The World Bank Tarbela Fourth Extension Hydropower Project (P115893) REPORT NO.: RES60588 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TARBELA FOURTH EXTENSION HYDROPOWER PROJECT APPROVED ON MARCH 20, 2012 TO ISLAMIC REPUBLIC OF PAKISTAN ENERGY & EXTRACTIVES SOUTH ASIA Regional Vice President: Martin Raiser Country Director: Najy Benhassine Regional Director: Pankaj Gupta Practice Manager/Manager: Simon J. Stolp Task Team Leader(s): Gunjan Gautam, Mats Johan Rikard Liden The World Bank Tarbela Fourth Extension Hydropower Project (P115893) BASIC DATA Product Information Project ID Financing Instrument P115893 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 20-Mar-2012 31-May-2024 Organizations Borrower Responsible Agency Islamic Republic of Pakistan Project Development Objective (PDO) Original PDO The Objective of the Project is to facilitate a sustainable expansion of the Borrower 's electricity generation capacity. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed COFN-C1550 27-Sep-2016 18-Jan-2017 11-Aug-2017 31-May-2024 300.00 95.87 204.13 IBRD-86460 20-Sep-2016 18-Jan-2017 11-Aug-2017 31-May-2024 390.00 145.03 244.97 IBRD-81440 20-Mar-2012 12-Apr-2012 27-Apr-2012 31-Dec-2019 400.00 400.00 0 IDA-50790 20-Mar-2012 12-Apr-2012 27-Apr-2012 30-Jun-2023 294.53 257.35 0 The World Bank Tarbela Fourth Extension Hydropower Project (P115893) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING This restructuring will extend the Closing Date of IBRD Loan 86460, which is financing Tarbela Fifth Extension Hydropower Project (T5HP), to September 30, 2027. The Results Framework has been revised to incorporate indicators from the World Bank Group’s (WBG) Corporate Scorecard approach and framework. A. Status of the Project 1. Background: The Project is comprised of: a. IBRD Loan-81440 (US$ 400 million, fully disbursed and closed) and IDA Credit-50790 (SDR 179 million, fully disbursed and closed) approved by the Bank on March 20, 2012, that financed the 1410 megawatt (MW) Tarbela Fourth Extension Hydropower Project (T4HP) in Tunnel 4 of the Tarbela Dam and related activities. T4HP was commissioned in 2018. b. IBRD Loan-86460 of US$390 million , approved by the Bank as additional financing on September 20, 2016, and AIIB Loan LN 0005-PAK of US$300 million in co-financing from the Asian Infrastructure Investment Bank (AIIB), approved on September 27, 2016, to support T5HP. T5HP includes: (i) expansion of the Tarbela hydropower facility with an additional 1530 MW hydropower plant in Tunnel 5 of the Tarbela Dam; (ii) a 500 kilovolt (kV) switchyard; (iii) a 500 kV Tarbela 5 Transmission Line (T5TL) from the switchyard to Islamabad West Substation (IWS); (iv) social and environmental management plans; (v) project and construction management and supervision; (vi) technical assistance; (vii) future project preparation; and (viii) a pilot floating solar plant in the Tarbela Reservoir. 2. Project Development Objectives (PDO) and Project’s Performance: The Project’s progress towards achievement of the PDO, “to facilitate a sustainable expansion of Pakistan’s electricity generation capacity,” is moderately satisfactory; because the PDO cannot be achieved by the current Loan Closing Date of May 31, 2024. T5HP and T5TL are expected to be completed by the extended Loan Closing Date of September 30, 2027. The overall implementation progress is moderately satisfactory. The Project’s environmental and social performance, financial management performance, and project management are all rated satisfactory. All major procurement is completed. Procurement rating is moderately satisfactory as records in Systematic Tracking of Exchanges in Procurement (STEP) system are not fully updated. 3. In T5HP, the key contracts for civil works and electro-mechanical (E&M) works are under implementation. The performance of E&M contractor has been satisfactory, and the contractor is expected to ship the key equipment and parts by first half of 2025. However, the civil works contractor is behind schedule on all work sites. The demolition of Tunnel 5 at the point of connection with the raised intake is on a critical path. The delay in completing the connecting shaft, a The World Bank Tarbela Fourth Extension Hydropower Project (P115893) complex construction challenge which must be managed carefully, will impact the commissioning dates of the generation units. However, this delay has no impact on final construction milestone, i.e. completion of raised intake by May 2027. 4. The contract for T5TL is under implementation, and construction progress has improved after initial delays. The National Transmission and Despatch Company (NTDC), the implementing agency for T5TL, is monitoring the progress of the contractor well. T5TL connects with IWS, which is financed by the Bank through National Transmission Modernization I Project. The contract for T5TL also includes an interconnection between T5HP switchyard and switchyard of powerplants in Tunnels 1-4. Therefore, if the completion of IWS is delayed, power from T5HP can be evacuated through this interconnection in the short-term. A Resettlement Action Plan (RAP) is being implemented for T5TL. NTDC is compensating landowners affected by the transmission towers and will compensate people affected by transmission line rights-of-way and related works in due time, adhering to the RAP. 5. Construction Supervision Consultant (CSC): There is a recent disagreement on commercial aspects of the CSC contract that may slow implementation progress. WAPDA is undertaking remedial measures to ensure construction progress is not impeded while working to resolve these disagreements. B. Rationale for Restructuring 1. The extension of the Closing Date of IBRD Loan is necessary to complete T5HP. The path for successfully completing T5HP is clear. o Reasons for implementation delays of the past (delayed selection of the CSC, need for additional geological investigations, restrictions related to the COVID-19 pandemic, resolving access to Tunnel 5) have been addressed. o Key contracts in T5HP for civil works and E&M works are underway and the contract schedules support the completion of the project by the extended Closing Date. The disbursement forecast has been revised based on the expected construction progress of the project. 2. There are no overdue audit reports or outstanding observations. II. DESCRIPTION OF PROPOSED CHANGES 1. Closing Date Extension: The Closing Date of IBRD Loan 86460 is extended to September 30, 2027. 2. Change in PDO Result Indicator: PDO result indicator and sub-indicator monitoring the hydropower capacity installed under the Project have been revised as “Renewable Energy Capacity Enabled” and “Renewable Energy Capacity Enabled with Direct Support”. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ The World Bank Tarbela Fourth Extension Hydropower Project (P115893) Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ 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 The World Bank Tarbela Fourth Extension Hydropower Project (P115893) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications COFN-C1550 Effective 30-Jun-2022 31-May-2024 30-Jun-2019, 31- IBRD-81440 Closed 31-Dec-2018 Dec-2019, 04-May- 2020 IBRD-86460 Effective 30-Jun-2022 31-May-2024 30-Sep-2027 30-Jan-2028 30-Jun-2019, 31- Dec-2019, 30-Jun- IDA-50790 Closed 31-Dec-2018 2022, 31-Dec-2022, 30-Jun-2023, 26- Mar-2024 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2012 0.00 0.00 2013 20,000,000.00 20,000,000.00 2014 81,676,466.00 81,674,466.00 2015 48,330,208.00 48,330,208.00 2016 92,985,483.00 92,985,483.00 2017 154,550,873.00 154,550,873.00 2018 118,245,419.00 118,245,419.00 2019 29,534,459.00 29,534,459.00 2020 9,579,321.00 9,579,321.00 2021 45,273,363.00 45,273,363.00 2022 25,636,987.00 25,636,987.00 2023 37,127,450.00 71,547,521.00 2024 111,382,350.00 54,685,259.00 2025 185,637,250.00 62,520,250.00 The World Bank Tarbela Fourth Extension Hydropower Project (P115893) 2026 37,127,450.00 62,520,250.00 2027 0.00 62,520,250.00 2028 0.00 50,016,200.00 2029 0.00 12,504,050.00 . The World Bank Tarbela Fourth Extension Hydropower Project (P115893) . Results framework COUNTRY: Pakistan Tarbela Fourth Extension Hydropower Project Project Development Objectives(s) The Objective of the Project is to facilitate a sustainable expansion of the Borrower 's electricity generation capacity. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target To facilitate a sustainable expansion of the Borrower 's electricity generation capacity Renewable Energy Capacity Enabled (Megawatt) 0.00 2,940.00 Rationale: Action: This indicator has been Revised Indicator name revised to match the World Bank Group's Corporate Scorecard 2024. Renewable Energy Capacity Enabled with Direct Support 0.00 2,940.00 (Megawatt) Rationale: Action: This indicator has been Revised Sub-indicator revised to match WBG Corporate Scorecard 2024. Energy Supply (Gigawatt-hour (GWh)) 14,175.00 19,000.00 Generation Capacity (Megawatt) 3,478.00 6,418.00 Reduction in production cost of energy (Text) 7.02 6.85 Preparation of hydro project, completion of pilot solar project 0.00 100.00 and capacity building program (Percentage) The World Bank Tarbela Fourth Extension Hydropower Project (P115893) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Component A: Construction of Power House and Modification to the Tunnel Component A-1 T4 Powerhouse construction (Percentage) 0.00 100.00 Component A-2 Construction of intake modification to T4 and T3 0.00 100.00 (Percentage) Component A-3 Construction of T5 Power House and Connection 0.00 100.00 to Tunnel 5 (Percentage) Component A-4 Construction of Intake modification for Tunnel 5 0.00 100.00 (Percentage) Component B: Power Units, Switchyard, Transmission Line and Ancillary Equipment Component B-1 Installation of number of power units (Number) 0.00 6.00 Component B-2 Installation of transformers and electrical 0.00 100.00 connection (Percentage) Component B-3 Electro Mechanical Works for Powerhouse and 0.00 100.00 construction of T5 Switchyard (Percentage) Component B-4 Transmission Line for Power Evacuation from T5 0.00 100.00 (Percentage) Component C: Social Action and Environmental Management Plans, Dam Monitoring and Surveillance Component C-1 Implementation of SAP and EMP (Percentage) 0.00 100.00 Component C-2 Operation of dams monitoring system 0.00 100.00 (Percentage) Component C-3 SAP schemes to include consultation with 50% of the schemes are based on priorities identified by No consultation with women reported women and reflect their priorities (Text) women. The World Bank Tarbela Fourth Extension Hydropower Project (P115893) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Component C-4 CBOs functioning under the Project must have at least 25% women members and at least one female office bearer 0.00 100.00 (Percentage) Component D: Construction Supervision, Monitoring and Evaluation of the Project Impacts and Social Action and Environmental Management Plans Component D-1 Construction supervision and implementation Constant support and supervision by the CSC Constant support and supervision by the CSCs support (CSC Consultants) (Text) Component D-2 Independent M&E of Project impact of SAP and Regular Support and monitoring Regular Support and monitoring EMP (Text) Component D-3 Annual Beneficiary feedback surveys to be Respondents report overall satisfaction with the No feedback survey has been done conducted as part of M&E (Text) implementation of RAP and SAP Component E: Project Management Support, Capacity Building of WAPDA, Technical Assistance, Training and Pilot Solar Project Recruitment of CSC and MSC on time and award of works Completion of project on time, smooth transition to O&M Component E-1 Effectiveness of PMU (Text) contracts arrangements Component E-2 Capacity Building of WAPDA (Percentage) 0.00 100.00 Component E-3 Pilot Solar Project (Percentage) 0.00 100.00 IO Table SPACE The World Bank Tarbela Fourth Extension Hydropower Project (P115893)