The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) REPORT NO.: RES38057 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF CHITTAGONG WATER SUPPLY IMPROVEMENT AND SANITATION PROJECT APPROVED ON JUNE 23, 2010 TO PEOPLE'S REPUBLIC OF BANGLADESH WATER SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Mercy Miyang Tembon Regional Director: John A. Roome Practice Manager/Manager: Takuya Kamata Task Team Leader: Arif Ahamed The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) ABBREVIATIONS AND ACRONYMS CWASA Chittagong Water Supply and Sewerage Authority DDO Deferred Drawdown Option EA Environmental Assessment FA Financing Agreement GOB Government of Bangladesh IDA International Development Association ISR Implementation Status and Results Report LGD Local Government Division PA Project Agreement PMU Project Management Unit SDR Special Drawing Rights The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) BASIC DATA Product Information Project ID Financing Instrument P103999 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 23-Jun-2010 31-Dec-2020 Organizations Borrower Responsible Agency Chittagong Water Supply and Sewerage Authority PEOPLE'S REPUBLIC OF BANGLADESH (CWASA) Project Development Objective (PDO) Original PDO The objective of the Project is to increase the sustainable access to safe water and improved sanitation, as well as support theestablishment of a long term water supply, sanitation and drainage infrastructure development and operational management program inChittagong. Current PDO The revised PDO is to increase access to safe water and improve CWASA’s institutional capacity and investment planning for sanitation and drainage in Chittagong City. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60930 23-Jun-2017 06-Aug-2017 09-Oct-2017 31-Dec-2020 37.49 29.49 9.07 IDA-47340 23-Jun-2010 26-Jul-2010 27-Oct-2010 31-Dec-2020 155.52 131.63 13.17 TF-58153 02-Sep-2007 02-Sep-2007 02-Sep-2007 18-Nov-2009 0 0 0 The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING The team recommends cancelling SDR 6,943,150 from the Original Credit (Cr. 47340-BD). This recommendation follows a request from the Government of Bangladesh (GOB) through a letter dated December 30, 2020, to address the Project’s savings, which has been estimated by the project implementing agency, Chittagong Water Supply and Sewerage Authority (CWASA) to be approximately US$10 million equivalent. A combination of various factors like exchange rate variation, underutilization of the provision made in most of the contracts for contingencies, has contributed to project savings. Consequent to the savings in the cost of water supply improvement, the project cost will change by the extent of the savings and result in revision in the allocation made in Category 1. The Bank project team alerted the Local Government Division (LGD) and CWASA that while the cancelled amount will be recommitted to Bangladesh portfolio, any unutilised balance at Credit closing will be returned to the Bank. The project has completed all works contracts, except one (Package W-5). This contract scope includes laying of transmission pipeline (11.148 km) and distribution pipeline (44.15 km) along with the installation of fittings, hydraulic testing, cleaning and disinfecting of pipes, GIS mapping, As-built drawings, and commissioning. The contract is close to completion and registered 95% progress as of December 13, 2020. The W-5 contract is expected to be completed by the Credit closing date of December 31, 2020. Notwithstanding the completion of civil works, several open works contracts need to be closed. Expenditures incurred on or before the closing date would be financed under this Credit. The project’s key targeted development outcomes including the number of direct beneficiaries with access to Improved drinking water supply along with operations and maintenance cost coverage from direct water sales revenue, have been attained. Besides, another PDO outcome i.e. water utility maturity level, has also been achieved, denoting that actions to realize strategies and policies are in place. The PDO rating is Satisfactory in the last ISR of December 2020 and the IP rating is Moderately Satisfactory. Fiduciary ratings are satisfactory for procurement and moderately satisfactory for financial management. Safeguards ratings are satisfactory for environmental safeguards and social safeguards. There are no outstanding audits. Performance of the implementing agency (CWASA) is rated as moderately satisfactory mainly due to the delays in contract completion, which in fact is contributed by the below performance of the supervision consultants. II. DESCRIPTION OF PROPOSED CHANGES The following changes are proposed: (i) To cancel SDR 6,943,150 (USD10 million equivalent) from the Original Credit (Cr. 47340-BD). (ii) To revise the cost of Component 1 (Water Supply Improvement) to USD 157.75 million. Cost of other components remains unchanged. Project cost will revise to USD 170.53 million. (iii) To revise the allocation of Credit for Category 1 from SDR 97,330,000 to SDR 95,576,850. Allocation for other disbursement categories remains unchanged. The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) (iv) To revise the disbursement table taking actual disbursements during FY 2010 to FY 2020 and provide estimates for disbursement during the balance project period and the disbursement grace period. III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Water Supply Improvement 167.75 Revised Water Supply Improvement 157.75 Investment Planning for Investment Planning for 4.22 No Change 4.22 Sanitation and Drainage Sanitation and Drainage Institutional Capacity Institutional Capacity Development and Project 8.56 No Change Development and Project 8.56 Management Support Management Support TOTAL 180.53 170.53 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation LOAN Disburs IDA-47340- 103,050,000.0 RESTRUCTUR ing&Re XDR 6,943,150.00 28-Dec-2020 96,106,850.00 001 0 ING, COST paying SAVINGS LOAN IDA-60930- Disburs RESTRUCTUR XDR 27,506,380.00 0.00 28-Dec-2020 27,506,380.00 001 ing ING, COST SAVINGS LOAN Fully TF-58153- RESTRUCTUR Cancell USD 0.00 0.00 28-Dec-2020 0.00 001 ING, COST ed SAVINGS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) IDA-47340-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: WRKS,GDS,CS,TRNG AND WS 97,330,000.00 85,439,774.35 95,576,850.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: RESETTLEMENT COMPENSATION COSTS 330,000.00 16,179.13 330,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: INCREMENTAL OPERATING COSTS 200,000.00 120,118.38 200,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: UNALLOCATED 5,190,000.00 0.00 0.00 Total 103,050,000.00 85,576,071.86 96,106,850.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2010 0.00 0.00 2011 0.00 448,513.00 2012 509,253.10 0.00 2013 0.00 18,919,533.00 2014 6,475,057.82 15,344,838.00 2015 16,060,985.62 25,924,699.00 2016 36,209,454.46 22,481,728.00 2017 32,747,412.62 13,804,656.00 2018 14,129,585.16 20,709,641.00 2019 20,869,493.06 20,308,677.00 The World Bank BD Chittagong Water Supply Improvement and Sanitation Project (P103999) 2020 14,000,000.00 32,587,715.00 .