Restructuring Status: Archived Restructuring Type: Level two Last modified on date : 02/19/2013 1. Basic Information Project ID & Name P120265: NP: Emerging Towns Project Country Nepal Task Team Leader Elisa Muzzini Sector Manager/Director Ming Zhang Country Director Johannes Widmann Original Board Approval Date 05/10/2011 Original Closing Date: 07/31/2016 Current Closing Date 07/31/2016 Proposed Closing Date [if applicable] EA Category B-Partial Assessment Revised EA Category B-Partial Assessment-Partial Assessment EA Completion Date 07/31/2010 Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 5.00 5.00 COMM 2.14 2.14 GTZ 3.00 3.00 IDA 25.00 25.00 Total 35.14 35.14 3. Borrower Organization Department Location 4. Implementing Agency Organization Department Location i 5. Disbursement Estimates (US$m) Actual amount disbursed as of 02/22/2013 5.06 Fiscal Year Annual Cumulative 2012 0.00 5.06 2013 0.00 5.06 Total 5.06 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured projects trigger any new safeguard policies? If yes, please select N from the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The Project Development Objective (PDO) is to improve delivery and sustainable provision of basic services and priority infrastructure in the participating municipalities. As per the performance ratings recorded in the last Implementation Support Report (ISR) (November 2012), following the fourth implementation support carried out in September 2012, progress toward the achievement of the PDOs is moderately unsatisfactory and overall Implementation Progress (IP) is moderately unsatisfactory. The project has disbursed US$ 5.06 million of US$ 25 million at the time of restructuring. In spite of the commitment from the municipalities and project agencies, implementation of the fast-track municipal sub- projects in the participating municipalities under the Socio-economic Infrastructure component, has not taken off, mostly due to delays in carrying out the safeguard assessments for the fast-track sub-projects and identifying viable regular-track sub-projects. There is also a significant mis-match between the loan-grant mix available for the municipal sub-projects and the loan-grant mix required to fund the sub-projects selected by the participating municipalities (i.e., there is a shortage of grant and the loan is under- committed). Coordination, oversight and information flows among the project agencies as well as local capacity need to be strengthened. An action plan was discussed and agreed with the PCO to address implementation issues and improve overall implementation progress in September 2012. One of the agreed actions was to strengthen coordination, oversight and information flows among the project agencies by increasing the staffing resources of the PCO and enhancing the capacity of the PCO as the project coordinating agency in line with the agreed roles and responsibilities of the office, while providing additional support to the participating municipalities. It was also agreed that the Steering Committee will discuss options to address the mismatch in the loan-grant mix and communicate outcomes of discussion to the World Bank. PROPOSED CHANGES The restructuring paper proposes changes in implementation arrangements and activities and reallocation of proceeds to (i) reflect the establishment of the MoUD as dedicated agency for the urban sector and (ii) address implementation issues identified during the fourth implementation support review (with the exception of the loan-grant mix issue, which will be dealt with separately following the Steering Committee’s deliberations an discussions with the World Bank). ii 7b. Revised Project Development Objectives/Outcomes [if applicable] iii