Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES12979 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MUNICIPAL INFRASTRUCTURE DEVELOPMENT PROJECT LOAN BOARD APPROVAL: NOVEMBER 24, 2009 TO THE REPUBLIC OF BULGARIA July 10, 2014 Sustainable Development Department Central Europe and the Baltic Countries Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS EU European Union GOB Government of Bulgaria IP Implementation Progress MIDP Municipal Infrastructure Development Project MP Master Plan MORD Ministry of Regional Development MOE Ministry of Environment MU Moderately Unsatisfactory PDO Project Development Objective PIU Project Implementation Unit PISA Project Implementation Assistance Support U Unsatisfactory WTP Water Treatment Plant Regional Vice President: Laura Tuck Country Director: Mamta Murthi Senior Global Practice Director: Junaid Kamal Ahmad Practice Manager: Dina Umali-Deininger/ Sumila Gulyani Task Team Leader: Anna Cestari 2 Republic of Bulgaria Municipal Infrastructure Development Project CONTENTS A. SUMMARY OF PROPOSED CHANGES Page 6 B. PROJECT STATUS Page 7 C. PROPOSED CHANGES Page 8 ANNEX 1: RESULTS FRAMEWORK AND MONITORING Page 13 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK Page 21 3 DATA SHEET Bulgaria Municipal Infrastructure Development (P099895) EUROPE AND CENTRAL ASIA GWADR . Report No: RES12979 . Basic Information Project ID: P099895 Lending Instrument: Specific Investment Loan Regional Vice President: Laura Tuck Original EA Category: Full Assessment (A) Country Director: Mamta Murthi Current EA Category: Full Assessment (A) Senior Global Practice Junaid Kamal Ahmad Original Approval Date: 24-Nov-2009 Director: Dina Umali-Deininger/ Practice Manager: Current Closing Date: 31-Dec-2015 Sumila Gulyani Team Leader: Anna Cestari . Borrower: Republic of Bulgaria Responsible Ministry of Regional Development Agency: . Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Board Approval Restructuring Level 1 Explanation of The proposed restructuring Level: Approval Authority: entails (among others) a modification to the PDO, which requires approval by the Board of Directors on an Absence of Objection (AOB) basis. . Financing ( as of 24-Jan-2014 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P099895 IBRD-78340 Effective 24-Nov-2009 01-Feb-2010 30-Apr-2010 31-Dec-2015 31-Dec-2015 Disbursements (in Millions) % Cancelle Disburse Undisbur Project Ln/Cr/TF Status Currency Original Revised Disburse d d sed d 4 P099895 IBRD-78340 Effective USD 118.70 118.70 0.00 18.61 98.40 16 . Policy Waivers Does the project depart from the CAS 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 The proposed restructuring was requested by the Ministry of Finance in a letter to the Bank dated May 15, 2014, following technical visits in July and September 2013 and high level discussions at the 2013 Annual Meetings. The discussions led to an agreement with the Government of Bulgaria (GoB) on the need for actions to improve project implementation and ensure that the Project Development Objective (PDO) is achieved. The restructuring entails the following: (i) Modify the PDO to better align it with the project scope. The first part of the PDO is proposed to change from "improve reliability and quality of water provision to the communities in selected settlements in the project area" to "improve bulk potable water provision in target areas"; while the second part of the PDO will remain unchanged and read, “ (b) assist municipalities to improve investment-planning capacity.” (ii) Scale-down of Component 3 by dropping the construction of one dam and associated water treatment plant (WTP). Based on updated cost estimates, current project funding is not sufficient to contract construction of the Neikovtsi dam and its associated WTP, and these works will be dropped from the scope of the project. However, the designs for this dam and its WTP would still be prepared under the project. Construction of Plovdivtsi and Luda Yana dams and associated WTPs as well as the rehabilitation of the Studena dam will remain in the scope of the project. (iii) Inclusion of the Studena-Pernik Water Treatment Plant in the scope of the project. GoB has requested the World Bank to include the rehabilitation of this WTP under component 3. This investment is included in the Master Plan for the Pernik area prepared with project financing, and it is linked to the Studena dam. A feasibility study for the WTP has been prepared by the local utility with the support of a qualified international consultant, and there are sufficient project funds to carry out the proposed rehabilitation works. The rehabilitated WTP would provide drinking water to residents outside the capital, Sofia. It could be contracted through a straightforward design-and-build contract and committed in 2014. This newly added investment at the WTP falls within the notification exception provided for in paragraph 7(a) of OP 7.50 as it will be limited to rehabilitation of the existing facilities and will not change the current capacity of the plant; accordingly, an OP 7.50 Exception to Notification Memo has been signed by ECA Vice President. A dedicated Environmental Management Plant (EMP) will be prepared by the borrower for this WTP, it will be disclosed and discussed publicly and it will be part of the bidding documentation. All other EMPs for the other investments are in compliance with Bank requirements. (iv) Partial cancellation and reallocation of loan proceeds. By dropping the construction of Neikovtsi dam, the IBRD contribution would be reduced by EUR 11 million to EUR 70 million. Funds would be reallocated from Components 2 to Component 1 to finance the Project Implementation Support Assistance (PISA) and site supervision consultants through project closing. (v) Extension of the Closing Date by 24 months, from December 31, 2015 to December 31, 2017. This would allow sufficient time for completion of all works and for impoundment of the reservoirs to deliver water to the treatment plants for final testing. 5 (vi) Revision of the Results Framework. Indicators, targets and achievement dates would be adjusted according to the reduced scope of Component 3 and extension of closing date. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ X ] No [ ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ X ] No [ ] Change to Financing Plan Yes [ X ] No [ ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] . B. Project Status MIDP was approved in November 2009 and became effective in April 2010. The project consists of three components Component 1 (Project Implementation Support), financing project operations, Component 2 (Preparation of Master Plans), financing the preparation of regional master plans for water supply and sewerage systems, and Component 3 (Completion and Rehabilitation of Dams) funding the rehabilitation/construction of dams and associated water treatment plants. The project experienced implementation delays largely because dam designs were not ready at approval and because the government was unable to allocate sufficient budget (expenditure ceilings) to the project. The designs and technical approvals were more laborious and time-consuming than estimated at appraisal. The project originally envisioned a sizable Project Implementation Unit (PIU) within the Ministry of Regional Development (MRD) that included technical experts financed by the Government of Bulgaria (GoB). Due to budget constraints exacerbated by the economic crisis, GoB could not provide sufficient manpower, slowing implementation. In 2011, a Project Implementation Support Assistance (PISA) 6 consultant was hired to support MRD and implementation improved noticeably, in both timing and quality. Inadequate budget allocation to the project also caused implementation delays in 2012 and 2013. Delays largely affected the completion and rehabilitation of the dams component. However, all (51) Regional Water Supply and Sewerage Master Plans were completed and approved by MRD at the end of March 2014. The current PDO/IP rating for MIDP has been U/MU since December 2012. The first restructuring, approved in May 2011, was to align the project with the requirements set forth in the Borrower’s Water Act and to strengthen implementation capacity. With the approval of the proposed restructuring, which will address existing challenges, the project is expected to meet its PDO by the extended closing date. Achievement of the PDO requires additional 24 months to complete activities under Component 3. The budget shortfall has been addressed and conceptual designs and technical documentation have been substantially completed for the three dams. Bids submission deadline for Plovdivtsi dam is July 30, 2014 with contract signing expected in October 2014. Bidding for Luda Yana and Studena dams will follow with contracts expected to be signed later in 2014 and early 2015. The financial management arrangements of the project are satisfactory. There are no outstanding Interim un-audited Financial Reports (IFRs) or audit reports. The audit report for the 2013 project financial statements has been submitted on time with an unqualified opinion, with no significant internal controls issues noted in the management letter. . C. Proposed Changes . Development Objectives/Results Project Development Objectives Original PDO The project objectives are to: (a) improve the reliability and quality of water provision to the communities in selected settlements in the project area, and (b) assist municipalities to improve investment-planning capacity. These objectives are in line with Bulgaria’s National Strategy on Environment (2005-2014) which has a goal to provide good quality and sufficient quantity of water for various purposes. Change in Project's Development Objectives Explanation Reformulation of the PDO is proposed to better align it with the project's scope. Although, in substance, the project objectives will remain unchanged, the current wording of the first part of the PDO -- "(a) improve reliability and quality of water supply provision to the communities in selected settlements in the project area" -- may lead to a misinterpretation of project achievements. In particular, the reliability dimension of the PDO must be clarified. The project has been designed to contribute to the long-term goal of providing uninterrupted supply of water to the beneficiaries. In this respect, the project will improve reliability by increasing bulk availability of potable water in target areas. The project’s works on dams will increase year-round water availability and will help mitigate seasonal water shortages currently affecting beneficiary communities. Before distribution, the water will be made potable by the Water Treatment Plants (WTPs) in compliance with the national standards, which are harmonized with those of EU. By changing the first part of the PDO from "improve reliability and quality of water provision to the communities in selected settlements in the project area" to "improve bulk potable water provision in target areas", the objective better represents the results to be achieved by the project's investments, which 7 include construction and rehabilitation of dams, WTPs and their connection to the existing distribution networks. Rehabilitation of the latter, however, is expected to be implemented using EU funds and is beyond the scope of the project. Proposed New PDO The project objectives are to: (a) improve bulk potable water provision in target areas, and (b) assist municipalities to improve investment-planning capacity. These objectives are in line with Bulgaria's National Strategy on Environment (2005-2014) which has a goal to provide good quality and sufficient quantity of water for various purposes. Change in Results Framework Explanation: The Results Framework is being revised to reflect the proposed changes in project scope and extended implementation schedule. Modifications are also proposed for the indicators measuring the PDOs and include the following: -- Revise Outcome indicator 1, "Water dams and WTP completed in Luda Yana, Plovdivtsi, Neikovtsi and dam refurbished in Studena, and operational in all project sites" from a Yes/No indicator, to one measuring the volume of water produced as a result of the project's investments, "Volume of additional potable water (number of cubic meters/year) produced by the dams and WTPs, completed under the project." -- Revise Outcome indicator 2, "Quality of water produced at the water treatment plants meet Bulgarian and EU standards, whichever is higher" to "Percentage of samples from the water produced by the dams and WTPs, completed under the project, meeting national drinking water standards." This is the standard indicator for measuring water quality. -- Revise Outcome indicator 3, "Completion of Regional Master Plans for water supply and sewage systems, of satisfactory quality for acceptance by Bulgaria and EC, to support investments in service delivery" from a Yes/No indicator to one measuring the number of plans completed, "Number of regional master plans for water supply and sewage systems, of satisfactory quality for acceptance by Bulgaria and EC, to support investments in service delivery." The target set at 51 is the total number of water supply service regions in Bulgaria. -- Revise target of Intermediate core indicator, "number of water utilities that the project is supporting" from 4 to 51 utilities to take into account the fact that the Regional master plans will support the investments in the service areas of the utilities. -- Add core indicator "total number of beneficiaries" residing in the areas serviced by the dams and WTPs, completed under the project, is also introduced as an intermediate indicator; this indicator also counts the percentage of female beneficiaries. -- Wording of other intermediate results indicators slightly adjusted to reflect changes in project scope or new measuring options in the Portal. All proposed updates are found in results framework section of this restructuring paper. . Change in Legal Covenants Explanation: A legal covenant under Schedule 2, Section III (D) (2) (a) and (b) have been added to allow a formal process for closer supervision of the project's implementation schedule. 8 Finance Ln/Cr/T Date Recurre Frequen Agreement Description of Covenant Status Action F Due nt cy Reference The Borrower, through MRDPW, shall maintain the PIU during the Schedule 2, IBRD- execution of the Project Complied No Section I (A) Monthly 78340 with necessary resources with Change (1) and qualified and sufficient staff in adequate numbers. The Borrower, through the MRDPW, shall Schedule 2, IBRD- maintain the Dam Safety Complied No Section I (C) Yearly 78340 Panel ... which will with Change (2) provide advice on issues related to dam safety. The Borrower, through MRDPW, shall ensure that appropriate budget Schedule 2, IBRD- allocations are made Complied No Section I (A) Yearly 78340 available yearly for the with Change (6) Project implementation purposes, throughout the Project life. No later than June 30 and December 31 of every year during the implementation of the Project, beginning on December 31, 2014, Schedule 2, IBRD- prepare and furnish to the Semi Section III (D) Not yet due New 78340 Bank a biannual Annual (2) (a) procurement progress report (“ Biannual Procurement Progress Report”), in form and substance acceptable to the Bank. No later than 15 working days following the submission of the Biannual Procurement Schedule 2, Progress Report by the IBRD- Semi Section III (D) Borrower, the Borrower Not yet due New 78340 Annual (2) (b) and the Bank shall exchange views with the Bank on the results of said report completed for the Borrower’s previous 9 calendar semester and thereafter implement such recommended measures as agreed with the Bank. . Financing Change in Loan Closing Date(s) Explanation: The closing date would be extended by 24 months, from December 31, 2015 to December 31, 2017 to allow sufficient time for completion of all works financed by the project at the dam sites, as well as impoundment of the reservoirs created by the dams, sufficing to deliver water to the treatment plants for final testing. Ln/Cr/T Original Closing Current Closing Proposed Closing Previous Closing Status F Date Date Date Date(s) IBRD- Effective 31-Dec-2015 31-Dec-2015 31-Dec-2017 31-Dec-2015 78340 Cancellations Explanation: Without Neikovsi in the MIDP scope, about Euro 11 million from the loan would not be needed and would be canceled. Accordingly, IBRD’s contribution to the project would be reduced from Euro 81 million to about Euro 70 million. Euro 983,300 will be cancelled from Category 2 (Prep. of Master Plans) and Euro 10,016,700 from Category 3 (Works and Goods PART C). Curren Current Amount (in Cancelled Amount (in Proposed Amount (in Ln/Cr/TF Status cy currency) currency) currency) Effecti IBRD-78340 USD 118,700,000.00 16,100,000.00 102,600,000.00 ve Change to Financing Plan Explanation: Government co-financing corresponding to Euro 11 million from IBRD would also be cancelled; this is about Euro 2.75 million. Source(s) At Approval Current (from AUS) Proposed BORR 29,600,000.00 29,600,000.00 25,600,000.00 IBRD 118,700,000.00 118,700,000.00 102,600,000.00 Total 148,300,000.00 148,300,000.00 128,200,000.00 Reallocations Explanation: Funds would be reallocated from Components 2 to Component 1 to finance the extended services of the Project Implementation Support Assistance (PISA) consultants and the site supervision consultants until the end of the project. There is no change to Disbursement %. Ln/Cr/TF Currency Current Category of Allocation Disbursement % 10 Expenditure (Type Total) Current Proposed Current Proposed DISB - CONSULTING IBRD-78340 EUR 6,220,800.00 8,397,500.00 80.00 80.00 Part A DISB - Prep. of Master 12,960,000.00 9,800,000.00 80.00 80.00 Plans, P B DISB - WORKS AND 61,616,700.00 51,600,000.00 80.00 80.00 GOODS PART C Designated Account 0.00 0.00 0.00 0.00 FRONT END FEE 202,500.00 202,500.00 0.00 0.00 Total: 81,000,000.00 70,000,000.00 Disbursement Estimates Change in Disbursement Estimates Explanation: Disbursement estimates would change to reflect changes in the loan amount as well as the extended implementation period (until December 31, 2017). Fiscal Year Current (USD) Proposed (USD) 2012 15,350,000.00 4,106,620.00 2013 24,000,000.00 4,422,290.00 2014 33,000,000.00 9,750,000.00 2015 31,000,000.00 23,000,000.00 2016 15,350,000.00 28,800,000.00 2017 0.00 23,800,000.00 2018 0.00 8,721,090.00 Total 118,700,000.00 102,600,000.00 . Components Change to Components and Cost Explanation: With the change in scope, the partial cancellation of the loan and the extension of closing date, costs for all three components would change. The cost of Component 1 would increase because more time and funds would be required to secure PISA’s support until the end of the project for monitoring and coordinating all contracts relating to the dams, and for the implementation of social and environmental safeguards. The cost of Component 2 would decrease because the component, which has been completed in early 2014, with the approval of 51 Regional Master Plans cost less than planned. Finally, the cost of Component 3 would decrease without the construction of Neikovtsi. It was agreed, however, that designs for this dam would be completed under Component 1. GoB also asked to include the rehabilitation of the Water Treatment Plant (WTP) for Pernik-Studena under Component 3. About EUR 1.6 million from the IBRD loan is allocated to potentially finance the WTP or to meet unexpected contingencies. Component 1 (Project Implementation Support) - from current EUR 7.78 million to proposed EUR 10.5 11 million Component 2 (Preparation of Master Plans) - from current EUR 16.2 million to proposed EUR 12.3 million Component 3 (Completion and rehabilitation of dams) - from current EUR 77.02 million to proposed EUR 64.7 million Total - from current EUR 101.0 million to proposed EUR 87.5 million US$ equivalent are shown in the table below. Current component costs in US$ deviate from original (about US$148 million) due to EUR/US$ exchange rate used in the last ISR. Original component costs amounted to US$ 11.40 million for Component 1, US$ 23.70 million for Component 2 and US$ 112.80 million for Component 3, for a total of US$ 147.9 million). With the approval of the restructuring the component costs in US$ will be updated in the ISR. Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Project Implementation Project Implementation 11.40 15.40 Revised Support Support Preparation of Master Preparation of Master 23.70 18.00 Revised Plans Plans Completion and Completion and 112.80 94.80 Revised rehabilitation of dams rehabilitation of dams Total: 147.90 128.20 . Other Change(s) Change in Implementation Schedule Explanation: The implementation schedule would be extended by 24 months with the proposed new closing date of December 31, 2017. According to the most recent estimates, all investments should be completed by that date, provided that implementation pace and sufficient budget allocation are maintained. Given the nature of the investment and the complexity of the civil works associated with the construction of dams, MORD and the Bank will closely monitor implementation and take timely actions as necessary according to the mentioned biannual procurement progress reports. 12 Annex 1 – Results Framework Project Project Municipal Infrastructure Development (P099895) Restructuring Status: DRAFT Name: Stage: Team Requesting Anna Cestari ECCU5 Created by: Anna Cestari on 04-Dec-2013 Leader: Unit: Product Responsible IBRD/IDA ECSUW Modified by: Anna Cestari on 30-Jun-2014 Line: Unit: Country: Bulgaria Approval FY: 2010 EUROPE AND CENTRAL Lending Region: Specific Investment Loan ASIA Instrument: . Project Development Objectives Original Project Development Objective: The project objectives are to: (a) Improve the reliability and quality of water provision to the communities in selected settlements in the project area, and (b) Assist municipalities to improve investment-planning capacity. These objectives are in line with Bulgaria’s National Strategy on Environment (2005-2014) which has a goal to provide good quality and sufficient quantity of water for various purposes. Proposed Project Development Objective (from Restructuring Paper): The project objectives are to: (a) improve bulk potable water provision in target areas, and (b) assist municipalities to improve investment-planning capacity. These objectives are in line with Bulgaria's National Strategy on Environment (2005-2014) which has a goal to provide good quality and sufficient quantity of water for various purposes. Results Core sector indicators are considered: Yes Results reporting level: Project Level . 13 Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Marked for (Revised May2011) Water Number Value 0.00 0.00 3.00 Deletion dams and WTP completed in Date 02-Nov-2009 03-Jun-2014 31-Dec-2015 Luda Yana, Plovdivtsi, Neikovtsi and dam refurbished Comment (Revised) Works under the Plovdivtsi, in Studena, and operational in Three Dams project have not Neikovtsi and all project sites (Luda yet started. Luda Yana Yana, dams completed Plovdivtsi, and operational. Neikovtsi) not Studena dam completed and wall Studena dam rehabilitated. not This indicator rehabilitated and target would change with (Original) The restructuring dam lakes for dropping Plovdivtsi, Neikovtsi. Luda Yana and Neikovtsi not completed. New (Revised Feb2014) Volume of Cubic Meter(m3) Value 0.00 0.00 8.00 additional potable water Date 02-Nov-2009 03-Jun-2014 31-Dec-2017 (number of cubic meters/year) produced by the dams and Comment Works for 8 million cubic WTPs, completed under the construction of meter/year of project. dams under the which 6 by Luda project have not Yana and 2 by yet started Plodvitsi. Marked for (Revised May2011) Quality of Yes/No Value No No Yes 14 Deletion water produced at the water Date 02-Nov-2009 03-Jun-2014 31-Dec-2015 treatment plants meet Comment (Revised) Values to be Bulgarian and EU standards, Existing water determined whichever is higher. quality as according to supplied by the EU/Bulgarian three ViK standards. compared to current standards (Original) Existing water quality as supplied by the three ViK compared to current standards. Baseline to be determined. New (Revised Feb2014) Percentage Percentage Value 0.00 0.00 95.00 of samples from the water Date 02-Nov-2009 03-Jun-2014 31-Dec-2017 produced by the dams and WTPs, completed under the Comment 95% of samples project, meeting national meet national drinking water standards drinking water quality standards. Marked for (Revised May2011) Yes/No Value No No Yes Deletion Completion of Regional Master Date 02-Nov-2009 03-Jun-2014 31-Mar-2014 Plans for water supply and sewage systems, of satisfactory Comment (Revised) No all 51 plans are Regional Master 15 quality for acceptance by Master Plans undergoing final Plans are Bulgaria and EC, to support available for approval produced, investments in service delivery the water procedure leading to the supply and identification of sewage priority systems to investments for assist EC funding government to through identify Structural Funds investments (Original) No Master Plan prepared New (Revised Feb2014) Number of Number Value 0.00 51.00 51.00 regional master plans for water Date 02-Nov-2009 03-Jun-2014 31-Mar-2014 supply and sewerage systems, of satisfactory quality for Comment target is met acceptance by Bulgaria and EC, to support investments in service delivery Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Number of water utilities that Number Value 0.00 51.00 51.00 the project is supporting Date 08-Dec-2012 03-Jun-2014 31-Dec-2017 Comment The target has been revised from 4 to 51, given that the project is supporting 51 16 utilities with the preparation of Master Plans. Number of water utilities that Number Value 0.00 0.00 4.00 the project is supporting Date 08-Dec-2012 03-Jun-2014 31-Dec-2016 Comment Revised (Revised June 2014) Percentage Value 0.00 100.00 100.00 Component 2: Diagnosis of the Date 02-Nov-2009 31-Dec-2013 31-Dec-2013 present situation and investment needs completed, as Comment (Revised) No target is met, all part of Master Plans diagnosis done (51) RMPs were preparation, and submitted to at the regional prepared and the MRD and Water level for water approved by Associations supply and MRD at the end sewage of March 2014. systems. (Revised May2011) Percentage Value 0.00 0.00 100.00 Component 2: Diagnosis of the Date 02-Nov-2009 01-Dec-2012 31-May-2013 present situation and requirements completed in all Comment (Revised) No The short-term All MPs are Bulgaria under the Master diagnosis done investment plans completed and Plans and submitted to the at the regional have been submitted MRDPW and Water level for water submitted by the Associations for approval supply and three JV sewage systems. Revised (Revised May2011) Percentage Value 0.00 70.00 100.00 Component 3: Preparatory Date 02-Nov-2009 03-Jun-2014 30-Sep-2014 works for dams and water treatment plants completed (% Comment No preparatory Progress has been All preparatory 17 progress) work made with activities Plovidtsi, completed Studena, and Luda Yana. Plovidtsi is being tendered and bidding for Studena and Luda Yana will be done in spring 2014. Neikovtsi will be dropped (Revised May2011) Percentage Value 0.00 70.00 100.00 Component 3: Preparatory Date 02-Nov-2009 03-Jun-2014 30-Sep-2014 works for dams and water treatment plants completed Comment No preparatory Progress has been All preparatory work made with activities Plovidtsi, completed Studena, and Luda Yana. Plovidtsi is being tendered and bidding for Studena and Luda Yana will be done in spring 2014. Neikovtsi will be dropped Revised (Revised Jun 2014) Component Percentage Value 0.00 0.00 100.00 3: Construction works for Date 02-Nov-2009 03-Jun-2014 31-Dec-2017 water treatment plants completed and equipment Comment Construction Works on the first Works 18 installed (% progress) in variable water treatment completed and stages to be plant are expected equipment assessed at to start in October installed feasibility 2014. (Revised May2011) Percentage Value 0.00 0.00 100.00 Component 3: Construction Date 02-Nov-2009 03-Jun-2014 31-Dec-2015 works for water treatment plants completed and Comment Construction Works on the first Works equipment installed in variable dam are expected completed and stages to be to start in April equipment assessed at 2014. installed feasibility Revised (Revised Jun 2014) Component Percentage Value 0.00 0.00 100.00 3: Construction works for dams Date 03-Jun-2014 31-Dec-2017 completed (% progress) Comment Construction Works for Studena, Luda in variable Plovidtsi dam Yana and stages to be may be starting in Plovdivtsi and assessed at October2014. Neikovtsi dams feasibility by 2017 (Revised May2011) Percentage Value 0.00 0.00 100.00 Component 3: Construction Date 03-Jun-2014 31-Dec-2015 works for dams completed (Studena Dam by 2014, and Comment Construction Works for Studena Dam by Luda Yana, Plovdivtsi and in variable Plovidtsi dam 2016; and Luda Neikovtsidams by 2015) stages to be may be starting in Yana, Plovdivtsi assessed at April 2014. and Neikovtsi feasibility dams by 2017 New Direct project beneficiaries Number Value 0.00 0.00 170000.00 Date 02-Nov-2009 03-Jun-2014 31-Dec-2017 19 Comment New Female beneficiaries Percentage Value 0.00 0.00 50.00 Sub Type Supplemental . 20 Annex 2 - Operational Risk Assessment Framework (ORAF) Bulgaria: Municipal Infrastructure Development (P099895) Project Stakeholder Risks Stakeholder Risk Rating Low Risk Description: Risk Management: There is a possibility of delayed coordination process for Coordination meeting are arranged regularly. All 51 MPs were approved by end of the Master Plans (MPs) among Ministry of Regional March 2014. Development (MRD) and Ministry of Environment and Resp: Status: Stage: Recurrent: Due Date: Frequency: Water (MEW), which may create problems on how such MPs will be translated into projects for financing under Both In Progress Implementation Yearly the next EU financial perspectives. Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Rating Substantial Risk Description: Risk Management: Not enough staff and expertise at the MRD to address Support from an external consultant is established. With restructuring further issues and workload during implementation. There is still acceleration of activities would be required. MRD would need to keep staffing adequate lack of integration between the responsible for the project and seek PISA support as needed. staff at MRD and the consultant. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Monthly Governance Rating Substantial Risk Description: Risk Management: While the Government has clear ownership and priority of MoRD should follow up with other Government bodies regularly to avoid delays and the water sector, effective decision making process is harmonize policies within the sector. hindered by evolving sector regulation, management Resp: Status: Stage: Recurrent: Due Date: Frequency: 21 changes and extensive time required for approval process. Client In Progress Implementation CONTINUO Some of the construction works under the project may be US delayed due to procedural constrains. Project Risks Design Rating Moderate Risk Description: Risk Management: Dams are relatively small and there are good capacities A good system for technical reviews is in place in Bulgaria, comprising of regular within the country. Risks are posed by the lack of internal technical reviews and the Panel of Dam experts. knowledge for pre-existing conditions, but are Resp: Status: Stage: Recurrent: Due Date: Frequency: manageable. Good system is put in place, including regular internal reviews and the panel of dam experts. Both In Progress Implementation CONTINUO Nevertheless, preparation of technical documents for four US dams has proved challenging for MORD/Bulgaria. Completion of designs required lengthy reviews that could be accelerated through regular and working-level meetings between design consultants and experts ahead of formal reviews and approval gatherings. Social and Environmental Rating Low Risk Description: Risk Management: RAPs need to be prepared and the compensation paid before the start of civil works for Land acquisition: Resettlement Action Plans (RAPs) are each sub-project. required for each dam. The level of social risk related to land acquisition appears to be low or minimal. There are Resp: Status: Stage: Recurrent: Due Date: Frequency: no houses, structures, or economic activities affected by Client In Progress Implementation CONTINUO land acquisition. US Risk Management: The EIAs were updated accordingly with the recent environment standards and there are no major issues identified. Resp: Status: Stage: Recurrent: Due Date: Frequency: 22 Client Completed Implementation 30-Nov-2012 Program and Donor Rating Low Risk Description: Risk Management: The MIDP Project is not directly dependent on other MRD to coordinate closely with JASPERS and MoEW. project activities. However the Master Plans require Resp: Status: Stage: Recurrent: Due Date: Frequency: coordination with JASPERS and MoEW. Client Completed Implementation CONTINUO US Delivery Monitoring and Sustainability Rating Moderate Risk Description: Risk Management: The sustainability of certain component in the long term MoRD to monitor closely follow-up investments. (such as financing of the investment after the MPs are Resp: Status: Stage: Recurrent: Due Date: Frequency: completed) is linked to further investment in the sector outside the Bank and PIU control. Client Not Yet Due Implementation Other (Optional) Rating Substantial Risk Description: Risk Management: Completion of the dams is subject to availability of GoB and MoRD to allocate sufficient budget sufficient budget allocations, to be secured by the Ministry Resp: Status: Stage: Recurrent: Due Date: Frequency: of Regional Development Client In Progress Implementation Yearly Overall Implementation Risk: Rating Substantial Risk Description: Delays in project implementation and lack of spending authority under the budget for previous years, could continue despite efforts to bring the project back on track with a second restructuring. Scale down is proposed as part of the restructuring by dropping the construction of Neikovtsi dam and associated WTP. Even with reduced scope, MORD needs to make all efforts to sign the main construction contracts in 2014 and secure that GOB makes the necessary spending authority available ( at least Euro 27 million available for both 2015 and 2016) for timely implementation. Implementation delays and lack of sufficient budget/spending authority would jeopardize completion. 23