The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) REPORT NO.: RES40669 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA APPROVED ON MAY 25, 2017 TO MINISTRY OF FINANCE AND ECONOMIC PLANNING, REPUBLIC OF RWANDA Transport Global Practice Africa Region May 28, 2020 Regional Vice President: Hafez M. H. Ghanem Country Director: Deborah L. Wetzel Regional Director: Riccardo Puliti Practice Manager/Manager: Benedictus Eijbergen Task Team Leader(s): Christopher J. De Serio, Emmanuel Taban The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) ABBREVIATIONS AND ACRONYMS DL Disbursement Letter ESIA Environmental and Social Impact Assessment EUR Euro FA Financial Agreement GoR Government of Rwanda IDA International Development Association JICA Japan International Cooperation Agency KLP Kigali Logistics Platform LVTP Lake Victoria Transport Program MINECOFIN Ministry of Economy and Finance MININFRA Ministry of Infrastructure NTMP National Transport Master Plan OPRC Output and Performance Based Road Contract RTDA Rwanda Transport Development Agency RWF Rwandan Franc SOP Series of Projects SUF Scale-Up Facility TA Technical Assistance ToR Terms of Reference USD United States Dollars VAT Value Added Tax WB World Bank The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) BASIC DATA Product Information Project ID Financing Instrument P160488 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 25-May-2017 31-Dec-2023 Organizations Borrower Responsible Agency Ministry of Finance and Economic Planning, Republic of Rwanda Transport Development Agency (RTDA) Rwanda Project Development Objective (PDO) Original PDO The program development objective is to facilitate the sustainable movement of goods and people in the Lake Victoria region, whilst strengthening the institutional framework for transport safety. The project development objective for SOP1 Rwanda is to improve the efficient and safe movement of goods and people along the regional corridor from the border crossing at Rusumo to the border crossing at Nemba and Rusizi together with upgrades to road asset management and road safety in Rwanda. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60430 25-May-2017 05-Jun-2017 05-Sep-2017 31-Dec-2023 81.00 12.18 70.74 The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Background 1. The Lake Victoria Transport Program (LVTP) - Series of Projects (SOP 1) was approved by the World Bank Board of Directors on 25th May 2017.1 With a total estimated project cost of approximately US$104 million, the International Development Association (IDA) is providing a Credit in the amount of €75.9 million2 through the IDA Scale-Up Facility (SUF); the Government of Rwanda (GOR) is providing a counterpart contribution of US$23 million equivalent to finance land acquisition and resettlement, tax obligations, and implementing agency operating costs. JICA is also supporting the Program through parallel financing of about US$68 million equivalent to a separate section of the regional road corridor for the Rwanda project. The project is scheduled to close on 31st December 2023. 2. The Program development objective is to facilitate the sustainable movement of goods and people in the Lake Victoria region, whilst strengthening the institutional framework for transport safety. The project development objective is to improve the efficient and safe movement of goods and people along the regional corridor from the border crossing at Rusumo to the border crossing at Nemba and Rusizi together with upgrades to road asset management and road safety in Rwanda. 3. The Project consists of following two components: (a) Component 1: Improving the physical infrastructure along the Ngoma -Nyanza road (estimated at US$96.90 million of which IDA US$76.30 million). IDA financing is provided for the upgrading of approximately 66.55 km along the Kibugabuga-Shinga-Gasoro road section through an Output and Performance-Based Road Contract (OPRC) to paved to bitumen standards. The component is also implementing the Resettlement Action Plan (RAP) through counterpart funding. (b) Component 2: Improving the institutional infrastructure and implementation assistance (US$7.10 million of which IDA US$4.70 million). World Bank-financing will support strengthening and harmonizing the institutional framework, and capacity building, in particular: (i) Monitoring consultant services for the Kibugabuga-Shinga-Gasoro road section, through the provision of technical advisory services to the implementing agency Road Transport Development Agency (RTDA) to carry out: (a) the review and approval of design reports prepared by the contractor; (b) implementation of the Environmental and Social Impact Assessment (ESIA), the RAP and a safe 1 The Financing Agreement was signed on 5th June 2017 and became effective on 5th September 2017. 2 US$ 81 Million equivalent at time of negotiations. The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) system approach along the road corridor; and (c) an assessment of the post-crash response system; and (ii) Strengthening the capacity of the RTDA and Ministry of Infrastructure, through the provision of technical advisory services to: (a) facilitate implementation of the Program and follow-on operations; (b) review and update axle load control enforcement; (c) provision of training to build the respective institution's capacity in environmental and social safeguards, including on gender and related risks; (d) carry out baseline surveys and monitoring and evaluation of Project activities; (e) strengthen the technical and fiduciary systems; and (f) carry out technical and safeguards audits. 4. This Restructuring Paper seeks Country Director’s clearance to process a level II restructuring for the Lake Victoria Transport Program - Series of Project 1 (LVTP- SOP1), which includes an amendment to the Financing Agreement (FA) to: (a) include a new technical assistance activity in Schedule 1 (Project Description) for developing a National Transport Master Plan (2020-2040) under Component 2, with an associated intermediate outcome indicator in the results framework; and (b) amend Schedule 2 to clarify the disbursement percentage for eligible expenditures is exclusive of taxes (by revising Section IV, Part A.2 – Disbursement Table, and deleting paragraph 2 of Section IV, Part B with remaining paragraphs to be renumber accordingly). B. Implementation Status 5. The project has approximately three years and eight months remaining in the implementation schedule and is making reasonable implementation progress. The project finances the upgrading of one section of the Ngoma-Nyanza regional road corridor. For the IDA-financed section from Kibugabuga-Shinga-Gasoro (66.55 km), a design-build-maintain approach through an Output and Performance-Based Road Contract (OPRC) is under implementation, with the contractor having delivered a cogent Contractor Environmental and Social Management Plan, established its campsite, quarry site and crusher plant, and begun earthworks on an 11 km segment that requires no land acquisition or resettlement compensation. The final detailed engineering designs and updated Resettlement Action Plan (RAP) are under review by the RTDA and the monitoring services consultancy. Parallel-financing from the Japan International Cooperation Agency (JICA) is upgrading the Ngoma- Ramiro (52.8 km) road section through traditional road contracting, for which the detailed designs and RAP are nearly finalized. Component 1: Improving the physical infrastructure along the Ngoma -Nyanza road (a) Lot 2: Kibugabuga- Shinga - Gasoro (KSG) Output and Performance-Based Road Contract (OPRC). A set of detailed engineering designs have been submitted by the Contractor to the monitoring consultant services. The designs are divided into two sections; the first for 11km that do not require land acquisition or resettlement and the remaining segment for 55.55km. A series of comments and reviews were provided to improve the quality of design documents as per the Contract, Specifications and Standards. The contractor has substantially completed the Crusher area construction. However, both the Crusher and Quarry still require installation of all perimeter fences, signage, addition of security-operated gates and interceptor ditches prior to use. The contractor’s works on the initial 11km section include road excavation, removal and replacement of unsuitable materials at approved burrow pits and dumping site, accordingly. The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) (b) Implementation of the Resettlement Action Plan. The World Bank team has provided clearance for the approval of a waiver for the need to develop a Resettlement Action Plan (RAP) for the road section from Km 62+102 to Km 73+000 as there is no resettlement or private land acquisition for this section. The contractor prepared and submitted a justification report, including a letter from Bugesera District confirming that the land belongs to Government. RTDA is in the process of updating (i) the KSG-RAP to address World Bank team comments prior to submission for final clearances, and (ii) the RAP for the JICA-funded section3 (Lot 1: Kibungo-Ramiro), which will be shared with the World Bank for review and confirmation of alignment with related policy. Component 2: Improving the institutional infrastructure and implementation assistance (a) Monitoring Consultancy Services mobilized in June 2019. A strong focus on collaboration between the Contractor and RTDA has been demonstrated in supporting development of the requisite Contractor’s Environmental and Social Management Plan. Part of this assignment also entails conducting a Post-Crash Response Study along the Ngoma-Nyanza regional road corridor. The Study was initiated in November 2019 with gathering of road traffic accident data and statistics, as well as geo-referencing and availability of pre-hospital emergency medical treatment services, police, fire brigade, district and rural health centres and referral hospitals. (b) The Axle Load Control Enforcement technical assistance is behind schedule. The GOR has recently rolled out a new e-procurement system in which consultants have indicated difficulty in registering. These difficulties resulted in two unsuccessful initial requests for expression of interest, with limited participation. RTDA has conducted additional market sounding with experienced firms that have successfully registered interest. (c) Monitoring and evaluation (M&E) consultant services to support data collection for the project results framework for impact evaluation were contracted in November 2019. Training of enumerators and pilot baseline survey data collection exercise for the impact evaluation has commenced. (d) International public transport expert. RTDA is in the process of recruiting an individual consultant to provide technical assistance to the RTDA department responsible for public transport management. Contract negotiations are expected to be concluded before end-May 2020. (e) Preparation of Follow-on Operations. RTDA has updated the procurement plan to include preparation of a Feasibility Study for upgrading one of two potential road segments that would improve access to the Kigali Logistics Platform (KLP) from the Ngoma-Nyanza road corridor. RTDA published the request for expression of interest on December 31, 2019. The shortlisting committee is evaluating a large pool of firms from a strong market response to the expression of interest. 6. The amount of the IDA SUF Credit is €75.9 million. Disbursements to date amount to €10.38 million (equivalent to 13.7 percent), as of May 12, 2020. The current commitment level based on signed contracts and cost estimates for pending LVTP activities has reached 49 percent of the Credit amount (i.e. approximately €37.2 million). The original cost estimates for the major civil works activity under Component 1(a) of the Project amounted to approximately US$90 million equivalent (€81.2 million). Upon award of the civil works contract for 3 Detailed designs and Final Design Reports are under JICA internal review for approval. The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) approximately US$45.2 million4 (or €40.8 million equivalent), there is an uncommitted Credit balance amounting to approximately €38.7 million. MINECOFIN has agreed to RTDA and MININFRA’s request to utilize uncommitted Credit resources for: (a) potential future additional civil works that would link the Ngoma – Nyanza Road corridor to the Kigali Logistics Platform (KLP) subject to acceptable feasibility study and environmental and social impact assessments to be prepared, and (b) technical assistance with the development of a National Transport Master Plan. C. Rationale for Restructuring 7. In its letter sent to IDA dated February 14, 2020 and received on February 19, 2020, MINECOFIN has requested a project restructuring that includes: (a) Amendment to Schedule 2, Section IV, Part A.2 (Disbursement Table). MINECOFIN has requested an amendment to the FA to revise the current IDA SUF Credit financing percentage of 84.78 percent to 100 percent financing, exclusive of taxes, for eligible expenditures. The disbursement percentage against eligible expenditures has been queried by the RTDA internal audit department and the independent auditor preparing annual audited financial statements on proper application of the disbursement percentage vis-à-vis payment of taxes against supplier invoices. The Borrower interprets the disbursement percentage5 to mean that the Credit finances eligible expenditure at 84.78 percent, and GoR finances taxes6, plus the remaining 15.22 percent of the eligible expenditures. The basis for the current disbursement percentage is IDA’s portion of the total estimated project costs (84.78 percent). Taxes, implementing agency operating costs, and livelihood restoration to affected persons are counterpart contributions. The amendment to the disbursement table will reflect that all eligible expenditures (e.g. goods, works, non-consulting services, consultants’ services, and training) can be financed at 100 percent, with GOR continuing to meet all tax obligations. This is intended to clarify to auditors’ RTDA’s application of the financing percentage; and (b) A new technical assistance activity for the National Transport Master Plan in Schedule 1 – Project Description. MININFRA seeks IDA support in the development of an updated National Transport Master Plan (NTMP) that will guide the development of an integrated multi-modal transport sector over the period 2020 to 2040. The activity fits both the Program and project-level objectives of promoting the sustainable movement of goods and people in Rwanda and across the region. 8. The restructuring will also involve minor revisions to the (a) results framework intermediate indicators (outcome indicators remain unchanged), (b) components and costs, (c) implementation schedule, and (d) disbursement estimates. 9. There are no changes to the project’s development objectives; implementing agency; disbursment drawdown status; credit closing date; disbursement categories; overall risk rating; safeguard policies triggered or environmental assessment category; institutional arrangements; or procurement arrangements. 4 Inclusive of taxes. 5 A disbursement percentage is the portion of eligible expenditure that the Bank has agreed to finance. Loan Handbook (2017) 6 FA (Section IV.B.2) and the Disbursement Letter (Para IV) The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) 10. This will be the first restructuring for the project. II. DESCRIPTION OF PROPOSED CHANGES 11. The description of the proposed changes are summarized below. 12. Amendment to Schedule 1 - Project Description to include the National Transport Master Plan as an eligible activity. The NTMP (2020-2040) offers a unique opportunity for Rwanda to present its transport sector vision across all modes through the lens of the ‘Sustainable Mobility for All’ (Sum4All) four thematic pillars: universal access; efficiency; safety; and green mobility. The NTMP will present a high-level investment outlook for meeting demands on public transport infrastructure and services, meeting international and regional commitments and regulatory frameworks, mechanisms for mobilizing private sector participation, and outlining the sector’s institutional capacity and reform agenda. MININFRA is in the process of finalizing related terms of reference for this assignment. Upon counterpart signature of the proposed amendment, the project procurement plan will be updated accordingly. This assignment can be completed within the current project implementation period. 13. Amendment to Schedule 2 – Project Execution to clarify the handling of taxes. The disbursement table in Section IV.A is revised to allow the Credit to finance 100 percent of eligible expenditures identified in the single disbursement category. Paragraph 2 of Section IV.B is also removed, with the application of taxes clarified in the preceding disbursement table. There is no change to the eligible expenditure categories, which comprise goods, works, non-consulting services, consulting services, and training under the project. A proposed disbursement table is presented in Table 1. Table 1: Proposed Disbursement Table Category Amount of the Credit Percentage of Expenditures to Allocated be Financed (expressed in EUR) (Exclusive of Taxes) (1) Goods, works, non-consulting 75,900,000 100% services, consultants’ services, and Training under the Project TOTAL AMOUNT 75,900,000 14. Updated Components and Costs. After detailed analysis of the project’s expropriation requirements and updating of the Resettlement Action Plan’s compensation framework, the project cost for Component 1(b) is reduced by US$4.4 million equivalent, thereby reducing the Government’s counterpart contribution. An indicative estimate for the NTMP assignment suggests that the activity cost will likely be in the range of US$4.0 million (inclusive of taxes). Additionally, the estimated costs for the Feasibility Study on connectivity to the KLP amounts to approximately US$0.85 million (inclusive of taxes). Programming a portion of uncommitted funding available through cost savings under Component 1(a) will be reallocated to Component 2 for both technical assistance activities. The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) Table 2: Revised Component Costs Original Project Allocation Revised Allocation Uncommitted IDA Comp (US$ eq) (US$ eq) Balance (US$ eq) IDA GOR Total IDA GOR Total 1(a) 76.3 13.7 90.0 72.3 12.8 85.1 32.8 1(b) 0.0 6.9 6.9 0.0 2.5 2.5 2 4.7 2.4 7.1 8.7 3.3 12.0 TOTAL 81.0 23.0 104.0 81.0 18.6 99.6 32.8 15. Programming of Uncommitted Credit Resources. The Government of Rwanda wishes to link the regional Ngoma – Nyanza Road corridor to the KLP located at Masaka to boost import and export trade logistics. The KLP is well situated to become a regional cargo transit hub that can facilitate the sustainable movement of goods by connecting the East African Community (EAC) central corridor. An alternatives analysis for upgrading of two prospective sections from District to National/EAC Asphalt Concrete pavement standards in Bugesera District will evaluate the technical and economic viability for selecting one of two possible route selection.7 Procurement is underway for consultant services to prepare the alternatives analysis and subsequent Feasibility Study, including preliminary engineering designs and safeguard instruments for the corridor that is ultimately selected. Funding for this Feasibility Study is an eligible expenditure under Part 2(a) of the Project Description. In accordance with the current project design, civil works would to be undertaken through OPRC contract modality. The remaining balance of approximately US$32.8 million equivalent from the IDA SUF Credit is being held in reserve for financing of civil works upon determination of the road segment to connect the KLP. A subsequent restructuring will need to be evaluated upon completion of the Feasibility Study for the upgrading for the selected road segment, which is anticipated to be available at the time of the anticipated Mid-Term Review in March 2021. 16. Strengthened Financial Management Internal Controls. The RTDA has revised the Project Implementation Manual and updated the Financial Management Manual to provide additional clarity on fund- flow processes, handling of invoices, application and payment of taxes, drawdown or payment procedures, and additional recording keeping requirements. These measures include: (a) inserting a confirmation upon signing of the withdrawal applications that all taxes have already been paid through counterpart resources; and (b) an additional reporting column in the quarterly interim financial reports on the payment of taxes. 17. Updated Results Framework. An intermediate outcome indicator will be included in the results framework to reflect the development and approval by MININFRA for the NTMP prepared with support of project financing. 18. Updated Disbursement Estimates. The RTDA has prepared an updated Credit disbursement projection based on the current implementation schedule of on-going and planned project activities. 7The two alternatives under consideration are (1) Riziyeri- Kabukuba- Masaka road (37km) or (2) Kindama-Gahembe-Kabukuba- Masaka (51km). The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Other Change(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Improving the physical Improving the physical 96.90 Revised 87.60 infrastructure infrastructure Improving the institutional Improving the institutional infrastructure and 7.10 Revised infrastructure and 12.00 implementation assistance implementation assistance TOTAL 104.00 99.60 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2017 0.00 0.00 2018 4,958,982.00 0.00 2019 9,933,921.00 5,395,205.00 2020 15,498,945.00 9,157,761.00 2021 18,134,361.00 21,028,976.00 2022 17,395,074.00 2,001,309.00 2023 13,040,514.00 2,222,067.00 2024 2,038,203.00 0.00 OPS_DETAILEDCHANGES_SORT_TABLE SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating at Approval Current Rating Political and Governance  Moderate  Moderate Macroeconomic  Moderate  Moderate Sector Strategies and Policies  Moderate  Moderate Technical Design of Project or Program  Substantial  Substantial The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) Institutional Capacity for Implementation and  Substantial  Substantial Sustainability Fiduciary  Substantial  Moderate Environment and Social  Substantial  Moderate Stakeholders  Moderate  Moderate Other  Substantial  High Overall  Substantial  Substantial . The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) . Results framework COUNTRY: Eastern Africa LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA Project Development Objectives(s) The program development objective is to facilitate the sustainable movement of goods and people in the Lake Victoria region, whilst strengthening the institutional framework for transport safety. The project development objective for SOP1 Rwanda is to improve the efficient and safe movement of goods and people along the regional corridor from the border crossing at Rusumo to the border crossing at Nemba and Rusizi together with upgrades to road asset management and road safety in Rwanda. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Efficient and safe movement of goods and people along the regional corridor Rusumo-Nemba/Rusizi Reduction in travel time from Kibugabuga to Gasoro (Hours) 2.75 1.75 Road safety measures introduced from Kibugabuga to Gasoro No Yes (Yes/No) Guardrails for pedestrian & vehicle safety (Kilometers) 0.00 9.00 Footpaths for pedestrian & vehicle safety (Kilometers) 0.00 11.00 Reduction in transport cost for users (Percentage) 0.00 10.00 Direct project beneficiaries (Number) 0.00 500,000.00 Survey reports on citizen engagement available (Yes/No) No Yes Upgrades to road asset management and road safety in Rwanda National paved roads network sections maintained using Roads 0.00 185.00 Maintenance Fund (RMF) (Kilometers) The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Number of permanent jobs created using Local Community 0.00 500.00 Associations (LCAs) (Number) Roads in good and fair condition as a share of total classified 45.00 48.00 roads (Percentage) Size of the total classified network (Kilometers) 1,250.00 1,316.00 Share of rural population with access to an all-season road 0.00 4.00 (Percentage) Number of rural people with access to an all-season road 0.00 100,000.00 (Number) Progress on post-crash response (Yes/No) No Yes PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Improving the physical infrastructure Roads rehabilitated, Non-rural (Kilometers) 0.00 66.00 Agricultural market centers connected along Kibugabuga - 0.00 13.00 Gasoro (Number) Improving the institutional infrastructure and implementation assistance Code of Conduct for contractor’s personnel and Action Plan No Yes designed (Yes/No) Females employed in LCAs on RMF road maintenance contracts 0.00 100.00 (Number) The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Road safety and post-crash response sensitization conducted for schools, health centers, and markets from Kibugabuga to Gasoro 0.00 20.00 (Number) Border agencies participating in implementing IBM at Rusizi I 0.00 4.00 (Number) Development of a National Transport Master Plan (Yes/No) No Yes Action: This indicator is New IO Table SPACE The World Bank LAKE VICTORIA TRANSPORT PROGRAM - SOP1, RWANDA (P160488)