Submission Date: January 19, 2010June 30, 2008June 18, 2008

Re-submission Date:

Indicative Calendar
Milestones	Expected Dates
Work Program (for FSP)	June 2008
CEO Endorsement/Approval	Nov 2008
GEF Agency Approval	Dec 2008
Implementation Start	Feb 2009
Mid-term Review (if planned)	Jan 2011
Implementation Completion	June 2012

part i: project IDentification

GEFSEC Project ID[1]: 2758

gef agency Project ID: P090374

Country(ies): Vietnam

Project Title: VN-GEF-Coastal Cities Project

GEF Agency(ies): ,

Other Executing partner(s):

GEF Focal Area (s):

GEF-4 Strategic program(S): Approved under GEF 3 - OP 10: Contaminant-based Operational Program. Also consistent with IW-SP2: reducing nutrient over-enrichment and oxygen depletion from land-based pollution of coastal waters in LMEs consistent with the GPA

Name of parent program/umbrella project: WORLD BANK – GEF INVESTMENT FUND FOR POLLUTION REDUCTION IN THE LARGE MARINE ECOSYSTEMS OF EAST ASIA/ IDA Financed COASTAL CITIES ENVIRONMENTAL SANITATION PROJECT

A. Project framework (Expand table as necessary)

Project Objective: The development objective of the Project is to demonstrate an innovative waster water treatment technology to reduce the discharge of pollutants from the city of Quy Nhon into the Ha Thanh River – which flows into the Thi Nai marine lagoon – in a financially and environmentaly manner. The Global Environmental Objective (GEO) is to pilot and promote the replication of a new, more efficient wastewater treatment technology, which would contribute to improving in an integrated manner the health and habitat conditions of globally significant marine and coastal ecosystems along the coastline of Vietnam and, through global oceanic circulation, other areas of the Pacific Ocean.
Project Components	Indicate whether Investment, TA, or STA**	Expected Outcomes	Expected Outputs	Indicative GEF Financing*		Indicative Co-financing*		Total ($)
				($)	%	($)	%
Construction of a chemically enhanced primary treatment plant (CEPT) and complementary city wastewater treatment capacity	Investment	CEPT plant constructed and operating successfully	- Volume of wastewater treated - Tons of BOD removed - Tons of nutrients (N&P) removed	4,500,000	34.4	8,564,466	65.6	13,064,466
Wastewater collection – secondary and primary sewers	Investment	Wastewater collection system constructed and operating successfully	- Number of HHs connected to the sewer system	0	0	12,471,438	100	12,471,438
Disseminations and replication promotion including IWLEARN activities	TA	- New technology accepted and operating - Structured learning and information sharing among stakeholders facilitated.	- Participation in biennial International Water Conference and workshops; - Number of presentations/learning events; - Number of papers published in the website and/or disseminated - Number of local city to city learning events to promote replication	350,000	87.5	50,000	12.5	400,000
Monitoring and evaluation, project management	TA	-Track the performance of the wastewater treatment system and confirm the reduction in pollution load entering the aquatic environment	- Baseline information established - Monitoring reports on outcome indicators	150,000	19.6	615,000	80.4	765,000
Total project costs				5,000,000	18.7	21,700,904	81.3	26,700,904

* List the $ by project components. The percentage is the share of GEF and Co-financing respectively to the total amount for the component.

** TA = Technical Assistance; STA = Scientific & Technical Analysis.

B. Indicative Financing Plan Summary For The Project ($)

	Project Preparation*	Project	Agency Fee	Total
GEF	350,000[2]	5,000,000		5,350,000
Co-financing		21,700,904		21,700,904
Total	350,000	26,700,904		27,050,904

* Please include the previously approved PDFs and planned request for new PPG, if any. Indicate the amount already approved as
footnote here and if the GEF funding is from GEF-3.

C. Indicative Co-financing for the project (including project preparation amount) by source and
by NAME (in parenthesis) if available, ($)

Sources of Co-financing	Type of Co-financing	Amount
Project Government Contribution	Counterpart Funding	2,687,966
GEF Agency(ies)	Soft Loan	19,012,938
Bilateral Aid Agency(ies)
Multilateral Agency(ies)
Private Sector
NGO
Others
Total co-financing		21,134.748

part ii: project JustiFication

A. State the issue, how the project seeks to address it, and the expected global environmental benefits to be delivered:

The South China Sea large marine ecosystems (LME) lie within the global centre of biodiversity for marine species, with more than 2,500 species of marine fish and 500 species of reef-building corals. The region also supports some of the world’s most diverse mangrove forests and seagrass beds.

However, East Asia’s rapid economic growth has been accompanied by significant environmental degradation. Land-based pollution, due mainly to coastal development, is one of its most severe environmental problems and is degrading the region’s seas, coasts, estuaries, and rivers. Around 270 million people live in the region, and this population is expected to double in the next three decades, which will cause significant ecological stress to coastal and marine areas. These changes, in turn, threaten the livelihood of fishermen and hoteliers, the latter of which contribute significantly to economic growth in Vietnam.

Among the primary environmental threats by humans in the South China Sea are increased sediments, nutrient pollution, and sewage pollution. The threats arise from municipal and industrial wastewater discharged virtually untreated into the waterways, with little to no re-use of treated wastewater. Sewage pollution affects biodiversity and fisheries, and has health impacts on the population. Traditionally, in Vietnam, no treatment facilities exist in manufacturing plants, factories and sewer systems before wastes are discharged into water bodies. As a result, only one-third of the original mangrove forests remain, 80% of the coral reefs are threatened, seagrass beds have been reduced or degraded by 20-50%, and many fish nursery areas and breeding grounds are being degraded.

To help the littoral states address this problem, the GEF and World Bank, in collaboration with regional partners such as the GEF/UNDP/IMO Partnership for Environmental Management of the Seas of East Asia (PEMSEA), have established an Investment Fund for Pollution Reduction in the Large Marine Ecosystems of East Asia (the Fund), the objective of which is to scale up investment in land-based water pollution reduction in the region’s coastal areas and major river basins.

Investments in wastewater treatment and pollution control in urban centers in Vietnam, including coastal cities such as Nha Trang (270,000 inhabitants), Quy Nonh (230,000 inhabitants) and Dong Hoi (95,000 inhabitants), which are bing assisted by an IDA investment, have lagged far behind its rapid economic development, which is currently estimated at 7% p.a. To maintain this higher than average growth, much of which is related to tourism, good environmental conditions are paramount. All the larger cities in the country are already undertaking sanitation investments, although none are yet operational. The CCESP cities represent the next tier of cities in Vietnam to tackle environmental sanitation issues, and have been selected based on their size and their specific needs – tourism features as a major economic activity in all three cities.

The IDA project is designed to: (i) improve the environmental sanitation in project cities and thereby enhance the quality of life of city residents. The cities, located on Vietnam’s east coast represent pollution hotspots in the South China Sea; and (ii) improve the financial sustainability and capacity of the pollution reduction service delivery entities. At the national level the Government has demonstrated commitment to sector sustainability with its policy of cost recovering tariffs. The cities participating in the IDA project have demonstrated strong commitment and understanding with regard to the needs for an extensive capacity building of the service providers, PMU, and communities in order to guarantee long term sustainability. The borrower has committed to this through a capacity building component included in the IDA operation. On the critical area of tariff reform each city has agreed to phased increases so that operating costs and depreciation of short lived assets is fully funded from user fees by the end of the project. This is included as a project covenant.

The proposed GEF project is an integral part of the IDA financed operation. The additional GEF funds of US$ 5 million would complement the IDA investment in enhancing the treatment capacity of the city of Quy Nhon, one of the project cities, and increase the efficiency in the removal of nutrients from wastewater through piloting a new technology, with a high demonstration and replication value in Vietnam and throughout the region. The technology consists of a Chemically Enhanced Primary Treatment (CEPT) plant with secondary treatment provided by trickling filters, with a capacity of 7,000 m3/d and serving 60,000 people. The plant will be connected to a sewerage system financed under the IDA Coastal Cities Environmental Sanitation Project (CCESP).

In addition to utilizing the infrastructure financed by IDA, the proposed project will also benefit from the capacity and financial improvements of the service delivery entities envisaged under the baseline operation.

CEPT is a high-efficiency option which is currently not used in Vietnam, and the planned dissemination activities which form part of the GEF project will help educate the public about (i) the importance of protecting the seas and coastal ecosystems and (ii) the value of low maintenance, simple to operate, efficient wastewater treatment systems, like CEPT. The project will also serve as a vehicle for promoting SDS-SEA objectives which would be incorporated into the Vietnam Country Assistance Strategy (CAS), included in the country dialogue, and integrated into the country’s lending program. To contribute to and benefit from GEF’s International Waters Learning Exchange and Resource Network (IW:LEARN), funding would be provided to officials from Quy Nhon to participate in the IW biennial conferences and projects would participate in IW:LEARN activities. A project website consistent with GEF IW:LEARN guidance would be established and operated, and the project will participate in GEF IW:LEARN and PEMSEA activities in order to share experiences with other countries in East Asia and promote replication. Papers presented at conferences, summary of workshops and papers published nationally will all be included within the website, as they will serve to foster improved understanding of the Project’s intentions and allow the public to consider the use of CEPT WWTP for their own applications elsewhere. The website should also include other publications regarding CEPT projects elsewhere. Funding would also be provided to contribute to the UNEP best practices database for the dissemination of the project results. The project would be allocated a travel budget for Quy Nhon participants to share their experiences with other provinces in Vietnam and countries in the region. The benefit to the South China Sea would be twofold: directly, in reducing pollution in Vietnam which would benefit the entire system, as waters from the South China Sea flow seasonally into the Sulu Sea and Java Sea and, indirectly, through dissemination and replication efforts.

B. Describe the consistency of the project with national priorities/plans:

Progressive local governments in Vietnam, including those supported by the CCESP, have declared pollution reduction a priority and adopted a sub-regional approach to tackling it. The GEF project would support and expand that approach in one project city (Quy Nhon) and have high replication potential not only for other coastal cities in Vietnam, but for all cities that discharge to rivers and thence into the seas off the country’s coast.

The current project fits within the Bank / Vietnam Country Partnership Strategy (CPS), which states that the poor are disproportionately affected by pollution, notably water pollution and have substantially less access to clean water and sanitation. Over the last 10 years, service delivery of clean water and sanitation to the poorest groups has grown at a much lower rate compared to non-poor groups.

Furthermore, Vietnam’s Socio-Economic Development Plan (SEDP), with which the WB’s CPS is fully aligned, contains strong, encouraging references to sustainable development. For environment, it includes targets, for improving wastewater and solid waste treatment in industrial zones and craft villages. The project therefore builds on the government’s commitment to sustainable development and will assist the government to achieve its wastewater treatment targets.

Lastly, the project, being under the GEF/WB Fund, managed in cooperation with PEMSEA, is part of the regional implementation plan of the United Nations Environment Program Global Programme of Action (UNEP-GPA) for the Protection of the Marine Environment from Land-based Activities, in which 108 countries have subscribed to protect and preserve the marine environment.

C. Describe the consistency of the project with gef strategies and strategic programs:

The proposed GEF-funded project was initiated under GEF’s Contaminant-based Operational Program (OP) 10, which is to demonstrate and encourage replication of innovative and best practice options to overcome the barriers to reducing land-based contamination of international water bodies and is consistent with that program by removing a barrier to the adoption of new technology. Its innovative features include: (i) construction of a non traditional wastewater treatment plant (i.e. the CEPT) which will demonstrate the applicability of the technology within the country; and (ii) promote a broader understanding of key issues related to appropriate wastewater treatment, including upgrading paths that follow each city’s economic development, beneficial reuse of biosolids from the process, cost effective nutrient removal, tolerance to saline intrusion (especially important in coastal cities), in addition to low capital and operating costs, and small land requirements. This improved understanding will be fostered by a workshop and study tour.

The project is also consistent with GEF’s current Strategic Objective 2, "to catalyze transboundary actions addressing water concerns," specifically to reduce land-based coastal pollution, and with Strategic Program 2, “reducing nutrient over-enrichment and oxygen depletion from land-based pollution of coastal waters in LMEs consistent with the GPA.” As noted above regarding nutrient pollution, Vietnam’s aquatic environment, including coral reefs, is seriously threatened by human activities, particularly municipal wastewater discharge.

D. Outline the Coordination with other related initiatives:

The GEF Vietnam Coastal Cities project is part of two related initiatives: first, the WB/GEF Investment Fund for Pollution Reduction in the Large Marine Ecosystems of East Asia, approved by the GEF Council in November 2005. Pollution reduction components of World Bank projects that receive GEF co-financing under the Fund meet the following criteria: (i) demonstrate a new pollution control technology or technique; (ii) “try and test” a pilot where there is low public awareness, limited experience, and where the client is not willing to take on that cost; (iii) are innovative institutional mechanisms or technical solutions to combat land-based water pollution; and (iv) are easily replicable and/or scalable. The Fund focuses mainly on pollution hot-spots in the coastal areas of China, Indonesia, Philippines, Vietnam and Cambodia. The proposed GEF-funded activities under the Bank Project clearly meet the above criteria. The Fund is one part of a related Strategic Partnership for Pollution Reduction, the other part (capacity building, replication and dissemination) to be implemented by PEMSEA.

Second, the GEF project is complementary to the IDA-funded CCESP, which aims at improving environmental sanitation in project cities.

E. Discuss the value-added of GEF involvement in the project demonstrated through incremental reasoning :

Many of the trends identified above - increased growth, poor sanitation conditions, coastal degradation, lack of investment in cleaning up - are a reflection of Vietnam’s development stage. In the worst case scenario, i.e. neither Bank nor GEF project, these trends will continue and the situation will only deteriorate. In the baseline scenario, i.e. Bank project but without GEF funding, the project will further develop/consolidate Vietnam’s urban environmental agenda technically (sewerage, wastewater treatment and solid waste management), financially (cost recovering charges), and institutionally (efficient and effective service providers), i.e. the project will establish good sector practice in Vietnam. However, lack of local experience with innovative solutions and client concerns about the use of “untried” technologies will limit the design of treatment facilities to conventional approaches adopted in industrialized countries that, due to their high complexity and cost, are not the most appropriate for Vietnam. Maximum wastewater treatment potential would therefore not be achieved.

The CEPT technology, not currently used in Vietnam, is cost effective, highly efficient and technically viable under local conditions. However, the technology would not be adopted under the baseline project because it is new and the Government is unwilling to shoulder the cost or the risk of trying it. The incremental GEF funds of US$ 5 million would support a significant enhancement of the IDA operation firstly by increasing the treatment capacity of the city, secondly by increasing the efficiency in the removal of nutrients from wastewater and thirdly, by enhancing the replication potential of the technology in Vietnam and throughout the region. An added value of using CEPT is that the increased efficiency of the primary treatment stage reduces the residence time needed and thereby increases treatment plant flow capacity. Because of decreased organic loading, the size of any subsequent secondary biological unit is reduced in terms of space and cost. Hence, the incremental support from GEF will help Vietnam meet its wastewater treatment requirements through innovative solutions and help bring to market a new technology.

A quantitative evaluation of the reduction of contaminants discharged into the receiving bodies was not possible for the lack of baseline information. No sewerage system exists in the areas targeted by the project and therefore no reliable data on the characteristics of sewage are available at this stage. Collection of information and creation of a project baseline will be one of the objectives of this project while the construction of the sewerage system will be financed under the IDA credit.

F. Indicate risks, including climate change risks, that might prevent the project objective(s) from being achieved, and if possible including risk measures that will be taken:

Risk	Risk Rating	Risk Mitigation Measure
Lack of continuing commitment from the Government of Vietnam to the project	M	Regarded as modest because the Government has undertaken significant commitments in the environmental sector and has also some economic interest in the project because it deals with tourist areas. The project team will continue to dialogue with the Government on the benefits of pollution reduction.
Improved sanitation behavior by beneficiaries	M	Information, Education and Communication program to promote changed behaviors. Adoption of a Healthy City Partnership.
Customers unwilling to pay for services	M	Public awareness campaign. Collection of waste-water fees through the water bill. Enhanced services.
Province authorities unwilling to charge for services	S	Extensive discussion with authorities during preparation and covenant on cost recovery levels in IDA project.
Inadequate operation of the new facilities	M	Training of operators included in the TA component of IDA project.
Lack of financial capacity to supply chemicals during the early years of operation	S	Supply of chemicals included within project design
Limited willingness to connect to the new systems	M	Public education, access to credit, mandatory universal charging to all customers with water connection and mandatory house connections required to new sewers.
Collusive and corrupt practices during project implementation	M	Low prior review thresholds, enhanced PMU procurement and FM training by IDA prior to effectiveness and hiring of consultants to assist in the procurement process, enforcing procurement complaint-handling and disclosure requirements, enhanced supervision by IDA during early implementation, and the preparation and implementation of a fairness and transparency plan.
Capacity of the PMUs in project management	M	Extensive training of PMU as part of TA component as well as experience gained under the IDA project
Overall Risk Rating	M

Risk Rating – H (High), S (Substantial), M (Modest), N (Negligible or Low)

describe, if possible, the expected cost-effectiveness of the project: The CEPT plus trickling filters, not currently used in Vietnam, has been selected among various alternatives as a simple and cost effective component for a multi stage wastewater treatment. The alternatives considered are: facultative ponds, aerated lagoons and oxidation ditches. CEPT proved to be the most cost effective technology for the removal of nutrients from wastewater, with an efficiency ranging between 70 and 90%, whereas for conventional primary + biological treatment only 20—30% of phosphorus is generally removed. Phosphorus and nitrogen are the two most important nutrients in a wastewater effluent and one or the other is usually the limiting nutrient in natural waters. Phosphorus is typically the limiting nutrient in fresh waters and nitrogen is typically the limiting nutrient in seawater. Either may be limiting in brackish water. Both phosphorus and nitrogen stimulate algal growth and the subsequent algal decomposition provides a new source of BOD. Thus CEPT, with its high levels of nutrient removal, is of particular interest as it can help mitigate the potential for harmful algal blooms and help in preventing eutrophication. Considering the above, CEPT was selected as the most appropriate approach to tackle the issue of improving the health and habitat conditions of globally significant marine and coastal ecosystem. Also, the removal of SS is very high if compared with conventional systems and the decrease in BOD is sufficient so as to not impact oxygen concentra­tions in the ocean. A table summarizing the removal efficiency of CEPT for different contaminants compared with the removal efficiency provided by conventional primary + biological treatment is attached below.

Option	BOD Removal (%)	SS Removal (%)	Nutrient Removal (%)
CEPT + Trickling Filters	95	95	85
Primary + Biological Treatment	85	80	30

H. Justify the comparative advantage of GEF agency:

part iii: approval/endorsement by gef operational focal point(s) and GEF agency(ies)

A. Record of Endorsement of GEF Operational Focal Point (S) on Behalf of the Government(S): (Please attach the country endorsement letter(s) or regional endorsement letter(s) with this template).

Pham Khoi Nguyen, Senior Vice Minister, Ministry of Natural Resources and Environment

Date: April 18, 2005

(Enter Name, Position, Ministry)

Date: (Month, day, year)

B. GEF Agency(ies) Certification

This request has been prepared in accordance with GEF policies and procedures and meets the GEF criteria for project identification and preparation.
Steve Gorman GEF Agency Coordinator	Project Contact Person
Date: June 18, 2008	Tel. and Email:
Name & Signature GEF Agency Coordinator	Project Contact Person
Date: (Month, Day, Year)	Tel. and Email:

wb19849wb188803

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