The World Bank Emergency Operation for Development (P155732) REPORT NO.: RES37679 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF EMERGENCY OPERATION FOR DEVELOPMENT – ADDITIONAL FINANCING APPROVED ON OCTOBER 31, 2017 TO MINISTRY OF FINANCE SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE MIDDLE EAST AND NORTH AFRICA Regional Vice President: Ferid Belhaj Country Director: Saroj Kumar Jha Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Jaafar Sadok Friaa Task Team Leader: Ibrahim Khalil Zaki Dajani, Nafie Mohammed Mofid, Soran Hama Tahir Ali The World Bank Emergency Operation for Development (P155732) ABBREVIATIONS AND ACRONYMS The World Bank Emergency Operation for Development (P155732) 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 P155732 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 07-Jul-2015 31-Dec-2022 Organizations Borrower Responsible Agency Ministry of Health,Ministry of Electricity,Ministry of Construction, Housing, Municipalities and Public Works,Reconstruction Fund for Areas Affected by Terroristic Operations, C/O Dr. Mustafa Hiti,Ministry of Agriculture - C/O Dr. Hamid Ali Hadwan, Director General of Plant Protection Department,Ministry of Education, C/O Mr. Sabah Khalaf Jebur, Director General,Ministry of Ministry of Finance Water Resources,Anbar Governorate,Diyala Governorate, C/O Muthanna Ali Mahdi al-Tamimi, Governor,Nineveh Governorate, C/O Ameen Ibrahim Fanash, Deputy Governor for Planning,Salah Ad-Din Governorate,Roads and Bridges Directorate @ Ministry of Construction, Housing, Municipalities and Public Works,Ministry of Transport Project Development Objective (PDO) Original PDO The Project is to support the Republic of Iraq in the reconstruction of damaged infrastructure and the restoration of public services delivery in Targeted Municipal Areas. OPS_TABLE_PDO_CURRENTPDO The World Bank Emergency Operation for Development (P155732) Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-87930 31-Oct-2017 05-Jul-2018 21-Aug-2018 31-Dec-2022 400.00 6.42 393.58 IBRD-85200 07-Jul-2015 12-Jul-2015 18-Sep-2015 30-Jun-2020 350.00 240.44 109.56 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 Background The Emergency Operation for Development Project (EODP) was approved on July 7, 2015 for a total of US$ 350 million and became effective on September 18, 2015. In 2017 and after a major milestone in the war on ISIS and the declaration of Mosul liberation, the Government of Iraq requested additional financing of US$ 400 million to expand the project scope to cover additional Iraqi territories liberated from ISIS and to expand the sectors covered by EODP to The World Bank Emergency Operation for Development (P155732) include agriculture, education, water resources and irrigation, urban services. The additional financing was approved on October 31, 2017 and became effective on August 21, 2018. The original project will close on June 30, 2020 while additional financing will close on December 31, 2022. The purpose of this restructuring paper is to reallocate the remaining funds from the unallocated category to the restoring health and water resources and irrigation service categories, to the Project Management and Monitoring category and to slightly revise the nature of activities to be financed under the restoring transport services category. This is the second restructuring of the additional financing for the EODP, loan number IBRD 8793. The first restructuring was completed on September 20, 2018 to reallocate parts of the loan proceeds in the unallocated category to reconstruct damaged infrastructure and reinstating services in Kirkuk governorate and adjust the results framework as per the government’s request. Project Status The implementation of EODP is progressing well and as of June 24, 2019 commitment reached US$ 281 million while disbursement reached US$ 246 million. Some implementation delays are being experienced due to a lengthy approval process at the Ministry of Planning of the activities to be financed by the Additional Financing, institutional and human capacity at a number of implementing agencies, especially those who have not worked on World Bank financed project before, and changes in staff of the Project Management Teams, especially after being trained by the Bank on policies, guidelines and procedures. The overall PDO, Implementation Progress and Safeguards ratings are Moderately Satisfactory while the overall risk rating continues to be High. The project is also progressing towards achieving its objectives, but improvements will need to be made in speedier approval of the activities by the MOP followed by speedier processing of procurement activities. Several sectors are progressing better than others including, the Electricity sector component, followed by the Roads and Bridges and the Municipal sectors components. The Health sector component is now progressing with ambulances and mobile clinics delivered to beneficiaries. Engaging UNOPS in the procurement of these goods has been instrumental in reaching the set targets. The Third-Party Monitoring Agency (TPMA) who has been retained by the Bank is providing the needed support to verify contractual compliance with technical, fiduciary, and safeguards aspects of the project. Findings from the site visits are followed up with the implementing agencies towards quick remedial measures. In terms of results, already over three million people, including women and youth, living in areas liberated areas are experiencing improvement in key services that were financed by EODP such as improved electricity supply, access to health water and sanitation, collection and disposal of municipal waste, connectivity to services, markets and employment through reconstructed bridges, and improved access to health services. Temporary and longer-term employment and involvement of private contractors have also been among the positive results of EODP. The implementation of the health component is now back on track. Already, 39 ambulances and 14 mobile clinics have been supplied and operational and additional 36 ambulances will be supplied before the end of December 2019. Already, 5,000 people have been served by these interventions while the restored service is now available to over a million population. Procurement of medical equipment for the health facilities is also ongoing and contracting for the repair of 9 health facilities in the liberated areas is also underway. It is worthy to note that the MOH-UNOPS-WB's partnership has been instrumental in achieving the reached results. This partnership continues to secure additional restoration of the service. The implementation of the municipal services component has been Satisfactory with commitments and disbursements reaching US$ 61.2 million and US$ 44.12 million, respectively. A total of forty eight goods, works and consultancy The World Bank Emergency Operation for Development (P155732) services contracts have been awarded towards improving municipal services through the supply of 275 special machinery and equipment and 3,120 garbage containers distributed among the targeted cities in Salah-ad-Din, Diyala and Anbar. Over 1.8 million Iraqi people are benefiting from these activities. The implementation of the Restoring Transport Services is also rated Satisfactory with substantial achievements in commitment and disbursements, reaching US$ 129 million and US$ 109 million, respectively. The reconstructed 23 bridges and repaired 400km of roads have contributed to improving access to services, markets and employment opportunities. Seven additional bridges and 60kms of roads are currently being repaired. Employment opportunities especially for the low skilled labor, especially those who have lost everything during the conflict, are being created. Changes proposed The Government of Iraq has requested, through its letter dated June 3, 2019, to utilize the remaining unallocated funds of $29 million as follows: a) reallocate from Category 14 an amount of US$ 24 million to Category 5 “Restoring Health Services” under the Ministry of Health; b) reallocate from Category 14 an amount of US$ 2.5 million to Category 2 “Restoring Municipal Waste, Water and Sanitation Services” under the Ministry of Construction, Housing, Municipalities and Public Works; c) reallocate from Category 14 an amount of US$ 2.5 million to Category 6 “Project management, Sensitization, and Communications, and Monitoring and Evaluation” including regular technical and financial auditing under the Reconstruction Fund; and d) revise the description of activities under sub-component (3b) – Transport Infrastructure Services to replace Category 3b(ii) restoration of public transport terminals with Rehabilitation of segments of Railway network and Weather Stations. Proposed reallocation table Percentage of Original amount of Revised Amount of Expenditures to Category the Loan the Loan be financed (Expressed in USD) (expressed in USD) (inclusive of Taxes) (1) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs, Training 50,000,000 50,000,000 100% and Workshops for Part 1 of the Project. (2) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs, Training 45,000,000 47,500,000 100% and Workshops for Part 2 of the Project. (3) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs, Training 111,000,000 111,000,000 100% and Workshops for Part 3(a) of the Project. (4) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs, Training 5,000,000 5,000,000 100% and Workshops for Part 3(b) of the Project. The World Bank Emergency Operation for Development (P155732) (5) Goods, Non-Consulting Services, Consulting Services, Operating Costs, Training and 0 24,000,000 100% Workshops for Part 4 of the Project. (6) Goods, Non-Consulting Services, Consulting Services, and Training and Workshops for Parts 5 0 2,500.000 100% and 6 of the Project. (7) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs and 32,000,000 32,000,000 100% Training and Workshops for Part 7 of the Project. (8) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs and 32,000,000 32,000,000 100% Training and Workshops for Part 8 of the Project. (9) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs and 35,000,000 35,000,000 100% Training and Workshops for Part 9 of the Project. (10) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs and 20,000,000 20,000,000 100% Training and Workshops for Part 10 (a)(i), 10 (c)(i), and 10 (d)(i) of the Project. (11) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs and 10,000,000 10,000,000 100% Training and Workshops for Parts 10 (a)(ii), 10 (c)(ii), and 10 (d)(ii) of the Project. (12) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs and 20,000,000 20,000,000 100% Training and Workshops for Parts 10 (a)(iii), 10 (b), 10 (c)(iii), and 10 (d)(iii) of the Project. (13) Goods, Works, Non-Consulting Services, Consulting Services, Operating Costs and 10,000,000 10,000,000 100% Training and Workshops for Parts 10 (a)(iv), 10 (c)(iv), and 10 (d)(iv) of the Project. (14) UNALLOCATED 29,000,000 0 (15) Front-End Fee 1,000,000 Amount payable pursuant to Section 2.03 of this Agreement in The World Bank Emergency Operation for Development (P155732) accordance with Section 2.07(b) of the General Conditions Amount due pursuant to Interest Rate Cap or Interest Rate Collar (16) 0 Section 4.05(c) of Premium. the General Conditions TOTAL AMOUNT 400,000,000 Rationale Following is the rational for the proposed restructuring of the loan: 1. The health sector in Iraq has been significantly impacted by the crisis over the past several years. Destruction of health facilities (including primary health care centers and hospitals) and medical equipment was wide spread, especially in liberated areas, leaving a large number of Iraqis without access to health care services. The Governorates of Anbar, Salah El Din and Ninawa are especially affected by the crisis with severe shortages in health care services. While the GOI focused on the rehabilitation of facilities, many of these hospitals and centers remain without essential equipment, thus affecting the ability of the GOI to respond to the health needs of the population. The purpose of this restructuring is to restore health services by rehabilitating hospitals and large health centers in the three governorates and supplying essential treatment, diagnostic, and surgical equipment. The MoH has prepared a priority list of medical equipment that are urgently needed to operate the facilities. The equipment will be delivered to and installed at 33 health centers and will service around 6 million people in the three governorates. 2. The sanitation systems, including waste management, has been amongst the infrastructure that were targeted during the liberation process. EODP supports the repair of the damaged facilities including the wastewater treatment plants. Among other activities, EODP is currently financing the rehabilitation segments of Fallujah wastewater treatment plant while the other segment was to be rehabilitated by a UN agency. The withdrawal of the UN agency from this project has jeopardized the effectiveness of the EODP segment. As a result, this restructuring aims to provide the necessary financing to complete the rehabilitation. 3. The role of the Reconstruction Fund (RF) has been essential in the overall management, coordination, monitoring and reporting on EODP implementation. The reallocation of US$ 2.5 million to cover the cost associated with the said activities will ensure continued coordination for the life of the Additional Financing and the delivery of the technical and financial audits as stipulated in the loan agreement. To date, the RF has been effective in coordinating the activities amongst the borrower, represented by the Ministry of Finance, the various implementing agencies, the Bank and other IFI and donors supporting the reconstruction program. The RF has a satisfactory rating in terms of contracting technical and financial audits and delivering timely audit reports. The World Bank Emergency Operation for Development (P155732) 4. The Restoring transport infrastructure and services are among those services that touches on the lives of many people in the liberated areas. Besides the 23 bridges already reconstructed and over 400km of roads have repaired, public transport terminals repairs were identified as another priority in this sector. However, considering that another source of funding has been identified to cover the cost of the terminals repair, the Ministries of Finance and Transport have agreed to focus other priorities such as the repair of several segments (380km) of the Iraqi railway network and associated Weather Stations (5) all in the liberated areas that have been damaged as a result of the conflict. These repairs, which will be carried out at the same footprint with no relocation of people nor land acquisition, would enable the reinstatement of transport services for people and agriculture and mining products in the targeted areas. Environmental and Social Management Plans will be prepared and incorporated in the works contracts. The allocation of US$ 5 million would serve this objective and benefit the mobility of about 250,000 people in that area. II. DESCRIPTION OF PROPOSED CHANGES 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 Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ The World Bank Emergency Operation for Development (P155732) Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-87930-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WSHP Part1 50,000,000.00 0.00 50,000,000.00 100.00 100.00 iLap Category Sequence No: 10 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WS P10 a1/c1/d1 20,000,000.00 0.00 20,000,000.00 100.00 100.00 iLap Category Sequence No: 11 Current Expenditure Category: G;W;NCS;CS;IC;TRG;WS P10 a2/c2/d2 10,000,000.00 0.00 10,000,000.00 100.00 100.00 iLap Category Sequence No: 12 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WS P10 a3/c3/d3 20,000,000.00 0.00 20,000,000.00 100.00 100.00 The World Bank Emergency Operation for Development (P155732) iLap Category Sequence No: 13 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WS P10 a4/c4/d4 10,000,000.00 0.00 10,000,000.00 100.00 100.00 iLap Category Sequence No: 14 Current Expenditure Category: UNALLOCATED 29,000,000.00 0.00 0.00 100 iLap Category Sequence No: 2 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WSHP Part2 45,000,000.00 0.00 47,500,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WSHP Part 3a 111,000,000.00 1,317,400.71 111,000,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WSHP Part 3b 5,000,000.00 0.00 5,000,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: G;NCS;CS;IOC;TRG;WSHP Part 4 0.00 0.00 24,000,000.00 100 iLap Category Sequence No: 6 Current Expenditure Category: G;NCS;CS;IOC;TRG;WSHP Part 5&6 0.00 0.00 2,500,000.00 100.00 100.00 iLap Category Sequence No: 7 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WSHP Part 7 32,000,000.00 0.00 32,000,000.00 100.00 100.00 iLap Category Sequence No: 8 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WSHP Part 8 32,000,000.00 0.00 32,000,000.00 100.00 100.00 iLap Category Sequence No: 9 Current Expenditure Category: G;W;NCS;CS;IOC;TRG;WSHP Part 9 35,000,000.00 0.00 35,000,000.00 100.00 100.00 The World Bank Emergency Operation for Development (P155732) Total 399,000,000.00 1,317,400.71 399,000,000.00 .