The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) REPORT NO.: RES33572 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF IN KARNATAKA URBAN WATER SUPPLY MODERNIZATION PROJECT APPROVED ON MARCH 31, 2016 TO GOVERNMENT OF INDIA WATER SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: John A. Roome Practice Manager/Manager: Michael Haney Task Team Leader(s): Andreas Rohde The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) I. BASIC DATA Product Information Project ID Financing Instrument P130544 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 31-Mar-2016 30-Nov-2022 Organizations Borrower Responsible Agency Karnataka Urban Infrastructure Development & Finance Government of India Corporation (KUIDFC) Project Development Objective (PDO) Original PDO The Project Development Objective is to provide city-wide access to a continuous piped water supply in the eligible cities in the state of Karnataka, and to strengthen service delivery arrangements at the city level. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-86010 31-Mar-2016 24-May-2016 22-Aug-2016 30-Nov-2022 100.00 12.77 87.23 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? Yes The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) Explanation This restructuring (Loan closing date extension) is being processed on the basis of a waiver of the provision of Section III, Paragraph 50 of the Bank Directive for Investment Project Financing (IPF) that was granted by the OPCS VP on April 30, 2021. This Paragraph states that a Closing Date may be extended if the Project’s DO remains achievable, the performance of the Borrower or Project Participant(s) remains satisfactory, and the Bank and the Borrower or Project Participant(s) agree on actions that will be undertaken by the Borrower or Project Participant(s) to complete the Project. Has the waiver(s) been endorsed or approved by Bank Management? Yes Explanation The waiver was concurred by SAR VP on April 22, 2021, supported by the Sr. VP and General Counsel on April 23, 2021 and approved by the OPCS VP on April 30, 2021. II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The Project has overcome initial implementation challenges and successfully re-tendered private developer contracts for continuous water supply in all three participating cities in June 2020. All three city contracts have commenced successfully and are disbursingwell. Despite disruptions due to the ongoing COVID-19 pandemic, the Implementation Progress has progressively improved and has been Moderately Satisfactory since July 2020. The Project was approved in March 2016 but since it resumed implementation only in June 2020 when the private developer contracts were re-tendered, the remaining time until the original Loan closing date of November 30, 2022, is too short to achieve its PDO of ‘city-wide access to continuous water supply’. Hence, the PDO is rated Moderately Unsatisfactory. Once the proposed restructuring is approved, the PDO rating will be upgraded to reflect the expectation that the project will achieve its development objective by the new closing date. The Department of Economic Affairs (DEA), Ministry of Finance, Government of India, acting on a request from the Government of Karnataka to request extension of the Loan closing date from November 30, 2022 to November 22, 2024, conveyed its support to the Bank for this extension on April 7, 2021. This extension is to allow completion of Project activities relevant to the achievement of the DO. Although discussions on a revised result framework are at an advanced stage, the Borrower needs more time to finalize revised target values and ensure adequate monitoring mechanisms. The Results Framework will be amended and will be reflected as part of a proposed Additional Loan to the KUWSMP, for which the Government of Karnataka has submitted a request to GOI which is under consideration by the GOI. To be responsive to the Borrower’s request received on April 7, 2021, the current restructuring is being processed to extend the Loan closing date of the KUWSMP. III. DETAILED CHANGES The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-86010 Effective 30-Nov-2022 22-Nov-2024 22-Mar-2025