The World Bank Egypt: Sustainable POPs Management Project (P116230) REPORT NO.: RES33405 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF EGYPT: SUSTAINABLE POPS MANAGEMENT PROJECT APPROVED ON JUNE 13, 2014 TO ARAB REPUBLIC OF EGYPT ENVIRONMENT & NATURAL RESOURCES MIDDLE EAST AND NORTH AFRICA Regional Vice President: Ferid Belhaj Country Director: Poonam Gupta Senior Global Practice Director: Karin Erika Kemper Practice Manager/Manager: Lia Carol Sieghart Task Team Leader: Qing Wang The World Bank Egypt: Sustainable POPs Management Project (P116230) I. BASIC DATA Product Information Project ID Financing Instrument P116230 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 13-Jun-2014 30-Nov-2018 Organizations Borrower Responsible Agency Arab Republic of Egypt Egypt Environmental Affairs Agency (EEAA) Project Development Objective (PDO) Original PDO The project development objective is to improve the management and disposal of targeted stockpiles of obsolete pesticides, including Persistent Organic Pollutants (POPs) and Polychlorinated Biphenyl (PCBs), in an environmentally sound manner. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-17336 26-Aug-2014 26-Aug-2014 08-Sep-2014 30-Nov-2018 8.10 2.75 5.35 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Egypt: Sustainable POPs Management Project (P116230) Project Status The project has two components: (i) Destruction of high risk stocks of obsolete pesticide ($3.83m); and (ii) Decontamination of PCB-containing transformer oils ($4.27m). The project has encountered delays towards achievement of the PDO and its indicators, mainly because slow progress has been made on the Component 2 for decontamination of PCB contaminated transformer oils. For component 1 (Destruction of high-risk stocks of obsolete pesticides), the first batch of 237 tons of obsolete pesticides at Al-Adabeya Port and 4 tons at El Saf and Bahteem storage sites has been successfully exported by an international firm for destruction in France. The works to safely and professionally remove the wastes which have been stored in the Port for 18+ years received substantial positive media attention from newspapers and TV. As a result, a feature story and a results video have been produced. The contract for the second batch of high-risk obsolete pesticides (350 tons – 35% of target, mainly Ametryn) at the El Saf site is in the process of signature (the Environmental and Social Impact Assessment inducing the Environmental and Social Management Plan had to be revised and has been cleared recently by the Bank). Meanwhile, the procurement for the third batch (about 41% of target) from other various sites is planned to be initiated in late 2018, once the identification of high-risk obsolete pesticides is confirmed. The second component on decontamination of PCB-containing transformer oils has encountered substantial delays due to the following reasons: (i) required re-tender of the Personal Protection Equipment due to sharp devaluation of the Egyptian Pound, (ii) delays of the inventory of the transformers in the transmission and distribution network to determine the amount and concentration of PCB contamination which are executed by staff of MOEE, and (iii) delays during the fasting month of Ramadan and emergency status in the distribution sector during the summer months. To date, 76% of PCB contaminated oil (1000 tons expected decontaminated by project end) has been identified. The PMU plans to initiate the feasibility study (while the PCB inventory is ongoing and expected to have more data available in late 2018) to determine the final options/facilities for decontamination, procurement and operation. Progress towards achievement of the PDO is measured by the PDO indicator “POPs and POPs waste destroyed, disposed of, or contained in an environmentally sound manner.” To date, 241 tons of POPs pesticides have been destroyed, disposed of, or contained in an environmentally sound manner, 12% of the target of 2,000 tons (including both high-risk obsolete pesticides/POPs and PCBs). The March 2018 Implementation Status and Results Report (ISR) rated the project Moderately Satisfactory in progress against achievement of development objectives and implementation progress. All legal covenants and safeguards requirements are complied with, and the latest audit reports of the project are up to date and deemed satisfactory. Rationale for Extension In order to allow completion of the planned project activities for achieving the PDO, the Mid Term Review (MTR) mission agreed that additional time will be needed. It was the best estimation of both the PMU and the Bank team that the Component 1 is expected to be completed by end of 2019, and the Component 2 by September 2020, taking into account the time needed for the PCB inventory, the Feasibility Study for decontamination, the procurement process and actual treatment of the 1000 tons of PCB oils. The Government of Egypt and the Bank agreed that the project closing date (Nov. 30, 2018) will be extended by 22 months to Sept. 30, 2020. It was also agreed that the Bank will grant only one closing date extension and this will be the only and final extension. All unused grants by the proposed closing date will need to be returned to the Global Environment Facility. The World Bank Egypt: Sustainable POPs Management Project (P116230) The PDO continues to be highly relevant to the priorities of the Republic of Egypt and the Bank, outlined in the Country Partnership Strategy (FY 2015-2019). The continued relevance of the project is evidenced by the successful disposal of all POPs pesticides storage in the country, and the government’s commitment to continuing disposal of high-risk obsolete pesticides in the agriculture sector and the PCB wastes in the power sector. Project efficiency has been demonstrated by cost-effective disposal of the POPs pesticides through the competitive bidding process. Cost effective options for decontamination and/or disposal of PCB wastes will be identified through a feasibility study based on the inventory of PCB wastes in the power sector. The team confirms that the project’s PDOs remain achievable with the extension, the performance of the Borrower remains satisfactory, and the Bank and the Borrower have agreed on actions in an action plan that will be undertaken by the Borrower to complete the project by the proposed closing date. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications TF-17336 Effective 30-Nov-2018 30-Sep-2020 30-Jan-2021