FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MUNICIPAL SERVICES PROJECT LOAN 7885-TU

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Social, Urban Rural and Resilience (GSURR) Europe and Central Asia Region Document of The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MUNICIPAL SERVICES PROJECT LOAN 7885-TU APPROVED BY THE BOARD ON MAY 6, 2010 TO THE REPUBLIC OF TURKEY DECEMBER 19, 2014 Report No: RES16218 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. 1

2 ABBREVIATIONS AND ACRONYMS AF ASAT ASKI DESKI IBRD ECA ICR ILBANK ISKI MESKI MOEU MSP PDO RF TL Additional Financing Antalya Water and Wastewater Administration Ankara Water and Wastewater Administration Denizli Water and Wastewater Administration International Bank for Reconstruction and Development Europe and Central Asia region Implementation Completion and Results Report Iller Bankasi Anonim Sirketi Istanbul Water and Wastewater Administration Mersin Water and Wastewater Administration Ministry of Environment and Urbanization Municipal Services Project Project Development Objective Results Framework Turkish Lira Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leader: Laura Tuck, ECAVP Martin Raiser, ECCU6 Ede Jorge Ijjasz-Vasquez, GSURR Sumila Gulyani, GSURR Elif Ayhan, GSURR 2

3 TURKEY MUNICIPAL SERVICES PROJECT CONTENTS A. SUMMARY page 5 B. PROJECT STATUS page 6 C. PROPOSED CHANGES page 7 ANNEX 1. RESULTS FRAMEWORK AND MONITORING page 10 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK page 16 3

4 DATA SHEET Turkey Municipal Services Project (P081880) EUROPE AND CENTRAL ASIA Report No: RES16218 Basic Information Project ID: P Lending Instrument: Specific Investment Loan Regional Vice President: Laura Tuck Original EA Category: Financial Intermediary Assessment (F) Country Director: Martin Raiser Current EA Category: Financial Intermediary Assessment (F) Senior Global Practice Director: Practice Manager/Manager: Team Leader: Ede Jorge Ijjasz-Vasquez Original Approval Date: 23-Jun-2005 Sumila Gulyani Current Closing Date: 31-Dec-2014 Elif Ayhan Borrower: Responsible Agency: ILLER BANKASI ANONIM SIRKETI Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Country Director Approval Restructuring Level: Level 2 Financing ( as of 11-Dec-2014 ) Key Dates Project Ln/Cr/TF Status Approval Date Signing Date 4 Effectiveness Date Original Closing Date Revised Closing Date P IBRD Closed 23-Jun Feb May Jun Dec-2012 P IBRD Effective 06-May Jun Jul Dec Dec-2014 Disbursements (in Millions) Project Ln/Cr/TF Status Currency Original Revised Cancelle d Disburse d Undisbur sed % Disbursed P IBRD Closed USD P IBRD Effective USD

5 Policy Waivers Does the project depart from the CAS in content or in other significant respects? 5 Yes [ ] No [ X ] Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes This restructuring paper seeks the approval of the Country Director for the following changes to the Project: a) extending the Additional Financing (AF) loan closing date until November 30, 2016; b) revising the Results Framework to reflect cancellation of Istanbul Water and Wastewater Administration (ISKI) sub-project and reallocation of the corresponding amount to Denizli Water and Wastewater Administration (DESKI), as well as update intermediate targets for the extended Project implementation period; and c) update thresholds for National Competitive Bidding (NCB) procedures in the procurement plans of municipalities with ongoing project activities to align with the country parameters. These changes were requested by the Borrower though Iller Bankasi Anonim Sirketi (ILBANK) letters dated June 25, 2014 and August 22, 2014, and were confirmed by Undersecretariat of Treasury, the Guarantor, through a letter dated December 3, This is the sixth restructuring of the Project and the first extension of the AF. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] 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 [ ] No [ X ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ ] No [ X ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ X ] No [ ] 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 ]

6 Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] B. Project Status The Municipal Services Project (MSP) original loan (7312-TU) in the amount of million (US$275 million equivalent) was approved by the Board on June 23, 2005 and became effective on May 18, On May 6, 2010 the Board approved an AF for MSP (7885-TU) in the amount of million (US$240 million equivalent) which became effective on July 26, The Project development objective, which is to support sustainable environmental services in selected municipalities, remains unchanged. The original Project scope included eleven municipalities/utilities, and the AF added three new participating municipalities and one municipal utilities company, as well as a scaling up of activities in three of the original eleven municipalities. The Project has undergone five restructurings: 1) in November 2009 to extend the original loan closing date for 18 months until December 31, 2011; 2) in May 2010 to process the AF loan and update the Project s results framework respectively to reflect the AF results; 3) in May 2012 to introduce an Omnibus Amendment on cross-debarment provisions approved by the World Bank s Board of Executive Directors; 4) in December 2011 to further extend the original loan closing date to December 31, 2012 along with reallocation of funds within the AF loan, revision of the Project s Results Framework, and updating the legal name of the implementing institution; and 5) in December 2012 to reallocate funds between the loan categories, cancel unused amounts from the original loan proceeds and introduce a grace period for disbursements under the original loan. The Project implementation is rated as moderately satisfactory, albeit with some delays, and the Project is expected to meet its Development Objective by the proposed extended closing date. There are no outstanding audits for this Project. All audit and financial management were received on time and found acceptable to the Bank. Procurement is rated as moderately unsatisfactory and the safeguards rating is satisfactory. The original MSP loan was closed on December 31, 2012 with million (97% of the total loan amount) disbursed and all sub-borrowing municipalities successfully completed their major investment items as foreseen in a total duration of 6.5 years. Disbursements under the AF loan have reached 57.5 million (32.3% of the total amount) as of end November The planned implementation period for the AF was 3 years. However, the AF is experiencing delays in implementation for several reasons. First, the AF included investments in new municipalities that were unfamiliar with implementation of Bank-financed projects. It also included new investment packages for municipalities financed under the original loan. Consequently, the planned implementation period of three years was not sufficient to complete the proposed sub-projects. The proposed extension would allow sub-borrowers to complete ongoing investments using loan proceeds. A more detailed update on each sub-project and respective work plans is attached as supporting documentation to the Restructuring Paper. Second, one of the largest sub-borrowers -- Istanbul Water and Wastewater Administration (ISKI) withdrew from the project in November 2012 and 39.5 million (22% of the total AF loan amount) had to be reallocated from the ISKI subloan. After considering several other options, it has now been reallocated to DESKI, which sought additional financing to support its transition to a metropolitan municipality following elections of March The planned investments at Denizli will be completed by the proposed closing date. 6

7 Third, municipal elections of March 2014 and the creation of 14 new metropolitan municipalities soon thereafter also caused delays in implementation. The Metropolitan Municipality Law no.6360 of November 2012 called for the establishment of 14 new metropolitan municipalities with significantly expanded boundaries, after local elections of March In addition the jurisdiction area of the existing 16 has also been expanded to match the provincial boundaries. Several municipalities that are part of MSP were affected by this change. Mugla and Denizli were transformed into metropolitan municipalities; and the district municipalities of Polatli, Odemis, Bergama, Ilica, Elbistan and Beypazari were merged into existing or new metropolitan municipalities, which then had to assume the tasks, responsibilities, assets and debts of these district or city municipalities. This transition process has gone smoothly in most cases; but there is one incident that remains unresolved as of today. The Ankara Water and Wastewater Administration (ASKI) has not yet accepted the transfer of the ongoing consulting service and works contracts signed by Beypazari Municipality under MSP. The issue is currently under court jurisdiction. If the court decides in favor of honoring the contract, then the proposed Project extension would provide sufficient time for the completion of work in Beypazari; otherwise a further project restructuring may be required to cancel this amount. C. Proposed Changes Project Development Objectives Original PDO Development Objectives/Results The objective of the Project is to support sustainable environmental services in selected municipalities. Change in Project's Development Objectives Change in Results Framework Explanation: The Results Framework of the Project is revised so as to reflect cancellation of ISKI sub-project and reallocation of the corresponding amount to DESKI, and to update intermediate targets for the extended Project implementation period. In addition baselines, intermediate targets and end of project targets for all sub-borrowers are uploaded in the system without revision to the respective indicators. Change in Loan Closing Date(s) Explanation: Financing The MSP Closing Date is proposed to be extended by twenty-three months until November 30, The extension is required to complete all ongoing investments planned under the AF. Originally the AF was scheduled to be implemented within a three year period, in line with the Bank s policy at the time of the AF approval. However, AF implementation is experiencing delays, as the investment items under the AF are either being implemented by new municipalities with no prior experience in applying World Bank procedures, or have been affected by legal and regulatory changes that have impacted municipal legal structures. In addition, 39.5 million (22% of the total AF loan amount) had to be reallocated from the ISKI sub-loan and programmed by DESKI, which sought additional financing to support its transition to a metropolitan municipality following elections of March 2014, expanded its municipal service area. Several other MSP AF sub-borrowers such as MESKI and Kirsehir also need more time to complete ongoing infrastructure investments and 7

8 would benefit from the extended Project duration. On this basis, the Project Implementing Agency, ILBANK, has requested the extension of the AF loan. Ln/Cr/T F IBRD IBRD Status Original Closing Date Current Closing Date 8 Proposed Closing Date Closed 30-Jun Dec Jun-2010 Previous Closing Date(s) Effective 31-Dec Dec Nov Dec-2014 Disbursement Estimates Change in Disbursement Estimates Explanation: The disbursement estimates are revised to reflect the extended Project closing date. Fiscal Year Current (USD) Proposed (USD) ,363, ,363, ,186, ,186, ,944, ,944, ,492, ,492, ,247, ,513, ,000, ,068, ,765, ,956, ,000, ,476, ,000, ,632, ,000, ,365, Change in Procurement Explanation: Total 515,000, ,000, Other Change(s) The thresholds for National Competitive Bidding (NCB) procedures are proposed to be increased up to US$20 million for Works and US$2 million for Goods in the respective procurement plans of the municipalities that have ongoing activities. This measure aligns MSP procurement procedures with the rest of the Turkey portfolio and is consistent with the ECA Regional Procurement Thresholds updated as of January 2, These changes are expected to reduce transactions costs and facilitate project implementation. Change in Implementation Schedule Explanation:

9 The implementation schedule is revised to reflect the reallocation of funds from ISKI to DESKI and extension of the project closing date. The updated implementation schedule is presented as part of the revised procurement plan attached to this Restructuring Paper. 9

10 Annex 1 Results Framework and Monitoring Turkey: Municipal Services Project (P081880) Sub-Projects (g) Target 2015 Target 2016 Frequency and Reports Data Collection Instruments Responsibility for Data Collection Project Outcome Indicators Percentage of NRW over the supply area of the municipal government/ municipal water company (%). Total annual BOD load reduction from municipal wastewater in the participating municipalities (tonnes/year). Amount of waste safely disposed in rehabilitated solid waste landfills (tonnes/year). POLATLI MESKI - I ODEMIS MUGLA KUTAHYA DENIZLI DENIZLI DENIZLI - 2 (DESKI) (5) ILICA ELBISTAN KIRSEHIR ASAT ASAT-2 (6) ODEMIS ,170 MUGLA BEYPAZARI ASAT (c ) 9,056 10,840 16,016 18,529 18,524 GELIBOLU (1) BERGAMA (2) KAYSERİ ,457 9, ,000 7,000 36, ,718 10

11 11 Annex 1 Results Framework and Monitoring Turkey: Municipal Services Project (P081880) Sub-Projects (g) Target 2015 Target 2016 Frequency and Reports Data Collection Instruments Responsibility for Data Collection Financial Working Ratio of municipalities/municipal companies. Percentage of projects financed by Iller Bank that are implemented by municipalities or municipal companies (measured as % of total disbursements) (b) POLATLI MESKI MESKI - 2 (6) GELIBOLU ODEMIS MUGLA BERGAMA KUTAHYA DENIZLI DENIZLI - 2 (6) DENIZLI 2 - (DESKI) (5) ILICA ELBISTAN ASAT ASAT -2 (6) BEYPAZARI KAYSERİ KIRŞEHİR

12 12 Annex 1 Results Framework and Monitoring Turkey: Municipal Services Project (P081880) Sub-Projects (g) Target 2015 Target 2016 Frequency and Reports Data Collection Instruments Responsibility for Data Collection Intermediate Outcome Indicators Component 1: Municipal Development POLATLI ,500 MESKI 0 350, , , ,000 MUGLA 0 5,200 11,000 13,200 15,820 KUTAHYA 0 70, , , ,000 Number of new population served by expanded water supply service (#). DENIZLI 0 235, , , ,189 DENIZLI , , ,000 DENIZLI - 2 (6) (5) (DESKI) , , ,100 ILICA 0 4,000 4,300 4,400 4,500 Percentage of population served by sewerage collection network in participating municipalities (%) ELBISTAN (f) 78,000 83,000 88,895 92,386 95,037 ASAT 843,641 1,000,081 1,040,935 1,082,314 1,073,794 (6) (f) - 1,000,081-1,082,314-1,116,745 1,180,000 1,223,928 ASAT - 2 (f) - 100, , , ,000 KIRŞEHİR MUGLA MESKI DENIZLI - I DENIZLI DENIZLI - 2 (5) (DESKI) ILICA ASAT ASAT

13 13 Annex 1 Results Framework and Monitoring Turkey: Municipal Services Project (P081880) Sub-Projects (g) Target 2015 Target 2016 Frequency and Reports Data Collection Instruments Responsibility for Data Collection Percentage of population served MUGLA by wastewater treatment to required standards in ASAT - I ÖDEMİŞ participating municipalities (%) BEYPAZARI Constructed capacity of landfills (tonnes) GELIBOLU (d) , ,700 BERGAMA , ,000 KAYSERİ ,639,487 2,639,487 Component 2: Municipal Technical Assistance (f) Number of Operational Plans completed POLATLI MESKI MESKI GELIBOLU ODEMIS MUGLA BERGAMA KUTAHYA DENIZLI DENIZLI DENIZLI - 2 (DESKI) (5) ILICA ELBISTAN ASAT (e) ASAT BEYPAZARI KAYSERİ KIRŞEHİR

14 14 Annex 1 Results Framework and Monitoring Turkey: Municipal Services Project (P081880) Sub-Projects (g) Target 2015 Target 2016 Frequency and Reports Data Collection Instruments Responsibility for Data Collection Number of man-days of training for Municipal staff (#). POLATLI MESKI MESKI GELIBOLU ODEMIS MUGLA BERGAMA KUTAHYA DENIZLI ILICA ELBISTAN ASAT ASAT - 2 (6) BEYPAZARI KAYSERİ 0 KIRŞEHİR 0 Component 3: Iller Bank Institutional Strengthening Successful and on-time completion of annual project audits (Y/N). Number of man-days of training for staff (#). Core Sector Indicators/ Cumulative Indicators for the Project Number of people in urban areas provided with access to Improved Water Sources under the project Number of people in urban areas provided with access to Improved Sanitation under the project Industrial and municipal waste disposal capacity created under the project (tons) N/A Y Y Y Y ,724 1,847, ,391,857 2,965, ,775 1,100, ,488,130 2,168, , , , ,700 3,418,187

15 Annex 1 Results Framework and Monitoring Turkey: Municipal Services Project (P081880) R: Rehabilitation N: New network (a) Population of 2006: To be rehabilitated; Population of 2009: Rehabilitation plus New network; Population of 2012: Rehabilitation plus New network (b) This indicator measures Iller Bank s transformation from an agency that directly financed and implemented projects, to one that appraises and finances projects proposed and implemented by municipalities (c) Lara WWTP financed by IB was put into operation in 2007 (BOD removed = 1784 t/yr) (d) Lot 2: Only excavation was conducted. Lot 1: Commissioned (e) ASAT is forecasted only sectoral (Drinking Water and Waste Water) (f) The Project is not only new construction, it also covers rehabilitation of the existing network. Therefore, the baseline figure is not zero. (g) This list includes the sub-projects under the Original Loan and the Additional Loan and 2009 figures are the baseline for the Original Loan and the Additional Loan, respectively. (1) Since the waste coming from the surrounding towns have not been collected, the value of 2012 is smaller than the target value. (2) Because of the waste collected from surrounding towns, the value of 2012 is higher than the target value. (3) The value of 2012 is not relevant with target value. The reason for this, this value of 2012 represents the population served under the scope of MSP, whereas the other values represent projected population planned to be serviced. (4) The value of 2011 seems to be higher than the value of The reason for this is for the year before 2012 the population is taken from the feasibility report, whereas for 2012 TUIK's population value is used. (5) With the latest amendment of the Metropolitan Municipalities Law, Denizli Municipality became Metropolitan Municipality and its service area expanded to include entire provincial border. DESKI (Denizli Water and Sewerage Administration) was established in May 2014 as the authority responsible for water and wastewater management in Denizli Metropolitan Municipality. After these changes, the indicators for Denizli has been re-estimated according to the new service area of DESKI. (6) ASAT, Mersin and Denizli municipalities are sub-borrowers both under the Original Loan and the Additional Loan. However, the sub-projects have different scopes and therefore, different figures were estimated for the same indicators. Iller Bank will check with these municipalities to provide a more detailed justification for the differences. 15

16 Annex 2 Operational Risk Assessment Framework (ORAF) Turkey: Municipal services project (P081880) Project Stakeholder Risks Stakeholder Risk Rating Moderate Risk Description: The key stakeholders are Iller Bankasi Anonim Sirketi (ILBANK), Ministry of Environment and Urbanization and sub-borrowing municipalities. ILBANK should be able to monitor and communicate how this project improves municipal service delivery, ILBANK's own capacity and people's lives. Although results can be observed through detailed indicators, a more comprehensive impact assessment is needed. If the final benefits of the Project for people living in target areas are not well communicated, stakeholders may withdraw support. This is also very important to sustain ownership and commitment at the municipal level considering that the new Mayors and municipal staff are in place following the local elections in March Implementing Agency (IA) Risks (including Fiduciary Risks) The original loan was closed on December 31, As there was Additional Financing (AF) loan processed, Implementation Completion and Results Report (ICR) for the Project is due after the AF closing. However collecting assessing and analyzing information and data from the municipalities under the original loan will be duly arranged without waiting for the due date of the ICR. Client In Progress Implementation Yearly Capacity Rating Substantial Risk Description: ILBANK continues to fulfill its fiduciary and reporting responsibilities as defined under the Loan Agreements, Project Appraisal Documents and Operational manual of MSP. However, contracts for procurement, financial management and technical The Bank provides external consultancy support to ILBANK if needed for better analyzing and evaluating the results achieved. Bank In Progress Implementation Yearly The Bank team is closely following up on the developments and will present an assessment of the situation as part of each implementation support mission to the Bank management as well as ILBANK management and Turkish Treasury. 16

17 specialists who worked at ILBANK as individual consultants since the beginning of the Project were terminated by the end of February ILBANK has decided to continue without support from individual consultants but rather rearrange responsibilities among existing staff. Annex 2 Operational Risk Assessment Framework (ORAF) Turkey: Municipal services project (P081880) Governance Rating Moderate Risk Description: ILBANK has enjoyed a period of consistency in organizational scheme and stability in management since the Project beginning. However, in early 201, its status was changed and a reform agenda was put in place for positioning ILBANK as an investment and development bank more than a government agency just transferring central funds to local administrations. By mid-2011, in line with the broader institutional restructuring among various line ministries, ILBANK has started to report to the recently established Ministry of Environment and Urbanization. Both of these developments have caused a series changes in the organizational structure and staffing of ILBANK over the last few years which seems to be settled down lately. Bank In Progress Implementation Quarterly International Relations Department and the inside the department will continue its efforts to brief the top management and the Executive Board of ILBANK about the legal agreements signed with the Bank and the operational manuals of the Project. Client In Progress Implementation Quarterly The Bank team will continue to closely follow up on the changes and inform the new managers of ILBANK about the Banks fiduciary and safeguards requirements as well as overall project development objectives and key issues related with implementation. Bank In Progress Implementation Quarterly The mechanisms of audit and monitoring employed in the framework of the Project will continue to ensure the due processes and diligence in the implementation as designed. Both In Progress Implementation Yearly 17

18 Project Risks Annex 2 Operational Risk Assessment Framework (ORAF) Turkey: Municipal services project (P081880) Design Rating Substantial Risk Description: The Project is governed by two legal agreements, one for the original loan (7312-TU) and another for the additional loan (7885-TU). The additional loan provides funding for similar type of investments in a second set of municipalities some of which were also part of the original loan. Since the beginning of the Additional Financing (AF), it has been communicated very clearly to ILBANK and the municipalities that the existed Bank policy does not allow AF loans to be extended and their implementation period could not exceed 3 years. However infrastructure projects are susceptible to delays and municipalities may face risks in completing planned investments on time, and that caused risks to the AF implementation. With updates to the Bank policies of April 2014, the duration of the AF projects is not limited by 3 years anymore and it is possible to extend the AF loan, if needed and requested by the Borrower. The Bank team follows very closely the implementation progress and organizes site visits with ILBANK to speed up the implementation where needed. The Bank procurement specialist is also closely working with ILBANK and municipalities in the course of preparation of the bidding documents, so that to ensure that the procurement procedures are completed as fast as possible. Both In Progress Implementation Quarterly Social and Environmental Rating Moderate Risk Description: The Project triggers the Safeguard Policies on the Environmental Assessment (OP 4.01), Involuntary Resettlement (OP 4.12) and Projects on International Waterways (OP 7.5). There is a risk that the municipalities and contractors may fail to adhere to Bank Safeguards Policies. ILBANK has requested a restructuring to include a recently identified sub-project and to reallocate the 22% and to extend the AF loan closing date for 23 months till November 30, 2016, to which the Bank has agreed. Client In Progress Implementation 31-Dec-2014 The Bank reviews preliminary list of the investments to be financed by the loan to screen them vis a vis Bank policies. Overall the compliance with environmental and social safeguards is satisfactory. During the implementation, Project will be monitored against the requirements and standards stipulated in the safeguards policies by an field based core team and safeguards specialists. Both In Progress Implementation Yearly 18

19 Annex 2 Operational Risk Assessment Framework (ORAF) Turkey: Municipal services project (P081880) Program and Donor Rating Low Risk Description: Besides MSP, ILBANK has started to implement two other internationally funded projects - one with EIB and the other one with JICA. These efforts or newly started project does not create a risk to the ongoing MSP activities, but effects ILBANK capacity to cooperate with the Bank to design future projects. Delivery Monitoring and Sustainability Rating Substantial Risk Description: ILBANK is good at contracts monitoring, but its capacity in overall evaluation of the projects results, consideration of future impact and sustainability of project activities and better communicating the results achieved is not that good. This is especially important at the stage when the original loan was closed, even though ICR for the Project wıll be prepared after the closing of the AF operation. Thus, it creates several years gaps with regard to a moment when it comes to data collection and evaluation of the results achieved under the original loan. This creates a risk of not having enough detailed information at the time of the ICR preparation. Unlike the situation before reorganization, Ministry of Environment and Urbanization has a great interest in providing support to its affiliated institutions such as ILBANK. In order to alleviate any possible negative impact of handling the work load of cooperation with various donors on the ILBANK, the Bank team works with the officials of the Ministry in addition to ILBANK for preparations of future projects. Both In Progress Implementation Yearly The Bank team agreed with ILBANK to work together on better recording and reporting the results achieved under the Project. Efforts will include incorporating core sector indicators that monitors the number of people benefited from improved municipal services, preparing results stories for each of the participating municipalities and preparing a more comprehensive progress report for the original loan. The team may provide external consulting support to ILBANK to achieve this. Both In Progress Implementation Quarterly Good practices gained in implementing the above action will be applied to the regular reporting under the AF. Client In Progress Implementation Quarterly 19

20 Overall Risk Annex 2 Operational Risk Assessment Framework (ORAF) Turkey: Municipal services project (P081880) Overall Implementation Risk: Rating Substantial Risk Description: Recent municipal reforms and local elections have affected the Project like any project that deals with the municipal sector. CPS for FY12-16 has provided a good basis to manage this risk with a strong emphasis on the urbanization and municipal agenda and with planned investments at the municipal level. Looking from the MSP's perspective, the risk of municipalities not completing the planned investments till December 31, 2014 has materialized and the Bank agreed to extend the AF closing date. At the moment the work program and the measures put in place satisfy the proposed extended closing date for all Project activities except for the uncertainty related with Beypazari sub-project. The Bank team will provide close implementation support to ILBANK and to the participating municipalities to make sure that the agreed action plan is implemented. ILBANK will closely follow the ongoing court case related with Beypazari sub-project and inform the Bank if the time left is not enough to complete the investments under Beypazari sub-project at any stage. 20