Nairobi Sanitation Project (P131512) - World Bank Document

The World BankNairobi Sanitation Project (P131512)

REPORT NO.: RES31084

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

NAIROBI SANITATION PROJECT

APPROVED ON DECEMBER 17, 2012

TO

THE NATIONAL TREASURY

WATER

AFRICA

Regional Vice President: Makhtar Diop Country Director: Diarietou Gaye

Senior Global Practice Director: Guang Zhe ChenPractice Manager/Manager: Catherine Signe Tovey

Task Team Leader: Rajesh K. Advani

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ABBREVIATIONS AND ACRONYMS

ESIA Environmental and social impact assessment

FM Financial management

IDA International Development Association

IFR Interim financial report

ISR Implementation status and result report

MS Moderately satisfactory

NCWSC Nairobi City Water and Sewerage Company

OBA Output-based aid

PDO Project development objective


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

P131512 Investment Project Financing

Original EA Category Current EA Category

Approval Date Current Closing Date

17-Dec-2012 29-Dec-2017

Organizations

Borrower Responsible Agency

The National Treasury Nairobi City Water and Sewerage Company

Project Development Objective (PDO)

Original PDOThe Development Objective is to provide sustainable access to sanitation and water services in selected low-income communities of Nairobi, by applying one-off OBA subsidies in order to make pro-poor sewerage and water connections financially viable.OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing

TF Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

TF-14251 19-Dec-2013 19-Dec-2013 19-May-2014 29-Dec-2017 4.33 2.49 1.84

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No


I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING


C. Project Status

The Nairobi Sanitation Project provides targeted subsidies to connect households to trunk infrastructure put in place in low-income areas of Nairobi through the IDA-financed Water and Sanitation Services Improvement Project (WaSSIP – P096367) and the Kenya Informal Settlements Improvement Project (KISIP – P113542). It also supports implementation of Nairobi City Water and Sewerage Company’s (NCWSC’s) social connection policy to subsidize private first-time connections of residential dwellings in low-income areas to public utility networks.

To finance the subsidies, a Grant Agreement for US$4.33 million was signed between the World Bank and the Government of Kenya on December 19, 2013 (TF014251). The project became effective on May 5, 2014, and has a current closing date of December 29, 2017. The client borrowed a commercial loan of US$6 million to co-finance the project, and has so far drawn down US$5 million..

The project aims to achieve a total of 7,800 sewer connections and 6,500 water connections. Of this target, 6,632 sewer connections with associated toilet and hand washing facilities and 5,030 water connections have been completed and verified in both the informal settlements and in areas where people have been resettled under the East Africa Transport and Trade project. The project implementation progress and progress towards achievement of the PDO are rated moderately satisfactory (MS). There was an investigation into social issues in June 2017 stemming from an informal complaint about actions of the contractor’s staff. The matter was investigated by NCWSC and proactive measures taken to deal with the allegations, several of which proved false. The report was reviewed by the World Bank, and there is ongoing monitoring of the project’s social aspects by NCWSC with supervision from the World Bank. The project has also brought notable social benefits to the poor.

Of the US$4.33 million grant, US$2.49 million has been disbursed, with an undisbursed balance of US$1.84 million. Disbursements are slow due to on-going funds flow issues between the National Treasury and NCWSC due to persistent delays at the Ministry of Water and Irrigation. The World Bank is helping to resolve the issues, and the NCWSC was advised to adopt a reimbursement approach to avoid implementation delays. The OBA grant is part of the overall Bank financing for this project, which includes an additional grant financing of US$2.6 million (TF081090) with a closing date of June 30, 2018.

D. Rationale for extension and likelihood of achieving the PDO

The client is implementing works and requires additional time for the contractor to complete the construction of toilets and water and sewer connections. The disbursement mechanism also requires a three-month post-construction sustainability test to check that consumers are receiving and paying their bills before the final 25 percent subsidy can be disbursed. The client has requested an additional six months to complete the connections and carry out the sustainability test, and notes that it lost 120 days due to the prolonged election period in Kenya, which started in August and concluded in November 2017. The informal settlements where works are on-going were directly affected in election related disruptions that slowed and in some cases stopped construction.

The following are specific points in support of this extension request:(i) If this extension is granted, the project age from signing to closure would be 4 ½ years. This is in line with the

average project implementation timeframe. (ii) The implementation progress and progress towards achievement of the PDO are rated MS in the latest ISR.

The project works are significantly advanced and the closing date extension should allow the client to fully disburse.

(iii) The project is part of an overall World Bank financing of US$7 million for project activities, and the related grant of US$2.6 million under P162248 has a closing date of June 30, 2018. The extension would align the closing dates of both projects, and if granted, this would be a final extension request for this project.Note: Formatting instructions for this document.

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(iv) The extension would help the project to achieve its development objective and meet project targets, securing an additional 1,168 sewer and 1,470 water connections, which would benefit about 12,000 people. The client would also benefit from 25 percent of the subsidy related to a 3-month post evaluation of customer billing and payments, helping to ensure household ability to pay and overall project financial viability. By achieving project targets, the extension would help the client to obtain a further US$1 million in disbursements.

(v) The task team will coordinate with other water operations in Kenya to maintain alignment with the World Bank’s overall water program and long-term strategy in Kenya.

E. Appraisal summary

There is no change to the procurement and financial management or safeguards assessments at appraisal. Procurements under the project have been subjected to prior review and cleared by the Bank. The project has been submitting IFRs and has been found to be FM compliant. The ESIA was produced by the client and updated to reflect comments provided by the Bank. The ESIA has been disclosed by the client.

Note to Task Teams: End of system generated content, document is editable from here.

II. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

III. DESCRIPTION OF PROPOSED CHANGES

The proposed change is the extension of the project closing date to June 29, 2018. The current closing date is December 29, 2017 and this is the second and final request for extension. With the proposed six-month extension, the cumulative extension of project closing date would amount to one year and the total project life would be 4 ½ years. The accompanied change in disbursement estimates based on current data is minor.

Note: Formatting instructions for this document.

B. Header1. [All sub-sections must have a continuous paragraph numbering for the entire main text or for each annex per institutional standard.]

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Note to Task Teams: The following sections are system generated and can only be edited online in the Portal.

IV.SUMMARY OF CHANGES

Changed Not Changed

Change in Loan Closing Date(s) ✔


Change in Disbursements Arrangements ✔

Change in Disbursement Estimates ✔

Change in Implementing Agency ✔

Change in Project's Development Objectives ✔

Change in Results Framework ✔

Change in Components and Cost ✔

Cancellations Proposed ✔

Additional Financing Proposed ✔

Reallocation between Disbursement Categories ✔

Change in Overall Risk Rating ✔

Change in Safeguard Policies Triggered ✔

Change of EA category ✔

Change in Legal Covenants ✔

Change in Institutional Arrangements ✔

Change in Financial Management ✔

Change in Procurement ✔

Change in Implementation Schedule ✔

Other Change(s) ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE

LOAN CLOSING DATE(S)

TF StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

TF-14251 Effective 30-Jun-2017 29-Dec-2017 29-Jun-2018 29-Oct-2018

OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE

DISBURSEMENT ESTIMATES

Change in Disbursement EstimatesYes


Year Current Proposed

2014 0.00 0.00

2015 0.00 0.00

2016 0.00 500,000.00

2017 0.00 1,100,000.00

2018 0.00 2,830,000.00

Note to Task Teams: End of system generated content, document is editable from here.

Nairobi Sanitation Project (P131512) - World Bank Document

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