The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) REPORT NO.: RES47591 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LESOTHO LOWLANDS WATER DEVELOPMENT PROJECT - PHASE II APPROVED ON MAY 17, 2019 TO THE KINGDOM OF LESOTHO Water Global Practive Eastern and Southern Africa Region Regional Vice President: Hafez M. H. Ghanem Country Director: Marie Francoise Marie-Nelly Acting Regional Director: Catherine Signe Tovey Practice Manager: Maria Angelica Sotomayor Araujo Task Team Leaders: Miguel Vargas-Ramirez, Palesa Selloane Mokorosi 1 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) ABBREVIATIONS AND ACRONYMS AF Additional Financing CERC Contingent Emergency Response Component CoW Commissioner of Water DA Designated Account DFIL Disbursement and Financial Information Letter DLI Disbursement Linked Indicator DRWS Department of Rural Water Supply DWA Department of Water Affairs GoL Government of Lesotho FM Financial Management LBWSA Lesotho Bulk Water Supply Agency (to be established) LG Local Government LEWA Lesotho Energy and Water Authority MoF Ministry of Finance MoW Ministry of Water Affairs MTR Mid-Term Review NRW Non Revenue Water PBC Performance Based Condition (previously referred to as DLI) PDO Project Development Objective PIU Project Implementation Unit RAP Resettlement Action Plan SIP Strategic Improvement Plan TA Technical Assistance WASCO Water and Sewerage Company WTP Water Treatment Plant W-PIU WASCO Project Implementation Unit 2 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) BASIC DATA Product Information Project ID Financing Instrument P160672 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 17-May-2019 28-Mar-2024 Organizations Borrower Responsible Agency Ministry of Water Affairs - Commission of Water Lowlands Unit, Water and Sewerage Corporation Project Development Objective (PDO) Original PDO The Proposed Development Objectives are to: (a) increase water availability and access to improved water supply services in two priority zones; and (b) improve technical and financial performance of WASCO. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-64020 17-May-2019 05-Jun-2019 09-Aug-2019 28-Mar-2024 48.00 .12 47.10 IDA-64030 17-May-2019 05-Jun-2019 09-Aug-2019 28-Mar-2024 30.00 8.03 20.77 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No 3 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The project was approved by the World Bank Board of Executive Directors on May 17, 2019 and became effective on August 9, 2019. The project has a total IDA commitment of Euro 68.4 million, including Credit Number 6403-LS (Portion A) of Euro 26.3 million (US$30 million equivalent) and Credit Number 6402-LS (Portion B) of Euro 42.1 million (US$48 million equivalent). The Government of Lesotho (GoL) contribution is Euro 6.8 million. The closing date of the project is March 28, 2024. 2. Progress towards achievement of the Project Development Objective (PDO) was rated Moderately Unsatisfactory during the MTR mission completed in May 2022. As of June 2022, disbursement is Euro 7.2 million or 10.5 percent of IDA financing (and Euro 3.6 million is committed in contracts). Government has disbursed Euro 2 million for project management and compensation. The lack of progress is reflected in poor achievement of the result indicators that are mostly off track. Delays in implementation are caused amongst others by the lengthy procurement process for the Design Review and Supervision Consultant (signed in April 2022), whose role is critical to support the preparation of design and bidding documents for four large work packages (see annex 1). Secondly, environmental flow and paleontological assessments were required under component 1, expressed as a disbursement condition. These studies were completed in January 2022 and the disbursement condition for category 1 was formally lifted on May 31, 2022. Thirdly, the COVID-19 pandemic resulted in delays due to travel restrictions for consultants, hindering the ability to timely deliver on tasks. Finally, complex implementation arrangements under component 3, including the use of Performance-Based Conditions (PBCs), previously called Disbursement Linked Indicators (DLIs), compounded delays. 3. Component 3 - Water Supply Investments in Zones 2 and 3: The designs for all four work packages are expected to be finalized by March 2023 and construction is scheduled to be completed by March 2024, with the defects and liability period to end by March 2025. Good progress was achieved regarding the Resettlement Action Plan (RAP) and related asset verification. The Environmental Flow Assessment and Paleontological Impact Assessment studies have been completed. The findings of these studies will inform the finalization of the project designs. The Environmental and Social Impact Assessment for Component 1 will be updated, if needed, and redisclosed once the design has been finalized. 4. Component 2 – Capacity Building, Institutional Strengthening and Project Management: The project supported the Ministry of Water Affairs (MoW), the Commissioner of Water (CoW) and the Department of Water Affairs (DWA) in assessing institutional options for bulk water management functions, resulting in the intention to establish the 4 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Lesotho Bulk Water Supply Agency (LBWSA). Technical assistance (TA) for the Lesotho Electricity and Water Authority (LEWA) is ongoing to improve auditing and regulatory oversight of the Water and Sewerage Company (WASCO). 5. Component 3 – WASCO Performance Improvements: TA to WASCO is ongoing and includes the development of a Non-Revenue Water (NRW) strategy and the development of a Strategic Improvement Plan (SIP), including measures to improve data quality and technical and financial performance. The SIP is expected to be endorsed by LEWA’s and WASCO’s Boards by end of July 2022. TA to the Department of Rural Water Supply (DRWS) did not commence yet but going forward will help put in place the delegation arrangements between Local Governments (LGs) and water service providers (other than WASCO) in the rural settlements of the project area. 6. Component 4 – Contingent Emergency Response Component (CERC): In June 2021, after the devastating pluvial floods, the Ministry of Finance (MoF) formally requested activation of the CERC for Euro 2.6 million, which was approved in January 2022, although activities have not yet started. A CERC Environmental and Social Management Framework was prepared and disclosed to assist with the screening of potential environmental and social risks associated with the CERC activities. Disbursement conditions were lifted for category 4 (CERC expenditures) on May 18, 2022. 5 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) 7. Financial management performance is rated Satisfactory as overall satisfactory interim financial reports are submitted on time. The auditor issued an unmodified opinion on project financial statements. Procurement performance is Moderately Satisfactory due to shortcoming in the most recent procurement post review that are being addressed. Performance on overall safeguards is Satisfactory. B. Rationale for Restructuring 8. There are several reasons that warrant a restructuring such as the recent CERC activation and the delays that have resulted in a high risk not to achieve the PDO within the current closing date, and without a reduction in scope and revision of the result targets. The PDO thus needs to be updated to reflect the activation of the CERC. Moreover, the proposed restructuring addresses expected cost overruns due to global inflationary pressure, supply chain bottlenecks and price surges due to the conflict in Ukraine. These expected cost escalations, combined with the foreseen CERC allocation, require prioritization of critical infrastructure, while optimizing the use of existing water supply assets1 in supply zone 2 and 3 and phasing the expansion of the distribution systems in settlements in these priority zones. This restructuring thus reallocates costs among the components, and due to the scope reduction of the investments, a revision of the results targets is applied as well2. An extension of the closing date is needed to complete the four civil work packages including the defect and liability period. 9. The restructuring reflects emerging policy priorities of MoW for bulk potable water services as well as retail water distribution services in rural areas. New interim result indicators are introduced that focus on institutional arrangements and tariffs underpinning the sustaibility of the first part of the PDO. While the second part of the PDO concerning WASCO’s performance remains relevant, the restructuring aims to accelerate implementation by removing the complexity of a second PIU hosted within WASCO (W-PIU), that until now was never operationalized. Rather, the project will retain one PIU as fiduciary agent for the entire project, while strengthening interaction on technical aspects with WASCO3. In line with this simplification, the Disbursement-Linked Indicators (DLIs) are proposed to be removed given: i) the complex financial management (FM) and verification requirements that are beyond the current capacities of WASCO; ii) the limited time left before project closing; and the ii) limited remaining uncommitted funds for component 3. At the same time, results indicators for WASCO’s performance are reformulated ensuring accountability of WASCO for the results related to project activities. II. DESCRIPTION OF PROPOSED CHANGES 1 This refers to new small, packaged treatment plants in Maputse and Hlotse that will be operational by the end of 2022, as well as existing reservoirs that can be used in the bulk water transfer scheme. 2 It should be noted that the GoL may decide to finance taxes (e.g. VAT of 14 percent, import duties) from the credit, as per the financing agreement. However, the original cost estimates for the project components did not include such taxes and hence have eroded the contingencies. 3 Despite that a subsidiary agreement was signed with WASCO, an independent WASCO PIU was never formally established, and no funds were transferred to its Designated Account. Activities under subcomponent 3.1 were implemented through the PIU hosted with the MoW. 6 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) 10. This Paper seeks the approval of a Level 2 Project Restructuring to reflect the activation of the Contigent Emergency Response Component (CERC), align the project with emerging Government of Lesotho (GoL) priorities, and improve the efficiency and effectiveness of the project based on recommendations of the Mid-Term Review (MTR) conducted from April 21 to May 5, 2022. It comprises the following changes: i) changes to the PDO, ii) changes to the Resuts Framework, iii) changes to the implementation agency and institutional arrangements, iv) removal of the PBCs and changes to disbursement arrangements, v) reallocation of cost among components, vi) rellaocation among expenditure categories, vii) extension of the closing date, and viii) changes to legal covenants. 11. Change in PDO and Results Framework: the first and second part of the PDO remain relevant and are deemed achievable after the restructuring. The proposed PDO is to: (a) increase water availability and access to improved water supply services in two priority zones; and (b) improve technical and financial performance of WASCO; and (c) in case of an Eligible Crisis or Emergency, respond promptly and effectively to it. PDO indicators have been revised to better reflect drinking water service levels provided by the project (i.e., basic and safely managed drinking water services4) and targets have been revised to reflect reduction in installed capacity of the Water Treatment Plant (WTP) and area of network expansion. The indicators related to WASCO’s performance were revised to be more specific and better attributable to component 3 interventions. Indicators to monitor the CERC were added. At the interim outcome level, several indicators are dropped due to their limited relevance, or revised to accommodate changes in project scope. New indicators are added that focus on priorities supported by the project after restructuring: i) legislation drafted for the new LBWSA; ii) delegation arrangements between LGs and rural service water providers with agreed tariffs; and iii) development of a bulk water tariff agreements between LBWSA and the off takers. More details on the results framework are provided in section IV. 12. Change in Cost Allocation for Components: Section IV details the changes in the costs of the components in US$ million equivalent including government funding. The amount in US$ equivalent is reduced due to the fluctuation in the Euro/US$ exchange rate as the credit is denominated in Euros. No cancellation of credit proceeds is considered under this restructuring. The table below illustrates the IDA reallocation for the components based on a revised cost table agreed during the MTR. Government Government IDA financing IDA financing Allocated amounts in Euro (millions) Financing Financing Current Cost Proposed Cost Component 1. Water Supply Investments in 57.4 2.2 55.5 2.2 Zones 2 and 3 Component 2. Capacity Building, Institutional 6.5 4.2 6.0 4.2 Strengthening and Project Management Component 3. WASCO Performance 4.5 4.2 Improvements Component 4. Contingent Emergency - 2.6 Response Component TOTAL 68.4 6.8 68.4 6.8 4As per the Joint Monitoring Program of UNICEF/WHO (JMP) definitions: basic services is an improved source within 30 minutes roundtrip; safely managed is connection on premises, with reliable supply (16 hrs/d) and free of contamination (national standards). 7 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) 13. It should be noted that under component 1, a second phase of expansion/rehabilitation of the distribution network in the project locations is necessary to achieve the original results targets for water supply access5. Moreover, civil works to augment the capacity of the adit6 for water releases to the Hlotse river are not included and require government financing and/or potential Additional Financing (Euro 4.6 million). There are no changes in counterpart funding and the committed Euro 6.8 million for compensation and project management are deemed sufficient at this stage7. Under component 2, additional activities are introduced for the setup and development of the institutions for bulk and retail water supply services and the preparation of tariff studies for the project areas. National level planning and strategy development activities have been reduced to accommodate the reallocation. Component 3 includes capacity strengthening of WASCO’s senior management, improving data quality of WASCO performance reports subject to LEWA audits, preparing more accurate water balances, and implementing priority investments for NRW reduction, asset management, modernization of billing and collection, and customer registry and feedback systems, with a focus on Maseru. 14. Implementation Arrangements, PBCs and Disbursement Arrangements: Weak capacity and poor understanding of the provisions and conditions in the subsidiary agreement between WASCO and MoF, compounded by the complex verification and FM requirements related to the investments tied to the PBCs, prevented the operationalization of the W-PIU until now8. Given the small non-committed fund allocation under component 3 (Euro 2.2 million) and the prioritization of investments based on WASCO’s SIP and NRW strategy, both the W-PIU as well as the PBCs will be dropped to pave the way for efficient achievement of the revised result targets for WASCO by the closing date. The Lowlands PIU under MoW will remain the single fiduciary entity (procurement and FM), while WASCO seconded staff are tasked to jointly develop the procurement plan for NRW and operational improvement investments9. The disbursement arrangements only require one designated account (DA)10. The subsidiary agreement becomes obsolete and instead a WASCO Institutional Collaboration Agreement is required for the implementation of component 311. 15. Expenditure categories. Thus far disbursement only took place in Category 2 (Euro 4.4million) and Category 5 (front end fees paid). The disbursement conditions for category 1 and category 4 were officially lifted on May 31, 2022, and May 18, 2022, respectively. Category 3(a) and Category (3b) become superfluous after the proposed Restructuring by removing the W-PIU and dropping the PBCs and related disbursement conditions. Category 4 (CERC) is allocated the approved allocation of Euro 2.6 million. To introduce maximum flexibility going forward, a new category 6 is introduced, that includes “Goods, Works, Non-Consulting, Consulting Services, Operational Cost, Training for Part A, B, and C of the project”, in other words all remaining project disbursements except for the CERC expenditures. 5 Hence the water supply access result targets have been reduced and once detailed designs are available these targets can be validated. 6 This is an existing tunnel that secures transfer from the Katse dam to the upstream Hlotse river to ensure minimum flow in the low flow period. 7 Thus far government expenditure is Euro 2 million equivalent and projections indicate at least another Euro 3.5 million is needed. 8 The W-PIU was supposed to operate its own designated account (DA-B) and be fully responsible for FM and Procurement of component 3 activities, governed by a subsidiary agreement between MoF and WASCO signed on June 25, 2020. 9 To be reviewed by the World Bank team for consistency with WASCO SIP and NRW strategy, and focus on Maseru, Hlotse and Maputsoe. 10 A second designated account (DA-B) was set-up for WASCO-PIU which no longer is required. The DFIL will be updated accordingly. 11 The allocated funds under component 3 remain on-granted to WASCO. 8 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) 16. Disbursement projections, implementation schedule and closing date: Based on a revised implementation schedule (added in Annex 1) for the main civil work packages, a closing date extension of 12 months is proposed to ensure the commissioning, handover and defects and liability period for the water systems12. The disbursement projections have been adjusted to reflect the revised implementation schedule with a closing date of March 31, 2025. This is the first extension of the closing date for the credits. 17. Amendments to the Financing Agreement: Several amendments to the Financing Agreement are necessary, including the removal of several legal covenants (see section IV for details). The amendment will require the signing of an Institutional Collaboration Agreement between WASCO and MoW, replacing the previously signed Subsidiary Agreement. New covenants are introduced that require: i) the transfer of water distribution assets to LGs in the rural settlements, agreed management arrangements and the setting of cost-reflective tariffs; and ii) the transfer of the bulk water scheme assets to the LBWSA and the setting of a cost reflective bulk water tariff. 18. Risk Assessment: the current risk rating is derived from the periodic assessments during the implementation support missions throughout 2022. It reflects the residual risk rating13. The overall residual risk has been downgraded from substantial at appraisal to moderate, based on a low risk for macro-economic, technical design, sector strategies, and stakeholder risk (reduced from substantial/moderate at approval due to mitigation measures integrated in project implementation), and a moderate risk for implementation capacity and sustainability (reduced from substantial at approval due to TA measures within the project and simplification of implementation arrangements). The political, fiduciary and environment residual risks remain unchanged at substantial. 12 In case of future implementation delays, the responsibility for the defects and liability period could be transferred to the GoL. 13 Guidance for risk rating has been updated since approval. 9 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) 19. PDO achievement, Implementation Agency and Action Plan: The proposed changes under this Restructuring will allow the PDO to become achievable, considering the extended closing date of March 31, 2025 and the simplified implementation arrangements. The performance of the Lowlands PIU is satisfactory as reflected in the recent Implementation Status Report ratings on Project Management, Environmental and Social Safeguards, Procurement and Financial Management. To avoid and redress shortcomings of the past, MoW and its PIU have agreed to the below Action Plan. Action Frequency/Due Date Actively keep abreast and involve both the Project Management Starting in July 2022, with reporting frequency as Consultant and Design Review and Supervision Consultant in the part of the semi-annual project progress reports preparation of bidding documents and safeguards instruments Hold monthly bilateral coordination meetings with WASCO with Starting in July 2022, monthly minutes to be commonly agreed Agenda and Minutes Preparation included in semi-annual project progress reports Take Human Resources actions on PIU procurement staffing By August 31, 2022 Hold bi-monthly procurement conferences to review Contract Starting in July 2022 on a bi-monthly basis management issues and take corrective measures Conduct additional Contract Management training for PIU and By December 31, 2022 WASCO staff Support MoW/CoW on decision and dissemination of Rural Water By March 31, 2023 Supply Models, in accordance with current draft legislation Conduct stakeholder consultation for the National Sanitation Plan By March 31, 2023 III. SUMMARY OF CHANGES Changed Not Changed Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ PBCs ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ 10 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ DDO Status ✔ Cancellations Proposed ✔ Safeguard Policies Triggered ✔ EA category ✔ APA Reliance ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_IA_TABLE IMPLEMENTING AGENCY Implementing Agency Name Type Action Lowlands Unit Implementing No Change Agency Water and Sewerage Corporation Implementing Marked for Deletion Agency OPS_DETAILEDCHANGES_PDO_TABLE PROJECT DEVELOPMENT OBJECTIVE Current PDO The Proposed Development Objectives are to: (a) increase water availability and access to improved water supply services in two priority zones; and (b) improve technical and financial performance of WASCO. 11 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Proposed New PDO The Proposed Development Objectives are to: (a) increase water availability and access to improved water supply services in two priority zones; and (b) improve technical and financial performance of WASCO; and (c) in case of an Eligible Crisis or Emergency, respond promptly and effectively to it. OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1. Water Supply Component 1. Water Supply 68.30 Revised 62.00 Investments in Zones 2 and 3 Investments in Zones 2 and 3 Component 2. Capacity Component 2. Capacity Building, Building, Institutional Institutional Strengthening and 12.40 Revised 11.10 Strengthening and Project Project Management Management Component 3. WASCO Component 3. WASCO 5.10 Revised 4.50 Performance Improvements Performance Improvements Component 4. Contingent Component 4. Contingent 0.00 Revised Emergency Response 2.80 Emergency Response Component Component TOTAL 85.80 80.40 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-64020 Effective 28-Mar-2024 31-Mar-2025 31-Jul-2025 IDA-64030 Effective 28-Mar-2024 31-Mar-2025 31-Jul-2025 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-64020-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: GDs,WKs,NCS,CS undr prt A.1 Prjct 12 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) 7,600,000.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: GD,WK,NCS,CS,OC,Tr pt A2,A3,A4,A5,B 31,294,750.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 3A Current Expenditure Category: GD(ex mot veh),NCS,CS,OC,Tr prt C1 1,600,000.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 3B Current Expenditure Category: GD(ex mt veh),WK,NCS,CS,OC,Tr pt C2 1,500,000.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: EMERGENCY EXPNDTRS PRT D PRJCT 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: FEF Current Expenditure Category: FRONT END FEE 105,250.00 105,250.00 iLap Category Sequence No: 5 Current Expenditure Category: Front End Fees PAID 0.00 0.00 105,250.00 100 iLap Category Sequence No: 6 Current Expenditure Category: GDs,WKs,NCS,CS,OC,Tr part A, B, C prjct 0.00 0.00 41,994,750.00 100 Total 42,100,000.00 105,250.00 42,100,000.00 IDA-64030-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: GDs,WKs,NCS,CS undr prt A.1 Prjct 11,500,000.00 0.00 0.00 100.00 100.00 13 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) iLap Category Sequence No: 2 Current Expenditure Category: GD,WK,NCS,CS,OC,Tr pt A2,A3,A4,A5,B 13,500,000.00 4,386,426.66 4,386,427.00 100.00 100.00 iLap Category Sequence No: 3A Current Expenditure Category: GD(ex mot veh),NCS,CS,OC,Tr prt C1 200,000.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 3B Current Expenditure Category: GD(ex mt veh),WK,NCS,CS,OC,Tr pt C2 1,100,000.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: EMERGENCY EXPNDTRS PRT D PRJCT 0.00 0.00 2,593,831.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: GDs,WKs,NCS,CS,OC,Tr part A, B, C prjct 0.00 0.00 19,319,742.00 100 Total 26,300,000.00 4,386,426.66 26,300,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2019 0.00 0.00 2020 4,881,630.00 2,500,000.00 2021 9,407,658.00 1,500,000.00 2022 17,127,552.00 4,400,000.00 2023 32,019,322.00 15,000,000.00 2024 11,448,206.00 35,000,000.00 2025 3,115,632.00 30,000,000.00 OPS_DETAILEDCHANGES_SORT_TABLE 14 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating at Approval Current Rating Political and Governance  Substantial  Substantial Macroeconomic  Substantial  Low Sector Strategies and Policies  Moderate  Low Technical Design of Project or Program  Substantial  Low Institutional Capacity for Implementation and  Substantial  Moderate Sustainability Fiduciary  Substantial  Substantial Environment and Social  Substantial  Substantial Stakeholders  Moderate  Low Other  Substantial Overall  Substantial  Moderate OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action By no later than one (1) month after the Effective Date, the Recipient shall establish and thereafter maintain, at all times during the implementation of the Project, the Project Steering Committee (PSC), in form and substance satisfactory to the Association. The PSC shall be responsible for providing overall strategic guidance on implementation of the Project, including providing oversight and guidance, facilitating inter-institutional - coordination, resolving legal, policy and operational Complied with No Change bottlenecks and informing on progress and challenges. To this end, the PSC will be chaired by the Principal Secretary of the MOW or any authorized representative and will be comprised of high-level representatives of relevant ministries, WASCO, non-government organizations and others as deemed relevant by the Recipient. (Schedule 2 Section I A. 2 of the Financing Agreement) 15 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) The Recipient shall, at all times during the implementation of the Project, coordinate implementation of the Project through the MOW. Specifically, the COW shall have full responsibility for the implementation and management of the Project through a Project implementing unit. To this end, by no later than fifteen (15) days after the Effective Date, the Recipient shall establish and thereafter maintain, at all times during the implementation of the Project, the - Complied with No Change Project Implementing Unit with qualified and experienced staff in adequate numbers, terms of reference, resources and functions, satisfactory to the Association, in accordance with the Project Operational Manual, including, but not limited to, a Project manager, financial management specialist, procurement specialist, and safeguard specialists. (Schedule 2 Section I A. 1 (a) of the Financing Agreement) For purposes of implementing Part C (Component 3) of the Project, the Recipient shall cause WASCO to establish and thereafter maintain, at all times during the implementation of Part C of the Project, an implementation team headed by a Project coordinator Marked for - Complied with and with qualified and experienced staff in adequate Deletion numbers, terms of reference, resources and functions, satisfactory to the Association, in accordance with the Project Operational Manual. (Schedule 2 Section I A. 3 of the Financing Agreement) - Prior to awarding any contract regarding the design or Complied with No Change civil works related to activities under Part A.1 of the Project, the Recipient shall carry out the following studies, assessments and plans in a manner satisfactory to the Association: (a) a baseline study of the upper Hlotse River that would be affected by the water releases from Katse Dam; (b) (i) a new instream flow requirement (IFR) calculation (using the 2008 instream flow requirement report on the conditions in the Hlotse River as benchmark), taking into account ecosystem services and downstream uses/users of the intake, current and future uses of the Hlotse River; (ii) a management plan 16 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) and an assessment on how the new IFR calculation will impact downstream users; (iii) a determination of impacts that could not be avoided or measures needed to deal with temporary impacts and/or extreme conditions; and (iv) a livelihood restoration plan to address any training or changes in practice required by changed conditions and to compensate for losses and restore livelihoods through alternative means if necessary; (c) (i) a complete study of the phase 1 paleontological impact assessment in the areas of highest fossil potential (i.e. where bedrock outcrops at or within 2 m of the surface); (ii) the mapping of all the fossil sites; and (iii) the compilation of a chance find protocol; (d) a hydrological assessment to determine the impact of water releases from Katse Dam on the hydrology of the upper Hlotse River above the planned intake civil works, based on which mitigation measures shall be developed; (e) an impact assessment of Katse Dam water releases on the biota (fish, invertebrates) of the upper Hlotse River; and (f) a water quality modelling on the impact of Katse Dam’s water on the water quality in the Hlotse River. (Schedule 2 Section I E 4. (a), (b), (c), (d), (e), and (f)) The Recipient shall ensure that no civil works shall commence until all resettlement measures set forth in any resettlement action plan(s) shall have been fully executed, including the full payment of compensation - Not yet due No Change prior to displacement and/or the provision of relocation assistance to all Affected Persons. (Schedule 2 Section I E 2. (a) - By no later than one (1) month after the Effective Date, Complied with No Change the Recipient shall cause DRWS, DWA and WASCO to second and thereafter maintain, at all times during the implementation of the Project, qualified and experienced staff in adequate numbers and with terms 17 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) of reference satisfactory to the Association. (Schedule 2 Section I A. 1 (b) of the Financing Agreement) Upon completion of the activities in Part A. 1, 2, 3 and 4 of Schedule 1 to the Financing Agreement, the Recipient, through the MOW, shall: (b) transfer the water system assets to local governments in rural IDA-64020 Not yet due New settlements and shall cause the local governments to set agreed cost reflective tariffs and management arrangements for the systems. (Schedule 2, Section I.B.2 (b)) By no later than sixty (60) days after the countersignature of this amendment letter, the Recipient shall amend the existing Subsidiary Agreement, under terms and conditions satisfactory to IDA-64030 Not yet due New the Association, for purposes of setting up the roles and responsibilities of MOW and WASCO for purposes of implementing Part C of the Project (Schedule 2, Section I.B.1) By no later than sixty (60) days after the countersignature of this amendment letter, the Recipient shall amend the existing Subsidiary Agreement, under terms and conditions satisfactory to IDA-64020 Not yet due New the Association, for purposes of setting up the roles and responsibilities of MOW and WASCO for purposes of implementing Part C of the Project (Schedule 2, Section I.B.1) Upon completion of the activities in Part A. 1, 2, 3 and 4 of Schedule 1 to the Financing Agreement, the Recipient, through the MOW, shall: (a) transfer assets of IDA-64030 Not yet due New the bulk water scheme to LWBSA and shall cause the LWBSA to set a cost reflective bulk water tariff (Schedule 2, Section I.B.2 (a)) IDA-64020 Upon completion of the activities in Part A. 1, 2, 3 and 4 Not yet due New of Schedule 1 to the Financing Agreement, the Recipient, through the MOW, shall: (a) transfer assets of 18 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) the bulk water scheme to LWBSA and shall cause the LWBSA to set a cost reflective bulk water tariff (Schedule 2, Section I.B.2 (a)) Upon completion of the activities in Part A. 1, 2, 3 and 4 of Schedule 1 to the Financing Agreement, the Recipient, through the MOW, shall: (b) transfer the water system assets to local governments in rural IDA-64030 Not yet due New settlements and shall cause the local governments to set agreed cost reflective tariffs and management arrangements for the systems. (Schedule 2, Section I.B.2 . (b)) 19 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) . Results framework COUNTRY: Lesotho Lesotho Lowlands Water Development Project - Phase II Project Development Objectives(s) The Proposed Development Objectives are to: (a) increase water availability and access to improved water supply services in two priority zones; and (b) improve technical and financial performance of WASCO. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Increased water availability in two priority water zones Additional daily water production capacity installed by the project in 0.00 0.00 1,200.00 1,200.00 1,200.00 21,200.00 21,200.00 two priority water zones (Cubic Meter(m3)) Rationale: The indicator definition has been slightly modified to reflect the additional daily water production capacity that is installed through investments by the project in the priority zones 2/3. This means it measures additional production capacity (hence baseline value is set at zero) which includes: i) additional capacity Action: This indicator has installed resulting from the rehabilitation of seven boreholes in Matputsoe (estimated at 1,200 m3/day), and ii) additional capacity installed by of the newly been Revised built WTP financed by the project, now planned for 20,000 m3/day design capacity. Hence, it does not measure the actual water produced (this may be less as the installed capacity during the project implementation period). Increased access to water supply services in two priority zones People provided with access to improved water sources 42,130.00 60,000.00 60,000.00 60,000.00 70,000.00 115,000.00 (CRI, Number) 20 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Action: This indicator has been Marked for Deletion People provided with access to improved water sources - Female 28,670.00 35,000.00 36,000.00 38,000.00 38,000.00 58,000.00 (RMS requirement) (CRI, Number) Action: This indicator has been Marked for Deletion People provided with access to improved 6,480.00 6,480.00 6,500.00 8,000.00 11,000.00 17,000.00 water sources - rural (CRI, Number) Action: This indicator has been Marked for Deletion People provided with access to improved 35,600.00 45,000.00 48,000.00 55,000.00 80,000.00 98,000.00 water sources - urban (CRI, Number) Action: This indicator has been Marked for Deletion People with existing 0.00 0.00 0.00 15,000.00 15,000.00 15,000.00 55,000.00 connections benefitting 21 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 from improvement in service quality (Number) Rationale: Action: This indicator has the target number has been reduced as the scope of the rehabilitation of existing networks has been reduced due to budget constraints; the definition has been been Revised updated of which female 0.00 50.00 (Percentage) Action: This indicator is New People provided with access to at least basic drinking 0.00 0.00 0.00 0.00 0.00 40,000.00 56,700.00 water services (Number) Rationale: The indicator is introduced to align with up-to-date definitions that are used under the SDGs (instead of the old indicator that stems from the MDG era); this Action: This indicator is helps to better understand the service level that is provided, either to be a basic water service (a stand post within 30 minutes return trip distance) or a safely New managed water service (an on-premises connection with reliable supply and water quality as per national standards). People provided with access to a basic drinking 0.00 9,100.00 water supply service (Number (Thousand)) 22 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: Action: This indicator is this indicator is added to capture those people that will gain access to a managed standpipe (i.e. with prepaid meters) within a 30 minute return trip, who New previously did not have water system access (and were collecting spring water or handpumps) People provided with a safely managed drinking 0.00 47,600.00 water service (Number (Thousand)) Rationale: Action: This indicator is the target has been reduced due to the reduced allocation available for the network and hh connection expansions New of which female 0.00 50.00 (Percentage) Action: This indicator is New • Improved technical and financial performance of WASCO WASCO's minimum achievement of selected key performance indicator PBC 5 0.00 0.00 0.00 70.00 70.00 70.00 targets defined by LEWA (Percentage) Rationale: Action: This indicator has The definition has been simplified to focus on selected key performance indicators (KPIs) of WASCO where reliability of data would be highest (based on the been Marked for Deletion LEWA auditing process) and where the project is likely to contribute trough its interventions. 23 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 O&M cost coverage by 0.84 0.84 0.84 0.84 0.90 0.95 1.00 billing for WASCO (Number) Rationale: This indicator is one of the Key Performance Indicators (KPI) for WASCO that reflects both improvements in technical and commercial aspects that are linked to project activities that are focused on Non Revenue Water reduction (both in terms of commercial as well as technical losses), technical assistance to define and Action: This indicator is start implementation of strategic improvements and the quality of data reporting (both technical and financial data). This new PDO indicator is deemed more New realistic and directly related to NRW activities as well as priority measures in the WASCO Strategic Improvement Plan (as compared to the earlier composite indicator of all 10 KPIs). The indicator will be measured for the Maseru area where most of the NRW and commercial improvements will be introduced under component 3. in case of an Eligible Crisis or Emergency, respond promptly and effectively to it. (Action: This Objective is New) Number of flood-impacted pumped water systems in rural areas that have been 0.00 0.00 0.00 0.00 10.00 30.00 30.00 repaired and are functional (Number) Rationale: The CERC introduced a total package of Euro 2.6 million to respond to the 2021 floods out of which 60 percent is allocated to emergency repair of water systems Action: This indicator is managed by WASCO and by Department of Rural Water Supply. It is expected that at 32 pumped drinking water systems managed by DWRS will be repaired New leading to full functionality of the systems (30 solar and 2 diesel-based pumping systems) PDO Table SPACE 24 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Component 1: Water Supply Investments in Zones 2 and 3 Number of km of total water pipelines constructed 0.00 0.00 0.00 0.00 30.00 140.00 200.00 (Kilometers) Rationale: Action: This indicator has the total length is revised to account for a reduced scope of the distribution networks; the length of the transmission main is included as well been Revised out of which bulk transmission pipeline 0.00 0.00 0.00 0.00 10.00 30.00 40.00 (Kilometers) Rationale: Action: This indicator is to indicate the distinction between bulk transfer mains and retail distribution networks New out of which distribution network pipelines constructed and/or 0.00 0.00 0.00 0.00 20.00 90.00 160.00 rehabilitated (Kilometers) Rationale: Action: This indicator is to distinguish between bulk transfer (managed by LBWA) and retail distribution networks (by WASCO and DWRS/rural service providers) New Increase in average monthly industrial water 2,794.00 0.00 0.00 2,000.00 3,000.00 4,500.00 6,000.00 consumption in two priority zones (Cubic Meter(m3)) 25 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: This indicator is proposed to better capture the results of increasing access and availability beyond the domestic household connections. Before the project, Action: This indicator is many of the industries in Maputsoe and Hlotse were not able to access reliable and sufficient water. With the rehabilitation of the boreholes and the new New treatment plant and bulk water transfer scheme the industrial/commercial water use will increase supporting the economic development of the area. Component 2: Capacity Building, Institutional Strengthening and Project Management Non revenue water in 45.00 45.00 40.00 35.00 30.00 25.00 project area (Percentage) Action: This indicator has been Marked for Deletion National Sanitation Action Plan TA completed and No No Yes Yes Yes Yes approved (Yes/No) Number of people trained according to approved 0.00 0.00 50.00 100.00 150.00 200.00 250.00 annual training plan (Number) Rationale: Action: This indicator has includes gender disaggregation been Revised out of which females 0.00 0.00 0.00 20.00 25.00 30.00 30.00 (Percentage) 26 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: Action: This indicator is to ensure women gender disaggregated data and prioritization of women for training New Customer satisfaction second customer WASCO implements survey in Maputsoe 2nd stakeholder forum reactive approach feedback survey gender-inclusive customer area, followed by completed with doable towards customer completed showing feedback mechanism in agreements on performance actions engagement improvements over selected project area (Text) doable actions in agreed; baseline results stakeholder forum Rationale: As part of the change management process for WASCO, customer engagement is one of the strategic priorities. A customer feedback initiative in Maputsoe Action: This indicator has and/or Hlotse branches will be executed to draw lessons and adopt for scale-up across WASCO organization. It will build on the existing customer engagement been Revised of WASCO and improve these through: i) proactive engagement with customers on a regular basis, and ii) transparency in results and agreed actions, and iii) a two-way dialogue (closed feedback loop) to report on improvement measures. Percentage of women employed by WASCO 23.00 23.00 25.00 25.00 30.00 30.00 (Percentage) Action: This indicator has been Marked for Deletion Number of institutions benefitting from the project 0.00 3.00 4.00 4.00 4.00 4.00 (Number) Action: This indicator has been Marked for Deletion 27 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Grievances satisfactorily resolved in line with 0.00 70.00 70.00 70.00 80.00 85.00 90.00 existing GRM procedures (Percentage) Rationale: Action: This indicator has definition updated and focused on project-specific GRM complaint resolution; this requires several GRM channels at national, municipal, and local level, been Revised including suggestion boxes, project websites, but also WASCO branch offices; all grievances are to be recorded, and responses coordinated centrally Draft Act for the establishment of Lesotho No No No No Yes Yes Yes Bulk Water Supply Agency prepared (Yes/No) Rationale: The project funded an institutional option analysis that has resulted in the intention of the government to establish the Lesotho Bulk Water Supply Agency Action: This indicator is (LBWSA). The LBWSA will own the newly created (treated) bulk water assets (WTP, and bulk transmission system) and hence its establishment is critical. At New restructuring additional resources are allocated to help the first phase of the LBWSA establishment, including the drafting of legislation, operational statutes and staffing arrangements. Rural water service providers operating distribution systems with 0.00 0.00 0.00 0.00 0.00 2.00 3.00 local government approved tariffs (Number) Rationale: Action: This indicator is In priority zone 2/3, WASCO will manage the distribution networks of Hlotse and Maputso. The distribution networks of four additional settlements Mpharana, New Ha Lesiano, Tsikoane and Khanyana are expected to be managed through an alternative rural service provider model. The local government can delegate the service to a licensed water service provider for example such as a community-governed non-for-profit structure (association), local private sector. The project 28 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 intends to develop national guidelines for such rural management arrangements and a tariff model/guideline that is applicable in this context (simplified). The tariff model/guidance will be applied to the project settlements (for standpipes, and for household connections), and taking into account the purchase of the bulk water from the LBWA. The tariff is to be endorsed by the local government, as LEWA does not yet have the formal mandate to set tariffs for other service providers than WASCO (although this is intended to change but may take longer than the project horizon) Bulk water delivery agreements with tariffs are signed between LBWSA and No No No No No No Yes WASCO and other rural service providers (Yes/No) Rationale: For reasons of sustainability it is essential that before any bulk treated potable water is distributed to WASCO and other off-takers that a tariff is determined Action: This indicator is and agreed between the entity operating the Bulk water system (LBWSA) and the off-takers (WASCO and other rural service providers). By the project closing New date bulk water delivery agreements should have been signed between LBWSA and the off-takers, including the agreed tariffs. LEWA will develop a standard methodology for setting bulk potable water tariffs that will serve to set the tariffs for the off-takers in supply zone 2/3. Component 3: WASCO Performance Improvements (Action: This Component has been Marked for Deletion) DLR 1.1: Technical data quality improvement and No Yes Yes audit plan approved (Yes/No) Action: This indicator has been Marked for Deletion DLR1.2: Proportion of cumulative actions achieved 0.00 60.00 80.00 95.00 100.00 (Percentage) 29 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Action: This indicator has been Marked for Deletion DLR 2.1: Financial data/reporting quality No Yes Yes improvement action plan approved (Yes/No) Action: This indicator has been Marked for Deletion DLR 2.2: Proportion of cumulative financial data PBC 3 0.00 0.00 60.00 80.00 95.00 95.00 quality/reporting actions achieved (Percentage) Action: This indicator has been Marked for Deletion DLR 3.1: Achievement of WASCO’s annual technical, financial and commercial 0.00 0.00 70.00 70.00 70.00 70.00 performance improvement targets (Percentage) Action: This indicator has been Marked for Deletion Component 3: WASCO technical and financial performance improvements (Action: This Component is New) Collection efficiency of 85.00 85.00 85.00 85.00 90.00 95.00 95.00 WASCO (Percentage) Action: This indicator is Rationale: New 30 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Simplification of the complex DLI / indicators that corresponds better with reduced scope and focus on WASCO technical and financial improvement for limited service area, namely Maseru (and to some extent Maputsoe and Hlotse). This indicator will measures improvement in collection efficiency through more accurate customer metering and pre-paid meters and other improvements in commercial systems, focused on measuring Maseru-wide data Water balance for WASCO is prepared with increased No No No No Yes Yes Yes accuracy (Yes/No) Rationale: WASCO NRW diagnostic indicated that existing information systems do not allow for accurate assessments of NRW indicators. The first priority is to improve the accuracy of the data and establishing water balance for the Maseru area, as Maseru supply areas contributes most to initial estimates of non revenue water. An Action: This indicator is accurate and verifiable water balance, audited by LEWA, is a necessity for potential performance-based NRW contracts for WASCO in the future. Project New activities will focus on improving the quality of the data to prepare a water balance for Maseru (DMAs, metering, pressure management, and other commercial data) Contingent Emergency Response (Action: This Component is New) Flood-impacted hydromet stations rehabilitated and 0.00 0.00 0.00 0.00 2.00 5.00 5.00 functional (Number) Rationale: Action: This indicator is Included to reflect the CERC activation New IO Table SPACE 31 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Performance-Based Conditions Matrix DLI IN01140788 ACTION PBC 1 DLR 1.1: Improved quality of WASCO technical data: Technical data quality improvement and audit plan approved Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Process No Yes/No 0.25 0.00 Period Value Allocated Amount (USD) Formula Baseline No 1 year Yes 0.25 See Annex 3 (Table 3.1) 2 years No 0.00 See Annex 3 (Table 3.1) 3 years No 0.00 See Annex 3 (Table 3.1) 4 years No 0.00 See Annex 3 (Table 3.1) 5 years No 0.00 See Annex 3 (Table 3.1) Action: This PBC has been Marked for Deletion DLI IN01140797 ACTION DLR 1.2: Improved quality of WASCO technical data: Proportion of cumulative technical data quality improvement actions PBC 2 achieved Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Percentage 0.75 0.00 Period Value Allocated Amount (USD) Formula 32 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Baseline 0.00 1 year 0.00 0.00 2 years 60.00 0.25 3 years 80.00 0.25 4 years 95.00 0.25 5 years 0.00 0.00 Action: This PBC has been Marked for Deletion DLI IN01140800 ACTION PBC 3 DLR 2.2: Proportion of cumulative financial data quality/reporting actions achieved Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Percentage 0.25 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 1 year 60.00 0.25 See Annex 3 (Table 3.1) 2 years 80.00 0.00 See Annex 3 (Table 3.1) 3 years 95.00 0.00 See Annex 3 (Table 3.1) 4 years 0.00 See Annex 3 (Table 3.1) 5 years 0.00 33 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Action: This PBC has been Marked for Deletion DLI IN01140803 ACTION DLR 2.2 Improved quality of WASCO's audited financial data/reporting - Proportion of cumulative financial data PBC 4 quality/reporting actions achieved Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Percentage 0.75 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.75 1 year 0.00 0.00 2 years 60.00 0.25 3 years 80.00 0.25 4 years 95.00 0.25 5 years 0.00 0.00 Action: This PBC has been Marked for Deletion DLI IN01140807 ACTION PBC 5 WASCO's minimum achievement of selected key performance indicator targets defined by LEWA Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Percentage 1.00 0.00 Period Value Allocated Amount (USD) Formula 34 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Baseline 0.00 1 year 0.00 0.00 See Annex 3 (Table 3.1) 2 years 70.00 0.30 See Annex 3 (Table 3.1) 3 years 70.00 0.40 See Annex 3 (Table 3.1) 4 years 0.30 See Annex 3 (Table 3.1) 5 years 0.00 See Annex 3 (Table 3.1) Action: This PBC has been Marked for Deletion Verification Protocol Table: Performance-Based Conditions DLI_TBL_VERIFICATION PBC 1 DLR 1.1: Improved quality of WASCO technical data: Technical data quality improvement and audit plan approved Description See Annex 3 (Table 3.2) Data source/ Agency See Annex 3 (Table 3.2) Verification Entity See Annex 3 (Table 3.2) See Annex 3 (Table 3.2) Procedure DLI_TBL_VERIFICATION DLR 1.2: Improved quality of WASCO technical data: Proportion of cumulative technical data quality improvement actions PBC 2 achieved Description See Annex 3 (Table 3.2) Data source/ Agency See Annex 3 (Table 3.2) 35 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Verification Entity See Annex 3 (Table 3.2) See Annex 3 (Table 3.2) Procedure DLI_TBL_VERIFICATION PBC 3 DLR 2.2: Proportion of cumulative financial data quality/reporting actions achieved Description Data source/ Agency See Annex 3 (Table 3.2) Verification Entity See Annex 3 (Table 3.2) See Annex 3 (Table 3.2) Procedure DLI_TBL_VERIFICATION DLR 2.2 Improved quality of WASCO's audited financial data/reporting - Proportion of cumulative financial data PBC 4 quality/reporting actions achieved Description Refer to Annex 3 (Table 3.2) Data source/ Agency Refer to Annex 3 (Table 3.2) Verification Entity Refer to Annex 3 (Table 3.2) Refer to Annex 3 (Table 3.2) Procedure DLI_TBL_VERIFICATION PBC 5 WASCO's minimum achievement of selected key performance indicator targets defined by LEWA the indicator measures whether at least 70 percent of the total score for achieving selected KPIs is reached. In total ten KPIs are agreed annually between WASCO and LEWA and an annual audit of WASCO KPIs is foreseen through the project. The Description KPIs used for this indicator are as follows: potable water quality (KPI-3; 15 pts); hours of supply (KPI-4; 15 pts); collection efficiency (KPI-6; 5 pts) and O&M cost coverage billed (KPI-7; 10 pts). NRW has not been selected as the NRW diagnostics carried out under the project indicate that reliability of data and accuracy of reporting is very weak Data source/ Agency See Annex 3 (Table 3.2) Verification Entity See Annex 3 (Table 3.2) 36 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) See Annex 3 (Table 3.2) Procedure 37 The World Bank Lesotho Lowlands Water Development Project - Phase II (P160672) Annex 1: Work Packages - Implementation Schedule Including Defects Liability Period Category Contract/Activity Duration Start Date Completion Cost (Euro) (Months) Date LLWDP/W/03- Source Development and 25 Feb 17, 2023 Mar 14, 2025 Treatment works (Intake, raw water pumping Work Package 1 station and Transmission, WTW and clear 16,000,000 water pumping station  Construction of Works 13 Feb 17, 2023 Mar 15, 2024  Operation of plant and maintenance of 12 Mar 18, 2024 Mar 14, 2025 defects LLWDP/W/04 – Bulk Transfer System 26 Jan 6, 2023 Mar 13, 2025 (transmission mains, booster pumping stations Work Package 2 and reservoirs) 25,900,000  Construction of works 14 Jan 6, 2023 Mar 13, 2024  Provision of Services during Defects 12 Mar 14, 2024 Mar 13, 2025 Liability Period LLWDP/W/05 – Construction of distribution 25 Feb 16, 2023 Mar 22, 2025 Work Package 3 systems-Khanyane, Hlotse, Tsikoane, Ha 2,720,000 Lesiamo, Mpharane • Construction of works 13 Feb 16, 2023 Mar 22, 2024 • Provision of Services during Defects 12 Mar 25, 2024 Mar 22, 2025 Liability Period LLWDP/W/06 - Construction of distribution 25 Feb 16, 2023 Mar 22, 2025 Work Package 4 systems-Maputsoe 4,620,000  Construction of works 13 Feb 16, 2023 Mar 22, 2024  Provision of Services during Defects Liability Period 12 Mar 25, 2024 Mar 22, 2025 Consultancy LLWDP/C/04 / Design Review and Construction 35 Apr 5, 2022 Mar 19, 2025 3,544,309 Supervision  LLWDP/C/04 / Design Review Lump Sum 11 Apr 5, 2022 Mar 9, 2023 950,795  LLWDP/C/04 / Construction Supervision - 14 Jan 9, 2023 Mar 19, 2024 2,074,811 Time Based - Construction  LWDP/C/04 / Construction Supervision - 12 Mar 20, 2024 Mar 19, 2025 518,703 Time Based - Defect Liability TOTAL 52,784,309 38