Guidelines and standard format for verification of ods production phase-out

This document is submitted in response to Decisions 31/42 and 31/47 under which the Executive Committee requested the Secretariat to work with the relevant Implementing Agencies and develop guidelines for submission to the Thirty-second Meeting, setting up an acceptable format and content for the verification of ODS production phase-out. The Secretariat and the World Bank worked closely on this document.

From the very beginning, management of ODS production phase-out under the Multilateral Fund has followed a modality different from that for the ODS consuming sectors. Instead of funding individual projects, ODS production phase-out has adopted a performance-based sector funding scheme under which disbursement of funds is made conditional upon verification that ODS phase-out targets provided for in the sector plan are actually achieved. Adding to the challenge of phase out verification is the gradual production closure adopted by many of the ODS plants included in the sector plans under which ODS production is not closed entirely at once but only scaled down yearly till its final cessation several years in the future.

The purpose of the guidelines is to provide standard procedures to be followed in conducting verifications of ODS production phase out (including gradual closures) financed by the Multilateral Fund. The guidelines include the Questionnaire in Annex I.

Before the field verification, the implementing agency responsible for the ODS production phase out project should ensure that the plant(s) to be audited provide the necessary information, using the Questionnaire attached.

The responsible implementing agency should prepare terms of reference for the verification mission and make available to the verification team, prior to the field visit, the Questionnaire(s) containing baseline enterprise information, annual data reported for the year by the enterprise and a copy of the sector agreement approved by the Executive Committee.

During the plant closure or production audit, the verification team should have full access to the daily production logs and the financial records to validate the data provided by the plant in the Questionnaire.

Based on the field findings against the data provided by the plant in the Questionnaire, the verification team should prepare its verification report for submission to the Executive Committee and attach the filled-in Questionnaire to its report.

The attached Questionnaire should be filled out by each plant to be audited and made available to the audit team before the field visit to the plant. Thus the verification team would have in hand before departure:

(i) names and locations of producers;

(ii) contact at each corporate headquarters and each plant site;

(iii) number of days in production (operational days) for each month, at each plant site, and for each ODS production monitored at the location;

(iv) monthly production data for the ODS production monitored at each plant site;

(v) monthly consumption and procurement data for feedstock used for the production of the ODS production monitored, (e.g. CTC and AHF for CFC-11 and CFC-12 production);

(vi) monthly sales figures for the ODS product(s) monitored, as well as stock for each monitored ODS production at the beginning and end of each year.

(i) review the data provided by the enterprise and ensure that the ODS production, sales figures and stock at the beginning and end of the years add up.

(ii) compare actual production to annual quota assigned for each ODS production monitored and at each plant site.

(iii) review any quota trading or changes of quotas during the year. Also check if ODS products monitored have been procured from other producers.

(iv) review and verify conformity of raw materials consumption with the ODS production monitored.

(v) based on questionnaire data, identify each campaign and distribute production and raw material consumption data per campaign.

(vi) ensure access to daily production logs and financial records for the ODS productions monitored as necessary for the verification of information provided by the producer.

(i) confirm production quantities and raw material consumption from production logs.

(ii) verify sales and procurements of monitored ODS products against financial records.

(iii) verify stock at the beginning and the end of year against financial records.

(i) review system of record keeping for adequacy.

(ii) observe plant condition and apparent operational status.

(iii) audit daily production records for monitored ODS production and "key" feedstock consumption data.

(iv) confirm monthly and annual production of monitored ODS:

(v) confirm that cumulative inventory change of monitored ODS corresponds to annual production and sales data.

(vi) confirm that cumulative inventory change of "key" raw material is consistent with production, both overall and per campaign.

(vii) integrate hourly in-plant flowrate data, (corrected for concentration if necessary), over time - either graphically or analytically - to get an independent value for production.

(viii) compare the changes in reported feed and product tank levels, integrated with the appropriate correlating factor, to reported raw material usage and CFC production.

(ix) on a spot basis, rationalise hourly plant logs with raw material consumption and, e.g. CFC production. In other words match throughput, for example for a week, with raw material consumption and the monitored ODS production for the same week. Do for at least two or three weeks during each campaign.

(x) review logs for periods of high hourly throughput and compare to reported production. Investigate any possible inconsistency.

(xi) review hourly plant logs during non-campaign time periods to verify non-production.

Verification steps at Complete Closed Location

(i) observe plant condition and apparent operational status.

(ii) verify the data provided in Section D I of the Questionnaire attached.

(iii) provide photographic documentation for the dismantling of the plant (e.g. photo and/or video)

The verification report should provide the results of the teams’ findings and conclusions on the implementation of ODS production phase-out annual programme. The report should include as annexes the completed questionnaires.

The verification team should consist of at least two persons.

At least one person should be fluent in the national language and one should be fluent in English language.

(i) one of the verification team members should be familiar with accounting practice and financial auditing.

(ii) one of the verification team members should be a technical expert with experience relevant to the ODS production to be audited.

*As applicable, e.g. SRI# for China’s CFC plants.

***This applies to plants where production of either HF or CTC or both is integrated.

I. Plant for Complete Closure

Annual CFC-11/12 quotas, production, sales and stocks since the baseline year*

(Please use one table for each CFC product)

*The year from which data is used to approve the ODS production phase out project.

**Till the year of the verification

*Till the year of the verification.

Monthly CFC-11/12 production and raw material consumption*

CFC Production and CTC consumption:

* Similar tables should be provided for CFC-12 and CFC-113.

(UNEP/OzL.Pro/ExCom/32/44, Decision 32/70, para 85).

(Supporting document: UNEP/OzL.Pro/ExCom/32/33).

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