Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES13779 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LAND ADMINISTRATION AND MANAGEMENT PROJECT LOAN NO L7647-ME APPROVED ON DECEMBER 9, 2008 TO MONTENEGRO MARCH 16, 2015 Social, Urban, Rural and Resilience Global Practice Europe and Central Asia Region 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 EA Environmental Assessment MSDT Ministry of Sustainable Development and Tourism PDO Project Development Objective READ Real Estate Administration Department REC Real Estate Cadastre Regional Vice President: Laura Tuck Country Director: Ellen A. Goldstein Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Jorge Munoz Task Team Leader: Olivera Jordanovic 2 MONTENEGRO LAND ADMINSTRATION AND MANAGEMENT PROJECT CONTENTS A. SUMMARY 5 B. PROJECT STATUS 5 C. PROPOSED CHANGES 6 3 DATA SHEET Montenegro Land Administration and Management Project (P106906) EUROPE AND CENTRAL ASIA 0000009081 Report No: RES13779 Basic Information Project ID: P106906 Lending Instrument: Specific Investment Loan Regional Vice President: Laura Tuck Original EA Category: Partial Assessment (B) Country Director: Ellen A. Goldstein Current EA Category: Partial Assessment (B) Senior Global Practice Ede Jorge Ijjasz-Vasquez Original Approval Date: 09-Dec-2008 Director: Practice Jorge A. Munoz Current Closing Date: 30-Apr-2015 Manager/Manager: Team Leader(s): Olivera Jordanovic Borrower: Ministry of Finance Responsible Real Estate Administration Department of the Ministry of Finance Agencies: Ministry of Sustainable Development and Tourism Restructuring Type Form Type: Short Form Decision Authority: Country Director Approval Restructuring Level 2 Level: Financing ( as of 16-Jan-2015 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P106906 IBRD-76470 Effective 09-Dec-2008 30-Dec-2008 24-Feb-2009 30-Apr-2014 30-Apr-2015 Disbursements (in Millions) % Cancelle Disburse Undisbur Project Ln/Cr/TF Status Currency Original Revised Disburse d d sed d P106906 IBRD-76470 Effective EUR 11.00 11.00 0.00 8.98 2.02 81.66 Policy Waivers Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] 4 respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes This restructuring is for the purpose of extending the closing date of the project by 8 months (to 31 Dec 2015) to allow for current activities on (1) creating the Real Estate Cadastre (REC) in rural areas of Montenegro; (2) upgrading software in the Real Estate Administration Department (READ); and (3) the completion and furnishing of the new READ headquarters building in Podgorica to be fully implemented and loan funds fully disbursed. B. Project Status Progress towards achieving the Project Development Objective (PDO) is Satisfactory and the PDO continues to be achievable. There has been significant progress on two out of three indicators – the average time to register a transaction and decrease in time to issue a construction permit. Targets for both indicators have already been met. Progress on the third PDO indicator - percentage of customers satisfied with services for real estate registration and planning and permitting - will be verified based on the results of the third (and final) customer satisfaction survey (expected to be completed by April 15). Implementation progress has improved substantially over the last 6 months, mainly due to completion of the major share of activities under Component B (Improved Planning and Permitting) and improved counterpart funding for Component A (Real Estate Registration). There are, however, three important activities where progress is slow and will not be completed by the current project closing date: (i) Completion of the Real Estate Cadaster (REC) for 100,000 ha in rural areas of Montenegro: The surveying works that had been carried out, both those financed by the project and those financed by Government funds, exceeded the targets planned in the project (over 250,000 hectares had been surveyed). However, registering property in the REC has proven to be more challenging and time consuming, mostly due to lengthy and complex legislative procedures and capacity constraints. While the REC pipeline is very strong, declaring the REC formally completed in a certain territory (i.e. the project performance measurement) depends on a complex two-stage appeals process and the entire territory can only be entered in the REC, once appeals on both levels are resolved,. An action plan including monthly targets, has been agreed with the Client in October 2014 and progress is being monitored by the team. As of February 28, 2015, 30,092 hectares (ha) have been entered in the REC (vs. 10,400 ha by Oct 30, 2014) while another 20,188 ha are completed and ready to be entered as soon as the appeals process is fully executed (expected by end June). This is the territory where both the surveying works and the public display process have been financed out of loan funds. In addition, there is 74,000 ha with REC completed which has been partially financed with loan funds, namely the government has been financing the surveying works, while the project funds the commissions working on the public display. (ii) READ Software upgrade: Work on the software upgrade and testing has been progressing well, but difficulties were encountered at the data migration stage. While this was to be expected, as the data migration stage is known to be the most difficult stage in any cadastre software development, the time for resolving issues and taking corrective measures was underestimated and delays occurred in completing the software upgrade and conducting users training. (iii) New READ building in Podgorica: Delays in completing the new building have been caused by the lack of counterpart funding. Subsequently the delays in construction works have also delayed the procurement of over $1 million worth of office furniture and equipment that could not be delivered and installed until the works were completed. While the counterpart funding issue is now resolved and appropriate funding provided by the Government in 2015 budget, additional time is needed for the building 5 to be equipped and become functional. The project has been restructured once, in April 2013, to clarify a number of results indicators and to extend the closing original date by 12 months, to April 30, 2015. The extension was required to allow additional time for improvements to the IT system to be developed and rolled out to all of READ’s local offices and finalize preparation of the Spatial Urban Plans. . All of the project’s legal covenants and safeguards are in compliance. Financial management and procurement performance are satisfactory. There are no outstanding audits. The project disbursement ratio is 81.7%, with an additional 6.5% already committed under ongoing contracts. The remaining 11.8 percent (or EUR 1.3 million) is to be committed upon completion of the ongoing procurement of furniture, ICT equipment, local READ office renovation works, purchase of office premises, etc. C. Proposed Changes Financing Change in Loan Closing Date(s): Explanation Extending the Project till December 31, 2015 would allow for: a. Completion of significant portion of the REC. It is estimated that about 70 percent of the territory surveyed under LAMP, or 70,000 ha, could be covered by REC by the end of 2015, vs. estimated 35 percent by the current closing date. Completion of the REC under LAMP is essential for security of property rights in rural areas of Montenegro. It would also have a major positive impact on sustainability of the project’s achievements and in particular on results captured under key project PDO indicator: the average time to register a transaction. b. Completing software upgrade and delivery of training to users. While the software upgrade is expected to be finished by the current closing date, more time will be needed (4 months) to conduct training for internal and external users. It is of great importance to allow sufficient time for providing training to external users such as notaries and private surveyors. That would allow the system to be further tested, and have a major positive impact on the speed of registration, through enabling online access to cadastre services for external users. c. READ Building to become operational: By April the construction works and installation of essential building equipment will be 95% completed. The remaining works, mostly associated with the façade 2 (glass façade), are expected to be completed by end of June. The tender for furniture was completed at the end of February, the evaluation of bids is ongoing, and the delivery of furniture is expected to be completed in June. Specifications of the ICT equipment are being finalized and equipment is expected to be delivered by the end of September. The building is thus expected to be fully equipped by October, and functional by December. Completion of the building, while in itself not a key indicator (new READ building in Podgorica operational is an intermediate outcome indicator of the Project), would be a major contribution to further improvements of customer service. Action plan with monthly targets for each of these three activities agreed in October 2014, and closely monitored over the period of 4 months, was put under a joint, Client-WB “reality check” during the short mission in March 2015. Revised set of final targets was agreed on March 13. Original Closing Current Closing Proposed Closing Previous Closing Ln/Cr/TF Status Date Date Date Date(s) IBRD- Effective 30-April-2014 30-April-2015 31-Dec-2015 30-April-2014 6 76470 7