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Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: RES13265

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF THE

EGYPT NATIONAL RAILWAYS RESTRUCTURING PROJECT

LOAN 7656-EG AND LOAN 7982-EG

MARCH 17, 2009

TO THE

ARAB REPUBLIC OF EGYPT

JUNE 12, 2014

Sustainable Development Department Middle East and North Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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ABBREVIATIONS AND ACRONYMS

AC Air Conditioned Trains CPAR Country Procurement Assessment Review DA Designated Account EGP Egyptian Pound ENR Egyptian National Railways ENRRP Egypt National Railways Restructuring Project ETCS European Train Control System FM Financial Management GoE Government of Egypt IBRD International Bank for Reconstruction and Development IP Implementation Progress LA Loan Agreement MoT Ministry of Transport PA Project Agreement PDO Project Development Objective PMU Project Management Unit PSO Public Service Obligation SBD Standard Bidding Documents SBU Strategic Business Unit

Regional Vice President: Inger Andersen Country Director: Hartwig Schafer

Sector Manager: Patricia Veevers-Carter Task Team Leader: Olivier Le Ber

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EGYPT, ARAB REPUBLIC OF

EGYPT NATIONAL RAILWAYS RESTRUCTURING PROJECT

CONTENTS

Pages A. SUMMARY…………………………………………………………………………………………......5 B. PROJECT STATUS……………………………………………………………………….…………….6 C. PROPOSED CHANGES………………………………………………………………………………...7 ANNEX 1: RESULTS FRAMEWORK ..................................................................................................... 11 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) ........................................ 17

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DATA SHEET

Egypt, Arab Republic of Egypt National Railways Restructuring Project (P101103)

MIDDLE EAST AND NORTH AFRICA

MNSTI .

Report No: RES13265 .

Basic Information

Project ID: P101103 Lending Instrument: Specific Investment Loan

Regional Vice President: Inger Andersen Original EA Category: Partial Assessment (B)

Country Director: Hartwig Schafer Current EA Category: Partial Assessment (B)

Sector Director: Junaid Kamal Ahmad Original Approval Date: 17-Mar-2009

Sector Manager: Patricia Veevers-Carter Current Closing Date: 31-Mar-2017

Team Leader: Olivier P. Le Ber .

Borrower: Arab Republic of Egypt

Responsible Agency:

Egyptian National Railways (ENR) .

Restructuring Type

Form Type: Full Restructuring Paper Decision Authority: Board Approval

Restructuring Level:

Level 1 Explanation of Approval Authority:

This is a level one restructuring and the approval authority is Board.

.

Financing ( as of 08-May-2014 )

Key Dates

Project Ln/Cr/TF Status Approval Date

Signing Date Effectiveness Date

Original Closing Date

Revised Closing Date

P101103 IBRD-76560 Effective 17-Mar-2009 02-Aug-2009 24-Jun-2010 30-Sep-2015 30-Sep-2015

P101103 IBRD-79820 Effective 14-Dec-2010 23-Sep-2011 28-Mar-2012 31-Mar-2017 31-Mar-2017

Disbursements (in Millions)

Project Ln/Cr/TF Status Currency Original Revised Cancelled

Disbursed

Undisbursed

% Disbursed

P101103 IBRD-76560 Effective USD 270.00 270.00 0.00 41.46 228.54 15

P101103 IBRD-79820 Effective USD 330.00 330.00 0.00 0.82 329.18 0 .

Policy Waivers

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

Yes [ ] No [ X ]

Does the project require any policy waiver(s)? Yes [ ] No [ X ] .

A. Summary of Proposed Changes

The following changes are proposed under the Level I restructuring: (i) amend the project development objective (PDO); (ii) revise the original project components; (iii) revise the Results Framework; (iv) reallocate the project savings of up to US$35 million among categories of expenditures and introduce an additional disbursement category; (v) add the procurement of consulting services; (vi) extend the closing date of the project from March 31, 2017 to January 31, 2019; and (vii) revise the disbursement estimates. The proposed restructuring will allow for completion of all activities financed under the project and will help the project achieve the PDO. There are no changes in the financial management arrangements and environmental and social safeguards of the project. The Government of Egypt (GoE) agreed on the need to introduce the above proposed changes through a project restructuring.

Change in Implementing Agency Yes [ ] No [ X ]

Change in Project's Development Objectives Yes [ X ] No [ ]

Change in Results Framework Yes [ X ] No [ ]

Change in Safeguard Policies Triggered Yes [ ] No [ X ]

Change of EA category Yes [ ] No [ X ]

Other Changes to Safeguards Yes [ ] No [ X ]

Change in Legal Covenants Yes [ ] No [ X ]

Change in Loan Closing Date(s) Yes [ X ] No [ ]

Cancellations Proposed Yes [ ] No [ X ]

Change to Financing Plan Yes [ ] No [ X ]

Change in Disbursement Arrangements Yes [ ] No [ X ]

Reallocation between Disbursement Categories Yes [ X ] No [ ]

Change in Disbursement Estimates Yes [ X ] No [ ]

Change to Components and Cost Yes [ X ] No [ ]

Change in Institutional Arrangements Yes [ ] No [ X ]

Change in Financial Management Yes [ ] No [ X ]

Change in Procurement Yes [ X ] No [ ]

Change in Implementation Schedule Yes [ ] No [ X ]

Other Change(s) Yes [ ] No [ X ]

Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ]

Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ]

Appraisal Summary Change in Social Analysis Yes [ ] No [ X ]

Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ]

Appraisal Summary Change in Risk Assessment Yes [ X ] No [ ] .

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B. Project Status

The project was approved on March 17, 2009, signed on August 2, 2009 and became effective on June 24, 2010. An Additional Financing was approved on December 14, 2010, signed on September 23, 2011 and became effective on March 28, 2012. The project closing date is March 31, 2017. The total loan funds amount to US$600 million (Original loan amount of US$270 million - Loan 7656-EG, and Additional Financing amount of US$330 million – Loan 7982-EG). As of May 8, 2014, the project disbursed a total amount of US$42.3 million, representing about 7 percent of total loan amount. Regarding project implementation, despite some progress, the overall implementation continues to be slow. The project is currently rated moderately satisfactory for progress towards achieving the PDO and moderately unsatisfactory for implementation progress (IP). The implementation of Components 1, Signaling Modernization on Cairo-Alexandria and Beni Suef-Asyut Lines, and Component 2, Track Renewal Works along the Cairo-Aswan Line, is progressing slowly, and is still afflicted by the delays caused, inter alia, by the events affecting the country since 2011. More specifically, under Component 1, the contract for signaling modernization of the Cairo-Alexandria line was recently signed, and the procurement of the signaling modernization of the Beni Suef-Asyut line is progressing well now albeit with some delays. The delays in the implementation of the track renewal works under Component 2 were due to the decision by the contractor to build a sleeper factory in Egypt instead of purchasing sleepers from the local market, as local sleepers would not meet the technical standards of the contract. This investment will prove to be a good resource in the medium and long term in view of the large track rehabilitation program envisioned by ENR. This, however, has resulted in a delay of at least ten months in the implementation of the track renewal contract. With regards to the implementation of Component 3, Modernization of Management and Operating Practices, the progress was made in carrying out the ENR transformation plan. Yet, the financial and operational performance of the ENR is a matter of concern as a result of the delayed payment of public service obligations (PSOs) and deterioration in services. The recurrence of strikes and track blockages, whether by ENR employees or the public, continued to cause interruption to operation and service. Of most serious concern is the deteriorating safety record over the past year, with fatalities increasing drastically following major railway accidents. Thus, achievement of the original PDO is jeopardized by the declining financial and operational performance of the ENR. During an implementation support mission carried out in April 2013, the Bank organized a high-level workshop at the Ministry of Transport (MoT) which identified several areas of importance to improve ENR’s governance and accountability for a successful railways restructuring, and proposed activities to be considered for Bank’s financing (resorting to savings under the project). All these activities will ultimately focus on improving safety of operations through the modernization of assets and greater accountability and governance. The mid-term review carried out in December 2013 concluded that the project is likely to achieve its revised objectives by the revised closing date of January 31, 2019 subject to the approval of this restructuring. .

Development Objectives/Results

Project Development Objectives

Original PDO

The objective of the project is to assist the Borrower in improving the reliability, efficiency and safety of the railways' services through signaling and track renewal investments by the Project Implementing Entity and the modernization of its management and operating practices in order to enhance the railways' sector responsiveness to economic and social needs and to strengthen the financial viability of the Project

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Implementing Entity.

C. Change in Project's Development Objectives

Explanation

The new PDO removes the objective “to enhance the railways’ sector responsiveness to economic and social needs and to strengthen the financial viability of the Project Implementing Entity” because this objective is no longer achievable under the current circumstances in the country. ENR adopted a financial recovery plan at the onset of the project and was on track to improve its financial sustainability, but after the revolution, the Government has dramatically reduced its contribution to the PSO and wages were significantly increased without the possibility of raising fares. These events were beyond the control of the railways and financial sustainability is no longer achievable during the life of the project.

Proposed New PDO

The objective of the project is to improve the reliability, efficiency and safety of the railways’ services on targeted sections of the rail network.

Change in Results Framework

Explanation:

The results framework will be revised to reflect the proposed change in the PDO. Two PDO-level indicators will be dropped. New indicators will be added to better measure the impact of the project activities and proposed restructuring. Following the reallocation of funds and the extension of the project closing date, selected target values will also be revised. There are no World Bank Core Sector Indicators for the railways sector. The specific changes are detailed in the Annex. .

Financing

Change in Loan Closing Date(s)

Explanation:

The Closing Date of the project will be extended from March 31, 2017 to January 31, 2019 to complete all the activities financed under the project (ongoing signaling contracts and new project activities funded following the reallocation) and to achieve the revised PDO. More specifically, the original Loan 7656-EG will be extended from September 30, 2015 to January 31, 2019 and the Additional Financing (Loan 7982-EG) will be extended from March 31, 2017 to January 31, 2019.

Ln/Cr/TF

Status Original Closing Date

Current Closing Date

Proposed Closing Date

Previous Closing Date(s)

IBRD-76560

Effective 30-Sep-2015 30-Sep-2015 31-Jan-2019 30-Sep-2015

IBRD-79820

Effective 31-Mar-2017 31-Mar-2017 31-Jan-2019 31-Mar-2017

Reallocations

Explanation:

Since new studies under Components 1 and 3 for the design of a new signaling system and improving the safety of ENR operations are proposed to be added, a new disbursement category (“Consultants’ Services”) will be introduced under Loan 7656-EG and US$9 million will be reallocated to this new category. In addition, the amount of US$26 million will be reallocated from category 1 (“Goods”) to category 2 (“Works”) to finance the additional track-renewal works under Component 2. The percentage of expenditures to be financed will remain 100 percent of eligible expenditures in line with Egypt's

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financing parameters. The proceeds under Loan 7982-EG will remain unchanged.

Ln/Cr/TF Currency Current Category of Expenditure

Allocation Disbursement % (Type Total)

Current Proposed Current Proposed

IBRD-76560 USD GO.PTS. A.1 & A.2 197,000,000.00 162,000,000.00 100.00 100.00

CW, PT. B 60,000,000.00 86,000,000.00 100.00 100.00

PREMIA FOR CAPS/COLLARS

0.00 0.00 0.00 0.00

UNALLOCATED 12,325,000.00 12,325,000.00 0.00 0.00

FRONT END FEE 675,000.00 675,000.00 0.00 0.00

Consulting services 0.00 9,000,000.00 0.00 100.00

Total: 270,000,000.00 270,000,000.00

IBRD-79820 USD GO, WKS under Part A 329,175,000.00 329,175,000.00 100.00 100.00

PREMIA FOR CAPS/COLLARS

0.00 0.00 0.00 0.00

FRONT END FEE 825,000.00 825,000.00 0.00 0.00

Total: 330,000,000.00 330,000,000.00

Disbursement Estimates

Change in Disbursement Estimates

Explanation:

The revised disbursement estimates are based on the expected implementation of the contracts and are in line with the revised closing date.

Fiscal Year Current (USD) Proposed (USD)

2011 6,864,303.73 6,864,303.73

2012 10,135,696.27 0.00

2013 60,000,000.00 3,410,662.84

2014 88,000,000.00 49,818,734.57

2015 180,000,000.00 155,000,000.00

2016 160,000,000.00 160,000,000.00

2017 95,000,000.00 130,000,000.00

2018 0.00 55,000,000.00

2019 0.00 39,906,298.86

Total 600,000,000.00 600,000,000.00 .

Components

Change to Components and Cost

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Explanation:

1. Component 1-1: Signaling Modernization Cairo (Arab El Raml)-Alexandria line The supported activities under this component will be expanded to support additional activities focusing on improving the safety of ENR’s operations by using the budget savings in the amount of US$35 million which resulted from the signing of the contract for the modernization of the signaling system on the Cairo-Alexandria line. These additional activities, in the amount of US$7.5 million, will include: (i) studies to prepare the next phase of the modernization of the signaling system (in particular ETCS level 1) (US$6 million), and (ii) studies for the signaling system and automatic train protection on the remaining ENR secondary lines (US$1.5 million). 2. Component 2: Track Renewal This component is expanded to finance the renewal works for about 60 km of additional tracks on the Cairo-Aswan line in the amount of US$26 million, using the budget savings under Component 1-1. 3. Component 3: Modernization of Management and Operating Practices In addition to financing activities directed toward developing and cementing changes in managerial and staff practices that reflect the operational and financial restructuring of ENR (which were 100% financed by ENR), this component will now finance with IBRD funds additional activities aimed at improving the safety of ENR’s operations through the modernization of assets and greater accountability and governance. These additional activities in the amount of US$1.5 million, using the budget savings under Component 1, will include studies to support the restructuring of ENR and improve the safety of its operations such as the elaboration of a new railway law, the preparation of a Safety Management System for ENR operations, the formulation of an infrastructure pricing methodology and the development of the structure of the PSO Contract between the State and ENR for loss-making passenger services. 4. Component 1-2: Signaling Modernization Beni Suef Asyut line No changes.

Current Component Name

Proposed Component Name

Current Cost (US$M)

Proposed Cost (US$M)

Action

Component 1-1: Signaling Modernization – Cairo (Arab El Raml) to Alexandria

202.00 174.50 Revised

Component 2: Renewal of 200 km of track

Renewal of track 80.00 106.00 Revised

Component 3: Modernization of Management and Operating Practices

12.00 13.50 Revised

Component 1-2: Signaling Modernization - Beni Suef to Asyut

337.00 337.00 No Change

Contingencies and front end fees 14.00 14.00 No Change

Total1: 645.00 645.00

1 Including Government counterpart funds of US$45 million

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.

Other Change(s)

Change in Procurement

Explanation:

The procurement of consulting services will be added to select consulting firms and individual consultants that will undertake the new studies which were introduced in the project. The selection methods will include: (i) Quality and Cost based Selection (QCBS), (ii) Selection based on Consultants’ Qualifications, (iii) Single-Source Selection (SSS), and (iv) Selection of Individual Consultants. An updated Procurement Plan for the project, prepared by the implementing agency, was received by the Bank in December 2013 and found to be acceptable. This plan will be subsequently updated annually or as needed to reflect the latest project requirements. .

Change(s) in Appraisal Summary

Appraisal Summary Change in Risk Assessment

Explanation:

The overall implementation risk rating will be updated from moderate to substantial, in view of the political and economic situation and its impact on railway safety and project sustainability.

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ANNEX 1: RESULTS FRAMEWORK

Egypt, Arab Republic: Egypt National Railways Restructuring Project (P101103) Stage: Restructuring

Results

Core sector indicators are considered: Yes Results reporting level: Project Level .

Project Development Objective Indicators

Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target

Revised Availability ratio of the useful fleet (%): long distance passenger

Percentage Value 49.50 75.00 80.00

Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment Availability ratio of the useful fleet (%), defined as the number of daily available locomotives divided by the total number of assigned locomotives for each SBU, averaged on a yearly basis

FY12/13 Target values are yearly and not cumulative.

Revised Availability ratio of the useful fleet (%): short distance passenger


Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment Availability ratio of the useful fleet (%), defined as

FY12/13 result Target values are yearly and not cumulative.

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the number of daily available locomotives divided by the total number of assigned locomotives for each SBU, averaged on a yearly basis

Revised Availability ratio of the useful fleet (%): freight


Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment Availability ratio of the useful fleet (%), defined as the number of daily available locomotives divided by the total number of assigned locomotives for each SBU, averaged on a yearly basis


Revised Kilometrage per available locomotive: long distance passenger

Kilometers Value 143,000.00 184,000.00 176,000.00

Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment Total number of km run by all locos during a year divided by the average


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number of yearly available locos

Revised Kilometrage per available locomotive: short distance passenger


Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment Total number of km run by all locos during a year divided by the average number of yearly available locos


Revised Kilometrage per available locomotive: freight


Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment Total number of km run by all locos during a year divided by the average number of yearly available locos


Revised Long distance passenger traffic on Cairo-Alexandria: total annual passenger-km in air conditioned (AC) trains (million)

Number Value 855.00 1267.00 1907.00

Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment FY12/13 result Target values are yearly and not cumulative.

Revised Long distance passenger traffic on Cairo-Alexandria: total

Number Value 1323.00 1078.00 2503.00

Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

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annual passenger-km in non-AC long distance trains (million)


Revised Long distance passenger traffic on Beni Suef - Asyut: total annual passenger-km in AC trains (million)

Number Value 2245.00 2397.00 3204.00

Date 17-Mar-2009 30-Jun-2013 31-Jan-2019

Comment FY12/13 Target values are yearly and not cumulative.

Revised Long distance passenger traffic on Beni Suef - Asyut: Total annual passenger-km in non-AC long distance trains (million)

Number Value 4239.00 3817.00 4944.00

Date 17-Mar-2009 30-Jun-2013 31-Jan-2019


Revised Average number of fatalities due to railway accidents on the ENR network measured as the total annual number of victims on ENR network per one million passenger-km

Number Value 0.60 1.18 0.30

Date 30-Jun-2008 30-Jun-2013 31-Jan-2019

Comment

Marked for Deletion

PSO compensation for ENR measured in total annual amount of PSO paid by the Government to ENR [expressed in EGP million].

Text Value 357 818 800

Date 30-Jun-2008 30-Jun-2013 31-Mar-2017

Comment FY12/13 result

Marked for Deletion

Freight traffic carried by ENR Number Value 2020.00 1170.00 3918.00

Date 30-Jun-2013 31-Mar-2017

Comment Total annual net-ton-km of freight traffic (million)

FY12/13 result

Intermediate Results Indicators

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Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target

Revised Punctuality of AC trains on the line Cairo-Alexandria


Date 30-Jun-2008 30-Jun-2013 31-Jan-2019

Comment Total number of AC trains arriving 15 minutes late to final destination during one year divided by the total number of AC trains operated in the same period of time.

Revised Punctuality of AC trains on the line Beni Suef - Asyut


Date 30-Jun-2009 30-Jun-2013 31-Jan-2019

Comment Total number of AC trains arriving 15 minutes late to final destination during one year divided by the total number of AC trains operated in the same period of time.

New Installation of a modernized signaling system on Cairo-

Yes/No Value No No Yes

Date 30-Jun-2013 30-Jun-2013 31-Jan-2019

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Alexandria line completed and operating 24/7

Comment

New Completion of studies to prepare the next phase of the modernization of the signaling system (ETCS level 1)


Date 30-Jun-2013 30-Jun-2013 31-Jan-2019

Comment

New Installation of a modernized signaling system on Beni Suef-Asyut line completed and operating 24/7


Date 30-Jun-2013 30-Jun-2013 31-Jan-2019

Comment

New Number of kilometers of renewed tracks along the Cairo-Aswan and Benha-Port Said lines

Kilometers Value 0.00 80.00 260.00

Date 30-Jun-2008 31-Dec-2013 31-Jan-2019

Comment

Revised Maintenance costs on sections where tracks are renewed: annual total cost of track infrastructure maintenance on sections renewed under the project (EGP million)


Date 30-Jun-2008 30-Jun-2013 31-Jan-2019

Comment FY12/13 result

Revised Average management training time: ratio between the number of staff-days allocated for training during a year and the average number of management staff at ENR

Number Value 2.90 17.00 12.00

Date 30-Jun-2008 30-Jun-2013 31-Jan-2019

Comment In 2008/2009 FY12/13 result Current annual value already exceeds the end target

New Completion of studies to support the restructuring of ENR


Date 30-Jun-2013 30-Jun-2013 31-Jan-2019

Comment

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ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)

Egypt, Arab Republic: Egypt National Railways Restructuring Project (P101103) Stage: Restructuring

Project Stakeholder Risks

Stakeholder Risk Rating Moderate

Risk Description: Risk Management:

The railway sector plays a significant role in the Egyptian economy and is an essential mode of transport for low-income Egyptians. ENR, a public entity reporting to the MoT, is a predominantly passenger railway. The GoE remains committed to improve ENR’s performance by giving priority to improving safety and quality assurance, developing human resources, enhancing operational reliability, and modernizing assets and introducing new technologies.

The Bank will continue and reinforce the ongoing dialog with key stakeholders in Egypt. The project support to the ongoing reforms has been appreciated by the counterparts. The Bank assistance to critical investments and the overall strengthening of ENR performance will reinforce the existing dialog on strategic ENR objectives, safety improvements, and on complex technical matters and modern management practices.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Client In Progress Implementation Yearly

Implementing Agency (IA) Risks (including Fiduciary Risks)

Capacity Rating Moderate


Implementation capacity within ENR is weak, although improving slowly under the company's transformation and modernization plan. Among other reasons, this is due to outdated internal procedures and lack of experience working with International Financial Institutions. The company's frequent change of management is very disruptive and undermines efforts put towards the transformation and modernization plans.

As a consequence of the ongoing transformation plan, a number of measures have been undertaken within the Project to mitigate the capacity risks: - the reorganization of ENR along business units, initiatives to strengthen capacity of staff, the introduction of new practices with the assistance of experienced international railway specialists are enhancing ENR capacity across the board; - a high level steering committee involving the ministries of Transport, International Cooperation, and Finance, oversees the implementation of the Project; - a PMU is fully staffed and operating; - throughout direct practice and training provided by the Bank, ENR is becoming more familiar with safeguard and fiduciary requirements, particularly procurement.

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Construction supervision consultants support ENR with respect to contract progress certification.


Both In Progress Implementation Yearly

Governance Rating Low


No risk foreseen beyond above capacity section


Project Risks

Design Rating Low


The preparation of the technical specifications and bidding documents for signaling modernization requires deep technical skills and good knowledge of state-of-the-art solutions.

The technical specifications and bidding documents for the ENRRP signaling investment have been prepared by an independent international consultant. Moreover, ENR, with the assistance of the same consulting firm, has already prepared similar technical documents for the Beni Suef - Asyut operation. During execution of works, the Project Manager hired by ENR for each construction contract in accordance with Bank rules will supervise the quality of works.


Both Completed Implementation Continuous

Social and Environmental Rating Moderate


Environmental impacts are expected mostly during construction phase and include high noise levels, increased levels of local air pollutants, and detours around

All project investments are on existing rail right-of-way. Railway corridor has no sensitive environmental habitats. ENR has prepared an Environmental Management Plan (EMP) to address environmental

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level crossings. and social impacts. It has confirmed that the impacts of investments are manageable. Agreed mitigation measures for periods during and after construction are detailed in an EMP and in an Institutional Capacity Building Plan. An Environmental consultant was selected by ENR to assist with the implementation of the EMP. The consultant is helping to establish an Environmental Affairs Directorate within the ENR structure to help sustain managing the environmental and social aspects during the operation phase of the project.



Program and Donor Rating Low


No risk foreseen


Delivery Monitoring and Sustainability Rating Substantial


Taking into account weak capacity of the ENR, project indicators are complex and difficult to assess. While the project design permits the implementation of the project as a stand-alone operation, the full benefits of the project can only materialize if ENR implements its reform program on modernizing the company.

In light of the implementation of the modernization and strengthening plan, ENR is periodically collecting indicators reflecting its overall performance. The project performance indicators were thoroughly discussed and agreed upon with ENR and the definition and methods for estimating these indicators were harmonized with existing ENR procedures and methods. The Italian Management team and the Bank team are spending considerable amount of time in building the capacity of the ENR's monitoring team. The modernization of ENR remains an important Government priority. The ongoing initiatives present an important and well thought through roadmap for ENR’s modernization. The Bank team will continue the regular monitoring of the progress of the modernization of ENR during its missions.

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The financial and operational performance of ENR is a matter of concern as a result of the delayed payments of PSOs by the Government and deterioration in services. The recurrence of strikes and track blockages, whether by ENR employees or the public, continued to cause interruption to operation and service.

The current economic situation in Egypt does not allow the achievement of the financial viability of ENR during the life of the project. Following the proposed restructuring, the project will finance new studies on a range of topics (including a new railway law to modernize the governance of ENR, sustainable infrastructure financing, PSO contracts). However, this risk cannot be fully mitigated by the project.



Other (Optional) Rating Substantial


Railway Safety: As a result of ENR's undermined financial position, lack of funds for timely maintenance (both for rolling stock and infrastructure) and essential capital investments threatens the safety of ENR's operations.

ENR and the Bank agreed on the importance of making railway safety a priority for the company. While the company is developing the Short and Medium-Term Financial Recovery Plan, the expenditures should be prioritized by putting those that ensure safety of operations in the first place.


Client In Progress Implementation Quarterly

Other (Optional) Rating



Overall Risk

Overall Implementation Risk: Rating Substantial

Risk Description:

The overall risk is rated substantial, in view of the political and economic situation and its impact on railway safety and project sustainability.

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