World Bank Document

Document of The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized Report No: 74176-KE

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

THE NORTHERN CORRIDOR TRANSPORT IMPROVEMENT PROJECT

Public Disclosure Authorized ORIGINAL CREDIT 3930-KE

IN THE AMOUNT OF US$207 MILLION EQUIVALENT

BOARD APPROVAL DATE: JUNE 17, 2004

AND

ADDITIONAL CREDIT 4571-KE

IN THE AMOUNT OF US$253.0 MILLION EQUIVALENT Public Disclosure Authorized BOARD APPROVAL DATE: APRIL 2, 2009

TO THE

REPUBLIC OF KENYA

December 27, 2012

Transport Sector Country Department AFCE2 Public Disclosure Authorized Africa Region

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.

ABBREVIATIONS AND ACRONYMS

AFD French Development Agency BER Bid Evaluation Reports CCCC China Communications Construction Company CRBC China Road and Bridges Corporation EAC East African Community EIB European Investment Bank FAA Federal Aviation Administration GoK Government of Kenya IASA International Aviation Safety Assessment ICAO International Civil Aviation Organization IDA International Development Bank IP Implementation Progress JKIA Jomo Kenyatta International Airport KAA Kenya Airports Authority KCAA Kenya Civil Aviation Authority KeNHA Kenya National Highways Authority KRB Kenya Roads Board KURA Kenya Urban Roads Authority MoR Ministry of Roads NDF Nordic Development Fund NCTIP Northern Corridor Transport Improvement Project OPRC Operational Procurement Review Committee PDO Project Development Objective RSGAP Road Sector Governance and Integrity Improvement Action Plan TSA Transportation Security Administration

Regional Vice President: Makhtar Diop Country Director: Johannes C.M. Zutt Sector Director Jamal Saghir Sector Manager: Supee Teravaninthorn Task Team Leader: Josphat O. Sasia

KENYA NORTHERN CORRIDOR TRANSPORT IMPROVEMENT PROJECT

CONTENTS

Page

DATA SHEET ...... ERROR! BOOKMARK NOT DEFINED. A. SUMMARY ...... 1 B. PROJECT STATUS ...... 2 C. PROPOSED CHANGES ...... 4 D. RISKS ...... 8 E. EXTENSION OF CLOSING DATE ...... 8

ANNEX 1: RESULTS FRAMEWORK STATUS ...... 11 ANNEX 2: REALLOCATION OF PROCEEDS ...... 13 ANNEX 3: REVISED RESULTS FRAMEWORK ...... 23 ANNEX 4: REVISED RESULTS MONITORING FRAMEWORK ...... 25

Data Sheet Restructuring Type: Level two Last modified on date : 12/27/2012

1. Basic Information Project ID & Name P082615: KE-Northern Corridor Trnsprt SIL (FY04) Country Kenya Task Team Leader Josphat O. Sasia Sector Manager/Director Supee Teravaninthorn Country Director Johannes C.M. Zutt Original Board Approval Date 06/17/2004 Original Closing Date: 12/31/2009 Current Closing Date 12/31/2012 Proposed Closing Date [if applicable] 12/31/2015 EA Category B-Partial Assessment Revised EA Category B-Partial Assessment-Partial Assessment EA Completion Date 05/08/2007 Revised EA Completion Date

2. Revised Financing Plan (US$m) Source Original Revised BORR 68.00 225.00 EUIB 0.00 93.00 FRDE 0.00 93.00 IDA 207.00 460.00 NDF 0.00 19.00 OLBC 0.00 30.00 Total 275.00 920.00

3. Borrower Organization Department Location Government of Kenya Ministry of Finance Kenya

4. Implementing Agency Organization Department Location Ministry of Roads, Ministry of Ministry of Roads, Ministry of Kenya Transport, Kenya Airports Transport, Kenya Airports Authority and Kenya Civil Authority and Kenya Civil Aviation Authority Aviation Authority

5. Disbursement Estimates (US$m) Actual amount disbursed as of 12/27/2012 246.27 Fiscal Year Annual Cumulative 2012 0.00 246.27 2013 27.73 274.00 2014 80.00 354.00 2015 66.00 422.00 2016 40.00 460.00 Total 460.00

6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N

Does the restructured project trigger any new safeguard policies? If yes, please select from N the checklist below and update ISDS accordingly before submitting the package.

7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The Project Development Objectives are to: (a) increase efficiency of road transport along the Northern Corridor to facilitate trade and regional integration; (b) enhance aviation safety and security to meet international standards; and (c) promote private sector participation in the management, financing and maintenance of road assets; and (iv) restore vital infrastructure and public assets damaged as a result of the 2007 post-election crisis.

7b. Revised Project Development Objectives/Outcomes [if applicable]

KENYA: NORTHERN CORRIDOR TRANSPORT IMPROVEMENT PROJECT P082615, P106200 CREDITS 3930-KE, 4571-KE Restructuring Paper

A. SUMMARY

1. This restructuring paper seeks approval for a level II restructuring as an exceptional extension of the Project Closing Date pursuant to paragraph 15(n) of the Bank’s Guidance to Staff on processing Additional Financing (dated November 18, 2009 and revised April 16, 2012) governing Additional Financing for Investment Lending (OP/BP 13.20) for the Kenya Northern Corridor Transport Improvement Project (NCTIP). The other proposed restructuring actions involve a reallocation of funds among various categories and increase in the financing percentages contingent on the extension of the closing date. The Additional Financing (AF) (Credit 4571-KE) to the NCTIP included a three year extension of the original Closing Date, from December 31, 2009 to December 31, 2012, as per the limits under the OP/BP 13.20. Now, a second extension of 36 month is required to complete the ongoing activities that are delayed due to factors external to the operation and outside the control of the Borrower1. The extension was requested by the Minister of Finance of Kenya in a letter dated September 21, 2012.

2. The proposed extension is necessary to enable the completion of the construction of road works contracts (136 km) and contracts for supervision of the works to the airport which are financed by the French Development Agency (AFD) and the European Investment Bank (EIB) funded by Credit 4571-KE. The main cause of the delay is the introduction of Road Sector Governance and Integrity Improvement Action Plan (RSGAP), introduced to strengthen governance in the road sub-sector. This was a requirement in processing the AF.

3. The RSGAP included new and additional steps and measures ranging from more detailed procurement reviews, both on the side of the Government of Kenya (GoK) and the Bank, to introducing new clauses in civil works contract documents requiring termination of a contract when a contractor is debarred by the Sanctions Board (an exception to Bank Policy). The introduction of these new measures to improve transparency and accountability resulted in extensive delays, a factor not fully anticipated nor recognized at the time of the preparation of Credit 4571-KE (AF). Additionally, unexpected high traffic growth rates, and operator’s safety requirements at the Jomo Kenyatta International Airport (JKIA), forced the GoK to substantially modify the original more modest plans to modernize and increase the capacity at the airport and to

1 Processing Additional Financing: Guidance to Staff, November 18, 2009 and revised 4/16/2012, paragraph 15(n), bullet 1 notes “When implementation of the additional loan activities is delayed because of a factor that is clearly external to the operation and outside the control of the borrower or implementing agencies (e.g., delay in additional loan effectiveness, natural disaster, major political change), the task team may request an extension of the closing date for a period that is equal to the delay due to the responsible factor. The RVP approves such a request.”

pursue a much more aggressive modernization strategy which included the building of a bigger new terminal. Consequently, additional time was needed to allow for comprehensive redesign of new terminal building financed by the AFD and EIB and the supervision consultancy funded from the project.

4. This proposed restructuring, is mainly to extend the closing date to December 31, 2015, and includes other restructuring actions such as: (a) increasing the financing percentage for road works; and (b) reallocation of funds among various categories of the Northern Corridor Transport Improvement Project (NCTIP) to allow the completion of the remaining ongoing activities under the project. The proposed 36 month extension of the project’s Closing Date is equal to delays that were external to the operation and outside the control of the Borrower and implementing agencies.

B. PROJECT STATUS

5. Background. The project involves Credit No.3930-KE in the amount of SDR138.44 million (US$207 million equivalent) approved on June 17, 2004 and Credit No.4571-KE, an AF operation in the amount of SDR172 million (US$253 million equivalent) approved on April 2, 2009. The Project Development Objectives (PDOs) are to: (a) enhance the efficiency of the Recipient’s transport sector through increasing the efficiency of road transport; (b) enhance aviation safety and security to meet international standards; (c) promote private sector participation in the management, financing and maintenance of road assets; and (d) restore vital public infrastructure and assets damaged as a result of the December 2007 post-election crisis. The key results indicators include: (a) reduction in travel time along the Northern Corridor; (b) security and safety clearance by Transportation Security Administration (TSA) of the USA and the International Aviation Safety Assessment (IASA) allowing US airlines to operate from JKIA; and (c) award of one output and performance based maintenance contract.

6. With the restructuring in 2009, the PDO was revised to include restoring vital public infrastructure and assets damaged as a result of the December 2007 post-election crisis. The additional credit funded: (a) the completion of reconstructing three road sections namely, Mau Summit-Kericho (55 km), Kericho-Nyamasaria (81 km), and Nyamasaria-Kisumu-Kisian (22 km of which 6 km is a dual carriageway) including the Kisumu Bypass, and (b) scaling up the institutional and policy reform activities to further strengthen the governance in the road sub-sector and the construction industry.

7. Results achieved to date. The completion of five road contracts has contributed to a 38 percent reduction in travel time along the Northern Corridor; the expansion of the apron and taxiways leading to a 50 percent increase in the parking space for aircrafts, has eased the severe congestion at the JKIA. The erection of an airport security perimeter fence, purchase of screening equipment, establishment of an oversight unit on airport security, among others, have contributed to JKIA achieving United States TSA Category 1 security status. One road segment on the Northern Corridor was offered to the private sector for tolling, and three output and performance based road maintenance contracts are expected to be awarded by the end of December 2012 as indicated in Table 1 in the implementation plan. Details on the implementation of reforms in the sector are provided

in Annex 1, the Results Framework Status. The revised Results Monitoring Framework and Results Framework are in Annexes 3 and 4.

8. There are no outstanding audit reports nor unresolved safeguard issues.

9. Project performance. As of November 19, 2012, the cumulative disbursements for the project stand at SDR156.95 million (US$243.25 million equivalent) or 53 percent. Credit 3930-KE is committed fully with 88.6 percent disbursed and Credit 4571-KE is about 95 percent committed with 20 percent disbursed. Most of the committed funds under Credit 4571-KE, the AF, approximately US$231 million equivalent, are for funding the three road links that were most affected by the implementation of the external factors. They are Mau Summit-Kericho and Kericho-Nyamasaria road contracts (totaling US$146 million) and Nyamasaria-Kisumu-Kisian road contract (US$70 million). The balance of the undisbursed funds will be disbursed to meet the costs for the smaller contracts, primarily goods contracts. No major bidding for works or selection of consultants is outstanding. Most activities are under implementation.

10. As of October 31, 2012, the progress of work executed was 22 percent on the Mau Summit-Kericho against a 97 percent of the time elapsed. Similarly, 40 percent of the works on the Kericho-Nyamasaria road section had been achieved against 85 percent of the time elapsed. The contractor procurement process was delayed, and both contracts also experienced delays, some caused by weak contractor performance and some by labor unrest. The GoK has already taken the necessary actions to tighten up project supervision and, taking these delays into account, both contracts are expected to be completed well within the proposed extension period. Nevertheless, the quality of works is acceptable so far. The third contract, Nyamasaria-Kisumu-Kisian took about three years to move from bid opening to contract award. Currently the contractor is progressing well with no delays experienced. About 21 percent progress of the work program has been achieved against 25 percent of the contract period elapsed including the mobilization period.

11. Overall the project is successfully achieving its development objective as well as convening other investors to the Kenya Northern Transport Corridor by leveraging of US$93 million from the AFD, US$93 million from the EIB, US$19 million from the Nordic Development Fund (NDF), and US$30 million from the local banks in Kenya. The project development objective is currently rated Satisfactory in terms of progress towards being achieved. The original project is performing well but, due to works delays for Mau Summit-Kericho and Kericho-Nyamasaria roads financed under the AF, the Implementation Progress (IP) is rated as Moderately Satisfactory.

12. Credit 3930-KE. Most of the activities financed under the original credit are either completed successfully or nearing completion. The activities completed include: (a) reconstructing 228 km of paved roads which 33 km is a dual carriage way, under five contracts including one of which financed by NDF; (b) expansion of the apron and extending the taxiways at JKIA leading to an increase of 50 percent in the parking space of and improving maneuvering of aircrafts; (c) acquisition of security equipment for

airports and erecting a security fence at JKIA; and (d) three feasibility and detailed engineering road designs.

13. Major achievements made possible by NCTIP include: (a) security clearance by the Transportation Security Administration (TSA) allowing US airlines operating from JKIA; (b) both the Kenya Civil Aviation Authority and the Kenya Airports Authority given financial autonomy; (c) aviation safety and security regulations harmonized and adopted by each member of the East African Community (EAC), including an agreement on sharing of resources, particularly safety inspectors; and (d) adoption of output and performance based maintenance of road contracting approaches. Details are in Table 1, Annex 2 and Annex 1, on the status of the targets in the Results Framework.

14. Credit 4571-KE (AF). Significant achievements have been recorded. For instance, the ownership of national, rural and urban roads was clarified while road sector policy formulation was separated from execution of road programs. In addition three autonomous road authorities were established; a regulatory body for the construction industry (National Construction Authority) was established with powers of registering contractors, monitoring their performance and publishing names of poor performers and those that are debarred; and the regulatory body for consulting and practicing the Engineers profession (originally, Engineers Registration Board and now Engineers Board of Kenya) was strengthened and added responsibilities and powers to register professionals and engineering firms, assess their qualifications, monitor their performance, and exercise the right to sanction poor performance or unethical behavior. The details are in Annex 1, Results Framework.

C. PROPOSED CHANGES

Rationale for Extension

15. The GoK has requested a 36 month extension to December 31, 2015, to overcome the cumulative delays caused by the main contributing external factors, described in more detail below. This would allow for: (a) completion of the Mau Summit-Kericho (55 km); Kericho-Nyamasaria (81 km); and Nyamasaria-Kisumu-Kisian (24 km including 6 km dual carriageway) road contracts and other outstanding but comparatively smaller contracts; and (b) completion of the JKIA improvements after completion of the redesign assignment. An Action Plan for the use of extension period has been proposed by the GoK and included herein as Table 1. The Bank reviewed the time lines and concur that the completion periods are reasonable and achievable. What follows are the main external factors that contributed to the implementation delays.

16. Implementation of new Governance measures. The road sub-sector in Kenya, similar to other parts of the world, faced substantial governance challenges, and so the Bank-financed operations were exposed to these risks/issues. Accordingly, in 2009 one of the requirements for processing the AF was that the Bank and the GoK agree on addressing these risks. The governance issues included complex institutional arrangements; unclear responsibility and ownership arrangements of the road networks; collusion and other forms of bid rigging; fraud and corruption in the construction

industry; weak due diligence on bidders; absence of robust cost estimates; weak capacity to detect and deal with fraud and corruption; overloading of vehicles that destroyed the road infrastructure, among others. In order to mitigate the risks and enhance integrity, the Bank and the GoK, with the guidance of the Integrity Vice Presidency (INT), agreed on a Roads Sector Governance and Integrity Improvement Action Plan (RSGAP), which was to be implemented under the additional credit.

17. The RSGAP underpinned the Kenya Roads Act 2007 and gave rise to several important institutional measures and policy initiatives. New project activities were subjected to much more stringent procurement processing and reviews, and new clauses and language to the contracts were required.

18. Executing the agreed RSGAP was more difficult and time-consuming than expected and contributed to the delays in awarding the contracts for the three road contracts financed by the Bank under the AF. For instance, the most pertinent new and additional measures of the RSGAP that led to significant procurement delays were the following:

(a) The GoK and the Bank had to carry out more stringent than before due diligence on contractors that had submitted bids.

(b) To ensure compliance with the agreed RSGAP, the Bank employed an Independent Procurement Specialist who undertook a separate review of all bids received and the Bid Evaluation Reports (BER). This was an additional step in the procurement review process which added several weeks to the process.

(c) GoK had to introduce a new clause in their large works contracts, which was an exception to Bank policy that gave both the Bank and the GoK the right to terminate the remainder of a contract if a contractor is debarred after contract award.2 While acceptable for new bidding processes, the introduction of this clause for the three works contracts came after bids were already opened. The additional risks transferred to the contractor, such as automatic contract termination following debarment, had not been considered at the time of preparing the bids, and caused the GoK to resist its implementation.

(d) The winning contractor for the Nyamasaria-Kisumu-Kisian contract was debarred for being associated with a recently debarred firm between GoK’s first evaluation for the bids and Bank’s no objection. The Bank used the bid evaluation exercise to request the GoK to establish any legal association, an area usually left for the Bank’s Department of Integrity (INT).

19. Implementation of the RSGAP poised a series of challenges to the GoK, most notably for ongoing projects. For the subject contracts, the requirements of the RSGAP caused a delay of almost three years, as it required undertaking discussions/negotiations

2 Project Paper on a Proposed Additional Financing Credit 4576-KE for the Northern Corridor Transport Improvement Project, March 5, 2009, paragraphs 94 and 95.

with all the different stakeholders in the procurement process, including all the relevant Government entities. As mentioned above, the GoK had already received and evaluated bids for these contracts at the time the restructured project was presented to the Board for approval. Bids were invited using the standard World Bank bidding documents, which did not contain the early-termination clause that had been agreed between the Bank and the GoK. As such, the GoK had to inform the bidders of the introduction of a new clause, which resulted in extensive delays, the extent of which were not anticipated or recognized at the time of the preparation of the additional financing. It is important to note that at the time there was no experience in the region with the measures that were proposed to be covered under the operation, or how they would be executed in Kenya, and hence the extension period of three years requested at the time of the AF was considered adequate.

20. The following chronology of events and the timeline illustrates the actions taken before the award of the three road contracts. Bids for all the three road works contracts were invited using the standard bidding documents of the World Bank which do not contain the early termination clause introduced under the RSGAP. The bids were received and opened on August 20, 2008 and Bank informed of the outcome of the response on September 18, 2008. The GoK evaluated them and made recommendations for award. However, the review of the bid evaluation reports by the Bank could not commence before the GoK and the Bank agreed on the RSGAP. Between October – November 2008, there were numerous discussions between the Bank and the GoK on several governance issues in the Kenya portfolio, including the RSGAP for the AF. The GoK wrote to the Bank management seeking assistance in expediting the approval of the AF, and confirmed to the Bank through the Minister of Finance, of their agreement to include the early termination clause in the road contracts. However, this was subject to the Bank’s confirmation to cover resulting financial costs related to any contract cancellation. In January 2009, the Bank responded confirming that it would proceed with submitting the AF to the Board, but clarified that it would only be able to finance technical assistance to support re-tendering, in case this was realized.

21. Between January 2009 – September 2009, there were extensive negotiations between the Bank and the GoK on the implications of implementing the RSGAP. Once an agreement was reached on how to implement the RSGAP, the review process including the procurement process had to be re-done starting with the bidding documents, the specifications and the BER under the new requirements of the RSGAP by the Bank- hired Independent Procurement Specialist. This new RSGAP and the required additional step led to a 13 month delay to issuance of Bank’s No Objection for award for the Mau Summit-Kericho and Kericho-Nyamasaria road contracts on October 15, 2009.

22. The No Objection for Nyamasaria-Kisumu-Kisian road contract was issued on August 3, 2011 and it took 36 months from bid opening to issue of No Objection to signing of contract after a cumbersome but comprehensive review. This is because the lowest evaluated bidder was debarred after completion of first bid evaluation. The first bid evaluation was done based on the new, required review proposed under the RSGAP including the formal negotiations for AF in March 2009. First the GoK had to implement the new contract clause and get acceptance from all the bidders. Once the standard

evaluation was submitted to the Bank, the Bank, through the Independent Procurement Specialist, undertook a comprehensive review of the complete bidding process and his comments were communicated to the GoK as comments on the BER. The revised BER was thereafter submitted to the Bank for review and clearance.

23. During this period, the Bank requested GoK to establish whether there is an legal association between the lowest evaluated bidder, China Communications Construction Company (CCCC) and China Road and Bridges Corporation (CBRC), which had been debarred earlier for collusion in the Philippines. The GoK had difficulty in collecting information that could link these two companies and the process to confirm the association, normally left for INT or similar entities, took a very long time. The GoK, having established that CCCC is indeed associated with CBRC, reviewed the other two bids and determined that the second lowest bidder did not have sufficient capacity to undertake this contract, having just been awarded the other two contracts, Mau Summit- Kericho, and Kericho-Nyamasaria.

24. Further procurement decisions were delayed as the GoK had to perform additional due diligence on the third lowest bidder. The eventual bid evaluation was reviewed by INT and its comments were also provided to the Operational Procurement Review Committee (OPRC) for consideration and clearance for award of the contract to the third lowest evaluated bidder. A further delay came about when the Bank’s clearance was done in two stages, the contract award on March 3, 2011, and the signing of the contract on August 11, 2011.

25. The extensive scrutiny of the contracts and implementation of the RSGAP led to improved transparency and accountability, but resulted in extensive procurement delays, contributing to a strained relationship between the Bank and GoK at the time. In hindsight, the AF should have requested an extension of the project closing date of longer than 3 years to allow for the additional processing time required to implement the RSGAP-requirements.

26. Higher than planned traffic growth rates at JKIA required new designs to modernize the airport. The original concept and scope changed from primarily focusing on the remodeling and renovation of the existing three terminal buildings at the JKIA to expanding them and constructing a new terminal building (Terminal Unit 4). This was a result of unprecedented growth in traffic which triggered the need for larger terminal facilities. JKIA handled 6.2 million passengers in 2011 against a design capacity of 2.5 million passengers annually and an anticipated volume of 4 million passengers. Carrying out new designs and procuring contractors for the works resulted in a delay of about 12 months to the expected completion of the works and, with it, the supervision consultancy, funded by the Bank. The construction of Terminal Unit 4 is expected to be completed in December 31, 2013 while the remodeling and expanding the existing terminal building is expected to be completed in September 2014. The Bank is financing the supervision consultancy for both contracts while the AFD and the EIB are financing the works.

27. Overall delays due to external reasons. The retroactive implementation of the RSGAP caused an estimated 30 month external delay in the implementation of the road works component. The need to re-design the planned works to modernize the JKIA airport caused an external delay of about 12 months. Since the implementation of the two activities was partly concurrent, the overall external delay in the implementation of the project is 36 months.

D. RISKS

28. The principal risks for extending of the closing date for this operation are: (a) jeopardizing the completion of the works under the Mau Summit-Kericho, Kericho- Nyamasaria and Nyamasaria-Kisumu-Kisian roads, and cancellation of the supervision contract for JKIA being financed by the AFD and EIB; and (b) creation of a substantive financing gap for GoK which it would take time to fill leading to the further delays in the completion of the works. .

29. In addition, failure to extend the closing date would endanger the outcomes and the development objectives of the Project and would also have an impact on the currently good relationships with both GoK and the co-financiers under the project, the AFD and the EIB.

30. The performance of the contractor for the Mau Summit-Kericho and the Kericho- Nyamasaria roads is being closely monitored by the GoK which has developed comprehensive implementation plan to mitigate further persistent delays. Furthermore, both contracts will be closely monitored by the GoK and the Bank, and frequent site visits will be fielded to ensure timely execution of the works.

E. EXTENSION OF CLOSING DATE

31. The Closing Date for the Kenya Northern Corridor Transport Improvement Project (Credit 3930-KE and Credit 4571-KE) would be extended from December 31, 2012 to December 31, 2015.

32. This proposed extension is equal to the delay caused by external factors to the operation and outside the control of the Borrower consistent with the Bank’s Guidance to Staff on Processing Additional Financing (dated November 18, 2009 and revised April 16, 2012) governing Additional Financing for Investment Lending (OP/BP 13.20). The project closing date was first extended by three years to allow for the use of the additional finance (Credit 4571-KE) on April 2, 2009.

33. This proposed extension of the Project’s Closing Date is also consistent with the Bank’s OP/BP 13.30 on Closing Dates and meets its requirements, namely: (a) the Project objectives continue to be achievable; (b) the performance of the Borrower and other implementing agencies is satisfactory; and (c) the Borrower has completed a specific action plan acceptable to the Association to complete the Project.

34. Implementation schedule. The proposed implementation schedule is cognizant of the risks discussed in paragraphs 27 – 29 above. The implementation support will focus on actions that are critical for project success. In particular, emphasis will be placed on quality of works, technical compliance, timely payment of contractors, supplies and consultants and adherence to implementation schedule. Continuous supervision will be encouraged given that most Bank’s task team members are based in the Kenya Country Office.

35. Emphasis will be placed on upstream reporting to ensure early detection and troubleshooting of problems. There will be continuous review of project implementation progress reports prepared by the supervision consultants.

36. The Financial Management Specialist will carry out periodic reviews to monitor processing of payments.

Table 1: Implementation Plan for Outstanding Activities as of November 2012

Item Activity Estimated Date Remarks No. 1. A. KeNHA March 30, 2014 and end of As of October 31, 2012, Substantial completion of reconstructing Mau defects liability period 23% of progress recorded Summit-Kericho road section September 31, 2015 2. Substantial completion of reconstructing Kericho- September 31, 2014 and As of October 31, 2012, Nyamasaria road section end of defects liability 39% of progress recorded period September 31, 2015 3. Substantial completion of reconstructing August 31, 2014 and end As at October 31, 2012, 10% Nyamasaria-Kisumu-Kisian road section of defects liability period of progress recorded August 31, 2015 4. Award of output and performance based road December 31, 2012 KeNHA is revising the draft maintenance contract bid evaluation report upon receipt of Association’s comments 5. Award of contract for supply of modular bridges December 31, 2012 Association has given its no (bailey bridges) objection to award the

6. Award of contract for supply of assorted June 2013 Bids have been invited equipment for Materials and Research Dept., Kenya Institute of Highways and Building Technology; and Mechanical and Transport Department 7. Award of contract for updating designs for July 2013 Expression of interest remodeling and renovating Terminal Units 1, 2 invited and 3 at JKIA 8. Completion of detailed signs on the Eldoret- March 2013 Feasibility studies and Kitale-Marich Pass-Lodwar-Lokichigio-Nadapal preliminary designs road section on the Kenya-South Sudan road link completed. 9. Completion of repairs on the headquarter office of August 2013 Contracts awarded road authorities at Kisumu, Homa Bay and Rachuonyo 10. Completion of implanting selected activities of the March 2014 Phase 1 involving the national road safety program development of the program completed

Item Activity Estimated Date Remarks No. 11. Completion of the development of a 50-year December 2014 Association provided its no transport master plan and preparation of a 10-year objection to the technical investment plan evaluation report. 12. B. Kenya Airports Authority (KAA) August 2013 and end of About 65% progress Substantial completion of Terminal Unit 4 and defects liability period recorded parking garage August 2014 13. Award of contract for updating designs for July 2013 Expression of interest remodeling and renovating Terminal Units 1, 2 invited and 3 at JKIA

ANNEX 1: Results Framework Status

PDO Outcome Indicators Status Increase efficiency of road Freight and passenger Achieved. Travel time has reduced by 38% (from 14.5 to 9 transport along the Northern travel time by road from hours by car) between Mombasa-Timboroa a distance of 750 km Corridor. Mombasa to Malaba and along the Northern Corridor (Mombasa-Malaba), and for buses, Busia reduced by 25 %. by 39% (from 18 to 11 hours) and trucks by 38% (from 24 to 15 hours)

Enhance aviation safety and KCAA cleared for Substantially achieved. The results/outcomes include: security to meet international International Aviation (a) The responsibility for passenger, baggage and mail security standards. Safety Assessment (IASA) screening at the airports transferred from the police to Kenya Category 1 safety status Airports Authority (KAA), allowing for better monitoring, and JKIA cleared by the control and training of security staff; United States Transportation Security (b) TSA provided security clearance allowing US airlines Administration (TSA) for operating from JKIA. However, this is yet to be direct flights to/from US implemented due to security reasons other than those related Airports. to the airport;

(c) Both Kenya Civil Aviation Authority (KCAA) and KAA given financial autonomy and now retain the revenue generated from their operations, which had been previously remitted to the government’s general revenue kitty;

(d) Aviation safety and security regulations harmonized and adopted by each member of the East African Community (EAC), including an agreement on sharing of resources, particularly safety inspectors;

(e) An airport security oversight unit responsible solely for monitoring security issues and ensuring compliance with security regulations established; and

(f) The GoK decided on further restructuring of KCAA by agreeing on separating oversight functions of KCAA from its service provision activities.

Substantially achieved. The results/outcomes include: (a) The ownership of national, rural and urban roads clarified;

(b) Policy formulation separated from execution of programs and three autonomous road authorities established;

(d) Management of the fuel levy funds for road maintenance without interruption and across all parts of the country enhanced;

(e) A 15-year Road Sector Investment Plan (RSIP) developed and adopted;

PDO Outcome Indicators Status (f) A regulatory body for the construction industry (National Construction Authority) established with powers of registering contractors, monitoring their performance and publishing names of poor performers and those that are debarred;

(g) The regulatory body for consulting and practicing the Engineers profession (originally, Engineers Registration Board and now Engineers Board of Kenya) strengthened and added responsibilities and powers to register professionals and engineering firms, assess their qualifications, monitor their performance, and exercise the right to sanction poor performance or unethical behavior. Promote private sector One long term participation in the performance based road (a) One road section on the Northern Corridor offered to the management, financing and management and private sector for tolling. However, the process was maintenance of road assets. maintenance contract terminated after award of the concession due to changed awarded to the private circumstances. sector and effectively under implementation. (b) Output and performance based maintenance of road contracts approach embraced. Bids under three separate One segment of the contracts covering a road network of over 300 km have been Northern Corridor offered received, evaluated and the bid evaluation report including for concessioning to the recommendations for awards, reviewed by the Association, private sector. and now under revision by KeNHA.

Restore public infrastructure Damaged public and assets damaged as a result infrastructure and assets Substantially achieved. The results/outcomes include: of the December 2007 post- restored. (a) Works contracts on the repairs of road authorities buildings election crisis. at their headquarters at Kisumu, Homa Bay and Rachuonyo awarded;

(b) Purchase of vehicles and computers replacing those destroyed completed; and

ANNEX 2: Reallocation of Proceeds

1. Proceeds for Kenya, Northern Corridor Transport Improvement Project Cr. 3930- KE/Cr. No. 4571-KE will be reallocated as follows:

Table 1: Withdrawal of Proceeds of the Financing Category of Allocation % of Financing (IDA) Expenditure Amended and Additional Revised Revised Revised Percentage of Restated Credit Amended and Additional Expenditures Financed Original Credit (Expressed Restated Credit (inclusive of Taxes) (inclusive of (Expressed in in SDR) Original (Expressed in Taxes) SDR) Credit SDR) (Expressed in SDR) 1. Works (a) Under Parts A 0 0 66,498,500 67% through E of the Project (b) under Part F of the 9,360,000 0 9,360,000 19% Project Such % age of Eligible (c) under Parts A 89,640,000 131,500,000 24,688,200 146140,000 Expenditures as the Association through E of the may determine for each Fiscal Year Project, except A(2) (d) Under Part A(2) 11,100,000 1,910,000 100% 2. Goods, Equipment and Vehicles

100% foreign expenditures and 90% of local expenditures (a) Under Parts A 0 0 through E of the Project (b) (i) under Part F of 8,190,000 0 4,910,000 the Project (ii) under Part G of 2,550,000 0 2,550,000 the Project (iii) under Part H of 500,000 0 400,000 the Project (c) Under Parts A 450,000 7,900,000 450,000 7,900,000 through E of the Project, except (A3) (d) Under Part A(3) of 0 1,600,000 1,600,000 100% the Project 3. Consultants’ Services including audits 100% of foreign expenditures and 94% of local expenditures (a) under parts A 0 0 2,360,800 through E of the Project (b) (i) Under Part F of 5,120,000 0 8,400,000 the Project (ii) Under Part G of 3,700,000 0 3,780,000

Category of Allocation % of Financing (IDA) Expenditure Amended and Additional Revised Revised Revised Percentage of Restated Credit Amended and Additional Expenditures Financed Original Credit (Expressed Restated Credit (inclusive of Taxes) (inclusive of (Expressed in in SDR) Original (Expressed in Taxes) SDR) Credit SDR) (Expressed in SDR) the Project (iii) Under Part H 350,000 0 350,000 of the Project (c) under Parts A 16,200,000 11,200,000 12,292,500 14,150,000 through E of the Project, except Part (A2) (d) under Part A(2) of 1,400,000 100% the project 4. Training 100% (a) under Parts A 650,000 0 650,000 through E of the Project (b) (i) Under Part F of 580,000 0 580,000 the Project (ii) Under part G of 500,000 0 420,000 the Project (iii) under Part H of 650,000 0 750,000 the Project Unallocated 5 (a) under Parts A 0 7,300,000 300,000 through E of the Project (b) under Part F of the 0 0 Project

TOTAL 138,440,000 172,000,000 138,440,000 172,000,000

Notes: (a) For the purposes of this Schedule, for Category 1(c) in the table the proceeds of the Credit will finance 100% of expenditures related only to constructing of the Mau Summit-Kericho; Kericho- Nyamasaria; and Nyamasaria-Kisumu-Kisian road contracts for FY13. The % age of financing will be reviewed for the subsequent years. The Government of Kenya is in the process of implementing a new constitution which has put significant strain on its finances.

(b) Reallocation

1. US$14 million (SDR 9,187,557.42 equivalent) reallocated from Category 1(d) to Category 1(c) since GoK used own funds to undertake part of the emergency related activities. 2. SDR 1.4 million (US$2,133,320 equivalent) reallocated from Category 3(d) to Category 3(c) to enhance the financing toward preparing a 50 year transport master plan.

3. US$5 million (SDR 3,281,270.51 equivalent) reallocated from Category 2(b)(i) to Category 3b(i). KAA received some security and communication equipment through bilateral financing. 4. US$120,000 (SDR 7,875.89 equivalent) reallocated from Category 4(b)(ii) to Category 3b(ii). 5. SDR 100,000 (US$152,380 equivalent) from Category 2(b)(iii) to Category 4b(iii). Cost saving realized under equipment category 6. SDR 7 million (US$9,142,800 equivalent) reallocated from Unallocated to Category 1(c ). 7. SDR 1,546,700 reallocated from category 3(c) to category 1(c) since this category was overdrawn by this amount.

2. The proposed reallocation is necessary to allow for the completion of the outstanding project activities, and attainment of the project objectives as envisaged. The reallocation has come up mainly due to the need for merging some of the activities , for instance, particular goods contracts for airport expansion at the JKIA have been merged under works contracts; the GoK has used its own funds to finance certain activities, thereby realizing unutilized funds under these activities; and the scope of some of the works contracts has increased, and more resources required.

3. The implementation progress of all the project activities is summarized in Tables 2 and 3 below.

Table 2: Status of Implementation of Project Activities under Credit 3930-KE

Component Agency Responsible Status

A. Rehabilitation of Northern Corridor Road Works The rehabilitation of the road sections has reduced the travel time from Mombasa to Timboroa from 14.5 hours by car in 2004 a distance of 750 km to 9 hours and by bus from 18 to 11 hours. 1. Maji ya Chumvi - Miritini (35 km and increased Completed and handed over to KeNHA. Financed by to 40 km) Nordic Development Fund. 2.Sultan Hamud-Machakos Turnoff (55 km) Completed and handed over to KeNHA. The scope of the contract was increased significantly with the designs enhanced to respond to unprecedented growth in traffic. GoK financed the extra cost resulting in GoK financing 51% and IDA 49% of the contract. The contract is under defect liability. 3. Machakos Turn off-JKIA 33 km (12 km of Completed and handed over to KeNHA. The scope which dual) KeNHA of the contract was increased significantly to respond to increased traffic, unprecedented mushrooming of industrial, commercial and residential developments requiring services. Two river bridges, an interchange, access and service roads were later included under the contract. GoK financed the extra cost, leading to IDA financing 49% and GoK 51%. The contract is under defect liability. 4. Lanet-Njoro Turnoff (dual 16 km) Completed and handed over to KeNHA. 5. Njoro Turnoff-Timboroa (84 km) Completed and handed over to KeNHA.

Subtotal IDA (1-5) 132.62 (US$M) 130.46 (US$M)

Component Agency Responsible Status

Consultant Services - Design and Supervision of works 1. Maji ya Chumvi-Miritini Completed 2. Sultan Hamud-JKIA KeNHA Completed Under defect liability. 3. Lanet-Timboroa Completed Under defect liability. 4. Mau Summit-Kisumu Subtotal IDA (1-3) 9.97 (US$M)

Sub totals IDA (A) 140.43 (US$M) 140.43 (US$M)

B. Socioeconomic Enhancement, Roadside Amenities and HIV/AIDS Mitigation Works 1. Roadside Facilities (partly in works contracts) Partially completed. Consultants Services KeNHA 1.Supervision of works Partially completed. 2. HIV/AIDS mitigation work (NGO) Partially completed and ongoing. Subtotal IDA (1-2) 1.62 (US$M)

Sub totals IDA (B) 3.05 (US$M) 143.48 (US$M)

C. Private Sector Participation in Road Management and Maintenance Works 1. Long term performance based contract (LTPBC) 1.43 (US$M) Consultant Services 1. Preparation of Concession bid documents Completed 2. Transaction Adviser for Nairobi Toll Rd Contract terminated upon the decision by GoK to KeNHA cancel the concession process. The balance of the IDA funds will be reallocated. 3. Design & supervision of LTPBC Partially completed. Subtotal IDA (1-3) 3.05 (US$M)

Sub totals IDA (C) 4.48 (US$M) 147.96 (US$M)

D. Road Safety Improvement Works 1. Road Safety Parks KeNHA Included in the main road works. IDA funds (US$1.86 million) to be reallocated to consultant's service (Institutional TA). Rehabilitation of parks delayed. The National Transport and Road Safety Authority established and will take-over this activity. Consultant Services 1. Design, supervision and safety education KeNHA National Road Safety Program developed and adopted by GoK. The new National Transport and Road Safety Authority will implement the program. Merged with supervision under main road works.

Component Agency Responsible Status

Sub totals IDA (D) 4.69 (US$M) 152.65 (US$M)

E. Institutional Strengthening in the Roads Sector and Technical Assistance The main outcomes included: the ownership of national, rural and urban roads was clarified; separation of policy formulation from execution of programs; the enactment of new policies; the development and adoption of a 15-year Road Sector Investment Plan (RSIP); the establishment of a regulatory body for the construction industry (National Construction Authority); the strengthening of the regulatory body for consulting and practicing Engineers (Engineers Board of Kenya); the GoK offered one road section was offered to the private sector for tolling. The process was terminated due to changed circumstances. Goods, Equipment & Vehicles 1. QA equipment & vehicles for the Materials, KeNHA Ongoing. Equipment for ERD procured while for the Research and Development Department Materials Dept., bids are expected on December 14, (MORPWH) and ERD 2012. Consultant Services 1. Technical Assistance for setting up KeNHA, Substantially completed. The start-up activities KeRRA and KURA and strengthening of MTD, including computers and MIS installed. KIHBT, Materials Dept., GDIPE and State Law Office 2. Support to Kenya Roads Board (KRB) (Road Completed successfully. Including the road KeNHA User Charges Study, inventory of unclassified inventory and condition survey for the unclassified roads and review and regulation of truck traffic in road network; re-classification of the road network; Nairobi) road user charges study and preparation of the a 15- year Road Sector Investment Program.

Feasibility & Detailed Eng. Design Studies & TA

1. 10 Year Transport Development Plan and Ongoing. Negotiations with the highest evaluated transport sector studies responsive firm underway. The activity has been expanded to encompass the preparation of a 50-year transport master plan including a 10-year investment plan. 2. Capacity building and training of staff in the Substantially completed proposed NHA, MORPWH, MOF, ERD & KRB 3. Project M&E, Ext. Auditor and Project Continuous Coordination Subtotal (1-3) 5.15 (US$M) Project Operating Costs (KeNHA) KeNHA Funded by GoK fully

Sub totals (IDA) (A, B, C, D & E) KeNHA 157.80 (US$M) 157.80 (US$M)

F. Support to KAA The main outcomes included: the responsibility for passenger, baggage and mail security screening at the airports has been transferred from the police to KAA, allowing for better monitoring, control and training of security staff; KAA has been given financial autonomy and now retain the revenue generated from its operations, which had been previously remitted to the government’s general revenue kitty. JKIA obtained Category 1 security clearance by TSA of USA allowing US airlines to operate from JKIA. Works The scope of this sub component is to increase the capacity at JKIA to handle 10 million passengers from its current design capacity of 2.5 million

Component Agency Responsible Status

passengers annually. The original concept of renovation of the existing facilities was abandoned and expansion of the JKIA adopted instead. The erection of the security fence at JKIA and acquisition of security screening has contributed to the security clearance for US airlines operating from the JKIA by Transportation Security Administration. 1. Rehabilitation of Old Embakasi Airport Dropped. IDA funds for this activity were Infrastructure (dropped) reallocated toward expanding JKIA. 2. External Electrical Works - Old Embakasi Dropped. IDA funds for this activity were Airport (dropped) reallocated toward expanding JKIA. 3. Renovation of terminal building – Old Dropped. IDA funds for this activity were Embakasi Airport (dropped) reallocated toward expanding JKIA. 4. Construction works for re-organization of passenger terminal JKIA (i) Unit 4 Apron Extension and Taxiways KAA Completed and increased the parking space for (New) aircraft by 50%. KAA financed this activity from its own resources and local banks. (ii) Unit 4 Terminal Building & Car park Works underway and expected to be completed by (New) June 2013. The AFD is the main financier. (iii) Units 1-3 Buildings Renovation and Delayed, due to the need for restructuring further the Modification activity to accommodate the requirements of the operators. The works contract will be funded by EIB. 5. Terminal Building – Kisumu Airport Completed. The original activity of rehabilitating (expanded) the existing terminal building was dropped. The airport has been converted into an international airport. A new terminal building has been constructed with a design capacity of 500,000 passengers annually. KAA financed this activity fully. 6. Rehabilitation and extension of runway and Completed, though with a larger scope than was construction of access road and parking area at originally envisaged – expanded to 45 m wide and 3 Kisumu Airport km long form 30 m wide and 2 km long. KAA financed this activity. 7. Renovation and upgrading of security at Wilson Feasibility study completed. Detailed design delayed Airport due to concerns raised by operators at the airport, which must be resolved before advancing this activity. KAA will undertake the follow on activities under parallel financing. IDA funds for this activity were reallocated toward the works contracts of expanding JKIA Subtotal IDA (1-7) 14.00 (US$M) Goods, Equipment & Vehicles 1. Security screening, baggage, access control, etc. Completed successfully, improving the working environment at JKIA and Moi International airport, Mombasa. 2. Perimeter Fencing for Major Airports Completed successfully for JKIA, bids received for (Materials) KAA Moi and Kisumu airports. 3. FIDS with Installation at Moi Airport Mombasa The bidding process underway. 4. Fire Tenders Completed successfully, and enhanced the capacity at JIKA and Moi International Airport. 5. Security perimeter lighting and detection at four KAA has proposed to reallocate the IDA funds

Component Agency Responsible Status

airports toward supervision of expansion of JKIA. KAA will finance this activity. 6. Security and communication Equipment and KAA has proposed to reallocate the IDA funds vehicles at four airports toward supervision of expansion of JKIA. KAA will finance this activity. 7. Support to Emergency Operation Centers KAA has proposed to reallocate the IDA funds toward supervision of expansion of JKIA. KAA will finance this activity. Subtotal IDA (1-7) 12.24 (US$M) Consultant Services 1. Feasibility/Design/Supervision: Kisumu and Completed. Feasibility study and detailed design of Wilson Airports and JKIA Runway Rehab. Design Kisumu airport and rehabilitation of the runway at JKIA completed successfully. Similarly, the KAA feasibility study of expansion of Wilson Airport completed successfully but detailed designs delayed. 2. Works Supervision for JKIA Units 1-4 and On-going Arrivals building (New)* Subtotal IDA (1-2) 7.72 (US$M Training 0.86 Substantially completed. Project Operating Costs Funded by the GoK fully.

Subtotals IDA (F) KAA 34.82 (US$M) 192.62 (US$M)

G. Support to the KCAA KCAA has been given financial autonomy and now retain the revenue generated from its operations, which had been previously remitted to the government’s general revenue kitty; aviation safety and security regulations have been harmonized and adopted by each member of the East African Community (EAC), including an agreement on sharing of resources, particularly safety inspectors; and KCAA established an airport security oversight unit, which is solely responsible for monitoring security issues and ensuring compliance with security regulations. Goods, Equipment & Vehicles 1. Support to KCAA for IT Completed successfully 2. Support to East Africa School of Aviation Substantially completed. The only activity (EASA) – Airworthiness, ATS and Engineering outstanding is the purchase of reference books for KCAA Equipment – and the Accident Investigation Lab the library. EASA is now an ICAO accredited school and has developed patent training programs that are in use worldwide, a source of revenue. Subtotal IDA (1-2) 4.26 (US$M) Consultant Services 1. Technical assistance to KCAA for safety Completed successfully, helped in substantially inspection, training and implementation of reforms achieving ICAO requirements. Examinations for pilots are now offered on-line compared to manually as before; and technical manuals on flight inspection operations and licensing developed and in use. 2. Implementation of the GNSS/GPS enroute and Completed successfully, improving on air safety. approach procedures 3. Training of staff and Trainers at EASA and Completed successfully. Helped in developing a pool KCAA of experts which was a major constraint. Project Operating Costs (KCAA) Financed fully by the GoK. Subtotal IDA (1-3) 5.76 (US$M)

Component Agency Responsible Status

Subtotal IDA (G) KCAA 10.02 (US$M) 202.64 (US$M)

H. Support to the MOT Goods, Equipment & Vehicles 1. Support to New Maritime Authority for IT Completed successfully. 2. Strengthening of in IT Completed successfully. 3. Support in enhancement of maritime training Completed successfully. Bandari college acquired capacities for compliance with IMO STCW95 training simulators and is able to offer International convention Maritime Organization (IMO) accredited courses. Subtotal IDA (1-3) 0.81 Consultant Services 1. Support for Implementation of maritime laws MOT Completed successfully. Rules and regulations of the and Maritime Authority regulator, Kenya Maritime Authority developed and in use. 2. Support to MOT including compliance with A new curriculum for driving schools (for drivers international transport and facilitation conventions and instructors) developed and adopted by GoK. and the NCTA treaty and implementation of the Traffic Act amended to strengthen road safety issues, National Trans. Policy and a new Highway Code developed. Subtotal (1-2) 0. 57 Training of MOT and Sector staff 0.83 Project Operating Costs (MOT ) Financed fully by GoK] Subtotal IDA (H) MOT 2.20 (US$M)

COMPONENTS IDA TOTALS 207.00 (US$M) (A,B,C,D,E,F,G&H)

Table 3: Status of Implementation of Project Activities Under Credit 4576-KE

Component Agency Status Responsible A. Rehabilitation of Northern Corridor and Emergency Restoration of Damaged Public Assets 1. Mau Summit-Kericho (55 km)* KeNHA Completion delayed partly due to late start-up emanating from Association’s requirement that: (a) GoK carries out stringent due diligence on contractors that had submitted bids; and (b) a clause is introduced in the contract, an exception to Association policy, on early termination of the contract in the event the wining contractor is debarred by the Sanctions Board. Bids were invited on April 24, 2008 and it was not until October 5, 2009 that the no objection for award was issued. The contract is underperforming. A new completion date of March 31, 2014 has been agreed following deployed of additional resources. 2. Kericho-Nyamasaria (81 km)* Same, except the completion date is September 31, 2014.

3. Nyamasaria-Kisumu Airport (22 km/ 6 Same, except that the delays were more protracted such that it km dual)** was not until March 3, 2011, that the no objection to award the contract was given, because the winning contractor was debarred during the intervening period, and it took time for receive the OPRC clearance (in consultation with INT) for award of the contract to the third lowest evaluated bidder since the second lowest, awarded the other two contracts (Mau Summit-Kericho, and Kericho-Nyamasaria) was established to have inadequate capacity to handle a third contract under the project. The contract is performing well so far and is expected to be completed by August 31, 2014. 4. Emergency Post-election Reconstruction Partly completed. Contracts for repair of offices that were and Recovery (New) partially burnt have been awarded, vehicles that were destroyed purchased. GoK used its own resources to execute some of the activities. KeNHA has proposed to re-allocate the balance of the IDA resources. 5. Supervision and consultants’ services for Proposal to reallocate the IDA funds. Emergency Repairs (New) Subtotal IDA A (1-5) 220.44 (US$M) 220.44 (US$M) C. Private Sector Participation in Road Management and Maintenance 1. Output and Performance Based Road KeNHA Ongoing. Bids received and evaluated. IDA provided its Contract - works comments to the Bid Evaluation Reports and recommendations of awards. Contract expected to be awarded by December 15, 2012. 2. Transaction Adviser-Nairobi Toll Rd. The concession process terminated by GoK, the balance to be re- (additional funds required) allocated. Sub-total 8.82 (US$M) 229.26 (US$M) E. Institutional Strengthening in Road Sector and Technical Assistance 1. TA for setting up of KeNHA, KeRRA, KeNHA/MoR Substantially completed. KURA and strengthening of MTD, KIHBT, Materials Dept., GDIPE and State Law Office. (expanded and additional funds required) 2.Institutional Strengthening Materials Ongoing. Bids expected on December 14, 2012. dept. – Equipment

Component Agency Status Responsible

Feasibility and Detailed Design Studies 3.Kibwezi-Kitui-Mwingi-Maua-Isiolo Completed successfully. Part of the road section under (additional funds required) construction with GoK resources. 4.Lakeside N.Tanzania-Narok (additional Completed successfully. funds required) 5.Mombasa Bypass (additional funds Completed and JICA providing funds for construction. required) 6. Sudan Road Link (New) Ongoing, expected to be completed by end of March 2013.

7. Urban Public Transport Improvement Partially completed. Study (New) 8. Project M&E, Ext. Auditor and Project Continuous Coordination (expanded and additional funds required) Sub-total (1-8) 9.83 (US$M) 239.09 (US$M) Strengthening Governance in Construction Industry (New) 9.Establishment of a Road Disaster MoR Ongoing. Management and Response Unit 10.Establishment of the National Established through an Act of Parliament. Construction Authority 11.Strengthen ERB and associated Strengthened and re-constituted to become Engineers Board of institutions Kenya, through an Act of Parliament with expanded mandate.

12.Emergency Equipment (Bailey Bridges) Ongoing. Bids received and evaluated. Association provided its and Vehicles comments on the bid evaluation report and recommendations of awards. Sub-total (9-12) 13.92 (US$M) Total 253.00 (US$M)

ANNEX 3: Revised Results Framework

PDO Outcome Indicators Use of Outcome Information Increase efficiency of road transport along Freight and passenger travel time Check if physical improvement of individual the Northern Corridor. by road from Mombasa to sections of the road lead to reduction in Malaba and Busia reduced by 25 travel times – if not, then identify causes and %. implement corrective measures.

Enhance aviation safety and security to KCAA cleared for International Adjust safety and security interventions to meet international standards. Aviation Safety Assessment ensure compliance with ICAO and US (IASA) Category 1 safety status Federal aviation Administration (FAA)/ and JKIA cleared by the United Transport Security Administration (TSA) States TSA for direct flights requirements. to/from US Airports.

Promote private sector participation in the One long term performance based management, financing and maintenance road management and of road assets. maintenance contract awarded to If pilot program of long-term performance the private sector and effectively based contracts and concessioning to private under implementation. sector is successful, then scale up with more road sections. One segment of the Northern Corridor offered for concessioning to the private sector.

Restore public infrastructure and assets Damaged public infrastructure damaged as a result of the December 2007 and assets restored. post-election crisis. Adjust post-election recovery program. Intermediate Results Results Indicators for Each Use of Results Monitoring One per Component Component Component One (A): Component One (A): Component One (A): Contracts awarded and construction Average roughness less than IRI Check construction quality and performance satisfactory on 381 km of selected priority 3.0 m/km on completed sections of the contractor and take remedial actions road sections along the Northern Corridor. of the project roads. as necessary.

Damaged or destroyed assets restored. (i) 3 public buildings restored Ensure expeditious return to normalcy in and functional; and conflict affected areas and enhance (ii) 3 term contracts awarded for government’s preparedness to respond to disaster response readiness. disasters.

Component Two (B): Component Two (B): Component Two (B): (i) Effective functioning of bus and truck (i) At least three roadside stations (i) Reassess location of roadside facilities if stops at key locations and satisfactory and amenities constructed and not adequately utilized by road users and construction and utilization of booths for functional as per designs and local communities. sale of local produce and products by serving road users and local roadside communities. communities.

PDO Outcome Indicators Use of Outcome Information (ii) Health kiosks constructed and (ii) At least 70% of road users (ii) Expand the campaign along other HIV/AIDS awareness campaigns and local persons surveyed important transport corridors. undertaken at key locations along the become aware of or make use of Northern Corridor. the Voluntary Counseling and Testing (VCT) and other facilities for HIV/AIDS campaign along the Northern Corridor. Component Three (C): Component Three (C): Component Three (C): Private Sector involved in road Legislation enacted for private Prepare bids for road concessioning and long management and maintenance. sector participation in roads. term performance based road management and maintenance contracts. Component Four (D): Component Four (D): Component Four (D): Road safety improved. At least 10% reduction in road Adjust awareness campaign and hazardous related fatalities per annum. spot improvements to achieve maximum benefit. Component Five (E): Component Five (E): Component Five (E): Management and governance improved (i) KeNHA established and fully Mobilize greater support for road sector in the road sector. functional. investments from Development Partners and (ii) All feasibility and design ensure government follows up on the agreed studies carried out satisfactorily. Road Sector Governance and Integrity (iii) Timely public disclosure of Action Plan. national program and business opportunities in the road sector. (iv) NCA established and functioning satisfactorily.

Component Six (F): Component Six (F): Component Six (F) Security improved at major airports. JKIA meets ICAO and USA Required for obtaining clearance for direct TSA security requirements. flights to USA and code sharing with USA Capacity at JKIA expanded. airlines.

(i) Annual passengers handled at Ensure adequate designs and reconfiguration JKIA increased from 4.8 million of the JKIA terminals to cope for added in 2007 to 6.4 million in 2012. capacity.

(ii) Cargo by air handled at JKIA increased from 278,000 tons in 2007 to 383,000 tons in 2012. Component Seven (G): Component Seven (G): Component Seven (G): Aviation safety and air navigation KCAA meets ICAO and USA Required for obtaining clearance for code standards improved. FAA Category 1 safety sharing with US airlines. requirements. Component Eight (H): Component Eight (H): Component Eight (H): Compliance with IMO conventions and IMO and NCTTCA certify Required for overall improvement in the NCTTCA treaty. compliance. transport supply chain in the Northern Corridor.

ANNEX 4: Revised Results Monitoring Framework

Outcome Indicators Baseline Target Values Data Collection and Reporting 2012 2013 2014 2015 Frequency Data Responsibility and Collection for Data Reports Instruments Collection 1. Freight and passenger Truck 18 hours 18 hours Quarterly Field Survey. Supervision travel time by road from 24 hours progress Consultant. Mombasa to Malaba report. reduced by 25 %. Bus 18 13.5 hours 13.5 hours hours

Car 14.5 11 hours 11 hours hours 2. KCAA and JKIA 100% 100% Quarterly FAA, TSA (Nairobi) respectively progress and ICAO cleared for FAA/IASA report. inspections. Category 1 and TSA security status. 3. One long term 100% 100% Quarterly Field KeNHA performance based road progress Supervision. mgmt. and maintenance report. contract awarded to the private sector and effectively under implementation. 4. Bids for concessioning 100% Quarterly Field KeNHA of one road segment progress Supervision. invited. report. 5. Damaged public infras. 100% Quarterly Field KeNHA and assets restored. progress Supervision. report. Component One (A): 1. Average roughness Less 50% 80% 100% Quarterly Field Supervision less than IRI 3.0 m/km on than progress measurement. Consultant. completed sections of the 20% of report. project roads. project road length.

(i) Public buildings 0 3 Quarterly Field Supervision restored and functional. progress measurement Consultant report (ii) Term contracts 0 3 awarded for disaster response readiness. Component Two (B): 1. At least three roadside None 1 3 3 Quarterly Field KeNHA stations and amenities progress inspection. constructed and report. functional as per designs and serving road users and local communities.

2. At least 70% of road None 10% 50% 70% Quarterly Questionnaire. MOR and users and local persons progress University of surveyed become aware reports. Nairobi of or make use of the (Consultant).

Outcome Indicators Baseline Target Values Data Collection and Reporting 2012 2013 2014 2015 Frequency Data Responsibility and Collection for Data Reports Instruments Collection ACT and other facilities for HIV/AIDS campaign along the Northern Corridor. Component Three (C): Legislation enacted for private sector None 100% Quarterly government MOR participation in roads progress gazette. report. Component Four (D): At least 10% reduction in road related fatalities per 3000 3150 2800 2700 Quarterly MOR Annual MOR annum. progress Report. report. Component Five (E): 1. Kenya National None KeNHA KeNHA Quarterly government MOR Highway Authority Established. Effective. progress gazette. KeNHA established and report. functional as evidenced by annual reports.

2. All feasibility and None 50% 75% 100% 100% Quarterly MOR KeNHA design studies carried progress Reports. report. out satisfactorily. 3. Timely public None Strategic Plans Plans Plans Annual Media. MOR, KRB and disclosure of national Road Disclosed. Disclosed. Disclosed. Progress KeNHA. Investment Reports. program and business Study opportunities in the road completed. sector. 4. NCA established and None Legislation Act passed NCA NCA Annual Government MOR functional as evidenced Drafted. by established. established. Progress gazette. Parliament. Reports. by annual reports 5. Governance and None 10% 30% 60% 100% Annual Field MOR Integrity Action Plan Progress inspection. KeNHA implemented Reports. UNES satisfactorily 6. User perception and None - 50% of >75% of >75% of Annual Annual Consultant satisfaction improved in users users users Survey Surveys along NGO the road sector surveyed surveyed surveyed report Northern are satisfied are are Corridor satisfied satisfied

Outcome Indicators Baseline Target Values Data Collection and Reporting 2012 2013 2014 2015 Frequency Data Responsibility and Collection for Data Reports Instruments Collection Component Six (F): 1. JKIA meets ICAO Quarterly ICAO and KAA and USA TSA Category None 50% 70% 100% progress TSA 1 security requirements. report. inspection.

2. No. of Passengers handled at JKIA 4.7 5.0 5.5 6.0 6.4 KAA KAA KAA (2007) annual statistics. (million). report. 3. Cargo handled at JKIA (tons). 278,000 300,000 330,000 360,000 383,000 KAA KAA KAA (2007) annual statistics. report. Component Seven (G): KCAA meets ICAO and None 70% 100% 100% 100% Quarterly ICAO and KCAA US FAA Category 1 progress FAA safety requirements. report. Inspection.

Component Eight (H): IMO and NCTTA 70% 100% 100% 100% Quarterly NCTA NCTTCA progress monitoring certify compliance with report. system. respective treaties.