The World Bank Three Gorges Modern Logistics Center Infrastructure Project (P153473) REPORT NO.: RES57424 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THREE GORGES MODERN LOGISTICS CENTER INFRASTRUCTURE PROJECT APPROVED ON JUNE 30, 2017 TO INTERNATIONAL DEPT., MINISTRY OF FINANCE, PEOPLE'S REPUBLIC OF CHINA TRANSPORT EAST ASIA AND PACIFIC Regional Vice President: Manuela V. Ferro Country Director: Mara K. Warwick Regional Director: Sudeshna Ghosh Banerjee Practice Manager/Manager: Benedictus Eijbergen Task Team Leader(s): Xiaoke Zhai, Anita Shrestha The World Bank Three Gorges Modern Logistics Center Infrastructure Project (P153473) I. BASIC DATA Product Information Project ID Financing Instrument P153473 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 30-Jun-2017 30-Sep-2023 Organizations Borrower Responsible Agency International Dept., Ministry of Finance, People's Republic Yichang PMO of China Project Development Objective (PDO) Original PDO The PDO is to improve freight transport and logistics services in Yichang. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-87660 30-Jun-2017 01-Sep-2017 27-Dec-2017 30-Sep-2023 200.00 101.84 98.16 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Three Gorges Modern Logistics Center Infrastructure Project (P153473) 1. This Restructuring Paper seeks your approval of a Level 2 restructuring of the Three Gorges Modern Logistics Center Infrastructure Project. The Restructuring aims to extend the closing date by 15 months from the original September 30, 2023 to December 31, 2024. The Restructuring is in response to the Ministry of Finance’s (MOF) letter to the World Bank, dated August 29, 2023, and this constitutes the first restructuring of the project. Project Background 2. Three Gorges Modern Logistics Center Infrastructure Project is financed by an International Development and Reconstruction Bank Loan (Loan No.: 8766-CN), totaling of US$200 million approved on June 30, 2017, and became effective on December 27, 2017. The Project is comprised of five components: (1) Component 1: Baiyang Port and Operations Area (total cost US$123.21 million, IBRD loan US$71.18 million, 29% of project cost); (2) Component 2: Baiyang Logistics Park (total cost US$252.37 million, IBRD loan US$92.99 million, 60% of project cost); (3) Component 3: Transport Connection Infrastructure (total cost US$34.25 million, IBRD loan US$24.50 million, 8% of project cost); (4) Component 4: Baiyang Logistics Information Platform and Facilities (total cost US$11.09 million, IBRD loan US$7.88 million, 3% of project cost); and (5) Component 5: Capacity Building (total cost US$2.95 million, IBRD loan US$2.95 million, 1% of total project cost). The project development objective (PDO) is to improve freight transport and logistics services in Yichang. The Project's current closing date is September 30, 2023. Summary of Project Status 3. Progress towards achievement of PDO is rated Moderately Satisfactory. The PDO remains relevant to the Government's green development strategies set in the 14th Five-Year Plan and the greener growth objective of the WBG's FY20-25 Country Partnership Framework as the Project improves freight transport and logistics service in Yichang and supports inland waterway transport. The Project was listed by Ministry of Transport and National Development & Reform Commission as one of multimodal transport demonstration projects on August 21, 2023. Yichang government gives a priority to develop the Baiyang Port and Logistics Park and facilitate business operation in the Park by moving the Xiaoting bonded area into the Park. The Project has not yet achieved the PDO's targets due to delayed implementation progress. However, the PMO anticipates the PDO could be achieved at the completion of all the activities and the results will be achieved by the proposed project closing. 4. Project implementation progress is rated Moderately Satisfactory. The PMO has made a substantial progress in 2023. Cumulative disbursement of the loan increases to US$101.84 million; 28 of all the 29 contracts have been procured; and 72% of physic works has been completed. However, overall implementation progress is behind schedule as the results of delays by unexpected events, such as the COVID pandemic about ten months in past years, flooding in 2020 about five months, and high temperature (>35℃) in 2022 near two months. Detailed implementation status of each component is summarized below: 1) Component 1: Baiyang Port and Operations Area. All the survey, preliminary design, construction drawings of the works, and approval are completed. Nine Contracts under this component have been procured. Of which, three civil works contracts and two goods contracts have been completed, and the remaining four goods contract are under implementation; 2) Component 2: Baiyang Logistics Park. All the survey, preliminary design and construction drawings of the works, and respective approval are completed. Twelve contracts under this component have been procured. Of which, four civil works contracts and one goods contract are completed, and four civil works contracts and three goods contracts are under implementation; The World Bank Three Gorges Modern Logistics Center Infrastructure Project (P153473) 3) Component 3: Transport Connection Infrastructure. two civil works contracts DJ-C1(Guihu and Songgang roads) and DJ-C2 (Shawan overpass bridge) are completed. No other actions are pending under this component. 4) Component 4: Baiyang Logistics Information Platform and Facilities. The contrac t XX-C1(furnishings of information center) is procured. Procurement of Contract XX-G1(information system) is delayed to address complaints from bidders. Bids of the contract were opened on September 12, and the contract is expected to be signed in October. 5)Component 5: Capacity Building. 1,810 person-days of study tours and trainings are completed. In addition, four consulting service contracts have been signed, including business plan, independent social monitoring, independent environmental monitoring, and oversea training. Final reports of the business plan and nine social and environment external monitoring reports are delivered. There is not pending action under this component. 5. Overall safeguards implementation is rated Satisfactory. Land acquisition and resettlement of the project-affected households have been completed. No GBV incident or non-compliance with environment and social safeguards policies has been reported. 6. Overall fiduciary implementation is rated Moderately Satisfactory. The PMO has made a significant progress in procurement and disbursement in 2023. Bids of the last contract were opened on September 12, 2023. Disbursement of the loan is in line with implementation progress at present. The Project has no significant finance management as well as audit issues. As the remaining contracts are fully financed by the loan, the Project has no issue with counterpart fund provision too. 7. Compliance with the legal covenants. Overall the PMO implements the Project in compliance with the legal covenants. Main Issue and Risk 8. Main issues of the Project are that the PMO can not complete all the project activities, disburse the loan proceeds, and achieve the PDO by the loan close date. The PMO updates the detailed implementation plan of key remaining activities and estimates it is necessary to extend the loan close date by 15 months to complete all the remaining activities, disburse the loan, and achieve the PDO. Based on prices of the signed contracts, the Project will save US$3.85 million of the loan. Since many contracts are under implementation and have contract variations to be settled, the PMO does not include cancellation of the loan in the request. 9. Overall risk of the Project is rated Substantial, which is mainly related to environment safeguards and institutional capacity. The environmental risk was rated as Substantial in last ISR, with the completion of the large civil works now, the remaining civil works only includes construction of small scale warehouses, equipment installation, and furnishing work, the environmental risk of the Project is now downgraded to Moderate. With experience gained from past years, the PMO's capacity has been improving in project management. However, the PMO will face new challenges of attracting businesses into the Logistics Park, providing quality service to customers, and operating the assets of the Baiyang Port and Logistics Park in an efficient way. Training and study tours will be provided to strengthen assets and operation management. Rationale for Restructuring 10. Without the extension of the close date, the PMO can not complete all the remaining activities, carry out trial operation of the assets supported by the Project, and achieve the PDO. Demonstration effect of the Project and service to freight transport and logistics by the Baiyang Port and Logistics Park will be compromised. The Project was The World Bank Three Gorges Modern Logistics Center Infrastructure Project (P153473) mainly delayed by unexpected COVID pandemic, extreme weather, change of development plan, and consolidation of state-own ports in Hubei during project implementation. Outbreak of the COVID-19 in 2020 and multiple rounds of th e COVID-19-related restrictions led to suspension of construction about ten months and disruption of supply chain and workers mobilit y; flooding in 2020 stopped under water construction about five months; and high temperature in 2022 stopped construction nearly two months. In addition, the implementation of the Project was slowed down by the port sector reform in Hubei Province and the change of development plan in 2022 to move the Xiaoting bonded area into the Baiyang Logistics Park. Currently, the COVID policy is relaxed, the construction of the port is basically finished, the design of the logistics park has been adjusted to meet t he changed development plan, and the consolidation of ports has been completed. After signing the last contract in October, the PMO can fully focus on implementation of the signed contracts, operation of the completed assets, and development of business in the Park. 11. The Project received the fully commitment from the client to achieving the PDO. The client agreed the time- bound action plan with the Bank team, ensuring that all the remaining works be completed by the proposed new closing date. Key actions are summarized as below: 1) The Borrower and the World Bank complete the extension of the loan closing date through amendment to the loan agreement before September 29, 2023 2) The PMO signs the last contract XX-G1 by October 13, 2023 3) The PMO completes development of the information system by June 29, 2024 4) The PMO completes all civil works of the remaining contracts by June 30, 2024 5) The PMO completes trial operation of the system by October 20, 2024 6) The PMO completes all installation of equipment by October 29, 2024 7) The PMO completes all the final accepts of works, equipment, and systems completed as well as contract variations procedures before December 16, 2024. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-87660 Effective 30-Sep-2023 31-Dec-2024 30-Apr-2025