FOR OFFICIAL USE ONLY

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Transport Sector Country Department AFCF2 Africa Region Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR 10.7 MILLION (US$16.0 MILLION EQUIVALENT) FROM PILOT CRISIS RESPONSE WINDOW TO BURKINA FASO FOR THE TRANSPORT SECTOR PROJECT September 13, 2010 Report No: BF 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.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective September 1, 2010) Currency Unit = XOF US$1 = XOF508 SDR1 = US$ FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AF AfDB ARAP BF CAS CEA DGPR DGR EMP ESMP EU FCFA FDI FM GDP GOBF HIV/AIDS ICB IDA ISR M&E MID MITH MS NGO NRTS Additional Financing African Development Bank Abbreviated Resettlement Action Plan Burkina Faso Country Assistance Strategy Cost-Effectiveness Analysis Direction Générale des Pistes Rurales (General Directorate of Rural Roads) Direction Générale des Routes (General Directorate of Roads) Environmental Mitigations Plans Environmental Strategic Management Plan European Union CFA Franc Foreign Direct Investment Financial Management Gross Domestic Product Government of Burkina Faso Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome International Competitive Bidding International Development Association Implementation Supervision and Results Report Monitoring and Evaluation Ministère des Infrastructures et du Désenclavement (Ministry of Infrastructure) Ministère des Infrastructures, des Transports et de l Habitat (Ministry of Infrastructure, Transport and Housing) Moderately Satisfactory Non Governmental Organization National Rural Transport Strategy

3 ODA ORAF PAD PCRW PCU PDNA PDO PIA PP PRSP RAI RPF SEA SDR SGES TA TOR TSP TSP-2 VPD WB Overseas Development Aid Operational Risk Assessment Framework Project Appraisal Document Pilot Crisis Response Window Project Coordination Unit Post Disaster Needs Assessment Project Development Objective Project Impact Area Project Paper Poverty Reduction Strategy Paper Rural Index Access Resettlement Policy Framework Sectoral Environmental Assessment Special Drawing Rights Service de Gestion Environnementale et Sociale (Social and Environmental Monitoring Unit) Technical Assistance Terms of Reference Transport Sector Project Second Transport Sector Program Vehicles Per Day World Bank Group Vice President: Obiageli Katryn Ezekwesili Country Director: Madani M. Tall Sector Director: Jamal Saghir Sector Manager: C. Sanjivi Rajasingham Task Team Leader: Aguiratou Savadogo Tinto

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5 BURKINA FASO TRANSPORT SECTOR PROJECT - ADDITIONAL FINANCING CONTENTS Additional Financing Data Sheet... i I. Introduction... 1 II. Background and Rationale for Additional Financing using PCRW funds in the amount of US$16 million... 2 III. Proposed Changes... 4 IV. Appraisal Summary of the Additional Financing Activities... 8 V. Financial Terms and Conditions for the Additional Financing Annex 1: Revised Results Framework and Monitoring s Annex 2: Operational Risk Assessment Framework (ORAF) Annex 3: Procurement Arrangements Annex 4: Allocation and Disbursement of the proposed AF... 29

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7 BURKINA FASO TRANSPORT SECTOR PROJECT - ADDITIONAL FINANCING Country Director: Madani M. Tall Sector Manager: C.Sanjivi Rajasingham Team Leader: Aguiratou Savadogo Tinto Project ID: P Expected effectiveness date: January 31, 2011 Lending Instrument: Specific Investment Loan (SIL) Additional Financing Type: Standard Grant Commitment Fee: % Project ID: P Project Name: Burkina Faso Transport Sector Project Lending Instrument: Specific Investment Loan (SIL) Additional Financing Data Sheet Basic Information-Additional Financing (AF) Basic Information - Original Project Sectors: Transport (Roads and Highways) Themes: Rural services and infrastructures Environmental category: A Expected Closing date: March 31, 2013 Joint IFC: NO Joint Level: NA Environmental category: A Expected Closing date: March 31, 2011 Joint IFC: NO Joint Level: NA AF Project Financing Data [ ] Loan [ ] Credit [x] Grant [ ] Guarantee [ ] Other Proposed terms: AF Project Financing Plan (US$m) Source Total (US$m) Total Project Cost 20.0 Cofinancing: 0.0 Borrower/Recipient 4.0 Total Bank Financing: 16.0 IBRD 0.0 IDA (PCRW) 16.0 New 16.0 Recommitted 0.0 Client Information Recipient: Burkina Faso Responsible agency: Project Coordination Unit (PCU) Contact person: Jean Bertin Ouedraogo Telephone: / Fax No: pst-2@pst-2.bf i

8 AF Estimated disbursements (Bank FY/US$m) FY IDA (PCRW) Annual Cumulative Project Development Objective (PDO) and Description Original Project Development Objective: The objective of the project is to assist the recipient to increase the mobility possibilities for people and goods in its territory through: (i) decreasing social, economic and financial transport costs; (ii) increasing sector management capacity of the Ministry of Infrastructure, Transport and Housing (Ministère des Infrastructures, des Transports et de l Habitat - MITH); (iii) improving mobility for the rural population; and (iv) improving road network condition. Revised Project development Objective: The PDO for the proposed Additional Financing (AF) remains the same as for the Transport Sector Project (TSP). Project Description: The Project consists of the following components already included in the original project: Part A: Institutional Support and Sector Reforms. Carrying out a program of activities to strengthen the General Directorate of Rural Roads (Direction Générale des Pistes Rurales, DGPR) and the General Directorate of Roads (Direction Générale des Routes, DGR) capacity to better perform their respective duties, for the management and monitoring of the rehabilitation of rural roads and culverts and other road works under Part B of the Project. Part B: Road Network Improvement. Carrying out a program of activities to: (i) rehabilitate about 180 kilometers of key rural roads; (ii) construct and rehabilitate about 17 culverts: (iii) rehabilitate/periodically maintain about 35 kilometers of key rural roads using labor-based maintenance techniques; and (iv) design and supervise the works. Part C: Project Coordination. Provision of technical advisory service to the Project Coordination Unit (PCU) to coordinate, monitor and evaluate the Project. Safeguard and exception to policies 6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X Does the project require any exceptions from Bank policies? Have these been approved by Bank management? Yes X No Yes No ii

9 Financing agreement Reference Article IV (4.01) Schedule 2/ Section I /A/3 (b) (i) Schedule 2/ Section I /B(a)-(d) Schedule 2/ Section I /E/3 (a)- (d) Conditions and legal covenants - AF Description of condition/covenant GOBF has recruited a second procurement specialist for the PCU. (i) the Service Agreement between GOBF and the Service Provider shall have been duly signed and should have become effective; and (ii) the Service Provider shall have recruited a consultant to assist it in carrying out procurement activities related to the high intensity labor based rural road rehabilitation works on the basis of Terms of Reference (TOR), qualifications and experience satisfactory to IDA. GOBF will have amended the relevant project manuals in order to reflect the specific requirements of the proposed AF. GOBF will deposit counterpart funds in installments to meet the needs of the proposed AF. Due date Effectiveness condition. Disbursement condition. No later than three months after the effectiveness date. No later than March 31, 2011 an initial amount equivalent to US$500,000; No later than September 30, 2011 an amount equivalent to US$500,000; No later than March 31, 2012 an amount equivalent to US$1,500,000 or such higher amount which may be required; No later than September 30, 2012 an amount equivalent to US$1,500,000 or such higher amount which may be required. iii

10 I. Introduction 1. This Project Paper (PP) seeks the approval of the Executive Directors to provide Additional Financing (AF) in the amount of Special Drawing Rights (SDR) 10.7 million (US$16 million equivalent) to Burkina Faso for the Transport Sector project (Cr BF and Gr. H0320-BUR). The PP presents the rationale for the proposed AF, the proposed changes and appraisal summary. 2. The proposed AF would help finance costs associated with the completion of some of the activities that could not be funded under the TSP due to higher than expected costs, cost overruns and consequent financing gap. The Project consists of the following components already included in the original project: Part A: Institutional Support and Sector Reforms. Carrying out a program of activities to strengthen the General Directorate of Rural Roads (Direction Générale des Pistes Rurales, DGPR) and the General Directorate of Roads (Direction Générale des Routes, DGR) capacity to better perform their respective duties, for the management and monitoring of the rehabilitation of rural roads and culverts and other road works under Part B of the Project. Part B: Road Network Improvement. Carrying out a program of activities to: (i) rehabilitate about 180 kilometers of key rural roads; (ii) construct and rehabilitate about 17 culverts: (iii) rehabilitate/periodically maintain about 35 kilometers of key rural roads using labor-based maintenance techniques; and (iv) design and supervise the works. Part C: Project Coordination. Provision of technical advisory service to the Project Coordination Unit (PCU) to coordinate, monitor and evaluate the Project. 3. The proposed US$16 million required for the proposed AF is fully funded through the Pilot Crisis Response Window (PCRW) approved by the World Bank Board of Directors on December 10, Partnership arrangements 4. Although the AF is not formally co-financed by other donors, the Second Transport Sector program (TSP-2), which the Transport Sector Project (TSP) funded by the International Development Agency (IDA) supports, is also supported by 10 other development partners. This means that the proposed AF is expected to be implemented in close collaboration with the other development partners involved in the sector and is consistent with the objectives of the TSP-2. In response to the financial crisis, and the 2009 flooding in the country, and based on the Post Disaster Needs Assessment (PDNA) report, both the European Union (EU) and the African Development Bank (AfDB) have provided funds to finance some road rehabilitation emergency works to support the Government of Burkina Faso (GOBF) in mitigating those impacts. 1

11 II. Background and Rationale for Additional Financing using PCRW funds in the amount of US$16 million Background 5. Burkina Faso is a medium sized (about 274 thousand square km) landlocked country with a population of around 14 million and a very low rate of urbanization. Cotton remains Burkina Faso s main export commodity by tonnage, and accounts for about 30 percent of its export tonnage in The modal share of goods exported through the road network is over 87 percent. Although over the last two decades Burkina Faso has invested heavily in improving its road network, the total classified road network is only about 15 thousand km, which gives it one of the lowest road densities in West Africa. Despite the recent creation of a road fund to better fund and manage road maintenance, for 2010, Burkina Faso will only be allocating about 70 percent of what it requires to adequately maintain its classified road network let alone the whole road network. This means that Burkina Faso still faces a maintenance funding gap on the classified road network. 6. The initial total cost of the TSP is US$144.4 million of which US$92.1 million equivalent is funded by IDA through a credit of SDR36 million (US$49.5 million equivalent) and a grant of SDR30.9 million (US$42.6 million equivalent). The TSP was approved on April 8, 2003, and became effective on August 15, The objective of the TSP is to assist the Borrower to increase the mobility possibilities for people and goods in its territory through: (i) decreasing social, economic and financial transport costs; (ii) increasing sector management capacity of the Ministry of Infrastructure, Transport and Housing (Ministère des Infrastructures des Transports et de l Habitat, MITH); (iii) improving mobility for the rural population; and (iv) improving road network condition. The TSP supports three components: (A) Institutional Support and Sector Reforms; (B) Road Network Improvement; and (C) Project Coordination. The TSP was scheduled to initially close on September 30, 2008, but the closing date was first extended by 18 months to March 31, 2010 and then by 12 months to March 31, The two extensions were primarily justified on the basis that the Project Development Objectives continue to be achievable and their achievement is supported by a performing Borrower and its implementing agencies. 7. The project performance was rated as Moderately Satisfactory (MS) in the last Implementation Supervision Report (ISR) both in terms of achievement of the development objectives and implementation progress. The MS rating was explained by a disbursement lag caused by the fact that the implementation of the physical works component (85 percent of the project amount) was much slower than expected due to: (i) inadequate engineering preparation of the rural road maintenance and rehabilitation works; (ii) initial difficulty by GOBF and consultants to introduce the concept of low-cost spot improvement to rural roads in Burkina Faso; (iii) slower than expected procurement and execution of civil works; and (iv) initial counterpart funding constraints by GOBF (counterpart was too high). In addition, the exceptional heavy rains during the 2009 rainy season with the September devastating flooding has caused additional needs for rehabilitation of rural roads. However, as a result of the June 2010 supervision mission the rating of the project was upgraded from MS to Satisfactory and this will be reflected in the next version of the ISR. 2

12 8. So far the TSP has met all relevant World Bank disbursement, procurement and fiduciary obligations as well as complied with all legal covenants and safeguards requirements. GOBF has taken extensive corrective measures and actions to increase disbursement levels, including a restructuring of the project in June 2006 which reduced the share of the government counterpart from 37 percent for civil works to 20 percent. In addition, for the second extension, GOBF has prepared a detailed action plan which indicates that the remaining revised project activities can be completed within a 12-months extension period. 9. As of end of August 2010, the TSP s disbursements had reached SDR61.9 million out of a total of SDR66.9 million available under the combined IDA Grant and Credit. Rationale 10. The financial crisis of 2008/2009, combined with other exogenous economic shocks, have negatively affected Burkina Faso s economic performance through lower economic growth, sharply reduced Foreign Direct Investment (FDI) and fluctuating Overseas Development Aid (ODA) levels. See the following table for details. Table 1: Data on FDI and ODA variations for Burkina Faso (FCFA billions) Projected 2010 FDI: ODA : of which grant financing: of which loan financing: Source: MEF, BECEAO and IMF The series of external shocks (poor rains, food and oil price increases, decrease in the price of cotton on world markets, world financial crisis, flooding, etc.) have reduced the Real Gross Domestic Product (GDP) growth rate from 7.1 percent in 2005 to 5.2 percent in 2008 to 3.1 percent in Growth projections for 2010 were similarly revised downwards from about 6.0 percent to about 4.2 percent and to about 5 percent for the period. The deceleration in the GDP growth rate has been caused primarily by the poor performance of the agricultural sector. Taking into account Burkina Faso s annual population growth rate of around three percent, this has meant that real GDP per capita basically stagnated in In September 2009 torrential rains caused heavy flooding, loss of life and serious damage to key public infrastructure and private property. The Post Disaster Needs Assessment (PDNA) prepared jointly by the GOBF and development partners has estimated the post flooding reconstruction needs at about US$250 million. The economic impact of the flooding was estimated at about two percent of GDP. The combined effect of the macroeconomic shocks to the Burkinabe economy has increased payment arrears in the overall economy and in particular to the transport sector. 12. In response to the financial crisis GOBF prepared in 2009 a comprehensive crisis response and recovery plan. The plan s objectives are to mitigate the impact of the crisis on the 3

13 country s economic performance in general and on vulnerable households. The plan, among other things, includes infrastructure development works, a special program for youth employment and high intensity labor based approach for civil works. 13. The proposed AF has been requested by GOBF to mitigate the impacts of the 2008/2009 financial crisis and to cover part of the funding gap and cost overruns on the rural road maintenance works component of the TSP. The primary reasons for the financing gap were as follow: (i) a major drop in the value of the US$ vis-à-vis the FCFA from FCFA660 at appraisal to FCFA450 at the initial project closing date (September 30, 2008); and (ii) an increase in overall construction costs by about 58 percent since the start of the project. The proposed AF will help GOBF to: (a) more fully achieve the road rehabilitation targets set out in TSP; (b) meet its strategic objective of increasing rural population mobility; and (c) contribute in alleviating rural poverty for vulnerable groups employed as laborers for roads works. Improved mobility will be possible through increased access to all weather roads, an improved transport services provision, while the rural road related maintenance works will generate cash income for the rural poor. These objectives will be by funding the rehabilitation of some of the rural road infrastructure and culverts that could not be funded under the original project. 14. The rationale for IDA s involvement in funding the proposed AF is to help GOBF to mitigate the impacts of the 2008/2009 financial crisis on the transport sector by supporting the rehabilitation of key rural roads and rehabilitation or construction of culverts that could not be funded under the original project. Also, IDA s support is justified by the critical direct and indirect multiplier effect that the transport sector has on the overall economy of Burkina Faso. 15. The proposed AF is consistent with the PCRW objectives to assist eligible countries in providing financial assistance to protect core spending on health, education, social safety nets, infrastructure and agriculture. Particularly, the proposed activities will serve to finance core infrastructure development needs identified before the financial crisis that are critical for economic growth. The proposed AF is expected to be quickly implemented as the preparation of the project is at an advanced stage. 16. Finally, the proposed AF continues to also support Country Assistance Strategy (CAS of 09/08/2009) which is aligned with the Poverty Reduction Strategy Paper (PRSP) pillars in: (i) minimizing economic vulnerability and promoting growth through economic transformation; and (ii) promoting shared growth through improved social service delivery; and as cross-cutting issues: (i) governance and capacity development; and (ii) demography. III. Proposed Changes 17. For the activities covered under the proposed AF, no change is required to the original project development objectives. As in the original Project, the achievement of the PDO under the proposed AF is supported by three components: (A) Institutional Support and Sector Reforms; and (B) Road Network Improvement; and (C) Project Coordination. 4

14 Proposed AF activities 18. Part A: Institutional Support and Sector Reforms (about US$1.3 million). Carrying out a program of activities to strengthen DGPR s and DGR s capacity to better perform their respective duties, for the management and monitoring of the rehabilitation of rural roads and culverts and other road works under Part B of the Project. 19. Part B: Road Network Improvement (about US$17.4 million). Carrying out a program of activities to: (i) rehabilitate about 180 kilometers of key rural roads; (ii) construct and rehabilitate about 17 culverts: (iii) rehabilitate/periodically maintain about 35 kilometers of key rural roads using labor-based maintenance techniques; and (iv) design and supervise the works. 20. Part C: Project Coordination (about US$1.3 million). Provision of technical advisory service to the Project Coordination Unit to coordinate, monitor and evaluate the Project. Proposed AF costs and financing plan 21. The proposed AF cost breakdown is shown in Table 2 below. Project Component A. Institutional Support and Sector Reforms Table 2: Project Funding (US$ million equivalent) Original Project Cost Additional Financing Revised Cost Total IDA GOBF Total IDA GOBF Total IDA GOBF B. Road Network Improvement C. Project Coordination Total Projects Costs Institutional implementation arrangements 22. The institutional arrangements for the implementation of the proposed AF are essentially the same as what is being used to implement the TSP. The only difference is that there will be fewer implementing agencies. More specifically, the proposed AF will only have three implementing agencies (including the PCU) while the original project had eight (PCU included). 23. The DGR and the DGPR will be the implementing agencies for the rural road rehabilitation works. DGR and DGPR will both be implementing the rehabilitation of rural road works. DGPR will also delegate to a service provider the rehabilitation of about 35 km of rural roads using a high intensity labor based method. DGR and DGPR will nominate focal points or confirm the existing focal points of the original project. The focal points will be responsible for the day to day management of project implementation activities. The Regional Directorates of the Ministry of Infrastructure (Ministère des Infrastructures et du Désenclavement, MID) will be responsible for the close follow up in the field of the roads works with a periodic inputs from DGR and DGPR at the central level. 5

15 24. The transport sector PCU, is already established and fully functioning under the TSP and will continue to be used to coordinate the implementation of the proposed AF. Overall project implementation will be coordinated and supervised by the existing and fully functioning Steering Committee that is in place under the TSP. The PCU will also continue to be responsible for meeting the financial, procurement, social and environmental standards for the proposed AF as well as the monitoring and evaluation. The unit will nevertheless be strengthened in procurement and financial management internal control. 25. In terms of disbursement arrangements, the proposed AF is expected to use the same disbursement arrangements used under the TSP. In light of the fact that the TSP is closing on March 31, 2011 and to better segregate the IDA funds under the TSP and under the proposed AF, a new Designated Account will be put in place for the IDA funds. Additional project monitoring indicators and Monitoring and Evaluation (M&E) arrangements 26. The current M&E framework has been revised and updated to take into account the additional km of key rural roads to be rehabilitated under the proposed AF. Furthermore, some indicators that are no longer relevant for the proposed AF have been dropped from the updated M&E framework. The monitoring of outcomes/results will be based on the agreed results framework and monitoring arrangements that have been described in Annex 1. Two outcome indicators have been added; (i) the total number of project beneficiaries; and (ii) the Rural Access Index (RAI) of the Project Impact Area (PIA). The indicators related to the institutional support have been dropped from the proposed AF revised M&E framework due to the fact that the institutional support activities have already been substantially completed under the TSP. 27. The PCU will continue to be responsible for monitoring the outputs, outcomes and results of the project. This will consist in a combination of internal and external monitoring. The internal monitoring will be conducted within the framework of the preparation of the Quarterly Progress Reports and Annual Progress Reports. The external monitoring will consist in conducting two updates on establishing the baseline data of the additional indicators and the progress made in achieving those indicators. What follows are the major project outcome indicators that will be monitored. Table 3: Project Outcome s Original Changes target with AF Revised target 10% increase in the total number of transport operators in PIA % decrease in average access time in minutes to health centers in the PIA by the end of the Project Increase in number of teaching months in primary 9 9 schools in the PIA. Direct beneficiaries in the PIA (number) of which female (%) Target not originally measured under 250,000 30% 250,000 30% 6

16 Share of rural population with access to an allseason road in the affected areas (%) Number of rural people with access to an allseason road in the PIA Roads in Good and Fair Condition as a Share of Total Classified Roads (%) Size in km of the total classified road network TSP Target not originally measured under TSP Target not originally measured under TSP 26% 3,000,000 70% 15,400 26% 3,000,000 70% 15, The proposed AF is also expected to provide about 170 workers/laborers per month during the construction season (about eight months per year) over a two-year implementation period in the areas where the road rehabilitation works are being executed meaning a total of 2700 jobs created. The estimated amount of cash wages generated by the proposed works is estimated at around US$1 million which will be primarily injected in the local communities in/around the PIA of the road rehabilitation works. Financial management arrangements 29. The Financial Management (FM) of the TSP has been rated Moderately Satisfactory during the June 2010 supervision mission and at present there are no outstanding financial audits. In accordance with Bank policy and procedures, the FM arrangements will be implemented as previously agreed and implemented under the TSP. For the proposed labor based rural road maintenance sub-component, a service provider will enter into an agreement with the GOBF through the UCP, giving it delegated responsibility for the implementation of all activities related to this sub-component in the field. 30. The following actions have been recommended to strengthen proposed AF FM capacities: (i) revise the terms of reference for the external auditor to include the audit of the proposed AF financed activities; and (ii) have an agreement in place with a service provider, describing the rights and the obligations of contracting parties, the financial management aspect which can be drafted in a separate annex to the implementation manual. The FM agreements for the activities being implemented by the service provider can be summarized as follows: GOBF will open a designated account at the West African States Central Bank (Banque Centrale des Etats de l'afrique de l'ouest, BCEAO) and a transaction account in a commercial bank acceptable to IDA. GOBF, based on the agreement with the service provider will give a mobilization advance to be accounted for by the service provider who will act as a delegated implementing agency and will be in charge of paying enterprises and consultant working under the high intensity labor based method. The service provider will guarantee the advance using a bank guarantee. DGPR will be in charge of the supervision of the service provider s activities. Procurement arrangements 31. The procurement arrangements for the proposed AF are the same as for the ongoing TSP. The only major difference is that for the proposed AF activities, the more up-to-date 7

17 procurement guidelines of May 2010 will apply. More specifically, procurement of goods and works required for the project and to be financed out of the proceeds of the grant shall be governed by the "Guidelines for Procurement under IBRD Loans and IDA Credit" published by the Bank in May 2004 revised in October 2006 and May Procurement of consultants' services shall be governed by the "Guidelines for the Selection and Employment of Consultants by World Bank Borrowers" published by the Bank in May 2004 revised in October 2006 and May For each contract to be financed by the Grant, the different procurement or consultant selection methods, estimated costs, prior review requirements, and time frame will be described in the Procurement Plan for the proposed AF. To ensure the successful implementation of the proposed AF, it was agreed that: (i) an additional procurement specialist be recruited to help the existing procurement specialist in handling the proposed AF activities; and (ii) the service provider recruit a consultant who has procurement experience and good knowledge of Bank procurement procedures to assist them to carry out procurement activities related to the implementation of labor based rural roads maintenance works. 32. After the proposed AF is approved by the Board of the World Bank, and before the effectiveness, an additional General Procurement Notice will be published online in United Nation Development Business (UNDB) and the Development Gateway (dgmarket) in addition to local newspapers of wide national circulation. A Specific Procurement Notice for all goods and works to be procured under International Competitive Bidding (ICB) and Expressions of Interest for all consulting services costing the equivalent of US$200,000 and above will be published in UNDB, dgmarket and in the national press. 33. A procurement plan for the activities expected to be funded under the proposed AF has been prepared and already approved by the Bank on September 2, Since the previous agreed procurement plan for the initial credit was governed by 1999 s Procurement Guidelines, it was agreed that the proposed AF procurement plan would not be integrated into the procurement plan of the TSP. The procurement plan would be updated at least annually or as required to reflect the project implementation needs and improvements in institutional capacity. Closing date 34. The original closing date of the TSP was September 30, 2008, which was extended twice to March 31, It is expected that all activities funded under the TSP will be completed by March 31, Therefore it is not necessary to extend the closing date of the TSP. It is expected that the activities to be financed under the proposed AF will be completed by March 31, 2013, which will be the closing date for the AF. IV. Appraisal Summary of the Additional Financing Activities Proposed activities 35. The activities that are expected to be funded under the proposed AF are essentially the same as those funded under the original project and are as follows: (i) rehabilitation and maintenance of about 215 km of roads and rural roads (including rehabilitation of about 35 km of rural roads using high intensity labor based method); (ii) construction or rehabilitation of about 8

18 17 culverts; (iii) design and supervision of works; and (iv) institutional support to DGPR and DGR in road sector management. Technical execution of the project 36. The institutional support for the proposed AF is focused on the two implementing agencies - DGR and DGPR and the Regional Directorates of the MID. The activities are related to capacity building, equipment and operating cost funding and will be implemented through procurement of equipment, training plans and direct funding of operating cost. 37. About 215 km of rural roads are expected to be rehabilitated together with about 17 culverts to be constructed or rehabilitated. All of the planned civil works will mainly be implemented by small/medium local contractors. The contractors will be procured competitively and will be encouraged to use as much as possible local labor to execute the works and generate cash income for rural populations living in the PIA. 38. About 35 km of the 215 km of rural roads slated for rehabilitation will be implemented using a high intensity labor maintenance method. The implementation will be carried out by a service provider following the approach developed under the National Rural Transport Strategy (NRTS). The service provider will sign an agreement with the GOBF which gives it delegated powers to act on behalf of DGPR in the execution of the planned labor based rural road maintenance works. 39. Some duties and responsibilities of the service provider would be as follows: (i) define the administrative, technical and financial standard of the labor based rural road maintenance works that will be studied and implemented; (ii) competitive selection of contractors; (iii) ensure the approval of technical studies for roads to be constructed; (iv) process payments for contractors supervision consultants involved in the works; and (v) ensure technical standards and quality of civil works on behalf of DGPR. 40. The high intensity labor based maintenance method is a technical approach where local communities play a key role in the execution of the road maintenance works. This participatory method provides cash revenue for poor rural comminutes, and can contribute to reduction of rural-urban migration of young people. Economic Analysis 41. The rural road rehabilitation and periodic maintenance works funded under the proposed AF are expected to make critical rural road links all weather and to improve the standard of service provided. This will contribute to the economic development of rural areas through decreased transport costs for agriculture inputs/outputs and a much improved access to health, education and social centers. 42. The economic analysis methodology for the proposed AF rural road rehabilitation works will follow exactly the same methodology and framework approach that was used in the Project Appraisal Document (PAD) for the TSP. This is to ensure, just like for the TSP, that all roads and culverts that are selected for rehabilitation and construction under the AF can generate good 9

19 economic rates of return. Under the TSP an economic analysis framework was developed and was systematically applied to all rural roads that were selected for rehabilitation/periodic maintenance under the project to ensure their economic viability. More specifically, the agreed economic analysis framework to be applied to all road maintenance works consists of the following: For all planned rural road links slated for rehabilitation/periodic maintenance that have more than 200 Vehicles Per Day (VPD) the Highway Design Model (version IV) will be used to conduct the economic analysis. For all planned rural road links slated for rehabilitation/periodic maintenance that have between 50 VPDs and 200 VPDs the Roads Economic Decision Model (RED) will be used to conduct the economic analysis. For all planned rural road links slated for rehabilitation/periodic maintenance that have less than 50 VPDs the Cost Effectiveness Analysis (CEA) model will be used to conduct the economic analysis. 43. For the proposed AF, just like for the TSP, all proposed road works will be subject to economic evaluation using the above cited criteria depending on the traffic volumes. In light of the low volumes of traffic on most of the rural roads that will be funded under the proposed AF, the most likely economic model that will be used is CEA. Social and environmental safeguards implementation arrangements 44. As part of the TSP-2 program, and supported by the TSP, a social and environmental assessment, which included the preparation of a social and environmental management framework, for the whole road transport sector were developed and disclosed. During preparation, the TSP adopted the social and environmental frameworks due to the fact that the rural roads to be rehabilitated or periodically maintained under the TSP (about 7,000 km) were not pre-selected during preparation and were expected to be identified and screened, on a programmatic/rolling basis, during the life of the project. To ensure full consistency and continuity, this is the same approach that will be followed for the proposed AF. 45. A Sectoral Environmental Assessment (SEA) and a Resettlement Policy Framework (RPF) were prepared to be applied to all transport projects, including the TSP, which would be funded by all development partners under GOBF s TSP-2. Both the SEA, which included an Environmental Strategic Management Plan (ESMP) and RPF were disclosed in 2003 for the TSP, and after review, were re-disclosed in 2008 during the preparation of the Burkina Faso component West Africa Transport and Transit Facilitation Project. 46. Consistent with the disclosed SEA and RPF, specific Environmental and Social Management Plans (ESMPs) were prepared and disclosed for each rural road rehabilitation and maintenance works funded under the TSP. The actual implementation of the ESMPs was carried out as part of the road rehabilitation works contracts and where supervised by the supervision consultants, the Social and Environmental Monitoring Unit (Service de Gestion Environnementale et Sociale, SGES) and PCU. More specifically, all of the bidding documents for the rural road rehabilitation works funded under the TSP included mandatorily extensive 10

20 environmental and social impact mitigation clauses to be implemented by the contractors and supervised by the supervision consultants, SGES and PCU. Environmental mitigation actions carried out under the original project were essentially related to: (i) reforestations and maintaining trees along the rural roads rehabilitated; (ii) dust and noise abatement during construction; (iii) safe disposal of waste and excess constructions materials; (iv) ensuring that local flora and fauna is not disturbed, captured or hunted by contractors; (v) fully restoring borrow pits and quarries used for the road rehabilitation works; and (vi) sensitizing local communities on the importance of preserving environment and maintaining the planted trees. 47. Regarding the social impact mitigation measures, the activities that were implemented focused on Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome (HIV/AIDS) sensitization of contractor s staff, rural populations living along the rehabilitated roads and transport sector stakeholders. The TSP has funded anti-retroviral drugs and social support to persons suffering from HIV/AIDS. Other social mitigation measures that were implemented focused on contractor safety through the supply of protective gear and enforcement of worker safety measures. If required on certain rural road, Abbreviated Resettlement Action Plan (ARAP) was prepared and implemented consistent with the already disclosed RPF. 48. To monitor the implementation of the social and environmental aspects of the TSP, the SGES within the MID was created with support from the TSP. The SGES was created in 2006 and currently includes four permanent staff coming from the Ministry of Environment, the Ministry of Social Development and the MID. A social and environmental specialist has been hired under the TSP and is located within the PCU to ensure the monitoring of the social and environmental activities being implemented under the project. Although the SGES was created in 2006 it took some time to make it fully operational. This was because of budget constraints. However, it is now a permanent unit within the organizational structure of the MID, and has its own operating budget making it fully operational and functional. Also the SGES members have all benefited from extensive training supported under the TSP to enable them be fully operational in the field and to improve their understanding of GOBF/World Bank safeguards guidelines. This means that the monitoring of the implementation of both the social and environmental measures has improved considerably during the life of the TSP due to increased monitoring capacity of the SGES and increased awareness of the contractors. The relevant social and environmental clauses of the biddings documents are systematically reviewed and approved by the SGES before launching the bidding process. As a result of putting in place a robust social and environmental framework to cover the social and environmental impacts of the multiyear rolling road rehabilitation/periodic rural road maintenance program under the TSP, the overall management of the social and environmental safeguards of the TSP has been satisfactory. 49. The environmental rating for the proposed AF remains the same (A rating) as for the original project, and the same safeguard policies (OP/BP 4.01 and OP/BP 4.12) that were triggered for the TSP are triggered for the proposed AF. The proposed AF is expected to rehabilitate and maintain a total of about 215 km of existing rural roads and to rehabilitate or construct 17 culverts in rural areas. As in the case of the TSP, all of the rehabilitation and maintenance works planned under the proposed AF will be on existing, low traffic, unpaved rural roads. The GOBF has produced a long list of 500 km of potential priority rural roads for possible financing under the proposed AF or by other development partners involved in the TSP-2. 11

21 50. The proposed AF may finance some of the rural roads in the GOBF s 500 km priority program using exactly the same approach that was developed and used for the TSP. More specifically, the implementation of the social and environmental safeguard measures of the proposed AF will follow the SEA and the RPF that were prepared and disclosed for the whole transport sector to meet the requirements of the TSP-II, and that were implemented under the TSP. Some initial draft ESMPs for certain road sections (Region de l Est, Gaoua, Centre, Centre-Nord et Centre-Ouest) have already been submitted to IDA for review and IDA has already sent comments to GOBF. Once the full and final list of rural roads and culverts to be rehabilitated and constructed has been finalized, draft ESMPs and any RAPs/ARAPs as required, will be prepared which will then be reviewed by the Bank. Once they have been reviewed and endorsed, they will be disclosed in country and at Bank Infoshop well before the roads works start on the ground. The specific social and environmental mitigation measures will be included in the contracts for rural road rehabilitation and maintenance works and their implementation will be closely supervised by SGES, supervision consultants and periodically by the PCU. The social impact mitigation measures, linked to the possible need to acquire land or displace structures of PAPs, will be prepared and implemented following the RPF and with the assistance of NGOs or directly by the PCU. 51. As in the case for the TSP, for the proposed AF, implementation monitoring of the ESMPs for the road rehabilitation works will be done by the SGES who will also provide advice and technical support to contractors to reduce the environmental impact during civil works execution. Sensitization campaigns will be organized by the SGES ahead of the rural roads works start to explain the content of the measures, and to ensure the ownership and the participation by the concerned population. SGES will also review and approve the ESMPs, and related bidding documents before their disclosure and to ensure compliance with criteria established in the social and environmental framework for the TSP-2 and fully applicable to the TSP and proposed AF. The SGES will ensure a comprehensive recording and closer monitoring and management of safeguards implementation which will be followed up by the PCU as well as IDA team during the supervision missions. Training of SGES staff will continue under the AF to maintain and enhance their skills. 52. Regarding the high intensity labor approach, the same social and environmental framework and process will be followed as for the TSP and for the other road works funded under the proposed AF. Furthermore, the SGES will utilize the extensive consultations that are required before labor based maintenance works commence to ensure that the affected rural communities are fully sensitized in the social and environmental mitigation measures that will be implemented under the proposed AF. Procurement management arrangement 53. The PCU procurement specialist, who has been working on three IDA projects in the transport sector, has experience in handling IDA funded projects and is familiar with the Bank procurement guidelines and procedures. However, the procurement process remains slow due to cumbersome GOBF procedures and the work load is becoming too high for one person. To take into account the expected increased workload caused by the proposed AF, a second procurement 12

22 specialist will be hired by the PCU before grant effectiveness. Furthermore, once the list of rural roads slated for rehabilitation has been finalized, the PCU together with implementing agencies will rapidly prepare the bidding documents required for the civil works to ensure the quick start of the road works funded under the proposed AF. Financial management arrangement 54. The financial management of the TSP has been managed by a FM specialist helped by an accountant. The same team working on the TSP will continue to provide the required financial management services for the proposed AF. The team is responsible for the day-to-day financial management functions for the project. The team s responsibilities include, budgeting, keeping adequate books and records, recording transactions correctly and ensuring that periodic management reports are produced to facilitate management decisions. At present there are no outstanding financial audits for the TSP and the assessed FM risk is rated to be Moderate and adequate for the purpose of managing the proposed AF being provided for the project. Institutional Arrangement 55. Implementation of the TSP is handled by eight implementing agencies 1 from the MID, the MITH and a PCU. The eight implementing agencies are responsible for technical matters and procurement document initiation, while the PCU plays the role of coordinating and carrying out fiduciary aspects. The PCU is also responsible for the implementation of two other IDA-funded transport projects. The PCU is staffed with a coordinator, administrative and financial management specialist, a procurement specialist, an M&E specialist, a social and environmental specialist, an operations officer, an internal controller, and some support staff. 56. At the technical level focal points have been designated to work closely with the PCU to follow up the project activities. This procedure will remain for the proposed AF but with three implementing agencies 2. For better implementation of the proposed AF, the regional directorate of the MID will be involved in the daily supervision of the roads works in their respective regions. The project management has been rated moderately satisfactory. Readiness for implementation 57. The activities that are expected to be funded under the proposed AF have been substantially prepared and the implementing agencies and the PCU have gained ample experience under the TSP in implementing similar type of works. If all goes as per plan, all of the studies can be finalized by end 2010 and the civil works contracts funded under the proposed AF could start in by the first half of calendar 2011 at the latest. The risk of implementation delays is relatively low, which means that the funds provided under the proposed AF can be 1 MITH Financial and Administrative Directorate, Maritime and Land Transports General Directorate, Meteorology and Civil Aviation General Directorate, Planning and Studies Directorate, SGES, DGR, DGPR and PCU. 2 DGR, DGPR and PCU. 13

23 disbursed relatively quickly. The readiness for implementation of the activities funded under the proposed AF can be considered to be satisfactory. Risks 58. The activities to be funded under the proposed AF are subject to a limited range of risks that can easily be mitigated. The weighted risk profile of the proposed AF activities can be considered Low. See Annex 2 (ORAF) for details. V. Financial Terms and Conditions for the Additional Financing 59. The proposed AF would be provided as an IDA Grant under the PCRW. The Country Financing Parameters allows for up to 100 percent disbursement including taxes and duties. 60. However, GOBF has agreed to provide about FCFA1.8 billion (about US$4 million equivalent) of counterpart funds to cover part of the proposed AF costs such as administrative expenses that cannot be covered by IDA, and some of the civil works and consultant services costs. 61. Apart for the submission of the legal opinion of the Recipient on the Financing Agreement, the proposed AF has the following effectiveness conditions. GOBF has recruited a second procurement specialist for the PCU, with terms of reference, qualifications, and experience satisfactory to IDA. 62. The proposed AF contains the following disbursement conditions for the funds allocated to the Part B (iii) of the Project (periodic maintenance of key rural roads using labor based maintenance techniques): (i) the Service Agreement between GOBF and the Service Provider shall have been duly signed and should have become effective; and (ii) the Service Provider shall have recruited a consultant to assist it in carrying out procurement activities related to the high intensity labor based rural road rehabilitation works on the basis of Terms of Reference (TOR), qualifications and experience satisfactory to IDA. 63. The proposed AF contains the following dated covenants. No later than three months after the effectiveness date, GOBF will have amended the relevant project manuals in order to reflect the specific requirements of the proposed AF. GOBF will deposit counterpart funds in installments in the following manner to meet the needs of the proposed AF. No later than March 31, 2011 an initial amount equivalent to US$500,000; No later than September 30, 2011 an amount equivalent to US$500,000; No later than March 31, 2012 an amount equivalent to US$1,500,000 or such higher amount which may be required; 14