World Bank proposes to restructure Cebu BRT project following delays

World Bank proposes to restructure Cebu BRT project following delays

THE World Bank has proposed to restructure its financing package for the Cebu Bus Rapid Transit (BRT) project, citing delays in implementation.

In a document uploaded on its website, the bank said that the restructuring will involve revisions to the allocation of the loan proceeds; revisions to the results framework; an additional extension of the project closing date; and a change of selected project activities to keep within the scope of what was agreed during the project’s mid-term review.

“The project faced further delays after the first restructuring due to frequent staff turnover and delays in budget allocations and protracted procurement processes for services, goods and works,” it said.

“However, in the last 18 months, the project achieved notable progress and has been receiving the highest attention and commitment from all levels of the government. The project continues to remain relevant,” it added.

The World Bank Board first approved the $228.5-million project in 2014.

The package includes an International Bank for Reconstruction and Development loan worth $116 million; a $25-million grant from the Clean Technology Fund; counterpart financing by the Philippine government worth $30 million; and parallel financing amounting to $57.7 mill ion from the Agence Française de Développement (AFD).

The Department of Transportation has said that the launch of the full operations for the BRT has been pushed back to 2027.

The project’s last restructuring in 2021 extended the facility’s closing date by two years.

“After this first restructuring in June 2021, the project made some progress in ensuring appropriate deliverables from key consultants, but this momentum was soon lost,” it said.

It said that delays in implementation were mainly due to the “inability of the client to maintain sufficient capacity in the early years of the project, absence of regular allocations from the annual budget, which, in turn, delayed the procurement of and/or payments to the key consultants.”

However, it noted that the project performance “notably improved” when the Marcos administration assumed office in July 2022.

“Furthermore, the World Bank and AFD informed the government that a request for a second extension could be considered for completion of the activities as per the adjusted scope/design as agreed during and since the mid-term review,” it said.

“Since then, the project closing date was extended for the second time and third time respectively on June 30, 2023, and Sept. 30, 2023, essentially to allow the Government of the Philippines to secure necessary internal approvals before submitting request for restructuring to reflect the current scope/design of the project as discussed during and since the mid-term review,” it added.

The restructuring proposed to extend the project closing date to Sept. 30, 2026 from Jan. 30, 2024 previously in order to “complete delayed civil works and operationalize bus services that will allow achievement of the project development objective.”

The project cost was also proposed to be increased to $309.3 million, with the government now providing counterpart financing worth $112 million and the AFD committing $56.3 million.

Other proposed changes include the extension of the deadlines for compliance with the covenants on institutional and implementation arrangements; revision of the scope of operating costs; revisions to the results framework; reallocations between disbursement categories. — Luisa Maria Jacinta C. Jocson