The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) REPORT NO.: RES34961 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ANDHRA PRADESH & TELANGANA ROAD SECTOR PROJECT APPROVED ON OCTOBER 15, 2009 TO REPUBLIC OF INDIA TRANSPORT SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Senior Global Practice Director: Guangzhe Chen Practice Manager/Manager: Shomik Raj Mehndiratta Task Team Leader: Nupur Gupta The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) ABBREVIATIONS AND ACRONYMS APRDC Andhra Pradesh Road Development Corporation APRSP Andhra Pradesh Road Sector Project APTRSP Andhra Pradesh and Telangana Road Sector Project CRN Core Road Network DEA Department of Economic Affairs DDO Drawing and Disbursing Officer EA Environmental Assessment EoP End of Project GAAP Governance and Accountability Action Plan GoAP Government of Andhra Pradesh GoI Government of India GoT Government of Telangana IBRD International Bank for Reconstruction and Development ICT Information and Communication Technology ISAP Institutional Strengthening Action Plan IT Information Technology LA Land Acquisition LA Loan Agreement LTPBMC Long-term Performance-based Maintenance Contracts MIS Management Information System PA Project Agreement PAP Project affected person PDO Project Development Objective PPP Public Private Partnership RDC Road Development Corporation RR Resettlement and Rehabilitation R&B Roads and Bridges TRDC Telangana Road Development Corporation The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) 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 P096021 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 15-Oct-2009 31-Dec-2018 Organizations Borrower Responsible Agency Ministry of Finance, DEA APRDC Project Development Objective (PDO) Original PDO The development objective of the project is to provide better quality, capacity and safe roads to users in a sustainable manner through enhanced institutional capacity of the Andhra Pradesh government in the road sector. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-77920 15-Oct-2009 22-Jan-2010 23-Mar-2010 31-Dec-2018 239.00 176.57 62.43 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING PROJECT STATUS A. Project Components 1. The project comprises the following components:  Component 1 – Civil Works – Upgradation packages and OPRC packages. Road Improvement component comprises two activities designed to upgrade and maintain the Core Road Network (CRN): (a) upgrading about 340 km of priority state highways under public sector financing; and (b) maintenance of 6,018 km of the CRN under Long-term Performance-based Maintenance Contracts (LTPBMC).  Component 2 – PPP Facilitation Support. Public Private Partnership (PPP) Facilitation component will strengthen the capacity of the Government of Andhra Pradesh (GoAP) and Government of Telangana (GoT) to attract private sector participation in financing, development, and management of selected high traffic density corridors.  Component 3 – Institutional Strengthening Institutional Strengthening component will provide targeted technical assistance, training and advisory services for: (a) operationalization of the Road Development Corporation, with requisite capacity for its responsibilities in managing the CRN and new PPP projects; and (b) various aspects of project implementation including the Asset Management Program, the Governance and Accountability Action Plan and the Institutional Strengthening Action Plan  Component 4 – Road Safety Road Safety component will help GoAP and GoT to provide safer road corridors by initiating measures to reduce road accidents on major corridors, in particular by assisting the concerned GOAP agencies to (a) undertake demonstration projects on selected CRN corridors, (b) carry out black-spot improvement program, and (c) implement institutional and policy action plans for improving the state’s road safety responsibility framework and capacities. B. Project Status 2. Implementation Progress. The project activities are substantially complete or close to completion. Component I(b) on LTPBMC covering 6018km under both the states has been satisfactorily completed. Based on the performance of this new contracting modality the state of Andhra Pradesh has initiated the scale-up of these contracts to 4800km of state highways and simplified ordinary maintenance contracts to another 6000km. Component 2 on PPP Facilitation Support has been concluded with the successful concessioning of two highway packages with technical support under the project. 3. The activities under the Institutional Strengthening and Road Safety components are also progressing satisfactorily and approaching completion. In Andhra Pradesh, the Road Management System is being integrated with the planning process and has become the basis for budgeting and maintenance plans. The The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) recommendations developed under the Institutional Strengthening consultancy on sustainable Road Financing, Organization Restructuring, etc. are under the active consideration of the State government. Under the Road Safety component the Road Safety Policy has been adopted by the state and the demonstration corridor has been substantially implemented with positive results and learnings. The safe corridor pilot in Andhra Pradesh demonstrated a 40 percent reduction in fatalities per ten thousand vehicles over the last 8 year period and GoAP is now planning a scale-up to the rest of the state. The Restructuring includes a reallocation to fund this activity. 4. In Telangana too, the recommendations of the Institutional Strengthening consultancy are under review by the State Government. On the Road Safety corridor, the construction works have been completed, procurement of equipment is substantially complete and operationalization is expected to be completed shortly. A State Road Safety Authority has been constituted and a Road Safety Bill is being drafted by the Road Safety Consultant under the project to empower the Road Safety Authority. 5. With regard to upgradation packages, roughly 90% of the road length of 340km has been brought up to bitumious layers. In Andhra Pradesh, out of the six packages four have been completed and handed over, one is substantially complete and the sixth package, PNV-08, will require additional time until March 2019 to complete. (PNV-08 had to be terminated and rebid and was only awarded last year.) Overall, of a total road length of 230km, 203km have been completed up to bituminous layers. In Telangana, of the two packages, one package KS-05 Road will require until March 2019 to complete. Thus far, 102km of 110 km have been brought up to bituminous layers. The works progress of the upgradation packages are given in the table below. Table 1: Status of Upgradation Packages (As of December 10, 2018) Road Name Km Progress (%) Package No. Physical Fin.** Andhra Pradesh Chittoor–Puttur CP-01 57.90 Complete Mydukuru–J'madugu MJ-03 17.82 Complete Mydukuru–J'madugu MJ-04 17.27 Complete Kurnool–Devanakonda KD-02 52.70 88.1 79.7 Pedana–Nuzvid–V'peta PNV-08-A 15.10 51.0 49.2 Pedana–Nuzvid–V'peta PNV-08-B 16.45 32.0 23.0 Pedana–Nuzvid–V'peta PNV-08-C 18.92 19.6 17.3 Pedana–Nuzvid–V'peta PNV-09 33.21 Complete Telangana Jagityal–Peddapalli JP-06 56.2 Complete Kandi–Shadnagar KS-05 53.8 77.2 75.5 Disbursements on the project currently stand at about 75%. The Project has no overdue audits. 6. Social Safeguards. The overall land acquisition progress is 93% of 319 acres (the remaining 7% is proposed to be dropped from the project) and resettlement assistance payments are 67% (full assistance) and 99% (partial assistance) of 3160 project affected persons (PAPs) in Andhra Pradesh. In the case of Telgengana, all The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) 101 acres of land acquisiiton has been completed and resettlment assistance payment progress is 92% of 439 project affected persons. However, there is a land ownership dispute for 1.34 acres of public land, which has been pending in court for more then 2 years. Safeguards compliance for OP 4.12 is rated Moderately Unsatisfactory for both Andhra Pradesh and Telangana owing to outstanding compensation and residual resettlement assistance payments for more than two years. Specifically: (i) Pending land acquisition compensation payment to 24 landowners; R&R assistance to 11 PAPs and partial R&R assistance payments to 1025 PAPs due to revision of resettlemet unit costs or those who became landless, marginal and small farmers due to land acquisition in Andhra Pradesh; in Telangana the differential land acquisition compensation to 29 landowners is pending due to non- application of Resettlement Policy Framework (RPF) provisions and resettlement assistance to 33 vulnerable landowners who became landless, marginal or small farmers due to land acquisiiton. (ii) Development of basic infrastructure is pending at two resettlement sites and payment of partial resettlement assistance to 715 families due to revision of resettlement unit costs for those who became landless, marginal or small farmers due to land acquisition is also pending on Kakinada- Rajamundhry Road (Andhra Pradesh) which was dropped from the project in 2017. 7. Both Andhra Pradesh and Telengana R&B departments are following up with their respective district administrations for payment of outstanding compensation and resettlement assistance amounts, but it is taking longer than expected due to changes in the e-payment procedures, district level processing, approvals and code of conduct provisions due to state assembly elections in Telengana. Since last supervision mission in August 2018, 30 PAPs have received resettlement assistance and interest payment for delayed compensation payment in addition to completion of verification of PAP’s eligibility and updating of Bank account details in Andhra Pradesh. In case of Telangana, the Government approvals and additional budget for payment of pending resettlement assistance have been obtained. Also, small pending land acquisition in five locations for a cumulative stretch of 600 meters has been completed. The total outstanding payments in Andhra Pradesh is about INR 62 Million (USD 0.88 Million) and in case of Telengana, it is about INR 9 Million (USD 0.13 Million). Both R&B departments have indicated that these payments are expected to be completed by December 31, 2018. The process of extending drinking water facilities in both resettlment sites is expected to take 2-3 months, during which time temporary arrangements are being made to provide drinking water. 8. The status update of compensation payments and resettlment assistance as of December10, 2018 is summarised below: Table 2: Status of Compensation and Resettlement Assistance Payments Andhra Pradesh Target Completed Remarks Private Land 319 298 The pending 21 acres is related to bypass Acquisition (93.4%) on PVN road which is now proposed to be (acres) dropped Full compensation 1723 1699 payment (No. of land (98.6%) owners) Full Resettlement 3160 2124 Additional 1025 people received partial Assistance (67.2%) assistance (No of PAPs) The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) Telangana Private Land 101 101 Land ownership for additional 1.34 acre is Acquisition (100.0%) pending with court for public land (acres) Full Compensation 459 430 Additional 29 land owners have received payment (No. of land (93.7%) partial compensation owners) Full Resettlement 439 406 The remaining 33 PAPs have received Assistance (92.5%) partial assistance (No. of PAPs) Note: The outstanding actions related to Kakinada-Rajahmundry road are not shown in the above Table since this road was excluded from the project in 2017, but the pending actions related to resettlement are being monitored until their implementation is completed. RATIONALE FOR RESTRUCTURING 9. The proposed project restructuring comprises the following: (i) Extension of the project closing date by 3 months to March 31, 2019. (ii) Reallocation of $ 20 Mn loan proceeds from Upgradation component to Road Safety component for scale-up. (iii) Modification to the implementation schedule in line with the new extension closing date. (iv) Adjustment of the Disbursement Projection in line with the new extension closing date. 10. Extension of Project Closing Date The project has been extended by 42 months from its original closing date of June 30, 2015. This was in large part necessitated by the bifurcation of the erstwhile state of Andhra Pradesh into Andhra Pradesh and Telangana which has resulted in delays in implementation. The three-month extension is being requested to ensure full achievement of the PDO through: (i) completion of the upgradation component which constitutes the major share of the Project; (ii) completion of the government approval process for institutional strengthening actions for sustainable road financing and operational autonomy of RDC; (iii) use of savings under the Andhra Pradesh loan to scale up the road safety demo pilots in all districts in the state; and (iv) provide adequate time to allow the Project to resolve pending Environmental and Social Safeguards issues. 11. Reallocation of loan proceeds towards Road Safety Component The Project has savings of USD 20 million owing to rupee depreciation and adjustment of some sections of the upgradation packages. It is proposed to reallocate the USD 20 million savings under the Upgradation Component to the Road Safety Component in Andhra Pradesh. The success of the safe corridor pilot in Andhra Pradesh has been demonstrated by a decrease of 40% in fatalities per ten thousand vehicles over the last 8 year period, despite a doubling of vehicular traffic. Based on the learnings from the Demo Corridor pilot, GoAP has decided to scale up the “Safe System” initiative to all 13 districts in the state. The Transport Department plans to equip roughly 1500 km (a demo corridor of 100-150 km length in each of the 13 districts in the state) under the project for which it has submitted a comprehensive proposal for Goods procurement for the key stakeholder departments – Police, Transport and Health. The procurement and installation is expected to be completed The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) within the revised closing date of March 31, 2019. As civil works improvements are not proposed within the scale-up, safeguard impacts are not expected. However, GoAP intends to take up works improvements on the identified corridors to ensure full implementation of the safe corridor approach. II. DESCRIPTION OF PROPOSED CHANGES The details of the proposed changes are as follows: C. Reallocation 12. Current and Revised Financing Arrangements as per Schedule 2, Section IV, A, 2 is as given below: Category Amount of the Loan REVISED Amount of Allocated (expressed in the Loan Allocated USD) (expressed in USD) Category Sequence 1A – Civil Works & RR – Upgradation, 60,255,000 60,255,000 Road Safety Civil Works Category Sequence 1B – Civil Works & RR - OPRC 35,812,500 35,812,500 Category Sequence 2 – Goods, Consultant Services, Training 8,378,000 8,378,000 & Incremental Operating Cost Category Sequence 5A – Civil Works & RR: Upgradation, 76,876,690 56,876,690 Road Safety Civil Works - AP Category Sequence 5B - Civil Works & RR - OPRC - AP 14,594,500 14,594,500 Category Sequence 6 – Goods, Consultant Services, 12,890,000 32,890,000 Training & Incremental Operating Cost - AP Category Sequence 7A – Civil Works & RR: Upgradation, 24,153,310 24,153,310 Road Safety Civil Works – TEL Category Sequence 7B – Civil Works & RR - OPRC – TEL 1,920,000 1,920,000 Category Sequence 8 - Goods, Consultant Services, Training 3,320,000 3,320,000 & Incremental Operating Cost – TEL TOTAL AMOUNT 238,200,000 238,200,000 The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ 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 ✔ The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-May-2017, 31- IBRD-77920 Effective 30-Jun-2015 Aug-2017, 31-Dec- 31-Mar-2019 31-Jul-2019 2018 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-77920-001 | Currency: USD iLap Category Sequence No: 1A Current Expenditure Category: Wks & RR Assist Comp 1a 4a & 4c 60,255,000.00 60,255,000.00 60,255,000.00 80.00 80.00 iLap Category Sequence No: 1B Current Expenditure Category: Wks & RR Assist Comp 1b 35,812,500.00 35,812,500.00 35,812,500.00 20.00 20.00 iLap Category Sequence No: 2 Current Expenditure Category: Gds, Cns, Tng & IOC 8,378,000.00 8,378,000.00 8,378,000.00 80.00 80.00 iLap Category Sequence No: 5A Current Expenditure Category: Wks & RR Assist Comp 1a 4a & 4c AP 76,876,690.00 33,740,984.70 56,876,690.00 80.00 80.00 iLap Category Sequence No: 5B Current Expenditure Category: Wks & RR Assist Comp 1b AP 14,594,500.00 6,877,761.23 14,594,500.00 20.00 20.00 iLap Category Sequence No: 6 Current Expenditure Category: Gds, Cns, Tng & IOC AP The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) 12,890,000.00 6,615,324.13 32,890,000.00 80.00 80.00 iLap Category Sequence No: 7A Current Expenditure Category: Wks & RR Assist Comp 1a 4a & 4c Tel 24,153,310.00 10,062,112.03 24,153,310.00 80.00 80.00 iLap Category Sequence No: 7B Current Expenditure Category: Wks & RR Assist Comp 1b Telangana 1,920,000.00 1,822,095.17 1,920,000.00 20.00 20.00 iLap Category Sequence No: 8 Current Expenditure Category: Gds, Cns, Tng & IOC Telangana 3,320,000.00 1,064,230.61 3,320,000.00 80.00 80.00 Total 238,200,000.00 164,628,007.87 238,200,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2010 15,000,000.00 15,000,000.00 2011 8,203,591.26 8,203,591.26 2012 14,512,775.07 14,512,775.07 2013 39,589,000.00 39,589,000.00 2014 36,359,000.00 36,359,000.00 2015 20,000,000.00 20,000,000.00 2016 16,870,000.00 16,870,000.00 2017 12,370,000.00 12,370,000.00 2018 0.00 10,295,634.00 2019 0.00 65,000,000.00 . The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021) Note to Task Teams: End of system generated content, document is editable from here. Please delete this note when finalizing the document