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Dominican Republic - Emergency Recovery and Disaster Management Project - Implementation Completion and Results Report

Document ofThe World Bank

Report No: ICR03970

IMPLEMENTATION COMPLETION AND RESULTS REPORT(IBRD-75460 IBRD-80980)

ON A

LOAN

IN THE AMOUNT OF US$ 80.0 MILLION

AND AN

ADDITIONAL FINANCING LOAN

IN THE AMOUNT OF US$ 20.0 MILLION

TO THE

DOMINICAN REPUBLIC

FOR AN

EMERGENCY RECOVERY AND DISASTER MANAGEMENT PROJECT

April 22, 2017

Agriculture Global PracticeCaribbean Countries Management UnitLatin America and Caribbean Region

CURRENCY EQUIVALENTS

(Exchange Rate Effective October 31, 2016)

Currency Unit = Dominican Peso (DOP)

US$1.00 = DOP 45.9251

DOP 1.00 = US$ 0.0217

FISCAL YEAR

January 1 to December 31

ABBREVIATIONS AND ACRONYMS

CAASD Corporación del Acueducto y Alcantarillado de Santo Domingo (Santo Domingo Water and Sewerage Corporation)

CDEEE Corporacion Dominicana de Empresas Electricas

(Dominican Corporation of State Electrical Companies)

CNE Comision Nacional de Emergencia (National Emergency Commission)

COPREComité de Operación de Presas Embalses (Committee for Operation of Dam Reservoirs)

CORAASAN Corporación del Acueducto y Alcantarillado de Santiago (Santiago Water and Sewerage Corporation)

DRDominican Republic

EDESUR Empresa Generadora de Electricidad del Sur (Electricity Generation Company of the South)

EDENORTE Empresa Generadora de Electricidad del Norte(Electricity Generation Company of the North)

EGEHID Empresa de Generación Hidroeléctrica Dominicana (Dominican Hydroelectric Generation Company)

ETED Empresa de Transmision Electrica Dominicana(Dominican Electrical Transmission Company)

ERDMP Emergency Recovery and Disaster Management ProjectERLEmergency Recovery Loan

GoDRGovernment of Dominican Republic

INDRHI Instituto Nacional de Recursos Hidráulicos

(National Institute of Hydraulic Resources)

ICRRImplementation Completion and Results Report

ISRImplementation Support Mission

MTRMid-Term Review

ONAMET Oficina Nacional de Meteorología (National Meteorology Office)

OP/BPOperational Policy/ Bank Procedure

PIUProject Implementation Unit

PPProject Paper

Regional Vice President:

Jorge Familiar

Senior Global Practice Director:

Juergen Voegele

Practice Manager:

Garry Charlier (Acting)

Project Team Leader:

Rémi Trier

ICR Team Leader:

Rémi Trier

ICR Main Author:

Caroline Plante

DOMINICAN REPUBLIC

Emergency Recovery and Disaster Management Project (P109932)

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Project Performance in ISRs

H. Restructuring

I. Disbursement Graph

1. Project Context, Development Objectives and Design1

2. Key Factors Affecting Implementation and Outcomes6

3. Assessment of Outcomes12

4. Assessment of Risk to Development Outcome19

5. Assessment of Bank and Borrower Performance20

6. Lessons Learned23

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners25

Annex 1. Project Costs and Financing26

Annex 2. Outputs by Component31

Annex 3. Economic and Financial Analysis40

Annex 4. Bank Lending and Implementation Support/Supervision Processes44

Annex 5. Beneficiary Survey Results47

Annex 6. Stakeholder Workshop Report and Results48

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR50

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders58

Annex 9. List of Supporting Documents59

Annex 10. Photographic records and examples of Communication Documents on Project Investments60

Annex 11. Map IBRD 4279766

A. Basic Information

Country:

Dominican Republic

Project Name:

DO Emergency Recovery & Disaster Management

Project ID:

P109932

L/C/TF Number(s):

IBRD-75460, IBRD-80980

ICR Date:

03/30/2017

ICR Type:

Core ICR

Lending Instrument:

ERL

Borrower:

MINISTRY OF FINANCE (SEH)

Original Total Commitment:

USD 80.00M

Disbursed Amount:

USD 99.56M

Revised Amount:

USD 100.00M

Environmental Category: B

Implementing Agencies:

Ministry of Finance

National Institute of Hydraulic Resources (INDRHI)

Dominican Corporation of State Electrical Companies (CDEEE)

Co-financiers and Other External Partners:

B. Key Dates

Process

Date

Process

Original Date

Revised / Actual Date(s)

Concept Review:

02/13/2008

Effectiveness:

05/06/2009

05/06/2009

Appraisal:

03/20/2008

Restructuring(s):

05/01/2008

10/01/2010

05/24/2012

06/04/2013

11/25/2014

12/04/2015

Approval:

05/01/2008

Mid-term Review:

06/10/2013

06/10/2013

Closing:

12/31/2012

10/31/2016

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes:

Moderately Satisfactory

Risk to Development Outcome:

Moderate

Bank Performance:


Borrower Performance:


C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank

Ratings

Borrower

Ratings

Quality at Entry:


Government:


Quality of Supervision:


Implementing Agency/Agencies:


Overall Bank Performance:


Overall Borrower Performance:


C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance

Indicators

QAG Assessments (if any)

Rating

Potential Problem Project at any time (Yes/No):

Yes

Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No

Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes[footnoteRef:1] [1: Sector designations and Theme coding were changed by the Bank and are locked in Portals. The sub-division of Sectors and Themes cannot be changed. Actual data by Sector/Subsector could be estimated, but for Theme/Sub-Theme proved difficult to extrapolate based on the subdivisions established by the change exercise, and thus the information shown in Portals is maintained here.]

Original

Actual

Major Sector/Sector

Agriculture, Fishing and Forestry

Irrigation and Drainage

23

44

Public Administration

Central Government (Central Agencies)

3

8

Energy and Extractives

Energy Transmission and Distribution

26

12

Renewable Energy Hydro

21

34

Water, Sanitation and Waste Management

Other Water Supply, Sanitation and Waste Management

27

5

Major Theme/Theme/Sub Theme

Environment and Natural Resource Management

Water Resource Management

33

33

Water Institutions, Policies and Reform

33

33

Finance

Finance for Development

17

17

Disaster Risk Finance

17

17

Urban and Rural Development

Disaster Risk Management

17

17

Disaster Preparedness

17

17

Disaster Response and Recovery

17

17

Disaster Risk Reduction

17

17

E. Bank Staff

Positions

At ICR

At Approval

Vice President:

Jorge Familiar

Pamela Cox

Country Director:

Tahseen Sayed Khan

Yvonne M. Tsikata

Practice Manager/Manager:

Garry Charlier (acting)

Laura E. Tlaiye

Project Team Leader:

Rémi Trier

Ann Jeannette Glauber

ICR Team Leader:

Rémi Trier

ICR Primary Author:

Caroline Plante

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)

The project development objectives (PDO) are to: (i) restore and strengthen priority, irrigation, electricity, water, and sanitation infrastructure damaged by Tropical Storms Olga and Noel or at risk of damage from future storms, and (ii) strengthen INDRHI's and CDEEE's capacity for future risk management.

The PDO was stated consistently in the Project Paper[footnoteRef:2] and in the Loan Agreement. [2: As a project prepared under OP/BP 8.00, a Project Paper was prepared and not a Project Appraisal Document.]

Revised Project Development Objectives (as approved by original approving authority)

N/A

(a) PDO Indicator(s)

Indicator

Baseline Value

Original Target Values (from approval documents)

Formally Revised Target Values

Actual Value Achieved at Completion or Target Years

Indicator 1 :

12,000 hectares with irrigation services restored

Value (Quantitative or qualitative)

0

12,000 ha

11,577 ha

37,218 ha

Date achieved

04/10/2008

12/31/2012

12/31/2013

10/31/2016

Comments (incl. % achievement)

Exceeded: 310%, if taking into account the areas restored under the retroactive financing (16,763ha) and the regular financing (20,455ha). If looking only at normally financed activities (20,455ha), the original target was exceeded by 170%.

Indicator 2 :

Four dam facilities rehabilitated with revised operational procedures to minimize impacts of future disasters


0

4

3

Date achieved

04/10/2008

12/31/2012

10/31/2016


Substantially achieved: 75%. The Tavera, Jaguey and Chacuey dams were rehabilitated according to improved standards. The works of the Maguaca dam were under litigation with only 16% of the works achieved by the contractor at closing. However the follow-up operation under preparation will ensure the finalization of works as initially planned in Maguaca and finance additional works identified in Chacuey.

Indicator 3 :

242 kilometers of transmission lines restored to improved, disaster resistant standards


0

242 km

152 km

152 km

Date achieved

04/10/2008

12/31/2012

12/31/2013

08/31/2014


Achieved: 100%. The project never planned to restore 242 km. This was an error in the PP. The Loan Agreement mentions 152 km. All planned works were completed.

Indicator 4 :

200 MW of hydroelectric generation capacity restored


0

200 MW

254 MW

252MW

Date achieved

04/10/2008

12/31/2012

12/31/2012

12/31/2012


Achieved: 99%. Out of 252 MW, 192 MW correspond to the capacity of the power plants directly or indirectly restored by the project under retroactive financing, 60 MW correspond to the rehabilitation of Aguacate power plant under regular financing (52 MW restored and 8 MW upgraded).

Indicator 5 :

Operation of Santiago wastewater treatment plant restored


No

Yes

Yes

Date achieved

04/10/2008

12/31/2012

05/01/2009


Achieved: 100%. All activities regarding the restoration of this plant were finalized before effectiveness and financed through retroactive financing mechanism.

Indicator 6 :

Real time, operational hydro-meteorological data system in place transmitting processed and interpreted data to Disaster Risk Management Institutions (ONAMET, COPRE, and CNE).


No system

1 system

1 hydro meteorological system implemented and functional

Date achieved

10/06/2011

12/31/2013

10/31/2016


Substantially achieved: 85%. The system is functioning, transmitting data to INDRHI which analyzes and transfers them to ONAMET, COPRE and CNE when relevant for disaster risk management purposes. However, 14 of the 64 hydro-meteorological stations have been partially vandalized, but stored safely, repaired, and will be re-installed in the short term once sites are secured. Additional actions such as calibration of instruments are ongoing to ensure the quality of data generated.

Indicator 7 :

Project beneficiaries with irrigation service restored


0

N/A

2,975

18,779

Date achieved

04/10/2008

12/31/2012

12/31/2013

10/31/2016


Exceeded: 631%. Out of the 18,779 beneficiary farmers (members of water user associations), 8,764 were beneficiaries of the retroactively financed activities. If considering only the other 10,015 beneficiaries under normal financing, the achievement would be 336% of target.

Indicator 8 :

Of which females


0

N/A

N/A

8.5%

Date achieved

04/10/2008

12/31/2012

12/31/2013

10/31/2016


There was no pre-defined target. In the scheme with irrigation service restored, women farmers (members of water user associations) corresponded to 8.5% of total beneficiaries.

(b) Intermediate Outcome Indicator(s)

Indicator

Baseline Value

Original Target Values (from approval documents)

Formally Revised Target Values

Actual Value Achieved at Completion or Target Years

Indicator 1 :

6,000 ha of irrigation services restored by end of Year Two


0

6,000 ha

1,933 ha

2,215 ha

Date achieved

04/10/2008

12/31/2010

12/31/2012

11/30/2013


Exceeded: 114% with delay. Was not reported as an Intermediate Indicator but as a milestone of a PDO Indicator. The 2,215 ha correspond to the first lot that was finalized (Lot 10). All the remaining lots were concluded after year Two.

Indicator 2 :

Operation and Maintenance study contracted by Year Two.


0

1

1

0

Date achieved

04/10/2008

12/31/2010

12/31/2012

12/31/2016


Not achieved. The scope of the study was extended as per the AF Results Framework to an evaluation of the costs of water at reservoir level and costs of water use for irrigation, energy and potable water, which seems more relevant for the implementing agencies during the preparation of the AF. This costing study was not conducted as planned initially but included in assessment of operation and maintenance requirements were included in the dam operation procedures for all priority dams (Indicator 3).

Indicator 3 :

Revised dam operations procedures by end of Year Two


No

Yes

Yes

Yes

Date achieved

04/10/2008

12/31/2010

12/31/2012

10/31/2016


Achieved: 100% with delay. All priority dams had their operational procedures developed and implemented.

Indicator 4 :

At least 90 of 242 kilometers of transmission lines restored by end of Year One.


0

90 km

90 km

96 km

Date achieved

04/10/2008

12/31/2009

12/31/2012

12/31/2012


Exceeded: 106% with delay. This was not reported as an Intermediate Indicator but was a Year 1 milestone of a PDO Indicator (with end-project target of 152 km). The rationale for this approach was not explained.

Indicator 5 :

At least 200 MW capacity restored by Year Two


0 MW

200 MW

192 MW

Date achieved

04/10/2008

12/31/2010

10/06/2011


Substantially achieved: 96% with delay. The Additional Financing Project Paper mentions this Intermediate Indicator as completed in 2011. It was not reported as an Intermediate Indicator but as a milestone of a PDO indicator. No rationale was provided.

Indicator 6 :

Decrease in generation and transmission unavailability (as measured by hours out of service)


Not calculated

Not calculated

Indicator eliminated by the AF

Not calculated

Date achieved

04/10/2008

12/31/2012

12/31/2013

12/31/2013


This Indicator was eliminated at the AF stage due to an absence of baseline reference data and hence the basis for a target.

Indicator 7 :

Operation of Santiago wastewater treatment plant restored


No

Yes

Yes

Date achieved

04/10/2008

12/31/2012

05/01/2009


Achieved: 100%. All activities associated with the restoration of this plant were finalized before Effectiveness and financed through the retroactive financing mechanism.

Indicator 8 :

Rehabilitation of accelerographs in 7 dams


No accelerographs

7

8

Date achieved

10/06/2011

12/31/2013

10/31/2016


Exceeded: 114.3%. This Intermediate Indicator was added by the AF. Eight accelerographs (instruments monitoring structures for earthquake response) were installed in eight dams.

Indicator 9 :

At least two training sessions conducted for 5 staff from the Hydrology Department on building and managing hydro-platform /database and hydro-modeling at the basin level


No training

Minimum 2 training sessions for 5 staff

2 training sessions conducted for all staff

Date achieved

10/06/2011

12/31/2013

10/31/2016

Comments (incl. % achievement))

Achieved: 100%. This Intermediate Indicator was added by the AF. Training was conducted for the entire Hydrology Department on the management of the Hydromet data system as well as during implementation of the study on dam safety for modeling purposes.

Indicator 10 :

Hydrological model calibrated in at least two pilot basins.


No model

Models for 2 pilot basins

Models for 3 basins

Date achieved

10/06/2011

12/31/2013

10/31/2016


Exceeded: 150%. This Intermediate Indicator was added by the AF. A study on dam safety incorporated the preparation of a flood map within the Early Warning System for 10 dams located in three basins including activities of hydrological studies, optimization of dam operation and dam failure assessment.

Indicator 11 :

Six Regional Centers operational


No Regional Center operational

6 Regional Centers operational

3 Regional Centers operational

Date achieved

10/06/2011

12/31/2013

10/31/2016


Partially achieved: 50%. This Intermediate Indicator was added by the AF. Three offices of INDRHI (Santo Domingo, La Vega and Santiago) have received support from the project (vehicles, computers, flow measurement equipment, rehabilitation of offices) to improve day to day performance of the Hydrology Department including operation and maintenance of the Hydromet network. The three other regional offices planned to be created during the preparation of the AF (Higuey, San Juan de La Maguana and Nagua) were not established by INDRHI’s decision. In addition, the project funded office rehabilitation and provision of computers for the regional offices of INDRHI in San Pedro de Macoris, and Azua.

G. Ratings of Project Performance in ISRs

No.

Date ISR

Archived

DO

IP

Actual Disbursements

(USD millions)

1

06/12/2008

Satisfactory

Satisfactory

0.00

2

11/26/2008

Satisfactory

Satisfactory

0.00

3

06/22/2009



0.00

4

12/19/2009



22.88

5

04/05/2010



22.88

6

06/02/2010



22.88

7

02/24/2011



23.97

8

10/02/2011



32.89

9

06/22/2012



45.04

No.

Date ISR

Archived

DO

IP

Actual Disbursements

(USD millions)

10

11/10/2012



48.05

11

03/04/2013



50.55

12

09/01/2013



58.36

13

01/05/2014

Satisfactory


64.48

14

08/03/2014

Satisfactory


73.51

15

01/06/2015

Satisfactory


82.38

16

06/25/2015

Satisfactory


87.04

17

12/28/2015

Satisfactory


91.92

18

06/26/2016

Satisfactory


97.07

H. Restructuring (if any)

Restructuring Date(s)

Board Approved PDO Change

ISR Ratings at Restructuring

Amount Disbursed at Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO

IP

10/01/2010

N

MS

MS

23.66

Triggering of new safeguard "Involuntary Resettlement OP/BP 4.12".

05/24/2012

N

MS

MS

41.09

Reallocation of funds

06/04/2013

N

MS

MS

55.72

Reallocation of funds and extension of closing date

11/25/2014

N

S

MS

79.65

Extension of closing date

12/04/2015

N

S

MS

90.82

Extension of closing date

I. Disbursement Profile

iv

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1.1.1Country context: The Dominican Republic experiences recurrent natural disasters due in part, to its hurricane- and tropical storm-prone geographic location. Mountainous areas are particularly susceptible to flash flooding and landslides due to deforestation and land use patterns which have contributed to the country’s vulnerability by increasing rainfall run-off and erosion in affected regions. National efforts have sought to reduce vulnerability and improve water resources management through land restoration activities but the process has been slow and complex.

1.1.2On October 28, 2007, Tropical Storm (TS) Noel struck the country with major rainfall nation-wide. Around 6 million people corresponding to 70 percent of the population were directly or indirectly affected[footnoteRef:3], over 160 people were killed and 130,000 displaced. Just five weeks later, the country was hit by TS Olga which displaced another 62,000 people, killed 33 and caused further destruction. Noel and Olga represented extreme climatic events with persistent and excessive rainfall - in the case of Noel, ranging from 130 to 250 percent of the normal monthly allotment - affecting 26 of the nation’s 32 provinces and 80 percent of its territory.[footnoteRef:4] Noel caused flooding, landslides, destruction of bridges and roads and distribution facilities particularly affecting the southern and western areas of the country (including the city of Santo Domingo and the Bajo Yuna basin). Olga mostly affected the northern and central portions of the country (including in/around the city of Santiago) with similar impacts. Productive infrastructure was severely damaged by both events, particularly related to water (irrigation, water supply and sanitation infrastructure), transportation and energy, impacting key sectors such as agriculture and health, and affecting many other sectors relying on power distribution. Hardest hit among the population were small agricultural operations and subsistence farmers, as well as rural and peri-urban residents. Storm-related flooding disproportionately affected poor communities living along riverbanks and in other disaster-prone areas such as the steep slopes characteristic of the country’s interior. [3: ECLAC (2008)] [4: The Dominican Republic has been cited as one of six Caribbean countries in the world’s top 40 climate “hot spots” by the Germanwatch Global Climate Change 2009 Risk Index. The country was ranked 12 out of 150 countries based on an analysis of weather events between 1998 and 2007. ]

1.1.3On a macroeconomic level, the Dominican economy had experienced a booming recovery from the banking, macroeconomic and social crises of 2003 and 2004. Real GDP growth reached 9.3 percent in 2005, 10.7 percent in 2006 and 8.5 percent in 2007. Macroeconomic stability improved and inflation was brought under control. Even so, the lag effects of an increase in food prices largely related to Noel and Olga, along with high international commodity prices, led to higher than expected inflation in 2008 (10.6 percent compared to 6.1 percent in 2007). This had, inter alia, major impacts on the poorer segments of the population, already hard-hit by the storms. At the time of appraisal, the country showed a high level of inequality and a strong divide between urban and rural areas; in 2006, of the estimated population of 9.5 million, some 36 percent were living below the poverty level (29% in urban areas versus 50.3% in rural areas) and approximately 13 percent lived in extreme poverty (8% in urban areas compared to 22% in rural areas). It was estimated at appraisal that some 90 percent of persons directly affected by the storms lived below the poverty line.

1.1.4Sector context and impacts: According to the Economic Commission for Latin America and the Caribbean (ECLAC), the cost of Noel and Olga reached US$439 million and US$105 million respectively corresponding to 1.5 percent of GDP. Economic losses in the agriculture sector amounted to US$185 million stemming from the loss of lands and irrigation services affecting both subsistence and export production (bananas, tomatoes, yucca and rice). Some 4,000 km of canals were affected due to the rupture of and sedimentation in water conveyance structures, and over 33,000 hectares of agricultural land were damaged, including up to 80 percent of the harvest in some areas. Damage related to electrical generation, transmission and distribution was estimated at US$76 million, while in the water and sanitation sectors, at least US$40 million in infrastructure impacts affected the provision of drinking water services to 2.5 million people in Santo Domingo and Santiago.

1.1.5While the country had, in the aftermath of Hurricane George in 1998, established the National System for Prevention, Mitigation and Response to Natural Disasters (Law 147-02) and developed a sound legal framework as the basis for an integrated disaster management strategy, involving among other agencies, INDRHI (Instituto Nacional de Recursos Hidraulicos) and CDEEE (Corporacion Dominicana de Empresas Electricas Estatales), the two key implementing agencies of the Emergency Recovery and Disaster Management Project, the implementation of this strategy was still weak when Noel and Olga struck. Further efforts were needed to improve coordination and capacity, disaster prevention and mitigation investments, information sharing among responsible agencies, and harmonization of methodologies and approaches used for local disaster risk assessments and management plans.

1.1.6Rationale for Bank assistance: At the request of the Government of the Dominican Republic (GoDR), the Bank and the Inter-American Development Bank (IDB), along with other donors including the United Nations (UN), worked to ensure that all priority infrastructure needs would be met in the four most effected sectors (irrigation, transport, electricity and water supply and sanitation). It was agreed that the Bank would focus on the three areas where it had the longest institutional relationship on the ground (irrigation, electricity and water supply/sanitation), building inter alia, on the experience of the Bank-supported Hurricane George Recovery Project which closed in December 2003. That project included significant investments to reconstruct irrigation, electricity and transport infrastructure and activities to improve the nation’s emergency response system, and was instrumental in the drafting of the legal and institutional framework for emergency response. Other projects in the irrigation sector (Irrigated Land and Watershed Management Project, closed 2004) and the electricity sector (Energy Technical Assistance Loan and Programmatic Power Sector Reform Loan) were important experiences which saw the Bank well-placed analytically and technically to lead the response to TS Noel and Olga.

1.1.7Contribution to higher-level objectives: As an emergency operation, the project was not planned in the Country Assistance Strategy for the Dominican Republic covering FY06-09. It fulfilled a special request to provide assistance to repair critical infrastructure damage from the two tropical storms. Nevertheless, the project was fully consistent with both pillars of this strategy, which were to: (i) stabilize the economy, improve competitiveness, and restore economic growth; and (ii) achieve greater social equity through human development and increased access to social and basic public services.

1.2 Original Project Development Objectives (PDO) and Key Indicators

1.2.1The project development objectives (PDO) were to: (i) restore and strengthen priority irrigation, electricity, water, and sanitation infrastructure damaged by Tropical Storms Olga and Noel or at risk of damage from future storms; and, (ii) strengthen INDRHI’s and CDEEE’s capacity for future risk management.

1.2.2The key outcome indicators in the Project Paper (PP) were: (i) 12,000 hectares with irrigation services restored; (ii) four dam facilities rehabilitated with revised operational procedures to minimize impacts of future disasters; (iii) 242 kilometers of transmission lines restored to improved disaster-resistance standards; (iv) 200 MW of hydroelectric generation capacity restored; and, (v) operation of the Santiago wastewater treatment plant restored.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification

1.3.1The PDO was not revised, including by the Additional Financing (AF) approved on November 17, 2011. However, to compensate for an omission from the PP, the AF added a new PDO indicator to capture the institutional strengthening objective and to reflect associated activities already included in the project: “Real time, operational, hydro-meteorological data system in place transmitting processed and interpreted data to Disaster Risk Management Institutions (the National Meteorology Office (ONAMET), the Committee for Operation of Dam Reservoirs (COPRE), and the National Emergency Commission (CNE)”. The Results Framework was also revised to better align the final targets of three PDO/Key Indicators with the project’s re-evaluated, expected results: number of hectares with irrigation services restored (from 12,000 to 11,577) and hydroelectric generation capacity restored (200 to 254 MW). Also, a typo in the PP on the indicator “km of transmission lines restored” was corrected (it reads 242 km instead of 152 km. The Loan Agreement was correct though, and stipulated a target of 152 km). See Data Sheet.

1.4 Main Beneficiaries

1.4.1Given the extremely rapid preparation of the project (less than three months between the concept review and Board approval) and the conditions on the ground post-disasters, the team was not able to assess the socio-economic profile of the primary targeted group, nor make a precise estimate of its number. As noted, those hardest hit by the storms were small agricultural and subsistence farmers as well as rural and peri-urban residents. All activities aimed at restoring the irrigation canals were prioritized in consultation with affected farmers, but the focus was mainly on the number of irrigated hectares to be rehabilitated given the objective of recovering food production levels, both of which were critical for food security and for agrifood exports. Restoration of electricity services was also to directly benefit these vulnerable segments of the population.

1.5 Original Components (as approved)

1.5.1There were three project components:

Component 1: Rehabilitation and Risk Management in the Water Resources Sector, (estimated total cost US$34.35 million), executed by INDRHI, and financing: (i) rehabilitation of the main irrigation works damaged by TS Noel and Olga; and (ii) support for priority disaster-related institutional strengthening activities and equipment. Operation of these systems was to be restored through the reconstruction and stabilization of critical physical infrastructure such as water storage facilities, headworks, and canal systems. Sub-components were:

Subcomponent 1.1: Rehabilitation and Reconstruction of Damaged Infrastructure, financed: (i) retroactive financing of emergency works completed in response to the disaster; (ii) reconstruction and strengthening works required to restore the irrigation and water resources management network; and (iii) a technical audit of completed works.

Subcomponent 1.2: Strengthening of Risk Management Systems, Purchase of Technical Monitoring Equipment, and Development of System Maintenance Program, financed the improvement of INDRHI’s capacity for watershed management and water-related infrastructure operation and maintenance, through: (i) review and strengthening of system maintenance and operations procedures and requirements; (ii) improved dam safety operations, integrating the meteorological early warning system into operational procedures; (iii) improving the system for management and distribution of water resources management information to stakeholder agencies; (iv) development of a public education program for water resources and watershed management; (v) rehabilitation and strengthening of the national meteorological monitoring and early warning system, through critical repairs and the purchase/installation of equipment; and, (vi) development of an irrigation system maintenance and management plan.

Component 2: Rehabilitation and Risk Management in the Electricity Sector, (estimated total cost US$33.95 million), executed by CDEEE, was intended to restore priority electricity infrastructure and make improvements needed in the short term in the areas affected by TS Noel and Olga, and to strengthen the sector’s ability to respond to natural disasters. It included four subcomponents:

Subcomponent 2.1: Rehabilitation of Generation Capacity financed the rehabilitation of hydroelectric generation facilities damaged by the recent tropical storms and operated by the Dominican Hydroelectric Generation Company (EGEHID), specifically ancillary works (access roads), repair of dams (Las Barias and Valdesia), and rehabilitation of power generation plants (Aguacate, Nizao-Najayo, and Aniana Vargas).

Subcomponent 2.2: Rehabilitation of Transmission Capacity financed the rehabilitation of the Dominican Electricity Transmission Company (ETED) transmission lines, including the future reconstruction of 69 kV lines of 15 de Azua-Sabana Yegua, Cruce Cabral-Las Damas, Sabana Yegua-San Juan, Cruce Cabral - Vicente Noble, and Galeria Infiltracion CAASD Manoguayabo, with a total length of 242 km.

Subcomponent 2.3: Rehabilitation of Distribution Capacity financed rehabilitation works already performed by the distribution companies of EdeNorte and EdeSur, which were proposed for retroactive financing.

Subcomponent 2.4: Strengthening Capacity to Respond to Natural Disasters financed: (i) enhancement of the electricity sector’s capacity to respond to emergencies caused by natural disasters; (ii) implementation of the proposed project; and, (iii) a technical audit to ensure the quality of project-supported works.

Component 3: Rehabilitation of Water and Sanitation Infrastructure in Santo Domingo and Santiago (estimated total cost US$3.5 million) financed the restoration of storm-affected water and sanitation services to the cities of Santiago and Santo Domingo. This Component was entirely retroactively financed. There were two sub-components:

Subcomponent 3.1. Retroactive financing of emergency relief in Santo Domingo provided the retroactive financing to Santo Domingo Water and Sewerage Corporation (CAASD) for emergency spending on water purification chemicals (such as chlorine and aluminum sulfate) used immediately following the storms, as well as extraordinary purchases of gasoline used for delivering potable water to affected populations in the aftermath of the storms.

Subcomponent 3.2. Retroactive financing of emergency rehabilitation works in Santiago provided the retroactive financing of works undertaken by the Santiago Water and Sewerage Corporation (CORAASAN) in the aftermath of Olga to rehabilitate damaged infrastructure and restore public services.

1.6 Revised Components

N/A

1.7 Other significant changes

1.7.1Extensions of closing date: The original loan agreement was signed on May 27, 2008, required two extensions of the deadline for project effectiveness totaling nine months, and finally became effective on May 26, 2009. The project closing date was extended four times (three times for the Additional Financing alone), totaling three years and 10 months, almost doubling the initially planned four-year duration (of what was intended as an emergency project). Extensions were mainly to allow for the completion of works under Component 1 (irrigation infrastructure including the rehabilitation of four dams) as Component 2 activities were completed by the end of 2014 and Component 3 were entirely retroactively financed.

1.7.2New safeguards triggered: During execution of the original project, CDEEE identified transmission line locations that were determined to be unacceptably vulnerable to potential disaster-related damage, and elected to relocate these lines to more secure locations in the vicinity of the original alignments. Because these new alignments required the purchase of right-of-way access, the project was restructured in November 2010 to include Bank Safeguard OP/BP 4.12, Involuntary Resettlement. An abbreviated Resettlement Plan was approved by the Bank in July 2010.

1.7.3Additional Financing (AF): The GoDR in August 2011 requested an Additional Financing mainly to allow completion of the original project activities by filling an unanticipated financing gap caused by cost overruns due to initial additional costs (e.g. hidden damage, improved designs, construction requirements), and additional damage caused by other storms after project effectiveness, and cumulative inflation since project inception. The amount of US$20 million was added to the original loan to complete the rehabilitation and repair of damaged infrastructure in the water (irrigation, water storage) and electricity sectors as well as to strengthen institutional capacity for disaster mitigation and risk reduction. The AF Project Paper included a revised Results Framework. The AF Loan Agreement was signed on November 18, 2011, but the date of Effectiveness required extension first until August 17, 2012, and the loan was then terminated as a result of not meeting this deadline, in the context of presidential transition, and the appointment of a new Minister of Finance as well as new Directors of CDEEE and INDRHI. This required reinstatement of the Loan Agreement and retroactive extension of the Effectiveness deadline to November 16, 2012.

1.7.4Reallocations of funds: Two reallocations were approved: (i) to distribute the unallocated funds of the principal loan (US$8 million) to the Category of “works” and redistribute pre-allocated funds among Categories “works” and “goods”, to provide additional funding for the construction process under execution, due to cost overruns; and (ii) to distribute the Unallocated funds of the Additional Financing (US$2.15 million) between Components 1 and 2. See Table 1.

Table 1: Summary of Changes during Implementation

Action

Date

Financing

Closing Date Extension

Other Changes

Restructuring Level 1 (Loan 7546)

October 1, 2010

Triggering of Involuntary Resettlement OP/BP 4.12.

Additional Financing (Loan 8098)

November 18, 2011 (LA signed)

Additional US$20 million

Results Framework revised

Restructuring Level 2 (Loan 7546)

May 24, 2012


Letter (Loan 7546)

November 29, 2012

December 31, 2013

Restructuring level 2 (Loans 7546 and 8098)

June 4, 2013


December 31, 2014

Restructuring Level 2 (Loans 7546 and 8098)

November 25, 2014

December 31, 2015

Restructuring Level 2 (Loans 7546 and 8098)

December 4, 2015

October 31, 2016

2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry

2.1.1Soundness of the background analysis: The project was prepared in accordance with OP/BP 8.00 Rapid Response to Crises and Emergencies, in a very short timeframe (less than 3 months between the concept review and Board approval) by a team of experts - working with line agencies - which conducted rapid assessments of the nature, location and estimated costs of the damage. As noted in 1.1.6, the GoRD asked the Bank to focus on the three areas where it had the longest institutional relationships on the ground (irrigation, electricity and water supply/sanitation sectors), and built, inter alia, on the experience of the Bank-supported Hurricane George Recovery Project (P063201) which closed in December 2003 and provided important lessons (see ERL PP, para 32).

2.1.2Assessment of project design: Design coalesced around three components corresponding to three implementing agencies. INDRHI would take responsibility for the water resources/irrigation activities under Component 1, CDEEE would handle the electricity activities under Component 2, and the Ministry of Finance would handle administrative aspects related to Component 3 water supply and waste water treatment plants activities implemented by CAASD and CORAASAN and financed solely through the retroactive financing mechanisms. Thus INDRHI and CDEEE were the primary project implementing agencies during the project lifetime. To ensure flexibility, the GoDR wanted each agency to conduct its own fiduciary, coordination, monitoring and reporting functions separately, instead of using a project coordination unit, to which the Bank agreed. While the PP justified this arrangement based on mixed experiences under the Hurricane George operation which used a single implementation unit (see PP Lessons Learned), in retrospect, the institutional separation of project management did not promote smooth project execution, especially in the case of INDRHI, given the short project engagement period and acknowledged institutional weaknesses. In addition, while the PP mentions that the project would focus on the implementation of works considered to be “truly of an emergency nature”, the PDO indicated a more hybrid type of project, where both emergency and other activities aimed at enhancing the capacities of the implementing agencies to disaster risk management would be carried out. Most of the true emergency activities actually corresponded to those carried out in the aftermath of the TS, which were retroactively financed. The other works proposed in the PP corresponded to damaged infrastructure requiring more complex civil works for their rehabilitation. These latter were handled under normal procedures which guaranteed their quality, but this also partly explains why a longer time-frame was required to complete the works.

2.1.3The PDO was straightforward, including, beyond the main objective of rehabilitation of infrastructure, the strengthening of institutional capacity in INDRHI and CDEEE to improve disaster management and response capacity. Up to 40 percent of the original loan or US$ 32 million equivalent was eligible to retroactively finance emergency activities conducted by the selected beneficiary agencies (INDRHI, CDEEE, CORAASAN and CAASD) in the immediate aftermath of the TS in the water/irrigation and electricity sector. Because of the rapid preparation of the project and conditions on the ground (areas still flooded, impaired access, and wide geographical distribution), institutional and technical capacity strengthening activities could not be well-defined, in particular for INDRHI where a long list of possible activities was proposed. The institutional benefits foreshadowed in the PDO were primarily intended for the INDRHI but CDEEE would also benefit from the significant improvement of the hydro-meteorological data system managed by INDRHI. Priorities were to be defined after effectiveness when more detailed assessments would become available. For the same reasons, the targets of the Results Framework were provisional and required refining once data would become available (see Section 2.3).

2.1.4Adequacy of government commitment: Government worked to ensure that the sectors most affected by the storms had sufficient financing to meet priority reconstruction needs and appealed to donors and multilateral agencies for support immediately after its declaration of emergency. Government’s recovery strategy also demonstrated its commitment to decentralized decision-making, with the sectors taking the lead on defining priority activities, consistent with the then-new natural disasters law which gives authority to the sectors to define and implement disaster prevention and recovery strategies. Community participation and communication were, and were expected to remain throughout implementation, a major focus for INDRHI especially as irrigation systems were community-based and secondary networks were community-managed through water user committees. Works selected/prioritized were identified through a process of public meetings with affected communities where representatives of each community were directly involved in vetting the list of priority works. The Bank’s project preparation team attended field meetings with small villages, private farmers and agri-business operators.

2.1.5Assessment of risks: The risks were well-assessed and articulated - and rated as High - with mitigation measures expected to reduce residual risk to Substantial. Risk mitigation was heavily dependent on the implementing agencies’ and Bank’s direct, hands-on supervision including greater frequency. However, despite its emergency nature and the numerous, often complex works expected to be financed, in particular under Component 1, the very short duration of the project was not identified as a risk in the PP. Instead, the Risk Assessment (PP, Section G) stated that “the compressed project implementation period is expected to maintain commitment for project activities”, the risk identified being the potential shift in institutional priorities. The proposed mitigation reassured that “technical project aspects are well-advanced, along with contracting arrangements, and project supervision will focus heavily on fiduciary aspects to facilitate rapid implementation of priority works.” These measures did not directly address the issue of institutional shortcomings (procurement capacity, bureaucratic administrative processes and works monitoring/supervision issues) and there was – due to the emergency nature of the operation - uncertainty at appraisal about which works would eventually be financed and their costs.

2.2 Implementation

2.2.1Main challenges: The project faced important administrative and technical challenges: higher than expected initial delays in declaring effectiveness (one year post signature of the original loan agreement); multiple changes in Project Implementation Units and staff (mostly in INDRHI); procurement challenges; cumbersome administrative processes for contract registration affecting all the activities; constraining national budgetary rules (fiscal ceilings); limited human and physical resources to work in parallel on a large number of structures (see para 2.4.3); and, technical complexity of the works’ design and construction (dams in particular), all affected the pace of project implementation. In order to ensure works’ robustness in the face of future storms, the priority for the country and Bank teams remained to ensure that their quality not be undermined.

2.2.2Mid-term Review: The timely Mid-term Review (MTR) in November 2010 identified the need to extend the closing date by at least 12 months mainly to offset the delayed ratification of the project by the Congress, a recurrent phenomenon affecting all projects in the Dominican Republic. The MTR also found that the investments slated for financing under Component 1 (INDRHI) needed to be re-prioritized given the evident under-estimation of their real costs. Those changes also implied the need to revise the Results Framework to reflect actual works/activities to be completed. No particular issue was faced with regards to CDEEE’s implementation of Component 2.

2.2.3Need for refinement of preliminary assessments: During the project’s lifetime, two major reviews of activities and costs were conducted, the first in 2009 by INDRHI to provide a more detailed review up to the task level, and the second in 2010 which showed evidence of important cost overruns in a majority of the sub-components and activities. For example, for the 16 lots[footnoteRef:5] managed by INDRHI, a 72 per cent increase from the initial, rapidly-estimated costs was calculated. Similarly, EGEHID identified the need for additional, complementary civil works to protect the infrastructure that was to be rehabilitated. During three supervision missions after the MTR in 2011, all project activities were re-evaluated and it was estimated that an additional financial support of US$17.8 million would be needed to complete originally planned project activities (US$11.7 million for Component 1, and US$6.1 million for Component 2). This formed the basis for government’s request for an Additional Financing. [5: Each lot was formed of a package of civil works in different locations within the same irrigation scheme or system.]

2.2.4 Procurement challenges: INDRHI identified a number of small lots corresponding to a portion of the conveyance canals and/or other infrastructure (intakes, weir, gate, etc.) to be repaired. These small lots were bundled initially into a few packages to reduce the number of procurement processes and enhance the attractiveness for private sector. Notwithstanding the fact that grouping these lots in three packages took around a year, this approach proved unsuccessful, as no international companies expressed interest in bidding for such type of contracts, requiring a reversion to national bidding, implying further delays. Important bottlenecks also delayed procurement processes. INDRHI was rapidly overwhelmed by the unusual high volume of work. Furthermore, its initial decision to use only its own technical staff for the preparatory topography and technical design of works resulted in important delays in the preparation of terms of reference for the bidding process. External technical experts were then contracted to support INDRHI’s staff in speeding-up the preparatory steps for civil works with feasibility studies and topographic surveys. The need for modifications of many contracts, whether those identified once works started due to design flaws or because conditions that prevailed at the time of tendering had changed when contracts were to be negotiated, were also burdensome and caused some delays.

2.2.5 Complexity of works and design requirements: The project planned to repair four damaged dams. Given the technical complexity and risks involved in such infrastructure, highly specialized skills were required to assess, design and supervise works. INDRHI’s dam department did not possess all the necessary technical documentation, and lacked sufficient skilled staff in-house, having to resort to external technical experts to start moving these activities forward. Staff turnover within the dam department further delayed progress. Works on dams required the opinion of an international panel on dam safety to comply with safeguards rules before works could start, which absorbed time. As for works on irrigation canals, these works also required comprehensive preliminary studies, including topographic and soil surveys, and careful design. The need to correct erroneous initial data or design weaknesses resulting from an intent of the agencies to move fast, ultimately resulted in important delays for some of the lots. Some design flaws were even discovered after works had started (e.g. lots 1, 6, 7, 8) requiring further contractual revisions. These elements also resulted in higher than expected costs and required the project to readjust the list of works to be financed under the project on various occasions.

2.2.6 Institutional weaknesses: Understandably, the GoDR and Bank teams did not foresee the need for the project to cover the full range of activities required to make comprehensive institutional improvements. Thus, efforts focused, as per the project’s development objectives, on improving a few priority aspects of individual departments to overcome major weaknesses directly related to the type of works being carried out, and improving capacity for disaster risk management. Most activities financed, including studies, development of procedures, systematic use of best practices to carry out civil works, as well as improvement of inter-institutional collaborations, made a direct contribution to a longer-term process of boosting capacity for disaster risk planning and management. Despite the efforts and improvements in the technical areas covered by the project, INDRHI’s capacity on administrative functions (budget, staffing, organizational and managerial capacities) remains a bottleneck for the fulfillment of all its mandate.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

2.3.1Quality of the M&E framework: Given the project’s rapid preparation and uncertainty regarding the works to be eventually financed by the project, the monitoring Results Framework (RF) could not be optimally prepared/populated. End targets were tentative, and it was expected that both indicators and targets would be refined and validated during the early stages of project implementation. The project essentially served to restore previously existing infrastructure to re-establish services no longer provided, hence most PDO indicators were output rather than outcome based (as intended – see PP, para 32). One target, “km of transmission line restored”, was written erroneously in the PP (it was correct in the Loan Agreement though). In the revised Results Framework (RF) the typo was corrected. Importantly, the RF lacked a PDO indicator, or Intermediate Outcome Indicator (IOI), capturing the objective of strengthening the capacity of INDRHI and CDEEE for future risk management. The revision was processed once all data became available, at the time of the Additional Financing. This revision reflected more realistic, expected achievements. A new PDO Indicator and IOIs – missing from the original RF - were introduced to reflect the improved institutional capacity and improved early warning system and disaster risk management activities already incorporated and financed.

2.3.2Apart from the RF and Arrangements for Results Monitoring (ARM) matrices, the PP did not specify/discuss any other monitoring and evaluation requirements, e.g., a management information system (MIS), periodic/progress reports, end-of-project impact evaluation study or case studies, or final report (Borrower Completion Report, BCR). Such instruments/products may not have been required under an ERL at that time given the short engagement period but as the project period increased, it might have been selectively considered. In any case, a BCR was produced by the Borrower as a routine part of project finalization. This was, however, done with some difficulty given the lack of harmonized and consolidated data across the implementing agencies in the absence of an overall coordination unit, as well as institutional memory losses on those parts of the project completed years before actual closing (retroactively financed activities under Component 3, and activities under Component 2).

2.3.3Implementation and Utilization: While the Aide-memoires did not include a specific section for Monitoring and Evaluation during project implementation support missions, they included details on the progress of all activities, and the information on PDO Indicator achievements was included in the internal Bank system (Implementation Status and Results report - ISR). However, Intermediate Indicators were not systematically reflected[footnoteRef:6]. An impact evaluation initially planned to be carried out by INDRHI did not materialize for a lack of time and the priority given to the finalization of works before project closing. However, data on beneficiaries were systematically collected by INDRHI and CDEEE throughout project implementation and reflected in both the RF and Annex 2, and workshops with beneficiaries were organized at closing for Component 1 (cf. Annex. 6). These workshops concluded that while the benefits of the project were perceived later than expected due to implementation delays, the impact of the project was perceived positively by the beneficiaries, who recognized that the availability of water for irrigation improved the productive systems, made them less vulnerable to drought, and permitted an increase in crop yields, as well as a shift in the types of crops cultivated towards those of greater economic value. [6: Only ISR sequence 9 (Oct 2011) could be accessed through the Bank operations portal. ]

2.4 Safeguard and Fiduciary Compliance

2.4.1Environmental Safeguards: The project was rated as a Category B with a partial assessment, given that project activities included reconstruction and rehabilitation activities – including of dams - with potential to cause limited, small-scale environmental impacts. Two policies were triggered: Environmental Assessment (OP/BP 4.01) and Safety of Dams (OP/BP 4.37), the former requiring the inclusion of environmental management clauses in all project contracts; and, the latter requiring a Dam Safety Assessment involving a panel of international experts prior to disbursement for any subprojects involving dams. With respect to dam safety, the Memorandum of Understanding signed between INDRHI and CDEEE also required a joint review of all activities relating to dams to assure proper coordination and application of safeguard requirements. These provisions were respected by the agencies throughout project implementation. Both INDRHI and CDEEE used their own, respective Environmental Management Department to implement environmental safeguards. Minor issues arose during project implementation but these were handled in a manner satisfactory to the Bank. Safeguards compliance was considered to be satisfactory and rated accordingly throughout project implementation.

2.4.2Social Safeguards: The project did not expect to trigger either of the Bank’s Social Safeguards policies and only focal points for social safeguards were nominated in the implementing agencies. However, as CDEEE identified the need to purchase right-of-way access during the repair of transmission lines, the project was restructured in November 2010 at which time, OP 4.12 (Involuntary Resettlement) was triggered, covering only CDEEE activities. Later, in April 2014, it appeared that INDRHI, which had limited knowledge of Bank Social Safeguards procedures, had begun expropriating farmers/private land owners in two locations in order to construct new canals/re-route existing canals. This situation occurred without the knowledge of the Bank and without the benefit of a project-level Resettlement Policy Framework in place. Once identified, remedial actions were required and verifications of compliance were carried out during several follow-up missions by the World Bank Social Specialist who concluded that all persons who had been expropriated had received proper compensation. Resettlement Action Plans and Remedial Action Plans were prepared for the sites concerned, although with important delays. These were found acceptable to the Bank and by Closing, it was determined that the Project was in compliance with OP 4.12.

Fiduciary Compliance

2.4.3Procurement: Delayed procurement had cumulative effects on project implementation. Weak capacity - especially in INDRHI - which had to manage a large number of procurement processes (70, of which 10 were ICB, compared to 9 with CDEEE, of which only 3 were ICB), was cause for concern given the number of contracts to be processed. Both INDRHI and CDEEE were slow to establish the required procurement capacity. CDEEE recruited a full time procurement specialist at shortly after project effectiveness. However, delays persisted in INDRHI which continued to show a lack of proactivity to effectively address the weaknesses until a change in leadership and team in July 2012 greatly improved the pace of progress. The Bank organized training sessions to update staff on procurement procedures and tools to accelerate implementation. In addition to participating in most in-country supervision missions, Bank procurement specialists conducted at least one procurement post review mission per year. The procurement rating was downgraded to Moderately Unsatisfactory in mid-2010. A detailed review conducted in May 2011 saw the Procurement rating upgraded to Moderately Satisfactory after CDEEE restructured its PIU with the creation of a centralized unit and the inclusion of new procurement staff, and INDRHI improved its coordination and communication between its PIU and internal procurement unit. Change of leadership in INDRHI in July 2012 led to a significant improvement in the management of procurement issues: in just 2 years between July 2012 and July 2014, most of the 50 activities listed in the Procurement Plan were concluded.

2.4.4Financial Management (FM) and audit: Both agency Project Implementation Units introduced a National Integrated Financial Monitoring Information Sub-System (UEPEX). Agencies were trained by the Ministry of Finance to use the system shortly after project effectiveness, and the system has been operational since then. Minor adjustments were introduced to the system to manage the AF for accounting classification and budgeting purposes. Issues in FM concerned mainly delays due to lengthy internal control reviews performed by the auditors of the General Controller’s Office at INDRHI, cumbersome procedures for contract registration by the internal audit team, and delays in the submission of external audit reports. The FM rating was downgraded to Moderately Unsatisfactory in April 2010 due to these delays. A comprehensive FM assessment and close monitoring of key FM issues at INDRHI and CDEEE, plus implementation support provided by the Bank task team to resolve and close audit findings, saw the project’s FM system upgraded from Moderately Unsatisfactory to Moderately Satisfactory before the Additional Financing was processed, a rating maintained through closing. The project financed yearly independent audits for CDEEE and INDRHI, and the first audit for INDRHI included all other water-related entities, namely CAASD and CORASAAN. Auditors’ Opinions on the Project Financial Statements were mostly unqualified (clean). Only the first audit of the CDEEE for FY09-10 included a Qualified Opinion with Exception, and the issue was rapidly solved. Management letters also identified some instances in the internal control environment, such as adjustments needed to re-classify project categories, the need to exercise due diligence and care in filing an insurance claim for stolen vehicles, among others. There were no outstanding audit issues at closing.

2.4.5Project costs and financing: The Table in Annex 1 illustrates cost increases per component compared to the original loan. The Additional Financing covered most of these costs required to carry out prioritized works and activities, but not all. In particular, under Component 2, CDEEE financed a budget gap of US$20.75 million. Cost overruns were mainly due to internal factors (large under-estimation of the work volume and necessary changes in design linked to the rapid preparation of the project under post disaster conditions), but also external factors (further damage from heavy rains in 2009 and a 21 percent accumulated inflation between 2009 and 2011). See also Annex 2.

2.5 Post-completion Operation/Next Phase

2.5.1All activities supported by the project will be pursued by the respective agencies. These were and still are part of their mandate. Infrastructure and equipment upgrades, along with the improved management of operations to ensure better monitoring, maintenance and daily operation of the dams, provide strong reassurance that this infrastructure will be better managed, and present fewer risks of being severely impacted by future disasters. Significant progress was made in inter-institutional cooperation, especially in regard to the preparedness, early warning and response mechanisms operating between relevant agencies. Agreements put in place established the basis for long-term cooperation. Maintenance and further improvement of the mechanisms in place will however depend on both the political willingness to improve the efficiency and synergies between relevant governmental agencies.

2.5.2Follow-on Bank operations: At the time of ICR preparation, the GoDR has requested support from the Bank for a new project focused on resilient agricultural landscapes and improvement of Natural Resources Management (water, soil, forest). The identification mission was carried out on February 2017 The Bank team is exploring how best to further support INDRHI’s capacity such as providing opportunities to further improve the telemetry network and help ensure the implementation of procedures developed under the ERL project. The future project would also include supporting the full rehabilitation of the Maguaca dam – certain works could not be finalized under the ERL project - as well as some additional works required on the Chacuey dam to strengthen its structure and which were identified by the studies carried out under the ERL project[footnoteRef:7]. The new operation will be designed to respond to some specific issues identified under the ERL, i.e. the protection of watersheds against soil erosion to limit the sedimentation of dam reservoir (25 percent of storage lost on average according the ERL study) and the pollution of water stored (pesticides, non-treated waste water). The new project will, as noted above, support implementation of two pilots to test legal and managerial reforms designed to increase cost recovery and support their institution at the national level (activities to include a cadaster of water users, Master Plans for Water Resources Management, and economic and cost recovery studies). To finalize other incomplete works, i.e. for Lot 1, INDRHI was able to secure supplemental funds from national budget. [7: Independently of any action carried out by the ERL project, and after persistent rainfall occurred in December 2014, a continuous cracking was detected in almost the whole length of the crest of the dam. In March 2015, the Panel of Experts recommended a series of actions aimed not only to improve the current conditions of dam safety, but also to generate more information to enable a more detailed analysis of the current safety condition of the dam. Among other, their recommendations include: (i) completing the installation of the instrumentation and monitoring equipment program of the dam, (ii) implementing the rehabilitation of the drain toe of the left embankment of the dam, (iii ) continue the ongoing monitoring evaluation of the dam; (iv) maintaining low levels of the reservoir and keeping the vehicular traffic suspended over the crest of the dam, and (v) evaluate the current safety condition of the dam through a more detailed calculation method. All these actions were carried out and concluded in 2016 on the need of a non-emergency and punctual rehabilitation on the dam crest, planned in the follow-up WB project.]

2.5.3The GoDR, with assistance of the Bank, is also currently preparing a Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option (CAT DDO - P159351), which will support the capacity of response to disaster risk management including in the water sector and will offer many potential synergies with the future project. It will also help leverage high level discussions. The Bank team working on this CAT DDO recognized that the project had been instrumental in strengthening the technical capacity of INDRHI.

3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation

3.1.1Relevance of objectives: The project sought to recover the population’s access to basic socio-economic infrastructure and services (electricity, irrigation for agricultural production, water supply and sanitation) destroyed or damaged by the TS Noel and Olga and to support longer-term institutional capacity for improved disaster planning and management. These objectives were, and still are highly relevant, and remain within the priorities of the Government (especially the National Development Strategy or Estrategia Nacional de Desarrollo –END- and the 4-years Program for Water - Cuatrienio del Agua- 2016-2020) and fully aligned with Bank’s Country Partnership Strategy (CPS). The CPS for 2015-2018 would support the Government’s efforts to make growth sustainable and more inclusive, by expanding economic and social opportunities to all Dominicans. Among its five pillars is the objective “to build resilience to external shocks by improving disaster risk management planning, developing a national integrated information system, installing a new telemetry network to manage water resource flows, and rehabilitating four dams”. This latter fully mirrors the ERL’s project objectives and key activities, confirming its prominent, strategic priorities and as part of the Bank portfolio. Relevance of objectives is rated High.

3.1.2Relevance of design: The project responded to a need for financial assistance to help rehabilitate critical, storm-damaged infrastructure. First, it offered flexibility with regards to the infrastructure to be selected in the water and electricity sector given the impossibility of accurately pre-determining all needs and costs up-front. Second, it offered retroactive financing, which was an important element of the ERL; two thirds of the retroactive envelope was absorbed, covering costs of activities found eligible for reimbursement within the four selected agencies. Third, while the design was consistent with the stated objective, the duration of the project was overly optimistic given the type of activities that were expected to be performed, the need to ensure their quality, and the high volume and geographical dispersion of activities especially those executed by INDRHI. Fourth, the objective of strengthening INDRHI and CDEEE capacity for future risk management was ambitious. Even if this capacity building aspect is common in post-disaster projects - as was already pointed out in the ICR for the Hurricane George ERL project[footnoteRef:8] - institutional strengthening in the context of a short engagement period, capacity issues and with infrastructure reconstruction the project’s top priority, can be risky. That said, and despite difficulties, moving forward the process of institutional strengthening was necessary and remains highly relevant in the circumstances of DR. Design is rated Substantial. [8: The ICR mentioned: “Among the various project objectives, longer-term institutional capacity strengthening was particularly challenging to achieve within the constraints of an emergency operation” and “Additionally, it should be noted that many of the flood control and watershed management studies conducted under the project will not have any impact unless they are successfully implemented by INDRHI; and that operation and maintenance (O&M) remains a major challenge for both agencies”.]

3.1.3Relevance of implementation. During implementation, constraints and capacities differed significantly between the two main implementing agencies, to which the Bank responded with customized solutions. The government remained committed during the whole implementation period of the project to achieve expected results in the water/irrigation and energy sectors, which were prioritized in the different CPS. With close supervision, continuous guidance and support from the Bank throughout the project, INDRHI managed to conclude works in a satisfactory manner. CDEEE showed agility to finance budgetary gaps and improve processes over time, allowing it to finalize works earlier in a satisfactory manner. The Bank, which remained the major external financier of the sectors covered by the project, was fully involved in all decisions regarding the prioritization and adjustment of works, as needed, to make the most efficient use of available funds. Its agreement to and approval of repeated extension of the closing date, as well as an Additional Financing – an uncommon mechanism for an ERL - were highly relevant to the project’s evolving circumstances. Implementation is rated Substantial.

3.1.4The overall relevance of project objectives, design and implementation is rated as Substantial. This balances a High rating for PDO relevance, Substantial rating for design given the issues outlined, and Substantial rating for implementation.

3.2 Achievement of Project Development Objectives

3.2.1The discussion below incorporates all key evidence attributable to the project, organized under the respective element of the PDO[footnoteRef:9]. [9: Neither the inclusion of a PDO Indicator for the PDO Part ii institution-building element, nor the adjustment of three PDO Indicator targets is considered to justify the triggering of an Appendix B split assessment of project outcome. The added PDO Indicator was correcting an omission in the original RF at appraisal, and did not materially affect/change project activities, cost, implementation or disbursement. And various targets were adjusted to reality due to imprecise estimations at appraisal.]

PDO part (i): restore and strengthen priority irrigation, electricity, water, and sanitation infrastructure damaged by Tropical Storms Olga and Noel or at risk of damage from future storms

Rated: Substantial

Irrigation infrastructure:

3.2.2The main achievements of the project were:

· PDO indicator #1 and #7: The rehabilitation of 24 priority irrigation systems severely affected by the TS Noel and Olga (of which eight corresponded to systems restored in the aftermath of the TS and financed through the retroactive financing mechanism). These included works on canals and reservoirs, embankments, pumping systems, water intakes, floodgate systems. As a result, irrigation was restored on 37,218 hectares (of which 16,763 resulted from retroactively financed activities) benefiting 18,779 farmers producing bananas, chick peas, rice, maize, tomatoes and other fruits and vegetables - all essential for local and national food security. This exceeded by far the target of 11,577 ha and 2,975 beneficiaries. See Table 3 and 4 in Annex 2.

· PDO indicator #2: Restoration of three dams (Tavera, Jiguey and Chacuey). The project’s target indicated four dams. Works included the reinforcement of structures such as embankments, protection walls and renovation of drainage systems, which are essential for the dams’ functionality associated with flood reduction, water supply, irrigation, hydropower and environmental conservation. The Chacuey dam required a modification of initial rehabilitation plans given the discovery of structural abnormalities (cracks on the crest, see footnote 11 in section 2.5.2) requiring additional studies and specific dam operation procedures. Nevertheless, the rehabilitation works initially planned on Chacuey’s spillway were completed. Works could not be completed in Maguaca due to a dispute with the contractor. It is planned that additional works required in Chacuey (related to this new situation created by the appearance of the cracks at end of 2014) and completion of works in Maguaca will be financed by the follow-up Bank project.

· Foundational work necessary for infrastructure design and INDRHI’s knowledge and information systems, based on studies on topography, soil conditions, dam security, sedimentation and water quality (necessary to estimate the life expectancy of the structures), as well as monitoring and early warning equipment (accelerographs and piezometers) among others.

Electricity:


· PDO indicator #3: Transmission capacity restored with the replacement of 152 km of transmission lines, helping to supply most of the electricity in the Southern region, and benefiting more than one million people, achieving the target ;

· PDO indicator #4: Restoration of the Aguacate power plant’s original generation capacity (52 MW) and its upgrade (additional 8 MW), totaling 60 MW generation capacity, benefiting over 590,000 inhabitants; restoration of the Las Barias dam, critical for the functioning of the La Valdesia power plant (54 MW capacity), Las Barias power plant (0.85 MW), and irrigation system of the Marcos A. Cabral and Nizao-Najayo canals; ancillary works (e.g. access roads) and equipment carried out on six hydroelectric plants contributing to their operation and recovery of their power generation capacity totaling 192 MW. In total, the project contributed directly or indirectly to the generation of 252 MW of power capacity, achieving the target; and,

· Distribution capacity restored by EDENORTE and EDESUR: equipment and operating costs incurred in the immediate aftermath of the TS were reimbursed through retroactive financing.

Water and Sanitation:


· PDO indicator #5: Restoration of the water treatment facilities in Santo Domingo (with CAASD) and in Santiago (with CORAASAN). The project contributed by retroactively financing exceptional expenses incurred just after the TS for the acquisition of materials and equipment, implementation of ancillary works, and operating costs. In Santiago, the project contributed to restoring 28 percent of the potable water consumption of 750,000 inhabitants, while in Santo Domingo over a million gallons of drinking water were provided to the population cut off from the regular water supply.

PDO part ii): Strengthen INDRHI’s and CDEEE’s capacity for future risk management.

Rated: Substantial

3.2.5The Additional Financing included a PDO Indicator: the “Establishment of a real time, operational hydro-meteorological data system in place transmitting processed and interpreted data to Disaster Risk Management Institutions (National Meteorology Office (ONAMET), the Committee for Operation of Dam Reservoirs (COPRE) and the National Emergency Commission (CNE)”. The main achievements of the project were:

· PDO indicator #6: Establishment of a high tech, unique in the Caribbean region, meteorological information system processing data from the conventional hydro-meteorological and telemetry systems, providing critical information for disaster risk management to the other relevant agencies according to the inter-institutional frameworks in place (Law 147-02, See para 1.1.5); restoration of the conventional hydro-meteorological network, and development and putting in operation of a telemetry network for the provision of data (in real time with the telemetry system), required for early warning, prevention and management of disasters;

· Significantly improved inter-agency cooperation for better disaster risk management between relevant agencies (led by INDRHI) including formalization of an agreement between EGEHID and INDRHI for an early warning system (collaboration barely existed at the start of the project);

· Institutional capacity enhancement (staff training) linked to the studies developed and equipment installed (e.g. dam safety, functioning and use of the hydrological/ hydro-meteorological information system, operation and maintenance);

· Preparation of critical studies and analytical work related to the management of dam operations; the acquisition of knowledge on sedimentation levels, water quality, reservoir storage capacity and underwater topography (bathymetry) in main dams;

· Equipment for main dams with instruments (accelerographs) required for early warning systems (seismic risks); and,

· Renovation of offices, provision of equipment, and support to the operations of INDRHI.

Overall, the achievement of PDO is rated Substantial.

3.3 EfficiencyRated: Modest

3.3.1Being an emergency operation prepared in 3 months, no economic assessment was conducted at appraisal for the original project or the AF. The restoration of priority (pre-existing) infrastructure damaged by TS Noel and Olga was considered an essential condition for maintaining economic growth. Agricultural production is critically dependent on the availability of water for irrigation, and the entire economy depends on reliable power supply. Further, the restoration of reliable access to these basic services was deemed still economically justified when the AF was processed.

3.3.2Methodology: An economic analysis was conducted at project closing and its methodology and results/conclusions are summarized below.

Component 1: The methodology used to evaluate the benefits corresponds to the Marginal Productivity Method, consisting of estimating the net present value (NPV) of the highest agricultural production compared with a scenario "without project" based on access to water through restored irrigation systems. This method considers water as an intermediate input in the production of agricultural products and is based on the principle that the farmer maximizes his profits by using water (as well as any other productive input) to the extent that the marginal net income generated by using an additional unit of water is equal to the marginal cost of obtaining this additional unit.

Components 2 and 3: The appropriate methodology for evaluating benefits from these components corresponds to the Avoided Harm Method, which seeks to estimate the benefits generated by a project that enables the reduction or elimination of damage or prejudice to society. Considering data available, the economic analysis could only be carried out for the Aguacate Power Station where project investments resulted in the rehabilitation of 52 MW and an upgrade of 8 MW under Component 2. The benefits of the other activities under this component (rehabilitation of 192 MW of power, 152 km of transmission and distribution lines, and rehabilitation of the Las Barias reservoir) could not be estimated because they were complementary to other investments performed by the government in the electricity sector (the project covered only a portion of the costs required for their functioning, e.g. rehabilitation of access roads, equipment, etc.). Hence it was not possible to isolate the specific impact of the project investments. The benefits of the investments in Component 3 were not incorporated either, due to a lack of information which impeded the realization of a full cost-benefit analysis. However, all costs were considered in estimating the total benefits of the project at the aggregate level.

3.3.3Results of the analysis: The results of the economic analysis at the aggregate level show a NPV of US $ 245.2 million and an Internal Rate of Return (IRR) of 21.2 percent, which indicate that the project had a positive performance in generating value for the Dominican Republic (see table below).

Table 2: Summary of NPV and IRR: Emergency Recovery and Natural Disaster Risk Management Project

Component

NPV (USD)

IRR

Component 1. Irrigation Improvement

$102,408,553

37.45%

Component 2. Rehabilitation of 52 MW and repowering 8 MW in Aguacate power plant

$151,949,310

25.85%

Project total

$245,287,788

21.20%

3.3.4The results of the economic evaluation for Component 1 should be considered as a reference, and not as absolute, due to the lack of primary information on the productive systems before and after the project. For this reason, information was collected through the managers of the Water User Associations, who provided generic information on the production systems they managed. In the absence of information to estimate the benefits of Component 3 and some Component 2 activities, the results obtained from the economic evaluation may be under-estimating the true effects for the country. Lastly, the sensitivity analysis shows that the results of the economic evaluation of the project are robust, indicating positive economic performance even with significant decreases in the incremental flows of benefits. There is a reasonable likelihood that these investments will be operated and maintained better than in the past, in the context of government’s recent prioritization of disaster risk and water sector management, and a follow-up Bank operation under preparation which would consolidate and further build upon ERL project achievements.

3.3.5 Even so, the project faced implementation inefficiencies. Delays, with very late Congressional approval, a common fact in Dominican Republic, and some inefficiencies linked mainly to institutional weaknesses in INDRHI and complex procurement procedures, slowed down project execution and increased management costs, especially for Component 1, as all activities under Component 2 were completed by the end of 2014. Several extensions of the project closing date were required to enable the project to complete the works that had first been prioritized, and for which partial repair would not have permitted the restoration of services nor guaranteed the robustness of the structures. These factors inter alia, account for the rating of Modest for efficiency.

3.4 Justification of Overall Outcome Rating

Rating: Moderatel