world bank document · there are now 13 operational mobile axle load weighing platforms through the...
TRANSCRIPT
Document of
The World Bank
Report No: ICR00002060
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-42830)
ON A
CREDIT
IN THE AMOUNT OF SDR 10.8 MILLION
(US$ 16.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF MOLDOVA
FOR A
ROAD SECTOR PROGRAM SUPPORT PROJECT
December 20, 2013
Sustainable Development Department
Ukraine, Belarus and Moldova Country Unit
Europe and Central Asia Region
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 17, 2013)
Currency Unit = Leu
1.00 = US$ 0.079
US$ 1.00 = 12.664
FISCAL YEAR 2014
ABBREVIATIONS AND ACRONYMS
ACAP Anticorruption Action Plan
CAS Country Assistance Strategy
CPS Country Partnership Strategy
EBRD European Bank for Reconstruction and Development
EC European Commission
EGPRSP Economic Growth and Poverty Reduction Strategy Paper
EIA Environmental Impact Assessment
EIB European Investment Bank
EMP Environmental Management Plan
ERR Economic Rate of Return
ESIA Environmental and Social Impact Assessment
EU European Union
FM Financial Management
GDP Gross Domestic Product
HDM-4 Highway Development and Management Model
ICR Implementation Completion Report
IDA International Development Association
IFI International Financial Institution
IMF International Monetary Fund
LTIS Land Transport Infrastructure Strategy
MCC Millennium Challenge Corporation
MTRI Ministry of Transport and Road Industry
NIF Neighborhood Investment Facility
NPV Net Present Value
PAD Project Appraisal Document
PDO Project Development Objective
PIU Project Implementation Unit
PPF Project Preparation Facility
RSPSP Road Sector Program Support Project
SEA Sector Environmental Assessment
SIL Specific Investment Loan
SRA State Road Administration
TTFTF Trade and Transport Facilitation Trust Fund
WTO World Trade Organization
Vice President: Laura Tuck, ECAVP
Country Director: Qimiao Fan, ECCU2
Sector Manager: Juan Gaviria, ECSTR
Project Team Leader: Jukka-Pekka Strand, TWIFS
ICR Team Leader: Simon Ellis, ECSTR
REPUBLIC OF MOLDOVA
Road Sector Program Support Project
CONTENTS
Data Sheet
A. Basic Information
B. Key Dates
C. Ratings Summary
D. Sector and Theme Codes
E. Bank Staff
F. Results Framework Analysis
G. Ratings of Project Performance in ISRs
H. Restructuring
I. Disbursement Graph
1. Project Context, Development Objectives and Design ............................................... 1
2. Key Factors Affecting Implementation and Outcomes .............................................. 7
3. Assessment of Outcomes .......................................................................................... 12
4. Assessment of Risk to Development Outcome ......................................................... 19
5. Assessment of Bank and Borrower Performance ..................................................... 20
6. Lessons Learned ....................................................................................................... 23
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 24
Annex 1. Project Costs and Financing .......................................................................... 25
Annex 2. Outputs by Component ................................................................................. 26
Annex 3. Economic and Financial Analysis ................................................................. 27
Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 28
Annex 5. Beneficiary Survey Results ........................................................................... 30
Annex 6. Stakeholder Workshop Report and Results ................................................... 31
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 32
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 43
Annex 9. List of Supporting Documents ...................................................................... 44
MAP
A. Basic Information
Country: Moldova Project Name: Road Sector Program
Support Project
Project ID: P100929 L/C/TF Number(s): IDA-42830
ICR Date: 12/20/2013 ICR Type: Core ICR
Lending Instrument: SIM Borrower: REPUBLIC OF
MOLDOVA
Original Total
Commitment: XDR 10.80M Disbursed Amount: XDR 3.71M
Revised Amount: XDR 3.71M
Environmental Category: B
Implementing Agencies:
State Road Administration
Cofinanciers and Other External Partners: European Bank for Reconstruction and Development (EBRD)
European Investment Bank (EIB)
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 11/08/2006 Effectiveness: 10/30/2007 10/30/2007
Appraisal: 02/05/2007 Restructuring(s): 12/18/2009
Approval: 03/29/2007 Mid-term Review: 09/23/2009
Closing: 06/30/2011 06/30/2011
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Low or Negligible
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Unsatisfactory
Quality of Supervision: Moderately Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank
Performance: Moderately Satisfactory
Overall Borrower
Performance: Moderately Satisfactory
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments
(if any) Rating
Potential Problem Project
at any time (Yes/No): No
Quality at Entry
(QEA): None
Problem Project at any
time (Yes/No): Yes
Quality of
Supervision (QSA): None
DO rating before
Closing/Inactive status: Satisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 19 19
Roads and highways 81 81
Theme Code (as % of total Bank financing)
Administrative and civil service reform 17 30
Infrastructure services for private sector development 33 70
Injuries and non-communicable diseases 17
Trade facilitation and market access 33
E. Bank Staff
Positions At ICR At Approval
Vice President: Laura Tuck Shigeo Katsu
Country Director: Qimiao Fan Paul G. Bermingham
Sector Manager: Juan Gaviria Motoo Konishi
Project Team Leader: Jukka-Pekka Strand Andreas Schliessler
ICR Team Leader: Simon David Ellis
ICR Primary Author: Jukka-Pekka Strand
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) Reduce road transport costs for road users in Moldova, by improving the condition and
quality of its road network and the way it is managed.
Revised Project Development Objectives (as approved by original approving authority)
The PDO and intermediate outcome indicators were not revised following project
restructuring in December 18, 2009.
(a) PDO Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target
Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : Vehicle operation costs on the roads improved under the Project have decreased
by at least 6 percent.
Value
quantitative or
Qualitative)
See HDM4 analysis
carried out during
Appraisal (in project
files).
Actual Vehicle
Operating Cost
reduction is of 6%
as compared to
pre-project VOC.
Actual Vehicle
Operating Cost
reduction is of 11%
as compared to pre-
project VOC.
Date achieved 05/01/2007 06/30/2011 06/30/2011
Comments
(incl. %
achievement)
The target was achieved for roads rehabilitated under the framework of this
project.
Indicator 2 : At the Program level, the percentage of National Roads in good condition will be
higher than in January 2007.
Value
quantitative or
Qualitative)
Good condition - 7.3%
Fair condition - 25.1%
Bad condition - 67.6%
Increase in % of
roads in good
condition
Good condition -
9.1%
Date achieved 05/01/2007 06/30/2011 11/29/2013
Comments
(incl. %
achievement)
The proportion of roads in good condition according to a condition survey in the
first half of 2012 was 6.5%. By adding the roads that have been rehabilitated
since that date the percentage goes to 9.1%. The target is achieved.
Indicator 3 : Also at the Program level, the Road Asset Value for the network of National
Roads will increase as compared to the 2006 level.
Value
quantitative or
Qualitative)
Road Asset value of
US$ 2,29 billion
(National Roads)
>2009 value US$2.96 billion
Date achieved 05/01/2007 06/30/2011 06/30/2011
Comments
(incl. %
achievement)
Increased asset values reflect the increased investment and maintenance that have
gone into the network since appraisal of the project. The target is achieved.
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : At the project level, the SRA has adequately managed and implemented the Road
Rehabilition Contracts included in the Project.
Value
(quantitative
or Qualitative)
N/A Yes Yes
Date achieved 05/01/2007 06/30/2011 11/29/2013
Comments
(incl. %
achievement)
Under the project 5 contracts were included and SRA is judged to have
adequately managed and implemented them. Although there were challenges, the
final roads were of good quality and the project helped SRA to develop the key
project management functions.
Indicator 2 : At the Program Level, the SRA has successfully implemented the investments
under the Road Sector Program
Value
(quantitative
or Qualitative)
N/A Yes Yes
Date achieved 05/01/2007 06/30/2011 11/29/2013
Comments
(incl. %
achievement)
SRA is effectively managing an on-going program that is 10 times the size of the
original program. Although there are delays SRA is adapting to these new
requirements. The quality of program roads is good.
Indicator 3 : Technical Audits have confirmed that road works comply with contractual
specifications.
Value
(quantitative
or Qualitative)
N/A Yes Yes
Date achieved 05/01/2007 06/30/2011 11/29/2013
Comments
(incl. %
achievement)
SRA continue to undertake technical audits to confirm compliance with
contractual specifications. Target is achieved.
Indicator 4 :
SRA has established a system for managing road investments which is adequate
to satisfy donor requirements, in terms of (i) Accounting and FM, (ii)
Procurement, and (iii) contract management
Value
(quantitative
or Qualitative)
No Yes Yes
Date achieved 05/01/2007 06/30/2011 11/29/2013
Comments
(incl. %
achievement)
SRA have an effective accounts and procurement departments. Overall this has
been successful. The December 2013 joint partner review of the program
identified some issues over contract management and SRA have now agreed to
set up a new division.
Indicator 5 : Axle Load Control system in place and operational.
Value
(quantitative
or Qualitative)
No Yes Yes
Date achieved 05/01/2007 06/30/2011 11/29/2013
Comments
(incl. %
achievement)
There are now 13 operational mobile axle load weighing platforms through the
country. Between 2009 and 2011 the percentage of overloaded vehicle declined
from 31% to 9%.
Indicator 6 : At least $20 million equivalent available for maintainence works on public roads
in 2010
Value
(quantitative
or Qualitative)
US$ 14 million US$ 20 million US$ 100 million
Date achieved 05/01/2007 06/30/2010 11/29/2013
Comments
(incl. %
achievement)
Very good compliance with agreed target for maintenance funding to the road
fund. In 2013 the exact targets have been met and the indications are that this
will be repeated in 2014. The target is achieved.
Indicator 7 : Roads rehabilitated, Non-rural
Value
(quantitative
or Qualitative)
0 160-200 km or
400 lane-km
87km or
297 lane-km
Date achieved 05/01/2007 06/30/2011 11/29/2013
Comments
(incl. %
achievement)
This indicator is a separately added core indicator and not part of the original
project design. Higher costs associated with a greater than expected scope of
engineering work limited the length of road to be improved.
G. Ratings of Project Performance in ISRs
No. Date ISR
Archived DO IP
Actual
Disbursements
(USD millions)
1 09/28/2007 Satisfactory Satisfactory 0.00
2 05/13/2008 Satisfactory Satisfactory 0.42
3 05/04/2009 Unsatisfactory Unsatisfactory 0.42
4 02/12/2010 Satisfactory Satisfactory 1.22
5 12/20/2010 Satisfactory Moderately Satisfactory 2.02
6 07/05/2011 Satisfactory Moderately Satisfactory 4.42
H. Restructuring (if any)
Restructuring
Date(s)
Board
Approved
PDO Change
ISR Ratings at
Restructuring
Amount
Disbursed at
Restructuring
in USD
millions
Reason for Restructuring &
Key Changes Made DO IP
12/18/2009 N U U 0.82
The Bank declared
misprocurement and cancelled
the corresponding part of the
IDA credit (US$11 million) in
December 18, 2009 after several
unsuccessful attempts by the
Bank (through visits and letters
by Europe and Central Asia
Region (ECA) senior
management) to convince the
Government to award the
contracts in line with the Bank's
procurement procedures. EBRD
cancelled €12.5 million from its
loan.
1
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Country context
1.1.1 The Republic of Moldova is a landlocked country situated between Romania and
Ukraine. With the accession of Romania to the European Union (EU) in early 2007,
Moldova became a border state between the EU and the countries further to the East. The
Pan European Corridor IX (Moscow-Kiev-Bucharest) crosses Moldova from East to
West, going through the capital city of Chisinau. Moldova’s road network totals about
9,650 km, of which 3,666 km are classified as National Roads and the remainder as Local
Roads. Considering the small size of the country and its population, the road network size
is adequate, with little need for expansion.
1.1.2 About 67 percent of National Roads and more than 75 percent of Local Roads
were classified as poor in 2007. This had resulted from severe and prolonged neglect of
the road network during the previous 15 years, when too little was spent on road
maintenance and rehabilitation. About 400 km of formerly paved roads had lost their
pavement and had reverted to unpaved gravel or earth roads. In 2006, the asset value of
the Moldovan road network was only about US$8.4 billion, instead of the US$12 billion1
it could have been with proper maintenance. The asset value loss of US$3.6 billion
equaled 1.4 times the entire Moldovan GDP in 2004.
1.1.3 The lack of investment and maintenance of Moldova’s roads had also made them
highly vulnerable to structural damage caused by overloaded trucks2. During project
preparation in 2006-2007, the damage caused by overloaded trucks was visible on roads
leading to and from cement factories, quarries, mines and steel plants. The country lacked
an axle load control system and no substantial fines were being imposed for overloading.
The only public vehicle weighing stations were at the borders, where they were used
exclusively to determine transit fees for trucks, not to protect the road network.
1.1.4 At appraisal, the Government of Moldova allocated only minimal amounts for
roads or other transport infrastructure. There was no external funding (loans or grants).
Poor road infrastructure was hurting Moldova’s agriculture and agro-industry exports and
was preventing the country from making the most of its 2001 World Trade Organization
(WTO) accession. It was clear that considerable financial resources would be required to
reverse the alarming trends in the road sector.
Project background
1 World Bank Public Expenditure Review 2006 estimated Moldova’s Road Network Asset Value. 2Refers to trucks circulating with loads above the legal limit of 10 tons for paved roads and 6-8 tons for other roads
2
1.1.5 The World Bank and the Government agreed in 2006 that the World Bank would
support the Moldovan road sector through an International Development Association
(IDA) credit. This was reflected in the Country Assistance Strategy (CAS) update of
October 2006. The Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) of
2004, adopted by the Moldovan Government and its development partners, also called for
the prevention of further degradation of the road network.
1.1.6 The Government first prepared a comprehensive Land Transport Infrastructure
Strategy (LTIS) for the period 2008-2017. The preparation was supported by a consultant
firm funded through a grant from the Government of Spain managed by the World Bank.
Bank staff provided technical support for the activity. The LTIS included a Strategy for
Road Infrastructure Recovery and a prioritized 10-year Road Sector Investment and
Expenditure Plan (together called the Road Sector Program). The Road Sector Program
addressed the underlying causes behind the road infrastructure degradation and proposed
a range of institutional and physical solutions. It constituted the framework for all actions,
investments and expenditures in the road sector from 2008 until 2017.
1.1.7 The Road Sector Program Support Project (RSPSP) was the first World Bank
supported operation in Moldova’s transport sector (Figure 1). At appraisal, it was the
second externally financed road project since the country’s independence. The first
project on road rehabilitation financed by the European Bank for Reconstruction and
Development (EBRD) was cancelled prematurely in 1998 because of contract
mismanagement by the Government. The combined funding of the World Bank’s
International Development Association (IDA), EBRD and the European Investment Bank
(EIB) for the second project amounted to US$48.7 million equivalent. The IDA
allocation was US$16 million.
1.1.8 The “Project” was defined as what IDA, EBRD and EIB as external funding
agencies would contribute to the Road Sector Program based on the LTIS; the subsequent
participation of the EU and the Millennium Challenge Corporation (MCC) in the Road
Sector Program was not certain at the time of project appraisal. The focus of the “Project”
was very much on supporting the overall road sector development program both in terms
of the physical investments and the institutional strengthening agenda. For this reason the
results framework included a combination of project level indicators and program level
indicators.
1.1.9 As Moldova’s International Monetary Fund (IMF) program included a
requirement for a certain percentage of grants or concessionary lending in all new
external loan packages, IDA participation was necessary to secure the EBRD and EIB
funding. Neither could have provided stand-alone loans. It also meant that the Bank was
going to work closely together with the other external partners during project preparation
and supervision. It was also envisioned that more grant funding could later come from the
EU and MCC.
1.1.10 At appraisal, the most urgent reforms in the road sector were: (i) the creation of a
reliable and stable financing mechanism for road maintenance, (ii) the reform of road
maintenance execution, and (iii) the introduction of an axle load control system to curb the
3
circulation of overloaded trucks. These reform measures formed the background for the
Institutional Support component in the project.
Figure 1: Road sector strategy, program and project
1.1 Original Project Development Objectives (PDO) and Key Indicators (as approved)
1.1.1 The Project Development Objective (PDO) was to reduce road transport costs for
road users in Moldova, by improving the condition and quality of its road network and
the way it is managed. Success in achieving the PDO was to be measured by the following
indicators: (i) comparing vehicle operating costs before and after on project roads; (ii) a
change in the percentage of roads in good, fair and poor condition for the program; and (iii)
a change in the value of road assets for the program.
1.2 Revised PDO (as approved by original approving authority) and Key Indicators,
and reasons/justification
1.2.1 The PDO or key indicators were not revised.
1.3 Main Beneficiaries
4
1.3.1 Road users, both individuals and truckers, were expected to be the main
beneficiaries. They were to benefit from reduced vehicle operating costs resulting from
physical road improvements, through the rehabilitation of roads and better road
maintenance. Rehabilitation works included in the project were designed to improve road
condition on sections having the greatest beneficial impact on road users. Better road
condition lowers vehicle operating costs through reduced fuel consumption and reduced
wear and tear on the vehicles. The project’s institutional development component aimed
at reforming maintenance practices and increasing maintenance funding so that the
rehabilitation benefits would be sustained and that road network degradation would be
reversed.
1.3.2 The State Road Administration (SRA) was to benefit from improved capacity to
manage and implement road investments. SRA had been languishing for years with
insufficient funding and with little knowledge of international procurement or road
management practices. The project was designed to address both problems through
specific interventions at policy, institutional and human resource levels.
1.4 Original Components
1.4.1 The project had two components. The first component focused on physical road
rehabilitation. The second component supported the implementation of various institutional
and other measures which were also included in the Action Plan of the Road Sector
Program. The components as originally envisaged are described in more detail below.
Component 1: Road Network Recovery (US$44 million equivalent, of which US$13
million to be financed from IDA credit)
1.4.2 Component 1 consisted of physical road works and related consulting and other
services, such as feasibility studies, detailed engineering designs, bidding document
preparation and works supervision. The physical works included localized repair, periodic
maintenance and light rehabilitation. Heavier rehabilitation could be involved on shorter
sub-sections of roads where the base course needed to be improved or replaced. The road
sections to be rehabilitated were located along the main North-South road corridor, between
Criva in the north, Balti, Săngerei, Orhei, Chisinau, Hinçesti and Comrat in the South.
They were among the country’s most trafficked and economically important road sections
so as to best contribute to the PDO.
1.4.3 Works would mostly consist of the application of a leveling course and a wearing
course of asphalt concrete, after carrying out localized repairs on the base course. Other
works included the re-establishment of adequate drainage and the improvement of
horizontal and vertical signage. Specific road safety features, such as guardrails and traffic
calming measures, were to be included where appropriate and cost-effective. The cost for a
two-lane road was expected to be MDL2-3 million (US$150-220k) per km for works,
excluding design and supervision costs. It was envisaged that the project could include some
short, badly deteriorated road sections where unit rehabilitation costs could be significantly
higher. For that reason, and also because some road sections have four and six lanes, the
5
total length of roads to be rehabilitated under the project was expected to be between 160
and 200 km.
Component 2: Institutional Support (US$4.7 million equivalent, of which US$3 million
to be financed from IDA credit)
1.4.4 This component aimed at strengthening the Government’s capacity to manage and
maintain the national road network. It was expected to support the Government in
implementing the institutional, legal and other measures included in the Transport Sector
Strategy Action Plan. The most important activities were envisaged to be: (i) the creation of
a reliable financing mechanism for road maintenance; (ii) a review of road maintenance
practices; (iii) strengthening of SRA’s capacity to efficiently manage road maintenance and
investments; and (iv) introduction of a system to curb the circulation of overloaded trucks.
Other activities were to be included depending on the available resources. Specialized local
and foreign consultants (technical, institutional and legal) were expected to help implement
the activities and required training. Some related equipment could also be procured.
1.5 Revised Components
1.5.1 Component 1 (Road Network Recovery): The IDA contribution to Component
1 was canceled during project restructuring in December 18, 2009 due to mis-
procurement. Of the related IDA credit, US$11 million was cancelled, representing 69
percent of the original total credit. Although US$13 million of IDA had originally been
allocated to Component 1, representing the initial cost estimate of the civil works, the
lowest-cost bids came in below that, at US$11 million. Under the restructured project,
IDA did not fund any civil works. Despite the IDA credit cancellation, EBRD and EIB
continued financing Component 1, including the road sections which were originally
planned for IDA financing. The delays from this process resulted in the majority of the
EBRD and EIB works finishing after the formal close of the Bank project. With
management approval it was agreed to delay the Implementation Completion Report
(ICR) until two years after the formal closing of the project.
1.5.2 Component 2 (Institutional Support): After project restructuring, US$2 million
of IDA credit, which was left in Component 1 after cancellation of US$11 million, was
reallocated to Component 2. A more detailed agreement was reached with the State Road
Administration on the use of the remaining IDA funds of about US$5 million to include:
Support to the design and implementation of an axle load control system;
Support to the reform of road maintenance execution, including road asset
valuation;
Technical and financial audits;
Support by local consultants to SRA in the areas of procurement, environment
and financial management;
Training activities;
Design and feasibility studies future for road rehabilitation;
Other activities supporting transport sector reform.
6
1.6 Other significant changes
1.6.1 Declaration of mis-procurement in December 18, 2009 was the most consequential
setback during project implementation. A joint bidding process for the three road contracts
in Component 1 (to be funded in parallel by IDA, EBRD and EIB) was launched in
February 2008. SRA’s bid evaluation committee adequately evaluated the bids and
recommended the award of two lots to one firm and one lot to another firm. However, the
high-level Road Sector Steering Committee countered the recommendation by saying that
the price of one of the recommended firm’s was too low and that at least one lot should go
to another bidder whose bid was twice as high.
1.6.2 There were clear indications that the recommendation by the Steering Committee
was motivated by instructions from the highest political level. The Bank team refused to
change the recommendation but agreed to negotiate with the Government on increasing the
bid security for the recommended bidder.
1.6.3 The Bank declared mis-procurement and cancelled the corresponding part of the
IDA credit (US$11 million) in December 18, 2009, after several unsuccessful attempts by
the Bank (through visits and letters by Europe and Central Asia Region (ECA) senior
management) to convince the Government to award the contracts in line with the Bank’s
procurement procedures. Through this process EBRD also cancelled €12.5 million from its
loan.
1.6.4 Before mis-procurement surfaced, total amount of funding available for the project
had increased since appraisal. EBRD and EIB had decided to provide larger loans for the
road sector than planned (Table 1). The IDA proportion of total funding ended up being
much smaller than originally intended.
Table 1: Project financing plan after restructuring
IDA Credit
(US$)
EBRD Loan
(EUR)
EIB Loan
(EUR)
Total 2
(US$ Equivalent)
Originally planned
amount
US$ 16.0 € 12.5 € 12.5 US$ 48.7
Actual Amount1 US$ 16.0 € 30.0 € 30.0 US$ 90.0
Cancelled Amount US$ 11.0 € 12.5 US$ 27.4
Remaining Amount US$ 5.0 € 17.5 € 30.0 US$ 62.6 1 Both EBRD and EIB Loans were made in two tranches of EUR12.5 and EUR17.5 million 2 Exchange rate: EUR 1.00 = US$ 1.308 (as used in PAD)
2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry
2.1.1 The project’s Quality at Entry is considered satisfactory. An important lesson
which was incorporated in the design was to not have a separate Project Implementation
Unit (PIU). In this project, implementation arrangements relied on the existing State
7
Road Administration. The aim was to make a lasting impact on project implementation
capacity as the same staff within SRA was to handle both internally and externally
financed contracts.
2.1.2 The Anti-Corruption Action Plan (ACAP) for the project was built in part on the
lessons learned from the cancelled EBRD road project in 1998. The risk of public sector
corruption during procurement was assessed as being high in the PAD, especially with
the expected large increase in road spending which would result from the project. The
ACAP design was adequate even when assessed in light of the mis-procurement that
occurred during project implementation. The strong controls in place did not eventually
prevent the political interference from occurring but were instrumental in staving off the
corruption attempt. A “system failure” was not to blame, but rather a single case of high-
level political interference.
2.1.3 The physical component design can be considered adequate. The physical works
component was intended to provide much needed funding for road rehabilitation. It was
targeted at roads whose basic structure was intact and which could be rehabilitated at a
relatively low cost. Select safety, drainage and signage improvements were also to be
made during rehabilitation. The selected road works were located on the most important
corridors in terms of traffic and economic importance. With relatively little Bank funding,
the component was designed to maximize its positive impact on road users. A Project
Preparation Facility (PPF) was used to fund feasibility studies, engineering designs, and
environmental and social studies for the road sections to be rehabilitated under the
project; international consulting firms were hired for this purpose. Road designs and
bidding documents were ready by the time of project effectiveness.
2.1.4 The institutional component was also designed adequately with an aim to address
the key sector issues through developing the needed capacity and preparing a project
pipeline for the external partners. The main objective was to strengthen the Government’s
capacity to manage and maintain the national roads network and project design was
highly satisfactory in this regard. The one weakness in project design was with the
results framework which contained a number of indicators at the program level which
were difficult to attribute to this project. There were also a number of intermediate level
indicators where the targets could have been better defined and more measurable.
2.2 Implementation
2.2.1 The Bank’s coordinating activities contributed to successful implementation of
the project, notwithstanding the implementation problems caused by mis-procurement
(see 1.7). The Bank was able to bring about efficiencies in the preparation and
supervision of the investments related to the Road Sector Program in leading the policy
and institutional reform dialog with the Government on behalf of all the IFIs and donors.
All external partners subscribed to the Road Sector Program as a basis for their
investments, agreed on shared reform goals for the Government and participated in joint
supervision missions.
8
2.2.2 During the events leading to mis-procurement, SRA showed its reliability as a
project implementation agency by bringing the political interference to the World Bank’s
and other partners’ attention. Due to this and the progress made on the institutional
component, the Bank and its partners were confident that project implementation could
continue with SRA despite the partial credit/loan cancellations.
2.2.3 However, to minimize the risk of further political intervention, EBRD and EIB
did not start funding the cancelled sections until the political leadership suspected of
interference changed two years after the declaration of mis-procurement. No changes
were made to the anti-corruption guidelines or procedures which had worked as planned
alerting stakeholders to the political interference.
2.2.4 For the civil works that were eventually funded the amount of work required to
bring the roads to good condition was significantly greater than anticipated at appraisal.
The original engineering solution was the application of a leveling course and a wearing
course of asphalt concrete, after carrying out localized repairs on the base course. However,
following more detailed surveys it was clear that in many cases full rehabilitation or
reconstruction would be required to provide a long term solution. In addition, there were a
number of bridges that underwent full reconstruction. The additional scope of work
significantly increased costs, the length of time to complete the works and consequently
reduced the length of road that could be improved.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
2.3.1 It was decided during project preparation that results would be measured not only
for the small Bank-financed project activities, but also for the wider program benefiting
from the funding from EBRD and EIB. Project scope therefore went beyond IDA’s share
of the total project cost, which amounted to $48.7 million from all three entities. This
followed from the Bank’s objective of designing a sector-wide approach for reform and
using its project as leverage for a sector-wide impact.
2.3.2 Three physical indicators on vehicle operating costs, road condition and road asset
value, were selected for the Project Development Objective. They were meant to be
compared before the project in 2007 and after the project in 2011. No interim data was to
be recorded. In addition to the PDO indicators, eight intermediate outcome indicators
were included in the original project design to measure the quantity and quality of road
maintenance and investments. These indicators have remained the same through the
project and were not changed during the restructuring. Separately, a WB core indicator
measuring the length of non-rural road rehabilitation was added in 2010 as part of
mandatory retrofitting of monitoring.
2.3.3 SRA was responsible for project monitoring with support from technical auditors
and the World Bank. SRA was deemed to have the capacity using its existing data
collection and analytical tools to carry out the ex-post economic evaluation and road
condition surveys required for PDO monitoring. Intermediate outcome indicators were to
be monitored using reports and data provided by SRA together with technical auditors.
9
2.3.4 The results could have also been measured during construction against set annual
targets. That would have informed the Bank and the partners involved on progress made
and helped determine the likelihood of achieving the intended results. The indicator on
road asset valuation could have been based on one agreed methodology. In this case, the
baseline was measured using one methodology, whereas the end value was to be recorded
with a new methodology devised by consultants. The team could have taken advantage of
the project restructuring to formally revise that indicator. A road safety indicator could
also have been considered since Component 1 incorporated specific road safety features3.
Road safety later became a government priority with a Road Safety Summit organized in
May 2011.
2.3.5 None of the PDO indicators was changed during project restructuring in 2009,
although IDA’s funding for any civil works was completely removed. Project
performance would therefore be assessed on the basis of works funded by the other
external partners as part of the wider road sector program. Not even the increase in
project resources was deemed sufficient to change the physical road rehabilitation targets.
The Restructuring Paper explained that more funding was needed to deliver the original
rehabilitation works to offset the significant road construction cost increases and the
continuing road deterioration after 2007.
2.3.6 The decision to leave the PDO indicators unchanged is understandable due to the
close cooperation with the other external partners and their commitment to complete the
original works as defined in the PAD. That said, it is surprising that the quantitative
targets for 2011 were not changed despite a foreseeable, nearly two-year delay caused
largely by the mis-procurement.
2.3.7 The intermediate outcome indicators can be deemed adequate in scope but
inadequate in measuring gradual progress. Only one of the indicators, the quantity
available for road maintenance, was quantitative while all the other indicators were
qualitative, or “yes/no”, which makes it difficult to assess how much progress had been
made from a “no” to a “yes”.
2.3.8 The restructuring paper could have explicitly stated that the cancelled IDA
sections would be implemented, albeit with a delay, with funding from EBRD and EIB
and that they would be responsible for supervision and monitoring of the road works on
those sections. Explaining that all the planned rehabilitation works would eventually be
completed would have also provided another reason not to change the physical PDO
indicators during restructuring.
2.4 Safeguard and Fiduciary Compliance
3 Specific road safety features such as installation of guardrails and traffic calming measures in villages along the road
were to be included where appropriate and cost-effective,
10
2.4.1 In accordance with World Bank safeguard policies, the safeguard screening
category of the project was SF, while the environmental category was assessed as B. All
environmental and social safeguards were handled satisfactorily, and all fiduciary
requirements were met during the project. A Sector Environmental Assessment (SEA)
and a Social Assessment were carried out. All project civil works were to be
implemented within the existing right-of-way on all road sections without any need for
land or asset acquisition.
2.4.2 Three Environmental Management Plans (EMPs) were prepared for the road
segments to be rehabilitated. As per WB requirements, they were publicly disclosed and
consultations were arranged with interested parties. After the World Bank’s participation
in physical road works was cancelled, no environmental supervision of civil works by
WB staff was finally carried out. However, EBRD and EIB environmental specialists
continued to cover environmental safeguards for their respective road sections. Also, the
EMPs prepared for the original IDA sections were still used when EIB and EBRD
decided to substitute their funding for IDA’s.
2.4.3 The environmental protection standards for national roads construction were
revised with support from a WB Safeguards Specialist. A new environmental handbook
for roads was prepared in coordination with the Ministry of Environment. Public
awareness materials were distributed about the revised standards and guidance.
Throughout the TA activities, a local environmental consultant funded from the IDA
credit supported SRA on the basis of declining time contribution; this included training of
newly recruited staff who are now able to handle the environmental aspects of road
projects.
2.4.4 After the mis-procurement, procurement consisted only in consulting services.
The associated bidding processes were transparent and fair, and all procurement activities
were carried out in accordance with World Bank guidelines.
2.4.5 Using country systems for financial management created some problems from the
beginning. For example, payments through the Treasury were initially processed slowly.
All problems were eventually overcome during project implementation resulting in
efficient disbursement of the revised IDA credit funds (99.8%). SRA project
implementation capacity was strengthened through training and with help from a
financial management consultant.
2.4.6 SRA submitted quarterly Financial Management (FM) reports following the
required WB format. The Bank’s FM staff always found the reports acceptable. The
project and SRA financial statements were audited annually by independent audit firm
selected on competitive and eligibility basis. The audit reports were submitted initially
with significant delays (up to five-six months) and this resulted in downgrading the
project FM rating to moderately satisfactory. The delays were later fixed with all audit
reports being submitted on time. This allowed upgrading the FM rating.
11
2.4.7 Each project account audit report contained an unqualified audit opinion, whereas
SRA entity audits revealed a series of internal control weaknesses. The audit opinion was
therefore undermined by issues related to road asset values, such as: (i) possession of
assets (roads) in operational management without adequate supporting documentation
confirming their historic value, and (ii) a lack of assessment methodology for recoverable
road asset values. Several measures were taken to address the auditors' concerns (for
instance, road asset valuation).
2.4.8 At project closing, disbursement stood at US$4,963,341 or 99.9 percent of the
revised amount of US$4,970,000 (or 31.0 percent against the original credit of
US$16,000,000). The undisbursed amount of US$6,658.97 was cancelled on October 31,
2011.
2.5 Post-completion Operation/Next Phase
2.5.1 Although the Bank’s contribution to the Road Sector Program Support Project
was closed on June 30, 2011, the project implementation continues under financial
support of EBRD and EIB. They have also re-tendered and are funding the IDA and
EBRD contracts which were cancelled during the mis-procurement proceedings. All the
main works were substantially4 completed in 2013, which is also the new end year for the
PDO indicators of this project. MCC and the European Commission are funding other
parts of the Program. The total amount of additional external funding mobilized for
Moldova’s road sector is US$460 million, while the IDA portion was only US$5 million.
2.5.2 Despite the small size of the World Bank’s (IDA) financial involvement, the other
external partners agreed that the Bank play the role of a lead donor and coordinator. In
2011, after the closure of the WB involvement in the Road Sector Program, MCC
accepted to play that role. MCC has committed US$133 million of additional resources to
Moldova’s road sector. The transition has proceeded smoothly, with continuing World
Bank support to MCC in the various coordination activities, from reporting to
communications with the client. The other external partners also continue to support the
Road Sector Program started with the Bank project. Their continued commitment helps
solidify development gains in a sector of massive investment needs.
2.5.3 The other external partners are also committed to the original World Bank goal of
strengthening institutional capacity. They share the Bank’s interest of raising and
securing maintenance funding for the road sector and are continuing the work on
reforming the Government’s maintenance management practices. This is important as
some of the intended reforms are yet to be completed and generally take years to fully
materialize.
2.5.4 After the closing of the WB involvement in the Road Sector Program, the Bank
secured a grant of US$1.3 million from the Trade and Transport Facilitation Trust Fund
4 For one contract the main works on the carriageway have been completed but there are some secondary
works still underway.
12
(TTFST). The grant was managed by the Bank and helped the Government in developing
a new Transport and Logistics Strategy for the country for the period 2012-2022. That
strategy was approved in July 2013 and now forms the basis for the framework of reform
that the joint partner group is pursuing with the government. The Bank is presently
planning a follow-up project in the road sector as reflected in the current Country
Partnership Strategy (CPS) for the period 2014-2017, taking into account Government
interest in continued World Bank involvement in the transport sector.
3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation
3.1.1 The project objectives, design and implementation remain highly relevant to
country needs and the Government’s current objectives for the transport sector. The
project was designed to tackle the serious deterioration of the road network, a costly
problem which continues to affect Moldova’s economy as a whole and the country’s
exports in particular. The project offered a solution to both problems through road
rehabilitation and reform of maintenance funding and management.
3.1.2 The project also reflects the Bank’s and other donors’ current country assistance
strategies for Moldova. Improving management of the road network falls under Pillar 1,
Improving Economic Competitiveness, in the Bank’s Country Assistance Strategy for
2009-2012. EBRD has highlighted support for road infrastructure as a key objective in its
Strategy for Moldova 2010-2013. Improvement of transport infrastructure remains a
major objective also for EIB in its activities in Moldova.
3.1.3 The project was designed as a programmatic approach where the project,
including finance from EBRD and EIB, was contributing to a broader government road
development program. The design included indicators that related to both project and
program level indicators. In some cases the program level indicators went beyond what
could be attributable to the project particularly after the restructuring. That said there is
no doubt that this project had a substantial impact on the government program both in
terms of its investment program and reform agenda.
3.2 Achievement of Project Development Objectives
3.2.1 The Project Development Objective (PDO) was to reduce road transport costs for
road users in Moldova, by improving the condition and quality of its road network and
the way it is managed. Implementation success was to be measured by the following PDO
level indicators: (i) comparing vehicle operating costs before and after on project roads; (ii)
a change in the percentage of roads in good, fair and poor condition for the program; and
(iii) a change in the value of road assets for the program.
3.2.2 All PDO and intermediate indicator targets have been met or partially met. The
change in Vehicle Operating Costs has been evaluated on the road section which had
been rehabilitated by May 2011. On that section, the end target of 6% lower Vehicle
Operating Costs has been exceeded (reduction of 11 percent compared to the pre-project
13
VOC). The story on the condition of the road network is more complicated in part
because of differences in the ways that road condition has been measured over time. The
latest figures suggest that 29% of the network is in good or fair condition compared to
32.4% at appraisal. However, the latest figures also include a third category, not included
originally, that includes 51% of roads. It seems reasonable that at least some of these
roads would have been included in the fair category in the original formulation. These
latest figures are from 2012 and the consultant at the time estimated that the road
condition in the country had at least stabilized following many years of declining
condition. Given the large on-going rehabilitation program and increased maintenance
finance the trend is towards steadily improving road condition. As such this indicator can
be judged to be partially met. The value of road assets has been judged to have increased
since project launch, as confirmed by an external consultant. The higher road asset value
reflecting the increased investment and maintenance funding in the sector in recent years.
3.2.3 The separately added core indicator for the length of road rehabilitated was not
met. The original target was for between 160-200km of road rehabilitated or about 400
lane-kms. To 2013 works have been completed for 87 km or 297 lane-km using EIB and
EBRD funding. The lower than expected length of road improved was because of the
greater scope of engineering interventions than anticipated at appraisal.
3.2.4 Under Institutional Support Component, the World Bank supported the
Government in: (i) putting together a coherent Road Sector Program, including a Road
Sector Strategy and a prioritized Road Sector Investment plan, (ii) defining and
implementing road sector reforms, (iii) setting up implementation arrangements for
externally funded road projects, and (iv) bringing in EBRD, EIB, MCC and EC to fund
the Road Sector Program.
3.2.5 The level of maintenance funding had been grossly inadequate until the project
started. Increasing the funds was a condition for road sector funding from the World
Bank and the other external partners. The Government committed to increasing the funds
available by approving the Land Transport Infrastructure Strategy on February 1, 2008.
The enactment of the new Road Fund Law in December 2009 was a practical milestone
in increasing maintenance funding. It included a commitment to allocating no less than
50, 65 and 80 percent of fuel excise tax revenue, in budget years 2010, 2011 and 2012,
respectively, to the Road Fund for road maintenance.
3.2.6 The Government complied with the amended Road Law in 2010 and allocated 50
percent of the fuel excise tax revenue to the Road Fund, which was also a “Condition
Precedent” in the Compact with the MCC. The 65 and 80 percent targets for 2011 and
2012 are reached as well. The encouraging results achieved can be attributed to the
project and the Bank’s coordinating role behind the external partners’ shared push for
reform of maintenance funding and execution (Table 2).
Table 2: Road maintenance funding 2007-2011
14
US$ mln 2007 2008 2009 2010 2011 2012 2013
Actual 14 18 21 53 65 80 100
Project Target - 16 18 20 - - *Estimates from Minutes of IFI Visit July 2011 and December 2013; Source for 2007-2010: Implementation Status
Reports
3.2.7 The introduction of an axle load control system has been successful in reducing
truck overloading. Thirteen mobile axle load weighting platforms, procured under State
budget, are currently operating across the country. The Ministry is planning to expand the
system in 2014 with a purchase of 13 new systems and by increasing monitoring to 24
hours with three shifts in place. The project aimed to have it operational by June 2011,
yet it was launched already in mid-2009. To better control for corruption risk, some
technical improvements were subsequently made to the system based on
recommendations from the IDA-funded consultant.
3.2.8 The main improvement was the installation on the mobile units of 26 cameras,
which stream live picture to a new operational control center in Chisinau. The results
have been positive (Table 3). The number of trucks weighted has been rising, while the
percentage of overloaded trucks has fallen from 31 to 9 percent over 2009-2011. The
fewer overloaded trucks in circulation, the less road deterioration will take place. In the
future, it will be easy for the Government to expand a system which fully finances itself
from the amount of fines collected.
Table 3: Results from axle load control system
2009 2010 2011
Number of load control units 10 10 13
Number of weighted trucks 6,156 17,349 24,596
Number of overloaded truck 1,880 2,691 2,175
Percentage of overloaded/weighted 31% 16% 9%
Amount of fines collected (MDL) 3,715,471 4,058,134 2,478,882 Source: SRA
3.2.9 The activities under the institutional component were expanded during project
restructuring and were fully completed by the closing date of June 2011. In particular, the
large consultant assignment for building a pipeline of new road investment projects was
delivered according to expectations. It included feasibility, design, environmental and
social studies for 650 km of priority road sections. Studies on road maintenance reforms
have also been completed. The most important concrete reform action resulting from the
studies is the consolidation of the existing 39 road maintenance companies into only 12
companies (now ongoing). Another outcome was the need to update the Road Fund
legislation; this has also been achieved by now.
15
3.2.10 The IDA credit also funded technical assistance to the State Road Administration
in the areas of Financial Management, Procurement and Environmental Safeguards. The
Government’s Treasury department is applying the financial controls introduced to this
project to other externally funded projects. SRA has started using supervision engineers
on internally funded contracts.
3.2.11 The result of the various technical assistance activities was improved capacity of
SRA in managing road investment projects, as envisaged in the Project Development
Objective. Other ministries are also taking notice and they are trying to use the same
model of using line agencies to implement externally funded projects.
3.2.12 The decision to not establish a PIU and instead use the State Road Administration
to manage project implementation has been conducive to long-term capacity and
institutional development. For example, having followed International Financial
Institution (IFI) contract monitoring requirements, SRA is starting to use supervision
engineers also in its internally funded projects. SRA staff received training in
environmental and social safeguards, procurement and financial management with lasting
benefits to their professional skills and to the capacity of the SRA as an institution.
3.3 Efficiency
3.3.1 The original Component 1, Road Network Recovery, included physical road
works and related engineering and consulting services amounting to US$44 million. The
total length of the roads planned for rehabilitation was 160-200 km, or up to 400 lane-km.
During project preparation, economic analyses were carried out for 400 km of main and
secondary roads which were candidates for inclusion into Component 1; they were used
to select the road sections that were actually included in the project. The cost-benefit
analysis resulted in a positive net present value (NPV) of US$177 million for all sections
combined, using a 12 percent discount rate and 2005 values.
3.3.2 The original economic analysis for Component 1 was carried out during appraisal
and is reflected in the PAD. The ex-post economic analysis can be found in Annex 3. To
summarize there was a total of 6 completed road sections that were analyzed, with a
length of 87 km’s (297 lane km’s) and total construction costs of US$ 67 million. As with
appraisal and HDM-4 analysis was undertaken to determine the economic viability
following construction. For the overall project the Economic Rate of Return (ERR) was
25.5% and an NPV of US$ 106.4 million. All road links comfortably exceeded the hurdle
rate of 12%.
3.3.3 All development targets of the Institutional Support Component were met. Under
this component the Bank disbursed approximately US$5 million for capacity building,
various technical assistance activities and the axle load control system. The WB-led
reform dialogue and the coordination efforts led by the Bank through this component
reassured the external partners that their planned road sector investments would be
implemented within a more robust institutional framework.
16
3.3.4 The declaration of mis-procurement of two civil works contracts (one to be
funded by IDA and the other by EBRD) reduced the efficiency of project activities. The
time and effort that went into preparing the tender for the mis-procured road sections
were lost. The cancellation of US$11 million of IDA credit funds and of €12.5 million of
EBRD loan funds under the first component deprived the client of the potential benefits
associated with the planned road rehabilitation works. The cancelled IDA amount also
had an opportunity cost of not being able to fund another project. Although EIB and
EBRD were willing to continue funding road works in Moldova, including the cancelled
sections, the whole road sector rehabilitation program was delayed by two years due to
the mis-procurement case.
3.3.5 After restructuring, relatively few Bank inputs leveraged a number of physical
outputs, mostly funded by other development partners. The concessional nature of IDA
funding enabled funding from EBRD and EIB. Without the Bank project, the two
institutions would have not been able to start their projects, not at least until the IMF’s
concessionality condition would have been fulfilled by IDA or some other institution.
MCC benefited from the feasibility studies funded with IDA funds. Had it not been for
the Bank project, MCC could have still entered the road sector but probably not as
quickly or in the same scale. EU contributions were facilitated by the road sector strategy,
project pipeline and improved SRA capacity to absorb funds resulting from the WB
project. EU did not rely on the Bank for its activities but was able to build on the existing
WB project. The external partners in the road sector have so far committed a total of
US$460 million in road sector funding, in addition to the US$5 million provided by IDA
(Figure 2).
Figure 2: Amount of funding mobilized from external partners during project
implementation (US$ mln)
EBRD second
loan, 101
EIB second
loan, 101
EC grants, 62
MCC grants,
133
IDA, 5
EBRD, 23
EIB, 39
RSPSP, 67
17
3.3.6 Close cooperation between the Bank and the external partners also contributed to
efficient project implementation. The Bank led the cooperation and was asked by the
external partners to lead the reform dialogue with the Government. All external partners
in the road sector were speaking to the Government with one voice and shared goals for
capacity building and road sector reform. The World Bank led joint missions twice a year,
including staff from EBRD, EIB, MCC and EC. No preparatory or consulting work was
duplicated. On the contrary, all external partners and the Government had a shared road
sector vision borne out of the Land Transport Infrastructure Strategy (LTIS) and linked
their loan conditions to reform targets expressed in the LTIS. That the Bank took on the
coordinator responsibility required little extra funding, but played a decisive role in
launching a comprehensive, long-term, multi-donor involvement in the road sector.
3.4 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
3.4.1 The project remains highly relevant to sector needs and achieved considerable
impact with great efficiency under the Institutional Support Component. The Bank’s
success in leveraging support from external partners exceeded expectations. There is now
a significant on-going road rehabilitation program financed by multiple external partners
and implemented by a considerably strengthened SRA. The government is now fully
meeting its commitments to the road fund which now stands at five times the level
envisaged under the original project. There has also been reform of the road maintenance
industry through consolidation of the numerous state owned maintenance companies. The
circumstances leading to the cancellation of IDA support for the Road Network Recovery
Component, as described earlier, prevent the overall outcome from being highly
satisfactory. The resulting delays in road works have also postponed the achievement of
the PDOs. However, all PDO indicators were either met or partially met by the end of
2013 according to a revised construction schedule.
3.5 Overarching Themes, Other Outcomes and Impacts
(if any, where not previously covered or to amplify discussion above) (a) Poverty Impacts, Gender Aspects, and Social Development
Not applicable.
(b) Institutional Change/Strengthening
(particularly with reference to impacts on longer-term capacity and institutional development)
Refer to 3.2 for details on institutional change/strengthening.
(c) Other Unintended Outcomes and Impacts (positive or negative)
The handling of the mis-procurement case initially appeared to diminish the risk of
corruption in IFI and donor funded road projects as an unintended positive outcome. That
the IFIs did not budge from their refusal to allow political interference and insisted on
“absolutely clean” procurement was a clear message. The cancellation of parts of the IDA
credit and EBRD loan signaled that political interference will be detected and repelled.
18
However, procurement issues on the EBRD-financed M3 section among others suggest
that the risk of political interference has not completely diminished. The IFIs therefore
have to continue careful procurement monitoring with adequate anti-corruption measures.
4. Assessment of Risk to Development Outcome Rating: Low
4.1.1 The project succeeded in generating reform momentum which is now being
sustained by not only the Government but also the external partners. The institutional
component has already produced good results with all related outcome indicators having
been achieved. The Government has implemented all the required reform measures since
project beginning and stays committed to reform, which is also a condition of continued
disbursement of remaining IFI funds.
4.1.2 Risks exist to the achieved institutional outcomes, but they can be considered low.
It is possible, although unlikely, that the reform process is halted or reversed if the
political situation changes or if new priorities are set for the road sector. If agreed
mechanisms for the allocations of funds for road maintenance are not applied, the
disbursement of funds from external partners would be affected or stopped. The various
loan agreements include pre-defined road maintenance allocations among the covenants.
However, road maintenance allocations are now less vulnerable to politics because of the
new Road Fund legislation of December 2009 which established clear allocation
mechanisms.
4.1.3 The new Road Fund Law included a commitment to allocating no less than 50, 65
and 80 percent of fuel excise tax revenue, in budget years 2010, 2011 and 2012,
respectively, to the Road Fund for road maintenance. The Government complied with the
amended Road Law in 2010 and allocated 50 percent of the fuel excise tax revenue to the
Road Fund, which was also a “Condition Precedent” in the Compact with the MCC. The
65 and 80 percent targets for 2011 and 2012 are reached as well, which reduces the risk
of the Government not increasing maintenance spending.
4.1.4 Further risks stem from the possible departure of key staff at SRA, which could
diminish the agency’s capacity and its commitment to reform. The local staff of SRA
who have been involved in the preparation and implementation of externally funded
projects have gained useful skills and experience, which could be of value outside SRA
or even in other countries. If many of them leave in search of other, better-paid
opportunities, their expertise will cease to benefit SRA. Of course, if they move to the
private sector and stay in the country, their skills could still continue to benefit the road
sector.
4.1.5 Disbursement risk is real in a country where local industry capacity for road
construction is weak. Local contractors lack equipment, staff and knowledge of FIDIC
contracting standards and may not be able to deliver construction works on agreed
schedule. These reasons may create further delays to funds disbursement and thereby
19
postpone the achievement of intended development outcomes. In fact, SRA signed five
construction contracts in 2011, which are being implemented with significant delays.
4.1.6 Another source of risk was the discontinuation of a formal Bank role in the
support of the Road Sector Program. Until the end of the Bank’s involvement in mid-
2011, the Bank had led the dialogue and reform efforts on behalf of all external partners
in the road sector. The Bank has now passed on the coordinating role to the MCC who
are doing an excellent job in taking forward the reform agenda. However it remains to be
seen if MCC can fulfill this role in the longer term, especially since the MCC’s compact
with the Government will expire in 2013. However, this risk is also considered to be low
as the other external partners share the Bank’s and the Government’s aims and it is likely
that the Bank will again have a project in support of the Road Sector Program.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory
5.1.1 The Bank’s performance in ensuring quality at entry was satisfactory. Project
design was highly relevant to the country needs combining urgently needed investments
with institutional reforms required to sustain them. The Bank team patiently explained
the rationale of the project to each new transport minister during preparation. The Bank
team tried to ensure that the proposed rehabilitation works were justified and
economically sound and fit into a wider transport sector strategy, which the Bank helped
prepare through the mobilization of grant funding and direct technical support. The
Institutional Support Component as defined by the Bank’s staff addressed the most
pressing weaknesses in road maintenance management. The two components reinforced
each other in generating reform momentum, which increased the likelihood of achieving
the development outcomes.
5.1.2 The Bank team’s input during project preparation also ensured that
implementation arrangements were sound and also innovative in avoiding the creation of
a PIU. Project implementation through the State Road Administration ensured a more
lasting development impact despite the more intensive up-front support and training
required. The government was actively consulted throughout project design and
preparation, which helped create strong ownership and trust. Preparation pace was also
brisk. It took only seven months from the start of formal project preparation to Board
approval. With hindsight, neither the client nor the external partners said that they would
have designed any aspects of the project differently.
20
(b) Quality of Supervision
Rating: Moderately Satisfactory
5.1.3 The Bank’s supervision performance was satisfactory. The client appreciated the
Bank always providing prompt and professional responses to all queries. The
arrangement of having just one point of contact on the team, the TTL, was considered an
efficient means of communication. The Bank effectively led the reform dialogue with the
Government and coordinated this effort with other IFIs, including joint missions every
six months. The Bank performed this role successfully according to both external
partners and the client. They saw the Bank team as possessing unique sector knowledge
and a strategic vision, which it was communicating effectively with the other
stakeholders.
5.1.4 The Bank’s proactive role in maintaining the reform momentum helped leverage
funding from the partners, which had included specific reform measures, such as
maintenance spending requirements, as loan and grant conditions. It is also worth noting
that it was the Bank team which brought the IMF on-board over the establishment of a
road fund and the associated funds earmarking.
5.1.5 The Bank team’s supervision performance was commendable even when
problems surfaced with procurement of the first rehabilitation contract. As soon as
politically motivated interference emerged, the team emphasized that the Bank’s
procurement guidelines must be followed. No valid reason existed to overturn the bid
evaluation committee’s recommendation. There were no major shortcomings in the
Bank’s handling of the situation. The Bank did its utmost in trying to protect the integrity
of the procurement process.
5.1.6 The one short-coming of supervision was that during restructuring, the projects
indicators were not changed to better reflect the current situation on the ground. For this
reason the equality of supervision is judged to be overall moderately satisfactory.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
5.1.7 Overall Bank performance in this project can be considered as moderately
satisfactory. All interviewees (from EBRD, MCC, EC, SRA and MTRI) were satisfied
the Bank team’s performance from preparation through supervision to closure. The
difficult circumstances surrounding mis-procurement did not greatly diminish the
positive perception. That the project survived the setback, albeit with a revised funding
structure, is testament to the good work which was already on-going on other project-
related aspects. The one short-coming related to the restructuring process where changing
the indicators would have been prudent.
21
5.2 Borrower Performance
(a) Government Performance
Rating: Unsatisfactory
5.2.1 The Government’s major shortcoming was its role behind the perceived political
interference into the bidding process for road rehabilitation works. The interference
materialized through the attempt to disqualify the firm to which the bid evaluation
committee had proposed the award of two contracts. The political instruction was to
award one contract to a firm that had given a considerably higher bid price. Although
denied by forceful opposition from the IFIs, the interference attempt caused a declaration
of mis-procurement and the cancellation of portions of the IDA credit and the EBRD loan.
It also delayed the planned road works by almost two years and jeopardized the timely
achievement of Project Development Objectives.
5.2.2 Otherwise the Government met its loan covenants and other obligations
satisfactorily. It changed the Road Fund Law, increased road maintenance funding as per
requirements of the new legislation, introduced the axle load control system and provided
all tax exemptions and permits for road works as requested. The politicians suspected of
involvement in the interference are no longer in power. However, the satisfactory
Government efforts on most project obligations were greatly overshadowed by the severe
rupture in project implementation caused by the partial credit/loan cancellations.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
5.2.3 The implementing agency’s performance was satisfactory overall. Members of the
World Bank and external partner teams as well Ministry of Transport and Finance
officials were satisfied with the implementing agency, SRA, and did not flag any major
shortcomings. What prevents the rating from being highly satisfactory is that SRA’s
performance in some areas, such as procurement, financial management and safeguards,
was initially slow and required capacity development at the beginning of project
implementation. This resulted from the conscious decision to not have a separate PIU but
rather leverage and develop SRA’s own resources for IFI-funded project implementation.
During the mis-procurement incident, SRA staff courageously maintained its professional
integrity despite heavy political pressure. SRA deserves much credit for trying to uphold
the integrity of the procurement process in the difficult circumstances where some of its
staff were threatened with job termination and even imprisonment.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
5.2.4 The combined rating is moderately satisfactory. The implementing agency ratings
are satisfactory while the government rating is unsatisfactory. It is worth noting that in
22
this project the implementing agency’s good performance saved the whole project from
being cancelled. If it had failed to cooperate with the Bank during the restructuring, it
would have been more difficult to retain the Institutional Support Component after the
Bank decided to cancel its involvement in the Road Network Recovery Component.
6. Lessons Learned
6.1 More resolute, up-front action could have been taken to counter the political
interference which led to mis-procurement. By agreeing to negotiate with the
Government on increasing the bid security for the recommended bidder, the Bank and
partner IFIs may have inadvertently left the impression that the Government can get away
with its unwarranted demands. It could have been better to stand up against political
interference without negotiations or meetings, and with clear deadlines for contract award.
6.2 Relatively modest investment funding can be used to leverage other external
resources with a programmatic approach. That the World Bank committed its funding
first was pivotal. EBRD and EIB funding could not be raised without some amount of
concessional financing provided by IDA credit. The Bank team also supported the
development of a long-term road sector investment strategy and solid implementation
arrangements, which provided a foundation for the external partners to select the road
sector for their investments.
6.3 Coordination with development agencies can make operations more efficient
and have a greater development impact. This project formalized cooperation among
the IFIs. During project preparation, the PAD was partly written by EBRD and EIB staff,
who also used much of the World Bank’s PAD text for their own project documentation.
As the first mover in the sector, the Bank took the lead in organizing joint preparation
and supervision missions and communicating shared positions. This avoided work
duplication and prevented mixed signals being sent to the Government.
6.4 The Bank can differentiate itself from other development agencies through
its expertise on institutional and policy reform. The external partners deferred to the
Bank on its unique knowledge of sector policy and institutional issues. They trusted in
the Bank’s proposed reform program for the Government and supported it throughout
project preparation and implementation. None of them had an institutional component in
their projects. Without the Bank, it is unclear who would have been the “reform
champion”.
6.5 Project outcome indicators should be limited in time and scope; they should
measure results which can be influenced by the Bank. The PDO indicators in this
project were not limited to results within Bank-financed road sections, but also included
section financed from EBRD and EIB. While this is understandable from the perspective
of joint project design, it can inadvertently make it more difficult to attribute program
success to specific institutions. In this case, although the Bank credit closed in mid-2011,
the final PDO data was only available in 2013 when the partner-funded road sections
were to be completed. The problem is that between project closure in June 2011 and
23
program completion in 2013, the Bank was rated on results over which it had little
control. Supervision missions were ended together with project closure. When designing
projects that are supporting a government program it is very important that there is a clear
separation between what the project can achieve and be measured upon and what it is
hoped the overall program will achieve. The later may or may not be under the control of
the project.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
The following quotations5 represent a sample of observations made by the implementing agency
and cofinanciers.
(a) Borrower/implementing agencies
SRA
"World Bank leadership was very good during project preparation and
supervision - the frequency of supervision missions was sufficient."
"The World Bank was decisive in attracting other IFIs."
"Other IFIs can learn from the WB how things are done at low cost but with high
quality."
"The World Bank provided quick and professional responses to all queries during
the project."
(b) Cofinanciers
EBRD
"World Bank performance was highly satisfactory."
"Transition of lead donor role from the World Bank to MCC has been very good." "Bank performance during supervision was very good, no complaints, except for
misprocurement."
"Misprocurement might have been prevented if the Bank had been more insistent up-
front on the Government to award the contracts to the recommended bidder."
(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)
5 Recorded during interviews and confirmed separately via email
24
Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Components Appraisal Estimate
(USD millions)
Actual/Latest
Estimate (USD
millions)
Percentage of
Appraisal
Road Network Recovery 44.0 67.2 153%*
Institutional Support 4.7 5.0 106%**
Total Baseline Cost 48.7 72.2 148%*
Physical Contingencies
0.00
0.00
0.00
Price Contingencies
0.00
0.00
0.00
Total Project Costs 48.7 72.2 148%*
Front-end fee PPF 0.00 0.00 .00
Front-end fee IBRD 0.00 0.00 .00
Total Financing Required 48.7 72.2 148%*
(b) Financing
Source of Funds Type of
Cofinancing
Appraisal
Estimate
(USD
millions)
Actual/Latest
Estimate
(USD
millions)
Percentage of
Appraisal
Borrower 0.00 0.00 0.00
European Bank for Reconstruction
and Development 16.4 22.9 140%*
EC: European Investment Bank 16.4 39.3 240%*
International Development
Association (IDA) 16.0 5.0 31%
*EBRD and EIB increased their commitment to the project by EUR 17.5 million each. See Section 1.7 for
details.
** During project restructuring, some funding was reallocated from Component 1 to Component 2.
25
Annex 2. Outputs by Component
Component 1: Road Network Recovery (USD67.2 million, of which USD0 million of
IDA contribution)
The IDA contribution to Component 1 was cancelled during project restructuring in
2009. The original plan was to allocate US$ 13 million of IDA funds for road
rehabilitation, but US$ 11 million was cancelled after the misprocurement and US$ 2
million were reallocated to Component 2. Component 1 nevertheless retained a large
volume of road works funded by EIB, EBRD (including EC grant finance).
It is important to note that while the IDA-funded input to the project ended on June 30,
2011, EIB and EBRD have increased their lending amounts and extended the time frame
for the Project until 2013. At present 87 km of road works have been completed with
funding from EIB and EBRD. This translates to about 297 lane-km of road rehabilitation
and improvement. The target of "400 lane-km or roads rehabilitated" was not met
because of the need for more substantial works than first anticpiated.
Component 2: Institutional Support (US$5 million equivalent, of which US$5
million of IDA credit)
Through this project component, the World Bank was able to support the Government of
Moldova in (i) putting together a coherent Road Sector Program, including a Road Sector
Strategy and a prioritized Road Sector Investment plan, (ii) defining and implementing
the necessary road sector reforms and the implementation arrangements for externally
funded road projects, and (iii) bringing in several other external partners into the Road
Sector Program (EBRD, EIB, MCC and EC) who are now continuing to fund the Road
Sector Program. The total amount of additional external funding that was mobilized as a
direct result of this component is of US$ 460 million, while the actual World Bank (IDA)
funding for the project was only US$ 5 million. While the IDA-funded portion of the
Road Sector Program Support Project closed on June 30, 2011, EBRD and EIB increased
their funding under the project and extended their involvement until 2013. The activities
under this component were expanded during project restructuring and fully completed by
the closing date of the IDA portion of the project.
26
Annex 3. Economic and Financial Analysis Introduction
The original Component 1, Road Network Recovery, included physical road works and
related engineering and consulting services amounting to US$44 million. The total length
of the roads planned for rehabilitation was 160-200 km, or up to 400 lane-km. During
project preparation, economic analyses were carried out for 400 km of main and
secondary roads which were candidates for inclusion into Component 1; they were used
to select the road sections that were actually included in the project. The cost-benefit
analysis resulted in a positive net present value (NPV) of US$177 million for all sections
combined, using a 12 percent discount rate and 2005 values.
The analysis presented here is based on the actual traffic for 2013, road user costs savings
(transport user benefits from using the new roads), and project economic cost. The HDM-4 model
was used to calculate the respective road user costs and economic rates of return. Most of the
works were denominated in Euros and hence that is principal currency of evaluation here with
dollar values based on November 2013 exchange rates.
Traffic
There has been a gradual increase in traffic on the network since appraisal of the project but
comparing the appraisal traffic numbers with the ex-post traffic numbers has been difficult. This
is mainly because the km markers for traffic counts in the originally appraised sections don’t
match exactly with the current traffic stations. It is also likely that there was some reliability
issues with some of the original data. The traffic presented in Table 1 is 2013 data collected from
a combination of manual, automatic and video counts.
Table 1: Road section descriptions and traffic levels
Road Road Section Length
(km)
Number
of Lanes
Roughness
2013 (IRI)
Traffic
2013 (AADT)
1 Chişinău-Hînceşti section km
7+820 - km 22+000 (EIB)
14.2 3 6.2 7,556
2 Chişinău-Hînceşti section km
22+000 - km 29+920 (EIB)
7.9 3 6.6 7,556
3 M2 Chişinău-Soroca, section
km 5+733 - km 26+200 (EIB)
20.5 4-6 6.2 15,278
4 M2 Chişinău-Soroca, section
km 26+600 - km 54+850
(EBRD)
28.3 4 2.5 15,278
5 M2 Chişinău-Soroca, section
km 54+850 – km 71+165
(EIB)
16.3 2 3.0 7,812
Total 87.1 4.2 10,932
27
Road User Costs
The Road User Costs (RUC) savings compares the transport user benefits on the new roads for
different vehicle types. The RUC savings consists of time and vehicle operation costs. The time
savings are mainly based on the increased capacity where the roads were widened and through
improved condition which allowed for higher operating speeds. The vehicle operation costs
savings are mainly based on savings in fuel consumption, depreciation, vehicle maintenance costs,
etc, which also depend on the road length, road conditions, and traffic volume and composition.
With help of the HDM-4 model savings were calculated for seven vehicle types: small bus,
medium bus, big bus, small truck, medium truck, big truck, and trailer.
Project Costs
The project costs over the evaluation period consist of costs for construction civil works, routine
and periodic maintenance costs, and other operating costs. The construction civil works have a
large impact on the final project costs particularly as the extent of the work was much greater
than estimated at appraisal. In many cases a full reconstruction or rehabilitation was undertaken
whereas during appraisal it was estimated that only a heavy periodic maintenance would be done.
These decisions were based on value engineering decisions at the time on the most appropriate
interventions to take. The civil works costs for the roads are given on the Table 2.
Table 2: Description of road works and costs (millions)
Road Description of works Estimated
Cost at
bidding
Final Cost Final/
Estimated
Final
Cost/km
1 Reconstruction and
Widening to 3 Lanes
€14.495
$19.568
€12.958
$17.493
0.89 €0.914
$1.234
2 Reconstruction and
Widening to 3 Lanes
€8.0
$10.8
€7.891
$10.653
0.99 €0.996
$1.345
3 Rehabilitation and
Reconstruction of 3 bridges
€10.0
$13.5
€9.26
$12.502
0.93 €0.452
$0.611
4 Rehabilitation and
Reconstruction of 8 bridges
€15.0
$20.25
€14.862
$20.063
0.99 €0.526
$0.710
5 Rehabilitation and
Reconstruction of 3 bridges
€5.0
$6.75
€5.236
$7.069
1.05 €0.321
$0.433
Total €52.495
$70.868
€50.208
$67.780
0.96 €0.562
$0.759
Economic Rate of Return
The economic rate of return (ERR) of the project roads is based on the construction values given
in Table 2. The actual ERR for all roads are lower than estimated at the appraisal stage due to
much high civil works costs. At appraisal it was estimated that costs would range from
US$ 150,000 to US$ 220,000 per km but the average cost was US$760,000 per km and the range
was between US$ 430,000 and US$ 1.34 million in 2013 prices.
28
The ERR for the overall project is estimated at 25.5% with an NPV of US$ 106.4 million. The
ERRs for individual road links varied from 17.1% to 60.1% as shown in Table 3. At appraisal the
project had an NPV calculated of US$177 million and ERRs that varied from 30% to 240%.
Table 3: Economic rates of return for the project roads
Road NPV
(€ Million)
NPV
($ Million)
ERR(%)
1 5.0 6.8 19.1
2 3.1 4.2 19.3
3 54.9 74.1 60.1
4 14.3 19.3 21.9
5 1.5 2.0 17.1
Total 78.8 106.4 25.5
29
Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Andreas Schliessler Lead Transport Specialist ECSTR Task Team Leader
Irina Babich Financial Management Specialist ECSO3 Financial
management
Arcadii Capcelea Senior Environmental Specialist ECSS3 Environmental
safeguards
Sandu Ghidirim Operations Officer ECSS2 Operational support
Marie Antoinette Laygo Program Assistant ECSSD Project support
Ross S. Pavis Senior Operations Officer AFTDE Quality control
Cesar Augusto Queiroz Consultant INTSC Technical support
Viorica Dumitri Strah Program Assistant ECCMD Project support
Sanjay N. Vani Lead Financial Management Spec OPCFM Financial
management
Supervision/ICR
Andreas Schliessler Lead Transport Specialist ECSTR Task Team Leader
during Supervision
Simon Ellis Lead Transport Specialist ECSTR ICR Team Leader
Andrei Busuioc Financial Management Specialist ECCAT Operational support
Arcadii Capcelea Senior Environmental Specialist ECSS3 Enviromental
safeguards
Jukka-Pekka Strand Infrastructure Finance Specialist TWIFS
Task Team Leader
At Closing/Main
author of ICR
Oxana Druta Financial Management Analyst ECSO3 Financial
management
Sandu Ghidirim Operations Officer ECSS2 Operational support
Yevhen Bulakh Transport Specialist ECCU2 Operational support
Romain Pison Junior Professional Associate ECSS5 Technical
supervision
(b) Staff Time and Cost
Stage of Project Cycle
Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY07 40.42 227.42
FY08 1.00 0.66
Total 41.42 228.08
30
Supervision/ICR
FY07 0.00 0.00
FY08 21.46 82.11
FY09 24.75 103.45
FY10 23.40 82.69
FY11 35.68 89.38
FY12 8.31 35.28
Total 113.60 382.91
33
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
The State Road Administration sent a project completion report to the Bank on
September 23, 2011. The report has been included in this annex in its entirety and
original form. The report has not been edited for style, language or content.
The Project Completion Report is referred to the period mid-2007 to 30.06.2011 of the
RSPSP and it provides the following sections:
I. Project Description
II. Assessment of the operation’s objective, design, implementation, and
operational experience
III. Assessment of the outcome of the operation against the agreed objectives,
updated performance indicators for the project
IV. Evaluation of the borrower’s own performance during the preparation and
implementation of the operational, with special emphasis on lessons
learned that may be helpful in the future
V. Evaluation of the performance of the banks, and co-financiers, or of other
partners during the preparation and implementation of the operation,
including the effectiveness of their relationships, with special emphasis on
lessons learned
VI. Description of the proposed arrangements for future operation of the project,
sustainability of investments
VII. Total project costs
I. PROJECT DESCRIPTION
The Government of Moldova (Government), represented by the Ministry of Transport
and Road Infrastructure (MTRI), is implementing a Road Sector Program Support Project
(RSPSP) financed by the World Bank (WB), European Bank for Reconstruction and
Development (EBRD), European Investment Bank (EIB) and European Commission
(EC) together referred to as International Financial Institutions (IFI). RSPSP is in direct
support of the Government’s overall Road Sector Program. The Borrower is the Republic
of Moldova. The implementing agency is the State Road Administration (SRA), which is
under the control of the MTRI.
The proposed Road Sector Program Support Project is the first World Bank supported
operation in Moldova’s transport sector. It is the second externally financed project in
Moldova’s Road Sector since the country’s independence in 1991, after an earlier EBRD-
financed road rehabilitation project which commenced in 1995 and was cancelled
prematurely in 1998.
In early 2006 the World Bank and the Government reached an agreement that the WB
would support the Government’s Road Sector Program through IDA funds. In June 2006
34
it was agreed that the WB would also help the Government to prepare a Transport Sector
Program with special focus on the Road Sector. A Spanish consulting consortium
mobilized in September 2006 to support the Government in the preparation of Moldova’s
National Transport Program for the 10-years period from 2008 to 2017.
The IDA credit was to provide financing of a number of activities included in that
Program, but more importantly, the project’s implementation arrangements were
designed to create a reliable, transparent and unified system for planning and managing
large-scale road sector investments. This, in turn, was expected to open the doors for
large-scale donor support to Moldova’s road sector. Subsequently, both EBRD and EIB
indicated their willingness to participate in the funding of a project. In 2007 three
separate financing agreements were signed between the Government of Moldova on one
side, and IDA, EBRD and EIB on the other.
Source of
Finance
Document Name /Credit
Number
Credit
Amount
Tranches
I II
WB / IDA Financing Agreement / 4283-
MD,
signed 03.05.2007
US$
16,000,000 US$ 16,000,000
EBRD Loan Agreement / 37671,
signed 28.06.2007
EUR
30,000,000
EUR
12,500,000
EUR
17,500,000
EIB Finance Contract / FIN Serapis No
2006 0485, signed 28.06.2007
EUR
30,000,000
EUR
12,500,000
EUR
17,500,000
The Government
of Japan
Agreement between Republic of
Moldova and IDA / TF057793,
signed 23.02.2007
US$
725,000 US$ 725,000
EU-NIF* Financing Agreement /
ENPI/2007/019549-MD-02,
signed 09.12.2008
EUR
12,000,000 EUR 12,000,000
EC Multi-Sector
Grant
TF094952 (EC Grant), signed
07.08.2009
EUR
2,800,000 EUR 2,800,000
*European Union Neighbourhood Investment Facility Grant
In 2011, two further separate financing agreements were signed between the Government
of Moldova on one side, and, EBRD and EIB on the other, under the Project. A third
financing agreement is being negotiated with the EC.
Source of
Finance
Document Name /Credit
Number
Credit
Amount
Tranches
I II III
EBRD Loan Agreement / 41442,
signed 29.10.2010
EUR
75,000,000
EUR
27,000,000
EUR
25,000,000
EUR
23,000,000
EIB Finance Contract /FIN Serapis No
2010-0154, signed 23.11.2010
EUR
75,000,000
Up to 20 Tranches in a minimum amount of
EUR 2,000,000
NIF Fund
grant from the
EC
Under negotiation EUR
31,200,000 EUR 31,200,000
35
PROJECT DEVELOPMENT OBJECTIVE
The development objective of the proposed project is to reduce road transport costs for
road users in Moldova by improving the condition and quality of its road network and the
way it is managed.
1. The Project consists of two components. The first component envisaged physical
road rehabilitation and the second component was aimed at supporting the implementation
of various institutional strengthening measures.
Component A: Road Network Recovery:
2. This consists of physical road works and of consulting and other
services directly related to those works, such as feasibility studies
(technical and economic), detailed engineering design, preparation of
bidding documents and supervision of works on selected road sections
along the main North-South road corridor between Balti, Singerei, Orhei,
Chisinau, Hincesti and Comrat under the responsibility of the SRA.
Component B: Institutional Strengthening Component:
1. Provision of support to improve the Government’s capacity to plan,
manage and maintain the network of national roads in Moldova,
including activities such as the development of a reliable road
maintenance financing mechanism, improvements to the system of road
maintenance execution and contracting, and implementation of a system
designed to curb the circulation of overload trucks.
2. Provision of support to strengthen the capacity of the SRA to
efficiently manage and maintain the roads under its responsibility and to
manage investment programs for road rehabilitation, reconstruction and
construction.
II. ASSESSMENT OF THE OPERATION’S OBJECTIVE, DESIGN,
IMPLEMENTATION, AND OPERATIONAL EXPERIENCE
The RSPSP has been designed initially for four years period from mid-2007 to the end of
2011 and present Implementation Completion Report (ICR) analyses the execution and
results of this period.
As stated in the original Project Appraisal Document (WB, March 2007), the
development objective of the Project was to reduce road transport costs for road users in
Moldova, by improving the condition and quality of its road network and the way it is
managed. The project had two components. The first component was focused on physical
road rehabilitation. The second component supports the implementation of various
institutional and other measures which were included in the Action Plan of the Transport
Sector Strategy. Component A consisted of physical road works and of consulting and other
36
services directly related to those works, such as feasibility studies (technical and economic),
detailed engineering design, preparation of bidding documents and supervision of works.
This component was to absorb about 90 percent of total project resources. The type of works
carried out through the project has been characterized as localized repair, periodic
maintenance and light rehabilitation. Heavier rehabilitation has been involved on shorter
sub-sections of roads where the base course needs to be improved or replaced. The
component B aimed at strengthening the Government’s capacity to manage and maintain the
network of National roads. It provided various types of support to the Government towards
the implementation of institutional, legal and other measures which have been included in
the Transport Sector Strategy Action Plan. The component mostly consisted of advisory
services provided by specialized local and foreign consultants (technical, institutional and
legal), training and the purchase of some equipment.
The overall outcome of the project is rated moderately satisfactory for Component A
because the project partially met the objectives and is rated very satisfactory for
Component B because all the objectives were met including institutional strengthening
through implementation of axle load control system, preparation of the reform of road
maintenance management and operations, road safety assessment, and strengthening the
capacity of the SRA in procurements, financial management and environmental and
social matters and others.
III. ASSESSMENT OF THE OUTCOME OF THE OPERATION AGAINST
THE AGREED OBJECTIVES, UPDATED PERFORMANCE
INDICATORS FOR THE PROJECT
The implementation progress and success of the program was measured in terms of
outcomes (results) and of outputs (physical achievements). The outcome of lower vehicle
operating costs for road users was measured by calculating and comparing vehicle
operating costs on the rehabilitated roads, before and after the project. Therefore,
vehicle operation costs on the roads improved under the Project have decreased to
some extent due to the implementation of one rehabilitation contract ICB3:
Rehabilitation of R3 Chisinau - Hincesti Road km 7+820 – km 22+000. However,
there is a shortcoming related to procurement of two rehabilitation contracts ICB1:
Rehabilitation of R14 Balti - Sarateni Road km 44+320 – km 66+670 and ICB2:
Rehabilitation of M2 Chisinau - Orhei Road km 5+733 – km 26+200, which were
mis-procured due to the fact that WB procurement procedures were not followed.
The outputs (physical achievements) are rehabilitation of 14,2 km of aforementioned R3
road (with 4,3 and 2 lanes) financed by EIB. A total of 51.8 lane-kilometres were
rehabilitated on the R3 road.
Contract reference Description of Road
Rehabilitation Works
Funding
Source
Admin-
istrator
Procurement
Procedure
Contract
signed
ICB1: REHABILITATION OF R14 BALTI -
SARATENI ROAD KM 44+320 – KM
66+670
WB WB WB misprocured
37
ICB2: REHABILITATION OF M2
CHISINAU - ORHEI ROAD KM 5+733 – KM
26+200
EBRD misprocured
ICB3: REHABILITATION OF R3 CHISINAU
- HINCESTI ROAD KM 7+820 – KM 22+000 EIB
19.01.2009
(completed on
21.02.2011)
Under the second stage of the Project (years 2010-2013) tenders for the procurement of
road rehabilitation works for five contracts have been launched. During the first half of
2011, four road rehabilitation work contracts have been signed and a further one has
been awarded.
Contract
reference
Description of Road
Rehabilitation Works
Funding
Source
Procurement
Procedure
Tender
Package
Contract
signed
RSPSP/W2/01 R14 Balti-Sarateni Road km
10+780-26+600
EC NIF
Grant EBRD I 15.03.2011
RSPSP/W2/02 M2 Chisinau-Soroca road
km 26+200 – km 54+850 EBRD
WB
II
18.02.2011
RSPSP/W2/03 M2 Chisinau-Soroca road
km 54+850 – km 71+165 EIB 18.02.2011
RSPSP/W2/04 R3 Chisinau-Hincesti road
km 22+000 – km 29+920 EIB 18.02.2011
RSPSP/W2/05 R14 Balti-Sarateni Road km
10+780-26+600
EC Multi-
sectorial III awarded only
Besides physical road works, Road Network Recovery component also included
consulting and other services directly related to those works, such as feasibility studies,
detailed engineering design, preparation of bidding documents and supervision. In this
respect, the objectives related to preparation of feasibility studies, environmental and
social impact assessments (ESIAs) of 697.4 km of roads, serving as a pipeline for the
further road sector investment projects, has been achieved.
For the institutional strengthening component, a number of critical objectives have
been reached that include: (i) An axle load control system has been implemented and
additional equipment for axle load control service was purchased; (ii) Road maintenance
reform management and operations were prepared. (iii) Road safety assessment of
approximately 3,000 km of road network was carried out; (iv) Support of individual
consultants in order to strengthen the capacity of Implementing Entity in procurement,
financial management and environmental and social matters; Elaboration of the
Environmental Road Handbook and Public Awareness activities were carried out; (v) 3
Road Engineering Standards regarding Environmental aspects were updated; (vi)
Financial Audit for fiscal years 2008, 2009, 2010; (vii) Technical Audit has been
conducted.
Consequently, the outcome of Road Network Recovery component can be rated as
moderately satisfactory due to misprocurement of two road rehabilitation lots at the first
stage whereas institutional strengthening component is rated satisfactory.
38
IV. EVALUATION OF THE BORROWER’S OWN PERFORMANCE
DURING THE PREPARATION AND IMPLEMENTATION OF THE
OPERATIONAL, WITH SPECIAL EMPHASIS ON LESSONS
LEARNED THAT MAY BE HELPFUL IN THE FUTURE
The performance of the Borrower and State Road Administration (SRA) in carrying out
the responsibilities assigned to them was satisfactory. The capacity of the SRA increased
form the beginning of the project implementation. Government willingness and
prioritized approach to tackle road infrastructure issues has also increased during the last
few years. Thus, in late December 2009 the revised Road Fund Law was enacted to
include a commitment for allocating no less than 50%, 65% and 80% of the revenue from
the fuel excise tax, in budget years 2010, 2011, and 2012, respectively, to the Road Fund
for road maintenance. The fuel excise tax has been significantly increased in 2010 to a
level of US$ 234.7 and US$ 97.8 per ton of gasoline and diesel, respectively. In 2010 the
Government allocated 50% of the fuel excise tax revenues to the Road Fund, in
compliance with the amended Road Fund Law. The revenue and expenditure of the Road
Fund in 2010 was US$ 50.7 million (including US$ 39.1 million from the fuel excise tax
and US$ 11.6 million from other taxes and fees). In 2011 the Government kept the fuel
excise taxes at the 2010 level, with the Government projection showing that both the 65%
allocation of the excise tax on fuel will be met and that LTIS target is to be substantially
met providing a total of about US$ 68.5 million, US$ 1 million (1.5%) short of the LTIS
target of US$ 69.5 million;
At the project level, the SRA has adequately managed and implemented one
rehabilitation contract. At the Program level, the SRA has successfully implemented
the investments under the Road Sector Program, having currently in place unified
accounting and Financial Management system and adequate contract management
system. 13 mobile axle load control teams have been established, properly equipped
and these are presently operating on the road network of Moldova. At least US$ 69.5
million equivalent is available for Road Maintenance in 2011.
V. EVALUATION OF THE PERFORMANCE OF THE BANKS, AND
COFINANCIERS, OR OF OTHER PARTNERS DURING THE
PREPARATION AND IMPLEMENTATION OF THE OPERATION,
INCLUDING THE EFFECTIVENESS OF THEIR RELATIONSHIPS,
WITH SPECIAL EMPHASIS ON LESSONS LEARNED
The performance of the Banks (IDA/EIB/EBRD) was considered satisfactory. The
IFI fielded 12 missions including one pre-appraisal mission, one appraisal and
negotiations mission, and 10 supervision missions. Banks missions were focused on
projects inputs and outcomes (physical progress of the works and consulting services
39
directly related to road works as well as improvement of the Government’s and SRA’s
capacity to plan, manage and maintain the road network in Moldova efficiently).
At the initial stage the World Bank had provided technical support and financing of
the Project through a Project Preparation Facility (PPF) of US$ 800.000. The WB
has also formally requested the Government of Japan to provide a PHRD project
preparation grant of US$ 708.450. IDA intended to provide an amount equivalent to
US$16 million, in the form of a Specific Investment Loan (SIL). EBRD and EIB
contribution was to be EUR 12,5 million each as the first tranches. The total combined
financing for the project from the three donors was estimated at US$ 48.7 million
equivalent. Upon successful completion of the first tranches, EBRD and EIB each
contribute was to be EUR 17,5 million as the second tranches. However due to declared
mis-procurement of two contracts, the WB cancelled the amount equivalent to US$
10,482,137.1 from the credit as of December 19, 2008, and EBRD, cancelled Tranche I
of Loan as of February 6, 2009, an amount of EUR 12,500,000.
Source of
Finance Credit Amount Cancelled Amount
Tranches
I II
WB / IDA XDR 10,800,000 XDR 7,082525,07 XDR 3,717,474,93
EBRD EUR 30,000,000 EUR 12,500,000 cancelled EUR
17,500,000
EIB EUR 30,000,000 --- EUR
12,500,000
EUR
17,500,000
Notwithstanding the aforementioned cancellation, the remain WB credit EIB credit
(Tranche I and partly Tranche II) has been successfully utilized for the implementation of
the following projects and activities:
PHRD Grant
1. Feasibility study and detailed design
2. Procurement of office equipment for project
WB credit
1. An axle load control system has been designed and implemented. Its objective
is to protect Moldova’s road network by reducing truck overloading on public
roads. To this purpose, 13 mobile axle load control teams were established
throughout Moldova.
2. Additional equipment for axle load control service, including 3 vans, 3 sets of
weighing scales and 26 cameras for live streaming were purchased in order to
increase the operational effectiveness and transparency of aforementioned
teams. The video output of the cameras is transmitted in real-time to an
operational control centre in Chisinau.
3. A large WB-funded contract for the preparation of feasibility studies,
environmental and social impact assessments (ESIAs), serving as a pipeline for
the further road sector investment projects, has been completed. After some
40
mutually agreed changes in road sections, the contract covered 11 road sections
totalling 697.4 km, as listed below:
R1: Chisinau – Ungheni – Sculeni – Romanian border (121.3 km)
R6: Section between M1 and R3 (6.5 km)
R13: Section Balti – Gura Camencii (39.9 km)
R16 Balti – Falesti – Sculeni (54.8 km)
R9: Section Arionesti - Otaci (9.6 km)
R33: Hincesti – Lapusna – M1 (37.2 km)
R34: Hincesti – Slobozia Mare (125.1 km)
R3: Hincesti – Cimislia (38.8 km)
M3: Ciumai – Giurguilesti (57.6 km)
M14: Balti – Criva (132.9 km)
R9: Drochia Jct. – Arionesti (31.1 km)
4. Preparation of the reform of road maintenance management and operations in
Moldova. The study included reviews, evaluations and recommendations in the
areas of:
(i) Reform of road maintenance operations;
(ii) Road asset valuation;
(iii) Road maintenance management, including a review of the existing
Pavement Management System.
The main recommendations in the area of road maintenance reform operations
are as follows:
Reviewing and amending of Road Fund Law, allowing multiannual
routine maintenance contracts and the fund to be distributed according
to traffic classes;
Reducing the current 39 maintenance enterprises by combining these
into 12 new enterprises;
The competition between the new maintenance enterprises and the
private sector should be gradually introduced;
Present maintenance contracts should be revised and adapted to
international standard using quantities for specified work items and
units;
A penalty system using de-merit points should be introduced;
Alternative methods and equipment for pothole repair (spray patching)
should be introduced.
5. Road safety assessment of approximately 3,000 km of the national road
network, including risk and crash cost mapping, Star Rating of the inspected
road network, a survey of driven speeds on roads, recommendations for high
return investments, recommendations for investment in targeted road safety
road engineering schemes and other proposals;
41
6. Strengthen the capacity of the State Road Administration in procurements,
financial management and environmental and social matters with the support
of individual consultants;
7. Elaboration of the Environmental Road Handbook and Public Awareness
activities were carried out;
8. Three Road Engineering Standards regarding Environmental aspects were
updated;
9. Training on project Environmental Assessments were held for all main
stakeholders (MTRI, Ministry of Environment, State Environment Inspectorate,
State Road Administration, road design and planning institutes, NGOs.) to
build up relevant national capacities in this area;
10. Financial Audit for fiscal years 2008, 2009, 2010;
11. Technical Audit comprising seven audit visits which have foreseen
examination of the quality of works executed, and compliance of road works
with the technical specifications and standards described in the bidding
documents has been conducted. Those technical audits covered all road works
carried out on National roads, under both domestic and external funding, and
included the drilling of road core samples and their laboratory analysis.
EIB Credit
Rehabilitation of the first section of R3 Chisinau – Hincesti Road, km 7+820-
22+000 has been completed;
Construction supervision for R3 Chisinau – Hincesti Road, km 7+820-
22+000 has been carried out;
Technical Assistance provided by International Engineering and Management
Consultant for the efficient and effective implementation of the Projects
during the feasibility and environmental study, design, tender, construction
and post construction phases.
Details on current funding sources are not provided in cases where the implementation of
the objectives is not yet completed.
VI. DESCRIPTION OF THE PROPOSED ARRANGEMENTS FOR
FUTURE OPERATION OF THE PROJECT, SUSTAINABILITY
OF INVESTMENTS
In 2007, the MTRI prepared a Land Transport Infrastructure Strategy (LTIS) for the
period 2008-2017 which was formally adopted by the Government through Cabinet
Decision No. 85 of February 1, 2008. The WB supported the preparation of the LTIS by
mobilizing grant funding from Spain for technical assistance, and through direct technical
advice. The LTIS was limited to three areas: (a) road infrastructure; (b) the railway
subsector; and, (c) urban transport in Chisinau.
42
While the LTIS is still valid, there is a need to prepare and adopt a broader Transport and
Logistic Strategy (TLS) which should incorporate and update the LTIS; (ii) cover other
transport subsectors, such as Freight and Passenger Road Transport Airports and Air
Transport, Ports, Freight Forwarding and Logistics Services, and Inland Waterways and
Maritime Transport; and, (iii) include measures aimed at improving of the Border
crossing and Customs services, since these are an essential part of the logistics chain. In
particular, the new Transport and Logistics Strategy should focus on making the transport
and logistics sector an enabling factor for the development of Moldova’s economy and
export trade, and support the ongoing process of harmonizing Moldova’s transport
system with the EU standards, legislation, and related regulations. To this purpose, the
WB is planning to provide grant funding from the multi-donor Trade and Transport
Facilitation Trust Fund (TTFST). This will pay for technical support services to be
provided by an international consulting firm.
The integrated an updated LTIS under TLS will reflect the changed timing for investments,
the latest status of funding sources and amounts, and updated road maintenance costs.
VII. TOTAL PROJECT COSTS
At the first phase the three banks (WB/EBRD/EIB) allowed to determine the financial
volume of the Projects, as follows: (i) The WB contribution through IDA resources of
US$ 16 million; (i) the EBRD and EIB - each contribution of € 12.5 million to the Project.
The loan agreements with EBRD and EIB were € 30 million each, including a second
tranche of € 17.5 million each. As has been mentioned above, the WB cancelled from the
credit, as of December 19, 2008, the amount equivalent to US$ 10,482,137.1 (XDR
7,082,525.07) and EBRD, cancelled from the Tranche I of Loan, as of February 6, 2009,
the amount of EUR 12,500,000 due to declared mis-procurement of two contracts.
Therefore, the total project costs up to the end of June, 2011 are presented in the table
below.
Project Activity Status Amount (US$)
PHRD Grant
Feasibility studies and detailed design Completed 708 450.00
Office equipment for Project Completed 14 155.52
TOTAL PHRD Grant 722 605.52
IDA
Technical audit Completed 470 573.73
Elaboration of SEA report Completed 5 656.99
Financial management consultant Completed 29 163.03
Procurement consultant Completed 27 283.14
Environmental issues consultant Completed 45 672.34
Assistance in preparing of SRA financial statements based on IFRS In process 104 318.48
Financial audit In process 190 053.68
Office equipment for MTRI Completed 19 736.22
Introduction of an Axle Load Control System Completed 673 685.17
43
Axle Load Control Equipment Completed 151 143.91
Assessment of the safety of Moldova's Road Infrastructure Completed 198 232.00
Roads feasibility and Detailed Design Studies Completed 2 781 735.24
Design and Implementation of Road Maintenance Reform Completed 1 048 854.02
Updating the Engineering Standards & Training on Environmental
Assessments
Completed 30 296.98
Preparation of National Environmental Road Handbook & Public
awareness activities
Completed 22 998.13
Bank charges 15 809.28
TOTAL IDA 5 815 212.34
45
Annex 9. List of Supporting Documents
Land Transport Infrastructure Strategy 2008-2017
PCN package documents
Project Appraisal Document
Negotiations package documents
Board package documents
Legal documents
Restructuring correspondence and memos
Restructuring Paper
Mission announcement and follow-up letters
Aide-Memoires from 2006-2011
Implementation Status Reports from 2007-2011
Chisinãu
Moghiliov-Podolski
Costesti
Camenca
Mãrculesti
Rezina
Dubãsari
Giurgiulesti
Moghiliov-Podolski
LipcaniCriva
Lãpusna
Chiperceni
Balatina
Costesti
Sculeni
Leuseni
Mãrculesti
Grigoriopol
DubãsariCriuleni
Orhei
RîbnitaRezina
Soldãnesti
CamencaDrochia
Donduseni
OcnitaBriceni
Edinet
Rîscani
Glodeni
Fãlesti
Ungheni
Cãlãrasi
Strãseni
Telenesti
Nisporeni
Floresti
Soroca
Sîngerei
Hîncesti
Ialoveni
Vulcãnesti
Cahul Taraclia
Ceadîr-Lunga
ComratBasarabeasca
Cimislia
Cãinari
AneniiNoi Bender
Tiraspol
Slobozia
Cãuseni
Stefan-Vodã
Leova
Cantemir
Balti
Chisinãu
B l a c kS e a
DanubeLake
Ialpug
LakeKitai
LakeCatlabug
Dan
ube
Nistu
Dnester
Nistu
Prut
Prut
Prut
R O M A N I A
U K R A I N E
U K R A I N E
To Kirovograd
To Bolgrad
To Reni
To Berezino
To BerezinoTo Berezino
To Berezino
To C
erna
uti
To Odessa
To O
dess
a
To Bîrlad
47°00'
48°00'
27°00' 27°30' 28°00' 28°30' 29°00'
29°30' 30°00' 48°00'
47°30'
47°00'
47°30'
46°30'
46°00'
45°30'
27°00' 27°30' 28°30' 29°00' 29°30' 30°00'
46°00'
45°30'
POLANDBELARUS
UKRAINE
ITALY
TURKEY
GEORGIA
ROMANIA
CZECHREP.
SLOVAKREP.
AUSTRIA HUNGARYMOLDOVA
BULGARIA
SERBIA
CROATIASLO
V.
BOS.&HERZ.
ALBANIA
GER
MA
NY
ARMEN
IA
AZERBAIJAN
BlackSea
Caspian Sea
FYRMAC.
RUSSIANFEDERATION
GREECE
MONTENEGRO
RUSSIANFED.
LATVIA
LITHUANIABalticSea
SWEDEN
IBRD 35280
MA
RCH
2007
0 10 20 30 40 50
KILOMETERS
MOLDOVA
ROAD SECTOR PROGRAMSUPPORT PROJECT
ROAD SECTIONS TO BE IMPROVEDUNDER THE PROJECT
NATIONAL ROADS
LOCAL ROADS
RAILROADS
AIRPORTS
PORTS
RIVERS
SELECTED CITIES AND TOWNS
RAYON CAPITALS
RAYON BOUNDARIES
INTERNATIONAL BOUNDARIES
This map was produced by theMap Design Unit of The World Bank.The boundaries, colors,denominationsand any other information shown onthis map do not imply, on the part ofThe World Bank Group, any judgmenton the legal status of any territory,orany endorsement or acceptance ofsuch boundaries.