Documentof The WorldBank FOR OFFICIAL USEONLY ReportNo: 36158-MD PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHE AMOUNT OFSDR2.8 MILLION (US$4 MILLIONEQUIVALENT) AND A PROPOSEDGRANT INTHE AMOUNT OFSDR2.8 MILLION (US$4 MILLIONEQUIVALENT) TO THE REPUBLICOFMOLDOVA FORAN AVIAN INFLUENZA CONTROLAND HUMANPANDEMICPREPAREDNESSAND RESPONSE(AIHP) PROJECT AS PART OFTHE GLOBAL PROGRAMFORAVIAN INFLUENZA(GPAI) May 5,2006 EnvironmentallyandSociallySustainableDevelopmentSector Unit South EastEuropeCountryUnit Europeand CentralAsia Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange RateEffectiveApril 31 2006) Currency Unit = MoldovanLeu MDL13.02 = US$1 USs1.4286 = SDR 1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Loan CAMIB Central AgriculturalMarketing InformationBureau CAPMU Consolidated Agricultural Project ManagementUnit CDC Center for Disease Control ECA Europe & Central Asia Region EU EuropeanUnion FM Financial Management IFWFMR Interimun-auditedFinancialReportsFinancial ManagementReport GPAI Global Program for AvianInfluenza andHumanPandemicPreparednessand Response HPNI Highly Pathogenic Avian Influenza H5N1 InfluenzaA virus IDA International Development Association ISA InternationalStandards on Auditing MAFI MinistryofAgriculture andFoodIndustry MDL MoldovanLeu MHSP Ministry o fHealthand Social Protection NCB National Competitive Bidding RCVD Republican Center of VeterinaryDiagnosis PHRD (Japan) Policy & HumanResources Development POM Project OperationsManual RISP I First Rural Investment and Services Project SANCO EuropeanCommission Health& ConsumerProtection Directorate-General SIL StandardInvestmentLoan SOE Statement of Expenditures SPMP Social Protection Management Project UNICEF UnitedNations Children's Fund USAID UnitedStates Agency for International Development WHO World HealthOrganization Vice President: Shigeo Katsu Country ManagerDirector: PaulBermingham Sector Manager: Benoit Blare1 Task Team Leader: Anatol Gobjila MOLDOVA Avian InfluenzaControlandHumanPandemicPreparedness& ResponseProject CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1. Country and sector issues.................................................................................................... 1 2. Rationale for Bank involvement......................................................................................... 3 3. Higherlevel objectives to which the project contributes .................................................... 3 B . PROJECT DESCRIPTION ................................................................................................. 3 1. Lendinginstrument............................................................................................................. 3 2. Project objective and phases............................................................................................... 4 3. Project development objective and key indicators.............................................................. 4 4. Project components ............................................................................................................. 5 5. Lessons learned andreflected inthe project design............................................................ 8 6. Alternatives considered and reasons for rejection .............................................................. 8 C. IMPLEMENTATION .......................................................................................................... 9 1. Partnership arrangements (if applicable) ............................................................................ 9 2. Institutional and implementation arrangements.................................................................. 9 3. Monitoring and evaluation o f outcomes/results ................................................................ 10 4. Sustainability..................................................................................................................... * 10 I . 5. Critical risks andpossible controversial aspects............................................................... 10 6. Credit/grant conditions and covenants.............................................................................. 11 D. APPRAISAL SUMMARY ................................................................................................. 11 1. Economic and financial analyses...................................................................................... 11 2. Technical........................................................................................................................... 12 3. Fiduciary........................................................................................................................... 12 4. Social................................................................................................................................. 12 5. Environment...................................................................................................................... 13 6. Safeguard policies ............................................................................................................. 13 7. Policy Exceptions and Readiness...................................................................................... 13 Annex 1: Country and Sector or Project Background ............................................................ 14 Annex 2: Major RelatedProjects Financed by the Bank and/or other Agencies .................17 Annex 3: Results Framework and Monitoring ........................................................................ 19 Annex 4: Detailed Project Description ...................................................................................... 24 Annex 5: Project Costs and Financing ...................................................................................... 29 Annex 6: Implementation Arrangements ................................................................................. 31 Annex 7: Financial Management and DisbursementArrangements ..................................... 32 Annex 8: Procurement Arrangements ...................................................................................... 36 Annex 9: Economic and FinancialAnalysis ............................................................................. 45 Annex 10: SafeguardPolicy Issues ............................................................................................ 48 Annex 11: Project Preparation and Supervision ..................................................................... 49 Annex 12: Documents inthe Project File ................................................................................. 50 Annex 13: Statement of Loans and @redits .............................................................................. 51 Annex 14: Country at a Glance ................................................................................................. 52 Annex 15: Map (IBRD 33448) ................................................................................................... 53 MOLDOVA AVIANINFLUENZACONTROL & HUMANPANDEMIC PREPAREDNESS & RESPONSE PROJECT PROJECT APPRAISAL DOCUMENT EUROPE AND CENTRAL ASIA ECSSD Date: May 5,2006 Team Leader: Anatol Gobjila Country Director: Paul G. Bermingham Sectors: General agriculture, fishing and Sector Managermirector: Benoit PaulBlare1 forestry sector (5O%);Health (50%) Themes: Naturaldisaster management (P);Other communicable diseases (P);Rural policies andinstitutions (S);Other environment andnatural resourcesmanagement(S) Project ID: PO99841 Environmental screening category: Partial Assessment LendingInstrument: Emergency Recovery Loan [ ] Loan [XI Credit [XI Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (uS$m.): 8.00 Proposedterms: U S 4.00 million on standardIDA terms o f40 years maturityincluding 10years grace; andUS4.00 million on grant terms not subject to repayment. DEVELOPMENT (USAID) EC: EUROPEANCOMMISSION 0.60 0.00 0.60 JAPAN: MINISTRY OF FINANCE - 0.50 0.00 0.50 PHRD GRANTS Financing Gap 0.40 0.00 0.40 Total: 10.60 0.00 10.60 Borrower: Republic o fMoldova Responsible Agency: Ministry o fHealth & Social Protection 2, V. Alecsandri Street Chisinau Moldova Ministry o fAgriculture & Food Industry 162 Stefan cel Mare Street, Office 416 Chisinau Moldova ND-2004 Project implementation period: Start September 15,2006 End: December 31,2008 Expected effectiveness date: September 1,2006 Expected closing date: December 31,2008 Does the project depart from the CAS incontent or other significant respects? Re$ PAD A.3 [ ]Yes [XINO Does the project require any exceptions from Bankpolicies? Re$ PAD D.7 [ ]Yes [XINO Have these been approvedby Bank management? [[ ]Yes [XINO ]Yes [ IN0 Is approval for any policy exception sought from the Board? Does the project include any critical risks rated "substantial" or "high"? Re$ PAD C.5 [ ]Yes [XINO Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ] N o Project development objective Re$ PAD B.2, Technical Annex 3 The overall objective ofthe Project is to minimize the threat posedto humans byHighly Pathogenic Avian Influenza (HPAI) andother infectious diseases that originate inanimals. To achieve this, the Project will conduct surveillance for outbreaks o f such diseases, prepare for outbreaks, and act to control outbreaks among humans and animals. Project description [one-sentence summary of each component] Re$ PAD B.3.a, Technical Annex 4 Component 1:Animal Health. The component supports government surveillance o fthe H P A I andother diseasesbyprocurement o fvital laboratory equipment for identifying viruses and through training o f technicians. Moreover, it strengthens HPAIcontrol programs through training andthrough procurement of special equipment for culling birds. To encourage reporting of sick animals, the component establishes and contributes to a Compensation Fundfor farmers whose poultry are culled Component 2: Humanhealth. This component strengthens the health system's response capacity through investments in laboratory equipment for identifyngviral infections, equipment for intensive care units, training, andpotentially, anti-viral medications and influenza vaccines. Component 3:Public Awareness & Information. This component supports information and communication activities to increase public understanding o f HPAI and to promote commitment and cooperation by civil society, the private sector, and government. Component 4: Implementation Support and Monitoring & Evaluation. This component supports project management, monitoring, and evaluation. Which safeguard policies are triggered, ifany? Re$ PAD D.6, Technical Annex 10 The only relevant safeguard policy is the Environmental Assessment. The Project is processed under emergency procedures and i s assessedas a B-category project. The Environmental Management Plan, covering both animal and humanhealth activities, will be preparedbefore implementation and then implementedwith support from the Project. Disbursement conditions are included inthe Financing Agreement to ensure that expenditures for activities which are to be coveredby an EMP are not disbursed before an EMP satisfactory to the Association has been issued (see below). Significant, non-standard conditions, if any, for: Re$ PAD C.6 Boardpresentation: There are no non-standard conditions. This is an emergency credit. Effectiveness Conditions: 1. Adoption o f a Project Operations Manual satisfactory to IDA Disbursement Conditions: 1.For Component I-Animal Health, preparationo f anEnvironmental Management Plan satisfactory to IDA; 2. For Component I-Animal Health, Sub-Component 1C, establishment o f a Compensation Fundinaccordance with criteria andprocedures set forth inthe Operational Manualandthe 1Recipient's legislation. Covenants applicable to project implementation: A. STRATEGICCONTEXT AND RATIONALE 1. Country and sector issues Emergence o f Avian Influenza. Outbreaks o f Highly Pathogenic Avian Influenza (HPAI) began in several Southeast Asian countries in 2003 and spread to Europe in 2005. Significantly for Moldova, outbreaks in the neighboring Danube delta region o f Romania and in the Crimea peninsula o f the Ukraine in 2005 obliged governments to cull (kill) poultry. New outbreaks o f Avian Influenza were registered in the Danube delta of Romania as recently as February 2006. To date, over 140million domestic poultry, in several continents, have either diedor been culled. Economic losses to the Asian poultry sector alone total around $10 billion. Past and potential infection o f humans. The World Health Organization (WHO) reports that a world-wide total o f 186 people contracted HPAI and 105 have died. The increase in infection raises concern that the ,viruscould mutate inways that favor human to human transmission. The WHO warns that the subsequent pandemic could have devastating effects on human health and livelihoods. The pandemic o f 1918 killed around 50 million people in eighteen months, with peak mortality rates occurring in people aged 20-45 years. The pandemics o f 1957 and 1958 were milder, butmany countries experienced strains on their health care systems. Ifapandemicweretoappearagain,airtravelwouldspreadthenewvirusanddecreasethetime available for preparing interventions. The Center for Disease Control (CDC) estimates 2 to 7.4 million deaths world-wide. Simulation o f a `mild-case' pandemic at the Lowy Institute o f Australia National University predicts loss o f 1.4 million people and o f US$ 330 billion o f world GDP while simulation o f an `ultra-case' scenario finds loss o f 142 million people and US$ 4.4 trillion. The likelihood of such scenarios i s highly uncertain. Still, the Project acts to strengthen the animal and humanhealth systems to addressthis risk to humans. International response. In November 2005, concerned governments, technical agencies, and donors met in Geneva to plan an international response to the risks that Avian Influenza will harm human health and cause large-scale economic losses. In January 12, 2006, the World Bank's Board of Directors approved up to $US 500 million in financing for the Global Program for Avian Influenza (GPAI) that will assist eligible countries. The GPAIis an Adapted Program Loan (AF'L) that operates horizontally, across countries. Also in January, governments and donors met inBeijing, China and pledged $US 1.9 billion to the fight against Avian Influenza. Government restlonse. The Government o f Moldovahas organized emergency teams, at both the local and national levels, to respond to any outbreak o f Avian Influenza. Importantly, the Government o f Moldova designed and enacted a National Contingency Plan for Avian Influenza, a National Preparedness Plan for Human Influenza Pandemic and a Republican Action Program on Avian FluProphylaxis on the Territory of Moldova. The Bank reviewed the plans and these appear adequate and inline with recommendations of the World Organization for Animal Health, the Food and Agriculture Organization, and the WHO. Nevertheless, the Bank recommends further strengthening of the plans. The EU TACIS Program in Moldova will support such strengthening on the animal health side, within a dedicated activity under its Project for the Development o f Animal Health and Food Safety Systems for the Control o f Major Epizootic 1 Diseases. On the human health side, the WHO will provide the expertise to review the contingency documents. Both activities will be done incoordination with the proposed Project. State o f the poultry sector. The poultry sector inMoldova represents circa 80% o f the livestock and poultry population, at roughly 18 million heads (as o f September 2005). Poultry meat is a nutrition staple generally, but more importantly, it i s so inrural areas where poverty incidence is high. Fourteenmillionbirds are owned byhouseholds (backyard poultry) and small commercial farmers. The number o f backyard poultry i s highly variable, with peak season (summer and early fall) population reaching approximately 20 million birds. Backyard farming patterns are characterized by unsafe bio management practices, such as maintenance o f multiple species in confined space and free range roaming for grazing. The country's commercial poultry industry is characterized by the predominance o f 5 large producers. Since independence, commercial poultry has suffered a severe drop inoutput, but has been on a strong rebound since 2002, with an average output (meat and eggs) growth o f 10%. Adequate bio-safety standards are enforced at all commercialproducers. State o f the animal health system. The national system is being transformed in many aspects. Moldova has set out to meet the animal health and food safety requirements for export o f livestock and meat and dairy products to the European Union (EU). According to a recent EU assessment, Moldova is expected to meet the requirements by the end o f 2007. A new Veterinary Law i s expected to be adopted later this year and to further transform the system. The new law favors private sector provision o f veterinary services and limits the size o f public services. Many o f the 2,500 veterinarians inpublic service will probably shiA to private practice. Under the new law, the National Agency for Sanitary Veterinary Service and Safety o f Animal OriginProducts will administer the public system, including the RepublicanCenter o f Veterinary Diagnosis (RCVD) and its two satellite laboratories. The EUFood Security Project rehabilitated infrastructure and funded equipment to help the R C V D laboratory identify viruses in livestock. This is a step toward renewing veterinary diagnostic capacity in Moldova, following a long period without investment. Nevertheless, assessment by the World Bank finds that laboratory testing capacity and training indisease control and field services remain areas for improvement. State o f the human health system. The Ministry o f Health and Social Protection is responsible for health care planning and regulation. However, most health care providers are directly accountable to their rayon (local) administration. Each Rayon Health Authority, led by a chief doctor, is composed o fthe primary and secondary providers. The public health system has been improving since the late 1990s. Public financing o f health care increased significantly from 2004 and reached 4.7% o f GDP in 2005. But per capita spending remains low relative to the region, at US$ 25. The Government focuses on retraining o f primary care doctors and equipment in health centers -and has achieved good geographical coverage o f primary care. As in the animal health sector, the Government lacked the fiscal space necessary for spending on healthcare technology over the past 15 years, and most equipment and facilities are inurgent need o fupgrading andreplacement. 2 2. Rationale for Bank involvement A Public Good. Prevention and containment of infectious diseases such as HPAI are public goods. Households and firms face little incentive to invest in prevention and containment that benefit others. Yet much o f the world is at risk o f a spread o f the infection, so the world as a whole faces a powerful incentive to invest inprevention and containment, hence the rationale for World Bankinvolvement inthe fight against HPAI. Rapid Response. Inview o f the potential risks, the Bank made every effort to speedpreparation. Following a standard preparation cycle would have enhanced technical planning and preparedness for implementation. Yet this would have left Moldova without the financial resources to respond to a highlyprobable outbreak o f Avian Influenza and induced greater risk to human health and greater economic risk. This rapid response necessarily implies somewhat greater implementationrisks and a degree o f flexibility inthe project design. Role o f the Bank. The role o f the Bank inMoldova, with respect to HPAI, is to mobilize funds andtechnical expertise andto buildpartnerships with technical agencies and donors. A technical team from the WHO joined the Project Team and took the lead in identifying human health activities. The FA0 and OIE are expected to contribute with technical expertise to the implementation o f the proposed Project. The UNICEF is leading the technical work on communications. Importantly, the US Agency for International Development (USAID) and the EUsupported FoodSecurityProject arepartners infundingthe fight against HPAIinMoldova. 3. Higher level objectives to which the project contributes Achieving the objectives o f the Project will lower the economic and social burden o f disease in Moldova- all while lowering health and economic risks to neighboring countries. B. PROJECT DESCRIPTION 1. Lendinginstrument The Proiect. The proposed Project is a Standard Investment Loan (SIL), financed through the International Development Association (IDA). It is 50% credit on IDA terms, and 50% grant. Table B.1.1. MOLDOVA: Sourcesof Financing of the Financing o f overall Project. The Avian Influenza Project and the Financing Gap proposed IDA Financing is the (inthousands ofU S dollars) largest source o f financing o f an Project Total $10,600 overall Project o f US$ 10.6 IDAFinancing $8,000 million (see Table B1.l and JapanesePHRDGrant $500 Annex Table 5.2 for further EuropeanUnion (Multi-donor Trust Fund) $600 details). With agreement o f the U S Agency for Intemationl Development $350 Government, the Bank will GovernmentofMoldova $750 cancel SDR 0.7 million (US$1 Financing Gap @ $400 million equivalent) from the SPMP (credit number 32610), Source: World Bank. 21The,Multi-donor Trust Fund, EU-supported Food Security Project, USAID, and UNICEFmay finance part of the Gap. 3 thereby freeing this amount to the country's overall IDA envelope, in order to make USD$8 million available to the IDA Financingo f the proposed Project. There i s a financing gap o f US$400 thousand. However, the EUand USAID appear likely to offer additional financing and there is potential for further support from the Multi-donor Trust Fund. Hence, the Project is likely to befully funded. 2. Project objective and phases. GPAI. The Project is part o f the "Global Program for Avian Influenza Control and Human Pandemic Preparedness and Response" (Report no. 34386). This Project Appraisal Document is ineffect a Technical Annex to the GPAIdocument. The GPAIdocument sets forth criteria for countries that seek financing. Country Eligibility Criteria under the GPAI. Moldova meets the criteria set in the GPAI document for a "country at risk": "Countries at risk, with no outbreaks or at an early stage o f an outbreak, will need to demonstrate governmental commitment to addressing the situation and have in place an appropriate plan for early detection and rapid response, including implementation and monitoring arrangements that the international agencies and donor community, including the Bank, could support." To date, Moldova has not suffered an outbreak o f Avian Influenza, though it is at significant risk, since two nations on its borders, Ukraine and Romania, suffered outbreaks. Moreover, the Government demonstrated its commitment to the fight against Avian Influenza through policy statements, through preparation o f formal plans, and through expenditure and commitment o f funds from the national budget. [Please note that the first two criteria relate to: (i) countries in endemic situations with new human infections detected; and (ii)countries with new infections among poultry, but not humans. At the time of appraisal Moldova does not fall in either category. The fourth and final criteria relates to countries with very low income levels and very low capacity circumstances, including LICUS countries, for which special criteria and waivers would apply if a full-blown human pandemic were to materialize, to ensure that assistance would be available if and when needed, even if the country itself would hardly be able to generate or mobilize any effective AI response, to safeguard the global public good nature o f the global Avian Influenza objective.] 3. Project development objective and key indicators The overall objective o f the Project i s to minimize the threat posed to humans by HPAI. To achieve this, the Project will support surveillance for outbreaks o f such diseases, preparation for outbreaks, and control o f outbreaks among humans and animals. The outcome indicators are as follows: 4 Ifthere is anoutbreak ofHPAIamongpoultry following implementation, then ... A Moldovan government laboratory identifies the presence o fHPAI; The Government culls birds at the infection point and establishes a protection zone, with participation o f local governments and the population; and Compensates small farmers for culled birds. .. If ispoultrytohumaninfectionfollowingimplementation;then there A Moldovangovernment laboratory identifies the presence o fHPAI; Patients are tranported safely andhospitalized inprotectedrooms. Patients are provided with adequate HPAIrelevanttreatment. . With regard to intermediateoutputs, the key indicators are as follows: .. The Moldovangovernment: Plans for each stage o f response to an outbreak o f HPAIand conducts simulation exercises; Procures, delivers, and trains personnel inuse o f testing equipment, protective clothing, and other equipment andmaterials; Conducts a public awareness and information campaign on HPAI. 4. Projectcomponents Component 1: Animal Health (The total size for this component is US$ 3.6 million; o f which US$ 2.85 million i s financed by IDA). Currently, the component does not include activities related to backyard poultry restructuring, due to lack o f identified funding. The Government expressed interest in implementing such activities if additional funding were to become available. Sub-component LA: Animal disease surveillance & diagnosis. The sub-component strengthens the RCVD and its two regional satellite laboratories. The key investments are in essential equipment for testing for the presence o f HPAI in animals, for consumables and reagents. Technical assistance focuses on buildinghuman resources inthe use o f database programs (including the global information system) and in the analysis o f data to support decisions on prevention and control o f animal diseases. To develop an efficient disease information system, the sub-component supports training on collection and analysis o f epidemiological data and on risk assessments. Project- supported technical assistance builds institutional capacity for serology and virology tests for the disease. These technical assistance and training activities are to be financed largely with proceeds o f the Japanese PHRD Grant (US$250,000). Sub-component 1.B: Animal HPAI control and outbreak containment. This sub- component supports actions to contain any outbreak o f HPAI, starting with culling o f infected and at-risk poultry and then moving to disposal o f their carcasses in a bio-secure and environmentally acceptable manner. Moreover, the sub-component promotes bio-security at commercial poultry farms and invests in control o f movement o f birds and products that may 5 be infected. The sub-component trains and equips staff and external workers, and delivers personal protective clothing. Inaddition, it supports technical assistance to review, assess, and if necessary recommend improvements in the Government's contingency plans for HPAI preparedness and response. Sub-componentl.C: CompensationFund. The purpose ofthe Fundisto encourage farmers to report possible outbreaks o f Avian Influenza. Inthe absence o f a Fund, many small farmers will not report sick poultry because o f the potential loss from culling. There are further reasonsnot to report: small farmers don't want to cause their neighbors to lose poultry to culling and want to avoid damaging the commercial reputation o f their town and o f their poultry industry. The activities o f the Public Awareness and Information component will help address farmers' concerns. But to effectively encourage reporting, a Compensation Fundmust reimburse the cost o f birds culled. To respond quickly, it should have enough cash available to reimburse a substantial part o f the cost o f the several isolated outbreaks o f Avian Influenza. It does not seem possible to predict the size o f an initial outbreak. Inthe absence o f a precise forecast, the Bank recommends establishment o f a fund with initial financing o f $1.5 million. This would reimburse farmers for nearly 500,000 conventional birds, or about 3.5% o f the national stock o f poultry on household farms (see Annex 4). Compensation to large commercial poultry producers i s not envisaged underthe present scheme. Failure to budget for compensation could leadto failure to pay toward the start o f an outbreak, so that farmers lose any incentive to report. Therefore, the Government o fMoldova agreedto establish andcontribute to the proposed Fund. The Bank proposes that, in valuing losses, the Commissions apply recent farm-gate prices for each type o f chicken (hen, broiler), roosters, turkeys, geese, and ducks (see Table in Annex 4). The Compensation Fund would apply this reference price, as opposed to a current price, since market prices for chicken would probably collapse during culling. Furthermore, the Compensation Fund refunds 75% o f the assessed market value, as recommended by FAO, to dissuade smugglingo fpoultry from areas not affectedby HPAI(see Annex 4). The Bank suggeststhat the Ministry o f Agriculture and Food Industry manage the Compensation Fund, with assistance from the Consolidated Agricultural Project Management Unit (CAPMU). Under the proposed arrangement, a local Extraordinary Anti-Epidemic Commission, organized bythe Ministry's State Veterinary Inspectorate, values the loss o f culled birds at each farm, signs a declaration o f loss, and issues a receipt to the farmer. The CAPMU validates declarations o f losses and pay Primarias (local mayoralties), who will pay farmers. Detailed operational and financial management arrangements for operating the Compensation Fund will be prescribed in the Project Operational Manual. Annex 7 elaborates on financial management aspects o f the Fund. Component 2: Human Health (The total size o f this component is US$ 3.7 million, o f which US$2.95 million i s financed by IDA). 6 The stock o f medical equipment deteriorated over past decades because o f lack o f spending on rehabilitation and investment. The focus o f the human health component i s therefore on procurement and training inuse o fkey equipment. Sub-component2.A: Human health capacity building. The sub-component brings technical assistance and trains government staff in epidemiology at the national and rayon level. It also procures epidemiological surveillance software and trains staff in its use. Importantly, it supports training in crisis preparedness and management. Moreover, it supports assessment & planning, and training in the information and telecom system. Finally, the sub-component supports review and update of the regulatory system and development o f guides for use o f personal preparedness equipment. Training and capacity building activities are to be financed through the proceeds o fthe Japanese PHRD Grant (US$lOO,OOO). Sub-component 2.B: Human HPAI testing. At present, the Ministry o f Health and Social Protection cannot test for the presence o f HPAI in humans. Therefore, this sub-component procures key testing equipment for the National Laboratory for Viral Respiratory Diseases, which is the only viral laboratory in Moldova. The lab's personnel have a good quality professional background and can learnto use new equipment quickly. Sub-component2.C: Human health system response. When preventive health measures fail, patients are hospitalized in isolation rooms. The sub-component procures equipment for the intensive care unit(s) o f designated hospitals. Furthermore, the sub-component p.urchasesWHO accredited influenza kits (including vaccines) and purchases Oseltamvir (Tamiflu), to increase the national stockpile. Component 3: Public Informationand Awareness. (The total size o f this component is US$ 1.3, o f which US$ 0.45 is financed by IDA). Institutional capacity building and training needs are to be covered from the Japanese PHRD Grant (US$150,000). The component implements a three-stage strategic communication plan: 1. A pre-epidemic campaign to promote health and safe behaviors to reduce risks to children, families, households and communities; and to promote responsible media .. reporting to avoid panic andmisinformation. 11. An intensive communication campaign during the pandemic alert, to begin immediately 111. Post epidemic communication support to promote recovery. ... ifandwhenhumantransmissionisconfirmed. Component4: Implementationsupport and monitoring& evaluation. (The total size o f this component is US$0.55 million, which is all financed by IDA). This component provides technical and financial support for project management, implementation, andmonitoring and evaluation. Inorder to increase Government ownership and ensure sustainability after the closing date o f the Project, measures will be taken to buildcapacity of the Implementation Agencies to implement the proposed Project. Therefore, the component provides support for strengthening implementation and monitoring capacity o f the Ministry o f Agriculture and Food Industry and the Ministry o f Health and Social Protection, by financing 7 technical assistance, including auditing services, and incremental operating costs and monitoring andevaluationactivities. In addition, this component funds training in project monitoring and evaluation at all administrative levels, and development of an action plan for monitoring & evaluations. It conducts baseline studies, on-going participatory monitoring and evaluations, and a final project evaluation. Specific surveys may be conducted to obtain data for this purpose. Project evaluation includes both quantitative and qualitative aspects and be conducted on a yearly basis. Unallocatedfunds. The risks of under-fundingo f a subcomponent are highbecause the volume o f humancases and of poultry culled are unpredictable. Therefore the costs o f medications and hospital care, as well as the costs of disposal o f poultry carcasses and compensation are unpredictable. Responding to larger than anticipated costs requires flexibility. To address this, the Project includes a largeunallocated component o f $US 1.45 million. 5. Lessonslearnedandreflectedinthe projectdesign The Project draws from lessons learned in the Vietnam Avian Influenza Emergency Recovery Project, which has been effective for more than a year, from the recent Kyrgyz Republic Avian Influenza Control and Human Preparedness and Response Project, as well as from experience with the multi-country programto fight HIV-AIDS. One o f the key lessons is that speed o f response is important inpublic health emergencies, where prevention i s more humane and cost-effective than ex-post treatment and mitigation. This is reflected inthe rapid identification and appraisal. Inthe Vietnam project, the country's preparedness was a key factor. Like Vietnam, Moldova prepared national strategy documents and action plans. A further lesson from Vietnam i s the success o f a two-pronged strategy: first, the control o f Avian Influenza at the source inhigh-risk regions, and second, simultaneous actions to minimize risks to humans and to prepare for a pandemic. This is the strategy adopted by the Government o f Moldova and is directly reflected inthe animal andhumanhealthcomponents ofthis Project. The main lessons learned from emergency projects are to avoid policy conditionality, apply a simple design, and adopt flexible procurement arrangements - all lessons respected here. 6. Alternativesconsideredandreasonsfor rejection Lending Instruments. The Bank has not considered other lending instruments for this intervention in light of the emerging urgency in dealing with the threat o f the spread o f Avian Influenza. Focus of Project. The Bank considered including a sub-component on backyard poultry restructuring. However, due to financing concerns, such activities were not included in the project design. 8 Implementation Arrangements. The Bank considered a variety o f implementation arrangements for the Public Information and Awareness Component, but chose to pursue an arrangement by which actual implementation will be out-sourced to UNICEF, in light o f UNICEF's in-country record and on-going involvement with public information and awareness activities related to Avian Influenza. C. IMPLEMENTATION 1. Partnershiparrangements(ifapplicable) All project components were designed in collaboration with officials in the Ministry o f Agriculture and Food Industryand Ministry of Health and Social Protection, and following field visits and consultation with local specialists. Turning to international partners, the WHO deployed three specialists to join the Project team, and they led identification o f the human health component. The UNICEF led design of the public awareness and information component. The Government of Japan, USAID and the European Union are partners in financing, either through parallel financing or co-financing arrangements. 2. Institutionalandimplementationarrangements A Project Steering Committee (PSC) will be established by the Government at the beginningo f the project to perform overall supervisory functions. The Bank recommends that the PSC includes key members of the Republican Emergency Anti-epidemic Commission. The PSC i s expected to be co-chaired by the Ministers o f Agriculture and Health and Social Protection. The PSC will conduct regular supervision o f project implementation and coordinate relations with the various ministries and other stakeholders. There are two Implementation Agencies. The Ministry o f Agriculture and Food Industry implements the Animal Health Component, while the Ministry o f Health and Social Protection implements the HumanHealth Component. The Ministry o f Health and Social Protection also coordinates implementation o f the Public Information and Awareness Component, although actual implementation of component activities will be contractedto UNICEF. To increase Government ownership and ensure sustainability, the Project augments the capacity of the Ministries to implement anti-AvianInfluenza activities after the closing date. Under this component, the Ministries hire (a total o f two) Component Coordinators as local consultants to manage and implement project activities within their sectors. Their role is to coordinate project activities with other relevant government agencies. Moreover, they prepare annual work programs in their sectors and submit inputs to the Project's quarterly and annual financial monitoring reports. The Coordinators are responsible for monitoring and collecting relevant data from their respective implementing ministries and agencies and compile them into progress reports, focusing on the status o f physical implementation by component, the use o f project hnds, andmonitoring indicators. 9 Because o f the urgency o f launching the Project, an existing unit, the Consolidated Agricultural Project Management Unit (CAPMU) assumes responsibility for procurement, financial management and disbursement. The CAPMU demonstrated its capacity to manage fiduciary tasks under the Rural Investment and Services Project (RISP I)and other agricultural and environmental projects. Itprovides fiduciary support to the two agencies and facilitates the work o f the Component Coordinators. Furthermore the CAPMU prepares bidding documents, drafts contracts, executes payments upon instruction o f the implementation agencies, submits financial reports and consolidates project progress reports. 3. Monitoring and evaluation of outcomeshesults The Implementation Agencies, with assistance from the CAPMU, will be responsible for evaluation o f outcomes. Please see Annex 3 for details. 4. Sustainability The Project appears fiscally sustainable in most respects. The Government already pays the salaries o f the veterinarians, technicians, nurses, doctors, and other staff engaged in prevention and containment o f Avian Influenza and will probably be able to continue to pay from its ordinary budget resources. Moreover, the Government is not contemplating significant new hiring as part o f the project and is purchasing materials and equipment from ordinary budget resources. The area for fiscal concern i s the Compensation Fund for farmers who lose poultry to Avian Influenza. Lack o f adequate fundingmay lead to a quick cessation inpayments to farmers as the hnds allocated from the Project are exhausted soon after the start o f a pandemic. This would reduce incentives for farmers to report sick poultry and this could become an obstacle to surveillance and culling. The Bank found that Moldovan government staff has a strong technical background. With training planned under the Project, they should be able to sustain project activities following the close o f the Project. 5. Critical risks and possible controversialaspects The greatest risk is that Avian Influenza will infect poultry across a sub-region o f Moldova before national capacity of surveillance and response increases, before the government can allocate a budget for compensation, or before donors contribute to Moldova's effort. An additional set o frisks relate to issues o f governance and corruption. These are acknowledged, even by officials within the Government as major issues inthe public sector, and the project will be implemented in an environment of possible corruption. Therefore, the Project will place strong emphasis on disclosure and transparency and on strengthened monitoring o f the 10 compensation mechanisms, coupled with specific remedial measures, to be detailed inthe Project Operations Manual. A summary o f such measures is provided inAnnex 7. Controversy may arise if compensation funds are exhausted, since farmers may resist culling. People may also resist any policy o f quarantine o f humanpopulation ("social distancing"). On the human health side, there is potential for controversy related to the availability o f sufficient stocks o f and/or inclusive access to medicines and/or treatment for infected patients. 6. Credit/grant conditions and covenants The conditions o f effectiveness are: ' Preparation and adoption o f a Project Operations Manual acceptable to IDA; The conditions o f disbursement are: ' For Component I-Animal Health, preparation of an Environmental Management Plan acceptable to IDA; For Component I-Animal Health, Sub-component 1C, establishment and implementation o f a Compensation Fund in accordance with criteria and procedures set forth in the Project Operations Manual andthe Recipient's legislation. Financial covenants: ' The DFA contains a financial covenant on the Government's contribution to the Compensation Fund. D. APPRAISAL SUMMARY 1. Economic and financialanalyses The Project appears justified by expected benefits relative to costs. These cannot be directly evaluated because science-based estimates of probabilities (risks) o f infection are not available. Instead, the economic analysis sketches scenarios with relatively conservative assumptions regardingprobabilities. Inthe main scenario for infection ofpoultry, implementation ofthe Project leads to a fall inthe probability o f a generalized outbreak among poultry from about 48% to 24% and from an expected loss o f $US 69 million to $US 35 million (see Annex 9). Inthis scenario, the rate o f return for a US$ 10.6 million project, considering only lost poultry, is 226%. In the low case scenario, the Project has much less impact on the probability o f an outbreak among poultry, and the baseline probability o f an outbreak i s also smaller. Inthis low case, the Project leads to a fall inthe probability of a generalized outbreak among poultry from almost 36% to 273% and the rate o f return is 23%. 11 Humans usually resist infection by existing strains o f HPAI", and the number o f infections and deaths from an outbreak in Moldova would probably be small. Mutation o f the virus may increase morbidity and mortality rates significantly (Annex 9). Given the assumptions on morbidity and mortality inAnnex 9, the Project would reduce the probability o f death o f exposed people from 0.5% to 0.2%. 2. Technical The Bank finds that the main technical needs for animal health are for testing equipment and training to create government capacity to identify Avian Influenza inpoultry. Turning to human health, the main technical needs are for separate laboratory capacity to identify Avian Influenza inhumans, for training, and for equipment for intensive care isolation unit(s) at the Dr.Toma Ciorba Infectious Disease Hospital in Chisinau, as well as possibly other hospitals indicated by the Government. Please see Section B 4 (Components 1 & 2) and Annex 4 (Components 1& 2) for details. 3. Fiduciary The financial management arrangements for the project have been determined and are acceptable to the Bank, except for controls and procedures for operating the Compensation Fund. The detailed financial management arrangements for operating the Compensation Fund will be prescribed inthe Project Operations Manual. CAPMU has the necessary capacity to carry out the fiduciary fimctions for Avian Influenza Project in all other respects. A financial management assessment o f the CAPMU was undertaken in February 2006 to determine whether the existing financial management arrangements are acceptable to IDA. The financial management arrangements o f the CAPMU have also been reviewed periodically as part o f previous project supervisions and have been found satisfactory. The CAPMU has established andmaintained a good financial management system for the implementationo f the RISP Project. The CAPMU'S financial management system is capable o f supporting the implementation o f the proposed project in accordance with the requirements o f OP 10.02, except for the Compensation Fund sub-component for which internal control and hnd flow arrangements have to be finalized. The flow o f funds under this sub-component will only begin after appropriate internal control and fund-flow procedures, satisfactory to IDA have been adopted and documented inthe Project Operations Manual. 4. Social The Project assists farm households -the poorest group inMoldova. It protects their income and nutrition from poultry from infection and compensates farmers for culled poultry. Besides poverty, the principle social issue is farmers' trust and participation in surveillance for Avian Influenza and inculling. Farmers will be reluctant to report sick birds ifthey do not believe they * Source: WHO ( h t t p : / / w w w . w h o . i n t / c s r / d i s e a s e / a v i a n i n f l ) 12 will receive compensation. Effective culling and disposable also depends on cooperation o flocal workers. The public awareness and information component will buildsupport. The participation o f local officials and veterinarians in the local Extraordinary Anti-Epidemic Commissions is another factor is buildingfarmers' trust. 5. Environment The Project has received an environmental rating o f B. An environmental analysis will be completed before project effectiveness. The Project incorporates investments inincinerators and bio-safety. Moreover, the Project leaves an unallocated contingency o f approximately 15%, including a contribution from the Government o f Moldova, which could be used, to the extent necessary, against the costs of appropriate disposal o f poultry carcasses and waste. Actual costs will depend on the number of poultry culled and are therefore somewhat unpredictable. 6. Safeguard policies Safeguard PoliciesTriggered by the Project Yes N o Environmental Assessment (OP/BP 4.01) [XI [I Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Cultural Property (OPN 11.03, being revised as OP 4.11) ' Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OP/BP 4.36) Safety o f Dams (OP/BP 4.37) Projects inDisputedAreas (OPBP 7.60)* Projects on InternationalWaterways (OP/BP 7.50) The Project triggers only one safeguard policy on the required Environmental Assessment. In view o f the emergency nature of the proposedProject, the team received a waiver allowing for a delay in the implementation of the Environmental Assessment from the normal appraisal stage. The preparation and disclosure of an Environmental Management Plan is a condition for disbursement for Component I- Animal Health. 7. Policy Exceptions andReadiness There are no policy exceptions. * By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputed areas 13 Annex 1: Countryand Sector or ProjectBackground MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project 1. Country background. Moldova is a small, landlocked country in south-eastem Europe, bordering on Romania on the west and Ukraine on the east. Its resident population i s estimated by the 2004 census to be 3.97 million. The population density of the country i s the highest inthe Former Soviet Union, and among the highest in Europe, at 129 persons per km2. The country presently has a nominal GDP per capita o f US$765 and a Purchasing Power Parity per capita income estimated to be US$1,470 per annum. By this measure Moldova ranks 148th of 177 countries. The country has a moderately continental climate which i s favorable to agriculture. Agriculture i s the largest real sector o f the Moldovan economy: it accounts for 18.2% of GDP (33% if agro-processing is included), generates the majority of Moldova's exports (65%). I t i s also important in terms o f employment (39% of the total), incomes and poverty reduction, especially in rural areas, with rural poverty accounting for 68% of the total and rural households deriving 73% of their income from agriculture. The poultry sector inMoldova represents circa 80% of the livestock and poultry population, at roughly 16 million heads (as o f January 2006). Poultry meat i s a nutrition staple generally, but more importantly, it i s so in rural areas where poverty incidence i s high. Twelve million birds are owned by households (backyard poultry) and small commercial farmers. The number of backyard poultry i s highly variable, with peak season (summer and early fall) populationreaching approximately 20 millionbirds. Backyard farming patterns are characterized by unsafe bio management practices, such as maintenance of multiple species inconfined space and free range roaming for grazing. The country's commercial poultry industry is characterized by the predominance o f 5 large producers. Since independence, commercial poultry has suffered a severe drop in output, but has been on a strong rebound since 2002, with an average output (meat and eggs) growth of 10%. Adequate bio-safety standards are enforced at all commercial producers. 2. Avian Influenza background. In 2005, the first confirmed outbreaks o f Avian Influenza were reportedinRomania and Ukraine. Thisposed an epidemiological threat to Moldovan poultry production. Inresponse, the Government set up a RepublicanEmergency Anti-epidemic Commission to take charge of preparations for outbreak response and containment. The Commission took several practical organizational and institutional steps, with regard to both the agncultural and human health sides, to improve response capacity: (1)imports of poultry products from countries with officially registered outbreaks were banned; (ii) equipment for serological and viral testing was purchased; (iii) additional disinfection equipment was installed at all border crossing facilities; (iv) outbreak containment simulation exercises at national and regional levels were carried out; (v) an immunization campaign for human influenza virus among 100,000 people who are considered to be high-risk for bird flu infection was implemented; (vi) a cooperation agreement with Romania for Avian Influenza diagnostic verification and virus isolation was concluded. 3. The Government prepared and formally approvedkey documents, which set forththe institutional and functional responsibilities for Avian Influenza prevention and response preparedness, including a National Contingency Plan for Avian Influenza, a National Preparedness Plan for Human Influenza Pandemic and a Republican Action Program on Avian Flu Prophylaxis on the Territory o f Moldova. To operationalize the contingency and action plans, The Government issued 26 operational guidelines and normative acts to concerned line agencies and institutions. A welcome development i s that the Government decided to compensate households and poultry farmers for losses incurred in cases of culling. 14 4. Furthermore, with the help o f UNICEF, the Government drafted and implemented a comprehensive public awareness campaign which disseminated basic knowledge on various aspects o f Avian Influenza prevention and preparedness among the population at large, farmers, veterinarians and children. In addition, staff o f relevant Government agencies has participated in various media events to raise awareness about Avian Influenza risks and mitigation measures. The Government i s committed to continue its public awareness efforts, while further streamlining the focus o f its interventions to specific target groups. 6. In early 2006, the Government o f Moldova formally approached the Bank asking for technical and financial assistance for augmenting its Avian Influenza prevention and mitigation efforts. The proposed project i s beingprocessedto respond to this request. 7. Summary ofthe ContingencyPlanfor Avian Influenzaofthe Republic of Moldova. The Contingency Plan for Avian Influenza of the Republic o f Moldova, available in the Project Files, was approved on October 20, 2005. Its major focus i s on animal health, as the first line of defense against Avian Influenza, but it contains aspects o f coordinationwithresponsible human health agencies. Itwill be updated and modified as neededinthe light of evolving conditions and growing experience. 8. The plan provides the basis for the mobilization o f resources and the provision o f coordinated technical and financial support, training and capacity building with regard to animal health and veterinary services. It establishes preparedness responsibilities and benchmarks o f the relevant institutions, from the Ministry o f Agriculture and Food Industry, and its State Veterinary Service to specific village based groups, to deal with the imminent threat o f the disease being introduced into poultry in the country, with actual outbreaks and compensation for culling. The Plan i s based on the existing in-country institutional and service structure, and adequacy and readiness to perform the intended tasks. The plan specifically deals with three main themes: surveillance, containment and controlof outbreaks, and communications. 9. The Plan includes the following chapters: 1.General Provisions 2. Legal Provisions 3, Financial Provisions 4. Supply Chains 5. Personnel Resources 6. Equipment and Facilities Resources 7. Operational Manual for Avian Influenza 8. Surveillance and Laboratory Diagnosis 9. Vaccination 10.National Compensation System 11.Training 12. Public Awareness and Information 10. Summary of the NationalPreparedness Plan for Human InfluenzaPandemic. This plan addresses aspects o f human health preparedness for human influenza in lieu o f national capacity inkey public health areas, inter-sectoral coordination, epidemiological surveillance, laboratory diagnosis, disease prevention, clinical case management, and communication. It will be updated and modified as needed inthe light o f evolving conditions and growing experience. 15 11. The Plan addresses the pandemic alert periods (when animal and human cases may occur) and the pandemic period (effective person-to-person transmission). It establishes mechanisms for coordination with the veterinary services as well as with relevant local, regional and international organizations, epidemiological surveillance, laboratory diagnosis, and clinical management human cases (under bothperiods). It addresses pandemic preparedness, including procurement o f a pandemic vaccine when available, rapid implementation o f a national immunization campaign, and communication to the public. 12. The plan does not acknowledge current limitations in terms o f financial and technical resources, however these were addressed in a recent collaborative effort between the WHO and Moldovanhealth authorities. 16 Annex 2: Major RelatedProjectsFinancedby the Bank and/or other Agencies MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project The WorldBank's recent and on-going relatedactivities include: Rural Investment and Services Program (RISP). RISP is a two-phased Adjustable Program Credit, and its objective is to provide long-term support to accelerate agricultural recovery and growth to enable Moldova`s agricultural sector to play its full role inproviding the underpinnings for future income growth and poverty reduction. Within this program objective, the objective o f the first and second phases was and i s to continue fostering post-privatization growth in the agricultural sector by improving access o f new private farmers and rural businesses to what they need to succeed - legal ownership status, knowledge, know-how and finance. The first phase o f the RISP was financed through a US$15.5 million IDA credit, while it i s expected that the second phase will be financed through a US$15 million IDA grant and credit package. The second phase of the RISP i s expected to go the Board on March 31, 2006. The RISP i s relevant to the proposed Project because o f the RISP's successful efforts to establish a nationwide network o f agricultural information and extension service providers. The network is actively involved in dissemination o f agricultural information to thousands o f small and medium sized farms, and i s currently part o f an on-going effort by USAID to implement Avian Influenza awareness and training programs in all Moldovan villages. Social Protection Manaeement Proiect. The development objective of the Social Protection Management Project is the implementation o f a comprehensive reform o f the public pension system and the introduction o f a regulatory framework for private pension funds; and support implementation o f the new organizational structure for social insurance. The Project was financed through a US$11.1 million IDA credit. The Government and the Bank agreed to cancel SDR 0.7 million (US$1 million equivalent) from the Social Protection Management Project and direct these proceeds to the IDA Financing o f the proposed Project. Health Investment Fund Proiect. The development objective o f the Health Investment Fund is to improve the health status o f the Moldovan population, and to increase the quality and efficiency o f the public health sector by improving access to essential services to the poor. The Fundwas financed through a US$10 million IDA credit. The Fund includes support to strategc work aimed at controlling the Tuberculosis and HIV/AIDS epidemics. The Health Investment FundProject is relevant to the proposed Project because it buildscapacity inthe health sector and attempts to deliver medical services to the poor. TheEuropeanUnion'srecent and on-going related activities include: Food Security Program. The Programis providing support to, among others, the budget of the Ministry of Agriculture and Food Industry. In the past three years, the Program has focused on strengthening the capacity o f the Ministry and implementing country-wide programs in irrigation, veterinary services, and animal identification systems, sanitary and phyto-sanitary measures. More recently, the Program approved disbursement o f Euro 300,000 for implementation o f Avian Influenza preparedness measures. This enabled the Government to finance most immediate needs related to diagnosis and containment preparedness. The Program will run through the end o f 2007, and will potentially finance up to Euro 250,000 in additional technical assistance and investment costs related to capacity building o f the veterinary services. 17 The United States Agency for International Development (USAID) recent and on-going related activities include: The Agribusiness Development Project. This Project is a 5-year, US$19 million program being implemented by the Citizens Network for Foreign Affairs. Its main objective i s to strengthen Moldova's highvalue agricultural sector by addressing four major links inthe supply chain. These are: (i) ensuring wide access to market information to penetrate new export markets, (ii)establishing and strengthening competitive agribusinesses, particularly export-orientated value adding enterprises, (iii) improving farmer capacity to supply the volume and quality o f agnculturalproducts needed by buyers, and (iv) establishing producer and industry associations. A relevant element o f the program i s the implementation o f an Avian Influenza Training/Information Dissemination Program o f about $US 250,000, designed to cover all Moldovanvillages, inorder to minimize the potential for an outbreak o f Avian Influenza inMoldova. The Agribusiness Development Project will be implemented with the assistance o f the RISP network o f extension service providers. USAID intends to co-finance national Avian Influenza awareness and informationefforts, to be implementedby the UNICEF. The financing i s estimated at US$350,000. The UnitedNationsDevelopmentProgramandUNICEF recent and on-going related activities include the co-financing, at roughly US$20,000 each, o f the national Avian Influenza awareness and information efforts. UNICEF will be the lead technical agency incharge o f implementation o f such activities. The Food and Agriculture Organization's (FAO) recent and on-going related activities include the Project for Emergency Assistance for Early Detection and Prevention o f Avian Influenza in the Eastern Europe and Caucasus Regions. The objective o f the project i s to strengthen national capacity for generating and sharing HPAI disease intelligence and using this to mount emergency preparedness planning against the eventuality o f HPAI being introduced into the region, specifically in relation to migration o f a trade inwild birds. Their Project cost is US$400,000. 18 Annex 3: ResultsFrameworkandMonitoring MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project ResultsFramework PDO ProjectOutcomeIndicators Use of ProjectOutcome Information Minimize the threat posed to humans Ifthere is anoutbreak ofHPAIamong ?rojectevaluation. by HPAI. poultry following implementation, then 1 A Moldovan government laboratory identifies the presence o f HPAI; 1 The Government culls birds at the infectionpoint and establishes a protection zone, with participation o f local governments and the population; and 1 Compensates small farmers for culledbirds. Ifthere is transmission ofaformof Avian Influenza HPAI to humans following implementation; then 8 A Moldovan government laboratory identifies the presence o f HPAI; 8 Patients are transported safely and hospitalized inprotectedrooms. 1 Patients receive treatment appropriate to HPAI infection. IntermediateOutcomes IntermediateOutcome Use of Intermediate Indicators OutcomeMonitoring The Government ofMoldova is Integrated and operationalresponse Improvement of preparedness prepared for each stage o fresponse plan for animal health delivered. to an outbreak o f HPAI. Integrated and operational response plan for human health delivered. Simulation exercises conducted. Small farmers report sick poultry to A compensationfundwith total Improvement innational veterinarians. funding o f at least US$ 1.5 million surveillance system for HPAI (coverage o f 3.5% o fthe poultry on infectiono fpoultry household farms) is established, has legal status, and pays legitimate claims. Nationalpublic awareness and information campaign i s conducted. People andprimary care physicians National public awareness and Improvement o f national report incidents o finfluenza information campaign i s conducted. surveillance system for HPAI suspectedo fbeing Avian Influenza. infectiono fpeople. The Ministryo f Agriculture and Equipment for animal testing for HPAI Improvement o f capacity for FoodIndustryhas the capacity to delivered. monitoring and surveillance o f 19 G v e y for and identify H P A I in HPAI infectiono f animals. animals. Personnel are trained. Personnel have used laboratory equipment and results have been validated by an independent laboratory. Protective clothing, medicines, testing Improvement of government ~ The Ministry of Agriculture and Food Industryhas the capacity to materials, etc., are delivered. capacity for containment and organize outbreak containment and Personnel are trained inoutbreak control, etc. control incollaboration with its local containment and control techniques. partners (Extra-ordinary Emergency Simulation exercises are successful. Epidemic Committees). Outbreaks are contained and controlled. The Ministry o f Health and Social Equipment for testing people for HPAI Improvement o f government Protection has the capacity to delivered. capacity for testing for HPAI identify the presence o f H P A I in Personnel are trained. infection o f people. people. Personnel have used equipment and results have beenverified by an independent laboratory. The Ministry o f Health and Social Equipment for the isolation intensive Improvement incapacity for Protection has the capacity to care roomis delivered to and installed treatment o f infected people and transport several HPAIinfected inDr.TomCiorba Hospital. for containing spread o f the patients safely to Dr.Toma Ciorba Personnel are trained. infection. Infectious Disease Hospital in Chisinau (other hospitals) and treat them adequately. 20 I P Lo 0 2 2 Lo 3 N a rri I .-c E: .I .-C E Annex 4: DetailedProjectDescription MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness & Response Project COMPONENT1:ANIMAL HEALTH Assessment o f the National Veterinary Services. A team from the European Commission's Health & Consumer Protection Directorate-General (SANCO) reviewed the main governmental veterinary services in 2005. The Government o f Moldova agreed to adhere to an Action Plan to meet European Commission's requirements for export o f live animals and animal products into the EU. The Parliament i s expected to adopt a new veterinary law later in 2006. The law will streamline the public veterinary service, which will function under the supervision o f an autonomous National Agency for Sanitary Veterinary Service and Safety o f Animal Origin Products. Significantly, the law will reduce staffing o f the public veterinary services and lead to large-scale privatization o f the service providers in the field. The quality o f the staff o f the public veterinary services i s rather good. Furthermore, the services are active in preparing for an outbreak o f HPAI. Much time and effort have been spent on raising awareness and preparedness among both the veterinary professionals and the general public. This included an extensive multi-media campaign and desk simulation exercises. The veterinary laboratory network was rehabilitated and the rehabilitation o f the central facility (RCVD) started in 2005 and will probably be completed in2007. Many o f the rayon-level laboratories will close and regional laboratory services will be concentrated in two satellite laboratories in Cahul and Balti. Nevertheless, the main area for improvement i s inequipment. Sub-component l.A.: Animal Disease Surveillance & Diagnosis. To strengthen diagnostic capacity, the sub-component will strengthen the capacity o f the RCVD and its two satellite laboratories. The main investments would be inessential equipment necessary to confirm the presence o f HPAIin animals. Moreover, the sub-component will finance the accompanying consumables and reagents, as well as training. To strengthen veterinary surveillance, the sub-component will develop a disease information system. Technical assistance will focus on human resource development in the establishment and use of database programs (including the global information system) and the analysis of data to support to decisions on prevention and control o f animal diseases. Furthermore, it will support training on collection and analysis o f epidemiological data and on risk assessments. In addition, technical assistance will build institutional capacity for serology and virology tests for confirmation o f the disease. Finally, the sub-component will provide limited financial support for technical assistance on surveillance o f wild and migratory birds. Such technical assistance and training activities are to be financed largely from the proceeds of the Japanese PHRD Grant. Sub-component l.B.: Animal HPAI Control and Outbreak Containment. This sub-component will support the implementation of HPAI outbreak containment actions. The sub-component will finance one or more simulation exercises inthe field to support increased levels o fpreparednessto deal with outbreaks. The sub-component will support activities aimed at eradicationo fthe disease at the source o f infection, and inparticular, the culling o f infected and at-risk poultry and the disposal o f carcasses ina bio-secure 24 and environmentally acceptable manner. The sub-component will promote bio-security at commercial poultry farms by supporting control o f movement o f birds and products that may be infected. It will also promote bio-security by procurement o f personal protective clothing and through vaccination o f veterinary staff and workers against seasonal human influenza. Poultry vaccination on a large scale as a preventive measure i s not recommended in Moldova at this moment. Inthe face of an outbreak and in order to contain the spread, the project will support the authorities with the procurement o f a limited quantity o f Avian Influenza vaccine to undertake ring vaccinations ifso required. Sub-component l.C.: CompensationFund. The purpose o fthe fund is to encourage farmers to report possible outbreaks o f Avian Influenza by offering compensation for poultry culled. The legal basis for compensation i s the National Contingency Plan on Avian Influenza, which refers to the Law on Insurance o f the Republic o f Moldova No. 1508-XI1 as o f 15/06/93. The Government will legally establish a compensation fund mechanism that would receive contributions fiom the Government o f Moldova, the World Bank (IDA), and possibly other donors. This will assure that international auditors can follow use o f IDA funds, without mixingo f funds used for other purposes. The fund should be large enough, initially, to reimburse birds culled as a result o f several isolated outbreaks o f Avian Influenza. The calculation below shows that a fundwith $1.5 million could reimburse farmers for 500,000 conventional birds culled, or about 3.5% o f the national stock o f poultry. Annex Table 4.1: ESTIMATED COSTS OF COMPENSATIONOF SMALL-SCALE POULTRYFARMERS Calculation Notes Stock o fpoultry inhousehold farms 13,987,793 Ministryo fAgriculture, for Sept. 1, 2005 gl Avg farm-gate price inMoldovan Lei 104.5 Average price inlei o f 2-2.5k chicken Adjustment for average age 0.5 Average age i s about 8 weeks. Age adjusted price inMoldovan L e i 52.25 Standardreimbursement rate 0.75 Rate applied inKyrgyz Republic & Turkey MoldovanLeiper US$ 13 Approx. exchange rate in2006 - Mixisassumedtobe60%hens, 10%roosters, &30%turkeys. Source:WorldBank at The Bank and the Government have agreed, that the latter, is to allocate US$0.5 million for the proposed Fund. The Bank allocates $US1milliono fthe proposedIDAFinancingfor thispurpose. 25 AnnexTable4.2: F~~~ The Ministry of Agriculture and Food Industry, through its veterinary Gate Cost of Live Birds in services organized Extraordinary Anti-Epidemic Commissions in each March 2006 locality. Each Commission consists of local government officials and representatives of civil society. The Commissions will supervise culling poultry Price inMDL by local hiredworkers andwith local equipment. The Commissions will Chickens 70 also value the loss o f culled birds, sign a declaration of the loss, and Roosters 100 issue a receipt to farmers. The declarations will be signed by the head of Turkeys 175 the Commission and the farmer. Source: World Bank. Based The Government would apply the retail price for each type of whole on visits to farms. chicken (hen, broiler), duck, and turkey meat as a basis for compensation. This is because farm-gate prices are not available; it i s even illegal, at present, to sell live birds. The sources of prices for poultry meat are the consumer price index (CPI), published by the National Statistical Bureau, supplemented when necessary by daily data collected by CAMIB, a private company. The Compensation Fund would apply the reference price about two months before culling, since market prices for chicken would probably collapse during culling. Furthermore, the Compensation Fundwould refund75% of the assessed market value, as recommended by FAO, to dissuade farmers in neighboringareas from smuggling inpoultry for culling. The Ministryo f Agriculture and Food Industry,through its veterinary services would manage culling and local record keeping. The Consolidated Agricultural and Project Management Unit (CAPMU) would manage payments to mayors, who would effect payments to farmers. Each farmer and a witness will sign the declaration of loss a secondtime uponreceipt of compensation. COMPONENT 2: HUMAN HEALTH Assessment. A delegation of experts from the WHO joined the Project Team and led its assessment of the human health sector and identification of priority investments. The Bank believes that there is a risk of human infection since Moldova i s on the route of migratory birds, and borders the Danube Delta of Romania, the scene of multipleoutbreaks of the Avian Influenza. Inthe assessment of the public health system, the main findings are that the professional quality o f staff i s rather good, but the stock of medical equipment deteriorated over past decades because o f lack o f spending on rehabilitation and replacement. Therefore, the focus of the component i s on replacing the highest priority equipment and introduction of modem medical and epidemiological techniques. Sub-component 2.A: Human health capacity building. The sub-component trains government staff and buildscapacity to strengthen monitoring, surveillance, and testing for HPAIinhumans. Specifically, it (i) improves country-wide laboratory based influenza surveillance, including through standardized collection of samples at rayon levels; (ii) instills a "bio-safety" and "quality-assurance" culture in the handling of viral diagnoses; (iii) supports drafting and adoption o f a validated laboratory Standard Operating Procedures (SOP); (iv) improves communication and information sharing between human and veterinary health viral labs; and (v) trains laboratory staff in the use o f new equipment and medical techniques The sub-component also builds capacity in containment o f HPAI and care for HPAI patients. It specifically supports: (i)development o f instructional tools, computer modules and workshops to promote adoption of case identification, management and infection control protocols at rayon hospitals and emergency transport services; (ii) development and dissemination o f additional relevant materials for district hospitals and emergency medical services relating to patient assessment, stabilization, and transport to Chisinau; (iii) development of hospital and rayon level pandemic contingency plans, with subsequent workshops and tabletop exercises; and (iv) development of a pandemic coordination network 26 at the rayon level. The training and capacity building activities are to be financed with proceeds o f the Japanese PHRD Grant. Sub-component 2.B: Human HPAI testing. At present, the Ministry o f Health and Social Protection cannot test for the presence o f HPAI in humans. Therefore, this sub-component will procure key testing equipment for the National Laboratory for Viral Respiratory Diseases, which i s the only viral laboratory o f its kind in Moldova, WHO accredited reagents, and consumables and goods, including for supporting bio-safety standards. The Bank finds that the lab's personnel have a strong enough background so that they can learn to use and apply new equipment and techniques quickly. Specifically, the Laboratory will be reinforced though the purchase and installation o f a Biological safety cabinet class I1for the National Virological Respiratory Laboratory; the upgrading o f its capacities for direct antigen detectionby immunofluorescence, the purchase and installationo fRT-PCR equipment; and necessary reagents and WHO kits. Inaddition and in order to address diagnostic needs in the short-term, the Project will support the establishment o f a protocol for sending suspected samples for testing abroad (e.g. to a WHO Collaborating Center), including collection materials, transport means, cold box devices for transport, and triple package containers. Sub-component 2.C.: Human healthsystem response. When preventive health measures fail, human cases will have to be hospitalizedin isolation rooms. The sub-component will procure equipment for the intensive care unitso f the Dr.Toma Ciorba Infectious Disease Hospital inChisinau, which i s the national reference hospital for patients with HPAI. Other hospitals may benefit from similar upgrades, if deemed necessary duringimplementation. Inthe short-term, the specific needs to be financed are: one mechanical ventilator for the hospital, infrastructure for an intensive care unit o f two to four beds at the hospital, medical supplies for a mobile ambulance for transporting infected passengers, personal protective equipment, and at least one mobile incinerator. The sub-component also supports purchases o f human influenza vaccines, WHO influenza kits, an increase inthe national stockpile o f Oseltamvir (Tamiflu), an anti-viral medication, and fully equipped ambulances, respiratory care and personal protective equipment. COMPONENT3: PUBLICAWARENESS AND INFORMATION. The objective of this component i s to raise public awareness about H P A I risks. The component will support the implementation of a communication plan to address key aspects o f prevention, preparedness and response inMoldova. At the request o f the MAFIand the MOH, UNICEFhas taken the lead in developing the plan. Capacity building and training i s to be supported by the Japanese Japanese PHRD Grant. The communication response has three planned stages: i.Apre-outbreakcampaigntopromotesafeandresponsiblebehaviortoreduceriskstochildren, families, households and communities; and to promote responsible media reporting to avoid panic and misinformation. ii.Anintensivecommunicationcampaignduringanepidemicalert, tobeginimmediatelyifand when human infection i s confirmed. iii.Postepidemiccommunicationsupporttopromoterecoveryandtohelpthosewhoneedit. The potential for an Avian Influenza pandemic demands a response from many partners, including the Ministry of Health and Social Protection, Ministry o f Agriculture, Ministry o f Finance, veterinary services, laboratories and local government. The component will support activities to improve coordination and collaboration among these stakeholders. 27 Turning to financing, USAID committed US$ 350,000 to support the implementation of the pre- pandemic phase of the plan, through parallel financing; UN agencies pledged US$ 42,000. IDA financing will partially cover the financing gap for 2006 and the subsequent years o f the campaign. COMPONENT 4: IMPLEMENTATIONSUPPORTAND MONITORING& EVALUATION. This component provides technical and financial support for project management, implementation, and monitoring and evaluation. Inorder to increase Government ownership and ensure sustainability after the closing date o f the Project, measures will be taken to build capacity o f the Implementation Agencies to implement the proposed Project. Therefore, the component provides support for strengthening project implementation and monitoring capacity o f the Ministry o f Agriculture and Food Industry and the Ministryof Health and Social Protection, by financing technical assistance, including auditing services, and incremental operating costs and monitoring and evaluation activities. Inaddition, this component funds training in project monitoring and evaluation at all administrative levels, and development o f an action plan for monitoring & evaluations. It conducts baseline studies, on- going participatory monitoring and evaluations, and a final project evaluation. Specific surveys may be conducted to obtain data for this purpose. Project evaluation includes both quantitative and qualitative aspects and be conducted on a yearly basis. 28 Annex 5: ProjectCosts andFinancing MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project Annex Table 5.1: ProjectCost by Componentand/or Activity Local Foreign Total us us us $million $million $million 1. Animal Health 1.3 2.3 3.6 2. HumanHealth 0.9 2.8 3.7 3. Public Awareness & Information 0.9 0.4 1.3 4. Project implementation andmonitoring& 0.3 0.25 0.55 evaluation Total Baseline Cost 3.4 5.75 9.15 Physical Contingencies 0.7 0.55 1.25 Price Contingencies 0 0.2 0.2 TotalProjectCosts 4.1 6.5 10.6 Note: See Annex Table 5.2 below for details of financing. 29 0 m v) # 0 v) 2 0 M FA c a u d 3 3 3 Annex 6: ImplementationArrangements MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project A Project Steering Committee (PSC) will be established by the Government at the beginning of the project to perform overall supervisory functions. The Bank recommends that the PSC includes key members of the Republican Emergency Anti-epidemic Commission. The PSC is expected to be co- chaired by the Ministers of Agriculture and Health and Social Protection. The PSC will conduct regular supervision o f project implementation and coordinate relations with the various ministries and other stakeholders. There are two ImplementationAgencies. The Ministryof Agriculture and FoodIndustrywill implement the Animal Health Component, while the Ministry of Health and Social Protection will implement the Human Health Component. The Ministry of Health and Social Protection will also coordinate implementation o f the Public Information and Awareness Component, although implementation and administrationo f the component activities will be contracted to UNICEF. To increase Government ownership and ensure sustainability, the Project will augment the capacity of the ministries to implement anti-Avian Influenza activities after the closing date. Two Component Coordinators will be hired within the ministries, as local consultants, with support from the Project, to manage and implement project activities within their sectors. They will coordinate project activities with other relevant government agencies. Moreover, they will prepare annual work programs intheir sectors and submit inputs to the Project's quarterly and annual financial monitoring reports. The Coordinators will be responsible for monitoring and will collect relevant data from their respective implementing ministries and agencies and compile them into progress reports, focusing on the status of physical implementationby component, the use ofproject funds, and monitoring indicators. Because of the urgency of launching the project, an existing unit, the Central Agricultural Project Management Unit (CAPMU) will assume responsibility for procurement, financial management and disbursement. The CAPMU demonstrated its capacity to manage fiduciary tasks under the Rural Investment and Services Project (RISP I)and other agricultural and environmental projects. It will provide fiduciary support to the two agencies and facilitate the work o f the Component Coordinators. Furthermore the CAPMU will prepare bidding documents, draft contracts, execute payments upon instruction o f the implementation agencies, submit financial reports and consolidate project progress reports. Program Coordination. The Government is in a solid position to coordinate the proposed Program, both with donors, as well as among its major institutions involved in HPAI preparedness. In 2005, it established a functioning and pro-active mechanism for coordination o f donor activities related to Avian Influenza, holding regular information, consultation and coordination meetings with the donor community. The lead Government agency for donor coordination is the Ministry o f Agriculture and Food Industry, through its State Veterinary Service. The Ministry of Health and Social Protection and its National Centre for Preventive Medicine are an integral part o f the coordination efforts. Implementation of actions relatedto HPAI is coordinated betweenthe Ministry o f Agriculture and Food Industry and the Ministry of Health and Social Protection based on the hierarchy established by the Government its National Contingency Plan for Avian Influenza and the Republican Action Program on Avian Flu Prophylaxis on the Territory o f Moldova. Both agencies report to the National Emergency Anti- epidemiologic Commission, which is the umbrella coordination body at the Government level, headedby a Deputy Prime Minister. 31 Annex 7: FinancialManagementandDisbursementArrangements MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project Executive Summary and Conclusion. The financial management arrangements for the project have been determined and are acceptable to the Bank, except for controls and procedures for operating the Compensation Fund.The detailed financial management arrangements for operating Compensation Fund will be prescribed in the Project Operations Manual2. The design o f a Project Operations Manual acceptable to IDA i s a condition of effectiveness. CAPMU has the necessary capacity to carry out the fiduciary functions for Avian Influenza Project inall other respects. C o u n w Issues. Based on the latest Country Financial Accountability Assessment o f December 13, 2003, improvement is still required inthe management o fpublic expenditures, including the budget process and budget execution, as well as cash and debt management. Implementing entities. The Ministry o f Agriculture and Food Industry (MAFI) and Ministry o f Health and Social Protection (MHSP) will be implementing the Project. CAPMU will be responsible for financial management functions for components implemented by both MAFI and MHSP. CAPMU will be responsible for ensuring that the Project establishes and maintains: (i) adequate accounting systems and procedures; (ii)flow-of-funds mechanisms facilitating timely disbursement o f funds and timely payments for goods, works and services; (iii) regular reporting on the use o f funds; and (iv) appropriate arrangements for regular financial audits. These responsibilities will be described indetail in the Project Operations Manual and summarized inthe FinancingAgreement. CAPMU has experience with financial management under Bank-financed projects and has established sound internal control mechanisms on the application and use o f funds. However, additional internal control procedures for the operations o f the Compensation Fund will be developed, to respond to the specific risks associated with the flow-of-funds mechanismenvisaged under the project. These procedures will be outlined inthe Project Operations Manual. Risk mitigation straten. The risk is low to moderate for all components, except for the Compensation Fund sub-component (moderate to substantial). The project financial management arrangements are designed to mitigate the inherent elevated risk through designing a detailed Project Operations Manual for the Compensation Fund, and the following combination o f Bank supervisions, required audits, and monitoring o fperiodic reports. Staff. The existing FMstaffing inthe CAF'MU i s acceptable to implement the project at the initial phase, but additional staff might be needed to allow, inter-alia, for periodic visits to the village level to review the implementation of the compensation Fund. The additional staff will report to the CAPMU financial and procurement managers. The financial manager will be responsible for disbursement functions as well as project accounting, reporting, and preparing accounting reports and financial statements, as well as monitoring financial flows to project beneficiaries, and prepare quarterly financial reports (IFRdFMRs) and the annual financial statements for audit. Financial Reporting. For project monitoring purposes, quarterly financial monitoring reports will be required. CAPMU will be responsible for designing appropriate interim un-audited financial reports (IFRs) [previously financial monitoring reports (FMRs)] to include: (a) Project Sources and Uses o f Funds, (b) Uses of Funds by Project Activity, (c) Designated Account/Local Bank Account Statements, The responsibility for drafting the Project Operations Manual rests with the ImplementingAgencies and CAPMU. The Bank will provide assistance and guidance to support the drafting. 32 (d) Physicalprogressreport, and (e) Procurement report. These financialreports will be submitted to IDA within 45 days o f the end o f each quarter. The first quarterly IFRsRMRs will be submitted after the end of the first full quarter following the initial disbursement. Formats o f the annual financial statements and the IFRs/FMRswill be incorporated inthe FinancialManagement section o f the Operations Manual. The accounting software currently used by the CAPMU allows for preparing IFRsEMRs which would incorporate all components, sub-components and expenditure categories, as may be appropriate. Disbursement Arrangements. The Recipient will establish through CAPMU a Designated Account for the credivgrant, in a commercial bank, acceptable to IDA. Disbursements from the IDA Financing will follow the transaction-based method, i.e., traditional Bankprocedures: Statements o f Expenditure (SOEs), Direct Payments, Special Commitments. For certain payments, above the MinimumApplication Size as specified in the Disbursement Letter, the CAPMU will submit withdrawal applications to the Bank for payments to suppliers and consultants directly from the Designated Account. There will be one Designated Account for the IDA credit and grant and to the extent possible, the DA will be funded equally form the credit and the grant. The ceiling for the Designated Account is established as $700,000. There will be a separate Designated Account for channeling the proceeds o f the Japanese PHRD Grant. Accounting policies and procedures. With the exception o f the Compensation Fund sub-component, for which CAPMU does not have previous experience, CAPMU has maintainedan effective internal control system to ensure that project expenditures are properly authorized and supporting documents are maintained; accounts are reconciledperiodically; project assets, including cash, are safeguarded; and cash compensation grants are properly accounted for. A detailed assetdinventories register will be maintained as part o f the project internal control procedures. Information Systems. CAPMU's information system i s a standard, of-the-shelf accounting software, known as the "1-C Bookkeeping System." This system i s used for keeping accounting records and preparation o f financial reports to the local authorities and o f financial reports, including SOEs to IDA. This Project will have a separate set o faccounts inthe CAPMU accounting records. Financial Audits. Annual audits o f the project financial statements will cover all aspects of the project, including specific requirements for the Compensation Fund. The audits will be performed by independent auditors acceptable to the Bank, and inaccordance with International Standards on Auditing (ISA), and the Bank's guidelines on auditing. They will include both the audit o f financial transactions, an assessment o f the internal control, funds flow mechanisms, and the reasonableness of the accounting, reporting and internal and external controls in respect of the Compensation Fund. The annual audit reports will consist o f a single opinion on the financial statements o f the project, incorporating the project accounts, including Designated Account Reconciliation, and SOE; as well as a Management Letter. The auditors' TOR will be prepared by the CAPMU and cleared by the Bank before the engagement o f the auditor. The cost o f the audits will be eligible for financing from IDA Financing. CAPMU will provide the auditor with full access to project-related documents and records, including the compensation claims database, and with the information required for the purpose o f the audit. The audit reports will be submitted to the Bank not later than six months after the end of the fiscal year to which they relate. Supervision Plan. During project implementation, the Bank will supervise the project's financial management arrangements in two ways: (1)review o f the project's quarterly IFRsRMRs and as well as the project's annual audited financial statements and auditor's management letter; and (ii) during the Bank's supervision missions, review o f the project's financial management and disbursement arrangements (including a review o f a sample o f SOEs and movements on the Designated Account) and 33 payments from Compensation Fund to ensure compliance with the Bank's minimumrequirements and procedures set out inthe Project Operations Manual. Compensation Fund. The Government will establish a national Compensation Fund from which owners o f poultry culled will be compensated. MAFIwill manage the Compensation Fund. Extraordinary h t i - Epidemic Commissions will be set up to value and record the culling o f birds by the State Veterinary Agency. The necessary legal, institutional, operational, and financial details for the Compensation Fund will be developed, agreed upon, and included inthe Project Operations Manual. CAPMU will execute gross payments from the Compensation Fund to agreed agents of each o f the affected towns/villages (most likely, local mayoralties will act as disbursing agents). The agents will make payments to individual farms and households. Proper financial and monitoring safeguards will be included in the Project Operations Manual to ensure timely, fair, transparent and monitorable disbursements to compensation beneficiaries, and to avoid potential abuses on all sides. As a condition of disbursement o f funds under the Compensation Fund sub-component, MOA, MAFI and CAPMU will establish and implement a Compensation Fund mechanism with appropriate internal control procedures and flow-of-funds arrangements acceptable to the Bank, to be documented in the Project Operational Manual. PAD annexes and Operations Manual will set forth the procedures for recording poultry culled under government orders and for establishing and recording poultry owner's claims for compensationpayments. A number o f minimum internal control procedures and risk mitigation measures will be implemented with respect to recording and verifying poultry culling and claims for compensation payment before any flow o f funds i s initiated. 0 The Project Operations Manual will detail the mechanisms for identifying owners eligible for compensation payments, ensuring that there will be no multiple claims. A Compensation Fund database will be maintained by the designated Ministry to facilitate record keeping, claim verification, payment facilitation, monitoring and auditing; 0 All forms to be used to record poultry culling and compensation claims will be provided by the Project. They will be pre-numbered and recorded inthe database o f the Compensation Fund. All unused forms, as well as any invalid or incorrectly completed forms, must be returned to the Compensation Fundwhen the culling records are submitted; 0 The owners o f village and backyard poultry will, at the time of culling, receive a Culling Certificate noting the date and the type and number of birds culled. Each certificate will be signed by all the designated members o f the established local commission and countersigned by the poultry owner. Based on the individual poultry owner certificates, a village summary will be completed; 0 For medium and larger farmers, appropriate internal controls, including independent check o f culling by independent audit firm and use of pre-numbered duplicate claim forms, would be included inthe operating manual; 0 Appropriate internal control procedures on the verification o f claims prior to payments are made would be included in the operational manual. Some o f these controls would include independent check o f the claim forms, chechng o f claim summaries (if applicable), checking against various database and applicable compensation schedules applicable at the prevailing date; 0 Flow-of-funds arrangements for making compensation payments are designed to minimize the number o f stages through which funds will need to pass before reaching the intended beneficiaries, while ensuring maximum transparency. Once authorized, compensation payments will be effected from the Compensation Fundthrough CAPMU inone o f two ways: (i) person in and in cash in the village, by Postal Service or bank transfer (depending on local conditions and 34 number o f payments), or (ii)through the mayoralties via their treasury accounts (in case o f numerous villagesitowns affected). Adequate internal control procedures would be implemented to ensure such payments reached the final beneficiaries/recipients. 0 The CAPMU will carry out, or will arrange to have carried out, additional checks to ensure that the eligible poultry owners, and only they, are paid and are paid in full. This will include, butnotbe limitedto, periodic operational reviews, under terms o freference (TORs) acceptable to IDA, to confirm the validity and legitimacy o f the compensation payments made. The reviewers will be required to verify compensation claims and payments made in randomly selected samples o f villages or districts; this verification will include: checking against the database, collecting and verifying information available and obtained at the village/district level, checking with individual poultry owners, checking forms and reports, etc. Any significant weaknesses identifiedwill be promptly rectified inclose consultation with IDA. 0 In addition, the external independent auditors will be asked to provide an opinion on the reasonableness o f the accounting, reporting and internal controls inrespect o f the operations o f the Compensation Fund, and the audit TORs (acceptable to IDA) will include these specific requirements. Financial Management Action Plan. Financial management arrangements at CAPMU are generally acceptable, but a number o f actions are requiredto ensure that arrangements are fully satisfactory for the project, especially withrespect to the Compensation Fund. The following action plan will be discussed with the Recipient: Action Responsibility DueDate Remarks Project Operations Manual. Develop Implementati Condition o f The Compensation Fund a manual to fully document the on Agencies, Effectivness sub-component will be procedures for accounting and internal CAPMU disbursedafter the control, including disbursement and CAPMUIMAFIhas flow o f funds (including flow chart), implemented appropriate financial reporting, including IFW internal control and fund FMR, annual reports andaudit, flow procedures. acceptable to the World Bank. Design o f institutional arrangements o f MAFI/MOA/ Disbursement A manualneedsto be the Compensation Fundoperations. CAPMU Condition for the developedto reflect the Establishment and implementation o f Compensation characteristics o f the appropriate internal control procedures Fundsub- project, including flow o f and fund flow arrangements for the component funds and accountability Compensation Fundsub-component, for cash grants1 acceptable to the World Bank. compensation fund. Staffing of the FM Unit. Recruitment CAPMU To be ready after o f additional specialist. This is not a commencement o f FMcondition. project implementation 35 Annex 8: ProcurementArrangements MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project A. General Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May, 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the IDA Financing, different procurement methods or consultant selection methods, need for pre-qualification, estimated costs, prior review requirements, and time frame are agreedbetween the Recipient and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. As described inOP8.50 for Emergency Recovery Assistance (ERA), inaddition to emergency assistance in response to natural disasters the Bank may support operations for prevention and mitigation in countries prone to or at risk of specific emergencies. This support may comprise: (a) developing a national strategy; (b) establishing an adequateinstitutional andregulatory framework; (c) carrying out studies of vulnerability and risk assessment; (d) reinforcing vulnerable structures;'and (e) acquiringhazard reductiontechnology Giventhat the HPIA may pose a significant risk to the country, as well as to the health of the population due to the risk o f an influenza pandemic the project may follow usual ERA procedures. Agreements covering procurement methods, thresholds and other conditionality will be consistent with ERA assistance guidelines and determined for Moldova according to its capacity and experience with Bank procurement. A General Procurement Notice (GPN) will be publishedinthe on-line edition of Development Business and indgMarkets inMay 2006 (estimated) announcing goods and consulting services to be procured and invitinginterestedeligible suppliers and consultants to expressinterest and to request any complementary information from the Recipient. Specific Procurement Notices (SPN) will be published in the on-line edition o f the Development Business for all ICB contracts, and inthe printed edition at the option of the Recipient. For goods to be procured through ICB, individual bidding opportunities would also be advertised in a major local newspaper on the same (or within 5) day(s) o f the on-line publication. The local advertisements will be inthe Englishlanguage and, at the option o f the Recipient, will also be inthe local language. For consultants' contracts above US$lOO,OOO, SPN/Request for Expression of Interest will be advertised in on-line edition o f the Development Business and in at least one major national newspaper/publication o f wide circulation (in the national and Englishlanguages). The notices should also be published on the web sites o f the Ministry o f Agriculture and Food Industry and Ministry of Health and Social Protection. Attention i s also drawn to the fact that under the May, 2004 Guidelines it i s also required to post information concerning Contract Awards. The following information should be published locally for each contract, the names o f all Bidderswho submitted a bid, the bid prices as read out at the public bid opening, the name o f the bidder and the evaluated price for each bid that was evaluated, the name of bidders who were rejected and the reasons for rejection, the name o f the winning bidder and the price offered. Information about all contracts awarded through direct contracting, irrespective o f price shall be published. For all ICB contracts and contracts awarded through selection of consultant firms for contract exceeding US$lOO,OOO the information should be posted on the World Bank site and in UNDB. The 36 procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented inthe Project Operations Manual. Procurement of Works: Works procured under this Project may include some minor rehabilitation works under both the Animal Health and Human Health components in cases where laboratories are in need o f minor repairs or upgrading in order to take delivery o f the new equipment. As these are all envisaged to be very small works (less than $100,000 equivalent per site) the procurement will be done usinga minor works or shopping procedure (see below); Procurement of Goods: Goods procuredunder this project estimated at about US$4m equivalent would include: equipment for veterinary laboratory network (RCVD and its two satellite laboratories) under the Animal Health component (Component 1). This would comprise specialised diagnostic equipment to confirm the presence o f HPAI in animals, including any necessary consumables and reagents and the development o f a disease information system. Under the Human Health component (Component 2) the main procurement will be concerned with the creation o f a capacity for testing for the presence o f H P A I in humans. This will comprised, specialized equipment, WHO accredited reagents and consumables. Goods supporting bio-safety standards will also be procured. Specifically this will comprise a biological safety cabinet class I1 for the National Laboratory for Viral Respiratory Diseases, upgrading o f immunofluorescence capabilities and the purchase and installation o f RT-PCR equipment and reagents. This component will also finance the upgrading o f facilities at the Infectious Diseases hospital in Chisinau through the purchase o f a mechanical ventilator, infrastructure and supplies for an intensive care unit and for an ambulance for transporting infected passengers, protective clothing and a mobile incinerator. It i s expected that limited procurement o f human influenza vaccines, influenza h t s and respiratory care equipment will be made. Under Component 4 there may be some procurement o f office equipment and computers to support implementation o f the Project. In so far as possible procurement will be done usingthe Bank's SBD for all ICB andNational SBD agreed with or satisfactory to the Bank. However, for the supply o f specific specialized equipment (particularly diagnostic equipment under both the Animal and Human Health components) an LIB procedure may be used. This is recommended and justified through the fact that there are only a limited number o f firms who can provide this equipment and due to the emergency nature o f the project. Consumables, various testing luts and medicines may be procured under Direct Contracting procedures through appropriate UN Agencies. The following procedures are envisaged to be usedunder IDAFinancing. International Competitive Bidding (ICB). Standard equipment, consumables, IT equipment and systems and medical equiment under all components o f the Project for contracts above US$300,000 equivalent per contract will be procured using ICB procedures inaccordance with the Bank's Procurement Guidelines. Limited International Bidding (LIB). For the purchase o f specialized diagnostic equipment a survey will be undertaken to identify suitable suppliers and ifjustified an LIB procedure may be used. This procedure will be implemented in accordance with paragraph 3.2 of the Procurement Guidelines. Shopping (SH) procedure will be used for readily available off-the-shelf goods, including office and computer equipment. In,line with regional policy for Avian Influenza operations, all items would have standard specifications, estimated to cost less US$200,000 equivalent per contract. This procedure will be based on obtaining and comparing price offers from at least three suppliers from at least two different countries inaccordance with paragraph 3.5 o fProcurement Guidelines. It isrecommendedthat the World Bank shopping site should be used as a basis to draw up shortlists for simple computer equipment. Inthe case of Minor Works shopping procedures will be used for contracts estimated to cost less than US$200,000 equivalent. National Competitive Bidding (NCB). Goods estimated to cost less than $300,000 equivalent per contract and Works estimated to cost less that $1,000,000 will be procured 37 according to N C B procedures in accordance with paragraphs 3.3 and 3.4 o f the Bank's Procurement Guidelines usingdocuments agreed with and acceptable to the Bank; (v) Direct Contracting. Where certain goods are available only from a particular supplier or incases where compatibility with existing equipment so requires goods may beprocured under Direct Contracting having obtained prior approval from the Bank (in accordance with para. 3.6 of the Procurement Guidelines). A number o f specialized UN Agencies are able to support the procurement o f drugs, vaccines, specialised equipment and supplies. It i s intended to make use o f these Agencies (e.g. WHO, FAO, UNICEF) in accordance with paragraph 3.9 o f the Procurement Guidelines as suppliers o f goods (mainly drugs, vaccines and reagents) following their own procedures for procurement. Procurement of non-consulting services: At this stage it i s not foreseen to procure any non-consulting services Selection of Consultants: Contracts for Consulting Services will be packaged to combine related slulls and services in order to make them attractive for competition and reduce the number o f contracts to be administered taking into consideration the implementation arrangements. To the extent practicable, training activities would be incorporated with consulting services contracts. Consultant services consist of short-and long-term assignments to be contracted to firms and/or individuals (national and/or foreign or jointly) depending on the nature and duration o f the assignments. Selection procedures will be managed through competition among qualified short listed consultants. The short lists for consultant services contracts with firms shall comprise six firms with a wide geographical spread, and with n o more than two firms from any one eligible country. The procurement of consultant services contracts financed under the IDA Financing will be in accordance with the provisions o f the Consultant Guidelines. For consulting assignments exceeding US$200,000 equivalent per contract, expressions o f interest will be obtained by advertisement in the Development Business (on-line), supplemented with notices issued in the national press. Consultancy services will be required for the following major tasks: technical assistance for human resource development in the establishment and use o f database programs; training on collection and analysis o f epidemiological data and on risk assessment under the animal health component. Under the human health component consultancy services will be required for capacity building. In particular this will comprise the establishment and maintenance o f surveillance and monitoring; support to drafting and adoption o f a validated laboratory Standard Operating Procedures (SOP). With respect to containment o f HPAI and care for HPAIpatients the following consultancy services will be required (i) development o f instructional tools, computer modules and workshops to promote adoption o f case identification, management and infection control protocols at rayon hospitals and emergency transport services; (ii) development and dissemination o f additional relevant materials for district hospitals and emergency medical services; (iii) Development o f hospital and rayon level pandemic contingency plans, and (iv) development o f a pandemic coordination network at the rayon level. Component 3 will comprise activities related to the raising o f Public Awareness and information. It i s expected this will be managed and conducted through UNICEF, it i s expected that would be hired under a sole source contract usingthe standard agreement between the Bank and UNICEFand having met the requirements of sections 3.10 and 3.15 o f the Consultants Guidelines. For any subcontracts UNICEF would use its own procurement arrangements. Finally there will be limited consultancy provided to support the implementation arrangements; Civil servants can be hired as individual consultants or as members o f a team with financing under the IDA Financingprovidedthey are onleave o f absence without pay andthey havenot been working for any of the Beneficiary Agencies immediately prior to taking leave o f absence. Short lists of consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the 38 Consultant Guidelines. The following procurement procedures will be used for selection o f consultant services : (0 Quality and Cost Based Selection (QCBS) procedures, as described in Section 11, paras 2.1 to 2.31 o f the Consultant Guidelines will be used for the larger assignments under all Components o f the Project; (ii) Selection under a Fixed Budget (FBS) would be used in accordance with para 3.5 o f the Guidelines. (iii) Least Cost Selection (LCS) procedure would be used for selection o f an auditor to carry out audit o f the Financial Statements o f the Project. (iv) Selection Based on Consultants' Qualifications (CQJ will be used for contracting firms for certain assignments under all components o f the project for which the value o f the assignments i s estimated to cost less than US$200,000 equivalent per contract and where it i s considered that a small team o f specialists would be more beneficial than a single individual. (v) Individual Consultants (IC). Many specialized activities where specific skills are needed for short period o f time at scattered intervals and which would not be practical to package with the assignments for consulting firms described above, would be best served through the recruitment of individual consultants (both foreign and national). Selection o f individual consultants will be carried out in accordance with Section V o f the Consultant Guidelines. Individuals will be selected on the basis o f their qualifications for the assignment by comparing the CVs obtained inresponse to anadvertisement inthe nationalpress or DevelopmentBusiness. (vi) Single (Sole) Source (SS). The method will be used for certain individuals with the prior approval o f the Association inaccordance with paras. 3.9 to 3.13 o f the Consultants Guidelines. The method will also be used for acquiring the services o f UNICEF under Component 3 o f the project; Training Activities: Training is an integral element o f the project's capacity building objective. IDA Financing will finance training programs, including training workshops and local training. Insofar as possible training programs would be included in larger TA contracts with firms to reduce administrative burden on project management. A large part o f the required training will be related to capacity building over adoption o f new protocols under the Human Health component. Training in the use o f new equipment will be packaged together with the equipment procurement. CAPMU supported by consultants, would be responsible for administration of a small number o f local workshops (including project launch, mid term and completion workshops) and a number o f study tours for the beneficiary Agencies and other specialists. Expenditures related to such training activities include: (a) for local training and workshops -per diems o f participants to cover transportation, lodging and subsistence; minor organizational expenses (stationery, handouts, training materials, coffee breaks); (b) for international study tours - international travel and visa costs, per diems (lodging and subsistence) and course-related expenses (fixed tuition or participation fee). Design o f the training courses and study tours may be done by the specialists contracted as short term consultants under relevant QCBS, CQ and/or IC procedures depending on the value o f the assignment as described above inthis Annex. CAPMUincooperation with the Beneficiary Agencies would be expected to prepare and agree a training plan with the Bank every year. Estimated budget, list o f participants and draft agenda for each training event will be subject to Banks prior review. Expenditure items for training activities, including study tours, would be reported under SOEs. The status of the training plan would be included as part of the quarterly progress reports, and wouldbe updated and/or modified as may be mutually agreed betweenthe coordinationunits and the Bank. Others: Following ERA procedures, the project may include financing for items on a positive list o f imports identified as necessary under a well-defined preparedness and response program to be prepared as part o f project implementation. In case o f a declared global influenza pandemic, which will trigger 39 disbursement conditions for critical imports, support will be provided under the project for the procurement o f a positive list of critical imports. These may be procured under Modified International Competitive Bidding (MICB) according to paragraphs 2.66 and 2.67 o f the Procurement Guidelines. Also, commonly traded commodities may be procured through organized international commodity markets or other channels o f competitive procurement acceptable to the Bank, in accordance with the provisions indicated above. There will be a CompensationFundprovided under the Animal Health Component, however, at this stage it is not expected that there would be any procurement activities related to this activity. Management o f the Fundwould be the responsibility o f the Government who would use existing structures to the extent possible. CAPMU, in its fiduciary capacity, may be used to transfer payments to the local level where actual effecting o f payments would be handled by the appropriate local departments. B. Assessmentofthe agency's capacityto implementprocurement Country Issues A country procurement review (CPAR) for Moldova was finalized in 2003, a summary o f which i s indicated in the following paragraphs. Public procurement represents a substantial element o f the expenditure side o f the Government's budget. Estimates prepared for the CPAR indicated that total expenditure on procurement amounted to 1.6 billion lei (MDL) in 2002 [US$118 million]. Procurement accounted for 17 percent o f total expenditures by the State government and 42 percent o f expenditure by local governments. While Moldova's procurement law i s basically sound, the practice o f public procurement falls some way short o f the relatively hgh standard which the law sets. The Department for Public Procurement (now a part o f the Agency for Material Reserves, Public Procurement and Humanitarian Aid), whose primary function i s to prevent departures from the procurement law, i s frequently subject to political pressure and i s not held accountable for the way inwhich it performs its regulatory and oversight functions. However, it shouldbe statedthat the proportion o f SS procurement has steadily fallen over the last few quarters. The Law i s currently being rewritten under an IDF Grant supported by the Bank, the new law should address many o f the shortcomings and weaknesses of the existing law and also aims to re-establish the status o f the now Department for Public Procurement back into that of an Agency and make it directly answerable to either Parliament or the Cabinet ofMinisters. ProcurementArrangements An assessment of the capacity ofthe ImplementationAgencies to implement procurement actions for the project has been carried out by Procurement Accredited Specialist (PAS) assigned to the project during pre-appraisal in February 2006. In common with other projects in this sector and due to its emergency nature, it was decided that the fiduciary responsibilities (including Procurement) would be the responsibility o f CAPMU. CAPMU has already successfully carried out these responsibilities for a number o f Bank financed projects inthe agricultural sector. The assessment reviewed the organizational structure for implementing the project and the interaction between the project's staff responsible for procurement and the two beneficiary ministries (Ministry o f Agriculture and Food Industry and the Ministry of Health and Social Protection). Overall responsibility for procurement management and coordination will therefore rest yith CAPMU. Each beneficiary agency will be strengthened with a component coordinator hired as a local consultant who main responsibilities will be to manage and implement the project activities, with the fiduciary support o f CAPMU. The procedure and documents to be used for all small procurements (inc. biddingdocuments and contract forms) would all be included inthe Project Operational Manual and would be subject to agreement with 40 the Bank as suitable for use (and standard) for the Project. The procedure to be followed would be based on the national Opentendering procedure. The overall projectrisk for procurement is High. C. Procurement Plan The Procurement Plan contains all the relevant procurement information, including prior review thresholds for Bank financed contracts. For procurement under the IDA Financing, the Recipient will use the Bank's latest Standard Bidding Documents (SBD), Standard Form o f Consulting Contracts and Request for Proposals (RFP), and Standard Bid Evaluation Report Forms. For NCB procedures acceptable Bidding Documents will be agreed. The Standard Bidding Documents for procurement o f US$200,000 per contract These will comprise Supply and Installationo f Information Systems - Single or Information Systems would be used for procurements o f all IT equipment estimated to cost over Two Stage Bidding (both version March2003 or more recent). Also, the sample procurement documents and forms developed in ECA Region for small value procurement would be adapted to suit the Project needs for procurement as outlined inthe POM. The Recipient, after appraisal, developed a procurement plan for project implementation which provides the basis for the agreed procurement methods. This plan has been agreed between the Recipient and the Project Team on M a y 3-5, 2006 and i s available at the offices o f CAPMU as well as at the two implementing Ministries. It will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. D. Frequency of Procurement Supervision Inadditionto the priorreview supervision to be carriedout from Bank offices, the capacity assessment of the Implementation Agencies has recommended two supervision missions per year to visit the field to carry out post review o f procurement actions. It i s envisaged that 2 out o f every 5 procurements will be reviewed ex-post. E. Detailsofthe ProcurementArrangements InvolvingInternational Competition 1. Goods, Works, andNonConsultingServices (a) List o f contract packages to be procured following ICB, NCB and direct contracting: See Procurement Plan (below) (b)ICB contracts estimated to cost above $200,000 equivalent per contract (for Goods), NCB contracts estimated to cost above $300,000 equivalent per contract (for Goods), and all direct contracting will be subject to prior review by the Bank. The first two ICB, N C B and Shopping contract for Goods (or any value) will also be subject to prior review. All ICB contract for Works, the NCB and first two Minor Works contract shall also be subject to Prior Review 2. Consulting Services (a) List o f consultingassignments with short-list o f internationalfirms: See Procurement Plan (below) (b) Consultancy services estimated to cost above $50,000 equivalent per contract for firms and $25,000 equivalent per contract for individuals and single source selection of consultants will be subject to prior review by the Bank. The first CQ contract and first two IC contract irrespective of price will also be subject to Prior Review. All TORS willbe reviewed and agreedwiththe Bank 41 (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract, may be composed entirely of national consultants inaccordance with theprovisionsofparagraph2.7 ofthe Consultant Guidelines. 42 1. PROCUREMENTPLAN I.GENERAL 1. Agreed Date of the procurement Plan Original: May 5,2006 Revision 1:.................... 2. Date of General Procurement Notice: estimated May 2006 11.Goods andWorks andnonconsulting:services. 1. Prior Review Threshold: Procurement Decisions subject to Prior Review by Bank as statedin Appendix 1to the Guidelines for Procurement : Procurement Prior Review Threshold Comments * allContracts subject tojustification 2. Pre-qualification. Bidders shall be pre-qualified inaccordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines(No pre-qualification i s envisaged) 3. CDDProcurement Manual: Project components to be carriedout bycommunity participationin accordancewith the provisions o fparagraph 3.17 include: No CDD i s envisaged 4. Any Other Special ProcurementArrangements: Payments underthe Compensation Fundwill be governedby the CompensationFundmanualwhichwill form an integralpart of the POM 5. Procurement Itemswith Methods and Time Schedule: See below 111.SelectionofConsultants 1. Prior Review Threshold: SelectionDecisions subject to PriorReviewbyBank as statedin Appendix 1to the GuidelinesSelection and Employment o f Consultants: 43 *all Contracts subject tojustification 2. Short list comprising entirely of national consultants: Short list o f consultants for services, estimated to cost less than $100,000 equivalent per contract, may comprise entirely of national consultants inaccordancewith the provisions o fparagraph 2.7 o f the Consultant Guidelines. 3. Any Other Special Selection Arrangements: 4. Consultancy Assignments with Selection Methods and Time Schedule: See below IV. Other 1. Ex-Post Review: All other contracts below Bank's prior review threshold are subject to Bank's selective ex-post review. Periodic ex-post review by Bank staff will be undertakenduringregular supervision missions. Procurement documents, such as bidding documents, bids, bid evaluation reports and correspondencerelatedto bids and contracts will be kept readily available for Bank's ex-post review during supervision missions or at any other points in time. Bank missions will review at least2 out o fevery 5 contracts which are subject to ex-post review. 2. Record Keeping: CAPMU will maintain complete procurement files which will be reviewed by Bank supervision missions. All procurement related documentation that requires Bank prior review will be cleared by Procurement Accredited Staff (PAS) and relevant technical staff. No packages above mandatory review thresholds by RPA are anticipated. Procurement information will be recorded by CAPMU and submitted to Bank as part o f the quarterly (FMRs) and annual progress reports. A simple management information systemwith a procurement module has been established to assist the CAPMUprocurement specialists to monitor all procurement information. 44 Annex 9: EconomicandFinancialAnalysis MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project Public goods. Investment in the Project is justified because prevention and containment o f infectious diseases such as Avian Influenza are public goods. Households and firms face little incentive to invest in prevention and containment that benefit others. Yet much o f the world i s at risk o f a spread o f the infection, so the world as a whole faces a powerful incentive to invest in prevention and containment, hence the rationale for World Bank involvement inthe fight against Avian Influenza. Probabilistic nature o f the analysis. Most World Bank projects seek to improve an existing condition, for example, to rehabilitate a poor quality road or to improve educational achievement. The proposed Avian Influenza Project differs fkom standard projects inthat there i s no existing condition: Avian Influenza has not infected Moldovan people or poultry, and this may never occur. Instead, the proposed Project seeks to prevent and control outbreaks that can be regarded, in effect, as probabilistic events, and to reduce the costs o f an outbreak (among poultry, or human), should it occur, by minimizing the chances o f it spreading further. Whether wild birds will infect poultry i s uncertain, and this uncertainty can be defined as a probability. Spread o f the Avian Influenza to the general poultry population i s also a probabilistic event. So i s the infection o f people directly exposed to the virus. Unfortunately, there do not seem to be any reliable estimates of the probabilities. Moreover, it i s rather difficulty to assess the impact o f the Project on outcomes for either poultry or people. Infection of poultry. Annex Table 9.1 below illustrates the chain o f probabilities involved inthe spread o f HPAI to poultry and the potential for the Project to reduce these probabilities. The probabilities are subjective estimates o f the Appraisal Mission. The column labeled `main' shows the most likely scenario. The Table presents a `Low' case scenario in line with the mandate to conduct a sensitivity analysis. Inthe L o w scenario risks o f an outbreak are relatively low and the impact o f the Project on reducingthese risks is relatively low. Annex Table9.1. MOLDOVA: Probabilitiesofthe Spread ofHPAI Among Poultry,With andWithout Project (inpercentage points) Scenarios Main Low ~WithoutProject, assumptions aboutprobabilities Single & limitedoutbreak among poultry 95% 90% Generalized spread o f the outbreak among poultry 50% 40% ~With Project, reduction in without Projectprobabilities Reductioninprob. o f a single limited outbreak among poultry 0% 0% Reduction inmob. of generalized spread o f outbreak 50% 25% Jointprobabilities: WithoutProject: Generalized outbreak amongpoultry 47.5% 36.0% WithProject:Generalized outbreak among poultry 23.8% 27.0% Source: World Bank. 45 In the Main scenario, implementation of the project leads to a fall in the probability of a generalized outbreak among poultry from about 48% to 24%. In the low scenario the proportional impact o f the project i s smaller; implementation leads to a fall in the probability of a generalized outbreak among poultry from 36% to 27%. The impact o f implementation can also be expressed in terms of the expected value o f poultry lost to Avian Influenza and to culling (Annex Table 9.2). Inthe main scenario, the loss of poultry falls from $69 to $35 million (this i s computed by applying the probabilities from Annex Table 9.1 to the market value of the birds). The rate of return for a US$ 10.6 million project is rather high, even when only the cost in lost poultry i s considered and even when the efficiency o f the Project inreducing riskrather low. Inthe main case, the rate o f returni s 226%, and inthe low case the rate falls to 23%. Annex Table 9.2. MOLDOVA: ExpectedValue ofLostPoultryWith and WithoutProject andRatesof Return (inmillions ofUS dollars) Scenarios Main Low Without Project $69 $52 With -Prniect __..- - a - - - $35 --- $39 --- Projectrateof returnfrom loss of poultryavoided 226% 23% Source: World Bank. Infection of people. Humans usually resist infectionby existing strains of HPAI (Source: WHO), and the number of infections and deathsfrom an outbreak inMoldovawouldprobably be small. There have been no fatalities so far as a consequence of the outbreak in Romania. Eventual mutation o f the virus could raise infection and mortality rates significantly, to around the figures shown on Annex 9 Table 3 below. The Project seems likely to modestly reduce the probabilities of infection, hospitalization, and mortality, perhaps by between 30 and 15%. Giventhese assumptions, the Project would reduce the probability of death of exposedpeople fiom 0.5% to 0.2% i s the main scenario. Annex Table 9.3. MOLDOVA: Probabilitiesof MortalityandMorbidityIncase of a World-Wide Pandemic (inpercentagepoints) Scenarios Main Minus WithoutProject, assumptions about probabilities Infectiono f exposedpeople 30% 50% Hospitalizationo f infectedpeople 10% 15% Mortality o f hospitalizedpeople 15% 25% With Project, reduction in without Project probabilities Reduction inprobability o f infection 30% 15% Reduction inprobability o fhospitalization 30% 15% Reductioninprobability o fmortality 30% 15% Compoundprobabilities: Without Project: Probability o f mortality o f exposed people 0.5% 1.9% With Project: Probability of mortality o f exposed people 0.2% 1.2% Source:World Bank. The probabilities in Annex Table 9.3 can be use to compute estimated economic costs o f a generalized pandemic among people (Annex Table 9.4). The scenarios are rather speculative; since this is an evaluation of costs of infectionby a virus with maybecome infectious betweenhumanthrough adaptation and mutation and does not yet exist. The computation assumes that about half the residential population 46 of 3.5 million is exposed to a new form o f Avian Influenza and that on average, infected people lose 6 days o f work, and that hospitalizationalso lasts for six days. Lost labor i s evaluated at the average daily wage and the cost of hospitalization is evaluated at the average daily cost o f hospital treatment for pneumonia. Lives lost are valued as the present discounted value of 20 years o f earning of the average national wage, discounted at 8%. The results are illustrative, but do show that implementation o f the Project, under the assumptions o f Annex 9 Table 3 and 4, would reduce total costs inboth the main and low case scenarios. Annex 9 Table 4. MOLDOVA:ExpectedValue ofLostWork, of Hospitalization,andofLostLife,Duringa GeneralHumanPandemic, With andWithoutProject (inmillions ofUSdollars) Scenarios Main Low Without Project Labor income lost $9 $15 Cost o f hospitalization $4 $11 Life lost $148 $618 Total without Project $162 $644 With Project Labor income lost $6 $13 Cost o f hospitalization $2 $8 Life lost $51 $380 Total with Project $59 $400 Fiscal impact and sustainability. The Project should not compromise the national budget, in most respects. The Government continues to pay the salaries o f the veterinarians, technicians, nurses, doctors, and other staff engaged inprevention and containment o f Avian Influenza. Moreover, the Government i s not contemplating significant new hiringas part of the project. The Government has been procuring basic equipment and materials as part o f its contribution to the anti- Avian Influenza effort. In 2005, the Government disbursed 5 million lei, to finance the following expenditures: a) necessary virology laboratory equipment for the Republican Center for Veterinary Diagnostic for AIdiagnostics; b) luts for AI serological testing; c) 6 tones o f disinfectant; d) a vehicle for performingpathological sampling inInfectionPoints; e) a vehicle for transporting interventionteams to InfectionPoints; f) 5 disinfectionvehicles; g) 2000 consumable items. The area for fiscal concern i s the Compensation Fundfor fanners who lose poultry to Avian Influenza. The Government has publicly committed itself to reimburse all fanners for lost poultry, but has not budgeted any money for such a fund and has no plans, at present, to submit such a budget request to the parliament. This leaves the Government with an uncovered liability o f roughly up to US$ 125 million- the value o f the domestic poultry stock. Moreover, lack o f adequate funding may lead to a quick cessation inpayments to farmers, once the $US 1.O allocatedby the Project is exhausted, and this would reduce incentives for farmers to report sick poultry. 47 Annex 10: SafeguardPolicyIssues MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project SafeguardPoliciesTriggeredby the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [I NaturalHabitats (OP/BP 4.04) [I [XI PestManagement (OP 4.09) [I [XI CulturalProperty (OPN 11.03, beingrevised as OP 4.11) [I [XI InvoluntaryResettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OP/BP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects inDisputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI The Project triggers only one safeguard policy on the required Environmental Assessment. In view of the emergency nature o f the proposedProject, the team received a waiver allowing for a delay in the implementation of the Environmental Assessment from the normal appraisal stage. The preparation and disclosure of an Environmental Management Plan i s a condition for disbursementfor Component I- Animal Health. * By supporting theproposedproject, the Bank does not intend to prejudice thejnal determination of theparties' claims on the disputed areas 48 Annex 11: ProjectPreparationand Supervision MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project Planned Acutal PCNreview None None Appraisal 3/24/2006 3/24/2006 Negotiations 411312006 5/5/2006 BoardRVP approval 511512006 Planned date of effectiveness 711512006 Planned date ofmid-term review 12/31/2007 Planned closing date 12/31/2009 Key institutions responsible for preparation o fthe project: I MinistryofAgriculture andFoodIndustry MinistryofHealthand SocialProtection WorldHealthOrganization UNICEF Bank staff and consultantswho worked on the project included: Name Title Unit Anatol Gobjila Senior Operations Officer ECSSD MenahemPrywes Senior Economist ECHSD Rob de Rooij Veterinary Specialist Consultant Dr.JohnBashiruddin Animal HealthLab Specialist Consultant (Institute For Animal Health) Dr.Alex Leventhal Director ofPublic Health WHO & Ministryof Health, Services Israel Dr.IsabelleBergeri Medical Officer WHO (Lyon, France) Dr.Pave1Ursu Liaison Officer WHO (Chisinau, Moldova) IrinaBabich Financial Management ECSPS Specialist NataliaCherevatova Program Assistant ECSSD Alexei Ionascu Project Analyst ECSHD Anna Wielogorska Senior Procurement Specialist ECSPS Bank funds expendedto date onproject preparation: 1. Bank resources:US$82,000 2. Trust funds: 3. Total: US$82,000 EstimatedApproval and Supervision costs: 1. Remainingcosts to approval: US$40,000 2. Estimatedannual supervision cost: US82,OOO 49 Annex 12: Documentsin the ProjectFile MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project Ministry of Agriculture and Food Industry,Veterinary Medicine Division. "National Contingency Plan of the Republic of Moldovafor Avian Influenza." Chisinau: Moldova, 2006. Special Anti-epidemics Commission. "National PreparednessPlan for Human Influenza Pandemic inthe Republic ofMoldova." Chisinau: Moldova, 2005 Special Anti-epidemics Commission. "Republican Action Program on Avian FluProphylaxis on the Territory of Moldova." Chisinau: Moldova, 2005 Special Anti-epidemics Commission. "Decision #1 on protectionof the Republic o f Moldova from Avian Influenza." Chisinau: Moldova, October 20,2005. WHO/EURO Mission Report, 20-24 February 2006. DetailedProject and Japanese PHRD Grant Costing Tables. 50 Annex 13: Statementof LoansandCredits MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project ~~ Difference between expectedand actual Original Amount in US$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel Undisb Ong Frm Rev'd PO89124 2006 COMPETITIVENESS ENHANCEMENT 0.00 4.90 0.00 0.00 0.00 9.62 0.00 0.00 PO82916 2005 PUBFIh' MGMT TA 0.00 8.55 0.00 0.00 0.00 8.25 0.00 0.00 PO79314 2004 SIF 2 0.00 20.00 0.00 0.00 0.00 15.97 -0.21 0.00 PO75995 2004 AG POLLUTION CONTROL (GEF) 0.00 0.00 0.00 4.95 0.00 2.79 1.17 0.00 PO40558 2004 ENERGY 2 0.00 35.00 0.00 0.00 0.00 29.74 6.83 0.00 PO74469 2003 WS & SAN 0.00 12.00 0.00 0.00 0.00 10.60 7.62 1.73 PO74122 2003 AIDS CONTROL 0.00 0.00 0.00 0.00 0.00 3.92 0.87 0.00 PO73626 2003 TRADE & TRANS FACIL INSE EUR 0.00 7.21 0.00 0.00 0.00 1.28 -1.64 0.00 PO51174 2001 HEALTH INVST FUND 0.00 10.00 0.00 0.00 0.00 0.35 -0.65 -0.65 PO51173 1999 SOC PROT 0.00 11.10 0.00 0.00 0.00 6.22 5.76 2.40 PO35771 1998 FIRST CADASTRE 0.00 15.90 0.00 0.00 0.00 2.22 -0.82 -0.82 Total: 0.00 124.66 0.00 4.95 0.00 90.96 18.93 2.66 MOLDOVA STATEMENT OF IFC's Held and Disbursed Portfolio InMillionsofUSDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2000 FinComBank 0.94 0.00 0.00 0.00 0.94 0.00 0.00 0.00 2004 FinComBank 1.25 0.00 0.00 0.00 1.25 0.00 0.00 0.00 1997 INCON 5.12 0.00 0.00 0.00 5.12 0.00 0.00 0.00 2000 Moldindconbank 0.56 0.00 0.38 0.00 0.56 0.00 0.38 0.00 2004 Moldindconbank 3.50 0.00 0.00 0.00 3.50 0.00 0.00 0.00 2000 ProCreditMDA 0.00 0.00 0.90 0.00 0.00 0.00 0.90 0.00 2001 UF Moldova 21.43 0.00 0.00 0.00 16.43 0.00 0.00 0.00 2001 Victoriabank 1.14 0.00 0.00 0.00 1.14 0.00 0.00 0.00 2004 Victoriabank 5.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 1999 VoxTel 0.00 0.00 1.25 0.00 0.00 0.00 1.25 0.00 2000 VoxTel 0.00 0.00 0.07 0.00 0.00 0.00 0.07 0.00 2001 VoxTel 0.00 0.00 0.30 0.00 0.00 0.00 0.30 0.00 Total portfolio: 38.94 0.00 2.90 0.00 33.94 0.00 2.90 0.00 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommitment: 0.00 0.00 0.00 0.00 51 Annex 14: Country at a Glance MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project BALANCE Of P A Y M E N T S 1984 1994 2003 2004 .- (US$ m/i/ionsj Current account balance to GDP (Oh) I 'Exports of goods and sewices 651 1,054 1196 imports of goods and sewices 751 1,720 1961 Resourcebalance -00 -666 -766 Net income -8 323 417 Net current transfers 24 8 2 I76 Current account balance -92 -181 -I73 Financingitems (net) a 2 214 214 Changes innet reserves -30 -33 -41 Memo: Reserves including gold (US$ miliions) BO 302 321 Conversion rate(DEC,locai/US$I 2.8 B.9 a 3 EXTERNAL DEBT and RESOURCE FLOWS 1984 1994 2003 2004 (US$ mi//ionsl ,Composition o f 2004 debt (US$ mill.) Totaldebt outstanding and disbursed 842 1,447 1301 iBRD 142 8 7 140 IDA 0 193 206 I A I40 Total debt service 84 228 191 IBRD XI 24 24 IDA 0 1 1 Composition of net resource flows Official grants 0 0 Official creditors 32 -31 -20 Private crediton 90 -119 -02 Foreign direct investment (net inflows) 24 0 Portfolio equity(net inflows) 1 0 F 208 World Bank program Commitments 55 0 A IBRD E- Bilaterd Disbursements 0 a0 14 B IDA -- D O t k rmitllatld - F Prlvate - Principalrepayments 0 I7 I7 C-IMF G- Shod-terr Net flows 0 -6 -4 Interest payments 0 8 7 Net transfers -0 -?4 -11 Note:This tablewas producedfrom the Development Economics LDB database. 8/25/05 52 Annex 15: Map MOLDOVA: Avian InfluenzaControl& HumanPandemicPreparedness& Response Project 53 IBRD 33448 27°E 28°E 29°E 30°E Dnestr To Vinnytsya UKRAINE To Chernivtsi Moghiliov- To Vinnytsya Ocnita Podolski Briceni MOLDOVA E D I N E T B To Donduseni Chernivtsi e Edinet Soroca s 48°N Drochia S O R O C A s 48°N Camenca aRRîscani îscani Floresti Nistru Costesti r Glodeni Soldănesti Soldănesti Balti Rîbnita Rîbnita Balatina a Rezina Prut rB A L T I Sîngerei Sîngerei To Voznesens'k FFălesti ălesti O R HChiperceni E I a 0 10 20 30 40 Kilometers Telenesti b ROMANIA Orhei 0 10 20 30 Miles Sculeni i Dubăsari Dubăsari To Pascani Mt. Balanesti a Călărasi Călărasi (430 m) CHISINAU DUBĂSARI Criuleni Ungheni Grigoriopol UNGHENI Străseni Străseni To Zhmerynka CHISINAU 47°N CHISINAU 47°N LLăpusna ăpusna Ialoveni Anenii Noi Leuseni Hîncesti Hîncesti Bender Tiraspol (Tighina) Slobozia LAPUSNA T I G H I N A Căinari Căinari Căuseni Căuseni To Odesa Plain Cimislia To Birlad Leova Bugeac Stefan-Vodă odă Nistru To Birlad Basarabeasca Comrat Cantemir (Gagauzia) This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information GAGAUZIA shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any UKRAINE endorsement or acceptance of such boundaries. Ceadîr- Ceadîr- To Artsyz CAHUL Lunga 46°N 27°E Prut 46°N Cahul Taraclia MOLDOVA TARACLIA GAGAUZIA Vulcănesti ulcănesti SELECTED CITIES AND TOWNS COUNTY (JUDETUL) CAPITALS NATIONAL CAPITAL To Imayil Black RIVERS Sea MAIN ROADS To Bucharest and Constanta RAILROADS COUNTY (JUDETUL) BOUNDARIES INTERNATIONAL BOUNDARIES 28°E 29°E 30°E SEPTEMBER 2004