Romania - Post Earthquake Construction Assistance Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4791 PROJECT COMPLETION REPORT ROMANIA - POST EARTHQUAKE CONSTRUCTION ASSISTANCE PROJECT (LOAN 1581-RO) November 18, 1983 Industry Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT ROMANIA - POST EARTHQUAKE CONSTRUCTION ASSISTANCE PROJECT (LOAN 1581-RO) TABLE OF CONTENTS Page No. PREFAC:E .................................................... (i) BASIC DATA SHEET ............................................. (ii) HIGHLIGHTS ............................................. (iv) PROJECT COMPLETION REPORT PREPARED BY BORROWER I. KEY PRaJECT DATA ...... ...................................... 1 II. PROJECT OBJECTIVES AND DESCRIPTION .. ...................... 1 III. PROJECT IMPLEMENTATION ..................................... 2 3.1 Reconstruction Program ..................... 2 3.2 Project Implementation ................. . 2 3.3 The Allocation of Loan Proceeds . ...................... 3 3.4 Procurement ........................................... 4 3.5 Disbursement ............................ . 5 IV. ECONOMIC BENEFITS ..................... ... 6 4.1 General Achievements in Investment Field ............. 6 4.2 Production Achievements . .............................. 7 4.3 Econcimic Benefits ............................... 8 V. ROLE OF BORROWER, BENEFICIARIES AND FOREIGN TRADE ENTERPRISES .......................................... 16 5.1 The Borrower ...... .................................... 16 5.2 The Beneficiaries and the Romanian Foreign Trade Enterprises ... ............................. 16 VI. CONCLUSIONS ..................................................... 17 6.1 Overall Assessment .................................... 17 6.2 Lessons to be Learned .................................. 17 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   - (i) - PROJECT COMPLETION REPORT ROMANIA - POST EARTHQUAKE CONSTRUCTION ASSISTANCE PROJECT (LOAN 1581-RO) PREFACE This report covers the Post Earthquake Construction Assistance Project supported by Loan 1581-RO. The Loan was made to the Investment Bank, which was responsible for overall project execution ard for ensuring provisior. of funds to thirteer eligible beneficiaries. The Loan of US$60.0 fmillion was approved in June 1978. Of the total amount, (97%) was disbursed by the end of FY1982, one year behirn schedule; full disbursement was delayed to the third quarter of FY1983 or account of delays in delivery of equirnent earlier committed under the loan. The Romanian Govermnent requested in early March 1977 Bank assistance to help overcoae the damage caused by the earthquake. in response to the Bank's request for a concrete proposal, the Government provided a statement of the damage in July, and informatior on specific enterprises ard items that could be financed in September. The project was formulated during the preparation/appraisal mission ir October/November; there was a brief follow-up missior. in March 1978. Negotiations were held ir Washingtor in April 1978. The main text of the Project Completion Report (PCR), was prepared by the Investment Bank in April 1983 based on inputs provided by the beneficiaries. Its significant findings and conclusions are judged to accurately reflect performance under the project. With regaxd to the PCR's statements on the performance of the Rcmanian ecoromy (para 4.1.1 ard 4.1.2), although the rate of economic growth in Romania due to restrictive policies that became necessary in response to increasingly more severe financial difficulties, declined to 4.2% as an average in the 1979-1982 period, it is still rather high by international standards. The preface, extended basic data sheet and highlights sectiors included in this report have been prepared by Bank staff. The Borrower's comments are shown in the Attachment. This project has not been audited by the Operations EvaLuation Department.   PROJECT COMPLETION REPORT ROMANIA - POST EARTHQUAKE CONSTRUCTION ASSISTANCE PROJECT (LOAN 1581-RO) BASIC DATA SHEET KEY PROJECT DATA original Actual Date Date Appraisal Date - 10-11/77 Negotiations Date _ 04/13-20/78 Board Approval - 05/30/78 Loan Signing _ 06/12/78 Effectiveness - 09/05/78 Loan Closing 06/30/81 06/30/82 Loan Amount (US$ Million) original 60.0 Disbursed 60.0 Cancelled - Repaid (04/01/83) 7.5 Compared to the appraisal estimate, disbursements were as follows: Cumulative Disbursements Cumulative FY1979 FY1980 FY1981 FY1982 FY1983 Estimate 30.0 50.0 60.0 60.0 60.0 Actual 7.0 20.6 37.9 58.0 60.0 Actual as % Estimate 23.3 41.2 63.2 96.7 100.0 Mission Data No. of No. of Date of Item Sent by Month/Year weeks Persons Report Preparation/ IND/ Oct./ 2 4 11/30/77 Appraisal EMENA Nov. 1977 (Decision Follow-up IND Mar. 1978 memo) Supervision 1 IND March 1979 1 1 03/30/79 2 IND July 1980 1 1 07/31/80 3 IND June 1981 1 1 07/22/81 Ccmpletion 1 IND April 1983 1.5 2 06/24/83  - (iii) - Allocation of Loan Proceeds (US$ Million) Reallocated Provisions (approved of Loan by Bank) Agreement 07/13/81 Disbursed Sub-Category I - Damaged Enterprises Sub-total 13.5 5.0 4.8 Sub-Category II - Producers of Construction Materials Sub-total 4.5 5.5 5.5 Sub-Category III - Manufacturers of Machinery and Plant for construction related industry Sub-total 25.0 22.5 19.9 Sub-Category IV - Manufacturers of Construction Equipnent Sub-total 20.0 30.0 29.8 Sub-Category V - National Center for Earthquake Engineering Sub-total 7.0 - - Total 70.0 63.0 60.0  - (iv) - PROJECT COMPLETION REPORT ROMANIA - POST EARTHQUAKE CONSTRUCTION ASSISTANCE PROJECT (LOAN 1581 - RO) HIGHLIGHTS In March 1977 the Roannian Government requested Bank assistance to overccme the damage caused by the earthquake earllier in the mnnth. The Post Earthquake Construction Assistance Project was foizmulated in response to the Government's request. The objectives of the project were to assist the Government in its efforts to: (i) carry out remaining short-term reconstruction; (ii) strengthen dcmestic construction capability to meet the needs of the current development plan, during which pericd all earthquake damage was scheduled to be repaired; (iii) maximize domestic manufacture of building materials, of equipment that produces them, and of construction equipment; and (iv) limit damage fran future earthquake through the National Earthquake Protection Plan. The project was successful in achieving the first three of the above objectives; the equipment to be procured to support the fourth objective was not financed under the loan and is now to be supplied dcmestically. The project supported the ecamony's investment and prcduction achievements in the 1979-82 period. The loan however, was intended to be quick disbursing, an objective which was not met fully. Slippage in disbursements (of one year for the bulk of the disbursements) fran the appraisal estimates was due to several reasons (Section 3.3). The project supplemented enormous expenditures ard efforts in manpower, management and institution building with vitally needed imports of special equipment machinery, ard components. The enterprises to be assisted were: the camputer center serving the ministry of Transport ard Teleccmmunications and two irdustrial enterprises which were damaged in the earthquake: nine manufacturing enterprises in construction-related sub-sectors; ard the National Center for Earthquake Engineering. In view of the emergency nature of the assistance required, the project incorporated same flexibility, which proved useful. The loan was based on a list of eligible direct imports amounting to US$70.0 million for the above mentioned beneficiaries, famn which US$60.0 million was to be financed fran the loan. Due to problems discussed in the report, US$7.0 million equivalent of eligible items were dropped, thus reducing the value of eligible items to US$63.0 million.  - (v) - In view of the large number of packages procured (276), the number of beneficiaries (13 reduced to 10) and the number of foreign trade enterprises involved (12), the project required significant coordination efforts on the part of the Borrower. Despite the delays addressed above, the Investment Bank is judged to have fulfilled this role satisfactorily. The cooperation between the Borrower and the Bank with regard to this loan, facilitated by frequent cammunication ard periodic supervision missions, was fully satisfactory and led to smooth problem-free implementation of the project. The continuity of the Bank staff assigned to this project facilitated implementation. The experience with this project, with its relatively ccmxplex implementation requirements, confirms the value that can be attributed to such continuity and cooperation. This project represents a useful model for future Bank efforts to provide assistance in emergency situations. Single institution responsibility for procurement and other coordination supplemented by direct contact with beneficiaries during supervision missions and the flexibility incorporated into the project design (i.e. in the list of items eligible for financing) facilitated smooth implementation of the project without substantial Bank involvement.  PROJECT COMPLETION REPORT ROMANIA - POST EARTHQUAKE CONSTRUCTION ASSISTANCE PROJECT (LOAN 1581-RO) I. KEY PROJECT DATA 1.1. Key project data at the time of appraisal and actual after completion are showrn in the following table: Original Actual Date Date Appraisal Date - 10-11/77 Negotiations Date - 04/13-20/78 Boand Approval - 05/30/78 Loan Signing _ 06/12/78 Effectiveness - 09/05/78 Loan Closing 06/30/81 06/30/82 Loan Amount (US$ Million) original 60.0 Disbursed 60.0 Cancelled _ Repaid (04/01/83) 7.5 II. PROJECT OBJECTIVES AND DESCRIPTION 2.1. The objectives of the project were to assist the Government in its efforts to: 2.1.1. Carry out remaining short-term reconstruction; 2.1.2. Strenghten domestic construction capability to meet the needs of the 1976-80 development plan, during which period all earthquake damage was scheduled to be repaired; and 2.1.3. Maximize domestic manufacture of building materials, of equipment that prcduces them, and of construction equipment. 2.2. The project supplemented the required domestic experditure with needed imports of special equipment, incorporating advanced technology, machinery and components. 2.3. To achieve these objectives the project assisted: 2.3.1. Damaged enterprises requiring immediate reconstruction (US$4.8 million); ard  - 2 - 2.3.2. Ernterprises in subsectors related to construction in accelerating exparnsion of capacity for the productiorn of constructior, materials, machinery and plants for constructior related in-dustry ard construction equipment (US$55.2 million). 2.4. The project financed direct imports for selected enterprises, out of a specified list of imports totallirg US$70 million from which US$60 million were financed by the Bank loan. III. PROJECT IMPLEMENTATION 3.1. Reconstruction Program 3.1.1. The March 4, 1977 earthquake had serious effects upon both the population ard the econany. Most of the damage caused was to buildings arid other types of structures, particularly houses. Total damage caused by the earthquake was US$2.048 billion of which US$1.42 billiorn was in construction (buildings, water supply, etc), US$104 million in equipment, installations and transport, US$364.7 million in productiorn losses arid US$159 million in raw materials, intermediate products ard consumer goods. 3.1.2. The reconstruction program was mainly concentrated on the resettlement of the affected fanilies and the return of production to norTnal levels. The Government's strategy was to undertake the rehabilitation and reconstruction effort without significantly affecting the overall implementation of output targets in the 1976-1980 Five Year Development Plan. 3.2. Project Implementation 3.2.1. The Investment Bank had the overall responsibility for project execution. The ten beneficiary enterprises were responsible for the execution of the sub-projects. 3.2.2. Procurement was carried out by several foreign trade enterprises which undertook imports in accordance with the Bank's guidelines. The participating foreign trade enterprises included: Masinexportimport, Industrialexportimport, Mecanoexportimport, Uzinexportimport, Danubiana, Forexim, Matalexportimport, Electronurm, Mineralimportexport, Universal tractor, Electroexportimport and Tehnoimportexport. 3.2.3. The Investment Bank developed a sustaired activity in order to positively influence the normal development of project implementation, constantly supervising and monitoring the progress of works of each sub-project and participated with the foreign trade enterprises in managirng the respective imports. 3.2.4. The actual progress related to each enterprise is discussed in Chapter IV. Implementation of sane sub-projects has been marked by a number of procurement-related difficulties. These difficulties, as  discussed below, occured in conjunction with the delayed procurement of imported machines and equipfment. 3.3. The Allocation of Loan Proceeds 3.3.1. The allocatiorn of the amount of the loan according to the Loan Agreement, subsequent reallocation and actual disbursement were as follows: Allocation of Loan Proceeds (US$ Million) Provisions Reallocated of Loan (approved by Agreement Bank) 07/13/81 Disbursed Category I - Damaged Enterprises I-1 viscofil 6.7 5.0 4.8 I-2 IMUAB 0.8 - - I-3 Centrul de calcul Ministry of Transport 6.0 - - Sub-total 13.5 5.0 4.8 Category II - Producers of Construction Materials II-1 Fabricile de ciment Medgidia and Alesd 2.6 3.9 3.9 II-2 IMC Buzau 1.9 1.6 1.6 Sub-total 4.5 5.5 5.5 Category III - Manufacturers of Machinery and Plant for construction related industry III-1 CUG Iasi 9.5 6.5 3.8 III-2 IUG Progresul Braila 6.5 7.5 5.7 III-3 IMUAB 3.5 5.0 6.4 III-4 IMGB 5.5 3.5 4.0 Sub-total 25.0 22.5 19.9 Category IV - Manufacturers of Construction Equipment IV-1 CUJG Iasi 5.0 6.0 6.7 IV-2 IUG Progresul Braila 6.0 7.0 6.9 IV-3 IA Brasov 7.0 14.0 14.1 IV-4 IM Timisoara .2.0 3.0 2.1 Sub-total 20.0 30.0 29.8 Category V - National Center for Earthquake Engineering V-1 INCERC 7.0 - Sub-total 7.0 - Total 70.0 63.0 60.0  - 4 - The Bank agreeJ on July 13, 1981 to amend the provisions of the Supplemental letter (which listel the itens eligible for Bank financing as part of Scheiule I - WithJrawal of the Proceeds of the Loan) of the Loan Agreement for the following reasons: 3.3.2. The equipment for the Canputer Center for the Ministry of Transportation amounting to US$6 million in the Loan Agreement was not acquired although after the ICB organized by the foreign trade enterprise Electronum in 1978, the contract was awarded in favour of Control Data Corporation (CDC) USA. Despite the efforts made by the Romanian authorities in the period 1979-81 at all levels ard during the Romanian-American meetings, and the assistance requested ard obtained fran the Bank in this respect, CDC did not deliver the equiprment in due time, since it could not obtain the export licence from the American authorities. Consequently, this amount had to be reallocated. 3.3.3. The seissmic research equipment for the earthquake engineering center (INCERC) was also not procured unier the loan. While this equipment was estimated to cost US$7 million at appraisal, the initial response to the bidding suggested a price of US$12-15 million. Subsequently Rmanaian authorities decided to implement an alternate solution based on a higher local content for this project component. 3.3.4. At appraisal, US$11.0 milliori was foreseen to cover expenlitures based on advance contracting, largely for the damaged enterprises an: for machine tools to be provided urider Category III. Subsequently, the borrower in consultation with the concerned enterprises, requested a substitution of a large portion of these rnachine tools with alternate canparable items. The substitution was requestei ard agreed to by the Bank because of two factors. First, in sore instances, payment for these machine tools had to be mnade ahead of the availability of the Bank loan funds. Second, in other cases due to technical considerations, sane machine tools though in an advanced stage of procurement, were reexamirned by the benificiary enterprises ani replaced by other similar items. This substitution reduced the amount of advance contracted items financed urder the loan primarily to those for the damaged enterprises a-mounting to arourd US$2 million and caused a significant slippage in early disbursemnents. 3.4. Procurement 3.4.1. Procurement took place urder the general coordination of the beneficiaries with the responsibility for technical aspects being assumned by the specialized research ard design institutes. A number of foreign trade enterprises (12), each dealing with one particular sector of the economy, were in charge of the procedures followed for imports acquired through ICB ard other inethods consistent with the Bank's guidelines. Procurement was carried out in a total of 276 packages ard required substantial coordination efforts. 3.4.2. Of the total value of contracts awarded urder the project (arourdS USS70 million equivalent of which US$60 million was financed urder the loan), contracts amounting to US$3.7 million were awardel for proprietary  -5- items against a Loan Agreement provision of US$5.0 million. Around US$23.4 million in contracts for specialized items ard packages under US$300,000 in value were awarded based on limited international terdering under Bank review prior to award of contract as against a loan agreement provision of US$26.0 million for this purpose. The remaining items were acquired through ICB. For these items, potential suppliers were prequalified following Bank guidelines and taking into account the technical capabilities ard demonstrated experience of interested firms. At least 5-6 foreign canpanies for each package were prequalified and in all cases the borrower had observed the IBRD methodology, namely procurement based on international bidding. 3.4.3. The final distribution of disbursed funds fram the loan was 100% for imported equipment. Of the value of imported packages financed under loan, 50% was for components for construction equipment, an important share (33%) was utilized to acquire machines and equipment for the machine building industry, with the remainder being applied to damaged and construction materials enterprises. 3.5. Disbursement 3.5.1. Initially, the closing date of the Bank loan was June 30, 1981. As a result of the factors mentioned in paras. 3.3.2 to 3.3.4, as well as of the delays in the delivery of some imported goods, the Bank agreed that the closing date be extended until June 30, 1982, by which date all the withdrawal applications under the loan had been submitted to the Bank for payment. Final disbursements fram the loan, however, were delayed further on account of delays in delivery against a letter of credit which had earlier been ccmmitted under the loan. Disbursement Schedule CY Annual Cumulative US$ million % of total US$ million % of total 1978 0.5 0.8 0.5 0.8 1979 13.1 21.8 13.6 22.6 1980 14.8 24.7 28.4 47.3 1981 18.4 30.7 46.8 78.0 1982 13.2 22.0 60.0 100.0 Compared to the appraisal estimate, disbursements were as follows: Cumulative FY1979 FY1980 FY1981 FY1982 FY1983 Estimate 30.0 50.0 60.0 60.0 60.0 Actual 7.0 20.6 37.9 58.0 60.0 Actual as % Estimate 23.3 41.2 63.2 96.7 100.0  -6- IV. ECONOMIC BENEFITS 4.1. General Achievements in Investment Field 4.1.1. During the pericd 1979-1982 the Romanian economy has undergone a radical transformation and has sustained a high growth rate. The level of diversification of industrial production has increased rapidly, providing the basis for the mcdernization and expansion of other econonic sectors and a general increase in labor productivity and national inccme. Furthermore, Rcmanian participation in the world economy has changed significantly with extended and diversified external commercial relations. 4.1.2. The investment program achieved during 1979-82 permitted a continuous increase in the economy's potential, with a high priority for the expansion of the raw material and energy base, completion of same important industrial, agricultural and transport sector projects and expansion of facilities for socio-cultural activities. The investment achieved during 1979-1982, by the main branches of the econcmy was as follows: Investment Performance (Lei billion a/) 1979 1980 1981 1982 Total economy 204.4 210.5 208.0 217.1 of which: Industry 104.3 107.1 105.5 100.7 Agriculture, Forestry 26.8 28.0 32.8 36.3 Construction 12.7 9.7 7.2 7.8 Transport, Telecommunicat. 20.4 25.3 20.6 29.2 Housing 21.4 21.9 23.5 27.9 a/ in 1979, 1980, 1981, 1982 prices 4.1.3. During 1979-1982 significant achievements were also carried out in the housing sector.  -7- Housing (000 Units) 1975-77 1979 1980 1981 1982 Total average 1979-82 Total housing of which: 149.9 191.6 197.8 161.4 162.0 712.8 frcm State arri Cooperation Furds 122.8 179.3 186.6 150.5 151.0 667.4 Funds of population 27.1 12.3 11.2 10.9 11.0 45.4 Non-family hostels 69.8 25.4 23.3 15.2 15.2 79.4 As compared to the period preceding the 1977 earthquake, the 1979-80 achievements in housing represented a significant increase in respone to reconstruction requirements. 4.2. Production Achievements 4.2.1. The production achieved during 1977-1981 in the machine building industry and the metal-processing industry for the main manufactured prcducts in Romanian industry had the following levels: Production Achievements 1979 1980 1981 Metal working machine-tools by cutting (000 tons) 78.5 92.8 97.8 Machines ard equipment for metal working by cold and warm plastic deformation (000 tons) 10.1 12.9 15.1 Machines, equipment and technological installations for industry (000 tons) 694.5 684.2 635.4 Electric motors (000 KW) 9323 10067 9415 Electric generators (KVA) 1016 1111 772 Excavators (units) 1660 1198 808  - 8 - 4.2.2. In the same period important achievements have been obtained in construction materials industry, as shown below. Output of the Construction Materials Irdustry 1979 1980 1981 Cement (000 tons) 14,656 14,607 13,762 Lime (000 tons) 3,829 3,813 3,742 Bricks (million Units) 1,471 1,423 1,472 Reinforced concrete parts (000 m3) 7,147 7,454 6,582 Refractory bricks (000 tons) 620 615 620 Production peaked in 1978-79 in response to the needs of reconstruction activity and has since stabilized. 4.3. Economic Benefits 4.3.1. The economic benefits resulting from the project are discussed below under three major categories: Part A - Earthquake damaged enterprises (Category I); Part B - Research and Development (Categories II, III and V); and Part C - Manufacture of Construction Equipinent (Category IV). A. Part A - Earthquake Damaged Enterprises (i) Intreprinderea de Fibre Artificiale "Viscofil" Bucuresti 4.3.2. The earthquake caused severe damage to the enterprise, affecting buildings, machinery and equipment; resistance pillars and walls of the production facilities were damaged, a large number of machines and equipment, stocks of raw materials and finished products were also affected, and losses suffered due to production interruption. To rehabilitate the production capacity and to ensure the fulfillment of production targets, investments amounting to Lei 1,155 million were made, out of which Lei 83 million was for imported machinery, equipment and other imported goods. The Bank loan financed 85.8% of these imports. Domestic investment efforts, supported by IBRD's financing, ensured the achievement during 1979-1982 of important increases in the production level compared with the year before the earthquake, 1976. Output from the damaged facility, which fell to 1,300 tons in 1977, was restored to around 1,800 tons by 1979.  -9- Value of the production achieved (Lei million) Of which Total Artificial Silk 1976 85.0 48.9 1979 131.2 81.3 1980 146.0 90.0 1981 170.0 111.0 1982 215.1 214.0 (ii) Centrul de Calcul Bucuresti 4.3.3. In spite of severe earthquake damage suffered by the conputer center of the Ministry of Transportation and of the US$6.0 million (10% of the Loan amount) allocated to this sub-project, the respective amount was not disbursed and was reallocated, due to factors mentioned in para. 3.3.2. Consequently, this investment, estimated to cost Lei 135 million, including Lei 90 million for computer equipment to be imported and financed under the Loan, could not be implemented. Thereafter, due to continued difficulties in obtaining this large computer and parallel developments in the field of computer control of transport systems, an alternate solution of smaller computers to be located in each region has been adopted and is being implemented. B. Part B - Development and Research (i) Fabrica de Ciment Medgidia and Fabrica de Ciment Alesd 4.3.4. In order to ensure additional quantities of building materials, the cement capacity of these two factories was significantly expanded (by 1.2 million tpy for Medgidia and 2.4 million tpy for Alesd). The Bank loan supported these investments by financing some critical inported items. For these sub-projects, IBRD financing amounted to Lei 58.6 million, of which Lei 41.7 million was for machinery and Lei 16.9 million for impotts of refractory bricks. The prcduction provided by these two factories during the 1979-1982 period substantially supported the post-earthquake reconstruction process. By main products, the output of the factories was as follows:  - 10 - Output of Supported Cement Plants (Lei million) 1979 1980 1981 1982 Medgidia Plant Cement 261.4 411.2 532.0 555.3 (000 tons) (911) (1,870) (1,705) (1,563) Asbestos Cement Plates 91.9 91.4 107.0 111.2 Asbestos Cement Tubes 139.4 136.4 77.5 38.1 Alesd Plant Cement 324.1 324.0 467.0 523.0 (000 tons) (1,653) (1,640) (1,551) (1,445) Asbestos Cement Plates 137.8 142.1 167.0 176.8 Asbestos Board 19.9 29.1 47.0 51.3 Agrolimestone 7.0 6.1 6.0 4.4 (ii) Intreprinderea de Materiale de Constructii Buzau 4.3.5. To ensure additional quantities of prefabricating walls, ceramic blocks and other construction profiles and aggregates, the existing production capacity of this enterprise was expanded. To that end, funds amounting to Lei 89 million were invested. of these: - Lei 60.0 million was used to procure installations and equipment, Lei 23.1 million for the process line to produce polyurethane panels, and financed under the Loan; and - Lei 25.0 million for civil works. 4.3.6. The investment program achieved, facilitated fulfilment of a production level close to the economy's requirements of such materials for the period 1979-1982. The output volumes for this period were as follows: Output of IMC Buzau (Lei Million) 1979 1980 1981 1982 Prefabricating Walls 134.2 101.8 129.6 114.0 Ceramic Blocks 39.0 36.9 41.6 46.0 Aggregates for Construction 10.5 10.1 9.2 16.0  (iii) Combinat de Utilaj Greu Iasi 4.3.7. in supporting the implementation of the post-earthquake reconstruction program, the production capacity of this enterprise was expanded partly to ensure ard supply additional quantities of machinery required for machine building ard metallic structures for construction. To that end, investments amounting to Lei 393.0 million, were made consisting of the following: - Lei 237.0 million for civil works; - Lei 127.0 million for installations and equipment of which, Lei 57.6 million was financed under the Loan; and - Lei 29.0 million for other expenditures. The investment enabled a substantial increase in the production value during the 1979-1982 period as shown below: output growth, CUG lasi Value of Value as % production of 1976 of preced. achieved level year (Lei million) 1976 110.0 100.0 100.0 1979 360.9 328.1 - 1980 605.2 550.2 167.2 1981 866.7 787.9 143.2 1982 1,526.7 1,387.9 176.1 The breakdown of the main products required for production of equipmnent and structures related to the construction industry produced during the 1979-1982 period is as follows: Construction - related Output, CUG Iasi (Lei million) 1979 1980 1981 1982 Construction Equipment 1,060.3 1,053.8 936.5 1,053.7 Metallic Structures 26.7 39.9 28.2 56.6 Iron Castings 58.7 54.2 187.1 140.4 Metallurgical Equipment 24.2 112.1 394.1 343.7  - 12 - (iv) Intreprinderea de Masini Grele Bucuresti 4.3.8. The prcduction capacity of this enterprise was developed to contribute to the implementation of the reconstruction works, and to ensure additional quantities of equipment for the machine building and construction-related industries. In this respect, funis amounting to Lei 238.5 million have been provided and invested, as follows: - Lei 139 million for procurement of installations and equipment, of which Lei 59.4 million (42.7%) was financed under the Loan; - Lei 74.5 million for civil works; and - Lei 25.0 million for other expenditures. As a result of these investment efforts, large volumes of equipment for construction-related industries was produced and supplied, as follows: output of Selected Products, IMGB (Lei million) Equipment for Cement and Metallurgical other construction materials Year Equipnent Production 1979 674.5 211.7 1980 632.0 115.0 1981 988.0 199.0 1982 588.0 361.0 (v) Intreprinderea de Masini Unelte si Agregate Bucuresti 4.3.9. To support the implementation of the reconstruction works, the production capacity of this enterprise was developed to provide additional quantities of equipment, machine tools and installations required for the machine-building industry related to the construction sector. To that erd, funds amounting to Lei 203.0 milion were invested as follows: - Lei 115.0 million for installations ard equipment, of which Lei 96.4 million was financed under the Loan; - Lei 70.0 million for civil works; and - Lei 18.0 million others expenditures. The main machinery produced for the machine building industry during the 1979-1982 period amounted to:  - 13- output of Selected Machine Tools, IMUAB (Lei million) 1979 1980 1981 1982 "Carousel" Lathes 359.0 349.0 239.0 238.0 Boring and Milling Machines 488.6 751.0 414.0 430.0 Grinding Machines 199.1 225.0 267.0 246.0 (vi) Intreprinderea de Utilaj Greu-Progresul Braila 4.3.10. In order to develop the enterprise's capacity to produce equipment required by the machine building industry, funds amounting to Lei 320.5 million were invested, as follows: - Lei 151.0 million to procure equipment and installation, of which Lei 84.8 million (56.2%) was financed under the Loan; - Lei 139.5 million for civil works; and - Lei 30 million for other expenditures. This expansion of the production capacity enabled the output of large volumes of machinery for the construction inidustry during the 1979-1982 period. Output of Selected Products, IUG Progresul Braila (Lei million) Equipment for Cement Metallurgical and other construction Year Equipment Materials Production 1979 567.9 175.8 1980 591.4 145.9 1981 601.7 99.2 1982 706.3 136.2 (vii) Institutul de Cercetari in Constructii si Econania Constructiilor (Earthquake Engineering Center) 4.3.11. Reasons for not developing the investment program for this Center (Lei 170.0 million) under the Bank Loan were mentioned in para. 3.3.3. As a result of the high cost of imported equipment, the center together with the concerned design institute has been authorized to install equipment to be largely manufactured locally. The conceptual design for this equipment has been accepted and detailed engineering is now undlerway.  - 14 - Part C - Manufacture of Construction Equipment (i) Ccmbinat de Utilaj Greu Iasi 4.3.12. Further to developing the production capabilities of the enterprise as mentioned in para. 4.3.7. and financing out of the Loan proceeds of oomponents to be incorporated into onnstruction equipment, comnponents amounting to Lei 99.8 million (US$6.7 million) were financed under the Loan during the 1979-1982 period. The following production was achieved: Construction Equipment Output, CUG lasi (Lei million) Product 1979 1980 1981 1982 Construction and Road Construction Equipment 726.3 706.4 595.5 438.9 Bulldozers (units) (3,923) (3,296) (1,859) (1,737) Front-end loaders (units) (205) (413) (547) (125) Road rollers (units) (711) (414) (321) (197) Scarifiers (units) (2,688) (1,665) (1,155) (791) Scrapers, Auto Scrapers and Autograders (units) (244) (35) (136) (147) Bogies 344.0 347.4 341.0 614.8 (units) (4,524) (4,560) (4,336) (6,560) (ii) Intreprinderea de Utilaj Greu, Progresul Braila 4.3.13. Expansion of the enterprise's capabilities, as mentioned in para. 4.3.10. and US$6.9 million financing under the Loan for components of construction equipment, ensured the possibility to produoe during the 1979- 1982 period: Output related to Construction Equipment, IUG Progresul Braila (Lei million) 1979 1980 1981 1982 Excavators 1,376.1 1,285.6 973.1 942.9 (units) (1,685) (1,331) (808) (769) Mounted Axle Sets 250.8 206.3 191.2 240.7 Speed Reducers 33.3 38.9 43.5 47.6  - 15 - (iii) Intreprinderea de Autocamioane Brasov 4.3.14. The amount of Lei 211.9 million (US$14.1 million) financing under the Loan, supported the prcduction during 1979-1982 of around 98,000 dumptrucks and spare parts amounting to Lei 4.9 billion, as follows: Output of Dumptrucks/Spares, IA Brasov YEAR Dumptrucks Spare parts (units) (Lei million) 1979 34,200 638.4 1980 31,896 1,384.0 1981 14,937 2,029.4 1982 17,275 830.2 (iv) Intreprinderea Mecanica Timisoara 4.3.15. Following and due to the Bank's support in financing same direct imports of components amounting to Lei 31.5 million (US$2.1 million), the prcduction over the 1979-1982 period consisting of machinery, lifting equipment and cranes amounted to Lei 5.1 billion, and producticn of construction machinery amounted Lei 1.0 billion as follows: Output of Selected Products, IM Timnisoara (Lei million) Machinery, Lifting Construction and Transport Machinery, Tower YEAR Equipment and Portal Cranes 1979 1,687.0 302.3 1980 1,928.9 176.7 1981 879.3 250.7 1982 592.8 273.1  - 16 - The decrease in the output of the above items between 1979-1982 (as against a moderate increase in the overall output of the enterprise) resulted from a transfer of the production of simple equipment (fork lifts, small rolling cranes) to other enterprises to enable IM Timisoara to diversify into larger and technologically more complex equipment. V. ROLE OF BORROWER, BENEFICIARIES AND FOREIGN TRADE ENTERPRISES 5.1. The Borrower 5.1.1. For this project, the Investment Bank was the official representative and the borrower of the Bank Loan. The Post-earthquake Reconstruction Program financed by the Bank loan was implemented under the direction of the Investment Bank. Procurement responsibility was shared by the benificiary enterprises and the involved foreign trade enterprises under the supervision of the Investment Bank. 5.1.2. The Investment Bank was specifically in charge of: (i) coordinating the Bank-related project activities with the ministries and the beneficiaries; (ii) providing information to the Bank to monitor the project implementation; and (iii) ensuring adherence by other agencies to Bank procurement procedures and channelling disbursement requests. 5.1.3. The beneficiary enterprises, supervised ard monitored by the Investment Bank, implemented the project with due efficiency. Smooth implementation of the project was facilitated further by the strong cooperation between the Investment Bank and IBRD. 5.2. The Beneficiaries and the Rcmanian Foreign Trade Enterprises 5.2.1. In implementing the post-earthquake reconstruction program, the affected enterprises and, more generally, the Rcmanian people, displayed courage, ingenuity ard perseverance. In most of the enterprises people worked day ard night in shifts, seven days a week, almost up to the erd of 1977, nine months after the earthquake. At the same time, the people were also involved in the rehabilitation of their homtes ard cities. 5.2.2. These efforts enabled the Romanian economy to achieve over the 1976-1980 period an annual growth rate of social product of 6.9 percent and of national incaoe of 7.2 percent, achieving the objectives ard the main tasks of the socio-econcmic development plan for the 1976-1980 period. 5.2.3. The ten Bank Loan beneficiaries for which imports financed under the Loan were procured through the service of 12 foreign trade enterprises, each having its own specific activity stipulated by Ramanian legislation, succeeded in all cases to follow the Bank's procurement procedures. 5.2.4. Nonetheless, some procurement difficulties (para 3.3.2-3.3.4) were encountered due to the nature of the project, the large number of  - 17 - beneficiaries of the Loan and the large number of foreign trade enterprises that were involved in handling project procurement. 5.2.5. The Investment Bank due to its past familiarity with Bank procedures succeeded in finding ard prctmting solutions acceptable to all concerned, resulting in good cooperation amongst all parties including the Bank. 5.2.6. Following the Bank procurement procedures, beneficiaries ard, particularly, the foreign trade enterprises gained wider experience in the area of import activities and especially in international ccmpetitive bidding. IBRD's periodic direct contact with the Loan beneficiaries and the Romanian foreign trade enterprises and the visit to the beneficiary enterprises of the Bank representatives, always proaptly facilitated by the Investment Bank, also contributed significantly to the good cooperation with the Bank. These Bank efforts during periodic supervision missions were helpful in ensuring timely implementation and thus in achieving the purposes of the project. VI. CONCLUSIONS 6.1. overall Assessment 6.1.1. The Rcmanian Postearthquake Reconstruction Program had a major positive impact on Romania's econanic performance during the 1976-1980 Five Year Plan and thereafter. 6.1.2. The Bank project, which was designed to support and finance specific import requirements of this Reconstruction Program, achieved entirely its objectives. 6.1.3. The fact that the canputer equipment for the Cormputer Center serving the Ministry of Transport and Telecomnunications (para. 3.3.1) and the essential equipment for earthquake research for the National Center for Earthquake Engineering (para. 3.3.2) were not procured and financed under the Loan, was beyond the control of the Investment Bank. As discussed in paras. 3.3.2 and 3.3.3, the Investment Bank and IBRD attempted to facilitate the finalization of these project canponents. 6.2. Lessons to be Learned 6.2.1. Taking account of the emergency character of this project and of the diversity of works to be performed under the Post-earthquake Reconstruction Program, the solution the Bank adopted in designing this project (i.e., assistance to a large number of enterprises for a diverse set of import requirements) has been successful.  - 13 - 6.2.2. The project was designed to provide sane flexibility to allocate the Bank Loan accordirlg to the different stages of the reconstruction process ani to enable disbursements for the most pressing ard necessary imports within the project scope ard objectives. 6.2.3. In cooperation with the Investment Bank, the Bank assured a careful *nonitoring of project implementation by inplementing agencies, adherence to Loan Agreement provisions and Bank procurement procedures, and thus the achievement of the scope arnd objectives of the project. 6.2.4. Finally, the experience of this project has demonstrated that the Investment Bank as the borrower succeeded in coordinating procurement activities according to Bank guidJelines, meeting reporting requirements arnd ensuring rlisbursements in accordance with the provisions of the Loan Agreement.  - 19 - ATTACHMENT BANCA DE INVESTITII Bucuresti, .