Document of The World Bank Report No: 59756-AF RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF AFGHANISTAN WATER RESOURCES DEVELOPMENT TECHNIAL ASSISTANCE PROJECT (Grant TF093637-AF) TO THE ISLAMIC REPUBLIC OF AFGHANISTAN February 28, 2011 ABBREVIATIONS AND ACRONYMS ARTF Afghanistan Reconstruction Trust Fund DSS Decision Support System GAMS General Algebraic Modeling System GOA Government of Afghanistan IDA International Development Association MEW Ministry of Energy and Water MOF Ministry of Finance PPU Project Preparation Unit REoI Request for Expression of Interest RVP Regional Vice President TISC Technical and Implementation Support Consultant ToR Terms of Reference WRPU Water Resources Planning Unit Regional Vice President: Isabel M. Guerrero Country Director: Nicholas J. Krafft Sector Manager: Herbert Acquay Task Team Leader: Ladisy K. Chengula Data Sheet Restructuring Status: Draft Restructuring Type: Level two Last modified on date : 2/28/2011 1. Basic Information Project ID & Name P112097: Afghanistan Water Resources Development Technical Assistance Project Country A fghanistan Task Team Leader Ladisy K. Chengula Sector Manager/Director Herbert Acquay/ John Henry Stein Country Director Nicholas J. Krafft Original Board Approval Date 03/23/2009 (Grant Funding Request Approval) Original Closing Date: 03/31/2011 Current Closing Date 03/31/2011 Proposed Closing Date [if applicable] 03/31/2013 EA Category C-Not Required Revised EA Category EA Completion Date N/A Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 0.00 IDA Credit 0.00 ARTF grant 5.50 Total 5.50 3. Borrower Organization Department Location Ministry of Finance Afghanistan 4. Implementing Agency Organization Department Location Ministry of Energy and Water Afghanistan 5. Disbursement Estimates (US$m) Actual amount disbursed as of 02/13/2011 1.088 Fiscal Year Annual Cumulative 2010 0.00 1.088 Total 1.088 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured projects trigger any new safeguard policies? If yes, please select N from the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The Project Development Objective is to build the Recipient's capacity to progressively undertake strategic basin planning and to improve project preparation for water resources development. 7b. Revised Project Development Objectives/Outcomes [if applicable] AFGHANISTAN WATER RESOURCES DEVELOPMENT TECHNICAL ASSISTANCE PROJECT (Grant TF093637-AF, P112097) Restructuring Paper 1. This R estructuring P aper s eeks R VP a pproval t o e xtend t he closing da te of t he Afghanistan R econstruction T rust F und ( ARTF) grant f or t he above-referenced pr oject from M arch 31, 2011 t o M arch 31, 2013. T his f irst e xtension i s r equired t o pr ovide adequate t ime t o co mplete t he p roject a ctivities w hich h ave b een co nsiderably d elayed due t o f actors out side t he c ontrol of t he G overnment a nd t he pr oject i mplementing agency. T he pr oject b ackground, r easons for t he pr oposed e xtension a nd t he t eam's recommendation are provided below. 2. Background: The A RTF M anagement C ommittee a pproved A RTF f inancing for t he p roject i n N ovember 2008. T he pr oject's de velopment obj ective i s t o bui ld t he Recipient's capacity t o progressively und ertake s trategic basin pl anning a nd t o improve project preparation for water resources development. The project has three components: A: Capacity building for multi-sectoral river basin planning, focusing on c apacity building of t he W ater R esources P lanning Unit (WRPU) of t he Ministry of Energy and Water (MEW); B: Preparation of water resources development investments through MEW's Project Preparation Unit (PPU); and C: Engagement of a technical and implementation support consultant (TISC) for (i) supervision of planning and project preparation activities done by and for the MEW; (ii) capacity building of WRPU and PPU staff through a " learning by doing " approach; and (iii) project management, including procurement and financial management. 3. The t otal pr oject c ost w as e stimated a t U S$ 15.25 m illion. T he pr oject implementation was divided in two phases with each phase covering a t wo-year period. The ARTF grant agreement for Phase 1 of the project (US$ 5.5 m illion) was signed on March 23, 2009 with a grant closing date of March 31, 2011. 4. Delays in the engagement of TISC: The pr oject i s t he f irst B ank-financed operation th at is a imed a t s ystematic c apacity building in th e ma nagement o f w ater resource in Afghanistan through learning b y doing, on t he job coaching and knowledge transfer. The engagement of a quality Technical and Implementation Support Consultant (TISC), p articularly th e s elected c onsultant's a bility to mo bilize a nd f ield a te am o f experienced personnel who are not only experts in their respective fields of specialization but also are committed t o work i n Kabul and deliver t he capacity bui lding obj ective o f the assignment, is the single most critical determinant of project performance. 5. The r equest for expression of i nterest ( REoI) was i ssued i mmediately after t he signature of the grant agreement and finalization of the Terms of Reference (ToR) for the consultancy. However, after considerable time had elapsed, only one firm on the shortlist submitted a pr oposal. The r emaining f ive f irms de clined t o s ubmit pr oposals be cause they were un able t o s end qua lified s taff t o w ork i n A fghanistan. M EW r eviewed t he single t echnical pr oposal r eceived a nd s ent i ts t echnical e valuation r eport ( TER) t o t he Bank in April 2010, t hat was almost one year after the grant agreement was signed. The Bank t eam r eviewed t he T ER a nd t he t echnical pr oposal a nd f ound t he pr oposal t o be non-compliant w ith c ertain pr ovisions of t he T erms of R eference and t he R equest f or Proposal ( RFP). G iven t he di fficulty i n a ttracting qua lified consulting f irms f or assignments i n A fghanistan a nd t he de lays e ncountered a lready, M EW a nd t he B ank team worked with the firm to correct the deficiencies of the proposal before finalizing the contract. That effort took another nine months and the contract was signed on January 29, 2011. The TISC is scheduled to commence work in Afghanistan on March 1, 2011. 6. Government Request for Closing Date Extension: Given t he de lays i n t he engagement of TISC, the Government has requested the Bank to extend the grant closing date b y tw o years to e nable th e imp lementation o f th e p roject's p hase 1 a ctivities. In retrospect, t he ad equacy of t he t ime n ecessary to en gage t he T ISC w as n ot f ully considered i n de termining t he or iginal grant c losing d ate. F urthermore, the pr evailing security r isk w as n ot ad equately as sessed an d m itigation m easures w ere not i dentified. These t wo f actors a re out side t he c ontrol of t he G overnment a nd t he pr oject implementing agency. 7. MEW `s Commitment and Work Plan : Despite the delays in the recruitment of the TISC, the Water Resources Planning Unit and Project Preparation Unit of the MEW continued to implement certain project activities with support provided by the Bank team. Those e fforts, how ever, va ried i n t erms of qu ality a nd s uccess. W ithin i ts l imited capacity, t he W RPU i s upda ting t he ba sic h ydrological and economic d ata us ed i n t he Kabul River basin model developed by the Bank team using General Algebraic Modeling System ( GAMS). W RPU s taff a ttended t raining c ourses i n l and s urface obs ervation, modeling and data assimilation in China; and snow and ice glaciers melt models for the Indus basin in Pakistan. The PPU used the priority investments identified in the scoping strategic opt ions f or t he de velopment of t he K abul R iver ba sin r eport t o pl an va rious water d evelopment p rojects. M EW s ubmitted a r evised w ork pl an f or t he t wo-year extension. The Bank team reviewed the work plan and found it acceptable. 8. Recommendation. In view of: (i) the factors causing implementation to slip that were o utside th e c ontrol o f M EW; ( ii) th e d elays in th e r ecruitment o f the T ISC; ( iii) continued commitment by MEW to the project objectives; ( iv) the expectation that the project obj ective r emains a chievable; a nd (v) t he de velopment of a r evised w ork program for the next two years prepared and submitted by MEW, which is acceptable to the ba nk, we r ecommend t he a pproval of t he e xtension of t he g rant c losing da te f rom March 31, 2011 to March 31, 2013.