The World Bank Nepal: Power Sector Reform and Sustainable Hydropower Development (PSRSHD) (P150066) REPORT NO.: RES54360 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NEPAL: POWER SECTOR REFORM AND SUSTAINABLE HYDROPOWER DEVELOPMENT (PSRSHD) APPROVED ON SEPTEMBER 25, 2015 TO NEPAL ENERGY & EXTRACTIVES SOUTH ASIA Regional Vice President: Martin Raiser Country Director: Faris H. Hadad-Zervos Regional Director: Guangzhe Chen Practice Manager/Manager: Simon J. Stolp Task Team Leader(s): Subodh Adhikari The World Bank Nepal: Power Sector Reform and Sustainable Hydropower Development (PSRSHD) (P150066) ABBREVIATIONS AND ACRONYMS The World Bank Nepal: Power Sector Reform and Sustainable Hydropower Development (PSRSHD) (P150066) 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 P150066 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 25-Sep-2015 30-Dec-2022 Organizations Borrower Responsible Agency Nepal Project Development Objective (PDO) Original PDO The Project Development Objectives are to: (a) strengthen the capacity of the power sector agencies to plan and prepare hydropowerand transmission line projects following international standards and best practices; and (b) improve the readiness of the powersector agencies for regulatory and institutional reforms. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-57280 25-Sep-2015 04-Feb-2016 02-Jun-2016 30-Dec-2022 20.00 10.14 9.60 TF-B4904 02-Apr-2021 06-Apr-2021 06-Apr-2021 30-May-2021 .66 .66 0 TF-18570 25-Sep-2015 04-Feb-2016 02-Jun-2016 31-Dec-2019 .50 .50 0 The World Bank Nepal: Power Sector Reform and Sustainable Hydropower Development (PSRSHD) (P150066) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Summary The objective of this restructuring is to cancel the SDR 6,014,314.07 (US$ 8 million), which will remain unused in the Power Sector Reform and Sustainable Hydropower Development Project (PSRSHDP). GoN has sent a request to the Bank for the cancellation of this amount. Overall Implementation Progress 1. Component A: The feasibility study for Upper Arun Hydropower Project (UAHEP) is now complete. The request for proposal for the procurement of new Owner’s Engineer for design and tendering works have been issued and the bids are being received. The consultation and Environment and Social Assessment (ESIA), Resettlement Action Plan (RAP) have also been completed the reports are being finalized. Similarly, the site investigation and design work for the HV transmission lines in eastern part of Nepal under this component is also ongoing. Out of 4 lines, the activities on two lines are in advance stage with the survey competed and design basis finalized. 2. Component B: The physical asset verification is now complete. NEA and the consultants are now assessing the values of the NEA assets based on the Nepal accounting standards. The final report is expected to be submitted by the project closing date of Dec 30, 2022. On the river basin planning works, the GON is now currently undertaking the activities using its own resources. The data collection work has been completed and the consultant is now fully mobilized for the data analysis and report preparation. 3. Component C: Under this activity, five TAs were completed (as per the target). These include a) support in the preparation of the regulatory act, b) gender equality and social inclusion guidelines, c) environmental and social impact assessment manual for hydropower, d) financial viability action plan for NEA and e) business plan for the power trading company for NEA. 4. Disbursement. As of December 8, 2022, the total disbursement is US$10.1 million - which represents around 50% percent of allocated amounts out of US$20 million. Additional disbursement of around US$2 million is expected to be incurred as of the Project closing date of December 30, 2022 which is expected to be claimed within the grace period of April 30, 2023. This may result in a potential unutilized balance of around US$ 8 million for the Project by the closing date which is mainly due to exchange gain between US Dollar and Nepalese Rupees. As such the Government has requested for proactive cancellation of US$ 8 million (which will remain undisbursed). The World Bank Nepal: Power Sector Reform and Sustainable Hydropower Development (PSRSHD) (P150066) II. DESCRIPTION OF PROPOSED CHANGES 5. This restructuring will proactively cancel the unutilized balance of about 6,014,314.07 (US$ 8 million). Ministry of Finance has sent a formal request for proactive cancellation of this amount vide its letter dated December 9, 2022. 6. Economic and Financial Analysis. Economic and Financial will be carried out during the upcoming ICR. III. SUMMARY OF CHANGES Changed Not Changed Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Economic and Financial Analysis ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ The World Bank Nepal: Power Sector Reform and Sustainable Hydropower Development (PSRSHD) (P150066) Other Change(s) ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation Disburs UNDISBURSE IDA-57280- ing&Re XDR 14,400,000.00 6,014,314.07 09-Dec-2022 8,385,685.93 D BALANCE 001 paying AT CLOSING Fully TF-18570- Disburs USD 500,000.00 0.00 500,000.00 001 ed Fully TF-B4904- Disburs USD 664,798.72 0.00 664,798.72 001 ed OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-57280-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: Goods & CS PART 1 12,050,000.00 5,843,215.24 6,035,685.93 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Goods & CS Part 2 c,d,e 2,350,000.00 0.00 2,350,000.00 100.00 100.00 The World Bank Nepal: Power Sector Reform and Sustainable Hydropower Development (PSRSHD) (P150066) Total 14,400,000.00 5,843,215.24 8,385,685.93 . 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