The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) REPORT NO.: RES45517 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ENHANCEMENT AND STRENGTHENING OF POWER TRANSMISSION NETWORK IN EASTERN REGION APPROVED ON MARCH 29, 2018 TO PEOPLE'S REPUBLIC OF BANGLADESH ENERGY & EXTRACTIVES SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Mercy Miyang Tembon Regional Director: Guangzhe Chen Practice Manager/Manager: Simon J. Stolp Task Team Leader(s): Mohammad Anis, Jari Vayrynen The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) ABBREVIATIONS AND ACRONYMS DPP Development Project Proforma EOI Expression of Interest IDA International Development Association LA Land Acquisition MIS Management Information System MTR Mid Term Review PDO Project Development Objective PGCB Power Grid Company of Bangladesh PIU Project Implementation Unit SUW Scale Up Window TA Technical Assistance The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) 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 P159974 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 29-Mar-2018 31-Dec-2022 Organizations Borrower Responsible Agency People's Republic of Bangladesh Power Grid Company of Bangladesh Limited (PGCB) Project Development Objective (PDO) Original PDO The proposed project aims to increase the transmission capacity and reliability of the electricity network in the eastern region and strengthen the institutional capacity of the Power Grid Company of Bangladesh Limited (PGCB). OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-61770 29-Mar-2018 10-Apr-2018 04-Jul-2018 31-Dec-2022 450.64 25.28 424.35 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) 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. After the initial delay in appointing Project Director to the project, the implementation of the project has been moving well considering the challenges due to Covid-19 pandemic situation. As of the Mid Term Review (MTR) mission in December 2020, the project is rated satisfactory in progress toward achievement of the Project Development Objective (PDO) and moderately satisfactory in Overall Implementation Progress. Fiduciary ratings are satisfactory for procurement and moderately satisfactory for financial management. Safeguards rating is satisfactory. There are no outstanding audits. The PDO continues to remain relevant as the shortages of grid-connected electricity is still identified as a key constraint to growth and ensuring adequate supply of electricity through the development of infrastructure is one of government’s priorities. 2. Contracts have been signed for four out of the seven works packages under this project. These four packages involve construction of transmission lines, reconductoring of existing transmission lines and construction of new substations. Signing of the contract for another new substation package is expected to take place by March 2021. Once the contract of this package is signed, the total value of the five signed contracts would be US$230 million. Out of the four consultancy packages, three contracts have been signed and Expression of Interest (EOI) for one package published. 3. Works at site have gradually started for the four signed transmission line contracts. The contractors have already started route survey, preparation of plan and profile drawing, and soil testing. Materials for the reconductoring package have already arrived at site. For the substation packages, the project involves land acquisition (LA)1 for twelve new locations. Out of the twelve new substation sites, eight sites have been handed over to PGCB already. Land development works in these sites will start soon. B. Rationale for Restructuring 4. This proposed restructuring follows a request from the Government of Bangladesh (GOB) through a letter dated March 11, 2021 to extend the closing date by one year and cancel US$50 million from IDA Scale Up Window (SUW) credit amount due to project savings. 5. While the project is on track to meet its development objective, it would not be possible to complete all the works within the current closing date of December 31, 2022. There was initial five months delay in appointing the Project Director and later the project works at sites could not start on time due to Covid-19 pandemic. Not only there were delays in signing most of the contracts (both works and consultancy), the bid submission date for one of the packages needed to be extended nine times due to Covid-19 situation. The recently 1 All the required land acquisitions under this project will be financed from the recipient’s own source. The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) concluded MTR assessed that the additional time needed to complete all project activities would be twelve months. 6. The project will have significant savings from the IDA SUW credit amount. The prices received for all the contracts so far have been low compared to the estimated price due to the fall in prices of aluminum, copper and steel in the global market in the last two years. Based on the joint assessment of project savings and financing requirements for the remaining IDA SUW financed components of the project during MTR, the total amount of IDA SUW credit available for cancellation is US$50 million. 7. Two changes to the results framework are also required. One result indicator relating to the length of the reconductoring work to be completed needs to be adjusted as some works have been completed through another project of PGCB. In addition, one of the institutional strengthening activities relating to the automation of financial reporting system of PGCB (financed by PGCB’s own fund) was earlier agreed to be dropped from the project scope. The related counterpart cost (US$640k) for this activity would be deducted from the cost of the component 2 (Institutional Development and Implementation Support), result indicator dropped, and legal covenant adjusted through this restructuring. DESCRIPTION OF PROPOSED CHANGES 8. The following changes are proposed: a. Cancellation of US$50,000,000 equivalent (EUR 41,792,000) from the original Credit. Following cancellation, the revised financing allocation will be US$ 400,640,000 (EUR 334,208,000). b. Extension of the project closing date from the original closing date of December 31, 2022 to December 31, 2023 to allow time to complete project activities. c. Updating the results framework by revising the target on “Transmission lines rehabilitated under the project” and dropping one intermediate results indicator, which is “Financial Management system implemented” with the adjustment in the related component cost and legal covenant. d. Disbursement estimates will be revised to reflect actual disbursement and projections (FY2021-24) based on the implementation workplan going forward following restructuring. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. II. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Legal Covenants ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Enhancement and Enhancement and Strengthening 686.60 Revised Strengthening of Power 636.60 of Power Network Network The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) Institutional Development and Institutional Development and 31.46 Revised 30.82 Implementation Support Implementation Support TOTAL 718.06 667.42 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-61770 Effective 31-Dec-2022 31-Dec-2023 30-Apr-2024 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation LOAN IDA-61770- Disburs 376,000,000.0 334,208,000.0 RESTRUCTUR EUR 41,792,000.00 11-Mar-2021 001 ing 0 0 ING, COST SAVINGS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-61770-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: Gds Wrks NCS CS 375,060,000.00 31,275,532.64 333,268,000.00 100.00 100.00 Total 375,060,000.00 31,275,532.64 333,268,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) Yes Year Current Proposed 2018 2,000,000.00 1,100,000.00 2019 18,000,000.00 0.00 2020 120,000,000.00 1,170,000.00 2021 130,000,000.00 35,700,000.00 2022 150,000,000.00 118,000,000.00 2023 30,640,000.00 150,000,000.00 2024 0.00 94,670,000.00 OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action Financing Agreement (FA), Schedule 2, Section I.D Description: GoB shall ensure that the following expenditures are financed exclusively out of its own resources or the resources of the PGCB and not out of the proceeds of the IDA financing: (i) all land required for the purposes of the Project; (ii) all resettlement and rehabilitation compensation and other assistance to Affected Persons, in accordance with the RAPs; (iii) operational costs of the PMU including purchase of IDA-61770 Complied with No Change vehicles; (iv) consultancy costs including for the compiling of a fixed asset register for PGCB; (v) consultancy costs for the developing of the computerized financial management system for PGCB; (vi) interest during construction; (vii) recurrent expenditures such as workshop allowances, sitting allowances, cash per diems, honoraria and fuel; (viii) import and supplementary duties and value-added taxes at import stage; and (ix) value-added taxes on contracts. FA, Schedule 2, Section I.A Partially complied - No Change with The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) Description: GOB shall cause the PGCB to maintain until the completion of the Project, a project management unit (PMU) headed by an appropriately qualified project director, and comprised of competent staff including, inter alia, one (1) procurement specialist, one (1) financial management specialist, and one (1) monitoring and evaluation specialist. FA, Schedule 2,Section I.A.2 Description: GoB shall cause PGCB to maintain until the completion of the Project, the audit committee Partially complied - comprising of staff, with experience and qualification, in No Change with numbers and under terms of reference acceptable to the Association; which committee shall be responsible for overseeing and settling any audit issues during the implementation of the Project. FA, Schedule 2, Section I.A.3 Description: GoB shall cause PGCB to maintain until the completion of the Project, a bid/proposal evaluation - committee with composition and terms of reference Complied with No Change acceptable to the Association, which shall include an international procurement specialist. The Association’s concurrence shall be required for the formation and modification in the constitution of the committee. FA, Schedule 2, Section I.C Description: GoB shall, and shall cause PGCB to, ensure - Expected soon No Change that the activities under the Project are carried out in accordance with the provisions of the ESIA (including the EMPs and the RAPs). - Project Agreement (PA), Section I.C.(iii) Expected soon No Change Description: Before commencing any civil works for any transmission line, substation or distribution network under the Project, PGCB to ensure that (i) all necessary governmental permits and clearances for such civil works shall have been obtained from the competent The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) governmental authority/ies and submitted to the Association; and (b) all the pre-construction conditions imposed by the governmental authorities under such permit(s) or clearances shall have been complied with. PA, Section III (a) Description: PGCB shall fill the vacancy for the position Partially complied - of General Manager, Finance and Executive Director, No Change with Finance in PGCB and appoint experienced and professionally qualified accountant(s) to the said positions by December 31, 2018. PA, Section III (b) and (c) Description: PGCB shall hire, by December 31, 2018, the relevant consultants/consulting firm (i) for assisting PGCB in compiling a fixed asset register and (ii) for supporting PGCB in developing a computerized financial - management system in accordance with the terms of Expected soon Revised reference agreed to with the Association. PGCB shall hire, by no later than December 31, 2018, the relevant consultants/consulting firm for the carrying out of Component 2 (TA) activities in accordance with the terms of reference agreed to with the Association. PA, Section III (b) and (c) Description: PGCB shall hire, by June 30, 2021, the relevant consultants/consulting firm for assisting PGCB in compiling a fixed asset register in Proposed accordance with the terms of reference agreed to with SOON the Association. PGCB shall hire, by no later than December 31, 2018, the relevant consultants/consulting firm for the carrying out of Component 2 (TA) activities. - PA, Section III (d) Complied with No Change Description: PGCB shall enter into a subsidiary loan agreement, and shall exercise its rights and carry out its obligations under such agreement in such manner as to protect the interests of the Association and to accomplish the purposes of the financing, including to identify the allocation of expenditures between PGCB and the GoB and the role of GoB as the default The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) financier. Except as the Association shall otherwise agree, GoB shall not assign, amend, abrogate or waive the subsidiary loan agreement or any of its provisions. In the event of any conflict between the provisions of the subsidiary loan agreement and the legal agreements, the provisions of the legal agreements . shall prevail. The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) . Results framework COUNTRY: Bangladesh Enhancement and Strengthening of Power Transmission Network in Eastern Region Project Development Objectives(s) The proposed project aims to increase the transmission capacity and reliability of the electricity network in the eastern region and strengthen the institutional capacity of the Power Grid Company of Bangladesh Limited (PGCB). Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Increase the transmission capacity and reliability of the electricity network in the eastern region Increase in transformation capacity in the project area (Kilovolt- 2,775,000.00 11,815,000.00 Amphere(KVA)) Improvement in maintenance and financial management No Yes practices (Yes/No) Average interruption frequency per year in the project area 110.00 40.00 (Number) People provided with new or improved electricity service (CRI, 30,258,000.00 32,833,000.00 Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Enhancement and Strengthening of Power Network Transmission lines constructed under the project (Kilometers) 0.00 290.00 The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Transmission lines rehabilitated under the project (Kilometers) 0.00 116.00 Action: This indicator has been Revised Substations constructed under the project (Number) 0.00 13.00 Substations rehabilitated under the project (Number) 0.00 1.00 Institutional Development and Implementation Support Corporate maintenance strategy developed (Yes/No) No Yes Fixed asset registry in place (Yes/No) No Yes Live line maintenance implemented (Yes/No) No Yes Improved customer (or beneficiary) satisfaction with new or No Yes improved electricity service (Yes/No) Percentage of female staff trained from total staff trained 0.00 30.00 (Percentage) Financial Management system implemented (Yes/No) No Yes Action: This indicator has been Marked for Deletion IO Table SPACE The World Bank Enhancement and Strengthening of Power Transmission Network in Eastern Region (P159974) Note to Task Teams: End of system generated content, document is editable from here. 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