The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project (P163207) REPORT NO.: RES39361 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TOGO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE IMPLEMENTATION SUPPORT PROJECT APPROVED ON FEBRUARY 27, 2018 TO MINISTRY OF ECONOMY AND FINANCE ENERGY & EXTRACTIVES AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Coralie Gevers Global Director: Riccardo Puliti Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader(s): Morten Larsen The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project (P163207) ABBREVIATIONS AND ACRONYMS AfDB African Development Bank CSO Civil Society Organization EA Executing Agency EITI Extractive Industries Transparency Initiative FM Financial Management ITIE Initiative pour la Transparence dans les Industries Extractives (i.e. EITI) MME Ministry of Mines and Energy MGDP Mining and Governance Development Project MSG Multi-Stakeholder Group OTR National Revenue Office (Office Togolais des Recettes) PDO Project Development Objective PIU Project Implementation Unit SNPT National Phosphate Company of Togo (Société Nouvelle des Phosphates du Togo) TA Technical Assistance WB World Bank The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project (P163207) BASIC DATA Product Information Project ID Financing Instrument P163207 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 27-Feb-2018 31-Dec-2019 Organizations Borrower Responsible Agency Ministry of Economy and Finance Secretariat ITIE Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0 Total Financing 0 Financing Gap 0 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The development objective is to support implementation and sustainability of the Extractive Industries Transparency Initiative in Togo. This will be achieved through improved reporting procedures for production and revenue data from the extractive industries, strategic communication with stakeholders as well as business planning for the EITI Secretariat. OPS_TABLE_PDO_CURRENTPDO The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project (P163207) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A8623 27-Feb-2018 22-Mar-2018 22-Mar-2018 31-Dec-2019 .30 .10 .20 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 Restructuring Paper proposes a closing date extension of the Togo Extractive Industries Transparency Initiative (EITI) Implementation Support Project by 12 months from December 31, 2019 to December 31, 2020. This restructuring is in response to a government request received on November 22, 2019. The EITI Project, which is financed by the Extractives Global Programmatic Support (EGPS) Multi-Donor Trust Fund (TF0A8623), became effective in March 2018. The objective of the project is to support implementation and sustainability of the EITI in Togo. This will be achieved through improved reporting procedures for production and revenue data from the extractive industries, strategic communication with stakeholders as well as business planning for the EITI Secretariat. The project comprises three main activities: a. Automated reporting of mineral production and revenue data with a view to moving from resource- intensive annual data compilation and reporting exercises to an automated reporting system by which operators and government representatives will generate automatic data logs of payment transfers and sector statistics; b. Strategic communication support to EITI which will modernize communication tool-kits and update information campaigns as well as finance outreach events; c. EITI Secretariat business planning to identify solutions for financial viability of the EITI process after the closure of the current grant financing. 2. Project performance is rated Moderately Satisfactory both with respect to achieving the Project Development Objective (PDO) and overall implementation progress. This rating is grounded in authorities’ ability to successfully complete key activities under the EITI, including annual publication of government revenue generated from the mining sector as well as stakeholder consultation. In 2019, there have been a total of 10 outreach events organized nationally to disseminate the annual EITI reconciliation and discuss governance aspects of the mining industry. Accountability forums were held both nationally and regionally in collaboration with the Ministry of Mines and Energy (MME) and the Bank-financed Mining and Governance Development Project (MGDP), to discuss contributions of the mining industry to economic and social development. A perception survey was commissioned jointly with MGDP to evaluate public perceptions and stakeholder awareness of the EITI. The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () 3. In line with the international EITI standard, Togo EITI started its second validation of EITI compliance in November 2019. The first validation was completed in 2018 and recognized Togo as making Meaningful Progress towards meeting the EITI requirements, a rating which is less than Satisfactory Progress. The Validation identified seven corrective measures to be completed before achieving full compliance. The corrective measures relate to governance of EITI, data comprehensiveness and communication. The present grant is supporting most of these measures. The conclusion of the second validation is expected in the middle of 2020. This timeframe represents the main reason for the proposed project extension, as it is important for the World Bank to continue supporting EITI throughout this validation process. 4. The disbursement rate as of November 15, 2019, has reached 32% of the total allocation of US$300,000. However, consulting contracts which are pending negotiation and signing would amount to almost US$100,000. It is expected that these contracts are signed around the end of the year. The low disbursement rate can be explained by turn-over of staff in the EITI Secretariat and competing deadlines for annual EITI Report production and introduction of additional requirements under the EITI framework, such as reporting on beneficial ownership and commodity trading. It should also be mentioned that the original implementation period was limited to 21 months execution because of the parent trust fund closing date. This limitation is now lifted as the parent trust fund has been extended to 2022. Moreover, initiation and first disbursement of the grant were delayed by several months because of incorrect registration of trust fund and designated accounts at the World Bank. 5. Out of ten results indicators, four have met their interim targets, three have progressed significantly though short of their target and three have not progressed yet. Successful indicators include the number of EITI outreach events per year, which amount to 10. EITI compliance is experiencing “meaningful progress” as planned, with updated rating to be confirmed in the middle of 2020. Another indicator which meets its interim target refers to EITI’s financial planning: though EITI’s financing plan is still supported by the Government, AfDB and the WB as anticipated, an inter-ministerial Working Committee has commenced financial planning for future EITI operation, a step in the right direction to ensure EITI’s sustainability. Indicators that have progressed but are shy of their interim targets relate to attendance numbers at EITI outreach event which are reported at 627 and 126 for male and female participants respectively against the 800 and 200 participants targeted. In addition, the perception survey reveals that respondents with EITI knowledge has improved though not fully reaching the targets. The three indicators that have not progressed are all linked to the delay in consultant recruitments related to automatic reporting system; these activities are in the process of being contracted. Furthermore, according to the most recent EITI report, the reconciliation of total revenue from extractive industries dropped below the 96% target at 85% of revenues reconciled, though it had reached 99% reconciliation the previous year. B. Rationale for restructuring 6. As mentioned above, Togo EITI is currently undergoing its second validation process to confirm its progress in meeting the international EITI standards. The process started in November 2019 and is expected to conclude in early to mid 2020. It is recommended that the current grant closing date be extended from December 31, 2019 to December 31, 2020 to ensure continued support to EITI throughout this validation process. The validation process is building momentum of EITI and enhanced accountability in the extractive industries. Accordingly, the current grant will be instrumental in defining the direction of accountability and transparency initiatives. Important reform initiatives are in progress and will require sustained support to reach fruition. These initiatives include automated reporting systems for revenue and production statistics in the mining industry. Another innovation is the roll-out of beneficial ownership declarations, which will report on the actual owners behind the mining companies. Consultancies will develop implementing procedures and reporting templates. The next 12 The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () months will be critical in the roll-out of these transparency standards. The proposed grant closing date will allow public dissemination of these standards as well as training to reporting agencies. 7. In terms of disbursement, the grant is projected to be fully disbursed by the end of 2020. The long initial delay in project disbursement as well as relatively short timeframe were factors outside of the EITI’s control that have negatively impacted the disbursement rate. The project has now picked up steam, with disbursements and commitments worth of more than 50% during the 12 months since October 2018. At this rate of execution, an extended closing date of December 31, 2020 would allow full disbursement. An action plan with corresponding budget was established and approved to complete all activities by December 2020. II. DESCRIPTION OF PROPOSED CHANGES A. Closing date extension 8. An extension of grant closing date by 12 months is recommended, from December 31, 2019 to December 31, 2020. Key dates and activities financed by the current grant are summarized in the table below. Activity contributions to outcomes are presented in Annex 1. Activities which are not financed under the grant are not included in the table; this includes the annual EITI reconciliation report which is financed through government funds. 9. Current activities include outreach events, accountability forums and a perception survey. Four consultancies are currently in the final stages of recruitment: (i) the strategy for long term sustainability of EITI-Togo, (ii) automated reporting of sector data, (iii) guidelines on beneficial ownership for mining companies and (iv) the grant audit. With contract signature expected in late December or early January 2020, it is projected that these consultancies would be completed in the first half of 2020. This timeframe will allow sufficient time for training and adoption before the proposed grant closing date. In the event that the grant closing is not extended, these services would need to be financed by other (yet unidentified) sources, which may result in their amendment or cancellation. Such outcome would be detrimental to the impact of ongoing activities and undermine the sustainability of the EITI process in Togo. Table 1. Timeline of activities under closing date extension Budget Responsible Contract Activity (US$) agencies Current status signature Delivery date Activity 1. Automatic declaration portal EITI MSG, Evaluation of January March 2020 Feasibility study 40,000 OTR, MME expressions of interest 2020 Training of reporting entities 20,000 Planned April 2020 June 2020 Server installation 30,000 Planned August 2020 October 2020 Activity 2. Strategic communication support to EITI EITI and MSG Operational EITI December Ongoing Ongoing costs including outreach 95,000 Secretariat, 2020 MGDP PIU The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () Budget Responsible Contract Activity (US$) agencies Current status signature Delivery date events and accountability forums Preparation of brochures and September Planned April 2020 communication tool-kit 30,000 2020 Annual perception surveys 0 September (MGDP Ongoing Ongoing 2020 funds) Activity 3. Institutional governance and sustainable financing Update of governance texts EITI for Togo EITI agencies Secretariat Evaluation of January March 2020 including financing and MSG expressions of interest 2020 mechanisms 30,000 Implementation of directives December Planned April 2020 0 2020 Activity 4. Establishment of beneficial ownership guidelines Drafting of guidelines EITI December Consultant selected March 2020 40,000 Secretariat 2019 Implementation of guidelines and MSG December Planned April 2020 0 2020 Financial audit of grant EITI Evaluation of November December 15,000 Secretariat expressions of interest 2020 2020 Total 300,000 10. The Results Framework has been revised to reflect the extended grant closing date. End targets have remained unchanged since grant closing is expected to reach a “steady state” where the EITI process is consolidated on a sustainable footing with streamlined reporting procedures and an annual work plan of regular stakeholder engagement. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () Implementing Agency ✔ Project's Development Objectives ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Satisfactory progress of EITI implementation according to international validation requirements Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action EITI compliant per EITI compliant per 2011 Value Meaningful Progress 2016 (or updated) Revised guidelines guidelines Date 01-Jan-2018 17-Jun-2019 31-Dec-2020 Percentage of payments which are reported automatically through EITI portal Unit of Measure: Percentage Indicator Type: Custom The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () Baseline Actual (Current) End Target Action Value 0.00 0.00 60.00 Revised Date 01-Jan-2018 22-Nov-2019 31-Dec-2020 Media, CSO, and citizen engagement in governance and accountability of the extractive industries Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action 8% of survey 18% of respondents 12% of survey respondents confirm confirm knowledge of respondents confirm knowledge of EITI. EITI Value knowledge of EITI. Revised 80% of resource persons 80% of resource 47% of resource persons confirm EITI knowledge persons confirm EITI confirm EITI knowledge knowledge Date 01-Jan-2018 01-Nov-2019 31-Dec-2020 Intermediate Indicators IO_IND_TABLE EITI data formats are linked to public financial management systems Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action EITI data are No links reporting No links. EITI data is automatically linked Value systems. EITI data is Revised entered manually to public financial reported manually management systems Date 01-Jan-2018 22-Nov-2019 31-Dec-2020 Percentage of sales value from the extractive industries which is automatically reported through the EITI portal Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 60.00 Revised Date 01-Jan-2018 22-Nov-2019 31-Dec-2020 Percentage of total revenue from the extractive industries which is reconciled through the EITI Report Unit of Measure: Percentage Indicator Type: Custom The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () Baseline Actual (Current) End Target Action Value 97.00 85.00 97.00 Revised Date 01-Jan-2018 22-Nov-2019 31-Dec-2020 Number of EITI outreach events per year Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 5.00 10.00 10.00 Revised Date 29-Dec-2017 26-Nov-2019 31-Dec-2020 Number of male participants Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 1400.00 626.00 800.00 Revised Date 01-Jan-2018 26-Nov-2019 31-Dec-2020 Number of female participants Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 230.00 126.00 300.00 Revised Date 01-Jan-2018 26-Nov-2019 31-Dec-2020 3-5 year financial plan for EITI implementation Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action EITI budget is Working Committee has 3-5 years financial supported by Value commenced planning plan including sources Revised development partners and budgeting of funds and Government funds Date 01-Jan-2018 15-Nov-2019 31-Dec-2020 The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A8623 Effective 31-Dec-2019 31-Dec-2020 30-Apr-2021 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2018 0.00 100,000.00 2019 0.00 50,000.00 2020 0.00 150,000.00 The World Bank Togo Extractive Industries Transparency Initiative Implementation Support Project () Annex 1. Milestone actions to meet outcomes Responsible Completion Activity Link to results framework agency date EITI validation Indicator 1: satisfactory progress of EITI Decision on Togo's EITI implementation according to international validation International compliance requirements EITI Board 6/1/2020 Beneficial ownership Guidelines on beneficial Indicator 1: satisfactory progress of EITI ownership declaration adopted implementation according to international validation EITI MSG, 3/30/2020 Beneficial ownership declared requirements MME 9/15/2020 Strategic communication support to EITI Brochures and communication Indicator 3: media, CSO, and citizen engagement in toolkits completed governance and accountability of the extractive 9/1/2020 National dissemination program industries conducted Indicator 7: number of EITI outreach events per year EITI 9/30/2020 Annual perception survey Indicator 8: number of male participants Secretariat, completed Indicator 9: number of female participants MGDP PIU 11/30/2020 Institutional governance and sustainable financing Governance texts for Togo EITI Indicator 1: satisfactory progress of EITI agencies updated implementation according to international validation 3/15/2020 requirements EITI Sustainable budget plan Indicator 10: 3-5 year financial plan for EITI Secretariat established implementation and MSG 5/15/2020 Automatic declaration portal Template documents established Indicator 2: percentage of payments which are 2/20/2020 Procedural manual adopted reported automatically through EITI portal 3/15/2020 Indicator 4: EITI data formats are linked to public financial management systems Indicator 5: percentage of sales value from the extractive industries which is automatically reported Data portal is operational through the EITI portal Indicator 6: percentage of total revenue from the extractive industries which is reconciled through the EITI MSG, EITI report OTR, MME 5/31/2020 Financial audit EITI EITI grant funds audited N/A Secretariat 12/31/2020