Beirut, Lebanon May 15, 2007

1. Presentation Infrastructure and Privatization Inter-Ministerial Committee Progress Report # 1 Beirut, Lebanon May 15, 2007 This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

2. The objective of this first Infrastructure & Privatization IMC meeting is to share with your Excellencies the GR PCO structure and progress to-date, resolve pending issues, and agree on the prioritization of initiatives Meeting Objectives • Brief your Excellencies on GR PCO structure and implementation progress to-date • Outline issues and challenges • Agree on a prioritization methodology for Paris III initiatives (a preliminary draft of the prioritized initiatives will also be shared with you) • Appoint Secretary to the IMC and agree on his role Note: GR PCO stands for Government Reform Program Coordination Office

3. Ministerial Initiatives Teams Ministerial Initiatives Teams Ministerial Initiatives Teams Cross Ministerial Initiatives Teams Cross Ministerial Initiatives Teams Cross Ministerial Initiatives Teams GR PCO Structure The Inter-Ministerial Committees (IMCs) are chaired by the Prime Minister, and will focus initially on Paris III related activities – The GR PCO will liaise with, and support all stakeholders High Level Structure of the Oversight Committee The PCO will also support (as needed) the MoF in its interaction with Donors Parliament Council of Ministers Prime Minister Quarterly Progress Reporting on Paris III Initiatives Periodic Reporting Prime Minister’s Office GR PCO • Committees chaired by the Prime Minister • IMC Secretary appointed during IMC first meeting Reporting Consolidation Social IMC Economic & Fiscal IMC Infrastructure & Privatization IMC Technical Support “Natural Owners” “Natural Owners” “Natural Owners” M & S Unit M & S Unit M & S Unit Note: M&S Unit = Monitoring & Support unit reporting to “Natural Owners” (Ministers/ Institutions Head) to be set-up as needed

4. GR PCO Structure Reports will be prepared by Ministries/Government Entities and the GR PCO to monitor progress against Paris III commitments on a monthly, quarterly and annual basis GR PCO Reporting Types and Frequency Description Audience Frequency • Brief progress report (2-3 pages) from each Ministry/ Government Entity, including latest progress on KPIs (for those which are monitored frequently) and overview of major developments (informal document) • Submitted by the M&S Unit to IMCs and the GR PCO in order to ensure constant follow-up of progress and the detection of possible problems • GR PCO • IMCs • Prime Minister (if interested) • Monthly Monthly Report (not published) • A formalized performance report, developed by IMCs Secretariat jointly with each Ministry/ Government Entity • Submitted by IMCs to the PM and the GR PCO in order to ensure constant follow-up of progress and the detection of possible problems • GR PCO • Prime Minister • Council of Ministers • Quarterly Quarterly Report (not published) GR PCO Annual Report (published) • Report developed by GR PCO every year, summarizing progress against Paris III objectives • Summarized version of Bi-Annual Performance Report (not published) • General Public • Annually

5. GR PCO Structure During the first stage, the GR PCO will help Natural Owners prepare detailed programs charters, workplans, and milestones, which will take the form of a commitment document for Natural Owners Programs Planning Stage • Support Natural Owners, through their M&S Units, in initiative identification, charters, milestones and KPIs development • Train M&S Units on GR PCO processes • Escalate issues to the respective level as appropriate • Consolidate reports GR PCO • Responsible for the implementation of Paris III Commitments • Sign the Paris III Commitment Document (PCD) with the respective IMC scope of work, timeline, milestones, and KPIs “Natural Owners” • Prepare in conjunction with ministerial and cross ministerial teams detailed action plans for their Natural Owner • Develop KPIs and milestones • Prepare regular reports on progress in implementation M & S Units Cross Ministerial Initiatives Teams Ministerial Initiatives Teams • Support M&S Units in preparing action plans and milestones • Report progress to “Natural Owners”/ IMCs (in the case of cross-ministerial initiatives) according to established mechanisms • Implement initiatives and manage external parties deliverables • Raise issues and risks to the attention of “Natural Owners”

6. 1 • Introductory meetings held with all initially identified Natural Owners • Technical meetings held with M&S Units • Regular follow-ups with M&S Units Meetings with Natural Owners 2 • Review and analysis of Paris III initiatives • Grouping of initiatives into programs • Preliminary allocation of Paris III initiatives to Natural Owners Review and Update of Paris III Initiatives 3 • Elimination of redundancies and gaps among allocated Paris III initiatives • Initiation of the development of detailed work plans, that will be grouped into program charters, resulting in a Commitment Document Development of Detailed Workplans 4 • Development of a detailed toolkit to train Natural Owners and M&S staff on GR PCO structure, processes and tools • Development of commitment document template Development of GR PCO Toolkit Progress To-date To-date, the team introduced the GR PCO structure to several Ministries/ Government Institutions, refined the list of Paris III initiatives, initiated the development of detailed workplans… Progress To-date … and completed the GR PCO toolkit (to be mainly utilized by the M&S units and GR PCO team)

7. Progress To-date The team conducted introductory meetings with Ministers and Heads of Government Entities, and started the second round of technical meetings with Monitoring Support Units staff (M&S) where available Meetings with Natural Owners and M&S Units • Technical meetings were conducted with Natural Owners to discuss their understanding of own commitments under Paris III • Most Natural Owners were positive on GR PCO implementation • Most M&S Unit members are committed to the GR PCO implementation process • Most M&S Units members came prepared with the initiatives plans submitted to Paris III • Some M&S Units lack the required human resources capacity needed for the process (e.g., MoEW, EDL)

8. Progress To-date The Infrastructure and Privatization IMC has up to 4 Natural Owners with a total number of up to 10 programs… List of Infrastructure and Privatization IMC Programs Engagement Not Finalized to-date

9. Social Affairs CDR HCP Energy/ EDL Health Telecom Education Labor/ NSSF OMSAR BDL Economy & Trade Finance Progress To-date … And 74 initiatives, representing 23% of the total number of Paris III initiatives Distribution of Initiatives As Extracted from Paris III Document Distribution of Initiatives After Discussion and Reallocation to Natural Owners Social Affairs CDR HCP Health Energy/ EDL Telecom Education Justice OMSAR Labor/ NSSF BDL Economy & Trade Finance

10. Issues and Challenges From the initial round of meetings, some issues emerged mainly related to initiatives ownership, sector strategy and staffing Issues Facing Infrastructure & Privatization IMC

11. Current initiatives can be prioritized according to several criteria including the extent to which they could translate into “quick-wins” and have a noticeable impact on the concerned sector reform Prioritization of Initiatives Initiatives Prioritization Criteria • Should have a noticeable impact before November 2007 • The impact should affect a large part of the population • The impact on the concerned sector reform should be easily communicated to the public Short-term Impact • Can be implemented without the need for legislation enactment • Requires long preparations (more than 5 months) before being submitted to the Parliament • Could be implemented with alternatives to legislation Absence of legislative barriers • Already progressing and requires minimal budget • Budget already allocated through other sources Budget availability / Ongoing activity

12. Prioritization of Initiatives Ministry of Telecom – Short-term Paris III Programs and Initiatives List of Programs and Initiatives PRELIMINARY

13. Prioritization of Initiatives Ministry of Energy and Water / EDL – Short-term Paris III Programs and Initiatives List of Programs and Initiatives PRELIMINARY

14. Prioritization of Initiatives Ministry of Energy and Water / EDL – Short-term Paris III Programs and Initiatives … (Cont’d) List of Programs and Initiatives PRELIMINARY

15. Prioritization of Initiatives Higher Council for Privatization – Short-term Paris III Programs and Initiatives List of Programs and Initiatives PRELIMINARY

16. In its first meeting, each IMC should appoint a Secretary, which will provide administrative support to the IMC Next Steps Functions of the IMC Secretary • Provide overall administrative support • Prepare agenda and circulate it before the meeting • Receive contribution of the IMC members and compile them • Distribute documentation to IMC members before the meeting • Prepare and distribute minutes of meetings

17. Next Steps Overall, four IMC meetings need to take place to finalize programs, timelines, KPIs and funding, with steady-state implementation progress reporting starting in August IMC Engagement Schedule – First Six Months Meeting Objectives Dates • Appoint Secretary to the IMC and agree on his/her role • Review progress, and resolve escalated issues • Endorse initiative and program allocation, and resolve overlaps • 1st Infrastructure and Privatization IMC: 15 May 2007 First Round of IMC Meetings • Follow up on 1st round of IMC meetings • Endorse cross ministerial initiative teams • Review and discuss program charters, plans and milestones • Start filtering funding / TA requirements • Resolve escalated issues • 2nd Infrastructure and Privatization IMC: 20 June 2007 Second Round of IMC Meetings • Approve natural Owners funding/ TA requests • Endorse program charters including action plans, KPIs and milestones • Sign Paris IIICommitment Documents with Natural Owners • 3rd Infrastructure and Privatization IMC: 16 July 2007 Third Round of IMC Meetings • Follow up on 3nd round of IMC meetings • Resolve issues arising out of funding requests and other items • Review monthly progress of implementation • Start steady-state implementation progress reporting • 4th Infrastructure and Privatization IMC: 20 August 2007 Steady-State Implementation Progress Reporting

18. Next Steps Going forward, Natural Owners should finalize and prioritize their list of initiatives, and follow up on the development of Program Charters with their respective M&S Units Actions Required • Review and finalize programs and initiatives ownership: • Appoint Board of Director or “Alternative Governance Structure” for Liban Telecom in order to proceed with the corporatization exercise • Reach consensus on a common approach to the “Reform of the Power Sector” • Decide whether HCP, TRA or MoT should own initiatives for the privatization of mobile telecom • Decide whether HCP or MoEW/EDL should own initiatives for the restructuring, corporatization and privatization of EDL • Review and agree on short term initiatives prioritization • Identify the need for, and assign specific ministerial or inter-ministerial initiative teams • Follow-up on progress in development of Program Charters with M&S Units