The World Bank LK GPOBA - Access to Sanitation Project (P111161) REPORT NO.: RES35689 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LK GPOBA - ACCESS TO SANITATION PROJECT APPROVED ON JUNE 8, 2011 TO DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA Water Global Practice South Asia Region Regional Vice President: Hartwig Schafer Country Director: Idah Z. Pswarayi-Riddihough Senior Global Practice Director: Jennifer J. Sara Practice Manager/Manager: Takuya Kamata Task Team Leader: Mathews K. Mullackal The World Bank LK GPOBA - Access to Sanitation Project (P111161) ABBREVIATIONS AND ACRONYMS GPOBA Global Partnership on Output Based Aid NWSDB National Water Supply and Drainage Board PDO Project Development Objective PPP Public Private Partnership The World Bank LK GPOBA - Access to Sanitation Project (P111161) BASIC DATA Product Information Project ID Financing Instrument P111161 Investment Project Financing Original EA Category Current EA Category Approval Date Current Closing Date 08-Jun-2011 30-Dec-2018 Organizations Borrower Responsible Agency Democratic Socialist Republic of Sri Lanka National Water Supply and Drainage Board Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 13.12 Total Financing 0.00 Financing Gap 0.00 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The objective of the Project is to improve sanitation services to low-income households in Greater Colombo by increasing the numberof sewerage house connections to existing and new sewerage networks and improving on-site sanitation services at household level. OPS_TABLE_PDO_CURRENTPDO The World Bank LK GPOBA - Access to Sanitation Project (P111161) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-99870 27-Dec-2011 27-Dec-2011 22-Jun-2012 30-Dec-2018 5.08 3.78 1.30 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project status: 1. This is a results-based financing project, funded by the Global Partnership on Output Based Aid (GPOBA)’s Trust Fund with two types of Outputs: increasing the number of sewer connections to households (Output 1) and improving on-site sanitation services at household level (Output 2). 2. To date, the project has resulted in 4,791 sewer connections against a planned target of 5,015 (96 percent), and 3,400 on-site connections against a target of 3,785 (90 percent), as reported by the PMU by mid of December. In total the project has delivered 8,191 outputs (93 percent). While the project performance was lagging in the initial years, in the past year, the National Water Supply and Drainage Board (NWSDB) has taken several measures such as procuring more contractors and intensifying demand generation activities, resulting in the steady increase in the rate of progress, as detailed in Table 1. Table 1: Recent Progress of the Project June 2017 Jan 2018 Mar 2018 Aug 2018 Dec 2018 Target Achievement: Output 1 3282 (65%) 4612 (92%) 4,772 (95%) 4,791 (96%) 4,791 (96%) 5015 Achievement: Output 2 9 (0.2%) 481 (13%) 812 (22%) 2,194 (58%) 3,400 (90%) 3785 Disbursement of grant $1.65m (32%) $ 2.3m (45%) $2.9m (57%) $3.8m (74%) $3.8m (74%) $5.08m 3. Scalable Approaches: The project has successfully piloted a menu of infrastructure options, which are scalable and sustainable, both in terms of technology and approach, as explained below. (a) The project supported three standalone decentralized sewerage networks cum waste water treatment systems (Dewats). The quality of effluent water was found to be better than acceptable standards and the cost of installation per household, including treatment has been found to be around one-tenth the cost for conventional sewer connection. The World Bank LK GPOBA - Access to Sanitation Project (P111161) (b) The project has piloted precast treatments units for onsite sanitation with anaerobic filter. The initial analysis of seven randomly selected units shows that Biological Oxygen Demand (BOD5) effluents is very low (highest 40 mg/l and average 24.5 mg/l). This shows a drastic improvement in the quality of effluents compared to conventional septic tanks which have a standard of 150-200 mg/lit (reference: Washington State Department of Health, Research Report, 2004). (c) The project has demonstrated a PPP approach for installation of treatment units and regularly scheduled desludging. It demonstrates the concept of a universal sanitation service which enables households to become legitimate “sanitation customers” of the utility, irrespective of whether services are provided by piped sewers or properly-managed and serviced on-site systems. B. Rationale for Restructuring. 4. The Bank processed a restructuring in October 2018 to make an amendment in the disbursement arrangements as per the request of the government. With the restructuring, the disbursement of 100% subsidy of Output 2 could be released in one tranche at completion, instead of two tranches- 80% at completion and 20% six months after completion. However, the government could not process the counter signature in the amendment letter to the grant agreement due to political and administrative changes in the country. 5. Now the government has appointed a new Secretary for Ministry of Finance and it is proposed to extend the closing date of the project by three months till March 2019, to facilitate the process of signing of the counter signature in the amendment to the grant agreement and successful closure of this project. II. DESCRIPTION OF PROPOSED CHANGES Closing Date 6. The closing date of the project will be extended by three months from Dec 30, 2018 till March 31, 2019 III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ The World Bank LK GPOBA - Access to Sanitation Project (P111161) Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications 31-Dec-2017, 30- TF-99870 Effective 31-Dec-2015 31-Mar-2019 30-Jun-2019 Dec-2018 Note to Task Teams: End of system generated content, document is editable from here.