Document of The World Bank FOR OFFICIAL USE ONLY Report No: 73020-NI PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR 3.3 MILLION (US$5 MILLION EQUIVALENT) TO THE REPUBLIC OF NICARAGUA FOR THE HURRICANE FELIX EMERGENCY RECOVERY PROJECT October 15, 2012 Sustainable Development Central America Country Management Unit Latin America and Caribbean 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 made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective October 4, 2012) Currency Unit = Córdoba C. 23.84 = US$1 US$1.54 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing BP Banco Produzcamos CDC Caribbean Development Committee CPS Country Partnership Strategy DA Designated Account EMP Environmental Management Plan ERL Emergency Recovery Credit FCR Fondo de Crédito Rural (Rural Credit Fund ) FM Financial Management FMR Financial Management Report GRAAN Gobierno de la Región Autónoma del Atlántico Norte (Government of the North Atlantic Autonomous Region) IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding INPESCA Instituto Nicaraguense de la Pesca (Nicaraguan Institute for the Fisheries Sector) INVUR Instituto de la Vivienda Urbana y Rural (Rural and Urban National Housing Institute) IP Implementation Progress ISR Implementation and Results Reports M&E Monitoring and Evaluation MHCP Ministry of Finance MINREX Ministerio de Relaciones Exteriores (Ministry of Foreign Affairs) MINSA Ministerio de Salud (Ministry of Health) MTI Ministerio de Transporte e Infraestructura (Ministry of Transport and Infrastructure) MTR Mid-Term Review NCB National Competitive Bidding ORAF Operational Risk Assessment Framework PAC Project Advisory Committee PCC Project Coordination Committee PDO Project Development Objective RAAN Región Autónoma del Atlántico Norte (North Atlantic Autonomous Region) SCED Secretaría de Cooperación Externa y Desarrollo (External Cooperation and Development Secretariat) SDC Secretaría de Desarrollo de la Coste Caribe (Caribbean Coast Development Secretariat) SE-SINAPRED Secretaría Ejecutiva del Sistema Nacional para la Prevención, Mitigación y Atención a Desastres (Executive Secretariat of the National System for Disaster Prevention, Mitigation and Response) SERENA Secretaría de Recursos Naturales y Ambiente (Secretariat of Natural Resources and Environment - GRAAN) SINAPRED Sistema Nacional para la Prevención, Mitigación y Atención a Desastres (National System for Disaster Prevention, Mitigation and Response) SOE Statement of Expenditures Vice President: Hasan A. Tuluy Country Director: Carlos Felipe Jaramillo Sector Director: Ede Ijjasz-Vasquez Sector Manager: Laurent Msellati Task Team Leader: Enrique Pantoja NICARAGUA ADDITIONAL FINANCING FOR HURRICANE FELIX EMERGENCY RECOVERY PROJECT CONTENTS Project Paper Data Sheet Project Paper I. Introduction……………………………………………………………......1 II. Background and Rationale for Additional Financing……………………..1 III. Proposed Changes……………………………………………….………...3 IV. Appraisal Summary……………………………………………………….4 Annexes 1. Revised Results Framework and Monitoring Indicators………………..……...8 2. Operational Risk Assessment Framework…………………………………….13 3. Summary of Financial Management, Disbursement and Procurement.............20 4. Safeguards Assessment………………………………………………………..26 NICARAGUA ADDITIONAL FINANCING FOR HURRICANE FELIX EMERGENCY RECOVERY PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Country Director: C. Felipe Jaramillo Sectors: 40% Gen agr/fish/for sector; Sector Manager/Director: Laurent Msellati / 40% Housing construction; 9% Other Ede Ijjasz-Vasquez social service; 8% Health Team Leader: Enrique Pantoja Themes: 67% Dis. Management; 33% Project ID: P132108 Other Rural Development Expected Effectiveness Date: March 30, 2013 Environmental category: B Lending Instrument: Specific Investment Expected Closing Date: December 31, Credit (SIL) 2014 Additional Financing Type: Cost overrun Joint IFC: No Joint Level: N/A Basic Information - Original Project Project ID: P108974 Environmental category: B Project Name: Hurricane Felix Emergency Expected Closing Date: December 31, Recovery Project 2013 Lending Instrument: Emergency Recovery Joint IFC: No Credit (ERL) Joint Level: N/A AF Project Financing Data [ ] Loan [ ] Credit [ X ] Grant [ ] Guarantee [ ] Other: Proposed terms: AF Financing Plan (US$m) Source Total Amount (US $m equivalent) Total Project Cost: 5.00 Cofinancing: 0 Borrower: 0 Total Bank Financing: 5.00 IBRD 0 5.00 IDA Grant New Recommitted Client Information Recipient: Republic of Nicaragua Responsible Agency: Government of the North Atlantic Autonomous Region (GRAAN) Contact Person: Evelyn Taylor, Regional Coordinator, GRAAN Telephone No.: 505-2792-5088 Fax No.: 505-2228-1494 Email: etaylor93@hotmail.com AF Estimated Disbursements (Bank FY/US$m) FY FY13 FY14 FY15 Annual 1.0 3.2 0.8 Cumulative 1.0 4.2 5.0 Project Development Objective and Description Original project development objective: to support the sustainable recovery of the communities affected by Hurricane Felix in the North Atlantic Autonomous Region (RAAN) of Nicaragua. Revised project development objective: N/A Project description: The project includes four components: (1) Early Recovery, (2) Recovery of Small-Scale Fisheries Sector, (3) Reconstruction of Housing and Social Infrastructure, and (4) Institutional Strengthening for Project Management, Monitoring and Evaluation. The Additional Financing Grant will cover cost overruns related to social/community infrastructure, thus allowing the completion of the original activities for Component 3, and will include funding for adequate project management and M&E under Component 4. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [ X ]Yes [ ] No Natural Habitats (OP/BP 4.04) [ X ]Yes [ ] No Forests (OP/BP 4.36) [ ]Yes [ X ] No Pest Management (OP 4.09) [ ]Yes [ X ] No Physical Cultural Resources (OP/BP 4.11) [ X ]Yes [ ] No Indigenous Peoples (OP/BP 4.10) [ X ]Yes [ ] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [ X ] No Safety of Dams (OP/BP 4.37) [ ]Yes [ X ] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [ X ] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [ X ] No Does the project require any waivers of Bank policies? [ ]Yes [ X ] No Have these been endorsed or approved by Bank management? [ ]Yes [ ] No Conditions and Legal Covenants: Financing Agreement Reference Description of Date Due Condition/Covenant Art. V, 5.01 The Additional Conditions of Effectiveness Effectiveness consist of the following: (a) the amendment to the GON-GRAAN Subsidiary Agreement has been executed on behalf of the Recipient and of GRAAN; and (b) the amendment to the Part 2, 3 and 4 Subsidiary Agreement has been executed on behalf of the Recipient, GRAAN, INPESCA, INATEC and INVUR. Sch. 2, Section I, B.1 The Recipient shall carry out, Throughout implementation and shall cause the Project to be carried out by GRAAN, in accordance with the terms of a manual satisfactory to the Association (the Operational Manual). Sch. 2, Section I, B.3 The Recipient shall cause Throughout implementation GRAAN to carry out Part 2.A of the Project, with the assistance of Banco Produzcamos, in accordance with the terms of a manual satisfactory to the Association (the Revolving Fund Operational Manual) Sch. 2, Section I, C.1 Recipient shall organize and Throughout implementation maintain during the implementation of the Project a technical committee (the “Credit Committee”) Sch.2, Section I, C.2 The Recipient shall organize and Throughout implementation maintain during the implementation of the Project a committee (the “Project Coordination Committee”), which shall assist with overall strategic and policy guidance for the Project I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an Additional Grant in an amount of SDR3.3 million (US$5.0 million equivalent) to the Republic of Nicaragua for the Hurricane Felix Emergency Recovery Project (P108974) supported by Credit 4392-NI. The proposed Additional Financing (AF) is sought to cover cost overruns related to social/community infrastructure, thus allowing the completion of the original Project activities for Component 3. The Project Development Objective (PDO), components, activities and Project area will remain unchanged. The proposed AF Grant will close on December 31, 2014, which will extend the Project implementation period by 12 months. II. Background and Rationale for Additional Financing in the amount of US$ 5.0 million 2. Background. Hurricane Felix, a Category 5 storm, hit Nicaragua on September 4, 2007, affecting severely the North Atlantic Autonomous Region (RAAN) – the poorest region of the second poorest country in Latin America and the Caribbean. Nearly 200,000 people, or about 60 percent of the region’s population, suffered the impacts of Hurricane Felix. Agriculture and fishery were heavily impacted, housing and social infrastructure experienced major damages, and forest areas, mangroves and coastal habitats were extensively affected. Given that 60 per cent of the total population and almost 77 percent of the rural population in the region live in poverty, the challenges for sustainable recovery were significant. 3. Original Credit. The Project is being financed by an Emergency Recovery Credit (ERL) of SDR10.7 million or US$17.0 million equivalent, which was approved by the Bank’s Board on March 6, 2008 and became effective on October 31, 2008. After two extensions, current closing date is December 31, 2013. The original credit 4392-NI will not be extended. The PDO is to support the sustainable recovery of the communities affected by Hurricane Felix in the North Atlantic Autonomous Region (RAAN) of Nicaragua. The Project includes four components. Component 1 was implemented by the Executive Secretariat of the National System for Disaster Prevention, Mitigation and Response (SE-SINAPRED) and the rest of the project is being implemented by the Government of the North Atlantic Autonomous Region (GRAAN). The specific activities of each component are as follows: • Component 1 - Early Recovery: This component was completed in August 2012, and financed critical rehabilitation and recovery activities such as provision of early reconstruction materials, housing rehabilitation for over 3,000 families, restoration of family gardens, and fishing gear. • Component 2 - Strengthening of Small-Scale Fisheries Sector: This component seeks to restore and improve the economic conditions of men and women working in the small- scale fisheries sector in the region. In addition to training and provision of fishing equipment, it includes the establishment of a revolving fund to provide credit to affected fisher folk. • Component 3 – Reconstruction of Housing and Social Infrastructure: This component aims to reestablish the social and economic environment of affected communities by providing safer and culturally responsive housing and social infrastructure, including reconstruction of community centers, churches and small health clinics. 1 • Component 4 – Institutional Strengthening for Project Management, Coordination and Monitoring and Evaluation, including activities to ensure adequate capacity in GRAAN to implement the project, and in general to lead regional development efforts. 4. There have been four level-two restructurings of the Project to date: (a) Restructuring approved on August 10, 2009 to include the financing of services associated with the processing of timber under the definition of “non-consultant services.” (b) Restructuring, approved on June 9, 2011, including (i) a change in the entity responsible for administering the Project’s revolving fund from the Rural Credit Fund (FCR) to the newly created Banco Produzcamos (BP), (ii) a reallocation of proceeds, (iii) a revision of the definition of non-consulting services to include expenditures related to the Communications Strategy under Component 4, and (iv) adjustments to some targets under Component 2 to reflect the revised fisheries sector recovery strategy. (c) Restructuring approved on January 20, 2012, including (i) a first seven-month extension of the Credit closing date from May 30, 2012 to December 31, 2012, and (ii) final adjustments to the Project’s original targets under Component 3 to reflect cost overruns, based on the agreements of the Mid-Term Review (MTR). (d) Restructuring approved on October 10, 2012, extending the original Credit closing date from December 31, 2012 to December 31, 2013. 5. Rationale for Additional Financing. On June 20, 2012 the Government of Nicaragua requested additional financing for the project in the amount of US$5.0 million, in order to complete original activities and meet targets under Component 3. These include reconstruction of key social/community infrastructure such as community centers and churches that double up as emergency shelters, and small health centers that bring services to isolated communities. The AF is needed to meet reconstruction cost increases that have taken place since Project approval. Moreover, the AF will provide the required resources for additional project management, monitoring and evaluation, and to finalize training to promote Hurricane-resistant construction practices. The Government requested the additional financing considering the poverty and vulnerability levels of the region and the importance of continuing to receive implementation support from the World Bank. 6. Alignment with CPS. The Project’s objective as well as the Government’s request for additional financing is fully consistent with the proposed World Bank Group’s Country Partnership Strategy (CPS) for 2013-2017 (Report No. 69231-NI) to be discussed by the Executive Directors on November 13, 2012, which focuses on two strategic objectives/pillars to: (i) raise welfare by improving access to quality basic services, and (ii) raise incomes by improving productivity and enhancing competitiveness. While contributing to the first pillar, the proposed AF would mainly support the second pillar. Under this Pillar, the CPS notes that the proposed AF will complement efforts for enhancements in infrastructure, and includes the AF as an indicative lending operation. Furthermore, the CPS recognizes the country’s vulnerability to disasters. 2 7. Status of Implementation. As reflected in the Implementation and Results Reports (ISRs) both Implementation Progress (IP) and PDO Achievement have been rated Moderately Satisfactory for over 12 months, and more recently Satisfactory. As corroborated during the Mid- Term Review (MTR) of October 2012 and subsequent missions, the PDO remains relevant and achievable. The Project experienced delays due to a slow learning curve by SE-SINAPRED and GRAAN and weak inter-institutional coordination, coupled with weather conditions, isolation of beneficiary communities, political factors (municipal and national elections), and limited market development of the region which posed major challenges to key bidding processes. After overcoming these challenges, Project progress has reached a more stable pace reflecting improved project management under new regional leadership and stronger capacity, including support through a specialized Implementation Team. Most major procurement processes have been completed, and activities under Component 1 closed in August 2012. As of September 2012, US$11.80 million (72.50 percent of total Credit funds) have been disbursed, and close to US$4.0 million committed. 8. Project progress is evident in the rehabilitation of houses, the implementation of the revolving fund for the small scale fisheries sector, and reconstruction of social infrastructure. To date over 3,980 families have benefited from roof rehabilitation and close to 200 families from housing reconstruction. An additional 105 families will soon receive their houses. Through the revolving fund, the Project has provided US$297,000 for Pikineras (women working in the small scale fisheries sector) and other activities in the sector. The construction of six churches and seven community centers is underway, and should be finalized by the end of 2012. The Project has also provided training and fishing gear to affected communities, and provided seeds for small family gardens. Finally, the Project is in compliance with its legal covenants, and as detailed below, with fiduciary requirements and applicable safeguard policies. 9. Implementation arrangements. GRAAN will continue as implementing agency supported by the existing specialized Implementation Team including a Technical Coordinator, an Infrastructure Coordinator, a Communication Specialist, an M&E officer, and qualified fiduciary staff. Overall implementation arrangements will also remain the same: the region’s Governor will lead the coordination and implementation effort with the support of two committees: (a) the Project Coordination Committee (PCC) integrated by representatives of the co-executing agencies and other relevant agencies such as the Caribbean Development Committee (CDC); 1 and (b) the Project Advisory Committee (PAC), which includes the Caribbean Coast Development Secretariat (SDC), the Ministry of Finance (MHCP), and the Ministry of Foreign Affairs (MINREX). III. Proposed Changes 10. As noted above, the AF will be used to reach the original targets of the social/community infrastructure and small health centers under Component 3, and will include funds for adequate project management and M&E under Component 4. Accordingly, the Project Development Objective, components, activities and Project area will remain unchanged under the AF. 1 Co-executing agencies include Banco Produzcamos, the National Fisheries Agency (INPESCA), the National Housing Institute (INVUR), and Ministry of Health (MINSA). 3 11. Specific Changes. Under Component 3, where the original targets had been reduced by almost 50 percent due to cost overruns, the AF will allow to restore these targets. More specifically, under Component 3 the AF will support the supervision and construction of eight churches, eight community centers, and two small health centers, and will allow equipping the health centers and completing the training on improved construction techniques. Table 2: Component 3 - Reconstruction of Housing and Social Infrastructure Original Reduced Proposed Final Targets Budget Targets Targets due to Works under Estimate (in Cost Increases AF million US$) Churches 14 6 8 14 1.45 Community Centers 15 7 8 15 0.70 Small Health Centers 4 3 2 4 2.40 Training on Improved Training Plan Adjusted Training plan Plan Completed 0.05 Construction Techniques Training Plan completed Total 4.60 12. Under Component 4, the AF will finance Project management, Monitoring and Evaluation. As originally described, this would include, among others, coordination, training, financial management, external auditing, and implementation of the Communication Strategy. Table 3: Component 4 - Institutional Strengthening for Project Management, Coordination and M&E Targets Budget Estimate (in million US$) Project Management Coordination, Training, FM, Audit, 0.29 Communication Strategy Monitoring and Evaluation Satisfactory M&E 0.11 Total 0.40 13. Financing plan. The above activities will be funded through an AF Grant of US$5.0 million equivalent, including 100 percent financing of eligible expenditures. As shown in Table 3, with the AF the estimated total for the Project would be US$22 million equivalent. Table 4: Estimated Total Project Costs (in US$ million) Component Original Credit AF Total Project Cost 1. Early Recovery 5.0 -- 5.0 2. Recovery of Small-Scale Fisheries Sector 6.3 -- 6.3 3. Reconstruction of Housing and Social Infrastructure 5.4 4.6 10.0 4. Institutional Strengthening 0.3 0.4 0.7 Total 17.0 5.00 22.00 IV. Appraisal Summary 14. Economic Analysis. The project was designed as an emergency recovery operation to help restore the lives of affected communities in RAAN. The investments in reconstruction of the social infrastructure were thus decided on the basis of the importance given by potential beneficiaries to the community churches and centers for community life and as emergency shelters during tropical storms and hurricanes, thus helping to save lives. The small health centers are located strategically to ensure the maximum coverage of historically isolated communities. Although these conditions have not changed under the additional financing, 4 reconstruction costs have increased since Project preparation reflecting inflation trends in the country. As a result, additional resources are being provided to meet these cost overruns. 15. Technical Analysis. Reflecting current good practice, the Project aims at rebuilding back better. As such, all designs and technical specifications have been prepared to ensure that the social infrastructure reconstructed under the project complies with hazard-resistant specifications. To ensure this, GRAAN has worked with relevant agencies such as the National Housing Institute (INVUR), the Ministry of Transport and Infrastructure (MTI), and the Ministry of Health (MINSA). Final designs and technical specifications for the works to be financed under the AF are ready since they are similar to the ones currently under construction. 16. Financial Management. The Project experienced moderate shortcomings in financial management such as delayed submission of the 2011 audit report for Component 1 and of FMRs, and internal control weaknesses in both implementing agencies. Since FM was considered Moderately Unsatisfactory (MU), an FM Action Plan was agreed and implemented centering mainly on (i) ensuring submission of audit reports and FMRs; (ii) strengthening internal controls and safety of warehouses; and (iii) completing special technical reports on roofing materials financed under Component 1. 17. The fiduciary supervision mission conducted in September 2012 as part of AF preparation helped to corroborate the good progress made by the implementing agencies on the action plan. Current FM arrangements are considered adequate and the FM rating has been upgraded to Moderately Satisfactory (MS). The overdue audit report for Component 1 was received by the Bank on August 31, 2012, and both implementing agencies are up to date with the respective FMRs. Nevertheless, the FM risk is rated substantial considering the Project context and operating environment. 18. For the AF Grant, FM arrangements will be strengthened through additional staff to improve the Project’s internal control system. Moreover, the Project administration has recently incorporated an experienced FM Specialist, has renewed the Internal Auditor’s contract and hired a Finance Assistant to help with internal control issues related to the warehouses. Arrangements such as quality and frequency of financial reporting, multi annual audits contracting, SIGFAPRO integrated financial system and overall cash flow will be based on the same policies and procedures applied under the original Credit. 19. Procurement. Procurement is rated Moderately Satisfactory (MS), and current arrangements for procurement are considered adequate. No major issues were identified during the fiduciary supervision mission carried out in September 2012 as part of AF preparation. GRAAN will continue to strengthen its capacity for selecting consultants and procuring goods, works and services for the AF (see Action Plan in Annex 3). The procurement risk is rated High (H) due to country risks and project characteristics. A procurement plan was prepared on October 10, 2012 and details can be found in Annex 3. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011and the provisions stipulated in the Financing Agreement. 5 20. Safeguards. The Project will remain Category “B.” The AF will not change this category as there are no changes proposed in the original scope of construction works nor is there expansion of the Project’s area. The AF will support implementation of the activities in the original project, which were not implemented due to cost overruns. As with the original Project, in general, no large scale, significant and/or irreversible impacts are thus expected. Reflecting these factors, the same safeguards that were originally triggered would also apply under the AF. These include: Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Physical Cultural Resources (OP/BP 4.11), and Indigenous Peoples (OP/BP 4.10). Regarding the latter, considering that the majority of population in the region is of indigenous or ethnic origin, the entire project has been designed to be consistent and in full compliance with OP 4.10. The safeguard instruments currently under implementation will remain valid under the AF since they were prepared taking into consideration the original Project area, activities and targets. 21. Safeguards Compliance. To date, safeguards ratings have been consistently rated Satisfactory (S) and there are no outstanding social or environmental issues. The Bank has corroborated safeguard compliance through intensive supervision by an environmental and a social specialist, more recently in May 2012. All required safeguard instruments (Environmental Assessment and Management Plan and a Social Assessment) were completed following broad- based consultations and have been published. The Environmental Management Plan was disclosed on the Bank’s external website on January 21, 2011 and in-country on the same date. In compliance with the environmental law, the Project has an Environmental Certification (License). A Communication Strategy complements these instruments. (See Annex 4 for Safeguards Assessment). 22. Environmental Aspects. None of the project activities has thus far caused negative environmental impacts. It should be noted that due to initial implementation delays, construction of community churches and centers, the civil works requiring more attention from an environmental perspective, have only started recently, while the contracting of the small health clinics is underway. Reconstruction and rehabilitation of houses, which is far more advanced, have not resulted in any substantial environmental impact, as corroborated during visits to target communities. In addition, new sustainable bamboo technologies for housing are being promoted under the project on a pilot basis. Future operation of the small health clinics poses some environmental risk as they will offer small surgery and natal care services, and MINSA has prepared acceptable solid and medical waste management plans. 23. Social Aspects. As corroborated during supervision missions, the Project is being implemented with the participation of beneficiary communities and their organizations, in keeping with the project’s emphasis on social inclusion and gender equity concerns. As originally assessed, no resettlement issues have emerged when making final decisions regarding reconstruction and rehabilitation activities. It should be noted that all land in the beneficiary communities is collectively owned. In the unlikely event that a decision on a new site that may affect some people becomes necessary for safety or other reasons, such selection would follow a community consultation process based on accepted traditional practices for the allocation of land for community or public structures. 6 24. Implementation arrangements for safeguard compliance are considered adequate. GRAAN will continue providing overall coordination and will be directly in charge of remaining project activities. GRAAN has an Environmental Secretariat (SERENA) and an External Cooperation and Development Secretariat (SCED), which monitor environmental and social issues respectively. Moreover, the Technical Coordinator of the Project is in charge of coordinating all supervision, and the Planning Officer of putting together field information. GRAAN will be assisted in safeguard compliance by co-executing agencies and a supervision firm contracted to follow up the civil works related to the community centers, churches and the small health clinics. 25. Project Risks. Overall risk for project implementation is rated substantial. Regional recovery and overall development of the Caribbean Coast continues to be a priority for the Government. GRAAN’s leadership has a renewed commitment to achieving project results. However, Project implementation is likely to continue facing difficult challenges related to remaining capacity weaknesses in GRAAN, social and political factors, physical conditions and isolation of beneficiary communities, and disaster vulnerability. In the short run, a heavy rainy season or the political cycle due to municipal elections in November 2012 may adversely affect Project implementation. A detailed assessment of risks and mitigations measures is included in Annex 2 (ORAF). Table 5 - Risk Rating Summary Risk Rating Stakeholder Risk Substantial Implementing Agency Risk - Capacity Substantial - Governance Moderate Project Risk - Design Low - Social and Environmental Low - Program and Donor Low - Delivery Monitoring and Sustainability Moderate Overall Implementation Risk Substantial 7 Annex 1 Results Framework and Monitoring NICARAGUA: HURRICANE FELIX RECOVERY PROJECT Results Framework Revisions to the Results Framework Comments/ Rationale for Change PDO Current Proposed To support the sustainable Continued recovery of the communities affected by Hurricane Felix in the North Atlantic Autonomous Region (RAAN) of Nicaragua. PDO indicators Current Proposed change* Income of fishermen and Continued women participating in the project is restored or improved At least 15% increase in Continued sustainable fish production among beneficiaries of revolving fund At least 40% of beneficiaries Continued receiving boats and fishing equipment under the Project are women At least 3,300 families living Continued in houses rehabilitated or reconstructed to safer standards under the Project, including roofs or whole structures At least 40 communities given Revised Original targets for community access to safer buildings for centers and churches restored emergency shelter through the through the additional financing, Project thus it is expected that the original number of communities will benefit from access to these safer buildings / emergency shelters. Intermediate Results indicators Current Proposed change* Component 1 (1.1) At least 2,800 affected Continued (Activities under this families have their roofs component were completed in August rehabilitated under the Project 2012). by August 30, 2011 (1.2): 100% of Component 1 Continued (Activities under this implemented by August 30, component were completed in August 2011 2012). 8 Revisions to the Results Framework Comments/ Rationale for Change Component 2 (2.1) At least 30 groups with Continued new boats and fishing equipment by end of Project (2.2) A sustainable revolving Continued fund established in BP by end of Project to continue providing credit to the small- scale fisheries sector (2.3) At least 80% of total Continued sampled beneficiaries, and 80% of female beneficiaries are satisfied with the sector rehabilitation efforts Component 3 (3.1): At least 25 communities Revised Original targets for community benefiting from community churches and centers restored churches and centers under the additional financing, reconstructed under the Project benefiting the original number of communities. (3.2): At least 4 health Revised Original targets for small health facilities constructed, centers restored under the renovated and/or equipped additional financing. (3.3): At least 80% of sampled Continued families are satisfied with the rehabilitation and reconstruction activities financed under the Project Component 4 (4.1): Regional Government Continued has adequate capacity to prepare and implement externally-financed projects (as measured by an independent evaluation) by end of project 9 REVISED PROJECT RESULTS FRAMEWORK Responsibility Baseline Cumulative Target Data Source/ Frequency for Data Comments Unit of Original Progress Values Methodology Collection PDO Level Results Indicators Measure Project To Date YR1 YR3 YR6 Core ment Start (2012) (2008) 1. Indicator One: Income of % US$200 --- --- --- 20% YR 2 and Surveys / GRAAN / fishermen and women participating per month end of Database of INPESCA in the project is restored or project beneficiaries improved 2. Indicator Two: At least 15% % 0 --- --- --- 15% Final Surveys / GRAAN / increase in sustainable fish Project Database of INPESCA / production among beneficiaries of evaluation beneficiaries Banco revolving fund Produzcamos 3. Indicator Three: At least 40% % 0 10% 20% 30% 40% Annual Database of GRAAN / of beneficiaries receiving boats and beneficiaries / INPESCA / fishing equipment under the Supervision Banco Project are women Produzcamos 4. Indicator Four: At least 3,300 Number 0 3,000 1,500 2,000 3,300 Semi- Database of GRAAN / families living in houses annual beneficiaries / INVUR / rehabilitated or reconstructed to Supervision SINAPRED safer standards under the Project, including roofs or whole structures 5. Indicator Five: At least 40 Number 0 --- 5 10 40 Semi- Database of GRAAN / communities given access to safer annual beneficiaries / INVUR buildings for emergency shelter Supervision through the Project Beneficiaries Project beneficiaries 25,000 0 18,000 --- 18,000 25,000 Of which female (beneficiaries) 13,000 0 10,000 --- 10,000 13,000 10 Intermediate Results and Indicators Baseline Target Values Original YR1 YR3 YR6 Responsibility Data Source/ Intermediate Results Indicators UOM Project Frequency for Data Comments Methodology Core Start Collection (2008) Intermediate Result 1: critical rehabilitation and recovery activities implemented in a timely fashion (1.1) At least 2,800 affected families have Number 0 --- 800 3,980 Semi- Database of SINAPRED / their roofs rehabilitated under the Project Annual beneficiaries / GRAAN Target was surpassed. by August 30, 2011 supervision (1.2): 100% of Component 1 implemented % 0 10 30 100 Semi-Annual FMR / SINAPRED by August 30, 2011 Supervision Intermediate Result 2: socio-economic conditions of men and women engaged in the small fisheries sector restored (2.1): At least 30 groups with new boats Number 0 0 0 30 Semi-Annual BP Revolving GRAAN / Banco and fishing equipment by end of Project Fund Report / Produzcamos Database of beneficiaries (2.2): A sustainable revolving fund Number 0 0 0 Revolv Annual Assessment of Banco established in BP by end of Project to ing Revolving Produzcamos / continue providing credit to the small- fund Fund GRAAN operati Sustainability scale fisheries sector ng based on agreed portfolio indicators (2.3): At least 80% of total sampled % 0 0 80 80 At YR2 and Surveys / GRAAN / beneficiaries, and 80% of female end of Consultation INPESCA beneficiaries are satisfied with the sector Project meetings rehabilitation efforts Intermediate Result 3: social and economic environment of affected communities re-established (3.1): At least 25 communities benefiting Number 0 0 10 25 Semi-Annual Database of GRAAN / from churches and community centers beneficiaries / INVUR reconstructed under the Project supervision (3.2): At least 5 health facilities X Number 0 0 2 5 Semi-Annual Database of GRAAN constructed, renovated and/or equipped beneficiaries / supervision 11 Intermediate Results and Indicators Baseline Target Values Original YR1 YR3 YR6 Responsibility Data Source/ Intermediate Results Indicators UOM Project Frequency for Data Comments Methodology Core Start Collection (2008) (3.3): At least 80% of sampled families are % 0 0 80 80 Semi-Annual Surveys / GRAAN satisfied with the rehabilitation and Consultation reconstruction activities financed under the meetings Project Intermediate Result 4: Institutional capacity of GRAAN for project implementation strengthened (4.1): Regional Government has adequate --- 0 0 Capacity End of GRAAN / capacity to prepare and implement increase Project Independent Independent externally-financed projects (as measured d Evaluation consultants by an independent evaluation) by end of project 12 ANNEX 2 OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Project Development Objective(s) Project Development Objective (PDO): to support the sustainable recovery of the communities affected by Hurricane Felix in the North Atlantic Autonomous Region (RAAN) of Nicaragua. 1. Project Stakeholder Risks 1.1. Stakeholder Risk Rating Substantial Description: Risk Management: Some potential beneficiaries may The Project is being implemented directly by the Regional authorities (GRAAN) in close coordination with territorial withdraw their support to the governments and local communities. Key decisions regarding the Project follow traditional consultation and decision- Project due to political factors making structures at the territorial and community level. A Social Communication Strategy is being satisfactorily and historical grievances implemented, and beneficiary satisfactory surveys periodically conducted as part of M&E of the Project to monitor project resulting in high expectations support. that an emergency project cannot fully meet. Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Implementa n/a Monthly In progress Road blocks and other measures tion are often used by communities to express overall dissatisfaction The Secretariat for the Development of the Caribbean Coast (SDC) has played a key role as liaison between the central and with socio-economic regional the regional government, and will continue to do so under the Additional Financing. The Project Coordination Committee situation. Municipal elections in has facilitated the interaction between central agencies and the regional government with positive results. The Co-executing November 2012 may result in Agreements signed between GRAAN and key agencies under the Project have also helped to strengthen inter-institutional intensification of this pattern. collaboration. Central government agencies may not be as collaborative with the Regional Government Resp: Stage: Recurrent: Due Date: Frequency: Status: (implementing agency) given that the delegation of functions Client Implementat n/a Quarterly In Progress from central to regional ion authorities is still evolving. 13 2. Implementing Agency Risks (including fiduciary) 2.1. Capacity Rating Substantial Description: Risk Management: Although GRAAN has gained GRAAN is under a new leadership with experience in Bank-financed projects and good implementation track record. experience in, and received GRAAN will continue as implementing agency supported by a specialized Implementation Team, which has proven effective strengthening support for in helping resolve implementation issues. The Implementation Team includes, inter alia, a Technical Coordinator, an implementing Bank-financed Infrastructure Coordinator, a Social Communication Specialist, an M&E officer, and qualified fiduciary staff. projects, its limited capacity poses substantial risks. The decision to not have separate Project Implementation Unit (PIU), although beneficial to the institutional strengthening of GRAAN, has increased implementation risks. At the Resp: Stage: Recurrent: Due Date: Frequency: Status: same time, demands on Preparation GRAAN’s capacity are further Client / n/a Monthly Not yet due exacerbated by implementation Implement. challenges such as isolation of communities, overall social and Fiduciary personnel have gained experience, and are expected to continue under the additional financing. The Bank will disaster vulnerability of the continue to provide training and close follow up on key operational and fiduciary issues. GRAAN is now linked to SIAFI and region, fiduciary and political has an administrative manual with Bank no objection. Financial Management arrangements have been strengthened through environment, and additional staff to improve Project’s internal control system. Specifically, the Project administration has recently incorporated underdeveloped markets that an experienced Financial Management Specialist, renewed the Internal Auditor’s contract, and hired a Finance Assistant to have constrained procurement help with internal control warehouse issues. On the other hand, arrangements such as quality and frequency of financial processes. reporting, multi annual audits contracting, SIGFAPRO integrated financial system and overall cash flow will apply using the same policies and procedures design for the original credit. GRAAN will have to strengthen its fiduciary capacity to ensure Resp: Stage: Recurrent: Due Date: Frequency: Status: implementation of the final Both Implementat n/a Yearly Not Yet Due stages of the original Credit and ion the additional financing. 2.2. Governance Rating Moderate Description: Risk Management: The Project is consistent with the Development Strategy for the Caribbean Plan and the National Human Development Plan. The relationship between The request for additional financing reconfirms the Government interest in responding to the region’s needs. GRAAN has GRAAN and the central increasingly demonstrated ownership and commitment to the Project's objective and activities. The Bank team will closely 14 government has been difficult at monitor the situation as municipal elections approach, and will continue to work with SDC to facilitate interaction between times. Municipal elections in GRAAN and municipal authorities. November 2012 may pose risks in this respect. Resp: Stage: Recurrent: Due Date: Frequency: Status: Both Implementa Given the isolation of tion n/a Monthly In progress communities and security situation in the region, ensuring materials and other goods All Project beneficiaries have already been selected on the basis of the criteria established in the Operations Manual, and (including the boats for the following a consultation process based on traditional organizational structures. A Communication Strategy is being Revolving Fund) acquired for the implemented to continue informing beneficiaries about the project and its activities. A database of beneficiaries has been project is a major challenge. developed to monitor who is benefitting and the locations where activities are taking place. Access to non-confidential information from the database is available to any interested persons or organizations. Storage facilities and inventory of Selection of project beneficiaries materials have been strengthened following Bank recommendations. may not be sufficiently Resp: Stage: Recurrent: Due Date: Frequency: Status: Inclusive. Client Implementat n/a Monthly In progress ion FM rating is currently Moderately Satisfactory. GRAAN has implemented an FM Action Plan that included measures required to address observations made in Audit Reports, such as (i) ensuring submission of audit report and FMRs; (ii) strengthening internal controls and safety of warehouses where construction materials are stored; and (iii) completing special technical reports on roofing materials financed under Component 1. Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Preparation/ n/a Monthly In Progress Implement. The Bank has an FM Specialist, an FM Consultant, and a Procurement Analyst in the Country Office who will continue to provide close follow up to fiduciary issues of the Project. Fiduciary training will also be provided to GRAAN as needed. Resp: Stage: Recurrent: Due Date: Frequency: Status: Bank Preparation/ n/a Monthly In Progress Implement. 3. Project Risks 3.1. Design Rating Low Description: Risk Management: 15 Project design is relatively All Project designs have been completed. Roof rehabilitation completed, and reconstruction of housing and community simple and based on local, infrastructure is underway. Technical quality is being ensured through contracting of supervision consultants and the although improved construction Infrastructure Coordinator and technical staff in GRAAN, with support from central agencies such as the National Housing technology. Specifically, the Agency (INVUR) and the Ministry of Health (MINSA). MINSA has provided support for the design of the small health Project will support the centers. In addition to solid waste management plans, MINSA has established acceptable standards for these centers, reconstruction or rehabilitation including their infrastructure which requires reliable water and energy systems, and a sanitary cell and small incinerator. of small structures such as houses and community Resp: Stage: Recurrent: Due Date: Frequency: Status: infrastructure, including churches and community centers Both Implementat n/a Monthly Not Yet Due – which double up as emergency ion shelters – and small health Risk Management: centers. In all cases, the Project The Bank will continue to provide close implementation support under the additional financing. will promote improved hazard- resistant construction techniques. Resp: Stage: Recurrent: Due Date: Frequency: Status: Rehabilitation of the fishing processing plan was canceled Bank Implementat n/a Monthly Not Yet Due since its economic feasibility ion was not confirmed. 3.2. Social and Environmental Rating Moderate Description: Risk Management: Overall, the Project is expected The Project’s is considered Category “B.” The AF does not change this category since no new activities will be carried out, to result in positive social and there are no changes proposed in the original scope of construction works nor is there expansion of the Project’s geographic environmental impacts. Project area. The original Project was prepared, and is being implemented with the participation of beneficiary communities and reconstruction and rehabilitation their traditional organizations, in keeping with the project’s emphasis on social inclusion and gender equity concerns. activities are of a relatively small Considering that the region is predominantly a multi-cultural and multi ethnic region with a majority of population of scale. Expected impacts indigenous or ethnic origin, the entire project has been designed to be consistent and in full compliance with OP 4.10 resulting from these activities, (indigenous peoples safeguard policy). This meant that the Implementing Agency consulted widely with prospective such as dust, noise and rubble, beneficiaries and their representatives during project design and implementation, and that the beneficiaries concerns were are temporary. Nevertheless, consistently integrated in project supported interventions to improve their social relevance, equity and sustainability. attention should be paid to disposal of reconstruction debris To date, safeguards ratings have been consistently rated Satisfactory (S). All required safeguard instruments (Environmental in isolated communities. Small Assessment and Management Plan and a Social Assessment) were completed following broad-based consultations and have health centers should have been published. In compliance to the environmental law, the Project has an Environmental Certification (License) and the adequate plans for disposal of Natural Resources and Environment Secretariat (SERENA), as the regional environmental authority, will follow-up and medical waste. monitor the compliance of the EMP developed for the Project. A Communication Strategy complements these instruments and includes weekly broadcasts detailing project activities on popular local radio stations where potential beneficiaries are 16 encouraged to contact project officials with any questions or concerns that they may have. Special attention is being paid by GRAAN to social inclusion and gender equity. The Project will not finance any In compliance with the environmental law, the Project has an Environmental Certification (License) and SERENA, as the activities requiring resettlement. regional environmental authority, will follow-up and monitor the compliance of the EMP developed for the Project. The Bank will continue to supervise closely safeguard issues and provide training and advice as needed. Selection process of beneficiaries for some of the As originally assessed, no resettlement issues have emerged when making final decisions regarding reconstruction and programs under the Project may rehabilitation activities. It should be noted that all land in the beneficiary communities is collectively owned. In the unlikely not be sufficiently inclusive. event that a decision on a new site that may affect some people becomes necessary for safety or other reasons, such selection would follow a community consultation process based on accepted traditional practices for the allocation of land for community or public structures. Beneficiaries and particularly The Bank will continue to supervise closely safeguard issues and provide training and advice as needed. The final Social women who are given the Assessment was completed during implementation based on broad consultations, and its recommendations have been opportunity to obtain loans to subsequently applied. For example, focus more on managing risks and achieving results than on functions and processes, buy new boats may not succeed contracting a communications specialist, design and implementation of beneficiary surveys to assess satisfaction with the if not given appropriate training reconstruction process, among others. and follow up support. Resp: Stage: Recurrent: Due Date: Frequency: Status: Both Implementa n/a Monthly In Progress tion Training is being provided for fisher folk benefiting from the Project, with support from the fisheries national agency (INPESCA), the national technical assistance agency (INATEC) and close coordination with a training program financed by FAO for the fisheries sector in the region. Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Implementat n/a Monthly In Progress ion 3.3. Program and Donor Rating Low Description: Risk Management: The Project is consistent with the SDC has helped GRAAN to coordinate with other development partners supporting projects across the region. The Bank will Development Strategy for the also facilitate coordination, as needed. Caribbean Coast, but its success 17 will not depend on other Resp: Stage: Recurrent: Due Date: Frequency: Status: agencies’ supported projects. Both Implement. n/a Yearly In Progress The Project also complements other Bank-financed projects benefiting the region. 3.4. Delivery Monitoring and Rating Moderate Sustainability Description: Risk Management: Market, weather and physical After initial difficulties regarding bidding processes, the Bank has worked with GRAAN to identify practical options to conditions in the region pose package procurement of works and goods. As agreed with the Government, the additional financing will have a two-year risks in terms of delivery of civil implementation period to ensure that there is sufficient time to complete all works in case of a heavy rainy season or other works and goods. Moreover, weather-related delays. GRAAN is working with territorial and local authorities to facilitate delivery of works and goods and security in the Project area has its uninterrupted execution. deteriorated. Given the region’s vulnerability, a heavy rainy season or a disaster could delay Resp: Stage: Recurrent: Due Date: Frequency: Status: completion of works. Client Implement ation n/a Monthly In Progress The Project has an M&E Strategy, which was prepared with the support of an international consultant. Adequate funds have In general, emergency recovery been allocated for a final Project evaluation to be carried out by a qualified firm. A database of Project beneficiaries was projects have suffered from weak developed and is being updated during project implementation. monitoring and evaluation. Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Preparation/ Implementa n/a Monthly In Progress tion Sustainability of project results The Project is being implemented by GRAAN in close collaboration with municipal and traditional authorities. Ownership may be hindered by lack of and future sustainability is being ensured through the active participation of beneficiary communities and their organizations. maintenance of community In the case of small health centers, their final location has been decided taking into consideration MINSA’s service outreach infrastructure. Moreover, strategy for the region. Although more difficult to ensure, the Project will promote the availability of basic supplies for unavailability of recommended future repairs of houses and community centers alike. construction materials for future repairs of reconstructed housing The revolving fund was designed with support from the Bank and an expert consultant. Its implementation has been and community buildings may supported by an international fisheries expert. Credit beneficiaries will be informed about their responsibilities regarding the weaken their structures. loans through consultations, training and the Project’ s Communications strategy. Sustainability of the revolving 18 fund for the fisheries sector may be at risk if credit beneficiaries are not well informed about the loans conditions and repayment Resp: Stage: Recurrent: Due Date: Frequency: Status: responsibilities, or are unable to Client Implement n/a Monthly Not Yet Due repay their loans. 4. Overall Risk Implementation Risk Rating: Substantial Comments: Overall risk for Project implementation is rated substantial. Despite the experience gained thus far, Project implementation is likely to continue facing difficult challenges related to remaining capacity weaknesses in GRAAN, social and political factors, physical conditions and isolation of beneficiary communities, as well as overall disaster vulnerability of the region. In the short run, a heavy rainy season or the political cycle due to municipal elections in November 2012 may adversely affect Project implementation. 19 Annex 3 Summary of Financial Management, Disbursements and Procurement Financial Management 1. GRAAN will be responsible for all Financial Management activities under the proposed Additional Financing. Fiduciary capacity of GRAAN is considered Moderately Satisfactory (MS). An Action Plan has been implemented by the implementing agencies, which centered mainly on (i) ensuring submission of audit report and FMRs; (ii) strengthening internal controls and safety of warehouses where construction materials are stored; and (iii) completing special technical reports on roofing materials financed under Component 1. For the Additional Financing, FM arrangements will be strengthened through additional staff to improve the Project’s internal control system. In this respect, GRAAN has recently incorporated an experienced Financial Management Specialist, has renewed the Internal Auditor’s contract, and hired a Finance Assistant to help with internal control Warehouse issues. 2. In the next quarter (to December 2012), GRAAN will carry out the following actions to continue improving FM performance: (i) implement the recommendations from the 2011 Audit Report; (ii) submit a final report, duly reviewed by the Internal Auditor, on timber and roofing material for housing reconstruction; and (iii) submit report on funds transferred to Banco Produzcamos for the revolving fund. At the same time, SINAPRED will complete the process of closing Component 1, which entails, among other actions, closing of Bank accounts, completion of last SOE, completion of recommendations of 2011 audit report, and ensuring finalization of 2012 Audit Report. 3. Financial Reporting. On a quarterly basis, GRAAN will prepare and submit to the Bank an unaudited interim financial report (IFR) containing at least: (i) a statement of sources and uses of funds and cash balances; and (ii) a statement of budget execution per sub-component (with expenditures classified by the major budgetary accounts). The interim reports will be submitted not later than 45 days after the end of each quarter. 4. On an annual basis, GRAAN will prepare project financial statements including cumulative figures, for the year and as of the end of that year, of the financial statements cited in the previous paragraph. These financial statements, once audited, will be submitted to the Bank not later than six months after the end of the Government’s fiscal year (which equals the calendar year). 5. External Audit. The annual project financial statements prepared by GRAAN will be audited by an independent firm and in accordance with terms of reference (TORs) acceptable to the Bank. The audit opinion covering project financial statements will contain a reference to the eligibility of expenditures. 6. The audit work will be financed with AF Grant proceeds. GRAAN will arrange for the first external audit within three months after AF Grant Effectiveness. Each audit engagement is expected to cover at least two years (multi-annual contract). 20 Disbursements 7. Grant proceeds will be withdrawn by GRAAN using the advance method supported by documentation showing that AF Grant funds have been used to finance eligible expenditures. Supporting documentation will be in the form of Statement of Expenditures (SOEs). Other disbursement methods that could be used consist of reimbursements, and direct payment. GRAAN will open a segregated Designated Account (DA) in Banco Central de Nicaragua in US dollars, to be used exclusively for deposits and withdrawals of AF Grant proceeds for eligible expenditures. The ceiling for the DA will be established at US$500,000. This arrangement will be confirmed in the Disbursement Letter. Disbursement categories are summarized in the table below and detailed in the Agreement Letter. Disbursement Category SDR Million % of Financing Goods, works, consultants services, Non-Consultant 3.3 100% Services 2, Training/Workshops 3 and Operating Costs 4 for Components 3 and 4 of the Project TOTAL 3.3 Procurement 8. General. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011and the provisions stipulated in the Financing Agreement. The general description of various items under different expenditure category is described below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are 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. 9. GRAAN will be responsible for all procurement activities under the proposed Additional Financing. Fiduciary capacity of GRAAN is considered moderately satisfactory and training will be provided as needed. The following Action Plan has been agreed to continue improving procurement performance: 2 The term “Non-Consultant Services” means the reasonable expenditures (none of which would have been incurred by the Recipient and/or GRAAN absent the Project), incurred by the Recipient and/or GRAAN to cover reasonable costs of: (i) transportation of materials; (ii) the design and printing of manuals and other similar materials for the Project; (iii) services associated with the processing of timber; and (iv) services associated with the Project’s communication strategy, such as radio and television spots. 3. The term “Training/Workshops” means reasonable expenditures incurred by the Recipient and/or GRAAN for the carrying out of training activities under the Project, including reasonable costs of travel and per diem of trainers and trainees, rental of training facilities and equipment and training materials. 4. The term “Operating Costs” means the reasonable expenditures (none of which would have been incurred by the Recipient and/or GRAAN absent the Project), incurred by the Recipient and/or GRAAN for the implementation, management, coordination and supervision of the Project, including, inter alia, office rent and utilities, operation and maintenance of vehicles, equipment and non-durable goods, excluding salaries for civil servants or permanent employees and non-consultant services. 21 Mitigation Measures Responsible Agency Timeline Update the capacity assessment to conduct procurement Procurement specialist Completed based in the Implementation Arrangements (Bank) Prepare a comprehensive, detailed Procurement Plan for the GRAAN Completed first 18 months of project execution Preparation of Bidding Documents and Request for GRAAN 60 days after effectiveness Proposals for the Procurement processes of the first year of Project’s implementation Establishment of SEPA as the system to monitor and GRAAN–Bank 30 days after negotiations expedite Procurement Plans Selection of additional professionals to conduct GRAAN As needed. procurement, based in the Implementation Arrangements and the scope of the Procurement Plan Procurement training conducted by the Bank’s Procurement Procurement Specialist Project’s launch Specialist (Bank) Improve the space designated for Procurement records, GRAAN 30 days after negotiations aiming to ensure their storage and preservation 10. Under the AF (a) works will involve rehabilitation and reconstruction of community churches, community centers and small health clinics. These small and medium works will be procured under ICB, NCB and Shopping procedures. (b) Goods will consist of contracts for purchase of inter alia, medical equipment, health clinic equipment, and office furniture and equipment. These goods would be procured using ICB, NCB and shopping procedures. (c) Non- consultant services will consist of contracts for transportation of materials, design and printing of materials, timber processing services and services associated with the Communication Strategy. ICB, NCB and shopping procedures will be followed for non-consultant services. (d) Consultant services consist of individual consultants and firms required for, inter alia, supervision activities of the project, project management and Monitoring and Evaluation, as well as audits and final evaluation of the project. (e) Operating costs to be financed include support staff for project management, expenditures for maintenance of vehicles and equipment, office supplies, consumables and incidentals related to supervision of the activities and project management. Procurement Special Provisions 11. In addition and without limitation to any other provisions set forth in this Section, the Procurement Guidelines or the Consultant Guidelines, the following principles of procurement shall expressly govern all procurement of works, goods, non-consulting services or consultants' services, as the case may be: (a) foreign bidders shall not be required to be registered with local authorities as a prerequisite for bidding; 22 (b) no bids shall be rejected, and no provisional awards shall be made at the time of bid opening; (c) the invitation to bid shall not establish, for purposes of acceptance of bids, minimum or maximum amounts for the contract prices; (d) the invitation to bid shall not publish the estimated cost of the contract; (e) in the case of Shopping, a minimum of three quotations shall be obtained as a condition to award the contract; (f) unless the Association may otherwise agree, for the procurement of goods and non- consulting services, the “best offer” shall be the one submitted by the bidder whose offer was determined to be the lowest evaluated bid and was found substantially responsive to the bidding document acceptable to the Association, provided further that the bidder was determined to be qualified to perform the contract satisfactorily; (g) bidders and Consultants shall not be allowed to review or make copies of other bidder’s bids or consultants’ proposals, as the case may be. Likewise, bidders’ and consultants’ responses to requests of clarifications made by the procuring entity during the bidding process shall not be disclosed to other bidders or consultants, as the case may be. Finally, reports including recommendations for award shall not be shared with bidders and consultants prior to their publication; (h) eligibility criteria shall be the one defined in Section I of the Procurement Guidelines and Consultant Guidelines. Articles 17 and 18 of the Procurement Law shall not apply; (i) automatic rejection of bids or proposals, as the case may be, due to differences between bid or proposal prices and cost estimates being higher than predetermined percentages, shall not be allowed; (j) bidders shall have the possibility of procuring hard copies of bidding documents even if they are published on the procurement portal; (k) unless so indicated in the applicable Association Standard Bidding Documents, pre- bid conferences shall not be conducted; (l) bid preparation terms shall not be reduced as a result of re-bidding; (m) consultants shall not be required to submit proposal and performance securities; (n) complaints shall be handled as indicated in the appendixes to the Procurement Guidelines and Consultant Guidelines. Articles 110 to 116 of the Procurement Law shall apply in a supplementary manner; (o) the procurement of goods and works shall be carried out using standard bidding documents acceptable to the Association; 23 (p) the Recipient, shall and shall cause GRAAN to: (i) supply the SEPA with the information contained in the initial Procurement Plan within 30 days after the Project has been approved by the Association; and (ii) update the Procurement Plan at least every three months, or as required by the Association, to reflect the actual Project implementation needs and progress and shall supply the SEPA with the information contained in the updated Procurement Plan immediately thereafter; and (q) the invitations to bid, bidding documents, minutes of bid opening, requests for expressions of interest and the pertinent summary of the evaluation reports of bids and proposals of all goods, works, non-consulting and consultants services shall be published in SISCAE, and in a manner acceptable to the Association. The bidding period shall be counted from the date of publication of the invitation to bid or the date of the availability of the bidding documents, whichever is later, to the date of bid opening. A. Procurement Plan I. GENERAL Bank’s approval Date of the Procurement Plan: October 10, 2012 Period covered by this Procurement Plan: 2013-2014 II. GOODS, WORKS AND NON-CONSULTING SERVICES. 12. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the “Guidelines: Selection and Employment of Consultants by World Bank Borrowers”: Thresholds for procurement methods and prior review (thousands of USD) Expenditure Contract Value (Thresholds) US Contracts Subject Procurement Method Category $ thousands to Prior Review 1. Works >1,500 ICB All 25 – 1,500 NCB First < 25 Shopping First NA DC All 2. Goods >150 ICB All 25 - 150 NCB First <25 Shopping First NA DC All Note: ICB = International Competitive Bidding NCB = National Competitive Bidding DC = Direct Contracting 24 III. SELECTION OF CONSULTANTS 13. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants: Thresholds for methods and prior review (thousands of USD) Contract Value (Thresholds) US Contracts Subject to Consulting Services Procurement Method $ thousands Prior Review >100; 3.a Firms >100 QCBS, QBS, FBS, LCS <100 Terms of Reference QCBS, QBS, FBS, LCS, <100 CQS Terms of Reference <100 SSS All Comparison of 3 CVs in accordance with Chapter >50; 3.b Individuals V of the Guidelines <50 Terms of Reference Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-Based Selection FBS = Fixed Budget Selection LCS = Least-Cost Selection CQS = Selection Based on Consultants' Qualifications SSS: Single Source Selection 14. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than $200,000 equivalent per contract, may consist entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 15. It is recommended annual supervision missions to visit the field to carry out post review of procurement actions. The size of the sample for post-review will be not less than 1 in 10 contracts 25 Annex 4 Safeguards Assessment A. Parent Project’s Performance 1. The Hurricane Felix Emergency Recovery Project (the Parent Project) was classified as Category B. The Project included mainly small-scale civil works to be executed in already settled rural areas. Thus, in general, no large scale and/or irreversible impacts were expected from project implementation. The safeguard policies originally triggered were: Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Physical Cultural Resources (OP/BP 4.11), and Indigenous Peoples (OP/BP 4.10). As detailed below, there are no outstanding issues from a safeguards point of view under the Project. Environment 2. Since the Project was prepared under OP 8.00 (Rapid Response to Crisis and Emergencies), a rapid environmental analysis was carried out during appraisal and the full Environmental Assessment and Environmental Management Plan (EMP) were completed during Project implementation. These instruments helped to identify any potential environmental impacts of project activities and to develop appropriate mitigation measures. As corroborated during Bank supervision missions, project activities have not resulted in negative environmental impacts. During implementation, project activities have promoted a recovery process based on “building back better” that should result in more resilient communities. Overall the project has promoted good environmental practices during the execution of works. 3. The EMP has been implemented adequately, and no remedial actions have been required. In compliance with the environmental law, the Project has an Environmental Certification. It should be noted that due to initial implementation delays, construction of community churches and centers, the civil works requiring more attention from an environmental perspective, have only started recently, while the contracting of the small health clinics is underway. Reconstruction and rehabilitation of houses, which is far more advanced, have not resulted in any substantial environmental impact, as corroborated during visits to target communities. In addition, new sustainable bamboo technologies for housing are being promoted under the project on a pilot basis. Social 4. Indigenous Peoples. With respect to OP/BP 4.10, considering that the region a majority of population of indigenous or ethnic origin, the entire project was designed and is being implemented to be consistent and in full compliance with the policy. This meant that the Implementing Agency consulted widely with prospective beneficiaries and their representatives during project design and implementation, and that the beneficiaries concerns were consistently integrated in project supported interventions to improve their social relevance, equity and sustainability. The project has been implemented mainly by people from the region, thus ensuring that beneficiaries are provided with culturally appropriate follow up and that communication is carried out in the preferred language of beneficiaries. Housing reconstruction 26 has followed a community-driven process, which although slowed down implementation, contributed to a stronger sense of inclusion and ownership. 5. Resettlement. As expected, no resettlement (physical displacement or economic impacts due to taking of land for project activities) has taken place. It should be noted that in the Project area most land is communally owned (even though not all land has been demarcated or collectively titled) and accepted traditional practices for the allocation of land for social / community infrastructure already exist. 6. Gender Equity. As planned, gender equity issues have been paid close attention during project implementation. There have been specific activities targeted to women, including a small credit program aimed at women who work in the small fisheries sector (Pikineras). This program has benefited women through credits and training. The project’s result matrix also includes specific indicators to monitor women’s sharing of project benefits. According to the latest ISR (August 2012), 96% of total micro-credits recipients are women. In addition, 24% of outboard motor recipients have been women, 30% women for fishing supplies, and 18% women for nasas. 7. Consultation and Participation. The Project was prepared following community consultations that corresponded to the first phase of the required Social Assessment. These consultations helped to establish a framework for continuous consultation and participation during project implementation. The final Social Assessment was completed during implementation based on broad consultations, and its recommendations have been subsequently applied. For example, focus more on managing risks and achieving results than on functions and processes, contracting a communications specialist, design and implementation of beneficiary surveys to assess satisfaction with the reconstruction process, among others. The Social Assessment reconfirmed the broad support that exists among targeted communities for project activities. 8. In addition, a social communication strategy was prepared and is under implementation to ensure that communities are well informed about the Project, its various programs, and the criteria for the selection o f beneficiaries. The strategy includes weekly broadcasts detailing project activities on popular local radio stations where potential beneficiaries are encouraged to contact project officials with any questions or concerns that they may have. 9. Community participation during implementation has been promoted through traditional organizations and decision-making mechanisms at the community and territorial level. As identified in the social assessment, these include, community councils, faith-based organizations, communal assemblies, councils of elders, women’s associations and fisher folk groups. Special attention is being paid by GRAAN to social inclusion and gender equity, and project indicators include specific targets to monitor women’s sharing of Project benefits. This is evident from the eligibility criteria designed to prioritize the needs of vulnerable people with no alternative support to rebuild their hurricane ravaged homes and assets. Also, the project results matrix includes specific indicators to monitor the share of benefits that actually go to women. As a result of the gender segregated nature of the fish resale business - where pikineras are exclusively women – they have received the majority of the small loans under the project’s 27 microfinance component. Despite project delays, recent surveys show that most beneficiaries are satisfied with the project benefits, as well as its consultation and participation mechanisms. Implementing Agency Performance 10. SE-SINAPRED completed implementation of Component 1 in August 2012. Supervision missions helped to corroborate that no major social and environmental negative impacts resulted from activities under this component. The main activity under this component was rehabilitation of roofs for traditional housing. These roofs were rehabilitated with improved technical specifications and any debris from the construction process adequately dealt with. 11. GRAAN has implemented the rest of the project, and followed up safeguard compliance adequately. GRAAN has an Environmental Secretariat (SERENA) and an External Cooperation and Development Secretariat (SECD), which monitor environmental and social issues respectively. Moreover, the Technical Coordinator of the Project is in charge of coordinating all supervision, and the Planning Officer of putting together field information. B. Safeguards Issues under the Additional Financing 12. The AF will not change the Project’s environmental classification of B. The additional financing is due to cost overruns, and funds will be used to complete originally planned small civil works under Component 3 (Reconstruction of Housing and Small Social Infrastructure). Accordingly, no new activities will be carried out, there are no changes proposed in the original scope of reconstruction works or other project activities nor is there expansion of the Project’s geographic area. As with the original Project, in general, no large scale, significant and/or irreversible impacts are thus expected. Reflecting these factors, the same safeguards that were originally triggered would also apply under the additional financing. The safeguard instruments currently under implementation will remain valid under the AF since they were prepared taking into consideration the original activities, targets, and Project area. 13. Given the limited nature and scope of the potential safeguard related issues in the project, current arrangements for managing these impacts are considered adequate. In addition to its own staff, GRAAN will continue to be assisted by several co-executing sector agencies such as the National Fisheries Agency (INPESCA), the National Housing Institute (INVUR), the Ministry of Transport and Infrastructure (MTI), and the Ministry of Health (MINSA). Finally, GRAAN has contracted, with financing from the original Credit, supervision firms for the construction of community churches and centers, and the small health clinics. These firms will help follow up on the adequate implementation of the EMP. 14. The Bank will continue to supervise closely safeguard issues and provide training and advice as needed. The Bank will coordinate with SERENA to ensure close follow up of the implementation of the EMP. 28