Document of The World Bank FOR OFFICIAL USE ONLY Report No: 59110-KI PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF SDR 13 MILLION (US$20 MILLION EQUIVALENT) TO THE REPUBLIC OF KIRIBATI FOR THE KIRIBATI ROAD REHABILITATION PROJECT January 27, 2011 Timor-Leste, Papua New Guinea & the Pacific Islands Sustainable Development Department East Asia and Pacific Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following board consideration and the updated document will be made publicly available in accordance with the Bank`s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2010) Currency Unit = Australian Dollar (AUD) SDR 0.6493 = US$ 1 US$ 1.5400 = SDR 1 FISCAL YEAR January 1 ­ December 31 ABBREVIATIONS AND ACRONYMS AusAID Australian Government Overseas Aid Program ADB Asian Development Bank AUD Australian Dollar CED Civil Engineering Division CQ Consultants` Qualification EA Executing Agency EMP Environmental Management Plan ERR Economic Rate of Return FM Financial Management GOA Government of Australia GOK Government of Kiribati HDM-4 Highway Development and Management Model version 4 HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome IA Implementing Agency IC Individual Consultant ICB International Competitive Bidding IDA International Development Association IEC Information and Education Campaign IFR Interim Financial Report KAP-II Kiribati Adaptation Program Phase II ­ Pilot Implementation Phase KCCM Kiribati Country Coordinating Mechanism KNAO Kiribati National Audit Office LCS Least Cost Selection LMD Land Management Division MCTT Ministry of Communications, Transport and Tourism MELAD Ministry of Environment, Land and Agricultural Development MFED Ministry of Finance and Economic Development MISA Ministry of Internal and Social Affairs MOHMS Ministry of Health and Medical Services MPWU Ministry of Public Works and Utilities NGO Non Government Organization NZAP New Zealand Aid Programme ORAF Operational Risk Assessment Framework PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PMU Project Management Unit PRIF Pacific Region Infrastructure Facility PSC Project Steering Committee QBS Quality-Based Selection of Consultant firms QCBS Quality and Cost-Based Selection of Consultant Firms RERF Revenue Equalization Reserve Fund ROW Right of Way RPF Resettlement Policy Framework SDR Special Drawing Rights SOPAC Pacific Islands Applied Geoscience Commission SSS Sole-Source Selection of Consultants STI Sexually Transmitted Infection STP Sustainable Towns Programme UNDP United Nations Development Programme US$ United States Dollar VCT Voluntary Counseling and Testing Regional Vice President: James W. Adams Country Director: Ferid Belhaj Sector Director: John A. Roome Sector Managers: Charles M. Feinstein N. Vijay Jagannathan Task Team Leader: Christopher R. Bennett REPUBLIC OF KIRIBATI Kiribati Road Rehabilitation Project CONTENTS I. Strategic Context .................................................................................................................... 1 A. Country Context ............................................................................................................... 1 B. Sectoral and Institutional Context .................................................................................... 2 C. Higher Level Objectives to which the Project Contributes .............................................. 4 II. Project Development Objectives............................................................................................ 4 A. PDO .................................................................................................................................. 4 1. Project Beneficiaries ..................................................................................................... 4 2. PDO Level Results Indicators ...................................................................................... 5 III. Project Description................................................................................................................. 5 A. Project components .......................................................................................................... 5 B. Project Financing.............................................................................................................. 7 IV. Implementation ...................................................................................................................... 7 A. Institutional and Implementation Arrangements .............................................................. 8 B. Results Monitoring and Evaluation .................................................................................. 9 C. Sustainability .................................................................................................................... 9 V. Key Risks and Mitigation Measures ...................................................................................... 9 VI. Appraisal Summary ............................................................................................................. 10 A. Economic Analysis ......................................................................................................... 10 B. Technical ........................................................................................................................ 11 C. Financial Management ................................................................................................... 13 D. Procurement ................................................................................................................... 13 E. Social (including safeguards) ......................................................................................... 14 F. Environment (including safeguards) .............................................................................. 16 Annex 1: Results Framework and Monitoring.............................................................................. 17 Annex 2: Detailed Project Description ......................................................................................... 19 Annex 3: Implementation Arrangements ...................................................................................... 23 Annex 4: Operational Risk Assessment Framework (ORAF) ...................................................... 35 Annex 5: Implementation Support Plan........................................................................................ 38 Annex 6: Team Composition ........................................................................................................ 40 Annex 7: Maps .............................................................................................................................. 41 REPUBLIC OF KIRIBATI KIRIBATI ROAD REHABILITATION PROJECT PROJECT APPRAISAL DOCUMENT EAST ASIA PACIFIC EASNS Date: January 27, 2011 Sector(s): Roads & Highways (100%) Country Director: Ferid Belhaj Theme(s): Rural Services & Infrastructure (75%), Sector Director: John A. Roome Other Public Sector Governance (10%), Other Urban Sector Manager: Charles M. Feinstein Development (10%), Infrastructure Services for Team Leader(s): Christopher R. Bennett Private Sector Development (5%) Project ID: P122151 EA Category: Partial Assessment Lending Instrument: IDA Grant Project Financing Data: Proposed terms: [ ] Loan [ ] Credit [ x ] Grant [ ] Guarantee [ ] Other: Source Total Amount (US$M) Total Project Cost: 38.84 Cofinancing: Government of Australia, 5.79 Coordinated through Pacific Region Infrastructure Facility (PRIF) Asian Development Bank 12.00 Borrower: 1.05 Total Bank Financing: 20.00 IBRD IDA New 20.00 Recommitted Borrower: Republic of Kiribati Responsible Agency: Ministry of Public Works and Utilities Contact Person: Mr. Riteti Maninraka, Secretary for Public Works and Utilities Telephone No.: (686) 26-982 Fax No.: Email: rmaninraka@gmail.com Estimated Disbursements (Bank FY/US$ m) FY 2011 2012 2013 2014 2015 2016 Annual 0.50 5.00 9.00 4.50 1.00 0.00 Cumulative 0.50 5.50 14.50 19.00 20.00 20.00 Project Implementation Period: Start: February 1, 2011 End: December 31, 2015 Expected effectiveness date: March 15, 2011 Expected closing date: June 30, 2016 Does the project depart from the CAS in content or other Yes x No significant respects? If yes, please explain: Does the project require any exceptions from Bank policies? Yes x No Have these been approved/endorsed (as appropriate by Bank Yes No management? Is approval for any policy exception sought from the Board? Yes No If yes, please explain: Does the project meet the Regional criteria for readiness for x Yes No implementation? If no, please explain: Project Development objective: The project will improve the condition of South Tarawa's main road network and help strengthen road financing and maintenance capacity Project description [one-sentence summary of each component] Component A: Infrastructure Improvements. This component consists of the main civil works activities to be undertaken on the South Tarawa road infrastructure including: (i) Reconstruction and Rehabilitation of Paved Roads on South Tarawa; (ii) Rehabilitation of Betio Causeway; (iii) Rehabilitation of Paved Roads in Betio; (iv) Sealing of Feeder Roads; (v) Road Safety Improvements; and (vi) Consulting Services. Component B: Road Sector Reform. Activities to strengthen the road sector and ultimately lead to more sustainable main road infrastructure in South Tarawa, including: (i) Land Transport Institutional Review Study; (ii) Micro-Enterprises for Routine Road Maintenance; (iii) Road Safety Action Plan; and (iv) Road Emergency Response Plan. Component C: Project Support. Specialist support to the GOK for implementation of the Project. This includes: (i) establishment of a Project Management Unit to ensure smooth operation of the project; (ii) project associated incremental operating costs; (iii) a valuation specialist to identify the appropriate compensation rates for trees and other assets affected by the project; (iv) an NGO to monitor implementation of the Resettlement Policy Framework; and (v) audit of the project accounts. Safeguard policies triggered? Environmental Assessment (OP/BP 4.01) x Yes No Natural Habitats (OP/BP 4.04) Yes x No Forests (OP/BP 4.36) Yes x No Pest Management (OP 4.09) Yes x No Physical Cultural Resources (OP/BP 4.11) Yes x No Indigenous Peoples (OP/BP 4.10) Yes x No Involuntary Resettlement (OP/BP 4.12) x Yes No Safety of Dams (OP/BP 4.37) Yes x No Projects on International Waterways (OP/BP 7.50) Yes x No Projects in Disputed Areas (OP/BP 7.60) Yes x No Conditions and Legal Covenants: Financing Agreement Description of Condition/Covenant Date Due Reference 4.01 (a) Each of the Co-financing Agreements has Effectiveness been executed and delivered, and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals thereunder (other than the effectiveness of this Agreement) have been fulfilled 4.01(b) The Project Steering Committee and Project By effectiveness Management Unit have been duly established, and the Project Manager and other key personnel referred to in Section I.A.2 (b) of Schedule 2 to this Agreement have been recruited and installed in their positions; 4.01(c) The Project Operations Manual has been By effectiveness duly adopted and deemed acceptable by the Association. Schedule II, 2(a) The Project Management Unit shall have at By effectiveness its disposal adequate funds and other resources as required to ensure proper coordination, and monitoring and evaluation, of the Project, subject to the overall authority and oversight functions of the Project Steering Committee Schedule II, 2(b) the Project Manager shall be assisted by a By effectiveness team of key personnel consisting of (i) a procurement assistant, (ii) an accountant, (iii) a part-time internationally-recruited procurement advisor, (iv) a valuation specialist to be responsible for compensation rates for trees and other assets affected under the Project, and (v) a non- governmental organization to monitor implementation of the Resettlement Policy Framework, along with other technical and support staff as needed and in adequate numbers, all of whom shall be suitably qualified and experienced Schedule II, 2(c) the positions of Project Manager and other Ongoing key personnel referred shall be kept filled at all times by persons having qualifications and experience acceptable to the Association V.1 The recipient shall develop and implement a No later than 1 July, multi-sector road safety action plan. 2012 V.2 The recipient shall develop and implement a No later than 1 July, road emergency response plan. 2012 V.3 The recipient shall provide the Association Not later than three draft road sector reform legislation for months prior to the review and comment and take into proposed introduction consideration the Association`s comments of any draft legislation on said legislation. for road sector reform V.4 The Recipient shall make adequate budgetary allocations to meet maintenance requirements of the road subsector, including: a) beginning in FY 2013, a provision in its annual budget for national road maintenance of at least $1,500 per kilometer of sealed roads and $500 per kilometer of unsealed roads in South Tarawa, to be adjusted annually thereafter according to the rate of inflation; b) a provision for the implementation of the multi-sectoral road safety action plan referred to under Part B (c) of the Project; and c) a provision for the implementation of the road emergency response plan referred to under Part B (d) of the Project. Strategic Context A. Country Context 1. Kiribati (estimated population of 110,000) is a small, remote country comprised of 33 atolls and reef islands, of which 21 are permanently inhabited. The total land area is only 726 km2 spanning approximately 3.5 million km2 of ocean. Over half the land (388 km2) is on Kiritimati (Christmas Island) situated some 1,200 km south of Hawai`i and over 2,000 km to the east of the capital of South Tarawa. 2. The maritime sector is central in connecting the dispersed populated atolls and in underwriting the national economy. The Kiribati Exclusive Economic Zone contains large resources of tuna and associated species, which are exploited primarily by foreign-based fishing fleets under access agreements that contribute up to one quarter of annual GNP. The vast majority of households are dependent to some degree on subsistence fishing. International and inter-island shipping of passengers and goods is important both from an economic and social perspective, as reflected in the Kiribati Development Plan 2008-2011 which identifies several strategies aimed at improving the status and performance of maritime services. 3. Only some 18% of the population is in permanent employment, and over half of these work for the government. Approximately 44% of the population lives in South Tarawa, and this is a magnet for internal migration from the outer islands. South Tarawa provides opportunities for cash employment and consumption, as well as access to higher education and specialist social services not available elsewhere in Kiribati. This has led to population growth of 5.2% in recent years into both North and South Tarawa. The UNDP1 noted that South Tarawa recorded the highest incidence of basic needs poverty in Kiribati, affecting 18.3% of households and 24.2% of the population. A household census of Betio and Bairiki villages conducted by the Sustainable Towns Programme (STP) in November 2009 found that the per capita income of 70% of residents was less than US$1.75/day. In 2006, with a Gini Coefficient of 0.35, South Tarawa was bordering on having an unreasonable level of inequality. 4. The revenue of Kiribati is drawn primarily from five main sources: (i) the sale of fishing licenses (access fees account for more than 50% of annual government revenue and add about 22% to the GDP); (ii) official development assistance from overseas; (iii) The Kiribati Revenue Equalization Reserve Fund (RERF); (iv) general taxation; and, (v) tariffs paid by households for services2. A high dependency on donor contributions and a vulnerability to external economic and environmental factors add to the challenges faced by the country, and more specifically the infrastructure sector. Major long term concerns include environmental degradation, the capacity of the islands to support a growing population with little coordination of the settlement patterns (particularly in Tarawa), the impending vulnerability to climate change, and general long term sustainability issues. 1 Kiribati: Analysis of 2006 Household Income and Expenditure Survey. UNDP, Suva. 2 Kiribati: Infrastructure Sector Review (September 2009). The Pacific Region Infrastructure Facility (PRIF), Sydney. 1 5. The World Bank has had limited operations in Kiribati. The Kiribati Adaptation Program Phase II ­ Pilot Implementation Phase (KAP-II) Project, financed by the Global Environment Facility, is assisting the Government of Kiribati (GOK) in enhancing its capacity to plan and implement adaptation measures to the climate-related issues facing the country, which will also reduce the detrimental impacts of climate change on the fragile atoll ecosystems of Kiribati. This involves technical assistance and small scale civil works. Other currently active technical assistance activities are the areas of institutional capacity building for labor export and in the telecommunications sector. Upcoming projects include investments in solar energy and assistance to respond to the global food crisis. B. Sectoral and Institutional Context 6. South Tarawa Road Infrastructure. In South Tarawa, the communities are linked by a single main sealed road and four causeways that run east to west (see map in Annex 7). For the majority of its length, the road passes through ribbon development comprising dwellings, small businesses, schools etc. all located within the confines of the atoll, which is generally no more than three meters above sea level and has an average width of only 450 meters. Virtually the entire population lives close to, and is affected by, the road`s condition. 7. The road system consists of about 36 km of bituminous sealed main roads (including causeways), about 20 km of secondary roads (half of which are sealed and half unsealed); and about 40 km of unsealed feeder roads. Road use on South Tarawa is growing rapidly: in central Bairiki, traffic volume on the main road has reached 6,000 vehicles per day and is growing at an average rate of 4 percent per year2. As the only main road, all freight transiting South Tarawa travels along it. Since there are no weigh scales either on the road or at the international port in Betio, there is no control on vehicle loading. The current road coverage does not support access to some areas in Betio, Bairiki and other built up villages. 8. Current Situation. While about 7 km of main road in Betio in the west of South Tarawa was rehabilitated in 2008 using finance from Japan, some 29 km of paved roads have received no major maintenance for over twenty years. The above mentioned high traffic levels on the road combined with persistent heavy rainfall in 2009/10 have caused extensive damage, to the extent that substantial sections have completely lost their surface and reverted to unpaved status. The state and condition of the roads in Kiribati are having both economic and social repercussions; particularly with regards to the health and safety of the population. The traffic speed has been reduced in places to 20 km/h or less as a result of the damage, and driving conditions are hazardous, particularly after the rain. In 2010 taxi drivers went on strike because they were unable to make the usual five return trips per day along South Tarawa, sometimes only managing at most three. Further, during the dry season the dust from unpaved sections of the road is contributing to upper respiratory problems among local residents. 9. Financing annual maintenance of the main road system in South Tarawa is estimated to cost AUD 80,000. Increasingly, from 2006 onwards, Government policy has been to move a number of expenditures, initially subsidies and more recently operations and maintenance of infrastructure, onto domestic private sector short term loan finance and to the Development Fund for possible donor assistance. The Budget does not specifically distinguish operations and maintenance expenditures but by extrapolating from the expenditure codes provided, it is likely 2 that between 23- 25% of the Ministry of Public Works and Utilities` (MPWU) GOK funded budget goes towards actual operations and maintenance. Of the operations and maintenance expenditures, around 10% is for the Civil Engineering Division (CED), responsible for maintenance of roads, road drainage, bridges, causeways and the airports. The Division`s maintenance budget for the whole country AUD 279,000 in 2007, AUD 298,000 in 2008 and AUD 195,000 in 2010. 10. Further revenues are derived from a toll on the Dai Nippon Betio causeway which raises an average AUD 300,000 per year, reserved for maintaining the causeway. The Causeway Fund currently holds some AUD 2.5 m of accumulated revenues. An average AUD 150,000 of maintenance is purportedly carried out each year. The vehicle registration and driver license fees are collected by the two Urban Councils and administered through local consolidated revenue accounts. The Council accounting codes do not distinguish between vehicle licenses and other types of licenses (e.g. business licenses, dogs, etc.) but are estimated to be in the order of AUD 70,000 annually. Under the STP, the Councils currently are in the process of establishing performance based budgeting systems including dedicated accounts for specific services including maintenance of feeder roads and solid waste management. There are taxes of 7 and 8 cents/liter on diesel and petrol respectively. 11. Current Implementation Arrangements. Current responsibility for maintaining the main roads in South Tarawa lies with the MPWU, and more specifically the CED of the MPWU. The Highway Authority ­ administered by the Ministry of Communications, Transport and Tourism (MCTT) ­ is responsible for general road safety and approving road related requests for features such as speed humps and bus stops. The engineering capability within the relevant divisions of MPWU is limited and there are no fully qualified Civil Engineers. Additionally, there are staffing problems within the MPWU divisions. For example, within the CED approximately one- third of positions are vacant. As noted above, the Urban Councils have the responsibility for local road maintenance. 12. The only road contracting capability in Kiribati rests with the MPWU where the CED has some donor-provided plant and machinery for road construction and maintenance work3. While there are some private sector firms engaged in building construction, to date they have not been engaged in road maintenance work. 13. Government Commitment. Recognizing the key role that the road system plays in the economy and social fabric of such an isolated and dispersed country, the GOK has acknowledged the need, not only to rehabilitate the infrastructure, but also to undertake necessary sector reforms and institutional strengthening to ensure sustainable financing and the maintenance of the Kiribati road network. However, the remoteness of Kiribati, and the fact that virtually all materials excluding sand and water have to be imported, means construction costs are high ­ as much as US$ 0.7 million/km for a two-lane, 7 m wide road. This fact, combined with tight budget constraints and other challenges facing the GOK, means that Kiribati is unable to make significant progress utilizing only its own resources and so assistance is required to 3 In November 2009, the CED reportedly had 3 backhoe loaders, 3 tipper trucks, 2 graders, 2 steam rollers, 2 rubber rollers and 1 bitumen distributor on South Tarawa (more equipment is held on Kiritimati Island). The Plant and Vehicle Unit responsible for maintaining Government vehicles had 1 backhoe loader and 1 tipper truck. The equipment is of variable condition. 3 make headway towards improving the road system, undertake road sector reform, and ensure road safety and the ongoing maintenance of the roads. C. Higher Level Objectives to which the Project Contributes 14. The project will lead to an improvement in the socioeconomic condition of the population of South Tarawa. The only road connecting the communities in South Tarawa will be restored to maintainable condition with proper drainage and safety appurtenances. Plans will be put in place for how to manage the impact of natural disasters on this critical road infrastructure. The sector reform will lead to more effective delivery of services and a plan for sustainable financing will be developed. II. Project Development Objectives A. PDO 15. The project development objective is The project will improve the condition of South Tarawa's main road network and help strengthen road financing and maintenance capacity. 1. Project Beneficiaries 16. The project will benefit the entire population of South Tarawa through improvements to the road network which will decrease road user costs, reduce travel time, improve safety, reduce the flooding and water ponding caused by improper drainage, and increase the overall quality and reliability of travel. Direct beneficiaries of the project will be private car owners, bus and truck operators, freight handlers, retailers and wholesalers, utility providers, public transport users, motorcyclists, cyclists, pedestrians, residents, businesses and the government. 17. The project will reduce road-side dust, resulting in better air quality. Not only will houses and shops near the road be cleaner, there will be benefits to the health of residents living adjacent to problem areas. The project will improve the convenience and amenity of public transport by improving bus travel. Bus stops will improve safety and bus shelters will provide protection from sun and rain. Increased safety and amenities for pedestrians through the provision of footpaths and solar street lighting will reduce reliance on vehicles, leading to reduced expenditure on transport. 18. The MPWU staff will benefit from the training they will receive by being embedded with the consultant for the design and supervision activities, as well as the equipment that will be provided. The road sector will benefit through the land transport sector reform study which will provide a plan for sustainable financing and management of roads. The project will also take the first steps towards establishing a domestic contracting industry by establishing micro-enterprises to undertake routine maintenance on a performance contract basis. 4 2. PDO Level Results Indicators 19. The achievement of the development objective will be assessed through: (i) the number of kilometers of the paved road network rehabilitated and suitable for only routine maintenance; and, (ii) implementation of an agreed plan for reform of road sector management and financing. III. Project Description A. Project components 20. The project will have three components with a total investment of US$ 38.84 million. There will be an IDA Grant of US$ 20 million, the Asian Development Bank (ADB) will provide co-financing of US$ 12 million, US$ 5.79 million provided by the Government of Australia (GOA) coordinated through the Pacific Region Infrastructure Facility (PRIF), and the GOK US$ 1.05 million. Each component is described below. For further details see Annex 2. 21. Component A: Infrastructure Improvement (US$ 36.46 million including contingencies). This component consists of the main civil works activities to be undertaken on the South Tarawa road infrastructure. The activities include: Reconstruction and Rehabilitation of Paved Roads on South Tarawa. The road from St. Anne to the junction with the Ananau Causeway (~19.25 km), the Ananau Causeway to just past the airport terminal (~2.25 km), the road from the Ananau Causeway junction towards Temaiku 1 (~2.75 km), the road from Temaiku 1 to the south of the airport, and then west to the Ananau Causeway (~2.5 km), and the road from Tanaea to Buota island (~2.5 km) will be reconstructed or rehabilitated (see map in Annex 7) with requisite safety improvements. About 7 km of water main adjacent to the road will be replaced. Rehabilitation of Betio Causeway. The pavement on the approximately 3.25 km long causeway will be rehabilitated, as well as potential repairs to the bridge deck. Rehabilitation of Paved Roads in Betio. Repairs to localized pavement failures and drainage improvements in Betio. Sealing of Feeder Roads. Up to 8 km of unsealed urban feeder roads with high traffic volumes will be sealed and provided with improved drainage. The roads were identified in consultation with the New Zealand Aid Programme (NZAP) financed STP. Road Safety Improvements. Implementation of a road safety improvement program, including street lighting, road signage and pavement markings, to address road safety issues on paved roads not otherwise included in the civil works packages. Consulting Services. For the design and supervision of civil works. 22. Component B: Road Sector Reform (US$ 1.27 million including contingencies). Activities to strengthen the road sector and ultimately lead to more sustainable main road infrastructure in South Tarawa: Land Transport Institutional Review Study. Provision of technical advisory services for a land transport institutional review study to review the existing land 5 transport sector framework, and develop and implement a road map for sector restructuring, including: (i) identification of options for reform of the GOK`s concerned ministries and agencies; (ii) identification of cost recovery options available for provision of access to and maintenance of roads, using revenues from vehicle import duties, fuel taxes and registration fees; and, (iii) preparation of draft road legislation reflecting the chosen options. Micro-Enterprises for Routine Road Maintenance. Provision of assistance in the form of (i) training, (ii) procurement of basic plant and equipment, and (iii) operational support for the management and monitoring of contracts, in order to promote the establishment of micro-enterprises to undertake routine maintenance on the GOK`s paved road network, using performance-based contracting methodology, and under supervision by MPWU. Road Safety Action Plan. Development and implementation of a multi-sectoral road safety action plan in consultation with the Kiribati`s National Road Safety Task Force Committee, including provision of breath testing equipment and radar guns for the traffic police to improve enforcement. Road Emergency Response Plan. The development and implementation of an emergency response plan to help mitigate the impact of any disasters to the GOK`s road network. 23. Component C: Project Support (US$ 1.11 million including contingencies). Specialist support to the GOK for implementation of the project. Establishment of a Project Management Unit (PMU) to ensure the smooth operation of the project4. The PMU will handle procurement and financial management, as well as assisting in the preparation of work-plans, budgets, progress and impact reports, and coordination of the overall implementation of the project. It will comprise a full- time locally-recruited project manager, procurement assistant and accountant, part- time internationally recruited procurement advisor. Project associated incremental operating costs (e.g. telecommunications, local workshops for stakeholders, procurement-associated activities, etc.). A valuation specialist to identify the appropriate compensation rates for trees and other assets affected by the project. An NGO to monitor implementation of the Resettlement Policy Framework (RPF). Audit of project accounts. 4 The PMU will be established in the MFED. It is anticipated that the PMU will not only support this roads project, but would also support the proposed World Bank financed Kiribati Aviation Infrastructure Investment Project`, which is under preparation with the Ministry of Communication Transport and Tourism Development. The GOK agreed that the MFED was the best location for the PMU given its role in the financial management of the project and the need for the PMU to support projects in different ministries. 6 B. Project Financing Lending Instrument 24. The project will be financed with an IDA Grant of US$ 20 million. Project Cost and Financing 25. The total project financing requirements are estimated at US$ 38.84 million. Table 1 shows the contributions of the different partners in the project; Tables 2 and 3 the costs by financier. Table 1: Financing Plan Amount Share of Source ($ million) Total (%) World Bank 20.00 51.5 Asian Development Bank 12.00 30.9 GOA Through PRIF 5.79 14.9 Government of Kiribati 1.05 2.7 Total 38.84 100.0 Table 2: Costs by Component and Financer Costs By Component and Financer (US $ m) Component/Activity GOA World ADB Through GOK Total Bank PRIF A. Infrastructure Improvements 18.48 12.00 4.93 1.05 36.46 B. Technical Assistance 0.41 0.86 1.27 C. Project Support 1.11 1.11 Total 20.00 12.00 5.79 1.05 38.84 IV. Implementation 26. The Executing Agency (EA) for the project will be the Ministry of Finance and Economic Development (MFED). The Implementing Agency (IA) for the project will be the MPWU. There will be a Project Steering Committee (PSC) that will oversee the project and monitor the project`s implementation as well as advising the GOK on any concerns or issues that may arise with regards to project implementation. 7 Table 3: Detailed Cost Estimate by Financer (US$ million) GOA Through Category World Bank ADB PRIF GOK $US m % of $US m % of $US m % of $US m % of Total Cost Cost Cost Cost Cost Cat. Cat. Cat. Cat. US$ m A. Investment Costs 1. Infrastructure Improvements 15.57 52.9% 7.96 27.0% 4.93 16.7% 1.00 3.4% 29.46 2. Consultants a. Design and Supervision 2.23 100% 2.23 b. Technical Assistance 0.13 13.1% 0.86 87% 0.99 c. Project Support 1.01 100.0% 1.01 3. Goods 0.16 100.0% 0.16 4. Land Acquisition and Resettlement 0.05 100% 0.05 Subtotal (A) 16.87 49.8% 10.19 30.1% 5.79 17.1% 1.05 3.1% 33.90 B. Contingencies 3.13 65.2% 1.67 34.8% 4.80 Financing Charges During C. Implementation 0.14 100% 0.14 Total Project Costs (A+B+C) 20.00 51.5% 12.00 30.9% 5.79 14.9% 1.05 2.7% 38.84 a Includes taxes and duties of 10% to be financed from government resources and loan resources. b In mid-2010 prices. c Physical and Price contingencies computed at 15% for civil works and 10% for consultants services. d Includes interest and commitment charges. Interest during construction for ADB loan from the Asian Development Fund has been computed at an interest rate of 1%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. A. Institutional and Implementation Arrangements 27. The institutional arrangements for implementing the project reflect the capacity constraints within the GOK. The measures to address the constraints include: The MPWU will be responsible for the implementation aspects of the project only. A PSC will be formed by the GOK to be responsible for general oversight, monitoring and supervision of the project. A PMU will be established in the MFED. It will contain a project manager, procurement assistant, an accountant, a part-time internationally recruited procurement advisor, as well as appropriate support staff. The MFED--though the PMU--will be responsible for the financial management of the project, including authorizing withdrawal applications. The project will use direct payments for the major contracts, and only have a small designated account. 8 At the request of the GOK, the ADB assisted the GOK to hire a consultant for project design and supervision at the onset of project preparation. The procurement of this design and supervision consultant was completed prior to project effectiveness5. The design and supervision consultant--financed by the ADB--will assist the GOK in all aspects of project implementation, including preparing the bidding documents for the procurement of the civil works contractor and assisting with the procurement as necessary. An NGO will monitor implementation of the RPF. B. Results Monitoring and Evaluation 28. The results monitoring and evaluation will be undertaken by the MPWU in the form of semi-annual Project Reports and by the World Bank and ADB through their project missions. The results monitoring and evaluation will center around the PDO Level Results Indicators of measuring: (i) the number of kilometers of the paved road network rehabilitated and suitable for only routine maintenance; and, (ii) implementation of an agreed plan for reform of road sector management and financing. 29. The majority of the data for the monitoring and evaluation will be gathered by the project`s design and supervision consultant and so is within the capacity of the MPWU to supply. C. Sustainability 30. The Borrower is very committed to this project and sees it as essential to the economic well being of the country. They acknowledge that there is a need to address the existing approach for financing and delivering road maintenance so as to ensure that the investment in road infrastructure is not allowed to deteriorate. The Borrower also recognizes the need to restructure the land transport sector in Kiribati. 31. Sustainability of the road network is part of the project`s objectives and this will be achieved through upgrading the existing road network to the point where it can be maintained in good condition with a minimum of investment, as well as through a series of targeted institutional strengthening activities aimed at sector reform and strengthening. V. Key Risks and Mitigation Measures 32. The key risks and mitigation measures are given in Table 4. 5 Consultants for A.2 were selected during preparation by the GOK with the assistance of the ADB, and will be financed 100% by the ADB. The selection was done using the ADB`s Guidelines on the Use of Consultants (2010), Quality-and-Cost Based Selection (QCBS). A review by the World Bank team has concluded that the selection is in accordance with paragraphs 1.8 and 1.11 (e) of the World Bank Guidelines for Selection and Employment of Consultants by World Bank Borrowers. 9 Table 4: Key Risks and Mitigation Measures Risks Mitigation Measures GOK lacks capacity to The project will establish a PMU in the MFED with appropriate staff, including implement the project a part-time international procurement advisor to assist the GOK. The project will employ a single design and supervision consultant to provide the necessary support to the MPWU and GOK in implementing the project-- including procuring the civil works contractor. The World Bank and ADB will ensure regular and intensive joint missions to provide support to the GOK. GOK fails to act on sector The technical assistance activities reflect the current recognized interest of the reform recommendations GOK in sector reform. The recommendations will reflect the actual capacity and constraints in Kiribati There will be regular dialog throughout the technical assistance process with the GOK to ensure proper buy in. GOK provides insufficient Technical assistance will assist the GOK with how to ensure sustainable funding for road maintenance financing for the sector. The project will train community based road maintenance groups who will be able to undertake routine maintenance on a performance based contracting basis under management by MPWU. This will be more cost effective and efficient than existing arrangements. For 24 months after completing construction the contractor will be responsible for maintaining the new road works. Environmental damage The EMP will be included with the bidding documents and Bill of Quantity, caused by the project thereby forming part of the contract. The design and supervision consultant shall ensure compliance with the EMP and report on compliance as part of their regular reports. Land claims An RPF was prepared covering the process for acquiring land and assets The project will use the existing GOK processes for administering land compensation since these are familiar to the local population and operate well. The road design fails to meet A road safety audit was done during preparation to clearly identify road safety the local needs issues and investments. The use of the same consultant for design and supervision provides clear accountability for any design errors, such as with drainage as was observed on previous projects, and will ensure consistency in the works for all activities on the project. The use of a 24 month defect liability from the contractor will further reduce the technical risk. World Bank and ADB do not Agreement in principle has been reached on the procurement methodology for reach agreement on joint co- co-financing civil works. A formal agreement on the detailed co-financing financing modalities is still pending. VI. Appraisal Summary A. Economic Analysis 33. An economic analysis was undertaken with HDM-46. The results of this analysis are presented in Tables 5 and 6. The project has an Economic Rate of Return (ERR) of 40.3% and an 6 An HDM-4 Level I calibration was done for passenger cars (28%), passenger vans (40%) and 4 tonne light trucks (32%). The initial road roughnesses were 5 ­ 7 IRI m/km for paved roads; 12 IRI m/km for the other roads. Traffic 10 NPV of US$ 18.49 million. The lowest rate of return is for the upgrading of the other roads at 14.3%. Betio Causeway gives a very high rate of return since it has a relatively low cost to repair and the current pavement is in such poor condition with some 6,000 veh/day. The sensitivity analysis in Table 5 shows that the project is economically viable and robust: varying the civil works costs, road user costs or traffic volumes by 20% do not compromise the overall economic viability. Table 5: Economic Analysis Results Net Present Economic Rate Value (NPV) of Return, ERR Section (US$ million) (%) Betio Causeway 3.27 105.3% St. Anne - Airport Intersection 13.10 43.0% Airport Road 0.98 46.2% Temaiku Road 0.62 23.9% Other Roads 0.52 14.3% Total 18.49 40.3% Rehabilitation Works 17.97 45.3% Upgrading Works 0.52 14.3% Total 18.49 40.3% Table 6: Sensitivity Analysis Civil Works Base Road User Costs Current Traffic Costs ERR Section -20% +20% -20% +20% -20% +20% (%) (%) (%) (%) (%) (%) (%) Betio Causeway 105.3% 128.6% 89.3% 86.1% 124.0% 84.3% 127.2% St. Anne - Airport Intersection 43.0% 54.6% 34.6% 32.9% 52.4% 32.8% 53.1% Airport Road 46.2% 57.7% 37.9% 36.2% 55.4% 37.2% 55.3% Temaiku Road 23.9% 32.1% 17.9% 16.6% 30.5% 18.5% 29.4% Other Roads 14.3% 18.1% 11.6% 11.0% 17.4% 10.8% 17.6% Total 40.3% 51.4% 32.4% 30.7% 49.2% 30.8% 49.9% Rehabilitation Works 45.3% 57.1% 36.7% 34.9% 54.8% 34.9% 55.6% Upgrading Works 14.3% 18.1% 11.6% 11.0% 17.4% 10.8% 17.6% Total 40.3% 51.4% 32.4% 30.7% 49.2% 30.8% 49.9% B. Technical 34. From a technical point of view the project is very straight forward: it is the rehabilitation of an existing road pavement on the existing alignment. The current pavements have lasted for growth rates were 4% for 2010-15; 3% 2015-25; 2% after 2015. Traffic volumes ranged from 6,000 ­ 2,000 veh/day for paved roads; 200 veh/day for other roads. The analysis assumed the road will be upgraded with a bituminous double surface dressed pavement. 11 twenty or more years which indicates that the bearing capacity is adequate. Key considerations are: Pavement Type. Confirming the most appropriate type of pavement. The project will need to import high quality materials from Banaba, Nauru or Fiji. While a double bituminous dressing surface is common for pavement such as these, given the high costs of imported materials and the maintenance challenges in Kiribati consideration will be given to other pavement types, such as cement concrete. The economic analysis shows that the project would still provide strong economic returns even with a cement concrete pavement. Drainage. Particular attention will be paid to drainage as this is a primary factor in the failure of the existing pavements. Road Safety. Ensuring that the road design is safe by considering issues such as: (i) provision of adequate footpaths in critical areas such as the densely populated villages to reduce the risk to pedestrians; (ii) provision of bus-stops that will contribute to better safety, traffic management and promote safer driving by bus-drivers; (iii) the provision of pedestrian crossings at schools and other busy areas to promote pedestrian safety; (iv) provision of proper signs and pavement markings; (v) improved intersection designs; (vi) provision of solar street lighting to improve safety at night in busy pedestrian areas; (vii) speed control measures such as speed humps to mitigate the likely increased risk of speeding as a result of improved road conditions, etc. Climate Adaptation. The designers will need to consider climate adaptation implications through forecasts of future changed climatic conditions, including but not limited to changes in rainfall intensity and sea level rise. The coastal assessment on the KAP-II project identified all beach areas that are adjacent to the road and are eroding. In some sites erosion is only a few meters away from the road. It will be necessary to ensure that there is adequate coastal protection for the road. It is anticipated that this work will contribute towards the disaster plan to be developed under the project`s technical assistance activities. Groundwater Recharging. Means of improving subsurface water reserves by introducing road water run-off will be investigated7. Improving Lagoon Flow. The designers will consider the implications and costs of providing additional culverts in the existing causeways to improve the flow in and out of the lagoon8. 7 A major climate change hazard for South Tarawa is sea level rise and the impact on fresh water supply through salt intrusion. The availability of fresh water is already a serious problem due to population pressure, behavior and pollution. The main road investment of 19.25 km represents approximately 15 ha of impervious area, which is significant when the main Bonriki reservoir is 71 ha. Even if only grey-water recharging is done, this could make a major contribution towards addressing the water scarcity issue in South Tarawa. 8 The construction of the causeways in South Tarawa has greatly reduced the outflow from the lagoon which has an impact on public health. Total solid waste generation is estimated at some 7,400 tons/year with an estimated 35% of this illegally dumped to the lagoon or sea. With only one narrow bridge along the entire length of South Tarawa there is also a limitation on the size of outriggers on boats which influences safety. The design consultant will review available information, such as the studies done by the Pacific Islands Applied Geoscience Commission (SOPAC) and Sustainable Towns Programme Lagoon Roundtable, March 2010, and identify options such as installing culverts at the time of road rehabilitation works. 12 Other Services. The accommodation of future services including fiber optic cable ducting, and water and sanitation services9. 35. Once the preliminary designs are completed, the consultant will undertake community consultations to ensure the acceptability of the proposals, particularly with regard to the urban livability` of the road, road safety and climate adaptations. On the basis of the community feedback the designs will be refined and the detailed designs prepared. C. Financial Management 36. The project proceeds, including overseeing the Designated Account, will be managed by the Ministry of Finance and Economic Development (MFED). A financial management capacity assessment has been conducted by the Bank and actions to strengthen the project`s financial management capacity have been agreed with the relevant implementing agencies. The FM assessment has concluded that with the implementation of these proposed actions, the financial management arrangements will satisfy the Bank`s minimum requirements under OP/BP 10.02. Annex 3 provides additional information on financial management. D. Procurement 37. The procurement risk assessment revealed that procurement capacity and knowledge across the public sector, and specifically in MPWU, is weak. In view of these limitations, dedicated procurement staff will be hired for the PMU in the MFED. They will be assisted by the design and supervision consultant in the civil works procurement. 38. Annex 3 includes the procurement plan. Procurement of all Bank-financed components under the project will be carried out in accordance with the Bank`s Guidelines: Procurement Under IBRD Loans and IDA Credits dated May 2004, Revised October 2006 and May 2010 and Guidelines: Selection and Employment of Consultants by World Bank Borrowers dated May 2004, Revised October 2006 and May 2010. The World Bank`s standard bidding documents will be used for the works contracts (to be co-financed with the ADB), and such contracts will be subject to prior review by the World Bank. 39. The bidding documents shall reflect that the World Bank intends to finance the contract jointly with ADB. A condition for disbursement for the civil works will be the signing of an agreement between the ADB and World Bank on joint co-financing. Each bidding document and contract shall contain a provision permitting the World Bank, ADB or persons appointed by them to inspect the Project and to inspect or audit the records and accounts of any bidders, contractors, suppliers or service providers as they relate to the Project. 9 Pacific Infrastructure Advisory Center (PIAC) is assisting the GOK with identifying investment opportunities in the areas of water, sanitation and waste management. The GOA has provided a grant of US$ 1.5 million through PRIF to finance approximately 7 km of water main replacement along the road, to be done as part of the civil works contract. 13 E. Social (including safeguards) 40. As the only major road connecting communities in South Tarawa, the road provides essential access to all services, including government, education, health, the airport, the port, local wharves, markets, churches, NGOs and businesses. There are no alternative routes. The road is also the main thoroughfare for pedestrians, even though there are few areas with proper provisions for non-motorized traffic. 41. The road`s condition is currently causing major social disruptions to South Tarawa. All vehicle owners experience high and frequent damage to vehicles resulting in premature ageing of the vehicles, high maintenance costs and unroadworthy vehicles on the road. Cyclists are deterred from using the road and there are few footpaths, pedestrian crossings, road signage, bus- stops, and shelters. During the rainy season the road is almost impassible and speeds drop significantly. Taxi and bus drivers reduce or even stop their service due to the wear and tear on their vehicles. The holes in the road and edges pool with water and present health risks from mosquito-borne diseases. In the dry season the dust from the road affects those living nearby and pneumatic illnesses have been reported from those affected by dust. 42. Road Safety: Road safety is a major concern with a growing incidence of road accidents due to increased traffic, the age and condition of vehicles and dangerous driving. Perversely, the current poor condition of the road is probably a factor in reducing the number of serious accidents due to its influence on vehicle speeds. The project will address road safety through a multi-faceted approach: During project preparation, the Task Team`s road safety specialist undertook a detailed road safety audit of the South Tarawa paved road network. This identified the existing deficiencies from an engineering perspective. This audit will be provided to the designers and used during project implementation support to ensure that the road safety issues are fully addressed. The civil works contract will include addressing road safety on all roads, not just the roads to be reconstructed as part of the project. This will ensure that South Tarawa`s main road network is as safe as is practicable. In addition to civil works activities to address road safety, there is a need to also address the problem from a multi-sectoral perspective. This would involve providing support to other key participants in road safety, such as the police, health and education sectors. To this end, the project will develop and implement a multi- sectoral road safety action plan. This will be done in consultation with the existing National Road Safety Task Force Committee. 43. Displacement of people is not envisaged during the implementation of the project. The road rehabilitation works are expected to be carried out within the Right of Way (ROW) of the existing road. Temporary acquisition of land may be required for easements to provide drainage pipes. There may also be cases where some crops (e.g. coconuts, pandanus etc.) that are currently standing very close to the road might be damaged or destroyed to make way for footpaths or bus stops. While the acquisition of land will be avoided whenever feasible, and while all viable alternatives will be explored, it may be still be necessary to acquire small parcels of land adjacent to the existing road in order to build bus stops. Even when land is not taken, there may 14 be cases where people`s livelihoods may be impacted by the road works either temporarily or, less likely, permanently. This will not be clear until the design stage of the road works. In order to address this, a RPF that identifies principles to be followed in the event of temporary land acquisition, the damage or removal of assets, and the acquisition of land, was developed and disclosed during project preparation. 44. HIV/AIDS. It is reported that HIV/AIDS in Kiribati is spread through sexual transmission, with the prostitution industry that services the international fishing vessels being of high risk. While the prevalence of HIV/AIDS is reported to be low, a study in 2004 found that Chlamydia is endemic among both pregnant women (13.0%) and seafarers (9.3%)10. This creates potential for a spread of HIV/AIDS. In accordance with the requirements of the Bank`s Standard Bidding Documents, the project will undertake an HIV/AIDS Information and Education Campaign (IEC) for the contractor`s employees, sub-contractors, consultants, as well as local communities in the proximity of the project site. Kiribati already has an existing and active National Aids Council in the form of the Kiribati Country Coordinating Mechanism (KCCM). There are already a number of initiatives in place from different NGOs educating people, particularly the youth, about HIV/AIDS prevention. There are voluntary counseling and testing (VCT) facilities. The civil works contract will contain a provisional sum to cover the cost of the IEC activities. The KCCM will work with the contractor to identify an appropriate NGO to provide the IEC activities using Ministry Of Health and Medical Services (MOHMS)-certified trainers. The NGO will apply, with suitable local adaptation, the HIV/AIDS in Transport Toolkit (www.theroadtogoodhealth.org) to the project. 45. Gender Analysis. Kiribati has ratified the Convention on the Elimination of All Forms of Discrimination Against Women, and women`s basic rights are protected under Kiribati's constitution. In reality, women`s social status is low, and men have greater access to and control of political, economic, knowledge, and time resources. Women comprise 51.5% of the workforce and 37% of those in paid employment. The need to address gender issues is widely recognized. 46. Women in Kiribati shoulder almost all the home care responsibilities and their assumption of roles as care givers, nurturers and providers for the family means that they are particularly affected by the lack of cash income, the impact of price rises for food and basic necessities, the availability of water and sanitation, and accessibility to health and education services. The improvements to the road, and provision of footpaths and other safety features, will help address some of these issues. 47. Kiribati has a national unemployment rate of 6.1%, with official male unemployment of 5.6% and female unemployment of 6.6%. Unemployment in the urban population is estimated at 10.9%. An alternative unemployment measure which excludes village workers (those involved in subsistence activities) from the labor market, gives a national rate of 14.6%, urban 16.8%, male 12.2% and female 18.2%. Yet another definition includes defining village workers as unemployed on the basis that these people would look for work if they believed cash work was available, and gives an unemployment rate of 64.5% nationally (59.6% for men and 70.3% for women). Irrespective of how it is calculated, women are over-represented in the unemployment statistics relative to men. 10 KRRP Poverty and Social Analysis. 15 48. During project design consideration was given to providing special employment opportunities to women. There was considerable community interest in the employment opportunities presented by the project both in the construction phase and the ongoing road maintenance component. There was much support for ensuring local people were employed where possible and extending the employment opportunities as much as possible. The suggestion that non-skilled labor be employed on short-term contracts was favorably received. The suggestion that some jobs be reserved` for vulnerable groups was generally supported with women and youth identified as possible target groups. The greatest support was for unemployed young people to be given these opportunities. To that end, the project will ensure that women are encouraged to apply for positions and that the availability of project employment is advertised widely and that recruitment is conducted giving equal opportunity to all. F. Environment (including safeguards) 49. The project is rated as a Category B project due to the environmental impact. The environmental management plan (EMP) was prepared and disclosed on September 6, 2010. The EMP summarizes all the anticipated environmental impacts and its associated mitigation measures during the design, construction and operational phases. It makes reference to the relevant law and contract documents, approximate location, timeframe, mitigation costs, and the responsibility for its implementation and supervision. A field monitoring checklist has been prepared based on the EMP and monitoring plan. The field monitoring checklist will be used by the supervising engineers. The signed checklists will be provided to the MPWU who will be responsible for the appropriate follow-up and compliance reporting. 50. The main potential impacts identified include: (i) disturbance including noise and dust arising from loading and unloading, and transportation of construction materials (aggregates and bitumen) by dump trucks; (ii) noise and dust arising during scarifying the existing road base, construction of the new road base and construction of the new surface; (iii) erosion and sedimentation from exposed surfaces that may affect the lagoon environment during the construction processes; (iv) risks from the use and disposal of hazardous materials such as used fuel and lubricants; and, (v) increased risk of accidents from increased vehicle movements. 51. A key consideration during project preparation was where the materials for the road construction would be sourced. The bulk of the road construction materials will be imported from offshore destinations such as Banaba, Nauru or Fiji. This will minimize the demand on the limited local resources. 16 Annex 1: Results Framework and Monitoring KIRIBATI: ROAD REHABILITATION PROJECT Results Framework Project Development Objective (PDO): The project will improve the condition of South Tarawa's main road network and help strengthen road financing and maintenance capacity Cumulative Target Values** Responsi Description Data bility for (indicator PDO Level Results Unit of Baseline Freque YR 1 YR 2 YR3 YR 4 YR5 Source/ Data definition Indicators* Measure 2010 ncy Core (2011) (2012) (2013) (2014) (2015) Method. Collectio etc.) n Indicator One: Roads Number of kilometers of rehabilitated the paved road network Semi- Supervision and only rehabilitated and Annual Mission/ drain km 7 (Betio) 39.5 39.5 MPWU suitable for only routine Project Progress cleaning and maintenance Report Report basic maintenance required. Indicator Two: GOK An agreed plan for Semi- Supervision No plan agrees on Sector reform reform of road sector Annual Mission/ for sector plan for plan under MPWU management and Project Progress reform sector implementation financing under Report Report reform implementation INTERMEDIATE RESULTS Intermediate Result (Component A): Number of kilometers of the road network in maintainable condition Intermediate Result Number of Semi- Supervision indicator One: Number km Annual Mission/ of kilometers of paved km 0 32.5 32.5 MPWU rehabilitated Project Progress roads improved under the Report Report project. Intermediate Result Semi- Supervision Number of indicator Two: Number km 0 8 8 Annual Mission/ MPWU km of kilometers of Project Progress rehabilitated 17 unpaved roads improved Report Report under the project. Intermediate Result Condition in indicator Three: Main Semi- Supervision accordance roads in good and fair Annual Mission/ with IDA % 20% 95% 95% MPWU condition as a share of Project Progress Core the total classified roads Report Report Indicator definitions. Intermediate Result Semi- Supervision Speed indicator Four: Average Annual Mission/ measured km/h 20 40 40 MPWU travel speed St Anne`s Project Progress outside of to Ananau Causeway Report Report peak hours. Intermediate Result (Component B): Road Sector Reform Intermediate Result Semi- Supervision indicator One: Land Study Study under Annual Mission/ No study MPWU Transport Institutional complete implementation Project Progress Review Study Report Report Intermediate Result indicator Two: Number of micro-enterprises for Semi- Supervision routine road Annual Mission/ Number 0 5 5 MPWU maintenance in South Project Progress Tarawa commercially Report Report active for two or more consecutive years Intermediate Result No indicator Three: National Semi- Supervision Draft Strategy Adoption and Road Strategy under Annual Mission/ Strategy adopted MPWU implementation of Safety implementation Project Progress prepared by GOK National Road Safety Action Report Report Action Plan Plan Intermediate Result No Road indicator Four: Plan Semi- Supervision Emergen Draft Plan Adoption and under Plan under Annual Mission/ cy Plan adopted MPWU implementation of Road implem implementation Project Progress Response prepared by GOK Emergency Response entation Report Report Plan Plan 18 Annex 2: Detailed Project Description 1. The proposed Kiribati Road Rehabilitation Project involves the rehabilitation of an estimated 32.5 km of main roads and approximately 8 km of principal feeder roads on South Tarawa. Extensive damage, primarily from wet weather since 2009 and an increase in traffic volume plying the roadways, has made the existing roads difficult to traverse. For the main roads, the upgrading will generally consist of 7 m wide sealed road with 1.5 m easement on each side for footpath drainage and service lines (electricity, water supply, telephone line, and other services). A lower standard will be adopted on other roads. 2. The existing road is in poor condition with excessive pot holes, cracks, inadequate drainage, edge break etc. and is need of urgent repairs. Every time it rains, expensive repair works are required. While parts of the South Tarawa road network (town roads in Betio and Biriki and a section of main road at Bikenibeu) were rehabilitated in 2008, no major maintenance works have been done on the remaining paved roads for more than 20 years. The damage to the roads has greatly affected travel in South Tarawa with the average travel speed reduced to 20 km/h and vehicles traversing large and deep depressions filled with water during the rainy seasons. During dry seasons, dust from the unpaved sections of the road has become a nuisance and health hazard to the adjacent communities. An increase in upper respiratory diseases has been reported among the residents of the adjacent communities from excessive dust generation. 3. Most of the South Tarawa road traverses a ribbon development area composed of residential dwelling units, small commercial and business concerns, churches, schools, etc. These are all situated within the confines of the atoll which is often no more than 100 meters wide. Virtually the entire population of South Tarawa lives in close proximity to the road and is greatly affected by the existing conditions of the road. Component A: Infrastructure Improvements (US$ 36.46 million including contingencies) 4. This component consists of the main civil works activities to be undertaken on the South Tarawa road infrastructure: Reconstruction and Rehabilitation of Paved Roads on South Tarawa. The road from St. Anne to the junction with the Ananau Causeway (~19.25 km), the Ananau Causeway to just past the airport terminal (~2.25 km), the road from the Ananau Causeway junction towards Temaiku 1 (~2.75 km), the road from Temaiku 1 to the south of the airport, and then west to the Ananau Causeway (~2.5 km), and the road from Tanaea to Buota island (~2.5 km) will be reconstructed or rehabilitated (see map in Annex 7) with requisite safety improvements. About 7 km of water main adjacent to the road will be replaced. The works will pay particular attention to drainage since that is a major problem. The works will also include safety considerations, such as bus bays, speed humps, solar powered street lighting and footpaths. The road upgrading will include the scrapping of the top layer of the road and plowing the existing road base; laying, mixing, spreading and compacting up to 30cm of new imported crushed gravel base, and a new bitumen or cement concrete surface. If a bituminous pavement is used, the road will have concrete edging to prevent the 19 propagation of edge breakdown of the new road. The finished road level will be slightly higher than the surrounding area to ensure proper drainage. The project will include the construction of speed humps at suitable locations, and construction of some 50 bus stops at locations to be identified. Wherever possible, the drainage will be connected to soak pits for groundwater recharge or discharged directly to the ocean. During the civil works for the road, approximately 7 km of water main will be replaced for an estimated cost of US$ 1.5 m (financed by a grant from the GOA through PRIF). The water main is scheduled to be replaced in the near future under a separate water and sanitation project. However, replacement during the road construction will avoid damage to newly constructed roads and reduce costs of laying the pipes. Rehabilitation of Betio Causeway. The pavement on the approximately 3.25 km long causeway is severely deteriorated and potholed so it will be rehabilitated. An assessment will be made of the bridge deck and, should problems be identified, this will also be repaired. Rehabilitation of Paved Roads in Betio. In 2008 there was reconstruction of the paved road network in Betio. However, design and/or construction faults, mainly related to failure to properly consider drainage, have led to localized pavement failures. These will be repaired under the project and appropriate drainage supplied. Sealing of Feeder Roads. Up to 8 km of unsealed urban feeder roads with high traffic volumes will be sealed and provided with improved drainage. Currently, these roads consist of unpaved surfaces with many depressions creating stagnant water after rain causing severe difficulties to cars in navigating the road. The roads were identified in consultation with the two urban councils, the MPWU and the NZAP financed STP. Road Safety Improvements. During preparation a road safety audit was conducted of the entire South Tarawa road network, including roads not included in the project. This identified a range of improvements such as street lighting road signage and pavement markings to address road safety deficiencies. These will be included in the contract for the civil works contractor to address. Consulting Services. For the design and supervision of civil works. Component B: Road Sector Reform (US$ 1.27 million including contingencies) 5. Activities to strengthen the road sector and ultimately lead to more sustainable main road infrastructure in South Tarawa: Land Transport Institutional Review Study. Provision of technical advisory services for a land transport institutional review study to review the existing land 20 transport sector framework, and develop and implement a road map for sector restructuring, including: (i) identification of options for reform of the GOK`s concerned ministries and agencies; (ii) identification of cost recovery options available for provision of access to and maintenance of roads, using revenues from vehicle import duties, fuel taxes and registration fees; and, (iii) preparation of draft road legislation reflecting the chosen options. Micro-Enterprises for Routine Road Maintenance. To ensure that routine maintenance is executed in a timely manner it is proposed that the project will support the establishment of micro-enterprises11 for road maintenance. These will be small enterprises with a performance based contract to maintain, say, 5 km of paved roads. Provision of assistance in the form of (i) training, (ii) procurement of basic plant and equipment, and (iii) operational support for the management and monitoring of contracts, in order to promote the establishment of micro-enterprises to undertake routine maintenance on the GOK`s paved road network, using performance-based contracting methodology, and under supervision by MPWU. Road Safety Action Plan. Development and implementation of a multi-sectoral road safety action plan in consultation with the Kiribati`s National Road Safety Task Force Committee, including provision of breath testing equipment and radar guns for the traffic police to improve enforcement. Road Emergency Response Plan. To help mitigate the impact of any disasters to the road network, an emergency response plan would be developed which considers: (i) the available resources and plans the GOK has to support affected communities; (ii) the resources and actions the GOK needs to take to repair a damaged road as soon as possible after an event (even if temporarily); (iii) the actions the community can take to look after and protect the road and actions needed by them in the event of a disaster (community response plan); and, (iv) how the MPWU is integrated into the disaster risk management framework and what sort of business continuity arrangements it has in place. Component C: Project Support (US$ 1.11 million including contingencies) 6. Specialist support to the GOK for implementation of the project. 11 The concept of micro-enterprises is that local people are assisted to form microenterprises which are subsequently trained and contracted to carry out basic maintenance activities aimed at preventing serious damage and slowing down the deterioration of the roads, as well as ensuring continued access. This concept has been successfully promoted and replicated in numerous Latin American countries with the help of the World Bank and other international organizations. In Kiribati it is anticipated that local village entities or social groups will form the basis of the micro-enterprises. During the course of the civil works for road construction, they will receive training on road maintenance, providing support to the contractor during the 24 month defect liability period. At the end of that period they will be in a position to undertake the routine maintenance on their own. The role of the MPWU will be to manage these micro-enterprises against their performance contract to ensure that the agreed standards are met. 21 Establishment of a PMU to ensure the smooth operation of the project12. The PMU will handle procurement and financial management, as well as assisting in the preparation of work-plans, budgets, progress and impact reports, and coordination of the overall implementation of the project. It will comprise a full-time locally-recruited project manager, procurement assistant and accountant, part-time internationally recruited procurement advisor. Project associated incremental operating costs (e.g. telecommunications, local workshops for stakeholders, procurement-associated activities, etc.). A valuation specialist to identify the appropriate compensation rates for trees and other assets affected by the project. An NGO to monitor implementation of the RPF. Audit of project accounts. 12 The PMU will be established in the MFED. The GOK agreed that the MFED was the best location for the PMU given its role in the financial management of the project and the anticipated role for the PMU in support of upcoming World Bank financed projects in other sectors. 22 Annex 3: Implementation Arrangements 1. Project Administration Mechanisms 1. The implementation of the project and its various components are as follows: Project implementation Management Roles and Responsibilities organizations Project Steering Oversees and monitors all aspects of project Committee (PSC) implementation Advises the GOK of any issues or concerns affecting project implementation and propose remedial action Executing Agency (EA) ­ Responsible for the overall execution of the project MFED Houses and operates the project PMU Responsible for all procurement and financial management on the project Responsible for negotiation of contract for design and construction supervision of road rehabilitation works Coordinate with the IA in preparation of withdrawal applications and submit application to World Bank and ADB Implementing Agency Responsible for the day-to-day implementation of the (IA) -MPWU project Work closely with the consulting firm in the preparation of design and construction supervision of road rehabilitation works Checks and certifies work done by all consultants and the contractor and submits certificates with invoices to the EA World Bank Responsible for administering World Bank and any GOA through PRIF-financed components of the project Responsible for supervision of all procurement financed under the Grant ADB Responsible for administering ADB-funded components of the project Responsible for procurement of consulting firm for design and construction supervision of road rehabilitation works in coordination with the IA 2. The institutional arrangements for implementing the operation reflect the capacity constraints within the GOK. The measures to address these constraints are: The MPWU will be responsible for the day-to-day implementation aspects of the project only. 23 A PMU will be established in the MFED. It will contain a project manager, procurement assistant, accountant, a part-time international procurement advisor, as well as appropriate support staff. The PMU will prepare a Project Operations Manual which will guide project implementation. The MFED--through the PMU--will be responsible for the financial management of the project, including authorizing withdrawal applications. The project will use direct payments for major contracts, and have a small designated account. At the request of the GOK, the ADB assisted the GOK to hire a consultant for project design and supervision at the onset of project preparation. The procurement of this design and supervision consultant was completed prior to project effectiveness13. The design and supervision consultant will assist the GOK in all aspects of project implementation, including preparing the bidding documents for the procurement of the civil works contractor and assisting with the procurement as necessary. An NGO will monitor the implementation of the RPF. 2. Financial Management, Disbursements and Procurement 2.1 Financial Management 3. The FM capacity assessment identified the following principal risks: (i) project financial staff does not have experience with Bank financed projects; and, (ii) limited financial management capacity within MPWU. 4. Mitigation measures to be agreed include: (i) a PMU to be established within MFED to manage project funds; (ii) FM training plan to be prepared and all project financial staff to be trained before and during project implementation; (iii) a brief financial management manual will be prepared and issued to standardize project FM procedures and provide guidance to project financial staff on Bank requirements; and, (iv) the terms of reference for the required external audits be agreed with the Bank. 5. The FM risk pre-mitigation has been assessed as Substantial and post-mitigation has been assessed as Moderate. 6. FM conditions: Prior to effectiveness, the PMU will complete recruitment of a qualified project accountant. Within 45 days of effectiveness: (i) FM training will be attended by project accountant and PMU; (ii) the POM will contain a supplementary FM manual for Bank-specific requirements; (iii) the PMU will provide the Bank with a copy of the 2009 GoK audit report; (iv) there will be agreement of the format of unaudited IFRs; and, (v) there will be agreement on Terms of Reference for external audit. 13 The Task Team undertook a due diligence review of the selection process and, in accordance with paragraphs 1.8 and 1.11 (e) of the World Bank Procurement Guidelines, confirmed that the QCBS procedures were used, the selected consultants are eligible, and have the necessary professional qualifications to carry out the assignment in accordance with the agreed schedule, and the scope of the services is consistent with the needs of the project. 24 7. Budgeting. The project will be included in the GoK development budget, and will also be subject to analysis of budget vs. actual expenditure as part of the quarterly project reporting to the Bank. 8. Funds flow. The majority of payments will be for large contracts, and will be made by direct payment. A small advance will be made into a designated project account (DA) to be set up at a commercial bank acceptable to the Bank, and will be managed by MFED. The MFED will be directly responsible for the management, maintenance and reconciliation of DA activities for their component, including preparation of withdrawal applications and supporting documents for Bank disbursements. 9. Accounting and financial reporting. The administration, accounting and reporting of the project finances by MFED will be in accordance with the existing GoK financial management regulations and processes. MFED will each be responsible for managing, monitoring and maintaining project accounting records. Original supporting documents will be retained by MFED, although some payments may be initiated by MPWU. Unaudited interim financial reports (IFRs) will be prepared by MFED on a quarterly basis. The financial reports will include an analysis of actual and budgeted expenditure for the current period, and for the cumulative to date. The format will be developed and agreed by the MFED and the World Bank. The IFRs will be forwarded to the World Bank within one month of the end of each calendar quarter. 10. The project will utilize a computerized project software package in MFED. The task team will monitor the accounting process, especially during the initial stage, to ensure that complete and accurate financial information will be provided in a timely manner. 11. Internal control. There will be reliance on existing GoK financial policies and procedures. The annual audit of all GoK agencies includes scrutiny of internal controls. To assist the PMU manage the Bank-specific requirements of the project, a brief FM manual will be developed to provide guidance on financial reporting, disbursement and audit requirements. 12. Audit. The project finances will require an annual external audit, due to the Bank six months after the close of the financial year, and will include reference to internal controls. The Terms of Reference for the external audit will be agreed with the Bank. 2.2 Disbursements 13. Three disbursement methods are available for the project: advance, reimbursement and direct payment. Supporting documents required for Bank disbursement under different disbursement methods will be documented in the Disbursement Letter issued by the Bank. 14. A small designated account in local currency will be opened at a commercial bank acceptable to the Bank, and will be managed MFED. The ceiling of the DA will be determined and documented in the Disbursement Letter. 15. The project funds will be disbursed against eligible expenditures as in the following table: 25 Amount of the Grant Percentage of Expenditures Category Allocated to be financed (expressed in SDR) Works for Part A 11,910,000 60% Goods, consultants services and incremental 1,090,000 100% operating costs for Parts B, and C of the project TOTAL AMOUNT 13,000,000 16. Retroactive financing will be applied for this project. Withdrawals up to an aggregate amount not to exceed SDR 260,000 equivalent may be made for payments made on or after January 21, 2011, for Eligible Expenditures under the Goods, consultants services and incremental operating costs for Parts B, and C of the project`s expenditure categories. 17. Land acquisition will be financed and executed by the GOK according to existing legislation. The Land Management Division (LMD) will be responsible for payments of compensation which will be paid for from the GOK`s contribution to the project. 2.3 Procurement 18. Procurement Risk Assessment. An assessment of the capacity of the MPWU revealed a limited understanding of procurement procedures and good practices. In addition, MPWU is understaffed, in terms of technical capacity. The procurement-related risk is rated high. To mitigate this risk, GOK has agreed to hire procurement-competent staff to the PMU to be housed under the MFED. A full-time procurement assistant will be hired, in addition to an internationally hired part-time procurement advisor. These staff will be responsible for all procurement activities under the project, including planning, processing, monitoring and reporting. MPWU will be responsible for supervision of the works contracts, with the assistance of a design and construction supervision consultant hired for the project. The design and supervision consultant will assist in the procurement process for the works contracts. 19. Procurement Plan. The procurement plan for the project is given below. The plan will be updated at six-monthly intervals by the PMU, in consultation with the MPWU, to reflect actual project implementation needs. Estimate Quali- Bank Expected Activity Description d Cost Method ficatio Review Award (US$ m) n Civil works including: (i) reconstruction and rehabilitation of paved roads on South Tarawa; (ii) rehabilitation of Betio Causeway; (iii) October A.1 $29.46 ICB Post Prior rehabilitation of paved road sections in Betio; 2011 (iv) sealing of feeder roads; (v) road safety improvements; (vi) replacement of water mains. 26 Estimate Quali- Bank Expected Activity Description d Cost Method ficatio Review Award (US$ m) n Not December A.2 Construction design and supervision $2.23 Financed See note 2010 by Bank October B.1 Land Transport Institutional Review Study $0.65 QCBS Prior 2011 Assistance in setting up of Micro-enterprises for B.2 $0.10 IC Technical June 2012 routine road maintenance B.3 Development of Road safety action plan $0.13 IC Technical June 2011 Equipment for Road Safety action plan October B.4 $0.10 Shopping Prior implementation 2011 November B.5 Development of Road emergency response plan $0.10 CQS Prior 2011 December B.6 Micro-enterprise maintenance equipment $0.01 Shopping Post 2012 December B.7 Micro-asphalt patching plant $0.05 Shopping Post 2012 February C.1 Valuation specialist $0.02 IC Technical 2011 February C.2 Project Management Unit Staff $0.75 IC Technical 2011 C.3 Project Management Unit Operating Costs $0.19 Note 3 Post continuous C.4 NGO to monitor RPF implementation $0.01 CQS Prior March 2011 C.5 Project Audit $0.04 LCS Prior June 2011 As per annual C.6 Training Costs $0.01 Training Plan Notes: 1/ ICB = International Competitive Bidding; QCBS = Quality-and-Cost Based Selection; IC = Individual Consultant; CQS = Consultants Qualifications Selection; LCS = Least-Cost Selection. 2/ Consultants for A.2 were selected during preparation by the GOK with the assistance of the ADB, and will be financed 100% by the ADB. The selection was done using the ADB`s Guidelines on the Use of Consultants (2010), Quality-and-Cost Based Selection (QCBS). A review by the World Bank team has concluded that the selection is in accordance with paragraphs 1.8 and 1.11 (e) of the World Bank Guidelines for Selection and Employment of Consultants by World Bank Borrowers. 3/ In accordance with GOK`s administrative procedures, acceptable to the Bank 20. Prior-Review Thresholds. Prior-review and procurement method thresholds for the project are shown below. These thresholds may be revised during project implementation, based on assessments done during post review missions, to be carried out twice a year. Procurement Methods Applicability Prior Review Thresholds Goods None; first shopping procurement Shopping =50,000 - =US$100,000 All contracts subject to prior review Works Shopping =50,000 - =US$250,000 All contracts subject to prior review Selection Methods Consultants >=US$100,000 (exception made to Firms (QCBS, QBS, LCS, CQS and SSS) SSS, where all contracts under this method are subject to prior review) In accordance with Consultant`s As indicated in the Procurement Guidelines Plan (exception made to SSS, where Individuals all contracts under this method are subject to prior review) 21. Design and Supervision Consultancy. The project will have a single Design and Supervision Consultant. This consultant was procured during project preparation by the GOK with the assistance of the ADB. The ADB will finance 100% of the costs of this consultancy. The terms of reference for the services were jointly developed and agreed between World Bank, the ADB, and the GOK. The contract was procured in accordance with ADB`s Guidelines on the Use of Consultants using Quality and Cost Based Selection with 80:20 technical and cost ratio, and using the simplified technical proposal procedures. ADB selected a consulting firm on behalf of the GOK, which negotiated the actual contract. The MPWU will administer the contract but will seek the World Bank`s and ADB`s agreement on any proposed variations to the terms of reference. 22. Specialized studies. Selection of consultants for specialized studies will be subject to prior review by the Bank. While the MFED will take the lead in the selection process, MPWU will be responsible for preparing terms of reference, evaluation criteria, and cost estimates, and in supervising the consultants and their outputs. 23. Civil Works Contract. The project comprises civil works for the rehabilitation of the main road on Kiribati from the airport to Bairiki along with upgrading of key urban feeder roads. For technical reasons, cost-effectiveness considerations, management risks, mobilization costs and also in view of Kiribati`s isolation, it is not feasible or desirable to split the works into separate physical components or contracts with different contractors. The civil works will therefore be procured as a single contract, under international competitive bidding, and the Bank`s standard bidding documents for Procurement of Works will be used. 24. Goods. Goods to be financed under the project comprise small value equipment, to equip micro enterprises to undertake routine maintenance and service personnel to improve road safety, which will be subject to post review. 3. Environmental and Social (including safeguards) 25. There are two safeguard policies triggered under the project. These are OP 4.01: Environmental Assessment, and OP 4.12: Involuntary Resettlement. The table below summarizes why the other policies are not triggered. 28 Policy Reason Not Triggered OP 4.04 ­ Natural Habitats The project will not convert or degrade any protected areas, known natural habitats, or established or proposed critical natural habitats. All activities are on the existing road alignment which passes through populated areas. OP 4.06 ­ Forests The project consists of rehabilitating an existing road on its existing alignment. There are no forests, forested areas, or tree plantations along the road to be affected, only isolated coconut trees. OP 4.09 ­ Pest Management Construction activities will do nothing to influence pest management. OP 4.10 ­ Indigenous Peoples The population of South Tarawa is from a single ethnic group. OP 4.11 ­ Physical Cultural Historical sites from the World War II consisting of large cannons and bunkers are Resources located along the beach in Betio area. However, these sites are located outside the project area. No specific cultural / archeological sites have been identified along the project`s road sections. However, in case a cultural/historical heritage site is identified during the construction, the contractor will be required to stop work immediately and notify the MPWU supervision consultant who in turn will notify the relevant GOK agencies. OP 4.37 ­ Safety of Dams None of these are triggered as it is a road project. OP 7.50 ­ International Waterways OP 7.60 ­ Disputed Areas 26. The safeguards documents were disclosed as shown below: Document Date of Disclosure In Country InfoShop Environmental Management Plan 9/6/2010 9/7/2010 Resettlement Policy Framework 9/21/2010 9/21/2010 Environment 27. The project is rated as a Category B project due to the environmental impact. The EMP was prepared and disclosed on September 6, 2010. The EMP summarizes all the anticipated environmental impacts and its associated mitigation measures during the design, construction and operational phases. It makes reference to the relevant law and contract documents, approximate location, timeframe, mitigation costs, and the responsibility for its implementation and supervision. A field monitoring checklist has been prepared based on the EMP and monitoring plan. The field monitoring checklist will be used by the supervising engineers. The signed checklists will be provided to the MPWU who will be responsible for the appropriate follow-up and compliance reporting. 28. Safeguard measures have been incorporated in the project during the design phase to allow the designers to incorporate the EMP in the project design, technical specifications and contract documents. During the construction phase the contractor will construct the project as per the design and technical specifications and implement the EMP with supervision provided by the supervision consultant. During the operation / maintenance phase, the period starting with the issuing of the Certificate of Completion the onus for the upkeep long term maintenance of the road falls on the MPWU. 29 29. Major Impacts. The major environmental impacts associated with the rehabilitation of the South Tarawa road are: clearance of the roadside vegetation; excavation of road bed to remove and replace unsuitable material with suitable imported material; soil erosion during excavation, construction and rainy seasons; transportation of excess waste material and backfill materials; dust during excavation and construction; emissions from the asphalt plant; disposal of excess excavated materials; traffic and safety during construction; drainage during construction, etc. However, in all cases the impacts are expected to be minor, temporary, readily mitigated and in most cases easily reversible. 30. Soil erosion, considered the most potential threat to the lagoon during and after construction will be reduced by: (i) minimizing the size of the work area; (ii) keeping clearing of vegetation to a minimum; (iii) minimizing the stockpiles of borrow materials; (iv) adopting in- time delivery of construction material; and, (v) by re-vegetating the disturbed areas immediately after the construction is completed in the area. 31. Contaminated drainage and sedimentation will be controlled by installing silt traps at the onset of the construction, phasing and limiting soil disturbance to areas of workable size, scheduling construction to limit disturbance to large areas during rainy seasons and avoiding direct discharge of contaminated water to the lagoon. 32. To minimize dust generation, all trucks transporting friable materials and all material stockpiles will be covered. Waste dump sites will be chosen in consultations with the GOK and the local communities to promote future uses of waste materials. The sites will be re-vegetated. The contractor will also be required to spray water on exposed surfaces during dry periods and especially near schools, hospitals, rural communities, etc. 33. Noise will mainly affect schools, hospitals, churches and rural and urban areas. To a large extent, noisy activities will be carried out during normal working time and completed as soon as possible. The trucks will be fitted with low volume mufflers. The schools, hospitals, community halls, etc. will be advised when there will be unavoidable and unusual noisy construction activities in the areas. 34. Source of Materials. Aggregates for the road construction will be imported from Banaba, Nauru or Fiji with aggregate size of 5 to 20 mm. The aggregate will likely be stored in Betio port area, currently an empty field, located next to the port, and about 250 m from the closest settlements, or a similar isolated area towards Temaiku. The aggregates will be transported to the construction site in covered transport vehicles, water sprayed to minimize dust generation and transported at off peak traffic hours. 35. Road Safety. Road safety is a key consideration in the project. A road safety audit was undertaken during project preparation to identify deficiencies. The designers will ensure that these deficiencies are addressed in the final designs after community consultations. These designs will be reviewed by the Bank prior to tendering. During construction, the contractor will be required to pay special attention to traffic safety, both for road users and the workers. 36. Decommissioning. To minimize ongoing impacts of disturbed areas after the construction is completed, the contractor will be responsible for the proper decommissioning of 30 the used sites. Recommended measures will include: (i) raking or loosening of compacted ground surfaces; and, (ii) establishing site re-vegetation. Where practical local communities / women`s groups will be contracted to implement re-vegetation. Involuntary Resettlement 37. The project will rehabilitate the footprint of the existing road. However, temporary acquisition of land may be required for easements to provide drainage pipes. There may also be cases where assets such as coconut trees may be affected to make way for footpaths or bus stops. While the acquisition of land will be avoided whenever feasible, and while all viable alternatives will be explored, it may be necessary to acquire small parcels of land adjacent to the existing road in order to build bus stops. This will not be clear until the design stage of the road works. In order to address this, an RPF was developed and disclosed on September 21, 2010. The RPF identifies principles to be followed in the event of temporary land acquisition, the damage or removal of assets such as coconut trees, and the acquisition of land. 38. The purpose of the RPF is to provide guidance for the process and intended outcomes of resettlement plans. It seeks to ensure that those people whose assets are directly affected by the project can share project benefits and be able to improve or at least restore their standard of living to the level prior to the beginning of project implementation. Compensation will be paid, and any other resettlement entitlements provided, before physical and economic displacement arises. 39. Institutional Arrangements. The Ministry of Environment, Land and Agricultural Development (MELAD) is the lead agency responsible for coordinating planning and implementation of land acquisition and resettlement. The MELAD formulates and manages the resettlement budget and pays compensation to the affected people after the Lands Management Division (LMD) has carried out a survey of the assets and trees on the site. The LMD has rates in place to pay compensation for various types of assets and to lease land when appropriate. As of 2010, the LMD reviews lease rates at least every three years. However, compensation rates have not been reviewed since 1992 and the LMD has asked the project to finance a Valuation Specialist to assess the current rates of compensation and suggest revisions if needed. The updating of the valuation of assets will take place with sufficient time prior to the commencement of works. 40. The GOK has in place legislation for payment of compensation and resettlement procedures that are in line with the World Bank`s policies. The MELAD has the expertise to assess resettlement plans in line with the Bank`s resettlement procedures, and the MELAD, in conjunction with other GOK stakeholders, will have the responsibility for reviewing the Abbreviated Resettlement Plan that may be needed and their implementation. 41. Consultations. Consultations to inform key stakeholders--local people, civil society, government agencies, church organizations and the unimwane representatives (group of elders)--took place September 20-21, 2010 in South Tarawa to disclose the project and its potential environment and social impacts. These consultations all followed the same format, but were undertaken in three different locations to ensure ease of access for local people. The consultations informed stakeholders about potential land disruption, disclosed the RFP and 31 explained that an Abbreviated Resettlement Plan may need to be created and will be appropriately disclosed. Focus group discussions were also carried out with a variety of women`s groups to ensure their concerns and feedback were incorporated into the project design. These focus group discussions were part of the gender analysis work done as part of the project preparation. In addition, household interviews were conducted with a random sample of the population in South Tarawa to further understand land issues. When the project design is clear and affected people are identified, further consultations will take place to inform affected people of the assets that may be impacted and appropriate compensation arrangements. As per Kiribati`s legislation, notice to take land will be published in the Kiribati Gazette. 42. Financing Land Acquisition. The land acquisition will be financed and executed by the GOK according to existing legislation. The LMD will be responsible for payments of compensation. 43. Grievance Redress Mechanism. The mechanisms for redressing grievances was presented and explained in the initial consultations, described above, and will be discussed again once the affected people have been identified. It should be noted that people in South Tarawa are generally well informed about compensation processes and redress mechanisms, as land leasing and land compensation is quite frequent given the lack of land in South Tarawa. The GOK has in place a grievance mechanism that allows people to file complaints at the Magistrates Court and make appeals at the High Court. However, the system can be overburdened and slow. The project will work with the Magistrates Court to ensure that they can address any grievances related to the road project expediently if needed. The project will work to ensure that women have access to compensation payments, and that people are provided advice as to how to spend their compensation wisely (such as school fees or uniforms). This will help to avoid the misuse of money and ensure equitable access to funds. 44. Monitoring. It is the responsibility of the GOK to make an assessment to determine that the objectives of the RPF has been achieved. The GOK will undertake internal monitoring of the project`s progress. In addition, the World Bank will assess the implementation of the RPF and other associated activities during implementation support. Supervision Mechanism 45. The design and supervision consultant shall have the direct responsibility for monitoring the implementation of the EMP on the project. The EMP contains reporting requirements and these will be included in the consultant`s quarterly progress reports. A summary of these will be included in the GOK`s semi-annual reports to the World Bank and ADB. 46. For land acquisition and resettlement, both the LMD and a local NGO will have responsibility for monitoring the implementation of the RPF. The local NGO will be contracted prior to the commencement of works and will be financed by the project. Social Risks or Issues that go Beyond the Coverage of the Safeguards Policies 47. Traditionally, land plots in South Tarawa are situated in strips from the ocean to the lagoon side. In the 1940s the British Colonial Government built the existing road through the island, essentially dividing existing plots. No records exist to confirm how acquisition took place 32 or what, if any, compensation was paid. However, the consensus view is that the Colonial Government had the power to acquire land with or without compensation. Since then, the land had been recognized as public property. After independence in 1979, the GOK assumed responsibility for maintaining the road. In the early 1990s the GOK considered providing back- payments for the road acquisition for the land under the existing road but the issue was later dropped. 48. There are no outstanding grievances in the country or complaints from landowners about the land under the road. This has been confirmed by the Magistrates Court and is consistent with the results of household surveys carried out with a random sample of people in South Tarawa. In fact, in recent years several projects have been undertaken to rehabilitate portions of the road and no ownership claims have been made. Currently, sections of the road are being maintained by MPWU and no ownership claims have been made. Moreover, the ADB financed the construction of a water pipe which is buried next to road in many places and no ownership claims were made. Given this historical scenario, the project will proceed recognizing the road as public property. However, the project will be in a position to address any claims of ownership for the land under the road if necessary through the compensation system adopted for land acquisition for bus stops and footpaths. 4. Monitoring & Evaluation 49. Data on compliance with the EMP will be collected by the supervision consultant as part of their regular duties. The EMP contains monitoring forms to be used for this purpose. Data regarding land acquisition will be available in the Abbreviated Resettlement Plans. This will include the list of people affected and the rates of compensation that they will be paid prior to commencement of works. 50. The LMD has data for at least half of South Tarawa`s plots that detail ownership and land boundaries. For those plots impacted that have not been surveyed, LMD will work with the implementation contractors to map out the plot boundaries and be able to pay compensation as needed. 51. The costs of data collection are included as part of the supervision consultant`s Terms of Reference. It is estimated that the cost of all data collection will be under US$ 10,000, with most of this being required for land acquisition and resettlement. 52. The data will be used during implementation to: (i) verify that people have been paid compensation for assets lost or land acquired prior to the commencement of works, as per World Bank and GOK policies; and, (ii) to ensure that the contractor is complying with the EMP. Where there are continued violations of the EMP the supervision consultant shall arrange training and identify other actions to be taken. 53. The PMU will submit to the Bank: (i) the quarterly supervision consultant reports; and, (ii) semi-annual progress reports in a format acceptable to the Bank. The MFED shall submit annual audit reports. 33 5. Role of Partners 54. ADB. The World Bank and ADB are co-financing the project. An MOU was prepared between the World Bank, the ADB and the GOK outlining the roles and responsibilities of the respective parties. During preparation, the two parties worked closely, fielding joint missions and collaborating on social and environmental safeguard activities. For financing, the contract for design and supervision will be financed by ADB and the civil works contract will be co- financed. During project implementation the EA will supply withdrawal applications directly to the ADB for their contribution to the project. 55. Pacific Region Infrastructure Facility. PRIF is a multi-donor trust fund comprised of AusAid, ADB, NZAP and the World Bank. The GOA will provide US$ 4.93 million for civil works through PRIF to cover (i) the road construction towards Temaiku; and, (ii) road safety infrastructure, as well as US$ 0.86 million for technical assistance activities. These funds will be administered by the World Bank. 56. New Zealand Aid Program. NZAP is undertaking a number of complementary activities under its STP. The STP Phase 2 (2010-2013), currently under approval, will be constructing a fully-serviced residential and associated land uses subdivision on a portion of Temaiku State Land for 150 low-middle income families. It also will provide a package of visible infrastructure improvements, in particular potable water and sanitation in the two poorest villages of Betio and Bairiki (1,000 households). The STP is strengthening the urban management capabilities of the Ministry of Internal and Social Affairs (MISA) and the Urban Councils through implementing a range of learning by doing` urban management core functions in the existing villages on South Tarawa and Kiritimati island, including solid waste management, local economic development, and a small works program comprising routine maintenance of village access roads, drainage, and construction of rainwater tanks at community maneabas. 57. The project will finance the civil works for rehabilitation and sealing of the main road eastwards from the Ananau Causeway to 1.7 km east of the mission of Taiwan, China providing eastern access to the STP-funded Temaiku subdivision (i.e. around 2.8 km east of Ananau). The costs of these improvements were originally included in the STP budget with financing from GOA through PRIF. NZAP and GOA agreed to provide these funds to the project instead since this will allow for the road to be reconstructed for a lower cost than having a separate contractor do such a small length for the STP project. The project`s budget includes provision of US$ 1.75 million for these works. The STP also has a need for the supply of high quality aggregate and it is anticipated that this will be procured from the same source as that supplying the road project since there will be economy of scale. 58. The STP has been working closely with the urban town councils on identifying road investment needs. The 8 km of feeder roads included in the project were identified based on the STP work in this area, as well as consultations with the two urban councils and the MPWU. 34 Annex 4: Operational Risk Assessment Framework (ORAF) Project Development Objective(s) The project will improve the condition of South Tarawa's main road network and help strengthen road financing and maintenance capacity. PDO Level Results 1. Number of kilometers of the paved road network rehabilitated and suitable for only routine maintenance Indicators: 2. An agreed plan for reform of road sector management and financing under implementation Risk Category Risk Rating Risk Description Proposed Mitigation Measures Project Stakeholder Risks Medium-L There may local opposition to the project. Through the project`s public consultation efforts, the local stakeholders will be made aware of the scope of the project and the benefits to the community. The detailed designs will be discussed with communities--particularly with regard to the safety improvements and locations of bus bays--so as both to advise the communities of the benefits from the project but also to ensure that their needs are fully considered. The other donors were fully engaged during project preparation, The other donors may not support the project for example, the feeder roads were identified in consultation with the NZAP STP. During implementation there will be joint missions with the ADB which the other donors will be invited to participate in. Implementing Agency Risks Medium-I The government lacks the capacity for implementing A PMU will be established in the MFED which will be a major road project such as this. responsible for procurement, financial management, reporting, and liaison with the World Bank and ADB. An international design and supervision consultant has been hired and they will not only provide technical support to the government for the project, but also assist with procurement, reporting and other activities. The World Bank and ADB will undertake regular implementation support missions. 35 Project Risks Design Medium-I There may be design errors, particularly with regard The Bank is financing the re-establishment of accurate survey to (i) road safety, or (ii) drainage which leads to benchmarks throughout South Tarawa as part of the Kiribati premature road failures. Adaptation Program Phase II ­ Pilot Implementation Phase (KAP II). This will help ensure accurate levels for monitoring the drainage designs. The design and supervision consultant`s TOR highlights the importance of ensuring proper drainage for the project. The use of a single consultant for design and supervision will provide a clear line of accountability should there be drainage problems. Having a 24 month defect liability period provides sufficient time to ensure that the drainage is fully functional. A road safety audit was undertaken during project preparation and the implementation of its recommendations will be monitored during implementation. Delivery Quality Medium-I The MPWU may be unable to deliver a quality The use of an experienced international consulting firm will project. ensure proper designs and project supervision throughout the period of civil works. Social and Environmental Medium-L During construction there may be disturbances to the A detailed EMP was prepared and disclosed which clearly local residents given the highly urbanized nature of defines the responsibilities of the contractor with regard to the road. There may be dissatisfaction over minimizing disruptions to local residents. The compliance with compensation for land acquisition. the EMP shall be ensured by the project design and supervision consultant. A road safety audit was done during preparation which will help ensure that speeds and pedestrian flows are properly managed, thereby reducing the risk of accidents. Any land acquisition will be almost exclusively for bus stops and drainage easements. During project preparation an RPF was disclosed and discussed with communities. Prior to construction, the detailed designs will be discussed with local communities to confirm that the social and environmental impacts have been minimized. 36 Program and Donor Medium-L Donors may present a conflicting agenda. The project will use joint World Bank/ADB implementation support missions with invitations for participation to the other donors. The MOU outlining the project operations and All parties are working towards completing an acceptable MOU. responsibilities will not be finalized. Overall Risk Rating at Overall Risk Rating During Comments Preparation Implementation This is very large and challenging project for Kiribati. The project design is such that while the impact of issues could be large, there is a low likelihood of this happening. However, due to the project's complexity Medium-I High during implementation is such that it must be viewed as a high risk, in spite of the comprehensive mitigation measures put in place during project design. 37 Annex 5: Implementation Support Plan Strategy and approach for Implementation Support 1. The strategy for implementation support has been developed based on the nature of the project and the ORAF risk profile (see Annex 4). Procurement. Implementation support will include: (i) reviewing procurement documents and providing timely feedback to the MPWU; (ii) providing detailed advice and guidance on the application of the World Bank`s Procurement Guidelines; and, (iii) monitoring procurement progress against the Procurement Plan. Financial Management. The implementation support shall consist of: (i) reviewing the MFED`s financial management system; (ii) reviewing transactions on each of the contracts; (iii) reviewing the quarterly IFRs; and, (iv) reviewing the audit and other financial reports. Environmental and Social Safeguards. The implementation of the EMP will be closely monitored, both through reviewing the supervision consultant`s reports and field visits. The application of the RPF and payment for land acquisition and loss of assets will be reviewed during missions. Role of Other Partners. The implementation support team shall consist of joint missions with the ADB and other donors. Implementation Support Plan 2. The project implementation will be supported by the task team based out of the Sydney office. This will ensure that it is possible to rapidly field missions should the need arise. Formal missions will be conducted at least three times during the first year of implementation, and then semi-annually afterwards. Detailed inputs from the team are given below. Technical. The civil works bidding documents will be reviewed by a highway engineer and a road safety specialist. Throughout implementation a highway engineer will participate on missions. Appropriate technical specialists shall be used to review and guide the Technical Assistance components of the project. Fiduciary. The team`s Financial Management Specialist shall undertake appropriate training of the MFED to ensure adequate capacity for the project. Formal supervision of the financial management shall be undertaken annually. In addition to the procurement prior review to be carried out by the Task Team, once a year support missions to visit the field to carry out post review of procurement actions. Safeguards. During the period of civil works the environmental and social safeguards specialists shall make semi-annual mission visits to ensure compliance with the project`s safeguard requirements. Between missions they shall review the supervision consultant`s reports to monitor progress and identify issues that may arise. Operations. The day-to-day operations of the project will be supported from the Sydney office. 38 I. Implementation Support Focus Time Focus Skills Needed Resource Partner Role Estimate (Staff Weeks) First twelve Technical review of the civil works Highway Engineer 2 The ADB will Months bidding documents Road Safety Specialist 1 undertake their own Procurement Specialist 4 reviews and advise the Technical review of TA documents Technical Specialists 4 Bank of any issues. Environmental Monitoring Environ. Specialist 2 ADB will also field Resettlement Monitoring Social Specialist 3 their own specialists. Review of financial management Financial Specialist 1 Implementation Support ACS 4 Team Leadership TTL 10 12-48 Project Construction Highway Engineer 6 Months Road Safety Road Safety Specialist 3 Technical Reviews of TA Outputs Technical Specialists 9 ADB will also field Environmental Monitoring Environ. Specialist 5 their own specialists Resettlement Monitoring Social Specialist 6 and reviewers. Review of procurement documents Procurement Specialist 4 Review of financial management Financial Specialist 3 Implementation Support ACS 12 Team Leadership TTL 24 I. Skills Mix Required Skills Needed Number of Staff Weeks Number of Trips Comments Environmental Specialist 7 6 Financial Specialist 4 4 Highway Engineer 8 5 Implementation Support 16 2 Procurement Specialist 8 3 Road Safety Specialist 4 2 Social Specialist 9 6 Team Leadership 34 10 Technical Specialists 13 5 In various disciplines III. Partners Name Institution/Country Role Richard Phelps Asian Development Bank Task Team Leader Sonya Cameron New Zealand Aid Program Development Program Manager - Kiribati 39 Annex 6: Team Composition World Bank staff and consultants who worked on the Project: Name Title Unit Christopher R Bennett Task Team Leader EASNS Kylie Coulson Senior Financial Management Specialist EAPFM Miriam Witana Procurement Specialist EAPPR Cristiano Costa e Silva Nunes Procurement Specialist EAPPR Raj Soopramanien Lead Counsel LEGAF Hanneke Van Tilburg Senior Counsel LEGEN Anil Somani Environmental Specialist Consultant Asif Faiz Highway Advisor Consultant Colleen Butcher-Gollach Infrastructure Finance Specialist Consultant Nanda Gasparini Social Safeguards Specialist Consultant Phillip Jordan Road Safety Specialist Consultant Fiona Doube Team Assistant EACNF Daniel Toga Team Assistant EACNF Amin Mohammad Program Assistant EACNF Jean-Francois Marteau Reviewer ECSS5 Jiangbo Ning Reviewer ECSS5 40 IBRD 37910 KIRIB ATI TAR AWA ATOLL Betio URBAN CENTERS ADMINISTRATIVE CENTER* 0 2.5 5 Kilometers MAIN PAVED ROADS Buariki OTHER ROADS * Bairiki Island serves as administrative center although the capital is the entire atoll of Tarawa Tearinibai Nuatabu Tebangaroi KIRIBATI Area of Map Taratai Taborio Notoue Abaokoro Marenanuka Tabonibara PACIFIC OCEAN Kainaba Nabeina OTHER ROAD L a g o o n Tabiteuea INVESTMENTS Abatao Tanaea Buota Bonriki Bonriki Intl. Airport Temaiku Eita Bangantebure Nawerewer Betio BETIO URBAN REPAIRS Ambo Taborio Bikenibeu Tangintebu Banraeaba MAIN PAVED ROAD BETIO CAUSEWAY INVESTMENT Bairiki Nanikaai Teaoraereke BAIRIKI This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. JANUARY 2010