Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004979 IMPLEMENTATION COMPLETION AND RESULTS REPORT 7991 - AR ON A LOAN/CREDIT/GRANT IN THE AMOUNT OF US$400 MILLION TO THE ARGENTINE REPUBLIC FOR THE Norte Grande Road Infrastructure June 8, 2020 (This ICR repleces the version publiched in the Board Operations System on June 15, 2020. Quality of Supervision was added, now paragraphs 91 and 92) Transport Global Practice Latin America And Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective May 20, 2020) Currency Unit = ARS ARS= US$0.01428 FISCAL YEAR July 1 - June 30 Regional Vice President: J. Humberto Lopez Country Director: Jordan Z. Schwartz Regional Director: Franz R. Drees-Gross Practice Manager: Bianca Bianchi Alves Veronica Ines Raffo, Liljana Sekerinska, Santiago Ezequiel Task Team Leader(s): Arias ICR Main Contributor: Liljana Sekerinska ABBREVIATIONS AND ACRONYMS CPF Country Partnership Framework DNV National Road Directorate (Dirección Nacional de Vialidad) DPV Provincial Road Directorate (Dirección Provincial de Vialidad) EDCA Standard Data System for Open Contracting EMP Environmental Management Plan ESMF Environmental and Social Management Framework FM Financial Management GDP Gross Domestic Product GOA Government of Argentina HDM Highway Development and Management HVS Heavy Vehicle Simulator ICPA Argentinean Portland Cement Institute (Instituto del Cemento Portland Argentino) IPF Indigenous Peoples Framework IPP Indigenous Peoples Plan LA Loan Agreement LPI Logistics Performance Index NPV Net Present Value PDO Project Development Objectives PIU Project Implementation Unit ROCKS Road Costs Knowledge System RONET Road Network Evaluation Tools UCPyPFE Executing Unit within Coordinating Unit for Programs and Projects with External Financing (Unidad Coordinadora de Programas y Proyectos con Financiamiento Externo) TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 6 A. CONTEXT AT APPRAISAL .........................................................................................................6 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ..................................... 10 II. OUTCOME .................................................................................................................... 13 A. RELEVANCE OF PDOs ............................................................................................................ 13 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 16 C. EFFICIENCY ........................................................................................................................... 19 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 20 E. OTHER OUTCOMES AND IMPACTS (IF ANY)............................................................................ 20 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 22 A. KEY FACTORS DURING PREPARATION ................................................................................... 22 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 23 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 25 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 25 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 26 C. BANK PERFORMANCE ........................................................................................................... 29 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 30 V. LESSONS AND RECOMMENDATIONS ............................................................................. 31 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 33 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 42 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 45 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 46 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 57 ANNEX 6. INSTITUTIONAL STRENGTHENING ACTIVITIES ....................................................... 66 ANNEX 7. LIST OF DOCUMENTS USED .................................................................................. 71 The World Bank Norte Grande Road Infrastructure (P120198) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P120198 Norte Grande Road Infrastructure Country Financing Instrument Argentina Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency ARGENTINE REPUBLIC Dirección Nacional de Vialidad (DNV) Project Development Objective (PDO) Original PDO The development objective of the proposed project is to reduce transport costs for users of provincial roads along selected corridors of the Norte Grande provinces, through the improvement of the quality of those roads and the introduction of improved road asset management tools and methods. PDO as stated in the legal agreement The objective of the Project is to reduce transport costs for users of provincial roads along selected corridors of the provinces of the Norte Grande region, through the improvement of the quality of those roads and the introduction of improved road asset management tools and methods. Page 1 of 71 The World Bank Norte Grande Road Infrastructure (P120198) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 400,000,000 369,774,566 358,833,576 IBRD-79910 Total 400,000,000 369,774,566 358,833,576 Non-World Bank Financing 0 0 0 Borrower/Recipient 100,000,000 100,000,000 65,876,686 Total 100,000,000 100,000,000 65,876,686 Total Project Cost 500,000,000 469,774,566 424,710,262 KEY DATES FIN_TABLE_DAT Approval Effectiveness MTR Review Original Closing Actual Closing 20-Dec-2010 23-Dec-2011 17-Mar-2014 30-Jun-2016 31-Dec-2019 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 01-Sep-2014 232.05 Change in Results Framework 19-May-2016 307.50 Change in Loan Closing Date(s) 12-Apr-2018 321.25 Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Procurement 27-Jun-2019 356.62 Change in Results Framework Change in Loan Closing Date(s) Cancellation of Financing Reallocation between Disbursement Categories KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Satisfactory Substantial Page 2 of 71 The World Bank Norte Grande Road Infrastructure (P120198) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 21-Feb-2011 Satisfactory Satisfactory 0 02 27-Jul-2011 Satisfactory Satisfactory 0 03 30-Jan-2012 Satisfactory Satisfactory 20.00 04 25-Sep-2012 Satisfactory Satisfactory 45.98 05 14-Jun-2013 Moderately Satisfactory Moderately Satisfactory 90.45 06 31-Dec-2013 Moderately Satisfactory Moderately Satisfactory 202.52 07 12-Jul-2014 Moderately Satisfactory Moderately Satisfactory 232.05 08 22-Oct-2014 Moderately Satisfactory Moderately Satisfactory 256.22 09 01-May-2015 Moderately Satisfactory Moderately Satisfactory 297.14 10 24-Nov-2015 Moderately Satisfactory Moderately Satisfactory 306.89 11 27-May-2016 Moderately Satisfactory Moderately Satisfactory 307.50 12 27-Dec-2016 Moderately Satisfactory Moderately Satisfactory 307.50 13 29-Jun-2017 Moderately Satisfactory Moderately Satisfactory 307.50 14 22-Sep-2017 Moderately Satisfactory Moderately Satisfactory 307.50 15 02-Apr-2018 Moderately Satisfactory Moderately Satisfactory 321.25 16 17-Sep-2018 Moderately Satisfactory Moderately Satisfactory 331.25 17 24-Jan-2019 Moderately Satisfactory Moderately Satisfactory 351.44 18 28-May-2019 Moderately Satisfactory Moderately Satisfactory 351.61 19 02-Jan-2020 Moderately Satisfactory Moderately Satisfactory 357.83 Page 3 of 71 The World Bank Norte Grande Road Infrastructure (P120198) SECTORS AND THEMES Sectors Major Sector/Sector (%) Transportation 100 Public Administration - Transportation 8 Rural and Inter-Urban Roads 92 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 30 Trade 30 Trade Facilitation 30 Private Sector Development 17 Jobs 17 Job Creation 17 Urban and Rural Development 54 Urban Development 17 Urban Infrastructure and Service Delivery 17 Rural Development 37 Rural Infrastructure and service delivery 37 ADM STAFF Role At Approval At ICR Regional Vice President: Pamela Cox J. Humberto Lopez Country Director: Penelope J. Brook Jordan Z. Schwartz Director: Laura Tuck Franz R. Drees-Gross Practice Manager: Aurelio Menendez Bianca Bianchi Alves Veronica Ines Raffo, Liljana Task Team Leader(s): Veronica Ines Raffo Sekerinska, Santiago Ezequiel Arias Page 4 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ICR Contributing Author: Liljana Sekerinska Page 5 of 71 The World Bank Norte Grande Road Infrastructure (P120198) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Country Context 1. At the time of appraisal in 2010, Argentina was trying to sustain the dynamics of its economy, which was under pressures from the worldwide economic crisis and a domestic growth slowdown. Since the 2001 crisis 1, the government had maintained a strong focus on infrastructure investments not only as a key part of its countercyclical economic stimulus package, but also as the key mechanism to improve internal territorial development. The Government of Argentina’s (GoA) Strategic Plan for Territorial Development 2010-20162 set out two main objectives for its investment agenda: (i) consolidating market forces for the country’s inclusion in the global economy and (ii) mitigating isolation asymmetries in the development of disadvantaged regions and communities to ensure more equitable and sustainable growth for the country, particularly by bridging infrastructure deficits in poorer provinces. 2. Despite nation-wide declines in poverty, the poverty level in the Norte Grande region remained high. It was the poorest region in Argentina in terms of per capita income and one of its most marginalized and underdeveloped. The region included nine provinces covering one third of the national territory - Catamarca, Chaco, Corrientes, Formosa, Jujuy, Misiones, Tucumán, Salta and Santiago del Estero - and comprised about 7.5 million people or 21 percent of the population. Despite its size, it produced only 10 percent of GDP and 8 percent of the country’s total exports. Poverty stood at 48 percent of the population (3.6 million people), with 24.6 percent (1.85 million people) living in extreme poverty. Furthermore, eight of the nine Norte Grande provinces occupied the bottom eight spots on the World Bank’s Provincial Development Index, which compiled measures of poverty and deficits in social and basic infrastructure services for all twenty-four provinces in Argentina.3 3. To correct historical imbalances among regions and to narrow the social and economic divide between Norte Grande and the rest of the country, the GoA had been implementing since 2004 the Norte Grande Development and Integration Program,4 under the financing of international partner institutions. The Program covered the energy, transport, water and competitiveness sectors. The infrastructure investment program was considered key to overcome bottlenecks to competitiveness, tackle endemic poverty and regional inequalities, and enhance living standards. Sector context 4. At the project’s start, the Ministry of Federal Planning, Public Investments and Services (Ministerio de Planificación Federal, Inversion Publica y Servicios) was in charge of the transport sector in Argentina. 5 The Ministry included the Secretariat of Public Works (Obras Publicas), responsible for road network investments, and the National 1 In 2001/02, after over three years of economic contraction under a fixed exchange rate regime, Argentina suffered a large financial crisis that resulted in a sharp depreciation of the peso, a collapse of economic activity, a default on sovereign debt, and a spike in poverty and unemployment. 2 1816-2016 - Argentina del Bicentenario: Plan Estratégico Teritorial (cited in PAD). 3 A Provincial Development Index for Argentina. Working Technical Note. The World Bank 2010. 4 The Norte Grande Development and Integration Program was part of a government strategy for historical redress of this region. The Program included financing by international donors, including four operations by the Inter-American Development Bank totaling US$2.5 billion (IADB Loans No. 1843-OC/AR, AR-L1021, AR-L1013 and 1851-OC/AR), and an operation with CAF financing in Route 81 in Salta and Formosa. 5 As of December 2016, until project closing, the transport sector and the National Roads Directorate were under the Ministry of Transport, established by the Government 2015-2019. Page 6 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Roads Directorate (Dirección Nacional de Vialidad, DNV). The country’s road network of 630,000 kilometers (km) was classified based on the governmental jurisdictions and consisted of: a. National Road Network or Primary Network: 38,000 km, which linked main cities and provincial capitals, under the jurisdiction of the DNV. As the network’s backbone, 90% of it was paved. DNV worked under the policy guidance of the Ministry of Federal Planning, Public Investments and Services (and since December 2015, under the Ministry of Transportation). The national road network was funded under the budget of the DNV and funds from the Transport Infrastructure System Trust Fund. b. Provincial Road Network or Secondary Network: 191,000 km under the jurisdiction of 23 Provincial Road Directorates (Direcciones Provinciales de Vialidad, DPVs), working under the guidance of the respective Provincial Governments. Provincial roads feed into the national network, enabling economic activity and access to social service centers across the country’s territory. Only about 20% were paved; the remainder were gravel and dirt. c. Municipal Network: 410,000 km, managed by the Municipalities, including urban and rural roads. 5. The national and provincial road network carried over 70% of total traffic. While there was no significant variation in the quality of the national roads traversing the Norte Grande provinces and those in the rest of the country, the Norte Grande provinces fared worse in the quality of provincial roads. The graph below shows that Norte Grande had a significantly lower ratio of paved national and provincial roads per 1,000 inhabitants than other parts of the country. Investigations carried out for appraisal of provincial roads proposed for financing under the Project showed them to be in exceptionally poor condition, with an average International Roughness index (IRI) of 8.6. 6 These results reflected the extent to which investments in road infrastructure had bypassed this region. Figure 1. Road connectivity comparison between Norte Grande provinces and the rest of the Argentina Norte Grande Rest of the Country 2.42 2.36 1.6 1.6 1.32 1.15 Km of paved roads in Km of national roads km of paved provincial networks per 1000 inhabitants provincial roads per per 100 km2 1000 inhabitants 6. Despite its breadth and remoteness, the Norte Grande region remained productive, with great economic potential from both agricultural and industrial activities. Except for Catamarca, where the mining industry was dominant, the region was predominantly agricultural, with a large part of its output exported abroad or distributed via production chains to regional and national markets. The expansion of regional production and exports had exerted strains on the logistics and transport infrastructure. These became evident through increased congestion and reduced transport efficiency, translating into higher transportation costs for firms that were remote from the main agricultural commodity processing centers and major export destinations. A World Bank report in 20067 found that the average logistic costs for companies in the Northwest8 region were 50% higher than those for the other regions in the country. 6 An IRI above 4 puts a road in a category “poor condition”, while roads with an IRI below 3 are categorized as “good condition”, and “fair condition” is for roads with an IRI between 3 and 4. 7 World Bank (2006), “Argentina: El Desafio de reducer los costos logisticos ante el crecimiento del comercio exterior”. 8 The Northwest region includes all Norte Grande provinces and a one more – La Rioja. Page 7 of 71 The World Bank Norte Grande Road Infrastructure (P120198) 7. The provincial road sector was funded under the provincial budgets and by provincial/national shared revenue for roads raised through the diesel tax. At appraisal, Argentina’s DPVs received approximately US$77 million in shared revenue for roads each year. In comparison to other Provincial Road Directorates in Argentina, DPVs in the Norte Grande region lagged in the quality of their management processes and the efficiency of planning policies. DPVs in Norte Grande lacked capacity for strategically administering the road network and effectively addressing road safety issues, among other things. For example9, (i) many of these DPVs still relied heavily on force account for the execution of works, with their focus placed on administering inputs rather than performance and management of results;10 (ii) financial planning in the road sector was not adequately linked to investment plans; (iii) there was wide variation in terms of the size and composition of the workforce, relative to the total length of the network; (iv) there was a generalized lack of technical tools and information systems for upper management to strategically administer the road network; (v) coordinating mechanisms among the different areas (planning, engineering, construction, maintenance, supervision) to operate under results oriented frameworks were weak; (vi) road safety teams were nonexistent or required considerable strengthening to be effective; and (vii) most DPVs in this region required better equipment and targeted training to carry out their regular activities more efficiently (planning, prioritizing, and designing investment projects based on sound economic criteria, carrying out surveys on the network’s condition and traffic levels, controlling axle load, managing environmental and social issues, etc.). Theory of Change (Results Chain) 9 Project PAD, based on a general assessment of road management capacities amongst the road agencies. 10 The use of performance-based rehabilitation and maintenance contract system (CREMA) was introduced in Argentina at the national level in 1995. In the Norte Grande region, the only province that was using CREMA contracts for maintenance was Corrientes. Page 8 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Project Development Objectives (PDOs) 8. The project development objective (PDO) as stated in the Loan Agreement was “to reduce transport costs for users of provincial roads along selected corridors of the provinces of the Norte Grande region, through the improvement of the quality of those roads and the introduction of improved road asset management tools and methods”. There is one minor difference in the wording of the PDO between the Loan Agreement and the PAD; the LA refers to the “Norte Grande region”, while the PAD PDO calls it the “Norte Grande provinces” (the geographical scope is the same). Key Expected Outcomes and Outcome Indicators Table 1. Key Expected Outcomes and Outcome Indicators To reduce transport cost for users of provincial roads along selected corridors of the Norte Grande provinces through the improvement of the quality Percentage reduction in generalized travel costs on targeted roads, of those roads measured per vehicle-kilometer in constant US dollars using HDM4 (for light vehicles, omni-buses and heavy vehicles) Evolution of average network roughness on targeted provincial roads: (i) Rehabilitation and Reconstruction and (ii) Upgrading Quality of service measured through users’ perceptions through the introduction of improved Number of provinces in Norte Grande with strategic multi-annual road asset management tools and road maintenance plans and road database management systems in methods place Components 9. Component 1: Rehabilitation, Upgrading and Reconstruction of Provincial Roads (Total amount US$ 465 million, IBRD financing US$ 365 million): This component financed the rehabilitation, upgrading and reconstruction of selected roads (“sub-projects”) under the jurisdiction of provinces in the Norte Grande region (“Participating Provinces”11), including associated shoulders, sidewalks, drainage, masonry, signage, lighting and ancillary works plus road safety improvements. All nine provinces of the Norte Grande region were considered to be Participating Provinces. Three provinces of the total nine (Chaco, Tucuman and Corrientes) had identified eligible roads for funding at appraisal, totaling 212.85 km.12 11 “Participating Provinces” were defined in the Loan Agreement as “any of the Borrower’s political subdivisions, as per title Two of the Borrower’s 1994 Constitution, which exercise partial or total jurisdiction over a Subproject in the Norte Grande region”. 12 For a road segment to be considered eligible for financing under the project, it had to fulfill the following requirements: (i) presentation of a formal request and justification by a Norte Grande province that emphasizes the productive and poverty reduction impacts of the proposed work; (ii) proposed work section must be included in Argentina’s Federal Strategic Road Infrastructure Development Plan (EDIVIAR) and intersect with a provincial road or national road of similar or higher level of service; (iii) all technical, legal, institutional, economic, financial, social and environmental viability studies must have been carried out to the satisfaction of the implementing agency and the Bank; and (iv) an accompanying investment plan for the sustainability of the road asset when works are complete must be presented, including a commitment from the province to guarantee its maintenance as part of the Participation, Transfer and Maintenance Agreement (PTA) between the Federal Government and the beneficiary province. Page 9 of 71 The World Bank Norte Grande Road Infrastructure (P120198) 10. Component 2: Institutional Development and Project Management (Total amount US$ 34 million, IBRD financing US$ 34 million): (i) Institutional Development: financed basic measures to strengthen the institutional capacity of DPVs in the Norte Grande region, including improvements in their investment planning and management capabilities. The Project was to fund a case-by-case tailor-made strengthening program for each DPV of the nine Participating Provinces to support the preparation and implementation of comprehensive and efficient road management strategies and multi-year road maintenance programs. At a minimum, the goal was that, at the end of the project, five provinces would have the following: Road Asset Management Systems in place (with road inventory, condition and traffic data collected and entered into the system; as well as the use of economic decision models like HDM- 4 and RED); Strategic multi-annual road investment plans prepared (suggested five years), with yearly updates; and Road safety plans prepared (“basic framework measures”). (ii) Complementary Measures: It was anticipated that, in addition to the basic framework measures, the provinces would benefit from selecting the package of institutional support measures that best suited their situation, in consultation with the federal implementing unit. These complementary packages of measures would be chosen based on the results of the institutional strengthening diagnostics funded by the Inter-American Development Bank (IADB) for the Norte Grande provinces.13 Provinces could decide what types of support they would receive from the project (including whether to participate in both of the above subcomponents, or one). (iii) Project Management and Supervision: This subcomponent financed the strengthening of the operational, social and environmental supervision capacities of the Executing Unit within the Coordinating Unit for Programs and Projects with External Financing (Unidad Coordinadora de Programas y Proyectos con Financiamiento Externo) (UCPyPFE) and Participating Provinces to carry out their functions and responsibilities under the project, through the provision of tailored technical assistance and training in the preparation of potential road and institutional strengthening investments, including related feasibility studies, project designs, economic impact studies, social and environmental impact assessments, and sector strategic studies. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 11. The PDO was not revised. Following the 2014 mid-term review (MTR), the baselines and end targets for the Key Outcome Indicators were revised through the first restructuring approved on September 1, 2014 (Table 2). 13 Eligible activities contemplated included: (a) the acquisition of road data collection equipment, computer equipment, road asset management software, traffic equipment, and related training, (b) acquisition of road economic decision software and related training, (c) building or updating of DPV websites, (d) GIS based transport observatories, (e) preparation of multi-annual road investment plans and annual performance reports, (f) preparation of revised design standards documents, (g) non-consulting services for data collection, (h) technical assistance to review institutional framework, management and financing of provincial roads, current maintenance practices, and recommendations for improvement of the same, (i) technical assistance and equipment for quality control, (j) technical assistance and equipment for axle load control; and (k) training to provincial staff on social, environmental, fiduciary and road safety matters. Page 10 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Table 2. Revisions in the Baseline and Targets of Key Outcome Baselines Original Revised Original Revised Key Outcome Indicator Baseline Baseline Target Target Percentage reduction in generalized travel costs on targeted 0% 0% 21% 26% roads, measured per vehicle-kilometer in constant US dollars using HDM4 (i) for light vehicles (with base of US$0.28 per veh-km) Percentage reduction in generalized travel costs on targeted 0% 0% 37% 31% roads, measured per vehicle-kilometer in constant US dollars using HDM4 (ii) for omni-buses (with base of US$5.55 per veh-km) Percentage reduction in generalized travel costs on targeted 0% 0% 28% 29% roads, measured per vehicle-kilometer in constant US dollars using HDM4 (iii) for heavy vehicles (with base of US$ 1.60 per veh-km) Evolution of average network roughness14 on targeted 5.00 5.86 2.80 2.60 provincial roads (i) Rehabilitation and Reconstruction Evolution of average network roughness on targeted 8.90 8.86 2.60 2.30 provincial roads (ii) Upgrading Quality of service measured through user's perception n/a 11.28% Baseline Baseline +20% +40% Revised PDO Indicators 12. PDO indicators were not revised. Revised Components 13. The components were not revised. Other Changes Closing date extensions 14. The project’s closing date was extended cumulatively by 42 months through three restructurings: (i) The second restructuring (May 19, 2016) extended the project’s closing date by 23 months from June 30, 2016 to May 31, 2018; (ii) The third restructuring approved by the Regional Vice President (RVP) on April 12, 2018 provided a 13-month extension from May 31, 2018 to June 30, 2019 (approved by the RVP due to the cumulative 36-month extension of the project implementation period); and (iii) The fourth restructuring approved by the RVP on June 27, 2019 included a six-month closing date extension. 14 Measured with International Roughness Index (IRI) Page 11 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Financing plan (funding allocations and cancellation of funds) 15. An increase of the percentage of Bank financing for Category 1 “civil works under subprojects” from 80 percent to 100 percent effective retroactively from September 1, 2017 was introduced as part of the third restructuring (April 12, 2018). Later, a cancellation of funds (total of US$ 30,225,434, including US$ 12,612,329 from Component 1 and US$ 17,613,105 from Component 2) was carried out through the fourth restructuring (June 27, 2019). Changes in intermediate indicators 16. The intermediate indicator target for roads rehabilitated was reduced from 495 km to 400 km due to unit cost escalations, and the intermediate outcome indicator “Annual performance reports indicating results achieved by DPVs participating in the institutional development component prepared and publicly disseminated” (yes/no) was replaced by a new indicator, “Road Safety Plans developed in targeted provinces” (baseline: 0; target: 4), as part of the first restructuring, approved on September 1, 2014. Additional changes 17. The earlier Procurement and Consultant Guidelines were replaced by the Procurement Regulations for Investment Project Financing (IPF) Borrowers (July 2016 revised in November 2017) as part of the third restructuring (April 12, 2018). Rationale for Changes and Their Implication on the Original Theory of Change 18. The baseline and target values for the key outcome indicators (see Table 2) were recalculated based on all road segments that had been included in the project by the 2014 mid-term review (the baselines at appraisal included only a few road segments). Previously, current and projected road roughness had been calculated based on the same sub- projects to reflect real improvements after the project. The total target for length of rehabilitated roads was reduced as a consequence of the inflation in civil works’ unit prices, due among other things to the currency exchange market restrictions during the implementation period. The baseline for the indicator “quality of service measured through user’s perception” was established, together with a revised (more ambitious) end target. 19. The intermediate outcome indicator measuring preparation and dissemination of the DPV’s Annual Performance Reports was dropped because the lack of progress in the implementation of the institutional strengthening suggested that it would be impossible to achieve the target. This intermediate indicator was linked to one of the three basic framework measures (“preparation of strategic multi-annual road investment plans (suggested five years), with yearly updates”) that were targeted to be taken in five Participating Provinces.15 Instead, the project began to track one of the other basic framework measures -- “preparation of road safety plans by Participating Provinces” – against four provinces. This was consistent with the Country Partnership Strategy (CPS) progress report for FY10-12 16 and the CPS for FY15-18, which put more emphasis on road safety and progressively suggested to treat road safety interventions as an integral part of infrastructure projects. 20. The closing date extension approved through the second restructuring in 2016 was needed because, following the change in government in 2015, implementation faced major delays, and the project stopped disbursing. The factors behind the other closing date extensions (2018 and 2019) are explained below and in III.B. 15 The target for the original intermediate outcome indicator was yes/no. The project aimed to implement the three basic framework measures in at least five DPVs - see para 18 (i)). “Road asset management system in place” and “Preparation of strategic multi-annual road investment plans (suggested five years), with yearly updates” were measured with the (original) PDO indicator (target: 5). “Preparation of road safety plans” – the third measure – became the new intermediate outcome indicator in the first restructuring (target: 4). 16 CPS progress report for FY10-12 (Report No. 59222-AR) dated February 24, 2011 and CPS FY15-18 (Report No. 81361-AR) dated August 7, 2014. Page 12 of 71 The World Bank Norte Grande Road Infrastructure (P120198) 21. The percentage of Bank financing for civil works was increased because the government was carrying out fiscal consolidation and, as a result, had reduced budgetary allocations for line ministries, including the Ministry of Transport and DNV. The change was intended to accelerate disbursements and fully disburse remaining loan funds before the closing date. As budget allocations in 2018 and 2019 did not meet the project’s financing needs, in particular for Component 2, the project implementing agency had to redefine priorities for budget resources, which slowed down the decision-making processes and negatively affected the pace of the activities. This caused the third closing date extension and funds cancelation as part of the fourth restructuring. 22. None of the restructurings affected the theory of change. The cancelation of funds at project closing did not affect the theory of change as enough funds were available to complete the implementation of all planned activities under both components. II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 23. The relevance of the PDO to the current Country Partnership Framework (CPF) FY19-2217 is rated Substantial. 24. Reducing transport costs and improving road network management continue to be strategic priorities for Argentina, as these factors are still negatively affecting its competitiveness. The CPF FY19-22 states that “support for improvements to business regulations and enabling services, such as telecommunications and transport/logistics, will continue to be a joint effort of the three organizations [Bank, IFC, and MIGA], supported by Development Policy Financing”.18 The PDO contributed to the Result area: Sustaining Employment Creation in Firms and Farms, #1 Fostering Private Investment and Strengthening its Enabling Environment measured with Indicator #1 “Reduction in cost of freight transport in selected corridors of Northern Argentina by 20 percent (expressed in cost per ton per km)” in the CPF FY15- 18. According to the Completion and Learning Review in the CPF FY19-2219 the results were that: “Given the importance of transportation time and costs, one of the indicators for strengthening the enabling environment (CPS Indicator #1) was the reduction in cost of freight in selected corridors and it decreased by 21.2 percent, exceeding the initial expectations. It was supported by the Provincial Roads Project (P070628) and the Norte Grande Road Infrastructure Project (P120198).” Reduction of transport costs is the PDO of the project and directly linked to freight costs as transport costs present the biggest share of the total freight cost. 25. The objective to reduce transport costs remains relevant for Argentina, a result of the country’s size and the broad disparities in quality of services across the provinces, which require better connective infrastructure. The CPF FY19-22 states, ”closing basic infrastructure service gaps will demand new institutional delivery models, investing in connective infrastructure, and strengthening local capacity will be key for the convergence of living standards and for linking populations to economic opportunities.”20 The Logistics’ Performance Index21 (LPI) shows a declining performance by Argentina on infrastructure, and the 2019 Global Competitiveness Report22 ranks the country 92nd out of 141 on quality 17 CPF FY19-22 Report No. 131971-AR dated March 28, 2019. 18 CPF FY19-22, paragraph 10. 19 Idem. 20 CPF FY19-22, paragraph 35. 21 LPI 2018. 22 WEF, 2019 Global Competitiveness Report. Page 13 of 71 The World Bank Norte Grande Road Infrastructure (P120198) of road infrastructure (road transport represents 95% of cargo movement). A 2016 World Bank study23 estimated trucking costs in the country to be two to three times higher than costs for efficiently managed rail transport and three to four times higher than waterborne transport on the Paraná-Paraguay river. 26. The PDO is relevant to the current CPF’s Focus Area 2, “Addressing Key Institutional Constraints for Better Governance and Service Delivery” and its Objective 4, “Strengthening transparency and reducing corruption” (Indicator 4.2. Implement anti-corruption risk-based warning system in the transport sector). The CPF’s Results Matrix explicitly mentions the Norte Grande Road Project as a contributor to this outcome. The introduction of improved road asset management tools and methods as part of the PDO helps introduce a data and evidence-based decision-making process in the road sector, which includes greater transparency about civil works costs, budgeting and execution. The institutional strengthening objective has a significant relevance for Argentina, as institutional constraints have been assessed as “persistently constraining the country from sustaining high-income levels”. 24 27. The project’s support for capacity building of Provincial Road Directorates (DPVs) contributed to the current CPF’s Focus Area 2, Objective 5, “Improving service delivery through enhanced inter-jurisdictional coordination”. As outlined in the Efficacy section below, the project strengthened the DPVs in the areas of tools and training, collection and use of road data, planning for investment and maintenance, confirming the quality of civil works, sharing data, and receiving feedback from users, all of which have contributed to the CPF objective of “holding provinces accountable for results they are achieving with resources transferred to them”.25 28. For the roads sector, the project’s support to DPVs and DNV to use multi-annual road maintenance plans to better track the costs and efficiency of their investments also contributed toward the CPF’s Focus Area 1, Objective 1, “Achieving fiscal consolidation while protecting the poor”; “. . . shifting, in the medium-run, the composition of expenditures to growth-enhancing categories, such as priority public investment projects.” 29. The project’s activities aimed at empowering indigenous women in the Norte Grande to develop productive activities has been taken up by the CPF as a priority. Specifically, the CPF states that it “will continue to support gender equality by focusing on enhancing women’s economic opportunities and protecting their human capital.“ 26 The project was successful in demonstrating how an otherwise “traditional” road project could be utilized to integrate women’s economic and social empowerment though its core investment activities. 30. Poverty reduction remains a cross-cutting theme for all of the Focus Areas of the current CPF. This is consistent with the project’s targeting of the Norte Grande provinces, as their poverty levels remain higher than the rest of the country. A comparison using the INDEC (National Statistics Institute) permanent household survey’s data for the first semester of 2019 shows that the region has improved in poverty terms compared to 2010’s levels, regionally decreasing from 48%27 to 41%(average between Northwestern and Northeastern regions), but, as the graph below shows, Norte Grande28 still lags behind. 23 Argentina-Paraguay-Uruguay: Soybean logistics, World Bank, 2016. 24 CPF FY19-22, paragraph 2. 25 CPF FY19-22, page 41. 26 CPF FY19-22, paragraph 94. 27 A Provincial Development Index for Argentina. Working Technical Note. The World Bank 2010. 28 Norte Grande provinces include Catamarca, Chaco, Corrientes, Formosa, Jujuy, Misiones, Tucumán, Salta and Santiago del Estero. INDEC (National Statistics Institute) presents data at regional level, thus the term (Northwestern, which is a region, that include the Norte Grande provinces and a one more – La Rioja). Page 14 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Figure 2. 2019 poverty levels in Norte Grande provinces 42.4 39.9 32.5 35.4 30.2 25.7 Northwestern Region: Northeastern Region: National Average Corrientes, Formosa, Chaco Catamarca, Tucumán, Jujuy, La and Misiones Rioja, Salta and Santiago del Estero Average poor people Average poor households 31. The PDO should have captured more broadly the improved accessibility to be achieved under the project. Reduced costs were one important outcome; however, users benefited also from greater access to all weather roads, better travel times, and improved comfort, all of which represented considerable gains in accessibility. Considering the long partnership with the World Bank in the road sector, which included operations covering provincial roads, one could have expected the PDO of this project to have had a higher level of complexity. However, the project was deliberately given a narrowly focused PDO because (i) some of the earlier operations had failed to achieve their more complex PDOs and (ii) the potential beneficiary provinces of this project were some of the poorest and weakest in capacity. The fact that this is the first provincial roads project29 that managed to achieve its development objective confirms that the decision for a compact PDO was correct. 29 Earlier projects included Programa Caminos Provinciales (1996-2004) and Programa de Infraestructure Vial Provincial (2005-2014). Page 15 of 71 The World Bank Norte Grande Road Infrastructure (P120198) B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome PDO: To reduce transport cost for users of provincial roads along selected corridors of the Norte Grande provinces Through the improvement of the quality of those roads 32. Today, the 10,232 vehicles that regularly use the project roads in Chaco, Tucumàn, Santiago del Estero, Corrientes and Catamarca travel at lower cost and with better times and comfort. An additional 43,000 citizens from the communities along these project routes have an all-weather road, enabling them to have uninterrupted access year-round. 33. The achievement of the PDO objective – to reduce transport costs for users through the improvement of the quality of those roads – is rated High and this is confirmed by the full achievement of all PDO indicators. (i) Travel costs were reduced by 29% for light vehicles, 27.6% for omni-buses, and 29.3% for heavy vehicles30 (project targets were 26%, 31% and 29%). These are a sum of vehicle-associated costs and travel time costs, which in turn depend on the road quality. (ii) All project roads have a significantly lower roughness index (meaning smoother road surface, better driving quality and comfort), ranging between 1.3 and 2.15, which is considered a “good road condition”. For the rehabilitated roads, the roughness index fell from a weighted average baseline of 5.86 to an end result of 1.67. The upgraded roads were dirt roads before the project, so for this group the average roughness improved from 8.86 to 1.94. (iii) Road users’ satisfaction, measured through surveys, focused on accessibility to health centers and educational facilities, production output perceptions, and accessibility during the year. The end-project satisfaction rates ranged between 77% and 97%, considerably above the target of 51.28%. 34. The ex-post analysis carried out at project closing showed that the project increased the share of rural population with access to an all-weather road throughout the year (measured as persons living 2 km from a route all year) from 79,864 to 123,511 (in Chaco, Santiago del Estero, Tucumán, Corrientes and Catamarca). The most significant improvements were from the road upgrades in Chaco, Tucuman and Catamarca, where some communities obtained access to a paved road for the first time. The shares of population with all-weather access improved from 11% to 31% in Chaco, 10% to 41% in Tucuman, and 50% to 77% in Catamarca. 35. At project completion, 277 km of roads had been rehabilitated in the provinces of Corrientes, Tucumán, Santiago del Estero, and Chaco and 141 km upgraded in the provinces of Chaco, Tucumán and Catamarca (a total of 418 km, as per the revised target). Traffic volumes (measured in annual average daily traffic) on these routes increased from 871 to 1,461 but this cannot be exclusively attributed to the project as it depends on many external factors and is factored into the efficiency analysis. As part of the provincial road rehabilitations and upgrades, the following gravel roads to indigenous communities near provincial roads were also improved: RP 5 (31 km) from Santiago del Estero, RP 3 (5 km) from Chaco, and RP 18 (7 km) from Santiago del Estero. Through the introduction of improved road asset management tools and methods 36. The project contributed to making available road asset management tools and methods in five targeted provinces for potential facilitating reduction of transport costs in general, as shown the achievement of the outcome and intermediate indicators: (i) The project supported the elaboration of Multi-annual Road Maintenance Plans for five provinces (Chaco, Jujuy, Salta, Tucumán, Santiago del Estero), as targeted. Page 16 of 71 The World Bank Norte Grande Road Infrastructure (P120198) (ii) The project financed preparation of four road safety plans in the provinces of Salta, Santiago del Estero, Tucumán and Jujuy. 37. Project DPVs are able to plan investment and maintenance needs. The PDO indicator “number of multiannual road maintenance plans and road databased management systems in place” was met. Five plans and provincial roads data bases were prepared (for the provinces: Chaco, Santiago del Estero, Jujuy, Tucuman and Salta). Thanks to the data and tools below provided by the project, DPVs have the ability to analyze overall network investment and maintenance needs and to develop multiannual plans. Additionally, DPVs now have software for cost analysis which helps them track and compare costs (for materials and work hours) between different contracts. This allows them to carry out more precise planning, better trace contract costs, and increase procurement transparency. The DNV updated the standards, manuals and technical specifications31 for road works, and these are now available and can be applied by all provinces in Argentina. 38. Chaco was the one province that succeeded in preparing on time the Multi-Annual Road Maintenance Plan 2014- 2018 and is now preparing a new multiannual plan for the period until 2024. The implementation of Chaco’s plan32 has resulted in an increase in the share of provincial network roads in good condition from 30% to 63% between 2014 and 2018 (Figure 3) and a seven percent decrease in road maintenance’s share of its budget. During the same period, Chaco extended the length of its paved network from 895 km to 1,051 km. All this confirms that Chaco’s sustained conservation and investment road policy using data-based planning (through the Multi-Annual Plan) has resulted in the improvement of the road network. Figure 3. Provincial road network condition in Chaco in 2014 and 2018 Source: Chaco Province Report about road network development 2014-2018 39. The other four DPVs’ Multi-Annual Plans have just been prepared in April 2020, and it remains to be seen if the availability of these plans will improve road asset management. The Chaco province experience suggests that it is possible to expect full integration of the plans in a province’s operations and maintain continuous implementation. Chaco’s current process of independently updating the plan demonstrates that the logic of asset planning has been internalized as a regular approach to asset management and confirms that the province developed the necessary capacity and tools with the help of the project. 40. Tools and training provided to DPVs. As a result of the project, the DPVs in five project provinces – Chaco, Salta, Jujuy, Tucumán and Santiago del Estero -- have the necessary equipment, technology and staff trained to utilize road asset management tools and methods. The introduction of these tools and equipment has a potentially transformational relevance for the DPVs because application of road asset management tools will enable them to properly maintain the 31 Available here: https://www.argentina.gob.ar/obras-publicas/vialidad-nacional/institucional/normativa/investigacion-y-desarrollo . 32 Chaco Province Report about road network development 2014-2018. Page 17 of 71 The World Bank Norte Grande Road Infrastructure (P120198) road network and dedicate investment resources guided by the potential to achieve further transport cost reductions for users. Utilization of these tools requires technical knowledge; therefore, an extensive training program was carried out under the project, in which a total of 319 technical specialists from the DPVs and DNV participated. Additionally, some software and equipment were made available to all DPV in the Norte Grande. 41. Project DPVs are able to regularly collect and use road data. The participating five DPVs (Chaco, Salta, Jujuy, Tucumán and Santiago del Estero) now have equipment to measure traffic levels and topography, which are the foundations for a data-based road asset management system. All these five provinces have functioning road databases of their entire networks, with key road characteristics measured in 2019 (roughness, deflections, traffic, vehicle structure) and presented on a GIS platform. Additionally, all nine provinces of Norte Grande benefit from project-funded laboratories to test materials for quality control. They also benefit from the use of a heavy vehicle simulator (which helps them understand future road deterioration under different vehicle loads) financed by the project and managed by DNV but available for use by all provincial DPVs through a document of collaboration signed between DNV and the DPVs. As planned, road safety plans were developed for Santiago del Estero, Salta, Jujuy and Tucuman. These provide DPVs with information on safety bottlenecks on the network that are considered in the multiannual road maintenance plans but are yet to be implemented through road safety improvements in the provinces. 42. All Norte Grande DPVs have tools to confirm the quality of civil works: The nine DPVs in the Norte Grande provinces can now use the software for pavement analysis (which helps them confirm durability of pavement) and bridge capacity (enabling them to confirm durability of bridge civil works). 43. DPVs are able to share data and receive feedback from users. In order to be able to consider user’s needs and obtain feedback from network use, DPVs have introduced a road user support platform. Additionally, an open data platform33 enables the public to learn about the life cycle of public works contracts in DNV, which increases transparency of road spending and contributes to improved governance. Substantial positive outcomes regarding improved capacity to plan and manage road investments and increase transparency of spending were achieved at a national level, through the strengthening of DNV; however, these outcomes were not captured though the project’s M&E framework (see Section E. Other Outcomes and impacts, Institutional Strengthening). Justification of Overall Efficacy Rating 44. The overall efficacy of the project is rated Substantial. The project’s physical investments reduced transport costs for users of the selected provincial roads in the Norte Grande region. By introducing improved road asset management tools, skills, and methods in Participating Provinces, the project laid an essential foundation for reducing transport costs over the medium to long term through more cost-effective investment programming and maintenance. 33 Available at: https://datosabiertos.vialidad.gob.ar/ui/index.html#!/charts_dashboard Page 18 of 71 The World Bank Norte Grande Road Infrastructure (P120198) C. EFFICIENCY Assessment of Efficiency and Rating 45. The efficiency of the project is rated Substantial. The results of the ex-post economic analysis do not differ substantially from what had been estimated at appraisal. All of the economic rates of return and net present values for the individual civil works present satisfactory results. The most beneficial project was RP 304 in Tucumán, with an Internal Economic Rate of Return (IERR) of 28.8% and a Net Present Value (NPV) of US$ 66.98 million. 46. At appraisal, an economic evaluation using the HDM-4 model was carried out for the RP 3 , RP 9 and RP 304, which showed that the proposed investment would yield a positive NPV in the order of US$ 56.66 million (in economic terms), for 55.5 km of roads rehabilitated and 175 km of roads upgraded, and an IERR of 20.98 percent. At closing, an ex-post evaluation using actual costs, with revised traffic and pavement conditions, as well as updated vehicle operating costs, showed that, despite the increase in the cost of road works, the actual investments yielded acceptable returns, with a NPV of US$ 136.54 million for about 276 km of roads rehabilitated and 141 km of roads upgraded and an IERR of 20.01 percent (See Table 3 and Annex 4). Table 3: Results of Ex-Post Economic Analysis of Project Roads NPV (MM US$) IERR Cost (MM US$) RP Nº 94: Tramo: Santo Tomé - Arroyo Chimiray. 0.39 12.9% 17.57 Provincia de Corrientes. RP Nº 3, Tramo: Pampa del Indio – Villa Río Bermejito. 2.12 12.8% 71.165 Provincia de Chaco. RP N° 304, Tramo: Los Gutierrez – Río Ureña. Provincia 66.98 28.8% 89.27 de Tucumán. RP Nº 46: Andalgalá-Belén, Sección: Andalgalá-Pr. 39.82 22.1% 75.07 50,915 (Piedra Cuesta de Belén). Provincia de Catamarca RP Nº 5: La Banda – La Invernada – Amamá. Tramo: Km. 19.44 19.5% 82.01 63+200 a 135+000. Provincia de Santiago del Estero. RP N° 9 - Tramo: Empalme RN N° 16 - Capitan Solari. 4.49 16.7% 30.61 Provincia de Chaco. RP Nº 18 - Forres – Loreto. Tramo 1: prog 0+000 y 3.30 15.0% 44.87 42+300. Provincia de Santiago del Estero. Global 136.54 20.01% 410.57 47. Only savings in road user costs and exogenous benefits from increases in the price of land in the zones of influence of the roads were included in the original economic analysis. In order to have a comparable evaluation with the ex-ante assessment, climate change co-benefits and costs and additional tourism and education benefits were not calculated ex-post. Significant benefits from greater resilience to climate change-led natural disasters as a result of road Page 19 of 71 The World Bank Norte Grande Road Infrastructure (P120198) upgrading should be expected. On the other hand, it should also be noted that extra tons of CO2 induced by higher traffic volumes will be translated into greater costs. Either way, a final balance including these extra considerations is expected to enhance the yielded values of IERRs for the civil works. 48. Delays in the implementation of the project, while not detrimental to the overall results from either Component 1 or 2, were substantial and reduced implementation efficiency. In the case of the road construction, the delays did not have a considerable negative impact, as calculated indicators show that resources were transformed into benefits with very positive returns. As for component 2 delays, these did prevent the DPVs – except for Chaco -- from utilizing the new asset management tools during the project’s life span (see section III.B below). Therefore, provinces could not identify additional activities to be included in the project and thus further increase the value for money from the project. On the other hand, the project extensions enabled that important additional outcomes related to the DNV strengthening (see Section E. Institutional Strengthening) are achieved. D. JUSTIFICATION OF OVERALL OUTCOME RATING 49. The overall outcome is rated Moderately Satisfactory, in consideration of the substantial delays and long implementation period. The project was successful in decreasing transport costs for users of provincial roads and in introducing improved road asset management tools in the five provinces that benefited from the operation. E. OTHER OUTCOMES AND IMPACTS (IF ANY) 50. The project had a positive impact on gender, specifically on women from the indigenous group Qom who live in Chaco province. The project is exemplary among infrastructure projects that ensure citizen engagement in design and integrate women’s empowerment actions in civil works. This was done before the World Bank formally introduced citizen engagement requirements in project preparation and the project gender-tag in 2014. 51. Learning from the community consultations, the road design in Chaco included specific investments to build two community artisan centers along Route 3 to be managed by the Qom women, offering a space for them to meet, become economically active, and receive training. The centers are used to promote women’s artisan products, allowing the women a means to earn an income and take advantage of the new opportunities created by the improved connectivity and increased transit and tourist visits. The project supported the initiative34 in collaboration with the province’s authorities and enabled capacity building activities for the women on business organization, community organizing, and family planning workshops in the Qom language, thus fostering their capacities for action and decision (i.e. strengthening their agency). Women also collaborated with the provincial authorities to jointly design the road signs informing visitors about important Qom cultural sites along those routes, enabling the group to showcase their heritage widely. Together with the Norte Grande Water Project (P120211), three centers have been constructed, which benefit around 300 women. Institutional Strengthening 52. The project helped strengthen the capacity of the Dirección Nacional de Vialidad (DNV) through: (i) introduction of systematic maintenance planning and programming based on a network analysis at national level (using the HDM-4 model and data collected about the condition of the networks and calculation system of pavements and 34 Argentina – Road to Agency – The Qom Culture Route Initiative, World Bank, 2015. Page 20 of 71 The World Bank Norte Grande Road Infrastructure (P120198) bridges); (ii) increased transparency of spending and citizen engagement in road planning (based on the introduction of a road user support platform and an open data platform35 at the national level); (iii) improved public expenditure planning and control (based on the introduction of a system to track costs of road construction and maintenance); (iv) development of a Geographic Information System;36 (v) acquisition of laboratory quality control equipment in all 19 district offices of the DNV across the country; and (vi) improvement of standards, manuals and technical specifications published on the DNV website. Mobilizing Private Sector Financing 53. This project did not aim to, nor did it, mobilize private sector financing. It did, however, contribute to a better enabling environment for private sector financing. The project improved planning capacity for investment and maintenance and thereby provided a useful platform for both DNV and DPVs to identify opportunities for private sector financing in the sector, better prepare investment packages with realistic cost estimates, and better supervise works execution. Poverty Reduction and Shared Prosperity 54. The project was structured with the aim of contributing to decreasing development disparities in the poorest provinces of Argentina. The project’s reduction of transport costs by 31%37 and increase in access for rural populations to an all-weather road by 54% directly benefited local communities in terms of improved accessibility, which is a key factor for better economic opportunities, contributing to poverty reduction (with particularly impactful results in Chaco, Tucuman and Catamarca). 55. An impact evaluation38, carried out in 2016, concluded that paving the 60 km of RP 3 that connects Pampa del Indio and Villa Río Bermejito significantly benefited local communities. Probability of access to basic services such as health and education was confirmed to have increased, alongside reductions in travel time, thus contributing toward reducing childhood mortality, school absenteeism, and dropout rates. Absenteeism also decreased in workplaces, and the employment activity rate rose for the adult population (between 25 and 64 years old), especially for women in low socioeconomic contexts. In addition, registration rates for education increased among young students between 3 and 17 years old, particularly for primary school students below 12 years old in vulnerable and poor households. Other Unintended Outcomes and Impacts 56. The collaboration with indigenous communities in Chaco and Santiago del Estero provided opportunities for DPVs to carry out a design preparation process which was informed by the needs of these local communities. In Santiago del Estero this meant introducing additional rural road access points to the provincial route, bus stops and safer access to schools, as well as awareness raising activities for the communities about safety in transport, including the wearing of helmets and other aspects of motorcycle safety. Additionally, in Chaco this work included the production of bilingual road signs showing indigenous communities' historical sites, cultural–ethnic sites of interest, and fauna and flora maps. More recently, the Chaco provincial authorities have built significantly on this initiative and 35 The open data platform enables the public to learn about the life cycle of public works contracts in DNV, which greatly increases the transparency and accountability of road spending. Available at: https://datosabiertos.vialidad.gob.ar/ui/index.html#!/charts_dashboard 36 Available at: https://www.argentina.gob.ar/obras-publicas/vialidad-nacional/sig-vial 37 Based on HDM-4 Ex_Post calculations. 38 It compared the data collected in 2012 (before construction of road and water projects), and in 2015 (after construction of road project, and while water project was still under construction). Page 21 of 71 The World Bank Norte Grande Road Infrastructure (P120198) launched new partnerships that have also provided internet connectivity for community artisan centers and added health services in some, thus converting them into multifunctional spaces that are of central importance to the residents and help them benefit from the increased traffic. 57. The civil works provided an overhaul of complementary hydraulic systems, especially in upgraded roads, and through the construction of an important number of culverts in RP 46 and RP 94 in the provinces Catamarca and Corrientes. All-weather roads and adequate evacuating systems are a fundamental component in building climate change resilience. This is significant because flooding is the most important climate hazard in Argentina, and several studies39 show that stronger and more frequent storms are to be expected, with gradually increasing impacts in local and regional communities. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 58. Project design. The project design was clear, well targeted, and with a direct contribution toward reducing transport costs in the Norte Grande provinces. The design was province-centric, as it provided maximum flexibility for provinces to tailor the project’s support to their needs. On civil works, provinces could propose reconstructions and upgrades, and on institutional strengthening they could receive support from a long menu of capacity building activities. Sufficient diagnostic work was carried out during preparation to allow provinces to move promptly with road works and institutional strengthening activities. 59. Collaboration with stakeholders and readiness for implementation. The project consulted intensively with local communities and NGOs in Chaco and Santiago del Estero during the preparation and used their feedback to adjust the road designs and thereby better address the communities’ needs. This was particularly evident in the preparation of the Indigenous Peoples Plan. Project preparation was efficient and with good quality, as within a year the Bank team was able to work with the client to prepare the first group of eligible roads for reconstruction, which represented 40% of the planned investment. 60. Adequacy of risk and mitigation measures identification. Most of the risks were properly identified at appraisal and were addressed by adequate mitigating measures. Most prominently, the project identified the risk of inadequate implementation capacity at the provincial level regarding environment and social management and mitigated this by a prioritized institutional strengthening carried out during the project. Training sessions on environmental and social management were carried out for all participating provinces early in the implementation, and this risk materialized only in some provinces, where it was managed by intensive supervision and collaboration with provincial authorities. Another prominent risk was the lack of maintenance by provinces of roads completed under the project. To mitigate this, all provinces that participated in the project signed “Participation, Transfer and Maintenance Agreements” which detailed their responsibilities to set maintenance budgets and structures for the project roads. This was done in all provinces, and analysis carried out during the ICR suggests the provinces are regularly maintaining the project roads. 39 GFDRR funded Argentina –Transport risk analysis, Oxford Infrastructure Analytics Ltd. 2019. Page 22 of 71 The World Bank Norte Grande Road Infrastructure (P120198) 61. The following design aspects contributed to the long implementation period: i. Project implementation arrangements. These focused on satisfying the fiduciary and general management aspects of the project, not the technical aspects. UCPyPFE was initially designated as the project implementing agency, primarily in consideration of its extensive experience in implementing programs financed by international cooperation agencies. However, UCPyPFE did not have the skills to take the leadership of the institutional strengthening component, and thus these activities had almost no progress until after the change in the implementation arrangements following the 2015 elections (see below). An implementing agency with the relevant technical expertise could have provided the appropriate platform for working effectively with provinces on institutional strengthening, thus contributing to a quicker absorption of resources for Component 2. ii. Over dimensioned budget for institutional strengthening. While the financing allocated to Component 2 might had been commensurate with the wide institutional strengthening needs of the Participating Provinces, experience from earlier projects or the then ongoing Provincial Roads Project should have signaled that the expectations were unrealistic. The project included a very detailed menu of institutional strengthening activities, which was designed based on the past Bank engagement in the sector, diagnostic models for DPVs developed by the World Bank, and a parallel diagnostic carried out by IADB. Supported by US$ 34 million available for institutional strengthening, the project had the potential to completely transform the provinces of the Norte Grande. However, carrying out such an ambitious program across nine provinces, and even more so among several separate institutions, proved to be impractical, and this difficulty contributed to the need for closing date extensions. iii. The results monitoring on institutional strengthening did not match the potential of the component. The results framework could have been further detailed, thus providing stronger guidance and incentives to the provinces to advance with the institutional strengthening. In line with internal Bank review guidance at the time of project preparation, the results monitoring was kept to a minimum, prioritizing core indicators on road network improvement. B. KEY FACTORS DURING IMPLEMENTATION 62. Project implementation lasted nine years (compared with the originally projected 5.5 years), to allow the completion of all civil works, to accommodate the late start of the institutional strengthening activities, and to adjust for delays stemming from the governmental transition following the 2015 elections. While construction of five road sections started early (2012 and 2013), by the spring of 2016 (the time of the first closing date extension), only three were complete and two others remained to be procured. Results observed on the finished roads showed good progress toward meeting the PDO, as all had an improving trend (roughness index improved, travel costs lowered, quality of service enhanced). Chaco was the only province that had developed its multi-annual road maintenance plan on time. By 2016, procurement had started for equipment purchase as identified in the provincial institutional strengthening plans (for Tucuman and Santiago del Estero), and work was starting on the development of road safety plans in four project provinces. 63. The following were the key factors under government control which affected implementation: (i) Coordination and engagement. Institutional strengthening activities suffered significant delays as a result of insufficient interest and commitment from the provinces and of the inability of UCPyPFE to collaborate more actively with the provinces on the technical matters related to road asset management. It was only in 2015 that the first diagnostics for Chaco, Tucuman and Santiago del Estero were completed, allowing the Page 23 of 71 The World Bank Norte Grande Road Infrastructure (P120198) identification of institutional strengthening activities under the project. The other two diagnostics were not completed. (ii) Elections in 2015. The new government made institutional changes that produced a transfer of the implementation responsibility for the project from UCPyPFE to DNV. This led to implementation delays due to the change of signatories and the need to properly staff the DNV team. Project implementation was largely stalled without any disbursements from late 2015 until the PIU became fully functional in April 2018. The remaining procurement processes required more time, as DNV had to adhere to both Bank and DNV’s internal procurement procedures. (iii) Financing and budget. Counterpart funding was not made available on time, as a result of government budget constraints in 2014 and 2015. This created delays in the ongoing civil works and the awarding of new contracts, as payments could not be maintained. The project experienced similar restrictions in 2018 and 2019 when the budget allocations did not meet the project financing needs, in particular for Component 2. In this context, the project implementing agency redefined its priorities and needs for budget resources, which slowed down decision-making and negatively affected the implementation of all activities under Component 2 and led to cancellation of funds. (iv) Technical capacity of DNV to guide institutional strengthening. The presence of relevant technical skills and vision in DNV was instrumental in the revival of the institutional strengthening component. In 2016, DNV developed a Comprehensive Institutional Strengthening Plan40 based on its internal needs and the identified needs of the DPVs. This linking of the DPVs and DNV allowed DNV to support provinces in the technology transfer and training to improve their asset management. (v) DNV’s technical capacity for supervision of civil works. DNV provided additional technical supervision support through its district offices in the Norte Grande region to DPVs, which were challenged by the complexity of the civil works, thereby contributing to satisfactory completion of civil works and proper environmental management. 64. The following factors under Bank control affected the implementation: (i) Adequacy of supervision. The Bank team showed exemplary ability to identify new collaboration and learning opportunities for the provinces, launching many initiatives linked to the project (see details in Annex 6). The Bank’s support was also responsive to changing needs, especially regarding capacity enhancement for the DNV. However, a level 1 restructuring (PDO revision and results) would have been the appropriate course of action to recognize the importance of the development impact of the DNV-focused activities. (ii) Adequacy of reporting. Implementation was monitored regularly and reported with candor and detail. 65. Key factors which were beyond the government’s control included: (i) High bid costs. The first works contracts made it evident that bid costs were higher than estimates and required an adjustment to the total length of roads expected to benefit from the project. This experience identified the urgent need to establish a system to track civil works costs regularly and, in the end, resulted in the development of such a system in DNV and the DPVs. (ii) Macroeconomic environment. In 2018 and 2019, the country’s economic situation worsened, resulting in a devaluation of the Argentine Peso and inflation. Luckily, most of the project-financed civil works had already been completed, and the only two remaining were at an advanced stage of implementation; thus, they were affected only slightly. However, this was not the case for the institutional strengthening activities, as some 40 Fortalecimiento Institucional de la Dirección Nacional de Vialidad y las Provincias del Norte Grande, DNV 2019. Page 24 of 71 The World Bank Norte Grande Road Infrastructure (P120198) suppliers refused to participate in bidding due to the macroeconomic environment. As a result, DNV had to rebid and lost valuable time for implementation. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) 66. The indicators for the PDO were well structured and detailed. 67. A sufficient number of indicators were included to measure benefits from reduced costs through roads improvement to primary beneficiaries (cost reduction and quality of service), and the team completed a detailed analysis for the indicator baselines and targets. 68. The M&E for the reduced costs through introduction of improved road asset management tools and methods included one PDO and one intermediate level indicator, in response to internal guidance to keep the results framework concise. Even so, Component 2 could have benefited from a more disaggregated list of indicators, given that it had a significant budget allocation (US$ 34 million) and the expectation for a wide range of activities (a full menu was provided in the PAD in Table A2-1). A more comprehensive set of intermediate indicators would have reflected and monitored more regularly the gradual institutional strengthening occurring during the project, and an additional PDO indicator would have better reflected the strategic institutional improvement to which the project aspired. M&E Implementation 69. The M&E system was maintained regularly during the project. The data were collected regularly by DPVs and was of relevance to their work and also to the provincial authorities beyond the project. The data collection also helped in the institutional strengthening, as it reinforced the need to approach road management from an efficiency point of view (reduction in time and cost) rather than just output (length of km rehabilitated). 70. The M&E was fine-tuned at the mid-term review (MTR) to reflect more closely the construction costs and ensure consistency throughout the project. At appraisal, baselines were set based on the sample of the first group of identified projects which included Chaco Route 3, Tucuman Route 304 and Corrientes Route 94. By the MTR, Route 3 had been completed, as well as Santiago del Estero Route 5, while Chaco Route 9, Tucuman Route 304 and Santiago del Estero Route 18 were undergoing works. Thus, the baselines were revised to reflect the results of a wider group of roads with a higher precision. M&E Utilization 71. Data were consistently measured and reported. This helped showcase to DPVs and the national authorities (from 2016, DNV) the usefulness of outcome-based results monitoring in road transport, thereby increasing the probability of such systems remaining a part of the internal operations of the institutions. Methodologies used for the data collection (road condition surveys, HDM-4 calculations, traffic surveys) were all of relevance to the DPVs for their improved operation, and thus the M&E implementation provided a hands-on experience for the DPVs. Page 25 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Justification of Overall Rating of Quality of M&E Substantial. 72. The M&E was well structured and utilized regularly, not only to track progress, but equally important, to provide a learning experience for DPVs on utilizing data collection and analysis methodologies which are now a part of their road asset management systems. The only shortcoming, due to which the overall rating is Substantial, is that the M&E design would have benefited from an amplification in indicators to reflect the wide range of initiatives supported under the institutional strengthening. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environmental compliance 73. The project was classified as a Category B under OP4.01 (Environmental Assessment) and triggered the following safeguard policies: Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Forests (OP/BP 4.36), Pest Management (OP 4.09), Physical Cultural Resources (OP/BP 4.11), Indigenous Peoples (OP/BP 4.10), and Involuntary Resettlement (OP/BP 4.12). All the required safeguards analyses were completed during preparation and implementation and proper disclosure and consultations were carried out. 74. All applicable mitigation measures for biodiversity, natural habitat protection, and forests were adequately addressed, as evidenced in regular work supervision reports and supervision from Bank specialists, but compliance required regular Bank oversight to ensure consistency and quality. In some instances, provinces missed conducting reassessments of environmental impacts when faced with modifications in the rehabilitation/upgrading works during construction. Often this related to sections where works intersected with water bodies or involved the use of water resources, and provinces did not identify environmentally acceptable technical solutions in advance. The regular supervision by the Bank’s environment specialists was able to identify such instances and work with the provinces to update the EMPs and implement necessary mitigation measures. While this did result in compliance, it also led to cost and time increases for the civil works, as additional environmental assessments and measures were carried out only after work contracts had already been in implementation. This was particularly a factor in the delayed completion of Route 94 in Corrientes, but it also occurred in Route 304 in Tucuman and Route 46 in Catamarca, but none caused delays in the overall project implementation. 75. The project was successful in exposing the Norte Grande Provinces to new methods and tools to identify natural habitats and mitigate negative impacts on fauna connectivity. The construction of the Chaco Route 3 involved a collaboration between the DPV and a local university and included a very detailed natural habitat and landscape analysis which informed the road design to include construction of underpasses and overpasses for fauna. This benefitted from the collaboration with the GEF Rural Corridors and Biodiversity project (P114294), executed by Argentina’s National Parks Administration (APN), as the knowledge generated regarding sensitive forests/natural habitats was utilized by the Chaco DPV in the landscape connectivity analysis. This work was showcased in a workshop jointly organized by the client, APN, and the Bank for all provinces in Norte Grande. In parallel, the Bank financed a study 41 on “Development of a Conservation Landscape in the Region of Chaco with a Special Focus on Road Infrastructure Works” using the subproject as a pilot area and this was showcased together with the DPV, ANP in a workshop for Norte Grande Provinces. Also, in collaboration with the European Satellite Agency, a pilot activity to monitor deforestation near Chaco Route 9 was carried out. 41 Results were published and are available at http://documents.worldbank.org/curated/en/2012/06/16555308/ . Page 26 of 71 The World Bank Norte Grande Road Infrastructure (P120198) 76. Since then, some of the design solutions that provide uninterrupted animal passage have been replicated in other provinces. Using the experience from the project, the Catamarca Province adjusted its own bidding documents to adopt and replicate the environmental specifications developed for the Norte Grande Roads Project (e.g. those regarding occupational health and safety, natural habitats, and physical cultural heritage). Social compliance 77. The project triggered OP4.10 (Indigenous Peoples) and OP4.12 (Involuntary Resettlement), and these were updated during project life as appropriate. The Indigenous Peoples Plan (IPP) was implemented fully and on time, as all planned access road improvements under the IPP were completed and the planned community trainings were carried out (full details are provided in the Annex 6). 78. The project is a remarkable example of using social safeguards to enhance project design and also how a road improvement investment can be structured to be an effective driver for women’s economic empowerment (as described in the section on gender). The activity became part of a wider innovative intervention to enhance the shared prosperity and poverty reduction outcomes for indigenous women of the Qom ethnic group in the Chaco eco-region. The intervention was "Qom Culture Route Initiative" (La Ruta de la Cultura Qom - QCR), led by indigenous artisan women to support the creation of a touristic route that facilitates direct access to markets for local and environmentally sustainable handicraft production and also facilitates access for tourists to the areas where the Qom communities are established. Activities under the QCR Initiative included, inter alia: (i) construction of three craftswomen’s community center buildings along a provincial road paved under the project, in which 300 indigenous women participate in cooperative activities and receive training; (ii) rehabilitation of gravel access roads to indigenous communities; (iii) family planning workshops for indigenous women in the Qom language; and (iv) production of bilingual road signs showing indigenous communities' historical sites, cultural–ethnic sites of interest, and fauna and flora maps. 79. Furthermore, training workshops were organized with indigenous women to develop the community tourism development strategy. The specialist hired by the World Bank prepared a report on the work on the QCR which became part of a bigger regional analytic work comparing similar experiences in Peru and Nicaragua with focus on gender. In November 2015 - the Bank Team presented the main findings of the report “Roads to Agency: Effects on Enhancing Women’s Participation in Rural Roads Projects on Women’s Agency”. Presentations were made in Buenos Aires and Resistencia, in both cases with active participation of government officials and civil society representatives. Procurement compliance 80. Procurement functions were generally well managed, and no major issues were observed during procurement post reviews. The UCPyPFE, which was the implementing agency until 2015, had long project implementation experience working with the Bank and other IFIs and had the required capabilities and institutional autonomy, which increased its agility in procurement procedures. The procurement risk under the project was assessed as high and, accordingly, all works contracts were subject to prior review. Additionally, the project team maintained a very pro-active and alert procurement monitoring. 81. An area of concern was the high bid prices for works observed in the first procurement rounds. In response to this and to help UCPyPFE estimate unit rates more precisely, the Bank team launched an analytical work to review road construction costs in Argentina using the ROCKS methodology (“Road Works Contracts, Competition, and Efficiency: Adding Transparency to the Road Sector in Argentina”). The work provided UCPyPFE the initial methodology to (i) develop an information system and cost analysis of road works and (ii) to establish an institutional memory and obtain the average and range of unit costs by type of work, based on historical data that could generate a database of road works costs based Page 27 of 71 The World Bank Norte Grande Road Infrastructure (P120198) on a uniform methodology. This was also followed by trainings to UCPyPFE and DPVs on works cost analysis. Later during implementation, this received additional attention and was followed by development of a works cost system which is now used in DNV and the DPVs. 82. At the time of the change of project implementing agency from UCPyPFE to DNV in 2016, the Bank was preparing a new road operation with DNV, and the project team used this opportunity to carry out a procurement capacity assessment of the DNV. This was used to structure training organized by the Bank on procurement guidelines for DNV, contributing to better client implementation capacity. 83. Delays in the launch of the institutional strengthening component activities meant that most of these activities ended up being implemented during 2018 and 2019. Moreover, the macroeconomic situation during these years in Argentina had a strong negative impact on the market response, and there were some cases where the PIU had to rebid. Additionally, some internal administrative processes in DNV generated the need for additional time to complete the procurement. As a result, the procurement of goods and services important for the institutional strengthening were delayed and required a tremendous effort by DNV and the Bank to be completed within the project period. Almost all of these contracts were completed by the project closing date, with the exception of two (purchase of laboratories for the DPVs and development of multiannual plans). DNV has secured financing in the 2020 budget to complete all payments under these contracts. Financial management compliance 84. Overall, FM was adequate and conducted in accordance with the loan agreement, with a properly functioning FM system. As a result of the budgetary constraints that faced the country in the 2014 and 2015 period, counterpart funding was not available on time, which resulted in temporary downgrading of the FM rating to MS because funds advanced to the Designated Account (DA) had been used to finance the local share of project expenditures, and once government funds were provided, the PIU would correct this issue by making payments in excess of the percentage of expenditures to be financed out of the local contribution. The financial management team was quick to identify this problem and agree with the PIU on a time-bound action plan to address the identified shortcoming. This created delays in the ongoing civil works and award of new contracts, as payments could not be maintained until counterpart funding was made fully available. For the remaining part of the implementation, the project did not experience similar restrictions. Additionally, in the 2018 project restructuring, the loan financing was increased from 80% to 100% including retroactive financing, in order to accelerate disbursements and fully disburse remaining loan funds before the closing date. In 2019, the project was restructured one last time to partially cancel funds which could not be absorbed due to budget restructurings for DNV which couldn’t absorb all loan funds. 85. The project regularly complied with the audit requirements, with the exception of the last year of implementation which had an overdue audit of 5 months. This refers to the 2018 audit, which was for the first time performed by Argentina’s Supreme Audit Institution, Auditoría General de la Nación (AGN), and has been delayed, instead of by private firms that had been in charge of previous audit reports. Annual audit reports received unqualified audit opinions throughout the life of the project, except for the 2014 report that the auditors qualified the Project Financial Statement and the SOE Statement because the project used Bank funds to finance counterpart contributions, a situation described in the paragraph above. Interim financial reports (IFRs) were conducted on time and were of satisfactory quality in general. 86. The disbursed amount is U$S 358,833,575 or 97% of the final loan amount and almost 90% of original loan amount. The project closed on 31 December 2019, while the application deadline was set at 30 September 2020. The latter date includes additional time to accommodate DNV for the transition period following the government change. Page 28 of 71 The World Bank Norte Grande Road Infrastructure (P120198) C. BANK PERFORMANCE Quality at Entry 87. Project preparation was guided by the country’s strategic priorities and the extensive Bank experience in the transport sector in Argentina, through a process which was collaborative and considerate of lessons learned. The project was fully aligned with the Argentina Strategic Plan for Territorial Development and had high relevance for Argentina. It was structured clearly, with identified collaboration opportunities beyond the transport sector which enabled a much wider impact. The project was prepared efficiently and within one year. Considering the implementation experience of the then ongoing Provincial Road Infrastructure Project, whose implementation efficiency had been negatively affected by the subsidiary loan agreement structure, this project was supported by a loan to the Argentine Republic and had centralized implementation. This factor was intended to ensure high project funds utilization and successful completion. 88. The design was based on a very detailed analysis of the capacity needs of provinces and included a menu of options for road sector management and institutional strengthening activities which was all-encompassing and included network planning and management, road safety, social and environmental management, and feasibility. The economic analysis was well prepared and confirmed a strong economic and financial basis for the proposed investment. The safeguards documents were successfully used to further inform the project design and create positive impacts, especially regarding indigenous people and forest protection (see Section E. Other Outcomes and Impacts and B. Environmental, Social, and Fiduciary Compliance). 89. Regarding the sustainability of the investments, the project included a pre-requisite for each Participating Province to incorporate regular maintenance of the provincial roads once completed under this project (see Section II. Key factors that affected Implementation and outcomes, A. Key factors during preparation). Risks associated with the project were well identified with appropriate mitigation measures put forward in the appraisal documents, and a high- quality environmental assessment was prepared. Several risks were identified at appraisal, including a high risk to procurement due to the limited institutional capacity of DPVs. The centralized procurement under the UCPyPFE was a mitigating factor to this risk. The responsibility for technical preparation and supervision remained with the DPVs. This was a good decision, as it ensured active participation and ownership from the DPVs in the road improvements which also benefited from the hand-on experience and capacity building as part of the project implementation experience. 90. The possible impediments to implement the institutional strengthening component were somewhat underestimated, especially given the substantial amount allocated to this component. The project design could have benefited from a central coordinative body composed of beneficiary DPVs and the UCPyPFE, or an expansion of the team of UCPyPFE to include road specialists to ensure that the technical dialogue on institutional development would be maintained as a priority. Such a coordinative mechanism also could have provided a regular experience and knowledge exchange between DPVs and utilized the successful advancement of some DPVs (such as Chaco) as an incentive/example for others. Page 29 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Quality of Supervision 91. The Bank provided regular and very proactive implementation support. Over the course of project implementation, 19 missions were conducted which included regularly all pertinent technical specialists from the Bank. The Bank team included the relevant expertise and had continuity, as the Bank Task Team Leader based in the country did not change during the project and maintained regular supervision and collaboration with the client. The project team initiated collaborations with other Bank projects and utilized these to expand the knowledge of the DPVs and DNV, especially in the aspects of environment management. The convening role of the Bank also helped expose the DPVs and DNV to new resources and tools, for example, setting up collaboration with national and international researchers working on roads ecology; tools and technologies to support the diagnosis and monitoring of impacts of roads on biodiversity and landscapes; infrastructure solutions to mitigate fauna-collision related road accidents; etc. Thereby the project team showed exemplary leadership in identifying ways to support the client beyond the regular supervision and organized workshops for the provinces on topics which were identified as important or deficient. These partnerships went further than the core road enhancement goal of the project and maximized the impact from the investments by ensuring higher consideration of protection of biodiversity and creating opportunities for women along some routes. 92. According to the borrower, the Bank team provided good quality support to the government during the implementation42. Justification of Overall Rating of Bank Performance 93. The Bank’s performance is rated Satisfactory. The Bank team ensured a project design that was relevant to the country’s needs, that integrated indigenous groups in the design process, and that established partnerships that have assured the sustainability of the benefits to indigenous groups. The project scope included robust financing for institutional strengthening, based on detailed knowledge and assessment of the DPVs’ needs and provided a highly relevant list of options for institutional strengthening activities. During implementation, even though faced with challenges due to limitations in capacity, inflation and devaluation, the team proactively helped the client complete all project activities and started many initiatives and partnerships with other Bank teams, outside organizations to demonstrate to the client best practices regarding road management, environmental sustainability, and women’s empowerment. D. RISK TO DEVELOPMENT OUTCOME 94. The risk that the project’s development outcomes would not be maintained is considered moderate. A key risk to the sustainability of road improvements is their maintenance. On the positive side, during the first years of operation, the roads will require primarily lower cost routine maintenance, suggesting an overall lower risk. For the provinces which had road upgrades from gravel to pavement, the risk from poor maintenance has been lowered through the paving, as now those roads require smaller routine maintenance compared to the earlier gravel roads that needed frequent resurfacing and regravelling. 95. Further, as required under the project, each of the five provinces with road investments presented an accompanying investment plan for the sustainability of the road assets after civil works completion, including a commitment to guarantee routine maintenance as part of the Participation, Transfer and Maintenance Agreements 42 Borrower ICR Report, December 2019. Page 30 of 71 The World Bank Norte Grande Road Infrastructure (P120198) (PTA) between the Federal Government and the beneficiary provinces. So far, this commitment has been met. The provinces of Chaco and Santiago del Estero (whose road sections were finished in the early part of the project, 2013- 2016) have regularly prepared maintenance plans, secured the budget and carried out maintenance. 96. However, an analysis of the DPVs’ budget allocations for maintenance, carried out during the ICR, shows that the DPVs’ ability to maintain the network depends significantly on currency fluctuations and can thus be at risk. This analysis looked at the annual road budget transfers from the federal government to the provinces and corrected them for dollar devaluation. In 2018 annual transfers from the federal government are enough only to cover the minimum necessary routine maintenance of the paved road network in the provinces. Over the period 2011 to 2018, a higher coverage level of 100% of the paved network and 60% of the gravel network was reached. The year 2017 was the best year, with the peak of transfers in dollars to the provinces. 97. Another key challenge moving forward will be the mainstreaming of all institutional strengthening activities in the DPVs. The delayed implementation of these activities prevented the DPVs from having enough time during project implementation to experience the use of the new systems, carry out operational adjustments to ensure their practicality, and benefit from project support. This increases the risk to their sustainable use, especially because there are no formal institutional arrangements to ensure that adequate budget allocations will be made for the use and further advancement of the new road asset management systems. 98. Important differences exist among the DPVs in terms of institutional capacity and professional working staff. The use of some of the new equipment, especially laboratories, is expected to be naturally adapted, as routine and quality control activities, which are common practices for DPVs, will be more efficient and accurate. Planning and analysis tools require more qualified personnel, and these are activities currently weakly practiced or not at all in some cases. Their future use will depend on the existence of skilled staff, with the capabilities and vision for their application in DPVs’ strategic planning exercises. V. LESSONS AND RECOMMENDATIONS Key lessons at entry include: 99. PIUs in projects that support decentralized levels of government need to include a coordinating mechanism for project beneficiaries to ensure their active participation. This is important for institutional strengthening activities which require ongoing engagement with beneficiaries who understand their institutional development needs and have more knowledge than PIUs, which tend to focus on fiduciary and project management aspects. A coordinating mechanism (which would ensure regular collaboration with the provincial governments), with a formal role in the implementation structure, could have been a platform for technical discussions and initiatives on institutional strengthening and contributed to a quicker absorption of institutional strengthening resources. 100. In federal, or decentralized systems of government, the implementation and loan agreement modalities (centralized or subsidiary loan) can be a highly relevant factor to implementation efficiency and successful completion, thus these modalities have to be very carefully considered during project preparation and based on country context and recent implementation experiences. Key lessons from implementation include: 101. In federal systems or decentralized countries where sub-national levels of government receive central government budget transfers for road network maintenance, central government should ensure that the budget Page 31 of 71 The World Bank Norte Grande Road Infrastructure (P120198) transfer entails minimum quality and maintenance criteria for sub-national levels in order to increase the efficiency of the provisioned public financing. In the current system in Argentina, the Federal Road Council (Consejo Vial Federal) is responsible for annually transferring central budget funds (collected through a fuel excise tax) to provinces to support provincial road maintenance. The only consequent requirement for the provinces is to invest this transfer exclusively in road maintenance, rehabilitation or construction. However, no quality standards or criteria are applied to control the sustainability of these investments. Beyond this project, valuable opportunities are missed by not encouraging provinces to coordinate maintenance and investment between each other. The Council’s function as the forum for provinces and the federal government to analyze complementarities between their respective road investment programs needs to be strengthened and amplified. The Council could also be a leading institution to identify capacity building priorities, especially on issues such as climate resilience. 102. Civil works contracts in local currency need to include mechanisms to protect the public interest and contractors in periods of high inflation or currency devaluation. The currency devaluations which occurred during the implementation affected the retention funds maintained by the investor and were a disincentive for the contractors to repair deficiencies during the guarantee period. Similar risk arose regarding the performance guarantees provided by contractors which lose their value in periods of devaluation (averaging a 30% devaluation throughout the loan’s period; the guarantees’ value in local currency fell around 70% in every 2-year contract). 103. Rural roads projects can significantly contribute to improving women’s empowerment and access to economic opportunities by promoting their participation in income generating activities, strengthening their leadership and life skills, and by removing constraints to their active participation in the design and implementation of infrastructure projects. Such projects43 can be instrumental in broadening women’s networks through their participation in community and women associations. Social networks give women increased access to peers, social support and information, strengthening their agency. . .. 43 Argentina – Road to Agency – The Qom Culture Route Initiative, World Bank, 2015. Page 32 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Reduce transport costs for users of provincial roads Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Evolution of average network Number 5.86 2.60 2.40 1.76 roughness on targeted provincial roads 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 Evolution of average Number 5.86 2.80 2.60 1.67 network roughness on targeted provincial roads (i) 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 Rehabilitation and Reconstruction Evolution of average Number 8.86 2.60 2.30 1.94 network roughness on targeted provincial roads (ii) 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 Upgrading Comments (achievements against targets): Page 33 of 71 The World Bank Norte Grande Road Infrastructure (P120198) The baseline and target values were recalculated based on an adjustment of targeted roads, from the ones identified during appraisal. Based on the expected completion of civil works and the IRI evolution until the project closing date, targets were updated using HDM-4. The IRI has been calculated as a weighted average based on section’s length. Its evolution in time from the baseline to the target is calculated with HDM-4 software based on a series of hypothesis. Local conditions in Norte Grande and a successful implementation of civil works explain the fact that achieved values exceeded proposed targets. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Quality of service measured Percentage 11.28 31.28 51.28 81.25 through user's perception 31-Jul-2012 30-Jun-2016 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): The baseline and target values were recalculated based on all the provincial roads that had been selected after approval of the project. The end target was increased expecting better outcomes from “baseline+20%” to “baseline+40%”. The target was highly exceeded confirming the need of the implemented investments and interventions and reassuring beneficiaries’ expectations and satisfaction. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 34 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Percentage reduction in Percentage 0.00 21.00 26.00 28.60 generalized travel costs on targeted roads, measured per 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 vehicle-kilometer in constant US dollars using HDM4 Percentage reduction in Percentage 0.00 21.00 26.00 29.00 generalized travel costs on targeted roads, measured 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 per vehicle-kilometer in constant US dollars using HDM4 (i) for light vehicles (with base of US$ 0.28 per veh-km) Percentage reduction in Percentage 0.00 37.00 31.00 27.60 generalized travel costs on targeted roads, measured 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 per vehicle-kilometer in constant US dollars using HDM4 (ii) for omni-buses (with base of US$ 5.55 per veh-km) Percentage reduction in Percentage 0.00 28.00 29.00 29.30 generalized travel costs on targeted roads, measured 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 per vehicle-kilometer in constant US dollars using HDM4 (iii) for heavy Page 35 of 71 The World Bank Norte Grande Road Infrastructure (P120198) vehicles (with base of US$ 1.60 per veh-km) Comments (achievements against targets): The project reduced the average generalized travel costs more than targeted for light and heavy vehicles. The generalized costs for omni-buses remained slightly under target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of provinces with Number 0.00 1.00 5.00 5.00 multi-annual road maintenance plans and road 17-Nov-2010 06-Nov-2018 31-Dec-2019 30-Apr-2020 database management systems in place (cumulative) Comments (achievements against targets): The project supported the elaboration of Multi-annual Road Maintenance Plans for five provinces (Chaco, Jujuy, Salta, Tucumán, Santiago del Estero). The plans were elaborated based on an extensive survey of traffic and condition of the provincial networks, which along with the prepared trainings and the costs system will provide the opportunity to rationalize and improve efficiency of expenditures in roads maintenance and conservation. Page 36 of 71 The World Bank Norte Grande Road Infrastructure (P120198) A.2 Intermediate Results Indicators Component: Rehabilitation, Upgrading and Reconstruction of Provincial Roads Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Roads rehabilitated, Non- Kilometers 0.00 495.00 400.00 418.00 rural 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Annual Average Daily Traffic Number 871.00 945.00 1151.00 1461.00 (AADT) on targeted roads 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): Presented values were calculated as a weighted average by length of AADT on all the 418 km targeted roads. The increase of about 7% interannually, on average, considerably higher than the average national growth rate, which stands at 3%. This growth is a natural consequence of reductions in vehicle operating costs and confirms the VOC reductions calculated by HDM-4. Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at Page 37 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Target Completion Share of rural population Percentage 24.00 39.00 39.00 34.00 with access to an all-season road 17-Nov-2010 30-Jun-2016 31-Dec-2019 31-Dec-2019 Number of rural people Number 79864.00 111010.00 11010.00 123511.00 with access to an all-season road 21-Mar-2018 Comments (achievements against targets): the increased shared is explained by the incorporation of new villages, within a 2 km buffer to paved roads, on the length of the upgraded roads. The following routes provided an increase in access to an all-season road: PR 46, PR 304, PR 9, PR 3 and PR 18. The remaining interventions, despite reducing vehicle operating costs, did not augment accessibility due to the existence of alternative routes in the surroundings of beneficiary populations. Component: Institutional Development and Project Management Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Road Safety Plans developed Number 0.00 4.00 4.00 4.00 in targeted provinces 17-Apr-2014 30-Jun-2016 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): The project financed preparation of four road safety plans in the provinces of Salta, Santiago del Estero, Tucumán and Jujuy. Each plan included: (i) a description of the situation of the targeted province in road safety terms, comparing it to the national level context; (ii) an in-depth assessment of a pilot Page 38 of 71 The World Bank Norte Grande Road Infrastructure (P120198) section identified by each DPV; and (iii) the proposal of a series of short-term much needed interventions for each of the pilot sections, along with conceptual-phase documentation. Page 39 of 71 The World Bank Norte Grande Road Infrastructure (P120198) B. KEY OUTPUTS BY COMPONENT Objective/Outcome: To reduce transport costs for users of provincial roads along selected corridors of the provinces of the Norte Grande region. 1. Evolution of average network roughness on targeted provincial roads (i) rehabilitation and reconstruction and (ii) upgrading; 2. Quality of service measured through user’s perception; 3. Percentage reduction in generalized travel costs on targeted roads, measured per vehicle-kilometer in constant US dollars using HDM4: (i) Outcome Indicators for light vehicles (with base of US$ 0.28 per veh-km); (ii) for omni- buses (with base of US$ 5.55 per veh-km) and (iii) for heavy vehicles (with base of US$ 1.60 per veh-km); 4. Number of provinces with multi-annual road maintenance plans and road database management systems in place. 1. Roads rehabilitated, Non-rural. 2. Annual Average Daily Traffic (AADT) on targeted roads. Intermediate Results Indicators 3. Share of population with access to an all-season road. 4. Road Safety Plans developed in targeted provinces. 1. 277 km of provincial roads rehabilitated. 2. 141 km of provincial roads upgraded. 3. Three craftswomen community centers have been constructed Key Outputs by Component 1 (Together with the Norte Grande Water Project (P120211)) 4. Gravel roads to indigenous communities near provincial roads improved: RP 5 (31 km) from Santiago del Estero, RP 3 (5 km) from Chaco and RP 18 (7 km) from Santiago del Estero. Key Outputs by Component 2 1. Multi-annual road maintenance plans for 5 provinces (Chaco, Jujuy, Salta, Tucumán, Santiago del Estero) prepared; Page 40 of 71 The World Bank Norte Grande Road Infrastructure (P120198) 2. Road databases for 5 provinces (Chaco, Jujuy, Salta, Tucumán, Santiago del Estero) prepared; 3. Road Safety Plans for Salta, Santiago del Estero, Tucumán and Jujuy prepared; 4. System to track and analyze Civil Works Costs; 5. Heavy Vehicle Simulator and 2 trucks for HVS transport; 6. Provincial laboratories for the DPVs; 7. Laboratories for the regional offices of the DNV; 8. Supervision Drones; 9. Rocks and soils testing systems; 10. Traffic counters; 11. Pavement and Bridges calculation software; 12. 8 Drones and 4 Total Stations; 13. 4 CPU and topographic software; 14. 36 GPS receptors; 15. Bathimetry Equipment and Boats for Bathimetry Equipment; 16. Triaxial automated system. 17. Road's lighting quality works equipment 18. Road- Specific Laboratory equipment 19. CIRCLE 7.0 Software 20. Bridge calculation software 21. Microsoft licenses 22. Integrated road user support platform 23. EDCA (Estándar de Datos para la Contratación Abierta) consulting services: Open Data See the details in Annex 6. Page 41 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Verónica Inés Raffo Task Team Leader Stephen Muzira Transport Engineer Alejandro Alcala Gerez Senior Counsel Ricardo Lugea Senior Procurement Specialist Marcelo Acerbi Environmental Specialist Graciela Sánchez Martínez Social Development Specialist Natalia Bavio Financial Management Analyst Carlos E. Velez Lead Economist Patricia Lopez Martinez Senior Infrastructure Finance Specialist Ignacio M. Urrutia Duarte Junior Professional Associate Ana Kuschnir Program Assistant Maria Emilia Sparks Program Assistant Isabel Tomadin Indigenous Peoples Consultant Esteban Travaglianti Consultant, Sr. Transport Engineer Nicolas Estupiñan Consultant, Transport Engineer Gabriel Luongo Consultant, Sr. Transport Engineer Andreas Schliessler Sr. Transport Economist, Peer Reviewer Pierre Graftieaux Sr. Transport Specialist, Peer Reviewer Tomas Serebrisky Sr. Infrastructure Economist, Peer Reviewer Supervision/ICR Veronica Ines Raffo, Santiago Ezequiel Arias, Liljana Task Team Leader(s) Sekerinska Page 42 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Ana Maria Grofsmacht, Maria Elizabeth Grandio Procurement Specialist(s) Paula Agostina Di Crocco Financial Management Specialist Paula Genis Team Member Ana Maria Kuschnir Procurement Team Claudia Nin Procurement Team Santiago Scialabba Social Specialist Maria Emilia Sparks Procurement Team Graciela Dora Broda Procurement Team Claudio Luis Daniele Team Member Pablo Francisco Herrera Environmental Specialist Francisco Javier Jijena Sanchez Team Member B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY10 23.928 61,188.62 FY11 30.980 119,249.45 Total 54.91 180,438.07 Supervision/ICR FY11 4.444 12,118.07 FY12 33.714 168,453.94 FY13 28.436 114,715.51 FY14 26.378 135,735.26 FY15 24.759 92,835.32 FY16 33.403 113,490.69 FY17 23.830 123,059.51 Page 43 of 71 The World Bank Norte Grande Road Infrastructure (P120198) FY18 14.981 71,284.10 FY19 11.635 65,141.83 FY20 7.843 59,115.02 Total 209.42 955,949.25 Page 44 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ANNEX 3. PROJECT COST BY COMPONENT Amount at Amount after last Actual at Project Percentage of Approval Components Approval restructuring Closing (US$M) (US$M) (US$M) (US$M) Component 1: Rehabilitation, Upgrading and 365.00 352.39 345.14 97.94% Reconstruction of Provincial Roads Component 2: Institutional 34.00 16.39 13.69 83.52% Development and Project Management Front end fee 1.00 1.00 1.00 100% Total 400.00 369.77 359.83 97.30% Page 45 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ANNEX 4. EFFICIENCY ANALYSIS HDM-4 Assessment model The economic analysis was conducted using the Highway Development and Management Tool (HDM-4), which simulates life-cycle predictions of road deterioration, road works effects and their costs and road user costs and provides economic decision criteria for road construction and maintenance works. The HDM-4 analyzes projects by computing present values, at a given discount rate, of costs and benefits of different investment options in terms of savings in road maintenance costs, vehicle operating costs and travel time costs. The comparison is done between the “do something” scenario (with project case) and the “do minimum” scenario (without project case) over the analysis period. The “do minimum” scenario incorporates an assessment of what would happen to the road infrastructure and road users if the project was not undertaken. The project scenario consists of the project construction works followed by proper maintenance works over the analysis period and for the different road sections that make up the Project. Within each group, in turn, a representative homogeneous section was modeled separately, incorporating their unique construction and maintenance cost structure and their traffic forecasts. The results for each group of works were later weighted and consolidated to obtain the Project’s EIRR and the NPV. The economic analysis follows a standard cost-benefit analysis framework, estimating and valuing exclusively the direct benefits to transport users when the transport system - in this case the road corridor - is incrementally improved. As follows, this is a partial equilibrium analysis which does account for changes in economic geography (e.g. agglomeration effects, land use or other economy-wide and social impacts which the project could facilitate). Similarly, it assumes that transport services providers are price takers and the transmission of lower vehicle operating costs to lower transport costs are intermediated by the market structure of the domestic transport industry as well as the supply response of transport services. In other words, the model assumes perfect competition and hence no possibility for transport service providers to behave in monopolistic fashion. The time horizon for analysis was considered in 20 years, and a benchmark discount rate of 12% per annum has been implemented in order to consider the difference in time of costs and benefits. An economic analysis to confirm the IERR and the NPV established at appraisal was carried out by the Planning Department of DNV. Furthermore, the economic assessments were also extended to every other executed civil work, following an Ex_post methodology. For the Ex_ante economic evaluation, three scenarios each with a different upgrading intervention (RP 3, RP 9 and RP 304) were analyzed and compared to select the best upgrading design. For the Ex_Post economic evaluation, the selected scenario during the Ex_Ante analysis and the actual executed scenario are compared to the baseline to evaluate whether the executed scenario had more or less benefits than originally planned. Executed projects characteristics During the project’s lifetime, 9 different road sections were rehabilitated or upgraded to paved standard. These projects total some 417 km. The projects are as described below. Page 46 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Table 1 – Civil Works Description Provincial Starting Ending Region Section Province Length(km) Type Route N° Date Date Chaco 40.96 Rehabilitation nov-13 may-15 Empalme RN N° 16 - 9 Capitan Solari. 304 Los Gutierrez – Río Sección 1: Los Gutierrez Tucumán 22.37 Rehabilitation jul-13 sep-15 Ureña. (Prog. 0,00) - La Ramada (Prog. 22,367) Sección 2: La Ramada Tucumán 33.17 Rehabilitation (Prog. 22,367) - Burruyacu (Prog. 55,540) 5 La Banda – La Km. 63+200 - 135+000. Santiago del 71.80 Rehabilitation jan-13 mar-14 Invernada – Amamá Estero 18 Forres – Loreto Prog 0+000 - Prog Santiago del 42.10 Rehabilitation dec-13 dec-15 42+300. Estero 94 Santo Tomé - Arroyo Corrientes 66.50 Rehabilitation sep-16 oct-19 Chimiray 3 Pampa del Indio – Sección 1: Tramo 0,000 a Chaco 33.35 Upgrade(Pavi mar-12 sep-13 Villa Río Bermejito km 30,000 (RP Nº3) + ng) Zona urbana Pampa del Indio Sección 2: Tramo km Chaco 26.10 Upgrade(Pavi 30,000 a 42,347 km (RP ng) Nº 3) + Tramo 0,000 a 13,154 km (RP Nº3) + Acceso a Villa Rio Bermejito. 304 Los Gutierrez – Río Sección 3: Burruyacu Tucumán 86.90 Upgrade(Pavi jul-13 sep-15 Ureña. (Prog. 55,540) - Río ng) Ureña (Prog. 86,900) 46 Andalgalá-Belén Andalgalá-Pr. 50,915 Catamarca 50.11 Upgrade(Pavi jan-17 mar-19 (Piedra Cuesta de Belén) ng) These identified Works represent a total of 140.92 km of paving works (earth or gravel roads to be upgraded to paved standards) and 276.90 km of roads to be rehabilitated or reconstructed giving a breakdown of 34% paving against 66% rehabilitation/reconstruction. Table 2 – Typology of civil works km % Paving 140.92 34 Rehabilitation/Reconstruction 276.90 66 Total 417.82 Page 47 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Due to variations in provincial budgets and priorities, and the level of traffic and existing surface type on different segment, the calculation of the proposed pavement structure using AASHTO 1993 has adopted different years of design life ranging between 10 and 15 years for existing earth and asphalt pavements and up to 25 years for the concrete pavement section on RP No 304. Demand and traffic composition Civil work’s demand is measured by the Average Annual Daily Traffic (AADT). Several types of traffic demand were considered for the economic assessment of the various executed civil works:  Normal Traffic: it is the traffic that circulates in the studied road in the current situation and will remain doing so independently of the investment’s existence and subsequent upgrade/rehabilitation.  Generated Traffic: it corresponds to current route users who as a natural consequence of the project’s decrease in operational costs provoked by the asset’s upgrade, will circulate more frequently or will increase the duration of their trips.  Induced and Diverted Traffic: it is represented by the users that as a consequence of the investment, will change its circulation road from a previously preferred one to the currently upgraded one, without changing its origin nor its destination. The AADT values were measured, gathered and provided by each one of the DPVs, and in every case the dataset includes at least one measurement dated the previous year of the civil works completion (See Table 3). During the intermediate years in which no measurements were gathered, a linear interpolation was calculated. Moreover, as the HDM software requires to predict demand’s evolution in time, the growth rate existent from the work’s completion until present has been set at the average national AADT growth, at 3%. The latter has been used to predict traffic’s evolution during the project’s lifetime. Table 3 – Traffic Timeseries Provincial 2011 2012 2013 2014 2015 2016 2017 2018 2019 Route N° 5 1029 1060 1092 1167 1246 1332 1423 1520 1624 18 964 993 1022 1053 1175 1312 1465 1635 1825 3 333 377 426 482 725 745 766 787 810 9 497 585 688 809 994 1072 1288 1548 1595 304 2151 2216 2282 2508 2756 3029 3329 3659 3769 46 251 258 266 274 291 309 328 348 369 94 271 279 300 323 348 375 397 420 444 *Colored cells represent measured values Generated and induced traffic has only been considered as non-negligible in upgraded roads, this is in the ones that were not previously paved: PR 3, PR 46 and PR 304. For the Chaco’s PR 3 case, an induced traffic of 30 daily vehicles has been added coming from PR 95 and heading to the provincial capital city, Resistencia. This estimation is based on Chaco’s DPV measurements dated from 2013 and 2014, which informed a difference of traffic in the PR 95 between 500 and 480 vehicles, expected to augment from 20 to 30 vehicles following the national grow trend. In the case of the other two upgraded provincial roads, a considerable rise in traffic has been appreciated Page 48 of 71 The World Bank Norte Grande Road Infrastructure (P120198) after the completion of civil works. It has been assumed that the normal traffic growth has been as the national average, at 3%, and the remaining growth (3,1% for PR 46 and 7% for PR 304) corresponds to induced traffic. Traffic composition and vehicle fleet characteristics has also been provided by the 5 different Provincial Roads Directorates and are as described below. Table 4 – Traffic composition and vehicle fleet characteristics Costs of the civil works (CAPEX) and operating costs (OPEX) Vehicle operating costs are calculated on a yearly basis by DNV and published on “COSTOP” for an ample variety of vehicular fleet, operating speeds and regional contexts. For each of the civil works, COSTOP values were transformed applying the adequate ARS-USD exchange rate for the last year of civil works. Regarding capital expenditures, budgeted values were adjusted considering every incurred and approved civil works modification. Following DNV’s recommendations, a 0.708 economic/financial costs factor has been applied. This value is the result of a 21% tax rate plus insurances deduction. The cost of the executed civil works in financial terms has been about 414.59 million US$ Table 5 – Budgeted and Final Costs Budgeted Final US$ Provincial Route Amount Region Cost (US$ Millions N° (US$ Millons) /km Millons) Empalme RN N° 16 - 9 18.91 30.59 0.747 Capitan Solari. Los 304 Gutierrez – 44.49 89.27 1.027 Río Ureña. La Banda – La 5 51.49 90.81 1.265 Invernada – Amamá Page 49 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Forres – 18 22.95 39.72 0.943 Loreto Santo Tomé - 94 18.55 17.97 0.27 Arroyo Chimiray Pampa del Indio – 3 61.73 71.16 1.197 Villa Río Bermejito Andalgalá- 46 53.96 75.07 1.498 Belén Global 272.08 414.59 0.99 Maintenance Strategy The proposed maintenance strategy varies for each type of work (rehabilitation or upgrade) considering the technical solution and its structural implications. Table 6 – Maintenance Strategy Provin cial Length Maintenance w/o Region Section Province Type Maintenance with project Route (km) project N° Reconstruction when Empalme 5-cm asphaltic reinforcement IRI>=8, RN N° 16 - when IRI>=3,5, 9 Chaco 40.96 Rehabilitation patching work, Capitan patching work, fissure sealings fissure sealings and Solari. and routine maintenance routine maintenance 5-cm asphaltic reinforcement Sección 1: Los Gutierrez Fissure sealings when IRI>=3,5, (Prog. 0,00) - La Ramada Tucumán 22.37 Rehabilitation every 8 years and patching work, fissure sealings (Prog. 22,367) routine maintenance Los and routine maintenance 304 Gutierrez – Reconstruction when 5-cm asphaltic reinforcement Río Ureña. Sección 2: La Ramada (Prog. IRI>=8, when IRI>=3,5, 22,367) - Burruyacu (Prog. Tucumán 33.17 Rehabilitation patching work, patching work, fissure sealings 55,540) fissure sealings and and routine maintenance routine maintenance Reconstruction when La Banda – 5-cm asphaltic reinforcement IRI>=7, La Santiago when IRI>=3,5, 5 Km. 63+200 - 135+000. 71.8 Rehabilitation patching work, Invernada del Estero patching work, fissure sealings fissure sealings and – Amamá and routine maintenance routine maintenance Reconstruction when 5-cm asphaltic reinforcement IRI>=7, Forres – Santiago when IRI>=3,5, 18 Prog 0+000 - Prog 42+300. 42.1 Rehabilitation patching work, Loreto del Estero patching work, fissure sealings fissure sealings and and routine maintenance routine maintenance Reconstruction when Santo 5-cm asphaltic reinforcement IRI>=5, Tomé - when IRI>=3,5, 94 Corrientes 66.5 Rehabilitation patching work, Arroyo patching work, fissure sealings fissure sealings and Chimiray and routine maintenance routine maintenance Page 50 of 71 The World Bank Norte Grande Road Infrastructure (P120198) 5-cm asphaltic reinforcement Sección 1: Tramo 0,000 a when IRI>=3,5, km 30,000 (RP Nº3) + Zona Chaco 33.35 Upgrade (Paving) patching work, fissure sealings Pampa del urbana Pampa del Indio Resurface every 120 and routine maintenance Indio – 3 Sección 2: Tramo km 30,000 days and routine Villa Río 5-cm asphaltic reinforcement a 42,347 km (RP Nº 3) + maintenance Bermejito when IRI>=3,5, Tramo 0,000 a 13,154 km Chaco 26.1 Upgrade (Paving) patching work, fissure sealings (RP Nº3) + Acceso a Villa and routine maintenance Rio Bermejito. 5-cm asphaltic reinforcement Los Sección 3: Burruyacu (Prog. Resurface every 120 when IRI>=3,5, 304 Gutierrez – 55,540) - Río Ureña (Prog. Tucumán 86.9 Upgrade(Paving) days and routine patching work, fissure sealings Río Ureña. 86,900) maintenance and routine maintenance 5-cm asphaltic reinforcement Resurface every 120 Andalgalá- Andalgalá-Pr. 50,915 when IRI>=3,5, 46 Catamarca 50.11 Upgrade(Paving) days and routine Belén (Piedra Cuesta de Belén) patching work, fissure sealings maintenance and routine maintenance Inputs Breakdown In HDM terms, in order to quantify the direct and indirect benefits incurred by the project, the following data was used as an input: (i) geometric data: design considerations and road’s condition; (ii) current and projected demand, including the derived, induced and generated traffic; (iii) vehicle fleet characteristics and particularities, prices of vehicular inputs and travel time costs; (iv) maintenance strategies and unit costs per kilometer; (v) civil works budget; (vi) structural characteristics for each intervention; and (vii) exogen model benefits. As an example, below is a detailed breakdown of every input used for one of the Norte Grande’s intervention: PR 46. Table 7 – Inputs Breakdown Page 51 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Page 52 of 71 The World Bank Norte Grande Road Infrastructure (P120198) International Roughness Index evolution The evolution of the pavement’s lifetime can be inferred by analyzing the International Roughness Index (IRI). The latter is a proxy for user's comfort and is directly related to the maximum vehicular speed and to the perception on the road's quality. Likewise, it is directly proportional to pavement’s deterioration and it is the basic decision Page 53 of 71 The World Bank Norte Grande Road Infrastructure (P120198) and control parameter for defining the software’s maintenance interventions schedule. HDM-4 simulates the evolution throughout time of this indicator, considering every pre-established input, and comparing the do- something scenario with the do-nothing one. Below in red is the evolution of IRI without interventions and in blue the progressive paved solution change in time, following the maintenance strategy. Figure 1 – IRI evolution projections for project’s lifetime Page 54 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Table 8– Summary of costs per civil work and comparison with cost at appraisal COSTO POR KM MES BASE COSTO POR KM PAD OFERTAS EJECUTADO Monto Monto Mont Costo/ Costo Tipo de Costo/km de o de Longitud DÓL km /km Proyecto de Obra(1) (MILL Obra % Obra % (Km) AR (mill (mill obra (Mill US$) (Mill (Mill US$) US$) US$) US$) US$) Ruta Provincial Nº 94, Tramo: Santo Tomé - Arroyo Chimiray. Provincia de Corrientes. Total RP N° 94 66.45 Rehab. 32.41 0.49 27.47 9.63 0.41 -15% 18.29 0.28 -44% Ruta Provincial Nº 3, Tramo: Pampa del Indio – Villa Río Bermejito. Provincia del Chaco. Sección 1: Tramo 0,000 a km 30,000 (RP Nº3) + 33.35 Pav. 33.66 1.01 41.73 4.21 1.25 24% 42.29 1.27 26% Zona urbana Pampa del Indio Sección 2: Tramo km 30,000 a 42,347 km (RP Nº 3) + Tramo 0,000 a 26.10 Pav. 22.94 0.88 28.49 4.21 1.09 24% 28.87 1.11 26% 13,154 km (RP Nº3) + Acceso a Villa Rio Bermejito. Total RP N° 3 59.45 56.60 0.95 70.21 4.21 1.18 24% 71.16 1.20 26% Ruta Provincial N° 304, Tramo: Los Gutierrez – Río Ureña. Provincia de Tucumán. Tramo 1: Los Gutierrez (Prog. 0,00) - La Ramada 22.37 Rehab. 15.04 0.67 30.05 4.39 1.34 100% 26.92 1.20 79% (Prog. 22,367) Tramo 2: La Ramada (Prog. 22,367) - 33.17 Rehab. 17.69 0.53 29.15 4.39 0.88 65% 24.72 0.75 40% Burruyacu (Prog. 55,540) Tramo 3: Burruyacu (Prog. 55,540) - Río 31.36 Pav. 22.65 0.72 44.94 4.39 1.43 98% 37.63 1.20 66% Ureña (Prog. 86,900) Total RP N° 304 86.90 55.37 0.64 104.13 0.35 1.20 88% 89.27 1.03 61% TOTALES de la 212.80 144.38 0.68 201.81 0.95 40% 178.73 0.84 24% MUESTRA (1) Agosto de 2010 Page 55 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Otras obras ejecutadas fuera de la muestra COSTO POR KM MES BASE COSTO POR KM PAD OFERTAS EJECUTADO Monto Monto Mont Costo/ Costo Tipo de Costo/km de o de Longitud DÓL km /km Proyecto de Obra(1) (MILL Obra % Obra % (Km) AR (mill (mill obra (Mill US$) (Mill (Mill US$) US$) US$) US$) US$) RP 9 - Provincia del Chaco RP N° 9 - Tramo: No formó parte de la Empalme RN N° 16 - 40.96 Rehab 36.42 5.43 0.89 s/d 30.62 0.75 -16% muestra Capitan Solari. RP 5 Y RP 18 - Provincia de Santiago del Estero RP Nº 5: La Banda – La Invernada – Amamá. No formó parte de la Tramo: Km. 63+200 a 71.80 Rehab 89.15 4.50 1.24 s/d 82.01 1.14 -8% muestra 135+000. Provincia de Santiago del Estero. RP Nº 18 - Forres – No formó parte de la Loreto. Tramo 1: prog 42.10 Rehab 52.05 5.73 1.24 s/d 44.87 1.07 -14% muestra 0+000 y 42+300. RP 46- Provincia de Catamarca RP Nº 46: Andalgalá- Belén, Sección: No formó parte de la 50.11 Pav 97.85 9.36 1.95 s/d 74.69 1.49 -24% Andalgalá-Pr. 50,915 muestra (Piedra Cuesta de Belén) TOTALES de No formó parte de la 204.97 275.47 1.34 s/d 232.19 1.13 -16% OBRA ADICIONALES muestra TOTALES del 417.77 0.68 477.28 1.14 68% 410.91 0.98 45% Programa Meta 400.00 Grado de cumplimiento 104% Obras de rehabilitación 140.92 Obras de pavimetaciones nuevas 276.85 Page 56 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Loan’s objectives The objective of the project was to facilitate the integration of productive regions in the northern provinces of Argentina to the economic development, fostering economic growth and diversification through: (i) the improvement of accessibility and connectivity conditions within and between regions; and (ii) by complementing investments, public and private actions. The proposed project was based on the achievements of previous projects, also financed by the Bank, and had the following specific objectives I. To improve accessibility and connectivity conditions of Norte Grande economic and productive circuits with domestic and foreign markets; II. To reduce vehicle operating costs and travel time for cargo and passengers intervened corridors; III. To improve safety conditions for the affected users; IV. To promote the sustainability of the road heritage’s conservation by ensuring works maintenance in time; V. To Strengthen the planning and management capacity of the provincial road administration agencies. Rehabilitation, upgrade and reconstruction of provincial roads This component included the execution of civil works for rehabilitation, upgrading and reconstruction, through the implementation of sub-projects (such as base reconstruction, surface reconditioning, paving and/or asphalt coating, including works on sidewalks, drainage, masonry, signaling, lighting, auxiliary works and road safety improvements) under the jurisdiction of the participating provinces of the Norte Grande Region. Institutional Strengthening Among the variety of activities carried out, because of their contractual amount and institutional impact, it is worth mentioning the acquisition of laboratory and condition assessment equipment, the implementation of the Open Contracting Data Standards, the design of pluriannual maintenance plans in the provincial road network and the training related to costs analysis in road civil works. Training sessions on road investments planning tools (RONET and ROCKS) The main objective of the ROCKS model is to develop an information and cost analysis system for road works, to create an “institutional memory” by obtaining a range of unit costs and its average values by type of civil work, based on historical data by generating a of road works costs database referred to a systematic and uniform methodology. In terms of road investment planning, the Bank implemented the RONET (Road Network Evaluation Tools) model, which allows to simulate the implementation of a Pluriannual Investment Plan at the network level, optimizing the allocation of resources and comprehensively assessing the road network of a provincial or national state, in order to identify CAPEX and OPEX needs of the entire network, based on condition standards and their associated costs. On the 18th and 19th September 2013, Training Workshop on Tools for Road Investment Planning were held, with a total of 49 participants, including representatives of the Provincial Road Directorates of the nine provinces that make up the Norte Grande Region. In addition, representatives of the Interamerican Development Bank, CAF, the National Ministry of Economy and the PIU also participated. Representatives of Chaco’s DPV presented the Page 57 of 71 The World Bank Norte Grande Road Infrastructure (P120198) work they had carried out in preparing the province's Pluriannual Investment plan, using the HDM-4 model and applying the RONET model. This activity allowed to underscore the importance of the work carried out by Chaco’s DPV in the elaboration of its plans, by sharing with the remaining provinces participating in the conference. Open Contracting Data Standard A service providing a set of data and documentation from all stages of the contracting process is the core of this system. It allows citizens to be informed and it enhances the public character and disclosure that governmental actions are meant to have. This application represented an innovation in the Public administration, as it has been the first of its kind implemented at a national public agency in Argentina. Its impact should be reflected in the medium and long term, measured by international indicators of public performance. The implemented system, democratizes access to data and provides maximum transparency to public management, since no approval, license or registration is required for its use, visualization or analysis. Provided data can be visualized or downloaded on any computer device. Pluriannual Investment Plans Given the strategic value of the road network, it is of upmost importance to preserve it sustainably, allocating conservation and maintenance expenditures in a systematic way and assessing intervention policies for routine and periodic maintenance that maximize society's benefits. Given that budgetary allocations for road agencies are generally insufficient, delays in maintenance policies usually take place, leading to a temporal offset of needed investments for recovering the initial level of service, gradually increasing deterioration of some sections and generating operating cost overruns and road safety losses for users. From the Road Agencies side, the level of maintenance budgets forces in some cases to implement conservation works for pavements in Regular or Bad conditions, being much more expensive to upgrade them to a Good condition level. Upgrading roads from Bad to Good condition at this stage implies intervening with costs of around 4 to 6 times greater than those necessary to maintain the road within the good condition range. In addition, from the user side, roads condition is intimately related to user costs, as vehicle operation costs and travel times increase when roads deterioration intensifies. The identified problematic showed the need for conservation and upgrading in road assets, in order to achieve investment’s sustainability over time while optimizing available resources. This challenging task required Road Directorates to acquire new tools for strategic control of investment planning and conservation. The Norte Grande Road Infrastructure project made it possible to conceive four planning and conservation plans for the provincial road network, which will provide each DPV with the necessary tools to plan investments and maximize their available economic resources. The result will not only be an improvement in funds, but also a reduction in vehicle operation costs on the provincial roads in the longer term. Laboratory Equipment Provincial road agencies need to continuously collect data for the identification and characterization of their network, defining the needs for improvement in the offered quality of service in each section. In addition, an improvement in quality and periodicity of data collection will allow the possibility of a timely diagnosis, which is the main input in the design of investment planning and road maintenance. In addition, a correct quality control will be fundamental to reduce the cost of maintenance and optimize the resources that were allocated to infrastructure investments. The current objective is to support systematic measurements of provincial road networks and to extend its degree of coverage. For this purpose, the Heavy Vehicle Simulator (HVS) equipment was acquired. The HVS is a Page 58 of 71 The World Bank Norte Grande Road Infrastructure (P120198) large-scale accelerated load test equipment that leads to pavement failure by simulating several years of traffic load in a few months. This equipment allows a rapid evaluation of new materials, pavement designs and construction techniques. The outputs generated by the HVS can be used to develop and optimize the use of local materials, allowing improvements in design and maintenance strategies. As for quality control, the need to have laboratories with updated technologies and human resources with related experience was expressed, in order to carry out an efficient task. Therefore, DNV assumed the responsibility of installing research and development laboratories both to strengthen the quality controls of its regional dependencies, and to support quality control and technology transfer to the DPVs. Ex-Post connectivity measurements: Chaco’s Study Case – Impact Synergies The historical lag in the economic development of the Norte Grande Region is a debt that, in order to be settled, requires the implementation of complementary public policies that cover the whole spectrum of economic, social and institutional issues that govern the civic space and the daily life of its inhabitants. Among the aspects to be addressed, the execution of projects aimed at expanding infrastructure and increasing the area's level of competitiveness stands out as a fundamental development pillar. Seeking this improvement in the living conditions of the inhabitants of the Norte Grande, the Argentine Government has supported a program for the development and integration of the region which, since 2004, has involved several infrastructure development and competitiveness operations financed by the Inter-American Development Bank (IDB), the Andean Development Corporation (CAF) and the World Bank (WB). The implementation of complementary infrastructure policies within the same geographical area produce synergies and brings along impacts that grow exponentially. This is the case of two infrastructure works located in the departments of Libertador General San Martín, General Güemes, and Sargento Cabral, within the Province of Chaco: (i) the paving of Provincial Route No. 3 in the section Pampa del Indio - Villa Río Bermejito; and (ii) the construction of a water treatment plant and an aqueduct in the towns of Presidencia Roca, Pampa del Indio, Laguna Limpia, Las Garcitas, Ciervo Petiso, Colonias Unidas and Capitán Solari. The first one was executed under this loan, while the second one was also carried out with resources from the World Bank, under a water project. Both projects aimed at favoring the economic development and integration of the zone’s communities, by facilitating the access of its inhabitants to essential services for human development (Health and education), and by upgrading sanitary conditions with the supply of safe water. In order to measure the complementary impact of the implementation of both projects, and to evaluate the different public policies in a holistic manner, the World Bank conducted a short-term impact assessment to estimate what would have been the situation for the households (and their members) living in the area of influence of the Route if it had not been paved. The results of the work suggest that paving improved connectivity by increasing the probability of access to services and reducing the time to reach them. These improvements are associated with the following aspects: - Raise in the enrolment rate of children and young people (3 to 17) in the affected areas; in particular, for primary school-age boys (6 to 12 years old) and especially for those in poorer and more vulnerable households (given the low education of the head of household). - Increases in the activity and employment rate of the adult population (25-64 years). In particular, labor market participation is increasing for both men and women; and female employment is increasing, especially in households with lower education levels. As for young people (15-24 years old), no statistically significant impact was found, although an improvement in activity and employment indicators is observed, along with a decrease in unemployment. Page 59 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Efficiency in resources allocation The problem linked to the increase in costs between budgeted and executed values, which occurred during the period 2003-2019, exploded with the exit of the Convertibility Law regime and the socio-economic crisis that broke out in the country in December 2001. Since then, a mechanism was established to adjust prices in local currency through the application of the Price Redetermination Methodology established in Bidding Documents. The main problems linked to efficiency in the execution of the sub-projects financed under the loan were the following: - Price variation in local currency (ARS) and in dollars (USD), impacting the final price of works. - Unit price dispersions in Bidders' quotations. - Dispersions in the yields used in the analysis of Bidders' prices. - Delays in payments and in the execution of works. During the first period of the Project's execution, until 2015, the dollar exchange rate had a lower volatility and variation over time than the variation in domestic prices. The project was evaluated during the preparation of the PAD at August 2010 values, reference year and base month for economic evaluations, work costs and estimated benefits. In the period from 2010 to 2013 inclusive, the internal price variation in local currency of road works was of 22% on average, increasing from 20% in 2010 to 25% in 2013. In turn, the variation in dollars was of about 11% interannually in the period 2010-2012. This variation in dollar prices affected the physical targets of the Programs that were designed and executed in that period, due to the increase in dollar costs compared to the estimates made during the design and appraisal times. In general terms, the incremental costs observed during the first stage of execution were due to the aspects identified during training sessions on costs, which exposed the need to prepare optimized pluriannual plans, and the need for an implementation of a cost system in order to apply corrective measures in the bidding documents, in the bidding processes and in the format of the price analysis submitted by the bids, as well as the need to optimize project costs. Road Assets Sustainability Assessment Nationally, the provincial network is 199,516 km long, of which 23% presents a paved surface (45,027 km), 20% has improved gravel roads (40,811 km) and 57% corresponds to dirt roads (113,677 km). Out of this total network, almost 27% is in the jurisdiction of the Norte Grande provinces. The Road Network of the Norte Grande Region has 53,659 km, made up of 19.0% of paved roads, 22.9% of improved gravel and 58.2% of dirt roads. Page 60 of 71 The World Bank Norte Grande Road Infrastructure (P120198) In turn, the Norte Grande provincial road network is distributed geographically under the following typology: The administration and maintenance of the provincial network is the responsibility of the DPVs. Its main source of funding comes from fuel tax collection derived funds, according to law N° 23,966 and law N° 24,699, complementing in some cases with DNV taking care of the maintenance of routes in provincial jurisdiction through a system of agreements subscribed between the national government and some of the provinces. The above laws define that a percentage of revenues coming from fuel taxes should be assigned to the different jurisdictions based on a formula of polynomial distribution with three variables: population; level of investment in road works, and consumption of each province. Resources availability according to this allocation has been studied, in order to measure the sustainability of the investment in Norte Grande region, and to foresee the level of service in the short term 44. To this end, the annual revenue of each beneficiary province was converted to US dollars, taking the average dollar exchange rate per year, and considering the following costs per km for the maintenance of each type of road: 44Excluding the maintenance coverage by agreement executed by DNV, either with own equipment and personnel, subcontracting to a specialized company or delegating the tasks to the province. Page 61 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Road Surface U$S/km Pavement 6,300 Gravel 4,000 Dirt 1,200 The analysis shows that in 2018 funds in dollars were reduced due to the combined effect of the economic slowdown and the devaluation of the local currency that, on average, led the value of one dollar from 16.84 ARS in 2017 to 28.43 ARS in 2018. As a result, the final resources of that year for the Norte Grande provinces were only enough for routine maintenance of the paved network. However, considering the entire period (2011-2018), the opposite situation can be observed. The dollar exchange rate remained stable at lower levels, and for this reason the funds had a higher degree of coverage, reaching 100% of the paved network and 60% of the gravel network. The highest degree of coverage was reached in 2013, 2015 and 2017. During these years, resources were available for the conservation of 100% of the paved network and between 90 and 100% of the gravel network. Available Resources and degree of Degree of coverage for coverage for maintenance routine maintenance % of Million USD, Year paved Paved Gravel Dirt Roads Fund network 2011 72.01 112% 100% 16% 0% 2012 94.84 148% 100% 63% 0% 2013 108.51 169% 100% 91% 0% 2014 101.03 158% 100% 75% 0% 2015 112.98 176% 100% 100% 0% 2016 85.33 133% 100% 43% 0% 2017 108.18 169% 100% 90% 0% 2018 64.13 100% 100% 0% 0% Average 93.38 146% 100% 61% 0% Page 62 of 71 The World Bank Norte Grande Road Infrastructure (P120198) The implementation of the Pluri-Annual Investment and Maintenance Plans for the road network in the provinces of Salta, Jujuy, Santiago del Estero and Tucumán prepared under Component 2 of this loan will undoubtedly contribute to an improvement in the distribution of monetary resources for each province. Environmental Impact Good practices that were not initially included in the loan emerged from the needs and opportunities identified during the project’s implementation:  The Route of the QOM culture in Provincial Route 3 with its accesses and signaling, implemented following the request of the local community;  The participation of the Project Executing Units of the provincial directorates in environmental training, a space created for the discussion of the Bank's environmental safeguards and their application according to the specific characteristics of each local region and province;  The opportunity to collaborate in the preservation of the local archaeological heritage for the Catamarca community in collaboration with the Museum of Andalgalá;  Enriching the performance of DNV's environmental area based on its experience with MDB, incorporating lessons learned in the design of the environmental strategy for PPP corridors and for locally funded works. o Attention to the environmental aspects in early stages to identify and define from the very beginning the environmental priorities that will contribute to multiply the benefits of the project. o Socio-environmental assessment defined according to project categorization based on the level of risk and sensitivity of the environment. o Analysis of the mitigation of impacts derived from climate change, proposal of adaptations and consideration of the Nationally Determined Contributions to low carbon development. Hydraulic studies with projections of upgrade needs according to climate change. o Definition of environmental baseline in discussion with technical areas of the Ministry of Environment and Sustainable Development. o Implementation of mechanisms to share the proposed works including Expedited Environmental Page 63 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Studies, for citizen participation and awareness of local and provincial authorities, to inform the public on early stages and consider its points of view throughout the planning and decision- making process. o Implementation of MDB safeguards in projects with local funding. o Implementation of penalties for non-compliance of environmental specifications established in bidding documents. o Hierarchization of the environmental area in DNV’s internal organigram. Lessons learned The Norte Grande Road Infrastructure Project was a program of works that covered an extensive execution period of approximately eight years, including different contexts: two constitutional governments of different political sign, and management of the works that made up the Norte Grande Road Infrastructure Program under the scope of two different institutions. In economic terms, the period has been characterized by a sustained increase in prices, a gradual devaluation of the local currency and an increase in sovereign public debt. In terms of growth, Argentina experienced an erratic evolution of its GDP, which ended with a reduction of 2.2% compared to 2011 levels. At the same time, the performance of the trade balance turned out to be in surplus between 2011 and 2014, later on running in deficit between 2015 and 2018. Although most of the work was carried out in the first part of the period, the deterioration in the purchasing power of the local currency, the uncertain trajectory of the exchange rate, and the temporary mismatch between the two variables, produced differences between the initially projected budgets and the finally certified and executed amounts. Other problems observed during the execution of the civil works during the first part of the program were: (i) dispersion of unit prices quoted in most of the bids; (ii) variations in the quoted indirect work costs; and (iii) disparity in applied performance rates. Although the prediction and assessment of the magnitude of changes in the monetary variables remains complex, it is possible to homogenize the costs and criteria applied in the analysis of roads civil work prices, in order to minimize the differences between the budgets calculated throughout the different stages of project preparation and execution. Therefore, it is needed to analyze in greater depth the costs of the works by comparing them with reference values from international experiences. As a consequence, the creation of a costs database has been proposed and implemented in order to monitor the above-mentioned variables. It remains as a priority for DNV to follow up on the application and institutionalization of the Costs System Software that has been developed under the financing of this loan. The software will make it possible to standardize the format of price analyses, to have a price and performance database, and to calculate the impact of each project on the rest of the sectors of the economy, both eliminating distortions in budget calculations and providing transparency to road infrastructure management. It is essential to accompany the creation of value and knowledge with a comprehensive maintenance plan that includes both national and provincial networks, coordinating efforts and designing strategies that approach the road sector problematics in a holistic fashion, beyond the jurisdictional boundaries. To this end, it is suggested to consolidate the already initiated institutional strengthening activities, and to intensify the exchange of knowledge and experience acquired between national and provincial levels, especially in the field of research and development, and in particular, in the use of the laboratory equipment acquired by DNV. Here it is suggested to continue signing agreements with the provinces for the creation of technical knowledge with HVS equipment. Finally, there is a need for permanent and exclusive follow-up and monitoring of civil works execution and assets acquisition financed through credit financial institutions. This activity should, at least, include: (i) the preparation of efficiency, efficacy and effectiveness indicators; (ii) data collection; and(iii) the implementation of an early Page 64 of 71 The World Bank Norte Grande Road Infrastructure (P120198) warning system. By duly acknowledging partial results of the programs, errors, deviations and delays from pre- specified goals and timetables could be anticipated. Page 65 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ANNEX 6. INSTITUTIONAL STRENGTHENING ACTIVITIES Beneficiary institutions are detailed for every good or service acquired. However, after the signature of a development and collaboration framework between the provincial directorates and DPV, that took place in 2019 at the Roads Federal Council, equipment can be shared with research and technical development purposes. Equipment to collect road data- DNV Good/ Service Description National industry widely used traffic counters that allow to quantify Traffic Counters the existing demand of the current network. These parameters are of paramount importance in every stage of transport planning. 8 Drones and 4 Total Stations 4 CPU (computer processing This equipment carries out photogrammetric and topographic units) and topographic software surveys in order to allow better and more precisely defined project 36 GPS (global positioning bidding documents. system) receptors Equipment and software to confirm quality of civil works Good/ Service Description This equipment, which allow to take samples of rocks and soils up to Triaxial automated system -DNV 60 mts deep, make possible to obtain characterization samples of the excavations mainly for the foundations of structures (bridges, etc). Soil and rock drill equipment- Additionally, they allow the evaluation of geological and/or soil DNV formations with different purposes. Equipment for District Laboratories for quality control of emulsions, asphalt binders, asphalt mixtures, fresh and hardened concrete, Road- Specific Laboratory stone aggregates, soils and stabilized granulometric. Scales and equipment- DNV and DPVs various elements of general use for district laboratories for quality control. Volatile solvent extraction hoods for quality control of binders, emulsions and asphalt mixtures. Software to plan investment and maintenance needs Good/ Service Description CIRCLE 7.0 Software – DNV and Mechanical Software for Structural Design of New and Refurbished DPVs Pavements, allowing DPVs to define its own criteria for pavement failure. Page 66 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Mechanical Software for bridge calculation by finite element method Bridge calculation software – allowing DPVs to optimize the designs of new bridges giving the DNV and DPVs possibility of including load scenarios on the current state of their infrastructure. Microsoft licenses- DNV and DPVs Official use licenses. 4 multi-annual plans for the provincial road networks including local Multiannual plans - DPVs practices, according to each specific budget. The Software allows to homogenize the format of the price analysis, using a 160-projects database of costs and yields organized in three Costs system – DNV and DPVs different levels, and calculating the impact of each work on the complementary sectors of the economy, eliminating distortions and providing transparency to road infrastructure management. Heavy Vehicle Simulator (HVS) This full scale accelerated test equipment allows the evaluation of equipment - DNV different technologies, in the conditions under which the pavement will be built, by simulating 10 years of deterioration in only 3 months of testing. Consequently, this will allow the optimization of resources 2 trucks for HVS transport associated to the implementation of new technologies assuring a stimulated durability in the project. System to share data and receive feedback from users Good/ Service Description Integral user- aimed platform, for claims, complaints and linkage with Integrated road user support DNV, through an app. platform The Standard Data System for Open Contracting (EDCA) refers to a EDCA (Estándar de Datos para la common and simple standard that allows to connect data generated Contratación Abierta) consulting by the governmental administration with the necessities of users services: Open Data - DNV wishing to analyze public procurement. Open and accessible information dissemination, timely allows citizens and enterprises to participate more actively by eliminating information asymmetries. Capacity building Good/ Service Description Training on new world-level technologies in the elaboration of rigid ICPA training days pavement dictated by ICPA (Instituto del Cemento Portland Argentino) Page 67 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Hot Asphalt Microagglomerate Training on asphalt binder technology dictated by ICPA Training MIDAS Bridge Software Training Training on the use of the acquired software Spanish- Latinamerican Asphalt Training on asphalt technology techniques and practices Congress HDM 4 Software Training Training on the economic assessment worldwide used tool: HDM4 Road Planning and investment Training on road engineering planning best practices tools training Topographic- geodesic and photogrammetric equipment Training on acquired equipment dictated by RTK and GEOSISTEMAS training Road Planning and cost analysis Training including WB used methodologies such as ROCKS and RONET training. Training on road safety knowledge and experiences in Latin American INTERCISEV Congress countries (Main road safety event in the region). Environmental Sustainability workshop 2015 Training on environmental awareness, sustainable roads and Road Infrastructure and biodiversity conservation. biodiversity conservation workshop Training on Road Safety Plans elaboration Road safety plans including a diagnostic of the current situation and guidelines on best practices for targeted provincial roads. Road Safety Plans Consultancy on improvements in fuel consumption’s efficiency Smartway Consultancy through driving best practices. Cooperation with the Ministry of Transport and the Ministry of Energy. Page 68 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Activities carried out as per the IPP Action Description Completion of work on gravel roads to QOM communities Road Access improvement along the PR 3 Construction of the QOMLASHEPI ONATAXANAXAIPI community center in Fortín Lavalle Community center for local community members to get Refurbishment of the Pampa del Indio together, articulate, exchange and share opportunities community center, headquarters of the organization Madres Cuidadoras de la Cultura QOM Updating of the general maps of the route's area of influence with information on the location of all the developed centers Signaling program and activities and new approach signals pointing out sacred places and other locations of interest for the indigenous communities Training for Santo Domingo's community and specific Road Safety Program workshop for local rural school placed next to the Provincial Route. Environmental Education Plan Training on household waste management In response to a request from the community, two days of training focusing on socio-organizational aspects and Support in Community Management management capacity in support of the community plan to Issues become a rural development association (Type of local government). Silvo-Pastoral Training Plan Two training days. Coordinated by Fabiana Menna, Specialist consultant in indigenous people, discussions and exchanges with representatives of communities linked to the development of QOM Women's Meetings local tourism and the promotion of artisan and cultural activities. Legal and accounting aspects discussions related to the legal personality used to frame the development activities. Financed from the World Bank’s budget Activity Description Discussion workshop on route ecology with emphasis on impacts on wildlife. Attendance of officials and technicians from government agencies in charge of planning, construction and maintenance of road Biodiversity conservation infrastructure in northern Argentina. International and local experiences related to road ecology were shared in order to identify the problems existing in the local context and to seek appropriate solutions. Page 69 of 71 The World Bank Norte Grande Road Infrastructure (P120198) Creation of a roads unit costs local database, differentiated by typology, Road Works Contracts, including more than 80 civil works. The calculation of each value Competition, and Efficiency: followed the World-Bank ROCKS model methodological approach. The Adding Transparency to the availability of this database will allow DNV to compare with other Road Sector in Argentina international values that followed the same methodology. (ROCKS study) Page 70 of 71 The World Bank Norte Grande Road Infrastructure (P120198) ANNEX 7. LIST OF DOCUMENTS USED  PAD  Loan Agreement  Aide Memoires and ISRs 2010-2019.  CPF FY19- FY22  World Bank (2006), “Argentina: El Desafio de reducir los costos logisticos ante el crecimiento del comercio exterior”  Chaco Province Report about road network development 2014-2018.  Argentina – Road to Agency – The Qom Culture Route Initiative, World Bank, 2015.  Evaluación de impacto de corto plazo de la Pavimentación de la Ruta Provincial Nro. 3 – Tramo Pampa de Indio- Villa Río Bermejito, 2016  Fortalecimiento Institucional de la Dirección Nacional de Vialidad y las Provincias del Norte Grande, DNV 2019.  Borrower ICR Report  GFDRR funded Risk analysis, Oxford Analytics, 2019.  LPI 2018.  WEF, 2019 Global Competitiveness Report. Page 71 of 71