THE PPSSF PROJECT

A.  Introduction

Public investment in Vietnam, particularly for infrastructure projects, is typically delayed compared with the initial schedules.  This situation applies equally to Asian Development Bank and other donor financed investments.  The rate of disbursement on bank financed projects in Vietnam has increased significantly during recent years but has remained substantially less than the rate at which new commitments are being made.  The result has been a continuous increase in undisbursed funds, expected to exceed $10.0 billion by the end of 2015. 

Regarding portfolio performance, ADB’s Viet Nam country portfolio review found that 12–18 months on average separate fact-finding from loan effectiveness, with an additional 2 years for project start-up and the first contract award, and that loan extensions add another 2 years.

The Project Preparation and Startup Support Facility will support the Government’s efforts to improve project performance.  This will be achieved by providing assistance with the critical project preparation activities, including the schedule and quality components.  The new project preparation facility can be used to provide assistance to feasibility studies, detailed designs, procurement and other necessary project-preparation activities, across all development sectors. 

The Asian Development Bank’s involvement arises from its significant exposure to almost all of Vietnam’s development sectors, from policy support to capacity building and investment operations.  The Bank has extensive global and country knowledge that add considerable value to Vietnam’s project preparation and implementation processes thus effectively supporting the institutional and procedural reforms that these processes require.

B.  Project Development Objective

The Project Development Objective is that Government agencies have increased capacity to plan and prepare public investments efficiently and to international quality standards. Project outcomes will include:

▪    better preparation of investment projects, through the provision of funds for updating feasibility studies, finalizing detailed engineering designs, and preparing bidding documents;

▪    quick project startup;

▪   resolution of project implementation related bottlenecks, particularly on safeguards (conducting baseline surveys, updating resettlement plans and compensation plans, incorporating environmental management plans into the bidding documents), procurement (selecting the first consulting firm for detailed design and supervision) and disbursement (opening imprest accounts and managing withdrawal applications); and

▪    provision of transaction advisory services.

Subproject preparation activities beyond the Feasibility Study stage (detailed engineering design, etc) are contingent upon the viability of the subproject based on the feasibility study findings.  It should be noted that approval of PPSSF financing for subproject preparation activities does not guarantee subsequent Asian Development Bank financing of the investment loan.

Costs incurred during the preparation of the PPSSF subprojects will replace the preparation activity costs that otherwise would be incurred during the investment-project.

C.  Eligibility

In order to be eligible for consideration for PPSSF funding a subproject must meet one of the following criteria (i) be included in ADB’s Country Operations Business Plan (ii) be considered by the Government as a high priority, (iii) be agreed upon by the MPI and the ADB at the CPM, the country programming confirmation mission (CPCM) or the country portfolio review mission (CPRM).

D.  Project Administration Manual

For information and reference by potential IAs the PPSSF Project Administration Manual, is available to be downloaded below in English and Vietnamese

• PAM in English
• PAM in Vietnamese

E.  Sectors of Assistance

PPSSF assistance is available for projects in all sectors including:

▪      Infrastructure,

▪      Education,

▪      Health care,

▪      Agriculture and Fisheries

F. Procurement Procedures

Procurement activities for all Asian Development Bank funded PPSSF subprojects are to be carried out in accordance with ADB procurement guidelines.

Counterpart Funded activities must comply with the Government of Vietnam’s Procedures and Regulations.

G. Social and Environmental Safeguards

PPSSF will finance subproject preparation studies and will therefore have no direct social or environmental impacts. However, there are potential negative impacts associated with the subprojects whose preparation is financed by the Project.  Therefore, in accordance with the Bank’s safeguard policies, the preparation of all subprojects financed by the Project will incorporate appropriate social and environmental considerations to add value to the Project’s benefits and to mitigate any potential negative impacts.

Provided they are well managed and executed, the Project is expected to have positive, albeit indirect, social and environmental impacts on future Bank lending operations through the preparation of Bank compliant, timely and good quality safeguard studies.

The Project will finance the preparation of appropriate safeguard instruments, as part of subproject preparation, to ensure compliance with the Bank’s social safeguard policies.  Screening will be carried out for each subproject to determine the main potential social impacts, whose safeguard policy may be triggered, and the assessment category of the subproject.

The IA’s capacity to prepare the required safeguard instruments will be assessed during the PPSSF application process. Assistance, advice and support will be provided to the IAs if required.

H. Financial Management

Financial Management of the PCU and PPSSF assisted subproject activities must comply with relevant Asian Development Bank and Government of Vietnam regulations.

Implementing Agencies, through their subproject PMUs will be responsible and accountable for financial management of the subcomponents.  PCU is not responsible for authorizing or verifying subproject transactions which remain the IA’s responsibility.

The Project Financial Statements will be audited by independent auditors acceptable to the Asian Development Bank and procured/managed by PCU.  The cost of financial audits will be funded by the project. In addition, quarterly Interim Financial Reports will be compiled by PCU, using financial inputs provided by the IAs.

I. Related Projects

In 2010, the World Bank (WB) developed the Project Preparation Technical Assistance Facility (PPTAF). The $100m facility supports World Bank-funded projects by preparing feasibility studies, detailed designs and bidding documents, and providing necessary resources to speed up project preparation. Several issues were encountered during its early stages of implementation, mostly delays caused by the complicated application process and lack of capacity in implementing agencies to prepare and process applications. PPTAF has served as a model for the PPSSF, and is also administered by MPI.

In 2013, the ADB commenced the Public-Private Partnership Support Project, a $33.9m facility with co-finance by Agence Francaise de Developpement. The project supports PPP project preparation activities, which will include the preparation of prefeasibility studies, detailed feasibility studies, and bid and contract documentation.