The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) REPORT NO.: RES40858 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ZHEJIANG RURAL WATER SUPPLY AND SANITATION PROJECT APPROVED ON SEPTEMBER 25, 2014 TO PEOPLE'S REPUBLIC OF CHINA WATER EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Regional Director: Benoit Bosquet Practice Manager/Manager: Sudipto Sarkar Task Team Leader(s): Gang Qin The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) ABBREVIATIONS AND ACRONYMS E&S Environmental and Social FM Financial Management IBRD International Bank for Reconstruction and Development IO Intermediate Objective LRWAC Longquan Rural Water Affairs Co., ltd MIS Management Information System MTR Mid-term Review O&M Operation and Maintenance PDO Project Development Objective PIU Project Implementation Unit WSS Water Supply and Sanitation WTR Water Treatment Plant WWTP Wastewater Treatment Plant ZPMO Zhejiang Project Management Office PMO Project Management Office The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) BASIC DATA Product Information Project ID Financing Instrument P133018 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 25-Sep-2014 31-Dec-2020 Organizations Borrower Responsible Agency People's Republic of China Zhejiang Provincial Economic Information Center Project Development Objective (PDO) Original PDO The proposed Project Development Objective (PDO) is to improve access to sustainable water supply and sanitation services in selected villages and towns in rural areas of Zhejiang Province. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-84240 25-Sep-2014 25-Nov-2014 02-Feb-2015 31-Dec-2020 200.00 164.25 35.75 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. Background. The IBRD loan of US$200 million for the Zhejiang Rural Water Supply & Sanitation Project (the Project) was approved by the Board on September 25, 2014 and became effective on February 2, 2015. The original closing date for the loan is December 31,2020. The Project Development Objective (PDO) is to improve access to sustainable water supply and sanitation services in selected villages and towns in rural areas of Zhejiang Province. The project comprises three components: (i) Improving Water Supply and Sanitation; (ii) Training and Capacity Building; and (iii) Project Management and Supervision. 2. Implementation Status and Achievements to Date. Progress towards achieving the PDO and the Implementation Progress are both rated Satisfactory. As of March 2020, two PDO indicators (the number of people in rural areas provided with access to improved water sources under the project, and the number of people provided with access to improved sanitation facilities under the project) have reached 78 percent and 87 percent of their targets, respectively. As of April 24, 2020, the loan has disbursed US$164.25 million (or 82.1 percent of the total loan proceeds). The PDO remains relevant to the government priorities and strategies. The PDO also remains relevant to the World Bank Group’s China Country Partnership Strategy for 2013-2016 (Report No. 67566-CN, dated October 11, 2012), and especially to the theme of supporting greener growth and promoting more inclusive development. 3. The status of implementation of each component is summarized below. Component 1: Improving Water Supply and Sanitation. This component includes construction and rehabilitation of water supply and wastewater collection and treatment facilities in the project counties. A framework approach was adopted in the project design to streamline project preparation and implementation, to yield earlier results, and to inform future investments. At the appraisal stage, four Wastewater Treatment Plants (WWTPs), three Water Treatment Plants (WTPs), and 61 village rural sewage treatment stations were identified and appraised. Together, these accounted for 53 percent of the total investment. Later during implementation, an additional four WWTPs, five WTPs, and 96 village rural sewage treatment stations were identified, appraised, and implemented. To date, out of the total eight WWTPs, five have been completed or are in trial operations, while the remaining three are expected to be commissioned in early July 2020. Out of the total eight WTPs, five have been completed, while the remaining three are expected to be commissioned in early July 2020. Out of the 157-village rural sewerage treatment stations, 139 have been built and put into operation, while the remainder have either nearly been completed or are currently being commissioned. In Longquan City, some of the sewer pipelines are still being constructed. In Tiantai County, the procurement for a smart water platform is being processed. Component 2: Training and Capacity Building. This component includes providing specific training and assistance to local water companies to improve their technical, financial, and overall management performance, including their technical capacity for the operation and maintenance of all water supply and sanitation (WSS) systems. To date, staff from the Zhejiang Project Management Office (ZPMO) and Project Implementation Units (PIUs) have participated in various trainings and workshops, totaling 2,814 person-days, which exceeds the end target value of 1,200 person- days. The training sessions covered a range of topics, including: procurement, financial management, project management, operation and maintenance (O&M), among others. Component 3: Project Management and Supervision. This component includes providing project management assistance to all relevant agencies at both the provincial and county levels. ZPMO, Fuyang District, Anji County, Tiantai The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) County, and Longquan City have recruited experienced project management consultants to assist in day-to-day project management. 4. Environmental and Social (E&S) Safeguards. The project is in compliance with Bank safeguard policies, and the respective E&S performance is rated Satisfactory. 5. Procurement. Project procurement has complied with Bank Procurement Guidelines and Consultant Guidelines. There have been no significant issues relating to either procurement or contract management. Performance is rated Satisfactory. 6. Financial Management (FM). The project is in compliance with Bank FM policies. There are neither outstanding audits nor any audit qualifications. Performance is rated Satisfactory. 7. Compliance with Covenants. The project is in compliance with legal covenants. B. Rationale for Restructuring 8. In order for the project to complete all of the planned works and to fully meet the development objectives, and respond to the context of Covid-19 and an institutional reform in Longquan City, it is proposed that the project include the following changes during the restructuring: (a) Extending the Loan Closing Date from December 31, 2020 to June 30, 2021 9. The outbreak of Covid-19 stopped almost all of the project’s construction activities during the period from end of January to March of 2020. In April 2020, site construction gradually resumed, although at a slower pace because the mobilization of construction workers and equipment were not yet fully back to normal. In particular, in Longquan City, there are a number of sewer network construction contracts that are still ongoing. In Tiantai county, the procurement of a smart water platform is being processed, and due to the situation with Covid-19, orderly completion of these contracts by the end of 2020 (as originally planned) will not be possible. Achievement of PDO and intermediate outcome indicators would be also at risk. Completion of these remaining activities will ensure that households will be connected to the WWTPs in Longquan City and water supply and sanitation service being provided to the customers in Tiantai County will be improved. Therefore, PDO will be fully achieved and the Bank loan will be fully disbursed. 10. For these reasons and having re-assessed the overall implementation progress and outstanding works, the proposal is to extend the closing date of the loan by six months so that all project works can be fully and properly completed. This will be the first extension of closing date of this project. (b) Changing Project Implementation Unit (PIU) in Longquan City 11. In late 2019, Longquan City initiated institutional reforms that established a professional water company, namely Longquan Rural Water Affairs Co. LTD (LRWAC), to be responsible for construction management, operations, and maintenance of water supply and sanitation facilities in the rural areas of the city. Under these reforms, Longquan City will transfer all of the staff, assets, debts, and roles and responsibilities of the original/current project implementation unit (PIU) (i.e. Longquan Rural Water Supply Station), to the newly established LRWAC. The original PIU arrangement was with Longquan Rural Water Supply Station, which is a government organization affiliated with the Longquan Water Resource Bureau. Therefore, changing the identity of the PIU from a semi-governmental institution to a professional water company is more in line with best international and domestic practices, and it is expected that these institutional changes will also help to improve the efficiency of project implementation and WSS service delivery during the remaining period of the project. The Bank team has assessed that LRWAC has the capacity The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) of construction management, operation and maintenance and therefore is capable of implementing the project. It is also assessed that this overall institutional transfer will not cause any implementation delays in the short term, and that after the reform, the institutional arrangement of Longquan City for rural water supply and sanitation will be the same as those for the other project counties (i.e. under operations by a professional water company). (c) Revision of the Results Framework 12. According to the framework approach, at the time of project appraisal, project indicators and targets were defined and set up to the year 2017. In November 2017, a project mid-term review was initiated, and the results framework was revised based on the findings and suggestions of the MTR and documented in the subsequent ISR (seq No.8, Archived on 18-June-2018). Since early 2018 and until now, there have been some changes to the scope of the newly added subprojects, and some of the results indicators and targets need to be revised accordingly. The results framework also needs to be adjusted to match the proposed loan extension date and to reflect the updated scope of subprojects. (d) Changing Cost of Components 13. The Project cost has been revised based on the actual costs to date and projections of the remaining investments until the loan is closed. At appraisal, under the framework approach, the project cost was estimated at CNY2.46 billion (US$400 million1 at an exchange rate of US$1 = CNY6.1581). At present, the revised total project cost is CNY1.97 billion (US$303.57 million at an exchange rate of US$1 = CNY6.5). 14. The reduction in the overall project cost is attributed to savings from competitive bidding during implementation and adjustment of the project scope after project MTR. Because of the loan savings and adjustments to component costs, the total amount of counterpart funding has also been adjusted from US$200 million to US$103.57 million in order to ensure that the US$200 million IBRD loan is fully utilized. (e) Changing of Disbursement Estimates 15. Given the loan closing date will be extended by six months from December 31, 2020 to June 30, 2021, the disbursements estimate needs to be adjusted accordingly to reflect this change. Risk Assessment 16. The overall risk of the project was rated substantial at appraisal stage. In the ISR of November 26, 2015, it was downgraded to Moderate given that risks associated with project management capacity, large number of scattered sub-projects over a wide geographical area, financial sustainability and local counterpart funding were substantially mitigated and overall implementation progress was good. This moderate risk rating was reviewed at project MTR in November 2017 and maintained through to the last ISR of March 2020, in which the impact of Covid-19 was assessed. Since then, the impact of Covid-19 to the project has not deteriorated further so that a moderate risk rating will be maintained. II. DESCRIPTION OF PROPOSED CHANGES 1 In the PAD, the total cost of US$400 million is presented as sum of: 1) cost of Component 1 (US$355.88 million), Component 2 (US$2.5 million) and Component 3 (US$3.5 million), totaling US$361.87 million; 2) physical and price contingencies (US$35.6 million); 3) front end fee (US$0.5 million), and 4) interest during construction (US$2.03 million). The revised cost of each component includes all these costs. The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) 17. The proposed restructuring requests: (a) extending the loan closing date for six months; (b) changing the project implementation unit; (b) revision of the results framework, and (d) adjusting the project cost. The first two changes will require an amendment to the loan agreement. (a) Extending the Loan Closing Date (from December 31, 2020 to June 30, 2021) 18. As elaborated above, the extension of project period for six months from December 31, 2020 to June 30, 2021 is proposed in order to complete the remaining works, and in direct response to the disruptions caused by the unforeseen Covid-19 outbreak and, finally, to achieve the PDO. The Implementation Plan has been updated and is included in Annex 1 and the project contract implementation status with next step planning is included in Annex 2 to this restructuring paper. The Bank received a letter from the Ministry of Finance on April 26, 2020 requesting a six- month loan closing date extension. (b) Changing Project Implementation Unit in Longquan City 19. Consistent with the institutional reforms mentioned in Section I-B, the PIU in Longquan City is proposed to be changed from Longquan Rural Water Supply Station to a newly established professional water company, called the Longquan Rural Water Affairs Co., LTD. This change will improve the O&M and service delivery of all of the rural water supply schemes in Longquan City. 20. After project restructuring is approved, Longquan City will enter the same subsidiary loan agreement with LRWAC as it did with Longquan Rural Water Supply Station after project effectiveness. Longquan City is also committed to support LRWAC to comply with project’s legal covenants on financial viability and project sustainability. The task team will supervise compliances through regular implementation support missions. Longquan City and LRWAC are committed to comply with legal obligations for the PIUs in the Project Agreement. Accordingly, apart from revising Appendix 2 of the Loan Agreement to include the new PIU, there is no need to amend the Project Agreement. (c) Revision of the Results Framework 21. As mentioned above, to reflect changes of the subproject scopes after project MTR, a revised result framework is proposed, which includes revisions of the targets as well as to adjust the end date of all results indicators to reflect the proposed new closing date, as detailed in the table below. Table 1: Revisions of Results Indicators Revised Indicator Name Description Target PO-1 Number of people in End target at project MTR is 400,000. The increase in the end rural areas provided with target is because water treatment plants in Tiantai County and 450,000 access to improved water Longquan City served more population than estimated at project sources under the project MTR. End target at project MTR is 700,000. It is revised to 630,000 PO-2 People provided with through this restructuring. The reduction in the end target is because, at detail design stage, the number of households access to improved sanitation 630,000 connected to the sewer systems were adjusted to fit local facilities under the project geographical conditions to make sure the investments are more cost-effective. In Fuyang City, some villages located alongside The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) Fuchunjiang River, supposed to be connected to the sewer system, were taken out of the project scope as the land use master plan for the areas was revised by the government. End targets at project MTR is 45,000. At project appraisal it only includes the piped household water connection newly constructed under the project. Actually, the project also benefits many existing piped water connections whose water source are IO-1.1 Piped household water shifted from unreliable ones to the safe and reliable water connections that are sources financed by the Project. Therefore, through this benefiting from rehabilitation 130,000 restructuring, this amount of connection is included in this IO works undertaken by the indicator, the end target is increased accordingly. project In the last ISR of March 2020, the Actual (current) number is 174,444. Zhejiang PMO confirmed that this is a typo in its report to the Bank; it should be 17,444. End target at project MTR is 95,000. It is revised to 85,000 through this restructuring. The reduction in the end target is because, at detail design stage, the number of households connected to the sewer systems were adjusted to fit local geographical conditions to make sure the investments are more IO-1.2 New household sewer cost-effective. In Fuyang City, some villages located alongside connections constructed 85,000 Fuchunjiang River, supposed to be connected to the sewer system, under the project were taken out of the project scope as the land use master plan for the areas was revised by the government. In the last ISR of March 2020, the Actual (current) number is 87,794. It should be 60,000. Zhejiang PMO advised that some household connections are miscounted in its report to the Bank. The end target at MTR is 4,325. The BOD load reduction is calculated as below BOD load reduction = volume of wastewater treated x (inflow BOD concentration – outflow BOD concentration) After MTR in November 2017, it was found that, when BOD load reduction was calculated, the volume of wastewater treated was IO-1.3 Volume (mass) of BOD determined as 100% of installed capacity. This is not correct. The pollution loads removed by 2,796 t/a scale of the WWTPs under the project are designed that, at early the treatment plants under stage of operation (or at project closing), the volume of the project wastewater treated only reaches its 70% of installed capacity, enabling WWTPs have the capacity to meet growing demands in the future. Therefore, this calculation error should be corrected through this restructuring. Secondly, the inflow BOD concentration in the WWTPs are found lower than what designer estimated in the technical design. This phenomenon is recently found being very common in East Asia, The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) mainly attributed to local light diet structure, sewer leakage and storm and ground water infiltration, etc. Thirdly, the large number of household septic tanks installed in Longquan City just a few months before project closing will substantially reduce BOD load in the sewer system as most of the fecal substance will be settled in the newly-installed septic tanks, therefore the inflow BOD concentration of WWTPs at this particular stage will be lower than normal level. Taking all these factors into account, through this restructuring, the end targets of BOD load reductions are reduced to 2,796. In the last ISR of March 2020, the end target is 4,049. This is an added-up error; it should be 4,325. End target at project MTR is 3,984. In the last ISR of March 2020, the Actual (current) number is 2,675. Zhejiang PMO confirmed - Fuyang WWTP (Phase 4) 2,500 t/a that this is a calculation error in the report sent to the Bank; the real BOD load reduction for 2019 should be 2,500. - Anren WWTP 15 t/a End target at project MTR is 33. - Badu WWTP 11 t/a End target at project MTR is 23 - Xiaomei WWTP 4 t/a End target at project MTR is 9 - Chatian WWTP 4 t/a End target at project MTR is 9 - Lanju WWTP 4 t/a End target at project MTR is 9 - Jinxi WWTP 3 t/a End target at project MTR is 8 This indicator has no change since MTR (in the ISRs it was rounded up as 250). Apart from receiving domestic wastewater, Meixi WWTP also receives industrial wastewater from nearby - Meixi WWTP 255 t/a industrial parks. Its inflow BOD concentration is higher than the other WWTPs. It is assessed that current end target is reasonable. IO-1.4 Ratio of production cost of water supply per cubic meter over the tariff charge per cubic meter - Anji Guoyuan Water Less than 1 No change to the end target. Company - Fuyang Water Company Less than 1 No change to the end target. - Tiantai Water Company Less than 1 No change to the end target. - Longquan Water Company Less than 1 No change to the end target. - Longquan Rural Water Less than 1 No change to the end target. Supply Station This is a newly added indicator to measure financial - Longquan Rural Water Less than 1 sustainability of water supply of the new PIU, in line with other Affairs Co., ltd PIUs. IO-2.1. Number of staff 2,800 End target at project MTR is 1,200 (in the last ISR end target is training days in project person-day 570, this is the end target for 2017 in the PAD. It should be The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) financed training and TA updated to 1,200 along with other indicators after MTR). The activities increase in the end target is attributed to the additional training activities conducted to enhance the O&M capacity. End target at appraisal is 5 and maintained through to project IO-2.2. Number of O&M MTR. Each of five PIUs needs to prepare its own O&M plan. The management plans prepared 6 new PIU also needs to prepare its O&M plan after restructuring and implemented is approved. Therefore, end target is revised from 5 to 6. The original intention of this indicator was to develop a simplified, project-specific MIS. The development of the simplified MIS was achieved by fully utilizing client’s counterpart fund, and the MIS has been used since the time after the project became effective. Subsequently however, Zhejiang Provincial IO-3.1 Development and Information Center, to which Zhejiang PMO is affiliated, implementation of a simplified developed a separate and more comprehensive MIS. Therefore, management information Deleted the simplified project MIS was merged into the Information system in the ZPMO for daily Center’s comprehensive MIS and is no longer needed as a stand- project management alone system. The new MIS provides all of the data collection and reporting functionality as the original simplified project MIS and fully satisfies the project indicator tracking and reporting requirements of the Bank. The new MIS is now being effectively used by ZPMO for day-to-day project management. Note: in the case of no actual data is available, the female beneficiaries are determined as 50% of total at project appraisal based on results of social survey. This percentage will be maintained and applied to the revised results framework. 22. The Results Framework is included in the Operations Manual which has been incorporated by reference in the Loan Agreement and the Project Agreement. Accordingly, an amendment to the Loan Agreement or the Project Agreement is not required, but the Operations Manual will be updated after the project restructuring to reflect the revised results framework. 23. Components and Cost. The Project cost has been revised based on the actual costs to date and projections of the remaining investments until the loan is closed. At appraisal, under the framework approach, the project cost was estimated at CNY2.46 billion (US$400 million at an exchange rate of US$1 = CNY6.1581). At present, the revised total project cost is CNY1.97 billion (US$303.57 million) at an exchange rate of US$1 = CNY6.5. 24. The reduction in the overall project cost is attributed to savings from competitive bidding during implementation as well as adjustment of scope of the subprojects identified during implementation following framework approach. As a result, US$200 million IBRD loan is being fully utilized while the amount of counterpart fund needed will be reduced from US$200 million to US$103.57 million. 25. Annex 2 outlines that there are 6 works contracts under construction in Longquan City and 1 goods contract under procurement in Tiantai County. The project counties confirm that the counterpart funds allocation for these contracts are adequate. 26. O&M and financial sustainability of the investments. In the project design, all the project counties need to sign subsidiary loan agreements with PIUs (professional water companies at county level), outlining PIUs’ roles and responsibilities to operate and maintain water supply and sanitation assets invested under the project. The project’s legal covenant also ensures the project counties have the obligation to provide subsidy to fulfill the gap between tariff revenue and O&M cost. The implementation support missions confirmed that the legal covenants are complied with, The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) the level of O&M are satisfactory, and the project counties have the financial capacity and are committed to continuously provide adequate subsidies to the PIUs beyond the loan is closed. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Institutional Arrangements ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Improving Water Supply and Improving Water Supply and 355.88 Revised 301.07 Sanitation Sanitation Training and Capacity Building 2.50 Revised Training and Capacity Building 1.00 Project Management and Project Management and 3.50 Revised 1.50 Supervision Supervision TOTAL 361.88 303.57 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-84240 Effective 31-Dec-2020 30-Jun-2021 30-Oct-2021 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 800,000.00 0.00 2016 11,200,000.00 20,000,000.00 2017 27,000,000.00 21,364,890.19 2018 41,000,000.00 32,941,834.41 2019 40,000,000.00 46,052,492.41 2020 45,000,000.00 43,391,557.92 2021 35,000,000.00 21,249,225.07 2022 0.00 15,000,000.00 The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) . The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) . Results framework COUNTRY: China Zhejiang Rural Water Supply and Sanitation Project Project Development Objectives(s) The proposed Project Development Objective (PDO) is to improve access to sustainable water supply and sanitation services in selected villages and towns in rural areas of Zhejiang Province. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 To improve access to sustainable water supply and sanitation services in selected villages and towns Number of people in rural areas provided with access to 0.00 53,375.00 93,304.00 312,078.00 400,000.00 450,000.00 Improved Water Sources under the project (Number) Rationale: Action: This indicator has been End target at project MTR is 400,000. The increase in the end target is because water treatment plants in Tiantai County and Longquan City served more Revised population than estimated at project MTR. Female population 0.00 27,105.00 47,330.00 156,039.00 200,000.00 225,000.00 (Number) Action: This indicator has been Revised People provided with access to ‘improved sanitation facilities” 0.00 185,576.00 479,009.00 611,160.00 615,000.00 630,000.00 under the proj. (CRI, Number) The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Rationale: End target at project MTR is 700,000. It is revised to 630,000 through this restructuring. The reduction in the end target is because, at detail design stage, the Action: This indicator has been number of households connected to the sewer systems were adjusted to fit local geographical conditions to make sure the investments are more cost- Revised effective. In Fuyang City, some villages located alongside Fuchunjiang River, supposed to be connected to the sewer system, were taken out of the project scope as the land use master plan for the areas was revised by the government. People provided with access to "improved sanitation 0.00 185,576.00 479,009.00 611,160.00 615,000.00 630,000.00 facilities" - rural (Number) Rationale: End target at project MTR is 700,000. It is revised to 630,000 through this restructuring. The reduction in the end target is because, at detail design stage, the Action: This indicator has number of households connected to the sewer systems were adjusted to fit local geographical conditions to make sure the investments are more cost- been Revised effective. In Fuyang City, some villages located alongside Fuchunjiang River, supposed to be connected to the sewer system, were taken out of the project scope as the land use master plan for the areas was revised by the government. Female population 0.00 93,692.00 236,075.00 305,580.00 307,500.00 315,000.00 (Number) Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Improving Water Supply and Sanitation The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Piped household water connections that are benefiting from rehabilitation works 0.00 5,113.00 9,283.00 17,444.00 100,000.00 130,000.00 undertaken by the project (Number) Rationale: End targets at project MTR is 45,000. At project appraisal it only includes the piped household water connection newly constructed under the project. Actually, the project also benefits many existing piped water connections whose water source are shifted from unreliable ones to the safe and reliable water Action: This indicator has been sources financed by the Project. Therefore, through this restructuring, this amount of connection is included in this IO indicator, the end target is increased Revised accordingly. In the last ISR of March 2020, the Actual (current) number is 174,444. Zhejiang PMO confirmed that this is a typo in its report to the Bank; it should be 17,444. New household sewer connections constructed under 0.00 13,630.00 47,463.00 60,000.00 75,000.00 85,000.00 the project (Number) Rationale: End target at project MTR is 95,000. It is revised to 85,000 through this restructuring. The reduction in the end target is because, at detail design stage, the number of households connected to the sewer systems were adjusted to fit local geographical conditions to make sure the investments are more cost- Action: This indicator has been effective. In Fuyang City, some villages located alongside Fuchunjiang River, supposed to be connected to the sewer system, were taken out of the project Revised scope as the land use master plan for the areas was revised by the government. In the last ISR of March 2020, the Actual (current) number is 87,794. It should be 60,000. Zhejiang PMO advised that some household connections are miscounted in its report to the Bank. Volume(mass) of BOD pollution load removed by treatment 0.00 534.00 2,212.00 2,261.90 2,777.00 2,796.00 plant under the project (Tones/year) The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Rationale: The end target at MTR is 4,325. The BOD load reduction is calculated as below BOD load reduction = volume of wastewater treated x (inflow BOD concentration – outflow BOD concentration) After MTR in November 2017, it was found that, when BOD load reduction was calculated, the volume of wastewater treated was determined as 100% of installed capacity. This is not correct. The scale of the WWTPs under the project are designed that, at early stage of operation (or at project closing), the volume of wastewater treated only reaches its 70% of installed capacity, enabling WWTPs have the capacity to meet growing demands in the future. Therefore, this calculation error should be corrected through this restructuring. Action: This indicator has been Secondly, the inflow BOD concentration in the WWTPs are found lower than what designer estimated in the technical design. This phenomenon is recently Revised found being very common in East Asia, mainly attributed to local light diet structure, sewer leakage and storm and ground water infiltration, etc. Thirdly, the large number of household septic tanks installed in Longquan City just a few months before project closing will substantially reduce BOD load in the sewer system as most of the fecal substance will be settled in the newly-installed septic tanks, therefore the inflow BOD concentration of WWTPs at this particular stage will be lower than normal level. Taking all these factors into account, through this restructuring, the end targets of BOD load reductions are reduced to 2,796. In the last ISR of March 2020, the end target is 4,049. This is an added-up error; it should be 4,325. Fuyang WWTP (Phase 4) 0.00 534.00 2,000.00 2,000.00 2,500.00 2,500.00 (Tones/year) Rationale: Action: This indicator has End target at project MTR is 3,984. In the last ISR of March 2020, the Actual (current) number is 2,675. Zhejiang PMO confirmed that this is a calculation been Revised error in the report sent to the Bank; the real BOD load reduction for 2019 should be 2,500. Anren WWTP (Tones/year) 0.00 0.00 0.00 6.90 8.00 15.00 The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Rationale: Action: This indicator has End target at project MTR is 33. been Revised Badu WWTP (Tones/year) 0.00 0.00 0.00 0.00 5.00 11.00 Rationale: Action: This indicator has End target at project MTR is 23. been Revised Xiaomei WWTP 0.00 0.00 0.00 0.00 1.00 4.00 (Tones/year) Rationale: Action: This indicator has End target at project MTR is 9. been Revised Chatian WWTP (Tones/year) 0.00 0.00 0.00 0.00 1.00 4.00 Rationale: Action: This indicator has End target at project MTR is 9. been Revised Lanju WWTP (Tones/year) 0.00 0.00 0.00 0.00 1.00 4.00 Rationale: Action: This indicator has End target at project MTR is 9. been Revised Jinxi WWTP (Tones/year) 0.00 0.00 0.00 0.00 1.00 3.00 The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Rationale: Action: This indicator has End target at project MTR is 8. been Revised Meixi WWTP (Tones/year) 0.00 0.00 212.00 255.00 255.00 255.00 Rationale: This indicator has no change since MTR (in the ISRs it was rounded up as 250). Apart from receiving domestic wastewater, Meixi WWTP also receives Action: This indicator has industrial wastewater from nearby industrial parks. Its inflow BOD concentration is higher than the other WWTPs. It is assessed that current end target is been Revised reasonable. Ratio of production cost of water supply per cubic meter over the tariff charge per cubic NA less than 1 less than 1 less than 1 less than 1 less than 1 meter (Anji Guoyuan Water Company) (Text) Rationale: Action: This indicator has been No change to the end target. Revised Ratio of production cost of water supply per cubic meter over the tariff charge per cubic Less than 1 less than 1 less than 1 less than 1 less than 1 Less than 1 meter (Fuyang Water Company) (Text) Rationale: Action: This indicator has been No change to the end target. Revised The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Ratio of production cost of water supply per cubic meter over the tariff charge per cubic less than 1 less than 1 less than 1 less than 1 less than 1 less than 1 meter (Tiantai Water Company) (Text) Rationale: Action: This indicator has been No change to the end target. Revised Ratio of production cost of water supply per cubic meter over the tariff charge per cubic less than 1 less than 1 less than 1 less than 1 less than 1 less than 1 meter (Longquan Water Company) (Text) Rationale: Action: This indicator has been No change to the end target. Revised Ratio of production cost of water supply per cubic meter over the tariff charge per cubic less than 1 less than 1 less than 1 less than 1 less than 1 less than 1 meter (Longquan Rural Water Supply Station) (Text) Rationale: Action: This indicator has been No change to the end target. Revised Ratio of production cost of water supply per cubic meter NA NA NA NA less than 1 less than 1 over the tariff charge per cubic The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 meter (Longquan Rural Water Affairs Co., ltd)) (Text) Rationale: Action: This indicator is New This is a newly added indicator to measure financial sustainability of water supply of the new PIU, in line with other PIUs. Training and Capacity Building Number of staff training days in project financed training and 0.00 1,575.00 2,264.00 2,814.00 2,800.00 2,800.00 TA activities (Number) Rationale: Action: This indicator has been End target at project MTR is 1,200 (in the last ISR end target is 570, this is the end target for 2017 in the PAD. It should be updated to 1,200 along with other Revised indicators after MTR). The increase in the end target is attributed to the additional training activities conducted to enhance the O&M capacity. Project Management and Supervision Number of O&M management plans prepared and 0.00 5.00 5.00 5.00 6.00 6.00 implemented (Number) Rationale: Action: This indicator has been End target at appraisal is 5 and maintained through to project MTR. Each of five PIUs needs to prepare its own O&M plan. The new PIU also needs to prepare Revised its O&M plan after restructuring is approved. Therefore, end target is revised from 5 to 6. Development and implementation of a simplified management information None Completed system in the ZPMO for daily project management (Text) The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Rationale: The original intention of this indicator was to develop a simplified, project-specific MIS. The development of the simplified MIS was achieved by fully utilizing client’s counterpart fund, and the MIS has been used since the time after the project became effective. Subsequently however, Zhejiang Provincial Action: This indicator has been Information Center, to which Zhejiang PMO is affiliated, developed a separate and more comprehensive MIS. Therefore, the simplified project MIS was Marked for Deletion merged into the Information Center’s comprehensive MIS and is no longer needed as a stand-alone system. The new MIS provides all of the data collection and reporting functionality as the original simplified project MIS and fully satisfies the project indicator tracking and reporting requirements of the Bank. The new MIS is now being effectively used by ZPMO for day-to-day project management. IO Table SPACE The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) Annex 1: Implementation Plan Components Actions Responsibility Timeline Component 1: Longquan City enter into the same subsidiary loan Longquan City End June 2020 Improving agreement with LRWAC after this restructuring is Government water supply approved and sanitation Civil work and equipment installation completed for PIUs June 2020 all WTPs and WWTPs. Longquan to complete all on-going sewer network PIUs March 2021 contracts Tiantai to complete smart water platform PIUs March 2021 Component 2: Technical trainings ZPMO and PIUs June 2021 Training and capacity building Component 3: Project results and impacts monitoring plan ZPMO and PIUs June 2021 Project implementation management Project management consultancy service ZPMO and PIUs June 2021 and supervision Compliance Longquan City provides adequate subsidy to cover Project Counties July 2020 with the Legal the different of the O&M cost and tariff revenue of covenant on LRWAC for rural water supply and sanitation. Financial and Operational Sustainability Upgrading of Zhejiang PMO and PIUs update the operation ZPMO and PIUs July 2020 the manual to reflect the revision of the results Operations framework through this restructuring Manual ICR Data collection and draft client ICR prepared ZPMO and PIUs June 2021 Preparation The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) Annex 2: Progress of Ongoing Contracts Plan for ongoing Contracts to Contract Contract Work works be Contract Title Contract Description Value No. started by completed (CNY) by 63% wastewater Longquan City Wastewater household pipelines 9th batch LQDV9C connection in Anren 12,930,000 12/18/2018 completed; 44% 03/31/2021 wastewater Town septic tanks treatment completed 87% wastewater Longquan City Wastewater household pipelines 10th batch LQDV10C connection in Badu 11,700,000 12/04/2018 completed; 61% 03/31/2021 wastewater Town septic tanks treatment completed Xiaomei WWTP plan to be commissioned by 07/15/2020; Longquan City One WTP and two Chatian WWTP Xiaomei and WWTP civil works; LQXC1C 47,279,500 11/22/2018 plan to be 03/31/2021 Chatian Equipment installation; commissioned by County WSS Wastewater pipelines 07/15/2020; WTP plan to be commissioned by 06/30/2020 WWTP plan to be Lanju WTP and WWTP commissioned by Longquan City civil works; Equipment 06/30/2020; WTP LQLI1C Lanju Village 34,582,300 03/20/2019 03/31/2021 installation; plan to be WSS Wastewater pipelines commissioned by 07/15/2020; WWTP plan to be Badu WTP and WWTP commissioned by Longquan City civil works; Equipment 07/15/2020; WTP LQBD2C Badu County 20,660,000 10/27/2018 03/31/2021 installation; plan to be WSS Wastewater pipelines commissioned by 07/15/2020; Jinxi WWTP; water WWTP is in trial Longquan City supply and wastewater operation; 66.5% LQJX1C Jinxi County 21,303,100 03/28/2018 03/31/2021 pipelines and septic tanks WSS household connections completed The World Bank Zhejiang Rural Water Supply and Sanitation Project (P133018) Equipment supply to Procurement is Smart Water establish smart water being processed. TTXJ-6 14,000,000 03/31/2021 03/31/2021 Platform platform for Tiantai Water Company