Date of Submission to Coordination Unit:

A. GENERAL INFORMATION

1. Activity NameRegional Integration through Trade and Transport Corridors (TRANSTRAC)-Jordan activities

2. Requestor Information Name: H.E Mr. Jafar Hassan Title: Minister of Planning and International Cooperation

Organization and Address: Ministry of Planning and International Cooperation (MOPIC)

Telephone: +962 6 4645437 Email: Jafar.Hassan@mop.gov.jo

3. Recipient Entity Name: Mr. Sami Halasa Title: Secretary General

Organization and Address: Ministry of Public Works and Housing

Telephone: +962 6 5850470 Email: sami@mpwh.gov.jo

4. ISA SC RepresentativeName: Julien SERRE Title: FEMIP Trust Fund Manager

Organization and Address: European Investment Bank

100 Boulevard Konrad Adenauer Luxembourg L 2950

Telephone: +52 621 339 175 Email: j.serre@eib.org

5. Type of Execution (check the applicable box)√ Type Endorsements Justification

Country-Execution Attach written endorsement from designated ISA

√ Joint Country/ISA-Execution Attach written endorsement from designated ISA

Due to its regional dimension and approach, which includes three other countries in addition to Jordan, the need for an ISA to execute in coordination with the national authorities is essential. EIB will carry out procurement and financial management. It will also coordinate between the four targeted countries. EIB will leverage its capacity and experience in financing transport projects and supporting their preparation. EIB will also use if relevant its participation in the Arab Financing Facility for Infrastructure. The country will be responsible for local coordination and monitoring and

April 17, 2013

evaluation as well as relevant capacity building activities. To ensure country ownership the ISA execution will be closely coordinated with the country activities.

ISA-Execution for Country Attach written endorsement from designated ISA

ISA-Execution for Parliaments

Attach written endorsements from designated Ministry and ISA

The EIB’s proposed TRANSTRAC initiative aims at enhancing economic development and employment creation in the Transition Countries by building up the transport sector capacity to identify, prioritise, prepare and implement projects that are consistent with both national and regional objectives, and that can meet the due diligence requirements of potential international funders and as a result help connect the region and integrate it into the global economy, support trade, boost development and address key transport challenges. Under this initiative, it is proposed to particularly support preparation of trade and transport corridors for Egypt, Jordan, Morocco and Tunisia (the proposed project to be supported by MENA TF). These countries are also the members of the Agadir Agreement. The Agreement unites the four countries of North Africa and the Middle East that are the most integrated with global production chains. However, none of the Agadir members traded more than 3 percent of its imports and exports with its partners to this Agreement. It is hoped that, once the trade, customs and logistics policies and reforms are implemented in the four countries, imports and exports between them will increase. TRANSTRAC would then contribute to increasing both intra-trade and trade beyond the borders of the Agadir partners.

EIB will also ensure that TRANSTRAC is coordinated with the LOGISMED TA proposal, promoting logistic networks and platforms in the Mediterranean countries. In this regard, the coordination efforts will be harmonized between LOGISMED TA and TRANSTRAC to ensure that future platforms can benefit from relevant activities in TRANSTRAC, with the active support of the ministry of transport.

Recent studies by the IMF, World Bank, IsDB and AfDB have shown that increasing trade competitiveness in the Middle East and North Africa region is a priority as: (i) trade facilitation and logistics bottlenecks are preventing potential growth opportunities from being realized, and impeding the integration of MENA countries into the outside world; (ii) increased trade will accelerate sustainable economic growth, opening up considerable opportunities of employment.

The proposals for each of the target transition countries (Egypt, Jordan, Morocco and Tunisia) promote:1. trade facilitation2. improving the transport infrastructure3. improving transport and logistics services

The expected outcome would bring trade facilitation and infrastructure in the main trade corridors up to best practice international standards. The activities of the proposals would mainly encompass:

• institutional strengthening• public and private sector training• preparatory studies for border crossing facilities• preparatory studies for road, rail, port improvements

The removal of the supply chain constraints (customs, logistics hurdles, tariffs and non-tariff barriers, inadequate infrastructure, inadequate border crossings) through the future implementation of the recommended actions would open up additional opportunities for trade create substantial numbers of full-time jobs as well as temporary jobs in the construction industry and related activities. The opening and facilitation of priority corridors will also support development of less privileged regions of the four target countries.

On the basis of the recommendations of the different studies, and as confirmed with the governments, the proposed TA project (the proposal for MENA Transition Fund support) would include three components:

A. institutional and capacity building for regional trade framework improvement; B. preparatory studies for infrastructure improvements/investments of the priority corridors (including border

crossings); C. project preparation, management, coordination, monitoring and evaluation.

The main focus of the proposal is on component B which prepares future investments for which the governments would be able to quickly mobilize resources for their funding from IFIs (including the EIB). Although small in amount, due to the limited resources under the MENA TF, component A focuses on the essential capacity building and training for regional trade framework improvement.

The detailed activities to be supported under the proposed project are tailored to each country. They are in line with the recommendations of the different relevant studies financed or carried out by different international institutions (EU, EIB, WB, IMF, JICA, AfDB, IsDB, etc.). These studies are further referred to in the project description section of this proposal.

6. Geographic FocusIndividual country (name of country): Jordan

√ Regional or multiple countries (list countries): Under the Transport Sector Support for Transition Countries (TRANSTRAC) initiative, the requested support from MENA TF (DPTF) is for preparation of Priority Trade and Transport Corridors-focusing at a first stage on Egypt, Jordan, Morocco and Tunisia.

The present request concerns Jordan activities.

7. Amount Requested (USD) Amount Requested for direct Project Activities: (Jordan activities)(of which Amount Requested for direct ISA-Executed Project Activities):

2.5 million(1,95 million)

Amount Requested for ISA Indirect Costs:1 0.13 millionTotal Amount Requested: 2.63 million

8. Expected Project Start, Closing and Final Disbursement DatesStart Date: September 1, 2013

(from grant approval to the start: preparation of TORs, RFPs and procurement)

Closing Date:

September 1, 2016 End Disbursement Date:

December 1, 2016

9. Pillar(s) to which Activity RespondsPillar Primary

(One only)Secondary(All that apply)

Pillar Primary(One only)

Secondary(All that apply)

Investing in Sustainable Growth. This could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity.

√ Enhancing Economic Governance. This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems.

√

Inclusive Development and Job Creation. This could include support of policies for integrating lagging regions, skills and labor market policies, increasing

√ Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and

√

1 ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time, travel, consultant costs, etc.

youth employability, enhancing female labor force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal policies and social safety net reform.

negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development.

B. STRATEGIC CONTEXT

10. Country and Sector Issues Country Context

Jordan continues to face multiple exogenous shocks—high import prices for oil and food; repeated and extensive periods of interrupted natural gas flow from Egypt; a slowdown in tourism and remittance flows; heightened domestic and regional political tensions; and rising sovereign financing costs.

The country’s economy was hurt by the global crisis and a series of regional events and has since been struggling to regain momentum. Following almost a decade of strong macroeconomic performance, the political upheaval that swept the Arab region has had a significant impact on Jordan, combining economic shocks (drastic drop in foreign direct investment, remittances and tourist revenues since 2011) and interruptions in the gas supply from Egypt, and coinciding with higher international food and energy prices. Energy imports increased from 9 percent of GDP in 2003 to 19 percent of GDP in 2011. In addition, the impact of the Syrian conflict, and persisting social challenges including unemployment at 13 percent and poverty at 14.4 percent is further undermining the economy.

One of the recommendations of the IMF’s Jordan 2012 Article IV Consultation was: “Improving the business environment for the private sector, and encouraging accountability and good governance, which are keys to achieving more inclusive growth and generating employment”.

The IMF recommends addressing also the potential impediments to accessing the GCC market, including through further improvements in customs and trade procedures and logistics. Jordan needs higher and more inclusive growth. Reducing the country’s high levels of unemployment requires a more dynamic economy that can generate jobs. Tackling infrastructure bottlenecks through investment and structural reforms, and undertaking improvements to the business climate and efficiency of labor markets (including reducing labor market rigidities and enhanced vocational training to reduce skill mismatches), would help remove key impediments to growth and employment. The Joint World Bank-IFC Country Partnership Strategy (CPS) for FY 2012–15, endorsed by the Bank’s Executive Board in January 2012, commits to support Jordan in its efforts to lay a foundation for sustainable growth and job creation particularly through strengthening the foundation for sustainable growth with a focus on competitiveness.

The government has announced a reform package presented under the Deauville Partnership “The Way Forward– Country Action Plan,” which draws on the government’s Executive Development Program 2011-13, the country’s medium-term socio-economic development plan. The key economic policies and programs focus on five areas:

Improving governance including (i) the modernization of internal control and external audit functions; (ii) enhancing transparency in the general budget process including the annual publication of the general budget; (iii) improving cash flow expenditure mechanisms and (iv) developing debt management capacities;

Creating Employment and Income-Generating Opportunities; particular areas of government focus are (i) SME and start–up support; (ii) Venture Capital Program; and (iii) microfinance and poverty reduction;

Competitiveness, Investment, and Private Sector Development. This area focuses on improving the legislative framework for both foreign and local investments;

Energy, Water and Key Infrastructure projects. Including a number of mega PPP projects; Regional and Global Integration, includes both plans to establish a Euro-Jordanian Free Trade Area by 2014

and Jordan’s interest in becoming a GCC member.

Transport and Trade Context and Key Issues

Transport Context

Due to its strategic location and well-developed transport infrastructure, Jordan is becoming an increasingly important communications and transportation node with its land and maritime transport services playing an increasingly important role in international, regional, and local trade. The transport sector plays a major role in Jordan's economy, accounting for about 11% of GDP and earning foreign exchange through the provision of transshipment services via the Port of Aqaba and overland transport routes.

The Ministry of Public Works and Housing (MoPWH) is responsible for road infrastructure, while the Ministry of Transport (MoT) is in charge of overall transport planning, and for regulating and coordinating road, rail, air, and port transport services. The MoT is also responsible for setting tariffs for bus and taxi services, as well as for freight movement.

Jordan has a well-developed highway network, which consists of 2,883 km of primary roads, 1,941 km of secondary roads, and 2,308 km of village roads. Outside the Amman urban area, roads have sufficient capacity to handle present levels of traffic. However, certain links in the trunk road system are missing, particularly in the Greater Amman Area, because of rapid urbanization, and to some borders (Saudi Arabia, Syria and Iraq). The network is in need of a maintenance program.

Railway services are operated by two state-owned corporations: the Hedjazi Jordan Railway (HJR), and the Aqaba Railway Corporation (ARC), which is included in the Government of Jordan’s (GoJ) privatization program. The HJR originally ran from Syria, via Amman and Ma’an, to the Hedjaz region of Saudi Arabia. It currently operates outdated rolling stock, and provides sporadic service between the Syrian border and Amman, a line with a single narrow gauge (1050 mm) track that is in very poor condition. The ARC operates one 295 km narrow gauge line of which 169 km are leased from the HJR. It transports about 2.5 million tons phosphate rock annually to the Port of Aqaba.

Aqaba Port, operated by the Ports Corporation, recently included in the newly established Aqaba Special Economic Zone (ASEZ) is Jordan's only seaport. The activities of the port grew sharply in the 1980’s, and peaked in 1988 at about 20 million tons. The port handles bulk phosphate, potash, fertilizer and other bulk exports, trans-shipment goods, and the major portion of domestic imports. Few years ago, APM Terminals (part of Maersk Group) signed a Terminal Management Contract with Aqaba Development Corporation (ADC) to operate, manage and market the Aqaba Container Terminal (ACT), as well as implement a number of upgrades to the facility.

Jordan has three main airports. The Queen Alia International Airport near Amman is the largest of the three. The Government is currently upgrading and modernizing the facility through a concession. The Aqaba International Airport is in need of capacity expansion as a regional airport serving the Aqaba-Eilat area. The third airport is the Amman Airport (at Marka). Presently, these airports are managed, operated and controlled by the Civil Aviation Authority.

Key Issues in the Transport Sector

The Trucking Industry: The Government launched a program to reform the trucking sector in May 2002 with the passage of the Road Freight Transport Law. The objective of the Law was to consolidate the number of small trucking operators in the sector, promote competition by lowering tariffs, and renew the fleet by offering incentives to acquire newer vehicles. Since April 2005, the Law has applied to all types of cargo, including general cargo and containers, which represent the bulk of goods transported in Jordan. Between April 2005 and December 2005 (six months after the law), the number of trucking companies that registered with the MoT increased from 72 to more than 120 (for all categories of goods). Collectively, these companies own in excess of 4,400 vehicles, and have an additional 1,100 operating under contract. On average, each company has around 45 trucks under its operation. Prices for transporting containers and general cargo were freed in mid-December 2005. It has been reported that the price of transporting containers from the Port of Aqaba to inland destinations has dropped by 10%. To encourage operators to renew their fleets, various tax incentives were incorporated into the new law. It was also reported that at the end of 2011, 21% of the trucking fleet was five years old or newer, which is up from the estimate of 7% in early 2004.

Truck Overloading: Significant progress has been made since the late 1990s in reducing overloading of trucks by establishing and enforcing lower axle load limits. The Government of Jordan (GoJ) has increased the number of fixed and mobile scales, and controls of trucks entering Jordan at the Syrian, Iraqi and Saudi borders have been enhanced. Uniform axle load standards are now applied to all trucks, and any truck with more than a five ton total overload is not allowed to enter Jordan. Since the number of trucks weighted at all stations increased, the percentage of overloaded trucks has shown a decline.

Traffic Safety: The fatality rate on Jordanian roads of about 18 deaths per 10,000 vehicles (half of which are pedestrians) is more than ten times the rate for developed economies. About 70% of all traffic accidents occur within the Amman and Zarqa Governorates, and a very high proportion of the accidents involve pedestrians (about 40% of all accidents with casualties).

Amman Ring Road: The need for a complete ring road around the Greater Amman Area (GAA) has become urgent with the rapid urbanization and development of the GAA. An estimated 3.1 million people, more than half the population of Jordan, now live in the GAA, which includes in addition to Amman, the populous city of Zarqa and its Special Economic Zone. As a result of the combined impact of a burgeoning population and rapidly rising motorization rates, the level of traffic throughout metropolitan Amman has grown significantly (an average annual growth of more than 6% since the early 1990s). Another key factor is Amman’s location at the center of an expanding regional trucking market. Commercial truck traffic utilizing the major north-south and east-west corridors, which connect Saudi Arabia with Syria and West Bank with Iraq, has increased considerably (5.8% a year). Both of these regional corridors funnel traffic directly into the GAA.

Government Program in the Transport Sector

The Government developed a strategy for the land transport sector that involves privatizing public sector enterprises, recovering costs in the transport sector, and particularly the road sector, strengthening road sector capacity to maintain the highway network, improving road safety, and constructing the few remaining strategic links in the network (including bypasses of major cities). With EIB financing under the Facility for Euro-Mediterranean Investment and Partnership Trust Fund (FTF), the government has completed a National Highway Master Plan which will serve as the basis for the overall road maintenance program and for all major inter-urban highway sector developments in the country over the period 2010 to 2030. The Government is also building a ring road around Irbid, the second largest city of the country.

In light of its strategic location, the Government seeks to take further advantage of its critical overland transport link to Iraq from the Red Sea, and is developing plans for becoming a regional logistics hub for difficult-to-access ports within and north of the Arabian Peninsula.

The Government has also completed the feasibility study for the National Railway Network project (NRP) which aims at linking the region to the Mediterranean ports and Mediterranean railway networks, facilitating regional trade and transport, supporting regional integration and boosting Jordan’s economic development. The government convened a lenders meeting, which was held in Amman in February 2011 to seek financing for the National Railway Network project. The lenders expressed interest to support the NRP and the government is looking at options to address the issues of debt ceiling (capped at 60% of GDP by law) and the sovereign guarantees in order to be able to finance the NRP.

Trade Context

Jordan’s economy is more open than those of most of its neighbors, and it has embraced the principles of free trade more aggressively. Despite the recent increases in the volume and value of international trade, the economy is still heavily dependent on remittances from overseas Jordanians and on investments from Gulf states in property development.

Some 25 percent of exports are in the highly vulnerable garments sector, with fertilizers and pharmaceuticals each contributing 8 percent of the total by value. All types of foods make up a further 8 percent. Exports are more diversified by type and by destination than for other Mashreq countries.

There have been many positive developments in trade facilitation, including the concessioning of Aqaba port and the development of an associated development zone. Jordan now has multiple free trade zones. The trucking industry has been revitalized by tax and tariff exemptions on new trucks that replace existing trucks. The customs agency has been restructured and its trade facilitation objective is rated more important than its revenue generation function. Replacement of the truck queuing system in Aqaba port has had a dramatic positive impact on trade flows. Jordan has a free trade regime with no basic restrictions on goods that can be imported or exported and no restrictions or regulations on who can undertake international trade. However, there is still a need for greater competition in the trucking industry, and development of transport infrastructure would further promote trade.

11. Alignment with Transition Fund ObjectiveThe Deauville Partnership Report on Trade and Foreign Direct Investment highlights that: “ tackling costs associated with inefficient trade facilitation and logistics and weak access to trade finance and remittances is central to further integration of Partnership countries, both regionally and globally”. The costs of “connectivity” are often fixed, and as a result they disproportionately affect small firms, farmers, and the poor, severely limiting their participation in trade and investment. Reducing the costs associated with moving goods along international supply chains, whether these costs are measured in terms of time, money, or reliability, is a core element of a trade and FDI agenda. One of the three Deauville Partnership priorities is to: modernize trade facilitation services by enhancing the performance of trade corridors, whether air, sea, or land; improving markets for logistics services; increasing the efficiency of border management, including customs; and facilitating the cross-border movement of service suppliers.

The proposed project aligns well with the objective of the Transition Fund in terms of Competitiveness and Integration as it covers planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of transport, trade facilitation and private sector development. The project aligns also with Investing in Sustainable Growth as it enhances the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy and private sector development (exporters, freight forwarders, manufacturing industry, etc.). Through the capacity building for regional trade framework improvement, the proposed project aligns also well with Enhancing Economic Governance. Through facilitating trade and transport services which supports increased economic activity and job creation at different levels (manufacturing, agriculture, rural development, industrial activities, services, etc.), the project aligns well with Inclusive Development and Job Creation.

In terms of inclusiveness, equity and sustainability the DP report underlines that to be sustainable, the political economy of trade and FDI requires that the benefits of integration, which are often concentrated in the large cities and among the more privileged sectors of the population, be shared as widely as possible across regions and people. Trade and FDI are more than simple exchanges of material goods and services: they have to do with people and their norms and values. To be sustainable, the political economy of trade and FDI needs to recognize the possible tensions between those societal policies. One of the Deauville Partnership priorities is to develop regional policies to connect lagging and remote regions, promote internal trade, and help poor people in these areas connect to the places where opportunities are concentrated.

12. Alignment with Country’s National StrategyCountry Action Plan under the Deauville Partnership. Jordan’s economic development program identifies enabling the investment environment, including for investment in industry and trade, tourism, and agriculture, as one of its seven priority pillars (along with social welfare, employment, education, infrastructure upgrade, financial reforms, and judicial reforms). Specifically, to bolster industry and trade, Jordan seeks the revision and simplification of rules of origin with the EU and other partner countries. Jordan also seeks to conclude the single regional convention on Pan Euro-Mediterranean preferential rules of origin with the EU. While the majority of Jordan’s FTAs contain services liberalization rendezvous clauses, only the Jordan-US and Jordan-Singapore FTAs contain a services chapter along the lines of the WTO’s General Agreement on Trade in Services (GATS). In this respect, Jordan is seeking to advance in the liberalization of services with the EU through the signature of the Protocol on Trade in Services. Jordan is looking for further trade liberalization through the signature of regional and bilateral trade agreements.

The Jordan program emphasizes that trade partner countries are to assist Jordan in addressing the barriers that impede the entry of its products into international markets. This is to be achieved through twinning projects and a

capacity-building exercise for industrial production and product standard criteria. Jordan additionally stressed the importance of facilitating the movement of business people into international markets, given the contribution this can make to enhancing trade, business, and investment relations. Jordan seeks support from the Deauville Partnership through (a) loan guarantees; (b) partnership and investment in venture capital funds; and (c) partnerships and investment facilitation in key development projects.

The proposed project aligns well with the country’s national strategy. Increasing trade competitiveness in the Middle East and North Africa region is a priority. Trade facilitation and logistics bottlenecks are preventing potential growth opportunities from being realized, and impeding the integration of MENA countries into the global economy. Increased trade will accelerate sustainable economic growth, opening up considerable opportunities of employment.

The trading process involves many different actors and numerous procedures. Strengthening the private sector involved in the trading process, such as freight forwarders, customs brokers and trucking companies, will further enhance economic growth and create jobs. Benefits from increased trade get transferred on to consumers as reduced transportation and transaction costs decrease the prices of the final products. The World Bank recent regional trade facilitation and infrastructure studies for Mashreq and Maghreb countries identified obstacles to trade in three dimensions: (i) trade facilitation; (ii) transport infrastructure, and (iii) transport and logistics services. A corridor approach enables attention to be focused on the areas that account for most of the trade of a country, ensuring that the measures implemented make sense in terms of international trade. Recent studies show that investing in trade and infrastructure helps accelerate sustainable growth, create jobs, strengthen governance framework and increase economic and social inclusion. These studies showed also that in the short-run every US$1 billion invested in infrastructure has the potential of generating up to 110,000 infrastructure-related jobs in the oil-importing countries, 26,000 jobs in the GCC economies, and 49,000 jobs in the developing oil exporting countries.

C. PROJECT DESCRIPTION

13. Project ObjectiveProject development objectives. The objective of the proposed project is to promote (through conducting studies and training) reduction of trade and transport barriers along the priority trade corridors of the country and in related border crossings.

The objective will be achieved through preparation of needed improvements of the country’s main trade corridors, particularly transport infrastructure, border crossings and accesses to those crossings.

The ultimate outcome once the investments are put in place will be more efficient and fluid logistics chains enabling increased realization of the country’s and region’s trade potential and reduced transaction costs. The project will thus contribute to the ultimate goal, which is to facilitate increased global trade of the country and the sub-region, and through this to make a significant contribution to increased employment and regional and global integration while supporting also development of less privileged regions of the country.

14. Project ComponentsJordan has a free trade regime with no basic restrictions on goods that can be imported or exported and no restrictions or regulations on who can undertake international trade. However, restrictions to this regime are made on an exception basis for environmental, health, security and sometimes trade protection reasons.

Main Trade Routes: Jordan has a key role in two of the main transport corridors in the Mashreq region. The North South corridor from the EU via Turkey to Saudi Arabia and the Gulf States, and one of the East West corridors from Iraq to the ports of the Mediterranean Sea.

Most of Jordan’s external trade is through the port of Aqaba. This port has been transformed in the last decade into one of the region’s main container ports, with its container handling efficiency comparable to the best international standards. With the abolition of the truck queuing system and its replacement by a state-of-art pre-allocation system, even its land access is no longer a significant problem. However, the development of the associated free trade zone has not yet achieved its hope for success. Aqaba port has feeder services to the main Gulf ports and now has some

direct calls as well.

Jordan has poor access to Mediterranean ports. Some operators tolerate the high trucking costs to Beirut or Latakia. This limited access leads many exporters to accept the slightly longer shipping times and slightly higher costs of using Aqaba, and early all Jordanian manufactured imports, whatever their origin, enter through Aqaba.

The proposed request (the project) comprises three components. These are: (a) institutional and capacity building for regional trade framework improvements; (b) preparatory studies for infrastructure improvements of the priority corridors; (c) project preparation, management, coordination, monitoring and evaluation. The activities to be supported under the proposed project are in line with the recommendations of the Euro-Med transport program, the Deauville Partnership Report on Trade and Foreign Direct Investment, the Highway Master-Plan financed by the EIB, and the World Bank regional trade facilitation and infrastructure study for Mashreq countries. They are national priorities for the government with a regional dimension.

Component A: Institutional and capacity building for regional trade framework improvements (US$0.35 million). This component focuses on the essential capacity building and training for regional trade framework improvement. It includes the following specific activities. This component includes the following specific activities.

1. TA to transportation (US$0.15 million) for training of all transports agencies in different PPP aspects and techniques relating to transport sector to be coordinated with EIB and other IFI initiatives on public-private partnerships in Jordan (e.g. EPEC, AFFI).;

This sub-component will be country-executed in close coordination with the ISA.

2. Road Safety assessment and preparation of an action plan (US$0.2 million). Road safety was one of the key elements of the Highway Master-Plan financed by the EIB. The fatality rate on Jordanian roads of about 18 deaths per 10,000 vehicles is more than ten times the rate for developed economies. Road safety is also a source of delays and dis-functioning of the trade corridors in particular. The sub-component will also include media, education sensitization and awareness campaigns, as well as an updated inventory of physical infrastructure to be replaced or put in place. This sub-component will be coordinated with the EU supported regional action plan on road safety.

Component B: Preparatory studies for infrastructure improvements of the priority corridors (US$1.75 million). This component supports preparation of feasibility studies, detailed design and tender documents, environmental and social impact assessments for the priority trade and transport corridors.

1. Upgrading of the North-South and East-West corridors (US$1.65 million)

Rail

The full infrastructure cost of the government proposed new railway network of about 1,000 km of standard gauge track will be about US$4 billion. The railway will comprise three lines that will link Aqaba and Amman to Syria, Iraq and Saudi Arabia. It is a key component of Jordan’s strategy to increase its role in trade and transport in the Mashreq region. It is expected to be the main transport mode in the North South corridor and in the East West corridors.

The Ministry of Transport (MoT) has already carried out further studies for prioritization of the planned investments and preparation of detailed institutional, legal (for PPPs), technical, environmental and social impact studies for the retained priorities that can be implemented in the coming six to ten years. No further TA is needed at this stage for rail under the DPTF.

Roads

Maintenance and rehabilitation of Road R15 from Jabher As Sarhan to Aqaba (US$0.85million) . This road, which needs major maintenance and rehabilitation, runs between the Syrian border at Jabher As Sarhan

and Aqaba, going through Mafraq, Zarka, Amman, and Ma’an, as part of the North-South Corridor. The road has been identified as a priority under the EIB financed Highway Master-Plan. The feasibility and initial environmental and social impact studies have been carried out. The proposed TA would finance support to the Ministry of Public Works and Housing (MoPWH) for preparation of detailed design and tender documents.

Rehabilitation and upgrading of North Shouna-South Shouna Road, R65 (US$0.8 million). This is another priority North-South corridor which forms the northern part of Road 65 starting at the rotary intersection in North Shouna municipality, running southward via Deir Alla municipality and South Shouna municipality, and ends at the junction with Road 40 (Dead Sea Road). The total length is 101 km covering the East Ghor, the main center of agriculture products in Jordan. This road is also a priority under the EIB financed Highway Master-Plan. The proposed TA would finance support to MoPWH for preparation of detailed design and tender documents (feasibility and preliminary design were financed by JICA) as well as environmental and social impact assessment.

2. Upgrading and expansion of Border crossing facilities (US$0.1 million)

Upgrading and expansion of Border crossing facility at Al Karama (US$0.1 million). The government is planning an expanded and upgraded facility on the border with Iraq. The current facility is inadequate for the volume of road traffic expected to use the border. The provision is expected to include additional truck parking space, new buildings for Customs and other border agencies and a large separate truck parking area. It will also include a new 3D truck scanner. The proposed TA would finance support to MoPWH for assessment of existing studies and of updating actual needs.

Component C: Project Management, Coordination, Monitoring and Evaluation (US$0.4 million). The proposed TA will support a project management unit (PMU) for management activities associated with project coordination and implementation, including capacity building

The PMU will be implementing a comprehensive monitoring and evaluation (M&E) system with the assistance of the ISA. The PMU will be located at the Ministry of Public Works and Housing (MoPWH), directly under the Secretary General of the Ministry. MoPWH is used to hosting such units as it is executing several projects and activities financed by different IFIs and bi-laterals (EIB, WB, Arab Fund, IsDB, Saudi Fund).

This component will be country-executed in close coordination with the ISA.

15. Key Indicators Linked to Objectives

1. About 20 transport staff trained in: PPP aspects and techniques (15);2. Studies completed: (i) priority North-South corridor(s), including border crossings, defined and technical

studies completed; (ii) road safety action plan completed.

D. IMPLEMENTATION

16. Partnership Arrangements (if applicable)The EIB has financed a Highway Master-Plan which was recently completed. The Master-Plan identifies the priority road corridors of the country and the investments requested (maintenance, rehabilitation, upgrading, reconstruction). The World Bank has also recently completed a Regional Trade Facilitation and Infrastructure Study for Mashreq Countries, which identified the main trade and transport corridors for the country.

The project (through EIB and the PMCU) will be closely coordinated with other initiatives, particularly with JICA (on the transport strategy regarding the trade and transport corridors), as well as with the EU Neighborhood Program Management and Support in the Transport Sector, the Euro-Med- Regional Transport Action Plan for the Mediterranean Region (including the road safety regional program) and the Euro-Med-Priority Transport Infrastructure Projects in the Mediterranean countries.

Upgrading of the road corridors to Saudi Arabia (through Al Omari border crossing) and to Iraq are already being supported or planned to be supported by the Saudi Fund. Close coordination will also maintained by the PMCU and EIB with the Saudi Fund regarding these corridors

17. Coordination with Country-led Mechanism/Donor Implemented Activities The proposed project under the EIB Transport Sector Support for Transition Countries (TRANSTRAC) initiative will be closely coordinated, for optimized complementarity, with the Euro-Med Transport Program and its Regional Transport Action Plan for the Mediterranean for 2007–2013. The Ministry of Transport is also the coordinator for the Euro-Med program and will ensure this complementarity.

Bridging the gap between identification of trans-Mediterranean transport networks and project implementation is yet to be filled, therefore that existing opportunities for funding by certain partners (such as in the context of EU’s Trans-European Transport network (TEN-T), with the EIB’s FEMIP (Facility for Euro-Mediterranean Investment and Partnership) and through other IFIs) can be leveraged.

The European Commission (EC) Communication on transport cooperation in the EU neighbouring regions invites the EC and the IFIs to support the neighbouring countries in developing transport strategies and, predominantly, help them to identify priority infrastructure projects and prepare project proposals. The Communication calls for establishment of mature and sound priority projects pipeline with a long-term outlook of extending the Trans-European Transport network (TEN-T) beyond the EU’s border and connect the countries in the region by building the Trans-Mediterranean Transport Network.

The Euro-Med Transport Working Group on Infrastructure, to which EIB actively participated, agreed on further steps to implement both the regulatory reform and all related actions of the Regional Transport Action Plan for the Mediterranean for 2007–2013. The dialogue built with the Mediterranean partner countries resulted in a list of corridors/programmes/ projects that now needs to be rationalized and prioritized before being brought forward. The work will be further taken up by the EU Neighbourhood Programme Management and Support in the Transport Sector to ensure progression and coordination in this area. As noted by recent reports, Transition Countries continue to actively participate in the various EC regional transport programmes and working groups and remained involved after the Arab Spring in the establishment of the future Trans-Mediterranean Transport Network.

The investments identified under the proposed TA project, and which will be prepared under the project, would later on be submitted for eventual financing by IFIs. The proposed project will help the government in its coordination with IFIs for effective development impact of eventual IFI investment projects in trade and transport, and in mobilizing quick increased financing for these investment projects as a number of priority trade and transport corridors would be ready for financing.

18. Institutional and Implementation ArrangementsThe project will be joint EIB-Government executed. Due to its regional dimension and approach, which includes three other countries in addition to Jordan, the need for the EIB to execute in coordination with the national authorities is essential. All procurement activities, financial management and disbursement will be executed by the EIB according to its procedures and guidelines. This is in line with EIB’s practices for regional approaches and TA projects with regional dimension. The country will be responsible for contracts management, local coordination and monitoring and evaluation. This arrangement will ensure country ownership while benefiting from EIB expertise in regional approaches (such as FEMIP). The EIB will ensure coordination of the regional dimension. The four targeted transition countries (Egypt, Jordan, Morocco and Tunisia) agree and are comfortable with this procedure. The four countries are benefiting from a number of FEMIP TA grants executed by the EIB and coordinated by the countries.

A project management and coordination unit (PMCU) will be set at the Ministry of Public Works and Housing (MoPWH) under the Secretary General of the Ministry (MoPWH SG), and will be responsible for: (i) overall coordination of the project activities with the different ministries, entities and departments involved in the project; (ii) monitoring and evaluation of indicators and overall progress; (iii) continuous follow up and periodic reporting on progress; (iv) liaison and coordination with the EIB. The PMCU will be headed by a project coordinator who will be selected competitively, and will include an assistant. The coordinator and the assistant will be financed by the project. The Ministry will provide a counterpart to the project coordinator as well as another assistant, and will host the PMCU with related expenses.

Each ministry, entity and department involved in the project will designate a focal point (FP) who will coordinate closely with the PMCU the activities of the concerned ministry, entity or department. The PMCU and the FP will assist in the preparation of TORs for the different studies, TA and training activities, in the selection process of the consultants and in managing and following up on the progress of the different activities.

A Steering Committee (SC) might need to be set up comprising representatives of the ministries, entities and departments involved in the project. The SC will provide oversight and guidance during project progress and will assist in ensuring smooth implementation of the project activities. The PMCU will call for the SC meetings and will prepare the necessary documentation and reports for the meetings.

The EIB is the Implementing Support Agency. It will assist in designing an appropriate monitoring and evaluation system as well as an appropriate reporting format. The EIB will carry out regular supervision and implementation support missions to ascertain the quality of the different consultants work, ensure overall adequate progress and closely monitor the achievement of the objectives. The EIB will also attend the Steering Committee meetings for specific studies under this proposal as may be needed. The EIB will ensure coordination of the regional dimension and approach of the project.

19. Monitoring and Evaluation of ResultsAt the project start, EIB will assist the PMCU and MoPWH in establishing the necessary monitoring and evaluation “M&E” framework for the project. Baseline data will be provided by the Focal Points (FPs), and exact yearly targets will be revised six months after the start of project implementation.

The PMCU will be responsible for the overall monitoring and evaluation with the assistance of the ISA according to the framework. It will coordinate with the FPs to establish the baselines, control the quality of the work of the different consultants, and will follow up on the yearly (and six-month) targets and monitor the achievement of the objectives.

E. PROJECT BUDGETING AND FINANCING

20. Project Financing (including ISA Direct Costs2)Cost by Component Transition

Fund(USD)

Country Co-Financing

(USD)

Other Co-Financing

(USD)

Total(USD)

Component A: Institutional and capacity building for regional trade framework improvements(a) Sub-component A.1: TA to transportation

(Country-executed)(b) Sub-component A.2: Road safety assessment and

action plan (EIB-executed)

150,000 200,000

150,000 200,000

Component B: Preparatory studies for infrastructure improvements of the priority corridors(a) Sub-component B.1: Preparation of North-South

road corridors (R15 and R65) (EIB-executed)(b) Sub-component B.2: Preparation of upgrading and

expansion of border crossing facilities (EIB-executed)

1,650,000

100,000

1,650,000

100,000

Component C: Project Preparation, Management, Coordination, Monitoring and Evaluation (Country-executed)

400,000 200,000 600,000

Total Project Cost 2,500,000 200,000 2,700,000

The above costs are estimates at this stage. The Terms of Reference (TORs) of the different studies and consultants services will be tailored, with agreement of the Government, to the available funds under the DP TF. The country co-financing is simply an in-kind estimate of the country’s contribution to the project management and coordination.

21. Budget Breakdown of Indirect Costs Requested (USD) Description Amount (USD)

For grant preparation, administration and implementation support:

Preparation,

administration, management, implementation support,

regional coordination including travel expenses, consultants services and staff time.

20,000

10,000

100,000

Total Indirect Costs 130,000

2 ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.

F. Results Framework and Monitoring

Project Development Objective (PDO): The objective of the proposed project is to promote reduction of trade and transport barriers along the priority trade corridors of the country and in related border crossings.

PDO Level Results Indicators*Unit of

MeasureBaseline

Cumulative Target Values**Frequency

Data Source/Methodology

Responsibility for Data Collection

Description (indicator

definition etc.)YR 1

YR2 YR3

Indicator One:About 20 transport staff (from different sub-sectors) trained in PPP aspects and techniques.

# of participants

0 0 20 Bi-annually

Reports PMCU and Focal Points

Quantitative – number of participants who have successfully completed the training

Indicator Two:Studies completed: (i) priority North-South corridor(s), including border crossings, defined and technical studies completed; (ii) road safety action plan completed.

Percentage progress and # of studies

0 50% 100% Bi-annually

ReportsStudies produced

PMCU, Focal Points with EIB input

Quality studies completed and approved

INTERMEDIATE RESULTS

Intermediate Result (Component One): Institutional and capacity building for regional trade frameworkSub-component A.1: TA to transportationSub-component A.2: Road safety assessment and action plan

Intermediate Result indicator One:TA to Transportation: training in PPP aspects and techniques

# of participants

0 0 20 Bi-annually

Reports PMCU and Focal Points

Qualitative- number of participants who have successfully completed the training.

Intermediate Result indicator Four:Road safety assessment and action plan

Percentage progress and action plan completed

0 10 50% 100% 3 -months Reports PMCU, Focal Points with EIB input

Quality study and action plan produced and approved

Intermediate Result (Component Two): Preparatory studies for infrastructure improvements of the priority corridors

Intermediate Result indicator One: Preparation of North-South road corridors (R15 and R65)

Percentage progress

0 50% 100% 3-months Detailed technical studies

PMCU, Focal Points with EIB input

Quality Studies produced and approved

Intermediate Result indicator Two: Preparation of upgrading and expansion of Border crossing facilities

Report 0 100% 3-months Report PMCU, Focal Points

Quality Report produced and approved

Intermediate Result (Component Three): Project Preparation, Management, Coordination, Monitoring and Evaluation

Intermediate Result indicator Quality reportingTime based

0 33 60% 100% 3-months Reports PMCU, with EIB input

Quality reporting, M&E