The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) REPORT NO.: RES55834 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SMALL TOWN WATER SUPPLY AND URBAN SEPTAGE MANAGEMENT PROJECT APPROVED ON DECEMBER 19, 2016 TO THE REPUBLIC OF BENIN WATER WESTERN AND CENTRAL AFRICA Regional Vice President: Ousmane Diagana Country Director: Coralie Gevers Regional Director: Simeon Kacou Ehui Practice Manager/Manager: Fatouma Toure Ibrahima Wane Task Team Leader(s): Yeli Mariam Dakoure Sou, Xavier Chauvot De Beauchene The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) ABBREVIATIONS AND ACRONYMS ANAEPMR National Agency for Drinking Water Supply in Rural Areas (Agence Nationale d’Approvisionnement en Eau Potable en Milieu Rural) ACEP Water Users’ Association (Association des Consommateurs d’Eau Potable) AQUA-VIE Benin Rural Water Supply Universal Access Program DDO Deferred Drawdown Option DG-Eau General directorate for Water (Direction Generale de l’Eau) FSTP Fecal Sludge Treatment Plant FY Fiscal Year GRM Grievance Redress Mechanism GoB Government of Benin GWSP Global Water Security and Sanitation Partnership IPF Investment Project Financing ISR Implementation Status and Results Report MCVDD Ministry of the Living Environment and Sustainable Development (Ministère du Cadre de Vie et du Développement Durable) M&E Monitoring and Evaluation NLWQC National Laboratory for Water Quality Control PAD Program Appraisal Document O&M Operation and Maintenance PDO Program Development Objective PEPRAU Small Town Water Supply and Urban Septage Management Project (Approvisionnement en Eau Potable en milieu Rural et D’Assainissement des eaux usées Urbaines) PforR Program-for-Results The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) PBC Performance Based condition PPP Public Private Partnership SAEP-mV Multi-village Water Supply System (Système d’Approvisionnement en Eau Potable-multiVillages) The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) BASIC DATA Product Information Project ID Financing Instrument P156738 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 19-Dec-2016 30-Jun-2023 Organizations Borrower Responsible Agency The Republic of Benin Project Development Objective (PDO) Original PDO The proposed development objectives of the Project are to: (i) increase access to water supply and sanitation in selected small towns and urban areas in the Recipient’s territory; (ii) strengthen service delivery capacity of water supply and sanitation sector institutions in selected small towns and urban areas in the Recipient’s territory; and (iii) in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency. Current PDO The proposed development objectives of the Project are to: (i) increase access to water supply in selected small towns and improve safe disposal of fecal sludge in selected urban areas; (ii) strengthen service delivery arrangements of water supply and sanitation services in selected small towns and urban areas; and (iii) in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency. OPS_TABLE_PDO_CURRENTPDO The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-59310 19-Dec-2016 20-Jan-2017 23-Jun-2017 30-Jun-2023 68.00 64.60 5.69 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This Restructuring Paper aims to seek approval to extend the closing date of the Small-Town Water Supply and Urban Septage Management Project (PEPRAU) Project (P156738) in Benin by twelve months, from June 30, 2023, to June 30, 2024. 2. The PEPRAU project was approved by the Board on December 19, 2016, and became effective on June 23, 2017, with an original closing date of December 31, 2022. 3. The project has already been restructured three times. a) The first restructuring was approved in May 2018. It modified the implementation arrangements of the Project to reflect the transfer of fiduciary responsibilities for the Project from the Ministry of Water to the ANAEPMR (Agence Nationale d’Approvisionnement en Eau Potable en Milieu Rural – Rural Water Supply National Agency). It also: (i) modified the Project description to expand its scope and make eligible the financing of the construction of piped rural water supply systems as well as the financing of technical assistance in support of institutional reforms in the rural and urban water sectors, which had not been considered at appraisal, and (ii) revised some indicators and targets of the Results Framework. b) The second restructuring was approved in May 2019. This restructuring followed the decision of the GoB to (a) change the type of Public-Private Partnership considered in the rural water sector from a subsidized concessions model to a regional affermage model, consistent with the strategic orientations of GoB’s national program for universal access to drinking water (AQUA-VIE), and (b) refocus the activities supported by the PEPRAU on GoB’s priorities to reach universal access to safe drinking water. The PDO, the project’s description, and the Result Framework were revised to reflect the modified scope of the project. c) The third restructuring was approved in September 2022. It extended the project closing date from December 2022 to June 2023 and revise the end of Project target values of two intermediate indicators in the Result Framework. The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) 4. To date, the project has disbursed US$63.36 million of the total loan of US$68 million (90.22 percent). It reached a 41 percent disbursement ratio for FY23 alone. All the infrastructure works under the Project have been delivered, except one lot of 5 multiVillages rural water supply systems (SAEPmV), which are 98 percent completed and on track to be delivered by the end of May 2023. 5. The project complies with World Bank fiduciary requirements and has no overdue audit reports or outstanding audit issues. The project also complies with the World Bank safeguard policies and remains rated Moderately Satisfactory. The project’s scope will not be changed as part of this restructuring. 6. The PDO is to (i) increase access to water supply in selected small towns and improve safe disposal of fecal sludge in selected urban areas; (ii) strengthen service delivery arrangements of water supply and sanitation services in selected small towns and urban areas; and (iii) in the event of an Eligible Crisis or Emergency, to provide an immediate and effective response to said Eligible Crisis or Emergency. 7. Component 1: Increase Access to Water Services (US$33.5 million). The PDO level indicator for this component is “the Number of people in rural areas provided with access to Improved Water Sources under the project.” The target of this indicator is 196,000 people, through 329 standpipes and 4742 household connections. To reach this target, 16 rural water supply systems (SAEPmV) have been planned to be constructed and transferred in the global rural water asset to be managed by regional operators through three affermage contracts (see para 3 on the second restructuring). 11 SAEPmV are completed and transferred to the regional operators, and they include 228 standpipes that already providing safe drinking water to 57,000 people (29 percent of the target). The remaining 5 SAEPmV will be completed by the end of May 2023. They encompass 101 standpipes that will be transferred to the Regional Operators and will provide water to 25,250 additional people (increasing the indicator’s target achievement to 42 percent) before the end of the current closing date. The water provision service has just started on March 1st, 2023, which will not provide enough time to implement a 12-month connection campaign and connect the 4742 households before the end of June 2023. These household connections will provide safe drinking water to 113,808 additional people and will allow reaching 100 percent of the PDO indicator’s target. 8. Component 2: Improving Fecal Sludge Management (US$27.5 million). The PDO level indicators for this component are “the volume of sludge per month being brought to the Fecal Sludge Treatment Plant (FSTP) for treatment under the project”, and a “service delivery arrangement for the Operation and Maintenance (O&M) of the FSTP is operational.” The target for the volume of sludge to be brought to the FSTP is 5140 cubic meters per month. Currently, fecal sludge is emptied from households but there is no appropriate FSTP to treat the sludge produced in Cotonou and Porto Novo. This means that the potential volume of fecal sludge to be treated by the FSTP is expected to exceed the indicator’s target value. Regarding the second PDO indicator level, the GoB committed to managing the FSTP under a PPP affermage contract, which has been procured and awarded. However, the signature of this contract is pending, which delays the start of fecal sludge treatment at the FSTP. The Task Team is closely monitoring the PPP contract signature with the GoB. A service order for the affermage contract is expected by the end of June 2023, which means that the twelve-month extension period will see the FSTP become operational and the volume of sludge treatment increase to reach or exceed the targeted volume of 5140 cubic meters per month by the end of the extension period. 9. The only contract pending completion is the National Laboratory for Water Quality Control (NLWQC), which also represents most of the US$6.87 million remaining to be disbursed. The NLWQC is not included in the project Result The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) Framework and does not determine the achievement of the PDO. It is worth mentioning that the construction of the NLWQC was considerably delayed due to the poor performance of the company contracted to build it, the COVID-19 crisis and the consequences of the war in Ukraine on commodity prices. The proposed closing date extension should be sufficient to complete the NLWQC. If that were not the case, the GoB would take over the funding of any remaining works. II. DESCRIPTION OF PROPOSED CHANGES 1. The Ministry of Finance issued on April 27th 2023, a letter requesting a restructuring of the project to extend its closing date by twelve months up to June 30, 2024. The extension was requested to account for delays in the roll out of the PPP contract to manage the rural water service, which is a prerequisite to achieving the PEPRAU PDO and a key aspect of the water and sanitation sector reforms supported by the Bank in Benin. 2. The proposed change is to extend the Project closing date by 12 months, from June 30, 2023, until June 30, 2024. A related change will be to reflect the revised closing date in the Result Framework (no change of indicator or target values). 3. The rationale for the extension of the project closing date is to provide more time to implement the following key activities supported by the project: (i) delivery of 4,740 private household connections and 101 standpipes in Benin rural areas, allowing to deliver improved water supply service to 196,000 beneficiaries (PDO target for component 1) ; (ii) collection and treatment of 5,140 cubic meters of fecal sludge per month (PDO target for component 2). 4. The Task Team confirms that World Bank’s requirements under World Bank Directive for Investment Project Financing (IPF) are met. The proposed extension will support the implementation of the remaining key project activities. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Cancellations Proposed ✔ The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-59310 Effective 31-Dec-2022 30-Jun-2023 30-Jun-2024 30-Oct-2024 . The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) . Results framework COUNTRY: Benin Small Town Water Supply and Urban Septage Management Project Project Development Objectives(s) The proposed development objectives of the Project are to: (i) increase access to water supply in selected small towns and improve safe disposal of fecal sludge in selected urban areas; (ii) strengthen service delivery arrangements of water supply and sanitation services in selected small towns and urban areas; and (iii) in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Increase access to water supply in selected rural areas and improve safe disposal of fecal sludge People provided with access to improved water 0.00 0.00 0.00 0.00 0.00 65,000.00 130,000.00 196,000.00 sources (Number) Action: This indicator has been Revised Including rural 0.00 0.00 0.00 0.00 0.00 65,000.00 130,000.00 196,000.00 (Number) Action: This indicator has been Revised Including female 0.00 0.00 0.00 0.00 0.00 32,000.00 64,000.00 98,000.00 (Number) Action: This indicator has been Revised Volume of sludge per 0.00 0.00 0.00 0.00 0.00 1,927.00 3,500.00 5,140.00 month being brought to The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 the FSTP for treatment under the Project (Cubic Meter(m3)) Action: This indicator has been Revised Strengthen service delivery arrangements of water supply and sanitation services A new institutional and contractual framework No No No No No Yes Yes Yes for the urban water sector is defined (Yes/No) Action: This indicator has been Revised Service delivery arrangement for the Operation and No No No No No Yes Yes Yes Maintenance (O&M) of the FSTP is operational (Yes/No) Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Component 1: Increase access to rural water supply and institutional strengthening The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 New household connections built under 0.00 0.00 0.00 0.00 0.00 1,000.00 2,708.00 4,740.00 the Project (functioning) (Number) Action: This indicator has been Revised New standpipes built under the Project 0.00 0.00 0.00 0.00 0.00 100.00 300.00 329.00 (functioning) (Number) Action: This indicator has been Revised Piped rural water supply systems included into information system to control and monitor rural 150.00 150.00 0.00 350.00 580.00 580.00 580.00 580.00 water supply assets and regional operators (Number) Action: This indicator has been Revised Inventory of water consumer associations No No No No No No Yes Yes (ACEPs) is completed (Yes/No) Action: This indicator has been Revised Organizational and No No No No No Yes Yes Yes institutional audit of the The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 DG-Eau and Deconcentrated Water Services is approved (Yes/No) Action: This indicator has been Revised Component 2: Improving Fecal Sludge Management An urban hygiene promotion and sanitation No No No No No Yes Yes Yes strategy is approved (Yes/No) Action: This indicator has been Revised A unit responsible to structure the fecal sludge service chain and regulate private fecal No No No No Yes Yes Yes Yes sludge emptying firms is operational within the MCVDD (Yes/No) Action: This indicator has been Revised Component 3: Project Management, Monitoring and Evaluation Grievances registered related to delivery of the 0.00 0.00 80.00 80.00 Project benefits that are addressed (Percentage) The World Bank Small Town Water Supply and Urban Septage Management Project (P156738) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Action: This indicator has been Revised IO Table SPACE The World Bank Small Town Water Supply and Urban Septage Management Project (P156738)