world bank document...document of the world bankreport no: icr0000742 implementation completion and...

Document of The World Bank

Report No: ICR0000742

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-7472)

ON A

LOAN

IN THE AMOUNT OF US$264.10 MILLION

TO THE

PROVINCE OF BUENOS AIRES

FOR A

BUENOS AIRES INFRASTRUCTURE SUSTAINABLE INVESTMENT DEVELOPMENT PROJECT PHASE II (APL2)

June 30, 2014

Sustainable Development Department Argentina, Paraguay and Uruguay Country Management Unit Latin America and the Caribbean Region

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CURRENCY EQUIVALENTS

(Exchange Rates Effective June 28, 2007 and December 31, 2013)

Currency Unit = AR Peso (AR$)

AR$1 = US$0.328 – Board Approval US$ 1.00 = AR$3.050

AR$1.00 = US$0.154 – Closing Date US$1.00 = AR$6.481

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS APL Adaptable Program Loan ABSA Aguas Bonaerenses Sociedad Anónima – Water Utility BAPIN Banco de Proyectos de Inversión Pública - Bank of Public Investment

Projects CAS Country Assistance Strategy CPS Country Partnership Strategy CREMA Contratos de Rehabilitación y Mantenimiento – Performance-Based Road

Rehabilitation and Maintenance Contracts DIPAC Dirección Provincial de Aguas y Cloacas – Provincial Directorate for

Water and Sewerage DIPSOH Dirección Provincial de Saneamiento y Obras Hidráulicas – Hydraulic and

Sanitation Directorate DPV Dirección Provincial de Vialidad EIRR Economic Internal Rate of Return FM Financial Management GDP Gross Domestic Product GoPBA Government of the Province of Buenos Aires IRI International Roughness Index ISO International Organization for Standardization ME Ministry of the Economy M&E Monitoring and Evaluation MI Ministry of Infrastructure OSSE Obras Sanitarias Mar del Plata-Batán PAD Project Appraisal Document PBA Province of Buenos Aires PDO Project Development Objective SCEOCI Subsecretaría de Coordinación con Estados y Organismos de Crédito

Internacionales – Sub-secretary for the Coordination International Credit from Countries and Organizations

SIL Specific Investment Loan SPIP Sistema Provincial de Inversión Pública -Provincial Public Investment

System UCO Unit for Coordination with Multilateral Credit Organizations UPAS Unit for Provincial Water and Sanitation Services WSS Water Supply and Sanitation

Vice President: Jorge Familiar Calderón

Country Director: Jesko S. Hentschel

Sector Manager: Wambui G. Gichuri

Project Team Leader: Lilian Pena P. Weiss & Maria Marcela Silva

ICR Team Leader: Lilian Pena P. Weiss & Maria Marcela Silva

i

ARGENTINA

BUENOS AIRES INFRASTRUCTURE SUSTAINABLE INVESTMENT PROJECT

PHASE II (APL2)

Data Sheet .......................................................................................................................... i

A. Basic Information ..................................................................................................... i

B. Key Dates ................................................................................................................... i

C. Ratings Summary ..................................................................................................... i

D. Sector and Theme Codes ......................................................................................... ii

E. Bank Staff ................................................................................................................ iii

F. Results Framework Analysis .................................................................................. iii

G. Ratings of Project Performance in ISRs .............................................................. vii

H. Restructuring (if any) ........................................................................................... viii

I. Disbursement Profile .............................................................................................. ix

Section 1.Project Context, Development Objectives and Design .................................... 1

Context at Appraisal ..................................................................................................... 1

Original Project/Program Development Objective (PDO) and Key Indicators ..... 3

Revised PDO and Key Indicators ................................................................................ 3

Beneficiaries .................................................................................................................. 4

Original Components ................................................................................................... 4

Revised Components .................................................................................................... 6

Section 2: Key Factors Affecting Implementation and Outcomes ................................... 7

Project Preparation, Design and Quality at Entry .................................................... 7

Implementation ............................................................................................................. 9

Monitoring and Evaluation (M&E) Design, Implementation and Utilization ...... 12

Section 3: Assessment of Outcomes ............................................................................... 13

Relevance of Objectives, Design and Implementation ............................................ 13

Justification of Overall Outcome Rating .................................................................. 17

Overarching Themes, Other Outcomes and Impacts .............................................. 17

(a) Poverty Impacts, Gender Aspects, and Social Development ............................ 17

(b) Institutional Change/Strengthening .................................................................... 17

(c) Other Unintended Outcomes and Impacts ......................................................... 18

Section 4: Assessment of Risk to Development Outcome ............................................. 18

ii

Section 5: Assessment of Bank and Borrower Performance ........................................ 199

Bank Performance in Ensuring Quality at Entry .................................................. 199

Bank Performance in Quality of Supervision .......................................................... 19

Borrower Performance .............................................................................................. 20

Government of the Province of Buenos Aires Performance ................................... 20

Implementing Agency (Coordinating and Executing Agencies) Performance Supervision 20

Section 6. Lessons Learned ............................................................................................ 21

Section 7: Comments on Issues Raised By Borrower/Implementing Agencies/Partners22

Annex 1: Project Costs.....................................................................................................24

Annex 2. Project Outputs by Components (and additional Project results)…………....28

Annex 3. Economic and Financial Analysis ................................................................... 31

Annex 4. Bank Lending and Implementation Support/Supervision Processes .............. 38

Annex 5. Borrower’s Report .......................................................................................... 40

Annex 6. List of Supporting Documents ........................................................................ 55

Annex 7. Map (IBRD 40951) ......................................................................................... 57

i

Data Sheet

A. Basic Information

Country: Argentina Project Name:

Buenos Aires

Infrastructure Sustainable

Investment Development

Phase II Project

Project ID: P105288 L/C/TF Number(s): IBRD-74720

ICR Date: 05/02/2014 ICR Type: Core ICR

Lending Instrument: APL Borrower: Government of The

Province of Buenos Aires

Original Total

Commitment: USD 270.00M Disbursed Amount: USD 264.10M

Revised Amount: USD 264.10M

Environmental Category: B

Implementing Agencies:

Ministry of Economy

Cofinanciers and Other External Partners: N/A

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 03/12/2007 Effectiveness: 08/08/2008 08/08/2008

Appraisal: 04/23/2007 Restructuring(s):

10/06/2011

10/12/2012

08/06/2013

Approval: 06/28/2007 Mid-term Review: 03/24/2011

Closing: 02/15/2012 12/31/2013

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Satisfactory

ii

Risk to Development Outcome: Moderate

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing

Agency/Agencies: Satisfactory

Overall Bank

Performance: Satisfactory

Overall Borrower

Performance: Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments (if

any) Rating

Potential Problem Project at

any time (Yes/No): Yes Quality at Entry (QEA): None

Problem Project at any time

(Yes/No): Yes

Quality of Supervision

(QSA): None

DO rating before

Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Flood protection 12 14

Roads and highways 40 43

Sewerage 21 21

Sub-national government administration 6 1

Water supply 21 21

Theme Code (as % of total Bank financing)

Improving labor markets 14 14

iii

Infrastructure services for private sector development 14 14

Municipal governance and institution building 14 14

Other urban development 29 29

Urban services and housing for the poor 29 29

E. Bank Staff

Positions At ICR At Approval

Vice President: Jorge Familiar Calderón Pamela Cox

Country Director: Jesko S. Hentschel Axel van Trotsenburg

Sector Manager: Wambui G. Gichuri John Henry Stein

Project Team Leader: Lilian Pena P. Weiss & M. Marcela

Silva Manuel G. Marino

ICR Team Leader: Lilian Pena P. Weiss & M. Marcela

Silva

ICR Primary Author: Elizabeth Hunter Eiseman

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)

The overall purpose of the APL program is to improve the provision of infrastructure services in the

Province within a framework of fiscal responsibility. Through improved services the Project aims to

support the return to a sustainable path of economic growth, to alleviate poverty and to increase

social equity. To this end, the Province prioritized a set of interventions through the sector wide

Infrastructure Program for the period 2005-2012 specifically aimed to:

i. Develop a multi-year public expenditure program, in line with the priorities of the Province,

to implement the Infrastructure Program following sound fiscal policies to ensure

convergence towards a long-term sustainable fiscal framework.

ii. Improve and maintain high priority segments of the non-concessioned paved road network

to support the reactivation of the provincial economy and strengthen regional

competitiveness.

iii. Enhance access to water, sewerage, sanitation and urban drainage services, especially for

the low-income segments of the population living in highly vulnerable areas of the

Conurbano Bonaerense.

iv

The Project Development Objectives (PDO) as outlined in the Loan Agreement (LA) of the APL II is

to improve the social and environmental welfare of approximately five million people living in the

Borrower's territory through the improved provision of transport, water and sanitation, and drainage

services.1 This ICR is evaluating the APL II.

Revised Project Development Objectives (as approved by original approving authority)

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : High-traffic productive road assets preserved with an acceptable average roughness (HT

IRI) to reduce operational and travel time costs, and avoided accumulation of future

liabilities in the overall network (AVG IRI) on total paved primary network)

Value

quantitative or

Qualitative)

HT IRI 3.5

AVG IRI 3

HT IRI 3

AVG IRI 3.3

HT IRI 3.7

AVG IRI 3.3

HT IRI 3.60

AVG IRI 3.05

Date achieved 05/29/2007 02/15/2012 12/31/2013 12/31/2013

Comments

(incl. %

achievement)

100% achieved. During implementation traffic increased significantly, therefore the

number of roads that fell under the HT category increased and the target was

restructured. Without the Program, AVG IRI would have reached 5.7 (projection

from HDM).

Indicator 2 : Additional poor people with access to Water Supply and Sanitation (WSS) services

Value

quantitative or

Qualitative)

Total: 0

- People with water

Connections

-People with sewerage

service lines

-People with active sewerage

connections

Total: 196,130

Water: 35,000

Sewer: 354,158

Active: 161,130

Total: 167,706

Water: 34,698

Sewer: 298,208

Active: 133,008

Total: 146,898

Water: 34,698

Sewer: 298,368

Active: 112, 200

Date achieved 05/29/2007 02/15/2012 12/31/2013 12/31/2013

Comments

(incl. %

achievement)

87.6 % achievement (water and sewer service lines: 100%; active sewerage connections:

84%). The Project targeted residents living in areas with high poverty incidences. Targets

were adjusted given construction price increases. See the Efficacy Section for more detail

on indicator values.

1 This description was taken from the APL2 Loan Agreement, which is the basis for evaluation; however it differs slightly from the description in the

PAD, which reads: “The specific Project Development Objective is to improve the social and environmental welfare of approximately 5,000,000 people

through the improved provision of transport, water and sanitation and drainage services.”

v

Indicator 3 : Improved flood management capacity measured as flood persistence times

Value

quantitative or

Qualitative)

Date achieved

Comments

(incl. %

achievement)

This indicator was dropped because flood persistence times impacts would not have been

fully observed until after the Project's closing. The impact of this component was measured

by indicator 6.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Km of roads rehabilitated

Value

(quantitative

or Qualitative)

0 350 251 251.35

Date achieved 05/29/2007 12/31/2009 12/31/2013 12/31/2013

Comments

(incl. %

achievement)

100% achieved. The target was adjusted to reflect construction costs, oil price increases and

the PBA's preference for widening works over rehabilitation. Works that were ongoing at

the time of the restructuring were transferred to the APL1 and its AF.

Indicator 2 : Km of roads widened

Value

(quantitative

or Qualitative)

0 20 35 35.2

Date achieved 05/29/2007 02/15/2012 12/31/2013 12/31/2013

Comments

(incl. %

achievement)

100% achieved. The target was increased in the October 2012 restructuring given the PBA’s

prioritization of road widening works.

Indicator 3 : Number of intersections enhanced

Value

(quantitative

or Qualitative)

0 2 2

Date achieved 05/29/2007 02/15/2012 12/31/2013

Comments 100% achieved.

vi

(incl. %

achievement)

Indicator 4 : Number of water supply services lines built by the project in poor neighborhoods (IPMH:

40%)

Value

(quantitative

or Qualitative)

0 9114 9045 9045

Date achieved 05/29/2007 02/15/2012 12/31/2013 12/31/2013

Comments

(incl. %

achievement)

100% achieved. The Project targeted residents living in areas with high poverty incidences

(average Index of Household Material Deprivation (IPMH) above 40%).

Indicator 5 : Number of sewerage service lines built by the project in poor neighborhoods (IPMH: 40%)

Value

(quantitative

or Qualitative)

0 87861 82468 82508

Date achieved 05/29/2007 02/15/2012 12/31/2013 12/31/2013

Comments

(incl. %

achievement)

100% achieved. The Project targeted residents living in areas with high poverty incidences

(average IPMH above 40%).

Indicator 6 : Number of hectares provided with proper drainage

Value

(quantitative

or Qualitative)

0 1200 1200

Date achieved 05/29/2007 02/15/2012 12/31/2013

Comments

(incl. %

achievement)

100% achieved. In January 2014, the PBA experienced heavy rains that led to flooding, but

the territory, which systematically flooded before the Finochietto drainage system, was

unaffected.

Indicator 7 : Implementation of at least one recommendation from the Coastal Erosion Control study

Value

(quantitative

or Qualitative)

No Study Recommendation

Implemented Software in use

Date achieved 05/29/2007 02/15/2012 12/31/2013

Comments

(incl. %

achievement)

100% achieved. As a result of the Coastal Erosion Study, the PBA purchased software to

measure coastal erosion. The PBA has been using the software to gather data to inform

investment decisions to erosion prevention and coastal infrastructure design.

Indicator 8 : Economic Development Sector Studies completed

vii

Value

(quantitative

or Qualitative)

0 3 2

Date achieved 05/29/2007 02/15/2012 12/31/2013

Comments

(incl. %

achievement)

66% Achieved. The third study, “Guidelines for Production Strategies in the PBA” was

canceled.

Indicator 9 : Number of agencies benefited from the project

Value

(quantitative

or Qualitative)

0 4 6

Date achieved 05/29/2007 02/15/2012 12/31/2013

Comments

(incl. %

achievement)

150% achieved. The APL2 supported: DPV, DIPAC, DIPSOH. SCEOCI, the Provincial

Directorate for Statistics and the Honorable Court of Auditors.

Indicator 10 : Activities to strengthen the agencies involved in the project

Value

(quantitative

or Qualitative)

0 4 4

Date achieved 05/29/2007 02/15/2012 12/31/2013

Comments

(incl. %

achievement)

100% achieved. The APL2 supported: (i) a regulatory accounting system for potable water

and sanitation; (ii) the design of an axle-load control system; (ii) the purchase of a

deflectograph; and (iv) capacity building activities.

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual Disbursements

(USD millions)

1 09/04/2007 Satisfactory Satisfactory 0.00


3 05/15/2008 Unsatisfactory Unsatisfactory 0.00





viii








15 07/31/2013 Satisfactory Moderately Satisfactory 261.87


H. Restructuring (if any)

Restructuring

Date(s)

Board

Approved PDO

Change

ISR Ratings at

Restructuring Amount

Disbursed at

Restructuring in

USD millions

Reason for Restructuring & Key

Changes Made DO IP

10/06/2011 S S 215.49

To trigger the involuntary

resettlement safeguard policy

(OP/BP 4.12), revise the scope of

activities to adapt to the financial

situation, revise the outcome

indicators accordingly, and extend

the closing date by 18 months to

August 15, 2013.

10/12/2012 S S 258.31

To reduce the scope of the civil

work components to reflect cost

increases, to revise the target values

of project indicators to account for

the revised project scope, and to

reallocate project costs among

components and loan proceeds

among categories accordingly. This

restructuring also involved the

financing of dropped APL2 works

under the additional financing of

APL1 through a parallel

restructuring.

08/06/2013 S MS 261.87

Extend the closing date by 4.5

months to December 31, 2013, and

reallocate funds between

disbursement categories.

ix

I. Disbursement Profile

1

Section 1.Project Context, Development Objectives and Design

Context at Appraisal

1. The Buenos Aires Infrastructure Sustainable Development Program Project Phase II (APL2, P105288) was part of an Adaptable Program Loan (APL) that was designed in 2004. Although the Program was split into two phases, the activities and goals of the APL1 (APL1, P088032) and APL2 were closely intertwined. In fact, the APL2 adopted the institutional logic of the APL1 and built on the established implementation mechanisms already in place with the agencies involved. As such, understanding the context at the time of appraising the APL1 is critical to understanding the APL2. Furthermore, the two Projects overlapped for the entire period of implementation of the APL2: although the APL2 began three years after the start of the APL1, the APL1, which received an Additional Financing (AF, P114081) in 2011, is still under implementation. It is set to close in May 2015. 2. At the time of the appraisal of the APL Program, Argentina was in the process of recovering from the 2001 to 2002 financial crisis. The crisis led to one of the most severe losses of household income on record. The percentage of the population under the poverty line increased from 20.5 percent in 1999 to 54 percent in 2002. The Province of Buenos Aires (PBA), the largest province in Argentina, represented 39 percent of the Republic’s population, accounted for 36 percent of the country’s GDP and contained the most extensive pockets of poverty in the country. The PBA’s recovery from the crisis was crucial for the economic recovery of the entire country.

2

3. During the financial crisis, the Government of the PBA (GoPBA) substantially reduced infrastructure investment,

3 magnifying already existent coverage and quality issues. The

infrastructure base began to deteriorate at an increasing rate, the basic needs of vulnerable groups grew, and growth prospects were constrained. At the time of the appraisal of the APL1, approximately 50 percent of the people living in the PBA had household connections to the water network, and only 25 percent were connected to the sewerage network.

4 The PBA also suffered from

recurrent floods due to inadequate drainage systems, and high travel times and vehicle operating costs due to poor road quality.

5

4. Despite the mounting need for increased infrastructure investments, the PBA faced scarce internal financing and limited external financing options given Argentina’s fiscal uncertainty. In response, the World Bank and the GoPBA, started addressing the difficult economic situation through counter cyclical spending, joining forces to design a major infrastructure investment program that responded to the most pressing infrastructure needs. The PBA and the Bank identified the following key objectives: (i) the rehabilitation and maintenance of key segments of the provincial primary road network to reduce logistic cost in the PBA and strengthen regional competitiveness; (ii) the rehabilitation and expansion of basic Water Supply and Sanitation (WSS) services for low income

2 Project Appraisal Document, APL2

3 In 2002, at PBA’s level, investment represented 0.1 percent of GDP and 0.7 percent of total spending, compared with 0.7 percent and 7.8 percent

respectively between 1993 and 1997 (Project Appraisal Document).



2

segments of the population; and (iii) the expansion of urban drainage systems in areas of high vulnerability. 5. Given Argentina’s difficult fiscal outlook, the APL Program emphasized the need to support the PBA’s infrastructure priorities within a fiscal responsibility framework. For the APL1, the provincial authorities designed a framework that ensured fiscal space to service debt obligations and to invest in infrastructure. The framework facilitated compliance with the Government of Argentina’s (GoA) August 2004 Fiscal Responsibility Law.

6 Highlighting the importance of fiscal responsibility

for the Program, the GoPBA designated the Ministry of the Economy (ME) to lead implementation even though the Program was focused on infrastructure. In addition, the APL Program had a series of triggers, which included a trigger on compliance with the fiscal framework, the PBA had to meet in order for the second phase of the APL to begin.

7

6. All of the triggers except the fiscal framework trigger for the APL2, “Evidence of satisfactory implementation of the fiscal framework that would enable accommodating the second loan, without jeopardizing convergence towards a sustainable fiscal situation,” were met. The fiscal framework contained various fiscal targets that ranged from debt stock levels to expenditures on personnel. At the time of appraisal of the APL2, the PBA had made progress with respect to the targets under its control, such as provincial revenue levels and debt stock and debt services as a proportion of net current revenue.

8 Nevertheless, the Province did not meet the targets for monitoring personnel

expenditures and the primary balance. The PBA’s failure to meet these targets was not a result of poor fiscal management. Rather, structural changes in Argentina’s fiscal policy towards the provinces altered the revenue balance between the Federal Government and the provinces and made the fiscal targets that reflected expenditure variables inapplicable. As the GoA began withholding more revenue from the provinces, the PBA became increasingly dependent on the Federal Government’s discretionary financial assistance and less able to control its compliance with expenditure targets. The APL1’s provincial fiscal framework no longer served to measure the availability of fiscal space to execute the project or the PBA’s medium-term debt sustainability. 7. At the time of the appraisal of the APL2, the PBA’s main fiscal risks included: (i) the lack of inter institutional clarity regarding the implementation of the 2004 Fiscal Responsibility Law

9 and (ii)

the gradual erosion of the PBA’s fiscal performance.10

To mitigate the impact of the PBA’s fiscal risks on the APL2’s implementation, the Bank committed itself to closely monitor fiscal and financing conditions throughout implementation.

11 Likewise, the PBA focused on exercising fiscal

6In August 2004, the Argentine Congress approved a Fiscal Responsibility Law. The Law set out broad principles for provincial fiscal conduct. Under

Argentina’s federal system, adherence to this law was voluntary for individual provinces, but required for those provinces that wanted continued

financial support from the Federal Government. The Law became the axis for Federal Government financing of provincial deficits. Among other

features, the Law established that: (i) nominal primary public spending should not surpass projected nominal GDP growth; (ii) debt service payments should not exceed 15% of current revenues; and (iii) new provincial indebtedness was subject to Federal Government approval. Adherence to the law

and fulfillment of its conditions would make the Province of Buenos Aires eligible for continued financial support from the federal Government to meet

its financing needs.

7 Trigger points included: evidence of satisfactory implementation of the fiscal framework and evidence that institutional policy and regulatory

frameworks were strengthened.

8 In 2005, the PBA’s revenue target was met (own revenue/net current revenues (NCR) equaled 57%), debt stock/NCR was 188% (target 180%) and

debt service/NCR was 14% (target 17%).

9 T

10 The Province recorded a primary deficit in 2006 and further primary deficits are likely in the coming years.

11 Project Appraisal Document, APL 2.

3

prudence within the constraints imposed by the GoA. For instance, the PBA emphasized increasing its own revenues, both through improved tax administration and via new taxes.

12 The APL1’s

successful implementation also illustrated that the APL2 could be implemented effectively despite fiscal risks.

Original Project/Program Development Objective (PDO) and Key Indicators

8. The overall purpose of the APL Program is to improve the provision of infrastructure services in the Province within a framework of fiscal responsibility. 9. The PDO of the APL2 is to improve the social and environmental welfare of approximately five million people living in the Borrower’s territory through the improved provision of transport, water and sanitation, and drainage services.

13

10. The PDO outcome indicators were: (i) High-Traffic (HT) productive road assets preserved with an acceptable average roughness (HT IRI) to reduce operational and travel time costs and avoided accumulation of future liabilities in the overall network (AVG IRI on total paved primary network); (ii) reduced waterborne diseases and improved sanitary living conditions; and (iii) improved flood management capacity measured as flood persistence times. The Project also had 10 intermediate outcome indicators, which are detailed in the Data Sheet.

Revised PDO and Key Indicators

11. The PDO was not revised during the life of the Project. The PDO-level indicators were restructured and approved by the Board in September 2011 to better align them with the outcome and the revised scope of the Project as well as the APL1 indicators. The outcome indicator on WSS services was revised to better align the indicator with the Project’s core objective of increasing access to more people in the PBA. The original indicator measured a reduction in waterborne disease, which reflected factors such as hygiene practices that went beyond the scope of the Project. The new outcome indicator was the additional number of poor people with access to: (i) water connections; (ii) available sewerage service lines; and (iii) active sewerage connections.

14

12. The flood management capacity indicator was removed because the impacts in terms of flood persistence times (original indicator) would not have been fully observed until after the Project’s closing.

The Bank financed the optimization and expansion of macro-drainage infrastructure, while

the micro-drainage infrastructure investments (necessary for the operation of the system) were financed with other provincial and municipal funds and were not expected to be finished until March 2014. The target for the roads outcome indicator was also revised to reflect the reduced scope of the Project’s investments. In addition, nine intermediate indicators were restructured during the life of the

12 At the time of appraisal of the APL2, the PBA had increased its own revenues and reduced its debt stock and debt service as a proportion of net

current revenues. The PBA’s fiscal prudence was complemented by the country’s strong economic growth (from 2003 to 2006, annual GDP averaged nine percent, poverty fell from 59 percent in 2002 to 31 percent in 2006, and unemployment fell from 21 percent in 2003 to approximately 11 percent in

2006), which resulted in national surpluses and streamlined transfers to the PBA.

13 This description was taken from the APL2 Loan Agreement,which is the basis for evaluation; however it differs slightly from the description in the

PAD, which reads: “The specific Project Development Objective is to improve the social and environmental welfare of approximately 5,000,000 people through the improved provision of transport, water and sanitation and drainage services.”

14 Active sewerage connections, the sewerage connections that are effectively connected to the network, were estimated based on a connection rate

calculation developed in the PBA that took into account the expected lag between the construction of the line and household’s decision to connect.

4

Project and six new core intermediate indicators were added. See the Implementation Section and the Data Sheet for further detail.

Beneficiaries

13. The Project expected to benefit approximately five million residents in the PBA through enhancing road networks, expanding access to WSS services, and improving drainage. The Project’s WSS component had a poverty lens and targeted 450,000 people living in communities with households averaging 40 percent or higher in the Index of Household Material Deprivation (IMPH).

15

The Project also aimed to expand drainage to 500,000 people.16

The road network works were expected to have a direct global impact on economic growth in the PBA through reducing travel times and costs, increasing the competitiveness of small and medium-size enterprises, and generating new employment opportunities in the construction sector. 14. The Project aimed to benefit sector agencies and government ministries through a number of institutional strengthening activities, including: (i) creating a strategic framework for provincial infrastructure development; (ii) carrying out sector studies to guide informed infrastructure investment decisions; (iii) implementing activities to promote competitiveness and job creation in the PBA; and (iv) improving information, monitoring and maintenance systems.

Original Components

The Project components, as presented in the Loan Agreement, are as follows: 15. Part 1: Provincial Roads (US$159 million, of which US$107 million is IBRD). This component included:

a) Carrying out of rehabilitation works (such as asphalt concrete overlaying) of about 10 selected

road sections of the non-concessioned interurban primary road network (representing

approximately 335 kilometers in the aggregate), of which two adjacent road sections

(representing approximately 56 kilometers) will be rehabilitated under the terms of a

CREMA17

Contract.

b) Carrying out of rehabilitation works (such as asphalt concrete overlaying) of 1 selected road

section of the non-concessioned primary paved road network (representing approximately 70

kilometers) located within the Conurbano Bonaerense.

c) Carrying out of rehabilitation works (such as removal and replacement of existing pavements)

of non-concessioned road accesses to the Dock Sud and the Bahia Blanca ports (representing

approximately 11 kilometers).

d) Carrying out of rehabilitation works (such as resurfacing, asphalt concrete overlaying or

reconstruction of the existing structure over a recycled base course) of about 6 selected road

15 The IMPH was developed by Argentina’s National Institute of Statistics and is based on an index of hereditary deprivation and current resource depravation. To avoid the exclusion of borderline low-income areas, it was agreed that subprojects in vulnerable zones with IPMH ratings between 30

and 40 percent could be considered eligible for financing on a case-by-case analysis so long as they do not represent more than 15 percent of total

resources assigned to the component. 16 There was no overlap between the beneficiaries targeted for drainage and WSS works and very little overlap between the beneficiaries targeted for water and those targeted for sanitation works.

17 Performance-based roads rehabilitation and maintenance contracts (CREMA) aimed to increase private sector participation in the maintenance and

management of the roads networks.

5

accesses of the non-concessioned secondary paved network (representing approximately 68

kilometers).

e) Carrying out of: (i) widening and rehabilitation works (within the existing right- of-way) of

about 2 selected roads of the Borrower’s non-concessioned urban primary paved network; and

(ii) construction works (which works consist of replacing intersections by more efficient

round-about arrangements) of about 2 selected critical black spots of the primary paved road

network.

f) Carrying out of the 2009-2011 annual routine maintenance programs of the non-concessioned

primary unpaved road network.

16. Part 2: Water and Sanitation (US$140 million, of which US$110 million is IBRD). Carrying out of demand-driven

18 water and sanitation infrastructure investments, which consist of the

construction of secondary water and sanitation networks.19

17. Part 3: Drainage (US$41 million, of which US$32.4 million is IBRD). Carrying out of drainage investments in selected urban and peri-urban areas in order to mitigate flooding caused by rainfalls of high intensity and relatively short duration, which investments consists of, inter alia, the optimization and expansion of storm drainage systems and primarily macro-drainage infrastructure based on integrated urban drainage plans.

18. Part 4: Technical Engineering, Feasibility, Design and Benchmarking (US$4.61 million, of which US$4.38 million is IBRD). Carrying out of the following Project activities involving design and implementation of a strategic framework for provincial infrastructure development constitute an expansion of the scope of the activities carried out or to be carried out under the Buenos Aires Infrastructure Sustainable Investment Development Project‒ Phase I: (a) design of master infrastructure investment plans; (b) carrying out of feasibility studies of infrastructure investments and final engineering design of investments identified by the plans mentioned in (a) above; (c) identification of infrastructure needs, and thereafter, establishment of a set of strategic priorities so as to avoid financing infrastructure investment bottlenecks; and (d) upon completion of the study, to design a strategy for coastal erosion control (which is being carried out under APL 1), implementation of the recommendations of said study (including the Bank’s views, if any), which recommendations may include the design of infrastructure investments.

19. Part 5: Pre-Investment for Competitiveness and Job Creation (US$8.42 million, of which US$8 million IBRD). Carrying out of the following Project activities constitute an expansion of the scope of the activities carried out or to be carried out under the APL 1:

a) Identification of the economic sectors and regions which are likely to play a fundamental role in provincial development, and thereafter, carrying out of sector studies on economic development.

b) Design of territorial guidelines to promote regional development and stimulate provincial growth and employment.

c) Carrying out of a review of the regulatory framework governing the investment climate across the economic sectors to identify those regulations which may affect the investment climate;

18 The WSS investments were focused on areas where concentrations of low-income families with limited access to basic services (identified using the

IPMH) were high and where there were ongoing or planned construction of main supply lines, collectors and treatment plants.

19 Primary networks were already available (in cases where the primary network had limited resource, the Project financed reservoirs). Areas neighboring the Project areas oftentimes already had good service. The Project supported DIPAC’s master plan by complementing service in unserved

pockets.

6

and (ii) thereafter, design a plan which will include, inter alia, actions to promote competitiveness, employment and value added generation, and to strengthen institutional capacity to implement private sector development policies.

d) As a result of the carrying out of the studies mentioned above, implementation, on a pilot basis, of selected policy recommendations to promote competitiveness and employment generation.

20. Part 6: Institutional Capacity Building for Provincial Infrastructure Service Provision and Oversight (US$8.52 million, of which US$8.22 million IBRD). Carrying out of the following Project activities below constitute an expansion of the scope of the activities carried out or to be carried out under the APL 1:

a) Carrying out of technical audits and certification of Subprojects. b) Provision of technical support to: (i) DPV, DIPAC and DIPSOH to assist MI in supervising

and monitoring Subprojects (including the annual road routine maintenance programs referred to in Part 1 (f) of the Project), and in the planning and design of future infrastructure investments; and (ii) DPV in the design and implementation of policies for the control of axle loads.

c) Implementation of selected actions identified in the action plan resulting from the carrying out of DPV’s institutional diagnosis under the APL 1, which actions will assist the DPV to: (i) monitor road network conditions; (ii) make an efficient use of resources; (iii) strengthen its environmental capacity; and (iv) adopt results-oriented management techniques.

d) Provision of technical support to the Borrower, through the ME, to continue the implementation of a program to strengthen the capacity of the agencies whose mandate is to regulate and control the provision of public services.

e) Strengthening of the integrated financial management system to continue supporting the development and implementation of said system.

Revised Components

21. Increasing construction costs, delayed procurement processes, as well as efforts to synchronize the implementation of the APL2 with the APL1 to maximize impact, resulted in the revisions of the components outlined in Table 1. The revisions (beyond the number of road works and WSS works) were part of the Project’s first Board-approved restructuring, which included changes to the PDO-level indicators. The Project’s three restructurings are described in more detail in the Implementation Section. Table 1. Restructured Elements

Component Restructured Elements

Component 1 Number of road works reduced due to increased Project costs.

Component 2 Number of WSS works reduced due to increased Project costs.

Component 3

Component 4 The traffic congestion solution study associated with the increase in port

activities was canceled since the development of a port master plan within the

framework of the APL1 made the study redundant.

Component 5 The pilot implementation of policy recommendations from the competitiveness

and employment studies was canceled because the final results of the studies

were not available in time to be implemented under this Project.

7

Component 6 The following activities were removed: (i) the requirement for technical audits

given that the implementation capacity of the involved agencies improved

substantially; (ii) the implementation of an action plan generated from the

institutional diagnostic of the DPV since the entity began regularly monitoring

road network conditions, allocating adequate resources to road maintenance, and

utilizing results oriented management techniques through performance-based

rehabilitation contracts; and (iii) the strengthening of the financial management

system since, in carrying out this activity, the Borrower did not require new

technologies or external consultants.

Section 2: Key Factors Affecting Implementation and Outcomes

Project Preparation, Design and Quality at Entry

22. Soundness of background analysis. As this was the second phase of the APL, the Project relied on the thorough background analysis done for preparation of the APL Program. Like the APL1, the Project directly supported the GoPBA’s key infrastructure investment priorities, ensuring a high level of client ownership. In addition to supporting the high level goals of the GoPBA, the APL2 was directly linked to the World Bank’s 2006 Country Assistance Strategy (CAS) Report Number AR-34015, which emphasized reducing the extent and severity of poverty in Argentina through sustained economic growth, social inclusion, and improved governance. The CAS pinpoints infrastructure investments as one of the key building blocks for sustained economic growth. 23. The Project also incorporated lessons learned from the APL1 on the design of eligibility criteria for works, safeguard frameworks and fiduciary management tools among others. The Bank’s rationale for supporting this Project was clear given the PBA’s demonstrated commitment to the APL Program, the PBA’s fulfillment of the APL1’s triggers,

20 and the PBA’s continued need to close the

growing gap in access to basic services. 24. Assessment of the Project’s design. On the whole, the Project design responded to the PBA’s priorities. The design also directly supported the Bank’s 2006 CAS, which emphasized social inclusion and infrastructure investments. The decision to design the Program as an APL as opposed to a Specific Investment Loan (SIL) permitted a longer-term outlook and flexibility in the implementation schedule. This was strategic from a design perspective given that the uncertain fiscal situation and the cross sector nature of the Project implied a higher probability of implementation delays in some or all of the components.

21 In addition, the longer-term outlook of the APL permitted

the inclusion of meaningful institutional strengthening activities, which oftentimes require an extended time period for consolidation.

20 The PBA met all but one of the triggers required for the launch of the APL2. By the time of the APL 2 design, the GoA had put in place a new legal framework that significantly contributed to the improvement of the fiscal situation of the PBA, making the fiscal trigger irrelevant.

21Specifically, the APL design enabled adjustments to the implementation pace according to the evolution of the fiscal framework as well as flexibility

in cases where subprojects depended on investments to be executed, operated and maintained by other agents, without restraining progress in other

components. For example, at the time of design of the APL1, the WSS sector was undergoing significant changes (private concessions were being transferred to public utilities), and it was unclear whether all the WSS works could be completed within the timeframe of the APL1. The APL provided

the flexibility to shift these works to the APL2.

8

25. The APL Program’s overall purpose, to improve the provision of infrastructure services in the Province within a framework of fiscal responsibility, captured the core objective of the Program and the two APL Projects. The APL2 PDO “to improve the social and environmental welfare” of PBA residents was vague, but the APL2 PDO’s sub-objectives (improved provision of transport, WSS, and drainage services) directly reflect the outcomes of the Project’s key activities. The first three Project components focused exclusively on roads (Component 1), WSS (Component 2), and drainage (Component 3). While components four, five and six focused on supporting strategic infrastructure development within a frame of fiscal responsibility. The activities under components four, five and six reflected the needs of the PBA at the time of appraisal, but the large number and wide scope of the activities limited cohesive impact and increased the complexity of Project implementation. The institutional strengthening activities, however, were of secondary importance to the Project’s achievement of the PDO. Grouping the disbursement categories for components four, five and six together also minimized the potential complication associated with having six components. 26. At a first glance, the implementation arrangements appear complex. The Unit for Coordination with Multilateral Credit Organizations of the Ministry of the Economy (UCO) was responsible for overall coordination. The Provincial Roads Agency (DPV), the Provincial Directorate for Water Supply and Sanitation (DIPAC) and the Provincial Directorate for Hydraulics and Sanitation (DIPSOH), under the Ministry of Infrastructure (MI), were in charge of supervising, contracting and implementing roads, WSS and drainage works respectively. The MI created a unit, the UCPO, to coordinate these three agencies and to maintain communication with the UCO (which became the Sub-Secretariat for Coordination of International Credit from Countries and Organizations (SCEOCI) at a later stage in the Project). 27. Despite the apparent complexity, at the time of design the APL1 was utilizing the same implementation arrangements successfully. From a design perspective, adopting the same arrangements was crucial given the parallel implementation and integrated nature of the two APL Projects. The SCEOCI team viewed the APL1 and APL2 Projects as one Program. The arrangements were also logical given the cross-sector reach of the Program and they set the tone for a fruitful collaboration between the ME and the MI. In addition, the designation of the ME as the lead implementing agency facilitated synchronized implementation of the Project’s infrastructure and institutional capacity building activities (actually, it helped to maintain a focus on institutional strengthening components complementary to the works throughout implementation), minimized counterpart financing problems and limited conflicts between state government dependencies and agencies. In addition, the decision to implement the Program within one Province diminished the risk of complications due to political discord between the entities. 28. The PBA had a high capacity to implement the APL2. As noted above, the PBA was successfully implementing the APL1, which followed a very similar structure and financed activities of a similar nature. Although the Project was infrastructure based, the design also included innovative aspects, including performance-based road rehabilitation and maintenance contracts (CREMA). 29. Fiduciary and safeguards aspects. Financial Management (FM) arrangements were appropriate. The Borrower had adequate FM systems, software, and trained staff. A thorough FM assessment was conducted for the APL1 Project and a less-detailed FM assessment was carried out for the APL2 to ensure the adequacy of the arrangements already in place. The Borrower also had adequate procurement arrangements at the time of Project design, but still several procurement strengthening measures were agreed at appraisal in order to mitigate potential procurement risks (see par. 32).

9

30. The APL2 ranked as a “Category B” Project. The APL2 adopted the safeguards framework developed for the APL Program given the effectiveness of the framework (a specific assessment of APL1 compliance with safeguards was performed). Individual environmental assessments of subprojects for the first year were prepared following the guidelines established under the APL1. The safeguard policies triggered for the Project (OP 4.01, Environmental Assessment, OP 4.11, Physical Cultural Resources, and OP 7.50, Projects on International Waterways) were appropriate given the Project’s original design. 31. Adequacy of Government’s commitment. The Project directly supported the PBA’s infrastructure program, generating a high level of Project commitment and ownership. The PBA requested that the Bank increases the size of this Project (from US$150 million to US$270 million) to accelerate the achievement of the overall Program objectives and expand the provision of basic services to a greater number of the poor. The PBA also requested an accelerated preparation schedule for the Project given its importance for the PBA’s development. The PBA prepared numerous bidding documents prior to the launch of the Project. In addition, the PBA’s active and satisfactory implementation of the APL1 illustrated a strong level of commitment and set the basis for sound preparation and implementation of the APL2. 32. Assessment of risks. The Project design anticipated all of the major risks. The risks identified for this Project were based largely on the risks identified in and experienced during the APL1 Project. The Bank team identified Moderate institutional risks regarding FM (auditing, reporting, and the use of Project resources) and procurement (still limited experience and capacity in Bank Procurement by sub-implementing agencies and risk of escalation of prices in procurement processes, among others) and developed detailed institutional strengthening measures to mitigate these risks. The Substantial fiscal risks and Moderate road sector risks due to possible market distortions were closely tied to external, macroeconomic factors, and the proposed mitigation measures, which called for close monitoring and high levels of adaptability, were adequate given the scope of the Project.

Implementation

33. Progress towards the PDO was Satisfactory from effectiveness to the December 31, 2013 closing date. The Loan was fully disbursed and all contracted infrastructure works were finalized by the closing date. The Project benefited from the PBA’s experience with Bank processes through the ongoing APL1 as well as an established relationship with the Bank team. The Project also benefited from the PBA’s pro-active preparation of the bidding documents, as a result of which during the first eight months of Project implementation approximately 50% of the loan had been committed and some US$15 million disbursed. The Project’s biggest internal challenges were administrative in nature.

22 The Project experienced a 14-month lag in effectiveness because of a delay in the signing of

the Guarantee Agreement. The Project also encountered various difficulties outside its control during implementation, including rocketing construction prices and historic floods. The Bank and the PBA adapted the Project to the changing circumstances through three restructurings that maintained focus on the Project’s core objectives and enabled effective implementation.

34. The March 2011 Mid-Term Review (MTR) revealed the need for adjustments in the scope, timeframe, and safeguards of the Project. A sharp rise in crude oil prices (see Table 2) caused construction prices to rise, limiting the Project’s financial wherewithal to carry out all planned

22 Administrative delays were caused by inter alia: (i) lengthy and cumbersome internal administrative processing to get authorization to launch bidding

processes, to have contracts signed, and to carry out any amendment, and (ii) procurement difficulties related to the Argentinian market.

10

activities. The Bank and PBA approached this limitation with a solutions-focused mindset. For example, funds were transferred from the DPV’s institutional capacity building activities to WSS works given that the DPV’s improved monitoring, operational and maintenance capacity made some activities, such as an institutional action plan, unnecessary. Additionally, the MTR provided a platform to discuss the measurable impacts of the Project’s components, yielding adjustments in certain indicators. The drainage PDO-level indicator, for example, was dropped to reflect the difficulty of measuring flood capacity until the micro- and macro-drainage were operating together, which would lag until September 2013. The drainage impacts were still measured by the ‘drained area’ as works were implemented, and in fact the drainage system functioned remarkably well during the heavy rains of January 2014. The number of beneficiaries from the drainage component was unaffected. The WSS PDO-level indicators (initially measured by reduction in waterborne disease) were also changed to reflect more measurable and pragmatic Project impacts, such as number of beneficiaries with improved WSS services. The Project’s closing date was also extended by 18 months, from February 15, 2012 to August 15, 2013, to allow for completion of activities given slow procurement processes (discussed in the Procurement Section below) and other administrative delays. The MTR also revealed the need to retroactively trigger the involuntary resettlement safeguard (discussed in more detail in the Safeguards Section below). Table 2. World Crude Oil Prices

23

35. The choice of an APL as opposed to a SIL proved to be key to facilitate successful implementation. Construction costs continued to rise during implementation (roads works increased in cost by approximately a factor of two), leaving the Project with a US$16.3 million deficit to fund the completion of ongoing roads and WSS works in October 2012. Rather than reduce the Program’s scope and drop ongoing works because of inadequate funding, the parallel nature of the APL Projects permitted the Bank team and the PBA to restructure the APL2, transferring the remaining US$16.3 million in works (one roads work and four WSS works) to the APL1/AF, which had an uncommitted balance. The Project’s third restructuring in August 2013 was a straightforward four month extension of the closing date (that brought cumulative extension to 22.5 months) to accommodate potential contingencies in the closure of the Finochietto drainage work and to permit the completion of

23 US Energy Information Administration, February 2014.

11

institutional strengthening activities. The restructuring also included adjustment in the allocation of loan proceeds to better accommodate the use of the remaining resources.

36. Safeguards. As mentioned above, the Involuntary Resettlement safeguard policy was triggered after the March 2011 MTR. According to preliminary sub-project designs, involuntary resettlement was not foreseen at the time of appraisal. However, a case of involuntary resettlement arose during the implementation of a road rehabilitation work due to a technical modification. This was, however, an isolated case. The PBA handled it satisfactorily and in compliance with OP 4.12 by applying the Resettlement Policy Framework (RPF) developed during the preparation of the APL1’s AF.

24 The MTR, however, did show that social and environmental procedures and capacities of the

PBA needed to be improved in order to reach the Bank’s socio-environmental requirements in projects planning, implementation and supervision. As a result of this analysis, the SCEOCI and the UCPO of the MI appointed specialized staff to oversee and ensure that social-environmental procedures were being implemented. In addition, the PBA consolidated the capacity of the sub-executing agencies through the implementation of several training workshops, including a Socio-Environmental Management Strengthening Program for socio-environmental personnel, project engineers and technical work supervisors. The PBA adopted a systematic monitoring model and began publishing inspection reports on the SCEOCI webpage regularly. 37. Procurement. The Project experienced slow procurement processes, especially for technical assistance activities. The Province has quite lengthy administrative processes, which impacted the duration of procurement processes. In addition, Argentina has several restrictions to purchase goods produced abroad and to contract and pay international companies. Most of the institutional activities were related to IT purchases, sophisticated roads equipment and international consulting firms. These made the contracting even lengthier. The most significant procurement challenge the Project faced was a mis-procurement of a US$5.9 million bid to a roads work contract in 2009 and the subsequent cancellation of funds. The PBA rejected all bids for the works contract based on an assessment that the bid prices were too high and to send a push back signal to the construction industry against inflated prices. The Bank objected to the rejection. This was an isolated case and did not reflect the PBA’s procurement capacity. The Bank and the PBA worked closely to overcome these procurement issues and managed to overcome hurdles without significantly impacting implementation or achievement of the PDO. 38. Financial Management. The Project complied reasonably well throughout its life with the prescribed FM arrangements and Bank requirements, providing acceptable periodic interim financial reports and up-to-date accounting records. The reports provided reasonable assurance that the Loan funds were used for the intended purpose. Project transactions were mainstreamed in the general budget of the PBA and subject to the PBA’s internal controls. Project transactions were also subject to the external oversight of the Province Court of Accounts, whose audit reports submitted to the Bank consistently showed unqualified audit opinions on the Project’s basic financial statements, statement of expenses and the designated account. The Bank’s financial specialists reviewed the audit reports throughout implementation and found them acceptable. 39. Post-Completion Operation/Next Phase. The AF of the APL 1 is still ongoing. The infrastructure works financed under the AF will help consolidate the advances made under the APL1 and APL2. The coordinating agencies and the sub-executing agencies involved in implementing this

24 See Annex II for more detail.

12

Project will also remain in place after the Project’s closure.25

In addition, the APL Program supported the development of a number of tools to assist the sub-executing agencies monitor the sustainability of the works. For instance, the APL2 supported the acquisition of ten vehicles and mobile axle-weight measuring devices to monitor the axle-loads on the network. One of the main anticipated risks is adequate budget allocation for operation and maintenance activities and continued much-needed infrastructure investment.

26 The PBA expressed its desire to build on the satisfactory experience and

progress made under the APL Program through future investment projects.

Monitoring and Evaluation (M&E) Design, Implementation and Utilization

40. M&E Design. Two of the original PDO indicators’ scope went beyond the reach of the Project. The original PDO-level indicator related to WSS services measured increased access to the services through a reduction in waterborne diseases. The reduction of waterborne diseases is correlated with improved WSS services but also considers aspects, such as hygiene, that the Project did not include. The WSS PDO indicator was restructured and the resulting set of WSS outcome indicators were straightforward and directly reflected the desired outcome of the Project’s investments (that water lines and sewerage service lines are built and people connect to them). The PDO-level indicator related to the drainage works that measured improved flood management capacity through flood persistence times anticipated that the drainage works would be completed at an early stage of the Project. This was an optimistic assumption given the complicated engineering required to construct the drainage works and the funding required from outside sources to build the micro-systems. This indicator was dropped, but an intermediate indicator reflecting the impact of the drainage work was maintained. The PDO-level indicator for roads (decreased IRI) was very straightforward and directly measured the impact of rehabilitating the roads.

27

41. The ten intermediate indicators (and six core indicators that were added during the first and second restructurings) were also very straightforward and provided a means to clearly measure the Project’s key outputs. The results framework was designed and restructured in parallel to the APL1’s result framework, enabling easy comparison and compilation of overall Program results. 42. M&E Implementation. The M&E framework was implemented successfully throughout the life of the Project. The PBA (through the SCEOCI, in coordination with the UCPO) collected data on the indicators and informed the Bank of progress through semester progress reports and during missions. The indicator on active sewerage connections proved difficult to accurately measure given the PBA’s limited experience projecting active sewerage rates and the WSS operator’s limited on-the-ground monitoring capacity to track active connections. In general, however, the straightforward nature of the indicators facilitated calculation and collection of data. The Bank missions also involved many field visits, which served to confirm the general reach of the activities and their respective indicators.

43. M&E Utilization. The Project supported three initiatives to further the use of M&E indicators in the investment analysis process. First, the APL supported an initiative within the

25 The PBA is using the same implementation structure to carry out projects with the BID and the CAF. The SCEOCI and UCPO were institutionalized

during the life of this project. 26 For instance, a lack of investment would reverse the steady-state condition of the roads network that the APL helped achieved. The maintenance backlog would reach over an unacceptable level of more than 20 percent over the next five years with the proportion of roads in bad condition

approaching or exceeding 10 percent.

27 Vehicle operating costs decrease with decreased IRIs while travel time improves.

13

statistics unit to collect more frequent and detailed household surveys. Second, the Project supported the development of a pilot budget management tool that tracks not only financial data on agencies’ annual expenditures but also concrete data on the agencies’ achievement of annual indicators and goals. The PBA plans to use this M&E-styled budget to inform investment decisions. Third, the APL Program supported the design and implementation of a provincial public investment system (SPIP) to facilitate the monitoring and evaluation of investment projects and inform the assignation of future investment funds.

Section 3: Assessment of Outcomes

Relevance of Objectives, Design and Implementation

Rating: High 44. The basic premise of the Program and the APL2 Project (providing access to basic services, improving the provision of transport, and improving urban drainage) remains very relevant in the PBA. The PBA hopes to develop other projects that would follow the model and build upon the achievements of the APL Program. The APL2 is also still very relevant from the Bank’s perspective. It is closely aligned with the objectives of the World Bank Group’s Country Partnership Strategy (CPS) discussed by the Executive Directors on June 9, 2009 (Report No. 48476-AR), which focuses on three pillars: (i) sustained growth with equity; (ii) social inclusion; and (iii) improved governance. The CPS also envisions infrastructure assets as one of the building blocks for sustained economic growth. The APL Program was a precursor of the Bank’s twin goals to alleviate poverty and promote shared prosperity. The ultimate objective of the APL Program was “to support the return to a sustainable path of economic growth, to end extreme poverty and to increase social equity”

28 through

infrastructure.

Efficacy Rating: Substantial 45. The Project fully achieved its key objective. By the time of the APL 2 design, the GoA had put in place a new legal framework (the National Fiscal Responsibility law) that significantly contributed to the improvement of the fiscal situation of the PBA. In addition, the PBA undertook a series of structural reforms to ensure the quality of fiscal management. In 2007, the GoPBA enacted the Financial Administration Act, created the National Revenue Agency of the PBA and implemented tax reforms. The PBA successfully reduced its debt in terms of Gross National Product, going from 24.6 percent in 2002 to 8.5 percent at the Project’s close. The PBA paid close attention to the prioritization of works based on social and structural needs (See the Overarching Themes, Other Impacts and Outcomes Section), did not over-expend on works and did not exceed their financial capacity. 46. The APL2 PAD estimated that the project was going to benefit about five million people. This estimate was achieved by the Project: the improved road network benefits 780,000 people directly on an annual basis and additional 1.7 million people indirectly

29 (benefiting around five million during

the lifespan of the Project), 330,000 directly benefited from the WSS works, and 345,000 directly

28 APL2 Project Appraisal Document 29 The DPV calculated 1.7 million beneficiaries that live in the areas nearby the improved roads. The 780,000 direct beneficiaries are people who use the improved roads network regularly, though these people may be the same from one year to the next.

14

benefited from the drainage works.30

In addition, the positive externalities created by the Project investments (increased economic activity and land value) as well as the increased institutional capacity to operate, maintain and implement further works have and will continue to benefit countless residents of the PBA. Roads 47. The Project improved the road network through financing the rehabilitation of 251.3 km of roads, the widening of 35.20 km of roads and the enhancement of two intersections. The Project had a network-focused approach in order to maximize the impact of the works. The Project achieved its output indicators as well as its outcome indicator, keeping the average roughness (measured through the International Roughness Index -IRI) of High Traffic

31 roads below 3.7 and the average IRI of the

network below 3.3. Project design targeted High-Traffic roads and assumed roughness of said roads would decrease (from 3.5 to less than 3). During implementation traffic increased significantly and the number of roads that fell under the HT category increased, however given budget limitations, the number of roads intervened by the Project did not increase accordingly. Therefore, the average roughness for the roads classified as HT increased and target was restructured. Without the Program, the overall roughness of the network (AVG IRI) would have reached 5.7 (projection from the -HDM). 48. In addition, the Project introduced the implementation of CREMA contracts, which are being used by the DPV for investments outside the scope of the Project. The Project met all of its roads-related indicators. Investments on the road network over the last couple of years have helped the PBA reach a steady-state condition with a maintenance backlog (roads with IRI>4) of less than 15 percent and a proportion of roads in poor condition (with IRI>5) of less than 5 percent. As a result, vehicle operating costs for the provincial vehicle fleets using the network have been reduced by nearly 15 percent. 49. The Project also played a significant role in strengthening the road asset management capacity of the DPV. For instance, the Project supported activities to: (i) consolidate the use of the HDM as a planning tool to design efficient and prioritized multi-year rehabilitation programs; (ii) operationalize a comprehensive Routine Maintenance Management System developed under the APL1 by hiring consultants to collect data on the network in order to feed the system and installing software in all the regional districts to elaborate a more rational and efficient annual program of routine maintenance activities over the entire provincial road network; and (iii) improve the DPV’s capacity to monitor axle-loads in the network,

32 to carry out network and traffic surveys and to carry out environmental

and social assessments of projects. 50. The budget allocated to the DPV has been in constant evolution since the 2002 economic crisis, going from US$100 million per year to about US$200 million per year in 2012. The PBA has still not reached pre-crisis (1995-2000) levels of US$300 to US$350 million per year, but has assigned between 10 and 25 percent of its total budget to the routine maintenance of the provincial road network over the past five years. That effort has translated into improved primary paved road network conditions. Table 3 includes detailed information on the condition of the non-concessioned paved network throughout the APL1 and APL2.

30 These numbers are lower than the estimated number of beneficiaries during appraisal because of cost increases.

31 Average traffic exceeds 4,000 vehicles per day. 32 According to information provided by DPV, the axle-load control helped reduce the proportion of overloading/infractors from ten to four percent in its

first year of implementation.

15

Table 3. Improvement in the riding quality of the non-concessioned paved network throughout the implementation of APL1 and APL2 (2004-2013)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% in good condition, IRI<4 84.7 76.9 92.7 93.0 91.4 88.0 84.5 86.8 86.9 86.

% in poor condition, IRI>5 4.2 6.5 3.7 2.0 3.2 3.1 3.0 5.2 4.4 5.0

Maintenance backlog, IRI>4 15.3 23.1 7.4 7.0 8.6 12.0 15.5 13.2 13.1 14.0

Average Roughness, IRI 2.8 2.8

2.9 2.7 2.8 2.6 2.9 3.0 3.0 3.1

Estimated Average IRI

without investment (HDM

prevision)

2.8 2.8 3.2 3.5 3.9 4.3 4.8 5.0 5.3 5.7

Budget assigned to routine

maintenance of the primary

paved network, US$ million

22.0 29.0 28.0 27.6 31.7 23.7 31

Water Supply and Sanitation

51. The Project improved the provision of WSS services through financing the construction of 9,045 water supply service lines and 82,508 sewerage service lines in poor areas (works targeted the poor through applying the IPMH index). These new lines provided water connections to 34,698 people, made available sewerage connections to 298,368 people and active sewerage connections to 112,200 people. The Project achieved all outcome and output indicators with the exception of active sewerage connections, which was missed by approximately 16 percent. The target for this indicator was estimated based on a formula developed by DIPAC and the Aguas Bonaerenses Sociedad Anónima (ABSA) that attempted to capture the lag that is always present between available access and actual connection to the network.

33 Although the target has not been met according to the formula

at this time, information provided by the WSS service providers indicates that the percentage of beneficiary households connected to sewer lines will increase to 80 percent and that the Project will achieve the target by 2017. 52. The WSS component of the APL2 was especially important given the volatility of WSS service provision in the national context as well as the low capacity of the utilities involved in the Project to invest in extending WSS, especially sanitation, services. Key members of DIPAC’s staff commented that without the Project, the utilities would not have had the financial capacity to invest in sanitation. The APL Program also played a fundamental role in developing the capacity of the PBA to manage WSS works. During the APL1, the MI established a unit for provincial water and sanitation (UPAS). During the implementation of the APL Program, the UPAS (which had eight staff members) became a separate directorate, the DIPAC, with 40 staff members and a budget of AR$300,000,000. The DIPAC was consolidated because of the APL Program and became ingrained in the MI. When established, the DIPAC only managed WSS works with external financing. By the close of the APL2, the DIPAC was managing more works financed by local sources than external sources.

33 Given the importance of having the population effectively connected to a network, the Bank and the PBA agreed at restructuring to add this more refined indicator. Nevertheless, given Argentina’s lack of experience in estimating and monitoring this indicator this data should be considered with

room for error.

16

Drainage 53. The Project improved the provision of drainage services through financing the macro-system for the Finochietto Drainage System (the micro systems were financed with local funds). The system covered 1,200 ha of drainage, achieving its respective output indicator. The communities covered by the system have already seen home values increase as much as five times.

34 In addition, in February

2014 the PBA experienced heavy rains and the area surrounding the system, which was highly prone to flooding, did not flood. During Project implementation, the population living around the drainage system increased, necessitating the construction of a safety railing in the final part of the drainage system. The PBA is currently in the process of constructing this railing with its own funds. 54. The APL Program also played a key role in increasing the capacity of DIPSOH. At the start of the APL1, drainage works could not be carried out because DIPSOH did not have an established method for designing works that considered the basin as a whole. As a result, during the APL1, DIPSOH developed the Manual for the Master Plan Designs to Improve Infrastructure and Management for Urban Drainage, which was formally approved by the GoPBA (Decree 2,647, October 10, 2006). The Manual outlines a holistic method for assessing the technical viability of urban drainage works that includes an analysis of: (i) hydraulic and hydrologic design; (ii) the structural and non-structural measures to be undertaken; (iii) compliance with environmental measures; and (iv) the importance of the works as part of a major drainage plan. During the APL2, DIPSOH fully adopted the Manual and began applying the approach to drainage projects in the PBA regardless of the source of financing. The success of the Manual spurred the development of further measures to strengthen the non-structural aspects of drainage. For instance, the GoPBA passed decrees to strengthen integrated coastal planning and to establish a hydraulic plan at the provincial level during the APL2 (See Annex 2 for more information on the decrees). Efficiency Rating: Substantial 55. The overall Efficiency rating of the APL2 is Substantial. The ex-post economic analysis showed that both the roads and drainage components performed better than expected at appraisal. Although the WSS component did not achieve the projected Internal Economic Rate of Return (EIRR), it was still economically efficient.

35

At the time of appraisal of the APL2, the DPV carried out an economic evaluation taking into

account a sample of roads that were proposed to be financed under the APL2 (the bulk of which

corresponded to rehabilitation works of interurban roads), that demonstrated high economic rates of

return, with an average EIRR of 50.9 percent and a Net Present Value of US$59.4 million. In 2014,

the DPV updated the evaluation with a representative sample of the works, the real costs of the works

and updated traffic volumes. That evaluation showed that despite the increase in cost that occurred

for the works the economic returns remained high; the average EIRR was 110 percent and Net

Present Value was US$310,000/km at closing. These higher rates of return are explained by different

factors including: (i) higher traffic volumes; (ii) higher user costs as a result of which higher benefits

related to savings in operating costs are accrued; (iii) the differences in the road samples used during

appraisal and completion and particularly the fact that the bulk of the roads used in the appraisal

34 Anecdotal information collected at the ICR mission during a site visit to the Finochietto Drainage System. 35 Five points above the 12% discount rate.

17

samples included lower volume roads which were later substituted by widening works in roads

segments within the conurbano with much higher traffic volumes. 56. For WSS, the ICR analysis utilized the same methodology as at appraisal: a cost benefit analysis with an avoided cost approach to measure the benefits. Benefits were measured as the resources saved from going from septic tanks (with corresponding cleaning costs) to conventional sewerage connections. For drainage works, benefits were measured as the averted financial loss from reduced or eliminated flooding risk. 57. Results of the evaluation show that the Project had important benefits for the PBA. In drainage, net benefits reached US$25M, and the works generated returns of 25 percent (higher than expected). In WSS, the works yielded net benefits (NPV) of US$42M and returns of 17 percent (similar to expected). See Annex 3 for more detail on the economic analysis. Water and Sanitation Drainage

Summary of Results PAD Actual PAD Actual

Net benefit (NPV of flows) 000USD N/A 41,913 N/A 25,000

EIRR

Between 17% and 37%

Average 22% 17% >=12% 17%

Justification of Overall Outcome Rating

Rating: Satisfactory The ICR rates the overall outcome of the Project as Satisfactory based on “High” ratings for relevance, and its “Substantial” rating for efficacy and efficiency.

Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

58. The WSS works were implemented in areas where average IMPH was 40 percent or higher, ensuring that the poorest segments of the PBA’s population benefited from the Project. The strengthening of the multiple agencies involved in Project execution will assist in the effective future expansion and rehabilitation of roads, WSS and drainage works, promoting economic and social development as well as poverty reduction.

(b) Institutional Change/Strengthening

59. Before the launch of the APL Program, the PBA had a small project implementation unit with capacity to implement development policy loans, but limited knowledge on the general processes required for implementing international organizations’ structural investment loans as well as a limited capacity to coordinate provincial agencies. As a result of the APL Program, a new unit was consolidated to implement the Program. The unit gained experience in contract negotiations, financial management, procurement processes and safeguard supervision among other areas. Given this increased implementation capacity, the PBA began soliciting and executing loans from other international organizations. The UCO went from unit status to agency status, and finally, to being a sub-secretariat. The SCEOCI team was recognized at a national level for being one of the best-organized teams in the country; representatives from a number of other provinces visited the SCEOCI

18

in order to gain insight on how to strengthen their own teams. The APL Program also contributed to the consolidation of the DPV, DIPAC and DIPSOH. For instance, as mentioned in the Efficacy Section, the DIPAC went from being a unit with eight employees to a directorate with 40 employees and a budget for investments of AR$300,000,000. 60. The APL Program also supported the development of tools to help the PBA prioritize investments based on social and structural need. The DPV utilized the HDM 4 model to prioritize road segments in need of repair. The DIPAC utilized the IPMH model, based on an index of hereditary deprivation

36 and current resource deprivation, to target investments towards communities

with high levels of poverty.

(c) Other Unintended Outcomes and Impacts

61. An unexpected impact has been the strengthening of the PBA’s environmental and social supervision capacity. During the APL1, all environmental and social requirements were met, but the PBA did not have the tools to move environmental and social management beyond compliance. The environmental and social specialists worked closely with the PBA to develop monitoring tools to streamline the supervision process. The APL2 also supported workshops not only for social and environmental specialists, but also for works inspectors and contractors. This hand-in-hand work improved safeguard supervision for the Project and resulted in an institutional shift in the PBA. The PBA recognized the need for systematically monitoring social and environmental safeguards and is utilizing the developed tools for monitoring all projects whether Bank financed or not.

Section 4: Assessment of Risk to Development Outcome

Rating: Moderate 62. The risk to the development outcome is Moderate. In general, the institutional strengthening activities have improved the capacity of the executing institutions to strategically plan and monitor investments. For instance, the DPV recently carried out a network-level economic evaluation with the HDM-4 model, showing that it has an adequate tool for designing multi-year rehabilitation programs, and has a new system for the management of routine maintenance. In addition, the budget allocated to the DPV has been in constant evolution since the 2002 economic crisis, going from US$100 million per year to about US$200 million per year in 2012; and the PBA has assigned between 10 and 25 percent of its total budget to the routine maintenance of the provincial road network over the past five years. Nevertheless, the sustainability of the improvements in the roads network depends heavily on the ability of the GoPBA to finance the DPV’s list of priority investments. The APL Program has played a key role in developing the PBA’s capacity to attract external sources of credit. Since the launch of the APL, the SCEOCI and UCPO have been involved in the design and implementation of six internationally financed projects, totaling over US$400 million in credit for different sectors. 63. A financial analysis of the two largest WSS operators in the PBA, ABSA and the Obras Sanitarias Mar del Plata-Batán (OSSE), shows that there is high probability that the WSS works will be sustainable. During implementation, both operators improved their financial results. ABSA and OSSE have a sound capital structure with liabilities lower than 20 percent of their assets, and equities higher than 80 percent. OSSE has tariffs that fully cover its operating cost and partially cover investment. ABSA has not achieved tariffs that fully cover operating costs, yet it has improved its

36 Hereditary deprivation is a measure of structural poverty and is determined based on the physical characteristics of the household’s dwelling (the

quality of the floor and roof and the presence of a flushable toilet). (APL2 PAD).

19

cost recovery from 56 percent in 2007 to 87 percent in 2012 (still one of the best ratios in the Country). Despite the internal financial shortcoming of ABSA, the GoPBA has demonstrated a high level of commitment to supporting this operator by regularly covering its deficits (following the overall policy in the sector in Argentina).

Section 5: Assessment of Bank and Borrower Performance

Bank Performance in Ensuring Quality at Entry

Rating: Satisfactory 64. During the three-month preparation period, the Bank team performed a comprehensive analysis of the APL1, integrated lessons learned into the APL2 and updated objectives and activities to align the Project closely with the PBA’s strategic vision and infrastructure plan. Project preparation was streamlined by drawing from the existing institutional arrangements of the APL1. For example, the implementing agencies (ME and MI) incorporated these new activities into their work program according to their experience with the APL1. Implementation manuals and procurement processes followed the same guidelines as the APL1, which significantly facilitated discussions with the PBA. The similarity between the two Projects also facilitated early implementation processes. During the first eight months of Project implementation (loan became effective on August 2008), US$15 million was disbursed and approximately US$188 million was committed. Actual and committed expenditures represented approximately 50% of the loan (May 2009 ISR). 65. The Bank team maintained enriching policy discussions with DPV authorities to increase the cost-efficiency of the use of the scarce budgetary allocations for the preservation of the road network to ensure that the standards and technical solutions used for upgrading, paving and rehabilitation corresponded to optimum economic alternatives that yielded the maximum value to the community.

37

This dialogue, initiated during the APL1, led to an agreement in the APL2 to: (i) optimize the technical standards of road works through the adoption of individual interventions that were both cost efficient and technically reasonable; and (ii) the introduction of the CREMA. In addition, during the implementation of the APL1, the Bank team created an updated data bank for the cost of road works based on official estimates and bidders’ estimates. The data bank played a key role in the preparation of more realistic official budget estimates for works under the APL2. The Project’s design-related shortcomings were minor. Namely, the PDO was vague, and the WSS PDO-level outcome indicator went beyond the scope of the Project.

Bank Performance in Quality of Supervision

Rating: Satisfactory 66. The Bank team played a very active role in supervision, processing three timely restructurings and adapting the Project to steady increases in construction costs. When construction costs exceeded Loan and counterpart funds, the Bank team smoothly transferred works to the APL1 and its AF. The Bank team also synchronized indicators for the APL2 and the APL1 enabling easy calculations for the overall impact of the APL Program. This proactive behavior helped smoothen implementation and indicated good communication with the PBA. In addition, the environmental and social

37 The adoption of over-designed pavement structures was a common phenomenon that absorbed a great deal of available funds, leaving little resource

for attending the rest of the network.

20

specialists, who were based in Argentina, played an especially active role in developing the capacity of the PBA to systematically monitor safeguards, environmental and social impacts. The PBA highlighted the positive working relationship with the TTLs. According to the ISRs, the PDO rating has been Satisfactory since effectiveness. The PBA, however, expressed frustration over the Bank’s inability to move funds for emergency relief in April 2013 after the heaviest rainfalls in more than a century, but noted that this was beyond the reach of the Bank task team to resolve. The PBA also noted that procurement support varied from specialist to specialist and that the Project would have benefited from more hands-on support and clearer communication in this field.

Justification of Rating for Overall Bank Performance

67. Given the Bank’s Moderately Satisfactory preparation and Satisfactory supervision of the Project, the ICR team rates the Bank’s overall performance as Satisfactory.

Borrower Performance

Government of the Province of Buenos Aires Performance

Rating: Satisfactory 68. Throughout Project implementation, the GoPBA’s performance was exemplary. The presence of the Ministers of Economy and Infrastructure during several Bank’s supervision meetings was a testimony of the high sense of commitment and ownership displayed by the Government. Also, the GoPBA tried its utmost to overcome the financial challenges posed by inflation and increased construction costs, enabling the Project to meet its development objectives. The GoPBA plans to finance the few activities not completed (five sub-activities within Component 6, amounting to approximately US$500,000) in the Project’s lifetime with its own funds. The GoPBA may also finance the Ports and Marina study, which was canceled; this additional investment would bring the PBA’s post-completion financing to US$1.9M. The GoPBA has also followed the environmental and social specialists’ recommendation and set aside funds to install safety railings along the open channel segment of the Finochietto River.

Implementing Agency (Coordinating and Executing Agencies) Performance Supervision

Rating: Satisfactory 69. The SCEOCI and sub-executing agencies were actively involved in the implementation of the Project and were committed to ensuring the Project’s Satisfactory completion despite a difficult operating environment (given the financial and environmental challenges). Strong coordinating teams within the MI and ME overcame the complexity associated with having many entities involved in project execution through close communication and investment in the development of staff members. During Project implementation, the agencies significantly increased their environmental and social safeguard monitoring capacity. The agencies were also actively working to streamline and systematize procurement processes throughout implementation. The administrative delays the Project experienced were largely due to lengthy internal processes that were outside the scope of the Project. The PBA successfully supervised the implementation of the Project, enabling the Project to close with full disbursement and satisfactory outcomes.

21

Section 6. Lessons Learned

70. The Adaptable Program Loan provided flexibility that was key to the Project’s successful implementation given the unstable fiscal environment. The APL structure provides flexibility in unstable implementation environments. The APL structure enabled the Bank to finance an expansive program (US$470 million at the time of appraisal) in an uncertain fiscal environment with decreased risk. The Program provided the PBA with a source of credit for approximately ten years, enabling strategic, medium-term, pro-active planning. This was especially important for the PBA given the absolute paucity of financing and credit lines at the time of the APL’s design. At the same time, the inclusion of required advances to trigger the launch of the APL2 limited the risk that the Bank was undertaking in financing such a large project in a time of high fiscal uncertainty. The similar structure and shared goals and indicators of the APL1 and APL2 also enabled flexibility in implementation schedules given the easy transfer of activities from one project to the other. This proved especially important given that at the time of the APL1’s design, the WSS sector was undergoing a major reform. The reforms took longer than planned and constrained project implementation to a greater degree than expected; for the first two years of the APL1’s implementation, WSS activities were stalled. Rather than cancel the WSS activities, the parallel structure of the APL Program enabled the easy transfer of these activities to the APL2, and roads activities, which were advancing as planned, from the APL2 to the APL1.

71. Project implementation arrangements can strategically foster institutional strengthening. The involvement of the ME as the leading implementing agency was a strategic decision to ensure that focus on the institutional strengthening activities was maintained throughout implementation to complement the works. The ME and MI leveraged their common interest in seeing this Project through to foster collaboration, and even shared the same Minister for some time.

72. The Project also played a key role in developing the SCEOCI. The PBA had a small project implementation unit to implement development policy loans before the start of the APL Program. As a result of the APL, the PBA consolidated a unit dedicated to implementing projects with credit from international organizations that had sufficient capacity to coordinate other ministries and institutions within the Province (such as the MI). In the ten years since the launch of the APL Program, the SCEOCI has become integrated in the operating structure of the GoPBA, going from unit status to agency status to becoming a sub-secretariat. The establishment of a sub-secretariat with significant experience implementing projects with foreign credit has had a multiplier effect, facilitating the GoPBA’s capture of international credit from other organizations. The APL Program has also played a key role in developing the DIPAC. At the time of the design of the APL Program, the PBA was not planning and executing WSS works. The MI established the UPAS at the beginning of the APL program. The UPAS (now DIPAC) went from being a small unit with eight staff members developed largely for the implementation of the APL to a separate directorate with 40 staff members and a budget for investments of AR$300,000,000, that is thoroughly ingrained in the MI. Today, the DIPAC plans more works with local financing than with external financing and has developed its own strategic vision for growth. 73. The ‘hands-off’ model for promoting connection to sewerage systems employed by WSS Operators in the PBA proved to be effective. Most of the WSS operators in the PBA do not monitor whether people are actually connecting to new sewerage networks. The operators have no real incentive to do so given that residents are required to pay a tariff whether or not they have a household connection. The residents also have no real disincentive to delay their connection to the network, as they are paying for sewerage service and the cost of cleaning the septic tanks is relatively high. Although residents may hesitate to connect to the system because of initial connection costs, anecdotal data from the WSS operators and wastewater flows arriving at wastewater treatment plants

22

show that within two years of construction, around 80 percent (a high connection rate in the region) of the residents are expected to connect to the system. For Project monitoring and evaluation purposes, however, measuring active sewerage connections is an important action that relates to the actual impact of investments, and it requires an active supervision jointly by the infrastructure implementing agencies and by the WSS operators. 74. Working at the province level facilitates implementation. The APL Program benefited from directly engaging the PBA to design and implement the Program’s activities. This design decision helped provide a direct channel to build provincial capacity to work with international organizations, build a close working relationship with the counterpart and tailor the Program closely to the Provinces’ needs.

Section 7: Comments on Issues Raised By Borrower/Implementing Agencies/Partners

1 – Cancellation of US$ 5.9 million (Section 2. Implementation paragraph 37)

75. The Bank cancelled an amount of US$ 5.9 million from the loan when the Province rejected the offer corresponding to Lot 2 of LPI 5/07, “Repaving section RO 17-RN 3 lot 2 of RP21,” the justification being that said process was not carried out according to the procedures established by the Bank’s Policies and the Loan Agreement. 76. The Province of Buenos Aires points out that the Bank violated the right of the contracting party to accept or reject any offer according to clause 33.1 of the Specific Bidding Document applying to said procedure, which states: “The Contracting Party reserves the right to accept or reject any offer, and to cancel the bidding process and reject all offers, any time before the contract has been awarded, without incurring any responsibility towards the affected bidder(s), or being obligated to inform the affected bidder(s) of the motives of the Contracting Party’s decision.”

2 – Cancellation of the “Study for the design of production strategies for the Province of

Buenos Aires.” (Intermediate Outcome Indicator(s) Table, Indicator 8)

77. The Province does not condone the Bank’s decision to cancel the bidding process, then in the technical proposal evaluation stage, due to the following reasons:

a. The Province, in contrast to the Bank, understands that Memo N° 1 did not modify the terms

of payment, since it only clarified that the payments would be realized in the legal currency of

the Republic of Argentina, according to the tributary administration’s national regulation,

which was informally agreed with the Bank. For this reason, said Memo was drafted as a

Clarifying Note rather than a Correction as understood by the Bank.

b. The Province took the necessary actions to promote a competitive process among consulting

firms, attempting to foster the largest quantity and highest quality possible of proposals, and

publicizing it through all appropriate avenues and formally inviting several firms to present

their own experience. Hence, the Province disagrees with the Bank regarding the modification

23

of the terms of payment, which would not have discouraged the participation of foreign

consultants and reduced the competitive nature of the process.

c. Regarding the Bank’s declaration of invalidity of the only proposal, the Rules establish that

the Borrower's rejection of all proposals should only be considered justified if all of them are

irrelevant and none respond to the requirements, either because of significant shortcomings in

complying with the terms of reference, or because their cost is considerably higher than the

initial estimate. Thus, as none of these conditions apply to the only existing proposal, the

Province considers that said proposal remained valid.

d. The Bank’s suggestion to begin the process afresh was unacceptable as it was virtually

impossible to carry out a new selection process and have the signed contract before the

closing date of the Project.

e. In this regard, we must point out that the tight schedule was compounded by the 4 months the

Bank took to review the terms of reference. While the request for No Objection to the Terms

of Reference was emitted on 27/04/12, the Bank's No Objection was only received on

23/08/12.

3 – Funds reallocation and extension of the closing date (Section 2. Implementation paragraph

35)

78. Given the flooding that occurred on April 2nd

and 3rd

, 2013, in the city of La Plata and its surrounding area, the Province proposed a reallocation of funds to allow the acquisition of anfidraga equipment, and an extension of the Project’s closing date by one year in order to install guardrails to ensure the safety of residents who live on both sides of the open canal of the Finochietto River. 79. While this issue was discussed in the Supervision Mission held in May 2013 and was recorded in the corresponding Aide Memoire, the Bank only granted an extension period of 4 months and a reallocation of funds to complete the planned activities of the Program.

24

Annex 1: Project Costs

Table A.1.1 – Project Cost by Component (in USD Million equivalent)

Components

Appraisal

Estimate (USD

millions)

Restructured

Project Costs

(October 2012,

USD Millions)

Restructured

Project Costs

(August 1, 2013,

USD Millions)2

Actual/Latest

Estimate

(December 31, 2013,

USD millions)

Percentage of

Appraisal

Roads rehabilitation 1591 150.97 150.97 153.85 96,76%

Water and Sanitation 140 147.97 151.97 153.12 109,37%

Drainage 41 46.46 48.61 48.02 117,12%

Engineering and

technical studies

4,61 0.66 0.10 0.08 1,74%

Competitiveness and job

creation

8,42 3.62 0.03 0.01 0,12%

Institutional Capacity

Building

8,52 5.58 3.74 3.06 35,92%

Total Baseline Cost 361,55 355.27 355.43 358.13 99,05%

Physical Contingencies 0.00 0.00 0.00 0.00 0,00%

Price Contingencies 0.00 0.00 0.00 0.00 0,00%

Total Project Costs3 361,55 355.27 355.43 358.13 99,05%

Front-end fee PPF 0.00 0.00 0.00 0.00 0,00%

Front-end fee IBRD 0.00 0.00 0.00 0.00 0,00%

Total Financing

Required

361,55 355.27 355.43 358.13 98,32%

1 In December of 2009, the amount of the roads category decreased due to a cancellation of US$ 5,900,000. The amount of financing was then changed to US$ 264.10 million. 2 Reallocation across Disbursement categories. Total costs were calculated retroactively. 3 Physical and Price contingencies included in costs. Identifiable taxes and duties were US$ 59 million, and the total project cost, net of taxes, was US$ 303 million. Therefore,

the share of project cost net of taxes is 89%.

25

Table A.1.2 – Project Financing

Source of Funds Type of

Cofinancing

Appraisal

Estimate

(USD millions)

Actual/Latest

Estimate

(USD millions)

Percentage of

Appraisal

Borrower 91.50 94.03 103.00

International Bank for Reconstruction and

Development 270.001 264.10 97.82

1 In December of 2009, the amount of the roads category decreased due to a cancellation of US$ 5,900,000. The amount of financing was then changed to US$ 264.10 million.

Table A.1.3 – Reallocation of Loan Proceeds among Categories (USD), October 2012 Restructuring

Amount of the Loan Allocated (US$)

Percentage of

Expenditures to be

Financed

Category of

Expenditure

Current

Allocation

Category of

Expenditure

Revised

Allocation

Current Revised

(1) Works and

goods under Road

Subprojects

101,100,000 (1) Works and

goods under

Road

Subprojects

101,100,000 79% 79%

(2) Works and

goods under

Water and

Sanitation

Subprojects

112,900,000 (2) Works and

goods under

Water and

Sanitation

Subprojects

116,900,000 79% 79%

(3) Works and

goods under

Drainage

Subprojects

36,700,000 (3) Works and

goods under

Drainage

Subprojects

36,700,000 79% 79%

(4) Goods,

consultants’

12,700,000 (4) Goods,

consultants’

8,850,000 95% 95%

26

*This includes a loan cancellation of USD 5,900,000 under Category (1).

services and/or

Non-consultant

Services under

Parts 4, 5 and 6

of the Project

services and/or

Non-Consultant

Services under

Parts 4, 5 and 6

of the Project

(5) Training under

Parts 4, 5 and 6 of

the Project

700,000 (5) Training

under Parts 4, 5

and 6 of the

Project

550,000 100% 100%

TOTAL

AMOUNT

264,100,000

*

TOTAL

AMOUNT

264,100,000

*

27

Table A.1.4 – Reallocation of Loan Proceeds among Categories (USD), August 1, 2013 Restructuring

Ln/Cr/TF Currency

Current

Category of

Expenditure

Allocation Disbursement %

(Type Total)

Current Proposed Current Proposed

IBRD-

74720 USD

Works and goods

under Road

Subprojects

101,100,000.00 101,100,000.00 79.00 79.00

Works and goods

under Water and

Sanitation

Subprojects

116,900,000.00 120,900,000.00 79.00 79.00

Works and goods

under Drainage

Subprojects

36,700,000.00 38,400,000.00 79.00 79.00

Goods,

consultants’

services and/or

Non-consultant

Services under

Parts 4, 5 and 6

of the Project

8,850,000.00 3,270,000.00 95.00 95.00

Training under

Parts 4, 5 and 6

of the Project

550,000.00 430,000.00 100.00 100.00

Front-end fee 0.00 0.00 0.00 0.00

Total: 264,100,000.00 264,100,000.00

28

Annex 2. Project Outputs by Components

(and additional Project results)

Given the integrated nature of the APL1/AF and APL2, the ICR team prepared a table that captures the overall

reach of the Program to-date. The outputs and outcomes are grouped by institution rather than component to

illustrate the full impact of the Program’s activities.

Activity APL1 and AF APL2 Outcome/Comments

Roads Infrastructure Improved and DPV Capacity Increased

Roads rehabilitated (km) 566 (to-date)

78 (under execution)

251.35 IRI levels on the network

have gone from 2.75 to 3.05;

without the rehabilitation

works, IRI levels would have

reached 5.07 (HDM

projection).

Road widened (km) 28 35.20

Intersection enhanced 2 2

Institutional Strengthening Institutional diagnostic conducted

Acquisition of ten vehicles and mobile

axle-weight measuring devices that

helped set up about ten mobile units

assigned to the monitoring of axle-loads

on the network

Acquisition of a Lacroix Deflectograph

to measure deflection on the network at

a speed of about 2 km/km, thus

enhancing the previous static

Benkelman Beam procedure

Acquisition of the latest version of the

HDM model (HDM-4) to help

evaluating an entire network of roads

extremely rapidly, in replacement of the

older version HDM-3 that had

constrained the number of road sections

and maintenance policies options

Procurement of computer equipment for

the regional districts (or zones) in order

to help them design and monitor their

annual routine maintenance programs

(POAs)

Participation of DPV’s personnel to

selected seminars or forums such as the

2009 seminar

Implementation of CREMA contracts

Implementation of the axle

load control, in 2013, helped

reduce the proportion of

overloading/infractions from

10 percent at the beginning of

the year to 4 percent at the

end of the year (2013 DPV

annual maintenance plan)

Improved planning capacity -

ability to properly survey

network with Network

Management Systems such as

the HDM Model.

Increase of private sector

participation in the

management and maintenance

of the networks (through

CREMA contracts)

WSS Infrastructure Improved and DIPAC Capacity Increased

Water connections 85,775 34,698 WSS coverage extended to

over 500,000 of the PBA’s

poorest population

(IMPH<40)

Sanitation connections 206,106 (under

execution)

298,368

29

Active sanitation

connections

199,960 133,008

Institutional Strengthening Regulatory accounting system designed

and implemented

Basic tariff system designed and

established

Software for efficient WSS network

design acquired and implemented

The DIPAC went from being

a 6 person unit to a 35

member directorate during

the lifespan of the Project

Before the APL Program, the

DIPAC only implemented

externally funded projects,

now it implements more

internally funded projects

than external

Drainage Infrastructure Improved and DIPSOH Capacity Increased

Improved drainage (ha) Soto Drainage

System (under

construction)

Finochietto

Drainage System:

1,200 ha

Increased property values

Increased economic activity

in surrounding neighborhoods

No flooding during heavy

February 2014 rains

Institutional Strengthening Coastal erosion study carried out and

software to monitor coastal erosion

purchased

DIPSOH developed and adopted a

methodology for drainage that considers

the basin as a whole and has been

included in the Manual for the Master

Plan Designs to Improve Infrastructure

and Management for Urban Drainage,

which was formally approved by the

GoPBA (Decree 2.647, October 10,

2006).

500 drainage management manuals

printed and distributed

DIPSOH utilizes basin-wide

approaches utilized in all

drainage projects

Coastal Erosion software used

to guide investment decisions

A series of decrees followed

the approval of the Manual,

including: Decree 3.202

(method for approving urban

coastal project); Decree 3.686

(organizational restructuring

of DIPSOH – environmental

department emerged from

this); Decree 3.735

(provincial hydraulic plan);

and Decree 1.802 (unit for

integrated coastal

management in the PBA

created).

Ministry of Infrastructure Capacity Increased

Social and environmental

monitoring Resettlement framework developed and

successfully implemented

Monitoring tools established and

integrated in supervision protocol

Training workshops, including a Socio-

Environmental Management

Strengthening Program

Systematic social and

environmental monitoring

(published on the SCEOCI

website)

Ministry of the Economy Capacity Increased

Institutional Strengthening APL spurred the establishment of an

entity responsible for implementing

Increased ability to attract

30

- SCEOCI projects with credit from international

organizations

Experience in standard Bank processes

(procurement, financial management,

safeguards management, etc.)

foreign credit

SCEOCI team was

recognized at a national level

for being one of the best-

organized teams in the

country

Institutional Strengthening

– Statistics Unit ISO 0991-2008 certification for retail

sale surveys

Unit has the capacity to

conduct more frequent

surveys tailored to the PBA

Unit is working with the BID

to build on the progress of the

APL and develop PBA-

tailored household surveys

Institutional strengthening

–

General

Budget unit developed a methodology

for collecting financial and physical

execution from the PBA’s agencies

Provincial system for public

investments (SPIP) and the Bank of

Public Investment Programs (BAPIN)

being implemented to improve resource

assignation

SIGADE (System for the Management

and Administration of Debt, Sistema de

Gestión y Administración del Deuda)

Version 5.3 implemented to optimize

debt management and increase

transparency

The Budget team is currently

collecting information from

all agencies and is monitoring

budget assignations in at least

10 municipal jurisdictions

SPIP and BAPIN have helped

optimize resource allocation;

4,154 projects have been

uploaded in BAPIN

Productivity / Economic

Competitiveness Strategic study to prioritize

infrastructure projects to maximize

growth and target poverty (10-year

vision)

Productivity strategy for the PBA

(includes inter alia a framework for

policies to support productive sectors,

specific lines of action for sector plans

and concrete revenue generating

opportunities) established

Strategic port plan (for the Sub-

Secretariat of Port Activities, APL1)

Policies on territorial

planning and economic

development established and

implemented

Infrastructure investments

prioritized and implemented

based on growth and poverty

impacts

31

Annex 3. Economic and Financial Analysis

Water and Sanitation Projects

The primary objective of the WSS component was to increase low-income households’ access to

sewerage systems by financing secondary sewer networks in the Conurbano. The APL2 aimed to

provide secondary sewer networks and the corresponding connections to about 100,000 households.

Methodology

At appraisal, a cost benefit analysis was conducted for the sanitation component. Benefits were

measured as the resources saved from substituting septic tanks, which have a recurring cleaning cost,

with conventional sewerage connections. The costs consisted of: investment, operating and

maintenance, internal connection costs, and hygiene education costs. The evaluation was carried out

for eight sub-projects to be implemented under the Project. The results showed that all sub-projects

were economically viable with returns ranging from 17% to 37%, and with an average return of 22%.

For the ICR, a cost benefit analysis that followed the same approach as the one used at appraisal was

applied. The evaluation was done for the whole Program using actual costs incurred and actual

benefits obtained with the implementation of the Project. The net benefit of the Project was estimated

as the incremental benefit from two scenarios: with and without the Project. The without Project

scenario assumed that the situation existing at time of appraisal remained; the with Project scenario

included benefits already attained with the works. As done at appraisal, the cash flows were

discounted using a 12% discount rate and a 20-year lifetime for the Project. In order to compare the

results with those reached at appraisal, the costs and benefits were adjusted to 2008 prices by taking

out exchange rate and inflation rate fluctuation.

Benefits

The benefits were measured for the whole Program. Sewerage beneficiaries were classified in two

categories: (i) those who will benefit from the secondary sewer network, but do not have household

connections yet; and (ii) those who are connected to the network. The first group was gradually

included in the evaluation as projections estimate that 80% of them will connect to the network. The

second group was included in the evaluation as they are already receiving benefits.

Table 1 shows that there are 82.5 thousand households benefiting from the service lines, but only

38% of the beneficiaries are actually connected. The number of households benefitting from

sewerage service lines was 16% less than expected at appraisal. The appraisal target was revised

during supervision, and the reduced target was fully accomplished. Active connections, however,

were expected to be 45%. The Project resulted in a 38% household connection rate. This evaluation

estimates the benefits using current active connections (30,974) plus annual increases until the active

sewerage connection rate reaches 66,000, or 80% of potential.

32

Table 1. Beneficiaries. Foreseen at Appraisal and Actual

PAD

(original

targets)

PAD

(revised

targets) Actual

Actual/original

targets

Actual/revised

targets

Connections

Water 9,124 9,045 9,045 0.99 1.00

Sewerage (service lines) 97,936 82,464 82,508 0.84 1.00 Active sewerage

connections 44,557 36,781 30,974 0.70 0.84

Population

Water 35,000 34,698 34,698 0.99 1.00

Sewerage (service lines) 354,158

298,20

8

298,36

8 0.84 1.00

Sewerage (with active

sewerage connection) 161,130

133,00

8

112,00

8 0.70 0.84

% of active/service lines 45% 45% 38% 0.83 0.84

The septic tanks costs used for this evaluation were based on actual costs in the areas where the

Project was implemented. A cost of US$29 per month per household was used, and it corresponded

to the average from a sample of subproject implemented and evaluated during implementation.38

The benefit obtained from the savings generated by substituting the existing septic tanks with a

conventional sewerage connection was partially offset by the cost of in-house adjustments needed to

connect to the sewer lines and by the monthly bill the new sewerage customer had to pay to the

operator. Both of these costs were included in this evaluation based on the actual tariffs and costs of

in-house adjustments. The information was obtained from the operators and from records of

subprojects implemented during the APL2 and was adjusted to 2008 prices. The cost of in-house

adjustment at 2008 price was about US$238, which corresponded to US$199 when 23.5% taxes were

taken out. Sewerage bills were estimated as a percentage of the water bill and averaged

approximately US$2 per household per month.

Costs

Costs included in this evaluation consisted of actual costs of works implemented in WSS, which

corresponded to US$154 million, 5% lower than foreseen at appraisal (Table 2). The financial plan

was similar to what was predicted: IBRD’s share was 78%, while counterpart funds were 22%. At

appraisal, it was expected that the IBRD would finance 79% and the counterpart would finance 21%.

Table 2. Costs of WSS works expressed in USD (Foreseen at Appraisal and Actual)

PAD ACTUAL

ACTUAL/PA

D

Million USD % Million %

38

Information was taken from subprojects in Merlo and Bahia Blanca. Cleaning cost US$247 per year, investment cost for a septic

tank US$759, six years of life. Source: Secretariat of Works and Public Infrastructure of the Municipalities.

33

USD

IBRD

financing 128.75 79% 121 78% 0.94

Counterpart

funds 34.20 21% 33 22% 0.97

Total 162.95 100% 154 100% 0.95

Source: Project file

When actual costs are expressed in Argentinean Pesos, the differences are partially explained by

exchange rate fluctuation and inflation. As figure 1 shows, the exchange rate went from AR$3.08 per

USD at the time of appraisal to AR$5.54 in 2013, representing an 80% cumulative depreciation of the

Argentinean Peso against the US dollar during the period. Inflation at the same time reached 71% at

the end of the period.

Figure 1. Exchange Rate and Inflation during 2008-2013 period

Source: Official figures reported by INDEC.

39

To understand the impact of these fluctuations in the project costs, the actual costs of works in

nominal prices were compared against the actual costs transformed to 2008 prices. This analysis

focused only on the WB proceeds (without counterpart funds), as there was no detailed information

on the counterpart funds on a year-to-year basis.

Impact of the exchange rate fluctuation was estimated transforming the yearly USD disbursements to

local currency using the average annual exchange rate; the result was then compared with the amount

obtained using the exchange rate at appraisal. Results show a 34 percent increase on the amount

received in local currency due to the depreciation of the Argentinian peso. At appraisal the exchange

rate was AR$3.08 per USD and the average obtained during implementation period was AR$4.14 per

USD. Impact of inflation was estimated comparing the disbursement amount in nominal prices,

against the amount disbursed expressed in 2008 prices using the inflation rate from 2008 to the year

in reference. Results show an average increase of 27% in prices due to inflation.

39 The data for Argentina are officially reported by INDEC. The IMF has, however, issued a declaration of censure and called on Argentina to adopt

remedial measures to address the quality of the official GDP data. In this context, the Bank is also using alternative estimates for the surveillance of data in Argentina.

34

Depreciation allowed receiving more money than expected with each USD disbursement. However,

inflation did the contrary, taking out purchasing power on local currency. Results show that the 34%

gained with depreciation was partially offset by 27% inflation. The remaining 7% corresponded to

real increases in the costs of the WSS works (Table 3).

Table 3: Investment Cost (without counterpart funds), Expected and Actual

IBRD Actual/PAD

IBRD Financing USD (Million) 121

Equivalent in AR$ (Million AR$)

Expected at Appraisal (using 2008 Exchange

Rate) 372

Using Exchange Rate of disbursement year 500

Transforming to 2008 prices 400 7%

Breakdown of the cost increase:

Depreciation of the Argentinean Peso 34%

Inflation Rate -27%

Real cost increases 7%

Results

Results show that the outcome of the Project had important benefits for the Province of Buenos Aires,

as actual net benefits were 34 percent higher than costs, producing a net benefit of about US$ 42

million. The EIRR generated by the Project is 17%, similar to the one expected at appraisal.

Table 4. Results of the Economic Evaluation

Water and Sanitation

Summary of Results PAD

Actual

NPV of flows

Costs (Investment and O&M)

000USD 121,879

Benefits (000USD) 163,792

Net benefit (000USD) N/A 41,913

EIRR

Between 17% and 37%

Average 22% 17%

The results are satisfactory given that actual investment costs - without inflation and exchange rate

differences - were 7 percent higher than expected at appraisal, and the actual connections were lower

than expected.

The biggest winners were the customers, who will save US$153 million during the lifetime of the

works by closing septic tanks and connecting to the sewer lines. This benefit is partially offset by the

bills the households will have to pay for the sewerage service, and the cost paid for the in-house

connections. The Government had a net loss of US$92 million, which corresponds to the difference

between the outflow of the grant to pay investment, minus the inflow that come from the taxes

received.

35

Drainage

At time of appraisal two criteria were adopted for drainage works: (i) for small drainage secondary

basins affecting the poorest segments of the population and whenever the rate of recurrence in the

design of the micro and macro drainage systems is below 5 years, the least cost alternative shall be

selected, independently of the net present value yielded by each alternative; (ii) for basins with

permanent or semi-permanent courses of great dimension with design recurrence rates over 2 years,

whether they are micro or macro drainage networks, the rate of return shall be at least 12%.

During implementation a cost benefit analysis was used for the works implemented in the Finochietto

basin, which corresponded to the second type of basin. The same evaluation was used for the ICR

using actual costs and benefits expressed in 2008 prices to make them comparable to the ones used at

appraisal.

The benefits of drainage works were measured in the form of losses that were averted when risk of

flooding was eliminated or reduced. Damage costs were projected for two scenarios: with and

without project. The Project’s net benefit corresponded to the difference of incremental benefits of

both scenarios. For the without project scenario it was assumed that flooding situation present at the

time of appraisal remained. For the with project scenario, the actual reduction of floods was included.

Costs. Drainage works implemented in the basin were AR$125M, which converted at economic

prices, using the same conversion factors as the ones used at appraisal, resulted in AR$91.3M.

Operation and Maintenance costs according to DIPSOH equal AR$520 thousand every two years.

Benefits or Averted damage costs were estimated based on flooding maps for both scenarios, with and

without the project, and damage cost associated with each recurrence period. A curve was built for

each scenario including damage costs versus the probability of occurrence. The area under the curve

corresponded to the expected damage cost for each scenario. The difference between the areas of

expected damage cost with and without project, corresponded to the expected averted losses, or

expected benefits of the project.

Damages were estimated for residential properties and varied according to flood intensity, water

level, and extension of flooded area. The size of flooding areas showed the magnitude of the problem,

as without the project 90% of the area was flooded for 10-year recurrence events. With the

implementation of works, no dwelling was affected for 2-year recurrence periods, and for a 10-year

period the area affected was reduced to 30 percent.

Table 1. Number of blocks affected with floods

Recurrence

Period 0-0.20 m 0.2-0.4 m +0.4 m Total

Without Project

2-year 7 47 135 189

5-year 8 39 170 217

10-year 6 29 207 242

With Project

2-year 0 0 0 0

5-year 1 16 0 17

36

10-year 0 20 58 78

Damage costs for residential sector included damages to the infrastructure as well as to the

equipment inside the properties. The number of dwellings and the damage cost were estimated using

the cadaster database of the municipality for each category given for property tax purposes (A highest

income level, B medium, and C lower).

Table 2. Damage cost per m2 en AR$

Category for

property tax 0-0.20 m 0.2-0.4 m +0.4 m

Damage on

Properties A 78 115 173

B 62 94 137

C 54 89 121

Damage on

Equipment A 23 63 96

B 23 48 67

C 14 40 64

The results for averted loss show AR$36 million for the 2-year recurrence period to AR$48 for 10-

year recurrence period

Table 3. Averted loss (million AR$)

2-year recurrence

period

5-year recurrence

period

10-year

recurrence period

Without Project 36 48 58

With project 0 0.6 10

Averted Loss 36 47 48

The results of the economic evaluation show that net benefits generated by the project were AR$77

million (USD 25M) with 25% return.

Roads In 2007, at the time of appraisal of the APL2, a revised economic evaluation that utilized a

representative sample of works was carried out by the DPV. The evaluation showed high economic

returns, with an average EIRR of 50.9% and a Net Present Value of US$59.4 million for a total of

543 km of road intervened, i.e., about US$109,392/km (compared to an EIRR of 38 percent in 2004

at appraisal of the Program). In 2014, the DPV updated that evaluation, taking a representative

sample of the works effectively intervened and introducing the real costs of the works and updated

traffic volumes. The evaluation showed that despite the increase in costs the economic returns have

remained very high throughout project implementation, with a final average EIRR of 110 percent and

a Net Present Value of US$310.010/km at closing. These higher rates of return are explained by

different factors including: (i) higher traffic volumes; (ii) higher user costs as a result of which higher

benefits related to savings in operating costs are accrued ; (iii) the differences in the road samples

37

used during appraisal and completion and particularly the fact that the bulk of the roads used in the

appraisal samples included lower volume roads which were later substituted by widening works in

roads segments within the Conurbano with much higher traffic volumes.

Another element that confirms the efficiency of the Project is that had the Project not been executed,

more than 50 percent of roads in the network would be in poor condition (with an average roughness

of 6 IRI). Currently (with the Project), five percent of the roads in the network are in poor condition

(with an average roughness of 3 IRI). The improved condition of the roads translates to lower

vehicle operating costs for the provincial vehicle fleet that uses the network; operating costs have

been reduced by nearly 15 percent.

In addition, procurement for the works was generally a success since out of 16 road subprojects, the

bid price exceed official estimates by more than 15percent (between 18 and 21 percent) in only two

cases. In terms of overall averages, bid prices were 5 percent below official estimates. Table 4. Ex-Post Economic Analysis

Prov.

Road

#

Length

km Rehab. type

Final Cost

US$ Million

NPV

US$M EIRR %

Cost

US$/km

NPV,

US$/km

202 4.5 Rec+widen+RC22cm 20.4 10.5 23 4,533,333 2,327,333

205 3.1 Widen+RC 22 cm 7.9 11.9 39 2,546,387 3,830,710

30-1 35.5 4/6 cm AC 4.2 3.1 112 118,310 81,324

30-2 36.5 8/10 cm AC 5.8 3.8 194 158,904 104,110

Keen 17.3 Rec. +7 cm AC 3.4 0.81 17.3 199.137 465,375

Total 98.9 41.8 30.0 110 431.549 310.010

38

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team Members

Name Position

Manuel G. Marino Co-TTL – LCSWS

Carlos E. Velez Co-TTL – LCSWS

Maria Marcela Silva Co-TTL – LCSTR

Lilian Pena P. Weiss Co-TTL – LCSWS

Elisabeth Goller Co-TTL – LCSTR

Ana Maria Grofsmacht Procurement Specialist

Ricardo Schusterman Social Specialist

Daniel Chalupowicz Financial Management Specialist

Lilian Pedersen Social Specialist

Elba Lydia Gaggero Environmental Specialist

Nora Elizabeth Sanchez Guzman Program Assistant

Gerard Liautaud Roads Specialist

Catherine Signe Tovey Water Resources Specialist

Alejandro Roger Solanot Financial Management Specialist

Esteban Fernando Travaglianti Transport Specialist

Julie Biau Junior Professional Associate

Patricia Lopez Infrastructure Finance Specialist

Natalie Palugyai LCSTR

Sergio Mora Risk Management Specialist

Keisgner Alfaro Procurement Specialist

Guang Z. Chen Sector Manager LCSWS

Gustavo Saltiel Water and Sanitation Specialist

Henry Laiño LCSWS

Juan Gaviria LCSTR

Luis Alberto Andres Infrastructure Economist

Julia Tierney Junior Professional Associate

Clementine Marie Stip Junior Professional Associate

39

(b) Staff Time and Cost (from SAP)

Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of Staff Weeks Total Costs US$

(including travel and

consultant costs)

Lending

FY2007 18.75 110,478.97

FY2008 .41 1,624.96

TOTAL: 19.16 117,854.01

Supervision/ICR

FY2008 18.09 123,890.18

FY2009 16.08 119,738.40

FY2010 21.58 109,095.29

FY2011 14.67 109,989.33

FY2012 22.10 158,678.31

FY2013 18.26 112,980.11

TOTAL 110.78 734,371.62

40

Annex 5. Borrower’s Report

INFRASTRUCTURE SUSTAINABLE INVESTMENT DEVELOPMENT PROJECT

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

IBRD 7472 (APL-2)

BORROWER’S

PROJECT COMPLETION REPORT

Ministry of the Economy

Sub-secretariat for Coordination with States and International Lending Institutions

Province of Buenos Aires

41

1. CONTEXT

1. The Buenos Aires Province Infrastructure Sustainable Investment Development Project (2004-

2010) was designed at the end of the severe economic crisis that ravaged the country in 2001-2002

and in particular in the Conurbano Bonaerense, and pushed the number of persons living below the

poverty line to 64 percent in 2002 (19.5 percent in 1994).

2. In a crisis context, fiscal discipline became a priority for the provincial government, which had to

cut the infrastructure, housing, and public services budget by 53 percent between 1999 and 2002.

This situation was compounded by the following infrastructure management problems:

(i) The virtual cessation of large-scale, strategic projects.

(ii) The halting of projects under way owing to insufficient funds (hospitals, court

buildings, gas pipelines, etc.).

(iii) Water services were provided to 65 percent of the population in the Greater Buenos

Aires area and sewerage services, to 35 percent, with low-income income population

groups being most affected by this situation.

(iv) The drying up of external sources of financing, which affected both the provincial

government and sector enterprises.

(v) The province’s road network, which had deteriorated significantly.

(vi) The need for a solution to water treatment in the Cuenca Deprimida of the Salado

River basin.

3. The province’s fiscal situation improved as a result of tax measures adopted and a small primary

surplus was achieved in 2003. Despite the more austere expenditure policy, the provision of basic

and essential services continued, mainly for the social classes hardest hit by the crisis.

4. Based on projections for 2004, a year for which encouraging signs of economic recovery were

beginning to emerge, the possibility of designing a Buenos Aires Province Infrastructure and Public

Services Management Plan was introduced, which was organized around identification of the

following five policies and ten central themes:

(i) Incentivizing economic development, productivity, and employment;

(ii) Expanding the provision and quality of public services;

(iii) Supporting the socio-cultural development of the population;

(iv) Increasing physical/territorial integration; and

(v) Strengthening institutional management and community participation.

42

5. Based on the infrastructure program, the province identified investment requirements amounting to

approximately US$700 million for the period 2004-2010 in two main infrastructure sectors: roads and

water (particularly sewers and drainage). Given the magnitude of the infrastructure needs identified,

the Bank, provincial government, and national government agreed in 2004 to conclude a two-phased

Adaptable Program Loan, in order to support the Buenos Aires Infrastructure Program. The first

phase of the program (APL 1) stood at US$200 million and the second, at US270 million (APL 2).

2. BRIEF OVERVIEW AND DESCRIPTION OF THE PROJECT

2.1. Project Purpose and Objectives

6. The purpose of the project was to improve the provision of infrastructure services in the Province

while contributing to sustainable economic growth that paves the way for poverty alleviation and

increases social equity. In particular, it sought to:

(i) Expand the coverage of basic water, sanitation, and urban drainage services for the

population, especially for low-income groups living in highly vulnerable areas of the

Conurbano Bonaerense;

(ii) Support the productive reactivation and growth of the provincial economy by

improving the conditions and sustainability of the road network; and

(iii) Gradually develop the respective sectoral infrastructure programs in a sound fiscal

framework that ensures convergence toward a sustainable fiscal situation.

2.2. Investment Problems and Prioritization

7. Road Problems. In 2003, the Strategic Road Plan for the Province of Buenos Aires was prepared

and takes into account the following variables for prioritizing investments:

(i) Transport and its composition (AADT, cars, light trucks, heavy trucks and buses);

(ii) Road conditions (roughness - IRI); cracks; patching; deflection and rutting; and,

(iii) Provincial regionalization, defined in two major areas—metropolitan and interior.

8. Different priorities were identified in the road sector, which included:

(i) Reducing the cost of travel and operations in the Province through the rehabilitation of

the primary paved interurban network;

(ii) Reducing congestion and increasing transport efficiency in the Conurbano Bonaerense

by expanding and rehabilitating key urban sectors of the primary paved network;

43

(iii) Improving road access to provincial ports;

(iv) Improving the linkage of local communities with the primary paved network through

the rehabilitation of their access roads; and

(v) The need for a paved and unpaved road network maintenance program to support its

long- term sustainability.

9. Water and Sanitation Problems. Water and sanitation services in the Province of Buenos Aires

(PBA) were very much affected by the crisis described. Under the program, a proposal was made to

increase the expansion of water and sanitation services to the disadvantaged and vulnerable

population groups, particularly in the Conurbano Bonaerense. The provision of this basic

infrastructure became a short-term priority, along with compliance with a new regulatory framework,

equitable regulatory treatment for public and private providers, and the independence of the

regulatory entities.

10. Drainage Problems. The Province of Buenos Aires is particularly vulnerable to urban and rural

flooding. The increase in the number of spills, blocked pipes, and the elevation of free ground water

levels (water table) along with the fact that it is located in a very flat and low area increase the

vulnerability of the Province of Buenos Aires to flooding. The increase in groundwater levels has a

particularly big impact on the suburban areas of the Conurbano Bonaerense and the agriculturally-

rich area of the Humid Pampas.

11. The lack of regulation or enforcement of urban planning has led to unplanned settlements,

particularly among low-income residents in the more flood-prone areas.

12. Institutional Strengthening Problems. In order to properly address current infrastructure

problems and foster the long-term sustainability of the program, a series of structural weaknesses

noted by the different provincial government entities, both during the planning and execution phases,

need to be taken into account.

2.3. Components

13. On this basis, three works components were identified for infrastructure investment and three, for

improvement:

44

COMPONENT OBJECTIVE

Road Rehabilitation of high-priority segments of the non-concessioned interurban road

network through traditional customized contracts and the introduction of

Performance-based Road Rehabilitation and Maintenance Contracts (CREMAs);

Elimination of critical bottlenecks by: (i) widening provincial roads within the

non-concessioned paved network in the Conurbano Bonaerense that connects

large industrial areas and ports to production and consumption centers, and (ii)

making significant road safety improvements at certain junctions and

intersections;

Rehabilitation of non-concessioned roads that provide nearby towns with access

to the primary road network; and

Implementation of a well-designed maintenance program for the entire non-

concessioned provincial road network.

Water and Sanitation Expansion of coverage for the provision of basic sanitation services in the

Province to benefit close to 100,000 low-income population groups who, for the

most part, live in highly vulnerable areas from a sanitation standpoint that are

under the responsibility of the ABSA, particularly in the Conurbano Bonaerense.

Priority will be given to investments in areas where (i) there is a high

concentration of low-income families; (ii) there is a high degree of environmental

health vulnerability; and (iii) plans already exist or are being prepared to build

main supply lines and collection and treatment plants. Most interventions will

take place in areas for which the ABSA is responsible, particularly in the

Conurbano Bonaerense.

Drainage Expansion and optimization of macro-drainage infrastructure in urban and peri-

urban areas of the Conurbano Bonaerense. The proposed investments are part of

an integrated drainage plan and follow the methodology adopted with the support

of the APL 1.

Technical engineering,

feasibility, design, and

benchmarking

Services to strengthen the execution of the program and to improve the selection

of eligible investments that are ready to be implemented.

Pre-investment for

competitiveness and job

creation

Consulting services to assist the government with the extension and

implementation of the outcomes of the strategic evaluation done during APL 1.

Institutional Capacity

Building

Building institutional capacity to provide provincial infrastructure services and

supervision for the purpose of strengthening the capacity of the agencies involved

in the implementation of the subprojects of each component, strengthening

technical assistance programs started under previous projects, and supporting the

improvement of information systems and implementing an analytical work

program to monitor processes related to the implementation and impact of the

program.

45

3. EXECUTION

3.1. Investment Costs

IBRD LOAN-7472 (US$) IBRD

CONTRIBUTION

LOCAL

CONTRIBUTION TOTAL

Water and Sanitation 120,900,000.00 32,220,875.96 153,120,875.96

Road Works 102,258,335.20 28,593,443.21 130,851,778.41

Road Maintenance - 23,000,000.00 23,000,000.00

Drainage 37,933,591.62 10,083,612.96 48,017,204.58

Technical Engineering, Feasibility,

Design and Benchmarking 71,479.55 3,722.97 75,202.52

Pre-investment for Competitiveness

and Job Creation 5,037.95 - 5,037.95

Institutional Capacity Building 2,931,555.68 128,596.94 3,060,152.62

TOTAL 264,100,000.00 94,030,252.03 358,130,252.03

3.2. Changes in the Components

14. During execution of the Program, the works components were, for the most, part, carried out.

The situation related to the capacity-building components is different, since they had to be revised.

15. In restructuring loans APL 2 and APL 1 FA, the scope of the activities of APL 2 included in the

pre-investment, institutional capacity-building and technical feasibility components were revised so

as to adapt them to the financial situation. The outcome indicators were revised and several

institutional activities were eliminated from components 4, 5, and 6.

46

A - ROAD WORKS COMPLETED

Rehabilitation of the primary paved road network

RP No. 4 Segment I: Camino Gral. Belgrano - R.N. No. 3

RP No. 4 Segment III: R.N. No. 3 and Av. Flemming

Primary interurban road network

R.P. No. 30 (between RP 74 - Km. 148,500) Segment I

R.P. No. 30 (between Km. 148,500 - RP 50) Segment II

Grid - RP 31 CREMA (*)

Access to towns

Open Door (Segment R.N. No. 7 - R.N. No. 8)

Access to Carlos Keen

Access to Palemón Huergo and Coronel Mom

Access to Huanguelén

Elimination of bottlenecks

RP No.205 Segment of R. Santamarina Street - Jorge Newbery Av.

RP No. 21 Segment RP 17-RN 3 (La Matanza)

RP No. 21 in the Segment: RN 3 – Lasalle Street

RP No. 21 in the Segment: Lasalle street - Eva Perón Street

RP No. 21 in the Segment: Eva Perón Street – Rivadavia Av.

RP No. 202 North access segment Tigre branch - R.P. 9 (Acc. Norte)

B - WATER AND SEWERAGE WORKS COMPLETED

Guernica Sewerage and Drainage - Presidente Perón

Sewerage Services in San Miguel Oeste I and Pumping Station

San Miguel Oeste II Sewerage Services

Moreno Sewerage Services and Potable Water Supply Distribution Network

Merlo Norte Sewerage Services

Mar del Plata Sewerage Services in the Fourth Biggest Catchment Basin

Catonas Basin Sewerage System – Zone 1- Moreno

Expansion of the Sewerage System Network in San Vicente

Orense-Gral Rodríguez Park Wastewater Collection Network

47

B° Park. San Martín Noreste - Merlo (*) Sewerage Services

B° Park. San Martín Suroreste - Merlo Sewerage Services (*)

B° Mariano Acosta and Ferrari Sewerage Services (*)

B° Mariano Acosta and Ferrari Oeste Sewerage Services (*)

Expansion of the Sewerage System Network in Cerri

Expansion of the Potable Water Networks in Pilar

C - DRAINAGE WORKS COMPLETED

Finochietto River

(*) Financed by IBRD Loan 7472 until Cert. and Aj. Prov. No. 23 – June 2012

(**) Financed by IBRD Loans 7472 until Cert. and Aj. Prov./def. No. 27– June 2012

D- TECHNICAL FEASIBILITY

Study

“Identification and Design of Strategic Interventions in Infrastructure and Development of Final Engineering

Projects in the Matanza-Riachuelo basin.” This was not done as it was impossible to include it in the projected

loan execution period. The projected amount is being reallocated to specific studies of the Ministry of the

Economy and capacity building in the Provincial Budget Directorate.

D- PRE-INVESTMENT FOR COMPETITIVENESS AND JOB CREATION

Study

“Strengthening Environmental Management of the Ministry of the Economy and the Ministry of

Infrastructure in the Province of Buenos Aires.” This is included on the basis of the working arrangements

between the Province and World Bank.

D- TECHNICAL FEASIBILITY INSTITUTIONAL CAPACITY BUILDING

Project

“Building the Capacity of the Ministry of the Economy in Budget and Financial Management—

Procurement of Equipment.” The decision was made to include this project. To this end, funds earmarked for

the following projects are being reallocated. (*)

Project

“Strengthening the Provincial Directorate for Multilateral Agencies” (funds earmarked for individual

consulting and IT equipment are being reallocated).

48

Study

“Development of Proposals for Institutional Capacity Building of the entity responsible for road safety.”

Project

“Institutional Capacity Building of the Provincial Directorate for Development Programs.”

(*) This information is presented in detail in the restructuring paper.

4. OUTCOMES

4.1. Conceptual Evaluation of the Project

16. Objectives – indicators achieved. The works were strategically important to efforts to make

progress toward economic growth, poverty reduction, and increased social equality in the province.

(i) The 35-kilometer stretch of new roads, the more than 250 rehabilitation works, and the

improved road junctions contributed to increased productivity and regional

competitiveness in local and international markets.

(ii) Investments in water and sanitation improved health and sanitation conditions by

increasing access to water service and sewerage connections for 147,200 residents

living in the Province’s highly vulnerable areas.

(iii) Improved drainage over a 1,200-hectare area through investments in urban drainage

helped reduce flooding triggered by rains that led to significant losses for households,

in particular low-income households, as well as for industries and commercial

activities, both directly and indirectly, owing to disruptions in transport and other

services.

17. Summary of Indicators Achieved.

OUTPUT INDICATORS

PROJ

DEC 31, 2013

ACTUAL

DEC 31,

2013

High traffic productive road assets preserved with an acceptable

average roughness to reduce operational and travel time costs

HT

IRI Below 3.7 3.6

AVG

IRI Below 3.3 3.05

Additional poor people with access to water supply and/or sanitation services 167,706 146,898

People with water connections 34,698 34,698

People with sewerage service lines (1) 298,208 298,368

People with active sewerage connections (2) 133,008 112,200

49

OUTCOME INDICATORS PROJ

DEC 31, 2013

ACTUAL

DEC 31,

2013

Component One:

Kilometers of roads rehabilitated 251.35 251.35

Kilometers of urban roads widened 35.20 35.20

Number of intersections improved 2 2

Component Two:

Number of water supply services lines built in poor neighborhoods (IPMH >

40 percent) 9,045 9,045

Number of sewerage service lines built in poor neighborhoods (IPMH > 40

percent) 82,468 82,508

Component Three:

Number of hectares of improved drainage 1,200 1,200

Component Four:

Implementation of recommendations from the Coastal Erosion Control

Study

Recommendation

s from the Coastal

Erosion Control

Study

implemented

Met

Component Five:

Sector development studies completed 3 2

Component Six:

Number of agencies benefiting from the Project* 4 6

Studies and activities to strengthen the agencies involved in the Project ** 4 4

(1) The project target of 298,368 available sewerage connections was met, as all of the works were completed

in 2013.

(2) There were 112,200 active sewerage connections as of December 31, 2013.

(*) Ministry of Infrastructure (DVBA/DIPSOH/DIPAC); Ministry of Economy (SCEOCI/Provincial Directorate for

Statistics); Court of Auditors.

(**) Regulatory Accounting System for the Potable Water and Sanitation Sector in the Province of Buenos Aires;

Design of the Axle-Load Control System (purchase of weighing devices); Deflectograph for the DVBA; Training

activities for the DVBA, DIPAC, SCEOCI.

50

18. Investments and Indicators Achieved, by Work – Water and Sewerage

WATER/SEWERAGE WORKS COST (US$) CONNECTIONS NUMBER OF PERSONS

Sewerage services - Mariano Acosta and Ferrari (oeste) -

MERLO

11,950,516 4,405 16,519 4,460

Sewerage services Mariano Acosta and Ferrari – (oeste) -

MERLO 11,864,421 6,644 24,915 5,232

Sewerage system for General Cerri - BAHIA BLANCA 5,014,316 2,500 7,055 3,281

Catonas Basin Sewerage System – Zone 1 - MORENO 17,023,870 12,768 48,409 21,058

Sewerage services in the Fourth Biggest Catchment Basin -

MAR DEL PLATA 24,694,503 11,929 38,348 12,080

Sewerage and drainage network - PTE PERON 7,511,314 6,932 19,066 9,152

Sewerage services network – Merlo norte – MERLO 1,123,306 1,379 4,535 3,265

Wastewater collection network - Orense Park and La

Argentina - GRAL RODRIGUEZ 4,553,371 1,827 6,994 2,518

Expansion of the Potable Water Networks – PILAR 4,256,291 2,305 8,644

Sewerage services network - Parque San Martín

neighborhood (noreste) - MERLO 12,929,908

7,736 29,010 9,573

Sewerage services network - Parque San Martín

neighborhood (sudeste) - MERLO 7,998,854 6,349 23,809 2,857

Sewerage services network - San Miguel Oeste 1 and E:B

(BATCH 1) - SAN MIGUEL 11,186,104 4,684 18,736 6,745

Sewerage services network - San Miguel Oeste 2 (BATCH

2) - SAN MIGUEL 9,277,897 8,694 34,776 14,084

Expansion of sewerage services – town of San Vicente -

SAN VICENTE 2,274,680 1,118 4,025 1,932

Sewerage services network and potable water distribution

network - MORENO 21,461,534 6,740 5,543 26,054 22,172 15,964

TOTAL

153,120,885 9,045 82,508 34,698 298,368 112,200

19. Investments and Indicators Achieved, by Work – Drainage

DRAINAGE WORK COST (US$) HECTARES OF IMPROVED DRAINAGE

Finochietto River* 48,017,205

1,200

TOTAL 48,017,205

1,200

* Remaining balance Cert. 38/39/40, Aj Prov. 38/39/40, Aj Def 36 to 40

51

20. Investments and Indicators Achieved, by Work – Roads

ROADS WORK COST (IN US$) KILOMETERS

Access to towns 14,379,737 64.18

Access - Carlos Keen 2,767,528 17.30

Access – Huangelen 1,232,098 6.40

Access - Open Door 7,951,282 26.28

Access - Huergo Mom 2,428,829 14.20

Elimination of Bottlenecks 66,199,660 35.20

RP No. 202 16,428,512 4.50

RP No. 205 8,224,068 3.50

RP 21 Batch 1 2,086,766 3.50

RP 21 Batch 3 9,601,531 5.20

RP 21 Batch 4 15,030,483 9.20

RP 21 Batch 5 14,828,300 9.30

Primary road network within the inter-

urban network 22,189,973 130.70

RP 30 I 4,227,080 35.00

RP 30 II 5,770,343 36.55

RP 31 CARMEN ARECO 12,192,549 59.15

Rehabilitation of the urban primary

road network 28,082,408 56.47

RP 4 Batch 1 9,733,101 36.18

RP 4 Batch 2 6,287,355 20.29

RP 4 Batch 3 12,061,952

TOTAL 130,851,778 286.55

21. The Program’s institutional strengthening activities helped build the management capacity of all

the participating organizations. The hiring of consulting firms and individual consultants, training

activities, and the production of support materials for each component generated lessons and new

management techniques in the various provincial organizations, thus ensuring the sustainability of the

Program’s activities.

52

4.2. Impact Evaluation

22. The impact of the Program’s works will be evaluated using the information gathered from

INDEC’s 2001 and 2010 National Population, Household, and Housing Census (CNPHyV). The

nature of the available information facilitates measurement of the impact of the program on potable

water supply and sewerage connections installed. Many evaluation studies focus in particular on this

variable because it is the key to the success of this type of infrastructure works.

23. A difference-in-differences analysis will be used to measure the pre- and post- program impact on

the areas in which works were carried out, as well as the program’s hypothetical impact.

24. It is important to bear in mind that in light of the survey date for the 2010 CNPHyV, only an

examination of the scope of the program in the short term (to very short term) is possible in the case

of some works, and that others could not be fully addressed (especially APL2 works). In the latter

case, consideration must be given to the characteristics of the region in which the works were

conducted in order to evaluate the program’s impact based on the outcomes of the works assessed.

5. FINAL EVALUATION

5.1. Sustainability

25. Actions Executed by the Province to Ensure Achievement of Project Benefits. The Program

addresses long-term sustainability by (i) monitoring fiscal conditions so as to assess the adequacy of

fiscal resources available to successfully execute the infrastructure program; (ii) prioritizing the

works between sectors and within each sector in order to adapt to the fiscal space available and

prioritize high-impact, high-return subprojects, meeting the Program’s specific objectives; (iii)

ensuring the implementation of adequate road management strategies and the provision of stable

financial resources to ensure ongoing maintenance of the network; (iv) ensuring the implementation

of the subprojects in a context of economic and financial equilibrium for water and sanitation

operators, in accordance with the requirements set forth in the Framework Agreement; and (v)

developing a strategic framework for investments, infrastructure policies, and the definition of

guidelines on sector and territorial development in the province.

26. In the water and sanitation sector, the Project does not include investments specifically designed

to address the service operators’ management or operational deficiencies, focusing instead on

expanding services to low-income population groups. Despite this proposal and the absence of

investments geared specifically toward enhancing efficiency or operations, the Project will have an

impact on these deficiencies, helping the provincial government to develop and implement proper

regulations and mechanisms with a view to maintaining and increasing efficiency targets, and

improving the sustainability and capacity to generate new investments.

53

27. More importantly, sustainability is underpinned by the provincial government’s firm decision to

implement the proposed Program and the requisite institutional and policy frameworks.

28. Assessment of the Risk of not Sustaining Project Outcomes. The Project’s overall risk level is

deemed to be relatively low. The outcomes achieved under APL 1, the experience gained in the area

of implementation by the executing agency, and the ongoing and firm commitment of the provincial

government to achieving the program’s objectives appear to support this assessment.

5.2. Changes in Original Design

29. On September 30, 2011, a restructuring paper for the Program was approved with a view to

implementing the involuntary resettlement safeguard policy (OP/BP 4.12). The following changes

were also made: (i) revision of the scope of the Project’s selected activities in order to adapt to the

prevailing financial situation; (ii) revision of the outcome indicators in order to better account for the

revised Project scope and facilitate monitoring of progress in order to achieve the Project

development objectives; and (iii) an 18-month extension until August 15, 2013, of the Project closing

date in order to complete works under way. With respect to point (i), the amount allocated in the

Water, Sanitation and Drainage Works Cost Matrix was increased, in view of the fact that funds

became available upon the elimination of a number of institutional strengthening activities that were

either redundant or no longer needed.

30. In October 2012, the International Bank for Reconstruction and Development approved the

restructuring of Loans No. 7472-AR and 7947-AR. With a view to covering a portion of the

estimated shortfall in the Works Components, the sum allocated to Water and Sanitation Works was

increased by US$4 million. Given that this increase covered a portion of the shortfall, the transfer of

certain works from IBRD-7472 to IBRD-7947 was approved in an effort to help complete works

being executed under APL2, the resources of which had been depleted. This restructuring exercise

was of critical importance to the ability to complete the four water and sanitation works and one road

work under IBRD-7472-AR, which, without this additional financing (IBRD-7947), would have had

to have been completed with local resources. The transfer of works was based on a prioritization

process that took into account the percentage of physical progress made in the Program’s works and

the impact of these works on the outcomes to be achieved (Program indicators).

31. In August 2013, an extension of the project closing date to December 31, 2013 was approved and

funds were reallocated across a number of disbursement categories, particularly with a view to

completing sanitation works on the Finochietto river basin.

5.3. Lessons Learned

(i) Leadership by the Ministry of Economy with respect to project implementation

(ii) Knowledge and relevance with respect to management of external financing

54

(iii) Team work between the civil servants and technical personnel from the province and

the World Bank was key to achieving agreements and finding quick, efficient, and

effective solutions for the difficulties and challenges faced during execution of the

Program.

(iv) The Program’s planning, action, and public investment strategy designed a

comprehensive approach model that takes into account not only efficiency in the

execution of the works, but also the quality of these works, measured in accordance

with the beneficiaries’ interests and needs.

(v) Institutional strengthening activities promoted the development of environments that

promote cohesion and confidence within the public administration, thus also

facilitating the execution of projects with multilateral lending agencies.

5.4. Achievements

(i) Creation of a professional, technical policy, multidisciplinary and interagency team

that belongs to the SCEOCI, UCPO, DIPAC, and DIPSOH.

(ii) Growth of the institutional role and responsibilities of the SCEOCI and UCPO,

which, over time, were significantly strengthening their capacity in areas relating to

project development and management (procurement, financial management,

monitoring and evaluation), while also being converted into sub-secretariats in their

respective line ministries.

(iii) Organization of the Planning Unit for water and sewerage services into a Provincial

Directorate for Water Supply and Sanitation [Dirección Provincial de Servicios

Públicos de Agua y Cloacas DIPAC], consolidating the planning process for the

expansion of water and sewerage services.

(iv) Implementation of the institutional agreements between the government of the

province of Buenos Aires and water and sewerage operators.

(v) Methodological change in the design and management of urban drains, and

subsequent approval of the “Manual for the design of master plans to improve

infrastructure and management for urban drainage.”

(vi) Execution of structural measures using local funds and national resources and

implementation of non-structural measures, for urban drainage.

(vii) Capacity building in planning and evaluating investments in road works, through the

incorporation of modeling and programming tools.

(viii) Incorporation of high-tech equipment (deflectograph, mobile axle-weight measuring

devices) for activities designed to maintain and improve the provincial road network.

55

Annex 6. List of Supporting Documents

Project ISRs

Project Aide Memoires

Project Appraisal Documents (APL1 and APL2)

Additional Financing to the APL1 Project Paper

APL2 Restructuring Papers

Policy Notes (APL1 and APL2)

Borrower’s Progress Reports

For Detail, seeMetropolitan Areainset below.

La PlataMagdalena

Mercedes

Navarro

Luján

Suipacha

San Vincente

Carmen De Areco

Chivilcoy

San Andresde Giles

Grl. La Heras

Capilla del Señor

CañuelasLobos

Brandsen

SanPedro

Ramallo

Baradero

ZaratéCampana

S. Nicolas deLos Arroyos

PergaminoColon

Junín

LincolnFlorentino Ameghino

Grl. Villegas

San Carlosde Bolivar

Pehuajó

Bragado

Grl. Viamonte Alberti

Las Flores

Daireaux

Henderson

Salliqueló

GuaminiCarhué

Puán

Pigüé

Laprida

Tornquist

MédanosPunta Alta

Monte Hermoso

Cnl. Dorrego

Tres ArroyosSan Cayetano

A. GonzalesChaves

Olavarría

Azul Rauch

Tandil

Balcarce

Ayacucho

Maipú

Cnl. Vidal

Grl. J. Madariaga

Pinamar

Verónica

Ranchos

Roque PérezSan MiguelDel Monte

Grl. Belgrano

Chascomús

PilaCastelli

Dolores

Grl. Lavalle

Grl. Conesa

Grl. Guido

Villa Gesell

Mar Chiquita

Lobería

Benito Juárez

Necochea

Miramar

Carmen de Patagones

Cnl. Suárez

Grl. La Madrid

Cnl. Pringles

Tres Lomas

TrenqueLauquen

Pellegrini

AméricaCarlos Tejedor

Chacabuco

RojasGrl. Arenales

Vedia

Grl. Pinto

Arrecifes CapitanSarmiento

Salto

9 de Julio25 de Mayo

CarlosCasares

Saladillo

Grl. Alvear

Tapalque

San Antoniode Areco

Mar del Plata

BahíaBlanca

BUENOSAIRES

BUENOS AIRES

SAN NICOLÁS

GRAL. VILLEGAS

LUJÁN

BAHÍA BLANCA

GENERAL RODRIGUEZ

PILAR SAN MIGUEL

PRES. PERON

LA MATANZA

BERAZATEGUI

FLORENCIO VARELA

SAN VICENTE

BERISSO

MORENO

HURLINGHAM

MERLO

ENTRE RIOS

SANTA FE

CÓRDOBA

LA P

AM

PAR

IO N

EGR

O

U R U G U A Y

UR

UG

UA

Y

A T L A N T I CO C E A N

R i o d e l a P l a t a

64°

60°62°

62°

34°

36°

38°

38°

36°

34°

40° 40°

ARGENTINA

BUENOS AIRES INFRASTRUCTURE SUSTAINABLEINVESTMENT DEVELOPMENT PROJECT

WORKS UNDER THE APL PROGRAM

MAY 2014

IBRD 40951

0 25 50 75 100

KILOMETERS

NATIONAL PAVED ROAD NETWORK

PROVINCIAL PAVED ROAD NETWORK

PROVINCIAL UNPAVED ROAD NETWORK

DEPARTMENT OR PARTIDO BOUNDARIES

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARY

WATER AND SANITATION

ROADS

DRAINAGE

APL1 AF APL2

METROPOLITAN AREA

W W W

D D

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

GSDPMMap Design Unit

W

W

W

W

W W

W

W

D

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WA DISPUTE CONCERNING SOVEREIGNTYOVER THE ISLANDS EXISTS BETWEENARGENTINA WHICH CLAIMS THISSOVEREIGNTY AND THE U.K. WHICHADMINSTERS THE ISLANDS.

FALKLAND ISLANDS(MALVINAS)

AtlanticOcean

Paci

fic O

cean ARGENTINA

Buenos Aires

URUGUAY

CH

ILE

BOLIVIABRAZIL

PARAGUAY

BUENOSAIRES

PROVINCE