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RETA 6498: Knowledge and Innovation Support for ADBs


Water Financing Program
Asian Development Bank TA-6498 (VIE)
Strengthening the Benefit Sharing Mechanism for People
Adversely Affected by Hydropower Generation Projects
in Viet Nam

Completion Report

Prepared by:

The Benefit Sharing Council of Quang


Nam Province with support from the
Fund

Management

McGrath
Quang Nam, 2010

Board

and

Tim

Preface
This Completion Report outlines the general approach and arrangements used to strengthen
provincial institutional arrangements and provide one round of grants to groups of affected
peoples participation for effective benefit sharing. The pilot demonstration activity (PDA) built on
an ongoing pilot activity TA 4689 that was started in 2008 to introduce long-term benefit sharing
mechanisms for local communities adversely affected by hydropower projects in Viet Nam and
use the results to test benefit sharing mechanisms for a draft decree.
The 210 MW AVuong hydropower project located in the central highlands of Quang Nam
Province was selected for the pilot activities. The first unit of power generation from the AVuong
project was integrated into the power system in October 2008.
The draft decree and guidelines represented GoV priorities to develop national and provincial
level legal instruments and institutional arrangements to introduce benefit sharing for the
operation phases of existing and new hydropower projects across the country. They
incorporated three forms of benefit sharing aimed at local communities living in the project
impact zone, who host the hydropower project (i) equitable access to electricity services; (ii)
enhanced entitlements for natural resource access to offset resource access lost or transformed
due to the hydropower project operation; and (iii) direct revenue sharing through a grant
application system to support beneficiary defined local development initiatives.
This PDA represented an important next step by the Government of Vietnam to establish
effective institutional arrangements at provincial level as part of a sector policy framework for
benefit sharing to balance economic, social and environmental aspects to foster sustainable
development of the power sector and ensure the involvement of affected people in decisions to
improve their well-being, livelihoods and income generation.

Table of Contents
Preface

Abbreviations

Part I - Background and Context

1.1 Development Context of the Project


1.2 Challenges for the Project
1.3 Project Objectives
1.4 The Project Area and its Relevance
Part II Methods Applied and Main Outputs
2.1 Methods and Processes
2.2 Main Outputs
Part III Project Outcomes and Lessons Learned
3.1 Project Outcomes
3.2 Major Lessons Learned

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Table 1: Grant distribution for Groups in MaCooih Commune


Table 2: Grant distribution for Groups in Dang Commune

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Photos: Pig breeding and production in Tro Gung village


in Macooih Commune
Chicken breeding in Kala village, Dang Commune

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ANNEX ONE: Steps in the Implementation of the PDA

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ANNEX TWO: Process for Effective Revenue Sharing

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Abbreviations
ADB

Asian Development Bank

BSM

Benefit sharing mechanisms

CPC

Commune Peoples Committee

CSO

Civil society (and social organizations)

DPC

District Peoples Committee

ERAV

Electricity Regulatory Authority of Viet Nam

EVN

Electricity Authority of Viet Nam

IWRM

Integrated Water Resource Management

MARD

Ministry of Agriculture and Rural Development

MoC

Ministry of Construction

MoF

Ministry of Finance

MoFI

Ministry of Fisheries

MoH

Ministry of Health

MoI

Ministry of Industry

MoNRE

Ministry of Natural Resources and Environment

MoST

Ministry of Science and Technology

MoT

Ministry of Transportation

MPI

Ministry of Planning and Investment

NGO

Non-government organizations

NWRS

National Water Resources Strategy

PPC

Provincial Peoples Committee

RBO

River Basin Organization

SC

Interagency Steering Committee for the TA

TA

Technical Assistance

TA-WG

Technical Assistance Working Group within ERAV

WWF

World Wildlife Fund

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RETA 6498: Knowledge and Innovation Support for ADBs Water Financing Program
PILOT AND DEMONSTRATION ACTIVITY (PDA)
Project Completion Report
Part I Background and Context
Despite the impressive overall economic growth and poverty reduction during the last
decade, people and communities most adversely affected by hydropower projects remain
among the poorest groups in Vietnamese society. Typically, these projects are constructed in
mountainous areas where more than 10 million of the countrys poor people live and these
people are mostly ethnic minority people1.
Vietnam depends on fossil fuels for the bulk of its electricity generation needs today. The
country of over 80 million people is rapidly modernizing and experiencing year-on-year
electricity load growth of well over 10%, moving from a small base. At the same time Viet Nam
has become one of the most active countries in the world in hydropower development.
Nationally there are over 30 large hydropower projects in operation providing nearly 40% of total
installed capacity on the interconnected power system, close to 11,200 MW. Current projections
based on the National Hydropower Strategy suggest that 13,000 MW of new hydropower will be
added to the grid system by 20202.
Viet Nam has initiated a far-reaching reform of the power sector, reflected in the Electricity
Law (2004) and other secondary legislation issued since 2004. The laws define the framework
for three progressive stages of power industry restructuring, tariff reform and establishment of a
competitive power market over a 20-year timeframe, namely:
Phase 1
Phase 2
Phase 3

(2005-2014)
(2015-2022)
(from 2022)

Establishing a competitive generation market in stages


Establishing a competitive wholesale market in stages
Establishing a competitive retail market

The concrete contribution of benefit-sharing mechanisms is increasingly recognized in many


countries as achieving sustainable hydropower development and ensuring there is a fair,
transparent and equitable distribution of both benefits and costs of hydropower development
within society. All too frequently local host communities and people adversely affected by
hydropower projects bear a disproportionate share of the costs of national hydropower
development, not only in relation to resettlement but also in terms of the longer term impact on
the community. There are three forms are found in international practice and supported by
Vietnams own development policy framework, namely:

i)

Equitable access to electricity services;

ii)

Enhanced entitlements for natural resource access; and

Government of Vietnam, Programme Document, Programme for Socio-Economic Development of


Communes and Villages Facing Extreme Hardship in Ethnic Minority And Mountainous Areas in the
2011-2015 Period, 2010.
2
The National Hydropower Plan (NHP) and Master Plan set out Vietnams strategy to meet the long-term
power demand in the country.

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iii)

Revenue sharing through a grant application system to support beneficiary


defined local development initiatives.

1.1 Development Context of the Project


During the ADB sponsored TA-4689 VIE, a draft Decree and Circular to implement benefitsharing mechanisms on hydropower projects suited to the Vietnamese situation were developed
using a collaborative process led by Electricity Regulatory Authority of Viet Nam (ERAV) and
following the direction set by the Inter-Agency Steering Committee. The draft Decree and
Circular included a bottom-up-process to decide how revenue sharing funds would be invested
to support initiatives in areas such as poverty reduction, sustainable income generation, access
to markets, environmental protection, ecological and local community development, and cultural
activities. In addition, the draft Decree and Circular took a comprehensive approach to introduce
benefit sharing principles over all stages of the project cycle for hydropower development and
the integration into the GoVs Socio-Economic Development planning process.
Similar to the general approach adopted in other developed and developing countries, the
guidelines in essence called for:
A formula and standard procedures to remit a share of the revenue generated by
hydropower project into a project-specific revenue sharing Fund, and to internalize this
cost in the retail electricity tariff;
Appointment of a benefit sharing council with appropriate local representation to manage
the Fund and to make other recommendations on non-monetary forms of benefit sharing
to extend to the projects host community;
Within a framework provided by regulations, collaborative development of a Fund charter
to transparently set out the eligibility criteria, grant selection and award procedures and
all the local administrative arrangements for the Fund;
Use of the Fund to offer a menu of local development measures preferred by
beneficiaries, administered through a grant application program3; and,
Ensuring that appropriate mechanisms for transparency, accountability and monitoring
are incorporated so as not to undermine public confidence.
Benefit sharing would apply to all hydropower projects in Vietnam (existing and new)
meeting specified requirements. Presently this includes over 30 large hydropower projects plus
a fairly large number of small hydropower projects, which in the Vietnamese definition can be up
to 30 MW.
The 210 MW AVuong hydropower project located in the highlands of Quang Nam Province
was selected for the pilot project. The generation first unit of the AVuong project was
synchronized in the power system in October 20084. Main outcomes of the pilot project included
the following:

i)

Established an institutional arrangement including Benefit Sharing Council, Fund


Management Board and a temporary revenue sharing account under
management of Quang Nam PPC;

ii)

Prepared a model fund Charter and application forms to implement revenue


sharing grants according to the Decree and Circular;

Measures can include increments to existing national and provincial programmes.


A point of reference is the AVuong hydropower project is expected to generate about $US 850,000
equivalent in revenue sharing a year. This assumes the facility has an average annual production of 938
GWh/yr, as indicated in the feasibility study and that 2% of gross revenue is applied to revenue sharing.
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iii)

Assessed and recommended measures for equitable sharing of electricity access


and enhanced entitlements for natural resource access - which tested the
provisions in the Decree and Circular and also responded to the views of the
AVuong community when they reviewed the draft guidelines;

iv)

Provided one-cycle of grant application and award using a nominal budget to test
the delivery and monitoring mechanisms for measures people prefer, as set out
in the Decree and Circular, and

v)

Prepared an article-by-article review of the Decree and Circular, carried out


amendments based on the pilot results in AVuong and provided
recommendations on finalizing the legal instruments to introduce benefit-sharing
mechanisms nationally.

1.2 Challenges for the Project


The government implements national programmes to improve the economic
development and access to infrastructure for ethnic minorities.
These programmes
characteristically use a general one size fits all approach to deliver access to services and
state resources for the different ethnic minority groups, in different regions, in diverse situations
and problems. Little attention has been paid to the fact that locally people are already dealing
with their daily realities in a certain way.
The present delivery approach in national programmes has resulted in ethnic minorities
becoming passive targets of benefits. Ironically, dependency has resulted from the large
amounts of support provided by the Government. The problem is not the Government support
itself, but rather, the ways in which the Government has given this support has promoted
dependency, low self-esteem and passivity, rather than promoting empowerment, social capital
and capacity in the villages. As a result, the poverty rate among ethnic minorities has only
reduced from 86% to only 52%, which is in stark contrast to the national poverty rate which
reduced from 58% to 14.5% between 1998 and 20085. The GoV has not developed a roadmap
to outline the transition from an NTP approach to effective social service delivery with good
targeting.
The dominant view in Vietnam is an evolutionary concept of culture (i.e. primitive ethnic
minority cultures are behind and need to catch up with modern civilisation), rather than a view
of the diversity of cultures. In this view, the cause of poverty for ethnic minorities their
backwardness and passiveness. This developmental philosophy has influenced policies to
support ethnic minority to overcome poverty and achieve development. Slogans such as help
the mountains to catch up the plains have been common among policies.
With this belief in mind, patriarchal approaches are used to implement programmes
targeting ethnic minorities. Ethnic minorities are considered as victims rather than actors in
development. They are there to be helped and we are better to decide what they need and
how to solve their problems. As a result, policies and programmes are often formulated and
implemented with vague assumptions and priorities. Critical assets that are important for ethnic
culture and identity such as community lands and customary laws are ignored and not
recognized.
1.3 Project Objectives
The objective of the PDA was to strengthen the benefit sharing mechanism at provincial
level, improve the impact and sustainability of benefit sharing investments, and enhance the
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VHLSS, 2008.

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participation of affected households in the development and implementation of production
groups. Through this PDA the Benefit Sharing Council aimed to strengthen the institutional
arrangements and the capacity of benefit sharing institutions including the Benefit Sharing
Council, Fund Management Board and district and commune leaders and officials in affected
areas.
The PDA was designed in close consultation with the Benefit Sharing Council and Fund
Management Board in Quang Nam. In the short-term, the PDA improved benefit sharing by
promoting production groups in the area affected by the A Vuong hydropower station. In the
medium-term the PDA will help Quang Nam develop practical and sustainable benefit sharing
institutions, enhance the role of production groups in benefit sharing, and the capacity for
effective strategic planning for benefit sharing in all hypropower stations in the province. The
model developed under this PDA will be integrated in the national roll-out of benefit sharing.
1.4 The Project Area and its Relevance
The PDA builds on TA 4689 that was started in 2008 to introduce long-term benefit
sharing mechanisms for local communities adversely affected by hydropower projects in Viet
Nam and use the results to test benefit sharing mechanisms for a draft decree and guideline.
The 210 MW AVuong hydropower project located in the central highlands of Quang
Nam Province was selected for the pilot activities. The first unit of power generation from the
AVuong project was integrated into the power system in October 2008.
This PDA targeted the beneficiary households selected for grants under TA 4689. These
households were selected using a transparent criteria and grants were disbursed to groups of
households based on transparency and accountability. These groups were selected according
to a criteria decided by the BSC.
In the pilot area, eight villages in Ma Cooih communes in Dong Giang district and Dang
commune in Tay Giang district were affected. Total households affected were 380, of which 330
households in 7 villages had to be resettled, 50 households in 1 village lost their land. According
to the EIA report, a large area of construction land such as the sand quarry, disposal area and a
part of auxiliary areas to enable construction are located in the future reservoir inundation area.
Part II Methods Applied and Main Outputs
2.1 Methods and Processes
A consultation process was used to ensure that stakeholders at provincial, district and
commune levels were involved in key decisions about the planning and implementation of the
PDA. Consultations were conducted with households and communities in the project area to
design activities and develop a consensus on the workplan and timeframe for PDA
implementation.
During the implementation of TA 4689 a process was developed for effective benefit
sharing. This process included 10 steps6. The focus of this PDA was strengthening the
implementation of steps five, six, seven, eight, nine and ten in the benefit sharing process
presented below.

See Annex Two for details of the ten steps.

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Step One:
Step Two:
Step Three:
Step Four:
Step Five:
Step Six:
Step Seven:
Step Eight:
Step Nine:
Step Ten:

Capacity Development, Review and Assessment of National and Provincial


Policy, Legal and Institutional Framework
Preparation of Institutional Arrangements
Preparing to Implement Benefit Sharing
Strategic Planning
Implementation of the Communication Strategy
Awareness raising in the affected communities and provision of training on
production models.
Decisions-making and Application Submission by Affected Households and
Groups
Approval of Applications
Disbursement of Funds
Follow-up Support and Monitoring

2.2 Main outputs


A training and awareness raising plan was prepared and training provided by officials
from the two district extension services. One district extension official, commune Peoples
Committee official and village leader conducted training sessions on 10 production models
suitable for local conditions. The extension official carried out follow-up visits to respond to
questions from households and production groups. Groups of households submitted proposals
for the grants and these were assessed for feasibility and chance of success. Some groups
were not successful with their applications and feedback was provided explaining the reasons
why they were unsuccessful. 209 households formed 12 production groups in 8 villages in the 2
communes and these groups received grants from the BSC. 30% of production group members
were women.
Capacity development was provided to the BSC and FMB on sustainable ecological and
environmental management, integrated water resource management, renewable energy, and
income generation for the poor ethnic minority groups. After capacity development, the Benefit
Sharing Council organised a consultation process with stakeholders including the community to
decide suitable production and management models for the area affected by A Vuong
hydropower station. The focus was community development and so PDA funding was
concentrated on supporting mass associations, cooperatives and community based
organizations. Public campaigns were conducted so communities accessed information about
the management and technical aspects of the different production models. This builds on and
strengthens the outcomes from the pilot phase supported by TA 4689 where the Benefit Sharing
Council focused grants to support household level.
A monitoring and evaluation plan was developed and carried out by the FMB and
international consultant. Regular visits were conducted to the field to assess progress towards
PDA expected outputs and outcomes. 100% of households in the project area received
information about the formation of the groups and the 10 production models. Village leaders
organized the meetings in community areas. The meetings went for two to three hours.
Handouts on the production models were provided to households during meetings to help
remind them of key messages later on. Follow-up meetings were organized so extension
officials met with groups to provide information about specific production models. For example,
for the pig production model, four meetings were conducted: selection of the land for the pens,
education about the impact on the environment, training on construction materials and
construction, and technical information about commercial pig breeding.

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In July, the construction materials and inputs for the production groups were distributed
to the groups. Each group prepared a construction plan and group members contributed their
labour to help with construction.
The Benefit Sharing Council issued Decision 2/Q-HCSLI on the 06/7/2010 approving
the groups and the production models. The tables below present the disbursement of benefit
sharing funds to the groups according to this decision.
Table 1: Grant distribution for Groups in MaCooih Commune - ng Giang District
Group
Name of Village
Number

Number of
Households

Production Model

Azal village

16

Pig breeding and production

Tr Gung Village

14

Pig breeding and production

Azal village

13

Pig breeding and production

Az village

12

Pig breeding and production

T rng village

10

Pig breeding and production

A S village

12

Pig breeding and production

A S village

17

Bamboo shoot production

Abng village

32

Commercial chicken breeding

Total

126

Table 2: Grant distribution for Groups in Dang Commune - Ty Giang district


Group
Name of Village
Number

Number of
Households

Production Model

Alua village

14

Commercial banana production

Kala village)

16

Commercial banana production

Alua village

29

Commercial banana production

Kala village)

24

Commercial chicken breeding

Total

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A final evaluation of the project was carried on the 27th September. The final evaluation team
included the leadership and staff of the FMB and the international adviser. The mission was
delayed because of severe flooding in the pilot areas, which resulted in significant delays in the
workplan of the PDA. Local authorities and the community were very busy cleaning up and
restoring their lives and livelihoods back to normal. The evaluation team visited the visited 10

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households to help assess the practical and sustainability of the production models as well as
their participation in decisions. The 10 households confirmed their involvement in key decisions
about issues including the type of models, the procurement process, and the construction of
pens, fences and styes. They considered the quality of guidance on extension issues was good,
the quality of animals provided to them was satisfactory and follow-up support was provided by
their team members as well as extension officers. The households commented that the
production models introduced new experiences involving a change in perspective. Previously,
households were focused on short-term income generation activities and the provision of labour
to outside the household when it was available. The production models showed households a
medium and long-term solution to their poverty. Households were part of a local production
group that shared experiences and increased their representative power in the local market.
See photos on page 13 for examples of household based pig and chicken production.
On the 29th September, the results of the PDA and production models were presented to the
Benefit Sharing Council and the vice-Chair of the Provincial Peoples Committee in particular.
The Council assessed the PDA had a high and sustainable impact in the two pilot communes.
The models developed by the PDA would be replicated in other communes with similar
geographical, and socio-economic conditions, not only in areas affected by the construction of
powerstations or ethnic minority areas.
Part III Project Outcomes and Lessons Learned
3.1 Project Outcomes
The establishment of the groups was inclusive and demand-responsive. Group leaders
were nominated by commune and village leaders according to their practical experience and
local prestige (uy tin) and approved by group members. The group leaders were the interface
with local authorities and service providers. The Dong Giang Extension Centre also interviewed
group leaders to ensure they had the technical capacity to carry out the selected production
model. Local maps were used to identify suitable locations for the pens and land for use by the
groups. During meetings the implications of the production models were also discussed, such
as the impact of pollution from animal breeding on the local environment.
A key innovation was the flexibility in the development of the production groups. Within
each group, several teams were established. Each team had three to five households and
these households were often related to each other and so the level of trust and confidence in
cooperating with each other was high. Households selected which group and team they would
participate. This helped develop cooperation between group members and team members, and
avoid tension later on when distributing profits from the ventures or sharing loses. This model of
organization could be used in other GoV and donor programmes and projects.
The scale of the groups was demand-driven and also evaluated by local authorities and
the extension service. A main criteria was the scale of the production model must be
economically feasible and sustainable. The scale of production enabled members to initially
develop stable markets for produce in the commune and neighbouring communes.
Estimates were 90% of households in Dang commune who received benefits from the
first round of benefit sharing were members of groups in the second round. In MaCooih
commune the number was about 50% of households. This caused some local tension between
households with local authorities. However, local authorities and village leaders explained that
households who were not part of groups during this round of grants should monitor the groups
and learn from experiences, and if they improved their capacity, then the conditions would be

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created for them to access assistance from other programmes and projects. The grants from the
PDA were an incentive scheme so households not eligible for this round of grants would
increase their capacity and commitment for future participation in the production model scheme.
The production groups were innovative and developed business plans to develop
markets for their produce. The business plan for commercial banana production was to sell
produce in the commune market and neighbouring markets. Surplus supply and during periods
of high prices the bananas would be sold to traders who transported the bananas to the large
Da Nang market. The groups assessed that it was beyond their short-term capacity to control
the transport of produce to the provincial markets at Da Nang or Tam Ky.
Pig production
groups will focus on a breed of pig that is used for festivals and special occasions such as
weddings. Prices are high and there is always a local demand. Bamboo and bamboo shoots
were a new product in the local market. Production groups planned to sell produce locally for
two to three years and at the same time stabilize supply and quality of produce. When supply
and quality were guaranteed, groups would expand the sale of produce to district centres and
the provincial markets.
The high level of political will of leaders and officials at provincial, district and commune
level was a key factor in the success in the PDA. Consultations were conducted with the leaders
and officials to inform them of the PDAs objectives and activities. Leaders were involved in the
planning and created the conditions for the implementation of the PDA. They identified that the
PDA was a useful pilot that helped to improve the well-being and livelihoods of affected people
in the project area. They assessed that the model was useful for other national and provincial
programmes and projects as well as consideration for other hydropower stations under
construction.
The process for the production models was integrated into government systems.
Commune leaders indicated that the methods and approach for the production models
developed as part of the PDA would be used when implementing state funded programmes and
projects such as P 135 II and the National Target Programme for Poverty Reduction. The
District Peoples Committee and the district Extension Station would integrate support for the
production groups into their annual workplan, which would enhance sustainability.
The PDA provided a second round of grants to affected households in the project area.
This provided the BSC an opportunity to assess the FMB charter for the implementation of
benefit sharing, application forms and the application process, the disbursement process and
M&E. Results included small changes to the charter to extend the financial limits of grants, and
the inclusion of the District Peoples Committee in the planning of production models and the
disbursement of the grants.
There is significant scope for replication of the outcomes of the PDA as part of the
implementation of the benefit sharing mechanism, especially the process for developing
community based production groups. The benefit sharing initiative has attracted considerable
regional and international attention, including other Mekong Countries via the Mekong River
Commission. In Vietnam, a roll-out phase of the benefit sharing mechanism is planned and ADB
has indicated financial support for this phase. A concept note on the roll-out phase has been
prepared and will be distributed to the international donor community to encourage their support
for the roll-out of benefit sharing.

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Pig breeding and production in Tro Gung village in Macooih Commune

Chicken breeding in Kala village, Dang Commune

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3.2 Major Lessons Learned

The selection of production models has been focused on practical models that are within
the capacity of the FMB, district and commune leaders and officials and the experience
of communities. This improved the chances for sustainability but an opportunity to further
improve livelihoods and income generation was to develop niche markets and
conducting value chain analysis so that more profit from products stayed in the
communities. Identifying niche markets and piloting of products for niche markets should
be considered in the future.

Decentralisation of key decisions about production models and disbursement to the


district Peoples Committee was a key innovation that improved the coordination of key
stakeholders and helped ensure the provision of services such as training, information
dissemination and agricultural extension when it was needed.

Linking grants from the benefit sharing mechanism to the SEDP was important. Not all
households could participate in production groups for this round of grants. However,
local leaders indicated that the lessons learnt from the production models supported by
the benefit sharing grants would be integrated into the SEDP. Households who had not
been selected to take part in groups during this round of benefit sharing would be eligible
to participate in production groups outlined in the SEDP and sponsored by the state
budget.

Benefit sharing in hydropower stations is part of the planning and management of the
river basin. The role of MoNRE and the national policy framework was not clear and it
was not clear how the relationship between benefit sharing and the Vu Gia Thu Bon
RBO should be developed. Clarification from central level was required so that the
province could develop effective local institutional arrangements.

Benefit sharing needs to be linked to regulating water flows in the basin for agriculture,
hydropower and water for living, which implies the development of a relationship with the
RBO. The role of Da Nang should also be assessed. Involving Da Nang would be
complicated but this would help outline a process and procedures for inter-provincial
benefit sharing.

Benefit sharing projects should be compatible with other programmes and projects. The
provincial Party apparatus has approved a programme worth 3.5 million USD from 2011
to 2015 for sustainable development in resettlement areas in two districts, Dong Giang
and Tay Giang. The programme includes agricultural development and also vocational
training, which was not part of previous resettlement packages. The production models
developed during the PDA will be used in the implementation of this programme.

Training on a range of over 10 production models was provided but most households
selected a small number of options in their application forms. This reflected local natural
conditions but also reflected that, culturally, households collectively make decisions
about production. One way to help improve this situation was providing the awareness
raising and training on the different models some months earlier so that individual
households could access information and select the most suitable model for their
conditions and dont feel rushed.

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Improved land-use planning at commune, district and provincial levels would create the
conditions for more effective benefit sharing by affected people in the different areas.
This is a critical issue. Severe limitations are placed on the development of production
models because of the local land-use planning limitations.

To complete the application form, households received support from different sources
including village leaders, youth union, local police officers, family members at school.
Households that had special problems, such as illiteracy or could not understand kinh
language were given special support. Completing the grant application form took from 2
to 10 days

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Annex One: Steps in the Implementation of the PDA


1. Preparation Phase January, February, 2010.

Dong Giang Extension Centre contracted to conduct Public awareness


campaign supported and monitored by FMB

Dong Giang Extension Centre will prepare a proposal outlining content,


delivery method and follow-up and submit to FMB. This proposal will be
reviewed by FMB and IC to ensure quality and corresponds with the
needs and demands of the BSC and the beneficiaries.

Suitable models identified that the groups in the villages communes can
utilize

WWF and Extension Centre submit information about models for


preparation of the capacity development plan prepared

2. First Implementation Start-Up Workshop 4th March 2010

The FMB presented the draft implementation workplan, roles and


responsibilities, application process for BSC comment and approval

FMB presented required revisions to the Fund Charter for BSC comment
and approval

For capacity development, WWF presented information about adverse


upstream impacts, adverse downstream impacts, ecosystem services,
and potential environmental and ecological models suitable for the
households in the affected area.

For capacity development, the Dong Giang Extension Centre presented


livelihood and production models suitable for households in the two target
communes

The Dong Giang Extension Centre presented details for the public
awareness campaign content and delivery methods for BSC and FMB
comment and BSC approval

The Vu Gia Thu Bon RBO provided training on the principles of integrated
water resources management and the RBO, and discussed areas of
cooperation with the BSC.

3. The BSC invited all members including the following:

The vice-chair of the PPC is the BSC Chairman;

The director of the Department of Finance (DoF) and Department of


Industry and Trade (DOIT) are the Vice-Chairmen

Representatives from provincial departments and mass associations


including Committee of Ethnic Minority, DONRE, DARD, DOLISA;

Representatives from the Vu Gia- Thu Bon River Basin Organisation;

Representatives from Provincial People Council;

Leaders from the three affected Districts People Committee;

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4.

5.

6.

7.

8.

Leaders of some of the affected communes;

Director of AVuong Hydropower plant.

Public Awareness Phase March 2010.

The Dong Giang Extension Centre carried out the public awareness
campaign on livelihood, production models in two communes

WWF provided training on environmental and ecosystem services and


ecological models to groups in the two communes.

Commune and village leaders to support development of groups according


to the models provided by WWF and the Extension Centre

Second Implementation Workshop March 26th 2010

Extension Centre presented results of public awareness campaign

FMB presented list of groups requesting financial support from the BSC

Third Implementation Workshop April 2010

BSC to review, discuss and approve final list of beneficiary groups.

Capacity development session on topics to be decided once demand has


become clear.

All BSC members will be invited

Training for Groups May, June 2010

Dong Giang Extension Centre and FMB organized a series of training


sessions for approved groups based on type of model

Dong Giang Extension Centre prepared purchasing plan on where to buy


animals, seeds, fingerlings etc. This plan will be submitted to the CPC, DPC
and FMB.

The FMB and District Peoples Committee approved the purchase plan

Disbursement of Funds July September, 2010 activities were delayed


because of severe flooding.

Preparation for disbursement accorded with the procedures outlined in the


Fund Charter and social accountability

FMB provided funds to the District Peoples Committee to disburse funds to


groups in accordance with the Fund Charter and ensure transparently and
accountably

FMB and Dong Giang Extension Centre guided groups on process to buy
animals, seeds, fingerlings etc to ensure efficiency and transparency

FMB reported to BSC on disbursement and results of training sessions on


models

FMB prepared Final PDA Report and expenditure report and submitted to
BSC

BSC submitted Final Report and expenditure report to ADB

18

Annex TWO: The Benefit Sharing Process


Many of the activities in each of the steps below requires a consultation process so that key
stakeholders can discuss and negotiate the conditions and events that are most practical for
their situation. Of critical significance is whether the affected area of the power station is limited
to one province or more than one province is involved as this will affect the implementation
arrangements such as institutional model and financial management.
In practice, the Provincial Peoples Committee will decide implementation arrangements if the
affected area is limited to the province. National level will decide inter-provincial implementation
arrangements.
The process and steps outlined below are based on practical experience from the pilot activities
in the affected area of the AVuong hydropower station and so limited to one province, Quang
Nam. However, the process and steps also provide a basis for inter-provincial benefit sharing,
although the negotiation process for implementation arrangements may be more complicated
and carrying out different steps may take more time.
Step One: Capacity Development, Review and Assessment of National and Provincial
Policy, and Legal and Institutional Framework

Capacity development for stakeholders at all levels on the definitions, scope, objectives,
general principles and forms of benefit sharing outlined in the Decree. Decision-makers
at all levels need to understand the implications of benefit sharing so they can make
effective decisions. Events for capacity development include training workshops and
distribution of reference materials.

Define the stakeholders for the benefit sharing at provincial, district and commune levels
and the adversely affected people and their communities and project impact zones.

Review national programmes such as P 135 II and NTP PR, relevant provincial and
donor/INGO projects and programmes. It is important that the benefit sharing activities
are complementary with the objectives of these projects and programmes and that
mechanisms do not undermine GoV processes such as targeting and conditions for
financial grants and subsidies.

Benefit sharing is integrated into the Socio-Economic Development Planning (SEDP)


process at all levels. The SEDP is the main management tool for local development and
so integrating benefit sharing planning will maximize the efficiency and effectiveness of

19
investments. This also helps ensure that benefit sharing funds are additional to GoV
funding as GoV funding will be presented in the budget attached for review to the SEDP.

Assess provincial regulatory framework relevant to benefit sharing, the project impact
area and adversely affected people. In particular, assess the regulatory framework for
specific hydropower stations, for example, existing regulations about reservoir use, and
land and forest management. This will help in the process of identifying suitable and
unsuitable activities for adversely affected people.

Conduct a stakeholder analysis and assess institutional and personnel capacity. This will
help to identify local strengths and weaknesses for implementing benefit sharing and
help decision-makers establish the most practical and sustainable implementation
arrangements.

Step Two: Preparation of Institutional Arrangements


Using the assessments and analysis from step one, the PPC decides the most appropriate
institutional arrangements for the benefit sharing of one more power stations.

Factors that

should be considered when establishing institutional arrangements include the following:

The level of funds available for benefit sharing. For example, the level of funding for the
A Vuong pilot project was small and did not require complex institutional arrangements.

Resource capacity and resources across the provincial departments and agencies.
Departments and agencies have different experiences and personnel with different
capacities.

The coverage of the benefit sharing mechanism should be considered. For example, the
number of beneficiary communes and districts and provinces will influence the
institutional structure. For example, inter-commune, inter-district and inter-province
benefit sharing will require different institutional structures.

In Quang Nam, provincial leaders and officials advised to keep institutional


arrangements simple and practical.

Potentially, there are two key provincial level institutions involved in benefit sharing. The Benefit
Sharing Council (BSC) is responsible for implementation of the Decree for Benefit Sharing. The
BSC reports to the Quang Nam PPC and supervises the Fund Management Board in awarding
the grants. With non-monetary benefit sharing types, the BSC will process the applications in

20
terms of entitlement of natural resource access in AVuong project area and electricity access.
The Fund Management Board (FMB) is the interface between the BSC and project affected
people and functions as the Secretariat for the BSC. The FMB has responsibility to facilitate
periodical BSC meetings, manage the fund under the monitoring of BSC, specify the affected
communes, clarify the communities who are eligible for grants, develop the criteria for
evaluation, evaluate applications, award grants, monitor the usage of grants and report/account
to the BSC.
From consultations with national and provincial level, four models were identified:
o

The BSC and FMB established by the PPC to supervise and implement benefit
sharing. Possibly, there could be some flexibility in the functions of the BSC and
FMB with the FMB assuming some management functions of the FMB. The PPC
would decide the relationship between the two organizations.

Establish only one institution. This institution would resemble the FMB and
located in one provincial department. The functions of this FMB would also
include many of the functions of the BSC. The FMB would be chaired by the
Vice-Chair of the PPC who would make executive decisions. The FMB would
organize and implement the benefit sharing activities and keep the chair regularly
advised on implementation and planning issues. On a needs basis or when
problems emerged the chair of the FMB could convene a special meeting, and
invite leaders from other departments to provide technical advice.

The vice-

chair of the PPC would also provide oversight of the FMB.


o

A small provincial Working Group is established to provide oversight of the FMB.


The Working Group would include the Vice-Chair of the PPC and the directors of
DoF and DoIT. Meetings of the Working Group would be organized on a needs
basis. The general operations and management of the benefit sharing
programme would be the responsibility of the FMB. Compared to model 2, this
model provides increased oversight of the financial arrangements and the
funding system and process.

A Benefit Sharing Working Group could be established in the local River Basin
Organisation (RBO). The working group would combine the functions of the BSC
and the FMB and include leaders from DoF and DOIT. The RBO is headed by
the vice-chair of the PPC who would also supervise and head the Benefit Sharing

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Working Group. This model would have the advantage of providing a basin
perspective for benefit sharing and applying the principles of integrated water
resources management (IWRM).
Step Three: Preparing to Implement Benefit Sharing
After institutional arrangements are decided, the PPC issues decisions outlining the mandate
and roles and responsibilities for the BSC and FMB. The PPC also allocates roles and
responsibilities to leaders and officials at provincial, district and commune levels to carry out
benefit sharing.
The BSC has responsibility to prepare a Fund Charter that outlines key issues for the planning
and implementation of benefit sharing and outlines responsibilities for the financial management
of funds7. The Fund Charter is usually about five to ten pages in length and includes the
following issues:

General provisions including scope, purpose and principles of the Fund

Revenue source and Fund expenditure including the principles for Fund distribution such
as eligible and illegible activities

Utilisation of the Fund including criteria for awarding grants and loan approval, term and
interest rate for credit, eligibility for revenue sharing fund and grant application, criteria
for assessing grant applications, process for carrying out revenue sharing grants, and
responsibility of successful grant applications.

Outlines the responsibilities of institutions in the grant process. This process has eight steps.
1.

The commune Peoples Committee is responsible to inform eligible parties and


support them during the application process

2.

The commune Peoples Committee is responsible to collect and help applicant


complete application documents before the Peoples Committee submits to the
FMB

3.

The FMB appraises the applications and announces the status of application to
applicants within 20 days of submission

4.

The FMB provides a ranking system to the BSC to assess applications. BSC
announces the approval results within 15 days of receiving the applications

SeeAnnex1fortheFundCharterdevelopedaspartofTA4689.

22
5.

The FMB informs the commune Peoples Committee about the approval results
and transfers the money to applicants within 5 days of approval.

6.

The commune Peoples Committee is responsible for the implementation and


monitoring of the grants and report to the FMB and BSC if there are problems

7.

The FMB is responsible to regularly report progress to the BSC

8.

The FMB is responsible to reclaim funds if used not according to the agreed
purpose and every six months will report to the BSC and report to the Peoples
Committees at province, district and commune levels about the return of credit
and the overdue liability (if any) for consideration and approval of the Council.

Management and finance including developing cost estimates, preparation of final


accounts and reporting system, and social and financial accountability.

Scale of financial and non-financial support, illegible and eligible households and groups
who can apply for support.

Based on the Fund Charter, the FMB conducts a consultation process to prepare application
forms for the grants. Stakeholders at all levels are asked their opinion of draft forms so that local
nuances are used to revise the forms. For example, special consideration may be needed for
different ethnic minority groups.
The identification of eligible households and groups should be conducted on an annual basis to
respond to changing social and organizational changes in the adversely affected areas, such as
new households as a result of marriages and the establishment of community based
organizations.
Step Four: Strategic Planning
The BSC prepares a strategic plan for the implementation and development of benefit sharing in
the province. The preparation of the strategic plan includes the following activities.

Assessment of key issues and priorities for the utilization of revenue sharing funds from
different hydropower stations in the province. This will involve consultations at provincial,
district and commune levels and the participation of communities.

Identification of resource and implementation gaps to respond to these issues and


priorities and estimate resources required to reduce gaps.

23

Outline a bottom-up and top-down strategic planning process so that problems and
emerging issues in the communities are identified and decision-makers can improve
implementation and revise the strategic plan.

Preparation of an annual strategic plan that also reflects SEDP priorities

Identification of activities in the strategic plan that should be outsourced, for example,
contracting experts to carry out markets for the poor, sustainable ecological utilization,
value chain analysis and income generation for poor and ethnic minority households.

The strategic plan and guidelines outline the practical production and management
models developed from research and analysis. The models demonstrate links in the
value chain, different produce for developing markets for the poor, and sustainable
environmental management. Models could include but not be limited to fish raising, pig,
chicken and cattle farming. Income generation production models could include papaya,
honey, medicinal herbs and specialized vegetables.

Step Five: Implementing the Communication Strategy


The implementation of a communication strategy ensures that stakeholders from national level
to communities are regularly informed of emerging issues, decisions and lessons learnt during
the implementation of benefit sharing. The communication strategy uses a two-way
communication approach and is also a valuable tool to promote accountability and
transparency.
The BSC is responsible for the communication strategy.

The strategy should include the

following information sharing activities:

National level: The multi-agency steering committee informs their respective


organizations and multi-stakeholder national level consultation workshop

Provincial level: periodical meetings of the BSC and FMB, workshops and the
strategic planning process

District level: participation in BSC meetings and workshops and the strategic
planning process

Commune level: participation in BSC meetings and workshops and the strategic
planning process and training provided to key officials on communicating to
communities the objectives of the benefit sharing and the ways for households and
communities to involve in benefit sharing. For example, the training explains the

24
application forms, the application process and eligible households and activities.
This training could be conducted two times so that officials clearly understand the
key messages they need to deliver. These officials organize the village leaders and
village meetings to disseminate information about the revenue sharing program to
eligible households (short-listed and approved by the DPC). They also ensure that
people from mass associations are mobilized to support households complete
application forms. Feedback and questions from village meetings are also delivered
to the CPC and FMB for resolution.
Other dissemination mechanisms are also used such as the local media and websites on the
environment, social and power sector organizations in Vietnam, for example the websites of the
Quang Nam PC, ERAV and IES.
Step Six: Awareness raising in the adversely affected communities and provision of
training on production models.
The BSC contracts organizations to examine the most effective and efficient ways to use the
funds from the revenue sharing to develop livelihoods, improve well-being and the sustainable
use of the ecology and the environment. For example, organizations could conduct value chain
analysis, identify suitable production models and income generation activities suitable for the
needs of local people.

Based on the results of the work conducted by the contractors, the FMB organizes
training and guidance materials for commune officials, village leaders and eligible
households on all steps in carrying out a range of suitable production models

The FMB and commune officials provide follow-up support for households and groups to
decide the most appropriate model to invest funds from the benefit sharing

The FMB organizes the dissemination of information to eligible households and groups
on other credit facilities so they can borrow to supplement funds from the benefit sharing

The FMB organizes training for households and groups in collaboration with commune
and village leaders and mass organizations such as the Youth Union, Womens Union
and Farmers Union. Training is provided by workshops and on-the-job training.

Step Seven: Decisions-making by Adversely Affected Households and Groups

After participation in training, households and groups decide the most appropriate model
or activity to invest their grants and loans.

25

The CPC organizes consultations with households to discuss the short-term and longterm implications of their investment choice. If necessary, these consultations will
continue with households who have not selected carefully and try to persuade them to
reselect a better investment.

Households can request from village leaders and the CPC support to complete the
application form. In Quang Nam, mass associations such as the Youth Union and the
Fatherland Front helped households who requested support.

All applications were

submitted before the deadline.


Step Eight: Approval of Applications

The CPC collects the application forms, and checks and reviews them to ensure that
they are in accordance with the instructions from the FMB.

The CPC delivers all the applications to the FMB in a ceremony organized at the district
level by the DPC.

The FMB reviews the applications to ensure they are in accordance with the regulations
outlined in the Fund Charter and when the review is completed and all applications are
in order, the FMB advises the BSC. If there are issues with several applications, the
FMB can ask the BSC to decide the outcome. For example, if a group applies for
additional funding to scale up an activity.

The BSC issues a decision indicated the approved applications and this decision is
circulated to all stakeholders

The CPC and village leaders inform successful households and provide explanation to
other households why their applications were not successful. Households have 10 days
to issue an objection or complaint.

Step Nine: Disbursement of Funds

The FMB visit the commune headquarters and disburses funds directly to households
and groups. This event is broadcast over the commune broadcasting system and village
meetings well in advance so all households have knowledge of the event. Households
from specific villages are asked to come to collect the funds at a particular time to avoid
people needing to wait for long periods.

Key stakeholders, such as the BSC, DPC and Peoples Council, are present at the
commune event to observe the transfer of funds. This helps to promote an environment
of transparency and accountability.

26
Step Ten: Follow-up Support and Monitoring

The BSC organizes follow-up technical and management support for households and
groups when they implement the models and activities from the benefit sharing funds.

The CPC monitors the implementation of the funds to ensure they are used for their
intended purposes. If there are problems, the CPC will resolve them or report to the
FMB.

Information about the results from the models and activities carried out in the communes
is used in the next strategic plan.