The World Bank EITI Post Compliance Implementation Support III (P159717) REPORT NO.: RES32966 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF EITI POST COMPLIANCE IMPLEMENTATION SUPPORT III APPROVED ON OCTOBER 20, 2016 TO REPUBLIC OF ZAMBIA ENERGY & EXTRACTIVES AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Paul Noumba Um Senior Global Practice Director: Riccardo Puliti Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader: Javier Aguilar The World Bank EITI Post Compliance Implementation Support III (P159717) ABBREVIATIONS AND ACRONYMS EGPS Extractive Global Programmatic Support EITI Extractive Industry Transparency Initiative GRZ Government of the Republic of Zambia PDO Project Development Objective ZEC Zambian EITI Council ZICA Zambia Institute of Chartered Accountants The World Bank EITI Post Compliance Implementation Support III (P159717) BASIC DATA Product Information Project ID Financing Instrument P159717 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 20-Oct-2016 31-Jul-2018 Organizations Borrower Responsible Agency Ministry of Finance and National Planning EITI SECRETARIAT Project Development Objective (PDO) Original PDO The overarching development objective is to improve transparency and accountability in Zambia?s extractive sector by supporting the EITI Zambia Secretariat and the Zambia EITI Council to implement the Extractive Industries Transparency Initiative in Zambia. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A3358 01-Dec-2016 23-Dec-2016 11-May-2017 31-Jul-2018 .35 .24 .11 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank EITI Post Compliance Implementation Support III (P159717) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Sector Context 1. The Extractive Industry Transparency Initiative (EITI) is a coalition of donors, mining companies, resource-rich countries, Civil Society Organizations and Investors. Its main objective is to disclose what gas, oil and mining companies pay to Government and what Government receives from these extractive companies as revenue. The purpose of disclosing this information is to promote transparency and accountability in the use of our natural resources. The implementation of EITI in Zambia has scored a number of successes notably such as: • Amendment of the Companies legislation to include beneficial ownership disclosure requirement for all companies incorporated in Zambia; • Establishment of the Mineral production project under the Ministry of Mines and Minerals Development as a response to the mineral production discrepancies highlighted in the past EITI reports; • Plans by the government to undertake a full study on the ASM sector to understand the operations of the sector as arising from the feedback given by the EITI reporting process; • Publication of mining licenses and associated documentation by the mining cadaster in line with the EITI requirements; • Creation of a quarterly platform for dialogue between the Minister of Mines and Minerals Development, and the civil society organizations. The EITI is establishing an online repository as a transition to mainstreaming EITI implementation in Zambia. 2. The World Bank has supported the initiative in Zambia from its inception 2008 through Technical and Financial support and currently is supporting the initiative through the Extractive Global Programmatic Support (EGPS) under the Post Compliance Implementation Support III. The grant has a funding of Three Hundred and Fifty Thousand United States Dollars (US$350,000). This grant is expected to come to end on July 31, 2018. 3. The Government of the Republic of Zambia is also embarking on the Mainstreaming of reporting EITI data through different government agencies in order to make the data available on a timely basis and also easily accessible by different user groups as well as the enactment of the EITI bill into law to make EITI reporting mandatory by various stakeholder groups. Additional funding would support these activities and will help Zambia to fully implement its EITI work program and to become validated under the EITI standard. Zambia needs to maintain the current EITI implementation momentum, consolidate the progress achieved, continue to build understanding of the EITI process in the country amongst stakeholders and society in general, and prepare for a validation exercise. 4. As of July 2018, an amount of US$ 220,000 has been disbursed and represents about 63 percent of the grant. Activities were not completed as per schedule of closing date. The ZEITI Secretariat and Ministry of Mines Procurement team completed the recruitment for the Independent Administrator by October 2017 with a view of the engaging their services before the end of 2017. However, the Zambia Institute of Chartered Accountants (ZICA), which is the regulatory body for the Accountancy profession did produce a list of Accounting firms which had not sorted out their membership issues and Moore Stephens (The best firm after evaluation) was one of the firms on the list. The Secretariat The World Bank EITI Post Compliance Implementation Support III (P159717) through the Permanent Secretary Ministry of Mines, engaged ZICA on this matter and the process took a couple of months to conclude. After the conclusion, there was a process of contract signing and review which also took a few months. The whole process was only concluded in July 2018 and the assignment has already started. Consultants will deliver the report by October 2018. 5. Since July 2017, progress towards PDO and Overall Implementation are Satisfactory. An audit report was prepared by the Auditor General for 2017. There were no issues to the audit and the report was accepted by the World Bank. Financial Management and Procurement have been handled adequately by the implementation unit in line with World Bank procedures. The changes proposed do not trigger any change in the safeguards policies. This will be the first extension of the closing date. II. DESCRIPTION OF PROPOSED CHANGES 6. On July 20, 2018, the government has requested a 20-month extension of the closing date and additional funds in the amount of US$400,000. In view of the lack of time to process the additional funds before the closing date (July 31, 2018), two steps will be undertaken. First, an interim restructuring of the project is being processed to extend the closing date. Once approved, a second restructuring will be processed on the additional funds. 7. The 6-month extension of the closing date from July 31, 2018 to January 31, 2019 is being processed as an interim step. Full extension until March 31, 2020 will be processed together with the additional financing package. This additional time and financing would support the EITI work program leading to Zambia’s EITI validation in April 25, 2019. III. SUMMARY OF CHANGES Changed Not Changed Change in Loan Closing Date(s) ✔ Change in Implementation Schedule ✔ Change in Implementing Agency ✔ Change in Project's Development Objectives ✔ Change in Results Framework ✔ Change in Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ The World Bank EITI Post Compliance Implementation Support III (P159717) Change in Disbursement Estimates ✔ Change in Overall Risk Rating ✔ 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) ✔ 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-A3358 31-Jul-2018 31-Jan-2019 31-May-2019