The Road Maintenance & Rehabilitation The Road Maintenance & Rehabilitation

Project for PolandProject for Poland

A proposed Program Based Approach projectA proposed Program Based Approach project

The Road Maintenance & Rehabilitation The Road Maintenance & Rehabilitation

Project for PolandProject for Poland

A proposed Program Based Approach projectA proposed Program Based Approach project

Half-day workshop on SWApHalf-day workshop on SWAp May 18, 2004 May 18, 2004 Half-day workshop on SWApHalf-day workshop on SWAp May 18, 2004 May 18, 2004

Poland at a glance…

Population: 39 million inhabitants GNP/Capita US4,570

Upper Middle Income Countries: US$5,040

Motorization rate is increasing fast: 9 million cars in 1990 14 million today

Poland compares poorly with EU neighboring countries both in terms of condition of the road network and safety

Road improvement: a CAS high priority

Total length of the road network : 370,000 km. – 2/3 are paved roads

0% 20% 40% 60% 80% 100%

AVERAGE

Slovenia

Slovak Republic

Romania

Poland

Lithuania

Latvia

Hungary

Estonia

Czech Republic

Bulgaria

Good

Fair

Poor

Condition of Road Network in 1999

Fatality rates per 100,000 population in OECD countries

0

5

10

15

20

25

30Fa

talit

ies/

100

000

popu

latio

n

Icel

and

Swed

en

Gre

at B

ritai

n

The

Net

herla

nds

Nor

way

Switz

erla

nd

Den

mar

k

Finl

and

Japa

n

Aust

ralia

Can

ada

Ger

man

y

Italy

Belg

ium

Irela

nd

Aust

ria

Fran

ce

Spai

n

New

Zea

land

Hun

gary

Cze

ch

USA

Pola

nd

Gre

ce

Sout

h Ko

rea

Poland RM&R project is a new kind of “hybrid”

This component is financed under a pooling of funds scheme

All the other components are using standard WB rules

The loan amount (Euro 100 million equivalent US$126 ) was requested by the borrower to match with its budget planning and to minimize the loan’s fees (Front-end and commitment fees)….

National road network: 18,000 km. – Maintenance backlog estimated to US$1 billion…

• WB’s support focusing on road maintenance & rehabilitation works (sub-program financed at 2/3 or 67%);

• WB funds (provided through a SIL Loan Agreement) are pooled with 2004 national budget for roads maintenance (see table next slide);

• Environmental/Social and Procurement due diligence were carried out to assess and approve country own procedures ( in view of granting a country “certification” for future projects);

• Environmental category: Financial Intermediary (FI). Publication of project OM chapter on environment and social was the only pre-requisite for appraisal.

Main features of the proposed project for Poland

Main features of the proposed project for Poland

• Implementation within a two-year time period to be followed by “repeater” projects with a wider scope of investment.

• Disbursement highly facilitated: chunky advance payment (40%), followed by periodic replenishments (remaining 60% after 6 months).

• The entire loan is expected to be disbursed in 12 to 18 months time period, including retroactive financing since January 1st, 2004.

• Procurement: essentially using Polish NCB rules with relatively high ICB threshold (€6 million) and “four exceptions” to EU Public Procurement Directives.

Pooling of WB funds

Main features of the proposed project for PolandProcurement

• Prequalification: Not foreseen.

• For Works and Goods above € 6 million equivalent: WB ICB.

• For Works and Goods, up to € 6 million equivalent: NCB with no prior review.

• Exception to Polish Public Procurement Law:

  No domestic preference shall be used;

 The term “Best (the most advantageous) offer” shall be understood as the lowest evaluated bid selected following evaluation with use of quantifiable factors expressed in terms of money; and

  No merit points system shall be used to evaluate bids.

•  Consultant services: World Bank guidelines apply

Main features of the proposed project for PolandDisbursement

• Financial Monitoring Reports (FMRs): Quarterly report based on monthly budget execution reports.

• Special Account open in National Bank of Poland by MoF.

• Loan proceeds disbursed to Special Account and then through budget accounts to MoI and GDDKiA.

• First disbursement for retroactive expenditures plus advance covering 6 months financial needs (est. 40%).

• Annual external audit by an independent auditor under TOR acceptable to the Bank.

• Previous road projects have helped in the reform of the Polish road sector;

• e.g., use of modern Pavement, Bridges and Highway Management systems;

• This project is not really a SWAp, but should be better be mentioned as a

Program Based Approach project (PBAp) using SWAp principles;

• It aims at filling the gap between Adjustment and Investment lending;

• It includes some key innovations to better respond to client’s needs;

• Based on reciprocal trust between World Bank and “mature” client countries;

Conclusions 1/2

Conclusions 2/2

• Shifting from an”ex-ante” to “ex-post” control system;

• Report-based, faster disbursement against % of total program expenditures;

• Maximized use of existing administrative procedures, with a few exceptions;

• e.g., procurement under NCB up to Euro 6 million with no prior review!;

• Not tying up huge amount of loan, but fitting Client’s fiscal year budget; and

• Before the end of this year, we will know how well it works…..

PS. At the end of the December negotiations, the Government has asked informally the World Bank to prepare the next operation (with same approach but including new investments) by November this year…