Operational and Financial Issues

1
Operational and Financial Issues

• Energy and Environment Practice Workshop
• 6-9 October 2004, Almaty

2
Increased Pressure on Implementing Fees

• UNDP Implementing fees averaged 9 over the past
  4 years
• GEF Council applying pressure on all GEF
  Implementing Agencies to reduce their
  implementing fees
• A proposal was tabled to reduced fees from 9 to
  7.5
• Corporate role of IAs and associated budget is
  also being challenged

3
UNDP Fee Distribution

• UNDP/GEF mandatory assessment to UNDP Treasury
  to increase from 1 to 2.
• UNDP COs receives 1/3 of total implementing fees,
  about 3 on average.
• UNDP/GEF RCUs receives 1/3 of total implementing
  fees to provide services free of charge to COs

4
Country Office Cost Recovery

• In line with its mainstreaming strategy, UNDP/GEF
  will try to absorb increases in mandatory
  assessments and continue to provide 1/3
  implementing fees to Cos
• However, UNDP/GEF may have to charge for UNDP/RC
  time, in accordance with present SURF practices.
• UNDP/GEF cannot charge implementing costs to
  project budgets
• Only execution services (ISS) can be charged to
  projects at the request of Govt based on
  Universal Price List.

5
Percentage Fee Trust Funds and Third-Party
Cost-Sharing (TFs and TPCS)
Sources of Funds Fee Range Type of Project Country Office(s) Regional Bureau BDP or BCPR Central Services Global Op.
Trust Funds, TPCS 5 to 7 Country (incl. TTF Country) Everything above 2 0.67 0 0.33 1
Regional (incl. TTF Regional) 0.67 Everything above 2 0 0.33 1
Global/Interreg (incl. TTF, GEF, MP, Cap21) 0.33 0.33 Everything above 2 0.33 1
6
Comparison of fee distribution Cost Recovery
Policy vs. UNDP-GEF practice
7
Enhancing Full Cost Recovery

• Co-financing ?
• How can we ensure accountability for fees?

8
Co-Financing

• GEF Definitions
• Co-Financing Resources committed by GEF or other
  sources which are essential for meeting GEF
  objectives
• Associated Financing Resources earmarked for
  related activities
• Leverage Resources Additional resources beyond
  the project itself that are mobilized as a result
  of the project

9
GEF Co-Financing Ratio
Source PIR FY 2003 Reports
10
Sources of Co-Financing
Source PIR FY 2003 Reports
11
Co-Financing Potential and Issues

• Substantial scope for Cost-Sharing (Cash),
  particularly if linked to poverty (SL) and
  governance issues in broader UNDP interventions
  
• Possible Barriers
• Low priority to environment
• Difficult to implement cross cutting programmatic
  interventions

12
Points for Project Revisions

• Expenditures over total budget cannot be covered
  by GEF resources
• Substantive budget revisions must be reported to
  GEF Secretariat via UNDP GEF
• UNDP/GEF project revisions should be forwarded to
  UNDP/GEF RCU before signature (five day clearance
  on a no-objection basis) to ensure that changes
  in budgets among activities are reported

13
UNDP/GEF Project Budget Cleanup for Atlas (ERP) 1

• Issues/problems identified in FIM
• Incorrect data erroneous project numbers
• Individual project budgets not updated via
  revisions
• Total project budgets that have exceeded
  allocations
• Cumulative budget balances as of end-2002 are
  inconsistent with UNDP financial records

14
UNDP/GEF Project Budget Cleanup for Atlas (ERP) 2

• Type of projects involved
• Country projects
• National (NEX) and Direct Execution (DEX)
• UNOPS/UN System Agency Execution
• NGO Execution
• Regional projects
• National (NEX) and Direct Execution (DEX)
• UNOPS/UN System Agency Execution
• NGO Execution

15
UNDP/GEF Project Budget Cleanup for Atlas (ERP)
3

• UNDP/GEF has asked COs to take action on
• Examine/correct erroneous project budgets
  recorded in FIM
• Budget revisions update, including mandatory
  revisions
• Examine/correct budgets that have exceeded
  allocations
• Examine/rectify budget balances as of end of 2002
  to be consistent with UNDP financial statement
  records
• Identify projects that are financially closed
• Follow-up with executing agencies, if necessary,
  on all the above
• Completion of country regional project budget
  data-entry into FIM

16
Completion of Migration to Atlas

• All offices should ensure that
• Non-migrated projects are officially closed and
  final revision sent to GEF by end of March
• Re-phasing takes place for active projects as
  soon as 2003 final expenditure is available
• Budgets are restructured for active projects
• Inform UN executing agencies of new budget
  structure and reporting requirements
• Ensure that OPS budgets are identical to UNDP
  projects in Atlas