The World Bank Judicial Services and Smart Infrastructure Project (P144700) REPORT NO.: RES34040 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF JUDICIAL SERVICES AND SMART INFRASTRUCTURE PROJECT APPROVED ON JULY 9, 2014 TO REPUBLIC OF AZERBAIJAN GOVERNANCE EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Mercy Miyang Tembon Senior Global Practice Director: Deborah L. Wetzel Practice Manager/Manager: Daniel J. Boyce Task Team Leader: Eva Maria Melis, Waleed Haider Malik The World Bank Judicial Services and Smart Infrastructure Project (P144700) ABBREVIATIONS AND ACRONYMS FM Financial Management GOA Government of Azerbaijan IBRD International Bank for Reconstruction and Development IFR Interim Unaudited Financial Reports JSSIP Judicial Services and Smart Infrastructure MOE Ministry of Economy MOF Ministry of Finance MOJ Ministry of Justice PDO Project Development Objective PIU Project Implementation Unit RP Restructuring Paper WB World Bank The World Bank Judicial Services and Smart Infrastructure Project (P144700) BASIC DATA Product Information Project ID Financing Instrument P144700 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 09-Jul-2014 31-Dec-2018 Organizations Borrower Responsible Agency Cabinet of Ministers,Republic of Azerbaijan Ministry of Justice Project Development Objective (PDO) Original PDO The objective of the project is to improve the access, transparency and efficiency of delivery of selected justice services. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-84070 09-Jul-2014 22-Oct-2014 31-Oct-2014 31-Dec-2018 100.00 78.31 21.69 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Judicial Services and Smart Infrastructure Project (P144700) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The project finances state-of-the-art ‘smart infrastructure’, the design and implementation of e-court services, and innovative approaches to facilitate access for those in need (legal aid, alternative dispute resolution, gender barriers, juvenile justice) at an estimated cost of USD 200 million (IBRD financing: USD 100 million, GOA financing: USD 100 million). The project development objective (PDO) is to improve the access, transparency and efficiency of delivery of selected justice services. The project has made laudable progress in delivering judicial services since implementation began in 2014, such as the roll-out of e-court services in four out of six regions and testing innovative solutions such as the automation of court order proceedings. Speedier court processes, more effective use of resources already led to savings in the state budget and have eased the workload burden of judges and staff while increasing access and transparency for citizens and businesses alike. The project is in compliance with the respective financial management (FM) covenants, namely, satisfactory financial management arrangements. The project submits timely and acceptable quarterly interim unaudited financial reports (IFR). The most recent project financial statements audit for the year 2017 was found satisfactory and acceptable to the World Bank. 2. The lack of government funding is the major constraint on the completion of activities and achievement of the PDO. The insufficient availability of GOA contribution led to delays in the implementation of critical elements such as the roll-out of e-Courts, while other important activities could not commence, putting the reliability and security of operations and investments made so far at risk, and limiting the achievement of project development objectives. Specifically, construction works in Surakhani, Masalli and Sumgayit are deteriorating due to a slow-down in implementation, putting investments made so far at risk. System-critical events, namely the Main Data Center in Baku and the Reserve Data Center in Yevlakh, could not commence. This is a concrete threat to the reliability and security of operations of the MOJ, including the judiciary, and the Ministry of Transport, Communication and High Technologies (MinCom). Recognizing the risks presented by delayed counterpart fund contributions, the Ministry of Justice (MOJ) with support from the GOA has significantly reduced the gap in disbursements made from the GOA share vs the IBRD loan by about half in the last six months. 3. Currently, the project is scheduled to close on December 31, 2018 but several implementation steps remain as described above. It is for this reason that the GOA has requested an 18-months extension of the current closing date. The request was received by the World Bank Country Office on September 10, 2018. In addition to extending the project closing date, the GOA also requested to revise the current results framework to reflect changes in the law, new strategic priorities of the MOJ and the judiciary, as well as achievements on the ground already accomplished. B. Rationale for Restructuring 4. Closing Date Extension. The proposed extension of 18 months would be the first extension of the project’s closing date. The GOA considers this a strategic project because of the way it impacts citizens and the business environment; speedier court processes and a more effective use of resources have already led to savings in the state budget. However, to ensure that the project fully achieves its objectives, an extension of the closing date would be necessary to complete all the required technical work to successfully achieve institutional and investment results related to court modernization and justice service delivery. 5. The extension would also allow the GOA to comply fully with its counterpart fund obligations under the project. During comprehensive discussion the World Bank held with the MOJ, Ministry of Finance and Ministry of Economy The World Bank Judicial Services and Smart Infrastructure Project (P144700) (MOE), the commitment to timely and adequate provision of GOA counterpart funds throughout the extension period was reconfirmed. Extending the project’s closing date by 18 months until June 30, 2020, will allow the GOA to take advantage of two budget cycles (2019, 2020) to make the necessary counterpart funding available. In addition, the Project Implementation Unit (PIU) has already shared updated time schedules for the most critical elements, in particular the roll-out of e-Courts, with the World Bank team and agreement has been reached on ensuring that the updated timeline is complied with. 6. As a consequence of the closing date extension, the disbursement estimates as well as implementation schedule would also be revised. Please consult Section IV. Detailed Change(s) – Disbursement Estimates for details. 7. Revisions to Results Framework. In order to ensure project alignment with changes in the law and new strategic priorities of the MOJ and the judiciary as well as to appropriately reflect the project’s contribution to the PDO, there is also a need to update the project’s results framework. The updated results framework will track (a) project progress and benefits resulting from the continued roll-out of e-Courts, and (b) sustainability of achievements during the extended implementation period. In particular, recent changes in priorities and the law as well as achievements in pilot-testing new approaches require revisions in two intermediate results indicators (“smart courts constructed”, “cost savings from reduced administrative and compliance burden of business inspections”) and adding a new PDO- level indicator (“electronic processing of uncontested civil enforcement cases”). The World Bank Judicial Services and Smart Infrastructure Project (P144700) II. DESCRIPTION OF PROPOSED CHANGES A. Closing Date 1. The closing date is proposed to be extended by 18 months with a new closing date of June 30, 2020. B. Changes to the Results Framework 2. The proposed revisions to the results framework and results indicators are the following: (a) Add a new PDO-level Indicator: “Number of uncontested civil enforcement cases electronically processed using the JSSIP-financed automated system”. In order to increase the efficiency of services provided by Azerbaijan’s courts, the project is focusing on e- services, including testing new tools to decrease the workload burden of judges and speeding up processes while at the same time increasing access and transparency for court users. The project’s innovative character and push for e-services in the judiciary deserves to be reflected adequately also in its results framework. (b) Revise the Intermediate Results Indicator: “Smart courts constructed”. The target value needs to be reduced from 13 to 12 smart courts constructed as GOA priorities have changed. Instead of investing further in hard infrastructure, the GOA’s focus is on e-service delivery to increase access for citizens and businesses, transparency and efficiency. The previously planned Court Complex of Baku City Specialized Court will therefore not be constructed under the project. As this construction was planned to be 100 percent financed by GOA counterpart funding, taking it off the project will relieve pressure on scarce GOA resources. This change will not affect the PDO achievability and impact. (c) Revise the end target date of the Intermediate Results Indicator: “Cost savings from reduced administrative and compliance burden of business inspections”. The end target value and date of this indicator needs to be revised, to reflect only the achievement prior to October 2015 when its practical relevance was superseded by a change in law. Law No. 1410-IVQ of October 20, 2015 and the Presidential Decree No 660 of October 26, 2015 have postponed the requirement to undertake business inspections; first until October 31, 2017, now extended until further notice. As such from the fall of October 2015 when the request for inspections was suspended, the project can no longer track the related cost savings. (d) Amend the end dates and targets of the remaining indicators to reflect the project’s revised closing date. 3. The proposed revisions to the indicators are specified in Part IV (Detailed Changes, Results Framework) of this restructuring paper (RP). Upon approval of the RP, the changes to the Results Framework as requested will be communicated back to the client jointly with the World Bank’s concurrence to extend the Project’s closing date. A draft of the letter prepared by LEG is submitted with the RP. The World Bank Judicial Services and Smart Infrastructure Project (P144700) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Judicial Services and Smart Infrastructure Project (P144700) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-84070 Effective 31-Dec-2018 30-Jun-2020 30-Oct-2020 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 3,700,000.00 10,273,890.03 2016 10,300,000.00 13,814,892.20 2017 20,000,000.00 31,077,670.38 2018 35,000,000.00 22,897,717.80 2019 31,000,000.00 12,575,829.59 2020 0.00 9,360,000.00 . The World Bank Judicial Services and Smart Infrastructure Project (P144700) . Results framework COUNTRY: Azerbaijan Judicial Services and Smart Infrastructure Project Project Development Objectives(s) The objective of the project is to improve the access, transparency and efficiency of delivery of selected justice services. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Improve the access, transparency and efficiency of delivery of selected justice services Users expressing satisfaction with access, transparency and efficiency 0.00 25.00 30.00 40.00 50.00 50.00 55.00 of selected justice services (Percentage) Rationale: Action: This indicator has To track progress and achievement of the project's objectives the end target and date have been revised to reflect the project's new closing date. been Revised Direct project 0.00 5,000.00 10,000.00 20,000.00 70,000.00 120,000.00 150,000.00 beneficiaries (Number) Rationale: The target set by this intermediate indicator has already been achieved. Action: This indicator To track sustainability of the project's objectives and further uptake as more and more courts will be connected the intermediate indicator's end target and date has been Revised have been revised to take into account the project's new closing date. Female beneficiaires 0.00 5.00 10.00 15.00 25.00 30.00 33.00 (Percentage) The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: The target set by this intermediate indicator has already been achieved. Action: This indicator To track sustainability and further uptake the intermediate indicator's end target and date have been revised to take into account the project's new closing has been Revised date. IDP and refugee beneficiaries 0.00 2.00 4.00 7.00 10.00 11.00 12.00 (Percentage) Rationale: Action: This indicator To track sustainability and further uptake the intermediate indicator's end target and date have been revised to take into account the project's new closing has been Revised date. Access: Beneficiaries utilizing legal aid services 2,200.00 3,000.00 4,000.00 6,000.00 7,000.00 9,000.00 10,000.00 (Number) Rationale: Action: This indicator has To reflect the new project's closing date and taking into account the delays in starting implementation of the legal aid pilot the indicator's target dates have been Revised been revised accordingly. Legal aid laws and procedures reviewed No No Yes Yes Yes Yes Yes and improvements adopted (Yes/No) The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: Action: This indicator To track sustainability and further progress the intermediate indicator's end target and date have been revised to take into account the project's new closing has been Revised date. Disputes submitted to pilot ADR system 0.00 0.00 0.00 200.00 400.00 400.00 400.00 (Number) Rationale: Action: This indicator As no additional resources are allocated to this activity, the intermediate indicator's end target has been revised to track sustainability and uptake while taking has been Revised into account the project's new closing date. Supreme Court E-Library information is accessed 0.00 0.00 0.00 4,000.00 10,000.00 10,000.00 10,000.00 by users (Number) Rationale: Action: This indicator To track sustainability the intermediate indicator's end target is maintained, its date has been revised to take into account the project's new closing date. has been Revised MOJ IT Call Center and Help Desk operational No No Yes Yes Yes Yes Yes (Yes/No) Rationale: Action: This indicator The target set by this intermediate indicator has already been achieved and is kept to track sustainability of the project's objectives. has been Revised Smart courts 7.00 7.00 8.00 10.00 10.00 11.00 12.00 constructed (Number) The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: The target value was reduced from 13 to 12 smart courts constructed as GOA priorities have changed. Instead of investing further in infrastructure, the GOA's Action: This indicator focus is on e-service delivery to increase access for citizens and businesses, transparency and efficiency. The previously planned Baku City Specialized Court has been Revised Complex will therefore not be constructed under this project. Transparency: Performance information available on Ministry of Justice and 0.00 2.00 4.00 5.00 5.00 5.00 5.00 Supreme Court websites (Number) Rationale: The target set by this intermediate indicator has been partially achieved. Action: This indicator has To track further progress and sustainability the intermediate indicator's end target and date have been revised to take into account the project's new closing been Revised date. Audio-video court proceedings transcription system No No Yes Yes Yes Yes Yes operational in JSSIP financed courts (Yes/No) Rationale: Action: This indicator To track sustainability and further uptake as more courts will be connected the intermediate indicator's end date has been revised to take into account the has been Revised project's new closing date. Information on construction activities is No Yes Yes Yes Yes Yes Yes publicly accessible (Yes/No) The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: Action: This indicator This is a continued monitoring and supervision tool, hence the intermediate indicator's end date has been revised to take into account the project's new closing has been Revised date. Information on performance and budgets is available on No No No Yes Yes Yes Yes MOJ and Supreme Court websites (Yes/No) Rationale: Action: This indicator The target set by this intermediate indicator has already been achieved and is kept to track sustainability of the project's objectives. The intermediate has been Revised indicator's end date has been revised to take into account the project's new closing date. Justice Sector Gender Strategy and Action Plan No No Yes Yes Yes Yes Yes publicly available (Yes/No) Rationale: Action: This indicator This activity is ongoing. To track progress and sustainability, the intermediate indicator's end date has been revised to take into account the project's new has been Revised closing date. Efficiency: Time taken to enforce contracts through 237.00 237.00 230.00 225.00 215.00 212.00 210.00 courts (Days) Rationale: Action: This indicator has To track sustainability and further progress the intermediate indicator's end target and date have been revised to take into account the project's new closing been Revised date. The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Cost savings from reduced administrative and compliance burden 0.00 10.00 15.00 25.00 25.00 of business inspections (Amount(USD)) Rationale: The target set by this intermediate indicator has already been achieved. Action: This indicator The end target data has been revised as its practical relevance is superseded. Law No. 1410-IVQ of October 20, 2015 and the Presidential Decree No. 660 of has been Revised October 26, 2015 have postponed the requirement to undertake business inspections: first until October 31, 2017, now extended until further notice. The project cannot track the cost savings of a postponed government procedure. Average energy consumption in JSSIP- 0.70 0.00 0.00 0.50 0.30 0.30 0.30 financed 'smart courts' (MWh/year) Rationale: Action: This indicator The target set by this intermediate indicator has already been achieved and is kept to track sustainability of the project's objectives. The intermediate has been Revised indicator's end date has been revised to take into account the project's new closing date. Number of uncontested civil enforcement cases electronically processed 5,000.00 0.00 5,000.00 10,000.00 20,000.00 25,000.00 27,000.00 using the JSSIP-financed automated system (Number) Action: This indicator is Rationale: New The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 In order to increase the efficiency of services provided by Azerbaijan's courts, the project is focusing on e-services and testing in this context new tools to decrease the workload burden on judges and speeding up processes while at the same time increasing access and transparency for court users. The project's innovative character and push for e-services in the judiciary deserves to be reflected adequately also in its results framework. PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 A. Judicial Service Delivery Improvements Direct project beneficiaries 0.00 5,000.00 10,000.00 20,000.00 70,000.00 120,000.00 150,000.00 (Number) Rationale: The target set by this intermediate indicator has already been achieved. Action: This indicator has To track sustainability of the project's objectives and further uptake as more and more courts will be connected the intermediate indicator's end target and date been Revised have been revised to take into account the project's new closing date. Female beneficiaries 0.00 5.00 10.00 15.00 25.00 30.00 33.00 (Percentage) The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: The target set by this intermediate indicator has already been achieved. Action: This indicator To track sustainability and further uptake the intermediate indicator's end target and date have been revised to take into account the project's new closing has been Revised date. IDP and refugee beneficiaries 0.00 2.00 4.00 7.00 10.00 11.00 12.00 (Percentage) Rationale: Action: This indicator To track sustainability and further uptake the intermediate indicator's end target and date have been revised to take into account the project's new closing has been Revised date. Legal aid laws and procedures reviewed and No No Yes Yes Yes Yes Yes improvements adopted (Yes/No) Rationale: Action: This indicator has To track sustainability and further progress the intermediate indicator's end target and date have been revised to take into account the project's new closing been Revised date. Disputes submitted to pilot 0.00 0.00 0.00 200.00 400.00 400.00 400.00 ADR systems (Number) Rationale: Action: This indicator has As no additional resources are allocated to this activity, the intermediate indicator's end target has been revised to track sustainability and uptake while taking been Revised into account the project's new closing date. The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 B. Strengthening Institutional Capacity, Efficiency and M&E MOJ IT Call Center and Help No No Yes Yes Yes Yes Yes Desk operational (Yes/No) Rationale: Action: This indicator has The target set by this intermediate indicator has already been achieved and is kept to track sustainability of the project's objectives. been Revised Audio-video court proceedings transcription No No Yes Yes Yes Yes Yes system operational in JSSIP financed courts (Yes/No) Rationale: Action: This indicator has To track sustainability and further uptake as more courts will be connected the intermediate indicator's end date has been revised to take into account the been Revised project's new closing date. Information on performance and budgets is available on MOJ and No No No Yes Yes Yes Yes Supreme Court websites (Yes/No) Rationale: Action: This indicator has The target set by this intermediate indicator has already been achieved and is kept to track sustainability of the project's objectives. The intermediate been Revised indicator's end date has been revised to take into account the project's new closing date. Justice Sector Gender Strategy and Action Plan is No No Yes Yes Yes Yes Yes publicly available (Yes/No) The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: Action: This indicator has This activity is ongoing. To track progress and sustainability, the intermediate indicator's end date has been revised to take into account the project's new been Revised closing date. Supreme Court E-Library information is accessed by 0.00 0.00 0.00 4,000.00 10,000.00 10,000.00 10,000.00 users (Number) Rationale: Action: This indicator has To track sustainability the intermediate indicator's end target is maintained, its date has been revised to take into account the project's new closing date. been Revised Cost savings from reduced administrative and compliance burden of 0.00 10.00 15.00 25.00 25.00 business inspections (Amount(USD)) Rationale: The target set by this intermediate indicator has already been achieved. Action: This indicator has The end target data has been revised as its practical relevance is superseded. Law No. 1410-IVQ of October 20, 2015 and the Presidential Decree No. 660 of been Revised October 26, 2015 have postponed the requirement to undertake business inspections: first until October 31, 2017, now extended until further notice. The project cannot track the cost savings of a postponed government procedure. C. Expansion and Modernization of Justice Infrastructure Smart courts constructed 7.00 7.00 8.00 10.00 10.00 11.00 12.00 (Number) Action: This indicator has Rationale: been Revised The World Bank Judicial Services and Smart Infrastructure Project (P144700) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 The target value was reduced from 13 to 12 smart courts constructed as GOA priorities have changed. Instead of investing further in infrastructure, the GOA's focus is on e-service delivery to increase access for citizens and businesses, transparency and efficiency. The previously planned Baku City Specialized Court Complex will therefore not be constructed under this project. Information on construction activities is publicly No Yes Yes Yes Yes Yes Yes accessible (Yes/No) Rationale: Action: This indicator has This is a continued monitoring and supervision tool, hence the intermediate indicator's end date has been revised to take into account the project's new closing been Revised date. Average energy consumption in JSSIP- financed 'smart courts' - 0.70 0.00 0.00 0.50 0.30 0.30 0.30 kilowatt-hours per square meter per annum (Megawatt hour(MWh)) Rationale: Action: This indicator has The target set by this intermediate indicator has already been achieved and is kept to track sustainability of the project's objectives. The intermediate been Revised indicator's end date has been revised to take into account the project's new closing date. IO Table SPACE