The World Bank PK Sindh Water Sector Improvement Project Phase I (P084302) REPORT NO.: RES34740 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PK SINDH WATER SECTOR IMPROVEMENT PROJECT PHASE I APPROVED ON SEPTEMBER 18, 2007 TO SINDH IRRIGATION AND DRAINAGE AUTHORITY (SIDA) WATER SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Patchamuthu Illangovan Senior Global Practice Director: Jennifer J. Sara Practice Manager/Manager: Michael Haney Task Team Leader: Toru Konishi The World Bank PK Sindh Water Sector Improvement Project Phase I (P084302) I. BASIC DATA Product Information Project ID Financing Instrument P084302 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 18-Sep-2007 31-Dec-2018 Organizations Borrower Responsible Agency Sindh Irrigation and Drainage Authority (SIDA) Government of Sindh Project Development Objective (PDO) Original PDO The overarching project objective is to improve the efficiency and effectiveness of irrigation water distribution in three AWBs (Ghotlu, Nara and Left Bank), particularly with respect to measures of reliability, equity and user satisfaction. This would be achieved by: (a) deepening and broadening the institutional reforms that are already underway in Sindh; (b) improving the irrigation system in a systematic way covering key hydraulic infrastructure, main and branch canals, and distributaries and minors; and (c) enhancing long-term sustainability o f irrigation system through participatory irrigation management and developing institutions for improving operation and maintenance of the system and cost recovery. The improved water management would lead to increased agricultural production, employment and incomes over some about 1.8 million ha or more than 30 percent o f the irrigated area in Sindh, and one of the poorest regions o f the country. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-55560 16-Dec-2014 11-Mar-2015 07-May-2015 31-Dec-2018 138.00 82.77 46.75 IDA-43580 18-Sep-2007 05-Oct-2007 26-Dec-2007 28-Feb-2015 145.00 147.58 0 The World Bank PK Sindh Water Sector Improvement Project Phase I (P084302) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The current progress towards achievement of PDO and overall implementation progress (IP) ratings are: MS (Moderately Satisfactory) and S (Satisfactory) respectively. On the positive terms, the civil works carried out under Component A in the project areas specified within the above-mentioned PDO have significantly contributed to the improvement in the four elements of irrigation services (efficiency, reliability, equity, and user satisfaction) stipulated in the PDO, as reflected in the updated Result Framework. Component C has also made significant contribution for successful formulation and preparation for the Sindh Barrages Improvement Project (P131324, approved on June 19, 2015) and an additional financing to Sindh Barrages Improvement Project (P162117, approved on May 25, 2018). Current ratings for procurement, financial management, the safeguards are MS (moderately satisfactory). There was a delay in providing compensations for about 84 resettled households resulting from difficulties in identifying the households as the resettlement occurred before the commencement of the concerned civil works according as the court order. However, the SIDA has recently identified all households and the compensation process has been started, aiming at completion by December 31, 2018. All audit reports are current, and there are no qualified opinions. While overall project implementation is satisfactory, institutional reform envisaged under Component B has stalled since about three years ago. In particular, the institutional reform envisaged under the Sindh Water Management Ordinance 2002 (SWMO), which defines the role and responsibilities for key stakeholder institutions in the irrigation and drainage sector, namely SIDA, AWBs, and the Irrigation Department (ID) has not progressed well. As a consequence, there are two parallel institutions, namely the SIDA and the ID in charge of the Irrigation Operation and Maintenance, casting serious confusion on the institutional mandates for the long-term operation of the irrigation infrastructure invested under the Project. This confusion also affects the financial sustainability collection of abiana (water charges) from water users has not increased as planned. In the meantime, and more importantly, Sindh is now facing newly emerging serious water challenges, including: (a) water security in Karachi, (b) province-wide worsening water quality (and resulting litigation), (c) serious salinization resulting from poor drainage, (d) depletion of groundwater and deteriorating quality, and (e) deteriorating wetlands. (particularly the Manchar Lake) and the Indus Delta resulting from the neglect on the need to maintain eco-services. Such challenges are even expected to loom in the future resulting from global climate change, regional development in the upstream Indus, and population growth within Sindh. During the last 12 months, extensive policy dialogue has been ongoing between the GoSindh and the Bank. Consequently, the GoSindh has taken a few bold initiatives to address the above-mentioned issues, including: (a) preparing and adopting an Irrigation Management Strategy to refine the mandates of the Irrigation Department and the SIDA, (b) preparing and adopting the Sindh Water Policy to embark on integrated water resources management to address water challenges, and (c) reviewing the current legal and institutional framework to identify deficiencies and preparing for a plan for institutional and legal reform. These actions are absolutely critical to achieve sound and sustainable water resources management in Sindh and determine the future path of Sindh for sustainable economic development; under such circumstances, the GoSindh, the Federal Government, and the Bank have agreed that the The World Bank PK Sindh Water Sector Improvement Project Phase I (P084302) Project is the best vehicle to further support these initiatives and have agreed that a 12 months extension of the closing date be granted. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 28-Feb-2015, 09- IDA-43580 Closed 30-Apr-2013 May-2018 IDA-55560 Effective 31-Dec-2018 31-Dec-2019 30-Apr-2020