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World Bank Document UGANDA THIRD PHASE OF THE ROAD DEVELOPMENT PROGRAM Public Disclosure Authorized PROJECT PAPER Africa Regional Office AFTTR Date: October 27,2009 Task Team Leader: Labite Victorio Ocaya Country: Republic of Uganda Sector Manager: C. Sanjivi Rajasingham Project Name: Third Phase of the Road Country Director: John Murray McIntire Environmental category: B (Partial Assessment) Borrower: The Republic of Uganda -Responsible agency: Uganda National Roads Authority (UNRA) Public Disclosure Authorized Revised estimated disbursements (Bank FY/US$m) FY 2009 2010 2011 2012 Annual 54.42 25.60 4.21 0.08 Current closing date: December 3 1, 2009 Revised closing date : October 3 1,201 1 _p P Indicate if the restructuring is: Board approved - RVP approved X - Public Disclosure Authorized Does the restructured project require any exceptions to Bank policies? Yes X No Have these been approved by Bank management? - Yes -No Is approval for any policy exception sought from the Board? - Yes X No Revised project development objective/outcomes [If applicable] Although some project sub-components have been dropped and the scope of some components revised, the project development objectives and outcomes remain unchanged. Does the restructured project trigger any new safeguard policies? No Revised Financing Plan (US$m.) Public Disclosure Authorized IB RD/I D A IDA GRANT FOR DEBT VULNERABLE A. Introduction 1. This Project Paper seeks the approval to introduce changes in the Third Phase of the Road Development Program-RDPP3 (the Project) (Credit No. 3976-UG and Grant No. H122-UG) for the Republic of Uganda and the accompanying amendments to the Project’s legal documents. 2. The proposed changes are as follows: (i)dropping several sub-components such as civil works for upgrading of about 23 km of Zirobwe-Wobulenzi road; rehabilitation and regravelling of about 91 km of Atiak-Moyo road; and reconstruction and upgrading of about 57 km on Busega- Mityana road that could not be implemented due to a shortfall resulting from higher than anticipated bids received on three tendered works contracts, out of the seven originally planned for implementation under the Credit; (ii)reallocating the amounts in Category 1 (b) for reconstruction and upgrading of Busega-Mityana road of SDR 16.53 million to Category 1 (a) to meet the shortfall on upgrading Soroti-Lira road (125 km) and Kampala-Gayza-Zirobwe road (44 km); due to the above and due to the fact that the financing agreement was amended (April 25, 2007) to allow 100 percent IDA financing of civil works and consultancy services under the project resulting in cost increases; and (iii)extending the closing date by 22 months from December 3 1, 2009 to October 30, 201 1. Due to initial procurement delays, the last of three contracts for upgrading of Dokolo-Lira road contract will end on November 30, 201 1. Thus, the extension would allow for completion of the contract and defects liability period and implementation of the Technical Assistance (TA) support to the Ministry of Works and Transport (MoWT) and Uganda National Roads Authority (UNRA). The proposed changes and reallocation will help finance the deficit on the on-going contracts, caused by higher bid prices than originally envisaged at appraisal, resulting from increases in the costs of construction inputs in both local and international markets. The changes will also take into account the initial delays in the procurement of works. 1 B* *m e, -a +2 C 0g 8 E C 3 0 .e iD m 0 .- W e,5. k a Q m m C k M .-m C e, Q .-Y Qe, -a -.- *d ug -B BY -e, 2 3 3 0 0 m eL m .-6 (lie, Q ue, -.- ti Y B Q > E 2 Q 9 B* -e, 2 8 m .-M me, Q -B .-ti Y -6 Ve, > 2 Q s Qe, * -e, 3 (li C 00 .-m e, Q -.-B *ti -B 3. The proposed changes, involving exclusion of sub-components, reallocation among categories and extension ofthe closing date would constitute a second order project restructuring. B. Background and Reasons for Restructuring Key Project Data as of September 2009 Ratings and Flags from last ISR Effectiveness Date 6/23/2005 Development Objective Satisfactory Current Closing Date 12/3 1/2009 Implementation Progress Satisfactory Project Age 4.9 years Problem Flags N/A YODisbursed 69.12% 5. Project Development Objectives (PDO) and Progress towards Achievement of PDO: The project development objective, namely, to “improve access to rural areas and economically productive areas and to progressively continue to build up sustainable road sector planning, design and program management capability including road safety management” is a replica of the program development objective and would remain the same. The project is the third and last phase of an originally four phased road sector Adaptable Project Lending (APL) Credit The already closed first two projects, Roads Development Program Phase 1 (RDPP1) and Roads Development Program Phase 2 (RDPP2) projects have contributed to the sector reforms, including the creation of the Uganda National Roads Authority (UNRA) and capacity expansion on a continuous stretch of about 710 km of national roads (including the rehabilitation of a 166 km bitumen standard road that was added to the RDPP1 through an amendment to the Credit). 6. Project Implementation Progress: Current project implementation progress is rated as Satisfactory. The project has six components: (i)upgrading and strengthening of three high priority national roads; (ii)detailed design of the upgrading of about 300 km of District Roads reclassified to the National Road Standard; (iii)consultancies for feasibility studies of upgrading to bitumen standard about 600 km of priority national roads; (iv) rehabilitationhegravelling of the Atiak-Moyo road; (v) construction of a proposed Road Authority headquarters building; and (vi) Institution building support to the National Road Authority, including the provision of external auditing services. 7. RDPP3 was originally planned to finance the paving and reconstruction of 249 kilometers of national roads and to regravel 91 kilometers of (national) gravel roads. Due to higher than expected bids, the paving and reconstruction of 57 kilometers of roads out of the 80 kilometers appraised could not be financed by the project and Government of Uganda (GoU) is now financing these from its own budget. The project was also supposed to finance the regravelling of a 91 km road which was planned to be financed by the IDA supported Northern Uganda Reconstruction Project (1994-1 996) but was abandoned as the insurgency in the area intensified. While the roads were appraised for regravelling, the government decided that with the increased traffic, it would be best to upgrade it to 3 a bitumen standard road. With that, the US$8.7 million allocated for the road was about 10 percent of the engineer’s estimate for upgrading the road. Hence, the government’s proposal is to finance it at a later stage through other means. 8. The outcome indicator related to the civil works for upgrading, rehabilitation and reconstruction component is “reduction in average travel time on national roads compared to baseline” and “reduction in vehicle operating costs on national roads compared to baseline”. At closure of the RDPP3, the three APLs will have upgraded and rehabilitated a total of 877 kilometers of roads, close to the original target of 886 kilometers appraised for upgrading rehabilitation and regravelling under the Program. This has resulted in reduction of travel time and vehicle operating costs between Kampala and the far off towns of Arua, Gulu and Hoima by about 40 percent. With completion of Soroti-Lira road, travel time and vehicle operating costs from the Kenya border for traffic originating from Mombasa to north eastern Democratic Republic of Congo (DRC) and southern Sudan will also be reduced by a similar amount. Further, under institutional support to the sector, creation of a roads authority, transfer of maintenance functions from the Ministry of Works to UNRA, and the creation of a road fund are major milestones. With the above background, it can be concluded that the outcome indicator related to the civil works for upgrading and rehabilitationheconstruction under the program remains fully relevant and achievable, notwithstanding deletion of the following three civil works for: (i)upgrading Zirobwe-Wobulenzi road (23 km); (ii)rehabilitation of the paved Busega-Mityana road (57 km) and regravelling of Atiak-Moyo road (91 km); and building contract for the proposed UNRA and MoWT offices as government has embarked on financing them. It would therefore not be necessary to modify the project development objectives or target values. (See also Annex 1) 9. Specific Reasons and Rationale for Project Restructuring. Designs and estimates for the project were prepared in 2003/04. Based on the estimates, the original total IDA (including both Credit SDR 45.97 million and Grant SDR 27.20 million) amount was SDR 73.17 million. The project experienced delays at the prequalification stage, mainly due to the need to clarify the information submitted by the prospective bidders and the need to verify the financial health of the recommended firms. In 2006, an update of the estimates showed that the amount on the Credit could finance only two roads (to be executed in three contracts: 2 contracts for upgrading Soroti-Lira road and 1 contract for upgrading Kampala-Gayaza-Zirobwe road) out of the planned four roads (2 for upgrading, 1 for rehabilitation and 1 for regravelling). Bids were opened on December 12, 2006 for the first two civil works contracts and on March 1, 2007 for a third contract. However, the total price of the three contracts was US$25 million over and above the Credit amount, necessitating a commitment by GoU to finance the deficit.
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