The World Bank
Central Highlands Connectivity Improvement Project (P159238)
REPORT NO.: RES56449
RESTRUCTURING PAPER
ON A
PROPOSED PROJECT RESTRUCTURING
OF
CENTRAL HIGHLANDS CONNECTIVITY IMPROVEMENT PROJECT
APPROVED ON JUNE 22, 2017
TO
SOCIALIST REPUBLIC OF VIET NAM
TRANSPORT
EAST ASIA AND PACIFIC
Regional Vice President: Manuela V. Ferro
Country Director: Mariam J. Sherman
Regional Director: Sudeshna Ghosh Banerjee
Practice Manager/Manager: Benedictus Eijbergen
Task Team Leader(s): Chi Kien Nguyen, Leslie Nii Odartey Mills
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
ABBREVIATIONS AND ACRONYMS
GoV Government of Viet Nam
IDA International Development Association
MOT Ministry Of Transport
ODA Overseas Development Assistance
PDO Project Development Objective
PMU2 Project Management Unit No.2
SDR Special Drawing Rights
XDR Currency Code for Special Drawing Rights
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
BASIC DATA
Product Information
Project ID Financing Instrument
P159238 Investment Project Financing
Original EA Category Current EA Category
Partial Assessment (B) Partial Assessment (B)
Approval Date Current Closing Date
22-Jun-2017 31-Dec-2024
Organizations
Borrower Responsible Agency
Socialist Republic of Viet Nam
Project Development Objective (PDO)
Original PDO
To improve the connectivity, safety and climate-resilience of the National Highway 19.
OPS_TABLE_PDO_CURRENTPDO
Summary Status of Financing (US$, Millions)
Net
Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed
IDA-61080 22-Jun-2017 27-Dec-2017 22-May-2018 31-Dec-2024 140.50 94.66 42.90
IDA-61090 22-Jun-2017 27-Dec-2017 22-May-2018 31-Dec-2024 9.50 0 9.23
Policy Waiver(s)
Does this restructuring trigger the need for any policy waiver(s)?
No
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING
1. This restructuring paper seeks the approval of a Level 2 restructuring of the Central Highlands Connectivity
Improvement Project (P159238). The restructuring proposes to partially cancel an amount equivalent to SDR
14,981,764 of the IDA Credit No. 6108 & IDA Credit No. 6109 based on estimated project savings.
2. The proposed restructuring does not change the Project Development Objective (PDO). No new activities are
proposed outside the scope of the Financing Agreement, and no changes to the Results Framework are proposed.
The environmental and social (E&S) safeguards classification remains “Category B”, and there are no changes to
the safeguards policies triggered. The proposed restructuring is in response to the Ministry of Finance’s (MOF)
letter to the IDA, dated April 25, 2024 received by the IDA on May 2, 2024. This proposed cancellation would be
the second restructuring of the project.
A. Project Background
3. The IDA’s Board of Executive Directors approved the financing for the Central Highlands Connectivity Improvement
Project (CHCIP) on June 22, 2017, with financing comprised of two credits from the International Development
Association (IDA Credit No. 6108 & IDA Credit No. 6109), totaling SDR 109.4 million (US$150 million equivalent).1
The Financing Agreement for CHCIP was declared effective on May 22, 2018 with an original closing date of June
30, 2023 which was retroactively extended to December 31, 2024 on August 2, 2023. The extension accommodated
delays in accessing counterpart funding.
4. The project development objective (PDO) is to improve the connectivity, safety, and climate-resilience of the
National Highway 19. CHCIP comprises two components:
(i) Component 1: Road Improvements (estimated cost of US$145 million, IDA: US$141.3 million). This
component supports the physical improvement of three sections of National Highway (NH) 19 including
pavement rehabilitation, widening of the road with paved shoulders, widening of lanes and features for the
safe sharing of the road by users, including through the addition of dedicated motorcycle lanes, and
reinforcement of slopes, to improve road connectivity, safety and to ensure sustainability of road assets.
(ii) Component 2: Implementation Support (estimated costs of US$8.7 million, IDA: US$8.7 million). This
component provides technical support for Project implementation, including detailed engineering design,
construction supervision, financial audits, environmental and social management, and monitoring and
evaluation.
B. Summary of Project Status
1 The project financing includes SDR 102,500,000 under IDA Credit 6108 and SDR 6,900,000 under IDA Credit 6109.
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
5. CHCIP is currently rated Moderately Satisfactory for both Development Objective and Project Implementation.
progress towards achievement of PDO and overall implementation progress is currently Moderately Satisfactory.
The safeguards rating is Moderately Satisfactory, and overall risk is Moderate. The status of project components is
as follows:
6. Component 1: Road Improvements. Progress of Civil Works (CWs) - The project consists of eight civil works
contracts of which, as of end-March 2024, four contracts CW 3, 5, 6 and 7 have been completed. The remaining
four contracts, CW 1, 2 and 4A, 4B, are under implementation at different pace of works ranging from 59 to 94
percent. Contracts CW 2, 4A and 4B are scheduled to be completed no later than end-June 2024; and the least
advanced contract CW1, is rescheduled to be completed or prior to project closing, subject to the resolution of
outstanding land acquisition issues by end-May 2024.
i. Delays in land acquisition and compensation: 37 affected households in Tay Son district of Binh Dinh
province have not been compensated, and relocation of utilities are yet to be completed, further delaying the
remaining land acquisition and resettlement. The delays in handing over the sites continue to impact civil works
implementation under contract CW1. MOT and Project Management Unit No.2 (PMU2) are working with the
local authorities to finalize the updated compensation plan, pay compensation to the remaining households,
shift the powerlines and hand over the sites to the contractor no later than end-May 2024. An assessment on
the timeframe to complete the civil works contract for CW1 will be conducted following the current deadline.
ii. Component 2: Implementation Support: The external financial auditor and independent environmental and
social safeguards monitoring consultant have been maintaining satisfactory performance. The construction
supervision consultants (CSC) have deployed all technical staff, a key position of a geotechnical engineer to
support implementation of the technically highly challenging slope works at the An Khe pass since March 2023
is still unfilled. PMU2 and the CSC are collaborating to ensure the hiring of the technical experts.
7. Fiduciary and E&S Summary. The project is in compliance with all legal covenants and fiduciary and E&S
requirements.
8. Disbursement and savings. As of April 30, 2024, the project has disbursed US$ 94.7 million from the IDA Credit
IDA-6108 (64.5 percent) and IDA Credit IDA-6109 (0.0 percent). Based on MOT/PMU2’s current estimates, there
are project savings in the amount of approximately US$20.5 million. The savings are a result of: (i) procurement
savings; (ii) favorable changes in the exchange rate from USD to VND; and (iii) unused contingencies.
9. Procurement, Financial Management (FM) and M&E. The procurement performance rating remains Moderately
Satisfactory with completion of procurement of all civil works. The performance rating for FM and counterpart
funding are rated Satisfactory.
10. Environmental and Social Safeguards. The project’s overall safeguards rating is currently Moderately Satisfactory.
As part of the proposed restructuring, no additional Safeguards policies are triggered, and there will be no change
to the current “Category B” safeguards classification.
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
11. Project management is rated moderately satisfactory due to pending land acquisition issues. The Monitoring and
Evaluation rating remains Moderately Satisfactory due to delay in recruitment of consultant to perform the iRAP
rating for PDO indicator 3.
12. The overall risk rating is moderate due to environment and social issues.
C. Rationale for Project Restructuring
13. The project’s financing will not be fully utilized by the closing date of December 31, 2024. The Ministry of Finance,
in its letter dated April 25, 2024, has requested a cancellation of SDR 14,981,764. This amount is expected to be
recommitted to finance other project(s) in Viet Nam before the current project closing date.
II. DESCRIPTION OF PROPOSED CHANGES
14. The proposed changes include: (a) partial cancelation of SDR 14,981,764 from Credits IDA-6108 and IDA-6109; and
(b) revisions to the disbursement estimates to reflect the partial cancellation. Table 1 summarizes the values of the
credits in SDR, the amounts to be cancelled through this Level 2 Restructuring.
Table 1. Financing Summary
Amount of Credit Allocation Cancellation Amount
(SDR) (SDR)
Category
Portion A Portion B Portion A Portion B
IDA-6108 IDA-6109 IDA-6108 IDA-6109
(1) Goods, works, non-consulting 90,100,000 6,900,000 8,081,764 6,900,000
services, and consulting services under
the Project
(2) Resettlement Compensation 12,400,00 0 0 0
required for Part 1 of the Project
102,500,000 6,900,000 8,081,764 6,900,000
TOTAL AMOUNT
109,400,000 14,981,764
15. Disbursement Schedule. The disbursement schedule has been adjusted to reflect the reduced financing after the
partial cancellation and is shown in Section IV. Detailed Changes below.
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
III. SUMMARY OF CHANGES
Changed Not Changed
Components and Cost ✔
Cancellations Proposed ✔
Reallocation between Disbursement Categories ✔
Disbursement Estimates ✔
Implementing Agency ✔
DDO Status ✔
Project's Development Objectives ✔
Results Framework ✔
Loan Closing Date(s) ✔
Disbursements Arrangements ✔
Overall Risk Rating ✔
Safeguard Policies Triggered ✔
EA category ✔
Legal Covenants ✔
Institutional Arrangements ✔
Financial Management ✔
Procurement ✔
Implementation Schedule ✔
Other Change(s) ✔
Economic and Financial Analysis ✔
Technical Analysis ✔
Social Analysis ✔
Environmental Analysis ✔
IV. DETAILED CHANGE(S)
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
OPS_DETAILEDCHANGES_COMPONENTS_TABLE
COMPONENTS
Current
Current Proposed Proposed
Cost Action
Component Name Component Name Cost (US$M)
(US$M)
Road Improvements 145.00 Revised Road Improvements 124.50
Implementation Support 8.70 No Change Implementation Support 8.70
TOTAL 153.70 133.20
OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE
CANCELLATIONS
Value Reason
Current Cancellation New
Ln/Cr/Tf Status Currency Date of for
Amount Amount Amount
Cancellation Cancellation
BORROWER'
Disburs S REQUEST
IDA-61080- 102,500,000.0
ing&Re XDR 8,081,764.00 25-Apr-2024 94,418,236.00 FOR
001 0
paying COUNTRY
REASONS
BORROWER'
S REQUEST
IDA-61090- Effectiv
XDR 6,900,000.00 6,900,000.00 25-Apr-2024 0.00 FOR
001 e
COUNTRY
REASONS
OPS_DETAILEDCHANGES_REALLOCATION _TABLE
REALLOCATION BETWEEN DISBURSEMENT CATEGORIES
Financing %
Current Allocation Actuals + Committed Proposed Allocation
(Type Total)
Current Proposed
IDA-61080-001 | Currency: XDR
iLap Category Sequence No: 1 Current Expenditure Category: GDS, CW, Non CS, CS
90,100,000.00 55,145,101.99 82,018,236.00 100.00 100.00
iLap Category Sequence No: 2 Current Expenditure Category: Resetlmt compensation P1
The World Bank
Central Highlands Connectivity Improvement Project (P159238)
12,400,000.00 8,914,697.52 12,400,000.00 100.00 100.00
Total 102,500,000.00 64,059,799.51 94,418,236.00
IDA-61090-001 | Currency: XDR
iLap Category Sequence No: 1 Current Expenditure Category: GDS, CW, Non CS, CS
6,900,000.00 0.00 0.00 100.00 0
Total 6,900,000.00 0.00 0.00
OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE
DISBURSEMENT ESTIMATES
Change in Disbursement Estimates
Yes
Year Current Proposed
2018 6,040,000.00 0.00
2019 28,550,000.00 0.00
2020 43,180,000.00 0.00
2021 35,260,000.00 3,897,000.00
2022 26,550,000.00 36,040,000.00
2023 10,420,000.00 26,514,000.00
2024 0.00 40,000,000.00
2025 0.00 23,006,650.00
.