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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 59310-UG PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR74.1 MILLION (US$120 MILLION EQUIVALENT) TO THE REPUBLIC OF UGANDA FOR AN Public Disclosure Authorized ELECTRICITY SECTOR DEVELOPMENT PROJECT May 31, 2011 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Public Disclosure Authorized Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective 4/30/2011) Currency Unit = Uganda Shillings USh 2381 = US$1 US$ = SDR0.62 FISCAL YEAR January 1 – December 31 (For UETCL) July 1 – June 30 (For GoU) ABBREVIATIONS AND ACRONYMS AfDB African Development Bank BHPP Bujagali Hydro Electric Power Project BIP Bujagli Interconnection Project BST Bulk Supply Tariff CAS Country Assistance Strategy CESMP Contractors‘ Environmental and Social Management Plan EIRR Economic Internal Rate of Return EPD Electric Power Division ERA Electricity Regulatory Authority ESIA Environmental and Social Impact Assessment ESMP Environment and Social Management Plan ESWG Energy Sector Working Group FIRR Financial Internal Rate of Return GoU Government of Uganda GWh Gigawatt hour (million kilowatt hours) IA Implementing Agency IDA International Development Agency IFR Interim Financial Report IPP Independent Power Producer kWh Kilowatt hour MEMD Ministry of Energy and Mineral Development MoFPED Ministry of Finance, Planning and Economic Development MW Megawatt MWh Megawatt hour NDP National Development Plan NPV Net Present Value PMU Project Management Unit PPA Power Purchase Agreement RAP Resettlement Action Plan RE Rural Electrification REA Rural Electrification Agency REB Rural Electrification Board ROE Return on Equity ii RPF Resettlement Policy Framework UEGCL Uganda Electricity Generation Company Limited UETCL Uganda Electricity Transmission Company Ltd. UEDCL Uganda Electricity Distribution Company Limited UMEME Private utility operating distribution networks under concession agreement USD United States Dollar USh Uganda Shilling Regional Vice President: Obiageli K. Ezekwesili Country Director: John McIntire Country Manager: Kundhavi Kadiresan Sector Director: Jamal Saghir Sector Manager: S. Vijay Iyer Task Team Leader: Somin Mukherji iii TABLE OF CONTENTS I. Strategic Context ..................................................................................................................... 1 A. Country Context ............................................................................................................... 1 B. Sectoral and Institutional Context .................................................................................... 2 C. Higher Level Objectives to which the Project Contributes .............................................. 4 II. Project Development Objectives............................................................................................. 4 A. PDO .................................................................................................................................. 4 1. Project Beneficiaries ..................................................................................................... 4 2. PDO Level Results Indicators ...................................................................................... 5 III. Project Description.................................................................................................................. 6 A. Project Components ...................................................................................................... 6 B. Project Financing .......................................................................................................... 7 1. Lending Instrument....................................................................................................... 7 2. Project Financing Table ................................................................................................ 7 IV. Implementation ....................................................................................................................... 7 A. Institutional and Implementation Arrangements .......................................................... 7 B. Results Monitoring and Evaluation .............................................................................. 8 C. Sustainability ................................................................................................................ 8 V. Key Risks ................................................................................................................................ 9 VI. Appraisal Summary .............................................................................................................. 10 A. Economic and Financial Analysis (Annexes-7 and 8) ................................................ 10 B. Technical .................................................................................................................... 12 C. Financial Management ............................................................................................... 12 D. Procurement ................................................................................................................ 13 E. Social (including safeguards) ..................................................................................... 13 F. Environment (including safeguards) .......................................................................... 15 G. Other Safeguard Policies (if required) ........................................................................ 16 Annex 1: Results Framework and Monitoring.............................................................................. 18 Annex 2: Detailed Project Description ........................................................................................ 20 Annex 3: Implementation Arrangements ..................................................................................... 27 Annex 4 Operational Risk Assessment Framework (ORAF) ....................................................... 43 Annex 5: Implementation Support Plan (ISP) .............................................................................. 46 Annex 6: Team Composition ........................................................................................................ 48 Annex 7: Economic Analysis........................................................................................................ 49 Annex 8: Financial Analysis ......................................................................................................... 58 Map – IBRD #38357 ......................................................................................................................70 iv UGANDA ELECTRICITY SECTOR DEVELOPMENT PROJECT PROJECT APPRAISAL DOCUMENT AFRICA AFTEG Date: May 27, 2011 Team Leader: Somin Mukherji Country Director: John McIntire Sectors: Power (100%) Sector Director: Jamal Saghir Themes: Infrastructure services for private Sector Manager: S. Vijay Iyer sector development (100%) Project ID: P119737 Environmental category: A Full Assessment Lending Instrument: Specific Investment Loan Joint IFC: Joint Level: Project Financing Data [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 120.0 Proposed terms: Grace period (years): 10; Years to maturity: 40; Commitment fee: 0-0.5% per annum on undisbursed balance of the Credit; and Service Charge: 0.75% per annum on undisbursed balance of the Credit On-lending arrangements: Grace period (years) 10; Years to maturity 40; Interest rate: 0.75% per annum Financing Plan (US$m) Source Local Foreign Total BORROWER/RECIPIENT 33.2 0.0 33.2 International Development Association (IDA) 22.3 97.7 120.0 Total: 55.5 97.7 153.2 Borrower: Republic of Uganda Responsible Agency: Ministry of Energy and Mineral Development, Kampala, Uganda Uganda Electricity Transmission Company Ltd. (UETCL) Plot 10, Hannington Road PO Box 7625 Uganda Tel: (256-41) 425-0677 Fax: (256-41) 434-1789 [email protected] Estimated disbursements (Bank FY/US$m) FY 2012 2013 2014 2015 2016 2017 Annual 20.0 12.0 49.6 14.8 10.8 12.6 Cumulative 20.0 32.2 81.7 96.6 107.4 120.0 Project implementation period: Start September 1, 2011 End: August 31, 2016 Expected effectiveness date: November 30, 2011 v Closing date: February 28, 2017 Does the project depart from the CAS in content or other significant respects? [ ]Yes [X] No Ref. PAD I.C. Does the project require any exceptions from Bank policies? Ref. PAD IV.G. [ ]Yes [X] No Have these been approved by Bank management? [ ]Yes [ ] No Is approval for any policy exception sought from the Board? [ ]Yes [X] No Does the project include any critical risks rated ―substantial‖ or ―high‖? [X]Yes [ ] No Ref. PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [X]Yes [ ] No Ref. PAD IV.G. Project development objective Ref. PAD II.C., Technical Annex 3 The project development objective is to improve the reliability of and increase the access to electricity supply in the southwest region of Uganda Project description [one-sentence summary of each component] Ref. PAD II.D., Technical Annex 4 Component A - Construction of 137 km of 220 kV Kawanda-Masaka transmission line and related substation construction/upgrades and resettlement of displaced persons; Component B - Technical Assistance
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