The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) REPORT NO.: RES48769 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SECOND KAMPALA INSTITUTIONAL AND INFRASTRUCTURE DEVELOPMENT PROJECT APPROVED ON MARCH 20, 2014 TO REPUBLIC OF UGANDA URBAN, RESILIENCE AND LAND GLOBAL PRACTICE EASTERN AND SOUTHERN AFRICA REGION Regional Vice President: Hafez M. H. Ghanem Country Director: Keith E. Hansen Regional Director: Mark R. Lundell Practice Manager/Manager: Peter D. Ellis Task Team Leaders: Martin Onyach-Olaa, John Stephen Ajalu The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) ABBREVIATIONS AND ACRONYMS CAM City Address Model CAMV Computer Aided Mass Valuation COVID-19 Coronavirus disease 2019 GIS Geographic Information Systems IFR Interim Financial Report IPN Inspection Panel KCCA Kampala Capital City Authority KIIDP 2 Second Kampala Institutional and Infrastructure Development Project O&M Operations and Maintenance PDO Project Development Objective PAPs Project Affected Persons RAP Resettlement Action Plan RoW Right of Way RVP Regional Vice President SMS Short Mail Messaging SOPs Standard Operating Procedures UGX Uganda Shillings US$ United States Dollars The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) BASIC DATA Product Information Project ID Financing Instrument P133590 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 20-Mar-2014 30-Nov-2021 Organizations Borrower Responsible Agency Republic of Uganda Kampala Capital City Authority Project Development Objective (PDO) Original PDO The project development objective (PDO) is enhanced infrastructure and institutional capacity of KCCA to improve urban mobility in Kampala. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-53840 20-Mar-2014 16-Feb-2015 08-May-2015 30-Nov-2021 175.00 146.76 12.46 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Kampala Institutional and Infrastructure Development Project (KIIDP 2, P133590) is supported by an IDA in the amount of US$175 million equivalent (IDA-53840) and Government Counterpart funding of US$ 8.75 million approved by the World Bank Board on March 20, 2021. The project became effective on May 8, 2021. The current project closing date is November 30, 2021. 2. The project development objective (PDO) is enhanced infrastructure and institutional capacity of Kampala Capital City Authority (KCCA) to improve urban mobility in Kampala. The project comprises two components: (i) City Wide Road Infrastructure and associated investments, and (ii) Institutional and Systems Development Support. Component 1 was meant to enhance the quality of roads infrastructure and associated investments in Kampala City for improved city mobility. Component 2 was intended to strengthen the capacity of Kampala Capital City Authority (KCCA) to deliver on its statutory mandates as a corporate body focusing on three directorates of (a) Engineering and Technical Services, (b) Physical Planning and GIS Directorate, and (c) Revenue Directorate, with IT as a crossing cutting solution. The focus was to strengthen the capacity of KCCA in two areas, namely (i) investment planning, implementation and operation and maintenance (O&M); and (ii) improvements in own source revenue to support future investments and ensure maintenance of infrastructure and services. 4. To date, several results have been achieved under the project. Under Component 1, the roads subprojects are expected to be completed by November 30, 2021, except for additional works for Kisaasi junction and Bulabira Ring Road and Ttuba –Kungu Link. The reconstruction and upgrading of a total of 26 km of roads (including stormwater drains, pedestrian walkways, streetlighting) has been completed, and additional work is ongoing on 54 km of roads scheduled to be completed by November 30, 2021, bringing the total number of roads and associated infrastructure improved to 80 km. Work on the upgrading of road junctions to traffic signalized junctions has been completed for 12 and work on-going for another 17, are expected to be completed by November 30, 2021, bringing the total traffic signalized junctions to 29. The Component also includes drainage works, which include 2.5 km of primary drainage channel and 3.28 km of major secondary drainage channel. The work on drainage channels has been delayed and will not be completed by November 30, 2021. A public satisfaction survey carried out in December 2017 as part of the Mid-term Review indicated that 80 percent of Kampala City Residents were satisfied with the roads and drainage subprojects even before the drainage works commenced. 5. Under Component 2, implementation of the various activities has been successfully completed. The support to the Directorate of Physical Planning covered the following: (i) developing of a City Address Model (CAM) and Computer Aided Mass Valuation (CAMV) to support revenue collection efforts, (ii) upgrading of the GIS software to corporate GIS; (iii) revaluing all properties and updating the property valuation rolls for the five Divisions in the City, and (iv) implementing a GIS based property valuation management system. A total of 3,582,154 clients out of the target 386,522 have been served through SMS with a total of 24,178,946 SMSs sent over the project period. The variance between SMSs sent and the number of receivers is because one client can receive more than one SMS for different reasons. The SMS platform is mainly used for payment notification and communication to the public. A total of 373,826 houses/properties have been assigned house numbers in the five Divisions within the City. The cumulative total numbers of properties entered in the online CAM/CAMV database is now 373,826. To date, a total 7,246 roads have been named, 12,555 house number plates given, and 3,364 signage have been installed. The house numbers are now integrated into google, with the GIS Module and Mobile Navigation application ready for use. The CAM has therefore achieved its objective. The Directorate of Physical Planning and GIS provided support to the The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) Directorate to move from a manual to a Computer Aided Mass Valuation (CAMV). The CAMV has helped KCCA to update its valuation roll for the five Divisions of Central, Nakawa, Kawempe, Lubaga and Makindye from UGX55.71 billion (FY2012/13) to a total annual revenue of UGX80.33 billion (approximately US$22.6 million) for FY2020/21. 6. The project remains on course to achieve its PDO and the Overall Implementation Progress rating is Moderately Satisfactory because of the delays in the implementation of the drainage channels. Three out of the five PDO indicators have already been achieved. One PDO indicator measuring the increase in number of primary drainage channels constructed was changed after completion of the Drainage Master Plan, which indicated the need to prioritize other secondary drainage channels to address the issue of flooding in Kampala. Five out of the eight intermediate results indicators have also been achieved. The achievement of another two is more than 90 percent. One intermediate result indicator measuring increase in own source revenue generated will not be achieved as the KCCA revenue generations potential was affected by the COVID-19 pandemic. 7. The overall disbursement is US$146.76 million (XDR104.9 million equivalent) which represents 92 per cent of the available credit. There are no outstanding audit reports or overdue Interim Financial Reports (IFRs). The project has also prepared quarterly IFR reports as required with the latest application for the period ended June 30, 2021, which was submitted in August. 8. There has been increased compliance and overall improvement in the management of Environment and Social risks of the project. Where non-compliance was noted, notices to correct were issued to the contractors, and these have been complied with. KCCA is committed to following up on agreed issues and monitoring compliance. Environmental and Social Audit was completed for the road works and the reports are being reviewed. The overall safeguards’ performance is rated moderately satisfactory. Whereas there is good progress registered in the acquisition of the right of way for roads subprojects, the progress has been slow on the drainage subprojects. Although there is continuous improvement in the implementation of environmental and social risk management, some risks related to health and safety, and closing all the grievances registered still exist. 9. Acquisition of Right of Way (RoW) has taken a lot of time to be concluded, particularly for the two drainage channels. For the Nakamiro drainage subproject, 332 project affected persons (PAPs) were identified along the channel of which 318 PAPs (95.8 percent) have now been compensated while 41 PAPs have been compensated for the Lubigi channel out of the 155 PAPs (26 percent) identified downstream of Kawaala bridge in an area that was considered to be a gazetted wetland and were omitted in the original Resettlement Action Plan (RAP) report of 2017. The contractor does not have full access to the drainage channel, and as a result works cannot be completed by November 30, 2021. The country has experienced abnormally high rainfall, affecting execution of the roads and drainage subprojects. For the major drainage channels with limited working corridors, this has meant that substantial time was lost to pump out excess water and cleaning the working areas. The combined time lost due to inclement weather resulted in time extensions of 135 days awarded to the contractors. Additional time was lost due to work stoppages to enforce adherence to the safeguards’ requirements. This especially affected the drainage subprojects where work had to be stopped resulting in nearly 29 days lost. Total cumulative time lost due to the above factors was 266 days. 10. A request to the Inspection Panel (IPN) was submitted on June 17, 2021 regarding concerns about works on the Lubigi channel financed under KIIDP-2. It was alleged that the affected community was excluded from the project’s resettlement under a 2017 Resettlement Action Plan (RAP), confronted with a forced eviction attempt in the same area of the project, and rushed through an inadequate, threatening, and coercive resettlement process under a supplementary RAP. The Request further alleged cumulative impact from different interventions in the project area. The Panel registered the Request on July 26, 2021, and Management submitted its Response to the The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) Request on August 24, 2021. Acknowledging that the identified problems were already being addressed by the project implementation unit as part of regular project implementation, Management Response concluded with a commitment to work with the Kampala Capital City Authority, the agency responsible for the project, to strengthen RAP implementation through a number of measures. The Board has approved the Panel’s recommendation on October 20, 2021 to investigate the project with the option of dispute resolution, which can take up to one year following confirmation within 30 business days after the Executive Directors approval of the investigation, whether or not the Parties voluntarily agree to pursue dispute resolution. 11. The 155 PAPs who are referred to in the request moved into the project area after finalization of the 2017 Resettlement Action Plan (“2017 RAP”) for the Project and thus were not identified in that RAP. KCCA has agreed to compensate those eligible under a Supplementary RAP which was completed and approved by the Chief Government Valuer. Compensation of the eligible PAPs is now being implemented. In addition, following the Board’s approval of the Panel’s recommendation, the Bank’s Accountability Mechanism Secretary is in the process of securing both parties’ consent for dispute resolution. 12. In addition, the World Bank and the Borrower have agreed on key actions in the Work Plan to be implemented to complete the project. These activities are summarized in Annex 1 and include: (i) Compensation of all identified PAPs and carrying out a RAP audit to validate the process; (ii) resolving all grievances registered during project implementation; (iii) completion of the drainage subprojects, which is critical in addressing the flooding problem in Kampala; and (iv) completion of the outstanding works on the road subprojects, which are critical for ensuring functionality of completed investments. The identified activities in the work plan can all be completed during the requested twelve-month time extension. B. Rationale for Restructuring 13. This restructuring proposes to extend the current project closing date by twelve months from November 30, 2021 to November 30, 2022. The Government of the Republic of Uganda sent the request on October 27, 2021, indicating that it will lose US$28.3 million which is committed but unutilized and not accounted for. The proposed restructuring is the third restructuring for the project. The first restructuring was approved on November 25, 2019 and extended the project closing date by eighteen months from December 31, 2019 to June 30, 2021. The second restructuring was approved on April 7, 2021 and extended the project closing date by five months to November 30, 2021. This current request will bring the cumulative extension period of the project to thirty-five months, hence requiring Regional Vice President’s (RVP) approval. 14. The proposed closing date extension meets the requirements of the World Bank Financing (IPF) Directive regarding extension of closing dates, specifically: (i) the project objectives continue to be achievable; (ii) the performance of the Borrower remains satisfactory; (iii) the World Bank and the Borrower agree on actions that will be undertaken by the Borrower to complete the Project; and (iv) there are no outstanding audits or IFRs. 15. The extension of the project would allow the completion of the remaining activities and pending tasks of the project under Component 1, including: (a) complete the drainage subprojects delayed by the COVID-19 pandemic; and (b) the dispute resolution by Accountability Mechanism Secretariat to ensure implementation of any action that may result from the pending dispute resolution process. It is critical for the drainage subprojects to be completed to address the flooding problem in Kampala Capital City. Kampala is a city of many hills and therefore prone to flooding once it rains, with serious effects on properties and property values, disruption of commercial activities and damage to road infrastructure. Flooding presents a critical hazard to the Greater Kampala Metropolitan Area which impacts both human life and economic activity. The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) 16. Project restructuring is also required to absorb project funds totalling US$28,283,988.31. Without project closing date extension, not only will the country lose unutilised funds, but it will also need to mobilise additional funds to complete committed works that would have not be delivered by the current project closing date. The Government is currently facing economic challenges and reduced own source revenue generation as a result of COVID-19 pandemic and may not be able to honor the outstanding commitments which could result in reputational risks. II. DESCRIPTION OF PROPOSED CHANGES 17. The project proposes to extend the closing date by twelve months from November 30, 2021 to November 30, 2022. The Implementation Schedule has been revised accordingly to address key activities necessary for completion of the project and is presented in Annex 1. No other changes are proposed. 18. Several factors have contributed to the need for this extension. The Project became effective only on May 8, 2015, nearly 13 months after its approval on March 20, 2014. The project has been affected by the COVID-19 pandemic and the country experienced two lockdowns, from March 20, 2020 to May 26, 2020, and from June 18 to July 29, 2021. Lockdowns have slowed work progress due to the need to comply with the mandatory Standard Operating Procedures (SOPs), requiring testing of workers intermittently encamping of workers, and providing additional service vans for transportation of workers. The measures put in place to mitigate the impacts of COVID-19, coupled with the curfew imposed, even after lockdown was lifted, subsequently reduced effective working time. The restrictions had the following combined impact: (i) it restricted movements of workers; (ii) reduced working time as workers had to leave site much earlier than the normal departure time; (iii) contractors were required to organize the workers in camps which took some time to manage; (iv) sources of construction materials were closed; (v) it affected mobilization of key personnel and equipment for the drainage subproject which started during the COVID- 19 period; and (vi) some staff and workers from the consultants, contractors and KCCA contracted the deadly virus while others lost their loved ones. The combined effect of the COVID-19 pandemic, the high rainfall, and delayed acquisition of right of way slowed down project implementation and ultimately about 266 days of productive time was lost and consequently the drainage subprojects will be only 40 percent complete by November 30, 2021. The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2021, 30- IDA-53840 Effective 31-Dec-2019 30-Nov-2022 30-Mar-2023 Nov-2021 . The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) Annex 1: Revised Project Implementation Schedule No. Critical Activities Delivery Timelines Progress Status October 30, 2021 Drainage 1. Acquisition of the full Right of Way (RoW) for January 31, 2022 18 percent the Lubigi Primary drainage Channel Improvement works 2. Construction Completion of the Lubigi Primary November 30, 2022 25 percent drainage Channel Improvement works (2.58km) 3. Construction Completion of the Nakamiro September 30, 2022 25 percent Secondary drainage Channel Improvement works (3.28 km) Roads 7. Kisaasi junction Signalization (Additional February 04, 2022 10 percent works) – Construction Completion 8. Additional Bulabira Ring Road and Ttuba – January 31, 2022 11 percent Kungu Link – Construction Completion Addressing Grievances raised: 4. Provide closed drainage channels for Doctors’ December 30, 2021 10 percent Lane – Construction Completion 5. Provide closed drainage channels for December 31, 2021 10 percent Ssemakula Road – Construction Completion 6. Resolve all community grievances registered June 30, 2022 86 percent on the project Other 9. Client Satisfaction Survey for KIIDP2-KCCA – December 31, 2021 5 percent Completion of the Assignment 10. KIIDP 2 RAP Audit June 30, 2022 Pending completion of RAP implementation The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) Annex 2: Updated Result Framework Matrix as of October 07, 2021 5. Results PDO Indicators by Objectives / Outcomes Enhanced infrastructure and institutional capacity of KCCA to improve urban mobility in Kampala IN00986274 ►Number of people in urban areas provided with access to all-season roads within a 500 meter range under the project (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 641,000.00 1,307,837.00 1,890,772.00 1,048,000.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986275 ►Sub-projects completed by KCCA on time and within budget (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 78.50 78.50 100.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986276 ►Increase in number of primary drainage channels constructed (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 2.00 2.00 4.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 Intermediate Results Indicators by Components Component 2 - Institutional and Systems Development Support IN00986278 ►Roads designs with pro-poor footpaths, bridges and walk ways (Kilometers, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 185.19 185.19 160.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986280 ►Increase in own source revenue (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 22.28 10.66 21.71 51.54 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986282 ►O&M plans implemented (Amount(USD), Custom) The World Bank Second Kampala Institutional and Infrastructure Development Project (P133590) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 10.66 7.12 1.66 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986284 ►Number of clients serviced via the SMS platform (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2,962,065.00 24,178,946.00 386,522.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 Component 1 – City Wide Road Infrastructure and associated investments IN00986277 ►Increase in paved city roads (Kilometers, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 37.07 80.65 85.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986279 ►Paved roads in good and fair condition as a share of total classified roads (Kilometers, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 300.00 352.42 406.96 385.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986281 ►Increase in number of junctions signalized (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 12.00 29.00 31.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021 IN00986283 ►Public satisfaction with roads and drainage (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 29.00 80.00 80.00 50.00 Date 27-Jan-2014 10-Mar-2021 07-Oct-2021 30-Jun-2021