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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 OF 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 i 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] ii 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.” 1 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
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