The World Bank Kenya Petroleum Technical Assistance Project (KEPTAP) (P145234) REPORT NO.: RES47269 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF KENYA PETROLEUM TECHNICAL ASSISTANCE PROJECT (KEPTAP) APPROVED ON JULY 24, 2014 TO GOVERNMENT OF KENYA ENERGY & EXTRACTIVES AFRICA EAST Regional Vice President: Hafez M. H. Ghanem Country Director: Keith E. Hansen Regional Director: Demetrios Papathanasiou Practice Manager/Manager: Christopher Gilbert Sheldon Task Team Leader(s): Susana Moreira The World Bank Kenya Petroleum Technical Assistance Project (KEPTAP) (P145234) I. BASIC DATA Product Information Project ID Financing Instrument P145234 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 24-Jul-2014 31-Aug-2021 Organizations Borrower Responsible Agency Government of Kenya MoPM,The National Treasury Project Development Objective (PDO) Original PDO The project development objective (PDO) is to strengthen the capacity of the GoK to manage its petroleum sector and wealth for sustainable development impacts. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-55260 24-Jul-2014 14-Aug-2014 02-Oct-2014 31-Aug-2021 50.00 38.20 7.46 TF-A3418 24-Jul-2014 16-Nov-2016 16-Nov-2016 30-Jun-2021 6.70 6.43 .27 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Kenya Petroleum Technical Assistance Project (KEPTAP) (P145234) II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The Kenya Petroleum Technical Assistance Project (KEPTAP) was approved in August 2014. Due to delays as a result of the Covid-19 crisis, the project was extended for 6 months from February 28, 2021 to August 31, 2021. From a slow start, the project implementation has gained momentum over time, and the disbursement rate has improved steadily, with a projection to near-full absorption by the close of the project. The IDA Credit is 86% (US$ 38.5 million) disbursed- and the Global Affairs Canada (GAC) Grant at 96% (US$6.43 million). The project has supported several institutional reforms such as the: (1) local content policy for the oil & gas sector, (2) gender assessment for the sector, (3) adoption of a transparency and accountability framework and action plan for the petroleum sector, (4) occupational safety health guidelines for the petroleum sector, (5) design of the institutional framework of a petroleum sector regulating agency, (6) LPG study for domestic distribution plan, (7) Geoscience data acquisition, (8) transaction advice for recoverable costs audit, and (9) access to transaction and technical advisors for negotiations with the operator. This restructuring will address a disbursement challenge posed by the current configuration of KEPTAP's disbursement Categories 9 and 10. Currently, category 9 is 88% financed by the Credit and 12 % by the Grant (, while category 10 is 84% financed by Credit and 16% by the Grant. The Credit and the Grant have varied closing dates, which presents a risk of undocumented expenditures at project closure if activities under the two categories are not completed and paid for within the Grant’s timelines. The Grant funds has US$0.268 million currently available () which is not sufficient to cover the 12% assignable to the Grant under Category 9, which amounts to US$0.924 million. KEPTAP is not co- financed by the Government of Kenya and therefore has no budget allocation to cater for any shortfalls. In order to address these two issues, a a restructuring is proposed allow for the: i) reconfiguration of Category 9 to 100% Credit, and ii) the reconfiguration of Category 10 to 100% Grant. There are no outstanding audits on the project. The project’s financial management and procurement ratings are satisfactory. KEPTAP’s overall safeguards rating and the environmental assessment have been upgraded to moderately satisfactory, in view of the completion of some of the recommendations in the Strategic Environmental and Social Assessment (SESA). III. DETAILED CHANGES REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Current Actuals + Proposed Disbursement % Ln/Cr/TF Expenditure Allocation Committed Allocation (Type Total) Category Current Proposed IDA-55260- Gds,NonCS,CS,Tr 001 g,OC PT A1- 13,391,372.00 13,390,128.26 13,391,372.00 100.00 100.00 Currency: 5,B2A,D The World Bank Kenya Petroleum Technical Assistance Project (KEPTAP) (P145234) XDR GD,NCS,CS,TR,O 2,550,563.00 2,478,223.50 2,478,224.00 84.00 0 C PtA4 Gds,NonCS,CS,Tr g,OC PT 1,649,263.00 1,649,262.33 1,649,263.00 100.00 100.00 B1,B2b,B3 TR Gds,NonCS,CS,Tr g,OC PT C1&2 342,628.00 342,627.64 342,628.00 100.00 100.00 MoIED PPF 0.00 0.00 0.00 0 REFINANCING GD,NCS,CS,TR & 0.00 0.00 0.00 0.00 0.00 OC Pt A1b MEP GD,NCS,CS,TR & 593,217.00 593,216.86 593,217.00 31.00 31.00 OC Pt A3c MEP GD,NCS,CS,TR & 0.00 0.00 0.00 0.00 0.00 OC Pt C1 MoIED GD,NCS,CS,TRg, 5,080,342.00 4,974,669.41 5,080,342.00 100.00 100.00 OC Pt A2 A5 D GD,NCS,CS,Trg, 8,892,615.00 2,226,708.03 8,964,954.00 88.00 100 OC A1 Total 32,500,000.00 25,654,836.03 32,500,000.00 TF-A3418- GD,NCS,CS,TR,O 1,230,000.00 543,158.34 1,332,922.00 16.00 100 001 C PT4 Currency: GD,NCS,CS,TR & USD 584,146.00 584,145.33 584,146.00 100.00 100.00 OC Pt A1b MEP GD,NCS,CS,TR & 1,979,481.00 1,979,480.98 1,979,481.00 69.00 69.00 OC Pt A3c MEP GD,NCS,CS,TR & 547,220.00 547,219.68 547,220.00 100.00 100.00 OC Pt C1 MoIED GD,NCS,CS,TEG, 1,132,386.00 1,070,229.86 1,132,386.00 100.00 100.00 OC Pt C1 GD,NCS,CS,TRG, 1,226,374.00 814,995.83 1,123,452.00 12.00 0 OC Pt A1 and A3 Total 6,699,607.00 5,539,230.02 6,699,607.00