The World Bank PMGSY Rural Roads Project (P124639) REPORT NO.: RES32095 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PMGSY RURAL ROADS PROJECT APPROVED ON DECEMBER 20, 2010 TO THE REPUBLIC OF INDIA,NATIONAL RURAL ROADS DEVELOPMENT AGENCY, MINISTRY OF RURAL DEVELOPMENT TRANSPORT & DIGITAL DEVELOPMENT SOUTH ASIA Regional Vice President: Ethel Sennhauser Country Director: Junaid Kamal Ahmad Senior Global Practice Director: Jose Luis Irigoyen Practice Manager/Manager: Karla Gonzalez Carvajal Task Team Leader: Ashok Kumar, Reenu Aneja The World Bank PMGSY Rural Roads Project (P124639) I. BASIC DATA Product Information Project ID Financing Instrument P124639 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 20-Dec-2010 15-Dec-2020 Organizations Borrower Responsible Agency The Republic of India,National Rural Roads Development National Rural Road Development Agency Agency, Ministry of Rural Development Project Development Objective (PDO) Original PDO The objective is to strengthen the systems and processes of the national PMGSY rural roads program for the expansion and maintenance of all-season rural access roads. The result will enhance the road connectivity to economic opportunities a nd social services for beneficiary communities in the participating states. Current PDO The objective is to strengthen the systems and processes of the national PMGSY rural roads program for the expansion and maintenance of all-season rural access roads. The result will enhance the road connectivity to economic opportunities a nd social services for beneficiary communities in the participating states. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-88640 25-May-2018 31-May-2018 18-Jun-2018 15-Dec-2020 500.00 37.51 462.49 IBRD-79950 20-Dec-2010 14-Jan-2011 18-Feb-2011 30-Jun-2018 500.00 500.00 0 The World Bank PMGSY Rural Roads Project (P124639) IDA-48480 20-Dec-2010 14-Jan-2011 18-Feb-2011 30-Jun-2018 279.40 246.58 0 IDA-48490 20-Dec-2010 14-Jan-2011 18-Feb-2011 30-Jun-2018 620.60 607.49 0 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 PMGSY Rural Roads Project has made significant accomplishments on civil works, institutional development, and Disbursement Linked Indicators (DLIs)/Result Framework with a Highly Satisfactory rating of the PDO. Amongst PDO indicators, share of rural population with access to all-season roads in the project participating states (PDO indicator 1) has increased to 90 percent against the end project target of 72 percent (base line 67 percent). Similarly, the road network in good and fair condition (PDO indicator 2) has increased to 64 percent against the end project target of 55 percent (baseline 50 percent). All the DLIs have been fully achieved and have exceeded in many cases. About 26,000 km rural roads have already been constructed and opened to traffic, against a target of 22,520 km. The project is fully disbursed and over committed. Against a Bank funding of US$1375 million for civil works, MORD has sanctioned civil works for about US$2,000 million. The current expenditure is already about US$1,640 million. In addition, the Bank, through its Technical Assistance (TA) and Lending, has supported several key reforms and governance changes in PMGSY to improve overall delivery of PMGSY and management of the rural roads network in the country. These include: 1. A national policy framework for rural roads in the inception stage of PMGSY that has significantly contributed to the overall design of PMGSY; 2. Improved Delivery of PMGSY through establishment of a core network, development of standardized procedures for designs and improved procurement and contract management performance, effective management of social and environment issues, effective quality monitoring mechanisms, and use of OMMAS for transparency and effective monitoring; 3. Environmentally Optimized and Climate Resilient Engineering Designs to provide both economic and environmental benefits; 4. Establishing maintenance policies in 19 states, introduction of performance/community based maintenance contracts, and establishing asset management plans to preserve rural road assets; 5. Human Resources Professional Development Strategy: To build capacity and knowledge base of rural road agencies and construction industry; and 6. The Bank has also supported (i) a detailed assessment of PMGSY to further enhance its design and implementation; (ii) preparation of a road sector modernization plan; (iii) climate resilient and disaster risk mitigation strategy; and (iv) road safety action plan. Despite the above accomplishments, PMGSY involves the following challenges and areas of further enhancements identified in the PMGSY Assessment Report: Speed-up implementation in low capacity states; give special attention to situations that give rise to high construction costs; reduce the variability of compliance with PMGSY systems and The World Bank PMGSY Rural Roads Project (P124639) procedures; continue to build institutional effectiveness; reinforce and propagate early successes in addressing status of rural road maintenance; harness the concepts of ‘green growth’ and climate-resilience; and apply stronger road safety management to rural roads. MORD has requested the Bank (in September 2017) to increase lending by US$500 million to the project and provide the continuing Bank support which can help tackle the above development challenges. Of the US$500 million, USD150 million would be used to meet the funding gap in the project. The remainder US$350 million will be used to introduce green and climate resilient construction in PMGSY while widening the developmental scope to tackle institutional, road safety, low carbon and climate-resilience, gender and other issues described above. The Bank Team is also resolved to work with Indian counterparts to disseminate the PMSGY program internationally as an adaptable model for rural road programs in other countries. It will demonstrate how climate change agenda should be integrated in the rural roads strategy, planning and actions. The Bank has already sent an invitation to the Republic of India to negotiate the proposed Additional Financing. The proposed date of Board Approval is May 15, 2018. Summary of Proposed Changes:- The project closing date is to be extended from April 30, 2018 to June 30, 2018 in order to keep the project alive until the proposed Additional Financing (AF) of US$500 million for the project is approved by the World Bank Board. The Additional Financing was to be approved by April 30, 2018 but due to extra time required in revising the safeguard instruments to include the new state of Tripura, the Additional Financing would now be presented for the approval of the Board in May 2018. The Bank has already issued the invitation to negotiate to the Republic of India. A request for extension of time for the project up to July 2018 has been received from the Department of Economic Affairs (DEA), vide letter dated April 2, 2018, based on a request from the Ministry of Rural Development (MORD), vide letter dated March 23, 2018. However, the Additional Financing is expected to be approved before June 30, 2018 and it would suffice to extend the current closing date till June 30, 2018. The project is already extended by 29 months and with this proposed extension the total extension will become 31 months. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2016, 30-Jun- 2017, 31-Oct-2017, IBRD-79950 Effective 30-Nov-2015 30-Jun-2018 30-Oct-2018 30-Apr-2018, 30-Jun- 2018 The World Bank PMGSY Rural Roads Project (P124639) 30-Jun-2016, 30-Jun- 2017, 31-Oct-2017, IDA-48480 Effective 30-Nov-2015 30-Jun-2018 30-Oct-2018 30-Apr-2018, 30-Jun- 2018 30-Jun-2016, 30-Jun- 2017, 31-Oct-2017, IDA-48490 Effective 30-Nov-2015 30-Jun-2018 30-Oct-2018 30-Apr-2018, 30-Jun- 2018