and 20%, for Nepal.

7. As for the specific culture and nature-based attractions of the region, a more specific analysis carried out under project preparatory technical assistance (TA)2 suggests that Lumbini in Nepal currently receives an estimated 500,000 annual visitors, including 71,000 international tourists. Sikkim State in India receives an estimated 210,000 tourists including 18,000 international tourists. The cultural attractions of the Bangladesh Heritage Highway are estimated to receive 370,000 visitors annually including 36,000 international visitors. The key international markets include the regional market segments of Thailand, Republic of Korea, Japan, the People's Republic of China, the European countries of the United Kingdom, France, Germany and Italy; and the United States of America, Canada, and Australia.

8. Available data suggest that tourism is a multicountry activity in the region. Considerable numbers of international visitors combine several countries for their visit. A recent exit survey in India indicates that one-third of foreign tourists visit India in combination with other countries, notably Nepal. A 2006 study in Bhutan records that 25% of visitors combined their visits with India, 13% with Nepal, and 8% with Nepal and India.

9. According to United Nations World Tourism Organization estimates, the global market for nature and culture-based tourism is growing about five times the growth rate of standard tourism. The western ecotourism market segments provide convincing potential for the subregion in terms of both volume and yield. Similarly, for Buddhist attractions, strong growth in demand is observed from both domestic and international markets, which range across a spectrum from pilgrims on a religious quest, to long-staying visitors pursuing spiritual studies or Buddhist spiritual well-being, and general sightseers. The subregion’s unique natural and cultural endowments therefore position it as a world destination for spiritual and heritage tourism offering immense opportunities for the socioeconomic growth of the subregion.

B. Analysis of Key Problems and Opportunities

10. Despite the impressive range of its superb cultural, natural, and spiritual endowments and sharp increases in tourist arrivals in recent years, the subregion’s share of world tourism remains insignificant. In 2007, the three countries’ 5.7 million international visitors represented 0.4% of world tourism. Potential tourists in the source markets and the tourism industry widely perceive the region as a “difficult” destination for a number of reasons.

2 ADB. 2006. Technical Assistance for Preparing the South Asia Subregional Economic Cooperation Tourism

Development Project. Manila (TA 6362- REG, December, $1.0 million).

3

11. Limited Connectivity. An important constraint to tourism growth in the participating countries is inadequate connectivity. Access to the heritage assets is a major impediment. Distances from source markets to the subregion as well as within the subregion are so great that air access in some cases is vital to tourism development. This is especially the case for Lumbini in Nepal where connectivity to the site is limited, with no direct air services from key regional and international visitor markets. Air access to Lumbini is through Kathmandu only. The airport, located within half an hour drive from Lumbini, currently serves only to domestic flights. There is need to upgrade this airport to enable direct access of growing number of visitors to Lumbini by increasing the airport’s capacity for the load and volume of passengers, enhancing its service level, and increasing its ability to handle international air traffic. There are also accessibility constraints arising from poor "last mile" road connectivity to many of the important sites along the Bangladesh Heritage Highway and in Sikkim State in India. These deter tourists from visiting these significant cultural and natural sites and hinder the potential to expand current tourism patterns and spread tourism benefits more widely. If the subregion is to be presented on a world stage, providing access to places, where culture and nature-based tourism products can be delivered, is a fundamental need.

12. Inadequate Destination Infrastructure. There is a general perception of the subregion in the marketplace as poorly developed tourism destinations. Environmental standards are poor. Utilities and civic services, such as water, sanitation, and solid waste management are inadequate and do not provide safe and attractive environments for visitors. In all of the cultural and natural heritage sites of tourism importance (including Lumbini in Nepal, Sikkim’s Rumtek monastery and nature-based sites, and heritage sites along the Bangladesh Heritage Highway), traffic management around the sites is inadequate; parking is limited; on-site visitor circulation remains poor; public amenities such as rest rooms and toilets are unfit for visitor use; basic visitor information and site interpretation facilities are either unavailable or substandard; the monuments along the Bangladesh Heritage Highway are in need of conservation to maintain their cultural value; and the infrastructure to properly protect key cultural and natural heritage sites from adverse effects of tourism and the surrounding populations is not in place. Inadequate environmental services, on-site infrastructure, and facilities are causing degradation of heritage structures and undermining the cultural and natural value of these heritage sites, while adversely affecting the visitor experience. Lack of visitor information and interpretation facilities is limiting proper interpretation of the subregion’s heritage. There is an urgent need to improve the infrastructure and services in these sites most of which are World Heritage Sites.

13. Weak Heritage Protection and Destination Management. The subregions' enormous potential for tourism development is further constrained by inadequate institutional capacity and human resources of sector agencies to plan, develop, protect, and manage these heritage destinations and deliver quality tourist experiences. Capacity of public sector agencies such as Nepal’s Lumbini Development Trust (LDT), India’s Sikkim Department of Tourism, and Bangladesh’s Department of Archeology, which are responsible for managing their respective sites, are in need of strengthening. The master plans for Nepal's Lumbini and Bangladesh’s cultural heritage sites are outdated while no master plan exists for Sikkim’s Rumtek monastery. Similarly, site management plans either do not exist or are not being implemented. Funds for protection and management of heritage assets and sites are grossly inadequate. Tourist entry fees and user charges, which can be used for sustainable sources of revenue for site management, are not sufficient. The situation is aggravated by inadequate community awareness of the value of the cultural and natural heritage, and potential benefits that will accrue from sustainable heritage tourism. Sustainable heritage tourism in the subregion is further constrained by weak capacity of existing training institutions and absence of a center of excellence specializing in sustainable culture and nature-based tourism. The resulting weak

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protection and management of heritage destinations is a major risk, which unless effectively addressed, could result in the loss of these indispensable heritage assets and tourism markets. 14. Inadequate Community Engagement. The heritage sites in the subregion, including Nepal’s Lumbini, Bangladesh Heritage Highway sites, and nature and culture-based heritage sites in Sikkim in India, are all located far from major growth centers, and therefore offer great potential for diversifying and spreading tourism benefits in the subregion. However, the absence of connectivity and destination infrastructure constrains potential benefits from tourism to local communities. Potential benefits are further limited by inadequate mobilization of communities in tourism, lack of tourism-related skills among the local populations, and weak supply chain linkages between the local economy and tourism. There are immense opportunities to promote inclusive tourism and community tourism products in and around Nepal’s Lumbini, Bangladesh Heritage Highway sites, and Sikkim’s Buddhist circuit and natural sites through infrastructure development and special efforts for mobilizing communities to engage in the tourism economy. The subregion has already had good practices of inclusive tourism such as the Tourism for Rural Poverty Alleviation program (TRPA) in Nepal and the award-winning village tourism projects in Sikkim. There is need to foster participation of communities in tourism and increase the benefits to local populations building on these good practices.

15. Limited Public Private Partnerships. Currently the private sector provides hospitality services, including accommodation, retail, and tour operations. However, inadequate connectivity and destination infrastructure creates an unfavorable climate for the hospitality industry, whose investments are needed for tourism growth and tourism-related employment generation in the subregion. Investments to improve connectivity and destinations, which are identified in close consultation with the industry, will induce private investments in complementary hospitality services. While planned and regulated public sector investments in key connectivity and environmental improvements and protection of these environmentally and culturally sensitive heritage sites are essential at this time, there is need in the medium term to promote, (i) partnerships between the community, and the private and public sectors in community-based tourism to enhance marketability (e.g., heritage village products); and (ii) private sector participation in the management of sites and assets in a regulated manner for more efficient and sustainable management of heritage sites and properties. There is need to test and gradually introduce innovative partnership models.

16. Cross-Border Travel. Many tourists to the subregion combine travel to a few countries. However, currently some border points do not offer efficient and smooth services for the entry and exit of tourists. Benefits will significantly increase in the long-run if cross-border travel is further streamlined. Possible actions to facilitate cross-border travel include, depending on the specific border point, streamlining visa issuance procedures, facilitating tourist vehicle movements, and coordinating border opening times and duration. The participating countries recognize these issues and they are at various stages of addressing them. A recently approved regional TA3 will also support the three countries and their subregional partners in developing a plan of action to streamline cross-border travel in the subregion. 17. Participating Governments’ Policies. Notwithstanding the above constraints, all of the participating countries’ policies promote sustainable and inclusive development. The countries prioritize tourism as a sector with capacity to make a significant contribution to inclusive development, enhanced protection and management of natural and cultural assets, and

3 ADB. 2008. Technical Assistance for Improving Connectivity and Destination Management of Cultural and Natural

Resources of South Asia Subregion. Manila (TA 6504-REG, December, $2.0 million financed by the Regional Cooperation and Integration Fund under the Regional Cooperation and Integration Financing Partnership Facility).

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sustainable development of physical environments. Nepal's Interim Plan (2008–2010) reaffirms the Government's plans for further supporting tourism as a major contributor to economic growth and livelihood generation through air transport and destination improvements. India's 11th Five Year Plan (2008–2012) confirms the Government’s continued commitment to tourism development as also reflected in the Asian Development Bank's (ADB) country partnership strategy (2008-2012) for India. Likewise, the Government of Bangladesh since 1999 recognizes tourism as a thrust sector; it acknowledges the need to tap the potential of the country's vast cultural heritage for inclusive tourism growth. The recent cultural policy of Bangladesh confirms the priority attached by the Government to enhanced management of heritage. 18. Subregional Cooperation in Tourism. Until recently, each of the three countries has been trying to carve out a niche in the market without any efforts to tap the potential synergies of tourism endowments available in the subregion. In 2001, Nepal, India, and Bangladesh, and their subregional partners (i.e., Bhutan and Sri Lanka) recognized the need to work together to promote tourism. The three countries and their subregional partners acknowledged that tourism in South Asia is a multicountry activity, and that there is need to harness the complementarities and contiguity of individual country tourism endowments. In 2001, a tourism working group (TWG) was formed comprising members of the national tourism organizations of Nepal, India, Bangladesh, and Bhutan under the South Asia Subregional Economic Cooperation Program (SASEC). The TWG was subsequently expanded with the participation of Sri Lanka. In 2004, the TWG with ADB assistance developed and adopted a tourism strategy4, covering the five countries, and building on the national tourism plans. Since then, the tourism strategy has provided a framework for coordinated efforts of the TWG to promote tourism based on the themes of nature and culture-based tourism, including Buddhist circuits.

19. Towards Joint Development of Infrastructure. More recently, the TWG countries aspired to work toward more tangible outcomes through joint development of tourism infrastructure in a phased manner. A South Asia Tourism Circuit and Infrastructure Vision, prepared with ADB support (footnote 2) and endorsed by the TWG demonstrates the countries’ commitment to joint development of infrastructure along defined multi-country circuits that combine complementary country assets into marketable subregional tourism products. A multicountry circuit is defined as a route on which more than one or two major destinations are located in more than one country. In this way, a tourist who enters a destination in one country is motivated to visit other destinations along the same route located in another country, hence resulting in increased arrivals to all destinations in more than one country.

20. South Asia Tourism Circuits and Infrastructure Vision. The vision, endorsed by Nepal, India, and Bangladesh and their subregional partners, involves a pattern of interlinked multicountry circuits of nature and culture-based destinations determined and ranked on the basis of the criteria, including the levels of market demand, contribution to national and subregional tourism growth, and poverty reduction. The vision also broadly identifies the investment requirements of these multicountry circuits in terms of access and destination infrastructure, as well as improved management. The vision, thus, (i) provides a long-term development planning framework for phased development of infrastructure along multicountry circuits in accordance with priorities and available funds, and (ii) sets the basis for the highest priority circuits and the subprojects to be included in the Project (Appendix 2).

21. The Project forms part of the South Asia tourism circuits and infrastructure vision. It includes the integrated development of priority tourism infrastructure and services in selected

4 Prepared under ADB. 2003. Technical Assistance for the South Asia Subregional Economic Cooperation Tourism

Development Plan. Manila. (TA 6131-REG, November, $450,000).

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multicountry circuits ranked in the vision document as highest priority circuits with greatest potential for inclusive and sustainable tourism development. The priority circuits, included in the Project, are (i) the Nepal portion of the Footsteps of the Lord Buddha circuit that cuts across India and Nepal, and combines Lumbini, the birth place of Buddha with the Buddhist sites of northern India, (ii) the Sikkim portion of both the greater Himalayan trail and the northeast India circuits centered near India’s Bagdogra, an air gateway linking the Himalayan culture, trekking, and adventure destinations of Sikkim, with northeastern Indian states, east Nepal, northern Bangladesh, and Bhutan, and (iii) the Bangladesh Heritage Highway connecting a cultural heritage-focused corridor from north to the south in the western regions of Bangladesh with established tourist flows in West Bengal and the northeast region of India.

22. Public sector intervention in the tourism sector in a subregional framework is required to (i) link and collectively promote the complementary and contiguous tourism attractions of the subregion’s countries that individually may not be able to attract high international arrivals; (ii) minimize infrastructure constraints and bottlenecks that hamper tourism development; (iii) regulate and enhance the sustainable protection and use of public tourism assets of natural and cultural importance by tourists, the private sector, and communities to reduce negative externalities; and (iv) increase opportunities for the subregion’s communities to benefit from tourism. The Project will have synergies with other ongoing and planned subregional initiatives, e.g., ADB’s subregional transport and communications project.

23. External Assistance and Lessons. No major development partners are active in subregional tourism in South Asia, except JBIC, which is involved in tourism infrastructure development in India, and the United Nations Educational, Scientific and Cultural Organization (UNESCO) with indirect involvement through mostly technical assistance for the protection of cultural heritage sites. The Project will be ADB’s first lending assistance for a subregional project in the tourism sector in South Asia. The Project is a culmination of a process of subregional cooperation in tourism in which ADB has played a major role since 2001 under SASEC program. ADB, in accordance with its South Asia regional cooperation strategy and program (2006–2008) and through several regional TAs, supported the formation of the TWG and a tourism strategy for South Asia. While the strategy has been a useful first step towards a framework for subregional action in tourism, it proved to be too ambitious to lead to focused interventions. A following regional TA on human resource development in the tourism sector has been effective in creating a pool of trainers with a view to cascading the knowledge to the national level, but again pointed to the need for more focused and sustainable outcomes.

24. While ADB, to date, has not provided any lending assistance for subregional tourism in South Asia, it provided two loans to Nepal for tourism infrastructure development in 1992 and 1996. Overall, these projects, especially air connectivity and ecotourism interventions, are found relevant and effective, except urban tourism improvements, which suffered from weak municipal capacities. Lessons include the following (i) marketing of destinations developed is critical, (ii) private sector involvement in site identification is needed to ensure viability, (iii) community involvement enhances sustainability, (iv) rigorous financial and marketability assessment of tourism sites is required, and (v) up-front capacity building of project agencies is important for timely implementation and sustenance of project outcomes and outputs. A recent evaluation study5 rates ADB assistance to the Greater Mekong Subregion tourism sector "successful" while providing several lessons, including the need for (i) greater facilitation of border crossings, (ii) inclusive approaches to ensure that tourism benefits local communities, (iii) improved inter-sectoral and interagency coordination, and (iv) accurate demand analysis. These lessons are

5 ADB. 2008. Evaluation Study on the Tourism Sector in the Greater Mekong Subregion. Manila (REG 2008-58

December).

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incorporated in the design of the Project. Appendix 3 provides the list of related external assistance. Donor coordination will be maintained through TWG at the subregional level, while involvement of UNESCO in the Project will be ensured to utilize its technical expertise in the development of heritage destinations in each participating country.

III. THE PROPOSED PROJECT

A. Impact and Outcome

25. The expected impact of the Project is sustainable and inclusive development in South Asia by tapping the potential of contiguous and complementary tourism assets of Nepal, India, and Bangladesh. This will be reflected in an increase in the contribution of tourism to the subregion’s economy and employment opportunities. The expected outcomes are several subregional circuits of nature and culture-based tourism destinations with (i) improved connectivity, (ii) better quality environment and visitor services; (iii) enhanced natural and cultural heritage, and capacity for sustainable heritage management; and (iv) greater engagement of communities in heritage management and tourism benefits. These outcomes will be achieved by (i) improving access and destination infrastructure and services in key nature and culture-based tourism sites located along selected multicountry tourist circuits; (ii) building the capacities of sector agencies for sustainable protection and management of natural and cultural heritage sites as well as tourism-related infrastructure and assets e.g., airport; and (iii) strengthening linkages between tourism and local population and building the capacity of communities to enable them to obtain greater benefits from tourism. The Project includes three countries: Nepal, India, and Bangladesh.

B. Outputs

26. Project outputs include (i) connectivity enhancement; (ii) destination improvements; and (iii) support for fostering community participation, capacity development, and project management. The first output involves upgrading air and road access to selected natural and cultural sites of importance for tourism. The second output includes (depending on the sites’ needs) environmental improvements, visitor infrastructure and services, on-site visitor circulation systems, and heritage protection. The third output involves interventions for (i) greater community engagement in heritage management and tourism; (ii) institutional and human resources development of relevant agencies in planning, developing, managing and promoting heritage sites of tourism importance; and (iii) effective project implementation. A description of each output for each country is provided below. Detailed descriptions of the project components for each country are in Supplementary Appendixes A, B, and C.

1. Nepal

27. In Nepal, the Project aims to develop the Nepal portion of the “Footsteps of the Lord Buddha circuit6 by focusing interventions on Lumbini. The importance of Lumbini stems from the Sacred Garden, a World Heritage site that includes the birthplace of Buddha and related archaeological remains and structures. Interventions are directed at (i) enhancing the connectivity to Lumbini, (ii) destination improvements in Lumbini, and (iii) capacity development of relevant public sector site managers and communities.

28. Connectivity Enhancement. This component aims to enhance air access to Lumbini by upgrading the Gautam Buddha airport to international standards. This involves (i) construction

6 The India portion of the Footsteps of the Lord Buddha circuit (the Buddhist sites in Uttar Pradesh and Bihar) of

India) is developed by the Government of India with support from the Japan Bank for International Cooperation.

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of a new runway, exit taxiway, and apron pavement; (ii) rehabilitation of the existing runway for conversion to parallel taxiway; (iii) refurbishment and expansion of existing terminal building as a domestic terminal building; (iv) construction of a new international terminal building: (v) new control tower, customs and cargo building, and crash fire rescue building, (vi) water supply, sewerage, and drainage improvements and other civil works such as Ghaghara Khola irrigation canal diversion, roads, and security fence; (vii) expansion of fuel farm; and (viii) and installation of communication and navigational equipment suitable for international airports. The airport will be constructed as category 4E in accordance with the guidelines of the International Civil Aviation Organization.

29. Destination Improvements. This component focuses on the Lumbini master plan area. It aims to enhance the protection and management of Lumbini and experience of visitors by improving the environmental quality, the outstanding universal value of the site, and visitor facilities. Improvements include (i) development of car parking and bus stop; (ii) completion of the unfinished portion of the perimeter road; (iii) provision of localized source-based drinking water supply; (iv) provision of toilets in key locations; (v) solid waste management improvements; (vi) enhancement of on-site interpretation displays and signage telling the Buddhist history of Lumbini; and (vii) construction of a visitor center, and landscaping and pedestrian walkways around the visitor center to enhance initial reception of visitors and provide visitors with required information and orientation about Lumbini.

30. Fostering Community Participation, Capacity Building, and Project Management. This component aims to foster community engagement in heritage management and tourism, build the capacity of agencies involved in managing heritage and tourism infrastructure, and support effective and timely implementation of the Project.

31. Community Participation. The subcomponent includes community awareness-raising programs on the importance of Lumbini as a world heritage site and potential benefits from tourism to the local economy, particularly new markets and livelihood opportunities that the local people can access. The subcomponent also supports a demonstration scheme for heritage tourism livelihood generation including (i) social mobilization, (ii) skills development in heritage site management and tourism-related activities based on a value chain analysis, and (iii) linking communities to available microfinance services. Local and nongovernment organizations (NGOs) and microfinance service providers experienced in similar schemes are expected to be involved as needed. The scheme builds on Nepal’s good practice “Tourism for Rural Poverty Alleviation project” and emphasizes market linkages (Supplementary Appendix D).

32. Capacity Building. This subcomponent primarily supports capacity building and human resource development of (i) LDT which is responsible for planning and management of the Lumbini area; and (ii) the Civil Aviation Authority of Nepal (CAAN), which is in charge of air transport infrastructure and services.

33. Assistance to LDT includes developing and implementing measures to strengthen LDT in (i) strategic planning, (ii) heritage protection, (iii) visitor management, (iv) environmental management, (v) maintenance of site infrastructure, (vi) financial management and revenue generation, (vii) coordination of multistakeholders, and (viii) engagement of communities in heritage tourism. The subcomponent also supports LDT in updating the Lumbini master plan and preparing a management plan for the World Heritage site in cooperation with UNESCO. Support includes defining linkages between the master plan and the broader Lumbini development area, and integrating measures for institutional development and financial management into the updated master plan and development control regulation. As part of the

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efforts to promote Lumbini, the Project also provides assistance to the Nepal Tourism Board to design and implement a marketing program for Lumbini and other Buddhist sites in its vicinity in coordination with regional TA (footnote 3). 34. For CAAN, the assistance focuses on enhancing the capacity for management of Gautam Buddha airport. This involves preparation and implementation of a business plan for the airport, including support for setting and restructuring aeronautical and nonaeronautical rates, possible outsourcing of various functions and other cost management measures, as well as staff training programs in airport management and financing.

35. Project Management. This subcomponent supports funding the costs of the project coordination unit (PCU) in the Ministry of Tourism and Civil Aviation (MOTCA) and project management and implementation units (PMIUs) in LDT and CAAN, including incremental administration and operations related to implementation, provision of equipment, logistics, and consulting services. 2. India

36. The India portion of the Project focuses on Sikkim State, with magnificent mountains, pristine environment, and significant Buddhist heritage. Sikkim is located at the geographic center of the subregion and has a good road connection to Bagdogra, the subregional hub with potential links to the Bangladesh Cultural Heritage Highway circuit, east Nepal, Bhutan, and other northeastern states. In addition to its strategic location and splendid attractions, Sikkim has a good record of practices in sustainable and responsible tourism, which potentially position it as a center of excellence for subregional experience sharing and capacity development in sustainable heritage tourism.

37. The connectivity and destination improvements in Sikkim focus on (i) a world-renowned Buddhist site, the Rumtek monastery, situated within 24 kilometers (km) away from Gangtok, the capital city of the State; (ii) the nature-based sites in west Sikkim which form a part of the greater Himalayan trail (footnote 1); (iii) village tourism development; and (iv) transformation of Sikkim into a center of subregional learning in nature and culture-based tourism by supporting the development of a training institute (Himalayan Training Institute) already initiated by the Government of India.

38. Connectivity Enhancement. This component involves improvements to several roads to enhance access to attractions around the Rumtek monastery complex and the proposed training institute. The first road improvement aims to expand the current “there and back” pattern of tourist flows between Gangtok and the Rumtek monastery into a circular trip enabling an option for tourists to visit other nearby attractions—the Lingdum monastery and Ban Jakhri Falls. This involves upgrading of the Sajong–Lingdum–Gangtok road, including surface improvement, strengthening, and widening from single to intermediate lane of about 20 km of approach road from Sajong to Gangtok via Lingdum and the Ban Jakhri Falls. The second road improvement aims to enhance access to a unique site next to Rey Khola—a perennial stream—a unique natural attraction located about 800 meters off the road to Rumtek. The improvements to this road include upgrading the single lane earthen road to blacktop leading to the site. The third road improvement enhances access to the Himalayan Training Institute in Chemchey by strengthening and widening, from single to intermediate lane, about 3 km of road to the site. The fourth road improvement includes strengthening and widening, the last 2.2 km to the site of the statue of Guru Padma Sambhava in Sandruptkse in the vicinity of the training institute.

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39. Destination Improvements. These include (i) improvements in the Rumtek monastery circuit, (ii) small-scale infrastructure improvements in West Sikkim’s nature-based sites, (iii) development of the Himalayan Training Institute, and (iv) village infrastructure development.

40. Rumtek Monastery Circuit. Interventions aim to enhance the environmental quality and cultural value of the heritage site, and to address visitor needs within the Rumtek monastery complex as well as several other attractions outside the complex on the circuit. Improvements to the Rumtek monastery complex include (i) development of a parking facility for about 250 vehicles outside the gate of the complex and on-street parking; (ii) improvement of toilets; (iii) provision of solid waste management facilities and services; (iv) development of a water storage and replacement of the distribution network; (v) construction of a visitor information and Buddhist interpretation center; (vi) development of a building facade regulation, and modification of facades in compliance with the regulation; and (vii) landscaping works, including converting overhead utility lines to underground lines. Improvements outside the complex and on the intermediate locations of the circuit focus on Shanti viewpoint and the waterfront of Rey Khola. Shanti viewpoint improvements include development of car park and a viewing platform and rehabilitation of toilet and tourist facilities. Rey Khola waterfront improvements involve development of a car park, public open space with landscaping along the river, a pedestrian pathway with railing along the river edge, access to water by steps at two locations, and toilets.

41. West Sikkim Himalayan Trail. Improvements aim to enhance the safety and to address the basic needs of tourists, and to ensure the protection and management of natural heritage along the important trekking trails and the Yuksam base camp in west Sikkim. The trekking trail improvements focus on Singalila trekking trail, which passes through the wilderness in a mountainous terrain of the Singalila ranges, mostly within West Sikkim, with a part in Nepal at Megu. Improvements include (i) strengthening and construction of trails; (ii) trail signs; (iii) development of campsites in designated locations; (iv) water supply, toilet, and bathing facilities; and (v) solid waste management. Improvements to the Yuksam base camp focus on redevelopment, including provision of common facilities, e.g., toilets, information center, administrative facilities, and a field training facility and equipment to be used in conjunction with activities of the proposed Himalayan Training Institute.

42. Himalayan Training Institute. This subcomponent is aimed at meeting the need and demand for a center of excellence to promote sustainable practices in nature and culture-based tourism in the subregion. The institute is envisaged to deliver various short-term courses, seminars, and long-term programs of up to 1 year for public sector officials, trainers, community leaders, and private sector stakeholders involved in conserving, developing, and managing, nature- and culture-based tourism products in ecologically and culturally sensitive areas. The target group also includes national and international students seeking to build a career in nature and culture-based tourism. The institute is envisaged to partner with other institutes offering specialized courses, and bring national and international trainers and experts.

43. The physical investments for completion of the training institute include (i) construction of a training center with six classrooms, two seminar halls, a library and documentation center, staff room, and services; (ii) an auditorium with seating capacity for 200, and audiovisual equipment, and furniture and fittings; (iii) expansion of currently constructed student hostels and provision of staff quarters; and (iv) provision of training equipment and storage. The Himalayan Training Institute interventions also include improvement of a nearby heritage attraction, the site and statue of Guru Padmasambhava, more specifically repairing the current cracks and retrofitting the statue, and improving the drainage, toilets, and solid waste management of the site. A key area of assistance for the institute is the smooth operationalization and long-term sustainability of the institute under the capacity building subcomponent.

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44. Village Tourism Infrastructure Development. The subcomponent aims to use the potential of the major destinations to attract tourists to surrounding villages. It focuses on three villages each within easy access of the Rumtek monastery circuit, West Sikkim trekking trails, and the Himalayan Training Institute. Improvements are targeted at enhancing the physical environment and heritage of villages and visitor services. These include, depending on the specific needs of each village, provision of water supply, sanitation, and waste management improvements; improvements to trekking trails passing through the villages; designing village walks covering the key village attractions; development of viewpoints; directional signage; visitor information centers; and cultural performance stages. All these physical improvements are accompanied by community preparation activities under the capacity building subcomponent. The component builds on the award-winning village tourism projects in Sikkim. 45. Fostering Community Participation, Capacity Building, and Project Management. This component aims to complement the inclusive infrastructure development interventions in Sikkim with increased community engagement in sustainable heritage management and tourism, and improved capacity of relevant public sector agencies and other stakeholders.

46. Community Participation and Partnership. The subcomponent includes general awareness-raising programs on the importance of natural and cultural heritage sites and potential benefits from tourism to the community. A specific focus is placed on fostering community engagement in (i) the West Sikkim Himalayan Trail, and (ii) heritage villages identified for tourism infrastructure development. Activities in West Sikkim include formation and capacity development of ecodevelopment committees representing local communities and developing skills on ecotourism services. Support for heritage villages includes (i) forming village communities; (ii) training villagers in heritage management and hospitality skills especially in home-stay management, handicraft development, and marketing, and other activities; and (iii) establishing links with the distribution end, e.g., the tour operators with a view to promoting community, private and public partnership in heritage village tourism. These utilize the state's current enabling framework for community involvement in ecotourism and build on award-winning village tourism schemes. NGOs with competence in similar programs are expected to be involved as needed (Supplementary Appendix E).

47. Capacity Building. Efforts are directed at (i) building the capacity of relevant agencies, including the Sikkim’s Department of Tourism (DOT) which is the executing and implementing agency for the Project; and other stakeholders involved in planning, developing, and managing the tourism and heritage assets; and (ii) operationalizing the Himalayan Training Institute.

48. Assistance to DOT includes (i) drafting guidelines for nature and culture-based tourism; (ii) establishing within DOT a unit for inclusive tourism; (iii) enhancing DOT revenues through levies and collection of various tourist entry fees and charges, and in the medium-term ring-fencing of tourism revenues; (iv) identifying areas of special importance for regulated development, and helping in notification of those areas as planning zones; (v) preparing a master plan for the Rumtek Monastery circuit; and (vi) marketing and promoting the circuits and sites created, in coordination with subregional marketing and promotion efforts under the regional TA (footnote 3). Moreover, the assistance includes training of site managers at key agencies i.e., DOT, Department of Forest, the Ecclesiastical Department, and any other relevant agency, including Rumtek monastery administration.

49. Support for operationalizing the Himalayan Training Institute involves developing and assisting in the implementation of an operation and business plan, including (i) identification of technical and managerial skills and other requirements to run the institute; (ii) design of

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curricula; (iii) identification of various laws, professional bodies, and committees governing and regulating the spectrum of nature and culture-based tourism; (iv) preparation of a prerequisites list to obtain appropriate affiliations, all mandatory approvals, and accreditations to conduct credible training programs; (v) identification of potential strategic partners whose experience, expertise, and market reach could be utilized; and (vi) development of measures to transform the institute in the medium-term into a not-for-profit organization to enable DOT to retain a supervisory role and enhance the financial sustainability of the institute. 50. Project Management. This subcomponent supports funding the costs of the PMIU in DOT and project implementation units in West Sikkim and South Sikkim, including incremental administration and operations, and provision of equipment, logistics, and consulting services.

3. Bangladesh

51. The Bangladesh portion of the Project aims to promote key cultural heritage sites along a heritage-rich geographic corridor extending from north to the south in the western regions of Bangladesh. Improving the access and site conditions, protecting and managing these significant heritage sites, and promoting them through an innovative concept of a “heritage highway” are expected to lead to increasing visitor numbers and the spread of tourism benefits to remote communities. 52. The Bangladesh portion of the proposed Project, to be implemented using a sector loan approach, includes the four key sites —Paharpur, Mahastangarh, Kantajee, and Bagerhat. A detailed subproject, already prepared for Paharpur, forms the first batch of subprojects for implementation. The subproject serves as a sample for design and feasibility of other sites that have already been identified and that will be confirmed as subprojects on the basis of the subproject selection and preparation criteria set out in section F of Supplementary Appendix C. The proposed subproject for Paharpur, a World Heritage Site, builds on plans and studies conducted by UNESCO.

53. Connectivity Enhancement. This component includes "last mile" connectivity roads to enhance access to the sites and manage visitor movement. In the case of Paharpur, the component include (i) developing an intermediate lane road to enable access to the northern gate of the site culminating at the proposed parking space near the northern gateway, and (ii) a pedestrian pathway along the eastern side to facilitate movement of local residents from surrounding villages without trespassing the heritage site.

54. Destination Improvements. This component includes (i) essential conservation works to protect the cultural value and authenticity of heritage structures, (ii) improvements to environmental infrastructure and services, which will prevent destruction of the sites and structures and their authenticity and upgrade the quality of the site environment, (iii) provision of facilities to address visitor needs and control on-site movement of visitors and (iv) enhanced interpretation and presentation of the sites. In the case of Paharpur, improvements aim to address the major issues of (i) management of increased tourism, (ii) accumulation of salt in heritage due to inadequate drainage and use of inappropriate material in conservation, and (iii) water logging and resulting degradation of heritage structures. Interventions include site drainage improvements; provision of car parks; construction of a visitor information and interpretation center, ticket boots, toilets, and on-site walkways, on site signage, displays, and serviced area for commercial use; and reorganization of the heritage site space though various landscaping work and walkway improvements.

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55. Fostering Community Participation, Capacity Building, and Project Management. The component, as in other two participating countries, aims to foster engagement of local communities in heritage protection and tourism, build the capacity of agencies involved in heritage and tourism management, and ensure effective implementation of the Project.

56. Community Participation. Activities include community awareness-raising programs on linkages between sustainable heritage management and tourism, and the potential benefits from heritage tourism to communities. A major activity is support to the design and implementation of a demonstration scheme for tourism livelihood generation. This involves social mobilization, training and skills development for local communities in heritage site management and tourism-related activities, and establishment of linkages with microfinance services based on supply chain analysis. The activities also involve building the capacities of Department of Archaeology (DOA) and Bangladesh Parjatan Corporation (BPC) to enable them to better interface with local communities and effectively engage in heritage tourism. Local organizations and NGOs experienced in similar programs are expected to be involved as applicable (Supplementary Appendix F). 57. Capacity Building. The activities are primarily directed at (i) strengthening DOA which is responsible for planning and managing the heritage sites, and (ii) increasing the interface between agencies responsible for heritage management and tourism, i.e., the Ministry of Civil Aviation and Tourism, BPC, and DOA under the Ministry of Cultural Affairs. Support to DOA involves (i) developing organizational and operational systems for enhanced heritage site planning, protection, and management; (ii) devising measures for increased revenue generation from user fees, and creating dedicated sources of funds for heritage management where feasible through ring-fencing of incomes from heritage sites; (iii) developing incentive measures and conducting training for staff in planning, conservation, and management of heritage tourism; and (iv) preparing management plans for heritage sites and key studies for innovative heritage protection and management. Further, assistance is given to BPC in designing and implementing a marketing program and pilot livelihood scheme.

58. Project Management. This subcomponent supports the PMIU in DOA and project implementing units at the sites as well as BPC by funding the cost of incremental administration and other related costs, e.g., provision of equipment, logistics, and consulting services.

C. Special Features

59. Subregional Dimension. The Project involves three countries (Nepal, India, and Bangladesh). ADB will sign separate grant and loan agreements with each country. The rationale for a subregional project rather than national tourism projects stems from the fact that development of tourism in each country in isolation will become increasingly difficult in a competitive world tourism market. Isolated country efforts to develop tourism will also bring suboptimal benefits given that tourism is a multicountry activity in the subregion. Substantial additional benefits will accrue through joint development and promotion of high potential multicountry circuits that link the complementary and contiguous heritage assets of individual countries, thus motivating tourists to visit more than one country in the subregion.

60. Focus on Nature and Culture-Based Tourism. An important feature of the Project is its focus on nature and culture-based tourism, including Buddhist circuits. This provides an appropriate branding considering the subregion's rich natural and cultural endowments as well as the fast-growing global markets for nature and culture-based tourism. Moreover, developing tourism based on these themes accompanied with necessary safeguard measures, support for planned interventions, and capacity building of all stakeholders on heritage management,

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present greater opportunities for (i) enhancing sustainable protection and management of the natural and cultural heritage assets and (ii) stimulating subregional action for management of precious subregional heritage upon which the subregion’s tourism depends.

61. Support for Sustainability and Capacity Building. The Project supports the governments’ policies for sustainable heritage management and tourism growth. It includes capacity development assistance in each country to assist in the attainment of the action plan, specifically to (i) guide planned interventions in heritage sites in accordance with international benchmarks; (ii) strengthen public sector agencies in management of heritage and tourism assets; (iii) ensure community engagement in heritage protection and tourism; (iv) strengthen sector agencies in entering partnerships with the community and explore the opportunity for public-private sector partnership in the management of heritage sites, and (v) enhance revenues for sustainable management of heritage sites and other tourism infrastructure, e.g., airport, by introducing and rationalizing site entry fees; user charges for services, e.g., water supply and toilets, parking fees where these are not concessioned out; concession fees on commercial facilities undertaken by the private sector, and the sale of interpretative materials; and preparation of a Business Plan for the Gautam Buddha airport, including airport fees and charges. The “sustainable heritage and tourism action plan” is in Appendix 4. The Project’s approach to public–private partnership is in Supplementary Appendix E.

62. Inclusive Tourism. Inclusive tourism principles are embedded in the Project. The Project’s principals, including the (i) consideration of poverty as one of the criteria in selecting circuits and subprojects, (ii) focus on cultural and natural heritage which are mostly located far from major growth centers, and (iii) inclusion of concepts such as the greater Himalayan trail, all enable linking the currently established tourism patterns to impoverished remote communities thus spreading tourism benefits more widely. To ensure that the communities can avail of the opportunities created, the Project incorporates a specific program to foster community engagement as an integral and tailored element of the Project in each participating country. This involves community mobilization, awareness-raising, and skills development in tourism; tailored schemes to promote tourism livelihood generation in Bangladesh and Nepal; and partnerships between the community, and public and private sectors through West Sikkim ecotourism and village tourism in Sikkim State in India (Supplementary Appendixes D, E, and F).

63. Grant-Funded Regional TA. The Project is supported by a grant-funded regional TA (footnote 3) which will commence ahead of the effectiveness of each loan and grant for each participating country. The TA aims to (i) enhance the readiness of countries for implementing the Project through capacity building in project management and implementation, and (ii) address subregional aspects of tourism development. The latter includes support for (i) periodic review and coordination of the country-specific projects at the subregional level, (ii) a subregional tourism marketing and promotion program, (iii) streamlining cross-border travel, (iv) subregional knowledge sharing through study tours and workshops on heritage tourism best practices and innovative approaches in heritage site management, and, (v) updating the Tourism Strategy of 2004 in line with the evolving priorities and needs for adjustments in view of the new stage of subregional cooperation for joint tourism infrastructure development .

D. Project Investment and Financing Plan

64. The project investment cost is estimated at $89.5 million, including taxes and duties of $7.35 million. The project cost for the Nepal portion is estimated at $46.5 million equivalent, for the India portion $28.0 million equivalent, and for the Bangladesh portion $15.0 million. Summary estimates by component are in Table 1. Detailed cost estimates and financing plans

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are in Appendix 5. Cost estimates by expenditure category, components, and financiers for each country are in Supplementary Appendixes G, H, and I.

65. The Government of Nepal has requested a grant of $12.75 million and a loan of SDR8,234,000 ($12.75 million equivalent) from ADB's Special Funds resources to help finance the Project. The loan will have a 32-year term, including a grace period of 8 years, and an interest charge of 1.0% per annum during the grace period and 1.5% per annum thereafter.

Table 1: Project Investment Plan

($ million) Components Amounta A. Nepal 1. Base Costb a. Connectivity Infrastructure (Airport) 32.36 b. Destination Improvements (Lumbini Site Improvements) 2.25

c. Support for Capacity Development, Community Participation, and Project Management 4.60

Subtotal 1 39.21 2. Contingencies c 6.57 3. Interest and Service Charges During Implementation 0.72 Total 46.50 B. India 1. Base Costb a. Connectivity Infrastructure (Roads) 4.61

b. Destination Improvements (Nature and Culture -based Tourism Infrastructure and Facilities) 14.77


Subtotal 1 22.50 2. Contingencies c 3.50 3. Financing Chargesd 2.00 Total 28.00 C. Bangladesh 1. Base Cost a. Connectivity Infrastructure (Roads) 1.26 b. Destination Improvements (Cultural Heritage Highway Sites Improvements) 8.64


Subtotal 1 12.15 2. Contingenciesc 2.58 3. Financing Charges During Implementation d 0.27 Total 15.00 Total Project Coste 89.50 a In 2009 prices. b Includes taxes and duties in Nepal ($3.15 million), India ($3.04 million) and Bangladesh ($1.16 million). c For Bangladesh, physical contingencies for civil works and equipment computed at 12% and for consulting

services at 10%; price contingencies for civil works items and equipment computed at 7.5% per year for domestic inflation and 0.8% for foreign inflation. For Nepal and India, physical contingencies computed at 10% for civil works, equipment, and consulting services. Price contingencies for Nepal for civil works and equipment were computed at 7% per year for domestic inflation and 0.8% for foreign inflation. For India, price contingencies computed for civil works and equipment computed at 7.5% per year for domestic inflation and 0.8% for foreign inflation.

d For Bangladesh this includes interest charges of ADF loan; for India, interest and commitment charges of the ordinary capital resources loan, and for Nepal, interest charges for ADF and OFID loans. Also includes bank charges to be financed from ADB loan proceeds.

e Includes taxes and duties of $7.35 million. Source: Asian Development Bank

66. The Government of India has requested a loan of $20.0 million from ADB's ordinary capital resources to help finance the Project. The loan will have a 25-year term including a

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grace period of 5 years, an interest rate to be determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility, a commitment charge of 0.15% per annum, and such other terms and conditions as set forth in the draft loan agreement. 67. The Government of Bangladesh requested a loan of SDR7,698,000 ($12.0 million equivalent) from ADB's Special Funds resources to help finance the Project. The loan will have a 32-year term, including a grace period of 8 years, and an interest charge of 1.0% per annum during the grace period and 1.5% per annum thereafter.

68. The Government of Nepal will provide $6.0 million, the Government of India $8.0 million, and the Government of Bangladesh $3.0 million equivalent as counterpart funds to finance taxes and duties, cost of land acquisition and resettlement, and part of the cost of civil works. The Government of Nepal will relend the loan and part of the grant to CAAN to finance part of the connectivity component; this subsidiary financing agreement with CAAN will have a 32-year term, including a grace period of 8 years, and an interest rate of at least 5% per annum. 69. The OPEC Fund for International Development (OFID) will provide a loan of $15.0 million equivalent to finance part of the cost of the Nepal portion of the Project, for the civil works and equipment related to the connectivity component (airport upgrading). Administered by ADB, the OFID loan will have a 20-year term, including a 5-year grace period with a 1% interest charge per year, and 1% service charge per year. The financing plan for the Project is summarized in Table 2. The provision of $12.75 million grant assistance to Nepal to finance the components of destination improvements, support for community participation, capacity development, and project Management" and selected civil works of airport upgrading (Appendix 5, Table A5.8 provides details of grant-funded components) is justified on the basis of the inclusive dimension of the Project and the country’s tight fiscal position.

Table 2: Financing Plan ($ million)

Source Amount % A. Nepal Asian Development Bank

Asian Development Fund Grant 12.75 27.40 Asian Development Fund Loan 12.75 27.40

OFID 15.00 32.22 Government 6.00 12.90

Total 46.50 100.00 B. India Asian Development Bank 20.00 71.00 Government 8.00 29.00

Total 28.00 100.00 C. Bangladesh Asian Development Bank 12.00 80.00 Government 3.00 20.00

Total 15.00 100.00 D. Project Total Asian Development Bank 57.50 64.00 OFID 15.00 16.00 Governments 17.00 20.00 Total 89.50 100.00

Source: Asian Development Bank

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E. Implementation Arrangements

1. Project Management

70. A subregional task force will be formed with representation from the ministries of tourism and finance, and the project executing and implementing agencies of each country to (i) coordinate the national components of the Project, (ii) review progress and address key issues; (iii) coordinate the regional TA activities with the Project; monitor especially the subregional action plan and provide policy guidance, and (iv) ensure coordination with other development partners for subregional tourism development. The task force will meet annually and be chaired on a rotational basis between the three countries. The secretariat support to the meetings will be given by the host country with logistical and technical support from the regional TA (footnote 3). The representatives of the national tourism organizations of other subregional partners (Bhutan and Sri Lanka) may participate in the meetings as observers. The project organization chart is in Appendix 6. Details of project implementation arrangements for each country are in Supplementary Appendixes J, K, and L.

71. Each country will have a national project steering committee, comprising the secretaries of the ministries of tourism as chair and representatives of the ministries of finance and project executing and implementing agencies and other relevant agencies. The committees will meet as required, at least biannually (i) provide policy guidance and facilitate cooperation among agencies involved in implementation; (ii) ensure that project implementation arrangements are in place; and (iii) oversee overall project progress, including the sustainable heritage and tourism action plan, and address key issues. In the case of India, a state steering committee will also be established in Sikkim state to oversee the India (Sikkim) portion of the Project.

72. In Nepal, the executing agency will be MOTCA where a PCU will be established to coordinate and perform consolidated project performance monitoring of the project activities undertaken by the two key implementing agencies, i.e., CAAN and LDT. PMIUs will be established in LDT and CAAN to manage and implement the connectivity enhancement and Lumbini heritage site improvements. In India, the Sikkim DOT, where a PMIU will be established, will be the executing and implementing agency to manage and implement the India portion of the Project. In Bangladesh, DOA is designated as the executing and implementing agency; a PMIU will be established in DOA to manage and implement the Bangladesh portion of the Project. 73. Each PMIU in Nepal, India and Bangladesh will be headed by a Project Director with a team of administrative, financial, technical, cultural, social, and environmental staff and will (i) monitor the Project and have overall responsibility for its implementation; (ii) appoint project management and detailed design and capacity development consultants; (iii) ensure land acquisition and other safeguards; (iv) approve surveys, investigations, engineering designs and bid documents; (v) review and endorse procurement of works and goods; (vi) oversee contract administration; (vii) organize awareness campaigns and participation programs; (viii) organize and operate the project performance monitoring system to be linked to PCU in the case of Nepal; (ix) prepare disbursement requests and forward them to ADB through PCU in the case of Nepal; (x) prepare and submit timely progress reports (through PCU in Nepal); (xi) review and facilitate the progress of the sustainable heritage and tourism action plan and compliance with loan covenants; and (xii) design and implement capacity building programs.

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74. Project implementation units responsible for overseeing the implementation and construction activities in the field will be established in all the countries as needed. For cultural heritage sites in Bangladesh and Lumbini in Nepal, close involvement of UNESCO as a member of the review panels will be ensured to bring expert inputs in the preparation of management and master plans and detailed design of heritage sites. Capacity development for marketing and promotion will be implemented with close involvement of Nepal Tourism Board in Nepal and BPC in Bangladesh.

2. Implementation Period

75. The Project will be implemented over 5 years (2009-2014). Capacity building and community awareness activities will take place at the early stages of project implementation. The project implementation schedule is in Appendix 7. 3. Procurement

76.62. Goods, civil works, and services financed by ADB and OFID will be procured in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time). International competitive bidding procedures will be used for civil works contracts estimated to cost $10.0 million or more in India, $2.0 million or more in Bangladesh, and $1.0 million or more in Nepal; and for supply contracts valued at $1.0 million or higher. The upper limit for civil works to be procured through national competitive bidding procedures will be less than $10.0 million in India, $2.0 million in Bangladesh, and $1.0 million in Nepal; and for equipment the upper limit will be $1.0 million. Shopping will be used for contracts for procurement of equipment and simple civil works of $100,000 or less.

77. The size of procurement packages are made (i) on the basis of the particular nature of works involved—such as cultural heritage improvements, small-scale ecotourism infrastructure or connectivity infrastructure; and (ii) to enable reasonable competition in the bidding and to minimize contract administration and management efforts by the PCU and PMIUs. Before the commencement of any procurement activity under national competitive bidding, ADB and the Government will review the public procurement laws of the participating government to ensure consistency with the Procurement Guidelines (2007, as amended from time to time). Any necessary modifications or clarifications7 will be reflected in the relevant loan agreement and procurement plan. The indicative procurement packages will be elaborated upon and updated by the PMIUs for approval by ADB. An indicative procurement plan is in Appendix 8.

78. Advance Action and Retroactive Financing. Advance action will be undertaken under the project for procurement of civil works, equipment, and materials, and recruitment of consultants. The Project offers retroactive financing for expenditures incurred during the period of 12 months prior to signing of the respective loan and grant agreements, and which do not exceed an amount equivalent to 20% of the individual loan or grant. The approval of advance action and retroactive financing does not commit ADB to finance the Project.

4. Consulting Services

79. Consultants will be engaged to assist the PCU and PMIUs in managing and implementing the Project in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). Services will be required in the areas of project management, detailed design, construction supervision, quality control, community participation,

7 These are available in the form of NCB annexes that become part of the procurement plan. The NCB annexes for

Nepal and Bangladesh require review and updating due to recently passed national procurement acts.

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environmental social safeguards, project performance monitoring and evaluation, and cultural heritage planning and management, ecotourism development, airport engineering, institutional development, and financial management.

80. Teams of international and national consultants based at the PCU and PMIUs in each of the countries will assist in managing, monitoring, and detailed design work and supervision of the Project. The consultants will support the PMIUs on a sustained basis; delineate the PMIU’s method and detailed program and work plans, procedures for coordination, management, and reporting; design, installation and operationalization of new systems as required; assist PMIU in detailed design, update environmental and resettlement safeguard documents, prepare contracts, procure construction firms, and supervise construction; assist in planning and implementing capacity development, community participation, and marketing and promotion activities and design and conduct of training programs including hands-on training. Consultants for preparing the management and master plans for the cultural heritage sites especially for the world heritage sites in Nepal and Bangladesh may be recruited separately. Services of NGOs and community-based organizations will likely be required for capacity building of communities, livelihood generation, and skill development. Terms of reference for consultants for each country are in Supplementary Appendixes M, N, and O. 81. A total of 935 person-months consulting services are expected to be required for the Project. The consulting services requirement for Nepal is 417 person-months (30 person-months international and 387 person-months national), for India 333 person-months (12 person-months international and 321 person-months national), and for Bangladesh 185 person-months (25 person-months international and 160 person-months national). For contract values of at least $200,000 and above, consultants will be selected following the quality- and cost-based selection method. For contracts valued at less than $200,000 and requiring highly specialized and boutique expertise, the consultants qualification selection method will be followed; for contracts valued at less than $100,000, consultants will be selected following the least-cost selection method.

5. Anticorruption Policy

82. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with all three participating countries. Consistent with its commitment to good governance, accountability and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the legal agreements and the bidding documents for each participating country under the Project. In particular, all contracts financed by ADB in connection with the Project will include provisions specifying the rights of ADB to audit and examine the records and accounts of the executing and implementing agencies; and all contractors, suppliers, consultants, and other service providers as they relate to the Project. All the PMIUs in the three countries will announce the subprojects and associated business opportunities on their websites and at least disclose the (i) list of participating bidders, (ii) amount of the contracts awarded, and (iii) goods and services procured. Moreover, grievance redress committees will be formed with participation of all stakeholders in each country to address any public concern on the use of project funds.

6. Disbursement

83. Payment of eligible expenditures from the proceeds of the loans and grant under the Project will be made in accordance with ADB’s Loan Disbursement Handbook (January 2007, as amended from time to time) and detailed arrangements between ADB and the governments.

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As the volume of expenditure will be quite large, the executing and implementing agencies will be provided with imprest accounts to enhance their liquidity and ensure timely payments for project expenditures.

84. In Nepal, separate first generation imprest accounts will be opened by MOTCA and operated by PCU for the ADB loan, ADB grant, and OFID loan. Concurrently CAAN will open separate second generation imprest accounts (SGIAs) for the ADB loan, ADB grant, and OFID loan in current accounts in a commercial bank acceptable to ADB. LDT will open a separate SGIA for the ADB grant. In India, the Government will open a first generation imprest account in the account of the Controller of Aid Accounts and Audit with the Reserve Bank of India. The Sikkim state government will open an SGIA as a current account in a reputed commercial bank subject to commitment of the state and DOT to adhere to ADB procedures for operating the SGIA. All disbursements made by ADB towards imprest advance or replenishment should be credited to SGIA within 30 calendar days. In Bangladesh, the Government will open an imprest account at the Bangladesh Bank which will fund an SGIA to be opened by DOA at a commercial bank selected in accordance with Borrower's procedures that are acceptable to ADB. 85. The initial advances to and the ceiling of each of the imprest accounts will be based on estimated expenditures for the first 6 months or 10% of the total ADB grant and/or loan amount, whichever is lower. The imprest accounts will be established, managed, replenished, and liquidated in accordance with ADB’s Loan Disbursement Handbook (2007 as amended from time to time) and detailed arrangements agreed upon between each country and ADB. The statement of expenditures procedure will be used to reimburse and liquidate eligible expenditures not exceeding $100,000 equivalent per individual payment. The project fund flows for each country are included in Supplementary Appendixes J, K, and L.

7. Accounting Auditing and Reporting

86. The PCU in Nepal and PMIUs and project implementation units in Nepal, India, and Bangladesh will maintain separate project accounts in accordance with generally accepted accounting principles for all expenditures incurred for the Project, whether funded out of loan or grant proceeds or other sources. They will establish and maintain separate records for works, goods and services financed out of loan proceeds. The participating governments will cause the detailed consolidated project accounts, as maintained by the PCU, PMIUs and project implementation untis, to be audited by independent auditors, whose qualifications, experience and terms of reference are acceptable to ADB. The use of imprest accounts and statement of expenditures will be part of the annual audit and the audit report should include a separate opinion on the use of imprest accounts and statement of expenditures. ADB reserves the right to verify the financial accounts of the PCU, PMIUs, and project implementation units to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. The audited accounts will be submitted to ADB within 6 months of the end of the fiscal year.

8. Project Performance Monitoring and Review

87. The PCU in MOTCA in Nepal, and the PMIUs in Sikkim DOT (India) and DOA (Bangladesh) will be responsible for establishing a project performance monitoring system acceptable to ADB within 3 months of the effectiveness of the loans and grant. The monitoring system will track project implementation activities, target dates, expected inputs, impacts, outcomes and outputs, and responsibilities, including those for the sustainable heritage and tourism action plan.

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88. The PCU in Nepal and the PMIUs in India and Bangladesh will provide ADB with quarterly progress reports informing of the national projects' progress. The reports will provide summary financial accounts of the Project including summary account for each implementing agency, expenditures to date, and a report on benefit monitoring. An ADB project inception mission will be fielded soon after the approval of the loans and grant. Regular review missions will be held twice yearly, with a midterm review in 2012. The midterm review will assess issues or weaknesses in implementation arrangements, and agree on changes needed.

IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS AND RISKS

A. Economic Analysis

89. All subprojects have a strong economic rationale since many of the services required (i) are natural monopolies unsuited to unregulated private investment, and hence justify government intervention; (ii) include environmental protection and sanitation improvement which protects public goods (such as a safe and clean environment) and prevents negative situations arising from pollution; and (iii) incorporate inclusive approaches that minimize inefficiencies of economic growth. The design of all subprojects were based on sound principles of need and priority that support the Project’s primary themes of nature and culture-based tourism including Buddhist circuits, incorporate demand forecasts based on local surveys and tourism trends, and represent the least-cost technically viable options that emphasize rehabilitation or expansion of infrastructure facilities.

90. The economic internal rates of return (EIRRs) were estimated to range from 23.76% to 33.21%, exceeding the economic opportunity cost of capital and confirming the economic robustness of the proposed subprojects. The overall EIRR is 28.27% demonstrating the economic viability of the whole Project. A sensitivity analysis, undertaken to further test the economic viability of the subprojects, ascertained that the subprojects are economically robust under most conditions. The results of the sensitivity analysis show that the EIRRs will be highly sensitive to a reduction or a delay in benefits. To address these risks, the Project is designed to support the participating Governments’ coordinated marketing and promotion programs for the circuits developed, as well as skill development programs in local communities to upgrade the quality of professional tourism services available.

91. A distribution analysis of the quantified benefits from the Project was also conducted. The major stakeholders of the Project are (i) the governments, (ii) labor, and (iii) households, including those comprising the nearby communities in the selected destination sites. The governments involved will gain an estimated $52.5 million from the Project, mainly from increased tax revenues arising from increased incremental tourist spending, as well as passenger movements. Laborers, both unskilled and skilled, will gain an estimated $37.3 million from the Project through wage payments and salaries paid by incremental businesses arising from the increased tourism spending. Households will benefit from the increased number of tourists and their expenditures increasing by an estimated $17.4 million. A subregional distribution analysis was also undertaken (Appendix 9, para. 11). The analysis confirms that labor and households stand to gain substantially from the Project.

92. The poverty reduction impact will be higher in local communities surrounding the destinations to be improved and made more accessible by the Project. These results can be traced to the inclusive principles embedded in the project design (para. 62). The community capacity building and skill development activities of the Project will increase employment opportunities particularly for those likely to be engaged in hospitality and heritage tourism services and will enable nearby communities to maximize their local earnings from the

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additional local employment and alternative livelihood opportunities arising from the Project. Details of the economic analysis are in Appendix 9. Economic analyses for each country are in Supplementary Appendixes P, Q, and R.

B. Financial Analysis

93. The financial assessment established that all the executing and implementing agencies have the basic financial reporting, internal controls, and audit systems for the Project. Capacity will be further strengthened by training of staff from executing and implementing agencies in each country in accounting, budgeting, financial information management, reporting, and use of information technology. In addition, indicative financial improvement action plans formulated by the executing and implementing agencies will ensure their subprojects’ financial viability and sustainability. Current tourism fees charged in the destination sites are deemed low. The indicative financial improvement action plans reflect this and incorporate the need for increased rates and new charges to generate sufficient financial revenues to meet the operating needs, and potentially the capital investment requirements of the destination sites.

94. The financial evaluation of subprojects was undertaken in real terms using constant 2009 prices. The financial internal rates of return (FIRRs) for the subprojects were estimated to range from 3.72% percent to 9.03%, exceeding the weighted average cost of capital which was calculated to be between 0.19%–2.75%. The sensitivity analysis confirms the financial viability of the proposed subprojects and the Project as a whole. The results of the sensitivity analysis indicate that the FIRRs are most responsive to reductions in the projected financial revenues. The governments’ financial improvement action plans were prepared to mitigate this risk. Details of the financial analysis, including the indicative financial improvement action plans are in Appendix 9. Country-specific analyses are in Supplementary Appendixes P, Q, and R.

C. Social Dimensions

95. Social. The subregion is in a vulnerable zone. Himalayan regions are sensitive earthquake zones prone to landslides, while floods and cyclones bring extensive damage to the low-lying areas. Although poverty has decreased in the last 2 decades in the project countries (poverty headcount for Nepal at 31%, India at 35%, and Bangladesh at 50%), with the high population this translates to high absolute poverty. Economic growth and employment are necessary to reduce poverty. Given the extreme climatic conditions and vulnerability of the project countries, new sources of employment must be found by utilizing the strengths of the countries. The Project will contribute to sustainable economic growth and reduce poverty in the subregion by developing environmentally and culturally sustainable and socially inclusive tourism, leading to increased employment, better distributed incomes and benefits to the subregion’s communities, and enhanced conservation and management of the subregion’s natural and cultural assets. The poverty and social strategy for the Project is summarized in Appendix 10. 96. Involuntary Resettlement. To ensure compliance with the governments' and ADB's policy and requirements on involuntary resettlement, a full resettlement plan was prepared for the Gautam Buddha airport upgrading component in Nepal, a short resettlement plan has been prepared for Rumtek monastery component in India, and a resettlement framework has been prepared for future subprojects in Bangladesh (Supplementary Appendix S). The resettlement plans outline the involuntary resettlement objectives and strategy for affected persons based on national and state laws and policies of the three countries and ADB’s Involuntary Resettlement Policy (1995). The resettlement plans provide a comparison of these and address gaps (summarized in Appendix 11).

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97. The Project is designed to minimize land acquisition and resettlement impacts. In all subprojects, to the extent possible, works will be within existing facilities on government land. For the sample subproject in Bangladesh; the West Sikkim destination improvements and Himalayan Training Institute component in India; and the Lumbini improvements in Nepal there will be no land acquisition and resettlement impacts as all works will be within unencroached existing facilities on government land. While most of the Rumtek monastery circuit component in India and Gautam Buddha airport upgrading in Nepal will be within the existing premises, the multilevel parking and Shanti viewpoint works in Rumtek monastery circuit and the runway expansion in Gautam Buddha airport require land acquisition.

98. In Rumtek, land acquisition (0.6 hectares) for multilevel parking will affect five people and their families. The land is used for agriculture and has one structure (a makeshift pigsty). The Shanti viewpoint has four tenants operating eateries and tea shops. They will be temporarily affected during construction, but will be provided commercial space after the construction of the viewpoint. In Gautam Buddha airport, strip land acquisition (92.89 hectares) will affect 590 plots belonging to 312 households. Affected lands are agricultural with the exception of 17 plots with residential structures. The land acquisition will also affect 132 fruit and timber trees, two primary schools (one private school serving 300 students and one government school serving 500 students), 80 wells, one shrine, and a portion of a poultry farm. Due to the proposed expansion, 10 km of village access roads will be disrupted and require reconstruction.

D. Environment

99. To ensure compliance with the governments and ADB policy and requirements on environmental assessment and management, seven Initial Environmental Examinations (IEEs) have been prepared for subprojects in Nepal and India, and a sample subproject in Bangladesh. An environmental assessment and review procedure (EARP) was also prepared for subprojects in Bangladesh. These are in Supplementary Appendix T, and summarized in Appendix 12. Cultural and natural heritage subprojects will have positive environmental impacts particularly in and around the sites through the provision of basic infrastructure amenities: water supply, sanitation facilities, site drainage, and solid waste management (paras. 29, 39–41, and 54). The IEEs also show that while cultural and natural heritage subprojects may be sited in environmentally sensitive areas, the works are designed to result in improvements in environmental conditions on-site. 100. Environmental impacts due to the Gautam Buddha airport upgrading are largely construction related—civil construction works associated with the proposed upgrading (para. 28). There are no impacts on sensitive receptors. The modeling of air and noise impacts due to the air traffic do not indicate significant impacts on surrounding communities, and do not require any further assessments or special mitigation measures. Any adverse environmental impact can be addressed through proper location, planning, and design of the subproject; control of construction activity; proper system maintenance following construction; and mitigation measures. The IEEs prescribe measures to ensure preservation of archaeological sites and sensitive ecosystems including careful design in consultation with government and other experts such as UNESCO, and consistent with masterplans developed, engagement of experts during all stages of the Project to ensure mitigating negative impacts, siting improvements only in areas designated for ecotourism and outside core areas, and planning construction to ensure reduced risks to cultural and natural heritage. Stakeholders were consulted about the subprojects and no significant environmental issues were raised. Environmental management plans (EMPs) were prepared, and the contract clauses specified in the EMPs will address construction-related impacts and effectively minimize any adverse impacts. Implementation

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arrangements provide for inputs of environmental specialists at the PCU and PMIUs during project implementation to effectively implement the EMPs, and undertake monitoring with reports submitted periodically to ADB. E. Risks

101. The main risks of the Project relate to (i) lower than expected market demand for the tourism destinations and the passenger arrivals for Gautam Buddha airport, (ii) sustainability of heritage assets and tourism infrastructure upgraded, (iii) suboptimal benefits to local communities from enhanced heritage management and tourism growth, and (iv) poor project implementation performance resulting in delays and accrual of benefits. The Project addresses these risks through various measures.

102. The conservative assumptions used in assessing the tourism market and passenger demands will mitigate the risk of lower than expected market demand. To ensure that the projected demand will materialize for the culture and nature-based tourism sites and the connectivity infrastructure upgraded, the Project will support a marketing and promotion program for the multicountry circuits and destinations created.

103. The Project will make sure that tourism will not bypass the communities. An awareness-raising program will be conducted at the outset of the Project on tourism benefits and the linkage between sustainable heritage management and tourism growth. The Project will support capacity and skill development of communities, as well as pilot schemes for promoting heritage-based tourism livelihood generation. Where available, services of NGOs and other development partners with experience in such programs will be sought to ensure the engagement of communities in tourism and heritage management. 104. Risks to sustainability of the heritage sites will be mitigated by (i) improving protection and environmental infrastructure; (ii) enhancing capacities of Nepal’s LDT, Bangladesh’s DOA, and India’s DOT of Sikkim, and other stakeholders for heritage management; (iii) supporting the preparation and implementation of management plans for the heritage sites; (iv) gaining community support for heritage site protection through awareness-raising, and (v) implementing revenue generation reforms to create sustainable sources of funds for managing the sites. All these will be supported by the Project under the capacity building component as well as subregional knowledge-sharing activities under the grant-funded regional TA (footnote 3). The implementation progress of the sustainable heritage and tourism action plan will be monitored by PMIUs, national project steering committees, and STF which will be supported by ADB review missions maintaining active dialogue with each country during project implementation.

105. Finally, the risks for slow project implementation will be mitigated by establishing PCU and PMIUs with qualified staff supported by project management and design consultants. In addition, the regional TA (footnote 3) commencing before the Project will expose the project agencies to ADB procedures and support them in project start-up activities including recruitment of project consultants and preparation of initial contracts.

V. ASSURANCES AND CONDITIONS

A. Specific Assurances

106. In addition to the standard assurances, the governments of the participating countries have given the following assurances which are incorporated in the legal agreements subject to any amendment to be mutually agreed by the participating governments and ADB.

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(i) The governments of the participating countries will ensure that the Sustainable Heritage and Tourism Action Plan (Appendix 4) will be implemented.

(ii) The governments of the participating countries will ensure that sufficient funds will be provided to meet any shortfall between the cost of and revenues for the operation and maintenance of the assets created under the Project.

(iii) The governments of the participating countries will ensure that all land and right-of-way required for the Project are made available in a timely manner; adequate compensations are provided prior to the signing of relevant civil works contracts; and involuntary resettlement is carried out in accordance with the resettlement plans and resettlement frameworks agreed upon between the governments and ADB, the national policies on resettlement and land acquisition and ADB’s Involuntary Resettlement Policy (1995). Updated and all new resettlement plans will be submitted for each subproject to ADB for review and approval following detailed design and prior to award of civil contracts.

(iv) The governments of the participating countries will ensure that the Project will not negatively impact vulnerable groups, such as indigenous peoples. In the event of their involvement in any of the subprojects, the governments of the participating countries will ensure that the subprojects comply with ADB’s Policy on Indigenous Peoples (1998).

(v) The governments of the participating countries will ensure that the Project considers gender issues at all appropriate stages of the Project particularly during design, and that the Project will be carried out in accordance with ADB's Policy on Gender and Development (1998).

(vi) The governments of the participating countries will ensure that (a) the Project is carried out in accordance with the project design, and construction and operations comply with applicable national and local environmental laws and ADB's Environment Policy (2002); (b) the EARP prepared for subprojects in Bangladesh will be followed to guide environmental assessment during implementation; (c) archaeological impact assessment will be undertaken prior to award of civil works contracts; (d) the relevant environmental mitigation measures specified in the EMP are incorporated in tender and bidding documents; (e) civil works contractor's specifications include requirements to comply with the environmental mitigation measures contained in the EMP; (f) civil work contractors are closely supervised to ensure proper implementation of mitigation and management measures; (g) project environmental performance is monitored; and (h) monitoring reports describing the progress in implementing the applicable environmental mitigation measures are submitted annually.

(vi) The governments of participating countries will ensure that (a) bidding documents include specific provisions to ensure that civil works contractors will comply with core labor standards and labor laws and (b) civil works contractors will disseminate information on sexually transmitted diseases including HIV to their employees and local communities surrounding the subproject sites.

B. Conditions for Loan Effectiveness

107. Apart from regular conditions to loan effectiveness, the loan and the grant to Nepal become effective only on condition (i) that the Project Agreements with CAAN and LDT have become legally binding on CAAN and LDT, and (ii) that the loan agreement between the OPEC Fund for International Development and Nepal has become effective.

C. Conditions for Disbursement 108. Nepal cannot make any withdrawals from the loan account and the grant account until it has furnished a copy of its subsidiary financing agreement with CAAN, in form and substance satisfactory to ADB.

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VI. RECOMMENDATION

109. I am satisfied that the proposed loans and grant would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve:

(i) the loan in various currencies equivalent to Special Drawing Rights 8,234,000 to Nepal for the South Asia Tourism Infrastructure Development Project from ADB’s Special Funds resources, with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Financing and Project Agreements presented to the Board;

(ii) the loan of $20,000,000 to India for the South Asia Tourism Infrastructure Development Project from ADB’s ordinary capital resources with interest to be determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility; a term of 25 years including a grace period of 5 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Loan and Project Agreements presented to the Board;

(iii) the loan in various currencies equivalent to Special Drawing Rights 7,698,000 to the People’s Republic of Bangladesh for the South Asia Tourism Infrastructure Development Project from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Loan Agreement presented to the Board;

(iv) the grant not exceeding the equivalent of $12,750,000 to Nepal from ADB's Special Funds Resources for the South Asia Tourism Infrastructure Development Project, on terms and conditions that are substantially in accordance with those set forth in the draft Financing and Project Agreements presented to the Board; and

(v) the administration by ADB of a loan not exceeding the equivalent of $15,000,000 to Nepal for the South Asia Tourism Infrastructure Development Project, to be provided by the OPEC Fund for International Development.

Haruhiko Kuroda President

26 October 2009

Appendix 1 27

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Indicators

Data Sources/ Reporting

Mechanisms

Assumptions/Risks

Impact Enhanced contribution of tourism to sustainable and inclusive growth in the subregion

By 2020 in the subregion: A 30% increase in the aggregate contribution of tourism to the gross domestic products of Nepal, India (Northeast India only), and Bangladesh A 12% increase in total employment from additional tourism-related jobs in Nepal, India (Northeast India only), and Bangladesh Geographic and seasonal diversification and expansion of existing tourism flows Increase in awareness and sustainable use of natural and cultural heritage

Tourism statistics of Nepal, India, and Bangladesh

World Tourism Organization statistics

World Travel & Tourism Council’s Annual Tourism Travel & Economic Research

Economic and social indicators of each participating country

Assumptions Participating countries remain committed to subregional and national tourism development in a sustainable and inclusive manner

Risks Political uncertainty and inadequate security

Economic upheavals

Outcome Nature and culture based tourism destinations of subregional importance with (i) improved connectivity, (ii) better quality environment and visitor services; (iii) enhanced natural and cultural heritage; and (iv) stronger linkages with communities

From 3 to 5 years of project completion, in the project areas: Connectivity to (i) Lumbini in Nepal, (ii) cultural heritage sites of Bangladesh Heritage Highway, and (iii) Sikkim heritage sites improved

– Tourist arrivals at each destination site increased by 25%

– Number of multi-country trips taken to visit destination sites increased by 20%

Destinations of Lumbini, Bangladesh Cultural Heritage Highway and Sikkim Rumtek monastery circuit and West Sikkim Himalayan Trail improved

– Tourist’s average daily expenditure increased by 10%

– International tourists’ average length of stay increased by 1 day at each site

Nepal’s Lumbini, Bangladesh’s Cultural Heritage Highway sites, and Rumtek monastery has management and master plans guiding their management; sustainable heritage and tourism action plans being implemented; About 250 staff trained in heritage and tourism asset management by the end of the Project Around 1000 individuals spread over 25 communities underwent training on heritage management and tourism related skills by end of the Project About 45,000 jobs created including in the tourism industry and other industries related to tourism; at least 5,000 livelihood created benefiting local people living around the sites after 3–5 years of project completion

Tourism reports and statistics of Nepal, India and Bangladesh World Tourism Organization statistics World Travel & Tourism Council’s Annual Tourism Travel & Economic Research Proceedings of the subregional task force meetings Project completion reports

Assumptions Project implemented timely and effectively Capacities and skills were developed to sustain project and heritage tourism assets Risks Delay in Project implementation Delay in implementation of institutional financial and operation improvement action plans Inadequate stakeholder and community engagement

Outputs Enhanced Connectivity

By the end of the Project: In Nepal, Gautam Buddha Airport upgraded to regional international airport resulting in enhanced

Project quarterly progress reports

Assumptions Connectivity components were

28 Appendix 1

Design Summary



Mechanisms

Assumptions/Risks

access to Lumbini in Nepal

In India’s Sikkim, (i) about 20 km road from Sajong to Gangtok via Lingdum improved, (ii) about 800 m road to Rey khola around Rumtek improved, (iii) about 3 km road to Himalayan Institute in Chemchey improved, and (iv) the road to Guru Padma in Sandruptske around Himalayan Institute improved

In Bangladesh, (i) an access road about 475 meter to Paharpur improved, (ii) a pedestrian road to avoid trespassing of the Paharpur heritage site developed, and (iii) last mile connectivity roads to other three key destinations in Bangladesh Heritage Highway improved

ADB review mission reports

Proceedings of the subregional task force meetings Project Completion Report

Reports of national tourism organizations

Reports of sector agencies, e.g., CAAN reports, and reports of national public works departments

implemented timely and effectively and capacities were built for sustainable operation and management of airport and roads Risk Project implementation delayed

Destination Improvements

By the end of the Project: In Nepal, upgrading of Lumbini Development Area completed, including (i) development of car parking and bus stop and pedestrian walkway at the entry of the site, (ii) completion of the unfinished portion of the perimeter road around the site, (iii) provision of localized source-based drinking water supply and toilets in several key locations, (iv) solid waste management improvements, (v) enhancement of on-site interpretation displays and signages, and (vi) construction of a visitor center and landscaping and pedestrian walkways around the centre. In India’s Sikkim, (i) Upgrading of the Rumtek monastery complex

completed, including development or upgrading of (a) a multi level and on-street parking; (b) toilets and solid waste management; (c) water storage and distribution replacement; (d) visitor information and interpretation centre, (e) facade regulation; and (f) landscaping;

(ii) Improvements along the Rumtek Monastery circuit completed, including development or improvement of (i) parking, viewing platform, toilets and other tourist facilities in Shanti view point, and (ii) water front improvements in Rey khola;

(iii) Improvements in nature based destinations of West Sikkim completed, including improvements to Yuksam Base camp and the Singalila trekking trail i.e., involving strengthening and construction of trails, trail signs, camp sites, water supply, toilet, and solid waste management improvements;

(iv) Himalayan Training Institute completed, including (a) a training centre with six classrooms, two seminar halls, a library and documentation centre, staff room and services, (b) an auditorium and equipments,

Project quarterly progress reports ADB review mission reports Proceedings of subregional task force meetjngs Project completion report Reports of national tourism organizations Reports of other international agencies, e.g., UNESCO in Bangladesh and Nepal Reports of national sector agencies; e.g., Lumbini Development Thrust in Nepal, Sikkim Department of Tourism in India, and Department of Archaeology in Bangladesh

Assumptions

Project implemented timely and effectively Capacities were built for sustainable protection and management of heritage tourism destinations Communities were engaged in heritage management and tourism activities Risks

Project implementation delayed Community engagement is limited

Appendix 1 29

Design Summary



Mechanisms

Assumptions/Risks

and furniture and fittings, (c) additional student hostels and staff quarters, (d) training equipment and store, and (e) repair of the statue of Guru Padmasambhava and improving the site and tourist facilities around the statue.

(v) Village tourism products in three villages within the vicinity of major tourism attractions in Sikkim completed, including water sanitation and waste management, trekking trails, village walks, view points, cultural performance stages, and etc.

In Bangladesh, upgrading of at least four key cultural heritage sites, (Paharpur, Kantajee, Mahastangarh, and Bagerhat) completed, including (i) conservation of cultural heritage structures, (ii) improvements to heritage sites environment and utilities, such as drainage, waste management, water supply, toilets, restrooms, and landscaping, (iii) managing tourist on-site circulation through provision of on-site walkways, car parking, lighting, commercial spaces for basic purchase, and (iv) enhancement of heritage interpretation and visitor information through construction of visitor centers, museum improvements, and onsite signages, and displays

Enhanced Capacity, Increased Community Participation, and Improved Project Management

By the end of the Project: Capacity development : (i) The staff of tourism ministries, board, and

departments in Nepal, India, and Bangladesh,underwent training in tourism planning, coordination, monitoring and marketing

(ii) A marketing and promotion program was prepared and implementation initiated by each country in conjunction with subregional marketing program under regional TA

(iii) Management and master plans for Nepal’s Lumbini, Bangladesh Heritage Highway’s cultural sites, and Sikkim’s Rumtek monastery circuit prepared and endorsed; Various heritage tourism guidelines for Sikkim prepared and endorsed.

(iv) Organizational and financial management measures for Lumbini Development Thrust of Nepal, Department of Archaeology of Bangladesh, and Department of Tourism of India’s Sikkim were developed and being implemented; and staff underwent training on planning, protecting, and managing the nature and culture based sites as well as world heritage sites

(v) A Business plan for Gautam Buddha airport of Nepal was prepared with measures for sustainable operation and management of the airport including enhanced revenue base

Project quarterly progress reports ADB review mission reports Proceedings of subregional task force meetings Business plans and annual accounts of sector organizations Project completion report Reports of national tourism organizations Reports of country sector agencies

Assumptions Sector agencies remain committed to develop capacities and take necessary actions for institutional and financial improvements Sector agencies make staff available for training

30 Appendix 1

Design Summary



Mechanisms

Assumptions/Risks

and financial management and approved; staff underwent training in airport management

(vi) Stronger partnerships between communities, tourism industry and governments at destinations were established

(vii) Subregional action plan to promote subregional cooperation in tourism being implemented.

Fostering Community Participation: (i) Community awareness raising programs in

Nepal, India and Bangladesh conducted on (i) the value of natural and cultural heritage and the role of the community in management of heritage sites and (ii) potential benefits from heritage–based tourism to the local economy,

(ii) Value chain analyses were undertaken in each country to establish stronger links between tourism and local economies.

(iii) Pilot schemes for tourism-based livelihood generation involving social mobilization and micro finance services designed and implemented in Nepal and Bangladesh

(iv) Tourism-related skill development activities in heritage management and hospitality-related skills among the communities around Lumbini in Nepal, Bangladesh Cultural Heritage Highway, and selected village communities in India’s Sikkim implemented

(v) Partnerships between communities, private sector and public sector established for enhanced site management and viable community tourism product development.

Sector agencies remain committed to involve communities and establish partnerships with them Community awareness and mobilization programs are effective to engage local people and communities are willing to engage in heritage management and tourism

Activities with Milestones 1. PCU and PMIUs established in all of the three participating countries by 31 Oct 2009 2. Consultants appointed by 30 April 2010 3. Community awareness program commenced by 30 April 2010 4. Capacity development of agencies and the community skill training and social mobilization

programs commenced by 30 April 2010 to be complete by 30 April 2012 5. Cultural heritage sites master plans in Bangladesh and Nepal were initiated by 30 June 2010

for completion by 30 June 2011. 6. Engineering design and tender documents for connectivity infrastructure prepared by 30 Sept

2010 7. Detailed projects for destination infrastructure improvements prepared by 30 Sept 2010 8. Contract awarded, construction commenced by 31 Dec 2010 9. Construction completed by 31 Dec 2013

Inputs ADB: $57.5 million Governments of Nepal, India and Bangladesh: $17.0 million Cofinancing (OFID): $15 million

ADB = Asian Development Bank, CAAN = Civil Aviation Authority of Nepal, OFID = OPEC Fund for International Development, OPEC = Organization of Petroleum Exporting Countries, PCU = project coordination unit, PMIU = project management and implementation units, TA = technical assistance, UNESCO = United Nations Educational, Scientific and Cultural Organization.

Appendix 2 31

SOUTH ASIA TOURISM CIRCUITS AND INFRASTRUCTURE VISION AND SECTOR ANALYSIS

A. South Asia’s Tourism Assets and Subregional Cooperation in Tourism

1. South Asia is endowed with diverse and ancient cultural and natural heritage that is more than 5,000 years old; many sites are inscribed in the World Heritage list. It has a rich diversity of ethnic groups with distinctive lifestyles. The region is also the Buddhist heartland, with many of the world’s major Buddhist sites, including ancient monasteries and sacred landscapes associated with the life of Buddha. The region's rich and unique endowments position it as a world destination for nature and culture-based tourism.

2. In 2001, a tourism working group (TWG) was formed comprising Nepal, India, Bhutan, and Bangladesh under the SASEC Program. The TWG was expanded in 2005 with participation of Sri Lanka. The TWG has recognizes that complementary natural and cultural endowments provide an opportunity for regional cooperation in tourism, which can lead to joint product development and marketing with resulting enhanced subregional tourism. With Asian Development Bank (ADB) support, it developed and adopted a regional Tourism Strategy1 providing a framework for cooperation in tourism. The strategy is based on the principle that tourism should be environmentally and culturally sustainable and contribute to poverty reduction. “Buddhist circuits” and “ecotourism based on nature and culture” are identified as the primary themes of tourism development. Recently the TWG perceived the need for joint development of tourism infrastructure and requested ADB support. ADB provided regional technical assistance (TA)2 to help prepare an investment project.

B. South Asia Tourism Patterns and Prospects 3. Asia accounts for almost 20% of global international tourists with an estimated 170 million arrivals in 2006. During 1995–2006, South Asian countries’ tourist arrivals grew at an annual average of 8%, outperforming many regions of the world and reaching almost double the global average of 4.8%. The United Nations World Tourism Organization forecasts that the South Asian countries will receive almost 15 million international visitors by 2020. In 2007, total international arrivals to Nepal, India, and Bangladesh were around 5.7 million, representing a 73% increase from 2000; tourism earnings from international visitors in the three project countries (including all of India) totaled $12.3 billion, representing a 150% increase from the earnings of 2003. India has fuelled the growth. International arrivals to Bangladesh and Nepal have fluctuated during 2000–2006; however demand improved in both countries in 2007 with an estimated increase in arrivals of at least 6% in Bangladesh and 20% in Nepal.

C. South Asia Tourism Circuits and Infrastructure Vision

4. During the eighth meeting of the South Asia Subregional Economic Cooperation (SASEC) TWG in July 2007, TWG representatives considered tourism development priorities in the subregion and the overlap of national tourism development agendas. Adopting India’s approach of using tourism circuit as a tool for expanding current tourism patterns and coordinated development and marketing, the TWG conceived a broad pattern for the future of

1 ADB. 2008. Technical Assistance for Improving Connectivity and Destination Management of Cultural and Natural

Resources of South Asia Subregion. Manila (TA 6504-REG, December, $2.0 million financed by the Regional Cooperation and Integration Fund under the Regional Cooperation and Integration Financing Partnership Facility).

2 ADB. 2006. Technical Assistance for Preparing the South Asia Subregional Economic Cooperation Tourism Development Project. Manila (TA 6362- REG, December, $1.0 million).

32 Appendix 2

South Asia tourism. The potential subregional circuits (multicountry circuits) were identified on the basis of current and projected demand and flows of tourism, and the envisaged connectivity and destination enhancements in the subregion. A multicountry circuit was defined as a route on which more than one or two major destinations are located in more than one country. In this way, a tourist who enters to a destination in one country would be motivated to visit other destinations in the same route located in another country, hence resulting in increased arrivals to all destinations in more than one country. The future pattern of tourism in the subregion thus envisages a number of multicountry circuits of nature and culture-based sites and Buddhist circuits that are interlinked.

Figure A2.1: Future Tourism Pattern in South Asia

(i) India and Nepal tourism become intertwined at Lumbini where the “Footsteps of Lord Buddha” circuit (1) meets a proposed “Nepal ecotourism road” circuit (2).

(ii) Bagdogra in India becomes not only an air gateway for expansion of India’s tourism circuit development patterns into the northeastern states, but also a hub for a “north east Himalaya” circuit (3), linking the Himalayan culture, trekking, and adventure destinations of Sikkim and Bhutan.

(iii) In Bangladesh, a “Heritage Highway” concept creates a new international circuit (4) with West Bengal. A former “Bhutan-India” (5) circuit is restored, providing road linkage from Bhutan to Assam’s air hub at Guwahati.

(iv) Also linking India and Bangladesh, a “Brahmaputra river cruise” circuit (6) to be created by extending the current Assam cruise pattern down to the sea.

(v) As a ribbon running east–west along the northern boundary of the subregion, the “greater Himalayan trail” circuit (7) spreads trekking to the entire length of the Himalaya linking remote areas of Nepal, India, and Bhutan.

Appendix 2 33

(vi) Sri Lanka’s established “cultural triangle” circuit (8) in the central region, and the proposed “southern ecotourism triangle” circuit (9) link wildlife, ecotourism, and significant Buddhist attractions.

5. The Vision also provides a prioritization of the circuits based on criteria: (i) market demand, (ii) contribution to national and more importantly to subregional tourism development, and (iii) potential for inclusive tourism growth. The market demand criterion refers to the type of demand relevant to the theme of nature and culture-based tourism and Buddhist circuits with strong appeal to target regional and international markets. Contribution to subregional tourism development takes into account the extent to which the circuit is likely to influence incremental tourism benefits at national and subregional levels. Higher ranked circuits are those that are likely to generate additional benefits in two or more countries. Contribution to national tourism development priorities relates to the level of importance given by the countries and their private sector ascertained through discussions and a review of relevant policies and plans. The criteria for inclusive growth are factored through (i) prioritizing circuits in high poverty areas, (ii) the focus on nature and culture-based tourism with greatest potential to expand the prevailing tourism patterns, and (iii) taking into account the national priorities that all aim to use tourism as a tool for poverty reduction. Special attention is given to links between Buddhist circuits and nature and culture-based destinations, and seeking opportunities to develop ecotourism near Buddhist sites or to extend Buddhist circuits to include natural and cultural destinations. The aim is to consolidate the appeal of tourism products and to expand the subregion’s appeal to new markets.

Table A2.1: Subregional Tourism Circuits and Their Ranking Circuit

Market Demand

Contribution to Subregional

Tourism Development

Contribution to National Priorities

for Tourism Development

Total Scores

Priority Ranking

Circuit 1 Footsteps of Lord Buddha 3 3 3 – Nepal; 3 – India; 1 – SL; 1 – Bhutan

14 1

Circuit 7 Great Himalaya Trail 3 3 2 – Bhutan; 3 – Nepal; 2 – India

13 2

Circuit 3 North East Himalaya 2 2 3 – India; 2 - Bhutan; 1 – Nepal; 1 – Bangladesh

11 3

Circuit 4 Bangladesh India Heritage Highway

2 3 3 – Bangladesh; 1 – India

9 4

Circuit 5 Bhutan-India 2 3 2 – Bhutan; 2 - India 9 5 Circuit 8 Sri Lanka’s Cultural Triangle

3 1 3 - SL

7 6

Circuit 2 Nepal Ecotourism Road 2 2 2 – Nepal; 1 - India 7 6 Circuit 6 Brahmaputra River Cruise 2 2 1 – Bangladesh; 2 –

India 7 6

Circuit 9 Sri Lanka’s Southern Ecotourism Triangle

2 1 3 – SL 6 7

6. The South Asia tourism circuits and infrastructure vision also broadly provides the investment requirements along the circuits based on an assessment of gaps, needs, and demands, and investment prospects undertaken through consultations with governments, the tourism industry, and communities. The vision then determines a list of subprojects by reducing a “long list” through the use of an agreed selection criteria which prioritizes the subprojects that: (i) have immediate priority in national tourism plans; (ii) enhance the experience of visitors through improved destination environment and visitor facilities; (iii) contribute to protection and sustainable management of heritage assets of tourism importance; (iv) improve the access to

34 Appendix 2

the sites and management of visitor movements; (v) promote tourism growth without detriment to the environment and tangible and intangible cultural heritage; (vi) have the ability to induce private sector investments; and (vii) are economically and financially viable. In addition, the criteria seek that the list of subprojects form integrated packages of complementary activities.

7. The entire “eligible short list” provides a development planning framework for the TWG and the basis for phased development and financing of investments. Activities are classified as either: access infrastructure; destination amenities; or capacity building. The access infrastructure components are airports or roads. Destination infrastructure includes environmental and visitor infrastructure and services and site presentation. Capacity building involves building capacity in (i) communities to participate in tourism and (ii) sector agencies to better develop and manage the heritage sites, infrastructure, and tourism. The broad estimates suggest that the overall cost of integrated packages of investments is about $300 million.

8. The Project forms part of the South Asia tourism circuits and infrastructure vision. It involves integrated development of high-priority infrastructure and services and management improvements in high potential multicountry circuits. Specifically, it includes investments in the (i) Nepal portion of the Footsteps of the Lord Buddha circuit cutting across India and Nepal, and combining Lumbini, the birthplace of the Buddha with the Buddhist sites of Uttar Pradesh state of India; (ii) the Sikkim State of India which is a premier nature and culture-based tourism destination and Buddhist site that forms part of the greater Himalayan trail circuit, and (iii) the Bangladesh portion of the heritage highway with key cultural heritage sites along a corridor in the western regions of Bangladesh with established tourist flows from south to north in West Bengal of India. D. Analysis of the Nepal Portion of the Footsteps of the Lord Buddha Circuit

9. Buddhist Circuit of Nepal—Lumbini. The Footsteps of the Lord Buddha circuit is the jewel in the crown of Buddhist circuits that justifies the “Buddhist heartland" label. The sites in the Indian portion of the circuit are currently developed by the Government of India with assistance of Japan Bank for International Cooperation. In the Nepal part, Lumbini is the most popular attraction and the icon of the Buddhist heartland. Lumbini’s importance stems from the Sacred Garden that includes the birthplace of Buddha and related archaeological remains and structures e.g., the Maya Devi temple, Ashokan pillar, Nativity sculpture, Puskarini pond, and the Marker Stone which authenticates the exact spot where Buddha was born. The Sacred Garden was declared as a World Heritage site in 1997 in recognition of its outstanding universal value. The Lumbini Development Area covers, in addition to the Sacred Garden, two other zones of (i) a monastic enclave and (ii) a cultural and administrative center with museum and tourist information center and other facilities. In addition, nine important Buddhist sites are located around Lumbini Development Area each with values for pilgrimage, sightseeing, and historical and archeological features. 10. Annual arrivals to Lumbini are estimated to be around 0.5 million, including 71,000 international tourists from 85 countries. Current key markets include Buddhist pilgrims and religious sightseeing segments from South Asia, Japan, People's Republic of China, Republic of Korea, Thailand, and some western countries. As a cornerstone Buddhist attraction, Lumbini has great potential for strong growth in tourism demand. However, its potential is constrained by several factors that are also the reasons for the current short stay and consequent low spending by visitors.

11. Inadequate Connectivity. One of the limitations of Lumbini is its remoteness and inadequate connectivity. Currently no direct air links are available to Lumbini from key regional

Appendix 2 35

and international visitor markets; Current air access is through Kathmandu only. There is an urgent need to upgrade the Gautam Buddha airport in Bhairahawa (0.5 hour drive from Lumbini) to improve access to Lumbini from other airports such as Colombo, Dhaka, Paro, and open up links to key Southeast Asian and global markets. Such air link will also help link several national ecotourism circuits to this regional Buddhist circuit hence help spread the benefits to a wider community.

12. Inadequate On-Site Infrastructure and Facilities. Lumbini’s development is guided by a master plan prepared in 1978 to provide a framework for reinforcing the site’s symbolic identity by defining the land use patterns and requirements for infrastructure, tourist facilities and services. However, many of the master plan’s proposals have not been implemented to date due to limited technical, financial, and institutional capacities, as well as the monumental nature of the proposals requiring large-scale financing. The inadequate on-site infrastructure and services are undermining the cultural value of Lumbini, while adversely affecting the visitor experience. No water supply and toilet facilities are available to meet visitors’ needs. The solid waste management system is inadequate, with garbage collected being either burnt or buried. The visitor center, currently serving in temporary structures, is hindering the proper presentation of the site’s outstanding universal value. On-site interpretation including displays and signage are substandard. Inadequate landscaping works, e.g., unpaved roads and lack of suitable plantation is a source of pollution and contradicts to the required ambience of the Buddha’s birth place. Visitor facilities such as car parking and pedestrian walkways around the visitor center are insufficient. Lack of facilities in the site is also a major impediment to generating revenues from visitors. On-site infrastructure and services need to be improved urgently.

13. Institutional Issues. The related institutional structure provides a good framework for coordinated initiatives of various participants in tourism. The key agency responsible for tourism is the Ministry of Tourism and Civil Aviation (MOTCA) which reflects the Government’s policy to promote tourism and use air transport as an important driver of tourism. MOTCA undertakes its activities through Nepal Tourism Board and Civil Aviation Authority of Nepal (CAAN) both affiliated to it. The Nepal Tourism Board is an autonomous entity in the form of a partnership of Government and the tourism industry, and responsible for marketing and promotion and providing overall policy guidance. Lumbini Development Trust (LDT), which is affiliated to the Ministry of Culture and State Restructuring, is responsible for developing and managing the Lumbini area following the Lumbini master plan. LDT is formed as a Trust, an autonomous body, demonstrating Government commitment to Lumbini’s development. CAAN is responsible for regulating air transport and civil aviation, developing and operating airports, and overseeing airline operations. 14. However these agencies need strengthening to accomplish their mandate. LDT's capacity needs to be developed for it to effectively perform its complex duties of planning, developing, and managing Lumbini; and addressing visitor demands while safeguarding the conservation of the Sacred Garden. The sustainable management of Lumbini also requires adequate and sustainable revenues for financing its development, conservation, and management. There is need to enhance financial management and increase revenues of LDT.

15. The current master plan of Lumbini is more than 2 decades old; it was prepared before the Sacred Garden was inscribed in the World Heritage list. Preparation of a management plan for the Sacred Garden is considered an urgent need to protect the outstanding universal value of the World Heritage site as an effective management tool. In parallel, the master plan (covering a larger area) needs to be reviewed and updated to address the multidimensional needs of the site in visitor services, conservation, environmental management; and to adopt strategies for financing and resource mobilization based on contemporary best practices.

36 Appendix 2

16. Similarly, investments in airport development have to be accompanied with support for CAAN's institutional development in line with the objectives of Nepal’s civil aviation strategy. Management skills and capacity, business orientation, and corporate planning within CAAN need to be enhanced with specific focus on the Gautam Buddha airport management.

17. Limited Community Engagement in Heritage Management and Tourism. The long-term conservation and sustainability of Lumbini cannot be achieved without engaging communities living in its vicinity. The socioeconomic status of surrounding communities is weak and the benefits from Lumbini to these communities are limited. In the absence of tangible linkages between Lumbini and its communities, most local inhabitants are indifferent or ignorant of the concept of conservation of Lumbini and tourism growth. It is essential to raise the awareness of communities in conserving Lumbini, enhancing the attractiveness of the site, and the associated benefits from tourism while creating economic opportunities for them. E. Analysis of Sikkim (Northeast Himalaya Circuit) of India 18. Sikkim’s Heritage Tourism. Sikkim is strategically located at the geographic center of the region. It is part of the greater Himalayan trail circuit and the Northeast Himalaya circuit (para. 4). It has a good road connection to Bagdogra, a site of an airport, which is soon to be upgraded to a regional airport by the Government of India. Bagdogra is the major air node and a regional hub with potential links to Bangladesh cultural heritage highway circuit, east Nepal, Bhutan, and other northeastern states. Sikkim has 107 monasteries, four sacred caves, the tallest statue of Guru Rinpoche, and 29 sacred lakes. It is one of India’s premier nature and culture-based tourism destinations and has been successful in attracting high-yield domestic segments as well as international trekkers, pilgrims, and nature-based adventure enthusiasts. From 2002 to 2006 Sikkim experienced 32% annual average growth in foreign arrivals. The main generating markets are United States, United Kingdom, Germany, France, and Japan. Provisional figures from the state government of Sikkim indicate that arrivals in 2007 totaled 17,500 persons. Industry estimates show that about 12,000 of these tourists go trekking in West Sikkim and around 9,000 visit the “must-see” Buddhist monastery of Rumtek near Gangtok. The planned upgrading of Bagdogra airport and development of a domestic airport in Gangtok will increase the appeal of Sikkim for international and regional travelers, and strengthen its role in subregional tourism development.

19. Government Policy. The state government of Sikkim identifies nature-based tourism, as a “thrust industry,” demonstrating its commitment and high priority attached to tourism development. The Department of Tourism is the key state agency for tourism development; through planning, policy making, regulation, and where necessary undertaking tourism infrastructure development. The Sikkim Tourism Development Corporation, established in 1999, provides and manages tourist facilities and services such as hotel accommodation, restaurants, and the Gangtok–Bagdogra helicopter service. The 20-year perspective plan of Sikkim for Sustainable Tourism Development aims to sustain Sikkim’s position as a premier nature and culture-based tourism destination in India. Policy objectives relevant to sustainable tourism are also set out with more focus on making tourism the state’s core competency sector and decisive source of employment and income generation for the benefit of local residents. While nature-based tourism is seen as the key driver, the state also aspires to be a major destination for Buddhist tourism, ethnic culture, and adventure tourism in India by 2022. The state realizes that the existing poor access and destination infrastructure constraints tourism development. 20. Rumtek Monastery Circuit. The Rumtek monastery is one of the international headquarters of the Kagyupa sect of Tibetan Buddhism and a well-known monastery located 24

Appendix 2 37

km from Gangtok within a forest setting. The monastery is home to a large community of monks, and contains the Golden Stupa as well as an institute for higher Buddhist studies. The original monastery, built in the 16th century, is located very close to the Rumtek monastery and has unique architecture; it contains valuable manuscripts and Buddhist heritage artifacts. The Rumtek monastery receives an estimated 5,000 visitors per day during the peak season, and has potential for growth in visitor numbers. However, the potential of the monastery to accommodate increased numbers of visitors and to sustain its cultural value and environmental quality is constrained by several factors. A major constraint is inadequate traffic management around the monastery. No organized car parking is available; and the high congestion creates a contrast to the serenity of Rumtek. Water supply, sanitation, and waste management facilities are inadequate in the monastery complex. The complex lacks on-site interpretation material and a visitor information center required to enhance the awareness of visitors on the cultural and spiritual value of the site. There is need to provide the key environmental and visitor infrastructure. There is also need for developing facade regulations and a guiding framework for future development within and outside the complex to prevent the adverse affects of unregulated development on the authenticity and integrity of the monastery.

21. Several other key attractions are located in the vicinity of Rumtek, including Lingdum Monastery and Ban Jakhri Falls, which are positioned on a potential circuit road connecting Gangtok–Rumtek Monastry off NH31A above Ranipool–Sajong (Lingdum monastry and Ban Jakhri Falls)-Gangtok. In addition, the road from Gangtok to Rumtek passes through highly scenic landscape such as Shanti and Rey Khola providing opportunities to develop rest stop and scenic viewing areas and short walking trails that could help visitors to explore the natural environment of Rumtek and its vicinity. However due to poor road conditions and supporting tourist infrastructure, these places are currently bypassed by current visitor flows. There is great potential to expand tourist flows to cover these areas, by improving the access and developing rest stops, scenic viewing stations, and waterfront areas.

22. Several villages are located along the Rumtek monastery circuit. In the absence of adequate linkages, benefits from enhanced tourism in the Rumtek monastery circuit to these communities remain suboptimal. For example, Rey Mindu, a Lepcha village, located along the Sadong–Lingdum–Gangtok road, has a unique traditional character and is the starting point of a trek leading into the Flambanglo wildlife sanctuary. The village has significant potential for heritage and ecotourism development. However, basic environmental and tourist infrastructure along with community capacity building are needed to link these villages to the major circuits.

23. Nature and Culture-Based Tourism in the Himalayas in West Sikkim. About 50% of international visitors to Sikkim go trekking in West Sikkim. The region has spectacular and picturesque nature, and is home to world famous Kanchendzonga national park with hundreds of species of flora and fauna. West Sikkim, where the first capital of Sikkim—Yuksam—is located is also the birthplace of the history and culture of Sikkim. Yuksam is the starting and completion point for a number of treks mainly into Kanchendzonga National Park (to Dzongri, Goechala) and to nearby monasteries, and lakes. Some of the oldest monasteries of Sikkim—Dubdi, Pemayangste, and Tashiding—are in West Sikkim and form part of the Coronation Trail starting from Yuksam. Yuksam and West Sikkim trails are part of the greater Himalayan trail circuit and offer immense scope to spread tourism benefits to remote communities. 24. During the peak season, more than 200 trekkers and campers everyday start their journeys from Yuksam, where all the supplies, porters, and guides, serving the trekkers, are based. However, the facilities in Yuksam are limited to meet the tourist needs and ensure environmental sustainability. There is need for developing a proper campsite with facilities, including toilets, kitchen, solid waste management facilities, porter shelters, as well as a tourist

38 Appendix 2

information center, and administration facilities in Yuksam. Similarly the main trekking trails in West Sikkim are poorly developed, resulting in safety concerns. Basic amenities, e.g., toilets, rest areas, and on-trail campsites with water and sanitation are absent. Besides, inadequate community awareness and mobilization, and local skills in tourism activities and heritage protection and management are limiting benefits to surrounding villages. Taken together, the deteriorating sanitary conditions, growing environmental impacts, and limited community involvement pose risks to these assets that unless effectively addressed, could result in the loss of the assets and markets. There is need for small-scale infrastructure and along select trails such as stabilization of treks, sanitation and waste management facilities, footbridges, and signs along with programs for community engagement in tourism.

25. Sikkim as the Venue of the Himalayan Training Institute for Culture and Nature-Based Tourism. Demand is growing in India and the rest of South Asia for a training institute delivering courses and short-term experiences on culture and nature-based tourism development and management for tourism trainers, public and private sector developers and managers of tourism, tour operators and guides, and interested tourists. Currently, there is no institute dedicated to nature and culture-based tourism. Such an institute will meet the critical need for human resource development not only in India but the subregion where economies and people’s livelihood largely depend on culture and nature-based tourism. Sikkim, because of (i) its central location, (ii) being a key destination for nature and culture-based tourism, and (iii) its good record on sustainable tourism, provides the ideal venue for a subregional institute of excellence.

26. Recognizing the need, and based on national and subregional demand for such an institute, the Government of India, in partnership with Sikkim State, has already initiated a project to develop the Himalayan Training Institute for nature and culture-based tourism in Chemchey in South Sikkim. The site is easily accessible from Bagdogra, and is about 80 km from Gangtok. A helipad is available at a distance of about 5 km from the site, enhancing its access and emergency evacuation. The natural scenery around the site comprises valleys, mountains, and exotic flora and fauna providing the right environment for such an institute. The Government has already approved the construction of institute and funds to complete phases 1 and 2. However, the institute has not yet been operationalized due to inadequate funding to complete all the training facilities and provide furnishings and equipment. There is need to complete the construction of training institute and develop and implement a business plan to enable full operation and sustainability of the institute.

27. A training institute specialized in nature and culture-based tourism is required under the lead of the public sector, to address the needs for (i) ensuring balance between tourism and biodiversity conservation in highly sensitive alpine areas; (ii) strengthening the planning, development and management skills of the public sector officials to ensure that nature and culture-based tourism destinations are developed on a sustainable and inclusive basis; (iii) increasing the number and quality of trained tourism professionals and guides; and (iv) developing the knowledge of the private sector operators and community tourism service providers for sustainable management of nature and culture-based tourism products.

28. Sandruptkse, a place of pilgrimage importance, is located at about 10 km from the site of the Institute. This contains a large statue of Guru Padma Sambhava, an 8th century monk, who traveled and taught in Sikkim, and meditated at the site. The work for the statue was inaugurated by the Dalai Lama. An annual festival is organized at the location on the occasion of Guru Padmasambhava’s birthday on 10th day of the 6th month of the Tibetan calendar. Many visitors, especially from South Asia visit this place which is also considered critical for the meditation training element of the institute. However, the base of the statue is currently in poor

Appendix 2 39

repair. Water in the pools around the statue is seeping into the prayer hall below. There is need to repair structure of the statue, improve the site, and provide basic tourist amenities.

29. Village Tourism. The sustainability of nature and culture-based tourism destinations cannot be achieved without engaging communities living around these sites. Similarly, benefits from growing tourism will not automatically be felt by the communities unless special efforts are made to enable their participation in tourism. It is essential to raise the awareness of communities on the importance of protection of heritage sites and linkage between tourism and associated benefits to communities. It is also critical to create economic opportunities for them by linking villages to major destinations, and capacity building and skill training of communities on tourism-related activities building on the best practices that Sikkim has already developed.

F. Analysis of Bangladesh Heritage Highway 30. Cultural Heritage Endowments. The heritage sites along the Bangladesh Heritage Highway are culturally very significant. These include Paharpur, Kantajee, Mahastangarh, and Bagerhat. Paharpur, a world heritage site, is the single largest Buddhist monastery built in the 8th century. Kantajee is the largest Hindu terracotta temple in the world. Bagerhat, another world heritage site is a mosque complex with a 77 domed mosque and eight other mosques nearby. These sites are the most popular attractions, and offer great potential for inclusive development by spreading tourism benefits more widely. Packaging these attractions through an innovative concept of a heritage corridor with links to northern and eastern India, and improving their access and site conditions together with marketing will lead to increasing numbers of visitors including Indian tourists, cultural and special interest groups, and wider international and intraregional segments.

31. Heritage Site Conditions. These sites are in need of restoration to maintain their universal value. The lack of environmental infrastructure e.g., drainage and solid waste management is undermining the cultural value of the sites while adversely affecting the tourist experience. Visitor facilities such as car parking, internal walkways, and toilets are inadequate to cope with demand. The absence of such facilities, causing uncontrolled tourist circulation in the sites, further contributes to degradation of the assets. Site presentations are substandard, limiting the experience of visitors. Nearby communities are able to derive a minimal livelihood from the sites but this is constrained by lack of infrastructure, information, and skilled people who can get involved in site maintenance and management. These constraints also act as deterrence for the industry to invest and promote these sites.

32. Institutional and Financial Issues. The Government first recognized tourism as an important industry with the framing of the National Tourism Policy in 1992. In 1999, tourism was declared a thrust sector. The policy recognizes the importance of cultural heritage as the primary tourism endowments. The Government also recently issued a Cultural policy with preservation of the heritage assets as a core component. The Department of Archeology (DOA) is the lead agency for the management of heritage sites in Bangladesh. Other agencies involved include the Ministry of Tourism through its Bangladesh Parjatan Corporation, which is responsible for tourism promotion, provision of visitor information and accommodation services, and selected capacity development in tourism. The organizational functions of DOA are spread over four regional directorates. However, delegation is limited, and financial and technical powers are rather centralized. The current staffing and skills are limited. A significant number of positions remain vacant, and staff incentives, e.g., promotions are inadequate. The pressure on the staff in managing sites is tremendous, considering that Bangladesh has around 400 heritage sites.

40 Appendix 2

33. Sustainability of heritage sites is further constrained by inadequate maintenance budgets. The average annual investment on cultural properties is Tk30,000 and repair budget is estimated at Tk10 million ($150,000). The revenues for a site like Paharpur are substantially below its cost of operation and maintenance. The primary sources of income for heritage site management are visitor fees and income from lease rental and parking arrangements. But these are low when compared with those in neighboring countries such as India. Besides, the revenues generated from the cultural heritage sites are not retained by DOA. Sources of incomes need to be increased by increasing existing tourist fees and introducing new fees. Dedicated funds need to be created for site management by exploring options to enable DOA to retain the revenues for the operation and maintenance of sites.

Appendix 3 41

EXTERNAL ASSISTANCE FOR TOURISM IN ASIA

Project

Year Approved

Source

Amount

A. ADB Loan Assistance in South Asia Nepal Tourism Development Project Nepal Second Tourism Infrastructure Development Project

1991 1996

ADB ADB

$10.5 million $17.2 million

B. ADB Technical Assistance in South Asia Nepal: Tourism Development Program Nepal: Tourism Development Project Nepal: Second Tourism Infrastructure Development Project Regional Technical Assistance: SASEC Tourism Development Plan Regional Technical Assistance: SASEC Human Resource Development Regional Technical Assistance: SASEC Tourism Development Project India: Inclusive Tourism Infrastructure Development Project Regional Technical Assistance: Improving Connectivity and Destination Management of Cultural and Natural Resources in South Asia Subregion

1989 1990 1994 2003 2004 2006

2007 2008

ADB ADB ADB ADB ADB ADB

ADB ADB

$460,000 $100,000 $460,000 $450,000 $600,000 $950,000

$1 million $ 2 million

C. External Assistance in South Asia India: Ajanta Ellora Conservation and Tourism Development Project (I) Ajanta-Ellora Construction & Tourism Development Project-II Nepal: Tourism for Rural Poverty Alleviation Programme India: Uttar Pradesh Buddhist Circuit Development Marketing Assistance to Nepal for Sustainable Tourism

1992

2002

2001

2005

2006

JICA

JICA UNDP/ DFID/SNV

JICA

Asia Invest

Europe Aid/SNV

¥ 3.745 billion ¥ 7.331 billion UNDP: $724,430 DFID: $ 4,166,852 ¥ 9.495 billion

D. ADB Loan Assistance in Greater Mekong Subregion Mekong Tourism Development Project Sustainable Tourism Development Project

2002 2008

ADB ADB

$35 million $10 million

E. ADB Technical Assistance in Greater Mekong Subregion Regional Technical Assistance: Mekong/Lancang River Tourism Planning Study Regional Technical Assistance: Mekong/Lancang River Tourism Infrastructure Development Project Regional Technical Assistance: Tourism Skills Development in Greater Mekong Subregion Regional Technical Assistance: Sustainable Tourism Development Project (formerly Pro-poor Tourism Improvements)

1997

1999

1998

2005

ADB

ADB

ADB

ADB

$600,000

$770,000

$150,000

$900,000

ADB = Asian Development Bank, DFID = Department for International Development of the United Kingdom, JICA = Japan International Cooperation Agency, SNV = Netherlands Development Organization, SASEC = South Asia Subregional Economic Cooperation, UNDP = United Nations Development Program.

42 Appendix 4

SUSTAINABLE HERITAGE AND TOURISM ACTION PLAN NEPAL Action by Date (by) A. Institutional and Financial • Develop an action plan and start implementing measures for enhanced (i)

strategic planning, (ii) heritage protection (iii) visitor management, (iv) environmental management, (v) O&M of infrastructure, and (v) engagement of communities in heritage tourism

• Develop and start implementing a financial improvement action plan to enhance revenues and financial management to progressively meet the cost of O&M of LDT area.

• Prepare, approve and submit to ADB a policy statement to eliminate outstanding charges to CAAN including provisions as appropriate for age of due based systematic write off and reduce overall outstanding dues to CAAN to a level of 30% of existing backlog.

• Prepare and start implementing a business plan for Gautam Buddha airport, including setting of aeronautical and non-aeronautical rates, outsourcing of some functions and cost management measures to ensure that the airport operations maintain an operating ratio of 0.9

• Design, install, and make operational a financial management reporting system for the Gautam Buddha airport linking it with the overall management information system of CAAN

LDT LDT MOTCA, NMOF MOTCA CAAN CAAN CAAN

Jan 2011 and thereafter Jun 2012 onward Jul 2010 Jun 2012 Dec 2010 and Jan 2014 onward Dec 2010

B. Planning

• Develop a Management Plan for the Sacred Garden for sustainable protection and management of the World Heritage site

• Define the linkages of the broader master plan with management plan; scope the content of the revision of master plan for Lumbini, including (i) an investment and resource plan linked to LDT financial management

improvements (ii) environmental and social measures and land use and zoning regulations

(iii) amendments to LDT organizational structure and role as needed

LDT/DOA/ UNESCO LDT

Commence Jan 2010 Commence Jan 2010

C. Inclusive Heritage Tourism • Form a “community participation cell” within LDT

• Develop indicators and monitor social and economic benefits to local communities from the site improvements and tourism growth

LDT supported by NTB LDT supported by NTB

Dec 2010 Jun 2010

D. Marketing and Promotion • Develop a marketing strategy and action plan in conjunction with subregional

marketing activities under the grant-funded regional TA

NTB Dec 2011

INDIA Action by Date A. Institutional and Financial

• Develop and start implementing a financial improvement action plan involving: a. enhanced ecotourism service fees for all trekking trails, village tourism

products, including automated annual increments; b. fees and charges or other forms of revenues to meet the costs of O&M

for the visitor facilities and common services at Rumtek monastery complex, and

• Assess the feasibility and start implementing a strategy for ring-fencing of revenues for nature and culture based tourism

DOT DOT

Jun 2012 Jun 2012

B. Planning • Complete the notification of the special planning zone for Rumtek monastery

circuit • Develop a master plan and regulations for Rumtek monastery circuit • Notify the final plan and development controls • Draft State-specific policy and guidelines on sustainable nature and culture-

based tourism including community-based tourism

UDHD/DOT UDHD/DOT UDHD/DOT DOT

Jun 2010 Dec 2012 Dec 2014 Dec 2011

C. Operationalization of the Himalayan Training Institute (HTI)

• Prepare and approve an Operation and Business Plan for HTI including a plan to transform it to a not-for-profit organization if feasible

• Undertake immediate actions of the Business Plan and complete Curriculum Design and notify staffing requirement

• Complete partnership agreements between HTI and other institutions • Finalize locations and obtain permissions for proposed field-based training

facilities

DOT DOT DOT DOT and DOF

Jun 2011 Jun 2011 Mar 2012 Mar 2012

Appendix 4 43

INDIA Action by Date (by) D. Inclusive Heritage Tourism • Form the sustainable community tourism unit within DOT

• Develop indicators and monitor social and economic benefits to local communities from the site improvements and tourism growth

DOT DOT

Jun 2010 Jun 2010

E. Marketing and Promotion

• Design a marketing and promotion program for the sites and villages to be promoted under the Project in Sikkim in conjunction with subregional marketing plan under the grant-funded regional TA

• Design a marketing and promotion plan for Himalayan Training institute

DOT DOT

Dec 2011 Dec 2011

BANGLADESH Action by Date (by) A. Institutional and Financial • Complete filling up of key vacancies and prepare and start implementing an

action plan to induct staff • Prepare and start implementing an action plan to increase incomes from site

entry fees, user charges for utilities, parking fees, concession fees on commercial facilities, and sale of interpretative materials to generate funds to gradually meet the O&M cost of the heritage sites

• Assess the feasibility and devise a mechanism whereby the revenues generated from cultural heritage sites are used for O&M of the sites and a rational policy to support sites with lower revenue realization

MCA & DOA MCA & DOA MCA & BMOF &DOA

Dec 2009 Jun 2012 Jun 2012

B. Planning

• Complete master and management plans for each of cultural heritage site in line with UNESCO guidelines and World Heritage Convention where World Heritage Sites are the subject

DOA with guidance of UNESCO

Jun 2011

C. Marketing and Promotion • Design a marketing and promotion program for the sites to be promoted

under the Project in conjunction with subregional marketing program under the grant-funded regional TA

BPC Jun 2010

D. Inclusive Heritage Tourism • Develop and incorporate measures into the site master plans to engage

communities in site protection and management and increase benefits from enhanced tourism

• Develop indicators to monitor social and economic benefits to local communities from the site improvements and tourism growth.

DOA BPC, DOA

Jun 2011 Jun 2010

SUBREGIONAL ACTION A. Subregional Dialogue for Sustainable Tourism Development

• Update the current subregional tourism strategy and endorse it to provide an up to date framework for subregional cooperation in tourism incorporating the (i) evolving priorities of new stage of joint infrastructure development, (ii) subregional action for heritage protection and management, (iii) action plan to streamline cross border travel, and (iv) subregional tourism market expansion plan

TWG and STF

Dec 2010

DOA = Department of Archaeology; BPC = Bangladesh Parjatan Corporation; CAAN = Civil Aviation Authority of Nepal; DOF = Department of Forest; DOT = Department of Tourism; HTI = Himalayan Training Institute; LDT = Lumbini Development Thrust; MCA = Ministry of Cultural Affairs; NMOTCA = Nepal Ministry of Tourism and Civil Aviation; BMOF = Bangladesh Ministry of Finance; NMOF = Nepal Ministry of Finance; NDOA = Nepal Department of Archaeology, NGO = Nongovernment Organizations; STF = Subregional Task Force; TWG = Tourism Working Group; UDHD = Sikkim Urban Development and Housing Department.

44 Appendix 5

PROJECT COST ESTIMATES AND FINANCING PLANS

Table A5.1: Project Cost Summary, by Components, for Nepala

(Rs Million) ($ Million)Foreign Total Foreign Total

Component Total Taxes Total TaxesA. Connectivity

1. Gautam Buddha Airport Upgrading 1,096.08 180.20 1,104.29 2,200.37 16.12 2.65 16.21 32.36Subtotal 1,096.08 180.20 1,104.29 2,200.37 16.12 2.65 16.21 32.36B. Heritage Site Improvements

1. Site Infrastructure 52.92 - 56.70 109.62 0.78 - 0.83 1.612. Tourism Information Center 20.99 - 22.49 43.48 0.31 - 0.33 0.64

Subtotal 73.91 - 79.18 153.10 1.09 - 1,16 2.25C. Support to Community Participation, Capacity Building

and Project Management1. Community Participation 31.03 - 6.72 37.75 0.46 - 0.10 0.562. Capacity Building and Project Management 10.21 - 265.16 275.37 0.15 - 3.90 4.05

Subtotal 41.24 - 271.88 313.12 0.61 - 4.00 4.60Total BASELINE COSTS 1,211.23 180.20 1,455.36 2,666.59 17.81 2.65 21.40 39.21


Total PROJECT COSTS 1,484.94 219.68 1,628.20 3,113.14 21.84 3.15 23.94 45.78Interest During Implementation - - 48.61 48.61 - - 0.72 0.72

Total Costs to be Financed 1,484.94 219.68 1,676.80 3,161.75 21.84 3.15 24.66 46.50

Local Local

a Includes physical contingencies at 10% for civil works, equipment, and consulting services. Price contingencies for

civil works items and equipment were computed at 7% per year for domestic inflation and 0.8% for foreign inflation. Interest during implementation on the ADB loan which will be capitalized was calculated based on the ADF loan term of 1% per year during the period of implementation and 1.5% thereafter. The OFID loan which will also be capitalized and financed by the ADB loan was calculated based on a term of 20 years, inclusive of a 5-year grace period, with a 1% interest charge per annum and an annual service fee of 1%. Also includes bank charges to be financed by the ADB loan proceeds. Totals may not add due to rounding.


Table A5.2: Expenditure Accounts, by Components, for Nepal ($ Million)

Support to Community Participation, Capacity Building and Project Management

Connectivity Heritage Site Improvements Capacity Gautam Tourism Building and

Buddha Airport Site Information Community Project Expenditure Account Upgrading Infrastructure Center Participation Management Total

I. Investment Costs A. Land 2.85 - - - - 2.85B. Civil Works 25.72 1.80 0.73 - - 28.26C. Training, Workshops and Conferences - - - 0.15 0.05 0.20D. Consulting Services - - - 0.05 4.24 4.29E. Equipment 9.24 0.03 - - - 9.27F. Tourism Promotion - - - - 0.10 0.10G. Demonstration Schemes for Livelihood - - - 0.35 - 0.35H. Incremental Administration 0.33 0.05 0.02 0.01 0.06 0.46

Total PROJECT COSTS 38.15 1.88 0.75 0.56 4.46 45.78Interest During Implementation - - - - - 0.72

Total Disbursement 38.15 1.88 0.75 0.56 4.46 46.50 Note: Totals may not add due to rounding. Source: ADB estimates.

Appendix 5 45

Table A5.3: Project Cost Summary, by Components, for Indiaa

Foreign ForeignComponent Total Taxes Total Total Taxes Total

A. Connectivity Enhancement1. Roads 75.7 22.98 113.5 189.2 1.8 0.56 2.8 4.6

Subtotal 75.7 22.98 113.5 189.2 1.8 0.56 2.8 4.6B. Nature and Culture Based Destination Improvements

1. Site Infrastructure and Facilities in Rumtek Monastery Circuit 57.1 16.60 83.1 140.2 1.4 0.41 2.0 3.42. West Sikkim Base Camp and Trek Improvements 47.2 14.17 70.7 117.9 1.2 0.35 1.7 2.93. Himalayan Training Institute for Nature and Culture-Based Tourism 111.6 36.91 194.5 306.1 2.7 0.90 4.7 7.54. Village Tourism Development 17.1 5.07 25.2 42.3 0.4 0.12 0.6 1.0

Subtotal 232.9 72.75 373.5 606.4 5.7 1.78 9.1 14.8C. Support for Capacity Development and Project Management

1. Capacity Development and Project Management 63.0 11.98 63.3 126.3 1.5 0.29 1.5 3.1Subtotal 63.0 11.98 63.3 126.3 1.5 0.29 1.5 3.1Total BASELINE COSTS 371.6 107.71 550.3 922.0 9.1 2.63 13.4 22.5


Total PROJECT COSTS 450.2 124.57 614.8 1,064.9 11.0 3.04 15.0 26.0Interest During Implementation - - 81.7 81.7 - - 2.0 2.0Commitment Charges - - 1.5 1.5 - - 0.0 0.0

Total Costs to be Financed 450.2 124.57 698.0 1,148.1 11.0 3.04 17.0 28.0

Local(Rs Million)

Local($ Million)

a Includes physical contingencies at 10% for civil works, equipment, and consulting services. Price contingencies for

civil works items and equipment were computed at 7.5% per year for domestic inflation and 0.8% for foreign inflation. Interest during implementation was calculated based on indicative interest rate for the proposed $ denominated OCR loan. Also includes bank charges to be financed from the ADB loan proceeds.


Table A5.4: Expenditure Accounts, by Components, for India ($ Million)

Nature and Culture-Based Destination Improvements Himalayan Training

Site InstituteInfrastructure for Support for and Facilities West Sikkim Nature and Capacity

Connectivity in Rumtek Base Camp Culture- Village DevelopmentEnhancement Monastery and Trek Based Tourism and Project

Expenditure Account Roads Circuit Improvements Tourism Development Management Total

I. Investment Costs A. Land - 0.06 - - - - 0.06B. Civil Works 5.40 3.78 3.33 5.66 1.19 - 19.36C. Training, Workshops and Conferences - - - - - 0.20 0.20D. Consulting Services - - - - - 2.41 2.41E. Vehicles and Equipment - 0.12 - 3.02 - 0.06 3.20F. Tourism Promotion - - - - 0.02 - 0.02H. Incremental Administration - - - - - 0.72 0.72

Total PROJECT COSTS 5.40 3.97 3.33 8.68 1.21 3.39 25.97 Interest During Implementation 1.99

Commitment Charges 0.04Total Costs to be Financed 5.40 3.97 3.33 8.68 1.21 3.39 28.00

Note; Totals may not add due to rounding. Source: ADB estimates.

46 Appendix 5

Table A5.5: Project Cost Summary, by Components, for Bangladesha

($ Million)Foreign Total Foreign Total

Component Total Taxes Total Taxes


Subtotal 457.52 60.98 200.54 658.06 6.88 0.90 3.02 9.90B. Support to Community Participation, Capacity Building

and Project Management1. Community Participation 24.06 0.00 2.67 26.73 0.36 - 0.04 0.402. Capacity Building and Project Management 7.75 0.00 115.42 123.17 0.12 0.00 1.74 1.85

Subtotal 31.81 0.00 118.09 149.90 0.48 0.00 1.78 2.25Total BASELINE COSTS 489.33 60.98 318.63 807.97 7.36 0.90 4.79 12.15




Local(Tk Million)

Local

a Includes physical contingencies at 12% for civil works and equipment and 10% for consulting services. Price

contingencies for civil works items and equipment were computed at 7.5% per year for domestic inflation and 0.8% for foreign inflation. Interest during implementation which will be capitalized was calculated based on the ADF loan term of 1% per year during the period of implementation and 1.5% thereafter. Also includes bank charges to be financed from the ADB loan proceeds.


Table A5.6: Expenditure Accounts, by Components, for Bangladesh

($ Million) Support to Community Participation, Capacity Building and Project Management

Cultural Heritage Site CapacityImprovements Building and

Access Site Community ProjectExpenditure Account Infrastructure Infrastructure Participation Management Total

I. Investment Costs A. Land - 1.37 - - 1.37B. Civil Works 1.58 9.02 - - 10.60C. Training, Workshops and Conferences - - 0.40 0.04 0.44D. Consulting Services - - - 1.87 1.87E. Equipment - 0.20 - - 0.20F. Tourism Promotion - - - 0.11 0.11G. Incremental Administration 0.01 0.11 0.00 0.01 0.14

Total PROJECT COSTS 1.59 10.70 0.40 2.03 14.73 Interest During Implementation 0.27Total Costs to be Financed 1.59 10.70 0.40 2.03 15.00 Note; Totals may not add due to rounding. Source: ADB estimates.

Appendix 5 47

Table A5.7: Financing Plan, by Expenditure Accounts, for Nepal ($ million)

ADB Grant ADB Loan OFID Loan Total

Excl. TaxesExpenditure Account Taxes Only Total % Amount % Amount % Amount % Amount %

I. Investment Costs A. Land 2.85 - 2.85 100.0 - - - - - - 2.85 6.2B. Civil Works - 3.15 3.15 11.1 6.94 24.6 10.37 36.7 7.81 27.6 28.26 61.4C. Training, Workshops and Conferences - - - - 0.20 100.0 - - - - 0.20 0.4D. Consulting Services - - - - 4.29 100.0 - - - - 4.29 9.3E. Equipment - - - - 0.41 4.4 1.66 17.9 7.20 77.6 9.27 19.2F. Tourism Promotion - - - - 0.10 100.0 - - - - 0.10 0.2G. Demonstration Schemes for Livelihood - - - - 0.35 100.0 - - - - 0.35 0.8H. Incremental Administration - - - - 0.46 100.0 - - - - 0.46 1.0

Total PROJECT COSTS 2.85 3.15 6.00 13.1 12.75 27.8 12.03 26.3 15.00 32.8 45.79 98.5Interest During Implementation - - - - - - 0.72 100.0 - - 0.72 1.5

Total Disbursement 2.85 3.15 6.00 12.9 12.75 27.4 12.75 27.4 15.00 32.3 46.50 100.0


ADB=Asian Development Bank; OFID=OPEC Fund for International Development Source: ADB estimates.

Table A5.8: Financing Plan, by Components, for Nepala ($ million)

ADB Grant ADB Loan OFID Loan Total

Excl. TaxesComponent Taxes Only Total % Amount % Amount % Amount % Amount %

A. Connectivity1. Gautam Buddha Airport Upgrading 2.85 2.85 5.70 14.9 5.41 14.2 12.03 31.5 15.00 39.3 38.15 81.9

B. Heritage Site Improvements1. Site Infrastructure - 0.21 0.21 11.2 1.67 88.8 - - - - 1.88 4.12. Tourism Information Center - 0.08 0.08 11.2 0.66 88.8 - - - - 0.75 1.6

Subtotal - 0.29 0.29 11.2 2.33 88.8 - - - - 2.62 5.7C. Support to Community Participation, Capacity Building

and Project Management1. Community Participation - - - - 0.56 100.0 - - - - 0.56 1.22. Capacity Building and Project Management - - - - 4.46 100.0 - - - - 4.46 9.6

Subtotal - - - - 5.01 100.0 - - - - 5.01 10.8Total PROJECT COSTS 2.85 3.15 6.00 13.1 12.75 27.9 12.03 26.3 15.00 32.8 45.78 98.5

Interest During Implementation - - - - - - 0.72 100.0 - - 0.72 1.5Total Disbursement 2.85 3.15 6.00 12.9 12.75 27.4 12.75 27.4 15.00 32.3 46.50 100.0


ADB=Asian Development Bank; OFID=OPEC Fund for International Development a The ADB grant will finance (i) the entire cost of the heritage site improvements less taxes, (ii) capacity building and

project management less taxes; (iii) community participation less taxes; and (iv) the civil works, equipment, and incremental administration costs relating to Gautam Buddha airport upgrading Phase 1 only. For the civil works, a total of $4.61 million will be financed as follows: other works related expenses ($4.0 million) and earthworks ($.61 million). For the equipment, $0.41 million of navigational aids will be financed. For incremental administration, $0.39 million will be financed.


48 Appendix 5

Table A5.9: Financing Plan, by Expenditure Accounts, for India

($ million)

Excl. TaxesExpenditure Account Taxes Only Total % Amount % Amount %

I. Investment Costs A. Land 0.06 - 0.06 100.0 - - 0.06 0.2B. Civil Works 2.02 2.43 4.45 23.0 14.91 77.0 19.36 69.1C. Training, Workshops and Conferences - - - - 0.20 100.0 0.20 0.7D. Consulting Services - 0.23 0.23 10.0 2.10 90.0 2.33 8.3E. Vehicles and Equipment 0.12 0.38 0.50 15.3 2.78 84.7 3.28 11.7F. Tourism Promotion - - - - 0.02 100.0 0.02 0.1H. Incremental Administration 0.72 - 0.72 100.0 - - 0.72 2.6

Total PROJECT COSTS 2.93 3.04 5.97 23.0 20.00 77.0 25.97 92.8Interest During Implementation 1.99 - 1.99 100.0 - - 1.99 7.1Commitment Charges 0.04 - 0.04 100.0 - - 0.04 0.1


ADB TotalThe GovernmentAmount


Table A5.10: Financing Plan, by Components, for India ($ million)

ADB Total

Excl. TaxesComponent Taxes Only Total % Amount % Amount %

A. Connectivity Enhancement 1. Roads 0.70 0.65 1.35 25.00 4.05 75.00 5.40 19.30

B. Nature and Culture-Based Destination Improvements 1. Site Infrastructure and Facilities in Rumtek Monastery Circuit 0.56 0.47 1.03 25.90 2.94 74.10 3.97 14.202. West Sikkim Base Camp and Trek Improvements 0.43 0.4 0.83 25.00 2.50 75.00 3.33 11.903. Himalayan Training Institute for Nature and Culture-Based Tourism 0.59 1.14 1.73 19.94 6.95 80.06 8.68 31.004. Village Tourism Development 0.16 0.14 0.30 24.70 0.91 75.30 1.21 4.30

Subtotal 1.74 2.15 3.89 23.60 13.29 76.40 17.18 61.40C. Support for Capacity Development and Project Management

1. Capacity Development and Project Management 0.49 0.24 0.73 21.50 2.66 78.50 3.39 12.10Total PROJECT COSTS 2.93 3.04 5.97 23.60 20.00 76.40 25.97 92.80

Interest During Implementation 1.99 - 1.99 100.00 - - 1.99 7.10Commitment Charges 0.04 - 0.04 100.00 - - 0.04 0.10




Appendix 5 49

Table A5.11: Financing Plan, by Expenditure Accounts, for Bangladesh

($ million) ADB Total

Excl. Taxes Expenditure Account Taxes Only Total % Amount % Amount %






Table A5.12: Financing Plan, by Components, for Bangladesh ($ million)

ADB Total

Excl. Taxes Component Taxes Only Total % Amount % Amount %


Subtotal C 1.79 1.16 2.95 24.0 9.34 76.0 12.29 81.9B. Support to Community Participation, Capacity Building

and Project Management1. Community Participation 0.03 - 0.03 7.0 0.37 93.0 0.40 2.72. Capacity Building and Project Management 0.03 0.00 0.03 1.5 2.01 98.5 2.04 13.6

Subtotal 0.06 0.00 0.06 2.5 2.38 97.5 2.44 16.3Total PROJECT COSTS 1.84 1.16 3.00 20.4 11.73 79.6 14.73 98.2




ADB

Natio

nal P

roject S

teering

C

om

mittee fo

r Each

Co

un

try

(Reporting)

(Funds)

Su

breg

ion

al Task F

orce

Ministry of T

ourism and M

inistry of Finance and other K

ey Im

plementin g A

gencies from each country

Government of Bangladesh EA – Department of

Archaeology

Project Implementation Unit - BPC


Department of Archaeology

Project Implementation Units •Paharpur •Kantajee, and etc

Government of Nepal EA- Ministry of Tourism and Civil

Aviation

Project Coordination Unit


CAAN-Kathmandu

Government of India EA- State Government of

Sikkim Department of TourismProject Implementation

Unit (South Sikkim)

Project Management and Implementation Unit (Gangtok)

Pro

ject Man

agem

ent an

d D

esign

Co

nsu

ltants

Project Implementation Unit (West Sikkim)

Project Management and Implementation Unit Lumbini Development

Trust-Lumbini

Project Implementation Unit (Gautam Buddha Airport)

PROJECT ORGANIZATION CHART

State S

teering

C

om

mittee

Review Panel – UNESCO, LDT

Review Panel- UNESCO, BPC, DOA

ADB = Asian Development Bank, BPC = Bangladesh Pajartan Corporation, CAAN = Civil Aviation Authority of Nepal, DOA = Department of Archaeology, EA = executing agency, LDT = Lumbini Development Trust. UNESCO = United Nations Educational, Scientific and Cultural Organization.

50 A

ppendix 6

Appendix 7 51

PROJECT IMPLEMENTATION SCHEDULE 2009 2010 2011 2012 2013 2014 Nepal Connectivity Enhancement-Gautam Buddha Airport Detailed Engineering Designs Implement Resettlement Plans Procurement Civil Works Equipments Installation Lumbini Destination Improvements Lumbini Information Centre and Infrastructure Improvements Surveys Detailed Designs Civil Works Capacity Building Lumbini Master Plan Revision Design of Capacity Building and Training Activities Implementation of capacity building and training activities Project Management and Design Consultants -Mobilization India-Sikkim Connectivity Enhancement Surveys and Investigations

Detailed Design Civil Works Rumtek Monastery Circuit Destination Improvements Surveys and Investigations Acquisition and resettlement arrangements of Land for Parking Detailed designs Civil Works Himalayan Training Institute for Nature and Culture Based Tourism Survey and investigations Detailed designs Civil Works Procurement of Equipments West Sikkim Base Nature-based Destination Improvements Surveys and investigation In principle and designs approvals by Forest and Environment Department , SG and Revisions to trekking Rules and Rates

Detailed designs Works Village Tourism development Community Mobilization Formation of Societies Surveys and Design Civil Works Bangladesh Paharpur Destination Improvements Site Surveys Design and approval including from UNESCO Works- Northern and Eastern Gate Drainage Improvements -Main Site Conservation Kantajee, Mahastangarh, Bagerhat Master Plan Surveys Design Civil Works and Conservation Capacity Building Design of Capacity Building and Training Programs Implementation of capacity building and training activities Project Management and Design Consultants -Mobilization Fostering Community Participation in Nepal, India, Bangladesh Design of awareness raising and pilot schemes Community Mobilization Implementation of pilot schemes

52 Appendix 8

PROCUREMENT PLANS

A. NEPAL

Table A8.1: Project Information Project Information Country Nepal Name of borrower Project Name South Asia Tourism Infrastructure Development Project Loan Reference TBD Date of Effectiveness Amount ($) $46.5 million Executing Agency Ministry of Tourism and Civil Aviation Approval Date of Original Procurement Plan – Approval of most recent Procurement Plan – Publication for Local Advertisements – Period Covered by this Plan 2009-2014 TBD = to be determined. Source: Asian Development Bank.

Table A8.2: Procurement Thresholds, Goods and Related Services, and Supply and Installation of Works

Goods & Related Services, Works, Supply & Installation of works Procurement Method Threshold ICB Works : $1,000,000 and above ICB Goods/ Supply & Installation : $1,000,000 and above NCB Works : Below $ 1,000,000 NCB Goods/Supply & Installation : Below $1,000,000 Shopping : Below $100,000 Consulting Services Procurement Method Threshold Quality and Cost Based Selection (QCBS) :$200,000 and above Consultants’ Qualification Selection (CQS) : Below $200,000 Least Cost Selection : Below $100,000 ICB = international competitive bidding, NCB = national competitive bidding Source: Asian Development Bank.

Table A8.3: Indicative Procurement Packages

S.No

Contract Packages

Number of Packages

Total Cost a ($ Million)

Procurement

Method

Expected Date of

Advertisement

Prior review Required

Comments

1 Bhairahawa Airport

Expansion and upgrading of airport including refurbishment of terminal, buildings and provision of utilities services

2

25.1

ICB Sept 2010 Yes

Multiple Packages

Supply, installation and commissioning of telecommunication equipments

2

10.9

ICB

March 2011

Yes

Multiple Packages

2 Lumbini

Improvement of Lumbini site infrastructure and amenities

1 2.048 ICB June 2010 Yes Multiple Packages

a For multiple contract packages, cost estimates refer to total cost and not to cost per package.

Appendix 8 53

S.No

Contract Description Total Cost a

($ Million) Procurement

Method Expected Date of

Advertisement Prior review

Required Comments

1 Project Management, detailed design and supervision Consultants

3.057 QCBS Sept 2009 Y 3 Packages

2 Tourism promotion activities 0.130 CQS July 2010 Y

3 Updating of Lumbini WHS and Management Plan

0.600 QCBS Sept 2009

4 Community Participation and awareness promotion

I Community Awareness Raising Program

0.139 CQS Sept 2009 Y

II Demonstration Scheme for Heritage-Based Livelihood Generation

0.200 CQS Sept 2009 Y

a For multiple contract packages, cost estimates refer to total cost and not to cost per package. Note: The National Competitive Bidding Procedures (NCB Annex Nepal) for Nepal is included in Supplementary Appendix J. Pending Review of a recent change of local procurement laws, the NCB Annex remains subject to change.

B. INDIA

Table A8.4: Project Information Project Information Country India Name of borrower Project Name South Asia Tourism Infrastructure Development Project Loan Reference TBD Date of Effectiveness Amount ($) 28 million Executing Agency Department of Tourism, State Government of Sikkim Approval Date of Original Procurement Plan – Approval of most recent Procurement Plan – Publication for Local Advertisements – Period Covered by this Plan 2009-2014 TBD = to be determined. Source: Asian Development Bank.


Goods & Related Services, Works, Supply & Installation of works Procurement Method Threshold ICB Works : $10,000,000 and above ICB Goods/ Supply & Installation : $1,000,000 and above NCB Works : Below $ 10,000,000 NCB Goods/Supply & Installation : Below $1,000,000 Shopping : Below $100,000 Consulting Services Procurement Method Threshold Quality and Cost Based Selection (QCBS) :$200,000 and above Consultants’ Qualification Selection (CQS) : Below $200,000 Least Cost Selection : Below $100,000 ICB=International Competitive Bidding, NCB = National Competitive Bidding Source: Asian Development Bank.

54 Appendix 8


S.No

Contract Packages

Number

of Packages

Total Cost a ($ Million)

Procurement Method

Expected Date of

Advertisement


Comments

1 Strengthening of roads in East Sikkim from (i) Sajong to Gangtok via Lingdum Monastery and Ban Jakhri falls and (ii) access road to Rey khola

1

4.547 NCB March 2010

Y

2 Strengthening of roads in South Sikkim (i) approach Road to Samdruptse (2.2 Kms) and (ii) approach road to the Himalayan Institute at Chemchey (3kms)

1


N

3 Provision of basic services and enhancement of environmental conditions within the Rumtek monastery complex

1


Y

4 Construction of multi-level parking at Rumtek

1 2.560 NCB August 2011

Y

5 Infrastructure improvements and redevelopment of destinations around Rumtek

2 0.2523 NCB August 2011

N

6 Redevelopment and provision of basic services at Yuksom base camp

1 0.4975 NCB August 2010

N

7 Improvement of Singalila trek and provision of basic amenities including signages, sanitation facilities, camping sites enroute from to Uttarey

1 2.378 NCB March 2011

For the first package only prior review

required

In Multiple packages

8 Civil works and provision of services at Himalayan Training Institute for Nature based Tourism, Chemchey

1 3.780 NCB August 2010

Y

9 Equipments and training aids at the Himalayan Training Institute

1 2.032 ICB December2012

Y

10 Retrofitting of Guru Padma Sambhava statue and provision of basic services

1 0.646 NCB August 2010

Y

11 Development of village (cultural and eco) tourism subprojects

3 1.030 NCB August 2010

For the first package only prior review

required

In multiple packages


S.No

Contract Description Total Costa ($ Million)

Procurement Method

Expected Date of Advertisement


Comments

1 Project Management, Detailed Design, and Supervision Consultants

2.459 QCBS October 2009 Y

2 TA for preparation of an operational plan for the institute

0.0243 CQS March 2010 Y

Appendix 8 55

S.No

Contract Description Total Costa ($ Million)

Procurement Method

Expected Date of Advertisement


Comments

3 Curriculum Design for Institute 0.0122 CQS March 2010 Y

4 Community Capacity Building 0.146 CQS November 2009 N a For multiple contract packages, cost estimates refer to total cost and not to cost per package Note: The National Competitive Bidding Procedures (NCB Annex India) for India is included in Supplementary Appendix K.

C. BANGLADESH

Table A8.7: Project Information Project Information Country Bangladesh Name of borrower Project Name South Asia Tourism Infrastructure Development Project Loan or TA Reference TBD Date of Effectiveness TBD Amount ($) Executing Agency Approval Date of Original Procurement Plan – Approval of most recent Procurement Plan – Publication for Local Advertisements – Period Covered by this Plan 2009-2012 TA = technical assistance, TBD = to be determined. Source: Asian Development Bank.




S.No

Contract Description

Number of Packages

Total Costa ($ Million)

Procurement Method

Expected Date of

Advertisement


Comments

1 Paharpur Mahavira Subproject

Development of tourist amenities and basic services, including access road, parking, signages, landscaping etc

1

1.063 NCB March 2010 Y

56 Appendix 8

S.No


Number of Packages


Procurement Method

Expected Date of

Advertisement


Comments

Conservation and environmental improvement within courtyard around the central vihara, e.g., drainage, footpaths, conservation of terracotta plaques etc

1 0.578 NCB March 2010

Y

2 Mahastangarh subproject

Development of tourist amenities and basic services in and around the site, including parking, signages , landscaping etc

1

NCB March 2011 Y

Conservation and environmental improvement within the complex

1 NCB March 2011 Y

3 Kantajee Temple

Development of tourist amenities and basic services in and around the site, including access road, parking, signages, landscaping

1 NCB March 2012 Y

4 Bagerhat Mosque complex

Development of tourist amenities and basic services in the periphery of the monument, including development of access road, parking, signages , landscaping etc

1 NCB March 2012 Y


S.No Contract Description

Total Cost a


Method

Expected Date of

Advertisement


Comments

1 Program Management and Design Consultants

1.85 QCBS November 2009 Y

2 Community Participation in Cultural Heritage Management and Tourism

I Community Awareness Raising Program 0.150 CQS December 2009 Y

II Training and Skills Development 0.150 CQS December 2009 Y

III Pilot Demonstration Scheme for Tourism-Based Livelihood Generation

0.100 CQS December 2009 Y

a For multiple contract packages, cost estimates refer to total cost and not to cost per package. Note: The National Competitive Bidding Procedures (NCB Annex Bangladesh) is under review pending a recent revision of Bangladesh local procurement law. The NCB Annex is attached in Supplementary Appendix L.

Appendix 9 57

ECONOMIC AND FINANCIAL ANALYSIS

1. An economic and financial analysis was conducted in accordance with the following Asian Development Bank (ADB) guidelines: Tourism for Pro-Poor and Sustainable Growth: Economic Analysis of Tourism Projects,1Financial Management and Analysis of Projects,2 Guidelines for the Economic Analysis of Projects,3 and Framework for the Economic and Financial Appraisal of Urban Development Sector Projects.4 The analysis was undertaken by comparing the incremental benefits and costs arising from the with- and without-project scenarios.

A. Economic Analysis

1. Country Economies and the Sector

2. Subregion Economies and Tourism. Tourism plays a pivotal role in the subregion economies. According to the World Travel & Tourism Council, the tourism industry’s direct impact on the economies of Bangladesh, India, and Nepal will reach a combined total of $29.5 billion, equivalent to 1.6%–3.1% of their gross domestic product (GDP). The council indicates that tourism’s contribution to GDP will reach 4% or $6,385 million by 2018 in Bangladesh, 6.1% or $172 billion in India, and 8% or $1,173 million in Nepal. But to achieve or even surpass these forecasts, the governments will have to address constraints to the tourism industry. The often-cited tourism development bottlenecks in the three countries include (i) difficulties with connectivity and access to the sites, (ii) inadequate infrastructure and visitor facilities, (iii) insufficient human resources and trained professional staff, (iv) relatively weak border crossing infrastructure and systems, (v) inadequate basic infrastructure such as water supply and sanitation systems, and (vi) limited benefits to surrounding communities.

2. Project Rationale

3. Justification for Government Intervention in the Sector. Fostering private sector participation is a vital element of each government’s tourism development strategy. Nonetheless, airport upgrading and the provision of public toilets, public footpaths, drainage, and public information centres justify government intervention for the following reasons: (i) many of the services required are natural monopolies usually unsuited to private investment and hence, justify government intervention at least in regulation; (ii) environmental protection and sanitation improvement provide public goods such as a hygienic and flood-free environment, and prevent negative situations arising from pollution; and (iii) poverty reduction programs minimize the inefficiencies of economic growth. The economic rationale for government intervention is, therefore, sound.

3. Demand Analysis

4. During 1995–2006, tourist arrivals of member countries of the South Asia Subregional Economic Cooperation grew at an annual average of 8%, outperforming many regions of the world and reaching almost double the global average of 4.8%. The United Nations World Tourism Organization forecasts that these countries will receive almost 15 million international visitors by 2020. However, demand forecasts show that without the Project, growth will be lower, or worse, demand for tourism in the subproject areas will gradually decline because of (i) the diminishing attractiveness of the sites due to major physical constraints that will worsen over

1 Tun Lin and F.D. de Guzman. 2007. Tourism for Pro-Poor and Sustainable Growth: Economic Analysis of Tourism

Projects. ERD Technical Note No. 20. Manila: ADB. 2 ADB. 2005. Financial Management and Analysis of Projects. Manila. 3 ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila. 4 ADB. 1994. Framework for the Economic and Financial Appraisal of Urban Development Sector Projects. Manila.

58 Appendix 9

time, and (ii) limits to increasing the number of tourists as a result of overcapacity. To arrive at demand forecasts for each of the subprojects, surveys of tourist arrivals, duration of stay, and average spending in the destination sites were conducted with assistance from the local tourism offices in each participating country.

4. Cost–Benefit Analysis

a. Economic Costs

5. In calculating the economic internal rates of return (EIRR) for the subprojects, the estimated costs and benefits were valued at their economic prices using the world price numeraire. The standard conversion factors used were taken from recent ADB studies on South Asia of a similar nature5 and confirmed using available import and export data from each country. The conversion factors used were as follows: Bangladesh (0.90); India (0.91), and Nepal (0.89). The economic costs do not include applicable taxes and duties, and are based on preliminary engineering designs and estimates prepared for the subprojects. b. Quantified Economic Benefits

6. Incremental Tourism Benefits. Tourism benefits from subprojects were calculated based on the increased (i) number of passenger or tourist arrivals as a result of the subprojects, (ii) length of tourist stays in the area, and (iii) amount of spending by tourists. The following income multipliers were applied: Bangladesh (0.63), India (0.93), and Nepal (0.76).6 The demand surveys conducted indicate that as a result of the subprojects, average daily tourism spending will increase. Based on the increase estimated for each destination site, average daily tourism benefits were determined taking into account the substitution effect.7

7. Incremental Airport Benefits. Using projected incremental passenger arrivals and aircraft movements, passenger and landing fees for relevant subprojects were calculated and converted into economic benefits by applying the appropriate standard conversion factors. Additional benefits such as airport revenues from parking facilities and cargo services were computed at 5% of the total incremental tourism and airport benefits.

c. Nonquantified Economic Benefits

8. Other Benefits. The analysis did not quantify other benefits that were difficult to value due to lack of data or the potential for double counting. These nonquantified benefits include (i) aircraft operating cost savings, (ii) increased public health due to improved water supply and sanitation facilities in the site, and (iii) access to increased employment and livelihood opportunities in the communities surrounding the destination sites.

d. EIRR Calculation and Sensitivity Analysis

9. The results of the EIRR calculation and sensitivity analysis are summarized in Table A9.1. The base case EIRRs range from 23.76% to 33.21%, exceeding the economic opportunity

5 See for example ADB. 2005. Report and Recommendation of the President to the Board of Directors on a

Proposed Loan to India for the Kerala Sustainable Urban Development Project. Manila. 6 These multipliers are based on the following studies by the United Nations Economic and Social Commission for

Asia and the Pacific: The Economic Impact of Tourism in India (1992) and Bangladesh (1993). For Nepal, see Horvath, Endre and Douglas Frechtling. 1999. Estimating the Multiplier Effects of Tourism Expenditures on a Local Economy through a Regional Input–Output Model. Journal of Travel Research, Volume 37, No. 4: 324–332.

7 It was assumed that domestic visitors’ spending had an 80% substitution effect.

Appendix 9 59

cost of capital which is 12% and confirming the economic robustness of the proposed subprojects.8 The EIRR for the entire Project is 28.27%, demonstrating its economic viability.

10. A sensitivity analysis, undertaken to further test the economic viability of the subprojects and the Project, ascertained the consequences of changes in the following variables: (i) 10% increase in investment cost possibly arising from a delayed implementation schedule or higher than expected inflation, (ii) 10% decline in benefits due to lower tourist arrivals and spending that may result from the global economic slowdown, (iii) a combination of scenarios (i) and (ii), and (iv) a delay in subproject benefits by a year. The results of the sensitivity analysis show that the EIRRs are highly sensitive to a reduction or a delay in benefits. To address this risk, subprojects were selected using a set of criteria that emphasized both contribution to subregional and national tourism development. The Project is also designed to support the participating governments’ coordinated marketing and promotion programs for the proposed circuits.

Table A9.1: Summary of Economic Internal Rates of Return and Sensitivity Analysis

Paharpur LumbiniHeritage Site Bhairahawa Heritage Site Sikkim

Improvements Airport Upgrading Improvements Improvements

Economic Cost 1,565.00 20,807.00 2,663.00 17,576.00 42,611.00($'000)

Net Present Value 2,365.00 25,919.00 6,370.00 42,183.00 73,993.00($'000)

Base Case EIRR (%) 30.72 23.76 34.69 33.21 28.27Sensitivity Tests:Case 1: Capital Cost + 10%

EIRR (%) 28.53 22.43 32.54 31.22 26.64Switching Value 85.40 88.51 105.18 106.70 99.90Sensitivity Indicator 1.17 1.13 0.95 0.94 1.00

Case 2: Benefits - 10% EIRR (%) 28.08 22.25 31.94 30.88 26.37Switching Value 71.10 77.76 82.52 91.04 85.63Sensitivity Indicator 1.41 1.29 1.21 1.10 1.17

Case 3: 1, 2 & O&M+10%EIRR (%) 25.87 20.93 26.62 28.91 24.73NPV ($'000) 1,843.00 19,917.00 5,158.00 34,889.00 59,247.00% Drop in NPV 22.08 23.16 19.03 27.43 19.92

Case 4: Benefits delayed by 1 yrEIRR (%) 16.07 21.05 19.30 20.02 24.42NPV ($'000) 741.00 21,295.00 2,858.00 21,783.00 62,057.00% Change in NPV 68.68 17.84 55.14 98.70 16.12

Subproject

ProjectBase Case/Sensitivity Scenarios

EIRR = economic internal rate of return; NPV = net present value; O&M = operation and maintenance; NPV = net present value. Source: ADB estimates.

5. Benefit Distribution and Poverty Impact Analysis

11. A distribution analysis of the quantified benefits from the Project was conducted. India will gain most from the Project with an estimated $52.2 million in net benefits. Nepal will gain approximately $39.1 million, while the net benefit to Bangladesh will be about $16.1 million. These results reflect findings that the economic impact of tourism, as measured by its income multiplier, is highest in India, followed by Nepal (para. 6).9 The net benefit to Bangladesh is smallest due to its lower income multiplier, which can be traced, in part, to the relatively limited

8 ADB. 2003. Economic Analysis of Projects. Operations Manual. OM G1/OP. Manila (para. 2 [vi-b]). 9 As noted in the summary of the United Nations Economic and Social Commission for Asia and the Pacific

economic impact studies conducted in the 1990s (footnote 6), the multiplier effects of tourism in a particular economy are a function of (i) purpose of the visit, (ii) expenditure patterns, (iii) leakages, (iv) linkages, (v) supply capacity of the economy to meet additional demand, (vi) stage of industrialization of the country, and (vii) foreign exchange and taxation policies of the country.

60 Appendix 9

forward and backward linkages of tourism in the country’s overall economy compared to India and Nepal.

12. The poverty reduction impact will be higher in local communities and villages surrounding the destination sites. Skills development to be carried out in each participating country will increase employment and livelihood opportunities particularly for those likely to be engaged in hospitality, guesthouse and small hotel services, food and beverages, handicrafts, local tours, cultural presentations, marketing, interpretation, and other microenterprise endeavors. The detailed economic analyses for three countries are in Supplementary Appendixes P, Q, and R.

B. Financial Analysis

1. Financial Management Assessment

13. To ensure that the Project’s implementing agencies are managerially and financially capable of efficiently and effectively implementing the proposed subprojects―consequently promoting project sustainability―a financial management assessment was conducted in accordance with ADB’s Financial Management and Analysis of Projects (footnote 3). The financial assessment established that all the executing and implementing agencies have the basic financial reporting, internal controls, and audit systems for the Project. Capacities will be strengthened under the Project by training executing and implementing agency staff in each country on accounting, budgeting, financial information management, reporting, and use of information technology.

2. Indicative Financial Improvement Action Plans

14. The Government of Bangladesh has decided on the following action agenda: (i) complete filling of key vacancies, and prepare and start implementation of an action plan to induct staff by December 2009; (ii) prepare an action plan and begin implementation to increase income from various sources including entrance fees, user charges for facilities, parking fees, concession fees, and sale of interpretative materials to generate sufficient funds to gradually meet operation and maintenance (O&M) costs of the sites by June 2012; and (iv) devise a feasible mechanism to allow revenues generated from the sites to be used for O&M, while implementing a rational policy to support sites with lower revenue realization by June 2012.

15. The Sikkim state government has decided to (i) assess the feasibility, and start implementation of a strategy for separately accounting and managing revenues for nature- and culture-based tourism by June 2012; and (ii) develop and start implementing a financial improvement action plan involving enhanced ecotourism service fees, other fees and charges to meet O&M costs of the Rumtek monastery complex and facilities, as well as proposed tourism products by June 2012.

16. The Government of Nepal has committed to pursue the following: (i) prepare and endorse a policy statement and guidelines acceptable to ADB to eliminate outstanding charges to CAAN by July 2010; (ii) reduce overall outstanding dues of CAAN to 30% by June 2012; (iii) prepare and start implementing a business plan for the Gautam Buddha airport by December 2010, including setting of aeronautical and nonaeronautical rates by January 2014 and every year thereafter; and (iv) design, install, and operate a financial management reporting system for the Gautam Buddha airport linking it with the overall management information system of CAAN by December 2010.

17. Management of Lumbini Development Trust (LDT) in Nepal will implement the following action agenda: (i) develop an action plan and start implementing measures for enhanced strategic planning, heritage protection, visitor management, environmental management, O&M

Appendix 9 61

of infrastructure, and engagement of communities in heritage tourism by Jan 2011; and (ii) develop and implement a financial improvement action plan to gradually enhance the revenues and financial management of LDT by June 2012, including an annual revision of the structures and rates of fees, and charges for various services to meet O&M expenses.

3. Cost–Benefit Analysis

18. Capital investment costs, valued at constant 2008 prices, were considered in the analysis. Recurrent annual expenses to support O&M were calculated at 3% of the total civil works cost. Using the visitor forecasts prepared for each subproject as part of the demand analysis (para. 4), financial revenue projections were prepared based on the indicative lease and fee rates proposed by the implementing agencies.

19. Table 9.2 presents the results of the calculation of financial internal rates of return (FIRRs) and sensitivity analysis. The base case FIRRs for the subprojects are estimated to range from 3.72% to 9.03%, exceeding the weighted average costs of capital calculated at 0.19% to 2.75%. The sensitivity analysis performed confirms the financial viability of the subprojects and the Project as a whole. The results of the sensitivity analysis indicate that the FIRRs are most responsive to reductions in the projected financial revenues. The governments’ financial improvement action plans will address this risk sufficiently (paras. 14–17). Details of the financial analyses for three countries are presented in Supplementary Appendixes P, Q, and R.

Table A9.2: Summary of Financial Internal Rates of Return and Sensitivity Analysis

Paharpur LumbiniHeritage Site Bhairahawa Heritage Site Sikkim

Improvements Airport Upgrading Improvements Improvements

Net Present Value 669.00 7,510.00 7,263.00 11,199.00($'000)

Base Case FIRR (%) 4.14 3.72 9.03 4.83

WACC (%) 1.48 2.75 0.19 1.89Sensitivity Tests:Case 1: Capital Cost + 10%

EIRR (%) 3.33 3.02 8.27 4.15Switching Value 32.60 38.44 116.08 43.05

Case 2: O & M Cost + 10% EIRR (%) 3.80 3.62 8.87 4.62Switching Value 78.62 268.03 562.94 136.22

Case 3: Revenues - 10% EIRR (%) 2.88 2.85 8.02 3.85Switching Value 21.14 30.66 87.96 29.96

Case 4: Combination of 1, 2 & 3EIRR (%) 1.76 2.09 7.13 2.97NPV ($'000) 70.02 76.00 5,666.00 4,115.00% Drop in NPV 89.53 98.99 22.00 63.25

Case 5: Revenues delayed by 1 yrEIRR (%) 3.03 2.95 7.57 3.57NPV ($'000) 392.12 4,034.00 5,812.00 6,144.00% Change in NPV 41.35 46.28 19.99 45.14

Subproject

Base Case/Sensitivity Scenarios

FIRR = financial internal rate of return; WACC = weighted average cost of capital; O&M = operation and maintenance; NPV = net present value. Source: ADB estimates.

62 Appendix 10

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

Country/Project Title: South Asia Tourism Infrastructure Development Project

Lending/Financing Modality:

Project loans (to Bangladesh and India) and grant and loan (to Nepal)

Department/ Division:

South Asia Department/ Urban Development

Division

I. POVERTY ANALYSIS AND STRATEGY

A. Linkages to the National Poverty Reduction Strategy and Country Partnership Strategy

South Asia, with a population of 1.2 billion is in a vulnerable zone. This includes the project countries of Nepal, India, and Bangladesh. Himalayan regions of the countries are in a sensitive earthquake zone, prone to landslides. Floods and cyclones bring extensive damage to Bangladesh. While poverty levels have improved in the last two decades in the four countries (poverty headcount for Nepal at 31%, India at 35%, and Bangladesh at 50%), with the high population—this translates to high levels of absolute poverty. Country poverty assessments, country partnership strategies, and sector analyses for these countries show that economic growth and employment are necessary to reduce poverty. Given the extreme weather conditions and vulnerability of the project countries, there is a need tap new sources of employment which will harness the strengths of the countries. Despite high levels of poverty, the subregion has a remarkable combination of potentials. The project countries are endowed with vast and diverse cultural and natural resources that give them the opportunity to build a globally competitive tourism sector. Tourism contributes to the project countries’ national and local economies. In 2007, tourism earnings from international visitors in the three countries (including entire India) totaled $12.3 billion, representing a 150% increase from the tourism earnings of 2003. According to World Travel and Tourism Council’s statistics tourism employed 13.7 million people in the three countries. However there is substantial scope to further enhance the contribution of tourism to economic growth and job creation through enhancing (i) connectivity to and destination infrastructure in remote tourism assets (ii) public sector capacities to manage heritage tourism and (iii) engagement of communities in heritage site protection and management and the tourism economy. The Project will contribute to sustainable economic growth and reduced poverty in the subregion through the development of environmentally and culturally sustainable and socially inclusive tourism, leading to increased employment, increased and better distributed incomes and benefits to the subregion’s communities, and enhanced conservation and management of the subregion’s natural and cultural resources. B. Poverty Analysis Targeting Classification: General Intervention

1. Key Issues The Project will strengthen the tourism sector as reflected in an increase in arrivals and length of stay of tourists in the subregion and increased spending of tourists and expanded patterns of existing tourist flows. All these are expected to result in additional employment and improved living conditions for the local populations including the poor. Subprojects are designed to further reach the poor. In Nepal, tourism is an important sector for the economy and the proposed subprojects in and around Lumbini will increase alternative livelihoods for the population. Poverty in the Terai is 28%. In India’s Sikkim, the poverty levels are around 36%. The nature and culture-based tourism and village tourism will provide additional employment to the rural communities and improve their environmental and accessibility conditions. The proposed training center will result in indirect employment in the surrounding communities. In Bangladesh, infrastructure development will support local livelihood, and the proposed improvements and restoration of cultural sites will increase tourist flows to benefit the local community. With constant threats from natural elements, alternative livelihood is required in these areas of the country (Rajshahi, Bogra and Dinajpur) where poverty levels are as high as 65% (in rural Rajshahi division). 2. Design Features While the Project will improve destinations and access, it also aims to expand access to livelihoods directly through project-based activities such as construction, and through structured efforts to promote community-based eco and cultural tourism activities and community-based management of select sites. To enable communities, the project will have capacity building activities to foster community involvement, and provide support in designing community-based tourism products.

Appendix 10 63

II. SOCIAL ANALYSIS AND STRATEGY

A. Findings of Social Analysis There has been progress in the achievements of Millennium Development Goals (MDGs) targets in the three countries. Nepal’s 2005 MDG Progress Report indicated that Nepal was likely or potentially able to meet MDG goals except universal primary education and HIV/AIDS. India on the other hand has been cited by the Millennium Progress Report as leading poverty reduction as “with more than 2.3 billion people in these two countries (People's Republic of China and India) alone, their major advances in poverty reduction drive developing world averages.” The 11th Five Year Plan of India have goals and programs more ambitious than the MDGs targets. Finally, UNDP’s MDG Monitor reflects that Bangladesh is on track in relation to most targets already achieving gender parity in primary and secondary education, and in wage employment in the non-agriculture sector. The achievement of the MDGs has been boosted by economic growth, which is expected to grow at a less rapid pace as a result of the global slowdown. This can worsen unemployment. While employment rates have been increasing in Bangladesh and India, at the current rates of 4.2% and 3.1% respectively—this translates to about 14 million individuals who are unemployed. While Nepal employment statistics are unavailable, studies estimate it in the region of 40% of labor force. Sustained economic growth and employment generation are key factors in further achieving MDG targets and achieving development. The Project is expected to enable the countries to earn more foreign exchange, generate additional jobs, and improve total economic output. It is estimated that the Project will benefit an overall 2.4 million people through increased incomes, employment, health and environmental improvements, and reduced travel time. Around 500,000 people will benefit from additional employment both in the tourism industry and the industries related to tourism. At least 10,000 local livelihoods will be created improving the lives of communities around the sites. The capacity building activities will equip around 250 practitioners with skills for enhanced protection, management, and marketing of key destinations in the three countries.

B. Consultation and Participation

1. Provide a summary of the consultation and participation process during the project preparation. Extensive consultations were held with stakeholders. As select activities will be community-based, willingness to participate and manage assets is one of the key requirements in subproject selection. The Project is designed to be inclusive, hence community capacity building, is part of the Project, including participatory processes. A stakeholder analysis was undertaken particularly for community based tourism subprojects. Key stakeholders identified were communities, NGOs, self-help groups and the government agencies. The perceptions were obtained through focus group discussions, individual interviews, and group meetings to assess the income and other benefits from the investments, the needs and willingness to participate in service and site management. These were considered in the project design.

C. Gender and Development

1. Key Issues

Women and men will benefit from the Project, through improved opportunities for income generation, directly as part of the community-based tourism activities, and indirectly through increase employment from increased tourist inflows. The improvement of tourist infrastructure and amenities will also result in general benefits to communities, including women. Given that the project provides for harnessing local handicrafts and potentials for community based tourism, it will positively benefit women entrepreneurs. 2. Key Actions. Measures included in the design to promote gender equality and women’s empowerment—access to and use of relevant services, resources, assets, or opportunities and participation in decision-making process:

No action/measure Summarize key design features of the gender plan or other gender-related actions/measures, including performance targets, monitorable indicators, resource allocation, and implementation arrangements. The Project brings benefits to women and men, and design to maximize benefits is part of the Project.

64 Appendix 10

III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS

Issue Significant/Limited/ No Impact

Strategy to Address Issue Plan or Other Measures Included in

Design Involuntary Resettlement

In Nepal, strip land acquisition (92.89 hectares) will affect 590 plots belonging to 312 households. Affected lands are agricultural with the exception of 17 residential plots with residential structures. The land acquisition will also affect 132 fruit and timber trees, two primary schools, 80 wells, 1 shrine, a portion of a poultry farm, and a village access road. In India, land acquisition (0.6 hectares) for multi-level parking will affect 5 brothers and their families. Four tenants operating eateries and tea shops will be temporarily affected during construction

In Nepal losses will be compensated at replacement value and other strategies are expanded in the resettlement plan. For India, land will be compensated at replacement value with the subproject designed so as not to affect land fronting the street which APs wanted to retain, tenants will be provided commercial space after construction of the view point.

Full Plan Short Plan Resettlement Framework

Indigenous Peoples

Potential impacts to indigenous peoples will be limited and related to involuntary resettlement.

Other Action - resettlement plans include additional entitlements for any vulnerable person affected including IP-headed households.

Labor Employment opportunities Labor retrenchment Core labor standards

Labor impacts will be positive. Other Action

Affordability There are no affordability issues. No Action

Other Risks and/or Vulnerabilities HIV/AIDS Human trafficking Others(conflict, political instability, etc), please specify

No other risks or vulnerabilities were identified.

No Action

IV. MONITORING AND EVALUATION

Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities and/or social impacts during project implementation? X Yes □ No

Appendix 11 65

SUMMARY RESETTLEMENT PLANS

A. Scope of Land Acquisition and Resettlement

1. The Project promotes environmentally and culturally sustainable and socially inclusive tourism growth in the South Asian subregion. This will be through: (i) integrated development of high yielding tourism circuits and destinations, (ii) effective management of tourism and environment and culture, and (iii) enhancing the linkages of expanded tourism to the local communities. These will be undertaken in three countries.1

2. The Project is designed to minimize land acquisition and resettlement impacts. In all subprojects, to the extent possible, works will be within existing facilities which is government land. For the Lumbini subproject in Nepal; the Chemchey, Singalila, Yuksom, and Himalayan Institute of Ecotourism and Mountaineering subprojects in India; and the sample-subproject in Bangladesh—there will be no land acquisition and resettlement impacts as all works will be within un-encroached existing facilities which is government land. While most of the Gautam Buddha airport improvement in Nepal, and the Rumtek monastery subproject works in India will be within existing facilities, the runway expansion in Gautam Buddha airport, and the parking lot and Shanti view point works in Rumtek require land acquisition.

3. In the Gautam Buddha airport, strip land acquisition (92.89 hectares) will affect 590 plots belonging to 312 households. Affected lands are agricultural with the exception of 17 residential plots with residential structures. The land acquisition will also affect 132 fruit and timber trees, two primary schools (one private school and one Government School) serving 300 and 500 students respectively, 80 wells, 1 shrine, and a portion of a poultry farm. Due to the proposed expansion, 10 kilometers of village access roads will be disrupted and will require reconstruction. Of the 312 affected households in Gautam Buddha airport, 68 affected households are vulnerable: 7 Affected households are headed by women, and 61 affected households are poor Dalit/Janjati whose livelihood is land-based. In Rumtek, land acquisition (0.6 hectares) for multi-level parking will affect 5 brothers and their families. The land is used for agriculture and has one structure (a makeshift pigsty). The Shanti view point has four tenants operating eateries and tea shops. They will be temporarily affected during construction, but will be provided commercial space after the re-construction of the view point. Detailed design will further consider subproject siting and alignment to further minimize land acquisition and resettlement impacts. A full resettlement plan has been prepared for the airport, a short resettlement plan has been prepared for Rumtek, and a resettlement framework has been prepared for future subprojects in Bangladesh (Supplementary Appendix T).

B. Objectives, Policy Framework and Entitlements

4. The resettlement plans are summarized in this document. The resettlement plans outline the involuntary resettlement objectives and strategy for affected persons based on national and state laws and policies of the three countries and the Asian Development Bank's (ADB’s) Policy on Involuntary Resettlement, 1995. The resettlement plans provide a comparison of these documents and addresses gaps.

5. Core involuntary resettlement principles for the Project are: (i) acquisition of land will be minimized and will avoid the resettlement of people, as much as possible; (ii) local stakeholders will be systematically informed and properly consulted to identify the possible alternative subproject engineering and operational solutions to avoid or minimize the adverse impacts of land acquisition; and disclosure to the public regarding the preparation of resettlement plans,

1 Components per country are described in the main text paras 28-29, 38 to 44, and 53-54.

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eligibility of affected persons, compensation, entitlements and special assistance measures to vulnerable groups will be undertaken; (iii) all affected persons will be properly identified and recorded in a census instrument in which cut-off date for their eligibility is the last day of the survey in the subproject area, and will be notified in advance when land for the subproject will be acquired; (iv) lack of formal legal rights to the assets lost will not prevent affected persons from receiving compensation, entitlement and rehabilitation measures; (v) where resettlement cannot be avoided, relocation site(s) whether permanent or temporary, free from environmental risks and with access to drinking water and sanitation, social services and all other services accessible in the previous location, will be provided prior to relocation, in consultation with affected persons and their hosts; (vi) relocated affected persons will be provided with assistance to maintain, or improve their pre-subproject living standards, income earning capacity and production levels; (vii) special assistance measures will be incorporated in resettlement implementation process to protect the socially and economically vulnerable groups that will be affected;2 (viii) effective mechanism for arbitration of complaints and grievances will be provided during resettlement implementation; (ix) institutional arrangements and human resources will be in place for consultation, liaison, land acquisition, resettlement and monitoring to ensure the effective resettlement implementation prior to commencement of the subproject; and (x) payment of compensation prior to displacement must be provided, and other resettlement assistance initiated prior to award of civil works contract. The entitlement matrix for the Project, which is an exhaustive list of entitlement also based on the resettlement framework and the above principles, are given in Table A11.1.

Table A11.1: Entitlement Matrix

Type of Loss

Application Entitled Persona

Compensation Policy Implementation Issues

1a Loss of land

Homestead land, agricultural land, or vacant plot

Owner(s) with legal title

Land-for-land arrangements of equal productive capacity satisfactory to AP AP option for cash compensation equivalent to replacement cost Provision of stamp duty, land registration fee, capital gains tax, and value added tax incurred for replacement land Option to be compensated if remaining land is no longer viable Provision of access to equivalent common property resources previously accessed Additional compensation for vulnerable households (item 5)

If land-for-land is offered, title will be to both husband and wife. Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

1b Loss of land


Tenant(s) and leaseholder(s)

Compensation equivalent to up to 3 months of rental Additional compensation for vulnerable households (item 5)

Landowners will reimburse tenants and leaseholders land rental deposit or unexpired lease. Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

1c Loss of land

Agricultural land

Sharecropper(s) 60 days advance notice to harvest standing seasonal crops, if harvest is not possible, compensation for share of crops (item 4) Additional compensation for vulnerable households (item 5)

Work schedule to allow harvesting prior to acquisition and avoid harvest season Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

2 This can include ethnic minorities, indigenous people, households headed by women, household headed by elderly

people, and people living below the poverty line.

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Type of Loss



1d Loss of land


Affected person(s) without legal titles (squatter(s) and encroacher(s))

60 days advance notice to shift from occupied land Additional compensation for vulnerable households (item 5)

Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

2a Loss of structure

Residential/ commercial structure and other assets (e.g. fences, gates, posts) structure

Owner(s) with legal title

Cash compensation equivalent to replacement value of structure (or part of structure) Option to be compensated for entire structure if remaining structure is no longer viable Rights to salvage materials from structure Provision of all taxes, registration costs, and other fees incurred for replacement structure Transferb and subsistence allowance (up to 3 months) Additional compensation for vulnerable households (item 5)


2b Loss of structure

Residential/ commercial structure and other assets (e.g. fences, gates, posts)structure

Tenant(s) and leaseholder(s)

Cash compensation equivalent to replacement value of structure (or part of structure) constructed by the AP Rights to salvage materials from structure Provision of all taxes, registration costs, and other fees incurred for replacement structure Transfer and subsistence allowance Additional compensation for vulnerable households (item 5)

Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan Structure owners will reimburse tenants and leaseholders rental deposit or unexpired lease,

2c Loss of structure

Residential/ commercial structure and other assets (e.g. fences, gates, posts) structure

Encroacher(s) and squatter(s)

Cash compensation equivalent to replacement value of structure (or part of structure) constructed by the affected person Rights to salvage materials from structure Provision of all taxes, registration costs, and other fees incurred for replacement structure Transfer and subsistence allowance Additional compensation for vulnerable households (item 5)


3 Loss of livelihood

Livelihood/source of income

Business owner (s), tenant (s), leaseholder(s), employee(s), agricultural worker(s), hawker(s)/ vendors(s)

Assistance for lost income based on three months lost income or minimum wage rates. Additional compensation for vulnerable households (item 5)


4

Loss of crops and trees

Standing crops and trees

Owner(s) with legal title, tenant(s), leaseholder(s), sharecropper(s), encroacher(s), squatter(s)

60 days advance notice to harvest standing seasonal crops, if harvest is not possible, cash compensation for crops (or share of crops) equivalent to prevailing market price Cash compensation for perennial crops and fruit bearing trees based on annual net product market value multiplied by remaining productive years Cash compensation equivalent to prevailing market price of timber for non-fruit trees

Work schedule to allow harvesting prior to acquisition and avoid harvest season Market value to be determined

5 Impacts on vulnerable APs

All impacts Vulnerable affected personsc

Land-for-land option will be a guaranteed option for vulnerable affected persons Additional allowance for loss of land or structure Vulnerable households will be prioritized in any employment required for the Project

Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan Land title will be to both husband and wife.

6 Temporary loss of land

Land temporarily acquired for the Project

Owner(s) with legal title, tenant(s), leaseholder(s), sharecropper(s), encroacher(s),

60 days advance notice Provision of land rental value during the duration of temporary acquisition Restoration of affected land

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Type of Loss



squatter(s) 7 Temporary

loss of access

Temporary loss of access to land, structure, utilities, common property resource

Owner(s) with legal title, tenant(s), leaseholder(s), sharecropper(s), encroacher(s), squatter(s)

60 days advance notice Provision of temporary access (e.g. planks across pipe trench) where possible Restoration/enhancement of affected land, structure, utilities, common property resource

8 Temporary loss of livelihood

Temporary loss of livelihood/ source of income

Business owner (s), tenant (s), leaseholder(s), employee(s), agricultural worker(s), hawker(s)/ vendors(s)

60 days advance notice Provision of temporary access (e.g. planks across pipe trench) where possible Provision of alternative sites for continued economic activity Where provision of alternative sites is not feasible, compensation of lost income Compensation for agricultural losses (item 4) Restoration of affected land, structure, utilities, common property resource

9 Any other loss not identified

Unanticipated involuntary impacts shall be documented and mitigated based on the principles provided in ADB’s Involuntary Resettlement Policy

a Identified during cut-off date, b Transfer allowance to be determined by the social safeguards specialist based on location of the transfer site and

the country it will be applied. For estimation purposes it is calculated as Tk4,000 in Bangladesh Rs4,000 in India, and NRs4,000 in Nepal.

c Vulnerable affected persons may include households headed by women, households headed by a disabled, households headed by an indigenous person, and households below the poverty line.

C. Consultation and Grievance Redress Participation

6. The resettlement plans were prepared in consultation with stakeholders. For the Gautam Buddha airport, consultations employing various methods (household sample surveys with 275 respondents, and focus group discussions with affected persons (June 2008) have been carried out. In addition, key informant interviews including affected persons (including vulnerable affected persons), village heads, and government agency representatives have been carried out. In line with the requirements of the Government of Nepal, public hearing to disclose and discuss the subproject and safeguards in communities, involving affected persons and other stakeholders, has been undertaken (March 2008). The issues raised were addressed in the safeguard documents. Subsequent to preparation of draft safeguard documents, consultations were undertaken in July 2008 involving stakeholders to disclose and discuss safeguards documents in local language. For Rumtek, consultations included focus group discussions with the affected persons at Shanti view point, and on-site interviews and household surveys for the 5 affected households (September 2008). Feedback was reflected in subproject design.33.

7. The resettlement plans for Nepal and India, and the resettlement framework for Bangladesh will be made available in relevant local government agencies, and the Project Management and Implementation Unit (PMIU). The resettlement plan will also be made available in the website of the Executing Agencies (EAs). The resettlement plan will also be disclosed in ADB’s website; and information dissemination and consultation will continue throughout Project implementation.

8. Grievances of affected persons will first be brought to the attention of the project social development specialist (SDS). Grievances not redressed will be brought to the grievance 3 Based on the feedback received during consultations, designs have been revised to enable the AHs to retain the

frontage of 30m from the road line, which they wanted to keep for future residential construction.

Appendix 11 69

redress committee (GRC). The GRC will meet every month (if grievances are brought to the Committee), determine the merit of each grievance, and resolve grievances within a month of receiving the complaint—failing which the grievance can be appealed with the GRC. Further grievances will be referred by affected persons to the appropriate courts of law. The project management and implementation unit (PMIU) will keep records of all grievances received including: contact details of complainant, date the complaint was received, nature of grievance, agreed corrective actions and the date these were effected, and final outcome.

D. Compensation, Relocation and Income Restoration

9. Loss of land, structure, assets, trees, and crops will be at replacement cost. Details are in the resettlement plans. Vulnerable households will be provided additional assistance in the form of land-for-land replacement options, prioritization in project employment, and an additional allowance for land and structure losses. Income losses are anticipated to be minimal and temporary. Income restoration activities include the provision of short-term allowances and restoration of access to livelihood activities.

E. Institutional Framework

10. The Ministry of Tourism and Civil Aviation, Department of Tourism, Sikkim; and Department of Archaeology; are the EAs for Nepal, India, and Bangladesh, respectively. For Nepal, a project coordination unit (PCU) for implementing the project at the national level will be established within the EA. Within the PCU, a safeguards coordinator will oversee and manage social issues and social safeguards. The safeguards coordinator will ensure that all subprojects comply with Government and ADB policies. NGOs or consultants will be engaged to implement the resettlement plans. Design, Supervision, and Management Consultants (DMS) will be recruited by the PCU to provide assistance to the PMIUs. In India and Bangladesh, these tasks will be within the PMIU. A Social Development Specialist (SDS) from the DMS will finalize (during detailed design stage) and implement resettlement plans, and monitor resettlement plan implementation.

F. Resettlement Budget, Financing and Implementation Schedule

11. The detailed budget estimates for involuntary resettlement is in the resettlement plan, which the EA will include in the overall project cost estimate. The budget will include (i) detailed costs of land acquisition and resettlement assistance, (ii) source of funding, and (iii) arrangements for approval, and the flow of funds and contingency arrangements. All land acquisition funds will be provided by the EA. All land acquisition and resettlement assistance will be considered as an integral component of project costs. The EA will keep the provisional budget in advance in its annual plan for the cost of land acquisition and resettlement. The resettlement cost in the resettlement plan includes a contingency of 10% of the total cost in order to adjust any deviation in the project implementation. General resettlement implementation is schedule for 12 months with detailed implementation schedules in each resettlement plan.

G. Monitoring and Evaluation

12. Monitoring will be the responsibility of the SDS. Monitoring indicators have been identified in the resettlement plan. Monitoring and evaluation reports documenting progress on resettlement implementation and the completion report will be provided by the EA to ADB for review. The monitoring reports will be submitted quarterly to ADB.

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SUMMARY INITIAL ENVIRONMENTAL EXAMINATIONS

A. Introduction

1. The Project promotes environmentally and culturally sustainable and socially inclusive tourism growth in the South Asian subregion. This will be through: (i) integrated development of high yielding tourism circuits and destinations, (ii) effective management of tourism and environment and culture, and (iii) enhancing the linkages of expanded tourism to the local communities in three countries. Components per country are described in the main text paras 28–29, 38–44, and 53–54. Initial environmental examinations (IEE) for subprojects in Nepal and India; and an Environmental Assessment and Review Procedure (EARP)1 and an IEE for a sample-subproject in Bangladesh2 were prepared (Supplementary Appendix T). The IEEs were based on a review of subproject site plans and reports3; field visits; primary and secondary data to characterize the environment and identify potential impacts; and interviews and discussions with stakeholders. Salient points from the IEEs are summarized below.

B. Description of the Environment

2. Nepal Subprojects. The Gautam Buddha airport and Lumbini subproject sites are in the flat terai region, is geologically stable with no major faults in the vicinity. There are neither any weak rocks nor any history of subsidence of land. The soil of the area comprises loose soils represented by silt, clay and sand. In the Gautam Buddha airport the Ghaghar Khola stream which supports common species in the rainy season flows where the runway will be extended.4 Land use is predominantly agricultural. All flora and fauna are common species and there are no protected areas in and around the site. In Lumbini works will be outside of the sacred garden area which is a UNESCO World Heritage Site, and outside of the Crane and Bird Sanctuary.5

3. India Subprojects. The subprojects are in the eastern, southern and western districts of Sikkim, which is part of inner ranges of Himalayan mountains with no open valley or plains but of varied elevations ranging from 300 to 8,585 m. The eastern and western districts constitute hard massive gneissose rocks, while the southern portion is formed of comparatively soft, thin, slate and half-schistose rocks. The proposed improvement of treks is within the Singalila ecotourism zone, in the west district and is within the Kanchendzonga National Park (KNP). The subprojects are outside core areas identified for conservation within the KNP and Biosphere reserve and are all within the Manipulation (Tourism) Zone.6 Other subproject sites are not in or adjacent to protected areas. 1 For Bangladesh, to ensure compliance with the environmental guidelines and requirements of the Government and

ADB’s Environment Policy (2002), environmental subproject selection guidelines and an EARP to guide the implementation of future subprojects have been developed. The EARP details the (i) government environmental assessment and review procedures, (ii) responsibilities and authorities involved in environmental assessment and review, (iii) compliance with ADB’s environmental guidelines, (iv) staffing requirements and budgets, and (v) subproject environmental selection guidelines.

2 The Project will be phased; the works in Paharpur Mahavihara site comprises Phase 1 and is the sample subproject.

3 Including environmental assessment undertaken by the Government for the Nepal airport subproject. 4 A tributary of the Tinau River. During the rainy season, varieties of fishes found in the khola are the same as those

in the River. Aquatic vegetation is sparse in the river bed due to the high velocity of the river current. 5 The Lumbini Gardens were created after the acquisition of land under the 1978 master plan, and the area has

turned into a rich habitat after tree plantation and creation of wetlands. The Crane and Bird Sanctuary was established by the International Crane foundation, in association with the World Conservation Union (IUCN) for the conservation and restoration of wetland biodiversity.

6 The KBP, has been demarcated into the core zone, manipulation zone (forestry), manipulation zone (tourism) and restoration zones. The subproject works in the manipulation zone (tourism) are in line with the conservation /development plans of the State Forest Department, Government of Sikkim for the management of the National Park, and promotion of the Singalila ecotourism zone.

Appendix 12 71

4. Bangladesh Subprojects. The Paharpur sample subproject site is a UNESCO World Heritage site in the Rahshahi division. Paharpur is located in slightly elevated landform terraces compared with the surrounding flat plains and form a distinct, relatively flood-free physiographic unit. The soil is red clay containing an excess of iron and lime but is deficient in siliceous matter. The surrounding land is predominantly agricultural (paddy). There are several streams and standing water bodies connected to the rivers through artificial channels. The site is drained by a lined drain to the Malancha wetland, which discharges into the Tulsi Ganga River. There is no adjacent natural vegetation or protected area.

C. Environmental Impact Forecasting and Mitigation

1. Environmental Impacts

5. Nepal. The subprojects will have positive environmental impacts particularly in and around the cultural and natural heritage site of Lumbini through improved water and solid waste management. All works are outside the sacred garden area and the Crane and Bird Sanctuary. Potential adverse environmental impacts in the works in Lumbini are largely construction related of limited intensity and of short duration, and can be addressed through proven mitigation measures and adoption of good engineering practices. The Gautam Buddha airport subproject will result in improved environmental conditions with the improvement in drainage conditions within the site, provision of better sanitation and waste management facilities, and landscaping. The diversion of the Ghaghar Khola stream to the periphery of the airport site has been designed based on 1:100 year return flood flow. No adverse impacts on flooding or on aquatic habitat are envisaged. Potential adverse impacts are largely construction related, which shall be of limited intensity to the surrounding communities during the construction period and can be addressed through proven mitigation measures and adoption of good engineering practices during construction. The modeling of air and noise7 due to the increased air traffic operations indicates that the impacts on the surroundings communities are not significant. 6. India. The subprojects will have positive environmental impacts particularly in and around the cultural and natural heritage sites through the provision of basic infrastructure amenities: water supply, basic sanitation facilities, and solid waste management. Works are outside protected areas with the exception of the strengthening of the trek in the Singalila Ecotourism Promotion Zone. However, work in this trek will be limited to existing trek and camp sites and will result in positive environmental impacts including reducing erosion, and preventing trekkers from going to sensitive areas outside the trails. Connectivity improvements are proposed within the vacant existing rights of way. Potential adverse environmental impacts are largely construction related which are of limited intensity and of short duration, and can be addressed through proven mitigation measures and adoption of good engineering practices. 7. Bangladesh. The subproject will have positive environmental impacts particularly in and around the cultural heritage sites through the provision of basic infrastructure amenities: water supply, basic sanitation facilities, site drainage, and solid waste management. Potential adverse environmental impacts are mostly related to planning, location, and design where failure to follow environmental subproject selection guidelines may adversely affect the site and its

7 For the short-term simulations from the airport, cumulative emissions from all sources in the area are simulated as

multiple point area source using SCREEN3. The concentrations were estimated around 400 grid points to obtain an optimum description of variations in concentrations over the site in 10-km radius covering 16 directions. The incremental concentrations are estimated for the worst case scenario using stability class B. For noise impacts , a screening model Area Equivalent Method, version 7.0 developed by Federal Aviation Administration (FAA), Office of Environment and Energy, USA has been used.

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surroundings. There are also construction impacts but these will be of limited intensity and of short duration. These can be addressed through proven mitigation measures and adoption of good engineering practices.

2. Mitigation Measures

8. In all subprojects mitigation measures have been identified for potential adverse impacts. Measures include proper location, planning, and design of components; control of construction activity; and proper system maintenance following commissioning. While each subproject with components in cultural and natural heritage sites are designed to have positive environmental impacts, in view of the fact that the sites are of cultural and natural value, extra precautions have been identified. All environmental assessments include environmental management plans (EMPs), and contractor clauses as part of the IEEs.8 Contractors will prepare a site specific environmental implementation plan (EIP) on the basis of the environmental assessment documents, the EMP, and contractor clauses. The airport expansion in Nepal is the subproject which has the largest potential negative environmental impacts. In this regard, EMPs have been prepared for the subproject. Potential impacts and mitigation are summarized in Table A12.1.

Table A12.1: Potential Impacts and Mitigation Measures for the Nepal Airport Subproject Potential Negative Impacts Mitigation Activities and Method

Planning, Location and Design Flooding and adverse drainage conditions from realignment of the Ghaghar Khola

Realignment based on flow and hydraulic assessments

Disruption of access to surrounding villages Alternative access roads to be provided prior to commencement of works along roads to be impacted, in consultation with communities

Poor performance and high O&M costs from failure of detailed design to incorporate good practice

Subproject design finalized based on an assessment of O&M requirements and institutional capacities

Construction Poor air quality and high noise levels due to construction activities

Adoption of good engineering practices, regular maintenance of construction equipment and vehicles, suppression of dust through sprinklers, scheduling of construction to avoid impacts on communities; hot mix plants and batching plants sited at least 800-1,000 m away from the inhabited areas and sensitive receptors

Impact on water courses due to wastes from construction activities

Planning of construction activities to minimize any waste inflows and restriction of vehicle movement in the vicinity of the Khola

Impacts due to lack of measures to redevelop/restore borrow areas/quarries/water sources for construction

Pre-approved borrow areas, all land temporarily acquired restored prior to handing over, water procurement for construction to minimize impacts on downstream users, especially during lean season

Adverse impacts due to improper stockpiling of materials during construction

Stockpiling at identified locations, and appropriate protection of materials, including covering, creation of temporary drains, etc. around the stockpiling locations to avoid any waste flows

Impacts from improper disposal of construction debris and other solid wastes

Construction debris to be disposed at designated spoil sites, solid wastes generated from camp sites will be managed, garbage collection system will be initiated by establishing bins in the construction area

Potential for benefit from employment for local people not realized

Contractor required to employ local labor as specified in construction contract tender documents

Removal of trees and vegetation in the areas to be acquired

Avoid removing trees wherever possible, compensatory plantation to be carried out.

Accident and injury to construction workers and public in construction zone

Contractor to implement a safety and health plan for workers, workers required to wear personal protective gear suitable to the type of work being performed, workers trained in safe work procedures, contractors maintain a record of accidents

Operation and Maintenance

Air and noise quality impacts due to increased air traffic, on surrounding communities

Adherence to good maintenance practices, creation of a buffer in the periphery, especially in the direction where settlements are located

8 Costs are identified in each IEE. These are costed in local currency and are detailed to include mitigation,

monitoring, and capacity building costs.

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Potential Negative Impacts Mitigation Activities and Method Induced development impacts due to the airport expansion and increased tourist/passenger flow

Land use plan around the airport area defining permissible land use, aviation authorities to work closely with the municipality on the strict implementation of the plan

Impacts from increased waste generation Systems for collection of solid and liquid wastes from the terminal to be operated effectively

Systems will not function properly without proper operation and maintenance

Site staff will be trained on operation of the equipment, systems regularly maintained and equipment serviced

Toilets are not maintained and septic tank sludge is not disposed of properly and affects surface water quality

Provision of proper sludge disposal, personnel to maintain toilets

C. Institutional Requirements and Environmental Management Plans

9. The Ministry of Tourism and Civil Aviation–Nepal; Department of Tourism, Sikkim India; and Department of Archaeology–Bangladesh are the executing agencies (EAs) respectively. In Nepal, the Project Coordination Unit (PCU) for implementing the project at the national level will be established within the EA. Within the PCU, a safeguards coordinator will provide overall direction for management of environmental issues. A Project Management and Implementation Unit (PMIU) will be established for each subproject. In India and Bangladesh, the PCU responsibilities will be undertaken by the PMIU. The PMIU’s responsibilities include ensuring implementation of IEEs. For Bangladesh it also includes preparing and updating IEEs consistent with the EARP.

10. Design, Supervision, and Management Consultants (DMS) will be recruited by the PMIU to provide assistance in project implementation. The DMS consultants will include an environment specialist (DMS-ES). The DMS-ES will support environmental management functions including updating subproject IEEs in respect to environmental management plans, assisting in updating IEEs, and assisting in monitoring impacts and mitigation measures associate with subprojects. For Bangladesh, the DMS-ES will also provide technical support to the PMIU including reviewing and updating the EARP and guidelines for specific types of subprojects, assisting in the preparation of reference for environmental assessment, and assisting in the preparation of IEEs.

11. Environmental review of subprojects will consist of screening by the PMIU and preparation of updated and new IEEs by with DMS-ES support. The DMS will assist in subproject preparation and implementation. Review will be conducted by environmental authorities in conjunction with a review panel set up by the PMIU. The PMIU working with the DMS-ES assist in the steps for updating or preparing the IEE, capacity building and training, preparation of guidelines and procedures, and subproject-specific guidance. Environmental monitoring as specified in the IEEs will be undertaken by the PMIU through the DMS ES. Monitoring reports will be provided to the PCU in Nepal and PMIU in India and Bangladesh, for approval and submission on a biannual basis to ADB.

12. The DMS-ES will be required to include mitigation measures in designs where appropriate, and to specify other measures in construction contracts. Contractors will be required by their contracts to implement all specified mitigation, monitoring, and reporting assigned to contractors as presented in subproject IEEs. Draft terms of reference for the ES and DMS-ES are in the IEEs and EARP.

D. Public Consultation and Disclosure

13. Public consultations (29 sessions) on safeguards were held in each subproject site between April and August 2008. This comprised a subproject briefing which provides an overview of potential environmental impacts and proposed mitigation measures. Participants

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(418) included communities directly affected by the subprojects, representatives of local nongovernmental organizations (NGOs), and representatives of local government agencies. Issues raised during public consultations were mostly related to compensation for lost assets, and ensuring that there was no loss in access to resources due to the subprojects. All issues raised and how these were addressed is documented in the IEEs. A proposal has been described in IEEs for continuing the process of public consultation during construction that includes a mechanism for redress of grievances that arise during construction. All IEEs and other relevant documents will be made available at public locations in the towns and will be disclosed to a wider audience via the ADB website.

E. Environmental Guidelines and Environmental Assessment and Review Procedures (EARP) for Bangladesh

14. To ensure compliance with Government and ADB environmental guidelines and requirements, environmental guidelines and EARP to guide the implementation of future subprojects have been developed. Future subprojects will be screened and categorized by the PMIU. Appropriate environmental assessment documents will be prepared depending on the categorization and will be reviewed and cleared by ADB for disclosure.

15. The full EARP, based on provisions of the Government’s environmental policies and legislative provisions and the Environmental Assessment Guidelines of ADB. The EARP also details the (i) Government’s environmental assessment and review procedures, (ii) responsibilities and authorities involved in environmental assessment and review, (iii) compliance of the Project with ADB’s environmental guidelines, and (iv) staffing requirements and budgets.

F. Conclusion

16. The IEEs show that while cultural and natural heritage subprojects may be sited in environmentally sensitive areas, the works are designed to result in improvements in environmental conditions on-site. The environmental impacts due to the GBA are largely construction related—civil construction works associated with the proposed improvements. There are no impacts on sensitive receptors. The modeling of air and noise impacts due to the air traffic do not indicate significant impacts on surrounding communities, and do not require any further assessments or special mitigation measures. Any adverse environmental impact can be addressed through proper location, planning, and design of the subproject; control of construction activity; proper system maintenance following construction; and mitigation measures. The proposed subprojects have been consulted with the stakeholders and no significant environmental issues were raised. EMPs have been prepared and the contract clauses specified in the EMP will address construction related impacts and effectively minimize any adverse impacts. Implementation arrangements provide for inputs of environmental specialists during project implementation to effectively implement the EMP. No further assessments of environmental impacts are required for the cultural and natural heritage subprojects in India and Nepal; and the sample subproject in Bangladesh.

Appendix E

DETAILED COST ESTIMATES

Table E1: Project Cost Summary, by Components (in US$ Million) 1

(US$ Million)Component Foreign Total Foreign Total

Total Taxes Total Taxes


Subtotal Cultural Heritage Site Improvements 457.52 60.98 200.54 658.06 6.88 0.90 3.02 9.90B. Support to Community Participation, Capacity Bldng & Proj Mgmt

1. Community Participation 24.06 0.00 2.67 26.73 0.36 - 0.04 0.402. Capacity Building & Project Mgmt 7.75 0.00 115.42 123.17 0.12 0.00 1.74 1.85

Subtotal Support to Community Participation, Capacity Bldng & Proj Mgmt 31.81 0.00 118.09 149.90 0.48 0.00 1.78 2.25Total BASELINE COSTS 489.33 60.98 318.63 807.97 7.36 0.90 4.79 12.15




Local(Taka Million)

Local

1 Includes physical contingencies at 12% for civil works and equipment and 10% for consulting services. Price

contingencies for civil works items and equipment were computed at 7.5% per year for domestic inflation and 0.8% for foreign inflation. Interest during implementation was calculated based on the ADF loan term of 1% per year during the period implementation and 1.5% thereafter.

Table E2: Components, by Financiers (US$ Million)

ADB Total

Component Excl. Taxes Taxes Only Total % Amount % Amount %


Subtotal Cultural Heritage Site Improvements 1.79 1.16 2.95 24.0 9.34 76.0 12.29 81.9B. Support to Community Participation, Capacity Bldng & Proj Mgmt

1. Community Participation 0.03 - 0.03 7.0 0.37 93.0 0.40 2.72. Capacity Building & Project Mgmt 0.03 0.00 0.03 1.5 2.01 98.5 2.04 13.6

Subtotal Support to Community Participation, Capacity Bldng & Proj Mgmt 0.06 0.00 0.06 2.5 2.38 97.5 2.44 16.3Total PROJECT COSTS 1.84 1.16 3.00 20.4 11.73 79.6 14.73 98.2



Appendix E

Table E3: Expenditures Accounts, by Financiers (US$ Million)

ADB TotalExpenditure Account

Excl. Taxes Taxes Only Total % Amount % Amount %





Table E4: Expenditure Accounts, by Components (US$ Million) Support to CommunityParticipation, Capacity

Building and Project ManagementCultural Heritage Site Capacity

Improvements Building andAccess Site Community Project

Expenditure Account Infrastructure Infrastructure Participation Management Total

I. Investment CostsA. Land - 1.37 - - 1.37B. Civil Works 1.58 9.02 - - 10.60C. Training, Workshops and Conferences - - 0.40 0.04 0.44D. Consulting Services - - - 1.87 1.87E. Equipment - 0.20 - - 0.20F. Tourism Promotion - - - 0.11 0.11G. Incremental Administration 0.01 0.11 0.00 0.01 0.14

Total PROJECT COSTS 1.59 10.70 0.40 2.03 14.73 Interest During Implementation 0.27Total Costs to be Financed 1.59 10.70 0.40 2.03 15.00

Appendix E

Table E5: Detailed Cost Estimates: Paharpur Pilot Subproject Package 1 - Reestablishing the Northern Entry (US$’000)

Unit Cost Total Total Cost with

Expenditure Item Unit Quantity ($) Base Cost Contingencies

I. Investment Costs A. Civil Works

1. Access Road km/lane 0.75 300,000 225.00 312.172. Footpath Along Access Road sqm 1,650 11 18.15 25.183. Fencing

Along Northern and Western Boundaries LS 100.80 124.87Repair of Existing Boundary Wall LS 33.60 41.62

Subtotal Fencing 134.40 166.494. Parking sqm 1,500 15 22.50 31.225. Entrance Pavement sqm 2,514 23 57.82 80.226. Tourist Reception and Interpretation Center sqm 50 375 18.75 26.017. Soft Landscape LS 109.24 135.338. Lighting pc 50 750 37.50 52.039. Walkway Inside Internal Court sqm 1,240 11 13.64 18.9210. Signage LS 11.20 13.87

Subtotal Civil Works 648.21 861.46B. Incremental Administration US$ 6.48 8.20

Total 654.69 869.67

Table E6: Detailed Cost Estimates: Paharpur Pilot Subproject Package 2 - Restructuring the Eastern Entry and Visitor Area (US$’000)



I. Investment Costs A. Total Civil Works

1. Parking sqm 15 234 3.51 4.872. Walkway sqm 23 3,600 82.80 114.883. Entrance Pavement sqm 23 5,599 128.78 178.674. Commercial Complex sqm 375 50 18.75 26.015. Soft Landscape

Trees pc 25 100 2.50 3.47Shrubs pc 3 80 0.24 0.33Ground Cover pc 2 1,000 2.00 2.77Doob Grass sqm 4 33,293 133.17 184.77

Subtotal Soft Landscape 137.91 191.346. Benches pc 375 20 7.50 10.417. Lighting pc 750 40 30.00 41.628. Signage LS 5.60 6.94

Subtotal Total Civil Works 414.85 574.74B. Incremental Administration US$ 4.15 5.25

Total 419.00 580.00

Appendix E

Table E7: Detailed Cost Estimates: Paharpur Pilot Subproject Package 3 - Site Level Drainage (US$’000)



I. Investment Costs A. Civil Works

1. Drainage of the Courtyard LS 24.19 29.972. Drainage from the Courtyard

Construction of New Pipeline in South Wall LS 2.24 2.77Dismantling of Existing Concrete Drainage Channel and Pump House LS 3.36 4.16Excavation of New Drain from Existing Tank to South Wall and From South Wall to SE Drain LS 1.12 1.39Installation of Flap Gate At South End of New Culvert LS 1.12 1.39Completion of Excavation in SW Quadrant of Courtyard LS 112.00 138.74Construction of New Pump House and Transfer of Existing Installation and Necessary Flap Gates LS 8.96 11.10

Subtotal Drainage from the Courtyard 128.80 159.563. Excavation and Grading on DoA Land Outside the North and West Sides of Courtyard LS 50.40 62.434. Creation of Water Retention Structures

Earthworks Excavation cu.m. 4 16 0.06 0.09Rough Dressing of Trenched Ground sqm 0.2 8,922 1.78 2.48Shuttering for Concrete Struts sqm 8 122 0.98 1.35Laying Concrete Struts cu.m. 124 24 2.98 4.13Rubble Masonry on the Walls of Water Structures cu.m. 94 228 21.43 29.74Brick Paving Along the Edges of Water Structures sqm 23 3,500 80.50 111.69

Subtotal Creation of Water Retention Structures 107.73 149.475. Peripheral Walkway sqm 23 1,168 26.86 37.276. Shrubs pc 3 649 1.95 2.707. Storm Water Drains m 75 1,211 90.83 126.01

Subtotal Civil Works 430.76 567.42B. Incremental Administration US$ 4.31 5.45

Total 435.07 572.87

Table E8: Detailed Cost Estimates: Paharpur Pilot Subproject Package 4 - Conservation and Information Center Equipment (US$’000)



I. Investment Costs A. Civil Works & Equipment

1. Conservation of 1st Level Terraces on SE, NE, and NW Quadrants LS 28.00 34.692. Terracota Plaques and Statuary LS 67.20 83.253. Equipment for Audio Visuals LS 52.90 63.63

Subtotal Civil Works & Equipment 148.10 181.56B. Incremental Administration US$ 1.48 1.85

Total 149.58 183.41

Appendix E

Table E9: Detailed Cost Estimates: Other Heritage Site Improvements (US$’000) Unit Cost Total Total Cost with


I. Investment Costs A. Land & Civil Works

1. Land Acquisition LS 1,368.07 1,368.072. Access and Parking LS 560.00 722.213. Other Site Improvement Works LS 5,980.80 7,754.244. Facilities

Chemical Lab and Equipment LS 115.00 138.33Subtotal Land & Civil Works 8,023.87 9,982.85B. Incremental Administration L.S. 81.49 106.06

Total 8,105.36 10,088.91

Table E10: Detailed Cost Estimates: Capacity Development and Project Management (US$’000)

Expenditure Item Unit Quantities

Unit Cost($)

Total Base Cost

I. Investment Costs A. Project Management & Supervision a. Remuneration

1. Project Management Specialist (National) pm 40 6,000.00 240.00 2. Conservation Specialist (International) pm 12 12,000.00 144.00 3. Archaeologist (International) pm 8 12,000.00 96.00 4. Cultural Heritage Specialist (International)/a pm 5 15,000.00 75.00 5. Conservation Archaeologist (National) pm 20 4,000.00 80.00 6. Civil and Structural Engineer (National) pm 15 4,000.00 60.00 7. Cultural Heritage Management Specialist (National) pm 10 4,000.00 40.00 8. Institutional Specialist (National) pm 10 4,000.00 40.00 9. Procurement Specialist (National) pm 20 4,000.00 80.00 10. Safeguards Specialist - Environment (National) pm 10 4,000.00 40.00 11. Safeguards Specialist - Social (National) pm 10 4,000.00 40.00 12. Project Monitoring Specialist (National) pm 15 4,000.00 60.00 13. Financial Management Specialist (National) pm 15 4,000.00 60.00 14. Heritage Landscape Architect (National) pm 10 4,000.00 40.00 15. Community Tourism Specialist (National) pm 4 4,000.00 16.00 16. Marketing and Promotion Specialist (National) pm 4 4,000.00 16.00

Subtotal Remuneration 1,127.00 B. Out of Pocket Expenses

1. Travel and Per Diem L.S. 360.002. Surveys and Investigation L.S 79.10

Subtotal Out of Pocket Expenses 439.10 C. Learning Events (Workshops)

Archaeology unit 2 5,400.00 10.80 Conservation unit 2 5,400.00 10.80 Museum Management unit 1 5,400.00 5.40 Heritage Tourism and Site Management unit 1 5,400.00 5.40 Tourism unit 2 5,400.00 10.80

Subtotal Learning Events (Workshops) 43.20 D. Tourism Promotion L.S. 110.00 E. Incremental Administration L.S. 12.87 F. Contingency L.S. 120.00Total 1,852.17

Appendix F

DETAILS ON ADB DISBURSEMENT PROCEDURES USING DIRECT PAYMENT, COMMITMENT PROCEDURE, AND IMPREST ACCOUNT METHOD

I For larger contracts, direct payment and commitment letter procedures will be used. A. Direct Payment Procedure—where ADB, at the Borrower’s request, pays a designated beneficiary directly (refer to Chapter 7 of the Handbook for details). A signed withdrawal application (W/A) is submitted to ADB together with a summary sheet and the required supporting documents. A separate W/A is required for each different currency. The following supporting documents must be submitted to ADB together with the W/A:

(i) A contract or confirmed purchase order (PO), if not submitted earlier to ADB, indicating the amount and date due;

(ii) In addition to above requirement: a. Payment of goods, the supplier’s invoice, bill of lading, or other similar

documents’ b. Payment of services, the consultant’s claim or invoice; and c. Payment of civil works, the claim or invoice from the contractor and a

summary of work progress certified by the project engineer and approved by the borrower’s authorized representative.

B. Commitment Procedure—where ADB, at the borrower’s request, provides an irrevocable undertaking to reimburse a commercial bank for payments made or to be made to a supplier against an LC financed from the loan account (refer to Chapter 8 of the Handbook for more details). A signed application for issuance of commitment letter is submitted to ADB together with a summary sheet for the commitment letter and the required supporting documents. A separate application is required for each currency in which a commitment letter is requested. The required supporting documents include:

(i) a contract or confirmed PO, if not yet submitted earlier to ADB; and (ii) two signed copies of the LC against which ADB’s commitment letter is requested.

C. Reimbursement Procedure—where ADB pays from the loan account to the borrower’s account or, in some cases, to the project account for eligible expenditures which have been incurred and paid for by the project out of its budget allocation or its own resources. Under this procedure, ADB’s payments are made only to the borrower or EA and not to a third party (e.g., supplier, contractor, etc.). This procedure normally requires submission of full supporting documentation (refer to Chapter 9 of the Handbook for more details). The required supporting documents include:

(i) the contract or confirmed PO, if not yet submitted to ADB; (ii) a copy of the invoice/bill/claim and delivery receipt; (iii) the evidence or receipt of payment showing the amount paid, the date of receipt,

and the payee. II For other activities, the imprest fund procedure will be used.

D. Imprest Fund Procedure—where ADB makes an advance disbursement from the loan account for deposit to an imprest account to be used exclusively for ADB’s share of eligible

Appendix F

expenditures (refer to Chapter 10 of the Handbook for more details). Steps and procedures on the establishment and operation of the Imprest Account:

1. Establishing the Account – the borrower/EA is required to open, for the exclusive use of the project, a separate bank account for depositing advances. The imprest account shall be maintained in current account only and opened in the borrower’s name:

2. Location of the Imprest Account – the Accounts will be opened at the Central

Bank of the borrower’s country or in a commercial bank the borrower designates, provided that the institution chosen is capable of.

Executing foreign exchange and local currency transactions; Opening letters of credit and handling a large volume of

transactions; and Issuing detailed monthly bank statements promptly.

(i) First Generation Imprest Account (FGIA) – will be opened in at the

Bangladesh Bank to be operated by the Borrower (ii) Second Generation Imprest Account (SGIA) - referred to as the project

operating account will be opened at a commercial bank selected in accordance with Borrower's procedures and acceptable to ADB and to be operated by DOA.

(iii) , the Borrower shall establish immediately after the Effective Date, a first generation imprest account at Bangladesh Bank. Except as ADB may otherwise agree, a second generation imprest account shall be established by DOA at a commercial bank, acceptable to ADB. The first generation imprest account and the second generation imprest account (collectively called the imprest accounts) shall be established, managed, replenished and liquidated in accordance with ADB's Loan Disbursement Handbook, and detailed arrangements agreed upon between the Borrower and ADB. The currency of the imprest account shall be Dollar. The initial aggregate amount to be deposited into the imprest accounts shall not exceed the lower of (i) the estimated expenditure to be financed from the imprest accounts for the first six months of Project implementation, or (ii) the equivalent of ten (10) percent of the Loan amount.

3. Currency of the Account – the currency of the imprest account must be

maintained in dollar (US Dollar). 4. Using the Account – The imprest account is used to pay contractors, suppliers,

and others for ADB’s share of eligible project expenditures incurred in local and foreign currency. For slow-moving imprest account and/or advanced amount not being utilized within reasonable time, the imprest fund ceiling shall be reduced to the appropriate level in line with project activities and surplus fund shall be returned to ADB immediately. Any use of the imprest funds for activities other than the eligible project activities will invoke corrective action deemed appropriate by ADB.

5. Ceiling of Advances – (i) total advances are not to exceed estimated ADB’s

share of eligible project expenditures to be financed through the imprest account for the next 6 months or 10 percent of the loan amount whichever is lower; and

Appendix F

(ii) the borrower must obtain prior ADB approval for any upward changes in the approved ceiling.

6. Initial advance – the borrower may request an initial advance from ADB based

on approved contracts and planned expenditures for the first 6 months of the project, including LCs in small amounts, which are to be paid through the imprest account. The initial advance, in any event, is not to exceed the approved ceiling. All advances are deposited in the imprest account.

Liquidation/Replenishment – under the project, the statement of

expenditures (SOE) procedure will be used for reimbursement of eligible expenditures for the Project and to liquidate advances provided into the imprest accounts, for any individual payment not exceeding the equivalent of $100,000. Any single payment exceeding $100,000 a full documentation is required, such as receipts, invoices, or other forms of evidence of payments. The corresponding bank statement and reconciliation statement should be submitted with the withdrawal application. Withdrawal application must be prepared in the currency of the account.

7. Recovery of Advances or Final Liquidation of the Account

Advances are to be gradually reduced within 1 year before the loan closing date or when the undisbursed balance of the loan, excluding outstanding commitments, is equal to twice the amount of advance, whichever comes first.

This is to ensure that sufficient time is provided for the borrower to obtain supporting documentation for clearing the outstanding advances before the loan account is closed.

The borrower must promptly refund to ADB, in the currency of the Account, any balance of the advance not liquidated at the time of loan closing.

8. Audit Arrangements – the Account and Second Generation Imprest Accounts (if

any) must be audited regularly by independent and qualified auditors acceptable to ADB. The audits are carried out as part of the regular annual audits of the project accounts. Separate audit opinions are included in the annual audit reports.

9. Review by ADB staff – ADB reserves the right to conduct spot or random

checks of expenditures covered by the imprest fund through special disbursement missions or review missions, or upon ADB’s request for submission of supporting documents on sampling basis.

Appendix G

DISBURSEMENT LETTER

1. This is a sample of a disbursement letter. The letter will be given by CTLA. Name of the Borrower Address Dear Sir/Madam:

Loan No.____: (Project name) 1. We draw your attention to the Loan Agreement and other related documents dated

_____________ of the above loan. The loan account will be credited with US$/SDR _____________ when the Loan Agreement becomes effective.

Withdrawal of Loan Proceeds 2. Expenditures are normally eligible for financing from the date the Loan Agreement

becomes effective. We enclose our Loan Disbursement Handbook and hope it will assist you when making withdrawals from the loan account. For disbursements using the SOE procedure and/or the imprest fund procedure which normally require ADB approval, please refer to Chapters 9 and 10 of the Handbook.1 Sample withdrawal application forms are in the Appendixes of the Handbook.1 Incomplete withdrawal applications which do not substantially meet the criteria requirements for disbursement, will be returned to you.

3. We wish to draw your particular attention to the following disbursement arrangements. (i) Imprest Fund Procedure Under paragraph _____ of Schedule 3 of the Loan Agreement, when ADB’s imprest fund

procedure is used, a portion of the loan proceeds is deposited by ADB into an imprest account from which you may draw ADB’s share of eligible Project expenditures. Detailed procedures for establishing and operating the imprest fund are set out in Annex ____ of this letter.

(ii) Statement of Expenditures (SOE) Procedure Under paragraph ______ of Schedule 3 of the Loan Agreement, you may apply the SOE

procedure to reimburse, liquidate, or replenish the imprest account for expenditures or contracts amounting to _____________. Details of the SOE procedure and formats to be used are in the Handbook. Under SOE procedure you should retain all supporting documents and produce them for examination by ADB’s representative whenever needed. Furthermore, SOE records are periodically audited, as part of the project audit, by an independent auditor or auditors acceptable to ADB and the audit report is to be given to ADB by the date indicated in the Loan Agreement after the end of each fiscal year.

1 Please ensure that each withdrawal application is numbered sequentially with a five-character numeric

identification, such as 00001. Assign an alpha identification for each executing agency (EA) (province) if there is more than one EA and submission of withdrawal applications is done separately by the EA (province).

Appendix G

(iii) Retroactive Financing Under paragraph _____ of Schedule 3 of the Loan Agreement, ADB agrees to

retroactive financing of expenditures incurred from __________ to the effective date up to US$/SDR ____________ for (specify eligible expenditures covered). Such expenditures are accumulated and withdrawn from the loan account immediately after the loan is effective using the reimbursement procedure described in the Handbook.

Authorized Signatory(ies) 4. The Handbook describes what you must do before disbursement commences. The

person(s) nominated by you to sign the withdrawal application on your behalf should be authorized under the Loan Agreement provisions. An authorization letter, together with the relevant specimen signature(s), is to be sent to ADB before submission of the first withdrawal application. If there is a change in the authorized person(s) later, send us a new authorization letter, accompanied by the specimen signature(s) to ensure uninterrupted processing of loan disbursements.

Minimum Amount per Withdrawal Application 5. To promote efficiency in processing loan disbursements, a minimum value per

withdrawal application is set at US$100,000 equivalent (or the amount determined to be reasonably minimum). As far as possible, the executing / implementing agency (ies) is requested to consolidate claims and submit a withdrawal application after its amount has exceeded this limit.

Loan Service Payment 6. Arrangements are to be made for paying the principal, as well as the interest, front-end

fees, and other charges on the due dates specified in the Loan Agreement. Required Action 7. We suggest that the procedures contained in the enclosed publications be studied

thoroughly by the officials responsible for administering the loan. Please inform us if we need to clarify any of the attachments. To avoid delays in disbursement after the loan becomes effective, you should immediately

(a) submit the withdrawal authorization letter together with the specimen signature(s); (b) submit the withdrawal application for reimbursement of expenditures eligible for

retroactive financing; and (c) submit the withdrawal application for the initial deposit to the imprest account. Advice of Withdrawals 8. Advice of withdrawals and other loan disbursement information are available at the

Controller’s web address http://lfis.adb.org. For password access to this website, please contact the Borrowers’ Services Section, Loan Administration Division, Controller’s Department at [email protected].

9. Please also provide us the updated address, telephone number, and e-mail address of

the executing/implementing agency(ies) concerned. 9. Please circulate this letter to the project staff, including project accountants.

10. We look forward to your continued cooperation and a mutually beneficial relationship.

Appendix G

Sincerely yours, Assistant Controller Loan Administration Division Controller’s Department cc: Name of executing / implementing agency (ies) Address (es) bcc: Country Director (ADB Resident / Regional Mission concerned) Project Specialist / Project Officer Attachments: 1. Loan Agreement 2. Loan Disbursement Handbook 3. Procedures for Establishing and Operating the Imprest Account

Appendix H

PROCUREMENT PLAN

Table 1: Project Information Project Information Country Bangladesh Name of borrower Department of Archaeology, Ministry of Cultural Affairs Project Name South Asia Tourism Infrastructure Development Project Loan or TA Reference 2580-BAN Date of Effectiveness 21 January 2010 Amount ($) $15,000,000. Executing Agency Department of Archaeology, Ministry of Cultural Affairs Approval Date of Original Procurement Plan – - Approval of most recent Procurement Plan – - Publication for Local Advertisements – - Period Covered by this Plan 2009-2012 TA = technical assistance, TBD = to be determined. Source: Asian Development Bank.

Table 2: Procurement Thresholds, Goods and Related Services, and Supply and Installation of Works


Table 3: Indicative Procurement Packages

S.No


Number of Packages


Procurement Method

Expected Date of

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Comments

1 Paharpur Mahavira Subproject

Development of tourist amenities and basic services, including access road, parking, signages, landscaping etc

1

1.508 NCB March 2010 Y

Conservation and environmental improvement within courtyard around the central vihara, e.g., drainage, footpaths, conservation of terracotta plaques etc

4 0.149 NCB March 2010

Y

2 Mahastangarh subproject

Development of tourist amenities and basic services in and around the site, including parking, signages , landscaping etc

1

NCB March 2011 Y

Appendix H

S.No


Number of Packages


Procurement Method

Expected Date of

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Comments

Conservation and environmental improvement within the complex

1 NCB March 2011 Y

3 Kantajee Temple

Development of tourist amenities and basic services in and around the site, including access road, parking, signages, landscaping

1 NCB March 2012 Y

4 Bagerhat Mosque complex

Development of tourist amenities and basic services in the periphery of the monument, including development of access road, parking, signages , landscaping etc

1 NCB March 2012 Y


S.No Contract Description

Total Cost a


Method

Expected Date of

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Comments

1 Program Management and Design Consultants

1.85 QCBS November 2009 Y

2 Community Participation in Cultural Heritage Management and Tourism

I Community Awareness Raising Program 0.150 CQS December 2009 Y

II Training and Skills Development 0.150 CQS December 2009 Y

III Pilot Demonstration Scheme for Tourism-Based Livelihood Generation

0.100 CQS December 2009 Y

a For multiple contract packages, cost estimates refer to total cost and not to cost per package. Note: The National Competitive Bidding Procedures (NCB Annex Bangladesh) is under review pending a recent revision of Bangladesh local procurement law. .

Appendix I

PROCUREMENT PROCESS FLOWCHART FOR NATIONAL COMPETITIVE BIDDING The flow chart shows the main steps for procurement under NCB.

Executing Agency ADB Suppliers/

Contractors

Procurement packages Loan/advance contracting documented in Procurement Plan approved

(For contracts over $0.5M in goods and related services or $1.0M in civil works)

Prepare draft PQ documents 2 Advertise and bid documents in adb.org

ADB review, first contract only

Advertise locally and issue PQ documents2;

Inform ADB of advertisement (4 weeks notice to suppliers is Purchase PQ documents

acceptable) from EA; submit PQ application

Evaluate PQ applications and select and/or recommend

prequalified firms 2 EA notifies ADB of PQ results. 3 EA notification to prequalified

Issue bidding documents to and disqualified firms prequalified suppliers

(4-week bidding period is acceptable) Purchase bidding documents and submit bids

Public bid opening; prepare record of public bid opening

Evaluate bids; prepare bid evaluation

report; proceed to and or recommend contract award.3

Prepare Contract Agreement and Return signed contract to EA;

send to supplier. Provide performance security

Send at least one English version of ADB post review, salient features of signed contract if approved, prepare PCSS. 3

to ADB Execute contract

Supervise and monitor contract

Appendix J

CONTRACT SUMMARY SHEET

I. PROJECT DATA

A. Loan No. : B. Executing Agency :

II. OUTLINE OF CONTRACT A. EA Contract No. : B. Contractor/Supplier Name : and Address : C. Description of Contract : D. Category Code :

III. SUMMARY OF CONTRACT AGREEMENT Currency 1 Currency 2

A. Contract Amount/s : Base Duties & taxes Contingency Total B. Contract Period : C. Date of Contract Signing : D. Commencement Date : E. Completion Date : F. Terms of Payment :

(including advance, if any) IV. RESULT OF BIDDING

A. Mode of Procurement : B. Date of Bid Invitation : C. Date of Bid Opening : D. Ranking/List of Bidders :

Serial No.

Name of Bidders Amount of Bid As

Opened Amount of Bid As

Evaluated Rank

Note: Please provide a brief explanation if the contract was not awarded to the lowest bidder. V. COUNTRY/COUNTRIES OF ORIGIN (for Goods only): Seen and Approved: Name

Project Director

For ADB use only

PCSS No.

Appendix K

CONSULTANTS RECRUITMENT

I. Quality-and Cost-Based Selection (QCBS)

A. Preparatory Work

EA prepares the invitation for Expression of Interests (EOIs), Terms of Reference (TOR) and submits them to ADB for approval.

After receipt of ADB approval and before shortlising, EA has to directly advertise the EOIs in the ADB Consulting Services Notices (CSRN) System for at least 30 days. To enable the EA to get access to the ADB CSRN; the EA has to submit the following information to ADB:

Name of the Contact Person Complete address Email address of the Executing Agency

The EA may, in addition, advertise in local newspapers and international trade

publications. A sample of the standard EOI form is available on ADB’s website,

http://www.adb.org/Consulting/toolkit-template.asp. B. Submission 1 – Short-list and Request for Proposal (RFP).

1. The EA has to submit the following documents prepared by the EA’s Consultant Selection Committee (CSC) to ADB for review/approval:

The signed CSC meeting minutes and evaluation report; The long list of consultants, which normally includes 15-20 technically-qualified

consulting firms with experience in similar projects. The short-listing criteria used and the proposed narrative evaluation criteria; The proposed short list of six consultants. The short list should contain firms from

a broad range of ADB member countries. When possible, the short list should include one firm from any one country, but no more than two firms are allowed for any one country. In addition, there should be at least one firm from a developing member country (DMC.

The draft Request for Proposal (RFP) with detailed TOR, Data Sheet, Summary and Personnel Evaluation sheets and draft contract.

CRAM Sheet. 2. Upon receipt of ADB’s approval, the EA issues the RFP to short-listed firms

and informs ADB of RFP issuance. ADB will post the short-list on ADB website.

C. Submission 2 – Evaluation of Technical Proposals.

1. The EA submits the CSC evaluation report that includes: a summary evaluation sheet highlighting any proposal that scored less than 750 points out of 1,000; a personnel evaluation sheet for each proposal; comments on the strengths and weaknesses of each proposal; and signed minutes of the CSC evaluation meeting(s) to ADB for review/approval:

Appendix K

2. Upon receipt of ADB’s approval, the EA then evaluates the financial proposal of technically qualified firms.

D. Submission 3 – Evaluation of Financial Proposals

1. The EA submits the financial evaluation report (minutes of CSC meeting/s) and overall ranking to ADB for review/approval.

2. Upon receipt of ADB’s approval, the EA then invites the first-ranked consultant for contract negotiations.

E. Negotiating the Contract

1. The EA normally conducts the negotiations face-to-face with the first-ranked consultant. If the EA and the consultant cannot reach agreement, the EA asks ADB’s agreement to terminate the negotiations and start negotiations with the next-ranked consultant until it reaches an agreement.

2. The EA may invite an ADB observer, if required, to contract negotiations. 3. The EA sends the draft negotiated contract to ADB for review and approval.

F. Finalizing the Contract

1. After receipt of ADB’s approval on the draft negotiated contract, the EA signs the contract, obtains the consultant’s signature, and submits a copy to ADB for its records and to the consultant.

2. The EA also submits some information for ADB to publish on its website. This consists of: a. Names of the short-listed consultants who submitted proposals b. Scores of their technical proposals c. Prices in the financial proposals d. Overall ranking e. Name of the consultant selected f. Cost, duration, and summary scope of the contract

3. EA sends notice to proceed to winning firm and send a copy to ADB for its records.

4. EA advises unsuccessful firms. 5. After completing the selection, it is the EA’s responsibility to brief the short-

listed consultants on the reasons for their ranking, when asked. G. Terminating a Contract – when terminating a contract with a consultant, the EA

sends a recommendation to ADB. When ADB approves termination, the EA sends a written notice to the consultant, in accordance with the provisions in the contract.

H. Monitoring the Recruitment Process - Both the EA and ADB use CRAM frames to

monitor the activities in recruiting the consultant and to avoid delays. CRAM identifies the main activities in the recruitment process, the time normally required for each activity, and target dates for completing each activity. Both the EA and ADB should closely update each activity to identify delays and to take prompt action to get the recruitment process back on schedule.

I. Flow Chart on Recruitment of Consultants following the QCBS Method

Appendix K

EXECUTING AGENCY ADB

Prepares a procurement plan

Advertises project in newspapers, etc. User division lists project in ADBBO

Discusses TOR Appraisal mission discusses TOR with the EA

Receives EOIs and prepares long list of consultants User division provides list of firms from DACON

SUBMISSION 1

Issues RFP to short-listed firms User division informs EA of ADB approval.

Informs user division of RFP issuance User division informs COSO to post short-list on ADB website.

SUBMISSION 2

User division informs EA of ADB approval.

SUBMISSION 3

User division informs EA of ADB approval

Negotiates contract

SUBMISSION 4

Finalizes and signs contract with the winning firm

Sends notice to proceed to winning firm

Advises unsuccessful firms

User division reviews EA submission, prepares checklist, submits to COSO, and requests for an informal meeting

COSO checks user division's submission for completeness and schedules the informal meeting

Provides information for posting on ADB website and sends copies of signed contract to user division and the winning firm


COSO and user division officers meet and jointly complete the checklist and then sign it

COSO Director approves completed checklist, and sends a copy to user division

Invites first-ranked firm and ADB observer, if required, to contract negotiations

Forwards draft negotiated contract and minutes to user division for approval

User division approves draft negotiated contract and informs EA of ADB approval

User division retains copy of contract and informs COSO to post contract information on ADB website

If QCBS, evaluates financial proposal of technically qualified firms; if FBS, evaluates financial proposal of firm with highest

technical score and bid within maximum budget; if LCS, evaluates financial proposal of technically qualified firm with

lowest f

User division reviews documents and submits to COSO



For QCBS, FBS and LCS: Submits financial evaluation report (minutes of CSC meeting[s], and overall ranking) to

user division For QBS: go to next step

RECRUIT ING CONSULTING FIRMS FOR LOANS

Evaluates technical proposals; submits technical evaluation report (minutes of EV meeting[s], summary & personnel

evaluation sheets) to user division

Conducts CSC; submits documents (signed CSC meeting minutes; long list; short-listing criteria; narrative evaluation

criteria; short-list; draft RFP with TOR, Data Sheet, Summary and Personnel Evaluation sheets and draft

contract; and draft CRAM sheet) t



(QCBS, QBS, FBS and LCS)

Fact-finding mission assesses EA procurement capacity and hels prepare a procument plan


User division reviews EA submission, prepares checklist, submits to COSO, and requests for an informal meeting

User division reviews EA submission; prepares checklist; submits its evaluation to COSO; and requests for an informal

meeting

TOR developed

Appendix K

II. Recruitment of Individual Consultants

A. Selecting and Approving the Short List

1. Several weeks before an individual consulting assignment is scheduled to start, the EA prepares a short list of at least three qualified candidates. The EA normally includes no more than one more candidate from any ADB member country. At the EA's request, the user division will provide the names and qualifications of suitable candidates from the DICON. The EA may also advertise for suitable candidates.

2. The EA ranks the candidates, and then normally submits their names and qualifications and the draft contract it will use for the engagement to ADB for approval.

B. Negotiation and Approving the Contract

1. After ADB approves the ranked short list and draft contract, the EA negotiates with the first-ranked candidate. If the negotiations fail, the EA obtains ADB’s approval to negotiate in turn with the next-ranked candidate until agreement is reached. The EA then normally sends a copy of the draft negotiated contract to ADB for approval.

C. Finalizing the Contract

1. After ADB approves the draft negotiated contract, the EA concludes the negotiations, signs the contract, and submits a copy to ADB for its records. After receiving the signed contract, the user division checks that it is substantially the same as the draft already approved and gives copies to COSO, CTL, and OGC. The division must send copies of all communications regarding consultants to COSO.

D. Terminating the Contract

1. When an EA proposes to terminate a contract with an individual consultant, it

sends a recommendation to ADB. The user division consults COSO and OGC, decides whether termination is warranted, and advises the EA of the decision. When the division approves termination, the EA sends a written notice to the consultant, in accordance with the provisions in the contract.

E. Flow Chart on Recruitment of Individual Consultants for Loan/Grant Project Assignments

Appendix K

Appendix L

CONSULTANTS TERMS OF REFERENCE PROJECT MANAGEMENT, DESIGN, AND SUPERVISION CONSULTANTS

I. OVERVIEW The PMDSC under the project will assist the PMIU, to be based within the Department of Archaeology, Ministry of Culture in managing, detailed design and supervision, monitoring of the project and capacity development activities. The community tourism specialist and the marketing and promotion specialist will work with the Bangladesh Parjatan Corporation under the guidance of the project management specialist. All consultants will be engaged in accordance with ADB’s Guidelines on the Use of Consultants or other arrangements satisfactory to ADB for engaging consultants. A team of PMDSC will assist the PMIU in setting up of the project management and monitoring systems and assisting Project Site Offices in the field and the Project Implementation Unit in BPC in managing and monitoring of the overall project progress and reporting. The PMDSC, comprising expertise in project management, monitoring, procurement, and financial management will support the other offices; define detailed program and work plans, procedures for coordination, management, and financial management and project accounting, project performance monitoring system, and reporting; and design, installation and operationalization of new systems as required. The PMDSC will also assist the unit in BPC in "community participation and livelihood generation" and "marketing and promotion" activities. Moreover, PMDSC will assist the PMIU in the implementation of the Sustainable Heritage and Tourism Action Plan. II. TERMS OF REFERENCE The areas of responsibilities of the consultants will include: Design stage

(i) carry out all surveys, studies and site investigations for the various Project components;

(ii) define the elements and carry out feasibility of the additional sites in accordance with the subproject selection criteria as annexed to Supplementary Appendix A;

(iii) carry out an appraisal of subprojects for additional sites; (iv) prepare subproject appraisal reports; (v) update feasibility studies; (vi) prepare detailed design reports and environmental assessment reports; (vii) prepare of bid documents, assist the EA in evaluation of bid documents and

prepare bid evaluation report. Construction stage The Consultant will:

(i) supervise and monitor the construction of work, (ii) carry out quality control activities, and prepare and certify the contractor’s bills, (iii) assist EA in issue of contract completion certificates, settlement of contractor's

claims, resolution of disputes etc. (iv) serve as the engineer's representative within the context of the conditions of the

construction contracts.

Appendix L

The Consultants have a specific responsibility to ensure that the works are designed in accordance with international/national engineering standards, and are constructed to the prescribed quality in accordance with the specifications, bidding documents, and quality assurance systems. The consultants will work in close coordination with Project Director PMIU and will also be responsible for preparation of Program Completion Reports in the prescribed format of ADB. The major tasks of the consultants associated with the provision of management support during the planning, design and implementation phases of the Project are generally as follows: Master Plan and Management Plan. Under the overall guidance of the international Cultural Heritage Specialist, all specialists will contribute to the preparation of the Master Plan and Management Plan for each of the project heritage site. Finalize the sub project elements to be taken up for detailed design and implementation and establish operating procedures for the site management. The subprojects will be based on the selection criteria appended to Supplementary Appendix A. Survey, Investigations and Tests. Review available secondary data and reports and identify requirements of field surveys and other investigations. Based on the requirement assessment, consultants with the agreement of the Project Director, PMIU will carry out all the required archaeological assessments, engineering surveys and investigations such as total station surveys, geo-technical investigations, soil surveys, leak detection survey, construction material survey, ground water investigation i.e. hydro-geological investigations, rainfall data collection, traffic survey, identification of underground utilities and its mapping, other sampling and analysis as required under the different sub projects. The survey will incorporate all the necessary features for design of all allied infrastructure. Preliminary Design. Prepare technical and environmental appraisal report of the each subproject after carrying out detailed study of the subsectors and its priorities, feasibility and analysis of alternatives; and finalisation of preliminary designs for the most appropriate options. The preliminary designs will provide technical rationale of the proposed design option, describe design criteria & parameters, design horizon, tentative cost estimates, additional survey and investigation requirements for detailed design, identify statutory requirements and proposed implementation procedures. For the environmental assessment of the subproject, consultants will first update rapid environmental assessment (REA) and based on the findings, consultant will prepare appropriate environmental assessment report following ADB’s environmental guidelines. Detailed Designs. Once the preliminary designs are agreed, the consultants will prepare the detailed engineering. Designs will be sufficiently detailed to ensure clarity and understanding by the Project Director, PMIU. All the design should be in conformity with the international/National engineering/design standards. All necessary calculations will be prepared to determine and justify the engineering solution proposed for each subproject/component, and will be incorporated into the design reports. Based on the detailed engineering design, the consultants will prepare all necessary tender drawings, specification, bill of quantities, detailed cost estimates, implementation schedule, and quality control programs; prepare various bid packages considering ADB requirements and ease of implementation. The specifications will be detailed and use Indian/ international standards as well as meet ADB requirements. Consultant will prepare schedule of rates for the project based on the market prices and will update it annually.

Appendix L

Bidding Documents. Prepare the necessary documentation required for National and International competitive bidding, shopping, etc. for all the procurement packages. The bidding documents will include instruction to bidders, Employer's requirements, general and special conditions of contract, technical specifications, bill of quantities, tender drawings, and forms of contract etc. Consultant will assist PMIU in bid evaluation, award of contract and contract signing etc. Construction Supervision and Contract Monitoring. The consultant, as the engineer's representative under the contract, will supervise construction of all the project components; monitor construction methods and quality control; certify that the quality of works conforms to the specifications and drawings; assess the adequacy of the contractor's input materials, labour, equipment, and construction methods; resolution of contractual issues, furnish all revisions and detailed drawings as necessary during the continuance of the contract; attend third party inspections as necessary; examine the contractor's claims for variations/extension, additional compensation, etc., and prepare recommendation for approval by PMIU; assist in preparing planned maintenance procedures; assist; and check installation and commissioning. Record the work measurement, certify the contractor's claim and assist PMIU in contract monitoring and in preparation of the “as built” drawings. The table below outlines the PMDSC package.

Project Management Design Supervision Consultant (PMDSC)

No. Specialist Person Months

International Consultants 1 Conservation Specialist 12 2. Archaeologist 8 3. Cultural Heritage Specialist 05 Subtotal 25 National Consultants 4. Project Management Specialist 40 5. Conservation Archaeologist 20 6. Community Tourism specialist 4 7. Civil and Structural Specialist (Engineer) 15 8. Project monitoring Specialist 15 9. Cultural Heritage Management Specialist 10 10. Marketing and Promotion Specialist 4 11. Procurement Specialist 20 12. Institutional Development Specialist 10 13. Safeguard Specialist Environment 10 14. Safeguard Specialist Social 10 15. Financial Management Specialist 15 16. Heritage Landscape Architect 10 Subtotal 183 Grand Total 208

A. DESCRIPTION OF TASKS PROJECT MANAGEMENT AND DESIGN 1. Project Management Specialist (National) Education and Experience: Masters in Civil Engineering/ Architecture with around 20 years experience in design, management and supervision of improvements to historical sites/

Appendix L

monuments / projects and a good understanding of conservation and community based themes. Demonstrated leadership qualities Terms of Reference:

(i) Overall Management of the Project- manage all tasks required under the contract and ensure delivery of outputs in a timely and satisfactory manner in accordance with the overall project implementation schedule;

(ii) coordinate and assist the Project Management and Implementing Unit (PMIU) in DOA and PIU in BPC in their functions and responsibilities design and implementation;

(iii) assist PMIU in coordinating with UNESCO and other stakeholders and prepare proposals for the review of the committee;

(iv) In consultation with the Project Director, PMIU, assist with the establishment of annual project work plans, job descriptions, staffing schedules and budgets, and prepare a detailed implementation schedule covering all stages of implementation process for each component from field survey and investigations to the acceptance of finished works;

(v) set up procedures and systems for overall project management and monitoring project implementation;

(vi) develop procedures and as necessary prepare guidelines for procurement including pre-qualification of contractors, evaluation of bids, awards of contracts etc., and assist PMIU in undertaking bidding procedures including prequalification of the contractors, bidding, bid evaluation and preparation of bid evaluation reports and awards of contracts for procurement of equipment, materials and civil works for all contract packages;

(vii) provide solutions to the PMIU on key technical issues; (viii) oversee the design of the master plan and management plan for additional sites,

ensure conformity to the subproject selection criteria, and carry out appraisal of the subprojects;.

(ix) review preliminary design of the feasibility study including all sites, soil and other investigations and reconfirm all project components and contract packages, and specify surveys and investigations as necessary for detailed design;

(x) contribute to design of all civil and structural design of the facilities and review detailed designs and associated bidding documents for all subproject components suitable for various procurement methods (ICB, IS or LCB) as specified in ADB’s Guidelines for Procurement;

(xi) assist PMIU with overall management and supervision of construction works including the resolution of contractual issues and preparation of as-built drawings;

(xii) review project implementation progress from the perspective of overall project management and detailed annual work plans, and recommend remedial measures as appropriate;

(xiii) review implementation of loan covenants in collaboration with PMIU and recommend remedial measures as appropriate;

(xiv) Support the PMIU in monitoring of sub projects, compliance with regard to assurances, progress on the agreements relating to management reforms and maintenance of PPMS database.

2. Conservation Specialist (International)

Appendix L

Education and Experience: Degree in Architecture and formal training in conservation/archaeo-chemistry with at least 15 years experience in a senior management position at a major archaeological or monumental site(s) subject to intensive visitor pressure, preferably at the international level in South or Southeast Asia. Experience in chemical conservation particularly in salt effects on brick and terracotta structures is highly preferred. Demonstrated ability to analyze site management problems; develop indicators; devise solutions, and design conservation and heritage components and supervise its construction and conservation. Terms of Reference:

(i) Design and supervise the implementation of all conservation work, including chemical conservation of brick and terracotta structures from salinity effects, restoration, removal, addition, rearrangement and other interventions/alterations to the physical structure and layout of the proposed monuments/ structures and other sites of heritage significance, with particular attention to preserving the authenticity and integrity of the physical heritage;

(ii) Provide input into the design of environmental and visitor infrastructure and services to ensure that their design and construction is in conformity with the authenticity and integrity of the sites;

(iii) Assist national institutional development specialist (Heritage management) in developing measures for sustainable management of heritage sites and properties

(iv) Contribute to the preparation of master and management plans for the additional heritage sites;

(v) In close collaboration with the Cultural Heritage Specialist, Site Management Expert and, the Safeguards Specialists, devise protocols and systems for on-site monitoring and predictive modeling and reporting of the impact of tourism on the state of conservation of the four sites, their buffer zones; the surrounding environment and the affected human communities.

(vi) Draft an operations manual for the implementation of the afore-mentioned protocols and systems and conduct workshop to training site managers in the application of the manual.

(vii) Every effort should be made to involve (a) local communities (and members therefore) and (b) tourist guides in the site monitoring activities.

3. Archaeologist (International) Education and Experience: Advanced degree in Architecture or allied fields with training in Archaeology with at least 15 years experience in a senior management position at a major archaeological or monumental site(s) subject to intensive visitor pressure, preferably at the international level in South or Southeast Asia. Demonstrated ability to analyze site management problems; develop indicators; design and implement solutions. Terms of Reference:

(i) Design and supervise the implementation of restoration, removal, addition, rearrangement and other interventions/alterations to the physical structure and layout of the proposed monuments/ structures and other sites of heritage significance, with particular attention to preserving the authenticity and integrity of the physical heritage;

(ii) Assist national Institutional Development Specialist and Cultural Heritage Management Specialist in developing sustainable management of heritage sites and properties

Appendix L

(iii) Contribute to the preparation of master and management plans for the additional sites;

(iv) from a heritage perspective, assist the design team on location decisions with regard to the proposed tourist infrastructure facilities such as water, sanitation and waste management arrangements;

(v) Assist the Project Manager in devising and implementing systems of monitoring the activities of the sub-project before, during and after execution in order to determine and, if possible, measure, both the positive and negative impacts the subproject activities have on the authenticity and state of conservation of the physical attributes of the cultural heritage (landscape, architecture, movable cultural property) and education services, community involvement in support of traditional culture, etc.);

(vi) Draft an operations manual for the implementation of the afore-mentioned protocols and systems.

(vii) Conduct workshop to training site managers in the application of the manual. (viii) Every effort should be made to involve (a) local communities (and members

therefore) and (b) tourist guides in the site monitoring activities.

4. Conservation Archaeologist (National) Education and Experience: Degree in Architecture, with an advanced degree in conservation/ archaeology or Masters in Archaeology / conservation with at least 15 years experience in conservation architecture and supervising conservation/restoration works in archaeological sites/monuments. Experience in Design and Conservation of the monuments, layout, and other physical features preferably of historical structures. Good understanding of local culture and architecture styles. Terms of Reference:

(i) lead design of TOR for surveys and investigations required for the protection / conservation of the monuments;

(ii) assist the International Archaeologist and conservation specialist in all tasks, with particular responsibility for assessing and, when necessary, mitigating the impact of the subproject’s physical and non-physical interventions on the affected monuments and their surrounding buffer zones.

(iii) in consultation with the PM and international specialist review the design as suggested by the Master Plans and its fit within the overall site;

(iv) based on approval of the best option for improvements and in discussion with the experts and engineers, complete design and supervise the implementation of the proposed activities in all the sites

(v) coordinate and contribute to the (i) designs for all elements (including working drawings);

(vi) estimates in consultation with the engineers, (ii) associated bidding documents, assist PMIU in bidding procedures including invitation of bids, bid evaluation, and awards of contract for the road component and (iii) assist PMIU with overall management and supervision of construction works and in the resolution of contractual issues and preparation of as-built drawings for the trails and associated facilities; and

(vii) in consultation with the DOA support preparation of Management Plans for all the sites including suggested improvement measures within the overall framework of the existing plan and areas where there could be changes based on the proposed Master Plan.

Appendix L

5. Civil and Structural Specialist (Engineer) (National) Education and Experience: Masters/Bachelors in Civil (Structural) Engineering with around 15 years experience in design of civil structures including infrastructure services such as water supply, sanitation and solid waste management. Experience in design and management of historical/ archaeological sites would be an advantage. The engineer should be conversant with International codes and best practices in design and management of historical sites. Terms of Reference: Structures and facilities15: With overall guidance from the project manager and inputs from archaeology and conservation specialists, will be responsible for layout, design including structural elements, working drawings, preparation of estimates and in consultation with the procurement, bid documents of all civil and infrastructural facilities as part of the four project sites. The consultant shall

(i) Prepare TOR’s and coordinate all surveys and investigations required for the design of improvements and

(ii) Support the team on aspects relating to sourcing of construction material and related tests.

(iii) The consultant will prepare: (iv) plan for the site , activity scheduling; (v) designs for all elements (including working drawings); (vi) estimates in consultation the conservation specialists and the archeologist ; (vii) associated bidding documents, assist PMIU in bidding procedures including

invitation of bids, bid evaluation, and awards of contract for the road component and

(viii) assist PMIU with overall management and supervision of construction works and in the resolution of contractual issues and preparation of as-built drawings for the roads component.

6. Cultural Heritage Specialist- Master Plan and Management Plan (International) Education and Experience: Advanced degree in Conservation Architecture and Planning or Archaeology Heritage Management. Around 15 years or more experience in the development of master plans and management plans for archaeological sites of historic period inscribed in the UNESCO World Heritage List. Experience in managing heritage/historic properties would be highly desirable. Membership in the relevant ICOMOS Expert Committees would be a plus. Terms of Reference

(i) Define and agree with the DoA the terms of reference for the Master Plan and Management Plan for the sites;

(ii) In consultation with the PM and the specialists, define the surveys and investigations required, prepare TORs and assist PMIU in selecting agencies for surveys and investigation;

(iii) in consultation with the other specialists carry out a situation analysis of the site; (iv) define the quality and management issues

15 Facilities include localized water, sanitation and waste management arrangements and on site parking.

Appendix L

(v) define the site level improvements (in accordance with the subproject selection criteria) required and with support from the archaeologist, conservation specialist and engineer define the improvements required, as well as the management plan for the site

(vi) on approval, coordinate design, costing, scheduling and procurement of agencies for implementing the design.

(vii) Define the management plan and measures to ensure implementation. As final output: present the revised Master and management Plan in full publishable format, together with the necessary maps; technical annexes; and time-bound action plans for the implementation of the Master Plan.

7. Institutional Development Specialist (National) Education and Experience: Masters/Bachelors degree in public administration or another relevant field and around 15 years or more experience in fields related to public or public/private property management, both within Bangladesh and in the region. Direct experience in managing heritage/historic properties would be highly desirable, as would experience in managing tourist destinations, pilgrimage sites or other types of properties/sites which experience visitor pressure. In addition to experience in public property management, the Site Management Expert should have previous experience in building institutional capacity at the local community level, and a demonstrated ability to innovate bespoke institutional structures. Terms of Reference

Capacity Building of DoA (i) Undertake institutional analysis and surveys of DOA and overall framework within

which heritage tourism operates (ii) Assess the current institutional, organizational, and staffing issues hindering the

smooth performance of DOA in detail and overall framework in general, (iii) Develop institutional, organizational, and operational systems and work

procedures and human resource development plan for enhanced cultural heritage site planning, protection, and management.

(iv) Assist the financial management specialist in developing revenue enhancement measures and other innovative approaches for sustainable O&M of the sites including creation of dedicated sources of funds for sustainable management of cultural heritage sites where feasible through ring fencing of incomes from the sites.

(v) Develop time framed action plans and assist their implementation; identify the training needs of the staff and various incentive measures to enhance staff performance. Design and conduct training in site planning, preservation, and operation and maintenance of the sites, and management of culture-based tourism. Training will include structured learning events such as short term courses, structured workshops/seminars. Training should also be provided to the tourism agency i.e., Ministry of Tourism and Bangladesh Parjatan Corporation in increasing their awareness of the heritage protection and management and the linkage between sustainable heritage protection and tourism growth

(vi) Coordinate with knowledge and experience sharing activities of the grant funded regional TA.

(vii) Contribute to the project outcome monitoring indicators in consultation with PPM specialist and supervision consultants on management aspects.

Appendix L

Innovative Site Management Modalities (i) Assess the management needs of the four affected heritage sites and perform a

“man-power” audit of these sites, projecting this for the expected increase in visitors as a result of the project.

(ii) Collate from the international experience, structural models for contractual management of (some aspects of) archaeological sites of national heritage importance, in particular World Heritage sites.

(iii) Study the existing systems of contractual management of heritage properties in Bangladesh, in particular the management of waqaaf property and prepare an approach paper for the Ministry of Cultural Affairs on management models for these properties and

(iv) On approval of options, − develop a schedule for the phased implementation of the agreed options

for contracting (aspect of) management responsibilities. − Devise a training programme for the presumptive contractees. − Draft a site management manual to guide contracted operations. − Develop a system of management accountability, linked to site

monitoring, to ensure the management of sites is responsive to the Government’s mandate to protect public assets.

− In all of the above task, effort should be made to entrust contracted tasks to local communities (or members thereof) located near the affected monuments.

Master Plan (i) Contribute to the institutional development and management aspects of the

Master and Management Plans for the additional sites. 8. Safeguards Specialist Environment (National) Education and Experience Masters in Planning/ Environment/ Ecology with around 15 years experience in design and environment related safeguards for donor aided projects, preferably with ADB and in oversight of their implementation/ compliance. Should be conversant with relevant national and state environmental laws, and ADB procedures. Terms of Reference Support and advise the PMIU and the Consultants team in

(i) preparation of ADB procedure compliant environmental safeguard actions including impact assessments if any during the design stage,

(ii) management plan and mitigation measures; (iii) oversight of implementation of environmental standards and safeguards as part

of project implementation (iv) Participate in preparation of Master Plan for additional sites and contribute to the

environmental safeguards to the plan and sub components, and (v) preparation of performance monitoring reports

9. Safeguards Specialist Social (National) Education and Experience Masters in Planning/ Social Sciences/Law with at least 15 years experience in design of resettlement plans and framework and experience in implementing resettlement plans as part of donor supported projects, preferably with the ADB. Should be

Appendix L

conversant with laws relating to land acquisition, state procedures in implementation of resettlement packages and ADB procedures. Terms of Reference Support PMIU and the design team in

(i) preparation and implementation of ADB compliant resettlement plans if any based on the approved framework,

(ii) oversee implementation of Resettlement Plans, (iii) lead community consultation during design phase of the preparation of the

Master Plan for additional sites and (iv) preparation of performance monitoring reports

10. Project Monitoring Specialist (National) Education and Experience: Masters in Engineering/ Planning/ Social Science with around 15 years of experience in project performance monitoring, preferably projects supported by Donors. Terms of Reference In relation to the project outcomes and in discussion with the PM and the Team16, design the project performance monitoring mechanisms for the project to include:

(i) Definition of the Project Performance Monitoring System (PPMS), forms and monitoring schedule ;

(ii) the outputs and outcome monitoring requirements and (iii) specify the requirements from the Environmental Engineer/ Planner and Cultural

Heritage Specialist (Supervision Team) specific requirements on outcome monitoring from culture based activities and eco tourism)

11. Financial Management Specialist (National) Education and Experience: CA/FCA/ICWAI Masters in Finance/MBA with around 15 years experience in project accounting and financial management systems. Should have adequate experience in design, implementation and management of project accounting financial management aspects of donor driven projects. Terms of Reference:

(i) Prepare financial management and reporting systems of the project and oversee production of Financial Management reports for submission to the ADB by the PMIU’s

(ii) develop revenue enhancement measures and other innovative approaches for sustainable O&M of the sites from a range of sources including introduction and enhancement of entry fees, user charges for utilities, parking fees, concession fees for commercial facilities by private sector, and sale of interpretative

16Conservation Specialist, Archaeologist, Cultural Heritage Specialist- Master Plan and Management Plan, Conservation Archaeologist, Civil and Structural Engineer, Institutional Specialist-Heritage Management and Financial Management Specialist

Appendix L

materials to generate sufficient funds to meet gradually the operation and management cost of the cultural heritage sites

(iii) Assess the feasibility and devise a mechanism whereby the revenues generated from cultural heritage sites are used (ring fencing of incomes) for O&M of the sites and develop a rational policy to support sites with lower revenue realization, and support implementing revenue improvement action plans for the sites

(iv) review and contribute to the finalization of master plan (finance and management aspects) plans and

(v) in consultation with the community development specialist and institutional development specialist, support communities in transactions (Link to Micro Finance, NGO Support Community Mobilization etc)

12. Heritage Landscape Architect (National) Education and Experience: Post graduate education (or equivalent research) in a field or discipline (e.g. botany, landscape architecture) directly related to the landscape of the region and its surrounding environment; Demonstrated professional expertise as a landscape architect with executed projects in South Asia dealing with (i) the restoration or recreation of historic gardens and environments; and (ii) use of indigenous species in landscaping. Terms of Reference:

(i) Compile and study all available reports on the present and past landscape of the sites and the surrounding area, from local, national, and international libraries archives, in order to understand the extent of knowledge available on the subject and the specific content of that knowledge as it pertains to appropriate species and historic garden design;

(ii) Compile and study all available reports of indigenous plants particularly plants of importance to the area;

(iii) Consult with local experts on landscape management and also with experts on the subject of appropriate gardens for specific sites;

(iv) In close cooperation with the officials, experts and community, design landscape changes and improvements as may be appropriate, bearing in mind that the historic authenticity of the landscape is the overriding factor, but keeping in mind other relevant factors such as conservation of the archaeology; provisions for landscape maintenance; and coherence with any master planning;

(v) Minimize the amount of landscape engineering and other major changes to the existing terrain that will be required;

(vi) Prepare a manual of practice to guide the execution of landscape works and as a reference for the on-going care and maintenance of the landscape and to guide any future interventions in the landscape that may be forthcoming and

(vii) Coordinate and contribute to the: (i) designs for all elements (including working drawings); (ii) estimates in consultation with the engineers and the conservation architect; (iii) associated bidding documents, assist PMIU in bidding procedures including invitation of bids, bid evaluation, and awards of contract for the road component, (iv) assist PMIU with overall management and supervision of construction works and in the resolution of contractual issues and preparation of as-built drawings for the trails and associated facilities.

13. Community Tourism Specialist (National)

Appendix L

Education and Experience: Masters in Social Sciences/Public Relation Management witharound 15 years experience in community mobilization and community based heritage tourism product development focused on livelihood. Design of livelihood and community based tourism products and in community capacity building. Terms of Reference:

(i) prepare TOR’s and support supply chain analysis and community mobilization activities;

(ii) lead workshops and community consultations and (iii) coordinate all activities of this component. (iv) Develop institutional, organization and operation systems and work procedures

and human resource development plan for community participation and planning. 14. Marketing and Promotion (National) Education and Experience: A degree in Tourism/ Communication/ Advertising/ Visual Arts with around 15 years experience in design and marketing of advertising and promotional content for all types of media including the internet, preferably on Tourism or development. Experience of work with a public agency would be important. Terms of Reference

(i) coordinate with the regional TA’s subregional marketing and promotion component and specific actions required for Bangladesh;

(ii) assist the BPC and the project in defining the media content on sub project sites, proposed themes being developed as part of the sub projects and more importantly on the tangible and intangible cultural heritage and nature and community based activities;

(iii) selection of entities for preparation of media content and outputs; (iv) in consultation with the Procurement specialist procurement of services and

goods relating to this activity; (v) marketing plan for the heritage sites developed and (vi) assist BPC in training of DOA on Heritage Tourism

15. Procurement Specialist (National) Education and Experience: B.Sc Engineering/MBA/Post-graduate degree in Social Science with about 15 years experience in procurement, equipment specifications and bid preparation and evaluation for infrastructure projects with practical experience of at least 5 years as a Procurement Officer/ Procurement Expert. He/she must be well acquainted with the procurement guidelines of the Asian Development Bank and have proven expertise in preparing documents with the procurement guidelines. Terms of Reference

(i) Review the equipment/materials, works, and services to be procured, including preparation of specifications, bid documents, and evaluation of bids consistent with procurement plan.

(ii) Design and document Procurement management system for DOA and train concerned staff in PMIU in assessment of

Appendix L

(iii) give specific attention to the roles and responsibilities of the procurement tasks of PMIU and the respective DOA line unit;

(iv) develop a short guideline for DOA staff at large on issues concerned in ordering material and services to be procured by the respective DOA units;

(v) assist Technical Evaluation Committees of DOA in evaluating bids (vi) tracking of procurement actions and plans, annual update of procurement plan

and status; 16. Cultural Heritage Management Specialist (National)

Education and Experience: Advanced in Archaeology, Management in Archaeology, Heritage Management. Should have adequate experience in the development of master plans and management plans for archaeological sites of historic period inscribed in the UNESCO World Heritage List. Experience in managing heritage/historic properties would be highly desirable.

Terms of Reference (i) Works closely with International Heritage Management Specialist in preparing

and agreeing with DOA the terms of reference for the Master Plan and Management Plan for the sites;

(ii) Under the overall guideline of International Cultural Heritage specialist and in consultation with other specialists, will be responsible for preparing the Heritage Management Plan including a comprehensive conservation plan of Paharpur World Heritage site and other sites under the project.

(iii) In consultation with the Project Manager and other specialists, assist in defining the surveys and investigations required, prepare TORs and assist PMIU in selecting agencies for surveys and investigation;

(iv) Assess the management needs of the four affected heritage sites and perform a “man-power” audit of these sites, projecting this for the expected increase in visitors as a result of the project.

(v) In consultation with the other specialists, assist in carrying out a situation analysis of the site;

(vi) Define the quality and management issues (vii) Define the site level improvements (in accordance with the subproject selection

criteria) required and with support from the archaeologist, conservation specialist and engineer define the improvements required, as well as the management plan for the site

(viii) In consultation with the World Heritage Committee/ finalize the Heritage Management Plan.

(ix) On approval, assist team in coordinating design, costing, scheduling and procurement of agencies for implementing the design.

(x) Assist International Heritage Management Specialist in defining the management plan and measures to ensure implementation. As final output: present the revised Master and management Plan in full publishable format, together with the necessary maps; technical annexes; and time-bound action plans for the implementation of the Master Plan.

SUPERVISION TASKS: During Implementation

Appendix L

The Minimum requirement: The supervision services broadly include as an “Engineer”, supervision and management of civil works. Following are the broad works to be taken up:

(i) Contract administration and management of the project (ii) Interpretation of the technical specifications (iii) Scrutinize the contractor’s detailed work program (iv) Scrutinize construction methods proposed by contractor including environmental,

safety, personnel and public issues (v) Quality assurance system including verification and source of material and

certification (vi) Monitor mobilization and progress of work (vii) Measurement of quantities and certification (viii) Prepare and certify at the end, ‘as-built drawings (ix) Carryout supervision of all the works including periodical inspection of

contractor’s machinery and equipments (x) Inspect the works at appropriate intervals during defect liability period and

certification issue. (xi) prepare construction supervision manual (xii) prepare maintenance manual (xiii) Monthly progress reports (xiv) Assist employer in computer aided monitoring of progress / implementation,

project management and M.I.S. of project C. REPORTING The consultants will produce and submit to the PMIU the following reports:

(i) Inception report in 20 copies one month after mobilization; (ii) brief monthly progress reports describing works and services performed and

issues encountered during the reporting month and scheduled activities in the following month to be submitted in 10 copies within a week of the last day of the reporting month, and quarterly progress reports and annual reports, describing in detail the implementation progress of all project components with issues highlighted to be submitted in 20 copies within two weeks of the end of the reporting period;

(iii) interim report at the end of the second year to provide a broad view of the physical and institutional progress achieved, and make recommendations to the Government and ADB on suitable modifications to successful implementation of the Project. The report will be submitted in 20 copies two weeks prior to the midterm review;

(iv) detailed design drawings, cost estimates and bidding documents in the numbers specified for all contract packages. In addition, survey plans, topographic maps, base maps and final as-built drawings will be submitted as necessary; and

(v) draft project completion report one month before the completion of the services and final Project completion report within one month of the completion of the services

Appendix M

FRAMEWORK AND GUIDELINES IN CALCULATING PROJECT PROGRESS A. Introduction 1. To ensure that all implementation activities are reflected in measuring implementation progress against the project implementation schedule, the term "physical completion” in the PPR has been changed to "project progress.” 2. Physical and precommencement activities are considered in calculating project implementation progress. These activities, which may include recruitment of consultants, capacity building, detailed design, preparation of bid and prequalification documents, etc., could constitute a significant proportion of overall implementation and therefore should be counted. 3. Each activity in the implementation schedule will be weighted according to its overall contribution (using time as a reference) to progress of project implementation. These weights will then be used to calculate the percentage of project progress along the entire time span of the project. This is to provide a holistic view of the pace of implementation. B. Framework for Compiling Activity List and Assigning Weights 4. As implementation activities and their corresponding weights will vary according to the type of project, sector, and country, sector divisions or RMs will be responsible for determining and including them in the project administration memorandum. The actual project implementation progress of these activities should be reported regularly through the EA’s quarterly project progress report. To ensure ADB-wide consistency, the following framework has been established; its application will be monitored through the PPR. 1. Compilation of Activity List 5. Sector divisions or RMs concerned should identify major implementation activities and include them in the implementation schedule, which is attached as an appendix in the report and recommendation of the President (RRP). The implementation schedule should follow the critical path of the project’s major activities in project implementation taking account of various country, sector, and project constraints. 2. Assignment of Weights 6. Corresponding weights for each activity should be assigned to ensure that “project progress" measures the percentage of achievement (nonfinancial except when the project has credit components) for all events during the entire duration of the implementation schedule. To avoid disproportionate assignment of weights, to the extent possible these should be evenly distributed along the implementation schedule. When activities are concurrent, avoid “double counting.” 3. Computation of Project Progress 7. Once all activities are identified and corresponding weights assigned, project progress should be calculated using the following steps:

(i) Determine the actual percentage progress (nonfinancial) of each activity. (ii) Multiply these percentages by the assigned weight of each activity to arrive at the

weighted progress. (iii) Add up the resulting weighted progress of all activities to determine the project progress.

Page 3 of this Appendix provides an illustration of this calculation using a generic sample implementation schedule and this Appendix, page 4 a specific example in the education sector.

Appendix N

LIST OF MAJOR LOAN COVENANTS

1. A list of Covenants is given in Table N1. Compliance of these covenants will be monitored strongly by ADB regularly in the same format.

Table N1: Covenants and Status Report of Compliance

Reference in LA Major Covenants Status of Compliance

1 LA, Schedule 5 Para. 1

Subregional Task Force Together with Nepal and India, the Borrower shall establish and maintain a Subregional Task Force (STF) for purposes of the South Asia Tourism Infrastructure Development Project and ensure adequate representation from the Economic Relations Division of its Ministry of Finance; MoCAT; MoCA or DOA; and other relevant ministries or agencies in the STF. The STF shall (i) coordinate the national components of subregional tourism circuits developed as part of the Project, (ii) review the the Project's progress and address key issues, and (iii) monitor the subregional actions set out in the Sustainable Heritage and Tourism Action Plan attached as Appendix 4 to the RRP


National Project Steering Committee. For the entire duration of the Project, the Borrower shall maintain a National Project Steering Committee (NPSC) comprising representatives from MoCAT; MoCA; DOA; BPC; the Economic Relations Division and the Finance Division of the Ministry of Finance; the Planning Commission; the Implementation Monitoring and Evaluation Division under the Ministry of Planning, and other relevant agencies. The Borrower shall designate the Secretaries of MoCAT and MoCA as co-chairs of the NPSC. The NPSC shall (i) facilitate coordination and cooperation among agencies involved in project implementation and release of resources, (ii) take action to ensure that project management and implementation arrangements are in place, (iii) oversee Project progress and monitor the implementation of the Sustainable Heritage and Tourism Action Plan, and address key issues, and (iv) provide policy guidance and support to the PMIU. The NPSC will meet as required, and at least bi-annually. The NPSC shall prepare and submit annual progress reports to the STF. The DOA shall act as the secretariat to the NPSC.


Role of DOA; Project Management and Implementation Unit. The Borrower shall designate the DOA as the Project Executing Agency. Within DOA, the Borrower shall establish and maintain a Project Management and Implementation Unit (PMIU) for the overall management and implementation activities, including, without limitation, (i) subproject identification, preparation and appraisal; (ii) detailed design and construction supervision; (iii) procurement of goods, works, and services; (iv) contract administration; (v) management of the Project accounts, including processing disbursement requests, supervision of the imprest accounts and preparation of financial statements; (vi) monitoring and reporting on Project implementation in compliance with the provisions of this Loan Agreement; and (vii) coordination, support, and liaison activities as required for the successful implementation of the Project. The PMIU will maintain project offices in Paharpur, Mahastangarh, Kantajee, Bagerhat and other locations as may be required to oversee implementation and construction activities in the field. BPC shall form a project implementation unit reporting to the PMIU to undertake marketing and promotion actvities and implement the Fostering Community Participation subcomponent of the Project. The Borrower shall designate a full-time Project

Appendix N

Director, satisfactory to ADB, as head of the PMIU. 4 LA, Schedule 5

Para. 4 Role of DOA; Project Management and Implementation Unit. The Borrower shall ensure that the PMIU employs dedicated and motivated staff with adequate expertise in the field of project management, financial management, engineering, architectural design, tourism marketing and promotion, community development, heritage preservation, procurement, and environmental and social safeguards implementation. The Borrower shall keep the PMIU equipped with the necessary office space, facilities, equipment, support staff and management information systems for the entire duration of the Project.


Technical Review Panel. A technical review panel comprising representatives from UNESCO, DOA and BPC shall advice and provide guidance to the PMIU on the preparation of heritage site plans and detailed design of heritage related components to ensure compliance with UNESCO guidelines and the Convention Concerning the Protection of the World Cultural and Natural Heritage.


Subproject Selection. All subprojects require the prior approval of ADB. DOA, in coordination with BPC and UNESCO as relevant, selects and appraises subprojects for implementation under the Project in accordance with the selection and appraisal criteria set out in Section F of Supplementary Appendix C to the RRP. The Borrower, through DOA, shall submit to ADB for its approval the subproject(s) it wishes to propose, together with a feasibility study for each proposed subproject showing in sufficient detail whether the proposed subprojects meet the selection and appraisal criteria and are otherwise suitable and viable.


Subproject Selection. The Borrower, through DOA, shall ensure that all relevant documents forming the basis for selection and processing of subprojects are made available to ADB upon request and are kept available for such purposes for a minimum period of five years from the date of the project completion report for the Project.


Sustainable Heritage and Tourism Action Plan. The Borrower (through MoCAT, MoCA, DOA, the Ministry of Finance and BPC) shall take all necessary steps to complete the actions for which it is responsible under the Sustainable Heritage and Tourism Action Plan attached as Appendix 4 to the RRP, on schedule and in a manner satisfactory to ADB.


Counterpart Funds. The Borrower shall make available all counterpart funds required for timely and effective implementation of the Project, including any funds required to make land available for the Project, to mitigate unforeseen environmental and social impacts and to meet additional costs arising from design changes, price escalation in construction costs and/or unforeseen circumstances. The Borrower shall make the resources thus required available on an annual basis for each fiscal year.


Operation and Maintenance of the Project facilities. The Borrower shall ensure that sufficient funds are provided to meet any shortfall between the cost and revenues for the operation and maintenance of the Project facilities.


Environmental Safeguards. The Borrower shall ensure that (a) the Project is carried out in accordance with the project design, and construction and operations will comply with applicable national and local environmental laws and ADB's Environment Policy (2002); (b) the EARP will be followed to guide the environmental assessment during implementation; (c) the relevant environmental mitigation measures specified in the Environmental Management Plans are incorporated in tender and bidding documents; (d) Works contractors' specifications include requirements to comply with the environmental mitigation

Appendix N

measures contained in the Environmental Management Plans; (e) Works contractors are closely supervised to ensure proper implementation of mitigation and management measures; (f) the Project environmental performance will be monitored; and (g) prepare and submit annually to ADB a monitoring report describing the progress in implementing the Environmental Management Plans and measures adopted to address environmental issues, if any.


Resettlement and Land Acquisition. The Borrower shall, subject to compliance with the relevant provisions of the Resettlement Framework, the Resettlement Plans and the Environmental Management Plans, and in accordance with all applicable laws and regulations of the Borrower, acquire or make available the land and rights to land required for commencement of construction activities of the Project facilities in accordance with the schedule agreed under the related Works contract, and will have cleared the utilities, trees and any other obstruction from such land.


Resettlement and Land Acquisition. The Borrower shall ensure that the Resettlement Plans, including compensation and entitlements for affected households and persons, are prepared and approved in accordance with the Resettlement Framework, implemented in conformity with all applicable laws and regulations of the Borrower, as amended from time to time, and the entitlement benefits as listed in the Borrower’s applicable laws, ADB’s Involuntary Resettlement Policy (1995) and the Resettlement Framework.


Resettlement and Land Acquisition. The Borrower shall ensure that people affected by the Project are fairly compensated in a timely manner based on replacement values in accordance with the Resettlement Framework and the Resettlement Plans, and that payments will be made in a timely manner, prior to dispossession from land and other assets, such that affected people are not adversely affected by the Project. The Borrower shall submit progress and completion reports on land acquisition and resettlement under the quarterly progress reports.


Resettlement and Land Acquisition. The Borrower shall ensure that prior to land acquisition and any resettlement for the Project, the Resettlement Plans, including the updates based on consensus of the affected persons, are disclosed with all necessary information made available to persons affected by the Project and confirm that it be available for uploading onto the ADB website.


Resettlement and Land Acquisition. The Borrower shall ensure that essential public infrastructure that may be affected by land acquisition and resettlement is replaced, as appropriate, in an expeditious manner in accordance with the Resettlement Plans.


Resettlement and Land Acquisition. The Borrower shall ensure that construction contracts contain binding requirements for construction contractors to fully reinstate pathways, other local infrastructures, and agricultural land to at least their pre-project condition upon construction completion. The Borrower shall adequately record the condition of roads, agricultural land and other infrastructure prior to transport of material and construction commencement.


Resettlement and Land Acquisition. The Borrower shall establish, within 3 months of the Effective Date, a grievance redress committee or committees with representation from all stakeholders in the Project facilities for addressing any grievances from affected peoples concerning resettlement, environment and any other social issues in a timely manner, misuse of funds or any other irregularities.

Appendix N


Resettlement and Land Acquisition. Any changes to the location, land alignment, or social or environmental impacts on account of detailed designs shall be subject to prior approval by ADB.


Indigenous Peoples. The Borrower shall ensure that the Project will not negatively impact vulnerable groups, such as indigenous peoples. In the unforeseen event that indigenous people are affected by the Project, the Borrower shall ensure that the Project complies with ADB’s Policy on Indigenous Peoples (1998) and all applicable laws and regulations of the Borrower.


Labor Law and Social Projection. The Borrower shall ensure that the bidding documents for the Works contracts include specific provisions to ensure that the Works contractors (a) comply with applicable core labor standards, labor laws and incorporate applicable workplace occupational safety norms; (b) do not differentiate payment between men and women or between people from different castes for work of equal value (c) do not employ child labor; (d) eliminate forced or compulsory labor; (e) eliminate discrimination in respect of employment; (f) allow for freedom of association; and (g) to the extent possible, maximize employment of local poor and disadvantaged persons for construction purposes, provided that the requirements for efficiency are adequately met.


Labor Law and Social Projection. The Borrower shall ensure that Works contractors disseminate, or engage appropriate service providers to disseminate, information on the risks of sexually transmittable infections, including HIV/AIDS, to the employees of Works contractors engaged under the Project and to members of the local communities surrounding the Project facilities, particularly to females.


Gender. The Borrower shall ensure that the Project considers gender issues at all appropriate stages of the project particularly during design, and that the Project will be carried out in accordance with ADB's Policy on Gender and Development (1998).


Anti-corruption. The Borrower shall comply with ADB’s Anticorruption Policy (1998, as amended to date). The Borrower agrees (a) that ADB has the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project and (b) to cooperate fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation. In addition, the Borrower shall (a) conduct periodic inspections on the contractors’ activities related to fund withdrawals and settlements; (b) ensure that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of all contractors, suppliers, consultants, and other service providers as they relate to the Project; and (c) the construction supervision consultant shall verify the contractors’ invoices in accordance with working drawings and contract specifications. DOA shall announce the Project and business opportunities associated with the Project on its website. In addition, the website shall at least disclose the following information in relation to goods and services procured for the Project: (i) the list of participating bidders, (ii) the name of the winning bidder, (iii) the amount of the contracts awarded, and (e) the goods and services procured.


Performance Monitoring and Reporting. The Borrower shall ensure that within 3 months of the Effective Date, a Project Performance Monitoring System (PPMS) shall have been established in a form and with a composition acceptable to ADB,

Appendix N

based upon the PPMS indicators agreed upon between the Borrower and ADB. The Borrower shall collect base line data for performance monitoring and undertake periodic Project performance review in accordance with the PPMS to evaluate the scope, implementation arrangements, progress and achievements of objectives of the Project..


Review. ADB and The Borrower shall meet every six months to discuss the progress of the Project and any changes to implementation arrangements or remedial measures required to be undertaken towards achieving the objectives of the Project.


Review. ADB and The Borrower shall meet every six months to discuss the progress of the Project and any changes to implementation arrangements or remedial measures required to be undertaken towards achieving the objectives of the Projects.

Appendix O

TEMPLATE FOR EXECUTING AGENCY’S QUARTERLY PROJECT PROGRESS REPORT A. Introduction and Basic Data 1. Provide the following:

ADB loan number, project title, borrower, executing agency(ies), implementing agency(ies);

total estimated project cost and financing plan; status of project financing including availability of counterpart funds and

cofinancing; dates of approval, signing, and effectiveness of ADB loan; original and revised (if applicable) ADB loan closing date and elapsed loan period

based on original and revised (if applicable) loan closing dates; and date of last ADB review mission.

B. Utilization of Funds (ADB Loan, Cofinancing, and Counterpart Funds) 2. Provide the following:

cumulative contract awards financed by the ADB loan, cofinancing, and counterpart funds (commitment of funds to date), and comparison with time-bound projections (targets);

cumulative disbursements from the ADB loan, cofinancing, and counterpart funds (expenditure to date), and comparison with time-bound projections (targets); and

reestimated costs to completion, need for reallocation within ADB loan categories, and whether an overall project cost overrun is likely.

C. Project Purpose 3. Provide the following:

status of project scope/implementation arrangements compared with those in the report and recommendation of the President (RRP), and whether major changes have occurred or will need to be made;

an assessment of the likelihood that the immediate development objectives (project purpose) will be met in part or in full, and whether remedial measures are required based on the current project scope and implementation arrangements;

an assessment of changes to the key assumptions and risks that affect attainment of the development objectives; and

other project developments, including monitoring and reporting on environmental and social requirements that might adversely affect the project's viability or accomplishment of immediate objectives.

D. Implementation Progress 4. Provide the following:

Appendix O

assessment of project implementation arrangements such as establishment, staffing, and funding of the PMO or PIU;

information relating to other aspects of the EA’s internal operations that may

impact on the implementation arrangements or project progress; progress or achievements in implementation since the last progress report; assessment of the progress of each project component, such as,

- recruitment of consultants and their performance; - procurement of goods and works (from preparation of detailed designs and

bidding documents to contract awards); and - the performance of suppliers, manufacturers, and contractors for goods and

works contracts;

assessment of progress in implementing the overall project to date in comparison with the original implementation schedule—quantifiable and monitorable target, (include simple charts such as bar or milestone to illustrate progress, a chart showing actual versus planned expenditure, S-curve graph showing the relationship between physical and financial performance, and actual progress in comparison with the original schedules and budgets, the reference framework or guidelines in calculating the project progress including examples are shown below); and

an assessment of the validity of key assumptions and risks in achieving the

quantifiable implementation targets. E. Compliance with Covenants 5. Provide the following:

the borrower's compliance with policy loan covenants such as sector reform initiatives and EA reforms, and the reasons for any noncompliance or delay in compliance;

the borrower’s and EA’s compliance with financial loan covenants including the EA’s financial management, and the provision of audited project accounts or audited agency financial statements; and

the borrower’s and EA’s compliance with project-specific loan covenants associated with implementation, environment, and social dimensions.

F. Major Project Issues and Problems 6. Summarize the major problems and issues affecting or likely to affect implementation progress, compliance with covenants, and achievement of immediate development objectives. Recommend actions to overcome these problems and issues (e.g., changes in scope, changes in implementation arrangements, and reallocation of loan proceeds).

Appendix P

AUDITING REQUIREMENTS AND PROPOSED AUTHOR’S TERM OF REFERENCE

A. Auditing Requirement

ADB requires the EA to maintain separate project accounts and records exclusively for the Project to ensure that the loan funds were used only for the objectives set out in the Loan or Project Agreements. The project accounts comprise the following:

The first set of project accounts to be submitted to ADB covers the fiscal year ending ________________. As stipulated in the Loan or Project Agreements, they are to be submitted up to _________________ months after the end of the fiscal year. For this loan, the deadline is by

The accounts and records for the project are to be consistently maintained by

using sound accounting principles. Please stipulate that your external auditor is to express an opinion on whether the financial report has been prepared using international or local generally accepted accounting standards and whether they have been applied consistently.

ADB prefers project accounts to use international accounting standards prescribed by the International Accounting Standards Committee. Please advise your external auditor to comment on the impact of any deviations, by [name of the Executing Agency] from international accounting standards.

Please ensure that your external auditor specifies in the Auditor's Report the

appropriate auditing standards they used, and direct them to expand the scope of the paragraph in the Auditor's Report by disclosing the key audit procedures followed. Your external auditor is also to state whether the same audit procedures were followed for all supplementary financial statements submitted.

ADB wishes that auditors conform to the international auditing standards issued by the International Federation of Accountants. In cases where other auditing standards are used, request that your external auditor to indicate in the Auditor's Report the extent of any differences and their impact on the audit.

The external auditor's opinion is also required on whether

- the proceeds of the ADB's loan have been utilized only for the project as

stated in the Loan Agreement; - the financial information contains data specifically agreed upon between

[name of the Borrower or EA] and ADB to be included in the financial statements;

- the financial information complies with relevant regulations and statutory requirements; and

- compliance has been met with all the financial covenants contained in the Loan or Project Agreements.

The Auditor's Report is to clearly state the reasons for any opinions that are

qualified, adverse, or disclaimers.

Appendix P

Actions on deficiencies disclosed by the external auditor in its report are to be

resolved by [name of Borrower or Executing Agency] within a reasonable time. The external auditor is to comment in the subsequent Auditor’s Report on the adequacy of the corrective measures taken by [name of Borrower or EA].

B. Sample Auditor Terms of Reference: Annual Project Accounts (APA)

The scope of audit should cover the following: 1. Accounting Policies and Changes. The auditor should comment on the project’s

accounting policies, and confirm the extent to which the agreed project accounting policies have been applied. In particular, the auditor should note the impact on the APA arising from any material deviations from the agreed accounting standards. The auditor should also comment on any accounting policy changes, either during a financial year, or from one year to another.

2. Imprest Accounts. The auditor must form an opinion on whether the Imprest Account

was used in compliance with required procedures (e.g., those of ADB), and the fairness of the presentation of Imprest Account activity and the year-end balance. The auditor should examine the eligibility and correctness of financial transactions during the period under review, account balances at the end of the period, the operation and use of the Imprest Account in accordance with the financing agreement, and the adequacy of internal controls for this particular disbursement mechanism.

3. Statements of Expenditures (SOE). The auditor will audit all SOEs used as the basis

for the submission of credit withdrawal applications to ADB. These expenditures should be coampared for project eligibility with the relevant financing agreements (and with reference to the RRP and other project documents for guidance when considered necessary). Where ineligible expenditures are identified as having been included in withdrawal applications and reimbursed against, these should be separately noted by the auditor. The annual audit report should include a separate paragraph commenting on the accuracy and propriety of expenditures withdrawn under SOE procedures, and the extent to which ADB can rely on those SOEs as a basis for credit disbursement. Annexed to the APA should be a schedule listing individual SOE withdrawal applications by specific reference number and amount.

4. Compliance with Financial Covenants. The auditor will confirm compliance with each

financial covenant contained in the project legal documents (see terms and definitions). Where present, the auditor should indicate the extent of any noncompliance by comparing required and actual performance measurements for each financial covenant with the financial year concerned.

5. Compliance with Financial Assurances. The auditor will confirm compliance with all

financial assurances contained in the project legal documents (see terms and definitions). Where present, the auditor should indicate the extent of any non-compliance by comparing required and actual performance of the borrower in respect of these ADB requirements for the financial year concerned.

Appendix P

6. Use of Funds for the Purpose Intended. The auditor will confirm, or otherwise, that: (i) All external funds have been used in accordance with the relevant financing

agreements covering each project, with due attention to economy and efficiency, and only for the purpose for which the financing was provided.

(ii) Counterpart funds have been provided and used in accordance with the relevant

financing arrangements and only for the purpose for which the financing was provided; and

(iii) Goods and services financed have been procured in accordance with the

relevant financing agreements.

7. Record Keeping. The auditor will pay particular attention to whether all necessary supporting documents, records, and accounts have been kept in respect of all project activities, with clear linkages between the accounting records and the APA. This will include: (i) computation and recalculation, including checking the mathematical accuracy of estimates, accounts, or records; (ii) reconciliation, including reconciling related accounts to each other, subsidiary records to primary records and internal records to external documents; (iii) physical observation, including inspecting or counting tangible assets, such as materials, inventory, land buildings, property, or equipment; (iv) confirmation, including directly confirming balances or transactions with external third parties, such as cash balances, accounts receivable, or accounts payable; (v) sampling, including vouching or examining supporting documentation to determine if balances are properly stated; and (vi) tracing, including tracing journal postings, subsidiary ledger balances, and other details to corresponding general ledger accounts or trial balances. 8. Internal Control Systems. The auditor will assess the adequacy of the project financial management systems, including internal controls, including whether: (i) proper authorizations are obtained and documented before transactions are entered into; (ii) accuracy and consistency are achieved in recording, classifying, summarizing, and reporting transactions; (iii) reconciliations with internal and external evidence are performed on a timely basis by the appropriate level of management; (iv) balances can be confirmed with external parties; (v) adequate documentation and an audit trail is retained to support transactions; (vi) transactions are allowable under the agreements governing the project; (vii) errors and omissions are detected and corrected by project personnel in the normal course of their duties, and management is informed of recurring problems or weaknesses; (viii) management does not override the normal procedures and the internal control structure; and (ix) assets are property accounted for, safeguarded and can be physically inspected. C. Sample Form of Auditor’s Opinion on the Operation of Imprest Account and

Statement of Expenditure

IMPREST ACCOUNT

We have examined the Statement of Imprest Account of Loan 2580-BAN(SF): South Asia Tourism Infrastructure Development Project for the period (specify the period, 1 July xx to 30 June xx) pursuant to the Agreement signed between the Government of Bangladesh and the Asian Development Bank on (7 December 2009.

Our examination was made in accordance with generally accepted auditing

standards emphasizing on the adequacy and completeness of the supporting documents

Appendix P

of the Imprest Account and other auditing procedures as we considered necessary in the circumstances.

In our opinion, the Statement of Imprest Account and support documents and

information submitted with them (can/cannot) be fairly relied on to support the applications for reimbursement/payment in accordance with ADB’s requirements as set out in the Loan Agreement.

STATEMENT OF EXPENDITURE

We have also examined the Statement of Expenditure submitted to ADB during

the period in support of applications for liquidation of the Imprest, pursuant to the Loan Agreement. Our examination was made in accordance with generally accepted auditing standards, and, accordingly included such tests of the accounting records, verification of assets and other such auditing procedures as we considered necessary in the circumstances.

In our opinion, the statement of Expenditure submitted, together with the internal

control and procedures involved in their preparation, (can/cannot) be relied on to support the applications for liquidations in accordance with the requirements of the Loan Agreement.

Appendix Q

PROJECT COMPLETION REPORT FORMAT I. PROJECT DESCRIPTION A. Objectives B. Components (or subprojects for sector and multiprojects) C. Implementation methods D. Description and justification of changes in components (or subproject appraisal criteria) or

implementation methods II. PROJECT IMPLEMENTATION A. Compare original and actual implementation schedules. Indicate delays, length and causes of

delays, and remedial action taken. B. Compare cost estimates made during appraisal and actual costs (foreign and local). Local

currency costs incurred, appropriate exchange rates for their conversion into US dollars, and the foreign exchange costs financed by cofinanciers must be compiled correctly with reference to audited project accounts. Indicate factors that contributed to any significant overruns or underruns.

C. State problems or difficulties in recruiting consultants, with reference to ADB procedures. Assess

the consultant's work and the working relationship between the executing agency (EA) and the consultant. Use of a design and monitoring framework is strongly recommended.

D. State problems or difficulties encountered in procuring goods and services (including civil works)

with reference to ADB procedures. Assess the supplier's or contractor's performance under the contract.

E. Give the extent of compliance of the borrower and EA with loan covenants, with reasons for

noncompliance or delays in compliance and the remedial actions taken. F. State reasons for any delays in loan utilization. Evaluate the appropriateness of the disbursement

methods used. Justify the reallocation of loan proceeds. G. State problems or difficulties with subproject appraisal. Evaluate the EA’s performance and

capacity to appraise subprojects. III. INITIAL OPERATIONS A. Describe initial operations of the project and transitional problems encountered from project

completion to initial operations. B. Describe measures taken to ensure continued smooth operation of the project relative to

management, staffing, funding, and maintenance of project facilities. C. Analyze the prospects of the project benefits being realized. IV. EVALUATION OF THE ASIAN DEVELOPMENT BANK’S PERFORMANCE A. Assess ADB's performance in supervising project implementation. Include comments on the

adequacy of the consultants’ terms of reference and appropriateness of specifications in tender documents. Evaluate the effectiveness and timeliness of assistance extended by ADB to solve implementation problems.

Appendix Q

B. Comment on problems encountered with ADB's procedures. Note the measures taken to resolve

these problems and suggest changes in procedures and requirements.