Designing Bank Operations to Support Program-Based and Sectorwide Approaches

POLAND Road Maintenance & Rehabilitation I & II “Program-based” approach projects

Poland at a glance…  Population: 39 million inhabitants  GNP/Capita US4,570  Upper Middle Income Countries: US$5,040  Motorization rate is increasing fast:  9 million cars in 1990  14 million today  Poland compares poorly with EU neighboring countries both in terms of condition of the road network and safety  Road improvement: a CAS high priority

National road network: 18,000 km. – Maintenance backlog estimated to US$1 billion …

Brief Historical reminder… o In late 2003, Government (MoF) clearly preferred to use “Adjustment-type” rather than “Specific- Investment” lending instruments.  WHY?: Found easier, i.e., shorter preparation time and faster disbursement. o Initially the Roads III project was supposed to be a Programmatic SAL, actually the first of a series of 2-3 projects for a total Bank support of US$400 million during the next 4-5 years…  BUT finally we agreed to use an innovative “program-based” approach which allowed to preserve the above “Adjustment” benefits through a Specific Investment Loan….

Project amount: US$175 million, of which the World Bank finances 72%; WB’s support focusing on road maintenance & rehabilitation works (sub- program financed at 2/3 or 67%); WB funds were pooled with 2004 national budget for roads maintenance (see table next slide); Environmental/Social and Procurement due diligence were carried out during project preparation to assess and to approve country own procedures (in view to grant country “certification” for future projects); Environmental category: Financial Intermediary (FI). Publication of project Operational Manual chapter on environment and social was the only pre- requisite for appraisal. Main features of the RM&R project

Poland RM&R project is a new kind of “hybrid” [1][1] This amount corresponds to the national budget allocation 2004 for maintenance and reparation works for the national road network (Detailed figures in annex 5). [2][2] Corresponds to a financing ratio of 67%. [3][3] Identifiable taxes and duties are US$m0, and the total project cost, net of taxes, is US$m Therefore, the share of project cost net of taxes is 0%. This component is financed under a pooling of funds scheme All the other components are using standard WB rules The loan amount (Euro 100 million equivalent US$126 ) was requested by the borrower to match with its budget planning and to minimize the loan ’ s fees (Front-end and commitment fees) ….

Concept review meeting April 2003 (Programmatic SAL); ROS meeting Nov (PSAL was not an option anymore!) Pre-appraisal in Dec (OK with a SIL) Safeguard consultation meeting: January 12, 2004 Quality Enhancement Review meeting: January 13, nd Project decision meeting: January 26, 2004 Appraisal/negotiations: mid February 2004 Board presentation: March 30, 2004 “…congratulations to the project team!” Fast track preparation: 3 Months

Board presentation: March 30, 2004 Loan signature: April 7, 2004 Loan effectiveness: June 15, 2004 Project launching: June 15, 2004 First supervision September/October 2004 Disbursed as end of October: US$113 million About 90% of the total loan proceeds 164 contracts procured under NCB ( see following table ) For a total of US$163.6 million of which 43.8% invoiced Fast track implementation: 4.5 Months

A – GDDKiA Modernization Action Plan (MAP) [25.0%] Independent technical audit of the GDDKiA completed by December 2004 – Revised MAP under preparation: B – Road Maintenance & Rehabilitation Program [100.0%] Completed by end of October C – Road Safety Improvement Program [10%] Will continue until completion of Roads II (June 2006) D – Promotion of PPP in the road sector [5.0%] Selection of consultant under Spanish CTF on-going. Final report available by September Implementation by component (Feb. 2005) [WB disbursement %]

Our Polish client clearly likes this new form of partnership; A “repeater” US$130.5 million RM&R II project has just been negotiated for 2005 (through video conference in less than two hours); Previous projects – especially RM&R I project -- have helped for new “repeater “ project preparation; Fundamentals: Based on reciprocal trust between World Bank and “mature” client countries; Shifting from an”ex-ante” to “ex-post” control system; Report-based, faster disbursement against % of total program expenditures; Maximized use of existing administrative procedures, with a few exceptions; Not tying up huge amount of loan, but fitting Client’s fiscal year budget Conclusions 1/2

Conclusions 2/2 Main changes in the “repeater” RM&M II project: Same €100 million Specific Investment Loan for year 2005 but with: increased scope of works allowed, i.e., significant changes in the road geometry within the right of way, using national environmental/social requirements as acceptable to the World Bank; launching of procurement process before project approval; further simplification in reporting requirements, e.g., suppression of the quarterly consolidation report; Further proposal for simplification, i.e., single category of expenditure not yet approved!

The Road Maintenance & Rehabilitation I & II Projects for Poland “Program-based” Approach projects The Road Maintenance & Rehabilitation I & II Projects for Poland “Program-based” Approach projects SWAp Session in Open eXchanges February 24, 2005 SWAp Session in Open eXchanges February 24, 2005 Thank you!