Annex V: Terms of reference for the study on the management of the financial mechanism of the Montreal Protocol
1. The financial mechanism was established by Article 10 of the Montreal Protocol to provide financial and technical cooperation to Parties operating under paragraph 1 of article 5 to enable their compliance with the control measures set out in articles 2A-2E and 2I, as well as any control measures contained in Articles 2F-2H, that are decided pursuant to paragraph 1 bis of Article 5. The mechanism includes a multilateral fund, financed by contributions from Parties not operating under paragraph 1 of Article 5. An executive committee was established by the Parties to develop and monitor the implementation of specific operational policies, guidelines and administrative arrangements, including the disbursement of resources for the purpose of achieving the objectives of the Multilateral Fund. A secretariat assists the Executive Committee in the discharge of its functions. The assistance activities requested by parties operating under paragraph 1 of Article 5 approved by the Executive Committee and funded by the Multilateral Fund are implemented by four multilateral implementing agencies (the United Nations Development Programme, the United Nations Environment Programme, the United Nations Industrial Development Organization and the World Bank) and also by bilateral agencies as agreed in decision II/8.
2. The Fourth Meeting of the Parties, which established the Multilateral Fund on a permanent basis, recognized the need to review periodically the operation of the financial mechanism in order to ensure maximum effectiveness in addressing the goals of the Montreal Protocol. Accordingly, in decision IV/18, the Parties requested an evaluation study, which was carried out in 1995. Based on the results of that study, the seventh Meeting of the Parties adopted decision VII/22, in which they decided:
(a) To request the Executive Committee to consider innovative mobilization of existing and additional resources in support of the objectives of the Protocol and any further action by the end of 1996 and to report thereon to the eighth Meeting of the Parties;
(b) That the actions set out in annex V to the report of the seventh Meeting of the Parties should be taken to improve the functioning of the financial mechanism.
3. Recognizing that more than five years after that first study it was appropriate to evaluate and review the financial mechanism, the Thirteenth Meeting of the Parties decided in its decision XIII/3:
(a) To evaluate and review, by 2004, the financial mechanism established by Article 10 of the Montreal Protocol with a view to ensuring its consistent, effective functioning in meeting the needs of Article 5 Parties and non-Article 5 Parties in accordance with Article 10 of the Protocol and to launch a process for an external, independent study in that regard to be made available to the Sixteenth Meeting of the Parties;
(b) That the study should focus on the management of the financial mechanism of the Montreal Protocol;
(c) That the terms of reference and modalities of the study should be submitted to the fifteenth Meeting of the Parties;
(d) To consider the necessity to launch such an evaluation on a periodic basis;
(e) To request the existing evaluation mechanism in place within the United Nations system to provide the Meeting of the Parties, for its consideration, with any relevant findings on the management of the financial mechanism of the Montreal Protocol at any time such findings are available.
4. In carrying out the study, the consultant should consider the management of the financial mechanism of the Montreal Protocol as follows:
(a) Executive Committee decision-making process:
(i) Review of the adequacy of planning and implementation process of activities to ensure compliance;
(ii) The adequacy of information presented to the Executive Committee to enable it to take decisions on projects and policies;
(iii) Coherence and effectiveness in project review process;
(iv) Cost effectiveness of approved ODS phase-out projects and programmes;
(v) Effectiveness and cost of the administrative organization of the Executive Committee, including the structure and functions of the Subcommittee for Project Review and the Subcommittee for Monitoring, Evaluation and Finance and their role in the Executive Committee. This should include analysis of options for management in the future, given implementation of the new country driven and compliance-focused programme;
(vi) Assessment of the necessary level of confidentiality of the Executive Committee meeting documentation, bearing in mind the interest of project proponents;
(vii) Use of performance indicators;
(b) Multilateral Fund secretariat activities:
(i) Appraisal of the efficiency and effectiveness of the review process of ODS phase-out projects and programmes with respect to the goals of the Montreal Protocol and decisions of the Meetings of the Parties;
(ii) Monitoring the efficiency of the implementation of projects and programmes, in particular the monitoring and management of fund transfer and disbursement;
(iii) Adequacy and comprehensiveness of the information provided to the Executive Committee on the financial reports submitted for the Executive Committee’s consideration;
(c) Activities implemented by multilateral and bilateral implementing agencies:
(i) Review of the adequacy in identifying plans and projects to assist national compliance with the Montreal Protocol;
(ii) Evaluation of the fund management and disbursement policy of each implementing agency;
(iii) Investment strategy of cash advances;
(iv) Assessment of the use of the administrative costs, with special consideration to smaller versus larger projects;
(v) Cost effectiveness of each agency, taking separately into account the investment projects and other activities (institutional support, ODS officer network management, etc.)
(vi) Assessment of the proportion of approved funds between investment and non‑investment projects in the different agencies;
(vii) Adequacy and effectiveness of fund disbursements, and fund disbursement management, including reporting to the Multilateral Fund secretariat;
(viii) Additional costs for the Multilateral Fund, if any, of overlapping activities between agencies;
(d) Fund management:
(i) Assessment of past experience of fund management as performed by the Treasurer;
(ii) Comparison with management and financial practices of other funds (Global Environment Facility, development banks) as benchmarks;
(e) Additional matters:
(i) Adequacy of the interaction between the implementing agencies, the Multilateral Fund secretariat and relevant subsidiary bodies;
(ii) Analysis and reconciliation of financial data from different sources (Treasurer, implementing agencies, Multilateral Fund secretariat accounts and audited United Nations Environment Programme Fund accounts);
(iii) Performance of donor countries in fulfilling their obligation vis--vis the Multilateral Fund.
Conclusions and recommendations
5. In carrying out the study, the consultant(s) will identify the strengths, weaknesses, opportunities and threats and, where relevant, make recommendations suggesting possible improvements. The study will include a general overall review of the achievements of the Fund in phasing out controlled substances and in enabling the compliance of Article 5 Parties with the Montreal Protocol.
Source of information for the evaluation
6. The Ozone Secretariat, the Executive Committee, the Treasurer, the Multilateral Fund secretariat, the implementing agencies (multilateral and bilateral), ozone offices, recipient countries and companies and non-Article 5 Parties are invited to cooperate with the consultant(s) and to provide all necessary information. The report should take into account the relevant decisions of the Meetings of the Parties and the Executive Committee.
7. The consultant(s) should consult widely with relevant persons and institutions and other relevant sources of information deemed useful.
8. The following table presents tentative milestones for the study.
|November 2003||Approval of the terms of reference by the
fifteenth Meeting of the Parties
|Selection of a panel|
|December 2003||Finalization of the procedure for the selection of qualified external and independent consultant(s).|
|Analysis of bids by the Ozone Secretariat and recommendation to the steering panel|
|Independent consultant(s) selected by the panel|
|January 2004||Independent consultant(s) meet with the steering panel to discuss study modalities and details|
|May 2004||Mid-term review/preliminary draft report review by the steering panel|
|Mid-June||First draft report submitted to the Open-ended Working Group at its twenty-fourth meeting|
|November 2004||Submission to the Sixteenth Meeting of the Parties|