RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE Report No: ZR EMERGENCY LIVING CONDITIONS IMPROVEMENT SUPPORT PROJECT GRANT H164 APPROVED BY THE BOARD ON MAY 26, 2005 AND EMERGENCY ECONOMIC AND SOCIAL REUNIFICATION GRANT H064 AND CREDIT 3824 APPROVED BY THE BOARD ON SEPTEMBER 11, 2003 TO THE DEMOCRATIC REPUBLIC OF CONGO (March 30, 2011) 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 BCECO CPPR DRC ESIA PDO PRO ROUTES PUAACV PUSPRES SDR SGRU Bureau Central de Coordination Country Program Portfolio Review Democratic Republic of Congo Environmental and Social Impact Assessment Project Development Objective High-Priority Roads Reopening and Maintenance Project Projet d urgence d appui à l amélioration des conditions de vie (Emergency Living Conditions Improvement Support Project) Projet d urgence du Soutien au Processus de Réunification Economique et Sociale (Emergency Economic and Social Reunification Project) Special Drawing Rights Société de Gestion et de Réhabilitation Urbaine Unité de Coordination de Projets (Project Coordination Unit) Regional Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader: Obiageli K. Ezekwesili Marie Francoise Marie-Nelly Jamal Saghir Junaid Kamal Ahmad Mahine Diop

3 CONGO, DEMOCRATIC REPUBLIC OF EMERGENCY LIVING CONDITIONS IMPROVEMENT SUPPORT PROJECT P CONTENTS Page A. SUMMARY... 1 B. PROJECT STATUS... 3 C. PROPOSED CHANGES... 8 D. APPRAISAL SUMMARY ANNEX 1: RESULTS FRAMEWORK AND MONITORING ANNEX 2: DETAILED IMPLEMENTATION SCHEDULE... 27

4 DEMOCRATIC REPUBLIC OF CONGO (DRC) EMERGENCY LIVING CONDITIONS IMPROVEMENT SUPPORT PROJECT (PUAACV) AND EMERGENCY ECONOMIC AND SOCIAL REUNIFICATION PROJECT (PUSPRES) RESTRUCTURING PAPER SUMMARY This Restructuring Paper seeks the approval of the Country Director (AFCC2) to introduce the following changes in the DRC Emergency Living Conditions Improvement Support Project (PUAACV) (Grant H164) and the DRC Emergency Economic and Social Reunification Project (PUSPRES) (Credit 3824 and Grant H064). 1. The objective of the PUAACV is to assist the Recipient in improving the living conditions of the populations by strengthening the socio-economic situation in key urban areas as well as in two isolated regions. 2. PUAACV, as restructured in 2010, includes the following two components : Component A: Support to medium urban centers - (US$10 million) is aimed at restoring certain basic services in 18 urban centers located in the provinces of Bas Congo, Bandundu, Equateur, Kasaï Oriental, Kasaï Occidental and Katanga. Component B: Support to provincial capitals - (US$27 million) is aimed at kick-starting economic development in the cities of Bandundu, Kananga, Kikwit, Lubumbashi, Matadi, Mbandaka and Mbuji-Mayi by supporting the rehabilitation of urban infrastructure and provision of equipment. 3. The PUAACV Grant was approved by the Board on May 26, 2005, for a total amount of SDR 53.9 million (about US$82 million equivalent), and declared effective on September 23, The project was restructured in 2010 and extended for one (1) year to modify the scope and design and allow the completion of the activities. 4. The objectives of the PUSPRES are (i) to assist the Recipient in its efforts to economically and socially reunify the Eastern provinces to the rest of the country; and (ii) to increase access to and use by the local population of basic infrastructure and social services in the provinces of Orientale, Maniema, Nord Kivu, Sud Kivu, Nord Equateur, Nord Katanga, Nord Kasai Oriental. 1

5 5. PUSPRES, as restructured in 2008, includes: Component A: Balance of Payments Support (US$50 million) providing budget support for critical imports has been fully disbursed. Component B: Institutional Strengthening Component (US$15 million) which aims to complement existing capacity enhancement programs. Component C: Infrastructure Rehabilitation Component (US$90 million) which aims at rehabilitating 1,779 kilometers o f the interurban road network. Component D: Urban Rehabilitation Component (US$30 million) aims to help activate adequate implementation mechanisms for rehabilitation o f local infrastructure and service delivery in urban areas. Component E: Community Empowerment Component (US$l0 million) aimed at financing demand-based sub-projects in several remote rural locations. 6. The PUSPRES was approved by the Board on September 11, 2003, for a Credit amount of SDR 35.7 million (about US$50 million equivalent) and a Grant amount of SDR 117 million (about 164 million equivalent), and declared effective on December 5, It was restructured in 2008 to improve implementation effectiveness, meet the sector s development financing needs, and strengthen the overall sector performance in DRC. 7. Both projects are managed by the same Project Coordination Unit (UCoP) located under the Ministry of Planning and all components are entrusted to implementing agencies. 8. The main reason for the proposed restructuring is to respond to the changing client needs, whereby certain activities are no longer a priority for the Government of DRC, which requested the Bank to focus on a set of key activities under PUSPRES that face a financing gap. A recommendation was made during the April 2010 supervision mission to prepare an additional financing to fill the financing gap. The additional financing option could not be pursued because of lack of IDA funding. Subsequently, other options were explored, and the option of using the ongoing PUAACV to finance the remaining activities was retained. Specifically, the restructuring will (i) drop a number of activities under Components A and B of PUAACV, which are no longer considered a priority by the government and (ii) transfer a set of activities that face a financing gap from PUSPRES to PUAACV. In this regard, the Resettlement Action Plan (RAP) prepared by the Recipient under the PUSPRES to address some pedestrian safety issues recorded at the exit of Bukavu and Kamituga due to over speeding drivers and very narrow road shoulders will be financed under PUAACV. 9. The proposed changes will not have a major effect on the original economic and social aspects of the Project and the PDO will not change as the transferred activities from PUSPRES to PUAACV fall within the scope of PUAACV. The environmental category will remain as B, and the restructuring will not involve any exceptions to Bank policies. 2

6 PROJECT STATUS PUAACV 10. Overall Implementation Progress and Progress towards achievement of the PDO are currently rated Moderately Unsatisfactory, mainly due to delays in the start-up of activities financed under Component B. The project was restructured in 2010 to modify its scope and design by dropping activities associated with two components. The unused funds which resulted from the restructuring were reallocated to Components A and B. During the supervision mission of October 2010, the procurement plans, as well as the disbursement plan, were updated and an action plan was agreed upon with the Government to help improve the ratings. Due to increased efforts and compliance with these plans, the DO and IP ratings are expected to be upgraded from moderately unsatisfactory to moderately satisfactory during the April 2011 supervision mission. 11. In spite of challenging implementation conditions, results are already visible on the ground. The reopening of roads in the Equateur Province contributed to facilitating the transportation of goods and passengers. People who were secluded for several years now have better access to the rest of the country. The average travel time in the targeted areas has been drastically reduced. Before the project, it took no less than one day by truck to cover 115 kilometers (Gemena-Akula), but today, three hours are enough. On the Lubumbashi-Kasenga road, the monthly tonnage rose from 272 tons in July 2006 to 33,647 tons in January In the education sector, there has been an average increase of 30 percent in the number of students registered in the rehabilitated schools. The attendance rate at the rehabilitated health centers has also doubled. In the water sector, access to potable water has increased by 25 percent in the targeted cities. The status of each component is presented below: Component A (US$10 million equivalent) is aimed at restoring certain basic services in 18 urban centers located in the provinces of Bas Congo, Bandundu, Equateur, Kasaï Oriental, Kasaï Occidental and Katanga. As part of the project restructuring the component amount has been increased from SDR6.6 million to SDR10 million (US$15.2 million equivalent). All planned activities under this component have been completed and the facilities are operational. The final implementation report and the documentary of the component are expected to be completed by the end of March Additional activities to be implemented under the component as a result of the restructuring will be managed by BCECO. These activities include those identified as part of the priority works under this component but could not be financed because of lack of resources. The completed activities cover the education and health sectors. 15 health centers and 35 schools have been rehabilitated or constructed and two markets have been rehabilitated. The impact is visible with populations having access to these facilities. The disbursement rate of the component is 66 percent and implementation progress is rated Satisfactory. Component B (US$31.5 million equivalent) is aimed at kick-starting economic development in the cities of Bandundu, Kananga, Kikwit, Lubumbashi, Matadi, Mbandaka and Mbuji-Mayi by supporting the rehabilitation of urban infrastructure and provision of equipment. Implementation of Component B was 3

7 delayed because recruitment of the Implementing Agency fell behind schedule. As part of the project restructuring the component amount has been increased to SDR20.6 million (US$31.35 million equivalent). After major start-up delays, implementation of the component has picked up and is now on track. Over US$20.2 million has been committed and US$15.4 million (76%) has been disbursed. Implementation progress is rated moderately Satisfactory. 12. During the supervision mission of October 2010, the Bank and the government concluded that a number of activities were no longer considered as a priority by the government because localities where these activities are anticipated to be implemented have already benefited critical investments from the project. These activities are: rehabilitation of urban roads in Matadi, water supply works in Mbuji Mayi and the supply of IT equipment for some of the schools rehabilitated. The cancellation of these activities will produce a US$6.1 million 1 cost savings, which can be used to fill the financing gap faced by PUSPRES and strengthen the impact and sustainability of its remaining ongoing activities. These arrangements were agreed with the Government during the October 2010 Bank s supervision mission. The cancellation of activities will not affect the PDO, and will require very few changes to the results framework of the project. 13. Environmental and Social safeguards. Six World Bank safeguard policies were triggered during project preparation and the pertaining mitigation measures identified. The triggered policies are: 4.01 (Environmental Assessment), 4.04 (Natural Habitats), 4.11 (Cultural Property), 4.12 (Involuntary Resettlement), 4.20 (Indigenous Peoples), and 4.36 (Forests). Because of the emergency status of the project, the Environmental and Social Impact Assessment (ESIA) were prepared during the first six months of project implementation. The Environmental Impact Assessment for Component C and the Environmental and Social management Framework for Components A, B and D required by OP/BP 4.01, the Resettlement Policy Framework (RPF), required by OP/BP 4.12 and the Indigenous Peoples Plan, required by OP/BP 4.20 were prepared and were disclosed in DRC (April 26, 2006) and at the Bank InfoShop (March 16, 2006). Copies were disseminated to NGOs, academics, Pygmy associations, and news agencies. An international environmental and social consulting firm has been hired to assist and train UCoP staff, contractors and the Bureau de Control on the areas of environmental and social impact and management, as well as Bank safeguards procedures and requirements. 14. With the closing of Component C during the first restructuring of PUAACV, the risks associated with its environmental safeguards have been significantly reduced. As a result, the Project team has upgraded the safeguard rating from Moderately Satisfactory to Satisfactory. 15. Financial Management: A detailed financial management supervision mission, held in October 2010, confirmed a satisfactory rating. As a result of the recruitment of an internal auditor and a sound control environment (qualified fiduciary staff, and adequate manual of procedures supported by a computerized accounting system), the project complies with financial management requirements such as timely submission of quarterly 1 Representing 7.4 percent of the total funds of the project 4

8 unaudited Interim Financial Reports and annual audit reports. The latest audit opinion was qualified, although no accountability issues were flagged. The government has established an action plan acceptable by the Bank to address the issues raised by the last audit report. There are no outstanding audit reports for PUAACV. 16. Procurement: Most of the activities have been handled through BCECO and SGRU as implementing agencies. A few activities were directly handled by UCoP and procurement activities have been closely monitored. The project team in UCoP includes a qualified and experienced procurement specialist who has access to the appropriate tools and knowledge that enables him to carry out his functions effectively. The procurement plan has been updated as required during implementation and there is a good filing system in place for bidding documents. Procurement under this project is rated Moderately Satisfactory due mainly to delays in the recruitment of the Implementing Agency and the processing of procurement of works under Component B. The quality of the bidding documents and bid evaluation reports are being improved and procurement rating is expected to be upgraded within the next three months. 17. Legal covenants: All legal covenants have been complied with. PROJECT STATUS PUSPRES 18. Both PDO and IP ratings have consistently been satisfactory. Out of the seven PDO level indicators, six targets have already been achieved, and the project performance for the remaining one indicate that it will be achieved, upon completion of the works. 19. In spite of the challenging implementation environment 2 results have greatly contributed to improving the living conditions in DRC. The project has been instrumental in helping the country achieve the reunification of its economic activities and has supported social reunification. The project has also contributed to jumpstarting the economy in the eastern part of the country which had been cut off from the other parts of DRC for several years. Thanks to the rehabilitation of the sections of road Kisangani Beni (750 km), secluded inhabitants from the eastern part of the country can now travel by car from Kisangani to Beni for the first time since 1998 when only bicycles and motorcycles could be used. Transportation costs have been reduced by 40 percent as a result of substantial time savings recorded in the movement of people and goods. Goods and services are now available in areas like Bafwasende that could not have benefited from these services seven years ago. The rehabilitation of urban infrastructure has facilitated access to basic social services (education, health) in many urban centers (Kisangani, Bukavu, Kindu, Goma) as well as in small urban centers (Bumba, Butembo, Isiro, Kalima, Kalemie, Kasongo, Lusambo, Uvira). More than one million people have access to improved health facilities while more than 69,000 pupils have seen their learning conditions improve. The project has financed the new procurement code which 2 The difficult implementation environment was due to: (i) huge logistical problems encountered in moving heavy equipment, and acquiring goods and construction materials;(ii) remote location of project sites and size of the country;(iii) weak supervisory capacity from executing agencies;(iv) cost overruns due to the lack of detailed technical studies as a result of the poor security conditions prevailing in the eastern part of the country during project preparation and ;(v) weak local capacity in civil engineering activities. 5

9 will improve procurement processes in the country and contribute to enhanced governance. Addressing the broader national challenge of sustainable forest management, the project financed an international Independent Observer to assist Government in reviewing the legality of all timber concessions. The legal review of the logging concessions by the Inter-Ministerial Committee was completed in National NGOs, Independent Observers, local forest communities and indigenous people fully participated in all relevant sessions. Out of 156 concessions submitted for the review, 65 were deemed ready for legal conversion, 75 were deemed illegal and proposed for cancellation, whereas 16 were the subject of specific observations, asking the government to take a decision. Following 25 field inspection missions completed in 2010, covering all the 91 concessions not deemed ready for legal conversion, the government announced its final decision in January In the final reckoning, 80 out of 156 concessions were deemed legal and therefore converted. These 80 concessions now need to negotiate Social Responsibility Contracts, mandated by law, with local communities and indigenous peoples affected by them, in order to retain their titles. Overall, the area under concession was reduced from over 25 million to less than 13 million hectares. The project is facing a financial gap for an amount of US$5.7 million to complete the ongoing works and finance additional activities identified during the supervision mission of May The main objective of restructuring the two projects is to address this gap. 20. Environmental and Social Safeguards. Overall safeguard compliance is rated Satisfactory. Safeguards rating is B and the project is on the corporate risk list because of the reputational risk of non-compliance in a sensitive social and environmental context. Six World Bank safeguard policies were triggered during project preparation and the pertaining mitigation measures identified. The triggered policies are: 4.01 (Environmental Assessment), 4.04 (Natural Habitats), 4.11 (Cultural Property), 4.12 (Involuntary Resettlement), 4.20 (Indigenous Peoples), and 4.36 (Forests). Because of the emergency status of the project, the Environmental and Social Impact Assessment (ESIA) had to be prepared within the first six months of project effectiveness. The Environmental Impact Assessment (EIA) for Component C of the project and the Environmental and Social Management Framework for Component D and E of the project were disclosed in DRC on March 26, 2006, and at the Bank InfoShop on February 3, The Resettlement Policy Framework (RPF) of the project was disclosed incountry on September 27, 2007, and in the Infoshop on September 26, The Indigenous Peoples Plan (IPP) of the project was disclosed in DRC on September 27, 2007 and in the Infoshop on September 26, These safeguards documents are now being used by the project. Copies were disseminated to NGOs, academics, Pygmy associations, and news agencies. An international environmental and social consulting firm has been hired to assist and train UCoP staff, the contractors and the Bureau de Control in the areas of environmental and social impact and management as well as Bank safeguards, in terms of procedures and requirements. The environmental and social aspects of the project have improved since the Inspection Panel investigation 3 which had 3 On December 1, 2005, the Inspection Panel registered a Request for Inspection, IPN Request RQ05/2 concerning the Democratic Republic of Congo (DRC) for two operations financed by the International Development Association (IDA): (i) Emergency Economic and Social Reunification Support Project (ii) Transitional Support for Economic Recovery Credit. The Inspection Panel request alleged inadequate 6

10 identified two major risks. One related to the Indigenous Peoples and the second to the Okapi Wildlife Reserve. The implementation of the Action Plan for the Indigenous Peoples is objectively helping its population improve their general living conditions. Due to the activities carried out in the health sector, more than 3,000 Indigenous Peoples have access to better quality of health care. In the area of education, due to the rehabilitation of the schools, 126 Indigenous schoolchildren have seen their conditions of studies improved. Concerning the activities related to the improvement of the citizenship of the Indigenous Peoples, several workshops were organized to reinforce the dialogue and peaceful coexistence between the Indigenous Peoples and the Bantus, leading to the signature of an Agreements Protocol. 21. To address the development of Indigenous groups in DRC in a more strategic manner, the Bank has supported the preparation of a Strategic Framework for the Preparation of an Indigenous Peoples Development Program, which was completed in December Important actions have been funded by the project to help the Congolese Institute for Nature Conservation (ICCN) better protect the Okapi Wildlife Reserve. These include support to ICCN for radios, vehicles, guard posts, and operating costs. The Bank team is closely monitoring safeguards issues related to the project and will ensure complies with Bank safeguard requirement. The RN2 road in Bukavu has been rehabilitated by the project. Although no displacement or asset losses took place as a result of the rehabilitation, the road shoulders have been considerably reduced to the point that practically no space was left between the road, homes and businesses, putting the population at an extremely high risk of traffic accidents. To correct the situation, the recipient has prepared an Ex-Post RAP. The RAP was completed, reviewed and cleared on August 3, Financial Management performance is rated Satisfactory: The implementing entities are compliant with the Bank s financial management requirements; and there are no overdue audit reports and interim financial reports from these entities. The financial statements of the PIU came back qualified, although no accountability issues were flagged. The main issues raised are; (i) unpaid payroll taxes; (ii) existence of employees advance without supportive documentation; and (iii) status of the advance payment to the Tanswansea Company whose contract has been terminated and is pending arbitration at the ICC in Paris between the company and DRC. Depending on the outcome of the Indigenous Peoples consultation, lack of EA and forestry risks. Roads through Pygmy areas & forestry legal reviews both require local participation; but country institutional capacity is weak. The investigation was authorized on February 28, On August 31, 2007, the Panel issued its report outlining the findings of the investigation. Management has prepared an Action Plan that addresses follow-up at the country level and within the Africa Region. The Region is committed to strengthening safeguards quality control to better monitor and manages environmental and social risks, as well as undertaking more consultations so that the concerns of project-affected persons are adequately considered. The Action Plan includes ongoing and future efforts for dealing with Indigenous Peoples in the Congo Basin, improving forestry sector governance and timber tracking systems nation-wide, and strengthening the presence of the forest administration at provincial and territorial level (through the Forest and Nature Conservation Project (PFCN) that became effective in September 2009), and continuing outreach about Bank sector work and lending. The first progress report was submitted to the Inspection Panel and the Executive Directors in March 2009.The last progress report was submitted to Management in March

11 resolution of dispute, the advance could be reimbursed to IDA. The government has established an action plan acceptable by the Bank to address these issues. 23. Procurement: Most of the activities have been handled through BCECO, MODRU, MODAC and UNOPS as Implementing Agencies. A few activities were directly handled by and procurement activities have been closely monitored. The project team in includes a qualified and experienced procurement specialist who has access to the appropriate tools and knowledge that enables him to carry out his functions effectively. The procurement plan has been updated as required during implementation and there is a good filing system in place for bidding documents. Procurement under this project is rated Satisfactory. The ongoing contracts under PUSPRES that cannot be paid due to the financing gap will be terminated on a consensual manner and new contracts will be signed under PUAACV to allow the completion of the works. 24. Legal covenants: All legal covenants have been complied with. PROPOSED CHANGES Changes in project scope and design 25. The proposed restructuring will involve (i) dropping a number of activities under Components A and B of PUAACV, which are no longer considered a priority by the government and (ii) transferring a set of activities that face a financing gap from PUSPRES to PUAACV. (i) Activities to be dropped from PUAACV: Urban roads in Matadi Water supply in Mbuji-Mayi Supply of IT equipment in some rehabilitated schools (ii) Activities to be transferred from PUSPRES to PUAACV: Implementation of the recommendations/activities identified in the Resettlement Action Plan (RAP) prepared by the Recipient (US$3 million) Works related to water supply in Goma, Bukavu and Kindu and power supply in Kindu (US$1.2 million). Extension of water supply networks in Bukavu, Goma and Kindu (US$ 800,000). Implementation of technical and financial audits, as well as studies for the implementation completion report of the project (US$290,000) Remaining project implementation costs (US$350,000) 26. The list of localities targeted under Components A and B will be slightly modified to include localities in the Nord and Sud Kivu where the proposed activities to be funded are located. These localities are for Component A: Kamituga, and for Component B: Bukavu Goma and Kindu. In this regard, the description of Components A and B will be modified as follows: 8

12 Component A: the Medium urban Centers targeted in this component will include as described in Schedule 2 the province of Sud Kivu with the city of Kamituga. Component B: There is need to add the cities of Bukavu, Goma and Kindu in the list of cities targeted by the component. 27. Implementation arrangements under Components A and B will be slightly modified to make responsible for the implementation of a number of activities in addition to the Urban Rehabilitation Management Firm and BCECO (Implementing Agencies). UCoP is the implementing agency for the ongoing activities under PUSPRES with UNOPS as the procurement agent. For continuity, it is critical that UCoP remains responsible for the implementation of these activities. Changes in outcome indicators and targets 28. The results framework of PUSPRES and PUAACV will be revised to i) better capture all the results the project is planning to achieve after the restructuring, and ii) adjust targets according to the revisions made. For further details please refer to Annex 1. Safeguards 29. This restructuring will not involve any additional categories of civil works beyond those originally planned, but will rather allow the planned works to be completed through the reallocation of Project resources. Consequently no change is required to the safeguard measures already adopted by the Project. 30. The Environmental and Social Management Framework (ESMF) for Components A, B and D required by OP/BP 4.01, the Resettlement Policy Framework (RPF), required by OP/BP 4.12 and the Indigenous Peoples Plan, required by OP/BP 4.20 were prepared and were disclosed in DRC (April 26, 2006) and at the Bank InfoShop (March 16, 2006). The ESMF prepared for PUSPRES includes mitigation measures for the rehabilitation of water and electricity supply systems. These have been applied by the Project implementing agency in supervising the works related to water supply in Goma, Bukavu and Kindu and power supply in Kindu. Bank supervision has confirmed that there are no significant environmental or social impacts associated with these works, but also noted that the mitigation measures included in the ESMF have not been incorporated into the contracts for these works. This will be corrected through the new contracts to be signed under the restructured PUAACV. 31. The RN2 road in Bukavu has been rehabilitated under PUSPRES. Although no displacement or asset losses took place as a result of the rehabilitation, the road shoulders have been considerably reduced to the point that practically no space was left between the road, homes and businesses, putting the population at an extremely high risk of traffic accidents. To correct the situation, the recipient has prepared an ex-post RAP. The RAP was completed, reviewed and cleared on August 3, 2010, and will be implemented under the restructured PUAACV. 9

13 Financing 32. Disbursement arrangements. Existing disbursement arrangements will be maintained. 33. Sustainability. Focus on sustainability is an important element taken into account in the project restructuring. On urban infrastructure an agreement was reached during the last supervision mission with the government to gradually transfer completed infrastructure to the sectoral ministries. Lastly, the Governance Capacity Enhancement Project, which became effective after the PUAACV, aimed at enhancing transparency and efficiency in central and sub-national public finance and human resource management, establishing and consolidating an equitable resource sharing mechanism between central and sub-national government, is paving the way for the sustainability of investments carried out in the Provinces. Follow-up missions will continue to ensure that all activities funded under the project are receiving appropriate funding for their O&M and are being transferred to the appropriated administration to ensure their sustainability. Closing Date of PUAACV 34. The work program under the restructured Project will not be completed by the current Closing Date of September 30, Completing Components A and B as well as the transferred activities under PUSPRES will require an additional 5 months as discussions with the government to find an alternative solution to the additional financing and agree upon with the Implementing agencies regarding the amendments to their current contracts with UCoP took some time. Consequently, an extension of the Closing Date for Parts A, B and E of the Project to February 29, 2012 is proposed. The arrangements above were agreed upon between the Bank and the Government during the supervision mission of October Furthermore, the Recipient submitted an action plan acceptable to the Bank to complete all activities within the agreed timeframe (as detailed in Annex 3). APPRAISAL SUMMARY 35. Technical appraisal: The activities to be funded are similar to those funded under Components A and B (education, health, water, electricity and economic infrastructure). These activities are designed to address issues recorded in the implementation of the last ongoing activities under PUSPRES. 36. As of March 29, 2011, the total undisbursed financing under PUSPRES is about US$1.14 million which will be used to complete the rehabilitation of the Ruzizi Power plant. This activity is critical for the supply of electricity for the people of Bukavu (600,000). Once completed, this investment will enable the city to have reliable electricity supply and jumpstart economic activities. Once this amount is disbursed, the project will be out of funds, while there are still pending activities. The financial needs to properly close this project are estimated at US$5.7 million. 10

14 37. The main causes of the financing gap are: (i) Unanticipated activities associated with the RAP and water supply network extensions: (a) The mitigation measures recommended by the RAP as a result of the rehabilitation of the Bukavu-Kamituga access road (closed to traffic for fifteen years) to address pedestrian safety issues, which were not anticipated in the design of the works. (b) Additional activities identified during the May 2010 supervision mission to strengthen investments made in the water supply sector in Bukavu, Goma and Kindu. Ongoing works are limited to the rehabilitation of the existing network but do not allow the population in the project areas to fully benefit from these investments. An extension of the water supply network to these areas in Bukavu, Goma and Kindu is therefore needed. (c) The cost of implementing the remaining activities. Delays in the implementation of the ongoing works, will lead to the revision of the contract of the Implementing Agency (UNOPS) for an amount of US$350,000. The implementation Agency is not responsible for these delays. (ii) Over-commitments due to the poor monitoring by UCoP (the Project Implementation Unit) of the depreciation of the USD against the SDR 4 leading to difficulties in paying the balance of ongoing contracts and in financing technical and financial audits of the project, as well as studies for the implementation completion report. For these activities all the technical studies are available as some of them are underway. 38. Benefits: As restructured, the PUAACV will strengthen the linkage between the achievements on the ground and the updated results framework. The project is expected to deliver significant social benefits by improving the living and environmental conditions of the populations living in the targeted areas and better access to water and electricity services for the populations of Kindu, Goma and Bukavu. 39. Risks: The overall risk rating for PUAACV remains High. Some risks identified during the preparation of the project (such as price risks, resulting from the absence of a functioning market for many goods and services in some isolated areas, delays in implementation) have materialized. The preparation of the project restructuring paper has been an opportunity to review and strengthen the mitigation measures corresponding to the risks. Therefore, as these risks still exist, it is proposed that the overall risk associated with the restructuring be rated as High. The main risks that could jeopardize the achievement of the restructured Project are: (i) the possible delays in completing the activities financed under Components A and B as a result of weak response from the construction industry and/or cost overruns; and (ii) the fiduciary risk which remains high in DRC. To mitigate these risks, the following mitigation measures will be implemented and closely monitored): (i) Closely monitor activities to ensure that works are completed within the agreed timeframe. A detailed project implementation schedule (PIS), 4 At project restructuring stage 1SDR=1.57 US$. As of today, 1SDR=1.55US$ 11

15 (ii) (iii) (iv) attached as Annex 2, was prepared and agreed upon with the government, confirming that remaining activities should be completed by December The Project Procurement Plan was updated accordingly. Include clear terms regarding contract renegotiations, fines in case of delays and indexation clauses to palliate the risks of oil or construction materials price increase. Make sufficient provisions to take into account physical and financial contingencies. Ensure closer supervision by the Bank and increase supervision missions and field visits by UCoP. 12

16 ANNEX 1 Results Framework and Monitoring DRC: PUSPRES Revisions to the Results Framework PDO Current (as per Proposed restructuring PP 2008) Assist the Recipient in its efforts to economically and socially reunify the Eastern provinces to the rest of the country; and increase access to infrastructure services in the provinces of Orientale, Maniema, Nord Kivu, Sud Kivu, Nord Equateur, Nord Katanga, Nord Kasai Oriental PDO indicators Current (as per Proposed change restructuring PP 2008) Number of people in the previously isolated provinces having access to 217km of rehabilitated sections of RN2 and 750km of RN4; Percentage increase of fiscal revenues collected in the reunified provinces; Increased access to water supply in areas benefiting from water services; Share of Rural Population with Access to an All-Season Road (%) [Supplemental information: Number of rural people with access to an all-season road] No change Increased access to health facilities in selected communities (urban centers); increase) Increased access to improved school facilities in selected communities; Reduction of the percentage To be dropped People in urban/rural areas provided with access to Improved Water Sources under the Project (number) People with access to a basic package of health, nutrition, or population services (percent Pupils with access to improved school facilities in targeted areas (number) Comments/ Rationale for Change No need to change the PDO. A first change was made during project restructuring Alignment with CORE indicator wording Alignment with CORE indicator wording Alignment with CORE indicator wording Indicator difficult to 13

17 Revisions to the Results Framework of learning time loss due to bad weather at selected schools Number of communities successfully implementing community activities in the isolated rural areas. Intermediate Results indicators Current (as per restructuring PP 2008) The budget support has been fully disbursed. Legal review of the logging concessions completed. New procurement code adopted by the government. PRSP adopted by the Government. Average speed of 25 km/hour on the rehabilitated sections of RN2 and RN4. At least 80% of the rehabilitated urban infrastructure are operational At least 500 communities in eligible areas have benefited from Microgrants to finance community activities. No change Direct project beneficiaries (number), of which female (percentage) Proposed change No change No change No change No change No change Rehabilitated urban infrastructure (health centers, schools, etc) are operational one year after completion (%) No change Health Health facilities constructed, renovated, and/or equipped (number) Education: Additional classrooms built or Comments/ Rationale for Change measure. Core Indicator 14

18 Revisions to the Results Framework rehabilitated (number) Schools equipped with materials and/or furniture (number) Electricity: Household electricity connections provided under the project (number) Transmission and distribution lines constructed or rehabilitated under the project (km) Water Improved community water points constructed or rehabilitated under the project (number) Comments/ Rationale for Change Core indicator Core indicators Core indicators Distribution network constructed/ rehabilitated (km) Roads Roads in Good and Fair Condition as a Share of Total Classified Roads (percentage) Roads Rehabilitated (km) Core indicators 15

19 Project Development Objective (PDO): Core REVISED PROJECT RESULTS FRAMEWORK - PUSPRES Assist the Borrower in its efforts to economically and socially reunify the Eastern provinces to the rest of the country; and increase access to infrastructure services in the provinces of Orientale, Maniema, Nord Kivu, Sud Kivu, Nord Equateur, Nord Katanga, Nord Kasai Oriental Baseline PDO Level Results Indicators Unit of Original Progress Cumulative Responsibili Data Source/ Measur Project To Date Target Values Frequency ty for Data Methodology ement Start (2010) 2011 Collection Comments (2004) 1. Share of Rural Population with % 15% 22% 22% Access to an All-Season Road (%) [Supplemental information: Number of rural people with access to an all-season road] 2. Percentage increase of fiscal revenues collected in the reunified provinces; 3. People in urban/rural areas provided with access to Improved Water Sources under the Project (number 4. People with access to a basic package of health, nutrition, or population services (percent increase) 5. Pupils with access to improved school facilities in targeted areas (number) 6. Number of communities successfully implementing community activities in the isolated rural areas. Number Annually On site survey % 0 368% 368% Annually DGI/DGRAD Number Annually On site survey Number Percent age Annually On site survey Number Annually On site survey Number Annually On site survey Level of re Venues 2004:18.5 million CF 2008:86.7 million CF 1000 people per standpipe 500 people per water sources 10,000 people per health center 100,000 people per hospital one cohort of 50 pupils per classroom in 916 classrooms rehabilitated and two cohorts of 50 pupils in 305classrooms rehabilitated or built 16

20 Beneficiaries 8. Direct Project Beneficiaries, Of which female Number % % % Annually reports Populations served by the rehabilitated roads, health centers, rehabilitated schools, and water points. Due to the nature of this project it could be possible that the same people would benefit from different services. It will not be possible to track down this possible double counting Intermediate Results and Indicators Intermediate Results Indicators Core Unit of Measur ement Baseline Original Project Start (2004) Progress To Date (2010) Target Values 2011 Frequency Data Source/ Methodology Responsibilit y for Data Collection Comments Intermediate Result 1: : Improved Health Infrastructure 1. Health facilities constructed, renovated, and/or equipped (number) 2. Rehabilitated urban infrastructure (health centers, schools, etc) are operational one year after completion (%) Number Quarterly Project report Percent age 0 90% 90% Quarterly Project report Intermediate Result 2: Improved Education Infrastructure 3. Additional classrooms built or rehabilitated (number) 4. Schools equipped with materials and/or furniture (number) Number Annually Project report

21 Intermediate Results and Indicators Intermediate Results Indicators Core Unit of Measur ement Baseline Original Project Start (2004) Progress To Date (2010) Target Values 2011 Frequency Data Source/ Methodology Responsibilit y for Data Collection Comments Intermediate Result 3: : Improved Water Infrastructure 5. Improved community water points constructed or rehabilitated under the project (number) 6. Distribution network constructed/ rehabilitated (km) Number Quarterly Project Report km Quarterly Project report Intermediate Result 4: Improve Electricity Infrastructure 7. Transmission and distribution lines constructed or rehabilitated under the project (km) 8. Household electricity connections provided under the project (number) km 0 12 Number Annually Project report /SNEL Intermediate Result 5: : Improved Roads Infrastructure 9. Roads in Good and Fair Condition as a Share of Total Classified Roads (percentage) percent age Quarterly Project report 10. Roads Rehabilitated (km) km Quarterly Project report 11. Average speed of 25 km/hour on the rehabilitated sections of RN2 and RN4 rehabilitated Km/h

22 Intermediate Results and Indicators Intermediate Results Indicators Core Unit of Measur ement Baseline Original Project Start (2004) Progress To Date (2010) Target Values 2011 Frequency Data Source/ Methodology Responsibilit y for Data Collection Comments Intermediate Result 6: : Implementation of key reforms The budget support has been fully disbursed US$ million Legal review of the logging concessions completed. number Annually Audit report Financial audit completed New procurement code adopted by the government PRSP adopted by the Government Adopted and implementation is underway Adopted and implemented. Government is preparing the second PSRP 19

23 RESULTS FRAMEWORK AND MONITORING DRC: EMERGENCY LIVING CONDITIONS IMPROVEMENT SUPPORT PROJECT Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed The objective of the Project is to assist the Recipient in improving the living conditions of the populations by strengthening the socioeconomic situation in key urban areas as well as in two isolated regions There is no need to change the PDO as the revised results framework establishes a better linkage between the PDO, the project outcomes and the key indicators. PDO indicators Current (PAD and/or FA) Increased number of children with access to good quality education (FA) Increased number of persons with access to performing health center (FA) Reduced average transportation time for transport infrastructure (FA) Proposed change* Pupils with access to improved school facilities in targeted areas (number) People with access to a basic package of health, nutrition, or population services (percent increase) People in urban areas provided with access to Improved Water Sources under the Project (number) Reduction in travel time in two isolated areas (hours) Share of Rural Population with Access to an All-Season Road (%) [Supplemental information: Number of rural people with access to an all-season road] These indicators are related to component A and are more targeted on the main activities financed under this component These roads were completely closed to traffic and the main indicators that could assess the situation are travel time and the number of persons having access to the rest of the country. To measure people who have gained access to roads due to intervention 20

24 Revisions to the Results Framework Comments/ Rationale for Change The cost for the transportation of goods between Lubumbashi and Kasenga decreased by 25%, price per ton transported between Akula and Gemena decreased by 30%) Performance indicators identified and listed in the list of Priority Institutional Support Activities have been reached (FA) Increased quality and coverage of essential services in seven provincial capitals and eighteen medium cities.(pad) Dropped Dropped Direct project beneficiaries (number), of which female (percentage) The main focus of the project is to increase the access by people to the roads, this will be measured by the other indicators The whole component is being dropped Intermediate Results indicators Current (PAD) Proposed change* Components A and B For each target city, availability of the priority services identified by stakeholders during the selection process - measured against the baseline and objective identified during the Selection process. Health Health facilities constructed, renovated, and/or equipped (number) Education: Additional classrooms built or rehabilitated (number) Schools equipped with materials and/or furniture (number) Water Improved community water points constructed or rehabilitated under the project (number) New piped household water connections that are resulting from the project intervention (number) Distribution network constructed/ rehabilitated (km) Sanitation Improved latrines constructed under the project (number) 21

25 Revisions to the Results Framework Comments/ Rationale for Change General Infrastructure Markets built/rehabilitated (number) Administrative buildings built, rehabilitated or equipped (number) Beneficiaries of public works program (Number) Person days provided in labor-intensive public work (number) Component C Road Roads in Good and Fair Condition as a Share of Total Classified Roads (percentage) Supplemental information: Size of the total classified network Roads Rehabilitated (km) Component D Increased quality of services rendered by each beneficiary institution - measured against an objective and a baseline agreed upon during selection process. Dropped Component is closed activities were undertaken with Government financing and the remaining by other donors. 22

26 Project Development Objective (PDO): The objective of the Project is to assist the Borrower in improving the living conditions of the populations by strengthening the socio-economic situation in key urban areas as well as in two isolated regions PDO Level Results Indicators 5 Core Unit of Measureme nt Baseline Original Project Start (2005) Progress To Date (June 2010) Cumulative Target Values end Frequency Data Source/ Methodology Responsibilit y for Data Collection Comments 1. Pupils with access to improved school facilities in targeted areas(number) Number Annually Survey of served areas Average population of 50 pupils per classroom and two cohorts of 50 pupils in 25 % of the classrooms rehabilitated or built 2. People with access to a basic package of health, nutrition, or population services (percent increase) 3. People in urban areas provided with access to Improved Water Sources under the Project (number) Percentage Number 0% 0-420,000 19% 500,000 38% Annually Number ,000 Annually Survey of served areas Survey of served areas 4. Reduction in travel time in two isolated areas (hours) Hours 60 hours 3 hours 3 hours 3 hours Annually On site survey 5. Share of Rural Population with Access to an All-Season Road (%) Supplemental information: % Number 0% 0 22% 1,890,000 22% 1,890,000 22% 1,890,000 Annually Census from the served areas people per health center 100,000 people per hospital 1000 people per standpipe 500 people per water sources Before the works in the scarce sections of roads opened to the traffic it took 60 hours to cover 110 kms, now 3 hours are enough Populations living in the neighboring villages