Dominican Republic - World Bankdocuments.worldbank.org/curated/en/428271493996148… · Web viewIMPLEMENTATION COMPLETION AND RESULTS REPORT ... the country was hit by TS ... The

Document ofThe World Bank

Report No: ICR03970

IMPLEMENTATION COMPLETION AND RESULTS REPORT(IBRD-75460 IBRD-80980)

ON A

LOAN

IN THE AMOUNT OF US$ 80.0 MILLION

AND AN

ADDITIONAL FINANCING LOAN

IN THE AMOUNT OF US$ 20.0 MILLION

TO THE

DOMINICAN REPUBLIC

FOR AN

EMERGENCY RECOVERY AND DISASTER MANAGEMENT PROJECT

April 22, 2017

Agriculture Global PracticeCaribbean Countries Management UnitLatin America and Caribbean Region

CURRENCY EQUIVALENTS

(Exchange Rate Effective October 31, 2016)

Currency Unit = Dominican Peso (DOP) US$1.00 = DOP 45.9251DOP 1.00 = US$ 0.0217

FISCAL YEARJanuary 1 to December 31

ABBREVIATIONS AND ACRONYMS

CAASD Corporación del Acueducto y Alcantarillado de Santo Domingo (Santo Domingo Water and Sewerage Corporation)

CDEEE Corporacion Dominicana de Empresas Electricas (Dominican Corporation of State Electrical Companies)

CNE Comision Nacional de Emergencia (National Emergency Commission)

COPRE Comité de Operación de Presas Embalses (Committee for Operation of Dam Reservoirs)

CORAASAN Corporación del Acueducto y Alcantarillado de Santiago (Santiago Water and Sewerage Corporation)DR Dominican RepublicEDESUR Empresa Generadora de Electricidad del Sur

(Electricity Generation Company of the South)EDENORTE Empresa Generadora de Electricidad del Norte

(Electricity Generation Company of the North)EGEHID Empresa de Generación Hidroeléctrica Dominicana

(Dominican Hydroelectric Generation Company)ETED Empresa de Transmision Electrica Dominicana

(Dominican Electrical Transmission Company)ERDMP Emergency Recovery and Disaster Management ProjectERL Emergency Recovery LoanGoDR Government of Dominican RepublicINDRHI Instituto Nacional de Recursos Hidráulicos

(National Institute of Hydraulic Resources)ICRR Implementation Completion and Results ReportISR Implementation Support MissionMTR Mid-Term ReviewONAMET Oficina Nacional de Meteorología

(National Meteorology Office)OP/BP Operational Policy/ Bank ProcedurePIU Project Implementation UnitPP Project Paper

Regional Vice President: Jorge FamiliarSenior Global Practice Director: Juergen Voegele

Practice Manager: Garry Charlier (Acting)Project Team Leader: Rémi Trier

ICR Team Leader: Rémi TrierICR Main Author: Caroline Plante

DOMINICAN REPUBLICEmergency Recovery and Disaster Management Project (P109932)

CONTENTS

Data SheetA. Basic InformationB. Key DatesC. Ratings SummaryD. Sector and Theme CodesE. Bank StaffF. Results Framework AnalysisG. Ratings of Project Performance in ISRsH. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design2. Key Factors Affecting Implementation and Outcomes3. Assessment of Outcomes4. Assessment of Risk to Development Outcome5. Assessment of Bank and Borrower Performance6. Lessons Learned7. Comments on Issues Raised by Borrower/Implementing Agencies/PartnersAnnex 1. Project Costs and FinancingAnnex 2. Outputs by ComponentAnnex 3. Economic and Financial AnalysisAnnex 4. Bank Lending and Implementation Support/Supervision ProcessesAnnex 5. Beneficiary Survey ResultsAnnex 6. Stakeholder Workshop Report and ResultsAnnex 7. Summary of Borrower's ICR and/or Comments on Draft ICRAnnex 8. Comments of Cofinanciers and Other Partners/StakeholdersAnnex 9. List of Supporting DocumentsAnnex 10. Photographic records and examples of Communication Documents on Project InvestmentsAnnex 11. Map IBRD 42797

4

A. Basic Information

Country: Dominican Republic Project Name:DO Emergency Recovery & Disaster Management

Project ID: P109932 L/C/TF Number(s): IBRD-75460, IBRD-80980

ICR Date: 03/30/2017 ICR Type: Core ICR

Lending Instrument: ERL Borrower: MINISTRY OF FINANCE (SEH)

Original Total Commitment: USD 80.00M Disbursed Amount: USD 99.56M

Revised Amount: USD 100.00M

Environmental Category: B

Implementing Agencies:

Ministry of Finance

National Institute of Hydraulic Resources (INDRHI)

Dominican Corporation of State Electrical Companies (CDEEE)

Co-financiers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 02/13/2008 Effectiveness: 05/06/2009 05/06/2009

Appraisal: 03/20/2008 Restructuring(s):

05/01/2008

10/01/2010

05/24/2012

06/04/2013

11/25/2014

12/04/2015

Approval: 05/01/2008 Mid-term Review: 06/10/2013 06/10/2013

Closing: 12/31/2012 10/31/2016

5

C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory

Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Moderately Satisfactory

Overall Bank Performance: Moderately Satisfactory Overall Borrower

Performance: Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

Yes Quality at Entry (QEA): None

Problem Project at any time (Yes/No): No Quality of

Supervision (QSA): None

DO rating before Closing/Inactive status: Satisfactory

6

D. Sector and Theme Codes1 Original Actual

Major Sector/Sector

Agriculture, Fishing and Forestry

Irrigation and Drainage 23 44

Public Administration

Central Government (Central Agencies) 3 8

Energy and Extractives

Energy Transmission and Distribution 26 12

Renewable Energy Hydro 21 34

Water, Sanitation and Waste Management

Other Water Supply, Sanitation and Waste Management 27 5

Major Theme/Theme/Sub Theme

Environment and Natural Resource Management

Water Resource Management 33 33

Water Institutions, Policies and Reform 33 33

Finance

Finance for Development 17 17

Disaster Risk Finance 17 17

Urban and Rural Development

Disaster Risk Management 17 17

Disaster Preparedness 17 17

1 Sector designations and Theme coding were changed by the Bank and are locked in Portals. The sub-division of Sectors and Themes cannot be changed. Actual data by Sector/Subsector could be estimated, but for Theme/Sub-Theme proved difficult to extrapolate based on the subdivisions established by the change exercise, and thus the information shown in Portals is maintained here.

7

Disaster Response and Recovery 17 17

Disaster Risk Reduction 17 17

E. Bank Staff Positions At ICR At Approval

Vice President: Jorge Familiar Pamela Cox

Country Director: Tahseen Sayed Khan Yvonne M. Tsikata

Practice Manager/Manager:

Garry Charlier (acting) Laura E. Tlaiye

Project Team Leader: Rémi Trier Ann Jeannette Glauber

ICR Team Leader: Rémi Trier

ICR Primary Author: Caroline Plante

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)

The project development objectives (PDO) are to: (i) restore and strengthen priority, irrigation, electricity, water, and sanitation infrastructure damaged by Tropical Storms Olga and Noel or at risk of damage from future storms, and (ii) strengthen INDRHI's and CDEEE's capacity for future risk management.

The PDO was stated consistently in the Project Paper2 and in the Loan Agreement.

Revised Project Development Objectives (as approved by original approving authority)

N/A

2 As a project prepared under OP/BP 8.00, a Project Paper was prepared and not a Project Appraisal Document.

8

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : 12,000 hectares with irrigation services restored

Value (Quantitative or qualitative)

0 12,000 ha 11,577 ha 37,218 ha

Date achieved 04/10/2008 12/31/2012 12/31/2013 10/31/2016

Comments (incl. % achievement)

Exceeded: 310%, if taking into account the areas restored under the retroactive financing (16,763ha) and the regular financing (20,455ha). If looking only at normally financed activities (20,455ha), the original target was exceeded by 170%.

Indicator 2 : Four dam facilities rehabilitated with revised operational procedures to minimize impacts of future disasters


0 4 3

Date achieved 04/10/2008 12/31/2012 10/31/2016


Substantially achieved: 75%. The Tavera, Jaguey and Chacuey dams were rehabilitated according to improved standards. The works of the Maguaca dam were under litigation with only 16% of the works achieved by the contractor at closing. However the follow-up operation under preparation will ensure the finalization of works as initially planned in Maguaca and finance additional works identified in Chacuey.

Indicator 3 : 242 kilometers of transmission lines restored to improved, disaster resistant standards


0 242 km 152 km 152 km

Date achieved 04/10/2008 12/31/2012 12/31/2013 08/31/2014


Achieved: 100%. The project never planned to restore 242 km. This was an error in the PP. The Loan Agreement mentions 152 km. All planned works were completed.

Indicator 4 : 200 MW of hydroelectric generation capacity restored

9


0 200 MW 254 MW 252MW

Date achieved 04/10/2008 12/31/2012 12/31/2012 12/31/2012


Achieved: 99%. Out of 252 MW, 192 MW correspond to the capacity of the power plants directly or indirectly restored by the project under retroactive financing, 60 MW correspond to the rehabilitation of Aguacate power plant under regular financing (52 MW restored and 8 MW upgraded).

Indicator 5 : Operation of Santiago wastewater treatment plant restored


No Yes Yes

Date achieved 04/10/2008 12/31/2012 05/01/2009


Achieved: 100%. All activities regarding the restoration of this plant were finalized before effectiveness and financed through retroactive financing mechanism.

Indicator 6 : Real time, operational hydro-meteorological data system in place transmitting processed and interpreted data to Disaster Risk Management Institutions (ONAMET, COPRE, and CNE).


No system 1 system 1 hydro meteorological system implemented and functional

Date achieved 10/06/2011 12/31/2013 10/31/2016


Substantially achieved: 85%. The system is functioning, transmitting data to INDRHI which analyzes and transfers them to ONAMET, COPRE and CNE when relevant for disaster risk management purposes. However, 14 of the 64 hydro-meteorological stations have been partially vandalized, but stored safely, repaired, and will be re-installed in the short term once sites are secured. Additional actions such as calibration of instruments are ongoing to ensure the quality of data generated.

Indicator 7 : Project beneficiaries with irrigation service restored

10


0 N/A 2,975 18,779

Date achieved 04/10/2008 12/31/2012 12/31/2013 10/31/2016


Exceeded: 631%. Out of the 18,779 beneficiary farmers (members of water user associations), 8,764 were beneficiaries of the retroactively financed activities. If considering only the other 10,015 beneficiaries under normal financing, the achievement would be 336% of target.

Indicator 8 : Of which females


0 N/A N/A 8.5%

Date achieved 04/10/2008 12/31/2012 12/31/2013 10/31/2016


There was no pre-defined target. In the scheme with irrigation service restored, women farmers (members of water user associations) corresponded to 8.5% of total beneficiaries.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : 6,000 ha of irrigation services restored by end of Year Two


0 6,000 ha 1,933 ha 2,215 ha

Date achieved 04/10/2008 12/31/2010 12/31/2012 11/30/2013


Exceeded: 114% with delay. Was not reported as an Intermediate Indicator but as a milestone of a PDO Indicator. The 2,215 ha correspond to the first lot that was finalized (Lot 10). All the remaining lots were concluded after year Two.

Indicator 2 : Operation and Maintenance study contracted by Year Two.

Value (Quantitative or

0 1 1 0

11

qualitative)

Date achieved 04/10/2008 12/31/2010 12/31/2012 12/31/2016


Not achieved. The scope of the study was extended as per the AF Results Framework to an evaluation of the costs of water at reservoir level and costs of water use for irrigation, energy and potable water, which seems more relevant for the implementing agencies during the preparation of the AF. This costing study was not conducted as planned initially but included in assessment of operation and maintenance requirements were included in the dam operation procedures for all priority dams (Indicator 3).

Indicator 3 : Revised dam operations procedures by end of Year Two


No Yes Yes Yes

Date achieved 04/10/2008 12/31/2010 12/31/2012 10/31/2016


Achieved: 100% with delay. All priority dams had their operational procedures developed and implemented.

Indicator 4 : At least 90 of 242 kilometers of transmission lines restored by end of Year One.


0 90 km 90 km 96 km

Date achieved 04/10/2008 12/31/2009 12/31/2012 12/31/2012


Exceeded: 106% with delay. This was not reported as an Intermediate Indicator but was a Year 1 milestone of a PDO Indicator (with end-project target of 152 km). The rationale for this approach was not explained.

Indicator 5 : At least 200 MW capacity restored by Year Two


0 MW 200 MW 192 MW

Date achieved 04/10/2008 12/31/2010 10/06/2011


Substantially achieved: 96% with delay. The Additional Financing Project Paper mentions this Intermediate Indicator as completed in 2011. It was not reported as an Intermediate Indicator but as a milestone of a PDO indicator. No rationale was provided.

Indicator 6 : Decrease in generation and transmission unavailability (as measured by hours out of service)

Value (Quantitative or Not calculated Not calculated

Indicator eliminated by Not calculated

12

qualitative)the AF

Date achieved 04/10/2008 12/31/2012 12/31/2013 12/31/2013


This Indicator was eliminated at the AF stage due to an absence of baseline reference data and hence the basis for a target.

Indicator 7 : Operation of Santiago wastewater treatment plant restored


No Yes Yes

Date achieved 04/10/2008 12/31/2012 05/01/2009


Achieved: 100%. All activities associated with the restoration of this plant were finalized before Effectiveness and financed through the retroactive financing mechanism.

Indicator 8 : Rehabilitation of accelerographs in 7 dams


No accelerographs 7 8

Date achieved 10/06/2011 12/31/2013 10/31/2016


Exceeded: 114.3%. This Intermediate Indicator was added by the AF. Eight accelerographs (instruments monitoring structures for earthquake response) were installed in eight dams.

Indicator 9 : At least two training sessions conducted for 5 staff from the Hydrology Department on building and managing hydro-platform /database and hydro-modeling at the basin level


No training Minimum 2 training sessions for 5 staff

2 training sessions conducted for all staff

Date achieved 10/06/2011 12/31/2013 10/31/2016

Comments (incl. % achievement))

Achieved: 100%. This Intermediate Indicator was added by the AF. Training was conducted for the entire Hydrology Department on the management of the Hydromet data system as well as during implementation of the study on dam safety for modeling purposes.

Indicator 10 : Hydrological model calibrated in at least two pilot basins.


No model Models for 2 pilot basins

Models for 3 basins

13

Date achieved 10/06/2011 12/31/2013 10/31/2016


Exceeded: 150%. This Intermediate Indicator was added by the AF. A study on dam safety incorporated the preparation of a flood map within the Early Warning System for 10 dams located in three basins including activities of hydrological studies, optimization of dam operation and dam failure assessment.

Indicator 11 : Six Regional Centers operational


No Regional Center operational

6 Regional Centers operational

3 Regional Centers operational

Date achieved 10/06/2011 12/31/2013 10/31/2016


Partially achieved: 50%. This Intermediate Indicator was added by the AF. Three offices of INDRHI (Santo Domingo, La Vega and Santiago) have received support from the project (vehicles, computers, flow measurement equipment, rehabilitation of offices) to improve day to day performance of the Hydrology Department including operation and maintenance of the Hydromet network. The three other regional offices planned to be created during the preparation of the AF (Higuey, San Juan de La Maguana and Nagua) were not established by INDRHI’s decision. In addition, the project funded office rehabilitation and provision of computers for the regional offices of INDRHI in San Pedro de Macoris, and Azua.

14

G. Ratings of Project Performance in ISRs

No.Date ISR

ArchivedDO IP

Actual Disbursements

(USD millions)

1 06/12/2008 Satisfactory Satisfactory 0.00

2 11/26/2008 Satisfactory Satisfactory 0.00

3 06/22/2009 Moderately Satisfactory Moderately Satisfactory 0.00







No.Date ISR

ArchivedDO IP

Actual Disbursements

(USD millions)




13 01/05/2014 Satisfactory Moderately Satisfactory 64.48






15

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

10/01/2010 N MS MS 23.66Triggering of new safeguard "Involuntary Resettlement OP/BP 4.12".

05/24/2012 N MS MS 41.09 Reallocation of funds

06/04/2013 N MS MS 55.72Reallocation of funds and extension of closing date

11/25/2014 N S MS 79.65 Extension of closing date

12/04/2015 N S MS 90.82 Extension of closing date

I. Disbursement Profile

16

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1.1.1 Country context: The Dominican Republic experiences recurrent natural disasters due in part, to its hurricane- and tropical storm-prone geographic location. Mountainous areas are particularly susceptible to flash flooding and landslides due to deforestation and land use patterns which have contributed to the country’s vulnerability by increasing rainfall run-off and erosion in affected regions. National efforts have sought to reduce vulnerability and improve water resources management through land restoration activities but the process has been slow and complex.

1.1.2 On October 28, 2007, Tropical Storm (TS) Noel struck the country with major rainfall nation-wide. Around 6 million people corresponding to 70 percent of the population were directly or indirectly affected3, over 160 people were killed and 130,000 displaced. Just five weeks later, the country was hit by TS Olga which displaced another 62,000 people, killed 33 and caused further destruction. Noel and Olga represented extreme climatic events with persistent and excessive rainfall - in the case of Noel, ranging from 130 to 250 percent of the normal monthly allotment - affecting 26 of the nation’s 32 provinces and 80 percent of its territory.4 Noel caused flooding, landslides, destruction of bridges and roads and distribution facilities particularly affecting the southern and western areas of the country (including the city of Santo Domingo and the Bajo Yuna basin). Olga mostly affected the northern and central portions of the country (including in/around the city of Santiago) with similar impacts. Productive infrastructure was severely damaged by both events, particularly related to water (irrigation, water supply and sanitation infrastructure), transportation and energy, impacting key sectors such as agriculture and health, and affecting many other sectors relying on power distribution. Hardest hit among the population were small agricultural operations and subsistence farmers, as well as rural and peri-urban residents. Storm-related flooding disproportionately affected poor communities living along riverbanks and in other disaster-prone areas such as the steep slopes characteristic of the country’s interior.

1.1.3 On a macroeconomic level, the Dominican economy had experienced a booming recovery from the banking, macroeconomic and social crises of 2003 and 2004. Real GDP growth reached 9.3 percent in 2005, 10.7 percent in 2006 and 8.5 percent in 2007. Macroeconomic stability improved and inflation was brought under control. Even so, the lag effects of an increase in food prices largely related to Noel and Olga, along with high international commodity prices, led to higher than expected inflation in 2008 (10.6 percent compared to 6.1 percent in 2007). This had, inter alia, major impacts on the poorer segments of the population, already hard-hit by the storms. At the time of appraisal, the country showed a high level of inequality and a strong divide between urban and rural areas; in 2006, of the estimated population of 9.5 million, some 36 percent were living below the poverty level (29% in urban areas versus 50.3% in rural areas) and approximately 13 percent lived in extreme poverty (8% in urban areas compared to 22% in rural areas). It was estimated at appraisal that some 90 percent of persons directly affected by the storms lived below the poverty line.

1.1.4 Sector context and impacts: According to the Economic Commission for Latin America and the Caribbean (ECLAC), the cost of Noel and Olga reached US$439 million and US$105 million respectively corresponding to 1.5 percent of GDP. Economic losses in the agriculture sector amounted to US$185 million stemming from the loss of lands and irrigation services affecting both subsistence and

3 ECLAC (2008)4 The Dominican Republic has been cited as one of six Caribbean countries in the world’s top 40 climate “hot spots” by the Germanwatch Global Climate Change 2009 Risk Index. The country was ranked 12 out of 150 countries based on an analysis of weather events between 1998 and 2007.

1

export production (bananas, tomatoes, yucca and rice). Some 4,000 km of canals were affected due to the rupture of and sedimentation in water conveyance structures, and over 33,000 hectares of agricultural land were damaged, including up to 80 percent of the harvest in some areas. Damage related to electrical generation, transmission and distribution was estimated at US$76 million, while in the water and sanitation sectors, at least US$40 million in infrastructure impacts affected the provision of drinking water services to 2.5 million people in Santo Domingo and Santiago.

1.1.5 While the country had, in the aftermath of Hurricane George in 1998, established the National System for Prevention, Mitigation and Response to Natural Disasters (Law 147-02) and developed a sound legal framework as the basis for an integrated disaster management strategy, involving among other agencies, INDRHI (Instituto Nacional de Recursos Hidraulicos) and CDEEE (Corporacion Dominicana de Empresas Electricas Estatales), the two key implementing agencies of the Emergency Recovery and Disaster Management Project, the implementation of this strategy was still weak when Noel and Olga struck. Further efforts were needed to improve coordination and capacity, disaster prevention and mitigation investments, information sharing among responsible agencies, and harmonization of methodologies and approaches used for local disaster risk assessments and management plans.

1.1.6 Rationale for Bank assistance: At the request of the Government of the Dominican Republic (GoDR), the Bank and the Inter-American Development Bank (IDB), along with other donors including the United Nations (UN), worked to ensure that all priority infrastructure needs would be met in the four most effected sectors (irrigation, transport, electricity and water supply and sanitation). It was agreed that the Bank would focus on the three areas where it had the longest institutional relationship on the ground (irrigation, electricity and water supply/sanitation), building inter alia, on the experience of the Bank-supported Hurricane George Recovery Project which closed in December 2003. That project included significant investments to reconstruct irrigation, electricity and transport infrastructure and activities to improve the nation’s emergency response system, and was instrumental in the drafting of the legal and institutional framework for emergency response. Other projects in the irrigation sector (Irrigated Land and Watershed Management Project, closed 2004) and the electricity sector (Energy Technical Assistance Loan and Programmatic Power Sector Reform Loan) were important experiences which saw the Bank well-placed analytically and technically to lead the response to TS Noel and Olga.

1.1.7 Contribution to higher-level objectives: As an emergency operation, the project was not planned in the Country Assistance Strategy for the Dominican Republic covering FY06-09. It fulfilled a special request to provide assistance to repair critical infrastructure damage from the two tropical storms. Nevertheless, the project was fully consistent with both pillars of this strategy, which were to: (i) stabilize the economy, improve competitiveness, and restore economic growth; and (ii) achieve greater social equity through human development and increased access to social and basic public services.

1.2 Original Project Development Objectives (PDO) and Key Indicators

1.2.1 The project development objectives (PDO) were to: (i) restore and strengthen priority irrigation, electricity, water, and sanitation infrastructure damaged by Tropical Storms Olga and Noel or at risk of damage from future storms; and, (ii) strengthen INDRHI’s and CDEEE’s capacity for future risk management.

1.2.2 The key outcome indicators in the Project Paper (PP) were: (i) 12,000 hectares with irrigation services restored; (ii) four dam facilities rehabilitated with revised operational procedures to minimize impacts of future disasters; (iii) 242 kilometers of transmission lines restored to improved disaster-resistance standards; (iv) 200 MW of hydroelectric generation capacity restored; and, (v) operation of the Santiago wastewater treatment plant restored.

2

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification

1.3.1 The PDO was not revised, including by the Additional Financing (AF) approved on November 17, 2011. However, to compensate for an omission from the PP, the AF added a new PDO indicator to capture the institutional strengthening objective and to reflect associated activities already included in the project: “Real time, operational, hydro-meteorological data system in place transmitting processed and interpreted data to Disaster Risk Management Institutions (the National Meteorology Office (ONAMET), the Committee for Operation of Dam Reservoirs (COPRE), and the National Emergency Commission (CNE)”. The Results Framework was also revised to better align the final targets of three PDO/Key Indicators with the project’s re-evaluated, expected results: number of hectares with irrigation services restored (from 12,000 to 11,577) and hydroelectric generation capacity restored (200 to 254 MW). Also, a typo in the PP on the indicator “km of transmission lines restored” was corrected (it reads 242 km instead of 152 km. The Loan Agreement was correct though, and stipulated a target of 152 km). See Data Sheet.

1.4 Main Beneficiaries

1.4.1 Given the extremely rapid preparation of the project (less than three months between the concept review and Board approval) and the conditions on the ground post-disasters, the team was not able to assess the socio-economic profile of the primary targeted group, nor make a precise estimate of its number. As noted, those hardest hit by the storms were small agricultural and subsistence farmers as well as rural and peri-urban residents. All activities aimed at restoring the irrigation canals were prioritized in consultation with affected farmers, but the focus was mainly on the number of irrigated hectares to be rehabilitated given the objective of recovering food production levels, both of which were critical for food security and for agrifood exports. Restoration of electricity services was also to directly benefit these vulnerable segments of the population.

1.5 Original Components (as approved)

1.5.1 There were three project components:

Component 1: Rehabilitation and Risk Management in the Water Resources Sector, (estimated total cost US$34.35 million), executed by INDRHI, and financing: (i) rehabilitation of the main irrigation works damaged by TS Noel and Olga; and (ii) support for priority disaster-related institutional strengthening activities and equipment. Operation of these systems was to be restored through the reconstruction and stabilization of critical physical infrastructure such as water storage facilities, headworks, and canal systems. Sub-components were:

Subcomponent 1.1: Rehabilitation and Reconstruction of Damaged Infrastructure, financed: (i) retroactive financing of emergency works completed in response to the disaster; (ii) reconstruction and strengthening works required to restore the irrigation and water resources management network; and (iii) a technical audit of completed works.

Subcomponent 1.2: Strengthening of Risk Management Systems, Purchase of Technical Monitoring Equipment, and Development of System Maintenance Program, financed the improvement of INDRHI’s capacity for watershed management and water-related infrastructure operation and maintenance, through: (i) review and strengthening of system maintenance and operations procedures and requirements; (ii) improved dam safety operations, integrating the meteorological early warning system into operational procedures; (iii) improving the system for management and distribution of water resources management information to stakeholder agencies; (iv) development of a public education program for water resources

3

and watershed management; (v) rehabilitation and strengthening of the national meteorological monitoring and early warning system, through critical repairs and the purchase/installation of equipment; and, (vi) development of an irrigation system maintenance and management plan.

Component 2: Rehabilitation and Risk Management in the Electricity Sector, (estimated total cost US$33.95 million), executed by CDEEE, was intended to restore priority electricity infrastructure and make improvements needed in the short term in the areas affected by TS Noel and Olga, and to strengthen the sector’s ability to respond to natural disasters. It included four subcomponents:

Subcomponent 2.1: Rehabilitation of Generation Capacity financed the rehabilitation of hydroelectric generation facilities damaged by the recent tropical storms and operated by the Dominican Hydroelectric Generation Company (EGEHID), specifically ancillary works (access roads), repair of dams (Las Barias and Valdesia), and rehabilitation of power generation plants (Aguacate, Nizao-Najayo, and Aniana Vargas).

Subcomponent 2.2: Rehabilitation of Transmission Capacity financed the rehabilitation of the Dominican Electricity Transmission Company (ETED) transmission lines, including the future reconstruction of 69 kV lines of 15 de Azua-Sabana Yegua, Cruce Cabral-Las Damas, Sabana Yegua-San Juan, Cruce Cabral - Vicente Noble, and Galeria Infiltracion CAASD Manoguayabo, with a total length of 242 km.

Subcomponent 2.3: Rehabilitation of Distribution Capacity financed rehabilitation works already performed by the distribution companies of EdeNorte and EdeSur, which were proposed for retroactive financing.

Subcomponent 2.4: Strengthening Capacity to Respond to Natural Disasters financed: (i) enhancement of the electricity sector’s capacity to respond to emergencies caused by natural disasters; (ii) implementation of the proposed project; and, (iii) a technical audit to ensure the quality of project-supported works.

Component 3: Rehabilitation of Water and Sanitation Infrastructure in Santo Domingo and Santiago (estimated total cost US$3.5 million) financed the restoration of storm-affected water and sanitation services to the cities of Santiago and Santo Domingo. This Component was entirely retroactively financed. There were two sub-components:

Subcomponent 3.1. Retroactive financing of emergency relief in Santo Domingo provided the retroactive financing to Santo Domingo Water and Sewerage Corporation (CAASD) for emergency spending on water purification chemicals (such as chlorine and aluminum sulfate) used immediately following the storms, as well as extraordinary purchases of gasoline used for delivering potable water to affected populations in the aftermath of the storms.

Subcomponent 3.2. Retroactive financing of emergency rehabilitation works in Santiago provided the retroactive financing of works undertaken by the Santiago Water and Sewerage Corporation (CORAASAN) in the aftermath of Olga to rehabilitate damaged infrastructure and restore public services.

1.6 Revised ComponentsN/A

4

1.7 Other significant changes

1.7.1 Extensions of closing date: The original loan agreement was signed on May 27, 2008, required two extensions of the deadline for project effectiveness totaling nine months, and finally became effective on May 26, 2009. The project closing date was extended four times (three times for the Additional Financing alone), totaling three years and 10 months, almost doubling the initially planned four-year duration (of what was intended as an emergency project). Extensions were mainly to allow for the completion of works under Component 1 (irrigation infrastructure including the rehabilitation of four dams) as Component 2 activities were completed by the end of 2014 and Component 3 were entirely retroactively financed.

1.7.2 New safeguards triggered: During execution of the original project, CDEEE identified transmission line locations that were determined to be unacceptably vulnerable to potential disaster-related damage, and elected to relocate these lines to more secure locations in the vicinity of the original alignments. Because these new alignments required the purchase of right-of-way access, the project was restructured in November 2010 to include Bank Safeguard OP/BP 4.12, Involuntary Resettlement. An abbreviated Resettlement Plan was approved by the Bank in July 2010.

1.7.3 Additional Financing (AF): The GoDR in August 2011 requested an Additional Financing mainly to allow completion of the original project activities by filling an unanticipated financing gap caused by cost overruns due to initial additional costs (e.g. hidden damage, improved designs, construction requirements), and additional damage caused by other storms after project effectiveness, and cumulative inflation since project inception. The amount of US$20 million was added to the original loan to complete the rehabilitation and repair of damaged infrastructure in the water (irrigation, water storage) and electricity sectors as well as to strengthen institutional capacity for disaster mitigation and risk reduction. The AF Project Paper included a revised Results Framework. The AF Loan Agreement was signed on November 18, 2011, but the date of Effectiveness required extension first until August 17, 2012, and the loan was then terminated as a result of not meeting this deadline, in the context of presidential transition, and the appointment of a new Minister of Finance as well as new Directors of CDEEE and INDRHI. This required reinstatement of the Loan Agreement and retroactive extension of the Effectiveness deadline to November 16, 2012.

1.7.4 Reallocations of funds: Two reallocations were approved: (i) to distribute the unallocated funds of the principal loan (US$8 million) to the Category of “works” and redistribute pre-allocated funds among Categories “works” and “goods”, to provide additional funding for the construction process under execution, due to cost overruns; and (ii) to distribute the Unallocated funds of the Additional Financing (US$2.15 million) between Components 1 and 2. See Table 1.

Table 1: Summary of Changes during Implementation Action Date Financing Closing Date

ExtensionOther Changes

Restructuring Level 1 (Loan 7546)

October 1, 2010 Triggering of Involuntary Resettlement OP/BP 4.12.

Additional Financing (Loan 8098)

November 18, 2011 (LA signed)

Additional US$20 million

Results Framework revised

Restructuring Level 2 (Loan 7546)

May 24, 2012 Reallocation of funds

Letter (Loan 7546) November 29, 2012

December 31, 2013

5

Action Date Financing Closing Date Extension

Other Changes

Restructuring level 2 (Loans 7546 and 8098)

June 4, 2013 Reallocation of funds

December 31, 2014

Restructuring Level 2 (Loans 7546 and 8098)

November 25, 2014

December 31, 2015

Restructuring Level 2 (Loans 7546 and 8098)

December 4, 2015 October 31, 2016

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

2.1.1 Soundness of the background analysis: The project was prepared in accordance with OP/BP 8.00 Rapid Response to Crises and Emergencies, in a very short timeframe (less than 3 months between the concept review and Board approval) by a team of experts - working with line agencies - which conducted rapid assessments of the nature, location and estimated costs of the damage. As noted in 1.1.6, the GoRD asked the Bank to focus on the three areas where it had the longest institutional relationships on the ground (irrigation, electricity and water supply/sanitation sectors), and built, inter alia, on the experience of the Bank-supported Hurricane George Recovery Project (P063201) which closed in December 2003 and provided important lessons (see ERL PP, para 32).

2.1.2 Assessment of project design: Design coalesced around three components corresponding to three implementing agencies. INDRHI would take responsibility for the water resources/irrigation activities under Component 1, CDEEE would handle the electricity activities under Component 2, and the Ministry of Finance would handle administrative aspects related to Component 3 water supply and waste water treatment plants activities implemented by CAASD and CORAASAN and financed solely through the retroactive financing mechanisms. Thus INDRHI and CDEEE were the primary project implementing agencies during the project lifetime. To ensure flexibility, the GoDR wanted each agency to conduct its own fiduciary, coordination, monitoring and reporting functions separately, instead of using a project coordination unit, to which the Bank agreed. While the PP justified this arrangement based on mixed experiences under the Hurricane George operation which used a single implementation unit (see PP Lessons Learned), in retrospect, the institutional separation of project management did not promote smooth project execution, especially in the case of INDRHI, given the short project engagement period and acknowledged institutional weaknesses. In addition, while the PP mentions that the project would focus on the implementation of works considered to be “truly of an emergency nature”, the PDO indicated a more hybrid type of project, where both emergency and other activities aimed at enhancing the capacities of the implementing agencies to disaster risk management would be carried out. Most of the true emergency activities actually corresponded to those carried out in the aftermath of the TS, which were retroactively financed. The other works proposed in the PP corresponded to damaged infrastructure requiring more complex civil works for their rehabilitation. These latter were handled under normal procedures which guaranteed their quality, but this also partly explains why a longer time-frame was required to complete the works.

2.1.3 The PDO was straightforward, including, beyond the main objective of rehabilitation of infrastructure, the strengthening of institutional capacity in INDRHI and CDEEE to improve disaster management and response capacity. Up to 40 percent of the original loan or US$ 32 million equivalent

6

was eligible to retroactively finance emergency activities conducted by the selected beneficiary agencies (INDRHI, CDEEE, CORAASAN and CAASD) in the immediate aftermath of the TS in the water/irrigation and electricity sector. Because of the rapid preparation of the project and conditions on the ground (areas still flooded, impaired access, and wide geographical distribution), institutional and technical capacity strengthening activities could not be well-defined, in particular for INDRHI where a long list of possible activities was proposed. The institutional benefits foreshadowed in the PDO were primarily intended for the INDRHI but CDEEE would also benefit from the significant improvement of the hydro-meteorological data system managed by INDRHI. Priorities were to be defined after effectiveness when more detailed assessments would become available. For the same reasons, the targets of the Results Framework were provisional and required refining once data would become available (see Section 2.3).

2.1.4 Adequacy of government commitment: Government worked to ensure that the sectors most affected by the storms had sufficient financing to meet priority reconstruction needs and appealed to donors and multilateral agencies for support immediately after its declaration of emergency. Government’s recovery strategy also demonstrated its commitment to decentralized decision-making, with the sectors taking the lead on defining priority activities, consistent with the then-new natural disasters law which gives authority to the sectors to define and implement disaster prevention and recovery strategies. Community participation and communication were, and were expected to remain throughout implementation, a major focus for INDRHI especially as irrigation systems were community-based and secondary networks were community-managed through water user committees. Works selected/prioritized were identified through a process of public meetings with affected communities where representatives of each community were directly involved in vetting the list of priority works. The Bank’s project preparation team attended field meetings with small villages, private farmers and agri-business operators.

2.1.5 Assessment of risks: The risks were well-assessed and articulated - and rated as High - with mitigation measures expected to reduce residual risk to Substantial. Risk mitigation was heavily dependent on the implementing agencies’ and Bank’s direct, hands-on supervision including greater frequency. However, despite its emergency nature and the numerous, often complex works expected to be financed, in particular under Component 1, the very short duration of the project was not identified as a risk in the PP. Instead, the Risk Assessment (PP, Section G) stated that “the compressed project implementation period is expected to maintain commitment for project activities”, the risk identified being the potential shift in institutional priorities. The proposed mitigation reassured that “technical project aspects are well-advanced, along with contracting arrangements, and project supervision will focus heavily on fiduciary aspects to facilitate rapid implementation of priority works.” These measures did not directly address the issue of institutional shortcomings (procurement capacity, bureaucratic administrative processes and works monitoring/supervision issues) and there was – due to the emergency nature of the operation - uncertainty at appraisal about which works would eventually be financed and their costs.

2.2 Implementation

2.2.1 Main challenges: The project faced important administrative and technical challenges: higher than expected initial delays in declaring effectiveness (one year post signature of the original loan agreement); multiple changes in Project Implementation Units and staff (mostly in INDRHI); procurement challenges; cumbersome administrative processes for contract registration affecting all the activities; constraining national budgetary rules (fiscal ceilings); limited human and physical resources to

7

work in parallel on a large number of structures (see para 2.4.3); and, technical complexity of the works’ design and construction (dams in particular), all affected the pace of project implementation. In order to ensure works’ robustness in the face of future storms, the priority for the country and Bank teams remained to ensure that their quality not be undermined.

2.2.2 Mid-term Review: The timely Mid-term Review (MTR) in November 2010 identified the need to extend the closing date by at least 12 months mainly to offset the delayed ratification of the project by the Congress, a recurrent phenomenon affecting all projects in the Dominican Republic. The MTR also found that the investments slated for financing under Component 1 (INDRHI) needed to be re-prioritized given the evident under-estimation of their real costs. Those changes also implied the need to revise the Results Framework to reflect actual works/activities to be completed. No particular issue was faced with regards to CDEEE’s implementation of Component 2.

2.2.3 Need for refinement of preliminary assessments: During the project’s lifetime, two major reviews of activities and costs were conducted, the first in 2009 by INDRHI to provide a more detailed review up to the task level, and the second in 2010 which showed evidence of important cost overruns in a majority of the sub-components and activities. For example, for the 16 lots5 managed by INDRHI, a 72 per cent increase from the initial, rapidly-estimated costs was calculated. Similarly, EGEHID identified the need for additional, complementary civil works to protect the infrastructure that was to be rehabilitated. During three supervision missions after the MTR in 2011, all project activities were re-evaluated and it was estimated that an additional financial support of US$17.8 million would be needed to complete originally planned project activities (US$11.7 million for Component 1, and US$6.1 million for Component 2). This formed the basis for government’s request for an Additional Financing.

2.2.4 Procurement challenges: INDRHI identified a number of small lots corresponding to a portion of the conveyance canals and/or other infrastructure (intakes, weir, gate, etc.) to be repaired. These small lots were bundled initially into a few packages to reduce the number of procurement processes and enhance the attractiveness for private sector. Notwithstanding the fact that grouping these lots in three packages took around a year, this approach proved unsuccessful, as no international companies expressed interest in bidding for such type of contracts, requiring a reversion to national bidding, implying further delays. Important bottlenecks also delayed procurement processes. INDRHI was rapidly overwhelmed by the unusual high volume of work. Furthermore, its initial decision to use only its own technical staff for the preparatory topography and technical design of works resulted in important delays in the preparation of terms of reference for the bidding process. External technical experts were then contracted to support INDRHI’s staff in speeding-up the preparatory steps for civil works with feasibility studies and topographic surveys. The need for modifications of many contracts, whether those identified once works started due to design flaws or because conditions that prevailed at the time of tendering had changed when contracts were to be negotiated, were also burdensome and caused some delays.

2.2.5 Complexity of works and design requirements: The project planned to repair four damaged dams. Given the technical complexity and risks involved in such infrastructure, highly specialized skills were required to assess, design and supervise works. INDRHI’s dam department did not possess all the necessary technical documentation, and lacked sufficient skilled staff in-house, having to resort to external technical experts to start moving these activities forward. Staff turnover within the dam department further delayed progress. Works on dams required the opinion of an international panel on dam safety to comply with safeguards rules before works could start, which absorbed time. As for works on irrigation canals, these works also required comprehensive preliminary studies, including topographic

5 Each lot was formed of a package of civil works in different locations within the same irrigation scheme or system.

8

and soil surveys, and careful design. The need to correct erroneous initial data or design weaknesses resulting from an intent of the agencies to move fast, ultimately resulted in important delays for some of the lots. Some design flaws were even discovered after works had started (e.g. lots 1, 6, 7, 8) requiring further contractual revisions. These elements also resulted in higher than expected costs and required the project to readjust the list of works to be financed under the project on various occasions.

2.2.6 Institutional weaknesses: Understandably, the GoDR and Bank teams did not foresee the need for the project to cover the full range of activities required to make comprehensive institutional improvements. Thus, efforts focused, as per the project’s development objectives, on improving a few priority aspects of individual departments to overcome major weaknesses directly related to the type of works being carried out, and improving capacity for disaster risk management. Most activities financed, including studies, development of procedures, systematic use of best practices to carry out civil works, as well as improvement of inter-institutional collaborations, made a direct contribution to a longer-term process of boosting capacity for disaster risk planning and management. Despite the efforts and improvements in the technical areas covered by the project, INDRHI’s capacity on administrative functions (budget, staffing, organizational and managerial capacities) remains a bottleneck for the fulfillment of all its mandate.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

2.3.1 Quality of the M&E framework: Given the project’s rapid preparation and uncertainty regarding the works to be eventually financed by the project, the monitoring Results Framework (RF) could not be optimally prepared/populated. End targets were tentative, and it was expected that both indicators and targets would be refined and validated during the early stages of project implementation. The project essentially served to restore previously existing infrastructure to re-establish services no longer provided, hence most PDO indicators were output rather than outcome based (as intended – see PP, para 32). One target, “km of transmission line restored”, was written erroneously in the PP (it was correct in the Loan Agreement though). In the revised Results Framework (RF) the typo was corrected. Importantly, the RF lacked a PDO indicator, or Intermediate Outcome Indicator (IOI), capturing the objective of strengthening the capacity of INDRHI and CDEEE for future risk management. The revision was processed once all data became available, at the time of the Additional Financing. This revision reflected more realistic, expected achievements. A new PDO Indicator and IOIs – missing from the original RF - were introduced to reflect the improved institutional capacity and improved early warning system and disaster risk management activities already incorporated and financed.

2.3.2 Apart from the RF and Arrangements for Results Monitoring (ARM) matrices, the PP did not specify/discuss any other monitoring and evaluation requirements, e.g., a management information system (MIS), periodic/progress reports, end-of-project impact evaluation study or case studies, or final report (Borrower Completion Report, BCR). Such instruments/products may not have been required under an ERL at that time given the short engagement period but as the project period increased, it might have been selectively considered. In any case, a BCR was produced by the Borrower as a routine part of project finalization. This was, however, done with some difficulty given the lack of harmonized and consolidated data across the implementing agencies in the absence of an overall coordination unit, as well as institutional memory losses on those parts of the project completed years before actual closing (retroactively financed activities under Component 3, and activities under Component 2).

2.3.3 Implementation and Utilization: While the Aide-memoires did not include a specific section for Monitoring and Evaluation during project implementation support missions, they included details on

9

the progress of all activities, and the information on PDO Indicator achievements was included in the internal Bank system (Implementation Status and Results report - ISR). However, Intermediate Indicators were not systematically reflected6. An impact evaluation initially planned to be carried out by INDRHI did not materialize for a lack of time and the priority given to the finalization of works before project closing. However, data on beneficiaries were systematically collected by INDRHI and CDEEE throughout project implementation and reflected in both the RF and Annex 2, and workshops with beneficiaries were organized at closing for Component 1 (cf. Annex. 6). These workshops concluded that while the benefits of the project were perceived later than expected due to implementation delays, the impact of the project was perceived positively by the beneficiaries, who recognized that the availability of water for irrigation improved the productive systems, made them less vulnerable to drought, and permitted an increase in crop yields, as well as a shift in the types of crops cultivated towards those of greater economic value.

2.4 Safeguard and Fiduciary Compliance

2.4.1 Environmental Safeguards: The project was rated as a Category B with a partial assessment, given that project activities included reconstruction and rehabilitation activities – including of dams - with potential to cause limited, small-scale environmental impacts. Two policies were triggered: Environmental Assessment (OP/BP 4.01) and Safety of Dams (OP/BP 4.37), the former requiring the inclusion of environmental management clauses in all project contracts; and, the latter requiring a Dam Safety Assessment involving a panel of international experts prior to disbursement for any subprojects involving dams. With respect to dam safety, the Memorandum of Understanding signed between INDRHI and CDEEE also required a joint review of all activities relating to dams to assure proper coordination and application of safeguard requirements. These provisions were respected by the agencies throughout project implementation. Both INDRHI and CDEEE used their own, respective Environmental Management Department to implement environmental safeguards. Minor issues arose during project implementation but these were handled in a manner satisfactory to the Bank. Safeguards compliance was considered to be satisfactory and rated accordingly throughout project implementation.

2.4.2 Social Safeguards: The project did not expect to trigger either of the Bank’s Social Safeguards policies and only focal points for social safeguards were nominated in the implementing agencies. However, as CDEEE identified the need to purchase right-of-way access during the repair of transmission lines, the project was restructured in November 2010 at which time, OP 4.12 (Involuntary Resettlement) was triggered, covering only CDEEE activities. Later, in April 2014, it appeared that INDRHI, which had limited knowledge of Bank Social Safeguards procedures, had begun expropriating farmers/private land owners in two locations in order to construct new canals/re-route existing canals. This situation occurred without the knowledge of the Bank and without the benefit of a project-level Resettlement Policy Framework in place. Once identified, remedial actions were required and verifications of compliance were carried out during several follow-up missions by the World Bank Social Specialist who concluded that all persons who had been expropriated had received proper compensation. Resettlement Action Plans and Remedial Action Plans were prepared for the sites concerned, although with important delays. These were found acceptable to the Bank and by Closing, it was determined that the Project was in compliance with OP 4.12.

Fiduciary Compliance

2.4.3 Procurement: Delayed procurement had cumulative effects on project implementation. Weak capacity - especially in INDRHI - which had to manage a large number of procurement processes (70, of 6 Only ISR sequence 9 (Oct 2011) could be accessed through the Bank operations portal.

10

which 10 were ICB, compared to 9 with CDEEE, of which only 3 were ICB), was cause for concern given the number of contracts to be processed. Both INDRHI and CDEEE were slow to establish the required procurement capacity. CDEEE recruited a full time procurement specialist at shortly after project effectiveness. However, delays persisted in INDRHI which continued to show a lack of proactivity to effectively address the weaknesses until a change in leadership and team in July 2012 greatly improved the pace of progress. The Bank organized training sessions to update staff on procurement procedures and tools to accelerate implementation. In addition to participating in most in-country supervision missions, Bank procurement specialists conducted at least one procurement post review mission per year. The procurement rating was downgraded to Moderately Unsatisfactory in mid-2010. A detailed review conducted in May 2011 saw the Procurement rating upgraded to Moderately Satisfactory after CDEEE restructured its PIU with the creation of a centralized unit and the inclusion of new procurement staff, and INDRHI improved its coordination and communication between its PIU and internal procurement unit. Change of leadership in INDRHI in July 2012 led to a significant improvement in the management of procurement issues: in just 2 years between July 2012 and July 2014, most of the 50 activities listed in the Procurement Plan were concluded.

2.4.4 Financial Management (FM) and audit: Both agency Project Implementation Units introduced a National Integrated Financial Monitoring Information Sub-System (UEPEX). Agencies were trained by the Ministry of Finance to use the system shortly after project effectiveness, and the system has been operational since then. Minor adjustments were introduced to the system to manage the AF for accounting classification and budgeting purposes. Issues in FM concerned mainly delays due to lengthy internal control reviews performed by the auditors of the General Controller’s Office at INDRHI, cumbersome procedures for contract registration by the internal audit team, and delays in the submission of external audit reports. The FM rating was downgraded to Moderately Unsatisfactory in April 2010 due to these delays. A comprehensive FM assessment and close monitoring of key FM issues at INDRHI and CDEEE, plus implementation support provided by the Bank task team to resolve and close audit findings, saw the project’s FM system upgraded from Moderately Unsatisfactory to Moderately Satisfactory before the Additional Financing was processed, a rating maintained through closing. The project financed yearly independent audits for CDEEE and INDRHI, and the first audit for INDRHI included all other water-related entities, namely CAASD and CORASAAN. Auditors’ Opinions on the Project Financial Statements were mostly unqualified (clean). Only the first audit of the CDEEE for FY09-10 included a Qualified Opinion with Exception, and the issue was rapidly solved. Management letters also identified some instances in the internal control environment, such as adjustments needed to re-classify project categories, the need to exercise due diligence and care in filing an insurance claim for stolen vehicles, among others. There were no outstanding audit issues at closing.

2.4.5 Project costs and financing: The Table in Annex 1 illustrates cost increases per component compared to the original loan. The Additional Financing covered most of these costs required to carry out prioritized works and activities, but not all. In particular, under Component 2, CDEEE financed a budget gap of US$20.75 million. Cost overruns were mainly due to internal factors (large under-estimation of the work volume and necessary changes in design linked to the rapid preparation of the project under post disaster conditions), but also external factors (further damage from heavy rains in 2009 and a 21 percent accumulated inflation between 2009 and 2011). See also Annex 2.

2.5 Post-completion Operation/Next Phase

2.5.1 All activities supported by the project will be pursued by the respective agencies. These were and still are part of their mandate. Infrastructure and equipment upgrades, along with the improved management of operations to ensure better monitoring, maintenance and daily operation of the dams,

11

provide strong reassurance that this infrastructure will be better managed, and present fewer risks of being severely impacted by future disasters. Significant progress was made in inter-institutional cooperation, especially in regard to the preparedness, early warning and response mechanisms operating between relevant agencies. Agreements put in place established the basis for long-term cooperation. Maintenance and further improvement of the mechanisms in place will however depend on both the political willingness to improve the efficiency and synergies between relevant governmental agencies.

2.5.2 Follow-on Bank operations: At the time of ICR preparation, the GoDR has requested support from the Bank for a new project focused on resilient agricultural landscapes and improvement of Natural Resources Management (water, soil, forest). The identification mission was carried out on February 2017 The Bank team is exploring how best to further support INDRHI’s capacity such as providing opportunities to further improve the telemetry network and help ensure the implementation of procedures developed under the ERL project. The future project would also include supporting the full rehabilitation of the Maguaca dam – certain works could not be finalized under the ERL project - as well as some additional works required on the Chacuey dam to strengthen its structure and which were identified by the studies carried out under the ERL project7. The new operation will be designed to respond to some specific issues identified under the ERL, i.e. the protection of watersheds against soil erosion to limit the sedimentation of dam reservoir (25 percent of storage lost on average according the ERL study) and the pollution of water stored (pesticides, non-treated waste water). The new project will, as noted above, support implementation of two pilots to test legal and managerial reforms designed to increase cost recovery and support their institution at the national level (activities to include a cadaster of water users, Master Plans for Water Resources Management, and economic and cost recovery studies). To finalize other incomplete works, i.e. for Lot 1, INDRHI was able to secure supplemental funds from national budget.

2.5.3 The GoDR, with assistance of the Bank, is also currently preparing a Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option (CAT DDO - P159351), which will support the capacity of response to disaster risk management including in the water sector and will offer many potential synergies with the future project. It will also help leverage high level discussions. The Bank team working on this CAT DDO recognized that the project had been instrumental in strengthening the technical capacity of INDRHI.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

3.1.1 Relevance of objectives: The project sought to recover the population’s access to basic socio-economic infrastructure and services (electricity, irrigation for agricultural production, water supply and sanitation) destroyed or damaged by the TS Noel and Olga and to support longer-term institutional capacity for improved disaster planning and management. These objectives were, and still are highly 7 Independently of any action carried out by the ERL project, and after persistent rainfall occurred in December 2014, a continuous cracking was detected in almost the whole length of the crest of the dam. In March 2015, the Panel of Experts recommended a series of actions aimed not only to improve the current conditions of dam safety, but also to generate more information to enable a more detailed analysis of the current safety condition of the dam. Among other, their recommendations include: (i) completing the installation of the instrumentation and monitoring equipment program of the dam, (ii) implementing the rehabilitation of the drain toe of the left embankment of the dam, (iii ) continue the ongoing monitoring evaluation of the dam; (iv) maintaining low levels of the reservoir and keeping the vehicular traffic suspended over the crest of the dam, and (v) evaluate the current safety condition of the dam through a more detailed calculation method. All these actions were carried out and concluded in 2016 on the need of a non-emergency and punctual rehabilitation on the dam crest, planned in the follow-up WB project.

12

relevant, and remain within the priorities of the Government (especially the National Development Strategy or Estrategia Nacional de Desarrollo –END- and the 4-years Program for Water - Cuatrienio del Agua- 2016-2020) and fully aligned with Bank’s Country Partnership Strategy (CPS). The CPS for 2015-2018 would support the Government’s efforts to make growth sustainable and more inclusive, by expanding economic and social opportunities to all Dominicans. Among its five pillars is the objective “to build resilience to external shocks by improving disaster risk management planning, developing a national integrated information system, installing a new telemetry network to manage water resource flows, and rehabilitating four dams”. This latter fully mirrors the ERL’s project objectives and key activities, confirming its prominent, strategic priorities and as part of the Bank portfolio. Relevance of objectives is rated High.

3.1.2 Relevance of design: The project responded to a need for financial assistance to help rehabilitate critical, storm-damaged infrastructure. First, it offered flexibility with regards to the infrastructure to be selected in the water and electricity sector given the impossibility of accurately pre-determining all needs and costs up-front. Second, it offered retroactive financing, which was an important element of the ERL; two thirds of the retroactive envelope was absorbed, covering costs of activities found eligible for reimbursement within the four selected agencies. Third, while the design was consistent with the stated objective, the duration of the project was overly optimistic given the type of activities that were expected to be performed, the need to ensure their quality, and the high volume and geographical dispersion of activities especially those executed by INDRHI. Fourth, the objective of strengthening INDRHI and CDEEE capacity for future risk management was ambitious. Even if this capacity building aspect is common in post-disaster projects - as was already pointed out in the ICR for the Hurricane George ERL project8 - institutional strengthening in the context of a short engagement period, capacity issues and with infrastructure reconstruction the project’s top priority, can be risky. That said, and despite difficulties, moving forward the process of institutional strengthening was necessary and remains highly relevant in the circumstances of DR. Design is rated Substantial.

3.1.3 Relevance of implementation. During implementation, constraints and capacities differed significantly between the two main implementing agencies, to which the Bank responded with customized solutions. The government remained committed during the whole implementation period of the project to achieve expected results in the water/irrigation and energy sectors, which were prioritized in the different CPS. With close supervision, continuous guidance and support from the Bank throughout the project, INDRHI managed to conclude works in a satisfactory manner. CDEEE showed agility to finance budgetary gaps and improve processes over time, allowing it to finalize works earlier in a satisfactory manner. The Bank, which remained the major external financier of the sectors covered by the project, was fully involved in all decisions regarding the prioritization and adjustment of works, as needed, to make the most efficient use of available funds. Its agreement to and approval of repeated extension of the closing date, as well as an Additional Financing – an uncommon mechanism for an ERL - were highly relevant to the project’s evolving circumstances. Implementation is rated Substantial.

3.1.4 The overall relevance of project objectives, design and implementation is rated as Substantial. This balances a High rating for PDO relevance, Substantial rating for design given the issues outlined, and Substantial rating for implementation.

8 The ICR mentioned: “Among the various project objectives, longer-term institutional capacity strengthening was particularly challenging to achieve within the constraints of an emergency operation” and “Additionally, it should be noted that many of the flood control and watershed management studies conducted under the project will not have any impact unless they are successfully implemented by INDRHI; and that operation and maintenance (O&M) remains a major challenge for both agencies”.

13

http://documents.worldbank.org/curated/en/2014/09/20187322/dominican-republic-country-partnership-strategy-period-fy2015-18

14

3.2 Achievement of Project Development Objectives

3.2.1 The discussion below incorporates all key evidence attributable to the project, organized under the respective element of the PDO9.

PDO part (i): restore and strengthen priority irrigation, electricity, water, and sanitation infrastructure damaged by Tropical Storms Olga and Noel or at risk of damage from future storms

Rated: Substantial

Irrigation infrastructure:

3.2.2 The main achievements of the project were:

PDO indicator #1 and #7: The rehabilitation of 24 priority irrigation systems severely affected by the TS Noel and Olga (of which eight corresponded to systems restored in the aftermath of the TS and financed through the retroactive financing mechanism). These included works on canals and reservoirs, embankments, pumping systems, water intakes, floodgate systems. As a result, irrigation was restored on 37,218 hectares (of which 16,763 resulted from retroactively financed activities) benefiting 18,779 farmers producing bananas, chick peas, rice, maize, tomatoes and other fruits and vegetables - all essential for local and national food security. This exceeded by far the target of 11,577 ha and 2,975 beneficiaries. See Table 3 and 4 in Annex 2.

PDO indicator #2: Restoration of three dams (Tavera, Jiguey and Chacuey). The project’s target indicated four dams. Works included the reinforcement of structures such as embankments, protection walls and renovation of drainage systems, which are essential for the dams’ functionality associated with flood reduction, water supply, irrigation, hydropower and environmental conservation. The Chacuey dam required a modification of initial rehabilitation plans given the discovery of structural abnormalities (cracks on the crest, see footnote 11 in section 2.5.2) requiring additional studies and specific dam operation procedures. Nevertheless, the rehabilitation works initially planned on Chacuey’s spillway were completed. Works could not be completed in Maguaca due to a dispute with the contractor. It is planned that additional works required in Chacuey (related to this new situation created by the appearance of the cracks at end of 2014) and completion of works in Maguaca will be financed by the follow-up Bank project.

Foundational work necessary for infrastructure design and INDRHI’s knowledge and information systems, based on studies on topography, soil conditions, dam security, sedimentation and water quality (necessary to estimate the life expectancy of the structures), as well as monitoring and early warning equipment (accelerographs and piezometers) among others.

9 Neither the inclusion of a PDO Indicator for the PDO Part ii institution-building element, nor the adjustment of three PDO Indicator targets is considered to justify the triggering of an Appendix B split assessment of project outcome. The added PDO Indicator was correcting an omission in the original RF at appraisal, and did not materially affect/change project activities, cost, implementation or disbursement. And various targets were adjusted to reality due to imprecise estimations at appraisal.

15

Electricity:


PDO indicator #3: Transmission capacity restored with the replacement of 152 km of transmission lines, helping to supply most of the electricity in the Southern region, and benefiting more than one million people, achieving the target ;

PDO indicator #4: Restoration of the Aguacate power plant’s original generation capacity (52 MW) and its upgrade (additional 8 MW), totaling 60 MW generation capacity, benefiting over 590,000 inhabitants; restoration of the Las Barias dam, critical for the functioning of the La Valdesia power plant (54 MW capacity), Las Barias power plant (0.85 MW), and irrigation system of the Marcos A. Cabral and Nizao-Najayo canals; ancillary works (e.g. access roads) and equipment carried out on six hydroelectric plants contributing to their operation and recovery of their power generation capacity totaling 192 MW. In total, the project contributed directly or indirectly to the generation of 252 MW of power capacity, achieving the target; and,

Distribution capacity restored by EDENORTE and EDESUR: equipment and operating costs incurred in the immediate aftermath of the TS were reimbursed through retroactive financing.

Water and Sanitation:


PDO indicator #5: Restoration of the water treatment facilities in Santo Domingo (with CAASD) and in Santiago (with CORAASAN). The project contributed by retroactively financing exceptional expenses incurred just after the TS for the acquisition of materials and equipment, implementation of ancillary works, and operating costs. In Santiago, the project contributed to restoring 28 percent of the potable water consumption of 750,000 inhabitants, while in Santo Domingo over a million gallons of drinking water were provided to the population cut off from the regular water supply.

PDO part ii): Strengthen INDRHI’s and CDEEE’s capacity for future risk management.

Rated: Substantial

3.2.5 The Additional Financing included a PDO Indicator: the “Establishment of a real time, operational hydro-meteorological data system in place transmitting processed and interpreted data to Disaster Risk Management Institutions (National Meteorology Office (ONAMET), the Committee for Operation of Dam Reservoirs (COPRE) and the National Emergency Commission (CNE)”. The main achievements of the project were:

PDO indicator #6: Establishment of a high tech, unique in the Caribbean region, meteorological information system processing data from the conventional hydro-meteorological and telemetry systems, providing critical information for disaster risk management to the other relevant agencies according to the inter-institutional frameworks in place (Law 147-02, See para 1.1.5); restoration of the conventional hydro-meteorological network, and development and putting in operation of a telemetry network for the provision of data (in real time with the telemetry system), required for early warning, prevention and management of disasters;

Significantly improved inter-agency cooperation for better disaster risk management between relevant agencies (led by INDRHI) including formalization of an agreement between EGEHID and INDRHI for an early warning system (collaboration barely existed at the start of the project);

16

Institutional capacity enhancement (staff training) linked to the studies developed and equipment installed (e.g. dam safety, functioning and use of the hydrological/ hydro-meteorological information system, operation and maintenance);

Preparation of critical studies and analytical work related to the management of dam operations; the acquisition of knowledge on sedimentation levels, water quality, reservoir storage capacity and underwater topography (bathymetry) in main dams;

Equipment for main dams with instruments (accelerographs) required for early warning systems (seismic risks); and,

Renovation of offices, provision of equipment, and support to the operations of INDRHI.

Overall, the achievement of PDO is rated Substantial.

3.3 Efficiency

Rated: Modest

3.3.1 Being an emergency operation prepared in 3 months, no economic assessment was conducted at appraisal for the original project or the AF. The restoration of priority (pre-existing) infrastructure damaged by TS Noel and Olga was considered an essential condition for maintaining economic growth. Agricultural production is critically dependent on the availability of water for irrigation, and the entire economy depends on reliable power supply. Further, the restoration of reliable access to these basic services was deemed still economically justified when the AF was processed.

3.3.2 Methodology: An economic analysis was conducted at project closing and its methodology and results/conclusions are summarized below.

Component 1: The methodology used to evaluate the benefits corresponds to the Marginal Productivity Method, consisting of estimating the net present value (NPV) of the highest agricultural production compared with a scenario "without project" based on access to water through restored irrigation systems. This method considers water as an intermediate input in the production of agricultural products and is based on the principle that the farmer maximizes his profits by using water (as well as any other productive input) to the extent that the marginal net income generated by using an additional unit of water is equal to the marginal cost of obtaining this additional unit.

Components 2 and 3: The appropriate methodology for evaluating benefits from these components corresponds to the Avoided Harm Method, which seeks to estimate the benefits generated by a project that enables the reduction or elimination of damage or prejudice to society. Considering data available, the economic analysis could only be carried out for the Aguacate Power Station where project investments resulted in the rehabilitation of 52 MW and an upgrade of 8 MW under Component 2. The benefits of the other activities under this component (rehabilitation of 192 MW of power, 152 km of transmission and distribution lines, and rehabilitation of the Las Barias reservoir) could not be estimated because they were complementary to other investments performed by the government in the electricity sector (the project covered only a portion of the costs required for their functioning, e.g. rehabilitation of access roads, equipment, etc.). Hence it was not possible to isolate the specific impact of the project investments. The benefits of the investments in Component 3 were not incorporated either, due to a lack of information which impeded the realization of a full cost-benefit analysis. However, all costs were considered in estimating the total benefits of the project at the aggregate level.

17

3.3.3 Results of the analysis: The results of the economic analysis at the aggregate level show a NPV of US $ 245.2 million and an Internal Rate of Return (IRR) of 21.2 percent, which indicate that the project had a positive performance in generating value for the Dominican Republic (see table below).

Table 2: Summary of NPV and IRR: Emergency Recovery and Natural Disaster Risk Management Project

Component NPV (USD) IRR

Component 1. Irrigation Improvement $102,408,553 37.45%Component 2. Rehabilitation of 52 MW and repowering 8 MW in Aguacate power plant $151,949,310 25.85%Project total $245,287,788 21.20%

3.3.4 The results of the economic evaluation for Component 1 should be considered as a reference, and not as absolute, due to the lack of primary information on the productive systems before and after the project. For this reason, information was collected through the managers of the Water User Associations, who provided generic information on the production systems they managed. In the absence of information to estimate the benefits of Component 3 and some Component 2 activities, the results obtained from the economic evaluation may be under-estimating the true effects for the country. Lastly, the sensitivity analysis shows that the results of the economic evaluation of the project are robust, indicating positive economic performance even with significant decreases in the incremental flows of benefits. There is a reasonable likelihood that these investments will be operated and maintained better than in the past, in the context of government’s recent prioritization of disaster risk and water sector management, and a follow-up Bank operation under preparation which would consolidate and further build upon ERL project achievements.

3.3.5 Even so, the project faced implementation inefficiencies. Delays, with very late Congressional approval, a common fact in Dominican Republic, and some inefficiencies linked mainly to institutional weaknesses in INDRHI and complex procurement procedures, slowed down project execution and increased management costs, especially for Component 1, as all activities under Component 2 were completed by the end of 2014. Several extensions of the project closing date were required to enable the project to complete the works that had first been prioritized, and for which partial repair would not have permitted the restoration of services nor guaranteed the robustness of the structures. These factors inter alia, account for the rating of Modest for efficiency.

3.4 Justification of Overall Outcome Rating

Rating: Moderately Satisfactory

3.4.1 Relevance: The project was developed after two consecutive natural disasters, to support the country’s efforts to restore critical infrastructure. The rehabilitation works were crucial to reduce risks related to the physical integrity of the infrastructure and improve longer-term resilience to extreme events, as well as to restore services lost (electricity, drinking water, irrigation). Contributing to strengthening INDRHI, in particular with regard to those aspects directly impacting its capacity to manage natural disaster risks, was also necessary. The project was designed on the basis of rapid assessments of needs and costs, which were further evaluated and priorities re-defined during implementation. The Additional Financing permitted the completion of critical works and priority institutional strengthening activities. Relevance was solid at appraisal and continues to be highly relevant today, therefore it is rated Substantial.

18

3.4.2 Efficacy: Overall, the project achieved its objectives of restoring damaged infrastructure using high standards of quality, and filling critical gaps in INDRHI’s capacity for future risk management. The technical quality of the works was maintained as a priority throughout the execution of the activities, with preventive measures and corrective actions systematically taken, when needed. Risk management tools, critical monitoring equipment, were all established using high standards. Capacity building activities for INDRHI were tailor-made and used internationally recognized experts, providing sound guidance and establishing improved conditions for carrying out its mandate. The achievement of PDO is rated Substantial.

3.4.3 Efficiency: The economic analysis showed positive IRR and a high NPV even if not all the benefits could be assessed. However, the project faced implementation inefficiencies with important delays. Efficiency is therefore rated Modest.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

3.5.1 The project indirectly impacted poverty, gender and social development. In the project’s physical/geographic context, irrigation is a pre-condition for the production of staple and nutritious food, which contributes to the national food supply, food security, jobs and revenues in rural areas, where poverty levels are higher than in urban areas. The restoration of the drinking water supply for two important cities with population totaling more than 3.85 million inhabitants impacted the overall population and is a key factor in public health, and in particular for maternal and child health. Dam reinforcement also sought to protect downstream populations from possible rupture and flooding. Lastly, the restoration of the electricity service in the South concerned mainly rural areas and is an essential condition for the economic growth of these areas, as well as living conditions and security.

(b) Institutional Change/Strengthening

3.5.2 In addition to the significant institutional gains in technical and inter-agency collaboration discussed earlier, the project confirmed the important financial, managerial and technical gaps in the water resource management sector. While some key aspects were able to be supported through the project, it still appears critical for the GoDR to more broadly revamp and properly equip INDRHI to ensure that it can comply with its mandate, considering its central role in disaster risk prevention, early warning and management. There were important improvements in inter-institutional collaboration which, given the pre-existing institutional silos, also paved the way for more efficient, country-wide, disaster risk management. In 2016, the WB task team, together with other International Financial Institutions, participated actively in government-sponsored discussions around water management that led the new Government to declare 2016-2020 as the Water Quadriennium (Cuatrinenio del agua) with ambitious reform on legal (one new law on water supply and sanitation, and another law on water management) and institutional re-arrangements.

(c) Other Unintended Outcomes and Impacts (positive or negative)

N/A

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder WorkshopsTwo workshops were conducted in January 2017 with beneficiaries of Component 1 within the framework of the economic and financial analysis. While data collection was the main objective of these

19

workshops, the overall satisfaction on the project’s achievements were expressed by the Water User Groups. See details in annex 6.

4. Assessment of Risk to Development Outcome

Rating: Moderate

4.1.1 Project investments ensured the structural resilience, improved monitoring capacity and operation of infrastructure, but also enhanced the capacity of the responsible agencies to carry out their functions and be better prepared to face future disasters.

4.1.2 From a technical and organizational point of view, CDEEE is well-equipped to ensure the adequate management and maintenance of infrastructure under its responsibility. It faces limited resource constraints because it is able to garner financial revenues from its electricity generation, transmission and distribution services which are partly covered by user fees, and thus maintenance of its infrastructure has not been – and is not expected to be - an issue.

4.1.3 Similarly, CORAASAN and CAASD are also adequately equipped and were efficient in their response to the crisis situation after TS Noel and Olga struck. There is no particular reason for concern that this situation could deteriorate.

4.1.4 INDRHI’s institutional capacity was strengthened in key areas with the support of internationally recognized experts (see Section 3.2). The restored infrastructure benefited from higher technical, engineering and implementation standards than those used in the past, thereby contributing to greater resistance and expected longevity. The functioning of the telemetry network boosting INDRHI’s institutional capacity, and reliance on high tech equipment and skilled operators/technicians, has allowed INDRHI to confirm its position as a critical player in the disaster risk management. This could pave the way for the next level of institutional modernization for INDRHI: becoming a modern, sustainable and service-oriented hydromet agency, which would be crucial to reduce climate vulnerability and enhance early warning systems in the country.

4.1.5 Even so, some uncertainties exist with respect to INDRHI’s capacity to ensure the longer term sustainability of these achievements. While the overall management of INDRHI’s infrastructure was not part of the project’s objectives, budget provision for maintenance remain suboptimal at INDRHI. This was seen in the earlier Hurricane George Recovery Project and mentioned in its ICR. The agency’s shortcomings in human resources management, both in terms of adequate number and skills, also constitute risk factors.

4.1.6 However, as mentioned in section 2.5 and para 3.5.2, it is clear that the current political and institutional context is much more favorable than at the beginning of the project. The new GoDR, which took office in mid-2016, is conscious of the need to improve its capacity to prepare for and respond to natural disasters. In this context, it has assigned top priority to the water sector and requested the Bank to help prepare a follow-up operation designed to consolidate project achievements, further improve institutional capacity, and finish some works initiated by the project. This denotes a commitment to strengthen water resources management and reduce the country’s vulnerability to extreme hydro-meteorological (and future climate) events. Disaster risk mitigation and resilience are now also among the core topics driving support to GoDR by international partners beyond the Bank, like the European Union

20

(EU)10, United States Agency for International Development (USAID)11, United Nations Development Program (UNDP)12 and Inter-American Development Bank (IDB)13, among others.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry


5.1.1 Project preparation and signature of the ERL legal documents were both expeditious and efficient, completing the cycle to Board in less than three months. The Bank engaged a group of highly skilled internal and external sectoral experts to support the Client in first assessing the extent of the damage and then defining the scope and categories of activities to be financed. Considering the conditions for project preparation in a post-disaster context and extensive destruction across a broad territory, as well as the tight timing for project preparation and approval, the project document was of good quality, while understandably, not optimal and this is explained in previous sections. The project engagement period was in particular under-estimated, and the monitoring and evaluation aspects may have had lower priority. The Bank conducted three missions between Board approval and effectiveness, guiding the implementing agencies on their staffing and organizational arrangements, advancing procurement planning, and the mechanism for retroactive financing, as well as providing training to the INDRHI and CDEEE implementing units on financial and procurement management, the Operation Manual, and technical requirements for the categories of works anticipated.

(b) Quality of Supervision


5.1.2 The project spanned seven and one half years following effectiveness. The Bank provided intensive support especially in the project’s first years up to the Mid-term Review (MTR), with six supervision missions conducted between May 2009 and November 2010. A total of 24 in-country supervision missions were conducted through project closing, averaging three per year. The project had four Bank task team leaders (TTLs), and importantly, continuity was ensured by the permanence of key technical/sector experts. This proved beneficial in developing relationships of trust with the Client and in facilitating the identification and resolution of issues, as well as in bridging the transition periods when the Bank’s TTL changed. The experience and institutional memory of Bank sector specialists were invaluable in maintaining project momentum. The Aide-Memoires provided detailed reporting on the issues faced, action plans and follow-up, and the major effort made to accelerate project execution during and in-between missions. The Bank was also pro-active in finding additional resources to complement capacity building activities at INDRHI: US$ 90,000 from the Water Partnership Program trust-fund helped to support the strengthening and modernization of INDRHI’s water resources monitoring and analysis system and its improved integration in 2010 within the national early warning system network for disaster preparedness and response. The Bank team was particularly strong in providing the technical 10 https://eeas.europa.eu/delegations/dominican-republic/18713/la-union-europea-fortalece-la-capacidad-nacional-para-la-gestion-de-riesgos-de-desastres_en11 https://www.usaid.gov/documents/1862/dominican-republic-climate-change-vulnerability-assessment-report1211 http://www.latinamerica.undp.org/content/rblac/en/home/ourwork/climate-and-disaster-resilience/overview.html1312 http://www.iadb.org/en/topics/natural-disasters/natural-disasters,1441.html

21

advice and support critical for the many complex works, ensuring that highly qualified specialists supported the Client, in focusing on the capacity building areas considered most strategically important in a post-disaster context and in exerting pressure when appropriate to maintain quality and momentum.

5.1.3 The Bank team concentrated efforts on solving issues that occurred during the project life implementation (See section 2.2) using proactive and adaptive approaches, at the expense of monitoring and evaluation aspects, even after the Results Framework was revised in late 2011. The Bank team could also have better anticipated the need for specific data to carry out a more comprehensive ex-post project evaluation given the absence of an economic and financial evaluation at appraisal.

5.1.4 On the fiduciary side, financial and procurement specialists provided continuous support. Dealing with two separate PIUs under the same project presented challenges. The Bank organized multiple training events to explain Bank procedures and tools, particularly after effectiveness and when there were staff changes in the implementing agencies. Remedial actions were systematically demanded by the Bank team when irregularities were detected (see para 2.4.4). However, the impact of some decisions on procurement seems not to have been sufficiently assessed and resulted in lengthier procedures and further implementation delays (see para 2.2.4). The occurrence of some delayed Bank responses to some Borrower’s requests for non-objection were also specifically noted by INDRHI and CDEEE.

5.1.5 Environmental Safeguards were appropriately monitored. With respect to Social Safeguards, the Bank team may have anticipated and prevented irregularities that occurred within INDRHI’s activities (See para 2.4.2), if OP 4.12 (involuntary resettlement) had been triggered project-wide when processing the Level 1 restructuring linked to CDEEE activities. Nevertheless, the Bank team took rapid action when INDRHI was found to be in non-compliance regarding the displacement of people, an element not covered at that time by a Bank pre-approved Resettlement Plan.

(c) Justification of Rating for Overall Bank Performance


5.1.6 This rating balances a series of strong performance factors at both the project design and implementation phases against certain caveats relating inter alia, to design choices, cost estimation and the engagement period, along with aspects of project implementation which needed more attention, especially M&E and the Bank’s procurement responsiveness.

5.2 Borrower Performance

(a) Government Performance


5.2.1 The Government demonstrated a strong and continuous commitment to the project, even though some aspects of the Presidential transition and appointment of a new Minister of Finance (as well as the two Directors of CDEEE and INDRHI), temporarily stalled progress at the time of the Additional Financing. Some complex internal procedures related to budget allocation and budget ceiling rules also resulted in delays in processing project extensions of the closing date, and also affected INDRHI’s financial capacity to carry out its program of activities according to schedule.

5.2.3 Conversely, on the Parliament side, despite the emergency nature of the project, there was no expedited process for approval of the loan/project, which resulted in the Loan Agreement (LA) of the

22

original project becoming effective only a year later in May 6, 2009 14. Delays in parliamentary approval of Bank projects are common in the DR and were not particular to this project15. The Government together with the Bank tried to propose solutions to accelerate Parliament approval of the project which did not materialize. Eventually, persistence of the Government and the Bank to communicate with the legislator resulted in the approval of the loan/project.

(b) Implementing Agency or Agencies Performance


5.2.4 All agencies - INDRHI, CDEEE, CORAASAN and CAASD - actively participated in/contributed to, project preparation. After retroactive financing was finalized with CORAASAN and CAASD, these agencies effectively ended their participation. The core of the project essentially involved CDEEE and INDRHI which had respective PIUs working independently (collaboration but no overall project coordination).

5.2.5 CDEEE: Despite some initial delays, due to staffing issues and resignation of the Director, changes in PIU staff, as well as insufficient procurement personnel, CDEEE managed to correct deficiencies, hired the required personnel and finalized works almost in accordance with what had initially been scheduled. Given its good managerial capacity, it was able to react effectively and overcome procurement difficulties linked to delays between tendering and contracting, as well as right- of-way issues and complaints. It also changed the approach for the supervision of works through the hiring of an independent inspection body, which contributed greatly to accelerating the works while ensuring their required quality.

5.2.6 INDRHI: Initially, a conjunction of changes in leadership and PIU staff turnover, lack of technical and managerial capacity, and important budgetary constraints (no capacity to finance activities - even in part - without the project’s financial support) affected the progress of INDRHI’s designated activities, despite its firm ownership of the project over time. Significant improvements were only noted after a new management team took over the project in July 2012, following which INDRHI’s PIU progressively improved its performance and recuperated some of the delays. Reactivity, planning and overall procurement/contract management capacity increased significantly.

(c) Justification of Rating for Overall Borrower Performance


5.2.7 The Borrower implementing agencies showed uneven capacity and performance. CDEEE managed its part in a Satisfactory manner. In the case of INDRHI, a key factor improving performance was the change in leadership in mid-2012, which was supported closely by the Bank team. This change enabled INDRHI to address critical deficiencies and ultimately move its portion of the project forward, justifying a Moderately Satisfactory rating. Overall Borrower Performance is therefore rated Moderately Satisfactory.

1413 Congress ratified it on March 23, and the legal opinion on the Loan Agreement as well as on the subsidiary agreements between the Ministry of Finance and CDEEE as well as between the Ministry of Finance and INDRHI were only provided on April 28, 2009 by the country’s attorney general.15 The six active projects at the end of 2008 all faced effectiveness delays between 15 to 19 months.

23

6. Lessons Learned

Weak institutional capacity and the large volume of activities involved in disaster reconstruction require exceptional effort from the GoDR and the Bank to support the client as well as adequate time and resources. Duration of a project should be commensurate with the type and volume of activities to be implemented in particular when complex infrastructure is envisaged, to allow activities to be conducted to a high standard of quality. This involves the evaluation of impacts, prioritization of activities, realistic planning and budgeting, reviewing complex technical specifications and reports, and constantly advising on best options. Procurement support - where multiple civil works contracts need management – is especially crucial. Skilled Bank specialists are also essential to ensure continuity of service and build trust over time with the Client.

When designing the implementation arrangements, careful consideration is required of the tradeoffs implied by the involvement of multiple implementing agencies in project execution. The key decision is whether to have one or multiple PIUs. Under the Hurricane George Recovery Project, a joint coordination unit was selected, but in practice this hindered project implementation by reducing operational flexibility. This directly influenced the ERL’s decision to have separate PIUs. However, it is clear that where fiduciary capacity is weak in one (or more) implementing agencies, the lack of centralization of fiduciary management can also negatively impact overall project performance and efficacy. Full independence of PIUs may also result in a lack of accountability project-wide, create constraints for supervision including auditing with higher transaction costs, and hinder project-wide evaluation.16

Even in the case of an emergency project designed to respond quickly to a government post-disaster, due consideration should be given to data collection for monitoring and evaluation purposes, including impact evaluation and economic and financial assessments. When not feasible at preparation stage, teams should ensure that relevant data be collected at the beginning of the project implementation and throughout the project life, to allow for the characterization of the situation without project/baseline, as well as in situations with project, following statistical methodologies. Likewise, it is recommended that the processes of project formulation and evaluation be improved, allowing them to go deeper into the technical and budgetary detail in the pre-investment phase, in order to specify the investment, maintenance and operational costs of the projects, and avoid overcharges due to the under-estimation of cost items. Lastly, it is suggested that scenarios of expected inflation in the cost of the items be incorporated, which may permit the effects of budget deficits caused by the loss of value of money to be limited.

While the focus is often placed on respective agencies’ role, preparedness and response capacity - which are indeed critical and complex - the political and legal context should not be overlooked. Institutional capacity building for improved risk management is a lengthy process and involves behavioral changes in the management and staff that should not be underestimated. Equally important is ensuring that specific legal provisions and procedures exist in all countries, especially those prone to disasters - to allow for expeditious processing of reconstruction programs when a disaster occurs, including the capacity to rapidly allocate exceptional budgets and approve emergency projects. In the absence of national decision making mechanisms allowing for a rapid approval of a loan/project in a context of a

16 The new project is considering the option of having a unique fiduciary team for the project (within Ministry of Economy), but technical inputs could come either (i) from teams that are still working within the line ministries; in this case, the PIU would have a limited technical staff (maybe a coordinator); or (ii) from technical teams hired by the project.

24

disaster, the opportunity to use Bank Investment Project Financing instruments should be carefully assessed. Mechanisms such as CAT-DDO or contingency IPF may be alternative bank instruments to consider to ensure a more rapid effectiveness and response to disaster.

Not all contracts are of strategic or financial interest for international civil works companies, and the chances of attracting such companies should be carefully weighed. Procurement methods need careful selection. A decision to bundle activities to attain the minimum procurement thresholds calling for international competitive bidding can result in significant and avoidable delays. In the DR ERL context at least, when envisaged construction corresponds essentially too many small, geographically-dispersed works of variable/moderate technical content/nature, national companies are a better option.

Business as usual is not an option when an abnormal amount of work and specific skills are required under a short time-frame, e.g. in a post-disaster context. This is particularly critical in the early phases of project implementation where detailed preparatory work (topography studies, in-depth assessment of damage and needs, design) is required as the basis for the proper execution/completion of works. Failure to adjust in-house staffing of the implementing agencies, instead of hiring temporary staff, including international experts to compensate for the lack of local capacity, can result in much higher downstream costs (re-doing studies, and dealing with additional damage linked to the vulnerability of compromised infrastructure) and loss of time. Implementing agency staffing needs to be adjusted to post-disaster management needs.

Cutting-edge technology and capacity in early warning systems and the forecasting of disaster impacts are necessary but not sufficient tools to prevent or mitigate the impact of disaster. The Dominican Republic especially, needs to re-focus its attention on integrated water resource management (including operation of large hydraulic infrastructures) at watershed level and the strategic establishment and management of protective civil works in order to reduce the occurrence and magnitude of disasters like floods and landslides. Government, with Bank support, should adopt such approaches using a broader landscape approach, while continuing to enhance the overall capacity of the relevant institutions in disaster planning and management.

25

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies

No issues were raised by the implementing agencies on the Draft ICR. Letters from CDEEE and INDRHI are attached in annex 7.

(b) Co-financiers

N/A

(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)

N/A

26

Annex 1. Project Costs and Financing

a) Project Cost by Component (in USD Million equivalent)17

A- Original Financing (Loan N°7546)

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

C1- Rehabilitation and Risk Management in the Water Resources Sector

34.35 35.33 102.8%

C2- Rehabilitation and Risk Management in the Electricity Sector 33.95 38.21 112.5%

C3- Rehabilitation of Water and Sanitation Infrastructure in Santo Domingo and Santiago 3.5 5.04 144%

Unallocated 8.0 - -

Total Baseline Cost 79.8 79.38 99.3%

Physical Contingencies 0 0 -

Price Contingencies 0 0 -

Total Project Costs 79.8 79.38 99.3%

Front-end fee PPF 0 0 -

Front-end fee IBRD 0.2 0.2 100%

Total Financing 80.0 79.58 99.3%

17 At the time of the ICR, accounting was incomplete – Some funds were still to be returned by INDRHI to the Bank but the exact amounts were unknown, hence total might be affected- Withdrawal applications deadline, originally set for Feb. 28, 2017 had been extended to April 30, 2017.

27

B- Additional Financing (Loan N°8090)

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)



11.7 13.02 111.3%

C2- Rehabilitation and Risk Management in the Electricity Sector 6.1 6.66 109.2%

C3- Rehabilitation of Water and Sanitation Infrastructure in Santo Domingo and Santiago 0 0 -

Unallocated 2.15 - -

Total Baseline Cost 19.95 19.93 99.9%

Physical Contingencies 0 0 -

Price Contingencies 0 0 -

Total Project Costs 19.95 19.93 99.9%

Front-end fee PPF 0 0 -

Front-end fee IBRD 0.05 0.05 100%

Total Financing 20.0 19.98 99.9%

28

C- Summary Total Financing per component (Original and Additional Financing)

Components

Actual/Latest Estimate Original

Financing (USD millions)

Actual/Latest Estimate Additional

Financing (USD millions)

Total Project (Original and

Additional Financing)

(USD millions)


35.33 13.02 48.35

C2- Rehabilitation and Risk Management in the Electricity Sector 38.21 6.66 44.87

C3- Rehabilitation of Water and Sanitation Infrastructure in Santo Domingo and Santiago

5.04 0 5.04

Unallocated - - -

Total Baseline Cost 79.38 19.93 99.31

Physical Contingencies 0 0 0

Price Contingencies 0 0 0

Total Project Costs 79.38 19.93 99.31

Front-end fee PPF 0 0 0

Front-end fee IBRD 0.2 0.05 0.25

Total Financing 79.58 19.98 99.56

29

(b) Financing

A- Original financing (Loan N°7546)

Source of Funds Type of Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)


Borrower 0 0 0

International Bank for Reconstruction and Development (IBRD)—7546 Loan 80.0 79.58 99.47%

B- Additional Financing (Loan N°8090)

Source of Funds Type of Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)


Borrower18 0 0 0

International Bank for Reconstruction and Development (IBRD) - 8090 Loan 20.0 19.98 99.9%

18 CDEEE put in USD 20.0 m plus of its own budget resources to fill the financial gap estimated in 2011, which was partially covered by the additional financing allocation (USD 6.1) in order to finalize works (see Table 7).

30

(c) Links between Project Costs and Financing

The following table summarizes the total costs and financing per component, before and after the additional financing.

Project Component

Original Allocatio

n

Distribution Unallocated funds

Total Allocation FY 2011

Estimated total

financing required

(Sept 2011)

Total AF Allocation

Total Financed with AF

AF share of total

allocation

Financed through

other sources

Component 1, INDRHI

34.35 1.8 36.2 47.85 11.7 47.9 24.4% -

Component 2, CDEEE

33.95 4.65 38.6 63.39 6.1 44.7 13,6%

CDEEE self-

financed the US$ 20.75M

gap

Component 3, CORASAAN /CAASD

3.5 1.54 5.04 - 0 5.04 0% -

Unallocated project funds

8.0 0 0 - 2.15 2.15 - -

Front-end fee

0.2 0 0.2 - 0.05 0.25 - -

Total 80.0 8.0 80.0 - 20.0 100.0 20% -

Adapted from the Additional Financing Project Paper

31

Annex 2. Outputs by Component

This section provides an overview of the main results of the project by component. It reports achievements following the description of activities per subcomponent as stated in the original Project Paper, and, when relevant, the Additional Financing.

Component 1: Rehabilitation and Risk Management in the Water Resources Sector

Subcomponent 1.1: Rehabilitation and Reconstruction of Damaged Infrastructure

Retroactively financed emergency works completed in response to the disaster:

INDRHI realized a number of infrastructure rehabilitation before the project was approved that were retroactively financed. These consisted in urgent repairs to the following irrigation schemes, which contributed to the restoration of irrigation and drainage services benefiting 8,764 farmers on 16,763 hectares.

Table 3: Summary of site with interventions retroactively financed (INDRHI)

No. Description of the works Location Irrigation area (ha)

Beneficiary farmers

1 Rehabilitation of the Main Canal Ysura and segment Villarpando-Los Toros. Azua

11,339 5,998

2 Improvement Rio Nizao en Rancho Arriba- en San José de Ocoa

San José de Ocoa

- -

3 Rehabilitation of Canal San Ramón, Tamayo Bahoruco 321 163

4Rehabilitation of Canal Nizao Najayo in discontinuous segments and construction of the siphon Canal Nizao-Najayo

Peravia2,440 952

5 Rehabilitation of Santana embankment Bahoruco 1,940 1,466

6 Protection and improvement of Rio Juma and construction of Canal Yuna-Bejucal. Monseñor Noel

498 98

7 Reconstruction of the wall of Rio Yuna, Los Platanitos. Duarte - -

8 Rehabilitation of intake structure Trujillo and improvement of channel Rio Yaque del Sur. Barahona

225 87

TOTAL 16,763 8,764

32

Reconstruction and strengthening works required to restore irrigation and water storage infrastructure:

The works described below correspond to the core activities implemented during the project lifetime. They included works on irrigation schemes, and four large dams.

Irrigation systems: The works carried out under the project resulted from: (i) prioritization exercises carried out after project effectiveness to select works from among the tentative list mentioned in the original Project Paper, which had been established based on rapid assessments of damage soon after the TS Noel and Olga; and (ii) a number of further adjustments of these works done on the basis of the results of more detailed preliminary studies for these works (soil, topography), and sometimes unforeseen constraints discovered once works had started, necessitating re-designing and re-establishing priorities based on the available budget. Not all the lots were managed at the same time. Some were also de-listed to allow other works that had started to be finalized.

By the end of the project, 10 lots including 16 irrigation systems had been restored, benefiting an area of 20,455 hectares of irrigated command area for 10,015 beneficiaries (members of the related water user associations). For the lots financed with the funds from the Additional Financing, “AF” is mentioned next to the Lot number.

Table 4: Summary of sites with interventions carried out after effectiveness (INDRHI)

No. Description Location Irrigation area (ha)

Beneficiary farmers

1 Rehabilitation of Canal Cambronal. Lot 1 Bahoruco 1,782 309

2 Rehabilitation of Canal Cristóbal. Lot 1 Bahoruco 1,940 1,466

3Rehabilitation of the pumping systems of Sabaneta-Artibonito, Sabaneta-Macasías, Guayabo, El Hoyo y Rio del Padre, Lot 3

Elías Piña 267 415

4 Rehabilitation of Canal Matayaya, Lot 4. Las Matas de Farfán 817 120

5 Rehabilitation of Canal El Llano, Lot 4 Elías Piña 1,645 758

6

Rehabilitation of embankment and intake structure of Canal Mijo y reconstruction of the lateral (secondary) Canal Las Charcas, Lot 5

San Juan 2,120 920

7 Rehabilitation of hydraulic structures of Lots 6 and 7 (AF) - Irrigation system of Padre Las Casas I y II.

Azua, San José de Ocoa y Peravia

3,260

284

8 Rehabilitation of hydraulic structures of Lots 6 and 7 (AF) - Uniting Canal Ocoa. 182

9 Rehabilitation of hydraulic structures of Lots 6 and 7 (AF) - Canal Marcos A. Cabral 2,747

10 Rehabilitation of hydraulic structures of Lots 6 and 7 (AF) - Canal Nizao-Najayo. 952

11 Rehabilitation of structures of Lot 8 (AF) - Canal Yuna-Cañabón. Monseñor Noel 840 130

33

No. Description Location Irrigation area (ha)

Beneficiary farmers

12 Improvement of Río Camú in the siphon Jima-Camú, Lot 10 (AF) La Vega 1,675 758

13 Rehabilitation of Canal, including Las Rosas pumping station, Lot 10 (AF) La Vega 540 157

14 Rehabilitation of tertiary canal Los Cáceres of Canal Jicomé, Lot 14 Valverde Mao 736 16

15 Rehabilitation of the secondary Canal 25.53. Lot 14 Valverde Mao 552 41

16 Rehabilitation of the intake structure and system of floodgates Canal Roselia, Lot 14 Montecristi 3,716 565

17 Rehabilitation of embankment Jayán and canal La Gina. Lot 15

Miches- El Seybo 338 116

18 Rehabilitation of embankment Arroyo Rico. Lot 15

Miches- El Seybo 228 79

TOTAL 20,455 10,015

The geographical location of these lots and representation of the segments of the irrigation systems restored, are shown on map at the end of the document. It demonstrates the nationwide coverage of the activities carried out by INDRHI.

Dams: The project planned the restoration of infrastructure related to four large dams: Tavera, Chacuey, Jiguey and Maguaca. Works included the reinforcement of structures such as embankments and protection walls, rehabilitation of spillways, renovation of drainage systems, and ancillary works (fencing, access roads, and other as required). All works were submitted to prior-review by an international consulting panel on dams. Works were accompanied by in-depth studies to evaluate each of the four dams’ security conditions and their status with regard to sedimentation and water quality (necessary to estimate the life expectancy of the structures).

The project also financed dam instrumentation intended to improve monitoring and early warning systems, including piezometers monitoring ground water levels, and accelerographs detecting ground motion potentially damaging the infrastructure in case of an earthquake. These studies and equipment are also important contributors to the objective of strengthening risk management, mentioned under subcomponent 1.2.

All works were completed as planned for the dams of Tavera and Jiguey. Work plans had to be modified in Chacuey due to the discovery of cracks on the dams’ crest that required further studies and prevented intervention on part of the infrastructure (See footnote in section 2.5.1). Additional consolidation works are expected to be implemented with financing from the Bank follow-up project under preparation. Works on Maguaca could not be completed due to the contractor’s deficiencies leading to a litigation process. The follow-up project will also ensure the finalization of remaining works for Chacuey (drainage) and Maguaca (spillway and intake of irrigation canal).

34

Technical audit of completed works:

There was no external technical audit carried out on this component. This was justified by budget shortages.

Subcomponent 1.2: Strengthening of Risk Management Systems, Purchase of Technical Monitoring Equipment, and Development of System Maintenance Program

This sub-component sought to improve INDRHI’s capacity for watershed management and water-related infrastructures operation and maintenance. The activities carried out for each of the areas envisaged by the project are described below.

Improvement of dam safety operations, integrating the meteorological early warning system into operational procedures:

Critical studies were conducted for the improved management and operation of dams. These included: (a) bathymetry and sedimentology studies on the dams of Tavera, Bao, Monción, Jiguey, Valdesia,

Hatillo, Rincón y Sabana Yegua; (b) the development of a Manual for dam operations, dam safety, maintenance and contingency plans

for the complexes of Tavera-Bao-López; Jiguey-Aguacate-Valdesia-Las Barias; Sabana Yegua; Hatillo; and Monción; and,

(c) an institutional strengthening proposal for the dam safety department at INDRHI.

Improvement of the system for management and distribution of water resources management information to stakeholder agencies:

A study was initially conducted to support the development of a national hydro-meteorological information system linked to the telemetry stations (see next point).

The information system was then developed including the installation of hardware and software, programming of instruments for data management and the staff trained to operate and use the information system. It includes data related to hydrometry, underground water, rainfall, meteorology, water level and quality in reservoirs, surface water quality, sedimentology, tide gauge, and irrigation canals. It permits connectivity with other hydro-met information systems, among which ONAMET and EGEHID. All data is expected to be accessible via internet as soon as the last stations are installed and the calibration of the entire system is done. The system also integrates real-time data provided by the telemetry system via satellite.

Support for the rehabilitation and strengthening of the national meteorological monitoring and early warning system, through the purchase and installation of critical repairs and equipment:

The project significantly improved the conventional and telemetry system, instrumental for disaster risk management. It included:

(a) preliminary studies to analyze the system in place, strengths and weaknesses, and recommend actions to develop a fully operational hydro-meteorological system covering the entire country, and able to provide real-time data required to make informed decisions to mitigate the impact of extreme weather events. It informed the design and requirements for the provision and installation of the equipment mentioned in (b). These studies were financed through the WPP grant. The main studies “INDRHI–Hydrological-Hydro-meteorological Instrumentation, Data

35

Transmission, Maintenance and Support”, and “Hydrologic Information System”, were produced in 2010, and established recommendations to enhance the monitoring network, particularly with regard to: the early warning system, detailing location of stations considered of high priority for the system, and stations that should be added or eliminated; improvement of each of the different networks operated by INDRHI including: weather stations, rain gauges, flow measurement stations, and groundwater monitoring network; system maintenance requirements and annual maintenance plan with estimated cost schedules; data sharing between INDRHI and other entities identified during meetings and workshops; repair and equipment purchase specifications; and, equipment rehabilitation and installation plan.

(b) 64 remote telemetry stations were installed, and two master stations established in the INDRHI’s offices of Santo Domingo and Santiago equipped with essential IT instruments and software to centralize and analyze climatic, water level and water quality data. Staff were trained to operate the system. Of the 64 stations however, 14 were partially vandalized (a recurrent problem in the country), then disassembled and stored in safe place for future re-installation when secure conditions will be ensured. Additional protection was provided to the other stations in place.

(c) The conventional hydro-meteorological network was improved, with required instruments purchased and installed to replace those missing or out-of-order. In the case of the telemetry stations, protection equipment – fencing - was also established.

Review and strengthening of system maintenance and operations procedures and requirements; and, development of an irrigation system maintenance and management plan:

These two closely related elements were addressed in other studies mentioned above. The project supported analyses leading to recommendations but didn’t include some financial support for their implementation.

Assistance with the development of a public education program on water resources and watershed management:

This activity was not concluded. The team instead focused on a study, which was deemed more relevant, on communication and education on flooding risk management.

The project financed other aspects that were not well spelled-out in the description of the subcomponents, but which were considered priorities for INDRHI’s institutional capacity strengthening. These included:

(a) INDRHI’s needs assessment for its strengthening were analyzed through multi-agency workshops establishing recommendations on priority areas for improvement; and, a study on needs assessment and institutional modernization and development plan for execution in 2011 and beyond (with WPP grant funding);

(b) Renovation of buildings and IT equipment for INDRHI’s main office in Santo Domingo, including to host the master station of the telemetry network; equipment for field/operational work (including vehicles, GPS, other); and small laboratory equipment; and,

(c) Strengthening of inter-agency cooperation: the project brought the two agencies together on the dam safety, early warning system and contingency plans issues. An inter-institutional agreement was signed between INDRHI and CDEEE at the beginning of the project as part of the conditions for effectiveness, “coordination agreement for the rehabilitation tasks of dams and hydro-

36

electrical plants between INDRHI and CDEEE”. The improved collaboration established during project implementation led to the signature of another collaboration agreement between INDRHI and EGEHID in 2014, with permanent validity: “convention for reciprocal collaboration between EGEHID and INDRHI in regard to the early warning system against floods”. Access to better hydro-meteorological data by CDEEE also improves its capacity for disaster risk management. In addition, Committees and other agencies/centres involved in disaster risk management, like COPRE, ONAMET, CNE and COE, which use INDRHI’s data are also directly benefiting from the project’s investments.

Component 2: Rehabilitation and Risk Management in the Electricity Sector

This component, executed under the coordination of the Dominican Corporation of State Electrical Companies (CDEEE), was intended to restore priority electricity infrastructure and make improvements needed in the short term in the areas affected by Tropical Storms Noel and Olga, and to strengthen the sector’s ability to respond to natural disasters. It included four subcomponents:

Subcomponent 2.1: Rehabilitation of Generation Capacity.

This subcomponent financed: the rehabilitation of hydroelectric generation facilities operated by the Dominican Hydroelectric Generation Company (EGEHID), damaged by the tropical storms as well as some dam infrastructure and ancillary works (access roads, equipment) related to these power generation infrastructure. The following power generation works were financed:

(a) Rehabilitation of the Aguacate power plant permitted the recovery of its full, original generation capacity (52 MW) and upgrade of 8MW, allowing for the generation of a total of 60 MW. This was one of the two main achievements under this sub-component -Aguacate and Las Barias, see point (c) below-. This power plant could enter into operation in September 2012. Had this plant not been restored, it would have cost US$ 39.42 million for the purchase of the equivalent energy produced in just one year (based on energy costs from September 2012 to October 2013). In comparison, project investments permitted the realization of the 60MW potential, costing US$ 17.2 million. Beneficiaries of this plant were estimated in 2014 at 592,667 inhabitants.

(b) Associated activities included: installation of reservoir equipment, rehabilitation of the irrigation pipes, repair of two turbines, installation of a cooling system, improvement of the fire protection system, and power transformers; upgrade of the command and control panel, as well as the system of direct current, equipment for low and medium voltage systems, improvement of the ventilation and air conditioning system, modernization of the crane, installation of an operational emergency generator, replacement of old cable trays, verification of the two main transformers, and painting works.

(c) Restoration of Las Barias dam, a strategic infrastructure required for the operation of Las Barias (0.85 MW capacity) and Valdesia (54 MW capacity) power plants. It is also essential for supplying water to the irrigation system of canals Marcos A. Cabral and Nizao-Najayo. The investments included the replacement of two new flood-gates, and their automatic equipment (elevation system, electric system of command and control, and replacement of old electric cables). These activities amounted to US$ 5.4 million.

37

(d) Rehabilitation of the small power plant of Nizao-Najayo, permitting the recovery of their generation capacity of 0.33 MW. Works included rehabilitation of the electric generation equipment, as well as access roads.

(e) Realization of ancillary works related to the power plants of Rio Blanco, Los Anones, Aniana

Vargas, Valdesia, Subana Yegua, and Jiguey. These consisted mostly in reconstruction of access roads, as well as covering transport and other operating costs, and small-scale equipment.

The resources used to retroactively finance CDEEE expenditures before the Bank loan was effective and those disbursed for expenditures incurred after that date contributed to the restoration of the plants with their generation capacity as indicated in the following table. Project resources did not cover in each case all the costs enabling the operation of the plants nor were they necessarily the main source of funds required to complete those repairs. Those cases are mentioned in the table as “contribution”. Activities financed through the retroactive financing mechanism are indicated as “Retro”.

Table 5: Summary of electric generation sites with interventions financed retroactively and post effectiveness (CDEEE)

Capacity Installed

MWContribution Principal

AguacateIn operation since 2012. Included an upgrade of the generation capacity from its original value 52MW to 60M.

60 60

Valdesia In operation since 2009 (Retro) 54 54

Las Barias

Rehabilitation of the reservoir necessary to guarantee the operation of the Las Barias Hydroelectric Plant, generation at the Valdesia plant and supply of the irrigation system of the canals Marcos A. Cabral and Nizao-Najayo.

0.85 0.85

Nizao-Najayo In operation since 2009 (Retro) 0.33 0.33Aniana Vargas In operation since 2009 (Retro) 0.6 0.6Jiguey In operation since 2009 (Retro) 98 98Sabana Yegua In operation since 2009 (Retro) 13 13

Rio Blanco In operation since 2009 (Retro) - Road access rehabilitated 25 25

Los Anones In operation since 2009 (Retro) 0.11 0.11

TOTAL 251.89 137.04 114.85

Hydroelectric Power Plants

Rehabilitation progress status (Data from 2009, adjusted)

Attribution to the project

MW

Subcomponent 2.2: Rehabilitation of Transmission Capacity.

This subcomponent was initially planning to finance the rehabilitation of the Dominican Electrical Transmission Company (ETED) transmission lines with the rehabilitation of three transmission lines of 69 kV for a total length of 152 km in the southern region (as per the original Loan Agreement).

The project ultimately financed the rehabilitation of the electric lines on the following segments of the transmission network in the South. The number of beneficiaries (as per the report from 2014) is also indicated in parentheses. In total, 1,022,644 inhabitants benefited from these investments.

- 15 Azua – Sabana Yegua – San Juan (592,667)- Cruce Cabral – Duvergé – Damas (370,880)

38

- Cruce Cabral – Vicente Noble (16,772) - Subestación Goya – Yaguate (42,325)

The works were grouped in three lots for procurement purposes. The summary of activities and results are provided in the table below. The target was achieved with the totality of the lines having been restored as planned.

Table 6: Summary of electric transmission sites with interventions (CDEEE)Lot Segment of transmission line Length contracted

(km)Length built (km) Activities carried out

1 Cruce Cabral-Duvergé-Las Damas

52.14 53.03 - Removal of old poles and installation of new ones

2 15 de Azua-Sabana Yegua 42.00 41.77

Sabana Yegua-San Juan de la Maguana

26.50 20.22 -Installation of conductors and cables

3 Cruce Cabral-Vicente Noble 25.00 24.15

Subestación Goya-Yaguate 7.90 8.04

TOTAL 153.54 147.21

Subcomponent 2.3: Rehabilitation of Distribution Capacity.

This subcomponent financed the activities related to the rehabilitation of electricity distribution by the companies EdeNorte and EdeSur in the aftermath of TS Noel and Olga. These were all retroactively-financed. Financing included material and equipment needed to repair damage as well as operating cost (fuel, staff, fees, etc.).

Subcomponent 2.4: Strengthening Capacity to Respond to Natural Disasters.

Under this subcomponent, the project financed costs related to: (i) project implementation including equipment for the PIU (office equipment and vehicles), social specialist consultancy, operating costs, as well as external financial audits ; and (ii) consulting services to ensure the technical quality of rehabilitation works (technical supervision and audit).

With regard to the enhancement of the electricity sector’s capacity to respond to emergencies caused by natural disasters, mentioned in the Project Paper, the project focused on the inter-sectoral collaboration between institutions - in particular between INDRHI and EGEHID - to ensure synergies and mutual support in preparing and responding to natural disasters (see also 1.2). Component 3: Rehabilitation of Water and Sanitation Infrastructure in Santo Domingo and Santiago

This component sought to restore storm-affected water and sanitation services to the cities of Santiago and Santo Domingo. It included two sub-components:

Subcomponent 3.1. Retroactive financing of emergency relief in Santo Domingo

39

This subcomponent consisted of retroactive financing of emergency spending on water purification chemicals (such as chlorine and aluminum sulfate) used immediately following the storms, as well as extraordinary purchases of gasoline used for delivering potable water to the affected population in the wake of the storms.

Annex 3. Summary of the Economic and Financial Analysis

Emergency Recovery and Disaster Management Project, Dominican Republic

1. Context

3.1 In October and December 2007, two tropical storms struck the Dominican Republic. About 6,000,000 people or 70 percent of the population were directly or indirectly affected. Infrastructure - particularly that related to water resources management, transportation and energy - was heavily damaged, leading to impacts in key sectors such as agriculture, electricity, drinking water, and sanitation. Hardest hit were small agricultural operations and subsistence farmers, as well as rural and peri-urban residents. In order to accelerate the reconstruction process, the Government of the Dominican Republic signed two loans with the World Bank in 2008 and 2012 to implement the Emergency Recovery and Disaster Management Project. The objectives of the project were: (i) restoring and rehabilitating water resources, electricity, water, and sanitation infrastructure damaged by the storms, or at risk of damage from future storms, and, (ii) reducing vulnerability to future disasters in the National Institute of Hydraulic Resources (INDRHI) and the Dominican Electricity Commission (CDEEE). The key expected outcomes of the project were: (i) 11,577 hectares with irrigation services restored; (ii) four dam facilities rehabilitated with revised operational procedures to minimize impacts of future disasters; (iii) 152 kilometers of transmission lines restored and improved to disaster-resistant standards; (iv) 254 megawatts of hydroelectric generation capacity restored; and (v) operation of Santiago wastewater treatment plant restored. The project included three components:

- Component 1. Rehabilitation and Risk Management in Water Resources Sector- Component 2. Rehabilitation and Risk Management in Electricity Sector- Component 3. Rehabilitation of Water and Sanitation Infrastructure in Santo Domingo and

Santiago

2. Objectives of Economic and Financial Analysis

3.2 The Emergency Recovery and Disaster Management Project has just concluded and an economic and financial analysis of the results is needed to assess their efficiency, that is, to study and conclude whether the costs involved in the achievement of project goals were reasonable compared to the benefits.

3.3 For Component 1, the methodology which was used to evaluate the benefits corresponds to the Marginal Productivity Method, consisting of estimating the net present value (NPV) of the highest agricultural production compared with a scenario "without project" based on access to water through restored irrigation systems. This method considers water as an intermediate input in the production of agricultural products and is based on the principle that the farmer maximizes his profits by using water (as well as any other productive input) to the extent that the marginal net income generated by using an additional unit of water is equal to the marginal cost of obtaining this additional unit.

y j=f (A ,OT )Where:

yj= yield per hectare of crop

40

A= availability of water per hectareOT= others inputs

Therefore, the greater availability of water after the project allows farmers to increase their agricultural production compared to the situation before the project. The economic benefit will be the difference of the net income between the situation after the project and the situation before project:

BEA=∑j

n

( p¿¿ j¿¿ y jcp−CT j)∗ha j−∑

j

n

( p¿¿ j¿¿ y jsp−CT j)∗ha j ¿¿¿¿

Where:BEA= Economic benefit for agriculturePj= sale price of crop jYj

cp = yield per hectare of crop j after the projectCTj= total production cost per hectare of crop jhaj = hectares cultivated with crop jYj

sp = yield per hectare of crop j before the project

3.4 For Component 2, the methodology which was used for evaluating benefits corresponds to the Avoided Harm Method, which seeks to estimate the benefits generated by a project that enables the reduction or elimination of damage or prejudice to society. In this case, the project allows the reparation of hydroelectric plants and therefore prevents this damage from being permanent.

BERCG=∑i=1

n (C icp∗P−CT )−(C i

sp∗P−CT )(1+r)i

❑

Where: BERCG: Economic benefit for infrastructure rehabilitationCi

cp : Generation capacity for year i after the projectCi

sp : Generation capacity for year i before the projectP: sale price of energyCT: Total production costR: Discount Rate 3.5 For Component 3, it was proposed to use the same methodology as for Component 2 - the Avoided Harm Method. In this case, the project enabled the rehabilitation of water and sanitation infrastructure thereby preventing the damage from becoming permanent.

3.6 However, only the 52 MW rehabilitated and 8 MW upgraded at the El Aguacate Power Station, corresponding to Component 2, were used for the economic analysis. For these two activities, a cost benefit analysis was applied using the Avoided Harm Method to estimate the benefits of rehabilitating the 52MW from El Aguacate, because with the project it was possible to reduce or eliminate the damage or prejudice to society for not having the power plant available. In addition, for the extra 8MW from Aguacate, a classic cost benefit analysis was applied, comparing the flow of costs and incomes during the period under analysis. The benefits of the other activities under Component 2 (rehabilitation of 192 MW of power, 152 km of transmission and distribution lines, and rehabilitation of the Las Barias reservoir) could not be estimated because they were a complement to other investments performed by the Government in the electricity sector, as the project covered only a portion of the costs required for their functioning (e.g. rehabilitation of access roads, equipment, etc.). Combining all these initiatives made

41

restoration of the infrastructure possible. For this reason it was not possible to isolate the specific impact of the project investments.

3.7 The benefits of the investments in Component 3 were also not incorporated due to a lack of information, preventing the realization of a full cost-benefit analysis. However, all costs were considered in estimating the total benefits of the project at the aggregate level.

3.8 Therefore, the economic evaluation of the project considered the following:

- Recovery of irrigation on agricultural land (Component 1)- The rehabilitation of 52 MW of El Aguacate Plant (Component 2)- The repowering of 8 MW of El Aguacate Plant (Component 2)

3. Results

3.9 The results of the economic analysis for Component 1 show a net present value (NPV) of US$ 102.4 million and an internal rate of return (IRR) of 37.45 percent. Some 37,218 hectares were benefited, corresponding to 18,779 farmers. This implies an incremental NPV of close to US $ 2,752 per hectare irrigated. For Component 2 (Rehabilitation of 52 MW and repowering 8 MW in El Aguacate power plant) the economic analysis shows a NPV of US$ 151.9 million and an IRR of 25.85 percent. According to CDEEE, beneficiaries of investments under Component 2 corresponds to 1,619,011 persons.

3.10 At the aggregate level show a NPV of US $ 245.3 million and an Internal Rate of Return (IRR) of 21.2 percent, which shows that the project performed positively in generating value for the Dominican Republic.

Summary of NPV and IRR: Emergency Recovery and Natural Disaster Risk Management Project Component NPV

(USD)IRR

Component 1. Irrigation Improvement $102,408,553 37,45%Component 2. Rehabilitation of 52 MW and repowering 8 MW in El Aguacate power plant $151,949,310 25.85%

Project total $245,287,788 21,20%

3.11 Sensitivity Analysis

Scenarios were simulated to evaluate the robustness of the project, considering the impact in NPV from lower flow of future benefits. It was found that NPV of Component 1 was equal to zero in the scenario in which incremental benefits flows corresponding to irrigation system rehabilitation fell by 69 percent. For Component 2 the NPV was equal to zero with a 70.5 percent decrease in the incremental flows of benefits corresponding to the rehabilitation and repowering of the Aguacate Plant.

The sensitivity analysis shows that the economic benefits obtained by the project are robust, indicating positive economic performance even with significant decreases in incremental flows of benefits.

3.12 The results of the economic evaluation for Component 1 should be considered as a reference, and not as absolute, due to (i) the lack of primary information on the productive systems before and after the project, and (ii) the information collected corresponding to 47% of the total area having benefited from the project, requiring an extrapolation of results to the areas where information was not available. Information was collected from the managers of the Water User Associations, who provided generic

42

information on the production systems they managed. Further, in the absence of information to estimate the benefits of Component 3 and some Component 2 activities, the results obtained from the economic evaluation may be under-estimating the true effects for the country. Lastly, the sensitivity analysis shows that the results of the economic evaluation of the project are robust, indicating positive economic performance even with significant decreases in the incremental flows of benefits.

3.13 Conclusion: It is recommended:

that future projects define as a priority activity the characterization of the situation without project or a baseline, as well as the collection of information in situations with project, following statistical methodologies to define a sample of adequate size and distribution, as well as a margin of error and reasonable confidence level, in such a way that the sample is representative of the universe and thus permits statistical inference;

that the processes of project formulation and evaluation be improved, allowing them to go deeper into the technical and budgetary detail in the pre-investment phase, in order to specify the investment, maintenance and operational costs of the projects, and avoid overcharges due to the underestimation of cost items; and that scenarios of expected inflation in the cost of the items be incorporated, which may permit the effects of budget deficits caused by the loss of value of money to be limited.

43

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit19Responsibility/

Specialty

Lending

Ann Jeannette GlauberTask Team Leader, Environmental

Specialist

Tatiana Proskuryakova Senior Operations Officer

Maria Lucy Giraldo Senior Procurement Specialist

Catherine Rojas Procurement Analyst

Miguel-Santiago da Silva Oliveira Sr Financial Management Specialist

Maritza A. Rodriguez De Pichardo Sr Financial Management Specialist

Fabiola Altimari Montiel Senior Counsel

Luis M. Vaca-Soto Consultant – Senior Energy Specialist

Gerald Meier Consultant – Infrastructure /Environment Specialist

Bert Kramer Consultant-Senior Irrigation Engineer

Nelvia Hayme Diaz Resource Management Assistant

Maricarmen Esquivel Junior Professional Associate

Maria Lucy Giraldo Consultant

Supervision/ICR

Remi Charles Andre Trier Task Team Leader, Sr Water Resources Specialist GFA04

Erwin De Nys Task Team Leader, Sr Water Resources Specialist LCS

Javier Zuleta Task Team Leader, Sr Water GWA03

19 gaps indicate information not available in project documents and/or the Bank's system

44

Resources Specialist

Tatiana A. Proskuryakova Country Manager ECCBM

Zoila Catherine Abreu Rojas Procurement Specialist GGO04

Keisgner De Jesus Alfaro Procurement Specialist GGODR

Maritza A. Rodriguez De Pichardo Sr Financial Management Specialist GGO22

Mariana Margarita Montiel Senior Counsel LEGAM

Nelvia Hayme Diaz Resource Management Assistant BPSHC

James Victor Pannett Energy Specialist GEE04

David Reinstein Senior Oil and Gas Specialist GEEX1

Luis Tineo Lead Operations Officer GFDRR

Kevval Andrea Hanna Operations Analyst CSASC - HIS

Valerie Hermann Perez Program Assistant EXC

Virginia Ricart Giro Team Assistant LCCDO

Robert H.Montgomery Lead Environment Specialist GEN04

Ramon E. Anria Operations Analyst GSU04

Maricarmen Esquivel Junior Professional Associate LCSTR - HIS

Maria Lucy Giraldo Consultant GGODR

Patricia H. de Baquero Consultant GWADR

Gerald E. Meier Consultant GSU10

Luis M. Vaca-Soto Consultant GWA04

Caroline Plante ICR Main Author – Sr Livestock Specialist GFA04

Anna F. Roumani Consultant - ICR GSULN

45

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeksUSD Thousands (including travel and consultant costs)

LendingFY08 190.57

Total: 190.57

Supervision/ICR

FY08 28.76 202.053

FY09 27.01 158.080

FY10 26.37 179.154

FY11 30.09 174.393

FY12 26.87 209.744

FY13 22.91 124.622

FY14 13.08 80.113

FY15 9.52 63.718

FY16 14.10 82.639

FY17 11.99 71.057

Total: 210.70 1,345.573

46

Annex 5. Beneficiary Survey Results(if any)

47

Annex 6. Stakeholder Workshop Report and Results

Information Collection for the Economic and Financial Analysis

Within the framework of the economic and financial analysis of the Emergency Recovery and Disaster Management Project in the Dominican Republic, two workshops were held at INDRHI on January 24 and 27, 2017, which were attended by managers of Water User Groups who benefited from the project. The objective of the workshops was to collect information on the productive characterization of the situation before the project (baseline), before the investments, and the situation after the project. The topics covered in the workshops were:

Context of the economic and financial evaluation of the Emergency Recovery and Disaster Management Project: this introductory session was intended to provide an overall framework of the economic and financial analysis of the project.

Estimation of the economic impact of the project: in this session it was shown, in general terms, how the increase in farm production due to the intervention of the project caused an increase in the incomes of the producer families.

Requirement of productive information of the situation without the project and the situation after the project: in this session each of the irrigation councils was asked to provide a brief report detailing yields, prices and production costs of crops that were cultivated in the season prior to the beginning of the investments, and in the season following the end of the investments, considering exclusively the irrigation systems that benefited from the project. Specifically, the following information was requested:

- Area cultivated (hectares) for situation before the project (before the investments) and for the situation after the project (after investments).- Crop structure (proportion of area cultivated by species), for situation before the project (before the investments) and for the situation after the project (after investments).- Yields of each crop (kg/ha, ton/ha), for situation before the project (before the investments) and for the situation after the project (after investments).- Prices of agricultural products produced ($/kg, $/ton), for situation before the project (before the investments) and for the situation after the project (after investments).- Costs of production ($/ha), for situation before the project (before the investments) and for the situation after the project (after investments), differentiating labor costs as much as possible.

About 10 people participated in each workshop, representing the following Water User Groups : Ulises Francisco Espaillat ; Horacio Vásquez ; Mijo ; Río Camú ; Elías Piña ; Río Yuma ; General Gregorio Ruperón ; Nizao Valdesia ; Padre de las Casas ; Santa Lucía

Each workshop lasted about three hours in order to develop all the planned topics and ensure that the information was fully understood by the counterparts. In general, the perception of the managers of the Water User Groups on the impacts of the project was positive, since they recognized that the availability of water for irrigation improved and made the productive systems less vulnerable to drought; it permitted an increase in crop yields, as well as a shift in the types of crops cultivated towards those of greater economic value. However, they also mentioned some problems during project implementation, related to the delay in construction of works, due to problems in the bidding process and/or unforeseen problems in the execution phase, which meant that the benefits of the project were perceived later than expected.

48

The final objective was that by the end of the second workshop, the Water User Groups would deliver complete information regarding the productive characterization of the situation before the project and the situation after the project. However, it was necessary to continue working remotely after the workshops in order to collect all the information and correct certain inconsistencies detected.

Even considering these difficulties, it is possible to conclude that:

- This participatory methodology involving managers of Water User Groups was a good mechanism for gathering information, since it worked directly with those who operate the distribution systems of water for irrigation and have the knowledge to characterize the productive situation before and after the project.

- Even though the methodology was able to be implemented, it was detected that there is a significant gap in technical and administrative capacities in the Water User Groups, since productive information is not collected or systematized. This suggests that their capacity to manage the water resources in general needs support in order to strengthen their skills and improve efficiency.

49

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

1- Summary of Borrower's ICR

Introduction

The Emergency Recovery and Disaster Management Project was developed to assist the Dominican Government with the repair of the country’s irrigation, electricity, and water supply infrastructure, which was severely damaged by Tropical Storms Noel and Olga that struck in October and December 2007, respectively.

To deal with the significant damage caused by the storms, the Dominican Government obtained World Bank loan No. 7546-DO totaling US$80,000,000.00 (eighty million dollars). This first loan was approved by the National Congress on May 1, 2009. The project became effective on May 26, 2009. Later, additional financing amounting to US$20,000,000.00 (twenty million dollars) was granted. The total cost of the project was US$100,000,000.00 (one hundred million dollars).

The general objective of the project was to provide financial support for the Government of the Dominican Republic for restoration of the country’s irrigation, electricity, and water supply infrastructure.

The specific objectives were to:

1) Restore and strengthen irrigation, electricity, and water supply infrastructure damaged by the abovementioned storms.

2) Strengthen the response capacity of the National Institute of Hydraulic Resources (INDRHI) and the Dominican Corporation of State Electrical Companies (CDEEE) for risk management of extreme meteorological events that may occur in the future.

The project had three (3) components.

Component 1: Rehabilitation and risk management in the water resources sector, executed by INDRHI.

Component 2: Rehabilitation and risk management in the electricity sector (CDEEEE).

Component 3: Rehabilitation of the water supply and sanitation infrastructure, executed by the Santiago Water and Sewerage Corporation (CORAASAN) and by the Santo Domingo Water and Sewerage Corporation (CAASD).

Period of Execution

The activities contemplated in the initial loan and the additional financing for the project were carried out between May 26, 2009 and October 31, 2016 (over a period of approximately 7 years and 5 months). Component 3 was completed first because it only executed works with retroactive financing. Component 2 was completed on December 31, 2015, and Component 1 lasted until October 31, 2016.

50

Amounts executed

The total amount executed for the project was US$99.44 million, of which Component 1 invested US$48.23 million, Component 2 US$44.87 million, and Component 3 US$5.04 million.

Project targets and indicators

The following targets and indicators were set out on page 46 of the Project Operations Manual:

1. 11,577 hectares with irrigation services restored.2. Four dam facilities rehabilitated with revised operational procedures to minimize impacts of

future disasters.3. 152 km of transmission lines restored to improved disaster-resistant standards.4. 254 MW of hydroelectric generation capacity restored.5. Operation of Santiago wastewater treatment plant restored.6. Real-time, operational hydro-meteorological data system in place transmitting processed and

interpreted data to disaster risk management institutions.

Most of these targets were met or exceeded by the end of the execution period.

The first target was exceeded. Some 20,455 hectares had irrigation services restored, following repair and rehabilitation of 16 irrigation systems in the whole country. In areas restored under retroactive financing, 16,763 hectares were restored in 6 additional irrigation systems. In total, 37,218 hectares under irrigation were restored after rehabilitating 22 irrigation systems under Component 1.

With respect to the indicator for rehabilitating four dam facilities, the Jiguey, Tavera, and Chacuey dams were rehabilitated. The Maguaca dam works could not be completed. The operations manuals were revised, piezometers and other measurement and listening instruments were installed, and the network for monitoring seismic movements in various dams in the country was improved.

Some 152 km of transmission lines were restored, which significantly improved the supply of electricity in the Barahona, Independencia, Azua, San Juan de la Maguana, and San Cristóbal provinces, in the southern region of the country.

With respect to the fourth indicator, i.e., the restoration of 254 MW of hydroelectric generation capacity, the results obtained were 251.89 MW with the restoration of the hydroelectric plants of Río Blanco, Los Anones, Aniana Vargas, Nizao-Najayo, Las Barías, Valdesia, Sabana Yegua, Jigüey, and Aguacate. The target is considered reached.

The Rafey wastewater treatment plant in the Province of Santiago was restored with the repair of its treatment units, as reported to us by the Santiago Water and Sewerage Corporation (CORAASAN). Indicator No. 5 was therefore achieved.

Finally, with the design, supply, and installation of the telemetric network of remote master stations that currently transmits real-time climatic, water measurement, and water quality data, and with the creation of the hydro-meteorological system, the country has an early warning system to prevent and mitigate extreme meteorological phenomena that cause natural disasters. Therefore, Indicator No. 6 has been substantially achieved.

51

The achievement of the abovementioned targets helped improve irrigation, electricity, and water supply services in the Dominican Republic. In addition, it has increased institutional capacity to manage the risk of extreme meteorological events, facilitating sharing of timely information among official agencies that deal with emergencies and disaster relief, and improving inter-agency coordination.

Compliance with the safeguards

The safeguards originally applicable to the project were dam safety and environmental assessment. However, social safeguards were added in the course of execution, because although there were no plans to construct new dams and canals, but rather to rehabilitate these hydraulic works, it was necessary to expropriate land to re-route the Lateral Neyba and Yuna-Cañabón canals and to gain access to the Arroyo Rico dam that was constructed. It was also necessary to have access rights for restoration of the electricity transmission line in the country’s southern region.

There was compliance with the safeguard requirements on Safety of Dams (OP/BP 4.37). Inspection procedures were improved and the vulnerability of the dams was analyzed. In addition, operations manuals were updated on the basis of current information on extreme flows and bathymetric surveys of the dams.

The Environmental Assessment safeguards (OP/BP 4.01) were observed. Permits were obtained from the Ministry of the Environment before beginning any work.

All contractors were given the Environmental Management Plan and meetings were held to motivate them to strict compliance with the measures contained in that plan.

In the course of execution of all the restoration works, inspectors of the project Component Implementation Units and environmental specialists of the supervisory firms contracted visited the work sites to ensure compliance with the Environmental Management Plan. There were final environmental inspections at the end of the works, ensuring that the places were left clean of solid and oily wastes and that the temporary work camps had been properly removed.

No work accidents or damages to third parties were reported at any of the works. There were no reports of violations of the environmental permits from the corresponding authorities.

With respect to social safeguards, some works contracted for Component 1 of the project were inadvertently started without application of the World Bank’s Involuntary Resettlement Policy (OP 4.12). This situation was corrected. Social specialists from the Bank ordered a halt to the works until affected farmers were compensated.

In addition, the Bank’s No Objection to the involuntary resettlement plans was prepared and obtained.

Procurement processes

With the conclusion of the works with retroactive financing, all procurement processes for works, goods, and services were completed.

The project had 79 procurement processes in Components 1 and 2. Component 3 did not have procurement processes because it only applied to works with retroactive financing.

52

All procurement processes were published in the DJ Marquet and Development Business, through the Client Connection, and on the web sites of the INDRHI and the CDEEE. There was no challenge to the awarding of the contracts, which shows the transparency and rectitude of the procurement processes. Also, during the execution of the project there were no legal disputes and complaints were duly addressed.

Contracts and purchase orders processed

Over the duration of the project there were 101 contracts for execution of the works, goods, and services contemplated in the Procurement Plans of the Project Implementation Units.

Component 1 had 83 contracts. Component 2 generated 18 contracts. A total of 110 contracts were executed under the Emergency Recovery and Disaster Management project.

The total amount of all these contracts was US$88,822,666.14. The total amount paid was US$87,349,380.58. The difference between these two amounts is attributable to the fact that a number of contracts in Component 1 were not completed by October 31, 2016.

In Component 1 of the project the contractual amounts increased by 8.67 percent; in Component 2 there were overruns of 15.54 percent. This increase in the total of the contracts is within normal limits.

However, when looking at the details, we see that there were large increases in the contracts for works and supervision. For example, in Lot 1, the works contract awarded to Servinca increased by 65.19 percent, while the one for supervision, awarded to Hanson Rodríguez, had an overrun of 73.31 percent.

Contract amounts increased because the designs for the works were flawed, as the required soil and topographic studies were not conducted. This led to a redesign of the works, with an increase in their cost and a considerable delay in their execution. Similarly, because the Implementation Unit of the project’s Component 1 did not have a technical audit of the works and had its own deficiencies, it did not take the necessary contract management measures in a timely manner.

Missions of the World Bank

World Bank authorities and experts responsible for the project conducted 26 supervisory missions, and throughout the project supported the Implementation Units of the Components with the execution of the activities. In addition, they provided several training opportunities for Dominican officials and experts. The works were also inspected on an ongoing basis and quarterly reports prepared. At the conclusion of the project, its management was rated as Moderately Satisfactory (MS).

Project impacts

The project’s investments have yielded economic and social benefits to the farmers and populations of the communities that were directly affected by Tropical Storms Noel and Olga, by restoring and upgrading the irrigation, electricity, and water supply services.

Preliminary results of the economic and financial analysis show that the most representative indicators have increased, which indicates that the project was beneficial, and that it had a positive impact on the rural and urban zones of the Dominican Republic where it was executed.

53

In Component 1, improvement of irrigation systems, the irrigated areas (hectares) nearly doubled with the same budget. The target was 11,557 hectares and 37,218 hectares were improved. This increased the availability of water for crops and increased the yield and productivity of the farms. The net present value (NPV) increased by US$102.41 million and the internal rate of return (IRR) was 37.45 percent.

In Component 2, rehabilitation of the electricity sector, the results were even more impressive. The NPV amounts increased by US$151.95 million and the IRRs were 25.85 percent. These figures come only from the rehabilitation of 52 MW of installed capacity in the Aguacate Hydroelectric Plant, and the increase of that plant’s generating capacity by 8 MW.

In summary, the project increased net added value by US$245,287,788 and achieved an internal rate of return of 21.20 percent.

Major challenges in the execution of the project

1) When the project was prepared, the budgetary estimates were too low. Additional financing was approved to cover all the project’s works, goods, and services.

2) The procurement processes were very slow. In some cases, as in Component 1, at the start, the project was at a standstill. Work to rehabilitate the canals and dams began four years after the preparation of the project.

3) Some of the designs delivered by the consultants were flawed because required studies had not been done in advance. There were therefore many design changes that increased the cost of the contracts and delayed their execution.

4) Because social safeguards were not taken into account at the start of the project, there were problems in access rights when works began, resulting in considerable delays in their execution and additional costs.

5) Registration of the contracts and amendments by the Controller General’s Office of the Republic also delayed the execution of nearly all the contracts, which affected Component 1 in particular.

6) It is necessary to take into account factors that could affect the sustainability of the works, including proper operation and continuous maintenance of the dams and irrigation systems, and measures to provide security for and preservation of the measuring equipment for the early warning system and the seismic network at the national level. It is also necessary to promote new inter-agency agreements to expand the telemetric network and optimize operations of the dams.

Lessons learned

1) Budgetary estimates in the pre-investment phase of the projects must reflect the real needs of the works. Cost estimates at the project profile level must be adjusted at the time of drafting the project.

2) When projects are drafted they must have a well-defined baseline. Comparison of final results with this baseline will enable us to evaluate the project’s impact objectively.

54

3) The implementation units of the project components must be carefully selected. Their personnel must have enough capacity and experience for good management. Key personnel for each project must be full-time and adequately compensated.

4) The safeguards that apply to each new project should be identified more precisely and compliance with them should be ensured throughout the project’s execution.

5) The operations manuals should be updated in a timely manner. Specifically, the thresholds for the various forms of bidding and selections must be revised.

6) Designs for works cannot be accepted without previous studies of soil, topography, etc. In addition, the contracting parties must be more rigorous in selecting the design alternative that is the most technically efficient and economically rational.

7) Management of contracts by the implementation units must be stronger and more demanding on the contractors and consultants. Special attention must be given to quality controls, compliance with timelines, follow-up meetings, and environmental inspections.

8) The evaluation of the final impact of the projects is indispensable for identifying the results and analyzing the lessons learned.

55

2- Comments on Draft ICR

56

57

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N/A

58

Annex 9. List of Supporting Documents

Project Papers (original and additional financing)

Loan Agreements (original and additional financing)

Restructuring Papers

Aide-Memoires

ISRs

Country Partnership Strategy documents

Borrowers’ trimestral reports

Safeguards (environmental and social) reports

Procurement reports

Financial audits

Disbursement tables (Client connection and Bank Portal)

Interinstitutional agreements

Websites INDRHI, CDEEE, UNDP, UE, IDB, USAID

CEPAL 2008: Evolución del impacto de la tormenta Noel en Republica Dominicana

UNDP 2009: Enhancing Gender Visibility in Disaster Risk Management and Climate Change in the Caribbean - Country Assessment Report for The Dominican Republic

ResearchGate – Natural Hazards (Micheal Izzo and al.) 2010: The tropical storm Noel and its effects on the territory of the Dominican Republic

ICR Hurricane Georges Emergency Recovery Project (2003)

59

Annex 10. Photographic records and examples of Communication Documents on Project Investments

Telemetry network

60

Irrigation systems

Canal El Llano before rehabilitation (Lot 4) Canal El Llano after rehabilitation (Lot 4)

Canal Las Charcas after rehabilitation (lot 5)

61

Pumping Station Las Rosas after rehabilitation (lot 10)

Protection of the site of the pumping station Las Rosas with retaining wall (lot 10)

Embankment of Roselia before rehabilitation (lot 14)

Blocks for rehabilitation of embankment of Roselia (lot 14)

62

63

Dams

64

65

66

Annex 11: MAP IBRD 42797

67