The World Bank AFCC2/RI-Zambezi River Basin Development Project (P133380) REPORT NO.: RES29637 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF AFCC2/RI-ZAMBEZI RIVER BASIN DEVELOPMENT PROJECT APPROVED ON MAY 30, 2014 TO ZAMBEZI RIVER AUTHORITY WATER AFRICA Regional Vice President: Makhtar Diop Country Director: Paul Noumba Um Senior Global Practice Director: Guang Zhe Chen Practice Manager/Manager: Jonathan S. Kamkwalala Task Team Leader: Marcus J. Wishart The World Bank AFCC2/RI-Zambezi River Basin Development Project (P133380) I. BASIC DATA Product Information Project ID Financing Instrument P133380 Technical Assistance Loan Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 30-May-2014 30-Sep-2017 Organizations Borrower Responsible Agency Zambezi River Authority Zambezi River Authority Project Development Objective (PDO) Original PDO The Project Development Objective is to advance preparation of the Batoka Gorge Hy-dro-Electric Scheme and strengthen cooperative development within the Zambezi River Basin. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-16238 03-Jul-2014 03-Jul-2014 24-Jul-2014 30-Sep-2017 6.00 4.51 1.49 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank AFCC2/RI-Zambezi River Basin Development Project (P133380) The project is supporting studies for the preparation of the Batoka Gorge Hydro-electric Scheme on the Zambezi River and is on track to meet the development objectives after some initial delays. The grant from the multi-donor trust fund for Cooperation in International Waters in Africa (CIWA) to the Zambezi River Authority was signed on July 21, 2014 and declared effective on July 24, 2014, following confirmation of the fulfillment of the conditions precedent to effectiveness. All three studies in support of the preparation for the Batoka Gorge Hydro-Electric Scheme are under implementation. The bi-lateral nature of the project has required a series of consultations with various stakeholders in Zambia and Zimbabwe beyond the level of effort originally envisaged. This requires an additional 11 month extension to the project closing date to facilitate completion of the studies and consultants. This would be the second extension for a total of 23 months. These status of the three studies can be summarised as follows: The Engineering Studies are aimed at assessing, updating and developing a full bankable feasibility study for the Batoka Gorge HES complete to tender design and documentation. The contract was signed on April 29, 2014. It is estimated that another seven months are required to complete the full Feasibility Study and an additional three months following the submission of the Final Feasibility Report for completion of the Tender Documentation. This is to accommodate additional investigations, alignment with the environmental and social impact assessment along with consultations between the two contracting states. The Environmental and Social Assessment is aimed at evaluating the design of the Batoka Gorge HES and developing the necessary Environmental and Social Impact Assessments (ESIA), along with Environmental and Social Management Plans (ESMPs), Resettlement Policy Frameworks (RPFs) and Resettlement Action Plans (RAPs), as needed, for each infrastructure investment associated with the project. The contract was signed on February 25, 2014 and the Draft Environmental & Social Impact Assessment Report and Draft Environmental and Social Management Plan (Construction and Operation) have been completed and subject to national approval processes as well as review by potential financing partners. An additional six months is required to complete the scope of work and consultations required. The Transaction Advisors are aimed at providing legal and financial transaction advice to the Zambezi River Authority on the development of the proposed Batoka Gorge Hydro-Electric Scheme on the Zambezi River. The contract was originally signed on May 08, 2015 and designed in two phases to allow flexibility in scope and financing given the resources available under the original CIWA grant. The first phase has been completed, including a series of market soundings as a first step toward assisting in mobilisation of resources, and included the following:(i) inception report; (ii) risk assessment; (iii) options analysis; (iv) financial analysis; (v) economic analysis; (vi) legal framework; and, (vi) diagnostic assessment. The Phase 1 outputs have been validated and a split development model approved by the Council of Ministers. This provides a three-in-one project solution involving: (i) public financing for the dam; (ii) a Special Purpose Vehicle for the North Bank Power Station; and, (iii) a Special Purpose Vehicle for the South Bank Power Station. Additional time is required to complete the second phase of the support from the transaction advisors. The scope of CIWA support to the second phase of the transaction advisory services has been revised following the appointment of the AfDB as the lead financial arranger by the two contracting states. It has been agreed that the Phase 2 services to be financed by CIWA will be limited to: (i) the Solicitation Strategy, (ii) the preliminary Debt Financing Strategy; and (iii) the Preliminary Information Memorandum. This will require additional time aligned with the technical studies. The remaining scope of work under Phase 2 for the dam, North Bank SPV in Zambia and South Bank SPV in Zimbabwe, including the Draft Proforma Legal Agreements, development of the EoIs shortlisting, preparation of the RfPs, The World Bank AFCC2/RI-Zambezi River Basin Development Project (P133380) development and issuance of the RfPs to shortlisted bidders, the subsequent evaluation and selection, along with the debt strategy will be carried out by the AfDB. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications TF-16238 Effective 30-Sep-2016 30-Sep-2017 31-Aug-2018 31-Dec-2018