The World Bank National Highways Interconnectivity Improvement Project (P121185) REPORT NO.: RES36611 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NATIONAL HIGHWAYS INTERCONNECTIVITY IMPROVEMENT PROJECT APPROVED ON OCTOBER 29, 2013 TO REPUBLIC OF INDIA TRANSPORT SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Senior Global Practice Director: Guangzhe Chen Practice Manager/Manager: Shomik Raj Mehndiratta Task Team Leader: Pratap Tvgssshrk The World Bank National Highways Interconnectivity Improvement Project (P121185) ABBREVIATIONS AND ACRONYMS PDO Project Development Objective IP Implementation Progress ERP Enterprise Resource Planning IRC Indian Roads Congress NH National Highway MoRTH Ministry of Road Transport and Highways NHAI National Highways Authority of India NHIDCL National Highways & Infrastructure Development Corporation Ltd TA Technical Assistance DEA Department of Economic Affairs The World Bank National Highways Interconnectivity Improvement Project (P121185) BASIC DATA Product Information Project ID Financing Instrument P121185 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 29-Oct-2013 30-Jun-2019 Organizations Borrower Responsible Agency Department of Economic Affairs, Ministry of Finance Ministry of Road Transport and Highways Project Development Objective (PDO) Original PDO The development objective of the project is to improve the National Highway network connectivity to less-developed areas and low-income states and enhance the institutional capacity of MoRTH to better manage the highway network under the purview of the Ministry. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-83010 29-Oct-2013 01-Jul-2014 05-Aug-2014 30-Jun-2019 500.00 247.07 252.93 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank National Highways Interconnectivity Improvement Project (P121185) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Overall disbursement as on April 9, 2019 is US$ 247.07 million i.e. approximately 49.4%. Currently, both the Project Development Objective (PDO) and the Implementation Progress (IP) are rated Moderately Satisfactory. Some of the activities envisaged under the project (upgrading of about 275 km of highways, implementation of ERP, revision of IRC codes and standards on road safety, development and implementation of a nation-wide Road Accident Database Management System etc.) will only be partially completed by the project closing date and at this stage, it is estimated that completion will take a further twelve months. The project is on course to achieve the PDO, but because of the delays in implementation of some of the activities, the PDO is expected to be only partially achieved by the loan closing date. The project has loan savings primarily because of the depreciation of the Indian Rupee vis-à-vis the US dollar and lower than estimated costs towards price contingencies during the implementation of the project. Component A: Road Improvement & Maintenance Component: – Upgrading and maintenance through item-rate contracts (about 403 km, 5 packages): Of the total 5 contracts, three have been completed, works are in advanced stage of completion in one contract, and the remaining one contract package – in Odisha (NH 217) – is progressing very slowly (physical progress of 51.3%). – Upgrading and maintenance through EPC Contracts (about 686 km, 10 packages): Of a total of 10 contracts, three have been completed, works are in an advanced stage in three contracts, and the remaining four contract packages – all in Bihar (NH 104 Lot 1, 2 and 3 and NH 106) – are progressing very slowly and works will not be completed by the project closing date. Component B: Institutional Development Component: This component seeks to enhance the institutional capacity of MoRTH to better manage the non-NHDP network through supporting specific interventions in five areas, viz., process improvements, network monitoring and management, financing, governance and accountability, and training. – Some of the envisaged activities for comprehensive improvement of work processes are ongoing. These include the development and implementation of an Enterprise Resource Planning (ERP) and updating of MoRTH’s Standard Data Book for Analysis of Rates and likely to be completed by the project closing date. The ERP will improve the work processes in the MoRTH, the National Highways Authority of India (NHAI) and the National Highways & Infrastructure Development Corporation Ltd. (NHIDCL). MoRTH took up the remaining envisaged areas - viz., works-execution-delegation framework, project preparation and implementation manual - through a study on “Organization and Process Transformation in MoRTH and its implementing agencies” funded under another World Bank funded project – NHAI-TA. – For achieving improvements in network monitoring and management, an Asset Management System has been developed under the Bank-funded NHAI TA. The system needs to be populated with the data for the entire non- NHDP network. This activity, which was originally envisaged under the project, is taken up by the MoRTH through the NHAI. – In the areas of governance & accountability, several envisaged actions have been undertaken. These include: (a) use of e-procurement in project works; (b) effective monitoring of procurement plan/timelines; (c) establishment of third-party audit of all project works; (d) periodic monitoring of Readiness Criteria to ensure The World Bank National Highways Interconnectivity Improvement Project (P121185) higher level of readiness; (e) disclosure of project related information and documents; and (f) review of the project by high-level Project Steering Committee. Component C: Road Safety Component: This component pursues the objective of improving road safety through: (i) updating Indian standards and regulations related to road safety; (ii) improving road accident data collection and analysis at central and state levels through implementation of the Road Accident Database Management System (RADMS) in project states; (iii) strengthening road safety capacity at the central level; and (iv) training. – To implement this component in a comprehensive manner, the MoRTH has procured an agency i.e. Asian Institute of Transport Development. Several training and capacity building activities are being conducted through this agency. Procurements of key consultancies on revision of the IRC codes and standards related to road safety, and development and implementation of a nation-wide Road Accident Database Management System are delayed and currently in progress. The MoRTH also intends to pilot safety enforcement mechanism in about 1200 km of highways through reallocation of $30 million proceeds from the works. Department of Economic Affairs (DEA) has now recommended (a) cancellation of US$ 49.99 million of loan savings, (b) reallocation of loan proceeds, and (c) extension of the closing date by 12 months. Given the time needed to complete ongoing works, a 12-month extension will allow for completion of remaining works as well as enable substantial achievement of the project targets and project development objectives. II. DESCRIPTION OF PROPOSED CHANGES The following changes are proposed: (i) Cancellation of US$ 49.99 million from the loan. (ii) Extension of the Loan Closing Date from June 30, 2019 to June 30, 2020. (iii) Reallocation of loan proceeds I. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ The World Bank National Highways Interconnectivity Improvement Project (P121185) Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Road Improvement and Road Improvement and 1106.40 Revised 1001.71 Maintenance Component Maintenance Component Institutional Development Institutional Development 20.90 No Change 20.90 Component Component Road Safety Component 17.50 Revised Road Safety Component 72.20 TOTAL 1,144.80 1,094.81 The World Bank National Highways Interconnectivity Improvement Project (P121185) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-83010 Effective 30-Jun-2019 30-Jun-2020 30-Oct-2020 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation LOAN Disburs IBRD- 500,000,000.0 450,010,000.0 RESTRUCTUR ing&Re USD 49,990,000.00 02-Apr-2019 83010-001 0 0 ING, COST paying SAVINGS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-83010-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: Wrks under Sub comp A.1 A.2 of Proj 442,100,000.00 228,216,627.77 348,350,000.00 50.00 50.00 iLap Category Sequence No: 2 Current Expenditure Category: Gds,NCS,CS,Trng under A.4 B C of pr 56,650,000.00 17,608,231.68 100,410,000.00 80.00 80.00 Total 498,750,000.00 245,824,859.45 448,760,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes The World Bank National Highways Interconnectivity Improvement Project (P121185) Year Current Proposed 2014 10,000,000.00 0.00 2015 50,000,000.00 21,090,453.37 2016 100,000,000.00 59,159,513.58 2017 150,000,000.00 78,994,961.23 2018 140,000,000.00 44,871,118.27 2019 50,000,000.00 58,643,953.60 2020 0.00 186,000,000.00 .