Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES20733 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 SEPTEMBER 23, 2015 GLOBAL PRACTICE WATER EAST ASIA AND PACIFIC REGION ABBREVIATIONS AND ACRONYMS ICC Investment Coordination Committee NEDA National Economic and Development Authority NIA National Irrigation Administration Regional Vice President: Axel van Trotsenburg Country Director: Motoo Konishi Senior Global Practice Director: Junaid Kamal Ahmad Practice Manager/Manager: Ousmane Dione Task Team Leader: Maria Theresa G. Quiñones PHILIPPINES Participatory Irrigation Development Project CONTENTS A. SUMMARY 2 B. PROJECT STATUS 2 C. PROPOSED CHANGES 2-3 DATA SHEET Philippines Participatory Irrigation Development Project (P088926) EAST ASIA AND PACIFIC Water Report No: RES20733 Basic Information Project ID: P088926 Lending Instrument: Adaptable Program Loan Regional Vice President: Axel van Trotsenburg Original EA Category: Partial Assessment (B) Country Director: Motoo Konishi Current EA Category: Partial Assessment (B) Senior Global Practice Junaid Kamal Ahmad Original Approval Date: 24-Jun-2009 Director: Practice Ousmane Dione Current Closing Date: 30-Sep-2015 Manager/Manager: Maria Theresa G. Team Leader(s): Quinones Borrower: Department of Finance Responsible National Irrigation Administration, Agency: Restructuring Type Form Type: Short Form Decision Authority: Country Director Approval Restructuring Level 2 Level: Financing ( as of 28-Jul-2015 ) 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 30-Sep-2015 Disbursements (in Millions) % Cancelle Disburse Undisbur Project Ln/Cr/TF Status Currency Original Revised Disburse d d sed d P088926 IBRD-77090 Effective USD 70.36 70.36 0.00 41.98 28.38 60 Policy Waivers Page 1 of 3 Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes A six-month loan closing date extension to March 31, 2016 is being proposed. The extension requested would provide time to the government (NEDA Board) to re-evaluate and facilitate the approval of the implementing agency's (NIA's) modified restructuring request. This interim extension request will result to a total of one year extension from the original loan closing date. B. Project Status Overall project implementation continues to pick-up in both the physical and financial accomplishment. Activities under Component 1 (institutional strengthening, irrigation management transfer) have been generally implemented according to plans, with several target indicators already or about to be achieved. The implementation of civil works activities (Component 2) has almost been completed in Core B systems (minor repair works) while progress in some Core A systems (major rehabilitation works) has also improved. Overall project management (Component 3) is satisfactory, even with 54% staffing complement. Compliance to fiduciary (procurement and financial management) and safeguards (social and environmental) requirements is also generally satisfactory, with some safeguards activities considered as good practice. The likelihood of achieving the project development objective (PDO) and the implementation performance (IP) ratings were recently downgraded to moderately unsatisfactory in view of: (a) the delays in the government's countersigning the Loan Agreement amendment letter (dated February 12, 2015); and (b) the slippages in the implementation of some civil works contracts. With the delays in countersigning the amendment letter, it is not possible for all the planned activities to be completed by the current loan closing date of September 30, 2015. The delays in civil works implementation in five (5) major/big national irrigation systems also contributed to downgrading of the project's implementation performance given that the civil works cover about 60% of the total project cost. Specific measures were agreed with the NIA Management to address these issues which are expected to help bring the project back on track. C. Proposed Changes Financing Change in Loan Closing Date(s): Explanation The government had submitted a restructuring request in July 2014. The request included among others, the extension of the loan closing date to March 31, 2017 to complete ongoing civil works and implement the needed rehabilitation works in prioritized national irrigation systems (schemes) that have been damaged by Typhoon Yolanda (Typhoon Haiyan) and other calamities. The July 2014 restructuring request was approved on October 29, 2014 by the Government’s Investment Coordination Committee’s Technical Board and Cabinet Committee. The NEDA Board discussed the restructuring proposal on May 19, 2015 but deferred its confirmation pending further review of the proposed retrofitting works by NIA in consultation with the Department of Public Works and Highways (DPWH). The definition and scope of retrofitting works have since been discussed and agreed by NIA and DPWH but NEDA Board confirmation remains outstanding. Page 2 of 3 Inasmuch as the last restructuring included a modification of the PDO, it required the Bank’s Board consideration and approval which was secured on February 11, 2015. A Loan Agreement amendment letter was sent to DOF on February 12, 2015 for their countersignature. However, as of today a countersigned amendment to the Loan Agreement has not been received by the Bank. To address the pending issue on delays in the government's countersigning of the Loan Agreement amendment letter, the Bank sent a letter to DOF on July 22, 2015 indicating the following three options: (a) countersign the Loan Agreement amendment letter which includes the 90/10 financing arrangements and the extension of the loan closing date to March 31, 2017, among others; (b) submit a modified request for restructuring re-affirming the pending request but without the 90/10 arrangement; and (c) close the project by September 30, 2015 and cancel the remaining undisbursed balance. Accordingly, the DOF sent a letter (dated September 2, 2015) to the Bank requesting a loan closing date extension of six months to provide time to the NEDA Board to re-evaluate and facilitate the approval of NIA’s modified restructuring request. Original Closing Current Closing Proposed Closing Previous Closing Ln/Cr/TF Status Date Date Date Date(s) 31-Mar-2017, IBRD-7709 Effective 31-Mar-2015 30-Sep-2015 31-Mar-2016 30-Sep-2015 0 Page 3 of 3