The World Bank Infrastructure and Local Development Project II (P151077) REPORT NO.: RES37823 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF INFRASTRUCTURE AND LOCAL DEVELOPMENT PROJECT II APPROVED ON DECEMBER 10, 2015 TO GABONESE REPUBLIC SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Elisabeth Huybens Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Sylvie Debomy Task Team Leader: Dina Nirina Ranarifidy, Patrice Joachim Nirina Rakotoniaina The World Bank Infrastructure and Local Development Project II (P151077) ABBREVIATIONS AND ACRONYMS CNTIPPEE National Commission for Public Infras. Works and Promotion of Small-Scale Enterprises GoG Government of Gabonese Republic FA Financing Agreement HSE Hygiene Security and Environment MU Moderately Unsatisfactory MTR Mid Term Review PDO Project Development Objective PPSD Project Procurement Strategy for Development The World Bank Infrastructure and Local Development Project II (P151077) 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 P151077 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 10-Dec-2015 31-Jan-2021 Organizations Borrower Responsible Agency National Commission for Public Infras. Works and GABONESE REPUBLIC Promotion of Small-Scale Enterprises (CN-TIPPEE) Project Development Objective (PDO) Original PDO The project development objective is to improve access to urban infrastructure and services in selected underserviced neighborhoods and to build basic capacities for municipal management in target cities. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-85640 10-Dec-2015 14-Jan-2016 25-Apr-2016 31-Jan-2021 100.00 29.36 72.04 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Infrastructure and Local Development Project II (P151077) Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project status 1. Project Performance. The Infrastructure and Local Development Phase 2 (PDIL2) was approved on December 15, 2015 and became effective in February 2016. After two years of effectiveness, project implementation experienced significant delays which is reflected in a low disbursement rate of 28 per cent, out of which only 13 per cent has been disbursed against activities. At project mid-term, the disbursement rate for Component 1’’ Infrastructure and services’’ (total amount US$ 85 million) stands at 14 percent and Component 2 ‘’Institutional Strengthening’’ (total amount $US 10 million) at 15 percent. Project implementation challenges resulted in (i) the downgrading of the project rating to Moderately Unsatisfactory following the September 2018 implementation support mission, and (ii) a request for project restructuring from the Government in April 2019 to limit project physical investments (Component 1) to 6 cities, instead of 9. 2. Significant implementation challenges. Challenges confronting the project include (i) outstanding delays in the delivery of physical infrastructure with priority investment plan (roads) delivered in only one city out of nine; (ii) insufficient quality control and lack of accountability from the PIU CN-TIPPEE resulting in shortfalls and inconsistencies in fiduciary and technical reports; (iii) insufficient diligence in contract management resulting in ineligible expenditures; (iv) lack of monitoring of the HSE situation on work sites resulting in recurring accidents on project sites. The hiring of a new project coordinator in May 2019 is expected to improve project performance and disbursement. Furthermore, improved oversight by the Ministry of Economy’s cabinet since February 2019 has contributed to swift decision making, especially on the project restructuring, and reinforced Government ownership and commitment to making the necessary changes in the project to meet the PDO at project closing. 3. Outcomes from project Mid Term Review (June 2019). As per the provisions of project loan document, the Mid-Term Review (MTR) was conducted in early June 2019 to assess progress of activities over the past two years and draw lessons from implementation to readjust activities through project closure in May 2021. Following a joint review between the GoG and the World Bank, the MTR confirmed the need to make substantial adjustments to deliver envisaged activities within the next 23 months. Identified adjustments to speed up implementation include : (i) the preparation of a Project Procurement Strategy for Development (PPSD), (ii) the repackaging of works to attract larger and more qualified firms and improvement of quality of delivery on project sites, the set-up of a strategy to ensure closer monitoring and enhanced accountability of the PIU, and (iii) the reduction of the number of cities to benefit from physical investments under Component 1. B. Rationale for restructuring 4. With Government’s request to concentrate physical investments in Koulamoutou, Libreville, Makokou, Mouila, Port-Gentil and Tchibanga, the US$ 18 million envelope originally allocated for works in Franceville, Lambarené and Oyem - 3 formerly beneficiary cities - will be reallocated to finance new activities and scale up existing ones. This will allow for a closer supervision of work contracts and increased impact in the selected cities. 5. This Restructuring Paper responds to a level 2 restructuring request of the GoG, received by the World Bank on April 5, 2019 and June 4, 2019 following consultations held during the April 2019 implementation support mission and discussions with the Gabonese delegation at the 2019 Spring meetings. There is no overdue audit report under the project. The World Bank Infrastructure and Local Development Project II (P151077) 6. This restructuring does not affect the Project Development Objective. This restructuring reduces the scope of originally planned activities primarily in Component 1, i.e. removing infrastructure investments in two cities, but retains activities under Component 2 in all originally planned cities. Thus, the restructuring will adjust the expected main outcome targets, but does not affect the PDO statement itself. II. DESCRIPTION OF PROPOSED CHANGES C. Summary of proposed changes (i) Cities benefitting from physical investments under Component 1 limited to Koulamoutou, Libreville, Makokou, Mouila, Port- Gentil and Tchibanga. (ii) Changes to components amounts to distribute the US$ 18 million from Component 1 between Components 1, 2 and 3. (iii) Adjustment/revision of procurement plan and implementation schedules (iv) Update of Nomenclature of the Ministry of Economy, Finance and National Solidarities following a government reshuffle on June 10, 2019. D. Detailed changes The physical infrastructure planned under Component 1 will cover the selected cities of Koulamoutou, Libreville, Makokou, Mouila, Port-Gentil and Tchibanga; capacities strengthening activities under Component 2 are maintained on the nine Target cities (Franceville, Koulamoutou, Lambaréné, Libreville, Makokou, Mouila, Port-Gentil, Oyem and Tchibanga) The restructuring proposes to reallocate the available amount of US$ 18 million as follows: o US$ 10 million to be reallocated within Component 1: funds will be used (i) to scale up infrastructure program envisaged under Component 1. This will bring project total amount for Component 1 to US$ 77.5 million. o US$ 5 million to be added to Component 2 to scale up existing activities and increase urban resilience. Additional amount to cover, but not limited to (i) scaling up the scope of existing activities; (ii) elaboration of an e-governance strategy, (iii) conduction of a natural disaster risk assessment for target cities, (iv) studies to generate updated urban data, and (iv) scaling-up of capacity building activities/seminars and workshops. This will bring project total amount for Component 2 to US$ 15 million. o US$ 3 million to be added to Component 3 to further support project implementation, supervision and site control, and enhance project performance. Funds to cover but not limited to (i) financing in-depth audits in fiduciary, social/environmental safeguards and technical aspects, (ii) enhance quality of project M&E with the introduction of the geo enabling monitoring system (GEMS), and (iii) hiring of technical assistance/contract management firm to support the Government in project implementation, supervision and site control. This will bring project total amount for Component 1 to US$ 7.25 million. The World Bank Infrastructure and Local Development Project II (P151077) 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 Components and Cost ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Procurement ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ APA Reliance ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank Infrastructure and Local Development Project II (P151077) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Improving urban Component 1: Improving urban infrastructure to increase access 85.50 Revised infrastructure to increase 77.50 to services access to services Component 2: Building Component 2: Building institutional development to institutional development to 10.00 Revised 15.00 strengthen the capacity of the strengthen the capacity of the urban sector urban sector Component 3: Project Component 3: Project management, coordination, management, coordination, 4.25 Revised 7.25 monitoring and evaluation of the monitoring and evaluation of project the project TOTAL 99.75 99.75 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2016 1,266,958.74 12,666,958.74 2017 9,606,777.67 9,606,777.67 2018 9,700,690.40 9,700,690.40 2019 16,024,248.78 10,000,000.00 2020 20,000,000.00 25,000,000.00 2021 23,901,324.41 24,901,324.41 2022 19,500,000.00 19,500,000.00 OPS_DETAILEDCHANGES_SORT_TABLE The World Bank Infrastructure and Local Development Project II (P151077) SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating at Approval Current Rating Political and Governance  Moderate  Moderate Macroeconomic  Moderate  Moderate Sector Strategies and Policies  Substantial  Substantial Technical Design of Project or Program  Substantial  Substantial Institutional Capacity for Implementation and  Substantial  High Sustainability Fiduciary  Moderate  Substantial Environment and Social  Substantial  Substantial Stakeholders  Moderate  Moderate Other Overall  Substantial  Substantial . 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