RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING THE EMERGENCY SCHOOL CONSTRUCTION AND REHABILITATION PROJECT (ESCRP TF GRANT )

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF Report No: IQ THE EMERGENCY SCHOOL CONSTRUCTION AND REHABILITATION PROJECT (ESCRP TF GRANT ) APPROVED ON OCTOBER 8, 2004 TO THE MINISTRY OF EDUCATION OF IRAQ September 10, 2010

2 ABBREVIATIONS AND ACCRONYMS MOE Ministry of Education IQD Iraqi Dinar SBD School Building Directorate DEO Education Directorate Office PMT Project Management Team Vice President: Country Director: Country Manager Sector Manager / Director: Task Team Leader: Shamshad Akhtar Hedi Larbi Jean-Michel Happi Mourad Ezzine/Steen Lau Jorgensen Lianqin Wang ii

3 IRAQ EMERGENCY SCHOOL CONSTRUCTION AND REHABILITATION PROJECT TABLE OF CONTENTS A. SUMMARY...3 B. PROPOSED CHANGES...3 ANNEX 1: RESULTS FRAMEWORK AND MONITORING...7 ANNEX 2: REALLOCATION OF PROCEEDS...8 ANNEX 3: LETTER FROM MINISTRY OF EDUCATION ON PROJECT RESTRUCTURING...10 ANNEX 4: REQUEST FROM MINISTRY OF EDUCATION FOR PROJECT CLOSING DATE EXTENSION...15 iii

4 RESTRUCTURING Restructuring Type: Level two 1. Basic Information Project ID & Name P087907: Emergency School Construction & Rehab. Country Iraq Task Team Leader Lianqin Wang Sector Manager/Director Mourad Ezzine Country Director Hedi Larbi Original Board Approval Date 10/08/2004 Original Closing Date: 09/30/2007 Current Closing Date 12/31/2010 Proposed Closing Date [if applicable] 06/30/2012 EA Category B-Partial Assessment Revised EA Category B-Partial Assessment-Partial Assessment EA Completion Date 07/01/2004 Revised EA Completion Date 06/30/ Revised Financing Plan (US$) Source Original Revised BORR SPF Total Borrower Organization Department Location Ministry of Education Iraq 4. Implementing Agency Organization Department Location Ministry of Education Iraq 1

5 5. Disbursement Estimates (US$m) Actual amount disbursed as of 08/03/ Fiscal Year Annual Cumulative Total 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 from the checklist below and update ISDS accordingly before submitting the package. N 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The objective of the project is to improve conditions of learning of students in primary and secondary schools in Iraq through the construction of new schools and rehabilitation of schools in need of urgent repair. 7b. Revised Project Development Objectives/Outcomes [if applicable] The revised objective of the project is to improve conditions of learning of students in primary and secondary schools in Iraq through the construction of new schools, the extension of existing schools, and the rehabilitation of schools in need of urgent repair. 2

6 EMERGENCY SCHOOL CONSTRUCTION AND REHABILITATION PROJECT RESTRUCTURING PAPER a. SUMMARY 1. The Ministry of Education (MOE) has requested a restructuring of the Emergency School Construction and Rehabilitation Project (ESCRP) to apply US$8.8 million in uncommitted funds to construction of six-classroom blocks in 20 selected primary and secondary schools in Baghdad in order to alleviate overcrowding of classrooms. The proposed changes would also involve updating the target values of the project outcome indicators; the reallocation of funds to adjust to actual project costs and to take into account the new activities; and the extension of the Closing Date by 18 months from December 31, 2010 to June 30, 2012 to allow sufficient time for completion of all project activities. 2. Three of the four conditions for Closing Date extension have been met, namely: (i) the project objective continues to be achievable; (iii) the client has prepared an action plan acceptable to the Bank for the remainder of the project; and (iii) there are no outstanding or unsatisfactory audits. It is expected that the fourth condition satisfactory performance of the client will be met through the changes that are being put in place as a result of this project restructuring, e.g., through reinforcement of the human resources committed to the project, and increased involvement of other technical departments of the MOE, as elaborated below. PROJECT STATUS 3. The US$60 million grant financing the ESCRP was approved by the Vice President of the Middle East North Africa Region on October 7, 2004 and became effective on October 14, The objective of the project is: to improve conditions of learning of students in primary and secondary schools in Iraq through the construction of new schools and rehabilitation of existing schools in need of urgent repair. About 85 percent of the funds have been committed (approximately US$51 million), and 67 percent (approximately US$45.27 million) has been disbursed to date. The current project closing date is December 31, b. PROPOSED CHANGES 4. The project development objective has been revised to include the extension of existing schools. The revised project development objective is to improve conditions of learning of students in primary and secondary schools in Iraq through the construction of new schools, the extension of existing schools, and the rehabilitation of schools in need of urgent repair. The proposed changes are as follows: Results/Indicators 3

7 5. To align the project with realities on the ground, the targets of the Outcome Indicators and Intermediate Outcome Indicators will be revised. The original project targets of building 117 new schools and rehabilitating 144 schools will not be met due to the increase in construction costs since project effectiveness. The average construction cost per square meter has increased from US$364 to US$547. This 50 percent increase is due to: (i) higher than expected inflation in ; and (ii) appreciation of the Iraqi Dinar (IQD) by 20 percent against the US Dollar between 2006 and Therefore, the revised targets are to build 48 new schools (of which 31 have been completed and 17 are under construction), to build six-classroom block extensions to 20 existing schools in Baghdad Governorate, and to rehabilitate 133 schools (all completed). In addition to the revision of the above-mentioned targets, a new Outcome Indicator and a new Intermediate Outcome Indicator are added to reflect the construction of six-classroom blocks in 20 schools in the Baghdad area (the proposed new activity). The updated Results Framework and Monitoring Table is in Annex 1. The revised targets will be reflected in a new Supplemental Letter that will be sent to the Recipient for signature at the same time as the Grant Amendment Letter. The indicators in the Grant Agreement itself (Schedule 5) will be deleted. Components 6. Component One: School Construction and Rehabilitation will be revised as follows: (i) new construction for primary and secondary schools will be reduced from the original 117 to 48 schools; (ii) rehabilitation of primary and secondary schools will be reduced from 140 to 133 schools; and (iii) funding will be provided for construction of 20 additional six-classroom blocks (including toilets) to alleviate overcrowding in selected primary and secondary schools in five Education Directorate Offices (DEOs) in the Baghdad area (see Annex 3 - Letter dated April 25, 2010 from the MOE). The uncommitted balance of US$8.8 million will be used to finance this additional construction which is aligned with the Project s objective to improve student learning conditions. These changes are necessary mainly for the following reasons: (a) security and/or ownerships issues which have resulted in potential project sites being dropped from the project; (b) changing priorities of the MOE; and (c) significant increases in construction costs since project effectiveness. 7. Component Two: Project Management and Capacity Building will remain unchanged. The MOE Project Management Team (PMT) will continue to be responsible for procurement and financial management. However, implementation arrangements for the project will be reinforced with increased involvement from the respective five Baghdad DEOs in the process of hiring and supervision of the contractors for the 20 new six-classroom blocks and toilets. This decentralization of implementation responsibilities will allow the PMT to better handle management of both the ESCRP and the more recent IDA-financed Third Emergency Education Project (TEEP). The construction of the school extension blocks will be implemented through five contracts to be supervised by the engineers of the respective five DEOs in Baghdad, and overseen by a Monitoring Committee with members from both the School Building Directorate (SBD) of MOE and the PMT. Each of the five DEOs will have a team led by the Head of the School Building Section and will include the required engineers and quality surveyors to undertake the tasks. These minor adjustments to implementation arrangements will be reflected in the updated Project Implementation Manual, and will not require amending Schedule 4(A) of the Grant Agreement. The school building extension activity will be accompanied by additional 4

8 capacity building activities for the PMT and DEOs, including procurement, financial management and anti-corruption training. Safeguards 8. No new environmental and social screening is necessary for the construction of the 20 additional six-classroom blocks because this construction will be on already existing and functioning schools. However, the agreed ESSAF Questionnaire will be completed and signed by the PMT Director for each site, before any construction activities begin, as the practice has been with the construction of new schools under the project. No OP 4.12 issues have been triggered. Financing 9. Project proceeds will be reallocated in order to take into account the new activities related to the building of 20 new classroom blocks and to adjust to the updated estimates of project costs, as well as to allow for the capacity building activities for the PMT and DEOs (see Annex 2 for the reallocation of proceeds). Financial Management 9. Financial Management arrangements will not change. The Financial Management performance rating was upgraded from Unsatisfactory to Moderately Unsatisfactory during the June 2010 supervision mission. There are no outstanding or unsatisfactory audit reports. 10. Main Financial risks are: (i) (ii) Weak controls environment, as evidenced by ineligible expenditures, which caused the qualification of the 2008 and 2009 audit reports; and Payment delays, due to time taken to process payments from the DOEs through MOE. 11. The Project s internal controls environment has been strengthened as follows: (i) (ii) (iii) (iv) (v) The Project Implementation Manual was updated to include the PMT s mandate and detailed job descriptions that ensure segregation of duties and accountability; Two dedicated internal auditors perform prior reviews of transactions; The FMRs reflect the physical progress compared to the financial progress of civil works contracts; The Fiduciary Monitoring Agent (FMA) increased the frequency of site visits and reports monthly and quarterly, or as issues arise, to the Bank, and recommends actions; The FMA pre-screens and carries out post-reviews of withdrawal applications for direct payments as well as reimbursements, on a sample basis, to ensure that the associated 5

9 internal controls have been properly applied and that they are in compliance, accurate and complete. 12. To address the issue of payment delays, business standards have been developed, bottlenecks have been identified, and DOE engineers will be trained on how to submit accurate and complete payment requests. Procurement 13. Changes in the procurement arrangements are reflected in paragraph 7. The overall risk rating continues to be High and risks are as follows: (i) The risk related to the Bank s inability to carry out in-country supervision was downgraded from High to Substantial in light of the effective assistance provided by the FMA; (ii) The risk related to implementation delays due to lack of planning and volatile security conditions remains High ; (iii)the risk related to the lack of adequate laws and regulations, the absence of modern standard documentation, and outdated procurement practices is downgraded from High to Modest due to progress on the new procurement law and the issuance of new implementing regulations; (iv) The risk related to the lack of experience with World Bank procurement guidelines and sound international practices is downgraded from High to Modest given the experience gained by the PMT during the past six years, the existence of the Master Implementation Manual, as well procurement, anti-corruption and contract administration training delivered by the Bank and the FMA; (v) The risk related to the possibility of high prices due to the high demand on the local construction industry remains High despite the FMA s close monitoring of market prices; (vi) The risk related to contractors lack of experience of Bank procurement procedures remains High, although pre-bidding meetings are planned; and (vii) The risk of fraud and corruption remains High. Implementation Schedule 14. The project implementation schedule will be adjusted to include the new construction activities as well as the extended Closing Date. Closing Date 15. The Project closing date will be extended from December 31, 2010 to June 30, 2012 to provide sufficient time to complete all project activities. Correspondence from the MOE dated July 29, 2010 requesting the extension of the Closing Date is attached as Annex 4. 6

10 ANNEX 1: Results Framework and Monitoring Indicators 1. Number of students benefiting from improved conditions of learning in rehabilitated schools 2. Number of students benefiting from improved conditions of learning in new school buildings 3. Number of students benefiting from improved learning conditions in additions of sixclassroom blocks (including toilets) in 20 Baghdad schools. 1. Number of schools rehabilitated 2. Number of new schools completed 3. Number of additions built (six-classroom blocks (including Measurement Baseline Value Progress To Date End-of-Project Target Value Date Number or Date Original Date Text Target Number or Text 7 Revised Target June 2010 PDO Outcome Indicators 0 10/24/ ,848 05/05/ ,700 44,848 05/05/ /24/ ,480 06/07/ ,160 23,040 06/30/ /20/2010 New indicator 0 10/24/ schools completed and contracts closed. 0 10/24/ schools completed, 17 schools under Intermediate Outcome Indicators construction 0 07/20/2010 New indicator NA (this is a new indicator) 05/05/ schools rehabilitated 06/07/ schools constructed NA (this is a new indicator) 4,800 06/30/ /05/ schools constructed 20 sixclassroom blocks (including toilets)com 06/30/ /30/2012

11 toilets) pleted ANNEX 2: Reallocation of Proceeds IRAQ EMERGENCY SCHOOL CONSTRUCTION AND REHABILITATION PROJECT (P087907) (TF#53545) Restructuring Paper 1. Proceeds for Iraq Emergency School Construction and Rehabilitation Project (TF#53545) (P087907) will be reallocated as follows: Category of Expenditure Current Allocation Revised Allocation % of Financing 1.Civil Works 53,855,000 53,040, Goods 145, , Consultants Services 4,600,000 4,800, Training 300, , Operating Costs 1,100,000 1,500, Unallocated Total 60,000,000 60,000, Project implementation is proceeding, with the new target of 133 schools to be rehabilitated already met, and with 31 of the 48 new schools constructed. The remaining 17 schools are under construction. With the proposed restructuring, 20 schools in the Baghdad area will have sixclassroom blocks added. It is expected that all civil works activities will be completed ahead of the proposed revised Closing Date of June 30, The proposed reallocation is necessary to adjust the grant proceeds to actual project costs and to take into account the new construction activities. 8

12 9

13 ANNEX 3: Letter from Ministry of Education on project restructuring 10

14 11

15 12

16 13

17 14

18 ANNEX 4: request from ministry of education for project closing date extension 15

19 16

20 17

21 18