Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: RES20225

Restructuring PAPER

ON A

PROPOSED Project restructuring

of

Maputo Municipal Development Program II (MMDP II)

CREDIT Number 4811-mz

SEPTEMBER 2, 2010

TO THE

republic of mozambique

December 3, 2015

Social, Urban, Rural and Resilience Global Practice (GSURR)

Country Department AFCS2

Africa Region


ABBREVIATIONS AND ACRONYMS

CD Country Director

CMMMaputo City Council

GDEIOffice of Strategic and Institutional Development

GOMGovernment of the Republic of Mozambique

IDA International Development Association

KPIKey Program Indicator

MTRMid-Term Review

PADProject Appraisal Document

PDOProject Development Objective

Regional Vice President: / Makthar Diop
Country Director:
Senior Global Practice Director: / Mark Lundell
Ede Jorge Ijjasz-Vasquez
Practice Manager/Manager: / Sameh Wahba
Task Team Leader: / Andre Herzog

COUNTRY

Maputo Municipal Development Program II (MMDP II)

Contents

A.SUMMARY5

B.PROJECT STATUS 6

C.PROPOSED CHANGES6

ANNEX 1: RESULTS FRAMEWORK AND MONITORING 11

DATA SHEET
Mozambique
Maputo Municipal Development Program II (MMDP II) (P115217)
AFRICA
Social, Urban, Rural and Resilience Global Practice
.
Report No: / RES20225
.
Basic Information
Project ID: / P115217 / Lending Instrument: / Adaptable Program Loan
Regional Vice President: / Makhtar Diop / Original EA Category: / Partial Assessment (B)
Country Director: / Mark R. Lundel / Current EA Category: / Partial Assessment (B)
Senior Global Practice Director: / Ede Jorge Ijjasz-Vasquez / Original Approval Date: / 30-Sep-2010
Practice Manager/Manager: / Sameh Naguib Wahba / Current Closing Date: / 31-Dec-2015
Team Leader(s): / Andre Herzog
.
Borrower: / Ministry of Economy and Finance
Responsible Agency: / Maputo Municipal Council
.
Restructuring Type
Form Type: / Full Restructuring Paper / Decision Authority: / Country Director Approval
Restructuring Level: / Level 2
.
Financing ( as of 05-Nov-2015 )
Key Dates
Project / Ln/Cr/TF / Status / Approval Date / Signing Date / Effectiveness Date / Original Closing Date / Revised Closing Date
P115217 / IDA-48110 / Effective / 30-Sep-2010 / 17-Nov-2010 / 21-Jan-2011 / 31-Dec-2015 / 31-Dec-2016
Disbursements (in Millions)
Project / Ln/Cr/TF / Status / Currency / Original / Revised / Cancelled / Disbursed / Undisbursed / % Disbursed
P115217 / IDA-48110 / Effective / XDR / 33.00 / 33.00 / 0.00 / 30.77 / 2.23 / 93
.
Policy Waivers
Does 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 Changes
This Restructuring Paper seeks Country Director approval of the following changes to the project which constitute a Level 2 restructuring:
Financial Agreement:
1.Extension of the Credit's closing date by 12 months from December 31, 2015 to December 31, 2016, to enable the completion of the public works in the already signed contracts under Component C and D.
2.Reallocation of proceeds within disbursement categories 1, 2, 3, 4, 5b, 5c, and 6 and from the “unallocated” category 8 to categories 1, 2, 5 and 6 and corresponding changes to the disbursement estimate and implementation schedule.
Project Agreement:
3.Revision of the agreement concerning the increase of the solid waste management fee.
This is the second restructuring for this project. The first restructuring was carried out after the MTR in 2013. The project development objective and the safeguards category will remain the same. The changes proposed in this restructuring have been requested through a letter from the Ministry of Finance and Economy dated November 9 2015.
Change in Implementing Agency / Yes [ ] / No [ X ]
Change in Project's Development Objectives / Yes [ ] / No [ X ]
Change in Results Framework / Yes [ ] / No [ X ]
Change in Safeguard Policies Triggered / Yes [ ] / No [ X ]
Change of EA category / Yes [ ] / No [ X ]
Other Changes to Safeguards / Yes [ ] / No [ X ]
Change in Legal Covenants / Yes [ X ] / No [ ]
Change in Loan Closing Date(s) / Yes [ X ] / No [ ]
Cancellations Proposed / Yes [ ] / No [ X ]
Change to Financing Plan / Yes [ ] / No [ X ]
Change in Disbursement Arrangements / Yes [ ] / No [ X ]
Reallocation between Disbursement Categories / Yes [ X ] / No [ ]
Change in Disbursement Estimates / Yes [ X ] / No [ ]
Change to Components and Cost / Yes [ ] / No [ X ]
Change in Institutional Arrangements / Yes [ ] / No [ X ]
Change in Financial Management / Yes [ ] / No [ X ]
Change in Procurement / Yes [ ] / No [ X ]
Change in Implementation Schedule / Yes [ X ] / No [ ]
Other Change(s) / Yes [ ] / No [ X ]
Appraisal Summary Change in Economic and Financial Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Technical Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Social Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Environmental Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Risk Assessment / Yes [ ] / No [ X ]
.
B. Project Status
MMDP II is currently rated as moderately satisfactory, with 69.6% total disbursement rate (International Development Association (IDA), Maputo Municipal Council (MMC), and government of Mozambique), and 93% disbursement of IDA resources (SDR 30.5 million out of SDR 33 million). Five of seven Project Development Objective (PDO) indicators have been achieved, and it is likely that the other two PDO indicators will be achieved by the revised closing date (December 31, 2016)also. The overall implementation of the Project components is progressing as planned, with the exception of the three major urban infrastructure works (Components C and D) which were delayed due to longer than expected procurement time, a contract default, complex drainage design, additional resettlement of affected families, and impact of rainy season. As such, it is expected that most of the activities of components A, B and E activities will be completed by December 31, 2015.
The three infrastructure work contracts within Components C and D have been signed, and the works are under way. However, full implementation will require an additional 9months beyond the original closing date. Taking also into consideration the rainy session that happens usually from November to February, and its possible impact on the execution of these three infrastructure works,it is proposed to extend the closing date to December 31, 2016.
The restructuring is also needed to: (i) amend a Legal Covenant (the percentage increase in solid waste management fee), which was achieved but in a manner that is slightly different from that in the financing agreement; and, (ii) adjust the categories of expenditures in order to reflect the extension of closing date and the increased cost of these infrastructure works.
.
C. Proposed Changes
.
Change in Legal Covenants
Explanation:
This is the second restructuring of the legal covenant regarding the increase of the solid waste management fee. The first restructuring, which followed the Mid-Term Review in 2013 and was approved on January 15, 2014, combined the processing of two separate SWM fee increases of 20% each by July 2013 and by December 2015 into one single fee adjustment of 40% by the end of 2014. After careful analysis of sustainability and willingness to pay, the CMM concluded that it could achieved the same adjustment by combining (i) a 30% increase of the SWM fee;with (ii) a reduction from 15 to 5% of the commission being charged by Electricidade de Mocambique (EDM) for the collection of the SWM fee. The expected revenue would further increase through an increase in the number of commercial payers for SWM services. All these three measures were implemented in early 2015, and the Bank team verified that CMM hasachieved the sustainability target of 40% revenue increase.
As such, the Ministry of Economy and Finance solicited to amend the Agreement, Section IV.2 of Schedule 2 as follows:
“The Project Implementing Entity shall no later than December 31, 2014, increase the Solid Waste Fee by at least 30% from its June 30, 2010, value and reduction from 15% to 5% of the commission for fare collection by EDM”
Ln/Cr/TF / Finance Agreement Reference / Description of Covenant / Date Due / Status / Recurrent / Frequency / Action
IDA-48110 / Finance Agreement:FA-Schedule 2-Section V. 1 | Description:the Recipient shall include in each proposed annual budget to its legislature & make available each year of project implementation the amounts set out in this section. | Frequency :Yearly / Complied with / / No Change
IDA-48110 / Finance Agreement:FA-Schedule 2-Section V. 2 | Description :Not later than 6 months after the Effective Date, the Recipient has approved a decree regulating property assessment in the Recipient's territory, in form and substance satisfactory to IDA | Due Date :21-Jul-2011 / After delay complied with / / No Change
IDA-48110 / Finance Agreement:FA-Schedule 2-Section V. 3 | Description :Not later than 3 months after effective date, the Recipient shall cause the implementing Entity to hire external auditors for the project, under terms of reference satisfactory to the Association | Due Date :21-Apr-2011 / Complied with / / No Change
IDA-48110 / Finance Agreement:PA-Schedule 2-Section IV. 2 (a) | Description:Increase solid waste management by at least 20% from its June 30, 2010, value. | Due Date :31-Jul-2013 / Partially complied with / / Marked for Deletion
IDA-48110 / Finance Agreement:PA-Schedule 2-Section IV. 2 (b) | Description:Increase the Solid Waste Fee by at least 20% from its 2013 value. | Due Date :31-Dec-2015 / Partially complied with / / Marked for Deletion
IDA-48110 / PA-Schedule 2-Section IV.2 / Increase the revenue from the Solid Waste Fee by at least 40% from its June 30, 2010 value. / 31-Dec-2015 / Complied with / / New
.
Financing
Change in Loan Closing Date(s)
Explanation:
In a letter dated November 9, 2015, the Ministry of Economy and Finance originally requested an extension of 18 months to June 30, 2017, in order to complete the implementation of the three large infrastructure projects, namely (i) the informal settlement interventions in Chamanculo C; (ii) the informal settlement interventions in George Dimitrov; and, (iii) the rehabilitation of Avenida Julius Nyerere. All key procurement processes for these three works have been completed, contracts were signed, and the execution of the works is underway. However, on November 30, 2015, the Bank and the Municipal Council of Maputo (CMM) carefully reviewed the execution plan of these three works, taking into consideration possible delays due to the country's rainy season from November to February, the complexity of the drainage design and works, and concluded that the extension should be for 12 months to December 31, 2016. The agreed timeline for completion of these infrastructure works is as follows:
(i)The infrastructure works in Chamanculo C and George Dimitrov carried out under Component C are expected to be completed by September 2016.
(ii)The infrastructure works of Avenida Julius Nyerere under Component D are expected to be completed by July 2016.
(iii)The complete resettlement of the families affected by the works of Chamanculo C, and of Avenida Julius Nyerere, including household access to water, electricity, and sanitation should be completed by September 2016.
Ln/Cr/TF / Status / Original Closing Date / Current Closing Date / Proposed Closing Date / Previous Closing Date(s)
IDA-48110 / Effective / 31-Dec-2015 / 31-Dec-2015 / 31-Dec-2016 / 31-Dec-2015
Reallocations
Explanation:
During the last Implementation Support Mission (September 2015) a detailed budget review was prepared. Based on this review, it is necessary to reallocate the proceeds in disbursement categories 1, 2, 3, 4, 5b, 5c, and 6 to allow for reallocation of funds between the categories and from the “unallocated” category 8 to categories 1, 2, 5 and 6. In particular:
Works category (category 1) needs to be increased by 13% to reflect the additional costs related to the new tender on the rehabilitation of the principal road project on Ave. Julius Nyerere. The existing Project RAP and ESMF and ESMP will be fully applied to this category.
Goods category (category 2) needs to be increased by 21% resulting from new activities related to the reclassification of informal settlements, support to the massive land regularization as well as new equipment for the deconcentration activities.
Consultant Services (category 3) needs to be reduced by 12% due to the cancellation of institutional development activities and a revision of the urban structure plan.
Training (category 4) needs to be reduced by 25% to reallocate funds to other categories.
Services category (category 5):
Subcategory 5a. The percentage of expenditures to be financed by IDA to cover for the maintenance of these services until program closure was revised and should remain at the value of 100%.
Subcategory (5b) needs to be reduced by 4% to reflect the actual cost of the contract of Solid Waste Management Services, paid by CMM funds, until program closure. The percentage of expenditures to be financed by IDA of subcategory 5b also needs to be adjusted. The percentages for FY2014 and FY2015 will be revised and kept at the FY2013 value of 40%. This is to: (i) take into account the overpayments made with IDA resources; (ii) but also due to increases in the current cost structure resulting from the delay in implementing the planned fee increases, thus requiring substantially higher contributions from CMM’s general revenues to the financing of service delivery contracts during 2013-2015 than originally projected;and, (iii) to economies in relation to projected IDA contributions that would arrive from the SWM disposal in the new land fill to be operational in 2018, after the revised closing date.
Subcategory (5c) needs to be increased by 6% to support the implementation of new activities related to the massive regularization of DUATs.
Operating Costs category (category 6) needs to be increased by 15% mostly associated with expenses to maintain the PIU and technical teams given the project extension.
Due to the reallocation of proceeds to the other categories, as described above, the Unallocated category (category 8) needs to be reduced by 75% to 275,000.00 (75%).
Ln/Cr/TF / Currency / Current Category of Expenditure / Allocation / Disbursement % (Type Total)
Current / Proposed / Current / Proposed
IDA-48110 / XDR / Wks A.1c A.2c Bc Cd Da, Db Dd E.2b / 13,360,000.00 / 15,100,000.00 / 100.00 / 100.00
Gds except Parts A.1(i) / 2,480,000.00 / 3,000,000 / 100.00 / 100.00
Consulting Services / 10,400,000.00 / 9,200,000.00 / 100.00 / 100.00
Training / 920,000.00 / 690,000.00 / 100.00 / 100.00
Services other than CS Parts A.1(e) / 500,000.00 / 500,000.00 / 100.00 / 100.00
Services other than CS Parts E.1(b) / 3,270,000.00 / 3,135,000.00 / 40.00 / 40.00
Serv other than CS Parts Bc Cc Cd / 330,000.00 / 350,000.00 / 100.00 / 100.00
Op Costs except Parts A.1(h) A.2(e) / 650,000.00 / 750,000.00 / 100.00 / 100.00
Compen or Displac people fin by CMM / 0.00 / 0.00 / 0.01 / 0.01
UNALLOCATED / 1,090,000.00 / 275,000.00 / 0.00 / 0.00
Designated Account / 0.00 / 0.00 / 0.00 / 0.00
Total: / 33,000,000.00 / 33,000,000.00
Disbursement Estimates
Change in Disbursement Estimates
Explanation:
The total of IDA funds by 31 of August 2015 to be executed amounts to $15,110,070 until project closure.
The funds for the remaining FY 2016 will be dedicated to: (i) for the contracts of the three infrastructure works; (ii) contract payments of the Technical Assistance contracts given the project extension; and(iii) payments associated with new approved activities. The funds for FY 2017 will be used for: (i) the final infrastructure works payments; and(ii) project close out activities such as the Financial Audit.
Fiscal Year / Current (USD) / Proposed (USD)
2011 / 3,100,000.00 / 2,101,546.50
2012 / 12,500,000.00 / 10,480,754.39
2013 / 15,300,000.00 / 13,184,172.66
2014 / 10,700,000.00 / 6,708,487.60
2015 / 5,300,000.00 / 12,617,752.53
2016 / 3,100,000.00 / 3,189,736.12
2017 / 0.00 / 1,717,550.20
Total / 50,000,000.00 / 50,000,000.00
.
Other Change(s)
Change in Implementation Schedule
Explanation:
The three large infrastructure works, the informal settlement interventions in Chamanculo C and George Dimitrov of Component C and the rehabilitation of av. Julius Nyerere of Component D, including the fully implementation of the resettlement actions is expected to be completed by September 2016, but could take one or two months longer depending on the intensity of the rainy season which is starting now.

1

ANNEX 1: RESULTS FRAMEWORK

Project Name: / Maputo Municipal Development Program II (MMDP II) (P115217) / Project Stage: / Restructuring / Status: / DRAFT
Team Leader(s): / Andre Herzog / Requesting Unit: / AFCS2 / Created by:
Product Line: / IBRD/IDA / Responsible Unit: / GSU13 / Modified by:
Country: / Mozambique / Approval FY: / 2011
Region: / AFRICA / Lending Instrument: / Adaptable Program Loan
.
Project Development Objectives
Original Project Development Objective:
Improve the delivery and sustainability of priority municipal services in Maputo Municipality.
Results
Core sector indicators are considered: Yes / Results reporting level: Project Level
.
Project Development Objective Indicators
Indicator Name / Core / Unit of Measure / Baseline / Actual(Current) / End Target
Direct project beneficiaries / / Number / Value / 729264.00 / 1130109.00 / 1041545.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Female beneficiaries / / Percentage / Value / 51.50 / 51.50 / 51.50
Sub Type
Supplemental
% cumulative annual real increase in revenue from IPRA / / Percentage / Value / 0.00 / 282.00 / 288.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Mean User Perception of Quality Public Services / / Number / Value / 2.80 / 2.70 / 3.00
Date / 02-Sep-2010 / 25-Nov-2014 / 31-Dec-2016
Comment
Number of people in urban areas provided with access to regular solid waste collection under the project / / Number / Value / 729264.00 / 1130109.00 / 1041545.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Number of people in urban areas provided with access to all-season roads within a 500 meter range under the project / / Number / Value / 60000.00 / 588975.00 / 300000.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Households with secure land tenure formalized (with DUAT) / / Number / Value / 0.00 / 12546.00 / 30800.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Intermediate Results Indicators
Indicator Name / Core / Unit of Measure / Baseline / Actual(Current) / End Target
Component A: Average processing time (days) for construction licenses / / Number / Value / 75.00 / 84.00 / 45.00
Date / 15-Jan-2014 / 02-Jun-2015 / 31-Dec-2016
Comment
Component A: Report Card Results / / Text / Value / June / CRC to be conducted in late 2015 / June
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Component A: Financial Execution Report / / Text / Value / April / N.A. Exercise to be conducted in June. / April
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Component B: % of recurrent expenditures covered by own-source revenue / / Percentage / Value / 96.00 / 162.00 / 100.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Component B: Recurrent expenditures spent on roads operation and maintenance (in MT) / / Number / Value / 7892640.00 / 45111045.00 / 9593553.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Component C: Total number of bairros with land use oriented by local spatial plans / / Number / Value / 9.00 / 18.00 / 17.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Component E: Sectoral commissions undertake specific initiatives each year to improve metropolitan coordination in keys sectors (Metropolitan Transport Commission, and Metrop. Solid Waste Commission) / / Text / Value / None / Ongoing implementation of metropolitan strategy for SWM. / 2 sectoral Metropolitan Commissions being implemented
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
Roads rehabilitated, Non-rural / / Kilometers / Value / 0.00 / 28.20 / 28.00
Date / 02-Sep-2010 / 02-Jun-2015 / 31-Dec-2016
Comment
.

1