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Document o f The World Bank
FOR OFFICIAL USE ONLY
Report No : 30871-YE
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR26.6 MILLION (US$40.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF YEMEN
FOR A SECOND RURAL ACCESS PROJECT
IN SUPPORT OF THE SECOND PHASE OF THE RURAL ACCESS PROGRAM
October 1 1,2005
Finance, Private Sector Development and Infrastructure Middle East and Nor th Afr ica Region
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without Wor ld Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective March 3 1,2005)
ADT CAS C M O
CPAR
EA EIA E M P FMS GCRB
GOY HDM
I C R IDA
IRR LAL MPWH
Currency Unit = Yemeni Rial (YR) 186 YR = US$ 1
US$1.50803 = SDR 1
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS
Average Dai ly Traffic Country Assistance Strategy Central Management Office (Rural Access Program) Country Procurement Assessment Report Environmental Assessment Environmental Impact Assessment Environmental Management Plan Financial Management Specialist General Corporation for Roads and Bridges Government o f Y emen The Highway Design and Maintenance Standard Model Implementation Completion Report Intemational Development Association Intemal Rate o f Retum Local Authority Law Ministry o f Public Works and Highways
M O F M O L A M O P D
M O T P A D P C N PIP P I U PMR RAMP RAP RED RMF R O Y SDR SEA SFD TOR voc
Ministry o f Finance Ministry o f Local Administration Ministry o f Planning and Development Ministry o f Transport Project Appraisal Document Project Concept Note Project Implementation Plan Project Implementation Unit Project Management Report Rural Access Master Plan Rural Access Program Roads Economic Decision Model Road Maintenance Fund Republic o f Yemen Standard Drawing Rights Sectoral Environmental Assessment Social Fund for Development Terms o f Reference Vehicle Operating Cost
Vice President: Christiaan Poortman Country Director: Emmanuel Mbi
Sector Director: Hossein Razavi Sector Manager: Hedi Larbi
Task Team Leader: Jean-Charles Crochet
FOR OFFICIAL USE ONLY YEMEN. REPUBLIC OF
Second Rural Access Project
CONTENTS
Page
A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 Country and sector issues .................................................................................................... 1
Rationale for Bank involvement ......................................................................................... 3
1 . 2 . 3 . Higher level objectives to which the project contributes .................................................... 3
PROJECT DESCRIPTION ................................................................................................. 4 B . 1 . 2 . 3 . 4 . 5 . 6 .
Lending instrument ............................................................................................................. 4
Program objective and Phases ............................................................................................ 4
Project components ............................................................................................................. 5 Project development objective and key indicators .............................................................. 5
Lessons learned and reflected in the project design ............................................................ 6
Alternatives considered and reasons for rejection .............................................................. 7
C . IMPLEMENTATION .......................................................................................................... 7
Institutional and implementation arrangements .................................................................. 8
1 . 2 . 3 . Monitoring and evaluation o f outcomesh-esults .................................................................. 9
4 . Sustainablllty ..................................................................................................................... 10
5 . Critical r i s k s and possible controversial aspects ............................................................... 11
6 .
Partnership arrangements .................................................................................................... 7
. .
Credit conditions and covenants ....................................................................................... 12
D . APPRAISAL SUMMARY ................................................................................................. 12 Economic and financial analyses ...................................................................................... 12
3 . Fiduciary ........................................................................................................................... 14
5 . Environment ...................................................................................................................... 16
Safeguard policies ............................................................................................................. 17
Policy Exceptions and Readiness ...................................................................................... 19
1 . 2 . Technical ........................................................................................................................... 13
4 . Social ................................................................................................................................. 14
6 . 7 .
This document has a res t r i c ted distribution and may be used by recipients only in the performance of their official duties . I t s contents may not be otherwise disclosed jwithout World Bank authorization .
Annexes
Annex 1: Country and Program Background .......................................................................... 20
Annex 2: M a j o r Related Projects Financed by the Bank and/or other Agencies ................. 27
Annex 3: Results Framework and Monitoring ........................................................................ 28
Annex 4: Detailed Project Description ...................................................................................... 32
Annex 5: Project Costs ............................................................................................................... 35
Annex 6: Implementation Arrangements ................................................................................. 36
Annex 7: Financial Management and Disbursement Arrangements ..................................... 40
Annex 8: Procurement ................................................................................................................ 52
Annex 9: Economic and Financial Analysis ............................................................................. 66
Annex 10: Safeguard Policy Issues ............................................................................................ 71
Annex 11: Project Preparation and Supervision ..................................................................... 76
Annex 12: Documents in the Project F i l e ................................................................................. 77
Annex 13: Statement o f Loans and Credits .............................................................................. 78
Annex 14: Country at a Glance ................................................................................................. 79
Annex 15: M a p (IBRD No . 33979) ............................................................................................ 81
. (iv) .
REPUBLIC OF YEMEN
Source
SECOND RURAL ACCESS PROJECT
Local Foreign Total
PROJECT APPRAISAL DOCUMENT
BORROWEWRECIPIENT INTERNATIONAL DEVELOPMENT ASSOCIATION Total:
MIDDLE EAST AND NORTH AFRICA
9.87 0.00 9.87 15.79 24.2 1 40.00
25.66 24.21 49.87
FINANCE, PRIVATE SECTOR AND INFRASTRUCTURE
Date: October 11,2005 Country Director: Emmanuel Mbi Sector Manager: Hedi Larbi public administration sector (1 5%)
Team Leader: Jean-Charles Crochet Sectors: Roads and highways (85%); General
Themes: Rural services and infrastructure (P); Decentralization (S) Environmental screening category: Full Assessment
Project ID: PO85231
Lending Instrument: Adaptable Program Credit
~~
[ 3 Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: Total Bank financing (USsm.): 40.00
Borrower: Republic o f Yemen, Ministry of Planning and International Cooperation Sana'a, Republic o f Yemen Tel: (967-1) 256 078 Fax: (967-1) 250 605
Responsible Agency: Rural Access Program Central Management Office Sana'a, Republic o f Yemen Tel: (967-1) 465 226 Fax: (967-1) 409 626
Project implementation period: Start: November 30,2005 End: M a y 3 1,2010 Expected effectiveness date: March 3 1, 2006 Expected closing date: November 30,2010
Does the project depart from the CAS in content or other significant respects? Re$ PAD A.3 Does the project require any exceptions from Bank policies? Re$ PAD D. 7
I s approval for any pol icy exception sought from the Board? Does the project include any critical r isks rated “substantial” or “high”? Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D. 7 Project development objective Re$ PAD 23.2, Technical Annex 3 The long term objective o f the Rural Access Program i s an improved l ivel ihood and reduced isolation for the rural population through improved year-round access to markets and services. By the end o f the Program, i t i s expected that, along project roads, transport rates, price o f essential commodities, and travel time wil l be reduced by 30%, 15%, and 30% respectively. In parallel, the institutional capacity to manage efficiently rural roads programs will have been established.
[ ]Yes [XINO
[ ]Yes [XINO
[ ]Yes [XINO
[ ]Yes [XINO
[XIYes [ ] N o
Have these been approved by Bank management? NA [ ]Yes [ IN0
The Second Rural Access Project’s specific development objective i s to reduce isolation o f the rural population with high incidence o f poverty. By the end o f the project, about 250,000 people located in district centers and within 2.5 km o f the project roads in rural areas, who do not currently have reliable access to Governorate centers, will be provided with such access.
Project description [one-sentence summa y of each component] Re$ PAD B.4, Technical Annex 4 (i) Upgrading o f at least 200 km of intermediate rural roads and at least 75 km o f village access roads (USD 34.09 million). (ii) Institutional support and capacity building to strengthen, at the central and local levels, institutional and technical capability for rural road planning, engineering, environmental and social analysis, management and implementation (USD 3.45 million). (iii) Maintenance o f about 950 km o f roads under perfonnance-based management and maintenance o f roads contracts and support to the Road Maintenance Fund (USD 12.33 million).
The proposed operation constitutes the second phase o f the Rural Access Program, an adaptable program lending (APL) approach for the improvement o f rural roads in Yemen. The first phase operation approved on June 7, 2001, was aimed at setting up sound institutional and technical arrangements for the program and testing these through the planning and execution o f pi lot sub- projects. The second phase operation i s intended to extend the arrangements piloted during
- (vi) -
?hase I, continue the capacity building effort (especially through the introduction o f modern road naintenance systems), and establish the basis for a decentralized management o f the program, whi le expanding the population benefiting from improved road access.
The seven triggers to move from Phase I to Phase I1 have been met as follows: 1. Five pi lot road sub-projects have been completed, through which methods and standards have Jeen successfully tested, adjusted on the basis o f experience, and adopted; 2. Draft Rural Accessibility Master Plans have been prepared for five Governorates, based on a nulti-criteria economic and social methodology agreed by the Government and, for the remaining thirteen Governorates, the preparation o f these master plans i s well underway; 3. An assessment o f the old rural road project portfolio in the national budget has been :ompleted and clear priorities defined for rural road investments, which are mostly going to be financed by donors; 4. A rol l ing rural road investment plan has been prepared on the basis o f which donor projects %re being selected; 5 . Technical preparation and bidding documents have been completed for the f i rst year o f the Phase I1 project; and 6. A Sector Environmental Assessment (SEA) for the Phase I1 project has been completed and publicly disclosed and the f i r s t year road works program does not include any category A sub- proj ec ts. 7. A 10-year National Road Master Plan has been prepared, which includes a new classification o f the road network and a plan for the management and financing o f the secondary rural and local roads. The new classification has not been enacted yet since the Government has decided to submit it to the Parliament for approval within the context o f a new road law, which i s s t i l l being prepared. This delay does not affect the fulfillment o f the program's development objectives since reduced isolation o f the largest possible share o f the rural population during the program's period will be best achieved by allocating resources to a well defined core network o f priority rural roads in the vicinity o f which most o f the rural population lives. This core network has been clearly established and i s receiving most o f the available funding including al l funds from donor agencies.
Which safeguard policies are triggered, if any? Re$ PAD D. 6, Technical Annex 10 (i) Environmental Assessment (ii) Natural Habitats (iii) Cultural Property (iv) Involuntary Resettlement
Significant, non-standard conditions, if any, for: Re$ PAD C.7 Board presentation:
None Loadcredit effectiveness:
- Employment o f such qualified staff in adequate numbers and restructuring o f RAPCMO's organization, in such ways as needed in IDA'S opinion for RAPCMO to carry out i t s responsibilities under the project; - Restructuring o f the Steering Committee so that i ts membership and terms o f reference are
- (vii) -
satisfactory to IDA.
- Disbursements for Project Component 3 to be contingent upon establishment o f a fully functional financial management system for RMFIU; - RAPCMO and RMFIU to be maintained throughout project implementation with staffing, structure, resources, and facilities acceptable to IDA; - Principles o f operation o f the RAPCMO (including decision making autonomy, and staffing policies) to be acceptable to IDA throughout project implementation; - Methodologies and procedures for sub-project assessment, selection, design, and implementation to continue to be acceptable to IDA throughout project implementation; - RAPCMO to keep current a detailed eighteen-month rolling work program; - Implementation o f a financial management strengthening program for the RAPCMO; - Implementation o f a financial management and procurement strengthening program for RMFIU; - Minimum annual road maintenance funding o f YR 3.1 billion by 2006, YR 3.9 bi l l ion by 2007, and YR 4.8 billion by 2008 and thereafter.
Covenants applicable to project implementation:
- (viii) -
A. STRATEGIC CONTEXT AND RATIONALE
1. Country and sector issues
One o f the main characteristics o f Yemen and an essential factor o f i t s current socio- economic development and high poverty i s the isolation o f much o f the rural population, about 75% o f the country’s total population. This i s due to historical and geographical circumstances, especially the rugged and mountainous conditions in the northwest o f the country where most o f the population lives. I t i s also the result o f the long term neglect o f the rural roads network.
Developing rural areas and reducing isolation are key elements o f Yemen’s 2003-2005 Poverty Reduction Strategy Paper (PRSP). Indeed, the f i rs t o f the PRSP’s three main objectives is: ”Achievement of economic growth, creation of j o b opportunities and expansion of the economic opportunities for the poor by remedying the structural causes of poverty, focusing on the prevention of poverty, and providing sustainable means of livelihood” (page 5). Better rural roads are essential for this. In general, improving infrastructure i s one o f the four main axes o f intervention (pillars) to meet the PRSP’s objectives. The PRSP also emphasizes that past infrastructure improvements were biased towards the urban areas and the more fortunate groups, to the detriment o f the rural population. In the transport sector, the specific PRSP goals are: “Adding 3,300 km of asphalt roads and 2,950 km of gravel roads, besides the reinforcement and maintenance of about 3,194 km of asphalt roads, so as to achieve interconnection and to reinforce the transport traffic and facilitate the f low of commodities and sewices and movement of people, aside from maintaining the existing roads to ensure the safety of their use and their sustainability (page 55); and “Connecting rural areas to markets, easing access to services through the expansion of the roads network” (page 57).
By late 2004, Yemen has made good progress towards the PRSP output targets for the transport sector. The length o f paved roads added to the network in recent years has been about 900 m y e a r . Overall, the length o f the paved road network has doubled in the period between 1990 and 2003. During the past years, funding for the road sector has been about US$ 100 mi l l ion per year, with roughly ha l f coming from external sources. The capability to plan and implement programs in the road sector has also made much improvement. Despite these achievements, some serious issues remain, as outlined below and described in Annex 1.
Insufficient coverage of rural areas with all-weather roads. One o f the most critical constraints to economic growth and poverty alleviation is the land transportation challenge facing Yemen. In spite o f the rapid growth o f the paved road network, paved roads s t i l l constitute only about 12% o f the total road network o f roughly 63.000 km and most o f the secondary and tertiary network i s in poor or very poor condition. In fact, about 75% o f the roads are very rough earth roads or rudimentary tracks which can be used only by light four-wheel-drive vehicles at very l o w speed and at high costs, and which often get interrupted by rains. As a result, only about 28% o f households throughout the country have access to all-weather paved roads. The provision o f roads o f
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appropriate standards i s especially challenging, given that a large proportion o f the population l i ves in small settlements in rugged terrain relatively far from trunk roads. This situation i s a primary obstacle for economic growth and improving the living conditions in rural areas, especially those distant from the main cities. The Government (specifically, the Ministry o f Public Works and Highways - MPWH) i s directly addressing this issue through i t s ongoing Rural Access Program (RAP) that started in 2001 under an adaptable program credit (Phase I) fi-om IDA. Other programs, such as the Social Fund for Development, improve small-scale village access tracks through participatory and labor-intensive work methods.
Institutional Challenges. The road sector also faces institutional challenges and, in particular, deficiencies in budget allocation processes, especially for the rural road network. This often leads to commitments for rural road projects that: (i) are not approved by Parliament; (ii) receive only very l i t t le funding through the annual budgets; and (iii) because o f l o w funding, are not completed and do not lead to sustainable accessibility improvements for the rural poor. The RAP i s designed to address this issue. I t i s a parallel system that uses a rational and participatory process o f Rural Accessibility Planning to identify rural road projects. Final selection, design, and implementation o f projects are based on sound, objective, technical, economic, and environmental criteria. This process was piloted and adjusted during the Phase I project, and it has proven successful. The Government and donors are gradually putting more money into the RAP, while budget allocations for the traditional inefficient system are being reduced. Over time this wil l lead to the gradual disappearance o f the o ld practice, as Governorate and District Governments, as wel l as local communities, will recognize that they wil l “get their roads” much better through the RAP than by exercising political pressure o n the central Government. In addition, the RAP has introduced rational methods for procuring and managing road contracts, and has initiated the necessary strengthening o f the contracting industry and the consulting profession in the road sector. These improvements s t i l l need to be reinforced.
Inadequate maintenance of the road network. Despite the establishment o f an independent Road Maintenance Fund (RMF) with i t s own revenue source and maintenance planning capability, and budget allocation o f substantial resources, the road sector s t i l l suffers from inadequate road maintenance funding and management. The need for regular maintenance funding for al l roads (including municipal roads) has been estimated at YR 4.8 b i l l ion (US$ 26 million) per year. However, in 2004, the combined resources allocated to road maintenance through the RMF and other budget allocations were only YR 2.3 bi l l ion (US$ 12.5 million). In addition, there i s a backlog o f road rehabilitation works, which i s only partially addressed through road resurfacing projects funded through the general road budget and executed by the MPWH. Currently, the maintenance funding shortfall mainly affects the unpaved road network. Paved roads in Yemen have proved to be much more resilient because o f l o w rain, good construction materials, and the prevalence o f rocky terrain. About 64% o f paved roads are in very good or good condition. The Government i s addressing the maintenance issue in three ways. First, the Parliament has approved a law which would channel 5% o f the price o f fuel to the RMF, which, at present fuel price and consumption levels, would result in
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approximately YR 5 bi l l ion (US$ 27 million) per year. This would be sufficient to cover the maintenance needs o f the entire road network. The practical implementation o f this law has been closely linked, however, to the reduction or elimination o f h e 1 subsidies, a step that has proven very difficult, but has been taken recently. Secondly, given the relatively l o w cost and high resilience o f road pavements in Yemen, the Government i s upgrading many unpaved roads to paved standards, through the RAP and through projects implemented by the MPWH. Thirdly, in order to address the maintenance management issue, the Government intends to continue to strengthen the RMF and introduce in Yemen the concept o f long-term contracts for performance-based management and maintenance o f roads (PMMR), which constitute a more integral approach to road maintenance and favors the participation o f private f i r m s in the planning and execution o f road maintenance.
2. Rationale for Bank involvement
The rationale for Bank involvement i s that the reduction o f rural isolation through improved rural access roads constitutes a key element for poverty reduction in Yemen, and that continued Bank assistance i s important for strengthening ongoing efforts by the Government, as described above, and mobilizing other donors’ resources. More specifically, the three following reasons justify Bank involvement: (i) now that the RAP i s attracting a significant number o f donors (Arab Fund, USAID, EU among others), there i s a need for coordination and leadership in the support to the sector, which the Bank has successfully provided under the Phase I project and i s uniquely placed to continue to provide; (ii) through i t s involvement in rural access road programs worldwide, the Bank can effectively disseminate knowledge and support the capacity building efforts o f the Government in this area; and (iii) the Bank also has wide experience in road maintenance issues, in particular the establishment o f more reliable funding arrangements based on user charges, and in the introduction o f PMMR. Other donors have indicated that their participation in the RAP i s contingent o n the continued participation and leadership o f the Bank.
3. Higher level objectives to which the project contributes
The project is designed so as to be closely aligned with the PRSP and especially i ts priority objectives o f improving access to basic social services, production inputs, and consumer goods, and promoting economic growth and the creation o f j o b opportunities by encouraging agricultural production and activities associated with it. As such, the project wil l significantly contribute to poverty reduction. I t wil l also contribute directly to the Government’s higher level objectives in the transport sector by increasing the coverage o f a l l weather roads in rural areas, developing institutional capabilities in the road sector, and testing better systems for road maintenance. In addition, the project will support the Government’s decentralization process through the establishment o f regional rural roads offices to be responsible for planning and implementation o f rural access projects. The project i s included in the Country Assistance Strategy (CAS).
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B. PROJECT DESCRIPTION
1. Lending instrument
Adaptable Program Credit (APC).
2. Program objective and Phases
The long t e r m objective o f the RAP i s an improved livelihood and reduced isolation for ?he rural popula?ion. This objective i s to be achieved through the improvement o f clusters o f rural roads, including intermediate access roads linking district centers with each others and to the main road network, combined with adjacent village access roads. In parallel, the institutional capacity to manage efficiently rural roads programs i s to be established. Implementation o f the Program started with the effectiveness (March 18,2002) o f the Phase I Credit. Progress in meeting the program objectives i s measured by three specific indicators (transport rates along program roads, price o f essential commodities at rural markets served by program roads, and access time). The Program’s three phases are briefly described below (see also Annex 1):
Phase I: Institutional strengthening and definition of appropriate standards. Phase I i s setting up the institutional and technical foundation for an efficient rural road improvement program and testing the planned approach through the establishment o f the Rural Access Program Central Management Office (RAPCMO) and the execution o f 15 pi lot projects o f rural road clusters.
Phase 11: Access improvement and decentralized network management. This Phase i s the subject o f the present Project Appraisal Document. I t i s intended to r o l l out nationwide the institutional and technical processes piloted during Phase I (including the participatory road selection processes and the proper management o f environmental and social impacts), continue the capacity building effort, and establish the basis for a decentralized management o f the program, while expanding the population benefiting from improved road access. This phase will be implemented f i om mid-2005 until mid- 2010. In parallel to the Bank own funding, i t wil l include large funding from other donors for projects prepared and implemented within the same institutional and technical framework.
Phase 111: Expanding the coverage of access improvement and consolidation of gains. This phase wil l expand capacity building at the regional level and improve access in rural areas not yet covered under Phases I and 11. It is also expected to fully institutionalize the processes developed through the f i rst two phases and achieve sustainable management and maintenance o f rural roads in Yemen. Phase I11 will be implemented between 2009 and 2012.
After a one year delay in its start, Phase I has made good progress and will be completed by mid 2006. The key institutional and technical objectives o f Phase I are being met fully and preliminary indications show that the program’s targets are being reached. In
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addition, overall good results have been achieved regarding the triggers that had been agreed between the Government and the Bank for the initiation o f Phase I1 o f the Program. As shown in Annex 1, with one justified exception which has no impact on the fulfil lment o f the program’s development objectives, these triggers have been met in substance or fully.
Triggers for Phase I11 o f the Program were agreed at Negotiations. They include those described in the P A D for the Phase I project, to which were added two new triggers targeting progress in road maintenance. The l i s t o f triggers for Phase I11 i s in Annex 1.
3. Project development objective and key indicators
The Phase I1 development objective i s to reduce isolation o f the rural population enabling them to better reach markets and access services (social and administrative). Progress towards this objective wil l be measured through the overall program indicators (see above) as we l l as the number o f persons who wil l have gained reliable l o w cost year- round road access through the project. The target for the end o f Phase I1 i s 250,000 persons. Details, including on the indicators for monitoring progress towards the intermediate results, are in Annex 3.
4. Project components
The project wil l have three components which are brief ly described below (Annex 4).
Component 1: Rural Access Roads. This component i s designed to address the sector issue o f insufficient coverage of rural areas with all-weather roads. I t wil l mainly consist o f the planning, execution and supervision o f works contracts to upgrade existing rural roads and tracks. The result o f this component will be that at least 200 km o f intermediate rural access roads and 75 km o f village access roads are improved (IDA- financed roads only). As in Phase I, most physical works wil l be carried out by local small and medium-size contractors, and design and supervision will be done by a mix o f local and foreign consultants. The target group for this component i s the rural population in the area o f influence o f the roads to be improved.
Component 2: Institutional Support and Capacity Building. This component is designed to address the sector issue o f institutional challenges in the rural road sector. I t builds on the results o f the Phase I project and will mainly consist o f training and technical support services carried out by local and foreign consultants. The result o f this component wil l be that institutional and technical capability for rural road planning, engineering, environmental and social analysis, management and implementation is strengthened at the central and local levels. More explicitly, i t i s expected that, by the end o f the project: (i) three decentralized rural road management offices are hnctional; (ii) at least 200 local professionals from the public and private sectors have received an average o f 10 days o f relevant high quality training; (iii) constraints to the development and efficiency o f the road maintenance and construction industry and road sector consulting profession have been identified and adequate improvement measures have been designed;
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and (iv) the implementation o f the RAP continues to be managed professionally and in conformance with legal and fiduciary requirements. The direct target group for this component consists o f Yemeni road sector professionals from both the public and private sectors.
Component 3: Road Maintenance. This component i s designed to address the sector issue o f inadequate maintenance of the road network. I t wil l mainly consist o f the planning, execution and supervision o f several pi lot contracts to introduce PMMR in Yemen and the strengthening o f the road maintenance management capability o f the RMF. The results o f this component would be that (i) at least 950 km o f roads are properly maintained by the FWF through P M M R contracts with private f i r m s and (ii) a modem Pavement Management System i s functional and able to produce sound assessments o f priority road maintenance and improvement expenditures for the primary road network of Yemen. The target group for this component consists o f the users o f the maintained roads who wil l benefit from sound pre-defined road service levels during the contracts’ period.
5. Lessons learned and reflected in the project design
Major lessons learned from previous projects in the transport sector in Yemen, particularly the Phase I project, are discussed below. These lessons which are consistent with the Bank’s experience with similar projects in other countries have been incorporated in the design o f the Phase I1 project.
First, in Yemen as in most countries, institutional performance can be substantially improved if it takes place within a transparent framework o f well defined procedures and technical guidelines, if staff i s recruited o n the basis o f merit, adequately motivated and remunerated, and offered sound work conditions, and if the institution can perform i t s daily tasks without outside interference. This has been the case for the RAPCMO and wil l be continued under Phase 11.
Second, the Yemeni road maintenance and construction industry and consulting profession have shown that they can develop relatively fast and reach satisfactory quality levels if they perform under a competitive and transparent selection process and professional supervision. At the same time, capacity constraints are expected to be binding in the near future as the RAP’S size i s greatly expanded with the participation o f other donors. The project therefore includes significant activities for the development o f local contractors and consultants. Some contracts will also be procured in larger packages in order to attract intemational contractors.
Third, the rural population has shown that i t i s interested mostly by access and that high technical standards only have marginal benefits. In addition, the costs o f improving rural roads may be lowered substantially if appropriate design and implementation methods are selected. O n this basis, continued attention wil l be paid under Phase I1 to appropriate standards, taking also into account the future costs o f road maintenance.
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Fourth, social framework agreements have shown o f high practical value in rural road projects to maximize net benefits and avoid conflicts. These written and signed agreements initiated under Phase I between the RAPCMO and the local beneficiaries o f each road improvement project, which involve significant community participation in project design, have almost completely eliminated the difficulties and work stoppages which were commonplace earlier. The use o f social framework agreements wil l be further strengthened in Phase I1 o f the RAP.
6. Alternatives considered and reasons for rejection
The altematives that were considered for the RAP at the time o f preparation o f Phase I are discussed in the corresponding PAD. In brief, these were (i) to focus solely on either intermediary or village access roads, (ii) to limit IDA’S involvement to one large stand alone 5 or 6-year project, and (iii) if an adaptable program concept was selected, to embark on large scale road improvement as soon as Phase I. The reasons for rejections o f altematives (i) and (ii) have been confirmed by experience. I t has been indeed highly beneficial to provide clusters o f intermediary and village access roads. Better knowledge o f rural roads has also shown that the needs were vast and that both capacity building and sheer investments needed IDA’s long term presence. As far as the third alternative is concerned, i t has in fact been partly implemented since RAPCMO’s capacity has developed faster than expected and the relatively l ow unit cost o f road works has made it possible to improve a far larger set o f roads. Experience has therefore validated the choices made at the outset and the program has proven flexible when circumstances have warranted a change.
Regarding the proposed Phase 11, there appears to be only one other alternative in project design, which would be to exclude the pi lot road maintenance component in order to simplify the project and not take risks with innovative PMMR contracts. However, the fact that poor road maintenance i s an increasingly important issue in Yemen, and the high potential rewards from introducing P M M R contracts, if successful, are strong enough arguments to justify the rejection o f this alternative.
C. IMPLEMENTATION
1. Partnership arrangements
The successful implementation o f Phase I has generated not only strong political and popular support for the RAP inside Yemen, but also very substantial interest fi-om extemal donors to participate in the financing o f the program. Already under Phase I, two donors (EU and USAID) have joined the RAP, both o f which have vowed to continue their support in parallel to IDA’s Phase 11. The Arab Fund has also recently approved a credit o f US$ 85 mi l l ion for rural road improvements.
Depending on the final outcome o f on-going discussions between the Government and donor agencies, the total size o f extemal financing for the RAP will be between US$ 150 and 180 million, to be complemented by Government counterpart financing o f about 15-
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20%, equivalent to about US$ 30 million. This would mean that, in the next four to five years, the RAP would be more than three times bigger than during Phase I, allowing the improvement o f about 1500 km o f intermediate rural access roads and some 300 km o f village access roads. The implications in terms o f size o f the RAPCMO and capacity o f the construction industry are being taken into account. External partners in the RAP have also expressed the wish that the Bank continue to be a leading partner, despite i t s relatively reduced financial contribution, in order to ensure continued conceptual and technical coherence o f the program and high standards o f i t s management and supervision.
2. Institutional and implementation arrangements
Project Components 1 and 2 wil l be implemented by the RAPCMO. Project Component 3 wil l be implemented by the RMF. Overall guidance and supervision would be provided by a steering committee.
The RAPCMO i s an autonomous agency o f the MPWH. I t was created under the Phase I project. I t is staffed by well trained, experienced staff, recruited competitively, and provided with attractive work conditions and benefits. I t has fully proved i t s capability. I t has, in particular, developed sound work methods and procurement and financial management systems, which wil l continue to be used under the Phase I1 project, with some improvements (see D.3 below). I t has also developed the capacity to manage adequately the numerous consultants and construction contracts that are needed for fulfilling i t s tasks. As a credit condition, the principles o f operation o f the RAPCMO (see Annex 6) as well as the methodologies, and procedures for sub-project assessment, selection, design, and implementation wil l be continuously acceptable to IDA throughout project implementation. As noted above, however, the RAPCMO i s evolving into the national agency for implementation o f rural roads programs. I t therefore needs additional staff and an organizational structure that i s adapted to i ts new size. About ten staff members are currently being recruited. A draft new structure has also been prepared. The completion o f staff recruitment and the implementation o f the new structure are conditions o f credit effectiveness. Also, to ensure consistency between i t s work load and staff and resources, the RAPCMO wil l keep current, as a credit condition, a detailed eighteen-month rol l l ing work program. Other factors in the RAPCMO’s evolution in the coming years wil l be (i) the setting up o f three regional offices, and (ii) the need, in a longer term perspective, to gradually establish the R A P C M O as a legally autonomous entity with hnding o f i ts operating costs that i s appropriate and mostly independent o f donor agencies. I t wil l in particular provide training and technical assistance to ensure the RAPCMO’s continued project implementation capability and the integration o f new staff, to assist in the development o f the regional offices, and to assess the pro and cons o f future corporatization o f the RAPCMO.
The project wil l assist the R A P C M O in these changes.
The RMF i s an autonomous State agency in charge o f the maintenance o f national and rural roads. Since its creation in 1995, it has gradually developed the technical and institutional capability to plan and administer road maintenance in an effective way. The RMF has
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recently designated a special unit - Road Maintenance Fund Implementation Unit (RMFIU) - for the implementation o f Project Component 3. This unit will need strengthening as explained in Annexes 7 and 8. In particular, the establishment o f a fully functional financial management system for RMFIU i s a condition o f disbursement for Project Component 3. Implementation o f an action plan for developing financial management and procurement i s also a credit condition. Given the innovative nature o f the P M M R contracts used in Project Component 3, the RMF will need support for their design and implementation. Intemational consultants will be used for this purpose.
As a credit condition, the RAPCMO and RMFIU will be maintained throughout project implementation with staffing, structure, resources, and facilities acceptable to IDA.
Oversight o f the RAPCMO, RMFIU, and the overall Project will be assured by the Steering Committee. This committee, which was established under Phase I, wil l be restructured. I ts main duties wil l be to approve policies and work programs, appoint key staff, coordinate, and review performance in project implementation (Annex 6). I ts membership will be limited to five high level representatives, two f rom MPWH (the Minister as chairperson o f the Committee and the Deputy Minister for Roads), and one o f each o f the Ministry o f Planning and International Cooperation (MPIC), the Ministry o f Finance (MOF), and the Ministry o f Local Administration (MOLA). The General Manager o f the RAPCMO and the Chairman o f the RMF wil l participate in the meetings o f the Steering Committee but not in the Committee’s decision making process. As a condition o f credit effectiveness, the Steering Committee wil l be restructured so that i t s membership and terms o f reference are satisfactory to IDA. This will be maintained throughout project implementation.
Disbursements will be made separately by the RAPCMO and the RMF. There would be two separate special accounts, one for each organization. The Borrower’s share o f project funding would be provided by the national budget under normal State procedures. Availability o f counterpart funds has never been a dif f iculty under the Phase I project.
Both the W C M O and the RMF will prepare semi-annual progress monitoring reports in accordance with a format acceptable to IDA. These reports wil l include sufficient operational and financial information, particularly on the status o f the RAPCMO’s work program, implementation o f a l l contracts, and expenditures.
3. Monitoring and evaluation o f outcomes/results
Both the RAPCMO and the RMF will monitor progress against agreed-upon program and project performance monitoring indicators, as shown in the Results Framework. As far as program and project outcome indicators are concerned, the mechanisms established during Phase I will be used. In the past years, the W C M O has organized surveys to collect data related to the rural access indicators before and after completion o f improvements o n each intermediate rural road and adjacent village access roads. The RAPCMO has also established a data base, o n which the information i s stored and may be regularly extracted and used by management to monitor progress. This will be
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continued under Phase 11. As far as results indicators are concerned, they are either simple quantitative work outputs which the RAPCMO and the RMF can easily prepare or qualitative indicators which the Bank supervision mission wil l assess. All results wil l be regularly reported in the semi-annual progress reports.
A key area for continued monitoring wil l be the environment for contract implementation and enforcement. There is for instance, an ongoing contractual dispute with a foreign contractor under a now-closed IDA-financed project. With World Bank support and encouragement, a technical opinion has been prepared by independent experts on the level o f contribution that the Bank could finance out o f the value o f the disputed claims. Government has accepted the opinion and i s prepared to use i t as a basis for negotiations but the contractor has not. In view o f this, the Bank expects to continue i t s effort to support both parties in reaching a satisfactory solution.
4. Sustainability
The RAP enjoys strong and widespread political and popular support in Yemen. I t i s also firmly anchored in both the Government’s PRSP and the CAS. The Government’s commitment has been demonstrated through the ready availability o f counterpart funding. The RAP i s also supported by several other donors, who count on the Bank to continue to plan and monitor the program, and to provide regular technical support. .
Within this supportive context, the long te rm sustainability o f the project’s roads wil l depend on the provision o f adequate funding for road maintenance and the increased capability to use funding efficiently. The situation regarding maintenance and the measures being taken by Government are described in Part A.l o f this PAD. During Phase I, annual maintenance funding was increased to about the target agreed with the Bank (YR 2.5 billion). As a credit condition, the Government wi l l ensure that the funding o f maintenance is gradually increased to YR 3.1 bi l l ion in 2006, YR 3.9 bi l l ion in 2007, and finally at least YR 4.8 bi l l ion (the present estimate o f maintenance needs) in 2008 and thereafter. In parallel, road maintenance management needs further strengthening. This will be the main objective o f Project Component 3. I t will introduce and test in Yemen best-practice approaches for maintenance management. These approaches wil l be mainstreamed if successful. In addition, it wil l assist the RMF in developing i t s planning and monitoring capabilities as wel l as its management systems and institutional knowledge.
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5. Cri t ical risks and possible controversial aspects
Risk
To project development Ibjective
’oor selection o f sub-projects
To component results
Lack o f counterpart hnds
?oor quality o f implementation If rural road upgrading sub- xojects and road maintenance 3ecause o f . inadequate project
management
inadequate performance o f contractors and consultants
Lack o f relevance o f the :ethnical assistance and training xog ram and resistance to :hange
Overall Risk Rating
M
M
M
M
M
Risk Minimization Measure
A sound planning and priorit ization process for rural road investments has been established under the Phase I project. This process i s n o w we l l accepted. Through the Rural Accessibil i ty Master Plans, local communities have also been increasingly involved in the selection o f sub-projects
This has not been a problem in Phase I, but could become one if Yemen’s macroeconomic and fiscal situation changes. The programmatic approach allows the total size o f the program to be adapted to the government resources available.
The principles upon wh ich the RAPCMO has successfully operated under Phase I (autonomy, decision making based o n objective criteria, competent and motivated staff) wil l continue. These reduce the risk o f inadequate project management and poor selection o f contractors and consultants. Specific support will also be provided to the RMF in the implementation o f Project Component 3. Training o f Government and R A P C M O staff as we l l as o f contractors and consultants wil l be provided under the project. Foreign contractors and consultants wil l also b e used to supplement the capacity o f local ones. Technical audits wil l continue to be used.
The terms o f reference for technical assistance and training wil l b e prepared on the basis o f a careful assessment o f needs. They will also include actions for motivating the trainees and knowledge receiving institutions. Efforts wil l b e made to select consultants who are sensitive to the country’s specific circumstances.
N o possible controversial aspects have been identified.
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6. Credit conditions and covenants
Effectiveness conditions: . Employment o f such qualified staff in adequate numbers and restructuring o f RAPCMO’s organization, in such ways as needed in IDA’S opinion for RAPCMO to carry out i t s responsibilities under the project Restructuring o f the Steering Committee so that i t s membership and terms o f reference are satisfactory to IDA
. Covenants and other conditions:
.
.
.
.
Disbursements for Project Component 3 to be contingent upon establishment o f a fully functional financial management system for RMFIU RAPCMO and RMFKJ to be maintained throughout project implementation with staffing, structure, resources, and facilities acceptable to IDA Principles o f operation o f the RAPCMO (including decision making autonomy, and staffing policies) to be acceptable to IDA throughout project implementation Methodologies and procedures for sub-project assessment, selection, design, and implementation to continue to be acceptable to IDA throughout project implementation RAPCMO to keep current a detailed eighteen-month rol l ing work program Implementation o f a financial management strengthening program for the RAPCMO Implementation o f a financial management and procurement strengthening program for RMFIU Minimum annual road maintenance funding o f YR 3.1 bi l l ion by 2006, YR 3.9 bi l l ion by 2007, and YR 4.8 bi l l ion by 2008 and thereafter
D. APPRAISAL SUMMARY
1. Economic and financial analyses
The economic analysis o f al l intermediary roads proposed for improvement, as a result o f the participatory process o f rural accessibility planning and screening, will be done using the Roads Economic Decision Model (RED). The RED was developed by the Wor ld Bank specifically for the economic analysis o f low-volume roads, based on some elements o f the more widely known HDM (Highway Design and Maintenance Model). The RED utilizes expected reductions in vehicle operating costs (VOC) as the principal economic benefits. This constitutes a conservative approach, since it i s now widely accepted that the traditional VOC-based economic analysis i s insufficient to capture the fill economic and social benefits o f low-volume rural road investments, in particular in the context o f projects in poor areas. On the other hand, a truly reliable quantification o f a l l benefits, in particular social benefits, would require a large amount o f data, which i s far too expensive to collect and to monitor for each road to be improved under the project. I t therefore seems reasonable to use the RED to verify if a minimum required
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threshold intemal rate o f retum (IRR) can be attained on the basis o f VOC savings only. This threshold wi l l be an IRR o f 12%. Based on the experience gained in Phase I, many o f the intermediate rural roads in Yemen reach that threshold, because o f the significant traffic levels on those roads. However, the Bank wil l consider applying a lower threshold where the isolation and poverty o f specific rural communities warrant the road improvement works, notwithstanding a comparatively modest IRR. For example, in cases where the absolute poverty rate in the road’s zone o f influence is 5% above the national average, the threshold might be reduced to, say, 9%. More details o n the economic analysis are in Annex 9, including the basic assumptions and the results for five intermediate roads that are being started under Phase I and wil l be completed under Phase 11. The results for the five roads show I R R s between 16% and 36% in the base case and acceptable outcomes in the sensitivity scenarios.
For village access roads, i t was agreed that a different type o f threshold would be applied, which i s the maximum amount spent on the road improvement per beneficiary (or the marginal cost of the village access road divided by the number o f inhabitants o f the village). Based on the experience o f Phase I, the threshold value was set at a maximum o f U S $ 75 per beneficiary. This amount wil l be revised annually during Phase I1 in order to ensure realism and responsiveness to changing socio-economic circumstances.
Fiscal Impact: Project cost wil l be U S $ 49.9 million, with the Government o f Yemen (GOY) providing US$ 9.9 mil l ion (about 20%). The U S $ 3.5 mi l l ion needed in the peak year as counterpart funds would represent about 4% o f 2005 total budget allocation to the road sector from the Government’s own resources. This Project i s thus not expected to have major implications for the national budget.
2. Technical
During Phase I o f the RAP, much effort has gone into the development o f adequate technical design specifications for the rural road improvements to be carried out under the program. One challenge was to find an equilibrium between the objectives o f keeping the costs l o w and sti l l providing adequate service levels to road users. Another objective pursued was the inclusion o f secondary benefits into the road design, such as water harvesting, terrace building, the use o f local materials, labor-based techniques whenever appropriate, different types o f surfacing, etc. A complete rural road design manual has been developed and applied for the about 15 roads presently completed or under execution during Phase I. Overall, the design criteria which have been adopted and applied are considered satisfactory. However, further efforts wil l be made during Phase I1 to simplify the RAP rural roads design manual without sacrificing the quality o f works, and to translate the manual into the Arabic language. The RAP i s also in the process o f developing a manual for construction supervision, in order to ensure that supervision by the numerous local and foreign consultants used under the program i s carried out in accordance to technically sound and uniform standards.
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3. Fiduciary
Financial Management. An assessment o f the financial management (FM) arrangements for the Project was carried out in February 2005 (Annex 7). From the FM perspective, the RAPCMO has managed the implementation o f the Phase I project in an acceptable manner. For the implementation o f Project Components 1 and 2 o f the Phase I1 project, i t wil l continue to use the same FM arrangements while ensuring some enhancements such as updating i t s accounting software and financial policies and procedures to reflect changes in the operations o f Phase I1 and reinforcing i t s FM staff to support new requirements. Therefore, as a credit condition, the RAPCMO will implement a financial management strengthening program satisfactory to IDA. Regarding Project Component 3, the RMF has already taken significant steps towards the development o f acceptable FM arrangements at the newly established RMFIU, including the assignment o f a director and a financial officer from i t s current staff. I t has also devoted a well equipped space to RMFlU’s activities and staff. Yet, as RMFlU has no prior experience in implementing Bank financed projects, the establishment o f a fully functional financial management system i s a condition o f disbursement for Project Component 3 as described in Annex 7. Implementation o f a satisfactory financial management strengthening program (including mostly training) i s also a credit condition.
Procurement. An assessment o f the procurement arrangements for the Project was carried out in October 2004 (Annex 8). I t showed that the RAPCMO had performed well under the Phase I project and had full capability to implement Project Components 1 and 2. I t wil l need, however, to recruit an additional procurement specialist, provide procurement training to i t s new technical specialists, and adopt a clear matrix o f responsibility for the procurement function under Phase 11. Regarding Project Component 3, the RMF has taken useful steps to build the procurement capacity o f RMFlU, including the recruitment o f international consultants who wil l assist in the preparation and procurement o f P M M R contracts. RMFlU will also benefit from the experience o f the RAPCMO. In order to further enhance its capability, the RMF will, as a credit condition, implement a strengthening program satisfactory to IDA (Annex 8).
4. Social
Primary beneficiaries and other affected groups. The primary beneficiaries o f the project are the rural population in areas which have lower-than-average access to markets and basic services. These areas generally have high concentration o f rural poor, o f which women constitute a disproportionately high fraction. The primary beneficiaries wil l participate both directly and indirectly. Direct participation wil l occur during the design phase o f individual roads, when local consultations take place and mitigation measures are coordinated between design consultants and the landowners adjacent to the road. Indirect participation wil l be through elected District Councils, which wil l be involved in the decision-making process related to accessibility planning and prioritization o f individual interventions. Other stakeholders are from the private sector, such as local contractors, design engineers, consultants, transport service providers and traders. They
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benefit from the overall program, which provides significant business opportunities and, in the case o f transporters and traders, large cost savings.
Social Framework Agreements. During Phase I, the RAP laid the groundwork for systematically addressing social issues in the planning and implementation o f rural roads. This has been done by incorporating social issues into standard procedures for project screening, planning, assessment o f impacts and formulation o f mitigation or enhancement measures for the final design and implementation o f each road project. The participatory mechanism for implementing these procedures i s the road-specific Social Framework Agreement (SFA), which is developed through consultations with beneficiaries during the project design stage and appended to each road’s Environmental Management Plan (EMP). Separate consultations are held for men and women. The SFA lays out al l areas o f potential social concern, with agreed and specific mitigation or enhancement measures to address these concerns. The SFA also formalizes the beneficiary committee and serves as a framework through which unforeseen problems wil l be solved during the course o f construction.
Rural Accessibility Planning. During Phase I, a methodology for rural accessibility planning has been established and applied for al l 18 o f Yemen’s rural Governorates. These plans provide a transparent and systematic framework for identifying priori ty rural road investments at the decentralized levels. This participatory methodology includes criteria that focus on providing basic access to the poorer areas, as well as gender-related access concems. During Phase 11, community participation is expected to become a routine feature o f the rural accessibility planning process. In the medium term, elected Councils wil l gradually develop capacity to assume an active role in improving rural access roads and their management and maintenance.
Land Acquisition/Resettlement. Road improvements during Phase I were purposefully selected to occur within existing right-of-ways only, thus avoiding any significant land acquisition or resettlement issues. During Phase I, the SFAs have also proved usefu l in establishing frameworks through which unforeseen land acquisition issues are resolved, particularly where the roads pass through densely populated areas. In such cases, small parcels o f land have been donated by their owners, confirmed through the beneficiary committee, because o f the existing Government pol icy and practice which allows compensation only for assets located on the land, but not for the land as such. During Phase 11, i t i s allowed that certain rural roads wil l require altered alignments and more significant land acquisition or displacement o f buildings. For this reason, a Sectoral Environmental Assessment (SEA) has been prepared, which contains a Resettlement Policy Framework (RPF), laying out the standard procedures for preparing a resettlement action plan acceptable to IDA if and when potential land acquisition or resettlement i s identified during the initial screening (see section D.6 below).
The treatment of other social issues i s described in Annex 10 (archeological and historical sites, graveyards and burials, and local employment).
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5. Environment
Environmental institutions and policy framework. The Republic o f Yemen has established institutions and responsibilities for environmental management. A National Environmental Action Plan (NEAP) was developed in 1995 and, the fol lowing year, the Environmental Protection Law was enacted. Since 2001, the Government has taken additional steps to consolidate environmental management through the creation o f (i) the Ministry o f Tourism and Environment in 2001 (converted to the Ministry o f Water and Environment in 2003); and (ii) the Environmental Protection Agency (EPA) with a mandate to develop and implement the environmental policies and legislation. In October 2002, the EPA prepared the “Environment and Sustainable Investment Program 2003-2008”, which i s the framework for the Government Environmental Policy. Although the Environmental Protection Law provides a broad framework for environmental management and the establishment o f sectoral legislation, there i s as yet no comprehensive regulatory framework for the road sector.
For this reason, the RAPCMO established an Environmental and Social Management Unit. Through this Unit, a standard environmental and social management process has been put in place, which has been tested during Phase I. For Phase 11, a SEA has been prepared, which provides a programmatic framework for al l roads to be improved under the program. The SEA includes Policy Frameworks for Involuntary Resettlement, Natural Habitats and Cultural Resources (see Section D.6), which will be triggered when such issues are identified during road project screening or in the course o f implementation.
Mitigation through avoidance environmentally-sound technical designs. A key aspect o f the Program’s Environment and Social Framework Agreement is the participation o f environmental and social specialists during the screening, design and implementation stages o f the road project cycle. In this way, potential environmental and social issues may be avoided or significantly reduced through design considerations and meaningful analysis o f alternatives. Phase I carried out test sections on the pi lot roads and village access roads, addressing such design issues as: (i) water harvesting o n mountain roads; (ii) narrower platforms, and related to a reduced need for cutting into slopes and negotiate earth movements; (iii) more durable road surfacing on steep slopes to avoid erosion; (iv) slope stabilization on sections o f the roads where slopes are unstable; (v) controlled disposal at designated sites o f excess material cut from the hillside slopes; and (vi) embankment design and wadi hydrology. Based on these experiences, revised design standards have been developed, which will be regularly updated based o n cumulative experience.
Reduction of potential impacts of physical works. Specific measures to reduce potential impacts o f physical works wil l be identified for each road during the design and implementation stages regarding the detailed design, construction tenders, construction process and contractor performance monitoring. Contracts wil l contain requirements for proper management o f construction waste; control measures for waste fbel, o i l and lubricants; recycling o f o i ly wastes, reduction o f noise and dust levels; safety in blasting; and rehabilitation o f areas used for construction detours, and sites used to temporarily
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store construction materials. Contractors wi l l be required to provide and maintain equipment with proper noise abatement controls. RAPCMO has incorporated these and other Environment, Health and Safety Regulations into i t s standard bidding and contract documents. These regulations provide contractors and consultants guideposts for these practices, many o f which are new concepts. The regulations contain a standard RAP EMP Table, which i s a comprehensive checklist to be adapted to each road project for implementation and monitoring. The project has thus provided an opportunity to introduce such regulations, where they did not previously exist in the road sector.
Management of Operational Impacts. The Project wil l address operational impacts for each road through maintenance contracts under the RMF, which wil l avoid deterioration of the rehabilitated road and associated dust and safety problems. Maintenance contractors will be required to fol low procedures similar to those for the construction contractors concerning proper disposal o f construction waste, control and recycling measures for waste fuel, o i l and lubricants and adoption o f health and safety measures for personnel. Expected increases in traffic levels are not expected to be so high as to bring about a significant increase in air pollution, and this may in fact decrease due to smoother and less dusty roads and improved vehicle standards. Suspended dust caused by vehicles will be reduced by the rehabilitation o f the roads, due to the large number o f road subprojects which include sealing.
6. Safeguard policies
Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI [I Natural Habitats (OP/BP 4.04)* [XI [ I Pest Management (OP 4-09) [I [XI Cultural Property (OPN 1 1.03, being revised as OP 4.1 1)* [ I Involuntary Resettlement (OP/BP 4.12)" [XI [I Indigenous Peoples (OD 4.20, being revised as OP 4.10) [XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OPBP 4.37) [I [XI Projects in Disputed Areas (OP/BP/GP 7.60)* [I [XI Projects on International Waterways (OP/BP/GP 7.50) [ I [XI
[XI
[I
* These policies will be triggered only if significant issues are identified during individual project screening under the program. Agreed Policy Frameworks (see below) wil l then apply in the design and implementation of these individual projects.
Safeguard Policy Frameworks. Because the location o f a l l project roads i s not yet known, safeguards pol icy compliance will be assured through a programmatic approach. In particular, an Environment and Social Management Process has been agreed and put in place during Phase I for the identification, screening, implementation and monitoring o f a l l project roads improved under the project. Environmental screening o f individual projects could possibly trigger three safeguard policies: Involuntary Resettlement (OD 4.30); Natural Habitats (OP 4.04, BP 4.04, GP); and Cultural Property (OPN 11.03).
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Accordingly, the Program’s Environmental and Social Framework Agreement contains Policy Frameworks for these three policies, which would be applied when triggered. Details o f the Environment and Social Management Process and the Policy Frameworks are presented in Annex 10.
Environmental screening category. The project has been placed into environmental screening category “A”, based on the possibility that some project roads may involve departure f rom existing realignments, or impact on natural habitats or cultural resources. As noted above, Policy Frameworks have been developed, to be applied if such cases occur. I t should be noted that, for the most part, projects are expected to keep within existing alignments, and the screening and design activities are geared towards avoiding or minimizing effects on land holdings and buildings, physical cultural resources or cause significant conversion, loss or degradation o f critical natural habitats. Annex 10 summarizes the main results o f the SEA.
Implementation capacity. The Environment and Social Management Unit wil l be responsible for the overall implementation o f the safeguards policies. During Phase I, this unit has built up a good knowledge and capacity in environment and social management, through f ield application o f the environmental review process on the pi lot roads. The Unit is also responsible for the monitoring o f socio-economic impact indicators. During Phase 11, the Unit wil l need to convert i t s role from one o f “doing” to one o f “managing and supervising” local consultants. It i s envisioned that the Unit will retain i t s role o f ini t ial screening and categorization, but then utilize consultants to carry out subproject EAs and prepare EMPs and social framework agreements. To increase the pool o f capable consultants, the Unit wil l carry out training and refresher courses. For Phase I1 category B roads, EAs, EMP and SFA will be completed by consulting firms selected to do the preliminary designs and construction supervision. Category A EAs wil l be carried out by separate consultants.
Consultations. Regional consultations were carried out during the preparation o f the SEA at four road locations between July and October 2003. Separate consultations were held with women. Consultations revealed an overwhelming desire for improved access and willingness to collaborate with the Program. Positive impacts noted include reduced transport costs and travel time, improved comfort and safety, increased mobility, stimulus to economic development, improved community cohesion and intercommunity cooperation and improved accessibility to social services and markets. Concerns expressed included effects on water harvesting and safety. Women’s concerns focused on j ob opportunities and impacts on water harvesting and irrigation systems, displacement of graveyards, and disruption o f travel patterns for water and wood gathering.
Disclosure. The draft Sectoral EA was made available in the country for comment o n January 10, 2005 at the RAPCMO’s office and website, the Environmental Protection Authority and the Governorate offices o f MPWH. The Sectoral EA was also made available at the InfoShop on January 10,2005
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7. Policy Exceptions and Readiness
The project does not require any exceptions from Bank policies.
Phase I o f the Rural Access Program (RAP) has been under successful implementation since 2001, and the Bank’s appraisal team confirms that Phase I1 o f the project is ready for implementation, based on the following readiness criteria:
Proven financial management and procurement arrangements are in place for the RAPCMO. Project staff and consultants have been mobilized. Flow o f counterpart funds has not been a problem until now. Procurement o f works has been completed for the initial contracts to be financed under Phase 11, and there i s a pipeline o f additional sub-projects under preparation. The SEA has been disclosed. Indicators have been specified and baseline data collected.
0
0
0
0
0
0
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Annex 1: Country and Program Background
YEMEN, REPUBLIC OF: Second Rural Access Project
A. The Road Sector
Road Network and Traffic. The paved road network in Yemen grew rapidly from about 2,900 km in 1980 to 6,631 km in 2001, and 7,236 km at the end o f 2003. In 2004 alone, an additional 735 km o f sealed roads were completed, whilst a fbrther 2,146 km were under construction. Due to the relatively young age o f most paved roads in Yemen, about 64% o f them are in very good or good condition while 21% are in fair condition and 15% are in poor to very poor condition. The gravel road network stood at 11,027 km at the end o f 2003. Most o f those roads are in a rudimentary state with little or no gravel surfacing. In addition, there are over 44,000 km o f tracks and trails, some o f which are motorable most o f the year with four-wheel drive vehicles. The MPWH has planned to develop in the long- term a fbrther 9,263 km o f paved road projects and almost 3,000 km o f gravel roads. Construction contracts have been signed for those projects without however having been budgeted. The estimated average daily traffic (ADT) volumes on paved roads, based on the last national traffic count o f 1998, range from around 14,000 A D T (near Sana'a) to just under 1,000 ADT on most o f the network. For the f i rst few years after unification in 1990, traffic grew rapidly, at around 8% per annum, and i s now about 5%, reflecting continued increase in trade and transport among various parts o f the newly unified country, and including o i l exploratiodproduction related traffic.
Institutional Arrangements. Within the GOY, the Ministry of Public Works and Highways (MPWH) has overall responsibility for planning, construction and maintenance o f all roads in Yemen, as well as for policy-making and regulation in the road sector. Prior to 1998, when the road authority function was moved to the MPWH, this fbnction was performed by the General Corporation for Roads and Bridges (GCRB), a public sector authority under MPWH. In January 1998, a Presidential Decree (PD Nr. 5 o f 1998) redefined the mandate o f GCRB to exclusively act as a GOY-owned contractor and to perform work under contract, mainly for the MPWH but also for Governorate administrations. This has le f t the Ministry with a much bigger work load without additional staff with the right kind o f experience. With limited staff, MPWH has taken the challenge o f building the institutional capacity to effectively manage the road network. I t has had difficulties, however, to retain sufficient qualified technical and managerial staff under present c iv i l service constraints. Within that context, the Ministry decided to strengthen the role and responsibilities o f agencies or external directorates and to delegate to them many road management functions. I t has already passed o n i t s responsibility for routine and periodic maintenance on al l roads to the RMF, whilst retaining full management control over major rehabilitation, new construction and development works. Similarly, the Central Management Office (CMO) for Rural Roads was established to implement the RAP.
Since 1998, the General Corporation for Roads and Bridges acts as a general road contractor, under MPWH, and operates with full financial autonomy. I t can rely on i ts 22
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branches located throughout the country to perform construction and maintenance activities for central and local governments. For international projects, GCRB may be selected through international competitive bidding processes, for which it can apply market prices. For the remaining locally-funded projects, GCRB i s directly contracted by the M P W H and has to apply the prevailing unit prices set by M P W H ’ s Cabinet. Those prices can be, in some cases, well below costs, a main problem that needs to be addressed. GCRB has increased i t s staff over time, from 3,200 in 1997 to about 5,500 staff (o f which about 2,000 are employed on a daily basis) today. In 2005, GCRB started a five-year contract with the RMF to handle the routine maintenance o f the whole paved network.
A Road Maintenance Fund (RMF) was established (Law No. 22 o f 1995) in 1996 under the IDA-supported Transport Rehabilitation Project to improve the maintenance o f roads and to enhance cost recovery in the road sector. An additional h e 1 levy was set up to provide the RMF with an annual budget o f about YR 6-700 million (US$ 3.2 to 4.5 million). Due to the continuous increase in the paved network, these revenues were insufficient t o keep the main road network in a stable condition. A significant amendment to the RMF law was thus adopted in 2000 to increase the f u e l levy to 5% o f the pump price (representing annual revenues o f about YR 5 bn) and put the road network on a fee- for-service basis. To date this law has not been implemented, leading to a critical situation where the RMF has to handle a constantly increasing number o f tasks but with tight resources. Under Phase I1 o f RAP, the RMF will s i g n multi-year performance-based contracts, for a total length o f about 950 km. These pilot projects are expected to expand the role o f the private sector and the effectiveness o f maintenance by letting contractors identify the best ways to meet pre-defined performance standards.
The overall responsibility for rural roads under the Rural Access Project (RAP) i s with the Central Management Office (RAPCMO). A Rural Roads Steering Committee, chaired by the Minister o f Public Works and Highways, provides the necessary oversight, control and guidance to the W C M O . To date, the R A F C M O has launched 22 rural road projects under IDA-hnding, for a total length o f roads close to 540 km, and three additional rural road projects financed by USAID and the European Union. With new donors (Arab Fund, FAD) ready to support the Rural Access Program, the Government decided in 2004 to transform the RAPCMO into a Government Agency responsible for implementation o f the national program for rural roads. A decree establishing such Agency i s expected to be issued in a near future. I t should further strengthen the principles o f autonomy, competent staffing, and transparent decision-making, which led to the success o f the RAPCMO.
Public Expenditures in the Road Sector. Over the two decades 1980-2004, public expenditures in the road sector have been mainly concentrated o n construction o f new roads, to the detriment o f road maintenance. Budgets have been allocated so as to support the ambitious expansion plans set by the Government for the paved network. This situation is unlikely to change in the future as the Ministry o f Public Works has planned to build further 9,263 km o f paved roads in the long term. To finance the expansion o f the sealed network, the Government is increasingly relying o n foreign donors’ assistance. In 2005, foreign contributions are expected to become the major source o f financing for the
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MPWH, representing about 60% o f the total budget (YR 37.3 bn), compared to only 30% in 2001.
There are currently four issues in the budget allocation process: (i) new road projects are started irrespective o f whether or not they are in the approved budget; at the heart o f the problem i s the system o f making politically driven annual commitments for local road projects that are not fully funded; (ii) MPWH has not been able to prioritize i t s actions, thus launching too many road projects with too l i t t le budget allocations; consequently a lot o f projects do not show much progress and stay in the budget for up to 10 years or more; i t is estimated that, at present, GCRB has committed i t se l f to execute 140 projects, or more than double its current ongoing projects; (iii) allocations for preparation (feasibility study and design) and supervision o f new projects are inadequate, and quality and timeliness o f the works executed i s suffering; and, (iv) there i s an overall lack o f inter-ministerial cooperation and coordination in the budget process. T o address such issues, the Government has gone towards a major decentralization process, through the new Local Authorities Law (Law No. 4 o f 2000), that would provide local authorities direct responsibility for planning, development, finance, services and social affairs, al l within a limited budget envelope. Although the practical implementation o f the law wil l be slow and tedious, due to limited capacities at the local level, i t i s expected to bring better budget discipline and prioritization in the road sector. For the time being, the Government has developed a strategy based on five main components: (i) contracts are only signed for new projects for which financing i s assured in the approved budget; in reality this has not led yet to a reduction in the number o f projects, due to difficulties in cancellation o f ongoing works contracts; (ii) the road budget i s rationalized somewhat and projects are completed sooner than three years ago, although there is st i l l room for improvement; (iii) a rol l ing multi-year investment program is created with better control o f new projects entering the program; (iv) more funding i s included for feasibility studies and for detailed design studies for new projects; and (v) funding i s concentrated o n the highest priority projects to reduce implementation periods to between 2 to 4 years.
B. The Rural Access Program
The overall purpose and long-term development objective o f the Yemen RAP is an improved livelihood and reduced isolation for the rural population. T o achieve that objective, year-round access to markets and services (both social and administrative) have to improve, especially in the rural areas where the large majori ty o f the country’s poor live. The Program also supports the Government’s decentralization process, which has been initiated in the year 2000, and complements and enhances several community- based programs in Yemen, such as the Social Fund Project and the Public Works Project.
The Program reduces isolation by ensuring that rural people have reliable access through the local, regional and national road networks. This wil l be done by financing improvements to a “cluster” or “sub-network” o f rural roads. The centerpiece o f this approach wil l be to improve rural access roads which link larger centers in districts to the main road network, here referred to as “intermediary rural roads”. These rural roads carry a substantial level o f traffic in Yemen, are generally in very poor condition and are
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excluded f rom village-level infrastructure programs. These investments would be complemented on a limited scale by improvements to smaller access roads that link isolated villages to the improved intermediary roads, thereby promoting a continuous f low o f goods and people to markets and services, and strengthening the poverty reduction impact. During Phase I, the institutional and technical basis o f the program were established. In Phases I1 and 111, the Program focus wil l gradually be scaled up. The non-physical parts o f the Program are also important and focus on capacity-building at a l l levels in the public and the private sectors related to rural roads.
The Program addresses poverty by improving overall mobil i ty in rural Yemen and reducing the isolation o f villages and communities. Between 1992 and 1998, Yemen’s rate o f poverty almost doubled, growing from 19% to about 33%, with about ha l f that in absolute poverty. The PRSP o f M a y 2002 identified a number o f key factors contributing to poverty conditions, including high population growth, l o w labor force participation, scarcity o f cultivable land and water, insufficient infrastructure and inadequate access to main social services. Isolation aggravates and sustains these poverty conditions in the rural areas, which manifest themselves in illiteracy, poor health and l o w employment and income. In 1994, the combined basic and secondary enrollment rate was just 55%, with the overall rate o f female enrollment at 24%. Due to isolation, only 50% o f the population had direct access to health services. The country’s purchasing power parity (PPP) per capita o f income i s ha l f the average for al l l o w income countries. In a 1997 study, 43% o f mothers stated that the reason they did not deliver their babies at a health clinic was due to reasons o f access. A study in rural Taiz Governorate showed that transportation comprised 32% o f the total cost o f a health visit.
The critical constraint o f accessibility i s being addressed under the RAP based o n knowledge about where the poor are located and how we l l they are served by existing roads. Identification and selection o f road improvements under the Program i s being carried out through better planning systems based o n rural accessibility master plans which have been developed as part o f the Phase I project. Poverty and gender issues are taken into account, to the extent possible, in the identification and prioritization process o f individual rural road projects. The sustainability o f this process i s being ensured through institutionalizing participatory activities which engage communities and districts in accessibility planning at the central and decentralized levels.
The Program is being implemented in three phases which are described below
Phase I: Institutional strengthening and definition of appropriate standards. Phase I o f the Program focuses on creating an adequate institutional, technical and participatory framework for planning, prioritizing and implementing rural access improvements. With the purpose o f testing the new framework, Phase I included the pi lot implementation o f physical access improvements o f (i) about 22 intermediate rural roads located in several rural Governorates, and (ii) key village access roads located adjacent to those intermediate roads, using appropriate technical and environmentalhocial standards. All Phase I roads have avoided any resettlement or land acquisition. During Phase I, baseline data on poverty and gender in Yemen have been gathered and used in the preparation o f detailed rural accessibility master plans for Yemen’s 18 rural Governorates. Phase I has
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included the preparation o f a SEA and the development o f a kamework to deal with land acquisition and resettlement, should i t occur during .the program. Phase I also included the preparation o f the designs and bid documents (and sin some cases the beginning o f works) for parts o f the roads to be financed under the next phase o f the Program and concludes with the formal adoption o f a rural accessibility master plans for Yemen's rural Govemorates.
Phase I o f the RAP also served as a vehicle to finance the rehabilitation o f the 114 km long A1 h e r - A1 Naqabah road section o f the Aden - Mukhalla road. This road project was originally part o f the Transport Rehabilitation Project (TRP - Cr. 2819-Yem), but had to be dropped from the credit to make room for a much needed reallocation o f funds to cover the costs o f addressing emergency repairs to the runway and taxiway o f the Aden airport, which had shown accelerated deterioration after suffering war damages during the 1994 c iv i l unrest in Yemen. A supplemental credit for the TRP to finance the A1 Ahmer - A1 Naqabah road was requested by the Government, but i t was agreed to include such financing in the following operation in the sector. The Phase I project o f the RAP provided the f i rst opportunity to do so, and this road rehabilitation project was thus included as a separate Part B o f Phase I, although strictly speaking it i s independent from the RAP.
Phase 11: Access improvement and decentralized network management. Phase I1 o f the Program wil l focus on (i) physical rural access improvements to areas with widespread poverty, poor accessibility and latent rural development potential, ut i l iz ing the planning (identification and selection) process developed in Phase I; and (ii) continued capacity- building at appropriate levels for the management and, in particular, the maintenance o f the intermediary rural road network, including improvements o f contractors and consultants, the monitoring o f key indicators, the implementation o f EMPs, and the management o f local participatory processes. This wi l l also include the financing o f village access roads adjacent to the intermediary project roads, the preparation o f the third phase and a detailed review and assessment o f the f i rs t two phases.
Phase 111: Expanding the coverage of access improvement and consolidation of gains. Phase I11 would expand rural access improvements and capacity building to critical intermediary access roads not yet covered under Phase 11. I t would continue to support village access road development. Capacity building to achieve sustainable management and maintenance o f rural roads, using the demand-driven and poverty-based approach for identification and prioritization o f rural road subprojects as initiated in Phases I and I1 (rural accessibility planning) would also continue under Phase 111.
C. Triggers for Initiation of Phase I1 and Phase I11 of the Program
During the processing o f the Phase I credit, the Government and the Bank agreed on a set of triggers for the initiation o f Phase I1 o f the Program. Each o f these triggers i s listed below and i t s situation reviewed. With one justified exception, al l triggers have been met in substance or h l ly .
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(a) Proposed technical and environmental standards for rural roads have been tested, verified and adopted for Phase I1 through the completion o f at least four pi lot road projects: Complied with. Five pi lot road projects have been completed, and the implementation o f several additional ones i s well advanced. Through these projects, standards have been successfully tested, adjusted on the basis o f experience, and formally adopted. They are consistent with traffic demand and aim at optimizing the cost effectiveness o f investments.
(b) A rational methodology for planning, prioritizing and budgeting o f rural road investments has been adopted: Complied with in substance. Draft Rural Accessibility Master Plans for five Govemorates have been prepared, based o n a multi-criteria economic and social methodology agreed by the Government. For the remaining thirteen Govemorates, the preparation o f these master plans is well underway. Threshold levels for investments in village access roads have also been determined and agreed between the Government and the Bank.
(c) An assessment has been completed for the current (2001) rural road project portfolio in the MPWH and a plan adopted for a reduction o f the number o f projects under construction, so as to allow their completion within 4-5 years with the allocated budget funds: The assessment o f the 2001 rural road portfolio o f the M P W H was carried out. As described earlier, the Government and the Bank have agreed o n a strategy to move away from the traditional system o f ad-hoc programming and budgeting o f rural road projects, and towards a rational system o f planning and prioritization o f rural road investments. The R A P i s an essential part o f that strategy.
Complied with in substance.
(d) Budgeting in the RAPCMO for rural road investments i s based o n a rol l ing three- year plan to be updated annually: Complied with in substance. This i s made more complex by the RAP’S success in attracting substantial donor funding. R A P C M O has prepared a three year plan for projects to be funded by IDA and other donors. A clearly prioritized 10-year pipeline o f rural road projects to be implemented mostly through the RAP i s also being established through the Rural Accessibility Master Plans, which provide the basis for a rol l ing planning process.
(e) Technical preparation and bidding documents have been completed for the f i rs t year o f the Phase I1 program o f roads: Complied with. The identification, design, and procurement o f projects has become a continuous activity within RAPCMO. Projects are ready that wi l l commit about one hal f o f the credit for Phase 11.
(0 A legal reclassification o f the road network has been enacted, and a long term strategy adopted by the Government on the management and financing o f secondary (rural) roads and roads under the ownership o f the Governorates and Districts: Complied with partially. The PRSP issued in M a y 2002 provides a sound strategic fkamework for the rural roads sector. In addition, the Government has completed a 10-year National Road Master Plan which includes, among many other elements, (i) a new classification o f the road network, and (ii) a plan for the management and financing o f the secondary rural
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and local roads. I t i s the Government’s intention to submit the new road classification to the Parliament for approval within the context o f a new road law, the preparation o f which requires much consensus building at political level and i s a lengthy process. This delay does not affect the fulfillment o f the program’s objectives since reduced isolation o f the largest possible share o f the rural population during the program’s period wil l be best achieved by allocating resources to a well defined core network o f priority rural roads in the vicinity o f which most o f the rural population lives. This core network has been clearly established and i s receiving most o f the available resources including al l funds from donor agencies.
(g) A sectoral environmental assessment (SEA) has been completed as well as Category A EAs for roads in the Phase I1 f i rst year program: Complied with. The SEA for the RAP has been completed and publicly disclosed in Yemen and at the Bank. The SEA includes the procedures to be applied for all category A sub-projects. The f i rst year program i s ready and does not include any category A sub-projects.
The following achievements have been agreed as triggers for the initiation o f Phase I11 o f the Program.
Phase I o f the Program completed satisfactorily; At least two thirds o f the civil works planned under Phase I1 o f the Program completed (measured by disbursement for civil works); Technical preparation and bidding documents completed for the f i rs t year (25%) o f the Phase I11 program o f roads; EAs for Category A roads or EMPs for Category B roads in Phase I11 f i rs t year program completed; Satisfactory budget allocation for road maintenance in the preceding fiscal year; and Satisfactory completion o f road maintenance management strengthening activities under Phase 11.
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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
YEMEN, REPUBLIC OF: Second Rural Access Project
Sector issue
IDA-f inanced Poor access, institutional weaknesses
Rural development
Employment generation
Other development agencies
European Un ion
U S A I D
UNDP Programs
Arab Fund
Arab Fund + OPEC
Omani Government
IP/DO Ratings: HS (Highly Sati
Project
Rural Access Program (Phase I)
Social Fund for Development
Third Public Works Project
Food Security Program (Khamis Bani Sa’ad - Alquata’a and Shafer - A1 Sali roads)
Kamis A1 Wathat - Kouydinah road
Environment and Eco-Tourism Government Capacity and Institutional Reform Poverty Alleviation and Employment Generation
Program o f about 1,000 km road improvement being started
Al-Beidah-Mukeiras-Lowdar Road
Roads in Mahra Govemorate
actory), S (Satisfactory), U (Unsatisfactory), HU (High1
Latest Supervision Ratings (Bank-financed projects only)
s i S
Jnsatisfactory)
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Annex 3: Results Framework and Monitoring
YEMEN, REPUBLIC OF: Second Rural Access Project
I
Results Framework
I
Program Purpose Improved l ivel ihood and reduced isolation for the rural population through improved year-round access to markets and services. Phase I : Institutional Strengthening and definit ion o f appropriate technical and environmental standards Phase II: Access improvement and strengthened road network management Phase III: Expanding the coverage o f access improvements and consolidation o f gains
PDO Isolation is reduced for about 250,000 persons in rural areas with high incidence o f poverty, enabling them to better reach markets and access services (social and administrative).
Component One: Rural Access Roads Rural Access Roads are improved to ensure year round access.
Component Two: Institutional Support and Capacity Building Institutional and technical capacity for road planning, management and implementation i s strengthened at the central and decentralized levels.
End of Program Indicators: Transport rates along each program road for goods and passengers are reduced on average by 30%. Price o f essential commodities at specific markets along program roads are reduced o n average by 15% (wheat, flour, sugar, rice water bottle cooking oil, ghee, petroleum, diesel, kerosene, gas cylinder, cement). Average access t ime f rom the villages benefit ing f r o m each program road to the closest markets and services are reduced o n average by 30%.
Outcome Indicators 250.000 persons located in district centers and within 2.5 km o f the project roads in rural areas, who do no t currently have reliable year round access to Governorate centers, wil l be provided with such access by the end o f the project.
Component One: 1 At least 200 km o f
intermediate rura l roads are paved in accordance with acceptable industry standards. At least 75 km o f vil lage access roads are improved in accordance with acceptable industrv standards.
I
Component Two : 1 At least 3 decentralized rural
road management offices are functional.
professionalsitechnicians f r o m the private and public sector have received o n average 10 days o f relevant
1 At least 200 local
Use of Indicator Information: (JA
Use of Outcome Information Lower number o f beneficiaries would flag either insufficient implementation progress or shortcomings in screening and selection o f project roads.
Use
Component One: Lower annual outputs would flag problems needing assessment and remedial action, such as: (i) l o w contractor performance; (ii) slow preparation o f n e w road projects; and (iii) procurement delays.
Component Two: Non-achievement o f targets would f lag poor overal l organization and management and/or lack o f po l i t ica l will.
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Component Three: Road Maintenance The RMF maintains identified road sub-networks to adequate pre-defined service levels.
high quality training. I Constraints to the
development and efficiency o f the road maintenance and construction industry and road sector consulting profession have been identif ied and adequate improvements measures have been designed
professionally and in conformance with legal and fiduciary requirements.
I RAP i s managed
Component Three: I At least 950 km o f roads are
properly maintained by the RMF through performance- based road maintenance and management contracts.
Management System i s functional and able to produce sound assessments o f priori ty maintenance and improvement expenditures for the primary road network o f Yemen.
I A modern Pavement
Component Three: Lower output wou ld flag problems needing assessment and remedial action, such as: inadequate preparation andor supervision o f maintenance contracts.
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- 3 0 -
0
5 e d g
0 0 cl m s
m s m
m s m
F 0
I 2 0 z m s
0 I N 8 m s
0 8 m s
m Y
2
0 m m m s 0 m vl o\ F
0 m 0 W s
8 0 0 m
0 s
0 8
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Annex 4: Detailed Project Description
YEMEN, REPUBLIC OF: Second Rural Access Project
Project Component 1: Rural Access Roads (USD 34.09 million)
This component wil l include the upgrading o f intermediate rural roads (linking Governorate capitals to District centers or District centers among themselves) and o f village access roads (linking villages to the intermediary rural roads). The works wil l generally comprise earthworks, slope protection, drainage structures, repair or reconstruction o f some minor bridges and culverts, and provision o f pavement layers including bituminous surfacing. The technical standards will be those tested and validated through the Phase I project. These standards have been the subject o f several technical audits and have been adjusted on the basis o f experience throughout the Phase I project. They are adapted to the relatively low traffic generally found on these roads and the capabilities o f Yemeni contractors. Unit costs will vary with the condition o f the existing roads and related structures, and the terrain. They are estimated between U S D 90,000 and U S D 140,000 per kilometer for intermediary rural roads and between U S D 35,000 and 50,000 for village access roads. Most contracts will be for improving a set o f about 20 to 30 km o f intermediate and village access roads. Their cost wi l l be in the USD 2.0 - 3.0 mi l l ion range. Based on the experience o f the Phase I project, c iv i l works are expected to be mainly carried out by local small and medium size contractors and to last 20-24 months per contract. Given emerging constraints in the local construction industry, however, some contracts wil l be tendered as packages so as to attract foreign contractors. I t is estimated that about 200 km o f intermediary rural roads and 75 km o f village access roads wil l be upgraded in the project. The separate cost o f road works i s estimated at USD 3 1.48 million.
The roads wil l be selected from a long l i s t already prepared o n the basis o f the first draft o f the rural accessibility master plans and agreed by Government. Each candidate intermediary rural road wil l be screened, and then submitted to environmental, social, and economic analysis on the basis o f the procedures established through the Phase I project. The village access roads wil l necessarily be roads that connect intermediary rural roads upgraded through the project to nearby villages. They wil l have to have a marginal investment cost o f less than USD 75 per beneficiary. Since the Phase I1 roads will be part o f a much larger nationwide program financed by several donors, with IDA being only a minor source o f funds, the roads may be located in any part o f Yemen. This is not expected to be a problem as the RAPCMO has the capability to adequately implement contracts over the entire country.
I t has been agreed with the Government that, since the RAP has developed into a continuous national program, it was important that part o f the Phase I1 road works be started under funding from the Phase I project and continued with funding from the Phase I1 project. This wil l also accelerate disbursements o f the Phase I credit and expedite the start o f the Phase I1 project. About nine contracts representing about one quarter o f the Phase I1 funding for improving rural access roads will thus be started under Phase I.
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Project component 1 also includes consultancy services for design and supervision o f road works (including the detailed design o f the f i r s t year road works program o f the third‘phase). The estimated cost o f these services, which wil l be provided by a m i x o f local and foreign consultants (with measures taken to encourage the development o f local consultants), i s USD 2.60 million. As with the road works, consultancy contracts wil l be procured and will start being executed under the Phase I project and their funding wil l be taken over by the Phase I1 credit upon exhaustion o f the f i rst credit. Some o f the design work started under the Phase I project and continued under Phase I1 wil l be for roads that will be financed by the Arab Fund. This was agreed at the Governrnent’s request in order to accelerate the start o f the Arab Fund financed project, which is also implemented by the RAPCMO. This also recognizes and reinforces the institutional achievements o f the Phase I and the emerging role o f RAPCMO as the national agency for implementation o f rural roads programs.
Project Component 2: Institutional Support and Capacity Building (USD 3.45 million)
This project component wi l l mainly include the provision o f training, services o f local and foreign consultants, and equipment for the following activities: . Establishment and operations o f at least three regional offices o f RAPCMO for
the supervision o f works required under the Program;
Development o f the capability o f the M P W H and RAPCMO, to manage the road sector, including follow up on the rural accessibility master plans, development o f planning and budgeting processes, continuous review and adjustment o f technical standards for roads and road works, improvement in procurement and contract implementation, development o f management systems, development o f the capability to address environmental and social issues, review o f the f i rs t two phases o f the RAP, and an assessment o f the possible alternatives for restructuring RAPCMO to ensure sustainable achievement o f the Program’s objectives;
Development of the Yemeni road maintenance and construction industry and road sector consulting profession, particularly through (i) the preparation o f industry guidance manuals; (ii) the development o f a training capability o n project management, work planning, cost accounting, bid preparation, contract documents, legal aspects, works supervision, and the environmental and social aspects of project preparation and implementation, and (ii) the carrying out o f a review o f the institutional, financial, and regulatory framework for contractors and consultants; . Any assessment study o f the transport sector issue as may be needed to achieve the objectives o f the Program;
Operations o f RAPCMO and its regional offices.
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Project Component 3: Road Maintenance (USD 12.33 million)
This project component wil l include the maintenance o f about 950 km o f roads under performance-based management and maintenance o f roads (PMMR) contracts. I t wil l introduce in Yemen this innovative type o f contract, which should help remedy current weaknesses in the management o f road maintenance. The specific roads to be maintained have already been proposed by the RMF. They were selected so as to make this experiment both feasible and valuable. The main features o f the contracts and the procedures for their procurement, supervision, and management wi l l be established through a consultancy started under the Phase I project and completed under the Phase I1 project. I t is expected that the contracts wil l cost about USD 10.92 mi l l ion in total and wil l be implemented over a four-year period.
The project component wil l also include consultants’ services, training, and equipment, for (i) supervising the P M M R contracts; and (ii) strengthening the maintenance management capability o f the RMF, including especially (a) improving the road data base and the planning/budgeting/monitoring systems o f the RMF; (b) clarifying the technical and organizational options for maintaining the different classes and types o f roads; and (c) supporting, as may be required, the activities o f the RMF, including for the improvement o f road safety.
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Annex 5: Project Costs
YEMEN, REPUBLIC OF: Second Rural Access Project
Local Foreign Total
million million million Project Cost by Component US$ US$ US$
Rural Access Roads 14.82 Road works Design and supervision services
Technical assistance services Training Equipment Operating costs of RAPCMO
Road works Supervision services Technical assistance services Training Equipment
Institutional Support and Capacity Building 2.22
Road Maintenance 5.32
14.82 29.64 (2 7.3 7)
(2.26) 0.81 3.03
(0.32) (0.3 5) (0.3 6)
5.45 10.77 (9.50) (0.3 0) (0.65)
(2.00)
(0.20) (0.12)
Total Baseline Cost Physical Contingencies
22.36 21.08 43.44 1.52 1.44 2.96
Price Contingencies 1.78 1.69 3.47 Total Project Cost' 25.66 24.2 1 49.87
Interest during construction
Total Financing Required 25.66 24.2 1 49.87 Front-end Fee - -
'Identifiable taxes and duties are U S $ 1.70 mi l l ion and the total project cost, net o f taxes, i s US$ 48.17 million. Therefore, the share o f project cost net o f taxes is 96.6%.
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Annex 6: Implementation Arrangements
YEMEN, REPUBLIC OF: Second Rural Access Project
Rd-finiskation Pr0GU-d and A G G ~ U ~ S
The RAPCMO will be the implementing agency for Project Components 1 (Rural Access Roads) and 2 (Institutional Support and Capacity Building). The RMF will be the implementing agency for Project Component 3 (Road Maintenance). These two organizations wil l be responsible for ensuring full compliance with IDA fiduciary requirements for the project components under their authority. In addition, the RAPCMO will be responsible for ensuring compliance with World Bank environmental and social safeguard policies for al l three project components. Basic information on these implementing agencies i s provided below.
Plaming Erwim-rt and Design Social
Swmuis ion Managermrt
Rural Access Program Central Management Office (RAPCMO).
During the preparation o f Phase I o f the RAP in 2000, the decision was taken to create the RAPCMO to be responsible for the management and coordination o f Phases I to I11 o f the program. During the execution o f Phase 1 , the RAPCMO has developed steadily and, on the whole, performed very well in al l o f i t s functions. The RAPCMO’s central office in Sana’s i s staffed with well-qualified personnel (currently four engineers, two environmental specialists, and additional financial and administrative staff) recruited through an open and competitive process. As shown in the organizational chart below, the RAPCMO has four units: (i) Engineering/Planning; (ii) Environmental and Social Management; (iii) Procurement and (iv) Financial Management and Administration. It i s led successfully by an experienced General Manager.
Orgarization Chart Rural Access Prqjram
I Steming Cormittee Chairp”:
Mrister d Public Works- and H i g h ~ m y s
During Phase I, the RAPCMO has also initiated the establishment o f three regional offices in Hadramout, Hoddeidah and Taiz. This has had mixed results mostly because
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the volume of works has not been sufficient to justify the presence o f highly qualified engineers in these offices. This wil l change in the coming years as the size o f RAP will be multiplied by a factor o f about three (as discussed in Part C. 1 above). During Phase 11, the regional offices wil l be fully established. Their role wil l be the fol low up and monitoring of project implementation under the management and supervision o f the central office o f the RAPCMO in Sana’a.
Given the steady r ise o f project activities during Phase I and the firther heavy increase expected very soon because o f the preparation and execution o f large projects under a variety o f funding sources, i t is necessary that the RAPCMO quickly recruits additional staff in the areas o f engineering, environmental/social, procurement and financial managemedaccounting. I t i s estimated that about 10 additional RAPCMO staff are now required. While some o f the additional work may be carried out by local consultants, the increase in the RAPCMO’s staffing as mentioned above i s essential to ensure that i t wil l be able to carry out successfully the Phase I1 project as well as the projects under other donors’ funding. The RAPCMO i s currently in the process o f recruiting such additional staff. Further staff may be hired in 2006 depending on the speed at which other donors’ project come on stream. The newly hired staff will require training in order to fully understand the program as well as the RAP’S procedures, standards and working methods. The organizational structure o f the RAPCMO will also need to be adjusted to correspond to i t s expanded size and volume o f work. I t i s agreed that RAPCMO would have four main departments, namely: (a) Administration and Finance, (b) Procurement, (c) Des ign and Supervision, and (d) Planninflrogramming and Environment/Social Management. These departments would be well structured. Underpinning these changes i s the Government intention that the RAPCMO would become the agency in charge o f implementing the Government’s entire rural roads program.
I t has been agreed that the principles that led to the success o f the R A P C M O (as wel l as the success o f similar agencies in other countries) wil l continue to be applied: (i) decisions regarding al l aspects o f sub-project preparation and implementation will be made on the basis o f transparent, rational, technical, economic, environmental, and social policies and criteria; (ii) the RAPCMO wil l be able to operate autonomously within the scope o f its mandate; (iii) the RAPCMO will have a full time general manager and department directors with high technical sk i l ls and proven experience in similar ’
activities; and (iv) competitive remunerations and adequate working conditions will be provided to staff at a l l levels.
During the Phase I project, the RAPCMO has developed sound methodologies and procedures for the selection o f sub-proj ects, including their environmental, social, and economic analysis. These procedures, which are noted in Annexes 9 and 10, will be used under Phase I1 and, as has been the case under Phase I, will be kept under review and improved continuously. Any change in substance will be agreed with IDA. As part o f these procedures, which are used on a continuous basis, the R A P C M O produces screening, environmental assessment, women’s consultations, traffic counts, and economic evaluation reports under standard formats agreed with IDA in order to in form the Government and obtain IDA’S clearance for each sub-project.
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The RAPCMO has also developed sound principles and standards for the design o f sub- projects. These are also kept under review and improved continuously with IDA’S concurrence.
Consultants are used for the preparation o f sub-projects’ environmental and social analysis as wel l as for engineering and supervision o f road works. The RAPCMO has developed standard terms o f reference for the services o f these consultants.
Part o f the success o f the RAPCMO has been due to i t s ability to attract and motivate high quality staff through good salaries and work conditions. To make this possible, the Phase I credit has thus paid for 80% o f the RAPCMO’s operations. This wil l be continued under Phase 11.
Road Maintenance Fund.
The RMF was established in 1995 under the IDA financed Transport Rehabilitation Project to improve the maintenance o f roads and to enhance cost recovery in the road sector. The RMF i s an autonomous State agency. With technical assistance funded by IDA, i t has gradually developed the technical and institutional capacity to plan and administer in an effective way the State financed maintenance program for national and rural roads. The RMF manages directly the funds that it receives from a f ie1 levy as wel l as from the national budget. I t has about sixty employees, many o f them road engineers, and has an organization adapted to i t s role. The RMF has created a special unit - RMFIU - for implementation o f Project Component 3 and, in particular, for carrying out procurement and financial management for such component. This unit wil l need strengthening as explained in Annexes 7 and 8. Given the innovative nature o f the PMMR contracts used in Project Component 3, the RMF will also need support for their design and implementation. A qualified consulting firm i s being recruited under the Phase I project to initiate th is support, particularly in the design o f the contracts. I t is expected that another h l ly experienced firm will assist the RMF in the management o f the contracts and the supervision o f maintenance works.
Project Coordination and Oversight.
Oversight o f the RAPCMO, RMFIU, and the overall Project would be assured by a Steering Committee. This committee, which was established under Phase I, will be restructured. I t s membership will be limited to five high level representatives, two from MPWH (the Minister as chairperson o f the Committee and the Deputy Minister for Roads), and one o f each o f the Ministry o f Planning and International Cooperation (MPIC), the Ministry o f Finance (MOF), and the Ministry o f Local Administration (MOLA). The General Manager o f the RAPCMO and the Chairman o f the RMF will participate in the meetings o f the Steering Committee but not in the Committee’s decision making process. Any relevant agency may be called upon to participate in discussions whenever needed.
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The Steering Committee’s main duties and functions wil l be to: (i) approve plans and design criteria for rural roads; (ii) approve staff service rules and manuals o f procedures; ,
(iii) approve employment contracts for senior staff o f RAPCMO; (iv) approve annual budgets for the Project; (v) approve reports on the progress in implementing the Project prior to submitting same to the Association; (vi) employ the financial auditors; and (vii) approve contracts for the provision o f goods and consultants’ services, and for the carrying out o f works, whose price shall exceed the equivalent o f $200,000. It i s well understood that the Steering Committee’s role would be focused on the approval o f policies and general plans and the monitoring o f progress in implementation o f these plans, and would not include involvement in management nor the exercise o f prior control on matters o f execution.
The R A P C M O and the RMF wil l have responsibility for the approval o f contracts under USD 200,000. Contracts above US$l,OOO,OOO wil l be referred to the High Tender Board for final approval, in accordance with the Yemeni legislation.
Further information on financial management and procurement arrangements is in Annexes 7 and 8.
Flow of Funds
The Borrower’s share o f project funding would be provided by the annual national budget under normal State procedures. Availability o f counterpart funds has never been a difficulty under the Phase I project.
Monitoring and Reporting
Both the RAPCMO and the RMF would prepare semi-annual progress monitoring reports in accordance with a format acceptable to IDA. These reports wil l include sufficient operational and financial information, particularly o n the status o f the RAPCMO’s work program, implementation o f a l l contracts, any problems that may have arisen and corrective actions being taken and expenditures. These reports wil l also provide an updated procurement plan and disbursement and commitment tables. In addition, monitoring and evaluation wil l be conducted continuously from the Bank’s country office in Sana’a, and, as in Phase I, through regular semi-annual supervision missions.
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Annex 7: Financial Management and Disbursement Arrangements
YEMEN, REPUBLIC OF: Second Rural Access Project
BY Required Actions
I Establish a fully functional financial
Executive Summary and Conclusions:
Completion Date
An assessment of the financial management (FM) arrangements for the Project was undertaken in February 2005 to determine whether these arrangements are acceptable to the Bank. This project, referred to in this annex as RAP-2, wil l be implemented by two implementing agencies, RAPCMO and RMF. The f i rs t project, RAP-1, was instead implemented exclusively by RAPCMO (referred to in this annex as CMO).
management system at RMF PIU: Draft Financial Management Manual
The CMO, from a financial management perspective, has managed the implementation o f RAP-1 in an acceptable manner. C M O will implement Project Components 1 & 2 o f RAP-2. I t wil l continue to use the same FM arrangements while ensuring some enhancements such as updating its accounting software and financial policies and procedures to reflect changes in the operations o f the new phase and reinforcing i t s FM staff to support the requirements o f RAP-2.
RMFIU As condition o f
The RMF will implement Project Component 3. I t has already taken significant steps towards the development o f acceptable financial management arrangements at the Implementation Unit (RMFIU) that it has recently established. RMF has assigned a Director, Financial Officer, Procurement Officer, and Engineer from the current RMF staff. I t has also devoted a well equipped space to the RMFIU activities and staff. Yet, as the RMFIU has no prior experience in implementing Bank financed projects, the establishment o f a fully functional financial management system will be a condition o f disbursement for Project Component 3, as explained in the action plan below.
Create a chart o f accounts and simple reporting and recording system
Issue first set o f Financial Monitoring Reports (FMR)
disbursement for Project Component 3
disbursement for Project Component 3
disbursement for Proiect ComDonent 3
RMFIU As condition o f
RMFIU As condition o f
Launch the process o f auditor recruitment RMFIU As condition o f disbursement for Proi ect Comoonent 3
I I J - 1
As Credit Covenant I Required Actions I By I Completion
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1 RMF to implement the following activities : Training o f accounting staff on World Bank relevant guidelines
activities: Revise the Financial Manual to reflect activities and FM set-up for RAP-2. Finalize the appointment o f an additional accounting staff Quarterly and comprehensive set o f Financial Monitoring Report(FMR) should be issued, reviewed, and sent to IDA Updating accounting software to reflect changes peculiar to operations o f RAP-2. Launching the process o f auditor
2 CMO to implement the following
Date
RMFIU Three months after effectiveness
C M O Three months after
C M O Three months after
CMO- 45 days after each Auditor quarter
C M O Three months after
C M O Three months after
effectiveness
effectiveness
effectiveness
Financial Management Analysis
1. Country Financial Management Risks: As reported and outlined in the CAS o f 2002, inadequate governance in Yemen i s a critical issue. The Country Financial Accountability Assessment (CFAA) report (2003) indicated that there had been some progress recently in the fiscal area, particularly in terms o f budget expenditure classification and consolidation o f investment and current budget. There is, however, a lack o f progress on achieving budget comprehensiveness as well as o n implementing a broader fiscal framework beyond the annual budgeting cycle. Efforts to move forward in reforming budget implementation, cash management, accounting and reporting have been pinned on the design and implementation o f the Bank-supported AFMIS system, which i s underway, although experiencing significant delays. On the other hand, the draft Reports on the Observance o f Standards and Codes (ROSC) Accounting and Auditing report (2003) stated that, at present, the accounting and auditing practices in Yemen suffer from institutional weaknesses in regulation, compliance, and enforcement o f standards and rules. Although some companies claim compliance with International Accounting Standards (IAS), full compliance is not readily achieved. There i s also inadequate adherence to International Standards on Auditing (ISA) and professional ethics. These factors, as well as the poor quality o f education and training in accounting, have contributed to the generally observed weaknesses o f the financial reporting and auditing regime.
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Inherent Risk
Country financial Management Risk
Counter Part Funds
High
Moderate
Based on the findings o f the various ESW conducted recently, serious weaknesses were identified in the accounting and auditing professions in Yemen. MM include: -Hire an independent qualified private audit firm. -Ring-fence the project implementation and funds. Although the experience with timeliness o f local funds contribution to Bank funded projects in Yemen i s quite mixed, there was a high level o f commitment in RAP-1.
Moderate
Moderate
2. Project Financial Management Risk:
Control Risk - CMO: The C M O has managed the FM implementation o f RAP-1 in an acceptable manner. However, in RAP-2, some r i sks exist which need to be considered.
Issue / Risk
Implementing Agency
Information System
Significant
Moderate
Comment / Risk Mitigation Measures
RAP C M O has managed the implementation
(MM)
o f RAP I in an acceptable manner. However, in RAP 2, more donors may be involved. MM include: - Reliable FM system will capture and
reflect different sources o f funds. - Coordination with donors with regard to
reporting and auditing requirements. The FM software used in RAP-1 did not allow issuing complete set o f FMRs. Furthermore, RAP-2 requirements are different.
Moderate
Moderate
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Staffing
Financial Policies and Procedures
Flow o f Funds
Internal Audit
Reporting and Monitoring
External Audit
Significant
Moderate
Moderate
Moderate
Significant
High
MM include: - C M O wil l continue to use the current FM
software after updating i t for changes peculiar to operations o f the new phase.
C M O had an experienced qualified Financial Manager in RAP- 1 involved in development o f computerized accounting system, FMR and FM Manual. MM include: - The C M O will renew his contract - C M O wil l hire an additional accountant
to provide assistance and to allow for segregation o f duties.
The C M O had comprehensive policies and procedures manual in Arabic. MM include: - The manual wil l be translated to English
to facilitate Bank supervision. - It wi l l also be updated to reflect changes
in phase I1 (eg. changes to chart o f accounts).
Special Account will be used for IDA credit proceeds. For high value contracts, direct payments wil l be used No internal audit exists at C M O level. However, MOP and MOF conduct a 100% ex-ante audit over al l expenditures. C M O has been issuing quarterly financial reports (FMRs) without procurement and physical progress. MM include: - C M O will issue a complete set o f FMR
including procurement and physical progress reports.
- FMR will be quarterly reviewed by private auditor.
An independent qualified private auditor acceptable to IDA will be hired to audit C M O accounts according to TORS upon which IDA would grant i t s annual No- Obi ection.
_I
Overall Control R i s k Before MM
VIoderate
Low
L o w
Moderate
Moderate
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Control risk - RMFIU: The RMF has no prior experience in implementing World Bank financed projects, which renders the implementation o f i t s component more risky.
Issue / Risk
Implementing Agency
Staffing
Information System
Financial Policies and Procedures
Flow o f Funds
Internal Audit
High
High
Moderate
Significant
Moderate
Moderate
Comment / Risk Mitigation Measures(MM)
Although the project design i s not very complex, RMFIU has no prior experience with implementing Bank projects. MM include: - Adequate training on Bank guidelines
will be provided to accountants. - Init ial oversight by C M O and close
supervision by Bank F M S wil l be provided.
Staff has no prior experience with Bank guidelines. MM include: - A financial officer i s already assigned
from RMF staff to RMFIU. - H e started to have on j o b training
through C M O FM. Based on the relatively l o w volume o f transactions and the expected simple nature o f payments (equal monthly installments under PMMR contracts), RMFIU will tentatively use simple recording and reporting. Upon kture findings, the need for a more complex automated software wil l be assessed. RMFIU has no policies and procedures manual in place. MM include: - RMFIU wi l l develop its own manual as a
condition o f disbursement o f Project Component 3, in light o f C M O manual, while taking into consideration the specific nature o f i t s operations (e.g. PMMR contracts)
Special Account wil l be used for IDA credit proceeds. For high value contracts, direct payments will be used. No internal audit exists at RMFIU level. However, MOPIC and MOF conduct a 100% ex-ante audit over a l l exDenditures.
vfoderate
Moderate
Moderate
Moderate
L o w
Moderate
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Reporting and Monitoring
Extemal Audit
Overall Control Risk Before MM
High
High
RMFlU has no prior experience with Bank reporting guidelines. MM include:
Moderate
- RMF will design i t s f i rs t FMR template before credit effectiveness with the assistance o f CMO.
- FMR will be quarterly reviewed by the same auditor.
An independent qualified private auditor acceptable to IDA will be hired to audit PIU accounts according to TORS upon which IDA would mant i t s annual No-Obiection.
Moderate
Overall Control Risk Before MM Moderate
3 . Institutional and Implementation Arrangements. The C M O wil l be responsible for Components 1 and 2 o f the program. The RMF, on the other hand, wil l be responsible for the procurement and financial management o f Component 3. The Rural Roads Steering Committee, chaired by the Minister o f MPWH, wil l provide oversight, control and guidance of/to the C M O and the RMF.
4. The C M O General Manager (GM) has been designated off icial ly as overall coordinator o f the project. Reporting to the GM i s the Financial Manager, who i s supported by a cashier, who handles petty cash. The C M O Information Specialist i s responsible for providing technical support for the C M O hardware and software including the accounting software. Both the Finance Officer and the Information Specialist demonstrate a reasonable knowledge and understanding o f Wor ld Bank procurement, disbursement, project accounting, financial reporting and auditing guidelines and procedures. The C M O has initiated the recruitment o f an additional accountant for further segregation o f duties and to assist the Finance Officer.
6. The RMF is an autonomous State agency. I t generates i t s revenues from the collection o f YR 0.5 per l i ter o f gas, in accordance with the law issued by the Government, as well as from budget h d s provided by the MPWH. The RMF i s headed by a Chairman; i t has a Finance Department headed by the General Director. RMF has set-up the RMFlU to manage Component 3 o f RAP-2. This unit wil l be headed by a director with Engineering, Procurement and Accounting staff reporting to him. The RMF Chairman wil l assign one qualified accounting staff from the RMF Finance Department to handle the accounting o f Component 3 o f RAP-2. Upon progress o f work, the need for an additional accountant will be reviewed.
7 . Accounting system. The project will use the International Public Sector Accounting Standards (IPSAS) cash basis o f accounting and the outline o f budget components for financial reporting. The books o f accounts for the project wil l be maintained on double- entry bookkeeping principles. I t is agreed that Project Accounting (cash basis) will cover
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al l sources o f Bank hnded project transactions and al l utilization o f said funds. All project-related transactions wil l be recorded in books o f accounts and supporting documents will be kept at C M O R M F I U . Direct disbursements made by the Bank and from the Special Accounts wi l l be included in the project accounting system. Funds received from different sources would be identified separately and reflected in project accounts, FMR and FS.
8. Project-related transactions and activities are distinguished at the data-capture stage. An identifiable Trial Balance for the project capturing al l projects receipts, expenditures, and other payments under the project is prepared. A Chart o f Accounts for the project has been developed for RAP-1 and will be used and updated for RAP-2. The Chart o f Accounts shall conform to the classification o f expenditures and sources o f funds as indicated in the project documents (Project Operational Manual, Program Appraisal Document). The Chart o f Accounts allows data to be captured in a manner to facilitate financial reporting o f project expenditures by: (i) project components; (ii) subcomponents, (iii) expenditure categories, and (iv) disbursement categories. A system o f reconciliation between the Project Financial Statementdfinancial reports and the legal books o f accounts has been defined under RAP-1 and wil l be utilized in RAP-2. The RMF wil l prepare i t s own Chart o f Accounts and wil l complete this as a condition o f disbursement o f Project Component 3.
9. Information System. The C M O will maintain i t s books o f accounts using a computerized accounting system that was also used for RAP 1 managed under i t s responsibility, prepare and disseminate the financial management reports, and ensure timely transmission o f these documents to the Board. The automated accounting books wil l reflect the government contribution, the balances related to the amounts disbursed, reflecting the transactions o f the special accounts and the remaining balance at the end o f each period. The Financial Manager i s in charge o f the issuance o f the annual project financial statements and the quarterly Financial Monitoring Reports (FMRs) as well as the submission o f these documents on a timely basis to IDA and to the auditors.
10. The RMF currently uses manual and computerized systems in parallel and reconciliation between these two systems are performed. The financial statement reports are prepared manually. The RMFIU will set-up its own accounting books for the project as a condition o f disbursement o f Project Component 3. Based o n the relatively l ow volume o f transactions and the expected simple nature o f payments (equal monthly installments under PMMR contracts), the RMFIU plans to tentatively use a simple system (such as Excel or Access) for recording and reporting financial transactions and to produce financial monitoring reports in a consistent manner. Upon future findings, the need for a more complex automated software will be assessed.
11. Budgeting system. An annual budget for procurement and disbursement i s issued by C M O based on i t s Project Implementation Plan. The proposed annual budget (Government contribution) i s submitted to the Project Steering Committee, which i s in- charge o f approving the C M O budget. This i s included in the overall budget o f MPWH,
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sent to the Ministry o f Finance (MOF) for approval and eventually sent for final approval to the Parliament.
12. The budget approved for the C M O i s deposited to the local Project Account opened at the Central Bank o f Yemen in the name o f the RAP-2 CMO. At the beginning o f the year, ha l f o f the budget i s deposited into the CMO's Project Account at the Central Bank and the remaining balance i s deposited only upon request o f the CMO, when the funds are needed. The same process wil l apply to the RMFIU.
13. Financial Policies and Procedures. The financial policies and procedures are crucial for ensuring transparency, providing clarity regarding financial aspects to the various stakeholders and finance staff, ensuring uniformity, and enforcing accountability. These policies inter-alia cover the following aspects: (i) expenditures that would be treated as project expenditures including their classification; (ii) expenditures, which would be eligible for reimbursement from IDA credit; and (iii) project accounting policies. These policies include aspects such as efficient management and deployment o f funds, internal control policies, etc.
14. In RAP-1, C M O financial policies and procedures manual outlined: (a) j ob responsibilities within the financial department, (b) accounting principles and policies (eg. evaluation o f non USD expenses), (c) accounting system, and (d) operational procedures (eg. for withdrawal from Special Account, replenishment, payments to contractors, etc), (e) the accounting cycle and entries, the chart o f accounts, and templates o f forms to be used. The manual wi l l be updated to reflect changes in phase I1 (eg. changes to chart o f accounts), and the use o f an imprest account. Since it was issued in Arabic language. i t needs to be translated to English to facilitate and streamline Bank supervision.
15. RMFIU has no policies and procedures manual in place. I t will develop i t s own manual as a condition o f disbursement o f Project Component 3, in light o f C M O manual, while taking into consideration the specific nature o f i t s operations (eg. PMMR contracts)
16. Flow of Funds. To ensure that funds are readily available for project implementation, the C M O 'and RMFIU would each open, maintain and operate a Special Account (SA) at the Central Bank o f Yemen. Deposits into, and payments from the SAs, wil l be made in accordance with the provisions stated in the credit agreement. Disbursement under this credit will be made according to the transaction-based disbursement procedures that include withdrawal applications for direct payment, reimbursement and requests for the issuance o f special commitments. Withdrawal applications and replenishments o f the SA will be prepared and sent by the C M O and the RMFIU signed by authorized signatories. The name and corresponding specimen o f signature o f each o f the authorized signatories wil l be submitted to IDA at effectiveness and before submission o f the first withdrawal application.
17. For both C M O and RMFIU, procurement is done at the C M O R M F I U level. N o contracting i s made at the regional offices. Invoices, together with supporting
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documentation, are submitted by the various consultants, contractors and suppliers to the procurement officer who reviews them against payment terms o f contract/physical progress and then forwards them to the financial department. The financial officer reviews the payment package for completeness and accuracy in accordance with IDA guidelines and submits i t for approval o f the project director. Upon director’s approval the financial officer prepares a check or a withdrawal application which i s duly signed by authorized signatories.
Report Frequency Preparation Due Date Responsibility FR Monthly 10 days from end o f month C M O /
18. Internal Controls. A fiduciary responsibility o f control o f the budget execution and monitoring rests with the Project Steering Committee. For CMO, the financial manager wil l have two staff in the Finance section, an accountant and a cashier, with job descriptions that indicate segregation o f duties to ensure there i s internal control in the system. The C M O has also engaged the services o f an information specialist to verify the accounting data in the system prior to generating the FMRs. For the RMFIU, the size o f staff in the financial department do not allow for complete segregation o f duties. Due to the expected relatively l ow volume o f transactions, only one financial officer has been assigned to the financial section o f the RMFIU. For both implementing agencies, in accordance to IDA requirements, appointment o f an independent private auditor acceptable to the IDA will be completed for RAP-2. In addition to the issuance o f an opinion on the project financial statements, the external auditor wil l be required to submit an annual management letter highlighting his observations on the internal control system,
Sent to M O P I C N O F
19. Reporting and Monitoring. Each o f the C M O and the RMFIU will issue monthly financial reports (FR), quarterly financial monitoring reports (FMR) and annual project financial statements (PFS):
FMR RMFIU
Quarterly 3 weeks from end o f quarter C M O / MOPIC/MOF
PFS RMFIU IDA
vear RMFIU IDA Annually 3 months from end o f fiscal C M O / M O P I C N O F
(zLJ Monthly un-audited FR. These reports wil l be prepared on a monthly basis and wil l not be sent to the Bank. However as part o f Bank supervision, they wil l be reviewed and reconciled with the monthly withdrawal applications and quarterly FMR. The format o f these reports should be quite simple (listing o f sources and uses o f funds and Bank reconciliation.
(b) Ouarterlv reviewed FMR. The format and content o f FMR will be agreed upon by negotiations, and included in the financial management manual. FMR include financial, procurement and physical progress information. There should also be an introductory narrative discussions o f project developments and progress during each quarter. Reviewed FMR would be submitted to the IDA not later than 45 days after the end o f each quarter.
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(CJ Annually audited PFS. The PFS should include: (i) a statement o f sources and uses o f funds indicating funds received from various sources, project expenditures, and assets and liabilities o f the project; (ii) schedules classifying project expenditures by components, subcomponents and expenditure categories; (iii) a Special Account Reconciliation Statement; and (iv) a Statement o f Withdrawals made on the basis o f Statements o f Expenditure (SOEs). Audited PFS would be submitted to the IDA not later than 6 months after the end o f the Fiscal Year.
~
Report FMR
Audit Arrangements
Due Date Responsibility Sent to Language Scope 45 days Extemal MOPIC/MOF ArabdEngl ish Review
20. Two separate annual project financial statements for Project Components 1 and 2 and Project Component 3 accounts wi l l be audited by independent private auditors acceptable to IDA under two separate contracts. There wil l also be two separate audits o f the Special Accounts managed by the C M O and the RMF. Each implementing agency wil l be responsible for the process o f contracting i t s auditor in accordance with procedures agreed between the Government and IDA. Audit reports wil l be submitted within six (6) months after the end o f the fiscal year. Reviewed FMRs would be submitted to the IDA not later than 45 days after the end o f each quarter.
PFS
from end Auditor IDA o f quarter 6 months Extemal MOPIC/MOF Arabic/English Audit from end Auditor IDA o f fiscal Year
21. The audit would be comprehensive and would cover al l aspects o f the project (i.e., a l l sources and uses o f funds, and expenditures incurred). The audit wil l be carried out in accordance with htemational Standards on Auditing. Terms o f Reference (TOR) for this assignment should cover an audit o f financial transaction, the SOEs, SAs, FMRs, and an assessment o f the accounting financial management system, including review o f intemal control mechanisms. The C M O and the RMF would provide the auditor with access to project-related documents and records, and information required for the purposes o f the audit. The auditors would carry out a concurrent audit during the fiscal year, to bring to management’s attention any issues, which need to be addressed. This would strengthen intemal controls, and would also facilitate early completion o f the annual audit.
Disbursement Arrangements
22. Disbursement. IDA funds wil l be deposited in two Special Accounts (SA) to be opened at the Central Bank o f Yemen, in the name o f the C M O for RAP-2 and the RMF P I U respectively. Withdrawal applications and replenishments o f the SAs will be signed
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by authorized signatories. Each withdrawal application will be signed by authorized representatives whose names and corresponding specimens o f their signatures wil l be submitted to IDA.
23. For both C M O & RMFIU, the proceeds o f the credit will be disbursed using transaction-based system (replenishment and reimbursement with full documentation or SOEs, direct payments, applications for special commitments). The signatories to the WAS will include a representative o f the MPWH, with either the C M O General Manager or the FWF Chairman, as applicable.
24. Allocation o f Credit proceeds. The allocation o f credit proceeds by disbursement category and percentage to be financed i s shown in the table below:
CATEGORY
Amount of Credit Allocated
(US$ million)
25.10
6.30
(i) Civ i l Works (a) for road upgrading (Project
(b) for road maintenance (Project Component 1)
Comuonent 3) (ii) Goods
(a) for Project Components 1 and 2 (b) for Project Component 3 ,
I
0.40 0.13
(iii) Consultants’ Services (a) for Project Component 1 (b) for Project Component 2
2.44 0.34 1.09
0.36 0.1 1 1.73
(b) for Project Component 3
(b) for Project Component 3
(iv) Training (a) for Project Components 1 and 2
(v) Incremental Operating Costs for Project Components 1 and 2 (including C M O staff salaries).
Total 40.00 (vi) Unallocated 2.00
% of Expenditures to be Financed
84%
60%
100% o f foreign expenditures, 100% o f local expenditures (ex-
factory) and 90% o f local expenditures
90% for f i r m s and 87% for individuals
100%
80%
25. Use o f Statements of Expenditures (SOEs). Full documentation for expenditures under contracts requiring the Bank’s prior review would be submitted with the corresponding application. Disbursements for contracts valued at less than US$l,OOO,OOO for works, US$lOO,OOO for goods; and US$lOO,OOO for services for consulting f irms, and US$50,000 for services o f individual consultants would be made o n
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the basis o f Statements o f Expenditures (SOE). Documentation to support these expenditures would be maintained by the C M O and the RMF, and would be made available for review by visiting Bank missions and for project auditing.
26. Special Account (SA). Two Special Accounts would be maintained in the Central Bank o f Yemen for RAP-2, and would be operated by the C M O and RMF, respectively, jo int ly with the MOF. The SAs would be operated in accordance with IDA’S and Government’s jointly agreed operational policies. The authorized allocations o f the Special Accounts wil l be US$2,500,000 for the CMO with an init ial advance o f $1,500,000 until withdrawals from Credit Account and special commitments issued by IDA reach SDR 5,000,000 under Components 1 and 2 o f the Project, and will be US$500,000 for the RMF with an initial advance o f $300,000 until withdrawals from Credit Account and special commitments issued by IDA reach SDR 1,000,000 under Component 3 o f the Project. These allocations represent a four-month average o f project expenditures to be financed through the SAs. The Special Accounts would be replenished monthly or at least once every quarter. Advances into the RMF’s Special Account wil l not be deposited until the condition o f disbursement i s fulfilled (see Paragraph C.2. - Institutional and implementation arrangements).
27. Direct Payments and Special Commitments. The minimum amount for applications for direct payments, reimbursements,, and for special commitment wil l be 20% o f the authorized allocation to the SA.
Supervision Plans.
28. Until early 2006, the development o f RMFIU financial management system wil l be monitored in detail by the Bank’s FMS. The update o f C M O financial management system to reflect changes peculiar to RAP-2 will be monitored as well by the Bank’s FMS.
30. Subsequently, as required, the Bank F M S wil l conduct periodic supervision missions. FMRs and audit reports will be reviewed by the Bank F M S and issues identified wil l be followed up. In general, during supervision missions project’s financial management and disbursement arrangements (including a review o f sample o f SOEs and movements in the Special account) wil l be reviewed to ensure compliance with Bank minimum requirements. A financial management rating for ISR purpose will also be developedreviewed twice a year. More intensive supervision wil l be devoted to RMFIU in the init ial stages as it i s new to implementation o f Bank financed projects.
3 1. Upon closing o f RAP-2, both the C M O and the RMF should prepare a l i s t o f assets accumulated during the l i fe o f the program, and these assets should be turned over formally to the MPWWMOF.
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Annex 8: Procurement
YEMEN, REPUBLIC OF: Second Rural Access Project A. Background
A Country Procurement Assessment Report (CPAR) for Yemen was carried out in late December o f CY2000. The report showed that the current procurement legislation (Law No. 3 o f 1997 concerning Government Tenders, Auctions and Stores, and corresponding regulations introduced by Decree No. 234 o f 1997) was a significant improvement over the previous legislation o f 1991, but was not yet up to international standards, notably in the fol lowing areas: (i) gaps in the legislation; (ii) absence o f use o f Standard Bidding Documents (SBD's) by public agencies; and (iii) conflicts with procurement guidelines o f donors, including IDA'S. Even where reasonable rules existed, they were not necessarily followed. As a transition strategy, until a revised procurement law i s enacted, the CPAR recommended a set o f national Standard Bid Documents (SBDs) for goods, works and services. This is under preparation together with a comprehensive National Procurement Manual (NPM) to support capacity building o f the Government's procurement function at a l l levels. IDA, through an IDF Grant for procurement capacity building, and the Government o f the Netherlands are supporting the development o f the NPM and requisite SBDs, which also includes preparation o f a separate volume on procurement procedures for local authorities. The assignment to prepare and rol l out the NPM through pi lot workshops and training-of-trainers for c iv i l servants in core spending ministries i s expected to be completed by the end o f 2005.
B. Use of Bank Guidelines
In the interim, procurement for the proposed RAP Phase I1 project would be carried out in accordance with World Bank "Guidelines: Procurement Under IBRD Loans and IDA Credits", M a y 2004; and "Guidelines: Selection and Employment o f Consultants by Wor ld Bank Borrowers", M a y 2004, and the provisions stipulated in the Development Credit Agreement (DCA) at Negotiations. The General description o f various items under different expenditure categories are described below and summarized in Table A. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, pre-qualification requirements above specific thresholds, estimated contract costs, prior review requirements, and time frame for contract processing will be finalized by Negotiations. The Procurement Plan wil l be updated at least every six months or as required to reflect the actual project implementation needs and improvements in institutional capacity at the RAPCMO at the center, its regional branches, as well as the RMF.
C. Procurement Capacity of RAPCMO.
A formal procurement capacity assessment o f the RAPCMO was carried out in October 2004 in accordance with the OPCPR Guidelines dated July 15, 2002. Procurement activities for Components 1 and 2 under the proposed Phase I1 project will be carried out by the W C M O as has been the case since 2001 for the Phase I project. The assessment
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reviewed inter alia the organizational structure, procurement staffing levels, and procurement administration and filing and system, in the context o f implementing a much larger RAP Phase I1 program.
Despite the overall nationwide limitations in handling procurement effectively, the RAPCMO has emerged as one o f the very few agencies in the Yemen context that can deliver i t s projects efficiently and in a cost-effective manner. During Phase I in contrast with the rest o f M P W H and even other implementing agencies, the implementation arrangements were such that the RAPCMO has been able to retain a reasonable degree o f autonomy; this has helped i t maintain the necessary independence and reasonable degree o f transparency in handling the important volume o f procurement for consultancy services and c iv i l works that it has had to carry out.
Since the start o f the RAP in 2001, the procurement capacity o f the RAPCMO has been satisfactory overall. Despite some deficiencies identified during a recent audit in the area o f proper o f procurement filing, and compliance with D C A with respect to publicity and invitations, the RAPCMO has demonstrated i t s ability to deliver many subprojects in reasonable time. An experienced Procurement Manager with a long experience in IDA procurement is on board and the C M O has recently recruited a Procurement Assistant to ensure maintenance o f proper procurement administration o f the subprojects. A number o f C M O staff have received procurement training provided by ILO and the World Bank. However, in order to be able to maintain and improve upon the current overall capacity to carry out an acceptable level o f compliance with the requirements o f the D C A with respect to procurement when the RAP expands further under the proposed Phase 11, the RAPCMO i s recruiting an additional procurement specialist. All new technical staff that are currently being recruited (see Annex 6) would also participate in Procurement and Financial Management in-depth training prior to project launch, in order to enhance implementation capacity for the Phase I1 project.
In addition, i t i s proposed that the RAPCMO specify a clear matrix o f responsibility as regards the procurement function during implementation o f Phase I1 led by the experienced Procurement Manager anchored at the RAPCMO. In view o f the above, the procurement risk for Project Components 1 and 2 for implementation by the RAPCMO i s rated as Average.
D. Procurement Capacity o f the RMF
A formal procurement capacity assessment o f the RMF was carried out in October 2004 in accordance with the OPCPR Guidelines dated July 15, 2002. The RMF has a cadre o f staff who has knowledge and experience in a range o f activities involved with road network maintenance and management. However, the performance o f the RMF as pointed out in the ICR o f the Transport Rehabilitation Project closed in 2002 with regard to procurement aspects was such that there were persistent problems o f successfully completing procurement packages under Bank guidelines during implementation. Under Component 3 (Road Maintenance), procurement activities in Phase 11, which the RMF will undertake, wil l for the most part consist o f planning for and managing the
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implementation o f several pilot PMMR contracts with the private sector for maintaining about 950 km o f roads. During the capacity assessment, one o f the key findings was that RMF staff in the Technical Audit Department have begun to familiarize themselves with the trial sample bidding documents for PMMRs, and, in particular, have utilized these documents for procuring a P M M R contract with the General Directorate o f Construction o f Road and Bridges (GCRB). The GCRB has recently been restructured to operate as a parastatal reporting to MPWH, but i s ineligible for IDA financing, as i t does not meet the autonomy and commercially operated entity criteria o f IDA guidelines.
Nonetheless, this ini t ial exposure to PMMR contracts has in the mission’s view been a useful capacity building first step for RMF staff, which now need to scale-up their skills in procuring and managing performance based road maintenance in accordance with IDA guidelines and sample P M M R bidding documents. The RMF management i s now in the process o f establishing an Implementation Unit (RMFIU) with a core staff o f Engineers, ProcurementKontract Management Specialist, and Financial Management Specialist to spearhead the procurement and management o f P M M R contracts for financing under Component 3 o f the proposed Phase I1 project. In addition, during the implementation phase, the RMF will undertake to take al l steps necessary including the preparation o f a study on identifying the necessary steps i t needs to take for transforming the current Directorate o f Routine Maintenance o f the RMF to the Directorate o f Performance Based Road Maintenance Contracts.
Given the overall procurement risk rating o f the RMF component as High, the mitigation measures identified in the capacity assessment are summarized in the fol lowing Action Plan.
Action Plan Activity
Implementation Unit (RMFIU)
Issue 1 Actions 1 Responsibility I TimeLine
Establish Project Implementation Unit with core staff
Determine a suitable RMF Completed location for the RMFIU at the RMF building
Addit ional IT IT equipment & furniture RMF September 30, equipment and procured using Phase I 2005 furniture for new P I U resources, as required
Staff designated to b e members o f the RMFIU do not have in-depth experience with IDA procurement procedures
Provide procurement training abroad for at least two staff in RMFIU
Supported continually by W o r l d Bank staff and documents for guidance.
RMF
IDA
Before June 30, 2006
2005 to 2008
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Implementation of Performance Based Management & Maintenance of Roads (PMMR)
I
Procurement Records Management
Issue
Limi ted Experience o f RMFIU staff t o prepare P M M R contracts
Preparation o f P M M R Procurement Plan and documents
Established a procurement filing system in the RMFIU satisfactory to IDA
Records o n claims and dispute resolutions
E. Procurement Arrangements
Advertisement
Actions
P M M R consultants appointed
Consultants provide pr ior in-depth training o n planning, designing execution and supervision o f performance-based contracts for the management and maintenance o f roads assets)
Special training offered o n supervising P M M R Projects
Prepare Procurement Plan for f i rs t year activities
Prepare selection process steps. Advertise, Issue BDs, evaluate, and award P M M R contracts.
Satisfactory filing system established and archive procurement files o n a continuous basis
Keep adequate records for a l l procurement processes including importantly, claims and disputes resolutions under P M M R contracts
RMF
EWFIU
RMF
RMFIU
RMFIU
P I U
October 30, 2005
November 2005 to June2006
M a y 3 1,2006
By Negotiations
2006
December 3 1 ,'2005
F r o m 2006 o n
A General Procurement N o t i c e (GPN) wil l b e issued in the U n i t e d Nat ions Development Business and DGMarket , to advertise for m a j o r consul t ing assignments (as w e l l as obta in expressions o f interest) and for any ICB for w o r k s and goods, not less than e ight weeks
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prior to the publication o f the first Specific Procurement Notice (SPN). The GPN wil l be updated annually for all outstanding procurement. The GPN will also be published in the national press or official gazette for purposes o f obtaining expression o f interest for contracts under N C B and to obtain expression o f interest from national consultants.
Procurement Planning.
The mission reviewed with the RAPCMO the procurement action plan for the first year investment and concluded that with the current capacity level and implementation arrangements, timely procurement actions could be carried out satisfactorily. A draft Detailed Procurement Plan (DPP) indicating the procurement method and processing time for each contract covering the f i rst year o f Phase I1 implementation for Components 1 and 2 (see Table C below) was reviewed and agreed at Negotiations. The RMF would also be preparing a draft Procurement Plan for about three PMMR contracts expected to be financed under Project Component 3 for IDA review and approval. An updated procurement plan for both the RAPCMO and RMF project components will be submitted for IDA review during every supervision. The progress reports forwarded to IDA will report on the procurement activities in appropriate degree o f detail.
Procurement of Works
Civ i l Works contracts financed by IDA are estimated to cost US$42.40 million, including physical and price contingencies. Bid packages, with an estimated contract value above U S $ l .O mil l ion equivalent would be procured using I C B procedures and documents and procedures, and they would be advertised in UNDB/DgMarket and local newspapers. Bid packages, with an estimated contract value below U S $ l .O mil l ion would be procured using N C B procedures and documents or national SBD if they become available and advertised in at least two local news papers. Component 3 o f the project (Road Maintenance) wil l include three or four P M M R contracts. These will be procured under I C B procedures and the Bank’s Sample Bidding Document for PMMR contracts wil l be used.
Procurement of Goods
Contracts for Goods financed by IDA relate mainly to furniture, office equipment, computers, and vehicles. I C B and N C B procedures would apply for goods contracts estimated to cost above US$lOO,OOO and US$50,000 equivalent respectively. International and Local Shopping method would be applied for contracts estimated to cost below US$50,000 equivalent.
Selection of Consultants
Consulting services financed by IDA would be for: (i) studies, technical design, c iv i l work supervision, preparation o f bidding documents, financial management support, technical audits, and financial audits; and (ii) consultancies on technical matters and training. Consultants financed by IDA would be hired in accordance with the Bank’s
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Guidelines for the Selection and Employment o f Consultants (May 2004). The CMO aand RMFlU would issue widely publicized procurement notices to get candidacies from consultants ( f i rms and individuals). Services for lectures, advisory services, small studies and small works supervision assignments would be selected through comparison o f qualifications among Individual Consultants (IC) expressing interest in the assignment, or approached directly. Based on agreed upon criteria, the C M O will maintain and update a long l i s t o f qualified Individual Consultants which wil l be used to establish short-lists.
Training
For training abroad and in-country, the training program containing names o f candidates, costs estimates, content o f courses, periods o f training and selection o f training institutions, will be approved by IDA annually.
F. IDA Prior Review.
Contracts above the prior review threshold would cover about 94% o f the contract amounts for works, goods, and consultants. Contracts for works financed by IDA, above a threshold value o f US$l,OOO,OOO equivalent, wil l be subject to IDA’s prior review procedures. Contracts for goods financed by IDA, above the threshold value o f US$lOO,OOO equivalent, will also be subject to IDA’s prior review procedures. Prior review will not apply to contracts for the recruitment o f consulting f i r m s and individuals estimated to cost less than US$lOO,OOO and US$50,000 equivalent, respectively. Prior review for the selection o f consultants will include the review o f budgets, terms o f reference, short-lists, selection procedures, requests for proposals, evaluation reports, proposals for contract awards, and negotiated contracts. However, the exception to prior IDA review will not apply, regardless o f the contract value, to: (i) the Terms o f Reference o f contracts; (ii) single-source hiring; (iii) assignments o f a critical nature as determined by IDA; and (iv) amendments o f contracts raising the contract value above the above- mentioned prior review thresholds. Documents related to procurement below the prior review thresholds wil l be maintained by the borrower for ex-post review by auditors (technical and financial audits) and by IDA supervision missions during project implementation, and for at least two years after the Project’s closing date.
G. Procedures Manuals
During Phase I, a Procedures Manual o n administrative procedures and internal organization was prepared and applied, and the same manual wil l be applied during Phase 11. The manual, which should be updated periodically, includes: (i) eligibi l i ty criteria for selecting sub-projects for implementation under the proposed project; (ii) procedures for calling for bids, selecting contractors, consultants, and vendors, and awarding contracts; (iii) internal organization for supervision and control o f works; (iv) financial management, budgeting, accounting, and disbursement procedures; and (v) procedures for handing over completed works.
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H. Agreements Reached at Negotiations
Preparation o f bidding documents for goods and consultant services Time given to bidders for preparation o f bids Bid evaluation Signature o f contracts Payments
During Negotiations, the Government gave assurance that i t will: (a) use and apply the Procedures Manual; (b) use the Bank’s Standard Bidding Documents for ICB, the Standard Request for Proposals for the selection o f consultants, and the Standard Bid Evaluation reports; (c) update the procurement plan on a regular basis before IDA supervision missions, or more frequently if needed, and transmit it to IDA (including in particular a comparison o f target times and actual completion); and (d) carry out, during supervision missions, an assessment o f the effectiveness o f bidding procedures and performance, as they relate to the program’s procurement experience, and propose for IDA and other donors’ consideration any modification to the current procedures to the extent that those would accelerate procurement, while s t i l l maintaining compliance with the Bank’s Procurement Guidelines and adequate control over contract awards and payments.
4 (6 for large contracts)
4 (6-10 for ICB) 2 (4 for large contracts) 2 (after IDA non-objection) 3 (after submission o f invoice)
The Government also gave assurance at negotiations that it wi l l take the necessary measures to ensure that procurement phases do not exceed the fol lowing target time periods:
Table A: Project Costs by Procurement Arrangements (US$ million equivalent)
Procurement Method’
ICB NCB Other’ N.B.F. Total Cost”’ Expenditure Category
1. Works 42.40 0.00 0.00 0.00 42.40 (33.00) (0.00) (0.00) (0.00) (33.00)
2. Goods 0.00 0.00 0.56 0.00 0.56 (0.00) (0.00) (0.56) (0.00) (0.56)
3. Services 0.00 0.00 4.61 0.00 4.61 (0.00) (0.00) (4.61) (0.00) (4.61)
4. Inc. Operating Cost 0.00 0.00 2.30 0.00 2.30 (0.00) (0.00) (1.84) (0.00) (1.84)
42.40 0.00 7.47 0.00 42.40 Total (33.00) (0.00) (7.00) (0.00) (40.00)
*/ Numbers may not add due to rounding ‘Figures in parentheses are the amounts to be financed by the Credit. All costs include contingencies.
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Includes c i v i l works and goods to be procured through national shopping, consulting services, services o f contracted staff o f the project management office, training, technical assistance services, and incremental operating costs related to managing the project.
2
Contract Value
(US$ thousands) Expenditure Category Threshold
Consultant Services Expenditure Category
Contracts Subject to Procurement Method Prior Review
(US$ millions)
A. Firms
B. Individuals
Total
< 1,000,000
Table A1 : Consultant Selection Arrangements (US$ million equivalent)
All contracts ~,000,000 NCB
Selection Method
QCBS LCS SFB I C CQ Y.B.F.
12.Goods
4.36 0.10 0.00 0.00 0.10 0.00 (4.36) (0.10) (0.00) (0.00) (0.10) (0.00)
0.00 0.00 0.00 0.05 0.00 0.00 (0.00) (0.00) (0.00) (0.05) (0.00) (0.00)
4.36 0.10 0.00 0.05 0.10 0.00 (4.36) (0.10) (0.00) (0.05) (0.10) (0.00)
2100,000 I C B All contracts
Table B: Thresholds for Procurement Methods and Prior Review
< 100,000
< 50,000
All contracts 2100,000 NCB
IS, N S First three contracts
1. Works
I 3. Services (Firms)
I 21,000,000 I I C B I ~ l l c o n t r a c t s 1
21 00,000 QCBS All contracts
First three contracts QCBS < loo’ooo 1 (National advertisement)
I < 100,000 I CQ,LCS I I 4. Services r (Individuals)
All contracts Section V o f consultants Guidelines 250,000
All TOR Section V o f consultants Guidelines < 50,000
5. Training
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Total value of contracts subject to prior review: US$49.3 million
Overall Procurement Risk Assessment: Average
Frequency of procurement supervision missions proposed: One every six months (includes special procurement supervision for post-review/audits)
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Annex 9: Economic and Financial Analysis
YEMEN, REPUBLIC OF: Second Rural Access Project
Framework approach. The RAP i s the Government’s framework under which it i s carrying out large-scale rural road improvements, with financing from various external sources and the national budget. During Phase I o f the RAP, this framework was designed in terms o f road selection methodology, engineering criteria and design standards, economic analysis, procurement, financial management, environmentalhocial planning and monitoring, etc. The text below describes the methods and tools for economic analysis which wil l be applied under Phase 11.
Methodology for economic analysis. The economic analysis o f intermediate rural access roads to be upgraded under the RAP will be done using the Roads Economic Decision Model (RED). The RED was developed by the World Bank specifically for the economic analysis o f low- volume roads, based o n some elements o f the more widely known HDM (Highway Design and Maintenance Model). I t has been used during Phase I and wil l continue to be used under Phase I1 to “test” al l intermediary roads proposed for improvement, as a result o f the participatory process o f rural accessibility planning and screening. The RED utilizes expected reductions in vehicle operating costs (VOC) as the principal economic benefits. This constitutes a conservative approach, since i t i s now widely accepted that the traditional VOC-based economic analysis i s insufficient to capture the full economic and social benefits o f low-volume rural road investments, in particular in the context o f projects in poor areas. O n the other hand, a truly reliable quantification o f al l benefits o f rural roads, in particular social benefits, requires a large amount o f data, which i s far too expensive to collect and to monitor for each road to be improved. I t therefore seems reasonable to use the RED to screen al l candidate roads under the RAP in order to verify if a minimum required threshold internal rate o f return (IRR) can be attained on the basis o f V O C savings only. This threshold wil l be an IRR o f 12%. Based o n the experience gained in Phase I, many o f the intermediate rural roads in Yemen reach that threshold, because o f the significant traffic levels on those roads and potential for traffic generation. However, the Bank wil l consider applying a lower threshold where the isolation and poverty o f specific rural communities warrant the road improvement works, notwithstanding a comparatively modest IRR. For example, in cases where the absolute poverty rate in the road’s zone o f influence i s 5% above the national average, the threshold might be reduced to, say, 9%.
For village access roads, i t was agreed during the preparation o f Phase I o f the RAP that a different type o f threshold would be applied, which was the maximum $-amount spent o n the road improvement per beneficiary. In other words, the expected additional cost o f the village access road i s simply divided by the number o f inhabitants o f the village (beneficiaries). If the resulting figure i s below the threshold, the road i s considered eligible. Based on the experience of Phase I, the threshold value was set at US$ 75 per beneficiary. This amount wil l be revised annually during Phase I1 in order to ensure realism and responsiveness to changing socio- economic circumstances.
Economic evaluation of five Roads. The results o f the economic evaluation conducted for f ive of the intermediate rural access roads that are being started under RAP Phase I and will be
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continued under RAP Phase I1 are presented below. For each o f these roads, the economic analysis compares three project alternatives: (i) a “without-project” scenario in which only emergency maintenance i s applied; (ii) an upgrade with pavement by bituminous surface treatment , which i s the “project” scenario; and (iii) an upgrade with pavement by asphalt concrete.
AI Dhabab - AI Manaom
Orod - Soug AI Horiah
Present traffic levels and composition. Traffic surveys on the network were conducted by categorizing vehicles into nine different groups: cars, utilities, three types o f buses (light, medium and heavy), and four types o f trucks (light, medium, heavy and articulated). For the five roads presented in this chapter, al l traffic was concentrated during the dry season, as rains during the ninety-day long wet season made those roads impassable or inaccessible. I t was observed that, for four roads out o f five, almost al l traffic was composed o f utility vehicles, such as four- wheel drive passenger vehicles and pick-up trucks. This situation i s even more patent for those roads located in mountainous areas where, due to very bad geographic and road surface conditions, no passenger cars or buses were counted.
3 82 7 7 99
0 137 0 2 139
Present Traffic Levels during the dry season (in No. of vehicles per day)
AI Madn -AI Shabareeg
AI Masqh -A I Aglain
AI Qabie - Shaharah
52 37 2 15 106
0 41 0 2 43
0 55 0 0 55
The improvement o f those four roads to paved standards should bring significant changes in traffic composition and lead, in the future, to a situation closer to the one seen in the A1 Madn - A1 Shabareeg road, where a wider variety o f traffic was counted. After the projects’ completion, i t i s expected that many o f the current utility vehicles will be replaced by passenger cars, small and medium-size buses, and light and medium-size trucks. However, in the absence o f a reliable basis for estimating the change in traffic composition, traffic growth rates were applied similarly to al l types o f vehicles. Consequently the proportion o f vehicle types wi l l remain constant in the model throughout the 15-year period o f evaluation.
Future traffic growth rate. In the RED analysis, traffic on the improved road i s composed of: (i) normal traffic, which i s o f the same nature as the existing traffic; (ii) generated traffic, which i s traffic that is suppressed today because o f the bad road conditions and the high Vehicle Operating Costs (VOC); and (iii) diverted traffic, or traffic that i s currently using an altemative road, but wil l switch to the new road because it i s shorter and/or in better condition. For a l l those different types o f traffic, average growth rates are applied during the 15-year period o f analysis. These growth rates have been set at 4.3% for the init ial five years, 4.5% for the fol lowing five years, and 4.6% for the remaining period o f analysis. Compared to RAP Phase I, which was built on a conservative scenario where traffic growth rates were planned to decrease significantly after the first five years (from 5% to 2%), RAP Phase I1 i s based on the assumption that traffic growth rates wil l remain stable over the considered period o f time.
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Generated and diverted traffic. Within the RED model, the volume o f generated traffic was calculated as a function o f the elasticity between transport cost and transport demand. In the case of RAP Phase 11, the price elasticity o f demand for transport was set at 1.2. This figure remains in the lower range o f price elasticity usually found in developing countries (between 0.6 and 2). This conservative scenario was preferred as most roads upgraded under Phase I1 wil l be located in remote areas. As experienced previously in Yemen, generated traffic may however be stronger than f i rs t anticipated and could materialize soon after the completion o f the road. As far as diverted traffic i s concerned, the five roads examined under this analysis were not probable alternatives to other existing roads, even once upgraded from unpaved to paved standards. Such roads are indeed unlikely to play the important function o f l i n k s within the main road network. N o diverted traffic was therefore included in the economic analysis o f the f ive roads.
Orod-Soug AI Horiah
AI Madn -AI Shabareeg
I AlDhabab-AlManaom I 81 I 88 I 110 1 138 1 70 I 76 I 94 I 118 1 114 124 154 193 97 105 131 165
87 95 118 147 69 75 93 116
Orod - Soug AI Horiah
AI Madn -AI Shabareeg
w q h - A I Aglain I 39 I 43 I 53 I 66 I 36 I 39 I 49 I 62 I
2 11 5,200 30 3.456
2 76,800 23 1.766
I AlQabie-Shaharah I 43 I 49 I 61 I 77 I 39 I 44 I 55 1 69 I
AI Masqh -AI Aglain
AI Qabie - Shaharah
Costs o f the road improvements. The investment duration for most roads upgraded under RAP Phase I1 was brought to two years to reflect the lessons learnt in Phase I o f the Program, during which road execution time ended up being about 18-24 months (compared to init ial ly planned execution times o f 8-10 months). The estimated costs for the five roads presented in this chapter are as follows:
2 105,600 17 1.795
1 144,000 11 1.584
I AI Dhabab - AI Manaom I 2 I 115,200 I 18 I 2.074 I
Summary of results for the five road projects and sensitivity analysis. For the five roads assessed in this chapter, the Internal Rate o f Return (IRR) i s between 16% and 36%, in the base case scenario, i.e. wel l above the threshold o f 12% set for the Program. The economic analysis also includes a sensitivity analysis which estimates the IRR and the Net Present Value (NPV) in the case of: (i) costs increase by 25%; (ii) benefits decrease by 25%; and (iii) a simultaneous cost increase o f 25% and a benefit reduction o f 25%. For the f i rs t three roads that, currently, have daily traffics between 75 and 105 vehicles per day, the IRR in the worst scenario never falls below 12%. For the two remaining roads, that are located in mountainous areas and have l o w first year daily traffics (between 36 and 41 vehicles per day), the IRR in the worst scenario wil l
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be 7%, which i s l o w but s t i l l acceptable given that the analysis does not account for unquantifiable social benefits.
IRR
Yemen - Rural Access Improvement Program (Phase II) Economic Analysis Summary Table for five roads
25% 20% 19% 14%
IRR
NPV Orod - Soug AI Horiah
36% 29% 28% 22%
4.623 3.960 2.805 2.142
IRR 25% 20% 19% 14%
IRR
NPV AI Masqh -AI Aglain
(NPV in $ million, at a 12% Discount rate)
16% 12% 11% 7 ?h
0.390 0.006 -0.092 -0.476
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IRR
NPV AI Qabie - Shaharah
17% 12% 11% 7 %
0.340 0.022 -0.063 -0.381
Yemen - Rural Access Improvement Program (Phase 11) Economic Analysis - Summary Data for five Rural Roads
Economic and Financial Analysis Financial Investment 1'000$/kml 11 5.20 1 15.20 76.8 105.60 144
Project Characteristics
18 30 23 17 11 Length (km)
Terrain Type
Road Type
Project
Rolling Mountainous Flat Mountainous Mountainous
Earth Earth Gravel
Bituminous Surface Standard
Earth
Bituminous Surface
Standard
Earth
Bituminous Surface
Standard
Bituminous Surface Standard
1
Bituminous Surface Standard
2 Investment Duration (in vears)
n n n L L L
Road Roughness
Without Project With Project
20 20 18 25 3
25 3 "
J J 3
Socio-Economic Data
15,000 15,000 15,000 7,000 15,000 Direct Population Served (persons) Annual Normal Daily Traffic (veh/day) in 2004
Composition:
Cars Utility LightBus Medium Bus Heavy Bus Light Truck Medium Truck HeavyTruck Artic. Truck
75 105 80 36 41
3 yo
7 yo 83%
1% 6%
49% 35%
2 Yo
10% 2% 2%
98%
1% 1 Yo
96% 100%
2% 2 Yo
I 2.07 Financial Investment Cost ($m) 3.46 I 1.77 I 1.80 1 1.58 I
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Annex 10: Safeguard Policy Issues
YEMEN, REPUBLIC OF: Second Rural Access Project
Safeguard Policies Triggered
I Policy I Applicability
“These policies will be triggered only if significant issues are identified during individual ‘project screening under the program. Agreed Policy Frameworks (see below) will then apply in the design and implementation of these individual projects.
Environmental Studies and Assessments
Phase I Environmental Management Plans. Phase I o f the RAP was placed in environmental screening category “B”, because projects were purposefully screened and selected to limit c iv i l works to improvement o f existing road alignments, with no need for land acquisition, resettlement or other significant environmental impacts. EAs and EMPs were carried out for each selected road project by the W C M O Environment and Social Unit and individual consultants trained by the Unit. These included local consultations with both men and women and resulted in a Social Framework Agreement, signed by a beneficiary committee, local authorities and the CMO.
Phase I1 and I11 Sectoral Environmental Assessment. Phase I1 o f the RAP has been placed into environmental screening category “A”, given the possibility that some selected roads may involve departure from existing realignments or fa l l into sensitive areas. Roads therefore may be identified during screening as “A” or “B”. As al l roads for the remainder o f the program are not yet identified, a SEA has been prepared, which assesses the range o f environmental issues that could confront rural road projects and establishes a programmatic framework for incorporating environmental and social considerations into the screening, planning and implementation o f a l l rural road projects carried out under the Program. During the scoping and screening phase, the scale and scope of potential impacts are assessed so as to categorize each subproject and determine whether any particular Safeguard Policies are triggered in ensuing studies. The SEA was prepared by Techniplan Consultants.
- 71 -
Road specific Environmental Assessments. Under the procedures specified in the SEA, each prospective road project wil l undergo screening by the RAPCMO Environment and Social Unit. The EAs for roads screened as Category B wil l be carried out by individual consultants or the consulting engineers engaged for the design. The EAs for roads screened as Category A wil l be carried out by independent consultants.
Safeguards Related Risks and Measures Taken
Involuntary Resettlement. Based on experience o f Phase I and the SEA, the major safeguard- related risk involves the triggering o f the Bank’s Involuntary Resettlement Pol icy when technical design and safety considerations require a significant departure from existing rights o f way, and in doing so, the taking o f property or land. For this purpose, a Resettlement Pol icy Framework has been prepared as part o f the SEA (Volume 2), which specifies criteria for when the Policy Framework is triggered, principles and procedures for preparing Resettlement Plans, methods for determining affecting affected persons and valuing assets, implementation processes and grievance mechanisms.
Natural Habitats and Cultural Resources. As a nation-wide program, there i s a possibility that RAP financed road subprojects could run through or adjacent to natural or critical natural habitats, or affect known or chance find cultural resources. In this context, a Natural Habitats Policy Framework and a Cultural Resources Policy Framework were prepared and also form part o f Volume 2 o f the SEA.
Consultation Processes
SEA Consultations. The preparation o f the SEA included consultations with sector stakeholders in Sana’a and at four selected regional sites country in July - August 2004. They included separate consultations with local men and women, engineers and contractors, local government, research institutions, and NGOs. These consultations provided valuable input to the specification o f potential impacts and the mitigation and avoidance measures to be considered in the design o f RAP subprojects (as noted above). For example, women’s consultations indicated the need to account for potential disruptions in traditional water harvesting structures, as wel l as footpaths to drinking water sources.
Subproject Consultations. For all individual subprojects, local consultations with both men and women form an integral part o f the environment and social management process specified in the SEA. These consultations result in the Social Framework Agreement (SFA), which i s signed by the Beneficiary Committee, the Governor and the RAPCMO.
Safeguard Related Impacts and .Mitigation
Main impacts. Rural roads have a range o f potential positive and negative impacts, depending on their location within the country. Roads located in the escarpments are characterized by hairpin bends whereas in flat areas they fol low rather straight alignments. These geometric features affect the volumes o f earthworks and consequent impacts on the environment. Water harvesting along and even on the road surface is routine practice and i s a major consideration in
- 72 -
rural road design, as i s cross-drainage, discharge to adjacent lands, flood protection and wadi hydrology. Slope stabilization i s a key issue in vertical alignment design to avoid landslides in the mountainous zones. Traditionally, rural roads designs in Yemen have featured a roadbed o f 7 meter width, with a road surface 6 meters wide and shoulders o f 0.5 meter o n each side. In the case o f mountain roads, this design requires rather deep cuts into the mountainside to achieve the design width o f the roadbed, leading to the erosion o f exposed slope surfaces and often to slides o f slopes onto the road. In addition, such road widths can lead to land taking through populated or agricultural areas, which i s difficult to justify, given the volume o f traffic o n these roads.
Mitigation through avoidance and improved and environmentally-sound technical designs. A key aspect o f the RAP’S Environment and Social management process is the participation o f environmental and social specialists during the screening, design and implementation stages o f the road project cycle. In this way, potential environmental and social issues may be avoided or significantly reduced through design considerations and meaningful analysis o f alternatives. Phase I carried out test sections on the pi lot roads and village access roads, addressing such design issues as: (i) water harvesting on mountain roads; (ii) narrower platforms, and related to a reduced need for cutting into slopes and earth movements; (iii) more durable road surfacing on steep slopes to avoid erosion; (iv) slope stabilization o n sections o f the roads where slopes are unstable; (v) controlled disposal at designated sites o f excess material cut f rom the hillside slopes; and (vi) embankment design and wadi hydrology. Based on these experiences, revised design standards are being developed, which wil l be regularly updated based o n cumulative experience.
Environmental Management Plans. Each road specific EA will include an EMP, which summarizes the impacts, mitigation measures and responsibilities for environmental and social impacts associated with the road. I t wil l be summarized in a standard table, which will be an adaptation o f the SEA Environmental Management Plan Table.
Capacity and Commitment of Implementing Institutions
The Environment and Social Management Unit at the CMO will be responsible for the overall implementation o f the safeguards policies. During Phase I, this two-person unit has built up a good knowledge and capacity in environment and social management, through f ie ld application o f the environmental review process on the pi lot roads. The Unit i s also responsible for the monitoring o f socio-economic impact indicators. In its transition to Phase 11, the Unit i s converting i t s role from one o f “doing” to .one o f “managing and supervising” local consultants. To this end, the Unit has trained a pool o f local consultants in preparing EAs, including women to conduct the women’s consultations. Because o f the increasing workload, the Unit will be increased by two persons, so as to assure adequate screening and fol low up monitoring o f the numerous subprojects.
Mitigation Funding
Cost o f Design Measures. The quantities, specifications and estimated costs o f design measures to avoid or mitigate negative impacts wi l l be assessed by the design consultant and incorporated
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into the works bidding documents. The contractor wi l l execute al l required works and wil l be reimbursed through pay items in the bil l o f quantities, which wil l be financed by the project.
Temporary Land Acquisition. Temporary acquisition for diversions, camps, borrow areas and other work sites will constitute a community contribution, under the auspices o f the Beneficiary Committee and confirmed through Social Framework Agreement. Additional costs o f rehabilitating al l such areas to their original state wi l l be incurred by the contractor and bome by the project, as a pay item in the bill o f quantities.
Resettlement Costs. All resettlement related costs wi l l be governed by the Resettlement Policy Framework. The Policy Framework specifies that the costs o f replacing affected buildings wil l be borne by the project and wil l be reimbursed through pay items in the bill o f quantities. In conformance with Yemeni traditional rural practice, owners o f affected lands wil l not be compensated by the project in cash for loss o f land, but the affected owners will donate such land for public purposes and community benefit. However, this donation will occur within the context o f a mutually signed community-based Agreement, which i s appended to the SFA, and which specifies the terms under which the donation i s made.
Natural Habitats and Cultural Resources. Mitigation measures involv ing c iv i l works or habitat restoration wil l be funded as a Project cost and wil l be included in the Bill o f Quantities as a pay item to the contractor, who wil l implement the said measures to a specified standard at the agreed location(s). The project wil l not finance any recurrent costs, which must be bome by the Ministry o f Water and Environment (MWE), the agency responsible for management o f the critical natural habitat, or the community in the case o f non-critical habitats.
Cultural Resources. Mitigation measures for protectionhestoration o f cultural resources sites involving c iv i l works wil l be funded as a project cost and wil l be included in the Bill o f Quantities as a pay item to the contractor, who wil l implement the said measures to a specified standard at the agreed location(s). The costs o f conservation or other non-civi l works mitigation wil l also be included in the project’s financing. This may include, for example, the temporary secondment of, and logistical support to, a qualified archaeologist or cultural resource specialist to the project. The specialist wil l supervise the implementation o f relevant mitigation and management activities, as wel l as the treatment o f any chance finds. Relevant findings will be recorded in the Works Supervision reports. Aside from c iv i l works directly related to the road, the project wil l not finance any recurrent costs, which must be born by GOAMM or other responsible agency.
Operational Costs. During operations, the costs o f mitigation in the course o f maintenance contracts wil l be incurred by the contractor and borne by the employer, who may be the Road Fund, Government or local government, and reimbursed as a pay item in the bill o f quantities. The maintenance o f water harvesting, footpaths and other social measures wil l be the responsibility o f the community. In addition, the community wil l be expected to carry out basic cleaning o f drains and culverts as part o f their contribution to maintenance. The cost o f safety and driver information campaigns will ini t ial ly be borne by the project, however the communities wil l be responsible for continuous community education and safety campaigns. Selected safety checks wil l be carried out by the project, in conjunction with communities.
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Environmental Covenants in Development Credit Agreement All subprojects will be planned and implemented in accordance with the environmental and social management process, as specified in the SEA (Volumes I and 11).
Monitorinp Arrangements
The W C M O through i t s Environmental and Social Unit (E&SU) shall be responsible for monitoring o f the overall environmental and social management process. During road construction or maintenance, the Resident Engineer (RE) wil l be responsible for monitoring the Contractor's compliance with al l contract clauses addressing environmental and social impact mitigation, to be carried out under the purview o f the General Safety, Health and Environmental Regulations. For this purpose, the RE will refer to the project-specific EMP and report on such compliance in his monthly reports. The E&SU shall maintain a dossier for each project road. This dossier wil l include:
0
0
0
0
Ini t ial requests for support and al l ensuing correspondence Screening Report and all attachments Draft and Final EA, E M P and SFA Records o f al l consultations at Govemorate and local levels Copies o f Special Reports, such as Resettlement Plans, Natural Habitats Plans or Cultural Resources Plans, when applicable
Supervision Arrangements
Following i t s exercise o f prior review, the Bank wil l monitor the implementation o f road specific EAs, SFAs, Resettlement Plans and specific mitigation plans for Natural Habitats or Cultural Resources. A s part o f regular supervision or separate missions, the Bank wil l also carry out targeted and spot review o f EMP implementation, including consultations and specific social cases and resettlement plans involving land donation and asset replacement.
EAs and other environment/social documents for category "A" sub-proj ects wil l be submitted to the Bank's MNA Environment and Social Cluster for early review in order to ensure that any issues are resolved well before final design and construction.
- 75 -
Annex 11: Project Preparation and Supervision
YEMEN, REPUBLIC OF: Second Rural Access Project
Planned Actual P C N review 1/15/2004 Ini t ia l P ID to PIC Ini t ia l I S D S to PIC 1/26/2004 Appraisal 1/30/2005 Negotiations 4/18/05 Board/RVP approval 11/20/2005 Planned date o f effectiveness 03/3 1/2006 Planned date o f mid-tenn review 03/0 1/2008 Planned closing date 11/30/2010
Key institutions responsible for preparation of the project: . . Road Maintenance Fund (RMF) Rural Access Program Central Management Office (RAPCMO)
Bank staff and consultants who worked on the project included:
Name Title Unit Jean-Charles Crochet Sr. Transport Economist M N S I F Andreas Schliessler Robert Fishbein Hisham Labadi Jerome Leyvigne Abdelghani Inal Richard James Ghada Youness Matthew Parish Thao L e Nguyen John Bryant Collier Mikael Mengesha Josephine Masanque Mohammed Yehya Abd El Kar im Yaa Pokua Afiiyie Oppong Tu yet C huppe
Sr. Transport Economist Environment Specialist
Highway Engineer Transport Specialist Highway Engineer Operations Analyst
Sr. Counsel Counsel
Disbursement Officer Operations Officer
Sr. Procurement Specialist Sr. Financial Management Specialist
Financial Management Specialist Social Development Specialist (YP)
Program Assistant
AFTTR AFTTR M N S H D M N S I F
M N A C S M N C A 3 LEGMS LEGMS LOAGl M N S R E M N A C S M N A C S M N A C S M N S R E M N S R E
Elena Gagieva Program Assistant M N S I F
Bank hnds expended to date on project preparation: 1. Bank resources: US$272,502 2. Trust funds: N/A
Total: US$272,502
Estimated annual supervision costs: US$85,000
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Annex 12: Documents in the Project File
YEMEN, REPUBLIC OF: Second Rural Access Project
. . .
. .
National Highway Master Plan, Government o f Yemen, SMEC Consultants, 2004 Draft National Road Classification, Government o f Yemen, SMEC Consultants, 2004 Draft Rural Accessibility Master Plans for Five Govemorates, Government o f Yemen, SMEC Consultants, 2005 Sector Environmental Assessment, Government o f Yemen, Techniplan Consultants, 2004 Resettlement, Natural Habitats, and Cultural Resources Policy Frameworks, Government o f Yemen, Techniplan Consultants, 2004 Screening reports and detailed economic analysis for five roads, RAPCMO, 2004
- 77 -
Annex 13: Statement o f Loans and Credits
YEMEN, REPUBLIC OF: Second Rural Access Project
Difference between expected and actual
disbursements Original Amount in US$ Millions
Project FY Purpose I D SF GEF Cancel. Undisb. Orig. Frm' Rev'd
IBRD IDA
0 00 6500 000 000 000 6332 -1 70 0 00
PO74413 2004 RY-Groundwater & Soil Conserv Proj 0 00 40.00 000 000 000 4020 6 80 0 00
0 00 60.00 000 000 000 58 59 17 76 0 00 PO82498 2004 RY-SOCIAL FUND FOR
PO82976 2004 RY-THIRD PUBLIC WORKS 0 00 45.00 000 000 000 41.79 0 45 0 00 000 13000 000 000 000 141 90 5415 0 00 PO57602 2003 RY URBAN WTR SUPPLY &
0 00 2340 000 000 000 2328 1043 0 01
2400 000 000 000 2463 5 60 0 00
45.20 000 000 000 3041 2443 -2 15
PO761 85 2005 RY-Basic Education Development Program
DEVELOPMENT I11
SANITATION APL
PROGRAM
PROJ
PROTEC
PO651 11 2003 RY-PORT CITIES DEVELOPMENT
PO64981 2003 RY-SANA'A BASIN WATER MGMNT oo
PO70092 2002 RY TAIZ MUNICIPAL DEV & FLOOD oo
PO76183 2002 RY Higher Education 0 00 5 00 000 000 000 5 73 179 0 00 PO43254 2002 RY-Health Reform Support Proj (HRSP) 0 00 2753 000 000 000 3040 4 40 0 00 PO43255 2001 RY Basic Education Expansion Project 0 00 5600 000 000 000 2603 4 64 0 00 PO62714 2001 RY-IRRIGATION IMPROVEMENT 0 00 21 30 000 000 000 1797 1444 0 00
4500 000 000 000 1970 1228 3 20 PO70391 2001 RY-RURAL ACCESS IMPROVEMENT oo
0 00 2000 000 000 000 1622 1108 -0 74 PO05906 2001 RY-RURAL WATER SUPPLY &
PO50483 2000 RY CHILD DEVELOPMENT 0 00 28.90 000 000 000 1238 1012 0 00 PO50706 2000 RY-CIVIL SERVICE MODERN 0 00 3000 000 000 000 21 46 1902 0 00 PO05902 1998 RY-Southem GOV AGRI PRIVATIZA 0 00 2470 000 000 401 5 93 10 20 0 00
PROGRAM
SANITATION
Total
YEMEN, REPUBLIC OF : STATEMENT OF IFC's Held and Disbursed Portfolio
In Millions o f U S Dollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1999 ACSM 8.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 2002 Ahlia Water 1.51 0.00 0.00 0.00 1.51 0.00 0.00 0.00 1998 Radfan 0 95 0 00 0.00 0 00 0.95 0.00 0 00 0 00
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic
- 78 -
Annex 14: Country at a Glance
YEMEN, REPUBLIC OF: Second Rural Access Proiect
5 0 1 7 5 7
POVERTY and SOCIAL
2003 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)
Average annual growth, 199703
Population (%J Labor force (%)
Most recent estimate (latest year available, 199703) Poveriy (% of population below national poverty iine) Urban population (% of total population) Life expectancy at birth (yean) Infant mortality (per 7,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% OfpOpulatiOn) Illiteracy (% ofpopulation age 15+J Gross primary enrollment I% of school-age population)
Male Female
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
---"Exports -.c1-lmports
GDP (US$ billions) Gross domestic investmenffGDP Exports of goods and servicesiGDP Gross domestic savings/GDP Gross national savings/GDP
Current account balance/GDP Interest paymentdGDP Total debffGDP Total debt servicelexports Present value of debffGDP Present value of debffexports
(average annual growth) GDP GDP per capita Exports of goods and services
1983
1983-93 1993-03
.. 5.5
.. 2.5
.. 5.4
Yemen
19.2 51 0 9.8
2.9 3.0
42 25 57 83 46 69 50 81 97 64
1993
4.9 20.2 27.4
-17.2 -5.2
-25.5 0.4
120.9 5.2
2002
3.9 0.8 8.6
M. East R North
Africa
31 2 2,210
689
1.9 2.9
58 69 44
88 31 96
100 92
2002
9.9 20.5 38.7 19.1 25.8
5.4 0.5
54.1 3.0
35.9 68.3
2003
3.1 0.1 2 1
Low- income
2,310 450
1.038
1.9 2.3
30 58 82 44 75 39 92 99 85
2003
11.0 21 0 37.7 18.8 23.0
1.8 0.5
49.0 4.6
32.5 65.5
200347
3.7 0.6
-7.0
Development diamond'
Life expectancy
7-
Gross primary
SNI
:apita enrollment
i
Access to improved water source
Yemen, Rep Low-income group
a"+ A * *
Economic ratios'
Trade
T
Investment Domestic savings
1 Indebtedness
Yemen, Rep Low-income orouo
- --
STRUCTURE of the ECONOMY
(% of GDPJ Agriculture Industry
Services
Private consumption General government consumption Imports of goods and services
Manufacturing
(average annual growth) Agriculture Industry
Services
Private consumption General government consumption Gross domestic investment Imports of goods and services
Manufacturing
1983 1993 2002
.. 22.6 11.4
.. 23.1 41.5
.. 12.7 5.4
.. 54.3 47.1
.. 98.2 64.1
.. 19.1 16.7
.. 64.9 40.2
2003
10.8 41.6 4.9
47.6
63.6 17.6 39.9
-GDI -GDP
~~ ~
Note: 2003 data are preliminary estimates
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing. the diamond will be incomplete.
- 79 -
PRICES and GOVERNMENT FINANCE
Domestic prices (% change) Consumer prices Implicit GDP deflator
Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surplus/deficit
Current account balance to GDP (%)
TRADE
(US$ millions) Total exports (fob)
CNde oil (government share) Crude oil (company share) Manufactures
Total imports (cif) Food Fuel and energy Capital goods
Export price index (1995=100) Import price index (1995-700) Terms of trade (1995=100)
BALANCE of PAYMENTS
(US$ millions) Exports of goods and services Imports of goods and services Resource balance
Net income Net current transfers
Current account balance
Financing items (net) Changes in net reserves
Memo: Reserves including gold (US$ millions) Conversion rate (DEC, /ocal/US$)
EXTERNAL DEBT and RESOURCE FLOWS
(US$ millions) Total debt outstanding and disbursed
IBRD IDA
Total debt service IBRD IDA
Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity
World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers
1983
1983
1983
4.6
1983
2,796 0
253
85 0 2
231 454
14 8 0
0 55 0
55 2
53
1993
35.8 19.2
15.2 -9.5
-12.8
1993
1,167 277 556
20 2,138
548 148 502
100 89
112
1993
1,344 3,182
-1,838
-408 998
-1,248
1,391 -144
148 48.6
1993
5,923 0
726
119 0
10
109 49 10
897 0
27 46
5 41
5 36
2002
6.8 4.9
33.9 6.0
-0.7
2002
3,684 1,600 1,546
138 2,932
997 416 747
134 83
162
2002
3,861 3,992 -131
-718 1,384
535
217 -752
4,056 175.7
2002
5,352 0
1,350
158 0
29
3 60 0
39 6
163 83 19 64 10 54
2003
11.9 12.5
33.9 5.0
-2.3
2003
3,934 1,828 1,631
139 2,932 1,153
480 852
154 91
170
2003
4.222 4,468 -246
-828 1,274
199
383 -583
4,445 183.4
2003
5,394 0
1,417
252 0
34
55 60 0
-131 2
47 89 23 66 11 55
Inflation ( O h )
45 T I 30
15
0
-15
i )*IIUUIUI*I GDP deflator - 0 ’ C P I I
Export and Import levels (US$ mill.)
“OoO T
97 98 99 00 01 02
kk! Exports Imports
1 Composltlon of 2003 debt (US$ mlll.)
I G: 438
A - IBRD E ~ Bilateral B - IDA D ~ Other multilateral F - Private C-IMF G - Short-term
Development Economics 9/20/04
- 80 -
Annex 15: Map (IBRD No. 33979) YEMEN, REPUBLIC OF: Second Rural Access Project
- 81 -
A1A2
A3A4
A5A6A7A8A9A10A11A12A13B1-2
* Roads to be financed only under Phase 2 have not been selected yet and are not represented in this map
Saadah
Maydi
Al Luhayyah Hajjah
Az Zaydiyah
Al Hodeidah
Bajil
Al Mansuriyah
Mabar
DhamarRida
Yarim
Al Nadirah
IbbQatabah
Lahej
Ghadir
Tor AlBahah
AtTurbah
Mocha
AtTurbah
Taiz
Hays
Harib
Bayhan
Nuqub
Wasit
Al BeidaAt Taffah
JaarShaqra
Zinjibar
Lawder
Aden
Marib
Safir
JIhanah
NisabAtaq Ar
Rawdah
Al Huwaymi
Tarim
Al GhurafSeiyun
ShibamHaynin
Hawra
Al MukallaAr Riyan
Al Ghaydah Quaseyr
Sayhut
Qishn
Nishtun
Tabut
Al Ghaydah
Thamud
Zamakh
Al Magharim
Atud
As Sufal
Shabwah
Hawf
Damqawt
Habarut
Ahwar
Al HamiyahAl Ahmer
Mudiyah
Al Mahfad
Al Nagabah
Mar’ayt
Sanaw
Saddat ash Shuqqah
BirAli
Al Hazm
RaydahAl Magrabah
Amran
Kuhlan
Al Jamimah
Khamis Bani Sa’d
ThullaAl Mahwit
Salif
Sana’a
Awin
Azzaher
Al Ribat
SehamBora’a
Al Khadra
Beni Shadad
Mudykhirah
Akamat Al Agoud
Al Udien
Al Kura’a
Al Kadan
Al QanawisBani Al Awan
Malhan District Center
A14An Nadirah-Damt,
20 km (14+6)
A L -
M A H A R A
H A D R A M O U T
S H A B W A
ABYAN
ADEN
TAIZ
DHAMAR
M A R I B
A L - J O W F
S A N A ' A
HODEIDAH
S A A D A H
H A J J A H
AL-BEIDA
LAHEJ
AL-MAHWIT
IBBAL-
DHALE’E
AMRAN
SANA’ACITY
Re
d S
ea
G u l f o f A d e n
0 25 50 75 100 KILOMETERS
0 5025 75 100 MILES
This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other information shownon this map do not imply, on the part of The World Bank Group, anyjudgment on the legal status of any territory, or any endorsement oracceptance of such boundaries.
Socotra(Yemen - Aden Governorate)
The Brothers(Yemen - Aden Governorate)
DarsahSamhah'Abd al Kuri
(Yemen - Aden Governorate)
S A U D I A R A B I A
OM
AN
ETHIOPIA
E R I T R E A
DJIBOUTI
Barim(Yemen -
AdenGovernorate)
16°
18°
14°
18°
46° 48° 50° 52° 54°44°42°
46° 48° 50° 52° 54°44°42°
A5
A2
A3
A4
A1
A6
A7
A8
A9A10
A11
A12
A13
A14
A15
A16
A17
A18
A19
A20
A21
A22
B2
B1
Rural Access Project (RAP) Phase 1:Thulla–Amran, 38.7 km (25.6+13.1).Kuhlan–Al Magrabah (Section 1),23.8 km (15.8+8).At Taf fah–Awin, 44.5 km (42+2.5).At Turbah–Tor Al Bahah,18.7 km (8.8+9.9).Azzaher–Al Ribat, 43 km.Seham–Bora’a, 29 km.Al Khadra–Beni Shadad, 27 km.Akamat Al Agoud–Mudykhirah, 36 km.Qratiel Hamdan, 4 km.Al Qanawis–Al Kadan, 34 km.Al Udien–Mudykhirah, 17 km.Bayhan–Al Harajh–Al Kura’a, 22 km.Abyn, 14 km (Rural roads only).Al Ahmer–Al Huwaymi, 232.7 km.
Rural Access Project (RAP) Phases 1 and 2*:An Nadirah–Damt, 20 km (14+6).Jabl Al Dar–Ribad Emran, 14 km.Al Qabie–Shaharah, 11 km.Orod–Souq Al Horiah, 31 km.Al-Mesqah–Al-Haqlain, 21 km (17+4).Al-Dhabab–Al-Manaom, 20 km.Al Madn–Al Shabareeq, 23 km.Rusabah–Shareh–Al Qubah, 10.8 km.Lawer–Jisr Malihah, 22.8 km (18+4.8).
A14A15A16A17A18A19A20A21A22
FOOD POVERTY:
10% – 14%
15% – 19%
20% – 24%
25% – 29%
30% – 39%
TOWNS AND VILLAGES
GOVERNORATE CAPITALS
NATIONAL CAPITAL
AIRPORTS
PORTS
GOVERNORATE BOUNDARIES
INTERNATIONAL BOUNDARIES
RURAL ACCESS PROJECT (RAP) PHASE 1
RURAL ACCESS PROJECT (RAP) PHASES 1 AND 2*
TOTAL LENGTH OF PROJECT(INTERMEDIATE ROAD + VILLAGE ACCESS ROADS)
PRIMARY ROADS
SECONDARY ROADS
REPUBLIC OF YEMENRURAL ACCESS PROGRAM — PHASES 1 AND 2* ROADS
PERCENT OF HOUSEHOLDS UNDER FOOD POVERTY LINE
IBRD 33979
JUNE 2005
REP. OFYEMEN