Armenia: Infrastructure Sustainability Support Program

Sovereign Project | 46220-001

Summary

The Asian Development Bank (ADB) will partner with the Government of Armenia (government) to improve road and water service provision under the proposed Infrastructure Sustainability Support Program (program).

The program will support the government's development agenda on sustainable infrastructure provision as articulated in the Draft Armenia Development Strategy, 2013- 2025; Medium-Term Expenditure Framework, 201-3 2015; and the Republic of Armenia Government Program. It is closely aligned with ADB's Strategy 2020; the Water Operational Plan, 2011- 2020; the Sustainable Transport Initiative Operational Plan; and the development priorities identified in the country operations business plan, 2012 -2013 update. ADB has partnered with the government in road transport and water supply sectors, and for policy-based loans.

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Project Name Infrastructure Sustainability Support Program
Project Number 46220-001
Country Armenia
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3155-ARM: Infrastructure Sustainability Support Program
Asian Development Fund US$ 49.00 million
TA 8710-ARM: Strengthening Sector Management Capacity in Road and Water Sectors
Technical Assistance Special Fund US$ 900,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector Public sector management - Public expenditure and fiscal management
Transport - Road transport (non-urban) - Transport policies and institutional development
Water and other urban infrastructure and services - Urban policy, institutional and capacity development - Urban water supply
Gender Equity and Mainstreaming No gender elements
Description

The Asian Development Bank (ADB) will partner with the Government of Armenia (government) to improve road and water service provision under the proposed Infrastructure Sustainability Support Program (program).

The program will support the government's development agenda on sustainable infrastructure provision as articulated in the Draft Armenia Development Strategy, 2013- 2025; Medium-Term Expenditure Framework, 201-3 2015; and the Republic of Armenia Government Program. It is closely aligned with ADB's Strategy 2020; the Water Operational Plan, 2011- 2020; the Sustainable Transport Initiative Operational Plan; and the development priorities identified in the country operations business plan, 2012 -2013 update. ADB has partnered with the government in road transport and water supply sectors, and for policy-based loans.

Project Rationale and Linkage to Country/Regional Strategy

Economic growth facilitated by improved infrastructure is a government development priority. Infrastructure assets are aging fast in Armenia, and resources for their rehabilitation or replacement are increasingly limited. The road and water sectors are of particular importance, given their impact on the economy and quality of life. Both sectors are acutely underfunded, with the government's long-term planning and sector management capacity limited. In the road sector, distortions between operating budgets and predominantly development agency-funded capital expenditures are increasing. Aging water sector assets cannot be maintained with limited public funding and tariffs. Under-provision or poor provision of roads limits people's access to markets, health, and education facilities. Better maintained road networks around economic hubs can improve access and create opportunities for economic integration of those in peri-urban and rural areas. Reliable and clean water supply would have direct health benefits. During the design background work, the following were identified as prerequisites for better sector management and service delivery: (i) integrated sector management informed by sound asset management; (ii) effective financial management and additional financing options; (iii) aligned responsibilities, functions, and accountabilities of all departments and agencies in each sector to help achieve sector targets.

The government has partnered with development agencies and the private sector to improve road infrastructure and water supply, but the current need far exceeds the resources available. The program will help strengthen results-based management systems to address these constraints and to achieve road and water sector development priorities. The program also introduces a cross-sectoral approach for sector and finance ministries, scaled up to all four levels of results-based management planning, budgeting, implementation, and monitoring within and between sectors. The program will partner with the Ministry of Economy (MOE) to align sector development plans with country development targets, with the Ministry of Finance (MOF) for adequate resource mobilization and optimal allocation, with the Ministry of Territorial Administration (MTA) for water and regional roads, and with the Ministry of Transport and Communication (MOTC) for the road network.

Impact Improved service delivery in the road transport and water supply sectors
Project Outcome
Description of Outcome Results-based management systems implemented in the road transport and water supply sectors
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. Sector management systems improved

2. Strategies and processes to allocate investments more efficiently developed

3. Regulatory frameworks improved

4. Monitoring systems strengthened

Status of Implementation Progress (Outputs, Activities, and Issues) The ADB Board of Directors approved the program and tranche 1. Loan effectivity process is underway.
Geographical Location Armenia
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects This is a program loan that will support better financial management and administration of road and water sectors in Armenia. It has no direct investment or project component which may trigger any of the safeguards.
Involuntary Resettlement This is a program loan that will support better financial management and administration of road and water sectors in Armenia. It has no direct investment or project component which may result in involuntary resettlement.
Indigenous Peoples This is a program loan that will support better financial management and administration of road and water sectors in Armenia. It has no direct investment or project component with an impact on indigenous people.
Stakeholder Communication, Participation, and Consultation
During Project Design The primary stakeholders for the program are beneficiaries of road and water services, the Ministry of Finance, Ministry of Economy, Ministry of Transport and Communication, Ministry of Territorial Administration, the State Committee on Water Economy, private sector providers of water and road transport services and infrastructure. These stakeholders have been consulted extensively on the policy conditions and timetable for implementation during workshops, focus group discussions, working group sessions held intermittently from March to August 2013.
During Project Implementation
Business Opportunities
Consulting Services

The TA will require 16 person months of international and 34 person-months of national

consulting services, for technical, advisory, and capacity development support through shortterm

and co-sourcing arrangements. A multi-disciplinary team of consultants will be engaged consisting of (i) international and national public financial management specialists, (ii)

international road transport and water supply economists, (iii) an international public utilities

regulatory affairs specialist, (iv) international and national water sector engineers, (v)

international and national roads engineers, (vi) a national data and system management

specialist, (vii) national audit specialists, and (viii) a national legal expert.

ADB will engage the services of a consulting firm to provide the international

consultants. The firm will be recruited in accordance with quality- and cost-based selection

using simplified technical proposals and a quality-cost ratio of 80:20. The internal audit

specialists will be recruited through an audit firm using least-cost selection to be able to draw

from the pool of experienced specialists and expertise that a firm may offer. The remaining

national consultants will be engaged on an individual basis because the required skills mix and

qualifications are diverse and difficult to source through an international consulting firm. National

and international consultants will work closely as a team and with the head of the program

steering committee, who will oversee the consultants' deliverables consistent with the DMF. The

consulting firms, individual consultants and resource persons will be recruited in accordance

with ADB's Guidelines on the Use of Consultants (March 2013, as amended from time to time).

Responsible ADB Officer Matthew Hodge-Kopa
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of Finance (MOF)PRESS@MINFIN.AM1 Melik Adamyan, Yerevan
Armenia
Timetable
Concept Clearance 11 Nov 2013
Fact Finding 04 Nov 2013 to 15 Nov 2013
MRM 25 Apr 2014
Approval 28 Aug 2014
Last Review Mission -
Last PDS Update 20 Mar 2015

Loan 3155-ARM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 Aug 2014 03 Oct 2014 19 Dec 2014 30 Sep 2015 31 Dec 2015 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 49.00 Cumulative Contract Awards
ADB 49.00 28 Aug 2014 19.00 0.00 42%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 28 Aug 2014 19.00 0.00 42%

TA 8710-ARM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 Aug 2014 19 Sep 2014 19 Sep 2014 30 Sep 2015 31 Dec 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
900,000.00 0.00 100,000.00 0.00 0.00 0.00 1,000,000.00 28 Aug 2014 425,766.97

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