World Bank Document€¦ · 24.03.2017 · implementation and significant progress has also been...

The World Bank Matanza-Riachuelo Basin (MRB) Sustainable Development Adaptable Lending Program (P105680)

REPORT NO.: RES26835

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

MATANZA-RIACHUELO BASIN (MRB) SUSTAINABLE DEVELOPMENT ADAPTABLE LENDING PROGRAM

APPROVED ON JUNE 9, 2009

TO THE

ARGENTINE REPUBLIC

March 3, 2017

ENVIRONMENT & NATURAL RESOURCES

LATIN AMERICA AND CARIBBEAN

Regional Vice President: Jorge Familiar Country Director: Jesko S. Hentschel

Senior Global Practice Director: Karin Erika Kemper Practice Manager: Raul Ivan Alfaro Pelico

Task Team Leaders: Christophe Prevost, Elba Lydia Gaggero

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ABBREVIATIONS AND ACRONYMS

ABBREVIATIONS AND ACRONYMS ACUBA Asociación de Curtidores de Buenos Aires (Tanneries Industrial Association of the Province of Buenos Aires) ACUMAR Autoridad de Cuenca Matanza Riachuelo (Matanza-Riachuelo Basin Authority) APL Adaptable Program Loan AySA Aguas y Saneamientos Argentinos S.A. (Argentina Water and Sanitation Utility) CBA City of Buenos Aires EIA Environmental Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan GoA Government of Argentina IBRD International Bank for Reconstruction and Development IWWTP Industrial Wastewater Treatment Plant M-R Matanza-Riachuelo MRB Matanza Riachuelo Basin MU Moderately Unsatisfactory MS Moderately Satisfactory PBA Province of Buenos Aires PDO Project Development Objective PIU Project Implementation Unit RPF Resettlement Policy Framework TIP Tanneries Industrial Park UCGP Unidad Coordinadora General del Proyecto (Project’s General Coordination Unit)


BASIC DATA

Product Information

Project ID Lending Instrument

P105680 Adaptable Program Loan

Original EA Category Current EA Category

Full Assessment (A) Full Assessment (A)

Approval Date Current Closing Date

09-Jun-2009 31-Mar-2017

Organizations

Borrower Responsible Agency

Argentine Republic Ministry of Environment and Sustainable Development,Unidad Coordinadora General del Proyecto (UCGP)

OPS_PROCESSING_DISCLOSABLE_TABLE Processing (this section will be automatically removed by the system before the paper is disclosed)

Form Type Based on the proposed changes this Restructuring type is

Full Restructuring Paper Level 2

Decision Authority

RVP Decision

Explanation of Exception to Decision Authority

RVP approval is required because the cumulative extension of the loan closing date exceeds two years from the original closing date.

Project Development Objective (PDO)

Original PDO

The project (APL-1) development objectives contribute to the overall program development objective by (i) improving sewerage services in the M-R River Basin and other parts of the Province and City of Buenos Aires by expanding transport and treatment capacity; (ii) supporting a reduction of industrial discharges to the M-R River, through the provision of industrial conversion grants to small and medium enterprises; (iii) promoting improved decision-making for environmentally-sustainable land use and drainage planning, and piloting urban drainage and land use investments, in


the M-R River Basin; and (iv) strengthening ACUMAR's institutional framework for ongoing and sustainable clean-up of the M-R River Basin.

OPS_TABLE_PDO_CURRENTPDO

Summary Status of Financing

Ln/Cr/Tf Approval Signing Effectiveness Closing Net

Commitment

Disbursed Undisbursed

IBRD-77060 09-Jun-2009 25-Aug-2009 20-Jul-2010 31-Mar-2017 718.03 255.73 462.30

Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)?

No

I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

A. PROJECT STATUS

1. The Matanza Riachuelo Basin Sustainable Development Project was approved on June 9, 2009 and declared effective on July 20, 2010. The Project helps financing the clean-up of the Matanza-Riachuelo Basin (MRB) by addressing waste water treatment from municipal and industrial sources and by strengthening the institutions in charge of managing the basin. The Project is expected to directly benefit 3.5 million people, of which approximately 1.2 million are poor (based on the national poverty line). The cleanup of the MRB has been mandated by Argentina’s Supreme Court on July 8, 2008 and is a priority at the highest levels of Government.

2. The Project was designed to support the implementation of the Government’s Plan for Environmental Remediation of the MRB, or PISA for the initials of its title in Spanish: Plan Integral de Saneamiento Ambiental. The PISA aims to implement the strategic objectives set out in the July 8, 2008 judgment of Argentina’s Supreme Court of Justice. The court’s judgment mandated the cleanup of the MRB, including improving the quality of life of the inhabitants of the basin; restoring the environment in the basin in all its dimensions (water, air and soil); and preventing environmental damages with sufficient and reasonable degree of predictability.

3. As an example of integrated cleanup of urban areas in one of the most polluted river basins in the world, the Project has very high national and international visibility and benefits from strong support of the population as well as high levels of scrutiny from the public, civil society organizations, and the press. Since the elections in late 2015 the cleanup of the MRB and the Project have benefitted from an unprecedented political alignment of the administrations at national, provincial, and municipal levels, belonging to the same political party.

4. Significant progress has been made under all components of the Project. To date, 85 percent of the US$718 million1 loan has been committed, US$255 million (or 35.6 percent of the loan) has been disbursed, and all activities to

1 The initial Loan amount of US$840 million was reduced to the current amount of US$718 million after a cancellation of US$122


be implemented have been identified. The main infrastructure contracts of Component 1 are now under full implementation and significant progress has also been made in the other project components. Implementation Performance is currently rated Moderately Satisfactory given the significant improvement recorded over the last year. Progress towards achievement of the PDO is however rated Moderately Unsatisfactory to date because the PDO cannot be achieved within the current loan closing date of March 31, 2017. Progress by component is described in the following paragraphs.

5. Component 1, Sanitation (IBRD financing: US$619.01 million), finances large and technically complex sewerage infrastructure investments to improve coverage and quality of sanitation service in the MRB. These infrastructure investments include the following three subprojects (see also graphic map):

a. The Left Bank Collector: a 16 km underground sewerage collector and 18 km of secondary collectors and complementary works on the left bank of the M-R River to convey the wastewater flows generated in the Argentina Water and Sanitation utility (Aguas y Saneamientos Argentinos S.A. or AySA) concession area located in the lower part of the MRB to the Wastewater Treatment Plant in Dock Sud;

b. The “Riachuelo” Outfall: a 11.5 km underground sub-aquatic outfall to adequately dispose the sewerage in the La Plata River; and

c. The Sludge Treatment Plant of AySA Southwest Wastewater Treatment Plant.

6. To date, the three subprojects are under full implementation. Execution rates of the respective contracts are the following: 6.3 percent for the Left Bank Collector, 16.5 percent for the Riachuelo Outfall, and 31.9 percent for the Sludge Treatment Plant. Once completed, these sanitation infrastructures will permit to properly treat and discharge 35 percent of the wastewater effluents of the concession of AySA and allow the connection to the sanitation system of 4.5 million additional people located in the Province of Buenos Aires.

7. Component 2, Industrial Pollution Abatement (IBRD financing: US$64.36 million), finances activities aiming to: i) reduce industrial discharge in the M-R River, ii) support small and medium enterprises with weak financial and technical capacity to comply with environmental regulation, and iii) focus on the main industrial polluters with significant organic and toxic loads that discharge to the M-R River. The Project will finance the construction of the Industrial Wastewater Treatment Plant (IWWTP) and its park in the Municipality of Lanús. This subproject known as ACUBA (from Asociacion de Curtidores de Buenos Aires) would allow to substantially reduce the contamination of the MRB by regrouping 22

tanneries and enabling the treatment of 78 percent of tannery effluents2 currently discharged untreated in the river. The subproject is part of the Government’s Plan for Environmental Remediation of the M-R Basin. The ACUBA subproject comprises three separated contracts: the construction of the Industrial Wastewater Treatment Plant, the construction of the Tannery Industrial Park (TIP) initially to be financed by the Government, and the supervision of works. It is expected that the bidding process for the IWWTP would take place in March 2017, followed immediately by the TIP and the relevant supervision contract.

8. Component 3, Environmental Territorial Management (IBRD financing: US$26.24 million), finances activities to million in 2012.

2 These correspond to a reduction of 54 percent for organic waste (BOD5), 88 percent for total chromium, and 93 percent for Sulfurs.


improve public policies on environmental territorial management. Toward this end, the component finances pilots of integrated investments in basic infrastructure service and flood control to improve urban living conditions in selected low income areas of the MRB. Most activities are now under implementation and include: i) the construction of water, sanitation and drainage systems to improve services for about 50,000 people living in low income settlements and neighborhoods in the Province and in the City of Buenos Aires; ii) the carrying out of technical, social and environmental studies to improve flood control system in the upper and middle parts of the basin, iii) the design and implementation of improved hydro-meteorological and water monitoring systems; and iv) strengthening the capacity of municipalities to manage floods through the design of contingency flood emergency plans.

9. Component 4, Institutional Strengthening and Project Management (IBRD financing: US$6.32 million), supports project management and the strengthening of the capacity of the Matanza-Riachuelo River Basin Authority (ACUMAR). Activities includes the development of a communication strategy, the establishment of the public information office, and the carrying out of technical and monitoring studies to provide periodic advice in conjunction with Project implementation. Under this component, the capacity of the Project Implementation Unit has been strengthened to manage technical issues, safeguards aspects, procurement processes and contract administration. Since Project inception, ACUMAR has grown in number and capacity with a team of about 800 professionals to date (compared with 142 in June 2010). ACUMAR’s institutional setup has recently been reorganized, with the nomination of new authorities and a direct reporting line to the Office of the Chief of Cabinet. Under this new configuration, it is expected that ACUMAR would have a stronger role and support from the highest authorities in coordinating the implementation of the PISA.

10. The Project is in full compliance with its environmental and social safeguards instruments. The Project has been assigned an environmental screening category A as per OP/BP 4.01 – Environmental Assessment. Compliance with the safeguards instruments has been systematically rated Satisfactory throughout project implementation to date. The PIU has demonstrated the necessary capacity for overseeing safeguards issues and ensuring full compliance with its safeguards instruments. The main environmental impacts expected from the Project are those connected to the construction of the infrastructure under Component 1: and these have been mitigated through the satisfactory implementation of the Environmental Impact Assessment (EIA) and Environmental and Social Management Plan (ESMP) prepared for each one of the subprojects. The physical investments under Component 2 and Component 3 meet the screening criteria for environmental and social sustainability as defined in the Operations Manual and the Environmental and Social Management Framework (ESMF) for these components and, as applicable, ESMPs have been developed for corresponding subprojects. All environmental permits are up to date, and supervision visits confirmed that the social and environmental management of all subprojects have been so far implemented and monitored in full compliance with safeguards instruments.

11. No audit reports are outstanding or unsatisfactory to the Bank for the Project. Neither the loan in particular nor Argentina in general, is subject to an ongoing suspension of disbursements. All legal covenants are complied with. The Project Development Objective continues to be achievable.

B. SUMMARY OF PROPOSED CHANGES

12. This Restructuring Paper proposes the following changes to the Project:

a. Extension of the loan Closing Date from March 31, 2017 to March 31, 2022, to allow for completion of all main activities and achievement of the Project Development Objective;

b. Increase from 80 percent to 100 percent of Bank financing for expenditure categories 1, 4, and 9 to allow for more agile implementation.

c. Change of the description of Component 2 – Part 2 (f) to incorporate the financing of the ACUBA Tanneries


Industrial Park (TIP) and specialized technical assistance for the supervision of the construction of the IWWTP and said industrial park; and,

d. Reallocation of loan proceeds to increase the allocation of category 1 for US$22.6m from categories 3, 4, 5, and 9.

e. Revision of the Results Framework to reflect the new closing date for the end targets, and to adjust some indicators based on the government’s priorities.

13. The proposed restructuring does not imply any changes to the PDO or to the Safeguards policies triggered. No changes to the Economic and Financial Analysis, Technical Analysis, Social Analysis or Environmental Analysis are proposed.

14. The restructuring complies with the requirements of Bank’s Operational Policy OP/BP 10.00 in that the Project’s development objectives continue to be achievable, the performance of the Borrower remains satisfactory, and the Borrower and the Bank have agreed on an action plan to be undertaken by the Borrower to complete the Project.

C. RATIONALE FOR RESTRUCTURING

15. The main purpose of the proposed restructuring is to extend the closing date of the Project to compensate for the exceptional implementation delays and to align the loan closing date with the implementation timeframe of the main sanitation infrastructure subprojects of Component 1.

16. The proposed five-year extension is the second step of a phased approach to extend the loan closing date in order to allow all project activities to be completed and achieve the PDO. The first restructuring of the Project, approved on December 24, 2015, included a one-year extension of the closing date (from March 31, 2016 to March 31, 2017) intended as an interim phase needed to: (i) allow the Administration that took power on December 10, 2015 to be part of the dialogue on the future of the Project, and (ii) materialize significant implementation progress while finalizing the proposed redesign of the two main infrastructures.

17. The Borrower has prepared an action plan to allow for the achievement of the PDO within the proposed extended closing date. Further to a review mission undertaken in October 2016, the Borrower and the Bank agreed on the proposed action plan and disbursement projections related to the extension of the closing date. The Client formally submitted a request of restructuring to the Bank on January 11, 2017.

18. With the main sanitation infrastructure contracts now under full implementation and significant progress made in the preparation and implementation of the other components, the Project is expected to be on track to achieve its PDO at the end of the proposed extended implementation period.

II. DESCRIPTION OF PROPOSED CHANGES

19. Extension of closing date. The proposed five-year extension aims to compensate for the exceptional implementation delays mainly due to the size and complexity of the proposed infrastructure and related procurement processes. After four initial years of very limited implementation, the Project has made significant progress over the past two years. The extension of the closing date also reflects the updated implementation timeframe of the main sanitation infrastructure subprojects. The Borrower has proposed some technical modifications to the Left Bank Collector and the Riachuelo Outfall, in order to improve efficiency and sustainability of the infrastructure. The Bank approved the proposed modifications of the technical design of the Left Bank Collector and the Riachuelo Outfall, on March 29 and


August 12, 2016, respectively. The technical modifications, resulted in changes to the contracts’ duration and costs: (i) the contract for the Left Bank Collector was extended by 19 months up to June 2020 and increased by 5.5 percent of the initial contract amount; (ii) the contract for the Riachuelo Outfall was extended by 14 months up to March 31, 2021 and increased by 9.4 percent of the initial contract amount. The proposed extension is based on the civil works contract with the furthest completion date, plus one year of supervision. The proposed closing date on March 31, 2022 would allow completion of all works and related supervision.

20. Change to Components and Costs. Changes are proposed only for Component 2, Industrial Pollution Abatement. The proposed change consists in financing the construction of the Tanneries Industrial Park (TIP), which was already part of the project design and originally planned to be financed with Government resources (estimated cost US$11 million). The TIP involves the installation of an exclusive industrial area intended for the establishment of 22 tanneries3. An Environmental and Social Impact Assessment for the IWWTP and the TIP and its corresponding Environmental and Social Management Plan were developed by ACUMAR and approved by the Bank. They were published in country in October 2015 and on the Bank external website in November 2015. Based on this change, the cost of components would change as follows.

Current Component Name Current Cost

(US$M) Proposed Cost

(US$M) Action

Component 1: Sanitation 596.41 619.01 Revised

Component 2: Industrial Pollution Abatement

57.80 64.36 Revised

Component 3: Environmental Territorial Management

53.90 26.24 Revised

Component 4: Institutional Strengthening and Project Management

7.82 6.32 Revised

Front-end fee 2.1 2.1

Total: 718.03 718.03

21. Change in percentage of Bank financing. The proposed changes consist of the increase from 80 percent to 100 percent the share of expenditures financed by the Bank for categories 1, 4 and 9 would lead to more agile implementation. The following changes are proposed:

i. Category 1: Works under Part 1(a) of the Project from: 80 percent to 100 percent ii. Category 4: Eligible Expenditures Parts 2(a) to (d) & 3(a) through (f) from: 80 percent to 100 percent

iii. Category 9: Works under part 2(f) and 3(g) from: 80 percent to 100 percent

3 This will allow the adequate treatment and safe disposal of around 78 percent of the total tannery wastewater discharged in the

basin.

Category

Amount of the Loan Allocated (expressed in USD)

Changes (expressed in

USD)

Disbursement % (Type Total)

Current Proposed Current Proposed


22. Reallocations of loan proceeds. The proposed reallocation reflects the change to Component 2 (financing of TIP) and the increase in cost of works under Component 1.

23. Change in Disbursement Estimates. The following table presents the revised disbursement estimates, based on actual and projected disbursements, and reflecting the proposed extended implementation period.

Fiscal Year Current (USD) Proposed (USD)

2009 0.00 0.00

2010 0.00 0.00

2011 4,778,757.09 4,778,757.09

2012 782,596.52 782,596.52

(1) Works under Part 1 (a) of the Project

576,412,000 599,012,000 +22,600,000

80% of each Eligible Expenditure incurred by AySA until disbursements under this Category have reached an aggregate amount of $400,000,000; and 40% of each Eligible Expenditure incurred by AySA thereafter

100.00

(2) Consultants’ services, goods and Training under Part 1 (b) of the Project

20,000,000 20,000,000 100.00 100.00

(3) Works, goods and/or consultants’ services under CRI Subprojects

1,000,000 500,000 -500,000 100.00 100.00

(4) Eligible Expenditures for Parts 2 (a) through (d) and 3 (a) through (f) of the Project

7,100,000 4,100,000 -3,000,000 80.00 100.00

(5) Eligible Expenditures for Part 4 of the Project

7,820,000 6,320,000 -1,500,000 100.00 100.00

(6) Unallocated 0 0 0.00 0.00

(7) Front-end Fee 2,100,000 2,100,000 100.00 100.00

(8) Premia for Interest Rate Caps and Interest Collars

0 0 0.00 0.00

(9) Works and consultants’ services under Parts 2(f) and 3(g) of the Project

103,600,000 86,000,000 -17,600,000 80.00 100.00

TOTAL AMOUNT 718,032,000 718,032,000 0


2013 1,538,487.22 1,538,487.22

2014 582,603.48 582,603.48

2015 176,355,897.06 176,355,897.06

2016 51,204,900.68 30,716,838.27

2017 482,788,757.954 60,000,000.00

2018 163,000,000.00

2019 117,000,000.00

2020 116,000,000.00

2021 25,000,000.00

2022 20,276,820.36

Total: 718,032,000.00 718,032,000.00

24. Modifications to the Results Framework. Changes to the Results Framework are proposed to reflect the new closing date. Adjustments to some indicators are also proposed, as a result of the discussions that were held with the new Administration over the year of the first extension of the closing date. The following table presents changes to the Results Framework:

Results Framework- Proposed Changes

PDO5: (no changes). The objectives of the Project are to: (a) improve sewerage services in the M-R River Basin, and other parts of the PBA and the CBA by expanding transport and treatment capacity; (b) support a reduction of industrial discharges to the M-R River, through the provision of CRI Grants; (c) promote improved decision-making for environmentally-sustainable land use and drainage planning, and to pilot urban drainage and land use investments, in the M-R River Basin; and (d) strengthen ACUMAR’s institutional framework for the ongoing and sustainable clean-up of the M-R River Basin

Original Indicators Proposed Change

D=Dropped N= New

R=Revised C=Continued

New Indicator (if New or Revised)

Comments (Justification of proposed Change)

PDO Indicators

Component 1 a) Percentage of all sewage (about 12m3/s) that is currently discharged from AySA’s concession area to the La Plata River without adequate treatment that is appropriately treated and disposed of by the end of APL-1

R To reflect the new closing date for end targets, i.e. March 31, 2022

Component 2 R To reflect the new closing date for end

4 The amount shown for year 2017 reflects the balance of the loan at the time of the current closing date (Restructuring approved by

the Bank in December 2015). 5 From the Loan Agreement.


b) (i) Volume (mass) of COD pollution load reduction achieved under the Project (Tons/year) (Core Indicator)

targets, i.e. March 31, 2022

(ii) Number of enterprises in the matching grants program that have effectively reduced their discharge loads according to their PRIs


Component 3 c) Updated Drainage Master Plan agreed with key stakeholders and are piloted

D

ACUMAR has finalized the TORs for the Drainage Master Plan, but considers finalization of the Flood Contingency and Emergency Response Plan for the Basin with the support of the Project, a higher priority.

N

Development of a Flood Contingency and Emergency Response Plan for the Basin

ACUMAR considers the Flood Contingency and Emergency Response Plan of the highest priority. It has started the preparation of this Plan in close coordination with and participation of the Basin’s 14 municipalities in the Province of Buenos Aires and the City of Buenos Aires.

Component 4 ACUMAR has fully staffed against its new organigram, operates with its own operating budget and is fully able to fulfill the functions vested in it by law.

R

ACUMAR is fully staffed against its new organigram, operates with its own operating budget and is fully able to fulfill the functions vested in it by law.

i) To reflect the new closing date for end targets, i.e. March 31, 2022; and ii) to correct a typo.

A participatory forum for environmentally sustainable land use with municipalities at the Basin level is in place

D The forum is not expected to take place.

Intermediate Results Indicators

Component 1 a) Linear kilometers of the Left Bank collector (including Baja Costanera bypass collector and secondary network) completed

R

(i) To revise the end-Project target from 18km to 34km, adding the secondary network of collectors and complementary works on the left bank of the M-R River; and (ii) to reflect the new closing date for end targets, i.e. March 31, 2022

b) Linear kilometers of the Riachuelo R To reflect the new closing date for end


outfall completed targets, i.e. March 31, 2022

Component 2 Field audits conducts by ACUMAR, including sampling/lab tests of the enterprises of the basin.

R

Field audits conducted by ACUMAR, including sampling/lab tests of the enterprises of the basin.

i) To reflect the new closing date for end targets, i.e. March 31, 2022; and ii) to correct a typo.

Component 3 a) Number of beneficiaries with improved access to water and sanitation services in poor settlements


b) Satisfactory update of the Drainage Master Plan

D

ACUMAR has finalized the TORs for the Drainage Master Plan. But has postponed the finalization of this activity, due to the priority given to the development of the Flood Contingency and Emergency Response Plan for the Basin

Component 4 Percentage of staffing completed on basis of staffing plan developed by ACUMAR

D

ACUMAR is experiencing a leadership and organizational transition. New authorities were recently appointed. A reorganization of the organisms is taking place, which will result in a new organigram

N

Development of a new organigram and staffing plans for ACUMAR

The Ministry of State Modernization is analyzing and elaborating a new organizational structure for ACUMAR

25. Change in Implementation Schedule. Changes to the implementation schedule are proposed to reflect the revised closing date and expected implementation of Project activities.

26. Change in Systematic Operations Risk-Rating Tool. The overall risk of the Project is rated High, given the inherent risks associated with the clean-up that is a complex challenge requiring institutional coordination and strengthening, as well as integrated basin management. The Project has high visibility and political sensitivity and is monitored by several stakeholders, including local community members and CSOs, due to its potential environment and social impacts. Project risks have been reassessed based on the Systematic Operational Risk-Rating Tool (SORT). Changes with respect to SORT prepared during the restructuring of December 2015 include the reduction of the rating from High to Substantial for risks related to the macro economic situation, environmental and social, and stakeholders, as these risks have not materialized (Macroeconomic) while other risks have been mitigated in a satisfactory manner (Environmental and Social, and stakeholders). The main risks and associated mitigation measures identified are the following:

i. Political and Governance risk is rated as High. This risk is due to the possible change in priority over time. This risk is mitigated by the Supreme Court ruling requiring the central government, the province of Buenos Aires and


the government of City of Buenos Aires to clean up the M-R Basin makes project execution a matter of national policy.

ii. Macroeconomic risk is rated as Substantial. Slower growth in Argentina and competing priorities may reduce the availability of government counterpart’s funds. The cleanup of the MRB was confirmed as a key strategic priority for the new Administration because of its very high visibility and political sensitivity, also because of the intense scrutiny from both the civil society and the judicial system. The proposed increase of Bank financing for key works is a key mitigation measure to isolate the project from possible fluctuations in the availability of counterpart funds.

iii. Technical design of project risk is rated as High. This is due to the risk of large infrastructure works not included in a sustainable technical, financing and institutional development framework. To mitigate this risk, a variety of technical alternatives for improving the sanitation service in the AySA concession area was studied as part of the preparation of the Project, using technical, economic, environmental, and social criteria to eventually select the most favorable option

iv. Institutional Capacity for implementation and sustainability risk is rated as Substantial. The risk is due to the weak counterpart capacity, particularly ACUMAR, which is a relatively new institution, with limited experience in implementing large projects and coordinating a large range of stakeholders. To mitigate this risk, strengthening ACUMAR capacity is one of the objective of the Project and technical assistance is included in the Project. On the other hand, both AySA and Ministry of Environment and Sustainable Development have demonstrated adequate capacity (technical and fiduciary) to implement respectively Component 1 and Components 2, 3 and 4. In terms of sustainability, the risk depends on operation and maintenance cost resulting from new sewerage infrastructure. Mitigation measures include GoA’s and AySA’s concrete steps towards ensuring cost recovery.

v. Fiduciary risk is rated as High. This rating is mostly driven by the Procurement risk that is rated High based on the size and complexity of the construction contracts, past delays of the different activities, significant changes in the

originally agreed scope and work’s contracts, and inherent complex institutional arrangements (division of roles, responsibilities and reporting requirements on the activities to be performed by each of the entities involved in the implementation of the Project) which ended up in difficulties for the Borrower to efficiently implement the Project and manage the related contracts. Mitigation measures include the supervision of large infrastructure works through specialized consulting firms; specialized engineers to accompany project execution; and the borrower’s use of the procurement plan execution system (SEPA) to manage procurement planning.

vi. Environmental & Social and Stakeholder risks are rated as Substantial. Both risks depend on the complexity of the sanitation infrastructure to be built and possible miscommunication or lack of participation of civil society in the Project. These risks are being mitigated through the implementation of the EIA and ESMP prepared for each one of the subprojects. In addition, the physical investments under Component 2 and Component 3 meet the screening criteria for environmental and social sustainability as defined in the Operations Manual and ESMFs for these components, and as applicable, an ESMP has been developed for corresponding subprojects. All environmental permits are up to date, and supervision visits confirmed that the social and environmental management of all subprojects been so far implemented and monitored in full compliance with safeguards instruments.

I. SUMMARY OF CHANGES

Changed Not Changed

Change in Results Framework ✔


Change in Components and Cost ✔

Change in Loan Closing Date(s) ✔

Reallocation between Disbursement Categories ✔

Change in Disbursement Estimates ✔

Change in Systematic Operations Risk-Rating Tool (SORT)

✔

Change in Implementation Schedule ✔

Change in Implementing Agency ✔

Change in Project's Development Objectives ✔

Cancellations Proposed ✔

Change in Financing Plan ✔

Change in Disbursements Arrangements ✔

Change in Safeguard Policies Triggered ✔

Change of EA category ✔

Change in Legal Covenants ✔

Change in Institutional Arrangements ✔

Change in Financial Management ✔

Change in Procurement ✔

Other Change(s) ✔

Change in Economic and Financial Analysis ✔

Change in Technical Analysis ✔

Change in Social Analysis ✔

Change in Environmental Analysis ✔

IV. DETAILED CHANGE(S)

OPS_DE TAILE DCHA NGES_RES ULTS_TA BLE

RESULTS FRAMEWORK Project Development Objective Indicators

PDO_I ND_TABLE

Percentage of all sewage (about 12m3/s) that is currently discharged from AySA concession area to the La Plata River without adequate treatment that is appropriately treated and disposed of by end of Unit of Measure: Percentage Indicator Type: Custom


Baseline Actual (Current) End Target Action

Value 0.00 0.00 35.00 Revised

Date 27-Apr-2009 20-Jan-2017 31-Mar-2022

Voume(mass) of COD pollution load reduction achieved under the project Unit of Measure: Tones/year Indicator Type: Core


Value 0.00 0.00 62400.00 Revised

Date 19-Nov-2015 20-Jan-2017 31-Mar-2022

Number of enterprises in the matching grants program that have reduced their discharge loads according to their PRIs Unit of Measure: Number Indicator Type: Custom



Date 27-Apr-2009 20-Jan-2017 31-Mar-2022

Updated Drainage Master Plan agreed with key stakeholders and piloted Unit of Measure: Yes/No Indicator Type: Custom


Value No No Yes Marked for Deletion

Date 27-Apr-2009 20-Jan-2017 31-Mar-2017

Development of a Flood Contingency and Emergency Response Plan for the Basin Unit of Measure: Yes/No Indicator Type: Custom


Value No No Yes New

Date 20-Jan-2017 20-Jan-2017 31-Mar-2022

ACUMAR is fully staffed against its new organigram, operates with its own operating budget and is fully able to fulfill the functions vested in it by law. Unit of Measure: Yes/No Indicator Type: Custom



Value No No Yes Revised

Date 27-Apr-2009 20-Jan-2017 31-Mar-2022

Intermediate Indicators

IO_IND _TABLE

Linear kilometers of the Left Bank collector (including Baja Costanera bypass collector and the secondary network) completed Unit of Measure: Kilometers Indicator Type: Custom



Date 27-Apr-2009 20-Jan-2017 31-Mar-2022

Linear kilometers of the Riachuelo outfall completed Unit of Measure: Kilometers Indicator Type: Custom



Date 27-Apr-2009 20-Jan-2017 31-Mar-2022

Field audits conducted by ACUMAR, including sampling/lab tests of enterprises of the basin. Unit of Measure: Number Indicator Type: Custom


Value 0.00 1351.00 1400.00 Revised

Date 27-Apr-2009 20-Jan-2017 31-Mar-2022

Satisfactory update of the Drainage Master Plan Unit of Measure: Text Indicator Type: Custom


Value NO TORs finalized. Drainage Master Plan updated

Marked for Deletion

Date 27-Apr-2009 20-Jan-2017 31-Mar-2017


Number of beneficiaries with improved access to water and sanitation services in poor settlements Unit of Measure: Number Indicator Type: Custom


Value 0.00 0.00 50000.00 Revised

Date 19-Nov-2015 20-Jan-2017 31-Mar-2022

Percentage of staffing completed on basis of staffing plan developed by ACUMAR Unit of Measure: Percentage Indicator Type: Custom


Value 0.00 0.00 100.00 Marked for Deletion

Date 27-Apr-2009 20-Jan-2017 31-Mar-2017

Development of a new organigram and staffing plans for ACUMAR Unit of Measure: Yes/No Indicator Type: Custom


Value No No Yes New

Date 27-Apr-2009 20-Jan-2017 31-Mar-2022

OPS_DE TAILE DCHA NGES_ COMPONE NTS_TA BLE

COMPONENTS

Current Component Name

Current Cost

(US$M) Action

Proposed Component Name

Proposed Cost (US$M)

Sanitation 596.41 Revised Sanitation 619.01

Industrial Pollution Abatement 57.80 Revised Industrial Pollution Abatement 64.36

Environmental Territorial Management

53.90 Revised Environmental Territorial Management

26.24

Institutional Strengthening and Project Management

7.82 Revised Institutional Strengthening and Project Management

6.32

TOTAL 715.93 715.93

OPS_DE TAILE DCHA NGES_ LOANCLOSING_TA BLE


LOAN CLOSING DATE(S)

Ln/Cr/Tf Status Original Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

IBRD-77060 Effective 31-Mar-2016 31-Mar-2017 31-Mar-2022 31-Jul-2022

OPS_DE TAILE DCHA NGES_REA LLOCAT ION _TA BLE

REALLOCATION BETWEEN DISBURSEMENT CATEGORIES

Current Allocation Actuals + Committed Proposed Allocation Financing % (Type Total)

Current Proposed

IBRD-77060-001 | Currency: USD

iLap Category Sequence No: 1 Current Expenditure Category: Works under Part 1(a)

576,412,000.00 150,817,931.68 599,012,000.00 80 100

iLap Category Sequence No: 2 Current Expenditure Category: CS, GO & TRNG under Part 1(b)

20,000,000.00 4,443,977.97 20,000,000.00 100 100

iLap Category Sequence No: 3 Current Expenditure Category: CW, GO & CS under CRI subprojects

1,000,000.00 75,242.77 500,000.00 100 100

iLap Category Sequence No: 4 Current Expenditure Category: Eligible Exp. Pts 2A to D & 3A to F

7,100,000.00 1,684,305.78 4,100,000.00 80 100

iLap Category Sequence No: 5 Current Expenditure Category: Eligible Expenditures for Part 4

7,820,000.00 2,481,734.76 6,320,000.00 100 100

iLap Category Sequence No: 6 Current Expenditure Category: UNALLOCATED

0.00 0.00 0.00

iLap Category Sequence No: 8 Current Expenditure Category: PREMIA FOR INTER. RATE CAPS/COLLARS


0.00 0.00 0.00

iLap Category Sequence No: 9 Current Expenditure Category: Civil Works under Parts 2f and 3g

103,600,000.00 140,647.27 86,000,000.00 80 100

Total 715,932,000.00 159,643,840.23 715,932,000.00

OPS_DE TAILE DCHA NGES_S ORT_TA BLE

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating at Approval Current Rating

Political and Governance High

Macroeconomic Substantial

Sector Strategies and Policies Moderate

Technical Design of Project or Program High

Institutional Capacity for Implementation and Sustainability

Substantial

Fiduciary High

Environment and Social Substantial

Stakeholders Substantial

Other

Overall High

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