The World Bank MEXICO Sustainable Energy Technologies Development for Climate Change (P145618) REPORT NO.: RES38660 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MEXICO SUSTAINABLE ENERGY TECHNOLOGIES DEVELOPMENT FOR CLIMATE CHANGE APPROVED ON MARCH 6, 2015 TO UNITED MEXICAN STATES ENERGY & EXTRACTIVES LATIN AMERICA AND CARIBBEAN Regional Vice President: J. Humberto Lopez Country Director: Pablo Saavedra Regional Director: Franz R. Drees-Gross Practice Manager/Manager: Antonio Alexandre Rodrigues Barbalho Task Team Leader(s): Guillermo Hernandez Gonzalez The World Bank MEXICO Sustainable Energy Technologies Development for Climate Change (P145618) I. BASIC DATA Product Information Project ID Financing Instrument P145618 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 06-Mar-2015 31-Dec-2020 Organizations Borrower Responsible Agency United Mexican States SENER Project Development Objective (PDO) Original PDO The objectives of the Project are to improve the institutional capacity of ACE technology institutions (both public and private)inthe territory of the recipient and to foster the commercialization of ACE technologies by providing financial incentives to the private sector, which together are expected to lead to GHG emissions reduction in the future. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-19403 06-Mar-2015 08-May-2015 21-Sep-2015 31-Dec-2020 16.88 8.88 8.00 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank MEXICO Sustainable Energy Technologies Development for Climate Change (P145618) 1. The Mexico Sustainable Energy Technologies Development for Climate Change Project (P145618, PRODETES for its acronym in Spanish) was approved by the Board on March 6, with a Global Environment Fund (GEF) grant in the amount of US$ 16.88 (TF No. 19403). The Project became effective on September 21, 2015, and is originally scheduled to close on December 31, 2019. 2. The overall status of the Project is Moderately Satisfactory. The project is currently rated as moderately satisfactory for Progress towards achievement of Project Development Objective (PDO) and overall Implementation Progress (IP), reflecting reasonable implementation with slight delays in the execution of a number of subprojects under Component 2 (see PRODETES Awards, or Premios PRODETES, below) and relevant consultancies under Component 1 (see Ex-Post Regional Evaluations below). 3. The project's main results to date include improved capacity for Advanced Clean Energy (ACE) technologies in Mexico and the provision of financial incentives to foster their commercialization. Under Component 1, ten Regional Needs Assessments have been completed and their findings have been consolidated in the website of the Observatory for the Clean Energy Ecosystem in Mexico, available at: https://oel.mx. This web platform is expected to incorporate the findings of Ex-Post Regional Evaluations, whose objective is to analyze the outcomes of the RNAs to inform, among others, the development and update of road maps for different clean technologies, as well as the operation and design of their current and future dedicated innovation centers (CEMIEs, for their acronym in Spanish), in line with the priorities of the new administration. Under Component 2, three calls for proposals for Premio PRODETES, i.e., Incentives for the commercialization of ACE Technologies, were successfully completed in 2016, 2017, and 2018. It is expected that all awardees from the 2016 and two from the 2017 calls for proposals will complete their subprojects by December 2019; two subprojects from the 2017 call for proposals will be completed by March 2020; and the 2018 recipients are expected to complete their subprojects by December 2020. 4. In the context of the recent change in federal government, project implementation was halted in the first half of 2019, until implementation modalities could be clarified. Starting with the supervision mission of June 2019, implementation activities have regained momentum, as supported by recent improvements in the disbursement rate, from 25% in December 2018, to 48.5% as of end of October, 2019. The disbursement rate is expected to reach approximately 65% by the end of December 2019, and would reach approximately 82% by the end of FY20 if the proposed extension is approved. 5. The proposed restructuring of the Project will provide the opportunity to complete all the agreed activities and will contribute to the achievement of the PDO. The proposed changes to the Project are as follows: (i) a 12-month extension to the closing date until December 31, 2020, and (ii) a reallocation of proceeds between Categories 2, 3 and 4 of eligible expenditures. The extension to the closing date will provide enough time to complete activities under Component 1 (notably the ex-post regional evaluations) and all sub-projects awarded under Component 2. The reallocation of proceeds will allow the Project Implementing Unit (PIU) to operate during the additional 12 months of implementation using remaining resources that resulted from (i) depreciation of the Mexican Peso versus the US currency, and (ii) savings due to competitive processes. 6. Fiduciary and Safeguards. The project does not have any outstanding audit reports and previous ones were deemed satisfactory, and where findings were reported, these have been addressed by the Recipient. The rating for Safeguards is Satisfactory, whereas the rating for Financial Management, Procurement, Project Management and Monitoring and Evaluation is Moderately Satisfactory. The World Bank MEXICO Sustainable Energy Technologies Development for Climate Change (P145618) 7. Risks. The overall risk was reduced from substantial to moderate, reflecting the overall progress towards the PDO and the commitment of the client to project implementation. The updated risk ratings will be reflected in the Implementation Status and Results Report (ISR) following the project restructuring. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications TF-19403 Effective 31-Dec-2019 31-Dec-2020 31-Dec-2020 30-Apr-2021 REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Current Actuals + Proposed Disbursement % Ln/Cr/TF Expenditure Allocation Committed Allocation (Type Total) Category Current Proposed TF-19403- CS, TR - Part 1 4,576,890.00 2,269,960.56 4,576,890.00 100.00 100.00 001 Currency: USD CS, TR - Part 2.2 1,000,000.00 186,716.29 500,000.00 100.00 100.00 GO, NCS, CS, OP 10,500,000.00 4,933,324.56 10,600,000.00 100.00 100.00 - Subp. Part 2.1 CS, OP - Part 3 803,844.00 801,307.60 1,203,844.00 100.00 100.00 Total 16,880,734.00 8,191,309.01 16,880,734.00