The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) REPORT NO.: RES37847 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF IRRIGATION SYSTEM ENHANCEMENT PROJECT APPROVED ON MAY 22, 2013 TO REPUBLIC OF ARMENIA WATER EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Mercy Miyang Tembon Senior Global Practice Director: Jennifer J. Sara Practice Manager/Manager: David Michaud Task Team Leader: Wilfried Hundertmark, Arusyak Alaverdyan The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) ABBREVIATIONS AND ACRONYMS AF Additional Financing FM Financial Management IFR Interim Financial Report ISR Implementation Status and Results Report ISEP Irrigation System Enhancement Project PDO Project Development Objective PIU Project Implementation Unit The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P127759 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 22-May-2013 30-Jun-2019 Organizations Borrower Responsible Agency Water Committee of the Ministry of Energy Ministry of Finance Infrastructures and Natural Resources,Water Projects Implementation Unit State Agency Project Development Objective (PDO) Original PDO The PDO is (i) to reduce the amount of energy used and to improve the irrigation conveyance efficiency in targeted irrigation schemes; and (ii) to improve the availability and reliability of important sector data and information for decision makers and other stakeholders. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-87860 14-Nov-2017 20-Nov-2017 18-May-2018 30-Jun-2019 2.00 1.89 .11 IBRD-82670 22-May-2013 29-May-2013 15-Jul-2013 31-Aug-2018 29.74 29.74 0 The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This Restructuring Paper proposes to extend the closing date of the additional financing (AF) (Loan Number 8786-AM) for the Irrigation System Enhancement Project (ISEP) by six months to December 31, 2019. The adjustment of the disbursement estimates and the end target date of the Results Framework are also proposed in accordance of the proposed closing date. This is the first restructuring of the Loan Number 8786-AM. Background 2. The original loan of US$30.0 million (Loan Number 8267-AM) for the ISEP was approved on May 23, 2013 and became effective on July 15, 2013 with the original closing date as June 30, 2017. The original loan was closed on the extended closing date, August 31, 2018. An AF for the original project was approved on November 14, 2017 (Loan Number 8786-AM). The new loan of US$2.0 million was signed on November 20, 2017, became effective on May 18, 2018, with a closing date of June 30, 2019. The AF supports the construction of tertiary system to supplement the Baghramyan-Norakert Gravity Scheme financed under Component 1 and project management under Component 3. Project Status 3. Both progress towards achievement of the PDO and implementation progress have been downgraded in the latest Implementation Status and Results Report (ISR) to Moderately Satisfactory given unexpected social and technical issues affecting two of the project’s Component 1 key schemes. There is high likelihood that the project will not nearly achieve its target of one of the PDO indicators regarding energy saving (Amount of energy saved annually in operating the irrigation system) as planned, unless it is extended. 4. To date only two out of four schemes supported by the project’s first component (Irrigation System Enhancement), receive water by gravity (Meghri and Baghramyan-Norakert), with Geghardalich and Kaghtsrashen schemes remaining non-operational. The reasons for this situation are subject to technical and social complexities. Only if all irrigation schemes are fully operational including, can targeted energy savings of over 36.6 million kWh and improved irrigation service delivery to over 12,932 ha of irrigated land be fully credited to the Project.  Baghramyan-Norakert gravity irrigation scheme. Construction of the scheme’s conveyance canal network was completed in June 2018. Earlier in February 2019, the design of the tertiary pressurized distribution network was upgraded to facilitate the creation of consolidated land and farm structures. The project implementation unit (PIU) has communicated the details of the modified design to the beneficiary communities and the works are likely to be completed by June 30, 2019. Benefits from this investment will include revitalization of irrigated agriculture on an area of about 601.5 ha (573 ha + 28.5 ha). Respective expenditure savings in the amount of The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) US$930,000 of the AF will be used to cover works on the following Geghardalich and Kaghstrashen gravity schemes.  Geghardalich gravity scheme (Lots 1, 2 and 3). Works in this scheme were implemented by three contractors under three civil works contracts. Two contracts (Lots 1 and 3) have been fully completed. Agreement has been reached on the issue on water rights between members of Goght Community and the Water Committee. This will allow the contractor to access the site (Lot 2) and to complete works on a 1.97 km pipeline over the summer months of 2019. The design of the pipeline will be upgraded in order (i) to prevent system failure; and (ii) to facilitate downstream instead of upstream operational control. The estimated cost to complete the work is US$360,000. At the completion, the gravity scheme is expected to provide irrigation services to about 1,499ha of lands in Goght, Geghadir, Hatzavan, and Voghjabed communities, and enable up to 10 million KWh energy savings per year, which is equivalent to about US$920,000.  Kaghtsrashen gravity scheme (Lot 1, 2 and 3). Construction works were complete, and the system considered as operational as of April 2018. However, leakages were observed during testing. The design was revised in order to ensure the reliable operation of the gravity scheme and increase its efficiency, in particular: (i) about 30 storm-water overflow structures will be installed: A regulation valve will be installed near the downstream end of the pipeline; (iii) an automatic control valve will be installed to regulate the flow of the pumped water depending on the water level at a balancing reservoir at the highest elevation point of system. The scheme will provide improved irrigation services to 1,232 ha. According to estimates, the cost of additional work may be about US$110,000. Total expected energy savings are likely to amount to 8 million KWh per year, which is equivalent to annual cost savings of US$750,000. 5. Component 2, Management Information, has two sub-components: Sub-component 2.1: Technical investigations and Subcomponent 2.2: Supervisory control and data acquisition system. Activities are all complete. 83 SCADA units have been installed, of which two have gone missing and ten are under maintenance. Monitoring data is fed into comprehensive water information systems to verify actual water deliveries to the water user associations. 6. The government has expressed its strong commitment to achieve the PDO within the revised timeline. The PIU prepared a detailed action plan to complete all the required work for the all schemes to be fully functional. Designs are currently under revision, and direct contracts will be signed as soon as a Project extension is approved. Concurrently, a technical supervision contract will be signed for all works contracts. Based on the action plan and revised work plan, all technical deficiencies shall be addressed, and all works shall be completed within before the end of 2019. Therefore, the government proposed six months extension from July 1, 2019. Under the AF Loan Number 8786, US$1.89 million are currently disbursed (94.58 percent). There are no commitments other than repayment of 52,327,920 AMD (US$110,113) to the compensate the Contractor for equipment already purchased under the Contract ISEP/AF/NCB/CW-17/001, which are not required anymore following change of design. 7. Compliance with environment and social safeguards is satisfactory. The Financial Management (FM) arrangements at the PIU, including planning and budgeting, accounting, financial reporting, funds flow, internal control, external audits, and staffing are satisfactory and continue to be acceptable to the Bank. There are neither overdue audits nor Interim Financial Report (IFR) under the Project currently being implemented by the PIU. II. DESCRIPTION OF PROPOSED CHANGES The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) 8. The proposed AF restructuring does not involve changes to the project’s development objectives, scope or categories of expenditures. The proposed change includes extension of the closing date of the AF Loan Number 8786 to December 31, 2019. The adjustment of the disbursement estimate and the end target date of the Results Framework is proposed in accordance of the proposed closing date. There is no change in indicators and target values in the Results Framework, except the end target date. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. I. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2018, 31- IBRD-82670 Closed 30-Jun-2017 Aug-2018, 15-May- 2019 IBRD-87860 Effective 30-Jun-2019 31-Dec-2019 30-Apr-2020 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2014 6,629,590.84 6,629,590.84 2015 5,784,401.47 5,784,401.47 2016 9,009,359.54 9,009,359.54 2017 6,227,547.63 6,227,547.63 2018 2,274,100.52 2,274,100.52 2019 2,000,000.00 1,891,598.67 2020 0.00 108,401.33 . The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) . Results framework COUNTRY: Armenia IRRIGATION SYSTEM ENHANCEMENT PROJECT Project Development Objectives(s) The PDO is (i) to reduce the amount of energy used and to improve the irrigation conveyance efficiency in targeted irrigation schemes; and (ii) to improve the availability and reliability of important sector data and information for decision makers and other stakeholders. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Reduce the amount of energy used and improve the irrigation conveyance efficiency Amount of energy saved annually in operating the 0.00 0.00 0.00 16.80 36.80 36.80 36.80 36.80 irrigation system (Gigawatt-hour (GWh)) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Water losses reduced in rehabilitated canals 0.00 0.00 0.00 23.58 23.58 23.58 23.58 23.58 (Cubic Meter(m3)) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Improve the availability and reliability of important sector data and information for decision-maker Data about O&M and EM Disseminated Most of Most of Most of Data used for Not available Not available Completed used by SCWE, WSAs and among decision reccomendations recommendations recommendations budgetary and The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 WUAs for decision makers adopted adopted adopted investment planning making (Text) purposes Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Technical audit of Data used for Disseminated Most of Most of Most of irrigation agencies used budgetary and Not Available Not Available Completed among decision reccomendations recommendations recommendations by MOEINR and SCWE for investment planning makers adopted adopted adopted decision making (Text) purposes Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Percentage of WUAs having water intakes 0.00 0.00 80.00 100.00 100.00 100.00 100.00 100.00 tracked by SCWE in real time. (Percentage) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Component 1. Irrigation System Enhancement The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Number of Pump Stations shut down 0.00 0.00 0.00 2.00 4.00 4.00 4.00 4.00 (Number) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Length of outlet canals receiving water from pumping stations that 0.00 0.00 15.20 47.10 52.00 52.00 52.00 52.00 have been rehabilitated (Kilometers) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Area provided with irrigation and drainage 0.00 0.00 0.00 9,977.00 12,932.00 12,932.00 12,932.00 12,932.00 services (ha) (CRI, Hectare(Ha)) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Area provided with irrigation and drainage services - 0.00 0.00 0.00 9,977.00 12,932.00 12,932.00 12,932.00 12,932.00 Improved (ha) (CRI, Hectare(Ha)) The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Rationale: Action: This indicator The end target date has been changed to the proposed closing date, December 31, 2019. has been Revised Water users provided with improved irrigation 0.00 0.00 0.00 8,816.00 12,336.00 12,336.00 12,336.00 12,336.00 and drainage services (number) (Number) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Water users provided with improved irrigation and 0.00 0.00 0.00 353.00 493.00 493.00 493.00 493.00 drainage services - female (number) (Number) Rationale: Action: This indicator The end target date has been changed to the proposed closing date, December 31, 2019. has been Revised Component 2. Management Information Observation points equipped with Installation of limnographs and water 0.00 0.00 71.00 71.00 71.00 71.00 71.00 71.00 measurement devices for the SCADA system (Number) The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Component 3. Project Management and WUAs? Support Operational water user associations 0.00 0.00 44.00 44.00 44.00 44.00 44.00 37.00 strengthened (number) (Number) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised WUAs staff trained 0.00 0.00 220.00 220.00 220.00 220.00 220.00 220.00 (Number) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised WUAs' women staff 0.00 0.00 80.00 80.00 80.00 80.00 80.00 80.00 trained (Number) Rationale: Action: This indicator The end target date has been changed to the proposed closing date, December 31, 2019. has been Revised Presence of women in WUAs' executive bodies 4.00 4.00 6.00 8.00 10.00 10.00 10.00 10.00 (excluding water masters) (Percentage) The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised Number of site specific ESMPs prepared 0.00 1.00 3.00 4.00 4.00 4.00 4.00 4.00 (Number) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised % of grievances responded within 5 0.00 0.00 0.00 0.00 0.00 100.00 100.00 100.00 business days (Percentage) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised % beneficiaries who report that their needs have been reflected in 0.00 0.00 0.00 0.00 0.00 30.00 70.00 70.00 project design (disaggregated by gender) (Percentage) Rationale: Action: This indicator has The end target date has been changed to the proposed closing date, December 31, 2019. been Revised IO Table SPACE The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759) The World Bank IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759)