CLEAN TECHNOLOGY FUND Lagos Cable Car Project USD 20 Million
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CLEAN TECHNOLOGY FUND Lagos Cable Car Project USD 20 million March 2020 TABLE OF CONTENTS 1. INTRODUCTION 6 2. PROJECT DESCRIPTION 6 3. CTF INVESTMENT CRITERIA 11 4. MONITORING & EVALUATION 13 5. CONCLUSIONS 13 ANNEX I: CTF INVESTMENT CRITERIA CALCULATIONS 14 ANNEX II: RISKS AND MITIGANTS 15 ANNEX III: PROJECT AREA 17 2 Cover Page for CTF Project/Program Approval Request Dedicated Private Sector Programs (DPSP-III) 2. CIF Project 1. Country/Region Nigeria [CIF AU will ID# assign ID] Public 3. Public or Private Private X 4. Project/Program Title Lagos Cable Car Project 5. Is this a private sector program Yes composed of sub-projects? No X 6. Financial Products, Terms and Amounts USD EUR Financial Product (million) (million) Grant 0.00 Fee on grant 0.00 MPIS (for private sector only) 0.00 Public sector loan Harder terms 0.00 Softer terms 0.00 Senior loan 20.00 Senior loans in local currency hedged 0.00 Subordinated debt / mezzanine instruments with income 0.00 Secondparticipation loss guarantees 0.00 Equity 0.00 Subordinated debt/mezzanine instruments with convertible 0.00 Convertiblefeatures grants and contingent recovery grants 0.00 Contingent recovery loans 0.00 First loss guarantees 0.00 Other (please specify) 0.00 Total 7. Implementing MDB(s) AfDB 8. National Implementing Agency NA 9. MDB Focal Point Leandro Azevedo ([email protected]) 10. Brief Description of Project/Program (including objectives and expected outcomes)[c] The project entails the development, construction and operation of the first phase/green line of the Lagos Cable Car Transit (LCCT) project, an aerial cable car public transport system that comprises 4 stations and spans 4.67 km connecting Lagos island to Victoria island. Once operational, the green line will lead to substantial time and cost savings resulting from a more efficient form of public transportation in Lagos. The total greenhouse gas emission reductions of the project are 3 estimated at 1,202,953.5 t/CO2 eq. over the project lifetime. The project will lead to the creation of 3,400 jobs during construction and 450 permanent jobs during operations. 11. Consistency with CTF investment criteria (1) Potential GHG emissions savings See page 11. (2) Cost-effectiveness See page 11. (3) Demonstration potential at scale See page 11. (4) Development impact See page 11 (5) Implementation potential See page 12. (6) Additional costs and risk premium See page 12. Additional CTF investment criteria for private sector projects/ programs (7) Financial sustainability See page 12. (8) Effective utilization of concessional See page 12. (9) Mitigationfinance (including of market a detailed distortions See page 12. (10) Risksanalysis on how the proposal meets See Annex II. the minimum concessionality 12. For DPSP projects/programs in non-CTF countries, explain consistency with FIP, PPCR, or principles, and on how it is aligned SREP Investment Criteria and/or national energy policy and strategy with the blended concessional Not applicable. finance principles) 13. Stakeholder Engagement The engagement with various Federal Government Ministries as well as national departments and agencies were held in August 2019 with a view to undertake a detailed review of the Environmental and Social Impact Assessment including identified risks and mitigation measures. The Africa Finance Corporation - one of the project developers - is leading the way on other engagements with various stakeholders aimed at vetting and confirming the project structure. In particular, discussions with the Federal Government of Nigeria (FGN) and the Lagos State Government led to the signature of the Passenger Revenue Shortfall Guarantee (PRSG) agreement. This agreement plays a key role in supporting the bankability of the project as it secures minimum cash-flows to the project. 14. Gender Considerations As outlined in the country’s National Gender Policy (2006), the FGN is committed to building a nation devoid of gender discrimination, guaranteeing equal access to political, social and economic wealth creation opportunities for women and men; and developing a culture that places premium on the protection of all including children. In furtherance of this goal, the FGN promotes the full participation of women, men, girls and boys by involving both public and private sectors as agents of development. The Federal Ministry of Women Affairs and Social Development serves as the national vehicle to bring about speedy and healthy development of Nigerian women and men in the mainstream of the national development processes and ensure the survival, protection, development and participation of all children in preparation for a meaningful adult life. One of the targets of the policy is to provide equal opportunities for women and men to enjoy and attain an acceptable minimum threshold of universal access to potable water, sanitation, electricity and transportation. The project’s security plans will include state of the art video-vigilance that will, among others, help ensuring that women are not harassed while using the infrastructure. Furthermore, the project will make a substantial contribution to help women participate in the labor market as it will significantly reduce commuting times in the city of Lagos. 15. For projects/programs with activities in countries assessed as being at moderate or high risk of debt distress, macro-economic analysis to evaluate the potential for the CTF project or program to impact the country’s debt sustainability Not applicable. 4 16. For public sector projects/programs, analysis of how the project/program facilitates private sector investment Not applicable. 17. Indicators and Targets Project/Program Timeline Expected start date of implementation January 2021 Expected end date of implementation January 2023 Expected investment lifetime in years (for estimating lifetime targets) 15 years Core Indicators Targets GHG emissions reduced or avoided over lifetime (tons of CO2-eq) 1,202,953.5 Annual GHG emissions reduced or avoided (tons of CO2-eq/year): 24,059.07 (average) Number of additional passengers using low-carbon transport per day: 277,198 (male) / 277,198 (female) Energy savings cumulative over lifetime of investment (MWh) Identify relevant development impact indicator(s) Targets Number of Jobs During Construction 3,400 Number of Jobs During Operations 450 18. Co-financing Please specify as appropriate Amount (in million USD) AfDB Senior Loan 50.0 AFC Senior Loan 56.0 JICA Senior Loan 59.0 Shareholders Equity 109.0 Total 274.0 19. Expected Date of MDB Approval 30 October 2020. 5 1. INTRODUCTION 1.1 The city of Lagos, with over 20 million inhabitants, is one of the largest cities in the World and in Africa. With a population growth estimated at 6%, Lagos engages 45% of the skilled workforce of Nigeria. Over the years, infrastructure development in Lagos has not been in parallel with its population growth. The density of the road network is estimated at 0.4 kilometers per thousand inhabitants, well below the continental average. 1.2 Outdated transport equipment and a poor management system have hindered the development of this sector which, by 2020, is expected to accommodate around 17 million daily passenger movements and trips putting substantial pressure on the existing and already unsustainable transport infrastructure of the city. 1.3 Generally, the existing mass transportation systems of Lagos are informal, strongly reliant on road infrastructure and do not cater to the need for swift and safe transportation of many Lagosians. The capacity constraints have reached unacceptable levels of traffic congestion with inhabitants spending as much as 6 hours (3 hours in either direction) per day commuting to/from their place of work. 1.4 Gaining access to Lagos Island has been a major constraint as additional new bridges are required and which constructions is very challenging due to existing urbanizations. Furthermore, roads in and around Lagos Island do not have setbacks and cannot be widened easily to meet a rapidly increasing demand. 1.5 Improvement in transport infrastructure is therefore a critical component of the transport policy of the Federal Government of Nigeria (FGN) who has reaffirmed its commitment to improving transportation as a part of Nigeria’s Vision 2020 and the Economic Recovery Growth Plan. 1.6 The Dedicated Private Sector Program (DPSP), established under the Clean Technology Fund (CTF) in 2013, was designed to finance programs or operations that can deliver scale in terms of development results and impact, support private sector and fast-track the deployment of CTF resources under more efficient processing procedures while maintaining a strong link to country priorities as well as CTF program objectives. This funding request is being submitted as part of DPSP III. 2. PROJECT DESCRIPTION 2.1 The project entails the design, development, ownership, financing, construction and operation of an aerial cable car public mass transit transport system in Lagos. Phase 1 consists of the development of the Green Line comprises 4 stations and spans along 4.67 km connecting Lagos Island to Victoria Island. The project will directly contribute to the development of a formal Lagos mass transportation system by seeking to replicate the success of identical initiatives in other cities such as in Tlemcen (Algeria), Caracas (Venezuela) and in Medellin (Colombia). Subsequent phases will include the Orange and Blue Lines as illustrated in Figure 1 below. 2.2 The Green Line will connect Adeniji Adele on Lagos Island to Ozumba