The World Bank Vishnugad Pipalkoti Hydro Electric Project (P096124) REPORT NO.: RES37968 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF VISHNUGAD PIPALKOTI HYDRO ELECTRIC PROJECT APPROVED ON JUNE 30, 2011 TO TEHRI HYDRO DEVELOPMENT CORPORATION LIMITED (THDC) ENERGY & EXTRACTIVES SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: Riccardo Puliti Practice Manager/Manager: Demetrios Papathanasiou Task Team Leader: Simon J. Stolp, Pyush Dogra The World Bank Vishnugad Pipalkoti Hydro Electric Project (P096124) ABBREVIATIONS AND ACRONYMS THDC Tehri Hydro Development Corporation Limited HCC Hindustan Construction Company USD United States Dollar The World Bank Vishnugad Pipalkoti Hydro Electric Project (P096124) BASIC DATA Product Information Project ID Financing Instrument P096124 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 30-Jun-2011 31-Dec-2019 Organizations Borrower Responsible Agency THDC Tehri Hydro Development Corporation Project Development Objective (PDO) Original PDO The Project Development Objectives are: (a) to increase the supply of electricity to India's national grid through the addition of renewable, low-carbon energy; and (b) strengthen the institutional capacity of THDC with respect to the preparation and implementation of economically, environmentally and socially sustainable hydropower projects. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-80780 30-Jun-2011 10-Aug-2011 07-Nov-2011 31-Dec-2019 648.00 109.66 538.34 TF-58016 24-Apr-2007 24-Apr-2007 24-Apr-2007 31-Mar-2010 .99 .99 0 The World Bank Vishnugad Pipalkoti Hydro Electric Project (P096124) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Since project implementation began in 2014, progress has been slow due to the poor performance of the Civil Works Contractor, Hindustan Construction Company (HCC). However, several critical milestones have been met. Excavation of the power station complex is well underway; Excavation of a significant portion of tunneling is already complete; river diversion closure is completed; the upstream coffer dam has been completed on May 31 2019; and, the critical tunnel boring machine which will excavate the main headrace tunnel for the project, has been shipped to site, erected and will be ready to commission in October 2019. The performance of the civil works contractor, HCC, has been generally poor, and extremely poor during 2018. HCC has been in the midst of a severe corporate liquidity crisis, and unable to allocate sufficient plant, material and human resources to the Project. The Borrower, THDC Limited, made significant efforts to improve implementation progress by providing HCC with secured cash advances, and by making direct payments to subcontractors at some of the more critical work-fronts on the Project. HCC is progressively addressing the liquidity issues that have hampered its performance to date, including through a fully subscribed rights issue, and the liquidation of outstanding contractual claims. HCC has now made all outstanding payments to staff and sub-contractors and is procuring significant new additional plant for the Project. As a result, progress on the civil works contract has improved significantly. In a letter dated June 27, 2019 , the Government of India requested of the Bank the partial cancellation of the loan in the amount of US$ 100 million. The project components will not be changed due to cancellation and project implementation will continue. This partial restructuring is to process the cancellation of US $100 million as requested. The World Bank Vishnugad Pipalkoti Hydro Electric Project (P096124) II. DESCRIPTION OF PROPOSED CHANGES The proposed change is partial cancellation of US $100 million to be deducted from: (1) Civil works and Hydromechanical equipment (US$ 72.74 million to be cancelled) and (2) Electro Mechanical equipment (US $27.26 million to be cancelled). III. SUMMARY OF CHANGES Changed Not Changed Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ The World Bank Vishnugad Pipalkoti Hydro Electric Project (P096124) Legal Covenants ✔ 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_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' Disburs S REQUEST IBRD- 648,000,000.0 100,000,000.0 548,000,000.0 ing&Re USD 27-Jun-2019 FOR 80780-001 0 0 0 paying COUNTRY REASONS BORROWER' Fully S REQUEST TF-58016- Disburs USD 988,526.51 0.00 27-Jun-2019 988,526.51 FOR 001 ed COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-80780-001 | Currency: USD The World Bank Vishnugad Pipalkoti Hydro Electric Project (P096124) iLap Category Sequence No: 1 Current Expenditure Category: CW & Hyd-mech equipmnts undr comp 1 407,960,000.00 90,527,148.10 335,220,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Electro mech equipmnt under comp 1 153,000,000.00 11,745,801.30 125,740,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: Consultants Services 13,100,000.00 2,035,572.73 13,100,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: Interest during construction 72,320,000.00 2,905,610.02 72,320,000.00 iLap Category Sequence No: 6 Current Expenditure Category: Premia for Int rate cap or collar 0.00 0.00 0.00 Total 646,380,000.00 107,214,132.15 546,380,000.00 .