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World Bank Document The World Bank ODRA-VISTULA FLOOD MANAGEMENT PROJECT (P147460) REPORT NO.: RES41216 Public Disclosure Authorized RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ODRA-VISTULA FLOOD MANAGEMENT PROJECT APPROVED ON JULY 23, 2015 TO Public Disclosure Authorized REPUBLIC OF POLAND JUNE 25, 2020 WATER GLOBAL PRACTICE EUROPE AND CENTRAL ASIA Public Disclosure Authorized Regional Vice President: Anna M. Bjerde Country Director: Arup Banerji Regional Director: Steven N. Schonberger Practice Manager/Manager: David Michaud Task Team Leader(s): Berina Uwimbabazi Public Disclosure Authorized The World Bank ODRA-VISTULA FLOOD MANAGEMENT PROJECT (P147460) ABBREVIATIONS AND ACRONYMS APSFR Areas of Potential and Significant Flood Risk CEB Council of Europe Development Bank ESMF Environmental and Social Management Framework EU European Union EUCF European Union Cohesion Fund EUR Euro IBRD International Bank for Reconstruction and Development IFR Interim Financial Reports IMGW Institute of Meteorology and Water Management KZGW National Water Management Authority NGO Non-Government Organization MAD Ministry of Administration and Digitalization MoE Ministry of Environment MoF Ministry of Finance MTR Mid-Term Review MMEIN Ministry of Marine Economy and Inland Navigation OVFMP Odra-Vistula Flood Management Project PCU Project Coordination Unit PDO Project Development Objective PIU Project Implementation Unit RBMP River Basin Management Plans RGZW Regional Water Management Authority TA Technical Assistance ZMiUW Voivodship Board of Land Reclamation and Waters The World Bank ODRA-VISTULA FLOOD MANAGEMENT PROJECT (P147460) BASIC DATA Product Information Project ID Financing Instrument P147460 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 23-Jul-2015 15-Dec-2023 Organizations Borrower Responsible Agency Republic of Poland Ministry of Interior and Administration Project Development Objective (PDO) Original PDO The project development objectives are to increase access to flood protection for people living in selected areas of the Odra Riverand the Upper Vistula River basins and to strengthen the institutional capacity of the Borrower to mitigate the impact of floods more effectively. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-85240 23-Jul-2015 10-Sep-2015 04-Nov-2015 15-Dec-2023 504.04 92.09 413.68 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank ODRA-VISTULA FLOOD MANAGEMENT PROJECT (P147460) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Background 1. This restructuring paper suggests corrective measures, following a Mid-Term Review assessment, needed to ensure that the PDO is achieved and project implementation is set back to a satisfactory path. The key adjustments proposed through this first restructuring of OVFMP are changes in the: Activities and Costs1, Implementation Arrangements and Results Framework. 2. The Odra-Vistula Flood Management Project was approved on July 23, 2015 for an IBRD loan (IBRD 8524-PL) for US$496 million with co-financing by the Council of Europe Development Bank (CEB) for US$323 million, European Union for US$216 million and the Government of Poland Counter finance for US$216 million. The Project was declared effective on November 4, 2015 and is scheduled to close on December 15, 2023. The overall goal of the project is to strengthen flood protection, improve preparedness, and invest in further effective river and flood risk management. The Project Development Objective (PDO) is to increase access to flood protection for people living in selected areas of the Odra River and the Upper Vistula River basins and to strengthen the institutional capacity of the Borrower to mitigate the impact of floods more effectively. It comprises of five components: (1) Flood protection of the Middle and Lower Odra; (2) Flood protection of the Nysa Klodzka Valley; (3) Flood protection of the Upper Vistula; (4) Institutional strengthening and enhanced forecasting; and (5) Project management and studies. 3. The Project’s direct beneficiaries are the population of the regions that the project covers, estimated to be about 15.1 million people. The project provides the following three areas with flood management infrastructure and related measures: (i) the Middle and Lower Odra; (ii) the Nysa Kłodzka Valley; and (iii) selected parts of the Upper Vistula including notably the areas of Kraków, Sandomierz, and communities in the Raba and the San tributary catchments. Other beneficiaries are those that are recipients of activities aiming to further strengthen the national institutional capacity under the project for flood risk management and improve preparedness of the country. 4. At appraisal, the implementation arrangements for the coordination and monitoring of project activities were designated to the Ministry of Environment (MoE), through the National Water Management Authority (KZGW) and the Ministry of Administration and Digitalization (MAD). A total of nine (9) PIUs were established, within the respective Regional Water Management Authority (RGZW), Institute of Meteorology and Water Management (IMGW) and Voivodship Board of Land Reclamation and Waters (ZMiUW). Following a reform in the water sector, and the effectiveness of a new Water Law Act, the State Water Holding Polish Waters (PWs) was established to perform water management tasks and is a direct successor of the KZGW. Status 5. Currently, the PDO remains relevant and there is progress towards achieving the expected development outcomes. Progress towards achievement of the Project Development Objective (PDO) is rated as ‘Moderately Unsatisfactory’, downgraded from ‘Moderately Satisfactory’ in June 2019, due to a cumulative risk of original activities not being implemented prior to project closure, and therefore not contributing to the achievement of the PDO. Implementation Progress (IP) was also downgraded to ‘Moderately Unsatisfactory’ in June 2019, as a result of stagnated implementation and poor performance of some PIUs causing additional delays in the implementation of 1 No changes to the components would be made, but only to a limited number of project-supported activities within each component. The World Bank ODRA-VISTULA FLOOD MANAGEMENT PROJECT (P147460) activities. These downgrades to the IP were also due to significant delays in procurement and implementation of key project activities such as contract works for modernizing and improving weather and hydrological stations, as well as improving forecasting capacities (IMGW-PIB Component) and flood protection measures of the city of Kłodzko and other small towns and localities within the Nysa Kłodzko Valley. Several actions have been undertaken since to improve implementation including strengthening staffing within consultancy teams to fast track the preparatory studies e.g. detailed technical designs; fast tracking procurement processing and contracting; training of PCU and PIU staff to strengthen capacity for monitoring and supervision; as well as restructuring of PIUs. Nevertheless, these measures alone will not suffice to ensure the achievement of the PDO and bringing back the IP on track, hence a project restructuring is required. 6. As of June 25, 2020, total disbursements of the IBRD loan amounted to US$92.09 million (18.27 percent). Total commitment amounts to US$660.95 million2(42% of the total project cost). Below is a summary of the implementation status of the five project components to date. a. Component One: Flood protection of the Middle and Lower Odra (US$6433 million of which US$177.7 million (27%) is committed). The aim of this component is to enhance protection against summer and winter floods for the cities of Szczecin, Słubice, Gryfino, and others along the middle and lower Odra River, within Areas of Potential and Significant Flood Risk (APSFR). As a result of complaints received from Non-Government Organizations (NGOs) in relation to the Environmental and Social safeguards documentation prepared for the modernization works on boundary sections of Odra River, significant delays in implementation were experienced. Despite the external factors that have impacted the scope and the timeliness of implementation, proactive actions including improved communication and stakeholder engagement have been implemented. b. Component Two: Flood protection of the Nysa Klodzka Valley (US$344.5 million of which US$195.7 million (56%) is committed). This component is divided into two-subcomponents, focused on active protection through the construction of four mid-sized dry polders, dike rehabilitation and construction, and passive protection through the reconstruction of the river alignments and embankments, as well as small bridges and other structures to allow temporary retention and safe passage of flood waves, accompanied by large amounts of debris, through the Nysa Kłodzko Valley. Activities under the passive protection stream of work have been modified to incorporate feedback collected during public consultations in Kłodzko Valley, and the results of extensive analytical studies. c. Component Three: Flood protection of the Upper Vistula (US$287.3 million of which US$109.38 million (38%) is committed). The activities in this component are to protect the Kraków agglomeration and Nowa Huta industrial area, the Sandomierz-Tarnobrzeg industrial and agricultural
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