Turkey - Emergency Flood and Earthquake Recovery Project

Document of The World Bank Report No. 18376-TU PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$ 369.0 MILLION TO THE REPUBLIC OF TURKEY FOR AN EMERGENCY FLOOD AND EARTHQUAKE RECOVERY PROJECT AUGUST 24, 1998 Infrastructure Sector Turkey Country Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 1998) Currency Unit = Turkish Lira 265,050. 00 TL= US$1.0 US$1.0 = 265,050. 00 TL FISCAL YEAR January I - December 31 FISCAL YLAR: WORLD BANK July 1-June 30 ABBREVIATIONS AND ACRONYMS AGM - Afforestation and Erosion Center AMU - Adana Management Unit CC - Crisis Center CAS - Country Assistance Strategy DDY - General Directorate of Railways DMI - State Meteorological Institute DSI - State Hydraulic Works EBRD - European Bank for Reconstruction and Development EIB - European Investment Bank EIE - General Directorate of Electrical Power ECU - European Currency Unit GDCD - General Directorate of Civil Defense GD - General Directorate GDDA - General Directorate of Disaster Affairs GDF - General Directorate of Forestry GDI - General Directorate of Insurance GDAEC - General Directorate of Afforestation and Erosion Control GDRS - General Directorate of Rural Services GDTRI - General Directorate of Technical Research and Implementation GIS - Geographical Information System GOT - Govemment of Turkey GPN - General Procurement Notice FMR - Financial Management Report HDA - Housing Development Administration IBRD - International Bank for Reconstruction and Development ICB - International Competitive Bidding IS - International Shopping LCSM - Least Cost Selection Method KGM - General Directorate of State Highways MARA - Ministry of Agriculture and Rural Affairs MPWS - Ministry of Public Works and Settlement NCB - National Competitive Bidding NGO - Non-Governmental Organizations NS - National Shopping PIP - Project Implementation Plan PIU - Project Implementation Unit PM - Prime Minister QCBS - Quality and Cost Based Selection SA - Special Account SME - Small and Medium Enterprises SPO - State Planning Organization SOE - Statement of Expenses SS - Summary Sheet TEFER - Turkey Emergency Flood and Earthquake Recovery Project TEK - Turkish Electricity Authority TOF - Terms of Reference UNDP - United Nations Development Programme USAID - U.S. Agency for Intemational Development USTDA - U.S. Trade and Development Agency WBSR - Western Black Sea Region Vice President: Johannes F. Linn, ECA Country Director: Ajay Chhibber, ECCO6 Sector Director: Ricardo A. Halperin, ECSIN Task Team Leader: Piotr Wilczynski, ECSSD  Turkey Emergency Flood and Earthquake Recovery Project Project Appraisal Document CONTENTS A. Project Development Objective ................................................................ 2 1. Project development objectives and key performance indicators ....................................2 B. Strategic Context ................................................................ 2 1. Sector-related CAS goal supported by the project ..................................................... 2 2. Main sector issues and Government strategy ........................................................... 3 3. Sector issues to be addressed by the project and strategic choices ..................................5 C. Project Description Summary ................................................................ 6 1. Project components ................................................................ 6 2. Key policy and institutional reforms supported by the project .......................................6 3. Benefits and target population ................................................................ 7 4. Institutional and implementation arrangements ........................................................ 7 D. Project Rationale ................................................................ 9 1. Project alternatives considered and reasons for rejection .............................................9 2. Major related projects financed by the Bank and/or other development agencies ............... 10 3. Lessons learned and reflected in proposed project design .......................................... 10 4. Indications of borrower commitment and ownership ................................................ 12 5. Value added of Bank support in this project .......................................................... 12 E. Summary Project Analyses ................................................................ 13 1. Economic ................................................................ 13 2. Financial ................................................................ 13 3. Technical ................................................................ 13 4. Institutional ................................................................ 13 5. Social ................................................................ 13 6. Environmental assessment ................................................................ 13 7. Participatory approach ................................................................ 14 F. Sustainability and Risks ................................................................ 14 1. Sustainability ................................................................ 14 2. Critical risks ................................................................ 15 3. Possible controversial aspects ................................................................ 16  G. Main Loan Conditions ........................ 16 1. Effectiveness conditions .................. 16 H. Readiness for Implementation ........................ 17 I. CompliancewithBankPolicies ........................ 17 Annexes Annex 1. Project Design Summary .18 Annex 2. Detailed Project Description .19 Annex 3. Estimated Project Costs .42 Annex 4. Cost-Benefit or Cost-Effectiveness Analysis Summary: not applicable .43 Annex 5. Financial Summary ......................................... 44 Annex 6. Procurement and Disbursement Arrangements .45 Table A. Project Costs by Procurement Arrangements .47 Table B. Thresholds for Procurement Methods and Prior Review .48 Table C. Allocation of Loan Proceeds .50 Annex 7. Project Processing Budget and Schedule .51 Annex 8. Documents in Project File .52 Annex 9. Statement of Loans and Credits .53 Annex 10. Countiy at a Glance .54 Map IBRD 29769  Turkey Emergency Flood and Earthquake Recovery Project Project Appraisal Document Europe and Central Asia Region Country Department for Turkey Date: August 24, 1998 Task Team Leader: Piotr Wilczynski, ECSSD Country Director: Ajay Chhibber, ECCO6 Sector Director: Ricardo Halperin, ECSIN Project ID: TR-PE-58877 Sector: Infrastructure Program Objective Category: n/a Lending Instrument: Emergency Recovery Loan Program of Targeted Intervention: [ l Yes (x I No Project Financing Data [x] Loan [] Credit [] Guarantee [x] Other [Specify] For Loans/Credits/Others: Amount: US$ 369.0 million Proposed terms: [] Multicurrency [x] Single currency, specify USD Grace period (years): 3 [] Standard Variable [x] Fixed Lx] LIBOR -based Years to maturity: 15 Commitment fee: 0,75% on undisbursed loan balances, beginning 60 days after signing, less any waiver Front End Fee: 1% Financing plan (US$m): Source Local Foreign Total Govemment 316.0 - 316.0 Co-financiers IBRD 190.0 179.0 369 IDA - Other (specify) Total 506.0 179.0 685.0 Borrower: Republic of Turkey Responsible agencies: Treasury and Housing Development Agency Estimated Disbursements (Bank FY/US$M): FY99 FY00 FYO1/02 Annual 158.0 142.0 69.0 Cumulative 158.0 300.0 369.0 Project Implementation Period: June 8, 1998- December 31, 2001 Expected Effectiveness Date: October 1998 Expected Closing Date: June 30, 2002  Page 2 A: Project Development Objective 1. Project development objectives and key performance indicators (see Annex 1): The proposed multi-sectoral project is of an emergency nature, aiming to restore basic infrastructure in communities and rural areas affected by the flood to reconstruct and repair household units damaged by the earthquake for currently displaced people, to make urgent repairs to the flood management system, to reduce flood risk and vulnerability, to improve the policy framework and institutional capacity for better flood and hazard disaster management and mitigation, concentrating on the most heavily affected regions of Turkey, to reduce public costs of future natural disasters in terms of the burden on the central and local budgets. The most urgent actions should be taken before the end of the construction season and the arrival of harsh winter months. The three principal objectives of the proposed project are to assist the Government of Turkey in: a) restoring basic infrastructure in municipalities and rural areas affected by the flood by repairing structures and facilities of economic and social importance b) providing assistance to restore housing in the earthquake affected Province of Adana; and c) reducing vulnerability to future floods and earthquakes. Key performance indicators for participating agencies and municipalities are timely repair or replacement of critical infrastructure to ensure public health and safety, in accordance with the priorities defined by local, regional and national authorities. Performance indicators for national government are repair of hydrotechnical infrastructures and introduction of an improved natural hazard mitigation system that will limit the damages caused by future floods. B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1): CAS document number: 16992-TU Date of latest CAS discussion: September 4, 1997 The project supports the CAS goal to sustain private sector growth, especially in the area of increased private sector participation in insuring against disaster risk and corporate liability of the construction industry. Private sector development is also supported through infrastructure development, by engaging local vendors, contractors and technical service providers to implement infrastructure restoration. The project also supports the CAS goals for environmental and social sustainability of reforms by repairing environmental infrastructure damages from the flood and the earthquake, restoring basic infrastructure necessary for economic activity. Moreover, the project supports the CAS goal of poverty reduction as it benefits the poor hit by the disastrous flood and earthquake. While the poverty impact of this project may not be directly measurable, the project will minimize the adverse effect on living conditions experienced by the currently displaced people who have been affected by these natural disasters, the flood and the earthquake. The project will have a significant positive impact in restoring normnal living conditions to a large proportion of the population in rural areas and affected municipalities. The project is not listed in the CAS as a priority operation for GOT as it responds to a national emergency that occurred after the last CAS discussion. However, the GOT has indicated that the project is a priority  Page 3 operation, and has asked the Bank for financial and technical support to deal with the flood and the earthquake emergencies. 2. Main sector issues and Government strategy: (a) Strategic Setting L Flood Damages. As a result of extreme rain on May 21, 1998, the Western Black Sea Region (WBSR) was affected by a flood with recurrence intervals estimated to range - depending on location - from 200 yea: 900 years, several hundred landslides occurred on May 21 and for several weeks thereafter. In WBSR, an area of about 37,000 square kilometers with a population of 2.2 million suffered the worst flooding of the last century. Some 151 rivers overran their beds and embankments; 478 settlements were left wholly or partially under water. The flood damaged private houses, public buildings (e.g. schools, hospitals, housing), rural and urban infrastructure, telecommunication and energy transmission systems and destroyed crops and livestock. In spite of the magnitude of the catastrophe, it was reported that only around 20 people died. The primary reason for the relatively low loss of life was that the heavy rainfall occurred during daytime. Following the heavy rains numerous landslides were reported, and around 1000 families have been evacuated from around 40 settlements. Access to nearly 600 villages was blocked. Based on investigations in the disaster areas, related government organizations prepared lists of construction and repairs, including estimated costs. The initial total estimated cost of recovery and reconstruction is about US$ 500 million as summarized below in Table 1. Table 1. Estimated Total Cost of Recovery and Reconstruction Activities, as of June 1, 1998 ITEMS COST (mil. $) Emergency Aid and Cost of Relief Activities 80 Housing and Technical Infrastructure 60 Agriculture and Livestock 50 Repair and Reconstruction of Highway and Bridges 100 Repair and Reconstruction of Rural Transportation Facilities 70 Repair of Railway 20 Repair of Telecommunication Facilities 5 Repair of Electrical Facilities 3 Repair and Reconstruction of Municipal Infrastructure 20 Repair and Reconstruction of Flood Control Facilities 70 Repair and Reconstruction of Public Buildings 3 Repair and Reconstruction of Bartin Harbour 2 Forest roads and facilities 17 TOTAL 500 Source: Government estimates. The TEFER project directly responds to the urgent needs in the flood affected region. It covers the repair and reconstruction to water and wastewater systems, municipal, rural and forest roads and bridges, irrigation facilities in more than 100 of the most damaged municipalities and villages. Over 500 specific investments were identified for various sectors. Flood Warning andResponse System. The floods and landslides in the WBSR demonstrated the need for an improved warning and response system throughout Turkey. Warning techniques employed in  Page 4 many other countries are not in use here, primarily due to a lack of real-time hydrologic and meteorological data. The provincial and municipal emergency response plans apparently worked as they were designed, but they respond mainly to the disaster rather than to disaster warning. The GOT indicated that the loss of life would have been much higher had the floods and landslides occurred at night, when many more people would have been at home. The technical agencies (DMI, DSI and EIE) are aware of the warning technologies available, but have not been directed to provide warnings of the type needed, and consequently have never developed the technical capability to do so. Their current budgets do not include funds needed for the collection of real- time data and the analysis of those data. Furthermore, there is no secure and reliable communications system to deliver disaster warnings to the provinces or municipalities, and the local response plans are not designed to respond to specific, localized warnings. Land Use Controls in Areas of High Flood and Landslide Risk. The GOT has a program to map floodplains and landslide-prone areas, and local government elements are mandated to use these maps fcr land use planning and management. However, due to lack of funding, the production of these maps is slow. Also, the Ministry of Public Works and Settlements, which produces these maps, is not certain that they are used effectively at the local level. Lack of Hazard Mitigation Planning. There is no systematic program in Turkey for disaster mitigation, although there are several good mitigation activities being undertaken, including the adoption of earthquake resistant building codes and land-use mapping and planning. II. Earthquake Damage: On Saturday, June 27 - during preparation of the emergency flood project - a major earthquake struck southern Turkey. According to Istanbul's Kandilli observatory, the Earthquake reached 6.3 on the Richter Scale in Adana Province. In spite of the magnitude of the catastrophe, it is reported that "only" around 144 people died in Adana Province. The primary reason for the relatively low loss of life was that the earthquake occurred in a summer month, on a weekend during daytime. Therefore many people were outside the buildings. Over 1,000 people were injured. Based on the information prepared by more than 100 official investigation teams (as of July 14, 1998), 74,303 household units were collapsed, heavily or lightly damaged. According to the official estimates, 11,601 units in Adana and 1,472 units in Ceyhan have to be replaced or reconstructed. The number for replacement and reconstruction of household units in rural areas are reported at 5,429. The total damage is estimated in the range about US$ 1 billion. (b) Government and International Donor Response Government of Turkey. At 10:30am on May 21, 1998, a " Crisis Center (CC)" was established at the Prime Minister's (PM) Office with all ministries and state agencies represented to address the flood emergency. In the disaster area, work of rescue teams were assisted by military units. Despite breakdown of communication and information systems, the local authorities managed the crisis rather successfully. In addition to the government efforts, civil organizations and private citizens banded together to help in the recovery efforts. The Turkish Red Crescent Society (Kizilay) provided aid to those living in the disaster areas: 14,280 blankets, 2,326 tents, mobile water tanks, food was sent and 12 mobile kitchens were serving hot food to 8,500 people daily. GOT agencies mobilized available technical sources to repair or maintain basic transportation, telecommunication, energy and safe water supply in the disaster area, and assess the magnitude of damage on the public works.  Page 5 On May 26, 1998, the Government informed the public that the total damage from the flood had exceeded US$ 500 million. Bolu, Zonguldak, Bartin and Karabuk were declared "disaster areas". By May 29, 1998, transport and communication with all municipal settlements had been re-established. However, around 200 villages were still unreachable as of July 2. The earthquake took place on June 27, at 16:56. Within 15 minutes after the earthquake, Crisis Centers in both Ankara and Adana were operative. Surgeons, physicians, nurses living in Adana were prepared at the hospitals for emergency cases and in the meantime the civil rescue team had started with their work. At 17:30, crisis centers in all the settlement units through the province were operative too. The same evening the Red Crescent started delivering hot meals for the earthquake victims. A large number of cities gave donations immediately. Food, first aid equipment, medicines, vaccination sets, rescue specialists, tents and similar needs were never subject to any shortage. A few days later, the government remitted additional money in order to arrange provisional housing for those who had lost their homes or whose households were heavily damaged. Starting from July 13, every eligible family or single residents have been paid a sum of about US$ 1,300.00. Within this frame, roughly 12,500 persons were paid for temporary settlement. During the last days of July, the most important problems besides dealing with the lack of housing for the displaced people appeared to be psychological disorders, reaching a very high number especially among women and children. 3. Sector issues to be addressed by the project and strategic choices: The objective of the multi-sectoral project is to reconstruct essential infrastructure and other facilities to promptly restore economic activity in affected areas The project will: (i) assist the Government to implement expeditiously the reconstruction and rehabilitation of infrastructure in the rural and urban areas damaged by the floods; (ii) improve construction standards and planning through regulatory instruments at the municipal and national levels to protect urban infrastructure and buildings from future floods; (iii) introduce measures to reduce potential losses from earthquakes and floods in the future; and (iv) increase the earthquake resistance of new buildings by adopting and enforcing building codes through introduction of mandatory corporate liability insurance for the construction industry. The rationale for geographic and technical focus is based on strategic choices to assist the most extensively damaged regions of Turkey to restore essential infrastructure in the WBSR, to mitigate future flooding, and to reduce the vulnerability to earthquakes nationwide.  Page 6 C: Project Description Summary 1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown): TEFER Bank Total Cost Financing Percentage (Incl. Taxes & (Incl. of Contingencies) Percentage Contingencies) Bank Category (US$ million) of Total (US$ million) Financing Component A. Municipal and Rural Infrastructure physical 209.2 30.6% 70.1 33.5% B. Flood Management and Hazard Reduction 1. Natural Hazard Risk Reduction and other 1.5 0.2% 1.1 73.0% Mitigation 2. Modemization of Forecasting, physical 46.0 6.7% 40.0 87.0% Warning, and Response System 3. Improvement of Disaster Response physical 15.5 2.3% 13.5 87.0% Capabilities 4. Repair and Improvement of Flood physical 95.6 14.0% 81.2 85.0% Protection Infrastructure Subtotal 158.6. 23.2% 135.8 85.6% C. Earthquake Reconstruction 308.3 45.0% 156.1 50.6% D. Project Implementation Unit proj mgt 4.8 0.7% 4.2 87.0% E. Front End Fee 3.7 3.7 100% Total Project 685.0 100% 369.0 100% Figures may slightly differ due to rounding. * Municipal and Rural Infrastructure: TA, design, supervision, and investments to restore infrastructure in affected municipalities and rural areas - Flood Management and Hazard Reduction: TA, design, supervision, and urgent investments to repair hydrotechnical infrastructure, modernize flood management system, improve forecasting and planning, and introduce liability and homeowner insurance * Earthquake Reconstruction: TA, design, supervision, and investments to reconstruct household units in affected municipalities and rural areas, provide training and studies to reduce earthquake vulnerability, and introduce liability and homeowner insurance and construction industry liability insurance * Project Implementation Unit: PIU to help implement, inter alia, procurement and disbursement activities associated with the project 2. Key Policy and Institutional Reforms Supported by the Project: * National Mitigation Policy and Strategy. * Sustainable Financing of Hazard Risks and Recovery. * Modernization of the Flood Monitoring, Forecasting and Warning System. * Upgrading Local Flood Preparedness and Response Plans. * Homeowners and Industry Liability Insurance. * Upgrading Emergency Response Capacity.  Page 7 3. Benefits and target population: Immediate benefits are the restoration of rural and municipal services and infrastructure serving the millions of inhabitants in the WBSR in Adana Province. Project investments would enable basic or normal levels of operation of water supply, wastewater treatment, sewerage, and transportation systems and buildings in the target region, and thereby improve health, safety and environmental conditions for the affected population. First phase investments to restore damaged hydrotechnical infrastructure (e.g., dikes) will limit or prevent possible significant additional losses. Economic recovery of the affected regions and incremental tax revenues supporting the GOT budget would result from restoration of normal industrial and agricultural activity. The flood management component of the project will contribute significant improvements to Turkey's system for flood preparedness and response in the WBSR. This component will include investments and technical assistance to modernize the hydrological and meteorological monitoring system, update mapping and modeling of the project river basin areas using advanced GIS, modernize forecasting and modeling capacity, and improve public awareness of flood risk and hazards. The earthquake reconstruction component of the project will benefit the displaced persons who were forced to live in tents after the disaster. This component will lead to the construction of 5,000 urban and 3,800 rural household units with improved building standards and less vulnerability to future earthquakes. Major public benefits can also be expected from the project, including the following: * strengthening the capacity of the government to respond rapidly to priority needs of its citizens in the face of natural disasters; * restoring dysfunctional community services to pre-flood normality; * providing employment in the construction industry and hydromechanical equipment industry; and