Tajikistan - Emergency Flood Assistance Project

Document of The World Bank Report No. T-7255 -TJ REPUBLIC OF TAJIKISTAN EMERGENCY FLOOD ASSISTANCE PROJECT TECHNICAL ANNEX August 3, 1998 Infrastructure Sector Unit Azerbaijan, Tajikistan, Uzbekistan, Aral Sea Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS (as of June 25, 1998) Currency Unit = Tajik Rubles TJR I = US$0.0013 US$1 = TJR 754 AVERAGE EXCHANGE RATES The Tajik Ruble replaced the Russian Ruble on May 10, 1995, at an initial conversion rate of TJR I = RUR 100 RUR per US$1 TJR per US$1 1993 932 1995 95 1994 2,192 1996 300 1997 748 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AKF - Aga Khan Foundation ADB - Asian Development Bank CAS - Country Assistance Strategy DC - Direct Contracting EFAP - Emergency Flood Assistance Project EMP - Environmental Management Plan FSU - Former Soviet Union GDP - Gross Domestic Product IBRD - International Bank for Reconstruction and Development ICB International Competitive Bidding IDA - International Development Association IS - International Shopping MOTRA - Ministry of Transportation and Road Administration NBF - Not-Bank-Financed NCB - National Competitive Bidding NGO - Non-Governmental Organization NS - National Shopping OCHA - UN Office for Coordination of Humanitarian Affairs PCERP - Post-Conflict Emergency Reconstruction Project PCU/EFAP - Project Coordination Unit for Emergency Flood PCU/PCERP - Project Coordination Unit for Post-Conflict PHRD - Japan Population and Human Resources Development SCE - State Commission for Emergencies SDR - Special Drawing Right SOE - Statement of Expenditures UNDP - United Nations Development Program UNOPS - United Nations Office for Project Services UTO - United Tajik Opposition WFP - World Food Program TAJIKISTAN'S FISCAL YEAR January 1 - December 31 Vice President: Johannes F. Linn, ECA Country Director: Ishrat Husain, ECCOI Sector Director: Ricardo A. Halperin, ECSIN Urban Sector Leader: Margret Thalwitz, ECSIN Project Team Leader: Felix A. Jakob, ECSIN  REPUBLIC OF TAJIKISTAN EMERGENCY FLOOD ASSISTANCE PROJECT TECHNICAL ANNEX Table of Contents L. BACKGROUND ...................................................................... 1 A. Country Background .......................................................................1 B. The April and May 1998 Floods ........ ..............................................................I II. INTERNATIONAL COMMUNITY ASSISTANCE ...................................................................2 m. BANK/IDA RESPONSE AND STRATEGY .......................................................................3 A. World Bank/IDA Strategy and Programs in Tajikistan ...........................................................3 B. Lessons Leamed from previous Bank/IDA Experience ..........................................................3 C. Rationale for Bank/IDA Involvement .......................................................................4 IV. PROJECT DESCRIPTION .......................................................................4 A Project Preparation ..................................................................4 B. Project Objectives and Design ..................................................................4 C. Project Components ................................................................. 5 D. Project Cost and Financing Plan ..................................................................5 E. Economic Justification ..................................................................7 F. Environmental Impact ..................................................................7 V. PROJECT IMPLEMENTATION ......................................................................7 A. Project Organization and Management ..................................................................7 B. Implementation Arrangements ..................................................................8 C. Mid-Term Review ................................................................. 9 D. Procurement ..................................................................9 E. Disbursements ................................................................. 11 F. Accounts, Audits and Intemal Control ............................. .................................... 12 G. Reporting and Monitoring ................................................................. 12 VI BENEFITS AND RISKS ..................................................................... 13 VIIi AGREEMENTS REACHED ..................................................................... 13 ANNEXES 1. Damage Assessment Summary 2. Detailed Cost Tables 3. Institutional Arrangements 4. Implementation Plan 5. Procurement Plan 6. Performance Monitoring Indicators 7. Financial Management MAP: IBRD 29751  I. BACKGROUND A. Country Background I. Tajikistan is among the poorest countries in the Former Soviet Union (FSU), with a 1997 per capita income of US$330. Of the country's 5.8 million inhabitants about seventy percent live in rural areas. Only some seven percent of the country's 143,000 square kilometers are arable, while the rest consists of mountainous areas. Tajikistan's economic endowment rests on plentiful supplies of water - an otherwise scarce commodity in Central Asia. Agriculture, which is largely based on extensive irrigation schemes, contributes to about twenty-five percent of GDP and fifty percent of employment. The industrial sector, which accounts for thirty-five percent of GDP but only for fifteen percent of employment, was developed under the Soviet regime to take advantage of the easy availability of hydroelectric power which resulted in the creation of a number of aluminum, chemical and other energy-intensive industries. 2. Tajikistan became an independent country in September 1991. In 1992, a civil war started as different regional and political groups struggled for a redistribution of power. The armed conflict continued for the next four years with varying intensity. An estimated 50,000 people lost their lives, 600,000 people were displaced inside the country and some 60,000 fled to neighboring Afghanistan. 3. The war had a severe impact on the whole country as it compounded the effects of the breakup of the FSU (which resulted in cutting off trade links and stopping budget transfers that amounted to up to forty percent of GDP), brought most economic activities to a standstill and plunged a large portion of the population into poverty. GDP is estimated to have declined by fifty percent during the first half of the 1990s. A complex and protracted negotiation process between the Government of Tajikistan and the United Tajik Opposition (UTO) began in 1994 and culninated in the signing on June 27, 1997, of the General Agreement on the Establishment of Peace and National Accord in Tajikistan. Although the implementation of the peace agreement has been uneven, significant progress has been made during the past twelve months. Key UTO leaders have returned to the country and accepted cabinet level positions in the Government. While relations between the two parties have been strained at times, especially during outbursts of violence engineered by groups that remain outside the existing political framework, there is clear evidence that both sides are committed to the implementation of the peace agreement. B. The April and May 1998 Floods 4. Tajikistan, because of its geographical conditions, is a country exposed to a variety of natural hazards. Along the many large mountain rivers that irrigate the country's lowland areas, minor floods are a relatively common and periodic occurrence, especially in the Spring season. The geological instability of the terrain in large parts of the country results in frequent landslides and mudflows. Last, most of Tajikistan lies in an area of high seismicity and, although no major earthquake has taken place in recent years, minor tremors are frequent and the threat of a major seismic event is permanent. However, the scale of the natural risks is such that seeking solutions to fully and permanently protect Tajikistan's population and economy from even relatively small-scale future natural disasters is unthinkable as it would require technical and financial resources far beyond the country's present and likely future economic capacity. 5. The floods of April and May 1998 were exceptional by any standards and the result of two coinciding natural phenomena. As a result of heavier than usual snowfalls during the 1997/98 winter, the flow levels of most mountain rivers were extraordinarily high throughout the Spring of 1998. Several successive periods of torrential rains in the months of April and May caused many rivers to swell to levels higher than any recorded in the last seventy-five years. This lead to extensive flooding, but also landslides  -2- and mudflows in many parts of the country. Most severely affected was the Khatlon region in the south, but other regions such as the Karategin-Tavildara valleys in the center-east, and the Panjikent district in the North of the country suffered heavy damages as well. Over a hundred people died, numerous dwellings were destroyed or damaged. Dozens of bridges and stretches of roads were washed away causing access to entire areas being cut off. Agricultural losses were considerable. Future production was compromised due to damages to, or destruction of, irrigation systems. Although precise figures are still extremely difficult to establish because of the remoteness of many of the affected areas, total damnages are estimated to be in the range of US$ 39 to US$ 77 million or between about 3% and 6% of GDP. 6. From the previous regime Tajikistan has inherited a system of disaster response and civil defense whose purpose is to provide immediate assistance to the population in the case of natural and other disasters. However, like many other Govenmment structures, the civil defense system has been weakened by years of conflict and economic decline and has lost a substantial part of its operational capacity. Aware of the need to rebuild its capacity to respond to emergencies, such as the recent floods, the Govemment has created a State Commission for Emergencies (SCE) which, under the authority of a Vice-Prime Minister, operates as the coordinating body for all activities related to disaster relief, mitigation and prevention. II. INTERNATIONAL COMMUNITY ASSISTANCE 7. Intemational assistance is an important element in the economy of Tajikistan. Since 1993 over US$ 180 million have been contributed by the international community to civil-war related emergency aid. The largest part of this assistance has consisted of food aid, which even today is distributed to over 10 percent of the population. Economic reform support has been provided mainly by Bretton Woods Institutions since mid-1996. Two Consultative Group Meetings (CG) were held for Tajikistan, the latest taking place in Paris in May 1998. At this meeting about US$ 280 million were committed by the donors (mainly bilateral) for an 18-month period (1998-99). Post-conflict reconstruction has been supported by IDA through two operations and the IMF, (see para. 12 below). 8. Immediate humanitarian and medical assistance to the victims of the April and May 1998 floods was provided by the various UN agencies (OCHA, UNDP, UNOPS, WFP), the International Federation of the Red Cross (IFRC), the Tajik Red Crescent Society and many international NGOs active in the country, including the Aga Khan Foundation (AKF), Care, German Agro-Action, Merlin, Mission Ost, Save-the- Children US and others. 9. To help the Government address the most urgent reconstruction and social needs resulting from the floods and landslides the International Monetary Fund (IMF) provided in June 1998, under the ESAF, a budgetary support of about US$ 9 million equivalent for 1998 and 1999. The Asian Development Bank (ADB) is considering making available up to US$ 6 million for the financing of emergency reconstruction projects. In response to a Government request of June 11, 1998 IDA decided to extend an immediate credit of US$ 5 million equivalent for the repair and/or reconstruction of critical transport infrastructure elements in various parts of the country, (see para. 11, below). While substantial, this assistance will only cover a fraction of the actual funding requirements and additional support from other donors will be necessary. To support the above programs, the Government created in June 1998 an International Assessment Group, comprised of experts of UN agencies and the major NGOs active in Tajikistan. Under the coordination of the World Bank Group Field Office and in cooperation with the SCE and the local authorities of the affected areas, this group has carried out a countrywide comprehensive evaluation of the physical and financial effects of the floods, (see Annex 1).  -3- 10. UNDP has begun to assist the Government in the development of a suitable strategy for prevention and mitigation of possible future natural disasters and environmental hazards. To this effect, it is supporting the SCE in organizing specific disaster management training workshops for Government officials and local experts, starting September 1998, with a view to use the results of the workshops as a basis for: (a) preparing a broader follow up program of technical assistance and training; and (b) rebuilding the local response capacity to natural disasters. III. BANK/IDA RESPONSE AND STRATEGY A. World Bank/IDA Strategy and Programs in Tajikistan 11. The Bank Group's Country Assistance Strategy (CAS) for Tajikistan was discussed by the Board on July 30, 1998. The Bank Group strategy focuses on poverty reduction by concentrating on: (i) restructuring farms under private ownership and investing in rural infrastructure as means of creating rural growth and better livelihoods; (ii) reducing economic inefficiencies by transferring publicly owned enterprises into the private sector; (iii) improving coverage, access and quality of social services; and targeting assistance to the poorest groups; and (iv) enhancing institutional capacity. Because most of the poverty is concentrated in rural areas, the primary emphasis of the CAS strategy is the transfer of agricultural assets from public to private hands, enhancing incentives, and investing in rural infrastructure. This will be complemented by investments in health, education, and social funds. Ensuring that the rural road network is able to support the agricultural production system and that rural populations have adequate transport conditions and access to markets for their production is therefore a particular priority for the Bank Group. 12. A Bank mission visited Tajikistan in July 1998 to identify and appraise an emergency assistance program which will address a part of the reconstruction needs resulting from the April and May 1998 floods. The proposed Emergency Flood Assistance Project (EFAP) will follow up on the support to the post-conflict reconstruction efforts in Tajikistan provided by IDA through the US$ 10 million equivalent Post-Conflict Rehabilitation Credit - PCRC (approved in December 1997) and the US$ 10 million equivalent Post-Conflict Emergency Reconstruction Project - PCERP (approved in January 1998), which were complemented by a US$ 1.5 million PHRD Grant from Japanese Government to defray the costs of technical assistance needed for the implementation of the two operations, and a US$ 165,000 special grant from the Bank's Post-Conflict Program (approved in March 1998) to support the implementation of the peace agreement. B. Lessons Learned from Previous Bank/IDA Experience 13. The Bank Group's experience in working in Tajikistan is still relatively limited and too recent to allow to draw specific lessons that are relevant for an emergency operation. The Bank and IDA have, however, a large experience with emergency reconstruction projects in other parts of the world. Assessment of past operations shows that successful implementation of reconstruction projects includes: (a) early bank involvement in defining a reconstruction strategy; (b) a good assessment of damages and needs; (c) flexible and expeditious programming, simplicity in design and implementation arrangements; (e) a willingness to help local authorities with project preparation; and, when and where needed; (f) diversification of reconstruction programming into various sectors; and (g) the use of pilot projects in community-based activities and in programs to support local initiatives. Additionally, experience demonstrates that emergency reconstruction projects are management and staff intensive and, to be successful, require a proactive involvement of senior management in key decisions, a strong commitment by  -4- Country Directors and project teams, and existence of resident missions with adequate staffing and delegation authority. C. Rationale for Bank/IDA Involvement 14. The CAS for Tajikistan recognizes the need for IDA to assist the country in its transition from armed-conflict to peace and from planned to market economy. The Peace Agreement between the UTO and the Government represents an important opportunity for establishing an environment that is conducive to macro-economic stabilization, structural reform and renewed growth. The current situation remains extremely fragile, however, and there is a risk that it could get thrown off balance as the assistance and reconstruction needs created by the recent natural disaster could overtax the available government resources. IDA's support, together with that from other donors, is therefore a critical element for stabilizing the economy and preserving the prospects for a successful transition of the country to market economy. For this reason IDA has taken on a lead role in helping the Tajikistan authorities to establish rapidly a comprehensive assessment of the damages and supporting the Government's reconstruction efforts through the proposed operation. IV. PROJECT DESCRIPTION A. Project Preparation 15. The proposed Emergency Flood Assistance Project (EFAP) has been prepared as an emergency operation in accordance with the instructions of OP/BP 8.50 on the basis of the preliminary results of the damage evaluation carried out, under the coordination of the World Bank Group Field Office, by the International Assessment Group created by the Tajikistan Government in June 1998, (see para. 9, above) and the findings of an identification/appraisal mission which visited Tajikistan in July 1998. Negotiations were held, by video-conference, from the World Bank Resident Mission in Tashkent (Uzbekistan) on July 23, 1998. B. Project Objectives and Design 16. The primary objective of EFAP is to provide emergency sup7ort: (a) support the Tajikistan Government in its efforts to mitigate the economic and social effects of the floods of April and May 1998 through the immediate repair or reconstruction of transport and other essential economic infrastructure; (b) establish the conditions for a rapid resumption of economic exchanges and growth, particularly in the affected rural areas; and (c) reduce the risk for future occurrence of similar damages. 17. To support the above objective the project has been prepared on the basis of a close consultation with the SCE, the Ministry of Transportation (MOTRA), and local authorities of areas affected by floods. Taking into account the project execution experience acquired to date under the PCERP Project (see para 12, above), EFAP has been prepared seeking a great simplicity and flexibility in its design in order to ensure, in a context of severe and extensive resource constraints, a fast and efficient implementation. The project is expected to start in September 1998 and to be completed by December 31, 2000 with a Credit Closing Date of June 30, 2001. 18. In keeping with the project's emergency nature, and because only a limited amount of IDA resources can be made available to Tajikistan in the immediate term, the scope of EFAP has been kept deliberately narrow focusing on short-term repair and reconstruction of critically needed transport and  -5- other economic infrastructure. The limitation is justified by the fact that: (a) needs in other sectors are already covered by other donors (see para. 9, above); and (b) broader structural problems in the water supply and rural infrastructure sector will be addressed under other projects included in the CAS. These latter projects, the preparation of which will be initiated shortly, will focus on re-reestablishing the financial and institutional framework which is necessary for sustainable future development in these sectors. Bi- lateral grant funding for technical assistance to help the Government establish a longer-term disaster mitigation, prevention and risk reduction strategy for transport and other essential economic infrastructure is being sought in order to complement and enhance the efforts already initiated in this area by UNDP, (see para. 10, above). C. Project Components 19. EFAP will include two components: (a) the repair and reconstruction of key elements of road transport infrastructure in various regions of the country; and (b) the repair and rehabilitation of other economic infrastructure pertaining to the agriculture, power and municipal service sectors, (see Annex 2 and Map IBRD 29751. 20. Transport Infrastructure (80% of base cost): The component will include: (a) repair or reconstruction of about nine bridges; and (b) repair and reconstruction of a total of about 270 kms of damaged sections of roads. The works above will also include, using labor-intensive techniques, the repair and reconstruction of embankment protections in proximity of repaired or rebuilt bridges and river scouring-exposed road sections, as well as construction of small-scale protection works to prevent further erosion of existing roads and bridges in areas at risk. 21. Other Infrastructure (20% of base cost): The component will include a series of infrastructure works in the sectors of agriculture (repair and reconstruction of flood protection dikes and irrigation systems); power (repair and replacement of small rural hydropower plants and transmission lines); and municipal services (repair of water supply systems) for which, however, additional technical preparation studies are required prior to implementation. D. Project Cost and Financing Plan D. 1 Project Costs: 22. The total estimated cost of EFAP is US$ 5.5 million equivalent. The estimated costs and foreign exchange by components are shown in Table 1 below. Detailed costs are shown in Annex 2.  -6- Table 1: Project Costs (in US$ million) Component Cost Foreign % of Base IDA Govnt Exchange Cost Local Foreign Total % 1. TransportInfrastructure 2.9 1.1 4.0 28% 80% 3.7 0.3 2. Other Infrastructure Works 0.5 0.5 1.0 48% 20% 0.8 0.2 Total Base Cost 3.4 1.6 5.0 31% 100% 4.5 0.5 Contingencies 0.2 0.3 0.5 0.5 Total Project Cost 3.6 1.9 5.5 5.0 0.5 23. All costs have been estimated in US Dollars due to the difficulties in forecasting exchange rates for the local currency. All cost estimates are based on detailed assessments of materials and labor requirements including transport cost to the sites and cost-comparisons with similar works recently carried out in Tajikistan under the PCERP Project (Cr.3037-TJ). 24. The foreign exchange component of US$ 1.9 million equivalent represents 35% of total project cost. The foreign exchange component was estimated as follows: (a) 'Transport Infrastructure': 28% (civil works); (b) 'Other Infrastructure': 48% (civil works and equipment). Given the short implementation period of about two years no financial contingencies have been applied. Physical contingencies have been estimated at 10%. Project costs include an estimated US$0.1 million equivalent in taxes and duties on civil works and locally procured goods. Goods specifically imported for the project will be exempted from custom duties and taxes. D.2 Project Financing: 25. The IDA Credit of US$ 5.0 million equivalent will finance 91% of total project cost (100% of the foreign exchange component and 85% of the local cost component). The Government's contribution of US$ 0.5 million equivalent will finance taxes and duties (US$ 0.1 million equivalent), operating costs for the project coordination unit (US$ 0.2 million equivalent), and payments for implementation of labor- intensive works (US$ 0.2 million equivalent). Table 2: Project Financing (US$ millior& Local Costs Foreign exchange Total project costs % of Total Cost IDA 3.1 1.9 5.0 91% Government 0.5 0.0 0.5 9% Total 3.6 1.9 | 5.5 100%  -7- E. Economic Justification 26. The main objective of EFAP is to contribute to the mitigation of the effects of the recent natural disasters on the national economy through the repair and reconstruction of critically needed transport and other economic infrastructure. The project will help rapidly restore adequate access to markets for the population of the areas affected by the recent natural disasters and therefore contribute to a quick recovery of the local economy especially in the agricultural sector. Many infrastructure protection works along rivers have been damaged or weakened by the recent floods to a point that makes them unlikely to resist even regular future seasonal rises of flow levels. Immediate repair and reconstruction of such protection works will help significantly reduce the risk of economic and human life losses from possible future floods. At this stage, however, because of both the scattered location of the project works and the lack of reliable statistical data on current conditions of transport demand or on agricultural production it is neither possible nor meaningful to estimate an Economic Rate of Retum (ERR) for the proposed project. F. Environmental Impact 27. The project will have a limited environmental impact given the nature and size of the works funded by it and has been classified as "B" for the purposes of OD 4.01. The project will focus on the repair, rehabilitation andlor reconstruction of existing infrastructure. It will not raise any resettlement or property rights issues and will be executed within the rights of way of the existing public roads network or embankment protection systems. An environmental management plan (EMP) will be prepared for minimizing the negative environmental impacts, (see para. 33, below). Environmental impacts associated with the removal of damaged infrastructure, disposal of debris (broken up pavements, etc.), reconstruction works, and any other project activities will be included in the EMP. The reconstruction works may require secondary activities (for example quarrying, asphalt mixing, etc.) which, in turn, may produce additional environmental impacts that must also be considered. There will be temporary impacts during the construction phase that will be analyzed and, if necessary, provided with appropriate mitigation. Requirements of the appropriate environmental authorities concerning the disposal of wasted materials, operation of asphalt mixing plants, quarrying activities, execution of reconstruction works and any other relevant aspects of the project will be ascertained and copies of any compliance documentation will be provided in the EMP. Possible environmental effects of all works or activities included in the project will be reviewed on a case by case basis and, if required, will be subject to prior environmental impact assessment as a condition for approval of financing under the project. V. PROJECT IMPLEMENTATION A. Project Organization and Management 28. The project will be implemented by the Project Coordination Unit (PCU/EFAP) which will be specifically created in the Executive Office of the President of the Republic of Tajikistan for the management of EFAP. 29. The Director of PCU/EFAP will report to the Prime Minister. He will be of Tajik citizenship and appointed by the Government. He will be assisted by a team of local experts. The PCU/EFAP Unit will be provided by the Government with an annual budget sufficient to cover regular operating costs such as rental of office space, utilities, salaries of personnel and other miscellaneous expenses. Specific Terms of Reference and organizational arrangements for PCU/EFAP are included in Annex 3. Creation and  -8- operatinig conditions of the Project Coordination Unit (PCU/EFAP) were agreed during negotiations. (see para. 50 (a). below). Creation of PCU/EFAP will be a condition for Credit Effectiveness. (see para. 51, below) B. Implementation Arrangements 30. PCU/EFAP will be specifically responsible for: (a) overall management of the proposed project, including the coordination of project activities with ministries and other government agencies, local authorities, non-governmental organizations, and international donor agencies; (b) procurement of works and goods financed under the project; (c) supervision and quality control of execution of works and delivery of goods; (d) management of project accounts including credit withdrawals and disbursements from the Special Account; (e) monitoring of the implementation performance of contractors as well as seeking continuous feedback from beneficiaries on adequacy of project response to needs; and (f) assisting the Government as well as local authorities in adequately informing the population about the project and its different features, (see Annexes 3A. 3B). To facilitate the implementation of the project, the PCU/EFAP will, as agreed with the Government, follow management procedures, including for procurement, identical to those agreed upon with IDA for the PCERP project. A tentative Implementation Plan is included in Annex 4. 31. The works included in the 'Transport Infrastructure Works' component will be executed under contractual arrangements between the PCU/EFAP and the two State enterprises (MOST-STROI and DOR- STROI), which operate under the oversight of MOTRA and are the only two existing enterprises in Tajikistan specialized, the first, in construction of bridges, and the second, in road construction and related works. All works will be implemented on the basis of standard MOTRA engineering designs, construction quality norms, and execution procedures. All design studies (including environmental review) will be carried out by MOTRA's 'Design and Research Institute' and subrnitted to IDA for prior review. Under the proposed arrangement, PCU/EFAP will procure all materials required for the works and funded through the project following procurement procedures identical to those used for the PCERP Project and specified in a PCU/EFAP Operations' Manual prepared in consultation with, and agreed upon by, IDA. MOST- STROI and DOR-STROI will provide the necessary specialized personnel from their workforce, ensure the transport of both personnel and materials from Dushanbe to the worksites, and execute the works in accordance with the quality standards, timetable, and payment schedule agreed on in the contract. 32. The works included in the 'Other Infrastructure' component will be executed under similar contractual arrangements which will be discussed with, and reviewed by IDA, upon completion of the necessary technical studies, with the authorities concerned. Special attention will be paid to ensure that all designs for both 'Transport Infrastructure' and 'Other Infrastructure' adequately address, within reasonable and economically sustainable limits, the issue of protection against, or resistance to, future natural disasters. 33. The environmental measures outlined in the EMP will be incorporated into the supervision documents and arrangements made with the local authorities and contractors for their implementation. Agreement on the preparation and implementation of the EMP was reached during negotiations (para. 50, (b). below).  -9- C. Mid-Term Review 34. In addition to intensive regular supervision by Bank staff and close follow up by the Bank Field Office in Tajikistan, IDA and the Government will carry out by end of November 1999 a mnid-term review to (a) assess progress in project implementation achieved until then; (b) identify constraints and obstacles encountered; (c) discuss solutions and possibly required adjustments in the implementation of ongoing components; and (d) agree on the completion program for the rest of the project. Subsequent periodic reviews will take place according to a mutually agreed schedule but, in no case, no later than June 30, 2000. Agreement on the scope and scheduling of the mid-term review was reached during negotiations, (see para. 50(c). below). D. Procurement 35. All goods and works to be financed from the credit proceeds will be procured in accordance with the IDA Guidelines for Procurement (Guidelines for Procurement under IBRD Loans and IDA Credits' published in January 1995 and revised in January 1996, August 1996 and September 1997), including amendments as of the credit signing date, using the Bank/IDA standard procurement documents. A tentative Procurement Plan is included in Annex 5. All procurement arrangements will be identical to those agreed on for the PCERP Project. Procurement arrangements were discussed and agreed at negotiations. (see para. 50 (d). below). Table 3: Project Costs by Procurement Arrangements (US$ million equivalent) Expenditure Category Procurement Method Total Cost (including contingencies) ICB NCB Other N.B.F 1. Works 0.0 0.0 3.1 0.0 3.1 (0.0) (0.0) (2.9) (0.0) (2.9) 2. Goods 0.0 0.7 1.5 0.2 2.4 (0.0) (0.6) (1.5) (0.0) (2.1) Total 0.0 0.7 4.6 0.2 5.5 (0.0) (0.6)_ (4.4) (().0) (5.0) Note: Cost estimates include taxes and duties. Figures in parenthesis are the amounts to be financed by the IDA credit Other include: Direct contracting for bridge and roads repair works US$ 3.1 million equivalent National Shopping US$ 0.2 million equivalent International Shopping US$ 1.3 million equivalent N.B.F. includes Operating costs of PCU/EFAP US$ 0.2 million equivalent  -10- 36. Works: The persistence of security problems in Tajikistan and the scattered and remote location of the worksites require an innovative approach to procurement. Due to the civil war in which the country was engulfed for the last six years no major infrastructure works have been carried out for several years. Therefore, for the works included in the project ICB is not expected to be suitable. Moreover, the size of the contracts is small (below US$ 150,000 equivalent). Also, there are no private sector enterprises in the country that have the capacity to carry out the civil works required under the project and National Competitive Bidding (NCB) is, therefore, not feasible either. For the works carried out under the 'Transport Infrastructure' component, there are only two semi-autonomous State enterprises capable of carrying out the works, MOST-STROI and DOR-STROI, which are specialized, the first in bridge constructions, and the second, in road construction and related works, and have the equipment and skilled personnel that is needed. Therefore, construction works with the help of those companies is the only possible approach. In order to have an optimal solution, under the proposed arrangement all construction materials will be procured by the PCU/EFAP directly in accordance with procedures acceptable to IDA and described in para. 36. PCU/EFAP will procure the execution of the works through nine individual Direct Contracts with MOST-STROI (of an average value of about US$ 140,000) and eighteen such contracts with DOR-STROI (of an average value of about US$ 105,000), on a sole-source basis for a total value of about US$3.1 million. MOST-STROI and DOST-DROI will provide the breakdown for their works, including labor costs for equipment. Corresponding rates will be subject to prior review by the Bank. Under these contracts MOST-STROI and DOR-STROI would provide the specialized personnel and equipment required to execute the works under the control of PCU/EFAP and technical supervision by MOTRA (if additional construction equipment is needed it would be leased by PCU/EFAP). Payments to MOST-STROI and DOR-STROI would be made according to a completion rates and time schedule included in their respective contracts with PCU/EFAP. Conditions for works to be implemented under the 'Other Infrastructure' component are similar, but will be reviewed on a case by case basis upon completion of the corresponding technical studies. 37. Goods: Considering the emergency situation in the country and the need to expedite project implementation, goods to be financed from the IDA credit consisting of construction materials readily available from local suppliers in the country such as sand, gravel, crush stone, etc. will be procured for contracts valued at less than US$ 200,000 equivalent and an aggregate amount of up to US$ 700,000 equivalent through National Competitive Bidding (NCB). International Shopping (IS). based on a comparison of price quotations obtained from at least three suppliers from at least two eligible countries, will be used for the procurement of construction materials such as steel, timber, cement, etc. not available m Tajikistan for contracts with a value not exceeding US$ 200,000 equivalent each and an aggregate amount of US$ 1.3 million equivalent. National Shopping (NS) will be used for the purchase of miscellaneous supplies costing less than US$ 50,000 per contract and for an aggregate value not exceeding US$ 200,000 on the basis of price quotations obtained from at least three suppliers. 38. Bank Prior Review: All contracts awarded under NCB and IS of a value in excess of US$ 100,000 equivalent, and contracts awarded under DC of a value above US$ 10,000 equivalent will be subject to prior review by the Bank. Additionally, the first two contracts for procurement under IS and NS will be submitted to prior review irrespective of their value. All other procurement documents and contracts will be subject to ex-post reviews by Bank supervision missions. 39. Procurement Monitoring: Procurement will be carefully monitored by the PCUJEFAP. A tentative procurement plan is attached (Annex 5). All procurement documentation will be kept at the PCU/EFAP office in order to be available for review by Bank supervision missions and external auditors. Quarterly reports will provide detailed information on procurement, (see para. 45, and para. 46, below).  -11- E. Disbursements 40. The IDA Credit is expected to be disbursed in about two and a half years, including six months for the finalization of accounts and submission of final withdrawal applications and other reports. Table 4: Estimated Credit Disbursement Schedule (US$ million) Bank Fiscal Year FY 1999 FY 2000 FY 2001 Annual 0.5 3.0 1.5 Cumulative 0.5 3.5 5.0 41. The proceeds of the Credit will be disbursed as follows: Table 5: Disbursement Categories (US$ million) Categorv Amount of Credit % of expenditure to be financed Works 2.7 90% Goods 1.8 100% of foreign expenditure 100% of local expenditure [ex- factory cost] 90% of local expenditures for other goods procured locally Unallocated 0.5 Total 5.0 42. To facilitate timely project implementation the Government will establish, maintain, and operate under conditions acceptable to IDA, a Special Account in US Dollars with an authorized allocation of US$ 250,000 in a commercial bank that meets the requirements. During the early stages of project implementation, the initial allocation of the Special Account will be limited to US$ 100,000. However, when the aggregate disbursements under the Credit will have reached the level SDR 350,000 equivalent, the initial allocation may be increased to the authorized allocation of US$ 250,000 by submitting the relevant applications for withdrawal. Replenishment applications should be submitted every three months and must include reconciled bank statements, as well as other appropriate supporting documents. 43. Disbursements for all contracts for works and goods of amounts of less than US$ 100,000 will be made on the basis of Statements of Expenditures (SOEs). Records of the Special Account proceeds and outlays will be available for review by IDA supervision missions and subject to annual audit. Modalities of  -12- Special Account management and disbursement arrangements were discussed and agreed during negotiations. (see para. 50 (e). below). F. Accounts, Audits and Internal Control 44. PCU/EFAP will maintain accounting procedures acceptable to IDA, and hire an independent auditor acceptable to IDA, in accordance with the provisions of OPIBP 10.02. Detailed accounts should be kept for each project component and their sub-components. The accounts will also reflect the status of payments against each contract, use of the Special Account, and replenishments made by IDA; and sources of funding used. The independent auditor will audit the Project Accounts and the Special Account annually. The audit reports will contain a separate opinion on the use of SOEs. Audit reports in English language will be submitted to IDA not later than six months after the end of each fiscal year. Terms of Reference and selection of the auditor will be subject to prior review by IDA. 45. A financial management system will be developed prior to project startup in collaboration with an international financial consultant hired under the PCERC Project to ensure compliance with the provisions of OP/BP 10.02, (see Terms of Reference in Annex 7). PCU/EFAP will prepare a specific Operations Manual for financial management and set up an organizational structure that is based on a clear delegation and segregation of duties, clearly established written standards and procedures, and a clear definition of responsibilities, including levels of authority. An Action Plan for establishing the financial management system is included in Annex 7. Reporting, accounting and auditing arrangements, including the implementation of the Financial Management Action Plan were agreed on during negotiations, (see para. 5-0. (f ). below). G. Reporting and Monitoring 46. The PCU/EFAP will prepare quarterly progress reports for IDA according to an agreed format. The reports will summarize the status of implementation of the different project components in terms of procurement, work execution, and disbursement. A model for quarterly Financial Management Reports is included in Annex 7. Annual Reports will be prepared by the PCU/EFAP and submitted to IDA no later than April 30 of each year. The Annual Report will contain a summary of the progress of each component and updated work plan for the coming year, including but not limited to, updated disbursement profile, key performance indicators, and project budget estimates. An Implementation Completion Report (ICR) will be prepared by the Government, no later than six months after the Closing Date of the Credit of June 30, 2001. 47. A management information system will be established and implemented within the PCU/EFAP to monitor the progress and problems in the execution of the different components of EFAP. Performance monitoring indicators will be used to monitor the achievement of the project objectives. The indicators (see Annex 6) reflect the concerns of the Government and IDA that the project will be implemented efficiently and expeditiously. The monitoring of the indicators will also help to detect at an early stage possible shortcomings in the project design and implementation arrangements and allow to quickly take remedial action, if necessary.  -13- VI. BENEFITS AND RISKS 48. The major benefits of the project consist in (a) reopening of adequate access to markets for the population of the areas affected by the recent natural disasters and allowing a quick recovery of the local economy, especially in the agricultural sector, and, (b) making, thereby, a significant contribution to the reduction of rural poverty. Additionally, through the implementation of labor-intensive works, the project will create a substantial number of, albeit temporary, jobs and help enhance the conditions for a rapid improvement of the economic situation of the communities affected. 49. The project faces considerable risks, many of which cannot be avoided. These risks fall into two broad categories: (a) Political risks: Despite a promising start, the continuing successful implementation of the peace agreement remains a fragile enterprise. Restoring the conditions for satisfactory social and economic development in the context of Tajikistan represents a formidable challenge whose favorable achievement could be jeopardized by a variety of factors. Political risks are difficult to manage and cannot be addressed under an individual project but may be dealt with at the country strategy level; (b) Managerial and technical risks: Effective and timely implementation of the project requires the early creation of the PCU/EFAP, including the appointment of key staff. The diversion of credit resources to other uses is an additional risk. The risks are minimized by: (a) the simplicity of the design of the project focusing on a few key components; (b) the relatively unsophisticated nature of the works to be carried out; and (c) the close follow up on project implementation by IDA. Placing the project under the responsibility of the Executive Office of the President of the Republic should help ensure the appropriate use of funds and minimize the risks of diversion. VII. AGREEMENTS REACHED 50. During negotiations agreement on the following points was obtained: (a) Creation and maintenance of Project Coordination Unit (PCU/EFAP), (see para. 28, and para. 29, above); (b) Preparation and implementation of environmental management plan, (see para. 33, above); (c) Mid-term review (see para. 34, above); (d) Procurement arrangements, (see para. 35, above); (e) Special Account and disbursement management arrangements, (see para. 43, above); and (f) Reporting, accounting and auditing arrangements, ( see para. 45, above). 51. Creation of PCU/EFAP will be a Condition of Effectiveness, (see para. 28, above)  ANNEX 1 Page 1 of 2 REPUBLIC OF TAJIKISTAN EMERGENCY FLOOD ASSISTANCE PROJECT Evaluation of April and May 1998 Floods Damages by International Assessment Group Summary INTRODUCTION: 1. Heavier than usual snowfalls during the 1997/98 winter caused flow levels of most mountain rivers in Tajikistan to be exceptionally high in Spring 1998. When in April and May several successive periods of torrential rains occurred, a number of these rivers rose to levels higher than any recorded during the last seventy-five years. As a result, severe flooding, landslides and mudflows occurred in virtually all areas of the country. Most severely affected was the Khatlon region in the south, but other regions such as the Karategin-Tavildara valleys in the center-east, and the Panjikent district in the north of the country suffered heavy damages as well. Over a hundred people died, numerous dwellings were destroyed or damaged. Agricultural losses were considerable. Dozens of bridges and stretches of roads were washed away causing access to entire areas being cut off, or at least made extremely difficult. 2. To assess the damage and provide the basis for a coordinated response by the donor community, the Govermment of Tajikistan requested on June 15,1998 the assistance of the donor community to form an International Assessment Group. Under the coordination of the World Bank Field Office, the group which was comprised of experts of UN agencies and major NGOs active in Tajikistan ', carried out a countrywide comprehensive evaluation of the damages and their likely cost in close cooperation with the Government's State Committee for Emergency Situations and the local governments [hukumat] affected by disasters. OVERVIEW OF DAMAGES 3 . Karategin Valley (ravons of Garm. Darband. and Tavildara) (a) Social Sectors: At least one large school (700 pupils capacity) was totally destroyed and numerous others were extensively damaged. Several health facilities also sustained severe damages. (b) Infrastructure: A total of about 70 kms of high and low tension power transmission lines was destroyed or damaged cutting off power supply to a large number of settlements. Water supply systems were damaged in at least three localities. Around 115 kms of road sections were made impassable in various locations, either because of landslides or river scouring. Two large bridges in the Tavildara rayon were carried away and about 25 others extensively damaged. (c) Agriculture: About 300 has of fields and orchards were flooded, and about 38 kms of irrigation systems damaged or partially destroyed. Some 3,000 units of livestock were reported killed. The participating UN agencies and other international bodies were: IFRC, OCHA, UNDP, and UNOPS. The participating NGOs were: Aga Khan Foundation, Care International, German Agro- Action, Mission East, Save-the-Children US. Also participating was the Tajik Red Crescent Society.  ANNEX 1 Page 2 of 2 (d) Housing: About 600 houses were destroyed or damaged in various locations, primarily as a result of landslides. Estimated total cost of damages: US$ 4.5 million 4. Khatlon Oblast (a) Social Sectors: One school was totally destroyed and two others damaged. (b) Infrastructure: At least 35 bridges were destroyed or severely damaged and a total of over 100 kms of roads were damaged. About 5 kms of power lines were damaged. Water supply systems were damaged in several locations and, in particular, in the city of Khulyab. (c) Agriculture: About 2,000 has of cultivated land were flooded and, in some locations, covered, to various degrees, with mud or gravel. About 35 kms of irrigation systems were destroyed or extensively damaged. (d) Housing: About 250 houses were destroyed and up to 1,000 damaged, primarily because of flooding. Estimated total cost of damages: US$ 5.7 million 5. Leninobod Oblast (ravons of Panjikent and Ainyv). (a) Social Sectors: n.a. (b) Infrastructure: About 65 bridges were destroyed or damaged and around 70 kms of road made impassable. (c) Agriculture: About 70 has of cultivated land were flooded and largely made unusable. About 33 kms of irrigation systems were destroyed or damaged. (d) Housing: About 160 houses were destroyed or damaged. Estimated total cost of damages: US$ 3.0 million 6. It must be noted, however, that while in the above three areas were the damages of the April and May disaster were the most severe and concentrated, similar damages occurred in a more scattered fashion in many other locations throughout the entire country. This is, among other factors such as differences in the evaluation methodologies and criteria used by the various international entities and government authorities involved, a main reason for making it difficult to establish a final estimate of the countrywide cost of the damages and their effect on the economy.  ANNEX 2 Page 1 of 2 REPUBLIC OF TAJIKISTAN EMERGENCY FLOOD ASSISTANCE PROJECT DETAILED COST TABLE ------------------Cost- (in US$ thousand) Project Component Local Foreign Total % of total cost 1. Transport Infrastructure Repair /Reconstruction of Bridges 1,170 830 2,000 Repair/Rehabilitation of Roads 1,750 250 2,000 Subtotal 2,920 1,080 4,000 80% 2. Other Infrastructure Works 450 500 950 Subtotal 450 500 950 20% Total Base Cost 3,370 1,580 4,950 100% Physical Contingencies (10%) 200 350 550 Total Project Cost 3,570 1,930 5,500  ANNEX 2 Page 2 of 2 REPUBLIC OF TAJIKISTAN EMERGENCY FLOOD ASSISTANCE PROJECT Transport Infrastructure Component (tentative list subject to review) Detailed Costs NO Description Road Bridge Cost Estimate (US$) Length Spans Total Material Equipt. Labor (km) (m) 1 Bridge on 76th km of road Vose- 11+2x17 228,000 123,000 57,000 48,000 Khovaling near Lohuti Settlement 2 Bridge through Obi-Mazor river near 11+23+15 348,000 188,000 83,000 76,500 Khovaling Settlement 3 Road Khovaling - Mazori Sulton with a 5 16 120,000 29,000 53,000 35,000 bridge 4 Bridges through Yakh-Su river in Various 720,000 396,000 163,000 161,000 Tomin Kolkhoz 5 Road Vose- Khovaling (13-18 km) 5 11+2x17 480,000 91,000 211,000 177,500 6 Bridge for 1 km of access road to Nurek 33 240,000 112,000 75,000 54,000 City 7 Road Dangara-Kangurt / I 10 66,000 16,500 30,000 20,000 8 Road Dangara-Kangurt (10-25 km) / II 15 108,000 27,000 48,500 32,500 9 Road Kofarnihon-Panj (45-97 km) / I 52 72,000 18,000 32,500 21,500 10 Road Sovetsky-Kangurt 5 19,000 5,000 9,000 6,000 11 Road Kulab-Muminabad with bridges 19 72,000 18,000 32,500 21,500 (20-39 km) 12 Road Boldjuan-Khovaling-Dektur with 7 84,000 21,000 38,000 25,000 bridges (0-7 km) 13 Road Kulab-Shuroabad-Hirmanjou 15 87,000 22,000 39,500 26,500 14 Road Teppai Samarkandi-Magmurud 15 48,000 12,000 21,500 14,500 15 Road Laur-Isamboy-Shortuguy 70 24+18 102,000 25,500 46,000 30,500 16 2 pipes on 88-89th km of road 15 120,000 30,000 54,000 36,000 Dushanbe-Khorog 17 Road Dushanbe-Tashkent (11-36 km) 25 360,000 90,000 162,000 108,000 18 Bridge on the Hissar rayon 18 36,000 18,000 9,000 9,000 19 Road Kofarhihon-Ramit (19-35 km) 16 120,000 30,000 54,000 36,000 20 Road Kofarnihon-Panj (38-40 km) / II 2 42,000 10,500 19,000 12,500 21 Road Dushanbe-Khorog (60-64 km) 4 72,000 18,000 32,500 21,500 22 Bridge on the 46th km of road 2x33 192,000 85,000 53,500 53,500 Dushanbe-Termez 23 Road and a bridge in Penjikent rayon 2 Various 132,000 33,000 59,500 40,000 24 Road and a bridge in Aini rayon 2 Various 132,000 33,000 59,500 39,500 TOTAL TRANSPORT 4,000,000 1,451,500 1,442,500 1,106,000 INFRASTRUCTURE  ANNEX 3A Page I of 2 REPUBLIC OF TAJIKISTAN EMERGENCY FLOOD ASSISTANCE PROJECT INSTITUTIONAL ARRANGEMENTS PROJECT COORDINATION UNIT In support of the implementation of the EFAP Project the Government will establish in the Executive Office of the President of the Republic of Tajikistan a Project Coordination Unit (PCU/EFAP) and will appoint its Director. As agreed with IDA, the PCU/EFAP Director, assisted by qualified personnel, will be responsible for the overall management of the Emergency Flood Assistance Project, with the following responsibilities: * coordinating the activities carried out under the project with the concerned line-ministries and ensuring that they are consistent with these ministries' standards, priorities and criteria; * preparing, in consultation with IDA, an 'Operations Manual' specifying the procedures to be followed for the execution of the different components including procurement procedures, as well drafting Chart of Accounts and Manual of Accounts and Accounting Procedures; * coordinating the execution of works, including periodic visits to work sites as required; * monitoring, in association with MOTRA and, when and where required, other ministries, the technical quality of the works carried out and/or goods delivered by contractors, monitoring the general performance of contractors; and taking remedial action, if required; * coordinating the activities carried out under the project with the local authorities of the communities concerned in order to ensure sustainability, ownership and effectiveness of the different operations; * reviewing, and signing all contracts, payment orders and disbursement requests related to the execution of the project; * monitoring progress in procurement, including the creation and operation of a computerized Procurement Management System; * preparing periodic progress reports for the Government including, in an appropriately defined format acceptable to, and agreed with, IDA, a Financial Management Report;  ANNEX 3A Page 2 of 2 * coordinating the implementation of preparatory technical studies (final designs, bills of quantities, etc.) by consultants or government agencies including obtaining necessary approvals, permits, etc. from relevant authorities; * arranging for annual extemal audits of project accounts by an independent auditor; * monitoring feedback from beneficiaries on the adequacy of the project response to the needs of the population concerned and, if needed, providing, in consultation with IDA, for adjustments in the project implementation arrangements, or project content; and * assisting the Government and the local authorities in informing the population about the features and other aspects of the project. Within the PCU/EFAP a separate unit will be created to be specifically responsible for procurement and accounting and, in particular, for * carrying out all project related procurement activities for goods and works, and ensuring that IDA procurement procedures are consistently applied to all contracts for goods, works or services for which IDA funds will be used to disburse part or all of the contract amount; preparing tender documents, evaluating offers, preparing award proposals, negotiating and preparing the relevant contracts; * controlling the quality of goods delivered and providing, and arranging, if necessary, for temporary storage;