The World Bank Afghanistan Rural Access Project (P125961) REPORT NO.: RES39540 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF AFGHANISTAN RURAL ACCESS PROJECT APPROVED ON JUNE 26, 2012 TO ISLAMIC REPUBLIC OF AFGHANISTAN TRANSPORT SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Henry G. R. Kerali Regional Director: Guangzhe Chen Practice Manager/Manager: Olivier P. Le Ber Task Team Leader(s): Mohammad Ajmal Askerzoy, Abdul Hameed Khalili The World Bank Afghanistan Rural Access Project (P125961) ABBREVIATIONS AND ACRONYMS AFS Afghani (Local Currency) ARTF Afghanistan Reconstruction Trust Fund FM Financial Management GoIRA Government of Islamic Republic of Afghanistan ICR Implementation Completion and Result Report IDA International Development Association ISR Implementation Status and Result Report Km Kilometer MRRD Ministry of Rural Rehabilitation and Development MoT Ministry of Transport MoF Ministry of Finance NRAP National Rural Access Program NCU National Coordination Unit O&M Operation and Maintenance PDO Project Development Objective PIU Project Implementation Unit SDR Special Drawing Rights The World Bank Afghanistan Rural Access Project (P125961) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P125961 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 26-Jun-2012 15-Mar-2020 Organizations Borrower Responsible Agency Ministry of Transport,Ministry of Rural Reconstruction Islamic Republic of Afghanistan and Development Project Development Objective (PDO) Original PDO The project development objective is to enable rural communities to benefit from all-season road access to basic services and facilities. Current PDO The PDO is to enable (a) rural communities to benefit from all-season road access to basic services and facilities and (b) an early emergency response in the event of an eligible crisis or emergency. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-H7920 26-Jun-2012 22-Jul-2012 12-Aug-2012 15-Mar-2020 125.00 121.43 .20 TF-13093 15-Sep-2012 15-Sep-2012 15-Sep-2012 15-Mar-2020 312.00 271.91 40.09 The World Bank Afghanistan Rural Access Project (P125961) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. Background: The grants (IDA H7920-AF) and (TF13093-AF) which were approved on June 15, 2012 and September 15, 2012 respectively, for the Afghanistan Rural Access Project (ARAP), was declared effective on September 15, 2012. The current closing date of the Grant is March 15, 2020. The PDO is to enable (a) rural communities to benefit from all-season road access to basic services and facilities and (b) an early emergency response in the event of an eligible crisis or emergency. The project has three components: (A) Improvement of 1000 km of secondary gravel roads, 250 km of secondary asphalt road, maintenance of 1000 km of secondary road and related activities; (B) Improvement of 1385 km of tertiary gravel roads, maintenance of 2000 km of tertiary road and related activities; and (C) Institutional strengthening, project management and program development. 2. As of December 31, 2019, US$393.3 million (90%) of the total Grants has been disbursed. The likelihood of achieving the project development objective (PDO) and implementation progress are rated as “Satisfactory” and “Moderately Satisfactory” respectively. 3. There are no overdue or pending audit reports for the project. The project had ineligible expenditures which was reported after the last mission. The government partially refunded ineligible expenditures to the World Bank. The project team is coordinating with the Ministry of Finance to refund the remaining amount of the ineligible expenditures of about US$7400 and the amount will be processed at the latest by April 30, 2020. Project Status: The status of implementation of the project components is summarized below. The World Bank Afghanistan Rural Access Project (P125961) 4. Overall the project is progressing very well and delivering results on the ground. The progress towards achieving the development objective has been rated Satisfactory, while the overall implementation progress rated as Moderately Satisfactory during the past 12 months. The project has mostly achieved the planned targets of each of the sub- components except sub-component A1(Secondary gravel road), where progress stands at 75%. Component A – Improvement of 1000 km of secondary gravel roads, 250 km of secondary asphalt road, maintenance of 1000 km of secondary road and related activities: 5. Physical Progress: the progress of road construction/rehabilitation as of December 31st, 2019, was 750 km (75%) for gravel secondary roads, 260 km (104%) for asphalt secondary roads and 1480 meters of secondary bridges (148%)1. Also, over 1500 km of secondary roads have been contracted out to communities for routine maintenance and 670 km of secondary roads have been contracted out for periodic maintenance. In addition, 33 emergency maintenance sub-projects and 9 post disaster road sub-projects have been completed under this component. Component B – Improvement of 1385 km of tertiary gravel roads, maintenance of 2000 km of tertiary roads and related activities: 6. Physical Progress: as of December 31st, 2019 is 1502 km (108%) of tertiary roads and 1948 meters (97.4%) of tertiary bridges have been constructed or rehabilitated. Over 3500 km (175%) 2of tertiary roads have been contracted out to communities for routine maintenance since project inception and have been completed and closed by December 31, 2019. Meanwhile, over 2000 km (100%) of tertiary roads have been contracted out for periodic maintenance of which 1750 km (87.5%) have been already completed. Component C - Institutional strengthening, project management and program development: 7. This component is jointly implemented by MRRD and MoT in coordination with National Coordination Unit (NCU) of MoF. There has been substantial progress in achieving planned targets under this component. The Geographic Information System (GIS) network planning system is now in place and is used to prioritize roads for works. A full inventory of secondary roads and highways has been completed, except in insecure areas. The 9 regional offices have been constructed and all offices are occupied and functional. Since project inception, over 2000 interns and newly graduated university students have received short-term on the job training at both PIUs. This includes more than 50 female students. The overall achievements in internship program is is 3 times higher than initial targets. 8. This component has US$ 5 million in uncommitted funds which were allocated for two consultancies for technical and safeguard studies of Torkham-Jalalabad-Kabul highway. The procurement process for both consultancies has reached the final stages, but the government has opted to halt the procurement process and not to proceed with the studies, mainly due to political and trade tensions with Pakistan. Therefore, as part of this restructuring, both consultancies have been dropped and the allocated amount will be cancelled. II. RATIONAL FOR RESTRUCTURING 1. Since the project fund is one category and had savings from local currency depreciation, it was possible to construct more length of secondary bridges than the initial target. 2. The project implemented community based routine maintenance with lower cost/km/year compared with the appraisal cost, so therefore, it was possible to achieve more scope vs. the initial target with the same amount of allocated budget. The World Bank Afghanistan Rural Access Project (P125961) 9. The purpose and rational of this restructuring are to allow time to complete ongoing activities and allow sufficient time for related project-closing activities. While the project was able to complete hundreds of civil work contracts since inception, there are still a dozen contracts to be completed and closed. The proposed extension will enable the client to complete all remaining ongoing civil work contracts in a proper manner, monitor the defect liability period for civil work contracts and process final payments to the contractors. Also, the proposed extension is necessary for timely preparation of the Implementation Completion and Result Report (ICR). 10. The second purpose of the restructuring is to cancel US$30 million in uncommitted funds which are largely the result of savings from Afghani depreciation against the US dollar. III. DESCRIPTION OF PROPOSED CHANGES 11. The following changes are proposed as part of this restructuring: (i) extension of the Grant closing date from March 15, 2020 to December 31, 2020; (ii) cancellation of US$303 million in uncommitted project funds; and (iii) update of the disbursement forecast and implementation schedule. 3The system shows a reduction of US$ 80 million instead of US$30 million. This is because the additional finance, which was processed in 2017, was for a total amount of US$155 million with US$50 million as a financing gap. The World Bank Afghanistan Rural Access Project (P125961) IV. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Afghanistan Rural Access Project (P125961) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component A - Improvement Component A - Improvement and maintenance of secondary 291.00 Revised and maintenance of secondary 243.00 roads roads Component B - Improvement Component B - Improvement and maintenance of tertiary 168.00 Revised and maintenance of tertiary 143.00 roads roads Component C- Program Planning Component C- Program and Development, Institutional Planning and Development, 28.00 Revised 21.00 Strengthening and Program Institutional Strengthening and Coordination Support Program Coordination Support Component D: Contingency Component D: Contingency 0.00 No Change 0.00 Emergency Response Emergency Response TOTAL 487.00 407.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-H7920 Effective 31-Mar-2018 15-Mar-2020 31-Dec-2020 30-Apr-2021 TF-13093 Effective 31-Mar-2018 15-Mar-2020 31-Dec-2020 30-Apr-2021 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation IDA-H7920- Disburs XDR 82,800,000.00 0.00 82,800,000.00 001 ing BORROWER' S REQUEST TF-13093- Disburs 312,000,000.0 282,000,000.0 USD 30,000,000.00 12-Feb-2020 FOR 001 ing 0 0 COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES The World Bank Afghanistan Rural Access Project (P125961) Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed TF-13093-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GDS,WKS,NON-CON,CON SER,TRNG & IOC 312,000,000.00 229,755,414.33 282,000,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Emergency Expenditiure 0.00 0.00 0.00 100.00 100.00 Total 312,000,000.00 229,755,414.33 282,000,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2012 0.00 0.00 2013 0.00 0.00 2014 0.00 0.00 2015 0.00 0.00 2016 0.00 0.00 2017 0.00 0.00 2018 0.00 0.00 2019 55,000,000.00 0.00 2020 50,000,000.00 20,000,000.00 .