The World Bank Somali Petroleum Technical Assistance Project (SOPTAP) (P164175) REPORT NO.: RES37993 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SOMALI PETROLEUM TECHNICAL ASSISTANCE PROJECT (SOPTAP) APPROVED ON JUNE 7, 2018 TO FEDERAL REPUBLIC OF SOMALIA ENERGY & EXTRACTIVES AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Carlos Felipe Jaramillo Global Director: Riccardo Puliti Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader: Alexander Johannes Huurdeman, Matthias Mayr The World Bank Somali Petroleum Technical Assistance Project (SOPTAP) (P164175) ABBREVIATIONS AND ACRONYMS BOE Barrel of Oil Equivalent EAFS External Assistance Fiduciary Section EGPS TF Extractives Global Programmatic Support Trust Fund FCV Fragility Conflict and Violence FGS Federal Government of Somalia FMS Federal Member States FM Financial Management IBRD International Bank for Reconstruction and Development IDA International Development Association MoMPR Ministry of Petroleum and Mineral Resources NCS National Communications Strategy NDP National Development Plan PC Project Coordinator PDO Project Development Objective PMU Project Management Unit PSA Production Sharing Agreement PSC Project Steering Committee SESA Strategic Environmental and Social Assessment SPA Somalia Petroleum Authority SPC Somalia Petroleum Company TA Technical Assistance TOR Terms of Reference The World Bank Somali Petroleum Technical Assistance Project (SOPTAP) (P164175) BASIC DATA Product Information Project ID Financing Instrument P164175 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 07-Jun-2018 31-Dec-2019 Organizations Borrower Responsible Agency Federal Republic of Somalia FGS Ministry of Petroleum and Mineral Resources 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 To strengthen the capacity of the Federal Government of Somalia to manage its petroleum sector. OPS_TABLE_PDO_CURRENTPDO The World Bank Somali Petroleum Technical Assistance Project (SOPTAP) (P164175) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A7805 07-Jun-2018 11-Jun-2018 11-Jun-2018 31-Dec-2019 .50 .12 .38 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Somalia Petroleum Technical Assistance Project has been effective since June 11, 2018 and has a current project closing date of December 31, 2019. The project is financed by the Extractives Global Programmatic Support Trust Fund (TF0A7805-SO) (USD 0.5 million). While the main objective of the project is to strengthen the capacity of the Government of Somalia to manage the petroleum sector, project management capacity is built in the Ministry of Petroleum and Mineral Resources through the establishment of a project management unit responsible for project implementation. There have not been any restructurings of the project to date. This would be the first restructuring. 2. Since the start of this first recipient executed project in June 2018, disbursement is less than 10%. The first withdrawal application to the Bank happened last May being the salary payment of the permanent project coordinator. The 2 TA Consultancy Assignments of this project (development of the Communications Strategy and the establishment of the Somalia Petroleum Authority) have been procured, and both are expected to commence in Q3 2019. The second and third SOPTAP quarterly report were approved on April 5, June 14 respectively. An Implementation Support Mission, including a trip to Mogadishu, was conducted from June 11-14, 2019 and a comprehensive discussion on implementation status and next steps was successfully finalized with the Client. To facilitate the empowerment of the project coordinator, some face to face Bank support was provided around fiduciary processes and deliverables (i.e. Procurement, Finance, Disbursement, Project Management and Reporting). The Ministry’s request for replacement of the PMU FM Specialist by EAFS staff who has previous experience with recipient executed Bank projects, was approved. A revised budget (from 0.4845 to 0.5 $million) and annual workplan for the Fiscal Year 2019 was submitted to the Bank including a quarterly cash forecast. The change in foreseen FY19 disbursement was shared for Parliament approval to include in the 2019 government supplementary budget. A revised Procurement Plan to reflect underlying variances in expenditure level was cleared. Some best practices of proactive measures around contract management for the 2 TA Consultancy Assignments and assuring timely payments of invoices, were overlaid. There are neither outstanding FM reports nor overdue FM issues. 3. The Ministry of Petroleum has never implemented a recipient executed project with the World Bank before and the Ministry is also lean in staff. As such significant delays were faced in setting up the PMU, opening of designated Project Accounts, familiarization with the Bank’s procurement processes (incl procurement system (STEP)) and fiduciary aspects. Upon advertising the TA Consultancy assignments, Client commitments towards procurement evaluation timelines have proven to be a challenge. Effective working relations between the Ministry of Petroleum and the Ministry of Finance have only slowly emerged. One of the 2 TA Consultancy assignments has reached contract execution and the other one is under evaluation. An extension until June 30th, 2020 would allow enough The World Bank Somali Petroleum Technical Assistance Project (SOPTAP) (P164175) time to complete execution of these procurements in a quality manner considering the existing capacity. While it is expected that the restructuring would be completed by March 2020, a longer closing date extension is being requested to ensure adequate time is provided for processing. II. DESCRIPTION OF PROPOSED CHANGES 4. An extension of the project closing date until June 30th, 2020 is proposed to allow enough time to complete execution of these procurements in a quality manner considering the existing capacity of the PMU. While it is expected that the restructuring could be completed by March 2020, a longer closing date extension is requested to ensure adequate time for processing. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ 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 ✔ The World Bank Somali Petroleum Technical Assistance Project (SOPTAP) (P164175) Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Somalia Petroleum Authority has the basic tools to start executing its mandate Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes Revised Date 01-Jun-2018 07-Sep-2018 30-Jun-2020 National Communication Strategy and Implementation plan Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes No Change Date 01-Jun-2018 07-Sep-2018 30-Dec-2019 Intermediate Indicators IO_IND_TABLE Somalia Petroleum Authority organizational structure and associated job descriptions in place Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes Revised Date 01-Jun-2018 07-Sep-2018 30-Jun-2020 Business processes and operational procedures for Somalia Petroleum Authority Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes Revised The World Bank Somali Petroleum Technical Assistance Project (SOPTAP) (P164175) Date 01-Jun-2018 07-Sep-2018 30-Jun-2020 TOR for SESA drafted Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes No Change Date 01-Jun-2018 07-Sep-2018 30-Dec-2019 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A7805 Effective 31-Jul-2019 31-Dec-2019 30-Jun-2020 30-Oct-2020 Note to Task Teams: End of system generated content, document is editable from here.