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Implementation Completion Report (ICR) Review - Transport Project


  
1. Project Data:   
ICR Review Date Posted:
09/28/2005   
PROJ ID:
P035775
Appraisal
Actual
Project Name:
Transport Project
Project Costs(US $M)
 49.5  51.3
Country:
Estonia
Loan/Credit (US $M)
 25.0  12.9
Sector, Major Sect.:
General public administration sector, Roads and highways,
Law and justice and public administration; Transportation
Cofinancing (US $M)
   
L/C Number:
L7008      
   
Board Approval (FY)
  00
Partners involved
 
Closing Date
12/31/2005 11/01/2005
         
Evaluator: Panel Reviewer: Group Manager: Group:  
Peter Nigel Freeman
Ridley Nelson Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives

  1. To reduce transport costs between Estonia's two largest cities and the Latvian and Russian borders.
  2. To improve Estonia's road safety performance.
  3. To strengthen Estonia's road administration.
  4. To improve the competitiveness of Estonia's trade supporting infrastructure and services.

b. Components (or Key Conditions in the case of Adjustment Loans):

  • Rehabilitation and upgrading of portions of the Tallin - Luhamaa road, including interchanges and the Tartu ring road. (App. estimate US$ 43.3 million; actual US$ 49.3 million)
  • Road Safety. Elimination of black spots, improvements in road markings and signs, speed control cameras, road safety educational campaign materials, technical assistance, software and training. (App. estimate US$4.35 million; actual US$ 1.8 million).
  • Institutional strengthening. Improvements to maintenance management and systems, training, office and laboratory equipment. (App. estimate US$ 1.4 million; actual US$ 0.1 million).
  • Trade facilitation. Development of laws and regulations, support to create a public, private partnership, improved market access and education, training and research on trade supporting services. (App. estimate US$ 0.1 million; actual nil). Note: The final actual cost was US$ 51.3 million as opposed to US$ 49.6 million at appraisal (which included a front end fee of US$ 0.3 million).

  • c. Comments on Project Cost, Financing, Borrower Contribution, and Dates
    In November 2003, the Ministry of Finance cancelled US$ 12.1 million of the loan because Estonia had moved into a position where it had a significant budgetary surplus and elected to complete the project using own funds. The actual date of completion is given as November 1, 2005, but this is when the outstanding loan was cancelled, not when the project was finished. The final project cost was US$ 1.75 million more than expected largely due to an additional 50km of road being rehabilitated over the distance outlined in the original project description. This additional work was entirely funded by Estonia.


    3. Relevance of Objectives & Design:

    The CAS for Estonia emphasized the importance of the private sector as an engine of growth to improve the living standards of those left behind in the transition from a command to a market economy. Lowering transport costs was an important and highly relevant part of creating the right climate for this to happen. In addition, the push for contract based maintenance, the streamlining of administration and the encouragement of transit traffic were all supportive of this general thrust. The quality of the design was appropriate for the country, and preparation took into account the Bank's policies. However, the design could have paid more attention to the longer term issue of the adequacy of funds for routine maintenance. The Quality Assessment Group assessed the project as satisfactory and stated that it was well focused and consistent with the CAS.

    4. Achievement of Objectives (Efficacy) :

    Reduce transport costs. Highly achieved.
    All road rehabilitation was successfully completed. In total, 240km were improved as against 190km planned at appraisal. Road roughness was reduced from an average roughness indicator of 4.0m/km to 2.95 m/km. The ERR at appraisal of 32% was exceeded and the ERR on completion was 38%. Traffic usage of the rehabilitated roads, including transit traffic, was greater than forecast.
    Road safety performance. Highly achieved.
    All aspects of the road safety program were successfully carried out. Fatalities per 10,000 vehicles were reduced from 4.7 to 3.2 over the life of the project. The road safety education program was also implemented successfully. The road safety budget was stable and a black spot remediation program was introduced in 2005 as a direct result of the successful black spot and strategy components of the project.
    Strengthening of road administration. Substantially achieved.
    Training has been undertaken to improve financial management, procurement, environment, and maintenance by contract. Specific reforms include the adoption of performance based contract maintenance for highways (this has been particularly beneficial), the replacement of in-house routine maintenance with long term contracted out maintenance arrangements and the consolidation of administrative districts (from 15 to 6). A Traffic Information Center and a laboratory for photogrammetry were established. A new traffic management system is 80% complete. An environmental unit has been set up in the Estonian National Road Administration (ENRA) and an environmental specialist recruited to coordinate environmental issues in compliance with the environmental management program. One concern is that the budget for road maintenance is currently insufficient. Part of this shortfall stems from the fact that maintenance has been partly funded by international financial institutions and although the government has cancelled all the outstanding loans because it is in a good financial position, it has not yet allocated additional funds for maintenance. ENRA, however, is a competent and effective organization so it is likely that this situation will be redressed soon. A new pavement management system funded under the project has already been operationalized. This will assist with the outstanding maintenance problem because it will be possible to assess road maintenance needs more accurately. Had it not been for the maintenance issue the outcome rating might have been even better.
    Trade facilitation. Highly achieved.
    As part of project preparation a transport and trade facilitation study was carried out which led to a strategic plan and an action plan being agreed. An electronic data interchange system has been set up to provide one-stop border clearances. This system is compatible with European Union (EU) standards, and allows for a direct transfer of electronic data related to shipments at border crossings of Estonia's main EU partners. The platform was financed by the Government of Estonia and all future expenditures will be fully funded by the private sector. No Bank funds were expended on this component because the private sector responded well. Particularly noteworthy was the introduction of an internet forum enabling the participation of specialists, including those with experience in other countries, (this link is also available on the Bank website).

    5. Efficiency:

    The ERR at appraisal of 32% was exceeded and the ERR on completion was 38%; this is a very good return. The higher ERR resulted from the use of actual figures on completion as opposed to imputed figures at appraisal. This means there was a significant reduction in transport costs to the users. The road safety, trade facilitation and institutional strengthening components were competently and effectively accomplished.
    6. M&E Design, Implementation, & Utilization:

    Both outcome and output design indicators were used. For the most part they were realistic and measurable. They were used effectively in monitoring and enabled the Bank to track progress and performance appropriately. An indicator on the funding of road maintenance in addition to the percentage of routine maintenance contracted out would have been helpful. Such an indicator was mentioned in the PAD but not shown in the ICR, Annex 1.
    7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):

    No safeguards were contravened and there were no unintended impacts.

    8. Ratings:
    ICR
    OED Review
    Reason for Disagreement/Comments
    Outcome: 
    SatisfactorySatisfactory
    Institutional Dev.: 
    SubstantialSubstantial
    Sustainability: 
    LikelyLikely
    Bank Perf.: 
    SatisfactorySatisfactory
    Borrower Perf.: 
    SatisfactorySatisfactory
    Quality of ICR: 
    Satisfactory

    NOTES:
    - When insufficient information is provided by the Bank for OED to arrive at a clear rating, OED will downgrade the relevant ratings as warranted beginning July 1, 2006.
    - ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.

    9. Lessons:

    The EU accession policy can play a catalytic role in accelerating institutional and policy reform in the region, especially through encouraging the attainment of road traffic safety and pavement upgrading standards.
    • When loans are repaid at an earlier stage than anticipated it is important to ensure that appropriate provision has been made for ongoing routine expenditure, including maintenance.
    • An internet forum can be an inexpensive and efficient way to exchange trade information and share specialist advice on transport and trade topics.

    10. Assessment Recommended?  No

              Why?  

    11. Comments on Quality of ICR:

    The ICR is well written and generally provides enough information to enable the project to be rated satisfactorily. Probably because the Bank was no longer involved in the project when it was finished, the actual date of completion of works is not given and there are some minor differences between the tables and the text explaining where the funds were actually spent.

    (ES-Rev4-Jul/05)
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