FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A

Transcription

1 Public Disclosure Authorized Document The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER Report No: BR Public Disclosure Authorized Public Disclosure Authorized ON A PROPOSED PROJECT RESTRUCTURING OF RIO GRANDE DO SUL INTEGRATED MUNICIPAL DEVELOPMENT PROGRAM (APL) PHASE 3 - INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT - BAGÉ RAINHA DA FRONTEIRA PHASE 4 - INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT PROJETO SANTA MARIA 2020 PHASE 5 - INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT PROGRAMA RIO GRANDE 2010: UMA VISÃO DE FUTURO WITH A GUARANTEE FROM THE FEDERATIVE REPUBLIC OF BRAZIL (LOANS 7582-BR, 7648-BR AND 7682-BR) APPROVED, RESPECTIVELY, ON JULY 23, 2008; DECEMBER 23, 2008 AND JULY 07, TO THE MUNICIPALITIES OF BAGÉ, SANTA MARIA AND RIO GRANDE Public Disclosure Authorized Sustainable Development Department Brazil Country Management Unit Latin America and Caribbean Region December 13, 2012 This document has a restricted distribution and may be used by recipients only in the performance their ficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Loan DAEB Departamento de Água e Esgotos de Bagé GIS Geographic Information System IT Information Technology LED Local Economic Development PAD Project Appraisal Document PAC Federal Government s Growth Acceleration Program PDMI Rio Grande do Sul Integrated Municipal Development Program / Programa de Desenvolvimento Municipal Integrado do Rio Grande do Sul PDO Project Development Objectives Project Implementation Unit PLANEPE Extraordinary Secretariat for Strategic Planning and Special Projects RP UAP Restructuring Paper Program Articulation Unit (Unidade de Articulação do Programa) UGM Project Implementation Unit (Unidade de Gestão do Município) UGP Project Implementation Unit (Unidade de Gestão do Projeto) WSS Water Supply and Sanitation Regional Vice President: Hasan A. Tuluy Country Director: Deborah L. Wetzel Sector Manager: Anna Wellenstein Task Team Leader/co-Leader: Juliana Menezes Garrido Pereira / Emanuela Monteiro ii

3 BRAZIL RIO GRANDE DO SUL INTEGRATED MUNICIPAL DEVELOPMENT PROGRAM (APL) CONTENTS Page A. SUMMARY... 1 PHASE 3 - INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT - BAGÉ RAINHA DA FRONTEIRA (7582-BR) B. PROJECT STATUS... 3 C. PROPOSED CHANGES... 3 D. APPRAISAL SUMMARY... 6 PHASE 4 - INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT PROGRAMA DE DESENVOLVIMENTO SUSTENTAVEL PARA A REGIÃO DE SANTA MARIA PROJETO SANTA MARIA 2020 (7648-BR) E. PROJECT STATUS... 7 F. PROPOSED CHANGES... 7 G. APPRAISAL SUMMARY PHASE 5 - INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT RIO GRANDE: PROGRAMA RIO GRANDE 2010: UMA VISÃO DE FUTURO (7682- BR) H. PROJECT STATUS I. PROPOSED CHANGES K. APPRAISAL SUMMARY ANNEX 1: RESULTS FRAMEWORK AND MONITORING - BAGÉ... 1 ANNEX 2: RESULTS FRAMEWORK AND MONITORING SANTA MARIA... 5 ANNEX 3: RESULTS FRAMEWORK AND MONITORING RIO GRANDE iii

4 Restructuring Restructuring Type: Level two 1. Basic Information Project ID & Name P094199: BR-(APL) RS (Pelotas) Integr. Mun. Dev. Country Brazil Task Team Leader / co-leader Juliana Menezes Garrido Pereira / Emanuela Monteiro Sector Manager/Director Anna Wellenstein Country Director Deborah L. Wetzel Original Board Approval Date 01/15/2008 Original Closing Date: 12/31/2012 Current Closing Date 12/31/2012 Proposed Closing Date 12/31/2013 EA Category B-Partial Assessment Revised EA Category B-Partial Assessment-Partial Assessment EA Completion Date 01/31/2007 Revised EA Completion Date 2. Revised Financing Plan (US$m) 1 Source Original Revised BORR IBRD Total Borrower Organization Department Location Municipal Government Santa Brazil Maria Municipal Government Bage Municipal Government Rio Grande 1 Since this is an Adaptable Program Loan APL (P094199), the system automatically uploads to this Datasheet the total Financing Plan the first phase the Program, Pelotas Polo Sul Project (7499-BR), The specific Revised Financing Plan each the phases the Program (except Pelotas and Uruguaiana) for which this restructuring is being proposed, can be found on the Proposed Changes Sections this Restructuring Paper. The total Revised Financing Plan for the whole Program is reflected in the Revised column this Datasheet. iv

5 4. Implementing Agency Organization Department Location 5. Disbursement Estimates (US$m) 2 Actual amount disbursed as 11/01/ 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 Program development objective is to strengthen the capacity the municipalities Bagé, Pelotas, Rio Grande, Santa Maria and Uruguaiana to provide selected infrastructure services and employment opportunities for their population 7b. Revised Project Development Objectives/Outcomes [if applicable] 2 Since this is an Adaptable Program Loan APL (P094199), the system automatically uploads to this Datasheet the sum the actual amount disbursed by the 5 municipalities included in the Program. As such, the information provided in the annual estimates column refers to the sum the Pelotas, Uruguaiana, Bage, Santa Maria and Rio Grande Projects. The accuracy content the cumulative column is affected. The specific Disbursement Estimates each individual Project (except Pelotas and Uruguaiana), for which this restructuring is being proposed, can be found in the Project Status Section each Municipal Project. v

6 RESTRUCTURING PAPER A. SUMMARY 1. This Restructuring Paper responds to the request the Municipalities Bagé, Santa Maria and Rio Grande to amend the Loan Agreements for their respective individual Integrated Municipal Infrastructure Projects, within the scope the Rio Grande do Sul Integrated Municipal Development APL Program (Programa de Desenvolvimento Municipal Integrado do Rio Grande do Sul PDMI): Bagé Rainha da Fronteira (7582-BR), Projeto Santa Maria 2020 (7648-BR) and Programa Rio Grande 2010: Uma Visão de Futuro (7682-BR). These are three the five participating municipalities under the PDMI. 2. The amendments encompass the following changes: (i) adjustments to the scope loan-financed activities to reflect changing municipal priorities and a reduced period, with a reduction in scope due to the exchange rate fluctuations and the steep increase in construction costs since the projects were appraised; (ii) revision the results framework to reflect the proposed adjustments and reduction in scope, to make more monitorable and to incorporate core ; (iii) reallocation funds between expenditure categories and in some cases an increase in the percentage loan financing to fset the impact the delay in Project and accelerate loan disbursement; and (iv) correction a typo in the Project Appraisal Document (PAD) specifically related to the Project safeguard category for the Bagé Project. In addition, the Municipality Santa Maria has requested a 12 months extension closing date. These proposed changes do not require or entail changes to the original Program or Projects Development Objectives (PDO). 3. The Program consists three components, followed by the individual projects: (1) Municipal Strengthening, which includes Public Service Modernization and Project Management; (2) Employment and Income Generation, which includes (i) preparing local economic development strategies, and facilitating micro and small business access to micro-credit and improvement the effectiveness such business, and (ii) providing support to productive subprojects in the agriculture sector; and (3) Infrastructure Service Improvements, which includes, inter alia, urban and street upgrading, water and sanitation improvements and integrated municipal solid waste management activities. 4. The original Projects costs estimates are as follows: Project Name Loan Amount Counterpart Total Project (US$m) Funds (US$m) Cost (US$m) Bagé Rainha da Fronteira (7582-BR) $6.60 $4.40 $11.00 Projeto Santa Maria 2020 (7648-BR) $13.95 $9.25 $23.20 Programa Rio Grande 2010: Uma Visão de Futuro (7682-BR) $8.10 $5.40 $13.50

7 5. The Borrowers primary reason for requesting a restructuring their respective Projects is to better align the planned activities to the current context and priorities each Municipality, including the adjustment to the remaining timeline available. These restructurings were thoroughly discussed with each Municipality since the mid-term reviews, which took place between end-2009 and mid The proposals were subsequently finalized by the individual Borrowers and were sent to the Federal Government for its endorsement as Guarantor. The following factors are the main drivers the proposed restructurings: a. The Brazilian Real (BRL) has appreciated significantly against the United States Dollar (USD) since Project preparation, going from an average BRL 2.2 for USD 1 at the time appraisal/approval to an average exchange rate BRL 1.77 since 2010, corresponding to the contracting and disbursement launch periods; b. There has been a significant increase in construction costs in Brazil, accompanying the scaling up Federal Government s investment in infrastructure and economic growth. The national index for building costs (INCC) for instance posted a 23 percent increase in the last two years. Therefore, the cost Project activities, mainly works, came out higher than originally estimated; c. Important Federal Government funds for infrastructure (the Growth Acceleration Program, PAC) and housing (the Minha Casa Minha Vida Program) became available after loan approvals, and have in some cases been mobilized / used by municipalities to finance investments originally earmarked for loan financing. Such changes were deemed necessary by the Municipalities to maximize the use available funding and thus prompted the need to revise the original investment plans to reallocate loan funds to other complementary/interlinked activities that contribute to achieving the PDOs; d. There were long gaps between appraisal, loan signing and effectiveness reflecting the time needed by each municipality to satisfy the requirements the Fiscal Responsibility Law. This resulted in reduced Project periods, thus necessitating adjustments to the scope the Projects. There were also delays in initiating some activities related to the procurement processes and/or the finalization the detailed designs. In some cases, changes to the municipal government s priorities also were reflected in the adjustments. 6. As a result, the total costs key loan-financed activities, especially works, increased from the original estimates. In response, the municipalities were eventually able to increase their share counterpart financing by leveraging Federal Government resources. Ultimately, however, the reduced timeframe and the resources available to the municipalities were insufficient to carry out all the planned activities and achieve the expected results and impacts by the Projects closing date. Consequently, an overall reduction in scope has become necessary. 2

8 PHASE 3: INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT (BAGÉ RAINHA DA FRONTEIRA) 7582-BR B. PROJECT STATUS 7. This Project was approved by the Board on July 23, 2008 in the amount US$6,600,000. The Loan Agreement was signed on November 11, 2008, and the Project became effective on January 7, The Project has three components: (1) Municipal Strengthening, which aims to strengthen the Municipality s capacity to more effectively and efficiently execute its programs, respond to demand for the provision water and sanitation services, and implement and mainstream improved appraisal, fiduciary and environmental and social procedures; (2) Employment and Income Generation, aimed at strengthening the Municipality s capacity to generate employment and income through training for small and micro businesses and supporting rural productive activities; and (3) Infrastructure Service Improvements, which encompasses investments in urban and street upgrading and water and sanitation. 9. The Project is evidencing solid progress. Up to November 1, 2012, the Project had disbursed US$ 5.96 million or 90.3% the loan amount. The large part Project activities have been completed or are well underway. Activities under Component 2, including the LED strategy, training to SME staff, and support to productive activities in the agriculture sector, have all been completed. Under Component 3, the rehabilitation/paving 5.3 kilometers (km) streets with drainage systems has been completed. Infrastructure for the macro-metering water was completed and over 2,000 individual water meters were installed. The expansion the sewerage system, including 36 km pipes and seven small wastewater treatment facilities was also completed. Under Component 1, the preparation the Municipal water and sanitation master plan and the cadaster water users are well underway. There are no safeguards or fiduciary compliance issues. C. PROPOSED CHANGES 10. Adjustments to Project activities. The appreciation the BRL against the USD, the increase in construction costs, and the delays between Project appraisal, approval and launch have all led to the total costs Project activities exceeding original estimates. Although the municipality was eventually able to increase its share counterpart financing, the available timeframe and resources remained insufficient to carry out all planned Project activities by the closing date. This contributed to the need to restructure the Project through some adjustments in Project scope, including the addition an activity to enhance the sustainability urban roads investments and the reduction other activities. Specifically, under Component 1, the preparation a geographic Information system for the water users cadaster was postponed due to higher than anticipated costs. Under Component 3, the acquisition maintenance equipment for roads was added in the scope the Project to strengthen 3

9 municipal capacity to perform its functions sustainably in the future. The rehabilitation segments the water supply system and expansion the water distribution network is proposed to be excluded as alternative funding under PAC was made available and the timeframe was adjusted accordingly. The increase in water treatment reservoir capacity is also proposed to be excluded due to higher than anticipated costs. As for drainage investments, while these were implemented in all streets paved/rehabilitated by the Project, alternative sources funding are being sought for system expansion. 11. Results/. Revisions to the Project s results framework are proposed in the table below to reflect the adjustments and reduction in scope the Project. These revisions also streamline the and are more suited to monitor and capture the Project s impacts in line with its revised scope. Where feasible, revisions are proposed to align the specific Bagé Project with from the other individual Projects under the PDMI APL, to allow aggregating results across the Program. Core are also introduced. See Annex 1. ORIGINAL INDICATORS PROPOSED INDICATORS NOTES PDO : Municipal secretariats implementing improved project processes. Improved municipal planning and management capacity through the preparation and adoption planning tools. Adjustment to standardize the indicator across the Program and better reflect impact Project activities. Improved financial and physical Dropped Indicator not directly linked to performance DAEB. % local businesses surveyed have positive views on municipal business environment. % collected municipal wastewater treated. N/A Intermediate : Number new job created in vegetables and fruits cluster Number courses delivered for job training programs N/A N/A Area (m2) urban roads paved or rehabilitated by the project. N/A Beneficiaries from income and employment generation project activities surveyed have positive views on municipal business environment. Dropped Number direct project beneficiaries. Dropped. Beneficiaries training and/or technical assistance (small enterprises and rural producers). Beneficiaries productive infrastructure installed by the Project. Long-term economic development strategy adopted Roads constructed/ rehabilitated. People provided with access to improved sanitation facilities under the project. 4 Project activities. Adjustment to standardize the indicator across the Program and better reflect impact Project activities. Already used as intermediary result indicator for component 3. Core indicator Indicator difficult to measure and impact cannot be attributed to Project activities. Indicator revised to reflect beneficiaries and to capture activities in addition to training. Indicator reflects Project activities. Indicator reflects Project activities, standardized across the Program. Core indicator. Measurement unit changed to km. Core indicator.

10 12. Safeguards. While there are no changes to the safeguards categories or activities, this restructuring corrects a typo in the original PAD (datasheet and in Annex 16), which incorrectly listed the Project as Environmental Category A. In reality, the Project is an Environmental Category B, as appraised and approved by the Board and as reflected in all ficial documentation. A corrigendum had been sent to the Board in June Financing plan and disbursement estimate. The revised financing plan, included below, reflects the increase in counterpart funding mobilized by the Municipality. The disbursement estimate is also reflected below. Revised Financing Plan (US$) 3 Source Original Revised BORR IBRD Total Disbursement Estimates (US$m) 4 Actual amount disbursed as 11/01/ Fiscal Year Annual Cumulative Total Reallocations funds amongst expenditure categories: The proposed reallocation loan proceeds between expenditure categories is as follows. The percentage expenditures financed under expenditure categories 1(a) and 2(a) is also increased to 100 percent to enable a further acceleration disbursements and a full use all loan funds before the Project Closing Date. Categories 1(b) and 2(b) have been fully disbursed. Category (1) (a) Goods, nonconsultant services, consultant services, Training and Operating Costs for Part I.2 (a), Part II and Part III.1 (b) the Project; and Amount the Loan Allocated (expressed in USD) (CURRENT) Amount the Loan Allocated (expressed in USD) (PROPOSED) Percentage Expenditures to be financed (inclusive Taxes) (CURRENT) Percentage Expenditures to be financed (inclusive Taxes) (PROPOSED) 610, ,000 89% 100% 3 Information to be taken into account, instead the one provided in the Datasheet. Please refer also to footnote 1. 4 Information to be taken into account, instead the one provided in the Datasheet. Please refer to footnote 2. 5

11 (b) Goods for Part III.2 (c) the Project (2) (a) Works for all Parts the Project (other than for Part III.2 (b) and (c) there); and 90,000 69,000 89% 89% 5,030,000 5,828,500 89% 100% (b) Works for Part III.2 (c) the Project. (3) Front-end Fee (4) Premia for Interest Rate Caps and Interest Rate Collars (5) Unallocated TOTAL AMOUNT 800, ,000 16,500 16, , ,600,000 6,600,000 89% 89% Amount payable pursuant to Section 2.03 this Agreement in accordance with Section 2.07 (b) the General Conditions Amount due under Section 2.07 (c) this Agreement D. APPRAISAL SUMMARY 15. Technical. Activities excluded from the Project have neither impacted the PDO nor the main objectives each component. Exclusion originally planned activities was thoroughly discussed with the Borrower, and although not financed with loan funds or implemented in the Project s timeframe, the Municipality is fully committed to mobilize resources, where none is yet available, to guarantee their execution. 6

12 PHASE 4: INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT (PROGRAMA DE DESENVOLVIMENTO SUSTENTÁVEL PARA A REGIÃO DE SANTA MARIA PROJETO SANTA MARIA 2020) 7648-BR E. PROJECT STATUS 16. This Project was approved by the Board on December 23, 2008 in the amount US$13,950,000. The Loan Agreement was signed in March 4, 2010, and the Project became effective on June 2, The Project has three components: (i) Component 1: Municipal Strengthening, focusing on capacity to implement fiduciary, environmental and social aspects projects, and improve the quality and efficiency municipal services; (ii) Component 2: Income and Employment Generation, focusing on improving municipal capacity to promote entrepreneurship, improving recycling and solid waste management as an income generating activity, implementing a technological park and a Business Innovation Incubator; and Component 3: Infrastructure Services Improvements, supporting improvements in urban and rural roads, and environmental rehabilitation water bodies through water, sanitation, drainage and paving. 18. Up to November 2012, the Project had disbursed US$ 4.22 million or 30% the loan amount, and US$ 5.59 million or 79% counterpart funds. The full remaining loan amount is either committed (around 60 percent) or being procured. Several Project activities have been implemented or are ongoing. Under Component 1, engineering designs for selected infrastructure projects were concluded while the preparation a transport master plan is underway. Under Component 2, the a technological park is underway, expected to be concluded in May Under Component 3, multiple improvements to the municipal road network were completed, while another 3 km are underway, to be concluded in January Maintenance equipment for rural roads was provided. Improvement environmental quality and preservation a river micro-basin and improvement drainage, infrastructure, public facilities and open spaces in a residential neighborhood is ongoing. There are no safeguards or fiduciary compliance issues. F. PROPOSED CHANGES 19. Adjustments to Project activities. The appreciation the BRL against the USD, the increase in construction costs, and the delays between Project appraisal, approval and launch have all led to the total cost Project activities exceeding original estimates. Moreover, a new municipal administration came into fice after loan negotiation and before signing. Related change municipal staff, including the project team, and the timeframe needed to understand the Project and procedures delayed the Project s take f. The new administration proposed some changes in Project activities within the scope the PDO and the objectives each component. These activities were discussed in the May 2011 mid-term review, after which accelerated. The main works and consultancies 7

13 effectively started in June 2012 after conclusion the bidding processes. Activities underway comprise 63% the loan amount and activities equivalent to another 35% the loan amount are under procurement. 20. Key proposed adjustments to the Project scope include the following. Under Component 1, new proposed activities include an urban aero-photogrammetry survey to identify land development possibilities and improve property taxation collection, a municipal water supply and sanitation master plan as required by law for municipalities to sign concession contracts with utilities, and a Master Plan for Information Technology (IT). Acquisition IT equipment was dropped, as the Master Plan is needed to identify the needs. Training municipal staff was concluded with local funds. Under Component 2, activities to promote entrepreneurship would include the preparation a strategy to promote microcredit, capacity building, and set up a community facility. Solid waste recycling and support to waste collectors would be financed with different sources, and related planned investments would be postponed until the Municipal Integrated Sanitation Master Plan, currently underway, is concluded. The business incubator was excluded as it was financed by the University Santa Maria, while the central warehouse facility improvement was excluded after the rail company that owns the facility identified an alternative use for the site. 21. Under Component 3, the scope the urban road improvements was reduced due to lack resources, while the rehabilitation rural roads and bridges was reoriented to municipal funds. Activities related to the construction resettlement housing and infrastructure improvements in the Cancela stream area were excluded after the mobilization PAC funding, and will follow a different timeframe. To support environmental improvement, the preservation river basins and the improvement quality life the local population, the two urban parks were integrated, together with preparation environmental management plans for conservation areas. The restructuring reflects the transfer the coordination the Project from the General Secretariat to the Secretariat for Strategic Planning and Special Projects (PLANEPE). Finally, the restructuring reflects a proposed extension closing date 12 months, until December 31, 2013, to enable a satisfactory conclusion planned activities. 22. Results/. Revisions to the Project s results framework are proposed in the table below to reflect the adjustments and reduction in scope the Project. These revisions also streamline the and are more suited to monitor and capture the Project s impacts in line with its revised scope. Where feasible, revisions are proposed to align the specific Santa Maria Project with from the other individual Projects under the PDMI APL, to allow aggregating results across the Program. Core are also introduced. See Annex 2. ORIGINAL INDICATORS PDO : Municipal secretariats implementing improved project PROPOSED INDICATORS Improved municipal planning and management capacity through the preparation and 8 NOTES Adjustment to standardize the indicator across the Program and better reflect impact

14 ORIGINAL PROPOSED INDICATORS NOTES INDICATORS processes. adoption planning tools. Project activities. % local businesses surveyed have positive views on municipal business environment. Beneficiaries from the income and employment generation project activities surveyed have positive views on municipal Adjustment to standardize the indicator across the Program and better reflect impact Project activities. Community members satisfied with urban transport. Community members satisfied with relocation. Rehabilitation environmental protected areas. N/A N/A Intermediate : Municipal staff trained and using effective sub-project planning, appraisal, fiduciary and monitoring systems. % annual work program delivered on time. Participants job training programs. N/A N/A Technology park implemented. % urban road program completed N/A N/A business environment. Community members satisfied with improved urban infrastructure in areas intervention. Dropped. Dropped. Community members satisfied with public parks Number direct project beneficiaries. Dropped. Same. Same. Micrinance strategy prepared and adopted. Community center (Clube 21) implemented. Same. Roads constructed/ rehabilitated. People in urban areas provided with access to improved sanitation under the Project. Public parks in urban areas implemented and management plans developed and adopted. 9 Adjustment to better reflect impact Project activities. Related activity excluded from Project. No baseline or monitoring methodology provided. Adjustment to better reflect impact the creation public parks in urban areas Core indicator. Related activity excluded from Project. Targets revised to reflect reduced period. Targets revised to reflect reduced period. Change to reflect adjustment in Project scope Change to reflect adjustment in Project scope Targets revised to reflect reduced period. Core indicator. Adjustment to standardize the indicator across the Program and better reflect impact Project activities. Adjustment to better reflect impact Project activities. Number people Dropped. Related activity excluded

15 ORIGINAL INDICATORS reallocated from environmental protection areas. PROPOSED INDICATORS from Project. NOTES 23. Financing plan and disbursement estimates. The revised financing plan is presented below and reflects a reduction in counterpart funding corresponding to the reduction in timeframe and changed Municipal priorities. The disbursement estimates are also included below. Revised Financing Plan (US$) 5 Source Original Revised IBRD BORR Total Disbursement Estimates (US$m) 6 Actual amount disbursed as 11/01/ Fiscal Year Annual Cumulative Total Reallocations funds amongst expenditure categories: The proposed reallocation loan proceeds between expenditure categories and adjustments to the definition the categories (including merger sub-categories) is as follows. The percentage expenditures financed under each category remains the same at 100 percent. It is important to note that procurement processes for newly proposed activities were carried out following Bank guidelines, thus making them eligible for reimbursement under revised financing percentages if requested by the Borrower. Category (CURRENT) (1) Goods and non-consultant services for all Parts the Project other than Part II.1 (b) (ii); Parts III. 1 (a) (ii); (b) (ii) and Category (PROPOSED) (1) Goods and non-consultant services for all Parts the Project other than Part II.1 (b) (ii); Parts III. 1 Amount the Loan Allocated (expressed in USD) (CURRENT) Amount the Loan Allocated (expressed in USD) (PROPOSED) Percentage Expenditures to be financed (inclusive Taxes) (CURRENT) Percentage Expenditures to be financed (inclusive Taxes) (PROPOSED) 4,940,000 1,942, % 100% 5 Information to be taken into account, instead that provided in the Datasheet. Please refer to footnote 1. 6 Information to be taken into account, instead that provided in the Datasheet. Please refer also to footnote 2. 10

16 (c) (i); and Parts III. 3 (a), (b), (c) (i) (B) and (c) (ii) B there (a) (ii); (b) (ii) and (c) (i); and Parts III. 3 (a), (b), (c) (i) (B) and (c) (ii) B there - (1) (a) Goods and nonconsultant services for all Parts the Project other than Parts III. 1 (a) (ii); (b) (ii) and (c); and Part III.3 (a) there (2) (a) Works for Parts II and III.1 and 2 the Project other than Part II, 1 (b) (ii), and Parts III. 1 (a) (ii), (b) (ii) and (c) (i) there; and (2) (a) Works for Parts II and III.1 and 2 the Project other than Part II, 1 (b) (ii), and Parts III. 1 (a) (ii), (b) (ii) and (c) (i) there; and - 617, % 5,370,000 2,430,000 1,573, * 100% 100% 100% (b) Works for Parts III.3 (c) (i) (A) and (ii) (A) the Project (3) Consultant Services, Training and Operating Costs for Parts the Project other than Part II.1 (b) (ii); Parts III.1 (a) (ii); (2) Works for Parts II and III the Project other than Parts III. 1 (a) (ii), (b) (ii) and (c); and Part III.3 (a) there (3) Consultant Services, Training and Operating Costs for Parts the Project other than Part II.1 (b) (ii); Parts III ,962, % 1,175, , % 100%

17 (b) (ii) and (c) (i); Parts III. 3 (a), (b), (c) (i) (B) and (c) (ii) (B) there (a) (ii); (b) (ii) and (c) (i); Parts III. 3 (a), (b), (c) (i) (B) and (c) (ii) (B) there (3) (a) Consultant Services, Training and Operating Costs for all Parts the Project other Parts III. 1 (a) (ii), (b) (ii) and (c); and Part III.3 (a) there (4) Front-end Fee (4) Front-end Fee 1,707, % 34,875 34,875 Amount payable pursuant to Section 2.03 this Agreement in accordance with Section 2.07 (b) the General Conditions (5) Premia for Interest Rate Caps and Interest Rate Collars TOTAL AMOUNT Amount due under Section 2.07 (c) this Agreement TOTAL AMOUNT 13,950,000 13,950,000 * Borrower is proposing to merge the sub-categories 2(a) and (b) into one. 25. Closing date. It is proposed to extend the closing date by 12 months until December 31, 2013, in order to conclude satisfactorily all planned activities. G. APPRAISAL SUMMARY 26. Technical. The new changes to Project activities have been discussed with the Borrower. New proposed activities (and related technical documents and safeguards requirements) have been thoroughly appraised by the Bank. The new proposed activities, combined with the original ones, would contribute to achieving the PDO. The Municipal government s commitment to the Project remains firmly in place to execute the Project in an effective and timely basis. 12

18 PHASE 5: INTEGRATED MUNICIPAL INFRASTRUCTURE PROJECT (RIO GRANDE: PROGRAMA RIO GRANDE 2010: UMA VISÃO DE FUTURO) 7682-BR H. PROJECT STATUS 27. This Project was approved by the Board on July 07, 2009 in the amount US$8.10 million. The Loan Agreement was signed on February 25, 2010, and the Project became effective on April 16, The Project has three components: (1) Municipal Strengthening, aimed at strengthening the municipality s capacity to more effectively and efficiently execute its programs and implement and mainstream the appraisal, fiduciary and environmental and social procedures; (2) Employment and Income Generation, aimed at supporting employment and income generation by preparing a long-term LED strategy and a strategy for the tourism sector, and improving the business environment; and (3) Infrastructure Service Improvements, aimed at improving selected urban roads and drainage services, and preparation an environmental rehabilitation, resettlement and socio-economic integration plan for the Henrique Pancada community. 29. Up to November 01, 2012, the Project had disbursed US$ 6.48 million or 80.0% the loan amount. Several Project activities have been completed or are ongoing. Under Component 1, activities concluded include acquisition equipment to facilitate client responsive services, automation computer systems and integration databases, staff training, and an IT wireless network linking public facilities buildings including schools and health centers. Under Component 2, the preparation the LED and tourism sector strategies are underway. Under Component 3, 12 km urban roads and a drainage system were completed, and the paving a main urban transport corridor 21 km was underway. There are no safeguards or fiduciary compliance issues. I. PROPOSED CHANGES 30. Adjustments to Project activities. The appreciation the BRL against the USD, the increase in construction costs, and the delays between Project appraisal, approval and launch have led to the total costs Project activities exceeding original estimates. This together with the unforeseen availability other sources funds for some Project activities originally up for financing with loan resources and the reduced period all led to the need for restructuring and adjustments in the Project scope. Proposed changes are as follows. Under Component 2, the remaining timeframe was not adequate to retaining the streamlining firm registration procedures as part the effort to improve the business environment, and as such it is proposed to be dropped and implemented with local funds in Under Component 3, it is proposed to drop the activity related to the preparation an environmental rehabilitation, resettlement and socio-economic integration plan for the Henrique Pancada community, as the loan which the Municipality intended to contract to implement such works did not materialize. Instead, the Municipality proposes to include 13

19 another activity with an equivalently important socio-environmental impact, namely the regularization land titling for some 3,500 urban lots to provide security tenure for 14,000 residents. With this activity, the Municipality will have completed the regularization land titles for 95 percent its population. 31. Results /. Revisions to the Project s results framework are proposed in the table below to reflect the adjustments and reduction in scope the Project. These revisions also streamline the and are more suited to monitor and capture the Project s impacts in line with its revised scope. Where feasible, revisions are proposed to align the specific Rio Grande Project with from the other individual Projects under the PDMI APL, to allow aggregating results across the Program. Core are also introduced. See Annex 3. ORIGINAL INDICATORS PDO : Municipal secretariats implementing improved project processes. % local businesses surveyed have positive views on municipal business environment. Community members satisfied with urban transport. N/A Intermediate : Municipal staff trained and using effective sub-project planning, appraisal, fiduciary and monitoring systems. N/A N/A Same. Dropped. PROPOSED INDICATORS Community members satisfied with improved urban infrastructure in areas intervention. Number direct project beneficiaries. Municipal staff trained and using effective project planning and monitoring systems. Long-term economic development strategy prepared and adopted by the client. Action plan for the tourism sector prepared and adopted. NOTES Reflection the beneficiary secretariats in the targets. Related activity excluded from Project. Adjustment to standardize the indicator across the Program and better reflect impact Project activities. Core indicator. Adjustment to reflect Project activities. Indicator reflects Project activities. Indicator reflects Project activities. Number enterprises effectively involved in the development the tourism sector and Cluster created. Extension (Km) urban roads paved or rehabilitated by the project. Dropped. Roads paved/ rehabilitated. 14 Indicator not directly related to Project activities, namely a strategy and action plan. Core indicator. N/A Target population with use Indicator reflects Project

20 ORIGINAL INDICATORS Development comprehensive resettlement plan and environmental rehabilitation project. PROPOSED INDICATORS or ownership rights. Dropped. NOTES activities. Related activity excluded from Project. 32. Financing plan and disbursement estimate. The financing plan, with US$8.1 million loan and US$5.4 million in counterpart funds, remains unchanged. The disbursement estimate is also reflected below. Disbursement Estimates (US$m) Actual amount disbursed as 11/01/ Fiscal Year Annual Cumulative Total Reallocations funds amongst expenditure categories: The proposed reallocation loan proceeds between expenditure categories is as follows. The percentage expenditures financed under each expenditure category is also increased to 100 percent to enable a further acceleration disbursements and a full use all loan funds before the Project Closing Date. It is important to note that procurement processes for newly proposed activities were carried out following Bank guidelines, thus making them eligible for reimbursement under revised financing percentages if requested by the Borrower. Category Amount the Amount the Percentage Percentage Loan Allocated Loan Allocated Expenditures Expenditures to (1) Goods, works, nonconsultant services, consultant services, Training, and Operating Costs for all Parts the Project other than Part I.1 and Part III.1 there (expressed USD) (CURRENT) in (expressed USD) (PROPOSED) in to be financed (inclusive Taxes) (CURRENT) be financed (inclusive Taxes) (PROPOSED) 7,920,000 8,079,750 89% 100% (2) Front-end Fee 20,250 20,250 (3) Premia for Interest Rate Caps and Interest Rate Collars 0 0 (4) Unallocated 159,750 0 Amount payable pursuant to Section 2.03 this Agreement in accordance with Section 2.07 (b) the General Conditions Amount due under Section 2.07 (c) this Agreement TOTAL AMOUNT 8,100,000 8,100,000 15

21 J. APPRAISAL SUMMARY 34. Technical. Activities excluded from the Project neither impact the PDO or component objectives. Exclusion originally planned activities was thoroughly discussed with the Borrower, and although not financed with loan funds or implemented in the Project s timeframe, the Municipality is fully committed to mobilize resources, where none is yet available, to guarantee execution. The inclusion technical assistance and services to provide ownership rights for around 3,500 urban plots will benefit approximately 14,000 inhabitants with important positive socio-economic and environmental impacts. Implementation support has been initiated by the Bank and activities are underway. When concluded, the municipal government will have regularized land titles for 95% the municipal population. New proposed activities (and related technical documents and safeguards requirements) have been thoroughly appraised by the Bank. 16

22 Core 1 RIO GRANDE DO SUL INTEGRATED MUNICIPAL DEVELOPMENT PROGRAM (APL) BAGE RAINHA DA FRONTEIRA PROJECT Project Development Objective (PDO): The Program development objective is to strengthen the capacity the municipality Bagé to provide selected infrastructure services and employment opportunities for their population Revised Project Development Objective: Not applicable. PDO Level Results Indicators* D=Dropped C=Continue N= New R=Revised Unit Measure Baseline Cumulative Target Values** YR 1 YR 2 YR 3 YR4 YR5 Frequency Data Source/ Methodology Responsibility for Data Collection Municipal secretariats implementing improved project processes Improved Municipal planning and management capacity through the preparation and adoption planning tools. D N # employe e tbd Plans prepared and adopted. Planning Finance Works Environment Improved financial and physical performance DAEB D % 0 Beneficiaries from the income and employment generation project activities surveyed have positive views on municipal business environment 20% 40% 60% 80% 100% Tasks carried out WSS MP ready 20% targets met 50% targets met LED, WSS Master Plan, WSS cadastre 80% targets met R % Baseline and Year 5 progress reports implementatio n Baseline and Year 5 progress reports implementatio n

23 Community members satisfied with improved urban infrastructure in areas intervention % collected municipal wastewater treated Number direct project beneficiaries C % 0 NA Baseline, and Year 4 and 5 progress reports implementatio n D % N Number ,374 INTERMEDIATE RESULTS Baseline, and Year 5 progress reports implementatio n Intermediate Result (Component One): Improve the municipality s capacity to more effectively and efficiently execute projects, with a focus on fiduciary, environmental and social aspects, and improve the quality and efficiency public services provided by the municipal government. Revised Intermediate Result (Component One): Not applicable. One: Municipal staff trained and using effective project planning and monitoring systems Two: % annual work program delivered on time C Number staff C % Intermediate Result (Component Two): Improve the municipality s capacity to generate employment and income opportunities. Baseline, and Year 4 and 5 Baseline, and Year 4 and 5 Revised Intermediate Result (Component Two): Not applicable. One: Beneficiaries training and/or technical assistance (small enterprises and rural producers) N Number small enterprise and rural producers small enterprise; 35 rural producers Baseline and Year 5 2

24 Two: Beneficiaries productive infrastructure installed by the Project Three: Long-term economic development strategy prepared and/or adopted. Four: Number new job created in vegetables and fruits cluster. Five: Number courses delivered for job training programs. N Number N Text LED prepared and adopted Baseline and Year 5 Year 5 D Number D Number Intermediate Result (Component Three): Carrying out activities aimed to improve urban and street upgrading; water, sanitation and drainage infrastructure and services. Revised Intermediate Result (Component Three): Not applicable. One: Roads constructed * R km Two: Roads rehabilitated R km Three: Micro meters installed in the water supply system Baseline, and Year 4 and 5 Baseline, and Year 4 and 5 R Number 0 3,000 5,000 7,000 10,000 10,000 Baseline, Year 5 3

25 Four: Coverage wastewater collection and treatment Five: People provided with access to improved sanitation facilities under the project R % collected % treated 50% collected 15% treated 60% collected 30% treated 70% collected 45% treated 80% collected 60% treated 90% collecte d 75% treated 90% collected and treated Baseline, and Year 4 and 5 N Number 55, Baseline, and Year 4 and 5 * Roads constructed: the project supported the drainage system and paving in already existent urban roads. 7 Baseline from

26 Core 2 RIO GRANDE DO SUL INTEGRATED MUNICIPAL DEVELOPMENT PROGRAM (APL) SANTA MARIA 2020 PROJECT Project Development Objective (PDO): The Program development objective is to strengthen the capacity the municipality Santa Maria to provide selected infrastructure services and employment opportunities for its population Revised Project Development Objective: Not applicable. PDO Level Results Indicators* D=Dropped C=Continue N= New R=Revised Unit Measure Baseline Cumulative Target Values* YR 1 YR 2 YR 3 YR4 YR5 Frequency Data Source/ Methodology Responsibilit y for Data Collection Improved Municipal planning and management capacity through the preparation and adoption planning tools. Municipal secretariats implementing improved project s processes (specific tbd) Beneficiaries from activities under the project satisfied with increased employment, income N Text D % # employees tbd N % IT, Urban Transpo rt and WSS Master Plans; and Aerophotogr ammetr ic Survey under preparat ion. Urban and Rural Transpor t, IT and WSS Master Plans Aerophotogra mmetric Survey Prepared and adopted. Year 4 and Selectio n process 80 Year 4 and 5 5

27 generation and business opportunities. % local business surveyed have positive views on municipal business environment Community members satisfied with improved urban infrastructure in areas intervention Community members satisfied with improved urban infrastructure in areas intervention Community members satisfied with urban transport Community members satisfied with relocation D Baseline plus % es for all activitie s under way TBD N % Year 5 N % Year 5 D D Number Number Rehabilitation environmental protection areas D % Number direct project beneficiaries To be defined YR1 To be defined YR1 To be defined YR Strategy and scope defined NA NA Strategy and scope defined 25% targets met 50% targets met 100% targets met N Number , ,000 INTERMEDIATE RESULTS Year 4 and 5 Intermediate Result (Component One): Strengthen the municipality s capacity to more effectively and efficiently execute its programs, implement and mainstream the appraisal, fiduciary, environmental and social procedures the PDMI. Revised Intermediate Result (Component One): Not applicable. 6

28 One: Municipal staff trained and using effective sub-project planning, appraisal, fiduciary and monitoring systems Two: % annual work program delivered on time D Number R % Intermediate Result (Component Two): Improve the municipality s capacity to generate employment and income opportunities. Year 3, 4 and 5 Revised Intermediate Result (Component Two): Not applicable. One: Micrinance strategy prepared and adopted. Two: Participants job training programs Three: Community center (Clube 21) implemented Four: N Text Micri nance strategy under preparat ion Micrin ance strategy prepared and adopted. Year 4 and 5 R Number Year 5 N R %; text %; text % Clube 21 works complet ed; manage ment under preparat ion 40% TP 100% Clube 21 works complete d; Clube 21 operation al. 100% TP Year 4 and 5 Year 4 and 5 7

29 Technology Park implemented works complet ed; manage ment plan prepare d. works complete d; TP operation al. Intermediate Result (Component Three): Improve urban streets and rural road; and rehabilitate environmentally key water bodies Revised Intermediate Result (Component Three): ): Improve urban streets and rural road; and rehabilitate environmentally key water bodies and urban areas. One: Roads constructed ** N km Two: Roads rehabilitated N km Three: People in urban areas provided with access to improved sanitation under the project Four: Public parks in urban areas implemented and management plans developed and adopted. Year 4 and 5 Year 4 and 5 N Number ,300 Year 5 N m 2 ; number manage ment plans ,831 m 2 parks design ed 54,831 m 2 parks impleme nted; 2 manage ment plans develope d and adopted. Year 4 and 5 8

30 Five: % urban road program completed. D % Six: Number people realocated from environmental protection areas D % To be defined in YR1 NA 25% target 50% target 100% target 100% target * YR1 2010; YR ** Roads constructed: the project supported paving in already existent urban roads. 9

31 Core 3 RIO GRANDE DO SUL INTEGRATED MUNICIPAL DEVELOPMENT PROGRAM (APL) RIO GRANDE 2010 UM VISÃO DE FUTURO PROJECT Project Development Objective (PDO): The Program development objective is to strengthen the capacity the municipality Rio Grande to provide selected infrastructure services and employment opportunities for their population Revised Project Development Objective: Not applicable. PDO Level Results Indicators* D=Dropped C=Continue N= New R=Revised Unit Measure Baseline Cumulative Target Values** YR 1 YR 2 YR 3 Frequency Data Source/ Methodology Responsibility for Data Collection Municipal secretariats implementing improved project processes R Secretaries % local businesses surveyed that have positive views on municipal business environment. Community members satisfied with improved urban infrastructure in areas intervention Number direct project beneficiaries Planning Finance Works Environ ment Baseline and Year 3 progress reports D % TBD R % Baseline and Year 3 N Number ,000 Baseline and Year 3 INTERMEDIATE RESULTS progress reports progress reports 10