IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-21936) ON A GRANT IN THE AMOUNT OF US$ 5.12 MILLION TO THE REPUBLIC OF TUNISIA FOR A

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-21936) ON A GRANT IN THE AMOUNT OF US$ 5.12 MILLION TO THE REPUBLIC OF TUNISIA FOR A Report No: ICR2530 DEMONSTRATION PROJECT FOR THE PHASEOUT OF OZONE DEPLETING SUBSTANCES Sustainable Development Department Middle East and North Africa Region December 21, 2012 i

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2012) Currency Unit = TND 1.00= US$ 0.63 US$ 1.00 = TND 1.57 FISCAL YEAR July 1- June 2013 ABBREVIATIONS AND ACRONYMS AM ANPE CE CFC CP ExCom FM GA GEO GOT HCFC HFC IA ICR INS IS ISN ISR LPG M&E MNA MOPIC MLF MS MU MTP NOC NOPP NOB ODS ODP Aide-Mémoire Agence Nationale de Protection de l Environnement Cost-Effectiveness Chlorofluorocarbon Country Program for the Phaseout of Ozone Depleting Substances Executive Committee Financial Management Grant Agreement Global Environment Objective Government of Tunisia Hydrochlorofluorocarbon Hydrofluorocarbon Implementing Agency Implementation Completion and Results Report Institut National de la Statistique Institutional Strengthening Interim Strategy Note Implementation Status Report Liquid petroleum gas Monitoring and Evaluation Middle East and North Africa Ministry of Planning and International Cooperation Multilateral Fund for the Implementation of the Montreal Protocol Moderately Satisfactory Moderately Unsatisfactory Montreal Protocol on Substances that Deplete the Ozone Layer National Ozone Committee National ODS Phaseout Plan National Ozone Bureau (former OPIU) Ozone Depleting Substances Ozone Depleting Potential ii

3 OP/BP OPIU OTF PCR PDO PSR QAG S TA TF TTL UNDP UNEP UNIDO USD Operational Policy / Bank Procedure Ozone Project Implementation Unit (later NOB) Ozone Projects Trust Fund Project Completion Report Project Development Objective Project Status Report Quality Assurance Group Satisfactory Technical Assistance Trust Fund Task Team Leader United Nations Development Program United Nations Environment Program United Nations Industrial Development Organization United States Dollar Vice President: Inger Andersen Country Director: Simon Gray Sector Director: Junaid Kamal Ahmad Sector Manager: Lia Sieghart (Acting) Project Team Leader: Alaa Sarhan ICR Team Leader: Andrew Losos iii

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5 REPUBLIC OF TUNISIA Demonstration Project for the Phaseout of Ozone Depleting Substances CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Global Environment Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Project Costs and Financing Annex 2. Outputs by Component Annex 3. Economic and Financial Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 5. Beneficiary Survey Results Annex 6. Stakeholder Workshop Report and Results Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Annex 9. List of Supporting Documents iv

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7 A. Basic Information Country: Tunisia Project Name: Project ID: P L/C/TF Number(s): TF ICR Date: 12/16/2012 ICR Type: Core ICR Lending Instrument: SIL Borrower: Original Total Commitment: Revised Amount: USD 5.12M Environmental Category: B TN-Ozone Depleting Substance ANPE, AGENCE NATIONALE DE PROTECTION DE L ENVIRONNEMENT USD 1.79 M Disbursed Amount: USD 4.42M Global Focal Area: Implementing Agencies: Agence Nationale de Protection de l'environnement Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 08/06/1992 Effectiveness: 08/01/ /14/1994 Appraisal: 10/04/1993 Restructuring(s): Approval: 06/14/1994 Mid-term Review: 12/12/ /31/ /31/ /28/ /28/ /22/2011 Closing: 12/31/ /30/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Global Environment Outcome Bank Performance: Borrower Performance: Satisfactory Low or Negligible Moderately Unsatisfactory Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Quality of Supervision: Moderately Implementing Moderately v

8 Overall Bank Performance: Unsatisfactory Agency/Agencies: Unsatisfactory Moderately Overall Borrower Moderately Satisfactory Unsatisfactory Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Project No at any time (Yes/No): Problem Project at any time (Yes/No): GEO rating before Closing/Inactive status Yes Satisfactory D. Sector and Theme Codes Sector Code (as % of total Bank financing) Quality at Entry (QEA): Quality of Supervision (QSA): Original None Rating Moderately Unsatisfactory Actual Central government administration Other industry Theme Code (as % of total Bank financing) Environmental policies and institutions Pollution management and environmental health E. Bank Staff Positions At ICR At Approval Vice President: Inger Andersen Daniel G. Ritchie (Acting) Country Director: Simon Gray Daniel G. Ritchie Sector Manager: Lia Sieghart (Acting) Daniel G. Ritchie Project Team Leader: Alaa Ahmed Sarhan Fathi Ben Slimane ICR Team Leader: ICR Primary Author: Andrew Michael Losos Malika Drissi Sanne Agnete Tikjoeb vi

9 F. Results Framework Analysis Global Environment Objectives (GEO) and Key Indicators(as approved) As a stand-alone project of the Montreal Protocol, the Global Environment Objective is the same as the Project Development Objective. The project objective is stated in two different documents stemming from 1993 and 1994, respectively, namely the official Montreal Protocol Project Document and the Trust Fund Grant Agreement between the World Bank and Government of Tunisia. The project objective in each document is phrased slightly differently, but the essence of the objective remains the same. The original Project Document of April 1993, stated the project objective as follows: "The project's objectives are to: a) establish the institutional and regulatory framework for decreasing ODS uses; and b) introduce ODS-free technologies to the refrigeration, foam and aerosol industries as a first demonstration phase in completing an early ODS phaseout program. As per the TF Grant Agreement of June 1994, the project's objectives are "to assist the Recipient in implementing a strategy aimed to establish the institutional and regulatory framework for decreasing the use of ODS and introduce, on a demonstrational basis, ODS-free technologies to the country's refrigeration, foam and aerosol industries so as to initiate actions leading to an early ODS-phaseout program". Per the original Project Document and TF Grant Agreement, no exact indicator value was established at the beginning of the project. However, the Project Document did establish that it aimed to phaseout about one-third of the 1991 consumption baseline of 1045 ODP through the demonstration of new technologies in 5 subprojects in the three sectors. Following appraisal, it was determined that the chlorofluorocarbons (CFC) used in the 5 subprojects identified amounted to 227 ODP tonnes; hence, this can be interpreted as the value originally targeted. Revised Global Environment Objectives (as approved by original approving authority) and Key Indicators and reasons/justifications The GEO was revised twice by amendment of the TF Grant Agreement of The first revision of December 12, 1997 widened the scope of the second part of the objective of the project by including an additional three ODS-using sectors. The revised GEO is "to assist the Recipient in implementing a strategy aimed to establish the institutional and regulatory framework for decreasing the use of ODS and introduce, on a demonstrational basis, ODS-free technologies to the country's refrigeration, foam, aerosol, solvent, halon and bromide industries so as to initiate actions leading to an early ODS-phaseout program". This change reflected additional funding (US$ 3.3 M) granted through the Montreal Protocol for new subproject investments in those sectors. The second revision on March 28, 2007 made a slight change to the last sentence of the GEO to reflect a new broader, national objective of Tunisia to phase out selected ozone depleting substances by The revised GEO is "to assist the Recipient in implementing a strategy aimed to establish the institutional and regulatory framework for decreasing the use of ODS and introduce on a demonstrational basis, ODS-free vii

10 technologies to the country's refrigeration, foam, aerosol, solvent, halon and bromide industries so as to initiate actions leading to fulfillment of the Recipient's commitment to phaseout ODS by This change reflected the approval by the MP Executive Committee (ExCom) of Tunisia's National Ozone Phaseout Plan (NOPP), which altered the scope of the project significantly from financing primarily sub-investments to supporting a national plan for complying with MP phaseout targets. Three revised indicators were developed when the NOPP was adopted, but the process for the inclusion of these indicators is unclear. Those revised indicators were closely aligned with the original indicator associated with phaseout from the five demonstration projects, above. The revised indicators were as follows: Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies; Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies (in ozone depleting potential (ODP); Develop an institutional framework within ANPE to regulate the elimination of ODS in Tunisia. An intermediate indicator was included in the most recent ISRs: "Replacement of CFC 11 and CFC 12 by HFC 134a". The ICR Team has not been able to ascertain when this indicator was added or how it was established. Further, the values listed for this intermediate indicator in the ISRs are not consistent with those reported for GEO indicator number 2, below. (a) GEO Indicator(s) Indicator Indicator 1 : Value (quantitative or Qualitative) Baseline Value Original Target Values (from approval documents) viii Formally Revised Target Values Actual Value Achieved at Completion or Target Years Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies. Alternative Successful Successful technologies were introduction of introduction of introduced at 12 Continued use of ODSbased technologies in through 5 demos refrigeration, alternatives alternatives in beneficiaries in the refrigeration, foam, refrigeration, foam and in the foam, aerosol aerosol sectors. aerosol sectors. refrigeration, solvents, halon Halon sector foam, and aerosol and bromide received TA on sectors. sectors. alternative options. Date achieved 06/14/ /30/ /31/ /30/2012 Comments (incl. % achievement) With the extension of the GA and addition of subprojects to Part A of the GA, the original objective of demonstrating new technology through 5 demonstration subprojects was more than achieved. Indicator 2 : Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies (in ozone depleting potential (ODP)).

11 Value (quantitative or Qualitative) 1045 ODP tonnes 227 ODP tonnes ODP tonnes ODP tonnes Date achieved 06/14/ /30/ /01/ /01/2010 Comments The actual value achieved (974.4 ODP tonnes) exceeded the revised target value (incl. % ( ODP tonnes) by 14 percent. achievement) Develop an institutional framework within ANPE to regulate the elimination of Indicator 3 : ODS in Tunisia. Value (quantitative or Qualitative) Embryonic institutional framework since 1989 ratification of Vienna Convention and Protocol of Montreal. Ozone Bureau established in ANPE reviews legislation and decisions related to the use and import of ODS. Fully functioning Bureau de l Ozone within ANPE, with a head of bureau fully financed by the GOT. Legal and regulatory system updated and in conformity with MP. Date achieved 06/14/ /30/ /30/2012 Comments Tunisia has acceded to or ratified all four Montreal Protocol amendments (incl. % (London, Copenhagen, Montreal and Beijing). achievement) (b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Indicator 1 : Replacement of CFC 11 and CFC 12 by HFC 134a. Value tonnes of CFC to (quantitative or 0.00 be eliminated. Qualitative) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Original target exceeded by 14% Date achieved 06/14/ /31/ /18/ /30/2012 Comments (incl. % achievement) Additional phaseout achieved in CFCs, halon with the newest subproject component (NOPP). ix

12 G. Ratings of Project Performance in ISRs No. Date ISR Archived GEO IP Actual Disbursements (USD millions) 1 03/15/1995 Satisfactory Satisfactory /05/1995 Satisfactory Satisfactory /01/1995 Satisfactory Satisfactory /25/1996 Satisfactory Satisfactory /23/1999 Highly Satisfactory Highly Satisfactory /27/1999 Highly Satisfactory Highly Satisfactory /13/2000 Highly Satisfactory Highly Satisfactory /18/2000 Highly Satisfactory Highly Satisfactory /06/2000 Highly Satisfactory Highly Satisfactory /28/2001 Highly Satisfactory Highly Satisfactory /27/2001 Highly Satisfactory Highly Satisfactory /01/2002 Highly Satisfactory Highly Satisfactory /31/2002 Highly Satisfactory Highly Satisfactory /30/2002 Satisfactory Satisfactory /15/2003 Satisfactory Satisfactory /27/2003 Satisfactory Satisfactory /19/2004 Satisfactory Satisfactory /12/2004 Satisfactory Satisfactory /16/2005 Satisfactory Satisfactory /20/2005 Satisfactory Satisfactory /02/2006 Satisfactory Satisfactory /28/2006 Satisfactory Satisfactory /28/2007 Satisfactory Moderately Satisfactory /14/2007 Satisfactory Moderately Satisfactory 3.54 Moderately 25 11/06/2008 Satisfactory Unsatisfactory /30/2009 Satisfactory Moderately Satisfactory /28/2009 Satisfactory Moderately Satisfactory /30/2010 Satisfactory Moderately Satisfactory /12/2011 Satisfactory Moderately Satisfactory 4.24 Moderately 30 08/28/2011 Moderately Satisfactory Unsatisfactory 4.25 Moderately 31 03/13/2012 Satisfactory Unsatisfactory 4.31 Moderately 32 07/11/2012 Satisfactory Unsatisfactory 4.31 x

13 H. Restructuring (if any) Restructuring Date(s) ISR Ratings at Board Restructuring Approved GEO Change GEO IP Amount Disbursed at Restructuring in USD millions 12/12/1997 N S S /31/2000 N HS HS /31/2003 N S S /28/2007 N S S /28/2010 N S MS /22/2011 N MS MU 4.30 Reason for Restructuring & Key Changes Made Increase of grant ceiling amount to $3.79 million. Slight revision of project objective to include 3 additional sectors (solvents, halon and bromide) as the sixth component under Part A (A6). Extension of closing date until December 31, Reassignment of disbursement categories for Part B to 1-G and 2-G (instead of F). Extension of closing date until December 31, Extension of closing date until December 31, 2010 to take into account GOT new strategy to eliminate ODS in accordance with the MP schedule. Increase of grant ceiling amount to $5.12 million. Slight revision of PDO to reflect a broader objective to phase out select ozone depleting substances in accordance with the MP by Jan. 1, Addition of Tunisia s National ODS Phase-out Plan (NOPP) as a program under Part A of the GA (A7). Reassignment of disbursement categories for Part B back to 1- F and 2-F. Extension of closing date until December 31, Extension of closing date until June 30, xi

14 I. Disbursement Profile xii

15 1. Project Context, Global Environment Objectives and Design 1.1 Context at Appraisal 1. Country and Sector Background. The Montreal Protocol on Substances that Deplete the Ozone Layer (MP) is a multilateral environmental agreement that was adopted in 1987 based on international recognition of the need for firm measures to protect the earth s ozone layer. 1 The Protocol established time-bound targets to reduce the production and consumption of a number of ozone depleting substances (ODS), initially (i) chlorofluorocarbons (CFCs), used in refrigeration, air conditioning, and aerosol, solvents and foam applications, and (ii) halons, used in fire protection The Government of Tunisia (GOT) ratified the MP in September of 1989 and thereby committed to the complete phase out of the regulated substances found in Annexes A-E of the MP in accordance with its provisions and amendments. Developing countries, such as Tunisia, are classified as Article 5(1) Parties. Ratification of the Protocol made Tunisia eligible to receive grants from the Multilateral Fund for the Implementation of Montreal Protocol (MLF) to support its ODS phaseout targets. 3. Tunisia was one of the early countries to receive financial assistance from the MLF for the development of a Country Program (CP) and the development of a national strategy for phasing out the use of ODS in accordance with the milestones given for Article 5(1) countries by the MP. 3 Tunisia s original CP was under preparation for over two years, the intervening period being used for data collection and developing the required strategies and defining the required policy and legal frameworks. The CP was completed with the assistance of the World Bank in The Executive Committee (ExCom) of the Multilateral Fund (MLF) subsequently approved the Tunisia CP at its 19th meeting in May Tunisia neither produced, nor exported, any of the substances controlled under the Protocol and hence, its consumption demands were met solely through imports. As a result, the CP spelled 1 The Montreal Protocol on Substances that Deplete the Ozone Layer (a protocol to the Vienna Convention for the Protection of the Ozone Layer) was amended four times, in 1990 (London), 1992 (Copenhagen), 1997 (Montreal), and 1999 (Beijing). The international agreement is being implemented in 197 countries, and scientists estimate that the ozone layer should return to pre-1980 levels between 2050 and The Protocol has been ratified by 197 states and the European Union. 2 About 90% of all ozone in the atmosphere is found in the stratosphere, beginning about 11 miles above Earth and extending upwards to 30 miles, and therefore called the ozone layer. The stratospheric ozone layer is important because it protects life on Earth from short-wavelength ultraviolet radiation produced by the sun. Solar ultraviolet-c radiation is lethal, and ultraviolet-b radiation is damaging to almost all forms of life. Excessive ultraviolet-b radiation can result in smaller crop yields and damage to plant genetic material, damage to marine ecosystems, reduced fishery yields and animal health problems. It can also cause human health problems such as skin cancers, eye cataracts and weakening of the immune system. 3 The standard reference we use used in this report for ozone-depleting potential (ODP) is as follows: ODP is the ratio of the impact on ozone of a chemical compared to the impact of a similar mass of CFC-11. The ODP of CFC- 11 is defined to be 1.0. Other ODS have ODPs that range from 0.01 to

16 out regulatory measures needed to control ODS imports, and fiscal and technology transfer measures to encourage the use of ODS substitutes and the adoption of non-ods technologies. 5. At the time of appraisal, 97 percent of ODS consumption in Tunisia was in the form of CFC- 11 and CFC-12, which was heavily used in the local refrigeration, foam and aerosol industries. Annual consumption was growing rapidly from 585 tonnes ODP/yr. in 1986 to 1,065 tonnes ODP/yr. in Of this, 55 percent was consumed as a foam blowing agent; 22 percent as a refrigerant; and 22 percent as a propellant for aerosol sprays. Servicing of domestic refrigerators alone accounted for 54 percent of CFC consumption in the refrigeration sector in Rationale for Bank Assistance: One of the Bank s major commitments to its clients is to provide support to them in meeting their obligations under international or multilateral agreements, of which the Montreal protocol is one. Such support often takes the form of targeted investments and capacity strengthening. In the early 1990 s, the Bank was beginning to play a larger role in the protection of the global environment by incorporating global environmental concerns into its strategy for sustainable development. Given the Bank s recognized ability to support large-scale, investment projects, and given the opportunity to link environmental efforts more closely with broader development objectives, the Bank agreed to be one of the original three implementing agencies of the MLF, along with UNEP and UNDP (UNIDO became the fourth Implementing Agency at a later date). 7. As an implementing agency of the MLF, the Bank assisted the Government of Tunisia in identifying opportunities for ODS phaseout in the manufacturing and service sector. At the time of appraisal, a number of similar projects were under development by the Bank, including another in the MNA region (i.e. Jordan). The Bank had a strong technical team that was involved in these operations and able to transfer experiences and best practices between countries. The Bank s focus on economic development while ensuring environmental sustainability placed it in a good position to support ODS phaseout where industrial expansion would need to include environmental considerations. 8. As spelled out in the Bank s Operational Policy 10.21, Investment Operations Financed by the Multilateral Fund for the Implementation of the Montreal Protocol, funding for the implementation of MP projects is channeled to recipients through the Ozone Projects Trust Fund (OTF), which the Bank established and administers. The OTF is constituted by funds approved by the MLF ExCom. Projects, and umbrella grant sub-projects, greater than $500,000 are prepared and pre-appraised by the World Bank, following which they are submitted for approval to the MLF ExCom. Such operations are then processed according to the procedures set out in Bank Procedures 10.21, which include project documents and reviews similar or identical to those that apply to regular investment projects, and then approved at the Regional Vice President level. 4 The World Bank Procurement and Consultant Selection Guidelines apply. 4 Montreal Protocol operations have evolved somewhat since OP/BP was originally established but its main feature, the umbrella grant agreement, was employed through As part of Bank-wide Investment Lending Reforms, there are plans to retire OP/BP in FY

17 1.2 Original Global Environment Objectives (GEO) and Key Indicators 9. As a stand-alone project of the Montreal Protocol, the Global Environment Objective is the same as the Project Development Objective. The project objective is stated in two different documents stemming from 1993 and 1994, respectively, namely the official Montreal Protocol Project Document and the Trust Fund (TF) Grant Agreement (GA) between the World Bank and Tunisia. The project objective in each document is phrased slightly differently; however the essence of the objective remains the same. 10. The original Project Document of April, 1993, stated the project objective as follows: The project's objectives are to: a) establish the institutional and regulatory framework for decreasing ODS uses; and b) introduce ODS-free technologies to the refrigeration, foam and aerosol industries as a first demonstration phase in completing an early ODS phaseout program. As per the TF Grant Agreement of June 1994, the project's objectives are "to assist the Recipient in implementing a strategy aimed to establish the institutional and regulatory framework for decreasing the use of ODS and introduce, on a demonstrational basis, ODS-free technologies to the country's refrigeration, foam and aerosol industries so as to initiate actions leading to an early ODS phaseout program". 11. Per the original Project Document and TF Grant Agreement, no exact indicator value was established at the beginning of the project. However, the Project Document did establish that it aimed to phaseout about one-third of the 1991 consumption baseline of 1045 ODP through the demonstration of new technologies in 5 sub-projects across the three sectors. The CFCs used in the 5 subprojects identified was determined to amount to 227 ODP tonnes and this became the original target value. 1.3 Revised GEO (as approved by original approving authority) and Key Indicators, and reasons/justification 12. The GEO was revised twice by amendment based on the project objective stated in the TF Grant Agreement of The first revision of December 12, 1997 widened the scope of the second part of the objective of the project by including an additional three ODS-using sectors. The revised GEO is "to assist the Recipient in implementing a strategy aimed to establish the institutional and regulatory framework for decreasing the use of ODS and introduce, on a demonstrational basis, ODS-free technologies to the country's refrigeration, foam, aerosol, solvent, halon and bromide industries so as to initiate actions leading to an early ODS phaseout program." This change reflected additional funding granted through the Montreal Protocol for new sub-project investments in those sectors. 14. The second revision of March 28, 2007 made a slight change to the last sentence of the GEO to reflect a new broader, national objective of Tunisia to phase out select ozone depleting substances by The revised GEO is to assist the Recipient in implementing a strategy aimed to establish the institutional and regulatory framework for decreasing the use of ODS and 3

18 introduce on a demonstrational basis, ODS-free technologies to the country s refrigeration, foam, aerosol, solvent, halon and bromide industries so as to initiate actions leading to fulfillment of the Recipient s commitment to phaseout ODS by This change reflected the approval by the MP Executive Committee (ExCom) of Tunisia s National Ozone Phaseout Plan (NOPP), which altered the scope of the project significantly from financing primarily sub-investments to supporting a national plan for complying with MP phaseout targets. Three revised indicators were developed when the NOPP was adopted, but the process for the inclusion of these indicators is unclear. Those revised indicators were closely aligned with the original indicator associated with phaseout from the five demonstration projects, above. The revised indicators were as follows: - Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies; - Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies (in ozone depleting potential (ODP); - Develop an institutional framework within ANPE to regulate the elimination of ODS in Tunisia. 15. An intermediate indicator was included in the most recent ISRs: Replacement of CFC 11 and CFC 12 by HFC 134a. The ICR Team has not been able to ascertain when this indicator was added or how it was established. Further, the values listed for this intermediate indicator in the ISRs are not consistent with those reported for GEO indicator number Main Beneficiaries 16. The direct beneficiaries identified in the original Project Document (April 1993) were local enterprises who would be eligible to receive funds to introduce appropriate ODS reducing technologies and production processes. 17. Indirectly, the global population is the main beneficiary group of the ODS phaseout program as ODS reduction will have positive effects on the stratospheric ozone layer. 18. Finally, other beneficiaries include various governmental entities, who have received funds for strengthening the institutional environment governing the phaseout of ODS. 1.5 Original Components (as approved) 19. Per the original Project Document, the project consisted of six components organized in two main parts: Technology Development and Institutional Strengthening. Part A: Technology Development. This part consisted of 5 components in three ODS-using sectors focusing on demonstration projects, technical assistance and training aimed at assisting the Government of Tunisia (GOT) in the transfer of technology suitable to allow it to reduce ODS in the refrigeration, flexible foam and aerosol sectors: 4

19 Refrigeration Sector: i. HFC-134a Refrigerator Prototypes: Introduction of HFC-134a as a substitute for CFC-12 as a refrigerant in the manufacturing of refrigerators; ii. Rigid Foam Conversion Demonstration: Replacement of CFC-11 as a foam-blowing agent for refrigerator insulation; iii. Technician Training (Refrigeration): Introduction of a CFC-recycling and refrigeration maintenance program through training. Flexible Foam Sector: iv. Flexible Foam Conversion Demonstration: Replacement of CFC-11 with a non-ods substitute. Aerosol Sector: v. Aerosol Study and Conversion: A sectoral study to determine assistance needs and training. Part B: Institutional Strengthening. This component was designed to establish and operate the Ozone Project Implementation Unit (PIU) to assist ANPE in managing the project, specifically through recruitment of staff, provision of consultant services, training and equipment, and identification of feasibility studies for new investment projects required to complete the phaseout of ODS. These new projects would be submitted to the MLF ExCom for financing of incremental costs: vi. Institutional Strengthening: Develop an institutional framework within ANPE to regulate the elimination of ODS in Tunisia. Table 1: Overview of Original Components and Funding Allocation Project Element Part A - A1 Component 5 OTF Grant (US$ 000) GOT/Industry (US$ 000) TOTAL HFC-134a Refrigerator Prototypes A2 Rigid Foam Conversion Demonstration A3 Technician Training (Refrigeration) A4 Flexible Foam Conversion Demonstration A5 Aerosol Study and Conversion Part B Institutional Strengthening Contingency TOTAL 1, ,231 The original project cost was US$ 2.23 million, of which US$ 1.79 million was financed through the OTF grant.

20 1.6 Revised Components 20. The components were slightly revised over the life of the project, though the administrative mechanism for their revision is unclear. Montreal Protocol projects did not require approval by the Board of Directors of the World Bank. 21. Component A6 (Additional Foam Sub-Projects) was added approximately in 1997, after the completion of the first round of demonstration sub-projects to include the group of foam subprojects between 1998 and Component A7 was added for the National Ozone Phaseout Plan (NOPP). Institutional Strengthening (IS - Part B) was renewed more than originally planned to ensure there was IS funding during implementation of Components A6 and A7 and other sub-projects (under UNIDO). The grant ceiling was raised incrementally from US$1.79 million to US$5.12 million as outlined in section The table below shows the revised components and the approximate disbursement for each component. Tunisia received project approvals from the ExCom in excess of the latest US$5.12 million grant ceiling amount. However, given a disbursement rate of 86 percent, the most recent GA extensions associated with the renewal of the IS component were not accompanied by a raise in the grant ceiling. An effective quota system and lower ODS demand than estimated in the NOPP form part of the explanation for the lower than anticipated disbursement rate. However, another reason is related to the implementation capacity of the NOB following the approval of the NOPP, which as a national program proved to be much more difficult to manage than the traditional subprojects and therefore slowed implementation. For more details, please see Annex 2. Table 2: Overview of Revised Components and Reallocated Funding: Project Components OTF Grant Approved (US$ 000) Part A - A1 HFC-134a Refrigerator Prototypes 405 A2 Rigid Foam Conversion Demonstration 259 A3 Technician Training (Refrigeration) 33 A4 Flexible Foam Conversion Demonstration 218 A5 Aerosol Study and Conversion 240 A6 Additional Foam Sub-Projects 1,523 A7 National Ozone Phaseout Plan 1,135 Part B Institutional Strengthening 1,456 Contingency 0 TOTAL 5,269 6

21 1.7 Other significant changes 23. The Project was designed to furnish grant funds approved by the MLF for the targeted phaseout of ODS. The Project s implementation structure was governed by an umbrella Grant Agreement (TF 21936), an instrument that had been created specifically for the Bank s MP investment activities. In this instrument, grant commitments were not received upfront but rather, were dependent on MLF approvals received over the life of the agreement, thereby allowing for the development of additional subprojects that might be required to assist the Government in meeting its MP phaseout targets in the future. This unique approval process of grant funding from the MLF has meant that a frequent number of extensions and amendments are common for MP projects. 24. Since the ODS Phase-Out Trust Fund Grant Agreement became effective on June 14, 1994, the original closing date of June 30, 1997, has been extended five times up to the last date of June 30, 2012 all at the request of the GOT. The grant agreement was also amended on November 3, 1994, December 12, 1997, and February 22, 2007 to incrementally increase the ceiling of the grant from an initial US$1.79 million to US$5.12 million to allow for funding of additional subprojects approved by the MLF. These increases were primarily to adapt to new stages of subproject approvals by the MLF based on evolving country needs as phased MP ODS elimination obligations came into force. 7

22 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 25. The project was prepared and designed in accordance with the operational mechanism of the MLF, which required the development of Country Program (CP) as a condition for approval of planned activities for the phaseout of ozone depleting substances of the MP (mainly CFCs and halon). Subsequently, investments identified in the CP were reviewed and funded separately based on their ODS phaseout potential, technical merit and cost-effectiveness. The Government s commitment had been demonstrated by ratification of the Montreal Protocol and acceptance of the ODS control schedule therein. 26. The project structure was simple: a single implementing agency with well-defined responsibilities would implement sub-projects identified in the CP to introduce ODS-reducing technologies to specific companies in targeted industries coupled with a strong technical assistance component that would strengthen institutional capacity during implementation. The transfer of ODS-reducing technologies to the private sector was structured as an umbrella agreement as provided by OP to facilitate the processing and management of multiple subprojects under a single Grant Agreement. At the time of appraisal, a Project Manager had been appointed by ANPE under terms of reference satisfactory to the Bank. With overall responsibility for the implementation of the project, the Project Manager was supported by Component Coordinators and an Institutional Specialist with expertise in complying with Bank and MP procedures. 27. The three main risks to the project identified at the preparation stage were considered to be: (a) a possible delay in implementing start up activities due to ANPE's lack of familiarity with Bank procedures, with a resultant delay in adopting the recommended accelerated phaseout schedule. This would be mitigated by the following: (i) securing an institutional specialist to assist with the preparation of detailed TORs, procurement documents, work plans, and procedural guidelines for the OPIU and NOC; and (ii) presenting a project launch seminar during the first supervision mission following grant signing in order to familiarize project participants with Bank and Montreal Protocol guidelines and procedures for project preparation and implementation; (b) the reluctance of manufacturers to cooperate with ANPE in the sharing of ozone friendly technology throughout the relevant sectors. This would be mitigated by the following: (i) the signing of sub-grant agreements which would require the transfer of technology - obtained through OTF financing - between enterprises, with signatures required as a condition for grant effectiveness; (c) the difficulty in enforcing an accreditation system in practice given that there was no existing system for monitoring refrigeration technician activities and qualifications. This would be partly mitigated by the following: 8

23 (i) the provision of training courses to all qualified candidates prior to enforcing the system, and by putting in place regulation of ODS distributors and a monitoring program of ODS-using industries. 28. In hindsight, despite the fact that most of these risks were effectively mitigated, issues regarding staffing, financial management and procurement still arose during the implementation period (see Section 2.2). However, it would appear that no measures taken at project preparation could have prevented these problems. 29. There were no significant environmental and social safeguards issues identified during preparation. Concerns primarily related to worker health and safety in the foam and aerosol industries and were mitigated by adhering to international standards for the safe handling of flammable and potentially toxic substances. 30. The project was designed before formal results frameworks were required for Banksupported projects; however, the objectives, baseline and target values were clearly defined from the outset and have continued to provide a meaningful framework for measuring progress throughout the life of the project. 31. Documentation on stakeholder involvement in the preparation of the Country Program was not available to the ICR team. However, based on MLF guidance in place for CP preparation in the early 1990s, the team assumes that the Tunisian CP preparation also involved stakeholder consultations. Participating enterprises were actively involved in sub-project preparation and selection of alternative technologies. 32. Protection of the ozone layer was an area of new business development for the Bank and a number of similar projects using the Ozone Projects Trust Fund resources were under development at the time. No similar projects however, had yet advanced sufficiently in implementation at that time to provide comprehensive lessons learned that could be applied in the preparation of this project. In fact, the Tunisia CP and the following ODS demonstration project were among the earliest MP activities of the World Bank. 2.2 Implementation 33. A number of critical success factors and institutional challenges stand out from the perspective both of the Bank and of the country. Overall, while the project has performed well and achieved its global environmental objective, implementation was not without delays or problems. Various difficulties related to supervision and implementation placed the project at risk in the last years prior to closing. 34. Changing project objectives: Clearly, the course of implementation deviated drastically from those original designs in the sense that all phases have been supported under a single project. In retrospect, it is possible to identify three distinct phases to the project as implemented: (i) First, to build the capacity of the GOT by establishing the institutional framework for ODS phaseout and pilot an initial set of demonstration activities; 9

24 (ii) Second, to fund a series of follow-on investments to assist the private sector in modifying production processes using ODS-free technology in participating industries; and (iii)third, to develop a National Ozone Phaseout Plan (NOPP) in 2006, which provides an overall strategy and action plan for the complete phaseout of consumption as defined by the Montreal Protocol of Annex A, Group I and II and Annex B, group II and III ozone depleting substances (i.e. CFCs and halon) by The first phase met with substantial success thanks to a campaign of sensitization and dialogue with the affected industries and companies during the preparation of the CP and the early stages of project implementation. During these early days of the project, the NOB approached industry associations of the sectors of interest and canvassed their membership for volunteers to participate in the technology demonstration program. The industry associations also became part of the information dissemination effort. 36. The technology demonstrations took the form of a grant to reduce or eliminate the cost of replacing capital equipment in the participating companies; for example, a foam injection company making rigid foam insulation with a CFC agent used for the blowing process would receive through the project a replacement injector machine capable of working with a non-cfc blowing agent such as HFC-134a. The capital equipment would be accompanied by training in its operation, also provided through the project. At the same time, within the government a program of targeted capacity building was underway to bring the capacities of the institutions managing the project into line with the project s exigencies. 37. The second stage built on the lessons learned from the first, both in technical and capacity terms. The mode of technology transfer was by this time established and the capacity of the NOB and other partner agencies substantially stronger. The only modifications required were to extend the closing date of the grants, and to raise the ceiling amount as required to accommodate the amount of new funds made available. This stage represented a scaling-up of the activities initially planned under the project. 38. By modifying the original project objective that had only captured three sectors and extending the grant and its ceiling, the opportunity and scope for ODS impact widened in a changing environment where CFC alternatives were becoming more accessible, the extent of ODS using industries and sectors became known and the MP baseline for developing countries was being established ( ). The third phase began to introduce new elements that had not been part of the initial project design. A project that had begun as a technical demonstration to encourage technological uptake in industry became the primary vehicle for the achievement of Tunisia s internationally agreed goals on ODS phaseout. This was the point at which the project became qualitatively different from its original design. However, the limited monitoring and results framework in place for the initial, limited project objectives did not keep pace with these changes and was not well suited to providing consistent measurement of outputs and tracking of impacts. Furthermore, the institutional capacities built during the prior stages of the project were not necessarily those which would lend themselves to the successful execution of this stage. 39. As the project grew evermore comprehensive in scope, project implementation performance suffered - as evident in the performance ratings since 2007, which have shown a general 10

25 downward trend. This coincided with MLF funding for the National Ozone Phaseout Plan (NOPP), which signaled a change from the previous approval of sub-project investments to funding of a national program. The new, country-driven, performance-based approach embodied in the NOPP and which was adopted by the ExCom at its 35th Meeting might have proven to be too much for the GOT without also increasing support to build capacity in project management. With the project-by-project approach in earlier days, consultants and direct contracting lightened the implementation burden for ANPE. All of this, coupled with changes in WB operational requirements (fiduciary procedures in particular) and with the fact that the NOPP may have overestimated the magnitude of the phaseout still required in the private sector, led to setbacks in implementation. 40. In hindsight, perhaps the best performance outcomes would have been achieved by dividing the task into separate phases with proper preparation and objectives for each phase. Another valid approach would have been to evaluate the project at intervals during its long implementation, such as via mid-term reviews (discussed in greater depth below), and to restructure the project according to the findings of those evaluations. This would provide the team with systematic opportunities to revise the legal agreement so that it continues to reflect accurately the actual activities being undertaken by the project. 41. Implementation Schedule: The implementation schedule itself never posed any problems as the nature of the umbrella agreement was amenable to extension as funds became available. The original project was designed to be implemented in three years with a closing date in Initially, as described in the original Project Document, the project was envisioned to establish the institutional and legal framework for phasing out CFCs and to demonstrate to the private and public sectors, using a series of activities, the introduction of non-ods substitutes in the refrigeration, foam, and aerosol industries. Subsequently, the GOT would submit to the MF the second phase of the CP consisting of investment projects. 42. Supervision Challenges: Supervision of this project began on quite a successful trajectory as shown by the series of ISR ratings, and operated that way for more than a decade. Problems began to occur in later years, particularly after A couple of key factors have challenged supervision; in particular, frequent rotation of TTLs in the later years of the project 5, and continuously evolving Bank procedures, particularly in the fiduciary domain. 43. The turnover of TTLs is a well-known issue in many projects across the World Bank, but in this case it became aggravated in the last few years of the project s lifespan, as TTL tenure became less constant, often falling below one year. The net effect of this, noted also by the Quality Assurance Group (QAG), was that the task team became stuck in perpetual learning mode as new staff took on the project, and were prevented from reaching the level of mature experience that would have contributed the greatest value to the Client s efforts. This problem was further aggravated by the contrasting longevity of the tenure of the main GOT counterparts: 5 The ICR team has been unable to reconstruct the complete chain of TTL custodianship for the entire lifespan of the project. Frequent turnover of TTLs has been identified as a problem by both Bank staff and the Client, and was identified in the QAG report based on FY information. The partial reconstruction shows that between 2005 and 2011, there were at least nine different TTLs for this project. 11

26 they had been involved in the project since its inception and could see the disparity with the relatively long tenure of the project s earlier TTLs. 44. Continuously evolving Bank administrative procedures have imposed challenges on the Client to conform to changing requirements. The challenge of changing procedures is to be expected over the long lifespan of a project like this, and is not unique. Communication, however, is the key to managing these routine changes over time. The Bank has a responsibility to collaborate with the Client during such transition phases (e.g. to new or changing reporting formats), but it has been noted that in some cases, the Bank did not make every effort to facilitate this process. It is likely that this has led to slippage on the part of the Client and may have reflected poorly on implementation performance. 45. While these challenges are not limited to this project, they have had an impact on both Bank and Client implementation performance. In a step towards creating better synergy between project objectives, staff expertise, and supervision resources, responsibility for supporting the implementation of the project was transferred from MNSIF (Infrastructure, Private Sector Development and Finance) to MNSRE (Environmental Cluster) in It is nonetheless important to keep in perspective that progress towards the GEO remained satisfactory and that Tunisia has achieved high levels of ODS phaseout; in fact, significantly higher than set targets. Instead, it was primarily the relationship between the Client and the Bank that was affected as a number of supervision challenges hampered the Bank s engagement with the project. 47. Mid-Term Review: No mid-term review was ever carried out by the Bank. It has not been possible for the ICR Team to uncover the exact reasons for this. However, compared to other ODS phaseout projects recently completed, it is not uncommon for MP projects with over 15 years of implementation to not conduct a mid-term review at all or to undertake this exercise late in the process. The Philippines Ozone Depleting Substances Phaseout Project (P004406), which was approved in 1994, completed a mid-term review in 2008 before project closing in The Republic of Turkey Second Phase-Out of Ozone Depleting Substances Project (P038404), which was approved in 1991 and closed in 2007 without undertaking a mid-term review. The same is true for the China Ozone Depleting Substance Phase-Out Project III (P003409), which was approved in 1995 and closed in 2008, and for the Jordan Ozone-Depleting Substances Phase-Out 2 Project (P049706), which was approved in 1995 and ended in 2012; neither of which ever undertook a mid-term review. 48. It should be noted that a mid-term review is not a formal requirement by the MP or the MLF. Though the MLF does not offer any financial incentives towards undertaking a mid-term review, the bank budget funding allocated to this project should in theory have been sufficient for all project implementation costs, including mid-term review(s). 49. Institutional Support: There was strong inter-ministerial support for the National Ozone Bureau (NOB) and for the project. Other ministries critical to the implementation of this project, such as Trade, Finance, Industry, and Health, as well as the Customs Office ( Bureau des Douanes ), have been involved in formal and informal cooperation mechanisms that have grown 12

27 to maturity over time and enabled the ODS phaseout program to be achieved by concerted action across these diverse entities. Within the ANPE, the NOB achieved and maintained support from its managers due in part to persistent high-level political support, to the project s demonstrated progress towards established targets, to the self-contained nature of its mandate, and to its ability to procure funding for its own operations from the proceeds of the MLF grants. 50. Country Ownership: From the beginning of the project, Tunisia has shown a strong sense of ownership of the project, and benefitted from the leadership of the GOT to make ODS phaseout a national priority. This strong national ownership has been an asset to the Tunisian ODS phaseout program at the level of the Montreal Protocol, where the country was among the early movers on this issue. The strong political commitment from the GOT has also been instrumental, as has the existing institutional foundation upon which the project has built and strengthened the capacity of the NOB. 51. QAG Review: This project was subject to a review by the Quality Assurance Group (QAG) in 2005 as part of the QSA6 (Quality of Supervision in FY03-04). The QAG review of this project assigned a Supervision rating of moderately unsatisfactory, based in large part on significant implementation challenges, including lack of continuity in task team composition leading to a state of perpetually learning the project from the ground up, the need to organize additional expertise to assist with supervision, and incompleteness of supervision documents, among others. The QAG review and the region s responses are discussed in greater depth in section 5.1(b). 52. Arab Spring: In December 2010, Tunisia experienced an unprecedented and spontaneous wave of massive civil resistance that ended the 23 year rule of former President Zine El Abidine Ben Ali, and which ushered in a new political and economic era. These events prompted a review of the existing Country Partnership Program for FY10-FY13, and an Interim Strategy Note (ISN) was prepared to outline the Bank Group's proposed post-revolution engagement in Tunisia for FY13 and FY While Tunisia is currently at a critical turning point, facing unprecedented challenges and opportunities, the GOT s commitment to meeting its obligations under the Montreal Protocol has been unwavering. Traditionally, the highest priority within the GOT has been accorded to legislation, which gives effect to international Treaties ratified by Tunisia. This includes the MP and it provisions, which have acquired the status of domestic law. 54. In practical terms, the ICR mission revealed that, though the Arab Spring did pose some difficulties in terms of general uncertainty within the government as a whole, the project did not suffer commensurate setbacks. The only specific incident cited was that there was some procurement difficulty with an international provider under contract who failed to meet the terms of the contract and delivery of goods was delayed while an alternative provider was found. However, the overall operation of the project was able to continue largely uninterrupted, due largely to two main factors: first, the fact that the MP grant paid for the operational budget of the NOB; and second, the existence of strong and long-standing working relationships between the NOB and its partner ministries and agencies (e.g. Customs). It must also be noted that the Arab Spring did not begin until the ODS elimination deadline was almost at hand. 13

28 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 55. The project has the advantage of having a single, well-defined, quantitative indicator to track progress towards meeting the GEO target of zero ODS consumption by 2010: that is, aggregate tonnes of ODS equivalents consumed per year. With clearly defined annual phaseout targets to measure progress towards the goal, the project results framework allowed for regular monitoring against the baseline value for this prime indicator. 56. The National Ozone Bureau (NOB) regularly collected data through calculation of enterprise-level phaseout achieved in sub-projects, as well as through ODS imports recorded by the Customs Authorities. ANPE is responsible for approving ODS import permits and for setting the quotas in consultation with other ministries and agencies. When reporting on data it draws from its records of quota issuance/import permits and from Custom Records. The audit reports of the NOPP lay out the procedures. This allowed the GOT to meet its reporting obligations under Article 7 of the MP, and in turn also allowed the MP to assess Tunisia s compliance status. In addition, and in line with MLF guidelines, this data was also used for preparation and submission of project completion reports and, eventually, for the annual audit reports required under the NOPP agreement signed with the MLF ExCom. Three independent audit reports have been prepared during the period covered by the NOPP. The latest audit report validating government reported ODS consumption levels for 2010, was submitted to the 68th meeting of the MLF ExCom in November A Project Completion Report (PCR) was prepared for each sub-project in accordance with ExCom requirements. Each PCR presents data on financing and expenditures, procured equipment, phaseout of ODS and consumption of alternatives, implementation efficiency, and disposal of ODS equipment. 58. For the purpose of evaluating the impact of the project, the first Tunisian CP went beyond data collection and recording historical consumption to also include estimates of future CFC consumption for each sub-sector that was likely to occur without intervention via assistance from the MP. These early estimates were based on a number of factors, including anticipated population growth, Gross Domestic Product growth, increases in household incomes, etc. It was estimated that with an unconstrained CFC consumption over the period , Tunisia would more than double yearly consumption and reach 3,000 tonnes/yr. by Linking project inputs and outputs in such a framework, affords the project to establish technical causality between the impact of the MP program and observed reduction of CFC consumption. 59. As evident by the introduction of a decree to definitively prohibit the import of Annex A substances, data collected in collaboration with the customs authority has been instrumental in allowing for such timely action that first sought to support enterprises in converting to alternative technologies before placing a ban on inputs that otherwise would have no substitutes. Previously they were banned indirectly by non-issuance of import quotas. 60. The project was restructured numerous times over its lifetime (refer to section H of the project data sheet, above), but the revisions made were in effect limited to adding sub-project components, raising the grant ceiling or extending the closing date. Restructuring was not used 14

29 as a means of updating the project s risk management or Monitoring and Evaluation (M&E) frameworks. In the early part of the 2000s, the World Bank began introducing measures for improving M&E, such as results frameworks. These could have been created as part of the restructuring of the project in 2003, for example. Indeed, the restructuring of 2007 to accommodate the adoption of the NOPP would have been an opportune moment to strengthen the M&E of this project with a results framework adapted to the new direction of national policy on ODS phaseout. 61. The reasons for this inaction on updating the project s design as newer practices came about are not clear from the documentary record, though inconsistency of team leadership as noted by QAG may have played a role. Contemporary ODS phaseout projects in other countries do not appear to have adopted this approach either (e.g. Philippines). Another possibility is that the M&E requirements of the MP were deemed sufficient for the purposes of the Bank as well. If so, this would not have prevented the establishment of a simple M&E framework which would have captured equivalent information for reporting to the Bank. Such a framework could have improved access to performance information by the task team. 2.4 Safeguard and Fiduciary Compliance 62. Safeguards. According to available Implementation Status Reports since 2006 and the equivalent Project Status Reports prior to 2006, both overall compliance with safeguards requirements and specific compliance with the requirements of OP 4.01 have been ranked Satisfactory. 63. While the overall impacts of the project were expected to be environmentally positive from a global perspective, the project was classified as category B, according to Operational Directive 4.01, to address potential local issues. A partial environmental assessment was prepared in 1993, which revealed that the main issues to be addressed were related to worker health, safety and awareness in the aerosol and foam industries, which may be using flammable and potentially toxic gases, such as cyclopentane, liquid petroleum gas (LPG) and methyl chloride. For the use of methyl chloride as a blowing agent for the flexible foam component, health and safety measures would have to comply with international standards. Safety measures related to the present use of LPG as a propellant would be investigated during the aerosol study and strengthened as necessary with any new proposals for the use of LPG. Use of cyclopentane as a foam blowing agent would require the support of a technology partner experienced in the safe use of cyclopentane, or a similar agent, for rigid foam applications. All new substances introduced to the Tunisian industries would have to follow the safety guidelines recommended by the manufacturers and conform to international safety standards. 64. Investments prepared as sub-projects under the umbrella GA and which exceeded US$ 500,000 were prepared and pre-appraised by the World Bank according to procedures similar or identical to those that apply to regular investment projects, including approval at the regional vice president level. As part of the Bank s rigorous standards on environmental and social safeguards, such concerns were considered during the preparation of each investment project aimed at converting to non-ods technology. 15

30 65. Fiduciary Compliance. According to the latest available Implementation Status Report of June 2012, Financial Management and Procurement were rated Moderately Satisfactory. 66. At project inception, national procurement rules were followed which, when combined with low initial capacity in the NOB, led to delays in implementing project activities. However, these weaknesses have since been remedied through (i) capacity/knowledge building and hands-on training to an identified staff among those in the ODS team as well as to the staff responsible for public procurement in the ANPE in general (SPCN); and (ii) continuous support and advice throughout the project life provided by Bank procurement staff based in Tunis. By the second half of the project period, the situation had markedly improved and procurement, for rather large contracts, was carried out satisfactorily thanks to the capacity that was built in the local project team. Despite this, national tender committees continued to be a source of bureaucratic delays. 67. The disbursement amount in one particular category (2.G) exceeded the amount allocated to that category by 84%. The issue of exceeding disbursement categories has been highlighted in Aide-Memoires since 2008, where it was recommended that the categories be reallocated, but no further actions were taken. 68. In addition, the project did not submit its last Interim Financial Report. The Bank team did a close follow up with the Client but was unable to receive the requested report. Hence, the project was not compliant with agreed FM arrangements. 2.5 Post-completion Operation/Next Phase 69. With the closing of the umbrella project and the expiration of the grant agreement, the GOT expressed concern regarding the continuity of its ongoing ODS phaseout program as outlined in the NOPP and to which the GOT remains strongly committed. The NOPP focuses on financing investments in equipment for remaining ODS-using enterprises and the servicing sector, as well as on technical assistance to the private and public sector to ensure sustainable and permanent CFC and halon phaseout. 70. To ensure a sustainable and uninterrupted transition and continued operation of the NOB and planned activities, UNIDO agreed to take over the responsibility for implementation of the institutional strengthening component of the project (Part B). UNIDO is already active in ODS Phase-Out in Tunisia in the industrial and agricultural sectors. A new request for continuation of the Institutional Strengthening component (Phase VI) was positively considered by the MLF ExCom in spring 2012, and funds approved for the next phase are transferred directly to UNIDO. 71. It should be noted that during the ICR mission, the Client expressed dissatisfaction with the lack of consultation from the Bank s side to discuss the closing of the project and the transition arrangements. 16

31 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 72. The need to eliminate the use and release to the environment of ozone-depleting substances was highly relevant in when the project was conceived and appraised, coming as it did on the heels of conclusive scientific evidence about the deleterious effects of CFCs and other anthropogenic chemicals on the atmospheric ozone layer. At the time, this project was highly topical and showed a determination to meet this new challenge. In the present day, it remains equally relevant even if the public eye is no longer so closely focused on the protection of the ozone layer. In terms of global environmental protection, the objective of the project remained relevant throughout its entire lifespan. 73. The project was designed in a way that allowed operational flexibility over a long time frame. It showed itself to be capable of going from a technical demonstration project to a fullscale, national ODS elimination project, due in large part to the open-endedness and flexibility of the umbrella grant agreement. Implementation followed this general pattern: moving from specific interventions with specific enterprises in the early stages, to broader work on a larger scale as time went on and capacity increased with experience. The achievement of the final phaseout objective shows that this initial design and the implementation that flowed from it were appropriate tools that remained relevant to the overall goal of ODS phaseout despite substantial changes in project activities over time. 74. The events of the Arab Spring have not changed the fundamental relevance of this project for the country. In concrete terms, the objective of the project remains relevant to Tunisia s social and economic development today, as well as to Tunisia s leadership position on environmental management in the Region. The Montreal Protocol includes trade-related provisions and indirect benefits of its implementation accrue countries can only trade ODS with other countries that are also Parties to the MP (HCFCs are ODS that can be used into 2020 for Art. 5 countries). In addition, by shifting to alternative technologies (key objective of this project), The GOTs continued reforms to introduce more stringent policies on ODS import, to streamline regulations on ODS consumption, and to scale-up the phaseout of ODS in public and private enterprises supports the Interim Strategy Note (ISN) Driving Objective 2 Strengthening the business environment and deepening integration by improving private sector competitiveness through compliance with international standards. 3.2 Achievement of Global Environmental Objectives 75. This project achieved its Global Environmental Objectives; namely, Tunisia was able to achieve the complete phaseout of CFC and halons by January 1, 2010with a total of ODP tones eliminated. This was a reduction 14% greater than the reduction target of ODP tones set for Tunisia by the Montreal Protocol. For this reason, this ICR rates the achievement of the GEO as satisfactory. 17

32 Table 3: Yearly Import of CFC and Halons, Annex Group Name A I CFCs 730 1, A II Halons TOTAL Annex Group Name A I CFCs A II Halons TOTAL As mentioned above, the key indicators for measuring achievement of the GEO are: Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies; Elimination of the consumption of ozone depleting substances through the introduction of ODS free technologies (in ozone depleting potential (ODP); Develop an institutional framework within ANPE to regulate the elimination of ODS in Tunisia. 77. The initial project baseline value of 1045 ODP tonnes is Tunisia's 1991 CFC consumption in the foam, aerosol and refrigeration sectors as referenced in the project document. Through the demonstration of new technologies in 5 subprojects in the three sectors, the project aimed to phaseout about a third of the total CFCs consumed in The CFCs used at the 5 subprojects was determined to amount to 227 ODP tonnes. 78. The revised target value of ODP tonnes represents the ozone depleting potential that Tunisia agreed to phaseout in on-going and additional subprojects, and includes the 227 tonnes ODP initially targeted. This was adjusted through amendment to the grant agreement in light of changes in national consumption patterns of ODS in various sectors, and in light of the start of the Montreal Protocol's compliance period for Annex A substances (CFCs and halon) in developing countries. 79. The actual value achieved of ODP tonnes shows that Tunisia not only phased out the ODP tonnes targeted by the revised project, but also was successful in completely eliminating Annex A substances according to its Montreal Protocol target by gradually bringing its consumption to zero by The Montreal Protocol established baseline consumption as the average of 1995 to 1997 consumption of ODS. In the case of Tunisia, this was ODP tonnes. The actual value achieved (974.4 ODP tonnes) exceeded the revised target value ( ODP tonnes) by 14 percent. 80. The objective was achieved through successful demonstrations of new, non-ods technologies in the critical sectors of aerosols, refrigeration, and rigid and flexible foam. The project generally helped companies to replace their ODS-dependent capital production 18

33 equipment with more modern versions that could use alternatives to ODS, plus the technical assistance required to make proper use of the new equipment. A further round of sub-projects followed on the first, to help bring the gains already realized closer to the national scale. 81. The following table shows the progress achieved in reducing the importation CFCs and halons into Tunisia over the period At the same time, the second major component of the project aimed to build the GOT s institutional capacity to eliminate ODS nationwide. This component was effective and the institutions benefitting from this component were able to play their roles effectively as repositories of knowledge and motivators of changes in industrial behavior. A solid legal and institutional framework has been established, which allows ANPE to manage the ODS program effectively. This result affirms that the ozone layer protection program has been fully integrated into the mainstream of environmental program planning and delivery, and bodes well for sustaining the results achieved to date. a) In accordance with the priorities of the GOT, the Montreal Protocol and its provisions have been given the status of domestic law through the adoption of the following laws and decrees. Though not all of these may be attributed to the effects of the project, they are a good indication of the type of broad-based support that Tunisia has had for the project since its inception: Law No of March 14, 1989 authorizing Tunisia's ratification and adhesion (joining the) to the Vienna Convention; Law No of March 14, 1989 authorizing Tunisia's ratification and adhesion (joining the) to the Protocol of Montreal; Law No of May 3, 1993 authorizing Tunisia's ratification and adherence/adhesion to the amended Protocol of Montreal (following the second and third parties meetings in London-June 27-29,1990 and Nairobi, June 21,1991; Law No of June 27, 1994 authorizing Tunisia's ratification and adherence / adhesion to the amendment of the Protocol of Montreal (following the fourth parties meeting in Copenhagen on November 23 to 25, 1992; Law No of August 2, 1999 for the ratification of the PM amendments (for ODS) adopted during the ninth parties meetings in Montreal on September 15-17, 1997; Law No of December 6, 2004 for the approval of the Republic of Tunisia's adhesion to the amendment of the Protocol of Montreal for ODS following the eleventh parties meeting held in Beijing - November 29-December 3, 1999; Decree No of March 7, 2005 for the ratification of the Republic of Tunisia's adhesion to the amendment of the Protocol of Montreal for ODS according to Law No

34 b) A National Committee has been established that oversees the implementation of the Montreal Protocol. A representative of every Ministry of Government sits on this Committee. This Committee has a sub-committee comprised of the six Ministries most affected by ODS issues. These include: - Ministry of the Environment and Sustainable Development (the lead Agency) / Agence Nationale de Protection de l Environnement (ANPE); - Ministry of Public Health; - Ministry of Agriculture and Water Resources; - Ministry of Industry, Energy and SMEs (small and medium enterprises); - Ministry of Commerce, Arts and Crafts; and, - Ministry of Finance (Customs) This sub-committee is supported by the NOB. c) The National Ozone Bureau (NOB) was housed at ANPE. It is the facilitation and coordination arm of a much broader engagement mechanisms for addressing the obligations associated with the ratification of the MP. The activities assigned to the NOU are: - expedite implementation of activities for reduction of ODS use and adoption of substitute chemicals and technologies; - enhance public awareness of the ozone issues; - if required, utilize economic instruments to cause increases of ODS prices to levels where the ODS substitutes become financially attractive; - establish an import quota / licensing system for ODS users; - establish import monitoring procedures and (vi), and; - create a Project Implementation/Management Unit (PIU/PMU). 83. All of the activities, be they financial or purely technical, are part of the overall program of ANPE. As noted, the recent renewal of the Institutional Strengthening (IS) component under UNIDO as the new MLF implementing agency will continue to strengthen the country s MP program and support the policy reforms currently underway. Other Factors Attributed to the Achievement of the GEO 84. While the institutional framework and local regulations on ODS has raised awareness of ODS and contributed to compliance by enterprises with local requirements for e.g. import procedures, taxation, and disposal, a number of external factors should be considered in determining causality between project investments, specific component outputs, and global environmental outcomes. 85. From the outset of the project, it was recognized that due to the very close association of Tunisian industries with European industries (partnerships, licensing arrangements etc.), 20

35 European Union policies, regulations and technology replacement choices would likely have a major impact on the phaseout timing and technology options selected by Tunisia. This, as expected, did occur, and indeed, contributed to a quicker-than-required phase-down of ODS consumption. 86. Another key factor influencing project outcomes has been the global phaseout of CFCs, which has reduced overall supply of CFCs. This trend was mainly driven by the global implementation of the Montreal Protocol as well as the introduction of less expensive alternatives in the market. As such, the global supply reduction of CFCs played a significant role in encouraging enterprises to adopt alternative technologies. 87. The context of global phaseout of ODS raises valid questions about the attributability of the project results to the project activities. If CFCs and halon were being phased out globally, what was the incremental contribution of this project to achieving phaseout in Tunisia? One important consideration to keep in mind is the protection of competitiveness for Tunisia s industries. In an environment of global regulatory phaseout, Tunisian industry would certainly have been forced, sooner or later, to phase them out as well. In that context, the project provided support to help those industries make the transition more smoothly and reduce any shock to Tunisia s economy. A second important consideration is the accelerated timetable on which phaseout was able to be executed with the accompaniment of this project. In a scenario without the project, industrial adaptation would likely have taken much longer. 3.3 Efficiency 88. At the time of appraisal, no specific estimates were calculated for the project s likely economic rate of return (ERR), net present value (NPV), or financial rate of return (FRR). It is common among all MP projects, that at the project preparation stage no such analysis is undertaken. The underlying reason was that MP funded activities involved global public goods and compensation for external costs as a result of an international treaty obligation. 89. Consistent with the MLF ExCom project approval regime, cost effectiveness is the main criterion that determines the level of eligible funding for sub-projects. Project cost effectiveness must fall within pre-established thresholds for different sectors, which means that all approved MP projects are expected to comply with a pre-set indicator of efficiency. Efficiency is assessed based on the cost-effectiveness (CE) of the phaseout achieved. CE is the amount of MLF grant per unit weight of ODS phased-out in ODP kg. 90. Full calculations for project CE are presented in Annex 3. They show that the overall actual CE of the project was better than originally estimated ($3.94/kg vs. $5.04/kg). This overall total, however, includes some elements which were more cost effective than the estimates, and some which were less. The two smallest sectors in terms of tonnes of ODP eliminated refrigeration and aerosols, at 72 and 50 tonnes, respectively were both less cost-effective than estimated. Contrarily, both the rigid and flexible foam sectors were able to achieve better CE than estimated. 21

36 91. The performance of three of the four sectors was below the cost-effectiveness thresholds established by the Montreal Protocol, indicating that they achieved better cost-efficiency than required. These were refrigeration and both flexible and rigid foam. The CE rating of the aerosol sub-project exceeded the threshold, indicating that its cost-efficiency did not meet the required standard. 92. The CE ratings of the project compared favorably with those of other MP projects supported by the World Bank. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 93. The project has fulfilled the GEO key indicators established and performed beyond expectations. Tunisia has managed to eliminate ODS within a timeframe similar to other ODS projects implemented in other country contexts. The project s concept and design were, and remains, relevant to Tunisia s commitment to the full phaseout of ODS as a signatory to the MP, and Tunisia is currently preparing to eliminate all HCFCs as well (with the support of UNIDO). The project successfully established a legal and institutional framework which has allowed ANPE to manage and scale-up ODS phaseout to a national level. This in turn is reflected in the significant elimination of ODP tonnes since project start; and amount substantially larger than targeted. Total ODS phased out by Tunisia under MLF projects is 1,381 tonnes ODP including projects implemented by UNIDO. 94. It is nonetheless challenging to determine an overall outcome rating for a project that spanned 18 years and expanded much beyond its original scope. As discussed above, the difficulty is further compounded by the fact that the project was part of a global initiative, by which it was strongly influenced. However, it should be underlined that the program was designed in this way to allow the incremental achievement of each MP project to create a synergetic, cumulative effect for the benefit of the global environment. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development Not applicable. (b) Institutional Change/Strengthening 95. Overall, the project has resulted in a substantial institutional development impact as capacity building activities related to this project has imparted valuable skills and experiences on NOB and its staff particularly in procurement and financial management. Such skills are easily transferable to other project management tasks both within NOB and in the GOT at large. In addition, several workshops and training sessions conducted under IS component, such as 22

37 training for Customs officers, and drafting of various by-laws governing the quota system and taxation schemes, have contributed in strengthening relevant institutions. 96. However, the NOB management function has yet to be fully institutionalized with ANPE, and remains reliant on funding from the IS component for its continued operations. (c) Other Unintended Outcomes and Impacts (positive or negative, if any) 97. One of the positively surprising outcomes of the project is that Tunisia has emerged as a global leader on ODS elimination, with a growing profile in various climate change mitigation activities. This is further supported by Tunisia s regional leadership position on environmental management in North Africa. To this end, Tunisia has been awarded three prizes for the country s outstanding commitment to protecting the ozone environment: UNDP prize on the occasion of the 10th anniversary of the Montreal Protocol (September 16, 1997); Ozone Secretariat prize (September 16, 2006); and UNDP prize on the occasion of the 20th anniversary of the Montreal Protocol (September 16, 2007). 98. Another unintended positive outcome is the indirect impact that the project has had on mitigating climate change through reducing global warming potential with an estimated 5.2 million tonnes CO2e (carbon dioxide equivalent) of emissions avoided Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable. 6 Based on phaseout of tonnes of CFC-11 with a global warming potential (GWP) factor of 4,750 and tonnes of CFC-12 with a GWP factor of 10,900, yielding a total GWP of 5,412,963 tonnes CO2e. A correction factor of 166,746 tonnes is subtracted from this due to the GWP of alternative substances used, yielding a corrected GHG reduction of 5,246,217 tonnes CO2e. GWP values used are drawn from the World Meteorological Organization s Scientific Assessment of Ozone Depletion: Global Ozone Research and Monitoring Project Report No. 50, 572 pp., Geneva, Switzerland,

38 4. Assessment of Risk to Development Outcome Rating: Low to Negligible 99. It is extremely unlikely that industries would revert back to using previous ODS consuming technologies as CFC technologies are obsolete and alternatives to halon and CFCs are now more cost-effective. Moreover, global production of CFCs and halon has ceased since Furthermore, as part of the agreement for each sub-project financed, baseline CFC-using equipment has been destroyed and sold for scrap metal by the enterprises With continued political commitment from the GOT and the transfer of the Institutional Strengthening component to UNIDO, country ownership of and commitment to the project remains strong. However, continued dependence on funding from the MLF to run the NOB is cause for concern. While the institutional and legal framework for complete ODS phaseout is robust, the GOT is strongly encouraged to budget for the cost of sustaining the NOB as an effective administrative and technical unit under the ANPE. This final step of mainstreaming will greatly improve overall sustainability of the development outcomes. 24

39 5. Assessment of Bank and Borrower Performance 5.1 Bank (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 101. The Bank's performance in the identification, preparation, and appraisal of the project was Satisfactory. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects, such as technical, financial, economic, and institutional, including procurement and financial management The Bank provided adequate resources in terms of staff weeks and dollar amount to ensure quality preparation and appraisal work. The project was consistent with the government priorities in the sector at the time. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal. The Project Document was finalized in April 1993 and the project became effective one year later, in June Project preparation was carried out by an experienced Bank team with an adequate number of specialists who provided the technical skill mix necessary to address sector concerns. The team worked effectively with the Montreal Protocol and policy and technical criteria and guidelines of the MLF. The team worked well with all stakeholders as well as with enterprises throughout the preparation, appraisal and implementation of sub-projects The original project document and grant agreement design laid out a fairly simple project structure that over time proved to be cumbersome in comparison to the level of the original expected grant (US$ 1.79 million) and as such, did not anticipate the changing basis for and of MLF assistance at the country and ExCom levels. By the end of the project s long lifespan, this resulted in a complicated structure of 16 disbursement categories and 8 project parts. This understandably led to confusion for both the project teams and the Client, particularly regarding the correlation of specific sub-projects to disbursement categories. However, these future changes could not have been anticipated at project conception. (b) Quality of Supervision Rating: Moderately Unsatisfactory 105. The Bank's overall performance during the entire implementation period is rated Moderately Unsatisfactory due to significant implementation challenges since While IP ratings remained solidly Satisfactory or Highly Satisfactory until mid-2007, following the final transfer of funds from the MLF upon approval of the NOPP the project became increasingly difficult for the Client to manage given the change in scope from individual sub-projects to a national ODS phaseout program. This development, which called for even closer Bank supervision, was confounded by high TTL turnover during the same period and led to a lasting reduction in supervision quality and in overall implementation performance. 25

40 106. The project was subject to frequent changes of TTLs throughout its lifespan, which has affected the quality of supervision. The ICR team has been unable to locate any evidence of hand-over notes between TTLs, which has likely caused substantial interruptions during transition periods and stunted the institutional memory over time. Towards the end of the project, supervision missions became less regular as a result of TTL changes and later due to the political uprising in Tunisia. The Bank s engagement with the project decreased over time as the project was extended multiple times and transferred between departments and TTLs At critical stages during project implementation, the Bank chose to continue to extend and fund the project rather than close the project and begin another phase as a new project. This was not an unusual practice for Montreal Protocol projects managed by the World Bank (e.g. the Thailand and Philippines ODS projects were 19 and 17 years long, respectively). An increasing number of activities were incorporated into the existing project, causing supervision to get increasingly difficult as the component categories no longer reflected the actual activities. The problem was that the 1997 and 2007 amendments made changes to the Part B categories. As the GA was simply amended, not enough time was spent explaining to the Client the structure and where to record expenditures for the different parts. In fact, the categories did reflect the activities planned, including the NOPP and the second phase, but they were cumbersome since there were 16 disbursement categories This cumbersome structure and the lack of communication following GA amendments did lead to incomprehension and frustration on the part of the Client. During the ICR mission, the Client expressed dissatisfaction with the qualitative input from the Bank team in the later stages of implementation. Specifically, the Client referred to supervision missions as fulfilling a watchdog function and not as a partnership in which the Bank contributed value-added to enhancing the project performance; a notion previously pointed out in the QAG Review On a positive note, NOB staff managed to build and strengthen a local implementation capacity with regard to procurement of goods and works, selection of consultants, accounts and audits, as stipulated in the Grant Agreement QAG Review: The project was subject to a review by the Quality Assurance Group (QAG) during implementation. The QAG review assigned a Supervision rating of moderately unsatisfactory. An overview of the QAG review is summarized in the table below. 26

41 Table 4: Summary of 2005 QAG Review (QSA6) and MNA Regional Response QAG Review Frequent changes of TTL and low task team continuity between supervision missions had a negative influence on the quality of supervision. Incomplete supervision documents. Missing audit reports. The Region was right to transfer the project from the infrastructure unit to the environment unit in 2003, though supervision issues continued. Little was done in response to delays in moving forward with national legislation on ozone depleting chemicals. Delays in procurement of equipment for two sub-projects which were needed to complete the conversion process from ODS chemicals to substitutes allowed under the convention. Slow progress in identifying potential new sectors for MP financing in Tunisia. Overall Assessment 27 MNA Regional Response There appears to be a disconnect between the low rating given by the panel and the fact that the Bank is meeting its fiduciary and safeguard requirements, the DO is being sustainably achieved, and both Client and donor are satisfied with the results. Supervision transaction costs are exceedingly high for a small, grant based project. However, in the period under review the project was discussed as part of the June 2003 CPPR and there were four supervision missions. The latest audit was reviewed by the last mission, which included an FMS specialist, and no issues were raised. However, the audit report was not delivered to HQ until it was requested by the task team in preparation for the QAG review. Since the transfer from MSIF to MNSRE, there were two missions plus a separate ex-post procurement review. Main problems encountered The region feels that putting undue pressure on Tunisia to update the legislation ahead of the agreed upon schedule would jeopardize the long-term success of the project. The issue of delayed procurement was resolved as quickly as possible given the highly technical nature of the equipment. The two sub-projects have now been successfully completed. The GOT has indicated that the expansion of the project to new sectors is inappropriate, as the project should focus on sectors covered by the MP. Appropriateness and adequacy of actions taken by the Bank to resolve existing/potential problems The Bank's supervision was unable to provide meaningful advice, given the continual turnover of task management which prevented a sustained dialogue with the GOT. In effect, each Bank mission was learning about the project from the ground up. Bank supervision was able to ensure basic compliance with requirements, but added little value to the Borrower's own efforts. More could have been done by the Region to bring in additional expertise, whether from the Center or from outside the Bank, to supplement the limited regional staff expertise dedicated to ozone operations. This ozone-reduction project seems not to have been included in CPPR reviews, indicating that these multilateral fundfinanced activities are not mainstreamed within Bank operation. The Bank should clearly identify a unit which will "own" this operation, which lasts until 2010, and maintain staff continuity with relevant expertise. This operation can serve as a channel not only for continued dialogue on ozone-related issues but also on broader environmental challenges in Tunisia, given the long period remaining before project completion. Thus, there is still an opportunity for the Bank's participation to make a significant impact, but this requires a more consistent engagement with the requisite skills, and more attention from management. Systemic Lessons Suggestions to the Task Team While there is no doubt that there has been a frequent turnover in task management over the period under review, the facts on the ground do not indicate either major existing or potential problems with project implementation. The team has worked extensively with the central MP unit throughout the review period and included a representative of that unit on the most recent mission. The region notes that the project was included in the CPPR conducted during the summer of The region accepts the recommendation that ODS issues be included more fully in country dialogue, and intends to discuss this issue within the RMT. During the review period: The project was discussed during the 2003 CPPR; Missions (4) have been fielded in a timely manner; Project was moved to MNSRE; Engagement with the central MP unit is on-going; Funds were allocated by the MP to update the national ODS phaseout program; Grant has been extended through the life of the MLF of the MP at the request of the Client; FMS specialist for Tunisia now part of task team; Ex-post procurement review has been undertaken; The region cautions the panel not to raise unrealistic expectations about the amount of policy dialogue that can reasonably be accomplished through very specific targeted grant financing in Tunisia.

42 (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 112. Based on the Bank s performance during project preparation and supervision as discussed above, overall Bank Performance is rated as Moderately Unsatisfactory by this ICR. While the Bank provided reliable policy and technical advice during the 18 years of project implementation, a number of factors as discussed above, related especially to project supervision, impacted the Bank s overall performance. Project implementation was challenged by frequent changes in task team leadership, which affected supervision quality, institutional memory, and possibly the Client s implementation performance. Furthermore, the Bank failed to take advantage of several opportunities to ensure that approved activities would remain aligned with the project objectives either through a proper restructuring or by closing the project and starting a new phase in a separate project. However, it is important to keep in perspective that the project objective has been met and the outcomes exceeded the set targets. This is partly due to a well-conceived and diligently prepared project design and partly due to the Bank s leadership on global environmental issues and commitment to deepening a long-standing Client relation with the GOT. 5.2 Borrower (a) Government Performance Rating: Satisfactory 113. Government performance, rated across the spectrum of the project s full implementation period is Satisfactory. Strong and unwavering political support as evident in the adoption of local legislation to underpin the objectives of the MP has contributed to creating an enabling environment for NOB to fulfill its mandate. Positive inter-departmental and inter-ministerial cooperation has allowed Tunisia to fulfill its commitment to phaseout of ODS consumption in accordance with the MP control schedule. Ministries and agencies involved through the National Committee, which was established to oversee the implementation of the MP, such as the Ministry of Environment, Ministry of Public Health, Ministry of Agriculture and Water Resources, Ministry of Industry, Energy and SMEs and the Ministry of Finance (Customs) and others, all played a role in ensuring the adoption of a comprehensive policy framework, and supporting regulations, for ODS phaseout, in building national capacity to comply with the objectives of a multilateral environmental agreement, and in promoting awareness about the importance of protection of the ozone layer. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 114. Through implementation of the Institutional Strengthening component, NOB was successful in enabling the country to implement the Montreal Protocol. This included ratification 28

43 of all four MP amendments and the issuance of national ODS regulation. NOB also introduced a licensing and import quota system, considered within the MP community to be the single most important piece of legislation to control ODS consumption. Such milestones were achieved by fostering inter-agency cooperation and promoting the importance of the ozone issue from an environmental, economic and human health perspective. NOB diligently fulfilled the data reporting requirements, and provided effective education in both the public and private sectors about ozone protection and related GOT policy However, implementation performance suffered from several short-comings. On one hand, the project benefitted from having in place a consistent and dedicated project management team, who has served the project since its inception. On the other hand, with a highly centralized project implementation unit in NOB the need for a more transparent and accountable institutional set-up has sometimes been called for During the ICR mission, the Bank team visited several companies to assess their project experience. These companies were in Greater Tunis and are specialized in foams. Most expressed satisfaction with the technological changes instituted under the auspices of the project. In some instances, it was mentioned that upon delivery of new technology and equipment, a lack of follow-up had left some enterprises without any implementation support. Another challenge which is seen in other projects too, is that sub-project expenditures were not carefully tracked in an electronic system The representatives of these companies expressed their strong commitment to the protection of the ozone layer and said that all their teams had received adequate training through the project. These companies have cited the project as an important factor in their subsequent success These noted issues are not captured in the ISRs or AMs available to the ICR team. One of the challenges the World Bank project team had in the last 4 years of project implementation was the Client s reluctance to facilitate supervision missions visits to the previous beneficiaries. The last two World Bank project teams did not receive adequate support from the implementing agency because of an apparent reluctance to share key information about the overall ODS program in Tunisia. Insistence by the World Bank team on improving contact with their direct counterparts was only sporadically successful in ameliorating the situation, and greater use of higher official channels 7 did not yield a lasting, satisfactory outcome Towards the very end of the project, the NOB s procurement performance was unsatisfactory with a number of problems encountered. This caused the project to close with a large undisbursed balance. 7 The June 2011 supervision mission attempted to set a meeting with ANPE senior management, seeking to raise the profile of the dialogue on ozone-related issues broader environmental challenges in Tunisia as means of preserving a sustained and consistent engagement. However, the meeting was not granted. 29

44 120. Based on the above, NOB s performance throughout the entire project period is rated as Moderately Unsatisfactory. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 121. Based on the Borrower s performance in both the Government and the Implementing Agency as discussed above, overall Borrower Performance is rated as Moderately Satisfactory. 30

45 6. Lessons Learned 122. The Bank s leadership at the sector level was a critical success factor during implementation: Past ODS phaseout projects have been characterized by their lengthy durations, as compared to normal Bank lending, with several projects in the portfolio having being effective for 15 years or longer. MP projects have been governed by a separate Operations Policy / Bank Procedure (OP/BP) since the start of the program to allow for a unique umbrella funding mechanism in which the MLF ExCom meets three times a year to approve individual projects and sub-projects at the enterprise level; taking into account the evolving ODS phaseout requirements. This structure has been difficult to align with a typical Bank project cycle, and has led to the project being amended several times through Level 2 Restructuring to extend the grant closing date and to raise the grant ceiling, as well as to make slight changes to broaden the project s phaseout scope. This was done to accommodate the particular demands of the MLF as the Bank remained committed to its Clients that depended on continued, uninterrupted flows of MLF financing to fulfill their obligations under the MP This has required extraordinary support and leadership from Sector Managers and Directors over the years to defend ODS projects despite their perceived poor performance. In the words of one Sector Manager: These projects are not ordinary projects and should be looked at differently in terms of quality management. There is almost a case for moving them out of the exception report since they unnecessarily create the impression that the region is lenient with extensions. Such informed leadership and unwavering support demonstrated the Bank s flexibility and responsiveness to the Client s needs, and a commitment to fulfill the Bank s responsibilities as an MLF implementing agency. This flexibility was not only appreciated by the Client, but also allowed the program of ODS elimination to continue and evolve to meet changing needs over an atypically long period; without this willingness to accept extensions of the GA and increases in its ceiling, the project would likely not have succeeded in achieving the positive outcomes that it did. As noted elsewhere, however, the project structure should also be adjusted in parallel to preserve operational effectiveness. The lesson could be applied across a broad range of operation types. The OP/BP provides for this umbrella structure to take into account the more frequent ExCom approvals and evolving ODS phaseout requirements. In future, MP projects will no longer be so long because MLF ExCom has changed the project modality to sector/national based support (program level) tied to permanent, aggregate reductions Mission creep can be mitigated through regular reviews: By modifying the original project objective and extending the grant agreement and its ceiling, the opportunity and scope for ODS impact widened in a changing environment that was becoming more favorable to ODS controls. As a result, the project activities increased in scope and became the main mechanism through which Tunisia aspired to achieve its MP obligations instead of a means to demonstrate technologies for wider adoption. As such, the Tunisia ODS project experienced mission creep : it went from being a technical demonstration project to being the primary vehicle for the national ODS elimination agenda, without a corresponding adjustment in the project s objectives. This kind of creep would and should be detected by more regular review of the proper correlation between activities and objectives. 31

46 125. The lack of any formal evaluation of project performance until the ICR has left inherent weaknesses and performance issues undiscovered for too long. In future, regular mid-term reviews should be held, and sector units should strongly consider the option of a series of programmatic or repeater projects to carry out a long mandate such as this. Such an approach would allow regular opportunities to reassess the project design and objectives and would help to ensure that a large gap does not develop between the intended purpose of the project and its actual activities. This lesson is widely applicable across the Bank portfolio, but in most cases regular review is already in place and prevents mission creep from reaching the very large proportions it reached in the case of this project The Bank needs to communicate proactively and early when procedures change: One of the key challenges during such a prolonged project is the on-going evolution of the Bank s procedures. This meant that a number of evolving procedures had to be retrofitted to the existing project, which was quite challenging for the task team and also for the counterpart and required adaptation on the part of both the Client and the Bank to achieve effective project implementation. One clear example is the procurement plan which was not required until the last 2-3 years of the project s lifespan. The introduction of the requirement for a procurement plan caused enough friction between the task team and the counterpart that it became a point of contention in the debriefing of the 2011 mission with the Ministry of International Cooperation. The lesson is that in long-lived projects, early and proactive communication to the Client of upcoming changes in administrative procedures is an important task that falls to the task team. This is also an important relationship management consideration, as it helps the Client to feel like more of a partner who participates in long-term change than an outsider who receives it as a fait accompli. This lesson is relevant to other Montreal Protocol projects and to series of repeater projects with a single counterpart Long-term Bank involvement in capacity building can deliver very good results: Through the MP project, ANPE has developed significant capacity in the area of procurement and financial management. This expertise is easily transferable to other projects executed by ANPE as well as across agencies as staff may move to new positions. This was one of the benefits of the long project lifespan, and might be an important consideration in the design of new projects. This was a unique laboratory in which the Bank was able to accompany an implementing agency from an embryonic state to full maturity over a long time frame, and it shows the value of long-term engagement and cooperation. This lesson may be helpful to retain in considering future programmatic approaches with a single counterpart in other areas of the Bank s portfolio. 32

47 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies No comments received. (b) Cofinanciers N/A (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) N/A 33

48 Equipment replaced in 1994 by the TN ODS project Foam products in process 34

49 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Components Appraisal Estimate (USD millions)^ Actual/Latest Estimate (USD millions) Percentage of Appraisal Investment Projects * 260 TA Component * 652 Unallocated Total Baseline Cost Physical Contingencies N/A Price Contingencies N/A Total Project Costs Project Preparation Facility (PPF) N/A Front-end fee IBRD N/A Total Financing Required ** 2866 ^ Numbers reflect the grant amount and does not include co-financing. * Numbers refer to the amount approved by the MLF ExCom. ** Number refers to the GA ceiling amount. (b) Financing Source of Funds Type of Cofinancing Appraisal Actual/Latest Estimate Estimate (USD millions) (USD millions) Borrower Grant 0.53 * * Montreal Protocol Investment Fund Grant * Input not received from Client Percentage of Appraisal 35

50 Annex 2. Outputs by Component 36