The World Bank Lao National Road 13 Improvement and Maintenance (P163730) REPORT NO.: RES36126 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LAO NATIONAL ROAD 13 IMPROVEMENT AND MAINTENANCE APPROVED ON MAY 18, 2018 TO LAO PEOPLE'S DEMOCRATIC REPUBLIC TRANSPORT EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Ellen A. Goldstein Senior Global Practice Director: Guangzhe Chen Practice Manager/Manager: Almud Weitz Task Team Leader: Sombath Southivong, Sadig Aliyev The World Bank Lao National Road 13 Improvement and Maintenance (P163730) ABBREVIATIONS AND ACRONYMS AIIB Asian Infrastructure Investment Bank IDA International Development Association MPWT Ministry of Public Works and Transport NDF Nordic Development Fund NR13 National Road 13 OPBRC Output and Performance Based Road Contract PDO Project Development Objective RAP Resettlement Action Plan The World Bank Lao National Road 13 Improvement and Maintenance (P163730) BASIC DATA Product Information Project ID Financing Instrument P163730 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 18-May-2018 31-May-2023 Organizations Borrower Responsible Agency Lao People's Democratic Republic Ministry of Public Works and Transport Project Development Objective (PDO) Original PDO To improve the road condition, safety and climate resilience on critical sections of National Road 13. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-62260 18-May-2018 23-Jul-2018 22-Jan-2019 31-May-2023 40.00 0 38.56 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Lao National Road 13 Improvement and Maintenance (P163730) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Lao National Road 13 Maintenance and Improvement Project (Project) was approved on May 18, 2018 with a US$40 million Credit from the International Development Association (IDA). The Project Development Objective (PDO) is to improve the road condition, safety and climate resilience on critical sections of National Road 13 (NR13). The Project is implemented by the Ministry of Public Works and Transport (MPWT). The Asian Infrastructure Investment Bank (AIIB) is providing co-financing in the amount of US$40 million under its joint co-financing framework agreement with IDA. The AIIB co-financing loan was approved by the AIIB Board on April 4, 2019. The Nordic Development Fund (NDF) is providing a parallel co-financing in the amount of US$9.5 million, part of which will finance land acquisition. The project closing date is May 31, 2023. 2. The Project was declared effective on January 22, 2019 and has entered an early implementation phase. The progress towards achievement of PDO is satisfactory. Implementation progress is moderately satisfactory as land acquisition has progressed slower than originally anticipated. The Ministry of Public Works and Transport (MPWT) and World Bank team have agreed on an action plan to accelerate project implementation, including implementation of land acquisition as per approved Resettlement Action Plan (RAP). An international consulting firm is supporting MPWT in RAP implementation and monitoring. Procurement of key project activities is progressing on schedule. Procurement of the Output and Performance Based Road Contract (OPBRC) is well advanced with expected contract award in July 2019 and commencement of civil works in October 2019. The selection of supervision consultant is progressing in parallel. The PDO remains relevant and achievable during project life. B. Rationale for Restructuring 3. The Project is co-financed by AIIB. The AIIB co-financing loan was approved by the AIIB Board on April 4, 2019 and will be effective by July 2019. Amendment to the IDA Financing Agreement is required to extend the co-financing effectiveness deadline of the AIIB loan which is currently set as April 30, 2019. In addition, there is a need to extend the date for submission of the first technical audit report to the World Bank to September 30, 2020 considering the current timeline for implementation of the road works. For the technical audit report for the following years during the project implementation, the recipient shall furnish it to the World Bank by December 15 each year. The World Bank received a formal request from the Ministry of Finance dated April 12, 2019 to amend the Financing Agreement to (i) extend the co-financing effectiveness deadline of the AIIB loan to July 31, 2019 and (ii) extend the date for submission of the first technical audit report to September 30, 2020. II. DESCRIPTION OF PROPOSED CHANGES The World Bank Lao National Road 13 Improvement and Maintenance (P163730) C. Proposed Changes 4. The proposed restructuring includes the following changes: a) To extend the co-financing effectiveness deadline of the AIIB loan which is currently set as April 30, 2019 to July 31, 2019 considering the timeline for the effectiveness of the AIIB’s co-financing loan; b) To extend the date for submission of the first technical audit report to September 30, 2020 considering the current timeline for implementation of the road works. I. SUMMARY OF CHANGES Changed Not Changed Legal Covenants ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ The World Bank Lao National Road 13 Improvement and Maintenance (P163730) Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action Institutional Arrangements (Section I. A, Schedule 2): Recipient to maintain, throughout the Project Implementation period: (a) Project Steering Committee, with a mandate, composition and resources satisfactory IDA-62260 to the Association; and (b) Project implementation Complied with No Change structures within Ministry of Public Works and Transport (MPWT), with functions, resources and staff in numbers and with terms of reference and qualifications satisfactory to the Association. Project Operation Manual (Section I. B, Schedule 2): Recipient to ensure that the project is carried out in accordance with the Project Operations Manual (POM); IDA-62260 Complied with No Change and not amend, abrogate or waive any provisions of the POM unless the Association provides its prior no- objection thereof in writing. Environmental and Social Safeguards: (Section I. F, Schedule 2): Recipient to ensure that the Project is carried out in accordance with the Safeguard Instruments, and not amend, abrogate or waive the Safeguard Instruments or any of their provisions, unless IDA-62260 Complied with No Change the Association has provided its prior no-objection thereof in writing, and consolidated reports on the status of compliance with the Safeguard Instruments are collected, compiled and furnished to the Association as part of the semiannual progress reports. The World Bank Lao National Road 13 Improvement and Maintenance (P163730) Annual Work Plans and Budgets (Section I. C, Schedule 2): The Recipient to furnish to the Association, no later than November 30 of each year, an annual work plan and budget for the Project for the following Fiscal Year, IDA-62260 Not yet due No Change in a manner and substance satisfactory to the Association, and thereafter implement the activities under the Project during the relevant Fiscal Year in accordance with such plan and budget. Technical Audit (Section I. D, Schedule 2): The Recipient to appoint, by October 15, 2019, an independent technical auditor, with terms of reference and qualifications satisfactory to the Association, and to furnish, not later than December 15 of each year during IDA-62260 Not yet due Revised the Project implementation period, commencing on December 15, 2019, the reports of the independent technical auditor and thereafter take measures, acceptable to the Association, to address the findings and implement the recommendations of such reports. The Recipient to appoint an independent technical auditor, with terms of reference and qualifications satisfactory to the Association, and to furnish, not later than December 15 of each year during the Project Proposed NYD implementation period, commencing on September 30, 2020, the reports of the independent technical auditor and thereafter take measures, acceptable to the Association. Output and Performance-Based Road Contract (OPBRC) Sustainability Plan (Section I. E, Schedule 2): The Recipient shall adopt, not later than twelve (12) months prior to the Closing Date, a sustainability plan, in form and substance satisfactory to the Association, specifying actions and budget designed to ensure the continued IDA-62260 Not yet due No Change and effective implementation of the OPBRC in the period after the Closing Date, including, inter alia, financial, institutional sustainability, and monitoring and supervision measures to be put in place by MPWT for the full period of the operation and maintenance phase of the OPBRC. The World Bank Lao National Road 13 Improvement and Maintenance (P163730) Co-financing Deadline (Article 4.01): The Co-financing Deadline for the effectiveness of the Asian IDA-62260 Not yet due Revised Infrastructure Investment Bank (AIIB) Co-financing Agreement is April 30, 2019. Co-financing Deadline (Article 4.01): The Co-financing Deadline for the effectiveness of the Asian Proposed NYD Infrastructure Investment Bank (AIIB) Co-financing . Agreement is July 31, 2019.