The World Bank - Mining and Environmental Remediation and Improvement Project (P154683)

REPORT NO.: RES31300 Public Disclosure Authorized

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF ZAMBIA - MINING AND ENVIRONMENTAL REMEDIATION AND IMPROVEMENT PROJECT Public Disclosure Authorized APPROVED ON DECEMBER 16, 2016 TO

THE REPUBLIC OF ZAMBIA Public Disclosure Authorized

ENVIRONMENT & NATURAL RESOURCES

AFRICA

Regional Vice President: Makhtar Diop Country Director: Paul Noumba Um Senior Global Practice Director: Karin Erika Kemper Practice Manager: Magda Lovei

Public Disclosure Authorized Task Team Leader: Abdelaziz Lagnaoui and Javier Aguilar The World Bank Zambia - Mining and Environmental Remediation and Improvement Project (P154683)

ABBREVIATIONS AND ACRONYMS

GRZ Government of Republic of Zambia ICR Implementation Completion Report IDA International Development Association IEG Independent Evaluation Group IPF Investment Project Financing KMC Municipal Council MMMD Ministry of Mines and Mineral Development MOH Ministry of Health MSD Mines Safety Department PAD Project Appraisal Document PCU Project Coordination Unit PDO Project Development Objectives PIU Project Implementation Unit PIM Project Implementation Manual WBG World Bank Group ZEMA Zambia Environmental Management Authority The World Bank Zambia - Mining and Environmental Remediation and Improvement Project (P154683)

BASIC DATA

Product Information

Project ID Financing Instrument P154683 Investment Project Financing

Original EA Category Current EA Category Full Assessment (A) Full Assessment (A)

Approval Date Current Closing Date 16-Dec-2016 30-Jun-2022

Organizations

Borrower Responsible Agency Ministry of Finance, Republic of Zambia Ministry of Mines and Mineral Development

Project Development Objective (PDO) Original PDO To reduce environmental health risks to the local population in critically polluted mining areas in Chingola, Kabwe, and Mufulira municipalities, including lead exposure in Kabwe municipality OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed

IDA-59370 16-Dec-2016 29-May-2017 30-Nov-2017 30-Jun-2022 65.60 4.16 65.13

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)? No

The World Bank Zambia - Mining and Environmental Remediation and Improvement Project (P154683)

I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

A. Project Status 1. The Project is consistent with the long-term development objectives articulated in the National Vision 2030. The project also supports the Government of Republic of Zambia’s (GRZ) Sixth National Development Plan (2013-2016) whose objectives include (a) promoting environmentally friendly technologies for income generation; (b) promoting sustainable land management and facilitating rehabilitation of degraded lands in open areas; (c) improving management of waste, chemicals and effluent; and (d) expanding access to Environmental Health and Food Safety services. Through its implementation structure, the project also builds on the government’s new National Decentralization Policy which aims to empower provinces and districts to manage their own affairs for effective socio- economic development. The GRZ’s Seventh National Development Plan is expected to provide opportunities to integrate and mainstream sustainable development goals in the national development framework. The project preparation and design took into consideration several lessons learned from the Environment Project identified in its Completion and Results Report (ICR) and highlighted in the World Bank’s Independent Evaluation Group (IEG) report.

2. The Project was approved by the Board on December 16, 2016 and Financing Agreement and the Project Agreements were signed on May 29, 2017. However, the project was only declared effective on November 30th, 2017 because of the delays in the signing of the Subsidiary Agreements between the Ministry of Finance and the Kabwe Municipal Council (KMC) and Zambia Environmental Management Agency (ZEMA) respectively. Both KMC and ZEMA suggested changes to the on-lending provisions in the Ministry of Finance’s draft subsidiary agreements, specifically as it related to the IDA financing being passed on to them as a grant. The Project design was premised on the fact that environment and health investments are public goods. They reasoned that although the Project components and flow of funds were designed to allow both ZEMA and KMC to take full ownership and accountability for results on the ground, the assumption was that funds would be given as a grant to the KMC and ZEMA to implement the Government’s agenda. These delays resulted in a loss of a full year of implementation.

3. An implementation support mission conducted in December 12-15, 2017 showed that significant progress has been made since project effectiveness. The detailed 18-month Procurement Plan has been updated and immediate next steps for disbursement has been agreed upon. These include procurement of office equipment and consulting studies for the first infrastructure investments (Kabwe Canal and solid waste management studies). However, despite progress of recruitment of essential project staff, key staff still need to be recruited or seconded to the Project Coordination Unit (PCU) and Project Implementation Units (PIUs) (PCU Director/National Coordinator; PIU Coordinator for MSD; Procurement Specialist; Communication Specialist; Health Specialist and Accountants) for a timely and efficient implementation of project activities. In order to quickly mobilize staff for these positions, the Government of Zambia officially requested to migrate the project to the World Bank’s New Procurement Framework (NPF) to take advantage of the various flexibilities and innovative approach to procurement provided under the NPF and applicable regulations.

B. Rationale for Restructuring 4. The delays in achieving project effectiveness resulted in a loss of one year requiring an acceleration in implementation to achieve project targets. The Government’s decision to reinforce capacity at the Project The World Bank Zambia - Mining and Environmental Remediation and Improvement Project (P154683)

Coordination and Implementation Units will have positive implications on the coordination and execution of the project. The proposed restructuring will ensure that the PCU at the Ministry of Mines and Minerals and the PIU at Mines Safety Department, Kabwe Municipal Council and Zambia Environmental Management Agency will be adequately staffed to execute project activities in a timely and efficient manner. There will be no changes to the project development objectives.

5. The restructuring will enable the Coordination and Implementation Units to receive continued support from qualified staff and government officers to enhance its coordination and implementation capacity, including: (a) Capacity to provide leadership, particularly at decentralized levels; (b) Day-to-day administration and implementation of project activities including environmental and social safeguards and communications; and (c) monitoring and evaluation of project implementation.

II. DESCRIPTION OF PROPOSED CHANGES

C. Change in Procurement 6. The change in procurement arrangements is the only proposed change for this restructuring. This will allow the Project to take advantage of the various flexibilities and innovative approach to procurement provided under the New Procurement Framework (NPF) and applicable regulations.

7. The Government’s decision to reinforce capacity at the Project Coordination and Implementation Units to support and accelerate implementation of project activities will have positive implications on the procurement process. The change in procurement arrangements will consist of migrating the project to the new World Bank Procurement Regulations for IPF Borrowers. The Financing Agreement will be amended to enable migration from the Guidelines “Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by the World Bank’s Borrowers” dated January 2011 to the “Procurement Regulations for Investment Project Financing (IPF) for Borrowers – Goods, Works, Non-Consulting and Consulting Services’ dated July 2016, amended November 2017. This notwithstanding, applicable Government Procurement Rules and Regulations will continue to be in force for procurement activities utilizing project funds subject to any relevant modifications acceptable to the Bank. Procurement details, including appropriate clarity of accountability over procurement, record keeping, and frequency and scope of prior and post review will be detailed in the procurement module in the revised Project Implementation Manual (PIM), and in the procurement plans.

8. Overall, the restructuring will also provide an opportunity to revise the PIM, amend the Financing and Project Agreements and disbursement letter to reflect the changes discussed above.

III. SUMMARY OF CHANGES

Changed Not Changed Change in Procurement ✔ The World Bank Zambia - Mining and Environmental Remediation and Improvement Project (P154683)

Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Results Framework ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in APA Reliance ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔

IV. DETAILED CHANGE(S)