$ Report No: RES00799 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF JHARKHAND POWER SYSTEM IMPROVEMENT PROJECT APPROVED ON October 1, 2018 TO INDIA Energy & Extractives South Asia Regional Vice President: Martin Raiser Regional Director: Pankaj Gupta Country Director: Auguste Tano Kouame Practice Manager: Simon J. Stolp Task Team Leader(s): Kavita Saraswat The World Bank Jharkhand Power System Improvement Project (P162086) @#&OPS~Doctype~OPS^dynamics@restrhybridbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name P162086 Jharkhand Power System Improvement Project Product/Financing Instrument Geographical Identifier Investment Project Financing (IPF) India Approval Date Current Closing Date 01-Oct-2018 28-Feb-2025 Original EA Category Partial Assessment (B) (PAD Approval Package-01 Oct 2018) Organizations Borrower Responsible Agency Jharkhand Bijli Vitran Nigam Ltd., Jharkhand Urja Sancharan Government of India Nigam Ltd. @#&OPS~Doctype~OPS^dynamics@restrhybridoperationstatus#doctemplate OPERATION STATUS Project Development Objective (DO) Original Development Objective The project development objectives (PDO) are to increase the transmission capacity of electricity network in the state of Jharkhand and strengthen the institutional capacity of state-owned power transmission and distribution utilities. Disbursement Summary (in USD million) Source of Funds Net Commitment Disbursed Undisbursed % Disbursed IBRD 251.05 142.31 108.74 56.68 i The World Bank Jharkhand Power System Improvement Project (P162086) IDA -- -- -- 0 Grants -- -- -- 0 Policy Waivers Does this restructuring trigger the need for any policy waiver(s)? No @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate ii The World Bank Jharkhand Power System Improvement Project (P162086) TABLE OF CONTENTS I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING ........................................................................................1 II. DESCRIPTION OF PROPOSED CHANGES ....................................................................................................................2 III. PROPOSED CHANGES ................................................................................................................................................2 IV. DETAILED CHANGE(S) ...............................................................................................................................................3 The World Bank Jharkhand Power System Improvement Project (P162086) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The World Bank Board of Directors approved the Jharkhand Power System Improvement Project on October 1, 2018, and the Project became effective on April 22, 2019. The Project was restructured three times: a) First restructuring (March 2021): to (i) cancel US$30 million of IBRD loan on account of exchange rate saving, and (ii) to reallocate US$30 million from Component 1 to Component 3. b) Second restructuring (May 2024): to (i) extend IBRD loan closing date to December 31, 2024, and (ii) cancel IBRD financing of US$28.95 million due to savings arising from INR depreciation against US Dollar. c) Third restructuring (December 2024): to extend IBRD loan closing date to February 28, 2025 to ensure necessary actions were in place before extending for the entire request of 15 months. 2. The revised IBRD loan amount is US$251.05 million, and it is fully committed, except one sub-station package which was cancelled recently and procurement for left over works is to be initiated. The disbursement rate is 57 percent (US$142.31 million) and the current closing date of the Project is February 28, 2025. The project's rating for overall implementation progress and progress towards achieving the Project Development Objectives is Moderately Satisfactory. There are no overdue Audit Reports for the two Implementing Agencies. 3. Component 1 - Intra-state transmission system strengthening. This component covers construction of 25 new grid substations, expansion of 5 substations and construction of 35 associated transmission lines. These works are divided into 16 packages which are under various stages of implementation. One contract covering three substations out of eight contracts, was terminated due to non-performance of the contractor. Procurement of the remaining works has been initiated. Four out of a total of eight transmission line contracts covering 17 lines, were cancelled in February 2024 due to poor performance of the contractor. Two replacement contracts to cover the remaining works were awarded in December 2024 and another two in February 2025. Out of the 25 new substations, ten have been built and five are in advance stage of construction. The others are under various stages of implementation. Four out of five substation expansion works have been commissioned, and one is in advanced stage of completion. A significant portion of the state is classified as forest land and requires permission from the Forest Department before construction. Delay in obtaining forest clearances is the main reason for implementation delays. A total of 25 out of 35 transmission lines and two substations (Ramkanda and Panki) require forest clearance and associated permits. The permission for the Ramkanda substations is in advance stage and only awaiting final authorization. The clearance authorization for Panki substation is less likely as the location as part of an eco-sensitive zone. Jharkhand Urja Sanchar Nigam Limited (JUSNL) has identified an alternative location for which environmental and social screening is being conducted. The forest clearances request for 18 lines have been submitted and seven are being expected to be submitted soon. While the construction of these transmission lines has started, the completion will depend on time to obtain all the forest permits. 4. Component 2 - Technical assistance for institutional development and capacity building of JUSNL: Two full time project management consultant firms have been hired to support JSUNL in supervising contracts and compliance with the Environmental and Social Management Plan. 5. Component 3 - Improving operational efficiency and developing institutional capacity of Jharkhand Bijli Vitran Nigam Limited (JBVNL): All contracts under this component have been awarded. The two main contracts—for the deployment of 350,000 smart meters in Ranchi and the implementation of IT-based commercial systems—are currently underway and are expected to be completed by April 2025. As of January 31, 2025, approximately 310,000 smart meters had been installed, and all 5.2 million consumers are now being billed through the new commercial systems. Page 1 The World Bank Jharkhand Power System Improvement Project (P162086) 6. Additionally, a large contract for electricity distribution network metering is in progress and is expected to be completed by May 2025. All these contracts cover supply, installation, and a five-year operation and maintenance (O&M) period from commissioning. The O&M will be financed under the project until its closing, after which JBVNL will take over the funding. 7. An IT Project Management Consultant (PMC) firm has been appointed under Component 3 and is actively supporting JBVNL. Furthermore, a power procurement cost optimization tool has been deployed and is actively in use, leading to savings in power procurement costs. II. DESCRIPTION OF PROPOSED CHANGES 8. The Government of Jharkhand, through the Department of Economic Affairs (DEA), Government of India, has requested a 15-month extension of the IBRD loan closing date to complete the ongoing works, as per their letter dated January 29, 2025. DEA, via letter no. F.No. 06/02/2016-FB-VIII dated February 20, 2025, has recommended extending the closing date to May 31, 2026. This restructuring seeks to extend the IBRD loan closing date to March 31, 2026. @#&OPS~Doctype~OPS^dynamics@restrhybridsummarychanges#doctemplate Summary changes III. PROPOSED CHANGES Operation Information Proposed Changes Operation Information Proposed Changes Development Objective No Loan Closing Date Extension Yes Safeguard Policies Triggered No Implementation Schedule Yes ISDS No Loan Cancellations No MFD/PCE No Reallocations No Results No Financial Management No Risks No Procurement No Legal Covenants No Institutional Arrangement No Conditions No Implementation Modalities No Disbursements Estimates No Disbursements Arrangements No DDO No Clients No Appraisal Summary No Components No Page 2 The World Bank Jharkhand Power System Improvement Project (P162086) @#&OPS~Doctype~OPS^dynamics@restrhybriddetailedchanges-disclose#doctemplate IV. DETAILED CHANGE(S) COSTS & FINANCING Private Capital Facilitation Is this an MFD-Enabling Project (MFD-EP)? Is this project Private Capital Enabling (PCE)? LOANS Loan Closing Original Revised Proposed Proposed Deadline Loan/Credit/Trust Status Closing Closing(s) Closing for Withdrawal Fund Applications IBRD-89080-001 Effective 31-May-2024 28-Feb-2025 31-Mar-2026 31-Jul-2026 Page 3