The World Bank Guinea Urban Water Project (P157782) REPORT NO.: RES59351 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF GUINEA URBAN WATER PROJECT APPROVED ON JUNE 27, 2017 TO MINISTRY OF ENERGY, HYDRAULICS AND HYDROCARBONS (MINISTÈRE DE L’ENERGIE, DE L’HYDRAULIQUE ET DES HYDRAUCARBURES) WATER WESTERN AND CENTRAL AFRICA Regional Vice President: Ousmane Diagana Country Director: Marie-Chantal Uwanyiligira Regional Director: Chakib Jenane Practice Manager/Manager: Fatouma Toure Ibrahima Wane Task Team Leader(s): Dambudzo Josephine Muzenda, Karamoko Sanogo The World Bank Guinea Urban Water Project (P157782) ABBREVIATIONS AND ACRONYMS DATU Town and Country Planning Department DNH National hydrology department MEHH Ministry of Energy, Hydraulics and Hydrocarbons NRW Non-revenue water PAPs Project affected persons PDO Project development Objective SEG Guinea Water Company PSC Project Steering Committee IP Implementation Progress The World Bank Guinea Urban Water Project (P157782) BASIC DATA Product Information Project ID Financing Instrument P157782 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 27-Jun-2017 31-Dec-2023 Organizations Borrower Responsible Agency Ministry of Energy, Hydraulics and Hydrocarbons (Ministère de l’Energie, de l’Hydraulique et des Hyd Project Development Objective (PDO) Original PDO The objectives of the proposed project are to increase access to improved water services in the Greater Conakry area and improve the operational efficiency of the urban water utility. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D2140 27-Jun-2017 26-Jul-2017 11-Jan-2018 31-Dec-2023 30.00 23.35 6.32 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Guinea Urban Water Project (P157782) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The purpose of this Restructuring Paper (RP) is to extend the Closing Date of the Urban Water Project in Guinea - P157782 by three (3) months from December 31, 2023 to March 29, 2024 to allow for the payment of compensation to all residual for Project-Affected People (PAP) in accordance with the Safeguards instruments, the roll-out of new customer management systems under component 1, and the successful completion of the ongoing works on water distribution under component 1 of the Project. 2. On a letter dated December 12, 2023, the Minister of Economy and Finance had requested the Bank to extend the Project Closing date from December 31, 2023, to March 30, 2024. IDA Grant No. D-2140- in the amount of US$30 million for the Guinea Urban Water Project was approved by the World Bank (WB) Board in June 2017. The Financing Agreement for Grant No. IDA-D2140- GN for from the International Development Association in the amount of SDR 21.9 million (US$ 30 million equivalent) for the Project was signed between the Republic of Guinea and the Bank on July 26, 2017, and was declared effective on January 11, 2018. 3. The Project Development Objective (PDO) is to 'increase access to improved water services in the Greater Conakry region and improve the operational efficiency of the urban water service and should be achieved by: (a) rehabilitating the water distribution network by replacing old and obsolete pipes and extending networks in targeted areas to reduce water losses (b) improving customer service by helping the SEG/customer department to be more responsive. The Project has four (4) components: component 1 on Urban Water; component 2 on Urban Sanitation; component 3 on Institutional Strengthening and Project Management; and component 4 on Contingent Emergency Response. Sustainability will be enhanced by improving the quality and continuity of water services. As indicated in the latest ISRs, the Project has remained moderately unsatisfactory in terms of achieving its main objective and progressing towards implementation over the past two years, mainly due to shortcomings in the completion of environmental and social safeguard activities, administrative delays and failure to deliver quality engineering studies to meet the WB standards. The Project was affected by several design problems at the preparation stage and was restructured twice to address some of the challenges faced during implementation. The first restructuring, effective June 15, 2020, cancelled the financing of activities under subcomponent 1(i) on Urban Water, relating to the construction of a booster station at “Grandes Chutes” dam to transfer additional water flow to the existing Yessoulou treatment plant, after feasibility studies revealed the need for a significantly higher amount of financing than provided by IDA which the Recipient could not cover, thus creating a financing gap. Instead, the Recipient and IDA agreed via the same restructuring, that the Project would finance (i) the rehabilitation of smaller scope of the Kakoulima water catchment complex and the renewal of the 20km pipeline for raw and treated water coming in and out of the PK3 treatment The World Bank Guinea Urban Water Project (P157782) station under a new subcomponent 1(v), and (ii) water, sanitation and hygiene activities as part of the COVID-19 response under a new subcomponent 1(vi). The restructuring also extended the project Closing Date by eighteen (18) months from June 30, 2022, to December 31, 2023, to ensure that the new activities could be fully implemented. Due to another financing gap, the Recipient and IDA agreed, through a second restructuring without extension effective March 24, 2023, to cancel the above-referenced subcomponent 1(v) as well as other activities, such as public standpipes, boreholes, and piezometers. These restructurings helped to improve implementation but not enough to allow key activities to be completed by the Closing Date of December 31, 2023. 4. While the restructurings were intended to help improve the Project implementation progress, other problems appeared very early, namely: (i) the COVID-19 pandemic, which significantly slowed the Project's progress, preventing the movement of contractors and other service providers, the import of materials and equipment needed for the work, and also imposing restrictions on in-person World Bank missions for Project implementation support; (ii) the military coup of September 5, 2021, which required the Bank to suspend disbursements for all new and existing operations with the Recipient from September 10, 2021, until the completed OP 7.30 assessment recommended the full resumption of new and existing operations as of February 9, 2022; (iii) the compensation process for people affected by the Project was marked by numerous difficulties in complying with the Bank's Safeguard policies; and (iv) the entreprises' equipment was blocked for months at the port of Conakry because taxes not provided for in their work contracts were demanded of them. It can be estimated that the above-mentioned constraints have slowed the Project implementation progress by nearly an additional three (3) months as of the current Closing Date of December 31, 2023. 5. Overall, for now the Project is on track to achieve its objective in terms of access to water services. Most of the end target of intermediate indicators have already been reached, and the others will be achieved before the Project's closing date if the extension is approved. The PDO indicators will all be met or exceeded (if the Project is extended) thanks to the additional work that will increase the Project's impact. However, if the Project's closing date is not extended, the difficulties encountered in carrying out the environmental and social safeguard activities, which are still pending, and the administrative delays are likely to prevent the works from being completed by December 31, 2023. As a result, some very advanced works are likely to remain unfinished, and this will have a major impact on the overall performance of the Project at its closing date. Overall Project performance 6. The current funding disbursement rate is 78.7%, while the commitment rate for the Project is 100%. The last supervision mission in November 2023 rated procurement and financial management satisfactory. The 2022 financial audit did not issue a qualified opinion, unaudited interim financial reports are submitted on time and are considered satisfactory and there are no overdue audits for the Project. The World Bank Guinea Urban Water Project (P157782) 7. Analysis of the results framework shows partial progress since the last support mission in August 2023. At the end of October 2023, the Project had achieved the following results: a. 1,200 social connections and meters (100% of target) were installed in Conakry. An amendment to the contract for 300 additional social connections is under realization. b. 24,000 additional people gained access to drinking water in Conakry through Project interventions, representing 80% of the final target. c. Component 2 [completed]: Strategic studies (sanitation inventory (drainage and wastewater), sanitation strategy, master plan for wastewater and stormwater in Greater Conakry up to 2040, feasibility studies for the priority tranche) are available. The technical and operational capacities (vehicles, information technology or IT and topographic equipment) of the Direction de l'Aménagement du Territoire et de l'Urbanisme (DATU) have been strengthened. d. Component 1(iv) [completed]: SEG has received materials and equipment for the team monitoring the program to reduce Non-Revenue Water (NRW). e. Subcomponent 1(i): Works are ongoing to install 12,500 meters (76% achieved), laying pipes (78%), repairing leaks (41%), and renewing connections (48%). f. Component 3(i) (completed): Modeling studies of the Conakry peninsula aquifer are available. The national hydrology department (DNH)'s technical and operational capacities have been strengthened in terms of hydrogeology and Geographic Information Systems (GIS). g. Component 3(ii) (partially completed): The draft report on the review of legal, regulatory, and institutional frameworks is available. The tariff study, the financial model and the sector policy letter linked to the strategic studies in progress are to be finalized by December 31, 2023. h. Component 1(iv) (completed): All equipment (vehicles, information technology and surveying equipment) was delivered to SEG's mapping department to strengthen its GIS. i. Component 1(iii) (partially completed): Significant progress was made in the implementation of a new customer management system (acquisition and integration of servers and materials) and in the validation of SEG's IT master plan. j. A household clients satisfaction survey has been carried out, and the provisional report is available. 8. Although the overall Project status rating is Moderately Unsatisfactory due to the PDO and overall Implementation Progress (IP) having been classified as “Moderately Unsatisfactory” over the past two years, other key Project performance ratings range from Moderately Satisfactory to Satisfactory. Procurement is rated Moderately Satisfactory; all procurement contracts related to the activities to be implemented until the [current] Closing Date have been awarded. Environmental and Social Safeguards are both rated Moderately Satisfactory. Financial Management is rated Satisfactory; the 2022 financial audit did not issue a qualified opinion, and unaudited interim financial reports are submitted on time and are considered satisfactory. The funding disbursement rate as of December 19, 2023, is 78.7%, while the commitment rate for the Project is 100%. The PDO of the Project will be achievable upon the proposed extension of the Closing Date. The World Bank Guinea Urban Water Project (P157782) Agreed Action Plan and Status to Date 9. In order to move the Project out of problem status, the following critical actions have been agreed between the Bank and the Government: a. A greater involvement of the Project Steering Committee (PSC) in providing implementation oversight and strategic guidance for the finalization of works under the Project. b. Implementation of “catchup plans” for the contractors, including the mobilization of adequate equipment to fast track implementation of distribution, NRW and customer service works. c. The compensation funds for the remainder of 139 people affected by the project (PAPs) are being mobilized from the national budget at the Public Treasury. The Project has already submitted a request to the national compensation commission led by the Ministry of Finance to organize the final PAP payments by December 31, 2023. If the Project is extended, compensation will be made before January 31, 2024. 10. As of November 2023, the status of implementation of the above critical actions is as follows: a. The PSC resumed its activities under the leadership of the Ministry of Energy, Hydraulics and Hydrocarbons (MEHH). The Secretary General of MEHH is providing key leadership to the Project implementing agencies, together with the directors of the SEG. b. The probability of the completion of works before the Project Closing Date have been maximized through the following: i. Validation of specifications for delivery of the remaining supplies and materials. ii. Address contractors’ claims for price revisions and related costs due to delays of works under subcomponent 1(i). Completion rate are 45% for the lot 1 and 65% for the lot 2. iii. Blocked imported equipment was released by customs, and the issue of customs fees unduly borne by contractors was resolved; and iv. Implementation of contract amendments to cover the period from January to end-March 2024. 11. On the basis of the implementation progress of the Government to the date of this restructuring, and the above-referenced and agreed action plan, the Bank team considers the Government’s performance in implementing the Project as satisfactory. DESCRIPTION OF PROPOSED CHANGES Change in Grant closing dates: 12. The proposed Level 2 restructuring introduces the following changes to the Project: The Closing Date is extended by 3 months, from December 31, 2023, to March 29, 2024, to ensure sufficient time to complete The World Bank Guinea Urban Water Project (P157782) the implementation of residual Project works and tasks and complete the payment resettlement compensations. II. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ 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 ✔ The World Bank Guinea Urban Water Project (P157782) 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-D2140 Effective 30-Jun-2022 31-Dec-2023 29-Mar-2024 29-Jul-2024 . COMPLIANCE OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action Finance Agreement :Project Implementation Manual Schedule 2, Section I, B.1. | Description :The Recipient shall prepare and adopt, no later than (3) three months after the Effective Date, a Project Implementation Manual including governance and oversight After delay complied IDA-D2140 No Change arrangements, implementation arrangements, including with roles and responsibilities of all involved stakeholders, financial management and procurement procedures for the Project, satisfactory to the Association. | Due Date :15-Dec-2017 Finance Agreement :Recruitment of key PIU Staff Schedule 2, Section V, A.1. | Description :The Recipient shall, no later than three (3) months after the Effective Date, have recruited for the PIU key staff including After delay complied IDA-D2140 No change Project coordinator, who shall be assisted by a core with team comprised of, inter alia, a financial management specialist and accountant, a procurement specialist, an environmental and social safeguards specialist, a The World Bank Guinea Urban Water Project (P157782) communications specialist and a monitoring & evaluation specialist (Key Project Implementing Unit Staff) with qualifications, experience and TOR, satisfactory to the Association. | Due Date :15-Dec-2017 Without limitation to the provisions of paragraph (a) above, the Project Implementation Unit shall be headed by a Project coordinator, who shall be assisted by a core team comprised of, inter alia,, a financial management After delay complied Proposed No change specialist and accountant, a procurement specialist, an with environmental and social safeguards specialist, and a monitoring & evaluation specialist (“Key Project Implementing Unit S Finance Agreement :Recruitment of External Auditor Schedule 2, Section V, A.3. | Description :The Recipient shall, no later than six (6) months after the Effective After delay complied IDA-D2140 Date, have appointed an external auditor, whose No Change with qualifications and experience and terms of reference shall be acceptable to the Association. | Due Date :15- Mar-2018 Finance Agreement :Computerized Accounting Software Schedule 2, Section V, A.2. | Description :The Recipient shall, no later than three (3) months after the Effective Date, have acquired and installed and made operational After delay complied IDA-D2140 No Change in the offices of the PIU computerized accounting with software capable of correctly recording and for automatic generating interim and annual financial statements. | Due Date :15-Dec-2017 Finance Agreement :Recruitment-a TA (Assistance à Maitrîse d'Ouvrage)-SEG. Schedule 2, Sec V, A.4. | Description :The Recipient shall, no later than six (6) months after the Effective Date, appoint a consultant, After delay complied IDA-D2140 No Change with qualifications, experience and terms of reference with satisfactory to the Association, to provide technical assistance (Assistance à Maitrise d'Ouvrage) to MEH and SEG. | Due Date :15-Mar-2018 .