This Bank Procedure statement was revised on July 2007 to reflect update on related Operational Manual Statements.
1. Project Preparation Advances (PPAs) are available to assist prospective recipients in preparing substantial investment projects to be financed from the Ozone Projects Trust Fund (OTF). Such advances may be necessary because many Montreal Protocol (MP) investment operations require
(a) detailed fieldwork to define end users and appropriate policies and incentives for phasing out ozone-depleting substances, and/or
(b) demonstrations of techniques and technologies for substituting acceptable alternatives for ozone-depleting substances before designs can be finalized for large investment projects in the sectors that consume ozone-depleting substances. OTF-PPAs may be used for three purposes:
(i) upstream preparatory work, including studies that are essential to expedite preparation and implementation of a project proposed for OTF financing;
(ii) preinvestment studies to confirm the feasibility of the proposed project; and
(iii) equipment, materials, and technical assistance to demonstrate technologies and techniques in preparation for large programs to phase out ozone-depleting substances or for projects in ozone-depleting-substance sectors.
2. The same eligibility criteria that apply to the regular MP projects apply to OTF-PPAs. OTF-PPAs below $500,000 must have been reviewed by the Executive Committee of the Multilateral Fund for the Implementation of the Montreal Protocol (MFMP) and included in approved work programs, and those greater than $500,000 must have been approved by the MFMP Executive Committee (see BP 10.21, para. 9). OTF-PPAs are limited to a maximum of US$1.5 million per proposed project. OTF-PPAs are made only when there is a strong probability that an MFMP grant will be made within two years after the Bank's letter to the potential recipient is signed. Furthermore, given that OTF-PPAs are approved by the MFMP Executive Committee in the same manner as investment projects (resources to be transferred to the recipient), they cannot be converted into administrative resources that the Bank would then use to execute project preparation. All advances are denominated in U.S. dollars.
3. Following MFMP Executive Committee review/approval, the country department concerned reviews a proposal for an OTF-PPA to determine whether it complies with the provisions of paras. 1 and 2 (relating to purposes/eligibility). The division concerned submits to the country department director a brief memorandum summarizing the results of the review, requesting approval for the advance, and indicating whether the granting of the advance has been cleared by the chief of the Global Environment Coordination Division (ENVGC). The memorandum is cleared with the Legal Department (LEG) and the finance officer.
4. Once the advance is approved by the country department director, the Letter of Agreement1 required for the OTF-PPA is processed. The text of the letter is cleared with LEG and the finance officer. It is also cleared by the Trust Funds Administrator, who assigns the OTF-PPA number that is shown on the letter. The Letter of Agreement is signed by an authorized officer in the Region (see Administrative Manual Statement 1.30, Authority to Sign Written Instruments: Bank and Association) and countersigned by the duly authorized government official.
5. OTF-PPAs are grants. To encourage the prompt use of these funds, the Financial Provisions Applicable to OTF-PPAs provide, inter alia, that
(a) the Trustee may cancel the OTF-PPA if within 180 days of the recipient government's countersignature of the Trustee's letter the recipient government or entity concerned has not started any of the preparatory activities for which the advance was granted; and
(b) except as the Trustee may otherwise establish, any unwithdrawn amount of the advance is canceled two years after the date the Trustee signs its letter to the potential recipient, and no further withdrawals may be made.
6. Bank staff provide to the chief, ENVGC, for inclusion in the Bank's progress reports to the MFMP Executive Committee, a report on the implementation status of the activity supported by the OTF-PPA.
- For preparation of, and questions on, letter agreements for project preparation advances, please contact the relevant country lawyer.