Document of The World Bank FOR OFFICIAL USE ONLY Report No: 66020-AM RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MUNICIPAL WATER AND WASTEWATER PROJECT CREDIT (3893-AM) BOARD APPROVAL: MAY 4, 2004 AND ADDITIONAL FINANCING FOR MUNICIPAL WATER AND WASTEWATER PROJECT CREDIT (4514-AM) BOARD APPROVAL: OCTOBER 30, 2008 TO THE REPUBLIC OF ARMENIA DECEMBER 14, 2011 ABBREVIATIONS AND ACRONYMS AWSC Armenia Water and Sewerage Company IDA International Development Association ISDS Integrated Safeguard Datasheet SCWE State Committee of Water Economy Regional Vice President: Philippe H. Le Houerou (ECAVP) Country Director: Asad Alam (ECCU3) Sector Manager: Stephen George Karam (ECSS6) Sector Director: Laszlo Lovei (ECSSD) Task Team Leader: Zaruhi Tokhmakhian (ECSS6) ARMENIA MUNICIPAL WATER AND WASTEWATER PROJECT (CREDIT NO. 3893-AM) ADDITIONAL FINANCING FOR MUNICIPAL WATER AND WASTEWATER (CREDIT NO. 4514-AM) Table of Contents A. SUMMARY ....................................................................................................................... 1 B. STATUS OF THE PROJECTS ....................................................................................... 1 C. PROPOSED CHANGES .................................................................................................. 2 ANNEX 1: REALLOCATION OF PROCEEDS UNDER THE ORIGINAL MUNICIPAL WATER AND WASTEWATER PROJECT ............................ 3 ANNEX 2: REALLOCATION OF PROCEEDS UNDER THE ADDITIONAL FINANCING FOR MUNICIPAL WATER AND WASTEWATER PROJECT............................................................................................................. 4 ARMENIA MUNICIPAL WATER AND WASTEWATER PROJECT (P063398) (CREDIT NO.: 3893-AM) ADDITIONAL FINANCING FOR MUNICIPAL WATER AND WASTEWATER PROJECT (P107614) (CREDIT NO.: 4514-AM) RESTRUCTURING PAPER A. Summary 1. This restructuring paper (1) extends the closing date of Armenia Additional Financing for Municipal Water and Wastewater Project by two months, from December 31, 2011 to February 28, 2012; (2) reallocates remaining proceeds for the original Project (P063398) and the Additional Financing (P107614). This is the first extension of the Additional Financing Project. 2. The Project Development Objective is to improve (i) the quality of services provided to customers in AWSC's service area; and (ii) the sustainability of AWSC. The overall implementation of the Projects is satisfactory. B. Status of the Projects 3. All activities of the Municipal Water and Wastewater Project were completed by the original credit closing date of February 28, 2009. As the closing date for the Additional Financing for Municipal Water and Wastewater Project was set for December 31, 2011, the closing date of the original Project was extended from February 28, 2009, to December 31, 2011. The total amount of the credit was SDR 15,400,000, and the Project was fully disbursed. The Bank team assessed the Project as satisfactory. 4. Overall implementation of the Additional Financing is also satisfactory. The Project is making good progress, and the performance of the management contractor (SAUR) is assessed as satisfactory. Disbursements as of December 12, 2011 amounted to US$18.14 million, out of the US$ 20 million Additional Financing, which represented 91% of the credit amount. The credit is almost fully committed. Major performance indicators reveal continued progress towards meeting the Project Development Objectives. The financial management and safeguards compliance are satisfactory. There are no pending audits under the Project, and the client is in full compliance with audit requirements. 1 C. Proposed Changes 5. The proposed reallocation of the original Project is also necessary to allow utilization of savings generated from SDR/USD currency exchange. This amount will be used to cover the management fee for the operator (SAUR) for the period from October 19, 2011 to December 31, 2011. The management contract with SAUR was extended effective October 19, 2011 to December 31, 2013. A follow on Project, under preparation, is expected to pay the management fee from January 1, 2012, to December 31, 2013. 6. The proposed extension and reallocation of the Additional Financing is necessary to use cost savings accumulated under the Project to prepare feasibility studies and designs for the civil works in the town of Masis and the village of Ayintap. This will be the first and the final extension of the Additional Financing. Annex 1: Reallocation of Proceeds under the Original Municipal Water and Wastewater Project (P063398) (CREDIT NO.: 3893-AM) 1. Proceeds for Municipal Water and Wastewater Project, Credit No. 3893-AM, will be reallocated as follow: Category of Expenditure Amount of the Credit % of Financing Allocated (Expressed in SDR) Current Revised (1) Works 1,768,885.00 1,725,477.92 60% (2) Goods 5,829,950.00 5,830,426.01 100% of foreign expenditures 100% of local expenditures (ex- factory cost) and 80% of local expenditures for other items procured locally (3) Consultants’ Services (a) Management Services 5,500,360.00 5,546,363.02 100% of foreign under Part A.1 of the Project expenditures and 92% of (b) Other 1,277,050.00 1,273,893.27 local expenditures (4) Redundancy Payments 172,844.21 172,844.21 100% of disbursed amount (5) Refunding of Project 679,980.60 679,980.60 Amount due pursuant to Preparation Advance Section 2.02 (c) of this Agreement (6) Operating Costs 170,930.00 171,014.97 90% (7) Unallocated 0 0 TOTAL AMOUNT 15,400,000 15,400,000 Annex 2: Reallocation of Proceeds under the Additional Financing for Municipal Water and Wastewater Project (P107614) (CREDIT NO.: 4514-AM) 1. Proceeds for Additional Financing for Municipal Water and Wastewater Project, Credit No. 4514-AM, will be reallocated as follow: Category of Expenditure Amount of the Credit % of Financing Allocated (expressed in SDR) Current Revised (1) Works 3,842,000.00 3,745,000.00 80% (2) Goods 3,317,000.00 3,277,000.00 65% (3) Consultants’ Services, 5,394,000.00 5,533,000.00 85% of Foreign including the Management Expenditures and 80% Services of Local Expenditures (4) Operating Costs 247,000.00 245,000.00 75% TOTAL AMOUNT 12,800,000.00 12,800,000.00