The World Bank Nepal-India Regional Trade And Transport Project (P144335) REPORT NO.: RES48875 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NEPAL-INDIA REGIONAL TRADE AND TRANSPORT PROJECT APPROVED ON JUNE 28, 2013 TO NEPAL TRANSPORT SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Faris H. Hadad-Zervos Regional Director: Guangzhe Chen Practice Manager/Manager: Shomik Raj Mehndiratta Task Team Leader(s): Deepak Man Singh Shrestha, Jan Erik Nora The World Bank Nepal-India Regional Trade And Transport Project (P144335) ABBREVIATIONS AND ACRONYMS DoR Department of Roads GoN Government of Nepal ICD Inland Clearance Depot ICRR Implementation Completion and Results Report IDA International Development Association MoICS Ministry of Industry, Commerce and Supplies MoPIT Ministry of Physical Infrastructure and Transport NIRTTP Nepal India Regional Trade and Transport Project NITDB Nepal Intermodal Transport Development Board NM Narayanghat-Mugling NNSW National Single Window NTIP Nepal Trade Information Portal PDO Project Development Objective RAIMS Road Accident Information Management System SDR Special Drawing Right SRCTIP Strategic Road Connectivity and Trade Improvement Project US$ United States Dollar The World Bank Nepal-India Regional Trade And Transport Project (P144335) BASIC DATA Product Information Project ID Financing Instrument P144335 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 28-Jun-2013 30-Nov-2021 Organizations Borrower Responsible Agency Ministry of Industry, Commerce and Supplies,Ministry of NEPAL Physical Infrastructure and Transport Project Development Objective (PDO) Original PDO The Project Development Objective is to decrease transport time and logistics costs for bilateral trade between Nepal and India andtransit trade along the Kathmandu-Kolkata corridor for the benefit of traders by reducing key infrastructure bottlenecks in Nepal and by supporting the adoption of modern approaches to border management. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-52730 28-Jun-2013 11-Jul-2013 10-Sep-2013 30-Nov-2021 69.00 59.32 5.51 IDA-H8630 28-Jun-2013 11-Jul-2013 10-Sep-2013 30-Nov-2021 30.00 10.68 17.68 The World Bank Nepal-India Regional Trade And Transport Project (P144335) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Nepal-India Regional Trade and Transport Project (NIRTTP: Credit No. 5273-NP and Grant No. H-863-NP) is being implemented through the Ministry of Industry, Commerce and Supplies (MoICS) and the Department of Roads (DoR) under the Ministry of Physical Infrastructure and Transport (MoPIT) for the Trade and Transport related components, respectively. The Project became effective on September 10, 2013 and currently scheduled to close on November 30, 2021. 2. The Project’s first restructuring extended the closing date by 23 months from December 31, 2019 to November 30, 2021, in view to complete the two critical activities under the trade component namely, development and implementation of Nepal National Single Window (NNSW); and construction of Inland Clearance Depot (ICD) at Kathmandu. The proposed second restructuring is expected to proactively cancel the Project’s unutilized IDA Grant and Credit funds that can be recommitment for use in Nepal. 3. Based on the Project’s last implementation review conducted in August-September 2021, it is noted that despite the Covid-19 related challenges, the Project is on course to substantially achieving its targets by the current closing date. The key achievements under the Trade components include: (a) substantial completion of the ICD, Kathmandu and the taking over by the Nepal Intermodal Transport Development Board (NITDB); (b) completion of the ICD Bhairahawa Pavement works, and ICD Birgunj railway shed; (c) completion of the Sanitary and Phyto-Sanitary (SPS) building in Kathmandu; (d) completion of the Nepal Trade Information Portal (NTIP); and (e) soft launch of the NNSW. The key achievements under the Transport components include: (a) upgradation of Narayanghat-Mugling (N-M) Road, 33km; (b) construction of four new bridges; (c) implementation of slope stabilization works and introduction of new methods; (d) feasibility and design studies for the N-M road (financed by a follow-on IDA supported Strategic Road Connectivity and Trade Improvement Project: SRCTIP); and (e) successful piloting of Road Accident Information Management System (RAIMS) in Kathmandu valley and Kathmandu-Birgunj corridor. 4. Despite the notable progress, there are few activities that are likely to remain incomplete by the Project closing date. As such, under the Trade component, only one out of three phases of the NNSW development, is expected to be completed by the Project closing date. Similarly, under the Transport component, the last additional contract for the valley side slope stabilization works at km 17 and 26 of N-M road, is likely to spill over beyond the Project closing date. For completion of these ongoing and any other outstanding activities beyond the closing date, the Government of Nepal (GoN) has committed adequate funding from its own resources. 5. As agreed in the last review, the respective implementing agencies (MoICS and MoPIT), are expected to prepare the Borrower’s Completion Assessment Report by January 31, 2022. The Bank team will carry out consultation for the same in January 2022, submit the draft of Implementation Completion and Results Report (ICRR) for GoN’s review by February 2022, and deliver the final ICRR before May 2022. There are no outstanding audit reports or audit issues. The World Bank Nepal-India Regional Trade And Transport Project (P144335) II. DESCRIPTION OF PROPOSED CHANGES 7. The total disbursements as of November 18, 2021 is SDR 49.34 million (~US$ 70 million). This consists of US$ 59.32 million IDA Credit and US$ 10.68 million IDA Grant. 8. From a detailed assessment carried out during the Project's recent implementation review and the status of funds utilization and estimation provided by the respective implementing agencies, the expected total disbursement for the remaining project period is US$10.91 million. This estimation consists of US$ 2.04 million of IDA Credit for DoR and US$ 8.87 million (US$ 4.18 million IDA Credit and US$ 4.69 million IDA Grant) for MoICS. Consequently, SDR 2.00 million (~US$ 2.85 million) IDA Credit under DoR component and SDR 11.00 million (~US$15.65 million) IDA Grant under MoICS component is expected to remain unutilized after the Project closure date. 9. In the above context, this restructuring is being initiated to proactively cancel the estimated unutilized funds with an expectation that they can be recommitted for further use in Nepal. Likewise, the Ministry of Finance has requested to cancel the above stated amount in a letter dated November 16, 2021, which is received by the Bank on November 18, 2021. III. SUMMARY OF CHANGES Changed Not Changed Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ The World Bank Nepal-India Regional Trade And Transport Project (P144335) Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation UNDISBURSE IDA-52730- Disburs XDR 45,800,000.00 2,000,000.00 18-Nov-2021 43,800,000.00 D BALANCE 001 ing AT CLOSING UNDISBURSE IDA-H8630- Disburs XDR 19,900,000.00 11,000,000.00 18-Nov-2021 8,900,000.00 D BALANCE 001 ing AT CLOSING OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-52730-001 | Currency: XDR iLap Category Sequence No: 3A Current Expenditure Category: Gds,Wks,NCS,CS,Trg,Wkshp Part C.1 31,800,000.00 28,665,410.34 29,800,000.00 100.00 100.00 iLap Category Sequence No: 3B Current Expenditure Category: Gds,Wks,NCS,CS,Trg,Wkshp Part C.2 The World Bank Nepal-India Regional Trade And Transport Project (P144335) 10,300,000.00 9,323,655.50 10,300,000.00 100.00 100.00 iLap Category Sequence No: 3C Current Expenditure Category: Gds,Wks,NCS,CS,Trg,Wkshp Part C.3 3,700,000.00 2,142,532.30 3,700,000.00 100.00 100.00 Total 45,800,000.00 40,131,598.14 43,800,000.00 IDA-H8630-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: Gds,Wks,NCS,CS,Trg,Wkshp Part A 4,600,000.00 965,003.12 1,400,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Gds,Wks,NCS,CS,Trg,Wkshp Part B 15,300,000.00 5,160,056.05 7,500,000.00 100.00 100.00 Total 19,900,000.00 6,125,059.17 8,900,000.00 .