Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD3940 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR1.9 MILLION (US$2.5 MILLION EQUIVALENT) IN CRISIS RESPONSE WINDOW RESOURCES TO THE FEDERATED STATES OF MICRONESIA FOR THE FEDERATED STATES OF MICRONESIA MARITIME INVESTMENT PROJECT May 28, 2020 Transport Global Practice East Asia And Pacific 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 April 30, 2020) Currency Unit = United States Dollar SDR 1 = US$1.3664 FISCAL YEAR October 1 – September 30 Regional Vice President: Victoria Kwakwa Country Director: Michel Kerf Regional Director: Ranjit J. Lamech Practice Manager: Almud Weitz Task Team Leaders: Sean David Michaels, Keelye Hanmer ABBREVIATIONS AND ACRONYMS AF Additional Financing CERC Contingent Emergency Response Component CIU Central Implementation Unit COVID-19 Coronavirus Disease CRW Crisis Response Window DA Designated Account DECEM Department of Environment, Climate Change and Emergency Management DFIL Disbursement and Financial Information Letter DHSA Department of Health and Social Affairs DoFA Department of Finance and Administration DoTC&I Department of Transport, Communications and Infrastructure EAP Emergency Action Plan ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FM Financial Management FSM Federated States of Micronesia FSMIP Federated States of Micronesia Maritime Investment Project FTCF Fast Track COVID-19 Facility GBV Gender-based Violence GRM Grievance Redress Mechanism GRS Grievance Redress Service HEIS Hands-on Expanded Implementation Support IDA International Development Association IFR Interim Financial Report IP Implementation Progress ISDS Integrated Safeguards Data Sheet JICA Japan International Cooperation Agency OHS Occupational Health and Safety OM Operations Manual PCRTP Pacific Climate Resilient Transport Program PDO Project Development Objective PID Project Information Document PIU Project Implementation Unit PPE Personal Protective Equipment SEA Sexual Exploitation and Abuse SEP Stakeholder Engagement Plan SORT Systematic Operations Risk-Rating Tool SPC Pacific Community STEP Systematic Tracking of Exchanges in Procurement TOR Terms of Reference UNOPS United Nations Office for Project Services USD United States Dollar WHO World Health Organization Federated States of Micronesia Federated States of Micronesia Maritime Investment Project Additional Financing TABLE OF CONTENTS I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ........................................ 6 II. DESCRIPTION OF ADDITIONAL FINANCING ...................................................................... 8 III. KEY RISKS ..................................................................................................................... 11 IV. APPRAISAL SUMMARY .................................................................................................. 12 V. WORLD BANK GRIEVANCE REDRESS .............................................................................. 14 VI SUMMARY TABLE OF CHANGES ..................................................................................... 15 VII DETAILED CHANGE(S) .................................................................................................... 15 VIII. RESULTS FRAMEWORK AND MONITORING ................................................................... 19 The World Bank FSM Maritime Investment Project Additional Financing (P174075) BASIC INFORMATION – PARENT (Federated States of Micronesia Maritime Investment Project - P163922) Country Product Line Team Leader(s) Micronesia, Federated IBRD/IDA Sean David Michaels States of Project ID Financing Instrument Resp CC Req CC Practice Area (Lead) P163922 Investment Project IEAT1 (9381) EACNF (6680) Transport Financing Implementing Agency: Department of Transportation, Communication & Infrastructure, Department of Justice, Department of Environment, Climate Change and Emergency Management ADD FIN TBL1 Is this a regionally tagged project? No Bank/IFC Collaboration No Expected Original Environmental Approval Date Closing Date Guarantee Current EA Category Assessment Category Expiration Date 09-May-2019 01-Aug-2024 Partial Assessment (B) Partial Assessment (B) Financing & Implementation Modalities Parent [ ] Multiphase Programmatic Approach [MPA] [✓] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [✓] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made disaster Page 1 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) [ ] Alternate Procurement Arrangements (APA) Development Objective(s) To improve the safety, efficiency and climate resilience of maritime infrastructure and operations in the Recipient's territory, and in the event of an Eligible Crisis or Emergency, to provide an immediate response to the Eligible Crisis or Emergency. Ratings (from Parent ISR) RATING_DRAFT_YES Implementation 18-Aug-2019 14-Jan-2020 Progress towards achievement of PDO S S Overall Implementation Progress (IP) S S Overall Safeguards Rating S S Overall Risk S S BASIC INFORMATION – ADDITIONAL FINANCING (FSM Maritime Investment Project Additional Financing - P174075) ADDFIN_TABLE Urgent Need or Capacity Project ID Project Name Additional Financing Type Constraints P174075 FSM Maritime Investment Cost Overrun Yes Project Additional Financing Financing instrument Product line Approval Date Investment Project IBRD/IDA 05-Jun-2020 Financing Projected Date of Full Bank/IFC Collaboration Disbursement 01-Dec-2024 No Is this a regionally tagged project? No Page 2 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) Financing & Implementation Modalities Child [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [✓] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [✓] Responding to Natural or Man-made disaster [ ] Alternate Procurement Arrangements (APA) [✓] Contingent Emergency Response Component (CERC) Disbursement Summary (from Parent ISR) Net Source of Funds Total Disbursed Remaining Balance Disbursed Commitments IBRD % IDA 38.49 3.23 34.42 8.6 % Grants % PROJECT FINANCING DATA – ADDITIONAL FINANCING (FSM Maritime Investment Project Additional Financing - P174075) PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFi n1 SUMMARY (Total Financing) Proposed Additional Total Proposed Current Financing Financing Financing Total Project Cost 38.49 2.50 40.99 Total Financing 38.49 2.50 40.99 of which IBRD/IDA 38.49 2.50 40.99 Financing Gap 0.00 0.00 0.00 DETAILS - Additional Financing NewFinEnh1 Page 3 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) World Bank Group Financing International Development Association (IDA) 2.50 IDA Grant 2.50 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount Micronesia, Federated 0.00 2.50 0.00 2.50 States of Crisis Response Window 0.00 2.50 0.00 2.50 (CRW) Total 0.00 2.50 0.00 2.50 COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [ ✔ ] No Does the project require any other Policy waiver(s)? [ ] Yes [ ✔ ] No INSTITUTIONAL DATA Practice Area (Lead) Transport Contributing Practice Areas Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Page 4 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) PROJECT TEAM Bank Staff Name Role Specialization Unit Team Leader (ADM Sean David Michaels Infrastructure IEAT1 Responsible) Keelye Rinchen Hanmer Team Leader Transport IEAT1 Procurement Specialist (ADM Angelia B. Nurwihapsari .S Procurement EEAR2 Responsible) Dominic Reyes Aumentado Procurement Specialist Procurement EEAR2 Maria Liennefer Rey Financial Management Financial Management EEAG1 Penaroyo Specialist (ADM Responsible) Social Specialist (ADM Craig Andrew Clark Social Safeguards SEAS1 Responsible) Environmental Specialist (ADM Penelope Ruth Ferguson Environmental Safeguards SEAE1 Responsible) Operations and Country Annette Gaye Leith Team Member EACNF Management Caroline Bruton Adams Team Member Operations EACNF Chanin Manopiniwes Team Member Transport IEAT1 Administration and Client Jason Yeung Sing Sze Procurement Team EACNF Support John A. Lowsby Team Member Transport IEAT1 Loren Jayne Atkins Counsel Legal LEGES Administration and Client Lorraine D. James Team Member EACNF Support Nicholas Gerard Williams Procurement Team Procurement EACNF Rachelle Therese Marburg Social Specialist Social Safeguards SEAS1 Sam William Johnson Team Member Transport IEAT1 Sophie Alexandra Egden Team Member Environment SEAE1 Toufiq Ahmed Team Member Operations EACNF Zhentu Liu Procurement Team Procurement EEAR2 Extended Team Name Title Organization Location Page 5 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING A. Background 1. This Project Paper seeks the approval of the Executive Directors for an additional International Development Association (IDA) grant (Grant No. D645-FM) in the amount of SDR1.9 million (US$2.5 million equivalent) to the Federated States of Micronesia Maritime Investment Project (FSMIP, P163922). The IDA resources are from the Fast Track COVID-19 Facility (FTCF) under the IDA Crisis Response Window (CRW). This Additional Financing (AF) request is for gap financing to replenish the funds reallocated to FSMIP’s Contingent Emergency Response Component (CERC) to enable continuation of the Project. 2. FSMIP, with a total financing of SDR27.6 million (US$38.49 million equivalent), was approved on May 9, 2019. The Project is financed by US$9.62 million equivalent national IDA and US$28.87 million equivalent regional IDA. 3. An outbreak of the coronavirus disease (COVID-19) caused by the 2019 novel coronavirus (SARS-CoV-2) has been spreading rapidly across the world since December 2019, following the diagnosis of the initial cases in Wuhan, Hubei Province, China. Since the beginning of March 2020, the number of cases outside China has increased thirteenfold and the number of affected countries has tripled. On March 11, 2020, the World Health Organization (WHO) declared a global pandemic as the coronavirus rapidly spread across the world. As of May 26, 2020, WHO reported 5,451,532 confirmed cases and 345,752 confirmed deaths in 217 countries and territories. 4. This AF is being prepared under the global framework of the World Bank COVID-19 Response financed under the FTCF. In response to the WHO declaration of the global pandemic, the Federated States of Micronesia (FSM) has triggered the CERC of the FSMIP 1 to address urgent COVID-19 emergency response and preparedness needs. FSM declared a national state of emergency on March 14, 2020 and will apply the CERC funding to supply medical equipment, pharmaceuticals and personal protective equipment (PPE). 2 The availability of unallocated funds in FSMIP has enabled the rapid release of funds for this purpose. As of April 2020, there are no confirmed cases of COVID-19 in FSM, and stringent travel restrictions are currently in place. 5. The triggering of the CERC has resulted in a financing gap for the FSMIP. This AF replenishes the funds reallocated to the CERC to enable continuation of the Project. This AF also includes a Level 2 restructuring to revise the results framework for the Project and formalize the activation of the CERC. The revision entails the addition of an intermediate-level indicator related to the CERC to capture the timeliness of the procurement of items as included in the CERC Emergency Action Plan (EAP). The current Project Development Objective (PDO) remains achievable. 6. The Government of FSM has received assistance from various donors for investments in the maritime sector including the United States Government, the Pacific Community (SPC), and the Japan International Cooperation Agency (JICA). For the CERC component, the World Bank engaged and coordinated with other health development partners to encourage efficient use of all available emergency funding and ensure all COVID-19 1 The CERC was triggered on May 5, 2020. 2 FSM COVID-19 Emergency Declaration: https://gov.fm/files/Declaration_as_of_March_14.pdf Page 6 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) preparedness and response pillars were covered by other partners based on their respective strengths and mandates. The World Bank will continue to actively collaborate with its partners throughout implementation. The role of these partners in responding to COVID-19 and the maritime sector in FSM has been considered in the design of this AF. B. Current Status of the Project 7. Summary Information on the Parent Project. FSMIP seeks to improve the safety, efficiency and climate resilience of maritime infrastructure and operations in the Recipient’s territory, and in the event of an Eligible Crisis or Emergency, to provide an immediate response to the Eligible Crisis or Emergency. The Project includes the following four components: (i) Maritime Infrastructure; (ii) Maritime Safety and Security; (iii) Technical Assistance for Port Planning and Project Management; and, (iv) Contingent Emergency Response. Key outcomes include: a reduction in cargo vessel turnaround times at project ports; an increase in container yard productivity at project ports; increased compliance with International Ship and Port Facility Security requirements; rehabilitation of ports to include at least one climate resilience measure; and, an increase in the number of ports with sectoral and contingency planning tools that address natural disasters and climate change. As sea transport services are considered essential for the basic economic and social functions of FSM, improving the safety, efficiency and climate resilience of maritime infrastructure and operations will have benefits for FSM’s population of about 105,544 people. 8. FSMIP became effective on August 14, 2019. As of April 2020, the disbursement ratio of FSMIP is eight percent. Since approval, the Project has been Satisfactory in terms of achieving its PDO, and Satisfactory for ‘Implementation Progress’. The last implementation support mission was carried out during November 11 – 26, 2019. The procurement process for the Needs Assessment for Component 1 (Maritime Infrastructure) and Component 2 (Maritime Safety and Security) has commenced, which is critical given this activity is time-sensitive and informs other activities under FSMIP. 9. The Project Manager of the Project Implementation Unit (PIU) within the Department of Transport, Communications and Infrastructure (DoTC&I) mobilized on October 7, 2019 and is currently supporting FSMIP activities. In addition, FSMIP benefits from support from the Central Implementation Unit (CIU) within the Department of Finance and Administration (DoFA), which is overseen by a Program Manager, with additional dedicated staff to provide fiduciary and safeguards support. The Program Steering Committee has also been established and the first meeting was held during the Project Launch on November 20, 2019. 10. As of May 1, 2020, there are no overdue Interim Financial Reports (IFRs) or Financial Audits. There is substantial compliance with legal covenants, and the Project Operations Manual that includes the annual workplan and budget is expected soon. 11. Since effectiveness, environmental and social risk management, via the Project Environmental and Social Management Framework (ESMF) and Environmental and Social Management Plan (ESMP), has been satisfactory. There has been no design work or physical works to date and no grievances or environmental, health or safety incidents. The environmental and social risks are being managed adequately through the services of the international and national safeguards advisers housed in the CIU, who support the entire FSM World Bank-funded portfolio. The Grievance Redress Mechanism (GRM) has been publicly advertised on the DoTC&I and DoFA websites. Page 7 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) 12. Rationale for AF. This AF replenishes the funds reallocated to the CERC to enable continuation of FSMIP. 13. Triggering Paragraph 12, Section III of the World Bank Policy. As the funds for this AF are being sourced from the FTCF, Paragraph 12, Section III of the World Bank Policy has been triggered to allow processing of the AF following the condensed procedures for situations of urgent need as part of the emergency response to the COVID-19 pandemic. However, as the AF is for replenishment of an amount equal to the funds reallocated to the CERC, and the mandatory direct payment process did not apply to the original project, an exemption from the mandatory direct payment which results from triggering Paragraph 12 for condensed procedures has been approved by World Bank Management. 3 II. DESCRIPTION OF ADDITIONAL FINANCING 14. Changes to Components and Financing. An ex-post restructuring of FSMIP is to be undertaken due to the triggering of the CERC. The AF will not change the original objectives, design, components or activities; however, the reallocation of uncommitted funds from Component 1 (disbursement Category 2) to the CERC (Component 4, disbursement Category 3) will enable the procurement of medical equipment, PPE, and pharmaceuticals to support FSM’s preparedness and response to the COVID-19 pandemic. 4 The AF will replenish Component 1 (disbursement Category 2) to bridge the financing gap created by the reallocation to the CERC, and therefore the original allocation for disbursement Category 1 will remain the same. The scope of the changes is as follows: a. There are no changes to the PDO; b. The results framework will be updated, including the addition of a new intermediate-level indicator: “CERC-related procurement packages completed on time as per the procurement plan (percentage)”; c. SDR1.9 million (US$2.5 million equivalent) will be reallocated to disbursement Category 3 (emergency expenditures under Part 4 of the Project) to cover the CERC activities; and, d. SDR1.9 million (US$2.5 million equivalent) of additional financing will be provided to disbursement Category 2 (Component 1) to bridge the financing gap created by the reallocation of uncommitted funds to the CERC. 15. Results Framework. The results framework will be updated to include the new intermediate-level indicator: “CERC-related procurement packages completed on time as per the procurement plan (percentage)”. This indicator captures the PDO, is within the capacity of the implementing agency to monitor and report on, and it is also to an extent within the control of the implementing agency to improve performance. Other aspects of CERC progress related to the COVID-19 preparedness and response will be further tracked through the Project Progress Reports. 3 Approval granted May 8, 2020. 4 Note: despite Section VI. ‘Summary Table of Changes’ the ex-post restructuring of FSMIP does not seek approval for any change in the safeguards policies. The only change has been to update the text in relevant sections of the Integrated Safeguards Data Sheet (ISDS) to include additional information related to COVID-19. Page 8 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) Table 1. Changes to Component Allocations Original Allocations (US$ Revised Allocations (US$ Component mil. equivalent) mil. equivalent) National Regional National Regional FCTF FCTF IDA IDA IDA IDA Component 1: Maritime 2.69 17.81 0.00 0.19 17.81 2.50 Infrastructure Component 2: Maritime 0.99 6.56 0.00 0.99 6.56 0.00 Safety and Security Component 3: Technical 5.95 4.50 0.00 5.95 4.50 0.00 Assistance for Port Planning and Project Management Component 4: Contingent 0.00 0.00 0.00 2.50 0.00 0.00 Emergency Response TOTAL 38.49 40.99 Table 2. Eligible Expenditures Amount of the Amount of the Amount of the Original Percentage of Financing Additional Financing Expenditures to Allocated Grant Allocated Allocated be Financed Category (expressed in (expressed in (expressed in (inclusive of SDR) SDR) SDR) Taxes) Before After reallocation reallocation (1) Goods, non-consulting services, consulting services, Operating Costs, and Training and 4,750,000 4,750,000 0 100% Workshops for Part 2.4(c)(i), 3.1, 3.4, and 3.7 of the Project (2) Goods, works, non- consulting services, consulting services, Operating Costs, and 22,130,000 20,230,000 1,900,000 100% Training and Workshops for Parts 1, 2.1, 2.2, 2.3, 2.4(a) and (b), 2.4(c)(ii) – (v), 3.2, Page 9 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) 3.3, 3.5, 3.6, 3.8 and 3.9 of the Project (3) Emergency Expenditures 0 1,900,000 0 100% under Part 4 of the Project (4) Refund of Preparation Amount payable Advance pursuant to 720,000 720,000 0 Section 2.07(a) of the General Conditions TOTAL AMOUNT 27,600,000 27,600,000 1,900,000 16. Implementation Arrangements. There are no changes to the implementation arrangements for the Project. As agreed in the approved CERC Operations Manual 5 and the Financing Agreement for FSMIP, the implementing agency for the CERC-financed EAP is the Department for Environment, Climate Change and Emergency Management (DECEM). DECEM will receive technical support from the COVID-19 Task Force. 6 The COVID-19 Task Force, alongside the Department of Health and Social Affairs (DHSA) are being guided by the COVID-19 Response Framework, a contingency plan that combines all the needs for FSM with inputs from state health colleagues. DECEM will ensure DHSA participation—at no lower than Assistant Secretary level—in decisions related to planning, monitoring and reporting of CERC-financed activities. The activities in the EAP will be delivered in the timeframe of 12 months from the day of the EAP approval. 17. Alignment with the World Bank’s Strategic Priorities. The proposed changes remain aligned with World Bank Group strategic priorities, particularly the World Bank Group’s mission to end extreme poverty and boost shared prosperity, by facilitating connectivity necessary for food imports and distribution, access to essential infrastructure and services, and the trade of basic goods, as well as building resilience to extreme weather events and improving the reliability of the transport network. This is vital for poverty alleviation given evidence of a strong relationship between extreme poverty and lack of accessibility and mobility. The Project continues to be focused on improving the safety and climate resilience of maritime infrastructure and operations, which is consistent with the World Bank’s Regional Partnership Framework for Nine Pacific Island Countries (FY2017-FY2023) (Report No 120479), particularly the focus areas: (i) fully exploiting the available economic opportunities; (ii) enhancing access to employment opportunities for all; (iii) protecting incomes and livelihoods; and, (iv) strengthening the enablers of growth and opportunities (macro-economic management, infrastructure and addressing knowledge gaps). Improved port and maritime services facilitate better functioning transshipment services, thereby enhancing access to economic opportunities. Without a well-functioning maritime sector, livelihoods could be compromised, especially since FSM imports much of its food, pharmaceuticals and fuel. Strategic Plans (to be completed under Component 3.4), also support the Regional Partnership Framework focus area (iv) by creating more reliable access to maritime infrastructure, and by improving the safety, reliability and resilience of the services provided. The investments and reforms included within the Project will continue to contribute to enhancing access to employment opportunities and social services, which will help protect incomes and allow people to exploit the available economic opportunities. This AF allows the Project to continue to deliver these activities in alignment 5 The CERC Operations Manual is currently in place and has been adopted by the Government of FSM. 6 The Task Force is chaired by the Secretary of Finance and the membership consists of representatives from Cabinet, Private Sector, State Government representatives and Development Partners. Page 10 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) with the Regional Partnership Framework. Finally, the scope of the activities identified in the EAP and financed through the CERC are fully aligned with the objectives of the FTCF. III. KEY RISKS 18. Overall risk rating remains Substantial. The risks to the Project remain largely the same as when assessed during the preparation of the original Project. The main concerns remain: (i) institutional capacity risk; (ii) fiduciary risk; and, (iii) environmental and social risk, all rated as Substantial, as noted below. To mitigate these risks, the Government of FSM is developing the capacity of the CIU within DoFA by financing additional staff through FSMIP in core implementation functions, including but not limited to procurement and financial management. The CIU has two safeguards specialists with capacity to implement environmental and social mitigation and monitoring for the FSMIP project including the CERC component. FSMIP is also addressing institutional capacity constraints through the creation of the PIU that is providing technical advisory support to DoTC&I. For further details on these risks and mitigation measures, please refer to the original Project Appraisal Document. 19. Institutional capacity risk remains Substantial due to thin capacity. Implementation capacity support continues to be provided to Implementing Agencies of the Project through the CIU. With the activation of the CERC to address a health emergency, DECEM will rely on technical support from the COVID-19 Task Force, strong inter-departmental support from DOFA and DHSA for successful implementation, and project management support from the CIU. Both the CIU and PIU remain in place and continue to support the implementation of FSMIP. 20. Fiduciary risk remains Substantial due to capacity shortages, particularly related to procurement. In addition to the risks identified during appraisal of the original project, the major risks to procurement under Component 4 are failed procurement due to lack of adequate global supply of essential medical consumables and equipment needed to address the health emergency, as there is significant disruption in the supply chain, especially for PPE. Travel restrictions will also affect the other FSMIP components and could lead to disputes between contractors and the Employer, as they may have different interpretations as to the role played by COVID- 19 in inevitable delays. To help mitigate this risk, the World Bank will coordinate closely with United Nations agencies, such as the United Nations Office for Project Services (UNOPS), that have established systems for procuring medical supplies. In addition, to mitigate risks associated with COVID-19 and travel restrictions, the Government of FSM has reviewed activities for FSMIP that are currently under implementation or were soon to be implemented. Activities where work can be completed remotely are being prioritized. Concurrently, timelines for activities that require in-country action are being recalibrated to allow mobilization of contractors and consultants following the resolution of the current global pandemic and easing of the current travel restrictions. 21. Environmental and social risk remain Substantial due to the overall social risk, including the Gender Based Violence (GBV) risk. New risks relate to the occupational and community health and safety of using goods purchased under the Project and the safe and proper disposal of hazardous and non-hazardous medical waste. These risks will be managed through the Infection Control Procedures and Waste Management Plan within the CERC ESMF. The CIU safeguards team has two specialists, including one specialist in-country full time and one specialist who will return to Pohnpei once travel restrictions have lifted. The team has adequate capacity to implement the CERC ESMF and conduct awareness raising, capacity building and due diligence monitoring on the implementation of mitigation measures through both remote and in-person methods. 22. Climate screening. FSMIP was assessed using the World Bank’s Climate and Disaster Risk Screening Tool Page 11 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) and the identified concerns remain the same. IV. APPRAISAL SUMMARY A. Technical and Economic Analysis 23. The proposed activities under the AF to strengthen FSM’s COVID-19 preparedness and response will have no impact on the technical appraisal of the original Maritime Investment Project. The proposed activities under the CERC reflect FSM’s efforts to implement the FSM COVID-19 response. Activities identified by FSM as priorities for the health sector focus on the procurement of pharmaceuticals, medical equipment and PPE. The remaining amount from the US$2.5 million allocated to the CERC is set aside for insurance, freight and handling costs, administration and indirect costs and contingency. These activities will support efforts to strengthen FSM’s health sector overall, boosting the country’s capacity to meet the needs of the population into the future and reducing the risk of additional pressures on the health sector from potential COVID-19 infections. 24. There are no changes to the prior economic analysis of the Project. The SDR 1.9 million (US$2.5 million equivalent) of additional financing will be provided to disbursement Category 2 (Component 1) to bridge the financing gap created by the reallocation of uncommitted funds to the CERC, and there will therefore be no changes to the original scope of the Project or activities originally envisaged. B. Financial Management 25. The Financial Management (FM) and disbursement arrangements for FSMIP will apply and no changes are proposed as part of the AF. This includes the existing institutional structure in the CIU to carry out the Project’s FM and disbursement functions with regards to funds flow and accountabilities for financial reporting. The existing FM staff in the CIU will continue to be responsible for monitoring and reporting of the status of Project funds including AF. The financial reporting and audit requirements remain unchanged. Semester IFRs are required to be submitted to the World Bank no later than 45 days after the end of each semester, including status of overall remaining funds. The audit of Project funds will be incorporated in the National Government Accounts and hence will be disclosed as a note to the accounts, with submission to the World Bank no later than nine months after the end of each fiscal year and subject to disclosure as per the World Bank’s Policy on Access to Information. There are no outstanding IFRs or audit reports under the Project. 26. No separate designated account (DA) will be established for the CERC component and the existing designated account already established under the Project will be used to receive funds from both the original and the additional financing; the ceiling of the current DA and minimum application size will remain the same. However, the Disbursement and Financial Information Letter (DFIL) will be amended to include both IDA original and additional financing, and updates on the DA arrangements and minimum value of applications. C. Procurement 27. There are no changes to the procurement arrangements for the proposed AF. The Project will continue to follow the World Bank Procurement Regulations for IPF Borrowers dated July 2016, revised November 2017 and August 2018. The Systematic Tracking of Exchanges in Procurement (STEP) application will be used to prepare, clear, and update Procurement Plans and conduct all procurement transactions for the AF activities. Accordingly, Page 12 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) all the procurement activities for the AF will be entered, tracked and monitored online through STEP. On the ground support will be provided by the CIU’s Procurement Specialist with the assistance of a pool of procurement specialists as necessary while the World Bank is also available to provide further support, such as through Hands- on Expanded Implementation Support (HEIS), if requested. D. Social (including Safeguards) 28. The original Project was classified as Category B. There is no change to the classification, as the proposed activities funded by the reallocation from Component 1 to the CERC are limited to the purchase of goods, and therefore no land access issues are anticipated. However, the use and disposal of medical equipment, PPE and pharmaceuticals will have clear implications for Occupational Health and Safety (OHS). Issues related to OHS at health care facilities will need to be carefully managed and monitored. These include but are not limited to first aid services, sanitation and hygiene at the workplace, and proper use and disposal of medical equipment and PPE. Clear provisions for OHS, specifically related to the use and disposal of medical equipment, PPE and pharmaceuticals are included in the CERC ESMF. 29. Extensive national and state stakeholder consultations, workshops and formal and informal meetings were undertaken during the preparation of the FSMIP ESMF, including for the CERC, as well as during the preparation of the CERC ESMF. The FSMIP Stakeholder Engagement Plan (SEP) will be updated on activation of the CERC to address the additional stakeholders related to the CERC activities. The GRM developed for FSMIP has been updated for the needs of the CERC to include the nominated manager of the CERC at each State. 30. Citizen Engagement. The Project will continue to monitor citizen engagement through the beneficiary feedback indicator: grievances registered related to delivery of project benefits that are addressed (percentage). In addition, as noted, consultations were held during preparation to help inform the Project, with the records contained in the FSMIP ESMF, as well as the CERC ESMF. Information on the GRM and the SEP is supplied in the FSMIP and CERC ESMFs. 31. Gender. The World Bank Gender Strategy (FY16 – FY23) and the Transport Global Practice Note (FY17 – FY20) 7 seek to enhance women’s agency and reduce gender gaps. FSMIP supports women and will address two gender-focused issues including: (i) enhancing employment opportunities for women; and, (ii) strengthening GBV and human trafficking prevention and response at maritime facilities. The female labor force participation rate in FSM is 48.4 percent compared to 66.1 percent for men. FSMIP will develop and implement a set of enabling policies and practices to help women enter and progress through maritime careers. The increase in the percentage of women employed in skilled positions by FSMIP on Sea Ports as a result of project activities will be measured through an intermediate results indicator. E. Environment (including Safeguards) 32. The original Project was classified as Category B. There is no change to the classification, as the proposed activities funded by the reallocation from Component 1 to the CERC are limited to the purchase of goods, and the impact and scope of environmental risk due to the use and disposal of medical equipment, PPE and 7 Transport Global Practice’s Business Plan for FY17-20 to support the implementation of the World Bank Group Gender Strategy. Page 13 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) pharmaceuticals will not increase the risk classification of the original Project. Risks relating to the safe and proper disposal of hazardous and non-hazardous medical waste will be managed through the Infection Control Procedures and Waste Management Plan within the CERC ESMF. The CERC ESMF is consistent with the Project ESMF and has been disclosed on the DoTC&I and DoFA websites. 8 V. WORLD BANK GRIEVANCE REDRESS 33. World Bank Grievance Redress Service. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported Project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects- operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org 8 https://tci.gov.fm/documents/pmu/maritime-investment-project/FSMIP-ESMF-CERC-COVID-19-Final- 20200430.pdf http://www.dofa.gov.fm/wp-content/uploads/2020/05/FSMIP-ESMF-CERC-COVID-19-Final-20200430.pdf Page 14 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) VI SUMMARY TABLE OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Reallocation between Disbursement Categories ✔ Safeguard Policies Triggered ✔ Implementing Agency ✔ Project's Development Objectives ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Procurement ✔ Implementation Schedule ✔ VII DETAILED CHANGE(S) COMPONENTS Current Component Name Current Cost Action Proposed Component Proposed Cost (US$, (US$, millions) Name millions) Maritime Infrastructure 20,500,000.00 No Change Maritime Infrastructure 20,500,000.00 Maritime Safety and 7,550,000.00 No Change Maritime Safety and 7,550,000.00 Security Security Technical Assistance for Port 10,440,000.00 No Change Technical Assistance for 10,440,000.00 Planning and Project Port Planning and Management Project Management Page 15 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) Contingent Emergency 0.00 Revised Contingent Emergency 2,500,000.00 Response Component Response Component TOTAL 38,490,000.00 40,990,000.00 REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed REALLOCATION NEW IDA-D4500-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: G NCS CS OC TN 2.4ci, 3.1, 3.4,3.7 4,750,000.00 165,044.54 4,750,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: G WS NCS CS OC TN - DISB NOTE 20,230,000.00 0.00 20,230,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: EMERGENCY EXPENDITURES PT 4 1,900,000.00 0.00 1,900,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: REFUND PR PREPARATION ADVANCE 720,000.00 0.00 720,000.00 Total 27,600,000.00 165,044.54 27,600,000.00 Expected Disbursements (in US$) DISBURSTBL Fiscal Year Annual Cumulative 2019 0.00 0.00 2020 3,225,100.82 3,225,100.82 2021 4,795,284.77 8,020,385.59 2022 7,158,015.10 15,178,400.69 2023 9,060,909.84 24,239,310.53 Page 16 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) 2024 13,015,059.90 37,254,370.43 2025 3,735,629.57 40,990,000.00 2026 0.00 40,990,000.00 2027 0.00 40,990,000.00 SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Latest ISR Rating Current Rating Political and Governance  Moderate  Moderate Macroeconomic  Moderate  Moderate Sector Strategies and Policies  Moderate  Moderate Technical Design of Project or Program  Moderate  Moderate Institutional Capacity for Implementation and  Substantial  Substantial Sustainability Fiduciary  Substantial  Substantial Environment and Social  Substantial  Substantial Stakeholders  Low  Low Other Overall  Substantial  Substantial Safguard_Table COMPLIANCE Change in Safeguard Policies Triggered Yes Safeguard Policies Triggered Current Proposed Environmental Assessment OP/BP Yes Yes 4.01 Performance Standards for Private No No Sector Activities OP/BP 4.03 Natural Habitats OP/BP 4.04 Yes Yes Forests OP/BP 4.36 No No Page 17 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) Pest Management OP 4.09 No No Physical Cultural Resources OP/BP No No 4.11 Indigenous Peoples OP/BP 4.10 Yes Yes Involuntary Resettlement OP/BP 4.12 No No Safety of Dams OP/BP 4.37 No No Projects on International Waterways No No OP/BP 7.50 Projects in Disputed Areas OP/BP 7.60 No No LEGAL COVENANTS2 LEGAL COVENANTS – FSM Maritime Investment Project Additional Financing (P174075) Sections and Description OPS LEGAL CONVENANT CHILD NODATA No information available Conditions Page 18 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) VIII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Micronesia, Federated States of RESULT NO PDO FSM Maritime Investment Project Additional Financing Project Development Objective(s) To improve the safety, efficiency and climate resilience of maritime infrastructure and operations in the Recipient's territory, and in the event of an Eligible Crisis or Emergency, to provide an immediate response to the Eligible Crisis or Emergency. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Efficiency Reduction in cargo vessel turnaround times at project 1,620.00 1,620.00 1,620.00 1,620.00 1,600.00 1,590.00 port(s) (Minutes) Increase in container yard productivity at project port(s) 0.00 0.00 0.00 0.00 10.00 10.00 (Percentage) Safety and security Project ports fully compliant with ISPS requirements 0.00 0.00 0.00 2.00 4.00 4.00 (Number) Page 19 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Climate resilience Project ports rehabilitated with at least one climate resilience 0.00 0.00 0.00 0.00 2.00 4.00 measure (Number) Ports with sectoral and contingency planning tools that 0.00 0.00 4.00 4.00 4.00 4.00 address natural disasters and climate change (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Maritime Infrastructure Area of cargo yard hardened at Pohnpei and Chuuk Ports 0.00 0.00 0.00 0.00 11,379.00 11,379.00 (Square Meter(m2)) Number of project ports with drainage measures 0.00 0.00 0.00 0.00 2.00 4.00 implemented (Number) Energy efficiency recommendations 0.00 0.00 0.00 0.00 2.00 4.00 implemented (Number) Maritime Safety and Security ISPS recommendations 0.00 0.00 0.00 20.00 50.00 100.00 implemented against identified Page 20 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 shortcomings (Percentage) Project ports with safety solutions implemented 0.00 0.00 0.00 2.00 3.00 4.00 (Number) FSMIP implementation of SOP on trafficking referral service No Yes Yes Yes Yes Yes (Yes/No) Women employed by FSMIP on Sea Ports (Percentage) 0.00 0.00 5.00 10.00 15.00 15.00 Percentage of contractor staff trained on GBV & Codes of 0.00 100.00 100.00 100.00 100.00 100.00 Conduct (Percentage) Citizen Engagement Grievances registered related to delivery of project benefits 0.00 100.00 100.00 100.00 100.00 100.00 that are addressed (Percentage) Contingent Emergency Response Component Adoption of a CERC manual given the risk of natural No Yes Yes Yes Yes Yes disaster (Yes/No) Rationale: Action: This indicator has been The indicator has been updated as the CERC manual has now been adopted and is in place Revised CERC-related procurement packages completed on time as per the procurement plan 0.00 0.00 100.00 100.00 100.00 100.00 (Percentage) Page 21 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Rationale: Action: This indicator is New A measure of timeliness of procurement of items in EAP for COVID-19 response IO Table SPACE Monitoring & Evaluation Plan: PDO Indicators Mapped Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Reduction in cargo vessel turnaround times with a Project DoTC&I (Pohnpei); Port target reduction of 30 Every 6 Measurement at Project Reduction in cargo vessel turnaround progress Authority or relevant minutes. Starts from the months port(s) times at project port(s) reports State Department time of pilot boarding to vessel departure from Weno Port. Container yard productivity at Pohnpei and Chuuk Project Every 6 Measurement at Project Increase in container yard productivity at Ports is the number of progress DoTC&I months port(s) project port(s) containers moved per reports hour. The current baseline is 10 moves/hour. Project Cumulative and includes Every 6 Project ports fully compliant with ISPS progress Independent assessment DoTC&I Pohnpei, Chuuk, Kosrae months requirements reports and Yap Ports. Project ports rehabilitated with at least A cumulative measure of Every 6 Project Stocktake conducted DoTC&I one climate resilience measure repairs to existing berths or months progress confirming climate Page 22 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) apron facilities, including to reports resilient measures in underwater quay detailed designs were structures, installation of implemented drainage systems, improvements to anchoring and fendering systems, acquisition of floating pontoons, SOPs for site management. Project Stocktake of strategic Ports with sectoral and contingency Every 6 Refers to strategic port progress plans and CERC-OM DoTC&I planning tools that address natural months plans and CERC manual. reports approved. disasters and climate change ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Mapped Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Square meters of cargo Project Every 6 Area of cargo yard hardened at Pohnpei yard hardened with progress Site inspection DoTC&I months and Chuuk Ports concrete, concrete blocks reports or pavement. Cumulative number of Project Every 6 Number of project ports with drainage drainage systems installed progress Site inspection DoTC&I months measures implemented or improved at Pohnpei reports and Chuuk Ports. Number of energy Stocktake based on site Project DoTC&I (Pohnpei); Port efficiency Every 6 inspection to ensure Energy efficiency recommendations progress Authority or relevant recommendations months implementation of implemented reports State Department implemented, such as PV recommendations systems, switch to LED Page 23 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) lighting systems. Measures implemented at Stocktake of measures Project ports to comply Project Every 6 employed that ISPS recommendations implemented with ISPS requirements, progress DoTC&I months address identified against identified shortcomings such as fencing, lighting, reports shortcomings CCTV, back-up generator, hardware/software. Stocktake of measures employed that were Cumulative number of Project Every 6 identified in the Project ports with safety solutions AtoNs, fenders, bollards, progress DoTC&I months Maritime Safety and implemented ladders and cleats installed reports Security Needs or repaired. Assessment Project Every 6 FSMIP implementation of SOP on Implementation of SOP on progress Verification assessment DoJ months trafficking referral service trafficking referral service reports Increase in percentage of women employed in skilled positions, such as technical Project Every 6 Stocktake of women operations, security, progress DoTC&I Women employed by FSMIP on Sea Ports months employed at the ports administration and reports management as a result of project activities e.g., technical training. Project Percentage of contractor Every 6 Percentage of contractor staff trained on progress Stocktake assessment DoJ; DoTC&I staff trained on GBV & months GBV & Codes of Conduct reports Codes of Conduct Page 24 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) Project Use of GRM system that Grievances registered related to delivery A measure of citizen Continuous progress tracks grievances lodged DoTC&I of project benefits that are addressed engagement reports and addressed Verification of receipt of Project WB No Objection to Every 6 Adoption of a CERC manual given the risk progress FSMIP CERC-OM and to DECEM Adoption of a CERC manual months of natural disaster reports any updates to the manual Stocktake of EAP Project CERC-related procurement packages A measure of timeliness of Every 6 implementation and progress DECEM; DoFA completed on time as per the procurement of items in months review of procurement reports procurement plan EAP for COVID-19 response transactions ME IO Table SPACE Page 25 of 26 The World Bank FSM Maritime Investment Project Additional Financing (P174075) Page 26 of 26