The World Bank Norte Grande Road Infrastructure (P120198) REPORT NO.: RES37241 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NORTE GRANDE ROAD INFRASTRUCTURE APPROVED ON DECEMBER 20, 2010 TO ARGENTINE REPUBLIC TRANSPORT LATIN AMERICA AND CARIBBEAN Regional Vice President: Axel van Trotsenburg Country Director: Jesko S. Hentschel Senior Global Practice Director: Guangzhe Chen Practice Manager/Manager: Juan Gaviria Task Team Leader: Veronica Ines Raffo The World Bank Norte Grande Road Infrastructure (P120198) ABBREVIATIONS AND ACRONYMS AADT Annual Average Daily Traffic DNV National Directorate of Highways (Dirección Nacional de Vialidad) DPV Provincial Directorate of Highways (Dirección Provincial de Vialidad) HDM Highway Development and Management Model IRI International Roughness Index ISR Implementation and Status and Results Report MTR Mid-Term Review PAD Project Appraisal Document PDO Project Development Objective PIU Project Implementation Unit PR Provincial Road The World Bank Norte Grande Road Infrastructure (P120198) BASIC DATA Product Information Project ID Financing Instrument P120198 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 20-Dec-2010 30-Jun-2019 Organizations Borrower Responsible Agency ARGENTINE REPUBLIC Dirección Nacional de Vialidad (DNV) Project Development Objective (PDO) Original PDO The development objective of the proposed project is to reduce transport costs for users of provincial roads along selected corridors of the Norte Grande provinces, through the improvement of the quality of those roads and the introduction of improved road asset management tools and methods. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-79910 20-Dec-2010 04-May-2011 23-Dec-2011 30-Jun-2019 400.00 357.62 42.38 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Norte Grande Road Infrastructure (P120198) The World Bank Norte Grande Road Infrastructure (P120198) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Norte Grande Road Infrastructure Project was approved by the Board on December 20, 2010 for an amount of US$ 400 million. The loan was declared effective on December 23, 2011. 2. Progress towards the achievement of the PDO is rated Moderately Satisfactory. Progress on PDO indicators related to Component 1 (Rehabilitation, Upgrading and Reconstruction of Provincial Roads) is satisfactory: PDO indicator 1 “Evolution of average network roughness” and PDO indicator 3 “Percentage reduction in generalized travel costs” are already achieved for the completed roads. PDO indicator 2 “quality of service through user’s perception” has increased from 11.28% to 40.90% and is yet to be updated after the completion of remaining civil works. However, institutional development activities under the project have not progressed in introducing improved road asset management tools and methods in provinces, as targeted. Only one of the targeted five provinces has finalized multi-annual road maintenance plans and has road database management systems in place, while work on these outputs in the remaining four provinces is still ongoing and will not be finalized by the current closing date (this is reflected in Moderately Unsatisfactory rating of Component 2: (Institutional Development and Project Management). To date, US$ 352.6 million or 88% of the total loan amount has been disbursed. 3. This would be the third extension of the loan closing date for the Project which would bring the cumulative extension to 42 months from the original loan closing date. The first extension in May 2016 extended the loan closing date by 23 months from June 30, 2016 to May 31, 2018. In May 2018, the loan closing date was extended for 13 months until June 30, 2019. The World Bank Norte Grande Road Infrastructure (P120198) B. Rationale for Restructuring 4. The proposed restructuring is needed to ensure achievement of the PDO by allowing additional time for the completion of key activities that have been delayed by unforeseen circumstances: (i) The ongoing fiscal consolidation has reduced budgetary allocation for line ministries. and budget allocations for Vialidad Nacional (the implementing agency) for both 2018 and 2019 did not meet the project financing needs, in particular for Component 2. (ii) Financial and exchange-rate volatility led the Borrower to delay a few critical procurement processes of imported goods until the exchange rate stabilized. (iii) In the context of budget restrictions, Vialidad Nacional redefined its priorities and needs for budget resources, which slowed down decision-making processes and negatively affected the implementation performance of all activities. 5. The proposed extension would allow the full implementation of the following key Institutional Development activities: multiannual investment plans, open data, road works cost system, provincial lab equipment, drones, soil and rock drill rig equipment. The Provincial Multiannual Investment Plans, which are captured in PDO indicators, are under development in a contract signed in March 2019, with most deliverables to be completed by December 2019. The six-month extension would cover this critical activity. The Borrower has committed to fund with public resources any remainder of that contract if further delays extended its activities beyond the new closing date. The proposed extension would also allow the Borrower to execute an additional US$5.5 million under Component 2, which are already included in the 2019 budget of Vialidad Nacional. Component 1 activities are expected to be completed by the current closing date, while the remaining funds under this component, corresponding to about US$12.6 million, will be cancelled. 6. The Project satisfies the conditions for extension of loan closing date as outlined in the Bank Policy on Investment Project Financing, in that the PDO remains achievable; the performance of the Borrower remains overall satisfactory, and the Borrower and the Bank have agreed on an action plan to complete the Project. The proposed restructuring would not imply any changes to the Safeguards policies triggered nor to the safeguards risks. There are no audit reports outstanding or not acceptable to the Bank. The World Bank Norte Grande Road Infrastructure (P120198) II. DESCRIPTION OF PROPOSED CHANGES C. Proposed Changes 7. The proposed Level Two restructuring consists of a 6-month extension of the loan closing date from June 30, 2019 to December 31, 2019 and a cancellation of loan proceeds for US$30.2 million (US$12.6 million under Component 1, and US$17.6 million of unutilized funds under Component 2), with proceeds being reallocated as detailed in table below. The results’ framework target dates will also be adjusted accordingly. I. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Components and Cost ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ The World Bank Norte Grande Road Infrastructure (P120198) Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-May-2018, 30- IBRD-79910 Effective 30-Jun-2016 31-Dec-2019 30-Apr-2020 Jun-2019 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' Disburs S REQUEST IBRD- 400,000,000.0 369,774,566.0 ing&Re USD 30,225,434.00 24-Jun-2019 FOR 79910-001 0 0 paying COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed The World Bank Norte Grande Road Infrastructure (P120198) IBRD-79910-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: CW under subprojects 365,000,000.00 333,703,869.14 352,387,671.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: GO,CS,Non-CS,TR,OP 34,000,000.00 6,788,301.09 16,386,895.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: Premia for CAPS/COLLARS 0.00 0.00 0.00 Total 399,000,000.00 340,492,170.23 368,774,566.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2011 0.00 1,000,000.00 2012 25,983,852.87 25,983,852.87 2013 76,842,989.38 76,842,989.38 2014 129,224,882.39 129,224,882.39 2015 65,083,572.49 65,083,572.49 2016 10,362,483.40 10,362,483.40 2017 25,000,000.00 0.00 2018 67,502,219.47 23,750,680.00 2019 0.00 37,751,539.47 . The World Bank Norte Grande Road Infrastructure (P120198) . Results framework COUNTRY: Argentina Norte Grande Road Infrastructure Project Development Objectives(s) The development objective of the proposed project is to reduce transport costs for users of provincial roads along selected corridors of the Norte Grande provinces, through the improvement of the quality of those roads and the introduction of improved road asset management tools and methods. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Reduce transport costs for users of provincial roads Evolution of average network roughness on targeted provincial 5.86 2.60 roads (Number) Evolution of average network roughness on targeted provincial roads (i) Rehabilitation and Reconstruction 5.86 2.60 (Number) Evolution of average network roughness on targeted 8.86 2.30 provincial roads (ii) Upgrading (Number) Quality of service measured through user's perception 11.28 51.28 (Percentage) Percentage reduction in generalized travel costs on targeted roads, measured per vehicle-kilometer in constant US dollars 0.00 0.00 using HDM4 (Percentage) Percentage reduction in generalized travel costs on targeted roads, measured per vehicle-kilometer in constant US dollars 0.00 26.00 using HDM4 (i) for light vehicles (with base of US$ 0.28 per veh-km) (Percentage) The World Bank Norte Grande Road Infrastructure (P120198) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Percentage reduction in generalized travel costs on targeted roads, measured per vehicle-kilometer in constant US dollars 0.00 31.00 using HDM4 (ii) for omni-buses (with base of US$ 5.55 per veh-km) (Percentage) Percentage reduction in generalized travel costs on targeted roads, measured per vehicle-kilometer in constant US dollars 0.00 29.00 using HDM4 (iii) for heavy vehicles (with base of US$ 1.60 per veh-km) (Percentage) Number of provinces with multi-annual road maintenance plans and road database management systems in place (cumulative) 0.00 5.00 (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Rehabilitation, Upgrading and Reconstruction of Provincial Roads Roads rehabilitated, Non-rural (Kilometers) 0.00 400.00 Action: This indicator has been Revised Annual Average Daily Traffic (AADT) on targeted roads (Number) 871.00 1,151.00 Action: This indicator has been Revised Share of rural population with access to an all-season road 24.00 34.00 (Percentage) Action: This indicator has been Revised The World Bank Norte Grande Road Infrastructure (P120198) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Number of rural people with access to an all-season road 27,724.00 30,496.00 (Number) Action: This indicator has been Revised Institutional Development and Project Management Road Safety Plans developed in targeted provinces (Number) 0.00 4.00 Action: This indicator has been Revised IO Table SPACE The World Bank Norte Grande Road Infrastructure (P120198)