The World Bank Maldives Clean Environment Project (P160739) REPORT NO.: RES57417 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MALDIVES CLEAN ENVIRONMENT PROJECT APPROVED ON JUNE 23, 2017 TO REPUBLIC OF MALDIVES ENVIRONMENT, NATURAL RESOURCES & THE BLUE ECONOMY SOUTH ASIA Regional Vice President: Martin Raiser Country Director: Faris H. Hadad-Zervos Regional Director: Dina Umali-Deininger Practice Manager/Manager: Christophe Crepin Task Team Leader(s): Karin Shepardson The World Bank Maldives Clean Environment Project (P160739) I. BASIC DATA Product Information Project ID Financing Instrument P160739 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 23-Jun-2017 31-Dec-2023 Organizations Borrower Responsible Agency Republic of Maldives Ministry of Environment Project Development Objective (PDO) Original PDO The Project Development Objective is to improve solid waste management in selected zones. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D1990 23-Jun-2017 16-Aug-2017 13-Sep-2017 31-Dec-2023 17.50 10.68 6.93 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 Maldives Clean Environment Project (P160739) Proposed Changes To complete project activities that are critical for the achievement of the PDO through a one year extension from December 31, 2023 to December 31, 2024. Rationale for Closing Date Extension A 12-month project extension request was received by the World Bank on July 4, 2023 from the Government of Maldives. A one-year extension will allow sufficient time to help address past and ongoing challenges and achieve MCEP’s project development objectives. There will be no other changes made to the scope, design, and financing of the activities. Establishment of basic infrastructure and systems for proper waste management and ensuring capacity building for operations of the same in the Maldives remain a high development priority. The project is helping to introduce this for a selected priority group of inhabited islands in project zones. This is a first extension request for a project implemented during the COVID and Ukraine crisis which heavily impacted construction markets and supply chains. A World Bank team conducted a technical mission for the Maldives Clean Environment Project (MCEP) between July 29-August 1, 2023 to assess items impacting the project’s current implementation progress rating and driving the need for an extension. Discussions reinforced the importance of the requested extension, agreed on solutions to resolve procurement challenges and a clear timetable for implementing remaining activities. Significant progress has been made since the last restructuring in August 2022 including: 1) the working interface with WAMCO and resolution of long-standing issues at Vandhoo; 2) achievements against the metrics in the restructured results framework indicators; 3) completion of the solid waste strategy and important enabling policy framework issues; 4) strengthened environmental safeguards systems and monitoring; 5) significant improvement on procurement progress; and 6) appointment of local Atoll coordinators progressing on the national waste campaign #fasgandu. An extension will enable disbursement of an additional 3 million USD in IDA grant funds for contracts that require additional implementation time into calendar year 2024. Project disbursements are currently at 61% and will increase to 68% after a current disbursement request is processed and is expected to reach 80% by the end of January 2024. Many procurement challenges have been addressed and overcome over the past year through reallocations of budget, flexibilities like direct contracting and simplified small works procedures, and moving activities to government funds. The total project funds spent and committed increased from 48% to 89% between September 2022 and September 2023. All contracts currently signed can be completed within the 12-month extension period, most by mid-2024, leaving a few months for operationalization of the centers and induction/training of the community members. Only three activities remain under the procurement re-tendering stage. Two are for construction of waste management centers in inhabited islands (Omadhoo in Thaa Atoll and Gan in Laamu Atoll) and the third is for a weigh bridge at Vandhoo. Installation of the weigh bridge at Vandhoo is important for better management decisions. These remaining contracts can be implemented within the extended timetable but should reach contract signature by the end of January 2024. The World Bank Maldives Clean Environment Project (P160739) A project extension will give time after the Vandhoo incinerator repairs and recommissioning to demonstrate the positive impacts of government and Bank investments on improvements in waste management services at this site and across zone 2. Remediation and repairs of the Vandhoo regional waste management facility have progressed steadily with the incinerator and landfill repairs completed. The incinerator was recommissioned with a bypass from the waste to energy boiler in July 2023. An international firm has been hired and worked on site with WAMCO in July and September 2023 to further assess repairs needed for the waste to energy boiler and to oversee the full system recommissioning process. A longer-term operations and maintenance contract is being planned. A Feasibility Study financed by the project defines more comprehensive infrastructure planning needs, including siting and construction requirements for a regional waste transfer facility in zones IV and V. Substantial resources beyond the MCEP project will still be required for upgrading waste management systems in these two zones. In 2023, the government allocated budget and Green Funds for highest priority needs and to cover cost-overruns from price inflation. The Bank was also informed by government of its recent policy decision to increase the share of the Green Funds over the next year for waste investments and a new tax on plastic bags is generating more revenue for waste management. The recipient's performance is considered satisfactory with no concerns meeting project audit requirements or legal covenant obligations. There are no overdue audit reports. The project has been implemented during considerable positive change and reform in the waste management sector which it supported and is continuing to help influence. Reforms are still ongoing with several important decisions taken over the past two years. The project for example has been instrumental in supporting the government policy for source separation of waste, phase out of single use plastics, and has supported the policy studies behind the new waste management law, a national strategy for waste management, and several sub-sector roadmaps. It pioneered the current design standard for island waste and resource management centers and the community mobilization programs the government has already scaled up to all zones of the country. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-D1990 Effective 31-Dec-2023 31-Dec-2024 30-Apr-2025