62604 v1
                       Document of
                   The World Bank


                                                                Report No:




              RESTRUCTURING PAPER

                             ON A

       PROPOSED PROJECT RESTRUCTURING
                       OF
         MUNICIPAL SERVICES PROJECT
                      LOAN
                  July 13, 2006


                             TO

                       ROMANIA


                      June 14, 2011




 Regional Vice President:         Philippe Le Houerou
        Country Director:         Peter C. Harrold
Sector Manager / Director:        Wael Zakout / Peter Thomson
       Task Team Leader:          Elisabetta Capannelli
                   ROMANIA — MUNICIPAL SERVICES PROJECT
                                 P088252
                              LOAN 4835-RO

                                   Restructuring Paper


1.     The closing date for Component 1 (Urban services in Bucharest Municipality)
under the Romania, MUNICIPAL SERVICES PROJECT, Loan 4835-RO, P088252 will
be extended from June 30, 2011 until March 31, 2012.

2.      The project’s development objective (DO) is to assist Romania to meet EU
environmental directives in the water and wastewater sector, thereby improving the
quality and coverage of water and wastewater services. Overall implementation of the
project is good and the project is likely to achieve its DO. As of end-May 2011, a total
amount of 98.74 million (93% of the total loan) has been disbursed. Component 3
(Project Application for the EU) implemented by the Ministry of Environment and
Forests has been successfully completed, and 99% of the loan amount has been utilized –
the remaining loan savings will be cancelled upon the Loan Closing Date. Component 2
(Urban services in Arad Municipality) in nearing completion. The Loan amount is
exhausted and remaining works are being fully financed by the counterpart. However,
only 85% (or 40.646 million) of Component 1 (Urban services in Bucharest
Municipality) has been disbursed.

3.      A nine-month extension of Component 1 is necessary to enable the Bucharest
Municipality to utilize its undisbursed funds, complete the remaining civil works
contracts and finance supervision consultants under the Loan. Delays were due to the
need for technical and design changes resulting from complicated construction conditions
which are now resolved, problems with issuance of construction permits, and delays in
transferring counterpart funding from Sector 1 Municipality to the General Municipality.
An action plan for completion of the project addressing the remaining constraints has
been submitted by the Bucharest Municipality. To ensure the achievement of the project
objectives, agreement has also been reached that the Bucharest Municipality will finance
all additional costs for civil works and consultant services beyond December 2011, if the
works were still not completed by then.

4.     This will be the first extension of the project.