Document of The World Bank Report No: 70822-RU RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF HYDROMETEROLOGICAL SYSTEM MODERNIZATION PROJECT LOAN NO.4769 RU DATE OF BOARD APPROVAL: MARCH 17, 2005 TO THE RUSSIAN FEDERATION July 19, 2012 1 2 ABBREVIATIONS AND ACRONYMS BEA Bureau for Economic Analyses IBRD International Bank for Reconstruction and Development MOF Ministry of Finance PIU Project Implementation Unit PDO Project Development Objective RHM Russian Federation Hydrometeorological Service (Roshydromet) QCBS Quality and Cost-based Selection 3 Regional Vice President: Philippe Le Houerou Country Director: Michal J. Rutkowski Sector Manager / Director: Kulsum Ahmed Task Team Leader: Adriana J. Damianova 4 RUSSIAN FEDERATION HYDROMETEROLOGICAL SYSTEM MODERNIZATION PROJECT P082239 CONTENTS A. SUMMARY ........................................................................................................................... 4 B. PROJECT STATUS ............................................................................................................. 4 C. PROPOSED CHANGES ...................................................................................................... 5 5 RUSSIAN FEDERATION: HYDROMETEROLOGICAL SYSTEM MODERNIZATION PROJECT RESTRUCTURING PAPER A. SUMMARY The proposed changes include: (a) a reallocation of Loan proceeds, and (b) a third extension of the Project’s Closing Date from August 31, 2012 to May 31, 2013. These changes are necessary to allow savings from the International Bank for Reconstruction and Development (IBRD) Loan proceeds to be utilized for the preparation of the proposed Second National Hydrometeorological System (Roshydromet) Modernization Project. The restructuring does not involve any change in the Project Development Objective (PDO) or associated outcome targets. B. PROJECT STATUS Currently, project implementation remains satisfactory. There are no major implementation risks towards completion of all project activities. The PDO and development outcome indicators have been met or exceeded. Indicators such as increased accuracy and lead time for national and regional forecasts are achieved and as a result Russia’s Hydrometeorological Service (Roshydromet, RHM) forecasting capacity is getting closer to that of leading world forecasting centers such as the European Centre for Medium-Range Weather Forecasts and the US National Center for Environmental Prediction. Significant improvements of Roshydromet’s emergency planning and preparedness have been achieved through the establishment of situational centers in Roshydromet Headquarters and the regions, resulting in more effective coordination and cooperation among respective authorities during emergency situations. The cumulative effect of the project resulted in improved lead time for warnings of dangerous weather events delivered to local authorities, the Ministry of Emergencies and media. The average timeliness increased from the baseline of 0.5 hour to 1 hour for flash floods, and from 1 hour to 1.7 hours for severe storms. Activities for institutional strengthening, information dissemination and emergency preparedness including development and implementation of automated management system in Roshydromet’s Headquarters, its regional branches and centers, and research institutes; methodological support and development of operational guidelines for modernization of observation networks, supporting finance and planning; a program of staff training; upgrading the equipment of 6 regional training centers, training and retraining of employees, have been fully completed. 6 Until end June 2012, 98.97 per cent of the loan proceeds (US$79.08 million) have been disbursed and 87 contracts have been fully implemented. There are 4 remaining activities under implementation with total commitment of US$ 535,530. Active contracts include: (i) RHM/3/A.1.i – Delivery of additional equipment to expand the data storage system of the computer complex of the Main Computer Center of Roshydromet; (ii) RHM/1/B.2.a.ii – Additional supply and installation of the aerological computer complexes; (iii) RHM/1/B.2.c – Supply of gas analyzers and control systems for gas generating plants; and (iv) RHM/1/C.4 – Review of Roshydromet’s subsystems for environmental monitoring. The preparation of the Second National Hydromet Modernization Project is ongoing however the activities related to the preparation are behind schedule. Procurement of 11 consultancies of the agreed Action Plan has been completed. Selection of consultants for the remaining two large consultancies under component D (D5a and D5i) is completed pending contract signing. It is expected that these consultancies will start in July 2012. C. PROPOSED CHANGES Reallocation: To date available estimated loan funds are in the amount of US$ 320,707. Loan savings are the result of effective and competitive procurement and lower than anticipated spending of the physical and price contingencies. Specifically, a reallocation of funds is proposed to use the balance in category “Works� and category “Training� to category “Operating costs�. All originally planned activities in these categories have been procured. The reallocation of available loan savings in category “Operating Costs� will be used to finance the additional operational cost which will be incurred by the Project Implementation Unit (PIU) to complete project preparation including preparation of Terms of Reference and tender documents for at least15 per cent of the loan amount for the Second National Roshydromet Modernization Project and therefore to ensure timely implementation upon project effectiveness. The reallocation of Loan proceeds between the different categories of expenditure shall be as follows: (i) Reallocate the amount of US$85,000 from category (2) “Works� to category (6) �Operating costs�, and (ii) Reallocate the amount of US$50,000 from category (4) “Training� to category (6) “Operating Costs� The following table shows the current and revised categories, allocations and financing percentage: Category Allocation (expressed in % of Expenditure to 7 Dollars) be Financed Current Revised Current Revised Current Revised 1.Goods including 1. Goods including 71,418,810.00 71,418,810.00 60% 60% inland transportation inland transportation before before and related insurance and related insurance May 1 May 1 and technical services and technical services 2009 and 2009 and 40% 40% thereafter thereafter 2. Works 2. Works 1,693,000. 00 1,608,000.00 60% 60% before before May 1, May 1, 2009 and 2009 and 40% 40% thereafter thereafter 3. Consultants’ 3. Consultants’ 2,795,529.68 2,795,529.68 60% 60% services Services before before May 1, May 1, 2009 and 2009 and 40% 40% thereafter thereafter 4. Training 4. Training 905,440.00 855,440.00 60% 60% before before May 1, May 1, 2009 and 2009 and 40% 40% thereafter thereafter 5. Capacity Building 5. Capacity Building 52,210.00 52,210.00 60% 60% Program Payments Program Payments before before May 1, May 1, 2009 and 2009 and 40% 40% thereafter thereafter 6. Operating costs 6. Operating costs 2,840,000.00 2,975,000.00 60% 60% before before May 1, May 1, 2009 and 2009 and 40% 40% thereafter thereafter 7. Preparation of the 7. Preparation of the 200,000 200,000 20% 20% Proposed National Proposed National Hydromet Hydromet Modernization Project Modernization Project Total Total 79,904,989.68 79,904,989.68 Extension of the Closing Date: A new closing date of the Project of May 31, 2013 is proposed. This is the third extension that would represent a cumulative extension of thirty one months from the original closing date. This new closing date has been requested by Roshydromet and MOF to allow for completion of the remaining actions related to the ongoing preparation of the Second National Hydromet Modernization Project. The requirements for an extension of the closing date are met: (i) The project objective continues to be achievable; (ii) the performance of the Borrower continues to be satisfactory; (iii) the Borrower continues to implement the agreed Action Plan for preparation of the 8 Second National Hydromet Modernization Project and is committed to complete preparation in time; and (iv) there are no outstanding audit reports for the Project. 9