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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 31771-PL PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN AN AMOUNT EQUAL TO EURO 140.1 MILLION (US$184.0 MILLIONEQUIVALENT) TO THE REPUBLIC OF POLAND FOR THE Public Disclosure Authorized ODRA RIVER BASIN FLOOD PROTECTION PROJECT February 21,2007 Sustainable Development Sector Unit Europe and Central Asia Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective December 14,2006) Currency Unit = Zloty (PLN) 1US Dollar ($) = 2.80 PLN 1 Euro (€) = 1.3137 US$ or 3.68 PLN FISCAL YEAR January 1 - December 3 1 ABBREVIATIONS AND ACRONYMS ARPA Agricultural Real Property Agency NGO Non-Governmental Organization CEB Council ofEurope Development Bank ONDR Office ofNational Disasters Recovery CNS Conservator ofNature ofSlaskie ORFPP Odra River Basin Flood Protection CPS Country Partnership Strategy Project DZMiUW Lower Silesia Board ofAmelioration occ Opportunity cost ofcapital and Water Structures ORB Odra River Basin EA Environmental Assessment PCU Project Coordination Unit EBRD European Bank for Reconstruction and PMF Probable Maximum Flood estimated Development based on probable maximum EFRP Emergency Flood Recovery Project precipitation EIB European Investment Bank PSC Project Steering Committee EMP Environmental Management Plan RAP Resettlement Action Plan FMS Financial Management System RDLP Regional Directorate ofState Forests GDP Gross Domestic Product RZGW Regional Authority for Water GDLP General Directorate ofState Forests Management GOP Government of Poland RZGWGL RZGW-Gliwice GPN General Procurement Notice RZGWWL RZGW-Wroclaw IRR Internal Rate of Return RZMiU Provincial Board for Amelioration ERR Economic Rate ofReturn and Hydraulic Structures EU European Union IMGW Institute ofMeteorology and Water SA Social Assessment Management SMOK System ofHydro-Meteorological KZGW State Water Management Authority Forecasting MIA Ministry ofInterior and Administration WFS Wroclaw Floodway System M&E Monitoring and Evaluation NFOSiGW National Environmental Protection and Water Management Fund NDP National Development Plan MOE Ministry of Environment MOF Ministry ofFinance Vice President: Shigeo Katsu, ECAVP Acting Country Director: Edgar Saravia, ECCU7 Sector Manager: Marjory-Anne Bromhead, ECSSD Task Team Leader: Masood Ahmad, ECSSD .. 11 FOR OFFICIAL USE ONLY POLAND ODRA RIVER BASIN FLOOD PROTECTION PROJECT CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE ................................................. 3 1. Country and sector issues.................................................................................................... 3 2 . Rationale for Bank involvement ......................................................................................... 5 3 . Higher level objectives to which the project contributes .................................................... 5 B. PROJECT DESCRIPTION ................................................................................................. 6 1. Lending instrument ............................................................................................................. 6 2 . Project development objective and key indicators.............................................................. 6 3 . Project components ............................................................................................................. 6 4 . Lessons learned and reflected in the project design ............................................................ 9 5 . Alternatives considered and reasons for rejection .............................................................. 9 C. IMPLEMENTATION ........................................................................................................ 10 1. Partnership arrangements (if applicable) .......................................................................... 10 2 . Institutional and implementation arrangements ................................................................ 11 3 . Monitoring and evaluation of outcomes/results ................................................................ 11 .. 4 . Sustainability..................................................................................................................... 12 5 . Critical risks and possible controversial aspects............................................................... 12 6 . Loadcredit conditions and covenants ............................................................................... 14 D. APPRAISAL SUMMARY ................................................................................................. 14 1. Economic and financial analyses ...................................................................................... 14 2 . Technical ........................................................................................................................... 15 3 . Fiduciary ........................................................................................................................... 15 4 . Social................................................................................................................................. 17 5 . Environment...................................................................................................................... 22 6 . Safeguard policies ............................................................................................................. 23 7 . Policy Exceptions and Readiness...................................................................................... 23 ... 111 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 . Annex 1: Country and Sector or Program Background......................................................... 24 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 33 Annex 3: Results Framework and Monitoring ........................................................................ 34 Annex 4: Detailed Project Description...................................................................................... 36 Annex 5: Project Costs ............................................................................................................... 41 Annex 6: Implementation Arrangements ................................................................................. 43 Annex 7: Financial Management and Disbursement Arrangements..................................... 46 Annex 8: Procurement................................................................................................................ 54 Annex 9: Economic and Financial Analysis ............................................................................. 61 Annex 10: Safeguard Policy Issues ............................................................................................ 68 Annex 11: Project Preparation and Supervision ................................................................... 127 Annex 12: Documents in the Project File ............................................................................... 128 Annex 13: Statement of Loans and Credits ............................................................................ 130 Annex 14: Country at a Glance ............................................................................................... 131 Maps Il3RD 33309 IBRD 33310 IBRD 33311 iv POLAND ODRA RIVER FLOOD PROTECTION PROJECT APPRAISAL DOCUMENT EUROPE AND CENTRAL ASIA ECSSD Date: February 2 1,2007 Team Leader: Masood Ahmad Country Director: Edgar Saravia (Acting) Sectors: Flood protection (80%); General water, Sector Manager: Marjory-Anne Bromhead sanitation and flood protection sector (20%) Sector Director: Peter D. Thomson Themes: Water resource management (P); Social risk mitigation (S); Biodiversity (S) Project ID: PO86768 Environmental screening category: A Full Assessment Lending Instrument: Specific Investment Loan Safeguard screening category: Significant impact [XI Loan [ 3 Credit [ 3 Grant [ 3 Guarantee [ ] Other: For Loans/Credits/Others: Euro 140.1 million Total Bank financing (€M.): Euro 140.1 million Proposed terms: Euro denominated fixed spread variable rate loan with 15 year maturity, including a five year grace period, with level repayment ofprincipal. Borrower: Republic ofPoland Responsible Agency: Ministry ofFinance and Ministry ofEnvironment Project implementation period: Start: July 1,2007 End: May 31,2014 Expected effectiveness date: July 1,2007 Expected closing date: November 30,2014 Does the project depart from the CAS in content or other significant respects? Re$ PAD A.3 [ ]Yes WINO Does the project require any exceptions from Bank policies? Re$ PAD D. 7 [ ]Yes [N]No Have these been approved by Bank management? [ ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes WINO Does the project include any critical risks rated “substantial” or “high”? [YIYes [ ]No Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ [YIYes [ ]No PAD D. 7 Project development objective Re$ PAD B.2, Technical Annex 3 The main development objective of the Project is to protect the population in the