Tajikistan - Post-Conflict Reconstruction Credit Project

Report No. PID5752 Project Name Tajikistan-Post-Conflict re+ n Reconstruction Credit Region Europe and Central Asia Sector Multisector Project ID TJPE53386 Borrower Government of Tajikistan Implementing Agency Prime Ministry Date this PID prepared October 31, 1997 Projected appraisal Date November 3, 1997 Projected Board Date January 29, 1998 A. Background: After four years of civil war the Tajikistan Government and the United Tajik Opposition (UTO) signed a peace agreement in Moscow on June 27, 1997 ending a conflict in which, of a total population of about 6 million, some 50,000 people lost their lives and, at the time of most intense fighting, 600,000 people were internally displaced, and 60,000 took refuge in Afghanistan. Moreover, because of the economic recession caused by the war, another 500,000 emigrated to neighboring CIS countries. A Commission for National Reconciliation (CNR) composed of both Government officials and opposition members was established and began to operate in Dushanbe, the capital of Tajikistan, in September 1997. It will be responsible for monitoring the implementation of the peace agreement and preparing new parliamentary elections scheduled for mid-1998. The areas most affected by the conflict were the south of the country [Khatlon Province] and the center-east region, in particular the area comprised of the Gharm, Karategin, and Tavildara valleys and neighboring districts (henceforth referred to as 'the Karategin Valley area'). The Khatlon Province has been under control of the Government forces over most of the past years and has benefitted from a significant relief and reconstruction effort supported by UN agencies, the international NGO community and, inter alia, the Bank through its Poverty Alleviation Project (Cr.2946-TJ). The Karategin Valley area (total population about 250,000), on the other hand, has remained under the control of the opposition forces and, therefore, was, with a few exceptions, largely unaccessible to external assistance agencies and outside the reach of central government agencies. Although no comprehensive assessment of damages has been carried out yet, a preliminary survey suggests that the sectors that suffered most from the war either directly or indirectly were transport infrastructure, schools, health care facilities, and agricultural infrastructure and equipment. As importantly, even in the absence of open fighting, the continuing state of war hindered the local communities in these valleys from having access to their traditional, mostly urban, markets in other parts of the country for produce, fruit, and dairy products and, as a result, caused a  virtual collapse of the local economy and a return to subsistence farming. A UN sponsored conference to confirm the political support of the donor community to the peace process will be held in Vienna, Austria, at the beginning of November 1997. A comprehensive National Reconstruction Program addressing the issues of the short- and medium term reconstruction and recovery needs is under preparation by the Government with assistance from the UN and is expected to be presented to a CG meeting early next year. Preliminary estimates by the Government suggest that short-term needs alone are in the range of USD 80 to 100 million. Relief assistance is being provided by various international organizations including UNCHR, WFP, and others as well as bilaterals and international NGOs and is considered to be sufficient to cover the immediate needs. At the request of the Tajikistan Government, a World Bank mission visited Tajikistan in September 1997 to identify the outline of a possible assistance program. In response to the Government's concerns that shortage of resources and delayed arrival of external assistance could cause the peace process to derail, the World Bank decided to launch two simultaneous operations: A Post-Conflict Rehabilitation Credit of an amount of about USD 10 million equivalent which is expected to be presented to the Board in December 1997 and will help the Government to face immediate general budgetary constraints arising from the peace agreement implementation and social protection needs; and a Post-Conflict Reconstruction Credit also of an amount of about USD 10 million, which, as agreed with both the Government and the leader of the opposition and chairman of the CNR, will address the specific needs for repair and reconstruction of transport and social infrastructure and redevelopment of agriculture in the Karategin Valley area whose reintegration into the national community represents a key political factor in sustaining the peace process. B. Project Scope and Objectives: The Post-Conflict Reconstruction Credit will complement the Post-Conflict Rehabilitation Credit. Although it will cover only the most immediate needs of a specific geographical region, it will be the first large-scale operation to address the problems of reconstruction and economic recovery on the ground. As such, it will serve as a pilot for both the design and implementation of the follow up operations that will be part of the larger National Reconstruction Program to be discussed with the international donor community. The project has been designed by taking into account the results of a comprehensive needs assessment carried out in October 1997 among the local communities of the Karategin Valley by a Tajik/World Bank team in close cooperation with, and support from, the UN, and with the active involvement of the local authorities. It will help finance a series of investments needed in the next two years to rehabilitate and rebuild severely damaged transport and social infrastructure, and to restore agricultural production - 2 -  capacity in the Karategin Valley area. C. Project Description: To achieve these objectives the project will, in principle, include three main components: (i) repair and/or reconstruction of various damaged bridges and roadways on road links of regional or local economic interest; (ii) repair and/or rehabilitation of schools, health care centers and other community facilities; and (iii) rehabilitation of agricultural infrastructure, in particular, small-scale irrigation systems. Other components could be identified during the project appraisal in November 1997. D. Project Cost and Financing: The total project cost is estimated at SDR 7.3 million or USD 10 million equivalent, with, according to very preliminary estimates, about SDR 4.4 million (USD 6.0 million) for the roads and bridges component, SDR 2.2 million (USD 3.0 million) for the schools, health center and community facilities component and SDR 0.7 million (USD 1.0 million) for support to agriculture. Grant co-financing in amount of about USD 1.5 million for the technical assistance to support project implementation is being sought. E. Project Implementation: The project will be implemented over a period of about two years beginning in Spring 1998. To oversee and coordinate project implementation management a Project Coordination Unit (PCU) will be established in the Prime Minister's office. The PCU will issue monthly supervision reports including statements on the use of credit funds to the Prime Minister and the CNR. The roads and bridges component will be executed under the technical oversight of the Ministry of Transport. Because of the small scale and the geographical dispersion of the project elements and the need to work in close association with the population concerned the implementation of the community facilities rehabilitation and agricultural input components will be contracted out to International Organizations (IOs) or Non-Governmental Organizations (NGOs) already involved in the implementation of such programs in the Karategin Valley area and/or other parts of Tajikistan. Setting up mechanisms to involve local authorities in project implementation and thereby strengthen local administration capacity will also be explored. Because their nature and size are unlikely to elicit the interest of foreign contractors, all works will be procured through national competitive bidding or, when impractical, implemented through force account. G. Environmental Aspects: The project is classified as a category (B-) operation. It will not have any environmental issue associated with its implementation since it will focus exclusively on the reconstruction and/or repair of existing infrastructure or facilities. It will not involve any resettlement. Currently available information suggests that landmines are not an issue of importance. H. Poverty Impact: Although the project is not targeted at a specific social category, it is aimed at improving the livelihood of - 3 -  communities that were cut off from the rest of the country and marginalized by the war, and the majority of whom are poor by any standards. I. Benefits and Risks: The proposed project will help the communities of the Karategin Valley area to regain access to markets for their agricultural production and redevelop the local economies. It will also create a substantial number of employment opportunities. The restoration of schools and health care facilities will have a significant positive impact on the delivery of educational and health services. By contributing to the reintegration of a community that was marginalized by the effects of the conflict the project will yield visible developmental as well as political benefits . 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. The demobilization of soldiers and their reintegration into civil life in the context of Tajikistan's economy constitutes a formidable challenge and its favorable completion could be adversely jeopardized by the rigors of the coming winter. Moreover, the existence of a few warlords who are neither under control of the Government nor the opposition represents a persistent threat to the economy and political stability. Last, there is a risk that problems from political and military developments in neighboring Afghanistan could spill over into Tajikistan. Political risks are difficult to manage, but the provision of budgetary support under PCAC I to help the Government bear some of the costs of the peace process can be expected to contribute to bolstering political stability. (b) Managerial and technical risks: Effective and timely implementation of the project requires the early creation of the PCU, including the appointment of key staff. The capacity of the local consulting and contracting industry is not known at this point, and contracting bottlenecks could delay implementation. 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 focussing on a few key components, (b) the relatively unsophisticated nature of the works to be carried out, (c) the provision of technical assistance as early as possible in the implementation process, and (d) the involvement of IOs and NGOs that already have experience in the management of this type of reconstruction and rehabilitation works in the project area and/or Tajikistan. Placing the project under the responsibility of the Prime Minister and having its implementation closely monitored by the CNR should help ensure the appropriate use of funds and minimize the risks of diversion. Contact point: Felix A. Jakob, Team Leader The World Bank 1818 H St. NW Washington, D.C., 20433 - 4 -  Tel.: (202) 473 70 73 Fax.: (202) 6477 13 86 Note: This information is provided for an evolving project. Certain components may not necessarily be included in the final project. Processed by the World Bank Infoshop week ending November 14, 1997. - 5 -  Annex Environmental Aspects The project is classified as a category (B-) operation. It will not have any environmental issue associated with its implementation since it will focus exclusively on the reconstruction and/or repair of existing infrastructure or facilities. It will not involve any resettlement. Currently available information suggests that landmines are not an issue of importance. - 6 -