Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES8823 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE ROAD UPGRADING AND MODERNIZATION PROJECT P118375 LOAN 7971-BY BOARD APPROVAL DATE: November 11, 2010 TO THE REPUBLIC OF BELARUS February 4, 2013 ECSTR EUROPE AND CENTRAL 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. Regional Vice President: Philippe H. Le Houerou, ECAVP Country Director: Qimiao Fan, ECCU2 Sector Manager: Juan Gaviria, ECSTR Task Team Leader: Andreas Schliessler, ECSTR 2 BELARUS ROAD UPGRADING AND MODERNIZATION PROJECT CONTENTS Page A. SUMMARY ........................................................................................................................... 5 B. PROJECT STATUS.............................................................................................................. 6 C. PROPOSED CHANGES ...................................................................................................... 6 D. APPRAISAL SUMMARY.................................................................................................... 8 ANNEX 1: RESULTS FRAMEWORK AND MONITORING ................................................. 9 3 DATA SHEET Belarus Road Upgrading and Modernization Project (P118375) EUROPE AND CENTRAL ASIA ECSTR . . Basic Information Project ID: P118375 Lending Instrument: Specific Investment Loan Regional Vice President: Philippe H. Le Houerou Original EA Category: Partial Assessment (B) Country Director: Qimiao Fan Current EA Category: Partial Assessment (B) Sector Director: Laszlo Lovei Original Approval Date: 11-Nov-2010 Sector Manager: Juan Gaviria Current Closing Date: 30-Nov-2014 Team Leader: Andreas Schliessler Report No: RES8823 . Borrower: Republic of Belarus Responsible Minskavtodor-Center (MA-C) Agency: . Restructuring Type Form Type: Full Restructuring Paper Approval Authority: Board Approval Restructuring Level 1 Level: . Financing Information ( as of February 1, 2013 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date IBRD- P118375 Effective 11-Nov-2010 19-Nov-2010 05-Jul-2011 30-Nov-2014 30-Nov-2014 79710 Disbursements (in Millions) Un % Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed disbursed Disbursed IBRD- P118375 Effective USD 150.00 150.00 0.00 65.08 84.92 43.38 79710 . Policy Waivers 4 Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] . A. Summary of Proposed Changes The original design of the Belarus Road Upgrading and Modernization Project included the design, procurement, supply and installation of the first stage of a countrywide state-of-the-art electronic road tolling system, under its "modernization" Component 2. Under the original design of the project, the first stage of the tolling system would have been implemented with World Bank funding, with the intention to gradually expand the system to about 2,600 km of major highways in Belarus over several subsequent years with the Government's own funding. The full implementation of the tolling system would have taken about 5 to 7 years. However, while the functional design of the system was carried out (during the first year of implementation of the World Bank funded project) the Government decided to accelerate the full implementation of the tolling system. In early 2012, it signed a PPP concession contract with a leading European firm for the supply and installation of the system on about 2,600 km of major highways, and its operation during 20 years. The contract is under implementation and the first phase of the new tolling system should be operational in mid-2013. It is important to note that the contract is not in any way related to the World Bank funded project. The Bank and the Government have agreed to nevertheless maintain their collaboration on the subject of road network modernization. The redefined project Component 2 will address another aspect of modernization of road network management. The proposed change is to replace the support for the tolling system by support for the design, supply, installation and commissioning of a countrywide state-of-the-art axle load monitoring and control system. The sole purpose of the project restructuring of the project is to redefine the content of Component 2 of the project and reflect this in the Project Development Objective and the Results Framework. There are no other changes to the project. The formal risk rating of the project remains "moderate". Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] 5 Change in Disbursement Estimates Yes [ ] No [ X ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ X ] No [ ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ X ] No [ ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Analysis Yes [ ] No [ X ] . B. Project Status The key activities under project Components 1 (Road upgrading) and 3 (Technical Assistance and Capacity Building) continue to advance well. Physical road works under Component 1 started very well in the winter of 2011/2012 but then slowed down during a few months in 2012, when the road contractor started to accumulate delays in the late spring and during the summer. However, works have accelerated during the fall and the accumulated delays are now rather small (about 10 percent of total contractual construction time). It is expected that road upgrading works will be fully completed as planned, by the end of 2013, one year before the project closing date. Under Component 3, technical support and advisory services, and various types of training are being provided to the project implementing agency Minskavtodor-Center (MA-C), the State Road Construction Supervision agency BELDORCENTER and other institutions. These are mainly to increase local capacity for the management of the FIDIC-type civil works contracts, for environmental and social management of infrastructure investment projects, and for economic assessment of road sector investments. (FIDIC is the International Federation of Engineering Consulting Firms.) The Client is satisfied with the various capacity-building activities carried out under this Component. A total of US$ 65.08 million (43.38 percent of loan amount) has been disbursed to date, most of which are payments to the road contractor TODINI. The current performance of the project implementing entity Minskavtodor-Center (MA-C) is satisfactory. Financial audit reports were received and are satisfactory. There are no outstanding audit reports. . C. Proposed Changes . Development Objectives/Results Project Development Objectives Original PDO The development objective of the project is to reduce transport costs for road users on the upgraded 6 sections of the M5 road, and introduce an efficient cost recovery mechanism in Belarus’ road sector through electronic tolling. The project objective would be achieved mostly by improving the condition, quality and capacity of a road section, and by implementing the initial stage of an electronic road tolling system. Change in Project's Development Objectives Explanation The electronic road tolling system included in the original project design is being replaced by an axle load control system. Proposed New PDO To reduce transport costs for road users on the upgraded sections of the M5 road and introduce a modern axle load control system in Belarus as a tool to increase road sector sustainability. Change in Results Framework Explanation: The electronic road tolling system included in the original project design is being replaced by an axle load control system. Therefore, the original indicator "Modern electronic road toll system is installed and operational on the section from km 22 to km 131 of the M5 road" is being replaced by another indicator: "Axle load monitoring and control system has been supplied and installed on non-tolled main roads in Belarus". . Compliance Change in Safeguard Policies Triggered . Change of EA category . . . Financing Components Change to Components and Cost Explanation: The electronic road tolling system included in the original project design is being replaced by an axle load control system. Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Road Upgrading 131.00 No Change Modernization of Road Axle Load Monitoring 18.00 Revised Tolling System and Control System Technical Assistance and 1.00 No Change Capacity Building 7 Total: 0.00 150.00 . Other Change(s) Change in Procurement Explanation: The procurement plan has been revised to reflect the change in Component 2. The "Supply and Installation of a road tolling system" is to be replaced by "Supply and Installation of Axle Load Monitoring and Control System". Consulting services under this component have been changed accordingly. . Change(s) in Appraisal Summary Appraisal Summary Change in Technical Analysis Explanation: In Belarus, new or reconstructed roads are being designed to carry axle loads of 11.5 tons in line with European standards, but older roads were designed to carry only 10.0 tons per axle. The different road types have thus different load limits, but both road types need to be protected from overloading. The revised Component 2 of the project will consist of the design, procurement and implementation of weigh- in-motion devices embedded in the pavement of major roads that carry large numbers of trucks. The system will make it possible to screen all trucks without stopping them, and to identify overloaded trucks. These overloaded trucks could then be stopped and their axle loads measured with precision, either at existing fixed weighing stations or by mobile units deployed at strategic locations throughout Belarus, for the purpose of enforcing legislation and issuing fines. This system would entail large efficiency gains, since (i) most heavy vehicles traveling in Belarus could be screened without causing any delay or interference with their trip; (ii) overloaded vehicles, and only those, could be identified, stopped and fined. The system would bring Belarus to the forefront of efficient axle load control and thus protect its road assets from premature deterioration. The Bank team reviewed and confirmed the technical and operational feasibility of the planned axle load monitoring and control system. The detailed functional and technical design of the system and the determination of the locations of the axle load control stations will be carried out by an international consulting firm. The stations will be along the non-tolled portion of the main road network, since the axle load control along the toll roads will be integrated in the tolling system (outside the scope of the project). The technology needed for the system is available from several suppliers. The proposed technological option is to implement weigh-in-motion devices embedded in the pavement of all major roads that carry large numbers of trucks. These devices will be combined with vehicle recognition technology and with ICT technology. 8 ANNEX 1 Results Framework and Monitoring Belarus - Road Upgrading and Modernization Project Status: Project Project Road Upgrading and Modernization Project (P118375) Restructuring Retrofitted Name: Stage: ORAF Team Requesting Andreas Schliessler ECCU2 Created by: Andreas Schliessler on 26-Nov-2012 Lead: Unit: Product Responsible IBRD/IDA ECSTR Modified by: Andreas Schliessler on 04-Feb-2013 Line: Unit: Country: Belarus Approval FY: 2011 EUROPE AND CENTRAL Lending Region: Specific Investment Loan ASIA Instrument: . Project Development Objectives Original Project Development Objective: The development objective of the project is to reduce transport costs for road users on the upgraded sections of the M5 road, and introduce an efficient cost recovery mechanism in Belarus’ road sector through electronic tolling. The project objective would be achieved mostly by improving the condition, quality and capacity of a road section, and by implementing the initial stage of an electronic road tolling system. Proposed Project Development Objective (from Restructuring Paper): To reduce transport costs for road users on the upgraded sections of the M5 road and introduce a modern axle load control system in Belarus as a tool to increase road sector sustainability. Results Core sector indicators are considered: Yes Results reporting level: Project Level . Page 9 of 12 Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target No Change Vehicle Operating Cost Percentage Value 100.00 100.00 94.00 Sub Type Date 10-Feb-2010 08-Jun-2012 30-Nov-2014 Comments Baseline Works underway. By the end of Vehicle Project, the Operating Cost VOC (at Data Set is in baseline traffic HDM4 files. levels) should The overall be at least six VOC data percent lower "without than before the project" are set project. as the baseline value of 100%. Revised Axle Load Monitoring and Text Value No Yes Control System introduced on Sub Type Date 10-Feb-2010 08-Jun-2012 30-Nov-2014 non-tolled main roads in Belarus. Comments System not in By the end of place. Project, the system should be in place and operational. Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target No Change Roads constructed, non-rural Kilometers Value 0.00 0.00 52.70 Sub Type Date 12-Feb-2010 08-Jun-2012 30-Nov-2014 Page 10 of 12 Comments Works underway, End of Project but no completed sections yet. No Change Road Roughness Number Value 3.20 2.00 Sub Type Date 10-Feb-2010 08-Jun-2012 30-Nov-2014 Comments The baseline Present value not The target value available. roughness value represents the Roughness will of IRI 2.0 is to roughness only be measured be achieved (IRI) before after construction after the the works. is completed. completion of the works. No Change Traffic Fatalities Number Value 12.00 5.00 Sub Type Date 10-Feb-2010 08-Jun-2012 30-Nov-2014 Comments The baseline Recent statistics After the fatality figure on annual opening of the represents the fatalities not completed road, average annual available. annual traffic fatalities on fatalities should the road drop to 5 or less. section to be improved under the project. Revised Axle Load Monitoring and Text Value No Yes Control System operational Sub Type Date 10-Feb-2010 08-Jun-2012 30-Nov-2014 Comments Not expected Page 11 of 12 until 2014. No Change Capacity to manage FIDIC Text Value No Yes type contracts Sub Type Date 10-Feb-2010 08-Jun-2012 30-Nov-2014 Comments Training underway. . Page 12 of 12