Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2228 Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON PROPOSED CREDITS IN THE AMOUNT OF US$96.8 MILLION Public Disclosure Authorized TO THE REPUBLIC OF NICARAGUA FOR A RURAL AND URBAN ACCESS IMPROVEMENT PROJECT Public Disclosure Authorized February 10, 2017 Transport & ICT LATIN AMERICA AND CARIBBEAN This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accord ance with the Bank’s policy on Access to Information. Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2016}) Currency Unit = US$ SDR 0.74386 = US$1 US$1.34455 = SDR 1 FISCAL YEAR January 1 ‐ December 31 Regional Vice President: Jorge Familiar Country Director: J. Humberto Lopez Senior Global Practice Director: Jose Luis Irigoyen Acting Practice Manager: Gylfi Palsson Task Team Leader: Sevara Melibaeva ABBREVIATIONS AND ACRONYMS ARAP Abbreviated Resettlement Action Plan CO2 Carbon Dioxide CONASEV National Council for Safety and Road Education EIRR Economic Internal Rate of Return ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plans FM Financial Management FOMAV Road Maintenance Fund (Fondo de Mantenimiento Vial) GDP Gross Domestic Product GRM Grievance Redress Mechanism GRS Grievance Redress Service HDM‐4 Highway Design and Management Model IDA International Development Association IDB Inter‐American Development Bank IFR Interim Financial Reports INIDE National Institute of Development Information (Instituto Nacional de Información de Desarrollo) JICA Japanese International Cooperation Agency MCA Community Modules for Adoquines (Módulos Comunitarios de Adoquinado) MTI Ministry of Transport and Infrastructure (Ministerio de Transporte e Infraestructura) NDF Nordic Development Fund NPV Net Present Value PDO Project Development Objective RED Road Economic Decision Model SIGFA Integrated Financial Management and Audit System (Sistema Integrado de Gestión Financiera Administrativa y de Auditoria) SIGFAPRO Integrated Financial Management and Audit System for Projects (Sistema Integrado de Gestión Financiera Administrativa y de Auditoria para Proyectos) SUF Scale Up Facility UCR Project Coordinating Unit for World Bank Resources (Unidad Coordinadora de Recursos‐ Banco Mundial UCR MTI‐BM) WB World Bank The World Bank Rural and Urban Access Improvement Project (P160359) BASIC INFORMATION Is this a regionally tagged project? Country(ies) Lending Instrument No Investment Project Financing [ ] Situations of Urgent Need of Assistance or Capacity Constraints [ ] Financial Intermediaries [ ] Series of Projects Approval Date Closing Date Environmental Assessment Category 06‐Mar‐2017 30‐Jun‐2022 B ‐ Partial Assessment Bank/IFC Collaboration No Proposed Development Objective(s) The objectives of the Project are to: (a) improve safe and sustainable access to markets and services in targeted rural and urban areas of the Recipient; and (b) in the event of an Eligible Emergency, provide immediate and effective response to said Eligible Emergency. Components Component Name Cost (US$, millions) Component 1: Road Infrastructure Improvement 85.20 Component 2: Road Safety 8.10 Component 3: Institutional Strengthening and Implementation Support 3.37 Component 4: Immediate Response Mechanism 0.00 Page 1 of 46 The World Bank Rural and Urban Access Improvement Project (P160359) Organizations Borrower : Republic of Nicaragua Implementing Agency : Ministerio de Transporte e Infraestructura (Ministry of Transport and Infrastructure) Road Maintenance Fund (FOMAV) [ ] [ ] IBRD [ ✔ ] IDA Credit [ ] IDA Grant [ ] Trust [ ] Counterpart Funds Parallel Funding [ ] Crisis Response [ ] Crisis Response Financing Window Window [ ] Regional Projects [ ] Regional Projects Window Window Total Project Cost: Total Financing: Financing Gap: 96.80 96.80 0.00 Of Which Bank Financing (IBRD/IDA): 96.80 Financing (in US$, millions) Financing Source Amount IDA‐59640 96.80 Total 96.80 Expected Disbursements (in US$, millions) Fiscal Year 2017 2018 2019 2020 2021 2022 Annual 0.00 8.71 17.56 35.99 23.62 10.92 Cumulative 0.00 8.71 26.27 62.26 85.88 96.80 Page 2 of 46 The World Bank Rural and Urban Access Improvement Project (P160359) INSTITUTIONAL DATA Practice Area (Lead) Transport & ICT Contributing Practice Areas Gender Jobs Social, Urban, Rural and Resilience Global Practice Climate Change and Disaster Screening This operation has been screened for short and long‐term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project‐relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF Yes b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment Yes c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK‐RATING TOOL (SORT) Risk Category Rating 1. Political and Governance Moderate 2. Macroeconomic Moderate 3. Sector Strategies and Policies Low 4. Technical Design of Project or Program Moderate 5. Institutional Capacity for Implementation and Sustainability Substantial 6. Fiduciary Moderate 7. Environment and Social Substantial Page 3 of 46 The World Bank Rural and Urban Access Improvement Project (P160359) 8. Stakeholders Moderate 9. Other 10. Overall Moderate COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✔] No Does the project require any waivers of Bank policies? [ ] Yes [✔] No Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔ Legal Covenants Sections and Description The Recipient, through MTI, shall maintain a Project coordination unit within MTI (the UCR‐BM) with functions and responsibilities satisfactory to the WB and with personnel in numbers and with experience and qualifications, all satisfactory to the WB and carry out the proposed Project activities in accordance with Operational Manual (Section I.A.1 of Schedule 2 of the Financing Agreements). Page 4 of 46 The World Bank Rural and Urban Access Improvement Project (P160359) Sections and Description The Recipient shall make a portion of the proceeds of the Financing allocated from time to time to Part 1.3 (Maintaining Road Assets) and activities under Part 3.6 (b) (Strengthening of the institutional capacity of FOMAV) available to FOMAV under a Subsidiary Agreement between the Recipient and the FOMAV, under terms and conditions approved by the Association (Section I.B.1 of Schedule 2 of the Financing Agreements). Sections and Description The Recipient shall (i) carry out the implementation of the proposed Project, except Part 1.3 (Maintaining Road Assets) and activities under Part 3.6 (b) (Strengthening of the institutional capacity of FOMAV); and (ii) cause FOMAV to carry out Part 1.3 and activities under Part 3.6 (b), in accordance with the terms of the Operational Manual, acceptable to the Association (Section I.C.1 (a)‐(n) and Section I.C.2 of Schedule 2 of the Financing Agreements). Sections and Description In order to ensure the proper implementation of Component 4 (Immediate Response Mechanism), if it is activated, the Recipient shall take the following measures: (i) prepare and furnish to the Association for its review and approval, an operations manual (“Immediate Response Mechanism Operations Manual”) which shall set forth detailed implementation arrangements for Component 4; (ii) afford the Association a reasonable opportunity to review the proposed Immediate Response Mechanism Operations Manual; (iii) promptly adopt this Manual for Component 4; (iv) ensure that the Coordinating Authority carries out Component 4 in accordance with this Manual (in the event of any inconsistency between the Manual and the Financing Agreements, the provisions of the Financing Agreements shall prevail); and (v) not amend, suspend, abrogate, repeal or waive any provision of the Manual without prior approval by the Association. The Recipient shall, throughout the implementation of Component 4, maintain the Coordinating Authority, with adequate staff and resources satisfactory to the Association (Section I.D.1(a)‐(e) and Section I.D.2 of Schedule 2 of the Financing Agreements). Sections and Description The Recipient and FOMAV shall carry out the implementation of the proposed Project in accordance with the relevant safeguards instruments as set forth in Section I.F of Schedule 2 of the Financing Agreements. Sections and Description The Recipient, through MTI, shall cause FOMAV to be staffed at all times during implementation of the proposed Project with personnel in numbers and with experience and qualifications, all acceptable to the Association (Section I.A.2(b) of Schedule 2 of the Financing Agreements). Conditions Type Description Effectiveness The Subsidiary Agreement has been duly authorized or ratified and executed on Page 5 of 46 The World Bank