The World Bank Dar es Salaam Metropolitan Development Project (P123134) REPORT NO.: RES37589 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF DAR ES SALAAM METROPOLITAN DEVELOPMENT PROJECT APPROVED ON MARCH 2, 2015 TO MINISTRY OF FINANCE URBAN, RESILIENCE AND LAND AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Mara K. Warwick Regional Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Meskerem Brhane Task Team Leader(s): Eric Dickson, Yohannes Yemane Kesete The World Bank Dar es Salaam Metropolitan Development Project (P123134) I. BASIC DATA Product Information Project ID Financing Instrument P123134 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 02-Mar-2015 31-Dec-2021 Organizations Borrower Responsible Agency Regional Administration and Local Government (PMO- MINISTRY OF FINANCE RALG) Project Development Objective (PDO) Original PDO The objective of the Project is to improve urban services and institutional capacity in the Dar es Salaam Metropolitan Area and to facilitate potential emergency response. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-55850 02-Mar-2015 12-Mar-2015 09-Jun-2015 31-Dec-2020 300.00 146.21 140.73 TF-19389 29-Apr-2015 29-Apr-2015 29-Apr-2015 31-Dec-2021 4.41 3.62 .80 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 Dar es Salaam Metropolitan Development Project (P123134) The restructuring of the Dar es Salaam Metropolitan Development Project (DMDP) is required to extend the project closing date by 18 months from December 31, 2020 to June 30, 2022. The proposed restructuring is the first Level 2 restructuring for the project. The Mid-Term Review recommended that the project closing date be extended by 12 months. Since that time, the project has encountered a number of delays, resulting in the Government requesting an extension of 24 months in a letter dated June 18, 2019. The Task Team recommends an extension of 18 months in order to complete remaining works, reprogram the remainder of the Nordic Development Fund Trust Fund resources, and achieve the PDO. The project has been upgraded to “Satisfactory” on progress towards achievement of the PDO and overall implementation progress (IP) and has consistently maintained “Moderately Satisfactory” or higher ratings in the last three implementation status and results reports. All major works contracts—local roads, storm water drainage, and community upgrading—are progressing well and the project has disbursed 51.42%. To date, the project has financed the rehabilitation of more than 202 kilometers of urban local roads and 67 kilometers of major drainage. Overall, the quality of the works, contract management, site safety, quality assurance and quality control are generally satisfactory. However, there remains a need to expedite construction across various works packages. PO-RALG and the Bank Task Team continue to maintain heightened supervision through regular visits. There is increased awareness and emphasis on safeguards by contractors, supervision consultants, technical assistance consultants (TAs), Project Implementation Units (PIUs), and PO-RALG. Resettlement Action Plans (RAPs) and Environmental and Social Management Plans (ESMPs) are being implemented in all municipalities, although at various degrees, and the grievance redress committees continue to be strengthened. Implementation Status. While significant progress has been made in the implementation of physical works, delays in several aspects related to compensation and the relocation of utilities have led to slower than expected implementation progress. Compensation payments were delayed due to challenges faced in securing funding and in estimating the number of properties and persons affected. Delays in the relocation of identified utilities, particularly underground water pipelines, have delayed progress of works. Procurement packages for roads and urban upgrading involved resettlement, and compensation had to be paid and rights of way cleared before the sites could be handed over to contractors. MTR findings. The Mid-Term Review conducted in March 2018 found that the project continues to make important contributions to improve the institutional capacities and service delivery mandates of the Dar es Salaam Local Authorities. The MTR recommended: (i) extending the project closing date by 12 months to adequately accommodate the completion of delayed works; (ii) reflect changes to the wording of the PDO indicator relating to the Metropolitan Governance Action Plan, and update the intermediate results indicators; (iii) update legal covenants in the Financing Agreement; (iv) reallocate funds between components and the associated adjustment in scope; and (v) process the Additional Financing for the Tanzania Urban Resilience Program. The proposed restructuring is being processed to address only the required time extension. The Task Team had originally agreed with PORALG and the CMU to process a full restructuring in parallel with the envisioned Additional Financing (AF) for US$20 million. While the envelope for the proposed AF has increased to approximately US$120 million, ongoing delays in securing the request letter from the Ministry of Finance coupled with the upcoming initiation of new works packages in April 2020, necessitate the extension of time. The remaining recommendations from the MTR will be addressed in a second restructuring. This phased restructuring approach is being pursued due to The World Bank Dar es Salaam Metropolitan Development Project (P123134) the protracted experience of revising the legal agreement for the Urban Local Government Strengthening Program for Results (ULGSP). Compliance with safeguards policies. Overall compliance with triggered safeguards policies (Environmental Assessment OP/BP 4.01, Physical Cultural Resources OP/BP 4.11, and Involuntary Resettlement OP/BP 4.12) is rated as “Moderately Satisfactory.” While the PCU has overall managed safeguards risks effectively, site safety and occupational health management on construction sites need to be strengthened. During the last mission in November 2019, a refresher on the Environmental and Social Framework was presented, in addition to a presentation on road safety to sensitize and educate local authorities on urban road safety issues in highly congested areas and schools. GRM systems are in place and functional although reporting and monitoring could be strengthened. Fiduciary aspects. A review of financial management in November 2019 found that the project adhered to the credit’s financial covenants and the disbursement rate had progressively improved. Audits have been submitted on time and issues raised in audit reports have been addressed. The unaudited interim financial reports (IFR) are being prepared on a quarterly basis and reviewed by the Bank. They have been submitted on time and was reviewed and found satisfactory. Procurement, although delayed at the start of the project, has been carried out in accordance with the Bank’s guidelines. Building and maintaining fiduciary capacity will remain critical under the project, both for the PCU and the PIUs in Ilala, Kinondoni, and Temeke Municipal Councils. Both II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-55850 Effective 31-Dec-2020 30-Jun-2022 30-Oct-2022 TF-19389 Effective 31-Dec-2021 30-Jun-2022 30-Oct-2022