FOR OFFICIAL USE ONLY Report No: RES56326 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT RESTRUCTURING PAPER ON A PROPOSED PROGRAM RESTRUCTURING OF DOMINICAN REPUBLIC WATER SECTOR MODERNIZATION PROGRAM APPROVED ON MARCH 24, 2023 TO THE DOMINICAN REPUBLIC May 24, 2023 Water Global Practice Latin America And Caribbean Region Regional Vice President: Carlos Felipe Jaramillo Country Director: Michel Kerf Regional Director: Anna Wellenstein Practice Manager: David Michaud Craig Phillip Kullmann Task Team Leader(s): Marie-Laure Lajaunie The World Bank Dominican Republic Water Sector Modernization Program (P177823) ABBREVIATIONS AND ACRONYMS Santiago Water and Sewerage Corporation (Corporación de Acueducto y CORAASAN Alcantarillado de Santiago) La Vega Water and Sewerage Corporation (Corporación de Acueducto y CORAAVEGA Alcantarillado de La Vega) General Directorate of Governmental Accounting (Dirección General de DIGECOG Contabilidad Gubernamental) DLI Disbursement-linked Indicator DLR Disbursement-linked Result E&S Environmental and Social ESCP Environmental and Social Commitment Plan ESRS Environmental and Social Review Summary ESSA Environmental and Social Systems Assessment National Institute for Water Supply and Sewerage (Instituto Nacional de Aguas INAPA Potables y Alcantarillados) IPF Investment Project Financing LMP Labor Management Procedures Ministry of Economy, Planning, and Development (Ministerio de Economía, MEPyD Planificación y Desarrollo) MPA Multiphase Programmatic Approach PCMU Program Coordination and Management Unit PDO Project Development Objective PforR Program-for-Results PrDO Program Development Objective SEP Stakeholder Engagement Plan WSS Water Supply and Sanitation The World Bank Dominican Republic Water Sector Modernization Program (P177823) DATA SHEET (Dominican Republic Water Sector Modernization Program - P177823) BASIC DATA Project ID Financing Instrument IPF Component P177823 Program-for-Results Financing Yes Environmental and Social Risk Classification (ESRC) (IPF Component) Moderate Approval Date Current Closing Date 24-Mar-2023 31-Dec-2027 Organizations Borrower Responsible Agency Dominican Republic Multiphase Programmatic Approach (MPA) Program Development Objective To increase access to safely managed water and sanitation services in selected areas. Multiphase Programmatic Approach (MPA) Status (Public Disclosure) Status and Key Decisions (Public Disclosure) The Program was approved by the World Bank Board of Directors on March 24, 2023. The next steps to advance the Program are to sign the loan agreement, to receive Congressional approval, and to have the Ministry of Economy, Planning, and Development (MEPyD) meet the effectiveness conditions. Program Development Objective(s) The objectives of the Operation are to: (i) improve the planning capacity and operational and commercial efficiency of selected water supply and sanitation institutions; and (ii) increase access to safely managed water and sanitation services in selected water stressed areas. OPS_TABLE_PDO_CURRENTPDO Page 1 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) Summary Status of Financing (US$, Millions) Net Approval Effectiveness Closing Ln/Cr/TF Signing Date Commitment Disbursed Undisbursed Date Date Date 24-Mar- IBRD-94900 31-Dec-2027 250.00 0 250.00 2023 Policy Waiver(s) Does the Program require any waivers of Bank policies applicable to Program-for-Results operations? No Page 2 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) I. PROGRAM STATUS AND RATIONALE FOR RESTRUCTURING A. Introduction 1. This Restructuring Paper seeks the approval of the Country Director for a Level II Restructuring of the Loan Agreement draft (IBRD Loan No. 9490-DO) for the Dominican Republic Water Sector Modernization Program (P177823), “the Program,” in the amount of US$250 million. The proposed restructuring responds to a request of the Government of the Dominican Republic to extend the delivery date for one disbursement-linked result (DLR) for 2023. There will be no other changes in the Multiphase Programmatic Approach Program Development Objective (PrDO), the Program Development Objective (PDO), or disbursement-linked indicators (DLI). B. Program Background and Status 2. The International Bank for Reconstruction and Development (IBRD) loan of US$250 million for the Program was approved by the World Bank Group Board of Executive Directors on March 24, 2023, with a Program closing date of December 31, 2027. The Loan Agreement is pending signature, therefore, is not yet effective. The Program is the first phase of a 10-year Multiphase Programmatic Approach (MPA) with the PrDO being to increase access to safely managed water and sanitation services in selected areas. The PDO of phase I is to: (i) improve the planning capacity and operational and commercial efficiency of selected water supply and sanitation institutions; and (ii) increase access to safely managed water and sanitation services (WSS) in selected water stressed areas. 3. The PDO is to be achieved through three results areas. Results area 1 will support expenditures and activities related to: (i) rehabilitation and extension of water supply networks, rehabilitation and construction of water treatment plants, and reduction of physical water losses; and (ii) implementation of social engagement strategies to connect households to existing sewers, rehabilitating and expanding sewerage networks, and rehabilitating and constructing wastewater treatment plants. Results area 2 will focus on improved planning capacity and operational and commercial efficiency through: (i) annual water audits, non-revenue water (NRW) reduction strategies, and improved planning for NRW; (ii) annual energy audits, energy efficiency strategies, electrical system rehabilitation, and pump rehabilitation or replacement; (iii) digitalization and update of WSS network and user cadasters; and (iv) improved operating plans, investment plans, operational and capital budgets, and procurement plans. Results area 3 will support expenditures and activities related to: (i) improving the quantity and quality of operational and commercial data generated by the WSS service providers; (ii) promotion of process improvements to modernize billing and collection systems and improve transparency, financial management and reporting, citizen engagement, and gender equity; and (iii) improved performance monitoring of WSS providers. The Program also has an Investment Project Financing (IPF) component that will finance supervision, coordination, monitoring, and evaluation of the entire operation as well as capacity building related to WSS and water resource management. The latest Implementation Status and Results Report (dated May 12, 2023) recognizes Satisfactory ratings for progress towards achievement of the PDO and overall implementation progress. 4. In a sign of strong commitment to the Program, the Government provided incremental budget to participating WSS service providers for fiscal year 2023. The three participating WSS service providers [the Santiago Water and Sewerage Corporation (Corporación de Acueducto y Alcantarillado de Santiago, CORAASAN), La Vega Water and Sewerage Corporation (Corporación de Acueducto y Alcantarillado de La Vega, CORAAVEGA), and National Water and Sewerage Institute (Instituto Nacional de Aguas Potables y Alcantarillados, INAPA)] are already using government funds to advance toward the achievement of the Program results specified for 2023. Page 3 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) C. Rationale for Program Restructuring 5. The proposed restructuring responds to the Borrower’s letter MH-2023-013715, dated May 9, 2023, requesting that the deadline for DLR 9.a (iii) associated with disbursement-linked indicator (DLI) 9 Strengthened Corporate Governance be extended within the country´s fiscal year (FY) 2023. 6. Initially, the deadline to deliver DLR 9.a (iii) within seven months in FY 2023 was set too ambitiously given the Program officially launched in January 2023. DLR 9.a (iii) requires the three participating WSS providers have their FY 2022 financial statements audited and published on the WSS service provider’s website within seven months after the end of the country´s fiscal year. In order to achieve this result, the providers would have needed to contract the auditing firm by the beginning of 2023. To do this, the providers would have needed available budget in FY 2022 to start the procurement processes to contract the auditing firms, which they did not have. 7. Recognizing that 2023 is the startup phase of the Program, that there is a learning curve for the involved WSS providers, and that the DLR will still be delivered in 2023, revising the deadline for DLR 9.a (iii) is reasonable. This type of delay is not expected to occur during future years of Program implementation as the providers will have had sufficient time to plan and allocate resources to start the procurement process for the required financial audits within the specified timeline. II. DESCRIPTION OF PROPOSED CHANGES 8. The proposed restructuring will only change the delivery date of DLR 9.a (iii) from 7 months to 12 months. There will be no changes to the results expected from the participating WSS providers in year 2023. DLR 9.a (iii) will be amended from the current text “The FY 2022 annual financial statements of the respective WSS Service Provider are audited and published in the WSS Service Provider's website within 7 months after the end of the Fiscal Year, based on the financial reporting guidance standards approved by the DIGECOG;” to read “The FY 2022 annual financial statements of the respective WSS Service Provider are audited and published in the WSS Service Provider's website within 12 months after the end of the Fiscal Year, based on the financial reporting guidance standards approved by the DIGECOG.” This change will be reflected in the Program Appraisal Document and the Loan Agreement. Environmental and Social Assessment (IPF component) 9. The overall environmental and social (E&S) compliance of the Project activities under the IPF component is Satisfactory. The Loan Agreement is yet to be signed. Activities have not changed since the Project's appraisal stage and the key measures related to the E&S risk management remain the same as the ones detailed in the Project's Appraisal E&S Review Summary (ESRS).1 To manage the E&S risks of the IPF component activities, the Borrower prepared and disclosed an Environmental and Social Commitment Plan (ESCP), which outlines the expectations in terms of E&S risk management.2 The Borrower also disclosed a draft version of the project's Stakeholder Engagement Plan (SEP).3 As per the ESCP, the Borrower is also expected to disclose final versions of the Project's Labor Management Procedures (LMP) and final version of the SEP no later than 120 days after effectiveness. The Project is not yet effective. 1 ESRS available at: http://documents.worldbank.org/curated/en/099610311292285296/P1778230cce57e0270bda40a41af1428837 2 ESCP available at: http://documents.worldbank.org/curated/en/099151502152354555/P177823038acb00d0821c0a1aaefb66c6a 3 SEP available at: https://documents1.worldbank.org/curated/en/099610111292221381/pdf/P17782303f36ed000bb2c01226504e580f.pdf Page 4 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) 10. As a hybrid Program for Results (PforR) operation with an IPF component, the Bank prepared an Environmental and Social Systems Assessment (ESSA). The ESSA was disclosed in February 2023.4 The ESSA includes actions to strengthen the Borrower's ability to manage the E&S risks of the activities under the PforR operation. Once those actions are implemented, they are also expected to enhance the client's ability to manage the E&S of the IPF component of the Project in accordance with the applicable provisions of the Environmental and Social Framework. 4 ESSA available at: https://documents1.worldbank.org/curated/en/099023503032386985/pdf/P17782309f48de0f0897b04c0c43d4dd53.pdf Page 5 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Implementing Agency ✔ Change in Program's Development Objectives ✔ Change in MPA Program Development Objective ✔ Change in MPA Expected Results and Indicators ✔ Change in Program Scope ✔ Change in Loan Closing Date(s) ✔ Change in Cancellations Proposed ✔ Reallocation between and/or Change in DLI ✔ Change in IPF Component ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Technical Method ✔ Change in Fiduciary ✔ Change in Environmental and Social Aspects ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) Page 6 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) MPA PROGRAM DEVELOPMENT OBJECTIVE Current MPA Program Development Objective To increase access to safely managed water and sanitation services in selected areas. EXPECTED MPA PROGRAM RESULTS Current Expected MPA Results and their Indicators for the MPA Program The MPA expected outcome is to increase access to safely managed water and sanitation services in selected areas. The PrDO will be measured by two results indicators: (1) Increased access to safely managed water services and (2) Increased access to safely managed sanitation services. OPS_DETAILEDCHANGES_COMPONENTS_TABLE . Page 7 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) ANNEX 1: RESULTS FRAMEWORK . . Results framework Program Development Objectives(s) The objectives of the Operation are to: (i) improve the planning capacity and operational and commercial efficiency of selected water supply and sanitation institutions; and (ii) increase access to safely managed water and sanitation services in selected water stressed areas. Program Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 To improve the planning capacity of selected water supply and sanitation (WSS) institutions Strengthened WSS 0.22 | 0.48 | 0.33 n.a. 0.38 | 0.61 | 0.53 0.78 | 0.76 | 0.73 0.87 | 0.88 | 0.86 0.99 | 0.99 | 0.99 performance monitoring (Text) 3 b. (i) Achievements 3 c. (i) Achievements 3 d. (i) Achievements 3 e. (i) Achievements against Performance against Performance against Performance against Performance Agreement evaluated by Agreement evaluated by Agreement evaluated by Agreement evaluated by Strengthened accountability PCMU and annual goals PCMU and annual goals PCMU and annual goals PCMU and annual goals and improved operational Not Achieved. 3.00 updated by WSS Service updated by WSS Service updated by WSS Service updated by WSS Service planning capacity (Text) Provider and published provider and published provider and published provider and published in in the respective WSS in the respective WSS in the respective WSS the respective WSS Service provider's Service provider's Service provider's Service provider's website; AND website; AND website; AND website; AND Page 8 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 (ii) Annual operating and (ii) Annual operating and (ii) Annual operating and (ii) Annual operating and capital investment capital investment capital investment capital investment budget budget prepared and budget prepared and budget prepared and prepared and approved approved by the approved by the approved by the by the respective WSS respective WSS Service respective WSS Service respective WSS Service Service provider’s board provider’s board of provider’s board of provider’s board of of directors according to directors according to directors according to directors according to the dates established in the dates established in the dates established in the dates established in DIGEPRES’ guidelines for DIGEPRES’ guidelines for DIGEPRES’ guidelines for DIGEPRES’ guidelines for budget formulation; AND budget formulation; budget formulation; budget formulation; (iii) At least 80% of AND AND AND activities related to (iii) At least 65% of (iii) At least 70% of (iii) At least 75% of efficiency improvement activities related to activities related to activities related to included in the POA for efficiency improvement efficiency improvement efficiency improvement the year implemented included in the POA for included in the POA for included in the POA for and completed by the the year implemented the year implemented the year implemented respective WSS Service and completed by the and completed by the and completed by the provider as planned. respective WSS Service respective WSS Service respective WSS Service provider as planned. provider as planned. provider as planned. To improve the operational and commercial efficiency of selected WSS institutions Reduced non-revenue water 0|0|0 n.a. n.a. -2.0 | -2.9 | -1.3 -9.0 | -11.0 | -5.0 -13.0 | -15.9 | -9.3 (Text) To increase access to safely managed water and sanitation services in selected water stressed areas Households serviced with safely managed water supply 0.00 34.70 (Number (Thousand)) Page 9 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 Households serviced with safely managed sanitation 0.00 76.30 (Number (Thousand)) PDO Table SPACE Intermediate Results Indicators by Result Areas RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 Strengthen policies and institutions for WSS services Percentage of women in engineering and technical 5.5 | 15.5 | 31.0 6.5 | 16.5 | 39.0 positions (Text) Percentage point improvement in customer Baselines established in Year 1 7.5 | 7.5 | 7.5 15 | 15 | 15 satisfaction (Text) Number of learning pilots implemented (Number) 0.00 3.00 Improve policies and institutions for WRM National water information system strengthened Not Achieved Achieved and used for decision-making (Text) Methodology for water rights formalization Not Achieved Achieved developed and approved (Text) Proposal for restructuring of the WRM Not Achieved Achieved institutional framework completed (Text) IO Table SPACE Page 10 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) Disbursement Linked Indicators Matrix DLI IN01295932 ACTION DLI 1 Households serviced with safely managed water supply Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Number Outcome Yes 25,000,000.00 0.00 (Thousand) Period Value Allocated Amount (USD) Formula Baseline 0.00 Disbursement = Additional safely 2023 0.00 0.00 managed water connections * A where: A: $721/ connection Disbursement = Additional safely 2024 0.00 0.00 managed water connections * A where: A: $721/ connection Disbursement = Additional safely 2025 0.00 0.00 managed water connections * A where: A: $721/ connection Disbursement = Additional safely 2026 0.00 0.00 managed water connections * A where: A: $721/ connection Disbursement = Additional safely 2027 34.70 25,000,000.00 managed water connections * A where: A: $721/ connection Page 11 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) DLI IN01295933 ACTION DLI 2 Households serviced with safely managed sanitation Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Number Outcome Yes 25,000,000.00 0.00 (Thousand) Period Value Allocated Amount (USD) Formula Baseline 0.00 Disbursement = Additional safely 2023 0.00 0.00 managed sanitation connections * A where: A: $328 / connection Disbursement = Additional safely 2024 0.00 0.00 managed sanitation connections * A where: A: $328 / connection Disbursement = Additional safely 2025 0.00 0.00 managed sanitation connections * A where: A: $328 / connection Disbursement = Additional safely 2026 0.00 0.00 managed sanitation connections * A where: A: $328 / connection Disbursement = Additional safely 2027 76.30 25,000,000.00 managed sanitation connections * A where: A: $328 / connection Page 12 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) DLI IN01295934 ACTION DLI 3 Strengthened accountability and improved planning capacity Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 11,250,000.00 0.00 Period Value Allocated Amount (USD) Formula Despite dependence on central government transfers, WSS providers do not agree on the results (value for money) to be achieved in a given year in Baseline line with strategic priorities. Lack of correlation between institutional strategic plans (PEI), annual operating plans (POA), and annual budget. 3a. (i) Performance Agreement signed; AND (ii) Four-year PEI including the POA and the related budget prepared and approved by the respective 2023 1,500,000.00 Achieved/Not Achieved WSS Service provider’s board of directors or Executive Director according to the requirements of the respective provider. 3 b. (i) Achievements against Performance Agreement evaluated by PCMU and annual goals updated by WSS Service Provider and published in the respective WSS Service provider's website; AND (ii) Annual operating and capital investment budget prepared and approved by the respective WSS 2024 Service provider’s board of directors according to 2,440,000.00 Achieved/Not Achieved the dates established in DIGEPRES’ guidelines for budget formulation; AND (iii) At least 65% of activities related to efficiency improvement included in the POA for the year implemented and completed by the respective WSS Service provider as planned. Page 13 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) 3 c. (i) Achievements against Performance Agreement evaluated by PCMU and annual goals updated by WSS Service provider and published in the respective WSS Service provider's website; AND (ii) Annual operating and capital investment budget prepared and approved by the respective WSS 2025 Service provider’s board of directors according to 2,440,000.00 Achieved/Not Achieved the dates established in DIGEPRES’ guidelines for budget formulation; AND (iii) At least 70% of activities related to efficiency improvement included in the POA for the year implemented and completed by the respective WSS Service provider as planned. 3 d. (i) Achievements against Performance Agreement evaluated by PCMU and annual goals updated by WSS Service provider and published in the respective WSS Service provider's website; AND (ii) Annual operating and capital investment budget prepared and approved by the respective WSS 2026 Service provider’s board of directors according to 2,440,000.00 Achieved/Not Achieved the dates established in DIGEPRES’ guidelines for budget formulation; AND (iii) At least 75% of activities related to efficiency improvement included in the POA for the year implemented and completed by the respective WSS Service provider as planned. 3 e. (i) Achievements against Performance Agreement evaluated by PCMU and annual goals updated by WSS Service provider and published in 2027 the respective WSS Service provider's website; AND 2,430,000.00 Achieved/Not Achieved (ii) Annual operating and capital investment budget prepared and approved by the respective WSS Service provider’s board of directors according to Page 14 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) the dates established in DIGEPRES’ guidelines for budget formulation; AND (iii) At least 80% of activities related to efficiency improvement included in the POA for the year implemented and completed by the respective WSS Service provider as planned. DLI IN01295935 ACTION DLI 4 Improved capital budget planning and implementation Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 9,750,000.00 0.00 Period Value Allocated Amount (USD) Formula Significant deviation between budget and executed Baseline budget. 2023 0.00 0.00 n.a. In Year 2, each WSS Service provider has prepared a costed annualized procurement plan for capital 2024 investments, with an associated cash plan, and 2,440,000.00 Achieved/Not Achieved included it as part of their respective annual budget proposal to the Borrower for FY25. In Year 3, each WSS Service provider has prepared a costed annualized procurement plan for capital 2025 investments, with an associated cash plan, and 2,440,000.00 Achieved/Not Achieved included it as part of their respective annual budget proposal to the Borrower for FY26. In Year 4, each WSS Service provider has prepared a 2026 costed annualized procurement plan for capital 2,440,000.00 Achieved/Not Achieved investments, with an associated cash plan, and Page 15 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) included it as part of their respective annual budget proposal to the Borrower for FY27. In Year 5, each WSS Service provider has prepared a costed annualized procurement plan for capital 2027 investments, with an associated cash plan, and 2,430,000.00 Achieved/Not Achieved included it as part of their respective annual budget proposal to the Borrower for FY28. DLI IN01295936 ACTION DLI 5 Increased collection rates Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 13,500,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 78.3 | 79.1 | 66.1 2023 0.00 0.00 n.a. 2024 0.00 0.00 n.a. 2025 1.0 | 1.0 | 11.9 3,000,000.00 Achieved/Not Achieved 2026 3.0 | 3.0 | 16.9 4,500,000.00 Achieved/Not Achieved 2027 5.0 | 5.0 | 18.9 6,000,000.00 Achieved/Not Achieved Page 16 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) DLI IN01295937 ACTION DLI 6 Improved operational planning, NRW performance, and energy efficiency Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 34,500,000.00 0.00 Period Value Allocated Amount (USD) Formula Lack of robust analysis to break down the problems of NRW and energy inefficiency and lack of strategic Baseline planning and prioritization of NRW and EE in POAs and budgets. Network and user registries are not up to date and negatively impact utility efficiency. 6 a. (i) Provisional NRW reduction and energy efficiency strategies developed and adopted by the respective WSS Service provider and approved by its management; AND (ii) Annual investment plan for the reduction of NRW and improved energy 2023 2,500,000.00 Achieved/Not Achieved efficiency developed by the respective WSS Service provider and approved by its management; and ; AND (iii) Inclusion of the costs identified in the corresponding annual investment plan in the annual budget of the respective WSS Service provider. 6 b. (i) Annual water audits in Priority Hydraulic Systems and Sectors as identified in provisional NRW strategy and energy audits in priority facilities as identified in the energy efficiency provisional strategy completed, and monitoring measures 2024 8,000,000.00 Achieved/Not Achieved implemented by the respective WSS Service provider; AND (ii) Development and adoption by the respective WSS Service provider of an NRW and energy strategy based on water and energy audits; AND (iii) NRW and energy efficiency activities (as set Page 17 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) forth in the Verification Protocol for each WSS Service Provider) included by the respective WSS Service provider in the POA and in its budget, and are being implemented, and the annual results are monitored, reported and published in the WSS Service providers’ website; AND (iv) Strategy to digitize Users Cadaster and Network Cadaster developed and approved by the respective WSS Service provider management. 6 c. (i) Annual water audit in Priority Hydraulic Systems and Sectors as identified in NRW strategy and energy audit in Selected Facilities and monitoring measures implemented by the respective WSS Service provider; AND (ii) Respective WSS Service provider NRW and energy strategies are updated based on annual water and energy audits; AND (iii) NRW and energy efficiency activities included (as set forth in the Verification Protocol for 2025 each WSS Service Provider) by the respective WSS 8,000,000.00 Achieved/Not Achieved provider in the POA and in its budget, and are being implemented, and the annual results are monitored, reported and, published in the WSS Service providers’ website; AND (iv) Digitalization of Water Network Cadaster and Users Cadaster plan is implemented by the respective WSS Service provider, covering at least 60% of the water network and 80% of the users in priority hydraulic sectors. 6 d. (i) Annual water audit in priority Hydraulic Systems and Sectors as identified in NRW strategy 2026 and energy audit in Selected Facilities and 8,000,000.00 Achieved/Not Achieved monitoring measures implemented by the respective WSS Service provider; AND (ii) Respective Page 18 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) WSS provider NRW and energy strategies are updated based on annual water and energy audits; AND (iii) NRW and energy efficiency activities (as set forth in the Verification Protocol for each WSS Service Provider) included by the respective WSS provider in the POA and in its budget, and are being implemented, and the annual results are monitored, reported and, published in the WSS Service providers’ website; AND (iv) Digitalization of Water Network Cadaster and Users Cadaster plan is implemented by the respective WSS Service provider, covering at least 75% of the water network and 80% of the users in priority hydraulic sectors. 6 e. (i) Annual water audit in priority hydraulic systems and sectors as identified in NRW strategy and energy audit in selected facilities and monitoring measures implemented by the respective WSS Service provider; AND (ii) Respective WSS provider NRW and energy strategies are updated based on annual water and energy audits; AND (iii) NRW and energy efficiency activities (as set forth in the Verification Protocol for each WSS 2027 Service Provider) included by the respective WSS 8,000,000.00 Achieved/Not Achieved provider in the POA and in its budget, and are being implemented, and the annual results are monitored, reported and, published in the WSS Service providers’ website; AND (iv) Digitalization of Water Network Cadaster and Users Cadaster plan is implemented by the respective WSS Service provider, covering at least 95% of the water network and 100% of the users in priority hydraulic sectors. Page 19 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) DLI IN01295938 ACTION DLI 7 Reduced non-revenue water (NRW) Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome No Text 15,250,000.00 0.00 Period Value Allocated Amount (USD) Formula Will be established in year 2024 or earlier based on Baseline water audits. 2023 0.00 0.00 n.a. 2024 0.00 0.00 n.a. 2025 -2.0 | -2.9 | -1.3 4,000,000.00 Achieved/Not Achieved 2026 -9.0 | -11.0 | -5.0 5,150,000.00 Achieved/Not Achieved 2027 -13.0 | -15.9 | -9.3 6,100,000.00 Achieved/Not Achieved DLI IN01295939 ACTION DLI 8 Improved energy efficiency Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 15,250,000.00 0.00 Period Value Allocated Amount (USD) Formula Will be established in year 2024 or earlier based on Baseline energy audits. 2023 0.00 0.00 n.a. 2024 0.00 0.00 n.a. Page 20 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) 2025 -5.3 | -7.9 | -3.8 4,000,000.00 Achieved/Not Achieved 2026 -18.0 | -16.4 | -13.0 5,150,000.00 Achieved/Not Achieved 2027 -22.6 | -21.5 | -22.0 6,100,000.00 Achieved/Not Achieved DLI IN01295940 ACTION DLI 9 Strengthened corporate governance Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 50,500,000.00 0.00 Period Value Allocated Amount (USD) Formula (i) Lack of transparency in planning and execution; AND (ii) Lack of modern and efficient methods for billing, collection, and payment; AND (iii) Financial Baseline statements are not standardized among the WSS providers and do not comply with the good practices; AND (iv) There is a gender gap between male and female employees of the WSS providers. 9 a. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published in the WSS Service providers’ website after the end of each quarter; AND (ii) Specifications for system requirements and business processes for digitizing 2023 3,000,000.00 Achieved/Not Achieved billing and collection systems completed and approved by the respective WSS Service provider’s management, and innovative consumer payment mechanisms identified and approved by said WSS Service provider’s management; AND (iii) The FY22 annual financial statements of the respective WSS Page 21 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) Service provider are audited and published in the WSS Service provider's website within 7 months after the end of the fiscal year, based on the financial reporting guidance standards approved by the DIGECOG; AND (iv) A Gender Action Plan is developed by the WSS providers and approved by the respective WSS Service provider's management. 9 b. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published on the WSS Service providers’ website after the end of each quarter; AND (ii) Billing and collection systems are digitized, and innovative consumer payment mechanisms are tried, tested and approved by the respective WSS Service provider’s management; 2024 AND (iii) The FY23 annual financial statements of the 11,600,000.00 Achieved/Not Achieved respective WSS Service provider are audited and published in the WSS Service provider’s website within 7 months after the end of the fiscal year, based on the financial reporting guidance standards approved by the DIGECOG; AND (iv) 65% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. 9 c. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published on the WSS Service providers’ website after the end of each 2025 quarter; AND (ii) Digitized billing and collection 11,800,000.00 chieved/Not Achieved systems and innovative consumer payment mechanisms are implemented by the respective WSS Service provider; AND (iii) The FY24 annual financial statements of the respective WSS Service Page 22 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) provider are audited and published in the WSS Service provider’s website within 6 months after the end of the fiscal year, based on the financial reporting guidance standards approved by the DIGECOG; AND (iv) 70% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. 9 d. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published on the WSS Service providers’ website after the end of each quarter; AND (iii) Digitized billing and collection systems and innovative consumer payment mechanisms are implemented and maintained by the respective WSS Service provider; AND (iii) The 2026 FY25 annual financial statements of the respective 11,970,000.00 chieved/Not Achieved WSS Service provider are audited and published in the WSS Service provider’s website within 5 months after the end of the fiscal year, based on the financial reporting guidance standards approved by DIGECOG; AND (iv) 75% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. 9 e. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published on the WSS Service providers’ website after the end of each 2027 12,130,000.00 chieved/Not Achieved quarter; AND (ii) Digitized billing and collection systems and innovative consumer payment mechanisms are implemented and maintained by the respective WSS Service provider; AND (iii) The Page 23 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) FY26 annual financial statements of the respective WSS Service provider are audited and published in the WSS Service provider’s website within 4 months after the end of the fiscal year, based on the financial reporting guidance standards approved by DIGECOG; AND (iv) 80% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. Action: This DLI has been Revised. See below. DLI IN01297721 ACTION DLI 9 Strengthened corporate governance Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 50,500,000.00 0.00 Period Value Allocated Amount (USD) Formula (i) Lack of transparency in planning and execution; AND (ii) Lack of modern and efficient methods for billing, collection, and payment; AND (iii) Financial Baseline statements are not standardized among the WSS providers and do not comply with the good practices; AND (iv) There is a gender gap between male and female employees of the WSS providers. 9 a. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published in the WSS 2023 Service providers’ website after the end of each 3,000,000.00 Achieved/Not Achieved quarter; AND (ii) Specifications for system requirements and business processes for digitizing billing and collection systems completed and Page 24 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) approved by the respective WSS Service provider’s management, and innovative consumer payment mechanisms identified and approved by said WSS Service provider’s management; AND (iii) The FY22 annual financial statements of the respective WSS Service provider are audited and published in the WSS Service provider's website within 12 months after the end of the fiscal year, based on the financial reporting guidance standards approved by the DIGECOG; AND (iv) A Gender Action Plan is developed by the WSS providers and approved by the respective WSS Service provider's management. 9 b. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published on the WSS Service providers’ website after the end of each quarter; AND (ii) Billing and collection systems are digitized, and innovative consumer payment mechanisms are tried, tested and approved by the respective WSS Service provider’s management; 2024 AND (iii) The FY23 annual financial statements of the 11,600,000.00 Achieved/Not Achieved respective WSS Service provider are audited and published in the WSS Service provider’s website within 7 months after the end of the fiscal year, based on the financial reporting guidance standards approved by the DIGECOG; AND (iv) 65% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. 9 c. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the 2025 11,800,000.00 chieved/Not Achieved corresponding fiscal year published on the WSS Service providers’ website after the end of each Page 25 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) quarter; AND (ii) Digitized billing and collection systems and innovative consumer payment mechanisms are implemented by the respective WSS Service provider; AND (iii) The FY24 annual financial statements of the respective WSS Service provider are audited and published in the WSS Service provider’s website within 6 months after the end of the fiscal year, based on the financial reporting guidance standards approved by the DIGECOG; AND (iv) 70% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. 9 d. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the corresponding fiscal year published on the WSS Service providers’ website after the end of each quarter; AND (iii) Digitized billing and collection systems and innovative consumer payment mechanisms are implemented and maintained by the respective WSS Service provider; AND (iii) The 2026 11,970,000.00 chieved/Not Achieved FY25 annual financial statements of the respective WSS Service provider are audited and published in the WSS Service provider’s website within 5 months after the end of the fiscal year, based on the financial reporting guidance standards approved by DIGECOG; AND (iv) 75% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. 9 e. (i) PEI and quarterly and cumulative quarterly Budget Execution Reports (i.e. 4 in total) for the 2027 corresponding fiscal year published on the WSS 12,130,000.00 chieved/Not Achieved Service providers’ website after the end of each quarter; AND (ii) Digitized billing and collection Page 26 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) systems and innovative consumer payment mechanisms are implemented and maintained by the respective WSS Service provider; AND (iii) The FY26 annual financial statements of the respective WSS Service provider are audited and published in the WSS Service provider’s website within 4 months after the end of the fiscal year, based on the financial reporting guidance standards approved by DIGECOG; AND (iv) 80% of the actions scheduled in the Gender Action Plan for the year are implemented by the respective WSS Service provider. Rationale: The delivery date for DLR 9 a. (iii) was changed from 7 months to 12 months. DLI IN01295941 ACTION DLI 10 Strengthened performance monitoring Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 25,000,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.22 | 0.48 | 0.33 2023 0.00 0.00 n.a. 2024 0.38 | 0.61 | 0.53 5,950,000.00 Achieved/Not Achieved 2025 0.78 | 0.76 | 0.73 6,100,000.00 Achieved/Not Achieved 2026 0.87 | 0.88 | 0.86 6,330,000.00 Achieved/Not Achieved Page 27 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) 2027 0.99 | 0.99 | 0.99 6,620,000.00 Achieved/Not Achieved Page 28 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) ANNEX 2: PROGRAM ACTION PLAN . . PAP_NOT_CHANGE_TBL Action Description Source DLI# Responsibility Timing Completion Measurement PCMU establishes performance WSS performance monitoring monitoring framework established with framework for protocols for reporting included WSS providers. Technical PCMU/MEPyD Due Date 31-Dec-2023 in the OM. MEPyD (DGIP) enters the budget for investment projects with approved SNIP codes into SIGEF in a timely manner to ensure WSS Verification that budgets for all providers can projects with SNIP codes are spend the funds. Technical DGIP/MEPyD Recurrent Quarterly entered into SIGEF. The Program financial statements are prepared following approved guidelines by DIGECOG, subject Annual verifications by an to external audit, PCMU/MEPyD, independent verification agent and are publicly DIGECOG, WSS will confirm if providers are available. Fiduciary Systems DLI 9 providers Recurrent Yearly complying with DLI 9. Consolidation of information on all credible and material complaints on fraud and corruption under the Program and actions taken or being taken, with report promptly Report on fraud and corruption shared with World cases and how they have been Bank. Fiduciary Systems PCMU/MEPyD Recurrent Yearly resolved submitted to the Bank. Preparation and Language for implementation of bidding a clause in the documents to Bidding documents include clause bidding Fiduciary Systems PCMU/MEPyD Other be agreed on complaints handling. Page 29 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) documents on the within 12 handling of months of complaints, which implementation includes a detailed , then included description of the in all procedure procurement through which a processes. timely and fair revision of the complaint is ensured. Promote the adoption of good international practices on the management of E&S impacts in the design, implementation, and monitoring of projects, per ESSA recommendations, including the sharing of good practices among participating Environmental and Social Report of international good institutions. Systems MEPyD Recurrent Continuous practices adopted. Capacity building support to the providers to implement strategies that promote the effective participation of citizens and beneficiaries on an ongoing basis, particularly in terms of grievance mechanisms, Report on capacity building prioritizing Environmental and Social activities to WSS providers and vulnerable groups. Systems PCMU/MEPyD Recurrent Continuous actions taken by providers. Establish an environmental and social unit for CORAAVEGA. Strengthen existing environmental Report on the establishment of and social units at the unit in CORAAVEGA and CORAASAN and WSS providers, Within 12 activities to strengthen E&S INAPA Central, Environmental and Social support from months after management for CORAASAN and including support Systems PCMU/MEPyD Other effectiveness. INAPA. Page 30 of 31 The World Bank Dominican Republic Water Sector Modernization Program (P177823) to INAPA Zone 1 service delivery unit. . Page 31 of 31