Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR101.3 MILLION

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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 PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR101.3 MILLION (US$156.0 MILLION EQUIVALENT) TO THE SOCIALIST REPUBLIC OF VIETNAM FOR THE Report No: VN MEKONG DELTA TRANSPORT INFRASTRUCTURE DEVELOPMENT PROJECT Vietnam Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region December 26, 2012 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective Date: October 15, 2012) Currency Unit = Vietnamese Dong (VND) VND20,828 = US$1.00 US$1.55 = SDR1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AA AF AusAID DRVN EIA EIRR EMDP EMP EMPF ENPV FM FY GoV HCMC IBRD IDA Km MDTIDP MoF MoT MPI MTR Administration Agreement Additional Financing Australian Agency for International Development Directorate for Roads of Vietnam Environmental Impact Assessment Economic Internal Rate of Return Ethnic Minority Development Plan Environmental Management Plan Ethnic Minority Policy Framework Economic Net Present Value Financial Management Fiscal Year Government of Vietnam Ho Chi Minh City International Bank for Reconstruction and Development International Development Association Kilometer Mekong Delta Transport Infrastructure Development Project Ministry of Finance Ministry of Transport Ministry of Planning and Investment Mid-Term Review NH National Highway NLF National Logistics Forum ODA Official Development Assistance OP/BP Operational Policy/Bank Procedure ORAF Operational Risk Assessment Framework PAD Project Appraisal Document PDO PDOT Project Development Objective Provincial Department of Transport PMU1 Project Management Unit 1 PMU-SIW Project Management Unit Southern Inland Waterways PPMU Provincial Project Management Unit PRCA Procurement Risk and Capacity Assessment RAP Resettlement Action Plan RPF Resettlement Policy Framework RSC Regional Support Center SIL Specific Investment Loan SRP Subproject Resettlement Plan SDR Special Drawing Right VIWA Vietnam Inland Waterways Administration VHLSS Vietnam Household Living Standards Survey VND Vietnamese Dong Vice President: Country Director: Sector Manager: Task Team Leader: Pamela Cox Victoria Kwakwa Jennifer Sara Dung Anh Hoang

3 SOCIALIST REPUBLIC OF VIETNAM ADDITIONAL FINANCING FOR THE MEKONG DELTA TRANSPORT INFRASTRUCTURE DEVELOPMENT PROJECT CONTENTS Additional Financing Data Sheet... i I. Introduction...1 II. Background and Rationale for Additional Financing...1 III. Proposed Changes...3 IV. Appraisal Summary...6 Annex 1: Results Framework and Monitoring Indicators...10 Annex 2: Operational Risk Assessment Framework (ORAF)...18

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5 SOCIALIST REPUBLIC OF VIETNAM MEKONG DELTA TRANSPORT INFRASTRUCTURE DEVELOPMENT PROJECT ADDITIONAL FINANCING DATA SHEET Country Director: Victoria Kwakwa Sector Manager/Director: Jennifer Sara Team Leader: Dung Anh Hoang Project ID: P Expected Effectiveness Date: March 15, 2013 Lending Instrument: SIL Additional Financing Type: Credit Basic Information - Additional Financing (AF) Sectors: Roads and highways (55%); Ports, waterways, and shipping (40%); Central government administration (2%); Subnational government administration (2%); Tertiary education (1%) Themes: Rural services and infrastructure (40%); Infrastructure services for private sector development (40%); Trade facilitation and market access (20%) Environmental category: A Expected Closing Date: December 31, 2015 Joint IFC: NA Joint Level: NA Basic Information - Original Project Project ID: P Environmental category: A Project Name: Mekong Delta Transport Expected Closing Date: December 30, 2013 Infrastructure Development Lending Instrument: SIL Joint IFC: NA Joint Level: NA AF Project Financing Data [ ] Loan [ X] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: IDA Blend Credit terms with 25 years maturity including a grace period of 5years. AF Financing Plan (US$m) Source Total Project Cost: Borrower: Co-financing (AusAID Grant) Bank Financing: IBRD 0.00 IDA Client Information Recipient: Socialist Republic of Vietnam Responsible Agency: Ministry of Transport Contact Person: Ms. Nguyen Thanh Hang, Deputy Director General, Department of Planning and Investment (DPI) 80 Tran Hung Dao street, Hoan Kiem, Hanoi, Vietnam Tel: (84-4) Fax: (84-4) hangkh@mt.gov.vn Total Amount (US$m) i

6 AF Estimated Disbursements (Bank FY/US$m) FY Annual Cumulative Project Development Objective and Description The development objective of the Project is to assist the Recipient in relieving key bottlenecks in the main transport corridors in the Mekong Delta region and improving access of the poor to those corridors. Project description: The project has five components: Component A: National Road Corridors aims to improve the standard of national trunk roads connecting the main economic hub of the Mekong Delta. Component B: National Waterway Corridors aims to improve the standard of trunk waterways connecting the Northern and Coastal Delta areas to Can Tho and HCMC. Component C: Connecting the Poor to the Supply Corridors aims to improve the connectivity of poorer and more distant producer communities by upgrading feeder waterways/roads, ports, and landing stages at the district and provincial levels in the Mekong Delta. Component D: Institutional Support to Ministry of Transport aims to provide technical assistance on multi-modal transport, institutional support, training, and project implementation support. Component E: Resettlement and Rehabilitation of Displaced Persons (entirely financed by counterpart funds) provides compensation to households in connection with implementation of the Project. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) Does the project require any waivers of Bank policies? [X] Yes [ ] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [X] Yes [ ] No [X] Yes [ ] No [X] Yes [ ] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ]Yes [ X] No ii

7 Financing Agreement Reference No non-standard conditions or covenants are included in the Financing Agreement Conditions and Legal Covenants: Description of Condition/Covenant Date Due iii

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9 I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to: a) Provide an additional Credit in the amount of SDR101.3 million (US$156.0 million equivalent) to Parts A, B, and C of the Socialist Republic of Vietnam - Mekong Delta Transport Infrastructure Development Project (MDTIDP) [P083588; Cr VN]; b) Adjust the scope of works in project components and restructure the Project Results Framework to make it more measurable, directly attributable to the investments, and attainable; and c) Extend the Closing Date of the original Credit from December 30, 2013 to December 31, 2015, to complete on-going project activities. 2. The proposed Additional Financing (AF) will finance unanticipated cost overruns to enable the project to complete the original project activities and achieve the project development objective (PDO). The closing date of the proposed AF Credit will be December 31, The original Project is co-financed by the Australian Agency for International Development (AusAID) through a US$25.0 million equivalent grant. AusAID has approved an additional grant, under the AusAID-World Bank Strategic Partnership in Vietnam (TF071834), in the amount of approximately US$15.0 million equivalent, as co-financing to the AF to support the provision of provincial transport infrastructure and institutional capacity building in the Mekong Delta. II. Background and Rationale for Additional Financing 4. The original Credit of SDR137.2 million (US$207.7 million equivalent) was approved by the Board of Executive Directors on May 22, 2007 and became effective on April 14, The PDO is to assist the Recipient in relieving key bottlenecks in the main transport corridors in the Mekong Delta region and improving access of the poor to those corridors. 5. Despite initial implementation delays, implementation progress is now satisfactory and the Project is on track to meet its PDO (with the proposed additional financing and the proposed changes to the original project). The Project is in compliance with all legal covenants and has no overdue financial audits. 6. An overview of the project components and progress to date is summarized below: Component A National Road Corridor Improvements, aims to widen and upgrade approximately 98 kilometers of national highways 53, 54, and 91 (NH53, NH54, NH91). Upgrading works on NH53 and NH54 (totaling 54 kilometers) are 95 percent complete. Preparation of bidding documents for the upgrading of NH91 is complete and the documents are ready for bid invitation. 1

10 Component B National Waterway Corridor Improvements, aims to improve the standard and connectivity of two key waterway freight corridors in the Mekong Delta: the Northern Trans Mekong Corridor (253 kilometers, known as Corridor 2) and the Southern Coastal Corridor (148 kilometers, known as Corridor 3). To date, eight contracts for Corridor 2 (combined value of US$70 million) are on-going and are making good progress. Procurement of works for the construction of a Corridor 2 ship lock is underway. Preparation of bidding documents for all remaining packages for Corridors 2 and 3 is complete and the documents are ready for bid invitation. Component C Connecting the Poor to the Supply Corridors, aims to improve the connectivity of the secondary road and waterway network in the Mekong Delta by investing in provincial roads (315 kilometers), feeder canals (58 kilometers), and selected landing stages. To date, 36 civil works contracts and 3 consulting services contracts (aggregate value of US$60.0 million) in all 13 project provinces are on-going and construction progress is satisfactory. The project-funded Regional Support Center (RSC) is actively engaged in building provincial government capacity and supporting sub-project implementation. Component D Institutional Support to the Ministry of Transport (MoT), aims to strengthen MoT by: (a) providing state-of-the-art advisory and knowledge transfer on measures to increase the efficiency and competitiveness of multi-modal transport and logistics; (b) advising the Vietnam Inland Waterways Administration (VIWA) on institutional reorganization and policy formulation; (c) delivering training on project management, asset preservation, and multimodal transport (partially in conjunction with the RSC); (d) providing Integrated Project Implementation Audit and Project External Financial Audit services; and (e) supporting the preparation of future transport projects. All activities are on-going and are progressing well. Component E - Resettlement and Rehabilitation of Displaced Persons (entirely financed by counterpart funds), provides compensation to households in connection with implementation of the Project. 7. Rationale for Additional Financing. Additional financing is necessary to cover cost overruns that have impacted nearly all project activities. The cost overruns are a result of: (a) double-digit inflation in Vietnam during and , which in part led to an approximate doubling of construction input unit costs compared to appraisal estimates of 2006; and (b) updated technical specifications of civil works during the detailed design stage, which resulted in significant increases in the quantity of works required compared to those originally planned on the basis of preliminary designs. In addition to the more comprehensive nature of detailed designs, a key contributor to the pronounced difference in the quantity of works estimated at appraisal compared to that confirmed at the detailed design stage was the protracted period of time between these milestones: approximately three years for Phase 1 works, and roughly six years in most cases for Phase 2 works. This meant that, by the time detailed designs and bidding documents were completed for the various subprojects, many determinants of engineering requirements including traffic levels, traffic mix, soil and terrain conditions, demographics, and demand growth projections had changed markedly on the ground relative to 2

11 appraisal. The revised specifications are (a) responsive to current needs, and (b) significantly more robust to demand projections going forward. 8. On a weighted average basis, approximately 70 percent of the unanticipated cost overruns resulted from unit cost inflation, while the remaining 30 percent was due to updated technical specifications (see Table 1). Failure to secure additional financing would severely limit the project s ability to meet its development objective and result in much reduced development impacts relative to original targets. Table 1: Sources of Cost Overruns (US$ Million) Component Category Project Cost at Appraisal Updated Cost \1 Cost Overruns Portion of Cost Overruns Due To: Unit Cost Inflation Updated Technical Specifications Component A: National Roads Works/Consultants Component B: National Waterways Works/Consultants Component C: Provincial Infrastructure Works/Consultants Total Civil Works Cost Share of Cost Overruns by Source: 71% 29% Notes: 1\ For Component A, updated cost includes entire NH91 corridor (Km7-Km50.889) as originally planned. III. Proposed Changes 9. Changes are proposed to: (a) adjust the scope of selected project activities; (b) update the Project Results Framework to reflect revised outcome and intermediate indicators, baseline values, and output targets; (c) facilitate project implementation through streamlined disbursement arrangements; and (d) extend the original Credit closing date by two years. 10. Adjustments to the Scope of Selected Project Activities. The proposed AF Credit will allow for the completion of original project activities with selected reductions in the scope of works, which: (a) are necessary to partially offset the project s cost overruns; and (b) do not undermine the project s ability to achieve the PDO. The proposed changes in scope are as follows: Component A. Due to significant increases in the cost of NH91 (see Table 1), the financing allocated to this segment will be revised to cover only seven out of the original 43 kilometers. The proposed reduced section is entirely located within Can Tho city, and is the most economically and socially critical portion of the original scope for NH91. This section will alleviate urban congestion, improve road safety, and provide heavy traffic (e.g., container trucks) with more efficient access to and from Can Tho port, the main multi-modal transport node of the Mekong Delta region. The Government has committed to provide funds to finance improvements to the remaining 36 kilometers of NH91 as a parallel investment. 3

12 The Government has confirmed that Bank safeguards policies will be applied over the entire 43 kilometer stretch of NH91. Component B. As a result of budget limitations at the appraisal of project, the originally proposed scope of works for the Cho Gao canal section of inland waterway Corridor 3 (Km35 Km80) only comprised bank protection along certain portions of the canal (unlike planned works for the rest of Component B, which also included channel deepening and widening, bridge replacements, construction of a shiplock, and provision of aids to navigation). Since 2006, however, Cho Gao has become a critical passageway for the majority of barge volumes to/from the Mekong Delta and Ho Chi Minh City. The limited improvements to this section of the network, as initially planned, are inadequate in the face of substantial traffic growth in the region in general and at the canal in particular. As a result, the original bank protection works at Cho Gao will be excluded from the project. The Government intends to address comprehensive improvements to the Cho Gao canal under a separate Bank project. Component C. Improvements to 58 kilometers of feeder canals in An Giang and Ca Mau provinces will now be excluded from the project, as these works have been either completed using provincial budgets or excluded from provincial governments list of infrastructure priorities. 11. Changes to the Project Results Framework. The original project outcome indicators will be replaced by indicators that: (a) are feasible of being measured; and (b) are directly attributable to the project (see Table 2). Most of the revised outcome indicators had been originally included as intermediate indicators at appraisal and therefore are not new to the project. Other changes to the intermediate indicators of the Results Framework, as well as changes to baseline and target values, are presented in Annex 1. Table 2: Proposed Adjustments to Project Outcome Indicators Outcome Indicator Reduced rice supply chain costs for Rach Gia producers to Saigon Port Reduced number of respondents to ICA citing transport as a constraint Unit of Measure VND/ton Count Data source Changes with AF Rationale for change MoT surveys World Bank survey Replaced by average rice barge travel time between Rach Gia and HCMC a key underlying driver of supply chain costs Dropped 4 Lack of technical definition of supply chain costs at appraisal Difficult to ensure comparability over time Not solely attributable to project activities Targeting an underlying driver of rice supply chain costs, such as barge travel times, largely addresses above issues The timeline for the Bank s next Investment Climate Assessment (ICA) survey (the first since 2007) has yet to be agreed with the Government of Vietnam; it is thus uncertain that required data can be obtained by project completion

13 Outcome Indicator Reduced time from commune to the nearest wholesale market in the Mekong Delta Average rice barge travel time from Rach Gia to HCMC via Corridor 2 Average travel time by truck on NH91 Accident rate on inland waterway Corridor 2 Fatality rate on NH91 Formation of an Internal Audit function at MoT s Inspectorate Department Unit of Measure Data source Changes with AF Rationale for change Min VHLSS Dropped Hours Minutes Accidents per 100 vessels Fatalities per 100 million vehiclekilometers MoT direct measurement MoT direct measurement MoT direct measurement MoT direct measurement Yes/No MoT Added Upgraded from Intermediate to Outcome Upgraded from Intermediate to Outcome Upgraded from Intermediate to Outcome Upgraded from Intermediate to Outcome Redefined as fatality rate rather than absolute number of fatalities Defined as reflecting entire Mekong Delta region and therefore not solely attributable to project activities Inability of VHLSS to measure data at levels of granularity consistent with project activities Measures outcome on improved access to markets by business, farmers, and the poor, all of whom are direct beneficiaries of the opening up of Corridor 2 to uninterrupted barge navigation from Rach Gia to HCMC Also measures outcome on lower logistics costs Measures outcome on improved access to markets by business, farmers, and the poor, as NH91 is directly connected to Can Tho port, the most important multi-modal node of the Mekong Delta region Also measures outcome on lower logistics costs Measures outcome on improved access to markets by businesses, farmers, and the poor, as safety is a major determinant of accessibility Improved safety also reduces logistics costs for waterway users Measures outcome on improved access to markets by businesses, farmers, and the poor, as safety is a major determinant of accessibility Improved safety also reduces logistics costs, particularly for users of Can Tho port Definition as fatality rate accounts for traffic growth between baseline and completion Captures institutional capacity building at the national level Measures outcome on alleviation of institutional bottlenecks in the management of the main transport corridors in the Mekong Delta 12. Changes to Disbursement Arrangements. Additional AusAID grant funds for Component C will be pooled with IDA funds under a single expenditure category from which disbursements will be made against withdrawal applications without reference to the funding 5

14 source. To facilitate project-wide disbursements, funds by expenditure category will be first disbursed from the original Credit until the balance under Parts A, B and C, are fully withdrawn, at which point all remaining disbursements for the respective category will be made against the AF Credit. A slight adjustment will be made to the Statement of Expenditure (SOE limits), and the frequency for reporting eligible expenditures paid from the Designated Accounts will be changed from monthly to quarterly. 13. Extension of Closing Date of Original Credit. It is proposed to extend the Closing Date of the original Credit to December 31, 2015 to complete on-going and planned civil works and capacity building activities. 14. Revised Project Costs. A summary of the revised project costs is presented in Table 3. Table 3: Revised Project Costs and Breakdown by Component (US$ Million) Component Cost Category Project Cost at Appraisal Updated Cost (inclusive of scope revisions)* Required AF Total IDA AusAID GoV Component A: National Roads Works/Consultants Component B: National Waterways Works/Consultants Component C: Provincial Infrastructure Works/Consultants Component D: Institutional Strengthening Consultants Land Acquisition and Resettlement/ Operating Costs Total Project Costs Compensation/ Operating Costs *Notes: For Component A, revised scope reduces length of Bank-financed NH91 improvements to 7 km only (with US$130 million in Government funds to cover the remaining 36 km). For Component B, revised scope reduces length of Corridor 3 improvements to 103 km. For Component C, revised scope excludes improvements to 58 km of feeder canals. IV. Appraisal Summary 15. Economic Analysis. A standard cost-benefit analysis was conducted to evaluate the economic viability of the project s NH91 and national waterway corridor investments, taking into account the identified cost overruns. The results of the economic analysis, summarized in Table 4, confirm that the proposed NH91 investment, as revised, remains economically viable. Results also indicate that upgrading of the full NH91 corridor (Km7 Km50.889) as defined at appraisal also remains economically viable. The economic viability of both sections is robust to a combination of up to a 30 percent reduction in benefits and a 30 percent increase in capital costs. Investments in Waterway Corridors 2 and 3, as revised, are estimated as borderline viable, with an Economic Internal Rate of Return (EIRR) of 11.4 percent. However, this outcome is qualified 6

15 by: (a) the likely underestimated magnitude of the benefit streams due to the use of conservative assumptions; and (b) the critical role that the AF-financed investments will play in ensuring the sustainability of on-going waterway investments made under the original Credit. Table 4: Economic Analysis of Main Activities to Benefit from AF Funds Investment Length (Km) Original EIRR Estimate Revised EIRR Estimate NH91 (Km7-Km14) 7.0 None 23.5% NH91 (Km7-Km50.889) % 21.7% Waterway Corridors 2 and % \1 11.4% Notes: 1\ The EIRR estimate obtained at appraisal for the National Waterway Corridor investments referred to the original scope of works, which included the Cho Gao Canal (for a total length of 402 kilometers of target waterways) and is therefore not fully comparable to the revised EIRR estimate (which excludes Cho Gao). 16. Technical Aspects. Integrated Project Implementation Audit services, retained under the original Credit, indicate that the technical quality of the national and provincial infrastructure improvement works is satisfactory. It is consistent with detailed designs, and is in compliance with current MoT construction standards. Technical audit services will continue to monitor implementation quality under the proposed AF. 17. Institutional Aspects. Implementation arrangements for the original Credit are functioning satisfactorily and will be retained for the proposed AF. 18. Financial Management and Disbursement. The same disbursement methods and documentation requirements available under the original Credit will be used for the AF Credit. Similarly, the same Designated Accounts used under the original Credit will be used for the AF Credit. The main Financial Management shortcomings identified during implementation of the original Credit were: (a) delayed mobilization of consultants to establish internal audit capabilities at MoT s Inspectorate Department; and (b) inefficiencies in the disbursement of funds for Component C activities. These issues are being resolved. Specifically, Internal Audit consultants have mobilized and implementation of their capacity building activities is progressing as planned. The disbursement mechanism has been revised to improve its efficiency, and additional staffs have been appointed with exclusive responsibility for Component C disbursements. 19. Procurement. Procurement under the original project has been satisfactory, although continued support by the RSC and closer oversight by Provincial Departments of Transport is still required by some provinces. Procurement risk management measures adopted under the 7

16 original Project, which have been effective, will continue under the AF: (a) implementation of the Action Plan to Improve Fairness and Transparency in Procurement; (b) delivery of procurement training, especially to new staff; (c) more frequent Bank missions to implementing agencies exposed to potential procurement or contract management bottlenecks; and (d) active RSC engagement. 20. The effectiveness date of the AF Financing Agreement will be considered the cutoff date for the use of the Bank s most updated procurement guidelines. For bids that are advertised 1 prior to the effectiveness date of the AF Financing Agreement, procurement will be carried out in accordance with: World Bank s Guidelines: Procurement of Goods, Works, and Nonconsulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers ; Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers dated May 2004; and with the provisions stipulated in the original Financing Agreement. For bids that are advertised on or after the effectiveness date of the AF Financing Agreement, procurement will be carried out in accordance with: World Bank s Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers ; Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers dated January 2011; and with the provisions stipulated in the AF Financing Agreement. 21. The Project Owners have prepared an updated procurement plan acceptable to the Bank. Procurement of contracts under National Competitive Bidding procedures will include the latest provisions for Vietnam. The procurement thresholds, which reflect the latest agreed thresholds applicable to Vietnam, are indicated in the procurement plan. 22. Safeguards. Environmental Assessment (OP/BP 4.01), Involuntary Resettlement (OP 4.12), Indigenous Peoples (OP 4.10), and Physical Cultural Resources (OP/BP 4.11) were triggered under the original project, which was assessed as Environmental Category A. There is no change to the environmental category under the AF and no new safeguard policies are triggered. Safeguard activities will continue to be monitored by independent monitoring services. 23. The Environmental Impact Assessment (EIA), the Environmental Management Plan (EMP), the Resettlement Policy Framework (RPF), and the Ethnic Minority Policy Framework (EMPF) prepared for the original Credit will continue to be applied, taking into account applicable Vietnamese environmental regulations and social policies, as well as lessons learned during implementation of the original financing activities. Sub-project Resettlement Plans (SRPs) and Ethnic Minority Development Plans (EMDPs) for sub-projects financed in whole or in part by the AF Credit have either been prepared or will be prepared in accordance with the relevant framework. 24. The updated English versions of all final safeguards instruments produced to date were disclosed on August 19, 2012 at the Vietnam Development Information Center in Hanoi and at the Bank InfoShop in Washington, D.C. 1 This refers to the date of first publication on nationwide newspapers. 8

17 25. Gender. The original project identified women as one of the vulnerable groups in the Mekong Delta, a region where the majority of the population relies on agricultural production. It was noted that the incidence of poverty among women headed households was higher than the average, and that women s income in the agriculture and aquaculture sectors was significantly lower than that of men. SRP implementation under the original project has taken this into account by closely monitoring and assessing the livelihoods of project-affected women headed households with the help of the integrated project implementation auditors. This practice will continue under the AF Credit. 26. The original project introduced an HIV/AIDS Awareness and Prevention Program for workers, which was financed under a Bank-executed AusAID grant (TF098788). Implementation of this program has been satisfactory and it has benefited women in local communities adjacent to project construction sites in all 13 Mekong Delta provinces. 27. Risks. The overall project risk is rated Moderate. Mitigation measures adopted include training, close supervision, and the continued use of standardized procedures and systems for Financial Management and Procurement across provinces. 9

18 Annex 1: Results Framework and Monitoring Indicators VIETNAM: ADDITIONAL FINANCING FOR THE MEKONG DELTA TRANSPORT INFRASTRUCTURE DEVELOPMENT PROJECT Results Framework Rationale for Changes PDO Revisions to the Results Framework Current (PAD) The development objective of the project is to assist the Recipient in relieving key bottlenecks in the main transport corridors in the Mekong Delta region and improving access of the poor to those corridors. Proposed Continued. Comments/ Rationale for Change PDO indicators Current (PAD) Reduced rice supply chain costs - Rach Gia producers to Saigon Port Reduced number of respondents to ICA citing transport as a constraint Reduced time from commune to the nearest wholesale market in the Mekong Delta None None Proposed change* Replaced by average rice barge travel time between Rach Gia and HCMC this is a key underlying driver of rice supply chain costs Dropped Dropped Average rice barge travel time from Rach Gia to HCMC via Corridor 2 Average travel time by truck on NH91 Lack of technical definition of supply chain costs at appraisal. More difficult to measure in practice and less attributable to project activities than measuring key underlying drivers of logistics costs, such as travel times. Timeline for the Bank s next Investment Climate Assessment (ICA) survey (the first since 2007) has yet to be agreed with the Government of Vietnam; it is thus uncertain that required data can be obtained by project completion. Original definition not fully attributable to project as it is defined for entire Mekong Delta, rather than project-impacted areas in particular. VHLSS unable to gather data at enough level of granularity to make impacts attributable to project activities. Indicator is driver of transport efficiency, market access, and logistics costs; it is also directly attributable to the project. Indicator is a driver of transport efficiency, market access, and logistics costs; it is also directly attributable to the project. 10

19 None Revisions to the Results Framework Accident rate on inland waterway Corridor 2 Comments/ Rationale for Change Improved safety is a dimension of market access and contributes to lower logistics costs; it is also directly attributable to the project. None Fatality rate on NH91 Improved safety is a dimension of market access and contributes to lower logistics costs; it is also directly attributable to the project. None Formation of an Internal Audit function at MoT s Inspectorate Department Captures alleviation of institutional bottlenecks in the management of the main transport corridors of the Mekong Delta. Intermediate Results indicators Current (PAD) Reduced road freight times on NH91 (mins) Reduced accident fatalities on NH91 (percentage reduction from base value) Increased number of container movements on NH91 per day Proposed change* Upgraded to outcome indicator; baseline and target values, missing at appraisal, now defined. Upgraded to outcome indicator and redefined as fatality rate rather than absolute number of fatalities; baseline and target values updated to reflect delays in start of works and reduction in NH91 scope. Dropped Baseline and target values refer to 7-km Bank-financed section only. Adjusted definition addresses the need to control for traffic growth. Baseline and target values refer to 7-km Bank-financed section only. Container movements on NH91 are only indirectly associated with project activities and therefore not solely attributable to them. Volumes mainly depend on economic conditions, which are independent of the project. They are also critically influenced by the efficiency of Can Tho port, which has not been targeted under the project. Length of national road rehabilitated (km) Number of bridges replaced Reduced barge freight times from Rach Gia to HCMC (mins) Target revised End-project target value decreased to 61 kilometers. Target revised End-project target value decreased to 10. Upgraded to outcome indicator; baseline and target values, missing at appraisal, have now been defined. Revised to specify that measurement applies to rice barges, as rice is the most critical commodity for businesses, farmers, and the poor that is primarily transported over the Mekong Delta waterway network. 11

20 Increased volume of daily container traffic on Northern Trans Mekong Corridor Revisions to the Results Framework Dropped Comments/ Rationale for Change Container volumes on Corridor 2 are only indirectly associated with project activities (mainly driven by overall economic conditions) and therefore not solely attributable to them. Reduced accident rates in Mekong Delta (accidents per 100 vessels) Upgraded to outcome indicator and redefined as accident rate in Corridor 2, rather than the Mekong Delta as a whole; baseline and target values updated to reflect delays in start of works. Adjusted definition makes indicator more attributable to the project. Length of waterway improved Number of bridges raised and improved Target revised End-project target value decreased to 356 kilometers. Continued Rural accessibility (%) Population in the Mekong Delta within 2km of an all-weather road Length of provincial road improved to all weather standard (km) Length of feeder waterways improved Number of rural landing stages/provincial ports improved Capacity building for MoT to improve multimodal transport planning and management is undertaken Capacity building for VIWA to develop an enhanced organizational framework is undertaken Number of provincial government staff trained by the Regional Support Center established under Component C.3 (b) of the Project Dropped Continued Dropped Target revised New New New Indicator as defined applies to entire Mekong Delta region, rather than project-impacted areas in particular, and therefore it is not entirely attributable to project. Weak connection between this indicator and the PDO. Feeder waterway works have been excluded from project scope. End-project target value decreased to 2 rural landing stages/provincial ports. Replaces original intermediate indicators on National Logistics Forum, multi-modal linkages/container routes, and multi-modal transport training curriculum. Indicator captures the institutional strengthening activity for VIWA provided under the project. Indicator captures institutional capacity building activities at the provincial level and is connected to the outcome of alleviating institutional bottlenecks in the Mekong Delta region. 12

21 Formation of a National Logistics Forum (NLF) MoT issues plan that highlights the main multimodal linkages and main current and future container routes Number of km of waterway under active management increased Revisions to the Results Framework Dropped Dropped Dropped Comments/ Rationale for Change Replaced by new intermediate indicator on delivery of multi-modal transport capacity building at MoT. The institutional target for the National Logistics Forum has been revised to delivery of a framework for the NLF and a plan for its implementation. Replaced by new intermediate indicator on delivery of multi-modal transport capacity building at MoT, under which this multimodal corridor analysis will be undertaken. Length of waterways under active management no longer a focus of related consulting services under this component. MoT approved curriculum for Multi-modal transport training Dropped Replaced by new intermediate indicator on delivery of multi-modal transport capacity building at MoT, under which this curriculum will be developed. * Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of project target value. 13

22 Project Development Objective (PDO): REVISED PROJECT RESULTS FRAMEWORK Assist the Recipient in relieving key bottlenecks in the main transport corridors in the Mekong Delta region and improving access of the poor to those corridors. PDO Level Results Indicators Core UOM Baseline Progress To Date (2012) Target Value (2015) Frequency Data Source/ Methodology Responsibility for Data Collection Comments 1. Average rice barge travel time from Rach Gia to HCMC via Corridor 2 Hours 52* Not yet due 47 (10% reduction) At completion Consultant and MoT surveys Multi-modal consultants (D1) for baseline value, MoT for endproject value D1 consulting services have provided replicable measurement methodology to MoT 2. Average travel time by truck on NH91 Minutes 15 Not yet due 13.5 (10% reduction) At completion Consultant and MoT surveys Multi-modal consultants (D1) for baseline value, MoT for endproject value D1 consulting services have provided replicable measurement methodology to MoT; NH91 refers to Bank-financed section only 3. Accident rate on inland waterway Corridor 2 Accidents per 100 vessels * Not yet due (5% reduction) At completion PMU-SIW report PMU-SIW Redefined to only apply to Corridor 2 4. Fatality rate on NH91 Fatalities per 100 million vehiclekilometers 47 Not yet due 40 (15% reduction) At completion PMU-1 report PMU-1 Redefined to control for traffic levels; NH91 refers to Bank-financed section only 14

23 5. Formation of an Internal Audit function at MoT s Inspectorate Department Yes/No/ On-going No On-going Yes Annual MoT report MoT Captures institutional capacity building at the national level * Due to the fact that Corridor 2 is not operational from Rach Gia to HCMC at present, baseline refers to the most heavily used currently operational route between the Rach Gia area and HCMC, known as Route C. It is expected that Corridor 2, when operational at completion of proposed civil works, will provide a key cargo routing alternative to Route C. 15

24 Intermediate Results and Indicators Intermediate Results Indicators Core Unit of Measure Baseline Progress To Date (2012) Target Value (2015) Frequency Data Source/ Methodology Responsibility for Data Collection Comments Intermediate Result 1: Improved efficiency of national roads in the Mekong Delta Region (Component A) 1. Length of national road rehabilitated Km Annual PMU-1 report PMU-1 Continued with revised target to reflect reduced scope 2. Number of bridges replaced Count Annual PMU-1 report PMU-1 Continued with revised target to reflect reduced scope Intermediate Result 2: Improved efficiency of national waterways in the Mekong Delta Region (Component B) 3. Length of waterway improved Km Annual PMU-SIW report PMU-SIW Continued with revised target to reflect reduced scope 4. Number of bridges raised and improved Count Annual PMU-SIW report PMU-SIW Continued Intermediate Result 3: Improved provincial access to main supply corridors (Component C) 5. Length of provincial road improved to all weather standard 6. Number of rural landing stages/provincial ports improved Km Annual Consultant reports Count Annual Consultant reports Advisory consultant (D4i) Advisory consultant (D4i) Continued Continued with revised target Intermediate Result 4: Institutional Support to the Ministry of Transport and Provinces (Component D) 7. Capacity building for MoT to improve multi-modal transport planning and management is undertaken Yes/No/ On-going No On-going Yes Annual Consultant report PMU-SIW Captures the project s institutional support to MoT on multi-modal transport 16

25 Intermediate Results and Indicators Intermediate Results Indicators Core Unit of Measure Baseline Progress To Date (2012) Target Value (2015) Frequency Data Source/ Methodology Responsibility for Data Collection Comments 8. Capacity building for VIWA to develop an enhanced organizational framework is undertaken Yes/No/ On-going No On-going Yes Annual Consultant report VIWA Captures the project s institutional support to VIWA 9. Number of provincial government staff trained by the Regional Support Center established under Component C.3 (b) of the Project Count ,100 Annual Consultant reports RSC and Advisory consultant (D4i) Captures institutional capacity building at the provincial level 17

26 Annex 2: Operational Risk Assessment Framework (ORAF) Vietnam: Additional Financing for the Mekong Delta Transport Infrastructure Development Project (MDTIDP) Project Development Objective(s) Assist the Recipient in relieving key bottlenecks in the main transport corridors in the Mekong Delta region and improving access of the poor to those corridors. PDO Level Results Indicators: 1. Average rice barge travel time from Rach Gia to HCMC via Corridor 2 2. Average travel time by truck on NH91 3. Accident rate on inland waterway Corridor 2 4. Fatality rate on NH91 5. Formation of an Internal Audit function at MoT s Inspectorate Department 1. Project Stakeholder Risks Rating Low Description: Project stakeholders have been supportive of the implementation of the original project. However, scope reductions could undermine support for the project among would-be beneficiaries. Risk Management: Continued communication to keep local communities and domestic and international interest groups informed about the benefits of the project, the reasons for scope reductions, the continued engagement and on-going dialogue between the World Bank and the Government of Vietnam with regard to infrastructure provision, and the safeguards arrangements in place. 2. Implementing Agency Risks (including fiduciary) Capacity Rating: Moderate Resp: Client Stage: Implementation Due Date: Status: On-going 18

27 Description: During implementation of the original project, capacity of national-level implementing units has been generally adequate in terms of compliance with Bank requirements and provision of effective project supervision. However, capacity gaps were observed at provincial-level implementing units which were unfamiliar with Bank procedures and lacked training in modern project management techniques. To address this, hundreds of provincial government staff members have received training under the original project through the RSC with strong results; however, staff turnover may lead to loss of some of the created capacity. Risk Management: Continued assessment of needs and provision of capacity building by the RSC to the staff of provincial implementing units at 13 Mekong Delta provinces. The Bank will continue to provide the necessary implementation support. Resp: Bank & Client Stage: Implementation Due Date: Status: On-going Governance Rating: Moderate Description: Some decision making bottlenecks were faced under the original project due to a multiplicity of entities involved in project implementation. These were largely Risk Management: Continued engagement of PMU-SIW as overall project coordinator. The Bank will continue to maintain close supervision at all levels and stages of implementation, with a focus on interagency coordination, particularly between PMU-SIW and PMU-1. resolved by placing overall project management responsibility with PMU-SIW, a national-level implementing unit with experience in Bank-financed projects. Resp: Bank & Client Stage: Implementation Due Date: Status: On-going 3. Project Risks Design Rating: Moderate Description: Implementation delays. The original project was impacted by implementation delays of nearly two years at the outset, as detailed designs were being finalized and procurement Risk Management: Implementing units will apply lessons learned from the original project on ways to expedite procurement of civil works, e.g., maintaining close coordination between bid evaluation committees and Project Owners. The Bank will monitor procurement progress closely and will provide timely guidance and approvals. processes could not be launched without final inputs from the design work. However, most of the remaining civil works bidding packages to benefit from AF funds are ready for issuance. Resp: Bank & Client Stage: Implementation Due Date: Status: On-going Further incidence of cost overruns. The original project was impacted by cost overruns resulting from (a) rapid inflation in construction unit costs, and (b) revisions to technical Risk Management: Price contingencies of 15% have been included in AF implementation costs. As project implementation progresses, the Bank will work with the Government to review the remaining project costs by component and the overall implementation status toward project completion. If cost increases climb beyond allocated funds, the Government will be advised to (a) reduce the scope of 19

28 specifications of civil works at the detailed design stage. Since virtually all detailed designs have been completed, there is negligible risk of cost overruns resulting from revisions to technical specifications for works financed in whole or in part under the proposed AF. However, there is still a moderate risk of cost overruns resulting from inflation in construction materials and other inputs, over which the project has no influence. Offsetting this risk is the fact that inflation rates over the next 3 years ( ) are expected to remain well below those seen in and (per IMF estimates). Broader Impact on Multi-modalism. Since this is the first Bank transport project in Vietnam designed as multi-modal in scope, the Project s ability to influence multi-modalism beyond the project-financed transport facilities may be limited. After some delays in the recruitment of multi-modal transport consulting services, the original project has now engaged the consultants. However, further efforts will be needed during AF implementation. selected activities (e.g., those lagging behind in implementation relative to plan), or (b) provide its own funds to complete such activities. Resp: Bank & Client Stage: Implementation Due Date: Status: On-going Risk Management: PMU-SIW leadership will ensure effective utilization of the consulting services on multi-modal transport. The Bank will provide timely feedback on the consultant s deliverables and will discuss them with PMU-SIW and MoT s Department of Transport staff. The Bank will also engage all government agencies involved in the project, at the national and provincial levels, on ways to further drive multimodal integration. Resp: Bank & Client Stage: Implementation Due Date: Status: On-going Social & Environmental Rating: Moderate Description: Government-funded land acquisition and resettlement compensation. As experienced by the original project, lack of counterpart funds or delays in their approval could slow land acquisition and resettlement implementation. Risk Management: Continued dialogue with MoT and MoF with regard to proper counterpart fund flows to carry out land acquisition and resettlement compensation. Resp: Bank & Client Stage: Implementation Due Date: Status: On-going Observance of safeguards policies. Project affected persons may not be properly compensated due to inadequate implementation of safeguards measures. This was an issue initially under the original project, although it was addressed by the implementing units with the help of the RSC and close Risk Management: Increased monitoring and supervision efforts by the Bank to ensure that all safeguards policies are complied with. Close collaboration between the Task Team and the RSC so that it provides timely support to provinces in the preparation and disclosure of sub-project environmental management plans and resettlement plans. 20