LRTF Quarterly Report March 1, As of February 22, 2012, the LRTF status was as follows: USD million
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1 LRTF Quarterly Report March 1, 2012 I. LRTF Administration As of February 22, 2012, the LRTF status was as follows: USD million Contributions Received Cash Contributions $146,902, Investment Income $1,960, Total Receipts $148,862, Future Cash Contributions as per signed Administration Agreements Approx. $23,714, Total LRTF Approx. $172,577, Project Commitments EMUS ($18,400,000.00) URIRP ($9,200,000.00) URIRP II (Additional Financing) ($27,000,000.00) LIBRAMP ($108,900,000.00) Total project commitments ($163,500,000.00) LRTF Administration and Projects Preparation and Supervision Costs LRTF Administration ($527,430.19) Total Non-Project Disbursement Admin Costs (Note 3) ($1,241,366.57) EMUS Appraisal and Supervision ($791,721.35) URIRP I Supervision ($ 247,230.00) Total Costs ($2,807,748.11) Available amount for future commitments $ 6,269, Since the December, 2011 OC quarterly meeting, additional contributions have been made to the LRTF by the EU and DFID for a total of $US 27,601,000. At present, the LRTF includes total cash contributions (including investment income) of about US $148,862, million. Total project-level commitments remain at US$163.5 million. The total amount available for future commitments as of February 22, 2012 is US$6,269, June 2011 Quarterly Report Page 1 of 7
2 II. Project Status Reports Emergency Monrovia Urban Sanitation Project (EMUS) 2. A mid-term review took place between January 19 th and February 4 th. Key objectives included: (i) review all project activities, including implementation, safeguard and fiduciary compliance, budget and disbursements; (ii) assess progress towards achieving the project's development objective; (iii) initiate the gradual transfer of funding for the service from EMUS to the Monrovia Municipality; and (iv) review sector-wide requirements for continuous service provision beyond the end of EMUS. Key Findings of the Mid-Term Review (MTR) The EMUS project is progressing well. It has re-instituted the solid waste management system in Monrovia after it had collapsed during the war. Two years from project start, all construction is nearly completed including the sanitary landfill engineered to high standards and two transfer stations. Waste collection has been outsourced to the private sector under PPP arrangements. Community based enterprises have been engaged for intra-community and door-to-door collection. A large scale educational campaign has been launched. The established multi-layered system is overall functioning well and expected to mature over time. Achievements within the municipality in terms of its financial management practices are very encouraging. The mid-term review mission commended the Monrovia City Corporation for these achievements. 3. As of date, 60% of project funds are disbursed. Nearly all procurement has been completed. Signed commitments represent 94% of available funding including the Government contribution. 4. All quarterly reporting to date has been on schedule. External audits have been completed in a timely manner and have expressed unqualified opinions on the project financial statements. The latest audit is for the six month period ending June 30, 2011, also unqualified. No significant internal control deficiencies have been identified by the auditors. 5. Compliance with environmental and social safeguards, as well as fiduciary requirements is satisfactory. Intermediate results indicators are being met and the project is on course to achieve its Developmental Objective (DO). Key issues related to the solid waste sector in Monrovia beyond EMUS (December 2013) 6. EMUS was designed as a 4-year emergency project aiming to deliver waste service in Monrovia. The basic infrastructure and contract arrangements to that end have now been put in place. In the remaining two years of the project, waste services are expected to continue to expand in terms of volumes and coverage. The public demand for service is also expected to grow. In parallel, citizens willingness to pay is also expected June 2011 Quarterly Report Page 2 of 7
3 to increase. While the concept of the user pays remains unpopular, it is slowly getting speed in line with increasing demand. 7. The remaining two years under the EMUS project could therefore be used to conceptualize and design a cost recovery mechanism for waste service. Various options exist; however they all have limitations and must be adjusted to local conditions. For instance, households typically pay a solid waste fee as a percentage of their property taxes or as a user charge attached to a utility bill. Since both of these possible vehicles are currently unavailable in Liberia, collection from households is difficult. 8. If there are no plans within the Government to start collecting individual property taxes within the next few years, which would be an optimal method to start recovering for the service at the household level, alternatives could be explored. 9. One such alternative is the franchise model where private operators are licensed to deliver waste services and recover their fees directly from customers. Reduced public financing is therefore required. While this model may seem very attractive to resourceconstraint governments, the Government should be cautioned that given the largely poor population of Monrovia and the high cost of the service (due to cost of fuel, heavy equipment requirements, and distance to landfill), private operators may not be able to recover their costs under the franchise model. Subsequently, only well-off customers are likely to be served. Cleanliness in poor areas may deteriorate greatly and the solid waste situation in Monrovia may rapidly revert to where it was in It should also be noted that under any model, rapid introduction of fee for service may push many households into reverting to old practices of disposing waste in drains and river beds as an alternative to fee payment. Since the Monrovia population at large remains poor, household level fees should be rolled out only gradually and at increasing scale. Key Recommendations 11. Mobilize resources for a study on options for service cost recovery and mechanism for introducing it in Monrovia. At the request of MCC, preliminary discussions have commenced for a possible grant funding for such a study. The study will need to collect data on revenue potential, which at the moment is not available. It will then inform the Government about pros and cons of various options given local conditions (essentially through property taxation or direct fee for service). Further, it will develop the corresponding financial model for setting tariffs. 12. The study itself is expected to take 6 months. After factoring in required time for grant mobilization, tender process and mobilization, the results are expected in approximately months from date. Depending on the recommended and approved option, an implementation plan will then need to be devised. 13. Further, it is recommended, that while the Government explores options how to place the service on a sustainability path, existing arrangements are extended for June 2011 Quarterly Report Page 3 of 7
4 years beyond 2013, which is the EMUS closing date. This would provide the Government with sufficient time to roll out the selected cost recovery option without compromising sector improvements already achieved. It would allow time for continuous education of the public about the benefits of the service which would then translate into increased fee collections. It will also permit MCC to complete the institutional transformation in terms of internal controls, revenue collection, and ability to manage the sector. Other Issues 14. Starting March 1, supervision of PPP arrangements will be transferred from the Engineer to MCC. The transfer of this key responsibility back to MCC is in line with the general thinking of institutional leadership and responsibility for service delivery. 15. As communicated at numerous earlier occasions, the remaining life span of Whein town is estimated at 4 years. Urgent action should be taken to allocate public land at an acceptable location, to be studied and developed into a permanent landfill. MCC has initiated steps in this direction but the effort needs to intensify. As of present, no funding has been secured for environmental and feasibility studies, design or construction of the landfill. 16. The MOF has effected its agreed allocation to the Solid Waste account for FY2011/12. Budget preparation is ongoing for FY2012/13 and expectation is the allocation will be made in a similar manner. Urban and Rural Infrastructure Rehabilitation Project (URIRP) 17. LRTFs initial co-financing of US$9.2 million to URIRP I supports rehabilitation of 15 km section of the Buchanan road (Cotton Tree Bokay Town) at an overall cost of US$9.8 million. Contractual completion of this Design-Build-Transfer (DBT) contract under Output and Performance-based Road Contract methodology (OPRC) was at the end of September, The works were completed on time, with quality and at original contract value. Prior to the ending of the Defects Liability Period (DLP) on September 15, 2011, the consultant and contractor undertook joint inspection. A list of minor defects to be addressed was agreed upon and is to be corrected by the contractor before the issue of certificate of completion and the release of the usual retained funds. The remaining works are to be completed and verified by end of March, URIRP II: Following the LRTF OC's decision to commit US$27 million for this component, the World Bank Board approved on June 29, 2010 an additional IDA resource of US$20 million to complement LRTF s allocation, to finance the total rehabilitation of the 66.5km Bokay Town - Buchanan road. The LRTF Grant and IDA Financing Agreement were signed by the Recipient, the Government of Liberia, on July 29th and the project became effective in November, June 2011 Quarterly Report Page 4 of 7
5 The works under URIRP II were executed in two contracts: 19. A 10 km section from Bokay Town towards Buchanan was added to the Cotton Tree Bokay Town original contract through an Addendum. The overall cost of the works was revised from US$9.8 million to US$16.5 million. The works were completed on schedule by the contractual completion date of April 27, Inspection and provisional acceptance of the road section took place in May, There is a 12-month Defect Liability Period which ends in May, The remainder of the road to Buchanan port is 56.5 km and includes the construction of a new 130m length bridge over the Mechlin River. The works were bid out on the basis of the Output and Performance-based Road Contracting (OPRC) methodology (albeit without maintenance stage) under Limited International Bidding to the two international road contractors present in Liberia (CHICO and CICO). The Government completed its negotiation with the lowest evaluated bidder and the contract was signed with CHICO on May 06, 2011 for a price of US$33,759, The completion timeline is 25-months. The contractor is fully mobilized on site. In addition to key staff from China and from the design consultant, the contractor has employed 650 local staff, of which 85% are from the local area. The contractor has completed construction of three site facilities along the route including two site laboratories, two asphalt plants and a concrete bathing plant. The detailed design has been completed for the new bridge and for 49 kms of the road. The design of the remaining 7 km is ongoing. Physical works have commenced in the road sections where part of the Resettlement Action Plan (RAP) approved under the previous project and at the beam casting yard for the Mechlin River Bridge. The RAP for remainder length is under preparation and likely to be finalized shortly. This will pave way for physical works to begin later in March. The monitoring consultant key staff is fully mobilized on the site. 21. Performance based service contracts for IIU staff with clear monitoring indicators and defined evaluation methodology have been introduced. In addition to the hiring of individual consultants, procurement of the services of a professional consulting firm to provide Technical Support to IIU is also underway. This consultant shall be mobilized by middle of this year. Simultaneously, the plan is underway to form a cohort of nationals as Technical Support Team (TST). Such persons shall be trained and mentored by the senior staff of IIU with the eventual objective of taking over key responsibilities. A short list has been established and interviews will be conducted shortly. Liberia Road Asset Management Project (LIBRAMP) 22. LIBRAMP was approved by the World Bank Board on June 07, 2011, and the Financing and Grant Agreements were signed between IDA and GOL on July 13, The credit was ratified by the Liberian Parliament in August and declared effective as of October 13, It includes US$67.7 million, to be financed from an International Development Association (IDA) credit, and a US$ million grant from the Liberia 1 US$108.9 is the remainder of the US$140 million approved by May 4, 2010 LRTF OC Decision Meeting and after accounting for the US$27 million used for URIRP II June 2011 Quarterly Report Page 5 of 7
6 Reconstruction Trust Fund (LRTF). The government will provide the remaining funding of US$72.8 million. The total project cost is US$249.4 million. 23. The Government of Liberia intends to seek deferment of its contribution of 30% share in LIBRAMP civil works. A formal GOL request is awaited. This request would require restructuring of project and the financing agreements. 24. LIBRAMP finances, under OPRC methodology, 10 year contracts including maintenance, of the 247 km Red Light-Ganta/Guinea border road corridor. Project activities will also support the deepening of policy and institutional advances in the transport sector, enhancing the capacity of sector institutions, supporting governance and accountability programs in addition to financing priority infrastructure improvements necessary to support Liberia s long-term development strategy. The bid package for the 250 km long road from Red Light to Ganta and onward to Guinea was divided into two lots: (a) Lot 1 for approximately US$156.5 million for the Red Light - Gbarnga Road (180 km); and (b) Lot 2 for approximately US$54.6 million for Gbarnga - Ganta - Guinea Border (69 km). 25. Bid opening took place on May 10, 2011 with good response of 7 bids received for Lot 1 and 9 bids for Lot 2. Bid Evaluation Reports (BER) for Lots 1 was approved on December 15, 2011 following detailed comments/guidance provided by Operational Procurement Review Committee (OPRC). The Government subsequently completed its negotiation with the lowest evaluated bidder and the contract was signed with CICO on January 25, 2012 for a price of US$166,099, The design consultant of the contractor has mobilized on site. The contractor will submit a detail work plan for the execution of works by February 23, 2012 and will subsequently be paid the advance payment in order to fully mobilize on site. For Lot 2, the lowest evaluated bid was significantly higher than the estimated cost. The client debated different options including one which could have allowed work to start during this year. On January 14, 2012 the Government, through the Minister of Public Work, informed the Bank that after carefully reviewing different options, it has decided to go for re-bidding. As on February 3, 2012, revised BER is awaited. With revision of bidding documents and retendering, the works on Lot 2 are likely to start only in III. Next Meetings The proposed dates until the end of CY 12 for OC meetings are as follows: Thursday, June 7, 2012 Thursday, September 6, 2012 Thursday, December 6, 2012 Ad hoc meetings can be called if and as needed. Relevant documents will be circulated two weeks prior to the meetings June 2011 Quarterly Report Page 6 of 7
7 ANNEX C: Updated Action Matrix Dec. 1, 2011 LRTF Actions Matrix Items Action Deadline Status Person Responsible LRTF Quarterly Report Circulate March LRTF financial report March 2012 Upcoming LRTF Secretariat LRTF Reporting Tutoring session to familiarize donors with Client Connection and Donor Portal Ongoing Several members have been trained individually. Other members will be offered individual training,, on request. LRTF Secretariat Budget lines for transport sector MoPW should introduce two separate budget lines: one for road maintenance and another for road rehabilitation December, 2011 Update on Budget allocation at March OC meeting. MoPW June 2011 Quarterly Report Page 7 of 7
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