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Document of the World Bank Public Disclosure Authorized Report No: 76088-AM

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Document of the World Bank Public Disclosure Authorized Report No: 76088-AM Document of The World Bank Public Disclosure Authorized Report No: 76088-AM INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$30 MILLION TO THE REPUBLIC OF ARMENIA FOR AN IRRIGATION SYSTEM ENHANCEMENT PROJECT April 25, 2013 Public Disclosure Authorized Sustainable Development Department South Caucasus Country Unit Europe and Central Asia Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 24, 2013) Currency Unit = US$ and Armenian Dram (AMD) US$1 = AMD 405 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AMD Armenian Dram ASRA Accounting Standards of the Republic of Armenian CFAA Country Financial Accountability Assessment CFSQC Consulting Firm for Supervision and Quality Control CPAR Country Procurement Assessment Review CPS Country Partnership Strategy CSOs Civil Society Organizations DA Designated Account DPO Development Policy Operation DRC Dispute Resolution Committee EDB Eurasian Development Bank EIA Environmental Impact Assessment EM Extraordinary Maintenance EMF Environmental Management Framework EMP Environmental Management Plan ERR Economic Rate of Return FBS Fixed Budget Selection FIRR Financial Internal Rate of Return FM Financial Management FMM Financial Management Manual FMRs Financial Monitoring Reports FNPV Financial Net Present Value GCF Government Counterpart Funding GDP Gross Domestic Product GIS Geographic Information System GoA Government of Armenia GPN General Procurement Notice IA Implementing Agency I&D Irrigation and Drainage IBRD International Bank for Reconstruction and Development IDP Irrigation Development Project IFAC International Federation of Accountants IFR Interim Unaudited Financial Report IFRS International Financial Reporting Standard IMF International Monetary Fund IREP Irrigation Rehabilitation Emergency Project IRR Investment Return Rate ISA International Standards of Auditing ISEP Irrigation System Enhancement Project LA Loan Agreement LCS Least Cost Selection MCA Millennium Challenge Account (Armenia) MCC Millennium Challenge Corporation MoF Ministry of Finance MoTA Ministry of Territorial Administration NCB National Competitive Bidding NPV Net Present Value O&M Operation and Maintenance OP Operational Policy (World Bank) ORAF Operational Risk Assessment Framework PA Project Account PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PIU Project Implementation Unit (Water Sector) PMB Project Management Board POM Project Operational Manual PP Procurement Plan QCBS Quality and Cost Based Selections QBS Quality Based Selections RA Republic of Armenia REOI Request for Expression of Interest RFP Request for Proposal RPF Resettlement Policy Framework SBD Standard Bidding Documents SCADA Supervisory Control and Data Acquisition SCWM State Committee of Water Management SIL Specific Investment Loan SPN Specific Procurement Notice SOE Statement of Expenditure SRFP Standard Request for Proposals SSS Single Source Selection TA Technical Assistance TOR Terms of Reference WSA Water Supply Agency WUAs Water Users Associations Regional Vice President: Philippe H. Le Houerou Country Director: Henry G. Kerali Country Manager: Jean-Michel Happi Sector Director: Laszlo Lovei Sector Manager: Dina Umali-Deininger Task Team Leader: Giuseppe Fantozzi ARMENIA IRRIGATION SYSTEM ENHANCEMENT PROJECT TABLE OF CONTENTS I. STRATEGIC CONTEXT ............................................................................................... 10 A. Country Context .......................................... 10 B. Sectoral and Institutional Context .................................. 10 C. Higher-Level Objectives to which the Project Contributes .. ............. 14 II. PROJECT DEVELOPMENT OBJECTIVES (PDOs)..............................................15 A. PDOs ................................................... 15 Project beneficiaries.......................................... 15 PDO-level results indicators...................................... 15 III. PROJECT DESCRIPTION ......................................................................................... 16 A. Project Components ......................................... 16 B. Project Financing .................................... ..... 19 Lending instrument .................................... ..... 19 Project cost and financing ..................................... 19 C. Lessons Learned and Reflected in the Project Design................ 20 IV. IM PLEM ENTATION .................................................................................................. 20 A. Institutional and Implementation Arrangements ............... ..... 20 B. Results Monitoring and Evaluation ............................. 21 C. Sustainability............................................ 21 V. KEY RISKS AND MITIGATION MEASURES......................................................23 VI. APPRAISAL SUM M ARY ......................................................................................... 24 A. Economic and Financial Analyses ............................. 24 B. Technical ........................................ ...... 26 C. Financial Management................................. ..... 30 D. Procurement ...................................... ...... 31 E. Social (including Safeguards) ................................ 32 F. Environment (including Safeguards) ...................... 33 G. Other Safeguards Policies Triggered ...................... 33 Annex 1: Results Framework and Monitoring........................... 35 Annex 2: Detailed Project Description ............................... 42 Annex 3: Implementation Arrangements ..................... ........ 60 Annex 4: Operational Risk Assessment Framework (ORAF) ............... 77 Annex 5: Implementation Support Plan.............................. 81 Annex 6: Fiscal Impact Analysis ................................... 83 Annex 7: Economic and Financial Analysis ...................... 88 Attachment 1 to Annex 7 - Detailed Cost Breakdown................ ..... 94 Annex 8 - Map of Project Locations ................................ 99 PROJECT APPRAISAL DOCUMENT (PAD) DATA SHEET Republic ofArmenia Irrigation System Enhancement Project PROJECT APPRAISAL DOCUMENT Europe and CentralAsia ECSAR Basic Information Date: April 9, 2013 Sectors: Irrigation and drainage (90%), General energy sector (10%) Country Director: Henry G. Kerali Themes: Water resource management (70%), Rural policies and institutions (20%), Rural services and infrastructure (10%) Sector Manager/Director: Dina Umali-Deininger EA Category: B - Partial Assessment Project ID: P127759 Lending Instrument: Specific Investment Loan Team Leader: Giuseppe Fantozzi Joint IFC: Borrower: Republic of Armenia Responsible Agency: State Committee for Water Management under the Ministry of Territorial Administration Contact: Andranik Andreasyan Title: Head of Agency Telephone No.: +374-10 540909 Email: info(a,scws.am Project Implementation Period: Start Date: 02-Sep-2013 End Date: 01-Sep-2017 Expected Effectiveness Date: 01-Jul-2013 Expected Closing Date: 29-Dec-2017 Project Financing Data (US$ millions) [x] Loan [ ] Grant [ ] Other [ Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost: US$37.5 million Total Bank Financing: US$30 million Total Cofinancing: US$7.5 million Financing Gap: US$0 Financing Source Amount(US$ millions) BORROWER/RECIPIENT 7.5 million IBRD 30 million Financing Gap 0 Total 37.5 million 6 Expected Disbursements (US$ millions) Fiscal Year 2014 2015 2016 2017 2018 Annual 3.5 6.7 14.6 5.2 Cumulative 3.5 10.2 24.8 30.0 Project Development Objectives The Project Development Objectives are (i) to reduce the amount of energy used and to improve the irrigation conveyance efficiency in targeted irrigation schemes; and (ii) to improve the availability and reliability of important sector data and information for decision-makers and other stakeholders. Components Component Name Cost (US$ millions) Irrigation System Enhancement 33.1 Management Information 1.7 Project Management and Water Users Associations' Support 2.7 Compliance Policy Does the project depart from the Country Assistance Strategy (CAS) in content or in other significant respects? Y [ ] No [x] e s Does the project require any waivers of Bank policies? Y No [x] e s Have these waivers been approved by Bank management? Y[] No[] e s Is approval for any policy waiver sought from the Board? Y[] No[] e s Does the project meet the regional criteria for readiness for implementation? Y [x] No e s Safeguard Policies Triggered by the Project Yes No Environmental Assessment Operational Policy (OP)/Bank Procedure 4.01 x Natural Habitats OP/BP 4.04 x Forests OP/BP) 4.36 x Pest Management OP 4.09 x Physical Cultural Resources OP/BP 4.11 x Indigenous Peoples OP/BP 4.10 x Involuntary Resettlement OP/BP 4.12 x Safety of Dams OP/BP 4.37 x Projects on International Waterways OP/BP 7.50 x Projects in Disputed Areas OP/BP 7.60 x 7 Legal Covenants Name Recurrent Due Date Frequency Designation of and ensuring the PIU as an effective x Yearly implementation agency Description of Covenant The Borrower, through SCWM, shall designate the PIU with the responsibility for procurement planning, monitoring and reporting, financial
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