The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) Modernization and restructuring of the road sector (P155842) EUROPE AND CENTRAL ASIA | Croatia | Transport Global Practice | IBRD/IDA | Investment Project Financing | FY 2017 | Seq No: 9 | ARCHIVED on 05-Jun-2021 | ISR46587 | Implementing Agencies: Ministry of Sea, Transport and Infrastructure (MSTI), Ministry of Finance Key Dates Key Project Dates Bank Approval Date: 28-Apr-2017 Effectiveness Date: 04-Nov-2017 Planned Mid Term Review Date: 21-Oct-2019 Actual Mid-Term Review Date: 21-Oct-2019 Original Closing Date: 31-Dec-2021 Revised Closing Date: 31-Dec-2021 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the Project is to strengthen the institutional effectiveness, enhance the operational efficiency and increase the debt service capacity of Croatia's road sector. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component A: Institutional strengthening and Sector Reforms:(Cost $7.09 M) Component B: Operational Restructuring of Road Sector Companies:(Cost $16.23 M) Component C: Support to the Sector debt and financial restructuring:(Cost $795.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO €Unsatisfactory €Unsatisfactory Overall Implementation Progress (IP) €Moderately Unsatisfactory €Moderately Unsatisfactory Overall Risk Rating €Substantial €Substantial Implementation Status and Key Decisions Earlier achievements under the MARS project have been significant. Motorway companies made serious steps towards consolidation and rationalization of their operations and defined new standards and operational strategies; and all three state-owned road companies successfully reprofiled their debts. A new intensification of efforts is necessary, with additional support to take into consideration the evolving financial environment and the impacts of covid19, so as to sustain and adjust the road sector reform agenda. 6/5/2021 Page 1 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance €Substantial €Substantial €Substantial Macroeconomic €Substantial €Substantial €Moderate Sector Strategies and Policies €Substantial €Moderate €Moderate Technical Design of Project or Program €Substantial €Moderate €Moderate Institutional Capacity for Implementation and €Moderate €Moderate €Moderate Sustainability Fiduciary €Moderate €Moderate €Moderate Environment and Social €Substantial €Low €Low Stakeholders €Substantial €Substantial €Substantial Other -- €Substantial €Substantial Overall €Substantial €Substantial €Substantial Results PDO Indicators by Objectives / Outcomes Institutional Effectiveness IN00989685 ►Ability of MSTI to plan road sector investments (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Planning department under MSTI renamed Creation of planning "Road Infrastructure Motorway and road Inexistent sector-wide department under MSTI; Project Financing and networks managed Value planning coordination transport strategy Support Service" since under rolling approved January 2021; investment plans transport strategy approved and in force Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 IN00989698 ►Ability of MSTI to monitor and enforce performance of motorway and road companies using Key Performance Indicators (KPIs) and standardized accounting measures (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Inadequate performance Service performance Service performance Integrated monitoring Value monitoring system agreements pending. agreements pending. system in place Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 6/5/2021 Page 2 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) KPI monitoring system established that allows tracking of performance measures to verify compliance with Comments: targets established in service agreements. Operating Efficiency IN00989696 ►Operating Expense Ratio (Total Operating Expenses / Total Operating Revenue) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target HAC: 0.38 Current: 0.43 (HAC); Current: 0.29 (HAC); HAC+ARZ: <0.27 Value ARZ: 0.31 0.36 (ARZ); 0.34 (HC) 0.25 (ARZ); 0.31 (HC) HC: <0.27 HC: 0.29 [Results of end 2020] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Calculated as ratio of operating expenditures (routine maintenance, tolling, administration and€€ direct Comments: costs plus subcontracts) over operating revenue (toll, fuel tax plus ancillary revenue) IN00989699 ►Operating Expenditures per kilometer of road network (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target HAC: 0.68 Current: 0.64 (HAC); Current: 0.65 (HAC); HAC+ARZ: <0.60 Value ARZ: 1.05 0.98 (ARZ); 0.09 (HC) 0.98 (ARZ); 0.09 (HC) HC: <0.07 HC: 0.08 [Results of end 2020] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Comments: Calculated as ratio of operating expenditures (as defined above) over length of network in km Debt Service Capacity IN00989697 ►Debt Service Coverage Ratio (DSCR) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target HAC: 0.15x Current: 0.67 (HAC); HAC: 1.0x Current: 1.15 (HAC); Value ARZ: 0.63x 0.48 (ARZ); 0.74 (HC) ARZ: 1.0x 0.90 (ARZ); 1.34 (HC) HC: 0.55x [Results of end 2020] HC: 1.0x Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 This indicator measures the capacity of the sector (road sector agencies-HAC, ARZ and HC) to meet its debt service obligations out of the cash flows generated by the sector. If the indicator is less than 1x [less than 100% if percentage representation is chosen],this means that the sector is unable to cover its debt service obligations out of its own cash flows. Comments: The indicator captures both the revenue and the debt service sides of the financial viability equation. The Indicator is defined as Cash Flow Available for Debt Service (CFADS) over Debt Service (DS) For the purpose of this indicator: - CFADS is defined as total revenue net of opex and capex in the period - DS is defined as interest plus principal payable in the period IN00989700 ►Loan Life Coverage Ratio (LLCR) 10 Year (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/5/2021 Page 3 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) HAC: 0.51x Current: 1.02 (HAC); HAC: 1.0x Current: 1.01 (HAC); Value ARZ: 0.66x 0.91 (ARZ); 0.79 (HC) ARZ: 1.0x 0.82 (ARZ); 0.90 (HC) HC: 0.97x [Results of end 2020] HC: 1.0x Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Net Present Value of Cashflows Available for Debt Service/Outstanding Debt for period Comments: This measure is used to estimate the ability of the borrower to repay the outstanding loans. IN00989701 ►Debt to CFADS Ratio (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current: 24.09 (HAC); HAC: 36.0x HAC: 10.0x Current: 13.22 (HAC); 19.87 (ARZ); 20.31 Value ARZ: 15.2x ARZ: 10.0x 11.42 (ARZ); 18.26 (HC) (HC) [Results of end HC: 9.8x HC: 7.3x 2020] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 The indicator measures the capacity of road sector companies to meet their financial obligations from their own revenue. Where the ratio is falling, it indicates that the company s capacity to meet its financial Comments: obligations from its own CFADS is strengthening. The indicator is calculated as follows: Debt Outstanding for Period/CFADS Intermediate Results Indicators by Components Component A: Institutional strengthening and Sector Reforms IN00989702 ►Status of implementation of new financing strategy for HAC, ARZ and HC as implemented under the coordination of the National Government [A.1] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Financing strategy Financing strategy Debt restructuring approved; execution of approved; execution of transactions Contract with advisor Value debt optimization debt optimization contemplated in signed transactions at three transactions at three Financing Strategy are stages through 2019 stages through 2019. executed Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 IN00989705 ►Operational status of Planning Department established within MSTI [A.2] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Inexistent planning and Department Department Department is fully Value coordination functions reorganization reorganization underway operational within MSTI underway Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 IN00989707 ►Status of implementation of improved and harmonized accounting standards [A.3] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Non-harmonized Roads Act amendment Roads Act amendment Improved accounting Value accounting standards pending pending standards applied 6/5/2021 Page 4 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Component B: Operational Restructuring of Road Sector Companies IN00989703 ►Weighted Average toll revenue per Vehicle-Km travelled [B.4] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current: 0.66 (HAC); HAC: 0.59 Current: 0.64 (HAC); HAC: >0.67 Value 0.67 (ARZ) [Results of ARZ: 0.64 0.64 (ARZ) ARZ: >0.67 end 2020] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 30-Jun-2021 Average toll rate (including VAT) per vehicle-kilometer for all vehicle categories, weighted by the Comments: percentage share of each category in the total vehicle-km IN00989706 ►Status of implementation of new tolling revenue enhancement measures [B.4] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target New tolling strategy New tolling strategy endorsed by MSTI; endorsed by MSTI; New automated tolling Existing mixed toll advanced preliminary Value design phase started but system completely system study accepted; bidding docs not yet implemented bidding docs not yet prepared prepared Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 IN00989708 ►Percent Reduction in Operating Cost of Motorways relative to baseline: HAC and ARZ [B.3] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current: 6.7 percent Current: 4 percent (783 (768 mn HRK) HAC: HAC+ARZ: 823 mn HRK mn HRK) HAC: 600 mn 586 mn HRK ARZ: 182 Value -30% annual HRK ARZ: 183 mn HRK mn HRK [results of end 2020] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Operating cost defined as sum of HAC-ONC contract plus HAC and ARZ staff and overhead costs Comments: IN00989710 ►Reduction in Operating Cost for State Roads relative to baseline: HC [B.6] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current: HC: 656 mn Current: HC: 631 mn HC: 515 mn HRK Value HC: 546 mn HRK annual HRK [results of end HRK annual 2020] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Operating cost defined as sum of routine maintenance contracts plus HC staff and overhead costs Comments: IN00989711 6/5/2021 Page 5 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) ►Staff per Kilometer of road under operation (motorways) [B.3] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current: HAC + ARZ: Current: HAC + ARZ: HAC: 2.7 2.44 [results of end Value 2.50 HAC + ARZ: < 2.2 ARZ: 3.2 2020] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Comments: Total staff (operator and road manager) per km IN00989712 ►Status of implementation of end-performance road maintenance standards [B.1] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Maintenance Maintenance standards standards consultancy Standards without end- Service standards consultancy completed. completed. Standards Value performance incorporated in rolling Rulebook update for HAC are developed requirements plan pending and published; for HC planned by end 2022 Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 IN00989713 ►Status of Implementation of Road Asset Management System (RAMS) development and incorporation in planning [B.2] (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target RAMS technical specification prepared RAMS implementation Road sector agencies and no-objected by RAMS inputs not contracted. RAMS Value and companies do not Bank; bidding incorporated in rolling implementation TOR have integrated RAMS documents prepared plan agreed. but procurement not launched. Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 IN00989714 ►Percent of HC network where county agencies (ZUC) participate in joint procurement committee (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 100.00 Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Comments: Total road length in respective HC business units over total HC length IN00989715 ►Percentage of TEN-T road network for which road safety audit or inspection as per EU Directive 2008/96 has been carried out [B.7] (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 17.80 10.00 100.00 Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 6/5/2021 Page 6 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) Total road length with documented completed audit or inspection. 100 percent state governed Comments: motorways. 17.8 percent of state roads IN00989716 ►Citizen engagement - Maintain full responsiveness rate to comments and grievances from citizens (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 100.00 100.00 100.00 100.00 Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 In 2020, 10,334 complaints were received, related to toll charges, and 100 percent were resolved. In Q1 2021, 2,998 toll related complaints have been received, and 98 percent were closed, while 2 percent are pending resolution due to pending submission of supporting documents/evidence. Overall as regards citizen engagement, the communication consultancy has been concluded and has contributed to the Comments: Ministry's and SOEs' capacities in communication and in citizen engagement more generally. The websites of the Ministry (mmpi.gov.hr), HAC (hac.hr) and HC (hrvatske-ceste.hr) include clear contact links and details for citizen/user communication. IN00989717 ►Gender balancing - Ratio of women in the motorway sector after retrenchment (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.19 0.20 0.20 0.25 Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 Value for 2019 (measured annually) Comments: Component C: Support to the Sector debt and financial restructuring IN00989704 ►Private Direct Mobilization (Debt Refinancing & Rescheduling with support of IBRD Guarantee) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 1.675 bn EUR over 900 mn EUR of refinanced and 1.8 bn debt refinanced and Value n/a Refinanced 400 mn EUR EUR rescheduled over 2 bn EUR through 2019 (three rescheduled for all stages) companies Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 values for 2019 Comments: IN00989709 ►Weighted average maturity of road sector companies' debt (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current: 5.7 [end 2020 Value 3.5 years Current: 6.4 7.8 years results] Date 31-Dec-2016 30-Oct-2020 30-Apr-2021 31-Dec-2021 6/5/2021 Page 7 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P155842 IBRD-87490 Effective USD 23.33 23.33 0.00 18.67 6.44 74% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P155842 IBRD-87490 Effective 28-Apr-2017 08-May-2017 04-Nov-2017 31-Dec-2021 31-Dec-2021 Cumulative Disbursements PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC 6/5/2021 Page 8 of 9 The World Bank Implementation Status & Results Report Modernization and restructuring of the road sector (P155842) Restructuring History There has been no restructuring to date. Related Project(s) P163833-Modernization and Restructuring of the Road Sector 6/5/2021 Page 9 of 9