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”

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. 2003 (PSAL was not an option anymore!)

• Pre-appraisal in Dec. 2003 (OK with a SIL)

• Safeguard consultation meeting: January 12, 2004

• Quality Enhancement Review meeting: January 13, 2004

• 2nd 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

Fiscal Year: 2004 Task Team Leader: Michel AudigéCountry: Poland Sector Director/ Manager: Hossein Razavi/ Motoo KonishiProject: Poland - Roads III project (P078170) Country Director: Robert W. Grawe

Steps/Actions Normal Elapsed Time Dates17. Appraisal Mission (Upgrade mission Dec. 2003) After #1218. Appraisal Aide-Memoire21. Decision Meeting package 3 weeks before #24 (translation) 01/ 18/ 04

2nd decision meeting (ROS or ROC meeting) 01/ 26/ 04Negotiations package (**) 01/ 30/ 04

22. Authorization to Negotiate (by LEGAF) before #23 01/ 30/ 0423. Notice of Invitation to Negotiate to SECGE before #24 01/ 30/ 0424. Appraisal/ Negotiations (field/ headquarters) 3-5 days duration 02/13/0425. Minutes of Negotiations Upon completion of #24 * 02/ 18/ 0426. Status of Negotiations 20 days before #33 * 02/ 24/ 04

27. Statutory Committee Report (by Lawyer)signed by RVP/ LEG 14 days before #30 * and others 5 days before #30 *

02/26/04

28. Board Package to CD or RVP 20 days before #33 * 02/26/0429. Board Documents to SECBO/ Printshop 18 days before #33 * 03/ 02/ 0430. Distribution to the Board 13 days before #33 * 03/ 09/ 0431. EM on Board Attendance and Speech, if applicable 4 days before #33 * 03/ 23/ 0432. Speech, Questions from EDs, ECA Pre-Board Meeting1 day before #33 * 03/ 27/ 0433. Board Presentation as scheduled 03/30/04

days = working days Black = Actual - Red = Planned (*) mandatory number of days Actual(**)

Processing Schedule for Poland Roads III project

Includes following drafts: (i) PAD and data Sheet; (ii) Legal Documents; (iii) Invitation to negotiate; (iv) Notice to the Board; (v) MOP; (vi) concordance table; and (vii) memo to CD

• 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

UWAGI:

zadania już wykonane na drodze

plan

ned

actu

al

plan

ned

actu

al

1 2 3 4 5 6 7 7a 8 9 10 11 12 13

GDDKiA O/ Białystok NCB Post 1/7223/Bi PLN

GDDKiA O/ Białystok NCB Post 2/7223/Bi PLN

GDDKiA O/Zielona Góra NCB Post 163/7223/Zg PLN

NCB Post 164/7223/Zg PLN

PLN US$ % PLNTotal: 621,558,991.520 163,568,155.66 43.8% 272,170,772.000

Average per contract: 3,933,917.668 1,035,241.49

5,115.899

878.127

GDDKiA O/Zielona Góra

2,633.100

4,688.90011,718.20

5,818.00

30VI

I

30VI

I

Baltom Sp z o.o. Bieniewiec ul.

Chełmońskiego 12 96-321 Żabia Wola

Strabag Sp. z o.o. ul. Brechta 7

03.-472 Warszawa

DK 32odcinki :

72+072-73+72074+125-75+50078+400-82+40083+550-83+95084+850-85+41586+000-86+33988+150-89+945

28V

15VI

I

30VI

II

"Drogi celne" 2 i 29163.

164.

2.

DK 64Wizna - Jeżewo

28+050 ÷ 32+540 36+000 ÷ 46+800

22VI

30IX

Przedsiębiorstwo Budowanictwa

Komunikacyjnego w Łomży i inni

15VI

Date of completion

Contractor,sname

Contract price w tys PLN.

1.

KonsorcjumWarsz.Przeds.Rob.

Drog.i August.Przeds.Rob.Drog.S

.A.

Proc

urem

ent m

etho

d

Post

/prio

r rev

iew

Contract No. Contract name

DK 61Netta - Augustów

251+466 ÷ 256+665

Procuring entity

ZADANIA REMONTOWE REALIZOWANE PRZEZ GDDKiA W 2004r. W RAMACH III POŻYCZKI BŚ, wg stanu na 1.10.2004r.

Con

tract

cur

renc

y

Termin przetargu - rok 2004

Item

15XI

932.000

5,183.000

15IV

Do dnia 1.10 wystawiono faktury

na kwotę

• 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 2005.

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 The Road Maintenance & Rehabilitation I & II

Projects for PolandProjects for Poland

““Program-basedProgram-based” Approach projects” Approach projects

The Road Maintenance & Rehabilitation I & II The Road Maintenance & Rehabilitation I & II

Projects for PolandProjects for Poland

““Program-basedProgram-based” Approach projects” Approach projects

SWAp Session in Open eXchangesSWAp Session in Open eXchanges February 24, 2005 February 24, 2005 SWAp Session in Open eXchangesSWAp Session in Open eXchanges February 24, 2005 February 24, 2005

Thank you!