The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) REPORT NO.: RES28853 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MOZAMBIQUE -ROADS AND BRIDGES MANAGEMENT AND MAINTENANCE PROGRAM - PHASE II APPROVED ON MAY 23, 2007 TO MINISTRY OF ECONOMY AND FINANCE, REPUBLIC OF MOZAMBIQUE TRANSPORT & ICT AFRICA Regional Vice President: Makhtar Diop Country Director: Mark R. Lundell Senior Global Practice Director: Jose Luis Irigoyen Practice Manager/Manager: Benedictus Eijbergen Task Team Leader: Kulwinder Singh Rao The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) ABBREVIATIONS AND ACRONYMS AF Additional Financing APL Adjustable Program Loan IDA International Development Association PDO Project Development Objective PPCR Pilot Program for Climate Resilience RBMMPII Roads and Bridges Management and Maintenance Program II The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) BASIC DATA Product Information Project ID Financing Instrument P083325 Adaptable Program Loan Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 23-May-2007 31-Dec-2017 Organizations Borrower Responsible Agency Ministry of Economy and Finance, Republic of ROAD FUND (Fundo de Estradas),National Road Mozambique Administration (ANE) Project Development Objective (PDO) Original PDO The primary objective of the overall Roads and Bridges Management and Maintenance Program (RBMMP), is to stimulate growth andcontribute to poverty reduction through improved road infrastructure, better sector policies, and enhanced roads sector management.More specifically by (i) improving the coverage and conditions of roads and bridges in the territory of the Recipient; (ii)strengtheningtheRecipient's institutional capacity to manage and administer the road sector; (iii) establishing financingmechanisms for road maintenance; (iv) promoting the use of local resources in roads construction and management; and (v) improvingroad transport safety. The project development objective of this phase of the APL is to improve access of the population toall-season roads through maintenance,rehabilitation and upgrading of the classified road network. The indicators to assess theachievement of the PDO are (i) the percentage of classified roads in good and fair condition, and (ii) the percentage of the ruralpopulation within 2 km of an all-season road. Intermediate outcomes have been defined as follows: (a) improved road sectormanagement capacity; (b) enhanced execution of the road maintenance program; and (c) timely and cost-effective implementation ofthe IDA financed rehabilitation and upgradingof sectionsof the National Road N1. Current PDO The project development objective of this phase of the APL is to improve access of the population to all-season roads through maintenance, rehabilitation and upgrading of the classified road network. The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-56020 31-Mar-2015 22-Apr-2015 23-Jul-2015 31-Dec-2017 73.60 30.68 41.56 IDA-53460 13-Dec-2013 24-Feb-2014 23-Jul-2014 31-Dec-2017 3.15 0 2.96 IDA-H9040 13-Dec-2013 24-Feb-2014 23-Jul-2014 31-Dec-2017 36.25 19.71 13.07 IDA-48920 07-Apr-2011 28-Jun-2011 27-Sep-2011 31-Dec-2017 41.00 37.31 2.18 IDA-43080 23-May-2007 09-Jul-2007 05-Oct-2007 31-Dec-2017 99.57 101.64 0 TF-17375 07-Jul-2014 07-Jul-2014 23-Sep-2014 30-Jun-2016 12.28 13.94 0 TF-15898 24-Feb-2014 24-Feb-2014 24-Feb-2014 31-Dec-2017 9.25 9.25 0 TF-15923 13-Dec-2013 24-Feb-2014 23-Jul-2014 31-Dec-2017 6.50 0 6.50 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Project implementation and current status: 1. The second phase of Roads and Bridges Management and Maintenance Program (RBMMPII) was approved on May 23, 2007 with the IDA financing of US$100 million and the objective of improving access to all-season roads through maintenance, rehabilitation and upgrading of the classified road network. RBMMPII implementation later suffered from significant delays, mainly because of the complex funds flow arrangements under the project which led to a declaration of mis-procurement of approximately US$430,000 in 2009. By the time of the first additional financing (AF1), in early 2011, disbursements had resumed, all three PDO indicators were about halfway achieved, and financial progress stood at 45 percent. 2. The AF1 to RBMMPII was approved on April 7, 2011 in the amount of US$41.0 million to cover cost increases in the years immediately after project approval and to scale-up some project activities. The AF1 also extended the closing date by 18 months, from June 30, 2011 to December 31, 2012. The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) 3. In late 2011 and early 2012, as RBMMPII was winding down to closure, adverse weather conditions led to substantial flooding in Mozambique and significant road damage. RBMMPII was restructured in late 2012 to devote available financial resources to reconstruction of roads damaged by the floods and the closing date was extended by 12 months, to December 31, 2013. 4. Extreme flooding again struck Mozambique in the Limpopo River Valley in January 2013. The floods devastated large areas, washed out many roads, and severed many communities from the main road network. In response to the emergency situation, on December 13, 2013, the World Bank approved a second AF2 operation to RBMMPII to finance road reconstruction and extended the RBMMPII closing date by 36 months, to December 31, 2016. As reconstruction needs far outstripped available IDA16 resources, the AF2 was approved with a financing gap of US$73.6 million. The total financing plan of AF2 was US$183.75 million, including US$40 million government counterpart funds and US$70.15 million in IDA-administered funds from a variety of sources, including the Crisis Response Window. Of the AF2 funds, US$15.0 million was devoted to emergency reconstruction works to restore basic mobility across Gaza province and the remaining AF2 resources were primarily devoted to building back climate resilient roads works. The AF2 explicitly mentioned a further additional financing once a new funding source could be identified (IDA17). 5. The third additional financing (AF3) filled the US$73.6 million financing gap of the reconstruction works agreed in AF2. The AF3 was approved on March 31, 2015 and declared effective July 22, 2015. In all, the AF3 would finance reconstruction of 196 kilometers of flood damaged roads and associated cross-drainage structures to restore all-weather access to markets and essential services in Gaza province. The AF3 extended the project closing date by a further 12 months to December 31, 2017. 6. All major activities financed by the original financing and AF1 are satisfactorily completed and the major civil works of the AF2 (Immediate Emergency Works) are satisfactorily completed. The major accomplishments of RBMMPII include: (i) contributed to improved access of the rural population to an all-season road from approximately 26 percent (2006) to 38.5 percent (2016); (ii) increased the percentage of classified road in good condition from 64 percent (2007) to 71 percent (2015); (iii) rehabilitation of 102 km of the national highway (N1), which serves as the transport spine of Mozambique; (iv) rehabilitation of 34 flood damaged road segments and eleven damaged bridge or drift structures; and (v) development of new road sector strategy. 7. Mozambique has suffered exceptionally extensive road damage during the lifespan of RBMMPII, far in excess of the country’s ability to rebuild, including damage outside the scope of RBMMPII. The proportion of classified roads in good and fair condition – a PDO indicator measuring the condition of the road network country-wide – has declined due to these flood damages and the target was accordingly adjusted downwards from 77 percent at appraisal to 71 percent upon adoption of the AF3. With the extension, the project will be on track to achieve its development objective, per the revised PDO indicator which currently stands at 71 percent of classified roads. 8. The pending activities fall under the scope of the AF2 and AF3. Consulting services to prepare conceptual designs and bid documents of the AF3-financed works are completed. The pending project activities include: (i) the development of national road design standards; (ii) the implementation of works pilot on climate resilient roads; (iii) the reconstruction The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) civil works in Gaza province financed under the AF3; and (iv) the preparatory studies for the planned new transport project. The four civil works contracts funded by AF 3 have commenced on March 4, 2017 and contractors have been mobilized satisfactorily. These works are expected to finish on time in the last quarter of calendar year 2018. 9. There have been significant changes in the management team at the two key Implementing Agencies (the National Roads Administration and the Road Fund), and currently the new teams are overcoming the initial learning curve and building the base to resume the pace of implementation. The project development objectives remain achievable despite delays noted above. As of June 30, 2017 the total disbursement of IDA-56020, IDA-53460, IDA-H9040, IDA-48920, IDA- 43080 are US$189.34 million (74.67 percent). Rationale for restructuring: 10. This proposed extension of RBMMPII by one year is critical to ensure the achievement of two critical outcomes. First, the extension will ensure the completion of the Medium-term Reconstruction Works in Gaza province. Delays in the preparation of designs and procurement process postponed commencement of these vital reconstruction works. Although a reputable firm was selected to prepare the conceptual designs and bidding documents for the remaining reconstruction works, the firm’s slow performance delayed bidding of the AF3-financed works by eight months, leaving insufficient time for completion of these civil works. Second, the extension will ensure the completion of the activities to improve the climate resilience of Mozambican road infrastructure, including the pilot civil works and preparation of new design manuals. 11. In addition to the closing date extension, the project shall be restructured to include direct payment as a disbursement method for Climate Infrastructure Funds. Direct payment will allow more agile payment to third parties on account of bureaucratic delays associated with clearance of the signed contracts by Administrative Tribunal, and will mitigate the risk of further delay in the project completion. 12. The Task Team confirms that the requirements of OP/BP10.00 regarding extension of closing dates are met, specifically (i) the project objectives continue to be achievable; (ii) the performance of the Borrower remains satisfactory; (iii) the World Bank and the Borrower have agreed on actions to be undertaken by the Borrower to complete the Project; and (iv) there are no outstanding audits or IFRs for the Credits and Grants. II. DESCRIPTION OF PROPOSED CHANGES 13. Restructuring including Extension of Closing Date. The Closing Date of RBMMPII is extended by one year to December 31, 2018. The proposed extension is the minimum time necessary to complete the key activities of the third AF3 and substantially achieve the project objectives. The Results Framework end-target dates are revised to reflect the extended project implementation period. The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) 14. Change in Disbursement Methods. The Project seeks to revise the disbursement methods to include Direct Payment disbursement method for the PPCR funds. 15. Change in Disbursement Estimates. The disbursement schedule reflects the planned implementation schedule of balance activities. By the time of current closing date, the project would have disbursed estimated US$198.97 million (78.47 percent). III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Loan Closing Date(s) ✔ Change in Disbursement Estimates ✔ Change in Implementation Schedule ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Roads in good and fair condition as a share of total classified roads Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 64.00 68.00 71.00 Revised e Date 28-Jun-2007 31-Dec-2015 31-Dec-2018 Share of rural population with access to an all-season road Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 11.00 30.00 40.00 Revised e Date 30-Jun-2007 31-Dec-2015 31-Dec-2018 Direct project beneficiaries Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 1500000.00 4660000.00 6100000.00 Revised e The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) Date 29-Dec-2006 31-Dec-2015 31-Dec-2018 Female beneficiaries Unit of Measure: Number Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 800000.00 2140000.00 3100000.00 Revised Intermediate Indicators IO_IND_TABLE Share of planned routine road maintenance performed annually (weighted average of paved and unpaved roads) Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 60.00 80.73 100.00 Revised e Date 01-Jul-2006 31-Dec-2015 31-Dec-2018 The share of planned paved road routine maintenance program achieved annually Unit of Measure: Percentage Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 54.00 100.00 100.00 Revised Date 01-Jul-2006 31-Dec-2015 31-Dec-2018 The share of planned unpaved road routine maintenance program achieved annually Unit of Measure: Percentage Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 66.00 85.00 100.00 Revised Date 01-Jul-2006 31-Dec-2015 31-Dec-2018 The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) Number of Kilometers of flood damaged roads rehabilitated in Limpopo province. Unit of Measure: Kilometers Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 0.00 196.10 Revised e Date 31-Dec-2006 31-Aug-2016 31-Dec-2018 Establishment/Revision of National Design Specification and standards for paved and unpaved road network Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Valu No design standards Revised Design Ongoing Revised e under preparation. Standards adopted Date 13-Dec-2013 31-Aug-2016 31-Dec-2018 Pilot to reduce weather induced disruptions on selected rural roads in Gaza Province. Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Valu Bid documents expected No pilot underway. Pilot completed. Revised e by end of October, 2016. Date 31-Dec-2013 31-Aug-2016 31-Dec-2018 LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Dec-2012, 31-Dec- 2013, 31-Dec-2012, IDA-43080 Effective 30-Jun-2011 31-Dec-2013, 31-Dec- 2016, 31-Dec-2017 31-Dec-2013, 31-Dec- IDA-48920 Effective 31-Dec-2012 2012, 31-Dec-2013, 31-Dec-2018 30-Apr-2019 31-Dec-2016, 31-Dec- The World Bank Mozambique -Roads and Bridges Management and Maintenance Program - Phase II (P083325) 2017 IDA-53460 Effective 31-Dec-2016 31-Dec-2017 31-Dec-2018 30-Apr-2019 IDA-56020 Effective 31-Dec-2017 31-Dec-2018 30-Apr-2019 IDA-H9040 Effective 31-Dec-2016 31-Dec-2017 31-Dec-2018 30-Apr-2019 TF-15898 Effective 31-Dec-2016 31-Dec-2017 TF-15923 Effective 31-Dec-2016 31-Dec-2017 31-Dec-2018 30-Apr-2019 30-Jun-2016, 07-Apr- TF-17375 Closed 31-Dec-2015 2017 DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2008 6840000.00 6840000.00 2009 3559937.00 19185852.18 2010 19097433.60 19097433.60 2011 36646948.83 36646948.83 2012 32118203.80 32118203.80 2013 14833659.83 14833659.83 2014 16872016.87 6737839.00 2015 34001000.00 4442001.00 2016 11000000.00 18755732.00 2017 5000000.00 30682205.62 2018 0 32114662.00 2019 0 32114662.00