Ministry of Foreign Affairs DANIDA

Transport Sector Programme Support (PAST)

Phase 2 2005 - 2009

FINAL PROGRAMME DOCUMENT

Nicaragua

October 2004

PROGRAMME DESCRIPTION

Country : Nicaragua Sector: Transport

Programme Title : Transport Sector Programme Support (PAST), Phase II 2005 – 2009

Ministry of Transport and Infrastructure (MTI), Cooperating Agencies : Road Fund (FOMAV), Governments of the Atlantic Coast (RAAN & RAAS), Regional Transport Councils in RAAS, RAAN and Las Segovias, Municipalities of RAAN, RAAS and Las Segovias.

Duration : 5 years Starting Date : 1st January 2005 Completion Date : 31st December 2009

Overall Budget : Danida 395 million DKK

(9 million DKK for Danida advisers included) : Local 19.9 million DKK

Components: There are three components to this five year phase 2 of PAST:

Component Danida Budget

DKK mill.1 Institutional support to MTI and FOMAV, with particular emphasis on

improved planning procedures and sustainability of implemented projects. Main indicator: At the beginning of phase 2, a minimum of 75% of the basic national network in maintainable condition receives the required annual maintenance. By the end of the phase, a minimum of 90% receives the required annual maintenance. .

50

2 Support to the improvement of tertiary transport infrastructure in RAAN, RAAS and Las Segovias.

Main indicator: Minimum 85% of projects implemented with PAST funds in the three regions receive the required routine and periodic maintenance.

185

3 Support to Spot Improvement of Secondary Transport Infrastructure in RAAN, RAAS and Las Segovias.

Main indicator: Minimum 85% of projects implemented with PAST funds in the three regions receive the required routine and periodic maintenance.

80

4 Unallocated funds 80 5 Total 395 Signatures

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Location Map for the PAST Components

LAS SEGOVIAS

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Table of Contents Programme Description .................................................................................................................. i Location Map for the PAST Components .................................................................................. ii Table of Contents ........................................................................................................................... iii List of Abbreviations & Exchange Rates.................................................................................... iv Executive Summary......................................................................................................................... v 1. INTRODUCTION .................................................................................................................1 2. NATIONAL SECTOR CONTEXT .......................................................................................2

2.1 Significance of the Transport Sector ........................................................................... 2 2.2 Sector Objectives, Policies & Programmes ................................................................ 3 2.3 Sector Set-up and Stakeholders .................................................................................... 5 2.4 Sector Investment Plans and Budgets ......................................................................... 8 2.5 Harmonisation and Aid Coordination......................................................................... 9 2.6 Cross-cutting Issues and Priority Themes of Relevance to the Sector ................12

3. AGREED ASSISTANCE......................................................................................................15 3.1 Development and Immediate Objectives .................................................................15 3.2 Strategy and Methodology...........................................................................................16 3.3 Capacity Development and Technical Assistance ...................................................22 3.4 Cross-cutting Issues and Priority Themes in PAST 2 Components ....................25

4. PROGRAMME SUPPORT COMPONENTS ......................................................................28 4.1 Component 1: Transport Sector Institutional Support ..........................................29 4.2 Component 2: Improvement of Tertiary Transport Infrastructure in

RAAN, RAAS and Las Segovias................................................................................30 4.3 Component 3: Support to spot improvement of secondary transport

infrastructure in RAAN, RAAS and Las Segovias..................................................31 5. BUDGET ..............................................................................................................................33 6. MANAGEMENT AND ORGANISATION ........................................................................35 7. FINANCIAL MANAGEMENT AND PROCUREMENT ..................................................40

7.1 Financial Management .................................................................................................40 7.2 Procurement ..................................................................................................................41 7.3 Auditing ..........................................................................................................................42

8. MONITORING, REPORTING, REVIEWS AND EVALUATIONS .................................44 8.1 Physical and financial reporting..................................................................................44 8.2 Socio-economic monitoring........................................................................................45 8.3 Reviews and evaluation ................................................................................................47

9. ASSESSMENT OF KEY ASSUMPTIONS AND RISKS .....................................................48 9.1 Assumptions and risks for the Development Objectives ......................................48 9.2 Main assumptions and risks for the Immediate Objectives...................................49

1 0. GENERAL IMPLEMENTATION PLAN..............................................................51 ANNEX 1: PROGRAMME ORGANOGRAM ANNEX 2: DRAFT TERMS OF REFERENCE FOR STEERING COMMITTEE ANNEX 3: PROGRAMME BUDGET ANNEX 4: OUTLINE TERMS OF REFERENCE FOR A STUDY OF THE PROPOSED MANAGEMENT ARRANGEMENTS ANNEX 5: ENVIRONMENTAL SCREENING NOTE AND ENVIRONMENTAL MANAGEMENT PLAN

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List of Abbreviations APDEL Programme of Support to Decentralisation and Municipal DevelopmentCABEI Central American Bank for Economic Integration C$ Nicaraguan Córdoba CRT Regional Transport Council DANIDA Danish International Development Assistance DKK Danish Kroner EPN National Port AuthorityFISE Emergency Social Investment Fund FOMAV Road Maintenance Fund GDP Gross Domestic Product GON Government of Nicaragua HIPC Highly Indebted Poor Countries Initiative IDB Inter-American Development Bank IDR Rural Development Institute INIFOM Municipal Development Institute MARENA Ministry of Environment and Natural Resources MTI Ministry of Transport and Infrastructure PAST Danida Transport Sector Programme Support PMU Programme Management Unit PND National Development Plan PNDO Operational National Development Plan PRSP Strengthened Growth and Poverty Reduction Strategy Paper RAAN Northern Autonomous Atlantic Region RAAS Southern Autonomous Atlantic Region RDE Royal Danish EmbassySC Steering Committee SECEP Technical Secretariat for the President

Approximate exchange rates (October 2004)

DKK 1 = C$ 2.66 DKK 1 = US$ 0.16

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Executive Summary This Programme Document describes phase 2 of the Nicaraguan Transport Sector Programme Support (PAST). The first phase commenced in April 1999 and is due for completion by the end of 2004. The second phase is due to commence on 1st January 2005 and to be completed by 31st December 2009. The total Danida budget for the second phase is DKK 395 million, including DKK 9 million for Danida Advisers and DKK 80 million in unallocated funds. There will be a local contribution of approximately DKK 19.9 million. Danida has provided support to the transport sector in Nicaragua for more than fifteen years. Support to a number of discrete projects, including transport network improvements in the remote Atlantic Regions, port improvements at Puerto Sandino and rehabilitation of a section of the main Pan-American Highway, was replaced by sector programme support (PAST 1) in 1999. Phase 2 will build on the experience gained during PAST phase 1. There will be an increased focus on the building of capacity and transfer of responsibilities at both local and central levels with a greater proportion of resources under the support applied to capacity building. This foresees a possible future phase 3 in which Danish assistance may take the form of sector budget support. In phase 2 there will be no trunk road component. However, a new component of support to reducing bottlenecks in the secondary network will be introduced. Danida’s support through PAST 2 will form part of Nicaragua’s national programme to reduce poverty and promote rural development as articulated in the Strengthened Growth and Poverty Reduction Strategy of July 2001. Reduction of poverty is a key concern of the Government of Nicaragua and this provides one of the main justifications for its desire for the development of rural areas where the majority of the poor are found, and where there is considerable potential for development. Poverty reduction is a shared concern of Danida and the focus of support in PAST 2 will continue to be to bring about improvements to transport infrastructure connecting the more remote and poorer rural areas and to improve the capacity to secure the sustainability of these improvements. Three components are included in phase 2: Component 1: Institutional Support to MTI and FOMAV DKK 50 million Institutional Support will be provided with the objective of improving the planning and management capacity of MTI to ensure a well functioning and sustainable road and aquatic transport system. The capacity building will be broader in scope than in phase 1 and will extend to FOMAV (Road Maintenance Fund) and in certain cases to the Regional Transport Councils. Specifically, support will be provided to legal framework development, improved planning, project formulation and supervision capacity and road and aquatic transport safety.

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Component 2: Improvement of Tertiary Transport Infrastructure in RAAN, RAAS and Las Segovias DKK 185 million The improvement of tertiary infrastructure (including community roads, tracks, footbridges and small wharves) will build on the achievements of PAST phase 1 in the Atlantic Regions and Las Segovias. There will be an increased emphasis on capacity building and the transfer of skills and responsibilities to the decentralised local government structures. The aim will be to ensure institutionalisation and sustainability. Component 3: Support to Spot Improvement of Secondary Transport Infrastructure in RAAN, RAAS and Las Segovias DKK 80 million This new component has the objective of creating properly functioning transport infrastructure networks in RAAN, RAAS and Las Segovias by financing spot improvements on critical parts of the secondary network. These provide the link between the trunk road network and the tertiary links addressed by Component 2. Component 3 will promote the use of local private sector contractors and consultants in the design, supervision and execution of all works. The component will ensure that sustainable maintenance arrangements are put in place not only on the improved sections, but for the entire maintainable network. Unallocated DKK 80 million PAST phase 2 will be contributing to an ongoing process of sector reform. At the time of formulation it is not possible to specify all the requirements for support over the five year period. For this reason an unallocated amount has been reserved that may at a later stage be allocated to new activities, which are not planned at the time of approval of the funds. If the amendment to the FOMAV law is approved, including the transfer of funds to the decentralized network, a more integral support covering the transfer of seed money through FOMAV to the municipalities will be considered using unallocated funds. This approach will be based on the pilot project presently included in Component 1, where a small amount of seed money will be transferred to the municipalities. A request from the Government of Nicaragua for support to construction of a major road from Nueva Guinea to Bluefields may also be considered using unallocated funds. Technical Assistance DKK 9 million (This amount is included in the component budgets above) Technical assistance will be provided to all components in the form of three international Danida advisers, a number of national advisers and external short-term consultants.

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A programme senior adviser will assist the responsible partnersin the coordination of the support to Component 1 over a five year period. Component 1 will also include a national adviser providing the continuous daily support to MTI and FOMAV. A senior adviser for component 2 will provide support to the regional CRTs over a two year period before handing over to a national adviser. Component 2 will also include national regional advisers heading small technical support teams in each of the three regions. The regional units will provide direct support to the CRTs as well as to the individual municipalities and communities. An international adviser for component 3 will provide support to the responsible partners as well as to the private sector (consultants and contractors) over a 3-year period during which time the strategy and procedures for this component will be established. A national adviser will coordinate monitoring and advise on cross-cutting issues for all three components. Programme Management The principal strategy regarding programme management of PAST 2 is that ownership shall be fully assumed by the Nicaraguan counterparts. The Programme Steering Committee will have executive power in phase 2. This body will be chaired by the Vice Minister for the Ministry of Transport and Infrastructure (MTI), and will include senior representatives from MTI, FOMAV, the Danish Embassy and a representative from each of the Regional Transport Councils. A Programme Management Unit (PM) shall be set up in the early part of PAST 2. The objective of this unit is to coordinate and carry out the day to day management of the programme, monitor progress and ensure that the necessary information is collected, analysed and forwarded to the Steering Committee, to enable this Committee to effectively carry out its decision-making functions. The staff for this Unit shall be appointed by the Steering Committee. The unit will initially receive support from the Danida advisers. The implementation of the above system for programme management will take place following agreements made after a study on programme management, financial and procurement aspects has been completed. Until these agreements are in place, the systems for programme management developed under phase 1 will continue.

1. INTRODUCTION Danida has provided support to the Transport Sector in Nicaragua since the mid 1980’s. Initially the development cooperation was in the form of project support and included assistance to transport network improvements in the remote Atlantic Regions, port improvement at Puerto Sandino and rehabilitation of a section of the main Pan-American Highway. In 1998 a more comprehensive and closer coordinated programme of support was agreed in the form of a Transport Sector Programme Support (PAST). The first phase of PAST commenced in April 1999 and will be completed by the end of 2004. Discussions with the main partner agencies on a possible phase 2 of PAST commenced in 2002. During the joint Annual Review of May 2002 potential components for phase 2 were identified. These focused on three areas of support, which were subsequently developed into three separate components:

• Component 1: Continued institutional support to MTI and FOMAV. • Component 2: Continued support to the improvement of tertiary transport

infrastructure in RAAN, RAAS and Las Segovias. • Component 3: Support to spot improvement of secondary transport

infrastructure in RAAN, RAAS and Las Segovias to address bottlenecks in the transport network.

Discussions with cooperation partners continued in more detail during 2003. For components 1 and 2, which are essentially extensions of support in existing areas, participatory workshops were held involving key stakeholders in order to decide the main objectives and outputs for phase 2 support. This resulted in draft logical frameworks for these two components, which formed the basis for detailed component descriptions. Component 3 addressed a new area of development cooperation. To provide more insight into the likely needs and the framework in which to address these needs, a transport study was initiated in early 2004. This focused on the transport networks in RAAN, RAAS and Las Segovias. It took existing studies and additional information in MTI and the municipalities as its point of departure, and as the basis for examining the existing networks and bottlenecks. It considered how these bottlenecks could be reduced in a coherent, rational and sustainable way. The first phase of the study has been finalised, providing an overview of potential projects in the secondary network as well as identifying general weaknesses in the overall transport network. A second phase of the study will be implemented by the end of 2004, with the main aim of defining an adequate method for prioritising the potential investments. The transport study will form the basis for road network planning for programme municipalities and MTI in the three regions and hence the selection of spot improvement projects in Component 3. The draft component description has been developed in parallel with the execution of the transport study. On completion of the draft component descriptions, a first draft of the SPS

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Programme Document was produced in April 2004 and the documents presented for discussion in a stakeholders’ workshop held in early May 2004. A pre-appraisal of the PAST phase 2 was carried out in June 2004 and an appraisal in October 2004. The SPS Documents were updated and comments arising from the appraisal were incorporated. Presentation to the Danida Board is scheduled for November 2004, which will allow for a planned commencement of phase 2 on 1st January 2005. 2. NATIONAL SECTOR CONTEXT 2.1 Significance of the Transport Sector Nicaragua is one of the poorest countries in the Western Hemisphere with a Gross Domestic Product (GDP) per capita of approximately US$ 8001 in 2003. In Latin America only Haiti has a lower GDP per capita. In addition it suffers from relatively high rates of infant mortality, illiteracy and malnutrition. The civil war of 1970s and 1980s brought about a significant contraction of the economy. Despite steady progress since the end of the civil war in 1990, many economic and social development indicators remain at levels lower than twenty-five years ago. Rural areas were especially badly affected by the war and many communities suffered major dislocation. The northern regions of the country, including Las Segovias and the Northern Atlantic Autonomous Region, were amongst the most severely affected. Transport links were either destroyed or fell into disrepair during the civil war. This has left many rural areas with very poor rural transport connections. The principal modes of long distance, internal transport in Nicaragua are roads, air and water. Road transport is by far the most dominant mode accounting for over 95% of freight and passenger movements. Internal air transport is important for a proportion of passenger movements, especially to and from centres in the Atlantic Coast Regions. Water transport is important between centres in the Atlantic Coast Regions and on Lake Nicaragua. For many communities and even some municipalities on the Atlantic Coast, water transport is the only means of access. The total length of the road network in Nicaragua is 18,420 kilometres. There are few principal road corridors in the country. The main corridor is the Pan-American Highway running from Honduras in the North via Managua to Costa Rica in the South. Only 2,180 kilometres (i.e. 12%) of the road network is paved (asphalt or concrete block surfacing). The majority of network comprises secondary and tertiary roads that are either gravel (2,770 km or 15%) or earth (13,470 km or 73%) surfaced. Except from the principal road corridors, the road network is generally in poor condition. This is due to the earlier years of conflict, fiscal crises, insufficient resources and inadequate attention to road maintenance. Moreover, Hurricane Mitch in October 1998 caused serious damage to the transport infrastructure and 1Note that the calculation method of the GDP was changed by the Nicaraguan Central Bank in 2003, which caused a change from US$ 400 in 2002 to US$ 800 in 2003.

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reversed earlier modest improvements. About 2,600 kilometres of the road network was severely damaged, mainly in the North and East of the country. Las Segovias was one of the areas most affected. According to recent Living Standards surveys, only 22% of Nicaraguan households are served by a paved road. Furthermore the studies show that the proportion of households with access to paved roads decreases as their poverty level increases. Thus, the household numbers with access to a paved road are 30% for the non-poor, 11% for the poor and 7% for the extreme poor. Agriculture remains the backbone of the economy and provides the major source of income for three-quarters of the poor. However, one of the constraints to improvement of agricultural productivity is poor rural access due to poor transport infrastructure. 2.2 Sector Objectives, Policies & Programmes The main objective of the Government of Nicaragua is to reduce poverty by stimulating economic growth and, in this manner, reduce poverty. This strategy is based upon the implementation of a programme of economic stabilisation and structural reform, including the privatisation of state-owned utilities. These measures seek to modernise and integrate the rural economy, create job opportunities, advance small and medium-sized enterprises, increase exports and foreign direct investments as well as boost specific sectors in the country. The development policy is articulated in its Strengthened Growth and Poverty Reduction Strategy Paper (PRSP) of July 2001. The PRSP rests upon four pillars:

• Broad-based economic growth centred on generating productive employment and rural development.

• More and better investment in human capital. • Strengthening the systems of social protection, with an orientation towards

the vulnerable sectors of the population. • Strengthening governance and institutional development.

These four pillars are entwined with three cross-cutting issues:

• Reduction of environmental degradation and ecological vulnerability. • Greater equality in the access to services and resources. • Promoting decentralisation.

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Following discussions related to the entrance into the HIPC process, the GON and the international community recognized that the PRSP needed to be elaborated further. Hence, the Government embarked on a lengthy and participative process of consultations with a wide range of stakeholders, including civil society and private sector representatives, in order to draw up a more detailed national development plan covering the next 25 years. According to the government, broad-based and labour-intensive economic growth is the PRSP’s most important pillar and it has, therefore, been the basis for the elaboration of a National Development Plan, PND, which was presented by GON on 12 September 2003. The PND has an emphasis on clarifying the various levels of competence, fostering a favourable investment climate, and raising the efficiency of private productive investment. The PND contains the strategic elements together with a matrix showing prioritised public actions for the next 25 years, including timing and the institutions responsible for execution. In September 2004 an Operational National Development Plan (PNDO) was presented covering the period 2005-2009. The purpose of the PNDO is to operationalise the PND and present a financial overview of the concrete investments required to implement the 5-year plan. The PND and PNDO are based on a Cluster Development Strategy, focusing on boosting specific key areas of commercial potential in the country. Implementation will, amongst other things, require major efforts to improve the productivity of rural workers as well as to generate off-farm employment in small towns and rural areas. Specific actions to promote these developments include improving rural infrastructure, particularly rural roads, rural water supply, housing and access to basic social services. The implementation requires a reinforcement of the planning process at municipal, regional and national level, which includes planning for the required transport infrastructure. The immediate steps being taken to improve the transport network are both physical and institutional. The physical improvements are mainly targeted at bringing roads into a maintainable condition. The institutional improvements are a combination of capacity building and restructuring to bring greater efficiency, effectiveness and sustainability to the improvement and maintenance of the road network. The PND contains a major section on infrastructure, including transport, and identifies the need for reform in several areas. Firstly, it proposes to transform MTI to be better aligned to be a planner, coordinator and standard setter for the sector. Secondly, it is proposed to create public regional departments for the maintenance of unpaved roads. These departments will take over responsibility for the improvement and maintenance of the unpaved roads, with much of the work being contracted to the private sector. Thirdly, it is proposed to amend the planned reform of the existing law concerning the Road Fund (FOMAV). This is primarily to introduce road user charges as a levy on fuel at a sufficient level to ensure a reasonable level of sustainability in the maintenance of roads. Fourthly, decentralisation of rural roads is envisaged to take place.

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SECEP is presently promoting the establishment of Regional Development Councils (“Consejos de Desarrollo Departamental”) to enhance the economic and social development and to promote good governance at a regional level. The Councils will be responsible for the formulation of Regional Development Plans. To facilitate the Councils with collection, processing and updating of data for the Regional Development Plans, regional technical secretariats will be created. The PNDO complements this initiative by proposing the establishment of Municipal Development Committees to assist in the definition of development plans, support their execution and secure control and follow-up on the performance of the municipal government. This requires an intensive capacity training of the members in the relevant tasks. The PNDO contains several major road rehabilitation and upgrading projects. One of the priorities is the corridor to Puerto Cabezas in RAAN – a road section of 340 km from Río Blanco. It also includes the construction of a new road from Nueva –Guinea to Bluefields as well as the improvements of ports in the Atlantic Region. Special emphasis is placed on the port at El Rama, which is an important transhipment point on the main corridor from Managua to Bluefields. The overall plan includes a total of 1085 kilometres of main roads and 186 kilometres of rural roads. The estimated cost of the 5-year investment is USD 1066 millions, of which only 19% has, at present, secured financing. The PNDO divides rural investments into four groups according to the poverty level of the rural population. The most marginalized groups are the extremely poor producers and the poor producers with some economic potential. In rural areas in extreme poverty, basic access is generally missing and the families are living in isolation. Therefore, in this case, the main focus of the PNDO is to provide basic social services. The poor producers with some economic potential generally have limited physical access to markets. There is therefore a strong requirement for transport investments in these poor rural areas. USD 20 million per year has been identified for the construction and maintenance of rural roads over the next five years. These projects are planned to be implemented with the assistance of the rural population, which includes the assignment of the responsibility for the routine maintenance to the beneficiaries. 2.3 Sector Set-up and Stakeholders The Ministry of Transport and Infrastructure (MTI) carries the primary responsibility for the transport infrastructure in the country. Currently the organisational structure comprises: • A high level directorate composed of the Minister, the Vice-Minister, the

General Secretary and several Advisers. • Central support units including a Legal Adviser’s Office, an Internal Auditing

Office, Human Resources, a Procurement Unit, a Public Relations Office, and Environmental Management and Monitoring.

• General Directorates for Roads; Land Transport, Civil Aviation, Water

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Transport; and General Construction Norms and Urban Development. • General Directorates for direct support comprising Planning, Administration

and Finance. The mandate of the Ministry is contained in Article 25 of Law 290 of June 1998. This Law covers the organisation, responsibilities and procedures for the executive level of government. Article 25 sets out the responsibilities of MTI as a managing, coordinating, supervising and standards controlling body in the transport sector. According to existing road law, MTI is the formal owner of the entire road network, including even the smallest access and tertiary road. In principle this means that MTI is responsible for improving and maintaining all transport infrastructures in the country. However, MTI recognises that it lacks the necessary resources to assume this responsibility. It further recognises that even with the establishment of the Road Maintenance Fund (FOMAV) the Government will not have sufficient financial resources to maintain the entire network. Even though all roads are thus formally the responsibility of MTI, the Ministry does not attend to the extensive network of local community access roads in the country. These are “de facto” the responsibility of the local communities, which they serve. The municipalities sometimes, and according to capacity, provide some support for the upkeep of these roads. A similar situation prevails with respect to water channels and local wharves. The larger ports are the responsibility of the National Ports Authority (EPN), which is regulated by MTI. However, many local wharves are the responsibility of local municipalities or communities. MTI currently employs about 800 staff. Over the past few years it has reduced its staffing levels in line with its mandate to be less deeply involved with day-to-day activities in the sector. However, it faces major challenges due to the size of the road rehabilitation backlog, the need for improved maintenance and the weakness in the planning processes. The existing financial and institutional weaknesses of MTI are considered to be one of the main obstacles for the satisfactory fulfilment of the objectives established in the infrastructure section of the PND. It has been estimated that carrying out the planned improvements will require MTI to double its implementation capacity over the next few years. This will be accomplished through appropriate support and increased use of the private sector. MTI has recognized that it does require substantial institutional support from the different donors in the transport sector in order to be able to cope with these extensive requirements. The plan to decentralise more responsibility for local infrastructure, including roads, to municipal level requires that municipalities increase their capacity. The larger urban municipalities already have a nucleus of trained staff. However, the smaller municipalities, particularly in the remoter rural areas, are generally poorly staffed and often without technically skilled personnel. The large variation in the size of the municipalities makes it difficult to establish a standard staffing level. In order to streamline the process of planning and coordination at the secondary

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and tertiary infrastructure levels and to compensate for the imbalance in the size and capacity of the municipalities, Regional Transport Councils (CRTs) have been established in Las Segovias and the Atlantic Coast Regions. Each Council comprises representatives from the participating municipalities (the mayor or the vice mayor) and a representative from the Regional Autonomous Government and the Regional Autonomous Council (in the case of RAAN and RAAS). Furthermore, representatives from the MTI participate as members of each of the Councils. The CRTs were introduced originally on the Atlantic Coast prior to the start of PAST phase 1 as a consultative body for the selection of small, local transport improvement projects. However, during PAST phase 1 these councils were reconstituted and a new council established in Las Segovias. This experiment has proved successful and should be considered for wider national replication. To ensure sustainability and to avoid parallel structures, it is foreseen that the CRTs will be integrated in the emerging Regional Development Councils. Now each CRT takes a lead in promoting the improvement and maintenance of the transport infrastructure network in its area through a consultative planning process as well as providing the liaison between municipalities, FOMAV and MTI. Both the CRT and FOMAV acknowledge their responsibility to coordinate and have asked Danida for help to establish guidelines for how to distribute funds for road maintenance to decentralized level. The study, which also includes recommendation for an amendment to the FOMAV law, has already commenced and is expected to be completed before the end of 2004. It is planned that maintenance of the core road network will steadily be taken over by the Road Fund (FOMAV). This body was set up in 2000 to administer the funding and implementation of road maintenance. The eventual intention is that the principal source of funds for FOMAV will be a user charge, collected as a levy on fuel. However, so far this has not been implemented, as the necessary part of the legislation regarding funding has not yet been passed by Parliament. FOMAV has commenced operations with seed funding from IDB and the World Bank. MTI has started to hand over to FOMAV the responsibility for maintenance of some sections of the paved road network that are in good maintainable condition. Once a fuel levy has been introduced, FOMAV plans to gradually extend the coverage of its routine and periodic maintenance activities to 4,000 kilometres of the core network that are in good and fair condition as well as 1,200 kilometres of unpaved regional/municipal roads in maintainable condition. However the legislation concerning the transfer of funds to the decentralized roads network of primary municipal importance has yet to be introduced in the amendment to the FOMAV law. Until recently, all maintenance of the road network was carried out by a state-owned contracting body (COERCO) operating under MTI. In line with a move to more private sector involvement, COERCO has now been reduced to a minimum. The intention is that local private sector contractors will gradually take over the responsibility for carrying out the maintenance. However, existing contractors with relevant experience are few, and it is expected to take time for the capacity of local contracting industry to increase. FOMAV, using the seed funds from IDB and the

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World Bank, awarded 12 contracts in 2003 and 17 contracts in 2004 with private contractors for maintenance works on different trunk road stretches. On some roads, the work by FOMAV contractors on the paved surface is supplemented by maintenance work such as grass cutting, cleaning of ditches etc. carried out by private micro-enterprises organized as co-operatives. 2.4 Sector Investment Plans and Budgets The overall budget for MTI for 2004 is approximately C$ 1,100 million (US $ 69 million). The sources of finance are: Government Treasury C$ 377 million (34%); and external resources C$ 722 million (66%). Of the external resources, 16% were grants and 84% were loans. Table 1 below shows the breakdown for 2004 and the projections for 2005 to 2009. The internal sources of funding are predominantly used for counterpart funding of development bank loans. In addition to the funding shown in the Table, there is a significant amount of funding for rural roads that is channelled through other agencies such as the Rural Development Institute (IDR) and the Emergency Social Investment Fund (FISE) as well as donor funds not recorded in the public finance system. Overall, both government and donor financial support to the road sector has grown in the past few years, when taking into account not only the MTI but also the investments of other institutions working in the road sector

Table 1: Summary of MTI Budget for 2004 - 2009 (1000 C$)

Source of Funds 2004 2005 2006 2007 2008 2009

TREASURY FUNDS 376,746 433,367 494,067.15 554,767 615,467 676,167

Operational Costs 44,866 45,551 46,250.53 46,950 47,650 48,350National Counterpart Funding 331,880 387,816 447,816.62 507,817 567,817 627,817 EXTERNAL RESOURCES2 721,845 728,617 827,341 835,165 753,822 260,506

a) Loans 609,725 599,527 477,735 517,232 590,969 260,506 - WB 191,894 80,506 110,506 160,506 210,506 260,506 - IDB 171,327 260,463 300,463 340,463 380,464 - Nordic Development Fund 23,327 25,724 16,263 - Venezuela 15,568 41,042 - CABEI 121,216 113,650 - Spain 77,788 90,268 - OPEC 47,500 15,745 b) Donations 112,121 129,091 349,606 317,934 162,854 0.00 - Denmark 47,377 77,488 70,633 70,633 70,634 - Japan 23,224 17,600 8,800 8,800 - The European Union 28,800 21,283 31,672 - CABEI 12,720 12,720 238,500 238,500 92,220 TOTAL BUDGET (1000 C$) 1,098,592 1,161,985 1,321,409 1,389,933 1,369,290 936,673

Source: MTI Note: 2004 is the approved budget, 2005 is the budget presented to parliament and 2006-2009 are estimated budgets It has been estimated by FOMAV that the total annual maintenance requirement of the basic core road network (4,000 km principal roads and 1,200 km of 2 Note that the figures in Table 1 understate external resources because not all donor disbursements are registered in the public finance system. For example, the total donation from Denmark to the sector in 2004 is DKK 31.7 million (approximately C$ 84 million).

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unpaved municipal roads) is USD 36 million. At current fuel consumption levels in Nicaragua, a fuel levy of 3 Cordoba (US cents 20) per gallon would be required to generate this revenue. To cover the full core network of 6,600 km principal and secondary road network, as well as 2,200 kilometres of unpaved municipal roads, an amount of USD 54 million would be required, corresponding to a fuel levy of 4,5 Cordoba (US cents 30) per gallon. This is a significant amount compared to current levels of revenue, although the annual benefits to the road users through lower vehicle operating costs have been calculated at USD 175 million. This is the amount that will be lost by road users if maintenance funds are not secured and roads deteriorate. In order to secure stable financing for FOMAV, the Government proposes to introduce a fuel levy. Draft legislation has already been presented for approval by Parliament although the process is currently stalled, due to record high fuel prices and present political disagreements between the government party and the remaining parties represented in parliament. 2.5 Harmonisation and Aid Coordination Coordination of activities and funding remains relatively weak in the transport sector. As indicated above, there are a number of donors involved in supporting the transport sector and their contribution is significant in terms of the overall budget. However, the support is mainly focused on investments with relatively few resources allocated to institutional support at the different levels. The assistance that is provided to institutional support involves a number of different donors with, currently, little coordination. At the national level, Danida and the Development Banks, IDB and WB provide the main funding for institutional support. IDB and WB have their respective local representative in the MTI, in charge of project planning and implementation of their particular projects. IDB in particular is providing relatively large amounts to institutional capacity building; however, no long-term strategy for the institutional support has been established. Both institutions mainly use the institutional support component for the purchase of vehicles, equipment, specific individual courses etc. The institutional support to MTI financed by Danida is provided by a support unit integrated in the Ministry. Since the requirements for institutional support is substantial, the unit is receiving more request for support than it presently has the financial and technical capacity to provide. A more integrated donor approach to the institutional support at the national level is required in order to optimise the use of the resources. The institutional support from all three institutions is negotiated on a regular basis and the investments banks probably would be willing to cover new areas, if the Ministry presented a proper plan for the overall institutional support to the MTI. In the case of FOMAV, the situation is quite similar; however FOMAV has more resources available, especially for capacity training. At the regional level, many donors are involved in institutional strengthening of the individual municipalities and to some extent also of the Regional Autonomous Governments. However the support is not coordinated and no long-term strategy

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for an integrated donor approach to the institutional support has been elaborated. On the contrary, the different donor policies are often in conflict. With regards to project implementation, donor coordination has also been lacking at national, regional and municipal levels. The majority of the donors provide support to the construction of transport infrastructure in areas with the highest economic development potential. At the same time these programmes have normally no tradition of specifically addressing the issue of sustainability. Generally, agreements are signed between the organisation and the national or regional counterpart, committing the counterpart to assume the responsibility of the subsequent maintenance. However, normally no institutional support is provided to set-up sustainable maintenance systems, and maintenance therefore frequently fails. Several donors provide support to the improvement of rural roads through government parallel institutions like FISE and IDR without direct coordination with the MTI, and without reference to overall transport sector plans. These institutions normally operate at central or municipal level, without the application of participatory approaches to enhance local ownership and responsibility for maintenance. Consequently, the maintenance of these rural roads is a particular problem. Currently, only Danida is providing transport sector support directed exclusively towards the less developed regions. Danida is also the only donor that is applying an integrated approach, supporting the establishment of sustainable maintenance system at community, municipal and national level as part of the programme implementation. It is not considered realistic in the short term to expect other donors or the Government to fully integrate these parallel institutions into the sector organisations, but there are several attempts to improve the coordination. Coordination of donor support to specific projects has included coordinated funding of the major improvement of the Managua to Rama road by Danida, IDB and the World Bank under PAST phase 1. Recently, the spot improvement of the Río Blanco - Puerto Cabezas road has been financed by coordinated funding from Danida and CABEI. However, there is considerable scope for better coordination of all the activities and funds related to the transport sector. Based on the above, it is clear that the conditions for good donor coordination have not yet been established. However, a number of recent initiatives are promising. Assistance for strengthening these initiatives, as well as generally supporting the efforts of greater donor coordination forms an integral part of PAST 2. At the National level the PNDO itself is an important tool for prioritisation and coordination of development interventions. In the transport sector, the PND is an important tool for coordination of sectoral activities and visions. Another structure that could promote greater coordination in development is the National Transport Council, which is currently being considered for establishment under the new transport law. This is currently under discussion in Parliament.

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Further, the Government is in the process of improving coordination of overall foreign development assistance, and it has recently set up "sector round-tables" (mesas sectoriales) composed of central institutions and donors in a variety of sectors (health, education, production, infrastructure, and governance) and a "general round-table" (Mesa Global) at which the macroeconomic framework and corresponding policies are discussed. A "Sub round-table" for the transport sector has been established (as part of the infrastructure sector table) under the leadership of MTI, but this Sub round-table is still in its preparatory phase. This sub-round-table should cover activities supported both through and outside MTI control so that, for example, there can be better coordination of rural road improvements. Both IDR and FISE are members of the Sub round-table, and this initiative is expected to considerably improve the coordination between the institutions. MTI has recently begun to address the issue of coordination. On a specific level, MTI has recently requested Danida to assist in the elaboration of a transport plan, to serve as a tool to reinforce the coordination with donors and relevant institutions in the transport sector, as well as for legal assistance to the decentralisation of the responsibilities for the construction and maintenance of transport infrastructure. These activities form part of the institutional support to the MTI in PAST 2. At the same time Danida support to decentralisation through APDEL is providing support to the SECEP, INIFOM and other relevant Government institutions with the aim of improving the decentralisation process, and streamlining the use of resources. At the regional level important steps have been taken with the creation of Regional Transport Councils in some regions. Several donors, amongst these both FISE and IDR, have shown interest in using these councils for coordination of all transport infrastructure projects in the relevant regions. FOMAV has expressed willingness to channel its decentralized resources to the municipalities, in order to cover the regional infrastructure under municipal responsibility. The funds will be channelled through FOMAV on the recommendation of the CRTs. In order to address these different functions, the principal task for the CRTs in the near future, will, therefore, be to establish clear criteria for the role and participation of the different stakeholders in the CRT. The Regional Transport Councils only receive institutional support from Danida and since this institution is new and still vulnerable, continuing support is necessary. Ideally other donors should be involved in this support in order to stress the importance and create a better basis for the long-term sustainability of the CRTs. The strengthening of the coordination role of the CRTs and ensuring links between municipal and national actors are important parts of PAST 2. Overall, PAST 2 is well placed to contribute to the process of donor harmonization, particularly in relation to the reforms in government procurement procedures, improved transport planning, reforms in legislative framework for roads and road transport and promotion of the Regional Transport Councils as coordinating mechanism at decentralized levels. Moreover, support to the strengthening of FOMAV will address the central concern of all transport sector donors in relation to the sustainability of externally funded improvements to road

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infrastructure. 2.6 Cross-cutting Issues and Priority Themes of Relevance

to the Sector The three crosscutting issues of the Danish Development Assistance are all of relevance to the sector. These issues are:

Promoting gender equality in the workplace and in the decision making process.

Good governance, democracy and human rights (including rights of indigenous people).

Establishment of and adherence to environmental protection strategies and guidelines.

The Danida cross-cutting issues are closely related to the three cross-cutting themes that have been identified as significant in Nicaragua’s overall Poverty Reduction Strategy, namely social equality, decentralisation and environment. The PNDO specifically points out that, typically, women have more acutely felt needs concerning access to basic social services. The PNDO also emphasises the importance of improving gender equity, by elimination or reducing the discrimination against women in the workplace, the public sphere and the home. This includes the strengthening of the participation of women in public debate and decision-making at all levels of society through the elaboration and implementation of a national policy for gender equity. Further, the Danida priority themes of private sector involvement and HIV/AIDS have to be taken into account. The relevance of each of these cross-cutting issues and priority themes in the national sector context is described in more detail below. 2.6.1 Gender equality The issue of gender equality in the sector context is strongly linked to the theme of social equality. This is an important theme in the poverty reduction strategy. During the extensive consultative process of drawing up the strategy, it was recognised that there were various vulnerable groups, including women, who may not benefit from the planned targeted efforts, or have specific needs and problems, which have to be taken into consideration. Although the participation by women in Nicaraguan society is generally good there is some reluctance to take account of women’s views especially in rural communities. As major users of transport, particularly of local rural transport infrastructure providing access to social and economic centres, the views of women are important. For this reason, attention has to be given to ensuring that the views of women are heard, and that women participate actively in the planning and implementation of rural transport infrastructure improvements.

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2.6.2 Good governance, democracy and human rights (including rights of indigenous people)

In the Nicaraguan context decentralization is seen as crucial to good governance. Decentralisation has been identified as an integral part of Nicaragua’s modernisation and reform process and an important element in the poverty reduction strategy. The decentralized delivery of services and development projects are seen as more responsive to the needs of the local population, including the rural poor. Municipal governments are pivotal in the process. They can encourage greater participation and sharing of responsibilities at local level. In the transport sector, the transfer of responsibilities for planning, regulation and management of transport infrastructure is a priority. The PNDO stresses that increased local participation in civil society and political decision-making can support the general democratisation process. This is seen as especially important for marginalized or excluded groups, including women and ethnic minorities. Further, the PND, PNDO and PRSP underline that it is necessary to implement a modernization process of the public sector, including institutional reforms, involving shared responsibility of the local, regional and national levels. It is noted in the PND that it will be necessary to significantly strengthen the MTI to manage this process. As for human rights, this issue is strongly linked to the rights of indigenous people and other ethnic minorities, especially on the Atlantic Coast. The vulnerable groups identified in the PRSP process include indigenous peoples, who are often living in isolated rural areas. Better transport links can improve the access for these groups. Moreover, a carefully planned and inclusive participation process can ensure that the indigenous groups are heard when planning transport infrastructure improvements. Furthermore, experiences of cooperation created between indigenous as well as other minority communities and the municipalities in relation to projects of mutual importance, e.g. transport infrastructure projects, have been shown to foster future dialogue and coordination. Another important issue is the right and access to communally owned natural resources; resources that could be a valuable asset for the indigenous communities, but also containing the potential for conflicts over use and exploitation by outsiders, once access to these resources is improved. Thus, the needs and rights of indigenous people and other ethnic minorities have to be considered carefully when working with the transport sector, especially in RAAS and RAAN.

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2.6.3 Establishment of and adherence to environmental protection strategies and guidelines

There are several facets to the issue of environment. Firstly, the GON recognises the need for stronger management of its important environmental resources. Roads in particular can open up access to environmentally rich areas. This can be a major benefit for both the local communities and the national economy. However, these benefits can be reduced or lost if environmental management is weak, leading to over exploitation of natural resources. An environmental policy and action plan has been drawn up after broad consultations within government and civil society. This clarifies the environmental goals of the nation and outlines areas where government intends to take specific environmental action. Further, it must be acknowledged that the process of constructing and maintaining transport infrastructure can have negative environmental impacts. Thus, ensuring good practice in design and construction to minimize environmental damage forms part of the general sector scope for environmental protection. 2.6.4 Private Sector Involvement The reform of the transport sector proposed in the PRSP and PND, places emphasis on a greater involvement of the private sector in the planning and implementation of transport infrastructure improvement and maintenance. As government institutions focus on their new role as primarily standard setters and regulators, they will gradually withdraw from direct involvement in carrying out works. This is a continuous process requiring legislative reform, re-orientation and re-structuring of the public sector institutions and the building of capacity in the private sector. The capacity of local consultants and contractors will have to expand considerably to meet future requirements and demands. This is further stressed in the PNDO, which specifically points to the need for the strengthening of micro, small and medium enterprises to improve both productivity and quality of products, to gain competitiveness and create local income and employment. This is especially important for the transport sector in relation to the implementation of projects in remote areas, where large contractors are hard to mobilize at a reasonable cost. In these cases, the use of small and medium sized contractors would generally be more appropriate. However these are often non-existent, thus, the required capacity has to be created, for example by promoting the establishment of micro enterprises. 2.6.5 HIV/AIDS Nicaragua still has a low prevalence of HIV/AIDS in comparison to the neighbouring countries but there is a fear that the problem may be increasing. The PNDO thus includes the containment and reduction of HIV/AIDS as a part of a general focus on preventive health efforts. In a transport sector context, the improvement of transport infrastructure is linked to an increased mobility of

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people and a consequent increased risk of the spread of HIV/AIDS. This can initially be connected to an influx of construction workers in an area, but in the longer term the greatest effect is caused by the increased movement of people. The initial need is for increased awareness amongst all stakeholders of the risks and the means to minimise them. 3. AGREED ASSISTANCE 3.1 Development and Immediate Objectives Poverty reduction is a central goal of PAST phase 2. The approach to addressing this is firmly set in contributing to the objectives of the PRSP related to rural development. It is generally acknowledged that reliable rural access is a precondition for sustainable rural development. The potential for productivity gains in agriculture required by the PRSP will only be realised if access to rural areas is improved. At the lowest levels of the rural transport network i.e. rural roads, small wharves and village tracks, the link to poverty alleviation is quite direct and observable. Increasing the use of labour intensive methods for road rehabilitation and maintenance will have positive effects for poor people through the creation of job opportunities, development of skills and contributing to local empowerment. The principal Development Objective of the Programme is that it will contribute to poverty reduction through a general improvement of the socio-economic conditions, by reducing transport costs and improving accessibility in the rural areas. The Programme is thereby supporting the Strengthened Growth and Poverty Reduction Strategy (PRSP), and will particularly address the first pillar of the PRSP, “broad based economic growth and structural reform”, that places strong emphasis on the development of rural areas. The immediate objectives of Danida’s support can be summarized by the following points: a) To improve access in Las Segovias, RAAN and RAAS by connecting rural

areas that currently have difficult access to social services and economic and administrative centres, and to establish overall systems and procedures to carry out economically viable, physical improvement of the transport network.

b) To ensure sustainable maintenance of the improved transport infrastructure,

sharing responsibility at national, municipal and community levels. c) Strengthen capacities of Communities, Municipalities, CRTs, MTI and

FOMAV in planning, implementation, maintenance and policy-making, with a particular focus on decentralization and progressive transfer of responsibilities.

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The activities related to these objectives will be carried out through local institutions or constituents, particularly MTI, FOMAV, the CRTs and the municipalities, and will involve a considerable element of capacity-building and development of systems at national, regional and municipal levels. It will also involve a high level of participation from the communities that will be the main target beneficiaries. Strong emphasis will be placed on securing a gradual transfer of responsibilities from PAST to the respective counterparts. The development and immediate objectives of PAST phase 2 are closely related to the objectives of PAST phase 1. However, based on lessons learnt during phase 1, procedures can be developed with more confidence and with a greater emphasis on wider replication. This will initially be particularly within the programme regions, but the objective of phase 2 is to develop and consolidate systems and procedures so that they could eventually be replicated nationally. A potential phase 3 could be based on pooling with other donors or with national funds, gradually working towards sector specific budget support. The objectives for PAST phase 2 can now also be placed in the context of the PRSP, which was drawn up after the start of phase 1. In phase 2 there will be a considerable emphasis on balancing the scope of improvements with the likely level of available resources for future maintenance of the improved infrastructure. This will involve identifying the respective owners of the different levels of the infrastructure network, the means of securing the resources, planning and implementation of sustainable maintenance of all improved infrastructure and ensuring systems for a timely and efficient disbursement of funds. 3.2 Strategy and Methodology The need for more and better rural roads has been identified as a necessary precondition for the development of rural areas that is emphasised in pillar 1 of the PRSP. Danida’s assistance under PAST phase 2 will continue to be provided in specific areas of the country that are poor or disadvantaged. The focus will be on Las Segovias in the north of the country and on the Atlantic Coast Regions. These are areas with levels of poverty higher than the national average. Also they are areas with particularly difficult problems of access, especially to the poorer communities. Las Segovias, RAAS and RAAN cover together more than half of the national territory; however these 3 regions have less than 6% of the basic road network. Only an average of 20.6% of this small network is in a maintainable condition, while the similar fraction at national level is 26%. The poor condition and coverage of the transport network in the three regions, which is still considerably below national average, is the justification for the continued support to these three programme regions. Poor access is believed to be an important factor contributing to the relatively low level of development and high level of poverty in these areas.

For an effective transport system, all levels of the transport network need to be addressed, including principal, secondary and tertiary roads. Currently, Nicaragua has been reasonably successful in mobilising external support for the principal

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road system, where traffic levels are relatively high and economic justification of improvements is fairly straightforward. Good progress has been made with the major rehabilitation of key routes, and an ongoing programme of trunk road rehabilitation will further improve the principal road system. However, the benefits of these improvements will only be felt in rural areas, and the objective of improved rural access achieved, if the connections from communities and small towns to these trunk roads are in a passable state. Currently this is generally not the case. The secondary network in the three programme regions is very small and in extremely poor condition. Las Segovias has 85 kilometres in maintainable condition, RAAS less than 30 - and RAAN has no secondary network in maintainable condition (and no primary either). At the lowest levels of the transport network the problems are even more complex. The tertiary network is rather large, but in equally poor condition. Existing traffic levels are low and the improvement of roads is not so easily justified on conventional economic grounds. The investment banks and major donors have, therefore, little interest in the lower parts of the network and investments are limited. Danida’s support under PAST phase 2 will concentrate on the secondary and tertiary networks where the needs are great and there is a gap in support to the transport sector. The national resources for maintenance, especially for the secondary and tertiary network, are uncertain and this raises questions over the sustainability of any improvements. This is exacerbated by the fact that most of these roads are earth or gravel surfaced and require frequent maintenance if they are not to fall back rapidly into a state of disrepair. Finally, the responsibilities for transport infrastructure are not clear and the legal framework not yet fully developed. The complexity of the issues to be solved provides increased justification for external support to MTI and FOMAV, particularly in the legal area, as well as with regards to an overall network planning approach and the elaboration of sustainable maintenance plans, as this will enable a range of expertise to be brought to bear on these problems. During the first phase of PAST, the counterparts were generally considered very weak, both at national, regional and municipal level. The Programme was, therefore, initially implemented with a very strong direct support from the programme advisers. As the capacity of the counterparts increased, as well as their ownership and commitment, the first steps have been taken towards a gradual transfer of responsibilities to national authorities. In the first few years of providing institutional support to the MTI under phase 1, the Ministry appeared reluctant to coordinate, probably because the concept of institutional support provided from an external programme was not completely accepted. The political environment at that time was generally not favourable towards this type of initiative. However, during the latter stages of phase 1 the atmosphere changed dramatically, with the MTI actively requesting institutional support at all levels and in a wide range of areas. The result has been that the institutional support to the Ministry has become highly demand-driven, and the main problem for the programme has been its capacity to follow up and satisfy

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these requests. At the regional level, the municipalities were initially very sceptical about the concept of implementing rural infrastructure projects using labour-intensive methods and with the beneficiaries taking on the responsibility for the future routine maintenance. Because of this, the programme had to take a very active role in the identification, formulation and implementation of projects. As experience accumulated and the beneficiaries realized the benefits of the approach, the attitude and commitment quickly changed at the community level. This gradually led to a change in the municipality’s perception, now generally being very positive and presently various municipalities have taken over the implementation of the projects. This has even progressed to a level where some municipalities have used the methodology to implement projects funded by the municipality’s own funds or by other donors. Similarly, the municipalities were initially reluctant to take on the responsibility for periodic maintenance of the community projects. But, since the communities were assuming their responsibility for the routine maintenance, the municipalities gradually accepted the need to take on the periodic maintenance responsibility. The establishment of a sustainable system for the maintenance of the rural infrastructure at municipal level is an important achievement, as this has proved difficult to address in many countries. Government resources for transport infrastructure at the lowest levels of the network are few or non-existent and great reliance has to be placed on the communities. It is, therefore, a significant achievement of phase 1 that shared responsibility has been defined and implemented. An important lesson learned during the first phase is that the impact of isolated rural projects is limited if the condition of the higher levels of the network remain poor. Often small investments on these intermediate levels of the network can be sufficient to secure basic access to markets and social centres. In phase 1 there has also been some development of higher-level transport links in RAAS and RAAN, but here an uncertain legal regional framework and a relatively young and developing local government structure have been limiting factors. The establishment of Regional Transport Councils has been a promising development and shows potential as both a coordinating body and an agent of change. In phase 2, the programme will continue to support the three main areas of support described above. At the national level, PAST will continue the institutional support to the MTI. However, considering the importance of securing sustainable maintenance of the transport network, it has been decided to integrate FOMAV in the future institutional support. There will continue to be a major emphasis on the issue of long-term maintenance of transport infrastructure. This will be in terms of identifying the various responsibilities and the necessary resources as well as establishing effective and efficient means of planning and carrying out maintenance. Considering the urgent nature of securing maintenance, several important issues have already been addressed at the end of phase I. These include support to the

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MTI on the establishment of a proposal for a functional classification of the road network and support to FOMAV in the promotion of the proposal for a law reform. These initiatives form part of the fundamental basis for the priority themes established under phase 2. The activities will, to the extent possible, be implemented directly by the relevant counterpart institution. MTI and FOMAV will be contract holders and responsible for the implementation of the consultancies that will be required to provide the institutional support. The programme advisers will assist and advise the counterparts in this process. However, this advisory support will cease once the necessary capacity is developed in the counterpart institutions. Under Component 2, PAST Phase 2 will continue to support the improvement of rural transport infrastructure in the same three regions. However, the activities will cover all municipalities in the regions, not only a small number of municipalities. Even stronger emphasis will be placed on building capacity at community, municipal and regional levels, with the objective of promoting decentralized planning, implementation and maintenance of the municipal and regional transport infrastructure network. Phase 2 will continue the work of strengthening local communities and project committees by encouraging their participation in the planning and implementation of the projects. Well-managed labour intensive methods have proved successful in phase 1 for transport infrastructure improvements and will continue to be promoted. However, during this phase, the municipalities will take on more responsibility for the planning, administration and implementation of the projects. The regional support units will support the municipalities in assuming this function, but the level of assistance to each individual municipality will decrease as capacity is developed. This will release capacity in the regional support units and allow the units to extend support to a greater number of municipalities. Weak municipalities will continue to receive full support. The Regional Transport Councils serve as an important link between central and local governments. They will continue to play a fundamental role in the planning process, having the main responsibility for securing an integral planning of the transport infrastructure projects at the regional level. The municipal and regional transport studies carried out under the phase 1 of the programme provide an important basis for this planning. However, the CRTs are still new and weak institutions, and will, therefore, need continuing support during phase 2. Even though the municipalities are expected to receive higher block grants from the Government in the future, there will continue to be a lack of funds on the municipality level for periodic maintenance of transport infrastructure under municipal responsibility. The decentralization of funds to the regional level to cover municipal and regional roads is not considered in the existing proposal for the law reform for FOMAV, so for the time being no funds are provided from FOMAV to the municipalities for road maintenance. Because of this, the CRTs have requested a consultancy to elaborate a proposal for an amendment to the law that will secure the transfer of funds to the decentralized level. This study is currently under elaboration and is expected to be finalized by the end of 2004.

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To bridge the funding gap between FOMAV and the municipalities, and to promote funding of road maintenance through FOMAV to the municipalities, the programme will provide seed money to FOMAV, earmarked for municipal road maintenance activities in the municipalities already benefiting from the programme support. Thereby both FOMAV and the municipalities will gain valuable experience, so that the same approach can be implemented nationally at a later stage. This initiative will be integrated under component 1. Consideration will be given to the use of micro-enterprises for routine and periodic maintenance of regional and municipal roads, applying the funds transferred from FOMAV. This will meet the twin objectives of carrying out work cost effectively and providing local work opportunities and skills development. The generally poor condition of the secondary transport network will be covered under component 3, using a spot improvement approach in order to maximize cost-effectiveness and minimize investment. The spot improvements on the secondary network3 will secure basic access from the rural communities to the national network. This component will have a strong emphasis on local private sector involvement by promoting the use of national consultants and contractors in the design, execution and supervision of spot improvements in the secondary infrastructure network. The projects will be prioritized and approved by the CRTs and will be executed by MTI, EPN or the municipalities according to the type of project. As for the other components, there will be a strong emphasis on securing sustainable maintenance. Adequate plans and resources for maintenance of the relevant network in maintainable condition provided by the respective owner will be a precondition to the funding of any improvements. The aim will be to ensure that expansion of the maintainable network by the improvements carried out under this component will be sustainable within the available resources, without endangering other infrastructure improvements, which are already in maintainable condition. The strategy for phase 2 aligns well with the four guiding principles of the PRSP, as shown in Table 2 below.

3The secondary network includes roads under MTI responsibility, municipal roads and important waterways.

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Table 2: Alignment of PAST Phase 2 with PRSP Guiding Principles PRSP guiding principle Relevant PAST interventions a) Modernization of the state, with the

purpose of increasing the social impacts, by allocating of a larger share of the national budget to social programmes and projects, targeting the poor, and improving their cost effectiveness.

• Institutional capacity building of MTI, FOMAV and CRTs, including support to decentralization.

• Emphasis on improving rural access, targeting the poorest regions and population groups.

• Transfer of funds through FOMAV to the municipalities for maintenance of decentralized municipal road network.

• Implementation of sustainable maintenance systems at national and regional level with the purpose of improving the sustainability and cost effectiveness of the investments.

• Developing cost effective means of improvement and maintenance by use of labour intensive methods and micro enterprises, creating local income-earning opportunities.

b) Promotion of greater equality, improving the benefits of the poor, with special attention to rural communities, women, indigenous groups and the population of the Atlantic Coast.

• Focus on rural areas, benefiting the inhabitants of Las Segovias, RAAN and RAAS.

• Involvement of women in participatory processes of decision-making and programme implementation.

• Special attention paid to indigenous communities, particularly in RAAN and RAAS.

• Programme implementation through proactive interventions.

c) Improved transparency and accountability through improved public administration, legal framework and procedures, and by means of participatory processes that include communities, beneficiaries and local leaders.

• Support to the development of a modern legal framework, improved procedures and a clear definition of responsibilities, thereby enhancing transparency and accountability in the MTI and FOMAV.

• Gradual transfer of responsibilities from PAST to national counterpart institutions.

• Positioning local authorities centrally in implementation of the programme, through the CRTs, and promoting dialogue between beneficiary communities and municipalities.

d) Broader participation of all members of society in the definition, implementation and follow up of the PRSP.

• Engagement with local communities, municipalities, CRTs, NGOs and local private sector consultants and contractors promotes involvement in the broader development process.

It is the expectation that, by the end of phase 2, the capacity of the respective counterparts at all levels will be substantially improved and that the transfer of responsibilities will have progressed significantly. It is considered, that the direct support for project implementation in the 3 existing regions will phase out. However, it is foreseen that the transport sector as such will have the need for further support. It is expected, that at the end of the second phase, a well-defined legal framework as well as national procedures for planning, implementation and maintenance of projects at municipal, regional and national levels will have been established. It is also expected that the CRTs will have been institutionalized and found adequate for national replication. These achievements will provide the basis for a possible third phase of the Transport Sector Programme Support, which

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might be provided in form of sector specific budget support. However, a potential third phase will be critically dependent on the establishment of sustainable financing for maintenance of the transport infrastructure network. 3.3 Capacity Development and Technical Assistance PAST phase 1 was successful in establishing appropriate and effective procedures for planning and implementing transport infrastructure improvements, and in implementing systems to secure their long-term sustainability. The main emphasis in phase 2 will be on building the capacity within partner institutions to fully manage and apply these procedures. The final objective is that any future assistance to the sector might be provided in the form of pooling of funds and eventually sector budget support. Technical assistance has been a key feature of Danida’s support to the transport sector since its first involvement in the Atlantic Regions. However, there has been a steady shift in the nature and location of technical assistance. Initially, the PAST support teams carried out most of the planning and implementation of local transport infrastructure projects. During PAST phase 1 there was an increasing shift of responsibilities towards local authorities. Danida has provided international technical assistance to strengthening planning procedures in MTI, and formally MTI has been responsible for the implementation of PAST phase 1. However, overall coordination and supervision of implementation have remained heavily dependent on Danida-funded advisers, primarily because of a lack of capacity in the counterpart organizations. In phase 2 there will be an increased focus on capacity building. The aim is to move steadily towards a situation where the programme support is fully managed by local institutions without the need for technical assistance. From the start of phase 2 the Nicaraguan authorities will assume a much greater role in the management of the programme through the Programme Steering Committee and the Programme Management Unit at the national level and the CRTs at the regional level. These management arrangements will initially require assistance and support from technical advisers at different levels. This support will be scaled down as capacity is established in the relevant institutions. This objective and strategy provides the point of departure for determining the requirements for technical assistance in phase 2 for each component. In PAST 2, Component 1 contains a significantly increased scope of institutional support. In addition, the support is spread over a wider range of areas than in phase 1 – legal, planning, project formulation, etc. This will require a high degree of coordination and considerable inputs from short-term advisers with different expertise. Gradually the responsibility for contracting, management and coordination of all short-term advisers will be transferred to MTI and FOMAV. However, there will be a need for a programme senior adviser based in MTI headquarters to support this process. The adviser will also assist the Programme Management Unit in the day to day management of the Programme. The Programme management unit consists of government staff members appointed by

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the Steering Committee. A national institutional adviser will liaise with the identified divisions and directorates of MTI and FOMAV in preparing and implementing the annual work plans to achieve the objectives of component 1 and will coordinate the inputs from national and international consultancies. This national adviser will phase out after 3 years on the assumption that by then the national authorities will have developed the necessary capacity to develop and implement workplans and coordinate consultancy inputs. The final terms of reference and performance indicators for the advisers will be determined jointly by the Danish Embassy and MTI based on an outline provided in the component description. For Component 2, a focal point is the transfer of capacities and responsibilities to the local counterparts. The municipalities will gradually assume the responsibility for the planning and execution of all works as well as the continued implementation of sustainable maintenance of all improved municipal projects. The Regional Transport Councils will be in charge of the prioritisation and final selection of new projects, but will also play an important role in relation to the supervision and monitoring of the performance of the individual municipalities. However, the new regional transport councils and the municipalities are weak organisations with a limited capacity and know-how. Moreover, it is the intention to expand support to more municipalities. Thus, technical assistance will continue to be provided to support planning and implementation of local transport infrastructure improvements at regional level. Support to the coordination of component 2 at national level will be provided by an international Danida Adviser for a period of two years after which a national adviser will take over this role. Based on the successful experience of phase 1 the system of one regional adviser per region supported by a small support team will continue in phase 2 for component 2. These regional advisers and their teams are national staff. Regional advisers refer to their respective Regional Transport Council. During the last two years of the implementation of phase 2 a gradual scaling down in the size of the regional adviser teams is planned. However, because any reduction in the need for support by one municipality is likely to be balanced by expansion to new municipalities, the need for regional advisory support units will continue until the end of phase 2. Component 3, addressing bottlenecks in the secondary networks, is a new component and will require an intensive input into the development of systems and procedures. MTI has limited experience with working with the private sector, but has already shown a keen interest in learning how to benefit from cooperation with private consultants for the design and supervision of projects, and from tendering and supervision of infrastructure projects executed by private national contractors. However, in order to assist MTI in the challenge of doubling the implementation capacity over the next 5 years by means of the private sector, as required according the National Development Plan, this process calls for considerable technical support to improve the capacity of the Ministry, other national partner organizations and the partners in the private sector. This support will be provided by an international technical adviser based at central level for an initial period of 3 years supplemented by specific technical support provided under

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a flexible arrangement by international consultancy firms offering a range of services relevant to secondary transport infrastructure improvements. . The international technical adviser may be sourced from the Latin American region as competency in Spanish, local knowledge and availability for an early start in phase 2 are all important After three years, all these support arrangements will be reviewed and the need for further technical assistance and backstopping services decided by the Steering Committee. Figure 1 below summarises the proposed technical adviser arrangements at the central level.

Figure 1: Planned Technical Assistance at Central Level 2005 2006 2007 2008 2009

International Danida Advisers: Component 1 Senior Adviser (+Sec support) Component 2 Senior Adviser Component 3 Adviser National Danida Advisers: Component 1: Institutional Adviser Component 2: Planning Adviser

Adviser on Cross-cutting issues & monitoring Total 5 5 5 2 2 NB: The Regional Support Unit staff is not shown - refer to component descriptions for further details.

Although not currently evident, there may be opportunities for pooling technical assistance to the transport sector with other donors in the future. This will be explored as part of the harmonisation and coordination of external support during phase 2. This may require modification or curtailment of the technical assistance required for PAST phase 2. The overriding aim will be to move to a more broad based capacity building and technical assistance strategy appropriate to a sector budget support approach in phase 3.

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3.4 Cross-cutting Issues and Priority Themes in PAST 2 Components

The different Danida cross-cutting issues and priority themes addressed by the PAST programme are described briefly below and in more detail in the individual component descriptions. The integration of the various themes is based on best practice and lessons learned from the previous phase. A recent independent review of the inclusion of the cross-cutting issues in all Danida Sector Programmes in Nicaragua gave a favourable assessment of PAST 1. PAST 1 was judged to be the only sector programme investigated that had managed to integrate the relevant issues in a truly cross-cutting manner, and this was related to a high degree of reflection and commitment at all levels of the programme. The same review stated that the preparation of PAST 2 clearly indicated a strengthening and systematization of the integration of the cross-cutting issues. The weaknesses found were related to the gender focus, concerning the difficulties in striking the necessary, but delicate balance of strongly promoting the participation of women, whilst not exposing the women to conflicts in the home and workplace, and on the need to make sure that a gender focus is implemented in all relevant capacity building activities at the central level. These observations have been taken into consideration in the finalization of the PAST phase 2 documents. In general, the Danida cross-cutting issues and priority themes have been integrated into the outputs and activities of the various components. In some cases these aspects have been reflected as an integral part of the immediate objectives. For component 2 a specific objective “To establish and implement strategies on the cross-cutting issues of gender equality, the rights and needs of indigenous people and ethnic groups and environmental protection in all component interventions” has been included. Since component 3 is a new component the cross-cutting issues still have to be developed further during the first year of the implementation, and evaluated by the first joint programme review. 3.4.1 Gender Equality A pro-active approach will continue to be taken to women’s participation in the programme in phase 2. Experience from the first phase of PAST indicates that the participation of women in the non-traditional roles in decision making and execution of transport infrastructure projects can result in general empowerment and increased participation of women at the local level. For Component 2, strategies and guidelines to ensure gender equity have, therefore, been elaborated, drawing on current best practice and consultations with other agencies. These include targets for the participation of women in project committees responsible for mobilisation of the community members, planning and training with regard to infrastructure rehabilitation and maintenance activities, and women’s’ participation in the execution of the projects both as foremen and workers, based on local customs and experience from phase 1. Training in the use of the guidelines and sensitisation workshops will be carried

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out. For component 3 gender equality will also be promoted and targets for female participation in planning and execution will be proposed. Under Component 1, this issue will be taken into consideration in connection with the strengthening of MTI and FOMAV in the formation of the inter-disciplinary groups in charge of supervision and formulation of road and aquatic infrastructure projects. It will further be integrated through specific activities where relevant, for example, in relation to the elaborating of a transport safety strategy, support to development of standards for project preparation etc. However, it is the intention to allow for flexibility in the approach until it is clear how a future national policy for gender equity will affect the public sector, including MTI and FOMAV. 3.4.2 Good governance, democracy and human rights (including

rights of indigenous people) Good cooperation has been established with national, regional and municipal authorities under PAST phase 1. An increased emphasis on support to municipal authorities through capacity building and the corresponding transfer of responsibilities under phase 2 will contribute to promoting the decentralisation process, which is seen as crucial to promoting good governance. The links between municipal authorities and beneficiary communities will continue to be strengthened, as well as the coordination between national and regional authorities through the CRTs. Promotion of the CRT’s will also encourage the sharing of experience between municipalities, and the development of best practice in local infrastructure delivery and maintenance. Under component 1, the development of the legal framework will clarify the roles and responsibilities of national, regional and municipal levels, which is a prerequisite to greater transparency and accountability. As for component 2 and 3, good governance and democracy is central to the implementation strategy, in that it supports the participatory processes at the local level as well as capacity building and assigning of responsibilities at the community, municipal and regional level. The continued support to strengthening local communities, including indigenous communities will bring other benefits relevant to Danida’s wider objectives, by ensuring their participation in the planning and implementation of transport improvement projects. It also emphasizes the responsibilities of the local government structures by encouraging them to work together with their constituent communities, thus supporting the general democratisation process. This is seen to be complementary to the Danida support to decentralization through APDEL. Concerning human rights, special attention will be given to the rights and needs of indigenous people and other ethnic minorities. This issue will be incorporated into the planning and implementation based on lessons learnt and procedures developed in phase 1. In the Atlantic Regions particular care will be taken when addressing the needs of indigenous communities, and specialist consultants will be brought in as necessary.

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Under component 2, strategies and guidelines for integrating the rights and needs of indigenous people and other ethnic minorities will have been elaborated before the end of the phase 1, in order to be ready for implementation from the beginning of the phase II. Under this component, targets have been set to ensure that all projects implemented in indigenous areas have a high level of indigenous involvement. For both components 2 and 3 full approval of each project that affects the indigenous groups has to be obtained from the indigenous authorities in the communities before implementation. Furthermore, it will be ensured that indigenous communities are not excluded because of their limited resources or their location in environmentally sensitive areas, and coordination and dialogue between the communities and municipalities will be promoted. Such aspects will be included in the capacity building and transfer of responsibilities to counterparts. Under Component 1, this issue will be taken into consideration in connection with the strengthening of MTI and FOMAV in the formulation of road and aquatic infrastructure projects, and will further be integrated through specific activities whenever relevant. 3.4.3 Establishment of and adherence to environmental protection

principles and guidelines Strengthened environmental management will be addressed particularly under component 2 and 3 where the selection and planning of transport infrastructure improvements will take full account of the environmental consequences, both direct and indirect. Strategies and guidelines for environmental protection during construction and maintenance of transport infrastructure will be drawn up in coordination with MTI, MARENA, relevant NGO’s and other institutions. Special attention will be paid to the assessment of road and waterway construction in environmentally sensitive areas, including protected areas. Training will be provided to project implementers. Under Component 2, the guidelines will be finalized before the end of phase 1, in order to be ready for implementation from the beginning of the phase II. A format for an environmental summary for each project has already been elaborated. This will be prepared for each new project and submitted for approval by the Environmental Division in MTI. Similarly, all proposed spot improvements under component 3 will receive the relevant environmental clearance by the Environmental Unit before proceeding, and environmental protection measures will be complied with. Under Component 1, this issue will be taken into consideration in connection with the strengthening of MTI and FOMAV in the formulation of road and aquatic infrastructure projects, and will be further integrated through specific activities whenever relevant. An environmental screening note and the corresponding environmental management plan can be found in annex 5. 3.4.4 Private Sector Involvement All components will contribute to the general sector strategy of increased private sector involvement. Under components 3, all implementation will be undertaken by private consultants and contractors. This will include the use of micro, small and medium enterprises, where appropriate for the type of project. The

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component will address and enhance the capacity of both public and the private sector organisations by supporting the development of new procedures and providing training where necessary. In Component 2 small private contractors may be used as a complement to the labour intensive methods, and the component will encourage the involvement of the private sector at the local level, wherever appropriate. Component 1 will facilitate the institutional change of MTI, assisting in the transformation from project implementer, towards a focus on planning, supervision and monitoring, thereby making room for increased private sector involvement. 3.4.5 HIV/AIDS The issue of HIV/AIDS will mainly be targeted under Component 2, in relation to the gender cross-cutting issue. The component will link up with existing government initiatives and specialised NGOs already working with the issue. The strategy is to collaborate with these organisations aimed at preventing increased risks of infection, as a result of the improved access and in general to raise awareness of HIV/AIDS. In both Component 2 and 3 the programme will support the development of general guidelines on HIV/AIDS related to road construction, for example by including specific activities aimed at reducing the spread of HIV/AIDS in contracts for larger contractual works, and in the establishment of labour camps. 4. PROGRAMME SUPPORT COMPONENTS Three main areas of support will be included under the PAST phase 2, each with a planned time frame of five years, even though the perspectives for the programme may be longer. 1. Continued institutional support to MTI and FOMAV, with particular emphasis

on improved planning procedures and sustainability of implemented projects (including reformed road law and decentralisation of responsibilities to the municipalities).

2. Continued support to the improvement of tertiary transport infrastructure in

RAAN, RAAS and Las Segovias. 3. Support to spot improvement of secondary transport infrastructure in RAAN,

RAAS and Las Segovias. Brief descriptions of the three components are given below. Full details can be found in the respective Component Description documents.

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4.1 Component 1: Transport Sector Institutional Support This component aims to continue the support for institutional capacity building provided in the 1st phase, improving the planning and management capacity of MTI to ensure a well functioning and sustainable road and aquatic transport system. As the intention is to delegate and decentralise the activities related to the actual provision of transport and infrastructure services, the capacity building will extend to FOMAV and in specific cases to the CRTs. Six key areas of cooperation have been identified: 1. A legal framework will be created with the purpose of defining an adequate

and integrated policy for the road sector. The new road law will create the norm for a functional classification of the road network with the objective of delineating the responsibilities of the central government and the municipalities. A special emphasis will be placed on decentralization of management and maintenance of the lowest part of the road network hierarchy.

2. Improved planning capacities will be developed in the MTI in the form of the

elaboration of a medium-term transport plan. The plan will include both investments and maintenance, in order to assist the MTI in establishing an adequate balance between allocation of funds for investment and maintenance. One of the main purposes of the plan is to facilitate improved coordination between the different institutions and donors in the road sector by presenting clear priorities. MTI and FOMAV will also be assisted in the elaboration of medium-term maintenance plans.

3. The institutional capacity to formulate and evaluate road and aquatic projects

will be improved by training and by assisting FOMAV and MTI in developing the planning and monitoring tools necessary for the efficient management of project formulation. This includes continued support to the road and bridge management systems.

4. Supervision will be improved by training the supervisors in FOMAV and MTI,

as well as assisting the institutions in the elaboration of technical and administrative manuals for project supervision.

5. Road and aquatic transport safety will be improved by implementing a safety

study and by supporting the formulation and implementation of a safety strategy.

6. The maintenance of regional and municipal roads will be supported by

assisting FOMAV in the elaboration of procedures and legal framework for the transfer of funds to maintenance of municipal and regional roads. Based on these procedures, a limited amount of seed money will be transferred from PAST II through FOMAV to support the maintenance at the decentralized level.

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The interventions have been defined and agreed by the different counterparts. The output and corresponding activities are specified in the component logframe and in the implementation plan included in the Component Description for Component 1. The component facilitates the poverty focused interventions that will be delivered under Components 2 and 3, by providing a legal and institutional framework for the improved management of transport services and by supporting the transfer of funds from FOMAV to the maintenance of municipal and regional roads. The component also incorporates the three cross cutting issues of Danish Development Assistance into the implementation of the programme whenever relevant. The total cost of the component over five years will be a Danida contribution of DKK 45.5 million plus DKK 4.5 million for a Danida Adviser. The local partners will provide counterparts for the different assignments, staff to be trained and staff for the Programme Management Unit, as well as institutional setting and office facilities. 4.2 Component 2: Improvement of Tertiary Transport

Infrastructure in RAAN, RAAS and Las Segovias This component aims to build on the achievements of the 1st phase, with an emphasis on capacity building and transfer of skills and responsibilities to the decentralised local government structures. The intention is to ensure institutionalisation and sustainability for this and any possible future phases, as well as developing robust systems and approaches with wider application. The component will provide the support for municipalities in RAAN, RAAS and Las Segovias to deliver tertiary infrastructure investments, targeting those areas and communities in the most need, and those projects that are considered to give the most sustainable results. The projects will primarily be rural access roads and bridges that can be built by the communities using labour-based techniques. However, there is sufficient flexibility to accommodate other transport interventions such as wharves for small boats, pedestrian tracks and footbridges where local communities consider these a priority. The responsibility for planning, management, procurement, implementation and supervision, currently largely undertaken by three regional transport support teams, will be gradually transferred to regional, municipal and community partners. The programme will provide support in the form of training, advice, setting up systems and mentoring to ensure that the local partners can undertake these functions in a sustainable way. All works require a community contribution of 5% to ensure full commitment, and the long term funding of required maintenance by the municipalities and communities. Communities will be vested with the responsibility (under the supervision of the municipalities) to manage and raise funds for routine

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maintenance activities. The municipalities will be responsible for the periodic and emergency maintenance. The component has a strong poverty focus, and the three target regions, RAAS, RAAN and Las Segovias, are considered amongst the poorest and most marginalized in Nicaragua. Furthermore, the programme aims to work with the poorest communities in these regions. The component promotes good governance including civil society participation. It also contains the modalities to ensure that the three relevant cross-cutting issues of Danish Development Assistance are fully incorporated into the implementation of the programme, namely:

• Promoting gender equality in the workplace and in the decision making process.

• Good governance, democracy and human rights, with special emphasis on the inclusion of the right of indigenous people.

• Establishment of and adherence to environmental protection principles and guidelines.

The interventions have been defined and agreed by the different counterparts. The output and corresponding activities are specified in the component logframe and in the implementation plan included in the Component Description for Component 2 The total cost of the component over five years will be DKK 202.2 million. Of this total, Danida will contribute DKK 185 million, including DKK 1.8 million to cover Danida adviser costs, while the local partners will contribute DKK 17.2 million. Local partner contributions include 5% of the implementation cost as well as the full maintenance costs of the completed infrastructure. The local contributions may include non-cash elements such as voluntary labour and donation of materials, which are assessed at their cash equivalent. 4.3 Component 3: Support to spot improvement of secondary

transport infrastructure in RAAN, RAAS and Las Segovias

This component is designed to assist in the creation of properly functioning transport networks in RAAN, RAAS and Las Segovias by financing spot improvements on critical parts of the secondary network. It is not the intention to rehabilitate complete sections of road or waterway, but to address the worst sections that make access problematic. This will include damaged bridges, wharves, drainage structures, and failed sections of carriageway. The component will promote the use of the private sector in the design, supervision and execution of all works. Consultants from the private sector will be commissioned to design and supervise the works, when appropriate. The component will assist in revising practices and procedures as necessary to improve the effectiveness and efficiency of using the private sector. The component will also seek to actively promote the use of local contractors and micro-enterprises to

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compete for these works, and will include activities for training and capacity building, including the adoption of labour-based techniques. The component allows the regions to take a network approach to their transport planning and gives them the responsibility for identifying and prioritising projects within the available funding limits. The MTI, EPN or the municipalities, depending on who is the owner of the infrastructure, will be responsible for execution. The owner will also assume the subsequent maintenance commitments and provide a maintenance plan with duration of at least five years, as well as secure the corresponding funding. Rehabilitation and improvement will only be undertaken on the basis of approved future maintenance plans, and new projects cannot be approved, unless satisfactory maintenance of existing projects has been fulfilled according to plans. The sustainability of maintenance is a main priority also in this component. For all three potential owners (MTI, EPN and the municipalities), funds for maintenance are scarce. The priority is to preserve existing infrastructure that is already in maintainable condition. If the availability of funds is not sufficient for maintenance of the whole transport network under the responsibility of the particular institution, any investment in new spot improvements for the particular institution under this component will be postponed until the situation improves. The sustainability of road maintenance, especially at national level, depends to a high degree on the establishment of sustainable funds to FOMAV. In the worst-case scenario, where FOMAV has no sustainable funding, the maintenance of the maintainable network will have to return to being the responsibility of MTI using its regular budget. In this case, new project should not in principle be implemented at national level before sustainable maintenance of all existing roads in good and regular condition has been established. Also, for water transport infrastructure under EPN and roads under municipalities, the existing infrastructure has to be maintained before additional resources will be provided for implementation and maintenance of new projects. The more specific conditionalities for maintenance commitments are explained in the Component Description for Component 3 The component enhances the poverty-focused interventions that will be delivered under Component 2, by addressing the transport network bottlenecks that prevent the full benefit of improved community access from being realised. The component also contains the modalities to ensure that the three cross cutting issues of Danish Development Assistance are incorporated into the implementation of the programme whenever relevant. The interventions have been defined and agreed by the different counterparts. The output and corresponding activities are specified in the component logframe and in the implementation plan included in the Component Description for Component 3. The total cost of the component over five years will be a Danida contribution of DKK 77.3 million plus DKK 2.7 million for Danida adviser costs and an estimated national contribution of DKK 2.7 million to cover maintenance. The local partners will also provide the staff to plan, commission and manage the works.

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5. BUDGET The time period for the PAST phase 2 budget will be January 1st 2005 to December 31st 2009. The total budget for this 5-year period is DKK 414.9 million, of which the Danida contribution, including Danida Advisers, is DKK 395 million, and the estimated national contribution is 19.9 million. A breakdown by component is given in the Tables below. A more detailed breakdown and notes on the assumptions made in drawing up the budget are given in the Annex 3.

Table 3: PAST Budget (Million DKK)

Component Budget 2005-2009

Danida, excl.

adviser Danida Advisers Danida Total National

Component 1: 45.5

4.5 50.0 Component 2: 183.2 1.8 185.0 17.2 Component 3: 77.3 2.7 80.0 2.7

Sub-Total 306.0 9.0 315.0 19.9

Unallocated 80.0 - 80.0 -

Total DKK mill. 386.0 9.0 395.0 19.9 The programme management unit will update and re-schedule the budget annually, in consultation with and approved by the Steering Committee. In addition, programme reviews may make recommendations to the Steering Committee on re-allocations within and between budget lines and the use of unallocated budget for new activities. More than 40% of the Component 1 budget covers the costs of specialist consultancy studies and training costs. 10% covers investment, in the form of seed money for FOMAV. The balance is for technical assistance provided by the support unit for Component 1, overall programme support through the Programme Management Unit for all 3 components, administration related to the Programme Management Unit based in MTI and some minor items of technical equipment. The budget is based on a broad estimate of costs. Actual annual budgets will be based on actual progress and approved annual work plans. The national contribution to this component is in the form of staff for the Programme Management Unit, transport, equipment, costs related to the functioning of the Steering Committee and the facilities required for the Programme Management Unit, including the Danida advisers. The cash value of this contribution has not been calculated, due to the complexity of the contribution. The total budget for Component 2 is DKK 202.2 million, of which 17.2 million (9%) will be provided by the municipalities and communities as counterpart funding to construction and all maintenance costs. More than 50% of the Component 2 budget is for the direct costs of constructing rural infrastructure. As labour intensive methods will be used, a large proportion (50-65%) of these costs

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will be in the form of labour wages. 12% covers the costs of the three regional support units that provide support to the project implementation. The relatively high costs for the support units shall be seen in the context of the significant focus on institutional strengthening of local governments in this phase of the programme support. The balance is for technical assistance in the form of a Danida adviser, specialist consultancies and training, administration of the regional offices and municipal support. Budgets are based on current costs and absorptive capacity in the regions. However, there is flexibility to transfer funds between the regions depending on their actual performance in phase 2. The yearly investment levels for component 2 are quite steady, and even slightly increasing towards the end of the phase when support to this component is expected to gradually phase out. This is primarily caused by a slight increase in the investment levels from year 2005 to 2009. This is due to two factors (1) the expected increased municipal capacity to support such an increase and (2) more municipalities being gradually integrated into the programme. Since all investments are planned to be implemented within one year, the implementation rate can remain high until the very end of the phase. By 2006 a national adviser is expected to take over the function of the international Danida Adviser in Component 2, and the cost for the support unit will thus experience a slight increase in that year. However, by the end of year three, the capacity of the counterparts is expected to have reached a level that allows for a downscaling of the support unit. This cost is, therefore, expected to decline in the last two years. The budget estimate is, however, quite conservative, since counterpart capacities will have to be evaluated at the appropriate time and before any final decisions are made. The total budget of Component 3 is DKK 82.7 million, of which 2.7 million (3%) will be provided by MTI, EPN or the municipalities as counterpart contribution to cover maintenance costs. 68% of the Component 3 budget has been allocated to infrastructure costs. Implementation will be carried out by private sector contractors and consultants and includes design, tendering and contract supervision costs. 18% has been allowed to cover private sector capacity building and the appointment of an international consultant to backstop the process. The balance is for technical assistance in the form of a Danida Adviser and programme administrative costs. An almost equal distribution of investment costs has been assumed between the regions, giving a slight preference to RAAS, but this may be varied depending on performance. The annual budget for component 3 contains a slight increase from year 2005 to 2009. This is due to an annual increase in the investment levels. Since this is a new component, the implementation capacity in the counterpart institution will need time to develop. Since all investments are planned to be implemented within one year, the implementation rate can remain high until the very end of the phase. The need for technical assistance in the form of a Danida advisor is expected to disappear by the end of year 3, when procedures have been established and implemented and the counterpart institution will have developed the capacity to take over the full responsibility. The need for external consultants for specialised technical assistance and studies is, however, expected to remain the same to the end of the period.

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A budget margin for unforeseen expenses within the programme frame, including fluctuations, is included under each component. This will only be used with the approval of the Steering Committee. An unallocated amount of DKK 80 million has been reserved for activities to be specified later. PAST phase 2 will be contributing to an ongoing process of sector reform. At the time of formulation, certain strategies are yet to be developed, and key items of legislative reform are in the process of consultation and drafting. For these reasons, it is not possible to specify with certainty all the necessary areas for support. The unallocated amount may at a later stage be allocated to new activities, based on discussions and agreement between the Steering Committee and Danida. If the amendment to the FOMAV law is approved, including the transfer of funds to the decentralized network, a more integral support covering the transfer of seed money through FOMAV to the municipalities will be considered using unallocated funds. This approach will be based on the pilot project presently included in Component 1, where small amount of seed money will be transferred to the municipalities. A request from the Government of Nicaragua for support to construction of a major road from Nueva Guinea to Bluefields may be considered using unallocated funds. 6. MANAGEMENT AND ORGANISATION The principal strategy regarding programme management of PAST 2 is that ownership shall be fully assumed by the Nicaraguan Counterparts. The Steering Committee will have the executive power in phase 2. This body will be chaired by the Vice Minister for the Ministry of Transport and Infrastructure (MTI), and will include senior representatives from MTI, FOMAV, the Danish Embassy and a representative from each of the Regional Transport Councils. This is in line with the Danida Aid Management guidelines and is described in more detail below. In PAST 1, day to day management was primarily carried out by a programme management unit staffed by Danida Advisers and Danida funded administrative staff. In phase 2 there will be an increased focus on capacity building and transfer of responsibilities to local partners. The aim is to move steadily towards a situation where the programme support is fully managed by the local institutions without the need for technical assistance. From the start of phase 2 the Nicaraguan authorities will assume a much greater role in the management of the programme through the Programme Steering Committee at the national level and the CRTs at the regional level. These management arrangements will initially require assistance and support from technical advisers at different levels. This support will be scaled down as capacity is established in the relevant institutions. A Programme Management Unit (PM) shall be set up in the early part of PAST 2. The objective of this unit is to coordinate and carry out the day to day management of the programme, monitor progress and ensure that the necessary information is collected, analysed and forwarded to the Steering Committee, to enable this Committee to effectively carry out its decision-making functions.

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The PM unit, located in MTI, will be headed by a Programme Manager, who together with other necessary staff, will be Nicaraguan officials appointed by the Steering Committee. The Danida financed international and national advisers will have advisory functions in relation to the unit. Danida will, in addition, finance administrative staff for the unit including a financial controller who will be responsible for the financial inputs to the PM unit and the programme. The implementation of the above system for programme management will take place following agreements made after a study on programme management, financial and procurement aspects has been completed. This study will commence immediately after the start of phase 2. Outline terms of reference are given in Annex 4. Until these new arrangements have been agreed and are in place, the present system for programme management in PAST 1 will, in general, continue. However, it is foreseen that the Programme Manager and a Financial Controller may be attached to the PM unit at an early stage, in order to initiate the process of gradually transferring responsibilities to the counterpart institution from the beginning of phase 2. Some specific responsibilities will also be transferred to the counterpart institutions from the beginning of the phase, subject to mutual agreement. In phase 2 the Steering Committee will be responsible for the approval of the overall planning, monitoring, etc. This body will meet quarterly. The Programme Management Unit, as well as the regional advisers and the national and international Danida advisers at central level together with additional staff from MTI and FOMAV may attend as resource persons without decision making powers. The Steering Committee will be open for participation of other donors when agreed upon by the partners, and other national institutions and development partners will be invited whenever relevant. The Draft Terms of Reference for the Steering Committee are set out in annex 2. The Terms of Reference will be finalised and adopted in the first meeting of the Steering Committee after the commencement of phase 2. The Steering Committee will have the responsibility for approving the annual workplans and allocation of funds to activities required to deliver the outputs to MTI/FOMAV in the case of Component 1 and to the regions in the case of Components 2 and 3. It will also have the mandate to reallocate funds within each component, according to performance. In the case of components 2 and 3, reallocation will also depend on the respective implementation and maintenance capacity of the components. The elaboration of annual work plans for the components will be the responsibility of the implementing bodies (i.e. MTI, FOMAV and CRTs) with the advisory support from the Programme Management Unit. The annual work plans for both CRTs and the Steering Committee will be elaborated by key members from the respective institutions and will be endorsed by the Programme Management Unit before presentation to the Steering Committee. All proposals for significant changes to implementation and management procedures will be submitted to, and approved by, the Steering

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Committee. The Royal Danish Embassy will be a full member of the Steering Committee but will also have some specific roles in relation to the management of PAST 2. These will be: • Initiating independent technical and financial audits of the Programme and its

components; • Giving approval to requests for the disbursement of funds and organising the

disbursements into the specified component accounts; • Giving no objection to major consultancy studies before contracts are signed,

according to existing Embassy procedures; • Giving no objection to all major construction contracts under component 3

before contracts are signed, according to procedures specified in programme manual for Component 3;

• Organising joint annual reviews including drawing up the mandate for the reviews;

• Appointing process consultants e.g. to assist with annual reviews and overall monitoring;

• Organising Programme and Component Completion Reports. A Danida international programme senior adviser will support the programme management unit and will take specific responsibility for advising on Component 1. The Job Description for this Adviser is given in the Component Description for component 1. This Job Description may be modified if found necessary by the findings of the study on programme management of PAST 2. The Danida adviser for Component 2 will primarily relate to the three Regional Transport Councils but, for logistical convenience, this adviser will be located in the programme management unit. Similarly, the International Adviser for component 3 and the centrally based national advisers for Component 1 will also be attached to the unit. The management structure for the overall programme is set out in the organogram in Annex 1. The detailed organisation structure for each component is given in the relevant component description. The three Regional Transport Councils established in the first phase will have the responsibility for receiving the annual project proposals, prioritising and approving projects, and making the final recommendation to the Steering Committee for the distribution of funds. Each Council will consist of one representative from the participating municipalities (the mayor or the vice mayor) and a representative from the Regional Autonomous Government and the Regional Autonomous Council (in the case of RAAN and RAAS). Furthermore, representatives from the MTI will participate as member of each of the Councils. The CRT is chaired by an executive board, consisting of a president, vice president and a secretary, democratically elected by the members of the CRT. A small technical secretariat will be established to provide technical support and advice to the members, maintain the regional transport database, and provide continuity

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between former and newly elected municipal councils. The Secretariat will be financed by the members with initial support from PAST on a decreasing scale. A study defining the precise tasks and structure of the Technical Secretariats is currently under elaboration. Initially the CRTs primary role has been to plan and approve projects funded by Danida; however the CRTs agenda is slowly developing towards the coordination and discussion of other infrastructure issues. The aim is that the CRT should coordinate and approve all new transport infrastructure projects as well as all maintenance plans within the region. The CRT system is already well accepted by many development partners and Government Institutions. FISE, IDR and FOMAV are showing interest in participating, although no formal commitment has been reached yet. It is hoped that the system will eventually spread to other regions in the country. Key aspects of the management arrangements in the three components are summarised as follows: Component 1

• MTI and FOMAV Senior Management will be responsible for preparing an overall plan for the allocation of resources between the outputs of Component 1. This will be closely coordinated with institutional support from other donors.

• The transfer of seed funds to the maintenance of municipal and regional

roads will be channelled from FOMAV to the municipalities, based on an annual maintenance plan, presented with comments from and endorsed by the CRTs to FOMAV for final approval.

• The majority of activities for this component will be carried out by

specialised private sector consultancies.

• Individual consultancies will be managed by the responsible division or directorate, or in some cases a specially formed interdisciplinary group. The Programme Management Unit and component 1 advisers will assist the implementing organisations with guidance and overall supervision of progress and quality on behalf of the SC.

Component 2

• The municipalities will be responsible for identifying projects, as well as designing and supervising construction with support and advice being provided by the Regional Advisers. The long-term aim is for the municipality to assume full responsibility for this, as well as for implementation of the projects. A plan for the steady transfer of responsibility to the municipalities can be found in the Component

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Description for component 2.

• Where projects are approved, the respective communities will establish a specific project committee. These committees will be responsible for negotiating contributions and commitments from the communities for implementation and maintenance.

• On completion of works, projects will formally be handed over from the

MTI to the municipality and beneficiary communities, who will be responsible for the periodic and routine maintenance respectively. This procedure will be applied, until a road law has been approved, defining the specific responsibilities of MTI and the municipalities.

• Danida will continue support to the regional transport support units, one in

each target region, under the direction of the Regional Technical Adviser. Until the municipality takes on the full responsibility, the engineering team will have overall responsibility for the elaboration of project proposals and, if a project is considered viable, the detailed technical design, budgeting and implementation. However, the municipal technician will participate in this process in order to gradually develop the required capacity to assume this function.

Component 3

• The Regional Transport Councils will be responsible for the annual selection and prioritisation of appropriate projects in their respective regions on the basis of the prioritisation established in the transport study and the fulfilment of previous maintenance obligations.

• National consultants will be appointed by the responsible implementation

institution to design, tender and supervise all works, which will be awarded to national contractors using competitive bidding procedures. The Steering Committee will approve these consultancies and the Embassy will give “no objection” to the contracts. Management of the contract and of the implementation of these projects will also be allocated to MTI, EPN or the respective municipality, depending on the ownership and responsibility for future maintenance.

• An international Danida adviser will provide assistance with planning and

training of the involved government institutions and private enterprises for an initial period of three years. International consultants will be appointed to advise local engineering companies with planning, design, tender and supervision of projects in close cooperation with MTI, EPN and the municipalities. After the first three years, the need for further technical assistance will be assessed.

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7. FINANCIAL MANAGEMENT AND PROCUREMENT 7.1 Financial Management In terms of funding sector programmes, the goal of Danish cooperation assistance is to channel the funds through national systems as sector budget support. In order to reach that objective and secure sustainability, it is necessary to transfer as much of the financial management to the national partners as possible according to the actual capacity. However, the relevant partner institutions and systems are judged to be not yet ready for budget support in PAST phase 2. The capacity of the municipalities is extremely varied in the three regions and EPN and MTI have little experience so far with traditional budget support. In order to develop a strategy for gradually transferring more responsibilities for organisational, administrative and financial management to local institutions, the proposed study on programme management (See Annex 4) will examine the existing financial and administrative systems in PAST 2 partner organisations as well as the organisational capacities, and will identify weaknesses and propose remedies. The end result of the study will be recommendations for a strategy for a steady transfer of management responsibilities to partner organisations, including a timeframe and the identification of possible capacity building needs. As a general principle, Danida grant funds will be kept separate from other funds in PAST 2. Disbursement from the Royal Danish Embassy to the PAST project accounts will initially continue as for phase 1. These arrangements will continue until a strategy for the transfer of financial management has been developed and adopted following the proposed programme management study. The exception will be for component 1 where the transfer of responsibilities will start from the commencement of phase 2 with regards to consultancies and capacity training, since it is considered that the counterpart organisations, MTI and FOMAV already have the required capacity to assume these functions. Moreover, the process of involving counterparts in the elaboration of Terms of References, tender evaluation and contracts has already started under phase 1. The Danish funds for PAST 2 shall be disbursed directly from the Royal Danish Embassy to dedicated PAST 2 programme accounts in the implementing institutions. Each institution shall maintain a separate bank account for Danish PAST phase 2 grant funds. The disbursements will be made according to the approved workplans. The Programme Management Unit will be responsible for coordinating and checking the requests for disbursements under arrangements that will be finalised once the study on programme management has been completed. The disbursement of funds will be made half-yearly except for larger amounts that will be disbursed quarterly. The Danish funds disbursed under PAST 2 shall, as far as possible, be reflected in the Nicaraguan Government’s budget and accounts.

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The SC will be responsible for approving the annual workplan and budgets. The programme management unit will be responsible for consolidating budgets and financial reports and providing this information to the SC for its decision-making purposes and for regular reporting to the Royal Danish Embassy. 7.2 Procurement During phase 2 the programme will adopt a general policy of procurement by national partners using government systems wherever possible. Thus, the procurement of contractors and consultants will be by the national implementing bodies to extent possible. As part of a system of checks and balances, approval by the programme management unit of terms of reference, contract document and tender evaluations will be necessary. The Danida Advisers will participate in this process in order to give the counterparts the necessary initial support. For larger contracts, e.g. under component 3, and for all major studies under component 1, a “no objection” by the Danish Embassy will be required before signing the contract. A new procurement law has been drafted and is expected to be passed by Parliament by the beginning of 2005. This introduces government procurement procedures that are more closely aligned with international standards and provides one of the main justifications for transferring greater responsibility for procurement to national partners. The office “Publica and Etica” (public ethics office), which is supported by a number of donors, has drawn up a manual of procurement functions and carried out intensive training for some central government departments in the new procurement procedures, including MTI. They have also planned some training of municipalities and this has commenced but national coverage might be constrained by a lack of funding. If necessary, PAST 2 will, in coordination with APDEL (the Danida funded decentralisation programme) among others, provide funds for this training to be extended to municipalities in the three programme regions. The policy of procurement using national procedures will, to the extent possible, be implemented from the start of phase 2 for components 1 and 3. This is particularly the case for the contracting of consultants and contractors. Traditional procurement will be maintained under the responsibility of the programme until the financial and management study has been completed. For component 2, which relates to the regional and municipal levels, the transfer of overall responsibility for financial management to the municipalities will be more gradual and matched to the capacity of the partner institutions to take on this responsibility. This process is described in the component 2 description and will be coordinated with the support from APDEL. A complete strategy for the transfer of responsibilities to the municipalities will be defined as part of the consultancy on management and financial capacities of the counterpart institutions.

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7.3 Auditing PAST 2 funds will, as far as possible, be subject to existing Government of Nicaragua auditing procedures. These audits will be supplemented by independent financial audits contracted from the private sector by the Royal Danish Embassy under similar procedures to those used under PAST 1. All independent audit reports will be sent to the Steering Committee and to the Nicaraguan authorities responsible for audits. The SC will be responsible for ensuring follow-up on recommendations of audit reports. In the case of municipalities in component 2, the programme will negotiate with the authorities in order to use the existing system for Auditing of Municipalities. Among other things, the Royal Danish Embassy will explore the possibility of coordinating the annual audits of municipalities with the Danida supported APDEL (Decentralisation) programme in order to either make joint audits or use national institution to facilitate the audit. Yearly technical/financial audits shall be carried out on the request of the Royal Danish Embassy. Additional particular financial management and procurement arrangements applying to the individual components are detailed below. Component 1 For the specialist studies and training inputs, consultants will be procured nationally or internationally, depending on the availability of the required national expertise, however wherever possible preference will be given to national procurement or joint ventures in order to build up local capacity in the private sector. The Royal Danish Embassy will give “no objection” to international consultancies and, in particular cases, these may be directly appointed by the RDE. With regards to the contracting of national consultants, the counterpart organization will to the extent possible, be the contract holder and thereby directly in charge of the implementation of the corresponding consultancy or training activity. MTI can also be the contract holder for international consultancies. Component 2 In order to secure sustainability it is necessary to transfer as much of the financial management to the national partners as is feasible. However the capacity of the municipalities is extremely varied in the three regions. A system has been introduced for a staged transfer of financial management responsibility, and this will continue in phase 2. However, to the extent possible, the process will be accelerated. For municipalities that require full management support, procurement of materials, payment of contracts and payment of labour is carried out by the regional support units. All municipalities in Las Segovias, and a growing number in RAAN and RAAS, are now paying the community labour directly from funds transferred from the regional accounts to municipal bank accounts. As capacities increase, the municipalities will also become responsible for the procurement of

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materials and the letting of contracts for the design and construction of structures. From the beginning of phase 2, procurement, both by the regional support units and by the municipalities shall follow national guidelines when the contract holder is a national institution. No funds will be released by the programme for construction unless the pre-conditions in terms of municipal and community contributions have been met. These conditions are fully set out in the project formulation guide for the Component. It should be noted that the community 5% contribution can be made in cash or kind, but the value of all contributions should be clearly stated and quantified. The responsibility for funding maintenance activities rests with the municipality and the communities. The municipality will establish a budget line in its accounts to cover periodic maintenance activities on all infrastructure projects in maintainable condition in the municipalities (regardless of the source of the funding). The community project committees will establish a bank account with the assistance of the municipality, to receive locally raised maintenance funds. For projects executed in one stage, a contribution corresponding to 30% of one year’s routine maintenance budget must be secured before project implementation. For projects executed in two stages, 50% of one year’s routine maintenance budget must be secured before the second stage can commence. Component 3 Procurement of national consultants and contractors to implement the works will be carried out by the implementing organisation. Procedures will be in accordance with Nicaraguan procurement law and tendering procedures, however, some modifications may be introduced as part of the programme. Until the national procurement law has been amended to meet international standards, WB rules on major procurement will be recommended for use. The Royal Danish Embassy will give “no objection” to international consultancies and, in particular cases, these may be directly appointed by the RDE. The responsibility for funding maintenance activities rests with the MTI, EPN and the municipalities, according to the corresponding ownership of the infrastructure. These institutions will establish a budget line in their accounts to cover routine and periodic maintenance activities on all completed projects that are in a maintainable condition (regardless of the source of funding). A satisfactory maintenance plan and a commitment to allocate adequate resources for maintenance will be a precondition for Danida support to any individual spot improvement scheme. Further the release of funds will be conditional on a satisfactory compliance with previous maintenance commitments.

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8. MONITORING, REPORTING, REVIEWS AND EVALUATIONS

8.1 Physical and financial reporting Quarterly financial reports and brief semi-annual progress reports will be submitted to the Steering Committee and the Royal Danish Embassy as background for decision-making in the Steering Committee. The focus will be on main problems and overall progress. Annual reports will be elaborated in accordance with Danida Aid Management Guidelines and will summarise the annual progress, detailing achievements relative to the annual target, explanations for major delays and proposed remedial actions. Decisions by the Steering Committee will also be recorded. The exact format of the reporting system will be reviewed and finalised in the first year of the phase. The annual progress report will include:

• A summary of progress as compared to the original (and revised) targets for all activities in the reporting period compared with the annual plan, including brief explanations of problems and bottlenecks and how these have been resolved.

• Reporting on objective and output indicators as set out in the component

logframe. Special emphasis will be given to the physical indicators for projects execution (km of roads, number of projects etc.). Investments planned in the Annual workplan will be compared with actual outcome achieved.

• Progress on the transfer of responsibilities from the programme to the

counterpart institutions will be compared to plan (e.g. number of municipalities assuming full responsibility for implementation of PAST or FOMAV projects, number of maintenance committees trained etc.).

• Financial progress will be compared to physical progress of the individual

projects. Any significant variances between physical and financial progress will be explained.

• The status of the various consultants contracted to assist in the institutional

support will also be evaluated.

• An overall assessment of progress made towards the achievement of the immediate objectives.

• Proposals for changes and adjustments (including budget reallocations) for

approval by the Steering Committee.

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• An assessment of the development of the national framework during the year.

The national institutional adviser for Component 1 will assist MTI, FOMAV and the CRTs in monitoring the condition of the improved roads as well as the quality of maintenance. The PMS and BMS system, established in MTI during the first phase of the programme, will provide data for overall monitoring of the primary and secondary road network condition. Simplified systems will be developed to track progress with the tertiary network, based on experience in RAAN, RAAS and Las Segovias. Data for financial progress will be provided by the Programme Management Unit in close coordination with the different partners involved. The regional support teams will, in close coordination with the municipalities, maintain records of implementation progress with respect to municipal institutionalisation, physical work done, standards of work, annual maintenance achievements, and the cross cutting targets related to gender, indigenous issues and environmental protection. The cross cutting issues will be additionally assessed by the socio-economic monitoring procedures. 8.2 Socio-economic monitoring The main rationale for the socio-economic monitoring of the programme is to assess, how the impact and results of the programme is supporting the priorities of the Nicaragua counterparts in relation to the overall PRSP objective of poverty reduction. Additionally for the programme management, monitoring is needed to assess the specific socio-economic impact and overall progress of the programme to facilitate the strategic management. Finally, for the daily management of the programme, a more detailed monitoring will be undertaken in order to continuously identify weaknesses in the current approach and suggest improvements and modifications. Therefore monitoring will be established on three different levels, according to the needs of each target group. These different types of monitoring, as well as the corresponding target group, will be specified below. The indicator system and the corresponding reporting are established to reflect these different needs and target groups. The more detailed indicator system for each component is presented in the respective component descriptions, more specifically in the logframes.

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8.2.1 Development objective and main indicators The monitoring of the development objective indicator related to overall poverty reduction is outside the scope of the programme. The monitoring of the national goals for poverty reduction is of national interest and therefore a national responsibility. An overall approach is outlined in the PNDO, though not very specifically defined. The programme will, to the extent possible, link up to this system. At the overall programme level, a monitoring system is in the process of preparation, which includes an attempt to define a “socio-economic development index” which can be seen as an approximate measure for poverty reduction. This monitoring system is however only feasible at project level and will therefore only be implemented in relation to Component 2. As part of Danida’s monitoring requirements, one main target indicator for each component has to be established in order to reflect the effect of the Danida support. In the case of the Transport sector Programme in Nicaragua, sustainability of maintenance is found to be an essential basic indicator for the success of the Programme, due to the fact that without sustainable maintenance of the various transport infrastructure investments, the long term socio-economic impact will be limited. Further, the realization of the planned maintenance is seen as tangible evidence of the capacity developed by the counterparts. The main indicators are: • Programme level: In year 2005, a minimum of 25% of the basic national

network is in maintainable condition, in 2006: 27%, in 2007: 29%, 2008: 32% and in 2009: minimum 35%.

• Component 1: At the beginning of PAST phase 2, a minimum of 75% of the basic network in maintainable condition receives the required annual maintenance. By the end of the phase, a minimum of 90% receives the required annual maintenance.

• Component 2: Minimum 85% of projects implemented with PAST funds in

the three regions receive the required routine and periodic maintenance. • Component 3: Minimum 85% of projects implemented with PAST funds in

the three regions receive the required routine and periodic maintenance. The overall national monitoring of the development objective will have the national institutions as well as the donor society as the target group. The development of the “socio-economic development index” for each region as well as the main indicators will be reported to the steering committee, the CRTs and Danida as part of the annual report.

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8.2.2 Monitoring of immediate objective indicators and outputs. The monitoring of the indicators for immediate objectives and results will be elaborated in order to provide the Steering Committee, the CRTs and the Embassy with the necessary tools for evaluating the effect and general progress of the programme as well as for the individual components. The detailed evaluation of progress will be presented in the annual report according to Danida guidelines. The semi-annual programme report for the Steering Committee and the CRTs will also contain information on progress on the immediate objective indicators as well as financial disbursement, in relation to physical output. 8.2.3 Monitoring of Activities and Annual Operational Plans Additionally, a number of indicators of interest primarily to the programme management unit will be monitored. These fall in two categories: • The data needed to ensure that the day-to-day programme management has all

the information needed to coordinate, follow up, detect eventual problems etc. The frequency of the reporting will depend on the type of indicator, but will typically be monthly or quarterly. Reporting will be submitted in detailed formats already established under phase 1.

• Special impact monitoring relevant to Danida to ensure that good and bad

experiences and lessons learned are collected and processed for internal use in the programme. These activities will be integrated in the annual socio-economic monitoring cycle. This monitoring will be presented in an annual socio-economic monitoring report.

8.3 Reviews and evaluation Programme Reviews will cover all three components of the programme. The Programme Reviews will be undertaken jointly with the Danida’s Technical Advisory Service, Royal Danish Embassy, MTI, FOMAV and representation from the CRT’s on behalf of the municipalities. The Annual Programme Reviews can make recommendations on re-allocations within and between budget lines, and the use of unallocated budget items for new activities. The Reviews can also recommend termination of a component or the programme as a whole if necessary because of lack of results, new developments in the sector or other critical factors. However, the Programme Reviews cannot recommend changes to the programme objectives. The findings of the Reviews will be recorded in a Review Aide Memoire that will be signed by both the Danish and Nicaraguan authorities. The Steering Committee will be responsible for following up on the recommendations contained in the Review Aide Memoire. Technical Reviews will usually be conducted annually to monitor the planning and execution of projects in component 2. Technical Reviews of the two other

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components will be undertaken as required. The Steering Committee will be responsible for the arrangement of all Technical Reviews. After three years, a review will be arranged by the Steering Committee to analyse the general need for support in the transport sector, any need for adjustment of PAST 2, including the provision of technical assistance in the latter stages of phase 2, and the need for a possible PAST phase 3. Evaluation of the component will be at the discretion of the Danida Evaluation Secretariat. However possibilities for joint evaluations covering the whole sector may be considered. 9. ASSESSMENT OF KEY ASSUMPTIONS AND RISKS The key assumptions and risks associated with each component’s Development Objective, Immediate Objectives and Outputs are set out in full in the individual Component descriptions. The most important assumptions, including those of a general programme nature, are summarised below together with an assessment of the degree of risk and the proposed mitigating measures. 9.1 Assumptions and risks for the Development Objectives The development objective of poverty reduction through a general improvement of the socio-economic conditions by reducing transport costs and improving accessibility assumes a stable social, economic and political situation, and stable co-operation policies. The development objectives for the three components are essentially similar, although Component 1 has a countrywide outreach, whereas Components 2 and 3 are restricted in their impact to RAAN, RAAS and Las Segovias. Nicaragua has a recent history of conflicts and has also been heavily affected by natural disasters. Since the end of the civil war, political conflicts have been solved without violence. However, programme implementation may still be adversely affected by the political situation in Nicaragua. The hierarchical structures of political parties have a clearly negative impact on democratic development. The government system is still very centralised, although decentralisation is under heavy debate. The bipartisan composition of the National Assembly and the serious conflicts and deadlocks that exist in it, could lead to significant delays e.g. in budget assignation, in the presentation and subsequent approval of relevant law proposals, as well as for the legalization of CRT’s. Also, the Presidential election in 2006 could potentially disrupt the collaboration with national counterparts as well as the progress towards institutional sustainability. This is because the present strategy depends to a large degree on the commitment and willingness of national counterparts. The elections will naturally lead to the assignment of a new minister, but is also likely to lead to changes in the overall management of the relevant counterpart institutions.

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Although the economic situation in Nicaragua is still difficult, the Government is endeavouring to advance market reforms, to maintain macroeconomic stability and to increase economic growth. The country has recently been assessed to have undertaken the necessary reforms to reach its completion point under the enhanced Heavily Indebted Poor Countries (HIPC) initiative, and is to be granted US$4.5 billion in debt service relief over the next twenty years. The resources thus made available from the government’s budget are to be allocated to fund key pro-poor growth programmes, based on proposals contained in its Strengthened Growth and Poverty Reduction Strategy Paper (PRSP), the National Development Plan (PND) and the Operational National Development Plan 2005-2009 (PNDO). The consequence of this should be a significant increase in the amount of funding available for pro-poor policies and a sound framework to coordinate and unify co-operation policies. The risks associated with these assumptions are thus seen to be acceptable, as activities by the donor community, civil society (through the PRSP process) and complementary Danida programmes are in a good position to bring influence to bear if there is a deviation from the agreed plans and commitments. 9.2 Main assumptions and risks for the Immediate

Objectives A number of assumptions and risks apply to the individual components’ immediate objectives and outputs. These are judged to be acceptable with careful monitoring by the programme, the application of the proposed mitigation measures and the taking of appropriate action if the level of risk increases. The main risk to the success of the programme support is that the conditions for sustainability of the transport infrastructure improvements will not be established. This mainly relates to a political will to “right sizing” the network and introducing the necessary measures to secure the legislative framework and resources required to maintain this network. This risk will thus be described in detail in order to cover all important aspects of the issue. An important prerequisite for sustainability is that the roles and responsibilities for maintenance are clear. This requires a transparent definition of ownership of the different parts of the infrastructure network. Currently, this is not clear in Nicaragua. New legislation is required to define which parts of the network are the responsibility of MTI, the municipalities and the communities. Once this is in place, the resources required to maintain each part of the network can be established. At present, although the Government has stated its objective to decentralise certain responsibilities, it has been slow to act on this. PAST has already contributed positively to this process by demonstrating how mechanisms for involvement of municipalities and communities in transport infrastructure improvement and maintenance can work, and by encouraging the establishment of a functional classification in the MTI. The extent, to which politicians and policy makers at national level have the will to

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embrace these mechanisms for securing sustainability and enshrine changes in ownership and responsibilities in a future road law, requires careful monitoring during PAST phase 2. This may be affected by the national and regional elections due in 2006 which could lead to a period when there is a temporary slowing down of political decision-making, e.g. on legislative reform, but it should not critically undermine the programme. Although a Road Fund (FOMAV) has been established, an adequate flow of resources into the fund has not yet been secured. It is the Government’s intention to introduce a user charge for road maintenance in the form of a levy on fuel. This is a system that has the potential to generate a steady flow of funds in an amount sufficient for adequate maintenance of the existing road network. Similar systems have worked quite well in the other Central American countries. However, the first attempt to introduce the fuel levy in Nicaragua failed as politicians removed the relevant part of the legislation related to the levy from the FOMAV law. Although the Government still intends to introduce this part of the legislation, there is no guarantee that it won’t fail again due to political or other factors such as the current record high price of fuel. Even if it is introduced, there is a high risk that the levy will be set too low and be inadequate for the full actual maintenance requirements, especially with regards to the regional and municipal roads. Compared to the situation at the commencement of PAST phase 1, there is a much greater awareness in MTI and municipalities of this issue. The link between maintenance capacity, particularly regarding the availability of funds for maintenance, and the sustainable network is better appreciated. PAST 2 will reinforce this understanding, in particular by applying strong conditionalities on investments in relation to available maintenance resources, especially in Component 3. Thus, investments for transport infrastructure improvements will not go ahead unless the resources available for maintenance of the existing networks are adequate. The application of this conditionality will serve as a means of monitoring this risk and raising the issue with the national partners and other donors if there is a problem. The sustainability of maintenance is a shared concern of all donors in the transport sector. Any failure of Government to keep to its stated course of action carries the serious threat of a dramatic withdrawal of external support for the sector. Furthermore the debt release of the HIPC is conditioned on the securing of sufficient funds for FOMAV. Consequently, although the risks associated with sustainability of the improved transport infrastructure network are quite serious, the likelihood that the Government will not introduce the necessary measures for sustainability is judged to be acceptable, if the mitigation measures build in the components are properly enforced and closely monitored. A general programme risk is that the transfer of increased management responsibilities to national partners that is planned under phase 2 may lead to implementation problems. The risk is judged acceptable and the design of the programme has taken these risks into account in the strategy developed. Measures that will be in place to mitigate this risk include a transition phase of one year during which the tried and tested procedures of phase 1 will continue to the extent necessary, whilst new systems for phase 2 are established. Further, a clear

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separation of Danida grant funds from other funding will be ensured together with both government and external auditing. The programme design allow for sufficient flexibility such that the rate of transfer of management responsibility, e.g. to municipalities and other counterparts, can be matched to the level of ability and capacity development. One of the consequences of this strategy could be a generally slower rate of implementation but this, in itself, is not considered critical and, moreover, would serve to highlight where there are weaknesses in government systems. Eventually it should lead to a more sustainable development process. 10. GENERAL IMPLEMENTATION PLAN PAST phase 2 is an extension of an existing programme. It is, therefore, expected to start smoothly, basically implementing at full speed from the beginning of the new phase. To maintain momentum and secure that the activities can commence from the very beginning of the phase, several preparatory activities have already started. It has been made clear that these activities are based on the assumption of the Danida Board’s approval of phase 2 of PAST. In order to establish a strategy for the increased transfer of financial management to national partners as soon as possible, the planned financial management consultancy will commence early in the first year of the phase. Component 1 is to a large extent being implemented with the assistance of short-term consultants specialized in the range of activities required for the different areas of the institutional support. In order to start up the principal activities related to the elaboration of a new road law, the formulation of a transport plan as well as the implementation of a road safety study, Terms of Reference have been elaborated for the consultancy services required. These three activities are seen as the top-priority for the component and must be started first in order to avoid bottlenecks in the implementation of the remaining activities. Once formal approval is given to phase 2, potential consultants will be identified in order to start the contracts as soon as possible after the start of the new phase. In relation to component 2, projects for 2005 have already been identified, prioritised and approved by the CRT. Each CRT has elaborated a tentative budget for project implementation in 2005, according to the budget frame established in the draft Component Description for component 2. In component 2, periodic maintenance plans for each municipality covering existing maintainable network have to be presented and a budget allocated before new projects can be implemented. Some preliminary work has been carried out to select and design a limited number of projects under Component 3. This should enable some projects to start in the first year of phase 2. Costs for these preparation activities have been covered under Phase 1. Design and tentative budgets for the Component 3 projects have been elaborated and are in the process of approval by the CRTs.

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Some general programme activities are included in the overall implementation plan. Financial audits will be carried out, as a minimum once a year. For decentralized funds under counterpart administration, semi-annual financial audits will take place until adequate procedures have been established in each municipality or in each counterpart institution. Technical audit will be carried out on an annual basis. In year 3 of the programme, the need for a potential new phase will be considered, and the need for ongoing technical assistance for all 3 components will be reviewed. Detailed implementation plans are included in the respective component descriptions. These plans have been summarised in the general implementation plan Figure 3 below. This plan will be superseded by detailed annual operational plans that will be elaborated in the beginning of each year by the respective counterparts. The Steering committee will be responsible for approving the annual operational plan as well as the corresponding budget. The implementation plan will usually be updated in connection with the joint sector reviews. These are tentatively planned to take place each year, but might be rescheduled according to the estimated need. Figure 3 below shows the overall Programme Implementation Plan. Separate component implementation plans are shown in each component description.

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2004 2005 2006 2007 2008 2009Finalize TSPS and component descriptionApprove TSPS

Component 1: Institutional support analyze legal framework draft proposal Elaborate regulations

Legal framework: Produce new Road Law

Introduce regulationsPlanning and coordination: Prepare 5 year investment plans

Prepare anual Investment planMeeting and elaboration of annual Donor coordination planProject preparation: Revise standards

Train staffProject supervision: Prepare manuals

Train staffTransport Safety Study: Prepare Study and strategy

Safety interventions and campaignsTransfer of seed money to FOMAV

Component 2: Tertiary Transport ImprovementFormalize and train Regional Transport CommitteesSelect and implement projectsCarry out maintenanceComplete cross cutting guidelinesImplement cross cutting guidelinesComponent 3: Secondary Transport ImprovementIdentify and select projectsPilot project: Rio Blanco-Puerto CabezasDesign and award projectsImplement worksCarry out maintenancePrivate sector capacity buildingAll componentsStudy of Management Arrangements for Past 2Annual Operation PlansTechnical AuditFinancial AuditProgramme ReviewAssess need for future TA assistanceEvaluate need for a 3rd phasePreparation of possible Phase 3International Technical AdvisersProgramme Senior AdviserComponent 2 Senior AdviserComponent 3 Adviser

Note: Phase 2 is expected to commence in January 2005. Terms of Reference for Consultancy prepared Ongoing activitiesMilestone Technical Adviser

FIGURE 3: DANIDA TRANSPORT SECTOR PROGRAMME - PHASE 2

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2004 2005 2006 2007 2008 2009Finalize TSPS and component descriptionApprove TSPS

Component 1: Institutional support analyze legal framework draft proposal Elaborate regulations

Legal framework: Produce new Road Law

Introduce regulationsPlanning and coordination: Prepare 5 year investment plans

Prepare anual Investment planMeeting and elaboration of annual Donor coordination planProject preparation: Revise standards

Train staffProject supervision: Prepare manuals

Train staffTransport Safety Study: Prepare Study and strategy

Safety interventions and campaignsTransfer of seed money to FOMAV

Component 2: Tertiary Transport ImprovementFormalize and train Regional Transport CommitteesSelect and implement projectsCarry out maintenanceComplete cross cutting guidelinesImplement cross cutting guidelinesComponent 3: Secondary Transport ImprovementIdentify and select projectsPilot project: Rio Blanco-Puerto CabezasDesign and award projectsImplement worksCarry out maintenancePrivate sector capacity buildingAll componentsStudy of Management Arrangements for Past 2Annual Operation PlansTechnical AuditFinancial AuditProgramme ReviewAssess need for future TA assistanceEvaluate need for a 3rd phasePreparation of possible Phase 3International Technical AdvisersProgramme Senior AdviserComponent 2 Senior AdviserComponent 3 Adviser

Note: Phase 2 is expected to commence in January 2005. Terms of Reference for Consultancy prepared Ongoing activitiesMilestone Technical Adviser

FIGURE 3: DANIDA TRANSPORT SECTOR PROGRAMME - PHASE 2

ANNEX 1: PROGRAMME ORGANOGRAM

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Programme SteeringCommittee

(MTI, FOMAV, CRTs,Embassy)

ProgrammeManagement Unit

Royal DanishEmbassy

MTI

EPN CRTsRegionalAdvisers(national)

FOMAV

Municipalities

NB: dotted lines indicate temporarysupport functions financed by Danida.

PAST PHASE II: PROGRAMME ORGANOGRAM

Communities

Technical Advisers(international &

national)

ANNEX 2: DRAFT TERMS OF REFERENCE FOR STEERING COMMITTEE

Transport Sector Programme Support, Phase 2 (2005-2009)

Draft Terms of Reference for Steering Committee for PAST Phase 2 (Subject to amendment following management study) 1. Background Danida will continue support to the transport sector in Nicaragua through a phase 2 of its Sector Programme Support (PAST 2). There are three components to this support:

• Component 1: Continued institutional support to MTI and FOMAV. • Component 2: Continued support to the improvement of tertiary transport

infrastructure in RAAN, RAAS and Las Segovias. • Component 3: Support to spot improvement of secondary transport

infrastructure in RAAN, RAAS and Las Segovias to address bottlenecks in the system.

Effective strategic decision-making and good coordination between these three components and between the various partners is essential for successful implementation. For this reason, a Steering Committee (SC) will be established. This will be supported by a Programme Management Unit to coordinate and carry out the day to day management of the programme, monitor progress and ensure that the necessary information is collected, analysed and forwarded to the Steering Committee. The SC is the formal mechanism for joint decision-making concerning PAST 2 between the MTI, the Road Fund (FOMAV), the Regional Transport Councils in Las Segovias, RAAN and RAAS, the Governments of the Atlantic Coast (RAAN and RAAS) and the Embassy. 2. Mandate and scope The SC is responsible for overall control of the programme. The SC ensures that the programme is implemented, outputs achieved and funds managed efficiently and effectively, in accordance with the programme document, Government Agreement, and other legal documents. Where deviations from the programme document are considered necessary, the SC is responsible for approving the decisions1. Programme objectives cannot be altered by the SC.

1 It is the responsibility of the Programme Manager of the Programme Management Unit to ensure that the mandate to take the necessary decisions in the SC is provided before the meetings. If decisions in the SC go beyond the limits of authority of the representation defined in the Annual Operational Plan (AOP), the Royal Danish Embassy must obtain the necessary mandate from the Danish Ministry of Foreign Affairs headquarters.

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Transport Sector Programme Support, Phase 2 (2005-2009)

The mandate of the SC includes approval of all planning documents, overall responsibility for monitoring of programme activities and output, monitoring of auditing procedures and results, and decisions regarding major implementation issues such as budget, procurement, technical advisers, short-term consultants, studies, etc. The SC has the responsibility for approving the annual allocation of funds to activities required to deliver the outputs in the case of Component 1 and to the Regional activities in the case of Components 2 and 3. It also has the mandate to reallocate funds between the components, according to performance. In the case of components 2 and 3, reallocation will also depend on the respective implementation and maintenance capacity of the components. The SC will approve annual work plans and monitor progress. All proposals for changes to implementation and management procedures will be submitted to, and approved by, the SC. 3. Composition The Members of the Steering Committee are:

• The Vice Minister of MTI, • The President of FOMAV, • The President of each of the Regional Transport Councils, • A representative from the Danish Embassy.

The appointment of substitutes will be permitted if members are unavoidably absent. Resource persons, who may be asked to participate in the meetings, but without decision-making powers, are:

• Programme Management Unit, • Senior management from MTI and FOMAV, • The national and international Danida advisers at central level, • The three regional advisers, • Representatives from other relevant stakeholders in the Transport Sector.

4. The specific tasks of the SC comprise:

• Approval of an initial action plan for the overall management of the component including agreement on the detailed responsibilities of the SC.

• Approval of major planning documents, annual plans and budgets. • Monitoring of overall progress of the programme with a special focus on

delays, problems and bottlenecks approval of progress and financial reports, decisions on follow-up activities.

• Monitoring of auditing procedures and results approval of the Terms of Reference for the annual audit, ensuring follow-up on recommendations in the annual audit report.

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Transport Sector Programme Support, Phase 2 (2005-2009)

• Monitoring the continued coherence between the programme and sector development.

• Decisions concerning deviations from the programme document. • Approval of Terms of Reference for long-term consultants. • Approval of revised job descriptions for advisers. • Decisions on procurement issues (cf. guidelines for local procurement). • Approval of timing of the sector and programme reviews. • Endorsement of Review Aide Memoires and ensuring follow up.

5. Working procedures

• The Vice Minister for the MTI will chair the SC meetings. • The SC will appoint the staff of the Programme Management Unit. • Decisions are made by consensus between all members of the SC. • The SC meets quarterly, but extraordinary meetings may be called at the

request of any member. • At the end of each SC meeting date for the next meeting will be agreed.

The Programme Manager for the Programme Management Unit will confirm the meetings with at least one week's notice. All documentation for the meetings (plan/budget, reports, proposals for adjustments, etc.) shall be distributed to the members at least one week in advance together with the invitation and a draft agenda.

• The Programme Manager is responsible for drafting the minutes of the SC meetings and distributing these to all participants within two weeks after the meeting. The SC approves the minutes at the next meeting.

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ANNEX 3: PROGRAMME BUDGET

Danida National Danida National Danida National Danida National Danida National Danida National

Comp. 1 1)

1.0 1.0 1.0 1.0 1.0 5.02) 4.8 4.6 4.6 4.0 4.2 22.23) 2.4 1.4 2.4 1.4 2.4 10.04) 0.5 0.5 0.5 0.5 0.5 2.55) 0.5 0.5 0.5 0.5 0.5 2.56) 0.0 0.9 0.8 0.8 0.8 3.3

0.9 0.9 0.9 0.9 0.9 4.510.1 0.0 9.8 0.0 10.7 0.0 9.1 0.0 10.3 0.0 50.0

Comp. 27.0 7.0 7.2 7.6 7.6 36.45.0 6.0 7.2 7.6 7.6 33.45.0 6.0 7.2 7.6 7.6 33.41.0 0.6 0.3 0.1 0.1 2.1

1) 18.0 0.9 19.6 1.0 21.9 1.1 22.9 1.1 22.9 1.1 105.3 5.22) 5.0 0.5 4.7 1.3 4.6 2.3 4.6 3.3 4.9 4.6 23.8 12.04) 4.5 4.5 4.9 4.0 4.0 21.95) 3.9 3.9 3.9 3.5 3.5 18.76) 0.0 3.3 3.4 3.4 3.4 13.5

0.9 0.9 0.0 0.0 0.0 1.832.3 1.4 36.9 2.3 38.7 3.4 38.4 4.4 38.7 5.7 185.0 17.2

Comp. 34.1 4.1 4.4 4.4 17.0

5.0 3.0 4.0 4.3 4.1 20.41.9 3.0 4.0 4.3 4.0 17.2

1) 6.9 0.0 10.1 0.0 12.1 0.0 13.0 0.0 12.5 0.0 54.62) 2.8 0.0 2.8 0.5 2.8 0.5 2.8 0.5 3.5 1.2 14.7 2.75) 0.4 0.4 0.4 0.4 0.4 2.06) 0.0 1.5 1.5 1.5 1.5 6.0

0.9 0.9 0.9 2.711.0 0.0 15.7 0.5 17.7 0.5 17.7 0.5 17.9 1.2 80.0 2.7

7) 0.0 20.0 25.0 25.0 10.0 80.053.4 1.4 82.4 2.8 92.1 3.9 90.2 4.9 76.9 6.9 395.0 19.950.7 1.4 79.7 2.8 90.3 3.9 89.3 4.9 76.0 6.9 386.0 19.9

Infrastructure - RAAS

Total incl. Danida AdvisersTotal excl. Danida Advisers

Total Investments

Investments

Operations & MaintenanceAdministrationBudget MarginDanida AdvisersTotal

Infrastructure - Region I

Infrastructure - RAAN

Unallocated

Technical Support

Budget MarginDanida AdvisersTotal

Administration

Investments - Region I

Operations & Maintenance

Investments - RAASInvestments - RAAN

Total InvestmentsProject Equipment

Investments

Investments

Operations & Maintenance

Total

Overall Programme Support

AdministrationBudget MarginDanida Advisers

Seed money to FOMAV

Technical Support

Table 3A: PAST budget (Million DKK)Total DKK million2005 2006 2007 2008 2009Activity

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ANNEX 4: OUTLINE TERMS OF REFERENCE FOR A STUDY OF THE PROPOSED MANAGEMENT

ARRANGEMENTS

Background Danida has supported the transport sector in Nicaragua since 1999 through a Transport Sector Programme Support (PAST). The first phase is due for completion by the end of 2004. A second phase is due to commence on 1st January 2005 and to be completed by 31st December 2009. During the first phase much of the day to day programme management was carried out by the Danida advisers. In phase 2 there will be a shift to greater management of the programme by the Nicaraguan partners. This will require the development of a strategy for the increased transfer of management responsibilities including financial management. To the maximum extent possible existing systems for management including financial management, in the Nicaraguan partner organisations will be used. Where there are shortcomings with respect to internationally acceptable principles and standards (e.g. Public Sector Accounting Standards – IPSASs), the necessary modification to procedures or capacity development required will be identified. Joint Danish/Nicaraguan management of the programme will be established through a Programme Steering Committee (SC). A programme management unit will ensure that the programme is implemented, outputs achieved and funds managed efficiently and effectively, in accordance with the programme document, Government Agreement, and other legal documents. However, actual implementation will be the responsibility of the relevant partner institutions or departments supported in some case by technical assistance. It is the intention that the Programme Management (PM) Unit will be set up in the early part of PAST 2. The objective of this unit will be to coordinate and carry out the day to day management of the programme, monitor progress and ensure that the necessary information is collected, analysed and forwarded to the Steering Committee, to enable this Committee to effectively carry out its decision-making functions. It is envisaged that The PM unit will be headed by a Programme Manager, who together with other necessary staff, will be appointed by the Steering Committee. The Danida financed international and national advisers will have advisory functions in relation to the unit. Danida will, in addition, finance administrative staff for the unit including a financial controller who will be responsible for the financial inputs to the PM unit and the programme. A financial management and procurement system has been set up during PAST1. Initially, this system will largely be used for PAST 2, but the effort started already in phase 1 of transferring responsibilities for financial management and procurement to the executing institutions, once a given project or activity has been approved in the SC, will be accelerated when it is assessed that capacities do exist to handle the processes. This is foreseen especially for construction contracts in the PAST 2 documents. This will also apply to consultancy contracts as far as

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possible. While such responsibilities at the regional level have been handed over to some municipalities with sufficient capacity, others not yet been covered by PAST need training and practical experience. For these the regional support units will temporarily handle detailed financial management and procurement until sufficient capacity has been developed. At national level some responsibilities regarding procurement and financial management have already been transferred to the national counterparts. However there is a need to evaluate the national capacity and revise the existing procedures. In relation to procurement, a national programme called ETICS under the Office of the President (financed by IDB with co-financing from a number of bilateral donors but not including Denmark) has worked for two years on a reform and modernisation of the Procurement Law and the procurement system at both national and municipal levels. Where appropriate, PAST 2 will collaborate with this programme. This may include financing activities under ETICS aimed at training municipalities in the three programme regions in procurement and contract management in the whole project cycle. . At national level, the Office has already carried out intensive training for some central government departments in the new procurement procedures, including the Ministry of Transport and Infrastructure Before the proposed new management arrangements are fully elaborated and implemented a study is required of the programme management, financial and procurement aspects of PAST phase 2. These Terms of Reference relate to this study. Until this study is completed and new arrangements are agreed, the management arrangements established under PAST phase 1 will continue. Objective The objective of the consultancy services is to assist the PAST2 Steering Committee in establishing a strategy for a steady transfer of management, including financial management, of PAST phase 2 to national authorities. The recommendations should: 1. Indicate how current weaknesses in partner institutions can be addressed and

over what timescale. 2. Elaborate a stepwise strategy for the steady transfer of management

responsibilities. This strategy is expected to be different for different institutions.

3. Define the functions of the Programme Management Unit and recommend the staffing for this Unit including the role of Advisers.

Where appropriate, reference will be made to Danida’s Aid Management Guidelines for Danish bilateral development assistance including the part relating to financial management guidelines5.

5 The guidelines can be downloaded from www.um.dk/danida/amg/

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Scope of Work 1. Review the existing management, procurement and financial procedures in the

relevant implementing authorities. Establish where existing procedures require improvement.

2. With participation from the implementing authorities and other key stakeholders, identify the need for improvements to procedures to strengthen existing systems

3. Establish the roles and responsibilities of the existing staff involved. Assess the need for training and, if necessary, additional staffing to adequately carry out the procedures.

4. Elaborate the role of the PAST 2 Programme Management Unit and recommend the staffing required.

5. Develop job descriptions for the proposed Programme Management Unit staff including the Programme Manager and the Financial Controller.

6. Where necessary, propose modifications to the role and job descriptions of the technical advisers including an exit strategy for these advisers.

7. Assess the need for additional resources and recommend the source of financing following the principle that any Danida contributions should be for inputs of a temporary nature i.e. not continuing beyond the end of PAST phase 2.

8. Develop a draft strategy for discussion with key stakeholders. 9. Hold a workshop of key stakeholders to gather comments and establish a

consensus on the best strategy and list of recommendations. 10. Finalise the proposed strategy and recommendations. Outputs 1. An inception report with preliminary findings (maximum 10 pages) related to

the programme management including the programme management unit, financial and procurements systems and the role of advisers.

2. A draft report with detailed recommendations on the above issues for discussion with key stakeholders (maximum 20 pages plus annexes as necessary)

3. A final report including the comments and conclusions of the stakeholder workshop with recommendations on roles and responsibilities in relation to management, including the role and staffing of the Programme Management Unit, procurement and financial arrangements for PAST phase 2 with an indicative implementation schedule. Draft job descriptions for programme management unit staff and modifications to technical advisers’ job descriptions.

Inputs and Programme A team of two consultants with knowledge and experience of: • Public sector management

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• Public sector accounting procedures at central and municipal levels • Donor assisted programmes including financial procedures A total time input of 15 person-weeks over a 6 month period will be required broken down as follows: • 4 person weeks over a 1 month period – initial discussions and documenting

findings in an inception report that will be discussed with the programme management

• 8 person weeks over a 3 month period – in-depth analysis and development of a strategy for each of the 3 components culminating in a workshop to discuss the main findings.

• 3 person weeks over a 2 month period – documenting the findings in a final report

The assignment is planned to commence within 3 months of the commencement of PAST phase 2.

*******

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ANNEX 5: ENVIRONMENTAL SCREENING NOTE AND ENVIRONMENTAL MANAGEMENT PLAN

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Danida Environmental Screening Note

A: Basic Information Programme title: Transport Sector Programme Support (PAST)

Phase II 2005 - 2009 Sector: Transport Country: Nicaragua Budget (Danida contribution):

395 million DKK

Inception date and duration: 1st January 2005, 5 years Short description of the programme intervention (emphasis on activities with potential environmental impacts): The main objective of the programme is to support the transport sector in Nicaragua through the following interventions: Institutional support to MTI and FOMAV, with particular emphasis on improved planning procedures and sustainability of implemented projects; Support to the improvement of tertiary transport infrastructure in RAAN, RAAS and Las Segovias (Region I) and Support to Spot Improvement of Secondary Transport Infrastructure in RAAN, RAAS and Las Segovias). Further, the programme contains unallocated funds, which potentially may be used for constructing a road Nueva Guinea-Bluefields. If this project is realised, it will receive intensive environmental investigations (all ready an environmental study is under way financed by the World Bank), and be handled accordingly under construction. It should be noted that such a project would be an exception to normal PAST activities. B: Environmental Issues Checklist Will the SPS and/or SPS Component: 6 − Irreversible use of the natural resources in ways that will pre-

empt the use, or potential future use, of those resources for any other purpose?

Yes No x

− Emission and degradation: Cause soil, water and air pollution and are the potential direct and indirect impacts likely to be of major significance?

Yes No x

− Local people and environment: Displace significant numbers of people, indigenous ethnic minorities or other communities? Change the way of life of indigenous peoples and other communities in such a way that it may lead to increased pressure on natural resources?

Yes x No

− Occupational health and safety: Lead to occupational health and safety risks?

Yes No x

− Environmental health: Are there health problems or opportunities from linking environmental opportunities and health?

Yes No x

6 The Screening Checklist is adapted from ‘Environmental Assessment for Sustainable Development’ (Danida, 1999).

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− Policies: Result in policy initiatives, which may affect the environment such as changes in agricultural, water, energy and transport pricing policies?

Yes No x

− Location: Be located in, and (potentially) affect, any environmentally-sensitive areas such as National Parks and other protected areas, important archaeological, cultural and scientific sites, species of plants and animals worthy of protection and other vulnerable environments such as arid and semi-arid lands, wetlands or coastal areas?

Yes x No

− Tenure and Access: Lead to conflicts and/or changes in tenure rights and rights of access or rights of use of natural resources?

Yes No x

All issues with ‘yes’ will have to be addressed separately in an EIA or separately in the ToR for the formulation of the sector program support. Checklist – elaborate on Environmental Opportunities: The GON recognises the need for stronger management of its important environmental resources. Roads in particular can open up access to environmentally rich areas. This can be a major benefit for both the local communities and the national economy. However, these benefits can be reduced or lost if environmental management is weak, leading to over exploitation of natural resources. An environmental policy and action plan has been drawn up after broad consultations within government and civil society. This clarifies the environmental goals of the nation and outlines areas where government intends to take specific environmental action. More specifically, PAST presents various environmental opportunities, in that environmental considerations are included in the capacity development activities at all levels, including support to elaboration of environmental guidelines, manuals and procedures, specific training activities and on-the-job-training in construction of transport infrastructure with labour intensive methods (which are generally considered highly environmentally friendly). Check list – elaborate on the Environmental Risks: The process of constructing and maintaining transport infrastructure can have negative environmental impacts. Thus, ensuring good practice in design and construction to minimize environmental damage forms part of the general sector scope for environmental protection. The PAST 2 interventions are mainly focused on improving existing transport infrastructure, which minimizes the direct environmental impacts. Further, all projects both in component 2 and 3 go through a process of environmental screening and approval in coordination with the The Ministry of Transport and Infrastructure (MTI) and/or the Ministry for Environment and Natural Resources (MARENA). For the few projects identified in, or providing access to, environmentally sensitive areas, specific studies will be carried out as part of the project preparation before approval by the Regional Transport Councils. This relates both to the construction process and to any impact derived from the improved access, e.g. possibilities/risks for increased commercialisation of natural resources. Any necessary mitigation measure will be defined and secured before the project can be executed. The Environmental Unit in the MTI will have a coordinating role to ensure that projects are implemented according to national environmental regulations. C: Institutional Context

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Assessment of the adequacy of the legislation, procedures and capacity in Environmental Management and Assessment in the Sector Concerning the legislation and procedures in the Transport Sector, it is assessed to be satisfactory. At the national level, the capacity is also assessed to be satisfactory. Coordination exists between the relevant units in the MTI and MARENA, and EIA have to be carried out before any major projects on the overall national network can be approved and carried out. At municipal and local level, the capacity to implement and monitor the relevant rules and procedures is highly varied and in some places very weak. Assistance from the programme will thus have to be provided. Sector wide assessments See above D: The next steps Based on the environmental risk assessment what is the environmental categorisation of the programme? Select : A [ ] B [x ] C [ ] Developing the environmental monitoring The MTI has a unit responsible for ensuring environmental monitoring of national projects. Under Component 2 and 3, environmental monitoring forms an integral part of the routinely project activities, both for implementation and follow-up on potential impact. The programme is in the process of elaborating an environmental guideline for project implementation under component 2 and 3; these guidelines will specify the type and frequency of the monitoring. The monitoring will be coordinated closely with the MTI unit, and carried out by the municipalities with the support of the programme. PAST 2 includes support to the developing of the environmental monitoring, through capacity building, training and development of specific tools (e.g. environmental assessment sheets for local use). E: Any other comments F: ‘Environmental Screening Note’ - Sign of: ………………………………………………………. Christian Sorensen Royal Danish Embassy Managua 21.10.04

ENVIRONMENTAL MANAGEMENT FOR THE 3 COMPONENTS OF PAST PHASE II In the following the environmental management for the various components is outlined. It should be noted that the activities executed varies widely, and that the corresponding involvement of national authorities can vary from project to project. This holds particularly true for component 2 and 3. Thus, the Environmental management plans attempt to give an overview of the general procedures to be followed. It should be noted that specific environmental guidelines for Component 2 and 3 are currently under elaboration in cooperation with the national counterparts, to ensure ownership and congruence with national rules. The guidelines will be ready for implementation before the start of the new phase. Abbreviations Used: CRT: Regional Transport Council EPN: National Port Enterprise MARENA: Ministry of Environment and natural resources MTI: Ministry of Transport and Infrastructure TM: Municipal Technician TS: Technical Secretariat UGA: Unit for Environmental Management Environmental Management, Component 1, PAST Phase II. Component 1 is focused on Institutional support to The Ministry of Transport and Infrastructure (MTI) and the Road Maintenance Fund (FOMAV). The implementation of the component in itself will therefore have no direct negative environmental effects, and an environmental management plan is therefore not elaborated. However, in order to promote improved environmental management at the sector level, it is necessary to ensure that the Component integrates environmental considerations in all relevant activities. The component support will therefore include (but not necessarily be limited to):

o Support to the integration of relevant environmental issues in the development of a legal framework for the sector. o Support to the integration of environmental issues in all activities related to the elaboration of transport plans (from elaboration of Terms of

Reference to finalizing the actual plans) o Support to the integration of relevant environmental issues in the strengthening of the institutional capacity of MTI and FOMAV, including

training activities and development of standards for project preparation. o Support to strengthening the specific supervision capacity of MTI and FOMAV, including supervision of compliance with environmental

clauses and mitigation measures.

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Environmental Management Plan Component 2, PAST Phase II Component II includes only small, communal projects implemented with labour intensive methods; usually the improvement of existing infrastructure. This type of projects does not require the elaboration of EIAs according to national standards. Further, the overall national legislation generally does not include this type of minor projects. However, the Programme sees a need to ensure, that even small negative environmental impact should be avoided or mitigated. Further, the programme works in environmentally vulnerable areas, where it is seem as prudent to assess and mitigate negative environmental impact, even if not strictly required by national standards. Authorities marked in parenthesis signify that their involvement may in very rare cases be relevant.

PAST Component 2: Description of Action(s) Required

Individual /unit Responsible

Standards or Guidelines Timing of Action

Authority / Agency

Elaborate Format for Environmental Project Screening

TS of CRT, supported by PAST UGA

At present no national format for systematic environmental screening of minor projects as the PAST component 2 projects exists. It is currently under elaboration in cooperation between PAST and the national counterparts as part of the Programme guidelines. The Format includes both impact derived from construction as well as impact corresponding to improved access, once the project is finalized.

Before initiating new phase

TS

Screen proposed projects TS of CRT (UGA)

Programme guidelines. Each project will be screened according to the above-mentioned format. For any expected negative impact, the corresponding mitigation measures must be convincingly elaborated, if the project is to be selected for presentation to the CRT. Further, when working in or close to vulnerable areas, it may be relevant to consult with UGA and/or MARENA. This will follow national regulations (including “Reglamento de Areas Protegidas” when relevant).

Included in project proposals

CRT (MTI, MARENA)

Elaboration of Environmental Management Plan

MARENA (UGA)

If it is evaluated, that the projects might lead to the exploitation of natural resources, for example timber extraction, the elaboration of an Environmental Management Plan has to be elaborated.

Before implementation

MARENA (MTI)

Include mitigation measures into design and budget

MT supported by PAST (in some cases local consultants).

Programme guidelines. The municipal technician will be responsible for a thorough integration of the mitigation measures, including the control in the cases that design is elaborated by consultants. The mitigation measures also include the necessary requirements to secure traffic safety and avoid accidents, especially under construction. For municipalities with weak capacity, PAST will support this process. Cost must be estimated for the required mitigation measures, and this must be included in the budget.

Design stage Municipality (MTI, MARENA)

Ensure that standard contract design contain satisfactory environmental clauses

Municipality, supported by PAST UGA

Programme Guidelines. Most projects do not include the use of consultants and contractors. However, whenever relevant existing standard documents and formats will be revised to secure that all relevant amendments are done.

Preparation of tender documents

Municipality, MTI

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PAST Component 2: Description of Action(s) Required

Individual /unit Responsible

Standards or Guidelines Timing of Action

Authority / Agency

Incorporate/implement mitigation measures during construction

Supervising Engineer/ TM

Programme guidelines. Construction stage

Municipality

Facilitate HIV/AIDS awareness campaign in workmen’s camps and settlements, when relevant

TM Programme guidelines outline responsibilities in relation to HIV/AIDS prevention activities.

Construction stage

Municipality

Monitor mitigation measures

Supervising engineer / TM

Programme guidelines Construction phase and 3 years after

Municipality (MTI, MARENA)

Assess environmental changes and effects

MT, TS of CRT, (UGA)

Programme guidelines (mandatory for projects where the screening procedure indicates relevance).

3 years after execution

Municipality, CRT, (MTI, MARENA)

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Environmental Management Plan Component 3, PAST Phase II The projects of component 3 vary widely with respect to type, size and owner. Therefore, a number of agencies can be responsible, according to the type and size of the specific project. Further, it must be noted that the vast majority are improvements of existing projects, which according to national law do not require EIAs and the corresponding screening. This also holds true for the smaller projects. However, in these cases the programme adds its own procedures in cooperation with the counterparts, to ensure that no environmental damage is done, neither through construction of effect of improved impact. The component comprises various types of capacity building activities, which will include environmental aspects.

PAST Component 3: Spot Improvements to the Secondary Transport Infrastructure Description of Action(s) Required

Individual /unit Responsible

Standards or Guidelines Timing of Action

Authority / Agency

Elaborate Format for Environmental Project Screening

TS of CRT, UGA, supported by PAST

The national system does not include this type of format for smaller projects improving existing structures in the secondary network. A format is therefore currently under elaboration in cooperation between national counterparts and PAST. This will properly be based on the World Banks Guide for Evaluation of Environmental and Social Impact of projects, which divides the projects in 3 groups according to the estimated risk. The format will be integrated in the environmental guidelines for the programme.

Before initiating new phase

TS

Screen proposed projects

Technical Secretariat of CRT, (with approval of UGA when relevant)

Each project will be screened according to the above-mentioned format. For any expected negative impact, the corresponding mitigation measures must be convincingly elaborated, if the project is to be selected for presentation to the CRT. Further, when working in or close to vulnerable areas, it may be relevant to consult with UGA and/or MARENA. This will follow national regulations (including “Reglamento de Areas Protegidas” when relevant). The vast majority of PAST projects are expected to be in the category of insignificant or low environmental impact, where no EAI is needed, and national environmental authorities do not need to be consulted. Where no national regulation applies, programme guidelines will be followed.

Before presentation of project proposals

CRT (MTI, EPN, MARENA)

Carry out EIA where required by National Guidelines

MARENA Relevant owner, Local or international consultants

An EIA is only required in connection with construction of trunk roads, which fall outside the scope of the programme. However major aquatic structures like wharfs, might need special attention. In the rare case, that an EIA is required, it will follow the law 45-94, paragraph 5, under MARENA jurisdiction. Where national rules do not require EIAs, the abovementioned screening standard will be used. The programme guidelines will define the overall responsibilities.

During Design MARENA MTI, EPN, Municipality

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PAST Component 3: Spot Improvements to the Secondary Transport Infrastructure Description of Action(s) Required

Individual /unit Responsible

Standards or Guidelines Timing of Action

Authority / Agency

Include mitigation measures and cost into design

Local or international consultants, infrastructure owner

Programme guidelines. The responsible owner will be responsible for a thorough integration of the mitigation measures, including the control in the cases that design is elaborated by consultants. The mitigation measures also include the necessary requirements to secure traffic safety and avoid accidents, both under construction and once the project is finalized. For municipalities with weak capacity, PAST will support this process. Cost must be estimated for the required mitigation measures, and these must be included in the total budget for the project.

Design stage Municipality, MTI, EPN, (MARENA)

Ensure that standard contract design contain satisfactory environmental clauses

Infrastructure owner, supported by PAST UGA

Programme guidelines. Standard documents and formats exist in a number of areas but may need amendments. Where relevant, the amendments will be realized under the responsibility of the technical division of the owner, supported by the programme.

Preparation of tender documents

Municipality, MTI, EPN, (MARENA)

Incorporate/ implement mitigation measures during construction

Supervising Engineer; Local or international consultant; local contractors

For projects that require EIAs, the EIA include a specific “Environmental and social management plan” (PMAS). For low impact projects without EIAs, the programme guidelines will specify responsibilities in connection to the incorporation of mitigation measures.

Construction stage

Municipality, MTI, EPN

Facilitate HIV/AIDS awareness campaign in workmen’s camps and settlements, when relevant

Local contractor For projects that require EIAs, the corresponding PMAS include health issues, though at present not specifically HIV/AIDS. In other types of projects, no such provisions are found according to the national system. In these cases, the programme guidelines outline responsibilities in relation to HIV/AIDS prevention activities.

Construction stage

Municipality, MTI, EPN, PAST

Monitor mitigation measures

Supervising engineer; Local or international consultant; local contractors

For projects that require EIAs, the corresponding PMAS include a plan for “Environmental Follow up and Monitoring” (Plan de Seguimiento, Monitoreo y Vigilancia Ambiental). For projects that do not require EIAs, the programme guidelines specify the responsibilities in relation to this monitoring.

During construction and defects liability period

TM, UGA/MTI, EPN, MARENA

Assess environmental changes and effects

Municipal Technician, TS of CRT, UGA, EPN

For bigger projects, the national system of ex-post evaluations (“Auditorias Ambientales”) will be used. For other projects, the programme guidelines will specify the overall responsibilities for environmental monitoring.

3 years after execution

CRT, MTI, EPN, MARENA

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