Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No. 48880-LR

PROJECT PAPER

ON A

PROPOSED ADDITIONAL FINANCING

IN THE AMOUNT OF

SDR 15.7 MILLION (US$24.20 MILLION EQUIVALENT)

TO THE

REPUBLIC OF LIBERIA

FOR THE

EMERGENCY INFRASTRUCTURE PROJECT

AND

AGRICULTURE AND INFRASTRUCTURE DEVELOPMENT PROJECT

June 18,2009

Transport Sector Country Department AFCWl Africa Region

I This document has a restricted distribution and may be used by reciuients only in the uerformance of I I their official duties. Its contents may not otherwise be disclosed withbut World Bank aithorization. 1

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CURRENCY EQUIVALENTS (Exchange Rate Effective May 29,2009)

AfDB AIDP CAS

EC EIP

EMP FBOs FBS GOL IDA IC ICB IP IIU LIB LWSC MDG MLME M O A MOF MOT MPW MTR NCB NPA OPRC PEIA PFMU PRS QCBS SDR S I U

CQS

EIP-SC

Currency Unit = Liberia Dollar (LRD) ,

LRD 1.00 = US$O.O15 SDR1 = US$1.54

FISCAL YEAR July 1 - June 30

ABBREVIATIONS AND ACRONYMS

African Development Bank Agriculture and Infrastructure Development Project Country Assistance Strategy Consultant Qualification Selection European Commission Emergency Infrastructure Project Emergency Infrastructure Project - Supplemental Component Environmental Mitigation Plan Farmers Based Organizations Fixed Base Selection Government o f Liberia International Development Association Individual Consultants International Competitive Bidding Implementation Progress Infrastructure Implementation Unit Limited International Bidding Liberia Water and Sewer Corporation Mil l ion Gallons per Day Ministry o f Lands, Mines, and Environment Ministry o f Agriculture Ministry o f Finance Ministry o f Transport Ministry o f Public Works Mid-Term Review National Competitive Bidding National Ports Authority Output and Performance Road Contracts Preliminary Environmental Impact Assessment Project Financial Management Unit Poverty Reduction Strategy Quality and Cost Based Selection Special Drawing Rights Special Implementation Unit

FOR OFFICIAL USE ONLY

sss Single Source Selection TOR Terms o f Reference UNDP United Nations Development Program URIRP Urban and Rural Infrastructure Rehabilitation Project

Vice President: Obiageli Katryn Ezekwesili

Sector Director: Inger Andersen Sector Manager: C. Sanjivi Rajasingham

Country ManagerDirector: Ishac Diwan

Task Team Leader: Gylf i Palsson

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization.

LIBERIA

ADDITIONAL FINANCING FOR

EMERGENCY INFRASTRUCTURE PROJECT AND

AGRICULTURE AND INFRASTRUCTURE DEVELOPMENT PROJECT

CONTENTS

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

11. Background and Rationale for Additional Financing ... ....., .. .... . , ... , ,. , .... . ..... .... . .... ,. . ... , , .... . . . 3

111. Proposed Changes ........................................................................................................... 5

IV. Consistency with CAS ......................................................................................................... 5

V. Economic Analysis of Cost Over-run or Financing Gap - and Appraisal o f Restructured or Scaled-up Project Activities ..... . .... ,. , , ..... ... .... ... . .... ....... . .... ... . . ... . ...... . . .... , ... ... ... . . ..... .... . ... ... . ... ...... . . . 6

VI. Expected Outcomes ............................................................................................................. 6

VII. Benefits and Risks ............................................................................................................... 6

VIII. Financial Terms And Conditions For The Additional Financing. ... .. . .... . . ... . . ... . .. . .. . ... . .... , , , . 7

Annex 1 - Emergency Infrastructure Project (EIP) ......................................................................... 8

Annex 2 - Agriculture and Infrastructure Development Project (AIDP) ....... ..... .... . .... . ... .. . ... . ..... .. 17

REPUBLIC OF LIBERIA EMERGENCY INFRASTRUCTURE PROJECT

PROJECT PAPER DATA SHEET Date: June 18,2009 Team Leader: Gylfi Palsson Country: Liberia Project Name: Emergency Infrastructure Rajasingham Pro-ject - Additional Financing

Sector Directormanager: C. Sanjivi

Country Director: Ishac Diwan - Project ID: P117005 Borrower: Republic o f Liberia Remonsible agency: SDecial Imdementation Unit

I Environmental Category: B

Revised estimated disbursements (Bank FY/US$m) FY FYlO FY11 Annual 5.0 3.2 Cumulative I 5.0 I 8.2 Current closing date: June 30,20 10

Bank policies?

Revised project development obj ectives/outcomes [If applicable]

The development objective o f the Project has not been revised.

Does the scaled-up or restructured project trigger any new safeguard policies? NO

[ 3 Loan [ ] Credit [x] Grant For LoandCreditdGrants:

For Additional Financing

Total Bank financing (US$m.): 8.2 Proposed terms:

Financing Plan (US$m.) Source Total

Borrower 0.0 IBRD/IDA 8.2 Others 0.0

1

REPUBLIC OF LIBERIA AGRICULTURE AND INFRASTRUCTURE DEVELOPMENT PROJECT

PROJECT PAPER DATA SHEET Date: June 18,2009

Project Name: Agriculture and Infrastructure Development Project -

Team Leader: Gylfi Palsson Sector DirectorManager: C. Sanjivi

Country Director: Ishac Diwan

estimated 1 cv

disbursements (Bank 11 I cv13

FY/US$m) I cv12

Revised FY I I I 1 1 I I L I& I I L L J

Annual I 8.00 I 6.00 I 2.00 I I

The development objective o f the Project has not been revised.

Total Bank financing (US$m.): 16.0

ii

I. Introduction

1. This Project Paper seeks the approval o f the Executive Directors to provide additional grants in the amounts o f US$8.2 million and US$16.0 mill ion to the Republic o f Liberia for the Emergency Infrastructure Project (H236-LBR), and Agriculture and Infrastructure Development Project (H327-LBR), respectively.

2. The proposed additional grants would help finance the costs associated with cost over-runs, scale up o f activity to enhance development impact and introduction o f one new modified project activity. Also, the approval o f the Executive Directors i s being sought for minor modification by dropping select activities. There are no new safeguard policies triggered by the additional financing and restructuring, nor are changes required to the development objectives o f the projects.

3. After a civi l war and following establishment o f democratically elected Government o f Liberia (GOL) in early 2006, International Development Association (IDA) has, with a series o f infrastructure projects' , contributed to GOL effort in re-establishing infrastructure o f the country. Whi le these projects are stand-alone operations o f relatively modest size, implementation o f the projects has had to take account o f needed re-prioritization, scaling up o f some interventions, critical infrastructure that during this time has collapsed, significant cost escalation and entry by other donors to Liberia. This has, in practice, resulted in the current projects being managed as a program responding to the evolving emergency infrastructure needs o f the country.

4. while Annexes 1 and 2 discuss issues specific to each project.

The main body o f this Project Paper presents all issues common to both projects,

5. There are complementarities among the IDA funded infrastructure projects and with other donor interventions in Liberia infrastructure, particularly - but not only - in the transport sector. While, for instance, the oldest IDA infrastructure project, Emergency Infrastructure Project (EIP), i s financing part o f an important road corridor, the Agriculture and Infrastructure Development Project (AIDP) i s financing another part o f the same road corridor; and indeed, a third IDA project, the recently approved Urban and Rural Infrastructure Rehabilitation Project (URIRP) i s financing yet another section with co- financing from a multi-donor trust fund2. Preparation i s also underway for an IDA- managed, but donor funded project to address the remainder o f that corridor as well as the second most important road corridor in the country. Similarly, project activities in the port sector started with IDA funded Infrastructure Rehabilitation Project, but are also addressed in two subsequent projects, the AIDP and URIRP. Another example i s where through European Commission (EC) co-financing to AIDP, rehabilitation o f feeder roads i s about to start, while

' Emergency Infrastructure Project (H236-LBR); Emergency Infrastructure - Supplemental Component (H256- LBR); Liberia Infrastructure Rehabilitation Project (TF057072 - under special funding); Agriculture and Infrastructure Development Project (H327-LBR) and; Urban and Rural Infrastructure Rehabilitation Project (4780-LR)

The Liberia Reconstruction Trust Fund - LRTF

1

coordination o f effort in that subsector i s with the bilateral efforts o f Swedish International Development Agency (SIDA), the United States Agency for International Development (USAID) and the EC. Thus, while each intervention i s “projectized” the overall transport sector reconstruction and development relies on convergence o f number o f IDA and other donors’ efforts within a unified vision. Or, to put it simply, each new project i s building on the progress o f a current project and other interventions in the sector.

6. In the water sector, close coordination with the government and African Development Bank (AfDB) i s resulting in IDA gradually phasing out o f the sector while AfDB will take the lead. Part o f this proposed additional financing and restructuring o f the EIP and AIDP projects i s in reaction to this development and needed adjustments to facilitate the transition.

7. This sector-holistic but project-based approach creates certain synergies, as well as additional requirements. The IDA funded and managed projects are subject to a single set o f implementation, financial management, procurement and institutional arrangements. Appraising activities needs to take account o f likely future financing by IDA or others to ensure holistic technical solutions, and economic and socioeconomic considerations go beyond the interventions planned for the specific project vehicle being used. On the Bank’s side, this allows unified supervision arrangements but also requires far more intense implementation support to the government than would be the case under more traditional arrangements.

8. Gradually, as older projects close and new operations are introduced, further concentration i s expected by IDA in the transport sector and a move from a number o f smaller civil works activities to larger packages o f engagements.

9. For the EIP specifically, the major changes being sought are to: (i) cover cost over- runs for five project activities; (ii) modify at zero cost the technical intervention o f specified road works on the Freeport o f Monrovia to Cotton Tree road corridor; (iii) introduce a new project activity in the port o f Monrovia; and (iv) drop three specific project activities from the project design.

10. For the AIDP specifically, the major changes being sought are to: (i) to cover cost over-runs for a major consultancy assignment and for the construction o f a critical bridge in Monrovia; (ii) for scaling up road works on 83 km corridors from Freeport o f Monrovia to Cotton Tree; and (iii) for dropping three activities from the project.

‘11. EIP i s not subject to co-financing. Nevertheless, modification o f some project activities, including dropped activities and introduction o f one new activity in the case o f EIP, are partly a result o f coordination among donors, for instance in the water sector, where AfDB will now take over as the lead development agency. A component o f the AIDP i s co- financed by the EC and has also previously received additional financing in 2008, in response to the food crisis. The proposed additional financing and restructuring o f the project however does not affect these components.

2

11. Background and Rationale for Additional Financing

12. Specific discussion on EIP in the amount o f US$8.2 million, i s in Annex 1-A.

13. Specific discussion on AIDP in the amount o f US$16 million, i s in Annex 2-A.

14. As mentioned in the introduction, the individual IDA funded infrastructure investment projects are unofficially and broadly managed as a coherent program. This involves among other things common implementation arrangements, financial and procurement management, policy content and discussion, institutional development and, indeed, cross-fertilization o f project activities.

15. Following the 2006 re-establishment o f democracy, the new Government faced huge challenges in infrastructure. Not only was the country’s infrastructure collapsing because o f lack o f maintenance for decades, but also the sector management, institutional arrangements, capacity, systems, procedures and processes had largely been depleted.

16. I t i s in this very fragile environment that IDA provided the initial infrastructure projects, where EIP, AIDP and other projects were prepared to respond to a fluid emergency situation. The proposed additional financing and restructuring will largely respond to the cost over-runs caused by unexpectedly high prices, cost estimates that were largely based on rough-order estimation, not detailed engineering estimates, and to some extent, by lack o f availability o f data and information during their preparation. I t should be noted that current cost estimates are far more robust than when the projects were designed, as engineering designs have now been completed, and as a result, costs are more likely to be under control.

17. Through the IDA projects, the government i s now gradually building up i ts capacity to manage the infrastructure sectors, particularly transport. National Transport Policy and Strategies with Investment Framework have been developed and are expected to be endorsed by Cabinet around mid-2009. The government has taken some courageous actions, including rapidly pursuing comprehensive port sector reform, including a public private partnership (PPP) transaction that i s well advanced and i s expected to result in container terminal concession in the Port o f Monrovia by early 2010. A road sector reform i s also being pursued, where an imminent change in implementation arrangements i s being formulated in such a way that these can, within a handful o f years, be converted into a Road Authority.

18. Donor collaboration in Liberia i s very good and activities in the transport sector are closely coordinated. In addition to the Liberia Reconstruction Trust Fund (LRTF), to which the World Bank’s Low Income Countries under Stress (LICUS) Trust Fund, Germany, Sweden, and Ireland have already contributed and to which the EC and the Department for International Development (DfI D) are preparing contributions. Other donors, including the AfDB and the United States Agency for International Development (USAID), are engaged in infrastructure on a bilateral basis. As the government plans to finance major Output and Performance-based Road Contracts (OPRC) in the near future with financing from LRTF or bilateral donors otherwise involved in the sector, significant demand i s on donor resources

3

and seeking co-financing to cover the costs o f the proposed additional financing from them is not feasible at this time.

19. Implementation i s currently by two entities: (i) the Special Implementation Unit (SIU) in the Ministry o f Public Works (MPW), which i s responsible for technical matters and procurement, and (ii) the Project Financial Management Unit (PFMU) in the Ministry o f Finance (MOF), which, as the name implies, i s responsible for financial management o f the projects. The split implementation responsibilities were specifically designed to provide checks and balances in a weak governance environment and this arrangement has functioned wel l to date.

20. The constitution o f the S IU was on the basis o f the available technical capacities in the M P W in 2006, when the f i rs t IDA financed infrastructure project came about. Since then, it has been augmented with additional local staff and technical assistance. During i t s tenure o f less than three years, the portfolio has grown from US$30 mi l l ion to about US$lSO mil l ion. While the SIU, considering the overall weak capacities in Liberia, has performed reasonably in moving procurement and activity implementation forward, it has done so only with very intense and direct support o f IDA. There is, therefore, a need to catapult implementation performance, particularly as the volume o f donor funding i s l ikely to increase significantly.

21. Currently, the SIU i s in the process o f transitioning to a new Infrastructure Implementation Unit (IIU). A Framework Paper for the IIU, which has been discussed at a l l levels o f the executive branch, envisions a largely autonomous implementation unit which will have far more independence in day-to-day implementation o f the projects and with clear reporting and liaison arrangements with the management o f the Ministry than i s the case with SIU. Oversight o f IIU performance will be through a Management Committee chaired by the MPW, and supported by i t s own Secretariat.

22. There are three main reasons why it i s expected that IIU will significantly enhance implementation performance over that o f SIU. The level o f autonomy and sector responsibility to be provided, as per the Framework, will delegate day-to-day responsibility for implementation o f donor projects to the IIU, as opposed to the SIU where even many o f the smaller decisions were dependant o n Ministerial approval. This delegation o f implementation mechanisms will al low for quicker - and more professional - responses by the government. Second, terms and benefits o f staff o f IIU will be competitive with the Monrovia private sector (in the case o f national staff) and regionally in the case o f international staff, thus l ikely to attract more seasoned professionals than is the case under SIU. Third, the IIU will be staffed with al l requisite specialists, national as wel l as international, needed for a large infrastructure program; including specialized engineers, social and environmental specialists, administrators, economists and legal counsel. The IIU will be organized with the characteristics o f a road authority with the intention that in time it would be converted to one. An international competition has been undertaken for the management o f the IIU and new management team is expected to be in place in September, 2009. As a result, speed and quality o f implementation is expected to improve dramatically.

4

23. The role o f PFMU wi l l not change as a result o f the IIU. However, while PFMU has by and large performed satisfactorily, i t s ability to monitor expenditure commitments against approved allocations o f individual categories and exercise reasonable budgetary controls has been weak. Also, long delays have been registered in reporting on designated account activities. This area o f fiduciary weaknesses and risk i s being addressed by the Bank.

111. Proposed Changes

24. For specific discussion on EIP, please refer to Annex l-B.

25. For specific discussion on AIDP, please refer to Annex 2-B.

IV. Consistency with CAS

26. The proposed additional financing to EIP and AIDP speaks to the core o f the joint Country Assistance Strategy (CAS) prepared in conjunction with IDA, International Finance Corporation (IFC), and AfDB. The CAS builds on four overarching principles: (i) aligning with the government’s Poverty Reduction Strategy (PRS), developed in 2008; (ii) focusing on selectivity and achieving results, (iii) mainstreaming good governance at the country program and operational level; and; (iii) making choices that are consistent with regional integration perspectives.

27. Specifically, the CAS pursues three strategic themes to address some key constraints on growth, as well as enhance the policy and institutional framework to ensure that growth i s increasingly pro-poor to: (i) rebuild core state functions and institutions; (ii) rehabilitate infrastructure to jump-start economic growth; and (iii) facilitate pro-poor growth. The CAS strategy also pursues the cross-cutting objective o f capacity development, while gender, and the environment are elements that are mainstreamed into the Bank’s programs.

28. The EIP and AIDP, with their focus on rehabilitating roads and bridges, address the overwhelming demand o f the consultative PRS. As far as selectivity i s concerned, during the CAS period o f FY09-FY 1 1 , the US$13 8 mill ion IDA envelope3 will provide US$96 million funding to the transport sector; the proposed additional financing i s a second installment on that commitment4.

29. The proposed additional financing for EIP and AIDP address directly the first two strategic themes, while re-establishment o f basic infrastructure i s the sine qua non without which pro-poor growth would be constrained.

The three year IDA allocation i s about SDR $85.8 million, with an average annual allocation o f SDR $28.6 million during each of the years with actual allocation in the outer years depending on a variety o f factors. See Liberia Country Assistance Strategy (47928-LR), April 21,2009, Footnote 2.

project for Liberia approved under the IDA 15 envelope. The US$44 million Urban and Rural Infrastructure Rehabilitation Project (URIRP) was the f i rs t transport

V.

30.

31.

VI.

32.

33.

VII.

34.

Economic Analysis of Cost Over-run o r Financing Gap - and Appraisal o f Restructured or Scaled-up Project Activities

For specific discussion on EIP, please refer to Annex 1 -C.

For specific discussion o n AIDP, please refer to Annex 2-C.

Expected Outcomes

For specific discussion o n EIP, please refer to Annex 1 -D.

For specific discussion on AIDP, please refer to Annex 2-D.

Benefits and R i s k s

The EIP and AIDP modified and scaled up project activities under the proposed ~~.

additional financing are aimed to further solidify benefits o f the original projects.-There i s l imited ability to address or mitigate the larger country specific risks in this operation. However, the delivery o f project activities will provide tangible benefit to large part o f the population, thus evidencing the benefit o f maintaining peace. The undertaking o f project activities will provide direct economic benefit to those engaged in the re-establishment o f basic infrastructure which is a pre-condition for revitalizing economic activities.

35. Although Liberia has started o n a path o f transition from an emergency situation, the political, social, and security situation is st i l l fragile. Governance and corruption continues to be a substantial risk and implementation capacity, albeit growing, i s weak.

36. However, as significant advancement towards the objectives has already been achieved and as the remaining activities are wel l advanced in procurement, the risk o f not achieving the core project development objectives i s viewed as moderate.

37. Financial management and procurement, which were recently evaluated specifically at appraisal o f the URIRP in April 2009, continue to be rated as substantial risk. The mitigation o f these risks were addressed in the URIRP Emergency Project Paper. Agreed implementation arrangements Le., the formulation o f the IIU and continuance o f PFMU in two separate ministries with clear delineation o f responsibilities, addresses these r isk to some degree. Additionally, this risk i s further mitigated by continued capacity-building support for these units, complemented by external technical assistance and continued intense Bank supervision.

38. , Because o f the weak local contracting and consulting environment, international interest may be required for successful achievement o f some o f the smaller works. As there are now two large international road contractors in Liberia, due to IDA’S efforts, the risk o f non-achievement o f the smaller works is viewed as limited.

6

39. This, as wel l as other IDA investment operations in Liberia, will be subjected to intense implementation support. As the need arises, the project team will address specific additional risks as they emerge. The projects will be carried out in accordance with the provisions o f the Bank’s 2006 Anti-Corruption Guidelines.

VIII. Financial Terms and Conditions for the Additional Financing

40. The proposed additional financing for EIP and AIDP projects i s under IDA grant terms and will finance 100 percent o f project activities as allowed under Liberia’s current Country Financing Parameters. There are no proj ect-specific conditions o f effectiveness.

4 1. Although financing o f taxes and duties is permitted under the financial parameters for Liberia, it i s expected that the MOF will give exemption for these, as has been done for the current IDA infrastructure projects.

7

Annex 1 - Emergency Infrastructure Project (EIP)

A. Background and Rationale for Additional Financing in the amount of US$8.2 million

1. The original grant amount approved under the Emergency Infrastructure Project (EIP) was US$30.0 million. The project was approved by the Board o f Executive Directors on June 22, 2006’. The financing agreement was signed on August 8, 2006 and the project became effective on October 30, 2006. A Supplemental Component was added to the EIP -- the Emergency Infrastructure Project Supplemental Component (EIP-SC) -- in the amount o f US$16.5 mill ion and approved by the Board o f Executive Directors on October 26, 2006. The financing agreement was signed on October 26, 2006 and became effective January 19, 2007.

2. In consultation with the Government o f Liberia (GOL), it has been identified that additional grant financing i s required for the EIP in the amount o f US$8.2 million. The additional financing i s necessary due to: (i) unforeseen cost over-runs, and (ii) modification o f project activities, where (a) scope o f one activity has changed, (b) some activities are dropped, and (c) a new activity i s introduced.

3.

4. works

The development objective o f the Project, which remains the same, is :

The objective of the Project is to provide the Recipient with emergency support to restore priority inpastructure through: (a) rehabilitation, repair and reconstruction of critical inpastructure; and (3) strengthening the capacity of the Recipients Ministry of Public Works, the Liberia Water and Sewer Corporation, and the Monrovia City Corporation.

The EIP-SC consists o f two components: (i) Road Rehabilitation, and (ii) Urban rehabilitation. Part o f the EIP-SC was implemented through United Nations

Development Program (UNDP). The EIP-SC, however, i s fully disbursed and the proposed additional financing i s to the EIP parent project.

5. The EIP project components are: (i) emergency rehabilitation and repair o f critical infrastructure; and (ii) strengthening institutional capacity. The activities under component 1 included: (a) repairs o f the Monrovia-Buchanan and Monrovia-Ganta-Guineahorder roads, (b) reconstruction o f major bridges including six bridges on Monrovia-White Plains- Careysburg road and on Gbanga-Ganta road; (c) emergency support to rehabilitate White Plains treatment plant; (d) development o f groundwater resources at Paynseville; (e) improvement o f existing and supplementary distribution network in order to increase distribution o f piped potable water; (0 support for the emergency power program.

6. Following discussions with the government, and following review o f the performance o f the projects it i s the team’s assessment that the additional financing and restructuring o f

5 IDNR2006-0 1002: Pre-Arrears Clearance Grant to Liberia - Emergency Infrastructure Project

8

EIP meets the Bank’s threshold criteria. The impacts o f the projects are in l ine with the expectations o f the EIP Memorandum o f the President (MOP). The Implementation Status Report (ISR) ratings for Implementation Progress (IP) and Development Objectives (DO) have consistently been satisfactory, except in the last ISR where the IP has now been rated as moderately satisfactory. However, the government i s undertaking concrete steps in improving implementation, including creation o f new implementation entity and undertaking international recruitment o f i t s management6. Once completed, the IP rating i s expected to be satisfactory. The safeguards preparation commitments were undertaken in accordance with OP 8.00, and there are no unresolved fiduciary, environmental, social or safeguard problems o f consequence.

7. The government i s committed to the projects and their successful implementation and realizes that additional financing, if provided, would be from the current IDA envelope allocation.

B. Proposed Changes

8. There are no changes proposed to the project’s development objectives.

Cost Over-runs

9. Supervision o f road repairs on primary roads (US$0.20 million). The original cost estimate was made on the basis o f the original volume o f road work envisioned under EIP. Eventually, the road interventions were intensified and further funding brought through the AIDP, thus requiring more supervision inputs from what was originally envisaged.

10. Detailed design and supervision o f Urban Works (US$0.60 million). The urban works needed more intensive supervision than originally intended. Particularly, as oversight o f various small labor based work requires far more intense intervention by the consultants than what was expected. This activity was identified in the EIP-SC and the original contract paid from EIP-SC; however, because o f additional needed inputs following depletion o f EIP-SC funds, this additional cost will be borne by EIP.

11. Rehabilitation o f White Plains and main pipe (US$0.60 million). As detailed design and engineer’s cost estimates were being developed for rehabilitation o f the White Plains Treatment Plant, it was found that EIP was severely under-budgeted to support the sector. Discussions with the African Development Bank (AfDB) resulted in an agreement that AfDB would take the financial lead in the sector while IDA would focus mainly on transport and urban activities. Currently, there i s a transition phase during which IDA focuses on short term interventions for stabilizing potable water production and distribution while AfDB finances the majority o f the rehabilitation. Current and proposed additional financing for this activity in the water sector will be used to allow the project to complete existing activities and commitments. The water sector activities under IDA funding, and rehabilitation o f the laboratory, are about to be contracted as are equipment and materials.

See Section 11, Background and Rationale for Additional Financing

9

12. Supplemental Component (EIP-SC):

The following activities subject to cost over-runs under EIP, originated in the

a. Labor intensive works - graveyard wall (US$0.25 million). In the early months o f EIP and prior to effectiveness o f the EIP-SC, there were as there s t i l l are, high expectations for IDA involvement in Liberia. The labor intensive works were identified in the EIP-SC, but cost o f this particular activity was to be borne by EIP as EIP-SC at the time was not yet effective.

b. Regular Solid Waste Collection (US$0.95 million). Under EIP-SC a one-time clean-up o f Monrovia was undertaken and a rudimentary collection put in place covering about 25-30 percent o f the needs. This cost over-run reflects ensuring continued rudimentary collections until a solid waste project, now under preparation, i s effective. This solid waste collection activity was identified in the EIP-SC, but the additional costs are to be borne by EIP.

c. Whein landfill site preparation (US$l.70 million). Originally, the waste collection used Fiamah landfill in Monrovia. That landfill was quickly filled to capacity, thus necessitating a new temporary site being developed. Environmental and social screening has taken place and mitigating plans approved.

Modij?ed Activities

13. Port Investments (new activity - US$5.00 million). This new activity for improvements in the port o f Monrovia was identified in a memorandum signed by the Bank in December 2007, which i s the basis for a more intensive reform process than originally envisioned. These funds are intended to facilitate the reform o f the port sector and, in particular, make improvements aimed at productivity gains. Viewed in the context o f significantly enhancing government commitment to the port sector reform, this activity will further anchor badly needed institutional development.

14. The specific works involved are: rehabilitation and paving o f container stacking area; the passage between the sheds at the southern end o f the Marginal Wharf; the passage connecting the main cargo corridor from the Marginal Wharf; and the road from the Customs House to the National Ports Authority (NPA) office blocks.

15. The potential environmental impacts o f the improvements to the container area at the port were already considered in the Preliminary Environmental Impact Assessment (PEIA) that i s a part o f the Technical Assessments Report prepared under the Liberia Infrastructure Rehabilitation Project (LIRP) in 2006. The Environmental Management Plan (EMP) contained in the PEIA includes recommended mitigation and monitoring measures. As i s the case for all the elements o f infrastructure rehabilitation at the Port, the contractor will have the obligation to prepare a detailed health, safety, environmental and social management plan

10

(HSES Plan) based on the EMP, for review and approval by the NPA prior to commencement o f work.

16. Road Repairs on primary roads (US$O.OO). Road repairs o f the two main corridors o f Monrovia-Ganta and Monrovia-Buchanan (a total o f 400 km) were to be done by patching and for that purpose US$14.50 mill ion was provided under EIP. However, following a heavy rainy season the condition o f the roads had deteriorated seriously and patching with the aim o f preserving these road assets was not technically realistic. A much more intense intervention was needed to preserve core assets and this required reduction in the number o f kilometers subjected to works. After consultations, the government requested that the funds allocated for both corridors be used to rehabilitate Monrovia-Buchanan road. A contractor, was selected to repair the whole road. After surveying the roads, the cost o f rehabilitating the whole road was determined to be US$48.58 million, far exceeding available funds. Therefore, the road was split into three sections. Section A, Freeport to Elwa junction through the circular Somalia Drive - Elwa and Tubman Avenue - Elwa would be financed under the EIP project; Section B - Elwa Junction to Cotton Tree would be financed under AIDP (additional financing i s sought for this activity - see Annex 2). The funding for Section Cy Cotton-Tree to Buchanan, would be deferred until further funds can be identified. Subsequently, works on the road corridor o f Monrovia Freeport-Cotton Tree (83 km part o f the Monrovia-Buchanan corridor) commenced and are well advanced. Therefore, with the more permanent intervention under the ori inally allocated amount, there i s a reduction o f kilometers affected from 400 km to 83 km. B Dropped Activities

17. incorporated into future and more comprehensive institutional support to the road sector.

Road classification and inventory study (-US$0.50 million). This activity w i l l be

18. Drilling; and testing o f two pilot boreholes and piezometers and associated supervision (-US$0.25 mill ion and -US$0.35 million). During early part o f the implementation o f EIP, the Liberia Water and Sewage Corporation (LWSC) decided to concentrate on building water treatment capacity and enhancing i ts distribution system rather than pursuing neighborhood specific solutions to provision o f potable water. Technically, this i s agreeable to the Bank. The funds for this specific activity are therefore dropped and equivalent amount added to contribute to rehabilitation o f White Plains and main pipe as explained above in paragraph 12.

’ Please also see paragraph 12 in Annex 2

11

Table 1: Project Costs'

SupeMsion of r o d repairs on primary roads Detailed Design 8 supetwsion of Urban Works Rehabilitation of White Plains and main pipe k b o r intensive works - graveyard wall Regular Solid Waste Collection Wenn site preparation Port Investments Road Repairs on primary roads Road classtication and inventory study Dnlling and testing of 2 pilot boreholes and piezometers Supetwsion of drilling and testinq of 2 pilot

1 0 0 1 .oo 0.90 0 OD 0 OD 0 OD 0.00 0 OD 0.50

0.20 0.60 0.60 0.25 0.95 1.70 5.00 0.00

-0 50

1 20 (a) cost overrun 1 60 (a) cost overrun 1 50 (a) cost overrun 0.26 (a) cost overrun 0.95 (a) cost overrun 1 70 (a) cost m m n 5.00 (c) modified project actiwtyinew

0 35 -0 35 0.00 (c) modified project actwityldropped - .

boreholes and pezoketers 0.25 -0.25 0 00 (c) d f i e d project actwityldropped WOO $8.20 $12.21

19. Complementary changes to the additional financing and restructuring affect only the closing date, where an extension for one year, from June 30, 2010 to June 30, 201 1 i s proposed.

20. Procurement activities under the additional financing will, as has been the case for the parent project, be carried out by the Special Implementation Unit (SIU) o f the Ministry o f Public Works till this unit transitions into the incoming Infrastructure Implementation Unit (IIU), which will be responsible for all currently active infrastructure projects, including the Urban and Rural Infrastructure Rehabilitation Project (URIRP), which has achieved effectiveness. Capacity assessment o f S I U showed that they have handled Bank funded projects since the year 2006 and have gained significant experience to handle procurement. In general, the capacity o f S I U in managing the procurement o f the portfolio o f infrastructure projects, using the Bank's Guidelines, procedures and processes i s found to be adequate. The current staff o f the S I U has been complemented with a Procurement Specialist recruited under Technical Assistance and this i s expected to bring additional capacities to SIU procurement implementations.

21. For contracts included in the original project's Bank approved procurement plans, for which invitations to bid were issued under the old procurement rules prior to approval o f the additional financing, procurement arrangements and conditions o f the original guidelines will continue to apply. However, in line with Bank policy, all new procurement activities, following effectiveness o f the additional financing, will be governed by the Bank's May 2004 Procurement and Consultant Guidelines as revised in October 2006. To the extent that the new procurement plan shows that all the new port contracts are to be procured under NCB, it shall be ensured that the following provisions would apply: (a) foreign bidders shall be allowed to participate in National Competitive Bidding procedures; (b) bidders shall be given at least one month to submit bids from the date o f the invitation to bid or the date o f

* The items (i) Labor intensive works - graveyard wall, (ii) Regular solid waste collection, and (iii) Whein site preparation, are activities identified in EIP-SC and therefore identified original amount under EIP (parent project) i s $0.

12

availability o f bidding documents, whichever i s later; (c) no domestic preference shall be given for domestic bidders and for domestically manufactured goods; and (d) in accordance with paragraph 1.14 (e) o f the Procurement Guidelines, each bidding document and contract financed out o f the proceeds o f the Financing shall provide that: (i) the bidders, suppliers, contractors and subcontractors shall permit the World Bank, at i t s request, to inspect their accounts and records relating to the bid submission and performance o f the contract, and to have said accounts and records audited by auditors appointed by the World Bank; and (ii) the deliberate and material violation by the bidder, supplier, contractor or subcontractor o f such provision may amount to an obstructive practice as defined in paragraph 1.14(a)(v) o f the Procurement Guidelines.

22. Financial and disbursement remain unchanged, as do implementation arrangements. Legal convents for EIP have been adhered to, with the exceptions that interim unaudited reports have been presented several days late.

Table 2: Disbursement Status in SDRs (as of June 11,2009)

Category Amount D i s b u r S e d Undisbursed WORKS 13,600@0 12?034,787 1,565213 GOODS r,sso,000 1263 282 536,718 CONS SERVICES 3,100,000 &422,024 67 7,976 TlLAmING 20,000 54,404 145,5% OPERATING COSTS 70,000 11 8,564 48,564 REFUNL) PPF ADVANCE 425120,000 36,414 353,586 tTpaALLOCATED 1,4 10,m 0 1,410,000 DESK CEILING ACCOUN 0 655929 4565,929

81%

C. Economic Analysis o f Cost Over-run o r Financing Gap - and Appraisal o f Restructured or Scaled-up Project Activities

Cost Over-runs

23. The premises for the economic analysis o f the EIP were largely based on rough orders o f magnitude and were made at a time when limited data and information were available in Liberia. Bank management at the time made a strategic decision to pursue early and quick engagement on the ground, as to be able to contribute not only to infrastructure rehabilitation o f Liberia, but also to start contributing to the anchoring o f peace in the country. That approach, however, has led to a need to adapt the projects, as better information i s gained, as i s often the case in emergency situations.

24. In the case o f the road corridors, where pot-hole fill ing was planned, technical inspection following the first rainy season, after the preparation o f the project, revealed exponential damage to the targeted roads. If pot-hole fill ing would have been pursued, it

13

would possibly have prolonged the pavement l i fe by only one to two years. Following discussion with government, it was decided to target available funds to preservation o f the economically and commercially most important road corridor, which also affected the largest share o f the original targeted population. Except for about 2 km, the eventual intervention involved resurfacing o f 83 km o f the original corridor (inclusive o f co-financing from AIDP). These assets have been saved and now have a likely lifespan o f additional 10 years. Meanwhile, following one more rainy season, it i s evident that the remainder o f the originally targeted corridors are collapsing and need full rehabilitation.

25. The additional financing i s deemed economically and socio-economically justified as it (depending on the activities), aims at preservation o f infrastructure assets at risk o f collapse, improves reliability o f otherwise fragile provision o f potable water and provides labor creation in post-conflict situation, including both men and women.

Restructured Activity

26. The port investment, valued at US$5 million, will finance landside improvements in the container terminal at the Monrovia Freeport. The container stacking area, which currently i s a laterite base causing significant difficulties in operation during the rainy season, will be paved with 20 cm thick interlocking concrete blocks on 20 cm crushed stone base. The size o f the container stacking area i s approximate 22,000 square meters.

27. Also, the passage between sheds at the southern end o f the Marginal Wharf, the passage connecting the main cargo corridor from the Marginal Wharf and the road from the Customs House to the NPA office blocks will be rehabilitated and paved.

28. The works wi l l significantly improve the operation at the port and by extension i ts productivity. Moreover, the works aim at making a concession o f the container more attractive to the private sector, particularly as the investment requirement on the private sector will be significant in the public private partnership (PPP) transaction now under preparation, as the concessionaire will be required to fund reconstruction o f a 600 meter span o f partially-collapsed marginal wharf.

29. These works have been appraised and found to be technically and economically sound and offer a least-cost solution to a serious operational impediment. Bid documents are close to completion.

30. Appraisal o f economical viability o f the investment focused on the counterfactual situation that, if the investment were not made, shipping might slow down to economically damaging levels. For the past two years or so, there has been the increasing risk o f shipping companies ceasing calls in Monrovia because o f the slow productivity, which has on numerous occasions required vessels to abort unloading or loading as the vessels had to hold to a tight schedule for calls in other ports in the region. On the landside, unavailability o f the laterite stacking area because o f flooding has put space pressure on the remainder o f the terminal, thereby further exacerbating productivity problems.

14

31. Further, these proposed works have been partly intended as an inducement to government to pursue a much-needed port sector reform. The sector has for many years been dysfunctional and mismanaged, and corruption has been rife. The reform being pursued, where the preparatory stage has been concluded, and the reform and concession transaction is now being pursued, now has al l o f the elements o f success.

32. The works are on an existing operational space and social and environmental effects are negligible and can be addressed with already formulated mitigations. The environmental category o f the project i s therefore not affected.

Average reduction in travel time on Monrovia- Buchanan corridor. Increase in annual RevenueofLWSC

Number o f skilled and unskilled labour employed (thousands man- months o f employment) Number of on-site sanitation facilities rehabilitated

(US$ * 1000)

D. Expected Outcomes

0 0 5 15

350 420 530 600

0 3 4 7

0 5 10 10

Table 3: Key Performance Indicators

20

650

Km roads of repaired primary I O ) 1 0 1 2 5 / 5 5

Month 1 y

MPW

LWSC

reports

Annual reports o f MPW

Annual Annual LWSC

constructed Daily production o f potable water at White Plains in

I I I

dicators I I I

15

Table 4: Financing Categories

Categow

(1) Works, Goods, Consultant Services, Training and Operating Costs for Parts A, By C.l, C.3 and E*

(2) Works, Goods, Consultant Services, Training and Operating Costs for Parts C.2 and D

(3) Refund o f Project Preparation Advance

(4) UNDP Management Fees

(5) Unallocated

TOTAL AMOUNT

Amount of the Initial

Financing Allocated

(expressed in SDR)

18,770,000

420,000

1,410,000

20,600,000

Works, Goods, Consultant Services, Trair

Amount of the First

Additional Financing

Allocated (expressed in

SDR)

(EIP-SC)

200,000

9,749,000

772,000

479,000

1 1,200,000

Amount of the Second Additional Financing Allocated (expressed in SDR)

5,300,000

Percentage of Expenditures to

be Financed (inclusive of

taxes)

100%

100%

1 ~~

Amount payable pursuant to

Section 2.07 o f the General Conditions

I 5.300.000 I

respect to the Second Additional Financing.

16

Annex 2 - Agriculture and Infrastructure Development Project (AIDP)

A. Background and Rationale for Additional Financing in the amount of UW16.0 million

1. The original grant amount approved under the Agriculture and Infrastructure Development Project (AIDP) was US$37.0 mill ion (plus co-financing by the European Commission (EC) o f Euro 10 million). The project was approved by the Board o f Executive Directors on July 31, 2007. The financing agreement was signed on August 21, 2007 and the project became effective on September 1 1,2007.

2. In consultation with the Government o f Liberia (GOL), it has been identified that additional grant financing i s required for the AIDP in the amount o f US$16.0 million. The causes for the need for additional financing are (i) unforeseen cost over-runs, (ii) scale-up o f one project activity, and (iii) modification o f project activities with three activities dropped.

3. The development objective o f the project is:

The objective of the project is to support the Recipient’s efforts to: (a) rehabilitate its basic infiastructure; and (6) revive its agriculture activities.

4. There are three components to the project. Component A for policy reform and institutional support, including financing for comprehensive reform o f the port sector, technical assistance to various entities o f the government responsible for transport and infrastructure as well as for policy reforms, legal and regulatory framework and capacity building. Component B funds design, rehabilitation and supervision activities of infrastructure assets, bridges on principal road corridors and on smaller river crossings nationwide, as well as secondary and tertiary feeder roads; contribution to the rehabilitation o f the water treatment plant for Monrovia, as well as activities in agriculture. Component C funds project management and capacity building.

5. The AIDP initially registered slow disbursement, but has now achieved 47 percent and i s set to improve in the coming year. There were three primary reasons for this: (i) Part B o f a contract procured under the Emergency Infrastructure Project (EIP) - Monrovia-Cotton Tree was to be funded under AIDP, but, due to a mistake, all certificates for this part were charged to EIP - this mistake has now been addressed and has resulted in a US$7.8 mill ion dollar disbursement in May 2009; (ii) the Vai Town bridge works took longer than expected to procure, but these works are now in the final stages o f mobilization and disbursement on this contract wi l l increase rapidly, and: (iii) the procurement process for the o i l jetty rehabilitation component failed several times. Notwithstanding the slow start o f activities, the pace o f implementation i s increasing. I t i s expected that the project, including the proposed additional financing, will close on time and fully disbursed.

6. Following project commencement and intense dialogue with the government, the planned strengthening o f port sector management was abandoned in favor o f a significantly deepened and full scale institutional and legal reform o f the port, including undertaking a

17

public private partnership (PPP) transaction. Progress on this component has been very satisfactory. The project includes a component complementing the road works on the EIP- funded Monrovia Freeport-Cotton Tree road and part o f the additional financing allows additional interventions to be carried out. Demolition o f the collapsed Vai Town Bridge and construction o f a new one has been awarded and the contractor i s in the final stages o f mobilization; however, the cost o f the works far exceeded the allocated amount under AIDP. Finally, while disbursement on agriculture activities i s a concern, selection o f the implementing contractor for the value-chains component i s imminent, i.e. sole-sourcing o f International Institute for Tropical Agriculture (IITA), and will result in the release o f a significant portion o f funds under this component.

7. After discussions with the government, and following review o f the performance o f the projects, i t i s the team's assessment that the additional financing and restructuring o f AIDP meets the Bank's threshold criteria. The impacts o f the projects are in line with the expectations o f the AIDP Emergency Project Paper. The Implementation Status Report (ISR) ratings for Implementation Progress (IP) and Development Objectives (DO) have consistently been satisfactory, except in the last ISR where the IP i s rated as moderately satisfactory. However, the government i s undertaking concrete steps in improving implementation, including creation o f new implementation entity and undertaking international recruitment o f i t s managementg. Once completed, IP rating i s expected to be raised. The safeguards preparation commitments were undertaken in accordance with OP 8.00, and there are no unresolved fiduciary, environmental, social or safeguard problem o f consequence.

8. The government i s committed to the project and i t s successful implementation and realizes that additional financing, if provided, would be from the current IDA envelope allocation.

B. Proposed Changes

9. There are no changes proposed to the project's development objectives.

Cost Over-runs

10. OPRC design o f road corridors (US$0.25 million). During implementation it was decided to increase the road length to be included in the assignment. The cost over-run i s proportional to this change.

11. Vai Town Bridge Emergency Construction (US$10.80 million). In late 2006, an important bridge in Monrovia, linking the city center to Bushrod Island, collapsed. This i s a major bridge requiring complicated construction. During preparation o f AIDP and while a consultant was being selected for design o f the works, a rough order estimate was derived, from then available data and information, f iom Ministry o f Public Works. For this purpose, an allocation o f US$6.00 million was made under AIDP. Some o f the information proved to

See Section 11, Background and Rationale for Additional Financing 9

18

be incorrect, mainly regarding the length o f the bridge. The costed engineer's estimate turned out to be US$14.00 mill ion and eventual lowest evaluated bid was US$16.0 million."

Scale up

12. Monrovia-Cotton Tree Road Works (US$ll.20 million). The road (Monrovia- Buchanan) was split into three sections. Section A i s financed under EIP, Section B (Elwa Junction to Cotton Tree) was to be financed under AIDP. Initial and relatively modest amount was allocated for AIDP for this activity prior to conclusion o f full survey. The funding for Section C - Cotton-Tree to Buchanan, would be deferred. Subsequently, works on the road corridor o f Monrovia Freeport-Cotton Tree (83 km part o f the Monrovia- Buchanan corridor) commenced and are well advanced. '' Dropped Activities

13. It i s proposed that the following activities be dropped, partly to lessen the additional financing requirement as well as to rationalize project activities and reflect moving priorities o f government.

14. Maintenance o f rehabilitated roads (-US$0.75 million). The recently approved Urban and Rural Infrastructure Rehabilitation Project (URIRP) provides funding for road maintenance on roads where IDA funded interventions has taken place. Also, planned future interventions on major corridors involve contractual arrangements that include maintenance following the rehabilitation.

15. Rehabilitation o f O i l Jetty (-US$2.50 million). Repeated procurement attempts for rehabilitation o f the o i l jet ty have been unsuccessful and a decision was made to cease further attempts and drop the activity; rather, URIRP will be financing a new fue l unloading structure in the port o f Monrovia.

16. Rehabilitation o f bridges on Monrovia-Ganta and Monrovia Buchanan roads (- US$3.00 million). Originally, six bridges were subject to repairs and rehabilitation. As the government has decided to pursue output and performance based (OPRC) type o f contracts on the Monrovia - Ganta and Cotton Tree-Buchanan road corridors, four o f the bridges wi l l be included in those contracts. O f the remaining two, Jamaica Bridge at Stockton Creek requires only minor repairs that will be executed by Government and the other, it has been found, needs to be replaced as it i s near collapse. Replacement o f that bridge i s now to be funded from the URIRP. Therefore, all six bridges are to be dropped from AIDP activities.

lo Difference in AIDP allocation and proposed additional financing due to possible variation orders during construction l1 Please also see paragraph 14 in Annex 2

19

AIDP

Contract Value Threshold**

C>=3,000,000

100,000<C<3,000,000

Table 1: Project Costs

Originai Proposed In US$ m i h n

Amount Change amounf OP13.2pam f

Procurement Contracts Subject to Method Prior Review /(US%)

ICB All contracts

Specified contracts as would be NCB identified in the Procurement

Plans

OPRC design of road corndors (Cotton-Tree- Buchanan and Monrwa-Ganta) 0.70 0.25 0 95 (a) cost overrun

5 15 10.80 15.95 (ajcost overrun 14.70 (b) scale up

Maintenance of rehabilitated roads 0 75 -0.75 0.00 (c) modified project actiwtyldropped Rehabilitation of Oil Jetty 2 50 -2.50 0.00 (c) modified project actmty/dropped Rehab of bndaes on Monrovia-Ganta/Monrowa-

c<100,000

All Values

Buchanan Roads 3 00 -3 00 0.00 (c) modified project actiwtyldropped 60 $16.00 $31.60

Shopping None

Direct Contracting All Contracts

17. to apply to AIDP. These are as per following table:

Recently introduced Africa region-wide revised procurement thresholds are proposed

50,000<C<500,000

Ta Expenditure

Category

Works

Specified contracts as would be identified in the Procurement Plans

NCB Agencies

Goods and services other than Consulting Services C<50,000

A l l Values

Consulting Services

Shopping None

Direct Contracting A l l Contracts

c>=200,000 ( f m s ) QCBS/LCS/FBS A l l contracts

C>=500,000

100,000=<c<200,000 ( f m s )

c<100,000 ( f m s )

C>50,000 (individuals)

ICB / LIB

QcBs/Lcs/ FBS A l l contracts

Qualifications o f short listed consultants + TORS.. If pool o f experts’ method i s chosen, then only TORS Qualifications o f short listed consultants + TORs. If pool o f experts’ method i s chosen, then

CQS

IC

All contracts

20

4

18. Procurement activities under the additional financing for AIDP will, as has been the case for the parent project, be carried out by the Special Implementation Unit (SIU) o f the Ministry o f Public Works till this unit transitions into the incoming Infrastructure Implementation Unit (IIU), which will be responsible for all the active infrastructure projects, including the recent Urban and Rural Infrastructure Rehabilitation Project (URIRP), which has achieved effectiveness. Capacity assessment o f S I U showed that they have handled Bank funded projects since the latter part o f 2006 and have gained significant experience to handle procurement. In general, the capacity o f SIU in managing the procurement o f the on-going infrastructure projects, using the Bank’s Guidelines, procedures and processes i s found to be adequate. The current staff o f the S I U has been complemented with a Procurement Specialist recruited under Technical Assistance, and this i s expected to bring additional capacities to SIU procurement implementation.

only TORS.

IC Only TOR

SSS for hiring fm C<50,000 (individuals)

All values or individual All contracts

Training, To be based on Workshops, All Values Annual Work Plan Study Tours and Budgets

19. Procurement o f goods, works, and selection o f consultants i s being carried out in accordance with (i) the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004, revised in October 2006; (ii) “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers” dated May 2004, revised in October 2006. ; iii) Requirements o f OP 8.00 for Rapid Response to Crises and Emergencies, and (iv) the provisions stipulated in the Grant Financing Agreement. Procurement activities will continue to be managed as identified above. This i s consistent with Bank policy, that all new procurement activities, following effectiveness o f the additional financing, will be governed by the reigning Bank’s Procurement and Consultant Guidelines.

20. To the extent that the current procurement plan does not identify any new contracts, the following provisions for NCB procurement activities would continue to apply, i.e. (a) foreign bidders shall be allowed to participate in National Competitive Bidding procedures; (b) bidders shall be given at least one month to submit bids from the date o f the invitation to bid or the date o f availability o f bidding documents, whichever i s later; (c) no domestic preference shall be given for domestic bidders and for domestically manufactured goods; and (d) in accordance with paragraph 1.14 (e) o f the Procurement Guidelines, each bidding document and contract financed out o f the proceeds o f the Financing shall provide that: (i) the bidders, suppliers, contractors and sub-contractors shall permit the World Bank, at i t s request, to inspect their accounts and records relating to the bid submission and performance o f the contract, and to have said accounts and records audited by auditors appointed by the World Bank; and (ii) the deliberate and material violation by the bidder, supplier, contractor

21

or sub-contractor o f such provision may amount to an obstructive practice as defined in paragraph 1.14(a)(v) o f the Procurement Guidelines.

2 1. Financial and disbursement arrangements remain unchanged, as do implementation arrangements. First audited financial report for AIDP i s due by June 30, 2009 (the project became effective in late 2007 and it was agreed to combine audit o f the initial 3 months with the first full year o f implementation). Legal covenants have been adhered to except that there has been a few days delay in presentation o f interim unaudited financial reports.

Table 3: Disbursement Status in SDRs (as o f June 11,2009) Category Amorrnt DiSbl?XSed Undisbursed

CONS SERV INCL A W I T

OPERATIMG GUSTS SPL k/C -ECO BANK

17,5 80,OOO m 0 0 0

5,050~000 330.000 350,000

Q

8257,6% 9,3z305 413,659 5 76,34 1

1,178,528 3,871,472 2Q,822 309,178

1 79,43 3 170,567 1,284,893 - 1284,893

47%

C. Economic Analysis o f Cost Over-run or Financing Gap - and Appraisal of Restructured o r Scaled-up Project Activities

Cost Over-runs

22. The economic viability o f the Vai Town Bridge following cost over-runs remains the same. This i s as initial funding in AIDP that was on the basis o f rough order estimates based on incorrectly provided data. Design and cost estimate (prepared after preparation o f AIDP) calculated economic return o f 12 percent and eventual bids come close to the cost estimates.

Restructured Activity

23. Normally, a prioritized order o f works and actions for investments in infrastructure uses the traditional method o f economic evaluation and examination o f rate o f return or multi-criteria analysis. However, the extremely dilapidated infrastructure in Liberia necessitates a different approach to prioritization. Thus, risk o f collapse o f transport network connectivity has been the guiding principal for the selected activities.

24. Road repairs o f the two main corridors o f Monrovia-Ganta and Monrovia-Buchanan (a total o f 400 km) were to be done by patching under EIP. However, following a heavy rainy season the condition o f the roads had deteriorated seriously and patching with the aim o f preserving these road assets was not realistic. A much more intense intervention was needed to preserve core assets and this required reduction in the number o f kilometers subjected to works. After consultations with the government o f Liberia, it was decided that the funds allocated for both corridors be used to rehabilitate Monrovia-Cotton Tree road. AIDP funded portion o f that road i s Elwa Junction to Cotton Tree. These assets are being

22

saved and have now a likely lifespan o f additional 10 years. Meanwhile, following one more rainy season, it i s evident that the remainder o f the originally targeted corridors are collapsing and need full rehabilitation.

I

25. This additional financing does not affect social and environmental impacts and are thus addressed with already formulated mitigations. Environmental category o f the project i s therefore not affected.

D. Expected Outcomes

Table 4: Key Performance Indicators PDO

The objective of the project i s to support the Recipient’s efforts to: (a) rehabilitate its basic infrastructure; and (b) revive its agriculture activities.

Intermediate Results One per Component

Component A - Policy Reform and capacity building

4 management contract for the iperation o f the port o f Monrovia

Outcome Indicators I Use of Outcome Information

Increased access to water for residents o f Monrovia

Port productivity increased

Increased access to an all season road for targeted rural population

Increased number o f markets where seed rice i s available

Percentage increase in metric tons o f cocoa

Restoration o f critical infrastructure will indicate success in supporting GOL’s top priority to reinstate assets destroyed during the war, ensure continued and reliable f low o f goods to Liberia, support safety and security in the country and in reviving the agriculture economy

The development o f National Transport Policy and Strategic Paper will indicate transition from post-conflict to longer- term development-oriented environment. Assess capacity o f M P W and MOT to plan for long term transport network and transport management needs

Increased marketed seed rice and cocoa exports i s evidence that farmers are responding to new marketing opportunities

Results Indicators for Each Component

Use of Results Monitoring

External Port Management Team in place

Productivity increase i s a proxy for improved port management

23

Improved policy formulation in transport sector

Improved policy formulation in agriculture sector

Component B. Agriculture and Infrastructure Investments

Road and river crossing access significantly improved in rural and urban areas

Increased access to potable water to Monrovia residents

The value and supply chains o f rice, cocoa and palm o i l have become more efficient

Increased production and marketing o f rice seeds

Draft National Transport Policy and Strategy Paper formulated and prepared for Government’s review and endorsement June 30,2008

Two new agriculture sector policies complete with results framework submitted to Minister o f Agriculture by December 3 1 , 20 10

Monrovia-Cotton Tree corridor rehabilitated by December 3 1, 2009

New Vai Town Bridge built by December 3 1,20 10

At least 30 minor river crossings improved by June 30, 2010

Rural population within 2 km o f an al l season road increases

Refurbishment o f White Plains treatment plant in Monrovia by December 3 1 , 20 10

Increased production and sale o f rice seeds on beneficiary sites

Increased market throughput in sample o f markets in project areas by Dec. 3 1,2010

Effective policies support growth o f the sector.

Inclusion o f result framework establishes basis for policy evaluation

Good progress or otherwise may indicate Government procurement and contractual management performance that will be addressed if the need arises

Production and sale o f locally produced seed evidence o f emerging functioning seed market

Improved functioning o f market infrastructure evidence o f greater efficiency in the value/ supply chain. Expansion o f FBOs evidence o f ability o f farmers to organize to seek new knowledge and access market opportunities Data shows effective production and sale o f rice seed. Validate assumption that producers use the markets to dispose o f marketable surplus

24

m

(r (r (r

6 r 8 n e! e!

c? 8 e! R e!

2

6 n

-8 -8 5 5 ?j ?j

$ N E: I