The World Bank Senegal Support to Extractive Industries Transparency Initiative Compliance Process (P160022) REPORT NO.: RES39904 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SENEGAL SUPPORT TO EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS APPROVED ON MAY 19, 2016 TO REPUBLIC OF SENEGAL 16 December 2019 ENERGY & EXTRACTIVES AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Nathan M. Belete Global Director: Riccardo Puliti Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader(s): Nina Inamahoro The World Bank Senegal Support to Extractive Industries Transparency Initiative Compliance Process (P160022) ABBREVIATIONS AND ACRONYMS CSO Civil Society Organization EGPS Extractives Global Programmatic Support EITI Extractive Industry Transparency Initiative FM Financial Management GDP Gross Domestic Product GoSN Government of Senegal IDA International Development Association IFR Interim Unaudited Financial Report M&E Monitoring and Evaluation MSG Multi-stakeholder Group (known as Comité ITIE in French in Senegal) MPE Ministry of Petroleum and Energies (Ministère du Pétrole et des Energies) MEFP Ministry of Economy, Finance and Planning (Ministère de l’Économie, des Finances, et du Plan) NGO Non-Governmental Organization PDO Project Development Objective TA Technical Assistance ToR Terms of Reference WB World Bank The World Bank Senegal Support to Extractive Industries Transparency Initiative Compliance Process (P160022) BASIC DATA Product Information Project ID Financing Instrument P160022 Investment Project Financing Original EA Category Current EA Category Approval Date Current Closing Date 19-May-2016 31-Dec-2019 Organizations Borrower Responsible Agency Ministry of Economy and Finance Senegal EITI Permanent Secretariat 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 The project development objective (PDO) is to assist Senegal in implementing its EITI agenda. OPS_TABLE_PDO_CURRENTPDO The World Bank Senegal Support to Extractive Industries Transparency Initiative Compliance Process (P160022) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A6166 08-Nov-2017 21-Nov-2017 21-Nov-2017 31-Dec-2019 .49 .22 .27 TF-A2673 19-May-2016 20-Jun-2016 20-Jun-2016 31-Dec-2019 .30 .30 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project status 1. The project was approved by the Extractive Global Programmatic Support (EGPS) in May 2016 to assist Senegal to implement its EITI agenda. The grant in the amount of $790,000 is set to close at the end of December 2019. The project supported the production of the 2014, 2015 and 2016 EITI reports and related dissemination activities and supported EITI Senegal stakeholders during the validation process against the 2016 standard. There are ongoing efforts by the MSG to lobby for the implementation of the study’s recommendations and the recommendations from EITI reports. The project also carried out a study of the license award process and contract disclosure both for the oil & gas and the mining sectors. An inter-ministerial committee was set up in early 2018 but hasn’t held frequent meetings to monitor the implementation of those recommendations. No such meeting has taken place with the government elected in February 2019. 2. With funding from the project, the EITI secretariat held a week-long training session on the development of oil and gas projects in Senegal for the multi-stakeholder group members. Additional training needs were also expressed by other groups such as Parliamentarians who despite knowing very little on the sector approved in early 2019 a new petroleum law and the ICA regarding the development of the GTA gas field. Further trainings targeting such stakeholders are planned under a WB funded technical assistance project to support capacity building for the gas sector. 3. The EITI Senegal multi-stakeholder group is seeking to mainstream extractive sector data into public sector data systems in order to report data much faster and contribute to a stronger oversight of the extractive sector by national institutions. The mainstreaming of EITI data will help to comply with the following recommendations from the 2014 EITI report and the recommendations from the ‘Cour des Comptes’ regarding the formal itemization of extractives revenues streams in the Government's public accounts: (i) the improvement in customs revenue management at two levels: first with a review of the “Direction Générale de la Comptabilité Publique et du Trésor” (DGCPT) clearance process and secondly with the creation of interfaces between the electronic platforms of three agencies CUSTOMS, The World Bank Senegal Support to Extractive Industries Transparency Initiative Compliance Process () DGCPT, and the National Revenue authority; (ii) the creation of one comprehensive platform to share extractive sector data; (iii) an effective monitoring of information on payments by companies to local authorities: for instance details of the identity of the taxpayer; name of the tax collected – the information is only available on paper with the decentralized territorial entities; and (iv) the harmonization of budget classifications used with international standards. The Ministry of Finance has been supportive of the extractive sector mainstreaming work and has committed to fund and implement the extractive revenue data mainstreaming recommendations upon validation of the scoping study. 4. Progress was made with regards to the work on beneficial ownership. In October 2018, Senegal hosted a beneficial ownership conference for the extractives sector in Africa. The beneficial ownership database is now finalized and is awaiting a formal launch by the authorities. The deadline set by the International EITI Board for all participating countries to comply with the publication of the beneficial ownership of extractives resources in January 1, 2020. 5. The following policy reforms have not made significant progress: (i) recommendations from the assessment of the licensing and awarding of contracts in the oil, gas and mining sector from 2014-2017, (ii) the disbursement of the subnational mining revenue transfers approved in the mining law which are pilling arrears since 2010 (fond de preréquations); and (iii) the activation of the FONSIS (fund aiming to promote the role of the Government of Senegal, as an investor/JV partner of the private sector) through the allocation of a portion of revenues from the oil, gas and mining sectors. 6. There are no overdue audits for the project. Today 87% of the grant is disbursed while the following activities remain to be implemented: (i) an EITI impact assessment study, (ii) the setting up of the extractive data platform and the (iii) project’s audit for 2019 which wasn’t initially planned. It is quite likely that the second activity will not be implemented by the closing of the grant. Currently TF2673 has an undisbursed balance of $4,466.34 and TF6166’s undisbursed balance is $268,590.75. The bulk of the remaining balance will serve to cover the costs of the second activity. B. Rationale for restructuring 7. A six months closing date extension is needed to implement and validate the remaining activities. An extension request was received from the Government of Senegal on November 8, 2019 in order to allow additional implementation time for the project to reach its development objectives. Events on the ground slowed down project implementation: (1) the previous EITI Chair took another assignment and left a vacancy in January 2019 that wasn’t filled until May 2019, (2) following the February 2019 presidential elections there were changes in Government which meant that Government representatives within the EITI multi-stakeholder group needed to be confirmed and there was a splintering of the Ministry of Economy and Finance, (3) the ongoing reforms of the EITI MSG also affected project implementation. Moreover, the implementation of the data platform requires additional procurement time and a significant amount of coordination is needed with all the stakeholders who are required to provide the data. 8. TF02673 will only be extended until 30 April 2020 because its parent TF closes on 31 October 2020 and TF06166 can be extended until 30 June 2020 since the parent account closes on 31 October 2022. The World Bank Senegal Support to Extractive Industries Transparency Initiative Compliance Process () II. DESCRIPTION OF PROPOSED CHANGES A. Proposed changes 9. The project’s objectives, outcome indicators or targets, components (except for the 2019 audit), scope, safeguard category will remain the same. The project’s audit for 2019 will be added to the Project Management Component and funded through costs savings from other activities. The implementation schedule and disbursement projections were adjusted to reflect the proposed closing date extension and the actual project disbursement as of present time. There are no changes with the executing agency, the EITI Senegal’s secretariat will continue to implement the project on behalf of the MSG. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ The World Bank Senegal Support to Extractive Industries Transparency Initiative Compliance Process () IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A2673 Effective 31-Dec-2018 31-Dec-2019 30-Apr-2020 30-Aug-2020 TF-A6166 Effective 31-Dec-2018 31-Dec-2019 30-Jun-2020 30-Oct-2020 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2016 0.00 0.00 2017 0.00 0.00 2018 190,000.00 170,000.00 2019 170,000.00 80,000.00 2020 30,000.00 140,000.00