Cambodia - Emergency Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16669 IMPLEMENTATION COMPLETION REPORT CAMBODIA EMERGENCY REHABILITATION PROJECT Credit No. 2550-KH June 10, 1997 Country Operations Division Country Department 1 East Asia & Pacific Region 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.  CURRENCY EQUIVALENTS Currency Unit = Cambodian Riel (R) At appraisal = US$1 = 2000 Riel At completion = US$1 = 2500 Riel WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 - December 31 ABBREVIATION AND ACRONYMS ADB Asian Development Bank CMEA Council of Mutual Economic Assistance ERC Emergency Rehabilitation Credit DC Direct Contracting ICB International Competitive Bidding ICORC International Committee for the Reconstruction of Cambodia IDA International Development Association IDF Intemnational Development Fund IMF International Monetary Fund IS International Shopping IGF International Grant Facility NBC National Bank of Cambodia NGO Non-Govemnment Organization PIU Project Implementation Unit SIDA Swedish International Development Agency SDR Special Drawing Right SNC Supreme National Council of Cambodia UNDP United Nations Development Program UNHCR United Nations High Commission for Refugees UNTAC United Nations Transitional Authority in Cambodia Vice President: Jean-Michel Severino, EAP Director: Javad Khalilzadeh-Shirazi, EAI Division Chief: Sanjay Dhar, Acting, EAICO Task Manager: Guy Darlan, EAlCO  i FOR OFFICIAL USE ONLY TABLE OF CONTENTS Preface .......................................................... iii Evaluation Summary ...........................................................v PART I: PROJECT IMPLEMENTATION ASSESSMENT A. Project Objectives ....................................................1I B. Achievement of Objectives ...................................................2 C. Implementation Record and Major Factors Affecting the Project ....... 2 D. Project Sustainability ...................................................3 E. Borrower Performance ...................................................4 F. Bank Performance ...................................................4 G. Assessment of Outcome ...................................................5 H. Relevance of Project Objectives and Design . ....................................... 6 I. Future Operations .....................................................6 J. Key Lessons Learned .....................................................6 PART II: STATISTICAL INFORMATION Table 1: Summary of Assessments. 9 Table 2: Related Bank Operations .10 Table 3: Project Timetable .11 Table 4: Credit Disbursements .11 Table 5-6: Key Indicators for Project Implementation and Operation 12 Table 7: Studies under the Project .14 Table 8: Project Costs and Financing .14 Table 9: Economic Cost and Benefits .15 Table 10: Status of Legal Covenants .15 Table 11: Compliance with Operational Manual Statements .15 Table 12: Bank Resources: Staff Inputs .16 Table 13 Bank Resources: Missions . 17 APPENDICES Appendix A: Completion Mission Aide Memoire .19 Appendix B: Borrower's Evaluation Report submitted as a contribution to the Implementation Completion Report .20 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.   iii IMPLEMENTATION COMPLETION REPORT CAMBODIA EMERGENCY REHABILITATION PROJECT CREDIT No. 2550-KH PREFACE This is the Implementation Completion Report (ICR) for the Cambodia Emergency Rehabilitation Project (Credit 2550-KH) in the amount of SDR 45.2 million, which was approved on October 26, 1993 and made effective on January 13, 1994. Two consultant trust funds, granted by Japan and Sweden and managed by the Bank, were made available to support project activities. Project activities were completed on schedule on June 30, 1996. However, a six month extension was granted to give the Project Implementation Unit (PIU) sufficient time to process all outstanding withdrawal applications and cover related expenditures. The Credit was closed on December 31, 1996. Final disbursement took place on April 30, 1997. The ICR was prepared by Messrs. Guy Darlan (EAICO) and Anton Rychener (Consultant), and Ms. Annie Green (EAlCO), and was reviewed by Mr. Walter Schwermer, Project Adviser, EA1DR. The borrower conducted a separate evaluation of the project and provided a copy of the evaluation report to the Bank. This report is included as Appendix B. During the preparation of this ICR, a number of Cambodian Government officials were interviewed and gave their opinions on the project and the services it rendered. A limited number of indirect project beneficiaries such as rice farmers, villagers, ordinary citizens of Phnom Penh, railway, water and electricity workers were also interviewed. Their observations are contained in this report.   v IMPLEMENTATION COMPLETION REPORT CAMBODIA EMERGENCY REHABILITATION PROJECT (Credit No. 2550-KH) EVALUATION SUMMARY Introduction (i) After 25 years of war and internal conflict, the Paris Peace Accords were signed in October of 1991. The Accords established the Supreme National Council (SNC, representing the four major Cambodian political factions) as the transitional vehicle of Cambodia's sovereignty. They also established the United Nations Transitional Authority for Cambodia (UNTAC) to maintain peace and develop a neutral political environment in which free and fair elections could be held. The elections took place in May 1993 and a national government was established in September 1993 within a framework of parliamentary democracy, under a new constitution, with a constitutional monarch as head of state. International assistance resumed. A Ministerial Conference held in Tokyo in June 1992 endorsed the priorities identified in the UN Secretary General's Appeal for Cambodia's Immediate Needs and National Rehabilitation and pledged some US$ 880 million for the country's rehabilitation. The World Bank contributed to this international effort through the Emergency Rehabilitation Project. The Emergency Rehabilitation Project (ERP) (ii) This was the first credit extended by IDA to Cambodia, and the first substantive lending operation by any official donor to the elected government following the resumption of aid to Cambodia. It was identified, prepared, and appraised during two missions in September 1992 and January 1993. (iii) The project was consistent with the Bank's policy on emergency operations. It was designed to have an immediate impact as opposed to a longer-term development impact. The design and scope of the project were decided on the basis of Cambodia's overall financing requirements and a viable fiscal strategy. It took into account ongoing rehabilitation activities, pledges and commitments of other donors, as well as the likely disbursements of these pledges and commitments during the first 18 months of the new government. The project was negotiated in Cambodia in January of 1993. However, due to diverging views of the four political parties of the SNC on the draft Credit Agreement, negotiations could only be completed in September 1993, with the representatives of the newly formed Royal Government.  vi Project Objectives (iv) In support of the reconstruction effort, the ERP was designed to help restore and maintain capacity and production in key sectors during the first 1S months of the new government. and provide budget support through the counterpart funds generated by the Credit. The project provided for: (a) imported goods for specific rehabilitation activities in the transport, agriculture, health, education, power, and water supply sectors; and (b) critical imports required generally for the rehabilitation of the Cambodian economy. Implementation Experience (v) The choice of an emergency rehabilitation operation--as opposed to an investment operation--to address the priority needs of post-conflict Cambodia was judicious, as an investment operation would have exceeded the institutional capacity of Cambodia at the time. The project substantially achieved its objectives. The equipment installed under the project is currently in use and the budget support protected critical expenditures during the recovery period. (vi) In line with Bank guidelines on emergency rehabilitation operations, the ERP retained the necessary flexibility during implementation to, on the one hand, address the most pressing needs and, on the other hand, consider in the indicative list of equipment and goods prepared at appraisal only those that could be procured and delivered expeditiously. This meant that activities that took too long to prepare had to be dropped. This was particularly the case in agriculture and road transportation, where detailed technical specifications could often not be prepared within the project timeframe. It also meant that equipment and goods for which it was clear that there would be insufficient local capacity for operation and maintenance upon delivery had to be dropped as well. (vii) Fast disbursing components--General Critical Imports, in particular--benefited from this situation. Because other donors experienced delays in delivering the budget support that they had pledged to Cambodia on time, and as a result of the pressure on the new government to re-establish public authority over the country, this component disbursed far ahead of schedule and was allocated almost twice as much as initially planned. Implementation in the Health, Power, and Water Supply components was carried out essentially as initially planned. (viii) The technical assistance support provided under the two trust funds enabled the beneficiary agencies to carry out important parts of the reconstruction programs that fell under their responsibility. It also provided the PIU with the support needed to manage the project satisfactorily.  vii Borrower Performance (ix) The performance of the Borrower was commendable. By allocating the necessary time and effort to the project, the beneficiary agencies were able to compensate for their weak implementation capacity and lack of experience with Bank procurement procedures. Bank supervision missions had easy access to the key Cambodian authorities in the beneficiary agencies and the Ministry of Economy and Finance, and the authorities provided feedback to the Bank in a timely manner. Bank Performance (x) The Bank must be given credit for having prepared the only type of Bank operation that could deliver much-needed services quickly and efficiently in the wake of 25 years of internal conflict in a country without an effective administration. A normal Bank investment operation would have been much more difficult to implement in that context. The supervision performance of the Bank was also good. Client satisfaction with the Bank's performance is high. Overall project supervision was effective in spite of the complexity resulting from the numerous sectoral components that were monitored by sectoral team members. It was noted that, early in the project, when the turnover of the Task Managers (three in rapid succession) had some effect, a number of supervision problems were identified and resolved before they had a negative impact on the project. It was also noted that Bank missions were staffed with experienced Bank staff who understood the needs of the country at that particular point in time. Early in the project, some of the consultants recruited under the Trust Funds, and who were accustomed to investment projects, had difficulty understanding the special nature of this operation and the streamlined procurement procedures that applied. However, this had a minimal negative impact on the operation. It simply translated into longer periods than needed to prepare technical specifications for equipment to be procured. Project reports and documentation were well prepared and maintained by the Task Managers and sector specialists throughout the duration of the project. Sustainability (xi) In view of the government's extremely weak implementation capacity and limited resources for O&M, the Bank is continuing its assistance beyond the life of the ERP to help ensure sustainability. Due to the nature of the ERP, little or no training took place under the project. The government weaknesses and limited resources were identified as a major risk of the project and addressed during ERP appraisal and in the Country Assistance Strategy (CAS) for Cambodia. As a result, several follow-up operations have been prepared.  viii Key Lessons Learned (xii) There are three main lessons learned in this project. First, priorities do not necessarily qualify as emergencies. Greater selectivity should have been applied during project appraisal when identifying the types of priorities that could be carried out in the very limited time frame of the ERP. Second, in post-conflict countries where operating conditions are very different from what international contractors are accustomed to, construction activities that rely on foreign expertise should be left out of emergency rehabilitation projects. And third, government commitment to the project and its responsiveness to our requests in the course of project implementation compensated for the borrower's weak institutional capacities. This has had a favorable impact on both the outcome of the project and time elapsed during implementation.  I IMPLEMENTATION COMPLETION REPORT CAMBODIA EMERGENCY REHABILITATION PROJECT (Credit No. 2550-KH) PART I - PROJECT IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES Project Objectives and Scope 1. In line with Bank guidelines on emergency rehabilitation operations, the ERP's main objective was to restore the functioning of basic economic activities after the cessation of hostilities. The project helped restore capacity utilization and production in key sectors. As evidenced by appeals to the donor community by the UN Secretary General and the UNTAC Administrator, there was considerable pressure to support the government that would come out of the UN-sponsored elections of May 1993 with a quick infusion of capital. The Bank in particular was believed to be in the best position to intervene first. The project provided for: (i) imported goods for specific rehabilitation activities in the transport, agriculture, health, education, power, and water supply sectors; and (ii) budget support through the counterpart fund generated under the General Critical Imports component. Implementation efforts were essentially devoted to achieving physical objectives. The expected result was to help establish an enabling environment for private sector activities and further international assistance. Evaluation of Objectives 2 Project objectives as defined in the MOP and the DCA were simple and straightforward, and were substantially met. They were nevertheless ambitious, since at the time of project preparation and appraisal, and for the most part of the project life, the Cambodian Government's implementation and supervisory capacity was close to non- existent. This extreme situation, characteristic of post-conflict countries, seemed to be well understood by the appraisal team and was clearly identified in the MOP as part of the project risks. Yet, the Technical Annex (called Implementation Volume) used for several project components contained unrealistic indicators of performance measurement (see Table 5-6). Many of these indicators would have been appropriate for investment operations rather than emergency rehabilitation projects. This was particularly the case for the Agriculture and Transportation components.  2 B. ACHIEVEMENT OF OBJECTIVES 3. Insofar as the emergency nature of the operation was meant to address the need for Cambodia to obtain quick external financial and technical assistance to help restore critical economic assets, the ERP has successfully met its objectives. In addition, in many ways the operation paved the way for renewed private sector activity and for the donor community to prepare its assistance program to the Government. All major donors--the European Union, USA, Japan, France and Germany--have cited the Bank's presence as a determining factor in their decisions to accelerate their respective aid interventions. The Bank itself benefited immensely from the ERP in preparing its assistance strategy and developing its lending program for Cambodia. In particular, the sectoral interventions of the ERP highlighted the extremely weak human, physical, and regulatory environment within which project activities were carried out. These weaknesses have since been taken into account in the preparation of the CAS and in follow-up IDA-assisted projects in agriculture, power, water supply, roads, and balance of payments support. C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT Implementation Record 4. Implementation progress was good at all times. Audit reports were submitted annually and on time. Project activities closed on schedule; however, a six month extension was granted to give the Project Implementation Unit (PIU) sufficient time to process all outstanding withdrawal applications and cover related expenditures. The PIU was established in the Ministry of Economy and Finance to manage, administer, and coordinate the project. It efficiently handled procurement of all goods to be imported, monitored the proper allocation and distribution of these goods, carried out the financial control of all sub-projects, and kept excellent records throughout the project. The Project Director was the Secretary of State for Finance. Such a high level government representation significantly facilitated project coordination and implementation. The Project Accountant was an expatriate Khmer whose input and professional rigor was key to the project's success. 5. On the other hand, the internationally-recruited Sr. Procurement Expert had difficulty grasping the true nature of this emergency rehabilitation operation at first, although he had extensive knowledge of Bank procurement procedures. This was the main cause for the disbursement lag during the first twelve months of the project. Another cause of the disbursement lag was the optimistic assessment that the beneficiary agencies would be able to identify their own priorities from the indicative lists prepared during appraisal. This was not the case for the following reasons: (i) central government services, in Phnom Penh particularly, had been seriously affected by the prolonged  3 internal conflict; (ii) the new government had just been established after a two-year government vacuum partially filled by UNTAC; and (iii) during its mandate, UNTAC did not attempt to strengthen capacity in line ministries. As a result, the international experts played a more important role than anticipated in identifying priorities, preparing technical specifications, and monitoring the work done by contractors. 6. The disbursement lag was more pronounced during the first twelve months of the project, but were not a cause for major concern. The disbursement lag did not exceed 13 percent (i.e., actual cumulative disbursements representing 87 percent of estimate). Once the learning period passed, the disbursement lag closed. Major Factors Affecting the Project 7. As explained in Para. 5 above, misunderstandings on the nature of the operation and the special procurement procedures that applied were the most significant factors that affected the speed at which project activities were implemented. Another important factor was the limited government resources available for counterpart funding. During the first part of the project, the budget support generated by the reimbursement of General Critical Imports was not sufficient to service all of the pressing needs. Understandably, the new government considered the payment of salaries for civilian and military personnel a priority at a time when it was striving to establish its authority over the country, following years of vacuum at the central government level. The situation improved after the first year, as Credit funds were reallocated to faster disbursing components such as General Critical Imports. However, this was done at the expense of project activities that took longer to prepare. D. PROJECT SUSTAINABILITY 8. In view of the Government's extremely weak implementation capacity and the limited resources for O&M, the Bank decided to extend its assistance beyond the life of the ERP to help ensure sustainability. The concern has been two-fold. First, will the beneficiary agencies be able to continue to make good use of the imported equipment after the project closes ? And second, will the Government develop an effective planning and budgeting mechanism for resource allocation for consumables and O&M ? 9. Due to the nature of the ERP, little or no training took place under the project, except at the PIU. Although local counterpart staff were assigned to the foreign experts who were called upon to identify equipment needs, prepare technical specifications, and monitor suppliers' contracts, those counterparts were not formally trained to ensure sustainability. This, and the fact that the capacity of the newly elected government to mobilize resources for O&M would remain extremely limited for several years, was identified as a major risk of the project and was addressed during ERP appraisal and preparation of the CAS for Cambodia. As a result, the Bank and UNDP provided support in the areas most likely to require skilled training for maintenance, namely power, water  4 supply, roads, and agriculture. Two UNDP-financed, Bank-executed technical assistance projects were implemented in parallel to the ERP and helped build capacity in the power and water supply sectors. Later, in the context of the CAS, the Government and the Bank agreed to address the sustainability issue by preparing a series of second-generation projects designed to provide the support that the emergency rehabilittion operation could not provide. Follow-up operations are now being implemented or prepared in five of the six sectors supported under the ERP: agriculture, health, power, transport, and water supply. These second-generation projects all have strong capacity-building components to complement their investment components. Furthermore, with regard to resource allocations for O&M, the Bank has continued to provide budget support through the follow-up Economic Rehabilitation Credit (ERC), now fully disbursed, and is preparing a Structural Adjustment Credit (SAC). The ERC enabled the Government to increase its allocations for O&M, though at a lower level than anticipated. The SAC would serve the same purpose, this time with stronger conditionality to ensure that the Government will make a stronger effort to cover recurrent expenditures in the priority areas. 10. The PIU experience was better than that of the beneficiary agencies. In spite of the temporary character of the PIU, the hands-on experience gained by the local staff in that unit benefited procurement management under subsequent IDA operations and other aid programs. As the ERP was closing, many of these local staff were assigned to IDA- financed project management units as well as the Government's newly established central procurement unit. E. BORROWER PERFORMANCE 11. Given the situation that prevailed in Cambodia during project appraisal, the Government had a limited role in preparing the project. However, once the newly elected Government was in place, the Borrower participated actively in its implementation and its performance was commendable. The Minister of Economy and Finance explained the project objectives to his sectoral colleagues during a lengthy session of the Council of Ministers and succeeded in mobilizing their attention and support as soon as they took office. By allocating the necessary time and efforts to the project, the beneficiary agencies were able to compensate for their weak implementation capacity and lack of experience with Bank procurement procedures. Bank supervision missions had easy access to the key Cambodian authorities in the beneficiary agencies and the Ministry of Economy and Finance, and the authorities provided feedback to the Bank in a timely manner. F. BANK PERFORMANCE 12. The Bank staff who helped prepare the ERP deserve credit for carrying out their work in a difficult context. They encountered unusual difficulties during identification, appraisal, and negotiations. When identification started in 1992, the security situation in  5 Cambodia was extremely volatile and discussions with the representatives of the four parties of the SNC were difficult. Cambodia was under UJNTAC command as the parties were preparing for general elections. Each party felt that it had to secure some of the benefits of the project for its own camp. None of the party representatives had prior experience with donor-financed projects. Negotiations started in January 1993 in Phnom Penh, during the electoral campaign, under military protection. They broke down due to the conflicting views of the four SNC parties and were not completed until after the elections, with the representatives of the newly formed Royal Government. 13. During implementation, Bank staff inputs were much higher than budgeted. This was due to unreasonably low budget allocations for this operation. The staff who participated in the project supervision strongly felt that, as recommended in the guidelines for emergency rehabilitation operations, the work load implications should have been recognized, and adequate provision made for staff time and supervision budget. It was initially felt that the consultant trust funds could help alleviate the administrative budget constraint. It turned out, however, that the consultants had difficulty grasping the special nature of this emergency rehabilitation operation. This was particularly the case for the PIU's Procurement Adviser whose role was critical. As a result, substantial delays occurred during the first twelve months and additional Bank resources had to be spent on supervision by the Bank's Task Manager and sectoral team members. The arguments often raised by the consultants, and sometimes by the Bank's sectoral team members, were that: (a) the Cambodian beneficiary agencies were not able to perform the tasks expected of them during project implementation, and (b) sustainability would become a major problem after project closing. The Task Manager and the Country Lawyer responded by reminding Bank staff and consultants concerned that the DCA had clearly underlined the emergency nature of the ERP, and that the project would therefore not be implemented as a traditional investment operation unless the DCA was amended. The Government fully supported that view and never considered amending the DCA. It was finally agreed that activities that could not be implemented satisfactorily in an emergency mode be dropped from the indicative list prepared at appraisal in favor of those that could. This led to significant Credit reallocations toward the end of the project, which is not unusual for an emergency rehabilitation operation. Furthermore, to address the sustainability issue, the Bank and the Government agreed to prepare a series of follow-up operations. G. ASSESSMENT OF OUTCOME 14. The project objectives were successfully achieved. The ratings on Project Development Objectives and Implementation Progress were ranked Highly Satisfactory or Satisfactory throughout the project. The factors that contributed to the success of the operation are: (i) the strong commitment of the Government to the project; (ii) the institutional support provided through the Japanese and Swedish Trust Funds; (iii) the flexible design of operation and the special procurement procedures that applied; and (iv) the close, albeit expensive, supervision by the Bank.  6 15. Sustainability was potentially an issue. However, the Government and the Bank have taken the appropriate steps in the context of the CAS to address it. Several follow- up operations are now being implemented or are being prepared in five of the six sectors covered under the ERP. The Borrower values this outcome of the project in particular (see the Government's Evaluation in the Annex). H. RELEVANCE OF PROJECT OBJECTIVES AND DESIGN 16. An emergency rehabilitation project was the only type of Bank operation that could have delivered the much-needed services quickly and efficiently in the wake of 25 years of internal conflict in a country without an effective central administration. A normal Bank investment operation would have been much more difficult to implement in that context. However, contrary to the DCA and the MOP, the Technical Annex (or Implementation Volume) did not always respect the emergency nature of the operation. It sometimes was drafted like an SAR for investment operations (see Para. 2), which took away the flexibility in project design that is recommended for emergency rehabilitation projects. I. FUTURE OPERATIONS 17. There are several follow-up operations to the ERP: the Phnom Penh Power Rehabilitation Project and the Agriculture Productivity Improvement Project, both now under implementation; and the Water Supply Rehabilitation and Road Rehabilitation projects, under preparation. These "second-generation" projects all have strong capacity- building components to complement their infrastructure rehabilitation components, something that could not be done under the ERP. Furthermore, with regard to subsequent balance of payment support, the Bank extended the Economic Rehabilitation Credit (ERC) and is now preparing a SAC. J. KEY LESSONS LEARNED 18. There are three main lessons learned in this project. First, priorities do not necessarily qualify as emergencies. Greater selectivity should have been applied during project appraisal when identifying the types of priorities that could be carried out in the very limited timeframe of the ERP. Too often, activities were included in the list of project activities simply because they were considered critical for Cambodia's rehabilitation. Many of them were in agriculture and had to be dropped during project implementation, either because they took too long to prepare or would have required, for their maintenance, a level of skills and operating budget that were not immediately available. Second, in post-conflict countries where operating conditions are very different from what international contractors are accustomed to, construction activities  7 that rely on foreign expertise should be left out of emergency rehabilitation projects. Bank procedures, although adjusted for this operation, did not allow to screen out contractors who did not have the experience to operate in difficult environments. For example, major delays were incurred by the contractor during construction of the Phnom Penh Floating Port in spite of close monitoring. This situation also applied in the case of the installation of the power generators. On the other hand, construction of the school buildings was carried out on time mainly because it relied on local expertise that knew how to operate efficiently in the country's situation. And third, government commitment to the project and its responsiveness to our requests in the course of project implementation compensated for the borrower's weak institutional capacities. This has had a favorable impact on both the outcome of the project and time elapsed during implementation. 19. The lessons learned from the ERP helped shape the portfolio of subsequent Bank operations in Cambodia. It was fortunate that the sectoral team members who were involved in the ERP were also those who prepared the fo]low-up operations. The sectoral interventions of the ERP helped to highlight the extremely weak environment within which those investments were made. Throughout the project life, trained manpower to look after investments was almost completely absent. Also, there were no operational policies with respect to such matters as procurement, cost recovery, beneficiary participation, and environmental standards. The follow-up operations have been designed to address these deficiencies. For example, all have strong capacity-building components and attempt to remedy the institutional, legal, and regulatory weaknesses characteristic of the Cambodian environment. Finally, all have strong project management units that slowly build relationships with the rest of the host ministry or agency in the course of the project as capacity develops in the administration.   9 PART II: STATISTICAL INFORMATION Table 1: Summary of Assessments A. Achievement of objectives Substantial Partial Vegligible Not applicable Macro policies LII [ZC Sector policies F7I O [Ii Financial objectives FIII Institutional development E E El Physical objectives [ EL L K] Poverty reduction [ E O L Gender issues O ] K CL Other social objectives O K K K Environmental objectives I E L E Public sector management I K] K EL Private sector development K hi O E Other (BOP support) K K] K B. Proiect sustainability Likelv Unlikely UJncertain IZ/I I] -I I I C. Bank performance Highly satisfactorv Satisfactorv Deficient Identification | | Preparation assistance || |l Appraisal Supervision D. Borrower performance _Highly satisfactory Satisfactorv Deficient Preparation ] [ | ] Implementation | |iii] Covenant compliance W Operation (if applicable) E. Assessment of outcome Highly satisfactorv Satisfactorv Unsatisfactory Highlv unsatisfactory K]l EL 0K]  10 Table 2: Related Bank Loans/Credits Year of Loan/credit title Purpose Approval Status Preceding operations None Following operations 1. Economic Rehabilitation Credit Balance of payments support 1995 Closed 2. Phnom Penh Power Rehabilitation Rehabilitate energy in 1995 On-going Phnom Penh and strengthen implementation capacity of power utilitity company (EDC) 3. Agriculture-Productivity Improvement Increase agricultural 1997 On-going productivity, strengthen implementation capacity of Ministry of Agriculture and help rehabilitate agricultural training institutions 4. Structural Adjustment Credit Balance of payments support Under preparation 5. Water Supply Rehabilitation Rehabilitate water supply Under station in Sihanoukville and preparation Phnom Penh and strengthen implementation capacity of water authorities 6. Road Rehabilitation Rehabilitation of selected Under main and secondary roads preparation and strengthen implementation capacity of Ministry of Public Works and Transportation  I1 Table 3: Project Timetable Steps in project cycle Date planned Date actual Identification May 1, 1992 May 29, 1992 Preparation May 1992 June25, 1992 Appraisal June 25, 1992 September 2, 1992 Negotiations January 11, 1993 September 30, 1993 Board presentation March 30, 1993 October 26, 1993 Signing April 1993 November 5, 1993 Effectiveness June 1993 January 13, 1994 Midterm review n.a. October 1994 Project completion June 30, 1996 December 31, 1996 Loan closing October 31, 1996 April 30, 1997 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (SDR million) FY 1994 FY 1995 FY 1996 FY 1997 Appraisal estimate 22.6 40.6 45.2 Actual 20.7 35.5 43.2 45.2 Actual as percent of estimate 91.6 87.4 95.6 100.0 Date of final disbursement April 30, 1997  12 Table 5 - 6: Key Indicators for Project Implementation and Operation I. Key implementation indicators in SAR/ Estimated President's Report Target Actual Establish and Maintain Project Implementation Unit December 1993 December 1993 Funds generated from sale of goods financed under n.a. Completed the project to be allocated as counterpat funds Agriculture: - number of and area covered with 300,000 ha inappropriate rice field demonstration plots - number of agricultural samples collected, estimates of rice produc- tion - number of hectares cleared for land 800,000 ha; inappropriate reclamation and number of used 500 tractors tractors repaired and operating Rubber: - number of hectares stimulated and 62,000 ha inappropriate data on amount of production - number of hectares of immature 10,000 ha inappropriate trees weeded and fertilized - data on production grading not available inappropriate Fisheries: - production of fish fingerlings not available inappropriate - number of fishing lots marked not available inappropriate - 1,000 m3 and area of canals not available inappropriate dredged June 1995 Livestock: - number of heads vaccinated by not available inappropriate provinces Land titling: - number of fields registered and not available inappropriate titles issued Education: - number of textbooks producted 55,000 (total of monthly by the MOE print shop I million over the life of the credit) - number of textbooks procured on not available the international market - number of textbooks available in not available provincial warehouses for distribu- tion to the districts and education facilities - construction of primary schools in April 1995 October 1995 selected villages Health: - distribution of essential drugs and October 1995 October 1995 medical equipment Power: - restoration of sufficient power December 1993 May 1996 supply and improve reliability of power system in Phnom Penh  13 Transport: - kilometers of road rehabilitated 620 km inappropriate and maintained - meters of bridges repaird or reha- 1100 meters inappropriate bilated - numbers of geotechnical tests not available inappropriate performed - amount of cargo handling equip- not available inappropriate ment repaired - amount of dredging performed not available inappropriate - number of navaids replaced or not available inappropriate installed - number of railway rolling stock not available December 1996 repaired - number of railway locomotives not available December 1996 repaired - construction of floating port in n.a. May 1996 Phnom Penh Water Supply: - rehabilitation of 20 kms of pipe- mid-1994 lines in Phnom Penh and Siha- noukville mid-1994 provision of a drilling rig and 300 hand pumps for rural water supply II. Other indicators n.a.  14 Table 7: Studies Included in Project Not applicable Table 8A: Project Costs Appraisal estimate (US$M) Actual estimate (US$M) Local Foreign Local Foreign Source costs costs Total costs costs Total IDA - 62.7 62.7 - 62.7 62.7 SIDA Grant - 2.3 2.3 - 2.3 2.3 Government 8.1 - 8.1 8.1 - 8.1 Total 8.1 65.0 73.1 8.1 65.0 73.1 Table 8B: Project Financing Appraisal estimate (US$M) Actual estimate (US$M) Local Foreign Local Foreign Source costs costs Total costs costs Total IDA 62.7 62.7 - 62.7 62.7 SIDA - 2.3 2.3 - 2.3 2.3 Government 8.1 - 8.1 8.1 - 8.1 Total 8.1 65.0 73.1 8.1 65.0 73.1 Note: A PHRD grant in the amount of JPY 97,500,000 (approximately US$1 million) was provided for project implementation.  15 Table 9: Economic Costs and Benefits Not applicable Table 10: Status of Legal Covenants Cove- Original Revised Description nant Present fulfill- fulfill- of Agreement Section type status ment ment covenant Comments date date DCA for 4.01 I C June 30, Maintenance of Audit reports ERP dated 1994 records and received annually November accounts. Audits from June 30, 5, 1993 of records and 1994 accounts Table 11: Compliance with Operations Manual Statements No significant variance with the Operations Manual Statements based on documents in the project file.  16 Table 12: Bank Resources: Staff Inputs Stage of Planned Revised Actual project cycle Weeks US$ (000) Weeks US$ (000) Weeks US$ (000) Through Appraisal 0.0 0.0 170.3 425.8 41.9 142.3 Appraisal - Board 0.0 0.0 115.9 289.8 65.3 226.0 Supervision 41.0 140.3 67.9 200.7 101.5 319.5 Completion 3.5 9.9 2.8 12.9 0.5 9.3 TOTAL 44.5 150.2 356.9 929.2 209.2 697.1  17 Table 13: Bank Resources: Missions Performance Rating Specialized Number Days staff Implemen- Develop- Types Stage of Month/ of in skills tation ment of project cycle year persons field represented status objectives problems Through Appraisal Sept. 1992 13 16 E, TR. H, AG, P, ED, PR, D, LEG Dec. 1992 2 9 E Appraisal through Feb. 1993 4 14 E, LEG, PR Board approval Board approval - - - - - - through effectiveness Supervision March 1994 4 E, TR, AG, HS HS H& ED Aug. 1994 2 13 TR, AG Oct. 1994 5 10 E, TR, AG, S S M, F P, ED & H March 1995 3 10 E May 1995 _ 12 E, TR July 1995 1 5 E S S Sept. 1995 1 13 TR Feb. 1996 1 10 E S S Completion May 1996 1 10 E 1. Specialization 2. Performance Rating 3. Types of Problems E = Economist HS= Highly satisfactory F = Financial TR = Transport Engineer S = Satisfactory T = Technical H = Health Specialist U = Unsatisfactory M = Managerial AG = Agriculture Specialist P = Power Engineer ED = Education Specialist LEG = Legal Specialist PR = Procurement Specialist D = Disbursement Specialist   19 Appendix A CAMBODIA PROJECT COMPLETION MISSION UNDER CR. 2550-KH A Bank mission' visited Cambodia in February and May 1996 to prepare the project for closing. This was followed by a visit from June 11-28, 1996, by the Consultant recruited to help prepare the ICR.2 A number of Cambodian Government officials were interviewed during that last visit. They gave their opinions on the project and the services it rendered. A number of indirect project beneficiaries such as rice farmers, villagers, ordinary citizens of Phnom Penh, railway, water and electricity workers were also interviewed by the Consultant. Their observations are contained in this report. The Consultant left no formal Aide-Memoire. Instead, a first draft of this ICR was prepared and sent to the Government for comments. The Government also conducted a separate evaluation of the project and provided a copy of the evaluation report to the Bank. This report is included as Appendix B. IThe mission was comprised of Mr. Guy Darlan and Ms. Annie Green (EA ICO). 2Mr. Anton Rychener.  20 Appendix B CAMBODIA GOVERNMENT'S EVALUATION REPORT OF CR. 2550-KH Submitted as a Contribution to the Implementation Completion Report for the Project Overall Evaluation The Emergency Rehabilitation Project (ERP) achieved its objectives, albeit with some delay in some instances. The rehabilitation operations allowed the Government to put critical facilities back in service after years of war and lack of maintenance. As expected, the weak implementation capacity of the technical ministries and agencies that benefited under the Project constituted a major constraint. Fortunately, the institutional support provided by the Project Implementation Unit (PIU) and the short- term missions of international consultants generally compensated for these weaknesses. One of the most important outcomes of the Project was that the local PIU staff, who had had no prior experience, received on-the-job training in project management, procurement, and accounting. At the end of the ERP, they were sent to strengthen other agencies and project management units of the Government. Units that benefited from their services include the newly established Procurement Unit and the Financial and Accounting Unit, both in the Ministry of Economy and Finance. Furthermore, most rehabilitation operations set the stage for follow-up projects that are now being financed/prepared by the World Bank or other donors. Examples of follow-up projects under World Bank financing include the Phnom Penh Power Rehabilitation Project, which is under implementation, and the Water Supply Project and Road Projects, which are under preparation. The follow-up projects seek a more thorough rehabilitation of the infrastructure facilities and much needed institutional strengthening and sectoral reform. This benefit of the ERP is important for the following reason: when the ERP implementation started in 1993, the newly established Government had no precise idea of priority needs in many sectors. The ERP helped identify those needs. Finally, the budget support provided under the ERP proved to be indispensable in supporting the newly and democratically elected Government which was carrying out a financial stabilization program with the support of the IMF. On the downside, the Royal Government regrets that because of the lack of funds at the end of the Project, some activities had to be dropped. Because those activities took longer to prepare, they became casualties of the intense competition for the limited funds available under the Credit. The fact that the whole Credit amount of US$63 million was  21 fully committed within the first two years of the Project shows that the needs for balance of payments support and rehabilitation had been underestimated during project preparation. Specific Problems with Contractors The selection of suppliers was done mainly on the basis of price; it did not sufficiently take experience and reputation into consideration. As a result, the Government experienced difficulties with several suppliers. The streamlined procurement procedures and the compressed timetable that applied under this emergency project made these problems possible. Power. Electricite du Cambodge (EDC) selected China Huaneng Group Hong Kong Ltd. to provide four diesel generators. The said supplier offered the lowest bid. The supplier had some experience in its own country, China, but did not have any international experience. In its offer, it turned out that the supplier had discounted a percentage of the total amount. It got the contract. However, during implementation the contractor tried to stay within the contract amount by trying to save money on installation of the generators. This led to defective installation, a dispute with the Government, and substantial delays. Phnom Penh Floating Port. The contract was passed between the Ministry of Public Works & Transport (MPWT) and Chrun-Chongquing Joint Venture. MPWT selected that company based on its lowest price. It turned out that the company's experience in the construction of floating ports was inadequate and it had to hire a sub-contractor. Two things resulted from this: (i) a seven month delay, and (ii) higher supervision costs. Health. The Ministry of Health selected the lowest bidders for the supply of drugs. Many of the suppliers were mere intermediaries who had no connection with drug companies. The results were: considerable delays in delivery, drugs with expiration dates that had expired, and the quality of the products often did not meet the Ministry's specifications. Other Problems Agriculture. The main difficulty with the component implemented by the Ministry of Agriculture was the almost total lack of qualified staff. Many component activities could not be prepared on time and had to be dropped. Lessons Learned This was the first time that post-conflict Cambodia was dealing with the international market. The lessons learned are extremely valuable and will be taken into account for future projects. The main lesson with contractors is that the Government should in the future be more careful when checking the experience of the firm, in addition to taking price into consideration.      IMAGING Report No.: 16669 Type: ICR