RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING ZIMBABWE NATIONAL WATER PROJECT APPROVED ON JANUARY 29, 2016 REPUBLIC OF ZIMBABWE

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1 Public Disclosure Authorized The World Bank REPORT NO.: RES30298 Public Disclosure Authorized RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ZIMBABWE NATIONAL WATER PROJECT APPROVED ON JANUARY 29, 2016 TO Public Disclosure Authorized REPUBLIC OF ZIMBABWE Public Disclosure Authorized Water Global Practice Africa Region Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leader: Makhtar Diop Paul Noumba Um Guang Zhe Chen Catherine Signe Tovey Chloe Oliver Viola, Christiaan Heymans

2 ABBREVIATIONS AND ACRONYMS EMA ISDS PAP PDO RAP RDC RPF RVP ZIMREF ZINWA ZNWP Environmental Management Agency Integrated Safeguards Data Sheet Project Affected Person Project Development Objective Resettlement Action Plan Rural District Council Resettlement Policy Framework Regional Vice President Zimbabwe Reconstruction Fund Zimbabwe National Water Authority Zimbabwe National Water Project

3 BASIC DATA Product Information Project ID P Original EA Category Partial Assessment (B) Approval Date 29-Jan-2016 Financing Instrument Investment Project Financing Current EA Category Partial Assessment (B) Current Closing Date 30-Jun-2019 Organizations Borrower Republic of Zimbabwe Responsible Agency Zimbabwe National Water Authority Project Development Objective (PDO) Original PDO The proposed project development objective is to improve access and efficiency in water services in selected growth centers and to strengthen planning and regulation capacity for the water and sanitation sector. Summary Status of Financing Ln/Cr/Tf Approval Signing Effectiveness Closing Net Commitment Disbursed Undisbursed TF-A Jan Feb Jun Jun Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No

4 I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Zimbabwe National Water Project (ZNWP) was approved on January 29, 2016, and declared effective on June 16, The project s development objective (PDO) is to improve access and efficiency in water services in selected growth centers and to strengthen planning and regulatory capacity for the water and sanitation sector. This will be achieved through three components: (1) growth center water and sanitation improvements; (2) technical assistance; and (3) project management. 2. The ZNWP was prepared as a US$20 million project to be financed through a grant from a multi-donor trust fund: the Zimbabwe Reconstruction Fund (ZIMREF). To date, US$10 million has been made available by ZIMREF and, as a result, the project has been arranged in two tranches. Under the first tranche, the growth center water and sanitation works are concentrated on three lots (Guruve, Lupane, and Zimunya), with work in the remaining four growth centers (Gutu, Madziwa, Mataga, and Nembudziya) to follow under a second tranche. 3. Access to the second tranche of financing has not been confirmed, and now seems unlikely to come from ZIMREF. There is some expectation that a second tranche of financing may become available given that elections planned for July 2018 are expected to trigger a resurgence of donor activity, and potential reengagement with the World Bank. The World Bank team has identified four options for restructuring the project in light of the financing gap: (1) assume the second tranche of financing will not eventuate and reduce the scope of the project; (2) extend the life of the project in the hope that full reengagement takes place; (3) maintain the project as is, integrating financing as it becomes available and extend the project if/when financing becomes available; or (4) restructure the project to include a trigger for the second phase. A decision on which option to pursue will be made in the months following the July election. 4. The ZNWP is performing well. Implementation Progress has been rated as Satisfactory or Moderately Satisfactory over the last 23 months. In the almost two years since the ZNWP was declared effective, the full US$10 million under the first tranche has been committed, and US$5.4 million (or 54 percent) disbursed. The ZNWP will close on June 30, B. Rationale for Restructuring 1. The ZNWP is a category B project and involves the rehabilitation and expansion of existing rural water supply infrastructure that poses low to moderate environmental and social risks/impacts. Environmental and Social Management Plans (ESMPs) were developed to meet both the Zimbabwe Environmental Management Agency (EMA) and World Bank requirements. The ESMPs were cleared by EMA and are included in the construction company's contract. The ESMPs were also cleared by the World Bank and disclosed on the World Bank's external website. 2. During the ZNWP s appraisal, project sites were screened and no resettlement impact was identified. However, during a site visit to Guruve in June 2017, the World Bank team found that some small household infrastructure for 19 households had occupied the right of way of the water distribution lines and had been either damaged or

5 destroyed. To rectify the situation, the ZNWP must be restructured to trigger the Involuntary Resettlement safeguards policy, and put in place guidelines for resolving actual and potential future resettlement issues. II. DESCRIPTION OF PROPOSED CHANGES 3. A Level 2 Restructuring of the ZNWP is required to (1) trigger a new safeguards policy (Involuntary Resettlement, OP, BP 4.12) and formalize a (remedial) Resettlement Action Plan (RAP) to replace damaged household infrastructure for the 19 households in Guruve and a Resettlement Policy Framework (RPF) to implement formal guidelines and principles for any future potential resettlement that may occur as a result of the ZNWP and project associated activities; and (2) update the Integrated Safeguards Data Sheet (ISDS). 4. Involuntary Resettlement is triggered. Under Safeguards Policies triggered, Involuntary Resettlement, OP, BP 4.12 has been changed to triggered, with the following explanation: Rehabilitation and expansion of water treatment works will be on existing ZINWA and Rural District Council (RDC) landholdings. Some of the targeted areas are new developments that are being developed and not yet inhabited. However, there is minor encroachment in some of the rights-of-way in Guruve for the water distribution lines by sanitation facilities. The local council approved these facilities as temporary facilities in the absence of RDC provision of water borne sanitation. An abbreviated RPF has been prepared to guide implementation in all locations, and a remedial RAP will guide mitigation of impacts in Guruve. 5. A remedial Resettlement Action Plan (RAP) was prepared and disclosed. The RAP details how these 19 households will be compensated or have assets replaced (or both). This RAP was reviewed and cleared by the World Bank on March 7, 2018, disclosed in Zimbabwe on March 15, 2018, and published on the World Bank s website on March 20, The works required under the RAP are under contract with the contractor already on site in Guruve and the remedial work is expected to be completed by August 31, A Resettlement Policy Framework (RPF) was prepared and disclosed. Based on the nature of the ZNWP s activities, involuntary displacement may take place in the form of temporary loss of access to assets or small-scale infrastructure, such as pit latrines or informal vending structures found to occupy the right of way for the transmission and distribution lines. It is not anticipated that any involuntary land acquisition will be required, but the RPF provides procedures in the remote case that acquisition cannot be reasonably avoided. It is expected that any loss of access will be temporary, managed through the RDC s community consultation processes, and compensated through improved access to water provided by the project s investments. Where impacts to small infrastructure such as private pit latrines or informal stalls for selling produce cannot be reasonably avoided, compensation is due to the Project Affected Persons (PAPs) and the contractor will provide temporary facilities as well as replacement of the impacted facility upon completion of works. It is not expected that there will be any impact on main household structures (homes or homesteads) as a result of the project or any project associated activities. Any future resettlement will be guided by a new RPF that was reviewed and cleared by the World Bank, disclosed in Zimbabwe on March 15, 2018, and published on the World Bank s website on March 20, The ISDS has been updated to reflect these changes.

6 8. Social safeguards capacity. Earlier there was little experience with resettlement activities and World Bank requirements. However, ZINWA subsequently transferred experienced staff to the PIU who have worked diligently and in a participatory manner with the affected households. The PIU was trained to screen and supervise the implementation of the RPF in all project locations and has received ongoing guidance on the RAP from the World Bank to be fully capable of overseeing all matters related to resettlement. The PIU subsequently screened all project locations for impact and guided impact avoidance to the satisfaction of the World Bank team. The PIU has also successfully trained the PITs to identify and avoid resettlement impact. A citizen engagement strategy and a gender strategy are under preparation to further improve management of social risk and impact. III. SUMMARY OF CHANGES Changed Change in Safeguard Policies Triggered Not Changed 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

7 OPS_DETAILEDCHANGES_COMPLIANCE_TABLE The World Bank Change in Social Analysis Change in Environmental Analysis IV. DETAILED CHANGE(S) COMPLIANCE Safeguard Policies Safeguard Policies Triggered Current Proposed Environmental Assessment (OP) (BP 4.01) Yes Yes Performance Standards for Private Sector 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) No No Indigenous Peoples (OP) (BP 4.10) No No Involuntary Resettlement (OP) (BP 4.12) No Yes Safety of Dams (OP) (BP 4.37) Yes Yes Projects on International Waterways (OP) (BP 7.50) Projects in Disputed Areas (OP) (BP 7.60) No No No Yes No Yes