Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES23660 RESTRUCTURING PAPER THE FERGHANA VALLEY WATER RESOURCES MANAGEMENT PHASE-I PROJECT IDA CREDIT # 46480 SEPTEMBER 24, 2009 TO THE REPUBLIC OF UZEKISTAN JULY 26, 2016 WATER GLOBAL PRACTICE EUROPE AND CENTRAL ASIA REGION This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CPF Country Partnership Framework FBM Feedback Mechanism ICB International Competitive Bidding IDA International Development Association ILO International Labor Organization IP Implementation Progress ISF Irrigation Service Fee ISR Implementation Summary Report OP/BP World Bank Operational Policy/ Bank Procedures PDO Project Development Objective SDR Special Drawing Right TPM Third Party Monitoring WCA Water Consumer Association Regional Vice President: Cyril E. Muller Acting Country Director: Mariam J. Sherman Acting Senior Global Practice Director: Jennifer J. Sara Practice Manager/Manager: Michael Haney Task Team Leader: IJsbrand de Jong 2 UZBEKISTAN Ferghana Valley Water Resources Management Phase –I Project (P110538) CONTENTS A. SUMMARY page 5 B. PROJECT STATUS page 5 C. PROPOSED CHANGES page 6 3 DATA SHEET Uzbekistan Ferghana Valley Water Resources Management Phase-I Project (P110538) EUROPE AND CENTRAL ASIA Water Report No: RES23660 Basic Information Project ID: P110538 Lending Instrument: Specific Investment Loan Regional Vice President: Cyril E Muller Original EA Category: Partial Assessment (B) Acting Country Director: Mariam J. Sherman Current EA Category: Partial Assessment (B) Acting Senior Global Jennifer J. Sara Original Approval Date: 24-Sep-2009 Practice Director: Practice Michael Haney Current Closing Date: 31-Jul-2016 Manager/Manager: Team Leader(s): IJsbrand H. de Jong Borrower: Ministry of Finance Responsible Ministry of Agriculture and Water Resources, Agency: Restructuring Type Form Type: Full Restructuring Paper Decision Authority: CD Decision Restructuring Level: Level 2 Financing ( as of 24-Jun-2016 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P110538 IDA-46480 Effective 24-Sep-2009 09-Feb-2010 03-Mar-2010 31-Jul-2016 31-Jul-2016 Disbursements (in Millions) % Cancelle Disburse Undisbur Project Ln/Cr/TF Status Currency Original Revised Disburse d d sed d P110538 IDA-46480 Effective XDR 42.20 41.75 0.45 32.94 8.81 79 Policy Waivers Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] respects? 4 Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes The project restructuring seeks approval to: (i) extend the Project's closing date by five months, from July 31, 2016 to December 31, 2016; (ii) cancel the amount of SDR 4,451,648.12 that will be unused from the proceeds of the IDA Credit 46480, including SDR1,173,648.12 from disbursement category 1 "Goods, works, consultants' services and Training for the Project," and SDR3,278,000 from disbursement category 4 "Unallocated." The cancellation of project funds responds to an official request from the Ministry of Finance of Uzbekistan received on June 30, 2016. An official request for the extension of the Closing Date was received on July 25, 2016. It is expected that the extension of the closing date will facilitate ensuring that the irrigation canals rehabilitated under the Project are operational after the Project closes. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ ] No [ X ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ X ] No [ ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ ] No [ X ] Change to Components and Cost Yes [ ] No [ X ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] B. Project Status The Project was approved by the Board on September 24, 2009 and became effective on March 3, 2010. The Project Development Objective (PDO) is to improve agricultural production in areas affected by water-logging, and to reduce damage to housing and infrastructure from rising ground water levels and 5 salinity in the project areas. Two Level 2 restructurings were approved during the project implementation: (i) on April 30, 2015, to address inconsistencies and discrepancies in the Results Framework and incorporate new Bank core indicators; and (ii) on December 28, 2015 to reallocate funds among categories to enable processing of resettlement payments. No change of the original closing date of July 31, 2016 was made in the previous restructurings. Out of the revised loan amount of SDR41,747,805.44, the total amount disbursed as of July 25, 2016 is SDR32,939,582.66, and the Government plans to disburse up to SDR4,356,574.68, including a margin of 5% for SDR foreign exchange risk, by the agreed revised deadline for withdrawal applications April 30, 2017. The overall safeguards rating was rated as Moderately Unsatisfactory in the Project Implementation Summary Report (ISR, approved on May 16, 2016) due to previously reported cases of non-compliance with the Bank’s policy for involuntary resettlement. This rating was, however, upgraded to Moderately Satisfactory in the last ISR, when the team confirmed that all outstanding compensation payments were made. The project Risk rating has been Substantial in the past 13 months due to child and/or forced labor that may be used in the project area for cotton harvesting. The Bank is currently working with ILO to prepare the Third Party Monitoring and Feedback Mechanism (TPM/FBM) of the 2016 cotton season. A Round Table was convened in Tashkent on May 6, 2016, jointly by the Government, the ILO and the Bank, to discuss the modalities of the TPM/FBM for this coming cotton cropping season and the specific measures in place for monitoring cotton areas of Bank-funded Projects. The progress towards achievement of the PDO and overall implementation progress (IP) were rated as Moderately Satisfactory. The PDO have been achieved to a large extent. Specifically, most of the PDO indicators have been achieved under Component A: “Improvement of Irrigation and Drainage Network� including the reduction of the groundwater table in the project area. Of particular interest is the significant impact that the project has had on crop diversification. In response to the lower groundwater tables, farmers have expanded their farming areas, and have started planting vegetables, orchards, horticulture products and other higher value crops. With respect to construction works under Component A, implementation of ICB-1 was fully completed, and good progress has been made under ICB-3-1 (lot 1). Estimates suggest that 80 percent of works under ICB-3-1 (lot 1) will be completed by July 31, 2016. All drainage network improvement works have been completed under the Project. On-farm irrigation works and laser levelling need to be completed by the Government out of their own funds as there have been negligible (ICB-2) or no (ICB-3-1, Lot 2) progress. All activities under Component B have been completed to date. The project provided 141 days of training (against the target value of 135), trained 1,953 land users in adopting sustainable land management practices with 796 farmers (against the target of 1,000 people) who adopted these practices. Further, the project strengthened capacity of 25 Water Consumer Associations (WCAs) in the project area. One of the key achievements in the WCA activities is the increase of the WCAs’ Irrigation Service Fee (ISF) collection rate from 33.5 percent in 2011 to 42.9 percent in 2015. The Task Team confirms that the requirements of OP/BP10.00 regarding extension of closing dates will be met, specifically: a) the Project’s development objectives continue to be achieved within the 5 month extension; b) the Borrower’s performance remains satisfactory; and c) the Bank and the Bo rrower have agreed on actions that will be undertaken by the Borrower to complete the Project within the proposed closing date extension. There are no outstanding audits and previous audits were found acceptable to the Bank. C. Proposed Changes Development Objectives/Results 6 Project Development Objectives Original PDO The Project Development Objective (PDO) is to improve agricultural production in areas affected by water-logging, and to reduce damage to housing and infrastructure from rising ground water levels and salinity in the project areas. Change in Project's Development Objectives Financing Change in Loan Closing Date(s) Explanation: The extension of the Project closing date by five months will enable completion of outstanding works under ICB3.1 (Lot 1, Rehabilitation of inter-farm irrigation network under Component A). Extension of the Project will also help ensure that rehabilitated inter-farm irrigation canals are fully operational. This will help to reduce water loss during the irrigation season. The proposed Project closing date is December 31, 2016. Proposed Ln/Cr/T Original Current Proposed Previous Closing Status Application F Closing Date Closing Date Closing Date Date(s) Deadline Date IDA- Effective 31-Jul-2016 31-Jul-2016 31-Dec-2016 31-Jul-2016 30-Apr-2017 46480 Cancellations Explanation: The cancellation of project funds in the amount of SDR4,451,648.12 responds to an official request from the Ministry of Finance of Uzbekistan received on June 30, 2016. Cancelled Proposed Curren Current Amount Value Date of Ln/Cr/TF Status Amount (in Amount (in cy (in currency) Cancellation currency) currency) Reason for Cancellation: LOAN RESTRUCTURING, COST SAVINGS IDA-46480- Disbur XDR 41,747,805.44 4,451,648.12 37,296,157.32 30-Jun-2016 001 sing Reallocations Explanation: Following the Government letter received on June 30, 2016 requesting to cancel SDR4,451,648.12, the amount of SDR1,173,648.12 will be cancelled from Category I "Goods, works, consultants' services and Training for the Project," and the amount of SDR3,278,000 will be cancelled from Category 4 "Unallocated." Current Categor Actual Pending Ln/Cr/T Currenc Allocatio Allocatio Disbursement % Cat.No. y of Disburse Commit F y n n (Type Total) Expendi ments ments ture Propose Propose Current Current d d 7 IDA- GO,W,C 37,277,8 30,264,4 36,104,1 46480- XDR 1 0.00 100.00 100.00 S,TR 05.44 41.74 57.32 001 Cash comp. 810,000. 603,107. 862,000. 2 and asst. 0.00 100.00 100.00 00 05 00 RPF,RA P Operatin 330,000. 257,676. 330,000. 3 0.00 100.00 100.00 g costs 00 16 00 UNALL 3,330,00 4 OCATE 0.00 0.00 0.00 0.00 0.00 0.00 D 41,747,8 31,125,2 37,296,1 Total: 0.00 05.44 24.95 57.32 8