The World Bank Anhui Xuancheng Infrastructure for Industry Relocation (P129431) REPORT NO.: RES40796 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ANHUI XUANCHENG INFRASTRUCTURE FOR INDUSTRY RELOCATION APPROVED ON JUNE 20, 2013 TO PEOPLE'S REPUBLIC OF CHINA URBAN, RESILIENCE AND LAND EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Regional Director: Benoit Bosquet Practice Manager/Manager: Francis Ghesquiere Task Team Leader(s): Wanli Fang, Minghe Tao The World Bank Anhui Xuancheng Infrastructure for Industry Relocation (P129431) I. BASIC DATA Product Information Project ID Financing Instrument P129431 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 20-Jun-2013 31-Mar-2020 Organizations Borrower Responsible Agency People's republic of China Xuancheng Project Management Office Project Development Objective (PDO) Original PDO The project aims to contribute to the economic, social and environmental sustainability of the project area in the Xuancheng Economic and Technological Development Zone. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-82700 20-Jun-2013 16-Aug-2013 14-Nov-2013 31-Mar-2020 90.00 79.47 10.53 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Anhui Xuancheng Infrastructure for Industry Relocation (P129431) Background. Anhui Xuancheng Infrastructure for Industry Relocation Project(P129431) was approved by the Board on May 20, 2013 and became effective on November 14, 2013. The project is funded by an IBRD loan of US$150 million. The Project Development Objective (PDO) is to contribute to the economic, social and environmental sustainability of the project area in the Xuancheng Economic and Technological Development Zone. The project has three components: (1) Roads and Bridges with Underground Storm-water Drainage Networks, Water Supply Networks, and Sewerage Networks; (2) Wastewater Conveyance, Treatment and Discharge; and (3) Institutional Development and Capacity Building. During the initial years of implementation, the project was negatively affected by an unfavorable macro-economic environment. As a result, the project was reduced in scope by downsizing the project area from 20.2 square kilometers to 14.6 square kilometers, increasing the disbursement percentage for civil works from 61 percent to 100 percent and a partial cancelation of the loan proceeds in the amount of US$ 60 million through the first restructuring in January 2017. The second restructuring was completed in August 2018, which granted the project an 18-month extension for implementation and revised the M&E framework to reflect the relevant impacts of the project. This is the third restructuring of the project. Implementation status. Overall the project has made solid progress towards achieving the PDO. The ratings remain Satisfactory. Disbursement has reached 88 percent and all contracts have been awarded and signed. As of December 2019, targets for all indicators have been met or have exceeded the end targets except for one intermediated indicator, "Volume (mass) of BOD pollution load removed", for which the number is below the target. This is because most of the industries in XETDZ are non-polluting industries and therefor concentration of pollution in wastewater is much lower than estimated at the design stage. Missing this intermediate target will not imply any unsatisfactory outcome for the project. In addition, the results of the three rounds of beneficiary satisfaction surveys all provided solid evidence on the positive social, economic and environmental benefits brought by implementation of this project. Technical assistance and capacity building activities have been completed with satisfactory outcomes. Rationale for extension. The outbreak of COVID-19 has caused delays in project implementation. Civil works have been suspended since January 2020 due to the situation caused by the ongoing COVID-19 epidemic. As of end of February 2020, although two additional civil works contracts were completed (i.e., the effluent of the wastewater treatment plant and the three roads under WWXC-16), Baocheng West Road (WWXC-6) was only 54 percent complete and the two roads under WWXC-14 were 74 percent completed. Timeline for a full restart of construction remains unclear not only due to labor shortage associated with commuting constraints but also due to difficulties with delivery of construction materials to the sites. These two remaining civil works contracts are expected to be completed in July/August of 2020, which are essential to complete the road network and improve overall connectivity of the zone. In addition, two goods contracts were also negatively affected: the procurement, delivery and installation of equipment and the test operations could not be carried out for the Smart Transport contract (WWXC-17) and the second-phase of the Real-time Environmental Monitoring System (WWXC-20). These two goods contracts are expected to be completed within one to two months after the emergency situation is lifted. These two goods contracts are important contributors to the innovativeness of this project by demonstrating application of new technologies. Completion of these four contracts is essential to ensure satisfactory outcomes of the project and full realization of the PDO. The PMO has developed an implementation plan to ensure timely completion of all project activities by the proposed closing date and is acceptable to the Bank. Monthly update of progress will be prepared by the PMO and share with the task team until project completion. Compliance. The project is in full compliance with the environmental and social safeguards requirements, fiduciary requirements and legal covenants. Overall risk rating of the project was revised from Moderate to Low in the last The World Bank Anhui Xuancheng Infrastructure for Industry Relocation (P129431) archived ISR, as residual risks to the project are unlikely to materialize at this stage or have any significant impacts on the development objectives of the project. Only the risk of environmental and social safeguards remains moderate given that there are still two civil works contracts under implementation. Such risk will be mitigated through effective enforcement of the environment management plan and the resettlement action plan with close external monitoring and supervision. Beneficiary satisfaction survey results. The PMO conducted the third round of satisfaction survey in January 2020. The survey aims to collect evidence of improvement in quality of living environment for residents as well as doing business environment for investors. The overall satisfaction ratio for this year is 74.2 percent, exceeding the end target of 70 percent. ICR preparation. The ICR mission originally scheduled for March 2020 has had to be postponed as operations travel within and to China have been suspended. The borrower's ICR draft was received on January 15, 2020, which has provided relevant and detailed information and data for the task team to prepare the draft ICR. Proposed extension to the loan closing date. An extension of five-months (i.e., from March 31, 2020 to August 31, 2020) has been requested by Xuancheng PMO on February 11, 2020 to accommodate the detrimental impacts of the situation caused by the COVID-19 epidemic. This will allow the project to close successfully and will also maximize utilization of the loan proceeds. A formal request for extension from the Ministry of Finance was received on March 16, 2020. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-82700 Effective 30-Sep-2018 31-Mar-2020 31-Aug-2020 31-Dec-2020