The World Bank Disaster and Climate Resilience Improvement Project () REPORT NO.: RES37835 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF DISASTER AND CLIMATE RESILIENCE IMPROVEMENT PROJECT APPROVED ON JUNE 2, 2015 TO ISLAMIC REPUBLIC OF PAKISTAN URBAN, RESILIENCE AND LAND SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Patchamuthu Illangovan Regional Director: John A. Roome Practice Manager/Manager: Christoph Pusch Task Team Leader: Ahsan Tehsin The World Bank Disaster and Climate Resilience Improvement Project () I. BASIC DATA Product Information Project ID Financing Instrument Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 02-Jun-2015 01-Dec-2019 Organizations Borrower Responsible Agency Provincial Disaster Management Authority Islamic Republic of Pakistan (Punjab),Punjab Irrigation Department,State Planning and Development Department Project Development Objective (PDO) Original PDO The project aims to support restoration of resilient flood protection infrastructure and strengthening government capacity to manage disasters and climate variability. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-56860 02-Jun-2015 30-Jul-2015 14-Sep-2015 01-Dec-2019 125.00 60.04 62.70 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Disaster and Climate Resilience Improvement Project () I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES Project Status: The project is making progress towards achievement of the Project Development Objective (PDO), however the pace is considerably slow and challenged by procedural hurdles, particularly in Punjab. Therefore, the PDO rating is Moderately Satisfactory and Implementation Progress rating is Moderately Unsatisfactory, and has remained there since the Mid-term Review carried out in August 2018. Overall, the project disbursement stands at 49% (US$ 60 million). Since the project was approved as an emergency project on the Government’s side, all major activities require further Government approvals of sub-project level PC-Is during implementation. These approvals have been stalled for the past year due to elections and transition in Government, leading to no new contracts being awarded. As part of proactivity action, the Bank has obtained a commitment from the Government of Punjab to complete all internal approvals of PC-Is by October 31, 2019, based on which the Bank will consider upgrading Implementation Progress to Moderately Satisfactory, subject to extension of the project closing date. Further, the Government expects savings of approximately US$ 20 million due to exchange rate differential. The Government is already planning to incorporate and expedite preparation of additional sub-projects in the workplan, to disburse all project funds during the proposed extended implementation period. The component specific status is as follows: Punjab Irrigation Department (PID): This component worth US$ 84 million has achieved a financial disbursement of US$ 35.72 million (42.57%) and utilization of US$ 31.08 million (37%) till date. The restored flood protection works, over 200 kilometers in length, have benefitted an estimated 1.3 million people in Punjab through this component. Out of 18 civil works sub-projects included in the workplan, 9 are complete, 3 are near completion while 6 are in various stages of procurement. With the completion of these remaining works, its is expected that more than 2 million people would be protected from riverine flood risks, of which over 1 million would be women. The Government has committed to expedite the procurement of remaining civil works contracts and revised timelines have been agreed with the Bank for the proposed extended implementation period. Provincial Disaster Management Authority (PDMA), Punjab: Overall implementation of the component has been slow. The component worth US$ 16 million has achieved a financial disbursement of 30.56% and utilization of only 20% till date. However, important results to strengthen disaster risk management in the province have been achieved till date. More than 900,000 people in vulnerable areas of Punjab are receiving early warning notifications. Risk assessments for 5 districts in Punjab have been completed which would lead to risk-informed development and planning. PC-I for Phase-I procurements of the Capacity Development Plan, with an outlay of PKR 543.68 million, has been recently approved by the Provincial Development Working Party. New PC-Is would need to be approved to program the remaining funds and utilize these within the proposed extended implementation period. A workplan with revised timelines has been agreed with the Government for these approvals. State Planning and Development Department: The implementation of this US$ 25 million component has been strong, and has achieved a financial disbursement of US$ 19.39 million (78%) and utilization of US$ 14.35 million USD (57%) till date. Out of 34 civil works sub-projects, 33 contracts have been awarded. In terms of physical progress, 21 sub- projects have either been completed or close to completion. The project has undertaken several innovative and paradigm changing interventions in the State, particularly on increasing the capacity and outreach of DRM institutions, as well as line departments to mainstream resilience. The World Bank Disaster and Climate Resilience Improvement Project () The Government of Pakistan formally requested a 13-month extension on June 20, 2019. The Bank fielded a mission to Punjab and the State to inform the restructuring, review progress and agree on an action plan for completion of project activities. Proposed Changes and Rationale: Given this was an emergency project, there were significant initial delays in setting up of Project Implementation Units and commissioning of Project Management and Implementation Consultants. Specifically over the past one year the political situation has caused delays in PC-I approvals, which is the primary bottleneck for implementation. This, coupled with contract management challenges during implementat ion, has led to lags in expected financial utilization and physical progress. Therefore the extension is necessitated to bring ongoing civil works and activities to an orderly closure. Further, given the high-level ownership and renewed commitment from government counterparts to expedite implementation, fill capacity gaps, and timely process internal approvals, there is potential for a fuller achievement of the PDO and results indicators with an extension in the project end date. As PC-Is for remaining sub-projects are being approved, implementation is seen to be picking up pace. Therefore, the following changes are proposed: 1. It is proposed that the closing date for the project be extended by thirteen (13) months from the current closing date of December 1, 2019 to December 31, 2020. This is the first such extension of the project. 2. While the project is making progress towards the PDO, the Results Framework needs to be adjusted to reflect a change in project activities to date. An activity related to the establishment of Decision Support System (DSS) for flood management in Punjab has been dropped. The Punjab Irrigation Department has decided to cancel the activity on establishment of DSS after prolonged delays and lack of interest from the Flood Risk Assessment Unit (FRAU) of the Irrigation Department. The PC-II for this component remained in administrative approvals for 18 months prior to cancellation of the activity from Irrigation Department. Therefore the corresponding Intermediate Results Indicator 'Establishment of a Decision Support System' under component 1 is being dropped. 3. On account of strong implementation progress of the State Planning and Development component, as well critical resilience building interventions which can be swiftly implemented by the State within the proposed extended project period, it is proposed that SDR 2,668,500 be reallocated from 'Category 1 of Expenditures by Punjab Irrigation Department' to 'Category 3 of Expenditures by State Planning and Development Department'. This is a simple reallocation equivalent to 15% of the original allocation to the State. It is confirmed that: (i) there are no overdue financial audits for this project, and; (ii) the proposed Level 2 Restructuring does not entail changes in the Project Development Objectives or the Safeguards Category. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications The World Bank Disaster and Climate Resilience Improvement Project () IDA-56860 Effective 01-Dec-2019 31-Dec-2020 30-Apr-2021 REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Current Actuals + Proposed Disbursement % Ln/Cr/TF Expenditure Allocation Committed Allocation (Type Total) Category Current Proposed IDA-56860- GD,WK,NonCS,C 59,730,000.00 13,478,859.32 57,061,500.00 100.00 100.00 001 S,Trng&OC - PID Currency: GD,WK,NonCS,C XDR S,Trng&OC - 11,380,000.00 1,997,347.42 11,380,000.00 100.00 100.00 PPDMA GD,WK,NonCS,C S,Trng&OC - 17,790,000.00 9,919,881.58 20,458,500.00 100.00 100.00 State Emergency Expenditures for 0.00 0.00 0.00 100.00 100.00 Comp 5 Total 88,900,000.00 25,396,088.32 88,900,000.00