Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 74176-KE

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

THE NORTHERN CORRIDOR TRANSPORT IMPROVEMENT PROJECT

ORIGINAL CREDIT 3930-KE

IN THE AMOUNT OF US$207 MILLION EQUIVALENT

BOARD APPROVAL DATE: JUNE 17, 2004

AND

ADDITIONAL CREDIT 4571-KE

IN THE AMOUNT OF US$253.0 MILLION EQUIVALENT

BOARD APPROVAL DATE: APRIL 2, 2009

TO THE

REPUBLIC OF KENYA

December 27, 2012

Transport SectorCountry Department AFCE2Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

ABBREVIATIONS AND ACRONYMS

AFD French Development AgencyBER Bid Evaluation ReportsCCCC China Communications Construction CompanyCRBC China Road and Bridges CorporationEAC East African CommunityEIB European Investment BankFAA Federal Aviation AdministrationGoK Government of KenyaIASA International Aviation Safety AssessmentICAO International Civil Aviation OrganizationIDA International Development BankIP Implementation ProgressJKIA Jomo Kenyatta International AirportKAA Kenya Airports AuthorityKCAA Kenya Civil Aviation AuthorityKeNHA Kenya National Highways AuthorityKRB Kenya Roads BoardKURA Kenya Urban Roads AuthorityMoR Ministry of RoadsNDF Nordic Development FundNCTIP Northern Corridor Transport Improvement ProjectOPRC Operational Procurement Review CommitteePDO Project Development ObjectiveRSGAP Road Sector Governance and Integrity Improvement Action PlanTSA Transportation Security Administration

Regional Vice President: Makhtar DiopCountry Director: Johannes C.M. Zutt

Sector Director Jamal SaghirSector Manager: Supee Teravaninthorn

Task Team Leader: Josphat O. Sasia

KENYANORTHERN CORRIDOR TRANSPORT IMPROVEMENT PROJECT

CONTENTS

Page

DATA SHEET............................................................................................................................... IA. SUMMARY.......................................................................................................................... 1B. PROJECT STATUS............................................................................................................ 2C. PROPOSED CHANGES..................................................................................................... 4D. RISKS................................................................................................................................... 7E. EXTENSION OF CLOSING DATE...................................................................................8

ANNEX 1: RESULTS FRAMEWORK STATUS...................................................................10ANNEX 2: REALLOCATION OF PROCEEDS......................................................................12ANNEX 3: REVISED RESULTS FRAMEWORK.................................................................22ANNEX 4: REVISED RESULTS MONITORING FRAMEWORK......................................24

Data SheetRestructuring Type: Level twoLast modified on date : 12/27/2012

1. Basic InformationProject ID & Name P082615: KE-Northern Corridor Trnsprt SIL (FY04)Country KenyaTask Team Leader Josphat O. SasiaSector Manager/Director Supee TeravaninthornCountry Director Johannes C.M. ZuttOriginal Board Approval Date 06/17/2004Original Closing Date: 12/31/2009Current Closing Date 12/31/2012Proposed Closing Date [if applicable] 12/31/2015EA Category B-Partial AssessmentRevised EA Category B-Partial Assessment-Partial AssessmentEA Completion Date 05/08/2007Revised EA Completion Date

2. Revised Financing Plan (US$m)Source Original Revised BORR 68.00 225.00 EUIB 0.00 93.00 FRDE 0.00 93.00 IDA 207.00 460.00 NDF 0.00 19.00 OLBC 0.00 30.00 Total 275.00 920.00

3. BorrowerOrganization Department Location

Government of Kenya Ministry of Finance Kenya

4. Implementing AgencyOrganization Department Location

Ministry of Roads, Ministry of Transport, Kenya Airports Authority and Kenya Civil Aviation Authority

Ministry of Roads, Ministry of Transport, Kenya Airports Authority and Kenya Civil Aviation Authority

Kenya

i

5. Disbursement Estimates (US$m)Actual amount disbursed as of 12/27/2012 246.27

Fiscal Year Annual Cumulative 2012 0.00 246.27 2013 27.73 274.00 2014 80.00 354.00 2015 66.00 422.002016 40.00 460.00

Total 460.00

6. Policy Exceptions and Safeguard PoliciesDoes the restructured project require any exceptions to Bank policies? N

Does the restructured project trigger any new safeguard policies? If yes, please select from the checklist below and update ISDS accordingly before submitting the package.

N

7a. Project Development Objectives/OutcomesOriginal/Current Project Development Objectives/OutcomesThe Project Development Objectives are to: (a) increase efficiency of road transport along the Northern Corridor to facilitate trade and regional integration; (b) enhance aviation safety and security to meet international standards; and (c) promote private sector participation in the management, financing and maintenance of road assets; and (iv) restore vital infrastructure and public assets damaged as a result of the 2007 post-election crisis.

7b. Revised Project Development Objectives/Outcomes [if applicable]

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KENYA: NORTHERN CORRIDOR TRANSPORT IMPROVEMENT PROJECT P082615, P106200

CREDITS 3930-KE, 4571-KE

Restructuring Paper

A. SUMMARY

1. This restructuring paper seeks approval for a level II restructuring as an exceptional extension of the Project Closing Date pursuant to paragraph 15(n) of the Bank’s Guidance to Staff on processing Additional Financing (dated November 18, 2009 and revised April 16, 2012) governing Additional Financing for Investment Lending (OP/BP 13.20) for the Kenya Northern Corridor Transport Improvement Project (NCTIP). The other proposed restructuring actions involve a reallocation of funds among various categories and increase in the financing percentages contingent on the extension of the closing date. The Additional Financing (AF) (Credit 4571-KE) to the NCTIP included a three year extension of the original Closing Date, from December 31, 2009 to December 31, 2012, as per the limits under the OP/BP 13.20. Now, a second extension of 36 month is required to complete the ongoing activities that are delayed due to factors external to the operation and outside the control of the Borrower1. The extension was requested by the Minister of Finance of Kenya in a letter dated September 21, 2012.

2. The proposed extension is necessary to enable the completion of the construction of road works contracts (136 km) and contracts for supervision of the works to the airport which are financed by the French Development Agency (AFD) and the European Investment Bank (EIB) funded by Credit 4571-KE. The main cause of the delay is the introduction of Road Sector Governance and Integrity Improvement Action Plan (RSGAP), introduced to strengthen governance in the road sub-sector. This was a requirement in processing the AF.

3. The RSGAP included new and additional steps and measures ranging from more detailed procurement reviews, both on the side of the Government of Kenya (GoK) and the Bank, to introducing new clauses in civil works contract documents requiring termination of a contract when a contractor is debarred by the Sanctions Board (an exception to Bank Policy). The introduction of these new measures to improve transparency and accountability resulted in extensive delays, a factor not fully anticipated nor recognized at the time of the preparation of Credit 4571-KE (AF). Additionally, unexpected high traffic growth rates, and operator’s safety requirements at the Jomo Kenyatta International Airport (JKIA), forced the GoK to substantially modify the original more modest plans to modernize and increase the capacity at the airport and to

1 Processing Additional Financing: Guidance to Staff, November 18, 2009 and revised 4/16/2012, paragraph 15(n), bullet 1 notes “When implementation of the additional loan activities is delayed because of a factor that is clearly external to the operation and outside the control of the borrower or implementing agencies (e.g., delay in additional loan effectiveness, natural disaster, major political change), the task team may request an extension of the closing date for a period that is equal to the delay due to the responsible factor. The RVP approves such a request.”

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pursue a much more aggressive modernization strategy which included the building of a bigger new terminal. Consequently, additional time was needed to allow for comprehensive redesign of new terminal building financed by the AFD and EIB and the supervision consultancy funded from the project.

4. This proposed restructuring, is mainly to extend the closing date to December 31, 2015, and includes other restructuring actions such as: (a) increasing the financing percentage for road works; and (b) reallocation of funds among various categories of the Northern Corridor Transport Improvement Project (NCTIP) to allow the completion of the remaining ongoing activities under the project. The proposed 36 month extension of the project’s Closing Date is equal to delays that were external to the operation and outside the control of the Borrower and implementing agencies.

B. PROJECT STATUS

5. Background. The project involves Credit No.3930-KE in the amount of SDR138.44 million (US$207 million equivalent) approved on June 17, 2004 and Credit No.4571-KE, an AF operation in the amount of SDR172 million (US$253 million equivalent) approved on April 2, 2009. The Project Development Objectives (PDOs) are to: (a) enhance the efficiency of the Recipient’s transport sector through increasing the efficiency of road transport; (b) enhance aviation safety and security to meet international standards; (c) promote private sector participation in the management, financing and maintenance of road assets; and (d) restore vital public infrastructure and assets damaged as a result of the December 2007 post-election crisis. The key results indicators include: (a) reduction in travel time along the Northern Corridor; (b) security and safety clearance by Transportation Security Administration (TSA) of the USA and the International Aviation Safety Assessment (IASA) allowing US airlines to operate from JKIA; and (c) award of one output and performance based maintenance contract.

6. With the restructuring in 2009, the PDO was revised to include restoring vital public infrastructure and assets damaged as a result of the December 2007 post-election crisis. The additional credit funded: (a) the completion of reconstructing three road sections namely, Mau Summit-Kericho (55 km), Kericho-Nyamasaria (81 km), and Nyamasaria-Kisumu-Kisian (22 km of which 6 km is a dual carriageway) including the Kisumu Bypass, and (b) scaling up the institutional and policy reform activities to further strengthen the governance in the road sub-sector and the construction industry.

7. Results achieved to date. The completion of five road contracts has contributed to a 38 percent reduction in travel time along the Northern Corridor; the expansion of the apron and taxiways leading to a 50 percent increase in the parking space for aircrafts, has eased the severe congestion at the JKIA. The erection of an airport security perimeter fence, purchase of screening equipment, establishment of an oversight unit on airport security, among others, have contributed to JKIA achieving United States TSA Category 1 security status. One road segment on the Northern Corridor was offered to the private sector for tolling, and three output and performance based road maintenance contracts are expected to be awarded by the end of December 2012 as indicated in Table 1 in the implementation plan. Details on the implementation of reforms in the sector are provided

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in Annex 1, the Results Framework Status. The revised Results Monitoring Framework and Results Framework are in Annexes 3 and 4.

8. There are no outstanding audit reports nor unresolved safeguard issues.

9. Project performance. As of November 19, 2012, the cumulative disbursements for the project stand at SDR156.95 million (US$243.25 million equivalent) or 53 percent. Credit 3930-KE is committed fully with 88.6 percent disbursed and Credit 4571-KE is about 95 percent committed with 20 percent disbursed. Most of the committed funds under Credit 4571-KE, the AF, approximately US$231 million equivalent, are for funding the three road links that were most affected by the implementation of the external factors. They are Mau Summit-Kericho and Kericho-Nyamasaria road contracts (totaling US$146 million) and Nyamasaria-Kisumu-Kisian road contract (US$70 million). The balance of the undisbursed funds will be disbursed to meet the costs for the smaller contracts, primarily goods contracts. No major bidding for works or selection of consultants is outstanding. Most activities are under implementation.

10. As of October 31, 2012, the progress of work executed was 22 percent on the Mau Summit-Kericho against a 97 percent of the time elapsed. Similarly, 40 percent of the works on the Kericho-Nyamasaria road section had been achieved against 85 percent of the time elapsed. The contractor procurement process was delayed, and both contracts also experienced delays, some caused by weak contractor performance and some by labor unrest. The GoK has already taken the necessary actions to tighten up project supervision and, taking these delays into account, both contracts are expected to be completed well within the proposed extension period. Nevertheless, the quality of works is acceptable so far. The third contract, Nyamasaria-Kisumu-Kisian took about three years to move from bid opening to contract award. Currently the contractor is progressing well with no delays experienced. About 21 percent progress of the work program has been achieved against 25 percent of the contract period elapsed including the mobilization period.

11. Overall the project is successfully achieving its development objective as well as convening other investors to the Kenya Northern Transport Corridor by leveraging of US$93 million from the AFD, US$93 million from the EIB, US$19 million from the Nordic Development Fund (NDF), and US$30 million from the local banks in Kenya. The project development objective is currently rated Satisfactory in terms of progress towards being achieved. The original project is performing well but, due to works delays for Mau Summit-Kericho and Kericho-Nyamasaria roads financed under the AF, the Implementation Progress (IP) is rated as Moderately Satisfactory.

12. Credit 3930-KE. Most of the activities financed under the original credit are either completed successfully or nearing completion. The activities completed include: (a) reconstructing 228 km of paved roads which 33 km is a dual carriage way, under five contracts including one of which financed by NDF; (b) expansion of the apron and extending the taxiways at JKIA leading to an increase of 50 percent in the parking space of and improving maneuvering of aircrafts; (c) acquisition of security equipment for

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airports and erecting a security fence at JKIA; and (d) three feasibility and detailed engineering road designs.

13. Major achievements made possible by NCTIP include: (a) security clearance by the Transportation Security Administration (TSA) allowing US airlines operating from JKIA; (b) both the Kenya Civil Aviation Authority and the Kenya Airports Authority given financial autonomy; (c) aviation safety and security regulations harmonized and adopted by each member of the East African Community (EAC), including an agreement on sharing of resources, particularly safety inspectors; and (d) adoption of output and performance based maintenance of road contracting approaches. Details are in Table 1, Annex 2 and Annex 1, on the status of the targets in the Results Framework.

14. Credit 4571-KE (AF). Significant achievements have been recorded. For instance, the ownership of national, rural and urban roads was clarified while road sector policy formulation was separated from execution of road programs. In addition three autonomous road authorities were established; a regulatory body for the construction industry (National Construction Authority) was established with powers of registering contractors, monitoring their performance and publishing names of poor performers and those that are debarred; and the regulatory body for consulting and practicing the Engineers profession (originally, Engineers Registration Board and now Engineers Board of Kenya) was strengthened and added responsibilities and powers to register professionals and engineering firms, assess their qualifications, monitor their performance, and exercise the right to sanction poor performance or unethical behavior. The details are in Annex 1, Results Framework.

C. PROPOSED CHANGES

Rationale for Extension

15. The GoK has requested a 36 month extension to December 31, 2015, to overcome the cumulative delays caused by the main contributing external factors, described in more detail below. This would allow for: (a) completion of the Mau Summit-Kericho (55 km); Kericho-Nyamasaria (81 km); and Nyamasaria-Kisumu-Kisian (24 km including 6 km dual carriageway) road contracts and other outstanding but comparatively smaller contracts; and (b) completion of the JKIA improvements after completion of the redesign assignment. An Action Plan for the use of extension period has been proposed by the GoK and included herein as Table 1. The Bank reviewed the time lines and concur that the completion periods are reasonable and achievable. What follows are the main external factors that contributed to the implementation delays.

16. Implementation of new Governance measures. The road sub-sector in Kenya, similar to other parts of the world, faced substantial governance challenges, and so the Bank-financed operations were exposed to these risks/issues. Accordingly, in 2009 one of the requirements for processing the AF was that the Bank and the GoK agree on addressing these risks. The governance issues included complex institutional arrangements; unclear responsibility and ownership arrangements of the road networks; collusion and other forms of bid rigging; fraud and corruption in the construction

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industry; weak due diligence on bidders; absence of robust cost estimates; weak capacity to detect and deal with fraud and corruption; overloading of vehicles that destroyed the road infrastructure, among others. In order to mitigate the risks and enhance integrity, the Bank and the GoK, with the guidance of the Integrity Vice Presidency (INT), agreed on a Roads Sector Governance and Integrity Improvement Action Plan (RSGAP), which was to be implemented under the additional credit.

17. The RSGAP underpinned the Kenya Roads Act 2007 and gave rise to several important institutional measures and policy initiatives. New project activities were subjected to much more stringent procurement processing and reviews, and new clauses and language to the contracts were required.

18. Executing the agreed RSGAP was more difficult and time-consuming than expected and contributed to the delays in awarding the contracts for the three road contracts financed by the Bank under the AF. For instance, the most pertinent new and additional measures of the RSGAP that led to significant procurement delays were the following:

(a) The GoK and the Bank had to carry out more stringent than before due diligence on contractors that had submitted bids.

(b) To ensure compliance with the agreed RSGAP, the Bank employed an Independent Procurement Specialist who undertook a separate review of all bids received and the Bid Evaluation Reports (BER). This was an additional step in the procurement review process which added several weeks to the process.

(c) GoK had to introduce a new clause in their large works contracts, which was an exception to Bank policy that gave both the Bank and the GoK the right to terminate the remainder of a contract if a contractor is debarred after contract award.2 While acceptable for new bidding processes, the introduction of this clause for the three works contracts came after bids were already opened. The additional risks transferred to the contractor, such as automatic contract termination following debarment, had not been considered at the time of preparing the bids, and caused the GoK to resist its implementation.

(d) The winning contractor for the Nyamasaria-Kisumu-Kisian contract was debarred for being associated with a recently debarred firm between GoK’s first evaluation for the bids and Bank’s no objection. The Bank used the bid evaluation exercise to request the GoK to establish any legal association, an area usually left for the Bank’s Department of Integrity (INT).

19. Implementation of the RSGAP poised a series of challenges to the GoK, most notably for ongoing projects. For the subject contracts, the requirements of the RSGAP caused a delay of almost three years, as it required undertaking discussions/negotiations with all the different stakeholders in the procurement process, including all the relevant

2 Project Paper on a Proposed Additional Financing Credit 4576-KE for the Northern Corridor Transport Improvement Project, March 5, 2009, paragraphs 94 and 95.

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Government entities. As mentioned above, the GoK had already received and evaluated bids for these contracts at the time the restructured project was presented to the Board for approval. Bids were invited using the standard World Bank bidding documents, which did not contain the early-termination clause that had been agreed between the Bank and the GoK. As such, the GoK had to inform the bidders of the introduction of a new clause, which resulted in extensive delays, the extent of which were not anticipated or recognized at the time of the preparation of the additional financing. It is important to note that at the time there was no experience in the region with the measures that were proposed to be covered under the operation, or how they would be executed in Kenya, and hence the extension period of three years requested at the time of the AF was considered adequate.

20. The following chronology of events and the timeline illustrates the actions taken before the award of the three road contracts. Bids for all the three road works contracts were invited using the standard bidding documents of the World Bank which do not contain the early termination clause introduced under the RSGAP. The bids were received and opened on August 20, 2008 and Bank informed of the outcome of the response on September 18, 2008. The GoK evaluated them and made recommendations for award. However, the review of the bid evaluation reports by the Bank could not commence before the GoK and the Bank agreed on the RSGAP. Between October – November 2008, there were numerous discussions between the Bank and the GoK on several governance issues in the Kenya portfolio, including the RSGAP for the AF. The GoK wrote to the Bank management seeking assistance in expediting the approval of the AF, and confirmed to the Bank through the Minister of Finance, of their agreement to include the early termination clause in the road contracts. However, this was subject to the Bank’s confirmation to cover resulting financial costs related to any contract cancellation. In January 2009, the Bank responded confirming that it would proceed with submitting the AF to the Board, but clarified that it would only be able to finance technical assistance to support re-tendering, in case this was realized.

21. Between January 2009 – September 2009, there were extensive negotiations between the Bank and the GoK on the implications of implementing the RSGAP. Once an agreement was reached on how to implement the RSGAP, the review process including the procurement process had to be re-done starting with the bidding documents, the specifications and the BER under the new requirements of the RSGAP by the Bank-hired Independent Procurement Specialist. This new RSGAP and the required additional step led to a 13 month delay to issuance of Bank’s No Objection for award for the Mau Summit-Kericho and Kericho-Nyamasaria road contracts on October 15, 2009.

22. The No Objection for Nyamasaria-Kisumu-Kisian road contract was issued on August 3, 2011 and it took 36 months from bid opening to issue of No Objection to signing of contract after a cumbersome but comprehensive review. This is because the lowest evaluated bidder was debarred after completion of first bid evaluation. The first bid evaluation was done based on the new, required review proposed under the RSGAP including the formal negotiations for AF in March 2009. First the GoK had to implement the new contract clause and get acceptance from all the bidders. Once the standard evaluation was submitted to the Bank, the Bank, through the Independent Procurement

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Specialist, undertook a comprehensive review of the complete bidding process and his comments were communicated to the GoK as comments on the BER. The revised BER was thereafter submitted to the Bank for review and clearance.

23. During this period, the Bank requested GoK to establish whether there is an legal association between the lowest evaluated bidder, China Communications Construction Company (CCCC) and China Road and Bridges Corporation (CBRC), which had been debarred earlier for collusion in the Philippines. The GoK had difficulty in collecting information that could link these two companies and the process to confirm the association, normally left for INT or similar entities, took a very long time. The GoK, having established that CCCC is indeed associated with CBRC, reviewed the other two bids and determined that the second lowest bidder did not have sufficient capacity to undertake this contract, having just been awarded the other two contracts, Mau Summit-Kericho, and Kericho-Nyamasaria.

24. Further procurement decisions were delayed as the GoK had to perform additional due diligence on the third lowest bidder. The eventual bid evaluation was reviewed by INT and its comments were also provided to the Operational Procurement Review Committee (OPRC) for consideration and clearance for award of the contract to the third lowest evaluated bidder. A further delay came about when the Bank’s clearance was done in two stages, the contract award on March 3, 2011, and the signing of the contract on August 11, 2011.

25. The extensive scrutiny of the contracts and implementation of the RSGAP led to improved transparency and accountability, but resulted in extensive procurement delays, contributing to a strained relationship between the Bank and GoK at the time. In hindsight, the AF should have requested an extension of the project closing date of longer than 3 years to allow for the additional processing time required to implement the RSGAP-requirements.

26. Higher than planned traffic growth rates at JKIA required new designs to modernize the airport. The original concept and scope changed from primarily focusing on the remodeling and renovation of the existing three terminal buildings at the JKIA to expanding them and constructing a new terminal building (Terminal Unit 4). This was a result of unprecedented growth in traffic which triggered the need for larger terminal facilities. JKIA handled 6.2 million passengers in 2011 against a design capacity of 2.5 million passengers annually and an anticipated volume of 4 million passengers. Carrying out new designs and procuring contractors for the works resulted in a delay of about 12 months to the expected completion of the works and, with it, the supervision consultancy, funded by the Bank. The construction of Terminal Unit 4 is expected to be completed in December 31, 2013 while the remodeling and expanding the existing terminal building is expected to be completed in September 2014. The Bank is financing the supervision consultancy for both contracts while the AFD and the EIB are financing the works.

27. Overall delays due to external reasons. The retroactive implementation of the RSGAP caused an estimated 30 month external delay in the implementation of the road

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works component. The need to re-design the planned works to modernize the JKIA airport caused an external delay of about 12 months. Since the implementation of the two activities was partly concurrent, the overall external delay in the implementation of the project is 36 months.

D. RISKS

28. The principal risks for extending of the closing date for this operation are: (a) jeopardizing the completion of the works under the Mau Summit-Kericho, Kericho-Nyamasaria and Nyamasaria-Kisumu-Kisian roads, and cancellation of the supervision contract for JKIA being financed by the AFD and EIB; and (b) creation of a substantive financing gap for GoK which it would take time to fill leading to the further delays in the completion of the works. .

29. In addition, failure to extend the closing date would endanger the outcomes and the development objectives of the Project and would also have an impact on the currently good relationships with both GoK and the co-financiers under the project, the AFD and the EIB.

30. The performance of the contractor for the Mau Summit-Kericho and the Kericho-Nyamasaria roads is being closely monitored by the GoK which has developed comprehensive implementation plan to mitigate further persistent delays. Furthermore, both contracts will be closely monitored by the GoK and the Bank, and frequent site visits will be fielded to ensure timely execution of the works.

E. EXTENSION OF CLOSING DATE

31. The Closing Date for the Kenya Northern Corridor Transport Improvement Project (Credit 3930-KE and Credit 4571-KE) would be extended from December 31, 2012 to December 31, 2015.

32. This proposed extension is equal to the delay caused by external factors to the operation and outside the control of the Borrower consistent with the Bank’s Guidance to Staff on Processing Additional Financing (dated November 18, 2009 and revised April 16, 2012) governing Additional Financing for Investment Lending (OP/BP 13.20). The project closing date was first extended by three years to allow for the use of the additional finance (Credit 4571-KE) on April 2, 2009.

33. This proposed extension of the Project’s Closing Date is also consistent with the Bank’s OP/BP 13.30 on Closing Dates and meets its requirements, namely: (a) the Project objectives continue to be achievable; (b) the performance of the Borrower and other implementing agencies is satisfactory; and (c) the Borrower has completed a specific action plan acceptable to the Association to complete the Project.

34. Implementation schedule. The proposed implementation schedule is cognizant of the risks discussed in paragraphs 27 – 29 above. The implementation support will focus on actions that are critical for project success. In particular, emphasis will be

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placed on quality of works, technical compliance, timely payment of contractors, supplies and consultants and adherence to implementation schedule. Continuous supervision will be encouraged given that most Bank’s task team members are based in the Kenya Country Office.

35. Emphasis will be placed on upstream reporting to ensure early detection and troubleshooting of problems. There will be continuous review of project implementation progress reports prepared by the supervision consultants.

36. The Financial Management Specialist will carry out periodic reviews to monitor processing of payments.

Table 1: Implementation Plan for Outstanding Activities as of November 2012

Item No.

Activity Estimated Date Remarks

1. A. KeNHASubstantial completion of reconstructing Mau Summit-Kericho road section

March 30, 2014 and end of defects liability period September 31, 2015

As of October 31, 2012, 23% of progress recorded

2. Substantial completion of reconstructing Kericho-Nyamasaria road section

September 31, 2014 and end of defects liability period September 31, 2015

As of October 31, 2012, 39% of progress recorded

3. Substantial completion of reconstructing Nyamasaria-Kisumu-Kisian road section

August 31, 2014 and end of defects liability period August 31, 2015

As at October 31, 2012, 10% of progress recorded

4. Award of output and performance based road maintenance contract

December 31, 2012 KeNHA is revising the draft bid evaluation report upon receipt of Association’s comments

5. Award of contract for supply of modular bridges (bailey bridges)

December 31, 2012 Association has given its no objection to award the

6. Award of contract for supply of assorted equipment for Materials and Research Dept., Kenya Institute of Highways and Building Technology; and Mechanical and Transport Department

June 2013  Bids have been invited

7. Award of contract for updating designs for remodeling and renovating Terminal Units 1, 2 and 3 at JKIA

July 2013 Expression of interest invited

8. Completion of detailed signs on the Eldoret-Kitale-Marich Pass-Lodwar-Lokichigio-Nadapal road section on the Kenya-South Sudan road link

 March 2013 Feasibility studies and preliminary designs completed.

9. Completion of repairs on the headquarter office of road authorities at Kisumu, Homa Bay and Rachuonyo

August 2013  Contracts awarded

10. Completion of implanting selected activities of the national road safety program

March 2014  Phase 1 involving the development of the program completed

11. Completion of the development of a 50-year transport master plan and preparation of a 10-year investment plan

December 2014 Association provided its no objection to the technical evaluation report.

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Item No.

Activity Estimated Date Remarks

12. B. Kenya Airports Authority (KAA)Substantial completion of Terminal Unit 4 and parking garage

August 2013 and end of defects liability period August 2014

About 65% progress recorded

13. Award of contract for updating designs for remodeling and renovating Terminal Units 1, 2 and 3 at JKIA

July 2013 Expression of interest invited

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ANNEX 1: Results Framework Status

PDO Outcome Indicators StatusIncrease efficiency of road transport along the Northern Corridor.

Enhance aviation safety and security to meet international standards.

Freight and passenger travel time by road from Mombasa to Malaba and Busia reduced by 25 %.

KCAA cleared for International Aviation Safety Assessment (IASA) Category 1 safety status and JKIA cleared by the United States Transportation Security Administration (TSA) for direct flights to/from US Airports.

Achieved. Travel time has reduced by 38% (from 14.5 to 9 hours by car) between Mombasa-Timboroa a distance of 750 km along the Northern Corridor (Mombasa-Malaba), and for buses, by 39% (from 18 to 11 hours) and trucks by 38% (from 24 to 15 hours)

Substantially achieved. The results/outcomes include:(a) The responsibility for passenger, baggage and mail security

screening at the airports transferred from the police to Kenya Airports Authority (KAA), allowing for better monitoring, control and training of security staff;

(b) TSA provided security clearance allowing US airlines operating from JKIA. However, this is yet to be implemented due to security reasons other than those related to the airport;

(c) Both Kenya Civil Aviation Authority (KCAA) and KAA given financial autonomy and now retain the revenue generated from their operations, which had been previously remitted to the government’s general revenue kitty;

(d) Aviation safety and security regulations harmonized and adopted by each member of the East African Community (EAC), including an agreement on sharing of resources, particularly safety inspectors;

(e) An airport security oversight unit responsible solely for monitoring security issues and ensuring compliance with security regulations established; and

(f) The GoK decided on further restructuring of KCAA by agreeing on separating oversight functions of KCAA from its service provision activities.

Substantially achieved. The results/outcomes include:(a) The ownership of national, rural and urban roads clarified;

(b) Policy formulation separated from execution of programs and three autonomous road authorities established;

(c) New policies enacted (e.g. a roads policy, which did not exist previously);

(d) Management of the fuel levy funds for road maintenance without interruption and across all parts of the country enhanced;

(e) A 15-year Road Sector Investment Plan (RSIP) developed and adopted;

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PDO Outcome Indicators Status

Promote private sector participation in the management, financing and maintenance of road assets.

Restore public infrastructure and assets damaged as a result of the December 2007 post-election crisis.

One long term performance based road management and maintenance contract awarded to the private sector and effectively under implementation.

One segment of the Northern Corridor offered for concessioning to the private sector.

Damaged public infrastructure and assets restored.

(f) A regulatory body for the construction industry (National Construction Authority) established with powers of registering contractors, monitoring their performance and publishing names of poor performers and those that are debarred;

(g) The regulatory body for consulting and practicing the Engineers profession (originally, Engineers Registration Board and now Engineers Board of Kenya) strengthened and added responsibilities and powers to register professionals and engineering firms, assess their qualifications, monitor their performance, and exercise the right to sanction poor performance or unethical behavior.

(a) One road section on the Northern Corridor offered to the private sector for tolling. However, the process was terminated after award of the concession due to changed circumstances.

(b) Output and performance based maintenance of road contracts approach embraced. Bids under three separate contracts covering a road network of over 300 km have been received, evaluated and the bid evaluation report including recommendations for awards, reviewed by the Association, and now under revision by KeNHA.

Substantially achieved. The results/outcomes include:(a) Works contracts on the repairs of road authorities buildings

at their headquarters at Kisumu, Homa Bay and Rachuonyo awarded;

(b) Purchase of vehicles and computers replacing those destroyed completed; and

(c) GoK partly financed the activity with respect to road repairs.

12

ANNEX 2: Reallocation of Proceeds

1. Proceeds for Kenya, Northern Corridor Transport Improvement Project Cr. 3930-KE/Cr. No. 4571-KE will be reallocated as follows:

Table 1: Withdrawal of Proceeds of the FinancingCategory of Expenditure

Allocation % of Financing (IDA)

Amended and Restated

Original Credit (Expressed in

SDR)

Additional Credit

(Expressed in SDR)

Revised Amended and

Restated Original Credit

(Expressed in SDR)

Revised Additional

Credit (Expressed in

SDR)

Revised Percentage of Expenditures Financed

(inclusive of Taxes) (inclusive of Taxes)

1. Works0 0 66,498,500 67%

19%Such % age of Eligible

Expenditures as the Association may determine for each Fiscal Year

100%

(a) Under Parts A through E of the Project

(b) under Part F of the Project

9,360,000 0 9,360,000

(c) under Parts A through E of the Project, except A(2)

89,640,000 131,500,000 24,688,200 146140,000

(d) Under Part A(2) 11,100,000 1,910,000

2. Goods, Equipment and Vehicles

100% foreign expenditures and 90% of local expenditures

100%

(a) Under Parts A through E of the Project

0 0

(b) (i) under Part F of the Project

8,190,000 0 4,910,000

(ii) under Part G of the Project

2,550,000 0 2,550,000

(iii) under Part H of the Project

500,000 0 400,000

(c) Under Parts A through E of the Project, except (A3)

450,000 7,900,000 450,000 7,900,000

(d) Under Part A(3) of the Project

0 1,600,000 1,600,000

3. Consultants’ Services including audits 100% of foreign expenditures and

94% of local expenditures(a) under parts A

through E of the Project

0 0 2,360,800

(b) (i) Under Part F of the Project

5,120,000 0 8,400,000

(ii) Under Part G of the Project

3,700,000 0 3,780,000

Category of Expenditure

Allocation % of Financing (IDA)

Amended and Restated

Original Credit (Expressed in

SDR)

Additional Credit

(Expressed in SDR)

Revised Amended and

Restated Original Credit

(Expressed in SDR)

Revised Additional

Credit (Expressed in

SDR)

Revised Percentage of Expenditures Financed

(inclusive of Taxes) (inclusive of Taxes)

100%

(iii) Under Part H of the Project

350,000 0 350,000

(c) under Parts A through E of the Project, except Part (A2)

16,200,000 11,200,000 12,292,500 14,150,000

(d) under Part A(2) of the project

1,400,000

4. Training100%(a) under Parts A

through E of the Project650,000 0 650,000

(b) (i) Under Part F of the Project

580,000 0 580,000

(ii) Under part G of the Project

500,000 0 420,000

(iii) under Part H of the Project

650,000 0 750,000

Unallocated5 (a) under Parts A

through E of the Project

0 7,300,000 300,000

(b) under Part F of the Project

0 0

(c) under Part G of the Project

0 0

(d) under Part H of the Project

0 0

TOTAL 138,440,000 172,000,000 138,440,000 172,000,000

Notes:(a) For the purposes of this Schedule, for Category 1(c) in the table the proceeds of the Credit will finance 100% of expenditures related only to constructing of the Mau Summit-Kericho; Kericho-Nyamasaria; and Nyamasaria-Kisumu-Kisian road contracts for FY13. The % age of financing will be reviewed for the subsequent years. The Government of Kenya is in the process of implementing a new constitution which has put significant strain on its finances.

(b) Reallocation

1. US$14 million (SDR 9,187,557.42 equivalent) reallocated from Category 1(d) to Category 1(c) since GoK used own funds to undertake part of the emergency related activities.2. SDR 1.4 million (US$2,133,320 equivalent) reallocated from Category 3(d) to Category 3(c) to enhance the financing toward preparing a 50 year transport master plan.

14

3. US$5 million (SDR 3,281,270.51 equivalent) reallocated from Category 2(b)(i) to Category 3b(i). KAA received some security and communication equipment through bilateral financing.

4. US$120,000 (SDR 7,875.89 equivalent) reallocated from Category 4(b)(ii) to Category 3b(ii).5. SDR 100,000 (US$152,380 equivalent) from Category 2(b)(iii) to Category 4b(iii). Cost saving realized

under equipment category6. SDR 7 million (US$9,142,800 equivalent) reallocated from Unallocated to Category 1(c ).7. SDR 1,546,700 reallocated from category 3(c) to category 1(c) since this category was overdrawn by this

amount.

2. The proposed reallocation is necessary to allow for the completion of the outstanding project activities, and attainment of the project objectives as envisaged. The reallocation has come up mainly due to the need for merging some of the activities , for instance, particular goods contracts for airport expansion at the JKIA have been merged under works contracts; the GoK has used its own funds to finance certain activities, thereby realizing unutilized funds under these activities; and the scope of some of the works contracts has increased, and more resources required.

3. The implementation progress of all the project activities is summarized in Tables 2 and 3 below.

Table 2: Status of Implementation of Project Activities under Credit 3930-KE

Component Agency Responsible Status

A. Rehabilitation of Northern CorridorRoad Works The rehabilitation of the road sections has reduced the travel time from

Mombasa to Timboroa from 14.5 hours by car in 2004 a distance of 750 km to 9 hours and by bus from 18 to 11 hours.

1. Maji ya Chumvi - Miritini (35 km and increased to 40 km)

KeNHA

Completed and handed over to KeNHA. Financed by Nordic Development Fund.

2.Sultan Hamud-Machakos Turnoff (55 km) Completed and handed over to KeNHA. The scope of the contract was increased significantly with the designs enhanced to respond to unprecedented growth in traffic. GoK financed the extra cost resulting in GoK financing 51% and IDA 49% of the contract. The contract is under defect liability.

3. Machakos Turn off-JKIA 33 km (12 km of which dual)

Completed and handed over to KeNHA. The scope of the contract was increased significantly to respond to increased traffic, unprecedented mushrooming of industrial, commercial and residential developments requiring services. Two river bridges, an interchange, access and service roads were later included under the contract. GoK financed the extra cost, leading to IDA financing 49% and GoK 51%. The contract is under defect liability.

4. Lanet-Njoro Turnoff (dual 16 km) Completed and handed over to KeNHA.5. Njoro Turnoff-Timboroa (84 km) Completed and handed over to KeNHA.

Subtotal IDA (1-5) 132.62 (US$M) 130.46 (US$M)

15

Component Agency Responsible Status

Consultant Services - Design and Supervision of works1. Maji ya Chumvi-Miritini

KeNHACompleted

2. Sultan Hamud-JKIA Completed Under defect liability.3. Lanet-Timboroa Completed Under defect liability.4. Mau Summit-Kisumu

Subtotal IDA (1-3) 9.97 (US$M)

Sub totals IDA (A) 140.43 (US$M) 140.43 (US$M)

B. Socioeconomic Enhancement, Roadside Amenities and HIV/AIDS MitigationWorks

KeNHA1.Roadside Facilities (partly in works contracts) Partially completed.Consultants Services1.Supervision of works Partially completed.2. HIV/AIDS mitigation work (NGO) Partially completed and ongoing.Subtotal IDA (1-2) 1.62 (US$M)

Sub totals IDA (B) 3.05 (US$M) 143.48 (US$M)

C. Private Sector Participation in Road Management and MaintenanceWorks1.Long term performance based contract (LTPBC) 1.43 (US$M)Consultant Services1. Preparation of Concession bid documents

KeNHA

Completed2. Transaction Adviser for Nairobi Toll Rd Contract terminated upon the decision by GoK to

cancel the concession process. The balance of the IDA funds will be reallocated.

3. Design & supervision of LTPBC Partially completed. Subtotal IDA (1-3) 3.05 (US$M)

Sub totals IDA (C) 4.48 (US$M) 147.96 (US$M)

D. Road Safety ImprovementWorks1. Road Safety Parks KeNHA Included in the main road works. IDA funds

(US$1.86 million) to be reallocated to consultant's service (Institutional TA). Rehabilitation of parks delayed. The National Transport and Road Safety Authority established and will take-over this activity.

Consultant Services1. Design, supervision and safety education KeNHA National Road Safety Program developed and

adopted by GoK. The new National Transport and Road Safety Authority will implement the program. Merged with supervision under main road works.

Sub totals IDA (D) 4.69 (US$M) 152.65 (US$M)

16

Component Agency Responsible Status

E. Institutional Strengthening in the Roads Sector and Technical AssistanceThe main outcomes included: the ownership of national, rural and urban roads was clarified; separation of policy formulation from execution of programs; the enactment of new policies; the development and adoption of a 15-year Road Sector Investment Plan (RSIP); the establishment of a regulatory body for the construction industry (National Construction Authority); the strengthening of the regulatory body for consulting and practicing Engineers (Engineers Board of Kenya); the GoK offered one road section was offered to the private sector for tolling. The process was terminated due to changed circumstances.Goods, Equipment & Vehicles1. QA equipment & vehicles for the Materials, Research and Development Department (MORPWH) and ERD

KeNHA Ongoing. Equipment for ERD procured while for the Materials Dept., bids are expected on December 14, 2012.

Consultant Services1. Technical Assistance for setting up KeNHA, KeRRA and KURA and strengthening of MTD, KIHBT, Materials Dept., GDIPE and State Law Office

KeNHA

Substantially completed. The start-up activities including computers and MIS installed.

2. Support to Kenya Roads Board (KRB) (Road User Charges Study, inventory of unclassified roads and review and regulation of truck traffic in Nairobi)

Completed successfully. Including the road inventory and condition survey for the unclassified road network; re-classification of the road network; road user charges study and preparation of the a 15-year Road Sector Investment Program.

Feasibility & Detailed Eng. Design Studies & TA

1. 10 Year Transport Development Plan and transport sector studies

Ongoing. Negotiations with the highest evaluated responsive firm underway. The activity has been expanded to encompass the preparation of a 50-year transport master plan including a 10-year investment plan.

2. Capacity building and training of staff in the proposed NHA, MORPWH, MOF, ERD & KRB

Substantially completed

3. Project M&E, Ext. Auditor and Project Coordination

Continuous

Subtotal (1-3) 5.15 (US$M)Project Operating Costs (KeNHA) KeNHA Funded by GoK fully

Sub totals (IDA) (A, B, C, D & E) KeNHA 157.80 (US$M) 157.80 (US$M)

F. Support to KAAThe main outcomes included: the responsibility for passenger, baggage and mail security screening at the airports has been transferred from the police to KAA, allowing for better monitoring, control and training of security staff; KAA has been given financial autonomy and now retain the revenue generated from its operations, which had been previously remitted to the government’s general revenue kitty. JKIA obtained Category 1 security clearance by TSA of USA allowing US airlines to operate from JKIA.Works The scope of this sub component is to increase the capacity at JKIA to handle

10 million passengers from its current design capacity of 2.5 million passengers annually. The original concept of renovation of the existing facilities was abandoned and expansion of the JKIA adopted instead. The erection of the security fence at JKIA and acquisition of security screening has contributed to the security clearance for US airlines operating from the JKIA

17

Component Agency Responsible Statusby Transportation Security Administration.

1. Rehabilitation of Old Embakasi Airport Infrastructure (dropped)

KAA

Dropped. IDA funds for this activity were reallocated toward expanding JKIA.

2. External Electrical Works - Old Embakasi Airport (dropped)

Dropped. IDA funds for this activity were reallocated toward expanding JKIA.

3. Renovation of terminal building – Old Embakasi Airport (dropped)

Dropped. IDA funds for this activity were reallocated toward expanding JKIA.

4. Construction works for re-organization of passenger terminal JKIA

(i) Unit 4 Apron Extension and Taxiways (New)

Completed and increased the parking space for aircraft by 50%. KAA financed this activity from its own resources and local banks.

(ii) Unit 4 Terminal Building & Car park (New)

Works underway and expected to be completed by June 2013. The AFD is the main financier.

(iii) Units 1-3 Buildings Renovation and Modification

Delayed, due to the need for restructuring further the activity to accommodate the requirements of the operators. The works contract will be funded by EIB.

5. Terminal Building – Kisumu Airport (expanded)

Completed. The original activity of rehabilitating the existing terminal building was dropped. The airport has been converted into an international airport. A new terminal building has been constructed with a design capacity of 500,000 passengers annually. KAA financed this activity fully.

6. Rehabilitation and extension of runway and construction of access road and parking area at Kisumu Airport

Completed, though with a larger scope than was originally envisaged – expanded to 45 m wide and 3 km long form 30 m wide and 2 km long. KAA financed this activity.

7. Renovation and upgrading of security at Wilson Airport

Feasibility study completed. Detailed design delayed due to concerns raised by operators at the airport, which must be resolved before advancing this activity. KAA will undertake the follow on activities under parallel financing. IDA funds for this activity were reallocated toward the works contracts of expanding JKIA

Subtotal IDA (1-7) 14.00 (US$M)Goods, Equipment & Vehicles1. Security screening, baggage, access control, etc. KAA Completed successfully, improving the working

environment at JKIA and Moi International airport, Mombasa.

2. Perimeter Fencing for Major Airports (Materials)

Completed successfully for JKIA, bids received for Moi and Kisumu airports.

3. FIDS with Installation at Moi Airport Mombasa The bidding process underway.4. Fire Tenders Completed successfully, and enhanced the capacity

at JIKA and Moi International Airport.5. Security perimeter lighting and detection at four airports

KAA has proposed to reallocate the IDA funds toward supervision of expansion of JKIA. KAA will finance this activity.

6. Security and communication Equipment and vehicles at four airports

KAA has proposed to reallocate the IDA funds toward supervision of expansion of JKIA. KAA will finance this activity.

18

Component Agency Responsible Status7. Support to Emergency Operation Centers KAA has proposed to reallocate the IDA funds

toward supervision of expansion of JKIA. KAA will finance this activity.

Subtotal IDA (1-7) 12.24 (US$M)Consultant Services1. Feasibility/Design/Supervision: Kisumu and Wilson Airports and JKIA Runway Rehab. Design

KAA

Completed. Feasibility study and detailed design of Kisumu airport and rehabilitation of the runway at JKIA completed successfully. Similarly, the feasibility study of expansion of Wilson Airport completed successfully but detailed designs delayed.

2. Works Supervision for JKIA Units 1-4 and Arrivals building (New)*

On-going

Subtotal IDA (1-2) 7.72 (US$MTraining 0.86 Substantially completed.Project Operating Costs Funded by the GoK fully.

Subtotals IDA (F) KAA 34.82 (US$M) 192.62 (US$M)

G. Support to the KCAAKCAA has been given financial autonomy and now retain the revenue generated from its operations, which had been previously remitted to the government’s general revenue kitty; aviation safety and security regulations have been harmonized and adopted by each member of the East African Community (EAC), including an agreement on sharing of resources, particularly safety inspectors; and KCAA established an airport security oversight unit, which is solely responsible for monitoring security issues and ensuring compliance with security regulations.Goods, Equipment & Vehicles1. Support to KCAA for IT

KCAA

Completed successfully2. Support to East Africa School of Aviation (EASA) – Airworthiness, ATS and Engineering Equipment – and the Accident Investigation Lab

Substantially completed. The only activity outstanding is the purchase of reference books for the library. EASA is now an ICAO accredited school and has developed patent training programs that are in use worldwide, a source of revenue.

Subtotal IDA (1-2) 4.26 (US$M)Consultant Services1. Technical assistance to KCAA for safety inspection, training and implementation of reforms

Completed successfully, helped in substantially achieving ICAO requirements. Examinations for pilots are now offered on-line compared to manually as before; and technical manuals on flight inspection operations and licensing developed and in use.

2. Implementation of the GNSS/GPS enroute and approach procedures

Completed successfully, improving on air safety.

3. Training of staff and Trainers at EASA and KCAA

Completed successfully. Helped in developing a pool of experts which was a major constraint.

Project Operating Costs (KCAA) Financed fully by the GoK.Subtotal IDA (1-3) 5.76 (US$M)

Subtotal IDA (G) KCAA 10.02 (US$M) 202.64 (US$M)

19

Component Agency Responsible StatusH. Support to the MOT

MOT

Goods, Equipment & Vehicles1. Support to New Maritime Authority for IT Completed successfully.2. Strengthening of in IT Completed successfully.3. Support in enhancement of maritime training capacities for compliance with IMO STCW95 convention

Completed successfully. Bandari college acquired training simulators and is able to offer International Maritime Organization (IMO) accredited courses.

Subtotal IDA (1-3) 0.81Consultant Services1. Support for Implementation of maritime laws and Maritime Authority

Completed successfully. Rules and regulations of the regulator, Kenya Maritime Authority developed and in use.

2. Support to MOT including compliance with international transport and facilitation conventions and the NCTA treaty and implementation of the National Trans. Policy

A new curriculum for driving schools (for drivers and instructors) developed and adopted by GoK. Traffic Act amended to strengthen road safety issues, and a new Highway Code developed.

Subtotal (1-2) 0. 57Training of MOT and Sector staff 0.83Project Operating Costs (MOT ) Financed fully by GoK]Subtotal IDA (H) MOT 2.20 (US$M)

COMPONENTS IDA TOTALS (A,B,C,D,E,F,G&H)

207.00 (US$M)

20

Table 3: Status of Implementation of Project Activities Under Credit 4576-KE

Component Agency Responsible

Status

A. Rehabilitation of Northern Corridor and Emergency Restoration of Damaged Public Assets1. Mau Summit-Kericho (55 km)* KeNHA Completion delayed partly due to late start-up emanating from

Association’s requirement that: (a) GoK carries out stringent due diligence on contractors that had submitted bids; and (b) a clause is introduced in the contract, an exception to Association policy, on early termination of the contract in the event the wining contractor is debarred by the Sanctions Board. Bids were invited on April 24, 2008 and it was not until October 5, 2009 that the no objection for award was issued. The contract is underperforming. A new completion date of March 31, 2014 has been agreed following deployed of additional resources.

2. Kericho-Nyamasaria (81 km)* Same, except the completion date is September 31, 2014.

3. Nyamasaria-Kisumu Airport (22 km/ 6 km dual)**

Same, except that the delays were more protracted such that it was not until March 3, 2011, that the no objection to award the contract was given, because the winning contractor was debarred during the intervening period, and it took time for receive the OPRC clearance (in consultation with INT) for award of the contract to the third lowest evaluated bidder since the second lowest, awarded the other two contracts (Mau Summit-Kericho, and Kericho-Nyamasaria) was established to have inadequate capacity to handle a third contract under the project. The contract is performing well so far and is expected to be completed by August 31, 2014.

4. Emergency Post-election Reconstruction and Recovery (New)

Partly completed. Contracts for repair of offices that were partially burnt have been awarded, vehicles that were destroyed purchased. GoK used its own resources to execute some of the activities. KeNHA has proposed to re-allocate the balance of the IDA resources.

5. Supervision and consultants’ services for Emergency Repairs (New)

Proposal to reallocate the IDA funds.

Subtotal IDA A (1-5) 220.44 (US$M) 220.44 (US$M)C. Private Sector Participation in Road Management and Maintenance1. Output and Performance Based Road Contract - works

KeNHA Ongoing. Bids received and evaluated. IDA provided its comments to the Bid Evaluation Reports and recommendations of awards. Contract expected to be awarded by December 15, 2012.

2. Transaction Adviser-Nairobi Toll Rd. (additional funds required)

The concession process terminated by GoK, the balance to be re-allocated.

Sub-total 8.82 (US$M) 229.26 (US$M)E. Institutional Strengthening in Road Sector and Technical Assistance1. TA for setting up of KeNHA, KeRRA, KURA and strengthening of MTD, KIHBT, Materials Dept., GDIPE and State Law Office.(expanded and additional funds required)

KeNHA/MoR Substantially completed.

2.Institutional Strengthening Materials dept. – Equipment

Ongoing. Bids expected on December 14, 2012.

21

Component Agency Responsible

Status

Feasibility and Detailed Design Studies3.Kibwezi-Kitui-Mwingi-Maua-Isiolo (additional funds required)

Completed successfully. Part of the road section under construction with GoK resources.

4.Lakeside N.Tanzania-Narok (additional funds required)

Completed successfully.

5.Mombasa Bypass (additional funds required)

Completed and JICA providing funds for construction.

6. Sudan Road Link (New) Ongoing, expected to be completed by end of March 2013.

7. Urban Public Transport Improvement Study (New)

Partially completed.

8. Project M&E, Ext. Auditor and Project Coordination (expanded and additional funds required)

Continuous

Sub-total (1-8) 9.83 (US$M) 239.09 (US$M)Strengthening Governance in Construction Industry (New)9.Establishment of a Road Disaster Management and Response Unit

MoR Ongoing.

10.Establishment of the National Construction Authority

Established through an Act of Parliament.

11.Strengthen ERB and associated institutions

Strengthened and re-constituted to become Engineers Board of Kenya, through an Act of Parliament with expanded mandate.

12.Emergency Equipment (Bailey Bridges) and Vehicles

Ongoing. Bids received and evaluated. Association provided its comments on the bid evaluation report and recommendations of awards.

Sub-total (9-12) 13.92 (US$M)Total 253.00 (US$M)

22

ANNEX 3: Revised Results Framework

PDO Outcome Indicators Use of Outcome InformationIncrease efficiency of road transport along the Northern Corridor.

Enhance aviation safety and security to meet international standards.

Promote private sector participation in the management, financing and maintenance of road assets.

Restore public infrastructure and assets damaged as a result of the December 2007 post-election crisis.

Freight and passenger travel time by road from Mombasa to Malaba and Busia reduced by 25 %.

KCAA cleared for International Aviation Safety Assessment (IASA) Category 1 safety status and JKIA cleared by the United States TSA for direct flights to/from US Airports.

One long term performance based road management and maintenance contract awarded to the private sector and effectively under implementation.

One segment of the Northern Corridor offered for concessioning to the private sector.

Damaged public infrastructure and assets restored.

Check if physical improvement of individual sections of the road lead to reduction in travel times – if not, then identify causes and implement corrective measures.

Adjust safety and security interventions to ensure compliance with ICAO and US Federal aviation Administration (FAA)/ Transport Security Administration (TSA) requirements.

If pilot program of long-term performance based contracts and concessioning to private sector is successful, then scale up with more road sections.

Adjust post-election recovery program.Intermediate ResultsOne per Component

Results Indicators for Each Component

Use of Results Monitoring

Component One (A):Contracts awarded and construction satisfactory on 381 km of selected priority road sections along the Northern Corridor.

Damaged or destroyed assets restored.

Component One (A):Average roughness less than IRI 3.0 m/km on completed sections of the project roads.

(i) 3 public buildings restored and functional; and(ii) 3 term contracts awarded for disaster response readiness.

Component One (A):Check construction quality and performance of the contractor and take remedial actions as necessary.

Ensure expeditious return to normalcy in conflict affected areas and enhance government’s preparedness to respond to disasters.

Component Two (B):(i) Effective functioning of bus and truck stops at key locations and satisfactory construction and utilization of booths for sale of local produce and products by roadside communities.

Component Two (B):(i) At least three roadside stations and amenities constructed and functional as per designs and serving road users and local communities.

Component Two (B):(i) Reassess location of roadside facilities if not adequately utilized by road users and local communities.

23

PDO Outcome Indicators Use of Outcome Information(ii) Health kiosks constructed and HIV/AIDS awareness campaigns undertaken at key locations along the Northern Corridor.

(ii) At least 70% of road users and local persons surveyed become aware of or make use of the Voluntary Counseling and Testing (VCT) and other facilities for HIV/AIDS campaign along the Northern Corridor.

(ii) Expand the campaign along other important transport corridors.

Component Three (C):Private Sector involved in road management and maintenance.

Component Three (C):Legislation enacted for private sector participation in roads.

Component Three (C):Prepare bids for road concessioning and long term performance based road management and maintenance contracts.

Component Four (D):Road safety improved.

Component Four (D):At least 10% reduction in road related fatalities per annum.

Component Four (D):Adjust awareness campaign and hazardous spot improvements to achieve maximum benefit.

Component Five (E):Management and governance improved in the road sector.

Component Five (E):(i) KeNHA established and fully functional.(ii) All feasibility and design studies carried out satisfactorily.(iii) Timely public disclosure of national program and business opportunities in the road sector.(iv) NCA established and functioning satisfactorily.

Component Five (E):Mobilize greater support for road sector investments from Development Partners and ensure government follows up on the agreed Road Sector Governance and Integrity Action Plan.

Component Six (F):Security improved at major airports.

Capacity at JKIA expanded.

Component Six (F):JKIA meets ICAO and USA TSA security requirements.

(i) Annual passengers handled at JKIA increased from 4.8 million in 2007 to 6.4 million in 2012.

(ii) Cargo by air handled at JKIA increased from 278,000 tons in 2007 to 383,000 tons in 2012.

Component Six (F)Required for obtaining clearance for direct flights to USA and code sharing with USA airlines.

Ensure adequate designs and reconfiguration of the JKIA terminals to cope for added capacity.

Component Seven (G):Aviation safety and air navigation standards improved.

Component Seven (G):KCAA meets ICAO and USA FAA Category 1 safety requirements.

Component Seven (G):Required for obtaining clearance for code sharing with US airlines.

Component Eight (H):Compliance with IMO conventions and NCTTCA treaty.

Component Eight (H):IMO and NCTTCA certify compliance.

Component Eight (H):Required for overall improvement in the transport supply chain in the Northern Corridor.

24

ANNEX 4: Revised Results Monitoring Framework

Outcome Indicators Baseline Target Values Data Collection and Reporting2012 2013 2014 2015 Frequency

and Reports

Data Collection

Instruments

Responsibility for Data

Collection1. Freight and passenger travel time by road from Mombasa to Malaba reduced by 25 %.

Truck 24 hours

Bus 18 hours

Car 14.5 hours

18 hours

13.5 hours

11 hours

18 hours

13.5 hours

11 hours

Quarterly progress report.

Field Survey. Supervision Consultant.

2. KCAA and JKIA (Nairobi) respectively cleared for FAA/IASA Category 1 and TSA security status.

100% 100% Quarterly progress report.

FAA, TSA and ICAO

inspections.

3. One long term performance based road mgmt. and maintenance contract awarded to the private sector and effectively under implementation.

100% 100% Quarterly progress report.

Field Supervision.

KeNHA

4. Bids for concessioning of one road segment invited.

100% Quarterly progress report.

Field Supervision.

KeNHA

5. Damaged public infras. and assets restored.

100% Quarterly progress report.

Field Supervision.

KeNHA

Component One (A):1. Average roughness less than IRI 3.0 m/km on completed sections of the project roads.

(i) Public buildings restored and functional.

(ii) Term contracts awarded for disaster response readiness.

Less than

20% of project road

length.

0

0

50%

3

3

80% 100% Quarterly progress report.

Quarterly progress report

Field measurement.

Field measurement

Supervision Consultant.

Supervision Consultant

Component Two (B):1. At least three roadside stations and amenities constructed and functional as per designs and serving road users and local communities.

None 1 3 3 Quarterly progress report.

Field inspection.

KeNHA

2. At least 70% of road users and local persons surveyed become aware of or make use of the

None 10% 50% 70% Quarterly progress reports.

Questionnaire. MOR and University of

Nairobi (Consultant).

25

Outcome Indicators Baseline Target Values Data Collection and Reporting2012 2013 2014 2015 Frequency

and Reports

Data Collection

Instruments

Responsibility for Data

CollectionACT and other facilities for HIV/AIDS campaign along the Northern Corridor.Component Three (C):Legislation enacted for private sector participation in roads

None 100% Quarterly progress report.

governmentgazette.

MOR

Component Four (D):At least 10% reduction in road related fatalities per annum.

3000 3150 2800 2700 Quarterly progress report.

MOR Annual Report.

MOR

Component Five (E):1. Kenya National Highway Authority established and functional as evidenced by annual reports.

None KeNHAEstablished.

KeNHAEffective.

Quarterly progress report.

government gazette.

MORKeNHA

2. All feasibility and design studies carried out satisfactorily.

None 50% 75% 100% 100% Quarterly progress report.

MOR Reports. KeNHA

3. Timely public disclosure of national program and business opportunities in the road sector.

None Strategic Road

Investment Study

completed.

Plans Disclosed.

PlansDisclosed.

Plans Disclosed.

Annual Progress Reports.

Media. MOR, KRB and KeNHA.

4. NCA established and functional as evidenced by annual reports

None Legislation Drafted.

Act passed by

Parliament.

NCA established.

NCA established.

Annual Progress Reports.

Government gazette.

MOR

5. Governance and Integrity Action Plan implemented satisfactorily

None 10% 30% 60% 100% Annual Progress Reports.

Field inspection.

MORKeNHAUNES

6. User perception and satisfaction improved in the road sector

None - 50% of users

surveyed are satisfied

>75% of users

surveyed are

satisfied

>75% of users

surveyed are

satisfied

Annual Survey report

Annual Surveys along

Northern Corridor

ConsultantNGO

26

Outcome Indicators Baseline Target Values Data Collection and Reporting2012 2013 2014 2015 Frequency

and Reports

Data Collection

Instruments

Responsibility for Data

CollectionComponent Six (F):1. JKIA meets ICAO and USA TSA Category 1 security requirements.

None 50% 70% 100% Quarterly progress report.

ICAO and TSA

inspection.

KAA

2. No. of Passengers handled at JKIA (million).

4.7(2007)

5.0 5.5 6.0 6.4 KAA annual report.

KAA statistics.

KAA

3. Cargo handled at JKIA (tons). 278,000

(2007)300,000 330,000 360,000 383,000 KAA

annual report.

KAA statistics.

KAA

Component Seven (G):KCAA meets ICAO and US FAA Category 1 safety requirements.

None 70% 100% 100% 100% Quarterly progress report.

ICAO and FAA

Inspection.

KCAA

Component Eight (H):IMO and NCTTA certify compliance with respective treaties.

70% 100% 100% 100% Quarterly progress report.

NCTA monitoring

system.

NCTTCA

27