The World Bank Karachi Neighborhood Improvement Project (P161980) REPORT NO.: RES46803 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF KARACHI NEIGHBORHOOD IMPROVEMENT PROJECT APPROVED ON JUNE 15, 2017 TO THE ISLAMIC REPUBLIC OF PAKISTAN URBAN, RESILIENCE AND LAND SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Najy Benhassine Regional Director: John A. Roome Practice Manager/Manager: Catalina Marulanda Task Team Leader(s): Fuad Malkawi, Anne Treylane Gapihan, Zishan Karim The World Bank Karachi Neighborhood Improvement Project (P161980) ABBREVIATIONS AND ACRONYMS Karachi Water and Sewerage Services CLICK Competitive and Livable City of Karachi KWSSP Improvement Project FM Financial Management MTR Mid-term Review GoS Government of Sindh P&D Planning and Development IDA International Development Assistance PDO Project Development Objective IUFR Interim Unaudited Financial Reports PEOSS Provincial Electronic One-Stop Shop km kilometer PIU Project Implementation Unit KMC Karachi Municipal Corporation SBCA Sindh Building Control Authority Karachi Neighborhood Improvement KNIP SBoI Sindh Board of Investment Project Karachi Transformation Steering Solid Waste Emergency and Efficiency KTSC SWEEP Committee Project KUMP Karachi Urban Mobility Project US$ United States Dollar The World Bank Karachi Neighborhood Improvement Project (P161980) 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 P161980 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 15-Jun-2017 30-Nov-2021 Organizations Borrower Responsible Agency Province of Sindh, Directorate of Urban Policy and Islamic Republic of Pakistan Strategic Planning, Planning and Development Depa Project Development Objective (PDO) Original PDO To enhance public spaces in targeted neighborhoods of Karachi, and improve the city’s capacity to provide selected administrative services. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60220 15-Jun-2017 26-Jul-2017 13-Oct-2017 30-Nov-2021 86.00 34.76 54.35 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Karachi Neighborhood Improvement Project (P161980) 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. An IDA Credit of SDR 62.8 million (US$86 million equivalent) for the Karachi Neighborhood Improvement Project (KNIP, P161980) was approved on June 15, 2017 and was declared effective on October 13, 2017. The closing date of the Credit is November 30, 2021. The Project Development Objective (PDO) is to enhance public spaces in targeted neighborhoods of Karachi and improve the city’s capacity to provide selected administrative services. As of May 31, 2021, US$34.8 million (39 percent) had disbursed from the Credit. This is the first restructuring for this project. 2. Project implementation overall has been delayed primarily due to COVID-19 related lockdowns and flood damage from the heavy monsoon rains in Karachi during July/August 2020 (which surpassed all meteorological records for Karachi dating back to 1931). Cumulative delays to date are estimated to be more than ten months. The government has been complying with the action plan agreed at the project Mid-Term Review in January 2021 and procurement of remaining activities (including COVID emergency response works) has since advanced substantially. In May 2021, the Government of Sindh requested the extension of the Project closing date by one year.1 After careful review of the remaining activities and the revised timeline, the task team has concluded a 12-month extension would allow for the completion of all pending activities and achievement of the PDO. As such, the most recent ISR dated June 10, 2021 rated the likelihood of achieving the PDO as Moderately Satisfactory, while the overall Implementation Progress (IP) as Moderately Unsatisfactory2. Financial Management, Procurement, Project Management, and overall safeguards are all rated as Moderately Satisfactory. 3. The proposed extension of the Credit closing date by 12 months (to November 30, 2022) and implementation of a time-bound workplan agreed with the Government of Sindh during the December 14, 2020 Mid Term Review will enable all activities to be completed and the PDO to be achieved. The implementation status of the three project components is summarized below. 4. Component 1: Public Space and Mobility Improvements in Selected Neighborhoods (US$70 million). Civil works under this component have been divided into two phases. Phase 1 works, which involved the improvement of public spaces in the Saddar, Malir and Korangi neighborhoods, have been completed. An estimated 362,000 residents (over 36 percent of the total project target) are benefiting from these improved public spaces. Community engagement was a key element during the planning and execution of these works, and as a result more than 1,500 people participated in consultation sessions. Detailed engineering designs for Phase 2 works are under preparation and the safeguards screening for these prioritized subprojects is ongoing. Civil works are expected to commence in early July 2021 and the estimated duration of all Phase 2 works is 18 months; the works therefore cannot be completed by the current closing date but the Government is committed to completing them by November 2022. 1 The Bank received a letter from the Government of Pakistan dated May 25, 2021, forwarding the GoSindh letter (dated April 5, 2021) requesting the restructuring of the Project and the extension of its closing date. 2 The TT will assess the pace of implementation once Phase 2 works progress and accordingly update the IP rating. The World Bank Karachi Neighborhood Improvement Project (P161980) 5. Emergency Works. In response to the economic impact of the COVID-19 pandemic and the damage caused by the 2020 monsoon rains, US$20 million of Credit funds originally allocated to Component 1 have been repurposed for labor intensive emergency works, such as repairs and reconstruction of existing infrastructure. The preparation of detailed designs for thirteen prioritized subprojects (estimated to cost US$14 million) commenced in late May 2021, along with safeguards screening. The works will be implemented in a staggered manner, starting with Saddar where construction is expected to begin in early July 2021. 6. Component 2: Support to Improved Administrative Services and City Capacity Development (US$10 million). Activities under this component aim to improve administrative services to ease doing business in Karachi, and to lay the foundations for better city management. The status of these activities is summarized below: a) Automation of construction permits and business registration in Karachi. The project supported the design and implementation of the Sindh Provincial Electronic One-Stop Shop (PEOSS) for business licenses and e- licensing by other provincial agencies. With the completion of this activity, the number of days required to register a firm in Karachi has decreased from 18 in 2017 to 16.5 in 2020. The automation of construction permit processes at the Sindh Building Control Authority (SBCA) has been completed. This component also financed complaints management and resolution and capacity building of SBCA. b) Laying the foundation for better city management. The project intended to set up the core modules of an Integrated Financial Management Information System (IFMIS) in the Karachi Municipal Corporation (KMC), finance a survey of municipal utility tax revenue, develop a web-based platform for city management, and implement a public awareness campaign on city programs and activities. However, many of these initiatives have been incorporated, and are being scaled up, under the Bank-supported Competitive and Livable City of Karachi (CLICK) Project (P161402). In November 2019, the Government of Sindh (GoS) requested that KNIP activities linked to KMC be dropped from the Project. As such, it is proposed to delete these activities from KNIP as part of this restructuring. 7. Component 3: Support to Implementation and Technical Assistance (US$5 million). A project implementation unit (PIU) has been established under the GoS Planning & Development Department (P&D). Training activities have been conducted to enhance the capacity of the PIU and other implementing entities in key skills needed to manage the project, inter alia, stakeholder consultation and participatory development, environmental and social safeguards, procurement, and financial management. The PIU provided technical and financial support to the preparation of three new World Bank operations in Karachi: CLICK; Karachi Water and Sewerage Services Improvement Project (KWSSIP, P164704); and Karachi Urban Mobility Project (KUMP, P166732). 8. The Project is in compliance with loan covenants as well as Bank fiduciary requirements. There are no overdue audit reports, and there are no significant unresolved observations made by the auditors. B. Rationale 9. The proposed restructuring and extension of the Credit closing date by 12 months will provide sufficient time for the completion of the remaining activities of Component 1, in particular Phase 2 and emergency works. Experience gained from implementing Phase 1 subprojects, and the capacity built within the implementing agency and other stakeholders, will contribute to a smoother implementation of Phase 2. The work plan proposed by the implementing agency has been reviewed by the task team and is considered realistic. The World Bank Karachi Neighborhood Improvement Project (P161980) II. DESCRIPTION OF PROPOSED CHANGES 10. Extension of the Credit Closing Date. The closing date of the Credit is proposed to be extended by 12 months from November 30, 2021 to November 30, 2022 to allow sufficient time to complete the remaining Project activities. 11. Changes to Component Activities and Costs. Remaining activities under Component 2, Subcomponent 2: Laying the Foundation for Better City Management are proposed to be dropped from KNIP, as activities will be carried out under the ongoing CLICK project. The US$7 million allocated for these activities will be re-allocated to Components 1 and 3, as shown in Section IV. 12. Revision of the Results Framework. The end target dates for the PDO and intermediate indicators have been changed to align with the proposed revised closing date of November 30, 2022. The PDO indicator, Integrated Financial Management Information System established and operational at KMC, and the intermediate indicator, Web-based platform with improved public access to information, established and operational at KMC, will be deleted to reflect the changes in the sub-component discussed above. A new replacement intermediate indicator, digitization of licensing and permitting functions, has been added to capture the remaining activities under Component 2. The definitions of a PDO indicator and two intermediate indicators have been revised to improve clarity. The details of the changes and the revised Results Framework are provided in the Results Framework annex. The World Bank Karachi Neighborhood Improvement Project (P161980) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank Karachi Neighborhood Improvement Project (P161980) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Public Spaces and Mobility Public Spaces and Mobility Improvements in Selected 70.00 Revised Improvements in Selected 75.00 Neighborhoods Neighborhoods Support to Improved Support to Improved Administrative Services and City 10.00 Revised Administrative Services and 3.00 Capacity Development City Capacity Development Support to Implementation and Support to Implementation 5.00 Revised 7.00 Technical Assistance and Technical Assistance TOTAL 85.00 85.00 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-60220 Effective 30-Nov-2021 30-Nov-2022 30-Mar-2023 . The World Bank Karachi Neighborhood Improvement Project (P161980) . Results framework COUNTRY: Pakistan Karachi Neighborhood Improvement Project Project Development Objectives(s) To enhance public spaces in targeted neighborhoods of Karachi, and improve the city’s capacity to provide selected administrative services. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 To enhance public spaces in targeted neighborhoods of Karachi People provided with improved urban living conditions 0.00 0.00 330,000.00 660,000.00 990,000.00 990,000.00 (Number) Rationale: The Saddar population estimates will be revised to capture residents as well as non-residential daytime population (government workers, and business owners and employees); revise threshold for accessibility as public spaces in Saddar service the whole Saddar District and beyond (catchment area to be Action: This indicator has been defined on case-by-case basis). Population estimates in Malir and Korangi will be revised to capture people living in urban and "peri-urban" areas provided Revised with access to improved public spaces or parks (within 500 meters). Both rehabilitation and construction of parks and public spaces would count. End target date aligned with revised project closing date. People provided with improved urban living 0.00 0.00 165,000.00 330,000.00 495,000.00 495,000.00 conditions - female (Number) The World Bank Karachi Neighborhood Improvement Project (P161980) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Rationale: Action: This indicator has End target date aligned with revised project closing date. been Revised To improve the city's capacity to provide selected administrative services Days required to register a firm 18.00 18.00 18.00 4.00 4.00 4.00 in Karachi (Number) Rationale: End target date aligned with revised project closing date. Action: This indicator has been Need to reflect updates in global Doing Business report. Revised Distance to Frontier measure for dealing with construction 57.65 57.65 57.65 57.65 62.65 62.65 permits for Karachi (Number) Rationale: Action: This indicator has been End target date aligned with revised project closing date. Revised It should reflect updates in global Doing Business report. General ledger, Integrated Financial aggregation and Management Information Revenue module and Payroll module Fixed asset module No reporting; and Yes System established and banking implemented. implemented. implemented. commitments and operational at KMC (Text) payments. Action: This indicator has been Rationale: Marked for Deletion The World Bank Karachi Neighborhood Improvement Project (P161980) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 The GoS has requested that remaining activities under Component 2- Subcomponent 2 related to ‘Laying the Foundation for Better City Management’, including building the IFMIS, be transferred to the ongoing CLICK project. These activities relate to supporting the KMC and are better placed under CLICK, which focuses on local government strengthening. PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Public Spaces and Mobility Improvements in Selected Neighborhoods Area of public spaces improved 0.00 0.00 25.00 50.00 75.00 75.00 (Hectare(Ha)) Rationale: Action: This indicator has been End target date aligned with revised project closing date. Revised Participants in consultation activities during project 0.00 100.00 200.00 400.00 600.00 600.00 implementation (number) (Number) Rationale: Action: This indicator has been End target date aligned with revised project closing date. Revised Participants in consultation 0.00 50.00 100.00 200.00 300.00 300.00 activities during project The World Bank Karachi Neighborhood Improvement Project (P161980) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 implementation - female (Number) Rationale: Action: This indicator has End target date aligned with revised project closing date. been Revised Beneficiaries that feel project investments reflected their 0.00 0.00 0.00 0.00 60.00 60.00 needs (percentage) (Percentage) Rationale: Action: This indicator has been End target date aligned with revised project closing date. Revised Beneficiaries that feel project investments 0.00 0.00 0.00 0.00 60.00 60.00 reflected their needs - female (Percentage) Rationale: Action: This indicator has End target date aligned with revised project closing date. been Revised Increase in the number of visitors to improved public 0.00 5.00 10.00 15.00 25.00 25.00 spaces (Percentage) Rationale: Action: This indicator has been End target date aligned with revised project closing date. Revised Definition of the indicator to be changed to reflect that the targeted public spaces which are considered destinations by themselves, like plazas and public parks renovated under the project. Baseline for a newly constructed public space is considered zero. The World Bank Karachi Neighborhood Improvement Project (P161980) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Increase in the number of visitors to improved public 0.00 0.00 1.00 2.00 5.00 5.00 spaces - female (Percentage) Action: This indicator has been Revised Increase in number of merchants or vendor stalls in 0.00 5.00 10.00 15.00 25.00 25.00 improved public spaces (Percentage) Rationale: End target date aligned with revised project closing date. Action: This indicator has been Definition of the indicator to be changed to reflect that the targeted public spaces are mainly plazas and public parks renovated under the project, which are Revised considered destinations. Baseline for a newly constructed public space is considered zero. Increase in number of merchants or vendor stalls 0.00 0.00 0.00 5.00 10.00 10.00 in improved public spaces - female (Percentage) Rationale: Action: This indicator has End target date aligned with revised project closing date. been Revised Support to Improved Administrative Services and City Capacity Development Web-based platform with No No No Yes Yes Yes improved public access to The World Bank Karachi Neighborhood Improvement Project (P161980) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 information, established and operational in KMC (Yes/No) Rationale: Action: This indicator has been This intermediate indicator related to ‘Laying the Foundation for Better City Management’ will be dropped as its relevant activities were moved to CLICK. Marked for Deletion A new replacement intermediate indicator that captures the remaining results under Component 2 has been added. Automation of licensing and 0.00 2.00 permitting functions (Number) Rationale: This new intermediate indicator captures the remaining results under Component 2 replacing the dropped indicator which covered activities related to Action: This indicator is New ‘Laying the Foundation for Better City Management’ that are dropped and moved to CLICK. Support to Implementation and Technical Assistance A shared vision Karachi transformation endorsed by No No Yes Yes Yes Yes the Karachi Transformation Steering Committee (Yes/No) Rationale: Action: This indicator has been End target date aligned with revised project closing date Revised IO Table SPACE The World Bank Karachi Neighborhood Improvement Project (P161980) Note to Task Teams: End of system generated content, document is editable from here. Please delete this note when finalizing the document