$ Report No: RES00359 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PK: Punjab Tourism for Economic Growth Project APPROVED ON 15-Mar-2017 TO Islamic Republic of Pakistan Finance, Competitiveness and Innovation South Asia Regional Vice President: Martin Raiser Regional Director: Mathew Verghis Country Director: Najy Benhassine Practice Manager: Gabi George Afram Task Team Leader(s): Kiran Afzal, Hasan Afzal Zaidi The World Bank PK: Punjab Tourism for Economic Growth Project (P158099) ABBREVIATIONS AND ACRONYMS C&W Communication and Works CAP Corrective Action Plan DIMP Destination Investment and Management Plan DoT Department of Tourism IBRD International Bank of Reconstruction and Development IDA International Development Association ISR Implementation Status and Results Report MMP Museum Management Plan MoEA Ministry of Economic Affairs MS Moderately Satisfactory P&D Planning and Development Board PCD Project Closing Date PCE Private Capital Enablement PDO Project Development Objective PMU Project Management Unit PTEG Punjab Tourism for Economic Growth Project RAP Resettlement Action Plan SMP Site Management Plan US$ United States Dollars WB World Bank The World Bank PK: Punjab Tourism for Economic Growth Project (P158099) @#&OPS~Doctype~OPS^dynamics@restrhybridbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name P158099 PK: Punjab Tourism for Economic Growth Project Product/Financing Instrument Geographical Identifier Investment Project Financing (IPF) Pakistan Approval Date Current Closing Date 15-Mar-2017 31-Oct-2024 Original EA Category Partial Assessment (B) (PAD Approval Package-15 Mar 2017) Organizations Borrower Responsible Agency Islamic Republic of Pakistan Planning and Development Board @#&OPS~Doctype~OPS^dynamics@restrhybridoperationstatus#doctemplate OPERATION STATUS Project Development Objective (DO) Original Development Objective The Project Development Objective (PDO) is to strengthen institutional capacity, increase private sector participation and improve infrastructure services in support of the tourism sector in the Province of Punjab. Disbursement Summary (in USD million) Source of Funds Net Commitment Disbursed Balance % Disbursed IBRD -- -- -- 0 IDA 50.00 38.90 11.10 77.79 i The World Bank PK: Punjab Tourism for Economic Growth Project (P158099) 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 PK: Punjab Tourism for Economic Growth Project (P158099) 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 PK: Punjab Tourism for Economic Growth Project (P158099) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. This project paper seeks the approval to carry out the second Level 2 restructuring of the Punjab Tourism for Economic Growth (PTEG) project [P158099] with an extension in the project closing date (PCD) to June 30, 2025. This PCD extension has been requested by the Ministry of Economic Affairs (MoEA) through its letter dated July 29, 2024. The US$50 million PTEG project became effective on October 13, 2017, and has a current PCD of October 31, 2024. The PTEG project has 4 components: (i) Tourism Enablement; (ii) Infrastructure and Destination Development; (iii) Project Management; and (iv) Contingent Emergency Response Component (CERC). The proposed changes will not impact the PDO, components, respective allocations and results framework. 2. The Project Development Objective (PDO) is to strengthen institutional capacity, increase private sector participation and improve infrastructure services in support of the tourism sector in the Punjab province. 3. The overall Implementation Progress and progress toward achievement of PDO remains moderately satisfactory (MS). The project management rating and the overall safeguards compliance also remains MS. All project components except component 2 are rated MS. Component 2 (Infrastructure and Destination Development) rating was downgraded to moderately unsatisfactory (MU) in August 2024 due to the overall slowdown in the implementation pace for; (i) Rohtas Fort Bypass Road and Kallar Kahar – Manara Road; and (ii) Conservation of Bhatti Gate. The contracts for both activities amount to ~US$ 9 million. The project has disbursed US$39 million (78%) of which US$32 million was utilized as of July 31, 2024, mainly for activities including the; (i) rehabilitation of roads; (ii) procurement of tourist facilities and site maintenance equipment, and (iii) preparation and dissemination of Museum Management Plans (MMPs), Site Management Plans (SMPs) and Destination Investment and Management Plans (DIMPs). 4. The project is being implemented by the Planning and Development (P&D) Board of Punjab through a dedicated Project Management Unit (PMU). The meetings of the Project Steering Committee (PSC) are convened under the Chairman, P&D Board. In addition, a project Working Group has also been constituted to ensure interdepartmental coordination. It comprises representatives of the P&D Board, Communication and Works (C&W) Department, and Department of Tourism (DoT) of the Government of Punjab. 5. The United Nations Educational, Scientific and Cultural Organization (UNESCO) has been engaged by the project for the preparation of MMPs and SMPs, and heritage education interventions in the province in partnership with local communities, academia and youth to contribute towards promoting and safeguarding Punjab’s cultural heritage. 6. The project is in compliance with the legal covenants, as well as the Bank’s fiduciary and safeguards requirements. There are no overdue reports and no unresolved audit observations. B. Rationale for Restructuring 7. The first extension in the PCD was due to the initial slow launch of project activities, followed by the adverse impact of COVID-19 on the pace of project implementation. The pandemic led to delayed or no market response to procurement and the inability of the project teams to effectively monitor on-site implementation for almost 1.5 year. Over the past 12 months, the implementation progress of project activities has been hampered by (i) provincial government’s Anti-Encroachment Drive (AED) across the province in October 2023, which also impacted the Kallar Kahar – Manara Road site, halted works on the site and necessitated the revision and implementation of Resettlement Action Plan (RAP) and Corrective Action Plan (CAP); (ii) repeated iterations of the design of Rohtas Fort Bypass Road by the client to ensure a structurally robust design; (iii) lengthy procedures for obtaining permits from the relevant local government departments and completing social mobilization prior to conservation Page 1 The World Bank PK: Punjab Tourism for Economic Growth Project (P158099) of the historic Bhatti Gate; and (iv) safe keeping/stock taking requirements for artifacts for archiving activities at the Lahore and Taxila Museums. 8. The above issues including the approval of revised RAP/CAP for the Kallar Kahar – Manara Road and its satisfactory implementation, now stand resolved/completed. 9. It is worth mentioning that the works were suspended along the entire 28 kilometer stretch of the Kallar Kahar-Manara Road following provincial government’s AED, with a requirement for satisfactory implementation of revised RAP/CAP. Although this was successfully and comprehensively achieved by the clients, this set the timeline back by three months and works only resumed in June 2024, which are now anticipated to be completed in the next 5 months (by December 2024). Whereas the ongoing works at the Rohtas Fort Bypass Road will require another 8-9 months for their successful completion. 10. The second extension of the PCD is therefore critical to allow the completion of above stated activities while enabling the project to optimally achieve the targets of Results Indicators in addition to other positive outcomes, including better access to tourist sites and development of otherwise missing museum and heritage products for Punjab province. Without an extension in the PCD, the project will not be able to deliver comprehensively on the targets including private capital enablement (PCE), digital database to capture tourist footfall and tourism receipts, and hospitality sector internships/apprenticeships for women beneficiaries. 11. The PDO remains highly relevant to the tourism industry of Punjab province and federal government’s vision of a competitive tourism industry. The interventions are now increasingly aimed at the PCE since the project completed the DIMPs for eight tourist sites, SMPs for two Gurdawaras and MMPs for Lahore and Taxila Museums. These have generated interest in potential investors, however an intense follow up by the provincial government to materialize these investments is required. 12. Without an extension in PCD, the contracts for ongoing and pipeline activities amounting ~US$16 million will remain incomplete and the momentum generated in the province around tourism product development, destination planning and heritage conservation will be diluted. The project is complementing government’s own financed activities for the sector and serves as a platform for stakeholders’ consultations, public private dialogue and donor coordination. While the PDO indicators are overachieved, the intermediate results indicator on investment mobilization need to accomplish more. II. DESCRIPTION OF PROPOSED CHANGES The proposed restructuring is to extend the project closing date from October 31, 2024 to June 30, 2025 to allow for completion of project activities as described above. Disbursement estimates and implementation schedule will be adjusted accordingly to align with the new timeline of the project. The PMU, P&D Board, DoT and C&W Department will need to ensure strong internal coordination to leverage the extension in PCD effectively, and to enable optimal utilization of the loan proceeds. WB will enhance its supervision of the agreed implementation plan with close monitoring of timelines. @#&OPS~Doctype~OPS^dynamics@restrhybridsummarychanges#doctemplate Summary changes III. PROPOSED CHANGES Page 2 The World Bank PK: Punjab Tourism for Economic Growth Project (P158099) Operation Information Proposed Changes Operation Information Proposed Changes Disbursements Estimates Yes Loan Closing Date Extension Yes Development Objective No Implementation Schedule Yes Safeguard Policies Triggered No Loan Cancellations No ISDS No Reallocations No MFD/PCE No Financial Management No Results No Procurement No Risks No Institutional Arrangement No Legal Covenants No Conditions No Implementation Modalities No Disbursements Arrangements No 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 Loan Closing Page 3 The World Bank PK: Punjab Tourism for Economic Growth Project (P158099) Original Revised Proposed Proposed Deadline Loan/Credit/Trust Status Closing Closing(s) Closing for Withdrawal Fund Applications IDA-59820-001 Effective 30-Apr-2023 31-Oct-2024 30-Jun-2025 30-Oct-2025 DISBURSEMENTS Operation Dates & Projection Details Reasons to change the full Disbursement date and/or the projection Restructuring Implementation Start Date Operation Closing Date 15-Mar-2017 31-Oct-2024 Projected Date for Full Disbursement 29-Apr-2025 Expected Disbursements (in US $) (Absolute) Original Estimation at Preparation Actual Year Revised Estimation (Approval Package – 15 Mar 2017) FY2017 1,000,000.00 0.00 0.00 FY2018 3,999,999.96 500,000.00 500,000.00 FY2019 8,000,000.04 3,000,000.00 3,205,930.00 FY2020 21,999,999.96 5,000,000.00 4,958,748.00 FY2021 20,000,000.04 8,000,000.00 7,320,000.00 FY2022 0.00 5,000,000.00 5,156,614.63 FY2023 0.00 8,000,000.00 7,425,316.19 FY2024 0.00 10,000,000.00 10,200,000.00 FY2025 0.00 10,500,000.00 0.00 Page 4 The World Bank PK: Punjab Tourism for Economic Growth Project (P158099) Page 5