Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 88797-BY

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVLOPMENT

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$250 MILLION

TO THE

REPUBLIC OF BELARUS

FOR A

TRANSIT CORRIDOR IMPROVEMENT PROJECT (P149697)

November 26, 2014

Transport and ICT Global Practice

Europe and Central Asia

This document has a restricted distribution and may be used by recipients only in the

performance of their official duties. Its contents may not otherwise be disclosed without World

Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November 24, 2014)

Currency Unit = BYR (Belarusian Ruble)

US$1 = BYR 10,860

BYR 1 = US$0.00009

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AADT Annual Average Daily Traffic

AMF Accident Modification Factor

BCP Border Crossing Points

BoQ Bill of Quantity

CES Common Economic Space

CPS Country Partnership Strategy

CSO Civil Society Organization

ECU Eurasian Customs Unions

EA Environmental Assessment

EAEU Eurasian Economic Union

EIA Environmental Impact Assessment

EMP Environmental Management Plan

EIRR Economic Internal Rate of Return

ENPV Economic Net Present Value

FIDIC Federation of Consulting Engineers

FM Financial Management

FY Financial Year

GA GROGNOAVTODOR

GDP Gross Domestic Product

GOB Government of Belarus

HDM Highway Development and

Management Model

IBRD International Bank for Reconstruction

and Development

ICB International Competitive Bidding

ICT Information and Communications

Technology

IFC International Finance Corporation

IFR Interim Financial Reports

ITS Intelligent Transport System

IRI International Roughness Index

MA-C MINSKAVTODOR - Center

MoTC Ministry of Transport and

Communications

NCB National Competitive Bidding

ORAF Operational Risk Assessment

Framework

PAPs Project Affected Persons

PDO Project Development Objectives

PIT Project Implementation Team

PPP Public-Private Partnership

POM Project Operations Manual

RAP Resettlement Action Plan

RPF Resettlement Policy Framework

SBC State Border Committee

SCC State Customs Committee

SMA Stone Mastic Asphalt

SME Small Medium Enterprises

SOE State-owned Enterprise

TRSCC Traffic and Road Safety Coordination

Center

VAT Value-added Tax

VMS Variable Message Sign

VOC Vehicle Operating Costs

WIM Weigh – in – Motion

Regional Vice President: Laura Tuck

Country Director: Qimiao Fan

Senior Global Practice Director: Pierre Guislain

Practice Manager: Juan Gaviria

Task Team Leader: Simon David Ellis

REPUBLIC OF BELARUS

Transit Corridor Improvement Project (P149697)

TABLE OF CONTENTS

Page

I. STRATEGIC CONTEXT .................................................................................................1

A. Country Context ............................................................................................................ 1

B. Sectoral and Institutional Context ................................................................................. 2

C. Higher Level Objectives to which the Project Contributes .......................................... 5

II. PROJECT DEVELOPMENT OBJECTIVES ................................................................6

A. PDO............................................................................................................................... 6

B. Project Beneficiaries ..................................................................................................... 6

C. PDO Level Results Indicators ....................................................................................... 7

III. PROJECT DESCRIPTION ..............................................................................................7

A. Project Components ...................................................................................................... 7

B. Project Financing ........................................................................................................ 10

C. Project Cost and Financing ......................................................................................... 10

D. Lessons Learned and Reflected in the Project Design ................................................ 10

IV. IMPLEMENTATION .....................................................................................................11

A. Institutional and Implementation Arrangements ........................................................ 11

B. Results Monitoring and Evaluation ............................................................................ 12

C. Sustainability............................................................................................................... 13

V. KEY RISKS AND MITIGATION MEASURES ..........................................................13

A. Risk Ratings Summary ............................................................................................... 13

B. Overall Risk Rating Explanation ................................................................................ 13

VI. APPRAISAL SUMMARY ..............................................................................................14

A. Economic Analysis ..................................................................................................... 14

B. Technical ..................................................................................................................... 15

C. Financial Management ................................................................................................ 16

D. Procurement ................................................................................................................ 17

E. Social (including Safeguards) ..................................................................................... 17

F. Environment (including Safeguards) .......................................................................... 18

G. Other Safeguards Policies Triggered .......................................................................... 19

Annex 1: Results Framework and Monitoring .........................................................................20

Annex 2: Detailed Project Description .......................................................................................25

Annex 3: Implementation Arrangements ..................................................................................31

Annex 4: Operational Risk Assessment Framework (ORAF) .................................................39

Annex 5: Implementation Support Plan ....................................................................................44

Annex 6: Economic Analysis .......................................................................................................47

Annex 7: Impact Analysis ...........................................................................................................51

Annex 8: Project Map ..................................................................................................................53

i

PAD DATA SHEET

Belarus

Transit Corridor Improvement Project (P149697)

PROJECT APPRAISAL DOCUMENT

EUROPE AND CENTRAL ASIA

GTIDR

Report No.: PAD996

Basic Information

Project ID EA Category Team Leader

P149697 B - Partial Assessment Simon David Ellis

Lending Instrument Fragile and/or Capacity Constraints [ ]

Investment Project Financing Financial Intermediaries [ ]

Series of Projects [ ]

Project Implementation Start Date Project Implementation End Date

01-Mar-2015 30-Jun-2020

Expected Effectiveness Date Expected Closing Date

30-Apr-2015 30-Jun-2020

Joint IFC

No

Practice

Manager/Manager

Senior Global Practice

Director Country Director Regional Vice President

Juan Gaviria Pierre Guislain Qimiao Fan Laura Tuck

Borrower: Republic of Belarus

Responsible Agency: Ministry of Transportation and Communications

Contact: Sivak Anatoly Aleksandrovich Title: Minister

Telephone No.: 375172597910 Email: mail@mintrans.mtk.by

Project Financing Data(in USD Million)

[ X ] Loan [ ] IDA Grant [ ] Guarantee

[ ] Credit [ ] Grant [ ] Other

Total Project Cost: 270.01 Total Bank Financing: 250.00

Financing Gap: 0.00

ii

Financing Source Amount

Borrower 20.01

International Bank for Reconstruction and

Development

250.00

Total 270.01

Expected Disbursements (in USD Million)

Fiscal

Year

2015 2016 2017 2018 2019 2020 0000 0000 0000 0000

Annual 0.00 90.00 75.00 40.00 25.00 20.00 0.00 0.00 0.00 0.00

Cumulati

ve

0.00 90.00 165.00 205.00 230.00 250.00 0.00 0.00 0.00 0.00

Institutional Data

Practice Area / Cross Cutting Solution Area

Transport & ICT

Cross Cutting Areas

[ ] Climate Change

[ ] Fragile, Conflict & Violence

[ ] Gender

[ ] Jobs

[ ] Public Private Partnership

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation

Co-benefits %

Mitigation

Co-benefits %

Transportation Rural and Inter-Urban

Roads and Highways

100

Total 100

I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information

applicable to this project.

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Financial and private sector development Infrastructure services for private sector

development

30

Public sector governance Other public sector governance 40

Trade and integration Regional integration 30

iii

Total 100

Proposed Development Objective(s)

The Project Development Objective is to improve transport connectivity, border crossing procedures and

safety for domestic and international road users on selected sections of the M6 corridor.

Components

Component Name Cost (USD Millions)

Component 1: Improvement of Sections of M6 'Minsk -

Grodno' Transit Corridor

259.28

Component 2: Road Safety and Network Management 6.80

Component 3: Border Management Enhancement 3.30

Front-end fees 0.63

Compliance

Policy

Does the project depart from the CAS in content or in other significant

respects?

Yes [ ] No [ X ]

Does the project require any waivers of Bank policies? Yes [ ] No [ X ]

Have these been approved by Bank management? Yes [ ] No [ X ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]

Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ]

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X

Legal Covenants

Name Recurrent Due Date Frequency

Section I.A. 3 of Schedule 2 to the LA X CONTINUOUS

iv

Description of Covenant

The Borrower shall maintain during the implementation of the Project, its offices, units and subordinated

agencies with technical, environmental and social safeguards, fiduciary and other Project related

responsibilities for implementing the Project, all with powers, functions, capacity, staffing and resources

acceptable to the Bank to fulfill their respective responsibilities under the Project.

Name Recurrent Due Date Frequency

Section I.D. 1 of Schedule 2 to the LA X CONTINUOUS

Description of Covenant

The Borrower, through MoTC and MA-C, shall carry out the Project in accordance with the

Environmental Management Plan (EMP) and the Resettlement Policy Framework (RPF). Except as the

Bank shall otherwise agree, the Borrower, through MoTC and MA-C, shall not assign, amend, abrogate

or waive the EMP and the RPF or any of their provisions.

Name Recurrent Due Date Frequency

Section I.D.2 of Schedule 2 to the LA X CONTINUOUS

Description of Covenant

Prior to commencement of any works to be carried out in the Grodno region under Part 1 of the Project,

the Borrower shall, through MoTC and MA-C, implement the Resettlement Action Plan, in accordance

with its terms and in a manner acceptable to the Bank, including the obligation of full payment of

compensation and/or the provision of relocation to all Displaced Persons prior to any displacement.

Conditions

Source Of Fund Name Type

IBRD Section 5.01 (a) of the LA Effectiveness

Description of Condition

The Project Operational Manual has been adopted by the Borrower.

Source Of Fund Name Type

IBRD Section 5.01 (b) of the LA Effectiveness

Description of Condition

The Inter-Ministerial Resolution has been duly issued and published in the National Registry of Legal

Acts, and is in full force and effect.

Team Composition

Bank Staff

Name Title Specialization Unit

Rodrigo Archondo-

Callao

Sr Highway Engineer Transport Economist GTIDR

Irina Babich Sr Financial

Management Specialist

Financial Management GGODR

Yevhen Bulakh Transport Specialist Highway Engineering GTIDR

Jacques Bure Lead Transport

Specialist

Peer Reviewer GTIDR

v

Funda Canli Program Assistant Administration GTIDR

Sebastian Eckardt Senior Economist Peer Reviewer GMFDR

Simon David Ellis Lead Transport

Specialist

Team Lead GTIDR

Clayton Bryant Kerswell Senior Trade Facilitation

Specialist

Customs and Trade

Facilitation

GTCDR

Elena Klochan Sr Country Program

Officer

Country Program

Management

ECCBY

Klavdiya Maksymenko Social Development

Specialist

Social Development GSURR

Juan Navas-Sabater Program Leader ICT ECCU1

Luis M. Schwarz Senior Finance Officer Disbursements CTRLA

Robert Charles Seekings E T Consultant Highway Engineering GTIDR

Elena Segura Labadia Senior Counsel Legal LEGLE

Jennifer Shkabatur Consultant Social Development GSURR

Hanna Shvanok E T Temporary Administration ECCBY

Maryna Sidarenka Research Analyst Customs and Trade

Facilitation

GMFDR

Alexei Slenzak Senior Environmental

Specialist

Environmental GENDR

Paul Vallely Sr Transport. Spec. Peer Reviewer GTIDR

Wei Wang Young Professional ICT and Instituional GTIDR

Barbara Ziolkowska Procurement Analyst Procurement GGODR

Non Bank Staff

Name Title City

Locations

Country First

Administrative

Division

Location Planned Actual Comments

Belarus Minsk X Project will cover Minsk

and Grodno Oblasts

1

I. STRATEGIC CONTEXT

A. Country Context

1. Macroeconomic Situation. The Republic of Belarus, a country with a population of

about 9.47 million, is highly urbanized – 77 percent of the population lives in 203 cities and

urban settlements and only 23 percent lives in 23,250 rural settlements in 2014. State presence in

and regulation of economic activity is still significant; the private sector accounts for just 22.6

percent of GDP1. While the role of the state has been gradually reduced, state owned enterprises,

which are supported by an extensive system of state support, still account for over half of output

and two thirds of employment. Equally, the financial sector is dominated by state owned banks,

which account for over 70 percent of bank assets and which channel a significant share of

financing to less productive parts of the economy, including through state programs and directed

lending. Despite recent liberalization efforts, the government also continues to regulate prices for

socially important goods and services, most importantly foodstuff and communication services.

2. Until 2008, Belarus was a strong growth performer in a fast growing region. During

2001–08, Belarus’s GDP grew on average by 8.3 percent annually but growth slowed

substantially following the global economic crisis of 2008–09, and since then, the country has

gone through a period of recurring macroeconomic instability and soaring inflation. Tight

monetary and fiscal policy in late 2011 and through 2012 led to some macroeconomic stability

being restored during 2013 but inflation remained stubbornly high at 16.5 percent and real GDP

growth slowed to 0.9 percent down from 1.7 percent in 2012.

3. Over the past decade, rapid economic growth translated into remarkable progress in

poverty reduction, although the recent crisis was associated with a modest poverty increase. The

absolute poverty rate (national poverty line) declined from 30 percent in 2002 to about 6.3

percent in 2012. The country has also been one of the most successful countries in the region in

sharing growth with the lowest 40 percent income group. In the 2006-2011 period mean income

growth averaged 6.4 percent, while growth of the lowest 40 percentile averaged 9.1 percent. As a

result, this group of the population earned 23.4 percent of total income in 2012.

4. Absolute poverty in rural areas is twice as high as in urban areas, and large heterogeneity

in poverty incidence is found among regions. While Belarus follows principles of equality and

non-discrimination in its policies and has a basic legal framework in place, gender equality

appears to be given lower priority compared to other social issues, and gender gaps persist in the

areas of worker remuneration and economic opportunities.

5. Nevertheless, the macroeconomic crises of the past years have revealed deep structural

constraints in Belarus’ state-centered economic model. Given the dominance of state-owned

enterprises, the private sector and especially small and medium-sized enterprises remain

marginalized. The economy continues to depend on energy- and resource-intensive exports.

6. The Government fully shares this assessment as reflected in the Country Economic

Memorandum and has formally requested Bank technical assistance to design a medium term

1 http://data.worldbank.org/indicator/FS.AST.PRVT.GD.ZS

2

structural reform program. This reform program would be comprehensive and consistent with the

key structural challenges facing the country. The reform program will include corporate

governance of State Owned Enterprises, reform of state programs and directed credits, industrial

policy, reforming the insolvency framework and social protection.

B. Sectoral and Institutional Context

7. Transport in Macroeconomics. Contributing about 6 percent of GDP in 2012, transport

is an important economic sector in Belarus. It generates significant revenues from transit

services, facilitates trade and transportation, and contributes to the country’s balance of

payments. In addition, the transport sector accounted for about 6 percent of total employment in

2012, with the largest proportion of transport employment in roads (100,900 persons), followed

by rail (69,100 persons).

8. The transport system. The transport system in Belarus is dominated by the rail and road

systems. The Belarusian Railways, a state-owned company under the authority of the Ministry of

Transport and Communications (MoTC) operates a rail network of 5,500 km. The rail transport

accounts for the bulk of freight transport (about 66 percent in 2013 excluding pipeline transport)

and a sizable but declining portion of the passenger traffic. Passenger rail transport – particularly

for transit journeys between Russia and Kaliningrad – struggles to compete with air travel

because of long journey times, while rail freight transport suffers from long loading and

unloading times. Belarus has around 86,660 kilometers of roads, including 75,030 kilometers of

hard-surface pavement which are generally in good condition, particularly for the Republican

road network. Belarus’ road sector is quite strategic and still accounts for about 34 percent of

freight and the majority of passenger traffic in the country. Aviation and inland waterway

transport remain insignificant with respect to passenger and freight traffic volumes, despite the

fact that aviation has seen some growth in the passenger market.

9. Road infrastructure development. In terms of road infrastructure, the main challenge is

the need to increase capacity in a safe manner on certain transport routes and corridors. Key road

corridors are now being upgraded to a Category 1 standard, which consists of four lanes, paved

shoulders and controlled access. These roads are equipped with high standard safety equipment

including central/side crash barriers and road lighting, the introduction of which is substantially

reducing the incidence of fatalities in vehicle accidents. There are two Trans-European

international corridors passing through Belarus which are Corridor II (Berlin – Warsaw – Minsk

- Moscow) which is the M1 road in Belarus and Corridor IX (Black Sea – Kiev – Minsk - Baltic

countries) which includes the M5, M7, M6 and M8. A section of the M5 was improved under the

first World Bank funded project, the Road Upgrading and Modernization Project (RUMP).

10. In addition to these formally defined international corridors there are also a number of

other major transit corridors linking Europe to/from Russia, Central Asia and China. The busiest

of these is the M6 which is the road to be upgraded to Category I standard under this project. The

M6 has a total length of 280 km in Belarus and connects Minsk with Grodno and then to Kuznica

at the border with Poland. On the Polish side the road connects through Bialystok to Warsaw

and about 110 of 250 km have already been improved to expressway standard and there are plans

to improve a further 90 km by 2017 and the remainder by 2019 partly with funding from the

3

European Union (EU). This corridor is one of the priority corridors identified under the Eastern

Partnership program of the EU.

11. Regional development and logistics. Belarus has a generally advantageous geographic

position, and physical infrastructure, that provides speed and flexibility to modern producers in

transporting perishables and high-value goods between Europe to/from Russia and Asia. Despite

unfavorable macroeconomic conditions, Belarus has been a net exporter of services in practically

all modes of transport, with total freight traffic volumes increasing slightly in 2012 to about 70.5

billion ton-km. Even though Russia is still the dominant trade partner for Belarus (35 percent of

exports, 60 percent of imports), trade between the Eurasian Customs Union (ECU) and the world

grew faster than trade among the three ECU members (Belarus, Russia and Kazakhstan).

However, the potential of Belarus as a transit and trade hub is presently far from fully exploited

and the overall performance of the Belarus logistics sector has been slipping relative to its

regional competitors. In 2008 it ranked 74th in the logistics performance index but has since

dropped to 91st in part due to complex and lengthy customs procedures at border crossing points.

The improved road infrastructure referenced above will only be fully effective if more is done to

facilitate the movement of trucks across the border in a timely manner. This project will work to

address border crossing delays on the M6 corridor.

12. Customs and border management. In an attempt to simplify procedures and facilitate

trade at border crossing points (BCPs), the Government of Belarus (GoB) is currently

implementing a reform, which will result in reducing the number of agencies at the border to

only two, namely State Customs Committee (SCC) and State Border Committee (SBC). The

SCC will be responsible for all government regulatory responsibilities (transport, sanitary,

veterinary, and phytosanitary inspections) and the SBC will be in charge of security (including

immigration controls). The SCC has already commenced administering MoTC technical

regulations (weight control). Delays at the border posts with Poland, which naturally link to the

M6 transit corridor, are to be reduced under the GoB reforms supported by the border

management enhancement component of this project, which will facilitate a reduction in rates of

physical inspections. The BCP at Bruzgi currently has a throughput capacity of 5,000 vehicles

per day, including 700 trucks. In 2013 the daily average number of truck movements through

Bruzgi was 815. To meet the growing demand, the SCC estimates that capacity may have to be

increased to 1,700 per day. In some instances it takes trucks in excess of 24 hours to complete

border clearance procedures, including waiting and queuing time. While such delays cannot

always be directly attributed to customs or other border management agency procedures, border

management is contributing to these delays through inefficient procedures as well as lack of

adequate infrastructure. Implementation of the ‘two agency’ policy will help address some of

these issues.

13. On May 29, 2014 the three members of Customs Union have signed an establishment

agreement to move from the Customs Union to a more integrated Eurasian Economic Union

(EAEU). The Customs Union came into effect on January 1, 2010 while the EAEU is to become

active on January 1, 2015. From a border management perspective the progression to an EAEU

is unlikely to have a major impact on this ‘outward facing’ EU border. Experience from Bank

projects with the other existing ECU members (Russia and Kazakhstan) suggests that most

impact occurs when the internal ‘fiscal’ borders between member states are eliminated (when the

4

customs union was established). It is possible however that Belarus will suffer some increased

border compliance ‘costs’, particularly regarding transit and standards/conformity.

14. Road sector reform. Belarus has a good capacity to plan, manage and maintain its road

infrastructure, with a very good track record over the past decades. The state operates several

enterprises for road design, planning, research, standards, maintenance, and construction. The

condition of the road network is generally good, which is due in large part to the adequate

allocation of resources for road maintenance over the past decades.

15. The road sector has undergone some reform over the last few years and as part of the

improvement of state management system, there has been some optimization of the institutional

structure at the MoTC. Until recently, the roads agency, Belavtodor, had responsibility for

planning, implementation and management of the network and “owned” the country’s

contractors and consultants. As part of the reform, Belavtodor has now been liquidated and

replaced by the Head Directorate of the Road Network, which is a structural unit responsible for

network management, at the MoTC. The new structure provides a road organization (‘Avtodor’)

in each Oblast to perform the project and road owner functions. A new organization called

Belavtodor Holding Management Company Republican Unitary Enterprise (RUE) was founded

in July 2013, which comprises 19 independently managed road and bridge contractors of Belarus

(i.e., large and small size construction companies). It is hoped that this framework will

eventually make the contracting industry in Belarus more competitive and capable of competing

internationally for works. In the future, the government could be in a position to consider that

some Oblast Avtodor functions related to maintenance could be separated.

16. Sustainable sector finance. Following a number of years of declining sector revenues

the government has undertaken important steps towards sustainable sector finance and has

introduced substantial increases in sector revenues and budget allocations for the road sector

starting in 2014. An important development is the promulgation of a new vehicle tax from

January 2014 which will be collected during the annual technical inspection of motor vehicles.

The new fee is expected to finance only capital expenditures including for instance financing for

the upgrading of road corridors such as the M6. The government expects to collect some BYR

1.6 trillion (US$160 million) from this new fee in 2014, out of which half will be for capital

expenditures in republican roads and half for capital expenditures on local roads.

17. Another significant development is the introduction of the e-tolling system, which has now

been deployed in selected roads in the country under concession to an international private

operator. The system has been operational since 2013, now covers 1,191 km and will be

expanded to cover all major road corridors including the M6 corridor, the modernization of

which will be financed under this project. Estimated revenues to the budget for 2014 are BYR

550 billion (US$55 million). Other sources of revenue include minor revenues from fuel excise

tax, axle load fees and transit cargo fees accounting for a further BYR 300 billion (US$30

million) per year.

18. Road safety. The Government of Belarus has been making continued efforts to improve

road safety in the nation. Since 2006, traffic accidents have been steadily decreasing, especially

in terms of fatalities and severe injuries. Recent statistics show a 30 percent fall in severe injuries

5

despite a threefold increase in automobile ownership since 1992. Belarus in general, is in the

middle range of road safety among European countries with relatively higher fatalities compared

with EU countries. In the current “Roads of Belarus” program till 2015, it was aimed to reduce

traffic fatalities by 100 every year, which is the so called “-100” program. For the new strategy

from 2015 till 2019, the goal is to fully eliminate traffic fatalities on main roads and road

corridors are now being upgraded to Category 1 standard, which includes high specification

safety equipment. A key issue now is with vulnerable road users including pedestrians and two

wheelers which account for 15 percent of road accidents. Bus stops are also a concern as many

are isolated and not equipped with lights at night, and therefore a source of insecurity, mainly for

women. The pedestrian crossings at bus stops are dangerous and the number of road accidents

involving a vehicle and a pedestrian on the M6 corridor increased from 15 in 2012 to 21 in 2013.

Improved design measures will be adopted in this project to adequately protect those using bus

stops and pedestrian crossings.

19. Road network management and user services. The overall management of the road

network is given high priority in Belarus to sustain a safe high quality road system. The MoTC

maintains good quality data on road condition, traffic levels, accident statistics and employs a

number of Intelligent Transport Systems (ITS) to monitor the road network and provide limited

feedback to users. These systems include e-tolling, temperature monitors, network cameras,

enforcement cameras, and the planned weigh-in-motion (WIM) system (financed under RUMP).

The outcomes from these initiatives are generally good with both the overall condition of the

network and level of road accidents comparing favorably to other countries in the region.

However, the MoTC wants to further improve its capacity for network management by properly

integrating the various systems so that data collection and analysis can be strengthened. The

results will be used to inform network development and maintenance priorities and to improve

user information. A key activity of this project will be the development of a Traffic and Road

Safety Coordination Center (TRSCC) to address these issues. Within the MoTC key

beneficiaries of the TRSCC will be the design institute (Belgiprodor) which periodically prepares

a prioritized “Roads of Belarus” program and the Oblast Avtodors to prioritize their maintenance

activities particularly during the winter months. Road users will benefit through improved road

information, better mechanisms to allow user feedback and citizens monitoring and improved

links with emergency services. This project will also support a more market-oriented approach to

the development of road-side services which are essential for road safety and overall user

comfort. The road-side services are also seen as a key way to promote small- and medium-sized

enterprises (SMEs) and employment in the more rural areas.

C. Higher Level Objectives to which the Project Contributes

20. This project supports a key area of the joint IBRD/IFC Country Partnership Strategy

(CPS) for the Republic of Belarus for the period of FY14-17, which focuses on improving

economic competitiveness, sustaining growth and job creation and boosting shared prosperity for

all citizens of Belarus. To address these objectives, one of the key actions is to increase

competitiveness of the economy through structural reform and improving the quality and

efficiency of public infrastructure. This project contributes to the overarching country goal to

increase economic growth, and create employment through an investment program which will

improve infrastructure critical to economic growth and export. The project will invest in the key

transit corridor connecting Belarus and Poland, and support the on-going reform of the roads and

6

customs sector and the move to commercialize key economic entities such as the contractors and

consultants.

21. The project will contribute toward alleviating poverty and boosting shared prosperity, the

two corporate goals under the World Bank Group strategy. By removing transport bottlenecks in

the national road network, it is expected that poor and disadvantaged communities will take

advantage of higher connectivity to get engaged in regional value chains, thus creating

possibilities for income generation. Additionally, improved transport links should contribute

towards improving the living standards of citizens by providing safer, quicker, and more reliable

access to public amenities.

22. Encouraging private sector participation in the transport sector is a key government

strategy. An infrastructure investment council and Public Private Partnership (PPP) unit has

recently been established under the leadership of the Ministry of Economy. A significant step has

been made in the roads sector with the first private sector concession for e-tolling which now

covers over 1,000 kms of the national road network, increasing revenues for the sector and

creating high quality private sector employment. This project will also promote private

participation in the roads sector through the development of road side services and provision of

open source data from the TRSCC. As traffic volumes increase on the main road network there

will be increasing interest from the private sector and having the correct investment framework

will be key to diversifying the economy.

23. The project will also contribute to broader country priorities as the institutional

components of this project move away from pure management of the infrastructure to take a

more user focused approach to service provision. The project through the TRSCC will not only

provide user information but will also encourage feedback and social accountability. In addition,

the evidence suggests that streamlining border clearance procedures will facilitate trade and

increase domestic job opportunities. The design of the infrastructure is also user focused with

attention to safety features particularly for pedestrians and security features around bus stops

particularly beneficial for women. With the expected increase in freight traffic on M6, the

corridor can serve as a strategic location for investors interested in supplying the EU and EAEU

markets. These infrastructure and institutional elements of the project will have a significant

impact in creating the opportunities that will contribute towards the alleviation of poverty and

boosting of shared prosperity.

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

24. The Project Development Objective is to improve transport connectivity, border crossing

procedures and safety for domestic and international road users on selected sections of the M6

corridor.

B. Project Beneficiaries

25. The improvement of M6 transit corridor will bring better and safer connectivity and

improved logistics performance to both domestic and international road users. Main project

7

beneficiaries include road users who will have improved connectivity to border crossings, public

amenities and services, reduced travel time, reduced vehicle operating costs and reduced road

accident risks. These road users include long distance truck drivers, local road users, bus-users

and pedestrians. The local population will also benefit from improved connectivity and the

employment opportunities that will be generated through SMEs investing in the road side

services and other business opportunities. This will enable the local population, particularly the

poor and bottom 40 percent, to expand their income-generating opportunities beyond their

villages and towns, and to contribute to better and more sustainable livelihoods. The historical

growth data shows that the overall economic growth in Belarus has been equitably spread, with

the growth of the lowest 40 percent being nearly 3 percentage points above the overall growth.

Therefore, this project is expected to boost shared prosperity by contributing to the creation of a

more efficient and competitive road sector and to the overall economic growth for Belarus.

26. In addition, during road construction, the project will provide jobs for hundreds of skilled

and non-skilled men and women from the area, helping them learn skills, increase their income,

and lower unemployment rate for a fixed period of time. Improved border management

procedures will have a positive impact on logistics costs, attracting more international road users

and increasing economic opportunities for Belarus through provision of logistics (transport)

services for transit and supply of inputs to SMEs. This project will also contribute to

strengthening capacity of the MoTC, to better manage road traffic and road-side services,

improve road safety and promote citizen engagement.

27. In order to adequately monitor and evaluate the relevant transport induced effect on

project beneficiaries, baseline data will be collected jointly with IFC before project

implementation and follow up surveys will be undertaken at mid-term and the end of the project

period. More details are provided in Annex 7. The scope of work, methodological framework,

and data collection techniques will be further defined in close consultation with the MoTC.

C. PDO Level Results Indicators

28. The key indicators to measure successful achievement of the Project Development

Objective are as follows:

i) Reduction in travel time between Minsk and Grodno;

ii) Reduction in vehicle operating costs for medium trucks along the project road;

iii) Reduction in severe injuries and fatalities on road sections under this project;

iv) Reduction in average time to complete inwards border clearance procedures

(commercial vehicles) at Bruzgi BCP; and

v) Percentage of project beneficiaries expressing satisfaction with project roads.

III. PROJECT DESCRIPTION

A. Project Components

29. Component 1: Improvement of Sections of M6 Transit Corridor (total cost US$259.28

million of which US$239.27 million financed by IBRD loan). This Component will finance

widening works (from a two-lane road to a four-lane road) in selected sections of the M6

8

Corridor between the cities of Minsk and Grodno for approximately 86 km in the aggregate. It

will include the installation of central crash barriers, side barriers, bus stops, road signs and

markings and the improvement of vertical alignments located in selected sections of the M6

Corridor. The road improvement will meet two strategic objectives for the government by: (i)

improving links between Minsk and Grodno as part of their national strategy of connecting all

six Oblast centers to high standard roads; and (ii) developing international transit corridors to

promote cross border trade. The crucial M6 transit route provides links between Minsk, Grodno

and the Polish border. There are insufficient finances for the whole road but sections have been

prioritized based on their overall economic returns. The road will be designed for the European

standard axle load of 11.5 tons and also include two level interchanges and road safety features

according to European standards. The route carries a substantial proportion of transit traffic with

volumes averaging 5724 vehicles per day, of which 44 percent are trucks. This component will

also finance financial and technical audits, and consultancy services to supervise implementation

of Federation of Consulting Engineers (FIDIC) type of contracts for civil works. Through

counterpart financing, the government will finance the feasibility studies, engineering design,

technical and environmental supervision, land acquisition, and infrastructure loss. Following

improvement, the road will be tolled and have Weigh-In-Motion sensors installed (not financed

through this loan).

30. The road will be built to meet high safety standards and all designs will be signed off by

the traffic police. The majority of fatalities on the road are from head on collisions (37 percent)

and vehicle roll overs (19 percent). Fatalities involving pedestrians and cyclists (15 percent) are

also a key issue. This component will focus on the engineering measures to improve road safety,

including provision of central crash barriers along the entire road and side barriers in dangerous

locations, safer pedestrian crossings and bus stops, and signs and markings in select road

sections. In the highest risk part of the corridor, between km 198 and km 211, the vertical

alignment of the road will be improved to correct the current poor sight line.

31. Component 2: Road Safety and Network Management (total cost US$6.80 million of

which US$ 6.80 million financed by IBRD loan). This Component includes the following two

sub-components:

32. Sub-component 2.1: Traffic and Road Safety Coordination Center (total cost US$6.5

million of which US$ 6.5 million financed by IBRD loan). The proposed Traffic and Road

Safety Coordination Center (TRSCC) will be established within Beldor Center to promote safer

roads through improved traffic management, emergency response and traveler information

dissemination in the road sector. The TRSCC will collect and analyze road traffic and condition

related data and provide real-time feedback to users, such as on traffic congestion, detour

suggestions due to severe weather and road maintenance works. The data from the TRSCC will

also be available to other entities within MoTC such as Belgiprodor (the design institute) and the

Oblast Avtodors who are responsible for regional roads maintenance. The data will strengthen

their ability to manage the development and maintenance of the network and allow more

effective long term planning including the optimization of toll fees.

33. The MoTC has already set up hotlines for citizens to report road problems. In order to

further promote public participation and enhance government accountability, the MoTC will

apply Information and Communications Technology (ICT) tools such as crowdsourcing

9

techniques to promote citizen engagement in identifying accident black spots and other road

maintenance and safety issues from road users’ point of view. The TRSCC will also promote

public awareness campaigns on issues particularly related to road safety. The MoTC will

continue its engagement with the private sector on using these open source data to develop

applications for practical usage. The following activities will be financed for the establishment of

TRSCC:

i) Consultancy services including: (a) the preparation of the technical design of TRSCC

and the necessary bidding documents for its establishment; (b) the development of the

necessary monitoring and evaluation mechanisms including the design and

implementation of road users’ satisfaction surveys; the carrying out of impact

evaluations of road sector interventions; and the carrying out of road safety awareness

campaigns.

ii) Providing capacity building needed for staffing such a center and for the staff of other

MoTC entities to utilize the asset management tools of the TRSCC;

iii) Provision of ICT systems that will comprise the TRSCC and associated infrastructure,

including systems integration services and equipment.

34. Sub-component 2.2: Road-side services (total cost US$ 0.3 million of which US$ 0.3

million financed by IBRD loan). The provision of road side services is important for the safety

and convenience of road users but is also a potential source of employment for local

communities and particularly women. The MoTC already has a detailed master plan for the

development of road side services, regulations governing their use and the government is

providing some incentives for investors such as tax breaks. However, recent attempts to attract

investors have been largely unsuccessful partly because of constraints related to the availability

of land and finance but partly because of the overall investment framework. This activity,

coordinated with IFC, will finance: (i) the design and implementation of a market survey on

road-side services to identify user needs and private sector interests in the road transport sector;

and (ii) a review of MoTC regulatory framework for the development of road-side services based

on a market-oriented approach.

35. Component 3: Border Management Enhancement (total cost US$3.3 million of

which US$ 3.3 million financed by IBRD loan). This Component will finance activities designed

to improve the overall performance of border management in Belarus, facilitating the movement

of cross-border trade at the Bruzgi BCP by reducing average clearance times and the number of

transactions conducted when crossing the border. This component will support the

implementation and increase the effectiveness of the ‘two agencies at the border’ policy being

implemented in Belarus. It will also support national ambitions to transition to a one-stop-shop

approach as part of a single electronic window environment.

36. Through parallel finance, an IFC advisory services grant will be used to undertake a time

release study to identify current constraints in border clearance procedures and other technical

assistance activities to support business process improvements in response to areas of priority

identified by the SCC. The following activities will be included in this project:

10

i) Consultancy services to re-design the physical layout of the ‘inward’ registration,

vehicle control, processing and examination areas to allow implementation of the

revised business processes to be adopted by the SCC under the “two agency”

approach.

ii) Goods and works necessary for implementation of the physical layout proposed by

the re-design services.

B. Project Financing

37. The Bank will finance the project through an IBRD Investment Project Financing Loan

with the total amount of US$250 million.

C. Project Cost and Financing

38. The total project financing requirements are estimated at US$270.01 million. Table 1

shows the financing for each component.

Table 1: Project Cost and Financing

Project Components

Project cost

(million US$)

IBRD Financing

(million US$)

IBRD

Financing (%)

Component 1: Improvement of Sections of M6

Transit Corridor 259.28 239.27 92.3%

Component 2: Road Safety and Network

Management 6.8 6.8 100%

Component 3: Border Management Enhancement 3.3 3.3 100%

Front-end-fee (0.25%) 0.63 0.63 100%

Total 270.01 250 92.6%

39. All contracts to be financed under the project will be exempt from VAT. The government

will contribute US$20.01 million from the state budget to cover the costs for technical and

environmental supervision, land acquisition, and infrastructure loss.

D. Lessons Learned and Reflected in the Project Design

40. Strong implementation capacity. Implementation of RUMP is satisfactory and the

implementing agency has demonstrated strong capacity to prepare designs and safeguard

assessments and to subsequently manage their implementation. However, experience from the

RUMP suggests that decisions made at the ministerial level can sometimes be overturned

(permanently or temporarily). The project legal agreement needs to consider introducing

sufficient flexibility to allow minor changes without major restructuring and complex approval

processes.

41. Procurement of contractors. Experience from Belarus and more widely in the region is

that some contractors present very low prices in the winning bids and afterwards delay the

execution of works through requests for variations. There is also a problem where large

international contractors obtain awards and then sub-contract a significant portion of works to

11

local contractors. For this project particular attention will be given to prequalification criteria and

the past performance of contractors in the region.

42. International best practice. The experience from the ongoing project (RUMP) indicates

that MoTC is a quick adopter of innovative practices in the sector. The MoTC is well advanced

implementing e-tolling, WIM and other network management tools and are now looking to

incorporate international best practice to bring these tools together in support of improved

network management. Through the inclusion of components such as the TRSCC and private

sector involvement with road side services, the project is designed to increase the client’s

exposure to these solutions. IEG project reviews support the positive role that the Bank can have

in catalyzing such integration.

43. Logistics performance. Substantial work has been carried out through the on-going

project on the diagnostics of the logistics sector. The government has also invested heavily in the

supporting infrastructure. However, the experience is that the elements of the logistics chain are

being addressed independently of one another. Through the inclusion of Component 3, the

design of this project will seek to improve coordination and a more seamless logistics chain.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

44. The project will be implemented over a five-year period by the MoTC, which is the

national authority in charge of road construction and maintenance in Belarus and will have the

overall responsibility for project coordination and monitoring of implementation progress. The

MoTC has formally delegated the responsibility for managing the day-to-day preparation and

implementation of the proposed project to the Republican Unitary Enterprise Minskavtodor-

Center (MA-C). MA-C is a unit of the MoTC in charge of the management and maintenance of

the Republican road network in Minsk oblast.

45. Within MA-C, a Project Implementation Team (PIT) was created in 2009 for the on-

going RUMP Project, which consists of experienced engineering, procurement and financial

management staff. The PIT will be augmented by staff from Grodnoavtodor (responsible for the

region where much of the proposed road is located under component 1). The PIT has less

experience with social issues and the team from Grodnoavtodor has not worked with the Bank

before. The Road Design Institute (Belgiprodor) and the National Academy of Sciences will be

involved in monitoring the adherence to environmental safeguards requirements. Beldor Center

will coordinate implementation of the TRSCC under component 2 of the project.

46. MA-C will also be responsible for the implementation of the border management

enhancement component although the day to day management of the component will be done by

the SCC of Belarus and its Grodno Regional Customs Agency (GRCA). Both the SCC and

GRCA will assign coordinators (project managers) responsible for project implementation to

work closely with the MoTC and MA-C. The customs agencies will be responsible for the

overall design and implementation quality of this component. They will prepare terms of

reference for design documents (or approving design documents when they are available),

ensuring appropriate technical supervision of the contracts, accepting payment orders, and

12

submitting adequate documentation to the MA-C so that it can prepare and sign withdrawal

applications. The customs agencies will prepare bidding documents for Component 3, identify

personnel to sit on procurement committees and jointly sign with MA-C relevant contract

documents.

47. The Bank will continue supporting the various entities with the necessary training on the

use of World Bank guidelines and procedures for procurement, financial management and

environmental/social safeguards management. Before and after project effectiveness, the PIT

staff will receive targeted training on land acquisition and resettlement given their more limited

experience in this area.

48. The implementation arrangements specified above will be formalized through an Inter-

Ministerial Resolution setting out MA-C as the sole implementing entity. This resolution will

also set out the roles and responsibilities for the other beneficiaries including Grodnoavtodor for

component 1, Beldor Center for component 2 and SCC and GRCA for component 3 of the

project.

B. Results Monitoring and Evaluation

49. The Results and Monitoring (R&M) Framework developed for the project is included in

Annex 1. The overall monitoring and evaluation will be the responsibility of the MA-C except

that SCC will be responsible for the R&M for Component 3. The PDOs will be monitored and

reported through periodic World Bank implementation support missions every six months. The

MA-C and SCC will conduct frequent inspections to prepare quarterly and annual progress

reports with detailed evaluation surveys and analysis. It is expected that the TRSCC will also

collect beneficiary satisfaction data in a variety of formats which will be used for project R&M.

Much of this data will be network wide but where possible the data will be specific to the project

interventions and provide for gender disaggregated data.

50. In order to identify the channels through which the project will impact the beneficiaries,

adequately measuring the relevant transport-induced effect on their livelihoods, baseline data

will be collected. Mid-term and end of project survey data will also be collected and compared

against a proper comparison group in an effort to capture project-related impacts on selected

welfare and accessibility indicators. More details are provided in Annex 7. To allow for possible

differences in demands and experiences from women and men, the surveys will consult with

women and men separately, ask gender specific questions and will allow disaggregation of data

by gender.

51. The ongoing project (RUMP) did not require land acquisition and resettlement whereas

the proposed new project will have to address these issues. As such the Bank will provide

additional support to MA-C and Grodnoavtodor in this area to ensure that their specialists have

the necessary knowledge and training. The Bank team will monitor the implementation of the

Resettlement Action Plans (RAPs) in the course of its regular monitoring missions.

13

C. Sustainability

52. The sustainability of the project depends on the institutional, technical and financial

capacity in the long term to provide adequate and regular maintenance of the road infrastructure

and maintain the smooth and safe traffic flow along the M6 corridor. This project will provide

technical support to the SCC to improve customs border control on M6, so that freight traffic

will be improved. This project will also support the MoTC to establish the TRSCC, which will

provide the MoTC and Beldor Center with state-of-the-art equipment for highway monitoring,

operations and maintenance. It will be the technical and institutional hub to bring together

various jurisdictions, modal interests, and service providers to optimize the performance of the

surface transportation system. Additionally, this project will support improving / expanding road

side services which will make this corridor more attractive. Finally, the road safety initiative will

help ensure this corridor is safe to travel and thus sustainable in the long run.

V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary

Table 2: Risk Ratings Summary

Risk Category Rating

Stakeholder Risk Low

Implementing Agency Risk

- Capacity Moderate

- Governance Moderate

Project Risk

- Design Moderate

- Social and Environmental Moderate

- Program and Donor Low

- Delivery Monitoring and Sustainability Low

Overall Implementation Risk Moderate

B. Overall Risk Rating Explanation

53. The overall implementation risk rating for the project is Moderate. The government and

implementing agencies have experience implementing World Bank financed projects and the

outcomes have been good in terms of the quality of the infrastructure. Environmental

management has been very good to date but there is less knowledge on land acquisition and

resettlement, and while Grodnoavtodor is one of the most experienced implementing agencies in

Belarus it has not had experience with World Bank procedures to date. The design of the project

is relatively straight forward in terms of the civil works component but there is a substantial

14

institutional component and the implementation arrangements are complicated given the

involvement of both the MoTC and SCC. The overall risk rating for the project is moderate.

VI. APPRAISAL SUMMARY

A. Economic Analysis

54. The economic feasibility of this project was assessed based on an analysis of the vehicle

operating costs savings and users’ travel time reduction as well as reduced road traffic fatalities

resulting from the improvement of the project road. Savings in vehicle operating costs were

evaluated using the Highway Development and Management Model, HDM-4 (version 2.8),

which computes annual costs for the road agency and road users for with and without project

alternatives over the evaluation period. Benefits arising from road safety improvements were

assessed using the estimated reduction of fatalities along the road, and the monetary value of loss

of human life, evaluated on the basis of the current income level.

55. The existing two-lane road will be widened to four-lanes. The average annual daily traffic

on the concerned road sections in 2013 was 5,724 vehicles per day with 44 percent composed of

trucks. The existing road has a bituminous pavement in fair condition with an average riding

quality, measured by the International Roughness Index (IRI), at 3.7-4.3 m/km. The total

economic construction cost is estimated to be US$237.87 million, which corresponds to

US$2.75 million per km. The road improvement investments under Component 1 are

economically justified with a total NPV of US$156.7 million, at 8.95 percent discount rate, and

an overall Economic Internal Rate of Return (EIRR) of 16.2 percent. Even under the pessimistic

scenario of increasing costs by 15 percent and decreasing traffic growth rate by 15 percent, the

project is still economically justified with an EIRR higher than 12.9 percent. The switching

values analysis shows that costs would have to increase by 105 percent to yield an EIRR equal to

8.95 percent, which indicates a robust economic justification of the project. The outcomes of the

economic evaluation are summarized below in Table 3, with more details provided in Annex 6.

Table 3: Economic Evaluation Summary

NPV EIRR B/C

Section Location (Million US$) (%) Ratio

1 km 57.2 to km 91.07 52.4 13.9% 0.44

2 km 91.07 to km 130.4 56.4 16.6% 0.60

3 km 197.7 to km 211.0 47.9 25.3% 1.62

Total 156.7 16.2% 0.72 Source: World Bank Calculations

56. Rationale for public sector financing. With few exceptions, roads are a public good that

are provided and often managed by the public sector. In this case public sector financing is also

the appropriate vehicle for financing the improvement of the project road. This is because while

the road sections are economically viable, traffic is not high enough to generate sufficient

financial receipts to justify a concession to the private sector for their improvement and

management. Following completion, in this case, a private sector concession will be used for

subsequent tolling. In addition, public investment and management of road infrastructure

15

provides the government a better handle to exercise control over key activities such as the

enforcement of axle weight control, and road safety regulations.

57. Value added of Bank's support. The World Bank is well positioned to support Belarus

in the sustainable investment and management of its road network with modern traffic

management practices and the incorporation of road safety in project designs, particularly for

vulnerable road users. In addition, the Bank’s international experience and expertise in the road

sector will help ensure the use of reliable procurement processes, sound social and environmental

management practices, the application of modern technical standards, and the execution of work

with proper quality control. Similarly, regarding the border management enhancement, the

Bank’s experience will help ensure best practice outcomes.

B. Technical

58. The detailed engineering design for the three sections of road to be upgraded has been

completed by Belgiprodor according to Belarusian standards that are a further improvement from

norms of the former Soviet Union, with adaptation to European axle loads. The road will be

widened to four lanes, and will include modern safety equipment including central crash barriers

and side crash barriers where required. The road will include the construction or reconstruction

of grade separated interchanges and bridges, include provision of fiber optic cables and will

ultimately be tolled and equipped with a weigh-in-motion system.

59. The pavement design is based on the use of Stone Mastic Asphalt (SMA), which provides

a deformation resistant and durable surfacing material, suitable for heavily travelled roads. SMA

has a high coarse aggregate content that interlocks to form a stone skeleton that resists permanent

deformation, including deformation caused by large temperature variations such as those present

in Belarus. SMA is an efficient solution for Belarus and its climate and has already been used

extensively in the country.

60. Road safety issues are addressed both through sound engineering design and the

implementation of a detailed traffic management plan during construction. The upgrading of the

road from two lanes to four lanes will provide the alignment with a median, which has very

positive effects on safety, given that most fatalities on that road are caused by head-on collisions.

Placement of metal guardrails will all but eliminate cross-median head-on crashes while

mitigating median-related crashes through adequate shock absorption. The choice of provision of

central cable (crash) barriers and reinforced shoulders has been made, because this has shown the

potential to further improve safety. Several grade separated interchanges will provide a safe

environment for crossings of the M6 road. Speed limits will be adjusted along the alignment at

the remaining level crossings. On the section in Grodno region (km 198- km 211) the vertical

alignment will be changed for improving visibility and bringing sharp horizontal and vertical

curvatures to the standards for category I roads (highways).

61. Particular attention has been given to pedestrian crossing and bus stop design to provide

additional safety for road users. Given low pedestrian numbers most pedestrian crossings will be

at grade but designers have adopted best practice and included staggered crossings, central

holding areas, and direct and approach lighting along with advance warning signs. Bus stops will

also have direct lighting and deceleration lines. The road will also include rest stops, sidewalks

16

to bus stops and crossings, traffic signs and deceleration lines on all exits to the road. Moreover,

the rest stops will include “economic zone” for possible commercial road services with parking

area for freight, passenger cars and disabled people - located as close as possible to the facilities.

During construction a traffic management plan, which will be reviewed and certified by the State

Motor Vehicle Inspection Department, will include diversion roads, temporary signs and

markings. In addition, through the establishment and functioning of the TRSCC, traffic accident

response time will be reduced and thus more lives can be saved following severe traffic

accidents.

62. Among engineering structures such as culverts and cattle crossings, design includes

social and environment protection measures such as noise protecting barriers, fencing to protect

against wild animals and measures to ensure the minimum influence during road construction

works. The TRSCC will integrate the various Intelligent Transport Systems that are available in

Belarus to improve monitoring, operations and maintenance of the road network and feedback of

road user information. This will support user satisfaction, road safety and road maintenance.

C. Financial Management

63. Financial management (FM) arrangements for the implementation of the project are

Satisfactory, and related FM risk is Moderate. The FM assessment focused on the capacity

assessment of Minskavtodor-Center (MA-C), which was appointed by MoTC as the agency

responsible for the technical implementation of the project, including financial management of

all project components. MA-C is in process of implementing RUMP, and therefore the current

assessment was based on the FM arrangements that are in place for the ongoing project, with

additional focus on strengths and weaknesses identified during its implementation. A number of

roads agencies, and particularly Grodnoavtodor RUE and the SCC will also be engaged in the

project implementation, particularly on the technical side of the project. Given the successful

experience of MA-C in the day-to-day implementation of the ongoing project, the fiduciary

responsibilities will continue to be carried out by MA-C in the new project.

64. The FM and disbursement capacity of the MA-C has grown substantially during the years

of implementation of the first project, and the FM arrangements were confirmed as Satisfactory

during the latest FM monitoring visit in September 2014. All key aspects of FM and

disbursement of the project are in place; although the MA-C was still to address the findings of

its auditors related to the accounting and reporting procedures of MA-C (auditors’ findings do

not affect the validity of project records, but are related to general capacity building of MA-C).

The audit reports issued on project financial statements for the last years were all unqualified

(clean). Requirements on quarterly reporting and annual auditing were fully and timely complied

with, including requirement on public disclosure of audits.

65. The Transit Corridor Improvement Project will continue to use the same experienced

fiduciary staff of MA-C for project implementation. Project accounting will be done in the same

accounting software (Galaktika), on a segregated set of accounts. Quarterly IFRs will be

prepared, and will include information on all components and contracts under implementation.

Annual audit of project financial statements will be carried out by eligible private auditors.

Additionally, MA-C will continue to submit the audit of its consolidated financial statements

prepared under requirements of National Accounting Standards, mainly for the purposes of

17

capacity building. A Project Operational Manual (POM) including the FM sections will need to

be adopted prior to effectiveness. Details of the FM arrangements, including disbursement

arrangements, are provided in Annex 3.

D. Procurement

66. Procurement activities under the proposed project would be carried out by Minskavtodor-

Center (MA-C) – Project Implementation Team (PIT), in accordance with the World Bank’s

“Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans

and IDA Credits and Grants by World Bank Borrowers,” dated January 2011 and revised on July

1, 2014 and “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA

Credits and Grants by World Bank Borrowers,” dated January 2011 and revised on July 1, 2014,

and the provisions stipulated in the Loan Agreement. A procurement assessment initiated in

April 2014 concluded that the PIT has adequate experience and capacity to carry out the

procurement activities related to the project. Taking into account MA-C’s long experience with

Bank-financed projects and successful implementation of the ongoing project (RUMP), the

assessment found the overall procurement risk for the project to be Moderate.

67. There is a potential risk of delays in the implementation of the procurements, especially for

large civil works contracts. In addition, in civil works contracts there is a risk of cost overruns

due to variation orders and claims. To mitigate the procurement risks the PIT will implement

measures agreed with the Bank which will include: (i) preparation of bidding documents for the

first year of project implementation for Component 1 in advance; (ii) a business outreach

organized by the PIT for the private sector on future business opportunities under the project

before launching first bidding procedures; (iii) the hiring of a consultant, experienced in FIDIC

type of contracts, who will assist the PIT in supervision of large civil works; (iv) the preparation

of procurement progress reports by MA-C during project implementation.

68. The Bank will closely supervise the project and will review the procurement arrangements as

performed by the PIT—including contract packaging, applicable procedures, methods, and the

scheduling of procurement processes—for conformity with the Loan Agreement, the proposed

implementation program, and the disbursement schedule. The Bank’s prior review thresholds

will be provided in the agreed Procurement Plan. The remaining procurement procedures, will be

subject, on a random basis, to the Bank’s ex-post review. One in 10 contracts under the project

will be subject to ex post review. More detailed findings of the assessment, the proposed

procurement arrangements, and measures to address the identified risks are presented in Annex

3. The Procurement Plan covering the first 18 months of the project implementation has been

agreed by the Bank and is presented in Annex 3.

E. Social (including Safeguards)

69. Safeguards: The project will require land acquisition from about 20 private owners for

widening the road from two-lane to four-lane. This will also cause small scale physical

displacement of about 5 households and one or two cases of economic displacement. The exact

number of people affected will be known after the technical design for the section of the road in

Minsk region is completed. A Resettlement Policy Framework (RPF) was prepared for the

project, agreed by the Bank and disclosed in Belarus in Russian and in English in Bank’s

18

Infoshop in May 2014. A Resettlement Action Plan (RAP) was prepared for the section of the

road in Grodno oblast where the technical designs have been completed and the exact alignment

known (km 57.2 - 91.1 and km 197.7 - 211.0). The Grodno RAP was agreed by the Bank and

duly disclosed in Russian on the site of Grodnoavtodor and in Bank Infoshop on September

2014. The RAP for the remaining section of road in the Minsk oblast (km 57.2 - 91.1) will be

prepared once the technical designs for that section have been completed and the exact alignment

known. The designs for the Minsk section were started after those in Grodno and are being

developed to avoid the acquisition of private land to the extent possible and to obey the sanitary

norms of the country. The PIT will identify the specialist responsible for monitoring the

implementation of the RAPs and reporting to the Bank on resettlement implementation. Bank’s

specialists will monitor resettlement issues in the course of their regular implementation support

missions. The hot line of the MoTC will be used as additional grievance mechanism for project

implementation and resettlement monitoring. The grievances and queries related to the project

will be redirected to the project support team for addressing them.

70. Social Accountability: A wide consultative process to identify the key problems and

opportunities for strengthening the project impact will be supported by the project. Business

associations of the international cargo services (such as BAIRC2) and trade unions of transport

workers will be involved in discussing the road improvements and providing their feedback on

the road safety, roadside services organization, and overall improvements in functioning of the

transport corridor as the result of the project. Beldor Center will be supported in engaging

citizens in identifying black spots and road safety concerns around the M6 corridor using ICT in

the TRSCC.

71. Gender Considerations: In the framework of establishing the TRSCC the project will

support Beldor Center in improving the monitoring of the roads sector and collecting gender

disaggregated information on travel needs, road users’ satisfaction, and complaints. Road safety

improvements will be conducive to reducing the number of traffic accidents and improving

safety on the roads both for men and for women. Some of the improvements on the road (lighting

at bus stops) will particularly benefit women by providing them with a safer travel environment.

Given that the optimization of the highway will entail the development of local roadside

infrastructure and services, this may have a positive impact on the increase of small businesses

run both by men and women and will create additional employment opportunities for rural

women in the non-agricultural sector (the service sector is largely represented by women).

F. Environment (including Safeguards)

72. The road alignment runs through the landscape which has been modified by human

activity (mainly agriculture and forestry) for many decades. Environmental impacts of road

rehabilitation/repairs, road widening and road infrastructure safety improvements will be

undertaken within the existing right of way of the road. These impacts are similar to those under

the ongoing RUMP and broadly include: (i) air pollution and noise from trucks, other

construction machinery and asphalt plants, (ii) soil disturbance, and (iii) tree-cutting. These

environmental impacts can be mitigated by good construction and housekeeping practices. Based

2 http://www.bamap.org/activities/about/regions/

19

on the nature and scope of anticipated negative environmental impacts the project is assigned

Environmental Category B.

73. A corridor-specific Environmental Impact Assessment/OVOS (EIA/OVOS 2013),

documenting baseline conditions and environmental risks for the road alignment was prepared

along with section specific Environmental Management Plans (EMPs). These documents were

disclosed and consulted upon in country in November-December 2013 and June-July 2014.

InfoShop disclosure took place in September 2014. The EIA/EMP indicates that the alignment

goes through the territory of the nature protected area (Zakaznik Naliboksky) at km 78.400 – km

100.00. The status of the protected area was given to Zakaznik Naliboksky in 2005 when the

road already existed and – according to local experts – one of the main reasons for protected

status was to keep this area as a hunting ground. On-the-ground verification with participation of

local environmental specialists suggests that the areas of Zakaznik Naliboksky in the immediate

proximity to the projected alignment do not represent significant ecosystem value. Cutting of

low-value tree species will be needed for the purposes of construction. Also, the Ministry of

Natural Resources and Environmental Protection of Belarus in its letter dated March 7, 2013

provided no-objection to the Scheme of the alignment within the boundaries of Zakaznik

Naliboksky in Grodno oblast.

74. Special mitigation measures to protect potentially affected animal species – as

recommended by the EIA/EMP – are being taken into account by the design and the trajectory of

the alignment will be adjusted accordingly. Environmental mitigation measures for construction

phase, including special engineering solutions for protection of amphibians and hooved animals

(underpasses and guide way fencing) have been proposed by the EIA/EMP and are being

incorporated in the design.

75. The proposed interventions at the border checkpoint involve minor expansion of the

border guards’ area (from 2 lanes each way to 4 lanes each way), and minor works (construction

of scale points, booths for custom officers, open sheds) at the paved area of the checkpoint.

Impacts will be site-specific and minor (installation of pre-fabricated sheds and small scale

construction). No significant negative environmental impacts are expected. Site-specific

mitigation measures have been developed with preparation of detailed design documentation.

G. Other Safeguards Policies Triggered

76. There are no registered historic or cultural heritage sites in the project area and standard

chance finds procedure is applied and in case of chance finds (immovable or movable) the

contractor and/or other parties involved follow the procedure prescribed by the legislation of

Belarus.

20

Annex 1: Results Framework and Monitoring

Country: Belarus

Project Name: Transit Corridor Improvement Project (P149697)

Results Framework

Project Development Objectives

PDO Statement

The Project Development Objective is to improve transport connectivity, border crossing procedures and safety for domestic and

international road users on selected sections of the M6 corridor.

These results are at Project Level

Project Development Objective Indicators

Cumulative Target Values

Indicator Name Baseline YR1 YR2 YR3 YR4

YR5

End Target

Reduction in travel time

between Minsk and Grodno

(min)

220 220 220 210 198 178 178

Vehicle operating costs for

medium trucks, along the

project road reduced

(US$ veh-km)

0.55 0.55 0.55 0.53 0.53 0.495 0.495

Reduction in average time to

complete inwards border

clearance procedures

0

Target data will be

provided once the time

release study has been

21

(commercial vehicles) at

Bruzgi BCP

(Minutes)

completed

Reduction in severe injuries

and fatalities on road

sections under this

project(Number)

35 35 35 30 30 21 21

Percentage of project

beneficiaries expressing

satisfaction with improved

travel experiences through

implementation of TRSCC

and new road-side

services(Percentage)

0

Target data will be

provided once base line

surveys have been

conducted through the

TRSCC

Intermediate Results Indicators

Cumulative Target Values

Indicator Name Baseline YR1 YR2 YR3 YR4

YR5

End Target

Roads constructed, non-rural

(kilometers) – (Core) 0 10 25 50 86 86 86

Development of a Traffic

and Road Safety

Coordination Center

(TRSCC)

No

Specification

for TRSCC

prepared

Oblast

Avtodor staff

trained in the

asset

management

tools of the

TRSCC

TRSCC operational and

providing regular road

agency and road user

information

Improved climate for SME

investment in road side

services

No

Market

survey

conducted

revised

market

oriented

framework

Revised market oriented

framework for road side

services prepared using

findings from market

22

for road side

services

prepared

survey

Implementation of the “in –

channel” clearance

procedures policy by State

Customs Committee

No

Time release

study

completed

Specifications

for

infrastructure

improvement

prepared

In – channel

clearance

policy

operational

Final time

release study

In – channel clearance

policy operational with

demonstrated reduction in

procedures and clearance

time

Direct project beneficiaries

(number), of which female

(percentage):

Short term construction jobs:

Long term maintenance/road

side services jobs:

Daily road user and border

crossing beneficiaries:

Annual road safety

beneficiaries:

0

600 (30%)

1200 (30%)

1200 (30%)

275 (36%)

26,575

65 (40%)

275 (36%)

26,575

65 (40%)

275 (36%)

26,575

65 (40%)

23

Indicator Description

Project Development Objective Indicators

Indicator Name Description (indicator definition etc.) Frequency Data Source /

Methodology

Responsibility for Data

Collection

Reduction in travel time

between Minsk and Grodno

(minutes)

This indicator measures the average travel time

reduction along the M6 corridor. This indicator

will be measured at the end of the project and

will be monitored annually for the roads

improved under the project.

Annual Project Progress

Reports

MoTC

Vehicle operating costs for

medium trucks, along the

project road reduced

This indicator measures the vehicle operating

costs for medium trucks along the M6 corridor

to be improved under the project. Vehicle

operating costs are expressed in US$ per

vehicle-kilometer. This indicator will be

measured at the end of the project and will be

monitored annually for roads improved under

the project.

Annual Project Progress

Reports

MoTC

Reduction in average time

to complete inwards border

clearance procedures

(commercial vehicles) at

Bruzgi BCP (Minutes)

This indicator will measure the impact on the

average time required for commercial vehicles to

complete the inwards border clearance

procedures at Bruzgi BCP

Annual Time release study and

SCC customs data

SCC

Reduction in severe injuries

and fatalities on road

sections under this project

This indicator will measure the reduction of

severe injuries and fatalities on road sections

under this project

Annual Project Progress

Reports

MoTC

Percentage of project

beneficiaries expressing

satisfaction with improved

travel experiences through

implementation of TRSCC

and new road-side services

(Percentage)

This indicator will measure the percentage of

project beneficiaries that express satisfaction

with the improved travel experiences through

implementation of TRSCC and new road-side

services

Annual Project Progress

Reports

MoTC

24

Intermediate Results Indicators

Indicator Name Description (indicator definition etc.) Frequency Data Source / Methodology Responsibility for Data

Collection

Roads constructed, non-

rural (kilometers) – (Core)

This indicator will measure the distance of

the M6 corridor that will be improved

under this project. This is a core indicator

of the World Bank.

Quarterly Project Progress Reports MoTC

Development of a Traffic

and Road Safety

Coordination Center

(TRSCC)

This indicator will measure the

development of the TRSCC

Quarterly Project Progress Reports Beldor Center

Improved climate for SME

investment in road side

services

This indicator will measure the

improvement of investment climate for

SME to participate in providing road side

services

Quarterly Project Progress Reports MoTC

Implementation of the “in –

channel” clearance

procedures policy by State

Customs Committee.

This indicator will measure the

development of the improved physical

environment necessary to give effect to the

policy.

Quarterly Time release study and

SCC customs data

SCC

Direct project beneficiaries

(number), of which female

(percentage)

This indicator measures the number of

direct project beneficiaries and percentage

of female beneficiaries among them.

Annual Project Progress Reports MoTC

25

Annex 2: Detailed Project Description

BELARUS: Transit Corridor Improvement Project (P149697)

1. The Project Development Objective is to improve transport connectivity, border

clearance procedures and safety for domestic and international road users on selected sections of

the M6 corridor.

2. Component 1: Improvement of Sections of M6 Transit Corridor (total cost

US$259.28 million of which US$239.27 million financed by IBRD loan). This Component will

finance the reconstruction and upgrading of selected sections of the M6 road, from a two-lane to

a four-lane road. The road improvement will meet two strategic objectives for the government

by: (i) linking Minsk to Grodno as part of their national strategy of connecting all six Oblast

centers to high standard roads; and (ii) developing international transit corridors to promote cross

border trade. The crucial M6 transit route provides links between Minsk, Grodno and the Polish

border. This component will finance the extension of the current four lane road from Minsk for a

further 73.2 kilometers (km 57.2 to km 130.4) and extend the current four lane road from Grodno

for a further 13.3 kilometers (km 197.7 to km 211.0). There are insufficient finances for the

whole road but these sections have been prioritized based on their overall economic returns. The

road will be designed for the European standard axle load of 11.5 tons and also include two level

interchanges and road safety features according to European standards. The route carries a

substantial proportion of transit traffic with volumes averaging 5,724 vehicles per day, of which

44 percent are trucks. The Bank will also finance financial and technical audits. Through

counterpart financing, the government will finance the feasibility studies, engineering design,

technical and environmental supervision, land acquisition, and infrastructure loss. Following

improvement, the road will be tolled and have Weigh-In-Motion sensors installed (not financed

through this loan).

3. The road will be built to meet high safety standards and all designs will be signed off by

the traffic police. The majority of fatalities on the road are from head on collisions (37%) and

vehicle roll overs (19%). Fatalities involving pedestrians and cyclists (15%) are also a key issue.

This component will focus on the engineering measures to improve road safety, including

provision of central crash barriers along the entire road and side barriers in dangerous locations,

safer pedestrian crossings and bus stops and signs and markings in select road sections. In the

highest risk part of the corridor, between km 198 and km 211, the roads vertical alignment will

be improved to correct the current poor sight line.

4. The widening of the road will be carried out almost exclusively within the existing right

of way, as the proposed road follows the alignment of the existing two-lane road. No major

technical issues are expected during the construction, given the flat terrain and well-known soil

conditions. Nevertheless, some sections of the road require the removal of peat and other

unsuitable materials up to several meters depth. This, combined with the high water table in

those areas, requires specific equipment and capacities of the contractors. The construction

works will be divided in three sub-sections (or lots).

5. The road will follow the geometric standards of Category I-b in line with national

standards as follows:

26

Cross Profile Parameter Standard Specifications

Road Category I-b

Type of Road National Roads, 1st class access roads to airports and rings

around cities

Traffic level threshold Over 10,000 vehicle /day

Speed Limit 100 km/h

Number of lanes 4

Lane width 3.5

Carriageway width 7x2

Shoulder width 3

Minimum Median width At least 2 meters, equipped with metal guardrails

Total roadway width 22+ s

6. The pavement design is based on the use of Stone Mastic Asphalt (SMA) for covering,

which provides a deformation resistant and durable surfacing material, suitable for heavily

travelled roads. SMA has a high coarse aggregate content that interlocks to form a stone skeleton

that resists permanent deformation, including deformation caused by large temperature variations

such as those present in Belarus. SMA is an efficient solution for Belarus and its climate and has

already been used extensively in the country.

7. Road safety issues are addressed both through sound engineering design and the

implementation of a detailed traffic management plan during construction. The upgrading of the

road from 2 lanes to 4 lanes will provide the alignment with a median, which has very positive

effects on safety, given that most fatalities on that road are caused by head-on collisions

Placement of central crash barriers will all but eliminate cross-median head-on crashes while

mitigating median-related crashes through adequate shock absorption. The choice of provision of

central cable (crash) barriers and reinforced shoulders has been made, because this has shown the

potential to further improve safety as they have a greater Accident Modification Factor (AMF).

Several multi-level interchanges will provide a safe environment for crossings of the M6 road.

Speed limits will be adjusted along the alignment at the remaining level crossings. Pedestrian

connections, including underpasses, will facilitate safe connections between left and right hand

sides of the road. Road lighting will be included at several sections of the alignment in order to

increase visibility and facilitate pedestrian movements and safety. A traffic management plan,

that will be reviewed and certified by the State Motor Vehicle Inspection department, will

include diversion roads, temporary signs and markings.

8. Design is being carried out by the national design institute Belgiprodor, which was

founded in 1932. Design has been developed according to Belarusian standards that are a further

development from norms of the former Soviet Union, with adaptation to European axle loads.

Belgiprodor, the leading design organization of Belarus in the field of engineering, research and

design of roads, bridges and airfields has about 450 staff members including a technical and

engineering department, and is certified ISO 9001:2008. Belgiprodor has actively participated in

many major road project designs and supervision in Belarus, including more recently the

27

reconstruction of the Minsk ring road (Category I, 6 lanes), the modernization of the road M5

Minsk-Bobrujsk (Category I), which was funded from the World Bank loan, the road M-1/E-30

Brest-Minsk (Category I), the M-2 Minsk-National airport Road, the reconstruction and repair of

roads in a 50-kilometer zone of Minsk in line with Category I-B, and the reconstruction of the

road R-20 Vitebsk-Polotsk-Latvia (Category II). All these projects have demonstrated sound

design, including modern road safety features, and their actual condition is generally good; i.e.

none of these roads shows premature fatigue or deformation.

9. Component 2: Road Safety and Network Management (total cost US$6.80 million of

which US$6.8 million financed by IBRD loan). This Component includes the following two sub-

components:

10. Sub-component 2.1: Traffic and Road Safety Coordination Center. The proposed

Traffic and Road Safety Coordination Center (TRSCC) will be established within Beldor Center

to promote road safety through improved traffic management, emergency response and traveler

information dissemination in the road sector. The TRSCC is likely to comprise the following

elements: (a) equipment for the center itself, including high performance servers, storage

capacity, modular high definition monitors and networking equipment, among others; (b) a

specialized software providing the functionality of a management information system for the

center; (c) networking devices in locations that are currently not equipped with such facilities;

(d) new digital cameras to replace the existing analog cameras in the road and to extend the

coverage of the road video surveillance system; (e) new VMS boards with road condition

information for users, with a priority for the roads in the Minsk area where most of the traffic

concentrates; (f) additional software applications and connectivity as needed to enable

integration of weather radars from airports, and other sources of information (including the

tolling system, the future WIM system, as well as integration with the road traffic police,

emergency services, etc.; and (g) other support necessary to implement the citizen feedback and

open data concepts, in particular through enhancements to the web portal of the MoTC and

Beldor Center.

11. The TRSCC will collect and analyze road traffic related data so that road agencies can

provide real-time feedback to users, such as on traffic congestion, detour suggestions due to

severe weather and road maintenance works. It will also use the data to better manage the

development and maintenance of the network and allow more effective long term planning

including the optimization of toll fees. The MoTC has already set up hotlines for citizens to

report road problems. In order to further promote public participation and enhance government

accountability, the MoTC will apply Information and Communications Technology (ICT) tools

such as crowdsourcing techniques to promote citizen engagement in identifying black spots and

other road maintenance and safety issues from road users’ point of view. The TRSCC will also

promote public awareness campaigns on issues particularly related to road safety. The MoTC

will continue its engagement with the private sector on using these open source data to develop

applications for practical usage. The following activities will be financed:

i) Consultancy services including: (a) developing a detailed concept, technical design

and preparing the bidding documents including technical specifications for

developing such a TRSCC and underlying infrastructure; and (b) developing the

necessary monitoring and evaluation frameworks to measure user satisfaction,

28

conduct impact evaluations of road sector interventions and undertake road safety

awareness campaigns.

ii) Providing capacity building for staffing such a center; and

iii) Providing financing for the necessary systems that would comprise the TRSCC and

associated infrastructure, including systems integration services and equipment.

12. Sub-component 2.2: Road-side services. The provision of road side services is

important for the safety and convenience of road users but is also a potential source of

employment for local communities and particularly women. The MoTC already has a detailed

master plan for the development of road side services, regulations governing their use and the

government is providing some incentives for investors such as tax breaks. However, recent

attempts to attract investors have been largely unsuccessful partly because of constraints related

to the availability of land and finance but partly because of the overall investment framework.

This activity will be coordinated with IFC to take advantage of their connections with business

associations in Belarus and finance: i) a market survey to better understand user needs and

private sector interest in the sector; ii) review of the overall framework for road side services

development taking a more market oriented approach with an aim to limiting obstacles or

introducing new policies to promote active engagement from the private sector.

13. Component 3: Border Management Enhancement (total cost US$3.3 million of

which US$3.3 million financed by IBRD loan). This Component will finance activities designed

to improve the overall performance of border management in Belarus, facilitating the movement

of cross-border trade at the Bruzgi BCP by reducing average clearance times and the number of

transactions conducted when crossing the border. The component will support the

implementation and increase the effectiveness of the ‘two agencies at the border’ policy being

implemented in Belarus. It will also support national ambitions to transition to a one-stop-shop

approach as part of a single electronic window environment through implementation of new

procedures - clearance in channel. It is expected that implementation of clearance “in-channel”

procedures will significantly reduce the time for clearance of trucks not requiring secondary

screening and reduce the number of vehicles referred for secondary inspection (usually

documentary check) by up to 50 percent.

14. Through parallel finance, an IFC advisory services grant will be used to undertake a time

release study to identify current constraints in border clearance procedures and other technical

assistance activities to support business process improvements in response to areas of priority

identified by SCC. The following activities will be included in this project:

i) Consultancy services to re-design the physical layout of the ‘inward’ registration,

vehicle control, processing and examination areas (starting at the initial Border Guard

control point upon entry to Belarus territory). This activity will take into

consideration the impact of revised business processes to be adopted by SCC under

the ‘two agency’ approach, the need to coordinate (integrate) the design with other

proposed improvements (construction of the Non-Intrusive Inspection facility) and

anticipated increase in traffic volumes. It will identify and consider best practice

examples of BCP design (particularly those identified by the E.U., OECD and the

29

Bank), especially where they apply to the implementation of the ‘in-channel’

clearance approach.

ii) Goods and equipment procurement of two automated low speed (< 5 km/h) ‘weigh-

in-motion’ units, with CCTV interface and automated number plate recognition, with

data made electronically available to customs and border guards.

iii) Civil works based on the design outputs of the consultancy services to address key

physical limitations including:

a. Widening the access road for commercial vehicles from 1 to 2 lanes.

b. Installation of the 2 automated ‘weigh-in-motion’ units along the access road.

c. Creation of up to 8 individual processing channels.

d. Other road works as necessary to support appropriate movement of vehicles and

traffic flow within the processing area.

e. Building/installation of sufficient offices or control booths to allow border guard

and customs official to effect clearance procedures in-channel.

f. Weather proof roofing over the clearance area to protect clients and staff when

effecting physical inspections of vehicles.

g. Connection of necessary services to support operations.

h. Re-surfacing and line marking of hard-stand/ parking area.

i. Other works as agreed.

15. Detailed project costing estimates are summarized in the table below:

Components

Project

Cost

(million

US$)

IBRD

Financing

(million

US$)

% of

IBRD

Financing

Component 1: Improvement of M6 Transit Corridor

Road Civil Works 237.86 237.86 100.00%

Financial Audit 0.15 0.15 100.00%

Technical Audit 0.30 0.30 100.00%

Consultant for FIDIC 0.96 0.96 100.00%

Financing of Preparation Works 5.54 0.00 0.00%

Engineering surveys and design works 4.98 0.00 0.00%

Feasibility study 0.05 0.00 0.00%

Preparation of bidding documents 0.50 0.00 0.00%

Funding in future periods: 14.47 0.00 0.00%

Technical supervision and administrative costs 5.19 0.00 0.00%

Contingencies costs 7.42 0.00 0.00%

Designer’s Supervision 0.52 0.00 0.00%

Environmental Supervision 0.16 0.00 0.00%

Land Acquisition 0.22 0.00 0.00%

Infrastructure Loss 0.54 0.00 0.00%

30

State expertise, State Construction Supervision and Inspection

Service 0.43 0.00 0.00%

Subtotal Component 1 259.28 239.27 92.3%

Component 2: Road Safety and Network Management

Sub-component 2.1 - Traffic and Road Safety Coordination

Center (TRSCC) 6.50 6.50 100.00%

TRSCC - building and hardware equipment for the center 0.50 0.50 100.00%

TRSCC Software 1.50 1.50 100.00%

TRSCC field equipment 3.70 3.70 100.00%

TRSCC staff training 0.10 0.10 100.00%

Consultant Services for TRSCC (design and monitor and

evaluations) 0.70 0.70 100.00%

Sub-component 2.2 - Road -side Services 0.30 0.30 100.00%

Subtotal Component 2 6.80 6.80 100.00%

Component 3: Border Management Enhancement

Design work 0.30 0.30 100.00%

Physical infrastructure work 3.00 3.00 100.00%

Grant from IFC for Time Release Study and Technical Assistance

on Selected Topics

Subtotal Component 3 3.30 3.30 100.00%

Front-end fees (0.25%) 0.63 0.63 100.00%

Total 270.01 250.00 92.6%

31

Annex 3: Implementation Arrangements

BELARUS: Transit Corridor Improvement Project (P149697)

Project Institutional and Implementation Arrangements

Project administration mechanisms

1. The project will be implemented over a five-year period by the MoTC, which is the

national authority in charge of road construction and maintenance in Belarus and will have the

overall responsibility for project coordination and monitoring of implementation progress. The

MoTC has formally delegated the responsibility for managing the day-to-day preparation and

implementation of the proposed project to the Republican Unitary Enterprise Minskavtodor-

Center (MA-C). MA-C is one of six regional operational subsidiaries in charge of the

management and maintenance of the Republican road network.

2. Within MA-C, a Project Implementation Team (PIT) was created in 2009 for the on-

going RUMP Project, which consists of experienced engineering, procurement and financial

management staff. The PIT will be augmented by staff from Grodnoavtodor (responsible for the

region where much of the proposed road is located). Through the on-going project the team at

MA-C has developed good expertise in procurement, financial management and environmental

issues. The PIT has less experience with social issues and the team from Grodnoavtodor has not

worked with the Bank before. For project preparation stages (road design, feasibility studies,

environmental and social assessments, etc.) MA-C will collaborate with the Road Design

Institute (Belgiprodor) whose performance has also been good. Belgiprodor in cooperation with

the National Academy of Sciences will also be involved in monitoring the adherence to

environmental safeguards requirements. Beldor Center will be coordinating the implementation

of the Traffic and Road Safety Coordination Center (TRSCC).

3. MA-C will also be responsible for the implementation of the customs performance

enhancement component although, through agreement, the day to day management of the

component will be done by the State Customs Committee (SCC) of Belarus and its Grodno

Regional Customs Agency. Both the SCC and the Grodno Regional Customs Agency (GRCA)

will assign coordinators (project managers) responsible for project implementation to work

closely with the MoTC and MA-C. The customs agencies will be responsible for the overall

design and implementation quality of this component. They will prepare terms of reference for

design documents (or approving design documents when they are available), ensuring

appropriate technical supervision of the contracts, accepting payment orders, and submitting

adequate documentation to the MA-C so that it can prepare and sign disbursement applications.

The customs agencies will prepare bidding documents for Component 3, identify personnel to sit

on procurement committees and jointly sign with MA-C any contract documents.

4. The Bank will continue supporting MA-C, Grodnoavtodor and the SCC in particular, in

the necessary training on the use of World Bank guidelines and procedures for procurement,

financial management and environmental/social safeguards management. Before and after

project effectiveness, the PIT staff will receive targeted training on land acquisition and

resettlement, areas where PIT is not very experienced with.

32

5. The implementation arrangements specified above will be formalized through an Inter-

Ministerial Resolution setting out MA-C as the sole implementing entity. This resolution will

also set out the roles and responsibilities for the other beneficiaries including Grodnoavtodor for

component 1, Beldor Center for component 2 and SCC and GRCA for component 3 of the

project.

Financial Management, Disbursements and Procurement

Financial Management

6. Financial management arrangements for the implementation of the project are

Satisfactory, and related FM risk is Moderate. The FM assessment focused on the capacity

assessment of Minskavtodor-Center (MA-C). MA-C is in process of implementing RUMP, and

therefore the current assessment was based on the FM arrangements that are in place for the

ongoing project. The FM and disbursement capacity of the MA-C has grown substantially during

the years of implementation of the first project, and the FM arrangements confirmed as

Satisfactory during the latest FM monitoring visit in September 2014. All key aspects of FM and

disbursement of the project are in place, although the MA-C was still to address and implement

the findings of its auditors related to the accounting and reporting procedures of MA-C (that

extend beyond the scope of the project, but are related to general capacity building). The FM

arrangements, as in the ongoing project, have been designed with the view of maximizing the use

of country systems.

7. Staffing. The same fiduciary staff of MA-C will continue to work on all aspects of

financial management and disbursements of the entire project. The financial staff of MA-C

gained substantial experience in the World Bank procedures related to financial management and

disbursements, and attended recent training events. Involvement of several staff with overlapping

responsibilities ensures proper segregation of duties. FM procedures and internal controls in

place for project implementation will be included in Project Operational Manual (POM), which

will need to be adopted prior to project effectiveness.

8. Accounting and Reporting. Project accounting will be done on the accounting and

reporting software (Galaktika), on a segregated set of accounts. The system was modified during

implementation of the ongoing project to ensure fully automated accounting and reporting in the

World Bank financed projects. Quarterly IFRs will be prepared, and will include information on

all components and contracts in the project. The format of the reports will be based on the

formats currently in use for the ongoing project.

9. Internal Controls. The internal controls structure for this project will be based on

procedures that were in place during implementation of the ongoing project, and they will be

detailed in project POM which will be adopted prior to project effectiveness. The POM will

specify (a) the role of specialists of Grodnoavtodor and SCC in preparation and signing of

contracts in their respective components as well as technical acceptance of goods/services

provided under those contracts (b) division of roles and responsibilities between MA-C financial

staff and representatives of Grodnoavtodor and SCC.

33

10. Government financing. Counterpart financing is envisaged to finance the feasibility

studies, engineering design, technical and environmental supervision, land acquisition, and

infrastructure loss. These payments will be made from the state budget following the national

legislation requirements. MA-C will be responsible for monitoring the timeliness of these

payments and keeping their records.

11. Auditing. Annual audit of project financial statements will be carried out by eligible

private auditors. The scope of the audit will be determined in the TORs that are subject to

approval of the World Bank. The scope will cover SOEs, Designated Accounts, and auditors will

be required to report any weaknesses of internal controls that were noticed during audit.

Additionally, MA-C will continue to submit the audit of its consolidated financial statements

prepared under requirements of National Accounting Standards, mainly for the purposes of

capacity building. Both sets of audited financial statements will be subject to public disclosure

in accordance with the World Bank Information Disclosure Policy. Additionally, periodic

technical audits will be carried out to confirm the acceptable quality works, and such technical

audits will be financed from government financing.

Disbursements

12. Disbursement Arrangements. The proceeds of the IBRD loan will be disbursed in

accordance with the traditional disbursement procedures of the Bank. These will be used to

finance project activities through the disbursement procedures currently used—that is, Advances,

Direct Payments, Reimbursements, and Special Commitments accompanied by appropriate

supporting documentation (Summary Sheets with records and/or Statements of Expenditures

(SOEs)) in accordance with the procedures described in the Bank’s Disbursement Guidelines.

The minimum application size for direct payment, reimbursement and special commitments will

be specified in the Disbursement Letter.

13. Designated Account. MA-C will open a segregated Designated Account in a Commercial

Bank acceptable to the Bank in U.S. dollars to cover the eligible project expenditures. The

Ceiling of the Designated Account will be specified in the disbursement letter. The PMU will be

responsible for submitting monthly replenishment applications with appropriate supporting

documentation along with a reconciled bank statement. The Designated Account will be audited

annually in conjunction with the audit of the project financial statements.

14. Statement of Expenditures (SOEs). Necessary supporting documents will be sent to the

Bank as indicated in the Disbursement Letter. The documentation supporting expenditures will

be retained at the MA-C and be readily accessible for review by the external auditors and

periodic Bank supervision missions. All disbursements will be subject to the conditions of the

Loan Agreement and disbursement procedures as defined in the Disbursement Letter.

Procurement

General

15. Procurement of goods, works, and non-consulting services for the proposed project

would be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods,

34

Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World

Bank Borrowers,” dated January 2011 and revised on July 1, 2014 (Procurement Guidelines);

and procurement of consultant services will be carried out in accordance with the World Bank’s

“Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and

Grants by World Bank Borrowers,” dated January 2011 and revised on July 1, 2014 (Consultant

Guidelines), and the provisions stipulated in the Loan Agreement. The Bank's “Guidelines on

Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA

Credits and Grants,” dated October 15, 2006, and revised in January 2011 (Anti-Corruption

Guidelines) will apply to this project. A General Procurement Notice has been published on the

Bank’s external website and the UN Development Business website. The following section

describes the procurement implementation arrangements agreed with the Project Implementation

Team.

Procurement Capacity and Risk Assessment

16. A Procurement Capacity and Risk Assessment of the project’s implementing agency

(Minskavtodor-Center) were initiated in April 2014. The PIT will be directly responsible for the

day-to-day implementation of all the activities under the project. The PIT will be in charge of the

entire procurement process, including planning, preparation of bidding documents, evaluation of

bids, award of contracts, and contract management. With respect to the border management

enhancement component, MA-C will coordinate all procurement processes, however the State

Customs Committee will be in charge of preparation of terms of reference for design documents,

quality check and approval of consultant’ works and technical supervision of infrastructure

contracts. The PIT’s procurement function will be managed by a Procurement Specialist, who

has gained practical knowledge of procurement through implementation of the ongoing RUMP

Project. In addition, the Procurement Specialist participated in the Procurement Capacity

Building Workshop in Moldova between April 7 and10, 2014.

17. The key issues and risks concerning procurement for implementation of the project have

been identified and include: (i) potential risk of delays in the implementation of the large works

contracts, and (ii) costs overruns due to claims and variation orders.

18. Given the findings of the assessment as presented above the procurement risk for the

proposed project is rated as Moderate.

19. To mitigate the identified procurement-related risks, the following mitigation actions

were agreed between the Bank and the client during project preparation.

Mitigation measure

Responsible

party Deadline

1 Prepare a detailed procurement plan for the

first 18 months of the implementation of the

project

PIT Completed

2 Organize a business outreach for potential

bidders or consultants before launching the

first bidding procedures

PIT Recurrent

35

Mitigation measure

Responsible

party Deadline

3 Start preparation of the bidding documents

for the first year of project implementation of

Component 1 well in advance to facilitate the

initiation of the procurement procedures as

soon as the project becomes effective

PIT Underway

4 Hire a consultant, experienced in FIDC type

of contracts

PIT Signing of civil

works contracts

5 The Bank's procurement specialist will work

closely with PIT and will organize

procurement refresher training events to

project staff whenever required during

project implementation

Bank Recurrent

6 Preparation of procurement progress reports

by the Borrower during Project

implementation

MA-C Implementation

Procurement Implementation Arrangements

20. Procurement of Works. The project will include rehabilitation, reconstruction and

upgrading of the M6 road, from a two-lane to a four-lane road between Minsk and Grodno.

These large civil works will be procured through International Competitive Bidding (ICB)

procedure, following prequalification For contracts above US$10 million, the Bank’s recent

Standard Bidding Documents (SBD) Procurement of Works will be used. Currently, the project

does not envisage any smaller works in the project, below US$10 million per contract. However

if there are any such contracts, the Bank’s most recent Standard Bidding Documents (SBD)

Procurement of Small Works will be used. International Competitive Biddings (ICBs) shall be

conducted for all contracts above US$5 million per contract. For contracts below US$5 million

per contract, the same SBD for Procurement of Small Works will be used; however the National

Competitive Bidding (NCB) procedure will apply, instead of ICB. For very small value civil

works contracts estimated to cost not more than US$200,000 per contract a shopping procedure

may be used.

21. Procurement of Goods and Non-consulting Services. The project may involve

procurement of traffic control equipment. The most recent version of the Bank’s Standard

Bidding Documents (SBD) for Goods shall be used for all International Competitive Biddings

(ICBs) above US$1 million per contract. For contracts below US$1 million, the Bank's sample

Bidding Documents for Goods under the National Competitive Bidding (NCB) may be used and

a shopping procedure for goods estimated to cost up to the equivalent of US$100,000 per

contract. Where the value of the plant and equipment represents the major part of the contract;

the contracts require comprehensive testing and acceptance procedures; or the contracts require

essential functional guarantees from the contractor on a single-responsibility basis, the Bank’s

latest Standard Bidding Documents for Procurement of Plant Design, Supply, and Installation

will be used (i.e. procurement of weigh-in-motion units). For the ICT related procurement

under components 2 and 3, the following different procurement strategies may be applied: 1)

36

Goods approach - a general purpose hardware and off-the-shelve software (without

customization) based on SBD for Goods, 2) Consulting Services approach - if the hardware

and packaged software content is minimal, e.g., less than 20% of the estimated contract value, a

consultancy selection procedure may be applicable with the Bank’s Standard Request for

Proposal 3) Single Stage IT SBD - if procurement package combines critical goods and services

elements, sophisticated hardware requiring an informed performance comparison and special

training requirements, a dominating value of the software packages, extra installation and

support requirements for these, software design, large-scale adaptation and/or development,

requirements for the supplier to continue to operate the equipment after installation, for contracts

requiring pricing for both investment & recurrent costs (life-cycle).

22. Logistical services for training and workshops related to technical assistance shall be

procured as non-consulting services.

23. State-Owned Enterprises (SOEs). The project’s first component may attract several

small and large size local construction companies that are part of the Belavtodor Holding

Management Company, created in July 2013. The Bank will review these companies Charters

and other relevant documents in order to determine, whether these companies will be eligible to

participate in Bank’s financed bidding procedures as per paragraph 1.10 (b) of the Bank’s

Procurement Guidelines.

24. Selection of Consultants. The consultant services under the project will include inter

alia: technical assistance, various road sector studies, logistics and impact analysis, as well as

support to the supervision of large civil works contracts including annual financing audit of the

project. For assignments estimated to cost US$300,000 per contract, the short-list may comprise

entirely national consultants.

25. Procurement Plan and Procurement Thresholds. The PIT has developed a Procurement

Plan for the first 18 months of the project that also provides a basis for the procurement methods

and thresholds. This plan has been agreed between the PIT and the Bank and will be published

on the Bank’s external website. The Procurement Plan will be updated at least annually or as

required to reflect actual project implementation needs. Procurement under the project will

include the following categories: Works, Goods and Non-Consulting and Consulting Services.

The applicable thresholds for procurement methods and Bank prior review applied for

procurement are presented below.

26. The Bank will review the procurement arrangements as performed by the PIT. The

procurements not receiving prior review by the Bank would be subject, on a random basis, to the

Bank’s ex post review in accordance with the procedures set forth in appendix 1 of the

Procurement and Consultant Guidelines. One in 10 contracts under the project will be subject to

the Bank’s ex post review. The ex post review of procurement documents will normally be

undertaken during the Bank’s implementation support missions or as the Bank may request for

any contract at any time.

37

Project Procurement Plan

№ Contract Description Contract type Procurement

method

Issue of

Bidding/Proposal

Documents

Expected

Contract

Completion

Component 1: Improvement of Sections of M6 ‘Minsk – Grodno’ Transit Corridor

1

ICB with 3 lots:

LOT 1

Reconstruction of 33,87 km of road, including

road, bridge and auxiliary works (km 57,2 –

91,07).

Civil Works

(CW) ICB

03/2015

10/2018

2

LOT 2

Reconstruction of 39,33 km of road,

including road, bridge and auxiliary works

(km 91,07 – km 130,4).

Civil Works

(CW) ICB 10/2018

3

LOT 3

Reconstruction of 13 km of road, including

road, bridge and auxiliary works (km 198,0 –

km 211,0).

Civil Works

(CW) ICB 10/2018

4 Financial audit Consultant

Services (CS) LCS 03/2015 07/2019

5 Technical audit Consultant

Services (CS) LCS 01/2016 12/2018

6 Consultant services (FIDIC) Consultant

Services (CS) LCS 03/2015 10/2018

Component 2: Road Safety and Network Management

Sub-component 2.1: Traffic and Road Safety Coordination Center

7 Consultancy services to develop the

framework for Traffic Management System

Consultant

Services (CS) QCBS 05/2015 06/2017

8 TRSCC - building and hardware equipment

for the center including software

Goods/IT

Systems

ICB/NCB TBD TBD

9 TRSCC field equipment Goods/IT

Systems

ICB/NCB TBD TBD

10 TRSCC staff training Operating

Costs

NA TBD TBD

Sub-component 2.2: Road-side Services

11 Market survey to better understand user needs

and private sector interest in the sector

Consultant

Services (CS) CQS 03/2015 06/2016

12

Consultancy services to develop the

framework for introducing Private Public

Partnership to road side services

Consultant

Services (CS) CQS 03/2016 06/2017

Component 3: Border Management Enhancement

13

Detailed design and preparation of biding

documents for physical layout of the border

control point

Consultant

Services (CS) QCBS 05/2015 06/2016

14 Physical infrastructure work Civil

Works/Goods ICB/NCB TBD TBD

38

Environmental and Social (including safeguards)

27. MA-C has nominated a specific team of specialists who will work on the preparation and

implementation of the project in close interaction with the World Bank. The team is headed by a

senior manager and will be augmented as needed during the implementation stage by hiring

additional specialists to cover the increasing work load. The team includes procurement and

financial management specialists, a lawyer, and an environmental specialist. The team will also

engage specialists from the environmental unit from Belgiprodor and Academy of Science.

28. The institutional capacity of the borrower was evaluated during the project preparation

stage. It was concluded the State Enterprise Belgiprodor has adequate capacities to perform

effective enforcement of EMP provisions. The institution employs highly qualified staff and is

equipped with analytical equipment to perform the required analyses of environmental quality.

Furthermore, this institution has previous experience in dealing with environmental safeguards

while implementing other similar projects in the country.

29. MA-C and Grodnoavtodor will be responsible for implementation of the RAPs and

coordination with the local authorities. The PIT will have a designated specialist who will

monitor implementation of the RAPs. For every oblast the annual plan for resettlement

implementation linked to the plan of civil works will be issued and implemented prior to the start

of the works. The PIT will report on resettlement in the framework of the regular annual report to

the Bank.

Monitoring & Evaluation

30. Monitoring and evaluation of results for components 1 and 2 will be the responsibility of

MA-C and will include: (1) monitoring of project physical progress (i.e. lengths of upgraded

roads, development of the Traffic and Road Safety Coordination Center, improved climate for

SME to participate in providing road-side services), and (2) evaluation of project socio-economic

impacts (i.e., benefits to local population and communities such as traffic fatalities reduction and

beneficiary satisfaction). The State Customs Committee will be responsible for monitoring and

evaluation of results from Component 3 (customs performance enhancement), which includes: (1)

monitoring the physical progress; and (2) evaluating the reduction in average time to complete

inwards border clearance procedures (commercial vehicles) and reduced number of commercial

transactions referred for secondary screening at Bruzgi BCP.

31. Progress towards PDO will be monitored and reported on through periodic World Bank

implementation support missions every six months. The MA-C and SCC will conduct frequent

inspections to prepare quarterly and annual progress reports with detailed evaluation surveys and

analysis. The ongoing RUMP project did not have any land acquisition and resettlement issues

whereas the proposed new project will have to address these issues. As such, the Bank will

provide additional support to MA-C and Grodnoavtodor in this area to ensure that their

specialists have the necessary knowledge and training. The Bank team will monitor the

implementation of the RAPs during its course of its regular monitoring missions.

39

Annex 4: Operational Risk Assessment Framework (ORAF)

Belarus: Transit Corridor Improvement Project (P149697)

Risks

Project Stakeholder Risks

Stakeholder Risk Rating Low

Risk Description: Risk Management:

The Belarussian road sector investment

program was prepared several years ago

and is being implemented by MoTC. The

priorities as set out in that document are

unlikely to change and it is unlikely that

changes in senior personnel will have any

significant impact on priorities. The

upgrading of the M-6 road to Category I

standard is universally supported, both

politically and also by road users; there is

very low likelihood of this support being

withdrawn.

There are no particular risk mitigation measures envisaged, besides monitoring any possible (but

unlikely) changes in the Government's road investment program.

Resp:

Both

Status:

In Progress

Stage:

Both

Recurrent:

Due

Date: Frequency:

SemiAnnual

Implementing Agency (IA) Risks (including Fiduciary Risks)

Capacity Rating Moderate

Risk Description: Risk Management:

This project will be implemented by the

MoTC through its Minskavtodor-Center

(MA-C). Within MA-C, a Project

Implementation Team (PIT) was created in

2009 for the on-going Road Upgrading and

Modernization Project, which consists of

experienced engineering, procurement and

financial management staff. The PIT will

be augmented by staff from Grodnoavtodor

At this stage the only specific recommendation to MA-C is to appoint a full time person responsible for

the social aspects of the project. The Bank will continue supporting MA-C, and Grodnoavtodor and the

Customs Committee in particular, in the necessary training on the use of World Bank guidelines and

procedures for procurement, financial management and environmental/social safeguards management.

Before and after project effectiveness, the PIT staff will receive targeted training on land acquisition

and resettlement, areas where PIT is not very experienced with.

Resp:

Both

Status:

In Progress

Stage:

Both

Recurrent:

Due

Date: Frequency:

SemiAnnual

40

(responsible for the region where much of

the proposed road is located). Through the

on-going project the team at MA-C has

developed good expertise in procurement,

financial management and environmental

issues. The PIT has less experience with

social issues and the team from

Grodnoavtodor (GA) has not worked with

the Bank before. For project preparation

stages (road design, feasibility studies,

environmental and social assessments, etc.)

the MA-C collaborates with the Road

Design Institute (Belgiprodor) whose

performance has also been good.

The Component 3 will be implemented

through the State Customs Committee of

Belarus and its Grodno Regional Customs

Agency, neither of which have worked

with the Bank before. Both of them have

assigned coordinators responsible for

project implementation to work with the

MoTC and MA-C. The MA-C will thus be

responsible for managing the project

implementation, in coordination with the

State Customs Committee and MoTC, and

will be the World Bank’s interlocutor. The

risk during project implementation will be

the effective coordination between the

various stakeholders.

Governance Rating Moderate

Risk Description: Risk Management:

GAC in the sector is generally quite good

with future improvements likely to come

from the demand side and by taking a more

user focused approach to management of

the sector. This will mean improved

information dissemination to users and

increased use of social accountability tools.

Through development of the TRSCC increased emphasis will be placed on the user and social

accountability mechanisms. Special regulatory mechanism will be developed by the MoTC to ensure

proper coordination and distribution of labor between MA-C and GA. Regional authorities will be

involved in the discussion on the RPF to ensure their understanding of their role and responsibilities as

regards to the land acquisition and resettlement.

Resp:

Both

Status:

In Progress

Stage:

Both

Recurrent:

Due

Date: Frequency:

SemiAnnual

41

Most of the road to be improved is situated

in Grodno region that is managed by GA.

There is currently no line of subordination

between MA-C, the main implementing

entity, and GA. In addition, land

acquisition for the project will be done

through the regional authorities which are

not otherwise stakeholders of the project.

Project Risks

Design Rating Moderate

Risk Description: Risk Management:

Project design for the civil works is

straightforward and follows the design of

the ongoing Road Upgrading and

Modernization Project. The project scope

and scale are also similar to the ongoing

project and include similar and proven

technical design features. The design

agency, Belgiprodor, has experience with

the design of these category 1 roads and

preliminary designs are already well

advanced. Road safety is a key element that

is being integrated into the design process.

The institutional component of the project

will develop some of the on-going reforms

in the road sector but some of these might

be difficult to implement further. There

may also be risks associated with the

coordination between MA-C and SCC

potentially raising the risks of institutional

relationships, and monitoring.

The Bank team will continue to monitor progress with the design of the road sections to ensure they

meet the required standards and work with the MoTC to develop an effective institutional component to

the project. Before implementation an Inter-Ministerial Resolution will be agreed between MA-C, SCC

and other entities to detail their roles and responsibilities

Resp:

Both

Status:

In Progress

Stage:

Both

Recurrent:

Due

Date: Frequency:

SemiAnnual

Social and Environmental Rating Moderate

Risk Description: Risk Management:

Through the on-going project the team at

MA-C has developed good expertise in

environmental issues and handled

The client will be supported by the Bank’s team at every stage of planning, consultations with affected

population and implementation of the resettlement and land acquisition process in compliance with

Bank’s policies.

42

environmental management very

effectively. The EIA that has been prepared

for the new project is also of high quality.

The client has no experience in Bank

implemented land acquisition and

resettlement. National legislation on the

matter is rather developed, though not fully

compliant with Bank’s OP 4.12 policy.

Resp:

Both

Status:

In Progress

Stage:

Both

Recurrent:

Due

Date: Frequency:

SemiAnnual

Program and Donor Rating Low

Risk Description: Risk Management:

The execution of this project is not

dependent on any other project or donor.

Resp: Status: Stage: Recurrent:

Due

Date: Frequency:

Delivery Monitoring and

Sustainability Rating Low

Risk Description: Risk Management:

The risks associated with poor quality

construction are considered low given the

strong oversight mechanisms within project

design and through government controls.

Evidence from the first project suggests

that construction quality will be high and

that the MA-C will provide regular

monitoring reports to evidence progress.

The sustainability of the investments is also

considered to be likely given the generally

good condition of the national roads

network to date and the various initiatives

to increase maintenance funding including

through a program of e-tolling and

licensing fees on vehicles.

The Bank team will monitor these aspects through implementation of the project and the project will

procure an independent technical audit company to monitor quality of civil works.

Resp:

Both

Status:

In Progress

Stage:

Both

Recurrent:

Due

Date: Frequency:

SemiAnnual

4.5 Other (Optional) Rating

Risk Description: Risk Management:

43

Resp: Status: Stage: Recurrent:

Due

Date: Frequency:

4.6 Other (Optional) Rating

Risk Description: Risk Management:

Resp: Status: Stage: Recurrent:

Due

Date: Frequency:

5. Overall Risk

Overall Implementation Risk: Moderate

Risk Description:

The overall implementation risk is rated as Moderate. As with preparation, the main risks are related to coordination between SCC and MA-C and

implementing some quite challenging institutional components even though the capacity of the implementing agencies is good.

44

Annex 5: Implementation Support Plan

BELARUS: Transit Corridor Improvement Project (P149697)

Strategy and Approach for Implementation Support

1. The implementation support will focus on implementation of risk mitigation measures

defined in the Operational Risk Assessment Framework (ORAF), namely the capacity,

governance, environmental and social safeguards, which are rated as moderate. Implementation

support missions, including field visits will be carried out semi-annually, and will focus on: (a)

technical aspects of works, (b) institutional strengthening; and (c) environmental and social

safeguards training.

a) Technical aspects of works. Close cooperation and review of planned road works will be

carried out from the design phase until completion of works. Engineering inputs will be

provided to all designs to ensure proper technical specifications, and appropriate

consideration of road safety. During bid evaluation, the review will ensure fair assessment of

the technical aspects of bids. During construction and commissioning, technical supervision

will be provided to ensure technical, environmental and social contractual obligations are

met. The team’s engineers will conduct site visits on a semi-annual basis throughout project

implementation.

b) Institutional strengthening. As a part of the PDO, institutional strengthening will receive

substantial focus during the project implementation and related implementation support. This

will include a regular dialogue on the progress of M6 improvement work, integrated systems

in TRSCC, private sector involvement in providing road side services and customs

performance enhancement.

c) Environment and social safeguards training. The PIT has had a training session in Bank

safeguards policies. Support will be provided in updating the Project Operations Manual to

include there provisions for resettlement implementation and reporting. Advanced training on

the implementation of resettlement plan will be provided to the specialists responsible for

resettlement in MA-C and GRODNOAVTODOR.

Implementation Support Plan

2. The project implementation support missions will coincide with the missions on the

ongoing roads project. The implementation support missions will involve engineering,

procurement and safeguards specialists and at least once annually also financial management.

Particular focus will be put on supervising the implementation of the road safety measures.

3. Capacity regarding environmental and social safeguards will be continuously monitored

by the World Bank environmental and social specialists who will participate regularly in

implementation support missions and provide input directly to the client in the course of EMP

and RFP preparation and works supervision.

45

4. The Mid-term review of the project, expected to take place in the first quarter of 2017,

will include technical workshops to discuss traffic management, road safety, road side services

and border control.

Main focus in terms of support to implementation during project

Time Focus Skills Needed

First twelve months Procurement

Concept design for TRSCC

Time-release study for Component 3

Road Engineering

Procurement

Safeguards

Project Management skills

Road safety

Customs/border control

12-48 months Civil works

Procurement

Road Engineering

Procurement

Project Management skills

Road safety

Skills Mix Required

Skills Needed Number of Staff Weeks Number of Trips

Task Team Leader 10 / year 3 / year

Transport Economist/Specialist 8 / year 3 / year

Road Engineer 8 / year 3 / year

Financial Specialist 4 / year 2 / year

Customs & Border Management

Specialist 2 / year 1 / year

Procurement Specialist 6 / year 2 / year

Environmental Management Specialist 2.5 / year 2 / year

Social Development Specialist 1.5 / year 1 / year

Partners

Agency Institution or owner Role in the project

Ministry of Transportation

and Communications

(MoTC)

Council of Ministers of the

Republic of Belarus

Overall responsibility for the

implementation of the project

Republican Unitary

Enterprise

MINSKAVTODOR-

Center (MA-C)

Roads Department MoTC Daily preparation and

implementation of the project

including procurement, contract

supervision, financial

management and reporting,

implementation progress

monitoring, and preparation of

progress reports

46

Republican Unitary

Enterprise

GRODNOAVTODOR

Roads Department MoTC Arranging land transfer for the

sections of the road on the

territory of Grodno oblast,

obtaining work permits, and

supervising works in Grodno

oblast

Public Enterprise

BELGIPRODOR

Roads Department MoTC Development of bidding

package, including both legal

part such as instructions to

bidders, conditions of contracts

and technical part such as bill of

quantities, specifications,

drawings and etc.

Republican Unitary

Enterprise Beldor Center

Roads Department MoTC Cooperation with the PIT in

implementation of Component

2.1 (TRSCC),preparation of

consultant’s selection documents

Public Enterprise

BELGIPRODOR

Public Enterprise

BELGIPRODOR

Designer’s supervision during

road rehabilitation

State Customs Committee

(SCC) and Grodno

Regional Customs Agency

The Council of Ministers of

the Republic of Belarus

Supervision, implementation,

quality control and monitoring

for Component 3 – Border

Management Enhancement

47

Annex 6: Economic Analysis

BELARUS: Transit Corridor Improvement Project (P149697)

1. The economic feasibility of the project was assessed based on an analysis of the savings in

vehicle operating costs and users’ travel time cost and reduced road traffic fatalities resulting

from the improvement of the project road. Savings in vehicle operating costs were evaluated

using the Highway Development and Management Model, HDM-4 (version 2.8), which

computes annual costs for the road agency and for road users for with and without project

alternatives over the evaluation period. Benefits arising from road safety improvements were

assessed using the estimated reduction of fatalities along the road, and the monetary value of loss

of human life, evaluated on the basis of the current income level.

2. Using the HDM-4 software, benefits and costs of road widening were computed for a 23-year

analysis period, 2015-2037. The Net Present Value (NPV) of the project costs was calculated

assuming three years of initial construction period, routine maintenance each year, and periodic

maintenance triggered in response to the road roughness. The financial costs are the same as the

economic costs given that the funds for project implementation will be exempt from VAT and

import duties. The NPV of the project benefits was calculated aggregating savings in vehicle

operating costs and users’ travel time, and reduction in accident costs, in comparison to the

Without Project scenario. The key inputs to the HDM-4 model, including the costs associated

with vehicles and parts replacement, fuel costs, wages, costs of various road maintenance

activities, have been calibrated in order to reflect the country-specific conditions.

3. For the purpose of the economic evaluation, the road to be upgraded under the project was

divided into four sections based on the proposed contract Lots. Table 1 shows the location of

each section, the average roughness of the existing road sections and the 2014 average annual

daily traffic (AADT), in vehicles per day. The average annual daily traffic on the four road

sections in 2013 was 5,724 vehicles per day with 44 percent composed of trucks. The existing

road has a bituminous pavement in fair condition with an average riding quality, measured by the

International Roughness Index (IRI), at 3.7-4.3 m/km.

Table 1: Road Sections Characteristics

Length Width Traffic Trucks Roughness Cracks

Section Location (km) (m) (AADT) (%) (IRI) (%)

1 km 57.2 to km 91.07 33.9 9 6,043 43% 3.7 22.0

2 km 91.07 to km 130.4 39.3 9 5,129 45% 4.3 17.9

3 km 197.7 to km 211.0 13.3 9 6,666 43% 4.1 0.0

Total 86.5 9 5,724 44% 4.0 16.8

Source: Feasibility Study

4. The existing two-lane road will be widened to four-lanes. The total financial construction

cost, inclusive of consultancy services for FIDIC and financial and technical audits, is estimated

to be US$239,275 million, which corresponds to US$2,766 million per km (Table 2). The

analysis considered planned routine maintenance and over-haul, based on the existing standard

building structures, approved by the order №11-D of the Ministry of Transport and

Communications of the Republic of Belarus dated April 28, 2014. Maintenance was appointed

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when the maximum permissible values of IRI for the category 2 (Without Project scenario) and

the category 1 (With Project scenario), were reached respectively.

Table 2: Financial Costs of Road Works

Length Financial Costs

Section Location (km) (US$ Million) (US$/km)

1 km 57.2 to km 91.07 33,9 120,131 3,547

2 km 91.07 to km 130.4 39,3 90,231 2,294

3 km 197.7 to km 211.0 13,3 27,503 2,068

Financial Audit, Technical

Audit, Consultant for FIDIC 1,410

Total 86,5 239,275 2,766

Source: Feasibility Study

5. Normal traffic, i.e., traffic that is expected to materialize both in With Project and Without

Project scenarios, is expected to grow at 3.4 percent per year for cars and 2.6 percent per year for

trucks and buses from 2015 to 20253. From 2026 onwards, traffic is expected to grow at 3.0

percent per year for all vehicles. In addition to the normal growth of traffic, it was assumed that

additional traffic will be generated as a result of the economic development impact of typical

major road investments, at 9 percent of the normal traffic for cars, and 33 percent for trucks.

6. The economic unit costs and basic characteristics of the vehicle fleet (Table 3) were obtained

from the feasibility study of the project. The estimate of the road safety benefits was based on the

monetized values of fatalities, calculated using the International Road Assessment Program

(iRAP) methodology that relates the value of life to the GDP per capita of the country. The

resulting cost per fatality for Belarus is US$ 547,213. On the existing road, there are on average

6.7 fatalities per 100 million vehicle-km. It is forecasted that the project will reduce fatality rates

to 1.7 fatalities per 100 million vehicle-km. Table 3 presents the unit road user costs, in US$ per

vehicle km, for different roughness levels and the average traffic composition.

Table 3: Vehicle Fleet Characteristics and Unit Road User Costs

Medium Heavy Artic. Small Medium

Car Pickup Truck Truck Truck Bus Bus

Economic Unit Costs

New Vehicle (US$/vehicle) 16,279 12,751 40,698 80,930 97,800 106,047 233,783

New Tire (US$/tire) 54.8 92.7 99.0 182.1 286.8 84.2 133.2

Fuel (US$/liter) 0.47 0.47 0.47 0.55 0.55 0.47 0.55

Lubricant (US$/liter) 12.6 7.2 8.90 8.90 8.90 8.90 8.90

Maintenance Labor (US$/hr) 2.97 2.97 3.27 3.43 6.39 3.33 3.66

Crew (US$/hr) 4.34 4.34 4.34 4.34 7.51 4.34 3.76

Overhead (US$/year) 0 0 3,000 4,550 10,000 10,500 10,500

Interest Rate (%) 12.00 12.00 12.00 12.00 12.00 12.00 12.00

Working Passenger Time (US$/hr) 1.77 1.77 1.77 1.77 1.77 1.77 1.77

Non-working Passenger Time (US$/hr) 0.89 0.89 0.89 0.89 0.89 0.89 0.89

3 This was based on: (i) the fact that country’s average GDP grew at about 6 percent per year during 2005-2013, and the observed

traffic growth during this period on the project road was 9 percent for cars and 7 percent for trucks and buses; (ii) the GDP

growth from 2014 to 2019 projected by the IMF is 2.3 percent per year; and (iii) assuming the same future elasticity of traffic

growth to GDP growth found on the 2005-2013 period.

49

Cargo Delay (US$/hr) 0.00 0.88 9.39 12.07 19.78 0.00 0.00

Basic Characteristics

Kilometers Driven per Year (km) 10000 30000 30000 35000 100000 50000 70000

hrs Driven per Year (hr) 123 369 484 565 3000 1094 1094

Service Life (years) 14 8 15 15 7 15 15

Percent Private Use (%) 90 0 0 0 0 0 0

Number of Passengers (#) 3 0 0 0 0 20 28

Work Related Passenger-Trips (%) 30 0 0 0 0 70 20

Gross Vehicle Weight (tons) 1.03 2.00 7.34 15.40 35.00 16.00 14.20

Equivalent Standard Axels (ESA) 0.00 0.10 0.23 0.52 6.50 0.74 1.44

Typical Traffic Composition (%) 55% 12% 11% 2% 19% 1% 1%

Unit Road User Cost, US$/Veh-km

2 IRI four lane 0.30 0.18 0.53 0.90 1.06 0.91 1.17

2 IRI two lane 0.31 0.18 0.53 0.90 1.06 0.93 1.18

4 IRI two lane 0.31 0.19 0.55 0.94 1.11 0.97 1.26

6 IRI two lane 0.33 0.20 0.60 1.02 1.21 1.07 1.42

8 IRI two lane 0.36 0.22 0.67 1.14 1.35 1.19 1.66

10 IRI two lane 0.40 0.24 0.75 1.30 1.52 1.34 1.95

12 IRI two lane 0.44 0.26 0.85 1.47 1.72 1.51 2.25

7. Table 4 summarizes the economic evaluation results. The road improvement investments

under Component 1 are economically justified with a total NPV of US$156.7 million, at 8.95

percent discount rate, and an overall Economic Internal Rate of Return (EIRR) of 16.2 percent.

Table 4: Economic Evaluation Summary

NPV EIRR B/C

Section Location (M US$) (%) Ratio

1 km 57.2 to km 91.07 52,4 13,9% 0,44

2 km 91.07 to km 130.4 56,4 16.6% 0,60

3 km 197.7 to km 211.0 47,9 25,3% 1,62

Total 156,7 16.2% 0,72

Source: World Bank Calculations

8. Table 5 shows the results of a sensitivity analysis, increasing costs and decreasing traffic

growth rate by 15 percent. The results show that even under the pessimistic scenario of

increasing costs by 15 percent and decreasing traffic growth rate by 15 percent, the project is still

economically justified with an EIRR higher than 12.9 percent. The switching values analysis

shows that costs would have to increase by 105 percent to yield an EIRR equal to 8.95 percent,

which indicates a robust economic justification of the project.

Table 5: EIRR Sensitivity Analysis

Base Cost

+ 15%, Traffic

Growth - 15% Section Location Case

1 km 57.2 to km 91.07 13.9% 10.9%

2 km 91.07 to km 130.4 16.6% 13.3%

4 km 197.7 to km 211.0 25.3% 21.2%

Total 16.2% 12.9%

Source: World Bank Calculations

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9. Public sector financing is the appropriate vehicle for financing the upgrading of the project

road because of the large initial costs that cannot be recovered through tariffs. Public investment

in road infrastructure is a way the government plays a key role in the country’s development by

handling a range of issues that can only be accomplished or implemented through government

actions, such as axle weight controls, and road safety regulations. The World Bank’s role is

justified because of the Project’s economic and social benefits and because of the value added it

brings beyond financing in areas such as: construction quality control, sustainability of road

maintenance, transport planning, environmental risk management, safeguards, procurement, and

financial management.

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Annex 7: Impact Analysis

BELARUS: Transit Corridor Improvement Project (P149697)

Poverty and Shared Prosperity in Belarus

1. Rapid economic growth in Belarus has translated into remarkable poverty reduction over

the past decade, despite a modest increase in poverty in the aftermath of the recent crisis.

Evidence shows that consumption-based absolute poverty between 2000 and 2010 (latest data

available) decreased from 6.1 to 0.1 percent using a regional poverty line of $2.5 a day, and from

39 percent to 4 percent, using a regional poverty line of $5 a day4. Belarus’ poverty rates are far

below the ECA regional averages of 5.8 and 18.8 percent ($2.5 and $5 poverty lines in 2010). In

2013, a fast GDP growth and a rapid rise in real wages and incomes (by 15.4 percent) brought a

further decrease in poverty. This positive trend in poverty reduction is matched by Belarus’s high

level of shared prosperity. Growth in consumption for the bottom 40 percent of the population

was not only higher than in other countries of the region, but also above national average growth

in consumption, suggesting a positive trend in income equality between 2002 and 2008. Belarus

also ranks high in terms of the Human Development Index (HDI) (50th out of 187 countries in

2012), largely thanks to the achievements in education.

Expected transport-related impacts on low-income groups

2. Adequate connectivity and accessibility are both critical requirements for poverty

reduction and shared prosperity. While transport alone cannot reduce poverty, the construction of

roads, railways, and inland waterways or the improvement of existing infrastructure, serve a

pervasive role in boosting household incomes and reducing income inequality (booth et. al,

2001). From a distributional perspective, the economic and transportation literature in general

supports the hypothesis that investment in road infrastructure may have a significant impact on

the poorest population of society, by enhancing their chances to access employment and

investment opportunities, markets, and basic public services.

3. Road investments in particular, can unambiguously boost economic activity within a

specific locality, potentially closing the income divide that is often observed in lagged regions.

Improving the quality of a road has both direct and indirect effects on the livelihoods of the poor.

At the most direct (and measurable) level, road rehabilitation projects reduce the time and costs

associated with transportation. The increased demand for transport may ensure that more trips

are made along the improved road, that transport fares decrease and commodities are transported

cheaply and more conveniently. Indirect impacts would then be observed at the household level,

as real consumption increases by virtue of both lower prices for consumer goods as well as

increased earnings from employment and business opportunities created during project execution

(e.g. short-term labor intensive works and associated forward linkages) and after the project is

completed (e.g. added investment and jobs throughout the catchment area). Finally, another

indirect effect would stem from enhanced access to health, education and other services, thereby

strengthening capabilities and enabling the poor to accumulate human capital. In sum, road

4 World Bank, ECAPOV

52

investments are relevant in reducing poverty because of their effect in the general conditions that

enable pro-poor economic growth to occur.

Framework of analysis, data collection, and methodology

4. An underlying priority for the proposed project is to identify design parameters and

implementation arrangements which could potentially yield the biggest pro-poor impacts

outlined above and optimize the project’s distributional implications. Therefore, it is necessary to

conduct rigorous analysis of how the bottom 40 percent would be positively or negatively

affected. This project will finance innovative assessments and evaluations to better articulate the

benefits of the planned road improvement works at the community and household levels.

5. The impact analysis will be geared towards examining project outcomes in the following

three areas:

a) Connectivity, mobility and accessibility, including traffic counts, vehicle speeds,

travel time, travel costs, availability and fare of public transport;

b) Local and international market development, investment, and employment including commodity prices, agricultural productivity, small business development,

and land use patterns in areas of influence;

c) Household welfare including income, consumption, asset ownership, and access to

market and public services.

6. The study will emphasize project outcomes on the bottom 40 percent and other

vulnerable groups (elder and people with disabilities). Contingent on resource availability and

timing of data collection, the impact assessment would generate quantitative and qualitative

analysis with the use of traffic surveys as well as household and community level surveys

emphasizing the following:

a) Major mobility/transport constraints faced by households in the immediate catchment

area of the selected road segments for their inter-regional transport needs and their

livelihood strategies.

b) Perceptions of poor and vulnerable households, small-scale farmers, and other groups

on the affordability, adequacy, and reliability of existing inter-regional transport

choices.

c) Theoretical and empirical channels, through which these road links taken together

with other investments could directly influence local economic development, improve

the functioning of product and labor markets, and enhance opportunities and welfare

of the bottom 40 percent.

d) Ideas where associated investment or infrastructure could be designed to leverage the

development impact in the area of influence.

While the specific methodologies, survey instruments, measurements, and scope of work will be

further defined and developed before and during project implementation, at the most basic level,

main activities of the impact analysis will include collection and analysis of relevant qualitative

and quantitative data, conducting an assessment of potential poverty and social impacts through

the project road with recommendations for enhancement, and examining induced effects on local

and regional economies.

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Annex 8: Project Map