There will be a bilateral engagement between the ADFD and the project proponent after selection. The final terms and conditions of the loan will be set by ADFD. Note the sequence of activities below:
Loan Offer and Letter of Consent
- A preliminary approval loan offer is made by ADFD. The host country government (e.g. Ministry of Finance) sends ADFD a letter of consent to the loan offer.
- As soon as the Letter of Consent is received by ADFD, an onsite appraisal will be arranged in consultation with the beneficiary (the ministry/government authority/organisation that has submitted the project).
- The borrower shall take appropriate measures to acquire the ownership of land or rights over it and ensure it is free of any encumbrances according to the requirements of the execution of the Project. The borrower shall provide access to the site for the engineering consultant and the contractor, suppliers etc. for execution purposes.
- A loan agreement will be signed with the Ministry that deals with the international borrowing of the country, if the beneficiary is a government entity.
- A loan guarantee agreement will be signed with the government in line with signing the loan agreement with the borrower, if the borrower is a semi-governmental or private entity.
- If a project is selected for ADFD funding, the loan and guarantee agreements should be signed within a maximum period of two years from the date of the official notification by ADFD.
- The loan agreement including all works and services shall be free from any taxes, fees and dues of any nature under any laws in force in the country.
Loan Ratification and Declaration
- Ratification of the loan agreement is in accordance with borrowing country law.
- The Government provides the Ratification and the Legal Opinion documents in order to enable ADFD to declare effectiveness of the loan (the process of contract preparations and tendering shall not be affected by the provision of the legal opinion and ratification documents).
Approval of Project Implementation Unit
- A qualified and experienced Project Implementation Unit (PIU) would need to be identified and established by the beneficiary (subject to approval by ADFD) to be responsible for the overall administration of the execution of the project.
Tendering and Procurement
- Project implementation shall be in accordance with the tendering and procurement procedures of ADFD. Technology providers and the technical consultant can only be awarded contracts after the project is selected and a loan agreement has been signed with ADFD. ADFD oversees and approves these procedures to ensure transparency of the tendering and delivery process.
- Tendering, procurement and the establishment of the PIU can start in parallel with the process of signing the loan agreement. However, disbursement of funds will not commence until the loan agreement has been declared effective.
- Invoices for actual work done. Disbursement shall be made directly to the services provider depending on the financing percentage. ADFD does not finance more than 50% of the total project costs.