The World Bank Supporting Gas Project Negotiations and Enhancing Institutional Capacities (P163563) REPORT NO.: RES60348 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SUPPORTING GAS PROJECT NEGOTIATIONS AND ENHANCING INSTITUTIONAL CAPACITIES APPROVED ON MARCH 16, 2018 TO Islamic Republic of Mauritania ENERGY & EXTRACTIVES WESTERN AND CENTRAL AFRICA Regional Vice President: Ousmane Diagana Country Director: Keiko Miwa Regional Director: Franz R. Drees-Gross Practice Manager/Manager: Robert Schlotterer Task Team Leader(s): Noora Arfaa The World Bank Supporting Gas Project Negotiations and Enhancing Institutional Capacities (P163563) ABBREVIATIONS AND ACRONYMS British Petroleum BP Development of Energy Resources and Mining DREAM Implementation Progress IP Grand Ahmeyim-Tortue GTA Project Development Objective PDO Project Implementation Unit PIU Project Preparation Advance PPA The World Bank Supporting Gas Project Negotiations and Enhancing Institutional Capacities (P163563) BASIC DATA Product Information Project ID Financing Instrument P163563 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 16-Mar-2018 22-Mar-2024 Organizations Borrower Responsible Agency Ministry of Economy and Finance Project Development Objective (PDO) Original PDO To support the government capacity to drive negotiation towards final investment decision, and lay the foundations for the gas sector’s contribution to the economy through enhanced legal and regulatory frameworks and capacity building. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D2730 16-Mar-2018 19-Apr-2018 19-Apr-2018 22-Mar-2024 20.00 17.98 1.50 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Supporting Gas Project Negotiations and Enhancing Institutional Capacities (P163563) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Project Status Progress in project implementation remains strong, with disbursements increasing from 73 percent in June 2023 to 92 percent by March 2024 and the achievement of all the project development objectives and all the intermediary indicators. The project closing date is March 22, 2024, and with just a few days remaining in the life of the project, disbursements are expected to increase modestly by the end disbursement date to around 95%. With this, a budget of around US$ 1 – 1.3 million will remain undisbursed. While the project faced significant delays during the first several years and as a result of the COVID-19, given the significant achievements and outcomes made over the past three years of implementation, the project is expected to close with satisfactory ratings for both progress towards the Project Development Objective (PDO) and Implementation Progress (IP). Component A: Technical Support on Gas Project Negotiations: Satisfactory Given the limited capacity in the country, the development of 2015 gas discoveries brought about significant challenges (and opportunities) for the Government of Mauritania, particularly during the negotiations of Grand Ahmeyim-Tortue (GTA). The PADG project has worked to mobilize international expertise to support the Government in the development of natural gas and condensate resources at the GTA field as well as in the negotiations of the various contracts related to the development of GTA project between the Government of Mauritania, the Government of Senegal and the oil operators British Petroleum (BP), Kosmos Energy and the two national hydrocarbon companies (SMH for Mauritania and PETROSEN for Senegal) in order to better serve the country's strategic interests. Component B: Strengthening the institutional and regulatory framework: Satisfactory In order to promote the development of the sector and reassure international investors, the PADG has contributed to the implementation of a number of institutional capacity development and regulatory activities aimed at structuring the sector and adapting it to the country's gas potential. These are: (i) the draft law on local content and the preparation and implementation of a local content strategy, including vocational training and support to support for the École Supérieure Polytechnique as a producer of engineers specialized in the hydrocarbons sector. (ii) preparation of the hydrogen code, (iii) the revision of the hydrocarbons code, (iv) the realization of an institutional diagnosis of the MSME and the SMH and the development of the SMH business plan; (v) the preparation of a Strategic Environmental and Social Assessment for the sector and the implementation of a capacity building program for the Ministry of Environment; (vi) and the preparation of a Gas Sector Master Plan; and vii) the preparation and implementation of a stakeholder engagement and communications strategy. In addition, most of the other project ratings are satisfactory. • Project Management is highly satisfactory and the Project Implementation Unit (PIU) for PADG is expected to remain the implementing entity for the Development of Energy Resources and Mining Sector Support Phase 1 Project (P179383, DREAM) Project Preparation Advance (PPA) and project. The institutional set-up of the PADG is working well as it was designed. The PIU is the backbone of the implementation and management of the PADG. • The project procurement performance is moderately satisfactory. Challenges with internal procurement processes within the ministry has led to a significant backlog in project, mainly due to the slowness of procurement procedures, recurrent changes in the legal framework, the limited capacity of procurement commissions, and unfounded complaints. The World Bank Supporting Gas Project Negotiations and Enhancing Institutional Capacities (P163563) • Financial management is rated as satisfactory. The project's financial management system is operating well, and the residual financial management risk remains moderate. • Environmental and social (E&S) safeguards are rated as satisfactory Proposed Changes and Rational Based on a request by the Government of Mauritania, dated March 20, 2024, the proposed restructuring will cancel SDR 753,488.65 (US$ 1 million equivalent) in uncommitted/unspent funds from the grant for the PADG project. The rationale for the proposed restructuring is that these funds will remain unspent after the close of the project and may be lost at the end of the IDA20 cycle. The cancellation will allow the funds to remain in the country pool and to be reallocate elsewhere in the Mauritanian country portfolio. II. DESCRIPTION OF PROPOSED CHANGES Under the proposed restructuring SDR 753,488.65 (US$ 1 million equivalent) will be cancelled from the full grant amount of SDR 14,300,000.00 (US$ 20 million equivalent). Given that the project is closing on March 22, 2024, no other changes will be made, and the cancellation is not expected to impact the project or its outcomes. III. SUMMARY OF CHANGES Changed Not Changed Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ The World Bank Supporting Gas Project Negotiations and Enhancing Institutional Capacities (P163563) Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation UNDISBURSE IDA-D2730- Disburs XDR 14,300,000.00 753,488.65 20-Mar-2024 13,546,511.35 D BALANCE 001 ing AT CLOSING OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-D2730-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: Gds,Ncs,Cs,OC,Trg 14,300,000.00 12,470,384.08 13,546,511.35 100.00 100.00 The World Bank Supporting Gas Project Negotiations and Enhancing Institutional Capacities (P163563) Total 14,300,000.00 12,470,384.08 13,546,511.35 .