The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) REPORT NO.: RES37353 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SECOND KAMPALA INSTITUTIONAL AND INFRASTRUCTURE DEVELOPMENT PROJECT APPROVED ON MARCH 20, 2014 TO REPUBLIC OF UGANDA URBAN, RESILIENCE AND LAND AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Carlos Felipe Jaramillo Regional Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Meskerem Brhane Task Team Leader: Martin Onyach-Olaa, John Stephen Ajalu 1 The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) ABBREVIATIONS AND ACRONYMS KCCA Kampala Capital City Authority KIIDP 2 Second Kampala Institutional and Infrastructure Development Project PDO Project Development Objective RoW Right of Way 2 The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) BASIC DATA Product Information Project ID Financing Instrument P133590 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 20-Mar-2014 31-Dec-2019 Organizations Borrower Responsible Agency Republic of Uganda Kampala Capital City Authority Project Development Objective (PDO) Original PDO The project development objective (PDO) is enhanced infrastructure and institutional capacity of KCCA to improve urban mobility in Kampala. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-53840 20-Mar-2014 16-Feb-2015 08-May-2015 31-Dec-2019 175.00 72.76 84.72 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No 3 The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Summary 1. This is the first restructuring of the Second Kampala Institutional and Infrastructure Development Project (KIIDP 2). The proposed restructuring is required to extend the project closing date by 18 months from December 31, 2019 (current closing date) to June 30, 2021. The project has fully complied with audit requirements and there are no any overdue audits. No changes are proposed in the Project Development Objective, PDO indicators or in the safeguard category, and no new safeguard policy will be triggered. B. Project Status 2. The KIIDP 2 Credit (US$175m equivalent) was approved by the World Bank Board March 20, 2014 and the Project became effective in May 8, 2015. The cumulative disbursements from the Bank to date stands at XDR 52.28M (equivalent to US$ 72.76M) representing 46% of the total credit. All remaining funds are fully committed and will be fully disbursed within the proposed extension period. With the current level of mobilization of the Batch 2 subprojects, a disbursement of US$ 60 million is projected to be achieved by June 2020. A withdrawal application of US$20 million is under process. This will bring total disbursement to US$97.76 million representing 57% disbursement to date. 3. Overall, the Progress towards achievement of the Project Development Objective is satisfactory while the overall project implementation is rated moderately satisfactory. Both Environment and Social Safeguards progress are rated satisfactory. Although the project has encountered several challenges in its implementation, a number of these have now been addressed. 4. The Institutional and Systems development (Component 2) has progressed well, the Citywide Road Infrastructure and associated investments (Component 1), encountered some challenges during implementation in relation to acquisition of right of way (RoW) for the roads sub-projects and in the management of environment and social safeguards. A lot of time was lost in batch 1 work stoppages to ensure that the contractor complies with safeguards requirements. All Batch 1 subprojects were successfully completed in April 2018 and the Defects Liability Period completed. Based on the lessons learned during implementation of Batch 1 subprojects, a lot more time was spent to ensure full acquisition of RoW for Batch 2 subprojects (Roads and Drainages) and undertaking a robust procurement process by conducting due diligence on contractors to ensure that they have sound safeguards record. This ensured that the challenges under batch 1 were not repeated. As a result, the cumulative time lost by the project was about 18 months. 5. The Contracts for Batch 2 Roads subprojects (in three lots 1, 2 and 3) worth US$ 57.09 million were signed by two successful contractors in March 2019 and the contractors given a commencement order at the beginning of May 2019. All the subproject sites were handed over to the contractors after full acquisition of the RoW. All the contractors are now fully mobilized, and all necessary statutory approvals regarding environment and social management secured. 6. For the Batch 2 Drainage works worth US$22 million, there are no issues on the right of way for one drainage while the acquisition of RoW for the second drainage is progressing satisfactorily. Although procurement of the two drainage contractors (under Lot 1 and 2) was concluded, the contracts will be signed when substantial RoW (at least 65 percent) has been achieved under the second drainage. These contracts are projected to be signed by the end of November 2019. 2 The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) 7. Stringent delivery timelines have been agreed with the Client to achieve the results targets. From the Bank side, mini-missions have been introduced in between and on top of the regular implementation support missions in addition to regular meetings with the project teams to monitor progress and address challenges and emerging issues on a timely manner as they arise. C. Rationale for Restructuring 8. The client has applied the lessons learned from Batch 1 works and addressed the challenges which caused delays such as acquisition of RoW, full compliance with safeguards requirements, full mobilization of contractors, and adherence to workplan timeline. The committed works for which contracts have already been signed and works where the procurement process has been concluded will fully absorb the project funds. However, they will not be finished by the current closing date of December 31, 2019. The restructuring is therefore to extend the closing date by 18 months up to June 30, 2021 to allow these works to be completed and achieve the project development objective. 9. A formal request was received from the Ministry of Finance, Planning and Economic Development on July 10, 2019 to extend the project closing date. A recent field visit by the Bank team on September 23, 2019 to validate what was on the ground confirmed the commitment of the client to deliver the project within the proposed extension time period. 10. Citizens’ Satisfaction – During the Mid-term review in December 2017, more than 80% of citizens expressed satisfaction with the completed road projects. The citizens were generally very satisfied with the completed infrastructure projects which had improved traffic flow with time saving of more than 40%, reduced accidents, improved security, and improved city aesthetics. On the other hand, only 29% of the citizens were satisfied with the drainage works where works have delayed. The required structuring will ensure that drainage improvements, which have lagged behind, are also implemented. II. DESCRIPTION OF PROPOSED CHANGES 11. The proposed extension of the closing date by 18 months has been arrived at based on considerations of the on-going Batch 2 signed contracts commitments, and activities under the Batch 2 drainage works where the procurement process has been completed and contracts are ready to be signed soon. No other major changes are proposed in the project design. 12. The Project Implementation Team has been maintained comprising specialists recruited by the project working hand in hand with the Client staff. Based on the lessons learned under Batch 1 subprojects, and in considerations of the challenges and risks, two additional surveyors and two assistant surveyors have been added to the project team to handle RAP implementation and acquisition of the RoW. 13. Disbursement projections have been revised in line with the revised work plans from the different subprojects. 3 The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ 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) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE 4 The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) LOAN CLOSING DATE(S) Proposed Original Revised Proposed Deadline for Ln/Cr/Tf Status Closing Closing(s) Closing Withdrawal Applications IDA-53840 Effective 31-Dec-2019 30-Jun-2021 30-Oct-2021 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2014 0.00 0.00 2015 8,380,000.00 10,022,226.00 2016 36,750,000.00 22,724,000.00 2017 73,500,000.00 35,400,000.00 2018 36,780,000.00 0.00 2019 18,340,000.00 4,611,014.65 2020 1,250,000.00 63,110,000.00 2021 0.00 39,132,759.35 . 5