Document of
                The World Bank


                                                 Report No: 90737 v1




             RESTRUCTURING PAPER

                     ON A

       PROPOSED PROJECT RESTRUCTURING
                       OF
               PROVINCE OF SINDH
SINDH WATER SECTOR IMPROVEMENT PHASE-I PROJECT
                 IDA CREDIT 4358
    BOARD APPROVAL DATE: SEPTEMBER 18, 2007


                    TO THE

         ISLAMIC REPUBLIC OF PAKISTAN



                September 3, 2012
 Regional Vice President:    Isabel M. Guerrero
        Country Director:    Rachid Benmessaoud
Sector Manager / Director:   Simeon K. Ehui/John H. Stein
       Task Team Leader:     Masood Ahmad




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                               PAKISTAN
         SINDH WATER SECTOR IMPROVEMENT PHASE-I PROJECT (P084302)
                             IDA CREDIT 4358

                                      Restructuring Paper

1.    This Restructuring Paper seeks the approval of the Country Director for an extension in the
closing date for the Pakistan: Sindh Water Sector Improvement Project, IDA Credit 4358,
P084302, from April 30, 2013 to February 28, 2015.

2.    At the inception, the Project encountered several delays in implementation primarily due to
extra-ordinary ring fencing to guard against governance and contract implementation issues, and
the political and security situation in the country prevailing at that time. The extra ring fencing
was done for this Project based on previous issues in Sindh during National Drainage Program to
ensure that higher standards of governance are applied in procurement and management under
this Project. In particular, the Project has a Project Management Consultants/Agent (PMCA) for
recruitment of all consultants under the project and staff of the implementing agency i.e. Sindh
Irrigation and Drainage Authority (SIDA) including the MD SIDA and the Project Director and
staff of Project Coordination and Management Unit – both implementation consultants and the
staff was necessary to start-up the project activities. FAO was selected as the PMCA for this
Project. It took some time to execute a contract with FAO because of difference in procurement
guidelines of FAO and the World Bank resulting in obtaining an exception. Later, the overall
political instability and security condition in the country and the subsequent change in
government exacerbated the slow performance. Mobilization of the PMCA was also delayed due
to the security issues prevailing at the time. Once the PMCA was fully mobilized, the selection
of consultants and staff etc. was completed without further delay. However, by this stage there
was a considerable implementation lag and while some of the time lost was adjusted within the
revised Project Implementation Plan, the overall complexity of civil works and spread of
activities over a vast area in Sindh as well as the related irrigation reforms program made the
overall implementation progress to be an exceptional task within the original Project duration.
The Project implementation is now on track and accelerating.

3.    However, the 2010 national floods and the 2011 floods in Sindh have become recent
externalities that have impacted the overall Project implementation since most of the civil works
are located in the rains/floods affected areas of the province. During these floods, the SIDA staff
remained involved in evacuation of water which took about six months. Also some the Project
sites remained inaccessible for continuing the civil works. As a result of shifting timelines, the
Government of Sindh through the Economic Affairs Division has requested a time extension to
the current project closing date.

4.   At this stage all project funds are committed under various contracts that are under
execution. No further procurement delays will be incurred. The proposed time extension will be
necessary to allow for completion of works and consultancy contracts that are currently in
implementation.

5. This will be the first extension of the Project closing date. The Project would not require
any further extension in time as ongoing contracts would be completed within the revised closing
date for the Credit i.e. February 28, 2015. The Task Team strongly recommends approval of the
extension in project closing date.


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