The World Bank Bhutan: Supporting Minerals Management Policy Reform (P163172) REPORT NO.: RES39406 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BHUTAN: SUPPORTING MINERALS MANAGEMENT POLICY REFORM APPROVED ON MAY 2, 2018 TO MINISTRY OF FINANCE ENERGY & EXTRACTIVES SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Mercy Miyang Tembon Global Director: Riccardo Puliti Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader(s): Javier Aguilar The World Bank Bhutan: Supporting Minerals Management Policy Reform (P163172) ABBREVIATIONS AND ACRONYMS ICT Information, Communication and Technology IT Information Technology MDP Mining Development Policy The World Bank Bhutan: Supporting Minerals Management Policy Reform (P163172) BASIC DATA Product Information Project ID Financing Instrument P163172 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 02-May-2018 12-Dec-2019 Organizations Borrower Responsible Agency Ministry of Economic Affairs - Department of Geology Ministry of Finance and Mines 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 objective of the project is to provide support to ongoing mining sector reforms with a focus on the most critical initial steps necessary to implement the recently approved Mining Development Policy (MDP). OPS_TABLE_PDO_CURRENTPDO The World Bank Bhutan: Supporting Minerals Management Policy Reform (P163172) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A7016 02-May-2018 05-Jun-2018 05-Jun-2018 12-Dec-2019 .30 .25 .05 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. Overall, good progress has been made by the GoB regarding the implementation of activities under this grant, and it is expected that outcomes would be achieved. As most of the activities are currently work-in progress, the impact would be felt mostly during 2020, especially once the new Minerals Act and its regulations would be implemented. Key activities advanced are: - Revision of Mines and Minerals Management Regulation 2002: The Department has completed first draft of the Regulation in line with the Mineral Development Policy and the proposed Mines and Mineral Bill 2019. The GoB through DGM would continue with the review and consultation with stakeholders. Further, it has been made mandatory that Regulation be submitted along with the Bill. The project has utilized the funding to revise the Regulations in line with the Bill. However, the revised version will not be approved until the Bill is enacted which is expected to be passed by summer session of 2020. - Development of web-based mineral information portal: an IT Firm has been hired and is working on design and prototype of the system. The system would go live in December 2019 including training of users. - Mines Monitoring Tools: the monitoring tool have been developed and Mines Inspectors have been trained on usage. The tool has been issued for implementation with effect from July 2019. - Enhancing capacity of Regional Offices: the Regional Offices have been supplied with desktop computers and printers which will increase the efficiency in service delivery. Further, the offices being primary sources of information for web-based mineral information system, it is very critical that the offices are equipped with adequate computers. - Connecting Regional Offices with fiber optics: the offices have been connected with fiber optics using Royal Government of Bhutan budget and no expenditure had been booked from earlier assigned project’s budget. The World Bank Bhutan: Supporting Minerals Management Policy Reform () - Training of Mines Inspector: thirteen mine inspectors participated in five-day training on Environment Management in Bangkok, Thailand. Later, these inspectors conducted training to rest of the staffs working on mining inspection. - Building Capacity of newly established division: the project has helped strengthen the capacity of the newly established Mineral Development Division with required ICT equipment and furniture 2. The project is proposed to be extended from its closing date of December 12, 2019 to April 30, 2020. The proposed project’s extension would help address and complete the following activities: - Revision of Mines and Minerals Management Regulations 2002: i) further review to be undertaken once the Lower House from the National Assembly of Bhutan endorse the Mines and Mineral Bill during winter Parliament session in January 2020; ii) consultation with stakeholders will be conducted after the Bill is endorsed by parliament and ready to be approved during Parliament’s summer session in 2020. - Expert’s advice on Policy Implementation: i) Mineral Pricing Framework consultant to be hired in January 2020, for completing a pricing framework report by end of February. - Hiring of consultant to develop the web-based system: i) any changes in the system arising during the training (December 2019 to January 2020) to be incorporated. - Training on usage of the system: i) training on usage of system to be completed in December 2019 and January 2020. 3. There are no outstanding audits for this grant. Project Financial Management arrangements are adequate and remain unchanged. 4. Up to October 2019, 84% (US$250,000) of the total grant has been disbursed. A balance of US$50,000 is expected to be fully disbursed by March 2020. II. DESCRIPTION OF PROPOSED CHANGES 5. A change is proposed to the loan (grant) closing date, extending it from the current closing date of December 12, 2019 to April 30, 2020. The government’s request proposed March 31, 2020 as the new closing date, but after reviewing the remaining activities it was agreed that extension until April 30, 2020 would allow enough time for completing adjustments to the regulations. This additional time would enable the recipient to utilize the allocated grant effectively and complete on-going activities. 6. As reflected in the modified procurement plan for the proposed restructuring, which has been approved by the Task Team Leader and Procurement Specialist, changes have been made to the timelines for proposed activities that correspond to the changed Loan Closing Date. All other aspects of the project design, including budget allocations for the project components, remain the same as before. The World Bank Bhutan: Supporting Minerals Management Policy Reform () III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ 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 ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A7016 12-Dec-2019 31-Mar-2020 31-Jul-2020 The World Bank Bhutan: Supporting Minerals Management Policy Reform () Note to Task Teams: End of system generated content, document is editable from here.