Completion Report

Project Number: 30292-023 Loan Number: 2223 October 2013

Viet Nam: Central Region Water Resources Project

CURRENCY EQUIVALENTS

Currency Unit – dong (D)

At Appraisal At Project Completion 22 September 2005 18 February 2013

D1.00 = $0.000063 $0.000048 $1.00 = D15,835 D20,828

ABBREVIATIONS

ADB – Asian Development Bank CPMU – central project management unit DARD – Department of Agriculture and Rural Development DMF – design and monitoring framework EIRR – economic internal rate of return EMP – environmental management plan GAP – Gender Action Plan ha – hectare IMC – irrigation management company MARD – Ministry of Agriculture and Rural Development O&M – operation and maintenance PPC – provincial people’s committee PPMU – provincial project management unit RRP – report and recommendation of the President SDR – special drawing right WUA – water user association WUG – water user group

NOTE

In this report, "$" refers to US dollars.

Vice-President S. Groff, Operations 2 Director General J. Nugent, Southeast Asia Department (SERD) Director J. Mir, Environment, Natural Resources, and Agriculture Division, SERD Country Director T. Kimura, Viet Nam Resident Mission, SERD Team leader D. Mellor, Country Economist, SERD Team members D. Ellingson, Principal Natural Resources Specialist, SERD

D. Huong, Associate Project Analyst, SERD H. Phong, Senior Programs/Project Implementation Officer, SERD N. Giang, Social Development Officer (Gender), SERD

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

CONTENTS

Page

BASIC DATA ii

MAP vi

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2

B. Project Outputs 3

C. Project Costs 5

D. Disbursements 6

E. Project Schedule 6

F. Implementation Arrangements 6

G. Conditions and Covenants 7

H. Consultant Recruitment and Procurement 7 I. Performance of Consultants, Contractors, and Suppliers 8

J. Performance of the Borrower and the Executing Agency 8

K. Performance of the Asian Development Bank 9

III. EVALUATION OF PERFORMANCE 9

A. Relevance 9

B. Effectiveness in Achieving Outcome 10

C. Efficiency in Achieving Outcome and Outputs 11

D. Preliminary Assessment of Sustainability 12

E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13

A. Overall Assessment 13

B. Lessons 13

C. Recommendations 14

APPENDIXES

1. Design and Monitoring Framework 16 2. Status of Compliance with Loan Covenants 22

3. Summary of Gender Equality Results and Achievements 30

I. BASIC DATA

A. Loan Identification 1. Country: Socialist Republic of Viet Nam 2. Loan Number: 2223-VIE(SF) 3. Project Title: Central Region Water Resources Project 4. Borrower: Socialist Republic of Viet Nam 5. Executing Agency: Ministry of Agriculture and Rural Development 6. Amount of Loan: SDR52,128,000 7. Project Completion Number: PCR:VIE 1429

B. Loan Data 1. Appraisal

- Date started 22 September 2005 - Date completed 5 October 2005 2. Loan Negotiations - Date started 24 November 2005 - Date completed 26 November 2005 3. Date of Board Approval

19 December 2005

4. Date of Loan Agreement

18 December 2006

5. Date of Loan Effectiveness - In Loan Agreement 8 June 2007 - Actual 8 June 2007 - Number of Extensions 0 6. Closing Date - In Loan Agreement 30 June 2012 - Actual 18 February 2013 - Number of Extensions 0 7. Terms of Loan - Interest Rate 1% per annum during

the grace period and 1.5% per annum thereafter

- Maturity (number of years) 32 - Grace Period (number of years) 8 8. Disbursements

a. Dates -

Initial Disbursement 3 August 2007

Final Disbursement 21 January 2013

Time interval 66 months

Effective date 8 June 2007

Original closing date 30 June 2012

Time interval 60.7 months

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b. Amount (SDR ‘000)

Category Original Allocation

Last Revised Allocationa

Amount Disbursed

Amount Cancelled

01. Civil Works 40,528 44,677 44,691 (14) 02. Materials and

Equipment 1,224 599 599 0

2a. Vehicles 278 170 170 0 2b. Other equipment and materials

946 429 429 0

03. Consulting Services 2,574 1,814 1,814 0 04. Survey, Investigation 913 1,940 1,964 (24) 05. Environmental

Management 428 148 148 0

06. Workshops and Trainings

966 1,212 1,151 61

07. Project Management 1,541 949 531 418 08. Operation and

Maintenance 111 0 0 0

09. Service Charge 1,324 789 789 0 10. Unallocated 2,519 0 0 0 Total

52,128 52,128 51,687 441

Total $ Equivalent 74,300 80,971 80,295 676 C. Project Data 1. Project Cost ($ millions) Cost Appraisal Estimate Actual Foreign Exchange Cost 37.82 38.93 Local Currency Cost 61.18 62.86

Total 99.00 100.99

2. Financing Plan ($ millions) Cost Appraisal Estimate Actual Implementation Costs

Borrower Financed 24.71 20.26 ADB Financed 72.40 79.51 Other External Financing 0 0 Total 97.11 99.77 IDC costs

Borrower Financed 0 0 ADB Financed 1.89 1.22 Other External Financing 0 0 Total 1.89 1.22

ADB = Asian Development Bank, IDC = interest during construction. a Approved on 5 December 2012.

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3. Cost Breakdown by Project Component ($ millions) a Component Appraisal Estimate Actual Irrigation Management Systems Improvement 15.53 11.37 Irrigation Infrastructure Improvement 81.58 88.40 Total 97.11 99.77 4. Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants Jun 2007 21 May 2008 Date of Technical Design Completion Jul 2007 Dec 2008 Civil Works Commencement of Construction 2007 2008 Completion of Construction Dec 2011 30 Jun 2012 Equipment and Supplies Jul 2007 Jul 2007 Dates

Commencement of Purchase Jul 2007 Jul 2007 Completion of Purchase Dec 2010 Oct 2011 Completion of Equipment Installation Dec 2010 Oct 2011

Operation Trial completion Jul 2007 Oct 2011 Commencement of Operation Jul 2007 Oct 2011

5. Project Performance Report Ratings Implementation Period

Ratings Development Objectives

Implementation Progress

From 8 May 2007 to 31 December 2007 Satisfactory Not Satisfactory From 1 January 2008 to 31 December 2008 Satisfactory Satisfactory From 1 January 2009 to 31 December 2009 Satisfactory Satisfactory From 1 January 2010 to 31 December 2010 On Track On Track From 1 January 2011 to 31 December 2011 On Track On Track From 1 January 2012 to 30 June 2012 On Track On Track

Data on Asian Development Bank Missions

Name of Mission

Date No. of Persons

No. of Person-Days

Specialization of Members

Fact-Finding 24 May–1 Jun 2005 4 7 d, f, c, e Appraisal 22 Sep–5 Oct 2005 4 14 d, f, c, e Inception 15 –20 Jan 2007 3 6 g, f, h d, c, e Review 3–13 Dec 2007 2 11 d Special Project Administration Mission

16–23 Jun 2008 2 8 d

Review 12–19 Dec 2008 2 8 f Review 27 Nov–11 Dec 2009 3 15 f, e, b Review 10–22 Jun 2010 3 13 f, e, b Review 17–28 Dec 2010 1 12 f Review 20 Jun–14 Jul 2011 3 15 f, e, b

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Review 8–20 Dec 2011 1 13 f Review 15–27 Jun 2012 1 13 f Project Completion Review 11 – 25 Jan 2013 2 13 a, f a No contingencies and bank interests included during project implementation.

a = economist, b = environment specialist, c = financial analyst, d = program officer, e = social development specialist, f = project specialist.

Hai Phong

HA NOI

Son La

Dien BienPhu

Lai Chau

Lao Cai

Ha Giang Cao Bang

Bac Kan

Lang Son

Yen Bai

Tuyen QuangThai Nguyen

Thai Binh

Ninh Binh

Thanh Hoa

Hoa Binh

Phu Ly

Hung Yen

Bac Giang

Ha Long

Vinh

Ha Tinh

Dien Chau

Thai Hoa

Dong Hoi

Dong Ha

Hue

Da Nang

Quang Ngai

Tam Ky

Hoi An

Pleiku

Bong Son

Kon Tum

Quy Nhon

Tuy HoaBuon MaThuot

Dak Song Ninh Hoa

Cam Ranh

Di Linh

Lien Huong

Da LatGia Nghia

Phan Thiet

Phan Rang-Thap Cham

Bien Hoa

Dong Xoai

Ho Chi Minh City

Vung TauMy Tho

Rach GiaPhu Quoc Island

LongXuyen

Can Tho

Vinh Long

Vi Thanh

Chau Doc

Ha Tien

Cao Lanh

Soc Trang

Tra Vinh

Ben Tre

Bac LieuCa Mau

Tan An

Thu Dau Mot

Tay Ninh

HaiDuong

Nha Trang

An Loc

Dat Do

Viet Tri

Phu ThoMong Cai

Cam Pha

That Khe

Vinh Yen

Lai ChauDien BienSon LaLao CaiPhu ThoTuyen QuangHa GiangYen BaiCao BangBac KanThai NguyenVinh PhucHa NoiBac NinhHung YenLang SonQuang NinhBac GiangHai DuongHai PhongThai BinhHoa BinhHa NamNinh BinhNam DinhThanh HoaNghe AnHa TinhQuang BinhQuang TriThua Thien HueDa NangQuang NamQuang NgaiKon TumGia LaiBinh DinhPhu YenDak LakDak NongKhanh HoaLam DongNinh ThuanBinh PhuocTay NinhBinh DuongDong NaiBinh ThuanBa Ria - Vung TauHo Chi MinhLong AnTien GiangDong ThapAn GiangKien GiangHau GiangCan ThoVinh LongBen TreTra VinhSoc TrangBac LieuCa Mau

1.2.3.4.5.6.7.8.9.

10.11.12.13.14.15.16.17.18.19.20.21.22.23.24.25.26.27.28.29.30.31.32.33.34.35.36.37.38.39.40.41.42.43.44.45.46.47.48.49.50.51.52.53.54.55.56.57.58.59.60.61.62.63.

PROVINCES

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63

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3

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5

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8

9

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11

12

13

14

15

16

1718

1920

2122 23

2425

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3132

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3839

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4243

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46 4748

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51

525354

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56

5758

60

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LAO PEOPLE'SDEMOCRATIC REPUBLIC

CAMBODIA

PEOPLE'S REPUBLICOF CHINA

Project Area

National Capital

Provincial Capital

City/Town

National Road

Other Road

Railway

River

Provincial Boundary

International Boundary

Boundaries are not necessarily authoritative.

VIET NAMCENTRAL REGION WATER

RESOURCES PROJECT(as completed)

100

Kilometers

50 2000

N

13-1939 AV

103 00’Eo

103 00’Eo

108 00’Eo

108 00’Eo

12 00’No 12 00’No

20 00’No20 00’No

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

I. PROJECT DESCRIPTION

1. In 1999, the Asian Development Bank (ADB) formally adopted poverty reduction as its overarching goal, and, beginning in 2000, the global development community gradually began using the United Nations Millennium Development Goals as the benchmark for monitoring poverty reduction. In line with these changes, the Viet Nam Country Strategy and Program (2002–2004) allocated one-third of lending to the impoverished Central Region as a major thrust of ADB's assistance1. At the time, the central coastal provinces were predominantly agricultural, dependent to a large extent on the production of rice as a primary crop, and they had an overall poverty level of about 38%. The primary approach to improving economic development was through improved agricultural production, which was dependent on the improved management of the region’s water resources infrastructure. Better infrastructure and its management would mean increased production through irrigation, especially in the dry season, and the prevention of crop damage through improved drainage, flood control, and the control of salinity intrusion. 2. The physical constraints to increased agriculture production included the region’s monsoon climate which guarantees abundant water during the monsoon season, but also contributes to flooding of much of its most productive agricultural land, while during the dry season, water shortages are prevalent. Rivers that originate within Viet Nam are short and steep, offering limited opportunities for multipurpose water storage reservoirs, but much of the agricultural land is low-lying and flat, requiring drainage for maximum crop production. Salt water intrusion was advancing into coastal plains and delta areas, limiting opportunities for extraction of water for agricultural, domestic, and industrial uses. This was exacerbated by the deteriorated and under-designed water resources control infrastructure (irrigation schemes, drainage schemes, and flood and salinity control structures) serving the rural population. Much of the infrastructure was initially under-designed and had suffered a lack of adequate maintenance such that the efficiency of operation was below design levels. 3. Institutional constraints were also identified as limiting effective water use. Provincial agencies had considerable authority over water infrastructure development and management (subject to conformity with national sector policies and strategies), but their capacity to target poverty in water projects and coordinate various cross-sectoral aspects of resource management was limited. Irrigation management companies (IMCs)—state-owned public utilities responsible for the operation and maintenance (O&M) of large water resources infrastructure—displayed little service orientation or capacity to manage irrigation in a sustainable manner. Maintenance was frequently neglected in favor of government-financed periodic rehabilitation. At the tertiary canal level, water users were not empowered to make water management decisions. Critically, there was a disconnect between the payment of water user fees and the delivery of water in the correct amounts and at the appropriate times. 4. To resolve some of these constraints and, as a result, increase agricultural production and reduce poverty within the central region, a project was designed (with the assistance of an ADB project preparatory technical assistance2) that focused on the upgrading of six medium-sized irrigation schemes in six coastal provinces,3 along with the introduction of service-oriented management systems within the schemes that were to be (i) financially sound; (ii) capable of

1 ADB. 2001. Country Strategy and Program: Viet Nam, 2002–2004. Manila

2 ADB. 2004. Technical Assistance to the Socialist Republic of Viet Nam for Preparing the Central Region Water

Resources Sector Project. Manila. 3 These were the Thach Thanh Subproject (Thanh Hoa Province), Thuong My Trung Subproject (Quang Binh

Province), Thach Han Subproject (Quang Tri Province), Tay Nam Huong Tra Subproject (Thua Thien Hue Province), Tra Cau Subproject (Quang Ngai Province), and La Tinh Subproject (Binh Dinh Province).

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meeting agreed service targets; (iii) enabled and structured to prepare work plans, budgets, user fees, and staff plans; and (iv) responsive to the needs of the client base. 5. The project’s intended impact was reduced poverty in six central provinces and its intended outcome increased agricultural production in the selected irrigation subprojects. About 400,500 people, 38% of whom live below the poverty line of $0.33 per person per day, were to have benefited directly from the project. 6. The project’s outputs were identified in two parts. Part 1 (irrigation management systems improved) dealt with institutional aspects and included the: (i) establishment of financially viable service providers; (ii) strengthening of water user participation through the formation of water user groups (WUGs) and water user associations (WUAs); (iii) development of on-farm infrastructure; (iv) operationalizing of a project performance management system; and (v) implementation of a gender action plan and HIV/AIDS awareness program. The physical improvements (over and above on-farm infrastructure) were identified as part 2 of the project and included: (i) the completion of detailed designs of the six subprojects; (ii) the implementation of the subprojects; (iii) resettling and compensating affected people; and (iv) the implementation of environmental management plans (EMPs). 7. Subproject physical works included the upgrading and new construction of irrigation reservoirs, pumping stations and canals on about 32,300 hectares (ha); the provision of drainage canals and pumped drainage systems on about 2,800 ha; the provision of flood control embankments on about 6,100 ha; and the provision of salinity intrusion prevention on 2,500 ha. 8. A loan for the project in an amount of SDR52,128,000, which was $74.3 million equivalent at the time of loan approval, was approved on 19 December 2005, was signed on 18 December 2006, became effective on 8 June 2007, and was scheduled to close on 30 June 2012. The actual closing date was 18 February 2013. Some changes were made to the project scope and institutional arrangements during implementation. These included (i) dropping two subcomponents from the original scope, thereby reducing to a minor extent the physical works, the area benefited, and number of beneficiaries and (ii) a revision of the institutional arrangements for water management at both the IMC level and the WUG levels. The implications of these changes are discussed below.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

9. The project as designed was directly relevant to and consistent with the development objectives and strategies of both ADB and the Government of Viet Nam. ADB’s strategy focused on poverty reduction in the Central Region. According to current development strategies of both the Government and ADB the rural areas of the Central Region had the highest levels of poverty relative to the national average and also the greatest potential for poverty reduction through enhanced agriculture productivity and reduced disaster susceptibility as a result of improved water resources management. The government’s Comprehensive Poverty Reduction and Growth Strategy promoted (i) increased income in the rural sector through broad-based, sustainable, and high quality growth; (ii) reduced income disparities, risks, and vulnerability, and improved food security and social well-being of the poor; and (iii) improved sustainability of natural resources in rural areas. The country’s Socio-economic Development Plan focused on completing, rehabilitating, and modernizing water infrastructure to ensure optimum use and conservation of water resources for irrigation, water supply, and industry, as well as increasing

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the role of users in the O&M of irrigation systems. The project design was consistent with all of these aspirations. With its focus on the improved management of water resources schemes, the project provided an institutional model for schemes in other parts of the region and the country. As a result, the project was relevant at the time of appraisal, and it remains relevant today. Of particular importance was the focus on the involvement of end user beneficiaries in the design of project works (especially on-farm works) and in the O&M of completed schemes. 10. Nonetheless, the envisaged institutional measures proved to have been overambitious and were eventually overtaken by unexpected national events. In reality, it proved difficult to establish new WUGs and WUAs on a geographic basis in the short time available for implementation. Thus, while some completely new WUGs were established, most of the new WUGs were based on existing rural organizations. In addition, pursuant to a Ministry of Finance decision to fully fund the operating costs of IMCs with government funds4 (a measure that is still a basis of dialogue and study between the government and development partners today), the relevant covenants on the financial independence and viability of IMCs had to be revised to take into account national policy. This enhanced the relevance of the project in terms of current institutional and financial realities, but could be considered a regressive step in terms of the original design intent of developing sound and sustainable water management practices in the long term. On the other hand, it is likely that the original proposals were simply unrealistic and too radical to have been implemented by a bureaucracy and an institutional culture that tend toward traditionalism rather than rapid and fundamental reform. B. Project Outputs

11. The planned physical outputs (irrigation, drainage, flood control, and salinity control measures) covered by the six subprojects are shown in Table 1 below.

Table 1: Planned Irrigation, Drainage, Flood Control, and Salinity Control Outputs

Subproject Improved Irrigation (ha) (A)

Improved Drainage (ha) (B)

Improved Flood Control (ha) (C)

Salinity Intrusion Control (ha) (D)

Beneficiaries (no.)

Thach Thanh 3,900 - - 26,000 Thuong My Trung

4,200 - 4,200 2,500 44,900

Nam Tach Han

13,400 - - - 137,600

Tay Nam Huong Tra

3,100 2,900 500 - 66,300

Tra Cau 4,300a 93,500b La Tinh 3,400c 1,400 36,500 Total 32,300 2,900 6,100 2,500 404,800 Grand Total Improved Area (A+B+C+D)= 43,800d ha = hectares. a Including 150 ha for aquaculture from Chop Vung reservoir. b Including 47,600 beneficiaries to benefit from improved domestic water supply from Chop Vung reservoir. c Including 300 ha for aquaculture.

4 Government of Viet Nam, Ministry of Finance. 2008. Decree II5, Waiver of Irrigation Service Fees. Hanoi

4

d This includes some overlap. For example, areas in Truong My Trung were to benefit from improved irrigation as well as improved flood control and salinity intrusion control. Source(s): Central Project Office Project statistics

12. All drainage, flood control, and salinity control outputs indicated above have been achieved. In terms of irrigation and domestic water supply, however, there were some shortfalls. The decision to drop the Ben Da weir subcomponent from the scope of the Nam Thach Han subproject due to excessive costs reduced the overall irrigated area by about 350 ha. The area provided with improved irrigation coverage therefore totaled about 31,950 ha, or 99% of the originally intended coverage. Elimination of the Chop Vung subcomponent from the Tra Cau subproject because of resettlement issues and questionable economic viability reduced the number of beneficiaries expected to receive improved water supplies to 39,300 from 47,600. On the whole, the project came close to achieving 100% of its intended physical outputs. Despite long start-up delays, these were accomplished with only a modest implementation extension. 13. In terms of the improved irrigation management systems outputs as listed in the report and recommendation of the President (RRP) (paras 24 to 32) 5, achievements were mixed and can be summarized as follows:

(i) Establishment of financially viable service providers: managerially independent, functional, and self-managing IMCs with published business plans were developed in all six provinces, but their funding came from the provincial governments and they were therefore not financially independent.

(ii) Strengthening of water user participation: strengthened water user groups have been established to cover 100% of five subprojects and about 60% of the service area of the Nam Tach Han subproject. They are not the independent WUGs based on irrigation turnouts as envisaged at appraisal, but based on existing cooperatives operating within the subproject areas.

(iii) The development of on-farm infrastructure: contracting with WUGs rather than using private contractors provided a much needed income boost to the WUG members, especially during the construction period. WUGs are now being contracted by the IMCs to undertake maintenance work on the schemes, adding to their viability and scheme ownership of WUG members.

(iv) Project performance management system: while a global information system-based system was put into place, it was too sophisticated and technologically advanced for use by IMCs and WUGs and is therefore not operational. Also, the design of this subcomponent confused the concept of the project performance management system, which is to be used for monitoring project implementation, with benefit monitoring, which is a post-construction activity carried out after the project is completed.

(v) Implementation of gender action plan and HIV/AIDS awareness program: separate gender action plans were prepared and implemented for each subproject. The project organized 138 study tours, trainings, and workshops on its gender action plan and social support program for 6,597 people, 46% of whom were women. An increased number of women active in the revamped WUGs has been reported, but not quantified.

14. Improved irrigation infrastructure outputs listed in the RRP (op. cit., paras 33 to 46) have been achieved. These include:

5 ADB. 2005. Report and Recommendations of the President to the Board of Directors, Proposed Loan to the Socialist Republic of Viet Nam for the Central Region Water Resources Sector Project. Manila

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(i) The completion of detailed designs of subprojects: all completed, but later than envisaged due to start-up delays, and technical problems.

(ii) Subproject implementation: all subprojects implemented with some minor changes, including the dropping of two minor subcomponents for cost and safeguard reasons.

(iii) Resettle and compensate affected persons: 13,372 households were affected by the project, but of these the effect on 12,959 was minor. The project resulted in the relocation of 27 households, while 386 lost more than 10% of their agricultural land. All six subprojects have completed the compensation process for affected households following required ADB procedures and standards.

(iv) The implementation of EMPs: EMPs were prepared for each subproject, and environmental monitoring consultants conducted 42 EMP monitoring missions during construction of the six subprojects. Supervising frequency was once every 3 months on average, while sampling, analysis, and reporting complied with current Vietnamese regulations.

C. Project Costs

15. Despite the complexity of the project, which was made up of six different subprojects, each with different subcomponents, the cost estimates at appraisal were reasonably accurate. The total project cost estimate at appraisal was $99.0 million, while the total project cost at completion was $101.0 million. The increase is primarily accounted for by inflation, which was particularly high for the dong during the project period. 6 However, this was partly compensated for because the loan was denominated in special drawing rights (SDR), and, in addition, the dollar inflation rate was considerably less than that of the dong. 7 As a result, in dollar terms, the ADB loan funded $80.3 million of the project cost as opposed to the estimated amount of $74.3 million. However, since local costs had devalued, the amount funded by the government was considerably lower than originally envisaged: $20.26 million rather than $24.71 million. 16. Necessary remedial works on the dam at the Khe Ngang reservoir in the Tay Nam Huong Tra subproject also increased project costs. Poor design and foundation work resulted in settling and cracks in the new structure, necessitating $1.5 million worth of remedial works. 8 On the other hand, the elimination of two subcomponents from the scope of the Tra Cau and Nam Thach Han subprojects for safeguard and technical and economic viability reasons reduced the overall project cost by about $7.5 million. In view of the increase in the international price of rice—the main commodity being produced by the project—as well as the considerable degree of currency fluctuation and the decline in the value of the dong, it is unlikely that the cost increases experienced by the project will have had a significant effect on the economic rate of return of the six individual subprojects. If any, the Tay Nam Huong Tra subproject may experience a somewhat lower economic rate of return due to a slightly delayed benefit stream. D. Disbursements

17. Up to the end of the third project year, disbursements were significantly delayed compared to original projections. This was due to long delays in loan signing (more than 1 year), consultant recruitment, detailed design completions, and contract awards. When the mid-term review mission took place in May 2009, contract awards were 8% of the total loan amount and

6 The cumulative inflation rate of the dong from 2006 to 2011 was over 100%.

7 The ADB loan was for SDR52,128,000. In 2006 this was equivalent to $74.0 million, while in 2012 it was equivalent

to $81.0 million. The dong depreciated by 41% against the SDR during 2006–2011. 8 The need for these works was confirmed by an independent engineering firm recruited to advise on remedial

actions.

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disbursements 5%. However, disbursements picked up considerably soon thereafter. Civil works contracts were mainly awarded in 2009 and 2010. Contract award amounts peaked in 2009, reaching more than 56% of the total project cost. The loan amount was fully disbursed at the time of loan closure in February 2013. 18. Imprest accounts were used for the project, with one first generation imprest account being established at the national level and six second generation imprest accounts being established at the provincial levels for each subproject. The accounts proved efficient in providing the funding needed by the provincial governments on time and in sufficient amounts. E. Project Schedule

19. As noted above, the project was completed on time. However, implementation did not follow the planned schedule. The government delayed signing the loan agreement by about 12 months due to an internal procedural requirement that called for the government’s feasibility study of the project to be approved prior to loan signing; Board approval was in December 2005, and the signing was in December 2006. This meant that the loan account was open, but for more than a year there were no disbursements and no physical progress at all.9 This was followed by further procedural complications, including (i) delays in the recruitment of the loan implementation consultants (under Vietnamese law at that time, recruitment could not start until a loan was effective); (ii) the need to recruit local design consultants; (iii) the difficulty in establishing new WUGs without any prior institutional basis; (iv) the time taken for detailed design and safeguard compliance; and (v) the fact that remedial works were needed at the Khe Ngang reservoir. Given these circumstances, it is noteworthy that the majority of works were completed by mid-2012, only 6 months later than the completion date of 31 December 2011 given in the loan agreement. F. Implementation Arrangements

20. Implementation arrangements were similar to those of previous water resources projects as well as a number of projects in other sectors (e.g., urban development, water supply, education) undertaken by the Ministry of Agriculture and Rural Development (MARD). These arrangements consisted of a central project management unit (CPMU) set up within the central project office of the MARD along with provincial project management units (PPMUs) for each province. The CPMU was responsible for overall project management and coordination, capacity building, and liaison with ADB. In line with the government’s policy on decentralization, individual PPMUs were responsible for implementing the six subprojects and ensuring that irrigation management institutions were revamped and strengthened. There are flaws with this general arrangement, however, since for each new project it is necessary to establish PPMUs and train new staff in ADB’s procedures. This leads to slow start-ups and problems with procurement. There are also language issues since many provincial staff do not speak or read English. However, these arrangements are in line with government and ADB policies. Moreover, they have worked satisfactorily for past projects in the sector (according to earlier project completion reports and project performance evaluation reports) and appear to have worked well enough for this project. After some start-up delays while PPMU and CPMU staff became familiar with ADB regulations and procedures, the main concerns were weaknesses in civil works design at the provincial level (see para 26 below) and difficulties in obtaining the timely allocation of provincial government funds.

9 At that time the loan account was opened upon approval by the Board. This is no longer the case and the loan

account is opened at the time of loan effectiveness.

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G. Conditions and Covenants

21. A summary of the borrower’s compliance with loan covenants is provided in Appendix 2. Most covenants, including financial covenants, have been complied with. However, several had to be rewritten to enable the establishment of new WUGs within the limited project period and conform with new legislation providing for the full funding of O&M costs of IMCs by the provincial governments. 10 22. These changes weakened the intended institutional impact of the project in terms of strengthening water management arrangements, nationally and the project area. However, the original design did not take account (i) the difficulty of bringing about institutional reform within a time-bound project in isolated parts of the country; (ii) the lack of a full understanding and buy-in of the proposed institutional changes by the provincial governments, provincial staff, and water user beneficiaries;11 and (iii) a completely unexpected decision by the Ministry of Finance to fully fund irrigation maintenance costs down to the secondary canal level through IMCs. 12 23. Nonetheless, while the intent of the covenants was watered down, some meaningful institutional reforms were undertaken, and these now act as a model for other schemes both within the project provinces and elsewhere. These include (i) the establishment of IMCs as independent entities with their own business plans and a service provider focus and (ii) the establishment of WUGs as self-managing organizations able to collect fees from water users and supplement their funding through O&M contracts with the IMCs. WUGs are now able to prepare and implement annual work plans to better serve their members. H. Consultant Recruitment and Procurement

24. At the time of project implementation there were restrictions on advance action for projects in Viet Nam. As a result, despite the implementation schedule in the RRP showing advance action for the recruitment of both the loan implementation consultants and the detailed design and construction supervision consultants, neither of these was legally possible in Viet Nam. Until early 2013, only early preparation of consultant recruitment documents (e.g., terms of reference, draft request for proposal) could occur before the loan had been declared effective; advertising and the preparation of a short list had to wait until after this occurred. In the case of this project, consultants were not fielded until May 2008, 2.5 years after Board approval and nearly 1.5 years after loan signing. Once the process was underway, no significant issues or problems were reported during the selection and recruitment of project implementation, design and supervision, or safeguard consultants. I. Performance of Consultants, Contractors, and Suppliers

25. While most consulting services were performed satisfactorily, there were some deficiencies in designing project structures, and the project implementation consultants failed to identify some of these deficiencies. On several subprojects, the Mission observed examples of poor and substandard designs. The most dramatic was the inadequate design of the Khe Ngang

10

These included paragraphs 5, 6, 7, and 8 of Schedule 6 of the loan agreement. 11

Partly due to the limited time available in the project implementation period and the large and diverse area within which these changes were expected to be undertaken.

12 As noted earlier, this decision and its implications are still under study and discussion. So far the impact has been positive. (See: MARD. 2012 Review of the Impact of the Viet Nam Government's Waiver of Irrigation Service Fees – Final Report. Hanoi).

8

reservoir dam, which had developed cracks as result of a poorly prepared foundation. 13 This required remedial action and, through the efforts of all stakeholders, specialist consultants were brought in to resolve the problem. Additional design defects noticed during field visits included the pumping stations in the Thuong My Trung subproject, which were so poorly designed that holes had to be punched in the walls and wooden supports added to accommodate the water pipes. In the same subproject, a cheaper gravel, rather than concrete, surface was used on the top of the embankments. These surfaces are used for transportation purposes, and they are subject to wear and tear as well as deterioration during floods. These design deficiencies have already resulted in delayed benefit accrual (in the case of the Khe Ngang reservoir, which will not be fully operational until 2014) and will result in overall lower than expected economic rates of return due to increased O&M costs. Additionally, some of the construction work observed (especially at Thuong My Trung) was substandard, indicating high O&M costs in the future. The project implementation consultants who were responsible for reviewing engineering designs and identifying both the design defects and the low-quality construction works were remiss in not bringing these to the attention of the CPMU and ADB. The substandard work and the deficiencies not being identified by the project implementation consultants may be attributed to the rush to finish works prior to loan closing so that the government could avail of loan funds. J. Performance of the Borrower and the Executing Agency

26. In reviewing project implementation, it is worthwhile to separate the case of the borrower from that of the executing agency. For the borrower, cumbersome procedures had a negative impact on the pace and success of implementation. Due to government internal processing requirements, it was not possible for the loan to be signed until more than 1 year after it had been approved by ADB’s Board of Directors. Because of further regulations, it was not possible to recruit project implementation consultants or design and supervision consultants until the loan became effective. This meant that for much of the first 3 years after approval, no physical works could be undertaken. Finally, difficulties ensued in obtaining the timely allocation of provincial government funds because of the very weak financial capacities of the participating provinces (which are among the poorest provinces in country) and the delayed provision of central government funds to them. Many of the initial problems were encountered at the central level and were not directly related to the performance of the MARD (the executing agency), the CPMU, and PPMUs. The performance of the Borrower is considered less than satisfactory. 27. Once these procedural problems at the central level were overcome, further difficulties arose during the initial project years. Staff members of the CPMU and PPMUs were not selected through a competitive procedure, but were directly assigned by the MARD and provincial Departments of Agriculture and Rural Development (DARDs) without terms of reference or job descriptions. This resulted in weak capacity and a lack of understanding of their duties during the first 2 years of implementation. However, during the last 3 years of implementation, their capacities and skills improved after the project provided a number of training courses and they became familiar with the scope of the project, their expected roles, and ADB procedures. Additionally, because of low cost norms, design consultants recruited by the government were not of the highest quality, resulting in weaknesses in civil works design. 28. Despite all of these difficulties, the executing agency adequately completed the project works and institutional reforms within budget and on time. The civil works and institutional reforms were implemented within 3 years instead of the 6 years originally planned. On this basis,

13

The provincial design consultant was not familiar with the new “jet-grouting” technique being used.

9

and despite initial delays and occasional instances of poor quality civil works, the performance of the executing agency is rated satisfactory. K. Performance of the Asian Development Bank

29. During the design and appraisal phase, the project would have benefited from a more realistic design (in terms of the institutional reforms expected) and a sounder knowledge of the government’s internal procedures and requirements. While the project correctly focused on institutional reform for water resources management institutions, it was overly ambitious. This could have caused serious project delays and disagreements, which would have further impeded or delayed implementation if a consultative approach to policy differences had not been taken during implementation. 14 Likewise, the constraints on internal processing by the government and the restrictions on consultant recruitment prior to loan effectiveness should have been known by the processing team and taken into account. In addition, the delay in loan signing by the government should have been accounted for in the monitoring of project implementation. These actions would have avoided raising expectations and provided a clearer picture of the actual state of implementation, rather than having the project appears to be in greater jeopardy during the early years of implementation than it really was. With only 8% disbursement at the end of its third year, the project appeared to be a non-performer when it was merely delayed due to procedural issues. This could have affected project supervision decisions and could even have resulted in cancellation or major reductions in project scope. 30. Once the project was underway and transferred to the Viet Nam Resident Mission, it was possible to take stock of the situation and provide more support to the MARD and the provinces to implement the project within a reasonable time frame and to a reasonable degree of compliance. Because of this implementation support, ADB’s performance is rated only partly satisfactory during preparation and processing, but satisfactory overall.

III. EVALUATION OF PERFORMANCE

A. Relevance

31. The project was relevant in terms of achieving ADB’s and the government’s strategic objectives of reducing poverty in the central region, increasing agriculture production, and increasing the efficiency of the use of the country’s water resources. At the time of preparation, the project was consistent with ADB’s medium-term strategy and its country strategy and program of poverty reduction which recommended economic growth focusing on the Central Region. It was also consistent with ADB’s strategy for water sector operations and the government’s socio-economic development plan, which indicated a priority to complete, rehabilitate, and modernize water infrastructure to ensure optimum use and conservation of water resources for irrigation, water supply, and industry and increase the role of users in the O&M of irrigation systems. The project is still relevant based on current ADB and government priorities. For ADB, these include Strategy 2020, which advocates intervention in the agriculture sector through irrigation improvement, and the current country program, which looks at upgrading rural infrastructure for economic growth and poverty reduction. For the government, relevant features in the current socio-economic development plan include enhancing the sustainability of rural infrastructure—including irrigation infrastructure—and strengthening local capacity to manage rural infrastructure. In attempting to improve the institutional structure

14

It is conceivable, for example, that the issuance of Decree 115 could have been taken as a sign of non-compliance with loan covenants resulting in (at one extreme) the suspension of the loan.

10

pertaining to the O&M of water resources infrastructure in the project area and in the country, the project was also relevant, but overambitious in attempting to do this through a time-bound investment project. Such changes take time and are often the result of an iterative process that allows the various reforms to be worked out step by step. Instead, there was a deadline within which reform measures needed to be completed, and this affected their ultimate achievement and outcome. This shortcoming in design was further amplified by the promulgation of Decree 115, waiving the irrigation service fee and rendering the measures aimed at making full beneficiary funding of the IMCs null and void. 32. The resulting changes have been improvements and been accepted by the national and provincial governments as well as the IMCs and water users. These changes include (i) restructuring IMCs so they are self-managing companies (albeit funded by the provincial government), (ii) restructuring WUGs so they are member-owned and managed, and (iii) providing the opportunity for WUGs to contract O&M work from the IMC. In this context, the revision of loan covenants to accommodate Decree 115 and bring the intended irrigation management systems arrangements into a more realistic and achievable framework was sound and logical. The promulgation of Decree 115 was a national-level decision made at the highest levels of government and was completely unexpected by all stakeholders. 15 Persisting with the inclusion of the affected loan covenants would have been counterproductive and may have led to the actual physical achievements of the project not being accomplished. 33. Overall, the project, both in its original design and with revised irrigation management arrangement targets, can be considered highly relevant. B. Effectiveness in Achieving Outcome

34. The outcome of the project is defined in the design and monitoring framework (DMF) as “increased agricultural production in the selected irrigation subproject areas.” In the most direct terms, this outcome has already been achieved. According to benefit monitoring figures, the growth in irrigated areas was 20% and the growth in the production value for rice in 2011 over 2008 levels was 30%.16 Moreover, since these increases were achieved prior to the physical completion of project works and prior to the completion of the post-project gestation period (2012 to 2015) during which yields and production are expected to increase, even greater production increases can be expected in the future. 35. The DMF also lists a number of other indicators to measure outcome: (i) area commanded and served in adequate and timely manner increased to 95% of potential; (ii) maintenance performed on 95% of commanded area; (iii) collection of water user fees increased to 95% of target; and (iv) subsidies to IMCs reduced by at least 20% from current levels. Since the physical works on three of the six subprojects have only just been completed, it is not possible to assess items (i) and (ii) until several years of operation have passed. Item (iii) has reportedly been achieved for WUGs, with water user fee collection rates having reached 100%. However, this does not include water user fees for IMC expenditures since these have now been waived under Decree 115. Indicator (iv) has also been impacted by Decree 115, with provincial governments now subsidizing all operational costs of the IMCs. Given this

15

Whatever the long-term impact of Decree 115 on water resource use might be, recent studies indicate that the impact to date has been positive. With water resources infrastructure receiving the O&M funding it needs, water users are absolved of paying an additional expense from their meagre incomes, and the infrastructure is in physically better condition.

16 According to the project’s benefit monitoring reports prepared by an independent consulting firm.

11

development, when the loan agreement was revised to accommodate the promulgation of the decree, the DMF should have been revised and this indicator removed. 36. Based on the actual physical outcomes observed to date (increased agriculture production value and increased scope for further production increases), the project can be assessed as effective. C. Efficiency in Achieving Outcome and Outputs

37. Expected economic internal rates of return (EIRRs) for the six subprojects at the time of appraisal along with revised EIRRs calculated during the preparation of the executing agency’s project completion report are shown in Table 2.

Table 2: Subproject EIRRs at Appraisal and as Calculated in the Executing Agency’s Project Completion Report

Subproject EIRR Expected at Appraisal

(%) EIRR Calculated in Executing Agency’s Project Completion

Report (%)

Thach Thanh 17 18 Thuong My Trung 18 21 Nam Thach Han 17 16

Tay Nam Huong Tra 17 13 Tra cau 18 23 La Tinh 16 18

EIRR = economic internal rate of return. Source(s): Central Project Office Completion Report

These indicate revised EIRRs generally similar to or higher than envisaged at appraisal, indicating a high level of efficiency. 38. It is too early to precisely assess the financial and economic efficiency of the individual subprojects and the project as a whole. This will only be possible after all works are fully functional (in 2014) and after the gestation period (in 2015). An analysis of the subprojects at that time will almost certainly show that once they are in full production, they will achieve and most likely surpass the EIRRs projected at the time of appraisal. The facts that (i) increases in the value of production already surpass those projected for the project as a whole (a 30% increase in production value versus a 20% expected increase in incomes by 2015) and (ii) the irrigated area has increased by 20% indicate that farm budgets and EIRRs are likely to be at least as high as expected during project preparation. In addition, further benefits can be expected from double cropping on previously single cropped areas as well as from drainage, flood control, and salinity intrusion control. This is all despite the fact that O&M costs in some of the schemes are likely to be higher than they would have been if structures had been designed and built to higher standards. 39. Efficiency of process is a somewhat more difficult issue to measure. In the end, the project was implemented almost on time, but if the original schedule had been followed, benefits would have accrued earlier. Therefore, there were inefficiencies, with up to 2 years of production foregone on some schemes. Also, with more implementation time, some of the originally planned institutional measures might have been more achievable. Overall, the project

12

can be assessed as efficient owing to expected financial and economic returns balanced against implementation delays. D. Preliminary Assessment of Sustainability

40. In view of the revised irrigation management arrangements, including revamped WUGs and restructured IMCs, and the medium-term impact of Decree 115, which ensures adequate funding for the O&M of larger project structures, the project can be assessed as sustainable.17 However, poorly prepared designs and barely acceptable levels of construction quality for some of the subproject structures will result in higher than anticipated O&M costs. E. Impact

41. The expected impact of the project as expressed in the DMF is reduced poverty in the six project provinces. Indicators for this are (i) poverty in the subproject areas reduced on average by 5% (compared with baseline survey) and (ii) incomes from irrigated land in the project schemes increased by at least 20% by 2015 (compared with baseline survey). With regard to the second indicator, the value of rice production has already increased by more than 30%, and while increases in the value of production do not translate precisely into increased farm incomes, they are directly related. From a production increase point of view, the impact of the project will be as expected or exceeded. 42. The impact on poverty is more difficult to ascertain. It is not possible to compare baseline survey poverty levels to current poverty levels since the poverty line has been adjusted upwards. In 2008 when baseline surveys were undertaken, the poverty line was D260,000 per capita per month. Since 2010, it has been adjusted upward to D400,000 per month. A meaningful comparison of the percentage decrease in poverty is thus not possible. 43. However the RRP indicates that at the time of the project initiation, 38% of the beneficiary population had incomes below the poverty line. If the new poverty line were applied retroactively this would be higher. The impact of increased production and hence increased farm incomes of 20% to date as well as increased employment opportunities as a result of the project will certainly have a significant impact on reducing poverty whichever measure is used. It is, thus, a sound assumption that the project has met its intended poverty reduction impact. 44. The project also had meaningful institutional impact. While the extensive reforms to irrigation management systems have not been as fundamental as originally intended, the restructuring has been accepted by all stakeholders and functions well. This has provided a reform model for other irrigation schemes in the project provinces and the country as a whole. 45. With regard to environmental and social impacts, the EMPs and resettlement plans were implemented according to the requirements of the loan agreement. However, the Viet Nam Resident Mission noted that there were some complaints of slow response by the provincial government to issues raised by affected persons in the Khe Ngang reservoir area. The resident mission suggests that in future projects more attention is paid to ensuring a response mechanism for affected persons. 17

Decree 115 guarantees a subsidy from the central government budget to the provincial government budget so that the operational costs of the IMCs can be funded. As long as this decree is in place (and there has been no discussion of repealing it), there should be no major concern about the access of the IMCs to finance for O&M purposes. The only current concern is that funding is based on cost norms that need to be periodically adjusted.

13

46. Gender and Development. The project has been successful in achieving the gender actions. Ten out of 11 gender actions/ targets were achieved in 8 sub-projects of 6 central provinces. The GAP addressed the needs of women in the sub-project areas to participate more effectively in irrigation management and other decision making activities pertaining to irrigation; to have more access to livelihood and income generating opportunities through training and credit. The GAP implementation had positive impacts on the lives of rural women in sub-project areas. The project trained 2,345 women farmers (54.7% of 4,286 farmers) on leadership, gender and water utility training. In addition, a total of 431 Commune Women Union officials (out of 939 commune officers) were trained on gender and irrigation, gender analysis and integration in irrigation and livelihood activities. About 118 women (37% of a total of 322 farmers) were supported to prepare loan applications and develop business plans. The project also ensured stable access to irrigation water supply to 111,892 farmers who are members of 137 water users cooperative in which women account for 40% or 44,757 people. Updated Summary of Gender Equality Results and Achievements including are in Appendix 3.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

47. The project was implemented as intended and achieved most of the outputs, outcomes, and impacts envisaged at the time of design and appraisal. 18 The main deficiency was with the irrigation management systems’ improvement component. The establishment of completely new WUGs proved impractical given the tight time frame of the project implementation period and the institutional context in the provinces. A compromise structure had to therefore be devised at the mid-term review. In addition, the unexpected promulgation of Decree 115 made the measures aimed at making IMCs self-financing impossible to achieve. From a medium-term perspective this was not necessarily a negative occurrence since the IMCs are now guaranteed funds to function adequately and maintain water resources infrastructure in operable condition. However the longer term consequences in terms of overall water resources management will need to be taken into account through further study and policy dialogue. The remedial measures taken at the mid-term review to accommodate these changes were appropriate.

48. The project is considered highly relevant, effective, efficient, and sustainable. It has achieved almost all of its physical targets (with some minor deficiency in the level of irrigation development) and will likely achieve its financial, economic, and poverty reduction targets. Loan covenants, including those related to safeguards and social development, appear to have been complied with. Overall, the project is assessed as successful.

B. Lessons

49. Significant lessons learned from the project implementation are listed below: (i) Policy Differences: When policies and views diverge, constructive dialogue is often more rewarding than confrontation. When Decree 115 was promulgated by the government, it directly impacted the loan agreement. 19 While the ADB project team could have invoked the agreement and demanded that either the decree be withdrawn or the project suspended, it chose to conduct constructive dialogue, resulting in a workable compromise. This allowed the physical completion of the project works with its associated benefits. 18

In some cases, however, the design and implementation of the civil works were of a low standard, leading to higher O&M costs and lower EIRRs than could have been attained.

19 Decree 115 affected schedule 6, paras. 5 and 8 of the Loan Agreement.

14

(ii) Ownership: Participation in key decisions can have a major impact on the ownership of policies and institutional changes. Once proposed changes to the IMCs and WUGs had been revised to take stakeholder views into account, they were enthusiastically taken up by government agencies, local administrations, and the intended beneficiaries themselves. The degree of ownership for the revamped institutions was tangible during field visits and interviews. This type of enthusiasm can only come from a participatory approach and a willingness to take into account all points of view as well as the actual field conditions. If an attempt had been made to push through the original revisions of the WUGs, results would have been far less promising. (iii) A cooperative approach to problem solving: One of the project’s major technical problems was the appearance of cracks in the Khe Ngang reservoir dam. This serious issue could have jeopardized a significant part of the project and could also have had further safety repercussions. The problem was resolved when the MARD, with ADB assistance, mobilized a senior engineering team to inspect the dam and come up with an acceptable and viable technical resolution. This positive and cooperative reaction by ADB allowed the works to be successfully completed with only a slight delay in the implementation schedule. (iv) Comprehensive assessment of implementation problems: Critical decisions on project investments must be informed, careful, and judicious. At the time of the mid-term review mission in May 2009, contract awards were 8% of the total loan amount and disbursements were 5%. On the basis of such apparent poor performance it would have been possible to cancel the loan and shut down the project at that time. However, a full analysis by the review mission indicated that delays had been caused more by procedural problems than deficiencies in the capacity of the executing agency and that implementation was at the point of finally taking off. The adoption of a comprehensive analysis of the problems facing the project and the decision to continue with implementation allowed the project to be successfully completed. C. Recommendations

1. Project Related

50. The project has been completed and is now in full operation. 20 In terms of future monitoring, covenants, further action, additional assistance, and the timing of the post project evaluation review, the following are recommended. 51. Future monitoring. The DARDs within each province will continue to monitor the production levels from the schemes by commune and by district. This should provide a sound foundation for any future evaluation or review work. Similarly, the IMCs will continue to monitor the functioning of the schemes and also the activities of the WUGs, again providing a basis for future post-project evaluation. 52. Covenants. Since the project has been completed and the loan fully disbursed, ADB has no further leverage over the government. However, during the preparation of future projects, it will be necessary to check to see if the covenanted arrangements for O&M (schedule 6 paras. 5, 6, 7, and 8 of the loan agreement) still apply. 53. Further action or follow-up. No specific follow-up actions are recommended.

20

Except for the Khe Ngang reservoir, which will not be operational until 2015.

15

54. Additional assistance. The central coastal region is no longer a strategic priority for ADB, with the focus having changed to the Northern Mountains and Central Highlands. Additional funding has not been requested, but if it were, it may not be considered high priority. 55. Timing of the project performance evaluation report. An appropriate time for a project performance evaluation report mission would be after 2015 when project works have been in operation for a few years and the expected gestation period for increased agriculture production has been completed.

2. General

56. Design preparation and review. Most of the feasibility studies and detailed engineering designs in Viet Nam are locally prepared at the provincial level. In this project deficient levels of design review and supervision have led to some poor quality works which in turn will mean somewhat higher operation and maintenance costs and lower levels of benefits. In future projects, to ensure that subproject works are of high quality ADB needs to (i) ensure that the project design includes sufficient training at provincial levels as part of each project’s capacity building efforts to enable provincial staff have the capacity to identify deficient designs and ensure high levels of construction quality, (ii) ensure that the budget and expertise allocation for project implementation consultants is sufficient to provide quality control for the design preparation and review, (iii) ensure that staff and budget allocations for project reviews are sufficient to determine that executing and implementing agency staff, design consultants and project implementation consultants are fulfilling their obligations. 57. Delayed project start-up. Long project start-up delays across all project sectors continue to plague project implementation in Viet Nam, although the 2013 promulgation of Official Development Assistance Decree 38, which allows advance action prior to loan effectiveness, has relaxed the restrictive laws and regulations that had affected the establishment of project and subproject offices as well as the recruitment of consultants. During the preparation of future projects, consultant recruitment should begin at the earliest possible time so that project implementation consultants are in place at the time of project start-up. 58. Water policy. ADB is one of the major development partners engaged in research studies and policy dialogue with the government on water policy. It should remain engaged and continue to monitor the impact of Decree 115, which is viewed by the government as a useful medium-term measure to ensure the sound operation and maintenance of existing water resources infrastructure. In the longer term, however, for reasons of sound water management, resource conservation, and sound government budgeting, water should be paid for by the end user. How and when a transition to full recovery of resource costs can be made should be a matter of continued policy dialogue with the government. 59. Contract packaging. Provincial governments have traditionally preferred to undertake civil works through a large number of small contracts. This is in part due to a preference for local contractors who are not able to take on larger jobs as well as concerns about seasonality. (Often, a large amount of work needs to be done in very short time periods when irrigation systems are not in operation). The consequent large number of small contracts has made supervision and the processing of payments difficult for the PPMUs, CPMUs, and ADB itself. This has also, at times, resulted in poor quality construction work detracting from the overall project’s economic returns. When preparing projects, the aim should be to minimize the number of contracts, while, at the same time taking into account conditions on the ground and the actual contracting needs of the works to be undertaken.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Indicators/Targets

Data Sources/ Monitoring Mechanism

Assumptions and Risks

Actual Achievements Remarks

Impact Poverty reduced in BinhDinh, Quang Binh, Quang Ngai, Quang Tri, Thanh Hoa, and Thua Thien Hue provinces of central Viet Nam.

Poverty in the subproject areas reduced on average by 5% (compared with baseline survey) Incomes from irrigated land in the project schemes increased by at least 20% by 2015 (compared with baseline survey)

Government's annual income and poverty surveys Provincial and Commune Statistics

Assumption Rice prices remain favourable Risks Export demand for rice decreases

Due to a change in the poverty baseline, it is not possible to accurately measure a reduction in poverty. However, increases in farm income reflect decreases in poverty levels, and in view of increased incomes (see immediately below), poverty has clearly been and will be reduced. By 2011, income increases from increased rice production alone had already reached 30% even though not all of the schemes had been completed. On this basis, the expected impact will be surpassed by 2015.

In Viet Nam the poverty base line is reset every 5 years. From 2001 to 2005 it was D100,000 per capita per month, from 2006 to 2010 it was D200,000 per capita per month, and from 2011 to 2015 it has been set at D400,000 per capita per month. Comparing pre-project (2005) poverty levels to post-project (2012) poverty levels is therefore not meaningful.

Outcome Increased agricultural production in the selected irrigation subprojects

Improved performance of irrigated agriculture in the selected subprojects:

(i) area commanded and served in adequate and timely manner increased to 95% of potential;

Project completion Report Performance monitoring surveys Feedback from water users Financial records

Assumptions Government continues to promote the decentralization and democratization processes Government allows IMCs to set realistic water

(i) This is still too early to assess as physical works have only just been completed. (ii) This is not a clear indicator and can only be

The indicators here do not reflect measures of increased production, but rather of more efficient management (which may or may not lead to increased production). A more meaningful measure of the outcome is the 30% increase in the value of rice production by 2011 that the project brought about. Additionally, the area under irrigation

Appendix 1 17

Design Summary

Performance Indicators/Targets

Data Sources/ Monitoring Mechanism

Assumptions and Risks

Actual Achievements Remarks

(ii) maintenance performed on 95% of commanded area;

(iii) collection of water user fees increased to 95% of target; (iv) subsidies to IMCs reduced by at least 20% from current levels.

of IMCs

user fees Risk Resistance of vested interests to changes in organizational structure of service providers and current water user fee collection arrangements

measured some years after the operation of the schemes. (iii) It is not clear if the indicator refers to collection by IMCs or by WUGs. IMCs are now fully funded by provincial governments. WUGs are reportedly collecting 100% of required fees. (iv) IMCs are now fully subsidized as a result of Decree 115. However, studies to date seem to indicate that this has had net positive effects on production.

increased by 20% as a result of the project. However, this does not fully capture the benefits since it does not take into account drainage and flood protection outcomes. Overall, a significant increase in agriculture production can be expected once all works are fully functional.

Outputs 1. Irrigation management systems improved in the selected subprojects

(i) IMCs restructured and operating in a financially viable and autonomous manner in six irrigation schemes (ii) O&M being fully implemented in the completed irrigation schemes. (iii) New style WUGs and/or WUAs set up

Approved IMC business plans Audited IMC annual Accounts Project performance monitoring surveys Provincial and Commune Statistics

Assumptions Timely fielding of consultants and appointment of project management staff at central and provincial levels IMCs can achieve financial Autonomy Risk

(i) IMCs have been restructured and are self-managing. They are financially viable inasmuch as they are fully funded by the provincial governments. (ii) This is too early to assess. (iii) WUGs set up to cover 100% of all schemes

Institutional changes made were in compliance with the loan agreement as revised after the mid-term review to take into account the promulgation of Decree 115 and the realities involved in forming WUGs in six different provinces within the project period.

18 Appendix 1

Design Summary

Performance Indicators/Targets

Data Sources/ Monitoring Mechanism

Assumptions and Risks

Actual Achievements Remarks

and operating in at least 66% of the command areas. (iv) Effective participatory irrigation management operating for all subproject areas by completion of physical works. (v) Water fee collection increased to at least 90% of

Minutes of WUG/WUA Meetings Reports of nongovernment organizations (NGOs) and other institutions contracted to help form WUGs/WUAs Training reports

Measures to reduce vulnerability to natural disasters not adequate

except Nam Thach Han. However, the provincial government is now committed to cover 100% of that scheme as well and has indicated that it will do so by 2014 (iv) Despite a long discussion in appendix 1 of the RRP, participatory irrigation management is not clearly defined, which makes it difficult to assess the achievement of this indicator. WUGs have been formed (often from existing entities such as cooperatives) and are now able to contract and undertake maintenance work for the IMCs, which give the WUG members a greater sense of ownership of the upstream infrastructure managed by the IMCs. WUGs and their members also have a greater role in irrigation management than under previous formulations when management decisions were taken by the commune. (v) Water fee collection is now reportedly 100%

Appendix 1 19

Design Summary

Performance Indicators/Targets

Data Sources/ Monitoring Mechanism

Assumptions and Risks

Actual Achievements Remarks

agreed water user fees. (vi) Annual work plans prepared and approved. (vii) Project implemented according to agreed schedules. (viii) Training provided

among WUGs. However, this does not include the O&M costs of the IMCs, which are now fully funded by the provincial governments. (vi) Work plans for both IMCs and WUGs are being prepared and approved annually. (vii) The project has been completed with only a modest delay. (viii) An extensive training program was taken up and included staff of the CPMU, PPMUs, IMCs, and WUGs, as well as a large number of farmer beneficiaries.

2. Irrigation infrastructure improved in the selected subprojects

(i) Improved irrigation on 32,300 ha, drainage on 2,900 ha, flood control on 6,100 ha, and salinity control infrastructure on 2,500 ha. (ii) Scheme infrastructure capable of delivering water to not less than 90% of the total command

Handover reports of completed civil works Participatory surveys of O&M effectiveness Minutes of WUG/WUA Meetings Reports of NGOs

Assumptions Framework for participatory preparation and implementation of subprojects adopted by provincial authorities Measures to reduce

(i) All targets met except for irrigation coverage, which achieved only 30,100 ha. (ii) To date, water is being delivered to 93% of the total command area. This will increase in 2015 when the Khe Ngang reservoir in Tay Nam Huong Tra subproject

Indicator (i) is not in the RRP DMF but has been added to indicate the degree of actual physical output achievement. Indicator (ii) ignores extensive improvements to drainage, flood control, and salinity intrusion prevention in several of the subprojects.

20 Appendix 1

Design Summary

Performance Indicators/Targets

Data Sources/ Monitoring Mechanism

Assumptions and Risks

Actual Achievements Remarks

area. (iii) System O&M effective over at least 90% of the command area. (iv) Irrigation water delivered at the correct time and in the correct amounts for all subproject schemes for 90% of the time. (v) Crop production increased through increased cropped area, cropping intensity, crop diversification, and aquaculture production. (vi) Increased reliability of household water supply.

and other institutions contracted to help form WUGs/WUAs Project performance monitoring surveys Provincial and commune statistics Approved contracts

vulnerability to natural disasters designed and implemented satisfactorily Water is the major limiting factor for crop production Construction completed on Schedule Risks Possible delays caused by resettlement complications Shortfalls in revenue lead to curtailment of O&M

becomes fully operational. (iii) Since the systems will only be in full operation in 2014 it is too early to assess this indicator. (iv) Since the systems will only be in full operation in 2013, it is too early to assess this indicator (v) Crop production and the value of production have increased by 30% so far and further increases are likely. (vi) With the omission of the Chop Vung reservoir from the Tra Cau subproject, 47,600 expected beneficiaries were not covered by the project as expected. Other schemes did improve household water supply.

Indicator (iii) is not a relevant indicator for improved irrigation infrastructure. It is more appropriate for output 1 (Irrigation management systems improved in the selected subprojects) above. It is not clear why it was included here. Indicator (iv) is also not a relevant indicator for improved irrigation infrastructure. It is not clear why it was included here. Indicator (v) is also an outcome indicator rather than an output indicator. Indicator (vi) is an outcome indicator rather than an output indicator (although it is not covered in the outcome section above).

Appendix 1 21

Design Summary

Performance Indicators/Targets

Data Sources/ Monitoring Mechanism

Assumptions and Risks

Actual Achievements Remarks

(vii) Annual work plans prepared and approved. (viii) Procurement of engineering works completed on time to specifications.

(vii) It is not clear whether the annual work plans were supposed to be for the IMCs and WUGs or for project implementation activities. In any event, annual work plans have been prepared and approved in all cases. (viii) Engineering works were generally completed on time and according to specifications. Some quality deficiencies were observed.

CPMU = central project management unit; DMF = design and monitoring framework; ha = hectare; IMC = irrigation management company; O&M = operation and maintenance; PPMU = provincial project management unit; RRP = report and recommendation of the President; WUA = water user association; WUG = water user group.

22 Appendix 2

STATUS OF COMPLIANCE WITH LOAN COVENANTS

No. Covenant Reference in Loan

Agreements

Status of Compliance

A GENERAL COVENANTS

A1 (a) The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

Loan Agreement,

Section 4.02a

Complied with.

A2 The Borrower shall enable ADB’s representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, and any relevant records and documents.

Loan Agreement, Section 4.03

Complied with.

B PARTICULAR COVERNANTS IN SCHEDULE 6

B1 MARD shall be the Project Executing Agency responsible for the overall Project implementation. Director of CPO shall be the Project Director. The Borrower shall ensure that CPO establishes the CPMU headed by a full-time Project Manager and adequately staffed with technical and administrative personnel, with qualifications acceptable to ADB. The CPMU supported by project management consultants shall (a) provide overall Project management and coordination; (b) liaise with PPCs and DARDs for improvement of irrigation management systems; (c) guide and coordinate activities of DARDs in improvement of irrigation infrastructure; (d) implement the PPMS; (e) procure consulting services (other than domestic consulting services to be used only for particular Subprojects); (f) assist the PPMUs in carrying out the procurement of goods and pursuant to Schedule 4 to this Loan Agreement; (g) prepare forecast of contract awards and disbursements, (h) arrange the

Loan Agreement, Schedule 6,

para 1

Complied with.

Appendix 2 23

No. Covenant Reference in Loan

Agreements

Status of Compliance

Project accounts audits; and (i) consolidate the PPMU’s reports, and prepare progress and project completion reports, as appropriate.

B2 PPCs through DARDs shall be the implementing agencies responsible for the day-to-day Project implementation at the provincial level. Each DARD shall establish a PPMU headed by a full-time subproject manager and adequately staffed with technical and administrative personnel, with qualifications acceptable to ADB. Each PPMU shall be responsible for (i) carrying out the procurement of goods and services through international competitive bidding and local competitive bidding pursuant to Schedule 4 to this Loan Agreement; and (ii) with consultants’ support, implementing the PPMS, Resettlement Plan, EMP, social support program and EMDP, as appropriate.

Loan Agreement, Schedule 6,

para 3

Complied with.

B3 Counterpart Funding The Borrower shall ensure that counterpart funds are provided in a timely manner during each year of the Project implementation and, to such end, it shall make submissions of annual budgetary appropriation requests and shall disburse funds to the Project Province in a timely manner.

Loan Agreement, Schedule 6,

para 4

Complied with, but not always in a timely manner.

B4 Regulatory Framework 5. The Borrower shall adopt, within twelve months of the Effective Date, necessary regulatory framework with revised institutional arrangements for management of irrigation systems at provincial and commune levels to enable achievement of the Project objectives more effectively. In particular, the Borrower shall take necessary measures to restructure IMCs, WUGs and WUAs and transfer the ownership for irrigation assets to IMCs, and WUGs/WUAs, as appropriate. The restructuring of IMCs shall include the authority to set, collect and allocate water fees.

Loan Agreement, Schedule 6,

para 5

Revised after the mid-term review to read: “Regulatory Framework 5. The Borrower shall adopt, within thirty-six months of the Effective Date, necessary regulatory framework with revised institutional arrangements for management of irrigation systems at provincial and commune levels to enable achievement of the Project objectives more effectively. In particular, the Borrower shall take necessary measures to restructure IMCs, WUGs and WUAs and transfer the management of irrigation assets to IMCs, and WUGs/WUAs, as

24 Appendix 2

No. Covenant Reference in Loan

Agreements

Status of Compliance

appropriate. The restructuring of IMCs shall include the establishment and full implementation of (a) technical and economic norms, including the quantities and assessed value of water provided which will depend on the size of area irrigated the crops being irrigated and the season in which the irrigation takes place; and (b) PPC-IMC contracts using the order-placing mechanism.” Subsequently complied with.

B5 Business Plans 6. The Borrower shall ensure through MARD and PPCs that each IMC develops its own business plan for achieving financial sustainability through organizational changes. Each IMC shall define its key functions, services, equipment and skills requirements, budgets, information flows, accounting procedures, performance monitoring, water pricing strategy, and financing plan. Business plans shall set out annual targets and milestones the achievement of which shall trigger release of Project funds to IMCs and beginning of civil works. Each business plan shall need to be approved by a respective PPC, and be satisfactory to ADB.

Loan Agreement, Schedule 6

para 6

Revised after the mid-term review to read: “Business Plans 6. The Borrower shall, through MARD and the PPCs, ensure that each IMC develops its own business plan for achieving financial sustainability through organizational changes. Each IMC shall define its key functions, services, equipment and skills requirements, budgets, information flows, accounting procedures, performance monitoring, water pricing strategy, and financing plan. Business plans shall set out annual targets and milestones the achievement of which shall trigger release of Project funds to IMCs and beginning of civil

Appendix 2 25

No. Covenant Reference in Loan

Agreements

Status of Compliance

works. Each business plan shall need to be approved by a respective PPC, and be satisfactory to ADB”.

Subsequently complied with.

B6 WUGs/WUAs 7. The Borrower shall ensure through MARD and PPCs that each WUG under the Project is set up as a legal entity on the basis of hydraulic boundaries, replacing in most cases the current user groups linked to cooperatives and based on administrative boundaries. WUAs shall be set up in large irrigation schemes to ensure official representations of WUGs. At least 40 percent of participants of WUGs/WUAs shall be women.

Loan Agreement, Schedule 5,

para. 7

Replaced after the mid-term review with the following:

“WUGs/WUAs 7. The Borrower shall ensure through MARD and PCCs that each WUG under the Project is set up as legal entity on the basis of a combination of hydraulic and administrative boundaries. WUGs shall be set up to ensure official representations of WUGs for canal serving multiple WUGs to operate and maintain the canals effectively, including fair sharing of water resources from the canal. At least 40 percent of participants of WUGs or WUAs shall be women.” Subsequently complied with.

B7 Water Fees 8. The Borrower shall ensure through MARD and PPCs that, by end of the second year of the Project implementation, water fees are determined and established in accordance with IMCs’ business plans to achieve and maintain the financial autonomy of IMCs and WUGs/WUAs (i.e., full recovery of O&M costs), subject to compliance with the Borrower’s applicable laws and regulations.

Loan Agreement, Schedule 5,

para. 8

Replaced after the mid-term review with the following: “Financial Viability 8. The Borrower shall ensure through MARD and the PPCs that, by end of Project implementation, funding for operation and maintenance is determined and

26 Appendix 2

No. Covenant Reference in Loan

Agreements

Status of Compliance

established in accordance with plan technical and economic norms issued by MARD to achieve and maintain the financial viability of IMCs and WUAs/WUGs (i.e., full funding of O&M costs), subject to compliance with the Borrower’s applicable laws and regulations.” Subsequently complied with.

B8 9. (a) The Borrower shall ensure that all land acquisition and resettlement activities under the Project are implemented in accordance with the applicable laws and regulations of the Borrower, ADB’s Policy on Involuntary Resettlement (1995), and the Resettlement Plan. In particular, the Borrower shall ensure (i) the timely provision and disbursement of counterpart funds to cover the actual replacement costs; (ii) compensation to affected persons at full replacement cost without deduction of depreciation or salvageable materials prior to their relocation and possession of land and assets; (iii) establishment of effective mechanisms for resolving grievances. In case of any discrepancies between the Borrower’s laws, regulations and procedures and ADB’s Policy on Involuntary Resettlement, the ADB’s Policy shall apply. (b) Prior to the start of land acquisition and resettlement activities with respect to any Subproject, the Borrower through MARD and PPCs shall have (i) updated the respective Resettlement Plan in full consultation with affected persons based on the detailed design for the Subproject concerned, (ii) disclosed to affected persons and submitted to ADB for approval the updated Resettlement Plan, and (iii) engaged an independent monitoring agency, acceptable to ADB, to conduct independent external monitoring and evaluation of the resettlement process and impacts. Reports of the independent monitoring agency shall be submitted to ADB.

Loan Agreement, Schedule 9a

and b

Complied with.

B9 Environment 10. The Borrower shall ensure that (a) the Project facilities are designed,

Loan Agreement,

Complied with.

Appendix 2 27

No. Covenant Reference in Loan

Agreements

Status of Compliance

constructed, operated and maintained in compliance with applicable environmental laws and regulations of the Borrower, ADB’s Environment Policy (2002), IEE and SIEE; (b) each EMP is updated, based on the detailed design for the Subproject concerned, and submitted to ADB for approval prior to final approval of the Subproject’s detailed design; (c) all mitigation measures detailed in each EMP are implemented and monitored to satisfactory standards; and (d) implementation of EMPs is reported to ADB.

Schedule 6, para. 10

B10 Social Issues 11. (a) The Borrower shall ensure that the GAP is fully implemented throughout the Project implementation period. This shall include, among other things, training of the CPMU and PPMU staff, approximately 1,600 female farmers, and approximately 100 commune and Vietnam Women’s Union officials at the local level to ensure gender mainstreaming through a participatory process. The implementation of the GAP shall be closely monitored and the progress shall be reported in semi-annual reports to ADB.

Loan Agreement, Schedule 6,

para.11a

Complied with.

2,345 women farmers (out of 4,286 farmers) or 54.7% attended the leadership, gender and water utility training; 431 Commune Women Union officials (out of 939 commune officers) were trained to ensure gender mainstreaming in project implementation.

B11 (b) The Borrower shall ensure that the EMDPs are implemented in accordance with applicable laws and regulations of the Borrower, ADB’s Policy on Indigenous Peoples (1998), and the EMDF. The Borrower shall update the EMDP for Subproject 5 (Tra Cau in Quang Ngai province) based on the detailed design for the Subproject. The Borrower shall prepare EMDPs for other Subprojects, where required in accordance with the EMDF, based on the detailed design for the Subprojects concerned. This shall include, among other things, (i) ensuring participation of and consultation with the affected ethnic minority people in preparing and updating the respective EMDP; (ii) disclosure of such EMDP to affected ethnic minority people prior to its submission to ADB for approval; and (iii) timely provision of necessary counterpart funds to cover the actual cost of implementation of the EMDP. The implementation of EMDP shall be closely monitored by an independent monitoring agency, acceptable to ADB, and the progress shall be reported in semi-annual reports to ADB.

Loan Agreement, Schedule 6,

para.11b

This portion became irrelevant after the removal of Chop Vung reservoir from the project scope since that is the only area that has a significant number of ethnic minorities.

B12 (c) The Borrower shall also ensure that the Project facilities are designed, constructed, operated, and maintained in strict conformity with all applicable laws and regulations of the Borrower, including those with respect to social development, health,

Loan Agreement, Schedule 6 para. 11c

Complied with.

28 Appendix 2

No. Covenant Reference in Loan

Agreements

Status of Compliance

labor, child protection and occupational safety regulations and standards.

B13 Project Performance Monitoring System 12. The Borrower shall ensure that PPMS, based on management information software linked to a geographic information system, is adopted for monitoring and evaluating implementation performance and development impacts at various stages of the Project cycle. The participatory baseline survey and follow-up surveys for each Subproject shall be led by NGOs. Initial conditions determined through baseline survey in each Subproject shall be updated at six-monthly intervals. Socio-economic data shall be disaggregated by gender and ethnicity, as appropriate.

Partly complied with.

PPMS software and required hardware were provided to PPMUs and IMCs, but was never fully used since it was technically too complex and not fully understood.

Also, in designing this subcomponent, the concept of PPMS (to be used for monitoring project implementation) was confused with benefit monitoring, which is carried out after the project is completed.

B14 Accounting, Auditing, and Reporting 13. (a) Without prejudice to the generality of Section 4.02 of this Loan Agreement, the Borrower shall ensure that (i) CPO, assisted by the CPMU, prepares separate accounts for the Project as a whole, monitors and consolidated accounts of each PPMU; (ii) within 12 months after the Effective Date, the CPMU establishes a simple computerized management information system suited to the financial management, and reporting needs of the Project; and (iii) the CPMU prepares and submits to ADB annual audit report, progress and project completion reports in a timely manner.

Loan Agreement, Schedule 6, para. 13a

Complied with.

B15 Anticorruption Measures 14. During Project implementation, MARD shall ensure that ADB’s Anticorruption Policy is followed, it being understood that ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project. MARD shall ensure that (a) periodic inspections on the contractor’s activities related to fund withdrawals and settlements are carried out, (b) relevant provisions of ADB’s Anticorruption Policy are included in all bidding

Loan Agreement, Schedule 6,

para. 14

Complied with.

Appendix 2 29

No. Covenant Reference in Loan

Agreements

Status of Compliance

documents for the Project, and (c) 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 MARD and all contractors, suppliers, consultants and other service providers as they relate to the Project.

ADB = Asian Development Bank; CPMU = central project management unit; CPO= Central Project Office; DARD = Department of Agriculture and Rural Development; EMDP = environmental management and development plan; IEE = initial environmental evaluation IMC = irrigation management company; MARD = Ministry of Agriculture and Rural Development; O&M = operation and maintenance; PPC = provincial people’s committee; PPMU = provincial project management unit;SIEE= summary initial environmental evaluation; WUA = water user association; WUG = water user group

30 Appendix 3

SUMMARY OF GENDER EQUALITY RESULTS AND ACHIEVEMENTS I. PROJECT DESCRIPTION

1. The project covered 6 provinces of Binh Dinh, Quang Binh, Quang Ngai, Quang Tri,Thanh

Hoa, and Thua Thien Hue in central Viet Nam which have high rural poverty and suffer disproportionately from natural disasters that cause loss of life and damage to houses and crops. Six irrigation subprojects (one in each province) with good potential for increased agricultural production were selected according to agreed selection criteria: (i) financially and economically viable; ii) contributing strongly to poverty reduction; (iii) environmentally sustainable; (iv) compliant with principles of integrated water resource management, and (v) responsive to natural disaster risk reduction initiatives.

2. Intended beneficiaries included 400,500 people living in 8 sub-project areas. 38% of the

beneficiary households lived below the poverty line of USD0.33/day and 25% of the households were female headed households.

3. The project impact will be reduced poverty in sub-project areas in six central provinces. The

project outcome will be increased agricultural production in selected irrigation subprojects. In these schemes, the Project will (i) improve irrigation system management by reforming service providers and concomitantly building capacity of client water users as partners in scheme operation and maintenance; and (ii) improve irrigation and drainage infrastructure and strengthen natural disaster risk reduction measures. Physical works will include rehabilitation and new construction of water conservation, irrigation, drainage, and protective measures.

4. The project was implemented from June 2007 till June 2012. The project gender

classification is Effective Gender mainstreaming and included gender actions (GAP) – please refer to the GAP appendix.

II. GENDER ANALYSIS AND PROJECT DESIGN FEATURES A. Gender Issues and Gender Action Plan features

5. There are two gender issues highlighted and addressed under the project: a) low level of

leadership skills, training and confidence among women farmers, leading to lack of informed participation in irrigation activities; and (ii) lack of access to credit, which constrains women’s engagement in potential livelihood activities.

6. The project aims to address these issues by including: (i) quotas for women to participate in

water user groups; water user associations; (ii) improving their capacity to make decisions in these organizations; (iii) targeting women in all training and extension programs; (iv) supporting women’s access to credit through training on credit management and supporting the development of business plans as part of loan application documents.

7. The key gender targets / actions include the following :

• At least 40% of women’s membership in Water User Groups (WUGs)/ Water User Associations (WUAs)

• Leadership skill training for 1,600 female farmers and 100 commune Women Unions officials

Appendix 3 31

• Improving women access to credit through training in accessing and managing credit • Technical training on livestock breeding for 1,200 local women • Gender sensitization training for PPMUs staff • Project monitoring and evaluation (M&E) system includes sex –disaggregated data

collection, analysis and reporting to ADB.

B. Overall Assessment of Gender – Related Results and Achievements: The GAP addressed the needs of women in the sub-project areas to (i) participate more effectively in irrigation management and other decision making activities pertaining to irrigation; (ii) to have more access to livelihood and income generating opportunities through training and credit. The GAP implementation progressed fairly well and had positive impacts on the lives of rural women in sub-project areas. The project trained 2,345 women farmers (54.7% of 4,286 farmers) on leadership, gender and water utility training. In addition, a total of 431 Commune Women Union officials (out of 939 commune officers) were trained on gender and irrigation, gender analysis and integration in irrigation and livelihood activities. About 118 women (37% of a total of 322 farmers) were supported to prepare loan applications and develop business plans. C. Gender Equality Results 1. Participation, access to project resources and practical benefits Gender actions included strengthening capacity, participation of women farmers, including Women Unions’ staff in water users groups and associations. The project delivered the following key results related to this action:

(vi) 52 women out of 166 people trained on TOT on gender, irrigation O&M, livelihood, credit management and HIV/AIDS awareness raising;

(vii) Of the 137 water user associations set up, women farmers comprised 40% of the 111,892 members (44,757 female members);

(viii) 2,345 female farmers (54.7%) out of 4,286 farmers received gender, leadership and irrigation O&M training in community;

(ix) 431 women cadres of commune Women Unions (out of 939 commune officers) received similar training on gender, irrigation, and gender analysis and integration and livelihood activities;

(x) 788 women (51.6%) out of 1,526 farmers received training on livestock raising, aqua-culture extension training;

(xi) 118 women (36.6%) out of 322 farmers received training on credit management and preparing loan application documents and subsequently supported to engage with credit institutions for credit application (via trainers who are staff of these credit institutions);

(xii) 496 women (51.3%) out of 966 educators /local officers received TOT training on HIV/AIDS to conduct IEC campaign on the subject.

2. Strategic changes in gender relations

The following gender strategic changes were achieved:

32 Appendix 3

(i) The gender training had positive impact on raising peoples’ awareness regarding women’s roles in irrigation, in the households and in the community. According to a female trainer and Duc Pho district women union officer, “Gender awareness raising helped to improve awareness of local officers, and helped women to gain confidence in contributing to social activities, in [Community] Party cells’ activities and people’s councils.21 In addition, “the project training contributed to raising awareness of local residents, eliminated gender stereotypes, and encouraged women to participate more actively in community activities”. 22 Six out of eight sub projects had female representative in resettlement committees to ensure that women’s needs, preferences as well as grievances and complaints are addressed. It is noteworthy that two out of 8 committees had women as head or vice head of these committees;

(ii) Women participated in consultation meetings discussing the design of sub-projects. At these meetings, women articulated their needs and constraints related to irrigation systems planning and development and farming outcomes.

3. Contribution of Gender Equality Results to Overall Loan Outcomes and Effectiveness:

The gender equality results contributed to achieving overall project objective and outcome. The overall project objective is to reduce poverty in six central provinces for about 400,500 people of whom 38% living below poverty line of $0.33/per day through improved irrigation management schemes and irrigation infrastructures upgraded or rehabilitated. Project gender equality results ensured that female water users accounted more than 40% of water users of subprojects’ beneficiaries accessing to reliable irrigation water supply from the sub projects hence contributing to inclusive poverty reduction objective of the project. The project aimed to increase agricultural production in the selected irrigation sub-projects areas. Agricultural extension training, including aqua-culture and livestock-raising training accessible to by both male and female farmers helped ensure that female and male farmers can benefit from water related agriculture activities thus improving their agriculture production.

III. LESSONS LEARNT AND RECOMMENDATIONS

1. There are several critical factors of success in achieving GAP targets:

(i) The project consultant gender specialists (international and national) were very helpful in providing technical inputs (designing and delivering the TOT, supporting and ensuring the quality of all activities, etc.);

(ii) PPMUs also received close collaboration and support from related agencies like VWU, HIV/AIDS prevention centres, agricultural extension centres, Department of Water Resources (DWRs) and Irrigation Management (and Drainage) Company (IMCs) in implementing activities under GAP;

(iii) CPO and PPMUs had strong commitment in implementing the GAP activities through quick and sufficient financial disbursement to respective PPMUs and

21 Independent monitoring report on GAP and Social Support Program implementation, December, 2012, p.86. 22 Independent monitoring report on GAP and Social Support Program implementation, December, 2012; pp. 101.

Appendix 3 33

collaborating agencies which led to timely implementation of most of the activities;

(iv) The project included an independent gender monitoring consultant. This action greatly facilitated the collection and reporting of sex-disaggregated data and supported timely actions/ course corrections to improve implementation.

2. The project faced several challenges during implementation:

(i) PPMUs gender focal points, were all male, were part-time, and had no background or prior experience on social development/gender. They all had background on irrigation. Some of the focal points were also re-assigned to other tasks during the course of the project and new GAP focal points were assigned. The project provided TOT training on GAP and gender issues in irrigation to the focal points to build their understanding and skills on gender and GAP implementation;

(ii) A number of GAP and HIV/AIDS training activities coincided with the country’s activities for the preparation of the general election and thus had to be re-scheduled.

4. Sustainability:

(i) Gender sensitization and gender integration in irrigation training for local

authority staff and local people have yielded positive results in changing people’s perception on gender issues and local authorities see the need and importance of continuing the work. Many local residents have been aware of gender issues in social activities and gradually changed their stereotype/perceptions on gender norms. This creates more enabling environment for women to participate in other social activities. Furthermore, one subproject’s (Nam Thanh Han subproject, Quang Tri) local officers have made further effort to raise more fund from Quang Tri DARD to continue gender sensitization activities for the people in their locality. This will help reinforce achieved results in the project.

(ii) (ii) Local capacity on gender awareness rising is sustainable. The groups of HIV/AIDS /gender sensitization educators/trainers in sub-projects areas continue to be active in local social development program and projects funded by government and other donors and their own agencies.

5. Recommendations:

(i) Design improvement: For future projects, the design can be improved by

incorporating gender targets/indicators in the DMF. The GAP can also include targets on women’s participation in WUA’s management committee. GAP needs to be updated at inception or MTR to ensure relevance and attainability of targets.

(ii) Implementation arrangement improvement: A key recommendation is for

the PPMU to assign a gender focal point from project start till end, with more time for GAP implementation and not to reassign a new person half way through the project without adequate proper training and support to ensure quality implementation, monitoring and reporting of the GAP.

34 Appendix 3

(iii) Improvement on monitoring and reporting: ADB requirements on

monitoring and reporting need to be introduced to CPMU, gender consultants for adoption soon after project start up. With this in place, resources can be saved on independent monitoring consultant, and utilized on building capacity of CPMU/PPMU in monitoring and reporting.

GAP Monitoring Table with detailed achievements is presented below. Gender Actions Achievement/ progress

• Staff training: Gender sensitization of Project staff (PMU/PPMUs)

• Participatory planning: Community

mobilization program to facilitate participatory approach to irrigation systems planning and development, management and related constraints; women’s needs will be specifically addressed through the process

• WUG: at least 40% women’s

membership in WUGs/WUAs • Training for approximately 1600

women farmers and nearly 100 commune and Women Union officials, thereby contributing to improving leadership skills and developing confidence among women at all local levels; this will enable them to play effective roles in WUGs/ WUAs, to be delivered by the Women Union.

• Provision of gender consultants to support project management

• All monitoring and evaluation to be

gender sensitive, including collection

• Achieved: 6 TOT on gender and irrigation/livelihood, HIV/AIDS and social support program organized for 166 people (52 women or 31.3%). Training contents included: gender sensitization, gender analysis tools and gender analysis in irrigation project, introduction of GAP and Social Support program, facilitation skills and training skills.

• Achieved: Minutes of the consultation meeting on the design of Quen Kim lake irrigation scheme, Thach Thanh, Thanh Hoa (dated 18 June 2008) and of the other consultation meeting on Bai Muong reservoir and Tay Huong pump station in Thanh My, Thach Thanh, Thanh Hoa (dated 13 June 2008) indicated that women were among consultation participants (7 out of 57 people)

23, and discussed and agreed to the

proposed designed schemes.

• Achieved: 137 water users cooperatives set up with at least 40% of women (44,757 female members out of 111,892 members)

• Exceeding target: 2,345 women farmers (out of 4,286 farmers) or 54.7% attended the leadership, gender and water utility training; 431 Commune Women Union officials (out of 939 commune officers) were trained. The contents included gender and irrigation, gender analysis and integration in irrigation and livelihood activities.

• Achieved: Two gender consultants recruited under LIC to support implementation. In addition one gender independent monitoring consultant was appointed to monitor and report to ADB on GAP and SSP implementation.

• Achieved: Monitoring of the GAP and HIV/AIDS prevention program was undertaken. Sex-disaggregated data were provided on some of the targets.

23

Estimated figures based on the tradition in Vietnam that name with “thi” as middle name are usually used for female and with “van” and other middle names usually used for male.

Appendix 3 35

of gender disaggregated data and analysis and reporting by the EA, ADB missions and external monitoring.

• Women to be consulted specifically on needs and constraints related to irrigation systems planning and development, and improved farming outcomes

• Inclusion of women union and female farmers in extension and training

• Improving women’s access to credit through training in accessing and managing credit

• Improved access to livestock

resources: technical training for livestock breeding for approximately 1200 women

• Resettlement: In all resettlement planning, women will participate fully. Monitoring will be gender disaggregated women union to be included in resettlement committees.

• Achieved: As indicated above, women were among consultation participants in discussing needs and constraints related to irrigation.

• Achieved: both female farmers and trainers were included in fish raising, animal husbandry, credit management training courses (788/1,526 trainees were female farmers). Below is a photo on aqua-culture training conducted by a male and a female trainer and with both male and female farmers/participants in Thach Thanh sub-project, Thanh hoa province.

• Achieved: 8 training organized on business plan

development and preparing loan application documents for 322 people (118 women or 36.6%).

• Underachieved: Technical training on livestock raising for 1,526 people (788 women or 51.6%)

• Achieved: 6 out of 8 sub projects had female representatives in the resettlement committees to help in addressing grievance and complains from affected people, especially women. Women were among participants attending resettlement consultation meetings and recipients of compensations, according to resettlement reports. In Thach Thanh sub-project, Thanh Hoa, approximately 27 out of 174 recipients

24

of land compensations (in cash and livelihood restoration skills training) were women.

24

Estimated figures based on the tradition in Vietnam that name with “thi” as middle name are usually used for female and with “van” and other middle names usually used for male.