The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) REPORT NO.: RES30557 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF RIO BOGOTA ENVIRONMENTAL RECUPERATION AND FLOOD CONTROL PROJECT APPROVED ON DECEMBER 14, 2010 TO CORPORACION AUTONOMA REGIONAL DE CUNDINAMARCA (CAR) WITH A GUARANTEE FROM THE REPUBLIC OF COLOMBIA WATER GLOBAL PRACTICE LATIN AMERICA AND THE CARIBBEAN REGION Regional Vice President: Jorge Familiar Country Director (Acting): Jutta Ursula Kern Senior Global Practice Director: Guang Zhe Chen Practice Manager/Manager: Rita E. Cestti Task Team Leader: Victor Vazquez Alvarez, Antonio Manuel Rodriguez Serrano The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) ABBREVIATIONS AND ACRONYMS ANLA Autoridad Nacional de Licencias Ambientales (National Authority of Environmental Licenses) BOD Biochemical Oxygen Demand CAR Corporación Autónoma Regional de Cundinamarca (Regional Autonomous Environmental Agency of Cundinamarca) DDO Deferred Drawdown Option DNP Departamento Nacional de Planeación (National Planning Department) EA Environmental Assessment EEAB Empresa de Acueducto y Alcantarillado de Bogotá (Bogotá Water Supply and Sewerage Company) FIAB Fondo para las Inversiones Ambientales en el Perímetro Urbano de Bogotá (Fund for Environmental Investments in Urban Perimeter of Bogota) IBRD International Bank for Reconstruction and Development IP Inspection Panel MCCT Mesa Ciudadana Cortijo Tibaguya (The Citizen Association of Cortijo Tibaguya) PDO Project Development Objective PM Program Manager RVP Regional Vice President TSS Total Suspended Solids UPZ Zonal Planning Units WWTP Wastewater Treatment Plan The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P111479 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 14-Dec-2010 30-Dec-2017 Organizations Borrower Responsible Agency Corporación Autónoma Regional de Cundinamarca (CAR) Corporación Autónoma Regional de Cundinamarca (CAR) Project Development Objective (PDO) Original PDO The objective of the Project is to assist the Borrower to transform the Rio Bogotá river into an environmental asset for the BogotáDistrito Capital metropolitan region by improving water quality, reducing flood risks, and creating multi- functional areas along the river. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-79850 14-Dec-2010 15-Jul-2011 21-Sep-2011 30-Dec-2017 250.00 55.93 194.07 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Project was approved on December 14, 2010 in the amount of US$250 million, IBRD Loan 7895-CO to the Corporación Autónoma Regional de Cundinamarca (CAR), and became effective on September 21, 2011. The original closing date was June 30, 2016. The total Project cost is US$531 million. The PDO is to assist the Borrower to transform the Río Bogotá into an environmental asset for the Bogotá Distrito Capital metropolitan region by improving water quality, reducing flood risks, and creating multi-functional areas along the river. The Project has four components: (i) upgrading and expanding the Salitre Wastewater Treatment Plant (WWTP); (ii) flood control and Río Bogotá environmental restoration works; (iii) environmental and water studies; and (iv) project management and administration. 2. On June 28, 2016, the Bank approved the first Level II Restructuring of the Project including the 18-month extension of the closing date, from June 30, 2016 to December 31, 2017. This restructuring was part of a phased approach towards a possible longer extension, driven by the duration of the Salitre WWTP turnkey contract (i.e., time required for the construction of the expanded Salitre WWTP). 3. As of December 2017, 22.4 percent of the loan proceeds (about US$55.93 million) have been disbursed and 100 percent have been committed. Progress towards the Development Objective is currently rated as Moderated Unsatisfactory since the PDO will not be achieved without an extension of the closing date. Overall Implementation Performance is rated Moderately Satisfactory given the strong advance in Project Performance. The CAR awarded the Salitre WWTP turnkey contract in May 2016, and since then, it has demonstrated good performance in other aspects of Project Implementation. 4. A summary of Project progress to-date under each of the four Project components is provided below: Component 1: Upgrading and Expansion of the Salitre WWTP (US$409.4 million, of which US$235.5 million IBRD financing). This component involves the upgrading and expansion of the Salitre WWTP from a 4 cubic meters per second (m3/s) primary treatment plant to a secondary treatment plant of about 8 m3/s. All major contracts have been awarded. In November 2015, the CAR contracted the Salitre WWTP Project Manager responsible for Project supervision, and in May 2016, the CAR awarded the turnkey contract for the Salitre WWTP works for an amount of US$392.6 million. The works started in April 2017, and they are on track to be completed on time, by the end of September of 2020. Component 2: Flood Control and Rio Bogota Environmental Restoration Works (US$115.9 million of which US$14.5 million IBRD financing). This component is advancing satisfactorily albeit after significant delays. The contract for flood control works for the first 52.5 kilometers (km) length of the river (US$60.85 million of which 15 percent is IBRD financing) has been completed after some delays and significant cost overruns. The contract for the additional 16.5 km is also completed and in the phase of correction of defects, thereby meeting the PDO and corresponding indicators on flood risk management. Under this component, 121 families from the low-income, flood-prone urban area of El Porvenir were successfully resettled to a new neighborhood with improved living conditions. The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) Component 3: Environmental and Water Studies (US$3.5 million of which US$0 IBRD financing). This component entails carrying out of studies to assist in the environmental sustainability of the Río Bogotá, including the elaboration of: (i) an Integrated Water Management Plan for the Río Bogotá basin; (ii) a Biosolids Master Plan for the metropolitan region of Bogotá Distrito Capital; and (iii) a River Management Plan for Río Bogotá. The Integrated River Basin Management Plan of Component 3 is finalized. The contract for the Study of Design, Operation, and Maintenance of Multifunctional Areas under Component 3 was awarded in October 2017 and negotiated in November 2017. The procurement of the Biosolids Master Plan has been relaunched due to problems encountered in the first procurement process. Component 4: Project Management and Administration (US$2.3 million of which US$0 IBRD financing). This component is also advancing satisfactorily and is currently rated as Moderately Satisfactory. B. Safeguards and Inspection Panel (IP) Review and Recommendations 5. The Project’s safeguards are rated as Satisfactory due to the good progress in fulfilling the Environmental and Social Management Plans. The main concerns expressed in the complaint made to the IP by the Mesa Ciudadana Cortijo Tibaguya (MCCT) and the Fundación Colectivo Somos Uno, were: (i) inadequate consultation with communities that live in close proximity to the proposed Salitre WWTP, (ii) environmental damage to the artificially-created Cortijo Tibaguya wetland area, located on the proposed Project site, and (iii) environmental and social impacts on the communities due to the construction and operation of the Salitre WWTP, including adverse impacts such as noise, odor, depression of real estate values, among others. After a review of the Bank Management Response to the Request for Inspection Panel Review, which was followed by a mission to Colombia in December 2016, the Inspection Panel decided not to register the case, as per the Board of Director´s communication on January 18, 2017. 6. The Inspection Panel issued a final report, which includes an Action Plan with nine actions, currently under implementation by the CAR. The Bank has been closely monitoring CAR’s implementation of the Action Plan and is overall satisfied with progress made, as all actions have been implemented or are on track. One of the most challenging actions involving the modification of the design of the WWTP in order to minimize the loss of the “Cortijo-Tibaguya Wetland” and the environmental buffer zone has been completed. Yet, the organizations from the UPZ72 keep demanding new actions from the CAR outside the action plan, such as stopping the WWTP works, providing free access to the construction site, and having the right to approve the WWTP designs. The Task Team will keep facilitating the dialogue between the CAR and these organizations. C. Rationale 7. The proposed restructuring includes an extension of 12 months of the closing date up to December 31, 2018. The proposed extension will allow for continued progress in the construction of the Salitre WWTP and corresponding disbursements. By the end of the extension period, the expected disbursement rate would be 74% of the loan (US$ 186 million). Concrete measurable actions with corresponding milestones for project monitoring had been agreed with the CAR and are presented in Table 1. This will ensure the Project continues to be on a good path towards achieving the PDO, which will be realized once the Salitre WWTP is completed and functioning. Implementation performance and progress towards achieving the project’s PDO over the extension period will have to be used to evaluate the future of the Project. Table 1. Actions The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) Action Milestones Compliance with agreed disbursement Disbursement of US$30 million of loan proceeds by June 30, 2018. levels corresponding to the current Disbursement of additional US$100 million of loan proceeds by construction schedule December 31, 2018. Decision taken on the sludge treatment technology by January 2018. Updated Reference Design by January 2018. Degree of optimal progress of the Completion of foundations of all structures of Lote 2 by September 30, turnkey contract WWTP Salitre 2018. according to schedule Submission of first group of detailed designs by July 31, 2018. Issuing of request for the shipment of at least 50 percent of main equipment by November 30, 2018. Continued compliance with IP Satisfactory rating over the course of the 12-months’ period of the recommendations extension. Closing the River Works Contract with the clarification of all contractual Component 2 completed (including pending issues as well as the closing of the guarantee period by March solving pending unresolved issues) 30, 2018. Hiring the consultancies for the Biosolids Management Plan and Design Completed by May 30, 2018 and Operation of Multifunctional Areas 8. The extension would ensure the continuity of the Bank’s technical assistance during construction of the Salitre WWTP. The support provided by the Task Team during this period is highly valued by the CAR, and the water utility Empresa de Acueducto y Alcantarillado de Bogotá (EAAB), final recipient of the Salitre WWTP, as it would help ensure the sound supervision of the final detailed design and construction of the plant. In addition, the extension would allow for close monitoring by the Task Team of the environmental and social safeguard policies throughout the duration of the turnkey contract. II. DESCRIPTION OF PROPOSED CHANGES 9. The restructuring proposes the following changes. Extension of Closing Date. The proposed second-phase extension of the closing date for 12 months (until December 31, 2018). There are no changes in the PDO or PDO indicators, except for the end date of the target related to the completion of the WWTP, which is now expected for the end of September 2021. Procurement. As part of the restructuring, at the request of the CAR, the Section I.E.1 (b) of Schedule 2 to the Loan Agreement, which states that all Project contracts would need to follow World Bank procurement rules, regardless of the source of financing, will be removed in its entirety. For clarity, the amendment letter provides that the Borrower’s undertaking in Section I.E.1 (b) of Schedule 2 to the Loan Agreement shall not apply to procurement processes which started on or after December 4, 2017, provided that: (a) the respective contracts are not financed in whole or in part by Loan proceeds; and (b) the procurement processes follow the Guarantor’s national procurement rules. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Loan Closing Date(s) ✔ Change in Disbursement Estimates ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in APA Reliance ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) Project Development Objective Indicators PDO_IND_TABLE The Salitre WWTP meets effluent discharge limits for BOD, TSS and total coliform Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Salitre turnkey contract started on April 17, 2017 and activities are on track, with adjustments Value No Yes Revised of intermediate milestones to compensate for the initial delays Date 27-Jan-2011 30-Nov-2017 30-Sep-2021 Direct project beneficiaries Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 2864000.00 No Change Date 14-Dec-2010 30-Nov-2017 30-Jun-2021 Female beneficiaries Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 52.20 No Change Rio Bogota flood control protection standard achieved under the Project (return period in years). Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 10.00 100.00 100.00 No Change Date 27-Jan-2011 30-Nov-2017 30-Dec-2017 Number of hectares reserved as multifunctional areas along the Rio Bogota recuperated under the Project. Unit of Measure: Hectare(Ha) The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 165.00 165.00 No Change Date 27-Jan-2011 30-Nov-2017 30-Dec-2017 Number of multifunctional areas along the Rio Bogota recuperated under the Project. Unit of Measure: Number Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 6.00 6.00 No Change Intermediate Indicators IO_IND_TABLE Design flow of the El Salitre WWTP (m3/s) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Contract under implementation and activities are on track, Value 4 m3/s with adjustments of 7 m3/s No Change intermediate milestones to compensate for the initial delays Date 27-Jan-2011 30-Nov-2017 30-Jun-2021 People under reduced risk of flooding as a result of the Project Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 106579.00 125387.00 No Change Date 14-Dec-2010 12-Dec-2016 30-Jun-2017 Grievances registered related to the delivery of component 2 addressed Unit of Measure: Percentage The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 291.00 95.00 No Change Date 30-Jul-2012 30-Nov-2017 30-Jun-2021 Length of flood control works constructed under the Project for the Bogota metropolitan area. Unit of Measure: Kilometers Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 68.50 68.00 No Change Date 27-Jan-2011 30-Nov-2017 30-Dec-2017 Integrated water resources management master plan for the Rio Bogota basin developed. Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value No plan Plan Developed Plan developed No Change Date 27-Jan-2011 30-Nov-2017 30-Dec-2017 Study for the Design of Multifunctional Areas and the Operation and Maintenance Plan for the flood control works under component 2 completed. Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action CAR has completed negotiation with selected firm and Study and Plan Value No study No Change contract expected to be completed. awarded in December 2017. Date 27-Jan-2011 30-Nov-2017 30-Dec-2017 Biosolids Master Plan for Bogota Distrito Capital developed. Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value No plan CAR decided to finance Plan developed No Change this study with own The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479) resources. CAR initiated a new hiring process following national procurement rules and the contract is expected to be signed in April 2018 Date 27-Jan-2011 30-Nov-2017 30-Dec-2017 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-79850 Effective 30-Jun-2016 30-Dec-2017 31-Dec-2018 30-Apr-2019 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2011 0.00 0.00 2012 0.00 0.00 2013 0.00 0.00 2014 14,500,000.00 14,500,000.00 2015 0.00 0.00 2016 0.00 0.00 2017 40,000,000.00 41,500,000.00 2018 100,000,000.00 130,000,000.00 Note to Task Teams: End of system generated content, document is editable from here. The World Bank CO Rio Bogota Environmental Recuperation and Flood Control Project (P111479)