Aide Memoire – June 2017 Mekong Integrated Water Resources Management Project Phase 1 Implementation Support Mission Lao PDR: Components 2 and 3 June 19-23, 2017 Project ID P104806 Total Project Cost: US$ 26.0 million Original Grant Amount: (Lao PDR) US$ 18.0 million (IDA-H6750): Components 2 and 3 Additional Financial (AF) Amount US$ 25.0 million: Components 2 and 3 (Lao PDR) (Contingent on Credit Effectiveness) Grant Amount: (MRC) US$ 8.0 million (IDA-H7620): Component 1 Date of Effectiveness March 8, 2012 Lao PDR Closing Date Current: March 31, 2018 After AF Effectiveness: March 31, 2021 MRC Closing Date March 31, 2018 Environmental Category: Category B Last Mission February 6-10, 2017 (Appraisal Mission for AF) May 24-26, 2017 (AF Negotiations) Date of Last Archived ISR May 12, 2017 Disbursement (as of February 9, 2017) IDA-H6750: US$ 16.42 million (US$0.45 million remaining) IDA-H7620: US$ 4.37 million (US$ 3.08 million remaining) Table of Contents Main Text: Section A: Introduction Section B: Summary Section C: Project Management, Fiduciary, and Safeguard Issues Section D: Project Implementation-MONRE Components Section E: Project Implementation-MAF Components Section F: Action Plan Annexes Annex 1: Financial Management Annex 2: Irrigation Component Annex 3: Fisheries Component Aide Memoire – June 2017 A. Introduction 1. A World Bank implementation support mission for the Mekong Integrated Water Resources Management Project Phase 1 took place from June 19-23, 2017.1 Component 1 of the Project is implemented by the Mekong River Commission (MRC), while Components 2 and 3 are implemented by the Lao PDR. This aide memoire covers Components 2 and 3, and will be sent to the Lao PDR Government. 2. The objectives of the mission were to i) help start-up activities to be financed through the proposed Additional Financing (AF) to the Project; and ii) provide implementation support to the on- going Project. A wrap-meeting was held on June 23, 2017 and was chaired by Mr. Chanthaneth Boualapha, Director General of the MONRE Department of Water Resources (DWR). The findings and conclusions of this aide memoire are subject to confirmation by World Bank management. In accordance with the World Bank’s Access to Information Policy, this aide memoire will be publicly disclosed. 3. The Bank team would like to express their gratitude for the support provided by the MONRE Department of Water Resources (DWR) and the Department of Planning and Cooperation (DPC), the MAF Department of Irrigation (DOI), and the MAF Department of Livestock and Fisheries (DLF). The mission appreciated the opportunity to meet with Mme. Bounkham Vorachit, Vice Minister of MONRE; Mr. Chanthanet Boualapha, Director General of DWR; Mr. Virana Sonnasinh, Deputy Director General of DPC; and Mr. Bounthong Sarphakdee, Deputy Director General of the DLF. 4. The World Bank would also like to thank the Government of Australia for its generous financial assistance which enables specialized World Bank contracted experts to support the overall Mekong IWRM program and facilitate transboundary water resources management. B. Summary 5. AF Credit Effectiveness: The SDR $18.3 million (US $25 million equivalent) AF credit for the Lao PDR part of the Project was approved by the World Bank Board of Executive Directors on July 6, 2017. The next step is for the World Bank and the Government of the Lao PDR to sign the Financing Agreement (FA). After the FA is signed and the Lao PDR provides a legal opinion confirming the FA, the World Bank will declare the FA effective. MONRE is requested to liaison with the Ministry of Finance to facilitate the process of Credit Effectiveness. Any eligible Project expenses incurred after April 1, 2017 are eligible for retroactive financing under the AF credit. 1 Mission Members included: Greg Browder (Outgoing Task-Team Leader, Lead Water Resources Management Specialist), Daryl Fields (Incoming Task Team Leader, Senior Water Resources Management Specialist), Eileen Burke (Senior Water Resources Specialist), Zhijun Chen (FAO Irrigation Specialist), Viengsompasong Inthavong (Water and Sanitation Specialist), Peter Crawford (Environmental Specialist), Nigel Hayball (Water Resources Management Specialist, Consultant), Ashley Hall (Fisheries Specialist, Consultant), Khamphet Chanvongnaraz (Procurement Specialist), Siriphone Vanitsaveth (Financial Management Specialist), and Thongkham Chanthavong (Program Assistant). 2 Aide Memoire – June 2017 6. Amended Law on Water and Water Resources: The amended Law was approved by the National Assembly on May 11, 2017. The mission noted that the AF comes at an opportune time and will provide MONRE with the resources to help implement the Law. MONRE also noted the importance of developing a National Water Resources Strategy, as mandated by the Law, as well developing sustainable financing mechanisms for the implementation of the Law. 7. Priority AF Start-UP Activities: The Project will close in March 2021, which means that MONRE and MAF have only 3.5 years to utilize US $25 million, so a quick start on implementation is important. Moving quickly on high-priority procurement actions identified during the mission will be important. These are highlighted in the next section. 8. MONRE Project Management: Since the project management functions are being transferred from DWR to DPC, it is important to have a smooth transition. The mission would like to encourage MONRE to formalize these arrangements as soon as possible, and ensure that experienced staff from DWR continue to support the DPC. 9. Change in World Bank Team Leader: The current Team Leader, Mr. Greg Browder, will be relocating to World Bank Headquarters in July 2017. Ms. Daryl Fields, who is based in Vientiane, will take over the Team Leader position. The Bank will provide MONRE an official letter when the transfer takes place in mid-July, 2017. 10. Project Financial Status: The table below shows the financial status as of May 31, 2017 and indicates that all components, with the exception of Fisheries (3.2) have essentially utilized their allocated funds. The primary reason for the overruns in 2.2 (Water Quality) and 2.4 (Hydro-Met) are higher than expected costs for buildings. The Project still has a net balance of approximately $500,000 to manage cash flow needs until AF becomes available. Sub Component Allocated Balance at Commitments Budget 31-May-17 2.1 Water Law 626,000 23,437.71 - 2.2 Water Quality 1,239,000 (445,689.30) - 2.3 Water Resources Modelling 592,000 246,789.24 50,000 2.4 Hydro-Met 1,870,000 (314,351.99) - 2.5 Project Management 1,393,000 71,311.39 30,000 3.1.1 River Basin Planning 2,079,000 30,973.26 10,000 3.1.2 Irrigation 5,289,000 163,215.44 85,000 3.2 Fisheries 4,912,000 1,411,137.51 500,000 TOTAL 18,000,000 1,186,823.26 675,000 C. Fiduciary and Safeguard Issues 11. Procurement: The Project Procurement Plan was reviewed during the mission, and some minor modifications were discussed. It was agreed that MONRE will submit the updated procurement plan in Word format, which will be formally approved and dated by the World Bank. MONRE and MAF staff have also undergone training in the Bank’s STEP procurement system and the procurement plan will be transferred to STEP in the near future. 3 Aide Memoire – June 2017 12. During the mission, the high-priority contracts were identified, and MONRE/MAF agencies are requested to initiate procurement actions under AF as soon as possible since in many cases it will take many months before contracts are signed and payments required. The two key contracts are: i) international procurement advisor (C2.5-CS-006); and ii) water resources management (WRM) consultancy (C3.1.1-CS-001). The WRM consultancy is particularly important as it will play a key role in integrating the different MONRE sub-components into an overall program to create a national water resources management system. Since the WRM consultancy will follow a QCBS process, it is extremely important that MONRE approve this activity and issue the Request for Expression of Interest (REOI) as soon as possible. 13. The Bank team was informed that thirty-six contracts subject to post-review were awarded during the period July 2016 to June 2017. The Bank reviewed seven of these contracts and provided a follow-up letter documenting its findings and recommendations for improvements. Overall procurement performance is considered “moderately satisfactory.” 14. Financial Management: Overall financial management performance is considered as “moderately satisfactory”. Details on the financial management aspects of the project are presented in Annex 1. Although IFRs and audit reports have been submitted in a timely manner there remain some minor shortcomings which are outlined in the Annex. With the recent direction from the Minister of MONRE (dated March 3, 2017), the management of all ODA projects disbursements is to be through the Department of Finance (DOF) of MONRE. Annex 1 contains more detailed recommendation on financial management under this new arrangement, provides guidance on how to transfer project assets from DWR to the DPC, and lays out a financial management action plan. 15. Safeguards Management: Safeguard related issues are related primarily to the fisheries component (3.2) which is currently the only component under intensive implementation. The mission visited sites in the fisheries project area which includes Champasak, Sekong and Attapeu provinces, and findings are presented in Annex 3. With respect to social safeguards, the mission found that the consultation process for the fishery management plans, alternative livelihoods, and rural infrastructure are proceeding in a generally satisfactory manner but there is a need for more comprehensive documentation and to more explicitly incorporate ethnic group representatives into the Fishery Management Committees. 16. The draft Environmental and Social Management Plan (ESMP) for the new hatchery in Attapeu was submitted to the Bank in March 2017. The mission was informed that the DLF wishes to include a new road and bridge at the new hatchery, and the mission requested that the ESMP be updated to include these features. The mission undertook a preliminary review of the ESMP but unfortunately, due to weather conditions could not visit the site. Another visit to the hatchery site is planned in the near future to review the situation. D. Project Implementation-MONRE Components 17. E-Water Contract: The mission notes that MONRE has signed the contract with E-Water for upgrading water resource models and preparing water resource assessments in four priority basins (XBF, XBH, Sedone, and Sekong); the contract also includes exploratory flood modelling in the XBF basin and hydropower scenario analysis in the Sekong. The mission urges MONRE to use this opportunity to bring together the different departments (NREI, DWR, and DMH) to promote integrated water resources management. 4 Aide Memoire – June 2017 18. WRM Consultancy (C3.1.1-CS-001): This consultancy is designed to help MONRE develop a national water resources management system and includes four parts: a) national water resources data and information system and decision support systems for priority river basins; b) water resources planning; c) national water resources strategy and water law regulations; and d) capacity building. A draft scope of work was discussed during the mission and shared with MONRE. It is important that MONRE approve this activity and submit the draft TOR and REOI for the Bank’s no- objection as soon as possible. The mission recommends that MONRE contract international expert(s) to help them manage the WRM consultancy. 19. Water Law: The mission reviewed DWR’s six-month plan for formulation the key implementing regulations for the Water Law. The mission recommended that DWR consider preparing a three-year plan which includes formulation, consultations, piloting, and revisions to the regulations. The role of the WRM consultancy in supporting the implementation of the regulations should also be considered. The mission notes that based on international experience it usually takes several years after the passage of a law before the implementing regulations become functional. 20. Hydro-Met Component: The World Bank’s Mekong and DRM team had a joint meeting with DMH. The Bank stressed that DMH should consider that the Bank is providing one program of support to DMH with two sources of financing. The mission requested that the Mekong PMU and the DRM PMU in DHM also coordinate closely. The mission requested that DMH provide one list of hydro-met stations to be financed through the Bank program. For the hydro-met stations there will be one procurement process for works and one for equipment supply, installation, training and maintenance. The mission suggested that DMH consider the following strategy for the siting and design of the hydro-met stations: i) Procure a contractor for turn-key design and construction of the stations; and ii) procure a civil engineering firm with hydrology expertise to supervise the contractor and prepare reports confirming their acceptance of the siting, design and construction of the stations. E. Project Implementation-MAF Components 21. Irrigation Component: This component is currently inactive due to lack of funds. The mission undertook a site visit to Khammouane province and visited proposed new sub-project sites. The findings and recommendations of the visit are presented in Annex 2, and the annex proposes a number of activities that can be initiated immediately while waiting for the AF to become effective. The mission stressed the need to ensure coordination between the Project’s irrigation investments and the proposed Bank-financed Agricultural Commercialization Project (ACP). During preparation of the Mekong AF, it was agreed in principle that the ACP would focus its commercialization support on irrigation schemes that had been upgraded under the Project. The World Bank fisheries specialist will work with DOI to help prepare the TOR for NAFRI and LARReC to undertake an evaluation of fish pass performance at selected flood gates constructed under the component. 22. Fisheries Component: A detailed evaluation of the mission’s findings and recommendations is presented in Annex 3. The Bank team is very pleased to see the significant progress made in this component over the last six months, including the establish of Fishery Management Committees (FMC) in 15 Kum Bans (KB); preparation of fishery management plans underway for 9 KBs; alternative livelihood support for 6 KBs; and design of rural infrastructure programs in 12 KBs. Three fish hatcheries have been rehabilitated, and a new hatchery in Attapeu is at an advanced stage of planning. 5 Aide Memoire – June 2017 F. Action Plan to Negotiations The following key actions were agreed during the mission and have been mentioned in the aide memoire: Action Target Date DMH Submits List of Hydromet Stations July 15, 2017 Finalize Revised Procurement Plan August 1, 2017 Revise the Attapeu Hatchery EMP August 1, 2017 MONRE Decision on PMU in DPC August 15, 2017 Issue REOI for WRM Contract September 1, 2017 AF Credit Effectiveness September 1, 2017 Contract International Procurement Specialist September 15, 2017 6 Aide Memoire – June 2017 Annex 1: Financial Management The overall financial management performance is rated “moderately satisfactory”. Although IFRs and audit reports have been submitted in a timely manner complying with the financing agreements and some of the recommendations from the previous mission have been implemented, there remains a few shortcomings such as (i) monthly bank reconciliation not properly documented, (ii) accounting entries for advances not comply with stated accounting policy, (iv) journal vouchers not prepared for some entries; (iii) reporting of advances in the Statement of Expenditure rather than actual expenditure, and (iv) certain supporting documents not available at time of review for which a follow up will be needed. FM arrangement under the Additional Financing (AF): With the recent direction from the Minister of MONRE (dated March 3 2017), the management of all ODA projects disbursements is to be through the Department of Finance (DOF) of MONRE. Due to limited capacity, it was agreed with DOF during the assessment of the AF that their involvement in the project’s FM will be limited to the approval of disbursements and high-level guidance until their capacity is built to enable them to take over the whole task. Therefore, under the AF, the financial management consultants previously working under NPMU of DWR will be moved to DPC offices and working closely with DOF on project financial management matters. We were also informed that the process of hiring a replacement cashier/accounting assistant is also underway and should be completed before the move to DPC. It is highly recommended that DPC and DWR jointly consider the cut-off date to which the move of the Finance team should be completed. Assets: Current NPMU should arrange for asset count and decide which item remains at DWR and which are to be physically moved to DPC. All important asset items for financial management such as computers, server storing the accounting information and other necessary equipment to facilitate smooth operation should be moved. The asset register should be updated with location, person responsible and conditions of the asset. Assets should remain project asset and for exclusive use of the project until the project closes. We recommend that the assets be counted and register updated by July 31, 2017. Disbursement. Disbursement rate to date is 97%. Documentation and replenishment to the DA have not been carried out regularly. Current undocumented expenditure is approximately $1.07 million. We strongly encouraged the project FM team submit the withdrawal application as soon as possible. Financial Management Annex: Reporting. IFRs have been submitted in a timely manner. The next IFR for the period ended June 30, 2017 will be due in August 15, 2017. Audit. The audit report for FY16 has been timely, before the due date. We noted several repeated issues in the Management Letter for the FY2016. The mission team have discussed the audit issues with the project Finance team and recommend to take remedies actions to address these repeated issues as soon as possible. Detailed recommendations will be included in a separate acknowledgement letter. 7 Aide Memoire – June 2017 Accounting Software. We were informed that the accounting software is not functioning as well as it should be, in particular the consolidation function. Errors frequently occurred requiring assistance from IT consultant to fix and this occurred on a monthly basis. As the reason for the error is not fully confirmed whether it is human input error or system error, the mission recommends the project Finance team to check the input from other project component offices before posting into the system. If it is identified as system error, then we recommend that a programmer be hired to fix the system. These recommendations should be carried out immediately for the June month closure. Transaction reviews. A sample of transactions was selected for review. Based on the review we noted two major issues: (i) it was noted that the advances made for activities such as workshops, monitoring missions or petty cash have been recorded as expenditures as soon as it is withdrawn from the DA. In the accounting system, withdrawals from DA were booked as expenditure in full and adjusted later if there was any refund. This practice is not in accordance with the accounting policies stated in the audit report. Moreover, advance amount or withdrawal from DA is recorded in SOE as expenditure; and (ii) some important supporting documents were not on file at time of review. The project FM team is to provide these documents no later than July 3, 2017. Insufficient supporting document may result in the expenditure becoming ineligible for financing. FM Actions Responsible Target for completion Unit 1. Provide remaining supporting document for the “Trip to Singapore to attend Water Convention Project No later than July 3, 2017 July 9-14, 2016” – US$4,430 Finance team 2. Complete the recruitment of project cashier/accounting assistant Project August 2017 Finance team 3. Check the input from other project component offices before posting into the accounting Project Immediately system. If it is determined to be system error, Finance then we recommend that a programmer be team hired to fix the system permanently. 4. Regularly submit withdrawal applications to document eligible expenditures paid from the Project Monthly Designated Account Finance team 8 Aide Memoire – June 2017 FM Actions Responsible Target for completion Unit 5. Carry out physical count of fixed assets and update of asset register prior to relocating to Project July 31, 2017 DPC Finance team 6. Change the way transaction is booked for advance transaction; maintain a Petty cash Project Immediately account and project’s advance register; report Finance only actual expenditure in the Statement of team Expenditure 7. Update the internal approval procedures to reflect changes in reorganization of the project. Project By August 2017 Assigned approval authority to the DOF of Finance DPC team 9 Aide Memoire – June 2017 Annex 2: Irrigation Component Mission Report on C3.1.2-Irrigation By Dr. Zhijun Chen, Senior Irrigation and Rural Infrastructure Engineer, FAO TCI June 20-24, 2017 1. Mission Activities The reporter met with the project team of DOI who is responsible for implementation of C3.1.2, the Deputy Director General and the Head of Irrigation Unit of PAFO, Khammouane Province; field visited Natai and Sorbo irrigation schemes in Khammouane, and Somsaat 1 and Nongheuathong 2 irrigation schemes and Houay Saina flood gate in Savannakhet; review the current progress of C3.1.2 activities; discussed the preparation and implementation of C3.1.2 activities under M-IWRMP1 AF; and explore possible collaboration between M-IWRMP 1 and the World Bank supported agriculture commercialization project (ACP) which is currently under preparation. 2. Major Findings All activities under C3.1.2 have been implemented to the extent of availability of current financing. The project team is waiting for the effectiveness of additional financing to implement any further activity. The four irrigation schemes and one flood gate visited in Khammouane and Savannakhet, identified for improvement under additional financing are in compliance with the set selection criteria. The proposed rehabilitation and improvement work to these irrigation schemes and flood gate are relevant, only canal cleaning and weeding could be implemented by WUAs as their normative maintenance work, instead of through project funding. Due to limitation of weather condition, field survey is expected to commence in October when the dry season start, which means that construction work may only be able to commence from October 2018. The ACP project areas proposed by PAFO of Khammouane are mainly rain-fed areas outside both KDP and M-IWRMP 1 benefit areas. This may not be in line with the ACP concept and idea originally discussed and agreed between the World Bank and the government. This issue has been brought to the attention of both PAFO and the Project Preparation Team (PPT) of ACP for their possible consideration and action in strengthening collaboration between ACP, M-IWRMP 1 and previous KDP in Khammouane. 10 Aide Memoire – June 2017 3. Recommendations The following recommendations on preparation and implementation of C3.1.2 activities under additional financing were provided to DOI project team during the mission: 1) Advance implementation preparation. While engineering survey may be limited by weather condition, other preparation work could be implemented to their extent possible, such as preparation of TORs and bid documents for engineering survey, design and feasibility studies; and TORs for the fish pass study. 2) Emphasize the set selection criteria. These include willingness of the beneficiaries in taking over O&M responsibilities after construction; and willingness of the beneficiaries in adopting SRI in rice farming. 3) Prioritize project interventions. Priority shall be given to rehabilitation and improvement of headworks (Pontoons and pump sets), main canals and key structures; move away from field canal lining, weeding and cleaning. 4) Improve system design. Currently all irrigation systems applied one typical design. In order to fit the needs of different scale of irrigation schemes, diversified typical designs shall be adopted. 5) Scaling up SRI activities. SRI activities under current financing are limited to household level demonstration at tiny plots. Further SRI activities under additional financing shall be scaled up to scheme level dissemination. 6) Pay attention to financial status of WUAs. Unified water fee standards are set by DAFOs and applied for all WUAs, which may not fit the situation of each WUA. The project team could do some analysis on the financial status of WUAs and provide policy recommendations to DAFO to ensure the financial sustainability of WUAs. 7) Enhance knowledge management. Build on the extension materials developed through implementation of previous KDP and M-IWRMP1, a series of training manuals/books on WUA, irrigation agriculture, irrigation management and pump operation and maintenance could be developed and published for the use of M-IWRMP 1 AF and other investment projects. 8) Strengthen project M&E. taken the lessons learned from implementation of existing financing, project M&E could be strengthened, including baseline survey, selection of sample households and control groups, and regular monitoring and reporting. 4. Follow-up actions 1) DOI PMU with assistance from the WB procurement specialist, will revisit their procurement plan and explore possibility for advanced implementation while waiting for effectiveness of the AF by July 30, 2017; 2) DOI PMU will prepare TORs and bid documents for engineering survey, design and feasibility studies by August 30 2017; 11 Aide Memoire – June 2017 3) DOI PMU with technical assistance from the WB fishery and procurement specialists, will prepare TORs for the fish pass study, identify qualified local implementing partner, and identify suitable procurement method by September 30, 2017. Mission Program Date Time Activities 20 June 12:30 Arrival in Vientiane 08:30-12:00 Meeting with DOI, discussion on sub-component activities and 21 June mission program 13:00-17:00 Travel from Vientiane to Khammouane Province 08:30-09:00 Meeting with DOI project team in Khammouane 09:30-12:00 Meeting with PAFO, discussion on M-IWRMP1 AF activities and ACP irrigation proposal in Khammouane Province and their possible 22 June coordination 13:30-19:00 Field visits to one flood gate and four irrigation schemes in Xebangfai River Basin in Khammouane and Savannakhet provinces 08:30-11:00 Meeting with DOI project team, discussion on preparation and 23 June implementation of C 3.1.2 activities under M-IWRMP1 AF 11:30-17:00 Travel from Khammouane to Vientiane 24 June 08:00-17:00 Mission reporting People Met Name Position Mr. Khamhou Phanthavong Deputy Director, Division of Planning and Cooperation, DOI Mr. Mannam Vongnalaysane Social Development Expert, PMU/DOI Mr. Thaly Salichanh Agronomist, PMU/DOI Mr. Vivarath Sihabouj Irrigation Expert, PMU/DOI Mr. Somchith Chith Pump Engineer, PMU/DOI Mr. Dethsackda Manikham Deputy Director General of PAFO, Khammouane Mr. Bouakham Choummany Head of Irrigation Unit, PAFO, Khammouane 12 Annex 3: Fisheries Component A. Component 3.2: Fisheries Management in Southern Lao This Component aims to provide support for improved fisheries co-management in southern Lao along the mainstream Mekong and the Sekong River basin covering Champassak, Sekong and Attapeu Provinces. Progress is reported under the following three sub-component activities: 3.2.1 Support for establishing community-managed fisheries (i) Establishment of Fishery Management Committees (FMC) and the formulation and implementation of fishery management plans. 1. This activity includes the establishment of committees for the management of fisheries resources at the kum banh (KB) (commune level) – termed Fisheries Management Committee (FMC). It includes the formulation and implementation of a fisheries management plan in each commune including physical establishment of offices; equipment for MCS (boats and surveillance gear), demarcation of protected areas and sign boards. To date, the following activities have been completed: FMC Establishment 2. All 15 from a target of 15, FMC have now been established (Table 1). 3. Community engagement activities and baseline surveys have been completed for all 15 KBs. Maps have been prepared by members of the KB during these surveys illustrating the location of important fish habitat and existing fish conservation zones. Safeguards for FMC establishment: 4. To meet the bank’s social safeguards2, documentation describing the community engagement and consultation activities (who participated, how and when, meeting minutes...etc.) have been prepared for all 15 KBs. Copies of the following supporting documents have been prepared in Lao: (i) consultation meeting reports; (ii) formal documents reporting the election of FMC members; (iii) Letters of approval for the FMC Committee sent to the District Governor; (iv) KFMC establishment Meeting Minutes, agenda, and list of participants. 5. Copies of these documents for KBs located in Champassak (9 KBs) are now held at the CMU office. Documents for the remaining 6 KBs located in Sekong and Attapeu provinces are held at the respective PAFO Offices. 6. To establish the FMC, the CMU instructs PAFO and DAFO (via letter) to invite representatives of the kum bans (KB), village heads and members of villages (via the village head) to form a FMC. Representatives included those listed in Annex 3 of the Fisheries Management Guidelines. The letter issued by the CMU does not however make explicit reference to the need to invite members of ethnic groups (if present). To ensure that all members of the village are informed and have an equal opportunity to 2 Following a request by the WB SES Specialist (Juan Martinez). 13 become members of the FMC, the village head notifies members of the village about the process to establish the FMC via word or mouth or by using the village notice board. 7. The mission raised concern that if these procedures were adopted, ethnic groups (where present in a KB) may not be (adequately) represented in the existing FMCs. 8. The mission therefore recommended that the CMU check and report as soon as possible, the representation of ethnic groups in the FMCs. Representation should be approximately proportional to the population of ethnic groups in the KB reported in the socio-economic survey reports. At worst, each ethnic group should be represented by at least one member of the FMC. If representation is inadequate, members of ethnic groups should be encouraged to become members of the FMC. 9. It is also recommended that the safeguards documentation that was prepared during the process of establishing the FMCs in Sekong and Attapeu Province, should be compiled and held securely for reference at the CMU office in Pakse. Management Planning 10. Guidelines for Establishing Co-Managed Fisheries received NO by the WB on 16/08/2016. The Guidelines have been translated into Lao. They provide a clear nine- step, three phase process to establish a FMC and to formulate and implement a management plan for the commune with key stakeholders. The guidance is aligned with WB social safeguards; the National Fisheries Law; and existing community fisheries management guidelines prepared by WWF in 2009. 11. Training activities (with workshops) in the use of these Guidelines has (July 2016) been delivered to the three Provincial CMUs with DAFO staff. 12. Management planning is underway in 9 of the 15 KBs. Draft management plans have been prepared and documented (completing Steps 1-3 of the Guidelines) for 4 KBs: Don Som (Kong District, Champasak); and Don Chan (Lamam District, Sekong); Ban Tae (Sanamsai, Attapeu); and Hinlad (Sanamsai, Attapeu). 13. According to the Fisheries Management Specialist (Dr. Sinthavong), the matrix used to monitor progress with respect to FMC establishment and management planning activities (Table 1) requires some revision, because less progress has been made in some KBs compared to what is currently reported. For example, the CMU is still in the process of summarising the management plans in tabular format; and some KB are still to agree penalties for non-compliance with some management measures. Some updates have already been made to Table 1, but more may be necessary. 14. The CTA is requested to prepare an updated progress matrix with the advice of the Fisheries Management Expert. 15. During the field visit to Don Som KB, a meeting was held with FMC to discuss the project activities. The meeting was attended by more than 30 participants. The FMC confirmed than the management plan was being prepared following the guidelines and implementation of their management plan was expected to begin in the next few months. Equipment for MCS was expected to be provided by the CMU by the end of the year. Management issues to be addressed were the use of illegal fishing gears, and the capture of immature and spawning fish. The management strategy will include the implementation (enforcement) of existing national legislation, and enhanced controls of fishing in 13 existing FCZs. 14 Safeguards for Management Planning 16. The process of engaging the commune in the management planning process was regarded as satisfactory by the mission members. Commune members are consulted on at least three occasions during the management planning process. For each consultation, the CMU instructed PAFO and DAFO (via letter) to invite the members of the FMC, representatives of ethnic groups, representatives of women and youth groups, and ‘anyone else who might be interested’ to participate. On each occasion, minutes of these consultations and a list of participants are reported. Documentation for several KBs was checked to confirm that these procedures were followed. 17. The Guidelines are currently being reviewed by the MAFF/DFL in preparation for their promotion for co-management planning throughout Lao PDR. A national workshop is being planned for 2017 to launch the Guidelines. (ii) Support for alternative livelihoods. 18. The national livelihoods consultant (Mr. Vilath) was not present during the mission to consult on this activity. 19. Alternative livelihood (AL) support was delivered in six (6) KBs during 2016 (Table 2). Delivery of AL support to a further six KBs is expected by July 2017. Activities, in 2016 included the identification of eligible and priority households to receive support; AL fund allocation by village; the establishment of a Procurement Committee Agreement; the preparation of a procurement request; site visits (to approve of AL activity) and training and capacity building. A budget of approximately $20,000 is allocated for each KB. 20. Monitoring implementation and impact should be undertaken for those six KBs that have received AL support to date. Safeguards documentation are made publically available via DLF website. 21. Initial AL support took the form of vaccinations and provision of rice seed. Recent AL support has taken the form of the provision of poultry pullets procured and delivered by the CMU. The total value of the AL support to date is approximately $110,000. More than 50 villages and several hundred households have received support to date. 22. Poultry farming and rice growing is now underway in the six KBs that have received AL support. During the mission visit to Don Som, a recipient of AL support was met. He reported that he received 25 pullets in September 2016 and was rearing chickens for market and consumption. He reported earning approx. $20 per month which he used to pay school fees. DAFO reported that it was monitoring AL support impact every 3 months. 23. Further AL support for other registered FMCs will continue in 2017. The remaining budget for this activity is approximately $225,000 which includes an additional $100,000 from AF approved in June 2017. Safeguards of AL Support 24. Guidelines for identifying AL support in the KB in accordance with WB safeguards were completed and received NO from the Bank on July 21st 2016. These were reviewed and ‘improved’ by the WB Social and Fisheries specialists and disclosed in February 2017 in preparation for the additional financing proposal. 15 25. During the mission field visit to Don Som KB, the CMU reported that the Guidelines prepared for this activity had been applied to identify and deliver AL support in Don Som. DAFO invites the FMC, District authorities; the DLF; the CMU and village heads to a kick-off/orientation meeting (stage 1 of the Guidelines) to brief the FMC and village heads about available funds and eligible AL activities. The village heads then return to their village and identifies priority households to receive AL support with the support of the AL consultant (Mr. Vilath) (Stage 2). Criteria for identifying priority HH to receive AL support includes impact of the FMP on HH livelihoods; household interest, capacity required to undertake the livelihood; and an assessment of the need for the AL support. A voting system is used to finalise the selection of priority activities and HHs. The FMC and village heads then met again with the AL consultant to screen and finalise the AL support activities and the selection of priority recipient households (stage 3). HH do not have to attend this activity to qualify for selection. Approval is then sought from the CMU manager and the goods to support the AL activities procured and distributed. 26. Safeguards documentation describing the community engagement process and consultation activities that led to the identification of AL support were reviewed by the mission. 27. The mission found that minutes of kick-off/orientation meetings were missing for 3 KBs. Ethnic group profiles for villages were also missing in some cases. Meeting registration forms were blank in some cases but this was because the participants were already listed in the RI meeting registration forms (only one orientation meeting was used to brief the community about the AL and RI activities). 28. In summary the AL documentation requires updating/completing. Proformas were not used in some cases. There is a risk that free, prior and informed consultations with ethnic groups may not have been undertaken in some cases, because meeting announcements, instructions and letters of invitation did not make explicit the need for representation by members of ethnic groups if present. The risk is diminished if FMC or village members represent ethnic groups. 29. As for the FMC establishment, it is recommended that the CMU identify the ethnicity of the recipients of AL support and compare these profiles with those of the commune or village population to determine if ethnic groups were selected to receive support in proportion to their presence in the commune or village. (iii) Rural Infrastructure 30. This activity finances priority rural infrastructure investments identified by the FMC. A total budget of $600,000 was originally allocated for this activity. A further $100,000 has been allocated from the additional financing request approved in June 2017. Each Committee will receive a maximum of $40,000, (up to $4,000 per village) for community works (water supply, irrigation, bridge construction, village office, rural infrastructure etc.). 31. Priority rural infrastructure projects have been identified and designed for 12 of the fifteen KBs. This required village and KB consultation meetings with representatives of the KB to identify and approve priority projects (preference list); site surveys to screen the investments (using environmental screening forms); preparation of infrastructure designs and BoQs, and the approval of designs by the target village and FMC. 16 32. A total of 92 projects benefiting 93 villages have been identified. Projects include road, bridge and irrigation repairs; water supplies, school repairs; culverts, irrigation canals, village offices etc. (Table 3). 33. Construction activities have been completed in 6 KBs amounting to 54 projects. Some projects require further work or funds to complete the structure or works. ‘Handing over’ of projects to the KBs will occur after the final completion of the structure or works. Safeguards for RI 34. Guidelines, aligned with WB safeguards, to identify and administer the RI support received NO approval from the WB during the first week of June 2016. These Guidelines have been translated into Lao and disseminated to the KB. These were reviewed and ‘improved’ by the WB Social and Fisheries specialists and disclosed in February 2017 in preparation for the additional financing proposal. 35. The mission concluded that the activity appears compliant with the WB social safeguards. DAFO briefs the FMC and village heads about the RI support, eligible projects, and the implementation procedures during the kick-off /orientation meeting. 36. The FMC and village heads then consult with their commune and village members and prepare a list of priority RI projects (preference list). Note that RI investment priorities are typically already agreed / specified in commune or village investment plans following consultation with members of the village or commune including ethnic groups (if present). 37. The RI Engineer then undertakes a site survey of the village to screen the priority investments using the Pre-feasibility form (Annex 5 of the Guidelines). 38. Consultation records held by the CMU include: (i) the preference list approved by the village heads and FMC; (ii) a list (register) of meeting participants3; and the completed pre-feasibility forms for each RI investment. 39. The RI and AL Guidelines contain proformas in their Annexes for recording consultations with ethnic groups. The RI engineer reported that this form was superfluous because members of each village collectively identify priority RI projects with the village head and in most cases priority projects have already been identified for village or commune development plans. 40. During the mission field visit to Don Som KB, the environmental safeguards specialist (Peter Crawford) reviewed the environmental and social screening (Pre-feasibility) forms completed for the priority rural infrastructure investments identified by the KB. No environmental or social impacts were reported in these forms. 3 This is the same procedure adopted to identify priority alternative livelihood support in the KB because a single kick-off/orientation meeting is used to identify both AL and RI support. 17 Table 1 Summary of Component 3.2 progress towards establishing co-managed fisheries in the project area. The three Phases and nine Steps described in the table columns are those described in the Management Guidelines. np - No plan in existence; N – No; na- not applicable; SE- Socio-economic; BIO – Fisheries Survey;  - Activity completed or in progress. 18 Province Sekong Attapeu Champassak Khong District Lamam Sanamsai Sanasomboun Pathoumphone Total Hinlad Saphay Khamao Pakpoun Kum Ban Don Som Ban Thae Don Than Don Chan Don Deng Boungkha Khampeng Ban Muang Oudomsouk Mean KB value Ban Gnaii Nava Pathoumphone na = np = # Villages 7.8 117 11 7 4 6 3 9 7 6 7 8 5 14 9 8 13 # HH 1,313 19,688 1,800 709 721 378 611 1,013 2,587 1,734 2,267 1,199 582 2,073 974 1,463 1,577 not applicable No existing plan Population 7,702 115,533 10,949 3,975 3,782 2,881 4,011 5,841 14,140 9,373 13,708 7,195 3,583 11,650 5,527 8,688 10,230 np np np np np np np np np np np np np np np Review Date for KB Development Plan Y Y Y Y Y Y Y Y N N N N N N Ethnic Minorities Present? ? ? ? ? ? ? ? ? ? na na na na na na EGDF Applied? ? ? ? ? ? ? ? ? ? na na na na na na EGDP Prepared if required?                1.1 Situation Analysis and Concensus building                SE Surveys 19                 BIO          1.2 Issues for Management (SWOT)           1.3 Management goals /objectives             1.4 Identification of altenative livelihoods Phase I             1.5 Identification of Rural Investments Consensus Building                1.6 Election of FMC members Step 1 - Situation Analysis and                Report of community engagement/consultation (for safeguards) - to be annexed to the MP                Formal Registration of FMC Step 2            3.1 Define the fishery to be managed            3.2 Define Objectives; indicators, reference points            3.3 Select Management Measures            3.4 Define Decision Control Rules  3.5 Summarise the plan in table format Step 3 3.6 Agree penalities for non-compliance            3.7 Agree methods for monitoring and evaluation Phase II 3.8 Agree Management roles and responsibilities 3.9 Agree financing arrangements     3.10 Document the plan Review (and Revise) the Plan Step 4 Obtain wider approval for the plan Step 5 Obtain District Approval for the Plan Step 6 Disseminate and Publicise the Plan Step 7 Equip the FMC and begin monitoring Step 8 Phase III Evaluation and revision Step 9 Information dissemination and disclosure: AL support described in Annual Report, and all safegu Report of community engagement/consultation (for safeguards) Table 2 Summary of progress with respect to Alternative Livelihoods (AL) support in each kum ban. PMU Disburse funds and CMU Procurement and distribution Environmental and social checklists completed? AL fund allocation by village summary ($) AL activity identified with community* AL site visit (for approval of AL activity) Identification of eligble and priority HH Monitor implementation and reporting Procurement committee agreement Procurement request from P DLF Training and Capacity Building EGDP Prepared if required? Ethnic Minorities Present? AL activity begins AL allocation ($) Monitor impact EGDF Applied? Population # Villages # HH Province District Kum ban AL Activity Khong Don Som 13 1,577 10,230 23,133 N na na          Nov-16 Procurement of pullets for poultry farming Khamao 8 1,463 8,688 16,000 N na na    Jun-17 Don Than 9 974 5,527 N na na    Pathoumphone Pathoumphone 14 2,073 11,650 24,759 N na na          Nov-16 Procurement of pullets for poultry farming Champassak Don Deng 5 582 3,583 N na na    Jul-17 Ban Muang 8 1,199 7,195 Y ? ?    Sanasomboun Saphay 7 2,267 13,708 12,120 N na na          Sep-16 Procurement of 1225 pullets for 49 HH Boungkha 6 1,734 9,373 Y ? ?    Jul-17 Khampeng 7 2,587 14,140 ? ?    Lamam Don Chan 9 1,013 5,841 16,524 Y ? ?          Nov-16 Procurement of 1575 pullets for 63 HH Sekong Ban Gnaii Nava 3 611 4,011 Y ? ?    Jul-17 Pakpoun 6 378 2,881 Y ? ?    Jul-17 Sanamsai Ban Thae 4 721 3,782 12,937 Y ? ?          Dec-16 Procurement of 700 chickens for 28 HH Attapeu Hinlad 7 709 3,975 22,074 Y ? ?          Dec-16 Procurement of 1225 pullets for 49 HH Oudomsouk 11 1,800 10,949 Y ? ?    Jul-17 117 19,688 115,533 127,547 * meeting minutes and registration details available # Villages that have received support 54 20 Information dissemination and disclosure: Rural infrastructure investments described in Annual Report, Table 3 Summary of progress with Rural Infrastructure Investment Activities. Approved design and BOQ by target village and KFMC Village Consultation meeting to idenfy Priority RI Consultation meeting to approve project priority Report describing village consulation meeting Prepare Infrastructure design and BOQ Constructruction/ rehabilitation EGDP Prepared if required? RI Maximum allocation ($) Ethnic Minorities Present? Elevated water tank Procurement materials Raod improvement Irrigation canal wooden bridge Deliver Materials Repair Bridge RI allocated ($) village office EGDF Applied? pipe culvert Handing-Over FCZ Office # projects Population Site Survey Borehole # Villages school Weir # HH Province District Kum ban Khong Don Som 13 1,577 10,230 40,000 40,000 N na na          ? 13 3 7 1 1 1 Khamao 8 1,463 8,688 32,000 40,000 N na na  ?       ? ? 6 3 2 1 Don Than 9 974 5,527 36,000 ? N na na 0 Pathoumphone Pathoumphone 14 2,073 11,650 40,000 40,000 N na na          ? 13 5 5 1 1 1 Champassak Don Deng 5 582 3,583 20,000 20,000 N na na  ?      ? ? 5 5 Ban Muang 8 1,199 7,195 32,000 ? Y ? ? 0 Sanasomboun Saphay 7 2,267 13,708 28,000 40,000 N na na          ? 8 1 3 2 2 Boungkha 6 1,734 9,373 24,000 ? Y ? ?  ?     ? ? ? 6 1 2 1 2 Khampeng 7 2,587 14,140 28,000 ? ? ? 0 Lamam Don Chan 9 1,013 5,841 36,000 40,000 Y ? ?          ? 9 3 5 1 Sekong Ban Gnaii Nava 6 378 2,881 24,000 ? Y ? ?  ?     ? ? ? 3 1 2 Pakpoun 3 611 4,011 12,000 ? Y ? ?  ?     ? ? ? 6 4 2 Sanamsai Ban Thae 7 709 3,975 28,000 40,000 Y ? ?          ? 4 4 Attapeu Hinlad 4 721 3,782 16,000 40,000 Y ? ?  ?        ? 7 1 6 Oudomsouk 11 1,800 10,949 40,000 ? Y ? ?  ?     11 1 10 117 16,127 95,867 436,000 300,000 91 93 query/check But only 4 villages in this KB!!! 21 3.2.2 Support for Public Sector Fishery Management (i) Baseline and Routine Monitoring 41. This activity will design and conduct baseline surveys and establish routine fisheries monitoring programs with FMCs. It includes capacity building activities for DAFO and PAFO staff in survey and monitoring methods. 42. As reported in June 2016, the National Fisheries Management Specialist held training courses with PAFO and DAFO staff (24 participants) in fisheries baseline assessment methodology in March 2016. A report describing this activity has been prepared. 43. Baseline fisheries surveys have now been completed in all 15 KBs. Surveys were fully participatory and included all members of society from the villages. Baseline Survey Reports (in Lao) have been prepared for 7 of the 15 surveys. The key findings, including maps, will guide the management planning process and be included in the KB Fisheries Management Plan. 44. The National Fisheries Management Specialist provided training in MRC routine fisheries monitoring procedures for 28 members of DAFO and PAFO staff from the three provinces in December 2016. A report was prepared. 45. Training will be provided to fishers from each KB after management plans have been prepared. 46. Financing for the routine monitoring and other management activities have been discussed but not yet agreed for any KBs. Funds may be sourced from revenue generated by ‘community fishing days’ or from some form of license to fish. 47. The project had planned to recruit a Fisheries Monitoring and Evaluation (M&E) Specialist to support the implementation of the routine monitoring program. The specialist will also support the analysis of the data generated from baseline surveys and the monitoring program. ToR were prepared and received NO approval from the WB. 48. Dr. Kaviphone, formerly with the MRC fisheries program and Director of LARReC, who was appointed for the GIS/Database position in September 2016, is also highly competent in M&E. Therefore, M&E tasks will be incorporated in to his contract and ToR (currently no M&E is ongoing). Planned (additional) international technical support in GIS has also be reduced. This was intended to help address the budget deficit (see below). 49. The preparation of digitized maps of the FMC fishing area and FCZ zone boundaries, as well as the design and development of a database to store and process the fisheries monitoring (and baseline) data will be priority activities for the GIS/Database/M&E Specialist. 50. Progress with mapping of FMC fishing areas and FCZ boundaries has been made with the mapping of 16 Kum Ban FCZ locations and boundaries using GPS: 22  8 FCZ in Don Som KB: Vang Paktham, Vang Hangdonemouang, Vang Songnang, Vang Veunsom, Vang Phahinleuk, Vang Thavath, Vang Konhouad and Vang Paphai  4 FCZ in Don Chan KB: Vang Thammakanh, Vang Hintang, Vang Veunpakma and Vang Houasenoi  4 FCZ in Ban Thae, Hinlad and Oudomsouk: Vang Chaliat, Vang Houakapong, Vang Houa Ouk and Vang Daklong. 51. All GPS coordinates were added to Google Earth and data made available in shape file and KML format. The boundary length and surface area of the FCZs were also calculated in Google Earth. 52. GIS training: Basic training in the use of QGIS was delivered to CMU and DAFO staff by Dr. Kaviphone over three days in late December 2016. Training materials were prepared. Further (advanced) training in GIS was delivered with (supporting training materials) in March 2017 by Dr. Philippe Puig. 53. No progress is reported with respect to the development of a database required to store and process the fisheries monitoring (and baseline) data. (ii) Support for Aquaculture and Stocking 54. Planned activities include the rehabilitation and renovation of existing hatcheries (KM8 hatchery in Pakse, Ban Na hatchery in Khong District; and Houy Kiew hatchery in Lamam District) in Champasak and Sekong Provinces, and the construction of a new hatchery in Attepeu (Sanamsai District). Activities also include the restocking (stock enhancement) of endangered species in natural waterbodies, and promoting and piloting the culture of indigenous and non-indigenous (exotic) species in collaboration with FMCs with fingerlings supplied from the hatcheries. Other activities are technical assistance activities, farmer-to-farmer training events, and study tours to learn about indigenous species aquaculture. 55. Detailed designs for the hatchery renovation and construction work were completed by a local firm (GECI Consultants) during Quarter 1, 2016. 56. During Q3, 2016 a Regional Hatchery Design Engineer was appointed to approve the designs and to supervise the works. The engineer undertook a site orientation field mission during the week beginning 20th June accompanied by the Component Coordinator. 57. The engineer made recommendations to GECI to provide further details of the engineering specification for the design and construction for all 4 hatcheries and to revise the BoQ accordingly. 58. GECI revised the plans and BoQ on 31/10/2016. 59. The Engineer (Mr. Kuankit) gave final approval for the revised designs in in November 2016. 23 60. The CTA submitted the ESMP for NoL for the new hatchery in Attapeu in March 2017 following reviews of an earlier drafts by the WB Fisheries specialist and Social Safeguards specialist between November 2016 and March 2017. 61. Construction works for Attapeu is expected to be completed by early 2019. 62. The Bank’s environmental safeguards specialist undertook a preliminary review of the ESMP during this mission and concluded that it would be necessary to undertake a site survey to confirm that the relevant safeguard procedures and documentation are compliant with policy requirements. 63. During the mission it was learnt that the estimated cost of Attapeu hatchery has increased from approx. $600,000 to $900,000. The component manager plan to meet with the GECI to discuss the issue. It was also reported that there will be an upgrade of existing road and bridge to the hatchery. Fieldwork by the CTA has been planned for early July, and findings from the field will be reflected in the ESMP and resubmit to the World Bank for NoL. 64. Procurement (REOI) for firm(s) for the hatchery renovation began in January 2017. The bid opening was 7th February 2017. Renovations works began March 2017. 65. GECI is overseeing/supervising the renovation works. 66. Hatchery renovation work has been completed for Houy Kiew hatchery in Lamam District; and is close to completion for KM8 hatchery in Pakse, Ban Na hatchery in Khong District. Completion of the works is expected in the next few weeks. 67. Ban Na hatchery was visited during the mission. Renovation works at Ban Na include concrete linings for 2 broodstock ponds, a renovation of a concrete canal to supply water to the broodstock and nursing ponds, a new water pump to supply water from the Mekong; and the renovation of office buildings and staff accommodation. 68. It was noted that waste water is discharged into a tank, before it is released into the Mekong via a tributary. Overspill and leaching from this tank is also possible. 69. KM8 hatchery was also visited during the mission. Renovation works include 2 new concrete canals to supply water to the broodstock and nursing ponds, concrete linings to 10 ponds, the installation of pond drains, and improved accommodation. Renovation work is expected to be completed this month with production starting soon after. 70. It was noted that water for the hatchery is currently abstracted from an adjacent stream (Houy Yang) before being passed through a sand and gravel filter. Waste water is discharged untreated back into the Houy Yang. The quality of the water abstracted and discharged is not monitored. Only basic water quality parameters (DO, pH and secchi depth) are measured in nursing ponds in situ, prior to realizing hatchlings. 71. The hatchery manager confirmed that the hatchery does not use chemicals or antibiotics, only lime to improve pH and vitamins contained in feed. 72. The environmental safeguards specialist will advise on what (if any) action might need to be taken with respect to these hatcheries to ensure they are compliant with the Bank’s safeguard policies. ESMPs may need to be prepared because the renovations appear to 24 be making them ‘operational’ which may need to be treated as a new construction. At least waste management plans should be prepared and ECOPs should be followed. 73. A Regional Hatchery Operations and Management Consultant will be appointed in August or September 2017. Safeguards Review Mission 74. The WB may seek to undertake a safeguards review mission to confirm that the Bank’s safeguards policies have been complied with. 75. To effect this, the Bank’s social safeguards specialist may also wish to spend 1-2 days at the CMU office reviewing, with the national consultants, the procedures employed for informing, and consulting with, ethnic groups (if present) to ensure that they were properly informed and had an opportunity to participate in the project activities and to benefit from them. (iii) Local Government Capacity Building 76. DAFO and PAFO staff received training in management planning and baseline fisheries survey methodology as described above. 77. During Q3, 2016, DAFO and PAFO received training from the PMU in project administration and financial and accounting systems. Training was also provided in the application of the Guidelines for AL enhancements and rural infrastructure investments. 78. Training in fisheries Co-Management Guidelines was delivered to CMU and DAFO staff in July 2016. 79. DAFO and PAFO have received 30 motorcycles to strengthen their enforcement capacity, as well as computers and office renovation and equipment. Cameras and GPS equipment have been purchased for preparing maps for management plans and to support other project activities. 80. Patrol boats or motorcycles and other equipment for management plan implementation (surveillance equipment, sign boards, materials for demarcating FCZs etc.) will be purchased for each FMC at Step 8 of the Co-Management process (expected to begin early 2018). 3.2.3 Sub-Component Management and Administration 81. Support to project component administration includes the funding of office renovations and the establishment and running costs of the CMU in Pakse and coordinating office at the DLF, Vientiane. The three provincial offices were all refurbished during 2014 (Activities 3.1 and 3.2). The DLF office renovation in Vientiane (Activity 3.2) was delayed for operational reasons and completed in mid-2015. 82. There is currently 31 staff directly employed by the project (up from 25 in late 2015). Of the 31 project staff 13 are consultants, including currently only one international 25 consultant, and the remaining 18 are support staff (secretary, drivers, interns and house- keepers). All of the national staff has ongoing full-time contracts although six require a contract extension by the end of Q1 2017. 83. In addition, there are 35 government staff (up from 29 in late 2015) directly and indirectly involved with the IWRMP C3.2 across the three provinces and at the DLF office in Vientiane. The breakdown of this staff is as follows:  DLF, Vientiane = 4  Champasak Province = 15 (PAFO = 1; DAFO = 10 and LFS = 4)  Sekong Province = 8 (PAFO = 1; DAFO = 3 and LFS = 4)  Attapeu Province = 8 (PAFO = 1; DAFO = 3 and LFS = 4) (i) Recruitment 84. Mr. Simon Diffey was appointed the CTA for the Component. His contract began in January 2017. (ii) Financial Management and Procurement 85. Funding under Activity 3 has been used to equip the four offices (three provincial and one at the DLF headquarters in Vientiane) plus purchase of six project vehicles (two for Champasak office, one each for the other two provinces and two for the DLF, Vientiane). The project has also procured 30 motorbikes, all of which have been distributed to the provinces. Four more project vehicles are still to be procured – three single-cab vehicles for the existing hatcheries (ongoing) and one more single-cab is to be procured for the new hatchery in Attapeu in late 2017. 86. C3.2 IOC include the costs of fuel for and maintenance of project vehicles; telephone and Internet costs; photocopying, office supplies and maintenance; and local per diems and other travel related expenses. Budget 87. The procurement plan was last updated in November (2016) by the CMU staff and Project Coordinator. 88. 9The Component had, to June 2017, disbursed approximately: $2.89m or 59% of the total budget allocation. Planned expenditure for 2017 is $1.78m, and disbursements in 2017 are currently $0.77m. 89. In September 2016, a budget deficit of approximately $600,000 had been identified. This arose, largely because the estimated cost of the Civil Works for the planned fish hatcheries had increased from 665,000 (quoted in the PAD) to 1.32 m (100 % increase) due to more precise and up-to-date cost estimates based upon more detailed hatchery designs and BoQs. 90. Additional financing of $2m to meet the funding shortfall and to extend the duration of the project to 2021 was approved in June 2017 (Table ). Table 4 Estimated Costs by Expenditure Category for Additional Financing 26 Works Amount (US$) Hatchery renovation1 KM8 hatchery (Champasak) $87,000 Ban Na hatchery (Champasak) $75,000 Houy Kiew hatchery (Sekong) $123,000 New fish hatchery (Attapeu) 1 $262,000 Goods Additional truck for new hatchery. $10,000 MCS equipment for FMCs2 $60,000 Goods for AL3 $100,000 Goods for RI3 $100,000 Consultants CTA4 $290,000 National GIS and M&E specialist5 $50,000 International GIS specialist $15,000 International Implementation Consultant6 to March 2018 $26,000 Additional Rural Infrastructure Engineer7 $14,000 AL Advisor to complete remaining activities8 $10,000 National Technical Advisor to complete FMC registration8 $31,000 8 National Fisheries Management Consultant $124,000 Financial management and admin staff 9 $80,000 Incremental Operating Costs Drivers, fuel, insurance, office consumables etc.10 $90,000 Training and Workshops - Other Re-imbursement of funds transferred to MONRE11 $500,000 Total $2,047,000 27