The World Bank Fourth East West Highway Improvement Project (P130413) REPORT NO.: RES35997 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF FOURTH EAST WEST HIGHWAY IMPROVEMENT PROJECT APPROVED ON MAY 9, 2013 TO MINISTRY OF FINANCE OF GEORGIA TRANSPORT EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Mercy Miyang Tembon Senior Global Practice Director: Guangzhe Chen Practice Manager/Manager: Karla Gonzalez Carvajal Task Team Leader: Aymen Ahmed Osman Ali, Robert Mutyaba The World Bank Fourth East West Highway Improvement Project (P130413) I. BASIC DATA Product Information Project ID Financing Instrument P130413 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 09-May-2013 28-Feb-2019 Organizations Borrower Responsible Agency Roads Department of the Ministry of Regional Ministry of Finance of Georgia Development and Infrastructure (RDMRDI) Project Development Objective (PDO) Original PDO The PDOs are: (i) to contribute to the gradual reduction of road transport costs and to improve road safety along the section upgraded under the project; and (ii) to strengthen the capacity of the Roads Department (RD) and Ministry of Regional Development and Infrastructure (MRDI) to plan and manage the road network and improve road traffic safety. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-82630 09-May-2013 06-Jun-2013 05-Aug-2013 28-Feb-2019 38.00 30.35 7.65 IDA-52450 09-May-2013 06-Jun-2013 05-Aug-2013 28-Feb-2019 37.00 35.74 0 The World Bank Fourth East West Highway Improvement Project (P130413) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES Project status: The Fourth East West Highway Improvement Project was approved on May 9, 2013 in the amount of US$ 38 million (Loan IBRD-82630) and US$ 37 million (IDA -52450). This is the second restructuring of the project whose initial and current closing dates are February 28, 2018 and February 28, 2019 respectively. The project is in its fifth year of implementation and has disbursed over 90 percent (IBRD and IDA combined). The status of the main Project components to date is as follows. Component 1 – Improvement and Asset Management of the E-60 Highway: Major civil works for upgrading to motorway standard of about 12 km of the East West Highway E-60 Highway including the construction of a 2-lane dual carriageway between Agara to Zemo Osiauri were successfully completed on July 31, 2017. The one-year Defects Liability Period (DLP) was also successfully completed on July 31, 2018. Environmental Improvement Measures along the completed section of Natakhtari-Ruisi of the E-60 Highway and other Civil Works to improve road safety and access roads on the existing E-60 Highway, between Natakhtari and Khashuri have also been completed. Ongoing activities under this component include: • Construction Supervision and Quality Assurance Services for Environmental Improvement Measures along completed section of Natakhtari-Ruisi of the E-60 Highway. Contract under Defects Liability Period until August 4, 2019. • Supervision of Small Scale Road Safety Improvements along E-60 Highway (km28 - km114 Natakhtari - Agara section). Contract under Defects Liability Period until June 14th, 2020. • Supervision of Lighting of E-60 stage II. Contract under Defects Liability Period until December 26, 2019. Component 2. Both Institutional Strengthening components for the Ministry of Regional Development and Infrastructure and the Roads Department have been successfully completed except the following: • Measures to improve manpower planning and development. The scope of this activity will be included in the proposed "Capacity Gap Analysis" which will be launched soon. • Support to the MRDI to improve operating environment for the local construction industry. This activity is expected to be covered under the proposed "Capacity Gap Analysis". • Construction industry Review Update. this activity is also expected to be covered under proposed "Capacity Gap Analysis". Component 3 – Preparation of supporting studies and future projects for the development of the East West Highway: The update of the feasibility study for Zemo Osiauri to Argveta, detailed engineering design for the section from Zemo Osiauri to Chumateleti, preparation of detailed design for the construction of Chumateleti-Khevi section, pre - feasibility study and feasibility study for Jinvali - Larsi road and detailed design for the construction of Kvesheti -Kobi road section, and the feasibility study for Samtredia – Zugdidi bypass to Abkhazia direction have all been completed. The study to define the scope of the maintenance interventions along some upgraded sections of the motorway from The World Bank Fourth East West Highway Improvement Project (P130413) Natakhtari to Ruisi was cancelled as the Client awaits the outcome and agreement on the way forward from the Global Infrastructure Facility (GIF) funded technical assistance for commercialization and tolling of the completed sections of the East West Highway. The following are the ongoing technical studies: • Feasibility Study (FS) for Tbilisi – Sagarejo – Bakurtsikhe and Tsnori – Lagodekhi and Detailed Design (DD) for Tbilisi – Sagarejo – Bakurtsikhe. Current completion date is December 31, 2019. • Feasibility Study (FS) of Rustavi – Red Bridge and Rustavi – Sadakhlo and DD for Rustavi – Red Bridge. Current completion date is August 31, 2019. Component 4 – Project Management Support: Most project management activities have been completed except the following: • Design review of the ongoing studies, being carried out by an experienced International Independent Consultant. This contract is expected to be extended until August 31, 2019. • Foreign Procurement Unit (FPU) Technical and Management Support Consultant. This activity is proposed to be included in the proposed "Capacity Gap Analysis". • Activity to fund Financial Management Salaries/Operating costs/Financial audits, and project monitoring and evaluation services (including payment for the finance manager, licenses for Smartsheets Inc and KPMG – Georgia). The Borrower proposed to extend this contract up to December 31, 2019. Overall, the project is on track to meet its development objectives (DO). The progress towards achievement of the DO is currently rated as Satisfactory and has been rated Satisfactory for almost the duration of the Project life. The overall implementation progress is assessed as at Moderately Satisfactory for the last 12 months due to delays in the completion of the ongoing technical studies in component 3. Project management, counterpart financing, monitoring & evaluation, safeguards and financial management are all rated satisfactory, and there are no overdue audits. Proposed changes: The proposed Project restructuring responds to a request received from the Government’s Ministry of Finance dated December 18, 2018, to extend the Project closing date for the second time from February 28, 2019 to December 31, 2019 to allow for the successful completion of ongoing technical studies and other activities (status of ongoing activities is shown above under each component). Based on the above and taking into consideration the moderately satisfactory implementation progress of the project, the project task team recommends the Borrower’s project restructuring request to be approved and extend the project closing date to December 31, 2019. III. DETAILED CHANGES LOAN CLOSING DATE(S) The World Bank Fourth East West Highway Improvement Project (P130413) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-82630 Effective 28-Feb-2018 28-Feb-2019 31-Dec-2019 30-Apr-2020 IDA-52450 Effective 28-Feb-2018 28-Feb-2019 31-Dec-2019 30-Apr-2020