$ Report No: RES00289 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PROPOSED ADDITIONAL LOAN TO IN Karnataka Urban Water Supply Modernization Project APPROVED ON DECEMBER 20, 2021 Water South Asia Regional Vice President: Martin Raiser Regional Director: Dina Umali-Deininger Country Director: Auguste Tano Kouame Practice Manager: Sumila Gulyani Task Team Leader(s): Upneet Singh, Rajesh K. Advani The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) ABBREVIATIONS AND ACRONYMS AF Additional Financing DEA Department of Economic Affairs GoI Government of India JPY Japanese Yen USD United States Dollars i The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) @#&OPS~Doctype~OPS^dynamics@restrhybridbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name IN Karnataka Urban Water Supply P130544 Modernization Project Product/Financing Instrument Geographical Identifier Investment Project Financing (IPF) India Approval Date Current Closing Date 31-Mar-2016 30-Jun-2026 Original EA Category Partial Assessment (B) (PAD Approval Package-11 Aug 2017) Organizations Borrower Responsible Agency Karnataka Urban Infrastructure Development & India Finance Corporation (KUIDFC) @#&OPS~Doctype~OPS^dynamics@restrhybridoperationstatus#doctemplate OPERATION STATUS Project Development Objective (DO) Original Development Objective

The Project Development Objective is to provide city-wide access to a continuous piped water supply in the eligible cities in the state of Karnataka, and to strengthen service delivery arrangements at the city level.

Disbursement Summary (in USD million) Source of Funds Net Commitment Disbursed Balance % Disbursed ii The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) IBRD 250.00 71.67 178.33 28.67 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 iii The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) TABLE OF CONTENTS I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING ...........................................1 II. DESCRIPTION OF PROPOSED CHANGES ........................................................................1 III. PROPOSED CHANGES ......................................................................................................1 IV. DETAILED CHANGE(S) .....................................................................................................2 The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Karnataka Urban Water Supply Modernization Project (KUWSMP) was approved in the amount of US$100 million in March 2016. An Additional Financing (AF) in the amount of US$150 million was approved in December 2021. As disbursement of the parent Loan was slower than anticipated, per the request of the Government of India (GoI), the signing deadline for the AF was extended to July 31, 2024, to enable saving of commitment charges on the undisbursed amount. 2. The parent KUWSMP Loan is currently 71.7 percent disbursed and is likely to be fully disbursed by the closing date of November 22, 2024. The Project Development Objective and Implementation Progress are currently rated as Moderately Unsatisfactory. Once signed and made effective, the AF will provide a further 19 months and additional funds to achieve the Project’s objectives and it is a necessary step to bring the Project’s performance back on track and upgrading the Project’s performance ratings. B. Rationale for Restructuring 3. The Department of Economic Affairs (DEA), GoI, vide their letter dated July 22, 2024, have communicated that they are ready to sign the legal agreements for the AF. In addition, at the request of the State of Karnataka, DEA has requested for a change in the commitment currency in the Loan Agreement of the AF from United States Dollars (USD) to Japanese Yen (JPY), prior to the AF signing deadline of July 31, 2024 as they anticipate the cost of borrowing in JPY to be comparatively lower. Hence, this restructuring is being undertaken prior to the signing of the legal agreements to effect a change in the commitment currency from USD to JPY in the Loan Agreement of the AF. II. DESCRIPTION OF PROPOSED CHANGES 4. The currency of the Loan is being changed from USD to JPY. There are no other changes in the legal agreements of the AF. @#&OPS~Doctype~OPS^dynamics@restrhybridsummarychanges#doctemplate Summary changes III. PROPOSED CHANGES Operation Proposed Operation Proposed Information Changes Information Changes Loan Closing Date Development Objective No No Extension Safeguard Policies No Loan Cancellations No Triggered Page 1 The World Bank IN Karnataka Urban Water Supply Modernization Project (P130544) ISDS No Reallocations No MFD/PCE No Financial Management No Results No Procurement No Institutional Risks No No Arrangement Implementation Legal Covenants No No Schedule Conditions No Implementation No Modalities Disbursements No Estimates Disbursements No Arrangements DDO No Clients No Appraisal Summary No Components No @#&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 Page 2