The World Bankdocuments.worldbank.org/curated/en/766611468132265990/pdf/RES... · The World Bank . FOR OFFICIAL USE ONLY ... Paloma Anos Casero Current Closing ... components to ensure

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: RES13294

INTERNATIONAL DEVELOPMENT ASSOCIATION

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING OF

PRIVATE SECTOR COMPETITIVENESS PROJECT GRANT

10-MAY-2012

TO THE

REPUBLIC OF TAJIKISTAN

JULY 25, 2014

TRADE AND COMPETITIVENESS GLOBAL PRACTICE EUROPE & CENTRAL ASIA

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

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Regional Vice President: Laura Tuck Country Director: Saroj Kumar Jha

Senior Global Practice Director Anabel Gonzalez Practice Manager: Paloma Anos Casero

Task Team Leader: Qahir Dhanani

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TAJIKISTAN

Private Sector Competitiveness Project

CONTENTS

DATA SHEET ............................................................................................................................... 4 ANNEX 1: RESULT FRAMEWORK ...................................................................................... 11 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) ................... 21 ANNEX 3: SUMMARY OF CHANGE AT SUB-COMPONENT LEVEL ............................. 29

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DATA SHEET

Tajikistan

Private Sector Competitiveness (P130091) EUROPE AND CENTRAL ASIA

ECCU8 .

Report No: RES13294 .

Basic Information

Project ID: P130091 Lending Instrument: Specific Investment Loan

Regional Vice President: Laura Tuck Original EA Category: Partial Assessment (B)

Country Director: Saroj Kumar Jha Current EA Category: Partial Assessment (B)

Senior Global Practice Director:

Anabel Gonzalez Original Approval Date: 10-May-2012

Practice Manager/Manager:

Paloma Anos Casero Current Closing Date: 31-Dec-2016

Team Leader: Qahir Dhanani .

Borrower: Republic of Tajikistan

Responsible Agency: .

Restructuring Type

Form Type: Full Restructuring Paper Decision Authority: Board Approval

Restructuring Level:

Level 1

.

Financing ( as of 18-Jul-2014 )

Key Dates

Project Ln/Cr/TF Status Approval Date

Signing Date Effectiveness Date

Original Closing Date

Revised Closing Date

P130091 IDA-H7710 Effective 10-May-2012 08-Jun-2012 06-Sep-2012 31-Dec-2016 31-Dec-2016

Disbursements (in Millions)

Project Ln/Cr/TF Status Currency Original Revised Cancelled

Disbursed

Undisbursed

% Disbursed

P130091 IDA-H7710 Effective XDR 6.50 6.50 0.00 0.65 5.85 10 .

Policy Waivers

Does the project depart from the CAS in content or in other significant respects?

Yes [ ] No [ X ]

Does the project require any policy waiver(s)? Yes [ ] No [ X ]

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.

A. Summary of Proposed Changes

The proposed restructuring would entail a re-focusing of the project on a set of core enablers for competitiveness, such as institutional capacity building, which are necessary building blocks for a well-functioning private sector. Since the Financing Agreement for the project was signed on June 8, 2012, numerous factors have hindered project implementation resulting in no contracts being signed for the first two years of implementation. These challenges stem mainly from issues related to (1) a project design with 10 complex sub-components aiming to deliver a particularly ambitious set of project objectives; (2) challenges faced by both the Project Management Unit (PMU) and the Project Team associated with coordinating the activities and institutional reform of the 12 government agencies involved in the project; (3) a protracted period taken to meet effectiveness conditions; and, (4) difficulties related to fully staffing the PMU and turnover in both the PMU and WB teams. Given the foregoing three major issues, the Project Development Objective is not achievable in its current form at present. In this context, the proposed restructuring builds upon the Government’s request and aims to re-focus the project to achieve a more modest, but feasible set of results. The proposed changes include a revised, simplified and more modest PDO and modifications to the activities, results indicators, and budget reallocations in 7 of sub-components to ensure they are focused on the most critical issues faced in relation to the country's private sector.

Change in Implementing Agency Yes [ ] No [ X ]

Change in Project's Development Objectives Yes [ X ] No [ ]

Change in Results Framework Yes [ X ] No [ ]

Change in Safeguard Policies Triggered Yes [ ] No [ X ]

Change of EA category Yes [ ] No [ X ]

Other Changes to Safeguards Yes [ ] No [ X ]

Change in Legal Covenants Yes [ ] No [ X ]

Change in Loan Closing Date(s) Yes [ X ] No [ ]

Cancellations Proposed Yes [ ] No [ X ]

Change to Financing Plan Yes [ ] No [ X ]

Change in Disbursement Arrangements Yes [ ] No [ X ]

Reallocation between Disbursement Categories Yes [ X ] No [ ]

Change in Disbursement Estimates Yes [ X ] No [ ]

Change to Components and Cost Yes [ X ] No [ ]

Change in Institutional Arrangements Yes [ ] No [ X ]

Change in Financial Management Yes [ ] No [ X ]

Change in Procurement Yes [ ] No [ X ]

Change in Implementation Schedule Yes [ X ] No [ ]

Other Change(s) Yes [ X ] No [ ]

Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ]

Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ]

Appraisal Summary Change in Social Analysis Yes [ ] No [ X ]

Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ]

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Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] .

B. Project Status

The project is currently rated "Moderately Unsatisfactory" in relation to both the development objective and implementation progress. This downgrade was processed in December 2013 owing to the fact that no contracts had been signed since effectiveness. Three areas are of specific concern in relation to the implementation of the project. First, until recently, the PMU, established within the State Committee on Investments and State Property Management (SCISPM or Goskom Invest), was unable to allocate adequate human resources to the project. No full-time staff at SCISPM have been dedicated to the project, staff allocated to the project are generally over-worked with multiple concurrent responsibilities, and no Procurement Specialist was in place until February 2014. Furthermore, due to lengthy inter-governmental procedures, the process for coordinating multiple agencies resulted in substantial delays and poor processing of TORs, REIs and other essential documents. Prior to the last mission in February 2014, new leadership at SCISPM made a renewed commitment to the project and actively supports the Project Restructuring plan to ensure the project gets back on track. All vacant positions at the PMU have also been filled as of April 2014. Second, the project’s original design included a wide-ranging program on construction permits and inspections, with particular emphasis on activities in the City of Dushanbe. Substantial dialogue with counterparts in the City has resulted in a consensus view on the future (reduced) scope of this component focusing support on the most critical needs. Dialogue with the National level Construction Committee has also demonstrated significant needs for institutional strengthening, which will be addressed. Third, the project aims to assist in the implementation of a One Stop Shop (OSS) for Business Registration. To this effect, the three parties to this sub-component, namely the Tax Committee, the State Social Insurance and Pensions Agency, and the Statistics Agency were not aligned in terms of their approach and commitment to the substance and implementation of the sub-component. They have subsequently agreed to work together, though this remains a risk. It should be noted that the Component on the Mining Industry has progressed well, though no contracts have yet been signed. .

C. Proposed Changes .

Development Objectives/Results

Project Development Objectives

Original PDO

The development objective of the project is to remove key constraints to business development and investment by: (i) simplifying business registration and construction permitting processes; (ii) improving regulations and infrastructure underlying access to financial services; and (iii) encouraging development of the mining industry, where Tajikistan has a competitive advantage.

Change in Project's Development Objectives

Explanation

The PDO as originally formulated was particularly ambitious given the budgets, timeframes and complexity of needs of the project and its related agencies. Dialogue with counterparts since project effectiveness has shown that delivering against the originally stated PDO would not be possible as significant institutional strengthening and capacity building is required of the various agencies. As such,

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"removing key constraints" was noted as a particularly ambitious objective, which would not be possible unless a number of prerequisites are in place. The new PDO's aim to "foster increased efficiency" refers to the prerequisite needs for institutional strengthening. Given the reduced scope in construction permitting processes, this reference has been dropped from the PDO, though substantial institutional strengthening and transparency are planned as evidenced by the intermediate objectives.

Proposed New PDO

The development objective of the project is to foster increased efficiency in key areas that influence private sector competitiveness, including business registration, infrastructure underlying access to financial services, and the mining industry.

Change in Results Framework

Explanation:

As the revised PDO aims to be more pragmatic, the results framework has been updated to ensure the appropriate results are being measured and reported on. New PDO-indicators and related intermediate indicators have been agreed upon. Going forward, the project will have 5 PDO-level indicators and 7 intermediate results indicators. .

Financing

Change in Loan Closing Date(s)

Explanation:

Since signing of the Financing Agreement in June 2012, almost two years have elapsed with no real activity occurring on the ground. An extension of 9 months will provide an opportunity for the project to complete all planned activities, albeit with an accelerated time-line. There are currently no unsatisfactory or outstanding audit reports and the next audit (Block Audit) will commence shortly.

Ln/Cr/TF

Status Original Closing Date

Current Closing Date

Proposed Closing Date

Previous Closing Date(s)

IDA-H7710

Effective 31-Dec-2016 31-Dec-2016 30-Sep-2017 31-Dec-2016

Reallocations

Explanation:

Revision to the project scope, as noted below, and in the PDO require revision of funding allocations between the Components. Allocations to the 3 existing Categories of Expenditure have been reduced to zero. Five new categories representing the components (per their redefinition) have been added with funds allocated accordingly.

Ln/Cr/TF Currency Current Category of Expenditure

Allocation Disbursement % (Type Total)

Current Proposed Current Proposed

IDA-H7710 XDR G, non CS, CS, TR - PART 1

4,110,000.00

0.00 100.00 0.00

G, non CS, CS, TR - PART 2

2,000,000.00

0.00 100.00 0.00

G, non CS, CS, TR, IOC - PART 3

390,000.00 0.00 100.00 0.00

Designated Account 0.00 0.00 0.00 0.00

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0.00 2,200,000.0

0 0.00 100.00


0.00 550,000.00 0.00 100.00


0.00 400,000.00 0.00 100.00


0.00 2,930,000.0

0 0.00 100.00

G, non CS, CS, TR, IOC - PART 5

0.00 420,000.00 0.00 100.00

Total: 6,500,000.0

0 6,500,000.0

0

Disbursement Estimates

Change in Disbursement Estimates

Explanation:

With the exception of an initial disbursement to the designated account, there have been no disbursements to date. Delays in the project implementation require revisions to the disbursement estimates.

Fiscal Year Current (USD) Proposed (USD)

2013 1,000,000.00 750,000.00

2014 2,000,000.00 64,821.50

2015 3,000,000.00 2,685,178.50

2016 3,000,000.00 4,200,000.00

2017 1,000,000.00 2,300,000.00

Total 10,000,000.00 10,000,000.00 .

Components

Change to Components and Cost

Explanation:

It is proposed to change the project structure from 3 main components to 5 main components. While this may suggest an increase in complexity, it does not result in any additional activities, but rather disaggregates a “catch-all” Component 1 into 3 technically independent, internally consistent, and focused components, each carrying the same level of importance. There are two main reasons for this proposed restructuring approach. First, at present, Component 1 involves activities as diverse as banking supervision and construction permits, which lacks technical focus and does not lend the component, in its current form, to correspond with a clear results chain. Disaggregation of the component into three independent and technically consistent components (Components 2, 3, and 4 below), allows for each component to be addressed as a standalone activity with its own results indicators and theory of change. Second, a disaggregation of this component will allow future dialogue on implementation to focus on all three areas, thereby raising them to the same level of importance and underscoring their relative independence from the other components. The revisions to the components and sub-components noted have been made for four principal reasons: (1) to enhance implementation arrangements; (2) to reduce complexity within each component; (3) to focus on

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the prerequisites for ensuring long-term development and improvement in each component's technical area; and, (4) to reflect current budget requirements for procurement of consultants, goods and services. The scope of each of the re-designated components has also been narrowed to focus on critical prerequisites and capacity building issues necessary to achieve institutional and policy change. Attempts to make progress on a number of the subcomponents as currently defined were hindered by a lack of capacity in some of the agencies involved. Until the institutional strength and capacity of these entities is not addressed, progress on the originally conceived objectives is unlikely to occur. As a result, the revised scope of the components is to focus on capacity building and institutional strengthening through training and equipment purchases. The revised and narrower scope of these redefined components as noted in Annex 3 below. These changes result in a lower ambition for the components in question, but will ensure that these agencies become stronger and better placed to implement more ambitious plans in the future, be it through World Bank assistance or otherwise. Budgets for each component have been reviewed and adjusted to reflect current market prices for goods/services/software. Regardless of the revisions to project scope, certain risks remain. While assurances have been received from all parties involved for rapid implementation and effective coordination of the project, a moderate risk remains for coordination among the various entities. Mitigation of this risk is envisioned through bilateral, rather than collective, coordination with the individual agencies. The PMU has affirmed this revised approach as the future operating model. In addition, there is a continued risk that vested interests could resist reforms. Finally, weaknesses in the control environment and an accelerated timetable for procurement/disbursement represent implementation risks. The project team will work in close coordination with the PMU to remain vigilant and ensure appropriate measures are taken to mitigate these risks.

Current Component Name

Proposed Component Name

Current Cost (US$M)

Proposed Cost (US$M)

Action

Strengthening the Business Environment

6.30 0.00 Marked for Deletion

Encouraging the Development of Mining Industry

Component 1. Encouraging competitiveness and development of the mining industry

3.10 3.38 Revised

Project Management Component 5. Project Management

0.60 0.65 Revised

Component 3. Institutional Strengthening to Support a Single Window for Construction Permits

0.60 New

Component 4. Improvement of Financial Infrastructure

4.52 New

Component 2. Strengthening business registration systems and processes

0.85 New

Total: 10.00 10.00

.

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Other Change(s)

Change in Implementation Schedule

Explanation:

Delays in implementation to date have necessitated a revised implementation schedule. All activities, per restructuring, will now be implemented within an accelerated timeframe.

Other Change(s)

Explanation:

The project restructuring will amend the Financing Agreement to permit payment of taxes from the project funds. Owing to the fact that the existing Financing Agreement of the project excludes financing of any taxes using project funds, the Ministry of Finance, with assistance of PMU, submitted a letter to the World Bank with a request to amend the Financing Agreement of the grant to include financing of all taxes. This amendment will be reflected in the new Financing Agreement along with the substantive restructuring of the project.

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ANNEX 1: RESULT FRAMEWORK

Tajikistan: Private Sector Competitiveness (P130091)

Project Name:

Private Sector Competitiveness (P130091) Project Stage:

Restructuring Status: DRAFT

Team Leader:

Qahir Dhanani Requesting Unit:

ECCU8 Created by: Qahir Dhanani on 17-Dec-2013

Product Line:

IBRD/IDA Responsible Unit:

GTCDR Modified by: Qahir Dhanani on 20-Jul-2014

Country: Tajikistan Approval FY: 2012

Region: EUROPE AND CENTRAL ASIA

Lending Instrument:

Specific Investment Loan

.

Project Development Objectives

Original Project Development Objective:

The development objective of the project is to remove key constraints to business development and investment by: (i) simplifyingbusiness registration and construction permitting processes; (ii) improving regulations and infrastructure underlying access tofinancial services; and (iii) encouraging development of the mining industry, where Tajikistan has a competitive advantage.

Proposed Project Development Objective (from Restructuring Paper):


Results

Core sector indicators are considered: Yes Results reporting level: Project Level

.

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Project Development Objective Indicators

Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target

New Time spent on business registration

Days Value 24.00 33.00 5.00

Date 01-Jul-2012 13-Dec-2013 30-Sep-2017

Comment Introduction of a step raised number of days.

Revised Lending based on new registration of security interests in the new collateral registry using moveable assets as collateral

Amount(USD) Value 0.00 0.00 2000000.00

Date 01-Jul-2012 13-Dec-2013 30-Sep-2017

Comment New collateral registry has not been procured, so no new registration has occurred

Original Indicator Three: Lending based on new registration of security interests in the new collateral registry using moveable assets as collateral

Amount(USD) Value 0.00 0.00 10000000.00

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment New collateral registry has not been procured, so no new registration has occurred

New Modern Automated Transfer System (ATS) and module of financial instruments for interbank transactions operational

Text Value No No System installed and operational and all relevant staff trained to use it

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Date 13-May-2014 13-May-2014 30-Sep-2017

Comment

New Legal and regulatory framework to improve bank supervision is developed, adopted, and implemented

Number Value 0.00 0.00 7.00

Date 01-Jul-2012 13-May-2014 30-Sep-2017

Comment

Revised Number of new mining exploration licenses issued

Number Value 3.00 3.00 10.00

Date 01-Jul-2012 13-Dec-2013 30-Sep-2017

Comment

Original Indicator Six: Number of new mining exploration licenses issued

Number Value 3.00 3.00 25.00

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment No changes to framework. Likely to be revised through restructuring.

Marked for Deletion

Indicator Two: Construction permits granted in the single window in the city of Dushanbe

Number Value 300.00 300.00 432.00

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment No changes from baseline occurred yet as the single window is not operational

Marked for Deletion

Indicator One: New businesses registered through the new online one-stop-shop

Number Value 60000.00 60000.00 69000.00

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment No changes from

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baseline occurred yet as the OSS is not operational

Marked for Deletion

Indicator Five: Legal and regulatory framework to improve payment system is developed, adopted, and implemented

Text Value 4 out of 10 CPSIPS principles observed

Improvement in at least 3 areas of the CPSIPS assessment

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Indicator Four: Legal and regulatory framework to improve bank supervision is developed, adopted, and implemented

Text Value Compliance achieved in 0 out of 25 Basel Core Principles

Improvement in at least 8 out of 25 Basel Core Principles

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment

Intermediate Results Indicators

Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target

New Number of staff of Statistics Agency, Social Insurance Agency, and Tax Committee trained

Number Value 0.00 0.00 30.00

Date 13-May-2014 13-May-2014 30-Sep-2017

Comment

New Visits to new City of Dushanbe Construction Website

Number Value 0.00 2000.00

Date 13-May-2014 30-Sep-2017

Comment

New Regulatory framework to Number Value 4.00 4.00 7.00

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improve payment system is developed and implemented

Date 01-Jul-2012 13-May-2014 30-Sep-2017

Comment

Revised Contingency planning and crisis management framework adopted and implemented

Text Value No Formal framework is in place and simulations do not reveal any serious shortcoming

Date 01-Jul-2012 13-Dec-2013 30-Sep-2017

Comment

Original Intermediate Results Indicator Fifteen: Contingency planning and crisis management framework adopted and implemented

Text Value No Formal framework is in place and simulations do not reveal any serious shortcoming

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment

Revised Average time to issue a mining exploration license

Months Value 36.00 36.00 18.00

Date 01-Mar-2012 13-Dec-2013 30-Sep-2017

Comment

Original Intermediate Result indicator Eighteen: Average time to issue a mining exploration license

Months Value 36.00 36.00 18.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

15

Revised Share of existing and new claims in the Mining Cadastre on new system

Percentage Value 0.00 0.00 60.00

Date 01-Mar-2012 13-Dec-2013 30-Sep-2017

Comment Procurement has not taken place yet

Original Intermediate Result indicator Sixteen: Share of existing and new claims in the Mining Cadastre on new system


Date 01-Mar-2012 13-Dec-2013 31-Dec-2016


Revised Share of geological surveys in electronic form on Modern System


Date 01-Mar-2012 13-Dec-2013 30-Sep-2017


Original Intermediate Result indicator Seventeen: Share of geological surveys in electronic form on Modern System


Date 01-Mar-2012 13-Dec-2013 31-Dec-2016


Marked for Deletion

Intermediate Results Indicator Fourteen: Adoption of banking regulations in line with international standards


Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result indicator Thirteen: Adoption of modern supervision methods

Text Value Supervisory framework lacking

Adoption of improved offsite reporting and

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modern supervision methods

analyses, new bank supervision manual, risk focused supervision, and consolidatedsupervision

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment Reforms in the supervisory framework not undertaken yet

Marked for Deletion

Intermediate Result Indicator Nine: Number of loans backed by moveable assets and registered in moveable collateral registry

Number Value 0.00 0.00 600.00

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result indicator Two: Costs to register a business

Amount(USD) Value 227.00 227.00 166.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result indicator Eight: Existence of an operational online system for registering collateral

Yes/No Value No No Yes

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Direct project beneficiaries Number Value 300.00 300.00 432.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment This indicator No change from

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will measure the direct project beneficiaries from introduction of single window for construction permits

baseline value has occurred yet.

No Change Female beneficiaries Percentage Value 0.00 0.00 10.00

Sub Type

Supplemental

Marked for Deletion

Intermediate Result indicator One: Time spent on business registration

Days Value 24.00 24.00 3.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result indicator Three: Steps to register a business


Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Volume of Bank Support: Enabling Environment - SME

Amount(USD) Value 0.00 0.00 1900000.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment No change from baseline value has occurred yet

Marked for Deletion

Intermediate Result indicator Four: Time spent on getting a

Days Value 228.00 228.00 150.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

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construction permit in the city of Dushanbe

Comment

Marked for Deletion

Intermediate Result indicator Five: Costs to obtain a construction permit

Amount(USD) Value 850.00 850.00 75.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result indicator Six: Steps to obtain a construction permit in the city of Dushanbe

Number Value 26.00 26.00 17.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result indicator Seven: Amended legal framework for secured transactions and debt resolution regimes

Yes/No Value No No Yes

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result indicator Ten: Modern Automated Transfer System (ATS) and module of financial instruments for interbank transactions operational

Text Value No System installed and operational and all the relevant staff trained to use it

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Direct project beneficiaries Number Value 60000.00 60000.00 69000.00

Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

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Comment This indicator will measure the direct project beneficiaries from introduction of one-stop-shop for business registration

No change from baseline has occurred yet

No Change Female beneficiaries Percentage Value 0.00 0.00 10.00

Sub Type

Supplemental

Marked for Deletion

Intermediate Result indicator Eleven: Number of high value (RTGS) payments made through ATS per day

Number Value 1600.00 3459.00 2150.00

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment

Marked for Deletion

Intermediate Result Indicator Twelve: Number of low value (ACH) payments made through ATS per day

Number Value 0.00 0.00 2500.00

Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

Comment .

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ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)

Tajikistan: Private Sector Competitiveness (P130091) .

.

Project Stakeholder Risks

Stakeholder Risk Rating Substantial

Risk Description: Risk Management:

There is a risk that vested interests could resist reforms in the business environment (e.g., starting a business, construction permits, and secured transactions regimes) that will reduce the scope for receiving informal registration payments and limit these agencies’ influence. Vested and politically connected interests in the banking sector may prevent passage and/or implementation of stricter bank regulations and supervision. Some vested interests among the implementing partners could work to reduce the impact at implementation of the project outputs, since they might feel threatened by the project’s goal of making information more transparent, as they benefit from current state of difficult access to limited information.

The project builds on the successful dialog and achievements in prior years, more specifically, the PSD and FSD dialog that led to gradual improvement of the country ranking in DB. Secured transactions reforms, which diffuse vested interests, will be supported bycontinuing work with the government's Working Group. These reforms will also be supported by emphasizing to the government how the reform will improve the country's Doing Business rating. Automation of certain processes (e.g., implementation of online collateral registry) will increase transparency and eliminate opportunities to receive informal payments. Adoption and implementation of banking regulations and supervision will be supported by continuing policy dialogue, a new TA approved by the FIRST initiative, additional TA under this project, a semi-resident advisor placed in NBT, coordination with the IMF which also agrees on the importance of these reforms for banking stability, and DPO prior actions. Also, the government has demonstrated ownership and commitment to implement reforms in business environment

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Bank In Progress Implementation 29-Sep-2017

Implementing Agency (IA) Risks (including Fiduciary Risks)

Capacity Rating Substantial


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PMU Capacity and Training: The implementation of the project is led by the State Committee for Investment and State Property Management (SCISPM) that has been charged directly with the implementation of reforms in several sectors. As the experience with the implementation of the project has already demonstrated, PMU has a rather limited capacity to implement the project. Preparation of documents takes a significant period of time due to the lack of staff in PMU. PMU management (e.g., head and deputy) are very busy officials and may be unable to review the documents drafted by their subordinates in a timely manner, which may lead to even greater delays. This bottleneck represents a significant risk for project implementation at early stages (e.g., drafting of TORs, REIs, RFPs...) Later on, when contracts will get signed, the problem may arise with the capacity of SCISPM to actually lead reforms in different sectors. Their personnel has not received sufficient training in issues related to all of the sectors covered by the project due to limited resources. Coordination: Given a large number of agencies involved in the project, PMU may be perceived as being weak in dealing with other counterparts, leading to tensions in project coordination.

PMU has recruited for all advertised positions, including procurement consultant, M&E consultant, administrative assistant. It is expected that preparation of documents and implementation will move faster. Project coordinators from stakeholder agencies (who will coordinate activities for each sub-component) are all specialists in their respective areas and will provide any necessary technical support to the PMU in more specialized areas. While this approach with work for NBT/mining components, OSS and construction permits activities need a different approach due to the challenges associated with these reforms. It will be beneficial to provide formal training to PMU staff responsible for technical areas in the areas they are covering (e.g., construction permits). In order to further improve the capacity of the PMU personnel, training on the World Bank FM and disbursement policies and procedures, as well as project management and areas related to project activities, will be organized as necessary.


Both In Progress Implementation 29-Sep-2017

Risk Management:

Capacity in the Mining Sector: Specifically in the mining sector, a Finnish agency has a twinning arrangement to improve institutional capacity in this sector. Strong interest in SCISPM for EITI will also lead to additional capacity building TA. On 31 August 2012, President Emomali Rahmonov signed Decree 449 which commits Tajikistan to EITI implementation. The Government of Tajikistan recently reaffirmed its commitment to implement the EITI. This took place at the EITI launch conference, organized by the MoF in cooperation with the World Bank, GIZ and OSI, which was held in the capital Dushanbe.


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Risk Management:

Coordination: The SCISPM will organize regular meetings of both the Steering Committee members and project coordinators to ensure that interaction with the involved agencies goes smoothly and project activities are implemented in a timely manner.



Governance Rating Substantial


Cooperation: There is a risk of lack of cooperation between SCISPM and government agencies, as SCISPM does not have direct control over the various agencies involved in the project. Consequently, it will be dependent on cooperation from other Government agencies and will need continued support from the Government (President's Office). Further, there is a risk that the implementing agencies’ bureaucratic procedures will delay timely decisions for the project's activities.

Cooperation: An inter-agency Steering Committee has been established by effectiveness with representatives of all the main agencies and the President’s Office to ensure coordination across agencies. Project coordinators from each involved agency have also all been assigned and are already actively participating in the implementation of the project. During the missions to Dushanbe, the team observed the strong capacity of the lead agency to coordinate the activities of all agencies involved in the project. The SCISPM organized several workshops, with participation of all stakeholders, to agree on the design and final scope of the proposed assistance under the project. The project will bring in international experts to assess current institutional organization and procedures and make recommendations for change.


Client In Progress Implementation 29-Sep-2017

Risk Management:

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Implementing Agencies: The project team will work closely with the World Bank procurement specialist assigned to the team to ensure that procurement and recruitment guidelines are followed in all cases by the implementing agencies. During preparation, the team met with a PREM Governance Specialist to review the project against the Governance Checklist and ensured that governance implications were considered in the design of the project, and this operation itself contributed to improving the governance environment in Tajikistan. Mining: Ensure that the cadastre and geo-data will be made public goods before building the capacity in these areas. Finnish agency has a twinning arrangement to improve institutional capacity. Strong interest in SCISPM for EITI will lead to additional capacity building TA. The overall outcome of the project is a decrease of fraud and corruption through increased transparency in the administration of the mining sector.


Client In Progress Implementation 29-Sep-2017

Project Risks

Design Rating Moderate


Complexity: The proposed project is very complex due to the number of activities and the number of implementing agencies involved. IT Packages Procurement: In the current design, the project envisions procurement of several IT packages in different sectors. Since the PMU procurement staff would

Complexity: Project restructuring will aim to address complexity as well as to ensure management attention is drawn to the full scope of the project. Project design includes substantial technical and administrative capacity building for the implementing agencies. The team will: (i) continue policy dialogue on the advantages of reforms, (ii) refer as needed to earlier commitments, (iii) link the project, TA, and other support to progress in reforms, and (iv) reinforce reforms through PDPGs. The project team will incorporate lessons learned from other private and financial sector projects in Tajikistan and will

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not have prior expertise with the procurement of IT packages in all of these sectors, it may have difficulty with reviewing technical specifications, and procurement of packages may be delayed. There is a risk that the legal, regulatory, and supervisory reforms will not follow international good practice and, therefore, will not promote development of the sector.

build on the experience of the implementing agencies. It will also incorporate lessons learned from other WB projects in the region on payment systems, secured transactions, and banking regulation and supervision. IT Packages Procurement: The team will engage a regional procurement specialist with IT expertise to review technical specifications beforehand so as to define a clear set of parameters. Furthermore, PMU procurement staff will attend training on procurement, which will incorporate some modules on procurement of IT packages.


Bank In Progress Both 29-Sep-2017

Social and Environmental Rating Moderate


Mining: Although no works will be undertaken under this project, successful implementation could lead to more mining activities in the future. An expansion of extractive industries could also contribute to enhanced risks of social conflict among groups in a country.

Mining: As per recommendations of the Regional Safeguards Meeting, TOR for a Strategic Environmental and Social Assessment (SESA) have been prepared. The assignment is taking place at present. The project includes a sub-component on outreach to potentially impacted stakeholders focused on increasing the benefits and reducing the risks to them of future mining developments. A scale-up of Tajikistan's mining sector may offer an opportune platform to establish relevant SA mechanisms from the outset, and this could be part of the overall TA activities to build in social accountability to a potential expansion of Tajikistan's mining sector. In addition, the German development agencies (BGR and GIZ) are planning to provide assistance to mitigate negative consequences in areas affected by extractive industry developments. This project will work in close coordination with them.



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Program and Donor Rating Moderate


Project activities do not currently depend on the completion of any other project. BGR and GIZ are planning some activities in EI sectors in Tajikistan. Therefore, there is a risk of limited collaboration with donors, including the IMF, SECO, and GIZ.

An active dialogue has already begun with BRG/GIZ and cooperation will be undertaken to avoid overlap and ensure complementarity.



Delivery Monitoring and Sustainability Rating Moderate

Risk Description: Monitoring and Evaluation: Some of the data required to monitor project indicators is not readily available and may be difficult to collect Project Sustainability: There is a risk that the progress may not be sustainable after project completion due to lack of technical capacity or adequate budget. Staff Retention: An important challenge facing the agencies of the government is to attract and keep professionals if and when the private sector (especially mining sector) starts developing rapidly and attracting the best talent.

Risk Management:

Monitoring and Evaluation The project will support the setup of the monitoring of the results indicators per the project's Results Framework. Since there are quite a few activities for which monitoring needs to be established, the procurement plan envisions hiring of the technical/monitoring and evaluation specialist who will assist with the initial set up of the results monitoring system (e.g., identification of data requirements, establishment of regular collection of data at the stakeholder agencies) by working closely with stakeholder agencies through their point of contact (coordinators). Subsequent data collection and analysis will be carried out in regular time intervals.



Risk Management:

Project Sustainability: The project team will cooperate with different donors (e.g., German aid program for the mining sector) on skill enhancement for sectors involved under the project.

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New IT Systems: New IT systems to be delivered and introduced will require maintenance and in-house expertise.



Risk Management:

Staff Retention: The project team will work with the relevant Government agencies on institutional changes required to attract and keep key staff in the implementation agencies.



Risk Management:

New IT Systems: The team will include in the procurement plan the cost for maintenance during the life of the project and build in-house capacity to continue with the maintenance of the project.



Other (Optional) Rating



Other (Optional) Rating


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Overall Risk

Overall Implementation Risk: Rating Moderate

Risk Description:

The overall implementation risk of the project is Moderate. Recent changes in leadership and administration at the State Committee on Investments and State Property Management (SCISPM), coupled with full recruitment of the PMU team, have given the team cause to believe the SCISPM is committed to the project and the required human resources are in place. In addition, a number of mitigation measures described in detail above make the risk of the project implementation manageable.

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ANNEX 3: SUMMARY OF CHANGE AT SUB-COMPONENT LEVEL

Tajikistan: Private Sector Competitiveness (P130091)

CURRENT PLAN RESTRUCTURED PLAN RATIONALE

Project Development Objective (PDO) The development objective of the project is to remove key constraints to business development and investment by: (i) simplifying business registration and construction permitting processes; (ii) improving regulations and infrastructure underlying access to financial services; and (iii) encouraging development of the mining industry, where Tajikistan has a competitive advantage.


Ensure achievability and relevance of project as well as link project to its core purpose, which is to influence competitiveness.

2 Encouraging the Development of Mining Industry

Component 1. Encouraging competitiveness and development of the mining industry

Emphasize the focus of the project on competitiveness and by changing the order of components, highlight the mining sector as a critical industry for Tajikistan.

2.1 Revision of mining sector laws and regulations Component 1.1 Revision of mining sector laws and regulations

N/A

1. Assist drafting of Law on Subsoil 2. recommend law specific to mining (excl. oil/gas) 3. Recommend associated institutional changes 4. Assist with revisions to mining fiscal regime 5. Assist revision of regulations for tender of

known deposits 6. Recommend org structure for mining, cadastre

and geological survey function. 7. Design programs & policies to enhance domestic

impact of mining

No revision in scope

Additional funds allocated to training and capacity building.

2.2 Develop modern mining cadaster

Component 1.2 Develop modern mining cadaster N/A

1. Conduct diagnostic of current cadastre system 2. Develop cadastre regulations 3. Implement automated cadastre system


N/A

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CURRENT PLAN RESTRUCTURED PLAN RATIONALE 4. Provide hardware 5. Provide training

2.3 Modernize geological survey function Component 1.3 Modernize geological survey function

N/A

1. Provide framework, hardware & software for geological info

2. Modernize policy framework & regulations 3. Develop geodata bank 4. Develop target oriented field survey techniques 5. Digitize existing maps 6. Provide training


N/A

2.4 TA to Mining Sector Component 1.4 TA to Mining Sector N/A 1. Conduct diagnostic of artisanal and small-scale

mining (ASM) sector 2. Conduct workshops 3. Consult on impediments to business


N/A

2.5 SESA Component 1.5 SESA N/A 1. SESA No revision in scope N/A 1. Strengthening the Business Environment -- As Component 1 was a catch-all component which

included diverse subcomponents ranging from business registration to construction permits to financial infrastructure, it is being unbundled into three more logical and independent components. Additionally, various aspects of the Mining Component involve “strengthening the business environment (for mining)” and so the original component was inappropriately titled.

1.1 One Stop Shop for business registration Component 2. Strengthening business registration systems and processes

Focus on the core activities being undertaken as part of the one stop shop process rather than establishment of the OSS

1. Review of the legislative framework 2. Registry Design and Development 3. Awareness and training activities

1. Review of the structures, processes, systems, relationships, monitoring & evaluation, as well as public awareness for the OSS to be effectively

Reduction in scope from a focus on legislative changes (which already exist through bilateral support from DFID to Tajikistan) to the enabling

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CURRENT PLAN RESTRUCTURED PLAN RATIONALE 4. Developing monitoring and evaluation

mechanisms for the reforms 5. IT infrastructure support

implemented 2. Support institutional strengthening through IT

and locally-based training (excluding foreign learning trips)

3. Purchase of relevant IT infrastructure (hardware and software required for the OSS to be operational)

factors for the legislation, namely the systems underlying a one stop shop. Capacity building and IT infrastructure support are retained and expanded in scope. Budget changes reflects increased needs for IT infrastructure and complexity of consulting assignment to assess the OSS systems.

1.2 Single Window for construction permits Component 3. Institutional strengthening to support construction permits single window

Needs are in capacity building and awareness.

1. Identify optimal location for single window and IT hardware systems (pilot city of Dushanbe)

2. Adopt regulatory amendments to construction permitting

3. Implement IT systems in Dushanbe city and among the Construction Committee offices

1. Institutional strengthening of the Construction Committee of the RT through training and capacity building and procurement of specialist/technical equipment and basic IT systems (computers, printers, internet connections, etc.)

2. Dushanbe City Construction Permits Single-Window public awareness raising campaign to include enhancing the website and promoting transparency across multiple dimensions (city master plan, processes, steps, fees, timelines, etc.)

Construction Committee of RT faces significant capacity constraints that could be significantly improved through training and equipment purchase; City of Dushanbe already has laws and procedures on a single window, but these (and the related fees, timelines, master plans, etc.) are unknown to the public, hence a focus on transparency. Budget change reflects a reduced scope (focus on transparency only instead of build-out of entire new system).

1.3 Improvement of Financial Infrastructure Component 4. Improvement of Financial Infrastructure

N/A

1.3.1 Secure Transactions & Debt Resolution Framework

Component 4.1 Secure Transactions & Debt Resolution Framework

N/A

1. Enhance legal and regulatory framework 2. Conduct a feasibility study to identify the

optimal model and location of the registry 3. Procure IT for moveable collateral registry 4. Strengthen capacity of registry users

1. Conduct a feasibility study to identify the optimal model and location of the registry

2. Procure IT for moveable collateral registry 3. Strengthen capacity of registry users

Legal and regulatory framework being addressed by the FIRST TAs. Budget change reflects updated costs of secured transaction software.

1.3.2 Modernization of Payment Systems Infrastructure

Component 4.2 Modernization of Payment Systems Infrastructure

N/A

1. Strengthen the legal and regulatory framework 2. IT support

1. Strengthen the legal and regulatory framework 2. Procurement of an ATS and CSD, including

Training needs identified by NBT have been accounted for.

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CURRENT PLAN RESTRUCTURED PLAN RATIONALE 3. Procurement of an ATS and CSD

relevant IT support 3. Training and capacity building (at Georgia’s

Central Bank)

Budget change reflects requirements for intense consultancy support to ensure the system is appropriately procured and installed.

1.3.3 Enhance banking regulation and supervision Component 4.3 Enhance banking regulation and supervision

N/A

1. Revise legislation 2. Revise NBT regulations 3. Upgrade NBT’s bank supervision IT system


Budget change reflects the costs of supervision systems and a revision of consulting budget needs.

3.0 Support the operation of the PMU in the SCISPM

5. Support the operation of the PMU in the SCISPM

N/A

1. Funding PMU at SCISPM

1. Funding PMU at SCISPM 2. Additional Procurement Specialist 3. Project Coordinator

Increased capacity and manpower for implementation is required.

Closing date 31-Dec-2016 Extended to 30-Sep-2017 Loss of 2 years since signing has created a backlog,

which will take several months to clear. An extension of nine months is required to ensure the project has adequate time to deliver.

Financing Plan Excluded payment of taxes using project funds Include payment of taxes using project funds An error at the grant agreement drafting stage

resulted in this issue not being appropriately provisioned.

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Documents

The World Bankdocuments.worldbank.org/curated/en/766611468132265990/pdf/RES... · The World Bank . FOR OFFICIAL USE ONLY ... Paloma Anos Casero Current Closing ... components to ensure