The World Bank Jhelum and Tawi Flood Recovery Project (P154990) REPORT NO.: RES47401 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF JHELUM AND TAWI FLOOD RECOVERY PROJECT APPROVED ON JUNE 2, 2015 TO REPUBLIC OF INDIA URBAN, RESILIENCE AND LAND SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: John A. Roome Practice Manager/Manager: Abhas Kumar Jha Task Team Leader(s): Hemang D. Karelia, Deepak Singh The World Bank Jhelum and Tawi Flood Recovery Project (P154990) I. BASIC DATA Product Information Project ID Financing Instrument P154990 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 02-Jun-2015 30-Jun-2021 Organizations Borrower Responsible Agency Republic of India Project Implementing Entity Project Development Objective (PDO) Original PDO The project development objective is to support the recovery and increase disaster resilience in Project Areas, and increase thecapacity of the Project Implementing Entity to respond promptly and effectively to an eligible crisis or emergency. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-56950 02-Jun-2015 21-Jan-2016 19-Apr-2016 30-Jun-2021 250.00 79.68 170.32 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? Yes The World Bank Jhelum and Tawi Flood Recovery Project (P154990) Explanation This restructuring (closing date extension) is being processed on the basis of a waiver of the provision of Section III, Paragraph 50 of the Bank Directive for Investment Project Financing (IPF) that was granted by VP OPCS on June 27, 2021. This paragraph states that a Closing Date may be extended if the Project’s DOs remain achievable, the performance of the Borrower or Project Participant(s) remains satisfactory, and the Bank and the Borrower or Project Participant(s) agree on actions that will be undertaken by the Borrower or Project Participant(s) to complete the Project. Has the waiver(s) been endorsed or approved by Bank Management? Yes Explanation The waiver was concurred by SAR VP on June 21, 2021 and LEG VP on June 22, 2021, and OPSVP's clearance of was received on June 27, 2021. II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES Background: In response to the 2014 floods in the Jhelum and Tawi basin in northern India, the Project financed by an IDA Credit of $250 million was approved on June 2, 2015 with a closing date of June 30, 2020. The Project focuses on reconstruction and recovery of infrastructure and livelihoods; and strengthening disaster risk management (DRM) capacities of the State. The closing date was extended to June 30, 2021 and CERC was activated with $50 million reallocated to support COVID-19 response and boost health preparedness. Project status: After a slow start the performance of the Project has incrementally improved over the last two years. Currently, US$226 million (90 percent) of the Credit is committed through signed contracts and earmarked for implementation support. The total expected contracts awarded by June 30, 2021 are likely to reach US$240 million. Current disbursement stands at US$80 million (32 percent), of which US$57 million has been disbursed in FY21. This indicates substantial progress despite continued challenges and disruptions on account of COVID-19 in FY21. Under the CERC component, 62 contracts worth US$42 million have been awarded of which 37 contracts worth US$23.8 million have been completed, and disbursement of US$20.85 million has been reported up to Q4 of FY21. A few packages for the Emergency Operations Center (US$4.8 million) and specialized medical equipment and supplies under the CERC component (US$7.8 million) are expected to be awarded by June 30, 2020. Proposed changes in the Project Restructuring: In response to Government of Jammu and Kashmir’s (GoJK) request for 18 months extension, the Borrower, Ministry of Finance, Department of Economic Affairs (DEA), Government of India, has sent a request to Bank on June 17, 2021 for a two-phase extension. This phased approach includes an initial extension of 12 month and a subsequent extension till December 31, 2022 dependent upon the outcome of a joint performance review by DEA and the Bank. This joint review will be scheduled in the first week of June 2022 and would assess the progress of an Action Plan below that has been agreed between the Project Implementing Entity and the Bank: 1. Achieve disbursement of an additional US$12 million in FY21. (This has been achieved with IUFR of US$14 million submitted on June 21, 2021). The World Bank Jhelum and Tawi Flood Recovery Project (P154990) 2. Share, by July 15, 2021, an updated status of cumulative number and value of contracts awarded as of June 30, 2021; No new contracts to be procured and/or awarded thereafter for financing under the Credit. 3. Disbursement of: (a) US$15 million or higher in Q1-FY22; and (b) US$20 million or higher in Q2-FY22. 4. (a) GoJK and DEA to finalize an assessment by March 31, 2022 of the likely savings under the credit (the funds that would potentially remain unutilized by December 31, 2022) factoring in (i) the implementation progress, (ii) contract variations, and (iii) exchange rate variations; and (b) Submit a request through DEA for cancellation of the identified savings under the credit by April 15, 2022; 5. Physical completion of at least 60 percent of the awarded contracts under the Credit by May 31, 2022. This restructuring proposes two-phase extension: (i) an initial extension of the closing date by 12 months -- from June 30, 2021 to June 30, 2022; and (ii) subject to successful implementation of the Action Plan, a further extension of 6 months to December 31, 2022, to complete any of the civil works contracts that remain incomplete. Rationale and Justification for Extension: It was noted in the earlier request for extension of closing date that it was not possible to predict, until the normal pace of activities was restored in J&K, whether that extension would have been sufficient to complete all sub-projects. Normal pace of activities has not yet been fully restored in project area, and thus the Project was not able to return to Satisfactory status. However, as of now, the Project has made significant progress and has concluded majority of the procurement activities and has advanced implementation of civil works, consultancies, goods and supplies. It is evident that without the proposed additional extension(s) of the closing date, a large share of ongoing works would not be completed by the current closing date, and the PDO would not be achieved. If granted, the proposed extension(s) would allow further progress and enhance the possibility of the Project achieving Satisfactory status and achievement of its PDO. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-56950 Effective 30-Jun-2020 30-Jun-2021 30-Jun-2022 30-Oct-2022 The World Bank Jhelum and Tawi Flood Recovery Project (P154990)