LATIN AMERICA AND CARIBBEAN Country

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: Argentina Norte Grande Road Infrastructure Project Region LATIN AMERICA AND CARIBBEAN Country Argentina Sector Roads and highways (70%); Sub-national government administration (20%); General transportation sector (10%) Lending Instrument Specific Investment Loan - SIL Project ID P Parent Project ID Borrower(s) The Argentine Republic, Argentina Implementing Agency Ministry of Federal Planning, Public Investment and Services - Unidad de Coordinacion de Programas y Proyectos con Financiamiento Externo Environmental Screening { }A { }B { }C { }FI Category Date PID Prepared November 9, 2010 Estimated Date of Appraisal November 11, 2010 Completion Estimated Date of Board Approval December 20, 2010 Decision Project authorized to proceed to negotiations upon agreement on any pending conditions and/or assessments. Other Decision I. Country Context 1. Recovery from 2001 crisis. Between 2002 and 2008, real GDP in Argentina grew on average 8.5 percent per year1. This strong growth performance was supported by a dynamic expansion of private investment, internal consumption and exports. Strong export growth, fueled by favorable commodity prices, and improved fiscal performance due to increased tax collection generated persistent twin surpluses (fiscal and external), which in turn favored reserves accumulation and debt reduction. Continued primary surpluses, together with a successful restructuring of sovereign debt in 2005, led to a marked reduction in the debt-to-gdp ratios from percent of GDP in 2002 to 56.4 percent at the end of The Government s economic strategy, aimed at supporting the growth momentum, included expansionary fiscal and monetary measures as well as active income policies. As a result, poverty more than halved from 58 percent in 2003 to 23.4 percent in 2007, and unemployment fell from 21.5 percent in 2003 to 8.3 percent in By mid-2005 real GDP had recovered to the level immediately before the recession. 1

2 2. Economic slowdown and recovery. Economic activity started to slow in 2008 due to a conflict with farmers over export duties during the first semester and the impact of the global financial crisis in September. Real GDP growth declined to 6.8 percent in 2008 from 8.7 percent in 2007 according to official statistics. Economic activity declined further in 2009 due to a drop in external demand, declining commodity prices, a deteriorating domestic investment climate and a severe drought that weighed on agricultural production. Fiscal performance deteriorated considerably in 2009 on account of lower economic activity, counter-cyclical stimulus measures and a sharp decline in foreign trade (primary fiscal surplus fell from 3.1 percent of GDP in 2008 to 1.5 percent of GDP in 2009). The economy rebounded strongly in 2010, fueled by fast growth in internal absorption, external demand (mainly Brazil and China) and commodity prices. A significant revitalization of industrial activity in automotives, basic metals and textiles, and a normalization of agricultural production following 2009 s severe drought, have contributed to the economy s dynamism. Internal absorption has been boosted by consumption and an expansion of public spending. Real GDP grew by 7.0 percent in the first quarter of 2010, and economic activity is expected to expand by about 7 percent in With the onset of the worldwide economic crisis and domestic economic slowdown, the GoA has prioritized an infrastructure investment program as a key part of a countercyclical economic stimulus package. Following the crisis, infrastructure investment grew every year, reaching levels of 4.67 percent of GDP in 2008, and has continued to grow strongly despite the recent economic slowdown. The GoA s Strategic Plan for Territorial Development sets out the two main objectives for its investment agenda: (i) consolidating market forces for the country s inclusion in the global economy and (ii) mitigating isolation asymmetries in the development of disadvantaged regions and communities to ensure a more equitable and sustainable growth for the country, particularly by bridging infrastructure deficits in poorer provinces. The infrastructure investment program is key to overcoming potential bottlenecks to competitiveness and an essential means of tackling endemic poverty and regional inequalities as well as enhancing living standards in different regions of Argentina. 4. The Norte Grande region epitomizes the marginalization, underdevelopment and extreme poverty enduring in parts of Argentina notwithstanding the economic recovery. The region includes the nine provinces of Catamarca, Chaco, Corrientes, Formosa, Jujuy, Misiones, Tucumán, Salta and Santiago del Estero. Although it covers one-third of the national territory and comprises about 7.5 million people, representing 21 percent of the population, it produces only 10 percent of the GDP and 8 percent of the country s total exports. In contrast to declining national poverty levels, poverty stands at 48 percent of the population (3.6 million people), with 24.6 percent (1.85 million people) living in extreme poverty. According to the latest Bank Provincial Development Index, which compiles measures of poverty and deficits in social and basic infrastructure services for all twenty-four provinces in Argentina, eight of the nine Norte Grande provinces occupy the bottom eight spots. Moreover, illiteracy (at 5.4 percent) is more than double the national average, the infant mortality rate (at 16.2 per 1000 live births) is above the national average of 13.3 per 1000, and the proportion of homes with Basic Unsatisfied Needs Argentina del Bicentenario: Plan Estratégico Territorial. 2

3 (Necesidades Básicas Insatisfechas, NBI3) is 18.6 percent compared to the national average of 14.3 percent. II. Sectoral and Institutional Context 5. The financing of infrastructure investment in Norte Grande is an essential building block for sustained economic growth and reduced inequality in the most marginalized and impoverished region of Argentina. The GoA has requested Bank support to the ongoing Development Program for the Norte Grande Provinces, which has thus far been financed by the Inter-American Development Bank (IADB) through a US$2.5 billion loan (with US$500 million in counterpart financing) covering the energy, transport, water and competitiveness sectors. The overall objective of this Program has been to contribute to the sustainable economic development of the Norte Grande provinces and to raise living standards of the local population by promoting increased productive activities and social well-being. This Program is part of the federal Government s efforts to correct historical imbalances among regions, including infrastructure works to stimulate and integrate production in these provinces, with a view to narrowing the social and economic divide between this region and the rest of the country. The development rationale for the project is supported by recent research by Calderon and Serven (2004) who underline the importance of infrastructure development for inclusive growth Of the US$ 8.6 billion spent on infrastructure in 2009, the road sector constituted about one-quarter (equivalent to 0.7 percent of GDP). In the road sector, executed and planned works include: construction of highways (autopistas), rehabilitation of the national road network, upgrading of gravel roads to paved standard, road safety works, and the paving and rehabilitation of provincial and municipal roads plus maintenance works on the paved road network. 7. In order to increase its infrastructure endowment and to ensure the sustainability of an efficient transportation network. It is therefore critical to strengthen the competitiveness of the regional economy by focusing on the following: - Road quality enhancement: The Norte Grande region lags behind other regions of Argentina by far in terms of paved road km/1000 inhabitants for both the national roads 1.32 km/ 1000 inhabitants for Norte Grande versus 2.42 km/1000 inhabitants for the other regions (excluding Norte Grande provinces), and provincial roads (1.15 km/ 1000 inhabitants for Norte Grande versus 2.36 km/1000 inhabitants for the other regions). While almost 90 percent of the national road network is paved, the provincial road type statistics are not as positive with only about 20 percent of the provincial network paved, and surface condition faring much worse than the national average in most of the Norte Grande provinces (See Annex VI and Table A7-5 for more detail). These statistics reflect the extent to which investments in improvement and expansions in road infrastructure 3 The NBI is a method of measuring poverty which uses indicators related to people s basic needs, namely shelter, sanitation, education, and minimum income. 4 In a panel study of 100 countries, these authors shows that increased availability and quality of infrastructure can lead to both growth acceleration and inequality reduction. Calderon, C; Serven, L. (2004): The Effects of Infrastructure Development on Growth and Income Distribution. World Bank Working Paper

4 have bypassed this region. Considerable resources are needed to improve and expand the road network in these provinces and reduce the regional disparity. - Improving access to markets: The Norte Grande region is not only distant from major domestic consumption centers (Buenos Aires, Cordoba and Rosario) but also far from the main export nodes (the ports of Buenos Aires and Rosario). In addition, existing transport networks are of low quality and efficiency (e.g. a lack of good intermodality, and unproductive empty freight transport return journeys on the south-north axis). - Institutional support and enhancement of planning tools: In comparison to other road agencies in Argentina, provincial road agencies in the Norte Grande region lag behind in the quality of their management processes and the efficiency of planning policies. They need to build a culture of sustainability (maintenance as well as road safety, environmental and social management practices) and improve governance, transparency and efficiency. Institutional support in the roads sector, in terms of better planning and prioritization, and establishing road asset management systems is a foundation on which the Project can build for better development outcomes. 8. Enhancing the quality and performance of the provincial road networks in the Norte Grande region, will contribute to improving service delivery, improving regional integration, productivity and competitiveness, and fostering economic growth. The Project is being prepared in parallel with a proposed Norte Grande Water Infrastructure Development Project, and both projects aim to complement the ongoing Development Program for the Norte Grande Provinces. These two projects provide an entry point for further work in this impoverished region. During implementation, close coordination with the Water Project and with the ongoing IADB-financed Norte Grande Road Project operation will be sought, carrying out joint supervision missions and seeking, in particular, full coordination and complementarity of institutional strengthening activities. 9. In line with the Bank s Country Partnership Strategy (CPS)5 and GoA s strategic priorities, the Bank is supporting a large investment lending program to finance other sectors with intervention in this region, including these two proposed Norte Grande Infrastructure Projects, the PROSAP Project (aimed at improving agriculture productivity and basic agricultural support service effectiveness to increase competitiveness and market access of agricultural products), and the PROINDER Project (aimed at increasing productive and organizational capacity in participating poor rural communities). III. Project Development Objectives 10. The development objective of the proposed project is to reduce transport costs for users of provincial roads along selected corridors of the Norte Grande provinces, through the improvement of the quality of those roads and the introduction of improved road asset 5 World Bank (2009), Country Partnership Strategy for the Republic of Argentina , dated May 6, Report No AR discussed by the Executive Directors on June 9,

5 management tools and methods. This objective will contribute to the high level goal of improving the integration and competitiveness of the Norte Grande Region. IV. Project Description 11. The proposed Project cost is estimated to be US$500 million (including physical and price contingencies and taxes and duties applicable), of which US$400 million would be provided by IBRD, and will have two main components: (i) Rehabilitation, Upgrading and Reconstruction of Provincial Roads; and (ii) Institutional Development and Project Management (see Annex II for a detailed project description). 12. Component 1: Rehabilitation, Upgrading and Reconstruction of Provincial Roads (Total amount US$ 465 million, IBRD financing US$ 365 million): This component will finance the implementation of rehabilitation, upgrading and reconstruction of civil works through the realization of Subprojects (such as base reconstruction, resurfacing, paving and/or asphalt concrete overlaying, as the case may be, including associated shoulder, sidewalks, drainage, masonry, signage, lighting and ancillary works plus road safety improvements) of selected roads under the jurisdiction of Participating Provinces in the Norte Grande region. For a road segment to be considered eligible for financing under the project, it must fulfill the following requirements: (i) presentation of a formal request and justification by a Norte Grande Province that focuses on the productive and poverty reduction impacts of the proposed work; (ii) proposed work section must be included in Argentina s Federal Strategic Road Infrastructure Development Plan (EDIVIAR) 6 and intersect with a provincial road or national road of similar or higher level of service; (iii) all technical, legal, institutional, economic, financial, social and environmental viability studies must have been carried out to the satisfaction of the implementing agency and the Bank; and (iv) an accompanying investment plan for the sustainability of the road asset when works are complete must be presented, including a commitment from the Province to guarantee its maintenance as part of the Participation, Transfer and Maintenance Agreement (PTA) between the Federal Government and the beneficiary province. 13. Three provinces have already been identified with eligible works for funding under this component, adding up km, as follows: (a) Province of Chaco: Provincial Road: RP No. 3, Pampa del Indio Villa Río Bermejito (59.45 km); (b) Province of Tucuman: Provincial Road: RP No. 304, Los Gutiérrez Rio Urueña (86.80 km); and (c) Province of Corrientes: Provincial Road: RP No. 94, Santo Tomé Arroyo Chimiray (66.5 km). 6 The EDIVIAR strategy, approved in 2004 by the Federal Road Council, reflects the agreement reached by the provincial and national governments on the conservation, expansion, and improvement of an integrated road network model, in response to the historical shortfall of road infrastructure investment due to scarce public resources and the gradual decrease in specific road funds of previous decades. See: Esquema Director Vial Argentino (EDIVIAR) available at 5

6 14. Additional provincial roads are foreseen to be prepared for presentation by the provinces and to be declared eligible during the loan implementation stage depending on available financing. 15. Component 2: Institutional Development and Project Management (Total amount US$ 35 million, IBRD financing US$ 35 million). This component will finance the following subcomponents: (i) Institutional Development: This subcomponent will finance the provision of support to strengthen the institutional capacity of DPVs, and improve their investment planning and management capabilities through the carrying out of eligible activities that may include, inter alia: (a) the acquisition of road data collection equipment, computers and software, traffic equipment, weights, and related training; (b) building or updating of DPV websites, (c) the setting up of GIS-based transport observatories; (d) preparation of multi-annual road maintenance plans and annual performance reports; (e) preparation of revised design standards documents; (f) technical assistance to review the institutional framework, management and financing of provincial roads, current maintenance practices, and recommendations for their improvement; (g) provision of non-consulting services for data collection; (h) training to provincial staff on social, environmental, and fiduciary aspects of project implementation, and (i) provision of technical assistance to review institutional framework, management and financing of provincial roads, current maintenance practices, and recommendations for improvement. The Project will fund a case-by-case tailor-made strengthening program for each participating DPV to support the preparation and implementation of comprehensive and efficient road management strategies and multi-year road maintenance programs. At a minimum, the goal is that at the end of the Project, 5 provinces have the following: Road Asset Management Systems in place (with road inventory, condition and traffic data collected and entered into the system; as well as the use of economic decision models like HDM-4 and RED); Preparation of strategic multi-annual road investment plans (suggested five years), with yearly updates; and Preparation of road safety plans. (ii) Project Management and Supervision: This subcomponent will finance the provision of support and strengthening of the operational, social and environmental supervision capacities of UCPyPFE and Participating Provinces to carry out its functions and responsibilities under the Project (including Project audits) through, inter alia, the provision of tailored technical assistance and training in the preparation of potential road and institutional strengthening investments, including the preparation of related feasibility studies, project designs, economic impact studies, social and environmental impact assessments, and sector strategic studies. 7 7 This sub-component will finance impact evaluation studies on different types of users of the intervened roads, including specific analysis on impact on indigenous populations and women, adding the opportunity to address specific social impacts and gender issues at later stages of project implementation. 6

7 V. Financing Source: ($m.) Government of Argentina International Bank for Reconstruction and Development Total VI. Implementation 16. Borrower and Implementing Agency: The Borrower is the Argentine Republic and the implementing agency will be the Unit for Coordination of Externally Financed Programs and Projects (UCPyPFE), within the Ministry of Federal Planning, Public Investment, and Services (MPF).8 At present, the UCPyPFE is coordinating several programs financed by multilateral development banks, including the Norte Grande Road Subprogram co-financed by the IADB, and already contains a specialized unit dealing with road projects in the Norte Grande Program. 17. Project Management and Implementation: The UCPyPFE will be in charge of overall project administration and execution. This unit will coordinate and implement all program activities, including the handling of procurements, contracts, and payments to contractors. It will act as necessary to meet the Bank s contractual conditions. Flow of funds will be centralized; there will be no transfers of funds to provinces. Provincial road directorates (DPVs) or supervision firms (in cases where the DPV lacks the capacity or is over-stretched) will be in charge of the day-to-day inspection of works. Details on the relationship between the different parties, and the flow of funds are provided in Annex III. Upon completion, the works will be transferred to the respective province for maintenance and management under transfer and donation arrangements included in the PTA between the national Government and the respective province. The PTA will delimit jurisdictional responsibilities with respect to the provincial road under intervention between the UCPyPFE and the participating province. 18. The administrative structure of the UCPyPFE will be strengthened in order to meet the incremental needs associated with the administration and execution of program components. The incremental technical, administrative, financial and human resources costs will be borne by the project component. Also, as an effectiveness condition, evidence must be presented that the executing agency and at least one participating province have signed a PTA. The entry into force of the PTA with each participating provinceis a supplemental commitment for program execution. 19. The main responsibilities of the UCPyPFE will be to: (a) Coordinate with Provinces on identifying sub-projects for financing and carry out the necessary appraisals to ensure compliance with eligibility requirements; 8 The UCPyPFE was created by Resolution 165/2000 of the Ministry of Infrastructure and Housing, and its duties and responsibilities were modified by Executive Decree 1,142/

8 (b) Provide guidance and support to Provinces on technical, economic, social and environmental aspects as needed in the preparation and implementation of sub-projects; (c) Coordinate with provinces on the preparation and implementation of the institutional strengthening component; (d) Handle the financial management, procurement and disbursement functions of the Project including keeping Project files and records; (e) Retain auditors acceptable to the Bank to audit the Project accounts; (f) Oversee compliance with Bank Safeguard policies on social and environmental issues; (g) Make official requests for no-objections to the Bank, and liaise with the Borrower on official requests for changes in the Project scope or terms; and (h) Submit semi-annual progress reports detailing progress in achieving project objectives. The format and content of these progress reports will be approved by the Bank. 20. Technical and environmental supervision. DPVs will undertake technical and environmental supervision of works. The UCPyPFE will provide further due-diligence by carrying out site visits to assess project progress, as well as the implementation of the Environmental Management Plan and any social impact mitigation measures that take place during construction. If necessary (due to capacity constraints) consulting services for the supervision of works will be hired before the contracts for the respective works are signed, according to terms agreed upon with the Bank. VII. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OP/BP 4.36) Safety of Dams (OP/BP 4.37) Projects in Disputed Areas (OP/BP 7.60) * Projects on International Waterways (OP/BP 7.50) VIII. Contact point at World Bank and Borrower World Bank Contact: Veronica Raffo Title: Infrastructure Specialist Tel: (54-11) * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties claims on the disputed areas 8

9 Borrower/Client/Recipient Contact: Pablo Abal Medina Title: Coordinador Unidad de Coordinacion de Programas y Proyectos con Financiamiento Externo, Ministry of Federal Planning, Public Investment, and Services Tel: (54-11) Implementing Agencies Contact: Victor Hugo Alonso, Gustavo Barcos Title: Unidad de Coordinacion de Programas y Proyectos con Financiamiento Externo Tel: (54-11) I. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web: 9