The World Bank UY OSE Sustainable and Efficient (P118064) REPORT NO.: RES29604 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF UY OSE SUSTAINABLE AND EFFICIENT APPROVED ON JULY 5, 2012 TO OBRAS SANITARIAS DEL ESTADO (OSE) WATER GLOBAL PRACTICE LATIN AMERICA AND CARIBBEAN Regional Vice President: Jorge Familiar Calderon Country Director: Jesko S. Hentschel Senior Global Practice Director: Guang Zhe Chen Practice Manager/Manager: Rita E. Cestti Task Team Leader: Maria Catalina Ramirez, Elba Lydia Gaggero The World Bank UY OSE Sustainable and Efficient (P118064) ABBREVIATIONS AND ACRONYMS BMEI Business Management Efficiency Index EI Environmental Index m3 Cubic meter NRW Non Revenue Water OSE Obras Sanitarias del Estado PDO Project Development Objective PSA Water Security Plans (Planes de Seguridad de Agua) The World Bank UY OSE Sustainable and Efficient (P118064) BASIC DATA Product Information Project ID Financing Instrument P118064 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 05-Jul-2012 31-Dec-2019 Organizations Borrower Responsible Agency Obras Sanitarias del Estado (OSE) Obras Sanitarias del Estado (OSE) Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to increase the sustainability of OSE by improving the reliability and resilience of itswater supply and sanitation systems, enhancing its efficiency, and strengthening its management capacity OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-81830 05-Jul-2012 11-Dec-2012 07-Mar-2013 31-Dec-2019 42.00 31.52 10.48 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank UY OSE Sustainable and Efficient (P118064) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING This is the third project restructuring. On September 7, 2016, the project was restructured to reflect revised indicators and targets identified during the project's mid-term review (November 2015), as well as changes in components and costs due to the economic situation the country was facing and the realignment of priorities within the National Water Utility, OSE. The second restructuring extended the loan closing date for a period of 22 months, from February 28, 2018 to December 31, 2019. Overall disbursement is about 75 percent and 99 percent of the loan proceeds have been committed. Progress towards PDO and Overall Implementation Progress have been upgraded to Satisfactory considering the PDO is expected to be achieved under the current project's timeframe and the project management unit has been able to fulfill all commitments, sign pending contracts, and advance with all activities. The project is in full compliance with environmental and social safeguards policies and the implementing agency has demonstrated the necessary capacity for overseeing safeguards issues and ensuring full compliance with the project's safeguards instruments. Similarly, the Project is in full compliance with Bank fiduciary policies. The project is financing works to increase OSE's resilience to flooding by constructing/protecting two drinking water treatment plants, one in the city of Durazno (benefiting 50,000 people) and another in the city of Treinta y Tres (benefiting 37,000 people). The project has also funded the purchase of pumps and motors for the main water treatment plant in Aguas Corrientes that provides water to the District of Montevideo. The new equipment has strengthened the reliability of the system, and is generating important energy savings. OSE has fully adopted a Non-Revenue Water (NRW) Program, which has improved the operating efficiency as well as the financial and technical sustainability of the company. The NRW contracts implemented in Salto and Las Piedras have achieved significant savings in water and energy. The project has also supported the purchasing of 230,000 micro-meters, representing approximately 230,000 cubic meters per month reduction in NRW. Furthermore, the project has supported OSE in strengthening its management capacity, focusing on operative management, strategic planning, risk management, environmental management, and quality management. Rationale for restructuring With the extension of the loan closing date, approved on July 19, 2017, OSE is expected to implement its action plan in order to achieve the Project’s PDO under a 22-month extension scenario, that includes a reduction in the number of systems in which the Project will implement NRW activities. This new timeframe and the new scope of NRW activities requires the update of the results framework and revision of the implementation schedule. In particular, end targets need to be adjusted to better reflect project impact. The reduced scope of NRW activities entails, as well, the amendment of the loan agreement in its Part 2.1(a) of Schedule 1. This revision was not processed at the time of the extension of the loan closing date request because some of the contracts were not signed at that time and an assessment in situ of the NRW activities was required to determine whether the targets were achievable or not. 4 The World Bank UY OSE Sustainable and Efficient (P118064) II. DESCRIPTION OF PROPOSED CHANGES The proposed changes include the revision of the results framework to improve project monitoring, reflect the extension of the loan closing date, changes in the area of influence of NRW activities that will require a change in some end targets, and all project indicators will reflect the extension of the closing date. Other changes in the results framework are summarized in the table below: Results Framework- Proposed Change Original Indicators Proposed New Indicator Comments (Justification of Change (if New or Revised) proposed Change) D=Dropped N= New R=Revised The Project Development Objective (PDO) is to increase the sustainability of OSE by improving the reliability and resilience of itswater supply and PDO sanitation systems, enhancing its efficiency, and strengthening its management capacity. PDO Indicators Cumulative volume of non-revenue water R End target revised to reflect recovered under the project (m3) extension of measurement period Energy saved in the systems where the Project R End target revised to reflect is being implemented (MWh/year) extension of measurement period Intermediate Results Indicators Reduction of non-revenue water in attended D The indicator and its breakdowns systems (liters/connection/day) were dropped and replaced by indicators (new below) that better reflect geographic scope of activities and measurement methodology N Reduction of non- End target in the Montevideo revenue water in the system is revised to reflect drop of Montevideo system activities in two lots (liters/connection/day) N Reduction of non- End target in Las Piedras system is revenue water in Las revised to reflect no impact in La Piedras system Paz system (liters/connection/day) N Reduction of non- End target is the Rivera system is revenue water in the revised to reflect expected impact Rivera system (liters/connection/day) N Reduction of non- End target is the Salto system is revenue water in the revised to reflect expected impact Salto system (liters/connection/day) Number of south-south knowledge exchange R End target revised to reflect activities increased number of activities carried out 5 The World Bank UY OSE Sustainable and Efficient (P118064) III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Implementation Schedule ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators 6 The World Bank UY OSE Sustainable and Efficient (P118064) PDO_IND_TABLE Piped household water connections that are benefiting from rehabilitation works undertaken by the project Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 433900.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Cumulative volume of non-revenue water recovered under the project (m3) Unit of Measure: Cubic Meter(m3) Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 51460000.00 81900000.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Energy saved in the systems where the Project is being implemented Unit of Measure: MWh/year Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 9310.00 20780.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Reach satisfactory level in the Business Management Efficiency Index (BMEI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value Low Satisfactory Satisfactory Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Intermediate Indicators IO_IND_TABLE Number of people that are benefiting from rehabilitation works undertaken by the Project Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action 7 The World Bank UY OSE Sustainable and Efficient (P118064) Value 0.00 0.00 1860000.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 New water intake point at the Aguas Corrientes plant constructed and in operation (m3/h) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 15000.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Number of electric motors installed and in operation at Aguas Corrientes Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 10.00 10.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Number of equipment (pumps, motors and electrical systems) replaced and in operation outside Aguas Corrientes Water Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 51.00 Revised Date 13-Jun-2012 30-Jun-2017 31-Dec-2019 Durazno and Treinta y Tres water treatment plants reconstructed and in operation (m3/h) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 1150.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Reduction of non-revenue water in attended systems (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action 8 The World Bank UY OSE Sustainable and Efficient (P118064) Value 2755.00 2335.00 1930.00 Marked for Deletion Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Montevideo (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 799.00 752.00 675.00 Marked for Deletion Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Las Piedras - La Paz (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 709.00 636.00 425.00 Marked for Deletion Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Rivera (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 668.00 485.00 390.00 Marked for Deletion Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Salto (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 579.00 462.00 440.00 Marked for Deletion Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Development of an Energy Management Program Unit of Measure: Text Indicator Type: Custom 9 The World Bank UY OSE Sustainable and Efficient (P118064) Baseline Actual (Current) End Target Action Value No Program Ready Program Ready Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Reach "Satisfactory" level in the Environmental Index (EI) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value Low Moderate Satisfactory Revised Date 05-Jul-2012 30-Dec-2016 31-Dec-2019 Asset Management Plan for electromechanical equipament implemented in one pilot region Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Phase II of the Asset Asset Management Plan Management Plan is Value No under implementation Revised operative in one pilot (70 percent) region Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Number of south-south knowledge exchange activities Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 10.00 10.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Water Security Plans (PSA) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 7.00 18.00 Revised Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Reduction of non revenue water in the Montevideo system (liters/connection/day) Unit of Measure: Number 10 The World Bank UY OSE Sustainable and Efficient (P118064) Indicator Type: Custom Baseline Actual (Current) End Target Action Value 799.00 752.00 736.00 New Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Reduction of non revenue water in Las Piedras system (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 837.00 636.00 555.00 New Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Reduction of non revenue water in the Rivera system (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 668.00 485.00 483.00 New Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 Reduction of non revenue water in the Salto system (liters/connection/day) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 579.00 462.00 470.00 New Date 05-Jul-2012 30-Jun-2017 31-Dec-2019 11