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					                                         Document of
                                     The World Bank

                                 OFFICIAL USE ONLY
                                                                         Report No: 65139-RO




                                RESTRUCTURING PAPER

                                            ON A

                  PROPOSED PROJECT RESTRUCTURING
                                  OF
      HAZARD RISK MITIGATION & EMERGENCY PREPAREDNESS PROJECT
                     LOAN 4736 RO AND GEF TF 053472
                        BOARD APPROVAL DATE
                                        May 20, 2004


                           IN THE INITIAL AMOUNT OF
                      LOAN US$ 150,000,000; GRANT US$7,000,000

                                            AND

                          A RESTRUCTURED AMOUNT OF
                      LOAN US$143,324,463; GRANT US$7,000,000


                                             TO

                                         ROMANIA


                                       March 31, 2012



Sustainable Development Department
South Caucasus Country Department
Europe and Central Asia Region



This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
World Bank authorization.
                    ABBREVIATIONS AND ACRONYMS



EIRR   Economic Internal Rate of Return
EMIS   Emergency Management Information System
GEF    Global Environment Facility
LAPF   Land Acquisition Policy Framework
OP     Operational Policies
O&M    Operation and Maintenance
PDO    Project Development Objective
TMF    Tailings Management Facility




          Regional Vice President:    Philippe Le Houérou, ECAVP
                 Country Director:    Peter C. Harrold, ECCU5
         Sector Manager / Director:   Stephen Karam/Laszlo Lovei, ECSS6
                Task Team Leader:     Gabriel Ionita, ECSS1
                         ROMANIA
 HAZARD RISK MITIGATION & EMERGENCY PREPAREDNESS PROJECT
                           P075163
                    TABLE OF CONTENTS

                                                                                                                                   Page

A.   SUMMARY ........................................................................................................................... 1
B.   PROJECT STATUS ............................................................................................................. 1
C.   PROPOSED CHANGES ...................................................................................................... 3
Restructuring
Restructuring Type: Level two
Last modified on date : 12/19/2011

1. Basic Information
Project ID & Name                             P075163: HAZ MITIG
Country                                       Romania
Task Team Leader                              Gabriel Ionita
Sector Manager/Director                       Stephen George Karam
Country Director                              Peter C. Harrold
Original Board Approval Date                  05/20/2004
Original Closing Date:                        12/31/2009
Current Closing Date                          12/20/2011
Proposed Closing Date [if applicable]         06/30/2012
EA Category                                   B-Partial Assessment
Revised EA Category                           B-Partial Assessment-Partial Assessment
EA Completion Date                            03/15/2003
Revised EA Completion Date


2. Revised Financing Plan (US$m)
Source                                                 Original                         Revised
BORR                                                        46.66                             46.66
IBRD                                                       150.00                            143.32
Total                                                      196.66                            189.98


3. Borrower
         Organization                         Department                          Location
Ministry of Public Finance                                            Romania


4. Implementing Agency
           Organization                       Department                         Location
 National Agency of Mineral             PMU                         Romania
Resources
 Ministry of Regional Development       PMU                         Romania
and Tourism
 Ministry of Administration and         PMU                         Romania
Interior
 Ministry of Environment and            PMU                         Romania
Forests




                                                  i
5. Disbursement Estimates (US$m)
Actual amount disbursed as of 12/19/2011                                                    116.99
         Fiscal Year                             Annual                            Cumulative
2011                                                        5.00                            121.99
2012                                                      21.33                             143.32
                                                        Total                               143.32


6. Policy Exceptions and Safeguard Policies
Does the restructured project require any exceptions to Bank policies?                               N


Does the restructured projects trigger any new safeguard policies? If yes, please select             N
from the checklist below and update ISDS accordingly before submitting the package.




7a. Project Development Objectives/Outcomes
Original/Current Project Development Objectives/Outcomes
The overall objective of the project is to assist the Government of Romania in reducing the environmental,
social, and economic vulnerability to natural disasters and catastrophic mining accidental spills of
pollutants through: (i) strengthening the institutional and technical capacity for disaster management and
emergency response through upgrading communication and information systems; (ii) implementing
specific risk reduction investments for floods, landslides and earthquakes; (iii) improving the safety of
selected water-retention dams; and (iv) improving on a pilot basis the management and safety of tailings
dams and waste dump facilities.



7b. Revised Project Development Objectives/Outcomes [if applicable]




                                                   ii
   HAZARD RISK MITIGATION & EMERGENCY PREPAREDNESS PROJECT

                                RESTRUCTURING PAPER

A. SUMMARY
This Project Paper seeks the approval of the Country Director to restructure the Romania
Hazard Risk Mitigation and Emergency Preparedness Project (Loan no. 4736 RO and
GEF TF no. 53472) and amend Project legal documents, as appropriate. Project restructuring
is being undertaken primarily to (i) extend the current Closing Date for both the Loan and
GEF Grant by about six months, from December 20, 2011 to June 30, 2012; (ii) increase the
percentage of Loan and GEF Grant financing to 100% for all categories of expenditure; (iii)
reallocate some of the Loan proceeds; and (iv) cancel an amount of $6,675,537 from the
Loan. Since the Closing Date is extended beyond the period of two years from the date of the
original Closing Date, the authorization of the RVP is being sought as well as per paragraph 7
of BP13.30.
These modifications were requested by the Government through the letters dated June 17,
December 7, and December 16, 2011sent by the Ministry of Public Finance (MPF) to the
Bank.
This is the second restructuring of the project.
B. PROJECT STATUS
The Project was approved on May 20, 2004 and became effective on October 20, 2004.
Project implementation was slower than anticipated both at start-up (because the bidding
detailed designs have been prepared after effectiveness) and during implementation (because
of insufficient funds allocated to project activities) but commitment of Project funds
gradually gained momentum and now over 90 percent of Project funds have been committed,
about 78 percent of the Loan has been disbursed, and about 85 percent of Project activities
have been completed. While performance was satisfactory most of the project’s lifetime,
since the Mid-Term Review, the progress towards achievement of Project Development
Objectives was rated only Moderately Satisfactory. This was due to the risk that the initial
investment program would only be partially completed because of insufficient funding
provided to the project from the state budget during the economic and financial crisis which
affected Romania. At the last implementation support mission, the achievement of Project
Development Objectives was also rated Moderately Satisfactory following substantial
increase of project funding from the state budget in the second half of 2011.
So far, the project has achieved seismic retrofitting of 28 public buildings, flood protection at
all ten project sites, enhancing the safety of six large and small dams, and safety of six
tailings management facilities (TMF) at three mines.
Seismic retrofitting of 15 public buildings is underway; retrofitting of nine buildings will be
completed by current Closing Date. The remaining six buildings would need up to six more
months to be completed. The works for enhancement of safety of a seventh dam are at an
advanced stage and would be completed by end-December 2011.
All technical assistance activities for the Romania Catastrophe Insurance Program have been
completed and the program has been up and running for over one year.
The Project was restructured in August 2009 (level 1) primarily to: (i) apply World Bank
Safeguard Policy, OP 4.12, Involuntary Resettlement to all Project components involving

                                                   1
execution of works; (ii) reduce the scope of envisaged Project investment programs due to
increased construction costs and loan currency depreciation; (iii) restructure the Project
output indicators for Component B (Earthquake Risk Reduction) and Component C (Flood
and Landslide Risk Reduction) to adjust them to the revised scope of the investment program
and revise the Results Framework; and (iv) extend the Project Closing Date from December
31, 2009 to December 20, 2011, to enable the Government to complete all activities
envisioned under the Project.
Further, the Project was restructured again in December 2010 (level 2) and November 7,
2011 to reallocate part of the Loan proceeds.
On June 17, 2011, the Borrower requested a second extension of the Closing Date, by 12
months to allow: (i) finalization of development and implementation of the Emergency
Management Information System (EMIS), (ii) completion of seismic retrofitting of all 48
public buildings in the investment program, (iii) finalization of the handbook for landslides
monitoring, and (iv) development and installation of two computer-based systems for
environmental monitoring and decision support in the mining industry (establishment of a
baseline and an environmental monitoring system, and of a regional mine spill disaster
response system).
At the time of receiving the Borrower’s request, the funds allocated to project implementation
were insufficient even to complete the existing contracts in 2011 and any allocation of
additional funds to the project to cover the funding gap affecting the Components B and D
was uncertain. In addition, EMIS implementation was, again, blocked by technical disputes
between the Contractor and EMIS beneficiary (the General Inspectorate of Emergency
Situations). Therefore, in its response to the Borrower, dated July 7, 2011, the Bank specified
that a second extension would be considered only if additional funding were provided by the
Government to Components B and D and significant progress was recorded in
implementation of the EMIS contract.
A budget rectification conducted by the Government in August 2011 resulted in allocation of
additional funds to Components B and D which fully covered the needs for the remaining
activities. In addition, progress was recorded in implementation of EMIS contract, under
Component A: the software was substantially improved to address all flaws identified earlier
by the General Inspectorate for Emergency Situations (the Beneficiary) and the operational
testing was successfully completed in early October 2011. Therefore, the conditions
specified in Bank’s letter dated July 7, 2011 have been met.
The additional funding provided to Component B allowed signature and start-up of eight
new works contracts for seismic structural retrofitting. Works under these new contracts will
be completed by June 2012. Therefore, by June 30, 2012, it is expected that 43 public
buildings would have safe structures, exceeding the revised target of 40 buildings set under
the 2009 project restructuring.
Although the investment program for seismic retrofitting of public buildings includes 48
buildings, the project target was revised to 40 buildings, given the uncertainties in works
implementation and financing noted during project implementation. Designs for the
remaining five buildings will be finalized under the project, but, since the works bidding
documents were not prepared on time (by October 15), these buildings would no longer
receive project financing and would remain to be retrofitted entirely with Government
financing after project closing.
Two of the buildings in the program, Iasi City Hall and Headquarters of the General
Inspectorate for Emergency Situations (GIES), were considered for retrofitting through

                                              2
innovative and cost-effective methods, which would demonstrate the feasibility and
replicability of such an approach. For different reasons, the works did not start for either
building. Retrofitting of the GIES building is too far behind schedule and will be dropped
from the project. However, the process for retrofitting the Iasi City Hall is sufficiently
advanced and the team recommends that it be included under the extended project. The
bidding documents have been finalized and tendering will start by December 20, 2011. If
launched as planned, the tendering should be finalized by end-February 2012 in time for
works to start in March 2012. Although the works would not be completed by June 2012 (but
by December 2012, as nine months are needed for completion of structural retrofitting), the
project team still recommends staring the process under the project due to demonstration
effect.
Implementation of Component C, the most advanced, is in final stages, with works for
improving the safety of one large dam (Dridu) about to be finalized and the contract for
supply and installation of the equipment for landslides monitoring in the two pilot areas
underway. It is expected that, weather permitting, the equipment installation would be
completed by end-December 2011. However, no time will be left for development of manuals
for data collection and pilot monitoring before the current Closing Date. Also, some
additional works needed at Dridu Dam require reallocation of some funds from other project
components.
Under Component D, the additional funding allocated allowed to start the procurement of a
Fixed and Mobile Laboratory for Environmental Monitoring (initiated in September 2011;
the contract is expected to be signed in December 2011 and completed in June 2012). In
addition, preparation of bidding documents for “Development of a Mine-specific IT-based
Environmental Monitoring and Decision Support System”, “Environmental Monitoring of
two TMF sites”, and “IT system for Mine Spill Disaster Response System” have well
progressed and the tendering is expected to be completed by mid-January 2012.
Implementation of these activities will create the link between the project activities and
achievements and a sustainable, long term monitoring, care and maintenance program
financed by the Government, and implemented by “Conversmin” (a national agency
responsible for sustainable mine closure founded during project implementation) which will
take over monitoring/analytical facilities, protocols and databases, and operate them beyond
project closure).

The Project’s Development Objectives (PDO) remain unchanged as follows: “to assist the
Borrower in reducing the environmental, social, and economic vulnerability to natural
disasters and catastrophic mining accidental spills of pollutants through: (i) strengthening the
institutional and technical capacity for disaster management and emergency response; (ii)
implementing specific risk reduction measures for floods, landslides and earthquake; (iii)
improving the safety of selected water-retention dams; and (iv) improving the management
and safety of tailings dams and waste dump facilities.”

C. PROPOSED CHANGES
      Financing
       o Disbursement arrangements
   The percentage of financing from the Loan and GEF Grant proceeds are revised and
   increased to 100% for all categories of expenditure, as of December 7, 2011, in response
   to Borrower’s request dated December 7, 2011, as shown in the tables below.
       o Reallocations

                                               3
      The Loan proceeds will be reallocated as follows: $3,085,000 from category (1)(a) to
      category (1)(b); $300,000 from category (1)(c) to category (2)(d); and $34,000 from
      category (1)(a) to category (4)(d)(ii).

          o Cancellations
      The amount of $6,675,537 will be cancelled from the Loan, as of December 7, 2011, in
      response to Borrower’s request dated December 7, 2011. The cancellation was requested
      because the time left for project implementation including the extended Closing Date
      does not allow for contracting and implementation of new project activities under
      component B. The respective project activities would be further implemented by the
      Government using the budget funds.

      The table below shows the revised allocation of Loan proceeds:

  Category of Expenditure                Allocation                      % of Financing
   Current       Revised           Current       Revised            Current         Revised
(1)Works for:                                                   100% of foreign   100% of foreign
(a) Part B of the Project         47,888,000       40,306,000   expenditures      expenditures and
(b) Part C of the Project         66,509,769       69,594,769   and 78% of        78% of local
(c) Part D of the Project          2,883,000        2,333,000   local             expenditures
(d) Part E of the Project                                       expenditures      incurred before
     (i) Part E.1                     0               0         (incurred before  March 7, 2007,
     (ii) Part E.2                  19,000            0         March 7, 2007)    78% of all
     (ii) Part E.3                  26,646          26,646      78% of all        expenditures
                                                                expenditures      (incurred before the
                                                                thereafter        date of this
                                                                                  amendment), and
                                                                                  100% of all
                                                                                  expenditures
                                                                                  thereafter
(2) Goods for:                                                  100% of foreign 100% of foreign
(a) Part A of the Project         8,904,000        8,904,000    expenditures,     expenditures, 100%
(b) Part C of the Project          367,500          367,500     100% of local     of local
(c) Part E of the Project                                       expenditures (ex expenditures (ex
     (i) Part E.1                   69,091           69,091     factory cost) and factory cost) and
     (ii) Part E.2                 235,000          134,000     75% for local     75% for local
     (iii) Part E.3                246,241          246,241     expenditures for expenditures for
     (iv) Part E.4                  23,000           23,000     other items       other items
(d) Part D of the Project         1,700,000        2,000,000    procured locally procured locally
                                                                (incurred before (incurred before
                                                                March 7, 2007); March 7, 2007);
                                                                75% of all        75% of all
                                                                expenditures      expenditures
                                                                incurred          incurred before the
                                                                thereafter        date of this
                                                                                  amendment; and
                                                                                  100% of all
                                                                                  expenditures
                                                                                  incurred thereafter
(3) Technical Services for Part       0                0        100% of foreign expenditures
    C.5 of the Project                                          and 75% of local expenditures



                                               4
  Category of Expenditure                  Allocation                       % of Financing
   Current       Revised             Current       Revised             Current         Revised
(4) Consultants' services,                                        75% of              75% of
including audit and training, for                                 expenditures        expenditures
(a) Part A of the Project            3,300,000        3,300,000   incurred by         incurred by local
(b) Part B of the Project            6,086,000        4,536,000   local consultants   consultants and
(c) Part C of the Project            5,853,369        5,853,369   and 85% of          85% of foreign
(d) Part E of the Project                                         foreign             consultants before
     (i) Part E.1                     100,000          100,000    consultants         the date of this
     (ii) Part E.2                   2,372,000        2,406,000                       amendment, and
     (iii) Part E.3                    28,875           28,875                        100% of all
(e) Part D of the Project             550,000          313,463                        expenditures
                                                                                      thereafter
(5) Operating costs for:                                                                    75% of all
                                                                                          expenditures
(a) MAI PMU                           100,909          100,909          75%            incurred before the
(b) MTCT PMU                          328,000          272,000          75%                date of this
(c) MEWM PMU                         1,927,600        1,927,600         75%              amendment and
(d) NAMR PMU                          482,000          482,000          75%                100% of all
                                                                                          expenditures
                                                                                            thereafter
(6) Unallocated for:
(a) Part A of the Project                0             0
(b) Part B of the Project                0             0
(c) Part C of the Project                0             0
(d) Part D of the Project                0             0
Sub Total                           150,000,000   143,324,463
(Amount Cancelled as of
                                                      6,675,537
December 7, 2011
             TOTAL                  150,000,000   150,000,000

     The following table shows the revised percentage of financing from the GEF Grant:

  Category of Expenditure                   Allocation                     % of Financing
  Current        Revised              Current       Revised           Current         Revised
(1) Goods                            1,200,000     1,200,000      100% of foreign     100% of foreign
                                                                  expenditures,       expenditures, 100%
                                                                  100% of local       of local
                                                                  expenditures (ex    expenditures (ex
                                                                  factory cost) and   factory cost) and
                                                                  75% for local       75% for local
                                                                  expenditures for    expenditures for
                                                                  other items         other items
                                                                  procured locally    procured locally
                                                                                      incurred before the
                                                                                      date of this
                                                                                      amendment, and
                                                                                      100% of all
                                                                                      expenditures
                                                                                      incurred thereafter
(2) Works                            2,700,000        2,700,000   100% of foreign     100% of foreign
                                                                  expenditures        expenditures and
                                                                  and 78% of          78% of local

                                                  5
  Category of Expenditure                Allocation                       % of Financing
  Current        Revised            Current      Revised             Current         Revised
                                                                 local               expenditures
                                                                 expenditures        incurred before the
                                                                                     date of this
                                                                                     amendment, and
                                                                                     100% of all
                                                                                     expenditures
                                                                                     thereafter
(3) Consultants’ Services          1,600,000         1,600,000   75% of              75% of
                                                                 expenditures        expenditures
                                                                 incurred by         incurred by local
                                                                 local consultants   consultants and
                                                                 and 85% of          85% of foreign
                                                                 foreign             consultants
                                                                 consultants         incurred before the
                                                                                     date of this
                                                                                     amendment, and
                                                                                     100% of all
                                                                                     expenditures
                                                                                     thereafter
(4) Training, workshops and         360,000          360,000          100%                 100%
study tours
(5) Operating costs for:                                                             75% of all
   (a) Part D of the Project           0                0              75%           expenditures
   (b) Part E.4 of the Project      770,000          770,000           75%           incurred before the
                                                                                     date of this
                                                                                     amendment and
                                                                                     100% of all
                                                                                     expenditures
                                                                                     thereafter
(6) Unallocated                     370,000          370,000
            TOTAL                   7,000,000        7,000,000


        Financial management
 The project is in compliance with the legal auditing and reporting financial covenants. The
 audit report for FY 2010 has been received before the June 30, 2011 due date, with a clean
 audit opinion and no internal control issues mentioned.
        Closing date
 The Bank team assessed the likelihood of fulfilling the commitments made by the Borrower
 in its letter of June 17, 2011 and found them feasible with a second extension of the Closing
 Date of the Loan and GEF Grant from December 20, 2011 to June 30, 2012, with the
 following conditions:
        No new tendering for works contracts under any of the project components, except
         for seismic retrofitting of City Hall Iasi for which tendering should start with priority
         and no later than December 20, 2011. Otherwise, tender launching for this contract
         should be stopped. The procurement plan has been revised accordingly.




                                                 6
      All procurement activities planned under Component D have already started and are
       expected to be finalized no later than February 28, 2012, to allow enough time for
       them to be completely implemented before June 30, 2012.
      All project activities underway at the time of the extended Closing Date (June 30,
       2012) will be completed by the Government with its own funds and without any
       project financing.
      Closing of the project accounts and archiving of project documents will start as soon
       as possible, by component, so that these activities are in advance stage or completed
       at Closing Date and would require less activity afterwards.
      The Bank team will initiate preparation of the Implementation Completion Report in
       January 2012 in order to collect most of the information and prepare an advanced
       draft ICR before June 30, 2012. The implementing agencies of the Borrower will also
       start preparation of the Borrower’s Implementation Report in January 2012 and
       submit the draft Report to the Bank by April 30, 2012. The final ICR will be
       completed shortly after the Closing Date.
Given that very few of the activities described above would need to continue beyond the
current Closing Date, the Bank project team discussed with the Borrower’s implementing
agencies in charge for Components B (Ministry of Regional Development and Tourism) and
D (National Agency of Mineral Resources), as well as with the Ministry of Public Finance
and got their confirmation that these activities will be completed in 2012 and the funds
required for their completion will be made available through the budget allocations for 2012.
Through the extension proposed, the Project would achieve the following final results:
   1. For Component A, all objectives will be met and the EMIS will be installed and
      operational in 48 locations, exceeding the target of 23 locations.
   2. For Component B, seismic retrofitting of 43 public buildings would be finalized
      (exceeding the target of 40 buildings) and one building, where innovative and cost-
      effective seismic retrofitting solutions are applied, will be in advanced stage of
      execution (to be completed in 2012). These buildings included, the project would
      provide safety for over 28,500 people at direct risk in case of a severe earthquake
      (96% of the final target of 29,600 people) and also introduce innovative solutions for
      seismic retrofitting.
   3. For Component C, flood protection and dam safety works will be completed in all
      sites (ten for flood protection and seven dams). Also, pilot data collection to monitor
      the two landslide prone sites will be conducted for 2-3 months and the manual for
      landslides monitoring completed and handed over to the authorities in charge with
      further use the equipment. Thus, the component objectives will be fully met.
   4. For Component D, all development and global environment objectives will be met.
      The works to secure the safety of tailings management facilities (TMF) at six sites
      will be completed, exceeding the objective of three sites. The computer-based
      systems for mine spill disaster response, environment monitoring, and decision-
      support will be in place and operational. The activities regarding trans-boundary
      cooperation on integrated water resources management can be seen as largely
      achieved.




                                              7
      Implementation schedule
The revised draft project implementation schedule for the extended Closing Date has been
reviewed by the project team and found acceptable.




                                             8

				
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