The World Bank Second Philippines Extractive Industries Transparency Initiative (EITI) Support Project (P157976) REPORT NO.: RES27435 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SECOND PHILIPPINES EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) SUPPORT PROJECT APPROVED ON JUNE 21, 2016 TO DEPARTMENT OF FINANCE ENERGY & EXTRACTIVES EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Mara K. Warwick Senior Global Practice Director: Riccardo Puliti Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader: Morten Larsen The World Bank Second Philippines Extractive Industries Transparency Initiative (EITI) Support Project (P157976) ABBREVIATIONS AND ACRONYMS The World Bank Second Philippines Extractive Industries Transparency Initiative (EITI) Support Project (P157976) BASIC DATA Product Information Project ID Financing Instrument P157976 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 21-Jun-2016 31-Dec-2018 Organizations Borrower Responsible Agency Department of Finance Philippines EITI National Secretariat Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 1.50 Total Financing 0.00 Financing Gap 0.00 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The project development objective is to enhance transparency and accountability in the management of the Philippines'€€ mineral and hydrocarbon wealth through an inclusive and sustainable EITI process. OPS_TABLE_PDO_CURRENTPDO The World Bank Second Philippines Extractive Industries Transparency Initiative (EITI) Support Project (P157976) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A2761 14-Sep-2016 24-Oct-2016 24-Oct-2016 31-Dec-2018 1.50 1.50 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The current Restructuring Paper proposes an extension of project closing date from December 31, 2018 to June 30, 2019 in order to consolidate project achievements and facilitate financial sustainability of Extractive Industries Transparency Initiative (EITI) implementation after project closure. The extension will allow for the completion of several critical activities including the Impact Assessment of EITI in the Philippines and a Gender and Extractives Scoping Study. 2. The Philippines became a member of the EITI in 2013. The first annual EITI report reconciling payments from oil, gas and mining operations to government was published in December 2014. The fifth annual report is due to be released before the end of December 2018. In October 2017 the Philippines became the first country to be validated as compliant with the global EITI Standard of 2016. To date five out of 49 implementing countries are deemed to be in compliance with the requirements. 3. In light of the successful EITI implementation, the project is rated Satisfactory both in terms of Progress Towards Achieving the Project Development Objective and Overall Implementation Progress. The project has achieved or exceeded all four PDO indicators. Three out of five intermediate indicators have been achieved (the proposed extension request will address one of the two indicators which are not achieved). In sum, the Project Development Objective remains achievable with the proposed closing date extension. 4. While the World Bank child trust fund has been fully disbursed, actual disbursement from the Client’s Designated Account stands at approximately 85% as of November 30 2018. All contracts planned under the project budget have been signed, except the activities related to dissemination of the 2018 EITI Report, which will be available only at the end of December. 5. The proposed closing date extension will allow a more gradual transition to 100% government-funding of the EITI. An Intermediate Results Indicator is tracking government contribution and was reported to be at 50% co-financing as of September 2018. The failure to ensure full funding of future EITI activities is largely explained by the inability of Congress to pass a proposed EITI Bill (House Bill #4116). The proposed closing date extension will allow continued Bank and consultant presence to advocate for the EITI Bill to be adopted. Action plan and budget for the extended implementation period has been validated and is attached. 6. The EITI Impact Assessment has collected responses from almost 1,000 stakeholders from government, civil society and private operators regarding perception and effectiveness of the EITI. The Impact Assessment is crucial for government and the EITI The World Bank Second Philippines Extractive Industries Transparency Initiative (EITI) Support Project (P157976) Multi-Stakeholder Group to prioritize and plan future activities with a view to optimizing dissemination of sector management. The Gender and Extractives Scoping Study aims at identifying pathways for enhancing the role of women in decision-making about revenue management as well as economic and employment opportunities. 7. The project has not yet submitted the Audited Project Financial Statement for the calendar year ended December 31, 2017. An exception to proceed with the extension despite the overdue audit report was obtained in accordance with OP/BP10.00. Except for the audit, the project is in full compliance with all requirements related to project implementation, fiduciary requirements and reporting. However, the Designated Account has remained inactive for nine months, and the project must submit Withdrawal Applications to document eligible expenditures incurred and paid out of the DA funds. II. DESCRIPTION OF PROPOSED CHANGES 8. It is proposed to change the closing date of the project from December 31, 2018, to June 30, 2019. 9. No further changes to the Grant Agreement are proposed. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ 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 ✔ The World Bank Second Philippines Extractive Industries Transparency Initiative (EITI) Support Project (P157976) Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ 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-A2761 Effective 31-Dec-2018 30-Jun-2019 30-Oct-2019