Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PAD1465 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$40 MILLION TO GEORGIA FOR A SECONDARY ROAD ASSET MANAGEMENT PROJECT February 26, 2016 Public Disclosure Authorized Transport and ICT Global Practice Europe and Central Asia 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. Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective January 14, 2016) Currency Unit = Georgian Lari (GEL) US1.00 = 2.41 GEL 1.00 GEL = US$0.41 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AADT Average Annual Daily Traffic IE Impact Evaluation Studies ADB Asian Development Bank IEG Independent Evaluation Group CENN Caucasus Environmental NGO Network IFAC International Federation of Accountants CO Country Office IFR Interim Unaudited Financial Report CPAR Country Procurement Assessment Report IPF Investment Project Financing CPI Consumer Price Index IPSAS International Public Sector Accounting Standards CPS Country Partnership Strategy iRAP International Road Assessment Programme CQS Consultant Qualifications IRI International Roughness Index CSPA Competition and State Procurement Agency ISA International Standards on Auditing DA Designated Account JICA Japan International Cooperation Agency DB Design-Build (contract) km Kilometer DLI Disbursement-Linked Indicator KRRIP Kakheti Regional Roads Improvement Project DLP Defect Liability Period LCS Least-Cost Selection EBRD European Bank for Reconstruction and Development MOESD Ministry of Economic and Sustainable Development ECA Europe and Central Asia MRDI Ministry of Regional Development and Infrastructure EIRR Economic Internal Rate of Return NBG National Bank of Georgia EMP Environmental Management Plan NCB National Competitive Bidding ESIA Environmental and Social Impact Assessments NGO Non-Government Organization ESMF Environmental and Social Management Framework NPV Net Present Value EU European Union OECD Organization for Economic Cooperation and EWHIP-4 Fourth East-West Highway Improvement Project Development FA Fixed Assets PAD Project Appraisal Document FBS Fixed-Budget Selection PDO Project Development Objectives FEWHIP First East-West Highway Improvement Project PfR Program for Result FIDIC International Federation of Consulting Engineers PP Procurement Plan FM Financial Management PRAMS Procurement Risk Assessment and Management FMM Financial Management Manual System FPU Foreign Project Unit QBS Quality-based Selection GDP Gross Domestic Product QCBS Quality and Cost-Based Selections Ge-GP Georgian E Government-Procurement QER Quality Enhancement Review GEL Georgian Lari RAP Resettlement Action Plan GeoRAP Georgia Road Assessment Program RD Roads Department GIS Geographic Information System RFP Request for Proposals GOG Government of Georgia RAMS Road Asset Management System GPN General Procurement Notice RPF Resettlement Policy Framework HDM-4 Highway Development and Management Model RUSS Road User Satisfaction Surveys HQ Headquarters SAOG State Audit Office of Georgia IBRD International Bank for Reconstruction and SEWHIP Second East-West Highway Improvement Project Development SLRP-I (First) Secondary and Local Roads Project IC Individual Consultants SLRP-II Second Secondary and Local Roads Project ICB International Competitive Bidding SLRP-III Third Secondary and Local Roads Project SME Small and Medium Enterprises TRRC Transport Reform and Rehabilitation Centre SOE Statement of Expense TSA Targeted Social Assistance SORT Systematic Operations Risk- Rating Tool TTL Task Team Leader SRAMP Secondary Road Asset Management Project UNFCCC United Nations Framework Convention on Climate SSS Single-Source Selection Change TA Technical Assistance VAT Valued-Added Tax TEWHIP Third East-West Highway Improvement Project WB World Bank TOR Terms of Reference Regional Vice President: Cyril E. Muller Country Director: Mercy Miyang Tembon Senior Global Practice Director: Pierre Guislain Practice Manager: Juan Gaviria Task Team Leader: Natalya Stankevich GEORGIA Secondary Road Asset Management Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ............................................................................................................ 1 B. Sectoral and Institutional Context ................................................................................. 1 C. Higher Level Objectives to which the Project Contributes .......................................... 4 II. PROJECT DEVELOPMENT OBJECTIVES ................................................................5 A. PDO............................................................................................................................... 5 B. Project Beneficiaries ..................................................................................................... 5 C. PDO Level Results Indicators ....................................................................................... 6 III. PROJECT DESCRIPTION ..............................................................................................6 A. Project Components ...................................................................................................... 7 B. Project Costs and Financing........................................................................................ 10 C. Lessons Learned and Reflected in the Project Design ................................................ 10 IV. IMPLEMENTATION .....................................................................................................12 A. Institutional and Implementation Arrangements ........................................................ 12 B. Results Monitoring and Evaluation ............................................................................ 12 C. Sustainability............................................................................................................... 13 V. KEY RISKS ......................................................................................................................13 A. Overall Risk Rating and Explanation of Key Risks.................................................... 13 VI. APPRAISAL SUMMARY ..............................................................................................14 A. Economic Analysis ..................................................................................................... 14 B. Technical ..................................................................................................................... 15 C. Financial Management ................................................................................................ 16 D. Procurement ................................................................................................................ 17 E. Social (including Safeguards) ..................................................................................... 17 F. Environment (including Safeguards) .......................................................................... 19 G. Other Safeguards Policies Triggered .......................................................................... 20 H. World Bank Grievance Redress .................................................................................. 20 Annex 1: Results Framework and Monitoring...................................................................... 21 Annex 2: Detailed Project Description ................................................................................. 27 Annex 3: Implementation Arrangements .............................................................................. 31 Annex 4: Implementation Support Plan ................................................................................ 57 Annex 5: Economic Analysis................................................................................................ 61 Annex 6: Poverty in Georgia and Potential for Development in SRAMP regions ............... 67 Annex 7: Key Achievements under Bank Funded Projects in the Secondary Roads Sector 73 Annex 8: Building Climate Resilience ................................................................................. 81 Annex 9: Map ....................................................................................................................... 86 PAD DATA SHEET Georgia Secondary Road Asset Management Project (P149953) PROJECT APPRAISAL DOCUMENT EUROPE AND CENTRAL ASIA 0000009382 Report No.: PAD1465 Basic Information Project ID EA Category Team Leader(s) P149953 B - Partial Assessment Natalya Stankevich Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 19-Mar-2016 31-Dec-2021 Expected Effectiveness Date Expected Closing Date 1-Jul-2016 31-Dec-2021 Joint IFC No Practice Senior Global Practice Country Director Regional Vice President Manager/Manager Director Juan Gaviria Pierre Guislain Mercy Miyang Tembon Cyril E. Muller Borrower: GEORGIA Responsible Agency: Roads Department of the Ministry of Regional Development and Infrastructure (RDMRDI) Contact: Mr. Irakli Litanishvili