The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) REPORT NO.: RES50308 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE ACCELERATING SOLAR WATER PUMPING VIA INNOVATIVE FINANCING PROJECT APPROVED ON SEPTEMBER 7, 2017 TO THE UNITED REPUBLIC OF TANZANIA WATER GLOBAL PRACTICE EASTERN AND SOUTHERN AFRICA REGION Regional Vice President: Hafez M. H. Ghanem Country Director: Mara K. Warwick Global Director: Jennifer J. Sara Regional Director: Catherine S. Tovey (Acting) Practice Manager/Manager: Fook Chuan Eng (Acting) Task Team Leader(s): Kristoffer Welsien, Sylvestre Bea The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) BASIC DATA Product Information Project ID Financing Instrument P161757 Investment Project Financing Original EA Category Current EA Category Approval Date Current Closing Date 07-Sep-2017 28-Feb-2022 Organizations Borrower Responsible Agency Ministry of Water and Irrigation,TIB Development Bank United Republic of Tanzania Limited Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0 Total Financing 0 Financing Gap 0 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The Project Development Objective is to support sustainable access to water in selected rural communities of Tanzania. OPS_TABLE_PDO_CURRENTPDO The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) Summary Status of Financing (US$, Millions) Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A5665 07-Mar-2019 07-Mar-2019 09-Sep-2019 28-Feb-2022 3.20 2.76 .44 TF-A5703 07-Mar-2019 07-Mar-2019 09-Sep-2019 28-Feb-2022 1.30 .90 .40 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Project Status 1. This Restructuring Paper proposes a restructuring of the Tanzania Accelerating Solar Water Pumping Via Innovative Financing Project (P161757). The Project was approved on September 7, 2017, with US$4.50 million in grant financing from the Global Partnership for Results-Based Approaches (GPRBA). The project development objective is to support sustainable access to water in selected rural communities in Tanzania. This objective is achieved by replacing the existing old inefficient diesel-electric pumps with clean and climate-friendly solar pumping systems that reduce operations and maintenance costs and strengthen the sustainability of the rural water supply. 2. The Project has made significant progress. As of February 15, 2022, all 110 sites for the retrofitting of diesel pumping systems with solar systems have been awarded, with the extensive community engagement and site selection under Output 1 having long been finalized. Progress towards achieving the PDO and overall Implementation Progress are rated Moderately Satisfactory. There are no overdue audits, and the Project safeguards performance is rated satisfactory. A summary of implementation across the project’s three outputs follows: Output 1. Community Consultation: The verification of signed loan agreements with the 110 Community Based Water Supply Organizations (CBWSOs) was completed in March 2021, and the Project disbursed 20 percent of the grant amount (US$840,000). Status: Completed. Output 2. Infrastructure: Seventy percent of the total grant amount (US$2.94 million) is allocated to install solar pumping systems, of which US$2.82 million has been disbursed. While procurement for all 110 sites has been completed and on-the-ground implementation is ongoing, COVID-19 has delayed implementation, with in-country missions and face to face support not having been possible. More than 50 percent of the targeted sites have completed the solar installation, including all civil and electrical works; only the quick pump installation is pending. Status: Around 85 sites (77 percent) are expected to have the construction of the solar pumping systems The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) completed by the current closing date - February 28, 2022. The rest will be completed by the proposed new closing date. Output 3. Sustainability: The final 10 percent of the grant (US$ 420,000) will be disbursed when the 110 CBWSOs have paid their first loan installment to TIB Development Bank, four months after the retrofitting of the system is completed. Status: This output will not be achieved by the current closing date as some of the sites are pending completion. 3. Other milestones: The Independent Verification Agent (IVA) was contracted and is currently verifying project outputs. Lastly, a US$ 6 million grant from the Danish Government through the Energy Sector Management Assistance Program (ESMAP) has been secured, and the next phase to scale up this long-term endeavor is being designed. 4. Extension of Closing Date: On December 18, 2022, the Government of Tanzania requested a six-month extension of the closing date from February 28, 2022, to August 31, 2022, and a grace period of September 1 to October 31, 2022, to provide enough time to complete the remaining project activities under Outputs 2 and 3. This is the third extension of the Project closing date. The extension of the grant (TFOA5703) closing date is necessitated by the substantial delay in implementing the project activities generated by the protracted Value Added Tax exemption process and the COVID-19 pandemic. For example, the project encountered significant delays in clearing containers at the port of Dar es Salaam where containers were held for over three months. 5. Change in subsidiary amounts: During the implementation, technical challenges led to a minor but unexpected cost increase. This specifically relates to the diameter size of the existing boreholes, which normally is a standard 6 or 8 inches. However, several boreholes were found to be 5.5 inches, which would not fit the designed 6-inch pumps. This challenge has been resolved by customizing 4-inch pumps. The Project does not want to put the additional incurred cost to the participating communities, which is why a subsidy increase from 60 percent to 63 percent is proposed with this restructuring. The subsidy level is not specified in the Grant Agreement; thus this amendment only requires a revision of the Disbursement Letter and Project Operational Manual. 6. Decision Requested: Despite continued challenges posed by COVID-19, the main implementing challenges related to the delivery of material and equipment to sites have been resolved, and construction activities continue apace. To process the proposed extension until August 31, 2022, the Task Team has requested to extend the closing date of one of the funding sources, TFOA5703 (US$1.3 million, of which US$0.4 million is undisbursed). The other funding source, TF A5665 ($3.2 million), is not being extended. II. DESCRIPTION OF PROPOSED CHANGES This restructuring paper seeks the approval of the following changes: The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) A. Extend the closing date of the recipient executed grant TFOA5703 from February 28, 2022, to August 30, 2022, a grace period ending October 31, 2022. It is noted that the TF A5665 ($3.2 million) is not being extended. B. Amend the Project's Disbursement Letter and Project Operational Manual to increase the level of subsidy from 60 percent to 63 percent. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank Accelerating Solar Water Pumping via Innovative Financing (P161757) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2021, 28- TF-A5665 Effective 30-Dec-2020 Feb-2022, 30-Sep- 2021, 28-Feb-2022 30-Jun-2021, 30- TF-A5703 Effective 30-Dec-2020 Sep-2021, 28-Feb- 31-Aug-2022 31-Oct-2022 2022 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Expected Disbursements (In US$) Fiscal Year Annual Cumulative 2018 0.00 0.00 2019 0.00 0.00 2020 0.00 0.00 2021 0.00 0.00 2022 0.00 0.00 2023 0.00 0.00