Document of The World Bank Report No: RES22994 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PARTICIPATORY IRRIGATION DEVELOPMENT PROJECT LOAN 7709-PH APPROVED ON JUNE 24, 2009 TO THE REPUBLIC OF THE PHILIPPINES MARCH 31, 2016 GWADR East Asia and Pacific Region ABBREVIATIONS AND ACRONYMS DOF Department of Finance ICC Investment Coordination Committee NEDA National Economic and Development Authority NIA National Irrigation Administration PDO Project Development Objective Regional Vice President: Antonella Bassani Country Director: Mara K. Warwick Global Practice Senior Director: Jennifer J. Sara Practice Manager: Ousmane Dione Task Team Leader: Maria Theresa G. Quinones PHILIPPINES Participatory Irrigation Development Project CONTENTS A. SUMMARY Page 2 B. PROJECT STATUS Page 2 C. PROPOSED CHANGES Page 2 DATA SHEET Philippines Participatory Irrigation Development Project (P088926) EAST ASIA AND PACIFIC Water Report No: RES22994 Basic Information Project ID: P088926 Lending Instrument: Adaptable Program Loan Regional Vice President: Antonella Bassani Original EA Category: Partial Assessment (B) Country Director: Mara K. Warwick Current EA Category: Partial Assessment (B) Senior Global Practice Jennifer J. Sara Original Approval Date: 24-Jun-2009 Director: Practice Ousmane Dione Current Closing Date: 31-Mar-2016 Manager/Manager: Maria Theresa G. Team Leader(s): Quinones Borrower: Republic of the Philippines Responsible National Irrigation Administration Agency: Restructuring Type Form Type: Decision Country Director Approval Short Form Authority: Restructuring Level: Level 2 Financing ( as of 17-Mar-2016 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P088926 IBRD-77090 Effective 24-Jun-2009 07-Aug-2009 03-Nov-2009 31-Mar-2015 31-Mar-2016 Disbursements (in Millions) Un- % Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed disbursed Disbursed P088926 IBRD-77090 Effective USD 70.36 70.36 0.00 46.27 24.09 66 Policy Waivers Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] respects? 1 Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes This restructuring proposes a closing date extension from March 31, 2016 to February 28, 2017. B. Project Status Overall project implementation has improved during the past year. Two of the three components (Component 1: Irrigation Sector Restructuring and Reform and Component 3: Project Management and Coordination) are being implemented satisfactorily, with a number of intermediate and outcome indicators already achieved. The project's compliance to fiduciary requirements is satisfactory and there are no outstanding audit reports. The implementation of safeguards activities is now also generally satisfactory and nearing completion with the full payment of required compensation to project-affected persons as per the resettlement action plans. Despite the recent progress, the project development objective (PDO) and implementation performance ratings remain moderately unsatisfactory as Component 2 (Irrigation Infrastructure Development), which accounts for about 60 percent of the Loan Proceeds, has mixed results. All 43 "Core B" irrigation systems (with minor repair works) have been completed. However, five out of the 15 "Core A" irrigation systems (with major rehabilitation and restoration works) have encountered significant delays in implementation with physical accomplishment ranging between 32-61 percent at the end of February 2016. Rehabilitation of another irrigation system is 77 percent completed, while works in two other irrigation systems are nearing completion. Many of the critical works can be implemented only during two water cut-off periods in a year (with six to eight weeks per cut-off period), typically during April-June and November-January (actual period varies from scheme to scheme). Most of the remaining works include improvements of: (a) main and secondary/lateral canals that are accessible only during the cut-off periods; and (b) abstraction works in rivers that can only be implemented during part of the dry season when river flows are low (typically March-June). The works in these eight irrigation systems cannot be completed by the current loan closing date, which is the main reason for the current ratings. C. Proposed Changes Financing Change in Loan Closing Date(s): Explanation This restructuring proposes a loan closing date extension from March 31, 2016 to February 28, 2017. The government is currently processing a restructuring request that includes, among others, a loan closing date extension and a reallocation of unallocated funds to address typhoon-induced damages at seven irrigation schemes. The restructuring request has been under consideration for over a year, but up to this date the government has not completed its approval process, and it is unclear whether the restructuring will proceed. After considering the technical, social, and political risks of closing the project on the current closing date of March 31, 2016, with eight civil works contracts uncompleted (including five ICB contracts), it is proposed that the Bank extends the closing date by 11 months to February 28, 2017. This will allow the National Irrigation Administration (NIA, the implementing agency), with close support of the Bank’s task team and in 2 close cooperation with management and members of Irrigators Associations, two construction periods to complete as much of the ongoing works as possible and terminate the remaining works of lower priority in an orderly manner early in 2017. Priority infrastructure that is critical for an efficient operation of the irrigation systems will be jointly identified and completed by contractors during this extension period. By completing the priority infrastructure, this orderly exit strategy will at least provide certain benefits to the more than 20,000 farmers in the five schemes. In the event that the Bank receives a formal restructuring request that would address the remaining outstanding issues of the project during this extended project implementation period, Bank management would consider it on its merits. Original Current Proposed Previous Ln/Cr/TF Status Closing Date Closing Date Closing Date Closing Date(s) 31-Mar-2017, 30-Sep-2015, IBRD-77090 Effective 31-Mar-2015 31-Mar-2016 February 28, 2017 31-Mar-2016 3