Document of The World Bank Report No: 65777 v1 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF AVIAN INFLUENZA AND HUMAN PANDEMIC PREPAREDNESS AND RESPONSE PROJECT LOAN NO. 4822-TU BOARD APPROVAL DATE: APRIL 24, 2006 TO THE REPUBLIC OF TURKEY NOVEMBER 2, 2011 ABBREVIATIONS AND ACRONYMS AI Avian Influenza EC European Commission IBRD International Bank for Reconstruction and Development GDPC General Directorate of Protection and Control OIE World Organization for Animal Health PVS Performance of Veterinary Services USAID US Agency for International Development Regional Vice President: Philippe H. Le Houerou Country Director: Ulrich Zachau Sector Manager / Director: Dina Umali-Deininger/Laszlo Lovei Task Team Leader: Brian G. Bedard ii TURKEY AVIAN INFLUENZA AND HUMAN PANDEMIC PREPAREDNESS AND RESPONSE PROJECT Loan No. 4822-TU Restructuring Paper Background: 1. The Avian Influenza and Human Pandemic Preparedness (AIHP) project supports the Government’s efforts to minimize the threat posed to humans by highly pandemic avian influenza infection and other zoonoses in domestic poultry and to prepare for, control, and respond to an influenza pandemic and other infectious disease emergencies in humans. The project is financed by an IBRD Loan in the amount of Euro 27.3 million (US$34.4 million equivalent1), a European Commission grant in the amount of US$12.73 million equivalent, and a USAID grant in the amount of US$1 million. 2. The purpose of this Restructuring Paper is to seek the Country Director’s approval for the reallocation of funds, in the total amount of Euro 0.6 million, from Category 2 (b) Works and Category 3 (b) Consultant Services and Training to Category 1(b) Goods. The proposed reallocation would provide funds for the goods for the vaccine storage warehouse under the Human Health component of the Project. Goods include complex shelving throughout multiple vaccine warehouse buildings, supplementary refrigeration equipment, forklifts, and ancillary equipment and supplies. The proposed reallocation is based on a request from the Republic of Turkey via letter no. 41444 dated September 23, 2011 from the Acting Director General of the Undersecretariat of Treasury to the Bank. The activities that were originally intended to be carried out using these funds will continue to be carried out by the Ministry of Health (MoH) from savings realized under works and consulting services contracts. This is the fifth reallocation of loan proceeds. 3. The additional funding for goods for the vaccine storage warehouse is consistent with the original project development objective, project components and activities. The additional funding for goods is needed due to changes in the design of the warehouse which requires much more storage space and thus additional investment in complex shelving, forklifts, refrigeration equipment and related equipment and supplies. 4. The current closing date of the Loan is December 31, 2011, and the need for an extension is not envisaged at this time. The bidding process for the additional warehouse goods is underway, with contract signing expected by November 15, 2011. The contract duration will not extend beyond the loan closing date and it is therefore expected that the goods will be delivered within the remaining period of the loan. 5. In addition to the warehouse furnishings contract described above, the remaining activities to be completed under the project primarily comprise the supply of goods and training for Ministry of Agriculture and Rural Affairs. These activities are also expected to be completed prior to the closing date. 1 Note that US$ 34.4 million equivalent was the projected amount based on the US$:Euro exchange rate at project approval. Subsequently, due to currency fluctuations, the US$ equivalent has increased to US$38.4 million. 1 6. In view of the significant appreciation of the Euro, since approval of the Loan, which is denominated in Euro, disbursements in USD terms for the remainder of the loan period may be lower than originally anticipated. As a result, some funds may remain undisbursed and would be cancelled at loan closure. Such cancellation may be in the order of Euro 1.5 million. Proposed Changes: 7. Loan funds would be reallocated as follows (please see Table 1): Table 1: Current and Proposed Allocations by Project Categories (Euro) Category of Expenditure Allocation % of Financing (expressed in Euro) Current Revised Current Revised Current Revise 1. Goods 1. Goods (a) under Part I of (a) under Part I of the Project, the Project, except except for for Categories (4) Categories (4) and (5) 7,720,000 7,720,000 100% 100% and (5) (b) under Part II (b) under Part II of the Project 2,980,000 3,580,000 of the Project (c) under Part (c) under Part III.1 and 2 of the III.1 and 2 of the 470,000 Project Project 470,000 2. Works 2. Works (a) under Part I of (a) under Part I of the Project, the Project, except except for for Categories (4) Categories (4) and (5) 4,360,000 4,360,000 100% 100% and (5) (b) under Part II.1 (b) under Part II.1 and 2 of the and 2 of the Project 6,100,000 5,600,000 Project 3. Consultants’ 3. Consultants’ Services and Services and Training Training (a) under Part I of (a) under Part I of the Project, the Project, except except for for Categories (4) Categories (4) and (5) 930,000 930,000 and (5) 100% 100% (b) under Parts II (b) under Parts II and III.3 of the 2,350,000 2,250,000 and III.3 of the Project Project (c) under Part (c) under Part 1,530,000 1,530,000 III.1 and 2 of the III.1 and 2 of the Project Project 4. Compensation 4. Compensation 2 Fund under Part Fund under Part I.3 (a) of the I.3 (a) of the Project Project 620,000 620,000 100% 100% 5. Poultry 5. Poultry 100% of 100% of Restructuring Restructuring amounts amounts Sub-projects Sub-projects 90,000 90,000 disbursed disbursed 6. Incremental 6. Incremental operating costs operating costs (a) under Part (a) under Part III.2 of the III.2 of the Project 120,000 120,000 100% 100% Project (b) under Part (b) under Part III.3 of the III.3 of the Project 30,000 30,000 Project 7. Unallocated 7. Unallocated 0 0 100% 100% TOTAL 27,300,000 27,300,000 8. No other changes are proposed to be made to the Project at this time. 9. Safeguards: The Bank’s Safeguards Specialist visited the warehouse site and reviewed the terms of reference for the design of the warehouse during a June 2010 implementation support mission. That mission confirmed that the construction site is owned and controlled by MoH, is well secured, and is currently being used only as a depot for medical supplies, and does not present any issues of concern related to conflicting usage, resettlement, etc. Procurement of interior furnishings does not pose any additional safeguard concerns. The Environmental category (B) for the project has not been changed. 10. Financial Management: The latest financial management supervision of the project was carried out in February 2011 and the arrangements continued to be satisfactory to the Bank. Audit reports for the project (provided separately for MoH and MARA) for the year ended December 31, 2010 were received on time and both had unqualified (clean) audit opinions. Since the auditors did not encounter any material internal control issues, there was no need to issue management letters. 11. Implementation progress: There are no changes proposed for the implementation arrangements under the Project. AIHP implementation has further accelerated. Progress towards the Project Development Objective (PDO) continues to be satisfactory. AIHP now displays satisfactory disbursement and commitments as reflected in the end-of- project workplans received from MFAL and MOH during the August 2011 implementation support mission. Project implementation is well on track in approaching the targets set for its key performance indicators. The implementation has improved considerably. The August mission discussed in detail use of the remaining balance and, in particular, the risks associated with completing construction of the vaccine warehouse by end December 2011. The implementation progress rating has been upgraded to satisfactory, considering that reasonable progress has been made on the warehouse construction and that timely completion should be achieved. 3 4