The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) REPORT NO.: RES34014 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF CHINA: GANSU QINGYANG URBAN INFRASTRUCTURE IMPROVEMENT PROJECT APPROVED ON MAY 31, 2012 TO PEOPLE'S REPUBLIC OF CHINA TRANSPORT GLOBAL PRACTICE EAST ASIA AND PACIFIC REGION Regional Vice President: Victoria Kwakwa Country Director: Bert Hofman Senior Global Practice Director: Jose Luis Irigoyen Practice Manager/Manager: Binyam Reja Task Team Leader: Muhammad Zulfiqar Ahmed The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) ABBREVIATIONS AND ACRONYMS IBRD International Bank for Reconstruction and Development PDO Project Development Objective WWTP Wastewater Treatment Plant The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) BASIC DATA Product Information Project ID Financing Instrument P123133 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 31-May-2012 31-Dec-2018 Organizations Borrower Responsible Agency People's Republic of China QINGYANG PMO Project Development Objective (PDO) Original PDO To assist Xifeng District to improve selected urban infrastructure services including urban roads and urban environmental services. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-81700 31-May-2012 12-Jul-2012 24-Sep-2012 31-Dec-2018 100.00 70.25 29.75 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) 1. The Board approved the US$100 million loan for the Gansu Qingyang Urban Infrastructure Improvement Project on May 31, 2012 and the loan became effective on September 24, 2012. The project development objective (PDO) is to assist Xifeng District to improve selected urban infrastructure services including urban roads and urban environmental services. Implementation after preliminary delays is now progressing satisfactorily. Cumulative disbursement of the Bank loan now stands at USD 70.25 million. Of the 20 contracts in the procurement plan, 15 have already been procured (of which 8 are completed) and 4 contracts are in procurement, and 1 contract is proposed to be funded by counterpart financing. The outstanding issues of land availability and resettlement that had an impact on implementation progress have been mostly resolved. Progress towards achieving the PDO and Implementation Progress are both rated as Moderately Satisfactory. The project stays compliant with loan covenants, as well as Bank fiduciary and safeguard policies. The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) 2. The project was previously restructured on August 29, 2016, and the following changes were made: a. Loan closing date was extended by 12 months to December 31, 2018; b. Disbursement percentage for categories 1 and 2 were changed from 80% to 100% (no changes were proposed to the allocation of the loan between the disbursement categories); c. Activities of project components were adjusted considering those completed under counterpart financing or changes in local regulations without any impact on the PDO; d. Results Framework was updated to include core indicators that were not part of the original matrix. 3. The status of implementation is summarized below. a. Component 1. Urban Infrastructure Improvement i. Sub-component 1.1. Urban Bypass Road Construction – includes 6 contracts. Completion of the civil works related to the urban bypass contracts are critical to the achievement of the PDO. 3 contracts for civil works were completed. Works on 2 contacts (Northern Extension of Beijing Dadao (East Ring Road) Huoxianggou Gully Highfill and from Anding Road to South Huoxianggou Gully) are on track likely to complete by November 2018. While 1 remaining critical contract for Monitoring System in Beijing Dadao Integrated Pipe Ditch is planned for procurement by November 2018 and to complete by May 2019. ii. Sub-component 1.2. Integrated Road Corridor Improvement – includes 4 contracts. 2-contracts for civil works and supervision were completed, while 2 civil works contracts (Rehabilitation of Nanbei Dajie Road and Anding Road Upgrading Works) are planned for procurement by March 2019 and complete by October 2019. iii. Sub-component 1.3. Drainage and Sewage Pipes - included 4 contracts after previous restructuring. 2 civil works contracts were completed. 1 contract for technical assistance on GIS based Drainage/Wastewater Pipe Network is planned for procurement by November 2018 and to complete by June 2019. 1 civil works contract (LCCP4-Drainage Pipelines rehabilitation Works in Old City Area) will not be financed with the loan proceeds. Xifeng District Public Utility Bureau confirmed to the Bank in May 2018 mission that some portion of LCCP4 scope had been earlier completed by local government’s urban renewal schemes while the remaining portion would be covered by Qingyang Sponge City Project Office under Sponge City scheme. All works shall be completed by July 2019. It was agreed therefore that the financing source for the LCCP4 contract will be switched to counterpart financing but the works under this contract will be still part of the project scope and will be monitored by the relevant indicators defined in the Results Framework. iv. Sub-component 1.4. Wastewater Treatment Plant (WWTP) – includes 3 contracts. 2 civil works and 1 goods contract are critical to the satisfactory completion of the project. Implementation is back on track (despite delays due to cost variation issues). The Chengdong WWTP construction civil works is planned to complete by July 2019, and all related contracts are planned for completion and operation by October 2019. b. Component 2. Institutional Strengthening and Capacity Building (and Training Program) – a research study on Water Resource Management was completed, while two TAs on project management, capacity building and training are ongoing. c. Financial Management. There are no overdue audits and no unaddressed issues highlighted by the auditors. Retroactively increasing the Bank loan financing percentage from 80% to 100% for category 1 and 2 did not capture the cut-off dates in the last restructuring of August 2016. It agreed that PMO will provide cut-off dates and the amount affected by the retroactive change. PMO has since reported that from October 21, 2014 to September 1, 2016, a total amount of RMB 184,508,253.57 yuan with 17 applications was applied for payment from the DA. Among this amount, RMB 180,137,589.49 yuan is for category 1 and 2. This amount includes a retroactive disbursement of RMB 36,027,517.90 yuan under category 1 and 2 because of the change of percentage from 80% to 100%. The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) d. Safeguards. Land acquisition and resettlement had slowed project implementation in the early years, which has progressed well in the past 6 months. All land acquisition for the remaining construction of four main roads in Panggong area have been completed, while the work of house acquisition and demolition were completed by end of July 2018. Resettled families will move into their permanent apartments by June 30, 2019. Based on the progress in resettlement, compliance with the Bank’s involuntary resettlement safeguard policy has recently been upgraded to Moderately Satisfactory. B. Rationale for restructuring 4. Based on the current implementation progress and the revised implementation plan, the remaining contracts cannot be completed by the current closing date. And the activities in progress are critical to the achievement of the PDO. 5. Considering the project status and the satisfactory performance, as assessed by the Bank in May 2018 mission, the government was informed that upon the receipt of an official request from MoF, the Bank would consider a restructuring, if approved by the Bank management. The proposed restructuring is also requested to allow enough time for the displaced families affected by the project to resettle prior to project closing. Completion of the remaining contracts would also enable the remaining loan balance of about USD 30 million to be disbursed. 6. The MOF have sent a restructuring request to the Bank on July 26, 2018 seeking to amend the loan agreement to; (a) extend the project by another 12 months; and (b) amend expense categories as agreed during the recent mission. The PMO has prepared a revised Implementation Plan for the proposed revisions, which shows that the remaining activities will be completed by October 2019. The task team has reviewed the revised plan and it is considered achievable. 7. Based on the above, the task team recommends considering an extension of closing date to November 30, 2019. II. DESCRIPTION OF PROPOSED CHANGES C. Proposed Changes 8. The following changes are recommended: The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) a. Extend the loan closing date by 11 months to November 30, 2019. b. Amend Loan Agreement – to add the cut-off dates of October 21, 2014 to September 1, 2016 to retroactively increase the Bank loan financing percentage from 80% to 100% for category 1 and 2. The retroactive disbursement amount is RMB 36,027,517.90 yuan under category 1 and 2. c. No change to Loan Agreement, Schedule 1, Part I.3 (b) - however activities of project components that need to be switched to counterpart financing without any impact on the PDO i. Cancel civil works contract under LCCP4 (Drainage pipelines rehabilitation works in the old city area: upgrading drainage networks along 20 roads, with the total length up to 22,914m (DN 300～2400mm); rehabilitation works). Counterpart financing. ii. Cancel goods contract under QYG3 (Office Facilities for PMO and PIUs). Counterpart financing. d. Update results framework (RF). PDO Indicators and the Intermediate Indicators remain relevant, however it is proposed to revise the end target for core indicators related to Chengdong Waste Water Treatment Plant (WWTP) as per actual capacity. The RF below shows the proposed revisions. 9. This will be the second change in the closing date and it will result in a 23-month cumulative extension of the original closing date. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-81700 Effective 31-Dec-2017 31-Dec-2018 30-Nov-2019 30-Mar-2020 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 0000 0.00 0.00 2012 0.00 0.00 2013 0.00 0.00 2014 4,000,000.00 3,777,972.16 2015 7,000,000.00 2,369,476.28 2016 15,000,000.00 11,043,103.52 2017 30,000,000.00 30,000,000.00 2018 30,000,000.00 30,000,000.00 2019 14,000,000.00 16,809,448.04 2020 0.00 6,000,000.00 . The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) . Results framework COUNTRY: China China: Gansu Qingyang Urban Infrastructure Improvement Project Project Development Objectives(s) To assist Xifeng District to improve selected urban infrastructure services including urban roads and urban environmental services. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target 2012 2019 Improve selected urban infrasturcutre services including urban roads (Action: This Objective is New) Journey time saved for through traffic (freight) (Minutes) 28.40 18.20 Action: This indicator has been Revised Share of through traffic (freight) on 2 corridors increased (West) 66.2 (0%) 72 (9%) (# of trucks over 24 hours and %) (Text) Action: This indicator has been Revised Share of through traffic (freight) on two corridors increased 9.1 (0%) 22 (142%) (East) (# of trucks over 24 hours and %) (Text) Action: This indicator has been Revised Service speed of buses during rush hour on Nan Bei Street 10.30 15.50 Corridor (km/hr) (and % change) (Kilometers) Action: This indicator has been Revised Built up area serviced by storm water/wastewater networks 50.60 92.00 increased (Percentage) Action: This indicator has been Revised Improve selected urban environmental services (Action: This Objective is New) The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target 2012 2019 Volume(mass) of BOD pollution load removed by treatment plant 0.00 365.00 under the project (Tones/year) Action: This indicator has been Revised Wastewater pollution reduction (SS) (tons/year) (Metric ton) 0.00 693.00 Action: This indicator has been Revised Wastewater pollution reduction (COD) (tons/year) (Metric ton) 0.00 802.00 Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target 2012 2019 Urban Infrastructure Improvements (Action: This Component is New) Drainage/sewage pipe reconstruction completed (km, 0.00 100.00 cumulative %) (Percentage) Action: This indicator has been Revised Roads constructed, non-rural (Kilometers) 0.00 5.76 Action: This indicator has been Revised Intersections with traffic channelized (Number) 12.00 27.00 Action: This indicator has been Revised Associated construction of pipes completed (km, cumulative %) 0.00 100.00 (Percentage) The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target 2012 2019 Action: This indicator has been Revised Roads rehabilitated, Non-rural (Kilometers) 0.00 16.06 Action: This indicator has been Revised % of users expressing positive opinion on services (from user 27.00 65.00 satisfaction surveys) (Percentage) Action: This indicator has been Revised Unsignalized zebras converted to signalized mid-block crossings 15.00 103.00 on the 3 corridors (# of crossings) (Number) Action: This indicator has been Revised Average annual number of fatalities and severely injusred in project corridors over a three-year period (relative to base year) 14.00 9.00 (Number) Action: This indicator has been Revised Wastewater treatment plant investment completed (US$, 0.00 100.00 cumulative %) (Percentage) Action: This indicator has been Revised New drainage/sewage pipe construction completed (km, % 0.00 100.00 cumulative) (Percentage) Action: This indicator has been Revised Bus stops reconstructed/upgraded (Number) 0.00 33.00 Action: This indicator has been Revised Passenger ridership of buses during rush hour on Nan Bei Street 5,845.00 12,000.00 corridor increased (and % change) (Number) Action: This indicator has been Revised The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target 2012 2019 Institutional Strengthening and Capacity Building (Action: This Component is New) Staff trained (cumulative number) (Number) 0.00 110.00 Action: This indicator has been Revised Studies completed (cumulative number) (Number) 0.00 5.00 Action: This indicator has been Revised IO Table SPACE The World Bank China: Gansu Qingyang Urban Infrastructure Improvement Project (P123133)