Document o f The World Bank FOR OFFICIAL USEONLY Report No: 31465-RU PROJECT APPRAISAL DOCUMENT O NA PROPOSED LOAN INTHEAMOUNT OFUSD80MILLION TO THE RUSSIANFEDERATION FORA NATIONALHYDROMET MODERNIZATION PROJECT February 16,2005 Environmentally and Socially Sustainable Development Unit (ECSSD) RussianFederationCountry Unit 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. CURRENCY EQUIVALENTS (Exchange Rate Effective January 31,2005) Currency Unit = Ruble Ruble28.0665 = US$1 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS AVHRR Advanced Very HighResolution Radiometer BEA Bureau o f Economic Analysis BSRN Baseline Surface Radiation Network CAS Country Assistance Strategy CQS SelectionBased on Consultant's Qualifications FMR Financial Management Report GGO MainGeophysical Observatory named after A.I.Voeikov GoR Government o fthe Russian Federation GTS Global Telecommunication System GEF Global Environmental Facility HRPT HighRatePictureTransmission LAN Local Area Network LCS Least Cost Selection LIB Limited InternationalBidding MoF Ministryo fFinanceo fthe RussianFederation MSC Meteorological Service o f Canada MTN Main TelecommunicationNetwork N C B National Competitive Bidding NOAA National Oceanographic and Atmospheric Administration (U.S.) NWS National Weather Service (U.S.) NWSRFS National Weather Service River Forecast System OCR Optical Character Recognition OPRC OperationalProcurementReview Committee PIU Project Implementation Unit PMC Project Management Committee QCBS Quality and Cost-Based Selection RHMC RosHydromet Center R M C Regional Meteorological Center RHM RosHydromet RosHydromet Federal Service on Hydrometeorology and Environmental Monitoringo fthe Russian Federation SA Special Account SBD Standard BiddingDocuments SOE Statement o f Expenditure TOVS TROS Operational Vertical Sounder VNIIGMI- All RussianResearch Institute o fHydrometeorological Information World - FOROFFICIAL, USEONLY WDC Data Center WMC World Meteorological Center WMO World Meteorological Organization UTC Coordinated Universal Time (formerly known as GreenwichMean Time) Vice President: Shigeo Katsu Country Director: KristalinaGeorgieva Sector Director: Laura Tuck Task Team Leader: Vladimir Tsirkunov This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. RUSSIANFEDERATION NATIONALHYDROMETMODERNIZATIONPROJECT CONTENTS Page A. STRATEGICCONTEXT AND RATIONALE ............................................................... 10 1. Country and sector issues.................................................................................................. 10 2. Rationale for Bank involvement....................................................................................... 12 3. Higher level objectives to which the project contributes.................................................. 12 B PROJECTDESCRIPTION . ............................................................................................... 13 1. Lending instrument ........................................................................................................... 13 2. Project development objective andkey indicators............................................................ 13 3. Project components ........................................................................................................... 13 4. Lessons learned and reflected inthe project design.......................................................... 16 5. Alternatives considered andreasons for rejection............................................................ 17 C. IMPLEMENTATION ........................................................................................................ 18 1. Partnership arrangements.................................................................................................. 18 2. Institutional and implementation arrangements................................................................ 19 3. Monitoringandevaluation of outcomesh-esults................................................................ 20 4. Sustainability..................................................................................................................... . . . 21 5. Critical risks andpossible controversial aspects............................................................... 22 6. Loadcredit conditions and covenants............................................................................... . . 23 D APPRAISALSUMMARY . ................................................................................................. 24 1. Economic and financial analyses...................................................................................... 24 2. Technical........................................................................................................................... 25 3. Fiduciary ........................................................................................................................... 25 4. Social................................................................................................................................. 27 5. Environment ...................................................................................................................... 28 6. Safeguard policies............................................................................................................. 28 7. Policy exceptions and readiness ........................................................................................ 29 Annex 1:CountryandSector or ProgramBackground ......................................................... 31 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies .................49 Annex 3: ResultsFrameworkandMonitoring ........................................................................ 50 Annex 4: DetailedProjectDescription ...................................................................................... 56 Annex 5: ProjectCosts............................................................................................................... 66 Annex 6: ImplementationArrangements ................................................................................. 67 Annex 7: FinancialManagementandDisbursementArrangements ..................................... 69 Annex 8: Procurement ............................................................................................................... 75 Annex 9: EconomicAnalysis ...................... :............................................................................... 85 Annex 10: SafeguardPolicyIssues ............................................................................................ 90 Annex 11: ProjectPreparationandSupervision ..................................................................... 91 Annex 12: Documentsinthe ProjectFile ................................................................................. 92 Annex 13: Statementof LoansandCredits .............................................................................. 95 Annex 14: Countryat a Glance ................................................................................................. 98 Map: IBRDNo 33836 . RUSSIANFEDERATION HYDROMET MODERNIZATIONPROJECT PROJECT APPRAISAL DOCUMENT EUROPE AND CENTRAL ASIA ECSSD Date: February 16,2005 Team Leader: Vladimir V. Tsirkunov Country Director: KristalinaI.Georgieva Sectors: Generalwater, sanitation and flood Sector Director: Laura Tuck protection sector (60%);Irrigation and drainage (30%);Information technology (10%) Themes: Water resourcemanagement (P);Climate change(S) Project ID: PO82239 Environmental screeningcategory: Not Required Lending Instrument: Specific Investment Loan Safeguard screening category: Project Financing Data [XI Loan [ 3 Credit [ ]Grant [ ]Guarantee [ ]Other: For Loans/Credits/Others: Total Bank financing (US$m.): 80.00 Pronosedterms: VSL Source Local Foreign Total BORROWER 33.30 20.04 53.33 INTERNATIONALBANKFOR 49.94 30.06 80.00 RECONSTRUCTIONAND DEVELOPMENT Total: 83.24 50.09 133.33 Borrower: Ministryo fFinanceo f the RussianFederation 9, Ilyinka street Moscow RussianFederation 103097 Tel: +7-(095)913-4406 Fax: +7-(099-913-43 15'4308 apavlov@dmfo.ru Responsible Agency: RosHydromet 12, Novovagan'kovsky pereulok Moscow 6 Russian Federation 123995 Tel: +7-(095)-205-4813 Fax: +7-(095)-252-1158 3edrBmecom.ru Project implementation period: Start June 17,2005 End: September 30,2010 Expected effectiveness date: June 17, 2005 Expected closing date: September 30,2010 Does the project depart from the CAS incontent or other significant respects? ??e$PAD A.3 [ ]Yes [XINO Does the project require any exceptions from Bank policies? Re$ PAD D.7 [XIYes [ ] N o Have these been approved by Bank management? [XIYes [ ] N o [s approval for anypolicy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated"substantial" or "high"? Ref: PAD C.5 [XIYes [ ] N o ~~ Does the project meet the Regional criteria for readiness for implementation? Ref: PAD D.7 [XlYes [ ] N o ~~~ Project development objective Re$ PAD B.2, Technical Annex 3 The main development objective o f the project is to increase the accuracy o f forecasts provided to the Russian people and economy bymodernizing key elements o fRosHydromet's technical base and strengthening its institutional arrangements. This would enable enterprise and household adjustments to protect lives and support economic growth. Project description [one-sentence summary of each component] Re$ PAD B.3.a, Technical Annex 4 Component A: Modernization o f Computing, Archiving and Telecommunications Facilities (US$46.1 millionbaseline excluding contingencies andtaxes, US$62.1million estimatedproject costs). A.1: Modernizationo fthe MoscowWMC and Obninsk Archiving Facility (US$30.5 million excluding contingencies andtaxes, US$41.O million estimated project costs). This subcomponent will support capacity upgrade at RosHydromet's Main Computing Center and at the main facility for archiving and retrieval o fhydrometeorologicaldata at Obninsk. A.2: Restructuring at Novosibirsk andKhabarovsk RMCs andModernization o fVoeikov GGO (US$7.9 millionbaseline excluding contingencies and taxes, US$10.7 million estimated project costs). This subcomponent will upgrade regional specialized forecast centers at Novosibirsk and Khabarovsk, and Voeikov Main Geophysical Observatory inSt. Petersburg. A.3: Modernizationof the Communications andDataTransmission System (US$7.7 million 7 baseline excluding contingencies andtaxes, US$10.4 million estimated project costs). The aim o f this subcomponent is to facilitate efficient andtimely aggregation and disseminationo fdata and analyses. Component B:Upgrading o fthe Observation Networks (US$42.3 millionbaseline excluding contingencies andtaxes, US$56.9 million estimated project costs) B1. Surface ObservationNetwork (US$17.4 millionexcludingcontingencies andtaxes, US$23.3 million estimated project costs). This subcomponent aims to upgrade the instrumentationat 900-1000 o fRosHydromet's surface observing stations. B2. Aerological (Upper Air) Network (US$4.9 millionbaseline excludingcontingencies and taxes, US$6.6 million estimated project costs).This subcomponent will upgrade the upper-air network. About 45 MeteoritIAVK aerological radars may be replaced, and a further 40 AVK stations suppliedwith new computing and radar supply sets. B3. Meteorological Radars and LightningDetection. (US$8.5 millionbaseline excluding contingencies andtaxes, US$11.4 million estimated project costs). This subcomponent will improve storm warning to heavily-populatedurban areas and to vulnerable coastal zone. B4. Regional HydrometeorologicalCenters (US$5.3 million excluding contingencies and taxes, US$7.2 million estimated project costs). This subcomponent will finance upgraded capacity at 20-30 regional hydromet centers, addressing four issues: satellite data reception, visualization systems, hydrological forecasting, and atmospheric pollution monitoring. B5. Hydrological Network (US$6.2 million baseline excluding contingencies and taxes, US$8.4 million estimated project costs). This sub-component will finance upgrade o f about 600- 800 hydroposts. The upgrade will focus on critical locations for flow measurements indicating the state o fthe river systems, locations critical for the purpose o f flood warning, and full re- equipment o f three flood-prone sub-basins to pilot the transition to automatic monitoring. Component C: Institutional Strengthening, Improvement inOutput Dissemination, and Emergency Preparedness (US$5.9 millionbaseline excluding contingencies andtaxes, US$7.9 million estimated project costs). C.1.Institutional Strengthening (US$2.7 million baseline excluding contingencies and taxes, US$3.6 million estimated project costs). This subcomponent will comprise a modest institutional strengthening program. C2. Client Service System (US$1.4 million baseline excluding contingencies and taxes, US$1.9 million estimated project costs). A Client Service System will be designed and implementedto facilitate disseminationo f data and information from RosHydromet centers. . C3. Emergency Preparedness andResponse (US$1.8 million baseline excluding contingencies and taxes, US$2.4 million estimated project costs). This subcomponent i s aimed to improve emergency response preparedness, via implementation o f several pilots with the goal o f 8 developing replicable models. Component D: Project Management, Training, andMonitoring and Evaluation (US$4.7 millionbaseline excluding contingencies and taxes, US$6.4 million estimated project costs). This component would support RosHydromet inproject implementation, training, monitoring and evaluation o f the project impact. Itwill support operation o fthe Project Management Committee (PMC) and overall project management, as well as technical assistanceinsuch areas as contract administration, installation and construction supervision, procurement and financial management. Which safeguard policies are triggered, ifany? Re$ PAD 0.6, Technical Annex 10 Environmental Assessment (OP/BP/GP 4.01) Significant, non-standard conditions, if any, for: Boardpresentation: Adoption o f RosHydromet Administrative Order on the Capacity BuildingProgram. Re$ PAD Annex 6 Loadcredit effectiveness: Execution o f Agency Agreement between MOF, RosHydromet and BEA. Re$ PAD C.6 Covenants applicable to project implementation: The Borrower to carry out the Capacity BuildingProgram activities inaccordance with a manual to be adopted by RosHydromet satisfactory to the Bank. Re$ PAD Annex 6 9 A. STRATEGIC CONTEXT AND RATIONALE 1. Countryandsector issues The Russian Federal Service for Hydrometeorology and Environmental Monitoring (RosHydromet) is charged by law with reducing loss o f life and damage to the environment and economy that arises from weather events and climate. To meet its charter, RosHydromet monitors meteorological variables, hydrological variables, air and water quality and soil characteristics. It produces daily weather forecasts, flood and storm warnings, seasonal forecasts, drought monitoring reports, agrometeorological forecasts, projections o f climate change, general ocean circulation models, and records o f ambient pollution, among other products. RosHydromet i s also responsible for the RussianFederation's compliance with treaty obligations inherited from the Soviet Union. In international agreements forged in the 1960s, the USSR accepted responsibility for a central role inthe world network o fmeteorology that is coordinated by the United Nations' World Meteorological Organization. As a result, the Moscow World Meteorological Center is one o f three worldwide centers that are charged with computing and distributing daily global forecasts to initialize the world's regional weather models, as well as developing new techniques in support o f worldwide forecasting. In addition, the All-Russian Research Institute o fHydrometeorological Information (VNIIGMI) archive locatedinObninsk is a World Data Center, RosHydromet's regional centers at Khabarovsk and Novosibirsk are charged with global leadership in specific areas o f forecasting, and Voeikov Main Geophysical Observatory is a World Data Center maintaining globally significant solar radiation databases. Finally, because weather processes are intrinsically global, the data supplied from Russia's vast land mass i s essential to forecasters worldwide; in fact, it comprises about 10 percent o f worldwide data supplied via the World Meteorological Organization (WMO) network as the basis for the world's daily weather forecasts. The capacity o f RosHydromet to provide services to Russia and globally has steadily declined since the economic transition began. RosHydromet's decline was associated with the overall deterioration o f public sector performance, but was exacerbated even in that context, as RosHydromet found itself at the margin o f Government interest, inadequately funded for staff salaries and unfunded for maintenance or new investments. From 1994-2000, funding from the national budget ranged from 28 percent to 41 percent o f what would be required for regular operations. As a result, RosHydromet's capacity to help prevent economic and human losses has deteriorated. To take one measure, the number o f dangerous weather events not predicted by RosHydromet, as a share o f the number o f dangerous weather events that actually occurred, increased from 6.1 percent in 1993 to 23.1 percent in2001. The decline has affected all elements o f the RosHydromet system: observational networks; data transmission, archiving and processing facilities; research and development facilities. Since 1987, RosHydromet has closed about 30 percent o f its surface data collection stations. The stations that remain open record a more limited set o f parameters, less frequently, using instruments that are aging and failing. The performance o f the hydrological monitoring network has seriously deteriorated as well: the timeliness and density o f stream gauge data is in many areas insufficient to provide a basis for accurate and timely flood forecasts. Of its former 10 network o f 130 upper-air stations (the data underlying large-scale weather modeling), RosHydromet has closed about thirty stations and scaled back launches at others because the cost o f regular launches is beyond the system's budget. Communications equipment and the technologies used are obsolete, unreliable, labor-intensive and expensive. Russia's meteorological satellites are either lost or not well-functioning. Only a few o f RosHydromet's satellite ground receiving stations are capable o f receiving data available from intemational satellites. Few urban areas have radar protection to monitor oncoming storms, and none have Doppler-capable radar that can track storms. RosHydromet's computing center depends, at present, on an eight-year-old Cray supercomputer. While the agency has made an outstanding effort to make the best possible use o f available computing resources through software and modeling improvements, today the agency's computing capacity i s out-powered by comparable international centers by a factor o f about 1000 to 1. The long-term safety o f data inthe very large archive o f the World Data Center in Obninsk is uncertain. Data may be lost ifrecords now held on paper, reels o f magnetic tape andmicrofiche are not convertedto electronic media soon. As a result o f long-term underfunding, RosHydromet's capacity to offer forecasts that help mitigate weather-related losses has fallen behind the standards set by other equivalent national services, and as such, the standard needed to keep the economy competitive. Aviation, shipping, agriculture, water resources management, forestry, fuel transport and construction, to name a few sectors, are at a competitive disadvantage, wasting resources because they do not receive best quality, timely weather forecasts allowing them to optimize weather-related decisions. . Beyond the hardware issues is the fact that RosHydromet, which has been working for the last decade in a "survival mode," is still missing a long-term institutional development perspective and strategy for adjustment to the realities o f a market economy. Such a perspective is required to ensure RosHydromet's sustainable functioning and to lay a basis for re-negotiated relationships with sectoral and governmental clients on the federal, regional and municipal levels. At present, RosHydromet collects about 25 percent o f its income from services provided to a wide range o f clients. Many o f them, particularly federal agencies, have doubts that such semi-commercial arrangements are indeed optimal from the national perspective. Despite these issues, RosHydromet has managed to maintain its basic monitoring infrastructure in functioning condition, retain core technical expertise and staff, and protect its institutional integrity and traditions. RosHydromet currently functions as a single, vertically-integrated national agency organized around several nationwide observational networks designed and operated in accordance with unified principles compatible with international standards. RosHydromet and its key specialists have high reputations among their peers globally. An important manifestation o f this was the election in 2003 o f Mr. A. Bedritsky, the Head o f RosHydromet, as President o f the United Nations World Meteorological Organization (WMO). RosHydromet demonstrates a strong commitment to technical innovation and readiness to embark on long-term institutional reforms to improve the quality o f its services and its client orientation. In the last few years, the Government has made a renewed commitment to improve RosHydromet's performance. The Government is concerned that the deterioration o f RosHydromet's infrastructure increases losses to the Russian economy and limits the Russian 11 Federation's capacity to meet its commitments to world meteorology. The Government o f the RussianFederation's Resolution #94 o fFebruary 8,2002, "On measures to fulfill the obligations o f the Russian Federation in international exchange o f hydrometeorological observational data andimplementationo fthe functions o fthe World Meteorological Center inthe city o fMoscow," confirms those commitments and specifies that RosHydromet i s responsible for fulfillment o fthe obligations o f the Russian Federation under the WMO convention. Inaddition, the Government has undertaken a targeted federal program, "Environment and Natural Resources of Russia (2002-20 lo)," with a sub-program "Hydrometeorological Support for Safe Vital Activities and Rational Nature Management" that aims to improve the hydrometeorological service. The recent major restructuring o f the Government re-established RosHydromet as a specialized federal service providing weather, hydrological and environmental monitoring services to society (Decree o f the President N649 dated May 20,2004). Unlike most institutions inthe new Russian Government, which report to the ministries, RosHydromet will report directly to the Government, a decision underscoring its important interagency functions and the broad demand for its services. 2. Rationale for Bank involvement One o f the Bank's key objectives is improvement of public service delivery, and the provision o f weather and hydrological forecasts is a traditional area o f such public service. The Bank is well- placed among financiers to support re-investment in the Russian Federation's hydrometeorological capacity. Skilled, accurate weather forecasting depends on hightechnology and on an international cooperative effort. The Bank is supporting related investments in ECA, such as those in Romania, Turkey, Poland and to a limited extent in Central Asia. The Bank's ability to promote international cooperation in the public sector and to coordinate international procurement provides useful support to the client's development goals. 3. Higher levelobjectives to which the project contributes The project supports the higher-level objective o f reducing the risk to life and the economy from unfavorable weather conditions. The total annual direct losses in Russia associated with dangerous weather and hydrological events are estimated to be USD 1-2 billion. Recent massive economic losses and human casualties resulting from floods, avalanches and torrential storms in the North Caucasus, Siberia and the Far East have showed how vulnerable the Russian Federation is today with respect to weather hazards. The project is intended to diminish not only the damage to the economy that arises from avoidable weather damage, but also that which results from the high degree o f uncertainty about weather risk, which adds to the cost o f doing business and limits the competitiveness o f Russian agriculture and other enterprises. The proposed project would build RosHydromet's capacity and strengthen it as an institution, and in this way strengthen the ability o f the public sector to meet public needs. The proposed project supports two strategic pillars o fRussia's 2002 Country Assistance Strategy (CAS). (i) will strengthen public sector management by improving the efficiency and It quality o f public service delivery critical for improving the investment climate and supporting long-term growth. Improved efficiency and quality inweather forecasting will reduce risks to the economy and support investment, mitigating the risks o f natural disaster that currently affect 12 important infrastructure, agricultural and industrial areas. (ii) will mitigate environmental It risks by addressing environmental hazards and improving environmental management. Improved forecasting will mitigate the risks o f floods, drought and fire, winds and extreme weather events and will support emergency preparedness associated with the potential damage resulting from industrial and other accidents. As well, the project will reduce social risk, by improving security through measures to improve emergency warnings to the population. B. PROJECTDESCRIPTION 1. Lendinginstrument The proposed project will be financed through a Specific Investment Loan (SIL) o f US$SO.O million requested by the Borrower, and by a Government investment contribution o f US$29 million (net o f taxes). The total cost o f the project i s currently estimated at US$133.3 million. The proposed loan will enable the Beneficiary (RosHydromet) to finance the modernization o f the most important elements o f the hydrometeorological system in Russia. Regular national budget funding, which is usually limited to commitments o f no more than one year, is not suitable for financing such a major sectoral investment where is single contract may require sustained funding over several years. The proposed project, over its five-year lifetime, will provide RosHydromet with the required investment capital and technical assistance to ensure that the organization can adequately fulfill its national and international mandate. Emphasis will be placed on strengthening computing resources, strengthening the measurement and transmission o f hydrometeorological data, and institutional capacity building to support and sustain the investments made. The Government will finance approximately 40 percent o f the identified investment costs, recurrent operatingcosts, taxes and duties. 2. Projectdevelopmentobjectiveand key indicators The main development objective o f the project is to increase the accuracy o f forecasts provided to the Russian people and economy by modernizing key elements o f the technical base and strengthening RosHydromet's institutional arrangements. All Russian citizens would then receive weather forecasts o f higher quality. This would enable enterprise and household adjustments to protect lives and support economic growth. The success o f the proposed project would be measured in terms o f improvements in the accuracy and spatial resolution o f forecasting, improved transmission o f data within the RosHydromet network and beyond, increased accessibility o f the RosHydromet archive records, higher density o f data networks, more-timely emergency alerts to mitigate weather damage, and progress toward a modernized concept o f operations. The latter should comprise the organizational changes needed to improve technical capacity through modernized methods, a sustainable approach to human resources issues, andprogress toward financial sustainability. 3. Projectcomponents The investments RosHydromet has proposed address priority needs that are indicated under all reasonable strategies for the agency's future development. Investments have been selected 13 according to several principles: (1) RosHydromet's core hnctions should not be compromised; (2) RosHydromet's capacity to forecast hazardous weather events in a timely manner should be restored and improved; (3) RosHydromet's institutional and economic viability should be strengthened; and (4) RosHydromet should ensure that Russia i s able to comply with its national obligations to WMO. Component A. Modernization of Computing, Archiving and Telecommunications Facilities (US$46.1 million baseline excluding contingencies and taxes, US$62.1 million estimated project costs) aims to upgrade computing capacity and capacity for transmission, archiving and retrieval o f data through three subcomponents. Modernization of the Moscow WMCand Obninsk Archiving Facility will finance procurement o f a supercomputer for the W M C in Moscow, and will modernize the RosHydromet archiving facilities in VNIIGMI-WDC (Obninsk) through the upgrading existing archiving facilities with support for data rescue o f informationcurrently stored on deteriorating media. Restructuring of Novosibirsk and Khabarovsk RMCs and Modernization of Main Geophysical observatory (GGO) will upgrade computing facilities at the Russian Federation's two WMO Regional Specialized Meteorological Centers, the forecast centers at Novosibirsk and Khabarovsk, through procurement o f two supercomputers (smaller than that to be procured for MOSCOW~S This subcomponent will also support upgrading at the World RadiationData WMC). Center maintained by RosHydromet for the WMO at Voiekov Main Geophysical Observatory in St. Petersburg. The latter undertakes long-term prediction and climate change forecasts. Inthese tasks, Voeikov Observatory i s constrained at present by the low resolution o f models that it can use, by impossibility o f ensemble forecasts. Informational resources are considerably limited by weak telecoms connectingit to the WMC Moscow and to the global community. Modernization of the Communications and Data Transmission System will address RosHydromet's communications system as a whole. This will include the modernization o f communications among RosHydromet's principal facilities and also communications with selected high-priority measurement stations and with remote stations. Communications and infrastructure required to support the modernized computer centers will be financed, including equipment to assure continuous power supply, investments in local and wide area networks and the supply o f required peripheral equipment. Taken together, investments under this component are expected to significantly improve the timeliness and effectiveness o f weather forecasts andto support data availability and sharing bothwithin Russia and globally. Component B. Upgrading of the Observational Networks (US$42.3 million baseline excluding contingencies and taxes, US$56.9 million estimated project costs) is intended to modernize key components o f RosHydromet's meteorological and hydrological observational networks. There are five sub-components. Suvface Observation Network will provide equipment for about 900 surface meteorological stations which are important for regional and local forecasts. It will also support the creation o f about 10 pilot sub-regional meteorological networks, which will be established following a comprehensive analysis o f the existing system and user needs. 14 Aerological (Upper-Air) Network will re-equip selected upper-air sounding stations. While the aerological network is important locally and regionally, it is the most important network investment insupport o f global forecasting: these stations collect the three-dimensional datasets o fkey meteorological variables that constitute the principal inputto global weather models. Meteorological Radars and Lightning Detection will improve storm waming to heavily- populatedurbanareas andto vulnerable coastal zones. Regional Hydrometeorological Centers will equip regional centers with hardware and software to improve weather and flood forecasts. It will provide equipment for visualization o f data, downloading o f satellite data and improvement o f communications capacity. It will also include workstations and software for operational archiving. These upgrades will improve prediction from the local level to the global level, and will also support forest fire identification and environmentalmonitoring. Hydrological Network will upgrade 700-800 hydrological posts. About half would be priority sites distributed nationally: sites that are flood-prone, or where time series are long, or that are crucial to the hydrology o f major rivers. The other half would comprise upgrade o f the entire hydrological network inthree highpriority river basins, currently foreseen as the Kuban, Ussury and Oka, with automatic and semi-automatic stations. Hydrological data to be collected would complement meteorological forecasts to enable flood wamings and support water resources management. Component C. Institutional Strengthening, Improvement in Output Dissemination and Emergency Preparedness (US$5.9 million baseline excluding contingencies and taxes, US$7.9 million estimated project costs) is intended to formulate, develop and test new operational principles drawn from worldwide experience, improve emergency wamings o f dangerous weather conditions leading to emergency situations and improve provision o f information to the clients. The work will be undertakenunder three subcomponents. Institutional Strengthening would support development and testing o f new principles and approaches aimed at institutional strengthening to make RosHydromet a viable, modern and client-oriented agency. This subcomponent will formulate new requirements for the modemized RosHydromet system based on the client's needs and projected trends in funding, undertake detailed design o f a new system and test it in selected regional RosHydromet branches. This would help to modify the agency's current planning and budgeting techniques, and operational and maintenance procedures. It would help define proper configuration o f the main elements o f the system; including, for example, automated monitoring, new forecast techniques, and modernization o fmanagement. Client Service System will include design o f a system (databases, networks and software) that will improve data availability, presentation and dissemination to ensure that information is supplied in useful formats to RosHydromet's clients. Under this subcomponent a number o f activities will be carried out specifically aimed at soliciting client needs and views and later ensuringthat clients are informed o fthe various developments at RosHydromet. 15 Emergency Preparedness and Response will undertake development o f improved emergency waming procedures. This subcomponent would examine how information from RosHydromet is used for emergency preparedness, aiming to improve cooperation with local and regional authorities, the Ministry o f Emergency and other concerned agencies during emergencies and for emergency preparedness planning. Principal investments would include technical assistance to define gaps inthe system, procurement o f equipment for emergency preparedness and resources for pilot testing ina few areas. Component D. Project Management, Monitoring and Evaluation (US$4.7 million baseline excluding contingencies and taxes, US$6.4 million estimated project costs) will finance project management, supervision, and monitoring and evaluation o f project impact. Progress monitoring will include periodic surveys tracking achievement o f project development objectives and identifying improvements or actions necessary for the project's success. Implementation arrangements for the project have been discussed with RosHydromet and the Ministry o f Finance, and it was agreed that RosHydromet staff will be responsible for overall and technical project implementation issues. A small Project Implementation Unit (PIU) will provide assistance to RosHydromet in such areas as procurement, financial management and disbursement. A key consultant, the design integrator would assist RosHydromet duringdetailed project preparation and then later duringimplementation to ensure that a fully integrated national weather service is maintained. 4. Lessons learned and reflected in the project design A number o f Bank operations undertaken elsewhere as well as within ECA have highlighted the importance o f institutional strengthening for ensuring sustainability o f project results. Unsatisfactory completion o f the technical assistance components o f the Environmental Management Project in Russia showed that institutional strengthening i s a prerequisite for the achievement o fproject development objectives. Based on this understanding a small but targeted institutional strengthening component has been designed and agreed with RosHydromet. One o f the key lessons learned from the Emergency Flood Recovery Project (EFRP) in Poland, which included a substantial component for hydrometeorological monitoring and early waming o f flood events, was that o f the significance o f a design and systems integrator involved from the very early stages of detailed project design and subsequently during implementation. Inorder to ensure coherent development it is essential that a "system" view o f developments be maintained. The importance o f this was underestimated during the implementation of the hydrometeorological component o f the EFRP with the result that the hydrometeorological warning and monitoring system was implemented under a number o f self-standing subcomponents. It is already apparent that some opportunities for cost savings were missed and, more importantly, there is a risk that the final system may not emerge as a seamlessly integrated entity. There were instances o f sub-systems that when formally complete were not integrated, becausethe item that would close the gap had not been procuredby either sub-system contractor. The existence o f a systems integrator at the design and early implementation stages could have prevented such occurrences and would have ensured, for example, that a single visualization system was developed and integrated with all individual sub-systems. Accordingly, it has been 16 decidedto engage a design integrator to ensure that all investments are coherent and are prepared so as to be efficiently and effectively integrated. The value o f emergency warnings cannot be measured in terms o f technical accuracy only (Tajikistan - Lake Sarez). Their format and means o f delivery clearly affect their usefulness. Moreover, what is an emergency in one community may not be in another, depending on local circumstances. For these reasons, translation o f meteorological and hydrological data into degrees o f waming to people at risk is best undertaken by agencies that have corresponding local knowledge and sociological expertise. The views o f the ultimate recipients should be considered. For this reason, project monitoring will include not merely indicators o f what information has been delivered by RosHydromet to its clients, but also o f what information has been received by citizens and how useful it i s perceived to be. Although any project with a highproportion of information technology investment will be driven by advances in technology, it is essential to maintain a systems design approach and to ensure that the choices made are the most appropriate and match the real requirements o f the end user. There should be a consideration of future sustainability, primarily operation and maintenance costs. The modernized system should be affordable in light of the resources available for operation and maintenance so that systems are not over-specified, unsustainable inthe longterm. 5. Alternatives considered and reasons for rejection A project focusing on upgrade o f the observational network and down-scaling proposed improvements in computing capability was considered, but was rejected in light o f global analyses that have demonstrated the preponderant importance o f computing capacity, given a basic observational network such as that which the Russian Federation already has. A balance needs to be drawn betweenincreasing computing resources and improving data availability. An investment limited to the system's major computing and archiving facilities (those in Moscow, Novosibirsk, Khabarovsk, Obninsk and regional centers) was considered. This was rejected following discussions with RosHydromet and meetings with users' groups, who emphasized the great need to improve the quality o f local forecasts, emergency warnings and specialized services. All o f these are critically dependent on a strengthened observational network. A project focusing essentially on computers and the observational network, but not including institutional strengthening, was considered. However, the Bank consensus is that to promote the sustainability of hardware investments and to assure that all their benefits were fully realized, it would be critically important to focus on institutional strengthening. An investment designed as a simultaneous upgrade o f all key elements o f RosHydromet was considered, with the aim o f meeting all the basic needs o f the system for the near term, including rehabilitation o f facilities at each key meteorological station and hydropost. This vision was rejected as beyond the Government's financial commitment to the project. It was agreed that project investments which raise the value o f special services will enable a more comprehensive investment program to be undertaken by the RosHydromet. The project will, rather, provide a 17 "package" o f urgent investments useful virtually under any future development scenario and, in parallel, provide a means for experimentation with new, modern approaches that will contribute to identification o f a future, more holistic and comprehensive system design. C. IMPLEMENTATION 1. Partnershiparrangements. The proposed project will be supported by bilateral arrangements with the National Oceanographic and Atmospheric Administration o f the United States and possibly by a proposed GEF Project. These partnerships are at the design stage. The latter would influence detailed implementationo f the Project. Bilateral technical assistance. The US National Oceanographic and Atmospheric Administration (NOAA) has expressed interest inin cooperation with RosHydromet alongside project implementation, highlighting the importance o f the Russian Federation in the global meteorological effort. In the course o f project preparation, a joint Memorandum o f Understanding between NOAA and RosHydromet has been developed to provide a framework for a range o f activities, including among others some that are complementary to the activities proposedunder this Project. NOAA/NWS has experience and may provide assistance intechnical support to development o f hydrometeorological networks, data rescue o f archived data, training o f staff, and other issues. NOAA's NationalWeather Service River Forecasting System (NWSRFS) is a software suite that ingests available information about a watershed (data from satellites, radars, river gauges, topography, snowpack, water content o f snow) to produce hydrological forecasts under various assumptions, accompanied by probabilistic information and formatted for the requirements o f several different kinds o f decision makers. The NWSRFS is freely available; however, training incalibrationandinitializationofthe system wouldbenecessary. For its part, NOAA is interested injoint work with RosHydromet on researching and improving the hydrological and meteorological models underlying the NWSRFS. In addition, NOAA i s interested in the contribution o f the Russian Federation to polar research; in particular, to the upcoming International Polar Year. RosHydromet's monitoring o f hydrological and meteorological variables inthe Russian Arctic provides important support to worldwide weather forecasting and also to worldwide climate change adaptation. NOAA is also interested in working with RosHydromet on developing economic valuation methods applicable to meteorological services. First, a set o fproposed investments would support RosHydromet's efforts to take on a program o f climate monitoring necessary for development o f climate change forecasts. Due to Russia's large size and history o f scientific investigation, its data is indispensable for development o f climate change forecasts accurate enough to support adaptation worldwide. 18 Second, a further second set o f investments proposed for the GEF project would complement ongoing activities to promote adaptation for climate change. Issues that would be addressedmay include the severe floods in the Russian Far East and North Caucasus in the last decade, permafrost weakening in Yakutia, and risk o f drought in agricultural areas. During project preparation a few areas which are particularly vulnerable were visited, and preliminary discussions with local stakeholders and RosHydromet were held. For instance, in Yakutsk, discussions were held with the regional RosHydromet Department and Permafrost Institute, confirming that ongoing softening o f the permafrost i s a danger to the region's infrastructure, all of it designed on the assumption that the permafrost would remain solid. RosHydromet aims to design investments inthis proposed IBRD project to support and dovetail into the objectives o f the possible GEF project. Among other contributions, the proposed IBRD project would invest in access to supercomputers for the institutes that carry out seasonal/climate forecasting, in data rescue and archiving to make historical data fully available, and inradiation balance measurements. 2. Institutionalandimplementationarrangements Project implementationwill be undertaken by RosHydromet. This approach reflects lessons from experience regarding project ownership and sustainability. There is a need for the immediate beneficiary to be actively engaged at all stages o f design and implementation. To achieve this, it i s important that RosHydromet be prepared to commit an adequate share o f the time o f relevant staff solely to the project. It i s intended that RosHydromet staff will be supplemented only by a small PIU and consultants in areas where the needed experience is missingor where an external objective view would clearly benefit the Project. As part o f the detail preparation a key consultant who will advise RosHydromet will be the design integrator. As noted in Section B.4, one o f the important lessons leamed from other projects i s that an experienced systems integrator may prove to be invaluable both during detailed design o f the system and later in implementation. It i s intended that such an integrator, with experience in modemizing national hydrometeorological organizations, would assist RosHydromet during detailed project preparation and then later during implementation to ensure that a fully integrated national weather service is maintained. By Order #74 (dated April 23, 2004), RosHydromet established a Project Coordinating Council (PCC) for completion o f the project preparation and its future implementation. InOctober 2004 by Order#137 (dated October 11,2004) this council was effectively transformed into the Project Management Committee (PMC). The Committee is headed by Mr. Bedritsky, the Head o f RosHydromet, who is supported by two Deputy Chairman and by technical coordinators, senior officials from RosHydromet and other entities. The Chairman o f the Committee has overall responsibility for project management, including approval o f action plans, major activities and budgets. However, the Deputy Chairmen and technical Project Coordinators are responsible for making operational decisions, including management o f equipment procurement and installation, technical reviews, resolution o f issues and supervision o f activities. The Coordinators would jointly play a lead role during the final stages o f project preparation, in particular development of technical designs in consultation with the technical staff. They will be directly supported by 19 Project Component Managers, members o f the staff o f the Bureau o f Economic Analysis (BEA, see below) andby the design integrator. During project implementation, there will be firther specification of the PMC's functions, responsibilities and composition. The PMC will be supported by the Bureau o f Economic Analysis (BEA), an independent non- commercial legal entity that will serve as Project ImplementationUnit (PIU) duringthe project's implementation stage. This entity has extensive experience gained from managing several World Bank projects in Russia including those with large information technology procurements. BEA was competitively selected by RosHydromet and the Ministry of Finance (MoF) among existing PIUs in Russia for providing assistance to RosHydromet in the detailed preparation o f the project. BEA assisted RosHydromet in detailed preparation o f the Project. This work has been financed from a part o f the resources (USD 1.3 million) o f Environmental Management Project, WB loan(3806-RU). BEA has modified its Operating and Financial Manuals to adjust its administrative, operational, procurement and financial management procedures to meet project requirements. BEA employs qualified administrative, procurement, financial management and disbursement specialists, and has passed the Bank's capacity assessmentreview. Both MoF and RosHydromet believe that the practical experience gained by BEA in detailed preparation of the Hydromet project is likely to render it well-suited for the role o f PIU for the project implementation phase. Alternative implementation mechanisms - e.g., delegating implementation responsibilities directly to one o f the existing RosHydromet entities - seem too risky at this stage and would inevitably lead to lengthy delays. None o f the RosHydromet entities have the relevant experience to manage implementation o f a World Bank project. However, the role o f the PIU will be limited to procurement, financial and disbursement aspects o f implementation, including operation o f the Special Account, preparation and submission to the World Bank o f claims for Special Account replenishment, and claims for disbursements o f loan proceeds directly from the World Bank. All substantive decisions will be undertaken by the RosHydromet Project Coordinating Council and ,.other dedicated staff. To oversee and coordinate regional project implementation activities, Project Coordinators (additional to the Technical Project Coordinators described above) would be based in Obninsk, Novosibirsk, Khabarovsk and possibly in other regional implementation centers. These Project Coordinators will be members o f RosHydromet staff or external individual consultants hired by BEA. In the latter case, salaries o f the consultants will be financed from project finds. 3. Monitoringand evaluation of outcomes/results Indicators o f project success have been discussed with RosHydromet, which filly supports development o f specific performance benchmarks to evaluate achievement o f the project objective. Achievement o f the project development objective would be measured principally in terms o f improvement inthe accuracy o f forecasts, using a suite o f statistical indicators standard inthe meteorologicalcommunity. Achievement o f intermediate results would be measured inseveral ways: 20 Upgraded Computing and Archiving Capacity. RosHydromet's computing centers would be able to run ensemble forecasts and forecasts at higher spatial resolution, on an operational basis. The principal infrastructure bottlenecks that constrain information transmission would be released. The response time for delivery o f information from RosHydromet archives would drop. IncreasedQuality and Availability of HydrometData. Measurement networks wouldbecome more dense, andtransmission o f data to forecasts centers would become more certain. Sharing o f data with the worldwide meteorological network would improve. Improved Delivery of Forecasts and Warnings. Project success would also be measured by indicators o f improved delivery o f forecasts and warnings to the authorized authorities and the public. The project would monitor (a) the leadtime provided to the Ministry o f Emergencies and other competent authorities notified by RosHydromet o f dangerous conditions, and (b) the lead time ultimatelyprovidedto the general public. InstitutionalDevelopmentand Financial Sustainability.The project would monitor indicators o f implementation o f an institutional strategy that should address operational management, growth in technical capacity, human resources management, compliance with applicable mandates, and financial management. 4. Sustainability As noted inSection A.l, it is the policyo fthe Government to revitalize its contribution to world meteorology and to raise the level o fprotection from negative weather events for its own citizens and economy. The proposed project i s similar to a concept set out by RosHydromet in 2003 to address this Government mandate. The present concept developed from the original mentioned above as the RosHydrometBank preparation team met with regional technical teams, international experts, the Ministry o f Emergencies, various branches o f the executive, users' groups, and other stakeholders. It is our understanding that the revisedproject still hlly supports implementation o f Government policies, having been adapted with the participation and agreement o fRosHydromet to the needs o fprincipal stakeholders. Sustainability o f project investments depends on adequate operation and maintenance o f the whole o f the RosHydromet infrastructure, new and old. It should initially be noted that, at whatever its level o f funding in the past decade, RosHydromet has skillfully and effectively maintained its technical infrastructure, limited essentially by availability o f parts and materials, as evidenced by the fact that equipment has lasted to the end o f its depreciation cycle and far beyond. It appears that RosHydromet's repair facilities can ensure that equipment will be maintained so as to reach the end o f its potential lifetime, at least in the case o f equipment that can be repaired domestically. Equipment that cannot be repaired domestically would, o f course, not be sustainable unless financial resources are made available for maintenance and repairs. Sustainability o f equipment and systems will be promoted when RosHydromet can systematically undertake life cycle management, including replacement o f equipment within projected life expectancy. 21 As for public funding, we believe that public support for accurate prediction o f weather and extreme events will be stronger inthe hture than it has been inthe past, because there is a better understanding in the Russian Federation today than there was in the 1990s o f the importance o f this function. It is also hoped that results o f the joint RosHydromet-World Bank economic study to assess the economic benefits o f reliable hydrometeorological services will adequately justify additional reallocation o f public hnds into this sector. As for private funding, project investments will make RosHydromet's contracted services more valuable. The project strategy is, therefore, to raise the economic value o f RosHydromet's contributions to the public and private sectors, to strengthen it innegotiations with both sectors for a level o f fundingthat would secure not only operations andmaintenance, but also a program o f ongoing re-investment. 5. Critical risks and possible controversialaspects The project's overall risk is ratedModerate (M), according to the following considerations. I Risks RiskMitigation Measures RiskRating With Mitigation To project development ot ective RosHydromet will be Clearly formulate the need for institutional L reluctant to embark on strengthening and communicate its benefits and large scale institutional risks to RosHydromet management changes 0 Design a phased strategy for changes and initiate pilot testing to minimize risks and resistance to reforms Strengthen RosHydromet capacity to effectively L RosHydromet will decline communicate to the government the economic I benefits o fhighquality hydrometeorological services 0 Buildbroadpartnerships, facilitate interagency and legislature support for the project Deficient uptake o f 0 Engagement o f critical institutional stakeholders M warnings and forecasts: (such as the Ministryo f Emergencies and Ministry People, agencies and o fAgriculture) inproject development tends to enterprises may not assurethat the improved level o f information is respond appropriatelyto that which these agencies are prepared to act weather information upon. supplied to them. Inpilot areas, the teamwill seek opportunitiesto increase benefits by enhancing the understanding ofpeople and enterprises, and disseminate lessons learned. Information supplied by 0 Monitoring inpilot areas will aim to uncover M RosHydromet may not be bottlenecks and to test regulatory approaches or 22 passed onward as warnings changes inthe charter o f entities as neededto inthe most effective way clear them. Complexity o f upgrade 0 Condition project on availability o fRosHydromet M may result inmissing links staff to assure integration o fnew equipment and infinal system systems. 0 Engage system integrator Lack o fRosHydromet 0 RosHydromet staffwill be complemented by M experience in small PIUqualified inprocurement, financial implementingWB project management and disbursement may leadto large delays 0 Ensure RosHydromet staffreceive maximum training possible Operation and maintenance 0 Detailed design andprocurement specifications M o fnew equipment will not will take into account hture O&M costs over a be affordable timehorizon andensure these are matchedwith available funding Procurement o f large 0 Team includes IT and procurement specialists to H computer systems and address this issue other IT components will be slow or deficient Riskratings: L-low, M-moder: :,H-high 6. Loadcredit conditions and covenants Conditions of Negotiations: (a) Chairman o fPMC, Deputy Chairmen, Technical Project Coordinators are nominated by RosHydromet and functioning as Project Management Committee (PMC); (b) Procurement Planhas been agreed for the first 18month o fimplementation; (c) Operational PIU at the Bureauo f Economic Analysis; (d) Modificationsmade to parts o fthe BEA (PIU) OperationalManualthat are relevantto the project implementation havebeen finalized according to the standards o fthe Bank; (e) A financial management system has been set up and i s operational at the PIU in accordance with Guidelines acceptable to the Bank. Conditions of Board Presentation: (a) Biddingdocuments for procurement o f supercomputers and RFP for design documents for refurbishment for the first year o fthe project implementation are designed and cleared. (b) Project Operational Manual is adoptedbythe Project Management Committee. (c) RosHydromet Order concerning the Capacity BuildingProgram is issued andprovided to the Bank. Condition of Effectiveness: The Agency Agreement has been entered into between the MOF, RHM, andBEA. 23 Condition of Disbursement under Category 5: RosHydromet shall approve a Capacity BuildingProgram Manual acceptable to the Bank for managingthe Capacity BuildingProgram. Financial Covenants: The PIUwill maintain a financial management system acceptable to the Bank; The project financial statements, Statements o f Expenditure (SOEs) and SA will be audited by independent auditors acceptable to the Bank and on terms o f reference acceptable to the Bank; The audited annual statements and audit report will be provided to the bank within six months o f the end o f each fiscal year. D. APPRAISAL SUMMARY 1. Economic and financial analyses The Bank and RosHydromet have completed the first phase o f a pilot study aimed at evaluation o f economic benefits o f the project and o f hydrometeorological information in general for Russia's people and economy. The study was undertaken with the participation of experts from the principal weather-dependent sectors o f the economy o f the Russian Federation. The Chief Economist o f NOAA contributed to the development o f the methodology for the study and participatedinthe workshop with stakeholders. Preliminary results o f the study indicatedthat the improvement in the quality and lead time o f the weather forecast that is reasonably expected to follow project implementation will have a very substantial positive economic and social impact, one that may be estimated inlight o f the following: 0 Direct losses caused by unfavorable weather and hydrological conditions and disasters annually would decrease by 8.5 percent on average. The sector that i s most sensitive to quality o fweather forkasts and wamings i s that o f municipal services and city economy, where annual losses caused by unfavorable weather would be expected to decrease by 12 percent over the lifetime o fthe project. 0 The project team undertook a critical review o f the validity o f available estimates o f losses to Russia's national economy due to extreme weather events, collecting additional information on sectoral losses, flood losses and undertaking cross-country comparisons. The team concluded that direct average annual economic losses are likely to be in the range USD 1- 2 billion. 0 The total annual economic effect o f the project, according to these estimates, would be USD 70-150 million. If similar economic effects were sustained over seven years (a conservative estimate inlight o f the assumptions made), the near-term economic effect o f the project could be in the range o f USD 480-1,000 million, far exceeding project costs. This means that the economic viability (economic efficiency) of the project (at the investment project cost o f around US$llO million) stands at 1:4.5 - 1:lo. Inother words, every US dollar used towards RosHydromet's modernization will help to avoid from US$5 to US$lO losses to Russian economy. Though substantial, this level o f expected 24 benefit is in line with recent estimates that for every $1spent for mitigation in natural hazards there is an $8 reduction ineconomic losses (Worldwatch Institute, 2001). No financial analysis was carried out for this public sector investment; it is not expected that RosHydromet entities will generateprofit from the project investments. 2. Technical The design o f the proposed project supports the Government strategy for reestablishment o f RosHydromet. (i) It supports the goal o f re-establishing RosHydromet as one o f the premier national weather forecasting services providing accurate and timely weather forecasts at global, regional and local scales. (ii)It supports the Government's objective o f assuring that RosHydromet deliver on the Russian Federation's obligations resulting from membership in WMO as well as other relevant internationaltreaties signed and ratified by the Government. (iii) Itwill help to reduce economic losses caused by extreme weather events, byproviding forecasts that can be used in decision support to mitigate risks and damage. (iv) It will likewise help to prevent avoidable loss o f life. As weather prediction i s a shared global enterprise, international standards for meteorological services are relatively well-established. These include standards for the quality o f data gathered by the national instrument network, standards for the format and timely delivery o f data to the global data-sharing system, treaties defining the minimal role o f various nations within the overall system, and widely-used definitions o f accurate forecasting. Project investments will be guided by these standards, however they will also take into account the specificity o f the Russian weather forecasting and monitoring system. A significant portion o f loan funds will procure meteorological and hydrological instruments that will be compliant or at least compatible with WMO standards. The loan funds will also support the Russian Federation in assuring that data collectedby its network are formatted and delivered inas timely a manner as possible, first to the national authorities and the public to help avert economic losses, and also to the international data-sharing system inaccordance with international conventions. The overall priority of project investments, including supercomputer procurement, has been defined with the specific aim o f measurably improving forecasting accuracy. Internationally recognized measures o f hydrometeorological system performance will be used as monitoring indicators o f project success. 3. Fiduciary The financial management assessment concentrated on BEA (PIU) and the link between RosHydromet and BEA. Cooperation between RosHydromet, experienced in operating issues, with the PIU, experienced in the World Bank procedures, will significantly mitigate fiduciary risks because the strengths o f one organization overlap with the weaknesses o f the other. All operating issues will be under the control o f RosHydromet, while BEA will be responsible for the hlfillment o f World Bank procedures. Taking into consideration the assessment o f the financial management systems andprocesses and the assessment of risks and mitigating measures, the financial management arrangements for BEA as an Entity and for the Project, BEA is considered capable o f satisfactorily recording all 25 transactions and reconciling balances, supporting the preparation o f regular and reliable financial statements, safeguarding the entities' assets, and is subject to auditing arrangements acceptable to the Bank. BEA has a financial management system that i s being adjusted to meet the project peculiarities. The financial management arrangements for the Project will meet Bank requirements. This would be easy to achieve taking into account that these arrangements are being tested now in the implementation o f preparation stage o f the Project financed from the EnvironmentalManagement Project (RU-3 806). BEA has implemented Bankprojects inthe past. It is currently implementing two projects, and has well-developed internal control procedures, accounting and reporting systems in place. The cash flow arrangements are in place for Project fund inflows, which will include inflows from IBRDand from the Federal Government. BEAisreadyto start the Project. The arrangements for procurement have been defined and agreed. A Procurement Plan has been developed and agreed between the Borrower and the Bank. Internal policies related to IBRD and federal funds have been drafted by BEA. The project will be staffed by existing BEA financial management staff. BEA staff i s experienced with Bank procedures. The format o f the FMRs has been developed, discussed between the Bank and BEA and agreed upon. The financial part o f the quarterly FMRs for the National Hydromet Modernization Project Preparation Component financed out o f the Environmental Management Project Loan 38060-RU (inthe amount ofUSD 1.3 million) will include: (a) Project sources anduses o f finds statement, (b) Statement o fexpenditure detail, and (c) Notes to the FMRs. The financial part o f the annual FMRs for the National Hydromet Modernization Project Preparation Component financed out o f the Environmental Management Project Loan 38060-RU (in the amount of USD 1.3 million), which will be subject to audit by independent auditors acceptable to the Bank and according to the Terms o f Reference acceptable to the Bank, will include: (a) Project sources and uses of funds statement, (b) Statement o fexpenditure detail, (c) Special account statement, (d) Statement o fExpenses (SOE) withdrawal schedule, and (e) Notes to the FMRs. The financial part o f the quarterly FMRs for the National Hydromet Modernization Project will include: (a) Project sources anduses o f funds statement, (b) Statement o f expenditure detail, 26 (c) Physical ImplementationProgress Report (contract management), and (d) Notes to the FMRs. The financial part of the annual FMRs for Hydromet project, which will be subject to audit by independent auditors acceptable to the Bank and according to the Terms o f Reference acceptable to the Bank, will include: (a) Project sources anduses o f funds statement, (b) Statement o fexpenditure detail, (c) Special account statement, (d) Statement o fExpenses (SOE) withdrawal schedule, and (e) Notes to the FMRs. BEA will supplythe Bank with quarterly FMRs and annual audited FMRs. Inaddition to FMRs, BEAwill submitto the Bank annual auditedEntityIFRS reporting. Disbursement o f IBRDfunds will be through the traditional disbursement mechanisms, including Special Account, Summary Sheets and SOEs, direct payments, Special Commitments covering Letters o f Credit, and guarantees. The federal funds will be disbursed through a co-financed account managed bythe BEA (PIU). The project will not use the FMR-based disbursement. 4. Social The project aims to increase the protection from extreme weather events to people living in vulnerable areas through improved forecasting by RosHydromet. It aims to do this by technical measures that will improve lead time and accuracy o f forecasts, flood prediction, and also through adoption o f streamlined information delivery techniques that will close the gap between technical information delivered bythe agency versus information assimilated by users. Interms ofnon-emergency services, theprojectwillprovideanopportunity for RosHydrometto undertake a revision o f its user-services strategy. At present, RosHydromet services are largely governed by the requirements o f Government users, companies large enough to define their own weather risk (and pay for special services to limit it), audiences o f the Government's media outlets, and populations perceived to be at risk. In addition, existing stations serve a valuable social purpose, especially in the remote areas o f the Russian Federation, though possibly at an unsustainably high cost. Future benefits should clearly be aimed at a combination o f free services, paid services, and services financed by cost-sharing with local and regional governments. Achieving an equitable balance among these services should be an issue addressed by RosHydromet within the scope o f the project, through its dialog with the Government and with other stakeholders. A clear message that emerged from meetings with a range o f stakeholders is that the proposed investments will increase the value o f services to a broad range o fpublic and private users. 27 5. Environment The project poses minimumenvironmental risks. The proposed project does not involve any new construction or major refurbishment works; all facilities where works will occur are currently used by RosHydromet. Moreover, the project will provide great environmental benefits, since it will support in mitigating natural hazard risks and in improving o f observations for environmental management. A comprehensive hydrometeorological system coupled with a strong agency responsible for its operation and maintenance will lay a foundation for reducing the risks associated with floods, drought and fire, winds, extreme weather events and even industrial accidents. It is expected that the project implementation will have a significant effect on enhancing the livelihoods particularly o f the poor fractions o f population by reducing vulnerability to environmental change, flooding and also routine weather contingencies that can affect marginal livelihoods such as small enterprises and farms. 6. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.01) [XI [I NaturalHabitats (OP/BP 4.04) [I Pest Management (OP 4.09) [I Cultural Property (OPN 11.03, beingrevised as OP 4.11) [I Involuntary Resettlement (OP/BP 4.12) [I Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I Forests (OP/BP 4.36) [I Safety o f Dams (OP/BP 4.37) [I Projects inDisputed Areas (OP/BP/GP 7.60)* [I Projects on International Waterways (OP/BP/GP 7.50) [I Safeguard Policies Classification: [ 3 S1[XIS2 [IS3 [ ] SF [ 3 TBD (to bedetermined) EnvironmentalAssessment Category: [ ] A [ 7 B [XIC [ ] FI[ 3 TBD (to bedetermined) Attention will be given to inclusion o f relevant standard environmental guidelines in bidding packages for the civil works associated with the refurbishing o f existing buildings as well as for the installation o f new equipment. Likewise, attention will be given to ensuring safe handling and disposal o f construction solid waste, debris and dysfunctional IT equipment. The standard environmental guidelines dictated by the Russian EA procedures have been incorporated in the BEA (PIU) Operational Manual. A full understanding is reached with RosHydromet officials and BEA on the importance to deal with environmental issues and the need for their mitigation should they be identified inthe course o fproject implementation. * By supporting theproposedproject, the Bank does not intend toprejudice the$nal determination ofthe parties' claims on the disputed areas 28 7. Policy exceptions and readiness The project has requested and received one exception from Bank policy (see below), and exceptingthis complies with all applicable World Bank policies. The Project Team has requested andreceiveda blanket waiver prior to the start o f the project concerning eligibility requirements for hiring o f Government-owned enterprises or institutions in the Borrower's country and institutions partially funded by the Beneficiary (relating to para. 1.11 o f the May 2004 Guidelines). OPRC discussed and agreed with the proposal for a period o f the first two years o f the Loan, subject to close monitoring o f the procurement process and supervision o f contract implementation. A recommendationwas made that the first few contracts procured based on this waiver should, in fact, be subject to Prior Review. The basis for the waiver would be reviewed two years after Project effectiveness. HIRING OF GOVERNMENT-OWNED ORGANISATIONS, ORGANISATIONS and INDIVIDUALS AFFILIATED WITH OR PARTIALLY FUNDEDBY THE BENEFICIARY. Many o f the Consultancy assignments related to the success o f the project are dealing with highly specialized fields of expertise related to hydrometeorology and weather forecasting and their success and relevance will depend not only on an indepth knowledge and experience o f the field concerned but also on anunderstanding o fthe situation inthe RussianFederation. As such, these are specialized areas where various research institutes and entities, subordinate or reporting to the Beneficiary (RosHydromet), and partially funded by the Beneficiary, Federal, or regional budgets, possess unique qualifications and experience. Private sector is not well developed in this field due to lack o f a market and the fact that the bulk o f available funding for this work comes either directly from the Beneficiary or from federal and regional budgets on a non- competitive basis. At appraisal, an initial non-exhaustive list o f Instituteswhose elimination from participation as government-owned or funded entities would undermine the chances for achievement o f the overall project development objective, seriously decrease the quality o f the project implementation and threaten its entire success. Following is the initial list o f entities that have been identified within the "system" o f RosHydromet although the formal relationships, legal status and level o f funding vary. The list may be added to, as appropriate, duringthe course Implementation: Scientific-Industrial Company "Typhoon"; Main Geophysical Observatory "named after A.I. Voeikov"; Institute for Applied Geophysics named after Academician Ye.K. Fedorov ; State Hydrological Institute; CentralAerological Observatory; Mountain Geophysical Institute; Arctic and Antarctic Scientific-Research Institute; All Russian Scientific-Research Instituteo fHydrometeorological Information (World Data Centre; Institute for Global Climate and Ecology o f RosHydromet and Russian Academy of Sciences; Scientific-Research Centre o f Space Hydrometeorology "Planeta" Hydrometeorological Scientific-Research Center o f the RussianFederation; RosHydromet Main Computing Center; RosHydromet MainRadioMeteorological Center. 29 The following assignments have been identified which would benefit from the services of these entities or individuals employed by these entities on the understanding that no entity (or individual) will appear on a shortlist for any assignment where it is the direct beneficiary o f the outputs o fthe assignment. Detailed design o fpilot hydrological networks; Detailed design o fpilot meteorological networks; Support to defining detailedtechnical specifications; Development o fa regulatory framework for RosHydromet; Development o finnovative approaches and institutional alternatives; Development (and porting) o f specialized software for weather an hydrological modeling and forecasting; Development (and porting) o f specialized software for archiving o f hydrometeorological data; Specialized training activities. Consultants for assignments under above mentioned activities will be selected using QBS or CQS methods or as Individual Consultants put forward by these Institutes. Short lists will be composed on the basis o f expressions o f interest submitted in response to advertisement o f each such assignment in the national press. As the assignments will each be below the threshold o f US$200,000 short lists will comprise only these national entities or individuals from the agreed list of entities. Injustifiable cases, with the prior agreement o f the Bank, single source selection will be used. As it is hoped a private sector will emerge and develop over the course o f the Project it is expected to review this arrangement after the first two years o f Project Implementation. 30 Annex 1:CountryandSector or ProgramBackground RUSSIANFEDERATION: NATIONAL HYDROMETMODERNIZATION PROJECT The Russian Federal Service for Hydrometeorology and Environmental Monitoring (RosHydromet), celebrating its 170-year anniversary this year, is one o f the world's oldest meteorological organizations. Since its creation, this agency has traditionally played the role o f principal provider o f public services to Russia inprotecting lives and property from dangerous weather events. Inaddition, RosHydromet has important global responsibilities. The first is for data: because of Russia's size, its observational networks supply a significant share o f the meteorological data used as the basis for the world's daily weather forecasts. The second is for research and computation: the Moscow World Meteorological Center is one o f three worldwide centers that are charged with computing and distributing daily global forecasts to initialize the world's regional weather models; the Russian Federation's Obninsk archive is a World Data Center; RosHydromet's regional centers at Khabarovsk and Novosibirsk are charged by the WMO with world leadership in specific areas o f forecasting; the Main Geophysical Observatory is a World Radiation Data Center. The third area o f responsibility i s communications infrastructure: the system that supports national forecasters worldwide incorporates Moscow as a hub. The realities o f economic transition from central planning to a market economy in Russia have brought new challenges to the functioning and, at times, even survival o f the agency. As a result, the capacity o f RosHydromet to provide services to Russia and globally has steadily declined. The main objective o f the project i s to restore this capacity by modemizing key elements o f the RosHydromet technical base and strengthening its institutional arrangements. A brief description of the sector and its issuesi s presented below. RosHydromet's mandate,major functionsandstructure RosHydromet is the public service charged by law with reducing danger to life and damage to the economy resulting from weather and climate-related events. The main objectives o f the agency, according to the Federal Law on Hydrometeorological Service (#113-FZ dated July 19, 1998) and govemment regulations, are formulated byRosHydromet inthe following manner: Timely and high-quality provision to the govemment authorities, the population, armed forces and industries with hydrometeorological, solar and geophysical information, as well as data on environmentalpollution; Development o f the public system o f observation, assessment and forecasts o f pollution levels o f air, inlandsurface water, inland seas, the shelf, and outer space; Stimulation o f a higher efficiency o f economic activities inweather-dependent industries (aviation, marine and river transport, energy, agriculture, etc.) by means of providing broader meteorological and climatic products and custom-tailored services; Development o f avalanche-management and hail-prevention services, and technologies o f active impact on meteorological and geophysical processes; 31 0 Support anddevelopment o fresearchinthe fields o fmeteorology, hydrology, solar and geophysics, environmentalpollution monitoring, active impact on meteorological and geophysical processes; 0 Evaluation and forecast ofclimatic change and climatic (agro-climatic, surface water, wind and solar energy, etc.) resources inRussia; 0 Maintenance o f a Unified State Fundo fhydrometeorological, oceanographic and geophysical data on the environment andits pollution, and improvement indata archiving technologies; 0 Active participation inthe global international exchange o fhydrometeorological data and support to the functions o fthe Global Meteorological Center o f the World Weather Watch inMoscow and RegionalMeteorological Centers inthe cities o fNovosibirsk and Khabarovsk. RosHydromet monitors atmospheric variables, including air quality; hydrological variables and water quality; and soil characteristics. It produces daily weather forecasts, flood and storm warnings, seasonal forecasts, drought monitoring reports, agrometeorological forecasts, projections o f climate change, general ocean circulation models, ambient pollution variables. In line with its mandate RosHydromet disseminates basic hydrometeorological data, weather forecasts and emergency warnings to all agencies and the public. RosHydromet's financing reflects a European approach, in which government agencies engaged in weather forecasts are allowed to sell their products to the clients. This process is regulated by the Government Resolution "On Information Services in Hydrometeorology and Monitoring o f Environmental Pollution" (#1425 dated November 15, 1997). RosHydromet was established and currently functions as a single, vertically-integrated national agency built around nationwide observation networks designed and operated in accordance with unifiedprinciples. Data from observation sites isusually collected inRosHydromet centers inthe 89 administrative units o f Russia (Subjects o f the Russian Federation). These centers are subordinate to 23 regional RosHydromet branches (UGMS) providing a full range o f hydrometeorological,services to regional clients. An organizational chart showing the main RosHydromet entities is presented as Figure 1. RosHydromet has its Headquarters in Moscow. Its lead research institutions such as the Main Geophysical Observatory and the State Hydrological Institute in St. Petersburg and, the World Data Center in Obninsk are collecting, generalizing and submitting data and forecasts on a national basis. Jointly with RosHydromet, research institutes are responsible for methodological guidance o f network operation, including monitoring principles, site selection, the observational program and its frequency, reporting formats, procedures and timing. There are established procedures for data submission to concerned authorities incase of dangerous weather conditions and emergency situations. During the transition period, the number o f RosHydromet staff dropped considerably (from 58,800 in 1992 to about 36,000 in 2003); however, it is still the second largest meteorological organization in the world after the Chinese meteorological service. The large number o f employees corresponds to the fact that the area area o f Russia is 17 mln km2(China - 9 mln h2), measurementsaremadebyobservers;almostnooperationaldataarecollectedby and all 32 automatic stations. RosHydromet research institutions employ over 5,000 people at present. These research institutions have historically been very strong, and their traditions have been maintained to the extent possible during the transition. Nevertheless, the research capacity o f RosHydromet has considerably degraded due particularly to severe underfundingand migration o f the most qualified workforce to better-paid sectors. RosHydromet's 2003 budget was 2.22 billion rubles (US$76.6 million) including 1.53 billion rubles (US$52.8 million) from the federal budget. The Federal budget allocation for hydrometeorological services, which was 0.29 percent o f the total federal budget in 1993, was only 0.09 percent in 2002. Over 74 percent o f overall funding was spent on remuneration o f staff. In 2003 the salary was increased by 40 percent, but even after that increase the average monthly salary is not reaching US$150. Communications costs, communal payments, fuel, consumables and food supplies for remote stations consume a further 21 percent o f total funding, leaving about 5 percent for all other items, including construction and procurement o f new equipment. In order to compensate for the deficit o f federal funding, from 1992 onward the government has allowed RosHydromet to charge clients for "specialized services." At present, the share o f RosHydromet's income derived from provision o f specialized services to federal, regional, municipal and sectoral clients, media and private companies is about 25 percent. These eamings are a crucial source o f funding for RosHydromet's continued operations. The main issue that RosHydromet now faces is that its capacity to provide hydrometeorological services inRussia and globally has been steadily deteriorating. This deterioration is primarily the result o f lack o f investment in modem technology, together with ongoing degradation o f the observational networks. From 1994-2000 the budget funding received by the agency varied from 28 percent to 41 percent o f the funding needed for regular operation, a shortfall that eventually required the closure o f about 30 percent o f RosHydromet's surface data collection stations. The stations that are still open record a more limited set o f parameters, less frequently, using instruments that are aging and failing. O f its former network o f 130 upper-air stations, RosHydromet has been forced to close about thirty and scale back launches at others, because the daily launches are beyond the system's budget. The overall design o f hydrometeorological system andits mainobservationnetworks, as well as its mainprinciples of operation, were developed by the mid-1970s and have not changedmuch since then. Nearlyall observations are made manually by staff locatedandlivinginthe field. Automatic andsemi-automatic devices are very rare and virtuallyunused inroutine data collection. Poor communications capability is a universal problem for the system. In general, communication o f data from monitoring stations is expensive, unreliable and labor- intensive. The ability to communicate products to clients is also an issue, due to the lack of high- speed transmission capabilities where they are most needed. Other infrastructure (e.g., buildings) is in very poor condition throughout the country. The working conditions o f staff in the operational programs are poor and have an effect on RosHydromet's ability to hire and retain staff at these locations. 33 Figure 1: ROSHYDROMETSTRUCTURE - CentralApparatus I Science-ResearchInstitutions Military Services Scientific-Industrial Company Skills Upgrading Institutefor "Typhoon" RosHydrometLeadingEmployees Main Geophysical Observatory HydrometeorologicalTechnical n.a.Voeikov Schools and Moscow Hydrometeorological College Institute for Applied Geophysics State Hydrological Institute "Hydrometeoizdat'' Middle-Siberian Hydro-ChemicalInstitute Publishing Center "Meteorology and State OceanographicInstitute Federal State Unitary Enterprise CentralAerological Observatory "Hydrometpostavka" Mountain Geophysical Institute FederalState Unitary Enterprise Arctic&Antarctic Scientific- ResearchInstitute Federal State Unitary Enterprise "Offset PrintingFactory" All-Russian Scientific-Research Institute of Hydrometeorological FederalState Unitary Enterprise Information -World DataCenter "Zonde-Postavka" All-Russian Scientific-Research Day-to-Day ProductionCenter for Institute for Agncultural Meteorology InformationTechnologies Institute for Global Climate and Ecologyof RosHydromet and RussianAcademy of Sciences Far-East RegionalScientific- ResearchHydrometeorological Institute "Hydrometeoflot" SiberianRegionalScientific- ResearchHydrometeorological Institute Scientific-ResearchCenter of AutonomousNon-Commercial Space Hydrometeorology - Enterprise"Center for Climate "Planeta" Projects ofJoint Implementation" CentralDesignBureauof CentralDesign AutonomousNon-Commercial HydrometeorologicalInstruments i BureauBranch - Enterprise"Agency of Atmosphere Technologies " CaspianSea Scientfic-Research RussianStateMuseumof Arctic and Center Antarctic Hydrometeorologyand Environmental Environmental Observatories RosHydromet has made an outstanding effort to make best use o f available computing resources, but today it is greatly out-powered by analogous international centers. As a result, protection against weather hazards afforded to Russian citizens is significantly less than that technically possible given the capabilities and achievements o f Russia's forecasters. For instance, the percentage o f dangerous weather events not predictedby RosHydromet compared to all recorded dangerous weather events increased from 6.1 percent in 1994 to 23.1 percent in 2001. The net effect o f the lack o f investment has been a gradual falling-behind o f the Russian Federation compared to other comparable economies in capacity to provide usefil prognoses o f weather hazards with adequate lead time to allow mitigation o f risks. Weather forecasts are too short; seasonalforecasts too uncertain; drought monitoring and flood monitoring are weak. Beyond hardware issues is the fact that RosHydromet, which has been working for the last decade in "survival mode," still lacks a long-term institutional development perspective and strategy for adjustment to the realities o f a market economy. Such a strategy i s required to ensure RosHydromet's sustainable fimctioning and to lay a basis for renegotiated relationships with sectoral and governmentalclients on the federal, regional andmunicipal levels. Data collection The state hydrometeorological observation network forms the backbone o f the hydrometeorological service o f Russia. RosHydromet operates several thousand meteorological, agro-meteorological and hydrological stations, a radar network, air and water quality monitoring, climate change research, and so on. As o f January 2004, the hydrometeorological network comprised 1626 meteorological stations, 3044 hydrological posts and stations, 104 upper air stations, 1049 agrometeorological stations, 233 evaporation stations, 627 urban air pollution monitoring stations, 2208 surface water pollution monitoring sites, 534 snow pollution sites and a number o f other more specialized networks. Hydrometeorological observations are carried out in accordance with national regulatory technical documents, which in turn are consistent with the WMO regulatory documents (specifically, WMO Manual No. 8 on Meteorological Instruments and Observation Methods). Compliance with national metrological requirements as formulated in the Federal Law on Uniformity o f Measurements is ensured by the Central Methodology Commission o f RosHydromet, which is responsible for issuing certificates authorizing the use o f instruments, technical means, technologies and methods in hydrometeorology. The hydrometeorologicalnetwork is currently equipped with about 48,000 measuring instruments o f 66 different types, and 335 standards are in use for periodic calibration and verification o f instruments. However, a major proportion o f these instruments and standards are already not meeting routine requirements for data collection because regular replacement o f most part of equipment andinstrumentation has not taken place inthe last 10-12years. More than 80 percent o f the instruments have been inoperation for more than eight years, the nominal service life o f the majority o fthe instrumentation. Surface stations. Surface meteorological and hydrological stations are important inter alia for local weather forecasts, flood forecasts and regulation o f water resources. According to their specializations, the stations record precipitation, temperature, pressure, humidity, wind velocity, 35 solar radiation and other elements o f the radiationbalance, soil moisture, evapotranspiration, and other elements o f the water balance, snow depth, water content o f snow, water levels and river flow, water quality and other hydrological variables, and so on. From the mid-1970s to the end o f 1980s the surface network was stable, though as noted above, since 1987 it has declined (in the last ten years alone by about 30 percent) due to financial difficulties. Currently the network is broadly divided into several categories. Baseline meteorological stations (about 900 stations) participate in global daily data exchange. Additional specialized networks are in some cases partially co-financed by Subjects o f Federation or other RosHydromet clients. While the station distribution remains somewhat dynamic, an indicative distribution o f meteorological stations is provided as Figure 2. Figure 2. Distribution of Surface Meteorological Stations (indicative). Empty circles represent stations of international exchange, solid circles represent stations reporting on climate change. As noted above, the observational networks and operational procedures developed in the 1970s are based on use o f observers located in the field. The existing equipment is old, obsolete, and labor-intensive to use and maintain. In some cases the prescribed equipment is no longer procurable (e.g., mercury barometers). In many countries, the type of equipment used by RosHydromet has been phased out and replaced with more modem and flexible equipment (e.g., electronic digital barometers) that allows for the continuous monitoring and recording o f data. Automatic and semi-automatic devices are very rare in the RosHydromet due to their high cost, and barely contribute to routine data collection. The few attempts made so far to employ automatic equipment inthe networks o fvarious regional branches have not been very successful, due to the highoperating and maintenance costs, lack o f compatibility with the existing network 36 design and established operational procedures, the system's poor communication channels, and destruction o f equipment by intruders. Support o f observations at remote or "difficult-to-access" stations is a particular problem for RosHydromet. There are about 290 remote stations located innorthern, eastern and mountainous regions, most o f which are critically important for weather forecasts. Incertain regionalbranches (e.g., Chukotka and Yakutsk) more than a third o f surface stations are inthis "difficult-to-access" category. About 1,400 observers live year-round at these remote stations, whom RosHydromet i s obliged to fully support if observations are to be continued. For comparison, only one station based on a similar ``full support" principle i s operated by the Meteorological Service o f Canada (MSC). Other remote stationsuseautomatic equipment that isperiodically maintained andcalibrated. MSC also haspartnershiparrangementswith other organizations to sustaina "hllsupport" operation. The hydrological network o f Russia needs a massive modernization. In every region visited by the project preparation team, flooding and associated damages were top priorities o f regional stakeholders and RosHydromet authorities. They said that the performance o f the hydrological monitoring network was low and declining, and that the timeliness and density o f stream gauge data was insufficient to provide a basis for accurate and timely flood forecasts using current methods. Automatic gauges, sensors and data loggers are very rare. In many river basins, a significant number of hydrological posts have been closed. In addition, in some flood-prone basins hydrological posts destroyed bymajor floods have not been restored (Fig.3). Inmost areas, andparticularlyinmountainousregions, the timeliness arid density ofstream-level data are insufficient to provide useful flood forecasts. The manual method o f determining stream height that i s universally used by RosHydromet is error-prone at best (besides posing occupational safety issues for staff who make the measurements). The lack o f reliable 24 hour communications for the existing programs seriously constrains the timely availability o f data in potential flood situations. These issues should be addressed as priorities, especially when it is taken into account that economic losses from floods in Russia presently average USD 1-1.4 billion annually (Cherepansky 2000, Vorob'ev, et. al, 2003). Like RosHydromet's other programs, the hydrological network needs to be reviewed as a whole and a strategy developed to modernize the basic observing infrastructure. Investing inthe status quo is not a sustainable long-term solution. Modern stream level gauges and data loggers will open the door to a variety o f communications options and canprovide much more data quickly and accurately. 37 Figure 3. HydrologicalNetwork-North Caucasus Btack triangles are existinghydrologicalposts, white triangles-posts destroyed by thefloods Upper Air Radiosonde Stations. Data from balloon-borne radiosondes that probe the upper atmosphere is an important input to numerical weather forecasting. A cooperative international network comprising about 1000 stations launches weather balloons daily. The international standardis for twice-daily launches, one at 0:OO Coordinated Universal Time (UTC) and another at 12:OO UTC. Over a period of about 90 minutes, each balloon rises to about 30 km above the surface of the earth, carrying a package o f instruments that measure temperature, relative humidity, and sometimes pressure. At about 30 km above the earth's surface, atmospheric pressure i s so low that the balloons - now greatly inflated - burst, and the packages fall to the ground. Data from all stations participating in the worldwide simultaneous launch is then promptly exchanged, via a relay that has been organized by the WMO. Russia is one of three countries in the hub o f hubs of this relay, the other two being the United States and Australia (Figure 4). Positional information on the moving balloons yields an estimate of wind speed. Receivers on the ground stations communicate with the balloon-borne sensors to record meteorological variables andballoon locatiodwind speed. 38 GTS Main Telecommunication Network Figure 4. Schema of the topology ofthe worldwide meteorologicaldata-sharing network Radiosonde data serves as one o f the principal inputs to global weather forecasts, which inturn serve as the starting point for nested regional and local forecasts. As a result, the density o f this network is a potential limitation on the value o f forecasts. Russia has historically maintained such a network, operating about 130 o f the world's 1000 stations. Since the transition began, Russia has made an immense effort to maintainits network o f sounding stations. The difficulty i s that each launch costs about US$lOO in expendables alone, o f which about US$50 is the cost o f the radiosonde (the rest covers the balloon, the hydrogen and the power consumed by the receiver). To save money, RosHydromet has closed or conserved about 30 stations, most located inremote northernareas, andhasreducedthe number ofdaily launches from two to one at some stations. The upper air network as it stands today is shown in Figure 5. Figure 5: Upper-Air SoundingNetwork of the RussianFederation 39 Most o fthe receivers now used inRussia are now well beyondtheir nominal lifetimes. The aging receivers are expensive to maintain, and some spare parts are supplied today only by cannibalization o f the already-closed stations. The techniques o f hydrogen generation used for balloon inflation are also obsolete, labor-intensive, unsafe for the staff, and characterized by a tendency to pollute the environment. Inthe short term, RosHydromet's chief concern is to keep down operating costs. The priority is the highcost o f maintaining the existing stations, which are energy- and labor-intensive, filly depreciated, and for which spare parts are no longer manufactured. Infuture, RosHydromet would like to replace about 10-12receivers per year. The proposed investment would jump-start this reinvestment program by replacing about 30-40 receivers. Radar. Russia currently has an array o f about 60 meteorological radars dedicated to storm detection. The radar array is concentrated; for example, the Moscow region alone is protected by three radars. The radars in the national array belong to an older generation, detecting clouds but not measuring wind speed as Doppler-capable radars do. The lack o f meteorological Doppler radar seriously limits the capacity for detection o f convective storms with precipitation. Real- time observations o f the approach o f such storms would offer very useful protection, allowing RosHydromet to issue needed warnings. Inaddition, conventional radar can give the hydrologist quantitative precipitation data that could vastly improve the ability to forecast flooding. RosHydromet's radar deployment strategy focuses on densely populated areas affected by convective storms. There is a need to protect the other large urban areas, as well as populated coastal areas inthe Black and Japan Seas that regularly suffer from intensive convective storms Satellite ground stations. RosHydromet operates several major ground stations that download data from the Russian Meteor system andNOAA's TIROS-n satellites, from the Advanced Very High Resolution Radiometer (AVHRR) and TIROS Operational Vertical Sounder (TOVS) sensors. Satellite data have the potential to fill in some o f the gaps in the surface network. The major problem to be resolved at RosHydromet's receiving stations i s that they are unable to download the growing volume o f relevant satellite imagery, mainly because the receivers belong to an older type that cannot download digital data. Satellite images are already valuable for fire- spotting, pollution monitoring and drought monitoring, and are becoming increasingly more valuable as work i s done to calibrate satellite images with field data and use o f modeling techniques allows sub-pixel accuracy to be established. The calibration will never be perfect; for example, the weather satellites transmit images that are in general resolved at twenty five hectares per pixel. However, methods o f making the most o f available data are under development. Data processing, archiving and forecasting Data collected at hydrometeorological observation stations is transmitted to district or oblast centers which are responsible for sending data to 23 RosHydromet regional branches. These branches are the focal institutions where most routine meteorological and hydrological data are collected, verified, processed, incorporated into forecasts and supplied to regional and local clients. Operational upper air and meteorological data are transmitted several times a day to RosHydrometCenter and the Main Computing Center inMoscow, for forecasting and for onward transmission to the WMO. Protocols governing the procedure and frequency o f data transmission 40 vary for different types o f data and under different conditions. For example, the frequency o f transmission o f stream stage readings from hydrological posts is usually once a day, but inhigh- flood periods the required frequency increases to 6-12 times a day. One o f the prime concerns inall parts o f RosHydromet system is poor communicationcapability. It is not uncommon, particularly at remote stations, that data are still transmitted bytelegram and Morse code signals, which have not been used by the more advanced meteorological services since the 1960s. The methods by which data are communicated from monitoring stations are not only obsolete, expensive and labor-intensive, but also unreliable. Sometimes equipment is physically worn out. A significant share of field data is collectedbut is not reported intime for inclusioninnumerical models and decision support because o f communications difficulties. This issue particularly affects remote and Arctic areas. For example, 7 percent o f the stations reporting to Yakutsk Branch on the day the project team visited failed to report on time for inclusion in forecasting models because communications had failed during an ongoing geomagnetic storm. There have been cases inPrymorsky and Krasnodar Krai recently when data from hydroposts that indicated a dangerous rise in stream levels was not communicated to the authorities in a timely manner because o f poor communication channels. These failures led to significant economic losses. Besides being unacceptably failure-prone, regular communication channels are expensive, consuming in 2002 about 9 percent o f RosHydromet's budget. It is evident that the present communications system needs to be significantly upgraded to allow Russia to meet international standards and to deliver timely data and forecasts. Data processing capability at all elements o fRosHydromet system is also poor. Most observation posts and stations are not equipped with automatic data loggers or PCs. Paper loggers are the primary recording media used by observers, though a few stations (about 500) are equipped with PCs that keep routine data records and handle simple processing routines. Oblast offices and regional branches o f RosHydromet are equippedwith older generation PCs sometimes connected inlocalnetworks. Plotters, copyingmachines and other items ofoffice equipment arerare. Some regionalbranches have old mainframe computers that are difficult and expensive to maintain and often unable to runmore-modern software. Many branches do not have easy access to their own data records: most data are stored on paper, and access to data in the archive i s a complex procedure. Overall, data management i s a labor-intensive and cumbersome process throughout the system. Many paper records are stored in uncontrolled environments, putting data access at risk. Inorder to get the maximumbenefit from new and improved modeling capabilities, the regional branches o f RosHydromet should be upgraded. These branches provide the interface between RosHydromet and its userdclients. Currently, they do not have the access to products and data that they need to do their job effectively. Direct real-time satellite data are available only in certain centers. Other centers can access data only over the internet, a source that is often not current. Receiving stations at all regional centers, or alternatively a capability to access real-time satellite data through high-speed communications, would improve the effectiveness o f these offices. The addition o f modem computers and better software would improve the lead times for warnings o f severe weather and flood conditions. 41 Traditionally, RosHydromet's leadresearch institutions were responsible for design o f the whole chain of specialized data collection, storage, processing, dissemination, and in some cases database maintenance routines and standards. For example, the State Hydrological Institute i s responsible for the whole hydrological data chain; the Main Voeikov Geophysical Observatory handles meteorological data; the State Oceanographic Institute i s responsible for marine data. All data flows are accumulated and archived in the All-Russian Research Institute of Hydrometeorological Information - World Data Center (VNIIGMI-WDC), in Obninsk. The main functions o f the Obninsk WDC are: (i) to collect, process, and archive all types o f data and forecast information; (ii) to prepare and disseminate information related to climate; and (iii) to support and regularly update catalogs o f information resources, data bases and information, supplyingdata upon request. According to the VNIIGMI-WDC inventory, the archive contains about 50,000 magnetic tapes with data on climate, hydrology, environment, etc.; 2,356,000 paper documents with information from 1734 - 2003; 719,000 photo documents containing satellite data; and 288,000 microfilms. Archived data are deteriorating rapidly and will soon become inaccessible ifdata rescue is not undertaken. The only option to avoid data loss seems to be near- term conversion o f paper data, reel magnetic data and microfiche data to electronic media. The conversion will be a challenge because of the limited technology available and the cost o f conversion. However, protection and restoration o f access to this unique data has intemational 'importance. Forecast capability and forecast preparation. The process o f development o f global and national weather forecasts, which are among the most important and frequently-used RosHydromet products, is described below inmore detail. Inintemational agreements made in the 1960s, the USSR accepted responsibility for a central role in the world network o f meteorology coordinated by the WMO. The agencies tasked with global responsibilities in those agreements are Russian today, and the Russian Federation has accepted responsibility for fulfillment o f their role. The Moscow WMC is one o f three worldwide centers that are charged with computing and distributing daily global forecasts to initialize a number o f the world's regional weather models. In addition, the Moscow World Meteorological Center (WMC) is charged with responsibility for developing new techniques in support o f worldwide forecasting; the Obninsk archive is a World Data Center (WDC); the regional centers at Khabarovsk and Novosibirsk are specified as sources o f global leadership in specific areas o f forecasting. Despite the work o f newer agencies such as those o f Europe and Japan, that supply some forecasting support to the world community, it remains the case that the communications infrastructure that supports national forecasters worldwide incorporates Moscow as a hub and designates it a major provider o f global modeling, data provision and methods development. The Moscow WMC (whose functions are carried out by Hydrometeorological Science-Research Center o f the RF and the Main Computer Center of RosHydromet) has basically sustained its global contribution during the transition period. Faced with severe budget constraints, RosHydromet has made an outstanding effort to make the best use o f available computing resources through improvement in physical modeling and algorithm implementation. That strategy has reached its limit, however. At present the Moscow W M C is out-powered by a factor of about 1000to 1(inoperations per second) by comparable intemational centers. 42 As a result, accuracy and lead time in forecasting is falling behind that available in competing economies, despite the excellent skills available in RosHydromet. Of far greater significance i s the consequence that protection against weather hazards is significantly less than what would be technically possible given the capabilities and achievements o fRussia's forecasters. Specifically, weather forecasts could be more accurate for given lead times and in any case would benefit from better probabilistic informationdelineating the uncertainty o fresults. The importance o f computing power compared to additional observation data is highlighted by a study undertaken in the 1990s, in which the data that supported US. forecasting o f world weather from 1958-1997 were re-analyzed using the methods o f 1995. The re-analysis showed that ifthe methods o f 1995 had been inuse, forecasting skill would have been almost as good in 1958 as it was in 1997; improved observational techniques and data availability made much less difference. That is, most o f the improvement in US. weather forecasting is improvement in methods/computers, not improvement inobservations. See Figure 6. Figure 6. Comparison of the Northern Hemisphere anomaly correlation from operational and re-analysis forecasts (scale on the left). Presented in Kalnay et al., Bulletin of the American Meteorological Society, Vol. 79 (No. 12), 1998. RosHydromet's forecast system initiates model runs when data from the worldwide balloon launches at 0O:OO U T C and 12:OO U T C becomes available. These forecasts are based on data including: 0 Data from the Russian Federation's 104upper-air stations, transmitted to regional centers by shortwave radio, cell phone, satellite, telephone or telegram, and forwarded from regional centers to Moscow by modem, as well as data from other stations in the worldwide simultaneous balloon launch made available for download on the Global Telecommunications System (GTS); 43 Data from about 1300 meteorological stations o f the Russian Federation, those in the "operational" category, transmitted to regional centers once per three hours, and from there onward to Moscow, as well as data from the worldwide network o f reporting meteorological stations, available on the GTS. Altogether, model initiation is based on hundreds o f thousands o f weather observations received daily at the Moscow WMC. Table 1below lists the number o f observations received on January 25,2002. Note that each observation may comprise values for several variables. Surface stations 40,433 Ships and drifting buoys 21,916 Aircraft 26,075 Radiosondes 5,875 Satellites 250,000 Global forecasts at the Moscow W M C are made from Oh U T C for 85 hours, and from 12hU T C for the following ten days (240 hours). The global model currently employed by Hydrometcenter, the lead weather forecast institution, uses 85 spherical harmonics and has resolution 1.4 degrees x 1.4 degrees (150 km x 150km). Its output is transmitted to the GTS and to the regional centers in Novosibirsk and Khabarovsk. This output i s then used to drive nested regional models at resolution 70 kmx 70 km. The Moscow and Novosibirsk centers then use the Moscow global model to initialize regional models, but the Khabarovsk center at present cannot, because Moscow's model run i s not available in time for the daily forecast in Khabarovsk. Instead, Khabarovsk RegionalMeteorological Center undertakes its regional model runbased on output from Bracknell and Japan. The three regional models (Moscow, Khabarovsk, Novosibirsk) incorporate regional data, knowledge and techniques additional to that used inthe global forecasts. The regional models are complete about 1.5 hours after initiation, and are distributed to Region VI countries per the responsibilities o f the Russian Federation (see Figure 4), as well as to the 23 RosHydromet regional branches within the Russian Federation. Each regional branch then forwards the regional forecast to the RosHydromet offices o f the Subjects o f the Federation that are in its area o f responsibility. Some offices o f RosHydromet in the Subjects o f the Federation may run local models (resolution 10 km x 10 km) nested within the regional models, additionally incorporating local radar data, satellite data when available, and archived data from which analogues to past weather and/or correlations among datasets are drawn. Local knowledge is the final input at this level. Local prognoses are then issued, providing a three-day outlook. Interaction with clients and provision of services The values o f hydrometeorologicalparameters collected by the RosHydromet network - such as the temperature and humidity o f the air, wind velocity, water temperature, precipitations, clouds, visibility, ice, the salinity and density o f sea water, concentrations o f pollutants, radiation flows and soil moisture, form a baseline for development o f information products. If these data are further processed and analyzed by RosHydromet institutions, the output is then classified as 44 generalized information or as information products. This information, in tum, falls into the "predictive" category (forecasts o f all types at various lead times, storm warnings, forecast updates, recommendations and consultations) or else is "regimen-reference" data (monthly summaries, bulletins, annuals, reference manuals and books, monographs, atlases, regulations, etc.). Global services. As noted above, the global weather community is a principal beneficiary o f RosHydromet's output, via the World Meteorological Organization. RosHydromet actively participates in all WMO systems: the Global Observation System, the Global Telecommunications System (GTS), data management, and the Global Data Processing System. RosHydromet provides data from 104 upper air stations (as o f 2002, about 10 percent o f the WMO system's 1050 reporting stations globally) and about 900 surface stations (as o f 2002, about 8.2 percent of the 10952 stations reportingto the WMO). Inaddition, the long-term stations andtime series obtained inRussiabyconsistent methods over many decades form an important component o f the world's meteorological database. It would be inthe best interests ofthe researchcommunity ifRussiawere to continue to finance operationo f these stations inexactly the same way. However, as noted above, current methods are expensive. If Russia opts to automate these stations, it would be best for the research community if observations by both methods were undertaken during an overlap/calibration period (Canada's experience suggests two years) to assurecomparability o fthe time series. Domestic services. Of course, RosHydromet also faces toward a domestic base o f clients and beneficiaries. The main information products o f RosHydromet and certain protocols for interaction with clients are regulatedby the Government Resolution "On Information Services in Hydrometeorology and Environmental Pollution" (N1425 dated November 15, 1997). All hydrometeorological information is divided into two broad categories distinguished by data availability, processing and the means o f data transmission to the user: standard information, and specialized information. Standard information is that obtained and processed according to RosHydromet's federally-set requirements and, in compliance with the above Resolution, made available to all users free o f charge. The Resolution specifies the detailed list o f products which constitute standard information. These free products include for instance all emergency warnings, data on extreme pollution events, basic weather forecasts for each territory o f the Subjects o f Federation with a lead time from 1 to 3 days, etc. Specialized information i s user- tailored data. Users pay for this information in accordance with the terms o f agreements struck betweenthe user and a RosHydromet entity. Information on all types o f emergency situations is among the mandatory free information provided to specially-authorized government bodies, mass media and the public. There is a special procedure for the provision o f data to the government authorities in case o f hydrometeorological disasters and emergency situations. It is regulated by "The order o f activities o f RosHydromet's organizations and institutions in case o f emergencies" (2000), and the "Guiding Document 52.04.563-2002. Instructions. Criteria o f dangerous hydrometeorological phenomena and order o f initiation o f storm alarms" (2002). However, the overall degradation o f all major elements o f RosHydromet network has inevitably led to a negative impact on its capacity to predict dangerous weather events. RosHydromet data shows that the percentage o f dangerous weather events not predicted by RosHydromet as a share o f all recorded dangerous 45 weather events which caused economic damages, increased from 6.1 percent in 1993 to 23.1 Box 1: Cases of no warning on weather hazards 9 On May 29,2003, inVolgogradRegion(Alekseyevsky Settlement)the weather forecast was silent as to huge hail (50 mm indiameter). The results were 1680houses damagedand 3,300 hectares of farmland destroyed, or atotal lossof 12.5 million rubles. 9 On the night of June 20-21, 1998, Moscow witnesseda heavythunderstormaccompanied by heavy rain and strong wind. Meteorological stations recorded wind up to 26 mps; however, weather radar data and the nature of destructions put wind speeds at over 30 mps. This thunderstorm was not predictedinatimely way. Damages included: ** 173 people injured, including 129 hospitalized, 86 trolleybus and 37 tramway lines blocked, ** * 1400 roofs destroyed, Several ships sank inthe river port, 67.5 thousandtrees were brokenor uprooted. Ittook severalmonthsto fix this damage. Cleaningstreets from the brokentrees alonecost the city an additional 30 million rubles(in prices ofJuly 1998). 9 As the resultof a strongwind (up to 30-34mps) unforeseeninthe weather forecastfor April 6,2003, the city ofNazran(Republic of Ingushetia)had several electric and communications lines damagedand several housesunroofed. percent in2001. A few cases o f losses due to poor forecasts are presented inBox 1. It would be important to note that overall weather dependency o fthe Russian Federation is high, particularly in the North, Far East and North Caucasus regions, which are exposed to extreme weather conditions and events. The number o f dangerous weather events is growing, as RosHydromet statistics show (Figure 7); the damages are highand have a tendency to increase as well. 300 250 200 150 100 50 0 Figure 7. Number of dangerous weather event recorded inRussia 46 Two specific sectoral cases o f long-term trends in economic losses caused by negative weather events, those for the agriculture and forestry sectors, are presented inFigure 8. 30 25 20 I 15 I I 10 ~ 5 I 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 +yuep6 (MJIpn. py6.) no AaHHbIM "PocHTqarpoYC" yuep6 (Mnpn. py6.) ll0AaHHbIM "ABHaJIeCOOXpaHa" Figure 8. Economic losses from unfavorableweather events in agriculture and forestry. All losses in Bln. Rubles (2003 Diamonds -losses in agriculture. Squares -forestry. The overall magnitude o f losses for the economy, estimated based on a range o f studies (Ragozin, 2001; Natural Hazards in Russia. Hydrometeorological Hazards, 2001; Natural Hazards in Russia. Assessment and Management of Natural Risks, 2003, Catastrophic Floods of the Beginning of 2Ist Century, 2003) and cross-country comparisons, appears likely to be in the range USD 1-2 billion annually (see Annex 9). The largest share o f these losses is associated with flood damage, the result o f floods o f many kinds-tsunamis and monsoons inthe Far East, storm surges inthe estuaries o f the seas, ice damming o f north-flowing rivers including the Lena, flood waves during spring snowmelt, and summer and autumn rainfall. The Far East and North Caucasus are the most affected regions; agriculture and infrastructure are the most affected sectors. In the process of project preparation, a range of consultations with sectoral and regional stakeholders was organized. The conclusion reached was that client satisfaction is not high. All parties noted the degradation o f basic network, deteriorating data quality and the discontinuation o f measurements. Specific cases o f poor forecasts in water resources management, forestry, shipping, power supply and municipal sector that had led to economic losses were described by clients. Many clients, particularly representatives o f federal, regional and municipal governments, complained about prices charged by RosHydromet for services which intheir view should have beenprovided as free public goods. 47 Unlike USA National Weather Service, which offers free weather forecasts to all those who want them, as noted above RosHydromet charges its clients for a broad category o f products. This approach is similar to the general European approach that allows government agencies engaged in weather forecasts to sell their products as do private weather bureaus. Russia's hydrometeorological market is now represented by over 300 private and government entities. It demonstrates a healthy 15-20 percent client growth annually, despite some competition with the private sector. According to RosHydromet, until 2000 the number o f such clients grew about 5 percent a year, but in 2001-2003 the annual growth was 35 percent, 26 percent and 15 percent. RosHydromet currently has 36,000 clients nationwide, with 29,000 clients buying specialized information. The energy sector i s the most active new client including RAO UES and GAZPROM companies. Altogether, annual turnover in this sector i s about USD 30 million, though it has a potential capacity o f USD 200-300 million. The year 2002 saw a 25 percent increase in the energy sector clients, where estimated economic benefits o f applying weather information was Rb12.4 billion (USD 80 million). In2003, RosHydromet earned Rbl. 1.1 billion (from all client categories), with a total estimated economic benefits over Rbl. 10 billion ($330 million). According to the RosHydromet MeteoAgency, only 1 percent o f all the organizations whose activity is weather dependent buy detailed specialized forecasts. The gap i s due more to the fact that not many users are aware o f the importance o f accurate weather forecasts to their activities, than to cost-saving considerations. What the sector is most interested in i s seasonal weather forecasts to allow an accurate estimate o f the requirements o f the heating season and development o f the best fuel-supply schedule. 48 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies RUSSIANFEDERATION: NATIONALHYDROMET MODERNIZATION PROJECT Sector Issue: Need for a long-term institutional development perspective and strategy for adjustment of environmental management to the market economy. The Environmental Management Project (1994) financed technical assistance (TA) for institutional and policy strengthening to support incorporation o f environmental and resource management concerns into the economic, social and political adjustment process occurring inthe post-Soviet period. Relevant lessons: (1) In any future large-scale technical assistance initiatives in the sector, demand for this kindo f TA on the part o f the borrower should be better defined. Ideally, a track record o f undertaking and accepting this kindo f assistance on a more modest scale should exist. (2) Institutional technical assistancerequires a sustaining client. This is obtainedonly where the client organization has bought into and has ownership o f the TA initiative from the outset. There should.be provision for timely restructuring o f counterpart relationships during supervision if ownership degrades or changes ininstitutional structure occur. Sector Issue: Communications and IT infrastructure base are obsolete and cannot support the high volume, transparent supply of information that would be optimal in the market economy. The Customs Development Project (2003) aims to modernize the information technology structure o f the State Customs Committee and institute e-Government facilities for information and interaction with the trade community. The project aims to overhaul the informatics infrastructure of Customs through provision o f systems, computers, telecommunications, and other technological infrastructure. The project is still inan early stage. Sector Issue: Obsoleteinformation technology: capacity to offer forecasts and dataproducts in support of the economy hasfallen behind the standard set by equivalent services, and as such, the standard needed to keep the economy competitive. The Development o f the State Statistical System Project (1999) aims to address the economy's growing requirement for statistical data. Data needs for policy and business decisions are emerging at a higher pace than the statistical system can develop and deliver. Transformation o f the statistical system will require introduction o f new survey methods, improvement o f management o f the statistical system to systematically cope with the new requirements, training and retraining o f staff to obtain a new skill mix, and procurement o f equipment to process, store, share and disseminate information efficiently to meet the needs o f the users. Sector Issue: As a result of under-funding, loss of capacity to monitor remote areas for threats to environment, human health and economic damage. The proposed GEF Fire Management in High Biodiversity Value Forests o f Amur-Sikhote - Alin Ecoregion Project (2006, Pipeline) would aim to support programs for improved management, monitoring and prevention o f fires, and public awareness campaigns for fire prevention, inorder to conserve these economically vulnerable forest ecosystems. The project is inthe pipeline. 49 Annex 3: ResultsFrameworkandMonitoring RUSSIAN FEDERATION: NATIONAL HYDROMET MODERNIZATIONPROJECT ResultsFramework PDO OutcomeIndicators Use of OutcomeInformation Increase the accuracy of forecasts Leadtime increases for national Ifforecastsdonotimprove, findthe providedto the Russianpeople and regional weather forecasts critical gaps indata collection, and economy by modernizing computing or telecoms andremove keyelements ofRosHydromet's them. technical base and strengthening its institutional arrangements. IntermediateResults ResultsIndicatorsfor Each Use of ResultsMonitoring Oneper Component Component ComponentA: ComponentA: ComponentA: Upgrade computing capacity and Computing centers obtain Ifforecast centersunableto capacity for transmission, operational forecasts at higher undertake these methods, revise archiving and retrieval of data resolution and using ensemble computing system designand/or methods. upgrade capacity. Data collected and transmitted Make sure that telecoms are (including processed effective; iftelecoms not effective, information) within Russia or reconfigure system and/or make globally does not encounter furtherupgrade. infrastructure bottlenecks in RosHydromet telecoms Ifarchiving systemremains unable , Responsetime drops for to respond to questions set by requests for archived data modelers and synopticians, identify capacity gap. ComponentB: ComponentB : ComponentB: Modernize key components of Availability and quality of data Ifnewsystems do notmakedata RosHydromet's observation that contributes to forecasting available to forecasters, reconsider network i s secured and improved. the applicability o f the technological solutions used. ComponentC: ComponentC: Component C: ~~ ~ Pilot new operational principles Development and pilot testing Ifaconcept ofoperations doesnot drawn from worldwide o f a RosHydromet concept o f emerge, seek world experience for experience, improving operations applicable lessons and promote emergency warnings and their introduction. supporting development of anew Improvement inleadtime for concept of operations. wamings deliveredto Analyze bottlenecksinwarning population incase of delivery (data collection, analysis, hazardous weather events delivery or presentation) and resolve them. 50 3 3 3 w w 32 32 gz a, m * m * m * u z u 2 u 2 A ll 3 gz 3 3 W m * x 4 sa . 1 uz u z Z0 U z !i U z cci 0 1' ,"I 0 U z c, U zI/: .-C -1 U z Annex 4: DetailedProjectDescription RUSSIANFEDERATION: NATIONAL HYDROMETMODERNIZATIONPROJECT The proposed project has four components: (a) modernization o f computing, archiving and telecommunications facilities; (b) upgrade o f observation networks; (c) institutional strengthening, improvement o f information dissemination and emergency preparedness; and (d) project management, monitoring and evaluation. ComponentA: Modernizationof Computing,ArchivingandTelecommunicationsFacilities (US$46.1 million baseline excluding contingencies and taxes, US$62.1 million estimated projectcosts) This component would upgrade the computing capacity o f five key facilities o f RosHydromet and overall communications throughout the national network. This would include upgrade to supporting infrastructure; that is, the system's capacity for transmission, archiving and retrieval o f data. The hydrometeorological centers concerned contribute critically to Russia's forecasting capability and also to its contribution to the UnitedNations World Meteorological Organization's global meteorological system. The five are: (a) the Moscow World Meteorological Center (Moscow WMC), which produces and distributes global forecasts, develops new forecasting methods, and coordinates forecasting in RosHydromet; (b) Obninsk All-Russia Research Institute o f Hydrometeorological Information (VNIIGMI) - World Data Centre (Obninsk Archiving Facility), which is responsible for archiving and distribution of hydrological and meteorological data; (c and d) Novosibirsk and Khabarovsk Regional Meteorological Centers (RMCs), which have been designated WMO Regional Specialized Meteorological Centers, producing and distributing regional forecasts and developing new methods o f regional forecasting; and (e) Voeikov Main Geophysical Observatory (Voeikov GGO) inSt. Petersburg, a World Radiation Data Center. As for the national network, the component would upgrade overall communications and transmission capability throughout the national forecasting network, focusing on the 30 oblast centers, 24 regional telecommunication centers, 40 regional forecasting centers, and about 400 observation stations, focusing especially on those situated in sparsely populated or difficult-of-access regions. A.l: Modernization of the Moscow WMC and Obninsk Archiving Facility (US$30.5 millionexcludingcontingencies andtaxes, US$41.0millionestimatedprojectcosts) The principal aim of this sub-component is to upgrade the computing capacity o f the Moscow W M C through investment at RosHydromet's main Moscow center, as well as the capacity for archiving andretrieval o f hydrometeorological data o f the Obninsk Archiving Facility. Modernization of Main Computer Center. The largest single investment would be through the procurement o f a supercomputer (and operating system environment) for the Moscow WMC, a highpriority inlight o finternational analyses showing that global gains inforecast leadtimes in recent decades have been largely driven by improvements in numerical forecast methods. It is expected that the proposed supercomputer would have a processing power o f at least four teraflops (one teraflop is 10l2floating point operations per second). The system architecture and configuration will depend on the results o f the procurement process. This would bring RosHydromet's basic computing power broadly into line with other globally important 56 meteorological centers. It would enable RosHydromet to make full use o f its own models, implement recent advances in modeling worldwide, and continue development o f new algorithms as the WMO has mandated. The new supercomputer will facilitate measurable gains in the lead time over which forecasts are considered useful, enabling use of improving parameterizations o f physical processes in the global model through the introduction o f model elements that have already been developed by RosHydromet but have not been introduced operationally due to the lack o f computing resources. In addition, it will enable an increase in the spatial resolution o f global models. The new computer will require significant adaptation o f software in use on the current supercomputer, especially the forecast models themselves. The component would therefore also include support to for this task. The local area network (LAN) supporting the supercomputer would be upgraded to at least 1Gb capacity along the backbone controlling access to the supercomputer. The remaining parts o f the LAN in the main computing center would also be upgraded to a standard such as a lOObaseT network o f approximately 400-450 nodes. The network would also provide access to authorized externalhemote users. For example, the LANmay be divided into two main segments, o f which the user access segment will be further divided into a sub-segment structure mirroring the departmental structure o f the Moscow WMC. The upgrade would also include hardware and software for network analysis and protection, including a firewall, anti-virus software, and equipment for physical protection o f the network from electrical surges such as lightning, including unintemptible power supply systems. A limited upgrade o f workplaces is envisaged, comprising computers and associated peripherals for about 75 workstations. The computing centre itself would obtain equipment for visualization and display, including wall-sized projector panels, large format plotters andprinters. ~ Limited refurbishment may be undertaken o f the area housing the supercomputer complex (on the order o f 400-600 m2), related office space (about 300 m2),and the control room for W M C computer operations. Refurbishment would include, inter alia, strengthening the floor o f the supercomputer room and upgrade o f air-conditioning and fire-safety systems. Upgraded power supply arrangements would likely include refurbishment o f three transformers and upgrade o f low-voltage electrical equipment o f the internal substation and power network to ensure a stable environment, upgrade o f the fire protection system, andnew cabling. Modernization of Archiving System. Obninsk All-Russia Research Institute o f Hydrometeorological Information - World Data Centre (VNIIGMI) has housed the Russian Hydrometeorological DataFundsince 1957. The total volume o f information held at the Obninsk archive is estimated at 150-180 Tb. Most is held on magnetic tapes (1200 and 6250 bpi density tapes) that are degrading. The current estimate is that only about 90 percent o f the data held on each tape is recoverable, despite regular maintenance o f the tape archive. In addition, a large archive o f original satellite data is held (as photographic negatives) and a large volume o f paper records is held as well. VNIIGMI is undertaking a program to digitize all data and transfer the archive to more-stable media. This subcomponent will support development o f an up-to-date computerized archive. Currently, on-line storage of about 40 Tb and disk space o f about 100 Tb -200Tbisenvisaged.Thecenterwillbeabletoreceiveandstoreafurther2Tbofdataperyear. Under this subcomponent, VNIIGMI will obtain high-capacity servers, software and storage 57 space for the data and operational archives. It is anticipated that this will include the provision o f disk archive servers, virtual tape servers with larger-capacity tape libraries, a tape driver and greater disk space. At the same time, automated and semi-automated facilities for storage o f paper records, magnetic media and a modem automated library will be established. The task o f mass digitization will be supported through the provision o f equipment for archiving o f paper records. Industrial document scanners with OCR readers and other specialized equipment for work with paper records will be procured, as will equipment for the modernization o f existing photo-offset printers to digital technology, and software for data collation and archiving. To facilitate adequate access to the data, hardware and software will be provided for data organization (database software and servers), visualization (GIs software), and web access. The archive's LAN will also be brought up to date, with data transfer rates increased to at least the standard o f fast Ethernet (such as 100BaseT) for the key parts o f the archive, and at least to Gigabit Ethernet for the main backbone. It is envisaged that some 120 upgraded workplaces may be procured, possibly including additional equipment (printers, plotters, wall panels) for data presentation. There will be limited rehabilitation and reconstruction o f space for the archive and supporting equipment, addressing inter alia issues o f guaranteed power supply and modernizing the local substation. There is also a need to renovate office space. Altogether, it is estimated that 2000- 3000 m2o f spacewill undergo rehabilitation. Substantial training o f staff in new equipment and new methods will be supported, as will the task o f the porting existing software and systems to the new computing facilities. A.2: Restructuring at Novosibirsk and Khabarovsk RMCs and Modernization at Voeikov GGO (US$7.9 million baseline excluding contingencies and taxes, US$10.7 million estimated project costs). This subcomponent will upgrade facilities at the Novosibirsk and Khabarovsk RMCs and at Voiekov GGO in St. Petersburg. The investments o f the RMCs are similar to those at the Moscow WMC, although at a smaller scale as these centers are responsible for regional rather than global forecasting. Processing power will be increased to raise capacity for regional forecasts and research. To that end, each centre will be provided with a supercomputer with capacity likely to be at least 400 Gflops. Each center would also be equipped with about 25 upgraded forecasters' workstations. Minor refurbishment would also be undertaken, about 200m2 at each center, puttingsystems inplace to protect the new hardware such as air conditioning, fire safety and power stabilization. Additional workstations and equipment will be procured to support data collection and local archiving. This will include modernized data collection systems, among which the collection o f data from data transmission satellites. Training will be provided for the staff o f the centres.Some. rehabilitation work will be undertaken to support maintenance o f regional data archives housed at the centers, such as minor reconstruction and provision o f air conditioning and humidity control. The computing resources at Voeikov GGO will also bemodemized, mainly through the provision o fa data server with a processing capacity likely to be at least 300 Gflops. In addition minor investments will be made in the LAN and telecommunications resources, and in limited renovation o f facilities to house the computing resources. The most significant outcome o f this investment will be the ability o f GGO to run ensemble forecasts o f climate change. Inaddition, it is planned to procure specialized equipment 58 insupport ofclimate change study. Procurement ofequipment to set up a station for the WMO Baseline Surface RadiationNetwork is planned. A.3: Modernization of the Communications and Data Transmission System (US$7.7 million baseline excluding contingencies and taxes, US$10.4 million estimated project costs). The aim o f this subcomponent is to ensure efficient and timely collection o f data and dissemination o f results. The Moscow W M C is the central node in the Russian Federation's domestic hydrometeorological service. All meteorological data from operational meteorological stations in the Russian Federation i s passed to Moscow W M C to support production o f global forecasts. Inturn, the global forecasts are passed outward to the regional centers where they are used input to regional forecasting. Because production o f daily forecasts depends on the inward and outward transmission o f data, the effectiveness o f the national network is critical to the overall lead time provided by Hydromet's forecasts. Upgrade o f the communications network that connects the Moscow WMC to the regional centers will be a cost-effective means o f improving the Hydromet's forecasts. This subcomponent will provide an upgrade o f telecommunications facilities to the Moscow WMC, the Khabarovsk and Novosibirsk RMCs, Voeikov GGO, the Obninsk Archive Facility, and throughout the regional RosHydromet network. The Moscow W M C at present receives about 220 Mb/day from the WMO's Global Telecommunications System. Outgoing data from the Moscow W M C is about 700 Mb/day (upload o f data from Russia's land mass, forecasts, etc.). Transmission between the Hydromet's various centers and Moscow i s on the order o f 310,000 messages (560 Mb) per day inbound and more than 670,000 messages (740 Mb) outbound. These volumes are expanding annually. To provide for future needs, it is proposedto raise capacity at the Moscow WMC to at least 30-50 Gb o f incoming traffic and at least 150-200 Gb o f outgoing traffic. A modern message switching system (MSS) will be implemented both centrally and at the regional centers. The LAN serving the Moscow WMC's communications center will be modernized and control and measurement equipment installed. Communications lines will be upgraded, e.g., to fiber optic channels where appropriate, and connection to the main Russian communications backbone will be ensured. International links will also be examined to determine the scope for increasing the data transmission speed between the W M C and the countries that it serves with global and regional forecasts. Telephone and telegraph facilities, where they are currently analog, will be converted to digital. Some necessary refkbishment work will be carried out in each facility, in the areas where communications facilities are housed. An important element o f the work will be related to modernization o f the overall data collection system and ensuring that measurement data get from measurement stations to the national regional and data centers. This will comprise supply and installation o f servers and MSS equipment for 30 oblast centers and 24 national regional centers, network equipment for 70 oblast and national regional centers, and the supply and installation o f telecommunications equipment for 400 key or remote stations. The latter will include appropriate equipment for the northern stations that are not adequately served by traditional means o f communications, and radio and satellite communications for some stations. The subcomponent will also equip backup communication centers. 59 Component B: Upgrading of the Observational Networks (US$42.3 million baseline excluding contingencies and taxes, US$56.9 million estimated project costs) This component would upgrade the instrumentation o f RosHydromet's data gathering facilities: surface observation stations, upper-air sounding stations, meteorological radars, satellite receiving stations, hydrometeorological centres and hydrological stations. Data from the observational networks form the basis for RosHydromet's weather forecasts at global, regional andlocal scales, seasonal forecasts, aviation forecasts, agricultural meteorology, support to water resources management, emergency warnings, and all other services. B1. Surface Observation Network (US$17.4 million excluding contingencies and taxes, US$23.3 million estimated project costs) RosHydromet currently operates 1626 meteorological stations that measure surface values o f basic meteorological variables: temperature, pressure, humidity, wind speed and direction, precipitation. Some stations maintain time series o f actinometric variables: hours o f sunlight, total solar irradiance, direct solar irradiance, diffuse solar irradiance, and/or UV irradiance. Some add measures o f cloud height and present weather; some measure pollution; some undertake specialized observations in support o f agriculture, such as evapotranspiration, soil moisture, soil temperature at a range o f depths, frost thickness, snow cover, and water content o f snow. At present, network equipment is in many cases nearing full depreciation, threatening capacity for various functions. This subcomponent aims to upgradeheplace instrument sets at about 900 o f RosHydromet's observing stations. The subcomponent would identify and procure standard instrumentation sets o f several types and varying complexity. Basic sets would measure standard meteorological parameters; another type o f set would recording in addition actinometric variables; another type o f set would also measure visibility and present weather. Some set designs would incorporate semi-automatic measurement and recording capabilities, thus reducing the need for staffing at some stations. In the selection o f sites to be upgraded, one possibility is a selection among the federal baseline network o f stations -(comprising 1346 stations o f RosHydromet's 1626 total). Another criterion for focus might be the WMO-reporting subset o f stations, which partly overlap with the federal baseline network. Inany case, the whole o f the federal baseline network should be assessed, as the configuration may need revision in light o f changing priorities and climate trends. The subcomponent may also support a more systematic approach to meteorological measurements through the design and implementation o f up to ten sub-regional meteorological networks. This initiative would be directly related to and result from the work undertaken under Component C (see below). As a result o f the analysis and re-evaluation of RosHydromet's methods o f work, a new approach to the establishment and maintenance o f meteorological measurement networks may be undertaken. This will include the establishment o f automated and semi-automated networks, improved integration with hydrological network and specialized networks, co-financing o f networks, andpossibly other issues. B2. Aerological (Upper-Air) Network (US$4.9 million baseline excluding contingencies and taxes, US$6.6 million estimated project costs) RosHydromet operates 104 atmospheric sounders to obtain the three-dimensional data that are the input to global forecast models. These sounders contribute to a worldwide network spaced to 60 capture the scale of atmospheric motions that contribute to development o f global weather inthe near term. Balloons are launched twice a day at 00:OOh and at 12:OOh UTC. The Russian Federation has in the past contributed about 15 percent o f the total data in the global network (which has about 1000 stations). However, budget considerations gradually forced closures, as the network that once comprised 127 stations now comprises 104. The dropoff in data availability has affected forecast quality, particularly the quality o f aviation forecasts. RosHydromet's present network uses three proprietary systems, all based on secondary radar: Meteorit; the AVK, and in a few places, Russia's new MARL-A system. The older systems are energy-intensive, relatively dangerous (because o f the radiation they emit, and because methods for filling o f ballons are hazardous), depend on voltages different from those received from the grid (thus requiring dedicated transformers), and are designed to broadcast at frequencies that modem conventions have specified as reserved for civilian use. Their single-dish antenna design is not as robust nor as flexible as MARL-A's phased array. Maintenance is becoming extremely expensive, as spare parts are becomingimpossible to procure. The project aims to upgrade this network by replacing about 45 MeteoriUAVK aerological radars with MARL-A tracking stations and upgrading 40 other AVK stations with new computing and radar supply sets. B3. Meteorological Radars and Lightning Detection (US$8.5 million baseline excluding contingencies and taxes, US$11.4 million estimated project costs) RosHydromet's weather radar network consists at present o f about 50 radars. Moscow is protected by a network comprising five radars, but other large urban centers do not have a similar level o f protection. None o fthe radars inRosHydromet's system are Doppler-capable; as a result, they can monitor precipitation but cannot track storms or measure wind. To increase capacity, the project would procure eight Doppler-capable radars, prioritizing deployment in the largest urban areas and areas at risk o f convective storms, such as Black Sea and Japan Sea coastal areas. The subcomponent would also finance retrofitting o f about 20 additional radars in the network with computer upgrades to improve analysis o f observations. Inaddition, about five lightning detection systems would be implemented to improve storm detection, providing coverage over an area on the order o f 150,000 km2. B4. Regional Hydrometeorological Centers (US$5.3 million excluding contingencies and taxes, US$7.2 million estimated project costs). This subcomponent will finance works at 20-30 regional RosHydromet centers to address the following critical issues: satellite data reception, visualization systems, hydrological forecasting, operational archiving and atmospheric pollution monitoring. Satellite Data Reception Systems. International satellites provide very useful set o f weather- related digital imagery. The Aqua satellite, for example, provides data that can make up for some o f the data gaps in the radiosonde network: it obtains atmospheric temperature profiles to the nearest 1°K for every 1 km layer in the troposphere and 1°K for every 4 km layer in the stratosphere up to 40 km, as well as humidity to an accuracy o f 10 percent in the troposphere. Other derived satellite products include among others geopotential height at 20 atmospheric pressure levels, cloud mask, rainfall, snow-water equivalent on land, vegetation cover, surfacekloud temperature, calibrated radiances in many spectral bands, at resolutions from 250 61 m to 10 km. Applicatons o f satellite data include monitoring o f pollution, forest fires and drought. Methods already exist to incorporate some o f this data, such as radiances, into forecast models, and development o f further methods is an active area o fresearch globally. Therefore, this subcomponent would procure about 20 ground receiving stations. The distribution o f receiving capacity by data format is not fixed. However, notionally, the project could obtain ten stations equipped to receive HighRate Picture Transmission (HRPT) images, at present the format for NOAA AVHRR and TOVS data. Six stations could be procured capable o f receiving medium-resolution data in the format used by the Aqua, Terra and Meteor 3 M satellites and the future satellites to be launched that will use this format. An additional station could be procured to receive data from the EUMETSAT, Meteosat 2"d generation satellites that are to be launched. Other satellite data receiving stations may be procured as well, such as a Radarsat station that may be supplied to the Arctic and Antarctic Institute inSt Petersburg. Visualization Systems. There are a number o f visualization systems that have been developed specifically for the collation, visualization and analysis o f meteorological information and data. Under this component, such systems/licenses would be procured and software upgraded at key hydrometeorological centers, in light o f the utility o f a national standard for analysis, visualization and presentation o f data. Although some work may be undertaken to adapt software to the local environment, it i s not intendedto carry out any major software development work under this task. Computerization of Hydrological Forecasting. A number o f the main regional hydrometeorological centers would benefit from major upgrades to their computing resources. Upgrade o f workstations and software at five to ten hydrometeorological centers would be undertaken inorder to ensure they can make best use o f hydrological forecasting methods and to enable further development. Creation of Operational Archives. RosHydromet regional branches usually do not maintain archives on the most modem technical media, a fact considerably limitingtheir data management capability and opportunities to respond promptly to information requests from regional and local clients. This subcomponent includes provision o f about 220 workstations equipped with standard archiving software to the regional RosHydonnet Branches. Development and installationo f specialized software and training o f staff would also be financed. This activity will be undertaken under overall guidance from VNIIGMI-WDC. Atmospheric Pollution Monitoring. In light o f the growing body o f information concerning the health risks o f air pollution, the project would invest in up-to-date monitoring equipment. It i s anticipated that up to ten sites would be instrumented for ongoing monitoring, comprising a mix o f industrial sites and urbancenters. B5. Hydrological Network (US$6.2 million baseline excluding contingencies and taxes, US$8.4 million estimated project costs). RosHydromet has undertaken the long-term task o f restoring an adequate network of hydrological measurement sites. This task was launched in 2002, following the Caucasus floods o f that year, following which RosHydromet initiated re-investment in hydroposts there. However, the initial strategy was limitedto restoration o f stations and hydroposts, rather than to 62 consideration o f networks. A more-strategic approach would be financed under this project. This subcomponent will finance upgrade o f about 700-800 hydroposts. It would focus inpart on critical locations for flow measurements indicating the state o f the river systems and locations critical for the purpose o f flood warning. It would also undertake a focus on three priority river basins, likely including the Kuban, the Ussury (a tributary o f the Amur), and the Upper Oka (a tributary o f the Volga). The Upper Lena is also under consideration. All candidate river basins suffer from flooding. The Kuban basin i s particularly notable for flash floods originating in heavy precipitation in the mountains. The Ussury River basin also experiences heavy flooding, but o f a different kind: concentration o f monsoon rains that fall over a very large territory. A more-dense network that improved forecasting would be the first step to mitigation o f these floods. As for the Upper Okayit is frequently flooded in springdue to snow melting. Snow pack measurement network has to be re-established in this basin. In these pilot areas, complete hydrological networks would be designed and installed. Hydrological forecasting solutions that worked in these basins would thus be broadly useful. Design o f the new networks would take into consideration recent developments in sensors and networks, including the use o f semi- automatic and fully-automatic stations. Modernization o f hydrological network will be combined with the improvement o f meteorological and other elements o f RosHydromet. The focus on the Kuban Basin will allow follow-up to recent Bank work on the safety o f the Krasnodar Dam. Inaddition, RosHydromet is considering a joint effort with US NOAA inwhich RosHydromet would undertake a prototype application o f the River Forecast System (a modelinglforecast suite developed byN O M W S ) , inthose three basins. Component C: Institutional Strengthening, Improvements in Output Dissemination, and Emergency Preparedness (US$5.9 million baseline excluding contingencies and taxes, US$7.9 millionestimatedprojectcosts) This component is to improve delivery o f services, responsiveness to natural disasters, and institutional strengthening to make RosHydromet a more viable, vibrant and client-oriented agency. Three subcomponents are envisaged: institutional strengthening, client service improvement and emergency planning andpreparedness. C.l. InstitutionalStrengthening(US$2.7 millionbaselineexcludingcontingenciesandtaxes, US$3.6 millionestimatedprojectcosts) This subcomponent will comprise a modest institutional strengthening program. In discussions with RosHydromet senior management, it was agreed that a step-by-step approach would be prudent for the process o f institutional reform. The process will start with comprehensive evaluation o f the entire RosHydromet system, to include a detailed institutional and regulatory review and an assessment o f RosHydromet's economic and financial system, including inventory o f its assets, assessment o f operation and maintenance needs. This evaluation will lead to preparation o f institutional development and system design alternatives aligned with the client's needs and funding trends, to be developed based on clarified system objectives and international lessons learned, together with the assessment o fRosHydromet's strengths and weaknesses. 63 Institutional alternatives would be tested in three or four RosHydromet regional branches: new network designs and operational procedures would be tested by branches that are committed to change, representing different physiogeographic, administrative and economic conditions. Modernization of the meteorological and hydrological networks in these regional branches (funded from Component B) will likely be relatively higher than in other braches in order to provide a critical mass of infrastructure changes to stimulate introduction o f reforms. The process o f institutional reform will be supported by a package o f training, study tours and collaborationwith international and national hydrometeorologic institutions. Taken together, it is hoped that the injection of modern equipment and software, training o f staff, and transfer o f relevant foreign experience will make the proposed institutional transition feasible. Individual consultants would be hired to support project development activities. The task would also include development o f arrangements for interaction between RosHydromet andthe administrations of the Subjects o f Federation, providing for more-specific delineation o f responsibilities and funding agreements. Activities may be carried out with the aim o f streamlining RosHydromet and increasing commercialization o f products. Steps leading to improvements in forecasting techniques will be identified, comprising both statutorily-required operational products and specialized projects with outputs aimed towards identified end users. C2. Client Service System (US$1.4 million baseline excluding contingencies and taxes, US$1.9 million estimated project costs). An important factor in the success o f the project will be improvement o f data presentation to ensure that data are made available in required and common formats that are also clearly understandable to users. Dissemination arrangements for the data and information products from the RosHydromet centers therefore need to be reviewed. To this end, a client service system will be designed and implemented. Here, the word "clients" encompasses both statutory clients (such as the federal and regional govemments, authorities responsible for emergency preparedness, sectoral authorities and the general public) and commercial clients (such as aviation companies and airports, power companies, television stations, etc). Solutions such as those based on web application servers may be used to access data stored at RosHydromet; and, for some clients, to shift from a data delivery model in terms o f RosHydromet's obligation to send out information, toward a data delivery models where users are enabled to fetch information. A web-based interface to RosHydromet data and information could be implemented. Access to data and information can be limited in accordance with statutory responsibilities and authorizations: users may have different authorizations and access to different levels o f data and information; for example, permitting varied levels of spatial and temporal resolution or varying lead times. Dissemination can include notification of data availability to categories of user. Other solutions may also be considered to improve dissemination o f information from RosHydromet. This subcomponent also envisages a sizable activity related to client outreach. RosHydromet aims to better understand and serve its clients, looking beyond its statutory responsibilities. To this end it intends to survey the data needs o f its RosHydromet clients and to improve the user interface. Following development o f an appropriate methodology for client survey, several client workshops and an outreach campaign are envisaged. 64 C3. Emergency Preparedness and Response (US$ 1.8 million baseline excluding contingencies and taxes, US$2.4 million estimated project costs). This component will address emergency preparedness. Activities will comprise the following elements among others: an examination o f how RosHydromet information could and should be used for emergency preparedness; development o f cooperation with local and regional authorities, the Ministry o f Emergency and other concerned agencies to be undertaken during emergency situations; emergency preparedness planning; plans for interactionwith communities; and development o f publicity and information materials. Several pilots would be undertakento develop models that could be replicated and expanded to other areas inthe country. One or two o f these pilots might be undertaken at the pilot river basins selected for comprehensive upgrade ofhydrological and meteorological networks. Component D: Project Management, Training, and Monitoring and Evaluation (US$4.7 million baseline excluding contingencies and taxes, US$6.4 million estimated project costs) This component would support RosHydromet in project implementation, training, monitoring and evaluation o f the project impact. It would include support for the operation o f the Project Management Committee (PMC) and financing o f overall project management, as well as technical assistance in such areas as contract administration, installation and construction supervision, procurement and financial management. The project management and implementation arrangements are further described inAnnex 6. The PMC staff would consist o f senior officials and technical staff from RosHydromet who would be supported inthe area o f procurement and financial management by the specialist staff o f the PIU. Inaddition, specialized technical consultants would be provided to PMC through the PIU to support component and sub-component technical directors. Project coordination offices would be maintained by RosHydromet in Moscow, Novosibirsk, Khabarovsk and Obninsk, and possibly in other regional implementation centers. These Project Coordinators will be members o f RosHydromet staff or else external individual consultants hired by the PIU. Inthe latter case, salaries o fthe consultants would be financed from project funds. 65 Annex 5: ProjectCosts RUSSIANFEDERATION: NATIONAL HYDROMETMODERNIZATIONPROJECT Local(US$) Foreign(US$) Total(US$) ComponentA: Modernizationof Computing, Archiving and TelecommunicationsFacilities Al. Modernization ofthe Moscow WMC and Obninsk 21,356,444 16,535,834 37,892,278 Archiving Facility A2. Restructuring ofNovosibirsk and Khabarovsk RMCs 3,951,682 5,927,522 9,879,204 and Modernization o fVoeikov GGO A3. Modemization of the Communicationsand Data 8,186,099 1,406,094 9,592,193 TransmissionSystem SubtotalComponentA 33,494,225 23,869,450 57,363,675 ComponentB: Upgradingof the ObservationalNetworks B1. Surface ObservationNetwork 19,477,020 2,128,105 21,605,125 B2. Aerological (Upper-Air) Network 5,000,000 1,110,000 6,110,000 B3. Meteorological Radarsand LightningDetection 1,05 1,000 9,500,000 10,55 1,000 B4. Regional Hydrometeorological Centers 3,644,575 2,981,925 6,626,500 B5. Hydrological Network 3,479,395 4,292,480 7,771,875 SubtotalComponent B 32,651,990 20,012,510 52,664,500 ComponentC: InstitutionalStrengthening,Improvementsin OutputDissemination,and Emergency Preparedness C1. Institutional Strengthening 2,904,375 512,500 3,4 16,875 C2. Client Service System 1,343,435 447315 1,791,250 C3. EmergencyPreparednessand Response 1,795,670 477,330 2,273,000 SubtotalComponentC 6,043,480 1,437,645 7,481,125 ComponentD:ProjectManagement, Training, and Monitoringand Evaluation SubtotalComponentD 5,342,789 780,000 6,122,789 TOTAL BASELINE COSTS' 77,532,484 46,099,605 123,632,089 Physicaland Price Contingencies 5,708,072 3,992,839 9,700,911 TOTAL FINANCING REQUIRED 83,240,556 50,092,444 133,333,000 'Identifiable taxes and duties are US$24.0 million, and the total project cost, net o f taxes, is US$109.4 million. Therefore, the share o fproject cost net o f taxes i s 73 percent. 66 Annex 6: ImplementationArrangements RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATION PROJECT Project implementation will be undertaken by RosHydromet, the federal agency which i s responsible for delivery o f the full range o f hydrometeorological services to the Government and the public. This approach reflects lessons regarding project ownership and sustainability: There is a need for the immediate beneficiary to be actively engaged at all stages o f design and implementation. To achieve this, it i s important for the Government to be prepared to commit adequate time o f relevant staff to the project and not to burden them unduly by insisting they carry out all o f their usual duties in addition to working on the Project. It is intended that RosHydromet staff will be supplemented only by a small PIU providing services in areas where the required experience is missing or where an extemal, objective view would clearly benefit the Project. A key consultant who will advise RosHydromet will be the design integrator. As noted in Section B.4, one o f the important lessons leamed from other projects i s that an experienced systems integrator may prove to be invaluable during system detailed design and in implementation. It is intended that such an integrator, with experience in modernizing national hydrometeorological organizations, would assist RosHydromet during detailed project preparation and during implementation to ensure that a fully integrated national weather service i s maintained. By Order #74 (dated April 23, 2004), RosHydromet established a Project Coordinating Council (PCC) to undertake project preparation and, later, implementation. In October 2004, by Order #137 (dated October 11, 2004), the PCC was effectively transformed into the Project Management Committee (PMC). The Committee Chairman i s Mr. Bedritsky, the Head o f RosHydromet, supported by two Deputy Chairmen, technical coordinators, and senior officials from RosHydromet and other entities. The Chairman has overall responsibility for project management, including approval o f action plans, major activities and budgets. However, the Deputy Chairmen and technical Project Coordinators are responsible for operational decisions, including management o f equipment procurement and installation, technical reviews, resolution o f issues and supervision o f activities. The Coordinators jointly play a lead role during the final stages of project preparation, in particular development o f technical designs inconsultation with the technical staff. They will be directly supported by Project Component Managers, members o f the staff o f the Bureau o f Economic Analysis and by the design integrator. Duringproject implementation and following revision, there will be further specification o f the PMC's functions, responsibilities and composition. The PMC is supported by the Bureau o f Economic Analysis (BEA), an independent non- commercial legal entity that will serve as Project Implementation Unit. BEA has extensive experience gained from managing several World Bank projects in Russia, including several with large information technology procurements. BEA was competitively selected by RosHydromet and the Ministry o f Finance (MoF) from among existing PIUs in Russia to assist RosHydromet in the detailed preparation o f the Project. It has done so. Its work was financed from the resources (USD 1.3 million) o f the Environmental Management Project, IBRD Loan 3806-RU, re-allocated by MOF specifically for the preparation o f the the National Hydromet Modernization Project; inparticular, development o f detailed design and bidding documents. BEA has modified its Operating and Financial Manuals to adjust its administrative, operational, procurement and financial management procedures in line with the Project requirements. BEA employs qualified administrative, procurement, financial 67 management and disbursement specialists, and successfully passed the Bank's capacity assessment review. MOF and RosHydromet believe that the practical experience gained by BEAindetailed preparationofthe Project is likely to render itwell-suited for the role o fPIU duringProject implementation. Alternative implementationmechanisms - such as delegating implementation responsibilities directly to one o f the existing RosHydromet entities - seem risky and likely to lead to significant delays. None o f the RosHydromet entities have the relevant experience to deal with World Bank projects. However, the role o f PIU will be limitedto the procurement, financial and disbursement aspects o f implementation - including operation o f the Special Account, preparation and submission to the World Bank o f claims for Special Account replenishment, and claims for disbursements o f loan proceeds directly from the World Bank. Substantive decisions, meanwhile, will be undertaken by RosHydromet Project Management Committee (PMC) and other dedicated staff. To oversee and coordinate regional project implementation activities, additional Project Coordinators would be based in Obninsk, Novosibirsk and Khabarovsk, and possibly in other regional implementation centers. These Project Coordinators will be members o f RosHydromet staff or external individual consultants hired by BEA. Inthe latter case, salaries o f the consultants will be financed from project funds. Operation of the Capacity Building Program. It was noted during appraisal that the services o f certain RosHydromet employees (who are not civil servants) would be uniquely well-suited both on economic and technical grounds for the task o f porting highly specialized software to be used on the new "high end" computers (supercomputers and powerful servers) provided under the project. The full benefit o f high-end parallel processing is very much dependent on the way that programs use the resources that the parallel processors afford. To secure that benefit, software that uses such processors should be parallelized; that is divided into segments o f code that are processed in parallel and those processed sequentially, in a way that makes most efficient use o f the processors. Efficient management o f processing power i s key to the successful implementation o f the high-end computers that will be procured under the project to assure improvements in weather forecasts. Although it would, intheory, be feasible to hire the services o f external consultants to carry out this work, it is believed that this would be impractical: first, the cost o f such highly-specialized and experienced consultants would be prohibitively expensive; second, the software that requires parallelization has been developed internally by RosHydromet and i s to a large degree proprietary. Moreover, RosHydromet will be required to further develop this software inthe course o f their day-to-day work in the future and would therefore benefit from familiarity with the way the software is re-coded coded to use the parallel processors. It is also believed that specific staff o f RosHydromet already familiar with the current implementation o f the software would be best placed to recode and optimize it for the new systems. But this work would require a significant effort on the part o f staff, beyond their current day-to-day duties. Therefore, a Capacity BuildingProgram will be established under the project and adopted by RosHydromet through an Administrative Order for the purpose o f providing expertise to the Project for the porting o f software required in relation to the commissioning o f new high-end computers provided under the Project. The allocation for the Program will be used in accordance with a "Capacity BuildingProgram Manual" and will be disbursed as operating costs under the arrangements prescribed by the Program Manual and endorsed by RosHydromet. It i s expected that some 125-150 individuals (who are not civil servants) may participateunder Fundactivities over the lifetime o f the Project. 68 Annex 7: FinancialManagementandDisbursementArrangements RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATION PROJECT A financial management capacity assessmentwas performed by the World Bank's financial management specialist. Below i s the summary report o f the assessment. Executive Summary. As o f July 2004, BEA has acceptable financial management arrangements in place to meet the current Bank requirements in respect o f the quality o f accounting, reporting and internal controls system and also in respect o f the audit arrangements, and is ready to start both the National Hydromet Modernization Project Preparation Component o f the Environmental Management Project and the National Hydromet ModernizationProject as such. CountryIssues The lastCFAA conductedinthe RussianFederationwas inJanuary2001, and its resultshavebeenfinalized. Pending the graduation o f the government's financial management and procurement capacity and infrastructure to a level o f performancethat would allow the World Bank to rely on those systems, the CFAA recommended that fiduciary functions (disbursement, procurement, accounting and reporting, and operational reviews) continue to be outsourced to specialized agencies. Such agencies (possibly the successors o f today's Foundations) present the advantage o f using skilled consultants and reliable, suitable, and stand-alone computerized information systems. Based on the Bank's current audit policy, the CFAA recommends maintaining current arrangements for the annual audit o f Bank-assisted projects, which involve audit by private sector audit firms competitively appointed among those pre-selected by the Bank, in consultation with MinFin . Inaddition, the work performed by the Accounts Chamber should also be reviewed by the Bank on a regular basis and taken into consideration in project 'preparation and supervision. The Accounts Chamber routinely performs documentary reviews o f Bank projects becausethey involve intemational borrowing and the use o f budget funds in the form of counterpart financing. These reviews are geared mostly towards assessing the efficiency and cost-effectiveness o f project expenditure and the prevention and/or detection o fpossible waste o fresources and abuses. RiskAnalysis The summary risk analysis i s presented below. It should be noted that the project's financial management risks are not considered to be significant enough to warrant inclusion in section C5 "Critical risks and possible controversial aspects" o f the PAD. Rating Comments Inherentrisk 1.Countryinherent risk Medium See CFAA 69 2. Sector inherent risk Medium The sector (Hydromet), whch is inexperienced inBank Projects but expert inthe hydrometeorology is the decision maker, whereas financial managementfunctions (disbursement, accounting, reporting) will beperformed byBEA, whichhas sigmficant experience inBankProject implementation. Therefore strengths of one Entitycover weaknesses o f another. 3. Project inherent risk Low Control risk Non-for-profit organization, which has anexperience o f implementation o f severalBank Projects. FundsFlow arrangementsare acceptablefor the Bank 3. Staffing Low Existing BEA staffwill do thejob Accounting policies have been developed andProcedures 5. Intemal Audit NIA No intemal audit function is inBEA 6. Extemal Audit Audit arrangementsare adequate Format o f reportinghas beendeveloped 8. Information Systems Medium The existing accounting software -Innotec might need - to bereplaced duringthe first year(s) o fthe project implementation. OVERALL FINANCIAL MANACEMENTRATING Strengths and Weaknesses The significant strengths that provide a basis of reliance on the project financial management system include: (i)the experience of the PIU and its financial management staff o f implementing similar Bank-financed projects and satisfying Bank financial management requirements; (ii) the unqualified audit reports and positive management letters issued by the auditors both for BEA as an entity, and for projects implementedby it; (iii) the sound internal control system within BEA, (iv) the positive results o f the Bank financial management supervisions o fBEA. The main remaining weakness at the final stage of the financial management assessment o f the project i s that some of the fine details o f interaction between Hydromet and BEA in respect o fproject implementation are not yet defined. The mitigatingfactor for this weakness is that these interaction details will not affect the basics o f financial management arrangements anyway, because the functions of financial management will be fully imposed on BEA Implementation Arrangements Project implementation arrangements are described indetail inSection C2 of PAD. 70 Funds Flow Disbursement of IBRD funds will be through the traditional disbursement mechanisms, including Special Account, Summary Sheets and SOE, direct payments, Special Commitments covering Letters o f Credit, and guarantees. The federal funds will be disbursed through a co-financed account managed by the BEA (PIU). The project will not use the FMR-based disbursement. Staffing The financial department o f BEA includes six accounting, disbursement and FM specialists. There is no allocation o f accountants to specific Projects, instead, there i s horizontal segregation of duties, where one specialist is obliged to prepare all WA, another is responsible for RAP accounting, etc. The education and work experience o f the all existing staff is adequate to the TORSfor the positions. AccountingPoliciesand Procedures The BEA perform accounting in RUR for statutory reporting in accounting information system Innotec on accrual basis. Then data from Innotec i s transferred to M S Excel for preparationo f the Project's and BEA's (Entity's) financial reporting. BEA has well-developed and approved procedures for accounting, internal control and document turnover in the Operational Manual. The Operational Manual is being adjusted to the peculiarities of the NationalHydromet Modernization Project BEA will also report to Ministry of Finance, RosHydromet, and Federal Center for Project Finance and will produce financial reporting required by tax authorities. All these reports will have different formats and therefore the BEA Chart o f Accounts must be sufficiently detailed to produce these reports. InternalAudit There i s no Internal Audit function inBEA External Audit Annual audits for the project accounts will be carried out in accordance with the Guidelines for Financial Reporting and Auditing of Projects Financed by the WorldBank. The audit o f the National Hydromet ModernizationProject will be conductedby independent private auditors acceptable to the Bank, on standard ECA terms o f reference, and procured by BEA in accordance with the Bank procurement guidelines, followed by issuance o f "No Objection" by the Bank Procurement department and/or Task Team Leader. One Auditor will audit all BEA Projects and BEA as an Entity.The audited financial statements will be sent to the Bank within six (6) months o f the end o f the Government's fiscal year. The cost o f the audit will be financed from the proceeds o f the loan. The project will involve a significant amount o f equipment procurement for RosHydromet offices spread over a significant amount o f locations inthe Russian Federation. Therefore, an 71 annual project audit will include checks on a sample basis to ensure that the equipment has been installed and inoperationinits intended facilities. BEA and Project statutory reporting and operating activities are also expected to be audited byAccounts Chamber, KRU(regional auditbody) andtax authorities. Reporting and Monitoring The financial part o f the quarterly FMRs for the National Hydromet Modemization Project PreparationComponent financed out o f the Environmental Management Project Loan 38060- RU(inthe amount ofUSD 1.3 million) will include: (a) Project sources and uses of funds statement, (b) Statement o fexpenditure detail, and. (c) Notes to the FMRs. The financial part o f the annual FMRs for the National Hydromet Modernization Project PreparationComponent financed out o f the Environmental Management Project Loan 38060- RU (in the amount of USD 1.3 million), which will be subject to audit by independent auditors acceptable to the Bank and according to the Terms o f Reference acceptable to the Bank, will include: (a) Project sources and uses o f funds statement, (b) Statement ofexpenditure detail, (c) Special account statement, (d) Statement o fExpenses (SOE) withdrawal schedule and (e) Notes to the FMRs. The financial part o f the quarterly FMRs for the National Hydromet Modemization Project will include: (a) Project sources and uses o f funds statement, (b) Statement ofexpenditure detail, (c) Physical Implementation Progress Report (contract management), and (d) Notesto the FMRs. The financial part o f the annual FMRs for the Project, which will be subject to audit by independent auditors acceptable to the Bank and according to the Terms o f Reference acceptable to the Bank, will include: (a) Project sources and uses o f funds statement, (b) Statement o fexpenditure detail, (c) Special account statement, (d) Statement ofExpenses (SOE) withdrawal schedule and (0Notesto the FMRs. BEA will supply the Bank with quarterly FMRs and annual audited FMRs. Inaddition to FMRs, BEAwill submitto the Bank annualaudited EntityIFRS reporting. 72 Information Systems The BEA information system includes Innotec software package and M S Excel. The Innotec i s used for statutory and project accounting, whereas MS Excel i s used for preparation o f the Project reporting for the Bank and IFRS reporting. The data i s transferred from Innotec to Excelmanually. As o fthe time o f this assessment, the servicing o f Innotec has become not as convenient as it was previously, due to relocation o f servicing company to Saint Petersburg. Therefore, it was recommended to BEA to consider the need for change o f the accounting software, depending on the successfulness o f resolution o f two main issues: (i) convenience in servicing o f the program, and (ii) capacity o f the program to maintain the sufficient level o f detail o f the Chart o f Accounts (that means, the sufficient number o f sub-accounts). Should BEA decide to change the software, the relevant expenditure must be included inthe procurement plan on a timely basis. Disbursement Disbursement o f IBRD funds will be through the traditional disbursement mechanisms, including Special Account, Summary Sheets and SOE, direct payments, Special Commitments covering Letters o f Credit, and guarantees. The federal funds will be disbursed through a co-financed account managed by the BEA (PIU). The project will not use the FMR-based disbursement. BEA will be solely responsible for all disbursement aspects, including operation o f the Special Account, preparation and submittingto the World Bank claims for Special Account replenishment, and claims for disbursements o f loan proceeds directly from the World Bank. BEA will also be solely responsible for operation of the Project Co-financing account in Roubles, and o f all other related (transit) accounts. Authorized signatories for the payment documents will be BEA General Director/BEA Deputy General Director (Project Director), and ChiefAccountant/Deputy ChiefAccountant. It is suggested that the authorized allocation of the Special Account be set at USD 2.0 million, and that the initial deposit into the Special Account be USD 1.0 million, until total disbursement reaches half o f the loan amount. Applications for the replenishment of the Special Account will be submitted by BEA on a regular basis, with the minimum frequency o f once per quarter. Loanproceeds could be disbursed against certified statements o f expenditures (SOEs) for: (a) payments from Capacity Building Program; (b) civil works contracts costing less than US$lOO,OOO equivalent; (c) goods and equipment contracts costing less than US$lOO,OOO; (d) consulting firm contracts costing less than US$100,000; (e) individual consultant contracts for less than US$50,000; (0 training contracts not subject to the Bank's prior review; and (g) incremental operating expenditures. All other contracts would be fully documented. Disbursement requests for SOEs should be submitted to the Bank monthly. Supporting documentation for SOEs would be retained by the PKJ and made available to World Bank staff duringsupervisionmissions and to external auditors. Action Plan Not required. 73 SupervisionPlan Duringproject implementation, the Bank will supervise the project's financial management arrangements intwo main ways: (i) review the financial part of project's FMRs as well as the project's annual audited financial statements and auditor's management letter; and (ii)during the Bank's supervision missions, review the project's financial management and disbursement arrangements to ensure compliance with the Bank's minimumrequirements. A Bank-accredited Moscow-based Financial Management Specialist will visit the project at least once a year. 74 Annex 8: Procurement RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATIONPROJECT A. General Procurement for the proposed Project would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRDLoans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004; and also in agreement with the provisions stipulated in the Legal Agreement. A general description o f various expenditure categories is given below. For each contract to be financed by the Loan, the different procurement or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame will be agreed between the Borrower and the Bank in the form o f a procurement plan. The plan will be agreed before negotiations and then updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. The most recent plan will be made publicly available through the Bank project portal and the Borrower project site. Procurementof Works:Works procuredunder this Project would include rehabilitation and reconstruction of building and facilities presently in poor condition. Completion o f all reconstruction works for facilities will be required a precondition to the procurement o f any new equipment to be installedinthose facilities. Procurement of Goods: Goods procured under this project would include the following major investments: one large (estimated cost US$17 million) and two smaller (estimated cost US$1.6 million) supercomputers to be delivered and installed at the World Meteorological Center in Moscow and in two national regional meteorological centers (RMC) in Novosibirsk and Khabarovsk; a large server for GGO (US$0.5 million); equipment comprising data servers for operational and backup archives for the facilities at Obninsk (estimated cost US$ 5 million);. equipment permitting the establishments o f local and wide area networks for all RosHydromet facilities; systems for reading and archiving paper, photographic and records on traditional magnetic media and archiving equipment will be procured for the facilities at Obninsk. Telecommunications equipment will also be procured to improve and facilitate communications between various meteorological centers, this will include substantial investment in communications equipment for data collection from remote measurement stations and from national regional and oblast centres; considerable quantities o f workstations, small servers, printers, copiers and other office equipment. In accordance with the design o f the Project, a systems approach will be adopted in the grouping o f contracts so as to reduce to a minimumthe number o f procurement actions and avoid risks associated with subsequent systems integration. Most procurements will be undertaken as single packages comprising several lots. Nearly all procurement comprising about 20 packages will be under done ICB using Bank's SBDs for Information Systems (in most cases 2 stage procurement) or the new Harmonized Goods documents. A few contracts representing less than USD 1 million equivalent will be done under shopping procedures. 75 There will be no goods procurement under NCB. LIB may be considered for some very speciliased hardware and software for which only a few suppliers are known, although it i s not likely that this would offer a significant time advantage. Procurement of non-consulting services: There will be one large contract estimated at about US$l.7million for technical services to procure and customize software for archiving at the storage facilities inObninsk. Selection of Consultants: Consulting services will be required to support the operations of the Project. A systems design integrator will be hired during detailed project preparation using a QCBS procedure with an option to have the contract extended into the implementation phase subject to satisfactory performance once the Project i s approved and becomes effective. There will be several relatively large and complex QCBS assignments mainly related to Component B and C o f the project. These will comprise the preparation o f institutional development alternatives and rationalization o f the Hydromet system design and the improvement o fhydrological and meteorological monitoring networks. Individual consultants will be hired to provide technical support for managers. Other assignments requiring the services o f more that one individual will follow under CQS selection method. LCS procedures are foreseen for the hiring o f a Project auditing firm. In view o f the nature o f the Project, most contract opportunities irrespective o f estimated amount will be advertised intemationally. Training: Approximately US$ 2.6 million equivalent will be expended for various training activities including study tours in accordance with procedures acceptable to the Bank, based on agreedprocedures (AP) and the submission o f annual trainingplans. Operational Costs: These costs are estimated at about USD 4.5 million dollars equivalent (including duries and taxes) out o f a total project cost o f 132.4 million USD, or 3.4 percent. Detailed itemizedbudges for PIU expenses will be reviewedby the Bank and will be spent in accordance with procedures acceptable to the Bank. B. Assessmentof the Agency's (BEA's) Capacitvto ImplementProcurement , - Procurement activities will be carried out by the RosHydromet supported by the Bureau o f Economic Analysis (BEA); a non-commercial legal entity which has implemented several projects in the past and i s deemed to have sufficient expertise capacity for the procurement tasks under the Project. BEA i s presently drafting amendments to the current BEA Operational Manual which would include a new part dealing specifically with the RosHydromet Modernization Project. This amended Manual will include a section on the procurement arrangements and procedures to be followed by the Project and will form the basis o f a specific Project Operational Manual. The Project Operational Manual will also include a special section on the Capacity BuildingProgram. Inview of the fact that BEA has successfully implemented World bank projects inthe past acting inthe role o f a PIU it was determined that a more in-depth assessment o f the capacity o f the BEA to implement procurement actions for the Project i s not necessary. The organizational structure for implementing the Project and the interaction between the project's staff responsible for procurement and the RosHydromet relevant units for administration and finance has been assessed and found to be satisfactory. Any corrective 76 measures required will be addressed as they become apparent. At present a mutually satisfactory arrangement has been arrived at.. The issueshisks concerning the procurement component for implementation o f the project has been identified and a procurement plan developed, designed as far as possible to mitigate these. Still the general level o f risk connected with the procurement activity inRussia i s still considered to be high. Due to the nature o f the procurements foreseen for the project a high degree o f supervision and cooperation with Bank accredited procurement staff i s foreseen, C. Procurement Plan A Procurement Plan for project implementation which provides the basis for the procurement methods was discussed and agreed upon. Once the Project i s approved, the procurement plan will be updated annually or as required to reflect the actual project implementationneeds and improvements ininstitutional capacity. D. Frequency of Procurement Supervision Inaddition to the prior review supervisionto be carried out from Bank's Moscow Offices, supervision missions every six months to visit the field to carry out post review o f procurement actions i s recommended. 77 PROCUREMENTPLAN I. General Scheduling of Procurement. Prior to the issuance o f any invitation for bidding, the proposed procurement plan for the project will be updated by the PIU and approved by the Project Management Committee. Procurement o f goods and services for the project will be carried out in accordance with the agreed procurement plan, which will be regularly updated and included inthe FMRs subject to Bank's review. (a) Agreed Date of the Procurement Plan Original: July 9,2004 Revision2: ...... Revision 1: November 23,2004 (b) Date of General Procurement Notice: estimated December 2004 11. Goods and technical (non-consulting) services. (a) All contracts for goods and technical services will - to the extent practicable -be grouped inpackages estimated at not lessthanUSD0.1 millionequivalent: (b) Prior Review Threshold: All ICB Contracts (adding up to about USD 110 million equivalent out o f a total allocation o f USD 133.3 million or 82.5 percent) will be subject to prior review by the Bank as stated inAppendix 1to the Guidelines for Procurement : (c) Pre-qualification: Bidders, if required, shall be pre-qualified in accordance with the provisions o f paragraphs 2.9 and 2.10 o f the Guidelines - It is envisaged that pre- qualification may be employed for the procurement o f large computers and other highly specialized equipment; (d) Any Other Special Procurement Arrangements: Direct Contracting may be used for the procurement o f highly specialized equipment, however, at this time no such items have been identified inthe Procurement Plan; It is recognized that Russian authorities require equipment to be certified for use in Russia. To this end any special arrangements that need to be undertaken by companies wishing to participate in bidding and offer goods that have not so been registered in Russia will be indicated inthe GPN. Foreign companies will not be prevented from participation based on non-certification of goods at time o f Bidding and adequate time will be given to these companies for arranging any required formalities. All reasonable assistance incompletion o f such formalities will be afforded to winning Bidders. Procurement Prior Review Comments Method Threshold ICB and LIB >$100,000 All subject to PriorReview NCB (Goods) <$100,000 N o NCB for Goods envisaged NCB (Works) <500,000 First(1) Works subject to Prior Review NCB (Works) >500,000 All subject to Prior Review Shopping(Goods) <$100,000 First2 Goods contracts subject to prior review 78 Direct Contracting* - All subject to PriorReview and justification 111. Consulting Services. (a) The list of consulting assignments comprises about 25 individual consultants contracts and about a dozen consulting assignments to be carried out by firms. (b) All consulting assignments for firms estimate to cost above USD 0.1 million equivalent per contract and all consulting contracts for individuals estimated at about USD 0.05 million per contract (USD4 million out o f a total allocation o f USD 5.6 or 70 about percent) will be subject to prior review by the Bank as stated in Appendix 1to the Guidelines Selection and Employment o f Consultants. (c) Short list comprising entirely of national consultants: Short list o f consultants for services, estimated to cost less than US$ 200,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. (d) Any Other Special Selection Arrangements: The Project Team has requested and received a blanket waiver prior to the start o f the project concerning eligibility requirements for hiring o f Govemment-owned enterprises or institutions in the Borrower's country and institutions partially funded by the Beneficiary (relating to para. 1.11 of the May 2004 Guidelines). OPRC discussed and agreed with the proposal for a period o f the first two years o f the Loan, subject to close monitoring o f the procurement process and supervision o f contract implementation. A recommendation was made that the first few contracts procured based on this waiver should, in fact, be subject to Prior Review. The basis for the waiver would be reviewed 2 years after Project effectiveness. HIRING OF GOVERNMENT-OWNED OKGANISATIONS, ORGANISATIONS and INDIVIDUALS AFFILIATED WITH OR PARTIALLY FUNDED BY THE BENEFICIARY. Many o f the Consultancy assignments related to the success o f the project are dealing with highly specialized fields o f expertise related to hydrometeorology and weather forecasting and their success and relevance will depend not only on an in depth knowledge and experience o f the field concerned but also on an understandingo f the situation inthe Russian Federation. As such, these are specialized areas where various research institutes and entities, subordinate or reporting to the Beneficiary (RosHydromet), and partially funded by the Beneficiary, Federal, or regional budgets, possess unique qualifications and experience. Private sector is not well developed inthis field due to lack o f a market and the fact that the bulk of available funding for this work comes either directly from the Beneficiary or from federal and regional budgets on a non-competitive basis. At appraisal, an initial non- exhaustive list o f Institutes whose elimination from participation as government-owned or funded entities would undermine the chances for achievement o f the overall project development objective, seriously decrease the quality o f the project implementation and threaten its entire success. Following i s the initial list o f entities that have been identified within the "system" o f RosHydromet although the formal relationships, legal status and level o f funding vary. The list may be added to, as appropriate, during the course o f Project Implementation: a) Scientific-Industria1Company "Typhoon"; b) MainGeophysical Observatory "named after A.I. Voeikov"; 79 Institute for AppliedGeophysics named after Academician Ye.K. Fedorov ; State Hydrological Institute; Central Aerological Observatory; Mountain GeophysicalInstitute; Arctic and Antarctic Scientific-Research Institute; All Russian Scientific-Research Institute o f Hydrometeorological Information(World Data Centre; Institute for Global Climate and Ecology o f RosHydromet and Russian Academy of Sciences; Scientific-Research Centre o f Space Hydrometeorology "Planeta" Hydrometeorological Scientific-Research Center o f the Russian Federation; RosHydromet Main Computing Center; m) RosHydromet MainRadioMeteorologicalCenter. The following assignments have been identified which would benefit from the services o f these entities or individuals employed by these entities on the understanding that no entity (or individual) will appear on a shortlist for any assignment where it is the direct beneficiary o f the outputs o f the assignment. a) Detailed design o fpilot hydrological networks; b) Detailed design o fpilot meteorological networks; c) Support to defining detailedtechnical specifications; d) Development o faregulatory framework for RosHydromet; e) Development o f innovative approaches and institutional alternatives; f) Development (and porting) o f specialized software for weather and hydrological modelingand forecasting; g) Development (and porting) o f specialized software for archiving of hydrometeorologicaldata; h) Specializedtraining activities. Consultants for assignments under above mentioned activities will be selected using QBS or CQS methods or as IndividualConsultants put forward by these Institutes. Short lists will be composed on the basis o f expressions o f interest submitted in response to advertisement o f each such assignment in the national press. As the assignments will each be below the threshold o f US$200,000 short lists will comprise only these national entities or individuals from the agreed list o f entities. Injustifiable cases, with the prior agreement o f the Bank, single source selection will be used. As it is hoped a private sector will emerge and develop over the course o f the Project it i s expected to review this arrangement after the first two years o f Project Implementation. Selection Method Prior Review Comments Threshold Competitive Methods (Firms) >$200,000 All subject to priorreview QCBS Competitive Methods (Firms) Any amount Firstcontract subject to prior LCS review 80 Competitive Methods (Firms) <$100,000 First2 contract subject to prior CQS review Individual Consultants (IC) >$50,000 All Individual Consultants (IC) <$50,000 First2 contract subject to prior review Single-Source All subject to prior review and (Firms and Individuals) justification TORSfor Consulting Contracts All All subject to prior review methodshalues IV. Other (a) Ex-Post Review: All other contracts below Banks prior review threshold are subject to Bank's selective ex-post review. Periodic ex-post review by the Bank will be undertaken duringregular supervisionmissions. Procurement documents, such as biddingdocuments, requests for proposals (RFP), bids, tenders, bid evaluation reports and correspondence related to bids and contracts will be kept readily available for Bank's ex-post review duringsupervisionmissions or at any other points intime. (b) Capacity BuildingProgram:A Capacity BuildingProgramwill be establishedunder the project and adopted by RosHydromet through an Administrative Order solely for the purpose o f providing expertise to the Project for the adaptation o f software required in relation to the commissioning o f new high-end computers provided under the Project. The allocation for the Program will be used in accordance with a "Program Handbook" and will be disbursed as operating costs under arrangement prescribed by the Program Handbook and endorsed by RosHydromet. It i s expected that some 125-150 individuals (who are not civil servants) may participate under Program activities over the lifetime o f the Project. Record Keeping: The PIUwill maintain complete procurement files which will be reviewed by Bank supervision missions. All procurement related documentation that requires Bank prior review will be cleared by Procurement Accredited Staff (PAS) and relevant technical staff. A total o f 3 packages above mandatory review thresholds by RPA are anticipated., o f these one i s above the OCPR threshold. Procurement information will be recorded by the PIUs and submitted to Bank as part o f the quarterly (FMRs) and annual progress reports. A simple management information system with a procurement module would be established to assist the PIUprocurement specialists to monitor all procurement information. 81 n L Annex 9: Economic Analysis RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATIONPROJECT Introduction. In the past three decades, more than 150journal articles, books and reports have assessed the economic benefits associated with use o f hydrometeorological information and weather forecasts. These studies have addressed a range o f weather-sensitive economic sectors and a wide variety o f forecast types. The common result o f all these studies is that use o fweather forecasts generates positive economic effects relative to the "naive" or no-forecast case. In addition, studies comparing the aggregate benefits o f forecasts (i.e., summed over all economic sectors) to the aggregate costs o f monitoring, data analysis and dissemination o f forecasts indicatethat these weather products yield benefits inexcess o f costs. Historically, assessment o f the economic efficiency o f hydrometeorological information in Russia has been confined to isolated studies o f fragmentary aspects o f RosHydromet's activities and theoretical studies on valuation o f benefits. Studies in Russia normally employed an approach based on the natural integration o f losses. These aimed at generalization o f losses in different sectorshranches o fthe economy caused by one o f the hydrometeorological phenomena (e.g. drought, flood or strong wind), or focused on investigation o f a specific area o f Russia (e.g. European Russia, etc.). In the course o f preparation o f the National Hydromet Modernization Project, the project team jointly with RosHydromet staff revised and extended this approach in an effort to evaluate the economic benefits o f the proposed project and estimate the value o f hydrometeorological information to the weather-dependent sectors ofthe Russian economy. Methodology. The authors o f the study aimed to analyze the immediate impact o f improvement inthe quality and the increased leadtime of weather forecasts on the level of economic losses. Assessment o f the project's economic efficiency was performed by comparing potentially preventable losses in main weather dependent sectors o f economy with the cost o f their prevention together with the cost o f upgrading RosHydromet's system as under the IBRD modernization project. Sectoral experts from agriculture, the power and gas industry, aviation, forestry, inland water transport, communications, water resources, and the municipal sector participated in the study, providing baseline information and sectoral assessments. Chief Economist o f NOAA contributed to the development o f the methodology and participated inthe workshop with sectoral stakeholders. The methodological approach was based on the following principal assumptions: 0 Modernization o f the hydrometeorological service as proposed by the project will enable Hydromet to significantly improve the quality and lead time o f forecasts. Increased quality and lead time will, intum, help to avoid some or all preventable losses that would otherwise be incurred. This important assumption was verified by an experts' survey (i. by interviewing experts in weather-dependent sectors of economy). Specific e., estimates o f projected improvements in lead time o f forecasts (agreed with RosHydromet) were furnished for sectoral experts' consideration. 0 The costs o f carrying out specific measures for prevention o f losses given current forecasts (i.e., in the without-modernization case) are assumed to be incurred in full. In other words, it was assumed that there were enough funds to carry out necessary preventive measures and, consequently, the incurred potentially-preventable-losses only 85 correlate with the quality and lead time o f forecasts. It was also assumed that users possess some modem protective technology, whose cost o f application will grow proportionally to the growth o fintensity o f a hazardous weather events. A sectoral questionnaire and a unified format for report on experts' evaluation results was developed and agreed with sectoral experts. Each expert put together a summary including: 0 a characterization o f hydrometeorological information used inthe industry, including the spectrum o f general information and its current level o f accuracy and leadtime; e an assessment o f the economic efficiency o f utilization o f hydrometeorological information including: (i)evaluation of the profit share derived through the use o f hydrometeorological information; (ii) evaluation o f the amount o f avoided and prevented damage attributable to access to hydrometeorological information; (iii) cost o f acquisition o fhydrometeorological information (ifany), and its share o ftotal costs; e an assessment o fthe economic effects o f the implementationo fthe National HydrometeorologicalModernization Project. The following formulas were used to quantifypotential benefits based on sectoral data: E=(El + G)/PC, where El =V(CRiSi- CZAi)/n; m G=R-S.Pd*zGDP,,*( 1+r)". (3) 0 where PC are the project costs; Ri, Si are the average percentage values of potentially preventable losses and theproportion ofpotentially preventable losses that could be avoided due to modernization of RosHydromet as envisaged in the project; V is the average annual level of lossesfrom weather hazards (hydrometeorological cataclysms)for the economy at the existing forecasting quality level; Ai is the proportion of change in the level of expenditures for activities necessaryfor prevention of the impact of weather hazards and unfavorable weather conditions resultingfrom improvement in the accuracy and increased lead time of hydrometeorological information; Ci are the average annual expenditures for protective measures for a sector; R, S are the coefficients determining the proportion of saved lives as a result of project implementation; n - number of sectoidindustries reviewed in the study; Pd is the number of human losses from weather hazards; GDP,, is the per capita gross domestic product in 2002 (at market prices); m is the average duration of economic activity per human victim (years); r is the average annual long-term growth rate of real GDP. Assessment of overall losses from hazardous weather events in Russia. The overall vulnerability o f the Russian Federation to weather conditions is high, particularly in the North, Far East and North Caucasus regions, which are the most exposed to the extreme weather conditions and events. The number o f dangerous weather events is growing, and damages are highand have a tendency to grow further (see Figure 8, Annex 1). According to the first major attempt to assess the average level o f total economic losses from all natural hazards and unfavorable weather conditions, undertaken by the Russian Academy o f Sciences in 1990, total 86 losses averaged Rub 15.5-19 billion annually during the 1980 (1990 Rub). Taking this analysis as a starting point, an updated estimate was produced in "Assessment and Management of Natural Risks" (2003) for the current average level of total annual losses from natural hazardous phenomena (floods, earthquakes, mudslides, strong winds, erosion, cold and heat waves, etc.), which increased the range o f total losses to USD 20 - 26 billion annually finding the range o f total losses at present USD 20 - 26 billion annually. This estimate includes both direct and indirect losses. The increase of losses is attributable to aging infrastructure, lack of investment in preventive and protection activities and an increased number o f extreme events, among other factors. The Ministry of Emergencies (MOE) regularly records all casualties and economic losses resulted from man-made and natural disasters. This data is presented in annual State Reports on the Status o f Protection o f the Public and the Russian Territories from Man-made and Natural Emergencies. A record of major natural disasters that have taken place o n Russian territory in recent years is presented below as Table 3. The MOE State Report, 2001, estimates the amount of direct reported economic losses from all natural hazards in 2001 at Rub 33.1 bln (USD1.l bln). Table 3. Major Natural Disasters on the Territory of Russia, 1990-2002 Direct Losses Social Date Disaster Type and Location Economic, $ mln. Death-Roll Affected People June 18-July 5,2002 Floodinthe South of Russia 484 114 389,752 Ice Jam FloodinSakhaRepublic More than May 12-May 24,2001 (Yakutia) on Lena, Nyuya, Vitim 240 7 50,000 March-April, 1YY8 - . . .. ---- I Landslides inFhecnGand -I40 1 .- I Morethan_ ~ ~ _.._..__ _ I - I In I 12,000 I August, 1996' Typhoon with floods inPrimorsky More than More than Krai 170 4 ,' 100,000 May25, 1995 Neftegorsk Earthquake, Sakhalin More than More than 1 1 1 1 Island 240 2000 240 September, 1994 1 Far East, Primorsky Krai. Typhoon. 84 settlements are flooded 140 13 18 1991 Flooddownstream Volga-Kama Dam Cascade 318 1990 Far East, Primorsky Krai. Flood causedby typhoon "Robin" 472,8 16,000 Chita oblast. The largest flood inthe -August, 1990 oblasthistory 746,4 April, 1990 FloodinBashkortostan Republic 250 12 The data shows a predominance of effects from weather-related disasters among the various types o f natural disasters. The large impact of floods has been estimated in several studies. The MOE State Report for 2002 estimates average annual losses from flooding at Rub 100bln. (over 87 USD 3 bln). The "Concept on Development o f State Water Resources and Water Sector Management" developed by the Russian Ministry o f Natural Resources in 2002 estimates average annual economic loss from floods at Rub 41.6 billion (USD 1.43 bln). An earlier study o f economic losses from floods in Russia undertaken by M. Cherepansky (2000) estimates this value at about USD 1bln. a year. Taking all weather-related losses together, an independent assessment derived from the reviews undertaken for the study by sectoral experts estimates direct annual economic losses at Rub. 58,2 billion (USD1.93 billion), and yields a distribution o f direct losses by sector as in the table below: Average annual Sector/Industry economic losses (billion Rub.) Power Communications 0.1 1 Water resources I 20,o Municipal services 2.58- Inlandwater transport I 10,o Civil aviation ** **- * assessmentfor municipal services was conductenfor MOSCOW cityand scaled upfor all major cities; -directeconomiclossesfor civilaviationareinsignifcant .;*e -direct economic losses estimatedfor theperiod of 1996-2002 lttt-directeconomiclossesestimatedfor theperiodof 1996-2003 Comparison o f data from the available studies suggests that that the most likely range o f direct economic losses from hazardous weather events in Russia is USD 1-2 billion per year. This range is comparable with the losses reported in other large countries. For example, in the US, average annual losses from extreme weather and water events are reported to be USD 11billion (NOAA, "National Weather Service Strategic Plan for FY 2003-2008," 2003), while damages from individual catastrophes may reach USD 20-30 billion (Hurricane Andrew in 1992, Midwest flooding in 1993). In Canada, annual losses from natural hazards are over USD 1 billion ("An Assessment o f Natural Hazards and Disasters in Canada," 2003) with maximum losses reaching USD 5.4 billion (Ice Storm in 1998). Estimated benefits of the project. Project implementation will affect the level o f the material cost o f preventive measures for different branches and sectors o f the economy to varying degrees. While insome sectors, such as water management, civil aviation and communications, a significant reduction (from 7.5 to 25 per cent) o f the cost o f protective measures is projected, in other sectors, including the power industry, gas industry and municipal services, the cost o f preventivemeasures is expected to increase. The most sensitive sector here is municipal services, where the cost o f preventive measures is expected to increase by more than 100 percent. This will have an appreciable effect on the cost o f preventive measures integrated over the entire 88 economy: it is estimated that the cost o f protective measures will increase on average by 7.9 percent. It is anticipated that project implementation will help to reduce the loss of human life from weather hazards. Available estimates indicate that the economic effect o f savinghuman lives as a result o f improvement of the quality and, particularly, lead time o f forecasts, will exceed US$7 million per annum. This is the most conservative estimate; it i s based solely on assessment o f the impact o f human losses on GDP dynamics and does not take into account the social and other damages. Hence, it represents the lower level o f potential economic benefits, since it is based solely on assessment o f the impact o f human losses on the GDP dynamics and does not take into account the value o f a human lifeper se. Preliminary results o f the study indicate that the improvement inthe quality and lead time o f the weather forecast that i s expected to follow project implementation will have a large positive economic and social impact, which may be quantified makinguse o fthe following estimates: e Direct losses caused by unfavorable weather and hydrological conditions and disasters would decrease by 8.5 percent on average. The most sensitive sector to the improved quality o f weather forecasts and warnings would be the sector o f municipal services and city economy, where annual losses are expected to decrease by 12percent. e Annual direct economic losses inRussia are at present inthe range o f USD 1to 2 billion with the largest shareo flossescausedby floods. e The total annual economic effect o f the project, based on the above range o f current direct losses, would amount to USD 68.3-153.3 million. If similar economic effects are sustained over seven years (a conservative estimate inlight o f the assumptions made), the near-term economic effect o f the project could be inthe range o fU S D 478- 1,073 million, far exceeding project costs. This means that the economic viability (economic efficiency) o f the project (at the investment cost o f around US$110 million) stands at 1:4.5 - 1:lo.In other words, every US dollar used towards RosHydromet's modernization would help to avoid from US$5 to US$10 losses to the Russian economy. Though substantial, this level o f expected benefit is in line with recent estimates that for every $1 spent for mitigating natural hazards there is an $8 reduction ineconomic losses (Worldwatch Institute, 2001). According to RosHydromet data, total economic benefits gained as a result o f provision of its services were Rub 10 billion (USD 330 million) in 2003. The largest share o f those benefits was received by the fuel and energy sector (36 percent), followed by agriculture, the marine sector (including sea transport and fishing), the municipal sector and motor transport (7-10 percent each). The share of inland water transport and construction intotal benefits amounted to about 4- 6 percent. Estimating that the minimum economic effect o f the project following its completion will be a benefit of USD 68 million annually, the total economic benefit o fRosHydromet's work (the amount o f avoided losses attributable to it) is expected to grow at least by 20 percent in comparison to its current overall level, to USD 330 million. 89 Annex 10: SafeguardPolicy Issues RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATION PROJECT The project poses minimumenvironmental risks. The proposed project does not involve any new construction or major refurbishment works, all facilities are currently used by RosHydromet. Moreover, the project will provide great environmental benefits, since it will support in mitigating natural hazard risks and in improving environmental management. A comprehensive hydrometerological system coupled with a strong agency responsible for its operation and maintenance will set the foundation for reducing the risks associated with floods, drought and fire, winds, extreme weather events and even industrial accidents. It is expected that the project will have a significant effect on enhancing the livelihoods particularly o f the poor fractions o f population by reducing vulnerability to environmental change, flooding and also routine weather contingencies that can affect marginal livelihoods such as small enterprises and farms. Overall, the project does not trigger any major safeguard policies, therefore, in terms o f environmental impact, the project i s rated as an EA category C project. Attention will be given to include relevant standard environmental guidelines in bidding packages for civil works associated with the refurbishing o f existing buildings as well as for the installation o f new equipment. Another reference will be made to ensure safe handling and disposal o f construction solid waste, debris and dysfunctional IT equipment. The standard environmental guidelines dictated by the Russian EA procedures are incorporated in the BEA (PW) Operational Manual. A full understanding with Hydromet officials and BEA is reached on the importance to deal with environmental issues and the need for their mitigation should they be identified inthe course o f project implementation. 90 Annex 11: Project Preparation and Supervision RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATION PROJECT Planned Actual PCNreview 10/15/2003 9/12/2003 InitialPID to PIC 10/08/2003 Initial ISDS to PIC -- 10/08/2003 Appraisal 6/20/2004 6/20/2004 Negotiations 91'1 0/2004 11/22/2004 BoardRVP approval 12/16/2004 3/17/2005 Planneddate of effectiveness June 2005 Planneddate o fmid-tennreview April 2008 Plannedclosing date Septkmber2010 Key institutions responsible for preparation ofthe project: 3 FederalService for Hydrometeorology andEnvironmental Monitoring(RosHydromet) k BureauofEconomic Analysis Bank staff and consultantswho worked on the project included: Name Title Unit Vladimir Tsirkunov Sr. Environmental Spec., TTL ECSSD JonathanPavluk Sr. Counsel LEGEC HannahKoilpillai Finance Officer LOAGl Masood Ahmad Lead Water ResourceSpec. ECSSD Anna Wielogorska Sr. Procurement Spec. ECSPS Lucy Hancock Operations Analyst ECSSD KarlSkansing Sr. Procurement Spec. ECSPS SergeiUlatov Economist ECSPE Tatyana Shadrunova Program Assistant ECCUl Anna-Maria Bogdanova ProgramAssistant ECCUl DavidLaw Consultant NA Terry Allsopp Consultant NA Marina Smetanina Consultant NA Alessandro Palmieri LeadDamSpecialist ESDQC Rita Cestti Sr. Water ResourcesEcon. ECSSD GlennMorgan LeadEnvironmental Spec EASEN Ajay Mathur Team Leader Climate Change ENV Alexander Mizgunov FinancialManagement Spec. ECSPS Ekaterina Arsenyeva FinancialManagement Spec. ECSPS Galina Kuznetsova Sr. Financial Mgt Spec. ECSPS Bank funds expendedto date on project preparation: 1. Bank resources: US$335,492.94 2. Trust funds: US$ 18,672.80 3. Total: US$ 354,165.74 Estimated Approval and Supervision costs: 1. Remaining costs to approval: US$14,289 2. Estimated annual supervision cost: US$113,000 91 Annex 12: Documentsinthe ProjectFile RUSSIAN FEDERATION: NATIONALHYDROMET MODERNIZATION PROJECT Assessment andManagementofNatural Risks. Volume 6 ofthe Series "Natural Hazards in Russia". Moscow, 2003 Cherepansky, M.M.Characteristicso fFloodRisk inthe RussianFederation. Minsk, 2000. Colgan, Charles S., andRodney Weiher. LinkingEconomic andEnvironmental Goals in NOAA's Strategic Planning. Draft, September 26,2002. Concept on Development of State Water Resourcesand Water Sector Management. Ministryof Natural Resourcesof the RussianFederation, 2002. Etkin, D., Haque, E., Bellisario, L., andI. An Assessment ofNaturalHazards and Burton. DisastersinCanada-A Report for Decision-Makers andPractitioners. 1SBN:O-9735436-0-4 FederalLaw "On Hydrometeorological Service" #113-FZ datedJuly 19, 1998. Governmental Resolution "On InformationServices inHydrometeorology and Monitoring o f Environmental Pollution", # 1425 datedNovember 15, 1997. Houston, Laurie L.,Adams Richard M., andRodney F. Weiher. The Economic Benefits o f Weather Forecasts: Implications for Investments inRushydromet Services. Report Preparedfor NOAA andthe World Bank underN O MContract OG 1330-04-SE-0052. May, 2004. Hydrometeorological Hazards. Volume 5 o fthe Series "Natural HazardsinRussia". Moscow, 2001. InformationBrief on Equipment for Observations andthe ObservationalNetwork o f Ros Hydromet. %~ Instructions. Criteria of DangerousHydrometeorological Phenomenaand Order O fInitiation of Storm Alarms. Guiding Document 52.04.5 63-2002. Manual #8 on Meteorological Instrumentsand Observation Methods. WMO. National Weather Service Strategic Plan fir FY 2003-2008. N O M , 2003. Order Activities o fRosHydromet's Organizations and Institutions incase o fEmergency". " 2000. Ragozin A.L. FederalAssessment ofNaturalHazardsRisk- A Strategic Foundation for Reduction ofLosses from Natural Disasters and Man-CausedCalamities on the territory o f Russia.Proceedingofthe 6thScientific Conference"Emergency Situations Risk Management". Moscow, 2001. 92 Ragozin, A.L. Assessment ofEconomic Lossesfrom HazardousNatural and Man-Caused Processes on the territory o fRussia. 2004. RosHydromet Annual Review 2002. RussianFederalService for Hydrometeorology and Environmental Monitoring, Moscow, 2003. RosHydromet Annual Review 2003. RussianFederal Service for Hydrometeorology and Environmental Monitoring, Moscow, 2004. Scheme o fTransmission of Hydrometeorological Informationto the RUT inNovosibirsk. Smith, Douglas A., andKeithVodden. Valuing MeteorologicalProducts and Services: DiscussionPaper. Preparedfor Meteorological Service of Canada. N0594, April 2003. State Report "On the Status ofDefenceof Population andTerritories ofthe RussianFederation from the Natural andMan-CausedDisastersinthe Year o f 2001". RFMinistryfor Civil Defense Matters, Emergency situation and Eliminationof Consequences ofNaturalDisasters.Moscow, 2002. State Report "On the Status of Defenceof Population and Territories ofthe RussianFederation from the NaturalandMan-CausedDisastersinthe Year o f 2002". RFMinistryfor Civil Defense Matters, Emergency situation andEliminationo f Consequences of Natural Disasters.Moscow, 2003. Vorobiev, J.L., Akimov V.A., andJ.I. Sokolov. CatastrophicFloods o fthe 21StCentury. Lessons and Conclusions. Moscow, 2003. Extractsfrom Web site of RosHydromet 0 System o f obtaining information. www.mecom.droshvdro/pub/rus/book/poluchenie.htm. e System for processinginformation. www.mecom.ru/roshvdro/pub/rus/book/obrabot.htm. 0 System for providing informationto users. www.mecom.ru/roshvdro/pub/rus/book/dovedenie.htni. e System for providing informationto users. www.mecom.ru/roshvdro/pub/rus/book/dovedenie. htm. e Active measures. www.mecom.droshvdro/pub/rus/book/vozd.htm. Forecastinggains expected Table: The development of MRFsystem inHydrometcenter o fRussia. Table: Error S1,2002 and forecast for 2006, at DWD, ECMWF, RosHydromet Center, for forecast times from 24 to 168hours. Further informationon some RosHydromet programs System o fobservations of the level andtemperature o fthe Caspian Sea. 93 About the center for drought monitoring -Intergovernmental Council onHydrometeorology - SNG [which is CIS?]. List o fpresentations byusers ofhydrometeorology at the meetingwith the mission o f the World Bank. (Novosibirsk) Estimation of ecological future ofurban andindustrial regions (Novosibirsk) Output examples Prognosis o fweather for August 2003 for Novosibirsk oblast. Bulletinfrom the Hydrometeorological Center, No. 8. Forecastofweather for August 2003 (Novosibirsk) Weather bulletin- Novosibirsk city andoblast, 14May2003. Weather bulletin- Novosibirsk city and oblast, 15 July 2003. Agrometeorological bulletinfor Novosibirsk oblast, No. 18, 3rddec., June 2003 Hydrologicalbulletin for Altaisk krai, Republico f Altai, Kemerovsk, Tomsk andNovosibirsk oblast, 17July 2003. Documents pertaining to the mission or the project Technology Development inRegionalHydro-meteorological Centers and Rosgidromet Observation Networks: An Indicative Cost Estimate. (versions ofJuly 15 and July 27,2003, the latter inEnglishand Russian). Short summaryo fmeetingswith the World Bank (Novosibirsk) Program for the mission ofthe World Bank (Novosibirsk) 94 Annex 13: Statementof Loans and Credits RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATION PROJECT ~~~ Differencebetween expectedand actual OriginalAmount in US$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd PO75387 2004 E-LRN SUPRT (APL #1) 100.00 0.00 0.00 0.00 0.00 100.00 6.24 0.00 PO64237 2003 TBIAIDS CONTROL 150.00 0.00 0.00 0.00 0.00 148.49 35.14 1.96 PO46497 2003 HEALTHREF IMP 30.00 0.00 0.00 0.00 0.00 29.15 10.78 0.57 PO66155 2003 TAX ADM 2 100.00 0.00 0.00 0.00 0.38 87.83 25.55 2.21 PO72960 2003 CUSTOMS DEVT 140.00 0.00 0.00 0.00 0.00 127.83 21.06 2.77 PO69063 2003 ST. PETERSBURG ECON DEVT 161.10 0.00 0.00 0.00 0.00 159.49 -1.61 0.00 PO64508 2002 TREASURY DEVT 231.OO 0.00 0.00 0.00 0.00 227.45 14.95 0.00 PO64238 2001NRESTRUCT 80.00 0.00 0.00 0.00 0.00 67.80 59.59 2.13 PO38551 2001 MUNHEATING 85.00 0.00 0.00 0.00 0.00 59.22 38.21 35.03 PO50474 2001 EDUC REFORM 50.00 0.00 0.00 0.00 3.00 32.83 29.53 2.30 PO46061 2001 MOSC URB TRANS 60.00 0.00 0.00 0.00 0.00 33.23 31.35 0.00 PO08832 2001 MUNWATER & WW 122.50 0.00 0.00 0.00 0.00 111.20 88.74 24.34 PO58587 2000 REG FISC TA 30.00 0.00 0.00 0.00 0.00 12.37 12.37 2.70 PO53830 2000 SUST FORESTRY PILOT 60.00 0.00 0.00 0.00 0.00 54.16 54.16 30.52 PO50487 1999 STATE STATS SYST 30.00 0.00 0.00 0.00 0.00 4.13 4.13 4.13 PO50891 1997 ELEC SECTR REF 40.00 0.00 0.00 0.00 1.52 13.21 14.73 14.73 PO44200 1997 BUREAUOF ECON POL 22.60 0.00 0.00 0.00 0.00 0.26 0.26 -0.04 PO08831 1996 LEGALREFORM 58.00 0.00 0.00 0.00 0.50 19.92 20.41 19.92 PO42622 1996 CAP MRKT DEV 89.00 0.00 0.00 0.00 33.75 15.38 49.13 15.38 PO08821 1995 ENV MGMT 110.00 0.00 0.00 0.00 0.00 36.85 36.85 0.57 PO08828 1994 FIN INSTS 200.00 0.00 0.00 0.00 115.12 3.83 118.95 47.05 Total: 1,949.20 0.00 0.00 0.00 154.27 1,344.63 670.52 206.27 95 RUSSIANFEDERATION STATEMENT OF IFC's HeldandDisbursedPortfolio InMillionsofUSDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2002 AgroIndFinC 5.00 0.50 0.00 10.00 3.83 0.50 0.00 7.67 2003 BCEN Eurobank 100.00 0.00 0.00 0.00 100.00 0.00 0.00 0.00 2004 BSGV 75.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 BSGV Leasing 21.62 0.00 0.00 0.00 11.03 0.00 0.00 0.00 2001 BVF 0.00 12.62 0.00 0.00 0.00 8.89 0.00 0.00 2002 Baltiski Leasing 0.44 0.00 0.00 0.00 0.44 0.00 0.00 0.00 2004 Bauxite Timana 45.00 0.00 0.00 30.00 0.00 0.00 0.00 0.00 2002 Borsteklo 14.48 0.00 0.00 0.00 14.48 0.00 0.00 0.00 2002105 Center-Invest 0.00 0.00 5.00 0.00 0.00 0.00 5.00 0.00 2002/03 Delta Credit 24.00 0.00 6.00 0.00 24.00 0.00 6.00 0.00 2004 Delta Leasing 4.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 2002 Egar Technology 0.00 1.50 0.00 0.00 0.00 1.oo 0.00 0.00 2002 IBS 0.00 0.00 8.00 0.00 0.00 0.00 8.00 0.00 2002 ICB 8.57 0.00 0.00 0.00 8.57 0.00 0.00 0.00 2004 INTH 0.00 3.50 7.00 0.00 0.00 0.00 5.00 0.00 2000 Ikea MOS 15.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 2002 KMB Bank 6.29 0.00 0.00 0.00 6.29 0.00 0.00 0.00 2004 Krono Swiss 50.00 0.00 0.00 58.51 50.00 0.00 0.00 58.51 2004 KronospanRussia 57.15 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 Kulon 0.00 0.00 7.47 0.00 0.00 0.00 5.87 0.00 2004 Lebedyansky 35.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2005 Moscow Credit Bk 10.00 0.00 0.00 0.00 1.oo 0.00 0.00 0.00 2003 MoscowNarodn... 100.00 0.00 0.00 0.00 100.00 0.00 0.00 0.00 1998 Mosenergo 11.24 0.00 0.00 0.00 11.24 0.00 0.00 0.00 2002/03 NBD 5.00 0.00 2.00 0.00 5.00 0.00 2.00 0.00 2001 NMC 2.21 0.00 0.00 0.00 2.21 0.00 0.00 0.00 2001 OMGC 0.00 0.00 1.50 0.00 0.00 0.00 I.50 0.00 2004 Pilkington Rus 57.83 0.00 0.00 0.00 17.35 0.00 0.00 0.00 2001 ProbusinessBank 0.00 0.00 5.00 0.00 0.00 0.00 5.00 0.00 2004 RZB LeasingRuss 20.00 0.00 0.00 0.00 6.50 0.00 0.00 0.00 2003104 RZB Russia 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 1998/01/02 Ramstore 27.86 0.00 10.00 26.25 27.86 0.00 10.00 26.25 2003 Ru-Net 0.00 3.00 3.00 0.00 0.00 3.oo 2.00 0.00 2001/03/04 Ruscam 17.50 0.00 0.00 0.00 17.50 0.00 0.00 0.00 2002/04 Russ SmdardBnk 41.06 0.00 0.00 0.00 29.06 0.00 0.00 0.00 1995 Russ Tech Fnd 0.00 0.91 0.00 0.00 0.00 0.91 0.00 0.00 2005 RussiaPartnersII 0.00 10.00 0.00 0.00 0.00 0.50 0.00 0.00 2004 RusskiyMir 13.93 0.00 0.00 0.00 13.93 0.00 0.00 0.00 SCF Restructured 0.00 0.60 0.00 0.00 0.00 0.60 0.00 0.00 2004 Severstaltrans 40.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 2004 Sibakadembank 7.OO 0.00 0.00 0.00 3.oo 0.00 0.00 0.00 96 2004 Siberia Airlines 20.00 0.00 5.00 0.00 0.00 0.00 0.00 0.00 2002 Sonic Duo 0.00 0.00 6.00 0.00 0.00 0.00 6.00 0.00 2003 Stav. Broiler 15.00 0.00 0.00 0.00 12.50 0.00 0.00 0.00 2004 Sveza 40.50 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2002 SwedwoodTichvin 7.37 0.00 0.00 0.00 7.37 0.00 0.00 0.00 2003 UralTransBank 10.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2001 Volga-Dnepr 14.00 0.00 2.90 13.00 14.00 0.00 2.90 13.00 2002 ZAO Europlan 7.14 0.00 0.00 0.00 7.14 0.00 0.00 0.00 1998102 ZAO Storaenso 5.60 0.00 0.00 0.00 5.60 0.00 0.00 0.00 Total portfolio: 944.79 32.63 68.87 137.76 567.90 15.40 59.27 105.43 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 1999 DLV 0.00 0.00 0.00 0.00 2003 Deltacredit Bank 0.03 0 01 0.00 0.00 2003 IntercellRussia 0.00 0.00 0.00 0.00 2004 NWSC 0.02 0.00 0.00 0.02 2003 QuadrigaCapital 0.00 0.02 0.00 0.00 2002 RSBI1 0.00 0.00 0.00 0.00 2004 RSB 111 0.02 0.00 0.00 0.00 2004 vsc 0.03 0.00 0.00 0.02 2003 Vneshtorgbank 0.00 0.00 0.20 0.00 Totalpendingcommitment: 0.10 0.03 0.20 0.04 97 Annex 14: Country at a Glance RUSSIANFEDERATION: NATIONAL HYDROMET MODERNIZATION PROJECT Europe B Lower- I POVERTYand SOCIAL Russian Central middle- Federation Asia income Developmentdiamond' 2003 Population,mid-year (millions) 143.4 473 2,655 GNI per capita (Atlas method, US$) 2,610 2,570 1,480 Life expectancy GNI (Atlas method, US$billions) 374.8 1,217 3,934 - Average annualgrowth, 199703 Population(%) -0.4 0.0 0.9 Laborforce (%) 0.9 0.2 1.2 GNI Gross Mostrecent estimate(latestyear available,199703) per pnmaly capita enrollment Poverty (% ofpopulation below nationalpovertyline) 21 Urbanpopulation(% oftotalpopulation) 73 63 50 Life expectancyat birth(years) 65 69 69 -, Infant morlality(per 1,000live bifihs) 12 31 32 Chiid malnutrition(99 ofchildren under 5) 6 11 Access to improvedwater source Access to an improvedwater source (% ofpopulation) 99 91 81 Illiteracy(% ofpopulation age 15+) 0 3 10 Gross primaryenrollment (% ofschool-agepopulation) 114 103 112 -Russian Federation Male 114 104 113 Lowermiddleincome group ~ Female 113 102 111 KEY ECONOMICRATIOSand LONG-TERMTRENDS 1983 1993 2002 2003 GDP (US$ billions) 435.1 345.6 Economic ratios' 432.9 Gross domesticinvestmentlGDP 27.0 20.2 20.6 Exportsof goods and services/GDP 38.2 35.0 35.0 I Trade Gross domesticsavings/GDP 34.7 30.7 32.0 Gross nationalsavingsiGDP 33.7 28.6 28.9 Currentaccount balance/GDP 0.6 8.4 8.3 InterestpaymentslGDP 2.7 2.4 Domestic - - Investment Total debffGDP 26.0 43.2 39.1 savings Total debt service/exports 4.3 24.2 18.2 Presentvalue of debffGDP 18.0 43.0 Presentvalue of debffexports 119.1 117.2 I Indebtedness 198343 'I99303 2002 2003 200307 (average annualgrowth) GDP .. 1.4 4.7 7.3 5.0 ~ RussianFederation GDP percapita .. 1.8 5.2 7.8 5.4 Lowermiddle-income group Exports of goods and services .. 6.6 9.6 13.7 ~ 2.8 STRUCTURE ofthe ECONOMY (% of GDP) Igg32o02 2003 z t h of InvestmentandGDP ( O h ) Agnculture 8 3 5 7 5 2 Industry 446 340 343 1 50 Manufactunng 0 Services 47 1 603 605 -50- Pnvate consumption 452 51 6 51 1 - -100- Generalgovernmentconsumption 200 177 169 Importsof goods and services 305 244 236 GDI -GDp and imports(%) ~ _ _ (average annual growth) 1983-93 199303 2o02 2003 Growth of expo- Agnculture 0 8 2 9 2 7 Industry 1 4 3 8 Manufacturing 8 5 20 Services 1 6 5 5 7 1 0 Pnvateconsumption 2 1 8 7 7 8 Generalgovernmentconsumption 0 7 4 8 2 6 Grossdomesticinvestment -46 -22 135 1 -20 - Importsof goods and services 4 3 146 195 Eqrts +inports 1 Note 2003dataare preliminaryestimates *The diamonds showfour key indicators inthe country (in bold) comparedwlth tts incomegroup average If dataare missing.the dlamondw~ll be incomplete 98 Russian Federation PRICES and GOVERNMENT FINANCE I 1983 1993 2002 2003 Domestic prices Inflation(%) (% change) 100 - Consumer prices .. 874.6 15.8 13.7 implicitGDP deflator .. 887.8 15.7 14.2 Governmentfinance (% of GDP, includes currentgrants) I 0- Currentrevenue .. 38.6 37.9 37.2 , 98 99 00 01 02 03 Currentbudget balance .. -4.1 2.5 2.0 Overallsurpius/deficit .. -8.7 0.0 2.1 -----GDPdeflatw +CPI TRADE I 1983 1993 2002 2003 (US$ millions) Exportand import levels (US$ mill.) Total exports(fob) 58,422 107,301 135,929 150,000- Crude oil 10,621 28,772 38,843 Naturalgas ...... 10,347 15,897 19,981 Manufactures .. 3,100 10,900 12,800 100 000 Total imports(cif) 63,828 78,539 Food 10,300 12,100 50 000 Fueland energy 1,000 1,300 I I Capitalgoods 16,700 21,400 O Export price index (20OO=fOO) 97 113 97 98 99 00 01 02 03 Importprice index (2000=100) 111 103 E F * Elnpwts Terms of trade (200O=fOO) 87 109 BALANCEof PAYMENTS 1983 1993 2002 2003 ~ ~~ - . ._- -. (US$millions) Current accountbalanceto GDP (Yo) Exports of goods and services _. 65,244 120,912 151,959 20 - Importsof goods and services .. 58,110 84,463 102,558 Resourcebalance .. 7,134 36,449 49,401 Net income .. -4,459 -6,583 -13,171 Netcurrenttransfers -750 -364 Currentaccount balance .. 2,675 29,116 35,866 Financingitems(net) .. 202 -16,450 -4,823 Changes in net reserves _. -2,877 97 98 99 w 01 03 -12,666 -31,043 02 -5 - Memo: Reservesincludinggold (US$ millions) .. 8,914 47,790 76,936 Conversionrate (DEC,local/US$) .. 0.4 31.4 30.7 EXTERNALDEBT and RESOURCE FLOWS II 1983 1993 2002 2003 - (US$ millions) Composition of 2003 debt (US$ mill ) Total debt outstandinganddisbursed .. 112,940 149,362 169,057 IBRD .. 367 6,599 6,289 A 6.269 IDA 0 0 0 G 16,976 C 5.082 Total debt service .. 2,800 30,734 29,791 IBRD 11 764 894 IDA 0 0 0 Compositionof netresourceflows Officialgrants .. 2,497 Officialcreditors .. 1,038 -4,075 -3,817 Private creditors .. 1,291 20,500 Foreigndirectinvestment .. 1,069 398 -2,408 Porlfolioequity 0 2,947 -5,045 I Wotld Bankprogram Commitments 700 608 320 A - lBm E Bilateral - Disbursements .... 371 229 233 B IDA D other mrhlateral - F Pnwte Principalrepayments 0 526 719 C IMF -- G Short-term -- Netflows .. 371 -296 486 Interestpayments 11 238 175 Nettransfers .. 360 -535 -661 DevelopmentEconomics 9/17/04 99 MAP SECTION