Cambodia - Disease Control and Health Development Project

Document of The World Bank Report No: 15596-KH STAFF APPRAISAL REPORT KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT November 15, 1996 Human Resources Operations Division Country Department I East Asia and Pacific Region  CURRENCY EQUIVALENTS (Official Rate as of October, 1996) Riel 2,600 = 1 US dollar WEIGHTS AND MEASURES Metric System LIST OF ACRONYMS ADB Asian Development Bank ARI Annual Risk of Infection AusAID Australian Agency for International Development CDC Cambodia Development Council CENAT National Anti-Tuberculosis Center CNM National Malaria Center EPI Expanded Program of Immunization EU European Union GPA Global Program on AIDS HIV Human Immuno-deficiencyVirus HMA Health Management Agreements ICRC International Commission for the Red Cross ITF Interim Trust Fund MOEF Ministry of Economy and Finance MOH Ministry of Health MOP Ministry of Planning NAO National AIDS Office NGO Non Governmental Organization NMP National Malaria Program NTP National Tuberculosis Program ODA Overseas Development Assistance PCU Project Coordination Unit PHA Provincial Health Advisor PROV. P.U. Provincial Project Unit SFKC Social Fund of the Kingdom of Cambodia STD Sexually Transmitted Disease UNDP United Nations Development Program UNICEF United Nations Children's Fund WHO World Health Organization FISCAL YEAR January I - December 31  KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Kingdom of Cambodia Implementing Agency: Ministry of Health Beneficiary: Not applicable Poverty: Program of Targeted Interventions Amount: SDR 20.6 million (US$ 30.4 million equivalent) Terms: Standard IDA, with 40 years of maturity and 10 years grace Commitment Fee: 0.5% on undisbursed credit balances, beginning 60 days after signing, less any waiver Onlending Terms: Not applicable Financing Plan: See para. 4.6 Net Present Value: Not applicable Map Number: IBRD 27986 Project ID Number: 4034 Vice President: Nicholas Hope, Acting, EAP Director: Javad Khalilzadeh-Shirazi, EA 1 Division Chief: Sven Burmester, EA 1 HR Task Manager: Christopher Chamberlin, Sr. Economist   KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT Table of Contents Pages 1. INTRODUCTION ..........................1 2. THE SECTOR ..........................2 A. BACKGROUND .........................2 B. SECTORAL ISSUES .........................6 C. GOVERNMENT STRATEGY ..........................7 D. PROJECT RATIONALE ..........................8 3.THE PROJECT.11 3.T E P O E T ...........................................................................................................II A. OBJECTIVES AND SCOPE .................................................. 11 B. PROJECT DESCRIPTION .................................................. 11 4. PROJECT COSTS, FINANCING, PROCUREMENT AND DISBURSEMENT . 20 A. COST ESTIMATES ................................................... 20 B. FINANCING ................................................... 22 C. PROCUREMENT ................................................... 23 D. DISBURSEMENT ................................................... 26 5. PROJECT MANAGEMENT AND IMPLEMENTATION ..................................... 28 A. ORGANIZATION ................................................... 28 B. IMPLEMENTATION ARRANGEMENTS ................................. .................. 29 C. ACCOUNTS AND AUDITING ................................................... 32 D. PROJECT MONITORING, EVALUATION AND REPORTING ........................... 33 E. ENVIRONMENTAL ASPECTS ................................................... 33 F. PARTICIPATION ................................................... 34 This report is based on findings of an appraisal mission that visited Cambodia in February-March 1996. The mission comprised Christopher Chamberlin (Task Manager), Stanley Scheyer (Sr. Public Health Specialist); Rama Lakshminarayanan (Health Specialist), Mostafa El-Erian (Legal), Ji An Zhou (Human Resources Specialist) and consultants Michael Porter (HIV/AIDS specialist), Jim Herm (Management Specialist) and Cyril Bowman (Architect). Sarah Foster and consultants Chris Braden, Clydette Powell, Jenny Hill and Michael Cheng contributed to the preparation of the project in earlier phases. Peer reviewers were Willy de Geyndt (ASTHR), Bernhard Liese (HSDDR) and Maureen Lewis (LA2HR). The report was cleared by Sven Burmester (Chief, EA I HR) and J. Khalilzadeh-Shirazi (Director, EA I).  - 11 - 6. PROJECT BENEFITS, RISKS AND SUSTAINABILITY ..................................... 35 A. BENEFITS .............................................................. 35 B. RISKS ............................................................... 36 C. SUSTAINABILITY .............................................................. 37 7. AGREEMENTS REACHED AND RECOMMENDATION ................................... 38 TEXT TABLES TABLE 4.1: SUMMARY OF PROJECT COST BY COMPONENT .............................................. 20 TABLE 4.2: SUMMARY OF PROJECT COST BY CATEGORY OF EXPENDITURE .................... 21 TABLE 4.3: FINANCING PLAN .................................... : 22 TABLE 4.4: SUMMARY OF PROPOSED PROCUREMENT ARRANGEMENTS .......................... 23 TABLE 4.5: DISBURSEMENT CATEGORIES ................................................. 26 ANNEXES 1. SUPPORT TO NATIONAL TUBERCULOSIS PROGRAM ................................................. 41 2. MOSQUITO NET DISTRIBUTION AND TREATMENT ..................................... 45 3. HIV/AIDS COMPONENT: MANAGEMENT AND IMPLEMENTATION ............................. 52 4. HEALTH SERVICES STRENGTHENING - PROVINCIAL SELECTION AND PHASING ......... 58 5. LIST OF MEDICAL EQUIPMENT FOR HEALTH CENTERS AND REFERRAL HOSPITALS ... 62 6. LIST OF PRIORITY DRUGS AND MEDICAL SUPPLIES SUPPORTED UNDER THE NATIONAL DRUG SUPPLY SYSTEM ............................................................. 67 7. PROJECT MANAGEMENT ARRANGEMENTS ............................................................. 70 8. HEALTH MANAGEMENT AGREEMENTS ............................................................. 77 9. PROJECT PERFORMANCE INDICATORS ............................................................. 84 10. PROJECT COSTS ..0......................................................... g 11. PROCUREMENT AND DISBURSEMENT MATRIX ........................................................... 94 12. DISBURSEMENT SCHEDULE AND PROFILE ........................................ 95 13. PROJECT IMPLEMENTATION SCHEDULE ......................................... 96 14. IDA SUPERVISION PLAN ............................................................. 97 15. SELECTED DOCUMENTS AVAILABLE IN THE PROJECT FILE . . 99 MAP SECTION IBRD 27986  KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT 1. INTRODUCTION 1.1 The development prospects of Cambodia are strongly shaped by three constraints: poorly developed official institutions and services as a result of 20 years of war and international isolation; a depleted human resource base due to the destructive policies of the Khmer Rouge government in the 1970s; and a continuing rural insurgency that isolates certain areas of the country and distorts government expenditures. These constraints are balanced by long term development potential based on valuable assets: abundant mineral and forest resources, compelling tourist attractions, extensive arable land, and trade and investment opportunities with the dynamic economies on its borders. The Government's development objectives are structured to address the above constraints in the near term and in the longer term to expand the productive sustainable use of the country's considerable assets and endowments. The project would address a key aspect of human resource development: improving the controi of three communicable diseases and rehabilitating primary health care services. 1.2 Health conditions in the country are particularly unfavorable; mortality levels from easily preventable diseases rival the highest rates in the world. Over half of Cambodia's population carries the TB bacillus, and from this pool of infection, an estimated 35-40,000 active cases of TB are prevalent each year, making TB a leading cause of death among young adults. Malaria is also a leading killer, causing up to 5,000 deaths a year out of 500,000 probable cases, and with drug resistance a major problem for treatment strategies. HIV/AIDS has grown geometrically each year into an epidemic, with risk groups reporting up to 40 percent sero-positivity for HIV. The primary health care system is poorly developed to manage and deliver the services that could have an impact on these and other preventive and communicable diseases. 1.3 The Disease Control and Health Development Project (CDCP) will help finance a focused five year effort to assist the Government in the reconstruction and expansion of Cambodia's health system with particular attention paid to reducing death and sickness from three leading communicable diseases: tuberculosis, malaria and HIV/AIDS. Tuberculosis and malaria control efforts will be expanded and improved and the rapidly expanding HIV/AIDS epidemic will be checked through a range of preventive measures focusing on blood safety, information and behavioral change. To ensure the effectiveness of these programs and other primary health care interventions, the project will also help rehabilitate the long neglected public health services and establish modern management techniques focused on objectives and performance.  2. THE SECTOR A. BACKGROUND Health Situation 2.1 Health conditions in Cambodia are extremely poor and have barely improved over the last twenty years, due to the virtual dismantling of the health system during the 1970s and overall lack of investment in the health system since then. Data on the health situation is limited, however, it is known that Cambodia suffers from a very high burden of mortality from preventable and curable diseases. An estimated 115 out of every 1,000 infants under the age of one die-nearly three times the regional infant mortality rate of 42 per 1,000 live births -- while the under-five mortality rate is 181 per 1,000 live births as compared to the regional rate of 56 per 1,000 -- with acute respiratory infections, diarrhea and malaria being the leading causes of childhood mortality. Maternal health is little better -- the maternal mortality ratio estimated at 900 per 100,000 births is the highest in East Asia. Tuberculosis and malaria are widespread and are leading causes of death, and HIV/AIDS is rapidly reaching epidemic proportions. 2.2 Tuberculosis. Cambodia harbors some of the highest rates of TB in the world, with active TB cases reported to be over 800 per 100,000 population in some areas. Over half the population is infected with the TB bacillus, and from this pool of infection, 35-40,000 active cases exist at any one time, making TB a leading killer of young adults and a significant threat to children. 2.3 Even with increased disease control efforts, a decrease in the number of active TB cases may not be realized for many years. Rather, over the next five years, Cambodia is likely to see an increase in the number of TB patients due to the effects of HIV infection, which dramatically increases the risk of developing TB; the increased availability and capacity of medical staff to diagnose TB; and the increased reliability and quality of TB treatment attracting a greater number of patients. In order to decrease the prevalence of TB in the population and reduce the number of new cases over a five to ten year time frame, about 70 percent of active cases (24,000 cases) will need to be treated each year, a 50 percent increase over the number of cases treated in 1994 and 1995. 2.4 Malaria. Malaria is a major cause of illness and death in Cambodia, with 100,000 laboratory confirmed cases and 1,100 recorded deaths in 1994. The real figures may be up to five times higher, with the overall case fatality rate estimated at about 1 percent, and rising to over 10 percent, in some malaria-prone districts. 2.5 An estimated 17 percent of the country's population live in areas where there is a high risk of malaria transmission. These high risk areas are the forested areas and rubber plantations towards the borders of the country. The densely populated central and south-eastern rice growing areas, along the Tonle Sap River, are low risk areas for malaria. However, there is a  - 3 - large transient population, mainly made up of young men, who venture into the forests to make a living, thereby increasing the population at high risk of malaria infection. 2.6 Drug resistant malaria is a rising problem in Cambodia. About 80 percent of the malaria infections are caused by Plasmodium falciparum malaria, which has developed a high level of drug resistance, especially in the western provinces. An additional problem is that many people rely on drugs bought in the marketplace to treat malaria, sometimes spending more than US$100 on inappropriate and dangerous medicines. Such inappropriate treatment is thought to be a major factor behind the high case fatality rates among malaria victims in Cambodia. 2.7 HIV/AIDS. Compared globally, the human immunodeficiency virus (HIV) emerged late in Cambodia. First detected in 1991, the virus continues a relentless spread in the community, and the country faces, potentially, the worst HIV epidemic in Asia. The rate of increase of HIV prevalence among blood donors is phenomenal and alarming, rising in Phnom Penh from 0.075 percent in 1991 to 8 percent in October 1995. Figures of HIV prevalence in mid-1995 derived from surveillance activities are similarly of concern. Not surprisingly, prostitutes show the highest infection rates, ranging up to 40 percent of those tested in Battambang. Especially disturbing is the number of pregnant women found HIV-positive, over 4 percent in Siem Reap and Sihanoukville. The military and police are increasingly infected, with around 10 percent of the force tested being HIV-positive in some locations, and patients with sexually transmitted diseases (STDs) in Phnom Penh showing similar levels of infection in a 1994 survey. Among tuberculosis patients in 1995, between 20 and 31 percent were HIV-positive. 2.8 From the available epidemiological data, the virus appears to be relatively evenly spread across the main urban centers. The epidemic is mainly sexually transmitted and of those identified with HIV, about 75 percent are men. An assessment of intravenous drug use conducted by the World Bank in November 1995 revealed little evidence of such practices despite the high volume of drug trafficking in the region. However, there were early indications that the situation may be changing. Indiscriminate use of needles for injections by providers of medical care is clearly a threat and may have contributed to the rapid rise of HIV prevalence. The Health System 2.9 In theory, the public health system in Cambodia consists of a clinic in each commune, a referral hospital in each district capital, and a provincial hospital in each provincial capital. In reality, most clinics are non-existent or virtually non-functioning at the commune level, with poorly motivated staff offering very limited services. Few of the district hospitals offer referral services. Instead they function more like clinics offering an outpatient clinic, mother and child health care, vaccinations and limited in-patient care for TB patients. Medical, surgical and obstetrical emergencies can only be treated in provincial hospitals, in national hospitals, and in a limited number of district hospitals. Overall, existing services are heavily biased in favor of Phnom Penh and the provincial capitals, with only 13 percent of the Ministry of Health (MOH) workforce employed in rural areas.  2.10 Where services are available, their quality is often poor and utilization of existing facilities low. Reasons for this include the poor state of facilities, inadequate equipment and drug supplies, the lack of quality and relevant training for health workers, and the low level of staff salaries leading to widespread informal fee charging for drugs and services by public health workers. The high maternal mortality ratio in Cambodia is to a large extent due to the lack of qualified surgeons/obstetricians in the country. Where donors have helped upgrade the clinical skills of the staff, ensured a reliable drug supply, and rehabilitated the facilities, utilization has increased dramatically, pointing to the large unmet demand for quality modem health services. 2.11 Up until 1993, the public health system was decentralized, and the provincial authorities were relatively autonomous in the management and financing of health services. This resulted in a weak central level and a large variation in terms of resource allocation and the quality of health care among the different provinces. Since 1993, the Ministry of Health, with the support of advisors from WHO and UNICEF, has endeavored to develop policies and plans to restructure and rationalize the health system. This resulted in the publication of the "National Health Development Plan 1994-1996" which redefines the institutional framework for the health system and the services offered at each level, in an aim to rationalize the use of resources. The focus of the plan is the development of the district health system to deliver essential primary health care to meet communities' basic health needs. 2.12 The reform of the health system implies a revision of the expected roles of each level of care as well as a revision of infrastructure coverage in accordance with population distribution, not administrative divisions, as before. Under the Health Plan, the health system is to be organized into three levels: (a) Peripheral level (or "operational district"), made up of health centers and district referral hospitals. Health centers will be the point of first contact for the population and would provide a minimum package of services (public health and minor curative) for a 10,000 person catchment area. Referral hospitals will offer first referral support to the health centers and provide a complementary package of public health and essential clinical services. (b) Intermediate level consisting of provincial directorates, hospitals and health institutions in the province. The Provincial Health Directorate is the link between the MOH and the operational districts. Provincial hospitals will act as referral hospitals for the district in which they are situated and will offer a number of specialized services that are not provided by the district hospitals. (c) Central level consisting of the MOH, national institutes, national programs and national hospitals. 2.13 Health coverage plans are being developed at the provincial level, in consultation with local authorities and communities, to define clearly the location of district-level health facilities, the services offered and their catchment areas.  2.14 As part of the Health Plan the national disease control programs are to be strengthened, including those for TB, malaria and AIDS. In the past, these programs have been run as vertical programs with management and reporting structures separate from the general health system. However, they are now in the process of being integrated with the other health care services provided at the district and provincial level, and the capacity within the MOH to play a more active role in their management and evaluation is being developed. 2.15 National Tuberculosis Program (NTP). The NTP was established in 1980 under the management authority of the National Anti-Tuberculosis Center (CENAT) based in Phnom Penh. CENAT has responsibility for managing and supervising TB control activities, including the definition of drug requirements and equipment for TB diagnosis and treatment and training provincial and district-level health workers in diagnosis and patient care. In 1993, a National Tuberculosis Control Plan was completed with the assistance of WHO. It sets out objectives and targets for the program. The main targets are to increase the case detection rate from 30 percent to 70 percent and the cure rate to 85 percent by the year 2000. As of late 1995, the NTP had covered over half of all public hospitals with its new short-course therapy procedures, drugs and training. 2.16 Treatment for TB is generally administered on an in-patient basis (directly observed treatment) for the first two to three months. Food supplements are provided to patients on a daily basis while in the hospital, and on a monthly basis during the follow-up ambulatory phase. This food program, mostly financed by the World Food Program until now, encourages patients to remain in hospital for intensive treatment and acts as an incentive for completing their therapy as an out-patient. 2.17 National Malaria Program (NMP). The NMP, also established in 1980, is managed at the central level by the National Malaria Center (CNM). As with the tuberculosis program, malaria treatment activities are undertaken primarily by provincial and district level health workers, with CNM providing technical supervision, training and support. Malaria vector control activities, including impregnated bednet supervision, is coordinated by CNM at the central level. 2.18 The primary objective of the NMP is to reduce malaria mortality and morbidity, with a target of supplying all central, provincial and district hospitals with sufficient antimalarial drugs effective for their area and achieving less than 2 percent hospital mortality from malaria by the year 2000. A three-fold strategy has been developed to achieve this: first, improve the access to early, accurate diagnosis and prompt, effective treatment; second, increase the use of preventive measures, particularly impregnated bednets; and third, develop community understanding of the prevention and recognition of the disease and its rational treatment. The second objective of the NMP is to develop the institutional capacity to control vector borne diseases through improved management, training and research. 2.19 National AIDS Program. Given the relatively recent incidence of AIDS in Cambodia, the national program for its prevention and control is relatively undeveloped. The response to the epidemic has been largely driven by external concern and support through WHO, UNDP and  -6 - the international NGO community. This has been critical in assisting the Government to focus on the issue and organize a response. A National AIDS Committee, chaired by the Minister of Health, was formed in 1992 to provide a multisectoral response to the epidemic. In 1993, a National AIDS Office (NAO) was established, located within the Ministry of Health. Staffed by six professionals, all doctors, the office manages the national program and acts as a de facto secretariat for the recently renamed National STD and AIDS Control Committee. 2.20 Despite the establishment of the NAO, there is still scant intersectoral coordination and limited program effort on HIV/AIDS. The NAO has insufficient resources, both human and financial, to be able to conduct a program on the scale needed if the epidemic is to be slowed. To date, NAO has relied on financing from the WHO/GPA (Global Program on AIDS), which is expected to stop at the end of 1995. The termination of WHO/GPA financing creates uncertainty and a loss of resources for NAO, which in 1996 and 1997 only has commitments of US$150,000/year from UNAIDS and an uncertain future government allocation. Given the limited resources for the national program, in effect, most HIV/AIDS activities are supported by NGOs. Particularly successful NGO programs include the social marketing of condoms, which has expanded the market for safe, reliable condoms. Recently, with the increasing need to take action on the HIV issue, the spotlight has been cast on high risk behaviors and how they could be modified. B. SECTORAL ISSUES 2.21 Low coverage and impact of public health programs. The public health system in Cambodia was virtually dismantled during the 1970s, and today, aside from EPI, national public health programs have yet to exert a sustained impact on disease and death from preventable and communicable diseases. EPI has been operating for many years with sustained support from UNICEF and WHO and is often the only public health service available to rural communities. Similar sustained efforts are required to have the desired impact on malaria, TB and AIDS. 2.22 Low public spending on health services. Public budgets for health have historically been very low in Cambodia, rising to about 49 billion riels (approx. US$20 million) or 0.7 percent of GDP in 1995. This is equivalent to less than US$2 per capita, far less than the US$12 per capita recommended for low income countries. Cost estimates by the MOH indicate that US$5-6 per capita will be needed to provide a minimum package of services at commune clinic and district hospital levels alone. The historically low levels of public expenditures for health is compounded by the even lower share given to essential services. Currently, government resources are dedicated heavily to the running costs of hospital services in Phnom Penh and provincial and district facilities -- 50 percent of the government budget is spent on tertiary and secondary hospitals. Very limited services are provided in TB, malaria and maternal and child care, particularly at the commune level, where only 15 percent of the public health budget is directed. The lack of public health services has meant that many people turn to the private sector for medical care. The Socio-Economic Survey of Cambodia 1993-94 indicates that households spend about US$22 a year per capita on health care, 7 percent of a household budget. These expenditures are primarily for drugs purchased at pharmacies and local drug sellers. Often these drugs are wrongly prescribed or administered and can worsen health problems.  - 7 - 2.23 Inappropriate distribution of health system resources. The present composition of the health care workforce and facilities and their distribution are not meeting the health care needs of the Cambodian population. An estimated 25 percent of the rural population do not have access to public health care. Health workers are poorly trained, poorly motivated and poorly paid. Reform of the health system is needed with particular emphasis given to rationalizing and improving the services of clinics and referral hospitals, and the managerial links between the two. This need is well-recognized by the MOH and is addressed through their strategy of developing provincial health coverage plans and an operational district-based health system. The main challenge now is to finalize these plans and implement them. The issue of staff pay levels is being addressed at the national level, through civil service reform. The MOH is a pilot ministry for this effort, which has substantial donor support. 2.24 Weak management capacity. Management and supervisory linkages between the MOH and the provinces are weak, in part because of the historical autonomy of the provincial level. Responsibility and accountability between the center and intermediary and peripheral levels of the health system are lacking. Few staff are trained in managerial techniques or in planning, budgeting and supervision. Invariably, it has been the presence of NGO support or provincial health advisors, financed by WHO and UNICEF, that have enabled management issues to be dealt with, in spite of system deficiencies. Improving the responsiveness and accountability between the Ministry of Health and the provincial and lower levels of the health system will require reforming the "contractual" responsibilities of various parties in the public health system, to increase the degree of accountability and expected performance of health care providers at all levels. C. GOVERNMENT STRATEGY 2.25 Following a period of intense policy dialogue and assistance from external advisors, the Ministry of Health has defined clear policies and service delivery strategies for the health sector. The overall aim of the Government's National Health Policy is to "improve the health and well- being of the Cambodian people by making full use of both public and private health care systems, giving special attention to health education, preventative and curative health care for people living in rural areas." 2.26 At the heart of the Government's strategy is the strengthening of a district-based health care system through which a cost-effective but essential minimum package of primary and preventive health services can be delivered to rural areas. Other priorities include reducing the incidence of communicable diseases, in particular, priority diseases that account for most of the burden of disease in Cambodia, including malaria, tuberculosis, sexually transmitted diseases and HIV; rehabilitating and upgrading the system infrastructure, including human resources, so as to deliver health services more effectively down to the primary service level; ensuring an adequate and secure supply of drugs throughout the health system; and ensuring the full participation of both the public and private sectors in the delivery of health services, within appropriate regulatory frameworks to raise service standards.  2.27 Through a process of restructuring and investment, the Government aims to develop an affordable and rational health service that meets the priority health needs of the population. The strategy to attain this objective embraces four key principles: increase the direct links between MOH and provincial and district systems on policy, budget and management matters; build-up the relevant national disease control programs;- expand national budgetary support for the health system; and more effectively coordinate donor support to fill identified gaps in financing. Thus, malaria and TB control programs require a full range of facilities, equipment and drugs in referral hospitals and health centers in order for these programs to be effective. 2.28 Donors are strongly supportive of the government's health plan and have assisted in its development and implementation. In particular, UNICEF and WHO have been supporting local service delivery (UNICEF finances provincial health advisors, immunization and essential drug programs) and building policy and management capacities at the central MOH (WHO, ODA and UNDP). The Asian Development Bank (ADB) has approved a Basic Health Services project in five provinces, and has coordinated its plans closely with World Bank project preparation. Together, the two projects will provide facility, equipment and essential drugs for 15 provinces and 80 percent of the population. Overall, donor coordination is good, as is the integration of NGO-supported activities into the government's program. NGOs have played an important role in providing health services and training in Cambodia over the past five years. Over 70 NGOs are active in the health sector, the majority running small-scale primary health care projects in rural districts. Many of them have well-qualified and skilled staff and have helped establish well-run health facilities. Their experience is likely to prove invaluable in implementing the government's district-based health plan. D. PROJECT RATIONALE 2.29 The Disease Control and Health Development Project (CDCP) has been designed to help attain the Government's health sector objectives through financial and technical support of the MOH's strategy. The objectives of the Project are consistent with IDA's Country Assistance Strategy for 1996-1997. 2.30 The choice among alternative interventions for project financing followed a four step process: (i) the epidemiologic profile was assessed to determine leading causes of premature mortality; (ii) those leading causes with clear public health characteristics (communicable diseases that individuals would not adequately control using their private resources) were selected as meriting public financing and project support (heart disease and injuries were ranked much lower, for example); (iii) the availability of substantial donor support was estimated so as to exclude well financed interventions (family planning and immunizations, for example); and (iv) the cost-effectiveness ratios for the remaining interventions were obtained in the secondary literature. This process led to the choice of three national disease control programs, namely TB, malaria and HIV, all of which are cost-effective interventions, high priorities of the Government, and are also underfinanced. 2.31 The treatment of TB by means of chemotherapy is ranked highly cost effective and is considered a core public health intervention. Specifically, short course chemotherapy involving  - 9 - two month hospitalization has been estimated to cost US$3 per Disability Adjusted Life Year saved (DALY'). Treatment of malaria, another comrmunicable threat to public health, is also justified on cost effectiveness and public health grounds, although at higher cost (US$200 per DALY in areas of high case fatality and endemicity, as is the case in Cambodia). HIV prevention activities have been accorded the highest public health priority, especially in the early phases of the epidemic, as in Cambodia. Spread of the disease from the "core" risk groups, such as prostitutes and soldiers, to the general population involves a major escalation of the epidemic and of future lives lost. Market failure in the control of such an epidemic is widely acknowledged. Moreover, the benefit of saving those lives and of averting the high costs to the health system of treating AIDS patients constitutes a compelling rationale on cost-effectiveness grounds for early and large scale preventive efforts. The epidemic in Cambodia is in just such early stages. Treatment of HIV/AIDS on the other hand 2 is not considered highly cost-effective , thus narrowing the intervention choices to preventive measures given current medical technologies. 2.32 Several key strategic choices were agreed with the Government in order to maximize sustainability and the impact of project investments. First, the project has opted for a two track approach of disease control and health system strengthening. A narrower focus on disease control would be simpler to implement centrally, but would encounter capacity and implementation constraints at the service delivery level. On the other hand, a health service strengthening project alone (facilities, equipment, drugs, training) would inject large quantities of inputs into health facilities, but with no clear disease control and public health objective or impact. Disease control programs are in fact highly dependent on the integrated service delivery structure at the provincial level and below. Given the unexpectedly rapid development of MOH and provincial capacities, the project will support both tracks to ensure the success of the disease control programs and to build capacities to deliver basic health services. 2.33 Second, during project design, an analysis of alternatives concerning "least cost" issues within the broad disease control strategies was done. For example, distribution of insecticide- treated bednets is considered a highly promising intervention to control the disease vector, and experiments and pilots in Cambodia have shown impressive results in reducing transmission of the disease. Bednet distribution is thus a replacement intervention for household residual spraying, the cost-effectiveness of which has been called into question in recent work. To tailor the bednet strategy to Cambodia and to identify least cost approaches, two studies were undertaken and their results incorporated in the formulation of the bednet distribution strategy of the National Malaria Program. 2.34 Similarly, in the case of TB control, a study on patient food supplements was conducted to estimate more accurately the minimum level of such supplementation to assure high patient compliance with the short course chemotherapy regimen. Although the project will not finance such costs, an effective incentive program for patient compliance is vital to the success of the TB I Jamison, et al, Disease Control Priorities in Developing Countries, World Bank, 1993. 2 N. Prescott, Economic Analysis of Antiretroviral Policy Options in Thailand (paper presented to Third International Conference on AIDS in Asia and the Pacific, Chiang Mai, Thailand, 1995).  - 10- control prograrn. Based on the study, the Government agreed to provide adequate resources to this activity at current levels of supplementation in cooperation with the World Food Program. 2.35 Third, the project will emphasize several management reforms to establish accountability for specific health outputs and ultimately outcomes. A MOH-provincial Health Management Agreement, limited organizational restructuring at the provincial level, and a special fund to support program supervision and management training will be supported by the project to improve management practices and orient the system to performance and results. 2.36 Fourth, given that the current phase of development in Cambodia is one of reconstruction and rehabilitation, the project will support the limited reconstruction and expansion of the publicly subsidized health system, rather than attempt to restructure the health system or its financing. Thus, the project will not seek to implement far-reaching reforms on personnel compensation a major issue, as it is tied to wider civil service reform efforts now underway. However, it will be structured to support cost recovery schemes both at health centers and in the social marketing strategy for bednet distribution. The project will also develop private sector capacities in specialized areas where the private sector can be expected to contribute to the public health objectives. Social marketing of impregnated bednets through private sector channels will be supported, as will NGO and other private sector initiatives in HIV/AIDS prevention and outreach. 2.37 Fifth, the project is structured to finance public subsidies justified on a public finance/public good rationale. The government and the Bank agreed at the outset that control of communicable diseases is a fundamental priority for any government, and that basic principles of public finance and epidemiology dictate a sharp focus on strengthening the capacities of the government to exert an impact on the severe public health problems in malaria, TB, and HIV. Thus the project will not support tertiary hospitals, sophisticated equipment used in the treatment of non-communicable diseases, or training of highly specialized medical personnel. 2.38 Finally, the project has been costed based upon a programmatic approach. First, the government assessed likely donor and budget flows to the three priority programs and made a decision on which of its priorities merited ITF financing3. Costs were estimated based on the total needs for the Government's public health programs in those project supported areas. Available financing from the government and donors has been estimated for these same programs, and financing gaps were then calculated. The ITF-assisted project is costed to fill these gaps. Primary care priorities, such as maternal and child care, family planning, immunizations and nutrition will be assisted indirectly by the health strengthening component, and are also receiving considerable support from other donors. 3 The project will be financed by the Interim Trust Fund (ITF), and IDA will serve as administrator of the ITF.  3. THE PROJECT A. OBJECTIVES AND SCOPE 3.1 Project Objectives. The project aims to support the Government of Cambodia in pursuing two of its principal health sector objectives: (i) reduce death and sickness from preventable diseases, especially malaria, TB and HIV/AIDS; and (ii) rehabilitate the health system infrastructure so as to deliver basic health services and disease control programs more effectively down to the community level. 3.2 Project Scope. To achieve these objectives the project will have the following components: (a) National Program Support for the malaria, tuberculosis and HIV/AIDS control programs, including provision of (i) drugs and laboratory supplies; (ii) impregnated bednets; (iii) training; (iv) logistical support; and (v) technical assistance in order to expand and increase the impact of these programs. (b) Basic Health Strengthening including investments in (i) the reconstruction and rehabilitation of first and referral-level facilities; (ii) medical equipment and furniture; (iii) essential drugs; (iv) in-service training; and (v) MOH strengthening. B. PROJECT DESCRIPTION Component I. National Program Support (US$13.0 million equivalent estimated base cost) 3.3 The project would support three national health programs, namely malaria, tuberculosis and HIV/AIDS. In all cases, ITF financing is being directed towards areas where available financing from the Government and other donors falls short of projected needs. Since the project will cover the estimated total financing gap of these national programs, the geographic coverage of this component is effectively nationwide. The parallel ADB supported Basic Health Services Project will provide the necessary health strengthening investments in five additional provinces, thus enhancing the impact of the three disease control programs nationally. National Tuberculosis Program (US$3.0 million equivalent estimated base cost) 3.4 The overall objective of this sub-component is to assist the NTP (see Annex 1) in its efforts to reduce tuberculosis prevalence by sustaining (i) a yearly combined cure rate and therapy completion rate of at least 85 percent, and (ii) a sustained yearly relapse rate of less than 5 percent. Specifically, the sub-component would: (a) improve the quality and accessibility of tuberculosis services in health centers and referral hospitals, including case diagnosis and  - 12 - management; and (b) strengthen the institutional capacity of the National Anti-Tuberculosis Center (CENAT), through improved management, training, and research. 3.5 The total financing base cost requirement for the NTP throughout the period 1996-2000 is estimated to be US$9.3 million base cost. Other major financing for the program is expected from the Government, WHO, JICA and the World Food Program (WFP). Under the project, the following activities will be supported: Disease Management 3.6 Improvements will be made to laboratories at referral hospitals and health centers with TB ward facilities to increase the capability for and accuracy of TB diagnosis. Inputs would consist of diagnostic equipment (primarily microscopes), reagents and supplies. Where laboratories are established in referral hospitals, the TB and malaria laboratory services will be integrated. In full referral hospitals, radiology equipment and additional TB beds will be supplied under Health Strengthening (Component II). TB drugs will also be supplied under Component II. Program Management 3.7 Support will be provided to CENAT in the form of (a) staff training including short courses in drug treatment and program supervision and short-termn overseas courses; (b) technical assistance; (c) office renovation and upgrading; (d) office equipment; and (e) vehicles for provincial level supervision. 3.8 Three different training courses will be supported: the bi-annual NTP meeting with approximately 100 participants; the short-course chemotherapy seminar conducted five times each year with approximately 80 participants; and workshops conducted five times each year with about 40 participants. In addition, the travel and per diem costs of CENAT staff traveling to the provinces four times each year for training and supervision will be covered. International training activities include participation in the meeting of the International Union Against Tuberculosis and Lung Disease, usually held in Europe, the regional tuberculosis control meetings (Thailand, Vietnam), and overseas courses in TB control and epidemiology. 3.9 Technical assistance will consist of a national program advisor and a laboratory advisor. To date, these positions have been financed by WHO and JICA on a full-time basis. This support is ending at the end of 1997, after which the project will support the cost on a-6 month basis in 1998, and four months per year thereafter. Evaluation and Research 3.10 Four types of epidemiologic survey will be financed: a national TB prevalence survey, a tuberculin skin test survey every five years, a drug-resistance survey each year, and an HIV infection survey among TB patients each year. Per diem costs and equipment are included in the financing of the surveys.  - 13 - 3.11 Food requirements for TB patients are included in the costs of the national program. However, these costs will be financed by the Government and the WFP, not by ITF. Malaria Control Program (US$3.5 million equivalent estimated base cost) 3.12 The overall objective of this component is to support the CNM in implementing the National Malaria Program which aims to reduce malaria transmission and case mortality and morbidity through a treatment and community-based preventive program (see Annex 2). Specifically, the component would (i) improve the access to early, accurate diagnosis and prompt, effective treatment of malaria; (ii) expand the community-level use of impregnated mosquito nets in high and medium risk areas; (iii) support pilot testing of a social marketing approach for impregnated mosquito nets; and (iv) increase the capacity of the CNM to manage, supervise and monitor the program. 3.13 The total base cost financing for the NMP for the period 1996-2000 is estimated to be US$11.9 million. Major financing for the program is expected from WHO, EU, ODA and AusAID. The project will support the following activities: Disease Management 3.14 Financing in the area of disease management will assist the CNM to expand diagnostic and treatment services into more peripheral areas. Inputs include microscopes and laboratory equipment for referral hospitals and selected health centers. Where feasible, integrated laboratories will be established which carry out TB and malaria diagnosis, as well as other laboratory tests. The supply of laboratory equipment under the project has, therefore, been rationalized to take into account existing stock and shared usage across programs. Anti-malarial drugs will also be supplied and are budgeted under the Health Strengthening Component. Vector Control 3.15 A key objective of the NMP is to expand and evaluate the use of insecticide-treated mosquito nets, through both public channels and development of a social marketing strategy implemented by the private sector and NGOs (see Annex 2). The project would support this initiative by financing (a) mosquito nets, insecticide and basic equipment for net treatment (if not funded by other donors); (b) vehicles (to be shared with other disease control programs); (c) training; (d) IEC materials; (e) operations budget for implementation; and (f) operations research in alternative, cost-effective personal protection methods, IEC strategies, cost recovery schemes and alternative distribution strategies. Details of the program strategy and its phasing are provided in the Project Implementation Plan. Program Management 3.16 Support will be provided to CNM in the form of (a) staff training; (b) technical assistance; (c) facility renovation and upgrading; (d) office equipment; and (e) vehicles (motorcycles) for program supervision at the provincial level.  - 14- 3.17 Training to be supported includes training of trainers programs, short courses for health workers in malaria treatment and control, and CNM staff training, including foreign scholarships, in areas such as information, education and communication, health policy and management, medical sociology, parasitology/entomology and epidemiology. Evaluation and Research 3.18 Current NMP strategies and activities are based on limited information. The expanded interventions that are to be supported will require more effort in evaluation and operational research if they are to have the desired impact. Financing will therefore be provided for a series of evaluation and research studies, including evaluations of in vivo drug resistance, expanding the use of artemesinin based anti-malarials, vector prevalence and mosquito biting habits, malaria parasite prevalence, the impact of impregnated mosquito nets, social marketing, and operational research into rapid antigen test kits and examination of malaria during pregnancy and early childhood. HIV/AIDS Program (US$6.5 million equivalent estimated base cost) 3.19 The objective of this sub-component is to counter the spread of the HIV virus. Assistance will be provided to increase the staff and financial resource base of the National AIDS Office (NAO) so as to enhance its ability to provide the overall guidance and management of the HIV/AIDS program. Providing direction and leadership to the program and coordinating donor and NGO contributions will improve a situation marked by a matrix of initiatives, undertaken with good intentions but lacking coordination and possibly sustainability. 3.20 Ultimately, the Bank's support for the HIV/AIDS program is expected to contribute to reduction in the transmission rate thus limiting the spread of the virus. Evidence from other countries indicates that such an outcome is possible through effecting behavior change. It is known to require an intensive effort and to take time. Achieving this objective will result in diminished morbidity and mortality among the working population, reduce child mortality and the number of orphans and lower the considerable direct and indirect financial burden of an unchecked epidemic. The total base cost financing for the HIV/AIDS program for the period 1996-2000 is estimated to be US$ 10 million. 3.21 The project will support the key elements of a national strategy to address the problem both at the country and provincial level through the following activities: Institutional Development 3.22 National Level. The National AIDS Office will be strengthened through the provision of (i) supplies and equipment, including communication equipment; (ii) training; (iii) technical assistance; and (iv) logistical and financial support for supervision of national activities for which the NAO will be directly responsible, as well as of provincial AIDS programs (see Annex 3). Travel to attend international meetings about HIV/AIDS and STDs will be provided. Technical assistance will be provided to support program management and implementation and related activities on a declining basis over the life of the project.  - 15- 3.23 Provincial Level. Support in the form of supplies, equipment and motorcycles will be provided for provincial HIV/AIDS programs to increase their capacity to implement and supervise AIDS program activities, including sentinel surveillance activities, monitoring NGO programs funded out of the Small Grants Programs, peer education activities and supervising counseling services at the provincial blood banks. Prevention Programs 3.24 Information, Education and Communication. The project will support a broad and intensive program of ensuring the population is well informed about the nature of the AIDS epidemic and how personal risk may be minimized. It is expected that much of the creative work which this entails, such as preparing radio and TV spots, will be contracted out to the private sector. Similarly, the actual broadcasting of prepared material will be undertaken by private radio and TV stations in addition to Government channels. The resources for this program will be managed through the NAO. A media director and supporting staff will be hired by the NAO to assist the NAO with its responsibility for managing the IEC program. Technical assistance will be provided to assist in the preparation of communication strategies and advise on message content and programming. 3.25 Blood Transfusion Services. To ensure that the blood supply remains HIV-free, financing will be provided for a supply of testing reagents for HIV screening in those centers already established and also for in-service training and a quality control program. Selected staff at the National Blood Transfusion Center and the provincial level will receive training in counseling for donors found to be HIV+. Assistance will also be provided for the establishment of a further 8 provincial blood transfusion centers (Kandal, Koh Kong, Mundalkiri, Preah Vihear, Prey Veng, Rattanankiri, Sihanoukville, and Stung Treng). 3.26 Risk Behavior Reduction: (a) Outreach Program. The NAO currently administers an outreach program to raise AIDS awareness. This program will be expanded with project support for the first two years. During negotiations, agreement was reached that program performance will be evaluated and the evaluation report submitted to IDA not later than December 31, 1997. Further support for outreach activities will be made available from unallocated project funds, provided the evaluation is fully satisfactory (para 7.1 (g)). Financing will be made available for motorcycles for outreach workers, and supplies such as T-shirts for the peer educators trained by the outreach workers; and a program of workshops for the outreach workers, which will include counseling skills. A program of central-level support will be initiated and technical assistance will be provided to assist with program development. Study tours to neighboring countries will enhance program effectiveness through observing alternative approaches and networking with colleagues. An incentive program will be maintained for peer educators and outreach workers.  - 16 - (b) Condom Promotion. Condoms are successfully socially marketed throughout Cambodia, and the project will not support this activity. However, limited support will be provided for condom supplies used for special activities, such as the outreach program and STD clinics where condoms are initially provided free to commercial sex workers and patients. Treatment Program for Sexually Transmitted Diseases (STDs) 3.27 The National Center for Dermatology and Venereology will be strengthened to enable it to perform more adequately its function as a national referral center for STDs and as a core training center. To accomplish this aim, the training and laboratory facilities will be expanded and upgraded accompanied by a program of staff improvement both at the laboratory and clinical levels. The core staff will be responsible for introducing the syndromic approach to STD diagnosis and management through a systematic program of training trainers at the provincial AIDS office, who will become responsible for conducting training for provincial and district health staff. This will be supported with technical assistance and resources to conduct specific epidemiological and other studies related to STD management. At the provincial level, five additional STD provincial referral clinics will be established at Kampong Speu, Kampong Thom, Kampot/Kep, Kratie and Rattanakiri. Developing activities among private sector providers will be entrusted to NGOs through the Small Grants Program. Monitoring, Research and Evaluation 3.28 The sentinel surveillance program will be sustained throughout the life of the project on an annual basis. A behavioral surveillance system, which will determine whether behavior change is occurring, will be introduced on a trial basis at a limited number of sites. For ongoing program monitoring and evaluation, resources for studies and operational research will be established to be used in a flexible manner and in response to identified problems and needs. An annual program evaluation will be undertaken through a workshop using technical assistance. Small Grants Program 3.29 A fund will be established under the NAO to provide grant financing for HIV/AIDS- related activities to be undertaken by the NGO community/private sector. It is anticipated that these resources will largely be directed towards local Cambodian NGOs. Identification of activities will be a two way process, by the NGOs themselves and by the NAO program which may require NGO capacity to carry out Government policy and program interventions. While the fund will be managed by the NAO, the decisions on grant awards will be subject to approval by a Project Grant Committee, charged with reviewing and approving proposals for Grants submitted by prospective Grantees. The proposed operational polices and procedures of the Project Grants Program and management arrangements for this committee are detailed in Annex 3. During negotiations the government provided assurances to appoint an HIVWAIDS Project Grant Committee not later than January 31, 1997, with responsibilities and membership satisfactory to IDA (para. 7. 1 (s)).  - 17- Component II. Health Service Strengthening (US$18.1 million eguivalent estimated base cost) 3.30 In order to ensure the effectiveness of the malaria, tuberculosis, and HIV/AIDS programs, the overall health delivery system in which these programs operate and on which they depend for implementation needs to be strengthened. Under this component, the project will support investments to upgrade the Ministry of Health and its basic health service delivery apparatus at the provincial level and below and to restore acceptable standards of facilities, equipment, and essential drug supply. Basic management procedures will be also introduced to improve performance and accountability within the public health system (see para. 5.4). 3.31 The national Health Coverage Plan, according to which the distribution of facilities, equipment, staff and services will be rationalized by population, epidemiologic patterns, special access conditions, and affordability, provides a sound framework for planning and phasing the health strengthening component. The Government's immediate objective is to increase the flow of resources to the peripheral level so as to establish an efficient district health system that provides communities with accessible and quality health care. In keeping with this policy, project financing will predominantly be directed to upgrading health centers and referral hospitals. 3.32 During the transitional phase while the Health Coverage Plan is being implemented, in effect, four categories of health facilities would exist at the district level and below: health centers which offer the minimum package of services; district hospitals which would operate as health centers in the future, but would maintain their TB diagnosis and treatment capacity; basic referral hospitals which would support essential public health programs but would offer only limited surgical services; and full referral hospitals which would provide services corresponding to the full complementary package of services as defined under the Health Coverage Plan. 3.33 Selection of Provinces and Facilities for Upgrading. Due to the widespread destruction and neglect of health infrastructure, the total needs for health facility upgrading are high, and well exceed the capacity of the MOH to staff, equip, supply and manage over five years. Therefore, a set of criteria was developed to prioritize provinces for project investment. The five criteria are: (i) disease incidence and prevalence (TB and malaria), (ii) management capacity, (iii) accessibility, (iv) population size, and (v) support from the ADB Basic Health Services Project (see Annex 4). Using the above methodology, a practical phased program of construction and support was developed for ten priority provinces in two phases (I and II). The six phase I provinces (upgrading to begin in the first year of implementation) are Battambang, Kampot/Kep, Kandal, Kompong Speu, Phnom Penh and Siem Reap. The four phase II provinces (upgrading to begin in the second year of implementation) are Kampong Thom, Kratie, Pursat and Rattanakiri. The project will support the needs of this program over a five year period, beginning in late 1996.  - 18- 3.34 The project will support the following activities: Facilities Upgrading (US$10.2 million eguivalent estimated base cost) 3.35 The project will support investments in the construction and rehabilitation of 26 referral hospitals and 230 health centers in the ten provinces. 57 health centers (including 26 with TB ward renovations), 6 basic referral hospitals and 15 full referral hospitals would be rehabilitated, 173 health centers would be newly constructed and 2 basic referral hospitals and 3 full referral hospitals would undergo major renovations (see Annex 4 for details by province and phasing arrangements). Medical Equipment, Furniture and Transportation (US$2.9 million equivalent estimated base cost) 3.36 The Health Coverage Plan outlines the minimum package of activities to be provided at the first level health center as well as at the referral hospital. Using this as a basis, and in consultation with relevant donors, MOH has identified a standard list of. equipment to be provided under the project which would support the core public health activities in these facilities. Lists of equipment to be provided for the health centers and referral hospitals under the project are provided in Annex 5. The quantities of equipment and furniture to be provided at each level have been adjusted to reflect expected inputs from other donors. The delivery of equipment will be synchronized with the phasing plan for facility upgrading. Essential Drugs (US$2.3 million equivalent estimated base cost) 3.37 The national needs for essential drugs, including those needed for the treatment of tuberculosis, malaria and STDs was estimated, based on an agreed list, and the projected costs were matched with the expected government and donor financing. The project will provide funding at the national level to cover the financing gap. The list of drugs to be supplied is provided in Annex 6. In-Service Training (US$0.2 million eguivalent estimated base cost) 3.38 Substantial donor support has already been committed for in-service training, particularly through an ADB Basic Skills Development Project and a WHO/UNDP/ODA Health Systems Strengthening Project. It is estimated that the total flow of donor funds into in-service training will be at least US$5.3 million over the next five years. Based on an analysis of the training needs and costs for health staff throughout the country, it appears that in the medium-term no additional donor resources are required for training of basic health staff. However, there is an urgent need to train surgeons, obstetricians and anesthetists to provide emergency obstetric and surgical care. An MOH committee is in the process of designing a national in-service training strategy in obstetrics/surgery for the country. A one year curriculum will be developed and training institutes identified and strengthened by the end of 1996. The project will directly support the training of two surgeons/obstetricians and one anesthetist in each of the full referral hospitals upgraded under the project. During project implementation, staff of the MOH and Project Coordination Unit (PCU) will work closely with the institutions and NGOs involved in  - 19 - training to ensure that the management and in-service training needs of other health staff in the project provinces are met. MOH Strengthening (US$2.6 million equivalent estimated base cost) 3.39 The Disease Control Project, and the ADB Basic Health Services Project, are the first major investment projects in support of the MOH and will require some strengthening of the MOH to coordinate and manage. The purpose of this sub-component, therefore, is to establish an effective coordination mechanism and management team within the MOH; build-up skills in areas such as procurement, disbursement, financial management and accounting; and improve the capacity of MOH and the provincial directorates in program management, including field supervision, data collection, progress monitoring and reporting. 3.40 The health centers specified in para 3.32 above are new types of facilities, and very few currently exist in the country. Health staff are not used to working in and operating this type of facility nor are they used to working as a facility based health service team at anything below the current district hospitals. Therefore, a program of training, operational support, and intensive supervision needs to be provided to each health center staff team at the time of commissioning of the facility. The initial development and implementation of this process will be provided in a central technical assistance contract, but the effort should be integrated into provinces' and the MOH Training Division's normal operations as quickly as possible. This effort should draw on the experience of NGOs who have constructed and commissioned the few health centers which exist. This effort should also be supported by provincial health advisors and other managerial technical assistance provided to the MOH, particularly the Accelerated District Development scheme support. The agreement on quantities and level of effort for this commissioning process should form part of each province's annual Health Management Agreements (see Chapter 5, Section B). 3.41 To achieve these objectives, the project will finance: (i) the running costs of a Project Coordination Unit (PCU) in MOH, including technical assistance, fellowships and operational support; (ii) office equipment and communication equipment to link the center and the provinces; (iii) limited renovation and construction of MOH administration buildings and the Department of Pharmacy; (iv) a baseline survey to establish current health status and performance indicators (ADB will support a final national evaluation survey); (v) a 2.5 year contract for technical assistance and operational costs for initial implementation of health centers commissioning (the initial recurrent costs and all the costs after the middle of the third year will be the responsibility of the Government); and (vi) a provincial Supervision Fund to cover the travel, per diem costs and office costs of project supervision within the 10 project provinces. 3.42 The project will support pilot activities in two areas with cost recovery activities namely: the social marketing of bednets and the training and management contract for Phase I health centers. During negotiations agreement was reached to implement by January 31, 1997, through MOH, a national policy satisfactory to IDA on the collection of service fees in national health facilities including the policy on retention of fees, the policy on setting and adjusting the schedule offees, and the allowable expenditure offee revenues (para. 7.1 (r)).  - 20 - 4. PROJECT COSTS, FINANCING, PROCUREMENT AND DISBURSEMENT A. COST ESTIMATES 4.1 Summary of Project Costs. The total cost of the project is estimated at Cambodian Riel 87.7 billion, or US$35.6 million equivalent including contingencies. The total costs are summarized by project components in Table 4.1, and by expenditure categories in Table 4.2. Table 4.1: Summary of Project Cost by Component % Total (Riel Million) (US$ Million) Base Local Foreign Total Local Forelgn Total Costs A. National Programs 1. TB Control 3,151.8 4,151.7 7,303.5 1.3 1.7 3.0 10 2. Malaria Control 2,929.7 5,784.4 8,714.1 1.2 2.3 3.5 11 3. HIV/AIDS Control 8,208.6 7,731.1 15,939.7 3.3 3.1 6.5 21 Subtotal National Programs 142T. 17,667 31,957.3 5.8 7.2 1 B. Health Service Strengthen 1. Facility Upgrading 17,804.0 7,369.2 25,173.1 7.2 3.0 10.2 33 2. Equipment & Transportation 569.5 6,478.4 7,048.0 0.2 2.6 2.9 9 3. Essential Drug Supply 277.2 5,266.8 5,544.0 0.1 2.1 2.3 7 4. In-service Training 393.8 98.5 492.3 0.2 0.0 0.2 1 5. MOH Strengthening 2,620.1 3,723.1 6,343.2 1.1 1.5 2.6 8 Subtotal Health Service Strengthen 21,664.6 3 2,96 44,600.6 -. 9.3 181 5 Total BASELINE COSTS 35,954.7 40,603. 76,557---7.9 14. 1 TT 311 T100 Physical Contingencies 1,622.9 1,944.0 3,567.0 0.7 0.8 1.4 5 Price Contingencies 4,868.3 2,671.3 7,539.6 2.0 1.1 3.1 10 Total PROJECT COSTS 42,445. 45,218.5 87,64. 17. 18T. 3S6 115 4.2 Contingency Allowances. Project costs include a contingency allowance for unforeseen physical additions at 5 percent of base costs (US$1.4 million equivalent) and for inflation at 10 percent of base costs (US$3.1 million equivalent) based on the standard Bank-wide guideline (for foreign inflation) and regional guideline (for domestic inflation). 4.3 Taxation. The Government has decided to exempt all the imported goods and consultant services purchased under the project from duties and taxes. Total project costs for these categories are, therefore, calculated net of duties and taxes. During negotiations, confirmation was obtainedfor this government exemption (para. 7.2 (a)). Local taxes may be levied to civil works at the rates of 3-5 percent. The project cost, therefore, allocates 10 percent of civil works cost to the Government contribution to cover any possible local taxes.  - 21 - Table 4.2: Summary of Project Cost by Category of Expenditure % Total (Riel Million) (US$ Million) Base Local Foreign Total Local Foreign Total Costs 1. Investment Costs A. Equipment 836.2 15,887.3 16,723.5 0.3 6.4 6.8 22 B. Drug 285.5 5,424.1 5,709.6 0.1 2.2 2.3 7 C. Civil Works 17,660.0 7,568.6 25,228.6 7.2 3.1 10.2 33 D. Local Training 3,690.3 922.6 4,612.8 1.5 0.4 1.9 6 E. Foreign Training 88.1 1,674.8 1,763.0 0.0 0.7 0.7 2 F. Local Consultant 1,070.2 267.5 1,337.7 0.4 0.1 0.5 2 G. Foreign Consultant 245.4 4,661.7 4,907.1 0.1 1.9 2.0 6 H. Studies 4,552.4 1,138.1 5,690.5 1.8 0.5 2.3 7 I. Grant 862.4 862.4 1,724.8 0.4 0.4 0.7 2 Total Investment Costs 29,290.4 38,407.2 67,697.5 11.9 15.6 27.5 88 II. Incremental Recurrent Costs A. Operating Cost 3,453.0 863.3 4,316.3 1.4 0.4 1.8 6 B. Supplies 243.3 243.3 486.6 0.1 0.1 0.2 1 C. Prov. Superv. Cost 275.8 68.9 344.7 0.1 0.0 0.1 - D. Maintenance for Equipment 587.5 587.5 1,175.1 0.2 0.2 0.5 2 E. Maintenance for Civil Works 1,267.1 223.6 1,490.7 0.5 0.1 0.6 2 F. Staff Remuneration 837.6 209.4 1,047.0 0.3 0.1 0.4 1 Total Incremental Recurrent 6,664.3 2,196.1 8,860.4 2.7 0.9 3.6 12 Total BASELINE COSTS 35,954.7 40,603.2 76,557.9 14.6 16.5 31.1 100 Physical Contingencies 1,622.9 1,944.0 3,567.0 0.7 0.8 1.4 5 Price Contingencies 4,868.3 2,671.3 7,539.6 2.0 1.1 3.1 10 Total PROJECT COSTS 42,445.9 45,218.5 87,664.4 17.2 18.4 35.6 115 4.4 Foreign Exchange Components. Direct and indirect foreign exchange costs are estimated at about 52 percent of base costs. The foreign exchange components for various expenditure categories are as follows: civil works, 30 percent; equipment and vehicles, 95 percent; drugs, 95 percent; foreign technical assistance, 95 percent; local technical assistance, 20 percent; overseas training, 95 percent; local training, 20 percent; studies, 20 percent; grant, 50 percent; operating cost, 20 percent; and supplies, 50 percent. 4.5 Incremental Recurrent Cost. The investment in civil works and equipment have been carefully designed to avoid an unnecessary recurrent cost burden on the government (see Chapter 6). Most of the civil works are renovation or upgrading of existing facilities, and most equipment provided under the project involve low-cost maintenance. The costs of maintenance for civil works (US$0.6 million, or 2 percent of baseline cost) and for equipment (US$0.5 million, or 2 percent of baseline cost) will be fully financed by the Government. The Government will also provide salaries for disease control staff (US$0.4 million, or 1 percent of baseline cost). However, the three communicable disease control programs require substantial field work, such as IEC activities, patient follow-up, mosquito net distribution, data collection and monitoring; also each of the ten project provinces will conduct field visits down to commune and village levels to supervise the project activities. These represent an extra burden of recurrent costs during the life of project implementation, which will be financed on a declining basis under the categories of operating cost and supplies (US$2.0 million, or 7 percent of baseline cost), and the category of provincial supervision costs (US$0.1 million ).  - 22 - B. FINANCING 4.6 The estimated total project cost of US$35.6 million equivalent, net of taxes, would be financed by: (a) a local counterpart funding of US$5.2 million equivalent, or 14.5 percent of the total project cost, from the Government; (b) an ITF credit of US$30.4 million equivalent net of taxes, or 85.5 percent of the total project cost, from ITF. 4.7 The project financing plan by expenditure categories is summarized in Table 4.3, and by project components and year in Annex 10. The source of IDA administered funds shown in Table 4.3 will be the ITF. The overall program financing plan, including donor contribution, is available in the project implementation plan. Table 4.3: Financin! Plan Intemational Government of Development (US$ Million) Cambodia Association Total Amount % Amount % Amount % I. Investment Costs A. Equipment 0.5 6.2 7.1 93.8 7.5 21.2 B. Drug 0.0 - 2.7 100.0 2.7 7.5 C. Civil Works 1.3 11.0 10.8 89.0 12.1 34.1 D. Local Training 0.2 10.4 2.0 89.6 2.2 6.1 E. Foreign Training 0.0 - 0.8 100.0 0.8 2.3 F. Local Consultant 0.0 2.4 0.6 97.6 0.6 1.8 G. Foreign Consultant 0.0 - 2.2 100.0 2.2 6.2 H. Studies 0.0 - 2.5 100.0 2.5 7.0 I. Grant - - 0.7 100.0 0.7 2.0 Total Investment Costs 2.0 6.5 29.3 93.5 31.3 88.1 II. Incremental Recurrent Costs A. Operating Cost 1.3 62.0 0.8 38.0 2.0 5.7 B. Supplies 0.0 15.0 0.2 85.0 0.2 0.6 C. Prov. Superv. Costs 0.0 15.0 0.1 85.0 0.2 0.5 D. Maintenance for Equipment 0.6 100.0 - - 0.6 1.6 E. Maintenance for Civil Works 0.7 100.0 - - 0.7 2.1 F. Staff Remuneration 0.5 100.0 - - 0.5 1.4 Total Incremental Recurrent Costs 3.1 73.8 1.1 26.2 4.2 11.9 Total Disbursement 5.2 14.5 30.4 85.5 35.6 100.0  - 23 - C. PROCUREMENT 4.8 The procurement arrangements for the project are summarized in Table 4.4 below: Table 4.4: Summary of Proposed Procurement Arrangements Procurement Methods Procurement Elements (US$ million) ICB NCB Other NBF TOTAL Civil Works 7.9 4.1 0.1 12.1 (7.1) (3.7) (10.8) Goods a. Equipment&Vehicles 5.3 1.6 0.2 0.5 7.6 (5.3) (1.6) (0.2) (7.1) b. Drugs & Pharmaceuticals 2.7 2.7 (2.7) (2.7) Training, Technical Assistance & Studies a. Training 2.8 0.2 3.0 (2.7) (2.7) b. Technical Assistance 2.8 2.8 - Policy Support: $0.8 million (2.8) (2.8) - Institutional Development: $0.9 million - Implementation Support: $1.1 million c. Studies 2.5 2.5 (2.5) (2.5) Grant 0.7 0.7 (0.7) (0.7) Incremental Operating Cost & Supplies 1.1 1.1 2.2 (1.0) (1.0) Provincial Supervision Costs 0.2 0.2 (0.1) (0.1) Maintenance 1.3 1.3 Staff Remuneration 0.5 0.5 Total 7.9 9.4 14.4 3.8 35.6 (7.9) (8.7) (13.8) (30.4) Figures in parentheses are respective amounts financed by ITF. Totals may not add up exactly due to rounding. 'Other" includes consultancy services and shopping. 'NBF": Not Bank Financed.  - 24 - 4.9 The procurement arrangements for civil works, goods and services financed by ITF would be carried out in accordance with the Bank's Guidelines for Procurement under IBRD Loan and IDA Credits, January 19954, and are described as follows: (a) Civil Works. The civil works (total estimated amount of US$12.1 million including contingencies) carried out under the project would be generally small and simple, consisting primarily of minor or major renovation of referral hospitals and renovations and new construction of health centers, dispersed throughout the ten project provinces. The average construction cost for a basic referral hospital would be US$259,000 equivalent; for a full referral hospital, it would be US$280,000; and for a health center the cost is about US$23,000. Rehabilitation cost would be considerably less. Considering the nature and size of the civil works under this project, no foreign contractors are likely to be interested in bidding for them. Tenders/bids would be invited in accordance with the following procedures: (i) National Competitive Bidding for estimated contract values > US$100,000. (ii) National Shopping for estimated contract values of US$50,000 - 100,000, up to an aggregated amount of no more than US$3.7 million. (iii) Direct Contract for estimated contract values < US$50,000, up to an aggregated amount of no more than US$0.3 million. The National Competitive Bidding (NCB) procedure, acceptable to the Bank, would be used for the majority of the civil works (up to a total amount of US$7.9 million, or 65 percent of total civil works cost). The PCU/MOH will carry out appropriate packaging in order to manage the NCB efficiently. A portion of civil works (up to a total amount of US$4.1 million, or 33 percent of total civil works cost) will be carried out through National Shopping procedure with at least three quotations from local contractors. This will apply to those facilities in remote areas where packaging for NCB is difficult. For a small number of health centers, for which selecting contractors through competition would be extremely difficult, direct contracting procedures, acceptable to the Bank, would be used (up to a total amount of US$0.3 million, or about 2 percent of total civil works cost). The Bank's Standard Bidding Document for Procurement of Civil Works (Small Contracts), January 1995 would be used by PCU/MOH in preparing the bidding documents for civil works.5 (b) Goods (Equipment. Vehicles, and Drugs). The costs of equipment, vehicles and materials are estimated to be US$7.6 million, including contingencies. About 70 4 The proceeds of the ITF Credit may only be withdrawn on account of expenditures for goods and works provided by nationals of and products in or supplied from, participating countries. Only consultants from participating countries shall be eligible to provide services financed out of the proceeds of the ITF. 5 Bidding documents will reference the ITF eligibility restrictions.  - 25 - percent of this amount, amounting to US$5.3 million, will be procured by International Competitive Bidding (ICB) procedure. Under ICB, domestic manufacturers would be eligible for a margin of preference in bid evaluations of 15 percent of the c.i.f. costs of the competing imports or the applicable customs duty, whichever is lower. About 21 percent of total equipment cost, up to an aggregated amount of US$1.6 million with the estimated cost of US$100,000 or less per contract, may be procured by National Competitive Bidding (NCB) procedure acceptable to the Bank. Small items or group of items costing US$25,000 or less per contract, up to an aggregate amount of US$0.2 million or 3 percent of total equipment costs, may be procured by prudent shopping, requiring quotations from at least three suppliers. The cost of drugs, estimated at US$2.7 million including contingencies, would be procured by ICB procedures. The PCU/MOH will prepare the bidding documents in accordance with the Bank's Standard Bidding document for Procurement of Goods, January 1995, and the Standard Bidding Document for Procurement of Pharmaceuticals and Vaccines, September 1993 (as amended to reflect the changes as per the Bank's Guidelines, January 1995, for procurement of drugs and pharmaceuticals).' (c) Technical Assistance, Training. and Studies. The technical assistance (estimated cost of US$2.8 million including contingencies) will be carried out by individual consultants or consultant firrns hired by MOH, following the Bank's Guidelines: Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency.6 The training (estimated cost of US$3.0 million including contingencies) will be carried out by the national and provincial training centers, or other contractors. The financial input for studies, (estimated cost of US$2.5 million including contingencies) would be used to support the special surveys and operational research that will be conducted by competent institutions or contractors. MOH would arrange these training, survey and study tasks by entering into an "agreement" or "contract" with the institution or contractor. Prior to negotiations, MOH provided IDA with its standard format for such contracting to ensure its compliance with the Bank's Guideline and the Standard Form of 6 Contract for Consulting services, June 1995 (para. 7.3) (d) Incremental Operating Cost & Supplies and Provincial Supervision Cost. The incremental operating cost and supplies (estimated cost of US$2.2 million including contingencies) would be procured through prudent shopping procedure, requiring at least three quotations from local suppliers. The provincial supervision costs (estimated cost of US$0.2 million including contingencies), which will support small annual contracts with each provincial project unit to cover local supervision costs, and would be procured using direct contracting procedures acceptable to IDA. 6 Procurement of consultants will conform to ITF eligibility restrictions.  - 26 - 4.10 Procurement Prior Review. All civil works contracts with an estimated cost of US$200,000 or more, all goods contracts with an estimated cost of US$100,000 or more, and all consulting service contracts with an estimated cost of US$100,000 or more for consulting firm (US$50,000 for individual) would be subject to prior review by the Bank. With respect to all consulting contracts irrespective of their values, prior review by the Bank will be required for: (a) terms of reference; (b) single source contract regardless of value; (c) all consultant contracts and assignments of a critical nature (because of environment safety or public health considerations) regardless of value; (d) contract amendments valued at more than US$100,000 for firms (US$50,000 for individuals), or those that raise the total contract value to more than. US$100,000 for firms (US$50,000 for individuals); and (e) grants more than US$5,000 per grani agreement. This will allow prior review for approximately 80 percent of the works and goods procured under the project. D. DISBURSEMENT 4.11 The proposed ITF credit of US$30.4 million equivalent would be disbursed over a period of five and half years (including a six-month period after the project completion date), by the closing date of March 31, 2002. The disbursement percentages for each expenditure category are summarized in Table 4.5. The disbursement schedule and profile are in Annex 10. Disbursements would be made against: (a) 90 percent of total expenditure of civil works; (b) 100 percent of c.i.f. cost of directly imported goods; 100 percent of ex-factory cost for locally manufactured goods, and 85 percent of the other off-the-shelf goods procured locally; (c) 100 percent of total expenditures for training, technical assistance and studies; (d) 100 percent of grant made by the National AIDS Office Grant Facility; (e) 85 percent of operating cost and supplies; and (f) 85 percent of provincial supervision cost. Table 4.5: Disbursement Categories ITF Allocation % of Expenditure to be Disbursement Category (US$ million) Financed by the Credit Civil Works 10.5 90% Goods (including equipment, vehicle, 9.4 100% of foreign expenditure and materials and pharmaceuticals) ex-factory local expenditure; 85% of expenditure for off-shelf items. Training, Technical Assistance and Studies 7.9 100% Grants 0.7 100% Incremental Operating Costs 1.0 85% and Supplies Provincial Supervision Cost 0.1 85% Unallocated 0.8 NA Total 30.4  - 27 - 4.12 Disbursements would be made against Statement of Expenditures (SOEs) for civil works contracts with a contract value of less than US$200,000 equivalent; for goods contracts with a contract value less than US$100,000 equivalent; for consulting services contracts with a contract value less than US$100,000 for firms, and less than US$50,000 for individuals; for grants valued at less than US$5,000 each; and for all expenditures for operating cost, supplies and provincial supervision costs. All documents supporting the SOEs would be retained by PCU/MOH, and made available for random sample review by IDA supervision missions. 4.13 A Special Account with an authorized allocation of US$1.5 million would be established in a bank acceptable to the Association. The PCU/MOH would operate the Special Account with due procedures for oversight by the Ministry of Economy and Finance. All the documentation for the operation of the Special Account would be retained in PCU/MOH, and made available for review by IDA.  - 28 - 5. PROJECT MANAGEMENT AND IMPLEMENTATION A. ORGANIZATION 5.1 The implementing agency for the proposed project will be the Ministry of Health. Overall direction and guidance for the project will be provided by a high level Steering Committee especially created to oversee the implementation of this project. The Steering Committee will comprise of representatives from the Ministry of Economy and Finance (MOEF), the Ministry of Planning (MOP) and the Cambodia Development Council (CDC), as well as senior staff of MOH. A Project Director, nominated by the Ministry of Health, will be a member of the Steering Committee, and will have overall responsibility for the implementation of the project. 5.2 In order to facilitate implementation, a Project Coordination Unit (PCU) will be set-up within the MOH, with the support of both the World Bank and the ADB. During negotiations, assurances were received that the PCU will be headed by a PCU Manager recruited on an international basis by the Government and approved by the World Bank and ADB, as a condition of effectiveness (para. 7.1 (a)). The Manager will have day-to-day responsibility for ensuring the timely and efficient implementation of the ADB and Bank-financed projects, and for building capacity within MOH in the areas of project administration, financial management and procurement. The PCU will have a Finance and Administration Unit responsible for procurement, disbursement and accounting for both the World Bank and ADB projects. In addition, separate units will be established to oversee implementation of the different projects. During negotiations, assurances were also obtained that the Chiefs of the Finance and Administration Unit and World Bank Operations Unit and Construction Manager will be recruited on an international basis and appointed as a condition of effectiveness (para. 7.1 (a)). Certain operational costs of the PCU (PCU Manager, Finance and Administration Unit) will be jointly funded by the World Bank and ADB. Details of the organizational structure of the PCU and the terms of reference for the Steering Committee and the PCU staff are provided in Annex 7. 5.3 The provincial health authorities will be responsible for the overall management and supervision of project activities at the provincial level and will act as the link between the central PCU/MOH and the operational district health system. A small Provincial Project Unit (PPU) will be set-up within the health directorate, headed by a Provincial Project Director nominated by the Provincial Health Director and confirmed by the MOH. During negotiations, agreement was reached that appointment of a Provincial Project Director in each of the six Phase Iprovinces is a condition of effectiveness and the appointment of a Provincial Project Unit Directors in each of the remaining four Phase II project province is due by September 30, 1997 (para. 7.1 (b)). The main functions of the PPU include (i) facilitating the timely implementation of the project in close coordination with the MOH/PCU; (ii) ensuring the timely flow of funds, particularly travel and per diem costs for supervision, paid out of the provincial Supervision Fund; and (iii) day-to- day monitoring of the project. During negotiations, agreement was reached that the Provincial  - 29 - Supervision Fund agreements will be prepared, satisfactory to IDA, by June 30, 1997, and will be entered into by September 30, 1997 for the Phase I provinces and by September 30, 1998 for the Phase II provinces (para. 7.1 (d)). The detailed arrangements for managing the Provincial Supervision Fund are contained in the Project Implementation Plan. B. IMPLEMENTATION ARRANGEMENTS Health Management Agreements 5.4 In order to define the expectations and responsibilities of both the MOH and the provincial authorities clearly under the Project, Health Management Agreements (HMA) would be entered into for each of the ten provinces supported by the Health Strengthening component (see Annex 8). The aim of instituting such agreements is to change the nature of the relationship between the MOH and the provincial health authorities to one of mutual responsibility and accountability, with a single overall purpose of improving performance of public sector health services. 5.5 The HMAs would provide a framework for planning and managing the health programs covered by the Project (TB, Malaria, HIV/AIDS, and Health Coverage Plan). They would govern the provision of inputs by MOH to the provinces in return for provincial agreement to attain annual targets in disease control and other areas. Commitments made by the MOH and the Provincial Health Authorities would be clearly specified in terms of annual health objectives, inputs, and processes with quantifiable and monitorable targets set. These annual plans would be defined and agreed in the context of 5-year goals and outcome/impact indicators. The HMAs would have no legal status, rather they would be used as a planning and management tool. However, they will be monitored and evaluated and action would be taken in response to performance. From the detailed performance indicators contained in the HMAs, a group of more broadly indicative measures have been selected as Project Performance Indicators. These are presented in Annex 9. 5.6 The HMAs will be formulated and agreed annually at provincial planning workshops with the involvement of representatives from the Provincial Governors' Office, the Provincial Health Directorate, MOH (including Ministry level representatives from the three disease control programs) and the PCU. The provincial health advisors (PHAs) and donor organizations assisting a given province will also be invited to the planning process and negotiations. During negotiations, agreement was reached that no expenditures by any province for civil works or medical equipment will be made unless the Ministry of Health and the province concerned have entered into their respective Health Management Agreement for the first year (para. 7.1 (c)). 5.7 Ideally this type of agreement would also be made between the provinces and the districts, but currently most districts are judged managerially too weak to undertake this type of agreement in the early stages of the Project. As district health office capacities improve, they could enter into sub-agreements with the provinces.  - 30 - Implementation of National Disease Control Programs Tuberculosis Control Program 5.8 The overall responsibility for implementation of the TB Control component rests with the National Anti-Tuberculosis Center (CENAT). CENAT will be responsible for establishing the policies for case management, consolidating annual project plans and budgets, monitoring provincial TB control activities, and assisting in the preparation of project reports and documentation. CENAT will prepare biannual TB drug forecasts by monitoring drug use and stocks and, jointly with CMS, determine drug procurement and provincial allocations. Provincial TB Supervisors are responsible for monitoring the distribution of TB drugs and supplies to the district health facilities and for the supervision of TB case management. CENAT will conduct five training sessions annually in short course chemotherapy, annual training of provincial supervisors and arrange international training and fellowships. By the end of 1996, CENAT will have trained staff in all facilities eligible to offer hospitalization and short course chemotherapy. During negotiations, an understanding was reached that the government, with available donor funding, wouldfinance the cost offood supplementation for TB patient hospitalization and, as resources permit, for the ambulatory phase of chemotherapy (para. 7.2 (c)). Malaria Control Program 5.9 The responsibility for the Malaria Control Program rests with the National Malaria Center (CNM). CNM would have similar responsibilities as CENAT, that is, establishing the policies for case management, consolidating annual project plans and budgets, monitoring provincial malaria control activities, and assisting in the preparation of project reports and documentation. CNM would also prepare biannual malaria drug forecasts by monitoring drug use and stocks and, jointly with CMS, determine drug procurement and provincial allocations. Provincial Supervisors are responsible for monitoring the malaria control program at the district level and organizing training. In addition, over the life of the project, CNM staff will manage and conduct studies of vivo and in vitro drug resistance, drug efficacy, malaria prevalence, vector control (bednet) effectiveness, bednet social marketing and entomological studies. Research will be carried out to test antigen test kits, examination of malaria during pregnancy, and community based epidemiologic assessments of bednet effectiveness. 5.10 The bednet program, including the social marketing pilot activity, would be managed at the central level by the CNM under the leadership of a Bednet Program Manager. The Program Manager will have overall responsibility for planning and managing CNM support for implementation at provincial, district and commune levels, and for program evaluation. A National Bednet Steering Committee comprised of CNM, donors and, relevant NGOs, will also be established for defining policy, standard setting and identifying resource requirements. During negotiations, agreement was reached that government will furnish IDA with a social marketing and national bednet distribution and treatment strategy (including a cost recovery proposal) by January 31, 1997for IDA review, and thereafter promptly carry out an action plan acceptable to IDA (para. 7.1 (o)). Key partners in program implementation are ODA, WHO and NGOs already implementing bednet projects in the country.  - 31 - HIVIAIDS Program 5.11 Overall responsibility for the management and implementation of the HIV/AIDS component will rest with the National AIDS Office located within the Ministry of Health. The director of the NAO will be the HIV/AIDS and STD component Project Manager. The status of the NAO will be raised to that of a department within MOH and additionally, a finance and an administrative officer will be appointed to this department. During negotiations, assurances were obtained from government that these two appointments and the elevation of NAO to departmental status will take place not later than September 30, 1997 (para. 7.1 (f)). Technical assistance will be provided on an intermittent basis to assist with overall project management and implementation. 5.12 The HIV/AIDS Grant Fund will be managed through a Project Grants Committee consisting of the director of the NAO (chairperson), a representative of the MOH/PCU and other representation to be determined. The Committee will solicit applications to the Fund, review these applications and reach decisions about the content of activities to be supported and the resources to be allocated. The Committee will also be responsible for reviewing progress and evaluating results of activities undertaken through this Fund. Details of the proposed management structure and operational procedures of the Fund are provided in Annex 3. 5.13 The Project will finance several elements of the blood safety effort under the MOH Blood Transfusion Services. Training of counselors to notify HIV positive blood donors will require first an agreement on notification and counseling protocols progress on which is well advanced between the MOH, the International Commission for the Red Cross and other donors. Implementation of Health Service Strengthening Civil Works 5.14 The MOH/PCU will be responsible for initiating, monitoring and ensuring that correct implementation procedures are followed during all stages of civil works implementation. During negotiations, agreement was reached on the criteria to be usedfor the selection of health centers and referral hospitals for upgrading (para. 7.1 (p)). The PCU will contract with qualified personnel to prepare technical specifications, supervise construction and disbursements, and be responsible for certification of completion. During negotiations, assurances were receivedfrom government that final implementation arrangements for contracting and supervision of civil works would be established by December 31, 1996 for Phase I provinces and by December 31, 1997 for Phase II provinces (para. 7.1 (i)). 5.15 Details of the implementation arrangements are provided in the Project Implementation Plan. In summary, the PCU would select consultants, in accordance with Bank guidelines, to inspect existing facilities and prepare the final design proposals, based on the PCU models, for MOH/PCU approval. Once approved, the PCU initiates the preparation of the bidding documents. Tenders/bids are then invited by the PCU in accordance with agreed procurement guidelines. Contract supervision will be carried out by the consultants who will report monthly  - 32 - to the PCU/Construction Manager. The PPU will also monitor the work on a random basis and report to the MOH/PCU. 5.16 The importance and form of an institutionalized maintenance and repair strategy for civil works was agreed with the MOH during preparation. During negotiations, assurances were receivedfrom government that a senior technicalfacilities manager will be appointed no later than September 30, 1997 in the Phase I provinces and not later than September 30, 1998 in the Phase II provinces (para. 7.1 (e)). The facilities manager will be responsible for the management and supervision of regular and preventive maintenance of all health facilities in that province. He/she will have a budget specifically for maintenance which will be used to contract reliable local contractors to do the work. Equipment, Essential Drugs and In-Service Training 5.17 Both medical equipment and drugs would be procured by the MOH/PCU, in close collaboration with the Procurement Unit at the Department of Pharmacy. Storage and distribution would be done through the logistics system of the Central Medical Stores (CMS) of the Ministry of Health. This logistics system is considered adequate to meet the needs of the project, given the recent expansion in warehouse and trucking capacity under a previous IDA project. Basic equipment provided under the project would predominantly be low maintenance. Maintenance of more complex equipment, such as X-ray machines, would be written into the purchase contract. In addition, training in the routine maintenance of hospital equipment will be provided to technicians in the referral hospitals upgraded under the project. Monitoring and control of drug and equipment supplies would be done through the existing computerized tracking system, so as to avoid irregular supplies. Indicators would be set and their progress tracked over time to monitor and improve the planning and timeliness of the procurement and distribution of medical supplies, drugs and equipment. 5.18 During negotiations, assurances were obtained from government that the health centers and referral hospitals upgraded under the project be adequately staffed (para. 7.1 (q)). During negotiations, assurances were also obtainedfrom Government that a national in-service training strategy be implemented by March 31, 1997. Moreover, a time bound plan for the training of health staff at the health centers and referral hospitals upgraded under the project will be furnished to IDA by March 31, 1997, and promptly thereafter, the government will carry out such a plan taking into account IDA's comments (para. 7.1 (n)). Such a plan would include disease control training supported by the project. The MOH/PCU will be responsible for identifying the medical personnel for the one year training in obstetrics/surgery and anesthesiology. The training will take place at national and provincial institutes selected by the MOH Committee on surgical training. C. ACCOUNTS AND AUDITING 5.19 The total project account would be managed by the PCU in the MOH, and separate accounts for project activities would also be maintained by each province (for the expenses eligible for reimbursement under the provincial supervision cost category) and national institutes  - 33 - in accordance with sound accounting practices. The project accounts would reflect all financial transactions during the project implementation period for both the IDA Credit and the counterpart funding in two books, one by project components and one by expenditure categories. 5.20 Project accounts would be audited in accordance with the Guidelines for Financial Reporting and Auditing of Projects Financed by the World Bank (1992). During negotiations, assurances were obtained that audits of project-related financial records and accounts, including the Special Account, will be undertaken in accordance with appropriate accounting principles by independent auditors acceptable to IDA. Audited accounts and financial statements, in a format agreed with IDA, and including audited Statement of Expenditures, will be sent to IDA within six months after the end of each Government fiscal year (para. 7.1 6)). In addition, at negotiations, assurances were obtained that Technical Performance Audits of HMAs will be carried out on a random basis beginning in January 1998 (para. 7.1 (h)). D. PROJECT MONITORING, EVALUATION AND REPORTING 5.21 The PCU will be responsible for monitoring project implementation progress and performance. A baseline survey would be conducted in the first year of implementation to establish project performance indicator measures. The Health Management Agreements would set out implementation targets against which project performance will be monitored. During negotiations, an understanding was reached that monitoring of these targets would be carried out on a semi-annual basis by the PCU, commencing Fiscal Year 1997, which will then report to IDA on (i) progress on major activities; and (ii) achievement or production of agreed outputs (para. 7.2 (b)). The Project Performance Indicators in Annex 9 provide the framework for the semi-annual reports, the format of which should be acceptable to IDA. There will be an annual review of HMA performance at the provincial level before planning the following year's agreement. During negotiations, assurances were received that an annual project budget will be submitted by the PCU to IDA by November 30 of each year in the Project, beginning November 30, 1996 (para. 7.1 (m)). 5.22 During negotiations, assurances were received that by March 31, 1999, the MOH will submit a comprehensive mid-term review report evaluating project performance based on the documented experience of the monitoring, as well as at least one impact study and the technical performance audits. Based on this review, discussions will be held with IDA by June 30, 1999, as to the need for any changes in project design and the implementation targets (para. 7.1 (k)). Also, assurances were obtained from the Government that a final evaluative survey would be carried out by June 30, 2001 and the results of this survey would be furnished to IDA for comments by March 31, 2002. Within six months of the closing date, the Government will submit afinal report to IDA on the project and a plan of such scope and detail, IDA may request for the future operation of the completed project (para. 7.1 (1)). E. ENVIRONMENTAL ASPECTS 5.23 The proposed project would have no significant impact on the environment. Protocols would be developed for the safe disposal of syringes and medical waste at all health facilities  - 34 - covered under the Health Strengthening component, and their implementation would be monitored during supervision. Permethrin, or another similar insecticide, will be used to impregnate bednets distributed under the malaria program. These are non-toxic to mammals and are classified as "unlikely to present any health hazard in normal use." They are toxic to aquatic fauna, including fish. However, its restricted and supervised use under the bednet program will exclude any environmental impact. Project activities will result in no involuntary resettlement or displacement. F. PARTICIPATION 5.24 Project preparation was conducted using a participatory approach, and all efforts were made to involve various stakeholders in project design and implementation decisions. First, extensive discussions were held with MOH staff, provincial and district health authorities and donors, including provincial health advisors, to determine the scope and coverage of the project. Second, technical working groups drawn from the line departments were convened to consider policy and technical issues specific to the project components. Third, a number of seminars were held on various topics such as Health Management Agreements, AIDS, and Malaria to invite comments and suggestions from a wider audience with representation from NGOs. 5.25 A PHRD grant has funded key aspects of project preparation, and the execution of the grant is split between MOH and the Association. MOH has used these funds to conduct various surveys and studies including an infrastructure and equipment survey, a social marketing study, a TB patient compliance study and a study of intravenous drug abuse as a potential route of HIV transmission (the latter three studies all employed focus group research techniques) to determine component inputs based on community needs. A project implementation plan has been prepared by MOH and jointly reviewed with the mission on a regular basis. In addition, during the later stages of project preparation and implementation, evaluation and assessment activities will be carried out to measure potential and actual popular response to service strategies.  - 35 - 6. PROJECT BENEFITS, RISKS AND SUSTAINABILITY A. BENEFITS 6.1 The benefits of the project correspond to measurable indicators of impact on the three targeted disease control programs and in the improved access of rural Cambodians to basic health services. The performance of the project will be measured in detail in the 10 provinces in which the project will combine its health strengthening investments, its managerial improvements, and its national disease control activities. In addition, the project will measure results of the three disease control programs on a national basis, to evaluate the impact of indivisible national program investments. A list of performance indicators by input, output, and impact and by project and national program scope is detailed in Annex 9. 6.2 For TB, the total number of treated cases over the five year period is targeted at 106,000. This is based on the need to reach an annual treatment target of 24,000 in the final year of the project, at which point the annual prevalent pool of cases should have begun to decrease and the incidence of new cases to decline. The project will calculate the annual risk of infection in the final year of the project to estimate whether these declines, set to occur over a 5 to 10 year time frame, have commenced. Such declines could be delayed by a substantial AIDS-associated rise in TB cases. The fatality rate of active, untreated TB cases is not known for Cambodia with precision. However, practitioners regard it, with malaria, as one of the leading causes of premature fatality among children and especially young adults. 6.3 For malaria control, the project will intervene to treat the disease through more effective case management and to prevent infection through bednet vector control. The incidence of malaria in any one area is highly variable from year to year depending on weather, migration and work habits, and to the quality of clinics and hospitals which will determine the flow of patients with malaria. The malaria program has targeted a 30 percent decline in incidence over three years in its first phase provinces for bednet distribution. The overall impact measure will be a proxy indicator of the prevalence of malaria at a point in time; this will be determined by means of periodic surveys of blood slide positively in the population. The impact on mortality will be measured by the hospital case fatality rate, which is targeted to decline to below 2 percent by the year 2000. 6.4 Impact on HIV incidence is difficult to predict due to the early stage of the epidemic, the difficulty in predicting its likely trajectory, and the need for more knowledge of the effectiveness of the various preventive interventions supported by the project. Further analytical work will be conducted under the project to determine the possible path of the epidemic based on recently analyzed Thai epidemiologic data. It is certainly probable that at a minimum, the rate of increase of sero-positive blood donations will decline from its current doubling every year to far lower rates of increase, and that the same will occur in the data on key risk groups (prostitutes and soldiers), as has been the case in Thailand. The performance of the HIV component will be measured more reliably by input and output indicators in the early stages of the project.  - 36 - 6.5 The beneficiaries of the TB and Malaria Control Programs will tend to be poor, rural residents. Children and women will likely share these benefits at least in proportion to their shares of population, which in Cambodia are higher than regional averages. The beneficiaries of the HIV program will be members of the core risk groups in the near term, as they will receive disproportionate levels of interventions through the NGO Small Grants Program, the Outreach Program and sentinel surveillance. In addition, rural families in the 10 project provinces will benefit from increased access to health centers offering the Government's minimum package of services. Upgraded referral hospitals will provide the full range of Health Coverage Plan Clinical Services. 6.6 The Health Strengthening component will improve access and raise utilization of modem health services at the health center and hospital level in the 10 project provinces. About 2 million people will have access to health centers and functioning referral facilities as a result of the project. B. RISKS 6.7 There are three main project risks. First, the management capacities of the MOH and its provincial counterparts have been overestimated, such that implementation of the provincial Health Management Agreements will be slower than planned. Second, there is a possible shortage of adequately skilled health personnel to staff and run the upgraded district-level facilities. Third, the zone of insecurity (due to the continuing insurgency) may expand rather than contract, causing the project to restrict its investments to a smaller scale than envisioned. 6.8 Care has been taken to minimize these risks during project preparation and appraisal. In terms of management capacity, both the scale and phasing of the project have been designed to reflect the management and implementation capabilities at the provincial levels. Management capacity, measured in part by the presence of a donor-funded health advisor at the provincial level, was a key criterion in determining which provinces the project would cover and how to phase project inputs. Management training will be provided under a contract for health center commissioning and through a parallel WHO-executed project. 6.9 As for the potential lack of adequately skilled and trained staff, the management and skills training needs of the provincial and district health authorities has been assessed and an initial estimate made of the resources committed to these programs by other donors. Sufficient resources are available to cover most in-service training requirements. The Government has agreed to prepare a National In-Service Training Plan to guide the allocation of Government and donor resources. The project will provide for training of surgeons and anesthetists placed in full referral hospitals. The PCU will coordinate closely with the donors and NGOs involved in training, to ensure that the training needs of the IDA-financed provinces will be met. 6.10 The only risk that cannot be reduced through project preparation efforts is insecurity, a factor affecting all development investments in Cambodia. For the past year, the zone of insecurity has contracted steadily, an encouraging but not yet definitive development in the  - 37 - Cambodian context. The project design has taken the current situation into account by reducing project activities in provinces where the security situation remains unstable. C. SUSTAINABILITY Fiscal Impact 6.11 The annual recurrent cost implications of the project itself are minor. These include maintenance and repair costs for facilities, replacement of foreign financed inputs, such as medical equipment, bednets and to a much smaller extent drugs, 80 percent of which will be financed by the Government budget during the project. Thus, these recurrent costs of US$2.6 million would consume less than 5.2 percent of the projected health budget in the year 2001. Even if the analysis uses total program recurrent costs (instead of the project), the burden is still manageable. The annual recurrent cost implications of the program have been estimated to be approximately US$12 million a year. These recurrent costs cover the major health programs of the MOH and the provincial delivery system. A report on Sustainability Analysis is included in the Project Implementation Plan. Cost Recovery 6.12 In several instances, the project has assessed the potential for cost recovery initiatives, with positive results. Thus, within the broad public health rationale for public financing, there are health services for which there is substantial (if inadequate) willingness to pay, with potential benefits to project sustainability and, to a lesser extent, the government's fiscal position. 6.13 In the case of bednet distribution, a market feasibility study was completed for appraisal, indicating that the bednet market in Cambodia was large and well distributed nationally, but that prices confined demand to the more well-off households. Using focus group methods, the analysis indicated a range of subsidized prices which would be affordable for the populations living in endemic areas. These findings will be applied to a social marketing pilot in two provinces and to the government's distribution of bednets through health facilities. 6.14 In the case of new health centers constructed under the project, an analysis of pilot health centers and the implementation of a modest out-patient fee schedule revealed promising results for the sustainability, utilization, and quality of health center services. Thus, the project will finance the introduction of a similar cost recovery mechanism in Phase I provinces. 6.15 Finally, the study on TB food supplementation (see above) considered lowering the food subsidy so as to lower food costs and raise patient contribution to their treatment. Patients receive free drugs, hospitalization, and food under current policy, but must pay transport costs, and foregone household production. The analysis concluded that the very low income profile of TB patients argued for a full food subsidy, as did the evidence of low patient compliance in hospitals where food supplementation was interrupted.  -38 - 7. AGREEMENTS REACHED AND RECOMMENDATION 7.1 During negotiations, the Government provided assurances that: (a) it will establish a Project Coordination Unit, with competent personnel in sufficient numbers, and select a PCU Manager, the Chief of the Administration and Finance Unit, the Chief of the World Bank Operations Unit and a Construction Manager in the World Bank Operations Unit acceptable to IDA, as a condition of effectiveness (para. 5.2). (b) a Provincial Project Unit in the Provincial Health Directorate will be established and the Provincial Project Director appointed for each of the six Phase I project provinces as a condition of effectiveness. The Provincial Project Directors for each of the four Phase I1 provinces would be appointed by September 30, 1997 (para. 5.3). (c) no expenditures by any province for civil works or medical equipment will be made unless the Ministry of Health and the province concerned have entered into their respective Health Management Agreement for the first year (para. 5.6). (d) it will prepare, satisfactory to IDA, implementation arrangements for the provincial supervision costs, including the basic agreement between the MOH and the participating Provincial Project Director, by June 30, 1997. It will enter into such supervision agreements with Phase I provinces by September 30, 1997 and Phase II provinces by September 30, 1998 (para. 5.3). (e) it will appoint senior technical facilities managers responsible for management of regular preventive maintenance of upgraded provincial health facilities by September 30, 1997 in the six Phase I project provinces, and by September 30, 1998 in the four Phase II project provinces (para. 5.16). (f) an administrative officer and a financial officer will be appointed to the NAO, and the NAO elevated to Department status within the MOH by September 30, 1997 (para. 5.11). (g) it will prepare a performance evaluation report of the Outreach Program under the HIV/AIDS Component covering the first two years of implementation, and submit for the approval of IDA, not later than December 31, 1997, the evaluation report and recommendations for further financing of the outreach program from the unallocated category of the project (para. 3.26). (h) technical performance audits of the implementation of HMAs will be conducted on a random basis starting in January, 1998 and the audit reports will be submitted to IDA (para 5.20).  - 39 - (i) it will enter into a contractual relationship, acceptable to IDA, to prepare the technical specifications and bidding documents, to supervise construction and to disburse to contractors, for the first phase of construction of facilities by December 31, 1996 and for the second phase of construction by December 31, 1997 (para. 5.14). (j) audits of project-related records and accounts, including the Special Account, will be undertaken in accordance with appropriate accounting principles consistently applied, by independent auditors acceptable to IDA, and that audited accounts and financial statements, in a format agreed with IDA, and including separate audits of Statement of Expenditures, will be sent to IDA within six months of the end of each Government fiscal year (para. 5.20). (k) it will prepare under terms of reference satisfactory to the Association, and furnish to the Association, on or about March 31, 1999, a report integrating the results of the monitoring and evaluation activities on the progress achieved in the carrying out of the Project during the period preceding the date of the report. This report will be reviewed with IDA by June 30, 1999 (para. 5.22). (1) it will conduct a final evaluative survey by June 30, 2001 and submit to IDA, by March 31, 2002, the results of this survey. The final evaluation report on the project and a plan of such scope and detail as IDA may request for the future operation of the completed project will be submitted to IDA within six months of the Completion Date of the Project (para. 5.22). (m) it will no later than November 30 in each fiscal year, commencing November 30, 1996, and until completion of the Project, furnish to the Association the annual work program and related budget for all project activities, acceptable to IDA (para. 5.21). (n) it will prepare and implement a National In-Service Training Plan and Strategy acceptable to IDA by March 31, 1997, including a time bound plan for the training of staff at health centers and referral hospitals upgraded under the project, and promptly thereafter carry out such plan taking into account IDA's comments (para. 5.18). (o) it will submit to IDA for comments and review by January 31, 1997 a social marketing strategy for bednet distribution and treatment, including a strategy for cost recovery, and based on such discussions prepare a proposed action plan for discussion with IDA and promptly carry out said action plan (para. 5.10). (p) it will select health centers and referral hospitals to be upgraded under the project in accordance with criteria acceptable to IDA (para. 5.14). (q) it will adequately staff health centers and referral hospitals upgraded under the project (para. 5.18).  - 40 - (r) it will, not later than January 31, 1997, implement through the MOH a national policy satisfactory to IDA on charging and collecting fees from patients for services rendered at its national health facilities, including the policy on retention of fees, the policy on setting and adjusting the schedule of fees, and the allowable expenditure of fee revenues (para. 3.42). (s) it will appoint an HIV/AIDS Project Grant Committee not later than January 31, 1997, with responsibilities and membership satisfactory to IDA (para. 3.29). 7.2 In addition to the above agreements, the Government agreed to the following understandings: (a) it will exempt the project from customs taxes and duties, or will make available to MOH a budget allocation to cover the costs of custom duties and taxes, including taxation of consultants (para. 4.3). (b) semi-annual progress reports will be furnished to IDA by June 30 and December 31 of each year commencing Fiscal Year 1997, in a format acceptable to IDA (para. 5.21). (c) the government, with available donor funding, will finance the cost of food supplementation for TB patient hospitalization and, as resources permit, for the ambulatory phase of chemotherapy (para. 5.8). 7.3 In addition to the above agreements, prior to negotiations, the MOH provided IDA with its standard format for a consultant contract to ensure its compliance with the Bank's guidelines and the Standard Form of Contract for Consulting Services, June 1995 (para. 4.9 (c)). 7.4 Subject to the conditions in paras. 7.1 and 7.2 above, the proposed project would constitute a suitable basis for an ITF Credit of SDR 20.6 million (US$30.4 million equivalent) to the Kingdom of Cambodia on standard IDA terms with a maturity of 40 years and 10 years grace.  - 41- Annex I KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT Support to National Tuberculosis Program The detailed TB component description and budget is found in the project implementation plan. I. Background 1. The National Tuberculosis Program (NTP) was started in 1980 with the establishment of a national network of microscopists and treatment centers. The program has been reorganized to incorporate short course tuberculosis therapy, long term technical support by the World Health Organization (WHO), the production and distribution of a TB program manual, a change in clinical and laboratory records in accordance with international standards, and a change from suboptimal 12 month anti-TB therapy to a modem short course therapy, all starting in 1994. 2. The "new" NTP is being implemented by the Centre National Anti Tuberculeux (CENAT), one of the seven central institutes in the Ministry of Health. CENAT consists of a central office in Phnom Penh with approximately 20 staff and over 115 provincial and district hospitals throughout the country. Provincial and district TB control activities are conducted in the respective hospitals where TB patients are diagnosed and treated. Some provincial supervisors may be members of the provincial hygiene station under the direction of the provincial director for public health, others are employees of the provincial hospital without direct connections with the hygiene station. Supervision from the provincial level down, government programs for patient feeding, and general hospitalization and staffing costs are borne by provincial governments. CENAT does not include commune or village level facilities. 3. Patient Diagnosis and Treatment. Patients suspected of having TB are diagnosed at hospitals within the CENAT system. If a patient suspected of having TB is seen outside the system, i.e. at a commune clinic, a referral is made to a provincial or district hospital within the system. Diagnosis is based upon unconcentrated sputum smears stained for acid-fast bacilli (AFB) at each treatment facility. Patients with negative sputum AFB smears undergo a series of clinical evaluations over six weeks for the diagnosis of AFB smear negative TB. The treatment of TB consists of multiple antibiotics given concurrently for 8 to 12 months. Several regimens are used, incorporating all or some of the antibiotics streptomycin, pyrazinamide, rifampicin, isoniazid, and ethambutol. Drug requirements are calculated on a quarterly basis at all treatment facilities based upon registry tabulations and passed to the central office. These requests are then shared with the Central Medical Stores (CMS) in the Ministry of Health which in turn is responsible for the acquisition and distribution of drugs for the country.  - 42 - Annex 1 4. An intensive phas of treatment, lasting the first two or three months depending on the regimen used, is directly observed and is almost always completed on an in-patient basis. If ambulatory care is offered during the intensive phase, then the patient must make daily visits to the hospital for supervised therapy. The continuation phase of therapy is done on an ambulatory basis with the patients given monthly supplies of medications. No formal outreach activities are included in the NTP at this time. 5. Food supplements in the form of rice, oil, fish and protein biscuits are provided to the patients on a daily basis while in the hospital, and on a monthly basis as an out-patient. The food program has been credited with enabling the patients to remain in the hospital through the intensive phase of therapy and acting as an incentive for completing their therapy as an out-patient. 6. Training and Supervision. An extensive training program has been established to implement the recent changes in the TB control program. In addition, ongoing training for microscopists is conducted to maintain competency of AFB smear reading in the field. A five day course is required for participants in the new program covering the theoretical groundwork for short course chemotherapy, the use of the short course antibiotic regimen, the new registries and cohort analysis. The seminar is followed by a field visit by the training team to the hospital from which the seminar participants work. In addition, a bi- annual meeting of participants is held to present the results of hospital experience and program analyses. 7. The NTP has had the benefit of a long-term advisor from the WHO for program development and implementation. A three tiered supervisory system is established with the central office overseeing the provincial offices and the provincial office overseeing the district offices. Regular supervisory visits are scheduled at the central and provincial level on a monthly basis. Tabulation of TB registry information and cohort analysis is conducted at all levels, with the information collected by provincial supervisors and passed on to the central office. 8. Laboratory Services. In addition to a simple microscopy laboratory at each treatment facility, CENAT includes a reference mycobacteriology laboratory. The facility is currently being renovated in order to culture for M tuberculosis and to perform identification and susceptibility testing. There are two long-term laboratory consultants, one supervisor, and 12 technicians working at the facility. This team is responsible for the training of all AFB smear laboratory technicians, the preparation of AFB staining supplies for the country, the quality control of AFB slide staining and interpretation in all of approximately 150 laboratories, and the conduct of future M tuberculosis drug-resistance surveys. 9. Program Evaluation and Surveys. Quarterly cohort analysis of TB patients is an integral part of the program. Indicators included in the analysis include: number of new cases and treatment regimens used, number and proportion of patients completing therapy, number and proportion of patients confirmed cured by sputum microscopy, number of patients who died, number of patients who defaulted from therapy, and the number of  I-43- Annex 1 patients who transferred to another treatment facility. These results are compiled and computerized at the central office and shared with all supervisors at the bi-annual TB supervisors meetings. 10. Several surveys are built into the program, including an initial TB prevalence survey, tuberculin skin test surveys to be conducted every five years, and M tuberculosis drug- resistance and HIV infection prevalence surveys yearly. II. Program Function and Implementation 11. The NTP is well founded in internationally accepted concepts of TB control in low income countries. Given the combination of the extraordinary burden of tuberculosis in the population, coupled with the proven efficacy of well implemented TB control, the NTP has the potential to greatly impact the future health of Cambodians. CENAT has been able to implement the new NTP with an impressive agenda starting in 1994. Implementation consists of training and support of hospitals with sufficient staff and facilities to carry out the program. Identified staff are trained in Phnom Penh in a five day seminar. After the initial training, a team from the CENAT central office visits the facility to help organize pharmacy, ward, record, and supervision procedures. For district facilities not yet trained or unable to participate in the new program, the old, more simplified program continues. The old program does not use the short course antibiotic regimen with its combination drugs and does not contain the records necessary for quarterly cohort analysis. Thus, program indicators such as the proportion of cases confirmed cured are not known for facilities using the old system. But the new program is expanding rapidly and 100% coverage is planned by the end of 1996. However, the program is still fragile and its capacity is strained. Human resources are short, especially for skilled administrative personnel. None of the staff work full-time and absenteeism is a problem. The central office is dependent on 12 key people for its function, including direct training and supervision responsibilities. In the provinces and districts, staff turnover has been problematic, requiring frequent training of new personnel. 12. The program has heavily depended on outside donor support, especially for drugs and training and supervision activities, and lack of future support lies in the path of increasing program needs. The patient load may increase by 50 percent within the next 5 years, requiring an increase in most every capacity and supply during that time. However, with comprehensive financing of the components outlined below, along with the support provided by the health systems strengthening, CENAT should be able to accommodate the expansion of this program projected to the year 2000. 13. Under health systems strengthening, facilities will be refurbished, upgraded or built anew. These facilities should be incorporated into the new NTP as efficiently as possible. Therefore, CENAT staff will be included in the effort to organize and start new facility functions. Refurbished buildings and new equipment and supplies will allow district facilities which could not support the new NTP in the past to become part of the program with the necessary training. Thus, with the upgrade and expansion of old facilities and the  -44- Annex I construction of new facilities, the NTP will be able to expand to meet the goals of the program and the needs of the people. III. Component Description and Financing Needs 14. The financing plan is based upon continuing the current program strategy, including feeding and housing of tuberculosis patients in hospitals for the intensive phase of therapy (two months) and feeding patients during therapy as an out-patient. 15. The number of patients projected for the five year period of the project are based on the epidemiologic assumptions previously detailed. The number of cases treated in the years 1993 to 1995 has increased 13, 000 per year. Projected case numbers for this project are based on continuing an 8 to 10 percent increase in the first three years, thereafter leveling off at 24,000 cases by the year 2000. Thus, with rounding, the five year projection of case numbers would is as follows: YEAR 1996 1997 1998 1999 2000 CASES 18,000 19,500 21,500 23,000 24,000 16. Calculations for the proposed financing are based upon these projections. The supply of drugs to the TB program is budgeted under essential drugs in the health systems strengthening component of the project. Acquisitions will be made through the Central Medical Stores (CMS) of the Ministry of Health. Distribution of drugs will proceed according to requests processed by CENAT and passed on to CMS.  - 45 - Annex 2 KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT Mosquito Net Distribution and Treatment I. National Bednet Program A. Objectives 1. In support of the overall Malaria Program Goal - to reduce malaria mortality and morbidity to the extent that malaria is no longer a major disease problem in Cambodia - the national bednet program objectives are: (a) Expansion of and evaluation of insecticide-treated bednets projects, including complete coverage of the population at risk in Kg. Cham and Kg. Speu in 1995-1997, with expansion to 19 other provinces in 1996-2000. (b) Development of social marketing strategies for reaching transient forest workers and other population groups in collaboration with NGOs, to begin in 1995 and increase yearly through 2000. B. Structure and Management Central Level 2. The National Bednet Program is managed at the central level by the National Malaria Center (CNM). A Bednet Project Coordinator has been contracted for the duration of the project by the Director of CNM, financed by ODA. The Bednet Coordinator, in collaboration with CNM staff and with technical support from a full time WHO Malariologist, is responsible for planning, organizing and managing program implementation and program evaluation. 3. The health education, laboratory, epidemiology, entomology and parasitology units within CNM provide technical supervision and support for the implementation of the National Bednet Program. The health education unit is currently running health education activities in Kg. Chain and Kg. Speu in support of bednet distribution in April 1995. The laboratory unit conducts blood surveys as part of program evaluation as well as providing technical supervision for routine blood slide surveillance services at provincial and some district hospitals. The epidemiology unit provides HIS and census data for planning purposes. The entomology and parasitology units are involved in surveillance activities (e.g. drug and insecticide sensitivity studies and program evaluation).  - 46 - Annex 2 4. It is proposed that a National Bednet Steering Committee is established with representatives from CNM, WHO, donor agencies, NGOs, social marketing and, where feasible, provincial malaria supervisors. The committee will be responsible for defining policy, for planning, coordinating and standard setting for project implementation, for program evaluation and for identifying resource requirements. The committee will be established end 1 995/early 1996, meeting on a fairly frequent basis during the early phases of program implementation, and biannually thereafter. Inputs Processes Outputs Training of CNM staff in Training, Supervision, National Bednet Plan of bednet technology, CNM to province. Action, 1996-2000. methodologies and promotion. Study tours to other countries Progress reports, CNM to Bednet Training Module. implementing national bednet MOH. programs. Vehicles, supplies and equipment. Operational budget. Provincial Level 5. The malaria program is managed in each province by a Provincial Malaria Supervisor under the overall responsibility of the provincial health directors, in addition to which there is a Malaria Supervisor for all the rubber plantations in the country. The Malaria Supervisors are usually attached to the Provincial Hygiene and Epidemiology Station, together with one or two microscopists. 6. Key duties and functions for the bednet program will be preparation of annual plans in consultation with the districts, training and technical support to the districts, storage of nets, distribution of nets to the districts, management of the operations budget, preparation of progress reports (submitted to CNM) and program evaluation. Inputs Processes Outputs Training of provincial malaria Training, technical Bednet Plan of Action. supervisors in net treatment support and supervision, Province reports, province to technology and province to district. CNM. methodologies, and promotion. Supplies and equipment. Social mobilization. Operational budget for Health education. implementation.  - 47 - Annex 2 District Leyel 7. District malaria supervisors will be responsible for conducting baseline demographic surveys, training and supervising commune health staff and villagers in bednet methodologies, storage of supplies and equipment, distribution of nets direct to village level, treatment and re-treatment of nets, health education and social mobilization. The districts will also be expected to follow-up net distribution with household visits to determine acceptance and compliance in the target population. 8. Funds for implementation of the national Bednet Program will be provided by the Provincial Health Team on a periodic basis, according to planned activities as reflected in the district annual plans. The districts will provide quarterly progress reports to the Provincial Health Teams with the focus on operational issues, particularly constraints, and will participate in annual review meetings at the province. Inputs Processes Outputs Training in insecticide-treated Monitoring. Technical Plan of Action. Monitoring bednet technology, support and supervision, reports, district to province. methodologies and promotion. district to commune. Supplies and equipment. Operational budget for Social mobilization. Health implementation. education. Commune Level 9. Staffing capacity at this level is severely limited. Hence staff at this level will only be expected to support the district in an organizational capacity, e.g. for baseline demographic and socio-economic baseline surveys and for treatment and re-treatment exercises. Inputs Processes Outputs Training in insecticide-treated Social mobilization and health Monitoring reports. bednet technology, education reports (promotion). methodologies and promotion. Follow up at household level. II. Program Strategies & Options for Cost Recovery 10. The national bednet program will adopt two approaches for the distribution and treatment of nets - a public sector health service strategy and a private sector social marketing strategy - each of which offers a set of advantages over the other. The public sector approach will: (a) ensure equity and access by the majority of the poor rural population; and (b) achieve high coverage thereby reducing malaria transmission. The social marketing approach has the advantages of: (a) creating high levels of demand, regardless of disposable  - 48 - Annex 2 income levels, through mass media campaigns; (b) catering for specific sub-groups of the population which are less accessible e.g. forest workers; and (c) providing better options for cost recovery. 11. Both sectors will be represented in a national Bednet Steering Committee, which will serve a number of purposes including: (a) to define and agree on policy; (b) to ensure standardization and quality control of bednet services, particularly in the private sector; and (c) to provide guidance on program evaluation. A. Cost Recovery - Public Sector 12. As an intervention in support of public good, bednet use has a strong rationale for public subsidy. The objective of cost recovery here will be an attempt to promote better utilization of nets at household level based on the logic described earlier - that nets with a cost attached to them will be better 'valued' by the buyer, and consequently used and cared for correctly. 13. There are several options for the flow of funds generated from net fees through the public sector distribution program. Revenue from the sale of nets can (a) be used to strengthen health services at the commune level, e.g. for renovations, supplementary drugs and/or services; (b) be retained in the community to support community-managed health and/or development projects; (c) used to strengthen district health services, e.g. provision of mobile outreach services. 14. The choice of one of these options will very much depend on capacity for financial management (structures or intermediaries) at the village level, which will undoubtedly vary from place to place, and it may be worthwhile to pilot cost recovery schemes in communities with well-established infrastructure. Health staff should begin a dialogue with community committees and associations in target communes well before distribution takes place, so that commune leaders, committee members and other community leaders can meet to decide on how to spend revenue generated from net sales in their commune/village. The bednet committees and community leaders should be given the responsibility for organizing public forums to create awareness about the distribution program, the 'net fund', and proposed uses of the fund. B. Cost Recovery - Social Marketing 15. The private sector/social marketing approach provides several options for cost recovery, two of which are considered here - distribution through private retailers and distribution through organizations such as NGOs, rubber plantation companies and the military service. 16. Nets and insecticide will be provided through the Ministry of Health's national program and sold at or below cost to private retail outlets and distributors, NGOs and other large institutions and/or companies. Nets will be sold through these outlets at a mark-up price in order to cover overheads and provide a profit margin. The outlets then buy more nets  -49- Anex 2 from the social marketing agency once their stocks are depleted. In principle this approach should provide a high level of cost recovery, depending on the willingness to pay of target populations. However, complete cost recovery is impossible due to costs incurred by the agency, including: (a) cost of the initial 'seed' supply of nets; (b) cost of the social marketing campaign; (c) running costs; and (d) lower than market prices to assure high retail sales to target groups. The social marketing program will therefore require significant donor subsidy. C. Rubber Plantations and the Military Service 17. Workers on the rubber plantations and the army are particularly at risk from malaria. Estimates of bed occupancy rates by soldiers in hospitals around the country exceed 50 percent in general wards. Rubber plantation managers report they have to provide supplementary curative services (in the form of mobile clinics) for their workers and their families during periods of heavy malaria transmission. 18. The full impact of malaria on the rubber plantation companies in economic terms has yet to be determined but is likely to be considerable due to both loss of productivity and the cost of providing extensive curative services for workers and their families. Nevertheless the biggest burden of malaria is at the household level, where family income is almost entirely generated from work in the plantations. Loss of earnings by workers through illness is exacerbated by significant, often crippling, expenditure on curative care both for themselves as well as their families. Death is also not uncommon. 19. There is need for dialogue between CNM/Ministry of Health, the military service and the rubber plantation companies to develop a mutually agreeable strategy for bednet distribution and treatment services for soldiers and workers (and their families) respectively. The strategy should provide for a cost recovery component, preferably with a high degree of subsidy by the employer. This strategy has the added advantage that employers can use a 'direct debit' approach for recovering net fees by deducting fees from salaries, with the option of payment in installments. III. Project Support to the National Bednet Program A. Social Marketing 20. An international non-profit organization will be contracted to develop a social marketing strategy suitable to the Cambodian situation. The first requirement is a detailed market survey, the findings of which will determine the feasibility and level of support required to implement a social marketing bednet distribution and retreatment program in Cambodia. This study was completed in April 1996 and its findings incorporated into the appraisal of the project. Feasibility was judged to be high. The TOR for a two year first phase implementation were prepared and agreed. 21. The social marketing component will utilize existing private sector resources, such as distributors, retailers and advertising agencies, to sell a branded insecticide-treated bednet product. Nets provided through the program (in the first four years; perhaps thereafter from  - 50 - Annex 2 wholesalers) will be repacked with an appealing package and image, and sold to retailers and distributors at a subsidized price. The retailers and distributors will in turn sell the brand- name bednets at a mark-up price to cover overheads. If sales are successful, the retailer buys more nets from the project and the cycle continues. Implicit in the project is the need to control the mark-up price, the modalities of which must be determined prior to project implementation. 22. Demand creation activities for nets and retreatment will be implemented alongside sale and distribution. Information on affordability, access and KAP from the market survey will be used to formulate appropriate information, education and communication (IEC) strategies and for specific target groups. In addition to creating demand for brand-name nets, it is anticipated that the IEC strategy developed by the social marketing project will also increase demand for insecticide-treated bednets provided through the public sector program. B. Health Education and Social Mobilization 23. The health education unit at CNM has already developed a number of IEC materials which include insecticide-treated bednets as a component of malaria control strategies suitable for community participation. Support will be provided for printing and reproduction of existing materials, as well as a limited operational budget for implementation. In addition to education of the general population, traditional healers, health activists and TBAs will be targeted through local workshops run by district and commune health staff. Community mobilization for bednet distribution and retreatment will be the responsibility of provincial governors, community leaders, health workers at provincial, district and commune levels, NGO personnel and employers. Mobilization campaigns should be conducted prior to net distribution and every six months thereafter, prior to retreatment exercises. C. Training 24. CNM will be responsible for training all personnel involved in bednet distribution and treatment - health staff, NGO employees, managers of the social marketing project, managers of the rubber plantations, villagers etc. This is critical to ensuring standardization and quality control of bednet services. WHO has provided TA for a period of four months for training of CNM staff in insecticide-treated bednet technology and associated methodologies (e.g. method for collective dipping, bioassays, insecticide sensitivity assays). 25. In-service training will be required at all levels of the health service - at national, provincial, district and commune levels - to ensure the delivery of quality services. A pre- requisite to training will involve an assessment of the training needs at each level, preferably during the planning session with provincial health management teams.  -51 - Annex 2 D. Logistics Procurement and Distribution 26. Nets and insecticide will be procured by CNM using MOH procurement services and delivered to the Central Medical Store of the MOH for storage and subsequent distribution to the provinces. Procurement will take place on an annual basis in the second quarter [to allow six months lead time], based on planning estimates. A request can be made to the supplier for delivery in two or more installments, to reduce the amount of storage required at CMS. After the first year, annual requirements can be revised according to the pace of implementation in the previous year. 27. Distribution to the provinces will follow the implementation schedule outlined in the Project Implementation Plan and a limited number of provinces, grouped into five 'regions' (Northwest, Central, Southwest, Southeast and Northeast), will implement the program each year. This is expected to simplify logistics and facilitate the distribution process. CMS will use the same distribution channels as currently used for drugs, immunization supplies and equipment. 28. The provinces will provide temporary storage for nets and deliver them to the districts as scheduled in the provincial plan of action. Districts will then be required to store nets and insecticide for a brief period, until they are delivered to the community level. Health centers are not expected to handle supplies. Transport 29. The Central Medical Store of the MOH will have five trucks suitable for the distribution of bednets and insecticide from Phnom Penh to the provinces. Additional transport can be sought from private companies at reasonable rates. For purposes of transportation from provincial headquarters to the districts, malaria supervisors will rely on common-use MOH transport and NGOs. Supplies and Equipment 30. Supplies and equipment required for the bednet program include nets, insecticide, plastic buckets, gloves, measuring cylinders, bioassay kits, insecticide sensitivity kits, equipment for blood surveys and vehicles.  - 52 - Annex 3 KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT HIV/AIDS COMPONENT: MANAGEMENT AND IMPLEMENTATION 1. The detailed project description and budget is found in the Project Implementation Plan (PIP). The following items reflect subjects of particular interest in relation to the management and implementation of the HIV/AIDS component. Organization and Management of the Government's response to the Epidemic 2. The Government's response to the epidemic is anchored in the National AIDS Office (NAO) which was established in 1993. The position of this office within the MOH has not been clear, but to rectify this situation, a condition of the credit will be to upgrade the office to the level of department through appointing an administrator and financial officer. The relationship between the NAO and the Institute of Dermatology and Venereology has also required clarification, but a decision has been reached that the Institute will fall under the NAO as its primary function relates to the STD program. 3. Policy guidance and interministerial coordination is conducted through the National Committee on HIV/AIDS/STD which is chaired by the Minister of Health. The First Prime Minister is the honorary chairman of this committee which meets irregularly and infrequently. There is no representation of the NGO community on the committee which, otherwise, broadly reflects those ministries with an interest in the epidemic. The national committee acts as a forum for discussion but it makes no decisions about resources and how those should be expended across ministries. The National AIDS Office at the MOH acts as the -secretariat for the national committee. 4. Earlier, there was an intent to establish a secretariat and a technical committee to assist advising the national program. In reality, the so called secretariat was another committee but comprised of lower level staff from across the concerned ministries. The technical committee meets infrequently. 5. The issues related to the Government's organization of its response were discussed at a World Bank/UNDP/WHO sponsored workshop conducted on August 17, 1995. While there was no immediate outcome, what has emerged is that the National AIDS Office in will become known as the National HIV/AIDS/STD Secretariat obviating the proposed "secretariat committee". The technical committee will serve the HIV/AIDS/STD Secretariat. 6. Currently, the whole Government's response to the epidemic is conducted through and by the Ministry of Health. Therefore, the Project will make available its resources through the MOH and the HIV/AIDS/STD Secretariat.  -53 - Annex 3 7. The following organogram sets out the relations of the key actors in the Government's response and the organizational structure within MOH. Figure 3.1 DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT HIVIAIDSISTD COMPONENT ORGANOGRAM Ministryr of H"tth National Commitee ror 'HlVAIDS1STD PreventIon &L --- Olreror General ConImI (NSAC) of Heal - - - - - - - - - - - p HIVIAIDSISTD Tadenical Natonal Blood Sub-Commttee - - - - - - - - Trnsusion Center I~~~~~" I I Natcnal MioSsTD so tMa nagement IEC Unwl GreFund Unit Admnlarit& Toing Unit Eres atuoniabeor | Pero gprcami Cenasa teSDcntradfrterinroucionancte Uniticapoaht tedagoi and management of STDs in the helth care delivery system. AdminiReseari Ungt Unt S a II | fIVrIoSfSTD N I Proslndal l l Programs F 8. Within the National AIDS office, units have been established to be responsible for specific functions of the NAO. The STD management unit will be responsible for the specialized programs at the STD center and for the introduction of the syndromic approach to the diagnosis and management of STDs in the health care delivery system. Administering the Small Grants Fund for NGO activities and responsibility for the National Committee for HIV/AIDS/STD Prevention and Control will rest with the Grants Fund Unit. An IEC unit, managed by a media director to be specifically recruited for this purpose, will orchestrate the public information campaigns to be developed and launched through the project. The Outreach Program will continue to receive direction and support from the unit already established for this purpose. All surveillance and evaluation activities will be managed by a specific unit for this purpose. Human resource development will be the responsibility of the training unit which will need to coordinate closely with more specialized units which have specialized staff development responsibilities. Finally, the administration and finance unit will provide the services necessary to ensure the smooth functioning of the NAO.  - 54 - Annex 3 9. The majority of the Provincial AIDS Offices (PAO) have a complement of five staff although a few smaller provinces only have three. The PAOs are technically under the direction of the NAO. The outreach and STD programs in each province are under the direction of assigned staff at the provincial office with the responsibility for fostering and managing the outreach program, currently mainly aimed at prostitutes, and managing the introduction of the syndromic approach to the diagnosis and treatment of STDs. Involvement in the epidemiological and other survey activities will form part of PAO work programs as well as organizing training activities at provincial level on a variety of themes including counseling. 10. The National Blood Transfusion Center (NBTC) is responsible for organizing and directing the country's blood transfusion services. The Director of the NBTC reports to the MOH. Small Grants Fund for NGOs 11. The significance of the role of the NGO sector in the response within the country so far cannot be over estimated, from the successful social marketing of condoms to preparing informational materials to working directly with high risk groups. The Government recognizes that synergy between the government and non-government sector is important for the country's effort to contain the epidemic. 12. In recognition of the continued importance of NGO efforts, under this project, a fund will be established to provide small grants for the NGO sector. The fund will work in two ways, responding to proposals submitted by NGOs and proposing activities to the NGO sector which they are best able to conduct. The fund is expected to contribute to attainment of government policy and priorities in relation to the epidemic. The following lays out the mechanism by which the fund will operate. NATIONAL AIDS OFFICE - NGO SMALL GRANTS PROGRAM National AIDS Program 13. The National AIDS Program is a coordinated effort by the Royal Government of Cambodia to address the increasing presence of HIV within the country. The program will receive assistance from the World Bank through the Disease Control and Health Development Project and through other multilateral and bilateral support. 14. The role of the NGO community in dealing with the prevention of the further spread of HIV in Cambodia is well known and documented. The synergy between the Government's program and those of the NGO community needs to be enhanced, each recognizing the relative strengths and merits of their activities.  55- Annex 3 Small Grants Program 15. The Small Grants program, set up under this project, will award grants to NGOs and other community groups for small-scale projects and activities that address HIV/AIDS issues. The principal objective of the programn is to facilitate and carry out innovative activities to further limit the spread of the HIV virus. Such activities may be proposed by the NGO conmmunity or proposed to them by the National AIDS Program. 16. Under this program, grants will be provided directly to NGOs and community groups to carry out specific projects and activities which fall within the overall strategy of containing the HIV epidemic. Grants will be made after evaluating proposals received from NGOs and community groups by the Project Grant Committee on an open and competitive basis. Grants will only be made to organizations and not to individuals. Such organizations must be organically and functionally outside the formal Government structure. The foregoing committee will administer the program. Project Grant Committee 17. The committee will consist of the Director of the National AIDS Program, a representative of UNAIDS Theme Group, a representative of the World Bank's Project Operation Unit, a representative of a Khmer NGO and a representative of an International NGO. In the latter two cases, the organizations represented will be those substantially dedicated to addressing the HIV/AIDS issue in Cambodia. The responsibility for selection of representatives from the Khmer and International NGO community will rest with the NGO HIV/AIDS Coordinating Committee. 18. The chairperson of the committee will be the Director of the National AIDS Program or his/her designee. The chairperson will organize the committee in consultation with the concerned parties and will be responsible for all committee meetings whose frequency will be at his/her discretion. The presence of three members will represent a quorum. 19. Responsibility for administering the approved projects, including disbursements, and for the preparation and submission of reports will rest with the staff of the National AIDS Secretariat. The terms of reference for the committee will be to: (i) Promote the NGO Grant program; (ii) Select and approve project proposals submitted to the committee; (iii) Review progress reports of projects; and (iv) Review and approve project completion reports for submission to the World Bank's PCU and other concerned entities. Application Eligibility 20. Whatever the type of organization, certain basic requirements need to be fulfilled as part of the selection criteria and include the following:  - 56 - Annex 3 (i) A basic organizational structure or constitution; (ii) At least two years experience in relevant fields of activity; (iii) Some demonstrated capacity in project management, reporting and accounting; (iv) Adequate coverage in clientele and geographic terms; (v) Some form of registration either with a Government institution or an NGO network, to establish both authenticity and accountability; and (vi) A statement of financial accounts for the previous year, to indicate the ability to manage project money. 21. Information on the above and other aspects of organizational history and strength will be asked for in the standard project proposal format which must be filled in by all parties applying for grants. If there is uncertainty whether an organization is eligible to apply for a grant, clarification may be sought from the Project Grant Committee. Type of Project Activities to be Supported 22. Grants will be awarded to innovative preventive activities, with a focus on populations particularly vulnerable to the impact of sexually transmitted diseases and HIV. For the target populations, areas of interest include, but are not limited to: (i) Peer education programs for target populations; (ii) Participatory and innovative workshops; (iii) Information, Communication and Education; (iv) Advocacy; and (v) Specialized studies and research framed in a social and gender context. Duration of Grants 23. Grants will initially be made to support project activities with a 12 month or less time frame. However, prospective applicants are encouraged to submit project plans covering a 2-3 year period. It is possible that follow-up grants may be made based on performance, at a later stage. Nature of Grants 24. Initially, the range for an individual grant will be up to US$25,000 equivalent. However, the actual size of grant will be determined depending on specific project requirements and the absorption capacity of the group concerned. The grants will be made in US$ riel equivalents based on budget estimates submitted with project proposals. 25. It is expected that the grants will be made in installments. The final installment will be made on satisfactory completion of the activity and the receipt of a final report. Funding can be provided for both new programs and for continuing existing activities. Co-funding of activities may be considered when appropriate.  -57 - Annex 3 26. Funding will not be available for construction and other infrastructure development activities nor for the purchase of vehicles. The cost of project related transport may be included in the budget estimate submitted with the project proposal. Limited budget support can be provided, if critical need is established, for the acquisition of items of office equipment if the cost does not exceed 30 percent of the total budget estimate for the project. Staff salaries may also be supported either on a partial or full basis for the duration of the project, but such support should be clearly indicated in the proposal submission. 27. Money allocated for the activities described in the project proposal cannot be assigned by the grantee for other purposes if it is greater than five percent of the total budget without prior approval from the Small Grants Program Approval Committee. 28. The grantee organization may propose to charge, in the budget estimate, an amount not to exceed 15 percent of total project budget for administrative overheads and such other expenses. 29. Each organization is expected to indicate what counterpart contributions it can make to projects over and above the grant from the program. This might include voluntary services and time on part of members of the organization, use of premises and equipment, mobilization of voluntary technical advice from competent sources and co-financing from the organization's other funds. The amount of counterpart funds, which should represent a minimum of five precent of the total project budget, will be reviewed during project assessment, although the magnitude of those contributions will not, in itself, be a key determinant. Submission of Proposals 30. All project proposals should be developed according to the prescribed project format copies of which are freely available at the National AIDS Office and the Project Coordination Unit. The proposals may be submitted in Khmer with an English translation or in English. They should be submitted to the Director of the National AIDS Office at the Ministry of Health for the attention of the Project Grant Committee. Submissions will be accepted twice yearly. 31. Applicants whose proposals are selected for funding will be asked to enter into a "Memorandum of Agreement" which will outline the nature of the project, duration, amount granted and other arrangements such as for reporting. Proposal Format 32. Each submission is expected to adopt the following format and to be no longer than three pages: (i) Name of Organization, list of principal officers and contact information; (ii) Brief background about the organization including background and experience of key people; (iii) Proposal indicating rationale, objectives and implementation schedule; and (iv) Budget - costs of personnel, project (travel, activities, communication), materials and overhead.  - 58 - Annex 4 KINGDOM OF CAMBODIA DISEASE CONTROL AND HEALTH DEVELOPMENT PROJECT Health Services Strengthening - Provincial Selection and Phasing National Health Coverage Support under the Project 1. In order to achieve a rational allocation and utilization of resources at the operational district level, the Government has developed a National Health Coverage Plan. Based on discussions with the government, and in keeping with government policy, the project will support the health coverage plan at the operational district level as a means to better deliver primary health care and disease control programs at the community level. The plan attempts to rationalize the provision of health facilities by changing the focus of the referral-peripheral unit from being linked to an administrative unit of a district, to being linked to the population size served (operational district). It aims at developing the physical infrastructure and human resources in the health system based on a geographical and population basis. It defines the catchment areas for each level of treatment and specifies the location of health facilities. Workshops were held with representation from provincial and district health authorities, NGOs and provincial health advisors. The decisions emerging from these workshops have been used as the basis for defining the needs of operational districts in terms of facilities, equipment and drugs. Determination of Province Selection and Phasing 2. The project will support the Government's National Health Coverage Plan by providing basic health services strengthening at the health center and referral hospital level. All provinces in the country have conducted a mapping exercise to determine the location of the health facilities under the coverage plan. Government also held a series -of provincial workshops in which provincial and district authorities reconciled the population-based numbers of health centers and referral hospitals to reflect the mapping exercise and needs of the operational district. The health facilities that would be upgraded/newly constructed and equipped under the project was determined using the provincial numbers of health centers and referral hospitals that emerged from the discussions as the basis. 3. In order to determine the provinces that would be included during the time frame of the project, the following criteria were used: (a) Exclusion of ADB assisted provinces - K.Cham, K. Chhnang, Takeo, Svey Reng and Prey Veng) (b) Prevalence of disease - TB, and malaria (high is positive, low is negative; 2 = tuberculosis and 2 = tuberculosis + malaria))  -59- Annex 4 (c) Management capacity - presence of provincial health advisor (H.A.) is positive, absence of H.A. is negative. (d) Access (good is positive, poor is negative) (e) Population size (large is positive, small is negative) Table 1 Scoring System Used for Provincial Selection No. Name of Criteria - Criteria - Province Positive Negative 1 B. Meanchey 1,2,5 3,4 3 K. Cham I (ADB) 4 K. Chhnang (ADB) 1111-114. I 0-4;11- ........... 18E S|iauokill 1, 2, 3, 5 9 Koh Kong 1,2, 3,4,5 I I Mondulkiri 1, 2, 3, 4, 5 1 2 P. Vihear 1, 2, 5 3, 4 14 Prey VengI (ADB) 18 Sihanuoukville I, 2, 4 3, 5 19 Stung Treng 1, 2, 4 3, 5 20 Svay Rieng I (ADB)_ 21 Takeo (ADB) *2 =high prevalence of tuberculosis and 2 = high prevalence of tuberculosis + malaria **The provinces that scored positive in four or all of the five criteria were included under the project. 4. Phasing of provinces is planned in 2 phases - phase I activities would begin during the 1 st year of the project and phase II activities would commence a year later. Phase I provinces are: Battambang, Kampot/Kep, Kampong Speu, Kandal, Phnom Penh and Siem Reap. Phase II provinces are: Kampong Thom, Kratie, Pursat and Rattanakiri.  - 60 - Annex 4 Table 2 HEALTH CENTER PHASING No. Name of Total HCs Yr. 0 Yr. Yr. Y., r.. Yr. Yr. Yr. Province targeted/ Govt. 1 2 .... - : 5 6 7 achieved other X donors .... I * Battambang 30/30 0 .. .. . 0 0 0 2 K. Speu 50/31 8 . 6 . . 8 3 0 3 K. Thom 50/26 4 0 . X 10 10 0 4 Kampot/Kep 50/23 6 - 5 6 7 8 8 5 5 Kandal 88/43 7 .10 10 1 15 15 8 6 Kratie 22/10 1 X 3 - 4 5 6 0 7 * Phnom 20/20 0 . 7 . - 0 0 0 Penh~~~~~~~~~~~~~~~~~~~ .. ... .... . .. .... . Penh _____ 8 Pursat 30/12 6 Q . 4 . 4 4 4 9 Rattanakiri 10/7 0 ; 3 . 2 3 0 10 * Siem Reap 28/28 0