Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD843 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF SDR 86.3 MILLION (US$ 133.54 MILLION EQUIVALENT) TO THE REPUBLIC OF YEMEN FOR A CORRIDOR HIGHWAY PROJECT May 7, 2014 Sustainable Development Department Middle East and North Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective March 5, 2014) Currency Unit = Yemeni Rial (YR) US$ 1 = 215.0 YR US$ 1 = SDR 0.64624531 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AADT Annual Average Daily Traffic CAS Country Assistance Strategy CBY Central Bank of Yemen CQ Consultant Qualifications DA Designated Account EIA Environmental and Impact Assessment EIRR Economic Internal Rate of Return EMP Environmental Management Plan EPA Environmental Protection Authority ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan FM Financial Management GCC Gulf Cooperation Council GNI Gross National Investment GOY Government of Yemen GRM Grievance Redress Mechanism HBS Household Budget Survey HDM-4 Highway Development and Management Tool HLC High-Level Committee HQ Head Quarters ICB International Competitive Bidding ICT Information and Communication Technologies IDA International Development Association IEG Internal Evaluation Group IFI International Financial Institution IRI International Roughness Index MENA Middle East and North Africa MOF Ministry of Finance MOPIC Ministry of Planning and International Cooperation MPWH The Ministry of Public Works and Highways NCB National Competitive Bidding NDC National Dialogue Conference NPV Net Present Value PCN Project Concept Note PDO Project Development Objective PIU Project Implementation Unit PLM People with Limited Mobility PQ Pre-qualification QCBS Quality- and Cost-Based Selection RAP Resettlement Action Plan RIB Resettlement Information Booklet RMF Road Maintenance Fund SAYICH Saada–Aden Yemen International Corridor Highway SBD Standard Bidding Document SFD Saudi Fund for Development SMO Statement of Mission Objectives SOE Statement of Expenditure TC Technical Committee TTL Task Team Leader UNDP The United Nations Development Programme WA Withdrawal Application YER Yemeni Rial Regional Vice President: Inger Andersen Country Director: Hartwig Schäfer Sector Director: Junaid Kamal Ahmad Sector Manager: Patricia Veevers-Carter Task Team Leader: Andreas Schliessler REPUBLIC OF YEMEN Corridor Highway Project TABLE OF CONTENTS Page PAD DATA SHEET ....................................................................................................................... i  I.  STRATEGIC CONTEXT .................................................................................................1  A.  Country Context ............................................................................................................ 1  B.  Sectoral and Institutional Context................................................................................. 2  C.  Higher Level Objectives to which the Project Contributes .......................................... 6  II.  PROJECT DEVELOPMENT OBJECTIVE ..................................................................8  Project Beneficiaries ........................................................................................................... 8  PDO Level Results Indicators ............................................................................................. 9  III.  PROJECT DESCRIPTION ............................................................................................10  A.  Project Components .................................................................................................... 10  B.  Project Financing ........................................................................................................ 11  C.  Lessons Learned and Reflected in the Project Design ................................................ 12  IV.  IMPLEMENTATION .....................................................................................................14  A.  Institutional and Implementation Arrangements ........................................................ 14  B.  Results Monitoring and Evaluation ............................................................................ 15  C.  Sustainability............................................................................................................... 15  V.  KEY RISKS AND MITIGATION MEASURES ..........................................................16  A.  Risk Ratings Summary Table ..................................................................................... 17  B.  Overall Risk Rating Explanation ................................................................................ 17  VI.  APPRAISAL SUMMARY ..............................................................................................18  A.  Economic Analysis ..................................................................................................... 18  B.  Technical ..................................................................................................................... 18  C.  Financial Management ................................................................................................ 20  D.  Procurement ................................................................................................................ 20  E.  Social (including Safeguards) ..................................................................................... 21  F.  Environment (including Safeguards) .......................................................................... 24  G.  Safeguards Policies triggered ...................................................................................... 25  Annex 1: Results Framework and Monitoring ........................................................................26  Annex 2: Detailed Project Description ......................................................................................31  Annex 3: Implementation Arrangements .................................................................................35  Annex 4: Economic Analysis ......................................................................................................51  Annex 5: Operational Risk Assessment Framework (ORAF) ................................................56  Annex 6: Implementation Support Plan ...................................................................................60  Map of Yemen ..............................................................................................................................63  . PAD DATA SHEET Yemen, Republic of Corridor Highway Project (P145361) PROJECT APPRAISAL DOCUMENT . MIDDLE EAST AND NORTH AFRICA MNSTI Report No.: PAD843 . Basic Information Project ID EA Category Team Leader P145361 A - Full Assessment Andreas Schliessler Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 02-Jun-2014 31-Dec-2018 Expected Effectiveness Date Expected Closing Date 15-Sep-2014 30-Jun-2019 Joint IFC No Sector Manager Sector Director Country Director Regional Vice President Patricia Veevers-Carter Junaid Kamal Ahmad Hartwig Schafer Inger Andersen . Recipient: Republic of Yemen Responsible Agency: Ministry of Public Works and Highways Contact: H.E. Eng. Omar Al-Korshomi Title: Minister Tel. No: 967 7355 56577 E-Mail: minister@mpwh-ye.net . Project Financing Data(in USD Million) [ ] Loan [ ] Grant [ ] Guarantee [ ] Credit [ X ] IDA Grant [ ] Other Total Project Cost: 191.00 Total Bank Financing: US$ 133.54 million, of which IDA-new: US$ 56.0 million IDA-recommitted: US$ 77.54 million . i Financing Source Amount RECIPIENT 57.46 IDA Grant 133.54 Total 191.00 . Expected Disbursements (in USD Million) Fiscal 2014 2015 2016 2017 2018 2019 Year Annual 0.00 27.00 30.00 35.00 30.00 11.54 Cumula- 0.00 27.00 57.00 92.00 122.00 133.54 tive . Proposed Development Objective(s) The Project Development Objective is improved transport connectivity and safety on the targeted section of the transport corridor between Aden and Taiz. . Components Component Name IDA funding (US$ million) Highway Construction 111.54 Institutional Support and Strengthening 22.00 . Institutional Data Sector Board Transport . Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits % Co-benefits % Transportation Rural and Inter-Urban 100 Roads and Highways Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. . Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Financial and private sector development Infrastructure services for private sector 50 development Trade and integration Regional integration 20 ii Trade and integration Export development and competitiveness 20 Social dev/gender/inclusion Conflict prevention and post-conflict 10 reconstruction Total 100 . Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects? . Does the project require any waivers of Bank policies? Yes [ ] No [ X ] Have these been approved by Bank management? Yes [ ] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ] Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] . Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X . Legal Covenants Name Recurrent Due Date Frequency Compensation of affected persons under X CONTINUOUS Resettlement Action Plan Description of Covenant The Recipient will ensure appropriate compensation and other compensatory measures as may be necessary, resettlement and rehabilitation of such Affected Persons in accordance with the RAP. Name Recurrent Due Date Frequency RAP implementation audit 31-Jul-2018 Description of Covenant Not later than twelve (12) months after completion of the implementation of the RAP, conduct and submit an audit by an independent qualified resettlement expert to monitor the outcomes of the RAP, iii including a survey and consultation with Affected Persons, and which audit shall also recommend necessary actions to address shortcomings in the implementation of said RAP. Name Recurrent Due Date Frequency Resettlement Project Account for X CONTINUOUS compensations under RAP Description of Covenant Not later than thirty (30) days after the Effective Date: (i) open and maintain a Project account (Resettlement Project Account) in the Central Bank of Yemen on terms and conditions satisfactory to the Association; (ii) make payments for the implementation of the RAP, out of the Resettlement Project Account in accordance with the format and modality agreed upon with the Association, and in accordance with the guidelines established in the RAP; and (iii) ensure that funds deposited into the Resettlement Project Account shall be exclusively used to finance payments of compensation made, or to be made to the Affected Persons, or resettlement assistance to said Affected Persons. Name Recurrent Due Date Frequency RAP implementation oversight and X CONTINUOUS monitoring Description of Covenant Ensure effective and adequate oversight of the day-to-day implementation of the RAP, adequate staffing and resources to ensure effective implementation of the RAP, and effective monitoring and supervision of the RAP. Name Recurrent Due Date Frequency TOR for environmental and social X CONTINUOUS safeguards studies Description of Covenant The Recipient, shall ensure that the terms of reference for any consultancy in respect of any study or activity under Part B of the Project, shall be satisfactory to the Association following its review thereof and, to that end, such terms of reference shall duly incorporate the requirements of the Bank Safeguard Policies then in force, as applied to the advice conveyed through such technical assistance. Name Recurrent Due Date Frequency Applicability of ESIA, ESMP and RAP X CONTINUOUS for SFD-funded highway section Description of Covenant The Recipient shall implement, or ensure that the SFD-financed section of the highway is carried out in accordance with the ESMP, ESIA and the RAP, or similar safeguard documents, including environmental and social safeguard guidelines, acceptable to IDA. Name Recurrent Due Date Frequency Technical Audits Six months after ONCE effectiveness date Description of Covenant The Recipient shall, not later than six (6) months after the Effective Date, recruit an External Technical Auditor, in accordance with the provisions of Section III.C of Schedule 2 to the Financing Agreement. . iv Team Composition Bank Staff Name Title Specialization Unit Azeb Yideru Program Assistant Program Assistant MNSTI Andreas Schliessler Lead Transport Team Lead MNSTI Specialist Nina Bhatt Lead Social Lead Social MNSSU Development Specialist Development Specialist Chaogang Wang Senior Social Senior Social MNSSU Development Specialist Development Specialist Luis R. Prada Villalobos Senior Procurement Senior Procurement MNAPC Specialist Specialist Samra Shaibani Senior Communications Senior Communications MNAEX Officer Officer Edith Ruguru Mwenda Senior Counsel Senior Counsel LEGAM Gaurav D. Joshi Environmental Specialist Environmental Specialist SASDI Africa Eshogba Olojoba Senior Environmental Senior Environmental MNSEE Specialist Specialist Said Dahdah Transport Specialist Road Safety Specialist MNSTI Nagwan Ahmed Sharhan Program Assistant Operations Officer MNCYE (DAIS) Moad M. Alrubaidi Senior Financial Financial Management MNAFM Management Specialist Specialist Saleh Qasem Al-Manary Financial Management Financial Management MNAFM Analyst Analyst Samira Al-Harithi Procurement Analyst Procurement Analyst MNAPC Omar Raja Wahab E T Consultant Operations Officer MNSTI Abdulhakim Ali Ahmed Senior Highway Senior Highway MNSTI Al-Aghbari Engineer Engineer Non Bank Staff Name Title Office Phone City Igor Jokanovic Highway Engineer . Locations Country First Location Planned Actual Comments Administrative Division v I. STRATEGIC CONTEXT A. Country Context 1. Situated on the southern part of the Arabian Peninsula, the Republic of Yemen has a population of some 24 million, of which about 76 percent live in rural areas where poverty incidence is particularly high. The country has a low GNI per capita of US$1,110 (2011), while on the UNDP Human Development Index, Yemen ranked 154th out of 187 countries in 2011. However, the report also showed that average life expectancy is up from 41.6 years in 1970 to 62.7 in 2010, with women’s life expectancy mirroring the overall trend. Across all economic indicators, Yemen is characterized by high levels of poverty and inequality. 2. In addition to the already existent widespread poverty, Yemen experienced intense and extensive domestic unrest from February 2011 until November 2011. The conflict and turmoil, and severe shortages of food and fuel, combined with high commodity prices left many poor unprotected. During this period of crisis, the economy contracted by 10.5 percent and the number of those living below the poverty line is estimated to have increased by 8 percentage points to 50 percent of the Yemeni population. Rising fuel costs caused sharp increases in transport costs, sometimes reaching 100 percent in urban areas and twice as much in rural areas. Meanwhile, oil production is expected to continue to decline and reserves are expected to run out by 2021 in the absence of new oil discoveries and developments. State revenues from natural gas production and exports will offer some cushion, but cannot compensate for the loss of oil revenues. 3. As a result of the events of 2011, Yemen has embarked on a political transition based on an agreement brokered by the Gulf Cooperation Council (GCC). The Government of National Reconciliation was formed and confirmed by Parliament in December 2011. Presidential elections were held in February 2012, and President of the Republic of Yemen, Mr. Abd Rabu Mansour Hadi was sworn in soon afterward. The National Dialogue Conference (NDC), a key element of the GCC agreement and transition process, was launched in an atmosphere of much hope, trepidation, and protest. Despite some delays, the NDC was successfully concluded in early February 2014 and is widely recognized as a milestone agreement achieved through an inclusive and consultative process. Importantly, the NDC agreed upon a formal process to develop a new constitution which fundamentally decentralizes decision making in Yemen to regional and local governments and enhances the voice of local communities. The agreement is to build a federal Yemen. Legislative and presidential elections are to be held under this new constitution, followed by the inauguration of a new president and formation of a new parliament. Implementation of the GCC agreement is thus occurring as planned, albeit with a delay of about four months. 4. Yemen is now in a delicate period in its transition process. The gains achieved through the NDC are important but precarious and the Government must act quickly to consolidate these achievements in a meaningful way for the average citizen. The transition government is therefore intent on addressing the underlying causes of instability and social strife in order to rebuild Yemen’s social and economic base, and to restore macroeconomic stability. There is an overall sense of optimism and hope for inclusive change in the new federal and democratic Yemen, but the country’s transition may face significant risks if reforms and economic opportunities do not 1 materialize quickly, and if substantive changes are not felt by the population. Yemen needs the collective support of the development community as it works to sustain its political transition and economic recovery. This project is critical to that process because it not only finances a strategically important piece of infrastructure, but it also supports the economic and regional unification of Yemen under the renewed national compact agreed through the National Dialogue. 5. The project will finance one of the most important sections of the Government’s ambitious Saada–Aden Yemen International Corridor Highway (SAYICH) Program, the 710 km long highway connecting the northern and southern parts of Yemen. Beyond unifying communities who were once divided in two countries, the project will provide much needed access to public services and markets for the communities that live along it, create jobs, promote internal and external trade, and improve road safety. Given its strategic and physical importance, the project is also an important partnership between the Bank and Saudi Fund for Development that is also providing financing for the SAYICH Program. B. Sectoral and Institutional Context 6. Yemen’s road sector has gone through a radical transformation in the past three decades. The most striking element has been the creation of a network of modern paved roads linking most of the main cities and governorates, particularly in the densely populated and mountainous western part of the country. This network has indeed grown from only about 5,000 km in 1990 to about 14,000 km in 2010, a 280 percent increase over about twenty years. Major progress has also taken place in rural areas where about 5,500 km of paved roads have been constructed in the past twenty years (out of a total of 58,200 km of non-urban roads). The paved road network is in relatively good condition, in part due to its young age but also due to the mostly excellent geotechnical conditions and road building materials in Yemen. The improvements of the road network have had a major impact on the population and the economy, promoting internal and external trade, enabling a growing share of the population to have access to public services and markets, and ensuring that food imports reach remote areas. Yemen’s current road network (in kilometers)1 Paved roads – total 14,200 International 3,600 Main 5,100 Secondary and rural 5,500 Unpaved roads 44,000 Grand Total 58,200 7. Moreover, the organization of the road sector and its main institutions has also undergone important changes in the past decades. The Ministry of Public Works and Highways (MPWH) has gradually taken firm control of the road sector and of the strategies and expenditure programs necessary for its development. In addition, a diverse set of private road construction and maintenance companies, and engineering firms, has emerged in Yemen with a cadre of 1 Source: Ministry of Public Works and Highways of the Republic of Yemen 2 qualified specialists who have a good understanding of the special physical conditions and human constraints in Yemen. 8. Despite these positive changes in Yemen’s road sector, the Government still needs to develop more effective and service-focused methods and institutions that are necessary for managing, operating and maintaining its road network at higher standards, particularly larger infrastructure such as the proposed new highway which must provide a much higher level of service to road users than traditional roads. The proposed project supports the physical upgrading that is needed to accommodate future higher volumes of traffic, and improving road safety given the topography and driver behavior as described below. In addition, it includes support for defining the most appropriate institutional and other arrangements for the management of the new highway asset. 9. In terms of main road arteries, most of Yemen’s major cities are connected by an existing North-South road. It begins in the southern port city of Aden and passes through Taiz, Ibb, Dhamar, Sana’a, Amran and Saada before reaching the Saudi Arabian border at Albayn. Although the existing road is a vital transportation route, it was not designed for efficient long- distance and inter-urban traffic. There are a host of problems affecting its use, first and foremost its inadequate physical capacity for handling rising levels of traffic. This lack of capacity has resulted in traffic jams, particularly where the road passes directly through the densely populated and congested centers of the capitals of eight governorates. Another problem is the high gradients and often sharp curves of the road, resulting in low average travel speeds of only between 40 to 60 km/hour. Overall, the road cannot serve as an efficient long-distance transport artery for passengers and commercial freight. The MPWH estimates that traffic on the road had increased at a rate of 5 percent per year during the decade before the unrest in 2011, with traffic surpassing the road capacity on many sections. Although traffic growth has been stifled since 2011, long lines of vehicles still form today behind heavy trucks which slowly climb or descend the winding mountainous road sections. This leads to risky behavior of drivers trying to overtake trucks, often resulting in serious accidents claiming many lives. 10. The MPWH has implemented partial solutions in the past, such as bypasses and ring roads in some cities, but they did not generally resolve the issues mentioned above, prompting the Government to seek a more comprehensive solution. With this intention, the Yemeni Government started already in 2003 to conceptualize and design a completely new dual carriageway highway between Aden and the border with Saudi Arabia (“Saada–Aden Yemen International Corridor Highway” or “SAYICH”). The new highway will provide the country with a 710 km long North-South route that will adequately serve its current and future transport needs. Detailed and in-depth studies to select the best overall highway alignment and the most appropriate technical design solutions were carried out between 2003 and 2005 by German and British engineering design firms hired by the Government of Yemen (GoY). Since that time, however the GoY has not been able to mobilize the funding necessary for that highway which is expected to cost close to US$ 3.0 billion for the entire length and will take about eight years to implement. 11. The first section of the new highway to be built is located between Aden and Taiz, with a length of 140 km. This section is of particular importance in the context of the National 3 Dialogue, since it connects the areas of the former South and North Yemen, and thus the main conflicting interest groups. Recognizing the above and the need to demonstrate actual quick progress on the ground, the Government of the Kingdom of Saudi Arabia agreed in early 2013 to fund the construction of 85 km of this section, as a separate project, between the city of Taiz and the locality of Noubat Dokaim. Loan and Grant Agreements totaling US$ 320 million were signed between the Saudi Fund for Development (SFD) and the GoY in March 2013. The tender for the construction of these 85 km was formally launched on June 30, 2013. Award of the SFD- funded contracts is imminent and it is expected that construction works will start during the second half of 2014. 12. The Bank is planning to support the Government’s overall program for the Saada – Aden Yemen International Corridor Highway (SAYICH). The different sections of the SAYICH Program are shown below. It envisions multiple donors for the different highway sections. The Government of Yemen has asked the Bank to play a catalytic role in the mobilization of large- scale funding for the SAYICH. The World Bank is planning to initially support the SAYICH Program through IDA resources of US$ 133.54 million for the "Corridor Highway Project" which is described in this document and which covers the part of Section 1 of the SAYICH which is not funded by the SFD, between Noubat Dokaim and Aden (55 km). World Bank/IDA funding could also be provided for later stages of the SAYICH Program. The IDA-funded "Corridor Highway Project" will thus complement the separate SFD-funded project of the 85 km between Noubat Dokaim and Taiz. Very importantly, the project will include activities to lay the groundwork for the other future sections of the Corridor Highway, such as updating existing feasibility and design studies, carrying out new environmental and social safeguards studies, etc. The availability of those project preparation studies and documents, reviewed and endorsed by the Bank, will make other donors feel comfortable towards providing funding - and this will respond to the Government’s specific request for the Bank to play a catalytic role for resource mobilization. Section 1: Aden - Taiz - Sub-Section from Aden to Noubat Dokaim: 55 km (IDA funding) - Sub-Section from Noubat Dokaim to Taiz: 85 km (SFD funding) Section 2: Taiz - Ibb - Dhamar - Sana'a: 214 km (funding to be identified) Section 3: Sana'a - Amran - Saada (Albain border): 358 km (funding to be identified) In addition, the project will also help to establish appropriate institutional arrangements for the management, operation and maintenance of the entire highway, based on modern principles of asset management and road user service quality. The new arrangements, which are expected to be in place before the end of the project, are expected to provide an example for service provision in other sectors, besides providing business opportunities for various types of companies, mostly small and medium sized. Road maintenance funding 12. Yemen’s paved road network is in better condition than in many other countries for which data is available. This is, however, not due to very good road maintenance, but rather because of excellent geotechnical conditions and high quality of available road building 4 materials. If the usual standards on maintenance expenditures are applied, and current prices taken into account from the ongoing contracts, about US$75 million should probably be spent every year on routine and periodic maintenance to keep Yemen’s paved network in satisfactory condition. This is several times more than what was typically spent in the past 10 years. 13. To address chronic under-funding and deficient management of road maintenance, a Road Maintenance Fund (RMF) was established in 1995 with dedicated, off-budget funding for maintenance, based on a levy on gasoline. This initiative had been the result of a long-standing road sector policy dialog between the Bank and the GoY in the context of several IDA-funded road sector projects in Yemen since the 1980s. Initially, revenues from this gasoline fuel levy were far too low to generate adequate funding for maintenance. The fuel levy was therefore increased by Parliament in 2000 by law to 5% of the price of both gasoline and diesel. However, the law was not actually implemented. Instead, the RMF received annual allocations from the MPWH budget. In the period between 2000 and 2010, maintenance funding was still about 10% of the needs. Finally, in March 2012, Cabinet decision No.41/2012 was issued to enforce the gradual implementation of the fuel levy, starting with 3% and to be increased gradually to reach 5% of the price of fuel, in line with Law # 27 of 2000. This Cabinet decision became effective on April 4, 2012. As a result, the Ministry of Finance (MOF) allocated for routine and periodic maintenance works about US$ 62 million equivalent for the year 2013, which is close to the needed amount. It is very important that revenues for the RMF now continue to be collected in accordance with the existing legislation in order to enable the RMF to perform road maintenance in a sustainable manner. The table below shows a comparison between RMF’s projected revenues in line with the legislation and the actual revenues, from 2000 to 2013. It shows the very strong increases in 2012 and especially in 2013. RMF's projectd and actual revenues 2000‐ 2103 Year Revenue 2000‐ 2008 2009 2010 2011 2012 2013 Projectd, YER 96,000,000,000.00      12,000,000,000.00        13,200,000,000.00    23,000,000,000.00    23,000,000,000.00   23,000,000,000.00 Actual, YER     8,000,000,000.00 1,036,451,176.00         1,085,276,722.00          927,984,554.00     4,895,545,017.00   13,365,131,119.00       Projected, USD         480,000,000.00 60,000,000.00               61,395,348.84          106,976,744.19         106,976,744.19         106,976,744.19             Actual, USD           40,000,000.00 5,426,383.61               4,639,922.77           24,477,725.09                          5,182,255.88                   66,825,655.60 Acuumualtive  Projected,  USD         480,000,000.00         485,182,255.88             490,608,639.49          495,248,562.26         519,726,287.35         586,551,942.94 Accumlative  actual, USD 45,182,255.88               50,608,639.49                        40,000,000.00             55,248,562.26           79,726,287.35         146,551,942.94 Gasoline  price: YER/lit 60 60 65 175 175 175 Diesel  Price: YER/lit 30 30 35 50 50 50 Source: RMF‐ Finance  Dept. The RMF is the implementing agency for the ongoing IDA-funded Yemen Road Asset Management Project (P125135). Road Traffic Safety in Yemen 14. Yemen has one of the poorest traffic safety records in the region with almost 6,500 reported deaths every year on the road network. Traffic police records show about 13,000 5 accidents with injuries each year, affecting about 17,000 people and their families2. Road traffic injuries rank among the top 10 causes of death in Yemen. 15. Such high rates of road traffic injuries and fatalities, also characterized by the high share of pedestrian fatalities, disproportionally affect the economically active population in Yemen; hence, the economic and social consequences are significant. The key factors that contribute to the poor road safety records are: (i) poor road conditions and the lack of safety features in road design, (ii) unsafe driving behavior; and (iii) ineffective enforcement of traffic laws and regulations. Prevalent among drivers are speeding and the use of communication devices (cell phones), while seat belts and other safety measures are not widely used. The World Bank has had a dialog with the Government on a range of needed measures to improve road safety, which include physical and non-physical measures (institutional and legislative). However, the unstable political and governance environment has not been conducive to the non-physical measures which should normally be applied as part of a comprehensive road safety strategy. In practical terms, physical road safety improvements on roads are presently the only viable and realistic measures likely to produce measurable results. 16. From the road sector’s point of view it is urgent and critical to improve the physical features of roads to reduce the likelihood and severity of crashes. A formal road safety audit should be required not only for new construction (as planned under this project) but also for road rehabilitation and reconstruction where there are ample opportunities to change the geometric design of roads and add other road safety features for improved safety. C. Higher Level Objectives to which the Project Contributes 17. At the present time, Yemen’s biggest challenge is to remain a unified country with the necessary conditions for peace, security and stability. The NDC which recently ended was the forum where a peaceful settlement of differences has been achieved. During the multi-party discussions in the NDC, the new Corridor Highway between Aden and the border to Saudi Arabia was identified by all parties as a key strategic project which would be crucial for unifying the country and provide much needed economic opportunities for the numerous communities along the corridor. 18. Beyond the quantifiable project benefits of transport cost reduction, time savings and reduced traffic fatalities (which are all captured in the traditional economic analysis), the project has numerous broader social benefits which feed into higher-level objectives pursued both by the Government of Yemen and the World Bank. The new highway section is expected to promote shared prosperity in the following ways.  In the short term, the construction of the road will bring important benefits through job opportunities for thousands of workers, unskilled and skilled, including those who have been repatriated from Saudi Arabia and Gulf states in the recent past. First, during the construction period a large number of skilled and unskilled workers will be employed by private contractors, resulting in important income generation (about 1.28 million person- days of unskilled work alone during the 3 to 4 years of project execution, at a rate of 2 In Yemen, data on traffic injuries and fatalities are collected by the traffic police as part of a nationwide system (not gender-disaggregated). 6 about US$ 18 per day). Unskilled workers, which in economic terms are part of the bottom 40% of the population, will typically be recruited from the area of the physical works, resulting in direct income generation for this group in the area of the road works. Second, the construction would also bring large-scale business opportunities for many Yemeni firms who will be involved in the construction activities, as contractors, sub- contractors and as suppliers of goods and services. These direct short-term benefits are of specific importance in the context of the ongoing political consolidation and unification process.  In the medium and long term, the new Saada-Aden Yemen International Highway Program, of which the Corridor Highway Project is the first part, is expected to bring trade facilitation and general economic revitalization, by lowering transportation costs and travel times, reducing overall trade costs, and by bringing access to international markets through Aden deeper into the country. The highway will also provide better access by rural populations to markets and services located in the larger cities along the new highway (Aden, Lahj and Taiz). Most social services, such as general healthcare, emergency medical services, education, etc. are located in the cities and the new highway will provide faster and easier access to those.  The project is expected to have a demonstration effect due to the new service-focused institutional arrangements for asset management and maintenance that it will help to define and put in place as one of the activities in Component 2 (see detailed project description). The new institutional setup will also provide business opportunities for local firms and communities along the highway corridor, mostly small and medium sized, and also provide an example for service provision in other sectors. 19. Within the context of the wider highway program, the SAYICH will eventually link the south of Yemen with the northernmost governorate of Saada, passing through eight of Yemen's governorates (Aden, Lahj, Taiz, Ibb, Dhamar, Sana’a, Amran and Saada) in which about 70% of Yemen's population lives. While providing economic benefits to those cities that are major trading points, the highway would nonetheless benefit less prosperous cities and areas as well. For example, Amran, ranked among the poorest governorates in Yemen in 2005-06 with almost two out of three of its inhabitants living in poverty, would be linked better to the relatively prosperous Saada to the north and to Sana’a to the south. In turn, Amran with improved highway access could then also act as a trade exchange point for Hajjah, another poor governorate. Thus, the proposed national highway has the potential to become an equalizing force in Yemen's development outcomes. 20. More generally, whether referring to the highway section between Aden and Taiz or the overall SAYICH Program, the development of roads and highways is a fundamental component of Yemen’s economic development because of the overarching importance of mobility. Access to markets and social services such as health and education simply cannot be improved without improving infrastructure, which also enhances mobility. This is especially the case for Yemen, where the fight against rural poverty is hampered by the inaccessibility of certain areas and whole districts. The Government recognizes transport connectivity as the key to facilitating the spread of development’s drivers, be it new technologies, knowledge or the meeting of basic needs. 7 21. The project will respond to the World Bank Group’s twin goals of ending extreme poverty by 2030 and boosting shared prosperity. Section VI.E presents how the project is linked to the Bank’s indicator for shared prosperity, namely “income growth of the bottom 40 percent” of the population. 22. The project is in line with the main medium-term strategic objectives of the FY13-14 World Bank’s Interim Strategy Note (ISN) for Yemen, which indicates that Bank Group support will be oriented toward addressing the key institutional and structural weaknesses that caused the crisis, including notably governance deficits, acute poverty, and deep horizontal inequalities, while helping to establish the foundations for long-term development and private sector-led growth. The ISN proposes to support these objectives across three strategic pillars: (i) achieving quick wins and protecting the poor; (ii) promoting growth and improving economic management; and (iii) enhancing governance and local service delivery. The project is also consistent with MENA Region’s Framework for Engagement with its four pillars consisting of (a) accelerating sustainable growth; (b) creating jobs; (c) strengthening the governance framework; and (d) increasing economic and social inclusion. 23. The project will also help to achieve results for Yemen in the context of the United Nations Decade for Road Safety. II. PROJECT DEVELOPMENT OBJECTIVE The Project Development Objective is improved transport connectivity and safety on the targeted section of the transport corridor between Aden and Taiz. Project Beneficiaries 24. The most direct beneficiaries of the Corridor Highway Project, and of the wider SAYICH Program, are Yemeni road users, which may be vehicle owners, but can also be passengers traveling in buses, or owners of cargo being transported by truck. These will benefit from reduced transportation costs and travel times between the connected cities and regions, and much improved traveling comfort. Road users, besides the population at large, will also be able to use the citizen engagement mechanism to be created under the project and use it to provide feedback on service quality and other issues related to the Corridor Highway. 25. The communities located along the new corridor will benefit economically for two main reasons. First, during the construction period a large number of skilled and unskilled workers will be employed by private contractors, resulting in important income generation (about 1.28 million person-days of unskilled work alone during the 3 to 4 years of project execution, at a rate of about US$ 18 per day). Unskilled workers, which in economic terms are part of the bottom 40% of the population, will typically be recruited from the area of the physical works, resulting in direct income generation for this group in the area of the road works. Second, the passenger and freight traffic on the new highway will generate business opportunities for communities along the highway, both during construction (as suppliers to contractors) and during operation, at the rest and service areas. 8 26. The MPWH will benefit from enhanced capacity in managing and maintaining the new corridor asset, while private contractors and consultants will benefit from the contracts that will arise from project execution and from the subsequent operation and maintenance of the new highway. 27. Both women and men are expected to benefit from the improved mobility, safety and access to markets and services along the corridor highway. During consultations, special efforts have been made to ensure the participation of women and this is documented in the ESIA and the RAP for this project. However, there is no hard gender-specific data available on road users, pedestrian traffic and on traffic injuries and deaths along the planned highway (and in Yemen in general). However, in terms of safety benefits it seems likely that (i) women and children will benefit in particular from the increased pedestrian safety generated by the project, since they tend to constitute the majority of pedestrians in settlements along the road, in order to access social services and markets (stores). The project will improve pedestrian safety mostly on the existing road, since the new road will take much of the high-speed traffic off the existing road and put it on the new highway which is further away from settlements. On the other hand, men will mostly benefit from those road safety improvements that address safety risks for drivers and vehicle occupants, which in their majority are men. Given that the project is to build a new major highway, it was found that it does not lend itself for gender-specific project actions or components, unlike urban and rural road projects which do often present such opportunities. (See section VI.E for more details.) 28. Finally, the project will also benefit People with Limited Mobility since the service areas along the new highway will be designed barrier-free to enable access with wheelchairs, crutches, etc. PDO Level Results Indicators 29. The achievement of the PDO will be measured with the following key outcome indicators: a. Decrease in travel time between Aden and Noubat Dokaim; b. Decrease in vehicle operating costs between Aden and Noubat Dokaim; c. Decrease in traffic fatalities between Aden and Noubat Dokaim; d. Direct project beneficiaries (number), of which female (percentage) 30. Key output indicators for the project will be: a. Length (in km) of new highway constructed; b. Earthworks completion rate; c. Pavement completion rate; d. Definition and establishment of an institutional structure for the management, operation and maintenance of the new Corridor Highway; e. Number of MPWH staff trained; f. Number of person-days of work created; g. Fiber Optic Duct installed. 9 III. PROJECT DESCRIPTION A. Project Components 31. The Corridor Highway Project would achieve the above mentioned Project Development Objective though the implementation of two project components: 32. Component 1: Highway construction (total cost of US$ 150 million, with US$ 111.54 million allocated from the IDA resources). Component 1 will include (i) civil works for the construction of a sub-section (55 km) of a 4-lane double carriageway highway between Aden and Noubat Dokaim, (ii) consulting services for the supervision of construction for the same section, and (iii) regular technical audits by an independent international auditor to verify that all road works have been executed in compliance with the technical specifications. The MPWH already commissioned detailed feasibility and design studies for this section in 2003, which the World Bank team reviewed. The highway was originally designed as a six-lane highway. While the overall platform width will remain as originally planned and designed, only the outer four lanes will be built now as part of the project, while the inner two lanes can be added at a later stage when traffic levels warrant such additional investment. Design of the highway includes all the road safety features typically applied under international good practice. The separation of opposing traffic directions by a wide median will essentially eliminate head-on collisions which are today a major cause of traffic fatalities. The technical design of the highway will include ducts and other elements to accommodate fiber optic cables. The highway will therefore also become the backbone for a new "data highway" for Yemen. The project will also benefit People with Limited Mobility since the service areas along the new highway will be designed barrier- free to enable access with wheelchairs, crutches, etc. 33. For procurement purposes, the 55 km sub-section has been divided into two smaller lots in order to facilitate the ability of local Yemeni contractors to prequalify for the works. Advance procurement of works and services is being applied, with procurement-related activities having started in September 2013. Prequalification of contractors was initiated in November 2013 and is expected to be completed in April 2014. The award of construction contracts is expected soon after project effectiveness. 34. Component 2: Institutional Support and Strengthening (total cost of US$ 22.0 million to be funded from IDA resources). This component will be comprised of several subcomponents: (a) Preparation for Sections 2 and 3 of the Saada – Aden Yemen International Corridor Highway Program. This sub-component is critical for the Government’s efforts to mobilize large-scale funding from several sources for the remaining sections of the SAYICH (in the order of US$ 2.5 billion). The Government has specifically asked the Bank to play a catalytic role in the mobilization of such additional funds for the SAYICH. The timely availability of high- quality project studies for the future highway sections is fundamental as an enabling factor. The following specific activities are included:  Preparation of Environmental and Social Safeguards studies (ESIA, EMP, RAP) in line with World Bank safeguards policies, for the following sections of the highway: (i) Taiz – Sana’a (Section 2); (ii) Sana’a - Amran (part of Section 3); 10  Update of existing design and feasibility studies for the section between Taiz and Sana’a (Section 2) and between Sana’a and Amran (part of Section 3);  Pre-feasibility and corridor selection study for highway sections between Amran and Saada (Border with Saudi Arabia);  Final design and feasibility study for highway sections between Amran and Saada; and  Environmental and Social Impact Assessment (ESIA) and Resettlement Action Plan (RAP) for the highway section between Amran and Saada (Saudi Arabia border). (b) Road safety. This will include a review of the existing design of the various sections of the SAYICH with the specific purpose of detecting and remedying any potential design deficiencies in terms of road safety. This is of particular importance for this highway because it will be Yemen’s first highway enabling drivers to travel at higher speeds. For the section between Aden and Taiz, the review will be funded through a Bank-executed trust fund (already identified). For the other sections to the north of Taiz, the road safety review will be funded through the IDA Grant. This activity will be combined with practical training of engineers at the MPWH on road safety issues. (c) Definition of asset management arrangements for the SAYICH. This subcomponent will include activities required for the establishment of arrangements for the effective and efficient management, operation and maintenance of the new highway. Although the IDA-funded civil works component of the project only includes the 55 km sub-section from Aden to Noubat Dokaim, it will be necessary to make the necessary arrangements for the entire future Corridor Highway asset, which will eventually connect Aden in the South to the Saudi Arabia border in the North. The overall setup for the management of the SAYICH will be also developed with the added objective of generating social benefits for the communities living along the road, such as the use of small and medium-sized local firms whenever this is possible and efficient. (d) Communications campaign. This will include the design and execution of MPWH’s information and communications campaign for the purpose of building public and stakeholder support for the Saada - Aden Yemen International Corridor Highway Program. The communications/outreach campaign is expected to include ICT-based citizen feedback mechanisms and will also promote road safety awareness among road users. (e) Training and capacity building. This subcomponent will also include resources to fund various types of training and capacity building for staff of the MPWH, apart from the resources for road safety training and asset management described above. B. Project Financing Financing Instrument 35. The World Bank is expected to contribute the amount of US$ 133.54 million to the project through an IDA Grant. The Recipient of the IDA Grant will be the Republic of Yemen and the representative of the Recipient will be the Ministry of Planning and International Cooperation. 11 Project Cost and Financing 36. The total cost of the proposed project is US$ 191 million including taxes. This figure includes the estimated cost of all those social and environmental mitigation measures which are not already covered in project components 1 and 2, for the entire highway section between Aden and Taiz, including the SFD-funded sub-section where by far the largest part of those costs will accrue. Most of the mitigation costs are to pay for land acquisition and resettlement. The World Bank will provide US$ 133.54 million through an IDA Grant. In addition, the GOY is committed to cover the operation cost of the Project Implementation Unit (PIU) and any other relating cost relating the RAP implementation, including travel cost and per diem, etc. for the various committees involved in RAP implementation. IDA Financing Project Components Project cost (incl. taxes) Financing percentage 1. Highway Construction US$ 150 million IDA: US$ 111.54 million 75* GoY: US$ 38.46 million 2. Institutional Support and Strengthening US$ 22 million IDA: US$ 22 million 100 Cost of Social and Environmental safeguard US$ 19 million GoY: US$ 19 million 0 measures not covered under Components 1 and 2 Total Project Costs US$ 191 million * IDA will pay 100% of invoices until the IDA amount allocated for this component is exhausted. C. Lessons Learned and Reflected in the Project Design 37. The Bank’s Internal Evaluation Group (IEG) has carried out a large number of ex-post project assessments and has been able to extract as one of the fundamental lessons that the likelihood of a project’s failure to achieve its development objectives increases proportionally with its complexity. This is especially true in fragile and conflict-affected countries such as Yemen, where the capacity of state institutions is limited and governance constraints exist. The design of the proposed project reflects this lesson by keeping things simple: The project has (i) only two components, (ii) only one implementing agency, and (iii) project activities that are within the proven abilities of MPWH as the implementing agency of several IDA-funded projects during many years. The Bank has worked with MPWH since 1970 through a series of road sector projects of which two are currently ongoing3. The Bank is therefore well informed about the capacity of the MPWH and what can reasonably and realistically be expected of MPWH staff in the Project Implementation Units. This knowledge has informed the design of the project, in terms of scope and complexity. 38. The World Development Report 20114: Conflict, Security and Development, which cautions not to let perfection be the enemy of progress—embrace pragmatic, best-fit options to address immediate challenges, has guided the design of the Yemen Corridor Highway Project. In absence of security it is generally impossible to achieve technical perfection in approaches to 3 The ongoing IDA-funded road projects implemented by MPWH are (i) Second Rural Access Project (RAP2, P085231) and (ii) Road Asset Management Project (RAMP, P125135). 4 WDR 2011 Report #62255 12 security, justice, or development. There is a need to be pragmatic, to address immediate challenges within political realities, with approaches that can improve over time. Transport corridor operations typically involve infrastructure investments, trade, customs/border post, and could also involve corporatization of road agencies. Given the fragile country circumstances and complex political economy context, the Bank has chosen an incremental and practical approach accounting for country realities but anchored in a coherent program of immediate, medium, and longer term support. Within the wider SAYICH program, the initial focus is on starting the construction of the highway and thereby demonstrating the ability of MPWH to follow good international practice in terms of technical standards, practices for procurement, financial management and environmental and social safeguards. The medium to long-term actions will focus on building the appropriate institutional setup for service-oriented management of the new highway. 39. The importance of convening partnerships is critical to deliver infrastructure services in fragile environments. The Bank is collaborating with the Saudi Fund for Development towards the implementation of the Section 1 of the Corridor Highway. Other International Financing Institutions (IFIs) have indicated their interest in contributing to the overall SAYICH program. The proposed IDA-funded project will carry out the technical preparation of all other future sections of the SAYICH which will facilitate other IFI’s participation in Yemen’s challenging environment alongside the World Bank. South-South learning has been an important part of project design and will continue during implementation. Exchanges between the South African National Highway Authority and the MPWH have been useful to better understand options for managing operations and maintenance of corridor highways in a fragile context, and ways to engage communities in the management of a shared asset in a country coming together through a renewed national compact. 40. The Bank should ensure that its interventions are responsive to client demand and receptivity to reform. In fragile and conflict states, Government engagement and commitment are imperative to increase the likelihood of satisfactory project outcomes. In Yemen, in some sectors, client engagement, capacity and ability to carry out projects have been low. However, in the road sector, the MPWH has been a committed partner for reform during many years. The following recommendations from the IEG Improving Institutional Capacity and Financial Viability to Sustain Transport - An Evaluation of World Bank Group Support since 20025, have been taken into account in the Project design: "For the subsectors and transport modes that rely on operations and maintenance funds from public sources or earmarked funds such as intercity highways and rural roads: engage with the client where high-level policy decisions related to maintenance funding can be taken" and "Where complex reforms are planned, encourage continuous and sequential engagement and support appropriate government-led reform programs in a realistic time frame, taking into account the capacity of the government to carry out the reforms". 41. Cost estimates should take into consideration additional insurance for contractors and consultants and the cost of private security. There are weaknesses in the contracting and consulting industries in Yemen, associated with the fragile country environment, security and 5 IEG Improving Institutional Capacity and Financial Viability to Sustain Transport - An Evaluation of World Bank Group Support since 2002, March 2013, Report Number 77092 13 local capacity issues. These weaknesses represent a significant challenge to the quality of construction in Yemen and the implementation prospects of this Project. To attract qualified international contractors, procurement packaging planning was introduced; joint ventures with local contractors are encouraged; cost estimates have taken into consideration additional insurance and costs of private security. The same applies for consulting firms that will be considered for the supervision of works. Due to the weak capacity of the local firms, attracting international reputable firms is critical to guarantee close monitoring of subprojects’ implementation and reporting on any deviations from Project design and contract terms. 42. Advance procurement is key to ensure good disbursement indicators. To avoid delays in Project implementation, advance procurement including pre-qualification of contracting firms, shortlisting of consultants, preparation of bidding documents and Terms for Reference for consulting assignments were undertaken during the Project’s preparation to ensure the project’s readiness for implementation, with first disbursements expected soon after the loan becomes effective. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 43. The Corridor Highway Project will be implemented by the Ministry of Public Works and Highways (MPWH). MPWH has gained much experience in the execution of externally funded road projects. Given the good track record of MPWH in the preparation and execution of externally funded projects, the risk of problems related to the capacity of the implementation agency are considered to be moderate. Overall implementation risks are nevertheless regarded as substantial, mainly due to the overall country risks and also due to environmental and social safeguards risks which exist, mostly along the SFD-funded highway section which is much more densely populated. Risks are moderate during the project preparation stages (road design, feasibility studies, environmental and social assessments, etc.) where the performance of MPWH has been mostly satisfactory. Most project preparation activities for the Corridor Highway Project have been completed already. 44. The MPWH has established within its own internal structure a specific Project Implementation Unit (PIU) which is responsible for all aspects of the overall preparation and implementation of the broader Saada – Aden Yemen International Corridor Highway Program, including the proposed Corridor Highway Project described in this document. The PIU is staffed with eleven staff, including engineers, accountants and a procurement specialist. This includes technical preparation, management of construction and consultant contracts, environmental and social safeguards management, procurement and financial management, among others. An environmental and social safeguards specialist is presently being hired to strengthen the PIU in that area. The MPWH has demonstrated its capacity to establish and staff PIUs for specific projects which then successfully implement projects under the Bank’s (and other donors’) guidelines and procedures. 45. Despite the widely recognized governance issues in Yemen at the country level, these high country risks have so far not translated into problems in the execution of externally funded 14 projects in the road sector. There have not been any reports of interference by higher-level authorities in the management of road projects by MPWH. Externally funded road projects benefit from tight scrutiny and oversight by the external funding agencies. Additionally, all projects in the road sector, independent of the funding source, are subject to internal auditing and control through the Ministry of Finance and other Government agencies. In order to further increase good governance, regular technical audits by an independent international auditor will be carried out to verify that all road works have been executed in compliance with the technical specifications. The methods to be used in the technical audits are described in more detail in Annex 2 (Detailed Project Description). 46. The existing arrangements for procurement and financial management that are being applied under the ongoing IDA-funded road projects will essentially be applied in the same way for the proposed Corridor Highway Project. The PIU for the Corridor Highway Project includes a qualified procurement specialist who has already received substantial training and who has successfully taken on procurement responsibilities. In order to ensure the quality and efficiency of project accounting, the PIU has acquired an automated accounting system which is capable of recording and reporting all Project transactions. 47. The PIU will designate one full-time staff member (presently being recruited) to monitor compliance with the Bank’s environmental and social safeguards policies (OPs 4.01 and 4.12), specifically in land acquisition procedures, and also with OP 4.11 on Physical Cultural Resources. The PIU’s existing staff has been actively involved in the preparation of safeguards documents for the proposed project. The World Bank will provide opportunities for further training and skills development for the PIU staff. 48. The situation in Yemen requires intensive, on-the-ground implementation support by the World Bank task team. However, direct World Bank staff involvement on the ground is not always possible due to the difficult security situation and the limited ability of WB staff to visit the site of the works. The use of the Third Party Monitoring Agent by the Bank in Yemen is a solution that at least partly offsets the difficulties in access by Bank staff and provides a reasonably good level of fiduciary oversight. B. Results Monitoring and Evaluation 49. MPWH will be responsible for the monitoring of results of the SAYICH Program. As is the usual practice under externally funded projects, regular monitoring reports will be prepared by staff of the PIU, both for the IFIs involved but also for other government agencies such as the Ministry of Planning and International Cooperation (MOPIC). During the regular implementation review visits, staff from the involved IFIs and MPWH will continue working together for joint results monitoring. The cost of the PIU is fully covered by MPWH and thus by the Government budget. C. Sustainability 50. As for any road investment project, the availability of sufficient funding for the maintenance of the new asset is essential to ensure its sustainability. As described in Section I.B 15 above, in 2012 the Government has introduced legal measures which have since dramatically increased the availability of funding to levels which are very close to the actual long-term needs. This has had a major positive impact on the sustainability of the road sector as a whole and also of the new Corridor Highway in particular. 51. As described elsewhere in this document, Component 2 of the project will also include the definition and establishment of the institutional arrangements for the management, operation and maintenance of the new Corridor Highway. This may also include the introduction of road tolling on the highway, although there is not yet a firm political decision on that issue. It is presently envisaged that the Corridor Highway will be managed by a specialized agency under the umbrella of the MPWH which will apply modern international practices used for corridor highways elsewhere. V. KEY RISKS AND MITIGATION MEASURES 52. Environmental and social safeguards. Due to the nature of the project as construction of a new highway (as opposed to upgrading of an existing highway), the project may have significant environmental and social impacts which need to be managed and mitigated. The proposed project is therefore considered a “Category A” project. 53. An Environmental and Social Impact Assessment (ESIA), Environmental and Social Management Plan (ESMP) and Resettlement Action Plan (RAP) have been prepared for the entire section between Aden and Taiz (140 km), which includes the sub-section being funded by the Saudi Fund for Development. These studies complement the existing earlier studies. The monitoring arrangements for the implementation of the ESMP and RAP will be the same for the SFD-funded and IDA-funded highway subsections. Besides its own internal monitoring by PIU staff, MPWH will involve an external independent monitoring agency. For the Aden–Taiz section of the highway, the necessary land acquisition and resettlement is concentrated in several pockets along the planned highway, while there are also long stretches in desert areas which are not affected by either land acquisition or resettlement. Negative environmental impacts would arise from construction activities and may include aquifer contamination, dust creation and lowered air quality, noise and vibration near communities, and possible loss of natural habitats. 54. Complementarity of project with SFD-funded civil works. The IDA-funded sub-section of the highway will cover 55 km from Aden to the small locality of Noubat Dokaim. This sub- section would have limited benefits as a stand-alone project. However, in combination with the separate SFD-funded project for the sub-section between Noubat Dokaim and Taiz, a viable highway section will be created, connecting the three Governorate capitals of Aden, Lahj and Taiz. The SFD funded project was approved the SFD Board in March 2013. The procurement of works contracts is well advanced and physical works are expected to start in the second half of 2014. There is nevertheless a risk that for any unforeseen circumstances there could be a delay in the construction of the SFD-funded sub-section, and that the full benefits of the IDA-funded sub-section may therefore not materialize until after the project closing date. This risk is however regarded as minor, given the fact that the SFD-funded project is more advanced than the IDA-funded project. It is also noted that most of the social and environmental impacts will occur on the SFD-funded portion of the highway, where the largest share of the project-affected persons live. 16 55. Security situation in project area. Progress and cost of civil works could be negatively affected by the difficult security situation in the project area. The bidding document for works, as well as the TOR for the supervision consultant will need to include provisions which require the contractor and supervision consultant to make the necessary security arrangements, and price those arrangements in the respective contracts. Despite such arrangements, the progress of works could be affected by threats or by actual attacks on the contractor’s personnel and equipment, or attacks on the supervision consultant. This risk could be mitigated at least in part through security support by state agencies (police or military). The World Bank is using a Third Party Monitoring Agent in Yemen to at least partly offset the inability of Bank staff to access the site of the civil works due to the security situation. A. Risk Ratings Summary Table Risk Category Rating Stakeholder Risk Low Implementing Agency Risk - Capacity Moderate - Governance Moderate Project Risk - Design Moderate - Social and Environmental Substantial - Program and Donor Moderate - Delivery Monitoring and Sustainability Moderate Other - Security High Overall Implementation Risk Substantial B. Overall Risk Rating Explanation 56. Despite the MPWH’s successful record in working on Bank-financed road sector projects and the Government’s strong commitment to the project, several of the project’s risk ratings are either Substantial or High. They apply mostly to project implementation. The most salient risks result directly or indirectly from Yemen's fragile political and security situation. The risks related to the implementation of the environmental and social safeguards (especially in the SFD-funded highway section) are also substantial. Risks related to project design (engineering and other design aspects) are moderate. 17 VI. APPRAISAL SUMMARY A. Economic Analysis 57. The project’s main development impact is improved connectivity, which is linked to the ability of citizens to physically move at a reasonable cost and speed. These factors are captured in the economic cost-benefit analysis which was carried out for the construction of the IDA- financed part of the new Aden-Taiz highway (Section 1 of the SAYICH), corresponding to 55 km between Aden and the locality of Noubat Dokaim. The results of the cost-benefit analysis show a Net Present Value (NPV) of US$ 33.1 million and an economic internal rate of return (EIRR) of 9.4 percent. The Highway Development and Management Tool (HDM-4) was used to carry out the analysis, which simulates life cycle conditions and costs, and provides economic decision criteria for road construction and maintenance activities. The sensitivity analysis simulated variations in construction costs and expected future traffic volumes by +/-15 percent. A positive NPV is maintained in the worst-case scenario (construction costs 15% higher than expected and traffic volumes 15% lower than forecast). Details of the economic evaluation are presented in Annex 4. 58. Given the difficult and unstable situation in Yemen, it would not be possible to carry out this project through the private sector, such as through a Public-Private Partnership arrangement. Public investment is presently the only possibility to move this project forward, since private investors are unwilling to accept the risks which they would be exposed to. 59. Due to its technical capacity and long experience in Yemen’s road sector, the World Bank is in a unique position to help the Government of Yemen to plan and implement the overall SAYICH program, with all the complexities of engineering design, environmental and social safeguards, procurement and supervision. This includes the Bank’s ability to support the Government in its efforts to mobilize the large amount of additional financial resources which are still needed to complete the SAYICH, which are in the order of US$ 2.5 billion. B. Technical 60. The section between Aden and Noubat Dokaim (55 km) of the planned Corridor Highway was originally envisaged and designed as a 6-lane double carriageway road. The chosen alignment starts in the eastern outskirts of Aden (Al-Alam area) at a planned intersection with the coastal road. From there it will run in a northern direction through the arid coastal plain and the flat desert, and progressively enter the more hilly area close to the end of this sub-section at Noubat Dokaim. The Corridor Highway will primarily serve medium- and long-distance traffic. The original design of the planned new highway as a 6-lane road between Taiz and Aden was completed by Dorsch Consult Ingenieurgesellschaft mbH (Germany) in 2005. However, during the past several years the Government has gradually upgraded the existing road between Aden and Noubat Dokaim from two to four lanes, with about 93% of the works completed. The old road will continue to carry most of the short-distance local traffic. Expected traffic demand for the new Corridor Highway does not presently justify six lanes and it will therefore only be built as a 4-lane highway. Nevertheless, the overall platform width of the highway will be built wide enough to accommodate six lanes, and all structures (bridges, culverts, intersections) will be built as originally planned. The outer four lanes will be built as part of the project, so that the 18 two inner lanes can be added later (if the need arises) without a need to modify those structures. The MPWH is currently updating the design and division into to two smaller, roughly equal sub- sections for procurement purposes. The smaller lot sizes should facilitate the ability of local Yemeni road contracting industry to participate in the works. The change of the design will bring about a significant cost reduction; while at the same time it will provide the required level of service for road users with regard to the existing and planned traffic volumes. Building the outer four lanes now will also eliminate the risk that the land acquired for the road will be encroached or occupied again. 61. The remaining part of the new Aden-Taiz Corridor Highway section, from Noubat Dokaim to Taiz (85 km) will be built under a separate project funded by the Saudi Fund for Development. It will retain the originally designed profile with six (6) lanes, with the other elements essentially the same as for the section between Aden-Noubat Dokaim. 62. The Project will also include a large volume of preparatory activities for those sections of the Corridor Highway that are located to the north of Taiz and all the way to the border with Saudi Arabia at Albayn (Saada Governorate). At many locations the capacity of the existing road cannot accommodate expected future traffic which is growing, along with the populations of the towns, cities and Governorates along the corridor. Current estimates show that traffic on the existing road has increased at an average rate of five percent per year over the period 2000 to 2010. The capacity of the existing road has been reached at many locations. Traffic congestions can be observed especially (i) where the road passes directly through villages and towns, (ii) along the many mountainous stretches of the road where slow-moving trucks determine the average speed. More generally, the average existing speed on this road varies between 40 and 60 km/hour, hampering its ability to serve as an efficient long-distance transport artery for passengers and freight. With the exception of the areas near the main cities, the existing road between Taiz and the border with Saudi Arabia typically has only one lane per direction (two- lane road). In the cities of Taiz and at the Al Hutah bypass, the main road has been widened to two and three lanes respectively per direction (four and six-lane road) to enable an average speed of some 40 km/h within the urban areas. In most other cities along the existing corridor, the road has only one lane per direction and exhibits the corresponding reduced capacity. Markets, parked cars, pedestrians and many other types of obstacles in these areas cause speed reductions down to stop-and-go levels. In each town, the pavement is in a very bad condition. Holes in the road as well as artificial humps cause damage to cars, high road user costs and accidents. Travel quality (road user service level) is low. As described elsewhere, another large problem on the existing road (and justification for a new highway road) is traffic safety. Two engineering consultant firms (Dorsch Consult Ingenieurgesellschaft mbH/Germany and Halcrow Group Limited/United Kingdom) carried out the engineering design and feasibility study for the new Corridor Highway sections between Taiz and Amran (280 km, as a six-lane road) in the period 2003 to 2005. The project will include the revision and update of engineering design (as a mostly 4-lane road) and feasibility study for the new highway between Taiz and Amran. It will also include the corridor-level studies and pre-feasibility analysis for the northernmost section between Amran and the Saudi Arabian border at Albayn (Saada Governorate) with a length of about 290 km. 19 C. Financial Management 63. The MPWH has established a Project Implementation Unit (PIU) staffed with qualified personnel. The financial manager and accountants assigned to the PIU have prior experience in externally funded projects, including IDA-funded projects. The project will apply essentially the same FM arrangements as the other two ongoing IDA-funded road sector projects managed by MPWH. 64. The PIU will manage the FM aspects of the project such as accounting, recording and reporting. It will use an automated accounting system and follow specific procedures for the management of the disbursement process which are included in the project’s operation manual. The PIU will also be responsible for planning, budgeting and overall monitoring of the project activities, and for reporting to the stakeholders. The PIU needs to further enhance its capacity by procuring and installing an automated accounting system capable of recording and reporting on the project’s transactions. The PIU will prepare and submit quarterly Interim Financial Reports (IFRs), not later than forty five days after each calendar quarter, and annual audited financial statements, not later than six months after each calendar year. The Financial Auditor’s Terms of Reference will be subject to the Bank’s review and no objection. 65. To ensure that project funds are readily available for project implementation, the PIU will open, maintain, and operate one US$ Designated Account (DA) at the Central Bank of Yemen (CBY). Deposits into, and payments from the DA will be made in accordance with the provisions which will be stated in the project’s Financing Agreement and in accordance with World Bank Disbursement Guidelines. The DA will be audited annually by external auditors acceptable to the Bank as part of the overall project audit. The names of authorized signatories and corresponding specimens of their signatures will be submitted to the Bank prior to the receipt of the first Withdrawal Application. 66. Given the nature of the inherent risks in the country system and the Project and in view of the FM arrangements already in place in the implementing entity, the overall FM risk rating of the Project has been assessed as Substantial. The mitigating measures include the reliance on the existing fiduciary system of the PIU, and the use of Financial and Technical Audits. Further details on the financial management arrangements for the project are presented in Annex 3. D. Procurement 67. A procurement capacity assessment of the implementing agency MPWH was carried out by the Bank. The organizational structure for implementing the project, staffing, procurement systems and past experience were reviewed. It is noted that MPWH has gained significant experience with carrying out procurement according to World Bank Guidelines, as demonstrated by its present implementation of two ongoing IDA-financed projects. The PIU that has been established for the Corridor Highway project includes an experienced procurement officer and a PIU director who is also knowledgeable in procurement. 68. The capacity assessment concluded that the procurement risk or the project is moderate. In order to mitigate the inherent risk it is considered necessary to strengthen the PIU capacity by 20 temporarily hiring a procurement consultant with extensive knowledge in Bank procurement in order to provide support to the PIU during the critical stages of the procurement for the larger contracts, in particular for the civil works. 69. The draft Procurement Plan for the project was prepared by MPWH. It was reviewed by the Bank team in November 2013 and found to be acceptable. This Procurement plan will be updated annually or as needed to reflect the latest project requirements. 70. Advance procurement of works and services is being applied, with procurement-related activities having started in September 2013. Prequalification of contractors was initiated in November 2013 and is expected to be completed in April 2014. The award of construction contracts is expected soon after project effectiveness. The procurement of most of the large consulting assignment is also underway and should be completed soon after project effectiveness. 71. It has been agreed that the physical works will be split into two contracts and will be procured as one package with two lots, to facilitate as much as possible the participation of local contractors, without compromising the necessary technical and financial capacity requirements that contractors must demonstrate to comply with. Procurement will be done through international competitive bidding (ICB) and subject to the Bank’s prior review. During project implementation, the Bank will conduct due diligence at critical stages of the procurement process and provide contract management support. E. Social (including Safeguards) Gender aspects 72. As learned during consultations with the local communities along the new and existing road (which included both men and women) the safety of pedestrians and livestock is one of the key concerns of the potential beneficiaries of the proposed project. The project will address this aspect, since the construction of the new highway will to a large extent separate the fast long- distance through traffic (which will mostly use the new highway) from the much slower local traffic (which will stay on the existing road). This effect, along with the fact that the alignment of the new highway is further away from settlements, is expected to significantly reduce pedestrian injuries and fatalities and thus will have significant positive social impacts on the communities along the road corridor. The existing road, along which the settlements are located, will have much less traffic and also slower traffic. This will to some degree “reunite” communities in settlements which have been physically separated by the existing road for many years. Despite the lack of gender-specific data on pedestrian traffic in settlements along the road, it appears that any measures to improve pedestrian safety will be of particular benefit to women and children who are likely to walk between their homes and places of social and other daily activities (food markets, schools, health clinics, etc.). 73. Although the proposed Corridor Highway Project does not include directly gender- specific activities, it is expected to have several indirect positive impacts on women. Under Component 1, project monitoring will ensure that the construction of the new highway in those 21 few areas that are close to settlements would not hamper safe access to key social services, particularly those that are primarily used by women, including hospitals, schools and childcare centers. 74. Road safety issues are relevant from the perspective of gender equality. As noted elsewhere, Yemen along with other MENA countries is among the countries with the highest road traffic injury death rates worldwide. The available road traffic injury and death data is however not segregated by gender. Consistent with the data on traffic injuries and deaths is the high adult mortality rate and low life expectancy especially among men in Yemen, which besides the high traffic crash risk is also the result of other factors including tobacco use and violence. The lack of gender-disaggregated data for traffic deaths makes it more difficult to understand to what degree traffic accidents contribute to specific mortality rates among the prime age men and women. As part of the Bank’s sector dialog with the Government, efforts will be made to convince the Government to collect gender-disaggregated data on road traffic injuries and deaths. Broader social benefits 75. In addition to the positive economic rate of return calculated with the HDM-4 model, the new Aden-Taiz Highway (and later on the overall Saada - Aden Yemen International Corridor Highway) will generate a number of other important, albeit less quantifiable, socioeconomic benefits, most of which are already described in Section I.C of this document. They are summarized again below. 76. Despite the depressed business activities in Aden during the recent years, the city of Aden is nevertheless relatively prosperous compared to many other areas of Yemen. The highway section between Aden and Noubat Dokaim which is to be built under the proposed project would expand the relatively prosperous Aden’s market into hinterland areas and improve access to supply chains for Lahj and Taiz Governorates which are marked by far deeper poverty. Lahj Governorate is among the five poorest governorates in Yemen, with about half its population classified as poor according to estimates from the Yemen Household Budget Survey (HBS) of 2005-06. Poverty in Taiz, one of the most populous governorates in Yemen, was estimated to be higher than the national average as well; the 2005-06 estimates put poverty in Taiz at 37.8 percent, 3 percentage points higher than the national average. Both Lahj and Taiz have sizable rural populations, facing twice as high poverty as their urban counterparts. Very importantly, about a fifth of all the poor in Yemen are estimated to live in the three Governorates of Aden, Lahj and Taiz. Moreover, an estimated 18.4 percent of Yemen's bottom 40 percent of the population (ranked in terms of per capita consumption) resides in these three governorates. 77. The new highway section is expected to promote shared prosperity and income growth for the bottom 40 percent of the Yemeni population in the following ways. In the short term, the construction of the road would bring important short-term benefits through job opportunities for thousands of workers, unskilled and skilled. During the construction period a large number of skilled and unskilled workers will be employed by private contractors, resulting in important income generation (about 1.28 million person-days of unskilled work alone during the 3 to 4 years of project execution, at a rate of about US$ 18 per day). The construction would also bring large-scale business opportunities for many Yemeni firms who will be involved in the 22 construction activities, as contractors, sub-contractors and as suppliers of goods and services. In the medium and long term, the new Saada-Aden Yemen International Highway (SAYICH) Program, of which the Corridor Highway Project is the first part, is expected to bring trade facilitation and general economic revitalization, by lowering transportation costs and travel times, reducing overall trade costs, and by bringing access to international markets through Aden deeper into the country. Within the context of the wider highway program, the SAYICH will eventually link the south of Yemen with the northernmost governorate of Saada, passing through eight of Yemen's governorates in which about 70 percent of Yemen's population lives. 78. More generally, whether referring to the project highway section between Aden and Noubat Dokaim or the overall SAYICH, the development of roads and highways is a fundamental component of Yemen’s economic development because of the overarching importance of mobility and access to markets and social services such as health and education. ICT-based citizen engagement and participation 79. As is increasingly common in more developed countries, operators of highways provide opportunities for citizens to engage through ICT-based citizen feedback mechanisms. This can be as simple as inviting road users to report potholes or any other defects of the road, but it often goes much further, especially on tolled highways where users can expect the delivery by the highway operator of certain service levels which are determined in the contract between the State as owner of the highway asset and the operating company of the highway. In the specific case of the SAYICH, the Government has not yet decided if the SAYICH is to be tolled. Also, the exact institutional arrangements for the management, operation and maintenance of the highway will be determined through a study which is to be executed as part of the project. This study will also determine the exact scope and form of the ICT-based citizen engagement mechanism. There is however no doubt that some form of ICT-based citizen engagement will be implemented. This could also be facilitated by the fact that the design of the new highway will include ducts for fiber optic cables all along the highway alignment (see information in Annex on detailed project description). Social Safeguards 80. The key adverse social impacts of the project are largely related to land acquisition and resettlement. As noted elsewhere in this document, an Environmental and Social Impact Assessment (ESIA) has been prepared not only for the IDA-funded road sections between Aden and Noubat Dokaim, but also for the adjacent section between Noubat Dokaim and Taiz which is funded by the Saudi Fund for Development under a different project. The ESIA shows that the impacts due to land acquisition and resettlement are spread among three Governorates (Aden, Lahj, and Taiz) and affect 5 districts and 74 villages or small settlements. According to census survey results, a total of 2,685 households are likely to be affected by land acquisition. Due to the large average household size, a total of 31,695 persons will be affected. These households earn their livelihood primarily through agriculture, Qat cultivation, wage labor and through small businesses. 23 81. A total of 1,224.8 hectares of land is to be acquired permanently for the project. Land acquisition will be most important in Lahj Governorate (909.6 ha.), significant in Taiz Governorate (277.9 ha.), and relatively minor in Aden Governorate (37.3 ha). The impact of land acquisition on livelihoods is likely to be significant in many cases. Of the 2,159 individual plots involved in land acquisition, 1,318 are to be acquired in their entirety (100%) while the remaining 841 plots are to be acquired in part. Of a total of 1,329 agricultural plots affected, 721 will be acquired in their entirety. While this impact is significant, it is offset in part by the pattern of multiple landholdings by households that is prevalent in the project area. 82. In addition to land acquisition, the project will require substantial demolition of structures and relocation of residents. Overall, 170 households (or 2,789 people) will be required to relocate. Among the governorates, Taiz will require the greatest relocation (2,546 people), compared to 233 in Lahj and 10 people in Aden. 83. To mitigate the impacts, an Environmental and Social Management Plan (ESMP) and a Resettlement Action Plan (RAP) have been prepared in line with the World Bank Policy on Involuntary Resettlement (OP 4.12) and relevant local laws and regulations of the GoY. The RAP was prepared based on a detailed census of the affected people, inventory of affected assets, socioeconomic surveys and extensive consultations with the project affected people, including women (See details in Annex 3). The monitoring arrangements for the implementation of the ESMP and RAP will be the same for the SFD-funded and IDA-funded highway subsections. Besides the monitoring by PIU staff, MPWH will involve an external monitoring agency. 84. Other potential negative social impact and risks. In addition to the resettlement impacts, the project may also have some other social risks and adverse impacts on different social groups. The construction of the highway will require a large number of construction workers and at least a part of those may come from other areas of Yemen. With the influx of many laborers from outside the local area, conflicts may arise between inhabitants of temporary construction camps and local communities. The ESMP for the project presents measures to be applied to mitigate these adverse impacts and manage these social risks. F. Environment (including Safeguards) 85. An ESIA has been carried out for the highway section to be funded by IDA and also the adjacent section funded by the Saudi Fund for Development. It found that the project is likely to have several impacts on the environment that need to be managed in line with laws of Yemen and the World Bank safeguards policies. The planned alignment of the new highway between Aden and Taiz first passes through the narrow coastal and wider desert plains in the southern parts, then through the gently rolling terrain further north beyond Noubat Dokaim. Closer to the city of Taiz the terrain becomes mountainous. Dry climatic conditions characterize a large portion of the alignment, with desert sand landscapes dominating between Aden and Noubat Dokaim. In the rolling and mountainous terrain, planted trees and shrubs are observed on mostly private land. The alignment of the planned highway was chosen in part to avoid proximity to human settlements as much as possible. This has been largely achieved along the IDA-funded section between Aden and Noubat Dokaim where the volume of needed resettlement is low. On the SFD-funded section between Noubat Dokaim and Taiz significant resettlement will be 24 necessary, especially in the area close to Taiz. There are no legally protected areas for flora or fauna along the alignment or even near the alignment. 86. The final choice of the alignment for the new highway was preceded by an analysis of options to also minimize impacts on environmental resources of the project area. The potential negative impacts of the road construction activities include (i) removal of vegetation, (ii) air pollution from emission of gases, dust and noise from construction plants and vehicles, (iii) risk of safety for residents, (iv) risk of damage to cultural properties of local importance which could be near the alignment, (v) changes to local drainage near water courses or borrow areas, in cases where watercourses are encountered, (vi) water pollution close to water courses, (vii) unsafe conditions for workers as well as (viii) stress on local population and resources due to temporary influx of large population of workers. During operation phase, increased severance of populations on either side of the new highway, increased air pollution from vehicle movement and hazard due to road accidents are possible. 87. As mentioned earlier, an ESMP has been prepared and integrated with the project documents, including the civil works contracts. The ESMP requires the implementation of measures by the MPWH as well as by the civil works contractor. The supervision consultants will monitor the implementation of the ESMP and report regularly on progress to the MPWH. The monitoring arrangements for the implementation of the ESMP and RAP will be the same for the SFD-funded and IDA-funded highway subsections. An environmental specialist is being recruited for the project and external independent monitoring will also be used. A written agreement between MPWH and the Yemen Environmental Protection Agency (EPA) has been reached which defines the roles and responsibilities of each party and describes the third party monitoring and evaluation to ensure the effectiveness of the measures for environmental management. G. Safeguards Policies triggered 88. The project triggers the following Safeguards Policies:  OP/BP 4.01 Environmental Assessment  OP/BP 4.12 Involuntary Resettlement  OP/BP 4.11 Physical Cultural Resources OP/BP 4.11 is triggered because cultural properties (mosques and graves) are affected by the highway construction and also because of the possibility of chance finds of cultural and/or historic value during construction. 25 Annex 1: Results Framework and Monitoring Country: Yemen, Republic Project Name: Corridor Highway Project (P145361) . Results Framework (Part 1) . Project Development Objectives . PDO Statement The Project Development Objective is improved transport connectivity and safety on the targeted section of the transport corridor between Aden and Taiz. These results are at Project Level . Project Development Objective Indicators Responsibility Cumulative Target Values Data Source/ for 2019 Methodology Data Collection Unit of Indicator Name Core Baseline 2015 2016 2017 2018 (End Frequency Measure target) HDM4 calculations Once, after have been Vehicle completion carried out Operating Costs of the new by WB for traffic highway team during World Bank Percentage 100.00 93.00 between Aden between project team. and Noubat Aden and preparation. Dokaim. Noubat The Dokaim. baseline figure is 100 percent 26 and the target figure is 93 percent or less. HDM files are available in project files Traffic Traffic fatalities Police Data on road corridor Once, at the on road between Aden Number 74.00 50.00 end of the MPWH accidents and Noubat project. and Dokaim. fatalities. Actual travel time as measured Travel time Once, after by staff of between Aden completion Minutes 60.00 40.00 MPWH, MPWH and Noubat of new excluding Dokaim. highway. any stops during the trip. Demograph Once, at the Direct project ic Data World Bank Number 0.00 4,000,000 end of beneficiaries available in team. Project. Yemen. Percentage Female Sub-Type 0.00 50.00 beneficiaries Supplemental . Intermediate Results Indicators Data Responsibility Cumulative Target Values Source/ for 27 2019 Methodology Data Collection Unit of Indicator Name Core Baseline 2015 2016 2017 2018 (End Frequency Measure Target) Roads After constructed, Kilometers 0.00 55.00 completion MPWH MPWH Rural of project. Number of Once, at MPWH staff Number 0.00 30.00 the end of MPWH MPWH trained. project. Supervision Earthworks Percentage 0.00 10.00 40.00 90.00 100.00 100.00 Annual Engineer's MPWH completion rate. Reports Definition and establishment of an institutional structure for the Once, at the management, WB Aide- Yes/No No Yes end of the MPWH operation and Memoires project. maintenance of the new Corridor Highway. No. of person- Supervision days of work Number 0.00 100,000 300,000 700,000 900,000 1,280,000 Annual Engineer's MPWH created. reports Once, at the Fiber Optic Yes/No No Yes end of the MPWH MPWH Duct installed. project. Supervision Pavement Percentage 0.00 0.00 0.00 10.00 50.00 100.00 Annual Engineer's MPWH completion rate reports . 28 . Country: Republic of Yemen Project Name: Corridor Highway Project (P145361) . Results Framework (Part 2) . Project Development Objective Indicators Indicator Name Description (indicator definition etc.) Vehicle Operating Costs for traffic between Aden and The average Vehicle operating costs (including time savings) between Aden and Noubat Dokaim. Noubat Dokaim will be decreased by at least 7 percent, based on HDM4 simulation. Traffic fatalities on road corridor between Aden and The number of people killed as a result of traffic accidents on the road corridor Noubat Dokaim. between Aden and Noubat Dokaim (both existing road and new highway). Travel time between Aden and Noubat Dokaim. The typical travel time between Aden and Noubat Dokaim will be reduced from 60 minutes to 40 minutes (excluding stops during trip). Direct project beneficiaries Direct beneficiaries are people or groups who directly derive benefits from an intervention (i.e., children who benefit from an immunization program; families that have a new piped water connection). Please note that this indicator requires supplemental information. Supplemental Value: Female beneficiaries (percentage). Based on the assessment and definition of direct project beneficiaries, specify what proportion of the direct project beneficiaries are female. This indicator is calculated as a percentage. Female beneficiaries Based on the assessment and definition of direct project beneficiaries, specify what percentage of the beneficiaries are female. . Intermediate Results Indicators Indicator Name Description (indicator definition etc.) Roads constructed, Rural Kilometers of rural roads constructed under the project. Rural roads are roads functionally classified in various countries below Trunk or Primary, Secondary or Link roads, or sometimes Tertiary roads. Such roads are often described as rural access, feeder, market, agricultural, irrigation, forestry or community roads. Typically, rural 29 roads connect small urban centers/towns/settlements of less than 2,000 to 5,000 inhabitants to each other or to higher classes of road, market towns and urban centers. Number of MPWH staff trained. Number of MPWH staff (including staff of affiliated agencies and units) trained during project period. Earthworks completion rate. The percentage of earthworks completed for the 55 km section between Aden and Noubat Dokaim. Definition and establishment of an institutional structure Based on the outcome of the study to be carried out under Component 2 and also on for the management, operation and maintenance of the the dialog between the Bank and the GoY, an appropriate institutional setup for the new Corridor Highway. management, operation and maintenance of the new SAYICH is to be defined and established. No. of person-days of work created. Number (in person-days) of overall employment related to the construction of the Corridor Highway during the project period. Fiber Optic Duct installed. The fiber optic duct is to be installed as part of the construction of the highway section. Pavement completion rate The percentage of asphalt pavement works completed for the 55 km section between Aden and Noubat Dokaim. . 30 Annex 2: Detailed Project Description REPUBLIC OF YEMEN: Corridor Highway Project 1. Component 1: Highway construction (Estimated total cost: US$ 150 million, with US$ 111.54 million of IDA resources allocated). This component will be comprised of three sub- components: (a) Construction of Noubat Dokaim-Aden highway sub-section. This sub-component includes civil works for construction of the new 55 km double carriageway highway between Noubat Dokaim and Aden. As explained earlier in this report, under the project the highway will be built as a 4-lane road (two travel lanes in each direction), but with a platform wide enough to accommodate two additional lanes in the future. The overall platform width is 36.7 m, to accommodate 2 x 3 travel lanes, each 3.65 m in width, of which only the two outer lanes in each direction will be built under the project. The median will be (i) wide enough to accommodate two additional travel lanes (one in each direction) in the future when traffic levels require such an additional investment, and (ii) will still be 6 m wide after the addition of the two lanes. The typical cross-section will also include on each side of the road, a 2.0 m wide verge, and gravel and paved hard shoulders, each of 1.2 m in width. From the start, all structures (bridges, culverts, intersections) will be built so that two additional lanes can be added later (if the need arises) without a need to modify those structures. Only the “outer” four travel lanes will thus be built, including shoulders. The “inner” two lanes will only be established at the level of “cut and fill/earthworks” and will initially be part of the median. The design speed is of 100 or 120 km/h, depending on local conditions. This will be a “controlled access” highway, with entry and exit only possible at the interchanges which will connect this highway with the rest of the Yemeni road network. The civil works will include the main carriageways, interchanges, highway structures and bridges, interconnecting and local (village and farmland) roads, installation of traffic safety measures and the rest and service areas. Flexible type pavement (asphalt concrete) with a total thickness of 50 cm (wearing course 5 cm, binder 7 cm, aggregate base course 20 cm and aggregate sub-base 20 cm) will be constructed above a 20 cm subgrade level. Traffic safety measures comprise double-sided median barriers and single-sided barriers at the shoulders. Two intersections along the highway (Al-Hutta and Will Jaber) are foreseen as grade-separated interchanges, diamond type, due to the nature of the intersecting roads and traffic demand, in order to provide safety for vehicle movements in all directions. Connections with the Aden Ring Road and the Aden Coastal Road at the Aden (Al Alam) are designed as three-lane turbo-roundabouts. The highway will be fully equipped to enable required level of service for users, containing lighting at interchanges, rest areas and service areas. Several road culverts (5 x 5 m and 3 x 3 m) are foreseen for provision of access to different sides of the highway, and for access to farmland. These will also be suitable for pedestrians and animals. Civil works will also include the duct for a new fiber optic backbone cable and related manholes, etc. For procurement purposes, the works are divided into two smaller, roughly equal lots in order to facilitate the participation of local Yemeni contractors in the works. 31 (b) Engineering supervision. This sub-component will include the services of a consulting firm to act as the Engineer (engineering supervision) for civil works and environmental and social management during construction of the highway between Noubat Dokaim and Aden, including post-construction services (project indicators monitoring and defects liability). The main role of the Engineer will be to ensure that the works are implemented according to specifications, within the cost and according to the schedule. The consultant would also provide training to the MPWH staff. (c) Procurement and technical audits. This sub-component will include the services of a consulting firm to carry out technical and procurement audits. The technical audits will focus on the ex-post examination of the quality of works completed and critically assess the implementation of the project, in particular the quality of road works carried out. The examination will be based not only on visual inspections but, most importantly, on laboratory analysis of road core samples drilled by the Consultant at random locations, to verify, among other elements, pavement layer thickness, grading, bitumen content, compaction, voids-in-the-mix and the general quality of materials used. There shall be on average of one sample per every two lane-km of constructed highway section, taken at random locations and/or at locations where problems may be suspected by the auditor. For the 140 km of the new highway between Aden and Taiz, there will thus be about 420 pavement core samples to be taken and analyzed. The technical auditor will be directly responsible for identifying the precise locations where samples are to be drilled, and also for the actual drilling and taking of the samples. The auditor will also be responsible for the reinstatement of the drilled holes (filling and compacting) with appropriate asphalt material which can be cold mix or hot mix. During each mission, samples will be taken from the road sections for which paving was completed in the preceding six months, or from those sections which have otherwise not been tested yet. Technical audits will be carried out in roughly six-month intervals during a period of 4 (four) years, with a total of 8 (eight) audit missions to Yemen. The timing of the missions may be adjusted in function of the actual progress of civil works, especially at times of intensive pavement works. The procurement audit will verify if the procurement of the civil works contracts and consultancy services funded under the project has been conducted in compliance with applicable procedures. The audit consultant will also provide training to staff at the MPWH and other bodies responsible for road investments, to strengthen local capacity for carrying out similar audits or quality control activities in the future. 2. Component 2: Institutional Support and Strengthening (total cost of US$ 22.0 million to be funded from IDA resources). This component includes the following subcomponents: (a) Preparation for Sections 2 and 3 of the Saada – Aden Yemen International Corridor Highway Program. This sub-component is critical for the Government’s efforts to mobilize large-scale funding from several sources for the remaining sections of the SAYICH (in the order of US$ 2.5 billion). The Government has specifically asked the Bank to play a catalytic role in the mobilization of such additional funds for the SAYICH. The timely availability of high-quality project studies for the future 32 highway sections is fundamental as an enabling factor. The following specific activities are included:  Preparation of Environmental and Social Safeguards studies (ESIA, EMP, RAP) in line with World Bank safeguard policies, for the following sections of the highway: (i) Taiz – Sana’a (Section 2); (ii) Sana’a - Amran (part of Section 3);  Update of existing design and feasibility studies for the section between Taiz and Sana’a (Section 2) and between Sana’a and Amran (part of Section 3);  Pre-feasibilty and corridor selection study for highway sections between Amran and Saada (Border with Saudi Arabia);  Final design and feasibility study for highway sections between Amran and Saada; and  Environmental and Social Impact Assessment (ESIA) and Resettlement Action Plan (RAP) for the highway section between Amran and Saada. The planned timing / sequencing for the studies is as follows: A: Taiz - Ibb - Dhamar - Sana'a - Amran (280 km): For this part of the SAYICH the alignment has been chosen and a preliminary design exists already which only needs to be modified. It is planned that the full technical preparation (including bidding documents for works) and ESIA/ESMP and RAP can be ready by mid-2015 and procurement of works can start at that time. B: Amran - Saada - Saudi Border (290 km): For this part of the SAYICH there are no studies at all. A corridor study (including pre-feasibility study) needs to be carried out first to select the alignment, before all the other studies (engineering, ESIA/EMP and RAP) can be started. This means the full preparation of that part of the SAYICH will only be completed by mid-2016 and procurement of works can start thereafter. (b) Road safety. This will include a review of the existing design of the various sections of the SAYICH with the specific purpose of detecting and remedying any potential design deficiencies in terms of road safety. This is of particular importance for this highway because it will be Yemen’s first highway enabling drivers to travel at higher speeds. For the section between Aden and Taiz, the review will be funded through a Bank-executed trust fund (already secured). For the other sections to the north of Taiz, the road safety review will be funded through the IDA Grant. This activity will be combined with practical training of engineers at the MPWH on road safety issues. (c) Definition of asset management arrangements for the SAYICH. This subcomponent will include a study required as the basis for decision-making on the establishment of arrangements for the effective and efficient management, operation and maintenance of the new highway. Although the IDA-funded civil works component of the project only includes the 55 km sub-section from Aden to Noubat Dokaim, it will be necessary to make the necessary arrangements for the entire future Corridor Highway asset, which will eventually connect Aden in the South to the Saudi Arabia border in the North. The overall setup for the management of the SAYICH will also 33 be developed with the added objective of generating social benefits for the communities living along the road, such as the use of small and medium-sized local firms whenever this is possible and efficient. The new institutional arrangements for the management, operation and maintenance of the SAYICH will be based on modern principles of asset management and road user service quality. The new service-focused arrangements, which are expected to be in place before the end of the project, should provide an example for service provision in other sectors, besides providing business opportunities for various types of companies, mostly small and medium sized. (d) Communications campaign. This will include the design and execution of MPWH’s information and communications campaign for the purpose of building public and stakeholder support for the Saada - Aden Yemen International Corridor Highway Program. The communications/outreach campaign is expected to include ICT-based citizen feedback mechanisms and will also promote road safety awareness among road users. (e) Training and capacity building. This subcomponent will also include resources to fund various types of training and capacity building for staff of the MPWH, apart from the resources for road safety training and asset management described above. 34 Annex 3: Implementation Arrangements REPUBLIC OF YEMEN: Corridor Highway Project Overall Institutional and Implementation Arrangements 1. The Corridor Highway Project will be implemented by the Ministry of Public Works and Highways (MPWH). Since 1970, MPWH has been the implementing agency for several IDA- funded road projects, with two of them ongoing6. MPWH has gained much experience in the execution of externally funded road projects. Given the good track record of MPWH in the preparation and execution of externally funded projects, the risk of problems related to the capacity of the implementation agency are considered to be moderate. Risks are also moderate during the project preparation stages (road design, feasibility studies, environmental and social assessments, etc.) where the performance of MPWH has been mostly satisfactory. Most project preparation activities for the Corridor Highway Project have been completed already. 2. The MPWH has established within its own internal structure a specific Project Implementation Unit (PIU) which is responsible for all aspects of the overall preparation and implementation of the broader Saada – Aden Yemen International Corridor Highway Program, including the proposed Corridor Highway Project described in this document. The PIU is staffed with eleven staff, including engineers, accountants and a procurement specialist. This includes technical preparation, management of construction and consultant contracts, environmental and social safeguards management, procurement and financial management, among others. The MPWH has demonstrated its capacity to establish and staff PIUs for specific projects which then successfully implement projects under the Bank’s (and other donors’) guidelines and procedures. 3. Despite the widely recognized governance issues in Yemen at the country level, these high country risks have so far not translated into problems in the execution of externally funded projects in the road sector. There have not been any reports of interference by higher-level authorities in the management of road projects by MPWH. Externally funded road projects benefit from tight scrutiny and oversight by the external funding agencies. Additionally, all projects in the road sector, independent of the funding source, are subject to internal auditing and control through the Ministry of Finance and other Government agencies. In order to further increase good governance, regular technical audits by an independent international auditor will be carried out to verify that all road works have been executed in compliance with the technical specifications. The methods to be used in the technical audits are described in more detail in Annex 2 (Detailed Project Description). Financial Management (FM) 4. An assessment of the FM arrangements for the Corridor Highway Project was undertaken in November 2013 to assess the capacity of the implementing entity and assist in determining the required FM and Disbursement Arrangements for project implementation. The outcome of the assessment was satisfactory to the Bank noting the need to enhance the PIU’s capacity through 6 The ongoing IDA-funded road projects implemented by MPWH are (i) Second Rural Access Project (RAP2, P085231) and (ii) Road Asset Management Project (RAMP, P125135). 35 procuring and installing an automated accounting system. The PIU has procured and installed an acceptable accounting system prior to project negotiation. 5. Organization and staffing. The PIU includes the financial manager and accountants who have prior experience in externally funded projects, including Bank-financed projects. They will be invited to the regular World Bank’s FM and Disbursement training to get more familiar with the Bank’s latest FM and Disbursement procedures. The job descriptions for all staff are included in the project’s operations manual. The staff capacity and FM arrangements are considered adequate for the project. The staff capacity will be regularly assessed and supported as needed. 6. Accounting, budgeting and recording. The PIU will manage the FM aspects of the project such as accounting, recording and reporting. It will use an automated accounting system and follow specific procedures for the management of the disbursement process which are included in the project’s operations manual. The PIU will also be responsible for planning, budgeting and overall monitoring of the project activities, and for reporting to the stakeholders. 7. Cash based accounting is to be used to record the project’s transactions under the automated accounting system. Accounting records will be maintained within the PIU using the accounting system, which will also generate the project accounts' quarterly IFRs. During project implementation, the PIU will submit to the Bank the Project’s quarterly unaudited IFRs, not later than 45 days after each calendar quarter. In addition, the PIU will submit to the Bank the Project’s Audited Financial Statements on an annual basis and within 6 months from each calendar year’s end. 8. Internal Control. The PIU has prepared a manual documenting procedures, controls and safeguards, to be applied during project implementation. These controls and procedures are documented in the Project's Financial Management Manual. The FM Manual describes the project’s FM and Disbursement procedures including job descriptions and policies/procedures covering all routine accounting and related administrative activities. Changes to the Manual will be subject to the Bank’s review and clearance. 9. The PIU will maintain an assets register of goods and equipment financed by the Bank and other IFI’s. Reconciliation of asset registries and actual locations/usage of these assets will be conducted annually including spot checks, and accordingly an annual report is issued that will reflect the assets from various sources of financing. This will be subject to the external auditor’s verification. 10. Disbursement and Flow of Funds. To ensure that project funds are readily available for project implementation, the PIU will open, maintain, and operate one US$ Designated Account (DA) at the Central Bank of Yemen (CBY). Deposits into, and payments from the DA will be made in accordance with the provisions which will be stated in the project’s Financing Agreement and in accordance with World Bank Disbursement Guidelines. An authorized allocation of US$ 10.0 million will be used as the DA’s ceiling. The amount to be advanced under the first application would be determined based on initial project needs. The PIU would claim the remainder of the advance when the project will have reached a more advanced stage of implementation. The DA will be replenished monthly based on withdrawal applications 36 supported by appropriate documentation, or when half of the advance to the DA has been utilized, whichever occurs first. The DA will be audited annually by external auditors acceptable to the Bank as part of the overall project audit. The names of authorized signatories and corresponding specimens of their signatures will be submitted to the Bank prior to the receipt of the first Withdrawal Application. 11. Transaction based disbursement will be used for this project. Accordingly, requests for payments from the Grant account will be initiated through the use of Withdrawal Applications (WAs) either for Direct Payments, Advances, Reimbursements, and Replenishments to the Designated Account, or for the issuance of Special Commitments. All WA’s will include appropriate supporting documentation, including detailed SOE’s for reimbursements and replenishments to the DA. 12. Supporting documentation for expenditures. Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments for (a) civil works against contracts valued at USD 1,000,000 or more, (b) goods and non-consulting services against contracts valued at USD 500,000 or more, (c) consulting firms against contracts valued at USD 200,000 or more and (d) individual consultants against contracts valued at USD 100,000 or more. The documentation supporting expenditures will be retained at the PIU and will be readily accessible for review by the external auditors and periodic Bank implementation support visits. 13. The below chart summarizes the flow of funds from IDA to the Designated Account through Withdrawal Applications, to finance the Project's eligible expenditures. Payment requests from the DA for eligible expenditures will be approved by the implementing agency Director and the Finance Manager, and then the payment requests will be sent to MOF for approval of payment from the DA at CBY through the use of the MOF's Loans and Grants Management Information System (LGMIS) which is an e-disbursement mechanism. Grant funds USD DA - FM & Director approval MOF approval CBY pmt to CBY beneficiaries 14. External Financial Audit. The proposed Project’s financial statements will be audited by an independent private–sector external auditor, who will also review the IFRs quarterly. The external auditor should be acceptable to the Bank and Central Organisation for Control and Auditing (COCA); and the TOR will be prepared and submitted for the Bank’s “No objection”, at the beginning of the Project. The external auditor report (in English and Arabic) shall encompass all Project’s components and activities under the Financing Agreement and shall be in accordance with the International Standards on Auditing (ISAs). The audit report and opinion will cover the proposed Project’s financial statements, reconciliation, use of the Designated Account (DA), and use of direct payments. In addition, the auditor is required to prepare a “management letter” identifying any observations, comments and deficiencies, in the system and controls, that the auditor considers pertinent, and shall provide recommendations for their improvements. 37 15. The Project Financial Statements (PFS) will be prepared annually following the cash basis of accounting, and will be subject to external audit. The audited PFS will be submitted to the Bank within six months from year-end. The PFS will include: (i) statement of sources and uses of funds, indicating sources of funds received and Project expenditures by category of expenditure; (ii) appropriate schedules classifying Project expenditures by component, showing yearly and cumulative balances; (iii) DA reconciliation statement reconciling opening and year- end balances. 16. Governance. Weak governance may affect the project resources. The above fiduciary arrangements, including the PIU structure combined with the reporting and tailored external financial and technical audit arrangements, are designed to mitigate these risks. 17. Implementation Support. The Project’s FM Arrangements will be supervised by the Bank in conjunction with the overall supervision of the project, and implementation support missions will be conducted at least twice a year. Procurement 18. General. Procurement activities under the project will be carried out in accordance with the World Bank’s (i) “Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011, (ii) “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011, and (iii) the provisions stipulated in the Financing Agreement. The project will also be carried out in accordance with the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 and revised in January 2011. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frame are to be agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 19. Procurement of works. This will involve the construction of two road sub-sections: (i) Noubat Dokaim - Al Majhafa, total length (30 km) with estimated cost of (US$ 80 million) and Al Majhafa – Aden, total length (25 km) with estimated cost of (US$ 70 million). Procurement will be done through International Competitive Bidding (ICB). The Bank’s Standard Bidding Documents (SBD) for Works will be used, following pre-qualification (PQ). 20. Selection of Consultants. Consulting Services from firms and individuals required for implementation of the project include: Construction Supervision for the Highway section between Noubat Dokaim and Aden (55 km), Procurement and Technical Audits of civil works, Environmental and Social Safeguards Studies (ESIA, ESMP, RAP) for highway sections Taiz- Sana’a and Sana’a-Amran, Design and Feasibility studies for new highway sections between Taiz –Ibb –Dhamar-Sana’a-Amran, pre-feasibility study for Amran and Saada, final design and feasibility for the highway section between Amran and Saada, Environmental and Social Impact Assessment (ESIA) and Resettlement Action Plan (RAP) for the section Amran to Saada 38 (Border), Study for Definition of Asset Management Arrangement for SAYICH and Study on Road Safety management Plan for SAYICH. Short lists of consultants for assignments estimated to cost less than US$ 300,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Summary of Procurement Arrangements Expenditure category Contract value Procurement Contracts subject to prior review threshold method (US$ thousands) Works >5,000 ICB All contracts above US$15 million 200 ≥ ≤ 5,000 NCB First contract ≤ 200 Shopping N/A Goods and non-consulting >500 ICB All contracts services 500≥ ≤ 50 NCB First contract and all contracts above US$ 500,000 ≤ 50 Shopping N/A >500 QCBS All process Consulting 500 ≥ <200 QCBS All process (firms) 100 ≤ 200 QCBS All single source contracts; and first two ≤ 100 CQ/LCS processes each calendar year for each selection method Consulting (individuals) Section V in All cases above US$ 100,000 and all the Guidelines single-source contracts Direct contracting All cases regardless of the amounts involved 21. Advance Procurement. Procurement of the main works package and several consulting contracts started during the third quarter of 2013. The award of those contracts is expected shortly after effectiveness. 22. Procurement Capacity Assessment of the Implementing Agency. A procurement capacity assessment of the implementing agency MPWH was carried out by the Bank. The organizational structure for implementing the project, staffing, procurement systems and past experience were reviewed. It is noted that MPWH has gained significant experience with carrying out procurement according to World Bank Guidelines, as demonstrated by its present implementation of two ongoing IDA-financed projects. The PIU that has been established for the Corridor Highway project includes an experienced procurement officer and a PIU director who is also knowledgeable in procurement. 23. Procurement risk. The capacity assessment concluded that the procurement risk for the project is moderate. In order to mitigate the inherent risk it is considered necessary to strengthen the PIU capacity by temporarily hiring a procurement consultant with extensive knowledge in Bank procurement in order to provide support to the PIU during the critical stages of the procurement for the larger contracts, in particular for the civil works. 39 24. Procurement Plan. The draft Procurement Plan for the project was prepared by MPWH. It was reviewed by the Bank team and found to be acceptable. This Procurement plan will be updated annually or as needed to reflect the latest project requirements. Details of Procurement arrangements involving international competition Works 1 2 3 4 5 6 7 Procure- Domestic Review Ref. Description Estimated ment Preference by Bank Comments No. Cost U$S method (Yes/No) (Prior/Post) 1 Noubat Dokaim- Al Majhafa (lot 1). 80,000,000 ICB NA Prior Al Majhafa - Aden (lot 2). 70,000,000 150,000,000 Consulting Services 1 2 3 4 5 6 Review by Ref. Description of Assignment Estimated Selection Bank Comments No. cost US$ Method (Prior/Post) 1 Construction Supervision for Highway section between Noubat Dokaim and Aden 6,750,000 QBCS Prior (55km). 2 Procurement and Technical Audits of Civil 1,000,000 QBCS Prior Works 3 Preparation of Environmental and Social Safeguards Studies and implementation support, for the following sections f the 1,500,000 QBCS Prior Highway : -Taiz-Sana’a/-Sana’a –Amran. 4 Highway design and feasibility studies (update)for proposed new highway between 6,000,000 QBCS Prior Taiz-Ibb- Dhamar- Sana’a- Amran 5 Pre-feasibility and corridor selection study Amran to Saada(Border). 2,000,000 QBCS Prior 6 Final design and feasibility study for Amran to Saada (Border). 4,500,000 QBCS Prior 7 Environmental and Social Impact Assessment (ESIA) and Resettlement Action 1,500,000 QBCS Prior Plan (RAP) for the section Amran to Saada (Border). 8 Study for Definition of Asset Management 1,000,000 QBCS Prior arrangement for SAYICH 9 Study on Road Safety management Plan for 1,000,000 QBCS Prior SAYICH. 10 Communication strategy 500,000 TBD Prior 11 Training and capacity building 450,000 TBD Prior 12 RAP and ESIA implementation audit 300,000 TBD Prior 13 Other sector-related studies and activities 1,500,000 TBD TBD 28,000,000 40 25. Shortlist Comprising Entirely of National Consultants. Short list of consultants for services estimated to cost less than US$ 300,000 equivalent per contract may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 26. Frequency of procurement reviews. The capacity assessment of the Implementing Agency has recommended two annual implementation support missions, including procurement post reviews. Environmental and Social (including safeguards) Environmental Safeguards 27. The Environmental Assessment process for the project has been in line with the regulations for EIA formulated by the GoY and with applicable World Bank policies. The ESIA and ESMP prepared for the project provide estimates of the nature and extent of impacts on key environmental features in the project area. The selection criteria for the road alignment included environmental aspects, in addition to economic and social impacts and engineering aspects. 28. Although the project does not affect any forests, clearing the road alignment will nevertheless will require cutting of 433,075 trees, of which 412,050 are commercially grown Qat trees. The remaining 21,025 trees are mostly fruit-bearing. 29. The project will also lead to increased emissions of pollutants to the air environment. This is due to the additional traffic generated by the new road. The increase in pollutant load by the year 2040 for both sections is as follows: Vehicle traffic levels in the “with project” scenario are about 1.59 times higher than in the “without project” scenario. The increases in pollutants are as follows: HC – 2.21 times, CO – 2.53 times, NOx – 2.15 times, SO2 - 2.13 times, CO2 – 2.13 times, Particulate Matter – 2.13 times, Lead – 2.19 times higher. Despite the significant increases, the overall dispersed pollution levels are still deemed to be at non-critical levels, which is partly due to the near-absence of other sources of pollution in most of the project area. The Environmental Management Plan for the project includes mitigation measures for sensitive receptors such as schools, health facilities and religious establishments. The increase in noise levels at such locations will be mitigated through measures such as noise walls, shielding existing receptors. 30. Consultations have been carried out with a wide range of stakeholders during the project preparation stage. These have also included extensive consultations with local residents (male and female) in the project area. Consultations were also held on the draft Terms of Reference for the ESIA, ESMP and RAP. MPWH also plans to continue consultations and outreach in the project area during the project implementation stage. In addition, a Grievance Redress Mechanism (GRM) for environmental and social impacts will also be implemented. 31. As part of project preparation, discussions with the Yemen EPA have been held and their views have been obtained on the ESIA and ESMP. A Memorandum of Understanding is 41 expected to be signed between the MPWH and Yemen EPA to clarify the role of each party and to ensure the adequate implementation of the ESMP measures. 32. The implementation of the ESMP will be the responsibility of PIU the MPWH. It is recruiting a full-time environmental/social coordinator to assist the Project Director on environmental and social aspects. The coordinator will interface with the Bank, the supervision consultant and with the contractors, as well as with other stakeholders such as the Yemen EPA, to ensure that all ESMP measures are implemented. The environmental coordinator will be the key liaison with the Bank and with other stakeholder departments of the GoY, for implementing the management measures that are to be implemented directly by the MPWH, as opposed to those that are to be implemented through the contractor for works. These could include plantation, consultation and training for environmental management, etc. Additional responsibilities of the environmental/social specialist will include training of relevant staff of the Contractor and Supervision Consultant team on the provisions of the ESMP, as well as documenting good practices and lessons learnt for use in subsequent stages of the SAYICH program. The monitoring arrangements for the implementation of the ESMP and RAP will be the same for the SFD-funded and IDA-funded highway subsections. 33. During the construction phase, the Supervision Consultant team will have an environmental specialist within the team. This specialist will advise the contractor on the steps to be taken during the implementation, and monitor progress as works are being executed. The environmental specialist will be responsible for reporting on the progress in the ESMP implementation as part of the works contract, and in assisting the PIU prepare periodic progress reports for review by the Bank. 34. Component 2 of the proposed project includes the preparation of environmental and social safeguards documents (ESIA, ESMP, RAP) for those sections of the Corridor Highway which are to be built in the future to the North of Taiz and up to the Saudi Arabian border. The World Bank will ensure that those studies are prepared in line with current World Bank safeguards policies. The GoY has indicated its intention to apply the World Bank safeguards for the entire SAYICH Program. It is however to be noted that the World Bank has no responsibility for ensuring GoY compliance with this pledge, for those sections of the SAYICH that are not funded by the World Bank Group. Land Acquisition and Resettlement 25. The key adverse social impacts of the project are largely related to land acquisition and resettlement. As noted elsewhere in this document, an Environmental and Social Impact Assessment (ESIA) has been prepared not only for the IDA-funded road sections between Aden and Noubat Dokaim, but also for the adjacent section between Noubat Dokaim and Taiz which is funded by the Saudi Fund for Development under a different project. The ESIA shows that the impacts due to land acquisition and resettlement are spread among three Governorates (Aden, Lahj, and Taiz) and affect 5 districts and 74 villages or small settlements. According to census survey results, a total of 2,685 households are likely to be affected by land acquisition. Due to the large average household size, a total of 31,695 persons will be affected. These households 42 earn their livelihood primarily through agriculture, Qat cultivation, wage labor and through small businesses. 26. A total of 1,224.8 hectares of land is to be acquired permanently for the project. Land acquisition will be most important in Lahj Governorate (909.6 ha.), significant in Taiz Governorate (277.9 ha.), and relatively minor in Aden Governorate (37.3 ha). The impact of land acquisition on livelihoods is likely to be significant in many cases. Of the 2,159 individual plots involved in land acquisition, 1,318 are to be acquired in their entirety (100%) while the remaining 841 plots are to be acquired in part. Of a total of 1,329 agricultural plots affected, 721 will be acquired in their entirety. While this impact is significant, it is offset in part by the pattern of multiple landholdings by households that is prevalent in the project area. 27. In addition to land acquisition, the project will require substantial demolition of structures and relocation of residents. Overall, 170 households (or 2,789 people) will be required to relocate. Among the governorates, Taiz will require the greatest relocation (2,546 people), compared to 233 in Lahj and 10 people in Aden. 28. To mitigate the impacts, a Resettlement Action Plan (RAP) has been prepared by following the World Bank Policy on Involuntary Resettlement OP 4.12 and relevant local laws and regulations of the GoY. The RAP was prepared based on a detailed census of the affected people, an inventory of affected assets, socioeconomic surveys and extensive consultations with people likely to be affected by the project. Below are the basic principles to be followed for land acquisition and resettlement: a) All affected persons are entitled to monetary compensation for lost assets, or to equivalent alternative forms of assistance in lieu of monetary compensation. Lack of legal rights to the assets lost will not bar affected persons from entitlement to such compensation or alternative forms of assistance. b) Compensation rates have been established in the RAP. They refer to the amounts to be paid in full to the individual or collective owner of the lost asset, without depreciation or deduction for any purpose. c) When cultivated land is acquired, it often is preferable to arrange for land-for-land replacement. Where suitable alternative land is not available, or at the preference of the affected person, compensation in cash at full replacement cost is appropriate. d) Replacement house plots and sites for relocating businesses or agricultural land should be of equivalent use value to the land that was acquired for the project. e) Compensation for land and other assets should be paid prior to the time of impact, so that new houses can be constructed, fixed assets can be removed or replaced, and other necessary mitigation measures can be undertaken prior to actual displacement. Adequate transitional support should be provided to affected persons or businesses required to relocate because of the project. 29. Compensation. The compensation rates established in the RAP for various impacts are based on the replacement cost which is determined through consultations with various stakeholders, including local government officials and the people affected. The compensation arrangements are different for different groups of people affected, such as owners of private land, 43 tenants, users of government land and communal land. The details are included in the Entitlement Matrix which is shown at the end of this Annex. 30. Institutional Arrangements. Three institutions will be involved in resettlement planning and implementation at the central level: (i) a High-Level Committee for Land Acquisition and Resettlement (HLC), (ii) a Technical Committee for Land Acquisition and Resettlement (TC), and (iii) the Project Implementation Unit (PIU), which will manage day-to-day aspects of RAP implementation. To facilitate the actual payment of compensation, a Beneficiary Committee will be established at the village level in coordination with the Local Council at the District Level. The roles and responsibilities of each of these entities are described in the RAP. 31. Public Consultation and Participation. Public consultation and participation played a key role in formulating the RAP. Affected residents (both men and women), farmers, business people and district governments participated in the census, inventory and formulation of the livelihood rehabilitation strategy, measures and relocation sites. Their feedback has been incorporated into the RAP. The RAP contains the methodologies of consultation, the key topics covered, the main concerns of affected persons, and the measures to address people’s concerns. Public consultation and participation will continue during RAP implementation. Information will be provided to the affected people through TV, radio broadcasts, newspapers, bulletins and posters. The RAP will be summarized into a resettlement information booklet (RIB) and distributed to every affected household. 32. Grievance Redress Mechanism. Grievances may be filed either in writing or orally. The redress channel lies within the project management and government systems. Recording requirements and timeframes have been established for grievance resolution. This mechanism is described in detail in the RAP and has been disclosed as part of the RAP. 33. Resettlement Implementation Monitoring. Internal and external monitoring has been designed as part of project resettlement management. The PIU will carry out internal monitoring of the resettlement implementation. The monitoring procedures, content, staffing, responsibility, timeframe and reporting have been detailed in the RAP. An external monitor will be selected for independent monitoring of RAP implementation. Independent monitoring will cover physical progress of RAP implementation, including compensation payment, allocation of residential sites, farm land allocation, and restoration of infrastructure. The independent monitor will also review the public consultation process, grievance redress mechanisms, and restoration of livelihood of the affected farmers. Independent monitoring will be conducted twice a year during the first two years of implementation, and once a year thereafter. 34. Resettlement Budget and Fund Flow. The RAP contains a detailed resettlement budget that covers all basic resettlement costs, management costs, contingencies, and monitoring cost. The basic resettlement cost includes compensation for land, houses, other structures, standing crops and trees, business profit loss, reconstruction of affected infrastructure, and relocation subsidies. The total resettlement budget is estimated at US$ 19.0 million equivalent. The funds for land acquisition and resettlement will be channeled from the Ministry of Finance to the PIU, which will directly make the payment to the people affected. 44 Total RAP Costs Amount Particulars (US$) Estimated cost for compensation of assets 18,303,773 Allowances and support to affected persons 700,961 RAP TOTAL COSTS 19,004,734 45 Entitlement Matrix Category Subcategory of Compensation or Mitigation Compensation Rates or Eligible Persons of Impact Impact Principle Standards for Assistance Loss of Private Registered or Compensation at replacement USD 4/m2 (average) agricultural agricultural land acknowledged land cost land owner Significantly affected Compensation at replacement USD 4/m2 (average) (e.g., >10 percent land cost, or direct land replacement loss) at request of those significantly affected, or combination of cash and land replacement Private pasture Registered or Compensation at replacement USD 0.75/m2 (average) acknowledged land cost owner Significantly affected Compensation at replacement USD 0.75/m2 (average) (e.g., >10 percent cost, or direct land replacement pasture land loss) at request of those significantly affected, or combination of cash and land replacement Tenant on private Acknowledged land No land compensation; Three months’ rent if terms have land user transitional assistance for been agreed, otherwise equivalent disruption of livelihood of three months rent at prevailing district rate. Tenant on Acknowledged user of Other arrangements for Three months’ rent if terms have communal land communal land for communal land provided, or been agreed, otherwise equivalent agriculture or pasture transitional assistance for of three months rent at prevailing disruption of livelihood district rate. 46 Category Subcategory of Compensation or Mitigation Compensation Rates or Eligible Persons of Impact Impact Principle Standards for Assistance Loss of Unharvested crops Cultivator (including Compensation for loss of Corn: USD 0.4/m2 production laborer/sharecroppers, standing crop and encroachers on Wheat: USD 0.5/m2 public land) Clover: USD 0.25/m2 Henna: USD 0.25/m2 Sorghum: USD 0.4/m2 Cotton: USD 0.5/m2 Fruit/nut trees Cultivator (including Compensation for estimated Qat: USD 15/tree laborer/sharecroppers, future production Qar: USD 3/tree (relocation) and encroachers on Palm: USD 350/tree public land) Mango: USD 400/tree Guava: USD 300/tree Papaya: USD 100/tree Banana:USD 175/tree Orange: USD 250/tree Lemon: USD 250/tree Apple: USD 250/tree Apricot: USD 250/tree Pomegranate: USD 400/tree Pepper : USD 5/tree Figs: USD 25/tree Other trees >20 years:USD 200/tree Other trees >=5 <=20years:USD 100/tree Other trees <5 years:USD 10/tree 47 Category Subcategory of Compensation or Mitigation Compensation Rates or Eligible Persons of Impact Impact Principle Standards for Assistance Loss of Permanent Owner Compensation at replacement Concrete: USD 400/m2 structure residence cost Stone: USD 300/m2 Brick: USD 250/m2 Mud: USD 200/m2. Well Owner Compensation at replacement Pumping wells USD 10,000/well cost including Drilling, structure and pump relocation. Manual wells USD 10,000/well including drilling and structure. Artesian wells USD 150/well including casing etc. Wall or fence Owner Compensation at replacement USD100/m cost Other Owner Compensation at replacement To be determined on case-by-case cost basis. Community Community or Community resources including Determined on case-by-case basis facilities or settlement mosques shall be relocated in infrastructure consultation with local people (including and the cost of relocation will mosques) be covered through cash payments and/or construction of replacement structures. These consultations will be carried out by MPWH staff and the decisions taken during the consultations will be recorded in writing. 48 Category Subcategory of Compensation or Mitigation Compensation Rates or Eligible Persons of Impact Impact Principle Standards for Assistance Loss of access Water User Restoration of access or Determined on case-by-case basis to resources provision of equivalent alternative Grazing area User Restoration of access or Determined on case-by-case basis provision of equivalent alternative Fuel or fodder User Restoration of access or Determined on case-by-case basis provision of equivalent alternative Residential Permanent Owner Transitional allowance for Payment equivalent to Yemeni relocation structure moving of household and Rial 1,000 per square meter of assistance belongings space in usage. Tenant Transitional allowance for Equivalent of three months’ rent moving of household and belongings Household with Supplemental transitional 20,000 Yemeni Rial member of vulnerable allowance (approximately USD 100). group Portable structure Owner Transitional allowance for Payment equivalent to Yemeni moving of household and Rial 2,000 per square meter of belongings space in usage. Business Permanent Owner Transitional allowance for To be determined on case-by-case structure moving of equipment, fixtures basis. relocation and inventory assistance Income disruption support Support determined on a case-by- case basis, to continue until business operation can be restored 49 Category Subcategory of Compensation or Mitigation Compensation Rates or Eligible Persons of Impact Impact Principle Standards for Assistance Tenant Transitional allowance for Payment equivalent to Yemeni moving of equipment, fixtures Rial 2,000 per square meter of and inventory space in usage Income disruption support Support determined on a case-by- case basis, to continue until business operation can be restored Portable structure Owner Transitional allowance for Payment equivalent to Yemeni moving of equipment, fixtures Rial 2,000 per square meter of and inventory space in usage Graveyard Owner Owner Compensation at replacement Relocation:USD 200/Grave cost, or full restoration 50 Annex 4: Economic Analysis REPUBLIC OF YEMEN: Corridor Highway Project A. Summary 1. The project team carried out an economic analysis for the Bank-financed portion of the new highway section between Aden and Taiz (the 55 km sub-section from Aden to the locality of Noubat Dokaim) using the Highway Development and Management Tool (HDM-4). The tool simulates life-cycle predictions of road deterioration, road works effects and their costs, and road user costs. It provides economic decision criteria for road construction and maintenance works. 2. HDM-4 analyzes projects by comparing a “without project” option (also called ”do minimum” scenario) with the envisaged project (“with-project” scenario), in terms of investment and maintenance costs, vehicle operating costs, travel time costs and accident costs. The analysis calculates the net present value (NPV) and economic internal rate of return (EIRR) of the proposed project, comparing it against the likely and realistic “do minimum” scenario which represents the assessment of what would probably happen if the proposed project was not undertaken. 3. In this case, the “do minimum” scenario would be to not build the planned new highway section (“Without Project”) and instead rely only on the existing 52 km four-lane road between Aden and Noubat Dokaim to handle current and future expected traffic. The existing road was until recently a two-lane road, but the Government is currently in the process of widening this road into four lanes, with about 92% of the work already completed. For the purposes of the analysis it was assumed that the existing road is already complete. The existing four-lane road has sufficient capacity to handle the current traffic volume of about 18,000 vehicles (average daily traffic - AADT) based on traffic counts carried out in September 2013. However, even though the existing 4-lane road theoretically has sufficient capacity to handle traffic for several years to come, two important problems remain. First, this road was built to serve mainly local traffic. Its alignment goes through urban areas and villages. It was not designed as a highway and thus cannot serve as a high speed, long distance transport artery, which is what the new Aden-Taiz highway and the larger SAYICH are meant to be. Second, because there is no actual highway linking Aden and Taiz, there are large differences in driving speed and behavior between the slow local traffic (which includes animal-drawn vehicles, bicycles, pedestrians, etc.) and high-speed long-distance users. This results in high accident and fatality rates on the existing road, particularly among pedestrians. 4. Under the “with-project scenario”, slow local traffic and fast long-distance would be separated on two different roads. The new highway will be access-controlled and its alignment is further away from populated areas, which should ensure that there are no pedestrians, bicycles, animal-drawn carts, etc.) on that road. Traffic joining the new highway will have acceleration lanes to reach the speeds that are necessary to weave into traffic. 5. The economic cost-benefit analysis of the new highway yielded an EIRR of 9.4% with an NPV of US$ 33.1 million. As expected, the new investment will decrease average travel times, vehicle operating costs and road accident costs. 51 6. A sensitivity analysis was also undertaken with the results shown in table below. The analysis projected simulated changes of +/- 15 percent in construction cost and in the projected traffic volumes on the new highway section. The results are shown in the table below. Sensitivity Analysis Results Economic Rate of Return (%) Base case Traffic Benefits 15% estimated Traffic Benefits 15% lower than estimated Traffic Benefits higher than estimated Estimated cost -15% 9.4% 12.1% 14.7% Estimated cost – base case 6.9% 9.4% 11.7% Estimated cost + 15% 5.1% 7.3% 9.4% Net Present Value (US$ million) Base case Traffic Benefits 15% estimated Traffic Benefits 15% lower than estimated Traffic Benefits higher than estimated Estimated cost -15% 28.1 46.5 65.0 Estimated cost – base case 14.7 33.1 51.5 Estimated cost + 15% 1.2 19.7 38.1 B. Assumptions and Inputs 7. The tables below show the inputs used for the economic cost-benefit analysis. Data for the economic analysis was obtained from a number of sources, but mainly from the feasibility and design studies undertaken by the firm DORSCH Consult in 2003-2005. Data on average daily traffic (AADT) and traffic composition by vehicle type were obtained during traffic counts in September 2013. Data on traffic fatalities on the existing road were collected in September 2013 by the Ministry of Public Works and Highways (MPWH). The vehicle operating cost input data were based on figures on 2012 data collected by the project team. 8. Traffic growth rates, generated traffic and diverted traffic for the new highway are based on assumptions which take into account Yemen’s present precarious security situation and the resulting depressed traffic volumes. It is assumed that due to the security situation in Yemen, present traffic figures are 25% lower than they would be if security was not an issue, so baseline traffic for the purposes of the economic evaluation is 25% higher than actual counted traffic. A discount rate of five percent was used, which reflects (i) the current cost of capital for the State - - here it is important to note that a large part of Yemen's public investment budget is funded from external grants and concessional loans, and (ii) the estimated rate of return of alternative uses of public funds, which in Yemen is presently rather low, and in any case much below the 12 percent that is typically assumed. 52 Input Data for “Without Project” and “With Project” Scenarios Without Project With Project Existing New 4 Lane 4 Lane Road Road Length (km) 52 55 Investment (US$ million excluding taxes) 126 Investment per km (US$ million/km) 2.291 Vehicles Maximum Speed (km/hr) 70 110 Roughness (IRI) 5 2 Normal Traffic Growth Rate (%/year) 2014-2018 5 5 2018-2037 4 4 Generated plus Diverted Traffic (% of normal traffic) Years 1 to 3 after construction 30 Years 4 to 7 after construction 45 Years 8 onwards after construction 60 2013 measured traffic (AADT) 18,371 2013 economic evaluation traffic (AADT), +25% 22,964 Percent of traffic diverted to project road 0 70 Normal Traffic on Project Road at Opening (2018) 29,029 20,320 Generated + Diverted Traffic on Project Road at Opening (2018) 0 6,096 Total Traffic on Project Road at Opening (2018) 29,029 26,416 Fatalities per year on existing and project road (no) 74 50 Reduction in fatalities per year (no) 24 Cost per fatality (US$) 108,343 Accident Benefits per year (US$ million) 2.600 Economic Internal Rate of Return (%) 9.4 Net Present Value (US$ million) 33.1 53 Vehicle Operating Costs Unit Costs ($) Pass. (employ Passengers ed) (not employed Cargo New Lubricati Maintenanc Crew Overhead Annual Time Vehicle Tire Fuel on Oil e Labor Wages costs Interest value Time Value Time Vehicle ($/vehic ($/ti ($/lit ($/hour Description le) re) er) ($/liter) ($/hour) ) ($/year) (%) ($/hour) ($/hour) ($/hour) Motorcycle 1,500 13 0.35 3.00 1.00 0.00 40 5.0 1.00 0.25 0 Car 0 Medium 14,000 70 0.35 3.00 2.00 0.00 150 5.0 3.00 0.75 Delivery 0 Vehicle 24,000 100 0.35 3.00 2.00 0.50 55 5.0 1.00 0.25 0 Truck Light 40,000 200 0.23 3.00 2.00 1.50 410 5.0 1.00 0.25 Truck 0 Medium 60,000 300 0.23 3.00 2.00 3.00 1,000 5.0 1.00 0.25 Truck 0 Heavy 100,000 400 0.23 3.00 2.00 3.00 1,260 5.0 1.00 0.25 Truck 0 Articulated 100,000 400 0.23 3.00 2.00 3.00 6,500 5.0 1.00 0.25 0 Bus Light 12,000 50 0.23 3.00 2.00 3.00 140 5.0 1.00 0.25 Bus 0 Medium 20,000 70 0.23 3.00 2.00 3.00 230 5.0 1.00 0.25 0 Bus Heavy 100,000 200 0.23 3.00 2.00 3.00 7,000 5.0 1.00 0.25 Vehicle Fleet Characteristics Basic Vehicle Fleet Characteristics Annual Annual Number Work Related Gross Km Working Service Private of Passengers Vehicle Vehicle Driven Hours Life Use Passengers Trips Weight Description (km) (hours) (years) (%) (#) (%) (t) Motorcycle 14,000 700 9 100 1 75 0.3 Car Medium 20,000 650 10 100 2 75 1.2 Delivery Vehicle 40,000 1,300 12 0 2 0 3.0 Truck Light 40,000 1,300 12 0 0 0 10.0 Truck Medium 40,000 1,750 14 0 0 0 13.0 Truck Heavy 40,000 1,750 14 0 0 0 30.0 Truck Articulated 40,000 1,750 14 0 0 0 40.0 Bus Light 30,000 1,400 12 0 10 75 2.0 Bus Medium 40,000 1,750 12 0 20 75 5.0 Bus Heavy 70,000 1,750 12 0 40 75 13.0 54 Traffic Count Details – Traffic Composition by type of vehicle L.BUS< L.BUS  Heavy Truck  Animal   Pick‐up  =   >=   Motor  Direction  Day  Cars  2  4  5  6  Bicycle Driven  & 4WD  27  27  3 Axle  Cycle  Axle  Axle  Axle  Axle  carts  seats  seats  To Taiz  2327  2369  1783  42  921  286  223  147  62  140        SAT  To Aden  2496  2794  2304  48  1203  286  235  158  100  128        To Taiz  2359  2463  2108  90  1197  226  299  173  110  158  1     SUN  To Aden  2270  2749  2116  36  1254  220  194  163  119  209        To Taiz  2388  2524  2229  36  1098  237  267  131  73  142        MON  To Aden  2557  2874  2477  45  1298  210  178  174  92  194        To Taiz  2202  2246  2248  51  1233  260  279  188  91  208     1  TUE  To Aden  2476  2377  2154  66  269  264  309  165  130  232     To Taiz  2369  2350  2168  50  1098  246  318  175  108  199     WED  To Aden  2233  2601  2267  52  1214  273  311  197  126  250  ADT for Taiz direction  2329  2390  2107  54  1109  251  277  163  89  169  1  1  ADT for Aden direction  2406  2679  2264  49  1048  251  245  171  113  203  0  0  ADT in both directions  4735  5069  4371  103  2157  502  523  334  202  372  1  1  ADT total  18371  (Veh./Day)  55 Annex 5: Operational Risk Assessment Framework (ORAF) Yemen, Republic: Corridor Highway Project (P145361) Stage: Board . Risks . 1. Project Stakeholder Risks Stakeholder Risk Rating Low Risk Description: Risk Management: For many years, the Corridor Highway has Despite the low stakeholder risk, the project will include support for the design and implementation of an been one of the most highly desired information and communication strategy, and of Stakeholder Feedback mechanisms. projects in Yemen, described by many Resp: Both Status: Not Stage: Both Recurrent: Due Frequency: Yearly Yemenis as a "National Dream". It was Yet Date: widely presented in the media. The Due opportunity to make it a reality now is highly welcome by all stakeholders, in particular the direct stakeholders (vehicle owners and users of passenger and freight transport) but also by the business community and decision-makers at all levels of Government. Despite the political differences and internal conflicts in Yemen during the past years, the Corridor Highway was maintained as one of the flagship projects for Yemen and it is not being challenged by any political force in the country. The Yemen Corridor Highway is universally supported and there is a very low likelihood of this support being withdrawn, even if there are more political changes in the years to come. Capacity Rating Moderate 56 Risk Description: Risk Management: The MPWH may have weaknesses for The PIU is robustly staffed with 11 personnel that will oversee all aspects of project implementation project preparation and implementation. (technical, fiduciary, safeguards, contract management). The Government agreed to maintain adequate staffing of the PIU. While most of the staff are already experienced, the Bank will support and organize further training, both during project preparation and implementation. Resp: Client Status: In Stage Both Recurrent: Due Frequency: Yearly Progress : Date: Governance Rating Moderate Risk Description: Risk Management: The Ministry of Public Works and The MPWH has a history of adequate Governance arrangements and oversight over project Highways (MPWH) and its PIU for the implementation. There is also oversight of the Ministry of Planning and the Ministry of Finance over the Corridor Road may have weaknesses in implementation of MPWH's investment projects. Procurement decisions are taken by a high-level general oversight, internal controls, committee composed of representatives from several different organizations. The PIU staff includes accounting and audit procedures. fiduciary safeguards specialists (Procurement and Financial Management). Besides the normal financial audits which a mandatory under Bank- funded projects, rigorous technical audits will also be used under the project, with sampling of completed pavements and of concrete structures. Resp: Client Status: In Stage Both Recurrent: Due Frequency: Yearly Progress : Date: Project Risks Design Rating Moderate Risk Description: Risk Management: There is a risk that the technical The technical (engineering) design of the Aden - Taiz section of the highway was carried out by reputable (engineering) design of this new highway international consulting firms. A review of the design by the Bank's project team showed that the could be inadequate which would result in engineering design is broadly adequate. Nevertheless, the team will carry out more detailed reviews of premature deterioration and loss of asset the engineering design as part of the quality assurance of the bidding documents for civil works and will value. make sure that changes (if necessary) will be reflected in the technical specifications. There is a risk that the Terms of Reference The Bank team has closely worked with the client to prepare and finalize most of the Terms of Reference for the large consulting assignments for the consulting assignments, as part of the project preparation process. The Bank team will also included in the project could be of support the client in preparing the other remaining Terms of Reference. inadequate quality. Resp: Both Status: Complet Stage: Prepa Recurrent: Due 30-April Frequency: ed ration Date: 2014 Social and Environmental Rating Substantial Risk Description: Risk Management: 57 Environmental safeguards management: As part of project preparation, an Environmental and Social There is the risk that environmental Impact Assessment (ESIA), and Environmental Management Plan (EMP) and a Resettlement Action Plan management during construction will be (RAP) have been prepared, which covers both the Bank-funded and SFD-funded highway sub-sections. inadequate and could result in avoidable The implementation of the EMP will become part of the construction contract and will be supervised by damages. the engineer and the MPWH. Resp: Client Status: Not Stage: Both Recurrent: Due Frequency: CONT There is the risk that land acquisition and Yet Date: INUO resettlement could be carried out Due US inadequately and could result in conflicts (including violent conflicts) between land Risk Management: owners/occupants and the Government. RAP implementation: The existing RAP will be the basis for the process of Land Acquisition and Resettlement which is to be carried out by MPWH. The Ministry of Finance has confirmed that it has already earmarked funds for compensation to land owners and other affected person. In general, MPWH has agreed that World Bank Policies will be applied under the project. Resp: Client Status: Not Stage: Imple Recurrent: Due Frequency: CONT Yet menta Date: INUO Due tion US Risk Management: Monitoring arrangements: The monitoring arrangements for the implementation of the ESMP and RAP will be the same for the SFD-funded and IDA-funded highway subsections. Besides its own internal monitoring by PIU staff, MPWH will involve an external independent monitoring agency. Resp: Client Status: Not Stage: Imple Recurrent: Due Frequency: CONT Yet menta Date: INUO Due tion US Program and Donor Rating Moderate Risk Description: Risk Management: The Bank will closely monitor the financial situation of the Government and if necessary, support the The proposed IDA grant of US$ 133.54 Government in mobilizing the counterpart funds from other sources. million will cover 70% of the total expected project cost of US$ 191 million. Resp: Bank Status: Not Stage: Both Recurrent: Due Frequency: Yearly The Government has agreed to fund the Yet Date: remaining US$ 57 million. There is a risk Due that the needed Government funding Risk Management: cannot be mobilized. The GoY and SFD have already concluded the financing agreement for the section between Taiz and There is a risk that for any unforeseen Noubat Dokaim. The SFD-funded project is more advanced than the IDA-funded project, with the selection of the contractors being expected in the first half of 2014. 58 circumstances there could be a delay in the Resp: Client Status: In Stage Both Recurrent: Due Frequency: CONT construction of the SFD-funded sub- Progress : Date: INUO section, and that the full benefits of the US IDA-funded sub-section may therefore not materialize until after the project closing date. Delivery Monitoring and Sustainability Rating Moderate Risk Description: Risk Management: The MPWH may experience difficulty in The project will include under Component 2 the definition and implementation of suitable institutional managing and maintaining the new corridor arrangements for the management, operation and maintenance of the Corridor Highway. highway, which represents a new level of Resp: Both Status: Not Stage: Imple Recurrent: Due Frequency: Yearly complexity when compared to existing Yet menta Date: roads in Yemen. Due tion Other (Optional) Rating High Risk Description: Risk Management: Progress and cost of civil works could be The bidding document for works, as well as the TOR for the supervision consultant will include negatively affected by the difficult security provisions which require the contractor and supervision consultant to make the necessary security situation in the project area. arrangements, and price those arrangements in the respective contracts. The works could nevertheless be affected by threats or by actual attacks on the contractor’s personnel and equipment, or attacks on the supervision consultant. This risk could be mitigated at least in part through security support by state agencies (police or military). The World Bank is using a Third Party Monitoring Agent in Yemen to at least partly offset the inability of Bank staff to access the site of the civil works due to the security situation. Resp: Both Status: In Stage: Imple Recurrent: Due Frequency: CONT Progress ment Date: INUO ation US Overall Risk Overall Implementation Risk: Substantial Risk Description: Based on the factors identified in the ORAF, the overall implementation risk is classified as substantial. 59 Annex 6: Implementation Support Plan REPUBLIC OF YEMEN: Corridor Highway Project 1. Implementation Support visits: The World Bank will carry out structured implementation support visits to Yemen at least every six months. During those visits, the World Bank team will monitor the progress of all IDA-funded activities. The Statement of Mission Objectives (SMO) and the timing of the visits will be agreed in advance with the Ministry of Public Works and Highways (MPWH). At the end of each visit a draft Aide Memoire will be presented and discussed with MPWH and other affected Government entities, if applicable. The final Aide Memoire including the agreed or recommended actions, changes and amendments to the work program etc. will be sent to the Government, represented by MOPIC, after formal endorsement by Bank management. 2. Skills: The following skills are required for the adequate implementation support of the project: (i) Task Team Leader (TTL): Given the scale of the project and the Bank’s role in preparing the overall large-scale SAYICH Program with a total investment volume of about US$ 3 billion, the Bank will ensure that a seasoned and experienced TTL will always be in charge of the project. In addition to ensuring adequate monitoring and implementation support, the TTL will be required to ensure a continuous dialogue with the stakeholders. (ii) A Highway Engineer is required within the World Bank team to cover all technical aspects of the project. (iii) Operations Analyst: will follow up on operational aspects including on-the-ground communication with relevant parties. (iv) An Environmental Safeguards Specialist will be required for the duration of the project. Tasks related primarily to the monitoring of compliance with the safeguards policy that may be triggered by the Project and the mitigation measures that have been put in place. (v) A Social Safeguards Specialist will also be required for the duration of the project. Tasks primarily relate to monitoring compliance with the ESMP, RAP, and the social mitigation measures specified therein. Additionally, monitoring the effective and transparent operation of project GRMs will be important. (vi) Procurement Specialist: will ensure compliance with World Bank procurement guidelines. (vii) Financial Management Specialist: will ensure compliance with World Bank FM guidelines. I. Plan for Implementation Support visits Time Focus Skills Needed Resource Estimate September 2014 Start of Physical TTL, Highway Engineer, US$35,000 Construction Works Operations Analyst, Procurement, FM, Social and Environment Safeguards Semi-annual Implementation Support TTL, Highway Engineer, US$40,000 per visit Operations Analyst, Procurement, FM, Social 60 Time Focus Skills Needed Resource Estimate Safeguards, Environment Safeguards June 2016 Mid-term Review TTL, Highway Engineer, US$50,000 Operations Analyst, Procurement, FM, Social and Environment Safeguards II. Skills Mix Required Skills Needed Number of Number of Trips Comments Staff Weeks Task Team Leader 6 4 Based in HQ or in the Region Transport Specialist 4 2 HQ Based Operations Analyst 4 2 Country Office Based Highway Engineer 4 2 WB staff or Consultant Environmental Safeguards Specialist 4 2 Social Safeguards Specialist 4 2 Procurement Specialist 4 2 Based in the Region Financial Management Specialist 4 2 Country Office Based III. Bank Staff and Consultants who worked on the Project during preparation included: Name Title Unit Andreas Schliessler Lead Transport Specialist – Task Team Leader MNSTI Chaogang Wang Senior Social Development Specialist MNSSU Luis R. Prada Villalobos Senior Procurement Specialist MNAPC Edith Ruguru Mwenda Senior Counsel LEGAM Gaurav D. Joshi Environmental Specialist SASDI Africa Eshogba Olojoba Senior Environmental Specialist MNSEE Said Dahdah Transport Specialist MNSTI Nagwan Ahmed Sharhan Operations Analyst MNCYE Omar Raja Wahab Transport Specialist MNSTI Azeb Yideru Program Assistant MNSTI Huda Al-Asbahi Procurement Analyst MNAPC Moad Al-Rubaidi Financial Management Specialist MNAFM Saleh Al-Manary Financial Management Analyst MNAFM 61 Name Title Unit Samra Shaibani Senior Communication Officer MNAEX Ebrahim Al-Harazi Communications Specialist MNAEX Rodrigo Archondo- Senior Highway Engineer ECSTR Callao Hakim Aghbari Senior Highway Engineer ECSTR Igor Jokanovic Highway Engineer (Consultant) Dan Gibson Social Safeguards (Consultant) 62 42ºE 44ºE 46ºE 48ºE 50ºE 52ºE 54ºE This map was produced by the Map Design Unit of The World Bank. REPUBLIC OF YEMEN GSDPM The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any CORRIDOR HIGHWAY PROJECT Map Design Unit endorsement or acceptance of such boundaries. HIGHWAY SECTION FUNDED BY IDA (55 KM) CITIES AND TOWNS 20ºN HIGHWAY SECTION FUNDED BY SAUDI GOVERNORATE CAPITALS 20ºN FUND FOR DEVELOPMENT (85 KM) NATIONAL CAPITAL REP. OF SAUDI AR A A B I SECTIONS PLANNED OF THE SAYICH YEMEN GOVERNORATE BOUNDARIES EXISTING MAIN ROADS INTERNATIONAL BOUNDARIES OMAN 18ºN 18ºN Sanaw To Thamarit Habarut Thamud SSAAAADDAAH To Mirbat Saadah Saada HADRAMOUT AL- AL-JOWF MAHRAT Zamakh Damqawt Maydi ¸- Huth Mar’ayt Al Hazm Al Ghaydah 16ºN HAJJAH AMRAN 16ºN Al Ghuraf Nishtun Al Luhayyah Hajjah Amran Hawra MARIB Salif Al Mahwit Marib Shabwah AL- SANAA SANA’A Qishn MAHWIT SANA'A SHABWA Sayhut R Al Hodeidah Al Gabain Nuqub Harib ed DHAMAR Ataq Shihr HODEIDAH RAIMH Dhamar Rida Nisab Al Mukalla AL-BEIDA Se IBB Al Huwaymi a 14ºN AL- Al Beida 14ºN Ibb DHALE'E Bir Ali Al Dhale'e Taiz ABYAN Mocha Ahwar Shaqra TAIZ At Turbah ERITREA Lahej Lahj Zinjibar Gu lf of Ad e n At LAHJ LAHEJ Turbah Aden Qalansiyah Qadub ADEN ETH. For detail, see Socotra 'Abd al Kuri Samha DJIBOUTI IBRD 40400 0 50 100 150 Kilometers Darsa 12ºN E ) 12ºN The Brothers RAT (HADRAMOUT GOVERNO IBRD 40432 MARCH 2014 0 50 100 Miles 42ºE 44ºE 46ºE 48ºE 50ºE SOMALIA 52ºE 54ºE IBRD 40400 42ºE 44ºE 46ºE 48ºE 50ºE 52ºE REPUBLIC OF YEMEN SAUDI ARABIA CORRIDOR HIGHWAY OMAN 18ºN PROJECT HIGHWAY SECTION FUNDED BY IDA (55 KM) SAADA Saadah AL- HIGHWAY SECTION FUNDED BY SAUDI AL-JOWF HADRAMOUT MAHRAT FUND FOR DEVELOPMENT (85 KM) Al Hazm Al Ghaydah HAJJAH AMRAN 16ºN INTERCHANGES Hajjah Al Mahwit Amran MARIB EXISTING MAIN ROADS AL- SANA’A Marib MAHWIT SANA'A SHABWA EXISTING ROADS R Al Hodeidah Al Gabain HODEIDAH DHAMAR CITIES AND TOWNS ed RAIMH Ataq Dhamar Al Mukalla AL-BEIDA IBB GOVERNORATE CAPITALS Se Ibb AL- Al Beida 14ºN DHALE'E a Al Dhale'e Taiz ABYAN NATIONAL CAPITAL TAIZ ERITREA LAHJ GOVERNORATE BOUNDARIES Gulf of Aden Lahej Zinjibar VERNORATE) OUT GO ADEN Aden Area of map, below. DRAM ETH. (HA Socotra INTERNATIONAL BOUNDARIES 12ºN This map was produced by the Map Design Unit of The World Bank. DJIBOUTI 0 100 Kilometers The boundaries, colors, denominations and any other information SOMALIA shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any 0 100 Miles endorsement or acceptance of such boundaries. Al Janad AL-DHALE’E Taiz Mawiyah Al Qub’ah Al Habilayn 13°30'N 13°30'N Ad Durayjah Jabal Warwa Al Misrakh TAIZ Al Rahidah Aqan Al Huwaymi Jawl Madram Noubat Dukaim Al-Anad At Turbah Al Hutah LAHJ Lahj ABYAN 13°N 13°N Bi’r Jabir Al Imad Al Alam ADEN 0 10 20 Miles Aden 0 10 20 Kilometers Gulf of Aden GSDPM 44°E 44°30'E 45°E Map Design Unit MARCH 2014