document of the world...
TRANSCRIPT
Document of The World Bank
Report No: 60006-AFR
PROJECT PAPER
ON A PROPOSED ADDITIONAL CREDIT
IN THE AMOUNT OF SDR 18.6 MILLION
(US$30 MILLION EQUIVALENT)
TO THE REPUBLIC OF KENYA
AND
A PROPOSED RESTRUCTURING OF THE PROJECT
FOR THE
REPUBLIC OF KENYA CREDIT (CREDIT 4148-KE)
UNITED REPUBLIC OF TANZANIA CREDIT
(CREDIT 4149-TA)
REPUBLIC OF UGANDA CREDIT (CREDIT 4147-UG)
AND
REPUBLIC OF RWANDA GRANT
(GRANT 202-RW)
FOR THE
EAST AFRICA TRADE AND TRANSPORT FACILITATION PROJECT
May 27, 2011 Transport Sector Regional Integration Department Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS (Exchange Rate Effective April 30, 2011)
Currency Unit = Kenya Shilling (KES) KES 84.59 = US$1
US$0.616918 = SDR 1
FISCAL YEAR July 1 – June 30
ABBREVIATIONS AND ACRONYMS
AF AfDB
Additional Financing African Development Bank
ARAP Abbreviated Resettlement Action Plan CBS Community Based System CBD Central Business District CCTTFA Central Corridor Transit Transport Facilitating Agency CGPT Cellule de Gestion des Projets et Programmes de Transport (Project
Management Unit for Transport Programs) CU Customs Union DCA Development Credit Agreement DfID Department for International Development DO Development Objective DP Development Partner EABC East Africa Business Council EAC East Africa Community EARA East Africa Revenue Authority EATTFP East Africa Trade and Transport Facilitation Project ECT Electronic Cargo Tracking EIA Environmental Impact Assessment EIRR EMP
Economic Internal Rate of Return Environmental Management Plan
ERP Enterprise Resource Planning ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan ESW Electronic Single Window FM Financial Management GAC Governance and Anti-Corruption GoK Government of Kenya GoR Government of Rwanda GoT Government of Tanzania GoU Government of Uganda IA Implementing Agencies EARA East Africa Revenue Authority IBRD International Bank for Reconstruction and Development ICD Inland Container Depot ICT Information and Communications Technology
IDA International Development Agency IFC International Finance Corporation IFR Interim Financial Report IMO International Maritime Organization IP Implementation Progress ISS Integrated Security System ISPS International Ships and Ports Security KPA KRA
Kenya Ports Authority Kenya Revenue Authority
KRC Kenya Railways Corporation KRPS Kenya Railways Pension Scheme KE Republic of Kenya KeNHA Kenya National Highways Authority KenTrade Kenya Trade Network Agency KES Kenya Shilling MoPW Ministry of Public Works MoWT Ministry of Works and Transport MoR Ministry of Roads MoT Ministry of Transport MS Moderately Satisfactory NEMA National Environment Management Authority NCTTCA Northern Corridor Transit Transport Coordinating Authority NSW National Single Window OP/BP Operational Policy / Bank Procedure ORAF Operational Risk Assessment Framework OSBP One Stop Border Posts PAD Project Appraisal Document PAP Project Affected Persons PCBS Port Community Based System PDO Project Development Objectives PIT Project Implementation Team PIU Project Implementing Unit PMI Project Monitoring Indicators PP Project Paper PPE Personal Protective Equipment PRG Partial Risk Guarantee QER Quality Enhancement Review RAP Resettlement Action Plan RDA Rwanda Development Authority ReMU Resettlement Management Unit RIEPA Rwanda Import and Export Promotion Agency RoW Right of Way RRA Rwanda Revenue Authority RTDA Rwanda Transport Development Agency RVR Rift Valley Railways RW Republic of Rwanda SIA Social Impact Assessment SOE Summary of Expenditure
SSATP Sub-Saharan Africa Transport Policy Program STC Seamless Transport Committee TAFFA Tanzania Freight Forwarders Association TANROADS Tanzania National Roads Agency TEU Twenty-Foot Equivalent Units TFF Trade Facilitation Facility TMEA Trade Mark East Africa TPA Tanzania Ports Authority TRA Tanzania Revenue Authority TSDP Transport Sector Development Project TZ United Republic of Tanzania UK United Kingdom UG Republic of Uganda UOM Unit of Measurement URA Uganda Revenue Authority URC Uganda Railway Corporation US$ United States of America Dollar WCO World Customs Organization
Regional Vice President: Obiageli Katryn Ezekwesili Country Director: Yusupha Crookes
Sector Director:Sector Manager:
Jamal Saghir Supee Teravaninthorn
Task Team Leader: Solomon Muhuthu Waithaka
AFRICA
EAST AFRICA TRADE AND TRANSPORT FACILITATION PROJECT
PROJECT PAPER FOR ADDITIONAL FINANCING AND RESTRUCTURING PROJECT PAPER079734
CONTENTS
Additional Financing Data Sheet ......................................................................................... i I. Introduction ..................................................................................................................1 II. Background and Rationale for Additional Financing ..................................................2 III. Proposed Changes ........................................................................................................6 IV. Appraisal Summary for the Project............................................................................14
Annex 1: Revised Results Framework and Monitoring Indicators .................................. 23
Annex 2: Operational Risk Assessment Framework (ORAF) ......................................... 30
Annex 3: Detailed Description of Modified and New Project Activities ........................ 33
Annex 4: Proposed Governance Action Plan................................................................... 53
Annex 5: Financial Management ..................................................................................... 54
Annex 6: Revised Estimate of Project Costs ................................................................... 62
i
AFRICA
EAST AFRICA TRADE AND TRANSPORT FACILITATION PROJECT
ADDITIONAL FINANCING DATA SHEET
Basic Information - Additional Financing (AF) Country Director: Yusupha Crookes Sector Manager/Director: Supee Teravaninthorn/Jamal Saghir Team Leader: Solomon M. Waithaka Project ID: P121354 Expected Effectiveness Date: Kenya: October 22, 2011 Tanzania: N/A Uganda: N/A Rwanda: N/A Lending Instrument: Specific Investment Loan (SIL) Additional Financing Type: Financing gap
Sectors: Railways (40%); General Public Administration (20%); General transport sector (40%) Themes: Trade facilitation and market access (P); Regional Integration (S) Environmental category: A - Full Assessment Expected Closing Date: September 30, 2014 Joint IFC: No Joint Level: N/A
Basic Information - Original Project Project ID: P079734 Environmental category: B - Partial
Assessment Project Name: East Africa Trade and Transport Facilitation Project (EATTFP)
Expected Closing Date: September 30, 2014
Lending Instrument: Specific Investment Loan Joint IFC: Yes Joint Level: Railway
Project Financing Data [ ] Loan [ X ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Standard IDA Credit terms
AF Financing Plan (US$m) Source Total Amount (US$m)
Total Project Cost: - Kenya - AF Co-financing: Borrower:
Total Bank Financing: IBRD IDA New Recommitted
30.00
17.93
30.00 30.00
ii
Client Information Recipient: Republic of Kenya Responsible Agency: Ministry of Transport Contact Person: Duncan Hunda Telephone No.+ 254 20 2729000 Fax No.+ 254 20 2731365 Email: [email protected] Recipient: United Republic of Tanzania Responsible Agency: SUMATRA Contact Person: Ernest Tarimo Telephone No. +255 22 2197507 Fax No. +255 22 2116697 Email: [email protected] Recipient: Republic of Uganda Responsible Agency: Ministry of Works and Transport Contact Person: Benon Kajuna Telephone No.+ 256 772 418 993 Fax No. +256 41 320135 Email: [email protected] Recipient: Republic of Rwanda Responsible Agency: Ministry of Infrastructure Development Contact Person: Olivier Kabera Telephone No.+ 250 78 863 8410 Fax No. Email: [email protected]
Estimated Disbursements (Bank FY/US$m)FY 2012 2013 2014 2015
Annual 0.0 6.0 10.0 14.0 Cumulative 0.0 6.0 16.0 30.0
Project Development Objectives and Description
Original Project Development Objectives: (i) improve trade environment through the effective implementation of the East Africa Community (EAC) Customs Union (CU) Protocol; (ii) enhance transport and logistics services efficiency along key corridors by reducing non tariff barriers and uncertainty of transit time; and (iii) improve railway services in Kenya and Uganda.
Revised Project Development Objectives: (i) enhance efficiency of customs agencies' clearance processes, for the EAC Partner States participating in the East Africa Customs Union, to facilitate trade; (ii) improve efficiency and reliability of transport and logistics services along the key corridors; and (iii) enhance safety in identified areas and reduce the Recipient’s fiscal transfers to railway institutions by rationalizing the work force on the Kenya-Uganda railway.
iii
Project description: Component 1- Support to EAC Customs Union Implementation through: (a) the strengthening of the EAC Secretariat; (b) regional CU implementation; and (c) support to Customs Department at national level (Kenya, Rwanda and Uganda). Component 2- Institutional Support for Transport Facilitation through: (a) strengthening of the Northern Corridor Transit Transport Coordination Authority; (b) support to Authorities in establishing an appropriate management mechanism, Central Corridor Transport Facilitation Agency, for the Central Transport Corridor connecting Dar-es-Salaam with the Great Lakes countries; (c) support to the implementation of the EAC Protocol on inland transport; (d) support to the implementation of regional/national transport regulation (Kenya, Rwanda, Tanzania and Uganda); and (e) project monitoring and coordination. Component 3- Investment Support for Trade and Transport Facilitation through: (a) enhancing security and providing IT investment to improve operations efficiency at the ports of Mombasa and Dar-es-Salaam; (b) trade flows through the main transport corridors through improved load security and control (Kenya, Tanzania, Uganda and Rwanda); (c) financing establishment of key joint border posts at main cross-border posts within the region; and (d) investment in Inland Container Depots (ICD) and intermodal platforms (Tanzania, Uganda and Rwanda). Component 4 - Support to Kenya and Uganda Railways Concessions through: (a) technical support to Kenya Railways Corporation (KRC) and the Uganda asset holding company; (b) the retrenchment and social mitigation of staff in Kenya; (c) the establishment of a Pension Fund for the staff of KRC; (d) the implementation of a Kenya Resettlement Action Plan (RAP); and (e) the provision of Partial Risk Guarantees to Rift Valley Railway Consortium to backstop Government of Uganda/ Uganda Railway Corporation and Government of Kenya/ KRC termination payment obligations under the two Concession Agreements. Project components supported by the Additional Financing: The additional financing will finance specific additional activities to support: (a) the implementation of the updated RAP and the updated Environmental Impact Assessment (Component 4: Support to Kenya and Uganda Railways Concessions); (b) Equipment investment at the Port of Mombasa; and (c) the construction of weighbridges (both under Component 3: Investment Support for Trade and Transport).
iv
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 [X]Yes [ ] 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? N/A
[ ]Yes [X] No [ ]Yes [ ] No
Conditions and Legal Covenants: Financing Agreement Reference
Description of Condition/Covenant Date Due
Dated Covenants
Schedule 2 – Section I – E paragraph 5
(i) To oversee the day to day implementation of the Updated RAP, the Recipient shall; (a) not later than September 30, 2011, establish and thereafter maintain until completion of the Project, a Resettlement Management Unit (ReMU) comprising technical specialists as may be agreed with the Association, including a resettlement expert, an engineer, relocation expert, legal expert, communication expert, project accountant, secretary, office assistant and security officer all with qualifications and experience satisfactory to the Association; and (b) ensure that ReMU has adequate staffing and resources to ensure effective implementation of the Updated RAP
September 30, 2011
Schedule 2 – Section I – E paragraph 4
(ii) The Recipient shall, not later than July 1, 2012: (a) open and maintain a Project account (Project Account) in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment; (b) thereafter, deposit into the Project Account such amounts as shall be required to pay its portion of the contribution for the implementation of the
July 1, 2012
v
Updated RAP; (c) make payments for the implementation of the Updated RAP, out of the Project account in accordance with the format and modality agreed upon with the Association, and in accordance with the guidelines established in the Updated RAP; and (d) ensure that funds deposited into the Project Account shall be exclusively used to finance payments made, or to be made for the implementation of the Updated RAP
Schedule 2 – Section V. Other Undertakings
(iii) KPA to maintain, until the completion of the Project, in a commercial bank, a separate account under terms and conditions acceptable to the Association, (“Counterpart Fund Account”), into which it shall deposit from time to time from its own resources, itscounterpart contribution corresponding to its share of the cost of implementation of its respective part of the Project for each quarter.
60 days after the effectiveness date
Additional Financing Effectiveness Conditions
Article V 5.01 (b)
(iv) The Recipient has updated the Project Implementation Manual, in form and substance satisfactory to the Association.
Article V 5.01 (a)
(v) The respective Subsidiary Agreement has been executed on behalf of the Recipient and each Project Implementing Entity.
Conditions of Effectiveness under the Amendment to DCA for Credit 4148-KE
Last paragraph of the Amendment Letter
(vi) KenTrade completes the preparation of financial, procurement and operational manuals for the agency, acceptable to the Association.
Last paragraph of the Amendment Letter
(vii) GoK signs a Subsidiary Agreement with KenTrade for the implementation of the National Single Window.
1
I. Introduction 1. This Project Paper (PP) seeks the approval of the Executive Directors to: (i) provide an additional financing (AF) in an amount of SDR 18.6 million (US$30 million equivalent) to the Republic of Kenya, for the East Africa Trade and Transport Facilitation Project (EATTFP), P079734 (Credits: 4148–KE); (ii) restructuring of the EATTFP project and (iii) extension of the project closing date by three years from September 30, 2011 to September 30, 2014 in all four countries. 2. The proposed additional financing is requested to help bridge the financing gap resulting from net scale up of activities as part of the project restructuring and anticipated cost overruns, due mainly to inflation since the project was appraised in 2005. The cost has arisen as a result of three-fold increase in the number of project affected households to be resettled in Kibera and Mukuru in Kenya, whose number has risen from 3,500 in 2005 when the Resettlement Action Plan (RAP) was first prepared to 10,006 in 2010. The delay in RAP implementation was mainly due to post-election violence and conflicts, and the need to include a wider “protection” or safety zone in light of high density occupation along the railway tracks.1 The updated RAP was disclosed in January 2011. In addition, the restructured activities and the projected higher cost of civil works and installations contracts apply to all four participating countries. The affected contracts involve the implementation of: (i) resettlement and safety infrastructure covered in the RAP in Kenya; (ii) One Stop Border Posts (OSBP) – in three countries; (iii) Port Integrated Security Systems (ISSs) – Kenya and Tanzania; (iv) Weighbridges – Kenya and Tanzania; (v) Electronic Cargo Tracking (ECT) – Uganda and Rwanda; and (vi) Railway Internal Container Depot (ICD) – Uganda. 3. The proposed restructuring will result in changes to the project’s: (i) development objectives (DO) and outcomes; (ii) implementing agencies in a few cases; (iii) results framework; (iv) scope of the RAP and as such, change in safeguards category from B to A; (v) activities, with some being dropped; and (vi) credit closing date. Details of the changes are presented in Annex 3. Furthermore, it is proposed to pursue current engagements with the East African Community (EAC) Secretariat and corridor authorities in order to facilitate a more proactive role for them in coordinating the regional integration agenda (of the project) and monitoring.
4. The proposed AF meets the criteria as defined in Operational Policy/Bank Procedure (OP/BP) 13.20 and the proposed project restructuring is consistent with the guidelines for Processing Restructuring of Investment Projects dated November 2009 and revised March 2010. 5. Parallel Financing: Department for International Development (DfID)/Trade Mark East Africa (TMEA) proposes to provide a UKP20 million (about US$30 million) grant to finance the construction of three OSBP with parallel financing (with the
1 In November, 2009 a serious train derailment in the Mashimoni section of Kibera resulted in serious human injury and deaths attributed largely to high-density occupation of the railway corridor. Consequently, the government of Kenya (GoK) delineated a “protection” or safety zone of 40 meters that would be cleared of people and structures.
2
concurrence of relevant governments). These are located along the Kenya/Uganda, Kenya/Tanzania and Uganda/Tanzania borders. Financing Agreements will be signed between TMEA and concerned governments.
II. Background and Rationale for Additional Financing Background 6. The project was approved by the Bank’s Board of Executive Directors in December 2005 and became effective March 2006 in Rwanda and Tanzania; April 2006 in Kenya; and April 2007 in Uganda with a current closing date of September 30, 2011. The project financing from the International Development Association (IDA) comprises: (i) a grant for Rwanda in the amount of SDR 10.4 million (US$15 million); and credits of (ii) SDR 83.3 million (US$120.62 million) for Kenya; (iii) SDR 25.5 million (US$37 million) for Tanzania; and (iv) SDR 18.2 million (US$26.4 million) for Uganda. An additional IDA Partial Risk Guarantee (PRG) of US$60 million was provided for the Railway Concession, and within the Bank, the International Finance Corporation (IFC) is taking the lead for the Railway Concession component. Although the PRG has not been utilized, under the restructured concession, the group of seven lenders and Rift Valley Railways (RVR) has expressed the need for the guarantee and plan to make it effective. 7. The original project development objectives (PDO) of the EATTFP are as follows: (i) improve trade environment through the effective implementation of the EAC Customs Union (CU) Protocol; (ii) enhance transport and logistics services efficiency along key corridors by reducing non tariff barriers and uncertainty of transit time; and (iii) improve railway services in Kenya and Uganda. This was to be achieved through the following four components: (i) support to EAC CU implementation; (ii) institutional support for Transport Facilitation; (iii) investment support for Trade and Transport Facilitation; and (iv) support to the Kenya and Uganda joint Railways Concessions. 8. The related original outcome indicators are: (i) harmonized legal and regulatory customs framework established and enforced, leading to an effective CU and free trade area by the end of the project; (ii) Rwanda meets the technical requirements to become a member of EAC CU by the end of the project; (iii) corridor institutions function along the Northern and Central corridors, main border posts operations are facilitated and ports’ compliance with security standards is improved; (iv) total transit time from ports through main corridors and main border crossings has significantly decreased; (v) uncertainty in total transit time along regional main trade corridors has decreased; and (vi) the Kenya and Uganda Joint Railways Concession is established, and quality and reliability of railway services have improved.
9. The AF does not involve significant changes to the original project activities and outcomes as stated in the 2005 Project Appraisal Document (PAD) – except for increased scope and complexity in the case of the railway RAP; modification of two DOs to focus on improving efficiency of the customs authorities and transit/transport logistics respectively; and modification to the DO relating to the railway.
3
10. As a pioneer regional project, EATTFP is a complex and ambitious project and has faced many implementation challenges. Among these are: (i) implementation time lost due to slow development of effective joint (and trans-boundary) strategies, for example, lack of joint procurement guidelines among participating countries, with each country obliged to use its national procurement rules even in situations where joint procurement would have been advantageous; (ii) poor performance of the Kenya-Uganda railway concession, whose activities the project supports, including complex resettlement action plans in high density segments; and (iii) low capacities in several implementing agencies especially in multiple, cross-country procurement and financial management. By and large, these challenges have been overcome through training, exposure, and proactive measures. The countries have also settled for parallel and coordinated implementation strategies where each country follows their national procurement processes while the implementation procedures are synchronized, including sharing status reports, study documents, and holding joint site meetings, for example, during planning and construction of OSBP. Implementation progress has picked up and the project is back on track for timely achievement of the modified project DOs. 11. Nevertheless, further interventions are required to ensure that the project remains consistently on track, and the modified outcomes and desired impacts are achieved. These include: (i) resolution of the impasse relating to the railway concession – negotiations with financiers to recapitalize the railway are in the final stages pending injection of funds and completion of necessary environmental and social management plans; (ii) completion of outstanding works and installations activities to facilitate rolling out of the soft aspects of the project; (iii) increased funding to cater for costs arising out of the revised project components and inflation since project appraisal in 2005; and (iv) working with the EAC to enhance regional integration and better coordination of the implementation of cross border activities. The Kenya and Uganda railway concessions restructuring has addressed item (i), while the restructuring of EATTFP will deal with the other challenges. 12. The AF is critical to help consolidate the EATTFP objectives and guarantee its sustainability. The AF is the best financing option compared with other lending instruments since it will be streamlined and organized for quick processing procedures to enable timely completion of all key activities. These include implementation of the updated RAP and the two other activities of the project whose procurement cycles are complete or nearing completion. 13. Other alternatives such as preparing a separate urban resettlement operation were considered and dropped because they would require more time, involve new agencies, and affect the outcomes and achievement of PDOs. The preparation of another project could also further delay clearing of the railway “protection” zone which is essential for railway operational safety.
4
14. The modified activities, under the restructured project, are consistent with the DOs as originally designed and the Country Assistance Strategies covering the participating countries. The modified activities have been appraised and found to be viable and will enhance achievement of the PDOs. Project execution, to be completed within three years of the original closing date of the current project, (September 30, 2014) is in accordance with OP 13.20 guidelines. Status of Project Implementation 15. The overall implementation of the project has made steady progress and as of May 2011, disbursements and commitments were 44 and 53 percent, respectively, with commitments expected to rise significantly by August 2011. The project remains on track towards achievement of its DOs with performance for both PDOs and Implementation Progress (IP), rated as Moderately Satisfactory (MS). The rating takes into account disbursement and commitments to date, recent and proposed award for port ISS and OSBP contracts, good progress in preparatory activities including the procurement of major works and installation contracts in all countries which is at an advanced stage and projected to be completed by the fourth quarter of 2011. It also takes into account the success in implementation of aspects of the railway component particularly rehabilitation of Wagon Ferry in Uganda, retrenchment in Kenya, which is completed, and updating of RAP for Kibera and Mukuru which was completed and disclosed in January 2011, and achievement of the original Project Monitoring Indicators (PMI) (see paragraph 16 below) due to amongst others the project’s advocacy. All these point to a higher likelihood of successful implementation of project activities and achievement of the PDOs. The PDOs and IP rating is likely to improve to Satisfactory with (i) projected increased disbursements and commitments in the coming months; (ii) proposed restructuring that will enhance project management; (iii) progressive implementation of the railway RAP which has commenced, with construction of resettlement and safety infrastructure projected to start by August 2011 and commencement of relocation by April 2012; and (iv) projected improvement of the performance of the railway concession as a result of proposed injection of financing by lenders led by IFC, and shareholders. Lastly, a separate update of the Abbreviated RAP (ARAP), prepared by consultants of RVR, for the other high-density segments of the rail line in Kenya and Uganda, is being finalized under supervision of the IFC and African Development Bank (AfDB), on behalf of the other five lenders. The ARAP update will inform the lenders, government of Uganda (GoU) and government of Kenya (GoK) of new encroachments in areas beyond Kibera and Mukuru and provide recommendations for dealing with the encroachments. 16. The PMI are updated regularly by the implementing agencies (IA) and Project Coordinators. Furthermore, the Seamless Transport Committee (STC) which has membership from both the private and public sectors, including truckers, conducts field trips along the Northern Corridor annually, to monitor transit logistics including port clearance, weighbridges, road blocks and border crossings and to collect data. Information thus obtained is used to update the PMI. Based on current indicators, two PDOs have largely been achieved i.e. (i) efficiency of customs and (ii) efficiency of
5
transport and logistics. However, those for PDO (iii) performance of the Kenya-Uganda railways, have yet to be achieved due to implementation challenges in the railway concession. 17. The overall implementation of the Kenya component of the project has also made steady progress, and as of May 2011, disbursements and commitments were 53.5 and 64 percent respectively with commitments projected to rise significantly by August 2011. A key challenging area where good progress has been made is support to the railway concession component where potentially high risk retrenchment of railway staff has been completed. In fact, its pension scheme is set up and fully operational. On the other hand, implementation of the initial 2005 RAP for the Kibera and Mukuru railway segments has been problematic due to delayed decision by government of Kenya on whether or not to implement the RAP following proposals to re-align the railway and by-pass Kibera, following insecurity and violence in the area. In 2010, an update of the RAP was started, completed, and re-disclosed in January, 2011. Implementation of the component for investment support for transport facilitation has also made steady progress, with the security compliance for Mombasa port achieved and due to be enhanced by the recently commenced installation of ISS for the port. Design and bid documentation for the five OSBP was completed in May 2011 and works components are projected to start by August 2011. The support to implementation of EAC Customs Union component will be completed by end 2011, once the last training program is executed, and ongoing minor repairs of existing Kenya Revenue Authority (KRA) buildings at Malaba, Busia and Lunga Lunga are completed. Over and above these developments, the agreed covenants have also been complied with. The rating for Kenya PDO and IP is MS. 18. Implementation of the Tanzania component has picked up after a period of slow progress. Procurement of a critical item, the civil works for OSBP, is complete and construction contracts were awarded in May 2011, well ahead of the other countries. The port ISS tender is also likely to be awarded in June 2011. These two activities constitute over 50 percent of the credit and the award will boost the credit disbursement. Overall IP rating for Tanzania is MS. The project is on course to achieve the DO. 19. The Uganda component of the project became effective 15 months after approval of the credit due mainly to the requirement of parliament’s clearance for all loans. Uganda also had weak capacity and it took a lot of training and capacity building to start implementation. Nevertheless, progress has been made and the rating for IP is MS. Steady progress continues in the procurement of various activities such as railway ICD, ECT and static weighbridges whose award is planned for June 2011. Also the execution of contracts for critical activities, such as the rehabilitation of MV Kaawa, mobile weighbridges and feasibility study for the Northern line is complete or due for completion by third quarter of 2011. These constitute over 50 percent of the project cost in Uganda. The remaining major item is the construction of the three OSBP. Their design is however progressing well after initial delays and it is projected that all outstanding procurement will be completed within 2011 calendar year. Clearance of the railway line in various segments in Kampala up to Jinja is awaiting completion of the
6
RAP, whose preparation and implementation are being supervised by the AfDB, the IFC, and other railway concession lenders.2 20. The implementation of the Rwanda component of the project has progressed well with over 60.7 percent of the US$15 million grant disbursed. Preparatory work for the implementation of the two outstanding activities, ECT and OSBP at Gatuna to be funded by the project are at an advanced stage with bids for installation and works contracts expected in June and August 2011 respectively. Based on the last supervision mission in June 2010 and subsequent reviews in December 2010 and January 2011, the rating of the IP and PDO for the Rwanda component is Satisfactory. 21. Compliance with agreed covenants has been achieved for each of the project components (in Kenya, Tanzania, Uganda and Rwanda).
(i) Audit and Financial Management: All audits are current. Based on the most recent reports for the period ended June 30, 2010 , the project has a clean record. (ii) Procurement - Satisfactory: All aspects of procurement have been managed professionally and followed procurement procedures as outlined in the procurement guidelines dated May 2004 and revised in October 2006 and May 2010. (iii) Environmental and Social Safeguards: Because of substantial risks associated with the implementation of the railway RAP in Kibera and Mukuru, the project’s risk rating is High. The risks emanate from: (i) large scale nature of the proposed resettlement in the slum areas where major disruption of the railway line has occurred in the past, (ii) train accidents in Kibera involving loss of human life, and (iii) increased environmental degradation in the high density slum areas. Consequently, the safeguards category has been changed from B to A. III. Proposed Changes 22. Table 1 below provides an overview of the changes in the AF and restructuring for each country. Specific details can be found in Annex 3.
2 During a supervision and appraisal mission in March and April, 2011, the Bank received the draft RAP for the Kenya-Uganda railway line, covering the densely populated segments of the line where encroachments occurred. This RAP, which was prepared by RVR consultants, did not cover the Kibera and Mukuru areas, where IDA funding was approved to cover the costs of RAP implementation.
7
Table 1: Overview of Proposed Changes to the Project Country Proposed Revision Regional (All Countries) PDOs modified as follows:
(i) enhance efficiency of customs agencies' clearance processes, for the EAC Partner States participating in the East Africa Customs Union, to facilitate trade; (ii) improve efficiency and reliability of transport and logistics services along the key corridors; and (iii) enhance safety in identified areas and reduce the Recipient’s fiscal transfers to railway institutions by rationalizing the work force on the Kenya-Uganda railway.
Extension of closing date by three years to September 30, 2014. Safeguards category rating changed from category B to A (to reflect high risk of RAP
implementation in Kenya’s railway component). Current engagement with the Northern Corridor Transit Transport Coordinating
Authority (NCTTCA), Central Corridor Transit Transport Facilitating Agency (CCTTFA) and Sub-Saharan Africa Transport Policy (SSATP) enhanced.
EAC secretariat’s role in monitoring, coordinating, convening and facilitating dialogue on transitional issues and ability to hold regular workshops enhanced.
Kenya Changes in Financing
The current IDA credit provides for US$120.62 million for the Kenya component of the project. The proposed AF will provide an additional US$47.93 million as follows; (i) IDA-US$30 million and (ii) the GoK - US$17.93 million (Treasury US$8.43m and KPA US$9.5m). The total funding for the Kenya project will therefore be US$168.55 million. Separately, TMEA will provide an estimated US$10 million for the OSBP activity.
Change in Railway RAP The restructured project will reflect changes to the 2005 RAP following the update (2010 revision). Details of RAP implementation are provided in Annex 3 - Attachment 1. Implementing the Updated RAP The additional financing will be used for implementing the updated RAP for involuntary resettlement of about 10,006 households on Kenya Railways land, in the areas of Kibera and Mukuru in Nairobi, including: (i) creation of a “protection” or safety zone of 40 meters wide for Kibera and 50 meters for Mukuru and construction of a wall on both sides of the railway line to secure it; (ii) creation of a 10-meter wide resettlement area for housing, business and other activities of project affected persons (PAPs); (iii) construction of three storey structures in the resettlement area for shops, stalls and residential housing of PAPs; (iv) provision of open market spaces (bandas), for displaced mobile traders and schools and other institutional structures; (v) construction of footpaths and drainage facilities; and (vi) construction of footbridges to connect the safety walls on the two sides of the railway line. It is planned that resettlement for Kibera will be within the current encroached location. In Mukuru however, about 70 percent of the PAPs will be settled on a new site located between Lunga Lunga and Likoni bridges about 2.5 km from Mukuru towards the Central Business District (CBD). RAP implementation will cost about US$39.1 million of which US$11.0 million has already been allocated in the original project. To close the financing gap, GoK will provide US$8.43 million and IDA AF US$19.67 million.
8
Implementing the Updated Environmental Impact Assessment (EIA) in Resettlement Areas The 2005 EIA for the entire Kibera and Mukuru resettlement site was updated, focusing on the areas where the replacement housing and other infrastructure will be constructed. These include environmental, health, and safety clauses to be included in the works contracts.
Investment in the Port of Mombasa The restructured project will strengthen the institutional capacity of the Kenya Ports Authority to implement the International Maritime Organization’s (IMO), International Ships and Ports Security (ISPS) Code requirements, including installation of an integrated port security system at the port of Mombasa, through the provision of technical advisory services, training and acquisition of goods.
Construction of Weighbridges The restructured project will carry out the construction of weighbridges in Mariakani and Athi River along the Nairobi-Mombasa road on the Northern corridor route, through the provision of works, technical advisory services and acquisition of goods. These have become crucial now following the construction of the dual carriageway and increased truck traffic.
Change in IA Under the restructured project, the following activities will have new IAs: 1) Implementation of the Port Community Based System (PCBS) – to be implemented by the new IA, Kenya Trade Network Agency (KenTrade). 2) Implementation of OSBP – to be implemented by a new IA, Kenya National Highways Authority (KeNHA). 3) Implementation of weighbridges – to be implemented by KeNHA.
Changes to Port Community Based System (PCBS) The scope of the PCBS has been expanded and modified, under the restructured project, to a National Single Window System (NSW). The newly formed KenTrade will be responsible for the implementation of the NSW. While the PCBS focused only on the port of Mombasa and its users, the GoK has recognized the need to expand the system beyond the port to facilitate easier clearance of other business processes that require the attention of other GoK organs. The current Project Implementing Team will be retained. It is also worth noting that other development partners such as TMEA and other Bank Units have taken a keen interest in the implementation of NSW. KenTrade will seek further assistance from them to provide resources for training and equipping users of the NSW platform. See Annex 3 - paragraphs 7, 9 and 27.
Activities Dropped Malaba Bridge – Construction of the bridge was originally lumped together with construction of the OSBP at Malaba. However, during the planning stage, GoK expressed the wish to have it expanded and constructed as part of the rehabilitation of the Eldoret – Malaba section of the Northern Corridor project financed by the EU. Consequently, the bridge is no longer part of the project and available funding will be utilized for the Malaba OSBP for which more extensive developments are anticipated.
Reallocation of Funds Among Categories The reallocation targets pension payments and severance items. The former is overdrawn and the latter still has significant funds. Since implementation of the two activities (setting up of Pensions Fund and Retrenchment) are completed, rationalization of the provision in the withdrawal categories is proposed under the restructured project.
9
Tanzania Change in IA
The Tanzania Revenue Authority (TRA) has taken over the role of the implementation of the OSBP sub-component from Tanzania National Roads Agency (TANROADS).
Change of the Location of Weighbridges Tanzania has proposed to change the location of Kibaha weighbridge to a location further up the road from Dar es Salaam. Additionally, under the restructured project, the government of Tanzania (GoT) has also proposed changes to the location of the other weighbridge stations.
Uganda Activities Dropped
The GoU has opted to directly rehabilitate MV Pamba - one of the two wagon ferries in the project and the project will rehabilitate the other - MV Kaawa. The allocation for this item will be fully utilized since the rehabilitation costs of MV Kaawa have increased compared with the 2005 PAD estimate.
Relocation of the Railway ICD As proposed by the GoU, the restructured project will relocate the planned railway ICD outside the congested Kampala CBD to the Mukono Uganda Railway Corporation (URC) railway station.
Reallocation amongst Categories The restructured project will reallocate funds amongst categories, particularly operating cost items that are exhausted, and support for ECT and construction of OSBP. The operating costs appear to have been underfunded based on the assumption that GoU would supplement project monitoring with its internal funds. However, due to budgetary constraints, this has not been the case.
Rwanda Change in IA
Under the restructured project, the following activities will have new IAs: 1) Overall Project Management will be under a new IA - Rwanda Transport Development Agency (RTDA). 2) Electronic Single Window (ESW) - Rwanda Revenue Authority (RRA) is the new IA.
Activities Dropped (i) ESW: The government of Rwanda (GoR) has opted for other arrangements for its design and installation, and implementation will be funded from internal sources. However, because of the ESW’s central role, the restructured project will continue to monitor implementation progress and its interconnection with other customs systems. The original allocation in the PAD which included the establishment of trade points around the country was US$2 million. (ii) Pipeline study: The study for the Uganda-Rwanda oil pipeline has been put on hold because the governments of Rwanda, Uganda and Kenya wish to pursue a private sector driven initiative. The PAD estimate was US$ 0.4 million. The balance of the funding resulting from the two items dropped will cater for increased costs for implementation of other activities specifically the OSBP and scanners.
10
Proposed Changes to the PDO 23. The revised PDOs are as follows: (i) enhance efficiency of customs agencies' clearance processes, for the EAC Partner States participating in the East Africa Customs Union, to facilitate trade; (ii) improve efficiency and reliability of transport and logistics services along the key corridors; and (iii) enhance safety in identified areas and reduce the Recipient’s fiscal transfers to railway institutions by rationalizing the work force on the Kenya-Uganda railway.
Rationale and Implication 24. The rationale for amending the three original DOs is as explained below: 25. The proposed change in the first original DO aims to refocus the objective to enhancing efficiency of the customs agencies to “facilitate trade”. 26. The second original DO was enhanced transport and logistics services efficiency along key corridors by reducing non tariff barriers and uncertainty of transit time. While the project continues to encourage governments to remove non-tariff barriers such as police road blocks, and other impediments along the key corridors, the project’s investments are focused on the ports of Dar es Salaam and Mombasa and at the border posts, where it finances security and other facilitation activities. Hence, it is recommended to amend the DO to reflect the impact of the project’s activities. 27. The third original DO for the railway component was improved railway services in Kenya and Uganda. The railway has performed poorly because of various problems that by design are not controlled by the project. Among these are low capitalization and poor management. The Bank’s leadership and oversight role for the concessioning process and subsequent performance of the railway falls under the IFC. Therefore, even if the activities being executed through the project are completed successfully, they may not catalyze railway performance and consequently improved railway service. Hence, it is recommended that the original DO be amended and aligned with the impact of the activities funded by the project. 28. Project Outcomes and Monitoring Indicators Changes in Project Outcome Indicators: In line with the proposed changes to the PDO and taking into account outputs that the project is responsible for, it is also proposed to modify/change the outcome indicators. The changes are presented in the Revised Results Framework in Annex 1 of the Project Paper.
11
29. Changes to the Revised Results Framework and Monitoring Indicators: The revised results framework is presented in Annex 1. It is proposed to reduce the number of indicators to a manageable number that are truly key for the achievement of the DOs, are appropriate, cost-effective for supervision, and can facilitate monitoring. The changes are aligned with the proposed change to the PDO and project outcomes. 30. Changes in IA: The changes in IA proposed by governments for some activities of the project are presented in Table 1 as well as Annex 3 for Kenya, Tanzania and Rwanda respectively. The financial and procurement capacity of the new IA have been assessed. 31. Change in Railway RAP: The restructuring will reflect changes to the 2005 RAP in the Kibera-Mukuru segments of the railway line in Kenya, following the 2010 revision and update. For details see Annex 3 - Attachment 1.
32. Activities proposed to be dropped: These are presented in Table 1 above and Annex 3, for Kenya, Uganda and Rwanda respectively. 33. Environmental and Social Impact Assessments: Following a review of project risks, reassessment of both social and environmental impacts prompted a change in safeguards category risk from “B” to “A”. Enhancement of railway operational safety, in particular, the Mukuru and Kibera segments in Nairobi, Kenya, where a fatal train accident occurred in December 2009, was undertaken, including key rail safety mitigation measures.
34. Similarly, an update of the 2006 EIA for Kibera and Mukuru was carried out and updated, focusing on the resettlement areas, and details are presented in Annex 3. Following completion of the update of the RAP, implementation of rail safety and environment mitigation measures will be covered in the works contracts, under project restructuring.3 35. The EIA and Social Impact Assessment (SIA) for other activities of the project involving investments in infrastructure will be carried out. For specific works, the Environmental and Social Management Framework (ESMF) will be applied to determine whether additional environmental and social safeguards instruments will be required at the design phase and applied to all the works or installations contracts.
36. OP 4.11 (Physical Cultural Resources) is being triggered for this AF; the EIA/Environmental and Social Management Plan (ESMP) will ensure that the civil works carefully avoid existing cultural assets. Guidelines for “chance finds” procedure will be integrated into the contracts. These include development of a cultural property 3 The Project encourages railway authorities to use cleared railway areas (“protection zone”) sustainably including urban-agriculture and such other similar programs.
12
management plan if physical resources are found, in accordance with the government’s policies and guidelines.
37. Extension of project closing date: A three year extension of the project closing date has been requested by the participating governments, from September 30, 2011 to September 30, 2014, in order to provide adequate time to execute the remaining activities, including most notably, the implementation of the RAPs in the Kenya-Uganda railway concession component and the implementation of the OSBP components. 38. Enhancement of Regional Integration and Monitoring: It is proposed to increase current engagement with the NCTTCA, CCTTFA, and the SSATP corridor observatories to enhance the monitoring of transit transport on the Northern and Central corridors. The information and data collected will be used to plan for enhanced transport and logistics services efficiency along the key corridors. 39. The project also proposes to enhance the EAC Secretariat’s role in monitoring, coordinating, convening and facilitating dialogue on transitional issues, some of which impede the achievement of the project’s and EAC’s DOs. Furthermore, it is proposed to work with the EAC Secretariat to hold regular workshops to review EAC Customs Union Information and Communications Technology (ICT) systems and provide guidelines to deal with perennial interconnectivity problems and to interlink new systems such as the ESW. The Trade Facilitation Facility (TFF) of the Bank’s International Trade Department and other Development Partners (DPs) will work closely with the project to support the EAC including providing funding. 40. Other Parallel Financing: DfID/TMEA proposes to provide a UKP20 million (US$30 million) grant to finance the construction of three OSBP (on both sides of the earmarked border posts hence six developments). Initially, it was proposed that the funds be deposited in a trust fund but this has changed and a separate financing has been adopted, with the concurrence of relevant governments. The three OSBP are located on the Kenya/Uganda, Kenya/Tanzania and Uganda/Tanzania borders. TMEA will take up the implementation at the stage it is, at the time of hand-over, and primarily finance the works contracts. Contracts for consultancy services to design and supervise the works are already signed and under the circumstances, project funds will be used wholly for the design phase. Since construction is yet to start, where feasible, it is proposed to transfer the supervision contracts to TMEA to enable them finance the supervision phase as well. The TMEA grants will help pay for plans under the EATTFP that would not have been possible without the funds. 41. TMEA was set up by DfID and is supported financially by them and other European Development Partners. It supports the EAC on trade facilitation and is well established in the region with offices in all participating countries. It has an established financial and procurement system since it already manages projects in the region.
13
Financing Plan 42. The original IDA financing available for the project is US$199.02 million. The total amount is expected to rise to US$246.95 million realized as follows: US$30 million contribution by IDA and US$17.93 million contribution/counterpart funding by the GoK. TMEA proposes to also provide a grant of US$30 million. The IDA additional financing and GoK contribution will finance the Kenya project only, with financing of the implementation of the updated RAP the main beneficiary. The balance of IDA funds will help close the financing gap of investment in the Mombasa port safety and security compliance and installation of weighbridges. 43. TMEA’s funding will finance OSBP as explained in paragraphs 40 to 42 above, effectively releasing earmarked funding in the PAD for the particular border posts to be used to close the financing gap for the other OSBP in the three countries. The table below summarizes the projected costs and sources of funding for the participating countries.
Table 2: Projected Costs and Proposed Financing Plan for Participating Countries
Country US$ million PAD
Estimates (a)
Revised Costs (b)*
IDA
(c)
Government
(d)
Total
(a+c+d)
Kenya 120.62 178.55 30.00 17.93 168.55 Tanzania 37.00 47.00 - - 37.00 Uganda 26.40 36.40 - - 26.40 Rwanda 15.00 15.00 - - 15.00 TOTAL 199.02 276.95 30.00 17.93 246.95
* TMEA’s US$30 million parallel financing is amongst the new sources of funding to Kenya, Uganda and Tanzania for OSBP activities.
Procurement 44. The procurement cycles for most of the key activities are planned to be completed by August/September 2011. Procurement for infrastructural activities relating to the updated RAP has commenced with submission of bids for works contracts expected in July 2011. Execution period is 24-30 months following award i.e. by December 2013. The other outstanding activities of the project are also planned to be completed within the same period. This also includes the OSBP activities. The port ISS contract has already been awarded for the Kenya project and that for Tanzania is likely to be awarded in June 2011. The duration of the execution of the works contracts, which are on the critical path, will be 30 months. Therefore, all activities of the project will be completed within the proposed three-year credit extension period. To be consistent, the procurement arrangements will take into account both the 2004 and new 2011 guidelines thus: (i) for all new procurements under the current Development Credit Agreement (DCA) and proposed FA that had not commenced by the date of negotiations, the new 2011 Bank Procurement Guidelines would apply; (ii) for procurement processes that had already started, the 2004 guidelines would apply; and (iii) the 2004 guidelines would, on an
14
exceptional basis, apply to additional finances from the additional credit applied to contracts procured under the 2004 guidelines. Implementation schedule 45. The table below presents the projected cumulative disbursement over the extended project period. The calculations are based on the total US$246.95 million funding, including the proposed AF. It is projected that all contracts will be substantially completed by end 2013 leaving a nine month window for project winding up.
Table 3: Projected Cumulative Disbursement over the Extended Project Period Period 2011 2012 2013 2014
Amt* US$ m
% Amt US$ m
% Amt US$ m
% Amt US$ m
%
Jan-March 90.86 36.79 161.71 65.5 217.83 88.2 246.95 100April- June 104.62 42.4 182.97 74.1 227.15 92.0 July- Sept 129.46 52.4 199.33 80.7 237.71 96.3 Oct - Dec 138.07 55.9 207.90 84.2 246.46 99.8
* Cumulative amount in US$ million
46. The implementation schedule for countries is presented in Annex 3. IV. Appraisal Summary for the Project
47. The following is a brief appraisal summary for the overall project. Economic and financial analysis 48. The original project’s PAD provides a comprehensive economic and financial analysis of the project which is varied. It also provides the basis for economic and financial analyses for the customs and trade facilitation components which is based on empirical evidence and which is still varied. The analysis looked at reduction in time for main parameters; dwell time in the ports of Mombasa and Dar es Salaam, transit time to Rwanda on the Northern Corridor and crossing time at Malaba border with and without the project. The evaluated economic internal rate of return (EIRR) was 26 percent. With further reduction of the target transit time planned under the restructured project, the EIRR is expected to rise. The analysis of the railway concession considered traffic demand, freight tariffs, passenger services against operating expenses, capital expenditure, financing in the early years and concession fee. EIRR, provided by the IFC, for Kenya and Uganda concessions was 36 and 28 percent respectively. Although the analysis did not include the costs of resettlement in the railway reserve (for Kibera and Mukuru), there were implicit "with project" benefits that were integrated into analyses of railway safe operations. These were estimated in terms of savings from costs of derailment and harm to surrounding populations and settlements. Alternatively, it was shown that in a "without project" scenario, the costs of addressing the problem of escalating encroachments into the rail reserve increased operating costs by twice the amount it would cost to clean up the railway line corridor. It was also found that benefits
15
would be forthcoming with immediate and effective enforcement of a rail monitoring (encroachment control) system. These benefits remain. 49. Furthermore, in 2010 the IFC and other lenders reviewed the economic and financial viability for the railway concession after recent restructuring and established that based on the amended structure and projections of traffic and freight volumes, the railway business is still economically and financially viable. The review of the viability of the customs and facilitation components was not repeated since the fundamentals have not changed. Social
50. As described in the PAD, the project continues to have positive economic and social development impacts from improved transport and trade, which have multiplier benefits in terms of increased employment and worker incomes. In particular, under the restructured project, these impacts are expected to be targeted mainly to one of the poorest urban slum areas in the region. Implementation of the resettlement and livelihood support activities, especially in the high-density and volatile post-conflict communities in Kibera and Mukuru, will generate positive social and economic benefits, even though it remains high risk. Similar encroachments, although at lesser rates, were also found in other segments of the rail line, including in the overcrowded slum sites near the rail lines in Kampala and other peri-urban areas in Uganda, where relocation and livelihood programs are also expected to generate positive benefits. At the macro level, the restructured project will continue to be cognizant of the socio-economic and political contexts that have influenced the pattern and scale of encroachments, especially in the railway areas. The proactive approaches that have been adopted and enhanced under the restructured project, involve policy discussions about ensuring that income and employment effects from the project will trickle down to the poorest households. These included proposals, for example, for introducing sustainable livelihood programs (e.g. under the community development programs). Environment 51. The restructuring will not result in changes to the EIA and Environmental Management Plan (EMP) for the works and installation activities of the project. However, for the railway component in Kibera and Mukuru in Kenya, an update of the EIA has been carried out, together with the updating of the RAP, in 2010. The EAI and EMP were disclosed in February 2011. The resulting EMP will be implemented, for example, by including environment, health, and social clauses in the infrastructure works contracts. See paragraph 58. 52. OP 4.11 (Physical Cultural Resources) is being triggered for this AF; the EIA/ ESMP will ensure that the civil works carefully avoid existing cultural assets. Guidelines for “chance finds” procedure will be integrated into the contracts. These include development of a cultural property management plan if physical resources are found, in accordance with the government’s policies and guidelines.
16
Risks 53. The risks envisaged and proposed mitigation measures are:
(i) Political/Social Tensions: During project implementation, delays in implementation of the RAP were caused by inordinately long time taken to reach decisions following political violence (in connection with the 2008 post-election violence and disruption of railway operations by politically instigated youth) in the Kibera area of the Kenya-Uganda railway line and subsequent consideration by GoK to relocate the railway line outside Kibera. Although the proposal to relocate the line was communicated to the Bank, it took a long time for GoK to reach a firm decision on retaining the line through Kibera (because of the proposed commuter service consideration under its Vision 2030) while exploring the by-pass option for the main line going west. It was only after this decision, to retain the line through Kibera, coupled with decrease in political and social tensions, that preparations for RAP implementation commenced in 2010. The restructured project recognizes that risks of internal conflict and violence remain and will require active mitigation measures. Therefore, Ministry of Transport (MoT), RVR, KRC and RAP consultants have begun to work with affected communities through participatory programs to reinforce their sense of ownership. Throughout RAP preparation, there was close collaboration between the consultation team, community and youth leaders, and RVR/KRC staff. A functional grievance resolution system is in place to ensure that feedback and complaints from PAP are addressed. During construction of the replacement housing and business units, local labor will be used. Community consultations are ongoing, including social accountability approaches that can be used for expenditure tracking and monitoring of construction of the proposed infrastructure. Lastly, there continues to be intensive mobilizing and sensitizing, including capacity building of local leadership.4 (ii) Cost overrun: Though every effort is being made to minimize costs especially those associated with works and installation contracts, there is still a likelihood of increased costs beyond what is provided in the PAD and proposed in this AF. A key increase in costs is the implementation of the RAP in Kibera and Mukuru. As demonstrated by the delay in RAP implementation, between 2006 and 2011, the cost increases were due primarily to uncontrolled encroachments and violence-induced expenditures. Hence, better project contract management, timely completion of procurement and execution of works contracts are critical to control costs. Sustainable and participatory approaches in high-risk areas will also be important for trying to keep the costs under control. Finally, because of the scope of the implementation of the RAP, a contingency is provided in the cost estimate. For the other items, cost ceilings have been fixed within available funding prior to tender. (iii) Continued Encroachments: GoK has assured the Bank that Kenya law will be followed, in line with the provisions of the new constitution, with regard to land and 4 Similar risk mitigation measures are proposed to cover the high-risk encroachments in the other segments of the railway line in Kenya and Uganda. Under the restructured project, coordination with the other lenders on implementation of the RAP for these areas will be enhanced.
17
individual rights to deal with current and future encroachments on railway land. Also, KRC and RVR will implement a security action plan, involving proactive programs such as improving monitoring of the railway corridor through joint inspections and parallel reforms of railway police and security agencies. Lastly, the GoK is co-financing the RAP costs, and is committed to supporting urban renewal activities in Nairobi and its vicinity and will adhere to procedures for relocation as defined in the RAP for Kibera and Mukuru. Similar procedures will be followed in construction of other infrastructure covered under the restructured project. (iv) Weak Capacities for Implementation: As explicitly stated in the DCA, participating countries are committed to enhance implementation capacities, and in the case of GoK, a technical unit has been set up to oversee RAP implementation in Kibera and Mukuru. The restructured project supports overall capacity building programs, including facilitation of cross-country coordination meetings. (v) Weak Human Health and Labor Practices: Overall, there is risk of impacts on human health and unfair labor practices if the provisions in the construction contracts regarding safety and labor policies are not followed. These include practices that encourage hiring of local labor, enforcement of safety measures during construction, and gender sensitive labor policies. Specifically for the railway areas, there is the risk of derailment and accidents (such as the one that occurred in December 2009, in Kibera, with loss of human life). A mitigation measure, to be fully enforced in the restructured project, is the demarcation of a sufficient “protection” or safety zone. Continued dialogue between the railway operator and asset holder and the lenders, will be enhanced to encourage safety-related upgrading of the rails and to carry out regular track maintenance and cleaning.
54. Annex 2 presents the Operational Risk Assessment Framework (ORAF) for the project. The rating is Medium-Impact for preparation risks and High for implementation. These ratings take into account coordination risks among numerous implementing agencies with varying capacities and risks. It also takes into account the region’s governance status and anti corruption strategies. Specific Appraisal Summary for Kenya Project Components 55. The economic and financial considerations for the Kenya project are similar to those of the project described in paragraphs 48 and 49 above. Similarly, the risks are those described for the project in paragraph 53 above. Governance and Anti- Corruption (GAC) strategy is described in paragraph 60 below. 56. Social Resettlement Action Plan: The RAP for the Kibera and Mukuru railway segments was prepared and disclosed in 2006. However, implementation of the RAP was significantly delayed as explained in paragraph 53 above. In addition, there was a need to expand the “protection” or safety zone since the recommended width (on both sides of the rail line) was too narrow for dealing with the consequences of derailment and other safety issues. In 2009, and in concurrence with the Bank team, KRC decided to update the RAP, which was completed and re-disclosed in January 2011. During appraisal, a
18
review of the RAP was completed, verifying the enumeration and mapping of PAPs and the technical proposals for construction of housing, businesses, institutions (schools, health center), etc. A summary of the recommendations of the updated RAP is presented in Annex 3-Attachment 1. 57. The RAP envisages the relocation of 10,006 households, from where they have encroached on railway reserve, to clear 40 meters (20 meters on each side of the rail line) for safety purposes. (For Mukuru the safety zone is 50 meters wide since developments will be on one side only). To date, GoK has made arrangements for its implementation that include: (i) co-financing of RAP costs; (ii) approval of design and bid documentation for construction of infrastructure and its supervision; (iii) sensitization and participatory programs for PAPs; and (iv) setting up of a resettlement unit technical team in a Resettlement Management Unit (ReMU) - in KRC to implement the RAP. An independent advisory group has been identified to provide oversight and do periodic monitoring and evaluation of RAP implementation. 58. Environment: The project has an ESMF since the exact location of infrastructure was not determined at the time the project was prepared in 2005. The EIA has been carried out for all proposed works at the seven border posts. Subsequent EMPs will be included in the preparation and execution of the works contracts as provided in the PAD.
59. The EIA for the updated RAP was completed and re-disclosed in February 2011. The recommendations are described in Annex 3, Attachment 1A. The EIA study focuses on the affected resettlement corridor and particularly on management of solid waste, safety and the impact of the proposed civil works for the resettlement infrastructure. The EMP arising out of the assessment will be implemented during the execution of the works contracts.
60. GAC Strategy: The transport sector in Kenya has adopted a strong GAC strategy and implementation of the project components will adhere to it. Annex 4 presents a summary of some of the risks the project envisages and the proposed actions and what has been done so far. Implementation of the project shall be carried out in accordance with the provisions of the Anti-Corruption Guidelines.
Financial and Disbursement Arrangements
61. The Bank’s financial management team conducted a financial management assessment of KeNHA and KenTrade in accordance with the Financial Management Manual for World Bank-Financed Investment Operations dated March 1, 2010 and the Bank’s Financial Management Assessment and Risk Rating Principles. The conclusion of the assessment is that the financial management arrangements meet the Bank’s minimum requirements under OP/BP10.02. Annex 5 presents the overall financial management assessment for the two agencies.. 62. The effectiveness condition for the restructured project for KenTrade relates to preparing and agreeing with the Bank a project operational manual with adequate
19
financial management arrangements. KenTrade will also need to acquire an accounting software. 63. For the existing implementing agencies, their overall residual risk assessments (per the most recent supervision report) is Moderate (Medium-L) for KPA, KRA and MoT and Substantial (Medium-I) for Ministry of Roads (MoR) and MoT/ KRC. There are no overdue audit reports and IFRs. Annex 5 details the issues raised in the audit reports of these entities. No ineligible expenditure was noted. 64. The financial management action plan (Annex 5) outlines the mitigating measures which, if implemented, would strengthen the financial management arrangements.
65. Financing: The table below presents the proposed sources, and allocation of the AF among the project components. The AF will be allocated to close the financing gap of various activities as follows: The US$30 million will primarily support the implementation of the RAP in Kenya with the balance supporting security investments for port of Mombasa and installation of weighbridges. The US$10 million grant to be provided by TMEA will primarily finance the OSBP component. The GoK’s US$9.5 million and US$8.43 million contributions are counterpart funds for security investments for the port and updated RAP respectively.
Table 4: Proposed Sources and Allocation of Funding by Project Component
Component Original
PAD (US$ m)
Funding (US$ m)
PAD & AF (US$ m)
IDA AF GoK Total 1. Support to Implementation of the EAC CU. 7.75 - - 7.75 2. Institutional support for transport facilitation.
3.50 - - 3.50
3. Investment support for transport facilitation. 39.17 10.33* 9.50 59.00 4. Support for the concession of the Railways. 70.20 19.67** 8.43 98.30
*weighbridges and port ISS; **Implementation of RAP.
66. Annex 5B presents the proposed allocation of IDA AF in various categories while Annex 6 presents the estimated costs table in the PAD and the revised costs.
67. Disbursement arrangements: The disbursement arrangements for the AF will continue to utilize the arrangements currently in operation for the original financing, with a few modifications to reflect the changes in implementation arrangements. The Designated Accounts for the AF will be pooled with those for the original credit agreements. New project Bank accounts may be opened for the new implementing agencies (i.e. KenTrade in Kenya, TRA in Tanzania and RTDA in Rwanda), provided that the existing project Bank accounts in agencies that are no longer going to be utilized (i.e. Project Management Unit for Transport Programs (CGPT)/Ministry of Infrastructure Development and Rwanda Import and Export Promotion Agency (RIEPA) /Rwanda Development Authority (RDB) in Rwanda, and Ministry of Public Works (MoPW) /and MoR in Kenya) fully account for the balances in these accounts and transfer unused balances to the Designated Accounts by effectiveness.
20
Implementation of Kenya - Uganda railway ARAP 68. For the other railway segments in Kenya and Uganda, the 2006 ARAP for Uganda has been under implementation. It is however being updated to take account of increased encroachments. Following discussions with lenders of the RVR, a review of the ARAP update is being executed by RVR consultants coordinated by IFC and AfDB on behalf of the other lenders. The review covers the entire railway line outside Kibera and Mukuru. Initial field data indicate that the number of new persons who have encroached on railway land after the 2006 cut-off date has increased. Although the report has yet to be finalized, initial findings of the update have identified 23 encroached areas in Kenya and 233 in Uganda (mainly in the Kampala-Malaba main line). There is therefore an anticipated substantial increase in costs for resettlement, compared with that for the 2006 ARAP. The governments of Kenya and Uganda retain the obligation of implementing the ARAP, either directly or through their concessionaire RVR, and together will mobilize the necessary resources to do so. 69. Following the field visits, the World Bank recommended to RVR the following considerations in finalizing the 2006 ARAP update: (i) involve KRC and URC as early as possible, sharing information on initial findings, so the governments of Kenya and Uganda can be informed early to enable them to better prepare for implementation; (ii) secure the railway properties, especially in rail stations, by physically demarcating the boundaries to ensure that minimum safety considerations are covered before the encroachments occur within the minimum railway safety corridor; (iii) discuss with governments of Kenya and Uganda clearly defined measures for dealing with future encroachments; (iv) agree on a defined entitlement matrix acceptable to GoK and GoU; and (v) determine the mitigation measures, in addition to cash compensation for PAPs in the high-density encroachments, especially near the Kampala area markets, including a possible resettlement site. Implementation schedules and measures to accelerate execution of outstanding activities in Kenya with AF 70. Table 5 and 5A below present the proposed overall and IDA-AF Kenya project disbursements respectively, during the extended period. The schedules have taken account of the need to fast track activities and particularly ensure that outstanding activities are completed by end of December 2013 to provide contingency time for any un-anticipated delays. The implementation has particularly taken into account the likely areas where delay could arise and addressed them as follows:
(i) OSBP – GoK has appointed a dedicated building team that will be responsible for close monitoring of the implementation. Consultants have been appointed to be responsible for design and bid documentation and support GoK in the procurement stage for civil works and eventually their supervision. Furthermore, following reduced border crossing time as a result of the gradual implementation of the OSBP concept, the scope of the works, particularly parking
21
provision, has been reduced. Execution time is therefore shorter – 15 months. Lastly, the works will be packaged in five contracts each for every one of the border post which should attract many medium size contractors and create competition, thus increasing chances of early completion.
(ii) Updated RAP – The AF proposes the recruitment of a ReMU which will have a team of experts to deal with all aspects of relocation and support the engineering consultants to manage the construction of RAP infrastructure. Effectively, the day to day management of RAP implementation will be carried out by a dedicated team that is fully funded by the project, while MoT retains its oversight role. The construction of RAP infrastructure will also be packaged in several contracts to allow for wider participation, use of local laborers and smaller contract packaging and hence shorter execution timelines. These arrangements are expected to provide a more conducive environment for fast tracking of RAP implementation and of the relocation process which should start once the first phases of civil works contracts are completed. Five works contracts (three for Kibera and two for Mukuru) are proposed.
(iii) Weighbridges – Following a poor response to bids, KeNHA proposes to revert to traditional design followed by works contracting and possibly unbundle the contracts to provide for civil works and equipment contracts. It is anticipated that the method will provide more certainty with contractors quoting against a standard design. KeNHA has identified an engineering consultant to carry out the designs and coordinate the implementation aspect of the entire assignment. The civil works which are on the critical path should take no more than 12 months with installation of equipment completed within three months hence a total of 15 months.
(iv) Port ISS – The installation contract is already awarded and execution should be completed by end of 2012.
Table 5: Proposed Disbursement Schedule (AF and Original Funding)
2011 2012 2013 2014
Period Amt US$
% Amt US$
% Amt US$
% Amt US$
%
Jan - March 70.34 41.7 124.36 73.8 157.68 93.5 April - June 77.4 45.9 139.79 82.9 161.46 95.8 July - Sept 94.64 56.15 150.42 89.2 165.24 98.0 Oct - Dec 106.23 63.0 153.91 91.3 168.55 100.00
22
Table 5A: Proposed Disbursement of the IDA AF
2011 2012 2013 2014 Period Amt
US$ % Amt
US$ % Amt
US$ % Amt
US$ %
Jan - March - 2.00 6.67 15.26 50.86 30 100 April - June - 5.30 17.67 18.26 60.87 July - Sept - 8.63 28.77 23.56 78.53 Oct - Dec - 11.96 39.86 26.89 89.63
23
Annex 1: Revised Results Framework and Monitoring Indicators
AFRICA: East Africa Trade and Transport Facilitation Project
TABLE A1-1: RESULTS FRAMEWORK Revisions to the Results Framework
PDO Current (PAD) Proposed Comments/Rationale for Change 1. Improve trade environment through the effective implementation of the East Africa Community (EAC) Customs Union (CU) Protocol.
Enhance efficiency of customs agencies' clearance processes, for the EAC Partner States participating in the East Africa Customs Union, to facilitate trade.
Modification to refocus on improving efficiency of the Customs Authorities.
2. Enhance transport and logistics services efficiency along key corridors by reducing non tariff barriers and uncertainty of transit time.
Improve efficiency and reliability of transport and logistics services along the key corridors.
The project can influence port efficiency and security and transit at the borders through its activities but has limited influence on removal of non-tariff barriers.
3. Improve railway services in Kenya and Uganda.
Enhance safety in identified areas and reduce the Recipient’s fiscal transfers to railway institutions by rationalizing the work force on the Kenya-Uganda railway.
The International Finance Corporation (IFC) is the lead in railway concessioning. The project provides for retrenchment, safety clearance of Right of Way and other facilities and has no influence on management and operations.
PDO indicators Current (PAD) Proposed Change* PDO 1 - Customs The EAC Customs Union is established and functions in a harmonized way.
Dropped This has already happened and is the basis of some of the project’s activities.
Transit time along the Northern corridors (Mombasa-Kigali) has reduced from 9 to 5 days.
More relevant indicator.
Rwanda develops and implements a comprehensive action plan towards accession to EAC Customs Union
Rwanda joins the EAC CU Protocol -
PDO 2 Corridor Facilitation Transit time through main regional corridors and Malaba border post is significantly reduced.
Dwell time for a standard Twenty-Foot Equivalent Units (TEU) for domestic cargo is reduced to : Mombasa port - 8 to 3 days Dar es Salaam port - 14 to 8 days
Measures of project achievement and Customs efficiency and interconnectivity. More relevant indicator.
Variance of transit time through the Northern and Central corridors is significantly reduced.
No Change - but measure on the Northern Corridor only (days)
Simplification
Policies and regulations regarding transport and transit are harmonized along the Northern and Central corridors.
Dropped Though this is desirable, need to reduce number of indicators and can be adjudged through proxy
Through implementation of cargo tracking system, control and monitoring of transit goods improves so that the Kenyan escort system is removed from the Northern corridor.
Seamless cargo tracking operational on the Northern corridor
Ultimate objective is to have an effective cargo tracking system.
Ports of Dar es Salaam and Mombasa improve security in compliance with International Ships and Ports Security (ISPS) Code .
Mombasa and Dar es Salaam ports comply with ISPS Code.
More precise definition
24
Revisions to the Results Framework PDO Current (PAD) Proposed Comments/Rationale for Change PDO 3 Railway Concession Concession is effective and financially sustainable.
Dropped The project has no influence on investments and management of the concession. The IFC is the lead on concession matters.
Net financial transfers from GoK and GoU to the railway are negative.
Kenya Railway Pension Scheme operational and financially sustainable.
A more rational indicator
Traffic increases by 75% in the first five years of the concession (5%)
Dropped The project has no influence on investments and management of the concession. The IFC is the lead on concession matters.
Safety operational zones established in Kibera and Mukuru. Wagon Ferry services re-established in Uganda.
A more rational indicator
Intermediate Results Indicators Current (PAD) Proposed Change* Component 1 The EAC Customs Management Law is implemented in a harmonized way across EAC countries.
Regional Interconnection of ICT system is functioning efficiently in all four participating countries.
Interconnectivity is a main area of support for the CU.
The EAC CU is established and is functioning
Dropped Can be determined through the other two indicators for this level.
Customs procedures and documents are simplified and World Customs Organization indicators show that efficiency of customs agencies increases
Customs procedures and documents are simplified.
More precise indicator
Component 2 Both corridor authorities function efficiently, which results in harmonization of regional transport policy and increase of traffic flows.
Both corridor authorities (CCTTFA, NCTTCA) set a transit traffic monitoring data base.
New more relevant indicator
The CCTTFA and its Permanent Secretariat is established and functions.
See above CCTTFA is already established and what is relevant is its output.
Component 3 Community Based Systems (CBS) is established and operational in Ports of Mombasa and Dar-es-Salaam.
National Single Window (NSW) ICT back bone is established in Kenya. CBS ICT back bone installed in Dar es Salaam.
Kenya has opted for a NSW in place of CBS.
The Regional Cargo Tracking system is operational along the Northern Corridor.
Moved to PDO level 2 indicator Strategy to reduce numbers. Also measured under PDO level
National Cargo Tracking systems are established in four countries and linked to each other.
Dropped See above - Strategy to reduce numbers
Load Control systems improved in the four countries
Dropped Load control is not core business of the project
Border crossing time reduced: Malaba, – 7-4 hrs Serare/Isebania – 7-5hrs, Mutukula – 7-5hrs Katuna/Gatuna – 3–2 hrs
More descriptive and measurable for KE/UG, TZ/KE, UG/TZ and RW/UG borders
Component 4 The joint concession is operating,
Railway ICD in Uganda built and
Performance of the Concession is outside the project’s influence.
25
Revisions to the Results Framework PDO Current (PAD) Proposed Comments/Rationale for Change and financial sustainability is secured.
operational. New more relevant indicator
Updated RAP in Kibera and Mukuru is implemented.
New more relevant indicator
Direct Project Beneficiaries (of which females %) - Retrenchment -25% - Resettlement – 30%
New core indicator
26
TABLE A1-2: REVISED PROJECT RESULTS FRAMEWORK
Project Development Objective (PDO): is to (i) enhance efficiency of customs agencies' clearance processes, for the EAC Partner States participating in the East Africa Customs Union, to facilitate trade; (ii) improve efficiency and reliability of transport and logistics services along the key corridors; and (iii) enhance safety in identified areas and reduce the Recipient’s fiscal transfers to railway institutions by rationalizing the work force on the Kenya-Uganda railway.
PDO Level Results Indicators
Cor
e
UOM
Baseline Original Project
start
Progress To Date
Cumulative Target Values Frequency
Data Source/ Methodology
Responsibility for Data
Collection Comments
2011 2012 2013 2014
PDO Level 1 Indicators Average time from ship readiness to unload to to final destination for an imported container, on the corridor targeted by the project (days) (Transit time through the Northern Corridor – Mombasa-Kigali)
days 19 9 9 8 7 5 Annually
Seamless Transport
Committee Data
Rwanda joins the EAC CU Protocol.
Yes/ No
Application made
Substantially completed
Substantially completed
- - Yes Annually Supervision
mission
PDO Level 2 Indicators Reduce dwell time for a standard (20 TEU) at the port of Mombasa* days
13
8
8
6
5
3
Annually KPA,
EABC, NCTTCA
Seamless Transit
Committee (STC)
NCTTCA
days
Reduce dwell time for a standard (20 TEU) at the at the port of Dar es Salaam*
18 14 14 12 10 8 TPA and TAFFA.
Field data
CCTTFA Consultant
Variance of transit time through the Northern Corridor reduced
days 14 5 4 3 2 2 Annually STC Data STC
Seamless cargo tracking operational on the Northern corridor (in at least 2 countries).
Yes/ No
non-existent
Technical plans
developed
ISS installation commences
installation complete-
Operations testing
Yes Annually KRA, URA, RRA.
STC
* Dwell time is the aggregated time for containerized local cargo at the KPA/TPA and Container Freight Stations.
27
PDO Level Results Indicators
Cor
e
UOM5
Baseline Original Project
start
Progress To Date
(2011) Cumulative Target Values Frequency
Data Source/Methodology
Responsibility for Data Collection
Comments
Mombasa and Dar es Salaam ports comply with ISPS Code Yes/ No
not fully complain
t
Training done.
ISS installation commences
installation complete - Mombasa
installation complete -
Dar es Salaam
Yes Annually KPA, TPA
Supervision mission
and Technical
Audit
PDO Level 3 Indicators
**Kenya Railway Pension Scheme (KRPS) operational and financially sustainable.
Yes/ No Non
existent
Established has
financial problems
Refurbish-ment of assets
sale of non-core
assets
sale of non-core
assets Yes Annually
KRC, KRPS, Audit
reports
KRC, Field
missions
Safety operational zone established in Kibera and Mukuru.
Yes/ No Non
existent
RAP prepared
and disclosed
RAP implementa-
tion
RAP implementa-
tion
RAP implementa-
tion Yes Annually
KRC, ReMU and
Resettlement Advisor
RVR, MoT
Wagon Ferry services re-established in Uganda
Yes/ No
All three wagon ferries
grounded
Rehabilitation of MV
Kaawa started
Rehabilitation
completed
Ferry services resume
- Yes Annually URC, RVR URC
The project will
rehabilitate one with
GOU responsible
for the others Beneficiaries
Project Beneficiaries: Households in Kibera and Mukuru (of which % women)
Number (%)Non
existent No
settlement 0% settled
30% settled
75% settled
10,006 households
(about 30,000
persons) settled
(30% women)
Bi- annual ReMU and Advisor’s
reports
KRC, MoT, ReMU
KRC staff retrenched (of which women)
Number
(% women)Non
existent 6,320 staff retrenched
Prepartion of post
retrenchment report
-- - 6,320 Staff
(25% women) annual
KRC, MOT, RVR
KRC
** Setting up of the KRPS was supported by the project. To be self sustaining it was envisaged that KRPS would develop income generating ventures including housing and dispose off none core properties ceded to them by KRC.
5 UOM = Unit of Measurement.
28
Intermediate Results and Indicators
Intermediate Results Indicators C
ore
UOM
Baseline Original Project
start
Progress To Date
Target Values Frequency
Data Source/
Methodology
Responsibility for Data
Collection Comments
2011 2012 2013 2014
Intermediate Result 1: Support to EAC Customs Union Implementation
Regional Interconnection of ICT systems functions in all 4 countries.
Yes/ No
non-existent
Optimal functionality not achieved
yet
review the ICT system
implement enhance-
ments
implement enhance-
ments Yes Annually
EARA, Data
collected through field
missions
EAC Secretariat
and Consultant
Interconnectivity is a main area of support
for the CU.
***Customs procedures and documents are simplified in accordance with WCO standards)
Yes/ No
Non existent
Work in progress
Optimization in progress
- - Yes Annually
EARA Data collected through review process
EAC Secretariat,
Customs expert/
consultant
More precise
indicator
Intermediate Result 2: Institutional support for Transport Facilitation Both corridor authorities (CCTTFA, NCTTCA) set a transit traffic monitoring data base
Yes/ No
Non existent
Data collection not focused
Methodology agreed on
Data collection.
Data collection.
Yes Annually Field
missions
NCTTCA, CCTTFA
data consultants
Intermediate Result 3: Investment support for Trade and Transport Facilitation
National Single Window ICT back bone is established in Kenya and
Yes/ No
Non existent
Specifications prepared. Capacity
building starts
ICT backbone installation
commences. Business processes prepared
Operations start
Fine tuning of operations
Yes Annually Field
mission. KenTrade,
EABC
Kenya has opted for a NSW in place of
CBS
CBS ICT back bone installed in Dar es Salaam
Yes/ No
Non existent
Specifications prepared. Capacity
building starts
ICT backbone installation
commences. Business processes prepared
Operations start
Fine tuning of operations
Yes Annually Field
mission TPA,
EABC
CBS users to be
supported by TMEA
Decrease in crossing time at the Malaba border
hr 15 hr KE, 30 hr UG
7 hr 7 hr 6 hr 4 hr 4 hr (2 hr KE, 2 hr
UG) Annually
URA, KRA andSSATP Corridor
Observatory
Seamless Transport
Committee NCTTCA
Decrease in crossing time at the Serare-Isebania border
hr No data 7 hr 7 hr 5 hr 5 hr 5 hr (2.5 hr each KE &
TZ). Annually
KRA, TRA andSSATP Corridor
Observatory Field data.
Seamless Transport
Committee NCTTCA
*** World Customs Organization (WCO) are the custodians of international standards in these areas.
29
Intermediate Results and Indicators
Intermediate Results Indicators C
ore
UOM
Baseline Original Project
start
Progress To Date
Target Values Frequency
Data Source/ Methodology
Responsibility for Data
Collection Comments
2011 2012 2013 2014
Decrease in crossing time at the Mutukula border
hr No data - 7 hr 5 hr 5 hr 5 hr (2.5 hr each TZ &
UG). Annually
URA and TRA.
Field data. CCTTFA
Decrease in crossing time at the Katuna-Gatuna border
hr 13 hr RW
side 3 hr 3 hr 2 hr 2 hr
2 hr (1 hr UG & 1 hr RW)
Annually
URA, RRA and SSATP
Corridor Observatory-
Field data.
Seamless Transit
Committee NCTTCA
Intermediate Result 4: Support to the Kenya - Uganda joint Railway Concessions.
Railway ICD in Uganda built and functional
Yes/ No
None existent
Land identified
and designs completed
Construction commences
Completed. ICD fully
established Yes Annually
URA and RVR.
Site visits.
URC, MoWT
Updated railway RAP is implemented in Kibera and Mukuru.
Yes/ No
chaotic Updating of RAP
completed
Implementation starts
Relocation starts.
PAPs resettled
Yes Annually KRC and
RVR. Site visits.
MoT, Resettlement Advisor and
Monitor
30
Annex 2: Operational Risk Assessment Framework (ORAF)
AFRICA: East Africa Trade and Transport Facilitation Project Additional Financing and Restructuring
Project Development Objective(s) The Revised PDOs are as follows: (i) enhance efficiency of customs agencies' clearance processes, for the EAC Partner States participating in the East Africa Customs Union, to facilitate trade; (ii) improve efficiency and reliability of transport and logistics services along the key corridors; and (iii) enhance safety in identified areas and reduce the Recipient’s fiscal transfers to railway institutions by rationalizing the work force on the Kenya-Uganda railway.
PDO Level Results Indicators:
(i)Transit time along the Northern Corridor (from Mombasa to Kigali) is reduced.
(ii) Rwanda meets the technical requirements to become a member of the EAC CU by the end of the project.
(iii) Dwell time for a twenty foot equivalent container for domestic cargo at the ports of Mombasa and Dar es Salaam is reduced.
(iv) Variance of transit time through the Northern Corridor reduced.
(v) Seamless cargo tracking operational on the Northern Corridor.
(vi) Mombasa and Dar es Salaam ports comply with ISPS Code.
(vii) Kenya Railways Pension Scheme set up and is financially sustainable.
(viii) Safety railway operational zones established in Kibera and Mukuru areas. Wagon ferry services resume in Uganda.
Risk Category Risk Rating
Risk Description Proposed Mitigation Measures
Project Stakeholder Risks
Medium-I
Re- occupation of the cleared right of way (RoW) by other or current PAPs.
i) Erection of demarcation wall. ii) Full utilization of cordoned area following improved services as a result of restructured and recapitalized concession. iii) GoK have commenced designs for an improved commuter service
Integration of the EAC has made good progress particularly in operationalizing of the Customs Union (CU). However, there are outstanding issues that may impede full realization of the benefits of the CU.
iv) The EAC Secretariat will be empowered to escalate coordination and sensitization of member states to fast track integration. v) Project advocacy to be enhanced.
31
Implementing Agency Risks
Medium-I
The project has many implementing agencies whose inadequate capacity has hampered progress. Participating countries have also tended to proceed with implementation without sufficient consultations citing slow progress by their partners across the border which could affect the achievement of the desired outcomes. Over and above this there is high risk of fraud and corruption considering the large number of procurements.
The project supports capacity building including training of staff, provision of appropriate equipment and where necessary TAs, which has helped increase capacity. Further capacity building with emphasis on accountability, procurement surveillance, MIS and public reporting will be provided as necessary. To overcome the tendency for independent operation, the project has adopted a parallel but coordinated implementation and proposes to work closely with the EAC to enhance its coordinating and convening role.
Project Risks
Design
M-L
Compatibility of systems across the borders is critical for success of trade facilitation without which many of the PMI targets will not be achieved.
The project has adopted a parallel but coordinated implementation to synchronize infrastructure development, ICT, and integrated operations.
Social and Environmental
High
Risk of below optimal implementation of the RAP that may lead to resistance by the PAPs. Delay in compensation will impact on implementation progress. Resistance by sections of the communities to move to designated houses/stalls and other unresolved localized grievances associated with RAP implementation.
The environmental category rating has been changed from “B” to “A”. i) GoK has made strong financial commitments to the project which is informed by their wish to quickly clear the RoW for the commuter service, which is in its short to medium term development plan. ii) Participating States have committed to compensate for land take before design starts and the project is pro-active in ensuring adequate funds are included in the Government budgets. iii) Ownership: First, the RAP was designed with community participation. Second, it is planned to ensure on-site relocation with designated houses and stalls to individual PAPs and 45 year lease provided. Third, community and local labor will be used in construction contracts. iv) Grievances: The project has a functional grievance resolution mechanism. v) Socio-political actions: The RAP includes active engagement of local and youth leaders in the design and implementation of
32
livelihood and community development programs. (vi) The project has an ESMF since the exact location of infrastructure was not determined at the time the project was prepared in 2005. The EIA has been carried out for all proposed works at the seven border posts. Subsequent EMPs will be included in the preparation and execution of the works contracts as provided in the PAD. An EIA for Kibera and Mukuru has been prepared and was updated in 2010.
Program and Donor
Low
Critical components of the project not fully implemented for lack of funding and, particularly those with inter-country impact. WB, JICA, AfDB, TMEA and USAID are involved in the overall trade facilitation effort and coordination of their efforts is critical to ensure synergy and avoid duplication of efforts.
Funding is primarily from the WB and Trade Mark (EA) and sufficient funding has been availed. Governments have also committed to provide counterpart funding. The project participates in donor meetings and plans to strengthen EAC’s coordinating role.
Delivery Quality Low
Risk of delivery of substandard quality infrastructure by contractors/vendors. Risk of inadequate control by the IA.
All works and major installation contracts will be designed and supervised by reputable Consultants. The PIT will also carry out regular inspection to monitor progress including quality of work.
Overall Risk Rating at Preparation
Overall Risk Rating During Implementation Comments
Medium-Impact High Certain factors such as implementation of the RAP in high density areas and many activities spread in four countries makes the project high risk. However, close monitoring of activities and processes and drive for results is planned. Furthermore, indications are that country and regional ownership has increased and there is better understanding of the need for trade facilitation by various stakeholders. This together with a shared desire to improve railway performance and enhancement of safety in slum areas should help counter the envisaged high risk during implementation.
33
Annex 3: Detailed Description of Modified and New Project Activities 1. This Annex consists of the detailed description of the various project activities in support of the development of the regional institutions. For consistency, the description/activities follow the country by country approach. However, a detailed table of the project activities and costs for each country can be found in Annex 6. 2. Revised project development objectives are to: (i) enhance efficiency of customs agencies' clearance processes, for the EAC Partner States participating in the East Africa Customs Union, to facilitate trade; (ii) improve efficiency and reliability of transport and logistics services along the key corridors; and (iii) enhance safety in identified areas and reduce the Recipient’s fiscal transfers to railway institutions by rationalizing the work force on the Kenya-Uganda railway. 3. Component 1: Support to (East Africa Community (EAC) Customs Union Implementation through: (i) the strengthening of the EAC Secretariat; (ii) regional Customs Union (CU) implementation; and (iii) support to Customs Department at national level (Kenya, Rwanda and Uganda). 4. Component 2: Institutional Support for Transport Facilitation through: (i) strengthening of the Northern Corridor Transit Transport Coordination Authority; (ii) support to Authorities in establishing an appropriate management mechanism, Central Corridor Transit Transport Facilitation Agency, for the Central Transport Corridor connecting Dar-es-Salaam with the Great Lakes countries; (iii) support to the implementation of the EAC Protocol on inland transport, (iv) support to the implementation of regional/national transport regulation (Kenya, Rwanda, Tanzania, and Uganda), and (v) project monitoring and coordination. 5. Component 3: Investment Support for Trade and Transport Facilitation through: (i) enhancing security and providing Information Technology investment to improve operations efficiency at the ports of Mombasa and Dar-es-Salaam; (ii) trade flows through the main transport corridors through improved load security and control (Kenya, Tanzania, Uganda, Rwanda); (iii) financing establishment of key joint border posts at main cross-border posts within the region; and (iv) investment in Inland Container Depots (ICD) and intermodal platforms (Tanzania, Uganda, Rwanda). 6. Component 4: Support to Kenya and Uganda Railways Concessions through: (i) technical support to Kenya Railway Corporation (KRC) and the Uganda asset holding company, (ii) the retrenchment and social mitigation of staff in Kenya, (iii) the establishment of a Pension Fund for the staff of KRC, (iv) the implementation of a Kenya Resettlement Action Plan (RAP), and (v) the provision of Partial Risk Guarantees to Rift Valley Railway (RVR) Consortium to backstop government of Uganda/ Uganda Railway Corporation (URC) and government of Kenya (GoK)/KRC termination payment obligations under the two Concession Agreements.
34
Proposed Changes Relating Specifically to Kenya 7. Implementing Agency: The proposed changes and rationale is presented in the table below. The financial and procurement capacity of the new implementing agencies have been assessed and found to be satisfactory and/or mitigation measures recommended therefore the changes are acceptable. Annex 5 presents the financial management assessment. See also paragraphs 23 and 24 below on implementation arrangements.
Table 1: Revised Implementation Arrangements Activity IA – Project
Appraisal Document (PAD)
New Implementing Agency (IA)
Comments
Implementation of the Port Community Based System (PCBS)
Kenya Ports Authority (KPA)
Kenya Trade Network Agency (KenTrade)
GoK has modified the PCBS to a National Single Window (NSW) that will provide services to an expanded community that includes other ports of entry. The new agency will implement and operate it.
Implementation of Weighbridges and One Stop Border Posts (OSBP)
Ministry of Roads (MoR) and Ministry of Public Works (MoPW)
KeNHA/ MoPW The Authority has taken over the executing role for road works. It is responsible for the implementation of weighbridge and OSBP sub-components supported by MoPW, in the later case, who are the GoK ministry responsible for building works.
8. Change in Railway RAP: The restructuring will reflect changes to the 2005 RAP following the revision and update (which was re-disclosed in January 2011). Details are provided in Annex 3- Attachment 1. 9. Changes to PCBS: The scope of the PCBS has been expanded and modified to a NSW. The newly formed KenTrade will be responsible for the implementation of the NSW. While the PBCS focused only on the port of Mombasa and its users, the GoK has recognized the need to expand the system beyond the port to facilitate easier clearance of other business processes that require the attention of other GoK organs. The current Project Implementing Team will be retained. It is also worthwhile noting that other development partners such as Trade Mark East Africa (TMEA) and other Bank Units have taken a keen interest. KenTrade will seek their support particularly in training and equipping users of the NSW platform. 10. Changes in Financing: The current International Development Association (IDA) credit provides for US$120.62 million for the Kenya component of the project. The proposed AF will provide an additional US$47.93 million as follows; IDA US$30 million, GoK- US$17.93 million (Treasury US$8.43m and KPA US$9.5m). Separately, TMEA will provide an estimated US$10 million grant for the OSBP activity and sign financing agreements with GoK. The total planned funding for the Kenya project is therefore US$178.55 million.
35
Implementation of Updated RAP 11. Annex 3- Attachment 1 describes the updated RAP recommendations. The updating of the RAP was completed in December 2010 and the RAP was re-disclosed in the Bank InfoShop in January 2011. The updated RAP proposes:
(i) provision of a 40 meter wide “protection” or Safety Corridor through Kibera and 50 meter wide through Mukuru and erection of safety walls on both sides of the line to secure the corridor;
(ii) provision of 10 meter wide resettlement zones for 10,006 households; (iii) provision of three story structures with the safety walls with the dual purpose of
serving as the outer walls that would demarcate the corridor boundary; (iv) provision of open bandas for current mobile traders; (v) construction of footpath and drainage facilities; and (vi) construction of footbridges to connect the resettlement zones that are separated by
the boundary/walls.
12. The resettlement zones will be located at the outer edge of the 60 m wide railway reserve. For Kibera, the resettlement zones will be within the current slum area while for Mukuru resettlement, there will be two locations: one within the current slum area and the other between Likoni and Lunga Lunga bridges about 2.5 km away from Mukuru on a location near the Central Business District (CBD). The ground floor of the resettlement units will be used for shops and stalls for relocated traders while the top two floors will be residential units. 13. There will also be relocation of about 8,553 school children, who attend informal/private schools, to Nairobi City Council Schools that are located near the resettlement zones. The RAP includes support for this relocation, including rehabilitation of some classrooms and facilities. 14. The projected overall cost is US$39.1 million, of which US$11.0 million is already provided in the current project. Under the restructured project, the GoK will finance US$8.43 million and the remainder will come from proceeds from the IDA credit, amounting to US$19.67 million. 15. The construction of the safety and resettlement infrastructure is expected to start in the third quarter of 2011 calendar year and will be completed by end of 2013. Investment in Mombasa Port 16. During appraisal of the original project, it was envisaged that the port security would cost US$17.5 million, US$1.5 million of which would be for training and capacity building to enable the port comply with the International Ships and Ports Security Code and US$16 million for the installation of an integrated port Integrated Security System (ISS). IDA was to contribute US$11.5 million of the overall cost while KPA would contribute US$6 million. Following increased scope of the port ISS and inflation the contract price is US$21.4 million. KPA has committed to provide a total of US$9.5 million. The balance of the funding of US$1.9 million will be provided by the additional financing (AF).
36
Weighbridges 17. The project provides for the construction of two weighbridges in Mariakani and Athi River. Current estimates are that the cost will be higher than the US$10.6 million provided in the PAD. The GoK is considering downsizing the scope of the activity particularly civil works. In the meantime the AF will provide US$8.43 million additional financing for the activity. Border Posts 18. As in the case of the activities described above, due mainly to inflation and increased construction costs, the projected cost of the works component of the One Stop Border Post (OSBP) is over US$7 million higher than estimated at appraisal. TMEA has agreed to separately provide about US$10 million in parallel with Bank financing to close this gap and provide for equipment that was not included in the original estimates. Activity Dropped 19. Malaba Bridge – Construction of the bridge was originally lumped together with construction of the OSBP at Malaba. However, during the planning stage, GoK expressed the wish to have it expanded and constructed as part of the rehabilitation of the Eldoret – Malaba section of the Northern Corridor project financed by the European Union (EU). All the funding available will be utilized for the Malaba OSBP for which more extensive developments are anticipated. Summary of proposed allocation of IDA - AF 20. The US$30million IDA AF will be distributed as follows: (i) implementation of updated RAP- US$19.67m; (ii) installation of port ISS - US$1.9m; and (iii) construction of weighbridges US$8.43m. Allocation of the funds in various categories is presented in Annex 5B. Institutional and Implementation Arrangements Implementation of the Updated RAP 21. Ministry of Transport (MoT) is responsible for the implementation of the RAP with KRC providing the technical input. To ensure the implementation is carried out smoothly, it is proposed to delegate the day to day activities to a Resettlement Management Unit (ReMU) that will be resident in the affected area or near. The MoT is obliged to establish this unit by September 30, 2011. 22. The unit will be responsible for: (i) day to day management of the resettlement, (ii) close liaison with the consultants and contractors responsible for the construction of resettlement and safety infrastructure to ensure coordinated execution of this key activity and linkage with relocation of project affected persons (PAPs), (iii) planning of and progressive relocation of PAPs, (iv) dealing with disputes and grievances, (v) preparation of lease documents for PAPs in consultation with KRC, MoT and other GoK departments, (vi) liaison with community leaders in
37
Kibera and Mukuru, government officials, non-governmental organizations and other stakeholders, (vii) communication, and (viii) management of resources set aside for its operations. MoT/KRC will retain the overall oversight for the implementation of the RAP including civil works for the resettlement and safety infrastructure and relocation of PAPs. 23. The ReMU will retain a team of experts recruited for the assignment that includes a team leader, resettlement, legal and communications experts and other experts as required. MoT will prepare terms of reference for these tasks. Payment for their services will be drawn from the project. 24. The ReMU will be responsible to the Permanent Secretary, MoT for its activities and will work closely with the project implementation team (PIT) for railway who will provide direction and guide the ReMU. MoT will prepare a Procedures Manual to provide for the operations of ReMU. Implementation of the Weighbridges component 25. The Kenya National Highways Authority (KeNHA) will continue to be responsible for the implementation of the weighbridges component. Since this task is already being executed by the authority, no changes to the implementation arrangements is envisaged. However, KeNHA will form a dedicated team to fast track the implementation of the activity which is delayed. Implementation of the NSW 26. KenTrade will be responsible for the implementation of the NSW. KenTrade is established under an Executive Order and its main function will be the setting up and operation of the NSW. It will inherit current staff deployed by GoK to develop the NSW. The project will support capacity building for the agency including the provision of equipment, training and Technical Assistance. Substantial preparatory work has already been done including wide consultation with stakeholders, preparation of a business processes report, technical report on system requirements, identification of a technical team of comprising business development, information and communications technology (ICT), legal and quality assurance experts to support current GoK staff and draft implementation plans. The preparatory work has benefitted from an Electronic Single Window (ESW) expert based in Mauritius funded by the project and who has carried out a comprehensive review of the ESW requirements for Kenya, Tanzania and Rwanda. The original project provides funding for Community Based Systems in Mombasa Port which will now be used for the implementation of NSW. Formation of KenTrade is within the overall project objective of institutional development for entities responsible for trade facilitation and given that many public and private organizations will use the NSW platform, its management by a single agency is welcomed. Implementation of the Port ISS 27. KPA will continue to be responsible for the implementation of the port ISS.
38
Reallocation of the Proceeds of the Credit 28. Categories 4 and 5 of the proceeds of the credit support retrenchment and setting up of the Pensions scheme for the Kenya Railway staff leaving employment following decision to concession the railway. Because of the larger than expected staff affected and higher cost of refurbishment of assets, Category 5 is overdrawn. Since the activities are complementary and completed, it is proposed to reallocate funds amongst the two and to draw the balance from the unallocated Category to regularize the over-expenditure. This change is reflected in Annex 5A.
Proposed Changes Relating Specifically to Tanzania 29. The proposed changes to the Tanzania component of the project focus on implementing agencies and financing arrangements. The government of Tanzania’s (GoT’s) proposal to change the implementing agencies for the OSBP is due to the fact that Tanzania Revenue Authority (TRA) has a vested interest in getting the activity implemented as soon as possible. TRA is also currently implementing a Tax modernization program funded by several DPs including the Bank and one aspect of the program is infrastructure improvement. TRA has an engineering unit dedicated to this task which is also responsible for managing the implementation of the OSBP sub-component. The new financing arrangements will recognize the entry of TMEA who has offered to fund two of the five OSBP. 30. Change of the location of weighbridges: Tanzania has proposed to change the location of Kibaha weighbridge to a location further up the road from Dar es Salaam. It has also proposed changes to the location of the other stations. Further consultations are planned before current plans are implemented.
31. Change in implementing agency: TRA has taken over the role of the implementation of the OSBP sub-component from (Tanzania National Roads Agency) TANROADS. This follows a re-organization of government services and recognition that TRA has a strong vested interest in not only implementing the OSBP but renewing its border facilities that are in poor condition. Following the transfer, TRA has successfully moved the procurement process to the current stage where award of works contracts was made in May 2011, way ahead of the other countries. TRA is a fully established revenue authority with strong internal financial and procurement management systems. 32. Financing plan: Out of the US$30 million grant planned to be provided by the TMEA, an estimated US$10 million is earmarked for Tanzania to help close the financing gap for OSBP on the (Kenya/Tanzania) and (Uganda/Tanzania) borders. The grant will finance the Investment support for transport facilitation component.
39
Table 2: Projected Costs and Financing Plan
Components PAD
Revised Cost
Balance*
US$ million 1. Support to Implementation of the EAC CU - 2. Institutional support for transport facilitation 2.70 2.70 0.00 3. Investment support for transport facilitation 34.30 44.30 10.00 4. Support for the concession of the Railways - - -
*To be financed by TMEA
33. Project costs: The revised project costs are presented in Annex 6. Currently the revised cost is US$47 million up from US$37 million estimated at appraisal in 2005. The increase is attributed to inflation since appraisal. TMEA’s contribution is expected to close the financing gap.
34. Implementation schedules and measures to accelerate execution of outstanding activities: The table below presents the projected disbursements for the Tanzania project. It is planned to complete all activities by December 2013. Three of the critical activities that are on the critical path are; construction of four OSBP, port ISS and installation of weighbridges.
(i) The procurement cycle for the OSBP is complete and award was made in May 2011. With an execution period of 12 months, the works should be completed by June 2012. A consultant is already appointed for the supervision task. Tanzania is ahead on the other countries in implementing this component. (ii) The port ISS bids have been received and evaluation is in progress. If as planned the award is made in June, then execution will be completed within 18 months i.e. by December 2012. (iii) Weighbridges – These are on a critical path and GoT decision to relocate the Kibaha and other weighbridges will delay implementation further. Nonetheless, the project will follow closely to ensure completion by December 2013.
Table 3: Projected Cumulative Disbursements
2011 2012 2013 2014 Period Amt
US$ % Amt
US$ % Amt
US$ % Amt
US$ %
Jan-March 5.35 14.46 15.94 43.1 27.24 73.6 April- June 9.15 24.7 18.85 51.0 30.19 81.6 July-Sept 10.12 27.3 21.77 58.8 34.17 92.4 Oct - Dec 13.26 35.8 24.13 65.2 37.00 100
Proposed Changes Relating Specifically to Uganda
35. The restructuring envisages changes to the location of the Railway ICD and number of wagon ferries that the project will rehabilitate. At appraisal in 2005, it was planned to provide URC with an ICD to be located near the central railway station in Kampala. After concession
40
this location was considered to be unsuitable and the RVR came forward with a more suitable location at Mukono station outside Kampala. 36. Following the post-election crises in Kenya in 2008, the government of Uganda (GoU) decided to re-open the southern route through Tanzania and felt that the rehabilitation of the Wagon Ferries should be expedited. A decision was then taken to have GoU repair one of the two wagons ferries and fund its rehabilitation using internal resources. 37. Relocation of the railway ICD: A sound decision was made by both URC and RVR to relocate the planned railway ICD outside the congested Kampala Central Business District (CBD) to land owned by the URC. The proposed site has many advantages compared with original site that include availability of land for future development and easier accessibility by industries that are located between Mukono and Kampala CBD. The proposed developments for the ICD were identified and designed by RVR and will be implemented in two phases. The project will fund the civil works for the first phase while RVR will finance movable items such as cranes. 38. Activity dropped: GoU has opted to directly rehabilitate MV Pamba one of the two wagon ferries in the project. The project will rehabilitate the other - MV Kaawa. The allocation for this item will be fully utilized since the rehabilitation cost of MV Kaawa has increased compared to the PAD estimate. 39. Project cost: The revised project cost is presented in Annex 6. Current estimated cost is US$36.4 million which may rise due to higher cost of the ICD. Available funding which includes the planned TMEA contribution is US$36.4 million. The cost increase is mainly due to inflation since project appraisal in 2005. GoU has indicated commitment to use its own resources in subsequent financial years to close the financing gap for contracts that will result in increases beyond the available funding. 40. Financing plan: The matrix below presents the financing plan. The proposed US$10 million TMEA’s grant will close the financing gap and as indicated earlier GoU has indicated willingness to finance cost of overruns.
Table 4: Projected Costs and Financing Plan
Component PAD
Revised Cost
Balance*
US$ million 1. Support to Implementation of the EAC CU
1.89 1.89 0.0
2. Institutional support for transport facilitation
1.66 2.01 0.35
3. Investment support for transport facilitation
18.86 27.26 8.40
4. Support for the concession of the Railways
4.00 5.24 1.24
*To be financed by TMEA
41
41. Reallocations: The table below presents the proposed reallocation of the proceeds of the Credit. The reallocation targets operating costs item that are exhausted including support for Uganda Revenue Authority’s Electronic Cargo Tracking and construction of OSBP. The operating item appears to have been under-funded. The assumption was that GoU would supplement project monitoring with its internal funds but due to budgetary constraints this has not been the case.
Table 5: Reallocation of Credit Proceeds
Allocation (SDR) % of Financing Categories Current Revised Disbursement
(March 22) Current Revised
(1) Goods 100 100 (a) for Part C.1 of the Project
1,590,000 1,740,000 588,587.00
(b) for Parts C.2, C.3, and D of the Project
2,550,000 2,550,000 74,443.30
(2) Works 100 100 Parts C.2, C.3, and D of the Project
9,960,000 10,510,000 128,161.80
(3) Consultant Services
100 100
(a) for Part C.1 of the Project
350,000 160,000 0.00
(b) for Parts C.2, C.3, and D of the Project
2,750,000 2,340,000
128,161.80
(4) Operating Costs 100 100 Parts C.2, C.3, and D of the Project
140,000 700,000 184,998.17
(5) Unallocated 860,000 200,000 - TOTAL 18,200,000 18,200,000 1,104,352.07
42. Closing date: The proposed closing date of the Uganda component is September 30, 2014. The date is in line with the rest of the proposed project closing date with the extension providing time for full implementation of outstanding activities described in paragraph 43 below.
43. Implementation schedules and measures to accelerate execution of outstanding activities: The table below presents the projected disbursement of the Uganda Project. The implementation of the project has experienced delay partly because it became effective a year later than the rest of the project. This coupled with low procurement capacity within the Ministry of Works and Transport (MoWT) at the time the project was started has affected progress. To overcome this and ensure the project is completed within the extended closing date the following is proposed for the main activities:
(i) OSBP – GoU has appointed a dedicated team that will be responsible for close monitoring of the implementation. Consultants have been appointed to be responsible for design and bid documentation, support GoU in the procurement stage for civil works and eventually their supervision. Furthermore, following reduced border crossing time as a result of the gradual implementation of the OSBP concept, the scope of the works, particularly parking provision, has been reduced. Execution time is therefore shorter – 15 months except for Katuna which is 18 months because of the difficult terrain. It is
42
proposed that the works be packaged in four contracts each for every one of the border post which would attract many medium size contractors and create competition which would increase chances of early completion. The earliest contract for Mutukula is likely to be awarded in August/September 2011 with the rest in December 2011. Effectively the longest contracts will be for the OSBP at Katuna and should be concluded by September 2013.
(ii) Railway ICD – The bids for the construction of the ICD at Mukono were submitted in April 2011 and hence award is planned by July 2011. Recruitment for the supervision consultant is in progress with award planned before end June which effectively means that competent teams (contractor and consultant) will be on board by July ready for the full implementation which is planned to be completed by end 2012.
(iii) Cargo tracking - Rebidding for the Cargo tracking is in progress and with successful bids award is likely by July 2011 and completion by September 2012.
Table 6: Projected Cumulative Disbursements
2011 2012 2013 2014 Period Amt
US$ % Amt
US$ % Amt
US$ % Amt
US$ %
Jan-March 5.65 21.4 12.08 45.7 20.05 76.0 26.4 100 April- June 6.45 24.4 14.11 53.4 22.01 83.4 July-Sept 8.45 32.0. 16.06 60.9 24.04 91.1 Oct - Dec 10.11 38.3 18.02 68.3 26.00 98.5
Proposed Changes Relating Specifically to Rwanda 44. Change in implementing agency: The table below presents the proposed change of implementing agencies for the indicated sub-component.
Table 7: Change in Implementing Agency Activity IA-PAD IA-New Comments
Overall Project Management
Project Management Unit for Transport Programs (CGPT) PIU in Ministry of Infrastructure Development
Rwanda Transport Development Agency (RTDA)
Formation of the RTDA was facilitated through Rwanda Transport Sector Development Project (TSDP) and the project implementing unit (PIU) and staff were fully absorbed by the agency.
ESW Rwanda Import and Export Promotion Agency (RIEPA)/ Rwanda Development Authority (RDB)
Rwanda Revenue Authority (RRA)
Re-organization of functions of state agencies and recognition of the ESW’s role in revenue collection.
43
45. Activities dropped.
(i) ESW: The government of Rwanda (GoR) has opted for a bilateral arrangement for its design and installation and will provide internal funds to finance the ESW. However, because of its central role the project will continue to monitor implementation progress and interconnection with other customs systems.
(ii) Pipeline study: The study for the Uganda-Rwanda oil pipeline has been put on hold because the governments of Rwanda, Uganda and Kenya wish to pursue a private sector driven initiative.
46. Project costs: The cost table is enclosed as Annex 6 to this paper. It presents the estimated cost of activities at project appraisal in 2005 and the current revised costs. While the overall cost is expected to remain within the PAD estimate, the cost of individual activities may change as indicated in the table. 47. Procurement management: Procurement for the project has been satisfactory and was managed by the PIU in the Ministry of Infrastructure Development prior to the establishment of the RTDA. The key challenge facing the RTDA is shortage of procurement staff with one Procurement Officer, who is not fully conversant with complex procurement processes, currently managing seven active projects and two in the pipeline. The RTDA will need to hire a second procurement expert to provide necessary support. 48. Financial management: The review of the Financial Management (FM) arrangements of the RTDA which absorbed the former PIU for the EATTFP (the CGPT) was carried out in March 2011, which rates residual FM risk is Medium-L (See Annex 5). The project maintained satisfactory audit compliance and the auditors expressed an unqualified audit opinion on the financial statements for the CGPT for 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 Grants requirements. The project has continued to prepare and submit satisfactory unaudited interim financial statements the latest being the Interim Financial Report (IFR) for the period ended December 31, 2010. RTDA will continue to use the existing funds flow mechanism and will use the designated account already in place. The entire FM unit of the CGPT was absorbed into RTDA and retains the fiduciary responsibility over the project. Although the implementation of the ESW has been relocated to RRA, the Fiduciary responsibility will be maintained within RTDA. GoR manuals prescribing FM procedures of budgeting, accounting, internal controls, funds flow, financial reporting and auditing currently in use by the CGPT will be applied to RTDA. The FM arrangements of the RTDA meet the Bank’s minimum requirements for project FM as per OP/BP 10.02. 49. Closing date: The proposed closing date of the Rwanda component is September 30, 2014 in line with the rest of the project. The three year extension of the project closing date will provide sufficient time for full implementation of two of the outstanding activities – construction of OSBP at Gatuna border post and installation of a cargo tracking system, and contingency in case of slippage.
44
50. Implementation schedules and measures to accelerate execution of outstanding activities: Table 8 below presents the projected expenditure for the outstanding activities of the Rwanda Project. The two main activities remaining whose implementation has been delayed include the OSBP and cargo tracking and the timelines for their execution is as follows:
(i) Following resolution of location of the post, which has delayed progress, design and bid documentation is expected to be completed by end June 2011 with procurement resulting in the award of the works contract likely by November 2011. Consequently, with an 18 months contract, completion is expected by third quarter of year 2013.
(ii) Rebidding for the cargo tracking is in progress and with successful bids award is likely by July 2011 and completion by September 2012.
Table 8: Projected Cumulative Disbursements 2011 2012 2013
Period Amt US$
% Amt US$
% Amt US$
%
Jan-March 9.52 63.5 10.82 72.1 14.40 96.0 April- June 9.62 64.1 11.50 76.7 14.62 97.5 July-Sept 9.82 65.5 12.72 84.8 15.00 100.0 Oct - Dec 9.82 65.5 13.72 91.5
45
Annex 3 - Attachment 1
Description of the Updated RAP and Updated Environmental Impact Assessment (EIA) in Kenya
Kibera and Mukuru Railway Segments
A. BACKGROUND 1. The Development Credit Agreement (DCA), signed in April 2006, initially provided funds for resettling 3,500 PAPs, specifically in the rail segments covering Kibera and Mukuru slums. The implementation of the 2005 RAP, described in the DCA, envisaged provision of replacement housing, markets, pedestrian bridges, and necessary utility facilities; and clearing and fencing of the footpath alignment. It allocated an “immediate safety zone” of 5.2 m on each side of the rail. 2. The GoK was unable to implement the 2005 RAP throughout the period when the area was unstable due to violence and conflicts, especially in Kibera. In addition, GoK decided in 2007 to expand the 10.4 m provision in the 2005 RAP for an "immediate safety zone" and increased the width to 40 m for operational and safety reasons. A Bank railway expert analysis concurred with the decision to increase the railway width for clearance. In 2009, this decision was borne out by a derailment accident in the area that resulted in significant human health impacts that confirmed the need for a much wider “protection” or safety zone. Finally, the updated RAP recognized the historical fact that the Kenya-Uganda railway's reserve, throughout the 1,920 km length of the line, was defined as 200ft (60m) wide, which was confirmed by the railway technical manuals. 3. The GoK approved the update of the RAP and agreed to set aside a 10m wide strip between the edges of the railway reserve and the wider “protection” or safety zone on each side of the railway line. The government also recognized that implementing the RAP in an expeditious and timely manner reduced the incremental costs as shown by the significant increases in RAP costs since the first estimates in 2005. As a result, there is a large financing gap, resolution of which will be undertaken through the requested additional financing.
B. REVIEW OF THE UPDATED RAP 4. The review and updating of the 2005 RAP followed the Bank procedures for a full census and enumeration of PAPs. Salient observations in both Kibera and Mukuru were as follows:
There would be land-for-land exchange, with GoK/KRC providing the 10m strip of the
railway reserve for resettlement. In most of the sections within the two areas, demarcation walls were erected at the edges of
the 60m railway reserve, and where there is no wall, KRC erected edge beacons. The RAP update found that these structures and markers clearly demarcated the boundaries of the railway reserve.
46
The on-site relocation areas are appropriate and feasible, acceptable to PAPs, and approved by GoK.
The residents of Kibera and Mukuru were intensively consulted, enumerated, and their assets inventoried, and a clear cut-off date was disclosed during the RAP updating process.
A grievance mechanism is functional, and used by PAPs, including meetings of focus groups to ensure that the grievance filing and resolution procedures are well known and accessible.
The technical solutions recommended for safety infrastructure, replacement housing, and business units are feasible and cost effective, as approved by GoK, and will be implemented in a participatory manner, with support of the affected communities.
C. RECOMMENDATIONS OF THE UPDATED RAP 5. The following is a summary of physical structures and PAPs (households) identified.
Table 9: Summary of Physical Structures and PAPs No. of Physical structures No. of PAPs (Households) Kibera Mukuru Total Kibera Mukuru Total Residential 3,973 1,240 5,213 3,350 1,405 4,755Business 2,684 1,320 4,004 3,420 1,452 4,872R&B * 43 37 80 49 41 90Institutions 252 18 270 271 18 289Total 6,952 2,615 9,567 7,090 2,916 10,006
* Residential cum Business The updated 2010 RAP recommends: 6. Demarcation of a “Protection” Safety Zone: There will be provision of about 40m wide (20m on each side) “protection” safety zone, which will be cleared of any structures and whose boundaries will be demarcated by a wall (that also serves as the outer wall of the multi-storey replacement housing units). For Mukuru, the width is 50m since the resettlement will be on one side of the line. 7. Construction of Resettlement Units: The solutions for both Kibera and Mukuru were developed in consultation with the affected communities. The RAP proposes construction of multi-story replacement housing - both business and residential - along the outer 10 m width on both sides of the reserve within the current settlements in Kibera, and on one side of the railway line, similar structures for Mukuru will be constructed. These form part of the land-for-land exchange that the KRC allocated, including GoK cost-sharing to cover some of the RAP implementation infrastructure. Because of the presence of a high voltage line on one side, and an oil pipeline on the other side, only a 1.0 km strip is available for resettlement within the current settlement in Mukuru. The RAP identified a relocation area located about 2.5 km away from Mukuru towards the CBD, on the northern side of the railway reserve, parallel to Jogoo road and between Lunga Lunga and Likoni Bridges.
8. Support to Schools: The RAP reports that there are 43 informal schools in Kibera with 7,056 pupils and five in Mukuru with 1,497 pupils. It recommends that the children be relocated
47
to public schools that are in the vicinity of the resettlement areas, many of which are currently operating below capacity. Five such schools have been identified in Kibera and six in Mukuru. The government provides free primary education in public schools and it is a requirement that the schools take all children who present themselves within the class capacity. As needed, rehabilitation and enhancements of school facilities will be covered. 9. Provision of 45-year Lease: In addition to land allocations, the KRC will provide a 45 year lease for the resettled PAPs (at a nominal fee that will be used to maintain the replacement units). KRC has currently a working mechanism for leasing its land and property and similar arrangements will be followed. This provision of a 45-year lease has been discussed and coordinated with relevant GoK agencies dealing with urban housing and resettlement. 10. Additional RAP Financing: Total estimated cost is US$39.1 million (a summary of expenditure items is presented in the table at the end on this Attachment). The cost includes provision for a safety and resettlement infrastructure and services, footpaths and pedestrian bridges. It also includes projected expenditure of incremental facilities required by schools that will absorb the relocated children. The DCA already provides US$11 million for implementation of the RAP and hence the funding gap is US$28.1 million. The MoT has put in place mechanisms to include counterpart funding for the implementation of the RAP in their FY11/12 and FY12/13 budget cycle. They have also embarked on detailed design and bid documentation for the safety and resettlement infrastructure with the aim of tendering for works contract in June/July 2011. D. IMPLEMENTATION OF UPDATED RAP 11. The DCA provides that GoK appoint a technical team for the purposes of implementing the RAP. The updated RAP also recommends the formation of such a team which will be responsible for the day-to-day implementation of the RAP, including post-relocation programs for restoring livelihoods. GoK will advise the Bank how they plan to proceed in its recruitment. 12. The following have been agreed with GoK and KRC regarding RAP implementation arrangements under the restructured project:
(i) ReMU: KRC has already set up the ReMU and is in the process of hiring the technical staff (social/resettlement specialists; environment specialist; engineer; communication/liaison officer etc). The ReMU will be in charge of the day to day relocation activities and work closely with the engineering consultants to first ensure that preliminary designs and bidding documents for civil works are completed in a timely manner and works contracts are executed expeditiously to enable relocation start as early as possible. The ReMU will also coordinate the activities of other GoK agency and NGO. (ii) RAP Advisors: This task will be carried out by the RAP consultants as advisors to the ReMU to ensure a systematic and phased relocation of PAPs. As recommended in the RAP, ReMU technical teams will work closely with the RAP Advisors and Community Leaders to ensure smooth transition. The construction and
48
relocation process will be done in sequential phases, except for Mukuru, since an un-encroached new site is available. In the case of Kibera, the RAP Advisors will enhance consultations to explain the phased movement of people and clearance of structures by sections. The RAP Advisors are also expected to assist in the implementation of the livelihood restoration and community development programs.
(iii) Independent Review: The RAP implementation will be assessed through an independent review. This will include programs like social accountability and audits of RAP implementation performance. A follow-up socio-economic survey, building upon the baseline survey that was completed in 2004 and in 2009, will be completed one year after relocation to track changes in PAPs living conditions and incomes. (iv) PIT: The PIT will continue its decision making and oversight functions with respect to RAP implementation. The inter-agency composition of the PIT, and its mandate to oversee general project implementation, allows a linkage of the RAP implementation activities to the other components of the project.
(v) Communications: This is a vital aspect of RAP implementation. The ReMU will have a dedicated communications and liaison specialist who will develop a public consultation and disclosure plan and a communications strategy. A draft program was prepared and will be approved by the PIT by August 2011 (before the PAPs are relocated). The restructured project has provisions to assist GoK implement a communications program.
E. IMPLEMENTATION TIME FRAME 13. The table below presents the proposed implementation schedule to completion
Table 10: Proposed RAP Implementation Schedule Activity Due dateRAP Disclosure January 14, 2011 Detailed engineering designs and preparation of bid documents; and bidding process
May/June, 2011
Procurement and award of contracts July 2011Re-validation and signing of consent forms by PAPs Aug 2011 – Nov 2013 (in phases)Recruitment of ReMU team September 2011Completion of works contracts July 2013Transfer of units, relocation, defect liability period December 2013Completion of relocation January 2014
14. Summary of estimated RAP implementation costs: The table below summarizes the cost estimates for the implementation of the updated RAP.
49
Table 11: Summary of Estimated Revised RAP Implementation Costs Item
Location Description Estimated Amount (US$1 = KES 79)
(KES) (US$)1 Kibera Resettlement and Safety Infrastructure:
1. Boundary wall 2. Proposed business stall and residential
units along the wall 3. Paved footpath on both sides 4. Water supply and wastewater disposal
system 5. Footbridges 6. Drainage works along the wall
1,708,174,480 21,622,462
2 Mukuru Resettlement and Safety Infrastructure:1. Boundary wall 2. Proposed business stall and residential
units along the wall 3. Paved footpath on both sides 4. Water supply and wastewater disposal
system 5. Footbridges 6. Drainage works along the wall
860,805,000 10,896,266
3 Schools Provision of schools improvement support to accommodate the affected students 40,000,000 506,329
Administrative & Professional Services
Project management costs :a) Construction supervision costs b) Independent Monitor c) ReMU remuneration and operations d) Communications and Maintenance of
records e) Final grievances arbitrator committee f) Other expenses
200,000,000 2,531,646
Sub- Total 2,808,979,480 35,556,703 Contingencies – 10%
(includes communication)280,897,948 3,555,670
TOTAL 3,089,877,428 39,112,373
50
Annex 3 - Attachment 1A
Summary of Recommendations of the EIA for Kibera and Mukuru Resettlement Sites
1. The human encroachment on the railway reserve has several serious consequences to the surrounding environment among them:
Risks to human safety due to proximity to active railway traffic; Risks to property in the event of accidents or derailments; Risks to human health from dumping of waste onto the railway track which impedes
track drainage and compromises track stability; Exposure of maintenance personnel to unhygienic working conditions and disease
due to disposal of faecal and other waste on the track; Slow train speeds which caused inordinate delays in transport and travel; and Inefficient use of the railway due to inability to increase freight carriage constrained
by the need to reduce train operational speeds. 2. In light of the above consequences, it is essential that a clear corridor of operation is established in Kibera and Mukuru to improve railway safety and operation. The RAP (updated) proposes to construct a boundary wall, storey units, market stalls, bridges and footpaths so as to implement the relocation of people residing, undertaking business, or otherwise occupying the reserve (the 60-metre railway operation corridor). 3. The EIA examined the potential positive and negative impacts of the project on the immediate surroundings with due regard to construction, occupation, and decommissioning. It encompassed the physical, ecological, socio-cultural, health and safety conditions at the relocation sites and its environs during and after construction. 4. The Environment, Health and Safety section of the EIA contains guidelines for protecting, managing and responding, to processes, situations, and conditions that might compromise health, safety and security of workers and ecological wellbeing. 5. To avoid or reduce negative environmental impacts, mitigation measures were proposed and an Environmental Management Plan (EMP) formulated for the Kibera and Mukuru relocation sites. The proponent EMP includes an annual environmental audit once the project is in operation. The recommendations to be included in the contracts for works/construction cover the following;
All construction materials and especially sand, gravel, hardcore and wood must be sourced/procured from legalized dealers.
Construction activities must be undertaken only during the day i.e. between 0800 hours to 1700 hours. This will minimize disturbance to the general public within the proximity of the site/project especially the residential estates.
Traffic on the access road to the site should be controlled and neighborhoods informed during construction, especially when heavy trucks are moving in and out of the site. This will ensure that no accidents are caused by the site’s activities.
51
The construction design and works must be approved by the relevant government departments i.e. Physical planning, Ministry of Lands and Housing, health etc. the proponent should therefore follow the guidelines as set by the departments to safeguard and envisage environmental management principles during construction and operation phases of the proposed development.
It is important that warning/informative signs (bill boards) be erected at the site. These should indicate the operation hours and when works are likely to be started and completed.
All solid waste materials and debris resulting from construction activities must be disposed off at approved dumpsites. The wastes should be properly segregated and separated to encourage recycling of some useful waste materials; i.e. some excavated stone materials can be used as backfills.
During construction, all loose soils must be compacted to prevent any erosion by wind or water. Other appropriate soil erosion control measures can be adapted. Any stockpiles of earth should be enclosed, covered or sprinkled with water during dry or windy conditions to minimize generation of rust particles into the air.
Once earthworks have been done, restoration of the worked areas should be carried out immediately by backfilling, professional landscaping/leveling and planting of low grass in open areas), flowers and suitable tree species.
Water is a setback in Kibera and Mukuru so the project should look into modalities aimed at enhancing water supply to the proposed scheme and also give a hand in upgrading water supply systems in the neighborhood. Nairobi City Council water supply system should be upgraded and water sourced from reliable sources; say from uplands. Rainwater harvesting systems should be provided as well as standard storage systems to every office floor unit; to enhance collection of the runoff generated from the roof catchments.
Drains will need to be properly designed, installed and regularly maintained to prevent storm water (run-off) from accumulating within the site spreading to the neighborhood. These must effectively drain the storm water from the premise into the existing public drainage system to be developed along the access road.
Proper and regular maintenance of construction machinery and equipment will reduce emission of hazardous fumes and noise resulting from friction of rubbing metal bodies.
Heavy construction activities should be limited (or avoided) during the rainy season to minimize the chances of soil degradation (soil erosion).
Maintenance activities must be carried out in service bay areas’ to reduce chances of oils or grease or other maintenance materials, from coming into contact with environment (water or soil). Wastewater from such areas must be refrained from coming into contact with solid mass or water bodies as it contains oil/grease spills.
Used and new oils must be handled and stored appropriately to avoid oil leaks and spills on the site.
Sewerage system must be properly designed within the site/office and effectively connected to the public sewer system. Design specifications must be followed during installation. Standard cleanliness and waste disposal facilities at construction site and during occupation must be maintained.
52
Workers should be provided with complete personal protective equipment (PPE) and safety gear. They should have working boots, complete overalls, helmets, gloves, earmuffs, nose masks, goggles etc. A fully equipped first aid kit must be provided within the site.
The contractor must have workmen’s compensation cover; the contractor is required to comply with workmen’s compensation Act as well as other relevant ordinance, regulations and Union Agreement. The contractor must provide adequate security during the construction period and especially during the night when there are no construction activities.
A complete fire fighting system must be provided after completion of the project. The equipment is clearly provided in the design plan, and in the report. This must be installed or provided at strategic points.
EMP 6. An EMP outline has been developed to ensure sustainability of the site activities during construction and thereafter. The plan provides a general outlay of the activities, associated impacts, mitigation plans and appropriate indicators for monitoring. Implementation timeframes and responsibilities are defined, and where practicable, the cost estimates for recommended measures are provided. There are also guidelines for addressing environmental health and safety. 7. OP 4.11 (Physical Cultural Resources) is being triggered for this AF; the EIA/ Environment and Social Management Plan (ESMP) will ensure that the civil works carefully avoid existing cultural assets. Guidelines for “chance finds” procedure will be integrated into the contracts. These include development of a cultural property management plan if physical resources are found, in accordance with the government’s policies and guidelines. 8. The National Environment Management Authority (NEMA) will issue an EIA license which is subject to annual environmental audits. This will be in compliance with the Environmental Management and Coordination Act of 1999 and the Environmental Impact Assessment and Audit regulations, 2003.
53
Annex 4: Proposed Governance Action Plan
RISK Proposed Actions
Comments
Collusion and bid rigging
- The proposed works and installation contracts will be post qualified and where prequalification is necessary – in two stage procurement- robust cost estimation will be carried out. - Public dissemination of the project and its business opportunities and reinforcement of the government’s and Bank’s commitment to fight corruption. This will also include publication of the project’s detailed and updated procurement plan on the website. - Ensure that contracts are not deliberately split to circumvent the Bank’s prior review thresholds or to limit competition. On the other hand ensure contracts are not too large to exclude certain groups.
Post qualification is planned for all works and installations contracts.
Fraud and Corruption
- Establish a transparent, well documented and consistent review methodology for exclusion of poor performers and contractors known to engage in fraudulent and corrupt practices. - Strengthen PIT capacity to oversee the design and supervision of the construction and installation aspects, with particular emphasis on quality and contract management. - Determine through an independent survey why some bidders who buy bid documents choose not to submit bids.
In instances where few bids have been received the client has been requested to provide reasons.
Weak due diligence (The integrity and past performance of contractors is a key determinant of fraud and corruption risks)
- Implementing agencies should increase their efforts in conducting due diligence of bidders, particularly with regard to past performance, financial and technical capacity, equipment holding, and compliance with tax laws and site safety regulations. - Undertaking performance reviews to ensure poor performers are identified.
Due diligence is a requirement for all major installation contracts and will be extended to civil works.
Absence of robust cost estimates
- Competent National and International consultants are engaged for design assignment and to provide cost estimates. - Thorough process of cost estimates is followed (including their developed from first principles) and adjustment for prevailing market conditions and, if possible, comparison to market rates in the region (i.e., East Africa). - Exercise the Project Manager’s rights under the conditions of contract to review true cost structure.
Due review and comparison with current cost appropriately.
Weak Capacity to detect and deal with fraud and corruption.
Facilitate training workshops focused on identifying red flags and establishing controls in procurement and financial management and fraud prevention in works and installation contracts.
The project has used substantial resources to build capacity and develop skills.
Weak Management Facilitate training of PIT. Strengthen systems to handle and effectively respond to complaints in a timely manner. Strengthen systems to handle and effectively respond to complaints in a timely manner.
ReMU which will be composed of experts will deal with complaint and grievances arising from implementation of the RAP. They will be supported by a committee of eminent persons who will be the final arbiters.
54
Annex 5: Financial Management Compliance with Financial Covenants for the Continuing Implementing Entities under the East Africa Trade And Transport Facilitation Project (EATTFP) - Kenya Audit issues 1. There are no overdue audit reports from the other existing implementing entities i.e. Kenya Ports Authority (KPA), Kenya Revenue Authority (KRA) and Ministry of Transport (MoT). In the audit reports for the year ended June 30, 2010, KPA received a clean audit opinion while KRA and MoT audit reports were qualified on internal control issues. MoT-Kenya Railways Corporation (KRC), MoT and KRA audit qualifications have now been cleared by the Kenya National Audit Office (KENAO). IFR issues 2. The existing implementing entities have submitted their Interim Financial Report (IFR) up to December 31, 2010. Financial Management assessment of new implementing entities under additional financing 3. The Bank’s financial management team conducted a financial management assessment of Kenya National Highways Authority (KeNHA) and Kenya Trade Network Agency (KenTrade) in accordance with the Financial Management Manual for World Bank-Financed Investment Operations dated March 1, 2010 and the Unit’s Financial Management Assessment and Risk Rating Principles. The conclusion of the assessment is that the financial management arrangements meet the Bank’s minimum requirements under OP/BP10.02. The overall residual risk rating is moderate (Medium-L) for KeNHA and substantial (Medium-I) for KenTrade hence the project will have an on-field site supervision once a year for KeNHA and twice for KenTrade. 4. KeNHA was established through the Kenya Roads Act 2007, to manage, develop, rehabilitate and maintain national roads in Kenya as a way of addressing governance challenges in the road sector. 5. KenTrade was established through an executive order in February 2011 after a cabinet meeting of September 15, 2010 (through a cabinet memo CAB(09)90) where the Cabinet approved the setting up of National Single Window (NSW) system and also approved the creation of an independent corporate entity to manage the NSW. The following are the financial management arrangements for the project.
Budgeting arrangements 6. KeNHA: The budgeting process is deemed adequate. The budgeting process follows the government of Kenya (GoK) procedures titled Government Financial Regulations and
55
Procedures. In addition, KeNHA has its own procedures manual entitled Financial Policies, Guidelines & Procedures Manual dated July 1, 2009. The Finance Committee of the Board reviews the budget before forwarding to the full Board for adoption and approval. The new SAGE Pastel accounting system has a module for budgeting but previously the budget was done manually. Staff have been trained on the SAGE system but are yet to go live.
7. KenTrade: The budgeting process will follow GoK’s procedures titled; Government Financial Regulations and Procedures. In addition, KenTrade being a state corporation intends to have its own procedures manual in addition to those used by GoK. Preparation of the manuals is a Condition of Effectiveness under the Amendment to DCA for Credit 4148-KE.
8. GoK is deploying staff that will be in charge of budgeting starting in July 2011. The budget will be done in excel worksheet pending procurement of an Enterprise Resource Planning (ERP) system. Accounting arrangements 9. KeNHA: Accounting and internal audit staff are adequate in terms of numbers, qualification and experience. However, since the Ministry of Roads (MoR) has to get involved at some point in the KeNHA payment process- for Direct Payments only, any staffing challenge at the MoR affects KeNHA especially when it comes to efficiency.
10. Financial Management Manual: The use of both the GoK procedures and own developed procedures entitled ‘Financial policies, Guidelines & Procedures Manual’ are considered adequate.
11. Information Accounting System: KeNHA has just acquired SAGE Pastel accounting system. The staff has been trained and implementation has just started. Previously they were on manual accounting system.
12. KenTrade: The accounting staffs have been deployed. They include a Chief Financing Officer and an accountant. 13. Although KenTrade uses a government financial and regulations procedures manual that is considered adequate, it is a quasi government institution that needs to develop its financial management manual that will be used for all its projects including this one. This will be a Condition of Effectiveness under the Amendment to DCA for Credit 4148-KE. 14. The entity is currently using manual system (excel worksheet) but will be procuring an ERP as stated above under budgeting.
Internal control and internal auditing arrangements Internal Auditing 15. KeNHA has a strong internal audit function with audit committees in place to address issues raised by both internal and external audit reports.
56
16. KenTrade is in the process of setting up its own internal audit function. So far they have hired one staff and GoK proposes to post additional staff to the agency. 17. The audit committee will also be constituted once the Board of Directors has been set up. This is also a requirement of the State Corporation guidelines. Internal Control Systems 18. KeNHA has adequate financial management manual documenting the internal control systems to be used under the project. 19. KenTrade: The GoK procedures manual has documented adequate internal control systems to be used under the project but as mentioned above, KenTrade is a quasi government institution that needs to develop its own Financial Management Manual that will be used for this project. 20. In addition, KenTrade will have to comply with the payment approval guidelines of state corporations. Review of Internal Control Systems 21. A review of the external audit reports and the management letters flagged some internal control issues in KeNHA, which are being addressed by the respective entities and will be monitored during project implementation by the Bank using agreed upon action plans with the entities. 22. KenTrade is a new entity and no audit has been done so far.
(a) Disbursements
Funds flow and disbursement arrangements 23. Banking arrangements: MoF will be required to open a Designated Account denominated in United States Dollars for KenTrade as KeNHA already has a Designated Account for the project. KenTrade will also open a Project Account denominated in Kenyan Shillings as KeNHA already has a Project Account for the project. Both accounts will be opened in commercial banks acceptable to the International Development Agency (IDA) based in Kenya. Details of these accounts once opened and the signatories are to be submitted to the Bank. 24. Funds flow arrangements: The project will adopt the transaction based Summary of Expenditure (SOE) method of disbursement. The Bank will give an initial advance with a ceiling. Subsequently, the implementing entities will submit their SOE and the Bank will process the withdrawal applications and deposit funds into the Designated Account. Funds will then be transferred from the Designated Account at MoF into the project accounts at KeNHA and
57
KenTrade through their line ministries, development bank accounts. KeNHA and KenTrade will be submitting their own withdrawal applications to the Bank through their line Ministries and the MoF. The Kenya portfolio has been facing delays in the transfer of funds from the Designated Account held at the MoF to the project accounts held by the implementing entities.
25. Disbursement arrangements: The transaction based disbursement procedures will be used. Other methods of disbursement will include direct payments, special commitments and reimbursements. Details concerning disbursements will be spelt out in the project’s Disbursement Letter that will be issued by the Bank.
Figure 1: Funds Flow Diagram
Financial reporting arrangements 26. KeNHA and KenTrade will prepare quarterly un-audited Interim Financial Reports (IFRs) for the project in form and content satisfactory to the Bank, which will be submitted to the Bank within 45 days after the end of the quarter to which they relate. KeNHA has been producing satisfactory IFRs under the EATTFP and will continue using the same while KenTrade has discussed and agreed on the format of the IFR with the Bank. 27. The contents of the IFR will include a section to report on the accountability of funds utilized and a section to access funds using the SoE Method. The reporting section includes: Statement of Sources and Uses of Funds; and Statement of Uses of Funds by Project Activity/Component. 28. The project will also prepare the projects annual accounts/financial statements within three months after the end of the accounting year in accordance with accounting standards acceptable to the Bank. The audited financial statements should be submitted to the Bank within six months after the end of the accounting year. KeNHA and KenTrade will prepare its accounts in accordance with International Financial Reporting Standards.
WORLD BANK (IDA)
PROJECT ACCOUNTS in KES in a Local Commercial Bank
(KeNHA, KenTrade)
DESIGNATED ACCOUNTS in US$ at
Treasury (KeNHA, KenTrade)
Payments to project activities
Line Ministry
58
Auditing arrangements 29. KENAO will audit EATTFP’s annual financial statements prepared by KenTrade and KeNHA using the International Standards on Auditing. The audited financial statements will be submitted to the Bank within six months after the end of the fiscal year along with the management letter and management response thereto. Audit terms of reference have already been agreed with KENAO under the original EATTFP. The audit report will be disclosed in accordance with the Bank’s disclosure policy. However, KENAO’s capacity to conduct value for money audits needs to be strengthened and as an interim measure they can hire specialists to conduct these audits. Value for money audits could be required depending on the fiduciary risk during project implementation. 30. The audit report for KeNHA under the EATTFP for June 30, 2010 was qualified on government counterpart funding reflected in the statement of receipt and payments that had not been deposited in the project bank account. The audit report of KeNHA under the Northern Corridor Transport Improvement Project (NCTIP) was qualified on commitment fees, interest on delayed payments, bank reconciliation and unclosed bank account for MOR. Both KeNHA ((NCTIP) and EATTFP issues have since been cleared by KENAO. No ineligible expenditure was noted.
Table 1: Audit Reports and Due Dates
Audit Report Due Date
KeNHA, KenTrade Annual audited financial statements and Management Letter for the project (including reconciliation of the Designated Accounts with appropriate notes and disclosures) for each entity.
Within six months after the end of each fiscal/financial year.
59
Financial Management Action Plan 1. The following actions need to be taken in order to enhance the financial management arrangements for the Project:
Table 2: Action Items for Financial Management Arrangements Action Date due by Responsible 1. Follow up on funds flow delays between
the Designated Account held by the Ministry of Finance (MoF) and the project account held by the KeNHA to ensure that GoK has an efficient funds flow process.
Strengthen the capacity of KENAO to conduct value for money audits which could be required for this project depending on the fiduciary risk of the project during implementation.
KenTrade to acquire accounting software.
During implementation To be managed by Country Office based Financial Management team. During Implementation
KENAO, MoF, KeNHA, MoT, KenTrade
2. Prepare and agree with the Bank a project operational manual with adequate Financial Management arrangements.
This will be a Condition of Effectiveness under the Amendment to DCA for Credit 4148-KE; limited to NSW funding.
KenTrade
60
Annex 5A – Reallocation of Proceeds of the Credit – Kenya
Category of Expenditure Allocation (SDR) Current Current Revised Total
Disbursement (March 22)
% of Financing
(1) Goods 100% of foreign expenditures and 90% of local expenditures
(a) for Part C.1 of the Project -
7,620,000 7,620,000 1,212,026.50
(b) (b) for Part C.2 of the Project -
3,680,000 3,680,000 1,768,133.00
(c) for Part C.4 of the Project 700,000 700,000 86,370.17 (d) for Part D of the Project 200,000 200,000 64,450.31 (2) Works 100% of foreign
expenditures and 75% of local expenditures
(a) for Part C.2 of the Project
200,000 200,000 0.00
(b) for Part C.3 of the Project 14,900,000 14,900,000 0.00 (c) for Part D of the Project 8,400,000 8,400,000 857,936.10 (3) Consultant Services -
100% of foreign expenditures and 94% of local expenditures
(a) for Part C.1 of the Project -
1,340,000 1,340,000 568,917.20
(b) for Part C.2 of the Project -
1,180,000 1,180,000 76,993.10
(c) for Part C.3 of the Project 900,000 900,000 73,260.38 (d) for Part C.4 of the Project 1,300,000 1,300,000 105,047.83 (e) for Part D of the Project 3,380,000 3,380,000 316,388.15 (4) Severance payments 28,900,000 25,550,660 25,452,117.00 100% of the
amounts disbursed
(5) Pension payments 5,300,000 9,621,423 9,621,423.30 100% of the amounts disbursed
(6) Operating Costs -
90%
a) for Part C.1 of the Project- 350,000 350,000 189,968.97 (b) for Part C.2 of the Project 330,000 330,000 0.0 (c) for Parts C.4 of the Project 330,000 330,000 35,892.59 (7) Unallocated- 4,290,000
3,317,917 -
TOTAL 83,300,000 83,300,000 40,428,924.60
61
Annex 5B – Proposed allocation of the IDA AF – Kenya
Category Amount of the Credit Allocated (expressed
in US$)
Percentage of Expenditures to be
Financed (inclusive of Taxes)
(1) Implementation of the Updated RAP under Part A of the Project (compensation of Displaced Persons, Goods, works, non consulting services and consultants’ services for associated construction)
19,670,000 100%
(2) Goods, works, non consulting services and consultants’ services for Part B of the Project
1,900,000 100%
(3) Goods, works, non consulting services and consultants’ services for Part C of the Project
8,430,000 100%
TOTAL AMOUNT 30,000,000
62
Annex 6: Revised Estimate of Project Costs
* OSBP identified for TMEA funding.
KENYA Revised Cost Table
Based on Financing from IDA, GoK and TMEA
Component
PAD estimate US$ m
Revised estimate US$ m
Component 1: Support to implement the EAC CU 7.75 7.75 1.3 Support to Customs Department at national level (including RRA inclusion to EAC CU)
7.75 7.75
1.3.1 Technical Assistance / Training 2.55 2.55 1.3.2 Equipment (Scanner) 5.20 5.20 Component 2: Institutional support for transport facilitation 3.50 3.50 2.4 Support to implementation of regional / national transport regulation 2.50 2.50 2.5 Monitoring and evaluation of the project 1.00 1.00 Component 3: Investment support for transport facilitation 39.17 66.60
3.1 Gateways safety and Security Compliance 11.50 22.90
3.1.1 Equipment Investment to Port of Mombasa 10.00 21.40 3.1.2 Training and Technical Assistance to Port of Mombasa 1.50 1.50 3.2 Improvement of Corridor Security and Transport Policy / Regulation 11.00 19.43 3.2.2 National cargo tracking system 0.40 0.40 3.2.3 Weighbridges 10.60 19.03 3.3 Border crossing improvements (Joint Border Posts) 13.47 21.07 3.3.1 Malaba pilot juxtaposed border post 5.10 5.10 3.3.2 Lunga-Lunga 2.20 4.00 3.3.4 Isebania 1.70 4.00 3.3.5 Busia* 2.27 4.00 3.3.8 Taveta* 2.00 3.77 3.3.10 Additional Studies 0.20 0.2 3.5 Trade Points and Community Based Systems 3.20 3.20 3.5.2 Community Based Systems in Port of Mombasa 3.20 3.20 Component 4: Support to the Concession of the Railways 70.20 100.70 4.1 Retrenchment and other staff related costs 58.00 60.40 4.1.1 Retrenchment cost in Kenya 45.00 46.00 4.1.2 Redeployment Support for Retrenchment Program 1.00 - 4.1.3 Pension start up/arrears 12.00 12.00 4.1.4 Rehabilitation of assets transferred to the pension fund 0.00 2.40 4.2 Technical Support and Investment Support 1.20 1.20 4.2.1 Technical assistance to the set up of the new KRC 1.20 1.20 4.3 Social Impact and Safeguard Issue 11.00 39.10 4.3.1 Implementation of Relocation Action Plan 11.00 39.10
Total 120.62 178.55 4.4 Partial Risk Guarantee 45.00 45.00
63
TANZANIA Revised Estimate of Project Costs
Based on Financing from IDA, GoT and TMEA
Component
PAD Estimate US$ million
Revised Estimate
US$ million Component 1: Support to implement the EAC CU - Component 2: Institutional support for transport facilitation
2.70 2.70
2.4 Support to implementation of regional / national transport regulation
2.00 2.00
2.5 Monitoring and evaluation of the project 0.70 0.70 Component 3: Investment support for transport facilitation
34.30 44.30
3.1 Gateways safety and Security Compliance 11.50 14.15
3.1.1 Equipment Investment to Port of Dar-es-Salaam 10.00 12.65 3.1.2 Training and Technical Assistance to Port of Dar-es-Salaam
1.50 1.50
3.2 Improvement of Corridor Security and Transport Policy / Regulation
8.50 8.50
3.2.2 National cargo tracking system 1.00 1.00 3.2.3 Weighbridges 7.50 7.50 3.3 Border crossing improvements (Joint Border Posts) (Mutukula and Horohoroare identified for TMEA funding)
11.20 15.72
3.4 Inland Container Depots (ICDs) and intermodal platforms 1.10 1.25 3.4.2.1 TPA Master Plan including ICD development inland 0.8 1.25 3.4.2.2 Specific TA for ICD development or concessioning 0.3 - 3.5 Trade Points and Community Based Systems 2.00 4.68 3.5.2 Community Based Systems in Port of Dar-es-Salaam 2.00 4.68 Component 4: Support to the Concession of the Railways - -
Total 37.00 47.00
64
UGANDA Revised Estimate of Project Costs
Based on Financing from IDA, GoU and TMEA
Component PAD
US$ m Revised US$ m
Component 1: Support to implement the EAC CU 1.89 1.89 1.3 Support to Customs Department at national level (including RRA inclusion to EAC CU)
1.89 1.89
Component 2: Institutional support for transport facilitation
1.66 2.01
2.4 Support to implementation of regional / national transport regulation
0.81 0.81
2.5 Monitoring and evaluation of the project 0.85 1.20 Component 3: Investment support for transport facilitation 18.85 27.26 3.2 Improvement of Corridor Security and Transport Policy / Regulation
2.31 5.02
3.2.2 National cargo tracking system 1.05 1.62 3.2.3 Weighbridges 1.26 3.40 3.3 Border crossing improvements (Joint Border Posts) 14.23 17.04 3.3.1Malaba pilot juxtaposed border post 3.57 5.10 3.3.5 Busia (identified for TMEA funding) 3.24 3.24 3.3.6 Mutukula (identified for TMEA funding) 3.15 3.50 3.3.7 Gatuna 4.06 5.20 3.3.10 Additional Studies 0.21 - 3.4 Inland Container Depots (ICDs) and intermodal platforms 2.31 5.20 3.4.3 Kampala- Mukono 2.31 5.20 Component 4: Support to the Concession of the Railways 4.00 5.24 4.2 Technical Support and Investment Support 4.00 5.24 4.2.1 Technical assistance to the set up of the new URC and feasibility of the Northern Line
1.58 0.30
4.2.2 Support to marine services 2.42 4.94 Total 26.40 36.40
4.4 Partial Risk Guarantee (maximum amount proposed) 15.00 15.00
65
RWANDA Revised Estimate of Project Costs
Based on Financing from IDA and GoR
Component PAD Estimate
US $ m Revised
Cost US$ m Component 1: Support to implement the EAC CU 6.20 6.45 1.2 Regional Customs Union Implementation 0.10 0.10 1.2.2 Customs Interconnectivity Investment 0.10 0.10 1.3 Support to Customs Departments at national level ( including RRA inclusion to EAC CU)
6.10 6.35
1.3.1 Technical Assistance / Training 1.10 0.45 1.3.2 Equipment (Scanner) 5.00 5.90 Component 2. Institutional Support for transport facilitation
2.50 1.20
2.4 Support to implementation of regional/ national transport regulation
0.90 0.60
2.5 Monitoring and evaluation of the project 1.20 0.60 2.6 Kigali – Kampala pipeline(feasibility study) 0.40 - Component 3: Investment support for transport facilitation
6.30 7.35
3.2 Improvement of Corridor Security and Transport Policy / Regulation
1.20 1.50
3.2.2 National cargo tracking system 1.00 1.50 3.2.3 Weighbridges 0.20 - 3.3 Border crossing improvements (Joint Border Posts) 2.70 5.21 3.3.7 Gatuna 2.50 5.21 3.3.10 Additional Studies 0.20 - 3.4 Inland Container Depots (ICDs) and intermodal platforms 0.40 0.44 3.4.1 Isaka Dry Port 0.40 0.44 3.5 Trade Points and Community Based Systems 2.00 0.20 3.5.1 Single trade process window 2.00 0.20 Component 4: Support to the Concession of the Railways - -
Total 15.00 15.00