The World Bank Madhya Pradesh Urban Development Project (P155303) REPORT NO.: RES32702 Public Disclosure Authorized RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MADHYA PRADESH URBAN DEVELOPMENT PROJECT APPROVED ON APRIL 12, 2017 TO Public Disclosure Authorized REPUBLIC OF INDIA SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE SOUTH ASIA Public Disclosure Authorized Regional Vice President: Ethel Sennhauser Country Director: Junaid Kamal Ahmad Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Catalina Marulanda Task Team Leader: Abhijit Sankar Ray Public Disclosure Authorized The World Bank Madhya Pradesh Urban Development Project (P155303) ABBREVIATIONS AND ACRONYMS IP : implementation progress MLD : million liters per day MPUDC : Madhya Pradesh Urban Development Company MPUDP : Madhya Pradesh Urban Development Project OP : Operation Policy PDO : project development objective ULBs : urban local bodies The World Bank Madhya Pradesh Urban Development Project (P155303) BASIC DATA Product Information Project ID Financing Instrument P155303 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 12-Apr-2017 31-Dec-2022 Organizations Borrower Responsible Agency Urban Development and Environment Department, Republic of India Govt. of Madhya Pradesh Project Development Objective (PDO) Original PDO The project development objective (PDO) is to enhance the capacity of MPUDC to improve coverage of key urban services and increase the revenue of participating urban local bodies. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-87460 12-Apr-2017 12-Jun-2017 12-Jul-2017 31-Dec-2022 116.20 6.65 109.55 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Madhya Pradesh Urban Development Project (P155303) The World Bank Madhya Pradesh Urban Development Project (P155303) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Background 1. The Loan 8746-IN for Madhya Pradesh Urban Development Project (MPUDP), in the amount of US$166 million was approved on April 12, 2017 and became effective on July 12, 2017. The original closing date of the Credit Agreement is December 31, 2022. 2. The project development objective (PDO) is to enhance the capacity of the Madhya Pradesh Urban Development Company (MPUDC) to improve coverage of key urban services and increase the revenue of participating urban local bodies (ULBs). 3. The project has two components: (i) Component 1: Institutional Development (US$26.5 million; Bank loan US$18.6 million) will strengthen urban policy reforms linked to implementation and sustainability of municipal investments being taken up through the Project, and undertake institutional strengthening of MPUDC as the nodal executing agency set-up with the mandate of improving provision of municipal services in the state of Madhya Pradesh in partnership and on behalf of ULBs; and (ii) Component 2: Urban Investments (US$139.2 million; Bank loan 97.4 million) will finance infrastructure sub-projects in participating ULBs to improve provision of a range of urban services, including water supply, sewerage and septage management, drainage, and solid waste management. B. Progress of the Project towards Achievement of the PDO 4. The project performance to date has been mixed. The project progress towards achievement of the PDO and overall implementation progress (IP) was rated satisfactory in July 2017 as the project had achieved effectiveness in the same month. By January 2018, both project progress towards achievement of the PDO and IP were rated as moderately unsatisfactory, primarily due to (i) slow progress on the procurement of the reform consultancy support envisaged to strengthen urban policy reforms, (ii) implementation delays in ongoing subprojects due to unsuitability of original sites identified for a few critical infrastructure, and (iii) weak sub-investment pipeline. The next implementation review is due in July 2018. 5. Based on infrastructure investment demand raised by ULBs, thirteen (13) new sub-investments have been identified and are under preparation. Some of these pertain to activities that trigger the Bank’s International Waterways Policy (OP 7.50). This Policy was not originally triggered as none of the initial sub-investment requests was under its scope of application. A restructuring of the project would facilitate building of a strong sub-investment pipeline, while supporting critical investment needs of local governments, thereby enabling the project to meet PDO and improve its performance ratings. II. DESCRIPTION OF PROPOSED CHANGES 6. The proposed restructuring of the MPUDP involves the triggering of OP7.50: Project on International Waterways. 7. MPUDP is a Category A framework Project. The initial list of 30% sub projects identified and posed by the Client at appraisal did not trigger OP7.50. Moreover, at the time of appraisal, there was no indication to suggest that the International Waterway policy would be triggered in the investments envisioned under the project in this land locked state. However, during project implementation, based on requests originating from different ULBs from across the state, MPUDC has proposed thirteen new sub-investments of which nine sub-investments (five water supply and four waste water projects) draw from and discharge into tributaries of the Ganga basin, respectively, and hence OP 7.50 requires to be triggered. 8. OP 7.50 is applicable to the nine proposed sub-investments to be carried out in the watersheds of Chambal, Sindh, Vyarma, Shivna, Kaithan, Chillar and Murna rivers, all tributaries of tributaries of River Ganga and hence part of the Ganges basin (refer to Annex 1 for details on the proposed sub-investments). These rivers and their tributaries are considered “international waterways” for purposes of the Policy. The World Bank Madhya Pradesh Urban Development Project (P155303) 9. Since these subprojects have been assessed as falling within the riparian country notification exception referred to in paragraph 7(a) of OP 7.50, and provided that triggering of the policy would be made as part of this planned project restructuring, the South Asia Vice President approved an exception to the riparian notification requirement on June 22, 2018. The Integrated Safeguards Datasheet Appraisal Stage (ISDS) and the Environment and Social Management Framework (ESMF) have been updated to reflect the triggering of OP 7.50. The revised ESMF was publicly disclosed at the Bank InfoShop on June 21, 2018 and locally disclosed on June 14, 2018 at the project areas. III. SUMMARY OF CHANGES Changed Not Changed Change in Safeguard Policies Triggered ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Results Framework ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Overall Risk Rating ✔ 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) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ The World Bank Madhya Pradesh Urban Development Project (P155303) Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPLIANCE_TABLE COMPLIANCE Safeguard Policies Safeguard Policies Triggered Current Proposed Environmental Assessment (OP) (BP 4.01) Yes Yes Performance Standards for Private Sector No No Activities OP/BP 4.03 Natural Habitats (OP) (BP 4.04) Yes Yes Forests (OP) (BP 4.36) No No Pest Management (OP 4.09) No No Physical Cultural Resources (OP) (BP 4.11) Yes Yes Indigenous Peoples (OP) (BP 4.10) Yes Yes Involuntary Resettlement (OP) (BP 4.12) Yes Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP No Yes 7.50) Projects in Disputed Areas (OP) (BP 7.60) No No The World Bank Madhya Pradesh Urban Development Project (P155303) Annex 1: List and Details of Sub-Investments that trigger OP 7.50 S.No. Investment Nature of Cost of Baseline Current Volumetric water Volumetric water Beneficiary Target Proposed Source Investment Investment Conditions Source use (without use (with project Population Coverage (US$ project intervention) (number) million1) intervention) (MLD) (MLD) 2019 2049 2019 2049 1. Morena Scientifically 45.6 98.4% Ground 11.4 38.7 19.44 66 552,970 100% River Chambal (a Water designed coverage2 Water tributary of River Supply centralized Yamuna which is water Decentralize a tributary of treatment d ad-hoc River Ganga) distribution chlorination system metering 2. Sewda Scientifically 2.86 Over 90% Ground 1.63 2.59 3.77 6.0 37,000 100% Sindh River (a Water designed coverage3 Water tributary of River Supply centralized Yamuna which is water Decentralize a tributary of treatment d ad-hoc River Ganga) distribution chlorination system metering 3. Patera distribution 0.84 Over 90% Ground 0.31 1.17 0.35 1.34 16,762 100% Vyarma River (a Water system coverage4 Water tributary of River Supply metering Ken which is a 1 US1=INR67.7 (as of 17 May 2018 sourced from www.xe.com) 2 Source: Census of India, 2011 3 Source: MPUDC