The World Bank LIFELINE ROAD NETWORK IMPROVEMENT PROJECT (P126782) REPORT NO.: RES46348 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LIFELINE ROAD NETWORK IMPROVEMENT PROJECT APPROVED ON JANUARY 31, 2013 TO REPUBLIC OF ARMENIA TRANSPORT EUROPE AND CENTRAL ASIA Regional Vice President: Anna M. Bjerde Country Director: Sebastian-A Molineus Regional Director: Charles Joseph Cormier Practice Manager/Manager: Karla Gonzalez Carvajal Task Team Leader(s): Elena Lungu, Ramon Munoz-Raskin The World Bank LIFELINE ROAD NETWORK IMPROVEMENT PROJECT (P126782) I. BASIC DATA Product Information Project ID Financing Instrument P126782 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 31-Jan-2013 30-Dec-2021 Organizations Borrower Responsible Agency Republic of Armenia Ministry of Territorial Administration and Infrastructure Project Development Objective (PDO) Original PDO The Project Development Objective is to improve access of rural communities to markets and services through upgrading of selected lifeline roads, and to strengthen the capacity of the Ministry of Transport and Communication to manage the lifeline road network. Current PDO The Project Development Objective is to improve access of rural communities to markets and services through upgrading of selected lifeline roads, and to strengthen the capacity of the Borrower's line ministry in charge of roads to manage the lifeline road network. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-89570 08-May-2019 10-Oct-2019 17-May-2020 30-Dec-2021 15.00 6.02 9.29 IBRD-85230 31-Jul-2015 26-Aug-2015 20-Apr-2016 30-Dec-2021 40.00 40.00 0 The World Bank LIFELINE ROAD NETWORK IMPROVEMENT PROJECT (P126782) IBRD-82290 31-Jan-2013 11-Feb-2013 15-Jul-2013 30-Dec-2021 45.00 43.42 1.58 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The Lifeline Road Network Improvement Project (LRNIP) is in its eighth year of implementation for the original Loan (US$45 million), in its sixth year of implementation for the first Additional Financing (AF1) (US$40 million). The second Additional Financing (AF2) (EUR 13.4 million – equivalent to US$15 million) was approved on May 8, 2019; the Loan Agreement (LA) was signed on October 10, 2019, and became effective on May 18, 2020. The cumulative disbursement rate (including AF2) is 86%, which is in line with the estimated progress. The closing date of all three loans is December 30, 2021. The Project is in compliance with environmental and social safeguards, as well as with the legal covenants. The financial management arrangements under the Project remain satisfactory and acceptable to the Bank. There are no overdue audits or interim un-audited financial reports under the project. As a result of the global COVID19 pandemic and in the aftermath of the military conflict that took place in Armenia during 2020, a number of important activities under the Project experienced delays. While civil works contracts financed by the Project and implemented by the local contracts progressed satisfactorily and incurred only minor interruptions during the military conflict period, the launch of key new technical assistance activities (TAs) was put on hold during 2020. As the Terms of Reference (ToR) for the specific technical assistance activities require the mobilization of international consultancy and expertise, and there are global travel restrictions due to pandemic, this entailed delays on launching the respective procurement processes. These specific delays are triggering the need to extend the Project closing date by 12 months to ensure all Project activities are completed in a satisfactory manner and that the loan is fully disbursed. Overall, the Project is on track to meet its PDO with a Satisfactory Implementation Progress rating. The progress to date is as follows: Component 1. The implementation of civil works has progressed satisfactory. The original loan activities and Year 1 and Year 2 of the three-year program of AF1 have been completed with satisfactory results. The implementation of the Year 3 program part of AF1, incurred minor delays due to COVID19 civil works restrictions imposed in Spring 2020, but were successfully completed by October, 2020. To date, 395 km out of the total of 450 km of roads have been rehabilitated, while 87 ‘safe village’ concepts out of 100 have been completed. The technical supervision of works and technical audits are being conducted in a satisfactory manner. The AF2 road designs were completed in time and all 12 civil work contracts, and respective technical supervision TAs, were procured. After winter suspension, the civil works are relaunched, and expected to be finalized by September 2021. During the 2020 and 2021 construction seasons, given that the physical access to sites has been restricted due to the ongoing pandemic, the Bank team has been supporting the Road Directorate (RD) - project implementing agency, with the deployment of remote supervision tools to support the supervision and monitoring of the on-going civil works on site. The World Bank LIFELINE ROAD NETWORK IMPROVEMENT PROJECT (P126782) Component 2. The procurement of specific TA activities part of Component 2, requiring international consultancy expertise, has been delayed, due to the travel restrictions imposed by COVID-19, as well as due to the military conflict situation. Specifically: (a) Strategic Development Plan for the Lifeline Road Network. Although the selection of consultant for the preparation of the Strategic Development Plan had started in fall 2020, due to the COVID-19 related travel restrictions for foreign consultants, the process was cancelled and postponed. The procurement of this TA is planned to be relaunched in July 2021. (b) The launch of the Performance Based Contracting (PBC) pilot for the country is also delayed due changing governmental priorities during crisis times, requiring state budget funding. Currently, the Government requested further support with assessing the national framework for PBC implementation in the country prior to proceeding with its implementation. In line with the agreed restructuring Action Plan and due to upcoming elections in June 2021, it was agreed that this activity will be resumed in September 2021. The Project will support the assessment of the PBC framework in the country, and if feasible, it would further support with the design of the PBC Bidding documents for the respective pilot. (c) The consulting services for road safety curricular for school aged children and awareness campaign was procured, a few phases of work have been successfully completed, however the actual campaigns' implementation got delayed both because of the COVID-19 and physical closure of schools and the military conflict, and resumed from February, 2021. (d) Crash Data Collection and Management System. Due to the COVID-19 and subsequent conflict escalation, the discussions with Road Police have not been possible, as the Road Police carried out an additional function of supporting the emergency situation among the public (adhering to the regulations such as wearing of masks, gloves, no public gatherings, etc.) as well as was part of military mobilization. Currently, an Memorandum of Understanding (MoU) has been drafted and is awaiting to be signed by the two parties- Ministry of Territorial Administration and Infrastructure and Road Police, to kick-off the implementation of the activity. In line with the agreed Action Plan, this activity is to be resumed by 1 September 2021. (e) Risk Assessment of Natural Hazards to Road Infrastructure TA. This activity includes an assessment to identify road sections vulnerable to natural hazards such as landslides, rockfalls, flash floods, mudflows, floods and avalanches. Currently, a draft ToR is in consultation within the Government and its procurement is expected to be launched by mid July 2021. (f) The recruitment of 8 female graduates for a 6-month paid internship is supported by the Project and an MoU in this respect was signed among the Road Directorate and the National State Engineering University of Armenia. The hiring of the firs t batch of interns was delayed to the social restrictions imposed by the COVID-19, and only starting from April 2021 three female interns joined the Road Department, while the other five have been preselected and should join by September 2021. Component 3. Contingent emergency response was included in AF2. The POM was updated with the required provisions for this component prior to effectiveness. The highlighted delays are triggering the need to extend the Project closing date by 12 months to ensure that all Project related activities are fully implemented in a satisfactory manner and that the loans are fully disbursed. The implementing agency and line Ministry are fully committed to ensuring the successful completion of the LRNIP. The Project procurement plan and results framework have been updated accordingly to reflect the extension. The The World Bank LIFELINE ROAD NETWORK IMPROVEMENT PROJECT (P126782) authorities were informed and agreed that any works not completed by the new closing date would be financed by the Government, as this would be the last extension granted to the Project. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Dec-2019, 30-Dec- IBRD-82290 Effective 30-Jun-2017 31-Dec-2022 30-Apr-2023 2019, 30-Dec-2021 IBRD-85230 Effective 30-Dec-2019 30-Dec-2021 31-Dec-2022 30-Apr-2023 IBRD-89570 Effective 30-Dec-2021 31-Dec-2022 30-Apr-2023