BLANK TEMPLATE FOR SIMPLE RESTRUCTURING



Document ofThe World BankFOR OFFICIAL USE ONLYReport No: RES19498Restructuring PAPERON APROPOSED Project restructuring of INTEGRATED NUTRIENT POLLUTION CONTROL PROJECT IF DOCPROPERTY LoanNo <> "" LOAN IF DOCPROPERTY CreditNo <> "" CREDIT {LOAN/CREDIT} {LOAN/CREDIT} \* MERGEFORMAT LOAN 48730, Grant GEF TF58040October 30, 2007TOROMANIAAugust 30, 2015 Environment & Natural Resources EUROPE AND CENTRAL ASIAThis document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.ABBREVIATIONS AND ACRONYMSEU European UnionINPCP Integrated Nutrient Pollution Control ProjectGEF Global Environment FacilityGEO Global Environmental ObjectiveIBRD International Bank for Reconstruction and DevelopmentMEWFMinistry of Environment, Waters and Forests MPF Ministry of Public FinanceNVZ Nitrate Vulnerable ZoneOP Operational ProgramPDO Project Development ObjectivePMU Project Management UnitTDS Training and Demonstration SiteRegional Vice President:Cyril E Muller DOCPROPERTY VicePresident \* MERGEFORMAT Country Director:Senior Global Practice Director:Mamta MurthiPaula CaballeroPractice Manager/Manager:Kulsum AhmedTask Team Leader:Cesar NiculescuROMANIAINTEGRATED NUTRIENT POLLUTION CONTROL PROJECT DOCPROPERTY "ProjectName" \* MERGEFORMAT ContentsA.SUMMARYpage 5B.PROJECT STATUS page 5C.PROPOSED CHANGESpage 6DATA SHEETRomaniaRomania Integrated Nutrient Pollution Control Project (P093775)EUROPE AND CENTRAL ASIAEnvironment & Natural Resources.Report No:RES19498.Basic InformationProject ID: P093775Lending Instrument: Specific Investment LoanRegional Vice President: Cyril E MullerOriginal EA Category: Partial Assessment (B)Country Director: Mamta MurthiCurrent EA Category: Partial Assessment (B)Senior Global Practice Director: Paula CaballeroOriginal Approval Date: 30-Oct-2007Practice Manager/Manager: Kulsum AhmedCurrent Closing Date: 30-Nov-2015Team Leader(s): Cesar NiculescuGEF Focal Area: International waters.Borrower:Ministry of Public Finance, ROMANIAResponsible Agency:Ministry of Environment, Waters and Forests (former Ministry of Environment and Climate Changes, former Ministry of Environment and Sustainable Development).Restructuring TypeForm Type: Short FormDecision Authority: Regional Vice President ApprovalRestructuring Level:Level 2Explanation of Approval Authority:This is the second extension of the closing date, with a cumulative extension exceeding 24 months..Financing ( as of 09-Jul-2015 )Key DatesProjectLn/Cr/TFStatusApproval DateSigning DateEffectiveness DateOriginal Closing DateRevised Closing DateP093775IBRD-48730Effective30-Oct-200728-Dec-200708-Dec-200831-Dec-201330-Nov-2015P099528TF-58040Effective28-Dec-200728-Dec-200708-Dec-200831-Dec-201330-Nov-2015Disbursements (in Millions)ProjectLn/Cr/TFStatusCurrencyOriginalRevisedCancelledDisbursedUndisbursed% DisbursedP093775IBRD-48730EffectiveUSD68.1068.100.0046.2115.9068P099528TF-58040EffectiveUSD5.505.500.003.232.2759.Policy WaiversDoes the project depart from the CAS/CPF in content or in other significant respects?Yes [ ]No [ X ]Does the project require any policy waiver(s)?Yes [ ]No [ X ].A. Summary of Proposed ChangesThis third restructuring proposes: (i) an extension of the current closing date of both, the Loan and the GEF Grant, for the second time by 18 months from November 30, 2015 to May 31, 2017 (3.4 years cumulative extension), and (ii) a reallocation of Loan and GEF Grant proceeds among Project components. This restructuring does not involve any changes to the Project Development Objective (PDO) and Global Environmental Objective (GEO). The restructuring is being proposed in response to the requests of the Ministry of Public Finance in letters dated April 7, 2015, and July 30, 2015. The Government also reiterated its request during the Spring Meetings and emphasized the willingness to continue the successful partnership established under INPCP, including a follow-up operation. A request for additional financing has been sent by the Government and AF operation is now under preparation.Although the Borrower has requested a one-year extension, the Bank team has concluded, after a detailed assessment and based on previous implementation experience that within a 18-month project extension period all the remaining Project activities can be fully completed. This was also based on a determination that: (i) the recent progress and previous mission findings (late May, 2015) indicate that the Project objectives continue to be achievable, (ii) project implementation continues and accelerates with contracts continuing to be signed even when such contracts extend beyond the current closing date, (iii) the performance of the implementing agency (MEWF) continues to be satisfactory, and (iv) the recipient (MEWF) has prepared an acceptable action plan to complete all activities and achieve the Project's objectives. In addition, the extension of the Project’s current closing date will also provide bridge funding and support for preparation of the additional financing for the nation-wide scale up of the Project. Therefore, in the context of Romania, in which legislative constraints prevent the hiring of PMU staff without a ratified loan agreement in force, and previous experience that indicates between six to twelve months from Board approval is required to make a new loan effective, an extension with 18 months of the closing date will help ensure not only the full implementation of the remaining Project activities, but also preparation of the additional financing with existing funds, and the continuity of PMU staff. Having a bridge between the original Project closing date and the effectiveness of the additional financing would also provide the opportunity to capitalize the knowledge and skills of the PMU staff accumulated thus far.The proposed reallocation of Loan and Grant proceeds among the Project’s components is necessary to account for the current Project design while reflecting the Project status more accurately. The reallocation of the available amounts is expected to improve the Project’s implementation by focusing on core activities that would ensure that the PDO and GEO are met by the closing date of the project. There are no changes in the Project safeguards category and no environmental and social issues with regard to the proposed restructuring. Procurement will continue to be carried out in accordance with the provisions of Schedule 2 Section III of the Loan Agreement dated December 28, 2007. The audit reports (loan and grant) for 2014 have been received on time, with a clean (unqualified) opinion on the project’s financial statements, and with no internal control issues mentioned. B. Project StatusThe Project remains highly relevant for Romania’s obligations related to the implementation of the EU Nitrates Directive, and is still the only project in Romania that finances direct investments in rural communities, bringing, at the same time, important environmental as well as social-economic benefits.The Project has made significant progress towards achieving its Development and Global Environmental objectives. However, for all the objectives to be fully achieved, additional time is needed. Currently, disbursement stands at €35.6 million (71.2%) of the loan and US$3.23 million (58.7%) of the grant. About 85 percent of the loan and 95.5 percent of the grant proceeds are committed. The DO and IP ISR ratings have been consistently rated moderately satisfactory since March 2012 until May 2015. Implementation has progressed with good results towards achievement of the PDO and GEO, albeit with some delay. During the past several weeks, the Project implementation continued and accelerated based on a revised and realistic implementation plan for this year, and additional 12-month extension, with clear deadlines for contracting and completion of each investment and activity. As such, the procurement process for several important new contracts (i.e. procurement of equipment for manure management in four communes, procurement of works for Bontida sewage collection system – Lot 1 and Lot 2, procurement of two new TA contracts) with the implementation duration beyond the actual Project closing date were launched.Under Component 1, which includes all physical investments (80% of the Project’s loan amount) for animal waste management, the bulk of major activities that contribute to meeting the reduction of nutrient discharges to water bodies are largely but not fully implemented. Investments for 67 communes are almost complete (e.g., over 60 out of targeted 75 communal platforms completed; 1136 out of 1350 individual farm platforms for manure management completed; 4014 out of 5400 household waste bins delivered/contracted for delivery), and one pilot biogas plant is under construction. Another 20 communal platforms for 20 communes and investments in sewage collection and treatment facilities in Cluj County remain to be contracted. Under Components 2 and 3, activities will be largely completed by the current closing date and the following results have already been achieved: (i) legislation harmonized with EU regulations related to the EU Nitrates Directive and relevant measures under the Water Framework Directive; (ii) about 400 specialists of the Nitrates Directive Working Groups trained at the national, regional, and county level; (iii) public awareness program at the national and river-basin levels, including dissemination of Project benefits have been completed. Nevertheless, the TA component for assisting the Romanian Managing Authorities in preparing guidelines for applicants, projects evaluation grids, and monitoring & control methodologies for projects related to EU Nitrates Directive, will be delayed due to the late approval of most of Romania’s related Operational Programs funded from EU Funds.Despite Project results achieved thus far and the satisfactory progress under Components 2 and 3, the achievement of the PDO is presently rated as Moderately Unsatisfactory due to the fact that delays with implementation of Component 1 in 2015 makes it impossible to achieve the Project’s development objectives by the current closing date. With the extension of the closing date, MEWF would be able to fully implement the remaining activities, and to fully achieve the PDO and GEO. .C. Proposed Changes.FinancingChange in Loan Closing Date(s): ExplanationThe closing date for the Loan and Grant Agreements is proposed to be extended by 18 months from November 30, 2015 to May 31, 2017. Within this new timeframe, the full achievement of the Project’s Development and Global objectives is expected, and in parallel, additional financing to scale-up the current Project at the national level will be prepared with direct support of the fully staffed PMU.For the remaining investments, all the necessary approvals have been received, and all the technical projects and detailed designs have been prepared. As such, the Project is now set to disburse the entire remaining Loan and Grant proceeds, and the PDO and GEO are expected to be achieved by the revised closing date. Although the Project activities were expected to be fully implemented by November 30, 2015, internal control processes within MEWF unexpectedly delayed procurement processes. This issue has now been resolved.Ln/Cr/TFStatusOriginal Closing DateCurrent Closing DateProposed Closing DatePrevious Closing Date(s)IBRD-48730Effective31-Dec-201330-Nov-201531-May-201730-Nov-2015TF-58040Effective31-Dec-201330-Nov-201531-May-201730-Nov-2015ReallocationsExplanationThe reallocation of Loan and Grant proceeds among the Project’s components is proposed to focus implementation on the following core activities that would ensure that the PDO and GEO are met by the closing date of the project. The need for reallocation arose as a result of lower prices than expected for construction activities, additional technical assistance needs, particularly to expand the successful public awareness campaigns and information dissemination efforts, and additional project management costs due to extension.Loan proceeds reallocation:(i) Reallocate the amount of EUR 449,713.20 from the category “Goods, Works, Consultants’ Services and Training” under “Part I (Component 1) of the Project – Commune-based investments in Nitrate Vulnerable Zones” to the category “Goods, Works, Consultants’ Services and Training” under “Part II (Component 2) of the Project – Institutional Strengthening and Capacity Building”. This amount will be used for continuing support to: (a) the National Water Administration "Apele Romane" (ANAR) by endowment with modern equipment for water quality/quantity data collection, (b) as well as to support the Agency of Payments and Interventions in Agriculture, other institutions involved in the implementation of EU Nitrates directive, mainly to increase the interactions among these institutions, to increase the control and inspection in the territory through training and consultancy services. (ii) Reallocate the amount of EUR 327,446.98 from the category “Goods, Works, Consultants’ Services and Training” under “Part I (Component 1) of the Project – Commune-based investments in Nitrate Vulnerable Zones” to the category “Goods, Works, Consultants’ Services and Training” under “Part III (Component 3) of the Project – Public Awareness and Replication strategy”. This amount will be used for continuing development of efficient and effective information and public awareness campaigns related to implementation of environmental agricultural practices in small and medium farms, and for increasing the impact of the Project. In addition, the farmers and local public authorities will receive support and assistance to facilitate access to EU funds available for conforming to the Nitrate Directive’s requirements. (iii) Reallocate the amount of EUR 766,546.72 from the category “Goods, Works, Consultants’ Services and Training” under “Part I (Component 1) of the Project – Commune-based investments in Nitrate Vulnerable Zones” to the category “Goods, Works, Consultants’ Services and Training” under “Part IV (Component 4) of the Project – Project Management”.This amount will be used for project management and implementation costs during the extension period, and for carrying out a new activity (new study) for evaluation and quantification of the Project’s efficiency by the end of the implementation period.The total amount of EUR 1,543,706.90 to be reallocated from the category “Goods, Works, Consultants’ Services and Training” under “Part I (Component 1) of the Project represents cost savings during implementation, including from construction of platforms for manure storage, procurement of operating sets, as well as construction of sanitation systems. The financing percentage of expenditures to be financed from the Loan in each category will remain the same.Grant proceeds reallocation:(i) Reallocate the amount of USD 296,373.26 from the category “Goods, Works, Consultants’ Services and Training” under “Part II (Component 2) of the Project – Institutional Strengthening and Capacity Building” to the category “Goods, Works, Consultants’ Services and Training” under “Part I (Component 1) of the Project – Commune-based investments in Nitrate Vulnerable Zones”.This amount will be mainly used after the completion of the biogas investment for a demonstration program on the feasibility of biogas and energy co-generation from manure/organic household waste through anaerobic digestion that will be delivered to interested farmers. (ii) Reallocate the amount of USD 69,193.22 from the category “Goods, Works, Consultants’ Services and Training” under “Part IV (Component 4) of the Project – Project Management” to the category “Goods, Works, Consultants’ Services and Training” under “Part III (Component 3) of the Project – Public Awareness and Replication strategy”. This amount will be used for public communication and information actions at national and regional levels. The financing percentage of expenditures to be financed from the Grant in each category will remain the same. Ln/Cr/TFCurrencyCurrent Category of ExpenditureAllocationDisbursement % (Type Total)CurrentProposedCurrentProposedIBRD-48730EURIBRD48730 - G,W,CS,TR PART 142,052,738.5640,509,031.66100.00100.00IBRD48730 - G,W,CS,TR PART 23,364,489.103,814,202.30100.00100.00IBRD48730 - G,W,CS,TR PART 31,953,207.402,280,654.38100.00100.00IBRD48730 - G,W,CS,AUD,IOC PART 42,629,564.943,396,111.66100.00100.00Total:50,000,000.0050,000,000.00TF-58040USDTF58040 - G,W,CS,TR PART 13,096,234.363,392,607.62100.00100.00TF58040 - G,W,CS,TR PART 21,921,191.431,624,818.17100.00100.00TF58040 - G,W,CS,TR PART 3127,300.00196,493.22100.00100.00TF58040 - G,W,CS,AUD,IOC PART 4355,274.21286,080.99100.00100.00Designated Account0.000.00100.00100.00Total:5,500,000.005,500,000.00 ................
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