REPORT NO.: RES59686 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF RURAL MOBILITY AND CONNECTIVITY PROJECT APPROVED ON DECEMBER 10, 2018 TO REPUBLIC OF GUINEA June 17, 2024 TRANSPORT GLOBAL PRACTICE WESTERN AND CENTRAL AFRICA REGION Regional Vice President: Ousmane Diagana Country Director: Marie-Chantal Uwanyiligira Regional Director: Franz R. Drees-Gross Practice Manager: Ibou Diouf Task Team Leaders: Oceane Keou, Theophile Bougna The World Bank Rural Mobility and Connectivity Project (P164543) ABBREVIATIONS AND ACRONYMS AGEROUTE Agence Routière de Guinée - Guinean Road Agency AGUISER Agence Guinéenne de la Sécurité Routière - Guinean Road Safety Agency ANAFIC Agence Nationale de Financement des Collectivités Locales - National Agency for Local Government Financing CVEP Communautés Villageoises d’Entretien des Pistes - Community-based Maintenance Committee ESIA Environmental and Social Impact Assessment GCADP Guinea Commercial Agriculture Development Project GoG Government of Guinea IDA International Development Association ISR Implementation Status and Results Report PCU Project Coordination Unit PDO Project Development Objective RAP Resettlement Action Plan RVP Regional Vice President RMCP Rural Mobility and Connectivity Project SDR Special Drawing Rights 2 The World Bank Rural Mobility and Connectivity Project (P164543) BASIC DATA Product Information Project ID Financing Instrument P164543 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 10-Dec-2018 28-Jun-2024 Organizations Borrower Responsible Agency Republic of Guinea Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to improve and sustain the rural population's road access to markets and basic services. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D4120 10-Dec-2018 23-Jan-2019 21-Aug-2019 28-Jun-2024 40.00 15.64 22.95 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No 3 The World Bank Rural Mobility and Connectivity Project (P164543) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. PROJECT STATUS 1. This Restructuring Paper seeks the approval of the Regional Vice President (RVP) to (i) cancel the Rural Mobility and Connectivity Project (RMCP) undisbursed funds as requested by the Recipient in the letter of April 17, 2024 (and by the Secretary General of the Recipient in the letter dated February 22, 2024 – referred to in the decision dated April 17, 2024); (ii) reallocate funds between disbursement categories; and (iii) revise costs of the Project’s components. 2. RMCP was approved by the International Development Association (IDA) Board of Directors on December 10, 2018, in the amount of a US$40 million equivalent IDA Grant. The corresponding Financing Agreement was signed on January 23, 2019, and the Project was declared effective on August 21, 2019. The Project Development Objective (PDO) is “to improve and sustain the rural population's road access to markets and basic services”. The Project has three components: (a) Component 1: rural roads and small community infrastructure; (b) Component 2: capacity building for road maintenance and road safety; and (c) Component 3: project management. The current Project closing date is June 28, 2024. 3. Overall, the performance of the Project has been ‘Unsatisfactory’. The progress toward the achievement of the PDO and ‘Overall Implementation Progress’ are respectively rated ‘Unsatisfactory’ and ‘Moderately Unsatisfactory’ as per the conclusions of the Project closing mission that took place end of May 2024. After six years of implementation, little progress has been achieved as reflected by the low disbursement rate of 39 percent as of May 29, 2024. The lack of progress is mainly attributable to the six months pause in disbursement after the 2021 coup and the poor management of project activities and contracts. The ratings of PDO and implementation progress, and the disbursement rate of the Project are as follows: Table 1. Latest Performance of the Project Estimated at ISR of December ISR of June 14, ISR of December Situation at end project closure, 29, 2022 2023 21, 2023 May 2024 June 28, 2024 PDO rating Unsatisfactory Unsatisfactory Unsatisfactory Unsatisfactory Unsatisfactory Implementation Unsatisfactory Unsatisfactory Unsatisfactory Moderately Moderately progress rating Unsatisfactory Unsatisfactory Disbursement ratio 16.0 percent 19.0 percent 33.0 percent 39 percent 43 percent 4. The Project’s Mid-Term review (MTR) was conducted in February 2023. At MTR, the PDO was deemed still relevant, however, given the delays accumulated by the Project and the poor management of contracts and activities, it was unlikely to be achieved within the current closing date. At that time, only Block A (313 km of roads) was deemed achievable within the Project’s timeframe provided that: (i) civil works contracts were signed by June 2023; and (ii) the Resettlement Action Plans (RAPs) were completed and approved by June 2023, and implemented by end of July 2023. The above milestones were completed with a delay of more than five months which made the finalization of corresponding works impossible by the Project’s closing date. Therefore, it was agreed with the Government of Guinea (GoG) to transfer some of these key investments to the Guinea Commercial Agriculture Development 4 The World Bank Rural Mobility and Connectivity Project (P164543) Project (GCADP-P164184) whose objectives are aligned with those of the RMCP, thus pursuing the latter’s PDOs relative to connectivity. 5. The Project was designed to support the GoG in its efforts to improve the mobility and connectivity of the rural population and to remove the two major constraints to agribusiness development in the country, namely the lack of infrastructure and the poor condition of roads. Specifically, it was designed to connect approximately 315,000 people in the targeted rural areas, and bring significant connectivity benefits to road users, farmers, and businesses, such as access to markets and to basic human capital services (schools and health centers). 6. With only about US$14.95 million as of May 29, 2024 (~39 percent) of the original grant disbursed, most of the activities have not been completed and very little impact has been achieved especially in the rehabilitation of road infrastructure, whose related Project’s first component1 represented about 75 percent of the Grant financing. The key pending activities under the first component include the completion of the original target of 800 km of road rehabilitation works, since only 43 km have been completed so far. 7. Status of Component 1 related to rural roads and small community facilities rehabilitation. This component encountered major difficulties throughout the Project, whether in carrying out technical feasibility studies and environmental and social impact assessments (ESIA), or in implementing the 800 km program that included 43 km of priority roads, Block A roads (313 km) and Blocks B and C roads (430 km). Only 43 km of rehabilitated roads were completed in 2023 (provisional reception), and the final reception of these works is scheduled in June 2024. Regarding the community-level infrastructure works planned along these 43 km (one warehouse and 11 boreholes), civil works are now completed with a reception scheduled in June 2024. 8. For Block A roads (totaling 313 km), the Project Coordination Unit (PCU) awarded nine works packages in the prefectures of Boké and Coyah and three works packages for the construction of four bridges in July and August 2023. The actual launch of works on several stretches has been delayed due to the difficulties in RAP implementation and mobilization of the contractor. The funds allocated by the Project for the payment of compensation are not sufficient, and the GoG has requested IDA to cover these additional costs, which amount to SDR 145,000 (~US$190,000 equivalent) through a reallocation.2 As it is highly unlikely that these civil works can be completed before the Project closing date, it was agreed with the Ministry of Agriculture and Livestock (MAL) that these contracts will be transferred to the GCADP (P164184) before the Project closing date. Regarding the community level infrastructure works planned along Block A roads (16 warehouses and 47 boreholes), civil works are ongoing and will be transferred to the GCADP as well. 9. For Blocks B and C roads (totaling 430 km), no works have been implemented. Yet, all the technical and environmental and social impact studies, RAPs, and tender documents have been completed and reviewed by the World Bank. Therefore, the GCADP is currently considering including about 150 km of roads out of the 430 km in its scope. 10. Status of Component 2 related to capacity building for road maintenance and road safety. The Project included technical assistance for the road agency (Agence Routière de Guinée, AGEROUTE) (Sub-component 2.1). This sub- component was significantly delayed, as AGEROUTE was created by decree in July 2021 and delay in prioritization of activities. Only a few activities were implemented including technical assistance, training of key stakeholders, 1Component 1 - Rural Roads and small community facilities rehabilitation. 2Request for this reallocation to Finance Additional Land Expenditures and Resettlement Compensation Costs from IDA Funds - IDA-D4120-GN was approved by the RVP on June 5, 2024 (approved RVP resettlement memo attached). 5 The World Bank Rural Mobility and Connectivity Project (P164543) and purchase of equipment. The Project also planned to support community-based rural road maintenance strategies by re-establishing the Community-based maintenance committee (Communautés Villageoises d’Entretien des Pistes, CVEP) as the entities responsible for maintaining access roads under the jurisdiction of rural communities (Sub-component 2.2). This activity is fully dropped for three reasons. First, the National Agency for Local Government Financing's (Agence Nationale de Financement des Collectivités Locales, ANAFIC) participation was necessary, yet no partnership agreement was prepared or signed with the PCU. Second, the PCU and ANAFIC should have already been involved in preparing the Local Development Plans and Annual Investment Plans, with a view to include the operating costs of the CVEP in these annual budgets. Third, works are not expected to be completed within a timeframe that would allow launch of maintenance activities. The total budget for this sub- component is therefore cancelled. Regarding the support to the road safety agenda (Sub-component 2.3), while the creation of the Guinean Road Safety Agency (Agence Guinéenne de la Sécurité Routière, AGUISER) by decree in April 2023 is a key achievement of the Project, follow-up activities were only partially implemented. Technical assistance (for the collection and processing of road crash data, financing strategy, procedures manual), training of key stakeholders, and purchase of equipment were or are expected to be completed by the end of the Project. 11. Status of Component 3 related to Project management. The performance of the PCU has been moderately unsatisfactory overall throughout project implementation. Since the start of the Project, World Bank supervision reports have highlighted lack of proactivity from the PCU, resulting in a low implementation pace. During the last six months of project implementation, the PCU has shown some proactivity with faster progress in implementing ongoing activities. As of end of December 2023, the initial budget for this component has been spent in full, i.e., SDR 2.2 million (equivalent to US$2.9 million). B. Rationale for restructuring: 12. After a careful assessment of the situation and discussion with the Recipient, the proposed level 2 restructuring consists of (i) cancelling the Project undisbursed funds (i.e., SDR 16.6 million, equivalent to US$21.9 million) that cannot be disbursed because some procurement activities have been dropped or will not be completed by the Project closing date, as requested by the Recipient in the letter of April 17, 2024; (ii) reallocating funds between disbursement categories; and (iii) revising scope and costs of Components 1 and 3 of the RMCP with the purpose of aligning existing plans and commitments with the allocated resources. The cancelled funds will be reallocated in the GoG's national IDA envelope, given the current country difficult situation and remaining structural and connectivity challenges. The current Project closing date is June 28, 2024, and no extension is planned. II. DESCRIPTION OF PROPOSED CHANGES Cancellation 13. The proposed changes consist of the cancellation of funds in three (03) disbursement categories for a total amount of SDR 16.6 million (equivalent to US$21.9 million), which is the final cancellation amount estimated and agreed with the GoG considering the latest progress in implemented activities, compared to the initial estimation (SDR 7.8 million, equivalent to US$10.3 million) provided in the request dated February 22. 14. Under Component 1, the total undisbursed or uncommitted funds amount to SDR 12,665,000 (equivalent to US$16.7 million). The cancellation of SDR 12,665,000 under Category 1 is due to the impossibility of completing all ongoing civil works on Block A (313 km) and the decision not to carry out the procurement of road rehabilitation works on Block B (320 km) and Block C (111 km) that could not be completed before closing. Under Component 2, 6 The World Bank Rural Mobility and Connectivity Project (P164543) the total undisbursed or uncommitted funds amount to SDR 3,513,000 (equivalent to US$4.6 million). The cancellation of SDR 3,513,000 under Category 2 is due to the impossibility of carrying out all the planned technical assistances before the end of the Project. 15. In addition, under Category 6 related to the payment of the Project Preparation Advance (PPA), the total undisbursed funds amount to SDR 422,000. The cancellation of SDR 422,000 under Category 6 is because all disbursed amount was reimbursed according to plan. Reallocation between disbursement categories 16. The proposed reallocation between Disbursement Categories is detailed as follows: an amount of SDR 418,000 will be moved from the balance of Category 2 (Goods, Works, Consultancy, Other Services and Capacity Building) of Component 2 and reallocated as follows: SDR 273,000 to Category 3 (Goods, Works, Consultancy and Capacity Building) of Component 3, to allow the PCU to remain fully functional until June 2024 and to cover bank charges, the social audit of the implementation of the RAP, and the Project Implementation Completion and Results Report (ICR); and SDR 145,000 under Category 5 (Resettlement Assistance) to cover the shortfall in compensation for Project Affected Persons (PAPs). The increase of the IDA allocation to finance resettlement costs was approved by the RVP on June 5, 2024. 17. The amount of SDR 418,000 is the final reallocation amount estimated and agreed with the GoG considering the latest progress in implemented activities, compared to the initial estimation (SDR 492,000) provided in the request dated February 22. Revision of components and costs 18. Following the cancellation of funds and reallocation between disbursement categories described above, the cost of Components 1, 2 and 3 will be revised as follows: the cost of Component 1 Rural Roads and small community facilities rehabilitation will amount to US$11.16 million; the cost of Component 2 Capacity building for road maintenance and safety will amount to US$1.15 million; the cost of Component 3 Project management (including resettlement assistance and PPA) will amount to US$4.04 million. These changes bring the total revised cost of the Project to SDR 12.4 million (US$16.35 million equivalent). Table 2: Summary of proposed cancellation and reallocation per category (in SDR) Amount Revised amount Proposed Disbursement CATEGORY Initial Allocation proposed for after cancellation reallocation cancellation Goods, Works, Non-Consulting Services, 1 Consulting Services, Operating Costs and Training 21 130 000,00 12 665 000,00 8 465 000,00 8 465 000,00 and Workshops for Part 1 of the Project Goods, Works, Non-Consulting Services, 2 Consulting Services, Operating Costs and Training 4 800 000,00 3 513 000,00 1 287 000,00 869 000,00 and Workshops for Part 2 of the Project 7 The World Bank Rural Mobility and Connectivity Project (P164543) Amount Revised amount Proposed Disbursement CATEGORY Initial Allocation proposed for after cancellation reallocation cancellation Goods, Non-Consulting Services, Consulting Services, Operating Costs and Training and 3 2 200 000,00 0,00 2 200 000,00 2 473 000,00 Workshops for Part 3 of the Project excluding Resettlement Assistance 4 Emergency Expenditures for Part 4 of the Project 0,00 0,00 0,00 0,00 5 Resettlement Assistance 290 000,00 0,00 290 000,00 435 000,00 6 Refund of Preparation Advance 580 000,00 422 000,00 158 000,00 158 000,00 TOTAL 29 000 000,00 16 600 000,00 12 400 000,00 12 400 000,00 III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ 8 The World Bank Rural Mobility and Connectivity Project (P164543) Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Rural roads and small Rural roads and small community 30.00 Revised community facilities 11.16 facilities rehabilitation rehabilitation Capacity building for road Capacity building for road 6.60 Revised 1.15 maintenance and safety maintenance and safety Project management 3.40 Revised Project management 4.04 Contingent Emergency Contingent Emergency Response 0.00 No Change 0.00 Response TOTAL 40.00 16.35 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation UNDISBURSE IDA-D4120- Disburs XDR 29,000,000.00 16,600,000.00 17-Apr-2024 12,400,000.00 D BALANCE 001 ing AT CLOSING OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) 9 The World Bank Rural Mobility and Connectivity Project (P164543) Current Proposed IDA-D4120-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GD,WK,NCS,CS,OC,TRN Prt1 21,130,000.00 6,914,978.65 8,465,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: GD,WK,NCS,CS,OC,TRN Prt2 4,800,000.00 415,220.32 869,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: GD,NCS,CS,OC,TRN Prt3 excl Res. Ass 2,200,000.00 2,072,669.81 2,473,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: EMERGENCY EXPENDITURES Prt 4 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: RESETTLEMENT ASSISTANCE 290,000.00 290,020.95 435,000.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: PPF REFINANCING 580,000.00 157,594.68 158,000.00 Total 29,000,000.00 9,850,484.41 12,400,000.00 . 10