The World Bank Rural Corridors and Biodiversity (P114294) REPORT NO.: RES47907 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF RURAL CORRIDORS AND BIODIVERSITY APPROVED ON APRIL 7, 2015 TO SUBSECRETARÍA DE RELACIONES FINANCIERAS INTERNACIONALES PARA EL DESARROLLO - SECRETARÍA DE ASUNTOS E ENVIRONMENT, NATURAL RESOURCES & THE BLUE ECONOMY LATIN AMERICA AND CARIBBEAN Regional Vice President: Carlos Felipe Jaramillo Country Director: Jordan Z. Schwartz Regional Director: Anna Wellenstein Practice Manager/Manager: Valerie Hickey Task Team Leader(s): Pablo Francisco Herrera The World Bank Rural Corridors and Biodiversity (P114294) I. BASIC DATA Product Information Project ID Financing Instrument P114294 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 07-Apr-2015 31-Aug-2021 Organizations Borrower Responsible Agency Subsecretaría de Relaciones Financieras Internacionales APN - Administración de Parques Nacionales para el Desarrollo - Secretaría de Asuntos E Project Development Objective (PDO) Original PDO The objective of the project is to increase the protection of vulnerable natural areas and conserve biological diversity within the Gran Chaco Ecosystem and the Patagonian Steppe and Coastal-Marine Ecosystems and, implement measures to enhance biodiversity resilience to climate change and protect forest carbon assets. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A0233 26-May-2015 12-Jun-2015 09-Nov-2015 31-Aug-2021 6.29 5.82 .47 The World Bank Rural Corridors and Biodiversity (P114294) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES Project Status 1. Project implementation is Moderately Satisfactory with cumulative disbursements of US$5.82M (92 percent of the grant proceeds). Initial implementation delays and findings from the Mid-Term Review (MTR) led to a project restructuring approved in September 2018, after which the project performance and its progress towards the achievement of the Project Development Objective (PDO) gradually improved. A subsequent restructuring approved in November 2020 included a 9-month extension of the Project closing date until August 31, 2021. Of the total grant amount, 91 percent has been executed or is committed through signed contracts. 2. The Project Implementation Unit (PIU) has made noteworthy efforts and showed commitment to move forward with project implementation, achieving significant progress in key activities and results, when circumstances in the field allowed. Of five PDO results indicators, the first two have experienced significant progress and the other three have been achieved. PDO indicator 1.1 “Areas brought under enhanced biodiversity conservation” has reached 493,321 ha (75 percent of the end-target). PDO Indicator 1.2 “Land area under sustainable landscape management practices” has reached 195,277 ha (86 percent of the end-target). Targets for PDO Indicators 2.1 and 3 have been exceeded with 14,765 ha of “Area benefiting from biodiversity resilience measures” (268 percent of end-target), and almost 14.7 million tons of Carbon (141 percent of the end-target) protected in Chaco forests, including: 6.2 million tons through the creation and improvement of the management of Parque Nacional El Impenetrable, and 8.5 million tons through the “sustainable and demonstrative use” Subprojects. In addition, under PDO Indicator 2.2, the Project has elaborated a Common Action Plan for 2020-2022 that has been submitted to the Federal Council on the Environment (COFEMA) for review and endorsement. COFEMA has begun to develop activities envisaged in the Common Action Plan. 3. The PDO will not be fully achieved by its current closing date (August 31, 2021). The likelihood that the PDO and some intermediate results will be fully achieved has recently decreased because of the COVID-19 pandemic. Due to the sanitary measures taken at local level, the works for the construction of the operating centers of the Loro Hablador (Chaco) and Copo (Santiago del Estero) Provincial Parks have suffered delays. They currently present a physical progress of 35%. As a result, the targets of some of the PDO indicators (“Areas brought under enhanced biodiversity conservation” and “Land area under sustainable landscape management practices”) cannot be met by the current closing date. 4. The Project has not experienced any procurement or financial management issues in recent times, and is in compliance with its environmental and social safeguards instruments. There are no overdue audit reports and those submitted to the Bank were deemed satisfactory. The audited financial statements as of June 30, 2021 have been submitted and found satisfactory. Significant delays have been experienced in the implementation of some social safeguards-related measures (i.e. the development of an Indigenous Peoples Plan (IPP) for the pilot biodiversity corridors), but actions have been agreed upon with the Grant Recipient and the World Bank (WB) to complete that The World Bank Rural Corridors and Biodiversity (P114294) aspect of project implementation. The PIU is preparing the consultation of the IPP with Indigenous People’s representatives considering the COVID-19 restrictions. Rationale for Restructuring 5. On August 11, 2021 the Government of Argentina (GoA) submitted a formal request to extend the project closing date and make a minor reallocation of funds among disbursement categories. The proposed project restructuring does not entail any changes to (i) the PDO, (ii) the scope or nature of project activities, (iii) the safeguards category, or (iv) the implementation arrangements. Therefore, it will not require GEF approval. This will be the fourth project Restructuring; the first, dated August 28, 2015, involved editorial corrections of the Trust Fund code in the Grant Agreement. The second, dated September 30, 2018, followed the MTR and adjusted the project design to refocus implementation on the achievement of results. The third, dated November 11, 2020 extended, for the first time, the closing date from November 30, 2020 to August 31, 2021. 6. The proposed restructuring complies with the requirements of the WB’s Directive on Investment Project Financing, namely: (a) the PDO continues to be achievable; (b) the Bank and the Recipient agree on actions that will be undertaken by the Recipient to improve project performance and achieve the PDO; and (c) neither the grant in particular, nor the country (Argentine Republic) in general, is subject to an ongoing suspension of disbursements. Description of Proposed Changes 7. The changes introduced in the proposed restructuring include: (i) extension of the closing date; and (ii) adjustment of the disbursement schedule. 8. The closing date of the Grant will be extended, for the second time, by four months from August 31, 2021 to December 31, 2021, resulting in a 13-month cumulative extension. According to the extension request submitted by the GoA, such four additional months would be enough to complete the pending activities, providing no further delays are caused by factors outside their control. 9. Grant proceeds will be reallocated between two disbursement categories. Category (No: 4) “Goods, Works, Training, Consulting Services and Non-Consulting Services accrued as of July 12, 2018” will be increased by US$219,621, for the completion of infrastructure works and the acquisition of equipment, both key to strengthen the protected areas of PDO 1. Category (No: 2) “Goods, Works, Training, Consulting Services, Non-Consulting Services and Operating Costs of the Subprojects accrued as of July 12, 2018” and Category (No: 3) “Operating cost accrued as of July 12, 2018” will be decreased by US$105,957 and US$113,664 respectively, to compensate for what is required under Category (No: 4) to cover the increased costs of the investments planned under this Category. The proposed reallocation will not impact the expected project results. III. DETAILED CHANGES LOAN CLOSING DATE(S) The World Bank Rural Corridors and Biodiversity (P114294) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications TF-A0233 Effective 30-Nov-2020 31-Aug-2021 31-Dec-2021 30-Apr-2022 REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Current Actuals + Proposed Disbursement % Ln/Cr/TF Expenditure Allocation Committed Allocation (Type Total) Category Current Proposed TF-A0233- GO,CW,TRG,CS, 001 NCS,OP incurred 815,956.00 815,956.00 815,956.00 100.00 100.00 Currency: on or before July USD 11, 2018 GO,CW,TRG,CS, NCS,OP under Subprojects 900,000.00 716,593.95 794,043.00 100.00 100.00 incurred on or after July 12, 2018 OP incurred on or after July 12, 2018 (other 184,208.00 61,743.91 70,544.00 100.00 100.00 than Operating Costs under Category (2)) GO,CW,TRG,CS, NCS incurred on or after July 12, 2018 (other 4,388,866.00 3,565,536.23 4,608,487.00 100.00 100.00 than GO, CW, TRG,CS,NCS under Category (2)) Total 6,289,030.00 5,159,830.09 6,289,030.00 The World Bank Rural Corridors and Biodiversity (P114294)