Document of The World Bank FOR OFFICIAL USE ONLY Report No: 86029-BJ PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 4.2 MILLION (US$6.4 MILLION EQUIVALENT) TO THE REPUBLIC OF BENIN FOR THE EMERGENCY URBAN ENVIRONMENT PROJECT APRIL 15, 2014 Africa Environment and Natural Resources Management Unit (AFTN1) Country Department AFCF2 Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presume outcome. This document may be updated following Board consideration and updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective February 4, 2014) Currency Unit = CFA Francs BCEAO 1 US$ = CFAF 485 1 US$ = SDR 0.65 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing AFD French Development Agency AGETUR Public Works Executing Agency CIDA Canadian International Development Agency CPS Country Partnership Strategy DA Designated Account DO Development Objective ESIA Environment and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan EU European Union EUEP Emergency Urban Environment Project FCFA Franc CFA FEWS Flood Early Warning System FM Financial Management FY Fiscal Year GDP Gross Domestic Product GoB Government of Benin IBRD International Bank for Reconstruction and Development IC Individual Consultants ICB International Competitive Bidding IDA International Development Association IFR Interim Unaudited Financial Report IP Implementation Progress IRR Internal Rate of Return ISC Inter-ministerial Steering Committee KfW German Bank for Cooperation LCS Least Cost Selection MEPN Ministry of Environment and Protection of Nature MEW Ministry of Energy and Water ii MTR Mid-Term Review MUHS Ministry of Urban Planning, Housing and Sanitation M&E Monitoring and Evaluation NAPA National Action Program for Climate Change Adaptation NCB National Competitive Bidding NGO Non Governmental Organization NPV Net Present Value NSWMS National Solid Waste Management Strategy OP Operational Policy ORAF Operational Risk Assessment Framework O&M Operations and Maintenance PAPs Project Affected Persons PDNA Post Disaster Needs Assessment PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PGUD Decentralized City Management Project PIM Project Implementation Manual PMU Project Management Unit QCBS Quality and Cost Based Selection RAP Resettlement Action Plan RFP Request for Proposal RPF Resettlement Policy Framework SCRP Growth Strategy for Poverty Reduction SERHAU Society for Regional Study of Urban Habitats and Planning SOE Statement of Expenditures SSA Sub-Saharan Africa SSS Single Source Selection SWM Solid Waste Management UN United Nations Vice President: Makhtar Diop Country Director: Ousmane Diagana Country Manager: Olivier Fremond Sector Manager: Benoit Bosquet Task Team Leader: Africa Eshogba Olojoba iii TABLE OF CONTENTS DATA SHEET V I. INTRODUCTION 1 II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING IN THE AMOUNT OF US$ 6.4 MILLION 1 III. PROPOSED CHANGES 8 IV. APPRAISAL SUMMARY 14 ANEX 1: RESULTS FRAMEWORK AND MONITORING 20 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) 25 ANNEX 3: DETAILED IMPLEMENTATION AND PROCUREMENT ARRANGEMENTS 29 iv REPUBLIC OF BENIN EMERGENCY URBAN ENVIRONMENT PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Country Director: Ousmane Diagana Sector: General water, sanitation and flood Sector Director: Jamal Saghir protection (55%); solid waste management Sector Manager: Benoit Bosquet (25%); and sub-national government (20%) Team Leader: Africa Eshogba Olojoba Themes: Other urban development, disaster risk Project ID: P148628 management and municipal governance Expected Effectiveness Date: September 26, 2014 Environmental category: B - Partial Assessment Lending Instrument: Investment Project Financing Expected Closing Date: December 31, 2015 Additional Financing Type: Scale-up Joint IFC: Joint Level: Basic Information - Original Project Project ID: P113145 Environmental category: B - Partial Assessment Project Name: Emergency Urban Environment Expected Closing Date: December 31, 2015 Project Lending Instrument: Investment Project Financing Joint IFC: Joint Level: AF Project Financing Data [ ] Loan [ X ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: AF Financing Plan (US$m) Source Total Amount (US$m) Total Project Cost: 6.8 Borrower: 0.4 IDA 6.4 Client Information Recipient: Republic of Benin Responsible Agency : Ministry of Urban Planning, Housing and Sanitation 01 BP 3502 Cotonou, Benin Email: jsehoue@yahoo.fr Tel: +229 21 31 77 71; Fax: 229 21 31 51 09 AF Estimated Disbursements (Bank FY/US$m) FY 2015 2016 Annual 3.0 3.4 Cumulative 3.0 6.4 v Project Development Objective and Description Original Project Development Objective: (i) improve infrastructure and mitigate the negative environmental impact of floods in the Cotonou Agglomeration, and (ii) increase the Recipient’s level of preparedness for future flooding. Revised Project Development Objective: N/A Revised project description: Component 1: Drainage Improvement and Rehabilitation (Total IDA: US$25.96 million) Calibration, grading, cleaning, scouring and expansion of drains and channels. The interventions will occur in three collectors (AA, P and W); and the Fifadji bridge will be elevated and rehabilitated to complement civil works to be undertaken on the P collector. It will also include capacity building, training, and strengthening the system for repair and maintenance of drains and channels. The Additional Financing will upscale component activities by expanding drainage network rehabilitation efforts by 2.1 kilometers total, covering the neighborhoods of Houeyiho and Vedoko. The Additional Financing activities are expected to benefit at least 10,000 additional residents. Component 2: Municipal Solid Waste Management (Total IDA: US$15.02 million) Substantially improving the collection, transport and disposal of solid wastes in the project’s targeted areas, and strengthening the institutional and legal frameworks for Solid Waste Management, as per the National Solid Waste Management Strategy. The following activities will be financed: (i) strengthening the institutional and regulatory framework for Solid Waste Management; (ii) construction of municipal solid waste collection points and transfer stations in the five municipalities of Cotonou, Abomey-Calavi, Porto Novo, Ouidah and Seme-Podji; (iii) construction of a controlled dumpsite at Abomey-Calavi; and (iv) construction of an additional cell at the Ouesse landfill site. Additional Financing activities include (i) preparation of a technical and economic feasibility study for putting in place a system for solid waste sorting at source in strategic areas of Cotonou, Porto Novo and Abomey-Calavi; and (ii) two years support to facilitate the operation of the controlled landfill facility in Takon, Porto Novo. Component 3: Improved Wastewater Management and Sanitation (Total IDA: US$5.40 million) The following activities will be financed: (i) capacity building and provision of technical assistance for establishing appropriate norms, standards, guidelines and regulations for more effective management of wastewater; (ii) development of urban wastewater master plans for the Cotonou Agglomeration and Porto Novo; and (iii) implementation of a small-scale decentralized sanitary drainage and wastewater treatment pilot project. Additional Financing activities will support mitigation of the negative environmental impacts and health hazards resulting from the mix of rain runoffs from rains with latrine and septic tank contents during the floods. The Additional Financing will fund wastewater pilots for sanitation and sewage management. Component 4: Flooding and Disaster Risk Preparedness and Management (Total IDA: US$7.13 million) Activities financed under this component include: (i) development of an early warning system; (ii) implementation of an information dissemination and awareness raising program on floods; and (iii) institutional strengthening of key institutions and other principal actors on management of crisis and risks associated with flooding. Additional Financing activities will complement preparedness activities by further improving the operational capabilities and management of flood risks in Cotonou and neighboring municipalities. Component 5: Project Management (Total IDA: US$2.89 million - No Additional Financing) Effective and efficient management support for the implementation of the project, including development vi Monitoring and Evaluation System, and all fiduciary and operationalization of an effective and efficient requirements. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [X]Yes [ ] No Natural Habitats (OP/BP 4.04) [ ]Yes [X] No Forests (OP/BP 4.36) [ ]Yes [X] No Pest Management (OP 4.09) [ ]Yes [X] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [X] No Involuntary Resettlement (OP/BP 4.12) [X]Yes [ ] No Safety of Dams (OP/BP 4.37) [ ]Yes [X] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [X] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X] No Does the project require any waivers of Bank policies? [ ]Yes [X] No Have these been endorsed or approved by Bank management? [ ]Yes [X] No Conditions and Legal Covenants: Financing Agreement Description of Date Due Reference Condition/Covenant Schedule 2, Section II.B.4 The Recipient shall amend the No later than four (4) months contract of the External Auditor after project effectiveness to include the AF date. vii I. INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in the amount of SDR4.2 million (US$6.4 million equivalent) to the Republic of Benin for the on-going Emergency Urban Environment Project (EUEP, the “parent project”) (Credit No: IDA 49370-BJ). The project closing date will remain unchanged (December 31, 2015). In a letter dated November 19, 2013, the Government of Benin (GoB) requested additional support from the World Bank for the project for an amount of US$6.4 million in order to: i) expand on the length of clogged drainage network scoured and rehabilitated beyond the parent project’s scope; ii) increase the number of pilot low-cost wastewater and sanitation sub-projects; and iii) provide technical support to the newly created National Agency for Civil Protection and Department of Climate Change at the Ministry of Environment. 2. This request for Additional Financing (AF) evolves from the initial request for support from the GoB made by the President of Benin to the President of the World Bank on September 30, 2010, and reiterated by the Beninese Delegation during the Annual Meetings (October 2010), to address the negative effects of the 2010 flooding, which affected more than 680,000 people and caused the death of 46 people. A World Bank Post Disaster Needs Assessment (PDNA) mission was fielded and the mission’s subsequent report outlined the extent and impacts of the flooding, suggesting possible actions the World Bank to support the Government’s recovery efforts. The EUEP is a direct output of the PDNA, which assessed that flood damages and losses required interventions on urban drainage systems, solid waste management, wastewater and flood risk management. Given limitation in the International Development Association (IDA)- Benin envelope, the sum of US$50 million was approved for the parent project. This AF request builds on the achievements made by the GoB under the EUEP, namely technical studies including master plans and civil works that are currently being carried out. 3. The EUEP’s performance has been rated satisfactory for both Development Objective (DO) and Implementation Progress (IP) since effectiveness in December 13, 2011. No major changes to the objective or general design and implementation modalities of the EUEP are being proposed. The proposed AF is fully compliant with OP/BP 10.00. II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING IN THE AMOUNT OF US$ 6. 4 MILLION 4. Country context. Benin is a coastal country with a population of nine million people and a per capita annual income of US$753 (Atlas method, 2012). The agricultural sector accounts for 32% of the Gross Domestic Product (GDP) and provides employment to about 70% of the workforce. GDP growth over the last two decades has averaged 4% annually, below the Sub- Saharan Africa (SSA) average of 4.6%. Benin abandoned Marxism in 1990 to embrace democracy. Presidential elections since the National Conference of 1990 have been generally considered free and fair; and transfers of power have been peaceful. In March 2011, Dr. Boni Yayi was re-elected to a second and final five-year Presidential term, and his alliance won a comfortable majority in the National Assembly. With a new mandate and cooperative and supportive legislature, the President has embarked on ambitious reform programs. 1 5. Impact of the 2010 floods. During the 2010 rainy season, Benin, together with most countries in West and Central Africa, suffered from heavy precipitation and flooding. Beginning in the middle of September 2010, unseasonably heavy rains struck the entire country1, with precipitation levels the highest since the beginning of the last century. The rising water levels took populations by surprise, and surpassed their traditional preventive, response and resilience mechanisms. As mentioned, the 2010 flood disaster affected more than 680,000 people and caused the death of 46 persons. Fifty-five out of 77 municipalities were affected to varying degrees. More than 50,000 houses were destroyed and 150,000 people were left without shelter. In addition, 278 schools were flooded, 128,000 hectares of crops and farmland were ruined, and an estimated 12,000 metric tons of food stocks were lost due to destroyed storage facilities. Aside from loss of assets, loss of income and rise in prices due to scarcity of agricultural products reduced the purchasing power of a number of households and increased poverty incidence. More acute in rural areas, where the poorest and most vulnerable reside, the poverty rate increased by 1.1 points, equivalent to 96,514 individuals or 19,303 households. Food insecurity has also increased sharply within the affected areas as reported by the World Food Program. 6. The EUEP was approved on April 26, 2011 and was declared effective on December 13, 2011. The Ministry of Urbanization, Housing and Sanitation (MUHS) was selected to become the Project Implementing Agency. As a flagship project of the GoB for addressing the consequences of the 2010 flooding disaster, the project has been funding investments for improved collection of municipal solid waste in Cotonou and neighboring municipalities, wastewater treatment, and preparedness and adaptation to natural disasters-climate change continuum in urban planning. 7. While the World Bank had supported urban environmental management in Benin for almost two decades prior to the EUEP, support focused on infrastructure and capacity building and not on improving urban environmental management. The first Bank urban project (Benin Urban Rehabilitation and Management Project, 1993-1997) focused on infrastructure rehabilitation and environmental sanitation in Cotonou and Porto-Novo. This project was followed by the first Decentralized City Management Project (PGUD-1, 2000-04) in Cotonou, Porto-Novo and Parakou and the second Decentralized City Management Project (PGUD-2, 2006-10), which was granted an additional envelope in 2008 to cover secondary cities. These urban projects laid the foundation for municipal capacity building in the planning, implementation and monitoring of municipal services and improvements in urban infrastructure such as support to drainage, roads, construction of landfills in key cities. The recently approved Cities Support Project (2013-2020) builds on the PGUD-2 by scaling up access to infrastructure and basic services in urban municipalities and further supporting the Government’s decentralization efforts. The PGUD-2 placed emphasis on the SWM component in Porto Novo by helping the city to develop a long term vision for integrated SWM and implementing a priority action plan with studies, technical support, and construction of a landfill. The EUEP and the AF build on the Porto Novo experience by replicating parts of the collection experience to other cities. They further expand urban environment management to issues that have hardly been addressed by Bank lending and other donor interventions in Benin, such as improved collection 1 Whereas 136mm of rain fell in September 2009, 128mm was recorded on September 10 alone and the monthly total was 344mm. 2 of solid waste in Cotonou and neighboring municipalities, wastewater treatment, and preparedness and adaptation to the natural disaster-climate change continuum in urban planning. 8. The proposed AF is fully aligned with the World Bank Country Partnership Strategy (CPS) for Benin for FY13-17 (Report No. 75774-BJ, approved on April 9, 2013). In particular, the project responds to Pillar II, “Improving Service Delivery and Social Inclusion”, Outcome No. 1, “Leveraging environmental and urban sanitation improvements”. The CPS lays out measures which support Benin’s third Growth Strategy for Poverty Reduction (SCRP-3, 2011- 2015). Both CPS and SCRP-3 acknowledge that Benin’s urban and peri-urban areas face significant environmental challenges related to inadequate and insufficient water supply, sanitation and solid (and liquid) waste collection systems, a situation exacerbated by recurrent floods. A corresponding priority action under SCRP-3 is long-term promotion of sound environmental practices at the national, local and household levels, which are being supported by the EUEP. 9. The project supports GoB’s national strategy for the implementation of the United Nation’s (UN) Climate Change Convention and the National Action Program for Climate Change Adaptation (NAPA), and is aligned with the World Bank’s Africa Region Climate Change Strategy. Due to the close linkage between floods and poverty incidence, the rehabilitation of clogged drainage channels, construction of new solid waste collection points and strengthening of flood preparedness and management are also expected to reduce overall poverty incidence in the targeted areas. 10. The proposed AF will capitalize on the achievements of the EUEP by enhancing urban drainage infrastructure and improving conditions for flood risk management and preparedness nationally. Importantly, it is expected that the AF project would serve as a basis for the preparation of a follow up operation in FY16 as specified in the CPS, in which other flood prone municipalities outside the targeted project area would benefit from further World Bank assistance; like in Northern Benin, and in particular the departments of Borgou and Alibori where the August 2012 floods caused significant human and material damage. Description of the Parent Project 11. Project objective. The Project Development Objective (PDO) of the EUEP is to (i) improve infrastructure and mitigate the negative environmental impact of floods in Cotonou Agglomeration 2, and (ii) increase Recipient’s level of preparedness for future flooding. 12. Project components. The EUEP comprises the following five components: Component 1: Drainage improvement and rehabilitation (IDA US$23.56 million equivalent). 13. The objective of this component is to rehabilitate and improve drainage networks in key areas of Cotonou Agglomeration, which was affected by the 2010 flooding. This will be achieved by calibrating, grading, cleaning, scouring and expanding drains and channels. The interventions will occur in three collectors (AA, P and W); and the Fifadji bridge will be elevated and rehabilitated to complement civil works to be undertaken on the P collector. It will also 2 Cotonou Agglomeration is composed of Cotonou, Abomey-Calavi and Seme-Podji 3 include capacity building, training, and strengthening the system for repair and maintenance of drains and channels. Component 2: Municipal solid waste management (IDA US$13.82 equivalent). 14. The objective of this component is to enable Cotonou Agglomeration and neighboring municipalities of Porto-Novo and Ouidah to mitigate the negative environmental impacts resulting from the obstruction of the drainage canals with waste, and also from the mix of flood waters with poorly managed and disposed of municipal wastes. This will be achieved by substantially improving the collection, transport and disposal of solid wastes in the project targeted areas and by strengthening the institutional and legal frameworks for Solid Waste Management (SWM), as per the National Solid Waste Management Strategy (NSWMS). The following activities will be financed: (i) strengthening the institutional and regulatory framework for SWM, including capacity building of the Ministry of Environment and Protection of Nature (MEPN), and support and capacity building to the municipalities and Non-Governmental Organizations (NGOs) involved in pre-collection of municipal wastes in the five municipalities; (ii) construction of municipal solid waste collection points and transfer stations in the five municipalities of Cotonou, Abomey-Calavi, Porto Novo, Ouidah and Seme-Podji; (iii) construction of a controlled dumpsite at Abomey-Calavi; and (iv) construction of an additional cell at the Ouesse landfill facility. Component 3: Improved municipal wastewater management and sanitation (IDA US$4.70 million equivalent). 15. The objective of this component is to develop an appropriate institutional and regulatory framework for the effective and sustainable management of municipal wastewater in Benin, in view of mitigating the negative environmental impacts and health hazards resulting from the mix of runoffs from rains with latrine and septic tank contents during the floods. The following activities will be financed: (i) capacity building and provision of technical assistance for establishing appropriate norms, standards, guidelines and regulations for more effective management of wastewater; (ii) development of urban wastewater master plans for the Cotonou Agglomeration and Porto Novo; and (iii) implementation of a small-scale decentralized sanitary drainage and wastewater treatment pilot project. Component 4: Flooding and disaster risk preparedness and management (IDA US$5.03 million equivalent). 16. The objective of this component is to increase the level of preparedness in Benin for addressing future flooding, and to strengthen the capacity of the institutions involved in Flood and Disaster Risk Management. Activities financed under this component include: (i) development of an early warning system; (ii) implementation of an information dissemination and awareness raising program on floods; and (iii) institutional strengthening of key institutions and other principal actors on management of crisis and risks associated with flooding to increase the efficiency of the National Flood Emergency Plan. Component 5: Project management (IDA US$2.89 million equivalent). 4 17. This component is designed to provide effective and efficient management support for the implementation of the project, including development and operationalization of an effective and efficient Monitoring and Evaluation (M&E) System, and all fiduciary requirements (safeguards, procurement and financial management). 18. Project performance. The project has made satisfactory progress towards meeting its PDO. The project has consistently been rated satisfactory since project effectiveness in December 2011 with respect to implementation progress. In terms of disbursement, as of end of December 2013, 40% (a total of US$12.7 million) of the IDA credit has been disbursed, and it is expected to increase to 65% (US$32 million) by the Mid-Term Review (MTR), scheduled for May 2014. Both disbursement rates are lower than originally estimated (55% by end of FY13 and 84% by end of FY14) due to some delays in the procurement process of the technical and safeguards studies that were required for the civil works. Now that the studies have been finalized and the works are under underway, it is expected that disbursement will increase substantially (about 75% of the entire credit amount has been allocated to the works). In terms of commitments, over 80% of the total credit amount will have been committed by December 31, 2014. The new estimate for disbursement of both the parent project credit and the additional financing presently does not warrant an extension of the closing date. 19. Over the past two years, a number of studies (technical and safeguards) have been prepared under the project in support of: (i) calibration and reconstruction of drainage channels; (ii) construction and enhancement of Fifadji bridge; and (iii) construction and rehabilitation of solid wastes collection points and transfer stations. While no major civil works have yet to be completed, they have been progressing satisfactorily: major civil works on the rehabilitation of selected drainage networks in Cotonou and the enhancement of Fifadji bridge are ongoing. The opening of a new cell at the Ouesse landfill facility and the paving of the access road that leads to the facility are progressing satisfactorily with 70% and 85% completion rates, respectively. With respect to flooding and disaster risk management, the project is in the process of putting in place contingency plans for the 21 communes that are at high risk of inundation. 20. Component-specific performance is summarized as follows: Component 1: The component performance is rated satisfactory. The project has prepared all the technical and safeguards studies, and civil works are ongoing especially scouring and rehabilitation of the drainage channels and the upgrading of Fifadji bridge. Component 2: The component performance is rated satisfactory. The studies for the construction of collection points and transfer stations are ongoing; and the opening of a new cell at the Ouesse landfill facility and paving of the access road to the facility are ongoing with completion rates of 70% and 85%, respectively. The project prepared a statistical database on solid wastes, and completed the financial and organizational study of pre-collection of solid wastes in the municipalities of Abomey-Calavi and Seme-Podji. Finally, the project prepared a feasibility study on the SWM chain, including transport to the existing landfill site at Ouesse. Component 3: The component performance is rated satisfactory. The project has recruited technical expertise for establishing appropriate norms, standards, guidelines and regulations for a more effective management of wastewater. Activities also include implementing the short term 5 action plans of the national strategy on wastewater in urban areas, including the establishment of effective regulation for municipal wastewater treatment services, and definition of guidelines and municipal wastewater discharge standards. The preparation of master plans for municipal wastewater drainage and treatment in the cities of Cotonou, Porto Novo, Abomey-Calavi and Seme-Podji is ongoing. The completed master plans will provide guidance on the nature, scale and location of potential wastewater pilots. Component 4: This component is rated satisfactory. The following has been achieved: (i) acquisition of 25 hydrometric stations; (ii) communication and raising public awareness on flooding; (iii) cartography of zones with propensity to be inundated; (iv) a study on putting in place an early warning system in the basin of Oueme; and (v) communal contingency plans for the 21 high risk and vulnerable communes in the five participating municipalities. 21. Procurement. Procurement compliance is rated satisfactory. The Additional Financing procurement activities will be implemented by the existing agencies: Public Works Executing Agency (AGETUR in French) and the Society for Regional Study of Urban Habitats and Planning (SERHAU in French) under the existing arrangements of the parent project. The project teams in the two executing agencies are familiar with World Bank procurement guidelines and processes (including PROCYS). They have also benefited from continuous World Bank- supported procurement clinics and training workshops. Procurement supervision missions reported satisfactory results. It was noted that almost all procurement processes had been finalized, the procurement plan had been updated as required, and the executing agencies had been following up on recommendations made by the World Bank and in the audit reports. The implementation of contracts awarded has been proceeding in accordance with the procurement plan. 22. Financial management. Financial performance is rated satisfactory. With respect to the project’s financial management (FM) performance, a supervision mission conducted on October 24, 2013 reported satisfactory results. The executing agencies have well qualified FM staff and adequate manual of procedures supported by a computerized accounting system. The project complies with FM requirements, such as timely submission of quarterly Interim Unaudited Financial Reports (IFRs) and annual audit reports. The latest external audit opinion was unqualified, and there are currently no open accountability issues. 23. Environmental and social safeguards. Overall safeguard compliance is rated satisfactory. The AF, like the parent project, triggers two safeguard policies: Environmental Assessment (OP/BP 4.01) and Involuntary Resettlement (OP/BP 4.12). Typical of Category B projects, the potential environmental and social impacts are expected to be minimal, site-specific and remediable at an acceptable level. The Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF), prepared and disclosed in-country and at the Bank’s InfoShop on May 29, 2012 and June 1, 2012, respectively, still apply. However, for the purposes of this AF, these instruments were revised and redisclosed in-country and at the infoShop January 22, 2014 and January 27, 2014 respectively. 24. The most recent implementation support mission confirmed that project-funded works implemented to date are in compliance with the World Bank safeguards policies. For the ongoing 6 civil works: opening of a new cell at the Ouese landfill facility and the paving of the access road leading to the facility, Environmental and Social Impact Assessments (ESIAs) were prepared, reviewed, approved and disclosed in-country and in the InfoShop prior to the commencement of the works. An Environmental Audit of the existing cell was also prepared and disclosed. An ESIA and a RAP for the drainage channels and the Fifadji bridge were also prepared and disclosed in-country and in the InfoShop. ESIAs for the solid waste collection points and transfer stations are in progress. 25. Staff from the five participating municipalities and from selected ministries and agencies have been trained on World Bank safeguard policies and are now better equipped to supervise the implementation of EMPs, RAPs, the RPF and the ESMF. The Project Management Unit (PMU) and the executing agencies: (AGETUR and SERHAU) have environmental and social safeguard specialists that follow-up the implementation of safeguards concerns, and also ensure that mitigations measures as recommended in the respective ESMPs are implemented by the contractors. They also provide health and safety training to the contractors and supervise consultants. The PMU is engaged with the inhabitants at the project sites to ensure that potentially Project Affected Persons (PAPs) are adequately consulted, and that their views are incorporated into project implementation. 26. Monitoring and Evaluation. The EUEP’s PMU has been working satisfactorily with AGETUR and SERHAU, on collecting and consolidating detailed data to track progress as per the results framework. Implementation support missions have evaluated data collection efficiency, and provided advice for its improvement as needed. 27. Follow up on risks. The overall risk rating of the parent project is Moderate. Most of the risks were rated Moderate and Low as the World Bank team was of the opinion that many of the identified risks could be mitigated through rigorous implementation support, monitoring and supervision. 28. During the course of implementation, fiduciary risks, including the risks of substantial delays in procurement procedures and processes, have been minimized. Through guidance and support of the World Bank’s FM and procurement specialists, as well as targeted training opportunities, the executing agencies have been strengthened to ensure that sound procurement and financial management was maintained. The computerized accounting system has been upgraded to allow close monitoring of project FM implementation. The PMU and the executing agencies have played central roles in fiduciary risk mitigation through monitoring and supervision of contractors and their supervising consultants. Rationale for Requesting Additional Financing 29. The AF is required to scale up the impact and development effectiveness of the EUEP. By scaling up activities both in terms of geographic coverage and types of intervention, some 20,000 additional beneficiaries in Cotonou and the other four participating municipalities of Abomey-Calavi, Seme-Podji, Ouidah and Porto Novo, are expected to directly benefit from improved access to offered services. Under component 1, 10,000 additional beneficiaries from the neighborhoods of Houeyiho and Vedoko will have access to a rehabilitated drainage network (as a result of the 2.1km expansion of the works), thereby reducing their vulnerability to 7 flooding; under component 3, the AF will significantly expand project-funded wastewater treatment piloting, which is expected to benefit approximately 2,600 additional people by reducing the health hazards resulting from the mix of rain runoff with latrine and septic tank contents during floods. Under components 2 and 4 (municipal SWM and flooding and disaster risk management, respectively), the AF will increase the effectiveness and efficiency of the original EUEP investments within the originally planned geographic coverage by targeting the same communities. Importantly, under component 4, the AF will put in place the currently missing elements for a much more effective disaster risk preparedness and management, which is expected to result in long term reduction of economic losses and saving of lives. The AF for components 2 and 4 are expected to benefit approximately 7,400 people. Due to the direct linkage between flooding and poverty incidence, the ongoing activities of the EUEP and those proposed in the AF will contribute to reducing poverty and promoting shared prosperity. See Table 1 for an analysis of the AF’s incremental impact. 30. The AF is the most efficient mechanism to maximize the EUEP’s development impact and results in the sector: activities can be accommodated at a relative ease, as implementation will rely on existing project implementation structures and arrangements, therefore bringing about cost-effectiveness gains for the Recipient, as compared to preparing a new project. All new activities are expected to be completed by December 31, 2015, which is also the EUEP’s closing date. The economic justification of the additional activities remains the same as that of the parent project. The additional activities do not change the environmental category (Category B) or trigger new safeguards policies. The proposed AF activities are consistent with the EUEP’s PDO and are aligned with Benin’s CPS. No changes to the project’s key performance indicators are proposed, although targets are adjusted to reflect the impact of the AF. The adjusted results framework is attached as Annex 1. 31. Consistency with OP/BP 10.00. The proposed AF is consistent with OP10.00 paragraph 26 (Investment Project Financing), under which the IDA may provide AF for Investment Lending for scaling up the development effectiveness of a well performing project. The parent project implementation has moved forward with success recorded in technical engineering works, M&E, and procurement, FM and safeguards compliance. Implementation of the project has been consistently rated satisfactory since project effectiveness in December 2011, including full compliance with legal covenants. The AF is economically justified in its response to the severe damages to drainage infrastructures occasioned by the effects of the 2010 floods and enhancing the Government’s capacity in flood disaster preparedness, mitigation and response at the national, municipal and commune levels. III. PROPOSED CHANGES 32. The PDO of the AF will be the same as the parent project’s PDO: to improve infrastructure and mitigate the negative impacts of floods in Cotonou Agglomeration, and to increase Benin’s level of preparedness for future flooding. The EUEP’s closing date of December 31, 2015, remains unchanged and this same date applies to the AF. 33. The disbursement categories and procedures remain unchanged. 8 34. The project outcome indicators remain unchanged, although the targets are increased to reflect the additional activities being financed. Activities undertaken in the various components will be scaled up to strengthen project sustainability. The description below provides a summary of AF activities in each component. Component 1: Drainage improvement and rehabilitation (IDA US$2.4 million equivalent) 35. The additional activities under this component will benefit an additional 10,000 residents at least, and will focus on strengthening the drainage systems through: (i) cleaning, reconstruction and calibrating of approximately 800 additional meters of canals under the P basin, covering the neighborhoods of Houeyiho and Vedoko; and (ii) opening, scouring and calibrating of channels, including resurfacing the inner walls of the drains to ensure free flow and evacuation of stagnant water and vegetation. This intervention covers additional 1.3 kilometers of drainage structures in the quarters of Houeyiho and along the Akossombo-Place du Souvenir road. The technical studies and bidding documents for these interventions are available. Component 2: Municipal solid waste management (IDA US$1.2 million equivalent) 36. The planned activities complement the efforts in the parent project by: (i) Preparing a technical and economic feasibility study for putting in place a system for solid waste sorting at source in strategic areas of Cotonou, Porto Novo and Abomey-Calavi. The study is expected to provide essential information to complement the EUEP-funded SWM activities, i.e., construction of about 25 collections points and two transfer stations in these municipalities; and (ii) supporting the operation of Takon controlled landfill facility: A feasibility study carried out under the EUEP recommended that the municipalities of Porto Novo and Seme-Kpodji dispose of their wastes in the newly constructed Takon landfill because of its relative proximity to the municipalities. The Takon landfill was built by the World Bank-funded PGUD-2 (P082725), as part of a comprehensive solid waste management plan, and was handed over to the Government of Benin by the contractor in April 2012. The operation of the landfill was mainstreamed into the municipality of Porto Novo budget for infrastructure maintenance. However, due to financial challenges faced by the municipality, the landfill has not been operational. The AF will support the start-up of this landfill, therefore achieving one of EUEP’s objectives (an increase in collection and disposal of waste to 60% from the present 2% - 30% rate, depending on the municipality). The landfill will continue to operate in accordance with a long-term financing and action plan which was prepared by the municipality of Porto Novo and accepted by the Bank. The AF will support the municipality of Porto Novo for two years according to the financing plan, after which it is expected that the landfill will continue to be financed and managed by the municipality independently from the project in accordance with the plan. Component 3: Improved Wastewater Management and Sanitation (IDA US$0.7 million equivalent) 37. This activity is proposed with a view to mitigating the negative environmental impacts and health hazards resulting from the mix of rain runoff with latrine and septic tank contents 9 during the floods. While individual on-site sanitation systems exist for modern houses (consisting mainly of latrines or septic tanks), a public municipal wastewater drainage and treatment system does not exist. The AF will fund additional wastewater pilot projects for sanitation and sewage management. These wastewater pilots will evolve from the master plans of wastewater and drainage of Cotonou, Abomey-Calavi, Seme-Podji and Porto Novo; that is currently under preparation. The wastewater pilots will test the technical, economic and financial feasibility of different municipal wastewater treatment options depending on the living and environmental conditions. They will also help establish the required maintenance, cost recovery, and service fees for scaled up schemes. The following guiding principles will be used for the design of the pilot projects: • Each project will target a settlement with between 500-1,500 inhabitants, i.e., an approximate number of 100 to 300 households; • The proposed schemes will incorporate local collection systems and discharging to simple low-cost and low-tech treatment units; • Collection systems will comprise whenever possible low-cost gravity feed sanitary drainage systems, following ground levels, and minimizing excavation depths for pipes and manholes; • The installation of latrines in the households; • The proposed schemes will build on the existing scheme whereby latrines and septic tanks are available in some of the households. Component 4: Flooding and disaster risk preparedness and management (IDA US$2.1 million equivalent) 38. The AF-funded activities will complement already funded preparedness activities which are meant to improve the operational capabilities and management of flood risks in Cotonou and neighboring municipalities, and institutional strengthening of institutions charged with floods and disaster risk management at the national, regional and local levels, such as the National Agency for Civil Protection, which has the mandate for Flooding and Disaster Risk Management. Activities are: (i) preparation of a national policy on disaster risk management and putting in place an integrated database for the management of disasters, especially those related to flooding; (ii) support to the new Department of Climate Change in the Ministry of Environment; support will be targeted at some of the priority action plans in the NAPA, such as establishing a system for forecasting climate risk and early warning for food security in four vulnerable agro-ecological zones; and mobilization of surface water for adaptation to climate change in vulnerable departments of central and northern municipalities; (iii) support to the National Meteorological Department by purchasing modern equipment and providing specialized training; (iv) support to the General Department of Water in monitoring hydrometric stations on the Oueme river; (v) support to the institute of water and laboratory at the University of Abomey-Calavi. 39. The AF activities remain within the parent project’s overall target area, i.e., the Cotonou Agglomeration. This area was selected for intervention because it had been the most affected zone by the 2010 floods. 10 40. The following table demonstrates the incrementality of AF-funded activities to the EUEP: 11 EUEP Activities EUEP Impact AF Activities AF Incremental Impact 1 • Calibration and unclogging of P, AA and W2 43,600 residents protected • Cleaning, reconstructing and calibrating 800 additional 10,000 additional and Wbis collectors (covering a total of 8.6 km of from floods and associated meters in P basin residents protected drainage structures) health impact in the • Opening, scouring and calibrating additional 1.3km of from the adverse • Construction of the Fifadji Bridge project target areas drainage structures. impact of flooding (loss of lives and property, disease and food insecurity) in an expanded target area 2 • Capacity building of the MEPN, and • A more limited • Preparing a technical and economic feasibility study Increased provision of TA and capacity building to the negative impact of solid for on-site waste sorting effectiveness, municipalities and NGOs involved in pre- waste on flooding • 2 year operational support for the Takon landfill efficiency of collection of municipal wastes in the project • Increased capacity of component activities, target areas central government, resulting in further • Construction of collection points and transfer municipalities and NGOs’ reduction of the stations to handle waste collection impact of solid waste • Construction of a controlled dumpsite on flooding in the Construction in Abomey-Calavi target areas • Construction of a new cell at the Ouessè dump and access road construction (paving option) 3 • Development of master plans for municipal • Strengthened • Implementation of some wastewater and sanitation 2,600 additional wastewater drainage and treatment institutional and pilot projects residents protected • Institutional strengthening and TA for regulatory framework for from some of the improved municipal wastewater management municipal wastewater health impact of • Implementation of a small-scale sanitary management flooding as a result of drainage and waste water treatment pilot project mixing flood water with untreated wastewater. 12 4 • Supporting the establishment of a FEWS • Improved operational • Preparing a national policy on disaster risk Improved legal policy • Strengthening the coordination capacity at the capabilities and management and knowledge national level management of flood risks • Putting in place a database for disaster management framework for • Education and awareness in the project target areas • Supporting government to implement priority NAPA disaster risk • Integration of prevention of flood risk in action plans management and urban planning • Purchasing modern meteorological equipment and further improvement • Support to the establishment of operational providing specialized training in national operational contingency plan in vulnerable communes • Supporting government in monitoring hydrometric capabilities – both stations on the Oueme River. ultimately resulting in • Support the institute of water of the University of increased Abomey-Calavi on flooding and inundation research preparedness and adaptation of communities to natural disasters, including flooding 13 41. Project costs and financing plan. Table 2 below summarizes the estimated costs: Table 2. Estimated AF Costs per Component Component Initial Credit ( US$ Additional Financing (US$ Total Financing million) million) (US$ million) 1 23.56 2.40 25.96 2 13.82 1.20 15.02 3 4.70 0.70 5.40 4 5.03 2.10 7.13 5 2.89 0.00 2.89 Total 50.00 6.40 56.40 IV. APPRAISAL SUMMARY 42. Technical appraisal. The technical design of the additional works funded by the AF credit will be based on the experience gained to date by the parent project. The investments, which were mutually agreed by the Government and the World Bank’s technical team, are expected to provide protection to the highest number of people in the areas most vulnerable to flooding in the city of Cotonou and in nearby municipalities. As with the parent project, the selected technical solutions are simple and within the reach of the Beninese counterparts. In addition, each activity has been identified and selected on the basis of available high quality technical studies: • Component 1 (cleaning, reconstruction and calibrating of additional 2.1km of canals under the P basin; and opening, scouring and calibrating of channels): the technical studies and bidding documents for these interventions are available. The civil works envisaged are mainly opening and calibrating the channel floor by removal and disposal of vegetation, solid wastes and mud; and to ensure flow to the outlet. The inner walls of the drains will be resurfaced to ensure free flow and evacuation of stagnant water and vegetation. • Component 2 (operational support to the Takon landfill facility): This will entail supporting the operation of the facility by providing funds to the facility operator to start compacting available and future solid wastes. • Component 3 (wastewater treatment pilot projects): The AF pilot projects will be implemented in locations which will be identified by the wastewater master plans under preparation, and funded by the parent project. The pilot projects will test among others the technical, economic and financial feasibility of municipal waste water treatment options. • Component 4 (support to the new Department of Climate Change to implement some of the priority action plans in the NAPA, training to the National Meteorological Department, and support to the General Department of Water in monitoring hydrometric stations on the Oueme river): technical information is available. 43. Economic appraisal. The economic analysis of the parent project continues to be valid. The economic analysis was performed for the prevention and adaptation infrastructure investments in terms of three drainage improvement area in Cotonou (prevention) and the 14 elevation of a bridge (adaptation) in Cotonou as well as the solid waste (prevention) subcomponent. It covered the recurrent annual flooding during the high season (April-July) and the low season (September-October). 44. A number of key conservative assumptions were considered: • The economic analysis was carried out over a period of 24 years (from 2011 to 2034); • A real discount rate of 12% per annum was used; • Priority investments were disbursed over the first 0.5 to 2.5 years of project implementation; • Operations and maintenance (O&M) cost increase at an average 3% annually in real terms; • The lost opportunity (monetized by the GDP) of 10 disruptive severe-flood-days were considered although an improved drainage, bridge and waste management were to help Cotonou Agglomeration avoid any major disruptive floods in the future. • A crude hedonic method was suggested to derive the incremental cost of land with the reduction or containment of annual floods. Current average land cost was CFAF23,000 per m2, whereas the incremental land cost due to the reduction of floods was assumed to be a net increase of 10% of the value of the land located within a distance of 75m from each side of the public setback drainage area (150m in total) with a total length of 8.6km; • The flooding of the bridge affects 40,000 people (average 2 people per vehicle, bus, truck and motorcycle) with a loss of one hour per day over 10 days; • The GDP per capita per year adopted for the calculation was CFAF346,500 with an annual growth of 3% and a distribution of 50% for the under 14 years of age, 100% for the 15 to 64 years age bracket and 30% for more than 64 years of age; • There were no major infrastructure, mechanical and equipment investments that could not be covered by O&M over the lifetime of the subcomponents; and • Only revenues perceived from the waste pre-collection were used in the analysis. 45. Determination of NPV, IRR and Benefit/Cost Ratio. The drainage, bridge and solid waste subcomponents aggregate economic Net Present Value (NPV) discounted at 12% was found positive with US$ 77 million over 24 years. The benefit/cost ratio reached 11 while the economic Internal Rate of Return (IRR) was also found positive with 31%. Despite the conservative stance and the few benefits considered in the economic analysis, the drainage, bridge elevation and solid waste subcomponents were found to be economically viable. 15 Table 3. Key Economic Indicators with 12% Discount Rate Key Economic Indicator Results Interpretation NPV/24 years US$77.4 Net benefit exceed cost IRR/24 years 31% Positive Benefit/Cost Ratio/24 years 11 Discounted benefit > discounted cost Result: The above three criteria indicate that the project is economically viable 46. Rationale for public provision of services and World Bank value added. Benin’s investment climate is weak. Recent studies of investment climate have ranked Benin amongst countries with the poorest business enabling environment. Private sector activity is hampered by expensive transaction costs of importation of goods, and the poor state of the country’s energy, road and ICT sectors. While the Government wishes to encourage greater private sector involvement in the implementation of the SCRP-3, and counts on the development of public- private partnerships to finance an ambitious infrastructure development plan, efforts to develop a PPP program have yet to be supported by a coherent strategic vision and an appropriate institutional set up. Private sector participation is further hindered by the lack of an effective and coordinated dialogue mechanism between the public and private sectors. The World Bank has supported Benin's urban development and management for almost two decades; therefore, within the country’s many development needs, this issue could benefit from the Bank’s comparative advantage and solid expertise. 47. Implementation arrangements. The AF will be implemented using the same implementation arrangements of the EUEP (see Annex 3 for detailed description of implementation arrangements). These arrangements have been successful to date, in particular the use of AGETUR and SERHAU as the executing agencies. 48. Monitoring and evaluation of outcomes/results. The EUEP’s M&E system will be used for the AF activities. It will be based on the agreed results framework and monitoring arrangements (see Annex 1), with the PMU. AGETUR and SERHAU will still be responsible for collecting the data needed to report on the results indicators and for conducting necessary surveys. AGETUR will continue to be responsible for following up on indicators for components 1, 2, and 3, while SERHAU will continue to follow-up on parts of component 2 and component 4. AF progress will be reported as part of the EUEP’s semi-annual monitoring table and progress reports, which will continue to be prepared by the PMU and discussed during the Steering Committee meetings. These reports assess achievements against the agreed work plans and the overall PDO. The PMU is responsible for preparing quarterly reports and updating the work plans on an annual basis, taking into account the achievements of the project outcomes to date, the strategic focus of the project, and feedback from the World Bank. From the onset of the parent project, special attention has been given to M&E of project implementation and objectives achievement. This focus has helped the Government and World Bank work together in a more streamlined way to achieve the good progress so far. An in-depth evaluation of project results will be undertaken at the Mid-Term Review of the parent project, planned by May 2014. 49. Financial management. The proposed AF does not involve any change that could affect the current FM arrangements. As a result, it has been agreed that the FM arrangements of the proposed AF will build on the existing FM implementation arrangements of the parent project as follows: FM arrangements for the AF would be handled by AGETUR and SERHAU, each 16 agency on its respective components. These entities would be responsible for implementing and monitoring day-to-day project activities, including budgeting, disbursement, FM, reporting, supervision, management of the designated account, and auditing. AGETUR will continue to be responsible for the consolidation of financial statements and quarterly IFRs, which will be extended to cover AF transactions. The contract of the external auditor under the parent project will be amended to incorporate the AF within one month of AF effectiveness. 50. Disbursements. The project will continue to finance 100% of eligible expenditures, inclusive of taxes under the original financing. Disbursements arrangements for the AF will be based on the existing arrangements for the parent Project. The project will continue to use report- based disbursement procedures. The existing Designated Accounts (DA-A: AGETUR; DA-B: SERHAU) at BCEAO Cotonou will also be used for the additional financing. The designated accounts will receive an initial advance equivalent to the forecast for two quarters as shown in the quarterly Interim Financial Report (IFR) upon project effectiveness. The project will continue to submit withdrawal applications electronically using “eDisbursements” accessible at the World Bank’s Client Connection website. Further instructions on disbursement and details on the operation of the DA will be outlined in the disbursement letter. 51. The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Financing (“Category”), the allocations of the amounts of the Financing to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Category Amount of the Percentage of Financing Allocated Expenditures to be (expressed in SDR) Financed (inclusive of Taxes) (1) Works for the Project US$2.4 million 100% (2) Goods, non-consulting services, consultants’ services, US$4 million 100% Operating Costs and Training for the Project TOTAL AMOUNT US$6.4 million 52. Procurement. Adherence to procurement guidelines and processes has been satisfactory in the parent project. Procurement for the proposed AF will be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works and Non-consulting Services under the International Bank for Reconstruction and Development (IBRD) Loans and IDA Credits and Grants by World Bank Borrowers”, published by the World Bank in January 2011, and the World Bank’s “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers”, published by the World Bank in January 2011. In addition, the “Guidelines on Preventing and combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006, and revised in January 2011, will apply. World Bank’s standard bidding documents and evaluation 17 report forms will be used. The Project Implementation Manual (PIM) describes in detail the procurement arrangements and the specific methods. Detailed procurement methods, similar to procedures under the parent project, are also described in Annex 3. The implementation arrangements for procurement will remain the same as those currently in place. As per the original design, all procurement activities for the AF will be carried out by AGETUR and SERHAU. A Post Procurement Review carried out in 2013 reported satisfactory results. The assessment revealed that AGETUR and SERHAU were very experienced and skilled with the World Bank’s procurement procedures and processes. 53. Procurement plan. The Government has developed a draft procurement plan for the first 12 months of project implementation. Following approval of the proposed AF, the agreed procurement plan will be published on the World Bank’s public website and the Recipient’s website. The procurement plan will be updated in agreement with the World Bank at least semi- annually or as required to reflect project implementation. All procurement will be carried out in accordance with the agreed procurement plan. All procuring entities and staff, as well as bidders, suppliers and contractors shall observe the highest standard of ethics during the procurement and execution of contracts financed under the project in accordance with paragraph 1.16 of the guidelines “Procurement of Goods, Works, Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers”, and paragraph 1.23 of the guidelines “Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers”. 54. Sustainability. The EUEP and AF finance a wide array of capacity strengthening activities for stakeholders as well as institutional and regulatory-centered activities – all aiming to increase the country’s ability to finance and manage relevant urban environment issues beyond the lifetime of the project: the country’s ability to sustain drainage improvement interventions (component 1) is expected to be strengthened through capacity building and training for stakeholders and by strengthening the system for repairs and maintenance; municipal SMW (component 2) is expected to be enhanced by strengthening the relevant institutional and regulatory frameworks; wastewater management and sanitation capabilities (component 3) will be strengthened through capacity building and the establishment of norms, standards, guidelines and regulations; and the country’s operational capabilities for disaster risk management (component 4) are also expected to be increased through support of relevant agencies. 55. In order to ensure that physical investments are maintained independently from project financing, arrangements for operation and maintenance have been put in place by the participating municipalities, and the budget needed will be integrated in their annual budgets. The project will also build strong operational capacity for the maintenance of the investments. In view of the significant capacity limitations at the central level, and in the context of an emergency operation where implementation efficiency is critical, the management of the EUEP and AF are outsourced to experienced executing entities. 56. Environment and social safeguards. The proposed activities are similar in type and scope to the parent project. It is not expected that the additional civil works activities to be carried out under the proposed AF will affect the environmental category of the project, which remains at Category B. No new safeguard policies are triggered; besides the Environmental Assessment Policy (OP/BP 4.01) and Involuntary Resettlement Policy (OP/BP 4.12) already triggered by the 18 parent project. The types of investments included in the AF are covered by the ESMF and RPF, prepared and disclosed in-country and the World Bank’s InfoShop on May 29, 2012 and June 1, 2012, respectively. These instruments, i.e. the ESMF and RPF, will apply and for this purpose, they were revised and re-disclosed in-country and at the World Bank’s InfoShop on January 22, 2014 and January 27, 2014, respectively. The PMU, AGETUR and SERHAU will be responsible for applying the safeguard screening and mitigation requirements to each AF-funded sub-project. The PMU has been staffed with a qualified professional as a focal person to work with the executing agencies in ensuring safeguards compliance, and the World Bank will assess the implementation of the safeguard instruments and provide additional technical support as needed. 57. Lessons Learned. The EUEP took into consideration lessons learned from PGUD-1, PGUD-2, the CIDA experience in SWM, and global disaster risk management and emergency recovery/reconstruction operational experience. Lessons learned included the need for selectivity in investments, the need to pay attention to investments’ sustainability, the importance of public participation and communication, and the advantage of using existing implementing agencies. The implementation of the EUEP has validated the importance of these lessons, and the design of the AF will continue to follow them. Importantly, the design of the AF activities also relies on the recommendations of a number of technical, financial, organizational and safeguards studies, which were funded by the EUEP. 58. Benefits. The proposed additional activities would scale up the impacts of components 1, 2, 3, and 4 of the parent project. According to initial estimates, the AF will benefit (i) additional 10,000 persons who would no longer be subjected to periodic flooding, and (ii) additional 2,600 persons who will have improved hygienic and sanitary wastewater system through the pilots. The related outcome indicators have been adjusted to reflect the additional benefits (see Annex 1). 59. Risks and mitigation measures. The AF’s overall risk rating is Moderate equivalent to the parent project’s rating. Conditions and Covenants 60. Effectiveness: There are no conditions of effectiveness. 61. Dated covenant: Not later than four months of effectiveness date the Recipient shall amend the contract of the external auditor referred to in Section II.B.4 of Schedule 2 to the original Financing Agreement, in form and substance satisfactory to the Association. Exceptions to World Bank Policies 62. The proposed AF does not involve any exceptions to World Bank policies. Project Readiness 63. The project is ready to be implemented, and there is capacity in the implementing and executing agencies to ensure timely delivery of the proposed additional activities. The technical and safeguards studies already exist for the civil works, and the procurement process will be launched immediately after effectiveness. 19 ANNEX 1: RESULTS FRAMEWORK AND MONITORING BENIN: Emergency Urban Environment Project (Additional Financing) Revisions to the Results Framework Revisions to the Results Framework Comments/ Rationale for Change PDO Current Proposed The objective of the project is Unchanged to improve infrastructure and mitigate the negative environmental impact of floods in Cotonou Agglomeration and to increase Benin’s level of preparedness for future flooding PDO indicators Current Proposed change Number of alerts on flood Unchanged risks issued per year using the Flood Early Warning System(End of project target: 20) Percentage reduction of Unchanged households vulnerable to flooding in the targeted municipalities as a result of improved infrastructure (End of project target: 30%) Intermediate Results indicators Component 1: Drainage Improvement and Rehabilitation Current Proposed change Length of drainage network New target: Length increased to 10.7 Target increase as per additional rehabilitated (End of project kilometers. activities under the AF target: 8.6 kilometers) Rehabilitation of the Fifadji Unchanged bridge Component 2: Municipal Solid Waste Management Number of municipal solid Unchanged waste collection points and/or transfer stations constructed and operational (End of project target: 40) Direct project beneficiaries New Target: 1,426,000 (of which 52% 20 Revisions to the Results Framework Comments/ Rationale for Change (End of project target: female) 1,401,000, of which 52% female) Component 3: Wastewater Management and Sanitation Waste water master plan Unchanged developed for Cotonou Agglomeration (Cotonou, Abomey-Calavi and Seme- Podji) and Porto Novo Pilot low-cost small scale Unchanged wastewater and sanitation projects implemented and operational Component 4: Flooding and Disaster Risk Preparedness and Management Installation of Flood Early Unchanged Warning System (FEWS) Targeted municipalities with Unchanged Communal Flood Contingency Plans (End of project target: 22) 21 Revised Project Results Framework Project Development Objective (PDO): To improve infrastructure and mitigate the negative environmental impact of floods in Cotonou Agglomeration and to increase Benin’s level of preparedness for future flooding. PDO Level Cumulative Target Values Responsibility Description Core Unit of Baseline Data Source/ Results Frequency for Data (indicator Measure 2010 2011 2012 2013 2014 2015 Methodology Indicators* Collection definition etc.) Indicator One: Number 0 0 3 10 15 20 Annual Progress SERHAU and Number of report DGEau alerts on flood risks issued per year using the Flood Early Warning System Indicator Two: % 70% 70% 60% 50% 40% 30% Annual Progress AGETUR and Percentage reports technical reduction of services of the households municipalities vulnerable to flooding in the targeted municipalities as a result of improved infrastructure 22 INTERMEDIATE RESULTS Intermediate Result (Component One): Drainage improvement and rehabilitation Intermediate Kilometer 0 0.5 3 8.6 9.2 10.7 Annu Progress AGETUR Rehabilitation Result indicator al reports and works will be One: Length of regular undertaken drainage construction/ concurrently in network rehabilitation the three rehabilitated reports collectors Intermediate Yes/No No No No Yes Yes Yes Annu Progress AGETUR Result indicator al reports and Two: regular Rehabilitation of construction/ the Fifadji rehabilitation bridge reports Intermediate Result (Component Two): Solid waste management Intermediate Number 13 15 25 35 40 40 Annua Progress AGETUR Collection points Result indicator l reports and or transfer One: Number of regular stations with municipal solid construction necessary waste collection reports accessories in points and/or place. transfer stations constructed and operational Intermediate Number 695 000 802 000 931 000 1 066 000 1 225 000 1 426 000 Annua Census/annua PMU and Core indicator Result Indicator / 417 000 185 741 520 l l estimates SERHAU for IDA Two: Number of % 361 400 484 000 554 000 637 000 ,000 and progress direct project (Female (Female (Female: (Female: reports beneficiaries : 52%) :52%) (Female (Female:52 52%) 52%) (number), of :52%) %) which females (%) (CORE) Intermediate Result (Component Three): Wastewater management and sanitation Intermediate Yes/N0 No No Yes Yes Yes Yes Annual Progress AGETUR and Result indicator report SONEB One: Waste water master plan developed for Cotonou Agglomeration 23 (composed of Cotonou, Abomey-Calavi and Seme- Podji) and Porto Novo Intermediate Yes/No No No Yes Yes Yes Yes Annual Progress AGETUR and Result indicator report SONEB Two: Pilot low- cost small scale wastewater and sanitation projects implemented and operational Intermediate Result (Component Four): Flooding and disaster risk preparedness and management Intermediate Yes/No No No Yes Yes Yes Yes Annual Progress SERHAU and Result indicator report DG-Eau One: Installation of Flood Early Warning System (FEWS) Intermediate Number 2 2 6 10 15 22 Annual Progress SERHAU Result indicator report Three: Targeted municipalities with Communal Flood Contingency Plans 24 ANNEX 2 Operational Risk Assessment Framework (ORAF) Benin: Benin Emergency Urban Env. Additional Financing (P148628) . . Project Stakeholder Risks Stakeholder Risk Rating Moderate Risk Description: Risk Management: Key stakeholders’ unwillingness to follow up maintenance The project will fund institutional strengthening efforts in project planning and of key infrastructures rehabilitated and improved upon by maintenance in the ministry of environment and urban planning; as well as in the project. participating municipalities. Municipalities buy-in is critical to the success of the The participating municipalities are knowledgeable about World Bank guidelines having additional financing given that some investments are on participated in PGUD1, PGUD 2 and the ongoing parent project. The parent project while involve temporal displacement for civil works. which is fully supported by the municipalities will guarantee beneficiaries ownership through proper mobilization, sensitization and communication. Good resettlement policy implementation is critical to ensure that PAPs are compensated appropriately before the commencement of civil works. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both Not Yet Due Implementation 30-Jul-2015 Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Rating Moderate Risk Description: Risk Management: The Project Management Unit may not be able to PMU is used to working with multi-ministries, agencies and municipalities as coordinate project activities with six ministries and five exemplified in the implementation of the parent project and the now closed PGUD-2 municipalities, in addition to five solid waste pre- project using the executing agencies of AGETUR and SERHAU. Further, the fact that collection NGOs. There could be delays due to inter- the proposed project will have focal points in all the ministries is likely to facilitate ministry bureaucracy and this might eventually lead to coordination. The parent project is being implemented satisfactorily with the executing delays in project implementation. Implementation capacity agencies having well qualified procurement and FM specialists. is generally weak in Benin and the executing agencies Resp: Status: Stage: Recurrent: Due Date: Frequency: may be over-worked due to other commitments Client In Progress Implementation 25 Governance Rating Substantial Risk Description: Risk Management: Public accounts are generally incomplete and delayed; The government is implementing an action plan to address the main weaknesses inadequate control mechanism, ex-post controls are identified by the Public Expenditure and Financial Accountability (PEFA) assessment. uncoordinated and include several units working A decree regulating internal audit has been adopted and the use of exceptional independently, external audits are delayed and surge in the procedures has been strictly limited. The issue regarding delay in production of accounts use of expenses following exceptional procedures. is being resolved. Additional staff has been recruited and the accounting software However, since 2009, the Government with assistance deployed to the sub national level. Concerning external audits, discussions are in from the World Bank has mitigated most of the risks. progress with the Government to improve the capacity of the Chamber of Accounts. Governance ratings for Benin are low according to World Resp: Status: Stage: Recurrent: Due Date: Frequency: Bank reports and so it would be for the project if efforts are not made to arrest the situation early at Both Completed Implementation 10-Aug-2012 implementation. Risk Management: The agencies have been assessed by the FM and procurement specialist of the World Bank and the results have been satisfactory. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Project Risks Design Rating Low Risk Description: Risk Management: The Additional Financing supports an existing project and The PMU will as in the parent project work with the executing agencies of AGETUR therefore design risk is low and SERHAU Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation 30-Jul-2015 Social and Environmental Rating Low Risk Description: Risk Management: Adverse environmental and social impacts of investments The executing agencies are well conversant with World Bank safeguards policies. In the parent project, three ESIAs and one RAP have been prepared. Further, the PMU has an 26 environmental and social specialist responsible for following up environment and social concerns. The proposed project will use same institutional arrangements for safeguards as the parent project. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation 25-Mar-2014 Program and Donor Rating Moderate Risk Description: Risk Management: There may be low donor interest. The wastewater sector Continuous coordination with donors will be ensured during the implementation of AF has never been addressed by any donor. Some donors, activities, similarly to the parent project, especially those active in the urban and such as the Canadian International Development Agency sanitation sectors, such as the French Development Agency (AFD) and the European (CIDA), have worked on solid waste management, but at a Union (EU). very limited scale. Resp: Status: Stage: Recurrent: Due Date: Frequency: Bank In Progress Implementation 30-Jul-2015 Delivery Monitoring and Sustainability Rating Substantial Risk Description: Risk Management: The project may not achieve its sustainability objectives Government has shown interest during the preparation of the project and there is strong Poor financing for O&M of the drainage and SWM civil commitment from the municipalities to provide land for construction of the collection works unless they occur within a short period of time points and transfer stations as well as counterpart funding. The World Bank team has had continuous discussion on O&M concerns with the municipalities, who have agreed to put aside some funds for O&M. The project will also build strong operational capacity for the maintenance of the investments. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client Not Yet Due Implementation 30-Jul-2015 Other (Optional) Rating Risk Description: Risk Management: Resp: Status: Stage: Recurrent: Due Date: Frequency: 27 Other (Optional) Rating Risk Description: Risk Management: Resp: Status: Stage: Recurrent: Due Date: Frequency: Overall Risk Overall Implementation Risk: Rating Moderate Risk Description: The overall risk associated with the project is Moderate. The team is of the opinion that many of the identified risks are manageable through rigorous implementation support, monitoring and supervision of the project activities. 28 ANNEX 3: DETAILED IMPLEMENTATION AND PROCUREMENT ARRANGEMENTS BENIN: Emergency Urban Environment Project (Additional Financing) I. Implementation Arrangements (as per parent project) 1. In close consultation and collaboration with the GoB and other stakeholders, it has been agreed that the institutional and implementation arrangements of the EUEP will remain unchanged for the AF as follows: 2. The MUHS will continue to be the World Bank’s main GoB counterpart in its capacity as the project Implementing Agency. MUHS will ensure that the project is correctly implemented in a timely fashion, and that the PDO is achieved. 3. The project will be overseen by the existing Inter-ministerial Steering Committee (ISC), headed by the Minister of MUHS. The ISC includes the ministries of Environment and Protection of Nature; Water and Energy, Decentralization, Interior, Development and Planning, Health, Finance; and the mayors of the participating municipalities (Cotonou, Abomey-Calavi, Porto Novo, Seme-Podji and Ouidah). The ISC will provide overall guidance to the project, review project implementation progress, and provide support to MUHS in the coordination between other ministries, municipal authorities, and other government agencies involved in project implementation. The ISC will meet twice a year to review activities and progress reports. The Project Management Unit (PMU) will act as the ISC permanent and technical Secretariat. The main functions of the Secretariat will consist of: (i) analyzing activity reports from the executing agencies; and (ii) summarizing recommendations coming from the World Bank. 4. The project will be managed by the existing EUEP’s Project Management Unit (PMU) under the supervision of MUHS. The PMU will be in charge of the day-to-day management of the project. Its functions would include: (i) follow up and evaluation of work to be performed by the executing agencies; (ii) act as the technical Secretariat of the ISC as mentioned above; (iii) prepare consolidated technical and financial project reports for the ISC and the World Bank; and (iv) ensure dissemination of knowledge from the project to MUHS and the Ministry of Environment and Protection of Nature (MEPN). The same operational staff in the parent project: M&E Specialist, Flood and Disaster Risk Management Specialist, Environment Specialist, Communication Specialist and the project Engineer, will manage the AF. The existing Memoranda of Understanding (MOUs) with MEPN, MEE, and the five municipalities of Cotonou, Abomey-Calavi, Seme-Podji, Ouidah, and Porto Novo, will apply. As in the parent project, the participating entities will each nominate a Focal Point, at the ministry and agency levels, for the daily management of their respective components and for coordination with the PMU. The PMU will report directly to the Minister of MUHS and will be overseen by the existing ISC. 5. As in the parent project, implementation of AF activities will be delegated to the EUEP’s two executing agencies, SERHAU and AGETUR. The existing agreements between the GOB and the agencies, and agreements between the participating municipalities and agencies, will apply. The expansion of the mandate of these agencies in accordance with Section 1.B of 29 Schedule 2 to the Financing Agreement of the parent project is part of the AF conditions of effectiveness. SERHAU and AGETUR have proven track record in delegated contract management under World Bank and other donor-funded projects; and they both operate finance and accounting systems acceptable to the World Bank. These entities shall continue to be responsible for the technical and fiduciary aspects (FM and procurement) of the components, including AF activities. AGETUR will continue to be responsible for tendering technical studies, major infrastructure works and works supervision (components 1, 2 and 3); while SERHAU will continue to cover studies and technical assistance under components 2 and 4. 6. The PMU, AGETUR and SERHAU will develop annual activities programs in close consultation with the focal points, which would include the AF activities. The annual programs would specify activity, target costs, financing (IDA credit and counterpart funding), terms of reference, agency fees, procurement plan, draft implementation timetable and respective roles and responsibilities of the parties. 7. The M&E system will be based on the revised results framework and monitoring (see Annex 2). Most of the indicators selected can be directly monitored, and the ones that cannot be directly monitored can be collected via simple surveys. The PMU, AGETUR and SERHAU will be responsible for monitoring the results indicators and conducting surveys. SERHAU will continue to be responsible for following up on components 2 and 4 relevant indicators, while AGETUR will continue to be responsible for following up on components 1, 2 and 3 relevant indicators. II. Procurement Arrangements 8. Procurement for the proposed AF will be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits and Grants” dated January 2011; and (ii) “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers”, dated January 2011. 9. Procurement under the parent project is rated satisfactory. The AF will capitalize on the excellent performance of the existing executing agencies. As per parent project design, all the procurement activities for the AF will be carried out by AGETUR and SERHAU under the oversight of the PMU. The current arrangements ensure expeditious processing, efficiency, adequate resource management and improvement of service delivery, and would be the same for the AF. 10. Procurement methods will rely on a competitive process in most cases, essentially International Competitive Bidding (ICB) and National Competitive Bidding (NCB) for goods, works and non-consulting services, and Quality and Cost Based Selection (QCBS) for consultancy services. In essence, procurement transactions will be carried out using the World Bank’s Standard Bidding Documents or Standard Request for Proposal (RFP) respectively for all ICB, for goods and for selection of consultants. For National Competition Bidding (NCB), the Recipient could submit a sample form of bidding documents to the World Bank for Prior 30 Review, and will use this type of document throughout the project once agreed upon. The Sample Form of Evaluation Reports, published by the World Bank, will be used. 11. Prior-Review Thresholds: The procurement plan shall set forth those contracts which shall be subject to the World Bank’s Prior Review. All other contracts shall be subject to Post Review by the World Bank. However, relevant contracts below Prior Review thresholds listed in the table below, which are deemed complex and/or have significant risk levels, will be prior reviewed. Such contracts will also be identified in the procurement plans. A summary of Prior Review and procurement method thresholds for the project are indicated in the table below: Table 3.1: Procurement and selection review thresholds Prior review Procurement/selection threshold Comments methods (US$) 1. Works and Goods ICB • Works ≥ 3,000,000 Method can be applied for any amount, but is mandatory • Goods ≥ 500,000 above these amounts LIB ≥ 500,000 NCB N/A Shopping ≥ 100,000 Communities Participation N/A Direct Contracting All contracts All contracts 2. Consulting services QCBS ≥ 200,000 LCS ≥ 200,000 CQS ≥ 200,000 Method for contracts ≤ US$500,000 Individual Consultants (IC) ≥ 100,000 Single Source Selection All contracts Review of all contracts (SSS) 3. Trainings and workshops On basis of detailed and approved annual plan (with indication of venue, number of participants, duration and Training and workshops ≥ 10,000 exhaustive budget, etc.) and No objection by the Task Team Leader 4. Terms of References (TORs) All TORS regardless of the value of the contract are subject to prior review. 12. Training, Workshops, Study Tours, and Conferences. Training (including training material and support), workshops, conference attendance and study tours, will be carried out on the basis of approved annual training and similar activities plan. A detailed training or workshop plan on the nature of the training/workshop, number of trainees/participants, duration, staff months, timing and estimated cost will be submitted to the World Bank for review and approval prior to initiating the process. After the training, the beneficiaries will be requested to submit a brief report indicating what skill have been acquired and how these skills will contribute to enhance their performance and contribute to the attainment of project objectives. All trainings, terms of reference of contracts estimated to more than US$10,000, and all amendments of contracts raising the initial contract value by more than 15% of original amount or above the Prior Review thresholds, will be subject to World Bank Prior Review. All contracts not 31 submitted to the Prior Review will be submitted to the World Bank for Post Review in accordance with the provisions of paragraph 5 of Annex 1 of the World Bank’s Consultant Selection Guidelines and World Bank’s Procurement Guidelines. 13. Procurement Plan and Filing. All procurement activities will be carried out in accordance with approved original or updated procurement plans. The procurement plans will be updated at least semi-annually or as required to reflect the actual project implementation needs and capacity improvements. Procurement documents must be maintained in the project files and archived in a safe place for at least two years after the closing date of the project. AGETUR and SERHAU will be responsible for the filing of the procurement documents. 14. Operational Costs. Operating costs financed by the project are incremental expenses, including office supplies, vehicles operation and maintenance, maintenance of equipment, communication costs, rental expenses, utilities expenses, consumables, transport and accomodation, per diem, supervision costs and salaries of locally contracted staff, except salaries of civil servants. They will be procured using the procurement procedures specified in the Project Implementation Manual. 32