mena transition fund application · web viewexpertise in upstream gas sector governance and...

Date of Submission to Coordination Unit:

A. GENERAL INFORMATION

1. Activity NameTechnical Assistance to Enhance Gas Sector Governance and Competitiveness

2. Requestor InformationName: Ms. Kalthoum Hamzaoui Title: General Director of Multilateral Cooperation

Organization and Address: Ministry of Investment & International Cooperation

Tunis

98, Avenue Mohamed V – 1002 Tunis Belvedere, TUNISIA

Telephone: + 216 71 892 653+ 216 20 560 060

Email: [email protected]

3. Recipient EntityName: Ms. Hela Cheikhrouhou Title: Minister of Energy, Mines and Renewables

Organization and Address:

Ministry of Energy, Mines and Renewables

Immeuble Panorama, 40 avenue du Japon, Montplaisir Tunis, 1002, Tunisie

Telephone: Email: [email protected]

4. ISA SC Representative Name: Ayat SOLIMAN Title: Social Development Practice Manager

Organization and Address: World Bank, 18th Street NW, Washington DC 20433, USA

Telephone: +1 202 4587441 Email: [email protected]

5. Type of Execution (check the applicable box)Type Endorsements Justifications

Country-Execution Attach written endorsement from designated ISA

Joint Country/ISA-Execution Attach written endorsement from designated ISA

√ ISA-Execution for Country Attach written endorsement from designated ISA

At the request of the Government of Tunisia (GoT) and ETAP, this will a Bank executed activity, covering analytical work and technical assistance. The country is requesting technical assistance from the Bank because of its

expertise in upstream gas sector governance and promoting market competitiveness. Moreover, building on OFID’s experience through the Transition Fund financed TUNEREP project, which has faced extensive delays due to national procurement policies and clearance processes, and due to the strategic and highly technical and advisory nature of this TA, both the GoT and the Bank agreed that ISA-execution for this operation is most effective as it will help ensure faster and more streamlined implementation as well as facilitate coordination and implementation of activities across the key institutions involved.

ISA-Execution for Parliaments

Attach written endorsements from designated Ministry and ISA

6. Geographic Focus√ Individual country (name of country): Tunisia

Regional or multiple countries (list countries):

7. Amount Requested (USD)Amount Requested for direct Project Activities:

(of which Amount Requested for direct ISA-Executed Project Activities):

3 461 500

(3 461 500)

Amount Requested for ISA Indirect Costs1 : 38,500

Total Amount Requested: 3 500 000

8. Expected Project Start, Closing and Final Disbursement DatesStart Date:

June 30, 2017 Closing Date:

August 30, 2020 End Disbursement Date

December 31, 2020

9. Pillar(s) to which Activity RespondsPillar Primary

(One only )Secondary(All that apply)

Pillar Primary(One only )

Secondary(All that apply)

Investing in Sustainable Growth. This could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity.

√ Enhancing Economic Governance. This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social

√

1 ISA indirect costs are for grant preparation, administration, management (implementation support/supervision), including staff time, travel, consultant costs, etc.

impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems.

Inclusive Development and Job Creation. This could include support of policies for integrating lagging regions, skills and labor market policies, increasing youth employability, enhancing female labor force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal policies and social safety net reform.

√ Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development.

√

B. STRATEGIC CONTEXT

10. Country and Sector Issues Country Context

Tunisia has gone through a prolonged period of political transition since the revolution in 2011, with a succession of two interim governments, followed by two presidencies composed of a total of seven different governments until 2016. In 2016, the Minister of Energy, Mines and Renewables Ministry of Energy (MEMER) got split up from the Ministry of Industry, leaving it with extremely limited staff to fulfil its role of policy supervision and sector regulator. The intense turn-over of governments has impacted the institutional and policy environment within which the private sector operates. This was coupled with a tense social environment where workers expected to see steadfast social changes and dividends, resulting in numerous strikes across sectors, and a strong pressure to create employment and hire staff. In turn, this contributed to deteriorating the private sector’s confidence and led to companies relocating to neighboring countries.

Five years after the Revolution, the population has yet to see the promised economic transformation or tangible economic dividends of democracy. To address the economic effects of cronyism, monopoly and exclusion, a fairly ambitious economic reform agenda was designed immediately after the 2011 revolution; but implementation of the agenda was delayed and did not begin to accelerate until 2015. As a result of reform delays and social unrest, the economy during 2011-2015 performed below pre-2011 levels: GDP growth averaged 1.4%, compared to 4.4% during the previous 5 years; the gross investment rate averaged 22.5% of GDP, compared with 24.6%; export growth averaged 2.2% annually, compared with 5.1%; and unemployment averaged 16.2%, compared to 12.7%.

Governance concerns in the extractives sector which started in 2008 in the country’s phosphate mining regions was one of the triggers behind the 2011 revolution. Since then, the country has paid particular attention to improving governance, transparency and accountability of the extractives sector, including oil and gas industries. In 2014, the Natural Resource Governance Institute’s resource governance index gave Tunisia a “weak” score of 49, ranking 28th out of 59 countries, based on poor reporting practices and

an unfavorable enabling environment.

Although Tunisia is not a member of the Extractive Industries Transparency Initiative (EITI) it has made significant progress towards openness and disclosure through contract disclosure, open contracting commitments and the creation of open data portal, indicating strong efforts and commitments to improving transparency and enhancing governance in the extractives sector. All hydrocarbons contracts are disclosed publicly, which goes far beyond EITI standards.

Sector Context

No new petroleum exploration or production licenses have been granted since the New Constitution has come into effect. The new constitution, which was voted in 2014 gives Parliament the power to approve or reject each petroleum contract. This new legal requirement has created a legislative inconsistency between the Tunisian Hydrocarbons Act of 1999 (which in Article 19.5 sets that exploration and production agreements have to be approved by Ministerial Decree) and the country’s New Constitution. Although oil and gas contracts must comply with the sector law, they are now superseded by the new constitutional requirement of approval by the National Assembly. This has created serious uncertainties in the sector’s enabling environment and until the Hydrocarbons Code is revised to reflect the new constitutional requirements it is likely that no new licenses will be granted.

Although mandatory Parliamentary approval may reflect the country’s priority to improve governance in the oil and gas sector, it does not correspond to international best practice. Today, it is relatively rare that an Agreement that complies with the Hydrocarbons Act and Model Agreements must then be approved by Parliament to give it the force of law . This procedure is burdensome and results in redundant reviews to approve new petroleum licenses. Some dozen countries around the world are required to do this, usually because the country does not have recent oil-related legislation or for other reasons determined by the legislature.

Inconsistencies in the legal and regulatory frameworks of the sector, as well as continued social protests have resulted in a deterioration of the investment climate in the country. In addition to a difficult social environment, Entreprise Tunisienne d'Activités Petrolière (ETAP) operates within a framework which does not incentivize private sector investments in exploration. ETAP can take a stake of up to 50% in all oil and gas field developments, after exploration costs have been advanced and the commercial viability of the resource is confirmed. When doing so ETAP reimburses the costs incurred by the operator during exploration and share all future development and exploitation costs. The fact that reimbursement takes place after the exploration phase (the riskiest phase for investors) this dramatically limits the attractiveness of investments, especially high-risk, high-return ones. In addition, because given Tunisia’s oil and gas fields are medium sized, in case of a successful exploration program, the operator can at best access 50% of the profits. These challenges constitute major dis-incentives for operators and other investors to invest in the sector, which in turn is impeding energy security of supply and national resource promotion.

Domestic Energy Demand

Since the mid-2000s energy demand has grown faster than domestic production, and oil and gas imports have inched upwards. The Tunisian energy market has been characterized by a persistent production deficit over the past decade, with consumption exceeding production with an energy trade deficit of 2.6% of GDP in 2012.2 Demand for primary energy sources has increased by 2.2% per year, while energy independence rate dropped from 93% to 56% over 2010-15. Projections of energy demand and current

2 The Impact of Shale Liquids and Gas Extraction in Tunisia, Oxford Economics, 2013.

supply sources anticipate a large shortage of primary energy around 2020. Indeed, Tunisia has witnessed an annual decrease of 6% in available primary energy sources and a 75% drop of royalties on Algerian gas transported in the Trans-Med pipeline, over the 2010-15 period. In turn, gas production in the main producing fields has dwindled with drops of 40% in El Borma, Adam and Ashtart; 50% in Miskar and 75% in Chergui.

Tunisia is experiencing increasing demand for energy, which would require increasing- if possible –domestic gas production and maximizing renewables in the energy mix. Tunisia’s energy independence collapsed spectacularly between 2010 and 2015, from 93% to 56%, and its energy trade deficit grew sevenfold. Until 2015, its energy mix was 99% fossil-fuel-based (53% natural gas and 46% oil). About 95% of the Tunisian electricity sector is gas based, with approximately half of the gas originating in Algeria. Since then, renewable energies have tripled their penetration to 3% of the energy mix and fossil fuels still represent some 97%.%. The country’s energy strategy now envisages renewable energy increasing its penetration by a factor of ten to achieve a highly ambitious target of 30% by 2030. At the same time, natural gas output will have to increase to keep the energy mix as clean as possible by eliminating coal use and ensure optimized use of imported of hydrocarbons.

Domestic Hydrocarbon Production

Developing domestic hydrocarbon resources has become an urgent priority for Tunisia’s energy strategy. The decline in hydrocarbon exploration and production activities has become a threat to the security of Tunisia’s energy supply. Tunisian consumers now source over 53% of their gas from Algeria and only 47% from domestic production. As Algeria is having difficulties maintaining its levels of reserves and production, this dependency presents an even greater risk for the security of Tunisia’s energy supply.

Lower output in the main fields,3 together with the resultant potential energy insecurity, largely accounts for the social unrest and subsequent problems that the government has had to confront in its decision making. Miskar, the largest gas field in Tunisia, reported 235 days of shutdown in 2016. Moreover, no new exploration licenses have been granted in recent years, and the number of active licenses has declined from 50 in 2012 to 26 in 2016. In a context where the country’s proven reserves are falling, problems associated with energy insecurity may worsen despite promising prospects. Moreover, labor tensions and social unrest are complicating the decision-making process for operators and the public authorities alike, creating a major obstacle for energy supply security and the development of domestic resources.

To address the controllable causes and ameliorate domestic hydrocarbon production, Tunisia’s exploration strategy will need to be adjusted to the specificities of the three exploration regions (described below) and supported by a revised hydrocarbons code. Generally speaking, oil and gas production in Tunisia comes from a geographical area that could be called “conventional” in terms of exploration and production. This area, which extends both onshore and offshore, is divided into petroleum production zones: the region of El Borma near the border with Algeria, the region between Tunis in the north and Sfax in the south (which extends west to the Algerian border), and the Western offshore region of Tunisia on the continental shelf (which extends east to the offshore border with Libya).

Given this situation, there is a pressing need to support the Tunisian government in its efforts to improve its energy security, both by enhancing the hydrocarbons sector’s legislative, regulatory, fiscal and governance framework and developing a new strategy for the development of the country’s national gas resources. To this end, aligning Tunisia’s legal and regulatory frameworks with international best

3 -40% at El Borma, Adam, and Ashtart, -50% at Miskar, and -75% at Chergui.

practices, as well as enhancing the organization and capacities of key institutions will be instrumental. To date, the MEMER is short of staff, especially when it comes to the hydrocarbon sector. It is therefore unable to fulfill its regulatory function as needed to foster effective private sector investment.

Despite this urgency, the government of Tunisia has faced challenges in mobilizing the resources required to achieve these goals. Although the country can access financing to improve energy efficiency and develop renewable energies, no backing has been received for developing its upstream gas sector, which is a key step towards achieving a sustainable and efficient transition to a low carbon energy profile (see COP21 Conclusions). In the next decade, gas will be crucial in order to cover the country’s basic energy needs and to ramp up – in the cleanest way - the penetration of energy of renewables in the energy mix, from 3 to 30% by 2030. Based on current Energy Master Plan, if Tunisia was unable to promote its gas production, a likely alternative would be an increased use of coal for power generation.

11. Alignment with Transition Fund ObjectiveThe proposed technical assistance is in line with the objectives of the Middle East and North Africa Transition Fund to strengthen governance and public institutions as well as to foster sustainable growth. The proposed technical assistance will seek to strengthen the governance of the hydrocarbons sector by building the technical capacity of the two key public institutions in charge of its governance (MEMER and ETAP) and also by advancing country-led policy and institutional reforms. It is also aligned with the following three key thematic areas of the MENA TF: Investing in sustainable growth, with a focus on enhancing the business environment. This project will support the review and harmonization of the hydrocarbon sector legislative framework. It will also support technical capacity building of members of the National Assembly responsible for approving new gas contracts and licenses, and the setting up of an efficient approval procedure which is conducive to business in the gas sector. This will provide the framework needed for the country’s sustainable development of its gas resources. Enhancing economic governance, with a focus on regulatory quality and administration simplification, institutional strengthening and capacity building. This project will support the enhancement of the hydrocarbons sector economic governance by improving the regulatory and fiscal frameworks in place in line with international best practice, as well as by enhancing the institutional organization of the sector and by building capacity of MEMER and ETAP staff. Competitiveness and integration, with a focus on promoting private sector development. This project will support the development of the country’s new gas exploration and production strategy in the view of promoting private sector investments and optimizing the country’s competitiveness.

12. Alignment with Country’s National StrategyIn December 2016, the Government of Tunisia, through the MEMER, requested immediate assistance from the World Bank to support its efforts to enhance the governance and competitiveness of the upstream gas sector, in the form of a technical assistance. This request is fully aligned with Tunisia’s national new energy strategy. In October 2016, the Tunisian government adopted an energy strategy

entitled Energy Sector Strategic Orientations 2030 based on the following four priorities: (i) developing domestic hydrocarbon resources; (ii) adopting a policy for the refining of crude oil and strengthening infrastructure for the transportation, distribution, and storage of oil products; (iii) developing electricity production and interconnections; and (iv) promoting energy efficiency and renewable energy. Developing domestic resources is a priority for the country’s energy strategy. To this end and based on the Tunisian government’s diagnosis, the most urgent problems to be resolved are the following : (i) update the Hydrocarbons Code; (ii) restructure and strengthen ETAP; and (iii) develop a strategy designed to promote prospection and exploration.

Based on the 2030 Energy sector strategy, the MEMER has identified the following priority actions in order to achieve the first objective of the new energy strategy and enhance energy security of supply: i) adopt a law to ensure immediate alignment of the new constitution and the hydrocarbon code; ii) amend the hydrocarbon code to resume exploration and to stop the decline in production; iii) redefine the role, organization and structure of the national oil and gas company, ETAP, so that it can be more effective in the promotion of natural resources; iv) develop a tailored strategy to promote Exploration and Production (E&P) in the areas already extensively explored, in the totally unexplored areas, and in the areas with tight reservoirs.

C. PROJECT DESCRIPTION

13. Project Objective The objective of the proposed project is to support the Government of Tunisia lay the groundwork to strengthen the regulatory framework and improve governance in the upstream gas sector.

14. Project ComponentsProject Scope:

The proposed technical assistance will support the Government of Tunisia lay the groundwork to strengthen the regulatory framework and improve governance in the upstream gas sector . The activities covered by the project will contribute to building the groundwork for upstream gas sector reform and enhanced governance, through institutional re-organizations.

Project Components:

The proposed technical assistance has four components: (Component A) Enhance the legal, fiscal, contractual and regulatory framework of the hydrocarbon sector; (Component B) Institutional reorganization and strengthening of the state-owned, ETAP; (Component C) Institutional reorganization and strengthening of the Ministry of Energy, Mines, and Renewable Energy; (Component D) Promote hydrocarbon prospection and exploration. The project was scaled-down from the initial $5 million request to $3.5 million. Additional funds will be sought from the Transition Fund, if and when available, to scale-up the project to the original scope in line with the decision of the Steering Committee. Details on the project components are summarized hereinafter:

Component A: Enhancing the legal, fiscal and regulatory framework of the hydrocarbon sector (US$ 0.9 million). The immediate objective of this component is to strengthen the legal, fiscal and regulatory framework of the hydrocarbon sector in order to clarify inconsistencies and ensure the Hydrocarbons Code is fully aligned with the new Constitution’s requirements for the hydrocarbons sector. The second

objective is to further enhance the sector’s framework by ensuring it is fiscally attractive and fully aligned with the country’s objectives and international best practices. Specific activities under this component include:

- Produce analytical work to inform the country’s best objectives in the hydrocarbons sector;- Take stock of international best practices regarding the legal, fiscal and regulatory framework in

the hydrocarbon sector;- Conduct review and provide recommendation to the legal, fiscal and regulatory framework of the

hydrocarbon sector to immediately align the Hydrocarbons Code with the provisions of the new Constitution;

- Conduct diagnosis of the existing Hydrocarbons Code and based on the findings, make recommendations to ensure the Code is aligned with the country’s best interests and international best practices.

- Support the MEMER to disseminate the results of the analytical, recommendation and diagnostic work conducted with relevant stakeholders including Parliamentarians and Civil Society Organizations.

Component B: Strengthening and re-organizing the state-owned Entreprise Tunisienne d'Activités Pétrolières (ETAP) (US$ 1 million). The objective of this component is to redefine ETAP’s role, organization and business plan to ensure it has a clear mandate, sufficient resources and functional capacities to manage national assets and take on the role of operator. Specific activities under this component include:

- Conduct institutional analysis to redefine the role, organization, and resources required by ETAP to fulfill its mandate as manager of national assets and partner of hydrocarbons operators with a specific a mission;

- Recommend business plan, human resources policy (especially in terms of hiring and competitive pay), legal status, and transparent budgets for ETAP;

- Strengthen the capacity of ETAP and its staff by provide tailored trainings.- Disseminate the results of the institutional analysis with key stakeholders, as identified by ETAP.

Component C: Strengthening and re-organizing the Ministry of Energy, Mines, and Renewable Energy (MEMER) (US$ 1 million). The objective of this component is to redefine the mandate and organization of the MEMER to enable it to exercise its role as regulator for the upstream hydrocarbons sector (which is currently performed by ETAP). In addition, this component aims to strengthen the MEMER’s capacity to make decisions on ongoing field development concepts, support the approval process for gas contracts with the National Constituent Assembly (NCA), and monitor the implementation of Tunisia’s diversification of energy supplies. Specific activities under this component include:

- Conduct institutional analysis to redefine the role of MEMER as upstream hydrocarbons sector regulator;

- Through tailored training sessions on reservoir engineering, procurement and project management, strengthen the capacity of the MEMER and its staff to:

o Review the Zarat field development concept to assess its technical and financial robustness before giving the green light to implementation (scheduled for this year);

o Give effective support to the Energy Commission of the NCA to enable it to improve the quality and speed of the approval process for gas contracts, for which the new Constitution has made it responsible;

o Identify and monitor how the diversification option for optimizing the country’s energy supplies is being exercised based on the work done by various entities operating under

its supervision.- Disseminate the results of the institutional analysis with key stakeholders, as identified by

MEMER.

Component D: Promoting hydrocarbon prospection and exploration (US$ 0.5 million). The objective of this component is to provide analytical and technical advice to Tunisia’s prospection and gas exploration promotion activities. The promotion strategy for prospection and exploration will hinge on solid research and analysis of the country’s three main hydrocarbon “regions”, and on international best practice. This component will also seek to help identify the role that both MEMER and ETAP can play in supporting the implementation of this strategy. Specific activities under this component include:

- Provide technical advice to MEMER and ETAP on preparing a strategy for promoting prospection and exploration that reflects the specifics of the three main hydrocarbon “regions” (Northern Mediterranean Offshore; Conventional and Shale Gas Potential zones) and its varying levels of maturity; and identify the role of the Ministry and of ETAP in such a promotion strategy;

- Develop scoping of geological studies to be carried out by MEMER and ETAP with the help of specialized consultants, especially for the conventional zone but also for the source-rocks or tight reservoirs.

- Provide technical recommendations to MEMER and ETAP on developing a strategy that uses seismic studies to inform and enhance the attractiveness of the northern Mediterranean. This strategy should be defined and developed by MEMER and ETAP with the support of internationally recognized consultants.

- Disseminate the results of the analytical work with key stakeholder as identified by ETAP and MEMER.

15. Key Indicators Linked to Objectives

Progress in achieving the project development objectives will be measured by the following key result indicators:

Fund-level indicators for aggregation:- Government bodies, institutions and local government units received support services- Studies, assessments, reports, action plans, roadmaps, models of good practices or framework

endorsed:o A study laying the groundwork for the re-organization and re-structuring of MEMER is

developed and endorsed by the Government of Tunisia (with a redefined mandate which enables it to exercise its role as regulator for the upstream hydrocarbons sector);

o A study laying the groundwork for the re-organization and re-structuring of ETAP to enable it to fulfill its mandate as manager of national assets and partner of hydrocarbons operators is developed and endorsed;

o A strategic study for promoting prospection and exploration that reflects the specifics of the country’s three main hydrocarbon “regions” is developed and endorsed;

o An action plan is produced for and endorsed by MEMER to operationalize the aforementioned strategy for promoting prospection and exploration

- Regulations or laws endorsed or entities, units or systems established:o An assessment report of the Hydrocarbons Code (including inconsistencies with the New

Constitution are clarified together with gaps with international best practices) is performed and endorsed by the Government of Tunisia;

- Staff from MEMER and ETAP are trained in international best practices on upstream gas

regulatory and governance frameworks, exploration and production, investment promotion, etc.

Intermediate Level Indicators:

Component A:- Analytical study finalized to inform Tunisia’s strategy for the hydrocarbons sector based on

international best practices- Stocktaking of international best practices regarding the legal, fiscal and regulatory framework in

the hydrocarbon sector accomplished

Component B:- Institutional analysis of ETAP conducted- Implementation recommendations for reorganization of ETAP developed- Training sessions for ETAP staff delivered

Component C:- Institutional analysis of MEMER conducted- Implementation recommendations for reorganization of MEMER developed

Training sessions for MEMER staff delivered

Component D:- Technical advice for promoting prospection and exploration that reflects the specifics of the

country’s three main hydrocarbon “regions” produced and provided to MEMER and ETAP- Production of scoping of geological studies conducted and provided to MEMER and ETAP for

further action- Technical recommendations produced and provided to MEMER and ETAP as a basis for

developing a strategy to enhance the attractiveness of the northern Mediterranean E&P zones

D. IMPLEMENTATION

16. Partnership Arrangements (if applicable)N/A

17. Coordination with Country-led Mechanism/Donor Implemented ActivitiesThis is a highly strategic advisory operation to support Tunisia develop and enhance governance of its gas sector to promote energy security as well as advance economic growth. Despite the importance of such advisory activities to government entities, financing from international financial institutions is often lacking due to the perceptions that the hydrocarbon sector of high importance to the private investors and would therefore likely benefit from private financing. But this is only true to a certain extent; in the case of Tunisia for example, developing gas sector operations has been neglected for many years leading to fiscal pressures from high market prices of petroleum products as well as a lack of domestic energy security.

World Bank Group support is available to support efficiency in the power sector, develop renewable

energy, and implementation of targeted safety net and automatic fuel-price adjustment mechanisms to alleviate energy subsidies – all of key importance to the country’s sector strategy.

In the downstream hydrocarbons sector, the OPEC Fund for International Development (OFID) is supporting refining by undertaking a study to support the implementation of a new method for LPG treatment, enhancing the JET fuel processing mode to obtain more jet fuel, undertaking an audit of existing facilities to ensure the safe operation of ageing facilities, and developing a refining and distribution model. In order to ensure synergies and no overlap, the proposed project was discussed with OFID. In fact, both projects are complementary; while OFID’s support to the sector is broad-based focusing on the energy sector as a whole, the Bank’s intervention is focused on the gas sector and support to MEMER and ETAP. Both ISAs have agreed to share relevant outputs for their respective projects and will be coordinating on the ground as well.

Besides the OFID operation which also provides support to ETAP, there are currently no other operations supporting the development of the hydrocarbon sector. This technical assistance is therefore a key agenda item for the government of Tunisia to pursue as it seeks new avenues to stimulate economic growth. The advisory nature of the work will support the government set the groundwork required to reform the upstream gas sector and boost its competitiveness. Although regulatory and governance reforms may take a while to be enacted, they are critical for Tunisia’s growth.

Therefore, the Government of Tunisia would like to mobilize the greatest amount of funds that the MENA Transition Fund can make available to support the reform and competitiveness of its upstream gas sector. In addition to soliciting financing from the MENA Transition Fund for this technical assistance, a small co-financing of US$ 100,000 has also been awarded by the EGPS Multi-Donor Trust Fund, and will contribute to all of the four proposed components.

18. Institutional and Implementation ArrangementsThis technical assistance will be executed by Bank staff from the Energy and Extractives Global Practice of the World Bank and international oil and gas experts, in close coordination with MEMER and ETAP. It will provide independent and robust advisory services and technical assistance to support governance in the gas sector as well as its development. While the MEMER is the main beneficiary of the proposed grant, the Bank as ISA will be the grant recipient.

Senior staff from MEMER and ETAP will form part of a Steering Committee in charge of coordinating implementation, quality control, validation and dissemination. In order to ensure quality control, independent peer reviewers will be selected from outside the Bank’s staff to review draft and final versions of each analytical product.

The grant will also benefit ETAP, the national oil company. The Bank’s Trust Fund and procurement policies and procedures will apply to all grant financed activities. A total of four supervision missions is envisaged to take place annually. Coordination and responsiveness to MEMER and other agencies mandated with the development of the gas will be central to this activity. Technical assistance will be provided through legal reviews, policy notes, workshops, and direct support on a just-in-time basis.

Both MEMER and the World Bank will undertake to coordinate with other private sector development activities throughout the implementation of the project. Steps will be taken to identify synergies with other projects and to leverage linkages between them.

19. Monitoring and Evaluation of ResultsThe World Bank will be responsible for monitoring and evaluating the progress of the activities and will be responsible for collecting the required data. The World Bank will work in close collaboration with the MEMER and ETAP to collect progress indicators, project outputs and document outcomes. The World Bank supervision task team will be responsible for monitoring the development of key regulatory, strategic and technical documents, as well as their adoption, in close collaboration with the Government of Tunisia.

E. PROJECT BUDGETING AND FINANCING

20. Project Financing (including ISA Direct Costs)

Cost by Component MENA Transition Fund (US$)

EGPS Co-Financing (US$)

Total (US$)

Enhancing the legal, fiscal and regulatory framework of the hydrocarbon sector

961,500 25,000 961,500

Strengthening and reorganization of the state-owned Entreprise Tunisienne d'Activités Pétrolières (ETAP)

1,000,000 25,000 1,025,000

Strengthening and reorganization of the Ministry of Energy, Mines, and Renewable Energy (MEMER)

1,000,000 25,000 1,025,000

Promoting hydrocarbon prospection and exploration

500,000 25,000 525,000

Total Project Cost 3,461,500 100,000 3,561,000

21. Budget Breakdown of Indirect Costs RequestedTransition Fund Total (USD)

For grant preparation and administration:Grant administration 38,500 38,500

Total Indirect Costs 38,500 38,500

F. RESULTS FRAMEWORK AND MONITORING

Project Development Objective (PDO):

Support the Government of Tunisia lay the groundwork to strengthen the regulatory framework and improve governance in the upstream gas sector.

PDO Level Results Indicators Unit of Measure Baseline End Target FrequencyData Source/

Methodology

Responsibility for Data Collection

Description (indicator

definition etc.)

Government bodies, institutions and local government units received support services

Number 0 2 Once Status Reports; Completion Report

The World Bank; MEMER

Fund-Level indicator for aggregation

Studies, assessments, reports, action plans, roadmaps, models of good practices or framework endorsed




A study laying the groundwork for the re-organization and re-structuring of MEMER is developed and endorsed

Yes/No N Y Once Status Reports; Completion Report


A study laying the groundwork for the re-organization and re-structuring of ETAP is developed and endorsed


The World Bank; ETAP

A strategic study for promoting prospection and exploration that reflects the specifics of the country’s three main hydrocarbon “regions” is developed and endorsed



An action plan is produced for and endorsed by MEMER to operationalize the aforementioned strategy for promoting prospection and exploration



Regulations or laws endorsed or entities, unit or systems established



Fund-Level indicator for

14

aggregation

An assessment report of the Hydrocarbons Code is performed and endorsed



Staff from MEMER and ETAP are trained in international best practices on upstream gas regulatory and governance frameworks, exploration and production, investment promotion, etc.

Number 0 TBD Once Status Reports; Completion Report



Intermediate Results

Component A Unit of Measure Baseline End Target FrequencyData Source/

Methodology



definition etc.)

Analytical study finalized to inform Tunisia’s strategy for the hydrocarbons sector based on international best practices



Stocktaking of international best practices regarding the legal, fiscal and regulatory framework in the hydrocarbon sector accomplished



Component B Unit of Measure Baseline End Target FrequencyData Source/

Methodology



definition etc.)

Institutional analysis of ETAP conducted Yes/No N Y Once Status Reports; Completion Report


Implementation recommendations for reorganization of ETAP developed


The World Bank; ETAP

15

Training sessions for ETAP staff delivered Yes/No N Y Once Status Reports; Completion Report


Component C Unit of Measure Baseline End Target FrequencyData Source/

Methodology



definition etc.)

Institutional analysis of MEMER conducted Yes/No N Y Once Status Reports; Completion Report


Implementation recommendations for reorganization of MEMER developed



Training sessions for MEMER staff delivered Yes/No N Y Once Status Reports; Completion Report


Component D Unit of Measure Baseline End Target FrequencyData Source/

Methodology



definition etc.)

Technical advice for promoting prospection and exploration that reflects the specifics of the country’s three main hydrocarbon “regions” produced and provided to MEMER and ETAP



Production of scoping of geological studies conducted and provided to MEMER and ETAP for further action



Technical recommendations produced and provided to MEMER and ETAP as a basis for developing a strategy to enhance the attractiveness of the northern Mediterranean E&P zones



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mena transition fund application · web viewexpertise in upstream gas sector governance and...

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