Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES23932 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PE ADDITIONAL FINANCING SIERRA RURAL DEVELOPMENT PROJECT IBRD-82460-PE APRIL 24, 2007 TO THE REPUBLIC OF PERU JUNE 17, 2016 AGRICULTURE GLOBAL PRACTICE LATIN AMERICA AND CARIBBEAN REGION This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS AGRORURAL Rural Program for Productive Development (Programa de Desarrollo Productivo Rural) BDP Business Development Plan PIU Project Implementation Unit TDP Territorial Development Plan Regional Vice President: Jorge Familiar Calderon Country Director: Alberto Rodriguez Senior Global Practice Director: Juergen Voegele Practice Manager/Manager: Laurent Msellati Task Team Leader: Luz Diaz Rios 2 PERU PE ADDITIONAL FINANCING SIERRA RURAL DEVELOPMENT PROJECT (P079165) CONTENTS A. SUMMARY 5 B. PROJECT STATUS 5 C. PROPOSED CHANGES 6 3 DATA SHEET Peru PE Sierra Rural Development Project (P079165) LATIN AMERICA AND CARIBBEAN Agriculture . Report No: RES23932 . Basic Information Project ID: P079165 Lending Instrument: Specific Investment Loan Regional Vice President: Jorge Familiar Calderon Original EA Category: Partial Assessment (B) Country Director: Alberto Rodriguez Current EA Category: Partial Assessment (B) Senior Global Practice Juergen Voegele Original Approval Date: 24-Apr-2007 Director: Practice Laurent Msellati Current Closing Date: 30-Jun-2016 Manager/Manager: Team Leader(s): Luz Berania Diaz Rios . Borrower: Ministry of Economy and Finance (MEF) Responsible AGRORURAL, AGRORURAL Agency: . Restructuring Type Form Type: Short Form Decision Authority: CD Decision Restructuring Level: Level 2 . Financing ( as of 31-May-2016 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P079165 IBRD-74430 Closed 24-Apr-2007 26-May-2008 09-Jul-2008 31-Dec-2012 30-Jun-2013 P079165 IBRD-82460 Effective 02-Apr-2013 04-Oct-2013 20-Dec-2013 30-Jun-2016 30-Jun-2016 Disbursements (in Millions) % Cancelle Disburse Undisbur Project Ln/Cr/TF Status Currency Original Revised Disburse d d sed d P079165 IBRD-74430 Closed USD 20.00 19.83 0.17 19.83 0.00 100 P079165 IBRD-82460 Effective USD 20.00 20.00 0.00 16.50 3.50 82 . 4 Policy Waivers Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] . A. Summary of Proposed Changes The proposed CD-Level Restructuring (Level 2) responds to a request of the Borrower to allow for: i) A nine-month extension of the Project closing date for the Additional Financing of Sierra Rural Development Project, Loan N. IBRD 82460 (PE, P079165), to finalize the completion of more than one thousand investment plans currently under implementation. The project had an initial delay of 16 months after the effective date, attributable to administrative constraints, specifically delays in recruiting PIU staff, which reduced the actual implementation period to only 21 months. The extension of the Project's closing date will allow for a total effective implementation period of 24 months, and for a proper conclusion of project activities. This will be the first extension and only extension of the project. ii) the reallocation of proceeds among eligible disbursement categories to accommodate higher demands for Territorial Development Plans (TDPs), which have increased from an original target of 375 plans to a total of 563. To cover this demand, the Borrower is proposing a reduction of original allocations for disbursement categories for component 1 (Business Plans) and component 3 (Part 3 of the project, related to project management), equivalent to 4.6 percent and 29.2 percent, respectively, and an increase of 15.5 percent to the aggregate expenditures categories related to component 2 (TDPs). Financial Audit. The first financial auditing report for the project, comprising the period December 1, 2014 - December 31, 2015, is due on June 30, 2016. The procedures leading to the selection of the firm that will carry out the audit are in advance stages. Currently, the project implementing team is expecting approval by the General Comptroller's office to proceed with the hiring of the firm that will carry out the auditing; on May 11, 2016, a precautionary commission to exercise due diligence over the auditing process was established by this office, which is a key first step in the firm's recruiting process. Once the final approval by the General Comptroller's office is granted, the project will be able to proceed with hiring the firm. . B. Project Status The AF of Aliados Project is currently rated Satisfactory for Implementation Progress (IP) and Moderately Satisfactory for Development Outcome (DO). The project has sustainably and consistently improved its implementation performance during FY16, and is now on track to recover from delays at project start. In November 2015, the IP was upgraded from MU to MS as a result of the gains achieved so far since the last supervision mission (July 2015). By March 2016, the IP rating was upgraded to S, as the project has already achieved and exceed most of its intermediary indicators. A total of 1360 contracts have been signed with beneficiary producers and communities, and of those contracts, 797 correspond to Business Plans (new and second generation) and 563 to territorial development plans (TDPs), exceeding end-target values. Project current beneficiaries reach 34,000, of which 46.7 percent are women. The project investments cover 263 districts in the six regions of intervention (Apurimac, Ayacucho, Huanuco, Huancavelica, Junin, and Pasco). The progress towards the achievement of PDO remains MS, as the investments made by the project, in alliance with communities/producer organizations, have not yet achieved completion and indicators of PDO cannot be fully reported. The first tranche of BPs and TDPs supported by the project reached completion in late May (28 Plans). The project objectives continue to be achievable with the proposed 5 extension period of implementation. AGRORURAL is currently focusing on supporting implementation of Plans and strengthening the monitoring of activities and results, including putting in place the project evaluation approach. Disbursements to date account to US$16.5 million, which corresponds to 82.5 percent of total Bank financing (US$20.0 million). . C. Proposed Changes . Financing Change in Loan Closing Date(s): Explanation Current project closing date is June 30, 2016. The AF of the project became effective on Dec. 20, 2013, but effective implementation started March 2015, following a 16-month delay. This delay was due to administrative constraints, specifically delays in recruiting PIU staff. During April-June 2015, the PIU was established, and since then, project implementation has progressed rapidly. A nine-month extension has been requested by the Borrower, until March 31, 2017, to finalize the completion of more than one thousand subprojects/investment plans currently under implementation, including the proper consolidation of results aligned with project development objectives (PDO). This will be the first and only extension of the project Proposed Ln/Cr/T Original Previous Closing Current Proposed Status Application F Closing Date Date(s) Closing Date Closing Date Deadline Date 30-Jun-2013, 15- IBRD- Jan-2014 Closed 31-Dec-2012 30-Jun-2013 74430 , 24-Jan-2014 IBRD- Effective 30-Jun-2016 30-Jun-2016 30-Jun-2016 31-Mar-2017 31-Jul-2017 82460 Reallocations Explanation The reallocation of proceeds among eligible disbursement categories is needed to accommodate higher demands for Territorial Development Plans (TDPs), which have increased from an original target of 375 plans to a total of 563. To cover this demand, the Borrower is proposing a reduction of original allocations for component 1 and component 3 activities, equivalent to 4.6 percent and 29.2 percent, respectively, and an increase of 15.5 percent to the aggregate disbursement categories related to component 2 (Territorial Development Plans). This increase does not comprise the achievement of the targets set for the activities aligned with components 1 and 3. Current Ln/Cr/T Currenc Cat Disbursement % Category of Allocation F y .No. (Type Total) Expenditure Actual Pending Current Disburse Commit Proposed Current Proposed ments ments TF- TF51888 CS 1,016,67 1,016,67 1,016,67 51888- USD 1 AND 0.00 100.00 100.00 1.89 1.89 1.89 001 AUDITS 6 TF51888 TRNG AND 40,088.9 40,088.9 40,088.9 2 0.00 85.00 85.00 WORKSHOP 9 9 9 S 3 TF51888 GO 5,768.00 5,768.00 0.00 5,768.00 85.00 85.00 TF51888 25,171.9 25,171.9 25,171.9 4 OPER. 0.00 85.00 85.00 1 1 1 COSTS 1,087,70 1,087,70 1,087,70 Total: 0.00 0.79 0.79 0.79 IBRD- RURAL 9,097,72 9,097,72 9,097,72 74430- USD 1 BUSINESS 0.00 100.00 100.00 3.14 3.14 3.14 001 SPROJ. COMMUNIT 10,327,7 10,327,7 10,327,7 2 Y 0.00 100.00 100.00 19.40 19.40 19.40 DEV.SPROJ. GO, CS, 408,351. 408,351. 408,351. 4 NONCS, 0.00 100.00 100.00 90 90 90 TRNG, OP UNALLOCA 6 0.00 0.00 0.00 0.00 0.00 0.00 TED 19,833,7 20,921,4 19,833,7 Total: 0.00 94.44 95.23 94.44 IBRD- GO,CW,CS,N 13,350,0 5,078,86 1,537,24 12,726,9 82460- USD 1 CS,TR,OP & 100.00 100.00 00.00 1.07 2.95 70.00 001 Subp. - Pt 1 GO,CW,CS,N 5,735,00 3,349,01 971,678. 6,624,81 2 CS,TR,OP & 100.00 100.00 0.00 3.83 94 2.00 Subp. - Pt 2 GO,CS,NCS,T 915,000. 648,218. 3 0.00 0.00 100.00 100.00 R & OP - Pt 3 00 00 20,000,0 29,349,3 2,508,92 20,000,0 Total: 00.00 70.13 1.89 00.00 7