The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) REPORT NO.: RES43115 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF INTEGRATED URBAN DEVELOPMENT AND RESILIENCE PROJECT FOR GREATER ANTANANARIVO APPROVED ON MAY 17, 2018 TO MINISTRY OF ECONOMY AND FINANCE URBAN, RESILIENCE AND LAND EASTERN AND SOUTHERN AFRICA Regional Vice President: Victoria Kwakwa Country Director: Zviripayi Idah Pswarayi Riddihough Regional Director: Ayat Soliman Practice Manager/Manager: Catalina Marulanda Task Team Leader(s): Gael Fetraniaina Raserijaona, Pierre Francois- Xavier Boulenger The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) ABBREVIATIONS AND ACRONYMS Executing Agency for Public Interest Works (Agence d’Exécution des Travaux d’Intérêt Public et AGETIPA d’Aménagement) CERC Contingent Emergency Response Component CUA Commune Urbaine d’Antananarivo CD Country Director CERC Contingent Emergency Response Component FID Fond d’Intervention pour le Développement GoM Government of Madagascar IDA International Development Association IP Implementation Progress MATSF Ministry of Planning and Land Management MEF Ministry of Economy and Finance MS Moderately Satisfactory PAPs Person Affected by the Project PDO Project Development Objective PMU Project Management Unit PRODUIR Integrated Urban Development and Resilience Project for Greater Antananarivo PUDe Detailed Urban Plan RF2 Water, Sanitation and Hygiene Community Groups (Rafitra Fikojàna ny Rano sy Fidiovana) TA Technical Assistance The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P159756 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 17-May-2018 28-Feb-2023 Organizations Borrower Responsible Agency Ministry of Economy and Finance Project Development Objective (PDO) Original PDO The Project Development Objective is to enhance urban living conditions and flood resilience in selected low-income neighborhoods of Greater Antananarivo; and to improve the Recipient’s capacity to respond promptly and effectively to an Eligible Crisis or Emergency. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-68180 10-Dec-2020 18-Dec-2020 11-Jun-2021 28-Feb-2023 50.00 0 51.11 IDA-62450 17-May-2018 01-Jun-2018 28-Mar-2019 28-Feb-2023 75.00 66.59 6.15 The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) 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 paper seeks approval from the Country Director (CD) for a Level II restructuring of the Integrated Urban Development and Resilience Project for Greater Antananarivo (PRODUIR), Credits No. 6245-MG (P159756) and No. 6818- MG (P175087), which will: (a) extend the project closing date and implementation schedule; (b) update the project disbursement projections; and (c) reallocate funds between project components and revise disbursement categories; accordingly. 2. Background: PRODUIR is an Investment Project Financing (IPF) that was approved on May 17, 2018, in the amount of US$75 million equivalent, and became effective on March 28, 2019. An Additional Financing (AF)1 in the amount of US$50 million was approved on December 10, 2020 and became effective on June 11, 2021. The Project’s closing date is February 28, 2023. The Project Development Objective (PDO) is "to enhance urban living conditions and flood resilience in selected low-income neighborhoods of Greater Antananarivo; and to improve the Recipient’s capacity to respond promptly and effectively to an Eligible Crisis or emergency.” PRODUIR consists of four main components: (a) Improving urban drainage, services, and resilience in targeted areas (US$58 million); (b) Strengthening institutional capacity for resilient urban governance (US$ 5.5 million); (c) Project Management, Coordination and Monitoring and Evaluation (US$6.5 million); and (d) Contingent Emergency Response Component (CERC) (US$ 50 million). 3. Project performance to date: Progress towards achieving the PDO is rated Moderately Satisfactory (MS), and Implementation Progress (IP) is rated MS. Procurement and Financial Management are currently both rated MS. There are no pending audits. Compliance with both social and environment safeguards is rated MS. The project has approximately a two-year delay relative to its original schedule due to delays in implementing the resettlement action plan related to the sludge disposal site of Iarinarivo. Due to a change of design of the sludge disposal site, a group of PAPs expressed opposition to the expansion of the site. Subsequently, project related activities were suspended till a settlement in line with International Development Association (IDA) Operational Policies and satisfactory to PAPs were found. With the facilitation of the Bank RSA, the government engaged in broader consultations with all PAPs. This led to a series of agreements between the PAPs and the government to unlock the stalemate, including (i) the re-sizing of the sludge disposal site to fit the 1Additional Financing was approved to fill the financing gap that had emerged following the activation of the Contingent Emergency Response Component (CERC), which supported the Government of Madagascar’s response to social and economic shocks due to the COVID-19 pandemic The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) areas that has the full support of the PAPs, (ii) an expedited process for compensation payment via digital payment, (iii) a revised procedure for land acquisition that reduces administrative burdens to the PAPs. All three measures have been implementation with close monitoring from Bank staff. As of February 24, all PAPS have adhered to the project’s design and 80 percent of PAPS compensated. Pending payments are due to unsettled inheritance issues for some PAPs and pending such resolution an escrow account was opened and once the legal settlement obtained, funds will be given to the remaining PAPs. Project activities have now resumed leading to the start of the work urban settings such as the dike rehabilitation of the Ikopa river which helped mitigate so far, the impact of cyclones in 2023. Considering all these positive developments, a conducive environment is in place to expedite project implementation. With the re-design of the sludge disposal site scheduled to be completed in June 2023, the dredging of the C3 canal is scheduled to start in February 2024 and completed by November 2024. The development of a resettlement site at Andavamamba to relocate the most vulnerable PAPs along the canal C3 is ongoing and will be completed by the end of 2023. In parallel to the activities related to the C3 canal, implementation of other activities - such dike rehabilitation and urban community infrastructure - under Components 1 and 2 are well advanced, contributing to the PDO and related performance indicators have reached 80 percent of the targets. It is therefore expected that with the requested extension of the closing date, and with additional proposed revisions of the project design detailed below, all development objectives will be achievable by the end of the project. 4. Status of implementation: Overall disbursement as of February 10, 2023, is US$66.5 million, which represents 53 percent of the available funds. To date, the four project components have progressed as follows:  Component 1 - Improving urban drainage, services, and resilience in targeted areas: As of February 1, 2023, the status of planned work contracts is as follows: (a) urban works2 in targeted neighborhoods of Antananarivo – a first phase of urban works consisting of 206 small infrastructures is 71 percent completed, and all works are expected to be completed by end of March 2023. A second phase (238 small infrastructures) is scheduled to be contracted by end of March 2023; (b) dike rehabilitation – 70 percent of planned works have been completed, and the total 5 kilometers of repairs will be completed in July 2023; (c) future resettlement site – construction started in November 2022 and is advancing well. The site is scheduled to be operational by November 2023; (d) sludge disposal site at Iarinarivo – The design of the site has been revised to accommodate to changes in the availability of land. Construction is expected to start by August 2023 and the site is expected to be operational by February 2024; (e) community works at Iarinarivo including a community office, roads and dike rehabilitation is 25 percent completed; and (f) upgrade of C3 canal – dredging and rehabilitation of the canal cannot start until the sludge disposal site is operational, and resettlement of affected people along the canal is completed. C3 canal rehabilitation works are expected to start in February 2024 and be completed by December 2024; resettlement activities along the canal will begin by August 2023. As part of technical assistance activities, a draft version of the Detailed Urban Plan (PUDé) for the project intervention area is available and will be adopted by the Government in April 2023. Support to neighborhoods (Fokontany) to prepare and test contingency plans and evacuation strategies is expected to begin by September 2023. With the completion of these works and technical assistance activities in the extended closing date, the targets for Component 1 will be met.  Component 2 - Strengthening institutional capacity for resilient urban governance: As of February 1, 2023, the status of planned activities is as follows: (a) the Commune Urbaine d’Antananarivo (CUA) building census have been completed in March 2022, which has resulted in 60 percent increase of proprieties identified for tax purposes. As a result, the CUA adopted a revenue enhancement strategy and action plan in October 2022, which 2 Small infrastructure works including inter alia, rehabilitation of pathways, local libraries, public water taps, toilets, and laundries The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) will lead to an increase of approximately 20 percent in its annual property tax collection; (b) operational support to water and sanitation community groups (Rafitra Fikojàna ny Rano sy Fidiovana RF2) within the project area was completed in May 2021; and (c) technical assistance (TA) to the CUA related to solid waste management, as well as to dike and canal maintenance is ongoing and will be completed by end 2023. With the completion of this TA within the extended closing date, the targets for Component 2 will be met.  Component 3 - Project Management, Coordination, Monitoring and Evaluation: All planned arrangements are in place, including: (a) the Project Management Unit (PMU) housed in Ministry of Planning and Land Management (MATSF) is staffed and operational; and (b) Executing Agency for Public Interest Works (Agence d’Exécution des Travaux d’Intérêt Public et d’Aménagement, (AGETIPA), the delegated contract management for MATSF implementing Component 1 has a project coordination team in place and operational.  Component 4 - CERC for COVID-19 response: All activities related to the financing of the response to COVID-19 implemented by Fond d’Intervention pour le Développement (FID) and PRODUIR were completed and closed in June 2022. 5.Rationale for project restructuring: A project restructuring is proposed to ensure that the PDO can be fully achieved before the project closing. Specifically: a) Extension of closing date: the extension of the project closing date will allow completion of: (i) all critical works under Component 1 including Iarinarivo disposal site, construction of resettlement housing, C3 canal dredging and rehabilitation, complete dike rehabilitation, and urban works. The successful completion of these activities would meet all Component 1 targets and contribute to a substantial portion of the PDO; and (ii) finalize remaining TA activities under Component 2, including the implementation of priority programs outlined in the detailed urban plan, solid waste management strategy for Antananarivo, and neighborhood emergency preparedness plans; b) Update of disbursement projections considering the revised closing date extension; and c) Reallocation of funds between project components and disbursement categories. 6.The proposed restructuring responds to a request from the Government of Madagascar that was received on February 20, 2023. It is consistent with agreements reached during the supervision mission that took place on November 2022. The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) II. DESCRIPTION OF PROPOSED CHANGES 7.Loan Closing Date(s) extension. The closing date(s) of the two credits will be extended by 23 months to January 31, 2025. This extended timeline has been discussed and agreed with the Government and will be sufficient to complete all pending activities, given the progress to date. 8.Disbursement Estimates Revision. This will reflect the new calendar of disbursements, with a new closing date of January 31, 2025. 9.Components and Cost reallocation. Project component costs will be modified by the reallocation of US$5 million defined as “Unallocated” at project approval. Reallocated funds will be used to: (a) adequately complete all critical activities under Component 1, accounting for financing gaps resulting from the new design of the sludge disposal site in Iarinarivo, additional repairs of dikes damaged during 2021-2022 rainy seasons; (b) continue strengthening capacity for inclusive and resilient urban management, under Component 2, when developing training and capacity building program to internalize the recommendations of the Detailed urban plan ; (c) continue, under component 2, supporting the modernization of public sector management and increasing local revenue mobilization of the municipalities in the project targeted area ; and (d) to mitigate price increase and revision of existing contractors caused by the COVID-19 crisis and the war in Ukraine. The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) Table 1: Reallocation of financing across components 3(millions of US$) Original amount and Additional Reallocation Proposed amount Financing Component 1 - Improving urban drainage, services and 58.04 +3.28 61.32 resilience in targeted areas SDR Component 2. Strengthening institutional capacity for 5.46 +1.72 7.18 resilient urban governance Component 3. Project Management, Coordination, 6.50 0 6.50 Monitoring and Evaluation Unallocated 5.00 -5.00 0.00 Component 4. Contingent Emergency Response 50.00 0 50.00 Component (CERC) for COVID-19 response financing TOTAL 125.00 - 125.00 10.Reallocation between Disbursement Categories. This will reflect adjustments between different categories (see below). 11.No other changes are needed. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. 3 Indicative budget per component in US$. Disbursement categories XDR will prevail. The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Improving urban drainage, Improving urban drainage, services and resilience in 58.04 Revised services and resilience in 61.32 targeted areas targeted areas Strenghtening institutional Strenghtening institutional capacity for resilient urban 5.46 Revised capacity for resilient urban 7.18 governance governance Project Management, Project Management, Coordination, Monitoring and 6.50 No Change Coordination, Monitoring and 6.50 Evaluation Evaluation Contingent Emergency Response Contingent Emergency 0.00 No Change 0.00 Component (CERC) Response Component (CERC) Unallocated 5.00 Revised Unallocated 0.00 TOTAL 75.00 75.00 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-62450 Effective 28-Feb-2023 31-Jan-2025 31-May-2025 IDA-68180 Effective 28-Feb-2023 31-Jan-2025 31-May-2025 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-62450-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GD, WK, NCS, CONS, EXC CANAL C3 10,659,600.00 9,594,293.71 14,059,600.00 100.00 100.00 The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) iLap Category Sequence No: 2 Current Expenditure Category: WK RELATED TO CANAL C3 PT A.A. (i) 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 3A Current Expenditure Category: CASH RESETTLEMT C.C3 WK PT 1.1(i) 640,400.00 0.00 640,400.00 100.00 100.00 iLap Category Sequence No: 3B Current Expenditure Category: CASH RES. PUMP STAT. WK PT 1.1(i) 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 3C Current Expenditure Category: CASH RES. URB INFRA INV PT 1.2(i) 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: PPF REFINANCING 1,400,000.00 727,606.22 1,400,000.00 iLap Category Sequence No: 5 Current Expenditure Category: EMERGENCY EXPENDITURES PT 4 35,500,000.00 35,269,523.03 35,500,000.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: UNALLOCATED 3,400,000.00 0.00 0.00 Total 51,600,000.00 45,591,422.96 51,600,000.00 IDA-68180-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: G,W,NC,C,EXC CANAL C3REHAB W PT1.1i 21,349,700.00 0.00 21,349,700.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: WKS RELATED TO CANAL C3 PT 1.1. (i) The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) 10,650,000.00 0.00 10,650,000.00 100.00 100.00 iLap Category Sequence No: 3A Current Expenditure Category: CASH RESETTLMNT CANALC3 WK PT1.1(i) 1,959,600.00 0.00 1,959,600.00 100.00 100.00 iLap Category Sequence No: 3B Current Expenditure Category: CASH RES. PUMP STATION WK PT1.1(i) 1,001,100.00 0.00 500,550.00 100.00 100.00 iLap Category Sequence No: 3C Current Expenditure Category: CASH RES.URBAN INFRA INV PT 1.2(i)) 539,600.00 0.00 1,040,150.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: EMERGENCY EXPENDITURES PT 4 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: UNALLOCATED 0.00 0.00 0.00 Total 35,500,000.00 0.00 35,500,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2018 0.00 0.00 2019 4,703,325.00 4,703,325.00 2020 11,036,600.00 11,036,600.00 2021 15,599,350.00 15,599,350.00 2022 24,008,250.00 24,008,250.00 2023 19,652,475.00 36,900,000.00 The World Bank Integrated Urban Development and Resilience Project for Greater Antananarivo (P159756) 2024 0.00 22,000,000.00 2025 0.00 10,752,475.00 .