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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: ICR00004467 IMPLEMENTATION COMPLETION AND RESULTS REPORT IBRD-76990, IBRD-81580, TF018812 ON A LOAN IN THE AMOUNT OF EURO EUR 18.9 MILLION (US$22.95 MILLION EQUIVALENT) Public Disclosure Authorized AND AN ADDITIONAL FINANCING LOAN IN THE AMOUNT OF EUR 37.2 MILLION (US$ 45.2 MILLION EQUIVALENT) AND AN EUROPEAN COMMISSION INSTRUMENT FOR PRE-ACCESSION RURAL INVESTMENT TRUST FUND IN THE AMOUNT OF EURO EUR 15.5 MILLION Public Disclosure Authorized (US$ 18.8 MILLION EQUIVALENT) TO THE REPUBLIC OF NORTH MACEDONIA FOR A MUNICIPAL SERVICES IMPROVEMENT PROJECT March 24, 2021 Public Disclosure Authorized Urban, Resilience And Land Global Practice Europe And Central Asia Region CURRENCY EQUIVALENTS1 (Exchange Rate Effective Feb 24, 2021) Currency Unit = EUR EUR 1 = US$ 1.20 US$ 1 = EUR 0.83 FISCAL YEAR July 1 - June 30 Regional Vice President: Anna M. Bjerde Country Director: Linda Van Gelder Regional Director: Steven N. Schonberger Practice Manager: Christoph Pusch Task Team Leader(s): Tatyana Shadrunova ICR Main Contributor: Grzegorz Aleksander Wolszczak 1 Tables in the ICR are automatically prepared by the Operations Portal, and do not always incorporate data about the second additional financing, EC-IPA RETF (budget EUR 21 million) that was added in December 2014. ABBREVIATIONS AND ACRONYMS AF Additional Financing CE Citizen Engagement CERC Contingent Emergency Response Component CLR Completion and Learning Review Report CPF Country Partnership Framework CPS Country Partnership Strategy CSE Communal Service Enterprise EC European Commission ERC Energy Regulatory Commission’s FY Fiscal year FYR Macedonia Former Yugoslav Republic of Macedonia IBNet International Benchmarking Network IBRD International Bank for Reconstruction and Development IPA Instrument for Pre-Accession ISR Implementation Status Reports kWp Kilowatt Peak M&E Monitoring and evaluation MBDP Macedonian Bank for Development Promotion Mini-PAD Project Appraisal Document (sub-project PAD) MLSG Ministry of Local Self-Government MoEPP Ministry of Environment and Physical Planning MoF Ministry of Finance MoTC Ministry of Transport and Communications MSIP Municipal Services Improvement Project MSIP2 Municipal Services Improvement Project 2 PDO Project Development Objective PMU Project Management Unit POM Project Operation Manual RETF Recipient Executed Trust Fund RF Result Framework TA Technical Assistance WB World Bank TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 5 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ..................................................... 10 A. CONTEXT AT APPRAISAL ....................................................................................................... 10 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ..................................... 13 II. OUTCOME .................................................................................................................... 16 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 17 C. EFFICIENCY ........................................................................................................................... 23 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 24 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 24 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 26 A. KEY FACTORS DURING PREPARATION ................................................................................... 26 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 27 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 29 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 29 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 31 C. BANK PERFORMANCE ........................................................................................................... 32 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 33 V. LESSONS AND RECOMMENDATIONS ............................................................................. 34 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 37 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 51 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 53 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 54 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 62 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 73 ANNEX 7. MSIP-FINANCED SUB-PROJECTS ........................................................................... 74 ANNEX 8. MSIP ELIGIBILITY CRITERIA ................................................................................... 81 ANNEX 9. TIMELINE OF ACHIEVEMENT OF MSIP INDICATORS ............................................... 84 The World Bank Municipal Services Improvement (P096481) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P096481 Municipal Services Improvement Country Financing Instrument North Macedonia Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Related Projects Relationship Project Approval Product Line Additional Financing P129996-ADD'L 10-May-2012 IBRD/IDA FINANCING - MUNICIPAL SERVICES IMPROVEMENT PROJECT Supplement P150342-ADDITIONAL 22-Dec-2014 Recipient Executed Activities FINANCING - MSIP (EU- IPA) Organizations Borrower Implementing Agency Republic of North Macedonia Ministry of Finance Project Development Objective (PDO) Original PDO To improve transparency, financial sustainability and delivery of targeted municipal services in the participating municipalities. Page 5 of 85 The World Bank Municipal Services Improvement (P096481) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing P096481 IBRD-76990 25,000,000 23,386,243 23,165,719 P096481 IBRD-81580 50,000,000 48,387,097 41,974,409 Total 75,000,000 71,773,340 65,140,128 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 75,000,000 71,773,340 65,140,129 KEY DATES Project Approval Effectiveness MTR Review Original Closing Actual Closing P096481 26-Mar-2009 04-Aug-2009 05-Oct-2011 30-Nov-2014 30-Sep-2020 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 07-Jun-2012 9.61 Additional Financing 24-Dec-2014 30.44 Additional Financing 14-Dec-2018 58.02 Change in Results Framework Change in Loan Closing Date(s) Change in Implementation Schedule 27-Mar-2020 66.01 Change in Loan Closing Date(s) 29-Jun-2020 64.98 Cancellation of Financing Reallocation between Disbursement Categories Page 6 of 85 The World Bank Municipal Services Improvement (P096481) KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 27-Jun-2009 Satisfactory Satisfactory 0 02 11-Dec-2009 Satisfactory Satisfactory .73 03 27-Jun-2010 Satisfactory Moderately Satisfactory .73 04 11-Dec-2010 Satisfactory Moderately Satisfactory .97 05 07-May-2011 Satisfactory Satisfactory 2.47 06 14-Nov-2011 Satisfactory Satisfactory 8.13 07 25-Jan-2012 Satisfactory Satisfactory 8.13 08 19-Jun-2012 Satisfactory Satisfactory 9.61 09 02-Sep-2012 Satisfactory Satisfactory 9.61 10 26-Dec-2012 Satisfactory Satisfactory 11.75 11 25-Jun-2013 Satisfactory Satisfactory 14.53 12 23-Dec-2013 Satisfactory Satisfactory 19.84 13 16-Jun-2014 Satisfactory Satisfactory 24.03 14 23-Dec-2014 Satisfactory Satisfactory 30.44 15 15-Jun-2015 Satisfactory Satisfactory 30.44 16 23-Dec-2015 Satisfactory Satisfactory 36.18 17 16-Mar-2016 Satisfactory Satisfactory 37.07 18 19-Oct-2016 Satisfactory Satisfactory 42.15 19 14-Apr-2017 Satisfactory Satisfactory 47.83 20 13-Oct-2017 Satisfactory Satisfactory 50.23 21 19-Apr-2018 Satisfactory Satisfactory 56.76 Page 7 of 85 The World Bank Municipal Services Improvement (P096481) 22 17-Oct-2018 Satisfactory Satisfactory 58.02 23 06-Apr-2019 Satisfactory Satisfactory 58.02 24 11-Oct-2019 Satisfactory Satisfactory 61.55 25 25-Nov-2019 Satisfactory Satisfactory 64.52 26 22-May-2020 Satisfactory Satisfactory 66.55 SECTORS AND THEMES Sectors Major Sector/Sector (%) Energy and Extractives 20 Other Energy and Extractives 20 Water, Sanitation and Waste Management 80 Sanitation 15 Waste Management 15 Water Supply 30 Public Administration - Water, Sanitation and Waste 20 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Public Sector Management 16 Public Administration 16 Administrative and Civil Service Reform 5 Municipal Institution Building 11 Urban and Rural Development 85 Urban Development 85 Urban Infrastructure and Service Delivery 60 Municipal Finance 25 Page 8 of 85 The World