Restructuring Paper Disclosable- Ma'anshan Cihu River Basin Improvement Project - P126813

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Restructuring Paper Disclosable- Ma'anshan Cihu River Basin Improvement Project - P126813 (English)
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The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) REPORT NO.: RES28008 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MA'ANSHAN CIHU RIVER BASIN IMPROVEMENT PROJECT APPROVED ON JUNE 4, 2013 TO PEOPLE'S REPUBLIC OF CHINA SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Bert Hofman Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Abhas Kumar Jha Task Team Leader: Ximing Zhang The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) ABBREVIATIONS AND ACRONYMS EMP Environment Management Plan EPB Environmental Protection Bureau RAP Resettlement Action Plan PIA Project Implementing Agency PIU Project Implementing Units PLG Project Leading Group PMC Project Management Company PMO Project Management Office WRB Water Resource Bureau The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) BASIC DATA Product Information Project ID Financing Instrument P126813 Specific Investment Loan Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 04-Jun-2013 31-Jan-2019 Organizations Borrower Responsible Agency Ma'anshan Municipal Government,Huangshan District People's Republic of China PIU,Cihu Hi-Tech Zone PIU,Yushan District PIU Project Development Objective (PDO) Original PDO To improve drainage and flood protection capacity in urban areas of Ma’anshan Municipality Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-82510 04-Jun-2013 04-Jul-2013 24-Sep-2013 31-Jan-2019 100.00 29.04 70.96 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) Project Status 1. Overall project progress. Progress toward achieving the PDO remains on the track. The Project was approved by the World Bank Board on June 4, 2013, and declared effective on September 24, 2013. About 3.5 years have passed, and disbursements have reached 29.04 percent of the total Loan and overall implementation performance (IP) is Moderately Satisfactory. The Project Development Objective (PDO) remains relevant. The implementation progress for development objectives (DO) is Moderately Satisfactory. With the restructuring, the Project development objective remains unchanged and continues to be achievable considering the new implementation period herein proposed. Some of the project’s key achievements include: (i) direct project beneficiaries reached 300,000 (23.1% of final target) (key PDO indicator in PAD -the same hereafter in this para.); (ii) population benefiting from improved drainage reached to 200,000 (31.3% of final target) (key PDO indicator); and (iii) 50 km2 of area provided with drainage services (40.1% of final target); and 9km of river channel rehabilitated (61.2% of final target) (Intermediate indicator); and 14km of tributary and drainage canals rehabilitated (51.9% of final target) (intermediate indicator). 2. Environmental and Social Safeguards. The overall compliance with safeguard policies has been Moderately Satisfactory. The environmental action plan (EMP) and resettlement action plan (RAP) are implemented well in general. The EMP activities are proceeding generally well and have being monitored by an external environmental monitoring agency-Ma’anshan Environment Monitoring Station; The RAP activities are proceeding generally well and have being monitored by an external resettlement monitoring agency-Hehai University. The implementation of the EMP and RAP is generally moderately satisfactory. The EMP and RAP are properly updated based on the project activity changes and reviewed and accepted by the Bank task team. 3. Fiduciary performance. Project financial management system has been maintained as acceptable to the Bank. The required financial reports were submitted to the Bank on time. And the project audit reports have been submitted on time and consistently yielded unmodified opinions. Project procurement has been implemented based on the Bank Procurement Guidelines. 4. Compliance with covenants. Compliance with project legal covenants has been satisfactory. Rational for Restructuring 5. Regionals for restructuring. The severe competitive bidding process and over project budgeting of the project led to large amount of Bank loan savings. Up to date, most of the contracts have been issued, the contract value is only about 46% of the total bidding budget. Based on the current contract value, the Project Management Office (PMO) made an estimate, and the Bank task team concurred, that the Bank loan savings would be about US$55 million. After the project mid-term review, Ma’anshan City Government and PMO proposed level-2 project restructuring to utilize the loan savings to extend the project benefits. This restructuring paper is prepared based on the approved FSR in response to the ‘Proposal for the Amendment of Legal Agreements and Extension of Closing Date for Ma’anshan Cihui River Basin Improvement Project’ submitted by MOF of PRC on April 18, 2017. 6. Risk Assessment. Feasibility Study Reports for the newly added project activities have been approved by Provincial Development and Reform Commission. Almost all the Preliminary Design Reports for the newly added project activities are also drafted and under government review. Without extension, the client is hardly able to complete the newly added The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) project activities. Therefore, the one and half year extension from January 31, 2019 to July 31, 2020 will allow the client to complete all the project activities reducing the risks to project completion. II. DESCRIPTION OF PROPOSED CHANGES 1. The Project Development Objective remains unchanged and all new project activities will continue to improve drainage and flood protection capacity in urban areas of Ma'anshan Municipality. 2. After Mid-term review (MTR) , three project activities were added under the project Component 2: Rehabilitation of Tributaries and Drainage Canals with the total budget of civil works of US$81.27 million, with eligible expenditures to be 100% financed by the Bank. These activities include: (i) Carrying out of comprehensive treatment work on upstream tributary river of the Cihu River, including, inter alia, tributary river catchment improvement, renovation of rain and wastewater collection pipes and other drainage facilities improvement; (ii) Carrying out of comprehensive treatment work on midstream tributary river of the Cihu River, including, inter alia, tributary water system improvement, drainage facilities improvement for road networks, and sluice improvement; (iii) Carrying out of comprehensive treatment work on downstream tributary river of the Cihu River, including, inter alia, improvement of tributaries, gullies, and canals, and renovation of drainage facilities for road works. Project Component 3. The project components will not be changed. Changes in the following activities will be made as part of the restructuring of the project. The newly added project activities will be in Component 2. Project activities in Component 1 and 3 are reminder unchanged. 4. Component 2: Rehabilitation of Tributaries and Drainage Canals. To fully use the loan savings, the following subprojects are added in this component: (i) Comprehensive Treatment Project of Cihu River Upstream Tributary River, (ii) Comprehensive Treatment Project of Cihu River Midstream Tributary River and (iii) Comprehensive Treatment Project of Cihu River Downstream Tributary River. Financial Management. 5. The financial management capacity for new implementing agencies have been assessed by the Bank. The additional counterpart funds have been committed by district governments and PIU. All the changes have been reflected in the project Financial Management Manual. 6. Project costs. Table 1 shows the original project costs as presented in the Project Appraisal Document (PAD), and compared with the revised project costs after restructuring. (1) Table 1. Comparison between original and revised Project costs (in US$ Million) Project Component At Appraisal Restructuring IBRD IBRD Total IBRD Financing Total IBRD Financing US$ m US$ m % US$ m US$ m % The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) 1. Cihu River Rehabilitation and Drainage 101.40 57.79 57 59.08 20 33.8 Improvement 2. Rehabilitation of Tributaries and Drainage 83.32 39.36 47.2 163.6 77.33 47.3 Canals 3. Environmental Management and Monitoring 1.44 1.21 84 1.7 1.47 86.5 4. Capacity Building and Project Implementation Support 1.40 1.39 99 0.96 0.95 99.0 Baseline costs 187.56 99.75 53 225.34 99.75 44.3 Contingencies 18.73 0 0 27.14 0 0 Total Project Cost 206.29 99.75 48 252.48 99.75 39.5 Interest During Implementation 3.81 0 0 6.27 0 0 Front-end Fee 0.25 0.25 100 0.25 0.25 100 Total Financing Required 210.35 100.00 48 259 100.00 38.6 Disbursement 7. The disbursement percentage will not be changed for this restructuring. The project was restructured earlier in February 2016 when the civil works disbursement rate was increased to 100% and funds were also reallocated among the disbursement categories. Disbursement estimates are modified based on the new project closing date. Environment and Social Safeguards 8. The implementation of the RAP and EMP was generally moderately satisfactory, and the lessons mainly cover, among others, i) establishment of a capable resettlement implementation team within the Project Management Office system; ii) early engagement of the experienced external monitor; and iii) regular and result-based bank supervision. 9. A supplementary RAP and a supplementary EMP have been prepared for the newly added activities in compliance with applicable Chinese regulations and standards, as well as the safeguard policies of the World Bank. The new activities are similar to the ones under the original project, and mitigation measures are expected to mitigate the environment and resettlement impacts. The additional resettlement impacts are covered in the supplementary RAP. The new activities will not substantially change the overall project risks or requires any modification of the original environmental categorization (Category B) of the project. No new safeguards policies are being triggered. Public consultations were held to review and discuss the draft supplementary RAP and EMP, and final versions of both documents have been published locally on December 27, 2016 and on the Bank’s external website on June 8, 2017. Project Monitoring 10.Based on the changes, the project monitoring indicators have been revised and are presented in the section hereafter. Technical The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) 11.The proposed new subprojects are technically sound. The feasibility study reports have been reviewed by the Bank task team, and were approved by Provincial Development and Reform Commission. The design of subprojects continues to draw from the experience of the existing project design, and that of the municipal government agencies. The Project Consultant hired by PMO has provided technical feedback during the design stage, and will continue to provide technical support throughout project implementation. Project implementation 12.To ensure the added project activities being implemented smoothly, three project implementation unites (PIUs) would be added: Huashan District PIU, Yushan District PIU and Cihu Hi-Tech Zone PIU. These three PIUs would report to Ma’anshan PMO and shall be responsible for implementing their respective parts of the Project, including leading the engineering design, procurement, signing and management of contracts, counterpart funds provision, accounting and reporting, and authorizing disbursements for each Project activity accordingly. Project Extension 13.The project closing date will be extended from January 31, 2019 to July 31, 2020, to enable the completion of all proposed new project investments. The task team has provided intensive training on contract management, procurement management, financial management, and implementation of RAP and EMP, etc.; the PMO also visited other successful Bank projects to learn and exchange experiences on Bank project management. The PMO significantly improved their management capacity for more efficient on-site contract management, shorter bidding process, more efficient financial management, and quicker land acquisition and proper follow up of environment requirement. The task team and the PMOs have worked out time bound schedules for completing all the newly added project activities by 2020. No further extension is needed. III. SUMMARY OF CHANGES Changed Not Changed Change in Implementing Agency ✔ Change in Results Framework ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Institutional Arrangements ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Financial Management ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) IMPLEMENTING AGENCY Implementing Agency Name Type Action Implementing Ma'anshan Municipal Government No Change Agency Implementing Huangshan District PIU New Agency Implementing Cihu Hi-Tech Zone PIU New Agency Implementing Yushan District PIU New Agency RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Direct project beneficiaries The World Bank Ma'anshan Cihu River Basin Improvement Project (P126813) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 300000.00 1300000.00 No Cha
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