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Document of The World Bank FOR OFFICIAL USE ONLY Report No: 432 13-DO Public Disclosure Authorized PROJECT PAPER ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$SO MILLION TO THE DOMINICAN REPUBLIC FOR AN EMERGENCY RECOVERY AND DISASTER MANAGEMENT PROJECT April 10, 2008 Public Disclosure Authorized Sustainable Development Department Caribbean Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without Public Disclosure Authorized World Bank authorization. Abbreviations CURRENCY EQUIVALENTS (Exchange Rate Effective April 3,2008) Currency Unit = Dominican Peso 33.95 = US$l FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CAASD Corporacih de Acueducto y Alcantarillado de Santo Domingo (Santo Domingo Water and Sewerage Corporation) CDEEE Corporacih Dominicana de Empresas Eldctricas Estatales (Dominican Corporation of State Electrical Companies) CEPAL Comisih Econ6mica para Amdrica Latina y el Caribe (see ECLAC) CNE Comisi6n Nacional de Emergencia (National Emergency Commission) COE Centro de Operaciones de Emergencia (Emergency Operations Center) CORAASAN Corporacih de Acueducto y Alcantarillado de Santiago (Santiago Water and Sewerage Corporation) DR Dominican Republic EA Environmental Assessment ECLAC United Nations Economic Commission for Latin America and the Caribbean (see CEPAL) EGEHID Dominican Hydroelectric Generation Company EPP Emergency Project Paper ERDMP Emergency Recovery and Disaster Management Project ERL Emergency Recovery Loan ETED Dominican Electrical Transmission Company FM Financial Management IBRD International Bank for Reconstruction and Development IDB Inter-American Development Bank IEG Independent Evaluation Group IMF International Monetary Fund INDRHI Instituto Nacional de Recursos Hidraulicos (National Institute of Hydraulic Resources) SEEPyD Secretaria de Estado de Economia, Planificacion, y Desarrollo (see MEPD) SOH Secretaria de Estado de Hacienda (see MoF) MEPD Ministry of Economy, Planning and Development (see SEPyD) MoF Ministry of Finance (see SOH) NOM National Oceanic and Atmospheric Administration OCHA United Nations Office for the Coordination of Humanitarian Affairs ONAMET Oficina Nacional de Meteorologia (National Meteorology Office) OP/BP Operational Policy/ Bank Procedure 2 PDO Project Development Objective PRA National Program for Blackout Reduction TS Tropical Storm UERS Rural and Suburban Electrification Unit UNDAC United Nations Disaster Assessment and Coordination Vice President: Pamela Cox Country Director: Yvonne Tsikata Sector Director: Laura Tuck Country Manager Christina E. Malmberg Calvo Sector Manager: Laura Tlaiye Task Team Leader: Ann Jeannette Glauber 3 FOR OFFICIAL USE ONLY This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Table of Contents A . Introduction ......................................................................................................... 6 B . Country and RegionaVSectoral Context ............................................................. 6 C . Bank Response .................................................................................................. 12 D. Appraisal of Project Activities .......................................................................... 19 E. Monitoring Arrangements ................................................................................. 25 F . Implementation Arrangements and Financing Plan.......................................... 26 G . Project Risks and Mitigating Measures ............................................................ 27 H. Terms and Conditions for Project Financing .................................................... 29 ANNEXES ............................................................................................................... 31 Annex 1: Detailed Description of Project Components ........................................... 31 Annex 2: Results Framework and Monitoring......................................................... 42 Annex 3 . Summary of Estimated Project Costs ...................................................... 46 Annex 4 . Financial Management Arrangements ..................................................... 47 Annex 5: Procurement Arrangements ...................................................................... 62 Annex 6: Implementation Arrangements ................................................................. 72 Annex 7 . Project Preparation and Appraisal Team Members .................................. 75 Annex 8: Environmental and Social Safeguards Framework .................................. 76 Annex 9: Preliminary List of Identified Works ....................................................... 80 Annex 10: Disaster Prevention and Response in the Dominican Republic ............. 94 Annex 11: Documents in Project File...................................................................... 97 Annex 12: Statement of Loans and Credits ............................................................. 98 Annex 13 . Country at a Glance ............................................................................. 100 Annex 14. Map IBRD 36028 ................................................................................ 103 4 Date: April 10,2008 Team Leader: Anne Jeannette Glauber Country Director: Yvonne Tsikata Sectors: Infrastructure, Environment, Sector Director: Laura Tuck Disaster Risk Management, Sustainable Sector Manager: Laura Tlaiye Development Project ID: P109932 Themes: Environmental Category: B Expected effectiveness date: May 2008 Expectedrevised closing date: December 20 12 The project seeks to: (i)restore and strengthen priority, irrigation, electricity, water, and sanitation infrastructure damaged by Tropical Storms Olga and Noel or at risk ofdamage from future storms, and (ii)strengthen INDRHIs and CDEEE’s capacity for future risk management. Short description: The PDO will be achieved through three components: (1) Rehabilitation and Risk Management in the Water Resources Sector (US$34.35 million); (2) Rehabilitation and Risk Management in the Electricity Sector (US$33.95 million); and (3) Rehabilitation ofWater and Sanitation Infrastructure in Santo Doming0 and Santiago (US$3.5 million). Financing plan (US$m.) Source I Local I Foreign I Total Borrower Total IBRDADA 12 68 80 Trust funds Others Total 12 68 80 2007 2008 2009 2010 201 1 2012 Total IBRD/IDA 0 32 25 15 8 Trust funds Does the emergency operation require any exceptions from Bank policies? Yes [ 3 No [ XI Have these been approved by Bank management? Yes [ 1 No [ 1 Are any critical risks rated “substantial” or “high”? Yes [XI No [ 3 What safeguard policies are triggered, if any? Yes [X ] No [ ] Environmental Assessment (OP 4.01) and Safety ofDams (OP 4.37) 5 A. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an Emergency Recovery Loan in an amount of US$80 million to the Dominican Republic for the proposed Emergency Recovery and Disaster Management Project (ERDMP). Consistent with OP/BP 8.0, this loan will help finance the costs associated with infrastructure recovery and rehabilitation in areas most affected by Tropical Storms Noel and Olga. 2. On October 28, 2007, Tropical Storm Noel struck the Dominican Republic, and the major rainfall affected much of the country. About 6,000,000 people or 70 percent of the population were directly or indirectly affected by Noel. Infrastructure-particularly that related to water resources management, transportation and energy-was heavily damaged, leading to impacts in key sectors such as agriculture, electricity, drinking water, and sanitation. Hardest hit were small agricultural operations and subsistence farmers, as well as rural and peri-urban residents. The country was still reeling from the effects of Noel when Tropical Storm Olga hit five weeks later on December 10. This storm displaced some 62,000 people and led to further infrastructure damage, particularly in the drinking water and sanitation sector. 3. This project is designed to respond to the Noel/Olga disaster by (i)restoring and rehabilitating water resources, electricity, water, and sanitation infrastructure damaged by the storms, or at risk of damage from future storms, and, (ii)reducing vulnerability to future disasters in the National Institute of Hydraulic Resources (INDRHI) and the Dominican Electricity Commission (CDEEE). The project design takes into account recent government reforms promoting decentralization which have delegated decision-making and implementation responsibilities to the individual sectors involved. 4. Accordingly, the key expected outcomes of the proposed project are: (i)12,000 hectares with irrigation services restored; (ii)four dams facilities rehabilitated with revised operational procedures to minimize impacts of future disasters; (iii)242 kilometers of transmission lines restored to improved disaster-resistant standards (iv) 200 megawatts of hydroelectric generation capacity restored; and (v) operation of Santiago wastewater treatment plant restored. (See Annex 2 for more detail). B. Country and RegionaVSectoral Context 5. The Dominican Republic is subject to recurrent disaster events due, in part, to its hurricane-