S7- /-A$/Xu DoC nvx t of The World Bank FOR OmCAL USE ONLY Repot No. P-6255-RU MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$240 MILLION TO THE RUSSIAN FEDERATION FOR THE AGRICULTURE REFORM IMPLEMENTATION SUPPORT (ARIS) PROJECT MAY 31, 1994 Agriculture, Industry and Finance Division Country Department III Europe and Central Asia Region MICROGRAPHICS This document has a resticted dsribouo and may be their official duties. Its contents may not othenvise b Report No: P- 6255 RU Type: MOP RUSSIAN FEDERATION - FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System CURRENCY EQUIVALENTS Unit of Currency = Ruble (RB) Exchange Rate: Rubles per US Dollar Moscow Inter-Bank Foreign Currency Exchange/Foreign Exchange Auction Market (VEB) Rates Period End of Period Average Period 1989 9 9 1990 19 23 1991 62 169 1992 I Quarter 177 160 II Quarter 134 144 III Quarter 178 254 IV Quarter 396 415 1993 I Quarter 580 684 II Quarter 968 1,060 III Quarter 1,028 1,169 IV Quarter 1,206 1,247 1994 I Quarter 1,591 1,753 II Quarter' 1,825 1,895 'As of May 24, 1994 FOR OFFICIAL USE ONLY ACRONYMS AND ABBREVIATIONS ARIS: Agricultural Reform Implementation Support CIS: Commonwealth of Independent States FIAS: Fanner Information and Advisory Services FSU: Former Soviet Union LARIS: Land Reform Implementation Support MIS Market Information System MOAF: Ministry of Agriculture and Food PDU: Project Development Unit PPAR: Project Performance and Audit Report GLOSSARY Base: A large storage and distribution facility for fresh fruits and vegetables Kolkhoz: Collective farm Kray: A constituent administrative region Oblast: A constituent administrative region Okrugs: Semi-autonomous area located in a kray or oblast Rayon: District - an administrative unit under oblast or kray jurisdiction Sovkhoz: State farm I This docume has resicted distton and may be usod by rsiis ol in th puma of tr official dties Ilscontsmynotoeisebedisclosdwth Wot W ain RUSSIAN FEDERATION AGRICULTURAL REFORM IMPLEMENTATION SUPPORT (ARIS) PROJECT TABLE OF CONTENTS Loan and Project Summary ........................................ i THE PROJECT A. Sector Background ......................................1 B. Project Objectives ..................................... 2 C. Project Description ..................................... 2 D. Project Implementation ........................................ 3 E. Project Sustainability ..................................... 3 F. Lessons from Previous Bank Experienc .e................................ 4 G. Rationale for Bank Partici.ation ..................................... 4 H. Actions Agreed ............................ 5 I. Enviromnental Aspects ............... 5 J. Program Objective Categories .5 K. Project Benefits ........ ........................................ 6 L. Project Risks ....................................... 6 M. Recommendation ..................................... 6 SCHEDULES A. Summary of Project Cost Estimates and Financing Plan ...................... 7 B. Summary of Procurement Arrangements, Estimated Disbursements of IBRD Loan . ..... 9 Estimated IBRD Disbuisement Schedule C. Timetable of Key Processing Events .................................. 11 D. Status of Bank Group Operations in the Russian Federation ................... 12 Statement of IFC Investments in the Russian Federation Maps IBRD 25149: Russian Federation: Market Infrastructure Development IBRD 25150: Russian Federation: Farmer Information and Advisory Services IBRD 25151: Russian Federation: Seed Industry Development RussIAN FEDERATION AGRICULTURAL REFORM IMPLEMENTATION SUPPORT (ARIS) PROJECT LoAN AND PROJECT SUMMARY Borrower: The Russian Federation Beneflciaries: Ministry of Agriculture and Food (MOAF) and participating private seed and marketing enterprises. Amount: US$240 million equivalent Terms: 17 years, including 5 years grace, at the Bank's standard variable interest rate. On-lending Terms: The proceeds of the loan would be channelled in two ways: First, funds to the government agencies involved in the project would be channelled through the budgetary process. Second, funds to participating private seed and marketing enterprises would be on-lent in US dollars by the Government through commercial banks on an agency basis. The sub-loans would have a repayment period of 10 years, including 2 years grace. The on-lending interest rate would be equal to the Bank's standard variable interest rate (the base rate) plus a margin of 2.5 percent. The Government would bear the default risk and the cross- currency risk; and the sub-borrowers would bear the foreign exchange risk between the US dollar and the ruble. Fhnancing Plan: Local Foreign Totl Source as Percent Financing Source J (US$ million equivalent) of ToJta IBRD) 1 1 240 240 74 Federal Govermnent 40 - 40 12 Participating Private Enterprises 45 - 45 14 Total 85 240 325 100 Percent of Total 26 74 100 Economic Rates of Return: Seed enterprises: 25-37 percent Marketing enterprises: 26-29 percent Non-investment activities: Not applicable Poverty Category: Not applicable Staff Appraisal Report: No. 12710-RU Maps: IBRD 25149, IBRD 25150, IBRD 25151 MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF TIHE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE ExEcuTIvE DIREcTORS ON A PROPOSED AGRICULTURAL REFORM IMPLEMENTATION SUPPORT PROJECT To THE RUSSIAN FEDERATION 1. I submit for your approval the following memorandum and recommendations on a proposed loan to the Russian Federation for an amount equivalent to US$240 million to finance the implementation of the Government's ongoing and future agricultural reform program by creating and strengthening infrastructure and institutional capacity for a nationwide market information system, fanner information and advisory services and enabling policy environment for private sector participation and by supporting "pilot" investments by participating private enterprises dealing with agricultural marketing and modem seed industry. The Agricultural Reform Implementation Support (ARIS) Loan would be at the Bank's stand; rd variable interest rate with a maturity of 17 years, including a five-year grace period. A. SEUrOR BACKGROUND 2. The agricultural sector plays a vital role in Russia's economy. First, the agro-industrial complex is large and accounts for about 25 percent of the net material product, employment and investment. Second, Russia is endowed with an extensive natural resource base with large agricultural potental, but at present these resources are not being used efficiently. Third, agriculture absorbs a large share of budgetary and hard currency resources, and any improvements in sector performance could have a large mnpact on containing the budget deficit and improving the balance of payments. Fourth, consumers allocate as much as 50 percent of their annual income to meet food requirements. Finally, agriculture is an important sector to facilitate transition to a market economy and development of private enterpri- a. Despite the sector's potential for higher efficiency and growth, the overall agricultural production. I. distribution remain inefficient. Agricultural production is declining, yields are low, physical losses ase high, output and input distribution systems are inefficient, prices are distorted, profitability is low and subsidies still remain high. 3. The prospects for agricultural production are largely dependent on the Government's ability to enhance economic incentives, promote competition, reduce its intervention and implement agricultural reforms. The government decrees and agricultural policies pursued since January 1992 indicate significant reduction in Federal Go-vernment intervention at all stages of agricultural production, distribution, marketing and pricing. However, there exists a wide variation in policies and reform initiatives being pursued by different oblast governments. 4. The Bank's strategy is to help put in place the fundamental building blocks, which are essential to the development of a market oriented agricultural economy. While this transition will necessarily take place over a number of years, there is an immediate need to develop human resources and institutional capacity in agriculture which are vital for the efficient functioning of a market economy and the implementation of agricultural reforms. The Bank's lending strategy thus focuses on financing key investments in the private sector as demonstrations for wider replication, on developing the critical infrastructure and institutions needed to support farm restructuring, land privatization, development of markets, enhancement of knowledge through creation of market and fanmer information systems, reduction in distortions and reform of agro-industrial enterprises. - 2 - B. PROJECr OJECnVES 5. The main objectives of the project are: (a) to create and strengthen the most critical agricultural support services to accelerate the implementation of on-going and future agricultural reforms; (b) to build analytical and institutional capacity to identify, appraise and implement agricultural and agro-business projects by the private sector on the basis of economic criteria; and (c) to demonstrate the role that the private sector can plav in promoting efficiency in the agro-industrial sector. The support services would focus on: (i) the creation of an enabling policy environment for private sector participation in seed and market development; (ii) establishment of a nationwide market information system; and (iii) establishment of farmer information and advisory services. The role of the private sector would be demonstrated by selective "pilot" investments in seed and market enterprises. The provision of critical support services, the development of analytical capacity and demonstration of the commercial viability of participating enterprises are expected to lay the foundation for an efficient agricultural sector based on private ownership and market principles. C. PROJECT DESCRIPON 6. The proposed project consists of three main components. These are: (a) market infrastructure development; (b) farmer information and advisory services; and (c) seed industry development. 7. Market infrastructure development consists of the creation of a market information system (MIS), pilot investments in market infrastructure and institutional development. The MIS will be a nation-wide system to collect, process and disseminate information on about 50 agricultural commodities and inputs. The pilot investments will consist of establishing and upgrading market enterprises (fruit and vegetable bases, mini-wholesale markets and vegetable storage facilities). These facilities will be owned and operated by participating private enterprises. Training and technical assistance will be provided to MOAF and local governments to enhance their catalytic role in market development. 8. Farmer informuation and advisory services (FLAS) consists of information development, information dissemination and institutional development. It is designed to meet the increasing demand for critical information by newly emerging private farms, restructured state and collective farms and agro- business enterprises. The underlying concept is an approach oriented to r-qer needs which is multi-source, multi-user, multi-disciplinary and multi-media. FIAS will provide . mely and relevant agronomic, technical, legal, business, management and environmmntal information in agriculturally important areas. 9. Seed industry development consists of the establishment of commercially viable hybrid corn and sunflower seed production and processing units owned and operated by private enterprises located in selected southern oblasts, krays and republics having a comparative advantage in seed production for these crops. These investments are intended to demonstrate how a commercial seed industry could be organized in a market environment. It will also support the establishment of a national policy and institutional framework which is consistent with accepted international norms. 10. In addition, Project Development Unit (PDU) has been established within the MOAF to coordinate the overall implementation of the ARIS project and to develop analytical capacity to prepare future agricultural projects for financing by international financial institutions. 11. Total project cost is estimated to be US$325 million, of which 74 percent is expected to be in foreign exchange. The respective shares of the project components in total project cost are 33 percent for market infrastructure development, 20 percent for farmer information and advisory services, 45 percent for seed industry development and 2 percent for PDU. The proposed Bank loan of US$240 - 3 - million would finance 100 percent of the foreign exchange cost of the project. It was agreed during negotiations to include a provision for retroactive financing up to US$1.0 million to cover expenditures beginning on June 1, 1994. The Federal Government and the participating private enterprises would finance all local costs, including any payments of import duties and taxes. About 60 percent of Bank funds would be on-lent in US dollars, through commercial banks on an agency basis, to the participating private seed and marketing enterprises as sub-loans with maximum maturity period of 10 years, including 2 years grace, at the Bank's standard variable interest rate plus a margin of 2.5 percent. Any surplus reflows (the difference between borrower's repayment obligations and sub-borrowers' repayments) will be used on a revolving basis, and on similar terms and conditions, to finance similar private sub-projects acceptable to the Bank. The Government would bear the.default risk and the cross-currency risk; and the sub-borrowers would bear the foreign exchange risk between the US dollar and the ruble. Summary of project cost estimates ano the financing plan are shown in Schedule A. Amounts and methods of procurement and disbursements are shown in Schedule B. A timetable of key project processing events is given in Schedule C. D. PoJEcr IMPLnENTATION 12. The MOAP will be responsible for implementing the ARIS project. The PDU will coordinate all the day-to-day work related to ARIS implementation, budgeting, procurement, disbursement, audit, reporting, monitoring, evaluation and appraisal of all the private sector sub-projects. Actual imnplementation of projecz components and sub-components will be the responsibility of component implementation units located within the departments and agencies of MOAF and in local government agencies. MOAF will work with the departments of agriculture at the oblast and rayon levels to implement different project components. The sub-loans to the pilot seed and marketing enterprises would be made in accordance with the terms spelled out in para. 11 above. The sub-projects would be appraised by the PDU and would be subject to review and clearance by the Bank. However, at least the first three sub-projects, for each of the seed and marketing enterprises, would be appraised by the Bank. The ARIS project will be implemented only in those regions which have agreed with the. MOAF to participate in the project. The implementation capacity of the MOAF would be strengthened through appropriate training and technical assistance in procurement, accounting and project management. E. PROJECr SUSTrANABUrTY 13. The sustainability of the project depends on: (a) availability of counterpart funds; (b) trained staff; and (c) commitment of the Government to continue project activities. The project is designed to assist in removing resource and skill constraints, thereby making it possible to sustain the project after five years. The participating private enterprises as "pilot" sub-projects would account for about 60 percent of the loan proceeds. The feasibility studies of selected enterprises indicate that the enterprises would be commercially viable and will be able to sustain their operations. 14. The remaining 40 percent of loan proceeds would finance much needed public sector activities to develop and disseminate information to private farmers, restructured farms and agro-business enterprises and institutional support to private seed industry. The project would introduce the concept of "fee for service" for selected activities. Agreement was reached during negotiations on the following cost recovery principles for services provided by the public sector: (i) establishment of a fee schedule for selected services in 1995; (ii) introduction of fee for service and other appropriate cost recovery measures in 1996; and (iii) establishment, operation and use of a "fund" in the MOAF from resources collected through fees or oher cost recovery measures in 1996. The Bank will work with the Government during implementation to design a cost recovery strategy to sustain the project. -4 - F. LESSONs FROM PREvIous BANK EXPERIENCE 15. The Bank has extensive experience in implementing diverse agricultural projects -- including market development, agricultural extension and seed industry. The proposed ARIS project is the first Bank project which deals with agricultural marketing, farmer information and advisory services and seed industry in the FSU. Given serious legal, institutional, political and economic problems faced by Russia, the proposed project may encounter problems. However, the design of the ARIS project has incorporated the relevant lessons to improve its chances for satisfactory performance. 16. Agricultural marketing projects supported the role of prices, market organization and infrastructure development but relied heavily on government parastatals. However, direct or indirect control on marketing margins, poor management, inadequate project preparation and implementation problems contributed to poor performance. The experience with agricultural extension projects indicates that: (i) such projects should strengthen generation, use and exchange of information; (Ji) a participatory approach leads to successful project design; (iii) increased emphasis should be on multi-media approach for dissemination; and (iv) while the public sector will continue to play an important role in agricultural extension, there is a need to encourage the role of private sector. Finally, Bank experience with seed projects in other countries has been primarily in the public sector. Many Bank projects have operated below their capacity. This has been due to lack of appropriate national seed policy and serious implementation problems. The establishment of government model seed farms has not been successful due to lack of appropriate incentives and trained personnel. G. RATIONALE FOR BANK PARTICIPATION 17. The Bank's involvement n the agricultural sector is essential to continue the dialogue with the Government which was initiated through the major Bank report entitled Food and Agricultural Policy Reforms in the Former USSR: An Agenda for the Transition, which was financed by the Bank's Technical Cooperation Program and was published in 1992. The Bank's support for this project would: (a) help develop key institutions necessary to implement agricultural reform; (b) accelerate the development of private farming; (c) finance critical investments to develop market infrastructure and modem seed industry; and (d) contribute to the prospects for continuing policy reform. 18. The Bank's Country Assistance Strategy (CAS) for Rursia was discussed with the Executive Directors on May 19, 1994. At that time, the Bank recommended an Intermediate Case lending program on the order of $1.0 - 1.5 billion annually (not including quick-disbursing adjustment lending), which would include a set of core projects that would not require major sectoral policy conditionality. The ARIS project and the companion Land Reform Implementation Support (LARIS) Project are included in the set of core projects. The objectives of the CAS include: (i) support for the development of a market- oriented economy based on private sector initiatives; (ii) encouragement of the redirection of public sector involvement in the economy toward the establishment of open and competitive markets and the provision of physical, social, legal and institutional infrastructure not normally provided through the private sector; and (iii) establishment of the Bank as a trusted and reliable development partner. The proposed ARIS Project meets all three objectives. The private sector would be involved in the operation of key agricultural marketing infrastructure and the development of a modem seed industry. The public sector would focus on the development of market information system and the provision of farmer information and advisory services to support the evolution of markets and growth of private fanning. The Bank's support for programs aimed at the development of private farming has encouraged the MOAF in promoting sound policies in this sector. The proposed project is therefore fully consistent with the Bank's CAS for Russia. The status of Bank Group operations is given in Schedule D. I 5 - H. ACIIONS AGREED 19. The Government has informed the Bank of (a) Government's policy on liberalization of prices and elimination of subsidies and administrative controls on marketing of seeds (hybrid corn and sunflower), fruits and vegetables; and (b) Government's commitment to maintain these policies. 20. The following agreements were reached during negotiations: (i) agreement on cost recovery principles; (ii) agreement on the terms and conditions for sub-loans to participating private enterprises; (iii) agreement on the process for preparation, appraisal, approval and financing of sub-projects; (iv) agreement on the use of any surplus reflows on a revolving basis for financing simila sub-projects; (v) agreement on the composition of the Project Coordination Committee for the PDU and its role in approving project sub-loans; (vi) agreement on the organization, staffing, functions and financing of PDU and the component implementation units; (vii) agreement on the provision of periodic reports on project progress, accounts for the project, auditing requirements and financial statements; (viii) agreement on selection procedures for procurement agents; (ix) agreemtnt on selection procedures for commercial banks to manage the Special Account and/or to serve as agency banks; (x) agreement on adequate legal and administrative framework for making sub-loans to private enterprises; (xi) agreement on guidelines for oblast participation in the project; and (xii) agreement on the position for retroactive financing up to US$1.0 million. 21. The following are the conditions of loan effectiveness: (i) appointment of key staff of the PDU (project management specialist, accountant, procurement specialist and technical specialists); (ii) establishment of component implementation units within the departments and agencies of MOAF and in at least two participating regions for sub-components dealing with private seed and marketing enterprises and appointment of their directors; and (iii) establishment of the Project Account with an iritial deposit of at least US$1.0 million equivalent in a commercial bank acceptable to the Bank. I. ENVIRONMENTAL ASPE$T 22. The project is expected to have a positivc impact on the environment. The move toward private farming promoted by this project is expected to foster more prudent use of land and other natural resources. In addition, public awareness of agricultural environmental issues will be created through appropriately designed environmental information collection and dissemination, technical assistance and training programs. Anv environmental concerns related to new investment sub-projects for the development of "pilot" seed and marketing enterprises will be addressed during implementation of sub- projects by following the Bank's and the country's environmental requirements and guidelines. The feasibility studies for seed and marketing enterprises will include an obligatory environmental review, the adequacy of which will be verified by the PDU. The Bank review of typical feasibility studies will ensure the adequacy of environmental analysis and suggest improvements as necessary. The PDU will be given the responsibility of ensuring that recommendations made in environmental analyses are implemented. The project has a "B" environmental assessment category. J. PROGRAM OBETVE CATEGORIES 23. The ARIS Project supports (i) private sector development through the creation of market information system and farmer information system and advisory services and the development of private marketing and seed enterprises; (ii) improved public sector management by developing the institutional capacity of the MOAF; and (iii) development of a policy, legal and institutional framework for accelerating the implementation of agricultural reforms. - 6 - K. PRojEcT BENEmS 24. The project is expected to have substantifl eirect and indirect financial and economic benefits for individual enterprises, farmers, consumers and the nation. The project's potential benefits include enhanced economic incentives, increased agricultural production (particularly corn and sunflower seeds), farm income, rural employment, and foreign exchange savings. The project would support accelerating the pace of reforms which would lead to an efficient agricultural sector based on private ownership and market principles. The development or a market information system and alternative agricultural marketing channels will increas- competition, reduce physical losses, provide higher quality food at competitive prices and have favorable impact on prices and marketing services received by farmers and hence farm income. The development and dissemination of appropriate and timely information and advisory services to private farmers, newly restructured farms and agro-business enterprises will enable them to make informed business decisions, improve agricultural productivity and actively participate in the process of agricultural reform. The establishment of a modern seed industry would increase the availability of quality seed which, in turn, would result in higher crop yields and foreign exchange savings from reduction in seed imports and would lay the foundation for a modern seed industry in the private sector. The project would train a large number of Russian experts to advise farmers and develop analytical capacity to prepare and implement future agricultural projects. L. PRojECr RimK 25. The main risk is that the project may face delays in implementation. Factors that could cause problems in project implementation include: the current unstable macroeconomic environment and its possible further deterioration, lack of political consensus on agricultural reforms, delay in government decision-making and lack of counterpart funds and trained personnel with experience in implementing World Bank projects. The maintenance of free markets for the sale of seeds is critical for the commercial viability of participating private seed enterprises. As long as these prices are not controlled, domestic seed prices should adjust with changes in international prices and the exchange rate, which should enable private investors to obtain an attractive return on their investment. The review and appraisal of at least the first three sub-projects for each of the seed and marketing enterprises by the Bank are expected to reduce potential implementation risks. The project has introduced necessary measures in the form of legal covenants, training and technical assistance, and has allocated necessary resources to minimize these risks. The establishment of a strong PDU, with appropriate support for procurement, disbursement, accounting, project management and technical aspects, is also expected to mitigate some of the potential project risks. The project would be intensively supervised (including a project launch workshop, annual reviews and a comprehensive mid-term review) so that appropriate and timely actions are taken to avoid and overcome implementation problems. M. RECOMMENDATION 26. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the loan. Lewis T. Preston President Washington D.C. May 31, 1994 Attachments -7- Schedule A Page 1 of 2 Russian Federation Agricutural Reform Implementation Support (ARIS) Project Summary of Project Cost Estimates (US$ million equivalent) Project Costs Foreign Component as Percent as Percent Components Local Foreign Total of Total of Total Market Infrastrudure Development Civil Works 15.70 6.23 21.92 28.39 6.75 Equipment and Machinery 0.68 44.18 44.86 98.48 13.80 Import Duty 4.43 - 4.43 -- 1.36 Operating Cost' 9.78 6.53 16.31 40.01 5.02 Training - 0.65 0.65 100.00 0.20 Technical Assistance - 2.75 2.75 100.00 0.85 Sub-Total 30.59 60.32 90.92 66.35 27.97 Farmer Information and Advisory Services Civil Works 3.25 2.25 5.50 40.96 1.69 Equipment and Machinery 0.07 24.23 24.31 99.70 7.48 Import Duty 3.64 .. 3.64 -- 1.12 Operating Cost 10.435 - 10.46 - 3.22 Training - 8.65 8.65 100.00 2.66 Technical Assistance -- 1.81 1.81 100.00 0.56 Sub-Total 17.41 36.94 54.35 67.96 16.72 Seed Industry Development Civil Works 5.30 6.07 11.37 53.40 3.50 Equipment and Machinery 5.70 89.84 95.54 94.03 29.40 Import Duty _ _ - _ Operating Cost 14.0 - 14.00 - 4.31 Training - 1.86 1.86 100.00 0.57 Technical Assistance _ 1.49 1.49 100.00 0.46 Sub-Total 25.00 99.26 124.26 79.88 38.23 Project Develcpment Unit Civil Works _ _ _ _ Equipment and Machinery - 0.24 0.24 100.00 0.07 hnport Duty 0.04 - 0.04 - 0.01 Operating Cost 2 0.47 1.33 1.81 73.77 0.56 Training 1.73 1.73 100.00 0.53 Technical Assistance - 3.55 3.55 100.00 1.09 Sub-Total 0.51 6.85 7.36 93.07 2.26 Total Base Cost 73.52 203.37 276.89 73.45 85.20 Physical Contingencies 3.88 17.30 21.18 81.68 6.52 Price Contingencies 7.60 19.32 26.93 71.76 8.28 Total ProjectCost 85.00[ 240.00 325.00 73.85 100.00 Foreign component refers to incremental working capital to finance purchase of critical agricultural inputs. 2 Foreign component refers to payments for local consultants. Of total project costs, about US$10 million are import duties. In addition, payable VAT (approximately US$45 million) is not included in the project cost since it is refundable within about one year. -8 - Schedule A Page 2 of 2 Financing Plan (UJS$ million equivalent) Financing Source Local | Foreign Total Percent of _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~ ~~Total IBRD _ 240 240 74 Federal Government 40 -- 40 12 Participating Private 45 -- 45 14 Enterprises ___ Total 85 240 325 100 PercentofTotal 26 741 100 _ _l -9. Schedule B Page 1 of 2 Russian Federation Agricultural Reform Implementation Support (ARIS) Project Summary of Procurement Arrangements (us$ million equivalent) I ---ocurement Method ' cost component ICB LCB OMERS NBF 1. Works Construcion 6.6 18.0 0.3 24.9 (1.9) (5.1) (0.1) (7.1) Tumlkey 7.2 6.3 13.5 (7.2) (7.2) Renovation 4.4 3.8 8.2 (3.2) (3.2) 2. Goods Computer and Communications 47.3 47.3 (47.3) (47.3) Turnkey 83.8 4.0 87.8 (83.8) (83.8) Equipment and Machinery 44.2 14.7 3.0 61.9 (44.2) (13.9) (58.1) Materials 7.3 7.3 (7.3) (7.3) 3. Consulting Services Training 14.2 14.2 (14.2) (14.2) Technical Assistance 11.8 11.8 ______________________________________ - ,._______ (11.8) (11.8) 4. Miscellaneous Opering Costs 38.4 38.4 Import Duties 9.7 9.7 Total Project Cost 1 189.1 j 18.0 f 52.7 1 65.2 325.0 (Dank Flnandeb bJ (184.4) (5.1) [ (50.5) (240.0) ICB: nenational Competitive Bidding LCB: Local Competitive Bidding Others: Refers to Limited International Bidding (LB) US$10.2 million, International Shopping (IS) US$14.9 million, Local Shopping (IO) US$0.3 million, Direct Contract (DC) US$0.1 million, and Force Account (FA) US$1.2 million, as well as US$14.2 million for taining and US$11.8 million for technical assistance, both of which will be obtained in accordance with the Bank's Consultant Guidelines. NBF: Non-Bank Financed b Figures in parentheses refer to Bank financing. - 10- Schedule B Page 2 of 2 Estimated Disbursements of IBRD Loan (US$ million equivalent) Category Amount of Percent of Expenditure to be Loan Allocated Financed 1. Turnkey Contracts 7 76 100% 2. Civil Works 7 30% 3. Equipment, Machinery, Material and Supplies 95 100% of foreign, 100% of local (ex-factory) and l_____________ .75 % of other items procured locally 4. Consultants' Services and 22 100% Training 5. Unallocated 40 Total 240 Disbursement Schedule Bank Fiscal Year (ending June 30) Disbursement (US$ milion equivalent) 95 96 97 98 99 Annual 20 70 90 40 20 Cumulative 20 90 180 220 240 - 11 - Schedule C Russian Federation Agricultural Reform Implementation Support (ARIS) Project Ilmetable of Key Processing Events (a) Time taken to prepare: 8 months (b) Project Prepared by: Government with IBRD assistance' (c) First IBRD mission: March 1993 (d) Departure of Appraisal Mission: October 1993 (e) Negotiations: May 1994 (f) Planned Date of Effectiveness: September 1994 (g) List of Relevant PCRs and PPARs: None The World Bank missions assisted the government in project identification (March/April 1993) and preparation (June/July 1993). The project was appraised by the Bank in October/November 1993. Mission members of the core Bank team are Mohinder S. Mudahar (Task Manager), Ramesh Deshpande, T.V. Sampath (EC3AI) and S. Janakiram (C.). Others who participated in the Bank missions and contributed to project preparation inrlude George Russell (ACTCO), Jonathan Pavluk (LEGEC), S. Balakumar, Charles Morse, John Liakakis, Leon Hesser, Johan van der Riet, Carol Hoisington, Michael Smedley, Ing. Zimmerman, R. G. Kolenbrander, Wesley Kriebel, Paul Hill, Edward Goldstein, Michael Olson, Mathieu Wagesman, Leonard Henny, Gary Reusche, Walter Migus and Carl Pray (Consultants). Wayne Ringlien assisted from the Bank's Resident Mission in Moscow. James Goering (ECIAG) and Jit Srivastava (AGRTN) were the peer reviewers. Claude Blanchi (ECAVP) and Marc Blanc (EC3DR) provided operational guidance. Michael A. Gould and Russell J. Cheetham are the managing Division Chief and Department Director, respectively, for this operation. -12- Schedule ) Page 1 of 2 Russian Federation Agricultural Reform Implementation Support (ARIS) Project Status of Bank Group Operations in the Russian Federation (as of May 20, 1994) Country: Russian Federation LOA data as of 04/30194 Amounts in US$ million MIS dat as of 05/20/94 (ess cancellation) Loan No Fiscal Borrower Purpose Bank IDA Undis- Closing Year bursed Date 0 Loans closed L3513-RU 1993 Russian Federation Rehabilitation Loan 600.00 - 68.00 09/30/94 L3546-RU 1993 Russian Federation Privatization 90.00 - 88.00 06/30/96 L3623-RU 1993 Russian Federation Oil Rehabilitation 610.00 - 607.00 12/31/95 L3532-RU 1993 Russian Federation Employment Servicesb 70.00 - 70.00 04/30/95 L3706-RU* 1994 Russian Feeration Highway Rehab.b 300.00 - 300.00 06/30/98 L3734-RU5 1994 Russian Federation Fin. Inst. Devpt.b 200.00 -- 200.00 12/31/98 Total 1870.00 1333.00 at Not yet signed bt Not yet effective - 13 - Schedule D Page 2 of 2 Statement of IFC Investments (as of April 30, 1994) Amount in US$ millonl Invoice Approval ObUgstor Orig. FC Equity Total Undis- No. Date Commit. Held bursed Loans 4040-RUS 06/10/93 Polar Lights' 60.00 60.00 0.00 60.00 0.00 3532-RUS 06/10/93 Vasyugan Servicese 11.50 10.00 1.50 11.50 11.50 3621-RUS 06/30/93 International Moscow Bank 15.00 15.00 0.00 15.00 15.00 4061-RUS 12/09/93 Framlington Fundb 8.00 0.00 8.00 8.00 4.00 Total 94.50 85.00 9.50 94.50 30.50 a/ For oil and gas b/ For capital markets - 14 - MAPS m:\mudahar\sar\aris.mop IB8D 25149 KILOMETERS0 500 RUSSIAN FEDERATION ' GsrAFT U.S.A. MILES o 400 AGRICULTURAL REFORM IMPLEMENTATION SUPPORT (ARIS) PROJECT MARKET INFRASTRUCTURE DEVELOPMENT COMPONENT Bearing OBLAST, KRA) OR REPUBLIC BOUNDARIES Seo MARKET INFORMATION SYSTEM AUTONOMOUS OBLAS1T OKRUG OR UNITED Norwegian REPUBLIC BOUNDARIES' KINGDOM ~- eJPILOT INVESTMENTS IN MOSCOW (1 61 MARKET DEVELOPMENT INTERNATIONAL BOUNDARIES East 'I,cluding Republics of Adygeya, Alhi, Ktamhdi.Chekess and Khokosia. Siberion . -i- _ . \ ~~~~~~~~ARCTIC OCEAN g>>V, , NORWAY Barent; 4 , d g {< v , T os e L Y - MONGOUA Gr unrO any 1 Atkbengelskr ie eblest 19. Snsolesskais ablest 37. Somonekais ablest 55. Pssotskeao obloss 73. Krssnoda ekei krsi 2. Nenetskii Autanemaus aleug 20. Tneakoie ables 38. Sarelansleis ablest 56, Komi-Permwslskob outbnomausoTrrug 74. Republicoaf Khbisbio 3. Republic of Kerelias 21. Tul'skoio ables 39. Republic of Tehnhnte 57. Snerdlanekala ablest 75. Tcdmyrsb'i lDalgena.Nenelsbiil oeelulnomos oknug 4. Republic of Komi 22. Moediminskoko ablest 40. Lllknovskis ablest 5sa Udmurl Republic 76. Ewenksidkii asuleeae,ous ekteG S. Murmonbskio ablest 23. leondranskee ablest 41. Velgagradskaia ables 59, AllhisIi eml 77, Republic ozf Tuwe 6. Velagoddskia obleod 24. Republic of Cbunesb 42. Republic of Doedostn 60. Republic of Alhil 78. Anmunskok ablest 7.01.Petersburg 25. Klranekol ablest 43. ChecheynRepublic aed In9asbRepublic 61. Keinernesbe ablest 79. Komchotskoho blest 8. Leningradsreia ablest 26. Republic of Mesi.-EI 44. Kobondino-BollcorRepublic 62. Nanasibieknis ablest 80. Keriabls utanemees abrag 9. Nangargskoie abbot 27. Mordovilan Republi:e 45, Knrsodensad i boT6 63. Omdcoko ablest B1. Khebaraossii knal 10. Pekanebela ablest 20 Nhiv Nond leist 46. Republic at Adplgeyeo 64. Teatebeis ablestd 82. Jewiebshatunretous ablest 11. Btionskoiooablesttelposnioid 47. Nertb-Oselle,Reipublic 65. T1smensrbis ablest 83. Mageslessenis ablst 12. Inenavelsal ablst 30. l(wrsksiea blest 48. Redostumal ablest 66. Kbssly-Maesiislsli astanameue abrug 84. Chekeisbli oulonomoaur okrug 13. Kalurbebae ablest 31. .ipehakeio ablest 49. 90vnropolskii kml 67. Yamel-Nentels oubanomous aleug 85. Frimarebli luol 14. Kestrmewobela abes2. Tambanekel blest 50. Ksrcbel.CheredsssRepublic 68. Republicof Beryahie 86. Sekhelinsksisoablest ,15..bsonsksie.ablast 33. Veraneshdsei ablest 51, Republic of Boshkorlodon 69. Cbliesbdeie ablest 87. RepJublic of Sokhe (Yalestie .16 ..blohvase.hy 34. Astrelsbnebeis ablest 52. Cbelisbinskeia ablest 70. Agiessdi Burwtlskii eutanemeus okrug 88. Kalissiegsadsbaia ablest 17. Ordovskoio ablest 35. Republic of Keletylie 53. Kerganebale ablest 71, Irkuhkokoe ablest 18. Risuansbsei ablest 36. Penendeesbt ablest 54. Orenburgstsee ablest 72. Ust'.OsdyasMi Baryae4kil edaraomsou oknug JUNE 1994 13RD 25150 KILOMETERSO 500 RUSSIAN FEDERATION ' - -. ,RjR..G U.SI . A ) MILES o 400 AGRICULTURAL REFORM IMPLEMENTATION SUPPORT (ARIS) PROJECT FARMER INFORMATION AND ADVISORY SERVICE COMPONENT I Bi OBLAST KRAI OR PEPUBLIC BOUNDARIES AUTONOMOUS OBLAST, OKRUG OR -tiNIT Ap Norwegiran1 POTENTIAL PROJECT AREA REPUBUCBOUNDARIES KIN M Secr *4 MOSCOW (16 / yft- INTERNATIONAL BOUNDARIES Easl8 B4 .1 E 84 'Including Republis of Adygeyo Altai, Korachoi-Cherkerond Kh.kosia. Siberian - North t e N RWAYs>' ,5' Brents ~ARCTIC OCEAN .) NOIRWAY _ -_h arents* ; - Sea 57 Sea ' K 8 l l r F I N A N D X g *X~~~~~~~~~,,/)Kou a ¢ t1 t-~~~~~~-~ 83 l \ F~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~8 79\, .s. Sea~~~~~~~~~~~~~~~~~~~~~~e 87~~~~~~~8 10 Sea~~~~~~~~~~~~~1, 6"-'8 e SYRIA>,, tlt X AZER;AIJAN > {,sr < X > ~~~~~~~~~~~~~~~~~~~~~~The boosdoties. colodrs deOnoo,minoiosHons nod onre ofThr inormoionk 2"g R A Q u A M i;;b U R\ < ~~~~~~~~ ~ ~~~~~~~~~~~~~~MONGOLIA rdoup, ony jsdg,n.setf ton tohe eofr ol sototoo of one territory. or ony r~~~~~~~~~ 1. Atlnbongelskoio oblost 19. Sralenskoia ablosl 37. Sameokroko oblant 55. Permskoio ablo t 73. Kresnoironkii kroi 2. Nenetskii Aolononmovo aokrg 20. Tvetnlcoioa blest 38. Sraoaletoia ablest 56. Kami.Pennyatokioi autonomous okrug 74. Republic of Khokosie 3. Repub ic of Karelio 21. Tul tkcaia ablest 39. Repoblic ot Takirstan 57. Snedlnoikoia ablast 75, Toimyrskoii Ioalgena.Naentrskii autonomous oknug 4. Republic of Komi 22. Vladio lrsealia ablest 40. Ulkaoosia ablest 58. Udmurt Repoblic 76. £venkliiskii aoteeOmouo aonrg S. Murmonskaio oblest 23. Itoslavsgkaia ablest 41, Valgagradslcal ablest 59. Altoiskii brol 77. tespoblic of Tuna 6. Volo_aoekaia obtest 24. Republic af Chuva h 42. Republic of Dager.an 60. Republic of Albal TB. Amonskaoi ables 7.5S. Pletemoburg 25. Kirnaskoioa blast 43. Chechsen Republic and Ingush Republic 61. Kemeranvskaia oblast 79. Katnchotsboia oblest 8. L.eningadskbal oblost 26. Republic of Mao6i.EI 44. Kabardiea.Bolhor Rapobllc 62. Nnelb,sal ables 80. Konariu ootonatnouo along 9. Nanosgongkoic abblot 27. Mosnlastan Republic 45. Knsseodaofdi lend 63. Omskele ablest 81. Khabaontblil knod 10. Pokonrshal ablest 28. Nrehniy Nongorod ablbst 46. Republic at Aeygeye 64. Tomskiai ablest 82. Jenrisl auoloamass oblest 11. Bsionokoioa blest 29. Belgoradebala ablest 47, North.Osetlen Republic 65. Tyomenshala ablest 83. Magodoas,klo ablest 12, lveanershal ablest 30. Korokae ablest 48. Rastenskaia ablest 66. Khanty-Mansliskii aubenomous along 84. Chokonsti autonomous abrug 13. Koluobolotaiobloul 31. Upetukola ablst 49. Stavrapalskii koal 67. Vomal-Neneto outonamaus olog 85. Primorskdiikrci 14. Kosbranabcl ablost 32. llnbovsnkeia ablest 50. Karachai.Cberkeoo Republic 68. Republic of Buryotiie 86. Sokholintkaia ableat 15. Mankovskai blest 33Ale.aneubsltaa blest 51. Republica ulkattathes 69. Chditnokboiabls 87. 5epublicof Sahh hotlYakt 16. Moso CilY 34. Atteakhanskoio ablest 52. Clelelskableoo eblest 70. AgietIdi Bsryatsbli autanaeaus akrug 88. Re ml r s ciao ald 17. Orlounkal ablest 35. Re public of Kolmnykio 53. Kwrgosaaa ablest 71. lrkolakoia ablout 18. Rleoonskoioabobud 36. Penoensboeo ablest 54. fOrebursegsoablebst 72. Udt -Ordyntbli buryctskii outonasmous okrug JUNE 194 IBRD 25151 KILOMETEPSO 500 RUSSIAN FEDERATION ' - 4.R SSTIAI U.S.A. AGRICULTURAL REFORM IMPLEMENTATION SUPPORT (ARIS) PROJECT ¸"r > MILES o 400 SEED INDUSTRY DEVELOPMENT COMPONENT r' r-Yi Potentialprojedon3afonPotential proje area for sod production nKriorRepubiboundariesg Zone where corn is grown for groin and Autonomous Oblost, Okrrg orug S 1NITESA:9 Norweedion Z sereduction (approx. 1. million ha.) Republic bouncaries' I ~ ~ ~ ~ ~~Nre9t Zone where corn is grown only for KIN DI M Se silage with ears (appox. 2.5 million ho.) 0 Moscow (16) (r'} Zone where corn is grown primarily for green Internatfionol boundaries East 8 Noah z 2055(- fodder siloge opprrox. 6.0 million ho. 8 h cost Sumsaf mean i.mol temperatures *lnuddnoeublsrAyernAli Siberian 5 ^ S< $ N orthS (sum s of days t em peroture > I0 'C ) ,sc i. eihess and Kheosi a Sea < ' NORWAY _-J_. pe2rents ' ',\l 12%<3 7s ts7 ' S W Sea _,eo ARCTIC OCEA ~ ~ ~ ~~~~~~~Ad Ohos Sea J~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~JpnJP AIJ^N /< X z t° ~~~~~~~~ ~ ~ ~ ~ ~~~~MONGOLIA G,u.a.Sami uotokfaySniut)a 1 . Arkhongelslsaia oblast 19. Smolenshalo oblast 37. Samarskaia oblost 5S. PFrmmskaia oblas 73. Krasnoiarskii krai 2. Nenetskii Autonomous okrug 20. Toerslsala ablest 38. Saratoyskala oblast 56. KomBf'ermnyolskaio ausonamass okrug 74. Republic of Khakosia 3. Republic of laruflia 21. Tul'skoia ablost 39. Republic of Tafarsban 57. Svurndfonskaia oblost 75. Taimyrslsil Ifolgano.Nenefslsii) autonomous okrug 4. Republic of Komri 22. Vbadimirskoioa blest 40. Ulkrnovskoio oblast 58. Udmurt Republic 76. Ewnkaliskii aofoeamouu okrug 5. Murmoaskaio oblost 23. Iorotlonskoia ablest C 41. Volgogradaluaa obfodt 59. Altoisk i krai 77. Republic of Tuna PROJECT OBLASTS, KRAIS, REPUBLICS 6. Vologodskoia oblast 24. Republic of Chsnash C 42. Republic of Dcgesdan 60. Republic of Altbi 78. Amurshala ablost 7. St. Petersburg 25. Kirovskoio oblast C 43. Chechen Republic and Ingush Republic 61. Kemeronnrsola ables 79. Kamchofsbaio obiosu C CORN SEED 8. LesingrenialaeX oblout 26. Republic of Marii-EI C 44. Kobordino-Bolkor Republic 62. Novosibirskoia oblodt 80. Koriokil autonomous okrug 9. Novgorogskoio ohlost 27. Mordonion Republic C/S 45. Kraseodrinski krai 63. Omskaio ables 81. Khabarankisi brol s SUNFLOWER SEED 10. Pskovskako ablest 28. Nhhniy Nongorod oblost C 46. Republic of Adygeva 64. Tomskiai ablest 82. Jewish aubneomouu oblasl 11. Brianshela ablest S 29. belgorodukala ablest C 47. North.Osetien Republic bS. Tyumesskaia ablost 83. Magadanshala obhast C/S CORN SEED AND/OR 12. Ivonovskaio ablesit 30. Kurslsala ablost C/S 48. Rostayskala ablest 66. Khanty.Mansiisbli autonomous obreg 84. Chukotsa'i autonomous aknueg SUNFLOWER SEED 13. Kaluzhskaia oblasl 31. Uipetskaia ablest C/S 49. Stanropolebli krai 67. Yomal-Nenets autoeomoss okcrug 85. Primorskii kroi 14. Kostromskoia oblast 32. Tombovskoia ablest 50. Karachai.Cherkess Republk 68. Republic of 8uryatlik 86. Sokholinskoio ablost 15S. Moskanssical ables C/S 33. Vononezhskoio ablest 51. Republic of bashkortastan .69. ChiSinsaial ablest 87. Republic of Saokha (YakuSoa) 16. Moscow City C 34. Auitrokhonukaio ablodt 52. Cheliabinskioal ablestl 70. Aginskhi Butyatshii autbnomous akinug 88. KaliningnrJdskok ablest 17. Orlovskoio ablest ' 35. ffepublic of Kalmykko 53. Kurganskaia oblast 71. Irkutskaio ablest 18. Riozanuicala oblast 36. Peuzenukalo ablest 54. Orenburgakolo ablest 72. Ustf-Ordynskii Buryotskii autonenous akrug 4 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~JUNE 1994