Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES16034 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF INTEGRATED SANITATION AND SEWERAGE INFRASTRUCTURE PROJECT TO THE ARAB REPUBLIC OF EGYPT September 30, 2014 Water Global Practice Middle East and North Africa 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. ABBREVIATIONS AND ACRONYMS HCWW Holding Company for Water and Wastewater IP Implementation Progress ISR Implementation Status Results report ISSIP Integrated Sanitation and Sewerage Infrastructure Project JSDF Japan Social Development Fund MU Moderately Unsatisfactory NOPWASD National Organization for Potable Water and Sanitary Drainage PDO Project Development Objective PIU Project Implementation Unit Regional Vice President: Inger Anderson Country Director: Hartwig Schafer Senior Global Practice Director: Junaid Kamal Ahmad Practice Manager: Steven N. Schonberger Task Team Leader: Yoshiharu Kobayashi THE ARAB REPUBLIC OF EGYPT INTEGRATED SANITATION AND SEWERAGE INFRASTRUCTURE PROJECT CONTENTS Page Data Sheet 1 A. SUMMARY 3 B. PROJECT STATUS 3 C. PROPOSED CHANGES 3 DATA SHEET Egypt, Arab Republic of Integrated Sanitation& Sewerage Infrastructure Project (P094311) MIDDLE EAST AND NORTH AFRICA 0000009087 . Report No: RES16034 . Basic Information Project ID: P094311 Lending Instrument: Specific Investment Loan Regional Vice Inger Andersen Original EA Category: Partial Assessment (B) President: Country Director: Hartwig Schafer Current EA Category: Partial Assessment (B) Senior Global Practice Junaid Kamal Ahmad Original Approval Date: 20-Mar-2008 Director: Practice Manager: Steven N. Schonberger Current Closing Date: 31-Dec-2015 Team Leader: Yoshiharu Kobayashi . Borrower: Government of Egypt, Ministry of International Cooperation Responsible National Organization for Potable Water and Sanitary Drainage (NOPWASD), Agency: Holding Company for Water and Wastewater (HCWW) . Restructuring Type Form Type: Decision Country Director Approval Short Form Authority: Restructuring Level 2 Level: . Financing ( as of 21-Jul-2014 ) Key Dates Approval Effectivenes Original Revised Project Ln/Cr/TF Status Signing Date Date s Date Closing Date Closing Date P094311 IBRD-75120 Effective 20-Mar-2008 15-May-2008 22-Jan-2009 30-Jun-2014 31-Dec-2015 P094311 TF-95516 Effective 03-Aug-2010 05-Aug-2010 05-Aug-2010 30-Jun-2014 31-Dec-2015 Disbursements (in Millions) Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P094311 IBRD-75120 Effective USD 120.00 120.00 0.00 28.19 91.81 23 P094311 TF-95516 Effective USD 2.91 2.91 0.00 0.27 2.64 9 . 1 Policy Waivers Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] . A. Summary of Proposed Changes The proposed restructuring is to increase Bank's financing percentage from 67% to 100% to help the Government finalize the remaining works considering its current constrained financial situation. . B. Project Status The current progress of the project is slow in terms of disbursement rate. However, most of Phase I contracts have been completed and are ready for commissioning and most of Phase II contracts amounting to US$50 have already been awarded. Although all the Phase II contacts may not be completed by the loan closing date of December 31, 2015, the Government committed to complete the remaining works by its own budget (Government letter dated July 8, 2014). . C. Proposed Changes Financing Change in Loan Financing Percentages: Explanation The Bank financing needs to be increased from 67% to 100% to enable the implementing agency to have sufficient Government budget available to complete the remaining works after the loan closing date of December 31, 2015. This is necessary because (i) the Bank decided not to extend the loan closing date and (ii) some of the contracts may not be completed by the loan closing date and need to be financed 100% by the Government after the loan closing date. 2 INTEGRATED SANITATION AND SEWERAGE INFRASTRUCTURE PROJECT RESTRUCTURING PAPER A. SUMMARY 1. Pursuant to a request from the Arab Republic of Egypt (Borrower) dated July 8, 2014, as a result of substantial delays in project implementation, the Borrower has requested to restructure the Integrated Sanitation and Sewerage Infrastructure Project (ISSIP) by increasing Bank financing percentage from 67% to 100%. 2. The project objective will remain unchanged. The proposed changes will neither trigger any new safeguards policy nor change the safeguards category for the project. B. PROJECT STATUS 3. The development objective of the project is to contribute to the sustainable improvement in: (i) sanitation and environmental conditions for the resident communities and (ii) the water quality in the selected drainage basins within the served areas. The June 2014 implementation status results report (ISR) rated the progress towards project development objective (PDO) of ISSIP as moderately unsatisfactory (MU) and its Implementation Progress (IP) as MU. The implementation of the ISSIP is considerably behind schedule because of significant delays in implementation of Phase I schemes caused by disruptions during Arab Spring from January 2011 to June 2014 and local objections as well as delays in land acquisition. The latest audit reports of the project are up to date and deemed satisfactory. C. PROPOSED CHANGES  Increase in Bank Financing Percentage 4. It is proposed that Bank financing percentage for Category 1, works of the ISSIP be increased from 67% to 100%.  Disbursement Projection 5. Table below provides the disbursement plan for the restructured project. FY 2014 2015 Till Q4 Q1 Q2 Q3 Q4 30/09/2014 Annual 26.77 10.14 17.62 23.72 21.57 20.18 Cumulative 26.77 36.91 54.53 78.25 99.82 120.00 6. The Government sent a letter to the Bank committing to cover all the remaining costs for completing any schemes under the ISSIP after the loan closing date of December 31, 2015. 3