Document of The World Bank FOR OFFICIAL USE ONLY Report No: 82702 v1 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE GOIAS SUSTAINABLE CERRADO PROJECT TO THE STATE OF GOIAS AND OF THE ICMBIO CERRADO BIODIVERSITY PROTECTION PROJECT TO THE INSTITUTO CHICO MENDES DE CONSERVAÇÃO DA BIODIVERSIDADE 1 GRANTS FROM THE SUSTAINABLE CERRADO INITIATIVE October 29, 2013 Sustainable Development Unit Brazil Country Management Unit Latin American 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. 2 3 Regional Vice President: Hasan Tuluy, LCRVP Country Director: Deborah L. Wetzel, LCC5C Sector Manager: Emilia Battaglini, Acting LCSEN Task Team Leader: Maria Bernadete Ribas Lange, LCSEN 4 BRAZIL SUSTAINABLE CERRADO INITIATIVE GOIAS SUSTAINABLE CERRADO PROJECT - TF097157 & ICMBIO CERRADO BIODIVERSITY PROTECTION PROJECT - TF097156 P121671/ TF097157 AND TF097156 RESTRUCTING PAPER – LEVEL 2 This level two restructuring paper is to extend the Closing Date of two projects under the Sustainable Cerrado Initiative, namely: TF097157 - Goias Sustainable Cerrado Project, and TF097156 - ICMBio Cerrado Biodiversity Protection Project, from December 2, 2013 to December 31, 2014. The Goias Sustainable Cerrado and the ICMBio: Cerrado Biodiversity Protection Projects are part of the Sustainable Cerrado Initiative that addresses global environmental biodiversity protection priorities, trough decentralized actions together with an integrated, biome-wide coordination. Each Project is financed by a GEF Grant in the amount of US$3.0 million. The Goias Sustainable Cerrado Project Grant was declared effective on September 10, 2010. To date, the Project has disbursed US$ 1,591,006 (53% of the grant amount). Most of the remaining funds have already been committed and are expected to be fully disbursed by December 2014. Some procurement processes suffered delays due to the lack of staff dealing with the administration of the contracts and to the additional information requested by the Prosecutors and Controllers Office from the State of Goias. In order to resolve these delays, the State Secretariat assigned two new staff to assist with the procurement processes and contracts, and staff from the Prosecutors and Controllers Office participated in the Bank’s course on Procurement and Financial Management to better understand the Bank guidelines and procedures. The ICMBio Project Grant was declared effective on September 13, 2010. To date, the Project has disbursed US$ 1,468,252 (49% of the grant amount). Most of the remaining funds have already been committed and are expected to be fully disbursed by December 2014. The project execution suffered some delays in 2012 due to problems in finalizing procurement processes, which had to be postponed to 5 be implemented in 2013, but due to the limit establish in the Annual Budget Law (LOA) ICMBio will not be able to spend all the remaining funds in 2013. The proposed amendments are based on the requests from the recipients dated August 12 and 30, and the Ministry of the Environment’s (MMA) endorsement, dated August 30, 2013, and the previously endorsement of the Brazilian Overseas Finance Commission’s (COFIEX), dated May 8, 2013. This will be the second extension of the Closing Date for these Projects, which will add to a total of 18- months extension. The reason for these extensions is to fully complete financing of contracts under implementation and to carry out a broad evaluation of the Projects’ results and intermediaries indicators. The design of the components and activities will remain the same and they are expected to reach the intended objectives. Some of the major accomplishments to date include: (i) strengthening of protection of existing protected areas; (ii) implementing new policies on water resources, fauna, and environmental regularization of rural properties, including specific systems ready to be used; and (iii) developing proposals for the creation of new protected areas. As a result of the Projects’ implementation, both ICMBio and the State of Goias have been able to strengthen the dialog and engage with relevant environmental agencies and local actors who are key for the achievement of the Projects’ objective. However, even if all activities are implemented, reaching the goal of 680,000 hectares (ICMBio) and 80,000 hectares (Goias) of new protected areas created, might not be achieved due to the uncertain political atmosphere in the Federal and State Governments for the creation of new protect areas, particularly those with strict protection. In order to process this request, the Bank team confirms that: (i) the projects’ objectives continue to be achievable; (ii) all safeguards are being complied with; (iii) the performance of the recipients is moderately satisfactory; and (iv) the Bank and the recipients agreed on actions that will be undertaken by the recipients to complete the Project. Procurement post-review and financial management missions were carried out, and the arrangements in place were considered moderately satisfactory. The Recipients are in compliance with all major legal covenants including audit requirements concerning these Grants. 6