Additional Financing to the Madagascar Road Sector Sustainability Project

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The COVID-19 pandemic led to the sharpest recession in Madagascar in two decades. The impacts reflect job losses during the recession, which were particularly severe in transport, tourism, and trade, and declining incomes more generally. The pandemic has likely reversed more than a decade of gains in poverty reduction. With two-thirds of the population living in rural areas, Madagascar remains primarily a rural country. Rural and remote areas are lagging in terms of economic opportunities: the rural population is primarily engaged in subsistence agriculture, remains disconnected from the country’s economic growth and are highly vulnerable to the effects of climate change. Madagascar is highly exposed to cyclones, extreme rainfall and flooding that may have become even more frequent because of global climate change. Although it is the typhoon season for Indian Ocean, it is rare for four storms (Ana, Batsirai, Dumako and Emnati) to hit Madagascar in span of four weeks during Jan 22 – Feb 23, 2022. Before cyclones the country already suffered from a lack infrastructure and connectivity, and the extreme weather has worsened the situations. ). Of the 32,000 km of roads in Madagascar there are 11,000 km of national roads and only 6,000 km are paved. About 40 percent of paved national roads are in fair to poor condition, requiring periodic maintenance, while most of the unpaved national roads require heavy rehabilitation. Madagascar has a rail network of 845 km of metric gauge, with a degraded quality of its infrastructure, of which about 670 km are operated by Madarail. Meanwhile, only about 33.7 percent (15percent on grid) of the population have access to electricity, compared with an average 48.4 percent for Sub-Saharan Africa in 2020 , which places the country in the list of the top 13 access-deficit countries in the world. Jirama, the public electricity service in Madagascar, manages about 6,752km of networks (HV, MV, and LV) but has difficulty ensuring their maintenance and reinforcement. The project is also fully aligned with the World Bank’s FY17 to FY21 Country Partnership Framework (CPF) for Madagascar (Report No. 114744‐MG) discussed by the Board on June 27, 2017 and extended by the Performance Learning Review (Report No. 162157-MG), which aims to build on current relative political stability to help address structural fragilities that hamper sustainable development.The AF will support a full replenishment of the financing gap in the project caused by the activation of the Contingency Emergency Response Component (CERC) at the request of the Government to mitigate the impacts of the cyclones. Original project components, being replenished through this AF, will maintain original scope and implementation arrangements. The original project was a $200 million project aimed primarily at the improving the road condition and resilience in Madagascar with technical assistance to support road and transport sectors reforms. Following devastating cyclones, the government requested the activation of the original project's CERC and reallocation of $100 million to cover emergency needs in the roads, rail, and electricity sectors. With the approval of this proposed AF, the project becomes as follows: Component 1. Improving Road Condition and Resilience (US$180 million equivalent): This component will finance works and consultancy services to support periodic and routine maintenance on about 1,200 km (representing 20 percent) of national paved primary roads in different regions of Madagascar. Component 2. Technical Assistance and Support to Roads and Transport Sector Reforms (US$ 20 million equivalent): This component will primarily finance consultancy services and goods aimed at supporting capacity building and activities within the roads and transport sector to strengthen institutions and to ensure the sustainability of connectivity.Component 3. Contingent Emergency Response (US$100 million equivalent): The following activities are being financed under the activated CERC of the original project.Sub-Component 3.1 Road and Rail infrastructure (US$ 80 million). This subcomponent will finance consultancy services, equipment, and works for the emergency reconstruction needs of roads, bridges, and associated infrastructure (US$78 million) as well as for railways operated by Madarail (US$2 million). This will primarily cover rehabilitating sections along the roads and railways network that were cut or heavily damaged by the storm, or at risk to rapidly deteriorate. Works will include rehabilitation of drainage and retaining structures, repairs and/or rehabilitation of short bridges, and improving collapsed or heavily deteriorated road and railway surfaces. The rehabilitation of this infrastructure will take into account higher climate resilience standards, such as reinforced retaining walls and structures and improved drainage, to reduce vulnerability to future climate extremes. Sub-Component 3.2 Electricity Infrastructure (US$ 20 million). This subcomponent will finance consultancy services, equipment, and works for the emergency reconstruction needs of JIRAMA electricity network, especially the distribution network. This includes the purchase and installation of electrical poles, cables, transformers, and associated parts and infrastructure. The main focus will remain on re-establishing critical electrical access through a viable and resilient distribution network. Sub-Component 3.3 Future Contingent Emergency Response (US$ 0 equivalent). This subcomponent is introduced to allow for the potential activation of future CERCs if needed and will facilitate access to rapid financing by allowing for the reallocation of uncommitted project funds in the event of a natural disaster, either by a formal declaration of a national emergency or upon a formal request from the government.