Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD929 PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR 32.4 MILLION (US$50 MILLION EQUIVALENT) TO THE REPUBLIC OF YEMEN FOR AN ADDITIONAL FINANCING TO THE LABOR INTENSIVE PUBLIC WORKS PROJECT JUNE 9, 2014 MNC03 Middle East and North Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2014) Currency Unit = Yemeni Riyal (YR) YR 214.87 = US$1 US$ 1.545140 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing CE Citizen Engagement EMP Environmental Management Plan ERR Economic Rate of Return ESMF Environmental and Social Management Framework IDA International Development Association ISN Interim Strategy Note ISR Implementation Status Report LC Local Council LIPWP Labor Intensive Public Works Project MoPIC Ministry of Planning and International Cooperation NPV Net Present Value OFID OPEC Fund for International Development OPEC Organization of the Petroleum Exporting Countries ORAF Operational Risk Assessment Framework O&M Operation and Maintenance PDO Project Development Objective PMU Project Management Unit PWP Public Works Project PWPIU Public Works Project Implementation Unit YR Yemeni Riyal Vice President: Inger Andersen Country Director: Hartwig Schafer Country Manager: Wael Zakout Sector Manager: Franck Bousquet Task Team Leader: Sabine Beddies ii REPUBLIC OF YEMEN ADDITIONAL FINANCING TO THE LABOR INTENSIVE PUBLIC WORKS PROJECT TABLE OF CONTENTS ADDITIONAL FINANCING DATASHEET ........................................................................................... iv  I. Introduction ............................................................................................................................................ 1  II. Background and Rationale for Additional Financing ............................................................................ 1  III. Proposed Changes ................................................................................................................................. 5  IV. Appraisal Summary ............................................................................................................................ 11  Annex 1: Results Framework and Monitoring for LIPWP- Additional Financing .................................. 16  Annex 2: Revisions to the Results Framework ......................................................................................... 20  Annex 3: Operational Risk Assessment Framework (ORAF) .................................................................. 21  Annex 4: Fiduciary and Implementation Arrangements including Estimated Project Costing ............... 24  iii ADDITIONAL FINANCING DATASHEET Yemen, Republic of RY: AF-Labor Intensive Public Works Project (P148366 ) MIDDLE EAST AND NORTH AFRICA MNSSU . Basic Information – Parent Parent Project ID: P122594 Original EA Category: B - Partial Assessment Current Closing Date: 30-Jun-2016 Basic Information – Additional Financing (AF) Additional Financing Project ID: P148366 Scale Up Type (from AUS): Proposed EA Regional Vice President: Inger Andersen B - Partial Assessment Category: Expected Country Director: Hartwig Schafer 15-Sep-2014 Effectiveness Date: Expected Closing Sector Director: Junaid Kamal Ahmad 30-Sep-2017 Date: Sector Manager: Franck Bousquet Report No: PAD929 Team Leader: Sabine Beddies Borrower Organization Name Contact Title Telephone Email Project Republic of Yemen Eng. Saeed Abdo 711252548 PWP-Yem@Y.Net.YE Director Project Financing Data – Parent ( Labor Intensive Public Works Project-P122594 ) Key Dates Original Approval Signing Effectiveness Revised Closing Project Ln/Cr/TF Status Closing Date Date Date Date Date P122594 IDA-H6630 Effective 01-May-2012 23-May-2012 22-Jun-2012 30-Jun-2016 30-Jun-2016 Disbursements Undis Percent Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed bursed Disbursed P122594 IDA-H6630 Effective XDR 39.30 39.30 0.00 28.43 10.87 72.34 iv Project Financing Data – Additional Financing RY: AF-Labor Intensive Public Works (P148366 ) [ ] Loan [ ] Grant [X] IDA Grant [ ] Credit [ ] Guarantee [ ] Other Total Project Cost: 53.00 Total Bank Financing: 50.00 Financing Gap: 0.00 Financing Source – Additional Financing (AF) Amount BORROWER/RECIPIENT 3.00 IDA Grant 50.00 Total 53.00 Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Explanation Does the project require any policy waiver(s)? No Explanation Team Composition Bank Staff Name Title Specialization Unit Tracy Hart Sr Environmental Specialist Environmental Safeguards MNSEE Nina Bhatt Lead Social Development Specialist Social Safeguards/ Gender MNSSU Ali Khamis Sr Operations Officer Operations Officer MNSSU Chaogang Wang Sr Social Development Specialist Social Safeguards MNSSU Brahim Abdelwedoud Sr Infrastructure Specialist Infrastructure MNSSU Sabine W. Beddies Sr Urban Specialist Team Lead MNSSU Mariana T. Felicio Social Development Specialist Citizen Engagement MNSSU Maria Florencia Liporaci Sr Program Assistant Program Assistant MNSSD Kanishka Balasuriya Consultant Decentralization MNSSU Eric Ranjeva Finance Officer Finance Officer CTRLA Jamal Abdulla Abdulaziz Sr Procurement Specialist Procurement MNAPC Nagwan Sharhan Program Assistant Program Assistant MNCYE Moad M. Alrubaidi Sr Financial Management Specialist Financial Management MNAFM Saleh Qasem Al-Manary Financial Management Analyst Financial Management MNAFM Samira Al-Harithi Procurement Analyst Procurement MNAPC Tobias Lechtenfeld Jr Professional Officer Economist, Gender MNSSU Fowzia Al-Qobi Temporary Program Assistant MNCYE Henri Nkuepo Associate Counsel Lawyer LEGAM v Edith Mwenda Sr. Counsel Lawyer LEGAM Khalid Moheyddeen ET Consultant Citizen Engagement MNSSP Walid Al-Najar Financial Management Specialist Financial Management MNAFM Victoria Gyllerup Senior Operations Officer Quality Control MNADE Non Bank Staff Name Title Office Phone City Locations Country First Administrative Location Planned Actual Comments Division Yemen Country-wide Country-wide Institutional Data Parent ( Labor Intensive Public Works Project-P122594 ) Sector Board Social Development Sectors / Climate Change Sector (Maximum 5 and total percent must equal 100) Major Sector Sector Percent Adaptation Mitigation Co-benefits Co-benefits percent percent Education General education sector 46 Water, sanitation and flood protection General water, sanitation and 35 flood protection sector Health and other social services Health 5 Transportation General transportation sector 4 Public Administration, Law, and Sub-national government 10 Justice administration Total 100 Themes Theme (Maximum 5 and total percent must equal 100) Major theme Theme percent Rural development Rural services and infrastructure 60 Social protection and risk management Social safety nets 40 Total 100 Additional Financing RY: AF-Labor Intensive Public Works ( P148366 ) Sector Board Social Development Sectors / Climate Change vi Sector (Maximum 5 and total percent must equal 100) Major Sector Sector Percent Adaptation Mitigation Co-benefits Co-benefits percent percent Education General education sector 46 Water, sanitation and flood General water, sanitation and flood 35 protection protection sector Public Administration, Law, and Sub-national government 10 Justice administration Health and other social services Health 5 Transportation General transportation sector 4 Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total percent must equal 100) Major theme Theme Percent Rural development Rural services and infrastructure 60 Social protection and risk management Social safety nets 40 Total 100 vii I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant from the International Development Association (IDA) in an amount of US$50 million to the Republic of Yemen for the Labor Intensive Public Works Project (LIPWP, P122594, IDA- H6630). 2. The proposed additional grant would help finance the costs associated with scaled-up activities to enhance the impact of the well-performing LIPWP, in accordance with OP/BP 10.00 and extend access to much needed basic infrastructure services. The scale up, requested by the Government of Yemen would involve increasing the number of sub-projects to be delivered by 313 and thereby increasing the geographical coverage, as well as the number of beneficiaries of basic infrastructure services and temporary employment. To enhance the participation of citizens, and especially women, the proposed Additional Financing (AF) will further strengthen the implementation and monitoring of measures to enhance (i) gender inclusion and (ii) citizen engagement. The AF will also fund (iii) the operational capacity building support to select local governments to support Yemen’s decentralization. By Project end, it is expected that: (i) more than 1.2 million people will benefit from improved access to economic and social services and; (ii) 130,000 person-month of employment will be generated. 3. There are no changes to the original objectives, design, scope, or implementation and fiduciary arrangements. The Project Development Objective (PDO) remains the same, i.e.: (i) to provide needed infrastructure to improve access to basic public services; and (ii) to create short term employment. The Public Works Project Implementation Unit (PWPIU) continues its role as the project implementing entity, and the Ministry of Planning and International Cooperation (MoPIC) continues as the grant recipient. 4. Parallel financing for this proposed Additional Financing is confirmed by the Organization of the Petroleum Exporting Countries (OPEC) International Development Fund (OFID) in the amount of US$17 million. II. Background and Rationale for Additional Financing in the amount of US$50 million 5. The proposed changes directly relate to the World Bank's twin goals of ending extreme poverty globally by 2030 and promoting shared prosperity in every country, as the proposed AF targets more than 1.2 million poor Yemenis with the provision of basic public services and job creation in order to increase their incomes and improve their livelihoods. With a Human Development Index of 0.458 (ranging between the lowest of 0.304 to highest of 0.955), Yemen ranked 160 out of 186 countries in 2012 and is thus one of the poorest countries in the world. Specifically, with its country-wide coverage, the AF aims to deliver labor-intensive, small-scale, demand-driven basic infrastructure services to people living in dispersed and sparsely populated rural settlements1, as well as to poor communities in urban areas. Sub-projects will be executed by small local contractors, employing labor from within the beneficiary communities. Poverty 1 Eighty percent of the investments will be in sparsely populated rural settlements. 1 reduction impact is among the key sub-project screening criteria2. The ongoing project has a track record of delivering significant outcomes, e.g. as of February 2014: 163,166 beneficiaries have improved access to primary health care services; 167,969 students have improved access to schools; and 30,000 beneficiaries have improved access to drinking water. Between 2012 and now, 151,000 person-months of short-term employment were also created. 6. The proposed Additional Financing is consistent with the World Bank's Strategy Update for MNA, presented to the Board on May 15, 2014 3, which underlines the need to improve governance through transparency and accountability measures, create jobs - particularly for youth and the poor - increase social and economic inclusion of disadvantaged groups, women and youth. The proposed AF responds to all of these strategic priorities. 7. The Additional Financing is also consistent with the Interim Strategy Note for Yemen (ISN, FY12-14- Report No. 70943-YE), as the project directly addresses two strategic ISN goals, i.e.: (i) achieve quick wins and protect the poor by creating short-term jobs, restoring basic services, improving access to social safety nets, and revitalizing livelihoods; and (ii) enhance governance and local service delivery by supporting transparency, accountability, capacity building, institutional strengthening, and improved citizen engagement. 8. Furthermore, the proposed AF supports Yemen's Fourth Socio-Economic Development Plan and Poverty Reduction (2011-2015) in regard to its second goal “Accelerate Progress towards Achieving the Millennium Development Goals (MDGs) through expanding primary education, primary health care services, improving access to drinking water, expanding rural roads” and its third goal “Expand Social Protection Programs through focusing on labor intensive programs”. The proposed AF contributes to the Government's transition efforts to address the ongoing social and economic challenges by providing needed infrastructure to improve access to basic public services and to create short-term employment. 9. The original IDA Grant. On May 1, 2012, the Board of Directors of the World Bank approved a US$61 million IDA Grant for the Labor Intensive Public Works project (LIPWP). The Grant was signed on May 23, 2012 and became effective on June 22, 2012. The PDO is: (i) to provide needed infrastructure to improve access to basic public services; and (ii) to create short term employment. To meet its development objectives, the project finances the following three components: 2 The nine sub-project screening criteria are:(i) not less than five percent community contribution; (ii) minimum labor content of 30 percent; (iii) investment cost per person-month is within benchmark for each sector; (iv) contribution to poverty alleviation; (v) investment cost per beneficiary is within benchmark for each sector; (vi) improvement in environment; (vii) sustainability plans included; (viii) sub-projects involve no relocation of households/ communities/ businesses; no private land taken from individuals or communities, nor any adverse impacts on livelihoods, and incomes (any form of land acquisition, that does not trigger the Bank’s OP 4.12, will be handled in accordance with the procedures detailed in the Manual of Procedures); and (ix) no sub-projects proposals will be accepted that involve trans-boundary aquifers or other international waterways in accordance with OP/BP 7.50. Baseline surveys for all sub-projects regardless of size and type are conducted before a sub-project is selected to ensure that it is technically and economically feasible in addition to being sustainable. 3 Middle East North Africa Strategy Update Seizing the Opportunity to Support a Historic Transition, May 2014. 2  Component 1: Community Infrastructure (US$59.03 million equivalent): Provision of goods and works for carrying out sub-projects in selected rural and urban areas across Yemen to construct, upgrade, rehabilitate and maintain community infrastructure, including in the following areas: (i) health; (ii) education; (iii) water supply; (iv) sewage; (v) water harvesting; (vi) stone paving of roads and streets; and (vii) vocational training centers.  Component 2: Technical Assistance (US$3.47 million equivalent): Provision of consultants’ services to ensure the sustainability of component 14.  Component 3: Project Management (US$2.50 million equivalent): Provision of goods, consultants’ services, training and operating costs of the Project Management Unit (PMU) to support project coordination, implementation, monitoring and evaluation, and management. 10. Status of implementation of the original grant. Since effectiveness, the project’s PDO and implementation progress have both been consistently rated as Satisfactory. Ratings for Environmental and Social Safeguards are also Satisfactory, as are Procurement and Financial Management ratings. The project is expected to meet its outcomes and outputs ahead of project closure on June 30, 2016. The implementation of Bank safeguards requirements is progressing well. The sub-project level screening mechanism, Environmental Management Plan (EMP) formulation, implementation, supervision, and reporting procedures are satisfactory, with quarterly progress reports being submitted in a timely manner5. Given the prevailing security situation which precludes Bank supervision of sub-projects, Third Party Monitoring for safeguards is being used. Annual audit reports are being submitted in a timely manner and there are no major audit issues. The Government of Yemen and the Project Management Unit are fully committed to the project. The legal covenants, most of which are recurrent, are continuously being monitored and complied with. Rationale for the proposed Additional Financing: 11. The demand for basic infrastructure services is greater than anticipated, as is the absorptive capacity of the LIPWP. By May 30, 2014, LIPWP disbursement stood at 59 percent. When the LIPWP was prepared in early 2012, the PWPIU had close to 17,000 community requests for sub-projects, of which the LIPWP was only able to execute less than three percent due to resource constraints. In February 2014, the PWPIU had 20,000 sub-project requests from communities. Hence, to meet the continuously high need for basic infrastructure services, the proposed AF is a scale up of the LIPWP to increase the number of sub-projects to be delivered, 4 Technical Assistance includes: (a) support to local communities and governments in the preparation of proposals to adequately identify sub-projects for financing; (b) preparation of feasibility studies, engineering design and tender documents for Sub-project proposals; (c) supervision of construction during execution of sub-projects; (d) benefit assessment surveys; (e) support for auditing of the PMU; (f) training and workshops on project implementation for consulting firms, contractors and non-governmental organizations; (g) training of local communities and beneficiaries in operations and maintenance of infrastructure; (h) preparation of environmental assessments and design of mitigation measures and monitoring systems thereof; and (i) other technical assistance necessary to improve the Recipient’s capacities in community infrastructure sustainability. 5 The Bank understands that if lands are required for sub-project level activities, these requirements are of very small magnitude and are typically undertaken on public/governmental owned lands. Land may also be voluntarily donated (by communities or individuals) for sub-projects that are to the benefit of communities with the assumption that sub- project activities do not have a fixed location (i.e. they can be moved) and that adequate documentation, demonstrating individual/ community willingness to donate lands for project benefits, is in place. 3 thereby increasing the geographical coverage and the number of beneficiaries. Table 1 summarizes the achievements as of May 2014. It indicates that 1.4 million people across Yemen are expected to benefit from the LIPWP. All 382 budgeted sub-projects are already contracted for expected completion by end 2014, about 1.5 years ahead of LIPWP’s June 30, 2016 closing date. Table 1: Summary of Achievements under LIPWP (May, 2014) Sub-project Total estimated Sub-projects Contracted Approx. number of number of projects as No. sub- Amounts US$ beneficiaries by per PAD projects6 Million7 Project end Health units 25 17 2.076 85,160 Schools 223 220 33.4 622,696 Water supply schemes 35 10 0.608 42,945 Sanitation schemes 16 5 2.133 60,300 Stone paving 19 32 6.78 336,000 Water harvest schemes 107 92 12.159 267,261 Social buildings 13 6 1.118 22,351 Total 438 382 58.27 1,436,713 12. Given the successful implementation of the LIPWP and the completion of the National Dialogue in January 2014, opportunities exist to build and further expand the original project’s achievements. Following the 2011 crisis, and the election of a new president in February 2012, the Government embarked on a reform program that entailed a National Dialogue between March 2013 and January 20148. Following the completion of the National Dialogue on January 25, 2014, a federal state structure for the Federal Republic of Yemen was approved. It comprises six federal states9. Given the changing country context, the AF will ensure that the additional sub-projects will cover these six regions adequately, while retaining the objective and well- proven LIPWP formula for allocating funds, i.e. (a) 50 percent population size; (b) 30 percent poverty index; and (c) 20 percent remoteness10 and deprivation. The AF will indicate the new sub-project sites vis-à-vis the sites of the ongoing LIPWP sub-projects and ensure that the AF will benefit areas that have not yet benefited from the ongoing LIPWP. Finally, the AF will also retain the LIPWP sub-project screening criteria, and use the current LIPWP components to disburse the additional funds. 6 Due to exchange rate fluctuation of SDR to US$, the total value of Grant H6630 (SDR 39.300 million) decreased gradually from US$61 million equivalent at grant signature date to US$60.2 million equivalent. Fuel supply shortages further increased the prices of construction materials, which increased the prices of civil works contracts. These two factors led to the need to reduce the numbers of sub-projects to 382 currently from the originally planned 421 at a total cost of US$55.5 million (approximately 91 percent of the grant amount). 7 Ibid. 8 The National Dialogue aimed at drafting a new constitution and establishing a new state structure through an inclusive debate among all concerned stakeholders. 9 The six federal states are: (i) Hadramout with the capital Al-Mukala and the four provinces of al-Mahra, Hadramout, Shabwa and Soctora; (ii) Saba (Sheba) with the capital Marib and the three provinces of al-Jawaf, Marib and al-Baidha; (iii) Aden with the capital Aden and the four provinces of Aden, Abyan, Lahj and Dhala'a, (iv) Al- Janad with the capital Taiz and the two provinces of Taiz and Ibb; (v) Azal with the capital Sana’a and the four provinces of Saada, Sana'a, Amran and Dhamar; and (vi) Tehama with the capital Hodeida and the four provinces of Hodeida, Raimah, al-Mahweet and Hajja. 10 Remoteness and Poverty Indexes are usually taken from reports and studies produced by the Government and UN Agencies, which are updated every five years. 4 13. Parallel financing for this proposed AF is confirmed by the OPEC International Development Fund (OFID) in the amount of US$17 million. 14. Risks: While the capacity risks for the Implementing Entity (including Fiduciary Risks) have continuously been rated Low, the country context is associated with high risks, which affects the Bank’s ability to supervise. Hence, for the proposed AF, the risk rating is set as Moderate, which is detailed in the ORAF (see Annex 3). 15. Choice of lending instrument: In line with Bank policies, the proposed AF is intended to scale up the impact and development outcomes of the original project. Specifically, the proposed AF will allow building on the satisfactory, on-going LIPWP, using its sound institutional arrangements, maximizing development outcomes and results, and providing cost-effectiveness gains without interrupting the Bank’s support for provision of basic service infrastructure and job creation. Furthermore, the choice of the AF instrument is fully in line with the guiding principle of the Yemen ISN of keeping project design simple, and relying on Additional Financing to scale up assistance to existing projects that are able to perform well under current conditions. III. Proposed Changes 16. The proposed AF aims to: deliver 313 additional sub-projects across Yemen’s six regions with an estimated total cost of US$47.57 million (at an average cost of US$140,000 per sub- project); create about 130,000 person-months of temporary employment; and benefit more than 1.2 million additional people. The proposed AF will disburse the additional funds through the established three LIPWP components at the following costs per component (see Annex 4 for a detailed cost breakdown): a) Component 1: Community Infrastructure (AF: US$47.57 million equivalent): This component finances works and goods for small sub-projects in the following sectors: (i) health; (ii) education; (iii) water supply; (iv) sewage; (v) water harvesting schemes; (vi) stone paving of roads and streets; and (vii) vocational training. It will also finance the new activities for (viii) enhanced gender inclusion; and (ix) the citizen engagement grievance redress mechanism. b) Component 2: Technical Assistance (AF: US$3.25 million equivalent): This component finances consultancy services for: (i) carrying out preliminary and detailed designs for Sub-project proposals; (ii) support for auditing of the Project; (iii) preparation of environmental assessments and design of mitigation measures and monitoring systems thereof; and (iv) training and workshops in the area of Project implementation for consultants, contractors, including women, non-governmental organizations and local governments. It will also fund (v) carrying out studies to identify existing and potential future citizen engagement activities; and (vi) other technical assistance necessary to improve the Recipient’s capacities in community infrastructure sustainability. c) Component 3: Project Management (AF: US$2.18 million equivalent): This component will finance (i) incremental operational costs of the PMU (including staff salaries); (ii) staff training; (iii) the assessment on the use of infrastructure that will be added to the impact evaluation to be conducted under the LIPWP; (iv) a technical audit of the PMU, as well as (v) and carrying out a study on the future role of the Recipient’s public works project. 5 17. The AF reflects the outcomes of the National Dialogue by ensuring that the additional sub- projects are covering Yemen’s newly designated six regions adequately, while retaining the objective and well-proven LIPWP formula for allocating funds, i.e. (a) 50 percent population size; (b) 30 percent poverty index; and (c) 20 percent remoteness11 and deprivation. The AF will ensure that it will benefit areas that have not yet benefited from the ongoing LIPWP. 18. Gender inclusion and citizen engagement. To enhance the voice and participation of all community members (‘citizen engagement’), and especially women (‘gender inclusion’), the proposed AF has two new design features under component 1: Under gender inclusion, activities cover: (a) gender disaggregated consultations during community sub-project preparation; (b) employment of female engineers as design and supervision consultants during sub-project preparation; and (c) short-term employment of female beneficiaries during sub-project implementation. For Citizen Engagement (CE), a project-level complaints handling mechanism (grievance redress mechanism) has been developed to capture broader community feedback in addition to those related to environmental and social safeguards risks. Strengthening CE will also entail a systematic collection of citizen feedback on infrastructure provision across all seven sectors to assess citizen satisfaction with AF investments before, during and after project implementation. Both of these activities aim to contribute to increased local accountability, and improved ability for local communities to voice their needs more effectively, while equally providing a benchmark for potential future interventions. The measures to be implemented are included in the revised Manual of Procedures, and results indicators will track performance on both the gender inclusion and the CE aspects of the project going forward. 19. In view of the completed National Dialogue, the AF will contribute to supporting the decentralization efforts through a pilot for Local Councils (LCs) capacity building - a new design feature under Component 2. Specifically, for a select number of LCs in the AF beneficiary districts of five geographical areas, the AF will: (i) conduct assessments of the operational capacity for sub-project management of all LCs within the AF beneficiary districts in the select areas; (ii) conduct classroom trainings on operational capacity building for a subset of the above LCs; and (iii) directly engage a subset of the above LCs in sub-project design and implementation through action learning and hands-on operational support under the supervision and full fiduciary responsibility of the Public Works Project (PWP). The AF will also provide funding for study visits, workshops and training. Finally, the AF will conduct a study on the future role of the PWP in light of Yemen’s decentralization efforts. 20. The AF will not trigger any new safeguards policies, retain category B – Partial Assessment as environmental category as the parent project and apply the same safeguards approach for screening, scoping, preparation, approval and implementation through an updated Environmental and Social Management Framework (ESMF), which was disclosed, both in-country and in the Bank’s Infoshop in English and Arabic on March 4 and March 12, 2014, respectively. Hence, the only triggered Safeguards policy is OP 4.01 on Environmental Assessment. 21. There are no changes to the legal covenants of the parent project, but as the safeguards language is being updated to an ESMF, this update also applies to two recurrent legal covenants. 11 Remoteness and Poverty Indexes are usually taken from reports and studies produced by the Government and UN Agencies which are updated every five years. 6 22. As an impact evaluation will take place under LIPWP, the proposed AF will use this data collection opportunity to add an assessment of the use of funds provided under the project to determine sustainability. 23. The proposed closing date of the AF will be September 30, 2017, i.e. about three years from the expected AF effectiveness date of September 15, 2014. The closing date of the original financing is not expected to be extended as all the funds would be exhausted by the current closing date of June 30, 2016. 24. The Results Framework is updated to reflect the increased scope and expected outcomes (see Annex 1 and 2). Summary of Proposed Changes Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [X ] No [ ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] Development Objective/Results Project’s Development Objectives Original PDO The proposed Project’s development objectives are to assist the Recipient to: (i) provide needed 7 infrastructure to improve access to basic public services; and (ii) create short term employment. Change in Results Framework PHHCRF Explanation: The Results Framework is updated to reflect the increased scope and new closing date, as well as the use of Core Sector Indicators and the measurement of the enhanced focus on gender inclusion and citizen feedback. Compliance Covenants - Additional Financing ( RY: AF-Labor Intensive Public Works - P148366 ) Source of Finance Date Funds Agreement Description of Covenants Recurrent Frequency Action Due Reference The Recipient shall prepare and furnish to the Association not later than forty Schedule 2, five (45) days after the end of each section II, calendar quarter, interim unaudited IDAT Quarterly New paragraph financial reports for the Project B.2 covering the quarter, in form and substance satisfactory to the Association. Before November 1 of each year, commencing November 1, 2014, the Recipient shall furnish to the Association, for its review and Schedule 2, comments, an Annual Investment Plan section I, including an estimate of (I) operational IDAT Yearly New paragraph costs of the PMU for the subsequent A5 year; and (ii) the counterpart funding required to be provided by the Recipient out of its own resources for Sub-projects to be carried out during the subsequent year. The Recipient shall carry out the Project in accordance with the requirements and operational Schedule 2, procedures set forth in the ESMF and CONTINU IDAT Section I, the Site-specific EMPs and shall not New assign, amend, abrogate or waive any OUS para C 1 provisions of the ESMF, and EMPs), or the Site-specific EMPs without prior approval of the Association. The Recipient shall, where required by the ESMF or any Site-specific EMP: (a) prepare, prior to the commencement Schedule 2, of any civil works under the Project, a CONTINU IDAT Section I, Site-specific EMP, satisfactory to the New Association, in accordance with the OUS para C 2 ESMF; (b) implement the Site-specific EMPs in accordance with the ESMF; (c) not amend, suspend or abrogate any 8 of the provisions of the Site-specific EMP without the prior agreement of the Association. Schedule 2, The Recipient shall carry out Sub- projects in accordance with the CONTINU IDAT Section I, provisions of para. 3 of Section I C, New OUS para C 3 Schedule 2 to the Agreement. No withdrawal under Category (1): Schedule 2, unless a Site-specific EMP has been CONTINU IDAT Section IV, prepared for the particular site for New OUS para B 1 (b) which the withdrawal application is submitted. The Recipient shall: (i) ensure that adequate annual budgetary allocations are made prior to January 1 of each year Schedule 2, to cover the counterpart funding required for the Sub-projects to be section I, IDAT implemented during such year; and (ii) Yearly New paragraph deposit each quarter into a separate A6 bank account the counterpart funds identified in the interim unaudited financial reports referred to in Section II B. 2 of Schedule 2. Schedule 2, Not later than three months after the Effective Date, the Recipient shall section I, 31-Dec- IDAT appoint an independent external auditor New paragraph based on terms of reference acceptable 2014 A7 to the Association. Covenants - Parent ( Labor Intensive Public Works Project - P122594 ) Finance Date Ln/Cr/TF Agreement Description of Covenants Status Recurrent Frequency Action Due Reference Before November 1 of each year, commencing November 1, 2012, the Recipient shall Para 5, furnish to the Association, for IDA- Complied No Section IA, its review and comments, an Yearly H6630 with Change Schedule 2 annual investment plan containing the information set out in Schedule 2 of the Agreement. The Recipient shall ensure adequate annual budgetary allocations are made prior to Para 6, cover counterpart funding IDA- Complied No Section IA, required for Sub-projects to be Yearly H6630 with Change Schedule 2 and deposit such funds into a separate bank account as set out in Schedule 2 of this Agreement. IDA- Para 7, Not later than three months 15- Complied No 9 H6630 Section I A, after the Effective Date, the Sep- with Change Schedule 2 Recipient shall appoint an 2012 independent external auditor based on terms of reference acceptable to the Association. Para 1, The Recipient shall carry out IDA- the Project in accordance with Complied No Section IC, the EIA (including the EMP), Yearly H6630 with Change Schedule 2. and the Site-specific EMPs The Recipient shall prepare, Para 1, prior to the commencement of IDA- civil works, and then implement Complied No Section IC, Site-specific EMPs in Yearly H6630 with Change Schedule 2. accordance with the EIA (including the EMP). The Recipient shall carry out Para 3, Sub-projects in accordance with IDA- Complied No Section IC, the provisions of para. 3 of Yearly H6630 with Change Schedule 2 Section IC, Schedule 2 to the Agreement. No withdrawal under Category Para 1(b), (1): unless a Site-specific EMP IDA- Section has been prepared for the Complied No particular site for which the Yearly H6630 IVB, with Change Schedule 2 withdrawal application is submitted. Finance Loan Closing Date - Additional Financing ( RY: AF-Labor Intensive Public Works - P148366 ) Source of Funds Proposed Additional Financing Loan Closing Date International Development Association (IDA) 30-Sep-2017 Change in Disbursement Estimates (including all sources of Financing)PHHCDE Explanation: Expected disbursement estimates change as the AF will add additional funds to the original disbursements. The changes will be made after the AF is approved. Expected Disbursements (in US$ Million) (including all Sources of Financing) Fiscal Year 2015 2016 2017 2018 Annual 16.00 13.25 13.25 10.5 Cumulative 16.00 29.25 42.50 53.00 Allocations - Additional Financing (RY: AF-Labor Intensive Public Works - P148366 ) Disbursement Source of Allocation Currency Category of Expenditure percent(Type Total) Fund Proposed Proposed Works under Part A of the IDA XDR 28,000,000.00 93 project 10 IDA XDR Goods 1,000,000.00 100 Consultant’s Services and IDA XDR 100 Training 2,100,000.00 IDA XDR Incremental Operating Costs 1,300,000.00 100 IDA XDR Total: 32,400,000.00 100.00 IDAT XDR 0.00 Total: 32,400,000.00 Components Change to Components and Cost Explanation: There is no change to the components of the parent, as the AF uses the same components. However, as the AF adds additional funding to the parent project, the component costs change Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Part A: Community Part A: Community 59.03 106.60 Revised Infrastructure Infrastructure Part B: Technical Part B: Technical 3.47 6.72 Revised Assistance Assistance Part C: Project Part C: Project 2.50 4.68 Revised Management Management Total: 65.00 118.00 Other Change(s) Change in Implementation Schedule Explanation: As is the case with the parent, LIPWP, the AF will use Third Party Monitoring for project supervision. The proposed closing date of the AF will be September 30, 2017, i.e. about three years from the expected AF effectiveness date of September 2014. The closing date of the original financing is not expected to be extended as all the funds would be exhausted by the current closing date of June 30, 2016. IV. Appraisal Summary Economic and Financial Analysis PHHASEFA Explanation: 25. Considering the relative importance of the different types of sub-projects to be executed by the proposed Additional Financing (AF), the financial and economic analysis focused on the investments in 135 schools (810 classrooms), and on investments in 78 water harvesting schemes. These two types of investments represent 70.26 percent of the total investments to be 11 financed under the proposed AF. The overall Economic Rate of Returns (ERRs) for classrooms and water harvesting schemes are 18.5 percent and 45.2 percent respectively, confirming the economic viability of these investments. These results are consistent with the overall Net Present Values (NPVs) for schools and harvested water of US$82.6 million and US$21.2 million respectively. Furthermore, a sensitivity analysis for water harvesting schemes assuming substantially shorter rainy season reveals that even with a 50 percent drop in benefits, the ERR for the water schemes would still be 21.6 percent; which is significantly greater than the opportunity cost of capital, and is supported by a robust NPV of US$6.5 million. 26. The financial impact of the proposed AF will be primarily on the entities required to make counterpart contributions, in cash or in kind for: water, sewage, water harvesting, and village access roads sub-projects, to ensure demand. There will also be financial impact on the users of services provided as a result of user charges. For instance, beneficiaries of water harvesting schemes will pay on average YR0.5 per liter for harvested water, rather than the current YR4.0 per liter to the private water-truck vendors, which will constitute a net positive financial impact equivalent to average savings of about YR3.5 per liter. An explicit design criterion for sub- projects financed by the PWP is that their operation and maintenance (O&M) costs be low and affordable for the targeted beneficiaries. The ability and willingness of the beneficiaries to operate and maintain the proposed facility is assessed during the evaluation of sub-project proposals to ensure compliance with established criteria, including sustainability. The proposed AF will continue to deliver sub-projects using technologies that facilitate financial sustainability through the use of designs and construction technology that has low O&M requirements. This is particularly pertinent for sub-projects for water supply schemes, water harvesting schemes, and improved access through stone paving. The main fiscal impact of the proposed AF will be in covering the recurrent cost requirements for O&M of additional classrooms for existing schools estimated to be an average of about US$419. However since the additional classrooms delivered would be spread all over the country, they are unlikely to constitute a significant financial/fiscal impact on any particular community and/or local government. The ex-post evaluation of similar sub-projects indicates that O&M has been handled adequately with few exceptions. The processes for ensuring adequate O&M arrangements before implementation of a sub-project will remain unchanged. Details on methodology, calculations and empirical results for this analysis are included in the proposed AF files. Technical Analysis PHHASTA Explanation: 27. There are no changes to the technical aspects of the proposed AF compared to the parent project. Hence, as with the parent project, the LIPWP, the technical rationale for the selection of additional sub-projects continues to be derived from: (i) the design criteria that include choice of construction technology; (ii) appropriate technical standards/specifications; (iii) affordable O&M; (iv) effective demand elicited through beneficiary consultations as well as community contributions in cash or kind; and (v) a labor content of at least 30 percent. Over the last 15 years, when the first public works project was approved in 1996, the PMU and sectoral line ministries have developed standard designs for sub-projects based on lessons learned and feedback from communities and beneficiary groups from all sectors, in particular education and health facilities; for instance all 382 sub-projects completed under the LIPWP were fully functional one year after 12 completion and handover. These designs have evolved to become responsive to effective demand and needs of the beneficiary communities, and are appropriate low-cost solutions in the context of the local topography and environment across all six regions of Yemen. Social Analysis PHHASSA Explanation: 28. There are no changes in the expected social development outcomes, which continue to be: (i) improved and sustainable access to basic services (classrooms, water supply and sewage networks, health facilities, water harvesting schemes, stone paving and vocational training). Access to water will particularly benefit women and girls through time savings enabling more productive use of their time; (ii) short-term employment for locally available unskilled labor during implementation; and (iii) community participation through direct involvement in sub- project selection, preparation, and O&M. Additionally, beneficiaries will have the ability to voice complaints and provide feedback on their levels of satisfaction with the infrastructure provided. 29. The additional 313 sub-projects continue to be demand-driven, with stakeholders and beneficiaries directly involved in the sub-project identification and implementation. As the parent project, the proposed AF does not envisage any disparity in access to benefits, or any negative social impacts. In line with the parent project, the proposed AF continues to (i) ask communities to prioritize their needs within budget constraints; (ii) target pockets of poverty and deprived areas within districts through site surveys in order to ensure that communities that are most in need will have the opportunity to benefit from the proposed AF; and (iii) work with the communities and local councils in assisting them to identify, prepare, prioritize and facilitate the availability of the necessary O&M funds where needed. 30. Two new design features of the proposed AF will further enhance gender inclusion and citizen engagement. These are also reflected in the Manual of Procedures, Results Framework, and Procurement Plan. a. Mainstreaming gender: Increased voice and 1. Request by  Community participation of women throughout the sub-project cycle are key elements under the proposed AF (see attached figure). Based on recent lessons 5. Operation &  2. Engagement  learnt from a LIPWP gender pilot12, the following Maintenance with Gov’t &  Community new entry points are now taken up by the AF: i. Sub-project identification will entail standardized, gender disaggregated consultations to ensure that women’s preferences for new sub-projects are reflected 3. Approval by  4. Project Design &  Steering  in selection outcomes. In addition to increasing Implementation  Committee the numbers of female respondents in baseline 12 Lessons on how to increase the engagement of women under the proposed AF derive from the gender pilot carried out during the 2012/2013 pilot of mainstreaming women’s involvement to LIPWIP, funded under the Middle East and North Africa Multi Donor Trust Fund. Using Focus Group Discussions and community consultations with more than 1200 women in 30 LIPWP sub-projects in 10 governorates, the pilot had identified entry points for strengthening the voice of women throughout the project cycle of LIPWP sub-projects. 13 surveys during sub-project identification, additional consultations with women in at least 90 sub-projects (30 percent of the total AF) will be carried out to reflect women’s priorities for sub-projects, their employment opportunities and preferences. These consultations and surveys, in addition to refining sub-project selection to women’s needs, will also assist in the identification of women for O&M activities after sub-project completion. For this, at least 30 female social scientists will be hired and trained before AF effectiveness to support the project with gender disaggregated consultations going forward. ii. Additionally, the AF will ensure that 30-50 percent of shortlisted urban and semi-urban sub-project supervision engineers are female. In rural areas, because the numbers of female engineer applicants are expected to be lower, ten percent of supervision contracts are expected to be given to female engineers. In total, 75 female engineers (about 25 per year) will receive technical training under the project to supervise complex civil works (e.g. water supply schemes, water harvesting schemes, etc.). b. Mainstreaming citizen engagement: In view of the decentralization process, the following two activities to strengthen citizen engagement aim to contribute to increased local accountability, and improved ability for local communities to voice their needs more effectively: i. To ensure that public concerns and aspirations are consistently understood and considered, the AF will include an institutionalized and robust project level complaints handling and community feedback mechanism. This mechanism is intended to equip the community with formal tools and resources to be able to improve the project transparency and accountability as well as to increase citizen participation. It is expected that under the AF, a well-designed and well-implemented complaints handling mechanism will help project management staff enhance operational efficiency in a variety of ways, such as generating public awareness about the project and its objectives; deterring fraud and corruption; mitigating risk; providing project staff with practical suggestions and continuous feedback that allows them to be more accountable, transparent, and responsive to beneficiaries; assessing the effectiveness of the internal organizational processes; and increasing stakeholder involvement in the project. To ensure clarity and disaggregation between safeguards and non-safeguards related complaints, project staff at all levels will receive detailed training, including on the types of grievances that are received and how to formally handle these (e.g. project’s standards and timeframes for complaint resolution, options for a complainant in case of dissatisfaction with the quality of infrastructure provided, grievance redressal process or outcome, etc.). ii. To assess citizen feedback on project investments, the AF will also collect citizen feedback on the project’s infrastructure provision at different points during project implementation, i.e. as part of the ‘Assessment of the Use of Infrastructure’ through a sample of the LIPWP and AF sub-projects (across all seven sectors); and as part of the Beneficiary Assessment at the time of the Project’s Implementation Completion Report, with a sample of LIPWP and AF sub-projects (across all seven sectors). 31. The Bank's Policy on Involuntary Land Acquisition and Resettlement (OP 4.12) does not apply to this project13 since there will be no involuntary land take, relocation, nor impacts on 13 The parent project did not trigger OP 4.12. 14 businesses or other forms of livelihoods as defined under OP 4.12. A screening tool to ensure that social risks, including confirmation that OP 4.12 does not apply, are included as part of the project Environmental and Social Management Framework (ESMF) under the proposed AF and the Manual of Procedures. The ESMF, approved by the Bank, and the updated Integrated Safeguards Data Sheet were both redisclosed prior to appraisal in Arabic and English in-country and the Bank’s Info Shop on March 4, 2014 and March 12, 2014. Environmental Analysis PHHASEnvA Explanation: 32. As the proposed AF is a scale-up of activities of the parent project, LIPWP, there is no change either to the safeguards category, or the triggered safeguards policies. The only triggered Safeguards Policy is OP 4.10 on Environmental Assessment, and the proposed AF remains category B. The safeguards instruments of the parent project can be applied to the proposed AF, with an update to include the social aspects. The LIPWP PMU will use the ESMF to monitor and address the expected environmental impacts, and to screen for any social impacts. The PMU has 15 years of experience managing project impacts successfully. The Manual of Procedures includes provisions for screening sub-project proposals, and stipulates rejection of any sub- project proposal that would result in involuntary resettlement of people, and/or may involve trans-boundary aquifers or other international waterways. Risk PHHASRisk Explanation: 33. While the capacity risks for the Implementing Entity (including Fiduciary Risks) have continuously been rated Low, the country context is associated with high risks, which affects the Bank’s ability to supervise. Hence, for the proposed AF, the risk rating is set as Moderate, which is detailed in the ORAF (see Annex 3). 15 Annex 1: Results Framework and Monitoring For LIPWP- Additional Financing Project Development Objective (PDO): The proposed Project’s development objectives are to: (i) provide needed infrastructure to improve access to basic public services and (ii) create short term employment. Actuals Cumulative Target Values** Data Description Baseline Responsibility Core PDO Level Results Unit of Source/ (indicator (2012 Frequency for Data Indicators* Measure YR 2013 YR 201414 YR2015 YR2016 YR2017 Methodolo definition etc.) LIPWP) Collection gy Indicator 1: Number 0 50,000 163,166 216,044 331,662 485,178 Bi- PMU PMU Each health unit Number of people with Annually serves on average improved access to primary 10000 people health care services Sub-Indicator 1.1: Percentage n/a 49 49 50 50 50 Bi- PMU PMU Share of women with Annually improved access to primary health care services Indicator 2: Number 0 24,500 Female 104,753 160,453 230,010 Bi- PMU PMU Each school serves Number of students with (69,068) (Female Annually on average 570 improved access to school Male (98,901) and Male) students enrollment Sub-Indicator 2.1: Percentage n/a 46 46 50 50 50 Bi- PMU PMU Share of female beneficiaries Annually with improved access to school enrollment Indicator 3: Number 0 26,000 30,000 101,795 148,713 213,180 Bi- PMU PMU People provided with access Annually to “improved water sources” under the project (number) Sub-Indicator 3.1: Percentage n/a 52 52 50 50 50 Bi- PMU PMU Share of female beneficiaries Annually with improved access to improved drinking water Indicator 4: Number 0 50,000 71,400 211,157 342,190 483,000 Bi- PMU PMU Improved Sanitation People provided with access Annually defined as Sewage to “improved sanitation Network. A typical household in Yemen facilities” under the project has 7 members Sub-Indicator 4.1: Percentage n/a 45 45 50 50 50 Bi- PMU PMU Share of female beneficiaries Annually with improved access to improved sanitation Indicator 5: Number 0 25,175 227,000 109,885 177,155 257,456 Bi- PMU PMU Water reclamation Number of people with Annually schemes defined as improved access to water Water Harvesting Scheme reclamation schemes 14 FY14 reflects progress to date, Feb 12, 2014 for contracted sub-projects. ** Estimated targets are based on projected sub-project implementation; these will be updated once the demand-driven sub-projects have been selected. 16 Sub-Indicator 5.1: Percentage n/a 52 52 50 50 50 Bi- PMU PMU Share of female beneficiaries Annually with improved access to water reclamation schemes Indicator 6: Number 0 28,870 321,000 120,830 131,962 253,320 Bi- PMU PMU Number of beneficiaries with Annually access to improved streets and access roads to villages, towns or informal settlements Sub-Indicator 6.1: Percentage n/a 51 51 50 50 50 Bi- PMU PMU Share of female beneficiaries Annually with access to improved streets and access roads to villages, towns or informal settlements Indicator 7: Number 0 650 1,800 2,047 3,200 5,984 Bi- PMU PMU Number of annually enrolled Annually students benefiting from improved access to vocational training Sub-Indicator 7.1: Percentage n/a 80 80 80 80 80 Bi- PMU PMU Share of annually enrolled Annually female trainees benefiting from improved access to vocational training Indicator 8: Number 0 23,700 151,000 74,655 120,000 240,000 Bi- PMU PMU This refers to men Number of person-months of Annually only, as efforts to generated short term generate employment for employment women are just starting and thus are minimal at this point 17 INTERMEDIATE RESULTS Intermediate Result Component One: Community Infrastructure 1. Health facilities Number 0 5 17 22 33 38 Bi- PMU PMU constructed, renovated, Annually and/or equipped 2. Schools: Number of new Number 0 260 1,314 1,156 1,806 2,130 Bi- PMU PMU This measures primary classrooms Annually and secondary levels, as rehabilitated/built in rural areas, these levels are often taught in the same classroom. Hence a distinction of primary or secondary level is not possible 3. Water Supply – Number Number 0 7 8 30 47 55 Bi- PMU PMU of new schemes built Annually 4. Number of households Number 0 9,100 11,200 30,800 49,000 77,000 Bi- PMU PMU provided with access to Annually “Improved Water Sources” under the project 5. Sanitation – Number of Number 0 3 5 16 23 28 Bi- PMU PMU new schemes built Annually Number 0 3,900 7,000 22,400 32,200 39,200 Bi- PMU PMU This is calculated from 6. Households provided with Annually average number of access to “improved households connected to sanitation facilities” under improved sewage the project schemes for each project, i.e. 200. 7. Water Harvesting – Number 0 21 92 99 153 185 Bi- PMU PMU Number of new water Annually harvesting schemes (structures) built Square 0 10 32 96 110 186 Bi- PMU PMU Average road length is 8. Stone Paving – Roads 2km meter Annually constructed 9. Training Centers – Number 0 2 6 12 17 21 Bi- PMU PMU Number of new facilities Annually built or rehabilitated Percentage 0 9 9 9 9 9 Bi- PMU PMU A minimum of 5 percent 10. Community Annually community contribution is required, although contributions in the total actuals have shown a sub-project cost larger share of contributions 11. Percentage of grievances Percentage 0 N/A N/A 80 80 80 Bi- PMU PMU registered, related to Annually delivery of project benefits, that are actually addressed 18 Component Two: Technical Assistance/Consultancy Services 1. Number of consultants Number 0 100 200 280 320 400 Bi- PMU PMU This refers to all types of given opportunity to work Annually consultants (design, quality assurance, supervision) as well as to individual consultants and firms 1.1 of which female Percentage 7 10 12 14 15 20 Bi- PMU PMU This refers to all types of Annually consultants (design, quality assurance, supervision) as well as to individual consultants and firms 2. Percentage of sub-project Percentage n/a 2 3 6 9 12 Bi- PMU PMU construction sites supervised Annually by female engineers Component Three: Project Management 1. Number of Sub-projects Number 0 88 382 396 528 683 Bi- PMU PMU implemented Annually 1.1 Sustainability: Number Number 0 5 10 15 20 30 Bi- PMU PMU O&M Capacity refers to: of water supply schemes Annually (i) training; and (ii) with sufficient O&M assessment one year after project completion and capacity handover 1.2 Sustainability: Number Number 0 30 92 112 150 170 Bi- PMU PMU O&M Capacity refers to: of rain water harvesting Annually (i) training; and (ii) schemes with sufficient assessment one year after project completion and O&M capacity handover 3. Share of Sub-projects for Percentage n/a 0 2 5 8 12 Bi- PMU PMU This target is dependent which short-term Annually on safety concerns of employment opportunities women and social norms at each sub-project for women have been found 4. Sustainability: Number of Number n/a n/a 382 396 528 683 Bi- PMU PMU This is measured during Sub-projects which received Annually the O&M period, where 2 follow-up visits to ensure sub-Projects are visited at least twice in the first Operation & Maintenance year after hand-over to capacity within community community 5. Sustainability: Number of Number n/a n/a 382 396 528 683 Bi- PMU PMU Indicator for Sub-projects which are fully Annually sustainability functional 1 year of enhancement completion and handover 19 Annex 2: Revisions to the Results Framework Comments/ Revisions to the Results Framework Rationale for Change PDO indicators Current (PAD) Proposed change PDO 1 Improved access to primary health care Beneficiaries were clarified to refer to individual revised services(number of beneficiaries) people PDO 2: Improved enrollment capacity Language was clarified: Number of students with revised (student per year) improved access to school enrollment PDO 3: Number of beneficiaries with Beneficiaries were clarified to refer to individual revised improved access to improved drinking water people, using a Core indicator PDO 4: Improved access to improved Beneficiaries were clarified to refer to individual revised sanitation (number of beneficiaries) people, using a Core indicator PDO 5: Improved access to water reclamation Beneficiaries were clarified to refer to individual revised schemes (number of beneficiaries) people PDO 7: Improved access to vocational training revised Trainees were clarified to refer to students (trainees enrolled per year) PDO 1-7 new Sub-indicators on gender were added Intermediary Result Indicators Component 1 Current (PAD) Proposed change New: Number of households provided with To capture households benefiting from access to N/A access to “Improved Water Sources” under the Improved Water Sources project New: Households provided with access to To capture households benefiting from access to N/A “improved sanitation facilities” improved sanitation facilities Stone Paving – New roads and streets Revised Revised unit of analysis “square meter” constructed New: Community contributions in the total sub- To capture community contributions using a N/A project cost Core indicator New: Percentage of grievances registered, To capture citizen engagement, using a Core N/A related to delivery of project benefits, that are indicator actually addressed Component 2 Current (PAD) Proposed change Language was clarified: Number of consultants Number of consultancy services developed revised given opportunity to work New: Number of female consultants given N/A Gender sub-indicator was added opportunity to work New: Percentage of sub-project construction N/A Gender indicator was added sites supervised by female engineers Component 3 Current (PAD) Proposed change N/A New: Sustainability - Number of water supply Sub-indicator added to specify water supply schemes with sufficient O&M capacity schemes N/A New: Sustainability - Number of rain water Sub-indicator added to specify rain water harvesting schemes with sufficient O&M harvesting schemes capacity N/A New: Share of Sub-projects for which short-term employment opportunities for women have been Gender indicator was added found N/A New: Sustainability: Number of Sub-projects which received 2 follow-up visits to ensure To capture O&M and use of infrastructure Operation & Maintenance capacity within provided by project community N/A New: Sustainability: Number of Sub-projects To capture citizen engagement, using a Core which are fully functional 1 yr of completion indicator and handover 20 Annex 3: Operational Risk Assessment Framework (ORAF) Project Stakeholder Risks Stakeholder Risk Rating Low Risk Description: Risk Management: Participant communities may not have sufficient resources Ministry of Planning will continue mobilizing donor support and ensure communities provide their 5 % from their own sources, or donor contributions to finance share minimum contribution to sub-project costs which is part of sub-project selection criteria. sub-projects. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both Not Yet Due Implementation CONTINUOUS Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Rating Moderate Risk Description: Risk Management: (i) Client may decide to change key PMU staff or staff may It is expected that the Government will maintain adequate staff in PMU and will consult with IDA prior move out for better paying jobs. to making any key appointments or replacements. Moreover, LIPU PMU is a well-established program (ii) Consultants assigned to supervise the construction work with dedicated staff and a cohort of consultants used to supervise construction of sub-projects, therefore lack adequate expertise. turnover is likely to be limited. (iii) Consultants assigned to collect baseline data or performance results lack adequate capacity to produce the Resp: Status: Stage: Recurrent: Due Date: Frequency: expected results. Client In Progress Both CONTINUOUS Risk Management: Strict applications of quality and cost control apparatus by the LIPWP-PMU on the construction site. This will be achieved through spot checks to construction sites by the PMU management as is the case under the ongoing LIPWP and will be further enhanced by a formalized complaints handling mechanism and citizen feedback on infrastructure provision and utilization. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client Not Yet Due Implementation CONTINUOUS Risk Management: Periodic random checks shall be conducted by the responsible PMU staff and/or third party on the quality and on-time collection of baseline data and performance results Resp: Status: Stage: Recurrent: Due Date: Frequency: Client Not Yet Due Implementation CONTINUOUS Governance Rating Moderate Risk Description: Risk Management: (i) There may be a risk that funds are not distributed to the Funds are distributed across 21 Yemen based on the agreed fund allocation formula, i.e; 50 percent poverty newly proposed six regions in accordance with the agreed index, 30 percent population, and 20 percent remoteness sub-project selection criteria. Resp: Status: Stage: Recurrent: Due Date: Frequency: (ii) There may be a risk that sub-project selection criteria are not strictly applied. Client Not Yet Due Implementation CONTINUOUS Risk Management: Strict application of the nine sub-project selection criteria (incl. rejection) as envisaged in the project documents. IDA clears the annual work program Resp: Status: Stage: Recurrent: Due Date: Frequency: Both Not Yet Due Implementation CONTINUOUS Risk Management: Supervision of construction works is delegated to local consultant firms that have been selected competitively using the quality-cost based selection method. Also, upon sub-project completion, the completed works are being received by the project through a multi-disciplinary committee, thus ensuring adequate standards are maintained. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both Not Yet Due Implementation CONTINUOUS Risk Management: Strict applications of quality and cost control apparatus by the LIPWP-PMU on the construction sites. This will be achieved through spot checks to construction sites by the PMU management as is the case under the ongoing LIPWP and verified by citizen feedback mechanisms. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client Not Yet Due Implementation CONTINUOUS Project Risks Design Rating Moderate Risk Description: Risk Management: (i) There is a risk that contractors will refrain from bidding on LIPWP-PMU will continue to use contractors from the same areas, where feasible, without jeopardizing works in districts of their home base thus minimizing cost and quality, following the same process as implemented in the parent project. competition and hence increasing costs. (ii) Most of the sub-projects are standard designs for all the Resp: Status: Stage: Recurrent: Due Date: Frequency: seven sectors involved. Client Not Yet Due Implementation CONTINUOUS Risk Management: More than 2000 sub-projects have been delivered under the previous phases of PWP - hence, the project has extensive experience on how to avoid design risks. Resp: Status: Stage: Recurrent: Due Date: Frequency: 22 Client Not Yet Due Implementation CONTINUOUS Social and Environmental Rating Moderate Risk Description: Risk Management: The relative inability to conduct on-site field supervision to The Bank’s Third Party Monitoring arrangements for project supervision, as well as the project-hired ensure safeguards compliance is a risk. environmental safeguards consultant ensure that project implementation is monitored for safeguards compliance and reported on accordingly, using the Environmental and Social Safeguards Framework (ESMF) for mitigation of any negative if and as needed. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client Not Yet Due Implementation CONTINUOUS Program and Donor Rating Low Risk Description: Risk Management: There is a risk that Donors may impose new changes or No mitigation measures are envisaged as the LIPWP-PMU can successfully operate and deliver outputs requirements to their financing conditions. independently. It also has a well-equipped and has the capacity to deal with changing working conditions. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Both CONTINUOUS Delivery Monitoring and Sustainability Rating Low Risk Description: Risk Management: There is a risk that a health unit is rehabilitated or extended None of the AF-supported sub-projects will fund new health units/centers. Only replacements, but may not be put into operation immediately because of rehabilitation or extension to existing health units/ centers will be financed. The task team will lack of operating budget. coordinate with the Bank Health and Population Project team concerning all sub-projects in the health sector to ensure sustainability and meeting safeguards requirements. Resp: Status: Stage: Recurrent: Due Date: Frequency: Bank Not Yet Due Both CONTINUOUS Overall Risk Overall Implementation Risk: Rating Moderate Risk Description: Although the LIPWP-PMU and project team are experienced and familiar with Bank policies and procedures through previous project phases with a proven track record of managing and mitigating risks adequately, the moderate rating is based on the fact that Yemen has a high-risk operating environment, while governance tends to be weak. 23 Annex 4: Fiduciary and Implementation Arrangements and Estimated Project Costing The proposed Additional Financing (AF) is a scale-up of the ongoing LIPWP, where the development objective, implementation progress, financial management, and procurement ratings (among others) are all satisfactory. As the proposed AF will use the same arrangements as the LIPWP, there is no change of the Implementation, the Financial Management and Disbursement, as well as Procurement Arrangements. The proposed AF has the following project costing by category: IDA Contribution GOV. Allocation Contribution A. Category (US$) Amounts Percentag (US$) (US$) e Civil Works 44,150,000 41,150,000 93 3,000,000 Goods 1,620,000 1,620,000 100 0 Consultancy 2,250,000 2,250,000 100 0 Study on future role of PWP 200,000 200,000 100 0 Local Government support 500,000 500,000 100 0 Operational Capacity Assessment 500,000 500,000 100 0 Incremental expenditures 1,980,000 1,980,000 100 0 Contingencies 1,800,000 1,800,000 100 0 TOTAL 53,000,000 50,000,000 3,000,000 24