Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES19013 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LOCAL DEVELOPMENT PROGRAM SUPPORT PROJECT II GRANT/{LOAN/CREDIT} March 18, 2011 TO THE REPUBLIC OF CHAD MAY 27, 2015 SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE AFRICA This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS FM Financial Management GoC Government of Chad IDA International Development Association PDO Project Development Objective PMU Project Management Unit Regional Vice President: Makhtar Diop Country Director: Paul Noumba Um Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Jorge A. Munoz Task Team Leader: Bleoue Nicaise Ehoue 2 REPUBLIC OF CHAD Local Development Program Support Project II CONTENTS A. SUMMARY OF PROPOSED CHANGES ............................................................................. 5 B. PROJECT STATUS ................................................................................................................. 6 C. PROPOSED CHANGES .......................................................................................................... 7 3 DATA SHEET Chad Local Development Program Support Project II (P113030) AFRICA Social, Urban, Rural and Resilience Global Practice Report No: RES19013 Basic Information Project ID: P113030 Lending Instrument: Adaptable Program Loan Regional Vice President: Makhtar Diop Original EA Category: Partial Assessment (B) Country Director: Paul Noumba Um Current EA Category: Partial Assessment (B) Senior Global Practice Ede Jorge Ijjasz- Original Approval Date: 18-Mar-2011 Director: Vasquez Practice Jorge A. Munoz Current Closing Date: 30-Jun-2015 Manager/Manager: Team Leader(s): Bleoue Nicaise Ehoue Borrower: Ministry of Rural Development Responsible Agency: Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Country Director Restructuring Level 2 Level: Financing ( as of 24-Apr-2015 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P113030 IDA-48890 Effective 18-Mar-2011 11-May-2011 19-Oct-2011 30-Jun-2015 30-Jun-2015 P113030 IDA-H6570 Effective 18-Mar-2011 11-May-2011 19-Oct-2011 30-Jun-2015 30-Jun-2015 Disbursements (in Millions) Cancelle Disburse Undisbur % Project Ln/Cr/TF Status Currency Original Revised d d sed Disbursed P113030 IDA-48890 Effective XDR 9.00 9.00 0.00 3.88 5.12 43 P113030 IDA-H6570 Effective XDR 7.30 7.30 0.00 3.61 3.69 49 4 Policy Waivers Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes 1. Cancellation of SDR 8,686,827 (SDR 4,997,839 from the IDA Credit and SDR 3,688,988 from the IDA Grant). 2. Reallocation of SDR 363,933 from Component 1: Capacity Building of Local Communities and Communes and Support to Decentralization to Component 3: Project Coordination and Management. 3. Revision of Disbursement Estimates. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ ] No [ X ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [X ] No [ ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ ] No [ X ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] 5 B. Project Status The Project Development Objectives (PDO) are to assist the Recipient in: (i) improving access to basic infrastructure and social services in target districts, and (ii) improving the planning, management and monitoring by local communities and communes of decentralized investment. IDA Credit 48890 and IDA Grant H6570 for SDR 9 million and SDR 7.30 million respectively were approved on October 19, 2011 and are scheduled to close on June 30, 2015. As of April 24, 2015 IDA-48890 had disbursed XDR 3.88 million (57%) and IDA-H6570 had disbursed XDR 3.61 million (51%). Achievement of the PDO and implementation progress are both rated unsatisfactory because of severe shortcomings: (i) lack of provision of adequate counterpart funds in a timely manner; (ii) high staff turnover in the project management unit which has affected financial management and project implementation; (iii) poor governance at the project management unit level - two project coordinators were removed in three years for wrongdoing, before an interim one was appointed in July 2014. The project has not fully complied with one legal covenant related to the technical audit of quality of micro-projects but has complied with Bank procurement and safeguards requirements. Project Financial Management performance is rated unsatisfactory: quarterly financial reports and audit reports have not been submitted in a timely manner; the external auditor’s opinions have been consistently qualified; and the 2013 audit report has not yet been submitted. The status of implementation of each project component is summarized below. Component 1: Capacity building of local communities and communes and support to decentralization (US$ 4 million). Implementation of this component is rated moderately unsatisfactory. About 1,900 beneficiaries have been trained in community-based procurement and financial management. 13 out of 75 communes had prepared and adopted strategic development plans. Activities whose implementation has not started so far will be cancelled, and US$512,000 will be reallocated from this component to Component 3: Project Coordination and Management. Component 2: Decentralized financing of micro-projects (US$18 million) finances the construction of basic infrastructure in targeted districts through the financing of demand-driven activities: (i) socio-economic infrastructure; (ii) environmental and natural resources management micro- projects; and (iii) income-generating micro-projects. Implementation of this component is rated moderately unsatisfactory. Currently, the 120 micro-projects being implemented will continue to be funded until the closing date. By the June 30, 2015 closing date, 360 micro-projects will be completed. The remaining 540 planned micro-projects and subsequent activities are proposed to be cancelled, as these will require about three years to be completed. This will result in a saving of SDR 8,686,827, which is proposed to be cancelled. Component 3: Project coordination and management (US$3 million) supports project implementation, including: (i) administrative activities; (ii) fiduciary activities, including financial management and procurement; (iii) technical execution; and (iv) monitoring and evaluation of Project performance and impact, including through the establishment of a monitoring platform. Implementation of this component is rated unsatisfactory. IDA resources allocated to this component have been fully utilized and it is proposed to allocate SDR 564,000 to this component from Component 1. 6 C. Proposed Changes Financing Cancellations Proposed Explanation SDR 8,686,827 (SDR 4,997,839 from the Credit and SDR 3,688,988 from the Grant) is proposed to be cancelled for the reasons explained above. Reallocations: Explanation: IDA-48890 Category (1) – The proposed allocation is SDR 1,312,969 comprising SDR 1,171,063 disbursed plus SDR 141,905, required for the remainder of the project. Category (2) – The proposed amount of SDR 466,169 is required to complete on-going micro- projects. There has been no disbursement from this category so far. Category (3) – SDR 1.454,864 has been disbursed so far, and an additional amount of SDR 363,933 is estimated to be required to complete remaining activities. The proposed amount came up to SDR 1,818,798 Category (4): SDR 404, 225 PPA has been disbursed, and the balance will be cancelled. IDA-H6570: No funds have disbursed from the Grant. The Project is expected to disburse SDR 3,611,012. The table below summarizes the current and proposed allocation of the Credit and Grant to the different parts of the project. Ln/Cr/TF Category Proposed Disbursement % IDA- Current Proposed Current Propos 48890 ed (1) Goods, and consultants 2,600,000 1,312,969 100% 100% for Part A of the Project (2) Micro-Project Grants for 4,450,000 466,169 100% 100% Part B of the Project (3) Goods, works, Operating 1,325,000 1,818,798 100% 100% costs and consultant services 7 for Part C of the Project (4) Refund of Project 625,000 404,225 Amount Preparation Advance payable to section 2.07 of the General condition Total Amount 9,000,000 4,002,161 100% IDA- (2) Micro-Project Grants for 7,300,000 3,611,012 100% 100% H6570 Part B of the Project Total Amount 7,300,000 3,611,012 Change in Disbursement Estimates Explanation Disbursement estimates for the remainder of the project are proposed to be adjusted as indicated in the table below to reflect the proposed cancellation. Fiscal Years Current (SDR) Proposed (SDR) 2012 2,477,667 2,762,781 2013 4,080,688 891,065 2014 4,700,795 2,968,8131 2015 5,040,850 991,196 Total 16,300,000 7,613,173 Components Change to Components and Cost Explanation As a result of the above-mentioned cancellations and reallocations, project cost will be reduced and components costs need to be adjusted. Current costs comprise (i) the project cost including the counterpart funding for US$ 50 million; (ii) IDA allocation for US$ 25 million and Beneficiaries US$ 2.5 million as shown in the table below. Proposed Project Costs include: US$ 3.130 million for Component A; US$ 12.54 million for component B; and US$ 4.5million for component C with respective Counterparts and IDA proposed costs. Component Current IDA- Counterpart Total Action Cost Proposed Proposed Proposed (US$ Cost (US$ Cost US$) Cost million) million) US$) A. Capacity building of local 12.00 2.14 0.99 3.13 Revised communities and communes and support to decentralization B. Support to 56.25 7.55 4.99 12.54 Revised decentralization 8 C. Project coordination and 9.00 2.96 1.54 4.5 Revised management Total 77.25 12.65 7.52 20.17 9