The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) REPORT NO.: RES34601 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ACCELERATING SOLAR WATER PUMPING VIA INNOVATIVE FINANCING APPROVED ON SEPTEMBER 7, 2017 TO THE UNITED REPUBLIC OF TANZANIA WATER GLOBAL PRACTICE AFRICA REGION Regional Vice President: Hafez M. H. Ghanem Country Director: Bella Bird Senior Global Practice Director: Jennifer J. Sara Practice Manager/Manager: Catherine Signe Tovey Task Team Leader: Kristoffer Welsien, Zaruhi Tokhmakhyan The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) ABBREVIATIONS AND ACRONYMS BoA Bank of Africa CD Country Director COWSO Community Owned Water Supply Organization GPOBA Global Partnership on Output-Based Aid OPCS Operations Policy and Country Services PDO Project Development Objective POM Project Operations Manual PVP Photovoltaic Pumping TIB Tanzania Investment Bank Limited The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) BASIC DATA Product Information Project ID Financing Instrument P161757 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 07-Sep-2017 Organizations Borrower Responsible Agency Ministry of Water and Irrigation,TIB Development Bank United Republic of Tanzania Limited Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 4.80 Total Financing 0.00 Financing Gap 0.00 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The Project Development Objective is to support sustainable access to water in selected rural communities of Tanzania. OPS_TABLE_PDO_CURRENTPDO The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Project was approved by Bank management in September 2017, followed by the signing of the Grant Agreement by the Country Director but the Ministry of Finance and Planning declined to countersign. The World Bank had initially approached the Tanzania Investment Bank Limited (TIB) proposing TIB as the Project implementing agency. TIB declined and Bank of Africa (BoA) was subsequently selected as the implementing agency. Upon receiving the signing package with Bank of Africa as the implementing agency, the Ministry of Finance and Planning advised that, to obtain a lower interest rate, the implementing Partner should be changed to the TIB Development Bank Limited. The effectiveness condition of the Grant Agreement stipulates that a subsidiary agreement between MoFP and TIB must be executed. The subsidiary agreement has not been signed to date; consequently, the Project is not yet effective. 2. Following guidance from the Government, the Project was redesigned to reflect the changes required by the Government of Tanzania and TIB. These changes include changing the implementing partner from BoA to TIB, the lowering of the interest rate, and an increase of the GPOBA subsidy from 50 percent to 60 percent. The TIB Development Bank Limited has approved the Project, and the revised Grant Agreement is ready for signing. To complete the process in the portal, OPCS advised the team to prepare an interim ISR and process a Level 2 restructuring. 3. The Project Commitment Paper was revised to reflect the changes and is attached to the Restructuring Paper. The Project Operations Manual (POM) has been amended and will be sent for the Bank’s approval. With the proposed changes, there is strong commitment by the Client to implement the Project. The objectives of the Project remain relevant and achievable. II. DESCRIPTION OF PROPOSED CHANGES 4. Implementing Partners: The Project design envisaged a partnership with a financial institution to provide blended finance to communities. According to the proposed new design, the implementing partner in the Project has changed from BOA, a commercial bank, to TIB, which is the Government of Tanzania’s development bank. TIB will act as a lender and as a Project implementing partner. The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) 5. Design: The design of the Project will largely remain unchanged. In the new scheme there are more favorable financial terms for the participating communities, i.e. 11 percent as compared to 17 percent, and the proposed GPOBA subsidy is slightly higher, i.e. 60 percent as compared to the original 50 percent. In addition, TIB did not require a risk guarantee for its lending as part of the Project, hence the Partial Risk Guarantee structure has been removed. The change in interest and GPOBA subsidy changed the number of targeted villages slightly, from 146 to 165 villages. 6. Rationale for the Proposed Changes: The rationale for the proposed changes is to accommodate the MoFP’s recommendation of switching the implementing partner to obtain a lower interest rate. The proposed implementing partner (TIB) requested for the GPOBA subsidy to be increased from 50 percent to 60 percent of the investments; the Project granted this request. 7. Detailed Changes: In response to the Borrower’s request, this restructuring paper seeks to amend the Grant Agreement to (i) change the implementing partner from Bank of Africa to Tanzania Investment Bank Limited throughout the document; (ii) specify the new lending terms (interest rate of 11 percent) by TIB to participating communities; (iii) increase the subsidy level by GPOBA to participating communities (increased from 50 to 60 percent); (iv) remove the risk guarantee instrument; and v) slightly change the number of targeted beneficiaries, villages (service providers), and the CO2 reduction due to the change in the interest rate and the subsidy. The Project Operation Manual has been amended to reflect these changes and there will be no changes to the PDO. 8. GPOBA donors are looking forward to the results of this innovative Project. Dutch Trust Fund has recently extended the closing date to allow implementation of this Project. The team looks forward to signing this Grant Agreement soonest to enable smooth implementation. The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Institutional Arrangements ✔ Implementation Schedule ✔ Other Change(s) ✔ Implementing Agency ✔ Project's Development Objectives ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Financial Management ✔ Procurement ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Number of other water service providers that the project is supporting Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) Value 0.00 0.00 165.00 Revised Date 29-Oct-2018 31-Dec-2020 Direct project beneficiaries Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 500000.00 Revised Date 29-Oct-2018 31-Dec-2020 Female beneficiaries Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 51.00 No Change Voume(mass) of COD pollution load reduction achieved under the project Unit of Measure: Tones/year Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 1000.00 Revised Date 29-Oct-2018 31-Dec-2020 Intermediate Indicators IO_IND_TABLE Number of COWSOs sensitized and trained Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 165.00 Revised Date 29-Oct-2018 29-May-2020 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications The changes of the interest rate and the subsidy slightly changed the Project Development Objective Indicators: 1. Number of service providers (villages) was amended to 165 2. Number of targeted beneficiaries was reduced to 500,000 3. The CO2 reduction was reduced to 1,000 tons The closing date has been extended to December 31, 2020 and the implementation schedule, including the Procurement Plan, has been updated accordingly. It is noted that the Project was initially processed in the Operational Portal with TIB as the implementing partner and, therefore, the implementing partner will not need to be changed in the World Bank Operational Portal.