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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 47133-AM EMERGENCY PROJECT PAPER ON A PROPOSED EMERGENCY FINANCING CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 16.1 MILLION (US$25 MILLION EQUIVALENT) TO THE REPUBLIC OF ARMENIA FOR A LIFELINE ROADS IMPROVEMENT PROJECT Public Disclosure Authorized February 6,2009 Sustainable Development Department South Caucasus Country Unit Europe and Central Asia Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective December 3 1,2008) Currency Unit = Armenian Dram (AMD) US$l.OO = AMD307.63 US$l.OO = SDR0.64 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank IDA International Development Association ARD Armenian Roads Directorate IFC International Finance Corporation ARR Armenia Railway Restructuring Project ISN Interim Strategy Note ASRA Accounting Standards of the Republic of LRN Lifeline Road Network Armenia LRIP Lifeline Roads Improvement Project BEEPS Business Environment and Enterprise MCA Millennium Challenge Account Armenia Performance Survey (State Non-Commercial Organization CAS Country Assistance Strategy implementing MCC program for Armenia) CFFA Country Financial Accountability MCC Millennium Challenge Corporation Assessment MOF Ministry of Finance CIS Commonwealth of Independent States MOTC Ministry of Transport and Communications COC Constitution of the Chamber of Control PA Project Account CPAR Country Procurement Assessment Review PEFA Public Expenditure and Financial DA Designated Account Accountability ECA Europe and Central Asia PFM Public Financial Management EIRR Economic Internal Rate of Return PIU Transport Project Implementation Unit EMF Environmental Management Framework PHRD Japanese Policy and Human Resource EMPs Environmental Management Plan POM Project Operational Manual EFC Emergency Financing Credit PP Procurement Plan EU European Union PPIAF Public Private Infrastructure Advisory FA Financing Agreement Facility FDI Foreign Direct Investment PRSC Poverty Reduction Support Credits FM Financial Management RPF Resettlement Policy Framework FMM Financial Management Manual SME Small and Medium Enterprises FMS Financial Management Specialist SNCO State Non-Commercial Organization GDP Gross Domestic Product SWECO Sverige AB Consulting Firm GOA Government of Armenia TA Technical Assistance GPN General Procurement Notice YUTP Previously Planned Yerevan Urban ICB International Competitive Bidding Transport Project Vice President: Shigeo Katsu Country Director: Asad Alam Country Manager Aristomene Varoudakis Sector Director: Peter D. Thomson Sector Manager Henry G. Kerali (Acting) Task Team Leader: ChristoDher R. Bennett FOR OFFICIAL USE ONLY ARMENIA LIFELINE ROADS IMPROVEMENT PROJECT CONTENTS Page A . Introduction ........................................................................................................................... 1 B. Emergency Challenge: Country Context. Recovery Strategy and Rationale for Proposed Bank Emergency Project .................................................................................... 2 C. Bank Response: The Project................................................................................................. 4 D. Appraisal of Project Activities ............................................................................................. 7 E. Project Risks and Mitigating Measures ............................................................................ 15 F. Terms and Conditions for Project Financing ................................................................... 17 Annex 1. Description of Project Components ........................................................................... 18 Annex 2: Results Framework and Monitoring ......................................................................... 20 Annex 3 . Summary of Estimated Project Costs ........................................................................ 22 Annex 4 . Financial Management and Disbursement Arrangements ...................................... 23 Annex 5. Procurement Arrangements ....................................................................................... 31 Annex 6. Implementation and Monitoring Arrangements ..................................................... 38 Annex 7. Project Preparation and Appraisal Team Members................................................ 40 Annex 8. Environmental and Social Safeguards Framework ................................................. 41 Annex 9. Economic and Financial Analyses.............................................................................. 43 Annex 10. Documents in Project Files ....................................................................................... 45 Annex 11. Statement of Loans and Credits............................................................................... 46 Annex 12: Country at a Glance .................................................................................................. 48 Annex 13. Map ............................................................................................................................. 50 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. 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 . ARMENIA LIFELINE ROADS IMPROVEMENT PROJECT EMERGENCY PROJECT PAPER DATA SHEET EUROPE AND CENTRAL ASIA ECSSD Date: February 6,2009 Team Leader: Christopher R. Bennett Country Director: Asad Alam Sectors: Roads and highways (100%) Sector ManagedDirector: Peter D. Thomson Themes: Rural services and infrastructure (P);Other rural development (S) Project ID: P115486 Environmental screening category: Partial Assessment Lending Instrument: Emergency Recovery Loan Project Financing Data [ ]Loan [XI Credit [ ]Grant [ ]Guarantee [ ]Other: Source Local Foreign Total BORROWEWRECIPIENT 5.40 0.00 5.40 International Development Association 25.00 0.00 25.00 (IDA) Total: 30.40 0.00 30.40 Borrower: Republic ofArmenia Ministry of Finance 1 Melik-Adamyan Street Yerevan Armenia 0010 Tel: (+374 10) 59 53 04 Fax: (+374 10) 52 42 82 minister@,minfin.am- Responsible Agency: Ministry of Transport and Communication 28 Nalbandyan Street Yerevan Armenia 0010 Tel: (+374 10) 59 00 01 Fax: (+374 10) 56 05 28 mintranscom@,mtc. am FY 2009 2010 2011 Annual 6.00 18.00 1.00 Cumulative 6.00 24.00 25.00 Expected effectiveness date: March 16, 2009 Expected closing date: December 3 1,201 0 Does the project require any exceptions from Bank policies? Re$ EPP D. 62 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [XINO Re$ EPP E. 80 Project development objective Re$ EPP C.22 The project development objective is to upgrade selected sections ofthe Lifeline Road Network and create temporary employment in road construction. Project description Re$ EPP C.23 and 27, Technical Annex 1 Component 1: Rehabilitation ofapproximately 100 km of the Lifeline Road Network (US$30.0 ~~ m including contingencies). Component 2: Technical assistance for strengthening ofthe Armenian Roads Directorate’s capacity (US$0.4 m including contingencies). Which safeguard policies are triggered, if any? Re$ EPP D. 55, Technical Annex 8 Environmental Assessment (OP/BP/GP 4.01) A. Introduction 1. In response to the Republic of Armenia’s request for Bank assistance to mitigate the impact of the global financial crisis, it is proposed to provide an IDA credit in an amount of SDR 16.1 million (US$25 million equivalent) to finance implementation of a Lifeline Roads Improvement Project (LRIP). 2. Armenia’s economy has already been severely affected by the crisis through slower direct investments, reduced remittances, falling commodity prices, reduced tourism receipts, reduced availability of credit, and other financial contagions that have decreased economic growth and increased local unemployment. The Government of Armenia (GOA) recognized the implications of the emergency and acted swiftly to begin addressing strategic macro, public investment and expenditure choices. As part of the recovery strategy it requested rapid support from the Bank and the LRIP is part of the requested program. 3. Improving the road network for rural communities has been one of the key objectives of the GOA in the transport sector since 2004. The GOA decided that each community should at least have one connecting road to an interstate road. These roads are called the “Lifeline Road Network” (LRN) and comprise some 3,014 km of Armenia’s 7,704 km of non-urban roads. Lifeline roads are defined as the optimal road network connecting rural communities to the interstate highways. The LRN includes roads with lengths from one to 59 km, and traffic volumes from 50 to 2,500 veWday. About 60 percent of the length is or was asphalthiturnen surface; however a lack of maintenance funding has led to significant deterioration and loss of accessibility. The poor condition of rural roads results in agricultural losses of over
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