The World Bank Urban Water and Sanitation Project (P117365) REPORT NO.: RES41193 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF URBAN WATER AND SANITATION PROJECT APPROVED ON APRIL 26, 2011 TO REPUBLIC OF NIGER, MINISTRY OF PLANNING May 11, 2020 WATER AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Soukeyna Kane Regional Director: Simeon Kacou Ehui Practice Manager/Manager: Yogita Mumssen Task Team Leader(s): Taibou Adamou Maiga The World Bank Urban Water and Sanitation Project (P117365) ABBREVIATIONS AND ACRONYMS CD Country Director DPL Development Policy Lending EA Environmental Assessment ESIA Environmental and Social Impact Assessment IDA International Development Association PDO Project Development Objective PEAMU Projet Eau et Assainissement en Milieu Urbain SEEN Societe d’Exploitation des Eaux du Niger SPEN Societe de Patrimoine des Eaux du Niger The World Bank Urban Water and Sanitation Project (P117365) BASIC DATA Product Information Project ID Financing Instrument P117365 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 26-Apr-2011 30-Jun-2020 Organizations Borrower Responsible Agency Ministry of Hydraulic and Sanitation,Cellule de Republic of Niger, Ministry of Planning Coordination du PEAMU,Societe de Patrimoine des Eaux du Niger (SPEN) Project Development Objective (PDO) Original PDO The Objective of the Project is to increase access to sustainable water supply services and to improved sanitation services in some urban areas in the recipient' s territory. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-58810 30-Jun-2016 27-Jul-2016 02-Feb-2017 30-Jun-2020 10.00 4.21 5.51 IDA-D1280 30-Jun-2016 27-Jul-2016 02-Feb-2017 30-Jun-2020 60.00 40.21 18.35 IDA-48930 26-Apr-2011 12-May-2011 01-Sep-2011 30-Jun-2020 90.00 83.79 0 The World Bank Urban Water and Sanitation Project (P117365) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING SUMMARY OF PROJECT STATUS 1. The purpose of the restructuring is: (i) to revise the closing date of the project by extending for six additional months, (ii) to revise the results framework by changing one PDO indicator and considering indicators related to COVID-19 response supported by the project. Consequently, disbursement estimates and project implementation schedule have been adjusted to reflect the proposed new closing date. 2. The project is rated “moderately satisfactory” for Project Development Objective (PDO) and “satisfactory” for implementation progress (IP), with all the contracts awarded and under implementation and solid progress on "urban sanitation” and “urban water supply” components. Achievement of PDO indicators is also showing positive trend. However, due to the recent COVID pandemic, there have been delays on the supply of materials as discussed in more detail below. The project was on a good track to restore the financial equilibrium because it has financed the necessary studies needed to support the prior actions and triggers of water reform supported by the 2019 and 2020 Development Policy Lending (DPO). This DPO supports water sector reform to restore financial stability and to strengthen the institutional framework of the water sector. The institutional framework (i.e. the setup of the independent regulation body and the appointment of its director) and the financial stability of the sector (i.e. arrears payment according to the arrears clearance plan and tariff adjustment plan) were on good track to improve even after the project closure as the DPO would continue to support the water sector reform. Yet the financial equilibrium of the urban water sector is not fully restored and the COVID response has further exacerbated financial pressure on both the Government and water utilities. The full restoration of its the financial equilibrium is unlikely to happen before the project current closure date. The disbursement rate is 85% and the project is expected to fully disburse. Progress by component: 3. Component 1: Urban Water Supply: The project has surpassed the outcome indicators under this component, including providing 893,500 additional people with access to water supply, against a target of 849,250 additional people originally planned. All contracts for planned activities have been awarded and are under implementation, and all civil works are expected to be delivered before the proposed new project closing date of December 31, 2020. . Civil works on the sites of Agadez, Tillabery and Zinder are expected to end by June 30, 2020. However, works involving large supply of steel pipes, electromechanical equipment and spare parts will be delayed and expected to be delivered by end June or early July 2020. 4. Component 2: Urban Sanitation: all contracts under this component are awarded. The civil works for school latrines faced implementation issues due to the security problems in the region of Tillabery. The former sites were changed to places where security can allow works implementation. The completion of the second fecal sludge treatment plant is delayed on The World Bank Urban Water and Sanitation Project (P117365) implementation but can be achieved with additional time. The project’s result targets are on track to be achieved or even exceeded by June 2020. 5. Component 3: Institutional Strengthening and Capacity Building: the project has supported the arrears audit to provide the government, Societé d’Exploitation des Eaux du Niger (SEEN), and Societé de Patrimoine des Eaux du Niger (SPEN) an action plan to clear the arrears by November 2021. It has also maintained constant dialogue with, and financed investments planned in the SPEN performance contract with the government. The arrears clearance plan was implemented correctly from September 2019 to March 2020. The Government pays every month 230 million XOF to SEEN, that in turn pays SPEN. Regarding the tariff adjustment, the project is financing a study to update the 2012 tariff study and to conduct a poverty and social impact assessment (PSIA) to provide the new regulation body with key elements for decision making to establish tariff adjustment plan based on a cost-coverage approach methodology. These two studies are complementing the DPO support to reinforce the water sector reform in Niger. The project is also financing capacity building activities and rehabilitation works to reduce the Government’s water bill. This will allow on time payment and substantial reduction of the Government’s monthly water bills. RATIONALE FOR RESTRUCTURING 6. COVID-19 related delays and the need for extension of the implementation period. The project is experiencing material supply shortages in five out of ten contracts due to the COVID-19 pandemic. Steel pipes, spare parts and fittings are ordered in Europe, China and India, depending on contractors, and their supply was delayed due to pandemic related disruptions. During the virtual implementation support mission that took place from March 23 to April 3, 2020, the team was informed that suppliers continue working but at limited capacity, therefore contractors and suppliers agreed on new supply schedules. It is anticipated that all pipes, spare parts and electronic equipment will be delivered in Niamey by end June or early July 2020. Based on the mission assessment, it will require an additional six months to implement these contracts, therefore an extension of the closing date is being sought. 7. Niger is exposed to multiple challenges adversely impacting its development. These challenges include: (i) regional insecurity and violent extremist groups that threaten stability, fuel pre-existing tensions and cause population displacement including refugees; (ii) high population growth and a large population of youth with few economic opportunities; (iii) an economy which, despite an improved macro-fiscal situation, remains exposed to multiple external shocks due to dependency on agriculture and extractives; (iv) increasing poverty, especially in rural areas; and (v) deep inequalities, particularly gender inequalities. On the other hand, in addition to the security situation in the country which swallows up a large part of the government available resources, the COVID-19 crisis further complicates the already precarious financial and economic situation. Niger is also preparing to organize elections during the year 2021. In these rather complicated circumstances, it is not realistic to make a tariff adjustment necessary to restore the financial balance of the sector. Project’s Critical support to the Government of Niger to combat COVID-19. To support WASH-related activities for the country's COVID-19 contingency plan, the Project will use some savings made as a result of favorable US dollar exchange rate and competitive bidding undertaken throughout the project’s life. With these savings, the project is undertaking the following additional activities, which are consistent with the project’s existing design: (i) under Component 1, support to water utilities, SPEN/SEEN, to ensure the continuity of service by financing necessary pipes, fittings and works implantation for the management of water shortage plan to prioritize peripheral areas with poor access to utilities network; (ii) under Components 1 and 2, supply water and hygiene facilities in health centers to support the Ministry of Health to complement the COVID project (P173846); and, The World Bank Urban Water and Sanitation Project (P117365) (iii) under Components 2 and 3, support the Ministry of Water and Sanitation to help with hygiene kits and communication in line with the government strategy. 8. As these activities fall within the allowable activities of the project’s scope, and because of the savings available within the project, no restructuring of the project design is needed. However, these additional activities will be captured under the revised targets for existing indicators and a couple of new indicators. The project has delivered the audit report as per the requirements every year, and there is currently no outstanding report under the project. DESCRIPTION OF PROPOSED CHANGES 9. Extension of the closing date. To retrofit for the materials delay as discussed above, the project closing date will be extended by six months from June 30, 2020 to December 31, 2020. 10. Revised project’s results framework. To capture the COVID-19 response and to realistically capture achievable progress on the financial situation of the sector, it is proposed to revise the project’s results framework as follows: (i) Revision of one PDO indicator: the indicator “Restoration of the financial equilibrium of the urban water sector” is revised as “Water sector financial equilibrium improved”. The reason of this change is that the “restoration of the financial equilibrium of the urban water sector” requires tariff adjustment which is not achievable in the shorter terms knowing the difficult country context. However, the water sector financial equilibrium can be improved. For the year 2020, it is expected 5.55 billion XOF payment to water utilities from the government; this payment represents the arrears clearance according to the clearance plan and payment of active water bills. The baseline is 25% and the target is 80% of the total amount. In comparison, full restoration of the financial equilibrium presumed 13.5% as original target. (ii) Addition of two intermediate outcome indicators to capture COVID-19 response: (a) Health centers provided with water connections (25); and (b) number of hygiene packages delivered in schools, health centers and refugees’ sites (15,000). II. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ The World Bank Urban Water and Sanitation Project (P117365) DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Dec-2016, 30- IDA-48930 Effective 31-Dec-2015 30-Jun-2020 30-Oct-2020 Jun-2020 IDA-58810 Effective 30-Jun-2020 31-Dec-2020 30-Apr-2021 IDA-D1280 Effective 30-Jun-2020 31-Dec-2020 30-Apr-2021 The World Bank Urban Water and Sanitation Project (P117365) OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2011 0.00 0.00 2012 7,828,600.48 7,828,600.48 2013 5,014,647.70 5,014,647.70 2014 15,749,323.43 15,749,323.43 2015 25,772,162.36 25,772,162.36 2016 21,121,995.47 21,121,995.47 2017 17,905,380.31 17,905,308.31 2018 34,315,424.60 10,379,825.76 2019 28,856,152.54 15,232,997.36 2020 10,646,018.45 34,995,140.00 . The World Bank Urban Water and Sanitation Project (P117365) . Results framework COUNTRY: Niger Urban Water and Sanitation Project Project Development Objectives(s) The Objective of the Project is to increase access to sustainable water supply services and to improved sanitation services in some urban areas in the recipient' s territory. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Increase access to sustainable water services in some urban areas in the recipient's territory Number of people in urban areas provided with access to 0.00 849,250.00 Improved Water Sources under the project (Number) Direct project beneficiaries (Number) 0.00 949,250.00 Female beneficiaries (Percentage) 0.00 52.00 Water sector financial equilibrium improved (Percentage) 25.00 80.00 Rationale: Revision of one PDO indicator: the indicator “Restoration of the financial equilibrium of the urban water sector” is revised as “Water sector financial equilibrium improved”. The reason of this change is that the “restoration of the financial equilibrium of the urban water sector” requires tariff adjustment which is not achievable in the shorter terms knowing the Action: This indicator has been Revised difficult country context. However, the water sector financial equilibrium can be improved. For the year 2020, it is expected 5.55 billion XOF payment to water utilities from the government; this payment represents the arrears clearance according to the clearance plan and payment of active water bills. The baseline is 25% and the target is 80% of the total amount. In comparison, full restoration of the financial equilibrium presumed 13.5% as original target. Increase access to improved sanitation services in some urban areas in the recipienté territory The World Bank Urban Water and Sanitation Project (P117365) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Number of students provided with access to appropriate 0.00 86,940.00 sanitation facilities in their schools under the project (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Urban water supply Improved community water points constructed or rehabilitated 0.00 953.00 under the project (Number) New piped household water connections that are resulting from 0.00 61,100.00 the project intervention (Number) People with access to enhanced water supply services under the 0.00 100,000.00 project (Number) Health centers provided with water connections (Number) 0.00 25.00 (Number) Rationale: New water points will be provider in the health center to reinforce hygiene. these water points/connection are part of the Action: This indicator is New covid response. Urban Sanitation New school latrines constructed under the project (Number) 0.00 3,164.00 Public sanitation facilities constructed under the project 0.00 20.00 (Number) The World Bank Urban Water and Sanitation Project (P117365) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Hygiene packages delivered in schools, health centers and 0.00 15,000.00 refugees’ sites (Number) Rationale: This indicator measure the number of hygiene packages delivered in health centers, refugees sites and schools to respond to Action: This indicator is New COVID crisis. Institutional strengthening and capacity building Satisfactory complaints resolution by the service provider 80.00 98.00 (Percentage) Beneficiaries who know at least two of their responsibilities 0.00 75.00 regarding their access to water (Percentage) IO Table SPACE The World Bank Urban Water and Sanitation Project (P117365)