The World Bank EITI Post Compliance Implementation Support III (P159717) REPORT NO.: RES33687 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 ASM Artisanal Small Scale Mining EITI Extractives Industries Transparency Initiative IT Information Technology MSG Multi Stakeholder Group PDO Project Development Objective SOE Statement of Expenses ZEC Zambia EITI Secretariat ZEITI Zambia Extractives Industries Transparency Initiative 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 Approval Date Current Closing Date 20-Oct-2016 31-Jan-2019 Organizations Borrower Responsible Agency Ministry of Finance and National Planning EITI SECRETARIAT Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0.35 Total Financing 0.00 Financing Gap 0.00 DETAILS -NewFin3 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 The World Bank EITI Post Compliance Implementation Support III (P159717) 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-Jan-2019 .35 .24 .11 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING The implementation of EITI in Zambia has made significant progress and is generating impact on the sector through:  Amendment of the Companies legislation to include beneficial ownership disclosure requirement for all companies incorporated in Zambia;  Plans by the government to undertake a full study on the Artisanal Small Scale Mining (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 Extractive Industries Transparency Initiative (EITI) is establishing an online repository as a transition to mainstreaming EITI implementation in Zambia. Overall, this activity has shown sustained progress on implementation of the work program and the satisfactory rating of both the Project Development Objective (PDO) and Implementation Plan continue to reflect strong implementation pace. The EITI is seen as good practice in building trust around contentious issues such as mining revenues and licenses granting. Project performance to this date has been satisfactory, with Zambia recently producing the 2016 EITI report. Its dissemination will start soon. The multi-stakeholder group is discussing further issues to be included in future reports such us SOE dividends, social payments, environmental information and beneficial ownership. The additional funds will finance an upgrade of ZEITI’s reporting capacity. It will support activities on i) feasibility study and technical solution for mainstreaming EITI reporting; ii) production of 2017 and 2018 EITI reports; and iii) enhancement of the ZEITI regulations and policy enhancing the disclosure of data (mainstreamed) and also the disclosure of beneficial ownership information. The project is proposed to be extended from its closing date of January 31, 2019 to March 31, 2020. The said project extension would help address the challenge of mainstreaming EITI reporting and advance cost reduction of EITI reporting making the initiative sustainable and less dependent from donor’s funding. The additional funds and the extension of closing date for the project have been discussed and mutually agreed by the Recipient and the World Bank project team. There are no outstanding audits for this grant. Project Financial Management arrangements are adequate and remain unchanged. The World Bank EITI Post Compliance Implementation Support III (P159717) II. DESCRIPTION OF PROPOSED CHANGES The proposed changes include: A. Extension of Closing Date: On July 20, 2018, the Government requested a 20-month extension of the closing date and additional funds in the amount of US$350,000. In view of the lack of time to process the additional funds before the previous closing date (July 31, 2018), two steps were undertaken. First, an interim restructuring of the project was processed to extend the closing date for 6 months from July 31, 2018 to January 31, 2019 instead of 20 months. Following that first extension, this second restructuring is being processed to include additional funding and to extend the closing date for 14 months from January 31, 2019 to March 31, 2020. This will allow full implementation of the EITI work program leading to Zambia’s international validation. This is the second extension of the closing date, for a total of 20 months. B. Additional Financing: An additional financing of US$350,000 is also sought to allow Zambia to upgrade its current progress in EITI implementation by financing strategic activities of the EITI work program such as mainstreaming the reporting process, capacity building for in-house production of EITI annual reports and sustainable functioning of the ZEITI Secretariat. The existing project description, PDO and monitoring indicators continue to be relevant and support the activities to be covered under the additional financing. C. New Components: (i) Mainstreaming EITI data and transparency policies The feasibility study and technical solution for EITI mainstreaming would provide an overview understanding of the challenge, describe the key existing Government of Zambia and company systems that are already publicly available via web sites or other means. A potential host platform would be proposed. The technical solution would set out a proposed IT systems architecture, frequency of data flows, data exchange protocols etc. for a mainstreamed EITI Portal in line with EITI Standard. This activity would help also on developing a roadmap and a funding strategy for securing support for “EITI mainstreaming” implementation. (ii) ZEITI Operations and Production of EITI Reconciliation Reports for 2017 and 2018 This activity would support the hiring of a consultant to advice the Zambia EITI Secretariat (ZEC) team on producing in- house the 2017 and 2018 EITI reports (partially mainstreamed while the mainstreaming work develops in parallel. The ZEITI website would be redesigned to include aspects for mainstreaming the EITI data (interim mainstreaming strategy). In addition, support to MSG training in relation to media engagement would be funded. The enactment of the transparency regulatory provisions for ZEITI’s work would contribute towards the development of a unified framework on natural resource governance. The legislation will enhance the disclosure of data (mainstreamed) and the disclosure of beneficial ownership information. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ The World Bank EITI Post Compliance Implementation Support III (P159717) Additional Financing Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Procurement ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Design for mainstreaming EITI reporting throughout the extractives value chain is approved and adopted. Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes New Date 30-Nov-2018 15-Jan-2019 31-Mar-2020 Intermediate Indicators IO_IND_TABLE The design for reporting EITI data, running on government and company platforms, is completed. Unit of Measure: Yes/No The World Bank EITI Post Compliance Implementation Support III (P159717) Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes New Date 30-Nov-2018 15-Jan-2019 31-Mar-2020 OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Production of EITI Production of EITI Reconciliation 217500.00 Reconciliation Reports for 2015 217500.00 Reports for 2015 and 2016 and 2016 Dissemination Activities 82500.00 Dissemination Activities 82500.00 Production of two topical Production of two topical reports 50000.00 50000.00 reports ZEITI operations and Production of EITI 0.00 New 160000.00 Reconciliation Reports for 2017 and 2018 Minstreaming EITI data and 0.00 New 190000.00 transparency policies TOTAL 350,000.00 700,000.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A3358 Effective 31-Jul-2018 31-Jan-2019 31-Mar-2020 31-Jul-2020 OPS_DETAILEDCHANGES_ADDITIONAL_FINANCING_TABLE ADDITIONAL FINANCING Source Currency Amount USD Equivalent Extractives Global Programmatic USD 350,000.00 350,000.00 Support(EGPS) Existing Net Commitment USD Amount 350,000.00 The World Bank EITI Post Compliance Implementation Support III (P159717) Total 700,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2017 0.00 0.00 2018 0.00 0.00 2019 0.00 200,000.00 2020 0.00 150,000.00 2021 0.00 0.00 2022 0.00 0.00