The World Bank Transit Corridor Improvement Project (P149697) REPORT NO.: RES40357 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TRANSIT CORRIDOR IMPROVEMENT PROJECT APPROVED ON DECEMBER 19, 2014 TO REPUBLIC OF BELARUS TRANSPORT EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Alexander Kremer Regional Director: Lucio Monari Practice Manager/Manager: Karla Gonzalez Carvajal Task Team Leader(s): Nijat Valiyev, Fiona J Collin, Yevhen Bulakh The World Bank Transit Corridor Improvement Project (P149697) ABBREVIATIONS AND ACRONYMS BCP – Border crossing point EA – Environmental assessment ESIA – Environmental and social impact assessment ESMP- Environmental and social management plan OP – Operational policy PDO – Project development objective RPF – Resettlement Policy Framework TRSCC - Traffic and Road Safety Coordination Center USD – United States Dollars WB – World Bank The World Bank Transit Corridor Improvement Project (P149697) BASIC DATA Product Information Project ID Financing Instrument P149697 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 19-Dec-2014 30-Jun-2020 Organizations Borrower Responsible Agency Republic of Belarus Ministry of Transportation and Communications Project Development Objective (PDO) Original PDO The Project Development Objective is to improve transport connectivity, border crossing procedures and safety for domestic and international road users on selected sections of the M6 corridor. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-84590 19-Dec-2014 08-Jan-2015 07-May-2015 30-Jun-2020 250.00 219.88 30.12 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Transit Corridor Improvement Project (P149697) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Transit Corridor Improvement Project (“the Project”) is providing US$250 million in lending to the Republic of Belarus through the IBRD loan (8459-BY) approved on December 19, 2014. The proposed Project restructuring was prepared in response to the letter from the Government of the Republic of Belarus dated January 10, 2020 requesting extension of the project closing date to allow completion of the existing project sub-component on the establishment of Traffic and Road Safety Coordination Center (TRSCC) and utilization of the project savings. 2. The Project’s progress towards achievement of the PDO is rated Satisfactory and implementation progress is rated Moderately Satisfactory. The Project is in track to meet its development objectives. Implementation of all key project activities has been timely completed, except the sub-component on the establishment of TRSCC, which will not be delivered within the current project timeframe due to the need for the contract re-tendering (see paragraph 5). As of early February 2020, the project loan disbursements stand at about US$218.6 million (87% of loan funds). Overall, efficient implementation of the project has so far resulted in reconstruction of significantly larger sections of M6 highway than it was originally envisioned (154km vs 86km) and in about 10 mln USD of additional savings of loan proceeds. 3. The recent Bank mission was pleased to observe completion of all major contracts for reconstruction of eight highway sections under the component of the project on Improvement of Sections of M6 Transit Corridor. Progress of works under the component was consistently smooth and fast throughout the implementation. All the road sections have been opened to traffic and commissioning of these sections is finalized. Technical quality of completed works was overall satisfactory and the independent technical audit conducted within the project did not identify any major deviations. The post-completion road user satisfaction survey has demonstrated overachievement of the targeted user satisfaction level (75 percent) by almost 10 percent. 4. The project component on the Border Management Enhancement financed the modernization of Bruzgi border crossing point (BCP) at Belarus-Polish border and was fully completed, including the original and additional scopes of works. The State Customs Committee has recently finalized the impact assessment study on the modernization of the BCP. The key project indicator on measuring the average time to complete inwards border clearance procedures at Bruzgi BCP has demonstrated significant improvement (82.3 minutes) compared to the baseline (126 minutes) and exceeded the target value of 100 minutes. 5. The key activities of the project component on the Road Safety and Network Management include establishment of TRSCC and implementation of the roadside services study. The contract for establishment of TRSCC is currently being re- tendered. The previous bidding could not be concluded given the need to update technical requirements and ensure better competition and value for money. Following completion of the bidding process signing of the contract is expected in April 2020. Operational acceptance of the system is scheduled within 18 months from the inception. The consultancy contract for developing market-oriented road-side services in Belarus has been satisfactorily completed. The activity involved data collection, surveys and analysis of the needs and satisfaction levels of road users, determined the interest of private sector to invest in road-side services, and identified main obstacles and problems faced by the private sector in developing road-side services. 6. The following table shows the current status of the key project results indicators. Table 1: Status of key project results indicators Cumulative Target Values Indicator Name Baseline Actual (as of January End Target 1, 2020) The World Bank Transit Corridor Improvement Project (P149697) Project Development Objective Indicators Reduction in travel time between 220 172 178 Minsk and Grodno (min) Vehicle operating costs for medium trucks, along the project road reduced 0.55 0.49 0.495 (US$ veh-km) Reduction in average time to complete inwards border clearance 126 82,3 100 procedures (commercial vehicles) at Bruzgi BCP (Minutes) Reduction in severe injuries and fatalities on road sections under this 35 17 21 project (Number)1 Percentage of project beneficiaries expressing satisfaction with improved travel experiences through 0 84.5 75 implementation of TRSCC and new road-side services (Percentage) 7. The Financial Intermediate Results Indicators Management, Project Management, Roads constructed, non-rural Counterpart 0 154 86 (kilometers) – (Core) Funding, Procurement, and TRSCC operational and Monitoring Development of a Traffic and Road and No No providing regular road agency Evaluation Safety Coordination Center (TRSCC) ratings of the and road user information Project are rated Satisfactory. Revised market-oriented Based on the latest Improved climate for SME framework for road side services financial No Yes management investment in road side services prepared using findings from review by the market survey Bank, the Borrower is in compliance with the financial In – channel clearance policy management Implementation of the “in – channel” requirements operational with demonstrated and the clearance procedures policy by State No Yes Project does reduction in procedures and not have Customs Committee overdue clearance time financial audit reports. Direct project beneficiaries (number), of which female (percentage): Short term construction jobs: 1203 (18%) 1 200 (30%) Long term maintenance/road side 312 (34%) 275 (36%) services jobs: Daily road user and border crossing 27 823 26 575 beneficiaries: Annual road safety beneficiaries: 70 (41%) 65 (40%) 1This indicator measures progress in the annual occurrence of severe injuries and fatalities on M6 sections financed under the project. The World Bank Transit Corridor Improvement Project (P149697) II. DESCRIPTION OF PROPOSED CHANGES 8. The proposed restructuring envisages some changes in the scope of the Project, extension of the Project closing date, and respective revisions in the corresponding Loan Agreement and Project Monitoring and Evaluation Matrix. These changes are specified below in more detail. Changes in the Scope of the Project 9. Changes in the scope of the project result from the request by the government of Belarus to utilize about 10 mln USD of loan savings generated by efficient implementation of the civil works component of the operation. During the recent Bank mission, the Bank team and government counterparts have discussed and preliminarily agreed the key project activities to be financed out of the project savings. The restructuring will involve changes in the scope of the Component 1: Improvement of Sections of M6 Transit Corridor and Component 2: Road Safety and Network Management. 10. Component 1: Improvement of Sections of M6 Transit Corridor. Additional activities within this component will include periodic maintenance (rehabilitation/repair) works and other minor road improvements, such as overlays, replacement of deteriorated water drainage pipes, installation of noise barriers, etc. for selected sections of M6 highway at km 239-244, km 290- 291 and some others, which have not been covered by the project so far. In total, additional activities envision about 5km of road rehabilitation works and about 10 km of road repair works. Additional activities are also proposed to include reconstruction of Volojin road maintenance facility serving the M6 highway. 11. Component 2: Road Safety and Network Management. Additional activities within this component will include preparation of a feasibility study for rehabilitation and road safety improvements of selected sections of M1 highway. M1 is the critical highway link, which crosses Belarus from South-West to North-East and forms part of the European E30 corridor connecting Russia with the Western Europe. New activities will also involve the review of the national regulatory framework on (i) traffic safety management during road construction works and (ii) wild animal road crossings in Belarus. Within these activities, the national road safety legislation is proposed to be reviewed and recommendations developed for improved traffic management during road construction works and for animal road crossings. Closing date 12. The Project Closing Date will be extended by 18 months, from June 30, 2020 to December 31, 2021. This is the first extension of the Closing Date. The Closing Date is proposed to be extended based on the assessment of time needed for completion of remaining project activities, including development of a Traffic and Road Safety Coordination Center and implementation of road safety study, M1 feasibility study, and M6 additional civil works. Implementation schedule 13. The Borrower has updated the project implementation schedule, which provides sufficient time for completion of remaining Project activities by the new Closing Date. The revised implementation schedule envisages (i) finalization of procurement and subsequent development of a Traffic and Road Safety Coordination Center by October 2021, (ii) implementation of institutional development activities and feasibility studies by mid-2021; and (iii) additional M6 rehabilitation and improvement works by mid-2021. Changes in the legal documents The World Bank Transit Corridor Improvement Project (P149697) 14. Changes in the Loan Agreement. The proposed changes in the Loan Agreement include modifications in (i) the Section IV B.2 of Schedule 2 of the Loan Agreement to extend the project closing date from June 30 , 2021 to December 31, 2022 and (ii) Schedule 1 of the Loan Agreement (Project Description) to reflect changes in the project scope. New activities reflected in the Project description include the road rehabilitation and repair works for selected sections of M6 highway, the reconstruction and improvement of the road maintenance facilities and procurement of road maintenance equipment serving the M6 highway corridor, the preparation of a feasibility study for rehabilitation and road safety improvements of selected sections of M1 highway, and implementation of a study on traffic safety management during road construction works, as well as wild animal road crossings. The latter will replace the current project activity on implementation of the road safety awareness campaigns, as per the ongoing priority of the client. To reflect some of the important results of the project achieved so far, the description of the project in Loan Agreement is updated to include the actual length (154km) of M6 highway expanded from two to four lanes under the project. The original length of M6 highway sections envisioned for expansion was 86km and included sections between km 57.3-130.4 and km 197.7-211.0. The revised length of the road now also covers the completed section of the road between km 130.4-197.7. This section was fully in line with the PDO and was agreed to in a Management Letter dated October 4, 2016, after consultation with the Bank management and legal team, in order to utilize savings of loan funds achieved under the project. 15. Changes in the monitoring indicators. The PDO level results indicators, the intermediate results indicators and their target values will be adjusted, mainly to reflect the expanded scope of the Project. The changes will include both the adjustment of the existing indicators and introduction of new indicators. The three new intermediate project indicators are being introduced to monitor progress with (i) the length of roads rehabilitated and repaired under the project, (ii) development of a feasibility study for the rehabilitation and road safety improvement of the selected sections of M1 highway, and (iii) improving road safety framework for the management of road construction works and wild animal road crossings. The PDO indicator measuring percentage of project beneficiaries expressing satisfaction with improved travel experiences along the project roads is being slightly adjusted to expand its scope and cover all aspects of user satisfaction. Finally, the intermediate core project indicator measuring the length of roads constructed under the project and the PDO indicator measuring reduction in severe injuries and fatalities on road sections under this project are being revised to reflect the significantly extended length of M6 sections reconstructed under the project, as mentioned above. The respective modifications will be also made in the description of indicators. The changes will be incorporated in the new amended Supplemental Letter of the Loan Agreement, to be signed by the Bank and the Republic of Belarus as part of the restructuring package. The proposed changes are reflected in the revised Loan Agreement and Results and Monitoring Framework. Safeguards 16. The proposed new activities to be supported by the Project are similar with the original project activities and include rehabilitation of existing roads, road maintenance facility, and technical assistance. Hence, in accordance with OP 4.01 Environmental Assessment, the project environmental category remains B and no additional safeguard policies are triggered. The implementing agency has a positive track record in the management of environmental and social issues and the project safeguard performance always was and is currently rated satisfactory. The ESIA&ESMP, prepared for the initial project will be used for development site specific ESMP Checklists to address potential environmental and social impacts associated with the proposed: (a) rehabilitation and repair of the selected sections of M6 highway that would mostly include overlays, replacement of deteriorated water drainage pipes, installation of noise barriers, as well as installation of road furniture and finishing works; and, (b) the reconstruction and improvement of the road maintenance facility. Considering the small scale of proposed civil works, the Borrower will apply ESMP Checklist templates for road rehabilitation subprojects and ESMP Checklist for small scale reconstruction and improvement activities (accepted by the WB and applied widely in the Europe and Central Asia Region, - in Poland, Moldova, Kyrgyz Republic, etc.). Per WB safeguard policies the EA documents will be disclosed and consulted with all interested parties. No works will start before finalizing the EA documents and including ESMP Checklist provisions in the contracts for implementation of the proposed sub-projects. The project has Resettlement Policy Framework (RPF), but given the nature of the additional Project activities (i.e. rehabilitation/repair of existing roads, reconstruction of road maintenance facility, and technical assistance) no land acquisition for the proposed new activities will be required. The World Bank Transit Corridor Improvement Project (P149697) Financing 17. The project financing arrangements will not change and the Bank financing will stay at original $US 250 million. The original and revised breakdown of Project costs is indicated in the Table 2. Table 2: Project Cost and Financing Project Components Original Original Revised Revised Project cost IBRD Financing Project cost IBRD Financing (million (million US$, (million (million US$, US$) %) US$) %) Component 1: Improvement of 259.28 239.27 (92.3%) 255.42 235.41 (92.2%) Sections of M6 Transit Corridor Component 2: Road Safety and 6.8 6.8 (100%) 9.18 9.18 (100%) Network Management Component 3: Border 3.3 3.3 (100%) 4.78 4.78 (100%) Management Enhancement Front-end-fee (0.25%) 0.63 0.63 (100%) 0.63 0.63 (100%) Total 270.01 250 (92.6%) 270.01 250 (92.6%) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Safeguard Policies Triggered ✔ Implementation Schedule ✔ Other Change(s) ✔ Implementing Agency ✔ The World Bank Transit Corridor Improvement Project (P149697) DDO Status ✔ Project's Development Objectives ✔ DLIs ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Improvement of Component 1: Improvement of Sections of M6 'Minsk - Grodno' 259.28 Revised Sections of M6 'Minsk - 255.42 Transit Corridor Grodno' Transit Corridor Component 2: Road Safety and Component 2: Road Safety and 6.80 Revised 9.18 Network Management Network Management Component 3: Border Component 3: Border 3.30 Revised 4.78 Management Enhancement Management Enhancement Front-end fees 0.63 No Change Front-end fees 0.63 TOTAL 270.01 270.01 The World Bank Transit Corridor Improvement Project (P149697) 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-84590 Effective 30-Jun-2020 31-Dec-2021 30-Apr-2022 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 0.00 625,000.00 2016 37,000.00 10,000.00 2017 37,255,000.00 46,846,180.00 2018 96,200,000.00 79,092,054.00 2019 86,435,000.00 74,408,000.00 2020 30,073,000.00 20,500,000.00 2021 0.00 26,000,000.00 2022 0.00 2,518,766.00 OPS_DETAILEDCHANGES_COMPLIANCE_TABLE COMPLIANCE Safeguard Policies Safeguard Policies Triggered Current Proposed Environmental Assessment (OP) (BP 4.01) Yes Yes Performance Standards for Private Sector No No Activities OP/BP 4.03 Natural Habitats (OP) (BP 4.04) No No Forests (OP) (BP 4.36) No No Pest Management (OP 4.09) No No The World Bank Transit Corridor Improvement Project (P149697) Physical Cultural Resources (OP) (BP 4.11) No No Indigenous Peoples (OP) (BP 4.10) No No Involuntary Resettlement (OP) (BP 4.12) Yes Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP No No 7.50) Projects in Disputed Areas (OP) (BP 7.60) No No . The World Bank Transit Corridor Improvement Project (P149697) . Results framework COUNTRY: Belarus Transit Corridor Improvement Project Project Development Objectives(s) The Project Development Objective is to improve transport connectivity, border crossing procedures and safety for domestic and international road users on selected sections of the M6 corridor. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 To improve transport connectivity on selected sections of M6 corridor and road users satisfaction Reduction in travel time between Minsk and Grodno 220.00 220.00 220.00 210.00 198.00 178.00 178.00 (Minutes) Vehicle operating costs for medium trucks, along the 0.55 0.55 0.55 0.53 0.53 0.50 0.50 project road reduced (Amount(USD)) Percentage of project beneficiaries expressing satisfaction with improved 0.00 75.00 travel experiences along the project roads (Percentage) Rationale: Action: This indicator has To expand the scope of indicator by covering various aspects of user satisfaction been Revised To improve border crosing procedures at Bruzgi BCP The World Bank Transit Corridor Improvement Project (P149697) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Reduction in average time to complete inwards border clearance procedures 126.00 100.00 (commercial vehicles) at Bruzgi BCP (Minutes) To improve road safety on selected sections of the M6 corridor Reduction in severe injuries and fatalities on road 42.00 42.00 42.00 35.00 21.00 21.00 21.00 sections under this project (Number) Action: This indicator has been Revised 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 Component 1: Improvement of Sections of M6 'Minsk - Grodno' Transit Corridor Roads constructed, non- 0.00 25.00 86.00 154.00 154.00 rural (Kilometers) Rationale: Action: This indicator has To reflect the actual length of roads constructed been Revised Direct project beneficiaries (number), of which female see below see below (percentage) (Text) The World Bank Transit Corridor Improvement Project (P149697) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Short term construction 0.00 1200 (30%) jobs (Text) Long term maintenance/roadside 0.00 275 (36%) services jobs (Text) Daily road user and border crossing 0.00 26,575.00 beneficiaries (Text) Annual road safety 0.00 65 (40%) beneficiaries (Text) Roads rehabilitated/ repaired under the project 0.00 25.00 (Kilometers) Action: This indicator is New Component 2: Road Safety and Network Management Development of a traffic TRSCC operational and and road safety co- Specification for No providing regular road ordination center (TRSCC) TRSCC prepared user information (Text) Action: This indicator has been Revised Revised market revised market oriented framework Improved climate for SME Market survey oriented framework for road side services investment in road side No conducted for road side services prepared using services (Text) prepared. findings from market surveys. The World Bank Transit Corridor Improvement Project (P149697) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Development of a feasibility study for the rehabilitation and road safety No Yes improvement of the selected sections of M1 highway (Text) Action: This indicator is New Improved road safety framework for the management of road No Yes construction works and wild animal road crossings (Text) Action: This indicator is New Component 3: Border Management Enhancement In-channel clearance Implementation of the “in – Specifications for policy operational with channel” clearance Time release study infrastructure In-channel clearance Final time release demonstrated No procedures policy by State completed improvement policy operational study reduction in Customs Committee. (Text) prepared procedures and clearance time IO Table SPACE The World Bank Transit Corridor Improvement Project (P149697)