FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE EGYPT NATIONAL RAILWAYS RESTRUCTURING PROJECT

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE EGYPT NATIONAL RAILWAYS RESTRUCTURING PROJECT Sustainable Development Department Middle East and North Africa Region LOAN 7656-EG AND LOAN 7982-EG MARCH 17, 2009 TO THE ARAB REPUBLIC OF EGYPT JUNE 12, 2014 Report No: RES13265 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 ABBREVIATIONS AND ACRONYMS AC CPAR DA EGP ENR ENRRP ETCS FM GoE IBRD IP LA MoT PA PDO PMU PSO SBD SBU Air Conditioned Trains Country Procurement Assessment Review Designated Account Egyptian Pound Egyptian National Railways Egypt National Railways Restructuring Project European Train Control System Financial Management Government of Egypt International Bank for Reconstruction and Development Implementation Progress Loan Agreement Ministry of Transport Project Agreement Project Development Objective Project Management Unit Public Service Obligation Standard Bidding Documents Strategic Business Unit Regional Vice President: Country Director: Sector Manager: Task Team Leader: Inger Andersen Hartwig Schafer Patricia Veevers-Carter Olivier Le Ber 2

3 EGYPT, ARAB REPUBLIC OF EGYPT NATIONAL RAILWAYS RESTRUCTURING PROJECT CONTENTS Pages A SUMMARY 5 B PROJECT STATUS 6 C PROPOSED CHANGES 7 ANNEX 1: RESULTS FRAMEWORK 11 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) 17 3

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5 DATA SHEET Egypt, Arab Republic of Egypt National Railways Restructuring Project (P101103) MIDDLE EAST AND NORTH AFRICA MNSTI Report No: RES13265 Basic Information Project ID: P Lending Instrument: Specific Investment Loan Regional Vice President: Inger Andersen Original EA Category: Partial Assessment (B) Country Director: Hartwig Schafer Current EA Category: Partial Assessment (B) Sector Director: Junaid Kamal Ahmad Original Approval Date: 17-Mar-2009 Sector Manager: Patricia Veevers-Carter Current Closing Date: 31-Mar-2017 Team Leader: Olivier P Le Ber Borrower: Responsible Agency: Arab Republic of Egypt Egyptian National Railways (ENR) Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Board Approval Restructuring Level: Level 1 Explanation of Approval Authority: This is a level one restructuring and the approval authority is Board Financing ( as of 08-May-2014 ) Key Dates Project Ln/Cr/TF Status Approval Date Signing Date Effectiveness Date Original Closing Date Closing Date P IBRD Effective 17-Mar Aug Jun Sep Sep-2015 P IBRD Effective 14-Dec Sep Mar Mar Mar-2017 Disbursements (in Millions) Project Ln/Cr/TF Status Currency Original Cancelle d Disburse d Undisbur sed % Disburse d P IBRD Effective USD P IBRD Effective USD Policy Waivers 4

6 Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ X ] Does the project require any policy waiver(s)? Yes [ ] No [ X ] A Summary of Proposed Changes The following changes are proposed under the Level I restructuring: (i) amend the project development objective (PDO); (ii) revise the original project components; (iii) revise the Results Framework; (iv) reallocate the project savings of up to US$35 million among categories of expenditures and introduce an additional disbursement category; (v) add the procurement of consulting services; (vi) extend the closing date of the project from March 31, 2017 to January 31, 2019; and (vii) revise the disbursement estimates The proposed restructuring will allow for completion of all activities financed under the project and will help the project achieve the PDO There are no changes in the financial management arrangements and environmental and social safeguards of the project The Government of Egypt (GoE) agreed on the need to introduce the above proposed changes through a project restructuring Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ X ] No [ ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ X ] No [ ] 5

7 B Project Status The project was approved on March 17, 2009, signed on August 2, 2009 and became effective on June 24, 2010 An Additional Financing was approved on December 14, 2010, signed on September 23, 2011 and became effective on March 28, 2012 The project closing date is March 31, 2017 The total loan funds amount to US$600 million (Original loan amount of US$270 million - Loan 7656-EG, and Additional Financing amount of US$330 million Loan 7982-EG) As of May 8, 2014, the project disbursed a total amount of US$423 million, representing about 7 percent of total loan amount Regarding project implementation, despite some progress, the overall implementation continues to be slow The project is currently rated moderately satisfactory for progress towards achieving the PDO and moderately unsatisfactory for implementation progress (IP) The implementation of Components 1, Signaling Modernization on Cairo-Alexandria and Beni Suef-Asyut Lines, and Component 2, Track Renewal Works along the Cairo-Aswan Line, is progressing slowly, and is still afflicted by the delays caused, inter alia, by the events affecting the country since 2011 More specifically, under Component 1, the contract for signaling modernization of the Cairo-Alexandria line was recently signed, and the procurement of the signaling modernization of the Beni Suef-Asyut line is progressing well now albeit with some delays The delays in the implementation of the track renewal works under Component 2 were due to the decision by the contractor to build a sleeper factory in Egypt instead of purchasing sleepers from the local market, as local sleepers would not meet the technical standards of the contract This investment will prove to be a good resource in the medium and long term in view of the large track rehabilitation program envisioned by ENR This, however, has resulted in a delay of at least ten months in the implementation of the track renewal contract With regards to the implementation of Component 3, Modernization of Management and Operating Practices, the progress was made in carrying out the ENR transformation plan Yet, the financial and operational performance of the ENR is a matter of concern as a result of the delayed payment of public service obligations (PSOs) and deterioration in services The recurrence of strikes and track blockages, whether by ENR employees or the public, continued to cause interruption to operation and service Of most serious concern is the deteriorating safety record over the past year, with fatalities increasing drastically following major railway accidents Thus, achievement of the original PDO is jeopardized by the declining financial and operational performance of the ENR During an implementation support mission carried out in April 2013, the Bank organized a high-level workshop at the Ministry of Transport (MoT) which identified several areas of importance to improve ENR s governance and accountability for a successful railways restructuring, and proposed activities to be considered for Bank s financing (resorting to savings under the project) All these activities will ultimately focus on improving safety of operations through the modernization of assets and greater accountability and governance The mid-term review carried out in December 2013 concluded that the project is likely to achieve its revised objectives by the revised closing date of January 31, 2019 subject to the approval of this restructuring Project Development Objectives Original PDO Development Objectives/Results The objective of the project is to assist the Borrower in improving the reliability, efficiency and safety of the railways' services through signaling and track renewal investments by the Project Implementing Entity and the modernization of its management and operating practices in order to enhance the railways' sector responsiveness to economic and social needs and to strengthen the financial viability of the Project 6

8 Implementing Entity C Change in Project's Development Objectives Explanation The new PDO removes the objective to enhance the railways sector responsiveness to economic and social needs and to strengthen the financial viability of the Project Implementing Entity because this objective is no longer achievable under the current circumstances in the country ENR adopted a financial recovery plan at the onset of the project and was on track to improve its financial sustainability, but after the revolution, the Government has dramatically reduced its contribution to the PSO and wages were significantly increased without the possibility of raising fares These events were beyond the control of the railways and financial sustainability is no longer achievable during the life of the project Proposed New PDO The objective of the project is to improve the reliability, efficiency and safety of the railways services on targeted sections of the rail network Change in Results Framework Explanation: The results framework will be revised to reflect the proposed change in the PDO Two PDO-level indicators will be dropped New indicators will be added to better measure the impact of the project activities and proposed restructuring Following the reallocation of funds and the extension of the project closing date, selected target values will also be revised There are no World Bank Core Sector Indicators for the railways sector The specific changes are detailed in the Annex Change in Loan Closing Date(s) Explanation: Financing The Closing Date of the project will be extended from March 31, 2017 to January 31, 2019 to complete all the activities financed under the project (ongoing signaling contracts and new project activities funded following the reallocation) and to achieve the revised PDO More specifically, the original Loan 7656-EG will be extended from September 30, 2015 to January 31, 2019 and the Additional Financing (Loan EG) will be extended from March 31, 2017 to January 31, 2019 Ln/Cr/T F IBRD IBRD Status Reallocations Explanation: Original Closing Date Current Closing Date Proposed Closing Date Previous Closing Date(s) Effective 30-Sep Sep Jan Sep-2015 Effective 31-Mar Mar Jan Mar-2017 Since new studies under Components 1 and 3 for the design of a new signaling system and improving the safety of ENR operations are proposed to be added, a new disbursement category ( Consultants Services ) will be introduced under Loan 7656-EG and US$9 million will be reallocated to this new category In addition, the amount of US$26 million will be reallocated from category 1 ( Goods ) to category 2 ( Works ) to finance the additional track-renewal works under Component 2 The percentage of expenditures to be financed will remain 100 percent of eligible expenditures in line with Egypt's 7

9 financing parameters The proceeds under Loan 7982-EG will remain unchanged Ln/Cr/TF Currency Current Category of Expenditure Allocation Disbursement % (Type Total) Current Proposed Current Proposed IBRD USD GOPTS A1 & A2 197,000, ,000, CW, PT B 60,000, ,000, PREMIA FOR CAPS/COLLARS UNALLOCATED 12,325, ,325, FRONT END FEE 675, , Consulting services 000 9,000, Total: 270,000, ,000,00000 IBRD USD GO, WKS under Part A 329,175, ,175, Disbursement Estimates PREMIA FOR CAPS/COLLARS Change in Disbursement Estimates Explanation: FRONT END FEE 825, , Total: 330,000, ,000,00000 The revised disbursement estimates are based on the expected implementation of the contracts and are in line with the revised closing date Fiscal Year Current (USD) Proposed (USD) ,864, ,864, ,135, ,000, ,410, ,000, ,818, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,906,29886 Total 600,000, ,000,00000 Change to Components and Cost Components 8

10 Explanation: 1 Component 1-1: Signaling Modernization Cairo (Arab El Raml)-Alexandria line The supported activities under this component will be expanded to support additional activities focusing on improving the safety of ENR s operations by using the budget savings in the amount of US$35 million which resulted from the signing of the contract for the modernization of the signaling system on the Cairo- Alexandria line These additional activities, in the amount of US$75 million, will include: (i) studies to prepare the next phase of the modernization of the signaling system (in particular ETCS level 1) (US$6 million), and (ii) studies for the signaling system and automatic train protection on the remaining ENR secondary lines (US$15 million) 2 Component 2: Track Renewal This component is expanded to finance the renewal works for about 60 km of additional tracks on the Cairo-Aswan line in the amount of US$26 million, using the budget savings under Component Component 3: Modernization of Management and Operating Practices In addition to financing activities directed toward developing and cementing changes in managerial and staff practices that reflect the operational and financial restructuring of ENR (which were 100% financed by ENR), this component will now finance with IBRD funds additional activities aimed at improving the safety of ENR s operations through the modernization of assets and greater accountability and governance These additional activities in the amount of US$15 million, using the budget savings under Component 1, will include studies to support the restructuring of ENR and improve the safety of its operations such as the elaboration of a new railway law, the preparation of a Safety Management System for ENR operations, the formulation of an infrastructure pricing methodology and the development of the structure of the PSO Contract between the State and ENR for loss-making passenger services 4 Component 1-2: Signaling Modernization Beni Suef Asyut line No changes Current Component Name Component 1-1: Signaling Modernization Cairo (Arab El Raml) to Alexandria Component 2: Renewal of 200 km of track Component 3: Modernization of Management and Operating Practices Component 1-2: Signaling Modernization - Beni Suef to Asyut Contingencies and front end fees Proposed Component Name Current Cost (US$M) Proposed Cost (US$M) Action Renewal of track No Change No Change Total 1 : Including Government counterpart funds of US$45 million 9

11 Change in Procurement Explanation: Other Change(s) The procurement of consulting services will be added to select consulting firms and individual consultants that will undertake the new studies which were introduced in the project The selection methods will include: (i) Quality and Cost based Selection (QCBS), (ii) Selection based on Consultants Qualifications, (iii) Single-Source Selection (SSS), and (iv) Selection of Individual Consultants An updated Procurement Plan for the project, prepared by the implementing agency, was received by the Bank in December 2013 and found to be acceptable This plan will be subsequently updated annually or as needed to reflect the latest project requirements Appraisal Summary Change in Risk Assessment Explanation: Change(s) in Appraisal Summary The overall implementation risk rating will be updated from moderate to substantial, in view of the political and economic situation and its impact on railway safety and project sustainability 10

12 ANNEX 1: RESULTS FRAMEWORK Egypt, Arab Republic: Egypt National Railways Restructuring Project (P101103) Stage: Restructuring Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Availability ratio of the useful fleet (%): long distance passenger Availability ratio of the useful fleet (%): short distance passenger Percentage Value Date 17-Mar Jun Jan-2019 Availability ratio of the useful fleet (%), defined as the number of daily available locomotives divided by the total number of assigned locomotives for each SBU, averaged on a yearly basis FY12/13 Percentage Value Target values are yearly and not cumulative Date 17-Mar Jun Jan-2019 Availability ratio of the useful fleet (%), defined as FY12/13 result Target values are yearly and not cumulative 11

13 Availability ratio of the useful fleet (%): freight Kilometrage per available locomotive: long distance passenger the number of daily available locomotives divided by the total number of assigned locomotives for each SBU, averaged on a yearly basis Percentage Value Date 17-Mar Jun Jan-2019 Availability ratio of the useful fleet (%), defined as the number of daily available locomotives divided by the total number of assigned locomotives for each SBU, averaged on a yearly basis FY12/13 result Target values are yearly and not cumulative Kilometers Value 143, , ,00000 Date 17-Mar Jun Jan-2019 Total number of km run by all locos during a year divided by the average FY12/13 result Target values are yearly and not cumulative 12

14 Kilometrage per available locomotive: short distance passenger Kilometrage per available locomotive: freight Long distance passenger traffic on Cairo-Alexandria: total annual passenger-km in air conditioned (AC) trains (million) Long distance passenger traffic on Cairo-Alexandria: total number of yearly available locos Kilometers Value 68, , ,00000 Date 17-Mar Jun Jan-2019 Total number of km run by all locos during a year divided by the average number of yearly available locos FY12/13 result Target values are yearly and not cumulative Kilometers Value 75, , ,00000 Date 17-Mar Jun Jan-2019 Total number of km run by all locos during a year divided by the average number of yearly available locos FY12/13 result Target values are yearly and not cumulative Number Value Date 17-Mar Jun Jan-2019 FY12/13 result Target values are yearly and not cumulative Number Value Date 17-Mar Jun Jan

15 Marked for Deletion Marked for Deletion annual passenger-km in non- AC long distance trains (million) Long distance passenger traffic on Beni Suef - Asyut: total annual passenger-km in AC trains (million) Long distance passenger traffic on Beni Suef - Asyut: Total annual passenger-km in non- AC long distance trains (million) Average number of fatalities due to railway accidents on the ENR network measured as the total annual number of victims on ENR network per one million passenger-km PSO compensation for ENR measured in total annual amount of PSO paid by the Government to ENR [expressed in EGP million] FY12/13 result Target values are yearly and not cumulative Number Value Date 17-Mar Jun Jan-2019 FY12/13 Target values are yearly and not cumulative Number Value Date 17-Mar Jun Jan-2019 FY12/13 result Target values are yearly and not cumulative Number Value Date 30-Jun Jun Jan-2019 Text Value Date 30-Jun Jun Mar-2017 FY12/13 result Freight traffic carried by ENR Number Value Intermediate Results Indicators Date 30-Jun Mar-2017 Total annual net-ton-km of freight traffic (million) FY12/13 result 14

16 Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target New Punctuality of AC trains on the line Cairo-Alexandria Punctuality of AC trains on the line Beni Suef - Asyut Installation of a modernized signaling system on Cairo- Number Value Date 30-Jun Jun Jan-2019 Total number of AC trains arriving 15 minutes late to final destination during one year divided by the total number of AC trains operated in the same period of time Number Value Date 30-Jun Jun Jan-2019 Total number of AC trains arriving 15 minutes late to final destination during one year divided by the total number of AC trains operated in the same period of time Yes/No Value No No Yes Date 30-Jun Jun Jan

17 New New New New Alexandria line completed and operating 24/7 Completion of studies to prepare the next phase of the modernization of the signaling system (ETCS level 1) Installation of a modernized signaling system on Beni Suef- Asyut line completed and operating 24/7 Number of kilometers of renewed tracks along the Cairo-Aswan and Benha-Port Said lines Maintenance costs on sections where tracks are renewed: annual total cost of track infrastructure maintenance on sections renewed under the project (EGP million) Average management training time: ratio between the number of staff-days allocated for training during a year and the average number of management staff at ENR Completion of studies to support the restructuring of ENR Yes/No Value No No Yes Date 30-Jun Jun Jan-2019 Yes/No Value No No Yes Date 30-Jun Jun Jan-2019 Kilometers Value Date 30-Jun Dec Jan-2019 Number Value Date 30-Jun Jun Jan-2019 FY12/13 result Number Value Date 30-Jun Jun Jan-2019 In 2008/2009 FY12/13 result Current annual value already exceeds the end target Yes/No Value No No Yes Date 30-Jun Jun Jan

18 Project Stakeholder Risks ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Egypt, Arab Republic: Egypt National Railways Restructuring Project (P101103) Stage: Restructuring Stakeholder Risk Rating Moderate Risk Description: The railway sector plays a significant role in the Egyptian economy and is an essential mode of transport for lowincome Egyptians ENR, a public entity reporting to the MoT, is a predominantly passenger railway The GoE remains committed to improve ENR s performance by giving priority to improving safety and quality assurance, developing human resources, enhancing operational reliability, and modernizing assets and introducing new technologies Implementing Agency (IA) Risks (including Fiduciary Risks) Risk Management: Capacity Rating Moderate Risk Description: Implementation capacity within ENR is weak, although improving slowly under the company's transformation and modernization plan Among other reasons, this is due to outdated internal procedures and lack of experience working with International Financial Institutions The company's frequent change of management is very disruptive and undermines efforts put towards the transformation and modernization plans The Bank will continue and reinforce the ongoing dialog with key stakeholders in Egypt The project support to the ongoing reforms has been appreciated by the counterparts The Bank assistance to critical investments and the overall strengthening of ENR performance will reinforce the existing dialog on strategic ENR objectives, safety improvements, and on complex technical matters and modern management practices Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Yearly Risk Management: As a consequence of the ongoing transformation plan, a number of measures have been undertaken within the Project to mitigate the capacity risks: - the reorganization of ENR along business units, initiatives to strengthen capacity of staff, the introduction of new practices with the assistance of experienced international railway specialists are enhancing ENR capacity across the board; - a high level steering committee involving the ministries of Transport, International Cooperation, and Finance, oversees the implementation of the Project; - a PMU is fully staffed and operating; - throughout direct practice and training provided by the Bank, ENR is becoming more familiar with safeguard and fiduciary requirements, particularly procurement 17

19 Governance Rating Low Risk Description: No risk foreseen beyond above capacity section Construction supervision consultants support ENR with respect to contract progress certification Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation Yearly Risk Management: Resp: Status: Stage: Recurrent: Due Date: Frequency: Project Risks Design Rating Low Risk Description: The preparation of the technical specifications and bidding documents for signaling modernization requires deep technical skills and good knowledge of state-of-the-art solutions Risk Management: Social and Environmental Rating Moderate Risk Description: Environmental impacts are expected mostly during construction phase and include high noise levels, increased levels of local air pollutants, and detours around The technical specifications and bidding documents for the ENRRP signaling investment have been prepared by an independent international consultant Moreover, ENR, with the assistance of the same consulting firm, has already prepared similar technical documents for the Beni Suef - Asyut operation During execution of works, the Project Manager hired by ENR for each construction contract in accordance with Bank rules will supervise the quality of works Resp: Status: Stage: Recurrent: Due Date: Frequency: Both Completed Implementation Continuous Risk Management: All project investments are on existing rail right-of-way Railway corridor has no sensitive environmental habitats ENR has prepared an Environmental Management Plan (EMP) to address environmental 18

20 level crossings and social impacts It has confirmed that the impacts of investments are manageable Agreed mitigation measures for periods during and after construction are detailed in an EMP and in an Institutional Capacity Building Plan An Environmental consultant was selected by ENR to assist with the implementation of the EMP The consultant is helping to establish an Environmental Affairs Directorate within the ENR structure to help sustain managing the environmental and social aspects during the operation phase of the project Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Yearly Program and Donor Rating Low Risk Description: Risk Management: No risk foreseen Resp: Status: Stage: Recurrent: Due Date: Frequency: Delivery Monitoring and Sustainability Rating Substantial Risk Description: Taking into account weak capacity of the ENR, project indicators are complex and difficult to assess Risk Management: In light of the implementation of the modernization and strengthening plan, ENR is periodically collecting indicators reflecting its overall performance The project performance indicators were thoroughly discussed and agreed upon with ENR and the definition and methods for estimating these indicators were harmonized with existing ENR procedures and methods The Italian Management team and the Bank team are spending considerable amount of time in building the capacity of the ENR's monitoring team While the project design permits the implementation of the project as a stand-alone operation, the full benefits of the project can only materialize if ENR implements its reform program on modernizing the company The modernization of ENR remains an important Government priority The ongoing initiatives present an important and well thought through roadmap for ENR s modernization The Bank team will continue the regular monitoring of the progress of the modernization of ENR during its missions 19

21 The financial and operational performance of ENR is a matter of concern as a result of the delayed payments of PSOs by the Government and deterioration in services The recurrence of strikes and track blockages, whether by ENR employees or the public, continued to cause interruption to operation and service The current economic situation in Egypt does not allow the achievement of the financial viability of ENR during the life of the project Following the proposed restructuring, the project will finance new studies on a range of topics (including a new railway law to modernize the governance of ENR, sustainable infrastructure financing, PSO contracts) However, this risk cannot be fully mitigated by the project Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Yearly Other (Optional) Rating Substantial Risk Description: Railway Safety: As a result of ENR's undermined financial position, lack of funds for timely maintenance (both for rolling stock and infrastructure) and essential capital investments threatens the safety of ENR's operations Risk Management: ENR and the Bank agreed on the importance of making railway safety a priority for the company While the company is developing the Short and Medium-Term Financial Recovery Plan, the expenditures should be prioritized by putting those that ensure safety of operations in the first place Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Quarterly Other (Optional) Risk Description: Rating Risk Management: Resp: Status: Stage: Recurrent: Due Date: Frequency: Overall Risk Overall Implementation Risk: Rating Substantial Risk Description: The overall risk is rated substantial, in view of the political and economic situation and its impact on railway safety and project sustainability 20