The World Bank MZ - Emergency Resilient Recovery Project (P156559) REPORT NO.: RES29806 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) SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE AFRICA Regional Vice President: Makhtar Diop Country Director: Mark R. Lundell Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Bernice K. Van Bronkhorst Task Team Leader: Michel Matera 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 30-Jun-2019 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 Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-59510 13-Jan-2017 20-Feb-2017 08-Sep-2017 30-Jun-2019 20.00 0 20.85 IDA-57320 29-Sep-2015 26-Oct-2015 18-Feb-2016 30-Jun-2019 40.00 23.84 15.92 The World Bank MZ - Emergency Resilient Recovery Project (P156559) 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 The Executive Directors approved the ERRP on September 29, 2015 for an equivalent of US$40.0 million. The project became effective on February 18, 2016. The closing date is June 30, 2019. There were no changes to the PDO, the design and/or scope of the ERRP, prior to this proposed Level II restructuring . The project development objective of ERRP 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. Thus, a first Level II restructuring was carried out in November 16, 2016 to reallocate funds for the Contingent Emergency Response Component (US$20 million) for the activation of the Immediate Response Mechanism to address the negative impact of the El Niño related drought in 2016. An Additional Financing was approved on January 13, 2017 for US$20 million to address drought recovery needs. This project has been under implementation for twenty months. The supervision mission in September 2017 concluded that project implementation initially suffered from administrative delays that prevented a swift start of some project activities, but has now picked up pace, benefiting from the activation of the IRM and preparation of the AF for drought response. Although some financial stress for regular project activities related to preparation of safeguard instruments has been experienced, Overall Implementation Progress (IP), Progress towards achievement of PDO and implementation of components A, B and C were rated as Moderately Satisfactory. All legal covenants for effectiveness have been met. The Original Credit IDA-57320, has disbursed 59.15% to a total amount of $23.66 million as of October 5, 2017. The Additional Financing, Credit IDA-59510, has become effective on September 8, 2017; no disbursement registered to date. Proposed change This restructuring proposes the removal of the safeguards related disbursement condition associated to Category (1). This removal would allow to proceed with urgent flood repair works that do not require a RAP. The protection provided by the obligation to prepare safeguards instruments would remain in place and any expenses related to the works expected to cause involuntary resettlement would be deemed ineligible until the relevant safeguard instruments are in place. The Project is in compliance with the preparation of the safeguards instruments, Environmental And Social Impact Assessment (ESIA) and Environmental and Social Management Plan (ESMP), and potential Resettlement Action Plan (RAP). The approved ESIA has identified the need for an abbreviated RAP for one of the three flood protection works at the Licungo river basin, namely Lot No. 1 of the Nante Dike. The works on Nicoadala Dike and on the Lot No. 2 of the Nante Dike do not require RAPs. The World Bank MZ - Emergency Resilient Recovery Project (P156559) Currently the TORs for the RAP have been cleared and consultant contract amendment is under final process of clearance. Since the preparation and implementation of the RAP require additional processing time, the proposal for removal of the disbursement condition will allow to proceed with the implementation of those works that do not require RAP, given that in any case the Financing Agreement clearly states that: (i) The Recipient shall ensure, or cause to be ensured, that the Project is carried out in accordance with the Safeguard Instruments, including the guidelines, rules and procedures defined in said Safeguard Instruments; (ii) Whenever a RAP would be required on the basis of the RPF: (i) each such RAP shall be prepared in accordance with the requirements of the RPF, adopted and disclosed by the Recipient, and subject to prior approval by the Association; (ii) the Recipient shall refrain, and cause AIAS to refrain, from tendering any civil works contract during Project implementation unless and until such RAP has been prepared in accordance with the RPF, adopted, disclosed and implemented by the Recipient, and approved by the Association; and (iii) no works under the Project shall be commenced until: (A) all measures required to be taken under said RAP prior to the initiation of said works have been taken; (B) the Recipient has prepared and furnished to the Association a report in form and substance satisfactory to the Association, on the status of compliance with the requirements of said RAP; and (C) the Association has confirmed that said works may be commenced. Therefore, the removing the disbursement condition does not exempt the client to comply with the preparation, adoption, disclosure and implementation of the RAP. In addition, this situation, coupled with the reallocation of funds for the Immediate Response Mechanism to address the El Niño drought related emergency in November 2016, has prevented the Project to use the resources of Category (1) to finance the preparation of the ESIA and ESMP, which creates stress on the Category (2) that finances the operating costs under Part C.1. A close monitoring with the Safeguards Team has been in place to expedite the preparation of the RAP by the Client. The risk of non-compliance for preparation and implementation of a RAP is limited since the contract amendment for the social safeguards consultant is under process. Finally, on September 13, 2017 the National Meteorological Institute (INAM), through the Mozambique National Climate Prediction Forum, informed seasonal consensus forecasts for 2017/2018, indicating that moderate to high risk of flood occurrence is expected in almost all basins for the period January-March 2018. This prognosis is particularly alarming for the Licungo river basin, where the risk of flood occurrence is considered Moderate to High. Further delays in dyke repair works in Nante and Nicoadala exacerbates the exposure to floods of vulnerable population living downstream. III. DETAILED CHANGES