Document of
         The World Bank


                                 Report No: 69654-PY




     RESTRUCTURING PAPER

             ON A

PROPOSED PROJECT RESTRUCTURING
              OF
   ROAD MAINTENANCE PROJECT
          LOAN 7406-PA
         AUGUST 24, 2006


            TO THE

    REPUBLIC OF PARAGUAY


          June 6, 2012
                           ABBREVIATIONS AND ACRONYMS



IGAP        Improved Governance Framework Action Plan
MOPC        Ministry of Public Works and Communication (Ministerio de Obras Publicas y
            Comunicaciones)
PDO         Project Development Objective




Regional Vice President:                      Hasan A. Tuluy
Country Director:                             Penelope J. Brook
Sector Director:                              Ede J. Ijjasz-Vasquez
Sector Manager :                              Aurelio Menendez
Task Team Leader:                             Maria Margarita Nunez




                                          2
                                   Extension of Closing Date

                            PARAGUAY — ROAD MAINTENANCE
                                      P082026
                                    LOAN 7406-PA

                                      Restructuring Paper

1. The closing date for Paraguay, Road Maintenance, Loan No. 7406-PA, P082026 will be
extended from June 30, 2012 to February 28, 2014.

2. The project was approved by the Board on August 24, 2006 but took some time to be
declared effective (due to difficulties in meeting loan effectiveness conditions), with an
effectiveness date of January 3, 2008. Disbursements were quite slow in the early
intervention years. Disbursements are now at 38 percent (US$ 28.14 million).

3. Progress towards the achievement of the Project Development Objective (PDO) and
implementation progress were upgraded to moderately satisfactory, in January 2012, due to
significant efforts of the Ministry of Public Works and Construction (MOPC) to carry out an
Action Plan that was agreed in September 2011 to accelerate implementation. This Plan has
been monitored by the Bank in December 2011 and April 2012. As a result, project execution
has improved substantially towards the PDO for its focus on the main activities of
institutional strengthening and road improvement and maintenance. A faster pace of
implementation has been sustained through the last year, increasing disbursements from 15 to
38 percent. Nevertheless, the current implementation indicates that a total of 140 km of rural
road rehabilitation for a total of US$22.5 million will be contracted by September 2012, and
services to strengthen MOPC’s capacity in the areas of budget preparation, project
programming, project execution, and monitoring and evaluation for a total of US$17.5
million will be contracted by October 2012. In addition, MOPC has been giving attention to
fiduciary (financial management, procurement) and safeguards (social and environmental)
requirements as per Bank policies and guidelines. Project objectives continue to be
achievable.

4. The proposed extension is necessary to enable the completion of the Project activities,
and to compensate for the initially slow start of the Project after Board Approval. The
Borrower has shown strong interest in implementing and completing the Project carrying on
with actions on all the major components (including road management system, road
inventory, traffic counts system, road toll system, road rehabilitation and maintenance
contracts; and assorted consultancy and non-consultancy services).

5. The Borrower has an action plan in place to implement the Project; a timeframe has been
set under the auspices of the Improved Governance Framework Action Plan (IGAP). The
IGAP is currently being strengthened for the better risk and progress monitoring. The major
ongoing procurement scheduling will ensure that there is sufficient time to implement the
institutional strengthening and infrastructure interventions.

6.   This is the first extension of the Project for a total of 20 months.




                                                 3