Document of The World Bank Report No: 70214-IN RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF INDIA ORISSA STATE ROADS PROJECT LOAN BOARD APPROVAL DATE: SEPTEMBER 20. 2008 TO THE GOVERNMENT OF INDIA JUNE 20, 2012 Sustainable Development Unit India Country Management Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS CSC Construction Supervision Consultants GAAP Governance and Accountability Action Plan GOO Government of Orissa ICT Information and Communication Technology ISAP Institutional Strengthening Action Plan IT Information Technology KMPH Kilometer per Hour LMV Light Motor Vehicle MIS Management Information System OWD Orissa Works Department PDO Project Development Objective PMU Project Management Unit PPP Public Private Partnership RAMS Road Asset Management System R&R Rehabilitation and Resettlement RTI Right to Information TDP Tribal Development Plan Regional Vice President: Isabel M. Guerrero Country Director: N. Roberto Zagha Acting Sector Manager / Director: Binyam Reja / John Henry Stein Task Team Leader: Rajesh Rohatgi 2 INDIA INDIA ORISSA STATE ROADS PROJECT P096023 CONTENTS Page A. SUMMARY ........................................................................................................................... 4 B. PROJECT STATUS .............................................................................................................. 4 C. PROPOSED CHANGES ...................................................................................................... 4 ANNEX 1: RESULTS FRAMEWORK AND MONITORING ................................................. 6 3 INDIA ORISSA STATE ROADS PROJECT RESTRUCTURING PAPER A. SUMMARY 1. It is proposed to remove “PPP enabling support� from the component entitled, “PPP Enabling, Sector Policy and Institutional Development and Implementation Support.� The “PPP enabling support� was original designed to provide technical assistance to prepare PPP transactions, for which the investment would be done by the government and the private. However, this change is being requested because the land acquisition and Rehabilitation and Resettlement processes and policies being followed by the Government of Orissa (GOO) under the “PPP enabling support� activity were not in compliance with Bank’s safeguard policies. 2. The Bank noted the aforementioned gaps during a mission in May 2011 and subsequently requested the GOO to suspend the land acquisition process until this issue is resolved. In response, the GOO communicated their decision to follow the state’s own policies and continued with the land acquisition process since the investment for the roads would not come from the Bank. On November 15, 2011, the Bank informed GOO that Non-compliance with the Bank’s safeguard policies constitute a breach of the legal agreements and discontinuation of Bank’s further support to any activity associated with the “PPP enabling support�. This Level II restructuring is proposed to formalize discontinuation of this support. ` B. PROJECT STATUS 3. The project is currently under suspension since May 2011. An action plan was prepared for lifting of suspension of loan disbursement. A recent mission in April 2012 noted that except for the actions related to progress and quality of civil works, GOO achieved good progress in implementing all other actions that are under their direct control. Keeping this in view, a final decision on suspension of disbursements shall be taken by the Bank after completion of the next full implementation mission, scheduled in July 2012. 4. The project, in its current status is unlikely to achieve the Project Development Objectives by the current scheduled date for loan closing (December 31, 2012) as all the three major civil works contracts in Phase I are under either termination or on show cause notice for termination and the bidding process for two major roads is yet to start. It has been therefore agreed to expedite a major project restructuring, proposal for which is expected from GOO through Department of Economic Affairs for review and processing within the Bank, subsequent to the current restructuring. C. PROPOSED CHANGES  Project’s Development Objectives There will not be any change in PDO due to the proposed restructuring. 4  Results/indicators Please refer to ‘Annex 1’for Revised  Components The revised new Component B would be: Sector Policy and Institutional Development and Implementation Support Component: This component will involve (i) Modernization and institutional strengthening of the Orissa Works Department; (ii) Strengthening the policy, institutional and legal framework of the state road sector and; (iii) implementation and monitoring of the project.  Safeguards No new/additional safeguard policy is expected to be triggered due to the proposed restructuring. 5 ANNEX 1: Performance Monitoring Indicators Results Framework PDO Project Outcome Indicators Use of Project Outcome Information 1. Remove transport 1.1 vehicle operating costs (at 2006 constant input prices) in To assess the project’s bottlenecks in priority transport project corridors reduced as follows: contribution to improve the corridors for greater state’s investment climate Cars/LMV: From 4.3 to 3.6 Rs/veh-KM (15%) investment and economic and Trucks: From 10.2 to 8.8 Rs/veh-KM (14%) social development activities. Buses: From 8.7 to 7.1 Rs/veh-KM (18%) 1.2 vehicle speed in project corridors increased as follows: Cars/LMV: 45 to 60 KMPH (33%) Trucks: From 35 to 45 KMPH (29%) Buses: From 40 to 55 KMPH (38%) 1.3 favorable response by firms about the condition of road corridors improved under the project 1.4 OWD efficiency and transparency improved: (i) Operation and Maintenance arrangement for the Core Road Network put in place; (ii) core business functions fully operational; and (iii) OWD meets RTI disclosure requirements and implements the GAAP Intermediate Outcomes Intermediate Outcome Indicators Use of Intermediate Outcome Monitoring 1 Three priority road corridors 1.1 461 km of state highways widened and upgraded efficiently To assess the performance of improved in socially and the project and to redirect it, if 1.2 Environmental management plans effectively implemented environmentally sustainable necessary, to achieve the PDO way 1.3 Social safeguard measures (R&R, TDP, HIV/AIDS Mitigation, and Road Safety Awareness program) effectively implemented in project corridors 2 OWD Core Business 3.1 Road Asset Management, Road Safety and Environment Units/Cells Fully Functional and Social Management operational and execute annual business programs, and IT/ICT/MIS operational 3.2 Milestones in GAAP and ISAP met 3 Conducive road sector policy 4.1 Improved policy and legislative framework in place put in place to govern the 4.2 Sustainable road maintenance financing options studied and management, financing and suitably implemented safety of the road network 4.3 Road Safety Action Plan established and being implemented 6 Arrangements for Results Monitoring Actual Value Target Values Data Collection and Reporting Outcome Indicators Baseline YR1 YR2 YR3 YR4 YR5 Frequency and Data Responsibility (2006) Reports Collection for Data Instruments Collection 1.1 vehicle operating costs 15% 15% Bi-Annual High RAMS OWD/PMU in project corridors reduced Cars 4.29 3.62 3.62 Priority Network by 15% Trucks 10.22 8.77 8.77 Condition Reports Buses 8.70 7.10 7.10 1.2 vehicle speed in project 36% 36% Bi-Annual High RAMS OWD/PMU corridors increased from by Cars 45 60 km/hr 60 km/hr Priority Network 36% Trucks 35 45 45 Traffic Reports Buses 40 55 55 1.3 favorable response by To be To be To be Baseline survey, Survey Independent firms about the condition of undertaken YR1 undertaken undertaken MTR and EOP Consultant road corridors improved user satisfaction under the project surveys 1.4 OWD efficiency and To be To be To be User Satisfaction Survey OWD transparency improved: (i) undertakenYR1 undertaken undertaken Surveys – every Operation and Maintenance two years arrangement for the Core Road Network put in place; (ii) core business functions fully operational; and (iii) OWD meets RTI disclosure requirements and implements the GAAP. Results Indicators for Each Component Component 1 (Road I Corridor improvement Component) 1.1 461 km of state 0% 204 km 461 km Semi-annual In-house OWD/PMU/CSC highways widened and progress report, reporting, upgraded efficiently Monthly reports, certification quarterly FMRs of quantities by CSC 1.2 Environmental 0% 100% for 100% for EOP report In-house OWD/PMU management plans Phase I Phase II reporting effectively implemented 1.3 Social safeguard 0% 100% for 100% for MTR and EOP Independent Independent measures (R&R, TDP, Phase I Phase II report impact Consultant HIV/AIDS Mitigation, and assessment Road Safety Awareness program) effectively implemented in project corridors Actual Value Target Values Data Collection and Reporting Intermediate Outcome Baseline YR1 YR2 YR3 YR4 YR5 Frequency Data Responsibility Indicators and Collection for Data Reports Instruments Collection Component 2 ( OWD Modernization, and Policy and Institutional Framework) 3.1 Road Asset Nil RAMS ES Road IT/ICT/MIS 50 IT/ICT/MIS Semi-annual In-house OWD/PMU Management, Road Safety Operational operational Safety Cell rollout 100% rollout progress reporting and Environment and Social operational report Management operational and IT/ICT/MIS operational 3.2 Milestones in GAAP and Nil 20% 60% 80% 100% Study report In-house OWD/PMU ISAP met and final reporting report 4.1 Improved Road Policy Nil Study Policy and Legal Study report In-house OWD/PMU and Legislative Framework completed Framework and final reporting put in place approved by GOO report 4.2 Sustainable road Nil Study Road Annual In-house OWD/PMU maintenance financing Completed Maintenance report reporting options studied and suitably Financing Option implemented suitably implemented 4.3 Road Safety Action Plan Nil Study New Safety Study report In-house OWD/PMU put in place completed Policy approved; and final reporting institutional report arrangement put in place, and Action Plan Implementation started 8