46844

DATA SHEET

PROJECT PAPER

Public Disclosure Authorized Date: November 19,2008 Task Team Leader: Nicolas Peltier- Country: Thiberge Project Name: Transport and Territorial Acting Sector ManagedDirector: Development Project - Project Emmanuel JamedLaura Tuck Restructuring Country Director: Yvonne Tsikata Proiect ID: PO95523 Environmental category: B Borrower: Government ofHaiti Responsible agency: Ministry ofPublic Works, Transport and Communications (MTPTC)

Revised estimated disbursements (Bank FY/US$m) FY FY07 FY08 FY09 FYlO FYI1 FY12 Annual 0.2 2.0 6.3 4.5 2.0 1.o Public Disclosure Authorized *2.2 8.5 1 13.0 I 15.0 I 16.0 Current closing date: June 1, 20 12 Revised closing date [if applicable] : June 1, 20 12 - Indicate if the restructuring is:

Board approved X RVP approved -

Does the restructured project require any exceptions to Bank policies? - Yes XNo Have these been approved by Bank management? - Yes -No Is approval for any policy exception sought from the Board? - Yes &No Public Disclosure Authorized Revised project development objective/outcomes:

The proposed revised Project Development Objective is: “lower the marketing costs for small farmers in two selected micro-regions (marketing costs are those costs incurred in the aggregate of functions involved in moving goods from producer to consumer) and rebuild selected infrastructure in areas struck by natural disasters”

Does the restructured project trigger any new safeguard policies? If so, indicate which one( s) : OP4.3 7 Safety of Dams

Revised Financing; Plan (US$m.) Source Local Foreign Total

Public Disclosure Authorized Borrower IBRD/IDA Others I l2 14 I l6

HAITI TRANSPORT AND TERRITORIAL DEVELOPMENT PROJECT RESTRUCTURING (Grant 34938-HT)

PROJECT PAPER

1. This Project Paper seeks the approval of the Executive Directors to introduce the following changes in the Haiti, Transport and Territorial Development Project, IDA Grant 34938-HT, P095523, and the accompanying amendments to the project’s grant agreement.

2. The proposed changes follow the occurrence of the series of hurricanes and tropical storms that struck Haiti in 2007 and 2008, causing major damages, particularly on transport infrastructure. The Haitian Government and IDA have identified the Transport and Territorial Development Project as a possible vehicle to channel funds for reconstruction works. The proposed amendments to the project’s grant agreement aim at reallocating project resources to these reconstruction activities, by creating a new component entitled “post natural disasters’ reconstruction of selected infrastructure”, with a total financing amount of US$8 million. Initial project activities will be kept unchanged. Provided country environment and project performance allow for it, an additional financing will be processed in late FY09 or early FYlO to compensate for this reallocation and allow all initial activities to be financed. This additional financing may also cover any possible increase of the price of road works, following the increased cost of gasoline. If an additional financing cannot be processed, a second restructuring, involving substantial modifications of the initial result framework, would be processed.

Background and Reasons for Restructuring

3. The Haiti - Transport and Territorial Development Project was approved by the World Bank Board of Executive Directors on April 11, 2006 and became effective on December 13, 2006. The 8 month delay between the Board and Effectiveness dates is due to the time required by the to ratify the grant agreement. The project’s original objectives were to “lower the marketing costs for small farmers in two selected micro-regions (marketing costs are those costs incurred in the aggregate of functions involved in moving goods from producer to consumer)”. The selected ’ micro-regions include in particular the communes of Dondon-Saint Raphael in the North of the country and the communes of Thiotte - Anse d Pitre in the South-East.

4. The project was originally designed with three components. Component 1 entitled “road rehabilitation and maintenance” aims at improving transport conditions through selected interventions on roads and critical points that are essential to the rural economy. The project finances the cost of the works, maintenance costs for the repaired roads, related technical and economic studies, and supervision. Component 2 finances the "Territorial Development Window", a consultative process with local stakeholders to identify investment priorities based on a multi-sector territorial development strategy for the micro-regions. Component 3 finances expenditures for project administration, including environmental management, monitoring and evaluation as well as the project's impact evaluation. The project is financed through a US$16 million IDA grant.

5, To date, despite longer-than-expected implementation delays, the project has performed in a satisfactory manner. Disbursements reach US$1.98 million and commitments US$3.84 million. Progress on each of the components is as follows:

0 Sub-component 1.1. Road Improvement. The engineering design studies of the two selected transport corridors are being prepared and should be completed by the end of 2008. A bridge (Pont Limite) is being replaced through an ad'hoc cooperation agreement between the MTPTC and the French Government (Centre National des Ponts de Secours), involving partial financing from this project. In the Northern micro-region, the project initially aimed at financing the rehabilitation of the 39 km road Carrefour La Mort - Saint-Raphael (Route Nationale No.3 / RN3). However, road standards had to be upgraded, following the decision of other donors to rehabilitate the rest of the itinerary, thus converting the RN3 in a major transport corridor that should become an alternative itinerary to the RN1 to connect Port-au-Prince to Cap Haitian, the country's two main cities. This upgrading of road standards requires a significant budget increase, but the EU has accepted to finance a greater portion of the RN3. As a consequence, the project is still financing the design study for the section Carrefour La Mort - Saint Raphael but it will only finance the works for section Carrefour La Mort - Barriire Battant (section 1 of the RN3), while the EU will finance rehabilitation works on Barriire Battant - Saint Raphael (section 2). On the other hand, the Agence Franqaise de De'veloppement (AFD) will finance the rehabilitation of the road Saint-Raphael - Hinche (section 3). Meanwhile, the European Union (EU) is currently financing the rehabilitation of the sections Hinche - Mirebalais (section 4) and Mirebalais - Port-au-Prince (section 5). A joint bidding process was coordinated between the Haitian Government, the AFD and IDA for the engineering design studies of the road Carrefour La Mort - Saint-Raphael - Hinche, allowing the selection of a unique consulting firm, thus ensuring better coordination and economies of scale.

0 Sub-component 1.2. Road Maintenance. The Road Maintenance Fund (Fonds d 'Entretien Routier / FER) has reached a significant implementation capacity and started financing routine, periodic and emergency road maintenance activities on selected transport infrastructure, with financing from the proceeds of a gasoline tax (collected and transferred to the FER by the Ministry of Finance). None of the maintenance activities considered under the project has been initiated by the FER. The FER will essentially intervene at a later stage once the rehabilitation works scheduled under Sub-component 1.1, have been completed. However, the role of the FER in the national road maintenance policy remains uncertain given some reforms envisaged by the Ministry of Public Works, Transport and Communications (MTPTC) to develop force account maintenance practices. IDA, together with other donors, has engaged a policy dialogue with MTPTC to clarify this issue and ensure the sustainability of project activities and, more broadly, the

2 efficiency of the national road maintenance policy. As a result of this policy dialogue, a detailed Road Maintenance Strategy has been prepared with funding from the EU, and several new maintenance contracts are being financed by the FER.

0 Component 2. Territorial Development Window. Two international NGOs have been contracted to be the “facilitators” of the Territorial Development Window in the two micro-regions and they have initiated the consultative process. In the Northern micro-region where this process is the most advanced, a development plan for the micro-region has been drafted, 10 productive initiatives have been screened by the Territorial Development Window and 3 have been prioritized for implementation. In the Southern micro-region, the participatory planning process is under way, and 3 productive initiatives have been reviewed in October 2008.

0 Component 3. Project Administration. A baseline survey has been completed. This survey is currently being complemented, with funding from an UNAIDS grant (HIV/AIDS Transport Incentive Fund), to monitor the incidence of HIV/AIDS in the micro-regions, and implement some mitigation measures to limit the spreading of the epidemics that may be caused by improved transport conditions. Haiti, with a 3.8 percent HIV adult prevalence rate has the highest rate for any country in the world outside of Sub-Saharian Africa.

6. Implementation delays were principally caused by the additional coordination that was required consecutive to the new planned interventions of AFD and EU on the RN3. However, the main Project Implementing Agency (Unite‘ Centrale d’Exe‘cution) was also slow in strengthening its execution capacity by recruiting additional staffs, as agreed at appraisal. For this reason, the project’s implementation performance was downgraded to “Moderately Satisfactory” in October 2007, until this recruiting is completed. Six additional staffs have been selected by the UCE in June 2008 of which five are being recruited, including two road engineers who will be responsible for following on the proposed reconstruction activities.

7. Reason for restructuring is the need to reallocate project resources to reconstruction activities following the occurrence of the hurricanes and tropical storms that struck Haiti in 2007 and 2008:

0 Tropical Storm Noel (October 2007): The storm resulted in flash floods and mudslides that hit the Western part of the country, causing 66 deaths, 17 unaccounted for, and 120 injured. 14,776 families lost their house (2,801 houses were completely destroyed and 12,020 seriously damaged). In addition, about 24,000 hectares of cultivated areas were destroyed and 10,000 cattle killed. As defined by the National System for Risks and Disasters’ Management, a response plan was prepared and implemented by the Civil Protection Directorate of the Haitian Ministry of Interior, in coordination with the MTPTC and with the international community (UNDP, EU, MINUSTAH, Red Cross and other NGOs, World Bank). As a result key emergency activities were implemented, such as the preventive evacuation of 14,000 people, a thorough damage assessment and selected emergency interventions to restore key basic services. On December 12-

3 19, 2007, a World Bank mission travelled to Haiti in order to help the MTPTC assess the damages on transport infrastructure (as well as other infrastructure, in coordination with the Ministry of Agriculture) and prioritize the reconstruction activities. Priority reconstruction activities for a total of about US$25 million were identified at the time. An official letter requesting the reallocation of US$8 million from the Transport and Territorial Development project to finance reconstruction activities was subsequently sent to IDA by the Haitian Ministry of Economy and Finance on March 13,2008. A second mission was fielded on June 9-13, 2008 to help the MTPTC and the UCE design appropriate technical solutions for the selected reconstruction works. Other Bank missions were also organized in the context of the Haiti - Emergency Recovery and Disaster Management Project to which an additional financing of US$7.4 million was approved by the Board of Directors on January 16, 2006 to finance other reconstruction works (drainage, irrigation, schools, health, community centers) in the affected areas.

0 Hurricanes and Tropical Storms Fay, Gustav, Hanna and Ike (August-September 2008): Damages are of considerable extent and almost all parts of the country have been affected by at least one of the four storms, According to the Government and the United Nations’ Office for the Coordination of Humanitarian Affairs (OCHA), 793 people have been killed and 301 injured. An estimated 11,000 houses have been destroyed and 35,000 damaged. Taking into account pre-disaster baseline data, contingency planning, and the impact of in 2004, an estimated 850,000 to 1 million people were affected throughout the country by the combined impact of the storms. According to the Government, 15 1,000 peoples are currently displaced, out of which 1 1 1,000 people are staying in temporary shelters throughout the country. The extensive damage is apparent in all major sectors and in particular in agriculture, infrastructure, health and education. The impact of these storms, in particular the impact of Gustav and Hanna, constitutes the fourth greatest catastrophe to occur in Haiti since the beginning of the 20th century in terms of number of households affected. Damages to the transport sector have been particularly severe, causing several Haitian regions to be completely isolated and the economy to be almost paralyzed. A preliminary assessment was performed by a World Bank mission, comprised of civil engineers from the region of Guadeloupe. The mission identified damages on priority bridges and roads for a total amount of US$37.7 million. This list was complemented by the MTPTC to include other second- priority damages for a total amount of US$90 million. Based on the result of this assessment, a US$20 million Emergency Bridge Reconstruction and Vulnerability Reduction Project has been prepared. Another Bank mission visited Haiti on October 22-31, 2008 in order to negotiate this emergency project and provide technical assistance to the Government. This mission also supervised and updated the list of reconstruction works that had been identified after Noel.

8. The overall country environment of Haiti has improved significantly in recent years. In particular, the authorities have made significant progress in stabilizing the security situation, as well as restoring political institutions and improving governance and transparency in public sector operations. Democratic institutions have been reinforced

4 through peaceful elections held for President, Parliament and newly-created local governments. The Preval government has been in place since mid-2006, and despite some political tension, the coalition of political parties has held together. The President has made security gains and the fight against corruption central to his agenda. Additionally, extensive measures have been taken to promote the transparent and efficient use of public resources, with the objective of improving confidence in the government and the business climate. Stepped up operations by the Haitian National Police and the United Nations Stabilization Mission in Haiti to combat criminal gangs have improved the security situation considerably since end-2006. These achievements on the security and governance fronts have facilitated significant economic results. Economic growth has increased from negative 3.5 percent in FY 2004 to 3.2 percent in FY 2007, implying positive real per capita GDP growth for the first time in several years. Despite these positive results, rising world prices for food and oil have become a new threat since 2007. Price increases have caused great hardship in the country, and triggered violent protests in early April 2008, which led the to vote Prime Minister Jacques-Edouard Alexis out of office on April 12. Calm has returned but the situation is volatile and uncertain. After, the rejection by the lower house of the President’s first two nominations for the post of Prime Minister, Ms. Michelle Pierre Louis was appointed on July 3 1, 2008.

Proposed Changes

9. The proposed change is to add a fourth component entitled “Post natural disasters’ reconstruction of selected infrastructure” to the project. This component would finance the reconstruction works for selected transport infrastructure and other investments to protect roads from erosion (eg. slope stabilization), as well as all related design studies and supervision costs. A list of priority reconstruction activities has been prepared in coordination with the MTPTC and the Ministry of Agriculture, for a total of about US$25 million. Within this list, a prioritization exercise, based on the results of field visits and dialogue with Government officials, was conducted to identify an indicative list of reconstruction works with the highest priority, for a total amount of about US$8 million (see table below). This list was updated to account for the further damages caused by the FGHI (Fay, Gustav, Hanna and Ike) storms. The proposed component would finance this list of priority activities. Nevertheless, this list of works is indicative and some substitution of activities could be performed, subject to the non- objection of IDA, in case new priorities would emerge (for example as a consequence of a new natural disaster or in case of modification of other donors’ interventions).

10. The prioritized list of proposed reconstruction activities was elaborated, taking into account the interventions of other donors (in particular the EU allocated EUR3 million to finance emergency and reconstruction works) as well as other WBG interventions (such as the Haiti - Emergency Recovery and Disaster Management Project and its additional financing, as well as the new Haiti - Emergency Bridge Reconstruction and Vulnerability Reduction Project). Reconstruction activities are expected to be implemented over an estimated period of 24 months (engineering design studies and works).

5 Table: Indicative list of prioritized reconstruction works.

Ganthier, RN8, PaP-Malpasse Bridge reconstruction 450,000 Riv Gauche, RD42. Jacmel-Lavallee Bridge. reconstruction 2,800.000 High- Raq mond, RD4 1, Jacmel-Marigot Road repair, drainage 130,000 Medium High Medium High Cayes Jacmel, RD4 1, Jacmel-Marigot Road reconstruction 120,000 ~~diu~Hi& High High Tesser, RD4 1, Jacmel-Marigot Road protection 165,000 Medium I figh ~~djun~High against erosion Marigot, RD4 1, Jacmel-Marigot Road protection 470,000 Medi~m High Iligh High against erosion Torbeck, RD25, Les Cayes-Port Salut Reconstruction, 50,000 ~~diu~High Medium High drainage Pont Madame, RN7, Les Cayes-Aeroport Road protection 40,000 High High Hi& High against erosion Bananier, RN8, Les Cayes-Camp Perrin Road repair 70,000 High High Very High Vory High St. Louis du S., RN2, Aquin-Les Cayes Reconstruction 95,000 High 1 ligh Medium High Rh. Doh, RL Les Cayes-Maniche Reconstruction bridge 900,000 Medium Very High Very High High and access road Ste Helene, RL Les Cayes-Maniche Drainage, Road 120,000 Medium High Medium High reconstruction Doh, RL Les Cayes-Maniche Drainage 240,000 Medium High Med~u~ High Barrage Dubreuil, RL Torbeck-Duck Dam repair 650,000 Very High Very%Migh High Verykgh Riv Bianche Slope stabilization 1,690,000 High Kg!n High Migh TOTAL 7,990,000 Source MTPTC, IDA.

11. The proposed new component would be implemented by the main project’s implementation agency (Unite‘ Centrale d’Exe‘cution / UCE) in MTPTC. In order to be able to cope with the additional work burden, the UCE is being staffed with additional professionals who will be in charge of the reconstruction works. Additional budget for an amount of US$lOO,OOO is being reallocated to component 3 (project administration) to finance the incurred additional operational costs. Slope stabilization activities will be coordinated by the UCE with the Ministry of Agriculture. Road reconstruction will be coordinated with the FER since repaired sections are expected to enter the list of priority roads eligible to FER’Sfinancing for road maintenance.

12. Implementation procedures for the new reconstruction activities will be the same as for initial project activities. This applies in particular to: (i)financial management, (ii) disbursement arrangements, (iii)procurement, (iv) environmental safeguards; and (v) social safeguards.

13. A revised cost table has been prepared to illustrate the proposed reallocation of grant resources (see below). This table does not include resources from the additional financing to be processed in late FY09 or early FY 10 to compensate sub-component 1.1. from the proposed reallocation.

6 Table: Proposed reallocation of grant resources (SDR million). Component / Sub-component Initial allocation Proposed revised- allocation 1.1. Improvement of two transport corridors 7.5 2.3 1.2 Road maintenance 0.4 0.4 2.1. Territorial planning process 0.3 0.3 2.2. Financing of prioritized productive investments 1.7 1.7 3. Project administration, M&E 1.2 1.3 1. Post natural disasters’ reconstruction of selected infrastructure 5.1 5. Unallocated 0.1 0.1 TOTAL AMOUNT 11.2 11.2

14. Considering the implementation delays of the road works under sub-component 1.1., no additional financing should be needed until the 4th Quarter of FY09 or the lSt Quarter of FY 10. A revised disbursement schedule has been prepared (see table below). Reconstruction activities are expected to take place over a period of about 24 months (FY09-FY lo). Therefore, the project’s closing date remains unchanged (July 1,2012).

FYO6 FY07 FY08 FY09 FYlO FYI1 FY12 Initial projected disbursement 0.5 2.5 5.0 3.0 2.0 2.0 1 .o Revised projected disbursements 0.0 0.2 2.0 6.3 4.5 2.0 1 .o

Analysis

15. The proposed changes are consistent with the initial list of interventions agreed for the project. In particular, the project envisaged the rehabilitation of key transport corridors but also spot interventions (bridge reconstruction, drainage improvement, road repair) on critical points that are key to ensuring the transitability and bring access to local populations. The indicative list of reconstruction activities includes essentially spot interventions that would have been eligible under sub-component 1.1. should these activities had been localized in the two selected micro-regions and financing had been available. However, an amendment to the grant agreement is needed since the proposed activities would not intervene in the two micro-regions selected as project areas but, instead, in the areas that have been the most struck by the tropical storm Noel, particularly the South-Western and Southern parts ofthe country.

16. Spot interventions on critical points usually have high rates of return and, therefore, the project’s economic evaluation is likely to remain the same or even improve, as a result of the proposed changes. No major change to the original economic, financial, technical, institutional, or social aspects ofthe project as appraised is expected.

17. The proposed changes only involve the reconstruction of existing infrastructure and, therefore, the proposed works are not expected to have any significant environmental impact. In most cases, the proposed works will limit the effect of erosion (eg. reconstruction of drainage, stabilization of slopes) and the net environmental impact is therefore expected to be positive. The environmental classification of the project remains unchanged (“Category B”), The project’s Environmental and Social Management Framework (EMF) is been updated to include the new activities that are resulting from the proposed restructuring. In particular, specific arrangements are being 7 included to account for the inclusion of dam repair works which may trigger the safeguards policy OP4.37. No major resettlement is expected from the proposed new reconstruction activities. If some resettlements occur, they will be handled under the project’s existing Resettlement Policy Framework. This framework is being amended so that its scope extends to the new activities.

18. The proposed restructuring does not involve any exception to Bank policies.

Expected Outcomes

19. The proposed changes affect the project’s development objective since additional activities were added, that take place in areas that were not initially considered. The full accomplishment of the project’s original objectives will be contingent on an additional financing to be processed in late FY09 or early FY 10 - provided country environment and project performance allow for it - to compensate the project for the financing resources that are reallocated to the new reconstruction activities. Reasons for not having processed an additional financing in FY08 include: (1) non-availability of IDA resources in FY08; and (2) waiting for the results of the on-going engineering design studies and costs’ updating for the two road corridors scheduled to be rehabilitated. If an additional financing cannot be processed, a second restructuring, involving substantial modifications of the initial results framework, would be proposed.

20. The proposed revised Project Development Objective is: “lower the marketing costs for small fmers in two selected micro-regions (marketing costs are those costs incurred in the aggregate of functions involved in moving goods from producer to consumer) and rebuild selected infrastructure in areas struck by natural disasters”.

2 1. Results of the new proposed component “post natural disasters’ reconstruction of selected infrastructure” will be monitored through two additional indicators added to the project’s results framework. Target values and monitoring arrangements are indicated in the table below.

Table: Results’ arrangements for the new proposed component. Components’ Ressults ’I Data Coflection kidimtors b4Wiine ~n~~ent~ Cornoonent 4 oost natural I disasters’ reconstruction of selected infrastructure

D No spot interventions on MTPTC MTPTC / UCE transport infrastructure operational affected by natural disasters report

D Number of days of road closure per year on MTPTC MTPTC / UCE reconstructed road segments operational report

Benefits and Risks

22. A number of risks associated to the proposed changes have been identified and mitigation measures have been proposed. Some of these risks are specific to the new

8 proposed component. Others relate to the broader impact of project restructuring on the other components and on the project’s development objective. The overall risk rating for the project is kept unchanged (High). A list of these identified risks and proposed mitigation measures is presented in the table below.

Table: Identified risks and proposed mitigation measures. RISK Risk Minimization Measures Rating Overall Country Risk High The UCE lacks implementation capacity Additional professionals in charge of the to handle the additional reconstruction reconstruction activities are being recruited by Substantial activities or is focusing more attention UCE. Technical support will be provided to on larger-scale projects. UCE during supervision missions.

The combined effect of reconstruction Proposed interventions have been prioritized interventions is marginal compared to after a thorough damage assessment and are Moderate the scale of the damages. focusing on high impact spot interventions on selected critical transport infrastructure. Proposed interventions are focused in selected areas affected by the tropical storm (South West and South) in order to get a “critical mass” of investments. Close coordination with other donors will help leverage additional fundine. Private construction firms are saturated Procurement processes with particular by the multiplicity of regular and attention given to publicity and opened to High reconstruction civil works and are not smaller-size firms to increase competition. interested in smaller-size activities. Reconstructions activities are redundant Close coordination is ensured within an Low with the interventions of other donors or informal “round table” opened to all donors with other WBG initiatives. active in the transport sector. Internal coordination has been done, particularly with the IDA-financed Emergency recovery and Disaster Management Project. An additional financing cannot be Project performance is closely monitored Moderate processed because the country through frequent supervision missions and environment or the project performance technical guidance is provided to the UCE. A does not allow for it. second restructuring would be processed in case an additional financing could not be envisaged. This restructuring would draw consequences for the project’s results framework.

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