The World Bank Second Tanzania Water Sector Support Project (P150361) REPORT NO.: RES36807 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE SECOND TANZANIA WATER SECTOR SUPPORT PROJECT APPROVED ON JANUARY 23, 2017 TO THE UNITED REPUBLIC OF TANZANIA WATER GLOBAL PRACTICE AFRICA REGION Regional Vice President: Hafez M. H. Ghanem Country Director: Bella Bird Senior Global Practice Director: Jennifer J. Sara Practice Manager/Manager: Catherine Signe Tovey Task Team Leader: Iain Menzies, Jacqueline Marie Tront The World Bank Second Tanzania Water Sector Support Project (P150361) ABBREVIATIONS AND ACRONYMS DAWASA Dar es Salaam Water and Sewerage Authority DAWASCO Dar es Salaam Water and sewerage Corporation The World Bank Second Tanzania Water Sector Support Project (P150361) 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 P150361 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 23-Jan-2017 30-Jun-2022 Organizations Borrower Responsible Agency Ministry of Water and Irrigation,Dar es Salaam Water MINISTRY OF FINANCE AND PLANNING and Sewerage Authority Project Development Objective (PDO) Original PDO The Project Development Objectives are to: (a) strengthen the capacity for integrated water resources planning and management in Tanzania, and (b) improve access to water supply and sanitation services in an operationally efficient manner in Dar es Salaam. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-59490 23-Jan-2017 20-Mar-2017 01-Jun-2017 30-Jun-2022 125.00 2.90 124.43 IDA-59500 23-Jan-2017 20-Mar-2017 01-Jun-2017 30-Jun-2022 100.00 3.07 99.72 The World Bank Second Tanzania Water Sector Support Project (P150361) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. Project status: The project was approved on January 23, 2017. The official project effectiveness date was June 1, 2017, although this was not reflected in the portal until January 2018, following the government’s delayed signature of an amendment to the Financing Agreement on January 9, 2018 (the amendment is dated September 28, 2017). More than two years of project implementation have been completed and three percent of the credit has been disbursed. The Implementation Progress (IP) rating is currently Moderately Unsatisfactory (MU). The Project Development Objective is still relevant and the progress on the Development Objective (DO) is rated Moderately Satisfactory (MS). The Results Framework continues to be an appropriate means to assess project performance. 2. Implementing agency capacity constraints initially led to poor procurement processing and poorly prepared procurement documents, but following intensive support from the Bank’s procurement team and a number of training initiatives, procurement activity is making progress. Major delays were also caused by the protracted merger of the two implementing agencies for Components 2 and 3 of the project (Dar es Salaam Water and Sewerage Authority (DAWASA) and Dar es Salaam Water and Sewerage Corporation (DAWASCO)). This merger was not foreseen during project preparation, took 12 months, and was not completed until September 2018. There was very poor coordination and decision making in these entities prior to the merger, especially in relation to procurement activities, but the DAWASA and DAWASCO Procurement Plans (and procurement teams) have now been merged. The newly constituted DAWASA is now in place and is the sole implementing agency for Components 2 and 3 (USD 171 million), and DAWASCO has been abrogated. The Bid Evaluation Report (BER) for DAWASA’s USD 40 million contract for the Construction of Water Supply Distribution Network Part 1, from University Reservoir to Bagamoyo Town, was recently approved by the Bank and contract awarding and signature are anticipated shortly. The Subsidiary Agreement between the government and DAWASA was signed on January 17, 2019, and the associated government legal opinion was signed on February 15, 2019. 3. The Bank team has appraised the reformulated DAWASA (following the disestablishment of DAWASCO) to ensure that it is able to carry out all financial management, procurement and safeguards responsibilities in accordance with Bank policies and procedures. DAWASA has established a new board and management team. The project and fiduciary staff have been transferred directly to DAWASA. DAWASA has assigned safeguards and fiduciary specialists and key management staff to manage the implementation of Components 2 and 3 of the project, and the Bank team is satisfied with these arrangements for project implementation. The World Bank Second Tanzania Water Sector Support Project (P150361) 4. Rationale for restructuring. DAWASCO was disestablished through Government Notice No. 414, published on August 10, 2018. Consequently, DAWASCO has been abolished and its functions have been taken over by DAWASA. The Financing Agreement needs to be amended to reflect this change in implementing agency arrangements. This project restructuring is solely proposed to reflect the abrogation of DAWASCO and assumption of its role in project implementation by DAWASA. II. DESCRIPTION OF PROPOSED CHANGES 1. Components 2 ( Dar es Salaam Water Supply Improvement) and 3 (Dar es Salaam Sanitation Improvement). The Financing Agreement will be amended to reflect the abrogation of DAWASCO as an implementing agency and assumption of its roles and responsibilities by DAWASA. I. SUMMARY OF CHANGES Changed Not Changed Implementing Agency ✔ Institutional Arrangements ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ The World Bank Second Tanzania Water Sector Support Project (P150361) Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_IA_TABLE IMPLEMENTING AGENCY Implementing Agency Name Type Action Ministry of Water and Irrigation Implementing No Change Agency Dar es Salaam Water and Sewerage Implementing New Authority Agency .