The World Bank Fourth East West Highway Improvement Project (P130413) REPORT NO.: RES29983 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF FOURTH EAST WEST HIGHWAY IMPROVEMENT PROJECT APPROVED ON MAY 9, 2013 TO MINISTRY OF FINANCE TRANSPORT & ICT EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Mercy Miyang Tembon Senior Global Practice Director: Jose Luis Irigoyen Practice Manager/Manager: Juan Gaviria Task Team Leader: Mustapha Benmaamar, Robert Mutyaba The World Bank Fourth East West Highway Improvement Project (P130413) I. BASIC DATA Product Information Project ID Financing Instrument P130413 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 09-May-2013 28-Feb-2018 Organizations Borrower Responsible Agency Roads Department of the Ministry of Regional Ministry of Finance Development and Infrastructure (RDMRDI) Project Development Objective (PDO) Original PDO The PDOs are: (i) to contribute to the gradual reduction of road transport costs and to improve road safety along the section upgraded under the project; and (ii) to strengthen the capacity of the Roads Department (RD) and Ministry of Regional Development and Infrastructure (MRDI) to plan and manage the road network and improve road traffic safety. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-82630 09-May-2013 06-Jun-2013 05-Aug-2013 28-Feb-2018 38.00 25.35 12.65 IDA-52450 09-May-2013 06-Jun-2013 05-Aug-2013 28-Feb-2018 37.00 35.74 0 The World Bank Fourth East West Highway Improvement Project (P130413) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES Project status: The Fourth East West Highway Improvement Project was approved on May 9, 2013 in the amount of US$ 38 million (Loan IBRD-82630) and US$ 37 million (IDA -52450). This is the first restructuring of the project whose initial and current closing date is February 28, 2018. The project is in its fourth year of implementation and has disbursed over 79 percent (IBRD and IDA combined). The status of the main Project components to date is as follows: Component 1 – Improvement and Asset Management of the E-60 Highway: Major civil works for upgrading to motorway standard of about 12 km of the East West Highway E-60 Highway including the construction of a 2-lane dual carriageway between Agara to Zemo Osiauri were successfully completed on July 31, 2017. This contract is currently under a standard one year Defects Liability Period (DLP) until July 31, 2018. Environmental Improvement Measures along the completed section of Natakhtari-Ruisi of the E-60 Highway and other Civil Works to improve road safety and access roads on the existing E-60 Highway, between Natakhtari and Khashuri have also been completed. Only Small Scale Road Safety Improvements along the E-60 Highway stage lll and Lighting of the E-60 stage II are yet to be completed but works are ongoing, scheduled for completion in the next 5 months. Component 2. Both Institutional Strengthening components for the Ministry of Regional Development and Infrastructure and the Roads Department have been successfully completed. Component 3 – Preparation of supporting studies and future projects for the development of the East West Highway: The update of the feasibility study for the section Zemo Osiauri to Argveta and detailed engineering design for the section from Zemo Osiauri to Chumateleti were both completed. The study to define the scope of the maintenance interventions along some upgraded sections of the motorway from Natakhtari to Ruisi was cancelled. Component 4 – Project Management Support: All project management activities have been completed except design review of the ongoing studies, being carried out by an experienced International Independent Consultant. Overall, the project is on track to meet its development objectives (DO). The progress towards achievement of the DO is currently rated as Satisfactory and has been rated S for the duration of the Project. The overall implementation progress is assessed as at least Moderately Satisfactory for the last 12 months due to delays in the procurement of Components 2 & 4. These issues have now been addressed. Financial management is satisfactory and there are no overdue audits. Proposed changes: The World Bank Fourth East West Highway Improvement Project (P130413) This proposed Project restructuring responds to two separate requests received from the Government’s Ministry of Finance dated May 30, 2016 and July 18, 2017 to extend the Project closing date for the first time to February 28, 2019, and to allow funding of key additional studies with Project savings which resulted in part due to the cancellation of the maintenance study which focused on interventions along the E60 4-lane carriageway between Natakhtari to Ruisi (component 3 (14) of the procurement plan). The maintenance study only narrowly looked at a few sections and it was dropped from the Procurement Plan when the entire Operation and Management (O&M) of the East West Corridor was included in a Global Infrastructure Facility (GIF) Trust Funded Study managed by the World Bank. The GIF study is analyzing possible O&M private public options including the viability of concessioning the O&M, e-tolling and long term maintenance implications. This is a proposed level-2 project restructuring, which is required to extend the project closing date without changes in the Project Development Objective. Currently the Borrower is implementing 5 major studies under Component 3 including pre-feasibility, feasibility and detailed engineering studies of key road sections linking the East West Highway with neighboring countries. These studies are being undertaken with the Bank’s no objection and the status is as follows: • Preparation of Pre-Feasibility and Feasibility Study for Samtredia-Zugdidi Bypass Road (91km) (including access road to Anaklia Deep Sea Port). Consulting services contract was signed on February 13, 2017 and expected completion date is end of July 2018. • Preparation of Feasibility Study and Detailed Design for Upgrading of Rustavi-Red Bridge and Rustavi-Sadakhlo Roads (61km). Contract was signed on February 13, 2017 expected completion date is July 27, 2018. • Preparation of Feasibility Study for Upgrading of Tbilisi-Bakurtsikhe, Tsnori- Lagodekhi Road (127km) and Detailed Design for the Upgrading of Tbilisi-Sagarejo (30km) and Sagarejo-Bakurtsikhe Road (57km). The consulting services contract was signed on May 31, 2017, and expected completion date is November 6, 2018. • Preparation of Pre - Feasibility Study and Feasibility Study for Jinvali - Larsi Road (110km) and Detailed Design for the Construction of Kvesheti -Kobi Road Section (30km). Consulting services contract was signed on April 26, 2017 and expected completion date is July 10, 2018. • Preparation of Detailed Design for the Construction of Chumateleti-Khevi Section (12km). Consulting services contract was signed on February 2, 2017, and expected completion date is April 16, 2018. The Project team supports the need for the new project closing date of February 28th, 2019 to supervise the entire defects liability period and the completion of the above-mentioned important studies. Based on the proposed completion dates on the studies above, and taking into consideration of the satisfactory implementation progress of the project, the project task team recommends this project restructuring request to be approved. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications The World Bank Fourth East West Highway Improvement Project (P130413) IBRD-82630 Effective 28-Feb-2018 28-Feb-2019 28-Jun-2019 IDA-52450 Effective 28-Feb-2018 28-Feb-2019 28-Jun-2019