The Planning Commission has approved new policy guidelines making it mandatory that no donor-funded development project will be submitted for approval without Appraisal Document (PAD) and financial agreement with the lender.
As per Policy Guidelines for Donor Funded Projects It has been recommended that the Intelligent Project Automation System (iPAS) of the Ministry of Planning Development & Special Initiatives (MoPDSIs) should not accept the PC-1 from the sponsor without the draft PAD and draft financing agreement, official documents available with the scribe reveals.
Although currently the MoPDSI’s Manual for Development Projects clearly states that “after the firm commitment of availability of foreign assistance from a donor through the EAD, the PC-I (along with the feasibility study, PAD, and draft loan/grant agreement), will be forwarded to the Planning Commission for consideration of the CDWP/ECNEC”.
However, the prevailing practice is totally against the Planning development manual. The sponsor submits the concept paper for the donor-funded project to the CDWP/ Concept clearing committee. After clearance, the sponsor prepares the PC-1 in light of their decisions. The sponsor then submits the PC-1 to the Planning Commission.
The PC-1 submitted generally does not have the draft PAD and financing agreement. The PC appraises the PC-1 through a broad consultative process, and experts suggest changes in the PC-1 before it is submitted to the CDWP. The CDWP also undertakes its review and suggests changes before submission to ECNEC. At none of these stages is the PAD considered or synchronized with the PC-1.
Once the ECNEC approves the PC-1, an intimation is sent to the EAD to process the financing agreement. The EAD signs the financing agreement with the donor based on PAD, not the PC-1. The donor releases funds based on the financing agreement during project implementation (the financing agreement is based on the PAD, not the PC-1).
In most cases, a disconnect exists between the PC-1 and the PAD, especially on interventions and implementation strategies. The PAD does not reflect the thorough appraisal process of the PC/CDWP/ECNEC, thereby violating the sanctity of the entire planning process.
As per the proposed guidelines for donor-funded projects, it has been suggested that the concept paper submitted by the sponsoring agency and duly appraised and approved by the CDWP/ Concept Clearing Committee should be the basis of the PAD and PC-1, the documents available with the scribe reveals.
It is further proposed that the sponsor should design the PC-1 in light of the directions of the CDWP/ Concept Clearing Committee. The PC-1 that the sponsor submits to the Planning Commission should include the draft PAD and draft financing agreement as per the Manual for Development Projects. It is recommended that the IPAS systems should not accept the PC-1 from the sponsor without the draft PAD and draft financing agreement.
The sponsor should certify that the PC-1 and PAD submitted are in sync. Once the CDWP has approved the PC-1, the PAD should be revised and harmonized with the PC-1. The sponsor should certify that this has taken place. Only after certification should the summary for approval of ECNEC be submitted. After approval of ECNEC, it is recommended that the EAD sign the financing agreement in light of the final CDWP/ECNEC approved PC-1, which includes the PAD.