The World Bank Clean Air and Sustainable Environment Project (P098151) REPORT NO.: RES34697 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF CLEAN AIR AND SUSTAINABLE ENVIRONMENT PROJECT APPROVED ON MAY 12, 2009 TO PEOPLE'S REPUBLIC OF BANGLADESH ENVIRONMENT & NATURAL RESOURCES SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Qimiao Fan Senior Global Practice Director: Karin Erika Kemper Practice Manager/Manager: Magda Lovei Task Team Leader: Harinath Sesha Appalarajugari, Shigeyuki Sakaki The World Bank Clean Air and Sustainable Environment Project (P098151) ABBREVIATIONS AND ACRONYMS AF Additional Financing BDT Bangladesh Taka CAMS Continuous Air Quality Monitoring Station CASE Clean Air and Sustainable Environment Project DNCC Dhaka North City Corporation DoE Department of Environment DSCC Dhaka South City Corporation DTCA Dhaka Transportation Co-ordination Authority ERD Economic Relations Division GoB Government of Bangladesh IA Implementing Agency IDA International Development Association IP Implementation Progress ISR Implementation Status Report MoEF Ministry of Environment and Forests PDO Project Development Objective PIU Project Implementation Unit The World Bank Clean Air and Sustainable Environment Project (P098151) BASIC DATA Product Information Project ID Financing Instrument P098151 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 12-May-2009 15-Dec-2018 Organizations Borrower Responsible Agency Department of Environment,Ministry of Environment People's Republic of Bangladesh and Forests,Dhaka South City Corporation Project Development Objective (PDO) Original PDO To improve air quality and safe mobility in Dhaka through the implementation of demonstration initiatives in urban transport and brick making OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-59240 13-Jan-2017 18-Apr-2017 29-May-2017 15-Dec-2018 35.00 15.63 19.93 IDA-45810 12-May-2009 27-May-2009 19-Aug-2009 15-Dec-2018 62.19 61.42 1.22 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Clean Air and Sustainable Environment Project (P098151) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The project was approved in May 2009 with an IDA credit of US$62.19 million to improve air quality and safe mobility in Dhaka through the implementation of demonstration initiatives in urban transport and brick making. The project consists of two components; the Environment Component which is implemented by the Department of Environment (DoE) aims at (i) strengthening the capacity of the Ministry of Environment and Forest and Department of Environment in air quality monitoring and (ii) demonstrating the effectiveness of new brick kiln technology to reduce air pollution emissions; and the Transport Component implemented by the Dhaka South City Corporation (DSCC)/ Dhaka North City Corporation (DNCC) and aims to support demonstration environmental investments in urban transport in Dhaka. The Ministry of Environment and Forests is the nodal ministry for the project. 2. A level 2 restructuring was approved in July 2013 which (i) revised the scope of some activities, (ii) refined and simplified the results framework to make it a more useful management tool, (iii) reallocated project funds, (iv) extended the closing date of the project to December 15, 2016, and (v) amended some terminologies and definitions to match Government institutional and economic framework. In January 2017, a second restructuring and an additional financing of US$35 million was approved. This restructuring (i) revised the results framework to reflect the higher results expected due to AF; and (ii) extended the closing date of the project from December 15, 2016 to December 15, 2018. The proposed restructuring will be the third restructuring in the life of the project with a cumulative extension of 51 months. The project has disbursed US$77.05 million so far at an overall disbursement ratio of 79.27ercent. B. Project Performance 3. The overall progress towards achievement of the PDO is satisfactory and the implementation progress is moderately satisfactory. The project has completed all activities under the original credit and all contracts under the additional financing are in the advanced stage of implementation. In terms of results, four of the five outcome indicators have been achieved. The pending outcome indicator, “vehicular traffic increased at selected intersections with operational traffic signals”, was added during the restructuring/additional financing approved in January 2017. It is envisaged that this indicator will achieve its target by the proposed new closing date. 4. The Environment Component has achieved the following: (i) established eleven Continuous Air Quality Monitoring Stations (CAMS) in eight cities and these stations are providing air quality data since 2015; (ii) implementing the contract for the establishment of additional five CAMS; (iii) completed piloting twelve low emission and energy efficient brick kilns and the performance of these new kilns has exceeded efficiency targets (>30%) and pollution reduction (>70%); (iv) in the final stages of completing the new office building of DOE and the auditorium; and (v) in the process of receiving laboratory equipment. Based on the above progress and delays in the establishment of additional CAMS and installation of laboratory equipment, the performance of this component is rated as ‘moderately satisfactory’. 5. The Transport Component has achieved the following: (i) completed, 12 km of the targeted 14 km of sidewalks; (ii) commissioned traffic signals through remote control systems at 22 of the targeted 85 intersections; (iii) in the final stages of completing road markings, traffic signs, bus stops; and (iv) in the advanced stage of implementing, demonstration pilot for better access to disabled people and ware house construction. In addition, awareness campaigns on traffic safety and a video clip to raise awareness on accessibility of people with disability has also been developed. Considering the above progress and delays in commissioning traffic signals and other activities the performance of transport component (DSCC/ DNCC) is rated ‘moderately satisfactory’. 6. The sub-component of the Transport component implemented by the Dhaka Transportation Co-ordination Authority (DTCA), completed all activities ‘satisfactorily’ in June 2017. 2 The World Bank Clean Air and Sustainable Environment Project (P098151) 7. The financial management performance of the project, in the last implementation status Report (ISR) of May 2018 was rated as ‘moderately unsatisfactory’, due to reporting issues in the Financial Management Reports and delays in the appointment of internal auditor by DoE. Both these issues were immediately addressed by DoE and the rating was upgraded as ‘satisfactory’ during the implementation support mission in June 2018. The upgraded rating will be recorded in the ISR planned to be submitted after current restructuring. There are no other fiduciary issues and overdue audit reports for the project. C. Rational for Restructuring 8. Through letter dated August 5, 2018, the Government of Bangladesh (GoB), requested the Bank for the extension of closing date of the project by three months, which was denied. Subsequently, up on receiving another request through letter dated September 24, 2018 and October 30, 2018, the rationale was re-examined in the light of the following factors. 9. The project has completed all activities envisaged under the parent credit (No.4581). However, certain activities initiated through additional financing such as installation of remote control traffic signals, continuous air quality monitoring stations, laboratory equipment, etc. are unlikely to be completed within the current closing date of December 15, 2018. These contracts involve supply and installation of equipment from abroad and are experiencing delays due to customs clearance processing, upcoming national elections and associated implementation challenges. The construction activities of transport component, DoE building and CAMS are also slowing down due to the national elections, disturbances around construction sites due to request for stoppage of sidewalks, footpath and traffic signal works to avoid public inconvenience, and general civil commotion. All these activities are essential for achieving respective intermediate result indicators and overall achievement of the PDO. 10.In view of the above factors (which are beyond the control of implementing agencies, contractors and suppliers) and critical natures of these activities, a short extension of about 3.5 months is proposed. In addition, cancellation of IDA savings accrued due to currency fluctuation and dropping certain studies / activities which are not critical for the achievement of PDO, is also proposed. II. DESCRIPTION OF PROPOSED CHANGES A. Extension of Closing Date 11.The restructuring proposes to further extend the project closing date by 3.5 months to March 31, 2019, to accommodate the delays in implementation due to the reasons explained in paragraph 9 above. B. Cancellations 12.The restructuring will involve cancellation of SDR4.375 million. This includes cancellation of SDR0.885 million from Credit No. 4581 and SDR3.490 million from additional financing Credit No.5924. The cancellations are proposed to account for the currency fluctuation and dropping certain studies/ activities, which are not critical for the achievement of PDO. Even though, the amount of cancellation requested by the government for the Credit No. 4581 is SDR1.02 million (US$1.41 million), the proposed amount of cancellation is restricted to the extent of undisbursed balance available under the credit, which is SDR0.885 million (US$1.22 million). The balance amount is already disbursed as designated account advance, which will be cancelled after project closure. 13.Changes to component costs and reallocation is being due to the above cancellation and changes to implementation schedule to account for the extension of the closing date. 14.The proposed cancellation and dropping of activities will not impact the achievement of PDO and the outcomes; and is based on the exchange of communication with the Government in August, request received on September 24 and October 30, 2018. 3 The World Bank Clean Air and Sustainable Environment Project (P098151) III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) 4 The World Bank Clean Air and Sustainable Environment Project (P098151) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Environment Component 1: Environment 33.80 Revised 29.57 (DOE) (DOE) Component 2A Transport Component 2A Transport (DCC) 58.70 Revised 56.67 (DCC) Component 2B Transport Component 2B Transport (DTCB) 7.00 No Change 7.00 (DTCB) TOTAL 99.50 93.24 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 15-Dec-2016, 15- IDA-45810 Effective 31-Dec-2014 31-Mar-2019 31-Jul-2019 Dec-2018 IDA-59240 Effective 15-Dec-2018 31-Mar-2019 31-Jul-2019 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' S REQUEST IDA-45810- Disburs XDR 42,191,720.00 885,350.00 31-Oct-2018 41,306,370.00 FOR 001 ing COUNTRY REASONS BORROWER' S REQUEST IDA-59240- Disburs XDR 25,500,000.00 3,494,000.00 31-Oct-2018 22,006,000.00 FOR 001 ing COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) 5 The World Bank Clean Air and Sustainable Environment Project (P098151) Current Proposed IDA-45810-001 | Currency: XDR iLap Category Sequence No: 1 PART A Current Expenditure Category: Goods , Wks , Serv- tr, sem , stud 9,906,720.00 8,964,631.04 9,308,370.00 100.00 100.00 iLap Category Sequence No: 1 PART B Current Expenditure Category: DISB - OPERATING COSTS 1,095,000.00 1,052,414.45 1,095,000.00 100.00 100.00 iLap Category Sequence No: 2 PRT B1 Current Expenditure Category: DISB - OPERATING COSTS 400,000.00 362,724.52 400,000.00 100.00 100.00 iLap Category Sequence No: 2 PRTB1A Current Expenditure Category: Goods , Wks , Serv- tr, sem , stud 26,250,000.00 24,590,636.11 25,963,000.00 100.00 100.00 iLap Category Sequence No: 3 PARTB2 Current Expenditure Category: DISB - OPERATING COSTS 135,000.00 117,754.11 135,000.00 100.00 100.00 iLap Category Sequence No: 3 PRTB2A Current Expenditure Category: Goods , Wks , Serv- tr, sem , stud 4,405,000.00 4,257,567.33 4,405,000.00 100.00 100.00 Total 42,191,720.00 39,345,727.56 41,306,370.00 IDA-59240-001 | Currency: XDR iLap Category Sequence No: 1 A Current Expenditure Category: Gds Wrks NCS CS Training 11,650,000.00 3,595,970.42 9,338,000.00 100.00 100.00 iLap Category Sequence No: 1 B Current Expenditure Category: IOC 750,000.00 233,439.99 750,000.00 100.00 100.00 6 The World Bank Clean Air and Sustainable Environment Project (P098151) iLap Category Sequence No: 2 A Current Expenditure Category: Gds Wrks NCS CS Training 12,930,000.00 4,651,647.11 11,748,000.00 100.00 100.00 iLap Category Sequence No: 2 B Current Expenditure Category: IOC 170,000.00 76,244.06 170,000.00 100.00 100.00 Total 25,500,000.00 8,557,301.58 22,006,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2010 4,530,901.54 4,891,982.53 2011 2,259,597.01 2,400,501.63 2012 7,482,281.96 7,838,637.09 2013 8,439,232.50 8,717,065.44 2014 12,487,987.00 13,161,171.28 2015 13,000,000.00 8,693,950.18 2016 9,000,000.00 7,595,305.86 2017 5,000,000.00 4,085,200.38 2018 0.00 11,208,942.68 2019 0.00 18,778,313.53 . Click here to enter text. 7