64961 v1

                    Document of
                 The World Bank


                                              Report No:




              RESTRUCTURING PAPER

                      ON A

         PROPOSED PROJECT RESTRUCTURING
                         OF
UTTAR PRADESH WATER SECTOR RESTRUCTURING PROJECT
                CREDIT NO. 3602-IN
                  February 19, 2002


                     TO THE

                REPUBLIC OF INDIA


                 OCTOBER 13, 2011
  INDIA: UTTAR PRADESH WATER SECTOR RESTRUCTURING PROJECT
                     RESTRUCTURING PAPER

A. SUMMARY

1. The proposed changes will support a requested cancellation of an amount of INR 250
million (SDR 3.2 million or US$ 5.1 million equivalent as of October 12, 2011) from the
Uttar Pradesh Water Sector Restructuring Project (Credit No. 3602-IN). The project will
close October 31, 2011.

B. PROJECT STATUS

2. The project is scheduled to close October 31, 2011. As of October 12, 2011, of the
IDA Credit of SDR 90.47 million, approximately SDR 76.5 million (85%) has been
disbursed (as of October 12, 2011). The key project data are:

                     Project Data                            Performance Rating
Board Approval                        February 19, 2002 Summary Ratings
                                                        Project Development
Effectiveness Date                      March 27, 2002                          MS
                                                        Objective
Original Closing Date of IDA
                                       October 31, 2007 Implementation Progress         MS
Credit
Revised Closing Date of IDA
                                       October 31, 2011 Procurement                     MS
Credit
Mid-Term Review (MTR) Date                      None Financial Management               MS
Original IDA Amount                   SDR 117 million
Revised IDA Amount                   SDR 90.47 million
Total Amount Disbursed (as of
                                      SDR 76.5 million
October 12, 2011)


3. The Project Development Objectives are to (i) to set up an enabling institutional and
policy framework for water sector reform in the State for integrated water resources
management; and (ii) to initiate irrigation and drainage sub-sector reforms in the State to
increase and sustain water and agricultural productivity.

4. Of the remaining project resources, several withdrawal applications are in the claims
pipeline (see table below). This includes claims that were i) earlier rejected due to
insufficient resources in the civil works category, ii) earlier deducted due to audit
disallowances, iii) rejected for other reasons and iv) claims to be submitted for the period
August 2011 to October 2011. After these claims are resolved, it is estimated that Rs.
30.96 crores will remain (about SDR 4 million). The proposed cancellation before the
project closure is necessary to relinquish these funds to the India program.




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Table: Remaining Claims Assessment                                              Rs. crores
Remaining credit as per World Bank Client Connection                                102.39
dated Sep 17, 2011
    A. Rejected due to insufficient credit in civil works                           29.36
       category
    B. Deducted due to audit disallowances                                           2.72
    C. Rejected due to other reasons                                                 9.21
    D. Claims to be submitted (Aug 2011 to Oct 2011)                                30.14

Total (A + B + C + D)                                                               71.43

Expected Savings                                                                  30.96
                                                                   (about SDR 4 million)

C. PROPOSED CHANGES

3. Due to project closure scheduled for October 31, 2011, a portion of the remaining
credit will be cancelled. The remainder un-cancelled amounts are preserved to allow for
the outstanding payments mentioned above. IDA has received a request from the
Government of Uttar Pradesh through the Government of India, Ministry of Finance,
Department of Economic Affairs (DEA) requesting cancellation of INR 25 crore.
Accordingly, the revised allocation is given below.

   Category of        Allocation (Expressed in                  % of Financing
   Expenditure            SDR Equivalent)
     Current           Current       Revised                    Current          Revise
(1) Works             53,990,000    52,690,000                    90%           Unchanged
(2) Goods,            9,276,000     8,676,000             100% of foreign       Unchanged
equipment,                                            expenditures, 100% of
machinery and                                         local expenditures (ex-
materials                                              factory cost) and 80%
                                                        of local expenditures
                                                            for other items
                                                          procured locally
(3) Consultants’      19,303,000      18,003,000                 100%           Unchanged
services and
Training
(4) Incremental         7,902,000     Unchanged        85% until March 31,      Unchanged
operating costs                                       2004; 75% until March
and incremental                                        31, 2005; 60% until
salaries                                               March 31,2006; and
                                                         30% thereafter
(5) Unallocated            0               0
Cancellation as on                     3,200,000
October 12, 2011
Total                 90,471,000      90,471,000

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