Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) LATIN AMERICA AND CARIBBEAN | Peru | Environment & Natural Resources Global Practice | IBRD/IDA | Development Policy Lending | FY 2009 | Seq No: 10 | ARCHIVED on 08-Sep-2015 | ISR16075 | Implementing Agencies: MEF - Ministerio de Economía y Finanzas Key Dates Key Project Dates Board Approval date:17-Feb-2009 Effectiveness Date:25-Sep-2009 Planned Mid Term Review Date:14-May-2013 Actual Mid-Term Review Date:14-May-2013 Original Closing Date:17-Feb-2012 Revised Closing Date:08-Sep-2015 Program Development Objectives Program Development Objective (from Program Document) The proposed Environmental Development Policy Loan Program (ENVDPL) aims at supporting the government's efforts to strengthen environmental governance and institutions in Peru, and mainstream environmental sustainability in the development agenda of key sectors (mining, fisheries, and urban transport and energy). The ENVDPL promotes improvements in health particularly of the poor who are exposed to the highest risks from environmental degradation. The ENVDPL is consistent with one of the key pillars of the 2006 Country Partnership Strategy (CPS) for Peru for FY07-FYI1 (and the 2009 CPS progress report) laying out a strategy to support the GoP to achieve its goals of sustained economic growth. The CPS recognizes the need to raise the profile of environmental issues in Peru by enhancing environmental public investments and strengthening the institutional framework. In support of the CPS# pillar (i) on economic growth, the ENVDPL program will contribute to making growth environmentally sustainable by supporting the environmental legal and institutional framework, biodiversity conservation, enhancing control over air and water pollution, improving the sustainability of the mining sector and the sustainable management of fisheries resources. In addition, by supporting the policy instruments of the newly created Ministry of Environment (MINAM), the ENVDPL would contribute to the modernization of the state institutions (CPS pillar iii). PHRPDODEL Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Satisfactory  Satisfactory Overall Implementation Progress (IP)  Satisfactory  Satisfactory Overall Risk Rating  --  Moderate Implementation Status and Key Decisions The Peru First Programmatic Environmental Development Policy Loan/Deferred Draw-down Option was approved by the Board on February 17, 2009. As of August , 2015, USD $20 million had been disbursed. The Second Programmatic Environmental Development Policy Loan was approved by the Board on December 8, 2009; and the Third Programmatic Environmental DPL (last of the series) was approved by the Board on August 5, 2010. On August 30, 2015, the GoP requested the final disbursement of the Deferred Draw-down Option. The ICR preparation was initiated after the loan proceeds are released. 9/8/2015 Page 1 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating 9/8/2015 Page 2 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) Political and Governance  --  --  Low Macroeconomic  --  --  Low Sector Strategies and Policies  --  --  Low Technical Design of Project or Program  --  --  Moderate Institutional Capacity for Implementation and Sustainability  --  --  Moderate Fiduciary  --  --  Low Environment and Social  --  --  Low Stakeholders  --  --  Low Other  --  --  -- Overall  --  --  Moderate Results Results Indicators PHINDIRITBL  Number of EIAs of large infrastructure/investment projects with potentially significant impacts reviewed by MINAM. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target MINAM will Congress established In 2011, MINAM review at least Servicio Nacional de INRENA reviewed 77 EIAs reviewed a sample of 10 EIAs of Certificacion Ambiental for projects (large and 200 EIAs for investment infrastructure/in (SENACE) to Value small) which could have an projects with potentially vestment strengthen Peru's impact on natural significant impacts. By projects with Environmental Impact resources 2011 MINAM had potentially Assessment regulatory achieved the end target. significant framework. impacts. Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments As per Legislative Decree No. 1013/2008 and Supreme Decree No. 007-2008-MINAM, which respectively created and regulated the Ministry of Environment’s organization and functions, MINAM was mandated to lead and manage the National System of Environmental Impact Assessment (SEIA). Further, Law No. 27,446/2009 that established the SEIA mandated MINAM, among other responsibilities, to randomly assess EIAs approved by sectoral authorities in the three levels of government in order to determine the actions needed to improve and consolidate the SEIA. This random review was based on the criteria and procedures set forth in Ministerial Resolution N° 239- 2010-MINAM. MINAM randomly reviewed 10% of the sample of 2,359 EIAs approved by sectoral agencies between 2001 and 2010, including Detailed- EIAs for Category III projects i.e., “projects whose characteristics and location could result in significant negative quantitative or qualitative effects requiring a detailed analysis of project impacts and the development of environmental mitigation strategies.” The review was the basis on which the Government submitted a Bill to create an organization to manage Peru’s EIA system. In 2012, the Congress issued Law No. 29968/2012 establishing the National Service of Environmental Certification for Sustainable Investments (SENACE), under the auspices of MINAM. SENACE’s core functions include the review and approval of the Detailed-EIAs, and the implementation of a “one-window” system for environmental certification, in order to simplify and expedite administrative procedures. In February, 2013, SENACE’s Board of Directors approved the agency’s rules of procedures. The GoP also approved an action plan and timeframe for structuring SENACE and preparing it to assume the EIA responsibilities that were under sectoral agencies (Supreme Decree N. 003-2013-MINAM). As of April 30, 2015, the establishment of SENACE was still in progress. However, the design of the DPO does not provide a logical linkage between the DPO-supported policy action of creating MINAM, and the results indicator of number of EIA of large infrastructure projects (Detailed-EIAs) reviewed by MINAM. Consequently, it is not evident how the measurement of this indicator would 9/8/2015 Page 3 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) contribute to the achievement of the project development objective. PHINDIRITBL  Increased NPA funding from various sources (including private sector) by at least US$ 2 million per year. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Resource allocation from In 2014 and 2015, various sources to the Resource allocation is resource allocation to National System of Natural US$ 2 million Value higher than US$ 2 SERNAP amounted to Protected Areas per year million per year. more than US$ 17 (SINANPE) of US$14.2 million per year. million. Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments Resource allocation to SERNANP (from all sources) was approximately USD 27 million in 2013. By December, 2014, SERNAP annual resources had fallen to about USD 17 million. In the past two years (2014 and 2015) budget appropriations for NPAs was higher than USD 27 million per year. PHINDIRITBL  Air quality data for the Lima-Callao Metropolitan Region is widely published and disseminated (in real time). (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Data are Data were not Data are disseminated Data is disseminated on- Value disseminated in disseminated in real time in real time line with some delay. real time Date 07-Jan-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments The National Service of Meteorology and Hydrology (SENAHMI) – an affiliated agency of MINAM – disseminates information on CO, O3, NO, NO2, HNO3, PM2.5 and PM10 levels in Lima-Callao Metropolitan Area at: http://www.senamhi.gob.pe/calidad_aire.php. However, the available information is not disseminated in real time; it is disseminated with several days delays. The GoP expects to implement mechanisms to disseminate this information in real time. 9/8/2015 Page 4 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) PHINDIRITBL  Air quality contingency plans are developed. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Air quality Air quality action plans contingency have been prepared in 5 plans area cities. The plans outline Air quality contingency developed and Pollution contingency actions to be considered plans area developed implemented in Value plans do not exist in Peru, during contingencies. and implemented for the 5 most except in La Oroya However, Peru does not Lima-Callao polluted cities: have operational air Lima, Arequipa, quality contingency Chimbote, Ilo plans. and La Oroya. Date 28-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments The GoP approved air quality action plans for the five most polluted cities in Peru: Lima, Arequipa, Chimbote, Ilo and La Oroya. These plans include the design and implementation of contingency plans in the short and medium term. In La Oroya, for example, the lack of real- time monitoring data on air quality precludes the operation of a contingency plan. In other urban centers the lack of reliable air quality monitoring networks precludes the operation of contingency plans. The GoP is preparing an investment project to fund air quality monitoring networks. PHINDIRITBL  Priority MELs are identified following the priority setting update of MELs inventory and resources for remediating priority public/private MELs confirmed. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target To date the updated At least 10 inventory includes 8616 priority MELs MELs. The inventory is are identified published on the website following the More than 10 priority No MELs have been of the Ministry of Energy priority setting MELs have been identified using technical & Mines. Since 2010, update of MELs identified following the criteria, and resources 119 MELs in priority inventory and Value priority setting protocol have not been confirmed areas of Cajamarca and resources for established by the for public/private MEL 755 other legacies in 21 remediating Ministry of Energy and remediation. former mining units have priority Mines. been remediated public/private through the state-owned MELS have agency, Activos confirmed Mineros. resources. Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments The Ministry of Mines and Energy (MEM) priority setting methodology was developed under the Peru-Canada Cooperation Program (PERCAN), focusing on key watersheds. With this information, MEM has updated its MEL inventory built on environmental and health impacts. With support from the Japanese cooperation agency (JICA), MEM is preparing an investment operation to finance a pilot project for remediation of MELs in Peru. In this context, JICA has assessed the remediation of 891 MELs of high and very high risk, located in six watersheds. 9/8/2015 Page 5 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) PHINDIRITBL  Number of environmental participatory monitoring projects in the mining sector. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Environmental Environmental Environmental participatory 35 community-based participatory monitoring participatory monitoring monitoring Value monitoring pilots are undertaken in more undertaken in more than undertaken in underway. than 40 sites. 60 sites. at least 60 sites. Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments The Ministry of Energy and Mines reviewed all environmental management instruments registered between 2008 and 2012. Out of 208 instruments, 24 instruments established committees and 77 of them included programs aimed at environmental participatory monitoring. Other instruments opted for establishing Permanent Information Office. The Environmental Enforcement Agency OEFA supervises the environmental participatory monitoring. However, there is no documentation on the effectiveness or implementation of the monitoring. More than 60 mining sites and mining operations have established participatory environmental monitoring activities, based on obligations adopted by mining operators in their EIAs. PHINDIRITBL  Gas stations supplying diesel in Lima supply 50ppm diesel. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All gas stations in the metropolitan area Lima- At least 30 Callao (more than 750) percent of gas supply diesel with less stations in main Gas stations in Lima- than 50 ppm of sulfur. cities (approx. Callao supplying diesel Gas stations in four 750) supplying Value Zero with less than 50 ppm additional clean diesel of sulfur content cities/departments (with less than supply diesel with less 50 ppm of than 50 ppm: Madre de sulfur content) Dios, Puno, Arequipa, by 2010. and Moquegua. Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 PHINDIRITBL  Number of vehicles converted to natural gas and number of service stations supplying natural gas in Lima. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target In the metropolitan area At least 80,000 of Lima-Callao, more vehicles More than 80,000 than 162,000,000 converted to vehicles converted to vehicles and 1,000 natural gas 35,000 vehicles converted natural gas (NG) and buses have been Value (NG) and 90 to NG in Lima. more than 90 service converted to natural gas. service stations stations are installed The number of service are installed and operating in Lima. stations providing and operating natural gas in the in Lima. country increased to 245 9/8/2015 Page 6 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) in the country. The Metropolitan Area Lima- Callao has more than 90 service stations providing natural gas. Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments Up to December of 2014, 197,303 vehicles were converted to natural gas (GNV) in Peru. The number of service stations providing natural gas increased to 245 in the country. PHINDIRITBL  Vehicle inspection and maintenance system operating in Lima. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Vehicle inspection and Currently more than maintenance 1,000,000 vehicles are system inspected yearly in 7 operating in Vehicle inspection and inspection centers in Lima (with at 6 inspection lanes maintenance system Lima, and 7 inspection least 600,000 Value operational in Lima for operating in Lima (with centers in Callao. Cities vehicles heavy-duty vehicles. at more than 600,000 such as Arequipa, inspected), and vehicles inspected). Trujillo, Chiclayo, and in each of the 3 Cusco count with vehicle largest cities inspection centers. (with at least 80,000 vehicles inspected). Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments Each inspection center has two or three lanes resulting in about 14-21 inspection lanes in Lima; and 14-21 inspection lanes in Callao. PHINDIRITBL  Percentage of anchoveta fleet under the quota system. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 100 percent of 100 percent of Less than 100 percent of Zero percent regulated by anchoveta fleet Value anchoveta fleet under anchoveta fleet is under quotas. under the quota the quota system. the quota system system. Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 9/8/2015 Page 7 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) Comments A new supreme decree (005-2012-PRODUCE) increased the maritime zone excluded from the quota regime i.e. the zone that had free access to anchoveta fishing. As a result, less than 100% of the anchoveta fleet is regulated by the quota system. PHINDIRITBL  Number of workers take advantage of economic incentives for leaving the fisheries sector. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target As a result of Decree 1084, 2046 workers left the fishing sector. Out At least 3000 of those workers, 1713 2,046 workers benefited workers benefit had effectively from economic from economic Value Zero benefited from the incentives for leaving the incentives for program (more than sector leaving the 1000 from advisory sector. services and more than 1000 from formative itineraries) Date 30-Sep-2008 14-May-2013 20-Aug-2015 31-Aug-2015 Comments According to PRODUCE, only 2046 workers left the fishing sector. The GoP met the end target of 100% of workers benefited by the program. Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P101471 IBRD-76740 -- USD 330.00 330.00 0.00 330.00 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P101471 IBRD-76740 -- 17-Feb-2009 08-Sep-2009 25-Sep-2009 17-Feb-2012 08-Sep-2015 9/8/2015 Page 8 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) Tranches PHTRANCHESEC Tranche 10 Description One tranche in the amount of 20 million, and $310 million as DDO Amount (USD) Expected Release Date Actual Release Date Status 20000000.00 18-May-2009 15-Oct-2009 Released Tranche Condition Description Status If Not Met If Delayed Approval of the Legislative Met Decree No.1013 creating the Ministry of Environment (MINAM), establishing its organization and key functions. Issuance of regulation Met establishing functions of the National Service for Natural Protected Areas (SERNANP). Issuance of the Supreme Decree Met No.002-2008-MINAM which sets the Environmental Quality Standards (ECAs) and Maximum Permissible Levels (LMPs) for air and water emissions. Approval of Legislative Decrees Met No. 1042 and No. 28526 which modify the MEL#s Law (No. 28271), and placed the onus for remediation on private holder (even after mining title/concession has expired) and forbids granting new mining concessions to companies that have not remediated their MELs. Issuance of Supreme Decree No. Met 028-2008-EM which approved a Regulation defining public and community participation during the concession, exploration, exploitation, execution and closing of mining process. Enactment of Law No.28694 Met establishing reduction of sulfur in diesel to 50ppm by 2010. Issuance of Supreme Decree No. Met 016-2008-MTC, which approved a Regulation promoting vehicle conversion from gasoline to natural gas and establishment of stations supplying natural gas. Approval of Legislative Decree Met No. 1084 regulating anchoveta fishing quotas by vessel, and the social protection measures for displaced workers. 9/8/2015 Page 9 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Peru First Progrmmatic Environmental Development Policy Loan /DDO (P101471) Restructuring History There has been no restructuring to date. Related Operations P116152-Second Programmatic Environmental Development Policy Loan ,P118713-Peru Third Programmatic Environmental Development Policy Loan 9/8/2015 Page 10 of 10 Public Disclosure Copy