Options for the Nam Ngum River Basin Fund
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Transcript of Options for the Nam Ngum River Basin Fund
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Options for the Nam Ngum River Basin Fund
Mekong Forum on Water, Food and Energy7-9 December 2011, Phnom Penh, Cambodia
Souphasay KomanyActing Director
Nam Ngum River Basin Committee SecretariatDepartment of Water Resources
Ministry of Natural Resources and Environment, Lao PDREmail: [email protected] and [email protected]
Decree No. 293/PM on Establishment and activities of River Basin Committee; Dated June 15, 2010
Article 12 : FundThe River Basin Committee has a fund for river basin management and development, which gains from:
1. the government budget, 2. grant assistance3. service charges, fine and;4. contributions from water resources developers in the river basin based on the principle of
“Polluter Pay”.
Legal and Institutional Concerns
Review of Existing Funds in Lao PDR
Budgetary Funds• Forest and Forest Resources
Development Fund (FRDF)• Road Maintenance Fund
(RMF)
Autonomous fund• Environment Pro tection
Fund (EPF)• Poverty Reduction Fund
(PRF)
Government Run-Funds
Budgetary Funds• Chair by Minister • Realize on national annual budget
(approve by NA)• Fund flow through Treasury Depart.
MOF• Financing through annual budget
plan of Ministry under which, the fund is running
• Audit is required as necessary (occasional)
Autonomous Funds• Chair by Deputy Prime
Minister• Realize on Donors assistance
and contributions• Special account for fund flow
and financing • Financing through proposals
(large sub grant approve by the Chair and Small approve by Fund Office Director)
• Annual auditing required
Summary of the Government-run Funds
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Eg. of Existing Funds OperationsPoverty Reduction Fund:
– Fund Type: Stand-alone
– Structure: Board of Directors → Central PRF → Provincial PRF → District PRF → Village Clusters
– Encompasses 5 Main Sectors:• Education;• Public Work and Transport;• Public Health;• Agriculture; and • Capacity Development for Communities.
– Sources of Finance: Donor Grants and Loans.
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Eg. of Existing Funds OperationsForest and Forest Resources Development Fund:
– Fund Type: Public Mainstreamed Funding.• 2 Mil. US$ / Year, which retains 20-30% at central level for administration, the
remaining is channeled to local administration.
– Structure: • National Assembly Approval • → Management Committee of the FDF (let by Ministry of Agriculture and Forestry)
screens the Fund Application under the format of Ministry of Planning and Investment • → Ministry of Finance Allocation.
– Sources of Finance: • Public Budget.• Note that the fund is not extracted from selling of seized illegal logs, non from forest
clearance for road construction, and forest tourism.
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Eg. of Existing Funds OperationsRoad Maintenance Fund:
– Fund Type: Public Mainstream Funding.• 30 Mil. US$ in 2009
– Structure: • Executed by Ministry of Public Work and Transports• Main Account is deposited at National Treasury of Ministry of Finance and Subsidiary
Accounts are deposited at Provincial branches of BCEL Bank (Public Bank)
– Sources of Finance: • Fuel Tax (420 LK / Liter or 5.25 US Cent / Liter).• Over-load Fine; • Annual fee on Heavy-load Truck Tax (Being cancelled)• Road –Bridge Charges (Being cancelled)• Trans-national transportation Charge (Being cancelled)• Contribution from public and private sectors and international organizations (Being
cancelled)
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Eg. of Existing Funds OperationsEnvironmental Protection Fund:
– Fund Type: Stand-alone
– Structure: Chaired by Deputy Prime Minister and Executed by Board of Directors let by Ministry of Finance.• Window 1: Policy implementation and capacity enhancement (PICE). • Window 2: Biodiversity and community investment (CBI).• Window3: Pollution Control. • Window4: Water Resources (being considered)• Window5: Sustainable Land Resources Management (being considered)
– Sources of Finance: • Grant• Loan with low interest for environment management (wastewater treatment, recycling
process, etc.)• Co-finance with other donor agencies.• Engagement and Contributions from Developers;• Etc.
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Eg. French River Basin FundStudy on French River Basin “Ear-marked Charges”:
» Fund Type: Stand-alone
» Structure: Executed by Loire and Breutany River Basin Authorities
» Sources of Finance: • Applying Polluters Pay Principle, which most of the
charges are from domestic and industrial wastewater discharge fee.
• Economically analytical-based charging design.
Funds set up to manage government & donor budgets
Funds set up to manage user fees & service charges
Funds set up to manage voluntary contributions
Multi-source funds
Environment Protection Fund (stand-
alone Fund)
Forest and Forest Resources Development Fund (Budgetary Fund)
Road Maintenance Fund(Budgetary Fund)
Poverty Reduction Fund(stand-alone Fund)
Fund Establishment
Approach for Designing
International best practices Practices of Funding in Laos
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Key issues and considerations• NNRBF must be consistent with the legal and institutional structure of
the NNRBC and its Secretariat
• NNRBF can only attract financial resources that are directly linked to its mandate and services that it will deliver to others
• NNRBF will have to be careful of being perceived as competing against other agencies and organizations for scarce funding
• Even where new funds are generated, NNRBF may not be able to retain them
• NNRBF will be wide-ranging in its sources, use and targets - requires flexibility
• Need to be realistic about the timing of fund set-up and funding flows
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OPTION #1: MAINSTREAMED
FUNDING
OPTION #2: STAND-ALONE
NNRBF
OPTION #3:NNRB WINDOW IN
EXISTING UMBRELLA FUND
OPTION #4:NNRB SUB-FUND
IN NEW UMBRELLA FUND
No separate fund. Sectoral budgets
and special programmes of
relevant line agencies allocate
funds for implementation of NNRBP activities
Special account for MoNRE is set up by
the MoF, earmarked for the
NNRB
Funding window created under the EPF, earmarked for
the NNRB
National RBF, with NNRBF as one sub-
fund under this
Design, structure and management
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Uses existing government budget mechanism
Annual budget allocation
Special programmes and projects
Sinking fund: draw down a pre-determined amount of funds over a specified time period
Endowment fund: invest the capital and spend the interest earned
Replenishable fund: permit for new sources of funds or income to be periodically added
Revolving fund: give out credit or loans, and return the interest and capital repayments to the fund for further lending or disbursement
Fund administration
OPTION #1: MAINSTREAMED
FUNDING
OPTION #2: STAND-ALONE
NNRBF
OPTION #3:NNRB WINDOW IN
EXISTING UMBRELLA FUND
OPTION #4:NNRB SUB-FUND
IN NEW UMBRELLA FUND
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Existing sectoral funding (State budget)
New/ earmarked funding comes only from specific private and international-funded projects
Government funds
International funds
New extra-budgetary sources of funding
• Service charges
• Payments for ecosystem services (PES)
• Private sector contributions
• Other voluntary and regulatory sources
Funding sources
OPTION #1: MAINSTREAMED
FUNDING
OPTION #2: STAND-ALONE
NNRBF
OPTION #3:NNRB WINDOW IN
EXISTING UMBRELLA FUND
OPTION #4:NNRB SUB-FUND
IN NEW UMBRELLA FUND
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Government budget
Service fees and user fees
Royalties
Fines
Payments for watershed services
Payments for other ecosystem services
Carbon finance
Fiscal transfers
Contributions from water developers
Biodiversity offsets
Other corporate sponsorship
International development grants
Interest from investments
?
?
?
?
?
?
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OPTION #1: MAINSTREAMED FUNDING
OPTION #2: STAND-ALONE NNRBF
OPTION #3:NNRB WINDOW IN
EXISTING UMBRELLA FUND
OPTION #4:NNRB SUB-FUND IN NEW
UMBRELLA FUND
Approaching to milestone of
April 2012• Structure?• Charge Rate?
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Thank You