PROJECT INFORMATION DOCUMENT (PID) - World Bank



PROJECT INFORMATION DOCUMENT (PID)

APPRAISAL STAGE

Report No.: AB5389

|Project Name |Preservation and Promotion of Cultural Heritage Project |

|Region |EUROPE AND CENTRAL ASIA |

|Sector |Other industry (100%) |

|Project ID |P120219 |

|Borrower(s) |RUSSIAN FEDERATION |

|Implementing Agency |Ministry of Culture of the Russian Federation |

|Environment Category |[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) |

|Date PID Prepared |February 16, 2010 |

|Date of Appraisal Authorization |February 3, 2010 |

|Date of Board Approval |May 14, 2010 |

1. Country and Sector Background

Russia’s dramatic economic growth between 1999 and 2007 has transformed the country’s economic and social structures. Russia’s success is in large part due to the implementation of a sound macroeconomic policy that supported impressive accomplishments in the Russian economy. However, the country’s developmental challenges remain formidable. The dominance of extractive industries and an uncertain investment climate have hampered private sector investments and led to a slowdown in the manufacturing sector. Additionally, whereas the reform of public administration and the civil service has been a top priority for the government in recent years, progress in this area has been limited and mixed thus far. These weaknesses have made Russia particularly vulnerable to the recent world financial and economic crisis

Russia’s GDP growth swung from positive 8.1% at the end of 2007 to negative in 2009, despite higher oil prices assumed in the current forecast. In similarity to many countries around the world, Russia is experiencing a recession in the wake of the global financial crisis. While Russia's strong short-term macroeconomic fundamentals - low debt, large international and fiscal reserves, and initially strong fiscal position - makes it better prepared than many emerging economies to face the crisis, its underlying structural weaknesses- including a dependence on oil exports, narrow industrial base, and limited small and medium-size enterprise sector means - mean that the country is still vulnerable to external shocks. As such, Russia’s Medium-Term Program (2006/2008) and Long Term (2020) Concept for Social and Economic Development are aimed at addressing many of the challenges mentioned above.

The Government would like to diversify growth and share the benefits of development more widely across Russia’s regions and population. Russian cultural heritage can play an important role in this diversification. The richness of the Russian history with both strong Asian and Western influences and the position of Russia as a commercial trade route linking the north and the south of the European and Asian continent have created a rich and diverse culture. The intellectual and political transformations of Russia in the 18th and 19th century have created an explosion of the arts that draw many foreign tourists and are a source of pride for the Russian population. Located in the Northwest of Russia, the four participating oblasts witnessed events that are seminal to the creation of Russian national identity and have remained heretofore largely unrecognized outside its borders. The region also has literary significance: in the nineteen century, the region was referenced in many novels and has been visited by many writers. The palaces built along this route for Catherine the Great as she traveled between the two cities is a testimony of the cultural significance of this region. Pushkin, the most cherished Russian poet, was inspired by many of the monuments, villages and mansion along the roads he traveled from Moscow to St Petersburg. This richness can also be harvested to stimulate local development through cultural tourism and cultural industries

The Medium-Term Program of Social and Economic Development of the Russian Federation (2006 - 2008) and the Concept for the Long-Term Social and Economic Development of the Russian Federation to 2020 indicate that culture is a strategic resource that can be used to promote economic diversification and economic development. Both t he policies both stress the importance of building on Russian regions’ cultural potential and advocate actively preserving and conserving Russia’s cultural and historical heritage; integrating cultural heritage into tourism development strategies; developing capacity to manage cultural sites; supporting integrated local development; promoting of Russian cultural heritage abroad; increasing the amount of users of cultural services in Russia; and ensuring the dynamic development of public/private partnerships to support the development of cultural activities. Many elements of these policies are reflected in the strategies elaborated by the regions participating in the project.

2. Objectives

The project development objectives are to: (i) support the conservation, safekeeping, valorization and promotion of cultural heritage assets in four oblasts of the RF and (ii) strengthen regional capacity for cultural heritage management so that cultural heritage assets fully support the socio-economic development of the four oblasts. The key indicators are: (i) number of cultural heritage preservation subprojects implemented, (ii) volume of stakeholders’ co-financing to support the cultural heritage project investments, (iii) number of visitors in supported cultural heritage sites, and (iv) level of stakeholders’ satisfaction. It is expected that the project will have broader outcomes that are difficult to measure but are also very important such as: improved safety and management of cultural assets in the areas covered by the project; adoption of new integrated methods for regional planning by local governments so as to enhance the value added of cultural assets for local development; and new initiatives by the private sector, NGOs and public institutions for cultural asset preservation and development. Economic and financial analysis will be conducted for each subproject during implementation.

3. Rationale for Bank Involvement

Supporting the Russian government’s program. The Project is in line with the objectives of the Medium-Term Program of Social and Economic Development of the Russian Federation (RF) (2006-2008), as approved by RF Government Ordinance #38-r of January 19, 2006 and the Concept for the Long-Term Social and Economic Development of the RF to 2020 (approved by RF Government Ordinance #1662-r of November 17, 2008). These documents refer to culture as a strategic resource for the economy and express support for developing Russian regions’ cultural potential. The Preservation and Promotion of Cultural Heritage in Russia Project (PPCHRP) aims to support the development of opportunities for cultural tourism in four specific oblasts of the Russian Federation (RF) – Leningrad, Pskov, Novgorod and Tver oblasts - located between St. Petersburg and Moscow in order to spur economic and social development. Moreover, the project supports the government’s recent directives for improving the protection of Russia’s moveable cultural property by supporting improved conservation and storage facilities and the establishment of security standards.

Linkages with CPS. In addition to the fact that the project is strongly aligned with the RF’s priorities, the proposed Project is fully consistent with the Russia Country Partnership Strategy (CPS) for the period FY2007-09 (Report No. 37901-RU) (including sustaining rapid economic growth and strengthening public management and performance). The project is also consistent with three of the extended CPS’s objectives (the extended CPS will be in effect through June 2011) including: (a) diversifying the economy for sustainable development and growth (formerly, “Sustaining Rapid Growth”); (b) improving public sector management and performance; and (c) enhancing Russia’s global economic positioning in the world.

Additionally, due to substantial development challenges remaining in a large number of Russian regions, the federal government has asked the WBG – as in the previous CPS – to increase its support to the regions. The technical assistance part of the PPCHRP will allow the four regions participating in the project to improve their institutional capacity and enhance their ability to incorporate cultural and historical heritage into regional development strategies.

Proven track record and comparative advantage of the Bank. The design of the PPCHRP is based on the experience gained from the Bank-financed St. Petersburg Economic Development Project (SPEDP) and its predecessor, the St. Petersburg City Center Rehabilitation Project. Indeed, in many ways the PPCHRP is an extension of the SPEDP’s investment component to neighboring oblasts. The Ministry of Culture (MoC) views the PPCHRP as a pilot that, if proven successful, could be scaled-up to other regions of Russia. The Russian Government values the Bank’s participation in the design of the project because of its experience with the development of mechanisms for procurement, financial management, environmental and social safeguards, and monitoring and evaluation. The Bank’s experience in Russia specifically, and in the sector of rehabilitation and conservation of cultural heritage generally, its access to specialized skills and its ability to convene international partners play an important role in the design of the project. The St. Petersburg Foundation for Investment Projects (FISP), which was asked by the government to conduct preparation of the PPCHRP, worked closely with the Bank as Project Implementation Unit (PIU) for a number of projects for over a decade and has accumulated a very solid experience in project implementation.

4. Description

Component 1: Integrated Heritage Site Development (US$ 200 million). This component will be implemented through a demand driven mechanism that will support, on a competitive basis, sub-project proposals made by oblasts and cultural institutions. The component will consist of two sub-components: (a) rehabilitation and improvement of cultural heritage sites and institutions and (b) capacity building for integrated site development to regions and local level institutions.

Sub-Component 1a: Rehabilitation and improvement of cultural heritage sites (US$ 196 million): The sub-projects funded from this sub-component will support the regeneration of areas with strong cultural significance through safekeeping, conservation and improvement of cultural heritage sites. To realize their full potential as drivers for social and economic growth, sub-projects will include the preparation of a site development and management plan prepared in collaboration with all relevant stakeholders concerned by the sub-project. The sub-project proposals will clearly present how the facility/monuments to be rehabilitated will be integrated in broader development activities and how various stakeholders will be involved in the development and maintenance of these sites. The sub-component will be separated into two windows. The first window will be intended for large investment programs presented by oblasts, that will require more complex local planning and economic and technical studies. The other window will support smaller local subprojects presented by regional cultural institutions that will require less planning and could be rapidly implemented.

Integrated Site Development (Window for large projects, US$ 176 million): Funding will be granted to comprehensive applications that meet the program’s selection criteria and will be supported by viable site development and management plans based on social, environmental and economic assessments. The sub-projects will also have to be consistent with regional (oblast levels) development plans. Under this window the component will finance the conservation of built heritage and other site interventions. Stakeholders such as the oblasts, local governments, local agencies and the private sector will provide sub-project co-financing for infrastructure investments (such as roads, parking, lighting) and the provision of services (such as support for small business activities, environmental upgrading, organization of guided tours or other site improvements and tourism development activities and investments).

Support to Cultural Institutions (Small project Window, US$ 20 million): This window will support the financing of small scale local sub-projects to improve existing heritage sites already functional in order to enhance their appeal to visitors and improve their value for local populations. This component will allow for relatively quick interventions in areas that may only require small site management plans.

Sub-component 1b: Capacity building for integrated site development to regions and local level institutions (US$ 4 million): This sub-component will build the capacity of oblasts and local level institutions to improve comprehensive cultural development planning. The sub-component will support: a) activities necessary to improve the capacity of oblasts in cultural heritage management and, specifically, in linking cultural heritage with economic and social development; b) pre-identified training and technical assistance specific to subprojects investments as well as similar additional support identified by the applicants, oblast and cultural institutions necessary for the effective implementation of the proposed investment; and c) exchange of experiences between oblasts and cultural institutions participating in the project for knowledge and innovation sharing across the regions involved via study tours and workshops.

Component 2: Protection of Museum Assets (US$ 43 million). This component is designed to support the MoC’s efforts in Russia and to protect and promote the moveable heritage assets of Russia. This component will comprise two inter related sub-components: (a) improvement of collection management of the institutions under the stewardship of the Museum Agency of Leningrad Oblast, and (b) development of museum security practices and their application in selected institutions in each of the participating Oblasts for demonstration purposes.

Sub-Component 2a: Improvement of collection management (conservation and storage, US$ 35 million). This sub-component is designed to improve the management of museum collections of the Leningrad Oblast from a conservation and storage perspective. The Oblast currently faces challenges in terms of lack of conservation services and human resources, as well as lack of exhibition and storage space. Artworks are currently at a high risk of damage and deterioration due to inadequate storage practices, and in need of conservation and skilled experts to carry it out. The sub-component will support: a) an in-depth institutional and physical needs assessment for the development of a conservation and storage strategy, b) targeted capacity building to improve the management of collections including inter alia spatial management, conservation, reporting practices and practices for electronic management of collections, and c) the construction of a Multifunctional Museum Facility. This facility, located at the Priutino museum complex, near St. Petersburg, will be used as a conservation, research and training center with laboratories and studios for various types of items and materials (e.g., works on paper, wood, canvas; metal, porcelain etc.) and serve as a regional hub for providing professional art services.

Sub-Component 2b: Museum security practices (development & testing, US$ 8 million). This subcomponent consists of two sets of activities: i) the elaboration of a set of practical guidelines for security by category of venues, and ii) the installation of security equipment in a selected number of venues for testing. Due to the wide variety of museums in Russia, institutions will be classified based on a number of characteristics including: architectural features of the building, the value, type and size of collections, location and the proximity of public services (police, fire department etc.). Specifications for the type of security systems and the type of training for museum guards and security personnel will be integrated into the guidelines. For demonstration purposes, the project will install relevant equipment and train targeted personnel in selected museums in the oblasts covered by the project.

Component 3: Project Management (US$ 7 million). The St. Petersburg Fund for Investment projects (FISP) has been designated by the MoC and the MoF as the lead agency for project preparation. It is expected that the FISP will also be designated as the agency for project implementation. As such, in addition to keeping offices in Moscow, the FISP will establish a Local Project Coordination Unit (LPCU) in each oblast to ensure: (i) effective and continuous communication with all stakeholders, (ii) close support for sub-project preparation and implementation. The component on Project Management will also include monitoring and evaluation activities.

Project Management: The FISP will be the Project Implementation Unit (PIU) and will coordinate all project activities, procure works, goods, and consultant’s services for project implementation, supervise and monitor project activities, and report regularly to the MoC and the MoF. The FISP will also act as secretariat of the committee that approves sub-projects for the integrated heritage site development program.

Monitoring and Evaluation: M&E activities will be very important as the project is seen as model that could be replicated in other oblasts and scaled up by the Russian Federation. As such, the FISP will carry out monitoring and evaluation of the project activities and create a simple impact monitoring mechanism for each sub-project.

5. Financing

|Source: |($m.) |

|Borrower |150 |

|International Bank for Reconstruction and Development |100 |

| Total |250 |

6. Implementation

The borrower for the PPCHRP will be the Russian Federation. The Project will be implemented by the Ministry of Culture of the Russian Federation. The day-to-day management of the project will be carried out by a project management team within the St. Petersburg Foundation for Investment Projects (FISP).

The FISP, a noncommercial legal entity which performed the functions of a project preparation unit for PPCHRP, will be officially appointed to implement the PPCHRP. FISP has gained extensive experience managing several World Bank supported projects in Russia that address cultural heritage, including the St. Petersburg City Center Rehabilitation project and the SPEDP. The FISP will be responsible for financial management and procurement functions. An assessment of the financial management and procurement capacity of FISP has been carried out. A project Operational Manual (OM), to be approved by the Bank before project effectiveness, will provide details about implementation and reporting processes. All oblast level activities will be carried out with an emphasis on regular and substantial involvement of project stakeholders, particularly local communities.

The Inter-Ministerial Committee (IMC) is the most important governance instance for the Project. The IMC is composed of high level representatives of the MoC, Ministry of Finance (MoF) and Ministry of Economic Development (MoED). The IMC is responsible for strategic issues and decisions during project preparation and implementation. In particular, the IMC is expected to: ensure coordination among the relevant government agencies in providing guidance on key implementation issues; approve sub-projects under Component 1 and 2 of the Project; provide strategic guidance on project implementation when requested and advise on ways to mainstream the findings of studies and strategic documents prepared under the project; receive and review project reports and seek clarifications on various issues and instructions on needed actions. At least once a year the IMC will convene representatives of the participating Oblasts and other technical specialists to discuss strategic issues related to project implementation with the FISP and the MoC.

The administrations of participating Oblasts will be responsible for coordinating project activities; helping in the identification and preparation of sub-projects under Component 1 of the Project; mobilizing co-financing for sub-projects (development of tourism related, engineering and services infrastructures) through the regional and municipal budgets and outreach to the local private sector as well as other activities necessary for the implementation of project activities.

Each oblast will establish an Oblast Working Group (OWG) composed of various officials and experts from relevant departments - such as finance, economy, tourism, business development, culture and others - will be created for the preparation of sub-project proposals under the Integrated Heritage Site Development window of Component 1. The OWG will invite representatives of municipalities and other relevant stakeholders concerned by the preparation of specific sub-projects to join them when needed. This OWG will ensure that there is an adequate dialogue with local sub-project stakeholders and beneficiaries; prepare development and management plans and the documentation supporting sub-projects proposals with the help of consultants if necessary; prepare draft Inception Letters for sub-project implementation to be signed between the Oblast and every sub-project stakeholder/partner/donor as part of the sub-project full proposal.

7. Sustainability

Stakeholder commitment. The PPCHRP activities are inter-sectoral and will require the participation of various government authorities at the federal, regional and municipal levels, the administration and staff of cultural institutions, and private companies. Consultation with local (oblast, rayon, and municipal) authorities in the four selected oblasts, confirmed the commitment of stakeholders to contribute both human and financial resources to the Project. Due to the large variation in capacity across the oblasts that are part of this project, the Project will need to finance capacity building activities and serve as a facilitator for project activities.

Financial sustainability. The financial sustainability of the project will depend on the MoC’s and Oblasts’ ability to provide adequate recurrent costs related to the investments undertaken by the project. Many stakeholders at the local level will also be involved in component 1 of the project (Integrated Heritage Site Development). They will provide both financial and in-kind contributions in the medium term to ensure the sustainability of the sub-projects. However, ensuring that stakeholders follow-through on their commitments will be very important for project sustainability. As such, one of selection criteria for sub-projects will be the financial capacity of stakeholders participating in a sub-project. Finally, the Inception Letters for sub-project implementation for the implementation of each sub-project will include financial and in-kind contribution sections clearly mentioning the obligations of each participant. The oblasts will also be required to ensure that the Inception Letter for sub-project implementation is respected by all participants.

8. Lessons Learned from Past Operations in the Country/Sector

The PPCHRP mostly builds on the experience of the St. Petersburg Economic Development Project (SPEDP) and will use many of the methods, mechanisms and operational standards developed under this project. Indeed, most of the conservation work, and procurement and financial management guidelines will be very similar to the methods used in the SPEDP.

Lessons learned from the St. Petersburg Economic Development Project SPEDP

Mechanisms to monitor and manage unforeseen costs increases for restoration and rehabilitation contracts during implementation. The experience of the on-going SPEDP project has shown that more detailed investigations (preferably non-invasive) and complete plans are needed during the preparation phase of rehabilitation or conservation works. Although risks cannot be entirely eliminated due to the very nature of such works, their potential negative impacts on project implementation can be reduced by: (a) budget contingencies of at least 20%; (b) in situ and documentation review by specialists during sub-project preparation; (c) mandatory use of non-invasive structural assessments as part of sub-project documentation; and (d) detailed procedures in the Project’s Operational Manual about how cases of cost overruns will be addressed.

Lessons learned from the St. Petersburg City Center Rehabilitation Project

Project sites should be selected not only based on technical and conservation goals but also on considerations related to regional development and other socio-economic objectives. In this project, the city identified pilot sites based solely on their architectural and cultural significance. While the social and economic returns of these interventions were probably positive overall, some of the interventions were not chosen with local economic development goals in mind. In the framework of the PPCHRP, a set of socio-economic targeting criteria are being developed that will be used as an integral part of the competitive selection of cultural heritage sites.

Proven ability of cultural institutions to use relatively small grants to generate non-budgetary revenue. The Cultural Investment Facility (CIF) sub-component helped nine federally-owned cultural organizations in St. Petersburg improve their ability to generate non-budgetary revenue by providing grants for the upgrading of facilities and initiating special projects. The grants were essentially used for projects that extended the institutions' core function in ways that successfully generated additional revenues. This approach which has already been successfully tested in the framework of SPEDP where 30 cultural institutions located in St. Petersburg received grants for selected CIF projects involving small-scale investments and institutional strengthening activities will be replicated in the proposed project by introducing a small window in the Integrated Heritage Site Development component.

Lessons learned from the Local Governance and Civic Engagement in Rural Russia project

Serious weaknesses at the lower levels of local governments can be partly compensated for by establishing partnerships with Oblasts and RF agencies; simple Technical Assistance can be effective for establishing these partnerships. The main goal of the JSDF-funded local governance project was to empower villages in taking control over their resources through strengthening formal and informal local governance institutions and engaging the public in local government decision-making activities. This initiative was implemented across 22 rural settlements and 8 districts in 3 regions of Russia (Perm, Penza, and Republic of Adygeya). Research undertaken by the project highlighted the myriad of challenges rural municipalities face in implementing self-governance reforms. The project recommended increasing collaboration between various levels of governments on specific local level projects and stronger involvement of the private sector and citizens in these projects. The project also showed that providing consultant services to local governments can be an effective way to create stronger partnerships at the local level. The team designing the PPCHRP is taking these recommendations into account, especially in the design of the capacity building component of the project.

General Lessons learned from project implementation in Russia

Increase the rate of disbursement at the beginning of project implementation. The World Bank’s Russia project portfolio is notable for its slow disbursement rates. Project preparation has been designed to ensure that implementation and disbursement start upon project effectiveness. Activities under preparation include pre-selection of pilot sites and some feasibility studies for the selected sites during project preparation.

Competitive mechanisms to access funds. The design and implementation of the Fiscal Federalism and Fiscal Reform Project and other projects in Russia have highlighted that the adoption of performance-based criteria to determine the allocation of resources across sub-national governments can help to improve the performance of sub-national governments. A methodology for competitive selection of sub-projects is being developed in the context of the preparation of this project.

Government ownership. Past experience has shown that strong Government ownership is critical for effective implementation. In the case of this particular project, both federal and regional governments demonstrated their commitment to the project. Evidence to that effect is witnessed by the fact that the Russian Federation Government allocated funds from the on-going SPEDP project for the preparation of PPCHRP.

9. Safeguard Policies (including public consultation)

|Safeguard Policies Triggered by the Project |Yes |No |

|Environmental Assessment (OP/BP 4.01) |[X] |[] |

|Natural Habitats (OP/BP 4.04) |[ ] |[X] |

|Pest Management (OP 4.09) |[ ] |[X] |

|Cultural Property (OP/BP 4.11) |[X ] |[] |

|Involuntary Resettlement (OP/BP 4.12) |[X ] |[] |

|Indigenous Peoples (OP/BP 4.10) |[ ] |[X] |

|Forests (OP/BP 4.36) |[ ] |[X] |

|Safety of Dams (OP/BP 4.37) |[ ] |[X] |

|Projects in Disputed Areas (OP/BP 7.60) |[ ] |[X] |

|Projects on International Waterways (OP/BP 7.50) |[ ] |[X] |

To mitigate the limited direct and indirect negative impacts and guide the risk mitigation measures for different project sites, an Environmental Management Framework (which will also address the physical cultural resources safeguard) will be developed by the Borrower as a part of project preparation and be ready by negotiations.

Land acquisition is unlikely to occur under the Project but occupants of heritage sites (typically small businesses but possibly also residents) may be displaced prior to works. Therefore, a resettlement policy and process framework has been prepared as part of Project preparation and relevant consultations have taken place.

The entire Project design attempts to: protect some of the highest priority cultural heritage from further deterioration; increase the capacity of cultural institutions; improve the operational safety and efficiency of facilities for both visitors and personnel; improve security for artworks currently on display; and safeguard other cultural assets from physical damages, theft or other hazards. It is expected that the conservation and rehabilitation works will mainly include the repair and upgrading of buildings and may also cover some interior utility networks (electricity, water, heating, a/c, etc) and landscaping. Each site will be developed and managed in accordance with principles of best practice in the cultural heritage field. The task team includes specialists knowledgeable in all aspects of heritage preservation and heritage site management. Every site will be managed in accordance with an agreed upon management plan based on local consultations and stakeholder inputs. EMPs for each of the project sites will also address physical cultural resources safeguards.

10. List of Factual Technical Documents

N/A

11. Contact point

Contact: Alexandre Marc

Title: Lead Social Development Specialist

Tel: (202) 473-8403

Fax:

Email: Amarc@

12. For more information contact:

The InfoShop

The World Bank

1818 H Street, NW

Washington, D.C. 20433

Telephone: (202) 458-4500

Fax: (202) 522-1500

Email: pic@

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