The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) REPORT NO.: RES55873 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BANGLADESH INVESTMENT PROMOTION AND FINANCING FACILITY PROJECT II (IPFF II) APPROVED ON APRIL 5, 2017 TO PEOPLE’S REPUBLIC OF BANGLADESH FINANCE, COMPETITIVENESS AND INNOVATION SOUTH ASIA Regional Vice President: Martin Raiser Country Director: Abdoulaye Seck Regional Director: Mathew A. Verghis Practice Manager/Manager: Gabi George Afram Task Team Leader(s): Suhail Kassim The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) ABBREVIATIONS AND ACRONYMS FA Financing Agreement GoB Government of Bangladesh ICT Information and communications technology IPFF Investment Promotion and Financing Facility PDO Project Development Objective PPPA Public Private Partnership Authority TA Technical Assistance SDR Special Drawing Rights SUF Scale-Up Facility The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) BASIC DATA Product Information Project ID Financing Instrument P159429 Investment Project Financing Original EA Category Current EA Category Financial Intermediary Assessment (F) Financial Intermediary Assessment (F) Approval Date Current Closing Date 05-Apr-2017 30-Apr-2024 Organizations Borrower Responsible Agency PEOPLE’S REPUBLIC OF BANGLADESH Project Development Objective (PDO) Original PDO The PDO is to increase long-term financing for infrastructure and to build capacity of the local financial institutions for promoting private sector-led infrastructure financing in Bangladesh. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60040 05-Apr-2017 05-Nov-2017 22-Jan-2018 30-Apr-2024 100.00 57.88 47.25 IDA-60050 05-Apr-2017 05-Nov-2017 22-Jan-2018 30-Apr-2024 156.15 137.29 21.47 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. In the backdrop of substantial infrastructure gaps in the country, Bangladesh Investment Promotion and Financing Facility II (IPFF II) Project was approved by the World Bank Board in April 2017 as a follow-on to the initial IPFF Project with the same objective of increasing long-term financing for infrastructure and to build capacity of the local financial institutions for promoting private sector-led infrastructure financing in Bangladesh. 2. The project has disbursed USD 195 million (74 percent of total project allocation) against on-lending to sub-projects in diverse sectors including renewable energy, port, industrial parks, waste management, and information and communications technology (ICT). The current project ratings for achievement of the Project Development Objective (PDO), implementation progress, project management, procurement, and monitoring and evaluation (M&E) are moderately satisfactory, while financial management is rated satisfactory. The overall risk of the project remains substantial. The project closing date is April 30, 2024. 3. On March 14, 2023, the Government of Bangladesh (GoB) requested the World Bank to repurpose USD 100 million (equivalent) from IPFF II component 1 (Credit No. 6005-BD) with a view to recommitting the amount to other strategic priorities. The restructuring was processed on March 26, 2023. Following the resultant partial cancellation, the total allocation under IPFF II component 1 decreased by the same amount. As such, the available project allocation stands at USD 256.7 million, comprising USD 100 million equivalent under Credit No. 6004-BD (IDA Scale-Up Facility or SUF, originally denominated in Euro) and USD 156.7 million equivalent under Credit No. 6005-BD. 4. The implementation of and disbursement against component 2 (“Technical Assistance” or TA activities) (Credit No. 6004-BD), continues to be slow, especially against the amount allocated for the Public Private Partnership Authority (PPPA). This has resulted in a revised procurement plan with reduced allocation for PPPA. As such, there will be unspent allocation of approximately USD 7.0 million under the TA component. II. DESCRIPTION OF PROPOSED CHANGES 5. Reallocation between components: On April 27, 2023, the GoB requested the World Bank to reallocate USD 7.0 million (equivalent) of IDA funding from component 2 to component 1, given the slow disbursement of the allocation under component 2, resulting in confirmed unspent balance by the project closing date. In addition, USD 1.5 million (equivalent) of unutilized GoB counterpart funding will also be reallocated from component 2 to component 1. This restructuring will process the reallocation between components. This will also be reflected through amendment of the Financing Agreement (FA). 6. Changes in financing percentages: The partial cancellation processed on March 26, 2023, and the proposed reallocation between components 1 and 2, warrant a change in the financing percentage between component categories, as well as between IDA and SUF, which this restructuring will address through an amendment to the FA. The financing percentage for IDA 6004 and 6005 was fixed based on each of these two credit’s shares of allocation in the overall allocation. Since there has been a cancellation under IDA 6005, the financing percentage under both the credits would change. After considering the cancellation as of March 14, 2023, and the reallocation of USD 7.0 million from category 2 to category 1 under IDA 6005, the revised financing percentages work out to 59 percent under IDA 6004 and 41 percent under IDA 6005. Since this is on account of cancellation, this change in financing percentage is made applicable from the date of cancellation (i.e.) from March 14, 2023. The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) 7. Changes to Results Framework: a. The Mid-Term Review Mission (January 2021) noted that the supported infrastructure subprojects are expected to contribute to the creation of a significant number of full-time jobs by the project closing date, and that during a forthcoming project restructuring, this metric would be included in the Results Framework as an Intermediate Outcome Indicator (IOI). This restructuring will introduce a new IOI on “Jobs supported by IPFF II (Number)” with a baseline of ‘zero’ and target number of 10,000. b. In the aide memoire for the implementation support mission conducted in November 2022, it was agreed with the project authorities that the IOI on “Female beneficiaries from IPFF II” will be redefined to replace “directly benefiting from” with “directly employed by”, where such direct employment would exclude short- term construction labor. This restructuring will process this revised IOI definition. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Long-Term Infrastructure Long-Term Infrastructure 303.70 Revised 312.20 Financing Component Financing Component Technical Assistance Technical Assistance Component 13.00 Revised 4.50 Component TOTAL 316.70 316.70 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-60040-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: Facility Loans-Infra Financing 94,164,000.00 38,912,081.60 94,164,000.00 28.00 59 iLap Category Sequence No: FEF Current Expenditure Category: FRONT END FEE 236,000.00 236,000.00 236,000.00 Total 94,400,000.00 39,148,081.60 94,400,000.00 The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) IDA-60050-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: Facility Loans-Infra Financing 107,108,650.00 81,013,885.64 112,288,950.00 72.00 41 iLap Category Sequence No: 2 Current Expenditure Category: Gds exc. vch,Wrks,NCS,CS,OC,Trng 7,400,000.00 723,440.59 2,219,700.00 100.00 100.00 Total 114,508,650.00 81,737,326.23 114,508,650.00 . The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) . Results framework COUNTRY: Bangladesh Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) Project Development Objectives(s) The PDO is to increase long-term financing for infrastructure and to build capacity of the local financial institutions for promoting private sector-led infrastructure financing in Bangladesh. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Increasing long-term financing for infrastructure & building capacity of the local fin. institutions Equity investments from private sector 0.00 10,000,000.00 15,000,000.00 35,000,000.00 20,000,000.00 15,000,000.00 95,000,000.00 entrepreneurs under IPFF II (Amount(USD)) Long term debt financing for infrastructure under 0.00 40,000,000.00 60,000,000.00 100,000,000.00 120,000,000.00 86,700,000.00 406,700,000.00 IPFF II (Amount(USD)) Total investments in infrastructure under IPFF II 0.00 80,000,000.00 100,000,000.00 150,000,000.00 160,000,000.00 120,000,000.00 610,000,000.00 (Amount(USD)) Private Capital Mobilized 0.00 20,000,000.00 50,000,000.00 75,000,000.00 75,000,000.00 40,000,000.00 260,000,000.00 (Amount(USD)) PDO Table SPACE The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Long-Term Infrastructure Financing Component Financing volumes through innovative financial instruments deployed for 0.00 5,000,000.00 10,000,000.00 10,000,000.00 3,000,000.00 2,000,000.00 30,000,000.00 financing of infrastructure (Amount(USD)) At least 20 domestic financial institutions use 0.00 3.00 5.00 5.00 5.00 2.00 20.00 IPFF II credit line (Number) Female beneficiaries from 0.00 20.00 30.00 50.00 80.00 20.00 200.00 IPFF II (Number) Rationale: Action: This indicator has Redefined to replace “directly benefiting from” with “directly employed by”, where such direct employment would exclude short-term construction labor. been Revised Affected citizens' satisfaction with 0.00 75.00 75.00 75.00 75.00 75.00 75.00 infrastructure subprojects (Percentage) PFIs maintain eligibility 0.00 100.00 100.00 100.00 100.00 100.00 100.00 criteria (Percentage) Jobs supported by IPFF II 0.00 10,000.00 (Number) Rationale: Action: This indicator is The Mid-Term Review (January 2021) noted that the supported infrastructure subprojects are expected to contribute to the creation of a significant number of New full-time jobs by the Project Closing Date, and that during a forthcoming project restructuring, this metric would be included in the Project Results Framework as an intermediate indicator. The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Technical Assistance Component The capacity of financial institutions participating in IPFF II to undertake financial analysis of 0.00 50.00 80.00 50.00 10.00 10.00 200.00 infrastructure projects is strengthened - number of staff trained (Number) Environmental assessments are undertaken for all infrastructure projects 0.00 100.00 100.00 100.00 100.00 100.00 100.00 financed under the facility in coordination with the DoE (Percentage) E&S capacity developed; 0.00 30.00 100.00 50.00 10.00 10.00 200.00 staff trained (Number) IO Table SPACE The World Bank Bangladesh Investment Promotion and Financing Facility Project II (IPFF II) (P159429)