Z-V : c// - 3- P" CL-- Docment of The World Bank FOR OFFICIAL USE ONLY Report NoP-6506-RU MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXCUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$40 MILLION TO TOE RUSSIA FEDERATION FOR A PORTFOLIO DEVELOPMENT PROJECT JANUARY 26,1995 MICROGRAPHICS Report No: P- 6506 RU Type: MOP This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EOUIVALENTS Unit of currency: Ruble I Ruble = 100 kopecks Rubles per US dollar Moscow Inter-Bank Foreign Currency Exchange/ Moscow Foreign Exchange Auction Market (VEB) rates AVERAGE EXCHANGE RATES Year Period Averange End of Period 1989 8.92 8.92 1990 19.34 22.80 1991 61.95 169.20 1992 227.90 414.50 1993 1,018.00 1,247.00 1994 2212.00 3,550.00 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CBR - Central Bank of Russia CPPR - Country Portfolio Performance Review DIFI - Department of International Fmance and Investment EBRD - European Bank for Reconstruction and Development EDI - Economic Development Institute FPP - Fund for Project Prparation FSU - Former Soviet Union GOR - Government of Russia IMF - Imternational Monetary Fund IBOS - Intemational Business Opportunities Services PIP - Ptoject Implementation Plan PPF - Project Preparation Facility PPIU - Project Preparation and Implementation Units RAICD - Russian Agency for International Cooperation and Development SOE - Statement of Expenditures TA - Technical Assistance TCP - Technical Cooperation Program FISCAL YEAR January 1 - December 31 FOR OFCIAL USE ONLY PORTFOLIO DEVELOPMENT PROJECT Loan and Project Summarv Borrower: Russian Federation Beneficiary: Russian Federal Center for Project Finance and Technical Assistance Amount: US$40 million equivalent Terms: 17 years, including five years of grace, at the Bank's standard variable interest rate Financing Plan: PROJECT FINANCING PLAN (US$ Millions) Local Foreign Total Project Costs *4,$$Ml % Project Government 39.5 - 50 World Bank 10.0 30.0 50 TOTAL 49.5 30.0 O _ 100 Economic Rate of Return: Not Applicable Poverty Category: Not Applicable Staff Appraisal Report: A Technical Annex has been prepared in lieu of a Staff Appraisal Report. Map: IBRD No. 25968 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPIMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE RUSSL4IN FEDERATION FOR A PORTIFOLIO DEVELOPMENT PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to Russia of US$40 million equivalent to help finance a project for Portfolio Development. It would strengthen external resource management and increase the Government's capacity to identify, prepare and implement projects expected to be financed by the Bank. The loan would be at the Bank's standard variable interest rate with a maturity of 17 years, including 5 years of grace. ackground In November 1994, the Russian Government announced that its ambitious reform program would enter a second stage. The first phase had focussed on aggressive privatization of state-run enterprises and small businesses combined with a moderate stabilization program. The Government is now determined to support a radical plan to lower monthly inflation from an average of 9.3 percent in 1994 to about 1 percent by end-1995. The Government's aim is to increase private investment in domestic industry and improve the standard of living. TMe plan is predicated on deeper structural reforms, an austere 1995 budget, and greater reliance on internal and external borrowing to close the budget gap. 3. The success of this program will depend in part on the Government's continued ability to mobilize substantial external financing over the next several years. The bulk of this support is expected to come from debt rescheduling and official bilateral and multilateral sources until private flows increase significantly. The international community has shown its willingness to provide financing in line with Russia's progress in reforms, primarily through generous debt rescheduling but also export credits, grant technical assistance and official finance. Competition for grant technical assistance is expected to increase as the availability of these resources to Russia declines. Therefore, the Government will also need to increase borrowing for technical assistance, particularly to prepare public investment projects for external financing. 4. Both the Russian and bilateral governments view the Bank as a critical catalyst for investment resources in support of Russian structural reforms. At the request of the Prime Minister, the Bank has expressed its readiness to prepare an expanded annual lending program of US$2.5-3.0 billion over the next several years. However, commitments of this magnitude require both a sustained reform effort and significant improvement in the pace of project preparation and implementation. The partnership between the Bank and the Government has strengthened and there is better understanding of the role of international investment in the transition process. Nevertheless, despite the efforts devoted by both sides to develop the Bank's portfolio, actual implementation has fallen short of initial expectations. This reflects, on one hand, start-up difficulties in lending to a new borrower, and on the other hand, systemic issues that constrain implementation and disbursements. 5. Atthe first annual Country Portfolio Performance Review (CPPR), held September 16-17, 1994, the Bank's Governor noted that the starting point for improved project implementation was close alignment of Government reform priorities and Bank projects. He stressed that Russian capacity to identify and prepare its borrowing program needed to be strengthened, and that greater integration of the Bank program into the Government's investment planning process was essential. At the same time, the -2- Government would like to increase the advisory role of the Bank in its relations with the Govemment. In order to make the partnership between the Government and the Bank even more effective, the Government plans to strengthen various agencies responsible for coordination with the Bank. An important role in this regard will be given to the newly-established Federal Center for Project Finance and Technical Assistance (the "Center"). In addition, the CPPR concluded that greater efforts were needed to ensure that sectoral ministries and implementing agencies play a substantive role in project design. 6. Until recently, responsibility for interacting with external sources of assistance has been dispersed among several committees and ministries and coordinated only partially by departments of international finance in the Government administration and Ministry of Finance. The Government has recognized that the fragmentation of authority has constrained its ability to mobilize new resources and manage existing commitments effectively. In addition, institutional capacity to identify suitable projects for external financing is limited. At the same time, sector ministries are moving away from direct involvement in project execution and assuming a greater policy formulation and monitoring role. While project management skills need to be developed in implementing agencies, the CPPR concluded that many specialized tasks such as project design and procurement should be contracted out where possible to Russian and international consulting firms. There is thus a particular need to support the development of the local consulting industry. 7. The Center, established in April 1994 by Prime Minister Chernomyrdin, is focussed on three primary functions: coordination, information dissemination, and advisory services. Specifically, it will: a) match Government investment priorities with official external financing sources and support the preparation of investment proposals by governmental organizations; b) advise and assist sectoral ministries and implementing agencies on the practices and procedures of external financing sources and monitor project implementation; and c) support the development of the local consulting industry and advise Russian businesses on procurement opportunities in externally-financed projects. The Govermnent has confirmed that the Center would be responsible for day-to-day working-level coordination activities with the Bank. Governoent's Objectives and Strateg 8. The Goverment's objective is to improve its ability to mobilize, coordinate and utilize external resources in support of the second stage of its economic reform progran. It believes that preparation of a sound pipeline of projects for Bank financing, which could also serve as a catalyst for other financial flows, is central to this effort. For 1995 alone, Russian ministries and agencies have proposed more than 60 projects to the Goverrment for financing by the Bank, requiring resources far in excess of the estimated borrowing program. The Government recognizes that an efficient process is needed to identify investment priorities and match them with external sources of funding. Greater collaboration is also required to develop consensus with external agencies on priorities for assistance and to address project-specific implementation constraints. All these objectives would be supported by the proposed operation. 9. In addition, the Govermnent recognizes that the introduction of competitive procurement procedures in initial Bank projects has led to substantial cost savings. Participation by Russian suppliers also provided strong financial incentives for enterprises to restructure and improve product quality. The Govermnent believes that efforts to mtroJuce competitive bidding practices within the economy can be facilitated by stimulating greater participation by potential Russian suppliers and contractors in the bidding -3- process on internationally-financed projects. For this reason, the Government has established a Business Opportunities Bureau within the Project Center that would also be supported by the proposed project. Bank Strategy and Rationale for Involvement 10. The proposed loan is central to fulfillment of the Bank's country assistance strategy (CAS) discussed on May 19, 1994 during consideration of the Financial Institutions Development Project. As mentioned in the CAS, a key Bank objective is to establish the Bank as a trusted partner of the Government in carrying out its reform objectives. The proposed loan will be a central instrument to achieve this objective, first, by increasing Russian ownership of its borrowing program and second, by ensuring rapid results through improved implementation capacity. More generally, the project will help ensure that all external resources are used as eff.ectively as possible. These are essential prerequisites if external resources are to contribute to the success of economic reforms. The lack of a clearly identified counterpart agency at. te central level has hampered the dialogue on priorities for external assistance and implementation issues. The proposed loan would thus also support improved arrangements for collaboration and project implementation while developing the local consulting industry, which would contribute to the sustainability of results. 11. The proposed loan will primarily provide a flexible source of financing for the development of high-priority investmnent projects that are integrated with the Govermnent's reform program. The initial projects in the Bank's lending program have been prepared with resources from the Technical Cooperation Program (ICP), the Project Preparation Facility (PPF), and substantial grant funding. The TCP has been terminated, PPF resources are limited, and grant iiiancing for technical assistance to Russia is expected to decline. Reliance on PPF funding and p' t .es* irces for all project preparation activities is, in any event, not a practical option for a count *' th reL ald expanding lending program such as Russia (potentially 9-10 projects, totaling up to t. billion per year). The three-year lending program is presently estimated to require up to s$25 million in technical assistance to prepare beyond what is available from other sources. Grant resources would be used first where suitable and readily available. The funds would only support the preparation of Bank projects since the EBRD, which is the only other major multilateral source of investment financing, has access to EU grant funds, including for project preparation. Project Objectives 12. The project has three objectives: (a) Develop a sound pipeline of projects suitable for Bank financing; (b) Strengthen institutional capacity in Russia for extenal resource management and project identification, preparation and implementation; and (c) Develop the local consulting industry and advise Russian businesses about procurement opportunities in externally-financed projects. Project Dscription 13. The project's three components are designed to meet the above objectives: -4- (a) Fund for Project Preparation (US$25 million), which would finance the preparation of projects in the next three years' lending program as agreed between the Government and the Bank, including through technical and sector studies, engineering designs, and analyses of economic, financial and environmental feasibility. A small amount of financing would support Lhe operational start-up costs of PPIUs and the execution of pilot projects as part of project preparation activities. (b) Technical assistance to strengthen external resource management and project preparation and implementation capacity (US$7.0 million). This component would primarily strengthen the coordination, infnrmation dissemination and advisory capacity of the Center in its dealings with implementing and core agencies and the business community. It would also strengthen critical project skills (such as procurement, disbursement, accounting, project management) in implementing agencies and debt management capacity in the Ministry of Finance. Additional activities would be identified as external resource management functions evolve in Govermnent. Financing would be available for consultant services, information and communications technology and related equipment, training and study tours. (c) Establishment of a Business Opportunities Bureau in the Federal Center for Project Finance (US$7.5 million). The Bureau's primary purpose is to advise enterprises, manufacturers and consultants on the opportunities and requirements tor participating in competitive bidding on externally-financed projects. It would advertise tenders to Russian consulting firms, contractors and potential exporters, conduct business opportunities' seminars in Moscow and regional economic centers, and assist interested suppliers and contractors with bid preparation through training programs. Financing would be available for consultant services to: (i) develop and deliver training and business outreach programs; and (ii) design and develop a data system on potential bidders among Russian consulting firms and enterprises. The loan would also finance minor civil works to restructure and refurbish the Bureau's facilities. 14. An illustrative list of subprojects under the three components, which were discussed and agreed at negotiations, is attached as Appendix I to the Technical Annex. A summary of key project activities including the Government's objectives, actions, benchmarks (outputs) and timetables is presented in Appendix I. Project Implementation and Fiancig Plan 15. Federl Center for Project Fumce and Teclmical Assistance. The Center would be responsible for overall project implementation. It was established in April 1994 by Government ordinance as a governmental body but with independent legal status. The Prime Minister appoints the Center's Chairman, who reports to the First Deputy Prime Minister for Economic Management. The First Deputy Prime Minister is also the Chairman of the Interministerial Commission that approves the external borrowing program of the Government, including from the Bank. Key management positions in the Center have been filled with highly qualified personnel. Staff recruitment, presently underway, is expected to reach 226 positions over time, of which 146 would be professional. A total of 60 professional and support staff are presently in place. The Center is organized into six departnents, including Technical Assistance, Project Finance, the Business Opportunities Bureau, Infornation Services, Finance and Administration. The Technical Assistance Departnent includes staff drawn from the -5- European Union technical assistance advisory unit, formerly part of the former Russian Agency for International Cooperation and Development (RA[CD). The regulations, organizational chart and reporting lines, estimated staffing plan and draft 1995 budget of the Center are in Appendices Vl-IX of the Technical Annex. 16. Over time, the Center will acquire the capacity to support the identification, preparation, implementation, and evaluation of externally-assisted projects. The proposed project will help accelerate this process by financing expert advisory services to the Center as well as information and communications technology and equipment. The Center will require expert assistance over the next two- three years to build capacity, particularly in project management, procurement and accounting and auditing. To a certain degree, this can be acquired through training courses offered by EDI and the Joint Vienna Institute Program, or financed by the UK Know-How Fund in procurement. In addition, Center staff would be invited to participate in Bank appraisals to acquire on-the-job experience. For more in- depth training and assistance during project implementation, the TA component will include financing for resident advisors for periods of up to two years. The advisors may, int alia: a) provide advice on project analysis and evaluation; b) advise on development of appropriate procurement plans for externally- financed projects; c) help develop appropriate procedures to monitor disbursements or for selection of project auditors; and d) assist in providing advice to PPIUs on procurement, disbursement and project- level accounting. Technical assistance inputs to support project implementation, particularly to the Project Center, are surmnarized in Appendix XI of the Technical Annex. 17. General Arrangements and Implmentation Status. Implementation arrangements for the project are outlined in Appendix EII to the Technical Annex. They emphasize~ the Center's role as coordinator within Govermment of the Bank's program. All technical activities related to subprojects would be decentralized to implementing or core agencies, as appropriate. The Center would also assure that work on the Bank's program throughout the project cycle is in line with broader coordination and loan processing arrangements developed between the Government and the Bank. The Implementation Plan (Appendix XIII) includes a Project Launch Workshop, a workshop for implementing agencies, and emphasis on actions to build the Center's capacity in the first half of 1995. Progress with the coordination and loan processing arrangements will be reviewed at the next CPPR in September 1995. A Mid-Term Review is planned in February 1996. 18. The successful implementation of the proposed project depends primarily on the broader dialogue on coordination and implementation arrangements between the Bank and Government. These matters were the subject of the first CPPR in September 1994. The Agreed Action Plan to Improve Implementation, adopted by the CPPR, is attached as Appendix V to the Technical Annex. All of the short-term actions have been completed on time. The most important of these was the drafting of coordination and loan processing arrangements, which were discussed and accepted by both sides during negotiations on the proposed loan and attached to the minutes of negotiations. The first medium-term action will be for the Government's Interministerial Commission for International Economic Relations to review the Bank's Country Assistance Strategy (CAS) in April 1995. The Project Center's first responsibility is to play a key role in the preparation of the documentation for the Commission's discussions. With the assistance of the key core ministries, it will review and make recommendations on the Bank's three-year lending program in light of Government development objectives and investment priorities. The outcome of the CAS discussions will lay the basis for implementation of the proposed loan beginning around April 1995. The Project Center as presently staffed is capable of carrying out this responsibility as well as implementation of the FPP components. Subproject preparation (funded by the FPP) would be the responsibility of the technical ministries. Activities under the FPP are sufficiently -6- independent of those under the component to strengthen the Project Center that both can be implemented in parallel fashion. However, the Center intends to act quickly to strengthen its ability to advise and assist technical ministries during the project cycle and to initiate operations of the Business Opportunities Bureau. During negotiations, the Russian Delegation agreed that the highest priorities for near-term action were: a) procurement of expert services for the Center in the areas of procurement, disbursement, accounting/auditing and staff planning and development; b) refurbishment of the premises of the Business Opportunities Bureau; and c) acquisition of additional office equipment for the Center. 19. Fund for Projed Preparation (US$25 miUlion). Under the first component, line ministries (in consultation with the Bank) would present requests for FPP financing to the Center, which would review them for consistency with the Government's investment priorities as agreed with the Bank in the Country Assistance Strategy. Subproject proposals mutually approved by the Government and the Bank would receive an allocation from the loan. The line ministry would handle all technical aspects of the subprojects and would contract consultants and procure equipment. The Center would monitor subproject processing and disbursements and provide advice when needed to Project Preparation and Implementation Units (PPIUs) on Bank procedures, particularly on procurement, disbursement and accounting. 20. External Resource Management (US$7.0 million). The second component would be primarily focussed on increasing capacity in external resource management in the Center and in implementing agencies, particularly in procurement, project-level accounting, disbursement and project management. It would be managed by the Center. The only exceptions would be subprojects to strengthen external resource management in other core agencies, which woula be managed by those agencies. The principal such subproject would be to build up debt management capacity in the Ministry of Finance. Others have been tentatively identified and are included in the Key Project Activities in Appendix II. These will be developed in view of evolving needs in external resource management. All of these activities will make maximum use of grant-financed TA (such as procurement training financed by the UK Know-How Fund and EDI or project management training provided by EDI). 21. Busiess Opportunities Bureau (US$7.5 milon). The third component, to establish a Business Opportunities Bureau, would be managed entirely by the Center. The Bureau is being established in response to a concern by the Govermment that Russian firms and enterprises with the capability of exporting or bidding on consultant contracts are currently either unaware of market access mechanisms or are hindered by an inability to comply with quality or other requirements. Approximately US$4 million has been allocated to help the Bureau develop a data base on potential bidders and to undertake business outreach programs, including seminars, and training programs in the field of international trade and procurement to firms, enterprises and foreign trade organizations. An estimated US$3.5 million would help finance the refurbishment of the Bureau's preriises. Bureau activities are listed as subprojects in Appendix I and described in more detail in Appendix X of the Technical Annex. 22. Fancing Plrn. The total financing required is US$79.5 million, of which the Bank would finance 100 percent of the foreign exchange and 50 percent of the total. Since development of the local consulting industry is a key project objective, the Bank expects to finance local expenditures for consultant services, primarily but not exclusively related to Droject preparation. The Government contribution includes US$26.7 million in operating costs, US$2.7 million in equipment purchases and US$7.2 million for renovation of Center facilities. The draft budget for the Center for 1995 is at Appendix IX of the Technical Annex. The Government has requested and will receive an Advance from the Project Preparation Facility of US$0.5 million to prepare the technical assistance needed to strengthen -7- the Center. A breakdown of costs and the financing plan are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in the Russian Federation are given in Schedules C and D, respectively. Lessons-of Experience 23. This is the first such loan to Russia. It has been designed with the Bank's experience to date in Russia. As with all new borrowers, unfamiliarity with Bank procedures and official finance in general has slowed project start-up and thus disbursements. Consequently, the project stresses up-front actions to strengthen project preparation and implementation capacity. The Center will ensure the early establishment of project preparation and implementation units and training of ministry staff in project- level accounting and procurement. It will aeso facilitate the procurement process by providing in-depth information to potential Russian bidders on international tenders. More broadly, the project will support the Action Plan to Improve Implementation, agreed to at the CPPR in September 1994. The thrust of this plan is to build borrower ownership, which has been identified as a key factor in successful projects. 24. Bank experience in technical assistance projects more generally has also been considered in the design of this loan'. The project has narrowly focussed and clear objectives, streamlined procedures for approval of subprojects, and on-the-job training for Center staff to ensure the rapid acquisition of project management skills. Procurement and Disbursement 25. All procurement of goods and services will be carried out according to the Bank's guidelines and using the standard bidding documents of the Bank (for details, see paragraphs 31-32 of the Technical Annex). A single Special Account will be established in a commercial bank acceptable to the Bank under the control of the Center to handle disbursements of project funds (other than direct payments) for all subprojects. Environmental Issues 26. This is a category "C" project since it only involves the financing of consultant services, study tours, training and office equipment. The Fund for Project Preparation would be available for preparing environmental projects or components, if considered a priority for the Government and the Bank. Feasibility studies would incorporate environmental assessments or impact studies in their terms of reference, whenever warranted. Agreed Actions 27. At negotiations, the Bank and Government agreed on the illustrative list of subprojects (Appendix I of the Technical Annex). The criteria and description of proposed subprojects must meet the specifications laid out in the Loan Agreement. As part of the agreed Implementation Program, the Government will submit all subproject proposals to the Bank for approval. Each must contain detailed financial implementation and procurement arrangements, as specified in the Loan Agreement. .IIn particular, "Managing Technical Assistance in the 1990s: Report of the Technical Assistance Review Task Force," Noveniber 1991; and O.D. 8.40, 'Technical Assistance," July 1992. -8- Project Benefils and Risks 28. The principal benefit of the operation will be to ensure the timely preparation and implementation of critical investment operations in support of the reform program. Of equal importance, it will enhance Russian ownership of its borrowing program by building up the Government's institutional capacity to identify, prepare and implement projects financed by external resources. The project would also increase efficiency in Russia by developing the local consulting industry and by helping domestic firms participate in tenders on externally-financed projects. Exposure to international competitive bidding will help Russian firms become more familiar with the trading practices, quality standards and pricing of products and services for sale on world markets. 29. The major risks are slow or inefficient utilization of funds. These could res ilt from unfaniliarity with procedures relating to procurement, disbursement and subproject approval; changes in the role of, or institutional weaknesses in, the Bank's new counterpart; or political developments affecting Government investment priom .ies. These factors would also affect the Bank's ability to deliver the FY96-98 lending program as planned. The loan design includes measures to strengthen procurement and disbursement skills and a broad implementation framework that is accepted by all key institutional actors in Government. One component of the project will primarily strengthen the Center. In addition, the Moscow Resident Mission will ensure close collaboration during project implementation. However, political risks that dramatically alter either investment priorities or institutional collaboration arrangements with the Bank cannot be mitigated entirely by the project. Recommendation 30. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and I recommend that the Executive Directors approve it. Lewis T. Preston President Attachments: Schedule A-D, Technical Annex January 26, 1995 Washington, D.C. -9- Schedule ESTIMATED PROJECT COSTS (US$ Millions) Local Foreign % Foreign Exchange Fundfor Project Prepaation 13.0 15.0 54 Subtotal 13.0 15.0 54 External Resource Management Project Center 27.6 4.5 13 Implementing Agencies 1.0 100 Core Agencies 2.0 @ _100 Subtotal 27.6 7.5 20 Business Opportunies Bureau Refurbishment of Premises 7.2 3.5 33 Data Base and PMonitoring System 1.7 1.0 37 Business Outreach Programs l.S 100 Training Programs 1.5 100 Subtotal 8.9 7 5 45 TOTAL PROJECT COSTS 49.5 30.0 38 PROJECT FINANCING PLAN (US$ Millions) Local Foreign |Total Project Costs ~~~% Project Government 39.5 50 World Bank 10.0 30.0 50 TOTAL 49.5 30.0 _ 100 -10- Schedule B PORTFOLIO DEVELOPMENT PROJECT Summarv of Proosed Procurement Arrangementst (USS millions) Procurement Method ProjeAt Element ICB LCB Other Not Bank 1. Works Rehabilitation and facilities - 4.2 .8 7.2 upgrading (4.2) (.8) - 2. Goods Office Supplies, 2.0 4.9 2.7 Equipment and (2.0) (4-5) - Furniture 3. Technical Assistance Technical, Sector and 21.5 3.0 Feasibility Studies, (21.5) Engineering and Softwarc Designs Expert Advisory Services (2.5) Training, Seminars, and 2.5u Study Tours (2.5) Business Outreach 1.5d Programs (materials (1.5) production and dissemination) 4. Operating Costs of Project Center -2. 5. Miscellaneous Refinancing PPF - - 0. TOTALS 2.0 4.2 33.8 39.5 (2.0) (4.2) (33.8) (0.0)_ jt Totab my not add due to rounding / Inwludes minor mintcnanc contract and purchacs for arall repairs (such as windows) under USS5D,000 that would bc procured through local shopping in accordance with the World Banc Procurement Guidelinc. This is primarily for the pilot subprojcct finanred under the Fund for Prject Preparation (USS0.5 million) but aso for refurbishment of the Buaines Bureau (USS0.3 million). bt Includes DC (proprictary) computer system elements and softwac prchased according to World Bank Guideline., (USS0.5 million). Also included am Intenationdl Shopping for purces under US300,000 for office cquipment (USS3.5 million) and Local Shopping for off4hd-shelf purchnase of item such as fax machines ad to *nompliment Center-finsnced faeilities upgmades including small furnishings (USSO.5 million), purchased in accordance with World Bank Gsd&cdrf. SI Consulting Services (USS265 million) would be procured in acordance with Wodd Bank Guidelines: Use of C _nabans (1981 edition). _/ Primarily consulting scrvices (US$1.5 million) relating to the pre,rstion of brochures ad the design and implmaentation of mrketing and dissemination stratees, procured in accordance with World Bank GCiddincs: Use of Conszkana (1981 edition). e/ A Project Preparation Facility (US$0.5 million) is expected to finance initial office equipmnent nd consulting services to srngthen the capacity of the Ccnter. Procurcmcat for equipment (USS100,000) would be by Local Shopping and for consulting servies (USS400,000) woutd be in accordance with World Rank Guidelines: Use of Conukis (19B1 editionL. -11- Schedule B ESTIlATED PROJECT DISBURSEMNT SCHEDULE Disbursement over 45 months (US$ millions) FY95 FY9 FY98 FY99 (4/95 - 6/95) (7/95-6/96) (7/96-6/97) (7197-6/98) (7/98-12/98) : Semester X 1 2 3 4 5 6 7 8 Project Component I. Fund ror Project Preparation Annual 1.0 3.0 5.0 6.0 5.0 4.0 1.0 0 Cumulative 1.0 4.0 9.0 15.0 20.0 24.0 25.0 25.0 II. Extenal Resource Annual 1.0 1.5 2.0 .75 .75 .75 .75 0 Cumulative 1.0 2.5 4.5 5.25 6.0 6.75 7.5 7.5 IHI. Business Opportunities Bureau Annual 1.5 2.5 1.0 1.0 .75 .50 .25 0 Cumulative 1.5 4.0 5.0 6.0 6.75 7.25 7.50 7.50 TOTAL Disbursements would be made as follows: Categoy Amounts Allocated Percge of Expenditures to be financed a. Civil Works US$5.0 million 100% of foreign expenditures and 70% of local expenditures b. Goods, including office US$6.5 million 100% of foreign expenditures, 100% of equipment and furniture local expenditures (ex-factory cost) and 70% of local expenditures for other goods procured locally c. Technical Assistance, US$28 million 100% Training and Study Tours d. Repayment of Project Preparation Facility US$0.5 million US$40.0 million -12- Schedule C PORTFOLIO DEVELOPMENT PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare the project: 9 months (October 1992 - May 1993; November 1994 - December 1994) (b) Prepared by: Russian Government with IBRD Assistance (c) First Bank mission: October 1992 (d) Appraisal mission departure: April 1993 (e) Negotiations: December 22, 1994 (f) Planned date of effectiveness: April 15, 1995 (g) Responsibility for Preparation: Task Manager: Marsha McGraw-Olive Division Chief: Pradeep Mitra Country Departnent Director: Yukon Huang Regional Vice President: Wilfried Thalwitz Peer Reviewers: Albert Howlett and Mike Stevens -13- Schedule D STATUS OF BANK GROUP OPERATIONS IN THE RUSSIAN FEDERATION (AS OF JANUARY 10, 1995) Amowt in US$ mion Undis- c1osmne Loan No. FY Purpose Loan Amo IDA bursed Date I Loan Closed 600.00 L35320-RUS 1993 Emplymnt Serv. & Soc. Prtctn 70.00 68.58 04/30/96 L35460-RUS 1993 Privatization 90.00 88.39 06/30196 L36230-RUS 1993 Oil Rehabilitation 272.00 263.84 12/31/95 L36231-RUS 1993 Oil Rehabilitation 158.00 146.99 12131/95 L36232-RUS 1993 Oil Rehabilitation 170.00 136.48 12/31/95 L36233-RUS 1993 Oil Rehabilitation 10.00 9.99 12/31/95 L37060-RUS 1994 Highway Rehab. & Maint. 300.00 296.42 06/30/98 L37340 RUS* 1994 Fmancial Institutions Dev. 200.00 200.00 12/31/98 L37560-RUS* 1994 Land Reform Impl. 80.00 80.00 06/30/00 L37570-RUS 1994 Agric. Reform Impl. 240.00 240.00 06/30/00 L37630-RUS* 1994 Enterprise Restructuring 200.00 200.00 06/30/00 L37680-RUS* 1994 Oil Rehabilitation 11 500.00 500.00 06/30/97 L38060-RUS* 1995 Environmental Management 110.00 110.00 06/30/01 L38240-RUS* 1995 Mngmnt and Finan. Training 50.00 50.00 12/31/98 Total number of Loans = 14 2,450.00 2,390.69 Total** 3,050.00 of which repaid 0.00 Total held by Bank & IDA 3,050.00 Amount sold 0.00 of which repaid 0.00 * Not yet effective ** Total Approved, Repayments, and Outstanding balance represent both active and inactive Loans and Credits -14- Schedule D STATUS OF IFC INVESrMENT IN THE RUSSAN FEDERATION (AS OF NOVEMBER 30, 1994) Amount in USS million liT of aL. IFC Hel Undi- Invoice No. Commit. Oblrt-or Commit Loans ETotl buoed A. Approved and Signed Projects 3621-RUS FY94 Ind Moscow Bank 15.0 15.0 0.0 15.0 13.0 4061-RUS FY94 Framlington Fund 8.0 0.0 8.0 8.0 4.0 4040-RUS FY94 Polar Lights 60.0 60.0 0.0 60.0 0.0 3941-RUS FY95 1st NIS Reg. Fund 15.0 0.0 15.0 15.0 9.0 4099-RUS FY95 Tokobank 5.0 5.0 0.0 5.0 0.0 B. Approved Projects Pending Comunit. 3532-RUS Vasyugan Smices 11.5 10.0 1.5 11.5 11.5 4191-RUS Sawinskaya 7.7 5.6 2.1 7.7 7.7 4333-RUS Russian Tele - .'m 7.5 0.0 7.5 7.5 7.5 473 1-RUS Russn. Trade 10.0 10.0 0.0 10.0 10.0 4740-RUS Volga Fund 0.0 0.0 20.0 20.0 20.0 Total 139.7 105.6 54.1 159.7 82.7 IBRD 25968 V UNITEDsts Ot AMERICA RUSSIAN FEDERATION Chuhel,I REPUBLICS, KRAIS, OBLASTS, OKRUGS *S NATIONAL CAPITAL Q) r Us rino - - RIVERS e ECONOMIC REGION BOUNDARIES UNITD '\ - 05 OSLAST KRAI, OR REPUBLIC BOUNDARIES 84 >NODCM .00% Nsraeglon1'1"ea jtj(* % 4 fAUTONOMOUS OBLAST OKRUGO, OR REPUBLIC BOUNDARIES' INTERNATIONAL BOUNDARIES Sberi 0K fi l s'Including rpubllts ofAdygoya, Alto), taraeha1-Che,hss, ad)Kthaks.le. Seao SWEDEN ol/ p 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Sco d~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ S SYIA 0}2C i < 200 O 400 6o 00 M1i aba 00 1100._r . 005 r *qe r56 je 4f IuE eZ ANe * -z At Czer 0 f ot aoKiMsr , N 0 O I I A /, o,^ I Arlcbangelabaie ublost 14. tost,ansnlaola ablest 27. Mordouo'n Republic 40, Ulionovubeio oblost 52. CI,aliabinulola ablast 64. Towslaio ubloti 73. lrosnoiorslcri ao35. Primaorabilbrai 3. Nenetkil oatonamoua ularu 1S. Mosisouscoic ablast 28. Nlabniy Novgorod ablest 41i VaIRa¶radslsio oblast 53. Iurgonssota oblost 65. Tyuwensboioablest 74. Republcof Khalcasla 86. Seckholinslcaloablest 3: Republice OT:ZIa lo MoscowCt 29as oe:3tr?;7 kt ;ooblost: 42 Rpo;sF:b9t:tM 54. Orenburgskaia ablest 66, Khonty#onsIIakIi 75. TairnvrabiilCaI¶rn.NenetsblIl 87. Republic ofSobbolYahutiel 5. Murc,cnslciu oblost 18. Riozonsheofooblost 31, Lipokesao oblast 44. Iobardina-Eolbar Republic 56, tconn-Psrmyatskaia 67. Yrnol-Nenels 76. Cvenbiialullautonomous obrug 89. IngushRepublic 6. Volagadsklsoa ablest 19. Scralenkobol oblost 32, Tambanskh oloablet 45. Krosnudarsii; krc; autonomous ckrug autonomous okrus 77. Republic of Tuna 7, 57. Petersburg 20. Tversboio oblast 33. Voroneobeslcela ablest 46. Republic oF Acygeya 57. Svanolovsbaia ablest 68. RepublIc of Bur,yatlia 78. Amnurslcaic ablest 8. Lenlingrodslsaie oblost 21. Tul'sboio oblast 34. Astrolchonsholo oblost 47. North Osetien Republic 58a Ucmurt Republic 69, Chitinslsaio oblost 79. Kawcf,atkaia ablast Tbaounda,as calrs, decaminatlans 9. Nangaragslsolo ollss 22. Vlodlnirskaa obloat 35. Republic of KiCamSyio 48. Rostoesk;olooblost 59. Altalskil bral 70. Aginakil Buryatslai 80. iorlokil autonemaus obrug thln.epdnaohrtlmpl. antiroohepartaf 10. Psbavsaio aoblst 233 hlorasaukol ablest 36, Penoenslala ablast 49.Stauropalskilicrel 60. Republic ofAltol autonomous olrug 81. Ichobronslcii;Irol The Wand Seal,Group,any ludgmrn.n 11, Brianslaia ablest 34. Republic of Chuvosln 37. Somorsboia ablslt 50. Korocboi'Cberlaes Republic 61, iemerovsleo; ablest 71, Irkutslsaia blest 832 jewih outoan,mous ablest an the leaalatu'uof any rtsrrtaryor 13. luos,anskai ablest 35. Iirousbao coblast 38. Sarotavskoia oblast 51. Republic oF Basblsrtastan 62. Nauasibirslsaiaoblost 72, Ust'.Ordyr,k;iiBuryatscii 52 B3Maaadonskoiaobclast anyendon.nn.ntarauceopsnunsf 13. Keluahskoia oblast 26. Republic oF Mar;;-EI 39. Republc of Tatarslon 63. Omskeie ablost uounamnaus okrug 84. Chukatakil autonomous obrug such baundorles