Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized SUSTAINABLE DEVELOPMENT UNIT EUROPE AND CENTRAL ASIA Document of The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BOR REGIONAL DEVELOPMENT PROJECT IDA CREDIT NO. 4326-YF (BOARD APPROVAL DATE: JUNE 20, 2007) AND IBRD LOAN NO. 7464-YF (BOARD APPROVAL DATE: JUNE 20, 2007) TO THE REPUBLIC OF SERBIA MARCH 11, 2013 Report No: 75962-YF 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.
ABBREVIATIONS AND ACRONYMS BRDP EBCL GoS IDA IBRD LIU MERD MEDEP MFE NES OBS PAR PCC PDO PIT PMU PSC RTB Bor Bor Regional Development Project European Business Competence License Government of Serbia International Development Association International Bank for Reconstruction and Development Local Implementation Unit Ministry of Economy and Regional Development Ministry of Energy, Development and Environmental Protection Ministry of Finance and Economy National Employment Service Opportunity Bank Serbia Portfolio at risk Project Coordination Committee Project Development Objective Project Implementation Team Project Management Unit Project Steering Committee Publicly owned copper mining and production industry, based in Bor, Serbia Regional Vice President: Country Director: Sector Manager: Task Team Leader: Philippe Le Houérou Ellen Goldstein Kulsum Ahmed Frank van Woerden
Restructuring Restructuring Type: Level one Last modified on date : 03/08/2013 Status: Submitted to SECPO 1. Basic Information Project ID & Name P092999: BOR REG DEVT Country Serbia Task Team Leader Frank Van Woerden Sector Manager/Director Kulsum Ahmed Country Director Ellen A. Goldstein Original Board Approval Date 06/20/2007 Original Closing Date: 09/30/2012 Current Closing Date 03/31/2013 Proposed Closing Date [if applicable] 09/30/2015 EA Category A-Full Assessment Revised EA Category A-Full Assessment-Full Assessment EA Completion Date 10/02/2006 Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 0.00 0.00 IBRD 33.00 15.42 IDA 10.00 10.00 Total 43.00 25.42 3. Borrower Organization Department Location Ministry of Finance and Serbia Economy 4. Implementing Agency Organization Department Location Ministry of Energy, Development Serbia and Environmental Protection
5. Disbursement Estimates (US$m) Actual amount disbursed as of 03/12/2013 9.00 Fiscal Year Annual Cumulative 2013 0.00 9.00 2014 7.00 16.00 2015 6.42 22.42 2016 3.00 25.42 Total 25.42 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured project trigger any new safeguard policies? If yes, please select from the checklist below and update ISDS accordingly before submitting the package. N 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The development objective of the project is to support the GoS' efforts to revive the depressed Bor region through: (i) dealing with urgent environmental and social legacy issues arising from mining sector restructuring; and (ii) fostering new sources of economic growth and job creation in the region. 7b. Revised Project Development Objectives/Outcomes [if applicable] The development objective of the project is to support the GoS in addressing the structural hazard of the river water collector of the Veliki Krivelj tailings disposal facility, which is one of the most urgent environmental legacy issues of the mining sector in the Bor region.
SERBIA BOR REGIONAL DEVELOPMENT PROJECT CONTENTS A. SUMMARY... 6 B. PROJECT STATUS... 7 C. PROPOSED CHANGES... 10 ANNEX 1: RESULTS FRAMEWORK AND MONITORING... 16
SERBIA BOR REGIONAL DEVELOPMENT PROJECT RESTRUCTURING PAPER A. SUMMARY 1. In its letter of September 7, 2012, the Government of Serbia requested the World Bank (the Bank) to consider the following changes: (a) a partial extension of the project closing date until September 30, 2015 to allow for completion of activities under Project Part 1 1 (Environmental Management and Remediation; US$30.9 million equivalent allocated from the Credit/Loan) and Project Part 3 (Project Implementation Support; US$1.14 million equivalent allocated from the Loan), and (b) reallocation to Project Part 1 of the remaining Loan proceeds from Project Part 2 (Socio-Economic Regeneration; US$10.56 million equivalent originally allocated from the Loan) implementation of which will not continue. 2. Subsequently, the Government of Serbia informed the Bank about recent developments regarding the future of the sites that were selected for remediation under the Project. Specifically, expressions of interest received from potential investors for the project sites with mine tailings facilities have opened possibilities of redevelopment for commercial purposes. These developments imply that continuation of remediation under the Project of these sites is considered premature. Accordingly, the Government of Serbia decided to cancel the remediation works under Part 1 of the Project, leaving the construction of the tunnel under Field 2 of the Veliki Krivelj tailings facility as the only remaining main investment under the Project. This decision was confirmed in a letter to the Bank on November 19, 2012 and in a subsequent letter of December 3, 2012 the Government confirmed to the Bank that the requested extension of the Project s Closing Date until September 30, 2015 would be for the implementation of the Veliki Krivelj tunnel works only. 3. On the basis of the referred Government requests, the proposed changes under this restructuring include: (a) a partial extension of the project closing date from March 31, 2013 until September 30, 2015 to allow for completion of the Veliki Krivelj tunnel works under Project Part 1 and Project Part 3; (b) cancellation of other activities under Project Part 1, in particular the remediation of mine tailings disposal facilities, mine overburden dump sites and environmental monitoring activities, and cancellation of the Loan proceeds related to these activities; (c) cancellation of the remaining Loan proceeds from Project Part 2 (Socio-Economic Regeneration; US$10.56 million equivalent originally allocated from the Loan) with related activities stopped since the original Project Closing Date of September 30, 2012; (d) modification of the Project Development Objective (PDO), outcome and intermediate output indicators due to the comprehensive restructuring and the above mentioned reduction in project activities; and (e) revision of implementation arrangements. Main parts of the remediation works are cancelled due to interest from private parties to alternatively redevelop the related sites. The 1 Project Parts 1, 2 and 3 are terms used in the Financing Agreement and Loan Agreement for the Bor Regional Development Project, where the Project Appraisal Document uses the terminology Component A, B and C (Project Part 1 is equivalent to Component A etc). In this Restructuring Paper the terms Project Part 1, 2 and 3 will be used instead of Component A, B and C. 6
proposed restructuring would allow the project to complete the construction of the tunnel under the Veliki Krivelj tailings facility and eliminate the high environmental risks related to the potential failure of the deteriorated existing concrete collector at the bottom of the tailings facility for the diversion of the Kriveljska River. B. PROJECT STATUS 4. Since approval of the project by the World Bank Board of Directors in June 2007 and subsequent signing of the Financing and Loan Agreements in July 2007, the project experienced significant implementation delays. First, due to government changes and a slow parliamentary ratification process, the project became effective only in December 2008. Further delays occurred with partial suspension of disbursements under Project Part 1 when an implementation covenant - related to resolution of the publicly owned copper mining and production industry RTB Bor s copper smelter in an environmentally sustainable manner, thus mitigating one of the highest sources of pollution in the region - failed to be met in December 2009 due to failed attempts of the privatization process of RTB Bor. This suspension came into effect in February 2010 and was lifted in mid-december 2010 after the Government of Serbia decided to cancel privatization attempts and entered into financing arrangements for investments in new copper smelting technology. Project Part 1 - Environmental Management and Remediation 5. This component is designed to support operations to remediate and stabilize waste and mine tailings disposal areas and replace a water collector to secure the safe discharge of river water underneath one of the mine tailings disposal areas. Project Part 1 consists of two subcomponents: 1(a) Management of Environmental Liabilities and 1(b) Remediation of Urgent Environmental Hazards. The responsibility for implementation of Project Part 1 is with the Ministry of Energy, Development and Environmental Protection (MEDEP). 2 6. During 2009 and before the partial suspension of disbursements, further delays occurred due to lack of implementation capacity and it was decided to recruit a dedicated Component Coordinator to support MEDEP together with an International Technical Advisor. With these enforcements, procurement steps for design contracts were initiated but could not be concluded before the suspension came into effect which halted implementation progress for Project Part 1 over the course of calendar year 2010. 7. Shortly after the lifting of the suspension, design contracts were signed and after the winter period site investigations commenced in early 2011. From this point in time onwards, progress under Project Part 1 has improved. Design work was concluded and bidding documents were prepared in early 2012. The Environmental and Social Impact Assessments (ESIAs) for the main works contracts were prepared in the first half of 2012 with all national permitting and authorization requirements obtained as well in this period. Also, the project area properties and mining concessions were transferred from RTB Bor to the state and placed under stewardship of 2 During project preparation and implementation, Environmental Protection has been under different ministries including the Ministry of Environment and Spatial Planning; the Ministry of Environment, Mining and Spatial Planning; and currently under MEDEP. For consistency, throughout this paper, the term MEDEP will be used. 7
the Mining and Minerals Institute, and arrangements with RTB Bor were concluded regarding their cooperation to enable implementation of works and their responsibilities to investigate and maintain their facilities adjacent to the project area in view of dam safety aspects. The procurement of the works contracts were also concluded up to the point where winning bidders were selected. These and other actions which reflect conditions to successfully implement project works were concluded in July 2012. The completion of this complex set of actions which involved many parties was an impressive turn-around in project implementation. 8. A more recent development has been the interest of commercial parties in the exploitation of the mine tailings facilities in the project area. Although firm arrangements have not yet been made for redevelopment of the mine tailings sites, the Government felt hesitant about investments in remediation considering the possibility that these investments would not achieve the intended objective if these sites would be redeveloped in the future. In order not to further delay the project restructuring, the Government decided in November 2012 to cancel the site remediation works under the project and in December 2012, requested an extension of the project s closing date to September 30, 2015 in order to have adequate time to implement the replacement of the Veliki Krivelj collector only. 9. The replacement of the Veliki Krivelj collector (a 2.5 km concrete main pipe with a diameter of 3 meters) that rests at the bottom of the mine tailings facility which has been constructed on top of it, is considered the most pressing environmental concern of the original project interventions. The collector, carrying much more weight from the material above than what it was designed for, is in a very poor condition and regular repair works have managed so far to maintain its integrity. Collapse of the collector would block the river discharge and immediately jeopardize the stability of the massive mine tailings disposal facilities that have been constructed in the Kriveljska River valley. The full replacement of the collector with a bypass tunnel in hard-rock around the tailings disposal facility is considered the only viable solution to eliminate this high risk. Project Part 2 - Socio-Economic Regeneration 10. This Component was designed to contribute to one of the project objectives of fostering new sources of economic growth and job creation in the region. Project Part 2 consisted of two sub-components 2(a) Labor Redeployment and Employment Support and 2(b) Private Sector Development and was designed to serve two mutually reinforcing goals: (a) support the improved labor redeployment programs and employment services aimed at RTB Bor redundant workers and unemployed population of the Bor region; and (b) promote the development of the private sector in the region. The responsibility for implementation of Project Part 2 was with the Ministry of Economy and Regional Development (MERD). 11. With project effectiveness delayed until December 2008, implementation of Project Part 2 was significantly affected by the financial crisis. Specifically, the prospects for privatization of RTB Bor faded with the global crisis, and the local landscape started to change with significant pressure on the local market and already weak and underdeveloped private sector which made implementation more difficult. Also, in addition to lower than expected demand for certain activities, the limited local capacity to implement complex projects added to the challenges. 8
Specifically, the delays and slow implementation were also related to slow preparation and procurement of new activities, processing of bidders complaints, slow evaluation process by evaluation committees, and/or overall slow project and procurement administration due to lack of efficient coordination between the Project Management Unit (PMU) and MERD. 12. Out of approximately Euro 7.8 million allocated for Project Part 2 from the IBRD loan, only Euro 3.59 million, or around 46%, have been fully utilized (disbursed as per signed contracts). Given that approximately 30% of the Project Part 2 included a microfinance credit line which is implemented by the Opportunity Bank Serbia (OBS) and depended on market conditions - around 58% of the resources under administration of MERD were utilized. 13. The entire budget for temporary employment programs (i.e. public works) was fully expended, and due to a high demand additional US$260,000 were approved and utilized. In total, by the original project closing date, 842 unemployed people have benefited from 36 temporary employment activities. 14. As of September 2012, a total of 17 training programs for 535 unemployed beneficiaries, 14 private sector beneficiaries, and 30 client relationship counselors from the National Employment Service (NES) have been successfully completed; no progress was recorded with implementation of business development services. The programs for unemployed included development of transferrable skills in area of IT; bookkeeping; welding; English language; and so forth; the entrepreneurs were provided with European Business Competence License (EBCL) training and business incubation, while the NES counselors were trained in client relationship management as a part of capacity building efforts for the NES aimed at improving service delivery. The cited reasons for lack of progress with business development services were low demand, though the preparation and procurement of proposals was also slow and inefficient. 15. The reconstruction works of the future location of the Business Incubator in Majdanpek have been successfully completed. The registration of the incubator, selection of tenants, and procurement of necessary equipment are still pending, and the government is expected to proceed with the support to the incubator in the medium term. The expansion of existing Business Incubator in Bor was dropped due to inability of the client and local government to identify adequate location. At the same time, the incubator was supported with limited training and equipment. 16. In light of challenging market conditions, the disbursements under the microfinance program have remained low. As of September 2012, the OBS has disbursed only 74 loans in the total amount of over Euro 500,000 out of the available Euro 2.5 million. The disbursed portfolio is performing well with the portfolio at risk (PAR) at 30 days of 1.4%. 17. Despite the listed challenges, it is also important to highlight the achievements under Project Part 2 as mentioned above. However, four years into effectiveness the disbursements under Project Part 2 have remained limited, thus warranting closure. As there are no new prospects of improved demand and/or increase in project implementation capacity, it is proposed to cease with further implementation of Project Part 2. 9
Project Part 3 Project Management 18. The project has a complex structure of organizational arrangements to facilitate implementation of the various components under different line ministries and provide to necessary levels of coordination. Now that only activities will continue under Project Part 1 implemented fully by MEDEP, these arrangements can be largely simplified, as proposed under Section C of this paper. C. PROPOSED CHANGES Project s Development Objectives 19. The initial Project Development Objective (PDO) is: to support the GoS efforts to revive the depressed Bor region through: (i) dealing with urgent environmental and social legacy issues arising from mining sector restructuring; and (ii) fostering new sources of economic growth and job creation in the region. 20. Considering changes in Government priorities, job creation activities under Project Part 2 will not be continued. The remaining tunnel construction works under Project Part 1 is highly relevant for the existing PDO, but all other remediation works will been cancelled, as described in this paper. In view of the substantial reduction in the project scope from dropping or discontinuing project activities, the proposed revised PDO for the restructured project is: to support the GoS in addressing the structural hazard of the river water collector of the Veliki Krivelj tailings disposal facility, which is one of the most urgent environmental legacy issues of the mining sector in the Bor region. Results / Indicators 21. The performance monitoring indicators for the remaining activities under Project Part 1 are proposed to be adjusted for the next three years of the project (YR 6-8) as per Annex 1 of this Restructuring Paper to account for the proposed project changes and closing date extension. Components 22. For the Project Components the following changes are proposed: a. Part 1(a) Management of Environmental Liabilities will be dropped. Activities that initially envisaged for monitoring of environmental performance and pollution levels in the Bor area will not be implemented. The other activities related to monitoring of works under the Project will be implemented under Project Part 3. b. Part 1(b) Remediation of Urgent Environmental Hazards will become Project Part 1 (as a consequence, Part 1 will not anymore have sub-parts). Under this revised Project Part 1, the only works to be implemented will be the construction of a tunnel to replace the old collector in the Kriveljska River to by-pass the mining tailings disposal facilities in its 10
valley. Other works, initially envisaged under the Project such as remediation of tailing disposal facilities and waste disposal areas, will be dropped. c. All activities under Part 2 Socio-Economic Regeneration will be discontinued. d. Part 3 Project Implementation Support will remain, but will support the revised implementation arrangements (for details, see Section Institutional Arrangements of this Paper). 23. The cancelling of the remediation works under the Project is not expected to induce a significant immediate environmental hazard. The sites earlier earmarked for remediation, and in particular Dam 3 of the Veliki Krivelj tailings facility, require a regime of monitoring and maintenance which is the responsibility of the Government of Serbia and the local Institute of Mining and Metallurgy, but eminent structural risks of this dam where not found during site investigations. At the same time the structural integrity of the tailings facility and its dams is also of crucial importance for operational purposes for RTB Bor (the local mining company) that operates another mine tailings facility directly adjacent to the project site and would be equally important if third parties receive a concession to redevelop the site. Overall monitoring and maintenance of the sites have been performed, though predominantly in the form of repairs when required and less so in the form of scheduled maintenance. Institutional Arrangements 24. The current implementation arrangements have been designed to support multiple components implemented by more than one implementing agency. The proposed project changes will result in a substantial reduction of activities that will fully fall under the responsibility of implementation by MEDEP. Therefore, the following changes are proposed to simplify and tailor institutional implementing arrangements to the reduced Project scope: a. All arrangements that were dedicated to the implementation of Project Part 2 will discontinue, such as the Local Steering Committee and the Local Implementation Unit for Project Part 2. b. All project implementation tasks will be managed by a Project Implementation Team (PIT) under MEDEP. This PIT will resume all responsibilities for project implementation from the existing PMU, currently under the Privatization Agency, and the Local Implementation Unit for Project Part 1 (LIUA). For this purpose, the PIT under MEDEP will be located within the Ministry and will consist of a Coordinator, a Procurement Specialist, a Financial Management and Disbursement Specialist and an Office Assistant / Translator. In addition, located in Bor, the PIT with have a team of specialists in a Local Implementation Unit (LIU) to supervise implementation of project works with a local Team Leader, a Geological-Geotechnical Specialist, an Environmental Monitoring Specialist and a Mining Engineer. The proposed changes are a restructuring of the existing PMU and LIUA to form the PIT under MEDEP and its LIU. c. The PIT will hire for the duration of the project the services of an International Technical Advisor, a reputable international specialist in the field of mining rehabilitation projects. 11
d. The Project Steering Committee (PSC) will be reduced and will be comprised with representatives of MEDEP and the Ministry of Natural Resources, Mining and Spatial Planning. Financing o Project Costs 25. The proposed changes in Project cost are related to the cancellation of various remediation works under Project Part 1 and the discontinuation of activities under Project Part 2. Costs of Project Management under Project Part 3 will increase due to the extension of the Project Closing Date and the transfer of monitoring activities from Part 1 to Part 3. Project Costs (US$m) Components/Activities Current Proposed Part 1 - Environmental Management and 30.90 18.45 Remediation (initial component title), to be renamed to: Part 1- Remediation of Urgent Environmental Hazards Part 2 - Socio-Economic Regeneration 10.56 4.88 Part 3 Project Management 1.14 2.09 Unallocated 0.40 0.002 Total 43.00 25.42 o Financing Plan 26. The proposed changes to the Financing Plan reflect the cost savings presented under the Section Financing Project Costs. Financing Plan (US$m) Source Current Proposed Local Foreign/ Total Local Foreign / Total BORROWER/RECIPIENT 0.00 0.00 0.00 0.00 International Bank for 0.00 33.00 0.00 15.42 Reconstruction and Development International Development 0.00 10.00 0.00 10.00 Association (IDA) Total: 0.00 43.00 0.00 25.42 o Cancellations 12
27. It is proposed to reduce the existing amount of Euro 24.3 million (US$33 million equivalent) of Loan 7464-YF, and the total of cost savings presented in the Section Financing - Project Costs amounting to Euro 13.07 million (US$ 17.58 million equivalent) will be cancelled. Hence the proposed remaining Loan amount will be Euro 11.23 million. o Reallocations 28. Proceeds for Serbia Bor Regional Development Project, Loan 7464-YF, P092999 will be reallocated as follows: Category of Expenditure Allocation % of Financing Current Revised Current (Euro) Cancelled (Euro) Reallocated (Euro) Revised Allocation Current* (1) Goods, Works and Consultants' Services for Part l of the Project (2) Goods, Consultants' Services and Training for Part 2(a) of the Project (3) Goods, Works, Consultants' Services and Training for Part 2(b)(i) and (ii) of the Project (4) Microfinance loan under Part 2(b)(iii) of the Project (5) Incremental Operating Costs, Consultants ' Services and Training for Part 3 of the Project (Euro) Same 15,354,000 8,556,300 697,760 6,099,940 100% Same 3,730,170 1,073,280 0 2,656,890 100% Same 1,600,000 1,166,910 0 433,090 100% Same 2,481,000 1,981,000 0 500,000 100% Same 840,000 0 (-) 697,760 1,537,760 100% (6) Front-end Fee Same 0 0 0 0 Amount payable pursuant to Section 2.04 of this Agreement in accordance with Section 2.07(b) of the General Conditions. (7) Premia for Same 0 0 0 0 Amount payable 13
Interest Rate Caps and Interest Rate Collars (8) Unallocated Same 294,830 292,510 0 2,320 TOTAL AMOUNT (EURO) 24,300,000 13,070,000 11,230,000 *) There are no changes to the current financing percentages under the restructuring pursuant to Section 2.08(c) of this Agreement in accordance with Section 4.04(c) of the General Conditions. 29. The proposed reallocation to increase the budget for project management under Project Part 3 is necessary to enable the successful implementation of works under Project Part 1 until the extended project Closing Date. The cost savings from discontinuing Project Part 2 and the cancellation of remediation works as described under Project Part 1 provide sufficient funds for this reallocation. Financial management 30. Financial management responsibilities for the project will remain with the Privatization Agency until appropriate arrangements are agreed and instituted for transfer of responsibilities to MEDEP. Current arrangements within the Privatization Agency used for implementation to date, will continue to be used in the transition period. There are appropriate arrangements in the areas of accounting, financial reporting, budgeting, internal controls, flow of funds and external audit. 31. In order to better coordinate overall implementation of the project which will be transferred after restructuring to MEDEP, the intention is likewise to transfer financial management responsibilities for the project to the already existing PIU within MEDEP which is implementing the ongoing Energy Efficiency project, once all arrangements for smooth transfer of responsibilities are agreed. The PIU within MEDEP had already instituted sound financial management system for implementation of the ongoing project and any need for modifying existing procedures to respond to the specifics of Bor Regional Development project will be determined and followed up by May 31 2013. It is planned to assess readiness for transfer of financial management responsibilities to MEDEP on May 31 2013, based on the review whether financial management and control system within the PIU in MEDEP is fully responding to the specifics of Bor Regional Development project. A separate report on the findings and conclusion regarding the transfer will be prepared at that time by the Bank s Financial Management Specialist. 32. Financial management covenants for the project will remain the same after the restructuring, i.e., (a) delivery of quarterly financial reports (IFRs) at the latest 45 days after the end of each calendar quarter, and (b) delivery of annual audit of project financial statements at the latest six months after the end of the audited period. 14
33. The existing designated account for the project will continue to be used, however authorized signatories for the account will need to be changed in order to reflect the change in implementing entity. Procurement 34. Procurement will follow the same Guidelines and procurement arrangements as in the original design, with the exception that, with the restructuring, all procurement will be conducted by a PIT under MEDEP which includes an experienced Procurement Specialist. Closing date 35. The closing date for Serbia Bor Regional Development Project, Loan 7464-YF and IDA Credit No 4326-YF, P092999 will be extended from March 31, 2013 until September 30, 2015 for Project Parts 1 and 3. 36. In view of the approaching current Closing Date of March 31, 2013, the proposed new Closing Date of September 30, 2015 will be communicated to the Government of Serbia in a notification letter, separate from an Amendment Letter that will address all other modifications to the Loan and Financing Agreements that result from this restructuring. 37. The proposed extension is necessary to enable the full implementation of the tunnel construction works under Project Part 1. The scheduled period for the works from contract signing --which took place on February 1, 2013-- to completion is two years. A project extension of two and a half years is considered sufficient to allow for uncertainties such as a longer than usual winter period. The action plan for project completion is based on the works contract which was already signed and mobilization of contractors after project extension has been approved, and putting all conditions in place for successful implementation of the works (works contracts ready for signature, permits and authorizations concluded, formal working arrangements with RTB Bor, arrangements for works supervision and monitoring, etc.). 38. This will be the third extension of the project and would represent a cumulative extension of three years from the original Closing Date. The two earlier short-term extensions for the period from the original closing date on September 30, 2012 until March 31, 2013 had the purpose to discuss, conduct and conclude the restructuring as presented in this paper. There are no outstanding audits under the Project. 15
ANNEX 1: Results Framework and Monitoring SERBIA: BOR REGIONAL DEVELOPMENT Project PDO Current (PAD) The development objective of the project is to support the GoS' efforts to revive the depressed Bor region through: (i) dealing with urgent environmental and social legacy issues arising from mining sector restructuring; and (ii) fostering new sources of economic growth and job creation in the region. Revisions to the Results Framework Proposed The revised PDO for the restructured project is to support the GoS in addressing the structural hazard of the river water collector of the Veliki Krivelj tailings disposal facility, which is one of the most urgent environmental legacy issues of the mining sector in the Bor region. Comments/ Rationale for Change Under Project Part 1 only replacement of existing collector will be implemented, all other environmental remediation and monitoring activities have been dropped. The social-economic under Project Part 2 will not be continued after the original closing date of September 30, 2012. PDO indicators Current (PAD) Part 1 Environmental Management and Remediation Improved environmental conditions in the areas associated with past and present mining operations. Improved capacity to monitor environmental conditions Part 2 Socio-Economic Regeneration Number of jobs created/supported under the Project. Proposed change Part 1 Remediation of Urgent Environmental Hazards Elimination of environmental risks related to poor state and possible failure of the Veliki Krivelj tailings facility s collector for Kriveljska River discharge. Dropped Dropped Change in component name reflects the cancellation of subcomponent for environmental remediation. Change reflects the cancellation of remediation works other than construction of new tunnel to avoid high risk of failure of existing collector for Kriveljska river discharge. See comment to PDO Activities will not be continued after September 2012. With 46% of allocated resources disbursed, 23% of target value was achieved in September 2012 (886 jobs created with a target value of 3,850) Intermediate Results indicators Current (PAD) Part 1 Progress in remediation works of environmental trouble spots Proposed change* Dropped Dropped since Rehabilitation of Veliki Krivelj river by-pass / collector is only works to be implementation under Project Part 1. 16
Revisions to the Results Framework Comments/ Rationale for Change Rehabilitation of Veliki Krivelj river by-pass / collector Part 2 Number of beneficiaries from employment support services offered under the Project / placement of beneficiaries in jobs (where applicable): i) job search assistance ii) off-the-job training iii) on-the-job training iv) temp employment (public works) Number of beneficiaries (tenants) from business incubation services Number of loans disbursed in microfinance program Total disbursed amount in MF program Repayment rates in the microfinance program. Continued Dropped Dropped Dropped Dropped Dropped Activities after 71% disbursement ratio will not be continued after September 2012. The following results were achieved: i) 3467; 64% of target ii) 535; 54% of target value iii) 0 (no results) iv) 842; 42% of target value Activities after 27% disbursement ratio will not be continued after September 2012. Results need final verification. Activity after 20% disbursement ratio will not be continued after September 2012. With 20% of allocated funds disbursed, number of loans stand at 2% of target value. Repayment rate at target level. 17
Results Framework and Monitoring SERBIA: BOR REGIONAL DEVELOPMENT Project Project Development Objective (PDO): The development objective of the project is to support the GoS' efforts to revive the depressed Bor region through: (i) dealing with urgent environmental and social legacy issues arising from mining sector restructuring; and (ii) fostering new sources of economic growth and job creation in the region. Revised Project Development Objective: The revised PDO for the restructured project is to support the GoS in addressing the structural hazard of the river water collector of the Veliki Krivelj tailings disposal facility, which is one of the most urgent environmental legacy issues of the mining sector in the Bor region. PDO Level Results Indicators* Core D=Dropped C=Continue N= New R=Revised Unit of Measure Baseline Progress to date Cumulative Target Values** YR 6 YR 7 YR8 Frequency Data Source/ Methodology Responsibility for Data Collection Indicator One: Elimination of environmental risks related to poor state and possible failure of the Veliki Krivelj tailings facility s collector for Kriveljska River discharge. R Text Existing collector in need of replacement - Start of works Works in progress Safe alternative provided and river water rerouted Quarterly Progress Reports; End-of-Project Impact Assessment Consulting Reports, Works Supervision and Completion Reports PIT INTERMEDIATE RESULTS Intermediate Result (Project Part One): (i) Remediation of most pressing environmental hazards resulting from past mining operations; (ii) Management of state environmental liabilities in a technically sound manner. Revised Intermediate Result (Project Part One): Remediation of most pressing environmental hazards resulting from past mining operations Intermediate Result indicator One: Rehabilitation of Veliki Krivelj river by-pass / collector C meters 0 (design completed; works contractor selected) 0 500 1800 2400 Quarterly reports on progress of works Consulting reports, works supervision reports PIT