The World Bank TN-Road Transport Corridors (P146502) REPORT NO.: RES33505 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TN-ROAD TRANSPORT CORRIDORS APPROVED ON JULY 14, 2015 TO REPUBLIC OF TUNISIA TRANSPORT MIDDLE EAST AND NORTH AFRICA Regional Vice President: Ferid Belhaj Country Director: Marie Francoise Marie-Nelly Senior Global Practice Director: Guangzhe Chen Practice Manager/Manager: Olivier P. Le Ber Task Team Leader: Andrew Michael Losos, Kristin Panier The World Bank TN-Road Transport Corridors (P146502) ABBREVIATIONS AND ACRONYMS DGPC General Directorate of Roads and Bridges (“Direction Générale des Ponts et Chaussées”) ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan GoT Government of Tunisia ISR Implementation Status and Results Report MEHLP Ministry of Equipment, Habitat and Land Planning (“Ministère de l’Équipement, de l’Habitat et de l’Aménagement du Territoire”) MDTF Multi-Donor Trust Fund MENA Middle East and North Africa PAP Project-Affected People PIU Project Implementation Unit RAP Resettlement Action Plan RN National Road (“Route Nationale”) RPF Resettlement Policy Framework RR Regional Road (“Route Régionale”) SBD Standard Bidding Documents TND Tunisian Dinar The World Bank TN-Road Transport Corridors (P146502) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P146502 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 14-Jul-2015 31-Dec-2020 Organizations Borrower Responsible Agency Ministere de l’Equipement, de l'Habitat, et de REPUBLIC OF TUNISIA l’Amenagement du Territoire Project Development Objective (PDO) Original PDO The objectives of the Project are: (i) to reduce transportation cost and time and improve road safety on select road corridors between lagging regions and more developed areas in the territory of Tunisia; and (ii) to strengthen the capacity of the Ministry of Equipment, Habitat and Land Planning in road asset management. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-85190 14-Jul-2015 02-Oct-2015 30-Dec-2015 31-Dec-2020 200.00 105.22 98.05 TF-A0260 02-Oct-2015 02-Oct-2015 30-Dec-2015 30-Sep-2018 .91 .91 0 The World Bank TN-Road Transport Corridors (P146502) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Implementation Status: 1. This restructuring Paper seeks approval to restructure the TN Road Transport Corridor Project (P146502) (Ln 85190-TN & TF0A0260). Due to savings made in during project implementation, this restructuring proposes to add the rehabilitation of a road of critical importance of about 55km in length, situated in the lagging region of Tataouine, to the project without requiring additional funds, any change in PDO, or safeguards category. This level two restructuring would add new activities and results indicators to the project. 2. The project was approved by the Board on July 14, 2015 with an IBRD loan of USD 200 million and a grant from the MENA MDTF of USD 0.91 million and become effective on December 30, 2015. There is no overdue audit report and all due legal covenants are complied with. The Legal covenant related to Schedule 2, Section I.C.6: Execution of the Action Plan concerning legacy resettlement issues is being actively implemented by the client prior to the beginning of works on plots affected by the Action Plan or adjacent to plots affected by the Action Plan as agreed at negotiations. The lack of reporting of two fatal accidents led to a temporary suspension of disbursements on 31 October 2018. The Borrower has promptly fulfilled all actions and provided all information required by the SIRT and conditions for lifting the suspension, including the carry out of a root cause analysis (RCA) of the two accidents. In light of the satisfaction of the specified conditions, the Bank lifted the suspension of disbursements on December 25, 2018. The Borrower is committed to continue to improve health and safety of the workers and roads users. As a result, the ratings on Implementation Progress have been restored to Satisfactory. The Overall Safeguards and Environmental Assessment is rated Moderately Satisfactory. All other implementation progress remains satisfactory. The project is in compliance with all applicable Bank Safeguards policies. As of January 15, 2019, the cumulative disbursements are USD 105.22 million from the loan (52%) and USD 0.9 million from the grant (99.46%). 3. The progress towards achieving the PDO have been consistently rated satisfactory since the launch of the project. The status of implementation of each component as of the last supervision mission in October 2018 is shown below. (a) Component 1: Road Corridor Improvements. The implementation of civil works is progressing smoothly. Works began on all road sections with variable progress rates observed: On RN12, lot 1 is 95% complete. Lot 2 is 92% complete. Lot 3 is 68% complete. Lot 4 is 92% complete. Lot 5 (the interchange on the outskirts of Sousse) is 100% complete, opened officially in June 2018. The single lot of RR133 is well advanced (76% completion rate). Works here are impeded by slow land acquisition. On RN4, lot 1 is 70% complete. Lot 2 is 45% complete after experiencing delays due to the relocation of a water conduit by the public water utility (SONEDE) which is now proceeding well. Lot 3 is 35% complete, as it suffers the most from the old SONEDE conduit (covering 10km of its length). Lot 4 is 65% complete. The 52% disbursement is mainly due to the The World Bank TN-Road Transport Corridors (P146502) uncommitted funds due to savings in implementation of about EUR 67 million (about 35% of the loan), which is not yet committed and is the reason for this restructuring. (b) Component 2: Road Network Management Improvement. The Trust Fund closing date was extended from 30 June 2018 to 30 September 2018 to ensure the proper implementation of the technical assistant activities. Both activities are now complete. B. Rationale for restructuring: 4. The loan has substantial uncommitted funds due to savings in implementation. The borrower has identified a surplus of approximatively EUR 67 million on the loan proceeds due to the depreciation of the Tunisian Dinar and to savings on the competitive procurement of works. The borrower has thus requested in a letter dated December 30, 2016, a restructuring of the project to finance a new road section from the identified surplus. The Bank team has worked with the borrower to update safeguards studies and project documents as reflected in this restructuring paper. Discussions are underway about the expected additional savings. The proposed restructuring will scale up the impacts of the Project by extending the geographical coverage of its activities to a wider range of roads in the southern lagging regions of the country. The government proposes to finance a new road corridor in the governorates of Tataouine and Medenine, linking the city of Tataouine to the A1 highway. 5. The proposed activity is consistent with the PDO of the existing project to reduce transportation cost and time and improve road safety on corridors between lagging regions and more developed areas. The proposed addition of this road section would contribute to the government’s objective of improving regional integration and renewing the social contract with lagging regions. Accordingly, it also aligns with Pillar 2 of the Country Partnership Framework for Tunisia (report number 104123-TN discussed by the Board of Executive Directors on May 17, 2016). 6. While the governorates of Tataouine and Medenine have emerging economies, they are still suffering from poor and unbalanced coverage of roads infrastructure: roads density is significantly higher in the North-East of the governorate of Tataouine and in coastal touristic areas in Medenine than in lagging regions. Moreover, substantial heavy truck traffic carrying agricultural products and raw materials circulates on the road network of both governorates. This is mainly due to the developing local economies: in Tataouine, agriculture is the main economic activity, and tourism, industry and oil production are in continuous development. The governorate has around 15 industrial plants and a new industrial zone (20 ha) is planned for the near future. In addition, some new oil fields were recently discovered which has strongly increased prospecting activities in the region. As for Medenine, industrial activity is much stronger with around 112 industrial plants mainly located in Djerba and Zarzis. 7. Therefore, the proposed investment is expected to substantially enhance road connectivity in the region providing improved road conditions and thus playing an important role in improving the economic situation and attracting more private sector investments. The investment is also expected to help tackle the unemployment challenges in the region since the resulting increased economic activity will create more jobs for the local population. The World Bank TN-Road Transport Corridors (P146502) II. DESCRIPTION OF PROPOSED CHANGES C. Scope and description of changes 1. Scope of component 1. The scope of component 1 will be changed by adding a new road section of about 55 km, linking Tataouine to Medenine and the A1 highway in the south of Tunisia. The proposed works will cost approximately 44.3 million Euros and will cover mainly: (a) Widening 13.5 Km of the National Road N°19; (b) Construction of 30.2 km of a new expressway of four lanes; (c) Construction of a bypass of the city of Tataouine (around 3.7 Km) to connect the industrial zone to the National Road N°19; (d) Rehabilitation of approximately 7.3 km of a two-lane road to connect Bir Lahmar and Ghomrassen to the new corridor; (e) Construction of two bridges for the crossing of Oued Tataouine and Oued Ettaam (around 100 meters long each); (f) Construction of 13 overpasses; and (g) Development of 14 roundabouts. 2. Technical analysis: The detailed technical studies as well as bidding documents have been finalized and are satisfactory to the Bank in quality and content. The project was subdivided into three lots as follows: (a) Lot 1: Widening 13.5 km of the RN19 including the construction of 3.7 km bypass of Tataouine; (b) Lot 2: Construction of 18km of a four-lane road, and rehabilitation of 7.3 km Bir Lahmar two-lane road; and (c) Lot 3: Construction of 12.2km of a four-lane road starting from Médenine to the A1 highway. 3. The project design is based on the recommendations of the French roads and highways research agency (SETRA). Geometrical characteristics are based on reference speeds compatible with a 90 km/h speed limit. The Annual Average Daily Traffic (AADT) for the new corridor is estimated at around 5600 vehicles during the first year of operation. This figure is expected to reach 9166 vehicles after 10 years, and 14361 vehicles after 20 years. 4. Road safety: A road safety report was prepared for this corridor as it was done for the other road sections of this project (RN4, RN12 and RR133). The report did not raise any major safety issues related to the proposed design of the corridor. 5. Environmental and social safeguards: The project does not present any major environmental and social challenges. The ESIA and the RAP have been prepared by the client in accordance with the project’s ESMF and RPF. The landscape comprises mainly low hills and the selected alignment avoids urban and agricultural lands. Only a few isolated trees are affected. For roadside trees along the RN19, five new trees will be planted for every tree removed as has been done elsewhere in this project. The DGPC has successfully implemented the ESMPs and the RAPs for the three existing road segments under implementation. Natural Habitats (OP) (BP 4.04) has been triggered as part of this restructuring. There are some natural habitats already degraded by pastoralism practiced by local breeders. According to the ESIA, there are no protected, sensitive or critical habitats impacted by the project. The ESMP proposes mitigation measures to avoid additional significant disturbance to the natural habitat by prohibiting any poaching or harvesting activity by the workers as well as prohibiting any fires. Legacy issues have been handled according to the action plan and implemented as part of the RAPs. Several complaints, in particular on land acquisition, have been handled by the DGPC appropriately. All but one, which pertains to a single proprietor on the RN12 in the governorate of Sousse, have now been resolved while the one outstanding is being followed actively by the PMU and task team. Reporting on and monitoring of safeguards implementation The World Bank TN-Road Transport Corridors (P146502) by the client will be strengthened by the measures prescribed in the Safeguards Corrective Action Plan (SCAP) prepared in December 2018 following a root cause analysis of the two unreported safeguards incidents described in paragraph I.A.2, above Resettlement Action Plans (RAP) have been prepared for the upgraded roads under the ongoing project, including an Action Plan to deal properly with legacy issues encountered during project design and implementation. In early 2018, the RAPs are still under implementation, and civil works have only started on sections where land issues have been remediated successfully. A Grievance Redress Mechanism (GRM) has been functioning and has dealt successfully with several grievances submitted. The additional Tataouine road section requires the approval by the borrower and the Bank of an additional RAP to manage the acquisition of the required land, which has been prepared by the borrower. A total of around 240 hectares (ha) must be acquired through expropriation, of which around 180 ha are private property and the remaining land is state land without known users. The expropriation of private property will affect 84 known PAPs and 60 plots for which due to inheritance the exact owners are not known at this stage. The RAP contains an initial census, entitlement matrix, description of compensation standards, gap analysis, GRM, and the other elements as required by World Bank policy. The RAP took into account alternative alignments to ensure land acquisition impacts on livelihoods were reduced and physical displacement is excluded, by avoiding irrigated and inhabited areas. The impact on livelihoods is minor as the land use is restricted to non-irrigated seasonal agriculture. No structures have been identified and damages to crops will be compensated through the RAP. The contractors will be national, and the labor force will reside locally in existing settlements. No labor influx is expected. The new road section will be in underused land and existing road sections have no known informal users. All impacts will be handled through the RAP. All these impacts are described in ESIA/ESMP which were the subject of public consultation and will be disclosed on Borrower website and on project specific areas for easy access by all stakeholders prior to implementation. The DGPC has hosted site-specific consultations on draft documents (ESIA/ESMP and RAP) with all relevant and impacted stakeholders (including communities, land owners and land users, other relevant agencies at national and local levels etc.) and the comments and feedback will be incorporated in project design and ESIA/ESMP. A rigorous Grievance system has been put in place for ongoing feedback from project affected persons, including issues related to involuntary resettlement. The GRM is described in the ESIA and the RAP, as well as ESMP for the project. Brochures detailing the GRM process will be distributed during the public consultations. In accordance with Section I.C.3 and I.C.4 of Schedule 2 to the Loan Agreement, no construction works will commence until the ESMP and RAP for the construction works for the new Tataouine section have been prepared, consulted, adopted, disclosed by the Borrower and at the Bank, and both the ESMP and RAP have been implemented (including payment in full of compensation to, or resettlement of, all affected people prior to commencing any related works), all in a manner acceptable to the Bank. 6. Economic analysis: An economic analysis over an evaluation period of 20 years was performed using HDM-4. The evaluation assessed the costs and benefits of the new corridor. Costs included construction and maintenance costs. Maintenance costs included periodic and yearly maintenance. Three sources of benefits were accounted: (i) time savings; (ii) savings in vehicle operating costs; and (iii) reduction of accidents. 7. The economic evaluation showed that the new section is economically justified, with an Internal Rate of Return (IRR) of 14.7% and a Net Present Value (NPV) of about TND 88.33 million at a discount rate of 8%. Sensitivity analyses were conducted to test the economic viability of the project in less optimistic scenarios: (i) Reduction of the project benefits by 10%; (ii) Increase the project costs by 10%; and (iii) the combination of both scenarios. The project remains economically profitable even in the worst-case scenario. 8. Greenhouse gas accounting: The economic analysis using HDM-4 included estimations of changes in emission levels of Greenhouse gases. The baseline emissions are estimated from the existing traffic allowing for annual The World Bank TN-Road Transport Corridors (P146502) growth. The impact on GHG emissions is moderately positive with estimated savings in CO2 emissions of about 6.3 kg per 1000 vehicle km. 9. Results framework: The results framework will be revised to reflect changes in component 1. For each PDO sub- indicator a section will be added for Tataouine corridor. The target values of four intermediate indicators will be updated. The number of roads constructed (km), roads rehabilitated (km) as well as the number of direct project beneficiaries and the number of person-month will increase with the added target values for Tataouine. In all cases, these will be structured in the same way as those for the existing sections in the project. 10. Amending the disbursement category description to include consultant services for Component 2.2 as part of the loan: Due to exchange rate fluctuations, the cost of Sub-Component 2.2 is likely to exceed the amount granted from the Middle East and North Africa Region-wide Technical Assistance Multi-Donor Trust Fund. The client has indicated its willingness to cover any shortfall with the proceeds of the loan. The loan consists of a single disbursement category of “Goods, works, non-consulting services, and consultants’ services and training for Parts I.1, I.2 and I.3 of the Project”. The description will be amended by adding “training” as well as Part I.5 (Tataouine) and Part 2.2 (technical assistance). III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Reallocation between Disbursement Categories ✔ Safeguard Policies Triggered ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Components and Cost ✔ Loan Closing Date(s) ✔ The World Bank TN-Road Transport Corridors (P146502) Cancellations Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-85190-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: GO, W, NON CS, CS Parts I.1,I.2,I.3, I.5 178,253,250.00 65,647,439.62 178,153,250.00 87.00 87.00 iLap Category Sequence No: 3 Current Expenditure Category: GO, Training, NON CS, CS Part II.2 0.00 0.00 100,000.00 100 Total 178,253,250.00 65,647,439.62 178,253,250.00 OPS_DETAILEDCHANGES_COMPLIANCE_TABLE COMPLIANCE The World Bank TN-Road Transport Corridors (P146502) Safeguard Policies Safeguard Policies Triggered Current Proposed Environmental Assessment (OP) (BP 4.01) Yes Yes Performance Standards for Private Sector No No Activities OP/BP 4.03 Natural Habitats (OP) (BP 4.04) No Yes Forests (OP) (BP 4.36) Yes Yes Pest Management (OP 4.09) No No Physical Cultural Resources (OP) (BP 4.11) No No Indigenous Peoples (OP) (BP 4.10) No No Involuntary Resettlement (OP) (BP 4.12) Yes Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP No No 7.50) Projects in Disputed Areas (OP) (BP 7.60) No No . The World Bank TN-Road Transport Corridors (P146502) . Results framework COUNTRY: Tunisia TN-Road Transport Corridors Project Development Objectives(s) The objectives of the Project are: (i) to reduce transportation cost and time and improve road safety on select road corridors between lagging regions and more developed areas in the territory of Tunisia; and (ii) to strengthen the capacity of the Ministry of Equipment, Habitat and Land Planning in road asset management. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Reduce transportation cost and time and improve road safety on select roads to lagging regions Reduction of vehicle operating costs on the roads improved by 0.00 0.00 the project (Percentage) (Percentage) RN12 corridor (Percentage - Sub-Type: Breakdown) 0.00 6.10 (Percentage) RR133 corridor (Percentage - Sub-Type: Breakdown) 0.00 16.40 (Percentage) RN4 corridor (Percentage - Sub-Type: Breakdown) 0.00 15.10 (Percentage) Tataouine Corridor (Percentage) 0.00 36.30 Action: This indicator is New Reduction in travel time on the roads improved by the project 0.00 0.00 (Percentage) (Percentage) RN12 corridor (Percentage - Sub-Type: Breakdown) 0.00 22.10 (Percentage) The World Bank TN-Road Transport Corridors (P146502) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target RR133 corridor (Percentage - Sub-Type: Breakdown) 0.00 25.00 (Percentage) RN4 corridor (Percentage - Sub-Type: Breakdown) 0.00 30.00 (Percentage) Tataouine Corridor (Percentage) 0.00 27.60 Action: This indicator is New Number of traffic-related fatalities per hundred million vehicle- kilometres travelled (vkt) on the roads improved by the project 0.00 0.00 (Nu mber) (Number) RN12 corridor (Number) 5.30 3.70 RR133 corridor (Number - Sub-Type: Breakdown) (Number) 7.00 4.90 RN4 corridor (Number - Sub-Type: Breakdown) (Number) 4.30 3.00 Tataouine Corridor (Number) 14.80 10.40 Action: This indicator is New PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Road Corridor Improvement Roads constructed, non-rural (Kilometers) 0.00 185.20 Roads rehabilitated, Non-rural (Kilometers) 0.00 16.00 The World Bank TN-Road Transport Corridors (P146502) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Person-months of employment created during construction 0.00 47,968.00 (Number) (Number) Direct project beneficiaries (Number) 0.00 648,669.00 Female beneficiaries (Percentage) 0.00 50.00 Grievances registered related to delivery of project benefits that are actually addressed within the stipulated timeframe 0.00 100.00 (percentage) – disaggregated by gender of the complainant (Percentage) Road Network Management Improvement Preparation and execution of a 5-year investment and No Yes maintenance plan using HDM-4 (Yes/No) Feasibility Study on performance-based contracting completed and technical specification for a pilot project in lagging regions No Yes validated (Yes/No) Use of road asset management principles by DGPC for No Yes maintenance budget assessment (Yes/No) Percentage of the secondary road network (traffic and state of 0.00 100.00 roads) managed using HDM-4 (Percentage) Available budget for routine maintenance of classified roads 1,542.00 1,927.00 (TND/km of classified roads) (Amount(USD)) IO Table SPACE |||||||||| The World Bank TN-Road Transport Corridors (P146502)