The World Bank Assam Agribusiness and Rural Transformation Project (P155617) REPORT NO.: RES38134 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ASSAM AGRIBUSINESS AND RURAL TRANSFORMATION PROJECT APPROVED ON AUGUST 31, 2017 TO REPUBLIC OF INDIA AGRICULTURE AND FOOD SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: John A. Roome Practice Manager/Manager: Kathryn Hollifield Task Team Leader: Manivannan Pathy, Ajai Nair, Soujanya Krishna Chodavarapu The World Bank Assam Agribusiness and Rural Transformation Project (P155617) ABBREVIATIONS AND ACRONYMS CAMUL Cachar and Karimganj Milk Producers' Cooperative Union Limited EAMUL East Assam Milk Producers' Co-operative Union Ltd GoA Government of Assam NDDB National Dairy Development Board PCU Project Coordination Unit PDO Project Development Objective PGC Project Guidance Council PIP Project Implementation Plan PIUs Project Implementing Units WAMUL West Assam Milk Producers' Co-operative Union Ltd. The World Bank Assam Agribusiness and Rural Transformation Project (P155617) BASIC DATA Product Information Project ID Financing Instrument P155617 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 31-Aug-2017 30-Sep-2024 Organizations Borrower Responsible Agency Assam Rural Infrastructure and Agricultural Services Republic of India (ARIAS) Society Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to add value and improve resilience of selected agriculture value chains, focusing on smallholder farmers and agro-entrepreneurs in targeted districts of Assam. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-87800 31-Aug-2017 30-Oct-2017 17-Jan-2018 30-Sep-2024 200.00 10.14 189.86 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Assam Agribusiness and Rural Transformation Project (P155617) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Board of Directors approved the Assam Agribusiness and Rural Transformation Project on August 31, 2017, and the Project became effective in January 2018. The Project is targeting several value chains with the objective of a sustainable increase in productivity and profitability. Based on the November 2018 implementation support mission, the DO and IP rating are Satisfactory1. All the project implementation units are in place. Overall, project implementation progress has been satisfactory, and the Project has also made considerable efforts to build up its implementation capacity and readiness. The disbursement is at 5.10 per cent (USD 10.14M on the net commitment of USD 200M). The closing date of the Project is September 30, 2024. 2. To achieve the development objectives, the Project is making critical investments in the identified value chains. Under the milk value chain, the Project is supporting upgrading and modernising the processing and supply chain infrastructure of the three milk unions viz., West Assam Milk Producers' Co-operative Union Ltd. (WAMUL), East Assam Milk Producers' Co-operative Union Ltd (EAMUL) and Cachar and Karimganj Milk Producers' Cooperative Union Limited (CAMUL). These three milk unions are under the operations of the National Dairy Development Board (NDDB), based on a tripartite agreement between NDBB, Government of Assam and the respective milk union. The key activities to be financed will include, among others, modernisation and upgrading of an existing dairy plant at Guwahati and setting up a new processing plant at Jorhat. 3. While the tripartite agreement provides the necessary management control of these milk unions, but it does not include responsibility for procurement of plant and machinery, managing the procurement process (including issuing the bid and contract signing) and contract management. For this to happen, the project funds will have to flow to NDBB. It was therefore proposed to include NDDB as one of the implementing entities under the Project. II. DESCRIPTION OF PROPOSED CHANGES 4. The proposed restructuring is to include NDDB as one of the implementing entities under the Project. As an implementing entity, NDDB would be responsible for expanding the existing milk plant in Guwahati as well as set up new milk plant in Jorhat. NDDB will follow World Bank Procurement Regulations and Financial Management Procedures as agreed under the Project. 5. Furthermore, NDDB is the main implementing agency in a Bank financed National Dairy Project (P107648). NDDB has the required capacity and experience to undertake procurements under APART. The Bank team has carried out a technical and fiduciary capacity assessment of NDDB and found them to be suitable to undertake the necessary assignments while implementing the following mitigation measures- i. Tenders to be floated under APART project shall either use NIC based e-procurement system or else tenders are invited offline with e-publication. ii. NDDB shall make use of the complaint management system which is developed as part of the National Dairy Project. iii. NDDB staff, responsible for APART, shall get trained on New Procurement Framework of the World Bank. However, this training is not a pre-condition to float tenders under APART project. 1GoA cancelled the planned ISM in April 2019, and the next ISM is scheduled from September 16 to 25, 2019. These ratings will be reviewed in this mission. The World Bank Assam Agribusiness and Rural Transformation Project (P155617) iv. Similar to other implementing units NDDB will also share its annual work plan based on which funds will be released to NDDB on its projected fund requirement. Unlike other implementing units within Assam, the zero- balance parent-child account arrangements will not be applicable to NDDB. v. NDDB has proper internal control systems and segregation of functions for verification of work done, delivery and installation and goods and services and its related payments. vi. The ERP system of NDDB will be used to record and report expenditures related to the project and NDDB will submit monthly financial reports along with original invoices to WAMUL/ Project Coordination Unit in ARIAS which will enable them to collate and submit consolidated quarterly financial reports to the Bank. vii. NDDB will also allow access to its books of accounts and related project documents to the project auditors of the APART project. viii. The Financial Management Manual of the APART Project will be updated to reflect the above financial management arrangements and changes in the IUFR formats. III. SUMMARY OF CHANGES Changed Not Changed Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ 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 ✔ The World Bank Assam Agribusiness and Rural Transformation Project (P155617) APA Reliance ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action Finance Agreement :Project Implementation Arrangements | Description :State of Assam to vest the overall responsibility for implementation of Project activities in ARIAS Society. At the State level, State of Assam to: (i) maintain, at all times during Project implementation, a Project Coordination Unit (PCU) (led by a full time State Project Director and assisted by adequate professional and administrative staff) within the ARIAS Society, controlled by a Project Guidance Council (PGC) chaired IBRD-87800 by the Chief Secretary, and a Governing Body (GB) Complied with Revised chaired by the Agriculture Production Commissioner; and (ii) maintain at all times during Project implementation, Project Implementing Units (PIUs) established within each of the Participating Implementing Agencies, each headed by the senior most Secretary of the agency and vested with the responsibility of overseeing the implementation of their respective activities under the Project, At the District level, State of Assam to: (i) maintain a District Level Coordination Committee (DLCC) headed The World Bank Assam Agribusiness and Rural Transformation Project (P155617) by the Deputy Commissioner and comprising all district level implementing departments and agencies, vested with the responsibility to ensure coordination, and review of the Project progress; (ii) maintain the respective Agricultural Technology Management Agency (ATMA) vested with the responsibility of implementation of Project activities at the District level, in collaboration with participating district offices of the implementing agencies, producer communities and entrepreneurs, NGOs, and private sector entities. State of Assam to hire qualified service providers, as needed, recruited in a competitive manner and under terms of reference satisfactory to the Bank to regularly monitor and evaluate the implementation of the activities under the Project; State of Assam to ensure that all civil works under the Project shall be executed by the Public Works (Roads) of Assam or any other agency of the State of Assam agreed by the Bank, in accordance with the requirements of the Safeguards Documents and the PIP. | Frequency :CONTINUOUS National Dairy Development Board (NDDB) is included as one of the Project Implementation Unit, with the Proposed Not yet due purpose of overseeing the implementation of their specific activities under the Project. Finance Agreement :Sector Stewardship Council Grants, IA Grants, CIG Grants, and FPO Grants | Description :The State of Assam to make grants available to Grant Beneficiaries to carry out Sub-projects under Parts A.4 (Sector Stewardship Council Grants), B.1 (IA Grants), C.1 (CIG Grants) and C.2 (FPO Grants) of the Project, in IBRD-87800 accordance with the procedures set forth in the Project Complied with No Change Implementation Plan (PIP), and for purposes of each Sub-project and through the concerned Participating Implementing Agency, to enter into a Sub-project Agreement with the relevant Grant Beneficiary on terms and conditions acceptable to the Bank and spelled out in the PIP. | Frequency :CONTINUOUS IBRD-87800 Finance Agreement :Agribusiness Investment Fund (AIF) Partially complied No Change   Feasibility Studies | Description :The State of Assam with The World Bank Assam Agribusiness and Rural Transformation Project (P155617) to: no later than six (06) months after the Effective Date, carry out feasibility studies, under terms of reference agreed with the Bank, to assess structures for the establishing of an AIF or investing in an existing one, required documentation, managerial structure, eligible investment activities, and potential pipeline; and submit to the Bank for its review and concurrence, its selected structure for AIF prior to undertaking any investment activities with respect to AIF under Part A.3 of the Project. | Due Date :01-May-2018 Finance Agreement :Agribusiness Investment Fund (AIF) | Description :State of Assam, prior to making or obtaining any Capital Contribution to the AIF, shall, by no later than nine (09) months after the Effective Date, hire the services of local counsel specialized on IBRD-87800 investment funds to provide in the preparation/review Expected soon No Change of the AIF Operational Manual of the AIF and legal documents involving the establishment of the AIF or the contribution to an existing fund meeting all of the requirements of the AIF Operational Manual | Due Date :01-Aug-2018 Finance Agreement :Agribusiness Investment Fund (AIF) | Description :State of Assam, prior to making or obtaining any Capital Contribution to the AIF, shall, by IBRD-87800 no later than twelve (12) months after the Effective Expected soon No Change Date, procure a AIF Fund Manager and sign a contract with said AIF Fund Manager with terms and conditions acceptable to the Bank | Due Date :01-Nov-2018 Finance Agreement :Agribusiness Investment Fund (AIF) | Description :State of Assam, prior to making or obtaining any Capital Contribution to the AIF, shall, by IBRD-87800 Not yet due No Change no later than eighteen (18) months after the Effective Date, complete a Technical and Fiduciary Assessment of the new or existing fund. | Due Date :01-May-2019 IBRD-87800 Finance Agreement :Agribusiness Investment Fund (AIF) Not yet due No Change | Description :State of Assam, prior to making or obtaining any Capital Contribution to the AIF, shall, by no later than twenty-four (24) months after the The World Bank Assam Agribusiness and Rural Transformation Project (P155617) Effective Date and based on the foregoing assessments/advice and with written concurrence from the Bank, establish a new AIF or establish adjustments to an existing fund as the AIF, and adopt an AIF Operational Manual | Due Date :01-Nov-2019 Finance Agreement :Agribusiness Investment Fund (AIF) | Description :State of Assam, prior to making or obtaining any Capital Contribution to the AIF, shall, by no later than twenty-eight (28) months after the IBRD-87800 Not yet due No Change Effective Date, contribute sufficient funds to AIF to provide financial support to promising agribusiness SMEs all in accordance with the Operational Manual. | Due Date :01-Mar-2020 Finance Agreement :Agribusiness Investment Fund (AIF) | Description :State of Assam, prior to making or obtaining any Capital Contribution to the AIF, shall, as part of the establishment of and contribution to the IBRD-87800 Not yet due No Change AIF, enter into a legal agreement with the other shareholders/partners of said fund on terms and conditions acceptable to the Bank. | Frequency :CONTINUOUS Finance Agreement :Agribusiness Investment Fund (AIF) - Sub financing | Description :The AIF and the respective AIF Beneficiary shall enter into Sub-financing agreement IBRD-87800 Not yet due No Change (the  Sub-Financing Agreement ) on terms and conditions, acceptable to the Bank. | Frequency :CONTINUOUS IBRD-87800 Finance Agreement :Safeguards | Description :The State Complied with No Change of Assam to ensure, and cause ARIAS Society, the Participating Implementing Agencies, the Grant Beneficiaries, and the AIF Beneficiaries to ensure, that the Project activities are carried out in accordance with: (i) the EMF; (ii) the EMP(s); (iii) the SMF (which includes the RPF and the IPDF); (iv) the RAP(s); and/or the (v) the IPDP(s); (all collectively referred to as the  Safeguard Documents ). The World Bank Assam Agribusiness and Rural Transformation Project (P155617) The State of Assam to ensure that ARIAS Society, the Participating Implementing Agencies maintain, throughout the period of implementation of the Project, qualified and experienced environment and social specialists under terms of reference agreed with . the Bank. | Frequency :CONTINUOUS