The World Bank MZ - Emergency Resilient Recovery Project (P156559) REPORT NO.: RES46710 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MZ - EMERGENCY RESILIENT RECOVERY PROJECT APPROVED ON SEPTEMBER 29, 2015 TO MINISTRY OF ECONOMY AND FINANCE (MEF) URBAN, RESILIENCE AND LAND AFRICA EAST Regional Vice President: Hafez M. H. Ghanem Country Director: Idah Z. Pswarayi-Riddihough Regional Director: Mark R. Lundell Practice Manager/Manager: Meskerem Brhane Task Team Leader(s): Lizardo Narvaez Marulanda The World Bank MZ - Emergency Resilient Recovery Project (P156559) I. BASIC DATA Product Information Project ID Financing Instrument P156559 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 29-Sep-2015 31-May-2021 Organizations Borrower Responsible Agency National Directorate of Water Resources Management (DNGRH),Ministry of Education and Human Ministry of Economy and Finance (MEF) Development (MINEDH),Water and Sanitation Infrastructure Administration (AIAS),National Institute for Irrigation (INIR) Project Development Objective (PDO) Original PDO The Project Development Objective is to restore the functionality of critical infrastructure in a resilient manner in the disaster-affected provinces; and to improve the Government of Mozambique's capacity to respond promptly and effectively to an eligible crisis or emergency. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D3960 30-Oct-2018 23-Nov-2018 22-Mar-2019 31-May-2021 13.00 11.05 2.22 IDA-59510 13-Jan-2017 20-Feb-2017 08-Sep-2017 31-May-2021 20.00 20.54 .40 The World Bank MZ - Emergency Resilient Recovery Project (P156559) IDA-57320 29-Sep-2015 26-Oct-2015 18-Feb-2016 31-May-2021 40.00 39.42 .25 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES PROJECT STATUS 1. The Project was approved on September 29, 2015, and became effective on February 18, 2016, with an expected closing date on June 30, 2019. This financing focused on the resilient recovery of rural infrastructure, including irrigation schemes, roads, power lines, and protection dikes, and schools affected by the cyclones and floods in the Central and Northern provinces of Niassa, Nampula, and Zambézia as well as improvement of capacities for resilience recovery and flood risk management in the affected regions. 2. In November 2016, the Immediate Response Mechanism (IRM) was activated and US$ 20 million was mobilized through the Contingent Emergency Response Component (CERC) to respond to a drought induced by El Nino in southern Mozambique; and an Additional Financing in the same amount from the Crisis Response Window (CRW) was approved on January 13, 2017, to provide additional support. 3. The project Mid-term Review (MTR) carried out jointly by the Government of Mozambique and the World Bank in August 2018, identified the need to restructure and extend the Project closing date by 12 months until June 30, 2020, to ensure completion of ongoing works and planned activities under the original credit. A Second Additional Financing in the amount of US$13 million was approved on October 30, 2018, to reposition the resources mobilized from the original credit for the activation of the IRM. 4. In light with the recommendation of the MTR, in December 2018, the project was first restructured through the cancellation of activities related to flood risk management and food security as agriculture production was restored mostly as a result of improvement of climate conditions in previously drought-affected areas. The Results Framework was revised, and the Project closing date extended to June 30, 2020. 5. In March 2019, cyclone Idai caused damages to rural infrastructure already rehabilitated under the Project in the province of Zambezia. In response, and following completion of a detailed assessment of damages, the Government amended the existing works contracts and launched the repair works of Intabo irrigation scheme, the Nante and Nicoadala dikes, the power transmission line, and the pumping station of the Intabo irrigation scheme in Nante. However, in January 2020, intense rainfall in the central region of Mozambique triggered flooding of the Licungo river basin which led to an interruption of all repair and rehabilitation works in Zambezia province. In addition, the COVID- 19 pandemic caused interruption of shipping of construction material from China, further delaying the physical progress of rehabilitation works of the water supply system of Mocuba in Zambezia province. In the southern region, an increase in water levels of the Limpopo river basin caused interruption of rehabilitation works of the Macarretane dam, in the Chokwe district. In response to these challenges, the project was restructured in June 2020, adjusting the results framework and extending the closing date for six months to December 31, 2020. The World Bank MZ - Emergency Resilient Recovery Project (P156559) 6. In November 2020, the Project closing date was extended for additional 5 months to May 31, 2021, in response to a Government request for the construction of a parking bay for the crane in the Chokwe district to increase the safety of the crane and road traffic transit through the bridge, as well as to improve the safety of manual operation of Macarretane dam, particularly in situations of power outages during major floods events in the Limpopo river basin. 7. While virtually all flood control works are expected to be completed by the current closing date, including the enhancement of security at Macarretane dam, an estimate of 76 mixed classrooms,(out of contracted 121) in the Zambezia province (component A.4), will not be completed before May 31, 2021, due to several factors detailed in this Restructuring Paper. 8. To date, the project has disbursed US$71.01 million (96.11 percent of the total US$73 million), and the remaining undisbursed US$1.99 million (2.7 percent) are committed to contracts currently under implementation, including the delayed contracts for the construction of the classrooms indicated before. 9. 9. The Project Development Objective (PDO ) remains relevant and achievable. The progress towards achievement of PDO and project implementation is satisfactory as all major works are completed and works due to May 31, 2021 are on track for successfully completion, except the construction of 76 mixed classrooms which requires additional time for completion. Three out of five PDO level indicators were already met: "Direct project beneficiaries" with 102 percent of achievement; "Number of people in urban areas provided with access to improved water sources under the project" with 105 percent of achievement; "Number of people protected by rehabilitated dike infrastructure" with the achievement of 100 percent. One PDO level indicator will be met by the extended closing date: “Number of children with access to improved education infrastructure”, currently with 69.6 percent of achievement. Finally, one of the PDO level indicators will be partially met: “Number of people with access to improved irrigation infrastructure”, currently with 59 percent of achievement. The remaining percentage corresponds to the expected beneficiaries of the rehabilitation of Munda- Munda irrigation scheme; this rehabilitation began with the ERRP, but was later included as part of the World Bank-financed Smallholder Irrigated Agriculture and Market Access Project- IRRIGA (P164431) which will expand the irrigation area benefiting a greater number of farmers. The original beneficiaries of the Munda-Munda system under the ERRP, are already included as part of the expended irrigation scheme and will be then accounted for under the World Bank-financed Smallholder Irrigated Agriculture and Market Access Project- IRRIGA (P164431). 10. The Intermediate Results Indicators (IRI) present various levels of completion, including 12 of 20 indicators already met. It is expected that one indicator on the Number of conventional classrooms rehabilitated will be achieved by the current closing date when the ongoing civil works come to completion; the other 4 indicators, all in the education sector, will be met within the extended closing date when the construction of the mixed classrooms and accompanying administrative buildings, toilets and rainwater systems are completed, including the training of local communities. In addition, in December 2020, MINEDH completed the recruitment of a Social specialist and an Environmental specialist to support the implementation of safeguards requirements in the construction and rehabilitation of education infrastructure. Finally, one IRI ("Hectares covered with irrigation infrastructure") will be partially met, since this one corresponds to the rehabilitation works of the Munda-Munda irrigation scheme transferred to IRRIGA project as indicated earlier (see attached the updated Results Framework for further details). 11. In summary, the project has delivered: Component A: The World Bank MZ - Emergency Resilient Recovery Project (P156559) - The rehabilitation of the Nicoadala dyke (5 km), Lot 1 (19km) and Lot 2 of the Nante dyke (11 km); the Eribacela weir; the Intabo irrigation scheme (300 ha) and its respective pumping station, the Niquídua-Mualei road (15km), the power transmission line (18km); 349 conventional classrooms, of which 217 correspondings to Phase I and 132 classrooms out of a total of 155 that correspond to Phase 2 classrooms; the Mocuba water supply system and distribution network and the Macarretane dam; - The completion and delivery of the construction work for 96 mixed classrooms out of 257 classrooms, four of the six multi-purpose boreholes in Mapai and Chibuto; the two desalination plants in Chokwe and Massingir, and the expansion of the water supply system of Chicoalacoala, and the offices of the Limpopo Basin Management Unit (UGBL) in Macarretane. - Executed 2,727 home water connections and 93 water points, beyond the 2,200 connections and 68 water points planned under the project. - Near completion (90 percent physical execution) of the construction of parking bay of crane at the Macarretane dam; the water supply system of Funhalouro, and the two desalination plants of Massangena (changed from multi- purpose boreholes to desalination plants due to the high water conductivity), with the delivery of works expected before the current closing date. Component B: - The implementation of Technical Assistance of the United Nations Program for Human Settlements (UN-Habitat) to the Ministry of Education and Human Development (MINEDH) has assured the training of 41 out of 49 local communities involved in the construction of resilient mixed classrooms in Zambézia and Nampula provinces. UN- Habitat also supported the supervision of the implementation of defect liabilities measures for classrooms rehabilitated during Phase I in the provinces of Niassa, Nampula, and Zambézia, and monitored compliance with quality and resilience standards of rehabilitation of conventional classrooms of Phase 2 and the completion of construction of mixed classrooms in Nampula Province. PROPOSED CHANGES AND RATIONALE 12. While most of the works have been completed and the still ongoing works in the water sector are almost completed, the construction of 76 mixed classrooms, out of contracted 121 in the Zambezia province (component A.4), will not be completed by the current closing date. The delays in the completion of construction of these classrooms have been caused by the increased restrictions to mobility imposed by the Government to reduce the transmission of Coronavirus Disease 2019 (COVID-19), which intensified in early January 2021 when a national curfew was imposed across the country. In addition, persistent heavy rains induced by the occurrence of cyclones Chalane (December 2020) and Eloise (January 2021) in central Mozambique limited access of contractors to some districts for the acquisition of construction materials and implementation of works by contractors. The World Bank conducted several due diligence meetings with the leadership of the Ministry of Education and Human Development (MINEDH) to solve the situation and an action plan was agreed for the completion of delayed mixed classrooms. An estimate of five months extension would be required to complete the construction of pending 76 mixed classrooms, followed by another extra month to complete the formal handover of the works to Government. 13. The Government sent a letter dated May 20, 2021, requesting an extension of a minimum of three months to complete the construction of delayed mixed classrooms. The World Bank MZ - Emergency Resilient Recovery Project (P156559) 14. The World Bank reviewed the request and the proposed action plan (attached) and found it viable, based on commitment and measures already introduced by the Ministry and the technical assistance of UN-Habitat to ensure the completion of works within the requested extra time. In addition, the requested extension will not require any additional costs as the Ministry will use Government resources to monitor the finalization of works under no-cost technical assistance from the UN-Habitat. Considered the need for quality verification and correction of defects, and the uncertainties associated with the Coronavirus Disease 2019 (COVID 19) situation, the team proposes an extension of six months, to November 30, 2021. The cumulative extension of the closing date will be 29 months. 15. It is confirmed that there are no overdue Interim Financial Reports (IFR’s) or audits. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2020, 31-Dec- IDA-57320 Effective 30-Jun-2019 2020, 31-May-2021 30-Jun-2020, 31-Dec- IDA-59510 Effective 30-Jun-2019 30-Nov-2021 30-Mar-2022 2020, 31-May-2021 31-Dec-2020, 31- IDA-D3960 Effective 30-Jun-2020 30-Nov-2021 30-Mar-2022 May-2021