The World Bank Third National Urban Water Sector Reform Project (P123513) REPORT NO.: RES41700 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT APPROVED ON APRIL 18, 2014 TO FEDERAL REPUBLIC OF NIGERIA WATER AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Shubham Chaudhuri Regional Director: Simeon Kacou Ehui Practice Manager/Manager: Maria Angelica Sotomayor Araujo Task Team Leader(s): Gerhardus Nicolaas Albertus Soppe The World Bank Third National Urban Water Sector Reform Project (P123513) I. BASIC DATA Product Information Project ID Financing Instrument P123513 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 18-Apr-2014 30-Jun-2020 Organizations Borrower Responsible Agency Federal Republic of Nigeria Federal Ministry of Water Resources Project Development Objective (PDO) Original PDO The Project Development Objectives (PDO) are: a) to increase access to improved water supply service in selected States of Nigeria and improve the financial viability of existing water utilities in those States, and b) to increase the investment planning capacityof participating States. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-54160 18-Apr-2014 07-Nov-2014 12-Feb-2015 30-Jun-2020 205.83 124.04 57.18 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Third National Urban Water Sector Reform Project (P123513) Status: Under Component 1, after a long ramp up phase to conduct feasibility studies, designs and procurement of works, the Project has stepped up progress towards achieving its Project Development Objective (PDO), with considerable acceleration in the last year. In Bauchi, seven (7) of the eight (8) works contracts are well advanced except for one critical contract (transmission mains linking the water treatment plant to the city networks) which is lagging in implementation and will not be completed by the current June 30, 2020 closing date. In Ekiti, all major works contracts (five) are at advanced state of implementation and will achieve physical completion by June 30, 2020. In Rivers State, works have not yet started due to continued procurement delays, and their completion at this stage would require eighteen (18) months at best. Under Component 2, after a slow ramp-up, technical assistance and minor investment activities have mostly been proceeding well towards supporting Tier 2 States in becoming investment-ready. Under Component 3, several activities towards the implementation of the National Action Plan are however still being procured and can no longer be completed ahead of the current closing date. These activities include the scoping and design of a national WASH Fund and various studies and activities to inform sector-wide policy making and investment planning in support of the National Action Plan. Under the circumstances, the Project progress towards achievement of PDO was downgraded to moderately unsatisfactory (MU) in November 2019, and an agreement was reached with the government on the restructuring needs. Proposed Changes: The Client had requested an 18-month extension in August 2019 following the ISM in May 2019 to enhance the achievement of the PDO and to regain time lost at the start of the project. In February, a revised request was made for a six-month extension. The team considered that with an extension of six months, all works can be completed; enough time is allowed for testing and commissioning on the newly installed facilities and the PDO can be achieved in Bauchi and Ekiti States although the current lockdown due to COVID-19 may have an impact on implementation. Rivers State requires a much longer extension and will not be able to complete the works within a reasonable extension. There is also the risk of the current weak capacity of the utility five years into the project in Rivers State to manage the investments in the infrastructure should the project go ahead in the State. As a result, the funds canceled during the previous restructuring represented most of the investments planned in Rivers State, as well as some capacity building costs. Rationale for extension of closing date of the loan: The client is implementing works and under the current program some critical activities in Bauchi will only be completed beyond June 2020. Without the full completion of these critical activities access to improved water will not be achieved. The implication of this is that all the amounts invested so far would have been in vain if the critical infrastructure that would unlock the full potential of the project remains uncompleted and subsequently abandoned due to paucity of funds in the States. The executive Governors in Bauchi and Ekiti states who took over leadership of the states following the last elections have shown strong commitment to the project through their direct supervision of the key activities and prompt resolution of issues that require their attention. They have consistently made counterpart fund contributions as required by the Financing Agreement. This has led to the significant progress made by the project in the last year. II. DETAILED CHANGES LOAN CLOSING DATE(S) The World Bank Third National Urban Water Sector Reform Project (P123513) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-54160 Effective 30-Jun-2020 30-Dec-2020 30-Apr-2021