World Bank Document
Total Page:16
File Type:pdf, Size:1020Kb
Document of The World Bank Public Disclosure Authorized Report No: 22470 UA PROJECT APPRAISAL DOCUMENT ONA Public Disclosure Authorized PROPOSED ADAPTABLE PROGRAM LOAN IN THE AMOUNT OF US$ 30 MILLION TO UKRAINE FOR A PRIVATE SECTOR DEVELOPMENT PROJECT Public Disclosure Authorized In support of the First Phase of a US$60 Million Private Sector Development Program March 6, 2002 Private and Financial Sector Deveikopment Department Europe and Central Asia Region Ukraine/Belarus Country Unit Public Disclosure Authorized * CURRENCY EQUIVALENTS (Exchange Rate Effective February 2002) Currency Unit = UAH (Hryvnya) UAH 1 (Hryvnya) = US$0.1879 US$1 = UAH 5.3206 FISCAL YEAR January 1 -- December 31 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Lending ARIA Moldovian Agency for Restructuring and Enterprise Assistance CAS Country Assistance Strategy C/B Cost Benefit CERMA Georgian Center for Enterprise Restructuring and Management Assistance CQ Consultant Qualifications CPAR Country Procurement Assessment Report DFID Department for Intemational Development EDAL Enterprise Development Adjustment Loan EDAL II Second Enterprise Restructuring Adjustment Loan FBS Fixed Budget Selection FDI Foreign Direct Investments FMR Financial Monitoring Report FSL Fixed Spread Loan FSU Former Soviet Union GDP Gross Domestic Product GoU Government of Ukraine GPN General Procurement Notice IC Individual Consultants ICB International Competitive Bidding IFC International Finance Corporation IFIs International Financial Institutions IMF International Monetary Fund IR Industrial Restructuring IS International Shopping LCS Least Cost Selection MOF Ministry of Finance of Ukraine N/A Not-Applicable N.B.F. Non-Bank Financed NCB National Competitive Bidding Vice President: Johannes F. Linn Country Director: Luca Barbone Sector Manager: Khaled Sherif Task Team Leader Vladimir G. Kreacic NGO Non-Governmental Organization NPV Net Present Value NS National Shopping PHRD Policy and Human Resources Development PIU Project Implementation Unit PPF Project Preparation Facility PSD Private Sector Development PV Present Value QBS Quality Based Selection QCBS Quality and Cost Based Selection RFP Request for Proposal SA Special Account SCRPE State Committee on Regulatory Policy and Entrepreneurship of Ukraine SFB Selection under a Fixed Budget SL Short List SMEs Small and Medium Enterprises SOE Statement of Expenditure SOEs State Owned Enterprises SPF State Property Fund of Ukraine SRO Self-Regulatory Organization SS Single Source TA Technical Assistance TACIS Technical Assistance for the Commonwealth of Independent States TORs Terms of Reference UCER Ukrainian Center for Enterprise Restructuring and Private Sector Development USAID United States Agency for Intemational Development UKRAINE PRIVATE SECTOR DEVELOPMENT CONTENTS A. Program Purpose and Project Development Objective Page 1. Program purpose and program phasing 3 2. Project development objective 3 3. Key performance indicators 4 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 4 2. Main sector issues and Government strategy 4 3. Sector issues to be addressed by the project and strategic choices 6 4. Program description and performance triggers for subsequent loans 7 C. Program and Project Description Summary 1. Project components 8 2. Key policy and institutional reforms supported by the project 8 3. Benefits and target population 8 4. Institutional and implementation arrangements 9 D. Project Rationale 1. Project altematives considered and reasons for rejection 10 2. Major related projects financed by the Bank and other development agencies 11 3. Lessons leamed and reflected in the project design 11 4. Indications of borrower commitment and ownership 12 5. Value added of Bank support in this project 12 E. Summary Project Analysis 1. Economic 13 2. Financial 15 3. Technical 15 4. Institutional 16 5. Environmental 17 6. Social 17 7. Safeguard Policies 18 F. Sustainability and Risks 1. Sustainability 19 2. Critical risks 19 3. Possible controversial aspects 20 G. Main Loan Conditions 1. Effectiveness Condition 21 2. Other 21 H. Readiness for Implementation 23 I. Compliance with Bank Policies 23 Annexes Annex 1: Project Design Summary 24 Annex 2: Detailed Project Description 26 Annex 3: Estimated Project Costs 35 Annex 4: Cost Benefit Analysis Summary 36 Annex 5: Financial Summary 41 Annex 6: Procurement and Disbursement Arrangements 42 Annex 7: Project Processing Schedule 52 Annex 8: Documents in the Project File 53 Annex 9: Statement of Loans and Credits 54 Annex 10: Country at a Glance 55 MAP(S) UKRAINE Private Sector Development Project Appraisal Document Europe and Central Asia Region ECSPF Date: March 1, 2002 Team Leader: Vladimir G. Kreacic Country Director: Luca Barbone Sector Manager: Khaled Sherif Project ID: P054966 Sector(s): IR - Industrial Restructuring Lending Instrument: Adaptable Prograrn Loan (APL) Theme(s): Private Sector Poverty Targeted Intervention: Y Program Financing Data Estimated APL Indicative Financing Plan Implementation Period Borrower ________ ~~~~~~~~~~~(BankFY) IBRD Others Total Commitment Closing US$ m % US$ m US$ m Date Date APL 1 30.00 78.9 8.00 38.00 09/01/2002 06/30/2007 Ukraine Loan/ Credit__ __ APL 2 30.00 75 0 10.00 40.00 07/01/2007 06/30/2011 Ukraine Loan/ Credit__ _ _ _ _ _ _ _ Total 60.00 18.00 78.00 [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ Other: For LoanslCredits/Others: Loan Currency: United States Dollar Amount (US$m): 30 Borrower Rationale for Choice of Loan Terms Available on File: 1 Yes Proposed Terms (IBRD): Fixed-Spread Loan (FSL) Grace period (years): 8 Years to maturity: 20 Commitment fee: 0.85percent on the undisbursed loan Front end fee (FEF) on Bank loan: 1.00% amount for the first four years of the Payment for FEF: Capitalize from Loan Proceeds loan's life, and 0.75percent thereafter, until maturity Initial choice of Interest-rate basis: Auto. Rate Fixing by period 6 months Type of repayment schedule: [X] Fixed at Commitment, with the following repayment method (choose one): annuity [ ], Linked to Disbursement Conversion options: [X]Currency [X]Interest Rate [X]Caps/Collars: Capitalize from Loan Proceeds Financing Plan (US$m): Source Local Foreign Total BORROWER 4.00 0.00 4.00 IBRD 4.46 25.54 30.00 UK: BRITISH DEPARTMENT FOR INTERNATIONAL 0.00 2.00 2.00 DEVELOPMENT (DFID) NETHERLANDS: MIN. OF FOREIGN AFFAIRS / MIN. OF 0.00 2.00 2.00 DEV. COOP. Total: 8.46 29.54 38.00 Borrower: UKRAINE Responsible agency: UKRAINIAN CENTER FOR ENTERPRISE RESTRUCTURING AND PSD State Committee of Ukraine for Regulatory Policy and Entrepreneurship Address: 27 Komintema St., Kyiv 01032, Ukraine Contact Person: Oleksandra Kuzhel Tel: (380 44) 246 8647 Fax: (380 44) 216 2435 Email: kuzhel(dkrp.gov.ua Other Agency(ies): PIU - Ukrainian Center for Enterprise Restructuring and Private Sector Development (UCER) Address: 14b Dymytrova St., Kyiv 03150, Ukraine Contact Person: Viktor Bekh Tel: (380 44) 227 5152 Fax: (380 44) 227 1097 Email: [email protected] Estimated disbursements (Bank FY/US$m): FY 2003 2004 2005 2006 2007 2007 2008 2009 Annual 1.80 5.70 14.90 5.60 10.00 Cumulative 1.80 7.50 22.40 28.00 38.00 Project implementation period: September 2002-December 2006 Expected effectiveness date: 09/01/2002 Expected closing date: 06/30/2007 OCSPAOAPtF- RM.~ Ah-D2 -2 - A. Program Purpose and Project Development Objective 1. Program purpose and program phasing: The purpose of the Program supported by the Bank Adaptable Program Loan (APL) is to foster private sector development in Ukraine using a bottom-up approach, which focuses on enterprise adjustment and the creation of a market friendly regulatory environment. The APL is planned as an 8 year Program consisting of 2 loan phases. The first phase of this Loan (USD 30 rnillion), which is the subject of this PAD, will focus on creating the baseline conditions for private sector development by working in collaboration with the Government of Ukraine (GoU) to improve the regulatory environment for private business, and provides intensive training of Ukrainian business managers and consultants to support enterprise restructuring. The first phase of the project will be initiated in 4 pilot oblasts. The second phase (USD 30 million) will extend the institutional and restructuring experiences acquired to a larger number of oblasts and enterprises. The four pilot oblasts were selected on the basis of their demonstrated commitment to reforns, which support a market friendly regulatory environment for the private sector. Incentives have been built into the project to ensure that such comrmitment continues, so that any oblast, which fails to continue to support the necessary regulatory reformns will be dropped from the project, and another oblast, which has demonstrated its commitment to support positive private sector reforms will be substituted. The Loan will support intensive training programs to upgrade technical business management skills of Ukrainian managers and management consultants, as well as facilitate the process of enterprise restructuring. Individuals who go through the training process will become the local experts and leaders in enterprise restructuring, which will take place through various conventional modes like spinning off SMEs from existing obsolete industrial complexes, or selling off certain assets or proprietary rights to create new start-up enterprises. Enterprises that achieve financial viability will likely become strong competitors in domestic and foreign