document of the world bank for official use...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 59800-RW

PROJECT PAPER

ON A

PROPOSED ADDITIONAL CREDIT

IN THE AMOUNT OF SDR 6.8 MILLION (US$11 MILLION EQUIVALENT)

TO THE

REPUBLIC OF RWANDA

FOR A

TRANSPORT SECTOR DEVELOPMENT PROJECT

(IDA GRANT H331-RW and ACGF GRANT TF090451-RW)

May 20, 2011

Transport Sector Country Department AFCE2 Africa Region

This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 30, 2011)

Currency Unit = RWF RWF601.7413 = US$1

US$ 1.620960 = SDR1

FISCAL YEAR

July 1 – June 30

ABBREVIATIONS AND ACRONYMS AADT Annual Average Daily Traffic ACGF Africa Catalytic Growth Fund AF Additional Financing CAS Country Assistance Strategy CGPT Transport Projects Management Unit DO Development Objective DRC Democratic Republic of Congo EAC East African Community EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan FM Financial Management FY Fiscal Year GDP Gross Domestic Product GoR Government of Rwanda HIV/AIDS Human Immunodeficiency Virus/ Acquired Immune-deficiency Syndrome IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICT Information and Communication Technology IDA IFR IL

International Development Association Interim Financial Report Investment Lending

IP Implementation Progress IRI International Roughness Index IRR Internal Rate of Return ISR Implementation Status and Results Report HDM Highway Design Model LCAs Local Community Associations M&E Monitoring and Evaluation

MININFRA MINECOFIN

Ministry of Infrastructure Ministry of Finance and Economic Planning

MOU Memorandum of Understanding MS Moderately Satisfactory NCB National Competitive Bidding NGO Non Governmental Organization NPV Net Present Value OBMC Output-Based Maintenance Contracts OP Operational Policy ORAF Operational Risk Assessment Framework PAD Project Appraisal Document PDO Project Development Objective PIU Project Implementation Unit POM Project Operational Manual PP Project Paper PPF Project Preparation Fund PMI Performance Monitoring Indicator RA Road Agency RED Road Economic Model REM Road Engineering and Management RMF Road Maintenance Fund RONET Road Network Evaluation Tools RTDA Rwanda Transport Development Agency RWF Rwandan Franc SBD Standard Bidding Documents SDR Special Drawing Right SIA Social Impact Assessment SSATP Sub Saharan Africa Transport Policy Program TA Technical Assistance TSDP Transport Sector Development Project TSWG Transport Sector Working Group UCS Use of Country System US$ United States Dollar VOC Vehicle Operating Cost

Vice President: Obiageli Katryn Ezekwesili Country Director: Johannes Zutt Country Manager: Omowunmi Ladipo

Sector Manager: Supee Teravaninthorn Task Team Leader: Tesfamichael Nahusenay Mitiku

RWANDA


CONTENTS

Additional Financing Data Sheet ..................................................................................................... i

I. Introduction .................................................................................................................................1

II. Background and Rationale for Additional Financing in the amount of US$11 million .............1

III. Proposed Changes ......................................................................................................................3

IV. Appraisal Summary ...................................................................................................................6

Annex 1: Results Framework and Monitoring Indicators................................................................9

Annex 2 Operational Risk Assessment Framework (ORAF) ........................................................15

Annex 3: Revised Estimate of Project Costs .................................................................................19

Annex 4. Detailed Description of the Project, Implementation Status and Modified and New

Project Activities ............................................................................................................................22

Annex 5: Procurement Arrangements ............................................................................................31

Annex 6: Economic Analysis Based on Updated Costs ................................................................41

i

RWANDA


ADDITIONAL FINANCING DATA SHEET

Basic Information - Additional Financing (AF) Country Director: Johannes Zutt Sector Director: Jamal Saghir Sector Manager: Supee Teravaninthorn Team Leader: Tesfamichael Nahusenay Mitiku Project ID: P119901 Expected Effectiveness Date: October 15, 2011 Lending Instrument: Specific Investment Lending (SIL) Additional Financing Type: Financing gap and cost overrun

Sectors: Roads &Highways (70); Ports/Water/Shipping (20); General Transportation sector (10%) Themes: Trade facilitation and market access, and infrastructure for private sector development (15%); Rural services and infrastructure (60%); Public expenditure, financial management and procurement (15%); Conflict prevention and post-conflict reconstruction (10%) Environmental category: B - Partial Assessment Expected Closing Date: December 31, 2013 Joint IFC: NO Joint Level: NA

Basic Information - Original Project Project ID: P079414 Environmental category: B - Partial

Assessment Project Name: Transport Sector Development Project (TSDP)

Expected Closing Date: December 31, 2013

Lending Instrument: Specific Investment Lending (SIL)

Joint IFC: NO Joint Level: NA

AF Project Financing Data [ ] Loan [ X ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Standard IDA Credit terms, i.e. principal amount repayable in 40 years, including a grace period of 10 years.

AF Financing Plan (US$m) Source Total Amount (US $m)

Total Project Cost: Cofinancing: Borrower:

Total Bank Financing: IBRD

IDA

New (AF)

Recommitted (Original Grant)

11.00 0.00 0.00

11.00

0.00

11.00

11.00

Client Information

ii

Recipient: Government of Rwanda Responsible Agency: Rwanda Transport Development Agency (RTDA) Contact Person: Olivier Kabera Telephone No.: (+250) 788638410 Fax No.:

Email: [email protected]/gmail.com AF Estimated Disbursements (Bank FY/US$m)

Fiscal Year FY12 FY13 FY14 Annual 8.5 2.0 0.5 Cumulative 8.5 10.5 11.0

Project Development Objective and Description Original project development objectives (PDO): to improve the quality of Rwanda's paved road network and to generate sustained employment in rural areas through road maintenance works. Revised project development objective: The original PDO remains unchanged.

Original Project description: Component 1- Paved Road Rehabilitation and Maintenance: Rehabilitation of 83 km of the Kigali-Ruhengeri road (Part 1 (a)) and maintenance of approximately 50 percent of the paved trunk road network of 1,100 km, including sections of the Gatuna-Bugarama, the Gitarama-Kibuye, Kagitumba-Rusumo, and Kayonza-Gisenyi corridors (Part 1 (b)), and supervision of the said rehabilitation and maintenance works. Component 2- Sector Governance and Policy Support: Sector Governance Improvement and Transport Policy Implementation, through provision of technical assistance to the transport sector agencies and local community associations, development and implementation of strategies and standards in selected critical areas, and capacity building. Component 3- Sector Analysis and Planning Support: (i) Strengthening transport planning functions and monitoring and evaluation systems, through provision of technical assistance to Rwanda Transport Development Agency , establishment of transport database and data management system, establishment of monitoring and evaluation systems and thepreparation of feeder roads ;(ii) Supporting capacity building efforts through financing of provision of long-term in-country training to professional staff of the road agencies, local entrepreneurs, and unemployed graduates in the areas of Road Engineering and Management (REM), and Transport Economics and Planning (TEP); and (iii) provision of Technical Assistance, training and IT equipment for Road Maintenance Fund (RMF). Component 4- Project and Program Management Support: (i) Financing of Operating Costs of the Rwanda Transport Development Agency; (ii) Provision of technical assistance in support of Project and Program technical audits; and (iii) Training of Project Implementing Entity’s staff The Additional Financing will continue to support (i) the rehabilitation of the Kigali –Ruhengeri road, and (ii) the preparation of a Roads and Bridges Design Standard and Specification Manual as well as the customization of road management tools under components (i) and(iii) respectively.

iii

Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

[ X ]Yes [ ] No [ ]Yes [ X ] No [ ]Yes [ X] No [ ]Yes [ X] No [ X ]Yes [ ] No [ ]Yes [ X ] No [ ]Yes [ X ] No [ ]Yes [ X ] No [ ]Yes [ X ] No [ ]Yes [ X ] No

Does the project require any exceptions from Bank policies? Have these been approved by Bank management?

[X]Yes [ ] No [X]Yes [ ] No

Conditions and Legal Covenants: Financing Agreement

Reference Description of

Condition/Covenant Date Due

FA - Article V 5.01(a)(ii) FA - Article V 5.01(a)(iii) FA – Article V 5.01(a)( iv) FA – Article V 5.01(a)(v)

Conditions of Effectiveness The Project Agreement has been executed on behalf of the International Development Association and the Rwanda Transport Development Project

The Subsidiary Agreement has been executed on behalf of the Recipient (GoR) and the Project Implementing Entity (Rwanda Transport Development Agency-RTDA) The Recipient has adopted and updated the Project Implementation Manual Covenants The Amended and Restated ACGF Grant Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it have been fulfilled.

Effectiveness On or before July 31 in each year or such other date as may be agreed with the Association Not later than the beginning of each month

iv

FA – Schedule 2, Section V.A(2)

The Recipient shall prepare and submit, a cash flow based maintenance plan for such year, detailing the maintenance works of the Project proposed to be carried out by the Recipient during each month of the year and the projected costs. The Recipient shall maintain at

No later than 30 days after the Effective Date of this Agreement No later than July 31 of each year, By June 30, 2012 Not later than December 31, 2011 or any other date agreed with the Association; Not later than December 31, 2011 or any other date agreed with the Association

v

FA – Schedule 2, Section V.A (3) FA – Schedule 2, Section V.A (4) FA – Schedule 2, Section V. B FA – Schedule 2, Section V. C

all times during Project implementation, in Rwandan Francs, in its central bank, a Counterpart Fund Account under terms and conditions acceptable to the Association, including management by the Road Maintenance Fund, into which it shall deposit on a monthly basis, funds accruing from the Recipient’s Fuel Levy collections and necessary to meet the cost of the Project, as agreed with the Association. The Recipient shall deposit into the Counterpart Fund Account an initial advance, corresponding to the cost of Part 1 (b) (ii) and (iii) of the Project for the first month as detailed in the Cash Flow Maintenance Plan, and thereafter replenish the Counterpart Fund Account not later than the first day of each month, with such amounts as shall be sufficient to cover the cost of Part 1 (b) (ii) and (iii) of the Project during said month as detailed in the Cash Flow Maintenance Plan, taking into account the balance of funds in the account and projected expenditures. The Recipient shall furnish to the Association as soon as available, an annual work plan and budget for the Project for the following year and thereafter implement with due diligence. The Recipient shall prepare and adopt a Transport Master Plan, including plans for establishing Vehicle Inspection and Drivers

Disbursement Condition

vi

FA – Schedule 2, Section V. E. 1 FA – Schedule 2, Section V. E. 2 FA – Schedule 2, Section IV. B (1)

Licensing Agency. The Recipient shall cause the Project Implementing Entity to establish a Tender Committee under terms of reference and resources satisfactory to the Association. The Recipient shall cause the Project Implementing Entity to recruit a Procurement Specialist and Procurement Assistant each with qualifications and experience and terms of reference satisfactory to the association Notwithstanding the provisions of Part A of this Section no withdrawal shall be made for payments (a) made prior to the date of the Original Financing Agreement, except that withdrawals for Eligible Expenditures up to an aggregate amount not to exceed $500,000 equivalent under Category (1) and $500,000 equivalent under Category (4) may be made for payments made prior to this date but on or after June 1, 2007 under Category (2) (b) unless at least one (1) multi-year performance-based management contracts, in form and substance satisfactory to the Association, has been concluded in accordance with the provisions of Section III of this Schedule between the Recipient and a contractor with qualifications, experience, and terms of reference satisfactory to the Association for purposes of implementation of Part 1 (b) (ii) and (iii) of the Project.

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I. INTRODUCTION 1. This Project Paper (PP) seeks the approval of the Executive Directors to provide an additional credit in the amount of SDR 6.8 million (US$11 million equivalent) to the Republic of Rwanda (Recipient) to finance the Rwanda Transport Sector Development Project (TSDP), P079414, Grant H331-RW and ACGF Grant TF090451-RW. 2. The proposed additional credit would help finance the costs associated with the financing gap due to cost overrun and is prepared in accordance with Operational Policy (OP) 13.20 – Additional Financing (AF) for Investment Lending (IL). The AF will avail funds for the completion of the rehabilitation of the Kigali-Ruhengeri road that will support Rwanda’s economic and social development by improving access to markets and reducing vehicle operating costs. The proposed preparation of road and bridge design standards and customization of road management tools will enhance sector governance and institutional development aspects by instilling effectiveness and efficiency in the use of resources allocated for the development and maintenance of Rwanda’s road network. While processing this AF, the Recipient has requested the Bank to consider: (i) crystallization of activities to be carried out as part of the strategic studies and design of limited feeder roads under Component 3; (ii) reallocation of grant proceeds among components; (iii) vesting in the Rwanda Transport Development Agency (RTDA) the responsibility of implementation of the project; (iv) extension of the closing date of the International Development Association (IDA) Grant and the Africa Catalytic Growth Fund (ACGF) Grant; and (v) modification of the arrangement for handling the Government of Rwanda’s (GoR’s) contribution to the project. 3. The project is financed by an International Development Association (IDA) grant and credit, the Africa Catalytic Growth Fund (ACGF) and the GoR. II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING IN THE AMOUNT OF US$11

MILLION 4. The Rwanda TSDP was approved on August 28, 2007 and became effective on December 28, 2007 with a current closing date of June 30, 2012. The original total financing amount for TSDP was US$69 million. The project was co-financed with two grants provided by ACGF – US$38 million and IDA – US$11 million, amounting to a total of US$49 million. IDA acts as the administrator of the ACGF grant. The GoR is providing RWF 12 billion (US$20 million) counter-part financing to the project. The proposed AF (IDA credit), in the amount of US$11 million, will raise the total project financing amount to US$80 million. The project was a direct response to a request by GoR for much needed assistance to a country reeling from a devastating civil war and genocide, both of which affected production and infrastructure, including transport. 5. Project Development Objectives (PDOs): The PDOs of the Rwanda Transport Sector Development Project are to improve the quality of Rwanda's paved road network and generate sustained employment in rural areas through road maintenance works. The project supports the above objectives through its four components: (i) Paved Roads Rehabilitation and Maintenance,

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(ii) Sector Governance and Policy Support, (iii) Sector Analysis and Planning Support; and (iv) Project and Program Management Support. The main outcome indicators are: (i) improved condition of the road network and (ii) generation of employment. The initial PDOs and outcomes remain unchanged and there is no major change to the original project design and scope. 6. The design of the TSDP embraced Rwanda’s vision and development strategy as set out in its Vision 2020. A key theme of Vision 2020 is the refurbishment and development of the country’s core economic infrastructure. The vision and its medium term development strategy – the Economic Development and Poverty Reduction Strategy, spanning the period 2008-12, seeks to transform Rwanda from a low-income agriculture-based economy to a knowledge-based service economy by 2020. The vision envisages real gross domestic product (GDP) growth of eight percent annually, to be achieved through: (i) deepening reforms, including in the business environment; (ii) investing in infrastructure (power, transport, and Information and Communication Technology (ICT)); (iii) increasing agricultural productivity, and (iv) investing in skills development needed for economic modernization. The strategy identifies the transport sector as a catalyst for rural development and regional integration. 7. Project Performance: Project implementation is underway and 44 percent of the IDA and ACGF grants are disbursed while 96.4 percent of the grants are committed. All conditions precedent to additional financing, as per OP 13.20 are fulfilled. A waiver of the requirement for a consistent “Satisfactory” project performance over 12 months for a project to qualify for additional financing under OP 13.20 paragraph 2 for the TSDP has been endorsed by management for presentation to the Board for approval. There are no unresolved fiduciary, environmental, social or other safeguard issues and project implementation is moderately satisfactory, with a possibility of upgrading to satisfactory by mid 2011 upon the start up of the training for transport professionals at the Kigali Institute of Science and Technology (KIST) and completion of preparatory activities for the commencement of studies under the transport sector planning component. There are no anticipated changes to the PDO or the project outcome indicators. The AF would principally support originally appraised activities. Financial management and procurement arrangements remain unchanged while the RTDA has become the implementing institution as envisaged during project design. The Environmental Category (B) of the project is also unchanged.

8. The major activity of the project, the rehabilitation of the Kigali-Ruhengeri road was about 40 percent completed, as of end of February 2011, and substantial completion is expected by March 2012. Mobilization and training of Local Community Associations (LCAs) is completed and signing of road maintenance contracts with LCAs will start in May 2011. However, the Road Maintenance Fund (RMF) has been contracting out paved road maintenance to small scale enterprises/contractors, since 2008. Good progress has also been made in complying with the agreed covenants. GoR has established a Transport Agency, RTDA, which is now operational. Long term performance agreements between Ministry of Infrastructure (MININFRA) and its agencies are under preparation and other reforms to spur growth and better management of the road sector such as the enactment of the Roads Act have made good progress. Two covenants have to be addressed in a modified or enhanced way, due to changing circumstances during implementation. First: GoR’s counterpart contribution to road maintenance works is being administered in a form of parallel financing. GoR will prepare a cash flow based

3

maintenance plan and deposit into a counter-part account the required funds on a monthly basis and apply the funds to the maintenance contracts under the TSDP Second: The vehicle technical inspection center, under the police, is proposed by GoR to be integrated with a Driver and Vehicle Licensing Agency, as it will be newly established. Accordingly, GoR will prepare an action plan for the establishment of the Driver and Vehicle Licensing Agency, upon completion of the preparation of the transport master plan. 9. The new activities supported by the AF and referenced in paragraph 2 above are consistent with the development objectives of the original project and with Rwanda Country Assistance Strategy. The activities have been appraised and found to be economically viable and will enhance the TSDP’s development objectives and if approved, their execution will be completed by December 31, 2013, which is within the allowable three years of the original closing date of the current project, all in line with OP 13.20 guidelines. 10. The GoR, by a letter dated October 18, 2010, has requested the World Bank for an AF to cover the financing gap due to cost overrun of the contract for the rehabilitation of Kigali-Ruhengeri road. Further, by a letter dated February 23, 2011, GoR requested the Bank to consider some changes as part of the AF, including: (i) application of its contributions in a form of parallel financing (ii) extending the grant closing dates, and (iii) vesting in the RTDA the responsibility for implementation of the project.

11. Compared with other lending instruments, the AF is the best option because it will provide quick disbursing funding to cover cost overruns for an ongoing works contract and close the financing gap of other sub-components of the TSDP that are under implementation. It will also help fast track the acquisition of management tools such as Road Design Manuals and Specifications for Rwanda that are urgently required and finance implementation of approved reforms including those provided for under the Roads Act and the RTDA Act. III. PROPOSED CHANGES 12. The AF will not result in major changes to the PDO or Implementation arrangements (RTDA has become the implementing institution as envisaged during project design of the original project). The main changes to the project and the details of the required additional financing are as follows: 13. Increasing the allocation for the Rehabilitation of Kigali–Ruhengeri road under Component 1 (US$10 million): This component supports the rehabilitation of approximately 83 km of Kigali-Ruhengeri section of Kigali-Ruhengeri-Gisenyi road. The funding will be used to close the US$7.78 million financing gap for the road contract realized in December 2009 during the signing of the works contract while the balance of US$2.22 million is the provision for contingencies. The total contract price is US$45.78 million for both works and supervision against US$38 million earmarked for this activity in the TSDP Project Appraisal Document (PAD). The increase in cost partly resulted from GoR’s request to widen the road, from 6.2 m to 7 m, to be within the standards of trunk roads in the region, and inflation due to delayed implementation arising from poor response to bids and subsequent analysis required to demonstrate that the widened road was still economically feasible.

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14. Increasing the allocation for Sector Analysis and Planning Support under Component 3 (US$1.0 million): The funds earmarked will be used to finance the following additional activities: (i) human capital development through training on road management tools; (ii) preparation of design and specifications manuals for roads and bridges; (iii) introduction and customization of road management tools including Roads Economic Decision Model (RED), Highway Development and Management Model (HDM) and Road Network Evaluation Tool (RONET). The new activities will help to ensure sustainability of the investment and the country’s road network, and are consistent with the PDO. 15. Crystallizing the activities to be carried out as strategic studies, support to RMF and design of limited feeder roads under Component 3: These include: (i) preparation of human resource development plan for RTDA, capacity building needs assessment for RMF and updating the formulae for the allocation of Road Fund revenues are proposed to be carried out as part of the strategic studies encapsulated in the Appraisal Document (Component 3); (ii) provision of technical assistance (TA), training and Information Technology equipment for RMF, transferred from Component 4 to Component 3, while RMF is expected to conduct technical audit of maintenance contracts from its own resources; and (iii) carrying out design, feasibility study and Environmental and Social Impact Assessment (ESIA) of limited feeder roads under component 3. Other critical studies that would help to improve the performance of the transport sector and project implementation will be conducted as they emerge. 16. Reallocation of funds among components: Based on the progress of implementation, revised cost estimates and request from GoR by a letter dated April 26, 2011 reallocation of funds among components is proposed as presented in Table 1 and Annex 3. The reallocation of the IDA Grant and ACGF Grant made during the first amendment of the Financing Agreements in September 2008 is revised as shown in Annex 3, to simplify disbursement. The reallocation will not affect the implementation of originally planned activities. 17. Implementation Arrangements: The RTDA will be responsible for the implementation of the AF including all fiduciary aspects of the project. The formation of the RTDA, which is an agency under MININFRA, was a disbursement condition for the TSDP and it was envisaged that once formed and operational, it would take over the functions of MININFRA stated in the PAD and specifically perform the functions of a road agency. The RTDA is operational and has been assigned the responsibility of implementing the TSDP and other road projects. The RTDA will manage the TSDP and other Bank funded projects hitherto managed by the Transport Project Implementation Unit (CGPT), a project implementation unit (PIU) under MININFRA. With the formation of the RTDA, all the functions of the CGPT and staff have been transferred to the new agency. The staff within RTDA will however continue to manage the current project and AF activities. With the RTDA being operational as a semi-autonomous road agency, it is expected that recruitment and retention of qualified personnel will be enhanced resulting, in a more professionally run agency. Following this change, a Subsidiary Agreement between GoR and the RTDA, and a Project Agreement between the Association and the RTDA shall be signed. To improve effectiveness RTDA and RMF will implement performance agreements signed with the Government. However, implementation of this item is limited to institutions directly involved in

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the project, and thus, the Rwanda Civil Aviation Authority is dropped from implementing such agreement. .

18. Implementation plan: The Client has prepared an implementation plan acceptable to the Bank. The plan confirms that all activities under the project will be completed within the proposed revised closing date of December 31, 2013. 19. Results Framework and Indicators: It is proposed to retain the Results Framework and Performance Monitoring Indicators (PMI) for the TSDP and include the following: (i) functional RTDA, (ii) adopted formulae for disaggregation of road maintenance funds amongst executing agencies, (iii) completed Road and Bridge Designs and Standard Specifications manuals, (iv) share of rural population with access to an all-season road (core indicator), and (v) direct project beneficiaries (core indicator). The monitoring indicators will be included in the updated Project Implementation Manual. 20. Closing Date Extension: The maintenance activities under TSDP which are on the critical path will be completed around end of September 2013. However, to cater for defects liability period and unexpected extension of construction time because of rains and emergency works, it is proposed to extend the grant period of the original grant (Grant H331) and ACGF Grant (TF090451) to December 31, 2013and October 31, 2013 respectively. 21. Funds Requirements and Sources: The total estimated budget for the AF is US$11 million. The breakdown is presented in Table 1 below and in the financial table presented in Annex 3. It is proposed that IDA contributes US$11 million.

Table 1: Costs by Component

Component Original cost (US$ million)

Changes with AF (US$ million)

Revised cost (US$ million)

1: Paved Roads Rehabilitation and Maintenance

62.00 +10.03 72.03

2: Sector Governance and Policy support 2.60 -0.50* 2.103: Sector Analysis and Planning 2.20 +1.47* 3.674: Project and Program management support

1.20 +0.40* 1.60

5. Refund Project Preparation Fund(PPF) 0.60 -- 0.606. Unallocated 0.40 -0.40* -----Total 69.00 11.00 80.00*As part of the AF it is proposed to reallocate, within IDA Grant, US$0.5 million from component 2 to component 4, and reallocate the funds needed for the RMF support in the amount of US$0.1 million to component 3. Further, US$0.03 million and US$0.37 million are reallocated from unallocated funds to component 1 & 3, respectively. Accordingly the revised amounts for component 1, 2, 3and 4 will be as presented in the revised cost column.

22. Financial Terms and conditions for the AF: The AF is proposed to be provided as a credit on standard IDA Credit terms, i.e. principal amount repayable in 40 years, including a grace period of 10 years. The financial management and disbursement arrangements for the TSDP IDA Grant will be equally applicable for the AF.

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23. Modifying the arrangement for GoR’s contribution to the project: Pursuant to the undertaking of GoR, the RMF deposited the first tranche of two billion Rwandan Francs (RWF), equivalent to US$3.34 million, out of the total amount of RWF 12 billion required, equivalent to US$20 million, in the counter-part fund account. However, due to delays in organizing LCAs (who were anticipated to carry out the maintenance works), MININFRA awarded contracts to local contractors and committed RWF 6.5 billion, equivalent to US$10.88 million, for maintenance contracts under TSDP. Further, the RMF has contracted out paved road maintenance works for small scale enterprises/contractors, in the amount of RWF 0.91 billion (equivalent of US$1.53 million). The Recipient has proposed to handle its counter-part contribution in the form of parallel financing.

24. The parallel financing arrangement is proposed to be implemented as follows: (i) the funds allocated from the IDA grant for part 1 (b) of the project, in the amount of US$2 million is proposed to 100 percent finance the maintenance of Huye/Butare-Kitabi (51 km) road; (ii) the uncommitted funds from GoR’s contributions, in the amount of US$7.59 million, are proposed to fully finance separate maintenance contracts on selected sections of paved roads envisaged under TSDP, mainly executed by LCAs, and contingencies, including sections of Gatuna-Bugarama, Gitarama-Kibuye, and Kagitumba-Rusumo, Kayonza-Gisenyi roads,; (iii) the Recipient shall prepare a monthly cash flow based maintenance contracts implementation plan and deposit, before the beginning of each month, the required funds in the counter-part fund account and apply the proceeds from the account for the maintenance contracts anticipated under the TSDP; and (iv) procurement of contracts fully financed by GoR/RMF will not be subject to Bank review, the Bank shall however, review the outputs of the work, to be satisfied that agreed standards have been met. 25. The original grant agreements (Grant H331-RW and TF090451) are being amended to include the most updated (January 2011) procurement guidelines, accordingly: the Recipient, through the implementing entities, shall carry out procurement activities in accordance with Section I of the “Guidelines: Procurement under IBRD Loans and IDA Credits” published by the World Bank in January 2011 (“Procurement Guidelines”), in the case of goods and works, and Sections I and IV of the “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” published by the World Bank in January 2011 (“Consultant Guidelines”) in the case of consultants’ services. Review by the World Bank of Procurement Decisions shall be carried out in accordance with the new guidelines, as presented in the Procurement Plan (Annex 5). For contracts included in the original project’s Bank approved procurement plans, for which invitations to bid were issued before the approval of the Concept Note, November 22, 2011, the original guidelines may apply. Such exception should be cleared by the Bank. The original grant agreements are also being amended to require the Recipient to implement the project activities in accordance with the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 and Revised in January, 2011. IV. APPRAISAL SUMMARY

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26. Economic and Technical: The feasibility study of the road rehabilitation project was updated in December 2008 to confirm the viability of the project after the cost over-run. Accordingly, at a discount rate of 12 percent the net present value (NPV) was determined as RWF 16,278 and the economic internal rate of return (EIRR) was 18 percent, which confirms the viability of the investment after the cost overrun. Details of the economic analysis are presented in Annex 6. Going forward, the agreement with GoR is to cover the costs for emergency works within the contingencies provided and limit further increase of the contract amount. 27. Safeguards: No negative long term environmental and social impacts are foreseen with regard to this project. The project rating remains Category B as assessed during appraisal and no change is expected. The Contractor is observing the Environment and Social Management Plan (ESMP) requirements and the implementing institution is fulfilling its oversight responsibilities. The safeguards document prepared (ESIA), was disclosed in-country on January 15, 2006 and submitted to InfoShop on January 14, 2006. The mid-term review has not considered the need for updating the ESIA, however, the RTDA will assess the situation towards the end of 2011, and if deemed necessary will update the ESIA and the ESMP. 28. OP 4.11 (Physical Cultural Resources) is being triggered for this AF; the Environmental Impact Assessment (EIA)/Environmental and Social Management Plan (ESMP) for the Kigali- Ruhengeri road has been updated to ensure that the civil works carefully avoid existing cultural assets, such as burial and archeological sites. Guidelines for “chance finds” procedure will be integrated into the contracts for construction and road maintenance consultants. These include development of a cultural property management plan if physical cultural resources are found, in accordance with the government of Rwanda’s policies and guidelines. This updated document was disclosed in country as well as in the InfoShop on April 21, 2011 29. Financial Management (FM): Residual FM risk is rated as Medium-L (See Annex 2). The auditors expressed an unqualified audit opinion of the financial statements for the CGPT for the period ended December 31, 2009, in accordance with the Financing Agreement. They also expressed an unqualified opinion that the designated account statements present a true and fair view for the year in accordance with IDA and ACGF Grants requirements. The project has continued to prepare and submit satisfactory unaudited interim financial statements, the latest being the interim financial reports (IFR) for the period ended December 31, 2010. The additional financing will continue to use the existing funds flow mechanism and will use the designated account already in place. The FM arrangements of RTDA meet the Bank’s minimum requirements for project FM as per OP/BP 10.02.

30. Procurement: The procurement arrangements under the proposed AF are expected to be the same as those under the ongoing TSDP. However, all activities funded after November 22, 2010 will use the updated procurement guidelines of January 2011. To further strengthen the procurement system, it is recommended that GoR should: (i) establish an internal tender committee; (ii) put in place a Procurement Manual; (iii) put in place a RTDA website; (iv) fully staff the procurement unit by finalizing recruitment of the Procurement Specialist and a Procurement Assistant; and (v) monitor and document impact of limited delegation of authority on project implementation.

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31. The risks envisaged and proposed mitigation measures are: (i) low institutional capacity; (ii) large turn-over of Senior Managers; (iii) un-attractiveness of tenders; and (iv) increased cost of the road rehabilitation contract: These risks are addressed in the Operational Risk Assessment Framework (ORAF).

Bank Policy Exceptions 32. The proposed additional credit necessitates an exception to the Bank’s Operational Policy governing Additional Financing for Investment Lending (OP 13.20). This Policy stipulates that the IDA provides Additional Financing only when implementation of the ongoing operation, including substantial compliance with its loan covenants, is considered Satisfactory, and the ISR ratings over the most recent 12 months, including those for Implementation Progress (IP) and Development Objectives (DO), have been consistently rated as Moderately Satisfactory (MS) or better. The proposed additional credit is for the Rwanda Transport Sector Development Project (TSDP), which was rated Moderately Satisfactory for IP and DO in March 2011 and that does not meet the 12 months requirements. Management approval for the presentation of the waiver request to the Board was received on April 20, 2011. Board approval of the policy waiver is sought as part of this Additional Financing.

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ANNEX 1: RESULTS FRAMEWORK AND MONITORING INDICATORS

RWANDA TRANSPORT SECTOR SUPPORT PROJECT

Revisions to the Results Framework Comments/ Rationale for Change

PDO

Current (PAD) Proposed 1. To improve the quality of the paved road network 2. To generate sustained employment in rural areas through road maintenance works

1. No change 2. No change

PDO indicators

Current (PAD) Proposed change* 50% of paved roads in good condition (average IRI less than 3.0 )

Roads in good and fair condition as a share of total classified roads Supplemental value: Size of the total classified network Breakdown: Kigali-Ruhengeri

Alignment with WB Core indicators

Number of permanent jobs generated annually from road maintenance works

Continued

Share of rural population with access to an all-season road (proportion, number of people with access to an all-season road)

Use of Core indicator - to be collected while establishing transport data base.

Direct project beneficiaries (number) -People living within the project influence area of the Kigali –Ruhengeri road (of which female)

Use of Core indicator – data on female proportion to be determined while establishing transport data base.

Intermediate Results indicators

Current (PAD) Proposed change* Component 1: Paved Road Rehabilitation and Maintenance

1(a) Improvement in roads network condition- Rehabilitated Kigali-Ruhengeri road in good condition (average IRI less than 3.0)

Roads rehabilitated, Non-rural Kigali-Ruhengeri (km)

Use of core indicator

1(b) Improvement in roads network condition- paved roads maintained in good condition (average IRI less than 3.0)

Roads maintained (km)

Component 2: Sector

10


Governance and Policy Support Current (PAD) Proposed change* 2(a) Improved effectiveness and efficiency of use of public resources - Number of sector agencies implementing performance agreements signed with the government

Continued - to be implement by RTDA and RMF

Implementation of this item is limited to institutions directly involved in the project. The Rwanda Civil Aviation Authority is dropped.

2 (b) Improved effectiveness and efficiency of use of public resources - MOU, sector policy matrix and road maintenance strategy adopted according to schedule in FA and being implemented Annual road maintenance budgets are at least 10% of road investment budgets Transport Master Plan

Continued Continued New - Adopted formulae for disaggregation of road maintenance funds amongst executing agencies New - Completion and adoption of a transport master plan

Ensuring balanced allocation of Road Fund revenues to the different category of the roads network

Component 3: Sector Analysis and Planning Support

3(a) Improved effectiveness and efficiency of use of public resources- statistics exist on transport costs, construction and maintenance costs; accidents, sector spending and financing, and are reflected in sector planning

Continued New Functional RTDA - Managerial and key professional staff positions filled and key standards and systems adopted

Need to strengthen the newly established Road Agency

3(b) Improved effectiveness and efficiency of use of public resource - Number of transport sector staff having completed masters degrees or equivalent in transport-related disciplines

Continued New – Completed Road and Bridge Designs and Standard Specifications manuals

Component 4: Project and Program Management Support

Improved effectiveness and efficiency of use of public

Dropped This is part of the implementation and supervision of the project and

11


resources- Project and program implemented according to PIP, disbursement and procurement plans; project audits are released timely.

does not need to be part of the Results Framework

* Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of project target value

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REVISED PROJECT RESULTS FRAMEWORK

Project Development Objective (PDO): to improve the quality of Rwanda's paved road network and to generate sustained employment in rural areas through road maintenance works.

PDO Level Results Indicators1 C

ore UOM2

Baseline Original Project Start

(2007)

Progress To Date (2011)3

Cumulative Target Values4

Frequency Data Source/ Methodology

Responsibility for Data

Collection Comments 2012 2013 2014 2015

1. 50% of paved roads in good condition (average IRI less than 3.0 )

% 23 48 50 50 Yearly

Road condition surveys

Control mission

39% o total classified roads network in good and fair condition as of 2011

2. Number of permanent jobs generated annually from road maintenance works

Number 0 0 3,000 Quarterly

Quarterly reports /Contractors statistics

Road contractors/control mission Technical Auditor/RTDA

Contracting with LCAs that would employ about 1500 people is in progress

3. Share of rural population with access to an all-season road

Propor-

tion Yearly RTDA Report RTDA

Baseline data to be collected while transport data base is established in 2012

Beneficiaries5 4. Direct project beneficiaries -People living within the project influence area of the Kigali –Ruhengeri road (of which female)

Number (%)

0 In

progress

2.1 Million (52%)

2.1 million (52%)

Yearly RTDA Report RTDA

1 Please indicate whether the indicator is a Core Sector Indicator (for additional guidance – please see http://coreindicators). 2 UOM = Unit of Measurement. 3 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value. 4 Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the “Comments” column. 5 All projects are encouraged to identify and measure the number of project beneficiaries. The adoption and reporting on this indicator is required for investment projects which have an approval date of July 1, 2009 or later (for additional guidance – please see http://coreindicators).

13

Intermediate Results and Indicators

Intermediate Results Indicators

Cor

e

Unit of Measurement

Baseline Original Project Start (2007)

Progress To Date (2011)

Target Values



Collection Comments 2012 2013

Component 1 - Intermediate Result 1: Paved Roads Rehabilitation and Maintenance - Improvement in roads network condition-

1. Roads rehabilitated, Non-rural Kigali-Ruhengeri (km)

km 16 29.05 83 83 Monthly

works supervision reports/control mission

/RTDA/Technical Auditor

2 Roads maintained (km) km 0 528 550 550 Monthly

works supervision reports/control mission

/RTDA/Technical Auditor

Component 2- Intermediate Result 2: Improved effectiveness and efficiency of use of public resource

3. Number of sector agencies implementing performance agreements signed with the government

Number None None 2 At least 2 Quarterly

Signed legislation review; Spot reviews of Signed agreements

RTDA/Technical Auditor

4. MOU, sector policy matrix and road maintenance strategy adopted according to schedule in FA and being implemented

Yes/No

Draft MOU, sector policy

matrix and maintenance strategy prepared

MOU with

development

partners prepared and under implement

ation

Yes

Satisfactory

implementation of all

three instrument

s (Yes)

Quarterly Policy implementation review

RTDA/Consultants/Technical Auditor

5. Annual road maintenance budgets are at least 10% of road investment budgets

% 50 10 10 Yearly Annual report of RTDA and RMF

RTDA and RMF

6. New- Adopted formulae for disaggregation of road maintenance funds amongst

Not

started

In progress

Yes Quarterly Quarterly report of RTDA/RMF

RTDA/RMF New indicator – to be collected

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Intermediate Results and Indicators

Intermediate Results Indicators

Cor

e

Unit of Measurement

Baseline Original Project Start (2007)

Progress To Date (2011)

Target Values



Collection Comments 2012 2013

executing agencies (yes/no)

7 . New-Completion and adoption of transport master plan (Yes/No)

In

progress Yes Yes Quarterly

Quarterly report of RTDA

RTDA

Component 3- Intermediate Result 3: Improved effectiveness and efficiency of use of public resource

8. Statistics exist on transport costs, construction and maintenance costs; accidents, sector spending and financing, and are reflected in sector planning

Yes/no None No 1

Yes 2 (Yes) Quarterly

Quarterly Project activity reports/Quality assessment of statistics produced


System improvement completed in at least 4 agencies

9 New- Functional RTDA- Managerial and key professional staff positions filled and key standards and systems adopted

Number of key staff

New institution

45 60 70 Quarterly

Quarterly report of RTDA/ Control mission


10. Number of transport sector staff having completed masters degrees or equivalent in transport-related disciplines

Number 0 0 0 50 Quarterly

Quarterly Course manager’s reports/ Degree Award Registry


11. New - Road and Bridge Designs and Standard Specifications manuals completed (Yes/No)

NO Yes Quarterly Quarterly report of RTDA

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ANNEX 2 OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)

Project Development Objective(s)

) The Project Development Objectives (PDO) are to improve the quality of Rwanda's paved road network and to

generate sustained employment in rural areas through road maintenance works. PDO Level Results Indicators:

1. Improvements in the road network condition 2. Sustained employment generation

Risk Category

Risk Rating Risk Description Proposed Mitigation Measures

Project Stakeholder Risks

Medium-L

i. Project outcomes may not complement partners’ development strategy and goals, and coordination may also be an issue.

ii. LCAs may not have the skill for maintaining roads and negotiating rates for output based maintenance contract (OBMC); LCAs may not implement contracts at anticipated rate and time; Relationships between domestic contractors that would be subletting maintenance works and LCAs may not be smooth

i. Project design and implementation shall take into account outcomes of consultations with partners and consensus built during Transport Sector Working Group (TSWG) meetings among the different stakeholders.

ii. Organize series of training programs for LCAs and domestic contractors on rate/cost structure building for maintenance activities, maintenance planning and implementation. Start with limited OBMC pilot projects in areas where there is relatively good potential for growth of LCAs. Start with term contract. Arrange consultation forum that involves potential LCAs to assess weakness, strengths and opportunities and build on existing good practices.

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Implementing Agency Risks

Medium- I

i. Large turn-over of Senior Managers and staff;

ii. Absence of competitive construction market; iii. Lack of clearly defined governance

arrangement, as well as demarcation of roles and responsibilities of implementing institutions;

iv. Weak internal and external control mechanisms;

v. Implementation capacity may be affected by the change in implementation arrangement

i. Support the preparation and implementation of the human resources development plan;

ii. Encourage the use of TAs in the transition period;

iii. Consider the use of country systems for small and medium size contracts procurement;

iv. Promote the potential of Rwanda’s infrastructure development opportunities;

v. Disseminate good practices in decentralized road management and governance;

vi. Strengthen the internal control mechanisms, including the establishment of a Road Inspectorate Unit

vii. Continue with training programs planned for the former implementation Unit.

viii. RTDA shall continue with the recruitment of additional professional staff

Project Risks

Design

Medium -L i. Limited experience in Rwanda in executing the proposed activities.

ii. Domestic contractors and LCAs may not cope- up with the output based maintenance contract shortly.

iii. The institutional development and sector

strategies preparation components contain several activities that would be challenging to the Client to implement within the project period

The AF resources will be used to hire both local and international Contractors and Consultants Flexibly adopt appropriate level of contract size and duration for domestic contractors and LCAs while introducing output based maintenance contracts Use standard design approaches and bidding documents Allow sufficient time for design and procurement and update and review original design to meet current conditions of the road Prioritize institutional development and sector strategy activities and focus on those that are at advanced stage. Prepare detailed implementation plan and implement accordingly. Determine the activities that may have to be implemented beyond this project period by the Client.

Social and Environmental

17

Medium -I

HIV/AIDS threat During construction environmental mitigation measures may not be mainstreamed in contracts and implemented

An SIA has been prepared for the project. HIV/AIDS prevention clauses are incorporated in the contract documents. HIV/AIDS awareness was conducted during training of LCAs. HIV/AIDS prevention strategy and action plan for the road sector will be prepared and implemented during and after project duration A comprehensive EIA has been carried out and ESMPs prepared for several road segments. The ESMP for the Kigali-Ruhengeri road has been updated to address Physical Cultural Resources and OP 4.11 has been triggered in this AF. The Client will implement ESMPs during construction.

Program and Donor

No other donor involved in the project

Delivery Quality

a.

Medium - I

The Implementing Agency (RTDA) may not have sufficient capacity to manage maintenance projects RMF may not provide sufficient funding for maintenance of the roads to be improved under the project Absence of proper M&E framework would risk evidence-based learning and adjustments.

Support preparation and implementation of human resource development plan for RTDA RMF has to revisit fuel levy levels as envisaged during project preparation. In the absence of sufficient collection of RM funds GoR has to allocate complementary budget for maintenance as per its undertaking during project preparation Establish reliable road data base and allocate RMF resources based on maintenance requirement Strong M&E framework incorporated in project design. Collect data on key indicators at Mid-Term Review and Project Completion Report by independent consultant

18

Overall Risk Rating at Preparation

Overall Risk Rating During Implementation

Comments

Medium – I Medium – I

The AF basically provides funding for an ongoing project. However, attention shall be given to implementation agency capacity risk and covenants implementation

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ANNEX 3: REVISED ESTIMATE OF PROJECT COSTS

1. Total project cost is US$80 million, excluding value-added tax of 18 percent. A 15 percent contingency is added to the Kigali-Ruhengeri road works.

Table 1: Total Project Costs by Component (in US$ million)

Item No Project Components

Total US$ million

of which GoR

of which IDA

of which ACGF

Total US$ million

of which GoR

of which IDA

of which ACGF

Total US$ million

of which GoR

of which IDA

of which ACGF

1 Paved Road Rehabilitation and Maintenance 56.20 20.00 4.00 32.20 64.45 20.00 7.70 36.00 67.81 20.00 9.81 38.00(a) Kigali-Ruhengeri Road Rehabilitation 32.20 0.00 32.20 39.00 0.00 3.00 36.00 45.81 0.00 7.81 38.00(b) Paved Road Maintenance 24.00 20.00 4.00 25.45 20.00 4.70 0.75 22.00 20.00 2.00

2 Sector Governance and Policy Support 2.60 0.00 2.60 1.35 0.00 0.80 0.55 2.10 0.00 2.10(a) Governance Improvement 0.30 0.00 0.30 0.10 0.00 0.10(b) Policy Implementation Support 2.30 0.00 2.30 2.00 0.00 2.00

3 Sector Analysis and Planning Support 2.20 0.00 2.20 1.15 0.00 0.70 0.45 3.67 0.00 3.67(a) Transport Planning and Monitoring Systems; Road Inventory; Road & Bridge Design Manual; Feeder Road Preparation; Support to the RMF 0.40 0.00 0.40 1.87 0.00 1.87(b) Capacity Building 1.80 0.00 1.80 1.80 0.00 1.80

4 Project and Program management support 1.20 0.00 1.20 1.05 0.00 0.80 0.25 1.60 0.00 1.60

5 Project Preparation (PPF) 0.60 0.00 0.60 0.60 0.00 0.60 0.60 0.00 0.60

Total Base Cost 62.80 20.00 10.60 32.20 68.60 20.00 10.60 38.00 75.78 20.00 17.78 38.00

Physical Contingency (Part 1a) 4.20 0.00 0.40 3.80 0.40 0.00 0.40 2.80 0.00 2.80Price Contingency (Part 1a) 2.00 0.00 2.00 0.00 1.42 0.00 1.42Total Project Cost 69.00 20.00 11.00 38.00 69.00 20.00 11.00 38.00 80.00 20.00 22.00 38.00

Original Project Cost Allocation Allocation as per FA Amendment Project Cost Allocation with AF

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Table 2: IDA H3310, Africa Catalytic Growth Fund (ACGF) TF090451 and GoR, Allocation and Disbursement Summary by Category

Category IDA Grant H3310 ACGF TF090451 GOR Contribution Original

Allocation in SDR

Amendment #1 Allocation in SDR

Actual Disbursement In SDR

Revised Allocation In SDR

Original Allocation in US$

Amendment #1 Allocation in US$

Actual Disbursement In US$

Revised Allocation In US$

Undertaking In US$

Actual Disbursement In US$

(1a) Part 1 (a) of Project: Paved Road Rehabilitation (Works, consultants’ services, and Training)

0 2,000,000 19,626.31 1,345,000 38,000,000 36,000,000 16,904,768 38,000,000 20,000,000 -

(2a) Part 1 (b) (i)of Project: Paved

Road Rehabilitation (Works, consultants’ services, and Training)

2,640,000 3,150,000 1,300,400 - -

(2b) Part 1 (b) (ii &iii) of Project: Paved Road Rehabilitation (Works, consultants’ services, and Training)

26,513.21 26,600 - 750,000 - 20,000,000 69,478

(3) Part 2 of Project: Sector Governance and Policy Support (Goods, works, consultants’ services, and Training)

1,720,000 510,000 303,126.12 1, 394,000 - 550,000 - - -

(4) Part 3 of Project: Sector Analysis and Planning Support (Goods, works, consultants’ services, and Training)

1,470,000 470,000 15.42 1, 772,000 - 450,000 - - -

(5) Part 4 of Project: Project and Program management Support (Consultants’ services, Training and Operating Costs)

800,000 500,000 332,187.63 1, 062,000 - 250,000 - - -

(6) Refund of Project Preparation Advance

400,000 400,000 238,334.18 400,000 - - - - -

(7) Unallocated 270,000 270,000 - - - - - -

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(8) Designated Account (DA-AA)

1,015,124.33 - - 1,500,000 - -

(9) Designated Account (DA-P)

(1,165.38) - -

TOTAL AMOUNT 7,300,000 7,300,000 1,933,763.82 7,300,000 38,000,000 38,000,000 18,404,768.34 20,000,000 69,478

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ANNEX 4. DETAILED DESCRIPTION OF THE PROJECT, IMPLEMENTATION STATUS AND

MODIFIED AND NEW PROJECT ACTIVITIES BACKGROUND 1. Challenges in the Transport Sector: Rwanda’s transport sector is still under-developed. Accessibility in the rural areas, where the majority of the population lives, is poor. Recent surveys indicate that about 70 percent of rural roads and 50 percent of the national paved road network require heavy maintenance or rehabilitation. Transport costs remain high, mostly because Rwanda is a land-locked country, with costs from the main ports of Mombasa and Dar-es-Salaam estimated to be at least 70 percent higher than those in the rest of the East African Community (EAC) region, which significantly raises the costs of doing business in Rwanda and accounts for about 40 percent of the cost of imported goods and 50 percent of exported goods. 2. Given these circumstances, the Government of Rwanda (GoR) in 2008 adopted strategies and policies to address the challenges. Among those implemented are: (i) adoption of a transport policy and road maintenance strategy; (ii) doubling of the road maintenance fund through an increase in fuel levy to Rwandan Francs (RWF) 62, equivalent of 10 US cents per liter; (iii) formation of the Rwanda Transport Development Agency (RTDA), and (iv) decentralization of the maintenance of rural roads to district administrations. The Transport Sector Development Project (TSDP) continues to address some of these challenges and the Additional Financing (AF) will enhance its effectiveness. 3. The rehabilitation of Kigali-Ruhengeri road and the road maintenance program targeted by TSDP are an integral part of a regional integration program that would facilitate the movement of goods and people within the neighboring countries. By the end of the Project, it is expected that substantial physical improvements will have been achieved on the national sections of the two road corridors linking Rwanda, the Democratic Republic of Congo (DRC) and Burundi to the Indian Ocean, through Tanzania or through Uganda and Kenya. THE PROJECT 4. Project Development Objectives (PDO): The PDOs of the TSDP are to improve the quality of Rwanda's paved road network and to generate sustained employment in rural areas through road maintenance works. The project supports the above objectives through its four components: (i) Paved Roads Rehabilitation and Maintenance, (ii) Sector Governance and Policy Support, (iii) Sector Analysis and Planning Support; and (iv) Project and Program Management Support. The main outcome indicators are: (i) improved condition of the road network and (ii) generation of employment. The initial PDOs and outcomes remain unchanged and there is no major change to the original project design and scope.

23

PROJECT DESCRIPTION

The Project constitutes part of the Program, and consists of the following parts:

1. Paved Road Rehabilitation and Maintenance

(a) Rehabilitation

(i) Rehabilitation of approximately 83 kilometers of Kigali-Ruhengeri section of Kigali-Ruhengeri-Gisenyi road and increasing its width to 7 metres.

(ii) Provision of technical assistance for the supervision of said rehabilitation.

(b) Maintenance

(i) Maintenance of the Huye/Butare-Kitabi road and provision of technical assistance for the supervision of the said maintenance.

(ii) Maintenance of approximately 550 kilometers of paved trunk roads network, including sections of Gatuna-Bugarama, Gitarama-Kibuye, and Kagitumba-Rusumo, Kayonza-Gisenyi roads, through execution of multi-year performance-based management contracts.

(iii) Provision of technical assistance for the supervision of said maintenance.

2. Sector Governance and Policy Support

(a) Sector Governance Improvement

Preparation and implementation of long-term performance agreements between the Recipient, the Project Implementing Entity and the Road Maintenance Fund.

(b) Transport Policy Implementation Support

(i) Carrying out of workshops and seminars relating to transport policy implementation and regional transport cooperation.

(ii) Carrying out of strategic studies for transport policy implementation.

(iii) Developing and implementing road safety action plans, improving data collection, and establishing an accident database in the Project Implementing Entity.

(iv) Developing and implementing a transport sector HIV / AIDS prevention strategy.

(v) Establishing and training local community associations in labor-intensive road maintenance.

(c) Transport Master Plan

Preparation of a transport master plan.

3. Sector Analysis and Planning Support

(a) Transport Planning and Monitoring Systems

24

(i) Establishing a transport database and monitoring and evaluation system relating to Project and Program performance, transport costs, transport industry standards, and other transport performance indicators.

(ii) Collecting transport data for planning and monitoring systems.

(iii) Acquisition of information technology equipment and materials for the monitoring and evaluation system established under Part 3 (a) (i) of the Project.

(b) Sector Training

Provision of long-term in-country training to Recipient’s transport sector professionals, local entrepreneurs, and unemployed graduates towards master’s degrees in road engineering and management and transport economics and planning.

(c) Road Inventory

Collection, storage and management of transport planning information and data.

(d) Road and Bridge Design Manuals

(i) Preparation of design and specifications manuals for roads and bridges.

(ii) Preparation of feeder roads designs, and carrying out of feasibility studies and environmental and social impact assessments for feeder roads.

(e) Road Management Tools

Introduction and customization of road management tools including road economic model, highway design model and road network evaluation tools.

(f) Capacity Building Support for the Road Maintenance Fund

(i) Acquisition of information technology equipment and materials for the Road Maintenance Fund.

(ii) Provision of training in road maintenance, management and technical and financial auditing of road maintenance projects.

(g) Strategic Sector level Studies

Carrying out a range of studies at the sector level to enhance sector capacity.

4. Project and Program Management Support

(a) Acquisition of information technology equipment and materials for and financing of Operating Costs of the Project Implementing Entity.

(b) Carrying out of technical and financial audits of the Project Implementing Entity.

(c) Training of Project Implementing Entity’s staff in accounting and financial management, procurement and contract management, and budget preparation and disbursement.

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PROJECT IMPLEMENTATION STATUS

5. Project Performance: Overall implementation of the project has accelerated after a period of poor performance. As of April 2011, expenditure and commitments were 55 percent and 96.4 percent respectively of the International Development Association/Africa Catalytic Growth Fund (IDA/ACGF) Grants. Road rehabilitation comprised 78 percent of the original project grant funding (and has risen to 91 percent with increased cost) hence the high commitment. The major activity of the project, the rehabilitation of the Kigali-Ruhengeri road is about 40 percent completed as of end of February 2011, and substantial completion is expected by March 2012, resulting in a dramatic increase in overall project commitment. Mobilization and training of the local community associations (LCAs) is completed and signing of road maintenance contracts with LCAs will start in May 2011. However, RMF was contracting out paved road maintenance contracts to small scale enterprises/contractors since 2008. Based on the assessment made during the October 2010 and January 2011 supervision missions, the project is back on track to achieve its development objectives and the performance ratings for PDO and Implementation Progress (IP) in the latest Implementation Status and Results Report (ISR) (March 2011) were upgraded to Moderately Satisfactory. It is expected that the ratings will be upgraded to Satisfactory during the next mission in June 2011 as a result of: (i) increased disbursements arising from expenditures on the road contract, which is projected to rise to 60 percent, (ii) increased engagement of LCAs in road maintenance activities, and (iii) implementation of the above two covenants. The grant funding provided by the IDA and ACGF has been used prudently. 6. In the ISR, dated March 7, 2011 (recording the status of implementation as of June 2010), the covenants that were partially complied with included: (i) adopt and implement a Financial Management Action Plan; (ii) adopt and implement a Procurement Action Plan; (iii) recruit an external auditor; (iv) adopt and implement a Sector Policy Matrix, a Sector Results Framework and Sector Medium Term Expenditure Framework; and (v) conclude at least one multi-year output-based management contract for road maintenance. Partial compliance refers to the delivery of said items, however the implementation of these covenants is an ongoing process that will end at project completion. This is therefore recognized as the Recipient being in compliance with these covenants. The March 2011 ISR indicated non-compliance with World Bank procurement guidelines for road maintenance activities, on the basis that GoR/RMF did not request clearance from the Bank on the award of the maintenance contracts, GoR applied national procurement procedures and awarded the maintenance contracts to avoid delays in contracting out maintenance contracts to Local Community Associations (LCAs), whose organization and training took longer time than expected. Given that the GoR was financing the maintenance contracts 100 percent it was not under the obligation to follow Bank procurement rules as no Bank financing was involved. This issue has now been fully resolved, since going forward; GoR will be financing specific road maintenance contracts under TSDP 100 percent, mainly through LCAs, and will be within its right to apply national procurement rules without further reference to the Bank. Good progress has also been made in complying with agreed covenants. A Transport Agency (RTDA) has been operational and a new Chief Executive has been appointed. Signing of the long term performance agreements between Ministry of Infrastructure (MININFRA) and its agencies

26

has commenced and other reforms to spur growth and better management of the road sector such as the legislation of the Roads Act have made good progress. Two covenants have to be addressed in a modified or enhanced way, due to changing circumstances during implementation. First: depositing GoR’s contribution to road maintenance works in a designated account. The GoR/RMF contributed the first tranche but due to delays in organizing LCAs, GoR committed funds by awarding maintenance contracts to local contractors under the TSDP. To streamline this arrangement GoR has requested for the modification of the arrangement for contribution of its counterpart funding to be in the form of parallel financing. As part of the AF process the financing agreement is being amended to respond to the request of the government. Additionally, GoR shall undertake to prepare an annual cash flow based maintenance plan for the maintenance contracts carried under the TSDP and deposit the monthly cash requirement in the Counterpart Funding Account, and use the proceeds to the intended purpose. GoR has also ensured that there will be sustainable flow of fund to maintenance by increasing fuel levy from four to 10 US Cents. Second: Setting up a vehicle technical inspection center under MININFRA. The center was set up but it is under the police. However, following consultation, it has been agreed that this aspect be reviewed in the context of the preparation of a Road Safety strategy, which will be developed under the Transport Master Plan. Under the new arrangement, GoR is considering setting up a Driver and Vehicle Licensing Agency, which will also have the responsibility of vehicle inspection. The intention of GoR includes conducting vehicle inspection by private sector. Stakeholder consultations are on-going and the project will provide support to this process. The establishment of the Driver and Vehicle Licensing Agency is comprehensive and beyond the scope of the original covenant, for this reason, it is proposed that, GoR will develop, as part of the Master Plan, policy recommendations and an action plan on the establishment of a Driver and Vehicle Licensing Agency. An appropriate covenant has been provided in the legal agreement to cover this change situation. 7. A mid-term review was held on October 25, 2010 and the recommendations included: (i) MININFRA to expedite the appointment of the RTDA Board as provided in the Act and harmonize the terms of service for RTDA staff; (ii) MININFRA to complete the review of relevant legislation to separate the roles of the RTDA and RMF; (iii) The Kigali Institute of Science and Technology (KIST) to twin or make such arrangements that will ensure that the program provides the best possible training for professional wishing to pursue post graduate programs in transport area; (iv) RTDA to be pro-active to ensure that the LCA training program is completed and the associations deployed; (v) MININFRA and Ministry of Finance (MINICOFEN) to mobilize funds to meet GoR's US$20 million commitment to the project; and (vi) RTDA to retain a strong team to manage the Kigali-Ruhengeri road project and specifically provide timely decisions and directions to ensure consistent progress, high quality of work, cost control and timeliness in contract delivery. During the mid-term review a revised funds requirement for each activity was conducted and this was considered as the basis for the proposed reallocation among components. The implementation of the recommendations will be followed up. APPRAISAL 8. Economic and Technical: For the Kigali - Ruhengeri road rehabilitation works, a cost-benefit analysis was conducted at appraisal stage, at a discount rate of 12 percent, the net present value (NPV) was RWF 4,314 million; and the Economic Internal Rate of Return (EIRR) was

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13.5 percent, which confirmed viability of the original planned investment. The feasibility study of the road rehabilitation project was updated in December 2008 to confirm the viability of the project after the cost over-run for the road contract was observed. Accordingly, at a discount rate of 12 percent the NPV was determined as RWF 16,278 and the EIRR was 18 percent, which confirms viability of the investment after the cost overrun. The main cause for the increase in the EIRR was the significant change in the traffic volume using the road - much higher than what was assumed during appraisal of the original project. The traffic survey conducted during the feasibility study update (second appraisal) showed a significant increase in traffic volume, with a change in Annual Average Daily Traffic (AADT) from 949 in 2005 to 2,049 in 2008. Details of the economic analysis are presented in Annex 6. 9. While the increase of the road width from 6.2 to 7 meters is one of the causes for the cost over-run, this design change will improve traffic safety and makes the road standard commensurate with the increased traffic level. 10. Going forward, some changes to the contract are anticipated. These changes result from new works to replace failed drainage structures and repair of landslides that have occurred while the contract was in progress. An addendum to the contract may be required. Nevertheless, the agreement with GoR is, as far as possible, to limit variations within the contingencies provided. 11. The additional complementary activities related to the preparation of Road and Bridge standard and specification manuals, customization and introduction of road management tools, and provision of TA and training will enhance the effectiveness of the institutional capacity building components and would help to improve the performance of the project. 12. The extent of the maintenance works remain unchanged, and as anticipated at appraisal stage, will continue to serve the purpose of preserving Rwanda’s network and ensuring sustainability. The remunerative character of community involvement in road maintenance and the integration of road maintenance into farming activities are expected to be both motivating and sustaining factors of the project. Furthermore, the road fund will offer a steady and permanent source of local financing for the roads to be maintained beyond project completion. 13. Expected Outcomes: There is no substantial change to the expected outcomes of the project. However, the intermediate outcome indicators in the Results Framework have been updated to include: (i) functional RTDA, (ii) adopted formulae for disaggregation of road maintenance fund amongst executing agencies and (iii) completed Road and Bridge Design and Standard Specifications manuals. 14. Environmental and Social Impact Assessments: The AF is to cover cost over-run of an ongoing road rehabilitation project and to prepare road and bridge design standard manuals. The road rehabilitation and maintenance works are the same as appraised and are not expected to have significant environmental impacts. The widening of the road pavement from 6.2 to 7 meters will be contained within the existing road width and right of way, and is not expected to entail changes to the original ESIA. The rehabilitation and maintenance works will be carried out along existing road alignment and no major social and environment impacts are expected, nor does this

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Additional Financing involve land acquisition/involuntary resettlement (as is the case in the original project). No change to the current environmental category (B) is anticipated. 15. At appraisal, a Social Impact Assessment (SIA) was conducted in conjunction with the Environmental Impact Assessment (EIA). The findings of the SIA concluded that project operations will have minor adverse social impacts in terms of social safeguards. The project may, however, induce the dislocation of social values resulting in the spread of Human Immunodeficiency Virus/ Acquired Immune-deficiency Syndrome (HIV/AIDS). To help the project address the HIV/AIDS threat, HIV/AIDS prevention clauses are incorporated in the contract documents and HIV/AIDS awareness was conducted during the training of LCAs. Further, an HIV/AIDS prevention strategy and action plan for the road sector will be prepared and will be implemented during and after project implementation. 16. Consultations with various stakeholders: Public consultations were held throughout the EIA and SIA processes in communities along the selected road. The results of the consultations confirmed solid support for the project. Both local governments, civil society, non-governmental organizations (NGOs), Community Based Organizations, Community Based Facilitators and groups such as women, youth, the handicap and the elderly are in favor of the project. To further improve stakeholders’ participation, the following actions will be carried out: (i) local communities will take part in road maintenance; (ii) women’s associations will take part in seminars organized under the project on transport policy and regulation, regional trade and road safety. In addition, the project includes provision for consultations with local population in the context of the road maintenance component. The objective of these consultations, which will be conducted in the local language by NGOs, is to establish strategic partnerships with local communities in order to ensure maintenance and ownership of the rehabilitated roads at the local community level. The project will provide income generating opportunities under the fee for service maintenance contracts with local communities. The safeguards document prepared (ESIA), was disclosed in-country on January 15, 2006 and submitted to InfoShop on January 14, 2006. The implementation of the rehabilitation work, which is sensitive in terms of environment and social issues, is at an advanced stage and the mid-term review did not consider the need for updating the ESIA. However, RTDA will assess the situation towards the end of 2011, and if deemed necessary will update the ESIA 17. Adverse impacts on natural vegetation which normally are associated with the operation of quarries, borrow areas and the construction of detours and access roads, will be very limited as only existing borrow/quarry sites, will be used. The maintenance works are expected to use the same burrow sites for sourcing materials and will not demand the opening-up of new burrow pits. Impact on soil erosion will be negligible, likewise, impact on stability of slopes or on sedimentation/siltation of rivers. Instead, the rehabilitation of the road will decrease erosion along the road alignment, by stabilizing slopes and providing proper drainage. The maintenance works to be carried out in the future, after completion of the rehabilitation, is not expected to induce negative impacts, rather will help to control slope stability and soil erosion. Field inspections carried out during the preparation of the ESIA revealed that landslides/rockslides from the top of the hills will remain a potential problem as a result of the geo-technical nature of the areas through which the roads pass. Emphasis should be on timely post-project maintenance activities. The implementation of the ESMPs prepared for the rehabilitation will continue.

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Future maintenance works will help control road side siltation to be caused by the anticipated continued agricultural activities in the project area. 18. Project operational manuals (POMs) will include environmental management instructions for routine maintenance, in the aim to prevent adverse social and environmental impacts, and the Client has complied with the requirements. 19. An Environmental Specialist position was added to the project management team, within the implementing institution to monitor potentially adverse environmental and social impacts of project operations. The specialist is deployed and is monitoring environmental and social safeguards compliance for all road investment operations in the sector. The Contractor is observing the ESMP requirements and the implementing institution is fulfilling its oversight responsibilities. 20. Operation Policy OP 4.11 (Physical Cultural Resources) is being triggered for this AF; the Environmental Impact Assessment (EIA)/Environmental and Social Management Plan (ESMP) for the Kigali- Ruhengeri road has been updated to ensure that the civil works carefully avoid existing cultural assets, such as burial and archeological sites. The document was disclosed in country and in the InfoShop on April 21, 2011. 21. Guidelines for “chance finds” procedure will be integrated into the contracts for construction and road maintenance consultants. These include development of a cultural property management plan if physical cultural resources are found, in accordance with the government of Rwanda’s policies and guidelines. 22. Safeguard-related risks: No salient social impacts have been identified by the SIA. No negative long term environmental impacts are foreseen with regard to this project. The project rating remains Category B as assessed during appraisal and no change is expected. The Task Team will however continue monitoring the progress to ensure that all mitigation measures for the roads activities are implemented. 23. Financial Management: This review of the Financial Management of the Rwanda Transport Development Agency is based on an assessment carried out in February 2011, which rates residual FM risk as Medium-L (See Annex 2). The auditors expressed an unqualified audit opinion of the financial statements for the Transport Project Implementation Unit (CGPT) for the period ended December 31, 2009, in accordance with the Financing Agreement. They also expressed an unqualified opinion that the designated account statements present a true and fair view for the year in accordance with IDA and ACGF Grants requirements. The project has continued to prepare and submit satisfactory unaudited interim financial statements, the latest being the IFR for the period ended December 31, 2010. The additional financing will continue to use the existing funds flow mechanism and will use the designated account already in place. The FM arrangements of the RTDA meet the Bank’s minimum requirements for project FM as per OP/BP 10.02. 24. Procurement: All aspects of procurement procedures have been managed professionally and followed. The procurement arrangements under the proposed AF are expected to be the same

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as those under the ongoing TSDP. However, all activities funded after approval of the AF will use the more up-to-date procurement guidelines of January 2011. To further strengthen the procurement system, it is recommended to: (i) establish an internal tender committee as per Ministerial Order N°001/08/10/MIN of 16/01/2008, Establishing Regulations on Public Procurement and Standard Bidding Documents; (ii) put in place a Procurement Manual; (iii) put in place RTDA website; (iv) fully staff the procurement unit by finalizing recruitment of the Procurement Specialist and a Procurement Assistant; and (v) monitor and document impact of limited delegation of authority on project implementation. Recommended actions (i), (ii) and (iv) will need to be in place three months after effectiveness, while action (iii) will need to be in place four months after effectiveness. Action (v) will be monitored during project implementation. The procurement manual will be developed as an annex to the Project Implementation Manual. 25. Benefits and Risks: The outcome of the economic analysis confirms the economic viability of the project. Further, the AF will ensure the improvement of the movement of national and transit traffic along the Kigali – Gisenyi corridor (the link between Kigali and Goma, in DRC), by supporting the completion of the ongoing rehabilitation of the Kigali-Ruhengeri road. The maintenance works will continue improving the condition of the paved roads network and preserving the road asset. Further, the proposed preparation of Road and Bridge design standards and customization of road management tools will enhance sector governance and institutional development aspects by instilling effectiveness and efficiency in the use of resources allocated for the development and maintenance of Rwanda’s road network. 26. The risks envisaged and proposed mitigation measures are: (i) low institutional capacity: The TSDP provides for capacity building and the AF will enhance it through engagement of TAs to support operations; (ii) large turn-over of Senior Managers: This is especially the case in MININFRA, however, the establishment of RTDA is expected to reduce this risk.; (iii) un-attractiveness of tenders; poor response to both consultancy and works tenders has been noted. It is proposed to convene a construction industry forum to discuss the matter and market Rwanda’s potential supported by a deeper analysis of the situation; and (iv) increased cost of the road rehabilitation contract: This is difficult to determine at this stage. However, the contract has a contingency provision and the AF enhances it. Furthermore, with increased revenue from the Road Fund, GoR could increase its contribution for the activities it is providing under counterpart funding and thus release IDA/ACGF funding to pay for cost increases in the contract.

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ANNEX 5: PROCUREMENT ARRANGEMENTS A) General 1. Procurement of Works: Outstanding works to be procured under this project and financed from the contribution of the Government of Rwanda (GoR) would include: paved road maintenance works (pluri-annual contract). The procurement will be done using the Bank’s Standard Bidding Documents (SBD) for all International competitive Bidding (ICB) while for National Competitive Bidding (NCB) National SBD satisfactory to the Bank will be used. 2. Procurement of Goods: Outstanding goods to be procured under this project and financed by the International Development Association (IDA) would include Information Technology equipment and software for: (i) a transport database and monitoring and evaluation (M&E) system, and (ii) a management information system. 3. Selection of Consultants: The consulting services to be procured under this project and financed by IDA are for the supervision of civil works construction, technical assistance (TA), preparation roads and bridges standard and specification, human resources development plan, and the design and implementation of transport-related studies. Short lists of consultants for services, estimated to cost less than US$100,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 4. Operational Costs: In the amount of US$500,000 which would be financed by the project through the proposed restructuring would be procured using the implementing agency’s administrative procedures which were reviewed and found acceptable to the Bank. This amount is in addition to the existing allocation under the program and project management component. 5. Applicability of the new procurement guidelines: All procurement not finalized by Concept Memorandum approval date of November 22, 2011 will apply new procurement and anti-corruption guidelines regardless of whether they are paid from the new or old money. For contracts included in the original project’s Bank approved procurement plans, for which invitations to bid were issued before November 22, 2011, the original guidelines may apply. Such exception should be cleared by the Bank. 6. Guidelines Applicable for Parallel Financing Arrangements: The Bank will allow the Government to apply its own procurement procedures in the procurement of goods and services fully financed from its own resources in accordance with the following principles (a) Under Article 1.8 of the Consultant Guidelines the Bank may agree to the use of the

public procurement systems of the Borrower country - referred to as the Use of Country System (UCS) -- for the selection of consultants (including individuals) under paragraph 3.12 of the Guidelines. In procuring consulting services not financed from such sources but included in the project scope of the loan agreement, the Borrower may adopt other rules and

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procedures. In such cases, the Bank shall satisfy itself that: (i) the procedures to be used will fulfill the Borrower’s obligations to diligently and efficiently implement the project, and will result in the selection of consultants who have the required qualifications; (ii) the selected consultant will carry out the assignment in accordance with the agreed schedule, and (iii) the scope of the services is consistent with the needs of the project.

(b) Under Article 1.5 of the Procurement Guidelines the Bank may agree to the use of the

public procurement systems of the Borrower’s country - referred to as the UCS for procurement under paragraph 3.20 of the Guidelines. In such cases, the Loan Agreement between the Borrower and the Bank describes the applicable procurement procedures of the Borrower, and the Bank shall be satisfied that the procedures to be used will fulfill the Borrower’s obligations to cause the project to be carried out diligently and efficiently, and that the goods, works and non-consulting services to be procured:

(i) are of satisfactory quality and are compatible with the balance of the project; (ii) will be delivered or completed in timely fashion; and (iii) are priced so as not to affect adversely the economic and financial viability of

the project.

B. Procurement Plan 7. The Recipient, at appraisal, developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on February 17, 2011 and is available at Rwanda Transport Development Agency (RTDA), KICUKIRO P.O. Box 6674 Kigali, Rwanda. It will also be available in the Project’s database and in the Bank’s internal website and on UNDB. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

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PROCUREMENT PLAN

I. GENERAL

1. Project information: Country: Rwanda Borrower: Republic of Rwanda Project Name: Transport Sector development Project

Loan/Credit No(s). GRANT No H331-RW, Credit No Project Implementing Agency (PIA): Ministry of Infrastructure/Road Transport Development Agency

Donor/Financier (s):

International Development Agency (IDA): US$22, 000, 000

Africa Catalytic Growth Fund (ACGF): US$38, 000, 000

Government of Rwanda: US$20,000,000

Date of signature of credit/grant agreement: 10/05/2007

Date of effectiveness: 12/28/2007

Date of initial closure: 06/30/2012

Date of proposed revised closure: 12/31/2013

2. Bank’s approval Date of the Procurement Plan: Original: June 2007; Revision 1:

June 1, 2009

3. Date of General Procurement Notice: July 12, 2008.

4. Period covered by this procurement plan: January 2011- December 2013

II. GOODS, WORKS, AND NON-CONSULTING SERVICES 1. Prior Review Thresholds: Procurement decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement: Thresholds for applicable procurement methods (not limited to the list below) will be determined by the Procurement Specialist /Procurement Accredited Staff based on the assessment of the implementing agency’s capacity.

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No Procurement

Method (Goods and Works)

Threshold in US Dollars

Prior Review Threshold in US Dollars

Comments

1 ICB (Goods) ≥500,000 per contract ≥500,000 per contract 2 LIB (Goods) No specific ceiling ≥500,000

.

3 NCB (Goods) ≥25,000 < 500,000 Contracts subject to Prior review in this category may be identified by the World Bank on a case by case basis

4 Shopping (Goods) < 25,000 per contract N/A 5 ICB (Works) ≥5, 000,000 per contract ≥5 000,000 per contract 6 NCB (Works) < 5, 000,000 per contract Contracts subject to

Prior review in this category may be identified by the World Bank on a case by case basis

7 Shopping (Works) < 25,000 per contract N/A 8 ICB (Non-

Consultant Services)

≥ 500,000 per contract ≥500,000 per contract

2. Pre-qualification: Not Applicable

3. Proposed Procedures for CDD Components (as per paragraph. 3.17 of the

Guidelines): Not Applicable

4. Reference to Project Procurement Manual: A project Operational Manual was prepared prior to grant effectiveness.

5. Any Other Special Procurement Arrangements : NA

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6. Procurement Packages with Methods and Time Schedule

1 2 3 4 5 6 7 8 Ref. No.

Contract Description Estimated Cost, US$

Million

Procurement Method

Prequalification (yes/no)

Domestic Preferenc

e (yes/no)

Review by Bank

Expected Bid-Opening

1. Paved road periodic and routine maintenance works(pluri-annual contracts, including LCAs-under IDA Grant - to be completed before June 2013)

1.5 NCB No No Post June 2011,

Multiple contracts.

Community to be engaged from closer vicinity of the specific roads to be maintained. LCAs could be directly contracted.

2. Paved road maintenance works(pluri-annual contracts- under RMF/GoR)

2.09 NCB No No NA June 2011, Multiple contracts

3 Paved road routine maintenance works Local Community Associations (LCAs) (pluri-annual contracts-under RMF/GoR Grant - to be completed before June 2013)

4.0 Direct Contracting

No No NA June 2011 Community to be engaged from closer vicinity of the specific roads to be maintained.

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4.

IT Equipment and Software for databases and Management Information System,

0.15 LIB No No Post June 2011

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III. SELECTION OF CONSULTANTS

1. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants:

Selection Method (Consultants)

Threshold Prior Review Threshold And other criteria

Comments

Quality and Cost Based Selection (QCBS)

Selection method and threshold are based on contract nature see para 2.1 Guidelines

≥ $ 200 000 per contract

Quality Based Selection (QBS)



Least Cost Selection (LCS)



Selection Based on the Consultants Qualification (CQS)



Single Source (SSS) (Firms)

Selection method and threshold are based on contract nature see para 3.8-3.11 Guidelines Selection of Consultants.

All Contracts

Individual Consultant (IC)

See section V Guidelines selection and Employment of Consultants

≥ $ 100 000 per contract , All TORs

2. Short list comprising entirely of national consultants: Short lists of consultants for services, estimated to cost less than US$100,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 3. Any Other Special Selection Arrangements: NA

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4. Consultancy Assignments with Selection Methods and Time Schedule

1 2 3 4 5 6 7

Réf. No.

Description of Assignment

Estimated Cost, US$

Selection Method

Review by Bank (Prior/Post)

Expected Proposal

Submission Date

Comment

1 Maintenance Works Supervision (pluriannual contract- under IDA grant )

500,000 QCBS Prior May 2011 Supervision of periodic and routine maintenance works Community routine maintenance supervision, To be completed before June 2013

2 Maintenance Works Supervision (pluriannual contracts- under RMF/GoR)

1,500,000 QCBS NA May 2011 Multiple contracts: Supervision of periodic and routine maintenance works Community routine maintenance supervision,

3 Transport sector HIV preventing strategy and action plan

50,000 individual consultant

Post March 2011

4 Technical assist, Transport database, M&E system, transport costs

250,000 IC Prior May 2011 Three different contracts

5 Design and Implementation of transport Safety Action Plan (SSATP), Identification study and Implementation

500,000 QCBS Prior April 2011

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6 Technical Audit for road maintenance

100,000 QCBS Post May 2011 There are 2 technical audit planned, one in 2011 and the other in 2012

7 Financial Audit 2010

16,000 QCBS Post 05/03/2011 There are 3 financial audits planned, one in 2010 and the second in 2011 and the last in 2012.

8 Preparation of Roads and Bridges Design and Specification Manuals and Customization and Introduction of Road Management Tools (RED, HDM, RONET)

1,000,000 QCBS Prior May 2011

9 Needs Assessment and Development of Human Resources Plan Study for RTDA and TA for implementation support

300,000 QCBS Prior April 2011

10 Study for Updating Road Fund Allocation Formulae and Sensitization of Stakeholders

150,000 CQS Post June 2011

11 TA to MININFRA in support of program development and strategic studies (Job Harmonization

150,000 CQS Post June 2011

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- Ratio of salary others to be determined)

12 Project Management Services

500,000 IC Prior if above $100,000

Continuous contracts

Several short-term TA ICs

13 Design and preparation of bidding document, feasibility and ESIA for feeder roads (design about 100 km & separate feasibility & ESIA-separate contracts)

370 ,000 QCBS Post July 2011 Two contracts

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ANNEX 6: ECONOMIC ANALYSIS BASED ON UPDATED COSTS

1. A feasibility study of the road rehabilitation project was conducted by an international consultant in December 2008 to confirm the economic viability of the project after the cost over-run for the road contract was observed. 2. The consultant carried out: (i) traffic analysis, (ii) calculation of vehicle operating cost (VOC), (iii) estimation of investment cost, (iv) estimation of maintenance cost, and (v) economic viability analysis by running the highway development management model version 4 (HDM-4). The study has determined the internal rate of return (IRR) and net present value (NPV) for three options of interventions. The discount rate applied was 12 percent, which is commonly used to determine the NPV of road projects funded by international donors, such as the European Development Fund. Sensitivity analysis was carried out for a reduction of traffic by 15 percent and 25 percent, coupled with 15 percent cost increase. 3. The traffic survey and analysis conducted during the feasibility study update (second appraisal) showed a significant increase in traffic volume, with a change in Annual Average Daily Traffic (AADT) from 949 in 2005 to 2,049 in 2008. 4. The analysis considered the following three options of road improvement interventions: (i) option 1 – rehabilitation and strengthening: complete rehabilitation of 37.5 km of road and strengthening the rest of the section with 4 cm Asphalt Concrete (AC) wearing/surface course, with widening of the carriageway from 6.2 to 7 meters; (ii) option 2 – rehabilitation with 5 cm AC wearing/surface course over 20 cm gravel base course, with widening of the carriageway from 6.2 to 7 meters; and (iii) option 3 – rehabilitation with 4 cm AC wearing/surface course over 20 cm gravel base course, with widening of the carriageway from 6.2 to 7 meters. 5. The results of the economic analysis are presented in Table 1 and Table 2.

Table 1: Economic Analysis Summary – Base Case - Kigali- Ruhengeri Section

Options NPV IRR Option 1- Rehabilitation and strengthening 14,956 17.3% Option 2 – Rehabilitation with 5 cm AC 16,278 18.0% Option 3 – Rehabilitation with 4 cm AC 17,827 18.8%

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Table 2: Sensitivity Analysis - Kigali- Ruhengeri Section

Options IRR with 15% Cost Increase and 15% Traffic Reduction

IRR with 15% Cost Increase and 25% Traffic Reduction

Option 1- Rehabilitation and strengthening

13.7% 11.3%

Option 2 – Rehabilitation with 5 cm AC

14.3% 11.9%

Option 3 – Rehabilitation with 4 cm AC

15.1% 12.6%

6. The economic analysis for the rehabilitation of the Kigali – Ruhengeri road shows satisfactory economic viability results, for the three options. The IRR for the rehabilitation project surpasses largely the desired minimum rate of 12 percent. 7. Likewise, during sensitivity analysis, with a 15 percent increase of cost and 15 percent reduction of traffic, the IRR remains satisfactory. As well, with a 25 percent reduction of traffic, the IRR for the rehabilitation of the Kigali-Ruhengeri road is about 12 percent. 8. The viability of the rehabilitation of the Kigali-Ruhengeri section doesn’t vary significantly for the three options. However, to maintain consistency with the ongoing rehabilitation of the Ruhengeri-Gisenyi section, it was preferable to rehabilitate the Kigali-Ruhengeri section with 5 cm asphalt concrete wearing/surface course. 9. The analysis also suggested that the widening of the carriageway of the Kigali-Ruhengeri section to 7 meters width and rehabilitation of the entire Kigali- Gisenyi road with the same standard will improve the safety condition and allow smooth movement of traffic between different zones of Rwanda and neighboring countries. Further, the impact of the improvement of this road on the development of tourism in the northern and western part of the country is considered to be significant. 10. The economic analysis results suggest that the rehabilitation and widening of the Kigali-Ruhengeri section and the positive socio-economic impact justifies the implementation of the rehabilitation.