Page  1
Document 
of 
The 
World 
Bank 
Report 
No. 
P7582-D 
JI 
INTERNATIONAL 
DEVELOPMENT 
ASSOCIATION 
PROPOSED 
SUPPLEMENTAL 
CREDIT 
OF 
SDR 
4.5 
MILLION 
(US$6.0 
MILLION 
EQUIVALENT) 
TO 
THE 
REPUBLIC 
OF 
DJIBOUTI 
FOR 
THE 
INTERNATIONAL 
ROAD 
CORRIDOR 
REHABILITATION 
PROJECT 
April 
2,2003 
Finance, 
Private 
Sector 
and 
Infrastructure 
Department 
Middle 
East 
and 
North 
Africa 
Region 
Page  2
CURRENCY 
EQUIVALENT 
AIDS 
CAS 
DCA 
EMP 
ERA 
EU 
ICB 
ICR 
IDA 
MOE 
NCB 
PM-U 
SDR 
Currency 
Unit 
= 
US$l 
Djibouti 
Franc 
(DJF) 
180.700 
DJF 
(as 
of 
Jan. 
07,2003) 
WEIGHTS 
AND 
MEASURES 
Metric 
System 
FISCAL 
YEAR 
January 
1 
- 
December 
31 
ABBREVIATIONS 
AND 
ACRONYMS 
Acquired 
Immune 
Deficiency 
Syndrome 
Country 
Assistance 
Strategy 
Development 
Credit 
Agreement 
Environmental 
Management 
Plan 
Ethiopian 
Road 
Authority 
European 
Union 
Human 
Immunodeficiency 
Virus 
International 
Competitive 
Bidding 
Implementation 
Completion 
Report 
International 
Development 
Association 
Ministry 
of 
Equipment 
and 
Transport 
National 
Competitive 
Bidding 
Project 
Management 
Unit 
Special 
Drawing 
Rights 
Vice 
President: 
Jean-Louis 
Sarbib 
Country 
Director: 
Mahmood 
Ayub 
Sector 
Manager: 
Hedi 
Larbi 
Task 
Team 
Leader 
Andreas 
Schliessler 
Page  3
THE 
REPUBLIC 
OF 
DJIBOUTI 
SUPPLEMENTAL 
CREDIT 
TO 
THE 
INTERNATIONAL 
ROAD 
CORRIDOR 
REHABILITATION 
PROJECT 
, 
PROJECT 
SUIWMARY 
Borrower: 
Government 
of 
Djibouti 
Implementing 
Agencies: 
Ministry 
of 
Equipment 
and 
Transport 
Beneficiaries: 
Ministry 
of 
Equipment 
and 
Transport, 
International 
and 
local 
civil 
works 
contractors, 
International 
Food 
Aid 
Agencies, 
Ethiopian 
foreign 
trade, 
Port 
of 
Djibouti, 
Local 
and 
foreign 
transporters 
Credit 
Amount: 
SDR 
4.5 
million 
(US$6.0 
million 
equivalent) 
Terms: 
Standard 
IDA 
terms, 
with 
40 
years 
maturity 
Financing 
Plan: 
Government: 
US$50,000 
IDA: 
US$6.00 
million 
Economic 
Rate 
of 
Return: 
55 
% 
Poverty 
Category: 
Not 
applicable 
Project 
ID 
Number: 
PO82134 
(Supplemental 
Credit) 
PO69930 
(Original 
Credit) 
Map: 
IBRD30713 
This 
memorandum 
is 
based 
on 
the 
findings 
of 
the 
supervision 
missions 
of 
the 
ongoing 
operation 
and 
an 
appraisal 
and 
negotiations 
conducted 
through 
communication 
exchanges 
in 
early 
February 
2003. 
The 
Bank 
supervision 
team 
includes, 
Messrs. 
Andreas 
Schliessler 
(Senior 
Transport 
Economist, 
Team 
Leader); 
Robert 
Fishbein 
(Institutional 
and 
Social 
Specialist, 
Consultant); 
Mohammed 
Dali1 
Essakali 
(Junior 
Professional 
Associate, 
Engineer) 
and 
Mrs. 
Rafika 
Chaouali 
(Sr. 
Financial 
Management 
Specialist). 
Page  4
Page  5
INTERNATIONAL 
DEVELOPMENT 
ASSOCIATION 
REPORT 
FOR 
A 
PROPOSED 
CREDIT 
TO 
THE 
REPUBLIC 
OF 
DJIBOUTI 
FOR 
SUPPLEMENTAL 
FINANCING 
TO 
THE 
INTERNATIONAL 
ROAD 
CORRIDOR 
REHABILITATION 
PROJECT 
1 
. 
I 
submit 
for 
your 
approval 
the 
following 
memorandum 
and 
recommendation 
on 
a 
proposed 
development 
credit 
to 
the 
Republic 
of 
Djibouti, 
for 
SDR 
4.5 
million 
(US$6.0 
million 
equivalent). 
The 
proposed 
credit 
is 
needed 
to 
provide 
supplementary 
financing 
for 
the 
ongoing 
International 
Road 
Corridor 
Rehabilitation 
Project. 
It 
is 
crucial 
to 
complete 
the 
rehabilitation 
of 
the 
road 
which 
connects 
the 
Port 
of 
Djibouti 
with 
neighboring 
Ethiopia, 
which 
fully 
depends 
on 
the 
Djibouti 
port 
for 
all 
foreign 
maritime 
trade, 
and 
for 
the 
massive 
and 
recurrent 
shipments 
of 
food 
aid 
to 
millions 
of 
Ethiopians. 
The 
supplementary 
financing 
is 
needed 
to 
cover 
higher 
than 
expected 
costs 
for 
physical 
road 
rehabilitation 
works, 
and 
ultimately 
to 
allow 
the 
existing 
International 
Road 
Corridor 
Rehabilitation 
Project 
to 
reach 
its 
original 
development 
objectives. 
The 
proposed 
credit 
would 
be 
on 
standard 
IDA 
terms, 
with 
a 
maturity 
of 
40 
years. 
Background 
2 
Country 
Context 
and 
Sector 
Background. 
Following 
the 
outbreak 
of 
arrned 
conflict 
between 
Ethiopia 
and 
Eritrea 
in 
1998, 
Djibouti 
has 
served 
as 
the 
primary 
transit 
port 
for 
landlocked 
Ethiopia. 
The 
port 
of 
Assab, 
on 
the 
Eritrean 
coast, 
formerly 
played 
this 
role, 
first 
as 
part 
of 
Ethiopia, 
and 
then 
under 
an 
agreement 
between 
Ethiopia 
and 
Eritrea 
following 
Eritrean 
independence 
in 
1991. 
The 
road 
corridor 
between 
Addis 
Ababa 
and 
Assab, 
which 
passes 
some 
20 
km 
from 
the 
Djibouti 
border, 
was 
upgraded 
and 
improved 
for 
that 
purpose. 
With 
the 
sudden 
shift 
of 
Ethiopian 
traffic 
to 
Djibouti 
port 
in 
1998, 
the 
20-year 
old 
road 
connection 
between 
Djibouti 
port 
and 
the 
Addis 
- 
Assab 
road 
(via 
Dikhil 
and 
Galafi, 
see 
Map 
No. 
30713 
attached) 
received 
a 
very 
high 
level 
of 
traffic 
of 
heavy 
vehicles 
(roughly 
700 
trucks 
per 
day) 
it 
was 
not 
in 
a 
condition 
to 
carry. 
While 
the 
Ethiopian 
Road 
Authority 
(ERA) 
upgraded 
the 
20-km 
spur 
road 
up 
to 
the 
Djibouti 
border 
at 
the 
town 
of 
Galafi, 
the 
221~km 
highway 
between 
Djibouti 
port 
and 
Galafi 
deteriorated 
steadily 
as 
a 
result 
of 
heavy 
traffic 
and 
inadequate 
maintenance. 
The 
European 
Union 
agreed 
in 
principle 
to 
finance 
a 
major 
upgrading 
project 
for 
the 
Djibouti 
- 
Addis 
transport 
corridor, 
but 
it 
was 
clear 
that 
this 
project 
would 
not 
materialize 
for 
a 
number 
of 
years. 
In 
2000 
a 
rapid 
emergency 
solution 
had 
to 
be 
found 
in 
order 
to 
assure 
that 
Ethiopia’s 
maritime 
trade 
would 
not 
be 
severely 
disrupted. 
A 
particular 
threat 
existed 
(and 
continues 
to 
exist) 
for 
the 
massive 
shipments 
of 
emergency 
food 
aid 
to 
millions 
of 
starving 
Ethiopians 
for 
whom 
the 
Djibouti 
- 
Galafi 
road 
is 
virtually 
their 
lifeline. 
In 
response, 
and 
based 
on 
a 
request 
from 
the 
Government 
of 
Djibouti, 
IDA 
prepared 
the 
ongoing 
International 
Road 
Corridor 
Rehabilitation 
Project 
as 
an 
emergency 
operation. 
In 
a 
broader 
context, 
the 
port 
of 
Djibouti 
is 
by 
far 
the 
country’s 
most 
important 
economic 
activity, 
and 
in 
the 
medium 
and 
long 
term, 
the 
port’s 
ability 
to 
compete 
with 
other 
ports 
depends 
on 
a 
good 
road 
connection 
with 
its 
hinterland, 
including 
Ethiopia. 
Page  6
-2 
- 
3 
Country 
Assistance 
Strategy: 
The 
Bank’s 
first 
CAS 
for 
Djibouti 
was 
approved 
in 
December 
2000 
and 
covers 
FY 
2001-2003. 
It 
was 
formulated 
in 
the 
dual 
context 
of 
enormous 
economic 
difficulties 
and 
deepening 
poverty, 
and 
a 
new 
commitment 
by 
the 
Government 
to 
address 
them. 
Djibouti’s 
main 
challenge 
is 
reversing 
the 
trend 
of 
declining 
per 
capita 
incomes 
and 
improving 
the 
country’s 
low 
social 
indicators 
-- 
school 
enrolment, 
maternal 
and 
infant 
mortality, 
and 
morbidity. 
The 
main 
constraints 
facing 
Djibouti 
are 
poor 
physical 
and 
human 
resource 
base, 
in 
addition 
to 
the 
constraints 
and 
vulnerabilities 
common 
to 
most 
small 
states-- 
vulnerability 
to 
external 
developments, 
limited 
scope 
for 
diversification, 
and 
limited 
scope 
for 
competition 
and 
economies 
of 
scale. 
The 
CAS 
recognizes 
that 
Djibouti’s 
most 
important 
asset 
is 
its 
port 
and 
strategic 
location. 
It 
states 
that 
the 
four-fold 
increase 
in 
port 
traffic 
since 
mid-1998, 
derived 
from 
the 
conflict 
between 
Ethiopia 
and 
Eritrea, 
has 
opened 
new, 
as 
yet 
not 
fully 
exploited, 
opportunities 
for 
investment 
and 
growth. 
Djibouti’s 
open 
economic 
policies 
with 
liberal 
trade 
and 
exchange 
system, 
which 
is 
free 
of 
capital 
or 
exchange 
restrictions, 
and 
relative 
stability 
should 
help 
in 
that 
effort. 
The 
CAS 
focused 
on 
two 
areas. 
First, 
direct 
interventions 
to 
reduce 
poverty, 
through 
(i) 
reversing 
the 
low 
educational 
enrolment 
rates; 
(ii) 
addressing 
health 
needs, 
particularly, 
the 
epidemic 
incidence 
of 
HIV/AIDS 
and 
tuberculosis; 
and 
(iii) 
preparing 
targeted 
assistance 
programs 
to 
minimize 
the 
impact 
of 
adjustment. 
Second, 
the 
CAS 
proposed 
measures 
to 
provide 
growth 
and 
employment 
generation, 
supported 
through 
structural 
reforms 
to 
restore 
competitiveness 
and 
private 
investments, 
and 
to 
develop 
port 
infrastructure 
services 
for 
participation 
in 
the 
increased 
regional 
transit. 
4 
Project 
Objectives 
and 
Description. 
The 
ongoing 
International 
Road 
Corridor 
Rehabilitation 
Project 
was 
approved 
on 
June 
22, 
2000 
and 
became 
effective 
in 
December 
2000. 
The 
objective 
of 
the 
Project 
is 
to 
secure 
in 
the 
medium-term, 
an 
acceptable 
level 
of 
service 
on 
the 
Djibouti-Galafi 
Road, 
which 
constitutes 
Djibouti 
port’s 
transit 
corridor 
to 
Ethiopia, 
during 
the 
period 
when 
a 
long-term 
transport 
corridor 
improvement 
scheme 
is 
being 
developed 
and 
implemented 
by 
the 
Ethiopian 
and 
Djibouti 
governments, 
with 
assistance 
from 
the 
European 
Union. 
The 
IDA 
credit 
of 
US$ 
15.0 
million 
equivalent 
mainly 
finances 
physical 
road 
works, 
although 
institutional 
strengthening 
activities 
are 
also 
included. 
The 
original 
intention 
was 
to 
carry 
out 
limited 
and 
low-cost 
emergency 
works, 
simply 
to 
make 
the 
road 
“survive” 
until 
the 
EU- 
financed 
corridor 
project 
is 
implemented. 
Current 
closing 
date 
is 
December 
31,2004, 
which 
will 
not 
be 
affected 
by 
the 
supplemental 
credit. 
5 
Implementation 
Status. 
Initial 
delays 
due 
to 
procurement 
issues 
have 
been 
overcome 
and 
project 
implementation 
is 
progressing 
well. 
Physical 
works 
are 
being 
carried 
out 
satisfactorily 
mostly 
by 
foreign 
and 
local 
contractors. 
Tendering 
of 
non-physical 
activities, 
such 
as 
the 
preparation 
of 
a 
transport 
sector 
strategy, 
are 
completed 
and 
activities 
are 
either 
underway 
or 
about 
to 
start. 
The 
project 
implementation 
unit 
is 
working 
satisfactorily. 
Rationale 
for 
the 
Supplemental 
Credit 
6 
. 
The 
proposed 
supplemental 
credit 
will 
finance 
exclusively 
a 
cost 
overrun 
for 
physical 
works 
on 
the 
Djibouti 
- 
Galafi 
road. 
Other 
parts 
of 
the 
project 
will 
not 
be 
affected 
in 
any 
way. 
The 
reason 
for 
the 
cost 
overrun 
is- 
closely 
related 
to 
changes 
in 
the 
scope 
and 
timing 
of 
the 
Page  7
-3 
- 
proposed 
EU-financed 
project 
to 
upgrade 
the 
Addis 
- 
Djibouti 
corridor. 
7 
Changes 
in 
scope 
of 
works. 
When 
the 
ongoing 
IDA-financed 
International 
Road 
Corridor 
Rehabilitation 
Project 
was 
prepared, 
it 
seemed 
clear 
that 
the 
future 
EU-financed 
project 
would 
eventually 
upgrade 
the 
same 
Djibouti 
- 
Galafi 
road, 
and 
that 
in 
the 
meantime, 
the 
IDA-financed 
project 
would 
only 
carry 
out 
(i) 
limited 
rehabilitation 
works 
on 
the 
100&m 
section 
between 
Dikhil 
and 
G&z! 
at 
a 
cost 
of 
roughly 
US$ 
120,000 
per 
km, 
and 
(ii) 
maintenance 
and 
minor 
repair 
works 
on 
the 
Arta 
- 
Dikhil 
section 
of 
the 
road, 
at 
an 
average 
cost 
of 
some 
US$35,000 
per 
km. 
However, 
the 
feasibility 
study 
for 
the 
EU 
project 
has 
now 
resulted 
in 
a 
decision 
by 
the 
Government 
of 
Ethiopia 
and 
the 
EU 
to 
upgrade 
the 
so-called 
“southern 
corridor”, 
which 
in 
Djibouti 
goes 
through 
Ali 
Sabieh 
and 
then 
southward 
into 
Ethiopia 
(see 
enclosed 
map). 
Much 
of 
the 
present 
main 
corridor 
road 
will 
hence 
become 
a 
secondary 
road 
corridor, 
which 
will 
nevertheless 
be 
an 
important 
link 
between 
the 
Port 
of 
Djibouti 
and 
the 
northern 
parts 
of 
Ethiopia 
(where 
much 
of 
the 
food 
aid 
goes). 
For 
the 
Dikhil- 
GalaJi 
road 
section, 
there 
will 
thus 
not 
be 
a 
follow-on 
project, 
and 
the 
original 
decision 
to 
carry 
out 
only 
a 
limited 
rehabilitation 
with 
a 
short 
lifespan 
had 
to 
be 
replaced 
by 
a 
more 
thorough 
rehabilitation, 
at 
an 
average 
cost 
of 
some 
US$ 
150,000 
per 
km. 
The 
additional 
cost 
for 
the 
Dikhil 
- 
Galafi 
road 
section 
will 
thus 
be 
US$ 
3.0 
million 
equivalent 
(including 
construction 
supervision). 
For 
the 
Arta 
- 
Dikhil 
section, 
the 
3-year 
delay 
of 
the 
EU-financed 
project 
(to 
start 
in 
2005) 
will 
make 
it 
necessary 
to 
carry 
out 
more 
extensive 
maintenance 
and 
emergency 
repair 
works 
than 
originally 
foreseen, 
and 
the 
cost 
per 
km 
will 
be 
some 
US$ 
44,000 
more 
per 
km 
than 
originally 
expected, 
which 
also 
give 
an 
additional 
cost 
of 
US$ 
3.0 
million. 
The 
total 
additional 
financing 
requirement 
is 
thus 
US$ 
6.0 
million, 
which 
will 
be 
covered 
through 
the 
supplemental 
credit. 
8 
. 
The 
proposed 
operation 
meets 
the 
requirements 
of 
OP 
13.20 
on 
Supplemental 
Financing: 
0 
a 
The 
cost 
overrun 
is 
beyond 
the 
control 
of 
the 
borrower. 
(i) 
The 
proposed 
EU- 
financed 
project 
to 
upgrade 
the 
Addis 
- 
Djibouti 
corridor 
is 
delayed 
by 
3 
years, 
due 
to 
policy 
changes 
in 
Ethiopia 
and 
at 
the 
EU. 
(ii) 
Contrary 
to 
earlier 
agreements, 
the 
EU 
corridor 
project 
will 
not 
cover 
the 
Dikhil 
- 
Galafi 
road 
section. 
(iii) 
Due 
to 
heavy 
traffic 
to 
Ethiopia, 
the 
road 
section 
between 
Arta 
and 
Dikhil 
is 
deteriorating 
at 
a 
much 
faster 
pace 
than 
anticipated, 
and 
more 
maintenance 
and 
emergency 
repair 
works 
have 
to 
be 
made 
quickly, 
otherwise 
the 
road 
section 
will 
collapse. 
04 
The 
ongoing 
project 
is 
being 
implemented 
in 
compliance 
with 
covenants. 
Overall 
project 
implementation 
is 
rated 
satisfactory. 
0 
c 
It 
is 
impossible 
to 
reduce 
the 
scope 
of 
the 
project 
to 
fit 
the 
available 
resources. 
If 
the 
supplemental 
credit 
is 
not 
made 
available, 
the 
ongoing 
International 
Road 
Corridor 
Rehabilitation 
Project 
will 
not 
reach 
its 
Development 
Objective. 
69 
The 
borrower 
is 
unable 
to 
finance 
the 
additional 
project 
cost, 
or 
to 
mobilize 
funding 
from 
other 
sources, 
and 
is 
now 
seeking 
IDA 
support. 
0 
e 
A 
new 
freestanding 
new 
loan 
would 
not 
be 
a 
sensible 
option. 
Page  8
-4 
- 
(f> 
The 
borrower 
has 
shown 
a 
clear 
commitment 
to 
the 
project, 
and 
the 
implementing 
agency 
has 
demonstrated 
reasonable 
competence 
in 
carrying 
it 
out. 
9 
Bertefits: 
The 
main 
benefit 
of 
the 
proposed 
Supplemental 
Credit 
(and 
of 
the 
ongoing 
International 
Road 
Corridor 
Rehabilitation 
Project) 
is 
to 
maintain 
the 
competitive 
advantage 
of 
the 
Port 
of 
Djibouti, 
which 
is 
Djibouti’s 
only 
significant 
asset 
and 
economic 
activity. 
Another 
important 
benefit 
is 
that 
food 
aid 
shipments 
to 
Ethiopia 
can 
be 
safeguarded, 
which 
would 
not 
be 
possible 
if 
the 
works 
on 
the 
Djibouti 
- 
Galafi 
road 
were 
not 
completed 
because 
of 
insufficient 
funding. 
Description 
of 
the 
Proposed 
Supplemental 
Credit 
10 
. 
The 
proposed 
Supplemental 
Credit 
will 
fund 
(i) 
the 
completion 
of 
ongoing 
road 
rehabilitation 
works 
on 
the 
Dikhil 
- 
Galafi 
road 
section, 
(ii) 
emergency 
repairs 
and 
maintenance 
on 
the 
Arta 
- 
Dikhil 
road 
section, 
and 
(iii) 
supervision 
of 
the 
above 
works 
by 
engineering 
consultants. 
11 
Project 
Financing: 
The 
additional 
project 
cost, 
to 
be 
covered 
through 
the 
supplemental 
credit, 
is 
estimated 
at 
US$6.05 
million 
equivalent 
of 
which 
an 
IDA 
Supplemental 
Credit 
of 
US$6.0 
million 
equivalent 
is 
proposed. 
The 
Government 
contribution 
is 
estimated 
at 
US$50,000 
equivalent. 
It 
is 
to 
be 
noted 
that 
the 
Government’s 
contribution 
to 
the 
ongoing 
International 
Road 
Corridor 
Rehabilitation 
Project 
is 
relatively 
high 
with 
US$2.35 
million. 
Given 
the 
extremely 
tight 
budgetary 
situation 
in 
Djibouti, 
it 
is 
unrealistic 
that 
the 
Government 
counterpart 
financing 
for 
the 
supplemental 
credit 
could 
exceed 
the 
above 
amount. 
The 
breakdown 
of 
the 
project’s 
cost, 
project 
financing 
plan 
and 
disbursement 
schedule 
is 
shown 
in 
Annex 
1. 
12 
Implementation 
Arrangements 
and 
Procurement: 
The 
proposed 
Supplemental 
Credit 
does 
not 
require 
additional 
implementation 
capacity 
beyond 
what 
is 
already 
in 
place, 
and 
a 
modification 
of 
the 
Project 
Implementation 
Plan 
is 
not 
necessary, 
except 
for 
an 
extension 
of 
the 
period 
for 
the 
execution 
of 
road 
works. 
The 
Supplemental 
Credit 
will 
be 
subject 
to 
the 
same 
monitoring 
and 
reporting 
requirements 
of 
the 
ongoing 
project. 
Procurement 
and 
disbursement 
procedures 
would 
follow 
the 
procedures 
outlined 
in 
the 
original 
Credit 
Agreement. 
The 
Supplemental 
Credit 
will 
be 
fully 
executed 
in 
16 
months 
and 
closed 
in 
28 
months, 
at 
the 
same 
time 
as 
the 
original 
credit 
(closing 
date 
December 
31,2004). 
13 
Accounting, 
financial 
reporting 
and 
auditing 
arrangements: 
The 
Project 
Management 
Unit 
has 
established 
an 
acceptable 
accounting 
and 
reporting 
system 
for 
the 
project, 
including 
arrangements 
for 
audits. 
The 
financial 
management 
capacity 
of 
the 
PMU 
has 
recently 
been 
strengthened 
through 
a 
technical 
assistance 
contract 
with 
a 
consulting 
firm; 
this 
has 
allowed 
to 
bring 
the 
accounting 
system 
fully 
up-to-date. 
The 
Supplemental 
Credit 
will 
be 
executed 
in 
accordance 
with 
the 
procedures 
which 
have 
been 
prepared 
and 
put 
in 
place 
under 
the 
ongoing 
International 
Road 
Corridor 
Rehabilitation 
Project. 
These 
procedures 
will 
continue 
to 
be 
reviewed 
during 
supervision 
missions 
to 
ascertain 
their 
continued 
applicability. 
Page  9
-5 
- 
14 
. 
The 
same 
Special 
Account 
as 
for 
the 
original 
credit 
will 
be 
used 
and 
maintained 
in 
a 
commercial 
Bank 
acceptable 
to 
IDA 
and 
managed 
by 
the 
Project 
Implementation 
Unit. 
Independent 
auditors 
acceptable 
to 
IDA 
will 
continue 
to 
audit 
the 
use 
of 
all 
IDA 
funds 
available 
under 
the 
credit, 
including 
the 
Special 
Account 
and 
the 
statements 
of 
expenditures. 
Audit 
reports 
will 
be 
submitted 
to 
IDA 
no 
later 
than 
six 
months 
after 
the 
end 
of 
the 
fiscal 
year. 
There 
are 
no 
overdue 
audit 
reports, 
and 
the 
most 
recent 
audit 
report 
did 
not 
raise 
any 
substantial 
issues 
which 
are 
not 
already 
being 
addressed. 
The 
format 
and 
the 
frequency 
of 
periodic 
reporting 
will 
be 
maintained 
as 
defined 
in 
the 
project 
implementation 
manual. 
An 
Implementation 
Completion 
Report 
(ICR) 
will 
be 
prepared 
within 
six 
months 
after 
Credit 
closing. 
15 
Environmental 
and 
Social 
Aspects: 
As 
part 
of 
the 
preparation 
of 
the 
original 
project, 
an 
Environmental 
and 
Social 
Assessment 
was 
conducted 
and 
concluded 
that 
the 
rehabilitation 
of 
the 
International 
road 
Corridor 
is 
not 
expected 
to 
generate 
any 
significant 
environmental 
and 
social 
problems 
since 
it 
represents 
the 
rehabilitation 
of 
an 
existing 
road 
only, 
with 
no 
changes 
in 
road 
width 
or 
alignment. 
Nevertheless, 
an 
Environmental 
Management 
Plan 
(EMP) 
has 
been 
satisfactorily 
prepared 
for 
the 
project 
in 
coordination 
with 
the 
Ministry 
of 
Habitat, 
Urban 
Development, 
Environment 
and 
Territorial 
Planning 
(MOE) 
to 
mitigate 
potential 
construction 
and 
operation 
period 
impacts 
and 
to 
address 
road 
safety 
issues. 
The 
last 
IDA 
supervision 
mission 
included 
an 
environmental 
expert 
who 
concluded 
that 
the 
EMP 
is 
being 
implemented 
satisfactorily, 
and 
that 
significant 
social 
or 
environmental 
problems 
do 
not 
exist. 
Provisions 
have 
been 
made 
in 
the 
project 
design 
and 
budget 
to 
continue 
to 
support 
the 
follow-up 
on 
the 
EMP. 
16 
Sustainability: 
The 
Bank 
is 
presently 
supporting 
the 
Government 
to 
develop 
a 
transport 
sector 
strategy 
with 
special 
emphasis 
on 
sustainable 
arrangements 
for 
future 
maintenance 
of 
the 
Djibouti 
portion 
of 
the 
International 
Road 
Corridor 
between 
Addis 
and 
Djibouti. 
It 
seems 
likely 
that 
a 
maintenance 
concession 
will 
be 
awarded 
to 
a 
private 
concessionaire 
who 
would 
manage 
and 
maintain 
the 
road 
and 
collect 
road 
user 
fees 
to 
finance 
his 
activities. 
Given 
the 
relatively 
high 
traffic 
volumes 
on 
that 
road, 
this 
solution 
seems 
feasible. 
The 
concessioning 
process 
will 
be 
supported 
by 
the 
ongoing 
project. 
17 
. 
Risks:. 
There 
are 
no 
major 
risks. 
Effectiveness 
Conditions 
and 
Agreements 
18 
No 
additional 
actions 
are 
required 
except 
for 
the 
submission 
of 
a 
satisfactory 
legal 
opinion 
on 
the 
Agreement 
Amending 
the 
Development 
Credit 
Agreement 
as 
a 
condition 
of 
effectiveness. 
Page  10
-6 
- 
ANNEX 
1 
Page 
1 
of 
3 
THE 
REPUBLIC 
OF 
DJIBOUTI 
SUPPLEMENTAL 
CREDIT 
FOR 
THE 
INTERNATIONAL 
ROAD 
CORRIDOR 
REHABILITATION 
PROJECT 
ESTIMATED 
ADDITIONAL 
PROJECT 
COSTS 
AND 
FINANCING 
PLAN 
(in 
US$) 
Estimated 
Costs: 
I 
COMPONENTS 
I 
LOCAL 
1 
FOREIGN 
1 
TOTAL 
1 
I 
1. 
Civil 
Works 
I 
930,000 
1 
4,800,OOO 
1 
5,730,ooo 
I 
I 
2. 
Consulting; 
Services 
1 
Total 
Project 
Costs 
I 
0 
1 
320,000 
1 
320.0001 
I 
930,000 
I 
5,120,000 
I 
6,050,OOO 
1 
Financing 
Plan: 
COMPONENTS 
LOCAL 
1 
FOREIGN 
1 
TOTAL 
1 
Government 
of 
Djibouti 
’ 
I 
50,000 
I 
0 
1 
-----56,r1 
IDA 
Total 
Prqject 
Costs 
880,000 
5,120,OOO 
6,000,OOO 
930,000 
5,120,000 
6,050,OOO 
Page  11
-7 
- 
ANNEX 
1 
Page 
2 
of 
3 
SUMMARY 
OF 
PROPOSED 
PROCUREMENT 
ARRANGEMENTS 
(US$) 
1 
Prqject 
Element 
I 
Procurement 
Method 
1 
TOTAL 
1 
I 
I 
ICB 
1 
NCB 
I 
OTHER 
I 
-1 
1. 
Civil 
Works 
2,720,OOO 
3,000,000 
5,720,OOO 
2. 
Consulting 
Services 
330,000 
330,000 
I 
TOTAL 
1 
3,050,000 
1 
3,000,000 
1 
1 
6,050,0061 
I 
IDA 
1 
3,020,OOO 
1 
2,980,OOO 
1 
1 
6,000,OOO 
1 
ALLOCATION 
AND 
DISBURSEMENT 
OF 
IDA 
SUPPLEMENTAL 
CREDIT 
(US$) 
Category 
Amount 
Percentage 
Financed 
1. 
Civil 
Works 
5,670,OOO 
100% 
of 
foreign 
expenditures 
and 
95% 
of 
local 
expenditures 
2. 
Consulting 
Services 
330,000 
100% 
TOTAL 
6,000,OOO 
Estimated 
Disbursement 
Schedule: 
RJS$) 
I 
FY03 
I 
FY04 
I 
FY05 
I 
Total 
I 
2,000,000 
I 
3,200,OOO 
800,000 
I 
Cumulative 
2,000,000 
5,200,OOO 
6,000,OOO 
Page  12
-8 
- 
ANNEX 
1 
Page 
3 
of 
3 
THE 
REPUBLIC 
OF 
DJIBOUTI 
SUPPLEMENTAL 
CREDIT 
FOR 
THE 
INTERNATIONAL 
ROAD 
CORRIDOR 
REHABILITATION 
PROJECT 
TIMETABLE 
OF 
KEY 
PROJECT 
PROCESSING 
EVENTS 
(a) 
Time 
taken 
to 
prepare: 
3 
months 
(b) 
Prepared 
by: 
Government 
with 
IDA 
assistance 
(c) 
Appraisal/Negotiations: 
February 
2003 
(d) 
Planned 
Date 
of 
Effectiveness: 
April 
2003 
(e) 
Completion 
of 
works: 
February 
2004 
(f) 
Closing 
Date: 
December 
3 
1,2004 
Page  13
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