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Document ofThe World Bank

Report No: 62561-SL

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF THE

SIERRA LEONE INFRASTRUCTURE DEVELOPMENT PROJECT(GRANTS H1910-SL, AND H4050-SL, AND CREDIT 4469-SL)

BOARD APPROVAL DATE: DECEMBER 6, 2005 AND JUNE 19, 2008

TO THE

REPUBLIC OF SIERRA LEONE

September 21, 2011

Transport SectorCountry Department AFCF1Africa Region

ABBREVIATIONS AND ACRONYMS

AADT Annual Average Daily TrafficAfDB African Development BankCAS Country Assistance StrategyCMU Coordination and Monitoring UnitEC European CommissionFTL Freetown Terminal LimitedGoSL Government of Sierra LeoneICAO International Civil Aviation OrganizationICB International Competitive BiddingIDP Infrastructure Development ProjectIDA International Development AssociationIERR Internal Economic Rate of ReturnIRMF Independent Road Maintenance FundISR Implementation Status ReportMARPOL International Convention for the Prevention of Marine Pollution from

ShipsNBF Not Bank FinancedNCB National Competitive BiddingNCP National Commission for PrivatizationNPV Net Present ValuePAD Project Appraisal DocumentPDO Project Development ObjectivesPFM Public Finance ManagementPPF Project Preparation FacilityPRSP Poverty Reduction Strategy PaperSALWACO Sierra Leone Water CompanySDR Special Drawing RightsSLAA Sierra Leone Airports AuthoritySLPA Sierra Leone Ports AuthoritySLRA Sierra Leone Roads AuthorityTSP Transport Sector ProjectUK United KingdomUS United States

Regional Vice President: Obiageli K. EzekwesiliActing Country Director: Sergiy Kulyk

Sector Director: Jamal SaghirSector Manager: Supee Teravaninthorn

Task Team Leader: Kavita Sethi

REPUBLIC OF SIERRA LEONE

SIERRA LEONE —INFRASTRUCTURE DEVELOPMENT PROJECTP078389

Grants H1910-SL, H4050-SL, and Credit 4469-SL P087004

CONTENTS

A. SUMMARY...................................................................................................................1B. PROJECT STATUS.....................................................................................................1ANNEX 1: REVISED RESULTS FRAMEWORK AND MONITORING..................4ANNEX 2: REALLOCATION OF PROCEEDS……………………………...…. ….10


Grants H1910-SL, H4050-SL, and Credit 4469-SL

Data Sheet

Restructuring Status: DraftRestructuring Type: Level 2Last modified on date : 09/13/2011

1. Basic InformationProject ID & Name P078389: SL-IDP Transp (FY06)Country Sierra LeoneTask Team Leader Kavita SethiSector Manager/Director Supee TeravaninthornActing Country Director Sergiy KulykOriginal Board Approval Date 12/06/2005Original Closing Date: 09/30/2011Current Closing Date 09/30/2011Proposed Closing Date March 31, 2013EA Category B-Partial AssessmentRevised EA CategoryEA Completion Date 09/01/2004Revised EA Completion Date

2. Revised Financing Plan (US$m)Source Original Revised BORR 5.79 5.79 IDA 55.00 55.00 Total 60.79 60.79

3. BorrowerOrganization Department Location

Republic of Sierra Leone Sierra Leone

4. Implementing AgencyOrganization Department Location

Office of the Vice President Sierra Leone

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5. Disbursement Estimates (US$m)Actual amount disbursed as of 9/09/2011 44.81

Fiscal Year Annual Cumulative 2012 5.0 49.812013 5.2 55.00 Total

6. Policy Exceptions and Safeguard PoliciesDoes the restructured project require any exceptions to Bank policies? N

Does the restructured project trigger any new safeguard policies? If yes, please select from the checklist below and update ISDS accordingly before submitting the package.

N

7a. Project Development Objectives/OutcomesOriginal/Current Project Development Objectives/OutcomesThe overarching PDO is: to rehabilitate selected priority roads, port and airport facilities of the Recipient; and to support the regulatory and institutional reform and effective management of the Recipient's road, port and airport sectors.

7b. Revised Project Development Objectives/Outcomes [if applicable]

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Grants H1910-SL, H4050-SL, and Credit 4469-SL

Restructuring Paper

A. Summary

1. This Restructuring Paper seeks the approval of the Country Director to restructure the Sierra Leone Infrastructure Development Project (SL-IDP) (Original Grant Number H191-SL; Additional Grant Number H405-SL; and Additional Grant Number 4469-SL). The proposed restructuring includes: (i) the reallocation of grant and credit proceeds across categories; (ii) an 18-month extension of the original closing date from September 30, 2011 to March 31, 2013; (iii) the revision and fine-tuning of the results framework, and (iv) cancellation of Project activities.

2. The proposed restructuring will help complete ongoing activities and implement remaining activities, which are critical for the attainment of the project development objectives (PDOs), as per the attached letter from the Government of Sierra Leone (GoSL).

B. Project Status

3. The SL-IDP was approved on June 12, 2005 with a grant amount of Special Drawing Rights (SDR) 30,400,000 and became effective on May 19, 2006. An additional Grant and an Additional Credit in the amounts of SDR 3.2 million and SDR 3.7 million respectively, were approved on June 19, 2008, and became effective on November 14, 2008, bringing total International Development Association (IDA) financing for the Project to SDR 37.3 million. As of September 9, disbursements have reached about 73 percent of the total proceeds. Meanwhile, commitments stand at 84.6 percent of total project funds, with another about ten percent expected to be committed by December 2011.

4. After an initial slow start, the project has picked up significantly since the mid-term review in April 2009. This is seen in the progress on implementation of the activities under the various components. Project achievements thus far include: (i) signing of the Concession Agreement between the government of Sierra Leone and Bollore Africa Logistics for the container terminal operation on November 25, 2010, and handover of the terminal to the concessionaire, Freetown Terminals Limited (FTL) on March 1, 2011; (ii) completion of the negotiations for the license of the break bulk operations at the port; (iii) completion of the rehabilitation and strengthening of the Lungi Airport runway on April 14, 2011; (iv) successful completion of the rehabilitation of the Makeni-Matotoka and Bo-Kenema Highways and handover of both roads to GoSL by the contractor; and (v) separation of the Road Maintenance Fund from the Sierra Leone Road Authority and establishment of the Independent Road Maintenance Fund under the Ministry of Finance.

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5. The main outstanding activity is the improvement of feeder roads in the four districts of Bonthe, Kono, Koinadugu and Kailahun (estimated at US$6.7 million equivalent in the Project Appraisal Document (PAD)). The designs and the bid documents for feeder roads works are currently being finalized under the oversight of the Sierra Leone Roads Authority (SLRA). The remaining main activities which are under implementation are: (i) the installation and commissioning of the Navigational Aids and Communications Equipment for the Airport (US$3.4 million equivalent), and (ii) supply and installation of the navigational aids at the sea port. The procurement processes for the ancillary civil works (estimated at US$2.18 million) and the environment reception facilities (estimated at US$250,000) have also been completed and contract signature is pending finalization of the reallocation; capacity building and training activities are also ongoing.

6. The ratings for Project Implementation Performance and achievement of Development Objectives are satisfactory, as documented in the last archived Implementation Status Reports (ISRs) dated September 13, 2011. The project development objectives continue to be achievable and will be further supported by the proposed re-allocation of project funds.

7. Furthermore, overall safeguards compliance is satisfactory and there are no unresolved legal or safeguard issues. The existing financial management procedures and guidelines for the Project will remain unchanged in substance, based on the continuing adequacy and reliance of the financial management systems for the project (staffing, budgeting, accounting, internal controls, financial reporting and audit arrangements), having met the minimum requirement for Financial Management under OP/BP10.02. There are no outstanding audit reports and the interim unaudited financial reports have met fiduciary compliance. The proposed restructuring will have the same disbursement categories as the original project. Monitoring of expenditures will continue to be done through approval and monitoring of implementation of Annual Work Plans (procedure in place during the original project will continue during the extended period).

C. Proposed Changes

8. Results indicators: are summarized in Annex 1: Results Framework and Monitoring. Although the PDO remains unchanged, the results framework is being revised to include mandatory core sector indicators and refine the wording of the monitoring indicators.

9. Cancelled Activities. The proposed changes include a change in the funding for the following activities within Component C: Freetown International Airport Rehabilitation and Airport Management Support: (i) water supply system and (ii) power supply system. The bid price for the civil works at the airport was substantially higher than the engineer’s estimate and the Client chose to re-scope the works included in the contract. The water supply and power supply systems at Lungi International Airport have been supported under government funded projects and are no longer part of the funding under this Project. Indeed, the piped water supply system at Lungi has already been

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expanded by the Sierra Leone Water Company (SALWACO) with dedicated supply lines for the airport. The paving of the container area at the port has been included in the terminal development activities of the Concessionaire for the Container Terminal and is funded by the Concessionaire, Freetown Terminals Limited. The Concession was part of the institutional reforms supported by the project.

10. Financing

The current allocation of proceeds is as shown in Annex 2, Table 1 and the proposed changes in the project costs by components and reallocation of proceeds between categories of expenditures are presented in Annex 2, Table 2. Funds from savings on the civil works under the roads (on main roads) and airport components are being reallocated to areas with shortfalls, mainly civil works and consultant services for SLPA, and goods and consultant services for SLAA. There are some savings on the training component as training related to operation of the navigational aids, at both the airport and port, has been incorporated in the supply and installation of these contracts with SLPA and SLAA.

The restructured project includes increased allocations for expenditures (local and foreign) to finance: (i) cost overrun in works under Component B-SLPA Reorganization and Freetown Port Infrastructure Development; (ii) cost overrun for the supply, installation, testing and commissioning of the navigational aids and communications equipment under Component C-Freetown International Airport Rehabilitation and Airport Management Support; (iii) cost overruns for consultants’ services for Components B and C mentioned above; and (iv) consultant services and operating costs of the Coordination and Monitoring Unit (CMU) under Component D- Project Coordination.

11. Closing date: This is the first extension of the original closing date of the Project. While most project activities have been completed, others are being implemented or remain to be implemented, as detailed in paragraph 5 of this paper. To allow for completion of the ongoing activities and rehabilitation of the feeder roads, the government has requested an 18 month extension of the project closing date. It is recommended that the project closing date be extended from September 30, 2011, to March 31, 2013.

12. Implementation schedule: The implementation schedule will be revised to reflect the extended project closing date of March 31, 2013.

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Annex 1: Revised Results Framework and MonitoringSierra Leone Infrastructure Development Project

Table 1: Revised Results Framework

Revisions to the Results Framework Comments/Rationale for Change

PDOCurrent (PAD) Proposed

Rehabilitate selected priority roads, port and airport facilities; and to support the regulatory and institutional reform and effective management of the road, port and airport sectors.

Unchanged.

PDO indicatorsCurrent (PAD) Proposed change*

Reduction in travel time on project roads;

Increase in usage of the project road;

Average distance traveled increases

Number of person-days of employment generated by Project Road Construction and Maintenance;

Prioritized programmed maintenance is established.

Roads in good and fair condition as a share of total classified roads (%) (core indicator);

Share of rural population with access to an all-season road (%) (core indicator); [Supplemental information: Number of rural people with access to an all-season road]

Second Generation Road Maintenance Fund is created and functioning (yes/no).

The proposed change includes the mandatory, core transport sector indicators. These indicators are also more suitable to capture impact on PDO

Improved port performance n handling Port Container;

Increase in port break-bulk ships daily handling performance;

Mandatory environmental and safety measures as agreed under the International Convention for Prevention of Maritime Pollution are addressed;

Significant reduction in SLPA staff;

Increase in financial surplus for SLPA after depreciation and

Port Container handling capacity (TEUs/day);

Port Break-bulk handling capacity (T/day);

SLPA Staff cost to annual expenditure ratio (%).

Streamlined wording of indicators.

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financial charges and before tax.

Airport complies with ICAO mandated standards.

Unchanged.

Direct project beneficiaries (number), of which female (%).

Mandatory CORE indicator.

Intermediate Results indicatorsCurrent (PAD) Proposed change*

Component 1: Roads(a) 106km of primary road

rehabilitation contracted out by mid-term;

(b) 400 km of rural/feeder road rehabilitation contracted out by midterm;

(c) mobilization of contractors 100% complete by mid-term;

(d) quality of works satisfactory (from technical audit);

(e) Progress satisfactory against program, with acceptable projected completion date.

(f) legalities completed by midterm;

(g) members of the IRMF recruited by mid-term;

(h) First year prioritized maintenance program agreed by mid-term;

(i) MSU operating on a totally commercial basis by midterm;

(j) Fuel Levy increased and maintained at not less than US$0.10 per liter to support prioritized programmed maintenance by mid-term.

(a) Roads rehabilitated Non-Rural (km);

(b) Roads rehabilitated Rural (km);

(c) Dropped;

(d) Dropped;

(e) Dropped;

(f) Dropped;

(g) Dropped;

(h) Km of Roads maintained compared to planned maintenance (%);

(i) Dropped;

(j) Road Fund annual budget (US$ or local currency).

(a) Replace with core indicators which are more streamlined;

(b) Replace with core indicators which are more streamlined;

(c) No longer relevant;

(d) No longer relevant;

(e) No longer relevant;

(f) No longer relevant;

(g) No longer relevant;

(h) To better capture the performance of Road Agency;

(i) No longer relevant;

(j) Measuring the annual budget will show if the Road Fund is provided with adequate funding.

Component 2: Freetown Port(a) Agreed reorganization

Action Plan implemented by mid-term;

(b) Legalities completed for

NAVAIDS installed and functioning (yes/no);

Environment and Safety equipment installed and functioning (yes/no);

Quay rehabilitated (including bollards,


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restructuring SLPA as a Landlord Port by mid-term;

(c) Cargo handling services concessioned and licensed by mid-term;

(d) Bidding underway for civil works associated with concessioning, by midterm;

(e) All selected Navigation and Environmental equipment procured and installed by mid-term.

ladders, and fenders) (yes/no); Landlord Port Bill approved by

parliament (yes/no); Concessioning agreement signed

(yes/no).

Component 3: Freetown International Airport(a) All civil works, Goods

and Services contracts awarded by mid-term;

(b) mobilization of contractors 100% complete by mid-term;

(c) quality of works satisfactory (from technical audit);

(d) Progress satisfactory against program, with acceptable projected completion date.

(a) Runway rehabilitation satisfactorily completed (yes/no);

(b) NAVAIDS installed and functioning (yes/no);


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Table 2: REVISED PROJECT RESULTS FRAMEWORK AND MONITORING

Project Development Objective (PDO): Rehabilitate selected priority roads, port and airport facilities; and to support the regulatory and institutional reform and effective management of the road, port and airport sectors.

PDO Level Results IndicatorsC

ore

Unit of Measurement

BaselineOriginal ProjectStart(2008)

Progress To Date

(2011)

Cumulative Target Values

Frequency Data Source/Methodology

Responsibility for Data

CollectionComments2011 2012 2013

Roads in good and fair condition as a share of total classified roads (core network) 1

% 60% annualIRI survey and road database

SLRA

Share of rural population with access to an all-season road (Supplemental information:Number of rural people with access to an all-season road).

%Number

28%(987,631) annual survey SLRA

Second Generation Road Maintenance Fund is created and functioning.

(yes or no) no

yes (IRMF

Created) yes - - CMU

Port Container handling capacity. 1 TEU/day

8.2TEU/hr 7TEU/hr annual reports SLPA

Port Break-bulk handling capacity.1 T/day 850T/day 895T/day annual reports SLPA

SLPA Staff cost to annual expenditure ratio.1 % annual reports SLPA

Airport complies with ICAO mandatory standards.

(yes or no) no yes yes - - SLAA

Beneficiaries

Direct Project Beneficiaries, Of which female. 1

Number% 0 End of Project study CMU

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Intermediate Results and Indicators

Intermediate Results Indicators

Cor

e

Unit of Measurement

BaselineOriginal ProjectStart(2008)

Progress To Date

(2011)

Target Values

Frequency Data Source/Methodology

Responsibility for Data

CollectionComments2011 2012 2013

Roads

Roads Rehabilitated Non-Rural. (km) 0 106 106 106 106 Annual reports SLRA

Roads Rehabilitated Rural. (km) 0 0 0 200 400 Annual reports SLRA

Km of Roads maintained compared to planned maintenance. 1 % - Annual reports SLRA/IRMF

Road Fund Annual Budget. US$ - Annual reports IRMF

Freetown PortNAVAIDS installed and functioning.

(yes or no) no yes no yes End of project reports SLPA

Environment and Safety equipment installed and functioning.

(yes or no) no Under

implementation no yes End of project reports SLPA

Quay rehabilitated (including bollards, ladders, and fenders).

(yes or no) no no no yes End of project reports SLPA

Landlord Port Bill approved by parliament.

(yes or no) no yes no yes - - SLPA

Concession agreement signed (yes or no) no yes - - yes - - SLPA

Freetown International Airport

Runway rehabilitation satisfactorily completed.

(yes or no) no yes yes yes End of project reports SLAA

Works progressing with 35% completed; Intended completion date revised for 31/03/2011.

NAVAIDS installed and functioning.

(yes or no) no Under

implementation no yes End of project reports SLAA Procurement process almost completed.

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Note 1: Revised or core indicators: Values to be obtained / updated post restructuring.

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ANNEX 2:Reallocation of Proceeds

Sierra Leone Infrastructure Development Project

Table 1: Current Allocation of Proceeds

Category

Amount of the Original Grant (H1910-SL) Allocated

(Expressed in SDR Equivalent)

Amount of the Additional Grant

(H4050-SL) Allocated


Amount of the Additional Credit

(44690-SL) Allocated


% of Expenditures

to be Financed

1 Works

(a) SLRA

(b) SLPA

(c) SLAA

13,996,000

600,000

8,650,000

3,200,000

0

0

1,100,000

2,500,000

0

100%

80%

90%

2 Goods

(a) SLRA

(b) SLPA

(c) SLAA

(d) CMU

0

430,000

1,500,000

60,000

0

0

0

0

0

0

0

0

100%

80%

90%

3 Consultants’ services, including audits

(a) SLRA

(b) SLPA

(c) SLAA

(d) CMU

2,004,000

650,000

515,000

859,000

0

0

0

0

0

100,000

0

0

100%

4 Training 650,000 0 0 100%5 Operating

Costs (CMU)270,000 0 0 100%

6 Refunding of Project Preparation Advance

216,000 0 0 Amount due pursuant to

Section 2.02 (c) of this

Agreement7 Unallocated 0 0 0

Sub-totals 30,400,000 3,200,000 3,700,000

TOTAL: 37,300,000 ========

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Table 2: Proposed Re-Allocation of Proceeds

Category

Category Description

Original Grant

(H1910-SL) After Reallocation (XDR)

Additional Grant

(H4050-SL) After Reallocation (XDR)

Additional Credit (44690-

SL) After Reallocation (XDR)

Revised Amount

After Reallocation (XDR)

% of Expenditur

es to be Financed

1-ACivil Work- SLRA

12,796,000

2,644,512

1,100,000

16,540,512

100%

1-BCivil Work- SLPA

621,000

555,488

2,500,000

3,676,488

80%

1-CCivil Work- SLAA

8,016,000

-

-

8,016,000

90%

2-A Goods - SLRA -

-

-

-

100%

2-B Goods - SLPA 334,000

-

-

334,000

80%

2-C Goods- SLAA 2,066,000

-

-

2,066,000

90%

2-D Goods- CMU 162,000

-

-

162,000

3-AConsultancy-SLRA

1,995,000

-

-

1,995,100

100%

3-BConsultancy-SLPA

1,835,000

-

100,000

1,935,000

100%

3-CConsultancy -SLAA

654,000

-

-

654,000

100%

3-DConsultancy- CMU

1,006,000

-

-

1,006,000

100%

4 Training 405,000

-

-

405,000 100%

5Operating Cost CMU

294,000

-

-

294,000 100%

6 PPF 216,000

-

-

216,000

7 Unallocated -

-

-

-

Totals 30,400,000

3,200,000

3,700,000

37,300,000

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