Annual Trust Fund Implementation Progress Report to Development Partners Australia, Finland, Germany, Norway, Switzerland (Canada, European Commission, and UK DFID joined in October 2016) As of September 30, 2016 TRUST FUND BASIC DATA TF Number TF072347 TF Name Extractives Global Programmatic Support (EGPS) Names of Donors Australia, Finland, Germany, Norway, Switzerland TF Managing Unit GEEX1 Managing Global Practice Energy and Extractives TF Program Manager Ekaterina Mikhaylova (Acting) Practice Manager Christopher Sheldon TF Activation Date June 16, 2015 TF End Disbursement Date October 31, 2020 Progress Reporting Frequency Annual Progress Report Due Date December 31 Table of Contents Foreword ...................................................................................................................................I 1. Development Objective and Program Description...............................................................1 2. Risks and Challenges ...........................................................................................................2 3. Financial Highlights..............................................................................................................3 4. The First Year of Implementation ........................................................................................4 5. EGPS Progress Updates Rounds 1 and 2 ..............................................................................8 6. Plans for Next Period .........................................................................................................15 7. Supplemental Report ........................................................................................................16 a. Foreword .................................................................................................................17 b. Albania ....................................................................................................................18 c. Ukraine ....................................................................................................................21 d. African Mining Legislation Atlas (AMLA) ..................................................................23 e. Local Content Community of Practice (CoP) ............................................................25 f. Grant to EITI International Secretariat: Data Portal, Mainstreaming, Validation, Global Conference ...................................................................................................27 FOREWORD For countries endowed with mineral wealth, extractive sector management is a challenging and often unpredictable enterprise. One aspect of the sector that is, however, predictable is the cyclical nature of commodity prices. Currently, the outlook for commodity prices remains poor. The World Bank’s most recent Commodities Markets Outlook predicts that metals will drop in value by 8% in 2016, after a 21% fall in 2015. Global mining investment has fallen by more than half since peaking in 2012 and despite the recent improved sentiment, the oil market remains oversupplied with stocks near record levels and average oil prices down 70 percent from June 2014. For resource-dependent countries with poorly-diversified economies, commodity downturns are a major challenge. The ‘new normal’ of long-term low commodity prices has caused many to adjust their economic outlooks downwards, reassess current expenditure and borrow money to fund public services. But adversity can precipitate change and bring opportunity. During periods of growth, governments need institutions ready to oversee the development of new projects, monitor contracts, collect taxes and administer and distribute revenues; they often do not have the capacity or the necessary political capital to revise legal, fiscal or regulatory frameworks. Low prices for hydrocarbons over the foreseeable future also provide an opportunity for countries to reduce or eliminate fuel subsidies and other distortionary economic policies and move towards less polluting sources of energy such as gas. So in many respects, the current period of cyclical decline represents an ideal time to support client countries to improve the efficiency of their institutions to better manage public resources, and design systems and frameworks that can withstand highs and lows of commodity markets. Expectation management during times of low prices and reduced demand for raw materials is critical to maintaining public support for the hosting of extractives projects and the EITI is an ideal platform from which the implications of the fall in commodity prices on government revenue and the services that it funds can be highlighted to citizens. Furthermore, the new requirements introduced in the revised 2016 Standard around following up on recommendations contained in EITI reports will add further weight to the EITI process and help to strengthen the link between transparency and accountability. The World Bank and the EITI International Secretariat will continue to work together to find the best solutions to assist clients to meet the requirements of the more rigorous 2016 EITI Standard. With the launch of the new Extractives Global Programmatic Support (EGPS) Trust Fund, the World Bank is better placed to support countries to address the extractives governance related issues along the entire value chain. As of the time of writing, the Extractives part (EEX) of the Energy and Extractives Global Practice (GEEDR) is active in about 70 countries globally. The EEX is currently working on 11 IDA country level extractives projects worth approximately $500 million, mostly in Africa, with the portfolio forecast to grow to approximately $700 million over the next two years. The practice also produces approximately 50 knowledge produces annually which range from the new research on extractives topics to communities of practice and just-in-time client support on a wide variety of issues. In addition to the EGPS, the EEX also manages the Global Gas Flaring Reduction Initiative (GGFR), and a dedicated extractives trust fund for French- speaking Africa (almost completed). Under the new Global Practices model, EGPS is leveraging technical cooperation with other Global Practices including Environment and Natural Resources (on climate change and environmental management), Governance (on civil service and civil society), Macro and Fiscal Management (on domestic resource mobilization issues), and Trade and Competiveness (on local content issues). Small grants were a large part of the EEX operating model since at least mid- 2000s. The earlier Extractive Industries Transparency Initiative (EITI) MDTF and Extractives Industries Technical Facility (EI-TAF) closed in December 2015. These I two MDTFs provided a bulk of small grants support in the World Bank in the past decade1. At December 2015 closure, there were over 30 small grants for specific activities in client countries. Transition to EGPS started with the first EGPS Work Plan and Budget approval in November 2015 and since then, the EGPS has managed to accommodate about 20 activities and upon approval of Round 3 of proposals in October would be expected to reach 38 activities. EGPS offers a more complementary approach to the broader reform needs of client countries, the enhanced scope of the EITI and the World Bank’s broader portfolio of extractive sector support. Going forward, this will ensure that the EEX will be better equipped to address the World Bank’s twin goals of promoting shared prosperity and ending extreme poverty. 1. DEVELOPMENT OBJECTIVE AND PROGRAM DESCRIPTION The objective of the EGPS is to improve the ability and capacity of current and emerging resource-rich developing nations in using their oil, gas and mineral resources sustainably and transparently for poverty alleviation, shared prosperity, economic diversification, and sustainable economic growth. Under EGPS, support to client countries will be available across the four Components in a “made-to-order” way which will allow: (a) flexibility in responding to shifting needs and priorities; (b) economies of scale in program management, monitoring and evaluation, trust fund administration, and communications; (c) improved synergies across partners and portfolios; (d) better coordination and harmonization of procedures and activities that were previously dispersed across multiple extractives-related Trust Funds managed by the World Bank; and (e) reduced transaction costs for donors, the World Bank and the clients. Task teams and recipient countries will be able to design a comprehensive program of support by selecting from amongst the four Components as needed and relevant to the country’s circumstances. EGPS Pillars and Objectives Pillar 1: Transparency and Governance Pillar 2: Legal and Regulatory Objectives: Objectives: – Improvement of revenue administration and revenue – Improvement of government’s ability to apply holistic, fair and management practices, including accountability, in national sustainable good practices, including economic development systems in resource rich countries. models, in structuring oil, gas and mining concessions in – Empowerment of governments to develop evidence-based interests of its citizens. decision making process that is both sustainable and beneficial – Establishment and use of appropriate frameworks and to a country’s development. mechanisms to ensure the fiscal and economic sustainability of – Empowerment of citizens and civil society organizations (CSOs) oil, gas and mining projects, including the avoidance of ‘race to to actively participate in making decisions related to national the bottom’ scenarios and the mitigation of the resource curse. mineral resources and advocate their rights. Pillar 3: Local Economic Diversification Pillar 4: Strengthening Institutions for Growth through Extractive Industries Objectives: - Assisting mineral and petroleum-rich countries to identify, Objectives: design, and implement local content policies aimed at – Inform institutional capacity needs of the governments maximizing economic benefits from petroleum and mineral required for managing the extractives sector. resources through efficient, sustainable, and equitable – Better social and economic performance of the private sector economic diversification, and increased local employment. operating in and around the extractives sector. – Increased socio-economic benefits for local communities and population from mining, oil and gas operations, including artisanal and small scale mining. – Response to emergencies including preparation of contingency plans related to extractives and its impacts. Pillar 5: Operational Support for the Trust Fund 1Other earlier trust funds were implemented concurrently, but were smaller in size and closed significantly earlier than EITI and EI-TAF MDTFs were Petroleum Governance Initiative (PGI) supported by Norway and Community and Artisanal and Small-scale Mining (CASM) MDTF. 1 The new EGPS facility also creates an opportunity to step up support for consideration of gender issues in extractives operations. Over the past 10 years, the Bank has increasingly focusing on how communities are impacted by extractives operations, and specifically how different groups within communities are impacted. Research by the Bank and other actors has demonstrated that men and women have very different experiences of the extractive industries – they have different exposures to both the benefits and the risks, and activities within the sector need to take these differences into account. The EGPS will provide an opportunity to strengthen gender mainstreaming activities. Activities under EGPS will be required to have a gender screening, and to meet the Bank’s internal standards for gender mainstreaming. This internal screening requires that projects address gender in project analysis, activities, and monitoring and evaluation. Projects will include gender disaggregated data, to be able to track impacts on men versus women, and activities will include a mix of gender- specific activities (for instance, specific activities particularly to support women), as well as mainstreaming (i.e., ensuring that policy reforms consider gender-specific dimensions). Project reporting will also include specific reporting on gender- related outcomes. 2. RISKS AND CHALLENGES At the concept stage, the following risks and mitigation measures were considered. The risks remain valid and no changes are proposed at this time. Strategic: While the goals of EGPS are shared by all donors on strategic level, there is a small risk of misalignment between selection of specific activities to achieve these objectives and priority type of interventions of individual donors. The mitigation measures still apply: The broad objectives set forth in the concept document and the priorities for budgeting/funding are agreed on by the Steering Committee during its meetings (two formal and one informal meetings in FY17). The MDTF combines the contributions of multiple donors and legal agreements governing MDTFs contain common provisions applicable to all donors and include provisions on the treatment of commingled funds, including operational and financial reporting, and the allocation and uses of funds. In a few cases, donors were able to state a non- binding preference that their contribution be used to finance one of the pillars. The World Bank administers the MDTF along this framework. Financial: The financial risks remain at two levels: (i) Insufficient funds in EGPS MDTF: this risk remains low. After less than two years of implementation, EGPS has already received approximately 50 percent of the donor contributions received during the ten-year life of the EITI- MDTF. (ii) Lower than expected benefits from projects: it is too early to measure this risk as the projects are just starting implementation with no activities completed at this time. There is an increase in requests for support for reforms in extractives sector which is consistent with the downturn in the sector. In theory, the current situation improves the chances of proper uptake of the advice provided under EGPS grants, in expectation of the eventual upswing in commodities prices. Operational: The operational model of the EGPS was based on the MDTFs for the EITI and EI-TAF, which experienced some challenges in providing timely country-level and micro/small grant assistance. The EGPS has taken all of these lessons and used them during the first year of implementation, introducing rigor and discipline in the project selection and management process. The process of preparation of the work plans and budgets showed improvement from EITI and EI- TAF; speed of processing projects has mostly improved as well. Operational risk remains low. Implementation: There is a risk of misalignment of timeline for implementation and/or closing of the current EITI and EI- TAF MDTFs which may lead to gap in funding and disruption to ongoing activities. The team was able to mitigate this risk by approving EGPS projects in Rounds as donor funding became available, based on need and continuity in Rounds 1 and 2, and a Call for Proposals in Round 3. The risk is negligible at this time as transition to the new platform is largely complete. 2 Environmental and Social: This risk remains low and was not triggered in the first year of EGPS implementation. The EGPS will support activities that will aim to address the environmental and social impacts of the extractive industries, including development of legal and institutional frameworks and structuring sector development which will indirectly lead to future sector development. There may be a risk of conflict between upstream advice on Safeguards matters and downstream financing of projects. So far, the team has focused on projects that do not trigger Safeguards—due to the significant financial resources they require that are not available under small grants from programs like EGPS—and there has been no issue. Reputational: This risk remains low and was not triggered in the first year of EGPS implementation. Given the oftentimes controversial perception of extractive sector, potential for corruption and known and new environmental and social risks, the program has a risk of having the World Bank and donors associated with specific problems that may arise in client countries from extractives. The Bank continues applying rigorous safeguards standards to ensure quality and integrity of advice provided to the clients, as well as through analytical work and publications. 3. FINANCIAL HIGHLIGHTS Table 1 summarizes contributions received by September 30, 2016 from five donors to EGPS totaled US$12.9 million equivalent. Unpaid pledges under signed Administrative Agreements amounted to US$2.3 million equivalent, for a total of US$15.2 million equivalent (Table 2). Table 2 also shows expected/actual reflows from EITI and EI-TAF MDTF accounts from all donors. On this basis, the EGPS is forecasted to have a total commitment amount of approximately US$35 million equivalent by January 2017. If these estimates are correct, in less than two years, funding for EGPS will reach approximately 50 percent of the total EITI-MDTF commitments over its ten-year lifetime. By mid-October 2016, agreements with Canada (US$4.5 million) and the European Commission (EUR 5 million) were signed, and UK DFID (US$2 million) will be finalized by the end of the month. This will bring the number of EGPS donors to eight, with total commitments of approximately US$27 million. The current work-plan and budget is counting the total expected commitments of approximately US$27 million prior to the October 27 EGPS Steering Committee meeting. Table 1: Donor Commitments to EGPS (US$ Million, Equivalent) Donor Name EGPS Paid EGPS Pending EGPS Total Comments Australia 6.71 1.51 8.22 Current Donor Canada - 4.55 4.55 AA Signed October 3 EC/EU - 5.00 5.00 AA Signed October 7 Finland 2.25 - 2.25 Current Donor Germany 0.34 0.28 0.62 Current Donor Norway** 2.10 - 2.10 Current Donor Switzerland** 1.53 0.51 2.04 Current Donor United Kingdom - 2.01 2.01 AA Signature Mid-October Totals 12.93 14.04 26.97 *Estimated US$ equivalent for contributions not yet received. **Contribution preferenced for Pillar 1 (EITI). 3 Table 2: Expected/Actual EITI-MDTF and EI-TAF Reflows to EGPS (US$ million) by January 2017 EGPS EITI EI-TAF Total New Donor Donor Name Comments Sept 2016 Reflows Reflows Reflows Contribution Total Australia 8.22 - - - - 8.22 No reflows Belgium - - - - 2.00 2.00 No reflows; new contribution Canada - 2.20 2.34 4.55 - 4.55 AA Signed October 3 EC/EU - - - - 5.00 5.00 No reflows; AA Signed October 7 Finland 2.25 0.19 - 0.19 - 2.44 Reflows Amendment Signed France - - - - 2.00 2.00 Under Consideration Germany 0.61 0.53 - 0.53 - 1.14 Reflows Under Consideration Netherlands - 0.26 - 0.26 1.74 2.00 Under Consideration Norway** 2.10 0.30 1.11 1.42 - 3.52 Reflows Under Consideration Switzerland** 2.03 0.26 0.28 0.54 - 2.58 Reflows Amendment Under Review United Kingdom - 1.91 - 1.91 0.10 2.01 AA Signature Mid-October Totals 15.22 5.66 3.73 9.39 10.84 35.45 *Estimated US$ equivalent for contributions not yet received. **Contribution preferenced for Pillar 1 (EITI). 4. THE FIRST YEAR OF IMPLEMENTATION EGPS Program Management and Administration From a management perspective, the primary objective of the first year of EGPS implementation was to ensure a seamless transition in support from the EITI-MDTF and EI-TAF to the EGPS. World Bank trust funds operate on a cash basis; financial commitments to recipient countries cannot be made without an equivalent amount of cash being received to the trust fund from donor partners. For the first year of the EGPS’s operation, this required some difficult decisions to be made in terms of how best to allocate the initial funding provided by Australia, Switzerland and Norway (these contributions were effective as of the first EGPS Steering Committee meeting in November 2015) ahead of additional donor contributions and the expected re-flows from the EITI-MDTF and EI-TAF which started to arrive some months later. During this interim period, it was agreed that in Round 1, the priority for EGPS funding would be supporting EITI implementation (Pillar 1) given its status as an ongoing initiative with tangible targets (and donor preferencing). More limited coverage was given to Pillars 2-4, with the focus being on outreach and knowledge product development. To identify the first and second rounds of recipient countries, the World Bank, in consultation with the International Secretariat, developed a prioritized list focusing on countries with limited alternative means of raising funds, where there were no other potential sources of support (such as IDA projects), and where the EITI process was performing well. One of the lessons learnt from ten years of earlier MDTFs’ operation was the significant delays that some countries encountered in disbursing their grants. In some cases, this lead to significant sums of trust fund money being held against commitments that could have been allocated to other activities. In order to reduce the amount of funds committed to country activities while retaining the EGPS’s programmatic approach, recipient-executed grants provided under EGPS have been split into tranches of funding. Governments receive installments of funds, with future tranches subject to satisfactory grant management/disbursement, the achievement of agreed outputs and results, and approvals by the donors and the Bank’s management. As subsequent tranches of funding are also subject to Steering Committee approval, this approach will have the added benefit of enhanced planning by the teams and donors, as well as ensuring that donors have greater understanding of the progress along multi-year programmatic support activities. 4 As project preparation can formally start only after the donor approval, it always takes some months to have the projects processed – which in the case of Recipient Executed grants includes in addition to project preparation period by the Bank, signature of Grant Agreements and opening of designated accounts. As a result, with the 1st EGPS Round of donor approvals finalized in November 2015 and the 2nd in March 2016, some of the Recipient-Executed grants were signed only towards the end of June 2016, and at the time of this Annual Report just started withdrawals. Most of the Bank-executed activities approved in Rounds 1 and 2 have been made effective and began disbursing, but as disbursements are linked to cycle of deliverables and consultations, these are not expected to complete until late FY17 or FY18. The projects that were approved and became effective under EGPS have disbursed $1.2 million (which includes project management and preparation cost) in less than one year of operation, which is a reasonable amount and timeliness of disbursement. The new process employed by EGPS (different from EITI and EI-TAF MDTFs) has shown some results to-date (such as some recipient executed projects managed to be processed within about three months compared to at least six months in the past; and some of the Bank-executed projects were approved within a few weeks). Based on the first year of implementation, which we note provides a rather limited sample of projects, the processing time of RE grants showed improvement with preparation duration from request from the government to signing of the grant ranging from under one month to about eight months (average of 3.5 months for seven projects that reached that stage). It is also noted that the average time from signing to effectiveness has been reduced to about a month in the current batch of projects that achieved effectiveness. Time between effectiveness and the first disbursement is on average 2.7 months (for five projects that started disbursing) which is consistent with the time to open accounts, obtain authorized signatures, and approve the first financing request with both the government and the Bank. Table 3 below summarizes current statistics on preparation. Table 3: EGPS Grant Processing Statistics Effectiveness Number of Number of Region/ Amount Date of Project Project Grant First (Counter- days from Number of days from Country/ (USD Recipient Initiation Paper/ Agreement Disbursement signature) request to days from Effectiveness Project '000) Request Note Appraisal Signed by CD Date Date Grant Signature to to Signature Effectiveness Disbursement AFRICA Ethiopia EITI Support 380 14-Mar-16 26-Jun-16 1-Dec-16 NA NA NA (P159798) Senegal Support to EITI Compliance 300 6-Apr-16 9-May-16 19-May-16 25-May-16 20-Jun-16 14-Oct-16 49 26 116 Process (P160022) Zambia Post Compliance Implementatio 350 21-Mar-16 23-Mar-16 20-Oct-16 NA NA NA n Support III (P159717) Nigeria EITI Support 320 15-Nov-16 24-Oct-16 7-Dec-16 9-Dec-16 24 NA NA (P162344) EAST ASIA AND PACIFIC Mongolia Improved Governance of 450 14-Oct-15 2-Jun-16 23-Jun-16 28-Jun-16 6-Jul-16 23-Aug-16 258 8 48 Extractives Project (MIGEP) (P158649) Philippines EITI Support Phase 2 (P157976) 1500 22-Dec-15 25-Jan-16 31-May-16 24-Sep-16 24-Oct-16 277 30 NA 5 Effectiveness Number of Number of Region/ Amount Date of Project Project Grant First (Counter- days from Number of days from Country/ (USD Recipient Initiation Paper/ Agreement Disbursement signature) request to days from Effectiveness Project '000) Request Note Appraisal Signed by CD Date Date Grant Signature to to Signature Effectiveness Disbursement EUROPE AND CENTRAL ASIA Albania EITI Support 400 2-Dec-15 17-Dec-15 29-Dec-15 26-Feb-16 19-May-16 18-Jul-16 86 83 60 (P158380) Ukraine EITI Support 400 18-Nov-15 17-Dec-15 24-Dec-15 24-Dec-15 14-Jan-16 22-Mar-16 36 21 68 (P158379) MIDDLE EAST AND NORTH AFRICA Iraq EITI Implementatio 500 31-Aug-16 7-Sep-16 NA NA NA n Support (P160274) LATIN AMERICA AND THE CARIBBEAN Peru Sub- national EITI 350 5-Feb-16 22-Aug-16 NA NA NA (P160633) Dominican Republic EITI 200 9-May-16 20-Sep-16 NA NA NA Support (P161434) GLOBAL World EITI Validation & 700 13-Nov-15 10-Aug-15 8-Dec-15 9-Dec-15 9-Dec-15 13-Apr-16 26 0 126 Data Support (P155263) Based on feedback received from donors, a number of major changes were made to the Bank’s intended approach to proposal development and approval by the Steering Committee (as compared to EITI-MDTF and EI-TAF models). Steering Committee members emphasized their desire for greater level of granular program information to enable them to coordinate better across their embassies and extended technical teams. Over the course of the year and three Steering Committee meetings (Berne, Lima, and Oslo, with latter being an informal meeting) the approach to Steering Committee approvals evolved to include a work plan and budget with indicative allocations by pillar and country, separate project proposals for each grant activity outlining the proposed programmatic approach over the duration of the activity (“one- pagers”) and an update on the approved activities. An “EGPS Roles and Responsibilities” document spelling out the process and various thresholds for approval was agreed at the EGPS Steering Committee meeting in Lima in February 2016. This has resulted in what we consider to be a more rigorous and collaborative decision making process. As agreed in Lima, each EGPS grant proposal summary provided to the Steering Committee for consideration now include:  A proposed Project Developmental Objective and anticipated outcomes/results;  A budget for the proposed activity broken down by pillar and a budget for future planned activities to be funded by separate tranches of funding subject to future committee approval;  Background Information on the size and importance of the extractives sector in the country;  A detailed justification for project support;  An overview of parallel projects by the World Bank and/or other donors; and  A summary of activities/outputs to be financed and future planned activities under subsequent tranches. While the EGPS design originally envisaged the establishment of technical working groups for each of the four Pillars, it was decided at the first Steering Committee meeting held in Berne on October 22, 2015, that this would not be necessary in the short term. Instead, the approach agreed was for all EGPS program-related discussion and decision making to be undertaken by the Steering Committee. Beyond start-up phase of the first year of EGPS implementation, it was also agreed that the Steering Committee would formally meet twice annually. The first Steering Committee meeting of each year, to 6 be held around February/March, would have more of a forward-looking focus and consider the annual Work Plan and Budget. The second Steering Committee meeting of each year, to be held around September/October, would focus more on performance evaluation, ex-post review, and will consider the EGPS annual report and the progress of activities against the annual work plan. During the year, the EGPS Program Manager Recruitment process was started and a selection is expected by the end of the calendar year 2016 (until then there is an Acting Program Manager in place). The Program Manager will oversee the EGPS Program Secretariat and manage the day-to-day engagement with Steering Committee members and stakeholders. The Program Manager will also serve as the link between the EGPS and the IMF’s Topical Trust Fund on Managing Natural Resource Wealth. The two teams met in Washington and agreed to collaborate and avoid duplication, as has been the case since the TTF and EI-TAF were established. The teams also agreed to attend each other’s respective donor meetings, whenever possible. EGPS – Improved Interface with CSOs EITI, which is a centerpiece of Pillar 1 support under the EGPS, traces its origins back to the Publish What You Pay (PWYP) campaign in 2002, and civil society remains an integral part of the multi-stakeholder process, both at the implementing country and global levels. As such, effective civil society engagement continues to be critical in creating demand for increased transparency and accountability as well as for communicating EITI information to communities and ensuring that recommendations are acted upon. Taking into consideration the lessons learnt in the previous phases of CSO support, the World Bank developed a new Strategy for Support to Civil Society for the EGPS, which was finalized in mid-2016 and subsequently approved by the EGPS Steering Committee. Going forward, the broad objectives of CSO support under EGPS will be as follows: 1. Increase the diversity of CSOs, at the global, regional and country levels, and include advocacy, environmental, women’s and Indigenous People’s organizations. 2. Strengthen the technical capacity of civil society actors to advocate for transparency, to hold governments and companies accountable and to effectively participate in decision making: 3. Strengthen global, regional and national-level civil society coalitions and networks to maximize advocacy efforts and peer-to-peer learning; 4. Promote partnerships between civil society organizations and other actors (government, parliament, companies, universities, etc.) The need for greater flexibility in the way the World Bank works with civil society organizations was also highlighted in the strategy as a key difference in our new approach. A key component of the new strategy will be to provide CSOs with the option of recipient-executed grants through an open, transparent process, leveraging the expertise of development partners. World Bank task team leaders will also be provided with additional technical and knowledge resources to improve results. The pilot for this approach is a part of the Round 3 for EGPS support. Partnerships with other World Bank global practices and initiatives (Governance, GPSA, IMF, Macro/Fiscal/Poverty) and with key global civil society organizations, coalitions and initiatives (Open Government Partnership, Natural Resource Governance Initiative, Publish-What-You-Pay coalition) and bi- and multi-lateral organizations working directly with civil society will be a key element of the support provided to civil society going forward. 7 5. EGPS PROGRESS UPDATE ROUNDS 1 AND 2 In October 2016, EGPS has completed its first year since effectiveness and is at one year anniversary of the first EGPS Steering Committee meeting which took place in Bern in October 2015. Two rounds of proposals were approved (November 2015 and February 2016). Table 4 provides status of each approved activity as of September 30, 2016. Table 4: EGPS Approved Activities Rounds 1 and 2 Country/Global Round Status Pillar1 Pillar2 Pillar3 Pillar4 Pillar5 Total Cote d'Ivoire 2 Concept Stage 300 250 - 50 600 Ethiopia 2 Concept Stage 375 - - - 50 425 Nigeria 1 Approvals Stage 500 - - - 50 550 Senegal 1 Implementation 200 100 - - 50 350 Zambia 2 Approvals Stage 350 - - - 50 400 Africa Total 1,725 100 250 0 250 2,325 Indonesia – GPSA 1 Approvals Stage 500 - - - 50 550 Mongolia 1 Implementation 450 - - 50 5002 Papua New Guinea 1 Implementation 160 - - - - 160 Philippines 1 Implementation 750 - - - 50 800 East Asia and Pacific Total 1,860 0 0 0 150 2,010 Albania 1 Implementation 400 - - - 50 450 Ukraine 1 Implementation 300 100 - - 50 450 Europe and Central Asia Total 700 100 0 0 100 900 Dominican Republic 2 Concept Stage 200 - - - 50 250 Peru 1 Concept Stage 500 - - - 50 550 Latin America and the Caribbean Total 700 0 0 0 100 800 Iraq – EITI 2 Approvals Stage 350 - - - 50 400 Middle East and North Africa Total 350 0 0 0 50 400 African Mineral Legislation Atlas (AMLA) 2 Implementation - 350 - - - 350 ASM Database and Pilots 2 Implementation - - - 400 - 400 Domestic Resource Mobilization 2 Concept Stage 100 100 - - - 200 EITI COP Manager3 1 Implementation 40 - - - - 40 EITI International Secretariat (Validation, Training, 1 Implementation 570 - - - - 570 Mainstreaming, Data) Local Content COP Manager4 1 Implementation - - 40 - - 40 Minerals and Climate Change 2 Implementation - - - 100 - 100 Global Total 710 450 40 500 0 1,700 Admin Fee 1 and 2 Actual - - - - - 258 Outreach 1 and 2 Actual - - - - 68 PMA 1 and 2 Actual - - - - - 382 General Total 0 0 0 0 0 708 Grand Total 6,045 650 290 500 650 8,843 Concept stage = preparation started, concept document not yet approved by the management Approval stage = main clearances in place, pending final approvals and/or signature Implementation = all approvals obtained, agreement signed (for REs), project activities started Actual = amount disbursed verified from the accounts 2 Mongolia had an approved allocation of $750,000 for Pillars 1 and 2. However, in the course of preparation due to lack of readiness of Pillar 2 activities, the WB country management unit requested that support under Pillar 2 be postponed until it can be fully defined. As a result, Pillar 2 for Mongolia was dropped from the grant and the total allocation was reduced by $250,000. 3This activity was approved but did not carry expenditures in the reporting period. EITI CoP remains primarily used as a consultation platform with EITI International Secretariat who expected to absorb this function. This activity will remain on the books until there is a transition of this function. 4Due to small size of this activity in FY16, it was linked to “outreach and PMA” and does not show as a separate line item in the in Table 4. The LC CoP will transition to a separate code in FY17. 8 Rounds 1 and 2 included 21 project level activities. With addition of Round 3 (being presented for discussion in October 2016), the total number of project level activities under EGPS is expected to reach 38. Out of the approved projects in Rounds 1 and 2, 12 are now in implementation (total disbursements and commitments under signed contracts amount to $1.2 million5), four are about to become effective, and five are in concept stage. Current commitments and disbursements are provided in Table 5. Table 5: EGPS Commitments and Disbursements through September 30, 2016 % Disb Disb + / Commit Grant Disb Disb Commit Total Disb + Grant / Grant Recip Ctry Exec TF Name Amount FY16 FY17 USD Disb Commit Amt Amt Africa Africa BE AFR Mining Legislation Atlas 350,000 63,525 136,730 63,525 200,255 18% 57% Ethiopia BE Ethiopia EITI BETF 50,000 6,300 6,300 0% 13% Nigeria BE Nigerian petroleum sector 550,000 0% 0% Senegal BE Senegal EITI (BE) 50,000 4,652 11,868 16,519 16,519 33% 33% RE Senegal EITI 300,000 0% 0% Zambia BE Zambia - Post Compliance III 50,000 6,080 6,080 0% 12% RE Zambia EITI Post Compliance III 350,000 0% 0% Africa Total 1,700,000 4,652 75,392 149,110 80,044 229,154 5% 13% East Asia and Pacific Mongolia BE MO Improved Governance 50,000 0% 0% RE MONGOLIA (MIGEP) 450,000 94,969 94,969 94,969 21% 21% PNG BE Papua New Guinea CSOs 160,000 151,750 151,750 0% 95% Philippines RE Second Philippines EITI (EITI) 1,500,000 0% 0% East Asia and Pacific Total 2,160,000 94,969 151,750 94,969 246,719 4% 11% Europe and Central Asia Albania BE Albania EITI Support 50,000 35,105 4,797 6,795 39,902 46,697 80% 93% RE Albania EITI 400,000 114,040 114,040 114,040 29% 29% Ukraine BE Ukraine EITI Support 50,000 29,788 2,137 6,795 31,926 38,721 64% 77% RE Ukraine EITI 400,000 11,336 16,543 27,879 27,879 7% 7% Europe and Central Asia Total 900,000 76,229 137,517 13,590 213,746 227,336 24% 25% MNA Iraq BE IRAQ EITI 80,000 64,650 64,650 0% 81% Middle East and North Africa MNA Total 80,000 64,650 64,650 0% 81% Global Projects World BE ASM Global Database 400,000 252,622 252,622 0% 63% World BE EITI Transparency Validation 40,000 1,500 18,237 19,737 19,737 49% 49% Role of Minerals in Low Carbon World BE Economy 100,000 13,000 39,000 13,000 52,000 13% 52% EITI Transparency Validation World RE Data Support 570,000 160,192 160,192 160,192 28% 28% Global Projects Total 1,110,000 161,692 31,237 291,622 192,929 484,551 17% 44% Total Projects 5,950,000 242,572 339,116 670,722 581,688 1,252,410 10% 21% Program Management & Admin and Outreach 282,019 58,610 41,812 340,629 382,441 GRAND TOTAL 524,591 397,726 712,534 922,317 1,634,851 The EGPS Program Secretariat maintains a public web-site (http://www.worldbank.org/en/programs/egps) which summarizes the program objectives, lists partners, posts featured stories, and also discloses public project documents when they become available. In line with the Word Bank’s information disclosure policy, public can access the following documents for the Recipient Executed grants (REs): Project Information Documents (for projects in preparation) and 5Disbursements are on the low side, but with most projects under implementation just recently becoming effective, disbursements remain in a normal range. Disbursements are expected to pick up significantly in the second half of FY17. 9 Project Papers (for approved projects). For knowledge products funded as Bank-executed grants (BEs), disclosure will apply to final products after endorsement of the outputs by the management and authorization for public disclosure. For EGPS, the following recipient-executed grants are posted on the web-site: Albania, Ukraine, Philippines, Mongolia, Senegal, EITI Data and Validation Grant, Peru, Iraq and Dominican Republic. There are no knowledge products that have been completed yet under EGPS, but the two major products that are co-funded by EGPS – Africa Mining Legislation Atlas (AMLA, approved in Round 2) and Mining Governance Assessment (MInGov–proposed in Round 3) have designated web- sites— http://www.a-mla.org/ (for AMLA) and http://www.worldbank.org/en/programs/mingov (for MInGov). Tables 6 to 8 summarize distribution of the portfolio including Rounds 1 and 2. Program Management and Administration (PMA) charges remained modest—in line with scaling up of the contributions and building up of the pipeline. Total PMA, including outreach and fees is about $700,000 actual expenditure since inception. The PMA alone was about $450,000 for FY16 and first few months of FY17 (see table 5 above) which is approximately 6 percent of total—well below the ceiling of 10 percent (on pre-2016 contributions). The EGPS Program Secretariat is currently understaffed after losing several members, hiring of the EGPS Program Manager is behind schedule and acting arrangements continue in the meantime. The volume of managerial work is now increased with 38 active projects and another Round of proposals expected around March 2017. Estimated cost of PMA will be $600,000 per annum once Program Manager is recruited. Table 6: Distribution of EGPS Projects (Rounds 1 and 2) by Round (in USD’000) Rounds 1-3 Amount Percent of total Round 1 (Approved—November 16, 2015—Berne) 5,010 57% Round 2 (Approved—February 26, 2016—Lima) 3,125 35% PMA, Outreach, Fees 708 8% Total 8,843 100% Table 7: Distribution of EGPS projects (Rounds 1 and 2) by Region (in USD’000) Region Amount Percent of Total Africa 2,325 26% East Asia and Pacific 2,010 23% Europe and Central Asia 900 10% Latin America and the Caribbean 800 9% Middle East and North Africa 400 5% Global 1,700 19% PMA, Outreach, Fees 708 8% Grand Total 8,843 100% Table 8: Distribution of EGPS projects (Rounds 1 and 2) by Pillar (in USD’000) Pillar Amount % of total Pillar 1 (EITI and Transparency) 6,045 68% Pillar 2 (Legal and Regulatory) 650 7% Pillar 3 (Local Content) 290 3% Pillar 4 (Institutional, Environmental and Social) 500 6% Pillar 5 (Project management) 650 7% PMA, Outreach, Fees 708 8% Total 8,843 100% 10 Results Monitoring Based on the experience with the first year of implementation, the overall program-level EGPS Results Framework (Page 28, Final Program Concept Document dated May 13, 2015) has been updated and proposed to donors to for comments in October 2016 meeting. However, the reporting options remain very limited at this time since only three of the country level EITI Support projects and two of the global projects undertook enough activities within the reporting period to be able to report some initial progress; none of the projects has been completed so far in this first year of implementation. With this, the current progress report (FY16 through September 2016) drills down only into selected project updates, while the next year update, which would have accumulated a critical mass of projects in progress, will launch the aggregated results framework. Highlights of Rounds 1 and 2 Project Achievements Global Activities At the global level, the first two rounds included allocations to the following Pillars/programs. Highlights of achievements from these and other projects are presented below (Boxes 1-3). o Pillar 1: Grant to EITI International Secretariat (Data Portal and Validations) o Pillar 2: Africa Mining Legislation Atlas (AMLA) o Pillar 3: Local Content Community of Practice Other Global activities launched in the reporting period included: Climate Smart Mining and Artisanal and Small-scale mining database development. The community of practice for EITI was also among approved activities that moved implementation, but at this stage expenditures were minimal as it remained primarily a platform for virtual meetings and consultations conducted for various EITI constituencies. BOX 1: The Grant to the EITI International Secretariat (Approved December 2015 / Closing December 2017) The EGPS Grant finances three activities that are central to achieving further tangible results by the Initiative in the future: (1) a design of the EITI data portal, (2) the work on countries’ validations and (3) EITI mainstreaming pilots.  The EITI data portal work has been a part of a larger effort to improve the accessibility and usefulness of EITI information that pays an important role in promoting accountability and good governance, stimulates the public debate and helps combat corruption. In order to address inconsistencies in EITI reporting and promote cross-country and cross-industry comparisons, in January 2015 the International Secretariat introduced a requirement for implementing countries to submit a summary data template populated with key financial findings of their EITI reports. The data portal is intended to enable an easier public access and use of these summaries and selected contextual information. The work on creating the EITI online data portal has been successfully completed and it is now active and open to public at www.eiti.org. However, populating all available data into the portal will take some time.  Validation is an essential feature of the EITI process the requirements for which have evolved as the initiative matured and expanded. The purpose of validation is to provide all stakeholders with an independent and impartial evaluation of whether an EITI implementation in the country meets seven EITI Standard requirements. In addition the validation report has to address the impact of the EITI in the country, lessons learnt and recommendations, an implementation of the activities encouraged by the EITI Standard and any stakeholder concerns. Future validations will have to highlight opportunities for mainstreaming the EITI process into the national systems. While the earlier validation system has served its purpose relatively well in the past there have been growing concerns that as the scope and membership of the EITI expand there is a need for a new system that is more cost-efficient and recognizes the diversity of the implementing countries. In this context the EITI Board approved in October 2015 five country pilots that were to test the alternative validation approach. The pilot validations in Mongolia, Sao Tome e Principe, Solomon Islands, Timor- Leste and Ghana were completed in December 2015 (funded by EITI MDTF). Based on the tested new methodology, a full validations schedule has been agreed at the EITI Board meeting in June 2016 in Oslo and the International EITI Secretariat has launched preparatory work funded by EGPS in accordance with the schedule. There were 15 validations launched in July 2016 — Azerbaijan, Ghana, Kyrgyzstan, Liberia, Mali, Mauritania, Mongolia, Niger, Nigeria, Norway, Peru, Sao Tome & Principe, 11 Solomon Islands, Tajikistan and Timor-Leste. EGPS provides limited support to the validator firm which verifies and finalizes the validation assessments.  Mainstreaming. There is a growing consensus among the stakeholders that extractive industry transparency should become an integral part of how governments manage the sector. This resulted in an increasing focus on mainstreaming the disclosure of the EITI information into standard government reporting systems and processes. In June 2015 the importance of mainstreaming the EITI into national systems was recognized and the need for pilot projects noted by the EITI Board. The mainstreaming procedure was approved by the EITI Board on 15 Feb 2016. An update on mainstreaming has been made publically available at https://beta.eiti.org/mainstreaming. A further update was provided to the Implementation Committee of the EITI Board on 26 June 2016. Kazakhstan has started the pilot already.  Future Support: In the next year of EGPS, as agreed with the Steering Committee, the EGPS can potentially provide additional support to the EITI International Secretariat, within the parameters agreed and ensuring no overlap with bilateral support provided by donors. Such support may include financing for regional training activities to EITI countries. BOX 2: Africa Mining Legislation Atlas (AMLA) (EGPS Financing Approved April 2016 / Closing February 2017) The EGPS grant provides resources to co-fund (with EI-TAF until December 2015, African Legal Support Facility and Bank’s own budget allocation) consulting services, technical assistance and operating costs for the implementation of the 2016 AMLA training; the population of the legislative framework in on-line platform; and the completion of the AMLA Guiding Template. Impact so far is as follows: Capacity building: The project has trained 44 African law students, 20 women and 24 men, from 17 countries some of whom are beginning to work, publish, and serve as opinion leaders in the sector. Access to information: With publication of all 53 mining codes ensuring free access in searchable and downloadable formats at www.a-mla.org, countries and citizens are beginning to use the tool to inform decision making. Reference tool: With the completion of the initial draft of the Guiding template, the document has already received positive acclaim on the utility of such a reference tool and has generated commendations from the African Union Commission and the Natural Resources Governance Institute. The final template (which is still work in progress) is expected to be launched at Mining Indaba Conference in February 2017. BOX 3: The Extractive Industries Local Content Community of Practice (EGPS Financing Approved November 2015/ Ongoing annual activity) The CoP was launched in February 2015 is an important element of the Pillar 3 focused on knowledge creation and sharing. During CoP’s almost two years of existence it has become a unique platform for multi -stakeholder dialogue and professional learning on LC policies and best practices. No similar online knowledge exchange forums on the topic exist to date. During the FY 16 the EILC CoP has made significant progress towards achieving its goals by:  Initiating and supporting online discussions and webinars with LC experts and practitioners on such topics as demand analysis, local content legislation and local benefit sharing;  Delivering e-mentoring and rapid response to support professional learning and advocate for best practices;  Expanding its on-line research library; The progress is demonstrated by a substantial increase in site traffic and number of members who are diverse both in terms of stakeholder groups and country representation. EILC CoP will remain operational and support will continue into the second year of EGPS. Country-Level Activities Boxes 4 and 5 below illustrate on-going activities in Albania and Senegal which have some progress to report in this period. Other country-level activities that started implementation in the reporting period included: 12 - Ukraine EITI (grant approved in December 2015 and became effective in April 2016, key contracts being signed). - Mongolia EITI (grant was approved in May and became effective in June 2016; just starting implementation). - Philippines EITI (approved by the Bank in June 2016 but pending countersignature with the Ministry of Finance of the Philippines following government change earlier this year). - A CSO support project was approved for Papua New Guinea and contract with PWYP was signed for its implementation. The activities to be funded were phase 2 of support from activities completed under EITI MDTF, which was successfully completed in the calendar year 2015. Unfortunately, a UK tax law impacted PWYP entering into a contract with the World Bank and the work has not been launched until now. It is possible that the service provider contract will have to be terminated and a different arrangement to be made. BOX 4: Albania EITI Support (Approved February 2016 / Closing December 2017 6) Albania was allocated USD 400,000 under the Round 1 of EGPS funding for pillar one and two activities and the implementation work is already underway. The grant was approved in December 2015 and became effective in April. The country has a strong EITI track record and remains committed to the EITI agenda recognizing the need to enhance extractives’ governance and accountability in order to boost sector’s contribution to country’s economic growth. The country became compliant in May 2013. All activitie s under the previous EITI MDTF grant of USD 420,000 were timely and satisfactory completed. Progress described below is hard to distinguish between EITI MDTF support and EGPS and thus given full complementarity, treated as a seamless program. Since EITI launch, the quality, relevance, and use of EITI reports in Albania has improved significantly: Albania’s EITI reports are now the official, impartial and internationally standardised reports used by the Ministry of Energy and Industry for communication with stakeholders. Albania has included the hydropower sector in its reporting (parallel to EITI) including disclosure of targeted investment in the distribution and transmission lines to reduce loses, as well as a review of the energy market model towards energy market liberalization. The Government has also been swift in acting on EITI reports’ findings. Albania’s EITI reports have shown that while the national tax law requires 25% of collected royalties to be distributed back to local communities, another law on annual budgets has prevented the distribution of royalties to the communities. Based on this information, the Ministry of Finance reviewed the royalty distribution scheme and established a new distribution formula. Five percent of the collected royalties now go back to the project-affected communities. The reports have also revealed that oil operators report no profit sharing with GoA in any of the years since the start of their contract. Based on that the GoA has initiated a review of the oil legal framework and fiscal package with several amendments to the Petroleum law underway. Finally, the reports have disclosed that there are no transit fee provisions for Albania in the Trans-Adriatic Pipeline. GoA has initiated consultation for re-opening negotiations on this subject. For the current grant activities the EITI National Secretariat and the MSG have finalized the Terms of Reference for the 2015 EITI report. While the full description of the activities and first results are outlined in more detail in the Appendix several of them are worth highlighting as they represent an important country’s effort to embrace the EITI agenda on a larger scale. Among them are early stage consultations with the Ministry of Agriculture to include other natural resource sectors such as forestry and fisheries. To identify and provide options for addressing the impediments to data collection from State Agencies and Operators in the EITI process, the National Secretariat and the MSG have published the Request for Expression of Interest for the legal and regulatory review of the Albanian national legislative framework. Furthermore, under pillar 2 of the round 3 financing (proposed for approval in October 2016) the work is planned to develop and implement an integrated government IT system for EITI data reporting. This initiative will be based on the feasibility study financed under a previous support to EITI implementation. Finally, Civil Society Organizations’ Engagement in the EITI process is improving with the establishment a national coalition, Albanian Network-EITI. The national coalition has finalized a code of conduct and clarified the process for selection of CSO representatives on the MSG. 6 Additional financing approved in October 2017 in Round 3, which will extend closing date. 13 BOX 5: Senegal EITI Support (Approved May 2016 / Closing December 20187) Senegal EITI support was approved under EGPS in Round 2 and has started implementation just about June-July 2016. The state of Senegal’s extractives sector has shifted dramatically in the course of the year, moving from modest mining and marginal hydrocarbon resources to the confirmed world scale oil and gas reserves recently discovered offshore. The new hydrocarbon discoveries have the potential to transform the country’s future by boosting its economic growth. Yet Senegal faces a serious likelihood of experiencing a ‘resource curse’ unless the right policy, legal and institutional systems and mechanisms are put in place to effectively and transparently manage the extractive sector. These developments raise the importance of the EITI and the urgency to establish good governance and accountability in managing extractives. Given that the need to accelerate efforts in transparency and good governance to achieve EITI compliance is a priority of strategic importance to Senegal, the country was selected for the 1st and 3d rounds of funding under the EGPS with USD 350,000 and USD 290,000 in grants respectively. Since June 2016, the data collection for the upcoming 3d EITI Report covering 2014 revenues has achieved 99 percent reconciliation and covered 100 percent of companies. The 2014 EITI Report is expected to be launched in a workshop in November 2016. Improvements in the data collection and partnerships have been made. For instance, the independent administrator identified La Cour des Comptes as a very efficient and reliable partner for data gathering and data disclosure, as it has an executive mandate. Also, questions surrounding export licenses have been resolved and a study identifying challenges and solutions is underway. Changes in approved activities: The changes took place only at country level activities: - Solomon Islands EITI project was approved as part of Round 1 in the amount of $250,000. However, due to difficulties experienced by the SoIs EITI and lack of clarity on the needs, the grant did not proceed into preparation. Following consultations with SoIs government, the proposal for EITI support was dropped. The new request was made by the Ministry of Mines to support broader sector reforms under Pillar 2. The new proposal for SoIs Mining Governance support ($450,000) is included in Round 3. - Nigeria EITI support is having to be revised to respond to the growing fiscal crisis in Nigeria, in which NEITI last received monthly budgetary transfers for operational expenses in July, and is unable to pay the Independent Auditors preparing the 2014 reports. Absent infusion of funding from other resources, NEITI risks being suspended for failing to meet the requirement for data timeliness. This risk was brought to our attention as an emergency request by the EITI International Secretariat only last week. The revised support to NEITI will therefore consist of (i) recipient executed support to help publication of the 2014 reports (oil and gas, and solid minerals) and get a timely start on the preparation of the 2015 oil and gas report; and (ii) Bank-executed activity to provide technical advice on petroleum sector governance and transparency. There is no change in the total amount ($550,000) - Mongolia EITI support envisaged covering two pillars: Pillar 1 (EITI) and Pillar 2 (development of mining regulations). Pillar 1 proceeded as designed. The regulatory support was decided to be postponed (dropped for now) while the government gets more clarity on which particular piece of regulation the EGPS would support. The amount of Mongolia EGPS grant was reduced to $450,000. 6. PLANS FOR NEXT PERIOD The Program Secretariat expects that in addition to the October 2016 Round 3 of proposals (see para below), there will be one more round of proposals in FY17 (proposed Round 4). Round 3 of Proposals: A Call for Proposals was launched in summer 2016 and based on the selection process, the EGPS Program Secretariat recommends 18 proposals for approval by the Steering Committee. Three of 18 proposals are second phase of earlier approved programs (Senegal, Ukraine and Albania). Five proposals are for global knowledge work. Country level work is proposed in the form of Recipient Executed Grants. Round 3 proposals amount to about $900,000 (including 7 Additional financing approved in October 2017 in Round 3, which will extend closing date. 14 PMA, outreach and urgent response allocation). It is so far the largest of the tranches and is commensurate with maturity of the EGPS and that operational model is now functioning well. It expands the EGPS in width and scope. A new model of support is also being tested in the case of the Papua New Guinea Bougainville proposal (included in Round 3) where a much larger project is proposed for support by a specific donor under a financing model with additional dedicated funds if agreed by the EGPS Steering Committee. Round 4 of Proposals (also following a Call for Proposals format) is expected to take place in early 2017 with a view to submit it to EGPS Steering Committee review in time for the spring meeting of the Steering Committee (around March 2017). Round 4 will be planned according to availability of new funds, demand and capacity to deliver. Further rounds (FY18) will also depend on funds availability and on progress made by ongoing projects – it will likely focus largely on Phase 2 and 3 of support of earlier approved projects. 15 Supplemental Report to Annual Trust Fund Implementation Progress Report to Development Partners Analysis of Projects under Implementation: Relevance, Effectiveness, Efficiency, Sustainability, and Impact As of September 30, 2016 16 FOREWORD The analyses presented in this Supplemental Report to the EGPS Annual Progress Report are intended as compliment the formal annual report to EGPS partners by providing deeper details on the ongoing EGPS-financed activities. The format for analysis follows the OECD framework for impact evaluation which was agreed to be utilized to the extent possible for EGPS. It is noted that EGPS is in the very early stages of implementation and no activities have been completed yet. The projects described in this report (except for the EITI data and validation) are continuation of support provided under EITI MDTF, or EITAF (for Africa Mining Legislation Atlas) or the World Bank’s own budget (for Local Content Community of Practice). Therefore, it is difficult to draw a line between what was achieved under earlier projects and what can be fully attributed to the EGPS. The analysis of impacts is also best conducted at closure of activities. We are treating the current report as a learning exercise to test the approach and the methodology for the future reports. The EGPS Program Secretariat intends to select a sample of projects carried out within each reporting year and present them as a supplement to the formal reports. The narrative is prepared based on a combination of contributions by the project teams and Implementation Status Reports where available. The EGPS Program Secretariat 17 1. ALBANIA Relevance. For the Government of Albania (GoA), the need to boost the contribution of the extractives sector to economic growth and employment is clear and requires enhancing sector governance to foster private sector investments in large infrastructure projects. The contribution of the extractives industries to economic growth is small in Albania but has a strong potential for enhancement, particularly for oil, chromium, nickel and copper. The contribution of the extractive industries to GDP increased to 5.6% in 2012, up from 4.3% in 2011, and significantly up from 2.4% in 2008. The industries’ contribution to the State Budget was also up from 1.8% to 2.5% in 2012 Crude oil export has grown dramatically since 2008's 277 thousand tons to 2012's figure of 1,024 thousand tons. A comparison of 2011 and 2012, however, demonstrates the volatility in the commodities sector. 2011 figures for production value of chromium were US$143 million which dropped substantially to $92 million in 2012. In March 2015, the start of exploration at sea for oil and gas was announced and the parliament also passed a new bill on hydrocarbons, in order to grant oil blocks through procedures. Currently there are ongoing negotiations with operators for exploration and potential production rights in Albania, and fairly immediate assistance is needed to provide a quick review of the current legislative and regulatory environment to assess areas for where it can be strengthened along international best practices as well as the development of a model contract. Relevance of Beneficial Ownership Requirements under the new standard. Albania’s Minister of Energy and Industry expressed strong support for beneficial ownership transparency at the EITI Global Conference in Lima. Under the new Standard, countries must also disclose their beneficial owners no later than January 1, 2020. Prior to meeting this requirement, EITI implementing countries must publish a roadmap for disclosing beneficial ownership information by January 1, 2017. The new provisions give countries some time to prepare and gain experience with beneficial ownership disclosure. Countries are encouraged to start including such disclosures in their EITI Reports immediately, to build awareness and experience prior to that it becomes a requirement in 2020. The potential next steps and recommendations for meeting the Albania’s beneficial ownership requirements are as follows: (i) establish an MSG working group to oversee development and implementation of roadmap, (ii) consider needs for stakeholder consultations in developing the roadmap, (iii) discuss activities to be included in the roadmap, including technical and financial assistance to implement the roadmap, (iv) evaluate possibilities to start working on BO by embedding BO disclosures in forthcoming EITI Report, and (v) ensure that the MSG agrees and publishes a roadmap by 1 January 2017. Effectiveness. Grant Effectiveness. In December 2015, the Bank approved the Albania Support to EITI Compliance Process Project (P158380). The newly established Extractives Global Programmatic Support (EGPS) Multi-Donor Trust Fund (MDTF) provided funding of US$ 400,000 in the form of a grant. The grant became effective in May 2016. An additional 1.1 million USD in sector support has been approved in-principle pending the successful implementation of the current grant and the availability of funds. While the grant was approved by the World Bank in December 2015, it took five months for the grant to become effective (May 2016) following the grant agreement’s ratification per Albania’s legislation. The delay in effectiveness essentially delayed the initiation of planned grant activities. While the grant was going through the approval channels within GoA, the National Secretariat took several proactive steps in order to immediately start implementation upon grant effectiveness and commitments and disbursements is expected to catch up in the second quarter of 2016. Legal and Regulatory Context. The EITI’s reporting requirements for Albania’s government institutions currently conflict with their statutory duty to maintain confidentiality over the information obtained. This confidentiality provision, referred to in the laws applicable to tax and custom procedures in Albania, allows access to the data only upon explicit consent from the Licensee. Current regulatory enforcement also does not address forms of reporting with regard to cash flows and contextual information and fails to address many aspects of current reporting requirements such as publication of data on a disaggregated level and financial reporting assurance processes. In order to overcome these barriers, the reporting template used by the Independent Administrator includes a letter seeking explicit consent of the licensee allowing recipient public entities to report information classified as confidential under governing laws, regulations and agreements, and allowing publication of relevant cash flows by payment stream and by licensee on a disaggregated level in EITI reports. The process of consent, however, continues to create significant delays in the reporting process from both licensees and reporting public institutions. The EGPS grant is financing a legal and regulatory review that will to identify such impediments slowing data collection from State Agencies and Operators in the preparation of EITI reports, and suggest recommendations for improvements to the process. Efficiency. Albania received a grant of USD 420,000 for EITI implementation through the EITI MDTF. The project financed: (i) the preparation of the 2011, 2012, 2013 and 2014 EITI reports; (ii) analytical work including a scoping study for the inclusion of the 18 hydropower sector in the most recent EITI reports, a study assessing IT options to systematize the production of EITI data as well as a study identifying options to enhance extractive industry revenues and their contribution to economic growth; (iii) community and outreach activities on the initiative; (iv) technical tra ining on EITI; and, (vi) a contribution to the EITI National Secretariat’s operating costs. All grant activities were completed timely and satisfactorily. Overall disbursement stood at 99.0 percent upon grant closure. The National Secretariat is staffed by highly qualified personnel who are extremely efficient and have experience in ensuring that all commitments and disbursements are met by grant closure. The same team will implement the EGPS grant and is expected to execute grant activities on time and without cost overruns. Further, the operational costs are mostly born by GoA. In terms of project management costs, the grant will finance two members of Albania’s EITI National Secretariat (IT specialist and procurement sp ecialist for USD 25,000) on individual consultant contracts to cover specific assignments as needed and support operational costs incurred by the EITI Secretariat and MSG for travel agreed by the Bank, i.e. 6% of the grant amount. GoA covers all other operating costs, including the costs of national Secretariat staff, office space, office maintenance, internet, phone, banking charges and associated utility costs. Sustainability. GoA is committed to enhance transparency and accountability in the extractive industries. The ultimate objective is to move the open data and anti-corruption agenda and to improve the contribution of the energy and extractive industries to economic growth. The need to ensure the long term sustainability of the transparency initiative is clear to the Authorities, who have commissioned a study assessing IT options to systematize the production of EITI data. This work is a contribution to the Gove rnment’s reflection on how to ensure the production and publication of reliable and current data on extractive industries’ reve nues flows. Additional studies include analytical work including a scoping study on including the hydropower sector in the next EITI reports and a study identifying options to enhance extractive industry revenues and their contribution to economic growth. Government Financing and Buy-in. GoA expressed its support to EITI in February 2009, and Albania became an EITI candidate in May 2009. The implementation of the EITI agenda is ensured by a technical Secretariat, which was created by a Ministerial Council ’s decision on July 07, 2010 and operates under the leadership of a Multi Stakeholder Group (MSG), created by a Decree issued by the Prime Minister in July 21, 2011. The government of Albania has been co-financing EITI implementation in an amount estimated to be about US$ 400,000 per year and will continue to provide parallel co-financing going forward to cover majority of the operational and staff costs. GoA covers salaries of 7 government employees of the National Secretariat and all other operating costs, including the costs of office space, office maintenance, internet, phone, banking charges and associated utility costs. The National Secretariat is embedded within the Ministry of Energy and Industry and all staff of the National Secretariat (besides consultants) are civil servants. Links to Public Financial Management Systems and Mainstreaming. The government’s reporting systems do not produce information on revenue generated by each sector aggregated for each applicable payment stream which is a requirement under the EITI standard. The government revenues and expenditures are recorded through a single cash management system, i.e. the Treasury system. This system provides information on a monthly basis on revenue generated for each tax but does not disaggregate for the upstream oil and gas sector, the mining sector, and the hydro-energy sector. The MSG is, therefore, unable to receive accurate and complete information on the total revenue generated for each applicable revenue stream in the oil, gas, mining and hydro-energy sectors from the Government’s information system. In addition, the Government’s information system currently does not produce information on total revenue generated by each individual license due to the following reasons:  Companies may operate one or more licenses. However, taxes and payment streams are not recorded separately for the individual license but for the entire business operating a Unique Tax Identification Number (NUIS). Hence, the cost account systems can produce information for taxes paid by a NUIS but not for taxes paid by each license, unless a separate NUIS is granted for each operating license.  Each public entity collecting revenue maintains its own management accounting system for recording and administering payments made by each NUIS. More specifically, the General Directorate of Tax, Albanian Custom Administrate, Local tax directorates, Local government units, Ministries and other public entities that collect revenue have their own records on revenue accrued and payments made by each NUIS. However, this information is not consolidated in the government’s information system to provide aggregated revenue generated by each individual NUIS. Therefore, the MSG cannot retrieve information on total revenue generated by each NUIS in a fiscal year in order to identify material reporting entities.  Further, management accounting systems held separately by each public entity (including tax and custom authorities) cannot produce information on revenue disaggregated by payment streams for the oil, gas, mining and hydro-energy sectors as the licensees are not categorized by their sector classifications in the management systems. Therefore, the MSG cannot retrieve accurate and complete information on the revenue generated in total and by payment stream from the sectors under EITI reporting. The EITI process in Albania provides ample opportunities to use EITI findings and recommendations to push for governance/legal/regulatory/fiscal reforms in the extractives sector and for Albania to move towards more automated 19 ‘mainstreamed’ reporting with synergies built with already existing public financial management system s. The key to the sustainability of Albania’s EITI process lies in capitalizing on such opportunities and to continue as a model for other sectors in terms of tr ansparency, accountability, revenue reconciliation, sector diagnostic, and mainstreaming. Capacity Building Opportunities. Civil society’s engagement in Albania’s EITI process is getting more structured and formalized through the establishment of a national coalition, Albanian Network- EITI, which is a new Albanian CSO coalition joining the Publish What You Pay (PWYP) Coalition. PWYP is a global coalition of civil society organizations united in their call for an open and accountable extractive sector. PWYP is active in most EITI implementing countries whose CSOs are member organizations of PWYP on an individual level or through a national coalition and is uniquely positioned to play a constructive role in advancing CSOs’ engagement in Albania’ s EITI process. The national coalition has finalized a code of conduct and clarified the process for selection of CSO representatives on the MSG. The code of conduct outlines the term of a CSO representative in the MSG (3 years, renewable only once), qualification criteria, and duties and responsibilities of the representatives. The next election is expected by April 2018. It is apparent that there is a great scope for capacity building and outreach efforts in terms of CSO engagement in Albania’s EITI process. However, the lack of funding to strengthen CSO engagement in Albania’s EITI process needs to be addressed. While Albania’s technical delivery of EITI implementation is strong, stakeholder engagement could be stronger. It is a very positive sign that CSOs relevant to Albania’s EITI process are organizing via a formal structure, clarifying their governanc e, and outlining their own accountability measures through a national coalition. The coalition should enable an easier mechanism for delivering capacity building support. Beyond capacity building on coalition building and governance, EITI, and outreach there is also an opportunity for regional cooperation/mentoring and knowledge sharing from countries with strong CSO engagement such as Ukraine. Impact. Quality, Relevance, and Use of EITI Reports in Albania. From a technical perspective Albania’s EITI proce ss is performing very well. EITI reports are produced on time and the process is recognized by the International Secretariat and the Board as being well supported by the National Coordinator. The most recent report covered 2013 and 2014 fiscal data in an effort to make EITI data more timely and relevant. The report highlighted the significant contribution made by the extractives sector to total exports and the considerable level of oil and gas prospectivity. The report included coverage of revenue generated by the hydropower sector for the first time, achieved 100% reconciliation of oil and gas payments and approximately 86% of mining payments. Further, the report provided very useful information on state participation in the extractives sector, both in terms of SOEs and state equity in oil, gas and hydro ventures. Albania’s EITI reports are now the official, impartial (prepared by a third party) and internationally standardized reports t hat are being used by MoEI for communication with stakeholders on the extractives and hydro power sectors, including members of parliament, journalists, investors, and civil society. Going forward, the Albania MSG needs to address the minor discrepancies uncovered in the 2013/14 report in the upcoming 2015 report to ensure that Albania is found compliant with the Standard when it undergoes Validation in 2017. From Findings to Reform/Action. Albania’s EITI reports have shown than while the law on national taxes requires that 25% of collected royalties be distributed back to local communities, another law on yearly budgets has effectively prevented the distribution of royalties to project-affected communities. Based on this information, the Ministry of Finance reviewed the royalty distribution scheme, and by early 2015 a new distribution formula was established taking into consideration central budget constraints but with the objective to enable a stable flow of funds from central government to local budgets. 5% of the collected royalties now go back to the project- affected communities. The 2015 EITI report is expected to demonstrate the effect of this new fiscal arrangement. EITI reports have also shown that while Albania is a country rich in natural resources, with a variety of minerals and the biggest oil field in Europe, the revenues from the sector are low. Oil operators report no profit sharing with GoA in any of the years since the start of their contract. Therefore, GoA has initiated a review of the oil legal framework and fiscal package with several amendments to the Petroleum law underway. Further, the EITI reports disclosed that the Trans-Adriatic Pipeline (TAP) shows no transit fee provisions for Albania. GoA has initiated consultation for re-opening negotiations on this regard. Replication to other Sectors. Albania has also successfully included the energy sector (i.e. hydropower sector) in its reporting has included in its agenda considerable targeted investment in the distribution and transmission lines to reduce loses, as well as a review of the energy market model towards energy market liberalization. Further, based on the experience and disclosure of the EITI reports and sector diagnostic, and with the proposal of the Parliamentarian Commission on Productive and Economic activities and the National Secretariat, MoEI representatives have commenced consultations (which are at an early stage) with the Ministry of Agriculture to include other natural resource sectors to EITI reporting such as forestry and fisheries. This speaks to the sustainability of the EITI process and relevance of the EITI process to other sectors as well. 20 2. UKRAINE Ukraine received US$450,000 in EGPS Round 1 and has proposed US$490,000 for Round 3 to produce more comprehensive reports, strengthen the capacity of all participating stakeholders and address a number of legal challenges impeding EITI data collection and reporting. Relevance. Sector Relevance. Ukraine has significant natural resources. The country is one of the world’s top ten producers of a number of minerals including iron ore, steel, rutile, titanium sponge, manganese ore, and ilmenite. Ukraine also owns abundant coal reserves ranking sixth in the world for hard coal. Finally, there is some gas production and Ukraine plays a crucial role as a transit country for Russian natural gas exported to Western Europe. Accession to the EU is important for Ukraine and focusing on transparency and accountability is a critical accession requirement. Further, Ukraine has taken a number of reform steps to address the gas sector challenges and meet the commitments it has assumed as part of its membership to the Energy Community. As part of its commitment to increase transparency in the extractives sector (including the oil, gas, and mining sectors), the Government joined EITI and has remained committed to achieving compliance. Further reforms are necessary to improve the energy and extractives governance, transparency, efficiency and attract private investments while ensuring compliance with the European Union's third energy package. EITI provides a good sector diagnostic to identify and push for reforms. Effectiveness. Ukraine is still in its nascent stages of EITI implementation and has produced only one EITI report so far. Ukraine’s EITI implementation still has several challenges that need to be overcome for the process to be smooth and effective.  Challenges—Preparation of Second EITI Report. The EITI Standard requires countries to cover oil, gas and mining activity in their EITI reports. For Ukraine’s second report, the scope must be expanded to the mining sector. Given that there is an overlap between Ukraine’s major mining regions and the conflict affected areas in eastern Ukraine, the MSG has decided to make a request to the EITI international board for an adapted implementation. Further, Ukraine needs to conduct an audit of the missing requirements from the first report and should consider redefining the materiality threshold for companies included in the reconciliation process. Ukraine is expected to undergo Validation in 2017, the exact timeframe is to be determined at the next Board meeting in Astana, and Ukraine’s second EITI report will be the basis for Validation.  Legal and Regulatory Context. Last year, the independent administrator faced difficulties in data collection due to a combination of the legal/regulatory context that did not fully address EITI reporting requirements as well as the lack of willingness/understanding of reporting entities to comply with requests for information. The bylaws adopted last year making EITI reporting in the oil and gas sector obligatory should make data collection relatively easier for the IA this year. However, as previously noted, legislation pertaining to mandatory EITI reporting and disclosure will be required to avoid reliance on voluntary disclosures.  Beneficial Ownership Requirements under the New Standard. Under the new Standard, EITI countries must disclose the beneficial owners of all corporate entities that bid for, operate or invest in extractive assets no later than January 1, 2020. Prior to meeting this requirement, EITI implementing countries must publish a roadmap for disclosing beneficial ownership information by January 1, 2017. Ukraine is among the few countries who are ahead of the curve in meeting this requirement. Ukraine already has legislation requiring the disclosure of beneficial ownership and a nascent beneficial ownership registry. However, additional work will need to be undertaken to ensure full compliance with the beneficial ownership requirements, including a review of assurance mechanisms, strengthening compliance with the existing requirements, definitions and the inclusion of politically exposed people and the disclosure of legal owners. Efficiency. Ukraine received a grant of USD 190,000 for EITI implementation through the EITI MDTF. Given that the grant was approved on March 3, 2015 with a closing date of December 31, 2015, it was clear from the onset that the life of the project would be short and all grant activities needed to be implemented rapidly. The project financed: (i) the preparation of the first EITI report, (ii) Ukraine EITI National Secretariat, including staff salaries and operational costs, and (iii) a contribution to the Ukraine EITI MSG's communication and outreach efforts. Despite significant delays in project launch, project implementation advanced substantially between July 2015 and October 2015, when the MSG fully staffed the National Secretariat, and recruited the Independent Administrator (IA) in charge of developing the first EITI report for Ukraine. The MSG demonstrated a strong drive and leadership in the supervision of the work developed by the IA, and a first draft report was therefore available in September 2015. Overall disbursements stood at 84.95 percent of the grant upon project closure. In Ukraine’s challenging political context, this rate of disburse ment is viewed as satisfactory. The National Secretariat is now staffed by qualified personnel who are efficient and can ensure all commitments and disbursements are met by grant closure. While the political and bureaucratic context in Ukraine remains challenging, the team is expected to execute EGPS grant activities on time and without cost overruns. Currently, a challenge faced under grant implementation is the procedural delays within the implementing ministry. The team within the Ministry changed with the change in government and a majority of the department heads (e.g. legal, accounting) have not been appointed yet. This transitional situation has led to delays in implementation progress, particularly the signing of documents (letters, requests, financial documents, contracts). 21 In terms of project management costs, the grant will support the costs of the EITI National Secretariat staff and provide support for the operating costs. The Government of Ukraine (GoU) covers all other operating costs. GoU has committed to implementing EITI. However, in this initial phase of EITI implementation, GoU has asked for funding support from the EGPS MDTF. There is a moderate risk that funding for the uninterrupted operation of the EITI National Secretariat will not be available once this programmatic approach comes to a close. The Bank will work closely with GoU and other donors in ensuring that adequate resources are made available to ensure sustainability and efficiency of the process in Ukraine. Sustainability. Ukraine is making steady progress against its commitment to implement the EITI. The new Minister of Energy and Coal Industry has confirmed his support for EITI implementation in Ukraine and its importance in meeting the country’s anti -corruption, transparency, and accountability reform agenda and for attracting investors to the extractives sector. The Minister’s commitment to the process was demonstrated by his insistence that the EITI reports be relevant and provide more up to date information. He expressed his desire that the MSG consider including both 2014 and 2015 data in the second EITI report in order to ‘catch up’ and provide the public and investors with more current information, thereby enhancing the relevance of the reports and the process more broadly. Despite the challenging geopolitical context, substantial progress has been made with the EITI process in Ukraine. In June 2015, the Parliament of Ukraine adopted a law mandating the participation of all relevant parties in EITI reporting (approved July 2015). The Ministry of Energy and Coal Industry has also developed bylaws specifying the scope of EITI reporting, entities required to participate, and the implications of non-participation. While the preparation of the first EITI report necessitated substantial effort and demonstrated a strong leadership and commitment from the Ukraine MSG, the challenges ahead are significant. Substantial effort will be needed to ensure the preparation of a report including all mandatory data in the oil and gas sector. The inclusion of coal, iron ores, and other potentially relevant mining industries is seen as a huge challenge. Impact. Civil society engagement in Ukraine continues to be strong. CSOs were very active in pushing for the implementation EITI in Ukraine. Since 2009, CSOs organized a number of conferences for capacity building and awareness raising for EITI. All these public events were crucial for raising awareness on the importance of the implementation of EITI in Ukraine and building the basic capacity for kick-starting broader public discussions on transparency in the extractives sectors. Currently, Ukraine’s civil society is focused on advocating legislation on mandatory EITI reporting (in compliance with EU directives) in the oil, gas, and mining sectors, identifying champions, and getting the law registered in the Parliament. Very few countries manage to produce a fully compliant report in their first attempt and Ukraine was no exception. The contextual sector information included in Ukraine’s first report was largely complete, but the financial reporting/reconciliation section contained major gaps and omissions. The first report provided: (i) a good overview of the roles of various government authorities and the fiscal regime; (ii) identified the revenue streams in the sector and who they are paid to; (iii) highlighted the importance/central role of State Owned Enterprises (SOEs) in Ukraine’s extractives sector; (iv) provided useful information of the state's interest in oil and gas companies; (v) showed growing private sector interest in the sector highlighted by a large proportion of exploration being conducted by private companies; and (vi) historical production data demonstrating the long decline in hydrocarbon production in Ukraine. The need for reform of the licensing regime was also highlighted, with the report showing the complexity of the permitting process and that it was common practice for hydrocarbon licenses to be held by companies for long periods while undertaking no development/exploration/production activity. Overall, the report provided a constructive mix of process/operational and policy/reform recommendations that fit well with Ukraine Government’s reform objectives. Ukraine’s EITI process has facilitated a platform for dialogue between the Government, private sector, and civil society organizations, with the objective of enhancing the governance of natural resources in Ukraine through several roundtable discussions. Last year a Sustainable Resource Management Forum, the first high level event that made clear the linkages between the EITI Standard and its implication in the broader energy sector reforms in Ukraine was organized in December 2015. The Forum was well-attended by decision makers in Ukraine’s energy and extractives sphere, as well as other stakeholders (civil society, operators, donors, EITI Board members). It provided a platform for stakeholders to discuss issues important to their stakeholder groups. For example, operators highlighted the lack of transparency in the licensing process. CSOs stressed issues associated with the lack of reporting by companies, as well as the lack of disaggregated data on regions. Government agencies tried to address the many questions participants had with regard to the tax code overhaul undertaken by the government. There was also a rich debate on how to create the best incentives to encourage all operators to comply with EITI mandatory reporting and whether or not the use of sanctions can be effective. The richness of the debate demonstrated the important ways in which EITI implementation can assume a pivotal role in policy dialogue. 22 3. AFRICAN MINING LEGISLATION ATLAS (AMLA) This report covers the activities carried out under AMLA during FY16. These activities were mainly co-funded by the Extractive Industries Technical Advisory Facility (EI-TAF) in FY15. In May 2016, a Grant Funding Request (GFR) was approved by the Extractives Global Programmatic Support (EGPS) to largely co-finance AMLA activities for FY17 and, marginally, additional AMLA activities to be implemented within FY16 that were not foreseen in FY15 under EI-TAF resources. The objective of AMLA is to support African countries in maximizing mineral resource benefits through: - Promoting transparency, accessibility and comparison of Africa’s mining laws; - Facilitating the preparation, revision and implementation of mining laws; - Providing a living database that will catalyze research and policy debates on legal and regulatory issues; and - Promoting the development of local expertise on African mining laws. Relevance. Proper management of natural resources remains one of the most critical development issues for the African continent. Experience has shown that, while the extractive industries can be an important source of wealth, growth without proper management cannot be sustained. Rather, it will continue to fluctuate with the vagaries of commodity prices and will fail to permanently transform African economies. A key component of ensuring that natural resources serve as a platform for development is negotiating mutually beneficial exploitation contracts with investors. However, mining contracts are always negotiated and implemented within a specific applicable legal framework, making legislation crucial as contracts alone cannot lay an adequate foundation for good governance of extractive industries. In the face of the commodities boom and the growing trend towards transparency, several African countries have adopted new mining laws since 2000,8 with more revisions and new enactments expected in light of new mineral resource discoveries. In many cases, these countries have sought comparative information and guidance on benchmark practices, but there is an absence of comparative data on mining laws, and no suitable templates or guidelines exist in the industry for Africa. To support these initiatives, African governments, academics, and civil society organizations need to have the mining laws of similarly situated countries on the continent at their fingertips as a resource to help them assess the quality of their own legal framework, and consider possible alternatives and improvements. These laws are already public documents yet their accessibility is hindered largely by lack of institutional capacity as well as a dearth of platforms for dissemination. AMLA aims to provide easy online access to a comprehensive and streamlined legal framework for Africa’s mining sector to increase transparency, improve investment decision analysis and thus lower investment barriers. To achieve the four objectives outlined above, the project involves legislation gathering, organization, dissemination and capacity building components which consist of the following: - Creation of the AMLA platform, a free, online one-stop resource for Africa's mining legal framework (mining codes, regulations and related legislation) with interactive features to provide comparative data; - Production of the guiding template, an annotated document that outlines a menu of legislative solutions to assist countries in the preparation or revision of their mining laws; and - Capacity building through training of African law students a) in the use and population of the platform and b) on overall issues in mining law. The objectives of the project remain relevant and, with the progressive realization of the above development interventions, they also remain achievable. The Project continues to work in collaboration with the African Legal Support Facility, the African Union Commission and several African law faculties from across all sub-regions of the continent. Furthermore, sector relevant global partners continue to support the project (for example, the Natural Resource Governance Institute and Latham and Watkins LLP). . Effectiveness. In FY16, the project achieved the following: - Capacity building: trained 44 African law students, 20 women and 24 men, from 17 countries; selected the 20 top- performers out of the 44 trained African law students to form the Legal Research Team (LRT) made up of 9 women and 11 men from 10 countries; concluded full AMLA training program cycle (i.e. two on-ground workshops plus six remote distance training modules); and expanded LRT to strengthen French speaking representation. - AMLA platform legislation framework population: published all 53 mining codes available for free in searchable and downloadable formats at www.a-mla.org; published customized legal analysis based on project-developed common taxonomy for 18 countries’ mining codes available at www.a-mla.org; and collected amendments to mining codes, primary mining regulations and related laws and regulations for 25 countries. 8 Most recently, countries such as Tanzania in 2010, Guinea in 2011 with amendments in 2013, Mali in 2012, Burundi in 2013 and Mozambique in 2014; DRC is currently revising its mining code; Togo is currently in the process of enacting a new mining law. 23 - Upgrade of the AMLA platform website: created multilingual functionality (English, French and Portuguese); and improved database Content Management System (CMS) experience for content providers and reviewers. - Guiding template: produced internal zero draft of the guiding template; and produced first working draft of the guiding template further to “book sprint” style meeting with external contributors. - Establishment of partnerships for project sustainability: expanded the established network of African law faculties that offer courses in natural resources law from 9 to 12; established the Guiding Template Review Committee (GTRC); and established an informal collaboration with the African Union Commission (AUC) to ensure alignment of the Project’s work on the guiding template with the African Mining Vision (AMV); Key obstacles and opportunities for reaching development goals: The key obstacle to reaching the development objectives is possible slow coordination efforts by the project partners which can result in the delay in results delivery. Key opportunities for reaching the development goals, include: (i) a growing number of African law faculties —including those from Francophone countries who are often excluded or marginalized in similar initiatives —have expressed an interest in participating in the AMLA training program; and (ii) the Ministerial Report of the recently concluded meeting of the AUC Specialized Technical Committee on Trade, Industry and Mineral Resources, dated 23-24 May 2016 requested that their member states not e AMLA “as a tool on guiding member states to develop, review and align their Mineral laws and regulations to the Africa Mining Vision.” Efficiency. With respect to EGPS, the resources will co-finance goods, consulting services, technical assistance and operating costs for the implementation of the 2016 AMLA training; the population of the legislative framework; and the completion of the AMLA Guiding Template. The overall cost of implementation including secretariat, overhead to technical input is approximately $650,000. There were no cost overruns in FY2016 and the operational costs were maintained at the budgeted levels. No significant delays were encountered, although the Project experienced some delay due to the redesign of the Proj ect’s sustainability features. Sustainability. The development outcomes will be maintained for the following reasons: (1) The African Legal Support Facility (ALSF) has committed to establishing an AMLA Secretariat with dedicated financial and human resources to coordinate efforts to ensure the long term sustainability of the Project, notably the training of African law students; (2) the African Union Commission has committed to continued collaboration with ALSF in sustaining the Project’s activities including mainstreaming the Project deliverables such as the Guiding template into the African Mining Vision processes; and (3) several African universities as well as global sector relevant entities have sent in statements of interest in joining part of the long term project implementation consortium. Impact. Capacity building: The project has trained 44 African law students, 20 women and 24 men, from 17 countries some of whom are beginning to work, publish, and serve as opinion leaders in the sector. Access to information: With publication of all 53 mining codes ensuring free access in searchable and downloadable formats at www.a- mla.org, countries and citizens are beginning to use the tool to inform decision making as indicated in the Feedback section above. The platform also provides customized legal comparison of the mining codes – based on a project-developed common taxonomy – for 18 countries’ mining codes. AMLA platform Google analytics indicate an average of 500 unique visits monthly from across the w orld, with the highest session and user rates registered in Africa, North America and Europe, as well as with Africa having the lowest bounce rate of all the continents. Reference tool: With the completion of the initial draft of the Guiding template, the document has already received positive acclaim on the utility of such a reference tool and has generated commendations from the African Union Commission and the Natural Resource Governance Institute. 24 4. LOCAL CONTENT COMMUNITY OF PRACTICE (CoP) Relevance. More than 90 percent of resource-rich countries have some kind of local content regulation (McKinsey 2013), yet robust evidence about best practices and policy effectiveness is still lacking. Local content policies in petroleum and mineral rich countries have had mixed results: knowledge and capacity gaps, lack of common standards and inadequate stakeholder consultation are among the factors that explain countries’ relative success. The CoP is intended to address knowledge gaps by fostering collaboratio n between policy makers, companies, practitioners, and other stakeholders on issues related to the design, implementation, and economic and social impact of local content policies in extractive countries. Effectiveness. The CoP’s goals as stated in the Charter are: (1) provide a forum for peer-to-peer exchange, (2) enhance World Bank internal coordination and collaboration, (3) provide a forum for multi-stakeholder collaboration to align expectations around local content policies, (4) provide continuous learning opportunities for local content practitioners and (5) co-create and disseminate local content related research. In FY 2016, the CoP made significant progress towards these goals, most importantly demonstrated by a significant increase in site traffic and members (>200). The membership is very diverse in terms of stakeholder groups and geographical diversity, with a focus on African countries. This fostered a unique multi-stakeholder dialogue, most prominently in the following eDiscussions: 1. Demand analysis: 23 responses from government officials, donors, civil society, and consultants; 240 views, 28 Webinar participants 2. Local Content Legislation: 11 replies from civil society, academics, World Bank staff and other IFIs, 238 views, 16 Webinar participants 3. The Art and Science of Local Benefit Sharing: 165 views, 9 replies from World Bank members, consultants, academics, private sector and donors; 24 Webinar participants 4. IPIECA Local Content Guide: 18 replies from civil society, government officials, researchers & academics, consultants, and the private sector, 260 views While eDiscussions and integrated Webinars were the most successful element of multi-stakeholder discussions with up to 250 views per discussion, the CoP members also used the platform for connecting amongst each other, post announcements and questions and maintain an event calendar. Further, the CoP contains a resource library with more than 150 sources such as academic papers, policy notes, as well as company and donor reports on local content. The compilation of the library was led by Engineers without Borders, a Canadian NGO. The CoP generally provides a huge opportunity to further continue the discussion of the global World Bank conference on “Reconciling Trade and Local Content Development” in M exico City in January 2016. Efficiency. The CoP creates value for its members and complements and enhances other World Bank efforts by enlarging their respective audiences by disseminating and discussing the results. Two examples are the World Bank’s globa l conference and the roundtable discussions of the Trade and Competitiveness LNG local content project in Tanzania. Even though the increased knowledge of members and the actual impact on their work is hard to measure in its attribution to the CoP, is considered cost-effective due to its lack of overhead costs, minimal delays, and lack of cost overruns or unreasonably high operational costs. Sustainability. The sustainability of the platform depends on continued funding for personnel to manage the CoP. Apart from the financials, the CoP is in very good shape in terms of its sustainability: members are approaching us to organize eDiscussions, frequently recommend new members, and use the forum to promote jobs and their research. In conclusion, the CoP has reached a mature stage and now benefits from the initial investment in setting it up. Impact. While hard to measure empirically, the positive impact of the CoP evidenced by anecdotal evidence highlights contributions such as the following:  Collaboration between (a) oil & gas and (b) mining industry professionals regarding their policy design and approach given that they do not face competitive pressures between each other  Knowledge exchange e.g. of EWB’s local procurement reporting standards and IPIECA’s view on how reporting requirements can be integrated into existing reporting frameworks  Enhanced awareness of local content policies globally and mutual learning regarding its challenges and opportunities  Enhanced World Bank internal coordination and cooperation, for example in finding experts for projects  Facilitation of the planning process for the World Bank 2016 global conference on Local Content Development in Mexico City 25  Increased awareness of global events, initiatives and research projects among members  Identification of knowledge gap regarding effective policy design and effectiveness of local content policies repeatedly raised in questions and discussions  Peer-to-peer exchange of local content professionals and practitioners The Local Content conference on January 26-28 2016 in Mexico City brought together about 150 local content professionals from the public and private sector, civil society, academia, donors and multilateral development institutions. Most attendees came from African countries, including ministers from Liberia, Zambia, Angola, Ghana and Nigeria, but Latin America and Asia were also represented with delegates from countries such as Mongolia, Chile, Malaysia, and Trinidad and Tobago. The topics covered were clustered in the following six panels: 1. The economic dilemma of free trade vs. productive policies; 2. Economic Development Policies in Context, 3. Extractive companies’ perspective on local value creation, 4. Technology and innovation: how do we make it happen?; 5. Creati ng a global talent pool and a competitive labor force and 6. Developing competitive local firms. The eminent speakers included Harvard professor Ricardo Hausmann, World Bank senior director Anita George, the Mexican minister of the economy, among others. Key learnings are that a balance must be struck between project optimization for local content, from which many people benefit, and the optimization for cost, schedule and safety for the company, which requires an effective collaboration between industry, government and civil society in balancing their different objectives. Trust is crucial and can be built by a transparent evaluation of local content and project costs. Effective local content policies must focus on competitiveness and quality, be transitory in nature, be designed early in the project lifecycle based on local industry capacity and human resource profile, engage all stakeholders involved, and should include access to finance as well as capacity building for suppliers. Cost reduction is the most effective argument within companies to create internal buy-in, and can involve external delivery partners to reach SMEs outside of the core value-chain, but must be handled with care in order not to debalance the local economy. While sometimes considered a heresy a decade ago, local content nowadays is how everybody does business. It is an effective way to leverage the huge spent on procurement and infrastructure. Policies must be designed effectively to prevent corruption, increase supplier-resilience and be in line with international trade agreements. 26 5. GRANT TO EITI INTERNATIONAL SECRETARIAT: DATA PORTAL, MAINSTREAMING, VALIDATION, GLOBAL CONFERENCE With the expansion of information being disclosed through EITI reports and the challenges and opportunities that this is providing for Implementing Countries, the EITI International Secretariat sought financial support in three areas that are central to the future of the initiative: Open Data, EITI Mainstreaming and Validations. In addition, a small amount of funding was provided to allow participation of 20 representatives from implementing countries at the EITI Global Conference in Lima in February 2016. The project was financed from two sources—the EITI MDTF (through closure December 31, 2015) and the EGPS MDTF (from January 1, 2016). The EITI Association contribute to the Project in the form of the EITI staff costs and co-funding of some of the activities, as needed. Implementation period is from October 1, 2015 through December 2016. The following subsections elaborate further on project’s components, their rationale, objectives and results to date. The grant is on schedule and there are no implementation issues. Issues largely relate to EITI as an initiative which is in a critical phase after adoption of Revised EITI Standard 2016 in Lima which has a number of implications to EITI countries that are also our clients. The Finance Committee is developing options for funding of the International Secretariat (for approval at October 2016 Board meeting in Kazakhstan). In the meantime, the EGPS donors requested that there be a clear distinction between International Secretariat core activities and what would be eligible for financing under the EGPS. This grant was intended as a transitional support while future financing model is developed. Data Portal. Access to open data increases awareness about how countries’ natural resources are used, how extractives revenues are spent, and how land is transacted and managed, all of which promotes accountability and good governance, enhances public debate, and helps to combat corruption. While there is a considerable guidance on what to report, the EITI is still developing guidance on how to report the data requirements that are contained in the Standard in an open and accessible format. The EITI Standard includes several provisions that address data accessibility, however, these tend to be addressed at the end of the EITI reporting process, rather than as a key principle underpinning the EITI’s work. The International Secretariat introduced in January 2015, a requirement for implementing countries to submit to the Secretariat a summary data template of the key financial findings of their EITI reports. The template aims to improve the consistency of data across countries by presenting national revenue streams according to a uniform classification and presentation. It also provides a credible basis for comparing EITI data from different EITI Reports. The information contained in these templates is housed on the EITI website managed by the International Secretariat, with links to implementing county EITI homepages for further information and more disaggregated data sets. The data portal developed under this project is enabling this summary and selected contextual information to be accessed and used far more effectively than is currently possible. It should be noted that the development of the data portal is part of a larger attempt to improve the accessibility and usefulness of EITI information. Status: The EITI Data portal work funded under the grant has been successfully completed and the portal is now active and open to public (eiti.org). Data is still being populated into the portal and not all countries have a full set yet, but this will come in time. Mainstreaming. In addition to increasing the openness and accessibility of the data disclosed through the EITI process, the EITI Board and the wider international movement is increasingly focused on the emerging issue of “mainstreaming” the disclosure of EITI information into standard government reporting systems and processes. To date, revenue data from more than 248 fiscal years have become transparent through standalone EITI reports. However, there is a growing consensus among stakeholders that, in the long term, extractive industry transparency should not be confined to the EITI and expensive reconciliation exercises, but become an integral part of how governments manage their sector. Rather than relying on the EITI reporting mechanism to bring about transparency, governments implementing and ‘mainstreaming’ the EITI could, to a greater extent, make the information required by the EITI Standard available through government and corporate reporting systems such as databases, websites, annual reports, and portals. Moving from the disclosure of data through a stand-alone EITI report to government and company would have the added benefit of enabling disclosures to be made closer to real-time, rather than the two-year delay that is typical in most EITI reporting. Mandatory reporting requirements in various jurisdictions and the Dodd-Frank and EU Directive if/when implemented will also increasingly make company figures publicly available. Some companies are also publishing financial data in annual reports; some countries including Timor-Leste have already decided to begin work on mainstreaming their EITI disclosures, and other countries like 27 Norway and Peru have expressed an interest. In some cases such as in Kazakhstan, there are already reporting mechanisms in place that the EITI can build on. In Indonesia such systems exist, but are incomplete and require improvements. Non-reporting related aspects of the EITI, such as oversight by the multi-stakeholder group (MSG) would still be maintained, not least given the important role that the MSG plays in building trust, discussing identified reforms resulting from disclosure of EITI data, and furthering the conversation about transparency and accountability in implementing countries. Over time, EITI reports would focus less on compiling data, and more on summarizing and analyzing data that is already in the public domain. This ‘mainstreaming’ agenda is strongly aligned with the Open Government Partnership (OGP) - an international platform for domestic reformers committed to making their governments more open, accountable, and responsive to citizens. Under the OGP governments commit to increasing the timeliness, availability and accessibility of information and data on government spending, policies and programs. Since its launch in 2011, the OGP has grown to include 66 participating countries and is supported by the World Bank, which has formed an Open Government Global Solutions Group (GSG) to assist client countries in governing in a more open environment The mainstreaming activity funded through this project involved developing and piloting a framework for mapping out and testing alternative ways to disclose data and share information among volunteer implementing countries. Status: Mainstreaming is high on the agenda of most EITI countries and for the initiative as a whole, but there is no clarity on what this means. Pilots are planned under this grant, and they should clarify methodology and options. A pilot in Kazakhstan has already been started. Validation. Validation is an essential feature of the EITI process. It serves to assess performance and promote dialogue and learning at the country level. It also safeguards the integrity of the EITI by holding all EITI implementing countries to the same global Standard. In practice, Validation is an independent and impartial evaluation of whether implementing countries have satisfactorily met all seven requirements of the EITI Standard. In 2013, the EITI International Board shifted the responsibility for procuring and managing all validations from individual implementing countries to the International Secretariat. It was recognized that this approach would improve the consistency and quality control of validation services, streamline the procurement process and alleviate any scope for a perceived conflict of interest. The Board approved in Bern in October 2015, a series of five pilots of an alternative approach to validation that would reduce the cost of the validation process to a more sustainable level and give more recognition to the diversity of implementing countries. Under the revised model, compliance with all seven of the EITI Requirements would remain a core requirement, but in addition, efforts to go beyond the EITI Requirements and the direction of progress towards meeting each of the EITI requirements would be included in the assessment. The Grant provided the International Secretariat with funding to complete the five pilot validations, as well as some of the remaining 32 countries due for validation in 2016/17. Status: The five pilot Validations (including external quality assurance) were completed in January 2016. The following EITI Validation schedule has been confirmed: 1. 15 Validations (Azerbaijan, Ghana, Kyrgyzstan, Liberia, Mali, Mauritania, Mongolia, Niger, Nigeria, Norway, Peru, Sao Tome & Principe, Solomon Islands, Tajikistan and Timor-Leste) will begin on July 1, 2016. 2. Six further Validations will commence on January 1, 2017 (Honduras, Iraq, Mozambique, Philippines, Tanzania and Zambia). 3. The Board will confirm the schedule for the remaining countries at its meeting on 25-26 October in Astana, Kazakhstan. Global Conference. The EITI Articles of Association require that an EITI Conference be held at least every three years in order to provide a forum for EITI stakeholders, to further the objective of the EITI Association and to express their views on the policies and strategies of the EITI Association. It is also the forum in which the EITI Chair and Board are elected and key policy decisions, such as amendments to the Standard, are voted on. Status: The Global Conference component of the project provided funding to enable 20 implementing country representatives to participate at the conference. 28