ICRR 14161 Report Number : ICRR14161 IEG ICR Review Independent Evaluation Group 1. Project Data: Date Posted : 12/09/2013 Country : Eritrea Project ID : P034154 Appraisal Actual Project Name : Er-ports Rehab Sil US$M ): Project Costs (US$M): 57.6 57.4 (fy98) L/C Number : C3005 Loan/ US$M ): Loan /Credit (US$M): 30.3 26.9 Sector Board : Transport US$M): Cofinancing (US$M ): 21.0 28.9 Cofinanciers : Italy, European Union Board Approval Date : 11/18/1997 Closing Date : 06/30/2002 12/31/2011 Sector (s): Ports waterways and shipping (97%); Solid waste management (2%); Central government administration (1%) Theme (s): Infrastructure services for private sector development (67% - P); Pollution management and environmental health (33% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Victoria Alexeeva Kristin Hallberg Soniya Carvalho IEGPS1 2. Project Objectives and Components: a. Objectives: Original Objective: (i) address the urgent port capacity requirements of the Borrower up to the year 2005; (ii) optimize the use of existing facilities by rehabilitating and upgrading the two ports of Massawa and Assab; and (iii) increase substantially the productivity and capacity of the two ports to international standards (Development Credit Agreement). The PDOs stated in the Development Credit Agreement, Staff Appraisal Report ’s (SAR) main text, and SAR’s Annex 6 differ slightly in its formulation across the three documents . The PDOs as per Annex 6 of SAR were as follows: (i) optimize the use of existing facilities and to rehabilitate and develop the port infrastructure in Massawa port; (ii) to increase the productivity of and capacity of the two ports; and (iii) improve operating practices at the two ports regarding control of and discharge of bilge water and solid waste from ships . Revised Objective: To increase productivity and capacity of Port Massawa . b.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives /key associated outcome targets? Yes Date of Board Approval: 04/20/2000 c. Components: Original Components 1. Civil Works (original appraisal cost US$15.7 million; revised estimate US$43.04 million; actual cost US$28.0 million).This consisted of the following, all in Massawa Port : (i) rehabilitation and extension of berths 5 and 6; (ii) dredging in front of the new berth 6; (iii) reclamation of land behind berth 6; (iv) heavy duty pavement for the new container stacking yard; (v) clearing of the apron and storage areas adjacent to berths 5 & 6; (vi) rehabilitation of the electrical and storm drainage systems; (vii) building for the port administration and customs authorities; and (viii) a workshop, an equipment shed and improvements to warehouses in the port. 2. Cargo Handling Equipment (original appraisal cost US$26.3 million; revised estimate US$20.9 million; actual cost US$20.6 million). Most of the equipment included in this component was for handling of containers for two ports to improve operational efficiency and services provision . 3. Environment [Services & Studies ] (original appraisal cost US$4.9 million; revised estimate US$7.55 million; actual cost US$7.04 million). Operating practices regarding facilities and equipment estimated at US$ 800,000 for each of the two ports were included to improve handling of hazardous cargo, as well as control of discharge of bilge water, solid waste from ships and oil spill combat equipment including support for formulation of a National Oil Spill Contingency Plan with assistance from the International Maritime Organization (IMO). 4. Training (original appraisal cost US$0.50 million; revised estimate US$0.17 million; actual cost US$0.10 million). Training programs in the fields of port operations and equipment maintenance, including overseas training at recognized international institutes and /or at overseas ports, and project management costs for the Project Coordination Unit (PCU). 5. Consultancy Services [Operating costs ] (original appraisal cost US$0.10 million; revised estimate US$0.19 million; actual cost US$0.16 million). This included (i) works supervision at Massawa Port; (ii) short term experts for equipment and spare parts procurement; (iii) specific studies on maritime & port legislation, Management Information Systems (MIS), cost accounting, tariff analysis and commercialization of port activities; (iv) a study on long term development plan of the port sector; and (v) short-term technical advisory services in port management & operations and equipment maintenance. Revised Components Dropped as part of the Mid-Term Review in 1999: the Assab- related subcomponents, and the construction of a new building for the Massawa Port administration and customs authorities . Added as part of the Mid-Term Review in 1999: (i) improvement of Massawa causeways at Sigalet and Dahlak, expansion of the container terminal, and purchase of additional port equipment ; and (ii) Phase II rehabilitation works in Massawa Port, which included the rehabilitation of pavement with concrete blocks behind berths 3-5, rehabilitation of port road network inclusive of new internal access roads, railing construction for 15-ton shore cranes, fencing around the container terminal area, raising of the sea walls to protect container stacking yard, construction of lighting towers, and rehabilitation of the water tower . Added as part of the Restructuring in 2008: (i) the construction of a new oil jetty (under a Design & Build contract method) to replace the existing one and (ii) the emergency repairs of the existing oil jetty to extend its service life until replacement. The project was restructured in April 2000 following the Mid-Term Review (MTR) carried out in December 1999. According to the ICR and subsequent confirmation by the project team, "at that time, under the World Bank procedures, the MTR was considered sufficient to restructure a project " (ICR, page 1). The modifications were necessitated by the cessation of Assab ’s operations due to a two-year conflict that erupted between Eritrea and Ethiopia. During the restructuring of September 2008, the previous revisions were confirmed, including a formal revision of the Project Development Objective by shifting its focus entirely to the Massawa Port , and new activities were introduced as a response to the risk of collapse of the oil jetty in Massawa . d. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project cost : Total project cost was US$57.4 million at closure compared to US$57.6 million at appraisal. Financing : The World Bank Group planned contribution consisted of a credit in the amount of US$ 30.3 million that decreased to US$26.9 million at closure. There were two co-financiers: Italy and European Union. Italy co-financed US$21 million of the cost of the Massawa components under an untied grant, which slightly increased to US 21.2 million at closure. The EU grant was US$17.1 million, which reduced to US$7.76 million at closure due to cancellation of the project activities by Government of Eritrea . Borrower contribution : The Borrower actual contribution was US$ 1.6 million, which reduced from planned contribution of US$6.3 million at appraisal. Dates : The project was extended four times by a total of 9 and a half years from the original closing date of June 30, 2002 to December 31, 2011. The first extension, in 2000, was for three years to June 30, 2005 due the border conflict that broke out between Eritrea and Ethiopia in May 1998, two months after the project’s effectiveness, culminating into a full-fledged war during 1999- 2000. The second extension was to June 30, 2007, followed by the third extension to September 30, 2008 as a result of slow progress in project implementation and continued border tensions between Eritrea and Ethiopia . The fourth extension of the closing date was to December 31, 2011 to complete the newly introduced activities during the project restructuring in September 2008. 3. Relevance of Objectives & Design: a. Relevance of Objectives: Original Objective Modest . At the time of appraisal, port infrastructure in the country was severely damaged during 30 years of the Independence War with Ethiopia (until 1991), posing a major obstacle for the country’s growth. Poor condition and low capacity of the country's major ports were not appropriate for handling traffic volume increases during the years after independence, especially growing container volumes . The objectives were relevant to the World Bank Group's FY08-10 Interim Strategy Note (Eritrea does not currently have Country Partnership Strategy ), the key goals of which include supporting human development and basic infrastructure development . The objectives were also in line with the main priorities of the Country Strategies at appraisal and during implementation, which aimed at reducing infrastructure constraints, creating an environment in which the private sector would develop and flourish in partnership with foreign investors, and investing in human resources . The objectives that included the Assab Port were not relevant at project closure, as the port ceased to exist . Revised Objective High. High . The revised objectives were relevant to the Government priorities and the World Bank Group's strategies for the country at project closure and appraisal as well as during implementation . The revised objective identified the project's focus on the Massawa Port as the Assab Port ceased its operations as a result of the border conflict . The Massawa Port remains as the major port for import /export of Eritrean cargo carrying 98% of the entire cargo for Eritrea. b. Relevance of Design: Original Objective Modest . The statement of development objectives was not clear and repetitive, i .e., the second sub-objectives used a vague definition 'of optimized use' along with the statement of outputs . The indicators designed by the project team at entry were not fully aligned with the components and the PDO in the Staff Appraisal Report (ICR, page 15). Revised Objective Substantial . The statement of development objectives was clear . The project results framework had a causal chain between the activities financed by the project and the outputs and outcomes related to the attainment of the development objectives. Due to the border conflict, the team revised the project scope by dropping the Assab -related sub-components and focusing entirely on the improvements in the Massawa Port . 4. Achievement of Objectives (Efficacy): Original Objective While outcomes were substantially achieved for one of the ports (Massawa), the ratings for achievement of the original objectives reflect the fact that the second port (Assab) targeted by this project ceased to exist (due to the factors outside of the project's control ). iii ) Substantially increased productivity of the two ports to international standards (iii) . Modest Outputs Phase 1 of rehabilitation works of the Massawa Port was completed . This included rehabilitation of Berth No . 5, rehabilitation and extension (up to the Break water) of Berth No. 6, provision or rail foundation for Gantry Cranes; laying of heavy duty concrete pavement blocks at the adjacent quay apron and a container stacking area of approximately 48,000 m2. The following works were completed but with the reduced scope and funded by the Massawa Port Administration (MPA): construction of the equipment maintenance shed and rehabilitation of the existing workshop at the Massawa Port. New cargo handling, spare parts and tolls and environment equipment (waste collection vehicles and oil spill response equipment) was procured. Phase 1 was completed in 2002; the second phase started in 2004 and completed in 2008. Outcomes Bulk cargo increased to 1,325 tons/ship/day in 2009 increasing the original target of 1,100 (ICR, Results Framework). By the end of 2010, bulk cargo fell short to 436 tons/ship/day, which is explained in the ICR by the decline in trade volumes worldwide due to the world economic and financial downturn in 2008 (ICR, page 37). Bagged cargo increased to 1,154 slightly below the original target of 1,200 (ICR, Results Framework). By the end of 2010, bulk cargo fell to 666 tons/ship/day due to the worldwide decline in trade (ICR, page 37). Break bulk increased to 257 tons/ship/day in the end of 2010 against the original target of 260. Containers TEU/hr increased from the baseline value of 3 to 8, exceeding the original target of 6 (ICR, Results Framework). By the end of 2010, the number of TEUs/hour decreased to 6 due to the worldwide decline in trade (ICR, page 37). iii ) Substantially increased capacity of the two ports to international standards (iii) . Modest . Outputs Rehabilitation and widening works of Massawa Causeways were completed . This included widening of Sigalet causeway, widening and rehabilitation of the Dahlak causeway, as well as provision of pavement for pedestrians on both causeways. Consultancy services to improve staff skills in environmental operating practices and cargo handling were carried out as planned. International environmental management standards achieved and contingency plan is in place . Outcomes Berth occupancy improved representing 52% exceeding the original target of 67% (ICR, Results Framework). . Overall, berth occupancy varied from 28% (2007) to 52% (2010) (ICR, page 37) . (i) Addressing urgent port capacity requirements of the Borrower up to the year 2005 .Substantial Substantial . All the targets for productivity and capacity indicators for the Massawa Port for the year 2005 were exceeded except for the bagged cargo indicator (ICR, Table 1, page 37). ii) Optimized use of existing facilities by rehabilitating and upgrading the two ports of Massawa and Assab (ii) . Modest . Based on the achievement of the planned outputs and outcomes by project closure . Revised Objectives Increased productivity . Substantial . Outputs Phase 2 of rehabilitation works of the Massawa Port was completed . The works included rehabilitation of part of Berth 5, Berth No. 3 and No. 4, laying of heavy duty concrete pavement blocks at the adjacent quay apron, crane rail foundation, rehabilitating the road network inside the port with heavy duty pavement blocks, refurbishment of the water towers, and new gates for the port . The following works were completed but with the reduced scope and funded by the Massawa Port Administration (MPA): construction of the equipment maintenance shed and rehabilitation of the existing workshop at the Massawa Port. New cargo handling, spare parts and tolls and environment equipment (waste collection vehicles and oil spill response equipment) was procured. Phase 1 was completed in 2002; the second phase started in 2004 and completed in 2008. Outcomes Bulk cargo increased to 1,325 tons/ship/day in 2009 increasing the target of 1,100 that was not revised (ICR, Results Framework). By the end of 2010, bulk cargo fell short to 436 tons/ship/day, which is explained in the ICR by the decline in trade volumes worldwide due to the world economic and financial downturn in 2008 (ICR, page 37). Bagged cargo increased to 1,154 slightly below the target of 1,200 that was not revised (ICR, Results Framework). By the end of 2010, bulk cargo fell to 666 tons/ship/day due to the worldwide decline in trade (ICR, page 37). Break bulk increased to 257 tons/ship/day in the end of 2010 against the target of 260 that was not revised. Containers TEU/hr increased from the baseline value of 3 to 8 in 2009, falling short of the revised target of 12 due to the lack of appropriate ship to shore handling equipment such as gantry cranes (ICR, page 14). By the end of 2010, the number of TEUs/hour decreased to 6 due to the worldwide decline in trade (ICR, page 37). Increased capacity . Substantial . Outputs Rehabilitation and widening works of Massawa Causeways were completed . This included widening of Sigalet causeway, widening and rehabilitation of the Dahlak causeway, as well as provision of pavement for pedestrians on both causeways. Consultancy services to improve staff skills in environmental operating practices and cargo handling were carried out as planned. International environmental management standards achieved and contingency plan is in place . Construction of the new petroleum jetty at Hirgigo Bay Massawa was not completed due to the termination of contract by the Government as a result of poor performance of the contractor . The existing oil jetty was repaired . Outcomes Berth occupancy improved representing 52% exceeding the original target of 67% that was not revised. Overall, berth occupancy varied from 28% (2007) to 52% (2010) (ICR, page 37). 5. Efficiency: Original Objective At appraisal, the economic and financial assessment was considered separately for the Massawa and Assab Ports, with the economic return for the overall project expected at 45.5% and net present value (NPV) of US$ 43 million at 12% discount rate. These estimates were based on the assumption of the Assab Port being the main transit port for Ethiopian trade, as at the time it handled 85% of Ethiopia's external trade, and being seen as a major revenue and employment generating enterprise for the Eritrean economy . As a result of the Assab Port's closure due to the war, the ICR reviewed only the economic returns pertaining to the Massawa Port . The funds had been reallocated from the Assab Port subcomponents towards the additional improvements in the Massawa Port during the MTR in 1999. Revised Objective The total Massawa investments for the original components were evaluated at appraisal to generate an estimated economic internal rate of return (EIRR) of 45.2% and net present value (NPV) of US$28 million (at 12%). The ex-post EIRR for the Massawa Port (excluding the new oil jetty added at restructuring in 2008) is estimated at about 42% with NPV of US$ 29 million. At appraisal, the investment was evaluated based on standard port appraisal methodology and techniques, such as assessment of the implications of port traffic, cargo handling rates and berth capacity on berth occupancy, shipping delays and user costs . The economic benefits were derived from reduction in berthing time delay, reduction in wait time for ship to berth, and increase in flow of containers . Benefits were estimated for years 1999 to 2005. Due to lack of detailed updated data to re -estimate the benefits and no availability of port ’s actual financial data on operating and maintenance costs and revenues, the analysis relied on the estimations made at appraisal to estimate the benefits per ton and adjust them to the actual traffic volumes and productivity levels . The operating and maintenance costs were also assumed as at appraisal . Benefits for the years after 2005 were assumed at the same benefit/ton level as 2005. Traffic data unavailable for years 2008 and 2009 was assumed at the same level as in 2010 (the lowest traffic in the trend) to be more conservative. The project closing date was extended by 9 and a half years due to "the slow implementation progress at initial stages emanating mainly from (i) the effects of the war and continued border tensions with Ethiopia and (ii) inadequate capacity of qualified and experienced staff at the time of entry and various periods of implementation " (ICR, page 14). The construction of the new oil jetty was not completed due to the termination of the contract by the Government as a result of the poor performance of the contractor . All other activities were completed as restructured with no cost overruns. Efficiency is assessed as modest . ERR )/Financial Rate of Return (FRR) a. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re-estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal Yes 45.2% 40% ICR estimate Yes 42% 49% * Refers to percent of total project cost for which ERR/FRR was calculated. 6. Outcome: Original Objective: The outcome rating for the original project objective is rated Moderately Unsatisfactory . Revised Objective: The outcome rating for the restructured project objective is Moderately Satisfactory . The disbursement shares are 53% and 47% prior to and subsequent to project restructuring in 2000 respectively; taking into consideration the fact that the restructuring was necessitated by factors outside of the project's control, IEG has assigned an outcome rating of Moderately Satisfactory . a. Outcome Rating : Moderately Satisfactory 7. Rationale for Risk to Development Outcome Rating: The factors that pose the risk to development outcome include (i) availability and adequacy of funds and presence of a government strategy to maintain the new infrastructure and equipment, and (ii) the capacity of the MPA staff to secure funding for construction of the new oil jetty . At the time of project restructuring, when most of the activities were completed despite the continued border tension with Ethiopia, the main potential risk flagged was the “threat to peace in the region which could limit the interest by international contractors for the construction of the new oil jetty, reduce availability of adequate manpower from the Recipient, and therefore delay the construction of the new oil jetty �. Also identified was “the risk of potential collapse of the existing jetty while the completion of the new oil jetty is delayed �. At completion, the risk of potential collapse of the existing oil jetty still remains due to the termination of construction of new oil jetty, posing serious concerns about both adverse economic and environmental impacts, which jeopardize the achieved PDO . In addition, the ongoing dispute between the GOE and the contractor may result in more follow up complaints coming to the Bank from the contractor. a. Risk to Development Outcome Rating : High 8. Assessment of Bank Performance: a. Quality at entry: The project was initially designed to address infrastructure of a new independent country, severely damaged by the war with Ethiopia, and substantially increase the productivity and capacity of two ports – Massawa and Assab. The Bank was previously involved in the port sector in Ethiopia (Assab) and was experienced in taking the lead role in formulating port modernization programs in neighboring countries along the east coast of Africa . The project team addressed the importance “to minimize risks and uncertainty as to the local capacity and lack of experience of the Department of Maritime Transport (DMT) and the two ports to implement and manage the project� through the establishment of a project coordination unit (PCU) at an early stage of project implementation. A coordination manager, an accountant and a procurement specialist were recruited before the project effectiveness (by March 1998) and trained on contract management, procurement, and financial management policies and requirements . The risks to the implementation of civil works (a period of about two years for berths 5 and 6 in Massawa) due to the possible heavy congestion of the port area during the contractor's works were mitigated by inclusion of specific and detailed clauses on phasing of the works and modalities for coordination with the operations department in the contract documents . The political risks such as the outbreak of the war were, however, understated during project preparation and appraisal, and “pull-out� options or alternative arrangements were not considered. The original task team composition at entry lacked the appropriate skills set (e.g., port engineer, procurement specialist) and capacity for efficiently designing the port specific project and adequately addressing the associated implementation risks . The indicators designed by the project team at entry were not fully aligned with the components and the PDO in the Staff Appraisal Report (ICR, page 15). at -Entry Rating : Quality -at- Moderately Unsatisfactory b. Quality of supervision: The Quality Assurance Group’s (QAG) assessment of Quality of Supervision (QSA5) in 2002 also highlighted (i) insufficient efforts of the project team to make alternative arrangements by hiring consultants when it was found not practical to get at least key persons for after the end of the war to resume the work at Massawa port; and (ii) inadequate Bank management inputs in the context of the severity of problems facing the project . In early 2003, the Bank team was added procurement and financial management staff, safeguards specialists and accredited civil engineer with highways and ports background, who joined the supervision missions that took place more regularly from then on. This helped the Bank supervision to address the project implementation constraints and follow all the QAG (QSA5) recommendations. As a result, the implementation progress was significantly improved and delays minimized, as acknowledged by the 2004 QAG (QSA6). To account for the slow implementation progress after the MTR restructuring, the team extended the project closing date to June 30, 2007. With the stronger support from the Bank supervision team, significant progress was achieved during 2004 – 2007, leading to a successful completion of the major components by the beginning of 2007. The Bank demonstrated flexibility helping to take advantage of the project savings and leverage the donor-provided TFs to close the financing gap at different stages of the project . Once the Bank implementation support was strengthened, the team was persistent in raising the capacity issues of the PCU and streamlining training opportunities within the project to help improve the PCU’s project management and implementation progress. The Bank team overall has been responsive to reflect on the changes following the war in 1998-2000, and quickly agreed with the GOE on the modifications to the project components carried at the MTR in December 1999. The Bank was also quick and flexible in restructuring the project to respond to the emergency situation with respect to the collapsing oil jetty in Massawa and took a more challenging road by adding new activities to the already over-age and problematic project, so as to respond to the GoE ’s immediate need in the atmosphere of a strained relationship between the GoE and the Bank . Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9. Assessment of Borrower Performance: a. Government Performance: The GOE remained supportive of and committed to achieving the project objectives notwithstanding the effects of the war and continuing border tensions with Ethiopia and made efforts by recognizing the urgent need to strengthen the MPA and the PCU, which had lost its skilled /experienced staff to the national services . The construction of a new oil jetty under the project was a top priority for the GOE . The government was strongly committed to implementing this activity and even made a decision to fill in the financing gap from its own sources, when the contract price for the construction works far exceeded the amount initially allocated through the EU grant and IDA credit. The civil works contract was, however, terminated by the GOE unilaterally due to the contractor’s poor performance without prior notice to or consultation with the Bank, which was not consistent with the Bank’s procurement policies. Despite expression of its intention to complete the new oil jetty, the GOE however decided not to extend the EU Gra nt and IDA Credit closing date despite the Bank ’s strong recommendation to do so. In the Letter of Sector Policy of 1997, the Government proposed to introduce a number of financial and legal changes in the port sector to be implemented within 5 years. However, the border conflict made it difficult for the GOE to move forward with the reform, and some of the basic data for determining financial restructuring were not immediately available. Consequently, in March 2004, the GOE accepted the recommendations provided through the port management technical assistance in respect to new Draft Maritime and Port Legislation, along with the technical assistance in revaluating the Massawa Port assets and developing new proposed tariffs . By enacting the Maritime Port Legislation, the Massawa Port would have been established as an independent authority . Nevertheless, according to the PCU, only a few actions were undertaken in 2005 including establishing Massawa Port Authority. Government Performance Rating Moderately Satisfactory b. Implementing Agency Performance: The project implementation was the responsibility of the Ministry of Transport and Communication (MTC) through the Department of Maritime Transport (DMT). The Ports of Assab and Massawa were established as autonomous commercial entities under the supervision of the Ministry . The DMT is responsible for policy and regulation, including planning and programming of the development of maritime transport capacity, safety, environment and other supporting services . The Project Coordination Unit (PCU) was established under the DMT. The implementing agency was well organized and engaged in open discussions with the Bank team in resolving critical issues. The PCU submitted financial reports to the Bank that were timely (well in advance of stipulated 45 day deadlines). The reports were reviewed and found in the form and content satisfactory to the Bank . Audit reports and management letters were similarly submitted in advance of stipulated six month deadlines, including final audit report and management letter for FY 11. The audit reports were unqualified /clean, and no material internal control weaknesses were flagged in the management letters . During the time of mobilization of many of the public service staff into national service, including many of best qualified PCU/DMT staff, the PCU/DMT capacity to implement the project and efficiently run its operations was put under tremendous strain. The Bank team insisted in resolving this problem to demobilize some of the mechanical staff as well as to further strengthen the PCU . As a result, the GOE increased capacity by hiring some local consultants, demobilized some of the staff, and implemented training programs . Some capacity was built through the ILO PDP funded under the project . The PCU/DMT continues operating after the project closing date to ensure that any outstanding issues are sufficiently followed up . Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10. M&E Design, Implementation, & Utilization: a. M&E Design: The project's indicators were appropriately linked with the intermediate objectives . A number of original indicators lacked baseline values, i.e., reduction of ships waiting and service time, and reduction of dwell time as well as “hazardous cargo and oil spill � (SAR, Annex 6, page 90). They were dropped during the project restructuring . The key indicators that were retained included baseline data and measurable targets, i .e., increase of bulk and bagged cargo, break bulk and TEU/hr containers, and improved berth occupancy . b. M&E Implementation: To facilitate the data collection and monitoring, the PCU was established prior to the project effectiveness date, and its capacity was strengthened through training and computerized network software enabling the PCU to monitor and track project progress in procurement, disbursements, and implementation . The measured data were reported on a regular basis in an agreed format in Quarterly Progress Reports (QPRs) with updated details of the quarterly progress of project implementation, including a set of key performance indicators on improvements in cargo handling capacities and operational productivity . This enabled a continued and consistent M&E of the project inputs, outputs and outcomes. c. M&E Utilization: The key performance indicators as restructured were used effectively to track project implementation and to assess progress towards meeting the PDO . M&E Quality Rating : Substantial 11. Other Issues a. Safeguards: This was a Category “A� project that triggered one safeguards policy – OP4.01 Environmental Assessment. Environmental Assessment and Management : Based on the project categorization, to satisfy requirements for environmental assessment an Environmental Impact Assessment (EIA) was developed as part of the Port Master Plan in January 1996. In accordance with the Bank policy, the EIA was carried out by an independent EA expert, not affiliated with the project. This EIA covered the original project activities, including recommendations on carrying out the dredging. The EIA identified a number of environmental issues related to construction were, especially related to the dredging, land reclamation and waste and hazardous material treatment . As improvement to environmental management of the Port was central for one of the components, environmental safeguards were, for the most part, mainstreamed into the project design . Based on the project documentation, compliance with environmental safeguards was mostly rated as satisfactory throughout the life of the project . That is, with one exception when the Port component was rated unsatisfactory, due to consultants ’ failure to produce an adequate Environmental Management Plan (EMP) on time, which was later corrected . The ICR reports that the project Aide Memoires recognized that there were no critical contaminations caused by the reclamation and coastal environmental damage by the dredging reported and /or claimed. On one occasion there was a minor oil spill caused by leakage from a ship scrapyard . As a result, the project team developed a Contingency plan and provided training at quarterly intervals . During civil works, there were no repeats of oil spills reported - and with procured equipment and enhanced staff skills in environmental management, ship wastes were collected and disposed in line with international practice – and a National Oil Spill Contingency Plan was established with assistance of the Port Management TA consultant, and required equipment was procured . For the purposes of project restructuring in 2008, a separate Environmental and Social Impact Assessment (ESIA) was prepared by an independent expert to cover the emergency repairs on the existing oil jetty and construction of a new oil jetty both at Hirgigo Bay and Massawa . The ESIA has identified impacts of the seven jetty design /siting alternatives and provided pragmatic management guidance on oil spill control and fire risk . The final Assessment report, disclosed in March 2008, included the ESIA with EMP, “Oil Spill Risk Assessment and Contingency Plan � and “Fire Risk Assessment and Fire Training Plan �. The Project closed in December 2011, before the civil works on the new oil jetty were concluded and after the Government had unilaterally terminated the civil works contract for non -performance. The World Bank sent a formal correspondence to the GOE conveying the need for the project extension to allow for completion of the works and warning of the potential environmental and economic risks from the collapse of the existing jetty . The Government declined the extension of the project . The ICR reports that the Bank team ’s last visit of the site concluded that the existing oil jetty had weakened over time and faced a real danger of collapse . The collapse of the oil jetty is believed by the Bank team to seriously impact Eritrea ’s economy as it is the main inlet for fuel imports and that there is a serious environmental risk. The GOE assured the Bank team that it was committed to completing the construction of the new jetty, once the outstanding issues with the previous contractor were resolved . While the project safeguards documentation, the Environmental Datasheet (EDS) in 1997 and subsequent Integrated Safeguards Datasheets (ISDSs) prepared in 2008 for project restructuring showed that only OP 4.01 was triggered by the project, the ISRs included compliance ratings for OP 4.11 – Physical Cultural Resources. With regard to the physical cultural resources in the project area, a mosque, located next to berth 6 and registered as historically significant national cultural heritage, was subsequently not structurally affected as part of the port civil works . The project improved the preservation of the site by stabilizing the foundation of the mosque and constructing a surrounding retaining wall. b. Fiduciary Compliance: Procurement : The ICR reports that "procurement was overall adequately carried out and completed ", despite the long life of the project, the specialized nature of many contracts, and cancellation of the new oil jetty construction contract before closing date. Procurement issues that emerged were addressed as appropriate and no problems of fraud and corruption were encountered by the project closing (page 17). The civil works contract was, however, terminated by the GOE unilaterally due to the contractor’s poor performance without prior notice to or consultation with the Bank, which was not consistent with the Bank’s procurement policies. Financial management . The ICR reports that "the project received unqualified /clean audit reports and no material internal control weaknesses were flagged by the auditors in the management " (page 17). There are no outstanding financial reports and audit issues on the project letters, with the final report submitted in FY 11. c. Unintended Impacts (positive or negative): d. Other: 12. Ratings : 12. ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Satisfactory Satisfactory Risk to Development High High Outcome : Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate. 13. Lessons: The ICR has identified a number of lessons, of which the most important are listed below : Restructuring a project in a timely manner to respond to changed circumstances is likely to increase the chances of achieving intended project results . However, the timing and relevance of injecting additional resources and introducing new activities towards the tail end of implementing a project should be assessed critically. They could complicate the institutional and implementation arrangements as well as imply injecting new skills in the project implementation team which may not be readily available . Pooling resources for a project from multiple donors reduces the transaction costs for the Recipient through streamlined procurement processing and implementation arrangements, but also increases the coordination and administration costs for the Bank project team . This is compounded by a situation where the Recipient is a new state, as it involves intensive supervision on the part of the Bank . Risk assessment and risk management /mitigation measures for projects in fragile states should not pull -out� underestimate the political risks and include “pull- out � options or alternative arrangements . Having an appropriately defined risk assessment with mitigation measures would assist project teams to recognize any events potentially impacting project implementation and respond quickly with appropriate actions . 14. Assessment Recommended? Yes No 15. Comments on Quality of ICR: The ICR is concise. It provides adequate detail on the implementation issues faced by the project in a post -conflict environment. The quality of evidence is adequate . The lessons are evidence based . The evaluation of project outcome should have been done against both the original and the revised objectives . a.Quality of ICR Rating : Satisfactory