The World Bank SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (P158379) REPORT NO.: RES34877 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT APPROVED ON DECEMBER 24, 2015 TO UKRAINE ENERGY & EXTRACTIVES EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Satu Kristiina J. Kahkonen Senior Global Practice Director: Riccardo Puliti Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader: David Reinstein The World Bank SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (P158379) ABBREVIATIONS AND ACRONYMS EGPS Extractives Global Programmatic Support EITI Extractive Industries Transparency Initiative FM Financial Management ISR Implementation Status Report MDTF Multi-Donor Trust Fund MSG Multi-Stakeholder Group PDO Project Development Objective The World Bank SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (P158379) BASIC DATA Product Information Project ID Financing Instrument P158379 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 24-Dec-2015 31-Dec-2018 Organizations Borrower Responsible Agency Ministry of Economic Development and Trade Ministry of Energy and Coal Industry Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0.78 Total Financing 0.00 Financing Gap 0.00 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The project development objective is to assist Ukraine in implementing its EITI agenda OPS_TABLE_PDO_CURRENTPDO The World Bank SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (P158379) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A1759 24-Dec-2015 14-Jan-2016 14-Jan-2016 31-Dec-2018 .78 .52 .26 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 current grant allocated under the project, totaling to US$780,000, was operationalized through (i) an original Grant Agreement between the Recipient and the Bank, signed on January 14, 2016, providing grant financing of US$400,000; and (ii) an additional top-up grant financing of US$380,000, allocated by the Bank to the Recipient in March, 2017, following a project restructuring. 2. The project has been rated as Moderately Satisfactory, as of the last ISR dated October 11, 2018. No issues are foreseen in meeting the Project Development Objectives (PDO), and progress towards the associated indicators has been highly satisfactory. However, the project had been rated as Moderately Satisfactory as the disbursement rate was lower than expected, with 65 percent of allotted funds having been disbursed, and around 69 percent having been committed. The audit report for the grant, covering calendar years 2016 and 2017, was finalized in May 2018, and no issues have been reported. 3. The ongoing grant has supported the following significant outputs and outcomes thus far: (a) The grant has already financed timely publication of two, out of a planned total of three, annual EITI reports of Ukraine, covering data until calendar year 2016. The most recent of these was published in May 2018. (b) Two out of three Project Development Indicators (PDOs) have already been achieved as follows: (i) Coal and Iron Ore data is now included in Ukraine’s EITI Reports, and (ii) Ukraine now reports 8 revenue streams for reconciliation, amounting to 100% of governmental revenues from the extractives sector. (c) Ukraine successfully underwent its first validation under the EITI Standard, 2016, and in June 2018, was adjudged to have made ‘meaningful progress’ in implementing EITI, thus making it an EITI compliant country. B. RATIONALE FOR RESTRUCTURING 1. The Government of Ukraine has requested for the project, and the associated grant, to be extended. The grant is currently scheduled to close by 31st December, 2018, but given the longer term financing requirements of the recipient agency for implementing Ukraine EITI, a request for grant extension, dated October 8, 2018, was The World Bank SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (P158379) received from the Government of Ukraine. Therein, an extension of the grant closure date till December 31, 2019, had been requested. Prior approvals from the Extractives Global Programmatic Support (EGPS) Trust Fund management team have also already been obtained for the said grant extension. 2. The proposed grant extension will enable the project to deepen the impacts of EITI implementation in Ukraine. The said grant extension will enable (i) continued support the recipient agency’s capacity through provision of operational, staff and consultant costs, (ii) allow for Ukraine EITI to publish a third EITI Report by leveraging the current grant, and also (iii) directly enable Ukraine EITI to finalize various analytical studies for improving transparent and accountable governance in the extractives sector. These activities will contribute towards Ukraine’s continued compliance under the international EITI Standard, 2016, and will also make EITI implementation in the country more sustainable and impactful, moving forward. In particular, EITI implementation becomes more cost-efficient, and the resulting transparency generates more accountability, when EITI data reporting is systematized within mainstream governmental and company systems. In September 2018, a law entitled “On ensuring transparency in extractive industries” (Law #6229) was adopted by the Parliament, which provides further impetus for such efforts at systematizing data disclosures. Following this, Ukraine EITI has already commenced a ‘scoping study’ for such systematization of data disclosures. Upon project extension, the World Bank team will explore opportunities to provide both technical inputs to the study and any subsequent processes, such that it is designed and implemented in a manner that leverages sector data for improved sector governance, and increased developmental results. II. DESCRIPTION OF PROPOSED CHANGES 1. Extension of Project Closing Date is requested: The proposed extension is a no-cost grant extension for a period of 1 year, which extends the Grant Closing Date from the current date of December 31, 2018 to December 31, 2019. This has meant changes to the project components, and their internal costing, while the overall envelope of the grant amount remains the same, i.e. US$780,000. 2. Changes to project components is proposed: Following the above-mentioned extension, the project would need to provide capacity support to the Ukraine EITI National Secretariat, including through provision of staff and skilled consultants, for another year. This meant increased costs towards the Project Management component, which will rise from the original allocation of US$160,000 to US$ 300,000. Costs towards the core component of EITI implementation also increased from US$440,000 to US$480,000. Thus, the components on ‘Capacity Building Activities’, and ‘Communication and Outreach’ have been dropped under this particular project, although they will be completed as planned using alternate donor funding that is currently being finalized by Ukraine EITI. 3. Procurement Plan has been revised: The revised procurement plan, along with revised implementation schedule, is attached to this restructuring paper. The World Bank SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (P158379) III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Loan Closing Date(s) ✔ Procurement ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) EITI Implementation Support 0.44 Revised EITI Implementation Support 0.48 Capacity Building Activities 0.08 Revised Capacity Building Activities 0.00 The World Bank SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (P158379) Communication and Outreach 0.10 Revised Communication and Outreach 0.00 Project Management 0.16 Revised Project Management 0.30 TOTAL 0.78 0.78 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A1759 Effective 31-Dec-2017 31-Dec-2018 31-Dec-2019 30-Apr-2020 Note to Task Teams: End of system generated content, document is editable from here.