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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 63649-AM PROJECT PAPER ON A Public Disclosure Authorized PROPOSED ADDITIONAL LOAN IN THE AMOUNT OF US$18 MILLION TO THE REPUBLIC OF ARMENIA FOR AN Public Disclosure Authorized IRRIGATION REHABILITATION EMERGENCY PROJECT September 27, 2011 Public Disclosure Authorized Europe and Central Asia Region Sustainable Development Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective September 27, 2011) Currency Unit = US$ and Armenian Dram (AMD) US$1.00 = AMD 370.75 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing AMD Armenian Dram CFSQC Consulting Firm for Supervision and Quality Control CPAR Country Portfolio Assessment Review CPS Country Partnership Strategy CSOs Civil Society Organizations DA Designated Account DO Development Objective DPL Development Policy Loan DPO Development Policy Operation EIA Environmental Impact Assessment EMP Environmental Management Plan ENPV Economic Net Present Value ERR Economic Rate of Return FM Financial Management FMM Financial Management Manual FMRs Financial Monitoring Reports FMS Financial Management Specialist FNPV Financial Net Present Value FRR Financial Internal Rate of Return GCF Government Counterpart Funding GDP Gross Domestic Product GIS Geographic Information System GOA Government of Armenia GPN General Procurement Notice I&D Irrigation and Drainage IBRD International Bank for Reconstruction and Development IDA International Development Association IDP Irrigation Development Project IFRs Interim Un-Audited Financial Reports IP Implementation Progress IPR Implementation Progress Report LA Loan Agreement MCA Millennium Challenge Account (Armenia) MCC Millennium Challenge Corporation MOF Ministry of Finance MONP Ministry of Nature Protection MOTA Ministry of Territorial Administration MTR Mid-Term Review NGO Non-Governmental Organization NPV Net Present Value O&M Operation and Maintenance PA Project Account PDO Project Development Objective PIU Water Sector Projects Implementation Unit PMB Project Management Board PMP Pest Management Plan POI Project Outcome Indicator PP Procurement Plan RA Republic of Armenia RFP Request for Proposal RPF Resettlement Policy Framework SCWM State Committee of Water Management SPN Specific Procurement Notice USSR Union of Soviet Socialist Republics WSA Water Supply Agency WUAs Water Users Associations WUF Water Users Federation Vice President: Philippe Le Houerou Country Director: Asad Alam Sector Director: Peter Thomson Country Manager: Jean-Michel Happi Sector Manager: Dina Umali-Deininger Task Team Leader: Giuseppe Fantozzi ARMENIA ADDITIONAL FINANCING OF THE IRRIGATION REHABILITATION EMERGECY PROJECT CONTENTS ADDITIONAL FINANCING DATA SHEET i I. Introduction 1 II. Background and Rationale for Additional Financing 1 III. Proposed Changes 3 IV. Appraisal Summary 5 Annex 1. Results Framework and Monitoring 8 Annex 2. Operational Risk Assessment Framework (ORAF) 13 Annex 3. Detailed Description of Modified or New Project Activities 17 Annex 4. Revised Estimate of Project Costs 20 Annex 5. Revised Implementation Arrangements and Support 23 Annex 6. Economic and Financial Analyses 34 ARMENIA ADDITIONAL FINANCING OF THE IRRIGATION REHABILITATION EMERGENCY PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Country Director: Asad Alam Sectors: Irrigation and Drainage Sector Manager: Dina Umali-Deininger (100%) Team Leader: Giuseppe Fantozzi Themes: Rural services and Team Co-Leader: Arusyak Alaverdyan infrastructure (100%) Project ID: P126509 Environmental category: Partial Expected Effectiveness Date: 12/1/2011 Assessment Lending Instrument: SIL Expected Closing Date: 6/30/2013 Additional Financing Type: Scale Joint IFC: up/Restructuring Joint Level: Basic Information - Original Project Project ID: P116681 Environmental category: B Project Name: Irrigation Rehabilitation Expected Closing Date: 12/31/2011 Emergency Project Lending Instrument: ERL Joint IFC: N/A Joint Level: N/A AF Project Financing Data [X ] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Additional loan would be an IBRD flexible loan at 6 months flexible LIBOR for US Dollars plus variable spread repayable in 25 years, including a grace period of 10 years. AF Financing Plan (US$m) Source Total Amount (US $m) Total Project Cost: 21.6 Co-financing (beneficiaries): 0.2 Borrower: 3.4 Total Bank Financing: 18.0 IBRD 18.0 IDA Client Information Borrower: Republic of Armenia Responsible Agency: State Committee for Water Management under the Ministry of Territorial Administration Contact Person: Andranik Andreasyan Telephone No.: +374-10 540909 Fax No.: +374-10 540603 Email: [email protected] i AF Estimated Disbursements (Bank FY/US$m) FY 2012 2013 Annual 8.0 10.0 Cumulative 8.0 18.0 Project Development Objective and Description Original Project development objective: (i) to improve water use efficiency in two selected irrigation schemes; and (ii) to foster immediate rural employment. Revised Project development objective: (i) to improve water use efficiency in the selected irrigation schemes; and (ii) to foster immediate rural employment. Project description: Component 1: Rehabilitation of identified stretches of canals in the selected irrigation schemes: The component includes: (i) civil works for the main and secondary canals rehabilitation in Aragastotn, Kotayk, Shirak, Lori, Ararat, and Armavir marzes; (ii) consultancy services for supervision of rehabilitation works. Component 2: Rehabilitation of tertiary irrigation networks in communities of Lori, Shirak, Gegharkunik, and Armavir marzes; (ii) consultancy services for supervision of rehabilitation works. Component 3: Project Management and Institutional Activities. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [X]Yes [ ] No Natural Habitats (OP/BP 4.04) [ ] Yes [X] No Forests (OP/BP 4.36) [ ]Yes [X] No Pest Management (OP 4.09) [X]Yes [ ] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [X] No Involuntary Resettlement (OP/BP 4.12) [X]Yes [ ] No Safety of Dams (OP/BP 4.37) [ ]Yes [X] No Projects on International Waterways (OP/BP 7.50) [X]Yes [ ] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X] No Does the Project require any waivers of Bank policies? [ ]Yes [X] No Have these been endorsed or approved by Bank management? [ ]Yes [X] No Conditions and Legal Covenants: Financing Agreement Description of Date Due Reference Condition/Covenant Schedule 2, Section I, A2 The Borrower shall update the By Project effectiveness Operational Manual and maintain the updated Operational Manual in form and content satisfactory to the Bank. Schedule 2, Section II, B1 The Borrower shall maintain or Recurrent cause to be maintained a financial management system in accordance with the provisions of Section 5.09 of the General Conditions. ii Schedule 2, Section II, B2 The Borrower shall prepare and Recurrent furnish to the Bank not later than forty five (45) days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Bank. Schedule 2, Section II, B3 The Borrower shall have its Recurrent Financial Statements and those of the irrigation institutions financed under the project audited in accordance with the provisions of Section 5.09 (b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one fiscal year of the Borrower. The audited Financial Statements for each such period shall be furnished to the Bank not later than six (6) months after the end of such period. Schedule 2, Section I, A1 The Borrower, through SCWM, Recurrent shall designate the PIU with the responsibility for procurement planning, monitoring and reporting, disbursement and implementation of internal financial controls, maintenance of Project accounts and preparation of Project Reports, and shall ensure that PIU at all times shall have adequate staff and resources to fulfill its responsibilities with respect to Project implementation and management. Schedule 2, Section I, A3 Until completion of the Project the Recurrent Borrower shall maintain the WUAs’ Support Group which will assist in the implementation of the Project. Schedule 2, Section I, A4 The Borrower shall ensure that Recurrent necessary budgetary resources for adequate operation and maintenance of irrigation systems are made available to the irrigation sector in the Borrower’s annual budget. Schedule 2, Section I, B The Borrower shall ensure that the Recurrent Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. iii Schedule 2, Section I, C1 The Borrower, through SCWM, Recurrent shall apply for the activities under Parts A and B of the Project the criteria, policies, procedures and arrangements set out in the EIA and RPF. Schedule 2, Section I, C2a The Borrower shall ensure that Recurrent civil works on any particular section of the canal selected under Part A and B of the Project will not start, unless an EMP for that canal section, satisfactory to the Bank, has been prepared by the Borrower and disclosed locally, and on the SCWM website, not later than thirty (30) days before
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