The World Bank Syrdarya Water Supply Project (P111760) REPORT NO.: RES26701 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SYRDARYA WATER SUPPLY PROJECT APPROVED ON MARCH 1, 2011 TO REPUBLIC OF UZBEKISTAN WATER EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Lilia Burunciuc Senior Global Practice Director: Guang Zhe Chen Practice Manager/Manager: Michael Haney Task Team Leader: David Malcolm Lord The World Bank Syrdarya Water Supply Project (P111760) I. BASIC DATA Product Information Project ID Financing Instrument P111760 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 01-Mar-2011 31-Dec-2017 Organizations Borrower Responsible Agency Uzkommunkhizmat,State Unitary Enterprise "Suvokova" Republic of Uzbekistan of Syrdarya Region Project Development Objective (PDO) Original PDO The Project development objective (PDO) is to improve the availability, quality and sustainability of public water supply services in selected districts of the Syrdarya region. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-48690 01-Mar-2011 16-Sep-2011 14-Jan-2012 31-Dec-2017 80.99 48.47 25.23 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Syrdarya Water Supply Project (P111760) Project Status 1. The project was approved by the Board on March 1, 2011 and became effective on January 14, 2012. The project closing date is December 31, 2017. The project has total IDA commitments of US$81 million equivalent for four components: (A) Improvement of Water Supply Infrastructure; (B) Institutional Strengthening and Capacity Building; (C) Feasibility Studies for Future Investments; and (D) Project Management. The PDO is "to improve the availability, quality and sustainability of public water supply services in selected districts of the Syrdarya region." 2. Progress towards achievement of the Project Development Objectives (PDO) is Moderately Satisfactory, a rating which reflects the Government’s request for extension of the project closing date. Implementation Progress is also rated Moderately Satisfactory, as result of substantially improved project performance over the last 12 months, attributable in part to focused intervention from the Government and the Bank through the implementation of a performance improvement action plan. 3. The disbursement rate for the project has increased to around 66 percent (US$48.5 million) of the IDA Credit 48690, driven largely by the progress of water supply infrastructure works under Component A. All key procurements have been completed and the credit amount is contractually committed. The progress of water supply civil works is on average around 70 percent complete. Out of ten works packages, three have been completed and a further five are scheduled for completion by end of December 2017, enabling water to be supplied to around 120,000 residents in Sardoba, Khavast, Akaltyn and Mirzaabad districts. 4. Two civil works contracts were adversely affected by protracted procurement and contract registration processes. Works under these contracts are still at an early stage of implementation and will not be completed by December 31, 2017. These infrastructure investments are critical to the achievement of the PDO, as they will enable the connection of further 160,000 residents in the project area. 5. Key activities under Component B are progressing well and will be substantially completed by the end of December, 2017. The State Unitary Enterprise of Syrdarya Region (Suvokova) is in the process of installing new automated billing and accounting systems. This activity along with complementary training and capacity building programs will contribute to the modernization and strengthening of the Suvokova and support the sustainability of water services in the region. Activities under Component C have been completed. 6. The responsible agency has overdue audit reports, due to unforeseen procurement issues which delayed contract award and commencement of auditing services. These procurement issues have now been resolved and the auditing services are in progress. Per the agency, the entity and project audit reports will be conveyed to the Bank by December 31, 2017. PMFM and WFAFO manager clearance has been obtained to proceed with restructuring notwithstanding overdue audits. Changes 7. The proposed Level 2 restructuring includes an extension of the closing date by 18-months, till June 30, 2019, and reallocation between disbursement categories. It will be the second restructuring under the project and the first extension to the closing date. The World Bank Syrdarya Water Supply Project (P111760) 8. The proposed extension will allow sufficient time for completion of remaining infrastructure works and commissioning of the new water supply system. Completing the two delayed civil works contracts is necessary for achievement of the PDO, enabling water to be supplied to a further 160,000 residents in the project area. 9. The requested reallocation of the IDA Credit is considered a minor mid-course adjustment, in-line with actual requirements of the project. The proposed reallocation of SDR 1 million from Category (2a) “Goods under Part A.2 (b) through (f) of the Project” to Category (1) “Works”, will cover a deficit incurred due the SDR/US$ exchange rate fluctuations, using project savings under Categor y (2) “Goods.” The amounts for Consultant services, training and operating costs under Category 3 remain unchanged. 10. Considering current levels of progress and proposed changes, the PDO is likely to be achieved, with some 280,000 residents in five districts of the Syrdarya region directly benefitting from the water supply investments. The PDO indicator target which relates to the institutional restructuring has already been achieved, through the creation of a regional utility (called State Unitary Enterprise – Suvokova), which under an aggregated service delivery model is responsible for water supply and sanitation across the Syrdarya region, including urban and rural areas. The targets for other PDO indicators which relate to improved utility performance (energy efficiency, metering and financial sustainability) and service delivery (water quality and water availability / consumption), are on-track to be reached within the revised implementation period. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-48690 Effective 31-Dec-2017 30-Jun-2019 30-Oct-2019 REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Current Actuals + Proposed Disbursement % Ln/Cr/TF Expenditure Allocation Committed Allocation (Type Total) Category Current Proposed IDA-48690- Works 44,101,774.15 26,135,770.07 45,101,774.15 70.84 70.84 001 Currency: The World Bank Syrdarya Water Supply Project (P111760) XDR Goods-Parts A.2(b) through 2,200,000.00 787,241.74 1,200,000.00 70.84 70.84 (f) Goods-other 150,000.00 24,648.35 150,000.00 83.33 83.33 Parts of the Pr. CS,TR and IOC 5,710,000.00 4,618,978.93 5,710,000.00 83.33 83.33 UNALLOCATED 0.00 0.00 0.00 Total 52,161,774.15 31,566,639.09 52,161,774.15