Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: RES9930

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF THE

REGIONAL - GOVERNANCE AND KNOWLEDGE GENERATION PROJECT

FUNDED BY

THE GLOBAL ENVIRONMENT FACILITY GRANT

IN THE AMOUNT OF US$3.0 MILLION

November 29, 2011

TO

PLAN BLEU POUR L'ENVIRONNEMENT ET LE DEVELOPPEMENT ENMEDITERRANEE

FOR THE BENEFIT OF

THE ARAB REPUBLIC OF EGYPT, THE REPUBLIC OF LEBANON, THEKINGDOM OF MOROCCO, THE REPUBLIC OF TUNISIA, AND WEST BANK

AND GAZA

March 25, 2013

Sustainable Development DepartmentMiddle East and North Africa Region

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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FISCAL YEARJanuary 1 - December 31

ABBREVIATIONS AND ACRONYMS

AWI Arab World InitiativeBB Bank BudgetCEA Country Environmental AnalysisCMI Marseille Center for Mediterranean IntegrationCPS Country Partnership StrategyCOED Cost of Environmental DegradationEC European CommissionEIA Environmental Impact AssessmentEIB European Investment BankEMS Environmental Management SystemEU European UnionFSP Financial Statement of the ProjectFY Fiscal YearGDLN Global Development Learning NetworkGDP Gross Domestic ProductGEF Global Environment FacilityIBRD International Bank for Reconstruction and DevelopmentICB International Competitive BiddingICZM Integrated Coastal Zone ManagementIDA International Development AssociationIFI International Financial InstitutionIGO Inter-Governmental OrganizationISP Implementation Support PlanIUFR Interim Unaudited Financial ReportIWRM Integrated Water Resources ManagementMAP Mediterranean Action PlanMBI Market-based InstrumentMCSD Mediterranean Commission for Sustainable DevelopmentM&E Monitoring and EvaluationMENA Middle East and North AfricaMETAP Mediterranean Environmental Technical Assistance ProgramMIS Management Information SystemMSSD Mediterranean Strategy for Sustainable DevelopmentNAP National Action PlanNEAP National Environmental Action PlanNGO Non-Governmental OrganizationOP/BP Operational Policy/Bank ProcedureORAF Operational Risk Assessment FrameworkPAD Project Appraisal DocumentPDO Project Development Objective

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PIM Project Implementation ManualPMT Project Management TeamPRSP Poverty Reduction Strategy PaperRAC Regional Activity CenterSAP Strategic Action ProgramSME Small and Medium EnterprisesSOE Statement of ExpendituresUfM Union for the MediterraneanUNEP United Nations Environment Program

Regional Vice President: Inger AndersenRegional Programs Director: Jonathan D. Walters

Sector Director: Junaid Kamal AhmadSector Manager: Lia Sieghart (acting)

Task Team Leader: Nathalie E. Abu-Ata

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REGIONALGOVERNANCE AND KNOWLEDGE GENERATION PROJECT

CONTENTS

PageA. SUM M ARY ........................................................................................................ 7B. PROJECT STATUS ............................................................................................. 8C. PROPOSED CHANGES ...................................................................................... 9ANNEX 1: RESULTS FRAMEWORK AND MONITORING............................... 12

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DATA SHEETRegional

Governance and Knowledge generation (Pl18145)MNSEN

Basic InformationProject ID: P118145 Lending Instrument: Specific Investment LoanRegional Vice President: Inger Andersen Original EA Category: Not Required (C)Country Director: Jonathan D. Walters Current EA Category: Not Required (C)Sector Director: Junaid Kamal Ahmad Original Approval Date: 29-Nov-2011Sector Manager: Lia Carol Sieghart Current Closing Date: 30-Jun-2015Team Leader: Nathalie E. Abu-Ata Report No: RES9930

Plan Bleu pour l'Environnement et le DSveloppement en MIditerranntRecipient: 15, rue Beethoven - Sophia Antipolis, 06560 Valbonne, France

Tel : (+33) (0)4 92 38 71 30, Fax: (±33) (0)4 92 38 71 31 - planbleu@planbleu.orgPlan Bleu pour l'Environnement et le D6veloppement en M6diterran6e

ipeentin: 15, rue Beethoven - Sophia Antipolis, 06560 Valbonne, FranceTel : (+33) (0)4 92 38 71 30, Fax: (+33) (0)4 92 38 71 31 - planbleu@planbleu.org

Restructuring TypeForm Type: Short Form Approval Authority: Regional Vice President ApprovalRestructuring Level: Level 2 Explanation of According to MNA Guidance Note on Project

Approval Authority: Restructuring, Level 1 restructuring appliesonly when there are changes to the PDO orchanges in the safeguards category or triggeringof a new safeguard policy. The purpose of thissubmission is to add new Beneficiaries to theProject. There are no changes to the PDO nor tothe safeguards category or policy (this is acategory C project). Therefore, a level 2restructuring applies to this submission.However, the approval of the Board ofExecutive Directors is sought per the request ofthe Board that any potential Beneficiary requiretheir approval as indicated in the Memorandumand Recommendation of the President and itsCorrigendum dated November 28, 2011.Therefore, this also qualifies for a level 1restructuring and the restructuring package issubmitted to MNAVP clearance and then to theBoard for approval on a no-objection basis.

Financing ( as of 12-Mar-2013)Key Dates

I Effectiveness Original RevisedProject Ln/Cr/TF Status Approval Date Signing Date Date Osing D eCls eDate Closing Date Closing DateP118145 TF-11513 Effective 24-Jan-2012 24-Jan-2012 29-Mar-2012 30-Jun-2015 30-Jun-2015Disbursements (in Millions)

Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed Undisburs %ed Disbursed

P118145 TF-11513 Effective USD 3.00 3.00 0.00 0.37 2.63 12.26

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A. Summary of Proposed ChangesThe proposed restructuring includes: (i) the addition of West Bank and Gaza and the Arab Republic ofEgypt as Beneficiaries to the Regional - Governance and Knowledge generation Project, and (2) a re-allocation of proceeds. The approval of the Board of Executive Directors is sought per the request of theBoard that any potential Beneficiary require their approval as indicated in the Memorandum andRecommendation of the President (MOP) and its Corrigendum, dated 28 November, 2011. The addition ofWest Bank and Gaza and the Arab Republic of Egypt as Beneficiaries will not require any modification tothe Grant Agreement since the addition of new Beneficiaries during project implementation is reflected inthe Grant Agreement.

B. Project StatusThe current rating of the project is satisfactory for the Development Objective (DO) and moderatelysatisfactory for the Implementation performance (IP), based on the last ISR. In spite of the early stages ofproject implementation, this rating acknowledges the preparation by the Recipient of a detailed annual workplan and a procurement plan found acceptable by the Bank (see attachments for details). The project is alsocompliant with all fiduciary requirements. In spite of a three-month effectiveness delay, the project'soverall progress is considered satisfactory in view of the number of national and regional activities whichhave been initiated and notwithstanding the prevailing unstable situation in the region.

The objective of the project continues to be achievable, project implementation is satisfactory and there areno pending audits. The Implementing Agency has prepared a detailed programmatic framework, a specificannual work plan and procurement plan acceptable to the Bank to complete the project.

C. Proposed Changes

FinancingReallocationsExplanationReallocation of proceeds: Proceeds for GEF Trust Fund Grant TFO1 1513 will be reallocated as follows. Thereallocation accounts for an increase of Category 2 from 8% to 10% in order to defray incrementaloperating costs for the PMT associated with the addition of two new Beneficiaries and therefore to fulfillthe project development objectives in a timely manner. This is in response to a letter (attached) from theProject Implementing Agency, dated February 14, 2013, whereby the Agency is requesting a reallocation ofthe subject Grant proceeds among disbursement categories as a result of the addition of two newBeneficiaries.

Current Category of AllocationExpenditure Current ProposedGO,NON

TF-1 1513 USD CS,CS,TR,STUDIES - 2,760,000.00 2,700,000.00PARTS 1,2IOC, AUDITS - PART 3 240,000.00 300,000.00

Sub Total: 3,000,000.00 3,000,000.00Total: 3,000,000.00 3,000,000.00

6

REGIONAL - GOVERNANCE AND KNOWLEDGE GENERATION PROJECT

RESTRUCTURING PAPER

A. SUMMARY

1. This restructuring paper seeks the approval of the Board of Executive Directors torestructure the Regional Governance and Knowledge generation project. Therestructuring includes: (i) the addition of West Bank and Gaza and the Arab Republic ofEgypt as Beneficiaries to the Regional - Governance and Knowledge generation Projectand (2) a re-allocation of proceeds. The approval of the Board of Executive Directors issought per the request of the Board that any potential Beneficiary require their approvalas indicated in the Memorandum and Recommendation of the President (MOP) and itsCorrigendum, dated 28 November, 20111. However, the addition of West Bank and Gazaand the Arab Republic of Egypt as Beneficiaries will not require any modification to theGrant Agreement since the addition of new Beneficiaries during project implementationis reflected in the Grant Agreement. This request is also in response to a letter received(attached) from the Project Implementing Agency, dated February 14, 2013, whereby theAgency is requesting a reallocation of the subject Grant proceeds among disbursementcategories as a result of the addition of two new Beneficiaries. The restructuringinvolves also the addition of new representatives to the Project Steering Committee and aforeseeable adjustment in the geographical scope of remaining project activities.

2. The GEF Trust Fund Grant in the amount of US$3.0 million for the RegionalGovernance and Knowledge generation Project was approved by the Board of ExecutiveDirectors on November 29, 2011 with the Republic of Lebanon, the Kingdom ofMorocco, and the Republic of Tunisia as Beneficiaries. The GEF Trust Fund GrantAgreement was signed with the Plan Bleu pour l'Environnement et le D6veloppement enM6diterran6e ("Plan Bleu") on January 24, 2012. Plan Bleu is the Recipient of the Grantand the implementing agency. The West Bank and Gaza and the Arab Republic of Egypthave expressed interest in joining the Governance and Knowledge generation Project asBeneficiaries. A letter of endorsement expressing the interest and commitment for theProject has been submitted by the Palestinian Environmental Quality Authority to theWorld Bank dated February 26, 2012. Similarly, a letter of endorsement expressing theinterest and commitment for the Project has been submitted by the EgyptianEnvironmental Affairs Agency (EEAA) to the World Bank dated October 10, 2012. Theno-objection from the Egyptian Ministry of Planning and International Cooperation wasissued on January 28, 2013. Effectiveness of the project was declared on March 29, 2012and the Project is supervised by the World Bank.

3. The Project is composed of three components: Component 1 -- Governance aims topromote dialogue, coordination, integration, and synergy among local, national, andregional stakeholders on environmental issues. It will provide Training to the relevantstakeholders and carrying out of Studies for: (i) the review of the environmental

1 Lebanon, Morocco, and Tunisia already benefit from the Project. To benefit from the Project, additionalcountries would express their interest through Endorsement Letters and, upon assessment of theirconsistency with the Project's objectives, the recommendation about these countries' participation wouldbe submitted for the Board approval.

7

management systems of the Beneficiaries; (ii) the review of the environmental issues atthe sectoral and macroeconomic levels of the Beneficiaries; (iii) the promotion of privatesector participation in environmental management; (iv) the involvement of localstakeholders in the environmental dialogue in the Beneficiaries; and (v) the regionalenvironmental integration. Component 2 -- Knowledge generation aims to produceinnovative knowledge on environmental issues. It will provide Training to the relevantstakeholders and carrying out of Studies for: (i) the preparation of knowledge productsfor the Beneficiaries on the various aspects of environmental vulnerability pertaining tothe most relevant economic sectors and most critical locations at local, national andregional levels; and (ii) the dissemination activities for the Beneficiaries for theknowledge products produced, and the establishment of Project website. Component 3 --Project Coordination and Management will support the implementation of the Project byPlan Bleu, through the financing of Incremental Operating Costs associated with Projectcoordination and management and the carrying out of the audits for the Project.

4. This is the first restructuring of the Project.

B. PROJECT STATUS

5. Following the official launch of the GEF Project and the first Project SteeringCommittee meeting, held on January 24-25, 2012, an annual work plan was prepared byPlan Bleu with a proposed list of activities. In addition, upon the request of theBeneficiaries, an overall programmatic framework for the Project was prepared by PlanBleu and subsequently validated by the Beneficiaries. A series of four work axis havebeen identified and a cross-cutting principle of action around the green economy has beenalso approved. The procurement plan for the Project activities agreed to date wassubsequently developed by Plan Bleu.

6. With regards to disbursement, the rate of disbursement has been slow. The slowpace of disbursement is due to the effectiveness delays as the Project was declaredeffective March 29, 2012 and to the preparation, discussion and validation of the overallprogrammatic framework finalized on May 3, 2012 and the related procurement planningprocess as activities to be financed under the grant are proposed, discussed and jointlyvalidated by the Beneficiaries. However, a number of project activities have beeninitiated with TORs prepared by Plan Bleu and validated by the World Bank. A workingsession on green growth with the Beneficiaries and other stakeholders was organizedback-to-back with the May 23-24, 2012 conference on green growth held in Marseille.The purpose was to discuss implications for country and regional level actions on thetheme of green growth for the Beneficiaries of the project. The last Project SteeringCommittee Meeting was held on January 15-16, 2013.

7. There are no outstanding issues to date with regards to audits and the currentrating of the project is satisfactory for the Development Objective (DO) and moderatelysatisfactory for the Implementation performance (IP), based on the last ImplementationStatus Report (ISR) and delays incurred in procurement planning. The project is alsocompliant with all fiduciary requirements.

8

C. PROPOSED CHANGES

8. The restructuring entails the addition of West Bank and Gaza and of the ArabRepublic of Egypt as project Beneficiaries. This restructuring is in response to a requestreceived from the Palestinian Environment Quality Authority in the form of anendorsement letter for the Project, dated February 26, 2012 (attached) as well as from theEgyptian Environmental Affairs Agency (EEAA) in the form of an endorsement letter,dated October 10, 2012 (attached) and from the Egyptian Ministry of Planning andInternational Cooperation dated January 28, 2013 (letter attached). The restructuring willinclude the following changes as described below.

9. The addition of West Bank and Gaza and of the Arab Republic of Egypt to theProject will have no impact on the PDO. There are no proposed changes to the PDOwhich will remain as originally stated i.e. "to foster the integration of environmentalissues into sectoral and development policies of the Beneficiaries, through the productionof innovative knowledge on environmental issues, with specific reference to water relatedtopics (freshwater, coastal, and marine resources), and the organization of Trainings2during which this knowledge will be used to strengthen the capacity of key stakeholdersat a local, national, and regional level". However, the Project's mid-term review will bean occasion to evaluate the Project's overall advancement and, in particular, to discussthe Project Development Objective and the progress toward its achievement.

10. With regards to Egypt and the new political context, the PDO (and theprogrammatic framework of the project which was subsequently developed and includes"participation" of local stakeholders in the environmental dialogue as a key focus) isaligned with the pillars of the World Bank Interim Strategy Note (ISN) for the ArabRepublic of Egypt approved in 2012. This is in particular relevant for the third pillar ofthe ISN "fostering inclusion" and "enhancing citizen and community participation in thedesign, implementation and monitoring of Government operations" in a range of sectors.Dialogues held within the context of the Project such as on participatory environmentalmanagement will feed into the sectoral policy dialogues identified as priorities by theGovernment of Egypt in the ISN. In turn, the policy dialogue intended to improve userparticipation, sector governance, transparency and social accountability stressed in theISN will provide the enabling and supportive environment for exchanges and debates aspart of the Project.

11. Similarly, for West Bank and Gaza, the PDO is aligned with the pillars andoutcomes of the World Bank Interim Strategy Note (ISN) 2012-2014 for West Bank andGaza approved in 2012. In particular, the Project will come in support of the PalestinianAuthority development goals to protect the environment (outcome 2.3 of the ISN). Inaddition, as the Project constitutes the "backbone" of the Sustainable Med Programcomposed of a blend of investment lending, policy dialogue and technical assistanceprojects, linkages with on-going projects in the environment and water sectors in theArab Republic of Egypt and West Bank and Gaza will continue to be sought.

2 Workshops, seminars, meetings, and conferences.

9

12. At a regional level, the addition of new Beneficiaries will reinforce the capacity ofkey actors to build a "coalition" and a shared vision to influence decision makers forgreater environmental protection. The addition of new Beneficiaries is consistent with theoverall objectives of the Project and its regional and governance dimension. It willcontribute to making regional analysis more comprehensive and facilitate the formulationof harmonized policy options at a regional level and the sharing of experiences at sub-regional and regional levels.

13. The addition of another two Beneficiaries will have no impact as well on the workand implementation arrangement of Plan Bleu (the implementing agency) as the projectactivities have consistently been discussed and decided collectively during ProjectSteering Committee meetings. The same criteria of eligibility and procedures for the useof the project funds will apply to any new Beneficiary.

14. Reallocation of proceeds: Proceeds for GEF Trust Fund Grant TFO 11513 will bereallocated as follows. The reallocation accounts for an increase of Category 2 from 8%to 10% in order to defray incremental operating costs for the PMT associated with theaddition of two new Beneficiaries and therefore to fulfill the project developmentobjectives in a timely manner. This is in response to a letter (attached) from the ProjectImplementing Agency, dated February 14, 2013, whereby the Agency is requesting areallocation of the subject Grant proceeds among disbursement categories as a result ofthe addition of two new Beneficiaries.

Category Amount of the Proposed Percentage ofGrant Allocated Reallocation (USD Expenditures to be

(expressed in million) Financed (inclusiveUSD) of Taxes)

(1) Goods, non- 2,760,000 2,700,000 100%consulting services,

consultants' services,Trainings and Studiesunder Parts 1 and 2 of

the Project(2) Incremental 240,000 300,000 100%

Operating Costs andaudits under Part 3 of

the ProjectTOTAL AMOUNT 3,000,000 3,000,000

15. Institutional arrangements: The restructuring will only involve minor changesto the institutional arrangements, i.e. the addition of a new representative to the projectsteering committee, and potential new project activities (i.e. Trainings and Studies) forWest Bank and Gaza and for the Arab Republic of Egypt.

16. First, the only change in the institutional arrangements for the project is thedesignation of one each representative from the environment sector of West Bank andGaza and of the Arab Republic of Egypt to participate in meetings of the Project SteeringCommittee. The representatives will be invited to attend each Project Steering CommitteeMeeting with full membership entitlements. The Project Implementation Manual will be

10

revised to reflect the addition of West Bank and Gaza and of the Arab Republic of Egyptas Beneficiaries to the Project.

17. Second, with the addition of West Bank and Gaza and the Arab Republic ofEgypt, it is expected that specific national activities for West Bank and Gaza and for theArab Republic of Egypt will be financed under the GEF proceeds. To date, only a portionof the project funds have been committed for specific country or national level activities.However, this will not lead to a change in the results indicators because there will not bean increase in the number of country specific activities but rather a modification in thegeographical scope of activities covering a wider spectrum of countries including WestBank and Gaza and the Arab Republic of Egypt.

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REGIONAL - GOVERNANCE AND KNOWLEDGE GENERATION PROJECTResults Framework

Project Development Objective (PDO): To foster the integration of environmental issues into sectoral and development policies of the Beneficiaries, through the production of innovativeknowledge on environmental issues, with specific reference to water related topics (freshwater, coastal, and marine resources), and the organization of Trainings during which this knowledge willbe used to strengthen the capacity of key stakeholders at a local, national, and regional level.

PDO D=Dropped Cumulative Target Values ResponsibilityLevel C=Continue Unit of Frequency Data Source! for Data Description

Results N= New Measure YR 1 YR 2 YR3 Methodology CollectionIndicators R=Revised

The evaluationsheet will bedeveloped in the

Effectivene PIM anddistributed to the

ssanof sBeneficiaries.

and Studies Trainings include

for the workshops,

Evaluation seminars,policy H Percentage 0 50% 65% 80% Quarterly sheets PMT meetings, andmaking asPMhmeeng,sn

C conferences.process as Studies includeassessed by

reports, reviews,the and analyses; they

Beneficiari do not include

es minutes,proceeding, notes,newsletters, andwebpages.

Intermediate Result (Component 1): Governance

Trainingsin Trainings includeltargieting

workshops,stakeholders C Cumulative 0 1 3 7 Quarterly Minutes PMT seminars,from the no. Proceedings meetings, andMinistry of

conferences.Environment

Trainings includeworkshops,seminars,

Tra g C meetings, andtaraings conferences. They

lta der Cumulative Minutes can be bothstakho der Catulat0 1 2 4 Quarterly M in s PMT bilateral ands from at no. Proceedings multilateral.least twomutler.leastr tw Stakeholders fromMinistries

the Ministry ofEnvironmentshould be alwaysrepresented.

Trainings Trainings includeworkshops,

private C Cumulative no. 0 1 2 3 Quarterly Minutes PMT seminars,sector meetings, and

participatio conferences.n

Trainings includeg at workshops,

Tranungs at CCumulative 0 2 6 10 Quarterly Minutes PMT seminars,local level no. meetings, and

conferences.Trainings includeworkshops,seminars,

Trainings at Cumulativemeetings, andregional Cumlaiv 0 2 4 6 Quarterly Proceedings PMT conferences.level C Regional trainings

should be joint byat least two of theBeneficiaries.

Intermediate Result (Component 2): Knowledge generationStudies includereports, reviews,

C and analyses; theyStudies Cumulative do not include

comletd Hno0 1 5 8 Quarterly PMT mntscompleted no. minutes,proceeding, notes,newsletters, andwebpages.During Projectimplementation, it

C will be decided ifthe website will be

Hits to the C Website created ad hoc forProject C ut 0 1,000 5,000 10,000 Quarterly automatic PMT the Project, or bewebsite no. monitoring hosted in Plan Bleu

website, CMIwebsite, orSustainable MEDwebsites.

13