RESTRUCTURING PAPER ON A SECOND PROPOSED PROJECT RESTRUCTURING DAKAR DIAMNIADIO TOLL HIGHWAY PROJECT CREDIT 4579-SN BOARD APPROVAL DATE JUNE 2, 2009

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Transport Sector Country Department AFCF1 Africa Region Document of The World Bank RESTRUCTURING PAPER ON A SECOND PROPOSED PROJECT RESTRUCTURING OF DAKAR DIAMNIADIO TOLL HIGHWAY PROJECT CREDIT 4579-SN BOARD APPROVAL DATE JUNE 2, 2009 TO THE REPUBLIC OF SENEGAL DECEMBER 6, 2010 Report No: SN

2 ABBREVIATIONS AND ACRONYMS AfDB AFD APIX CFAF DDTH EMP FA GoS IDA IFC PAP PPP RAP RS African Development Bank French Development Agency (Agence Française de Développement) Investment Promotion and Large Projects Agency (Agence Nationale Chargée du Développement de l Investissement et des Grands Travaux) CFA Franc Dakar Diamniadio Toll Highway Environmental Management Plan Financing Agreement Government of Senegal International Development Agency International Finance Corporation Project Affected Persons Public-Private Partnership Resettlement Action Plan Resettlement Site Regional Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader: 2 Obiageli K. Ezekwesili Habib Fetini Jamal Saghir C. Sanjivi Rajasingham Moctar Thiam

3 SENEGAL DAKAR DIAMNIADIO TOLL HIGHWAY PROJECT P CONTENTS Page A. SUMMARY... 4 B. PROJECT STATUS... 5 C. PROPOSED CHANGES

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5 DATA SHEET Restructuring Restructuring Type: Level two Last modified on date : 12/01/2010 Status: Draft 1. Basic Information Project ID & Name P087304: SN-Dakar -Diamniado Toll Highway Project Country Senegal Task Team Leader Moctar Thiam Sector Manager/Director C. Sanjivi Rajasingham Country Director Habib M. Fetini Original Board Approval Date 06/02/2009 Original Closing Date: 07/31/2015 Current Closing Date 07/31/2015 Proposed Closing Date [if applicable] EA Category A-Full Assessment Revised EA Category A-Full Assessment-Full Assessment EA Completion Date 08/02/2007 Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised AFDB BORR FRDE IDA ZPCO Total Borrower Organization Department Location Republic of Senegal Senegal 4. Implementing Agency APIX Organization Department Location Senegal i

6 5. Disbursement Estimates (US$m) Actual amount disbursed as of 12/01/ 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. Y Safeguard Policy Last Rating Proposed Environmental Assessment (OD 4.01) X Natural Habitats (OP 4.04) X Forestry (OP 4.36) X Pest Management (OP 4.09) Physical Cultural Resources (OP 4.11) X Indigenous Peoples (OD 4.20) Involuntary Resettlement (OP 4.12) X Safety of Dams (OP 4.37) Projects in International Waters (OP 7.50) Projects in Disputed Areas (OP 7.60) 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The objective of the Dakar Diamniadio Toll Highway (DDTH) is to provide significant improvement to the Dakar metropolitan area as the economic driver of Senegal development. It intends to give this densely populated area the transport means necessary for its expansion to the benefit of the Dakar population, its businesses, as well as the whole Senegalese economy. It also intends to support the restructuring of one of the poorest area in Dakar (Pikine Irregulier Sud) and to contribute to the mitigation of one of the largest pollution source in Dakar, the Mbeubeuss solid waste deposit. 7b. Revised Project Development Objectives/Outcomes [if applicable] ii

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8 SUMMARY REPUBLIC OF SENEGAL DAKAR DIAMNIADIO TOLL HIGHWAY PROJECT RESTRUCTURING PAPER 1. The proposed amendments to the Financing Agreement (FA) of the Dakar Diamniadio Toll Highway (DDTH) Project are necessary to address changes contained in the Resettlement Action Plan (RAP) Addendum-3 (e.g. valuation of compensation rates; updated calendar for RAP implementation, in particular, clearing of the right-of way (RoW) of the Pikine-Keur Massar section of DDTH) adopted by the GoS. Pursuant to BP 6.00 Annex A, the team has obtained authorization from Land Committee on October 8, 2010 to proceed with the changes in the compensation scheme of the RAPs and to finance part of the necessary cash compensation. 2. A first restructuring of DDTH project was approved on October 13, 2010, in order to introduce amendments to the FA of the Project to address delays in the Government s implementation of some of the Project activities and to include other changes to certain effectiveness conditions reflecting modifications agreed with the Bank team. The project was declared effective concurrently with the approved restructuring on October 13,

9 PROJECT STATUS 3. The DDTH Project was approved by the Board of Executive Directors, in June 2009 in the amount of US$105 million (IDA Cr.4579-SN), as part of a co-financing scheme with the Government of Senegal (GoS) (US$186 million), French Development Agency (AFD) (US$80 million) and the African Development Bank (AfDB) (US$49 million). The Project is also financed by the private sector for the PPP component, including board approved financing from IFC in the amount of EURO 22.5 million. The current Project design is as follows: Component A: Road Infrastructure. Implementation of the highway construction, management and maintenance program which is part of the DDTH as set forth in the Concession Agreement between the Recipient and the Concessionaire (financed by AFD, ADB, the GoS and the Concessionaire); Component B: Clearing of Right of Way (RoW) of DDTH (financed by the Recipient) and corresponding urban development of a proposed Resettlement Site (RS) including site clearing, construction of dwellings, and site preparation (e.g. surface storm water system, a gravitational water sanitation system, a road network, and public health, education and sports facilities (financed by the Association and AFD). Component C: Urban restructuring of Pikine Irrégulier Sud (financed by IDA, Recipient and AFD). 4. During the period, Resettlement Action Plans (RAPs) and Environmental Management Plans (EMPs) were prepared and disclosed for the 4 segments of DDTH (Phase 1: Malick Sy-Patte-d Oie; Phase 2: Patte d Oie-Pikine; Phase 3: Diamniadio-Keur Massar; and Phase 4: Pikine-Keur Massar). The resettlement is progressing at those sites with 68 percent of the Project Affected Persons (PAPs) compensated on Malick Sy- Patte d Oie segment; 90 percent on Patte d Oie-Pikine, and 92 percent on Keur Massar-Diamniadio segment. Most recently, a RAP Addendum-3 (update) for Pikine-Keur Massar (Phase 4) was completed and cleared by the Bank on October 13, The Bank is in the process of clearing the addendum for the RAP of Malick Sy-Patte d Oie Construction of phases 1 and 2 of DDTH which started in 2005 was completed by the GoS with government funds, in The construction of Phase 3 of the DDTH (Keur Massar-Diamniadio) started in January 2010 and construction of Phase 4 of DDTH (Pikine-Keur Massar) is expected to start no later than November 24, 2011 (date set in the Concession Agreement) or as soon as its right-of-way is cleared. 1 The RAP addendum of Malick Sy Patte d Oie was necessary to (a) take into account the additional PAPs created by the destruction by explosion of the old highway bridge of Colobane, and (b) the changes in the footprint of the Colobane roundabout which required more right of way. 5

10 6. Project Effectiveness and the co-financiers support for the construction of the Resettlement Site (RS) and some other components have been delayed. This is partially due to the delay suffered by the Concessionaire to achieve financial closure through the mobilization of private financing as well as general delays by GoS in the implementation of several project-related activities. The mobilization of such private financing is underway and IFC Board approval was received for the same on September 30, 2010, in the amount of EURO 22.5 million in the form of senior and subordinated long-term debt facilities. PROPOSED CHANGES 7. The GoS revised the compensation scheme (set forth in the Addendum-3 to the Pikine-Keur Massar RAP) based on the fact that PAPs indicated strong preferences for cash compensation and on the delayed availability of housing in the RS. This implies that less houses would be constructed in the planned RS in Tivaouane Peulh, while more cash will be needed for cash compensation payments and transitional allowances (see Annex A for detailed changes in the RAP Addendum-3). 8. Under the initial RAP (2006), it was anticipated that 2,000 houses were to be built at the Tivaouane Peulh RS. However, it is expected that less than 200 houses may be required to be built. These are preliminary estimates of houses since PAPs have not yet indicated their final preferences. Nevertheless, the possibility that significant additional houses are requested is low. 9. The proposed changes in the compensation scheme has the following financial implications: (i) a potential financing gap in the total available cash for compensation budgeted by the GoS under the Pikine-Keur Massar RAP (2006) and updated in October 2010, and (ii) a reduced budget for the construction of housing on the RS under Component B of the Project. 10. The GoS is requesting (see attached letter dated October 7, 2010) a reallocation of credit proceeds, to fill the potential funding gap, by reallocating part of the funds under Component B initially planned for the construction of houses in the Tivaouane Peulh RS. This will allow part of the cash compensation under the RAP for Section 3 Diamniadio- Keur Massar to be financed through the Credit for up to a maximum amount of US$21.5 million. The remainder shall be covered by Government funds. 11. The above-mentioned changes to the composition and timing of compensation to PAPs in the Pikine-Keur Massar section will require the following amendments to the FA: Amend the FA in order to allow for IDA financing of cash compensation under Component B of the project, as described above. Further amend the FA to reflect the changed resettlement implementation scheme which (i) provides more time for the GoS to finalize the RS, and therefore close 6

11 the neighboring landfill (Mbeubeuss) and open the replacement landfill (Sindia); and (ii) requires the GoS to secure its portion of the cash compensation necessary under the RAP for Segment 3 of the DDTH (Diamniadio-Keur Massar) earlier than initially anticipated and in an increased amount. More specifically, the following detailed changes have to be made to the FA: The dated covenant related to the securing of funds in a segregated account for the cash compensation of PAPs of Pikine-Keur Massar section shall be modified to reflect the changes in the RAP implementation as follows: CFAF 18 billion shall be paid or secured in a segregated account no later than April 30, The dated covenant related to the closing of the Mbeubeuss dump site shall be modified to reflect that it shall be closed no later than December 2011, and that its final closing plan shall be adopted no later than March The dated covenant related to the availability of Government subsidy for the concession contract shall be amended to reflect the revised amounts that have been negotiated with the concessionaire. A new dated covenant shall be introduced that requires the Government to avail a functional resettlement site no later than June 30,

12 ANNEX A SENEGAL: DAKAR DIAMNIADO TOLL HIGHWAY PROJECT Summary of Changes to Compensation and Urban Renewal Program in the Resettlement Site for the Pikine-Keur Massar RAP Addendum-3 Implementation 1. The GoS (APIX) submitted Addendum-3 to the RAP (2006) proposing: (i) changes in the number of project-affected persons (PAPs) following a new census completed in August 2010; (ii) adjustments to the compensation rates presented in 2006 to reflect inflation and current land market prices; and (iii) increases in the amount of cash compensation, based on initial PAPs preferences for cash (compared to replacement land and housing units). 2. Changes in number of project-affected persons (PAPs). The updated number of PAPs is summarized in the table (below). Community No. of Institutional Structures* No. of Affected Residential Units Homeowners Renters No. of Affected Business Units Business No. of Affected Agricultural Land Agricultural Land TOTAL Guinaw Rail Sud ,764 Guinaw Raill Nord Thiaroye Gare Tivaouane Diacksao Diamaguene Sicap Mbao ,213 Overlapping areas** TOTAL 13 1,839 2,153 1, ,163 8

13 3. The compensation package consists of two parts: Adjustments in the Compensation Rates (following current market pricing and replacement costs). The RAP Addendum-3 proposed the following breakdown for cash compensation: (a) Land. A Land Pricing Market Survey was completed in 2005 and updated in August This was the basis for the average square meter unit pricing that GoS applied in the previous sections (1,2, and 4) as follows: (i) CFAF 30,000 (increased to 40,000) for titled land (formal titles); (ii) CFAF 28,000 for titled businesses; (iii) CFAF 15,000 (increased to CFAF 17,000) for non-titled land (informal titles); and (iv) CFAF 23,000 (increased to CFAF 28,000) based on average market price for land with some less official titling. These land valuation rates were approved by GoS Ad hoc Committee and disclosed to PAPs by the Operational Unit (APIX) during the land and asset valuation process. (b) Houses, buildings (businesses), and crops/trees as proposed in the RAP Addendum-3, are estimated on a case-by-case basis and in the presence of the owner/ occupant. The GoS uses a standard form for documenting the valuation that is signed by the valuer and the owner/occupant. (c) Moving allowance is determined on the basis of the type of structures and assets to be moved. However, the actual demolition and clearance costs will be covered by the concessionaire. In the previous segments, this was done by the Operational Unit (APIX) and a similar documentation process has been applied. (d) Transition allowance provided in RAP Addendum-3 would be calculated as equivalent to 6 month rental costs in the area. From the above: Total Cash Compensation = (a) Land + (b) Houses, buildings, crops/trees + (c) Moving allowance + (d) Transition allowance. This is the proposed basic compensation package. It is anticipated that close to 98 percent of PAPs will opt for cash compensation (based on the NGO s preliminary "expression of interest ). Compensation Enhancements Such enhancements were not offered in the previous sections (1, 2, and 4) since GoS did not have similar urban renewal programs for these areas. These enhancements are voluntary, and PAPs are given several incentives which are income-based to ensure that the program is just and equitable. 9

14 The following will be offered to PAPs by APIX: (i) Free land and housing to vulnerable PAPs. Vulnerable PAPs will be given the option of relocation in the resettlement site with free and titled land and low-cost housing. If they choose this option, PAPs households will receive cash, free land and low cost housing. (ii) Free land and housing at-cost. GoS will offer titled land + similar model, low-cost houses to PAPs with total value of compensation less than 5 million CFAF. (iii) Land at 50% cost + housing. Titled land will be offered by GoS at 50% cost for PAPs with total value of compensation between 5 and 10 million CFAF. They can also select from 4 different types of houses (3 to 6 bedrooms) at different prices. (iv) Land at full cost + housing. Titled land at full cost + housing (by type) will be offered to PAPs with total value of compensation higher than CFAF 10 million. GoS will provide transitional allowance equivalent to the cost of rental until the houses are constructed for PAPs who opt for land and housing in the resettlement site. 4. Revised RAP (Addendum-3) budget. A new budget reflects changes as proposed in the above compensation package. This breakdown excludes the original costs estimated for the resettlement site construction. Table 1: Revised RAP (Addendum-3) Number of PAPs Allocation in CFAF Houses 1,814 19,296,169,113 Private titled land 25 6,741,452,000 Agricultural plots ,094,550 Subtotal Right Of Way Acquisition 1,890 26,167,715,663 Negotiation margine and contingences (10%) 2,616,771,566 Total Right Of Way Acquisition 28,784,487,229 10

15 Table 2: Overall Budget of RAP Addendum (CFAF) Number of PAPs Allocation in CFAF Total Right of way acquisition 1,890 28,784,487,229 Collective Infrastructure (mosques, churches, schools, etc.) ,617,892 Businesses 1, ,345,812 Relocation assistance for renters 2, ,358,453 Loss of rental income 223,083,300 Provision to reduce the moving delay 326,430,000 Moving allowance 90,675,000 Social Fund (3%) 863,534,617 Communication plan (NGOs 1%) 287,844,872 OTHER EXPENSES 3,791,889,946 TOTAL PREVISIONAL RAP BUDGET 32,576,377,175 11