The World Bank Climate Resilience Improvement Project (CRIP) (P146314) REPORT NO.: RES44026 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF CLIMATE RESILIENCE IMPROVEMENT PROJECT (CRIP) APPROVED ON APRIL 22, 2014 TO DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA URBAN, RESILIENCE AND LAND SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Faris H. Hadad-Zervos Regional Director: John A. Roome Practice Manager/Manager: Abhas Kumar Jha Task Team Leader(s): Asmita Tiwari, Udage Arachchige Priyanka Kuma Dissanayake The World Bank Climate Resilience Improvement Project (CRIP) (P146314) I. BASIC DATA Product Information Project ID Financing Instrument P146314 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 22-Apr-2014 31-Dec-2020 Organizations Borrower Responsible Agency Ministry of Mahaweli, Agriculture, Irrigation and Rural Democratic Socialist Republic of Sri Lanka Development Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to reduce the vulnerability of exposed people and assets to climate risk and to improveGovernment’s capacity to respond effectively to disasters. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-57680 21-Mar-2016 05-Sep-2016 06-Oct-2016 31-Dec-2020 42.00 37.09 5.58 IDA-54170 22-Apr-2014 10-Jul-2014 05-Aug-2014 31-Dec-2020 110.00 89.32 11.37 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Climate Resilience Improvement Project (CRIP) (P146314) I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The Climate Resilience Improvement Project (CRIP) is a successful operation that is addressing critical flood risk mitigation infrastructure shortfalls in vital irrigation, drainage, and flood control infrastructure, transport infrastructure, and schools. The Project aims to reduce the vulnerability of exposed people and assets to climate risks and has four components: 1) Development of Basin Investment Plans for flood and drought mitigation; 2) Strengthening Climate Resilience of Infrastructure; 3) Project Management, and 4) Contingent Emergency Response Component. The overall project implementation performance is satisfactory and most of the key performance targets have been substantively met, some even exceeding intermediate and end targets. Some key achievements include: i) completion of flood and drought mitigation investment plans for six major river basins (out of ten) using modern water and geospatial analytical tools and techniques; ii) capacity building of 20 engineers through hands on training and overseas training on cutting edge hydrological and hydraulic modeling tools, GIS and training more than 50 senior engineers in flood and drought risk assessments and post disaster management; iii) completion of a comprehensive flood risk mitigation strategy for Kelani river basin; iv) landslide risk mitigation in 18 schools in Kandy district improving the safety of 29,000 school children from landslides; v) reconstruction of 12 bridges which were either impassable during floods or contributing to floods due to inadequate opening to discharge floodwaters; vi) stabilization of more than 20 landslides prone slopes on national highways; and vii) reduction of flood and drought damage risk benefiting more than 200,000 farmer families in 13 poorest districts as a result of rehabilitation and improvements to selected irrigation and drainage infrastructure of the country. Total disbursement has reached 83.16 percent of the total credit amount with an undisbursed balance of USD 16.87 million as of October 30, 2020. There are no overdue audit reports or financial reports and the project’s social and environmental safeguards performance has been satisfactory. Due to the unprecedented disruptions caused by the COVID-19 outbreak and insufficient budget provision between January and August 2020 from the successive vote on accounts (allocated only 21 percent of the funding needed), the implementing agencies are facing substantial difficulties in completing all the contracts by the current project closing date of December 31, 2020. Therefore, the Bank team together with the PMU and Implementation Agencies conducted a detailed assessment of the current status of each of the pending contracts related to the ongoing consultancy studies and civil works during the recent implementation support mission from September 7-11, 2020. Under the project, out of the 718 civil work contracts that were awarded, 547 have been completed, 152 are ongoing, and 19 were terminated. The Project supported ten river basin plans. Six of the ten basin investment plans targeted under the project have been completed and the remaining four basins are nearing completion by December 2020. Ongoing feasibility studies got delayed due to difficulties in carrying out geotechnical investigations, ground surveys, and stakeholder consultations due to the lockdown. Out of the total ongoing contracts (i.e., six consultancy/feasibility studies and 152 civil works contracts), 45 contracts are not likely to complete by the project closing date of December 31, 2020, and will likely roll over to the calendar year 2021. The estimated value of those contracts is LKR 1,007 million (USD 5.4 million). Following the September 2020 mission, the Bank has received a formal government request for an extension of the project closing date. The Government’s extension request (attached) for four months is based on the following reasons: inadequate budgetary allocation from successive vote on accounts; significant political changes in the country; countrywide lockdown from March 2020 imposed by COVID 19 pandemic; delays in paying the contractors after COVID -19 lockdown was lifted and the labor and material shortages after COVID-19. The World Bank Climate Resilience Improvement Project (CRIP) (P146314) A four months extension of the current closing date until April 30, 2021, is critical to make up for the lost time including those related to the COVID-19 lockdown, and to allow sufficient time for the PMU and the Implementing Agencies to complete all the ongoing studies and works and to ensure arrangements for post-project sustainability of the works to be completed in the remaining months. This will be the third extension of the project closing date. The first restructuring and extension was for thirteen months extending the project closing date from May 31, 2019, to June 30, 2020 following the CERC activation in response to flooding in 2017 and to accommodate the government's request to expand the scope of Component 1 to carry out detailed studies and analytical work necessary for the preparation of the Climate Resilience MPA, which were not originally envisaged. The second extension was for six months to the current closing date of December 31, 2020. However, the GoSL could not use the second extension effectively from July 2020 due to the budget allocation problem which delayed payments to contractors, shortage of material and labor. The PMU confirmed that the budget allocations for the project from the fourth Vote-on account budget approved for the remaining months of the calendar year (Rs. 1991 Mn) to settle the contractor’s claims up to the end of December 2020. A considerable amount of funds for the first quarter of 2021, however, are needed to make payments for the invoices that would be received after 01 January 2021 for the works completed by then. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2020, 31-Dec- IDA-54170 Effective 30-May-2019 30-Apr-2021 30-Aug-2021 2020 30-Jun-2020, 31-Dec- IDA-57680 Effective 30-May-2019 30-Apr-2021 30-Aug-2021 2020