RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE WESTERN PROVINCES RURAL WATER SUPPLY, SANITATION AND HYGIENE PROMOTION PROJECT

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE Report No: WESTERN PROVINCES RURAL WATER SUPPLY, SANITATION AND HYGIENE PROMOTION PROJECT LOAN 4863-CHA BOARD DATE: JUNE 26, 2007 TO THE PEOPLE S REPUBLIC OF CHINA APRIL 24, 2012

2 ABBREVIATIONS AND ACRONYMS DfID GBP GOC IBRD KPIs MOF MOU PAD PDO PIU PMO RMB USD Department for International Development British Pound Sterling Government of China International Bank of Reconstruction and Development Key Performance Indicators Ministry of Finance Memorandum of Understanding Project Appraisal Document Project Development Objective Project Implementation Unit Project Operation Manual Provincial Project Management Office Renminbi (Chinese Yuan) US Dollar Regional Vice President: Country Director: Acting Sector Manager/Sector Director : Acting Task Team Leader: Pamela Cox, EAPVP Klaus Rohland, EACCF Paul Kriss, EASCS/John Roome, EASSD Sing Cho, EASCS 2

3 CHINA WESTERN PROVINCE RURAL WATER SUPPLY, SANITATION AND HYGIENE PROMOTION PROJECT P CONTENTS A. SUMMARY... 6 B. PROJECT STATUS... 6 C. PROPOSED CHANGES... 6 Page ANNEX 1: RESULTS FRAMEWORK AND MONITORING

4 Restructuring Restructuring Type: Level II Last modified on date : Status: Draft 1. Basic Information Project ID & Name Country Task Team Leader Sector Manager/Director Country Director Original Board Approval Date June 26, 2007 Current Closing Date September 30, 2012 Proposed Closing Date [if applicable] EA Category B Revised EA Category No Change EA Completion Date December 1, 2006 Revised EA Completion Date Not Applicable P Western Provinces Rural Water Supply, Sanitation and Hygiene Promotion Project China Paul Kriss Paul Kriss Klaus Rohland 2. Revised Financing Plan (US$) Source Original Revised BORROWER IBRD DfID Total Borrower Organization Department Location Ministry of Finance International Department Beijing, China 4. Implementing Agency Organization Department Location Shaanxi Provincial Offices for World Bank Projects Sichuan Provincial Offices for World Bank Projects Shaanxi Foreign Loan Support PMO; Sichuan Rural Irrigation and Water Conservancy Bureau Xian, Shaanxi, China; Chengdu, Sichuan, China 4

5 5. Disbursement Estimates (US$m) Actual amount disbursed as of 4/5/ Fiscal Year Annual Cumulative Total Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? Have these been approved by Bank management Is approval for any policy exception sought from the Board? Does the scale-up of restructured projects trigger any new safeguard policies? If yes, please select from the checklist below. N N 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The development objective of the project is to increase access of poor participating communities to sustainable and equitable water supply, sanitation and hygiene promotion services by adopting an integrated and participatory approach. 7b. Revised Project Development Objectives/Outcomes [if applicable] n.a. 5

6 CN-WESTERN PROVINCE RURAL WATER SUPPLY, SANITATION AND HYGIENE PROMOTION PROJECT A. SUMMARY RESTRUCTURING PAPER 1. This Project Paper seeks the approval of the Executive Directors to introduce the following changes in the China Western Provinces Rural Water Supply, Sanitation and Hygiene Promotion Project (P095315): (a) reduction of project activities; (b) change in project costs, reallocation of Loan proceeds, and increase in disbursement percentages; and (c) updating of the results framework. The restructuring is necessary to reduce the scope and outcomes of the project in line with the reduced funding envelope resulting mainly from: (a) the 2008 Wenchuan earthquake that significantly affected both project provinces; and (b) the withdrawal of grant funding from the United Kingdom s Department for International Development (DfID) in The project was funded by a combined investment of US$75 million: US$25 million from a World Bank loan, US$25 million equivalent from a DfID grant, and a US$25 million equivalent investment by the Government of China (GOC). The Loan and DfID Grant were supported by three legal documents, dated September 29, 2007, namely: (i) a Loan Agreement between the Bank and the People s Republic of China; (ii) a Project Agreement between the Bank and both borrowers Shaanxi Province and Sichuan Province; and (iii) a Grant Agreement between the People s Republic of China and the Bank acting as administrator of the DfID Grant. B. PROJECT STATUS 3. The project was approved on June 26, 2007 and became effective on December 20, Project implementation fell significantly behind schedule for two reasons. Six months after effectiveness, the both Sichuan and Shaanxi Province were hit by the Wenchuan Earthquake of May The emergency response to the earthquake strained both provinces financial and human resources and resulted in implementation delays of about one year. 4. Furthermore, the project suffered financing shortfalls for several reasons: (a) as a consequence of the Wenchuan earthquake, the prices of construction materials and labor rose significantly; (b) in 2009, DfID informed GOC and the Bank that it intended to close its China program, and that the undisbursed portion (about US$6 million equivalent) of its grant would be canceled in 2010; (c) the value of the Chinese RMB rose significantly compared to the US Dollar and the British Pound Sterling (GBP), thus increasing the cost of the project in RMB terms; and (d) the project provinces did not provide sufficient counterpart funds. At the mid-term review in June 2010, the Bank advised the provinces to devise a restructuring plan to realign the project scope with reduced available funding; however an agreed restructuring plan was not formally submitted to the Bank until March Due to lack of agreement on the scope and funding for the project, contracts could not be signed and implementation stagnated for almost two years as demonstrated by the lack of progress in fulfilling key performance indicators (KPIs). For example, the number of additional 6

7 people with access to safe water supply has reached about 378,840 or only 53% of the project target. The increase in the percentage of households with improved latrines is only 23% in Shaanxi (target is 100%) and 15% in Sichuan (target is 70%). The increase in the percentage of people who have adopted safe hygiene and sanitation behaviors is not known because monitoring and evaluation have been inadequate (the 2011 survey results should be available soon). Due to slow implementation progress and the shortfall in financing, it is unlikely that the Project Development Objective can be satisfactorily met to the extent reflected in the KPIs by the Loan closing date of September 30, No funding was made available by the GOC to fill in the gap. The purpose of the restructuring, therefore, is to allow the Loan to be fully utilized and achieve most benefits in the remaining time. 6. Compliance with covenants. The last ISR reports that the project management offices in each province have not delivered project reports, including M&E, in a timely manner and annual work plans were not delivered by end October as expected, especially for 2010 and There are no overdue audits and audits have consistently yielded unqualified opinions. The overall safeguard compliance is downgraded due to the delay submission of updated external monitoring and evaluation report on land acquisition. C. PROPOSED CHANGES Results/indicators by Component 7. All four project components will remain in both project provinces, but the outputs will be scaled back as shown in the table below. Table 1. Revised targets for Shaanxi Province Project Activities by Component, Shaanxi Original Targets Restructuring Targets 1. Water Supply Component Multiple Village Piped Water Supply Schemes Single Village Piped Water Supply Schemes Rainwater Storage Reservoirs Environmental Sanitation Component Schools Three Compartment Latrines Hand washing and Onsite Soakaway Systems Solid Waste Drop-Off Points Households Biogas Latrine 27, Double Urn Latrine 45, Three-compartment Latrine Villages Solid Waste Drop-Off Points Three Compartment Latrines Promotional Materials and Activities 7

8 8. For the Environmental Sanitation component, some counties decided to construct a greater number of public three compartment latrines to replace the household three compartment latrines which were dropped due to inadequate funding. 9. For the Hygiene Promotion component, two final activities will be completed by loan closing: (a) the last survey on behavioral change, which was already included in an existing consulting service contract and (b) a local workshop to share experiences among county project management offices. 10. For the Institutional Development and Capacity Building, three domestic study tours will be conducted to learn about the operations and maintenance experiences of other rural water supply projects in China. Table 2. Revised targets for Sichuan Province Project Activities by Component, Sichuan Original Targets Restructuring Targets 1. Water Supply Component Multiple Village Piped Water Supply Schemes Single Village Piped Water Supply Schemes Cluster of Household Piped Water Supply Schemes Single Household Wells 23,247 16, Environmental Sanitation Component Schools Three Compartment Latrines Hand washing and Onsite Soakaway Systems Solid Waste Drop-Off Points Households Biogas Latrine 28,824 12,287 Three Compartment Latrines 57,648 14,897 Waste Water Soakaway Systems 51 0 Villages Solid Waste Drop-Off Points Three Compartment Latrines 36 8 Promotional Materials and Activities 11. For the Hygiene Promotion component, the only activity scheduled before closing is execution of the last survey on behavioral change, which is already included in an existing consulting service contract. 12. For the Institutional Development and Capacity Building component, Sichuan will hire a consultant to review the project outcomes and prepare the borrower s completion report. Annex 1 on the Results Framework and Monitoring shows the key indicators and the expected final outputs for the reduced project to be reflected in the amendment of the Project Agreement. All 3- in-1 model adoption/replication related indicators originally shown in the Project Appraisal Document will be dropped, and all HP related indicators to be replaced with behavior based indicators because of inadequate available data or attribution issues. 8

9 13. With regard to safeguard review, as only slight reduction in project scope is proposed, the environmental category of the project remains category B, and no new safeguard policies are triggered. The restructuring did not bring any changes to the project financial management system which has been assessed and reviewed as acceptable to the Bank. 14. Financing The table below provides the updated project costs by component. Table 3. Project Costs (US$ million) Components/Activities Current (PAD) Proposed Water Supply Environmental Sanitation Hygiene Promotion Institutional Strengthening and Training Contingency 4.19 N/A Financial Charges (front-end fees of the Bank) N/A 0.06 Total Water Supply. Funding for this component is being increased from $44.45 million to $51.29 million in order to cover the increased costs of construction materials and labor, and depreciation of USD. 16. Environmental Sanitation. Funding for this component is being reduced from $19 million to $16.51 million because of the reduced available financing envelope following DfID s withdrawal. 17. Hygiene Promotion. This component s funding will be reduced from $3.79 million to $1.24 million because the mass media campaign in Shaanxi was financed through an alternative source and because of the reduced funding available for other activities following DfID s withdrawal. 18. Institutional Strengthening and Training. This component will be slightly reduced by trimming down the number of domestic study tours for experience learning. 19. The revised Financing Plan is available from the datasheet proposed by the Borrower and acceptable to the Bank to reflect the withdrawal of DfID. There is no change in the IBRD loan of US$25 million. The DfID contribution has declined from US$25 million to US$15.5 million, which was the amount disbursed when DfID withdrew from the project. With the substantial appreciation of the Chinese RMB against the USD (and GBP), the borrower s contribution has risen from $28.51 million to US$31.65 million to be provided by Sichuan and Shaanxi provincial governments. 20. Reallocations and Increase in Financing Percentages. The Loan proceeds will be reallocated among the disbursement categories and the financing percentages for several 9

10 categories of expenditure will be increased in order to (a) alleviate funding shortages following the withdrawal of DfID and to (b) enable full disbursement of the Loan by the September 30, 2012 closing date. These changes are shown in the Tables 4 and 5. Table 4. Revised Disbursement Table for Shaanxi Province Component (1) With respect to Shaanxi Province: (a) Goods, works and consultants services under Part A: Safe Water Supply (b) Goods, works and consultants services under Part B of the Project (excluding Household Subsidies) Allocation (US$) % of Financing Current Revised Current Revised 7,467,500 8,891,750 36% No change 350,250 1,697,087 35% No change (c) Household Subsidies under Part B of the Project 2,758, ,148 50% of Household Subsidies paid (d) Goods, works, non-consulting services, consultants services, workshops and training under Part C: Hygiene Promotion (e) Goods and consultants services under Part D: Institutional Strengthening and Development (f) Workshops and training under Part D: Institutional Strengthening and Development No change 937, ,441 50% 100% 577, ,207 50% 100% 378, ,117 50% 100% Front-End Fee 31,250 31, % No change Total 12,500,000 12,500,000 Table 5. Revised Disbursement Table for Sichuan Province Component (2) With respect to Sichuan Province: (a) Goods, works and consultants services under Part A: Safe Water Supply Allocation (US$) % of Financing Current Revised Current Revised 7,051,750 9,572,750 35% 70% (b) Goods, works and consultants services under Part B of the Project (excluding Household Subsidies) 343, ,860 35% 70% (c) Household Subsidies under Part B of the Project (d) Goods, wors, non-consulting services, consultants services, workshops and training under Part C: Hygiene Promotion (e) Goods and consultants services under Part D: Institutional Strengthening and Development (f) Workshops and training under Part D: Institutional Strengthening and Development 3,243,500 1,653,250 50% of Household Subsidies paid 100% 959, ,310 50% 100% 437, ,360 50% 100% 433, ,220 50% 100% Front-End Fee 31,250 31, % No change Total 12,500,000 12,500,000 10

11 Core ANNEX 1: Results Framework and Monitoring CHINA: WESTERN PROVINCES RURAL WATER SUPPLY, SANITATION AND HYGIENE PROMOTION PROJECT PDO Level Results Indicators* Indicator One: Increase in number of people with access to safe water supply D=Dropped C=Continue N= New R=Revised Unit of Measure Baseline YR 1 YR 2 R Number 0 0 Shaanxi: 49,282 Sichuan: 75,113 Cumulative Target Values** YR 3 Mid-Term Review Shaanxi: 146,005; Sichuan: 127,536 YR 4 YR5 (end target) Shaanxi: 326,716 [No Change]; Sichuan: 258,000 Responsibility for Data Collection Indicator Two: Increase in percentage of people in project communities and schools who have adopted safe hygiene and sanitation behaviors Indicator Three: Increase in number of schools with access to safe water supply Indicator Four: Increase in number of people with access to improved sanitation services Indicator Five: Increase in number of schools with access to improved sanitation services Indicator Six: Percentage of water supply schemes operating sustainably after one year3 R Percent 0 0 Shaanxi: 15% Sichuan: 0% R Number 0 0 Shaanxi: 13 Sichuan: 16 R Number 0 0 Shaanxi: 12,960 Sichuan: 9,228 R Number 0 0 Shaanxi: 0 Sichuan: 6 Unknown Shaanxi: 70% Sichuan: 60% Shaanxi: 46; Sichuan: 57 Shaanxi: 59,755 Sichuan: 83,678 Shaanxi: 0 Sichuan: 57 C Number Most schemes operating but less than one year Shaanxi: 124; Sichuan: 57 Shaanxi: 78,705; Sichuan: 121,800 Shaanxi: 41; Sichuan: % [No Change]

12 Core Intermediate Outcome Indicators* D=Dropped C=Continue N= New R=Revised Unit of Measure Baseline Indicator One: Access to and use of safe water supply in participating communities Cumulative Target Values** YR 1 YR 2 YR 3 Mid-Term Review YR 4 YR5 (end target) Responsibility for Data Collection (a) Increase in percentage of households using safe water supply in participating communities (b) Average time saved by households in obtaining safe drinking water (c) Percentage of water supply systems meeting the tariff covenant after the first year of operations (d) Percentage of water supply systems meeting its full design supply capacity two years after construction completion. (e) Percentage of Water Quality Certification of water supply scheme done on time. C 0 0 Shaanxi: 16.7% Sichuan: 15% C 0 0 Shaanxi: No data Sichuan: 15 min Shaanxi: 45% Sichuan: 27% Shaanxi: No data Sichuan: 20 min C Most schemes operating but less than one year C Most schemes operating but less than one year C Most schemes still under commissioning, not yet hand over to operator for operation Indicator Two: Access to and use of improved sanitation services in participating communities. 100% [No Change] [No Change] 100% [No Change] 45% [No Change] 100% [No Change] (a) Increase in percentage of R 0 0 Shaanxi: 6.42% households with improved latrines Sichuan: 6% (b) Increase in percentage of schools R 0 0 Shaanxi: 0% in project areas with improved Sichuan: 7% latrines, hand washing facilities, soak-away systems and garbage drop-off points. (c) Number of community garbage R drop-off points and public latrines sustainably managed by communities Indicator Three: Access and use of improved hygiene services in participating communities Shaanxi: 16% Sichuan: 15% Shaanxi: 0% Sichuan: 38% Shaanxi: 7 Sichuan: 19 Shaanxi: 21.4% Sichuan: 50% Shaanxi: 33% Sichuan: 50% Shaanxi: 671 Sichuan: 258 (a) Increase in percentage of school children hand washing with soap N Shaanxi: 17% Sichuan: 25% Shaanxi: 30% Sichuan: 45% 12

13 (HWWS) after toilet use (b) Increase in percentages of community HWWS at 5 key occasions N (c) Increase in percentage of N household disposal of the Feces of young child in a safe manner Indicator Four: Access and use of improved hygiene services in participating communities Shaanxi: 8% Sichuan: 16% Shaanxi: 48% Sichuan: 60% Shaanxi: 20% Sichuan: 30% Shaanxi: 70% Sichuan: 80% (a) Proportion of vulnerable households receiving and using safe water supply service (b) Proportion of vulnerable households receiving and using improved sanitation services (c) Number of WASH Committees established by following principles and requirements set out by the project (d) Percentage of vulnerable households and women representatives in executive committee of WASH Committee (e) Number of WASH Committee members and percentage of women participating in training for capacity building (f) Number of WASH Committee managed Single Village and Cluster household Water Supply Schemes working sustainably (g) Number of meetings of WASH Committees (h) Percent of spot-checks of schemes in which community needs have been satisfactorily reflected in project planning. C 0 0 R 0 0 C 0 0 C 0 0 R 0 0 R 0 0 R 0 0 R 0 0 Shaanxi: 15% Sichuan: 12% Shaanxi: 6.42% Sichuan: 7% Shaanxi: 273 Sichuan: 33% Shaanxi: 20% Sichuan: 29% Shaanxi: 1540/20% Sichuan: 660/ Unknown Shaanxi: 0 Sichuan: 0 Shaanxi: 206 Sichuan: 206 Shaanxi: 20% Sichuan: Unknown Shaanxi: 44% Sichuan: 24% Shaanxi: 16% Sichuan: 22% Shaanxi: 282 Sichuan: 34% Shaanxi: 20% Sichuan: 15% Shaanxi: 1540/20% Sichuan: 660/ Unknown Shaanxi: 132 Sichuan: 24 Shaanxi: 312 Sichuan: 471 Shaanxi: 85% Sichuan: 60% 100% [No Change] Shaanxi: 100% Sichuan: 60% 100% [No Change] 20% [No Change] Shaanxi: 1540/26% Sichuan: 824/20% Shaanxi: 140 Sichuan: 55 Shaanxi: 468 Sichuan: 618 Shaanxi: 90% Sichuan: 80% 13