Document of the World Bank for OFFICIAL USE ONLY Report No: PAD1243 INTERNATIONAL BANK for RECONSTRUCTION and DEVELOPMENT PROJE
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Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD1243 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF US$8.55 MILLION TO THE REPUBLIC OF ARMENIA FOR A GEOTHERMAL EXPLORATORY DRILLING PROJECT (GEDP) JANUARY 9, 2015 Energy & Extractives EUROPE AND CENTRAL ASIA This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective January 9, 2015) Currency Unit = AMD 480 = US$1 US$1.5 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank IP Investment Plan AMD Armenian Dram kV Kilovolt BOT Board of Trustees kWh Kilowatt-hour CCGT Combined Cycle Gas Turbine CPS Country Partnership Strategy LEC Levelized Energy Cost DA Designated Account MENR Ministry of Energy and Natural Resources DSC Drilling Service Company MDBs Multilateral Development Banks DSCR Debt Service Coverage Ratio MOF Ministry of Finance EBRD European Bank for Reconstruction and NGO Non-Government Organization Development EMP Environmental Management Plan NPV Net Present Value ESIA Environmental and Social Impact ORC Organic Rankine Cycle Assessment FM Financial Management PP Procurement Plan FMM Financial Management Manual PPP Public Private Partnership GEDP Geothermal Exploratory Drilling Project PSOD Private Sector Operations Department GEF Global Environmental Facility PV Photovoltaic GHG Greenhouse Gas R2E2 Renewable Energy and Energy Fund Efficiency Fund GRM Grievance Redress Mechanism RAP Resettlement Action Plan GWh Gigawatt-hour RPF Resettlement Policy Framework HPP Hydropower Plant SOE Statement of Expenditures IBRD International Bank for Reconstruction SREP Scaling-up Renewable Energy and Development Program IDA International Development Association TSSC Technical Supervision and Support Consultant IFC International Finance Corporation TTL Task Team Leader IFR Interim Financial Report US$ United States Dollars WACC Weighted Average Cost of Capital Regional Vice President: Laura Tuck Country Director: Henry Kerali Senior Global Practice Director: Anita George Practice Manager: Ranjit Lamech Task Team Leader: Artur Kochnakyan Co-Task Team Leader: Almudena Mateos Merino ARMENIA Geothermal Exploratory Drilling Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT ...............................................................................................12 A. Country Context .......................................................................................................... 12 B. Sectoral and Institutional Context ............................................................................... 12 C. Higher Level Objectives to which the Project Contributes ........................................ 17 II. PROJECT DEVELOPMENT OBJECTIVES ..............................................................17 A. PDO............................................................................................................................. 17 B. Project Beneficiaries ................................................................................................... 17 C. PDO Level Results Indicators ..................................................................................... 17 III. PROJECT DESCRIPTION ............................................................................................18 A. Project Components .................................................................................................... 18 B. Project Financing ........................................................................................................ 19 C. Project Cost and Financing ......................................................................................... 19 IV. IMPLEMENTATION .....................................................................................................20 A. Institutional and Implementation Arrangements ........................................................ 20 B. Results Monitoring and Evaluation ............................................................................ 21 C. Sustainability............................................................................................................... 21 V. KEY RISKS ......................................................................................................................21 A. Overall Risk Rating and Explanation of Key Risks.................................................... 21 VI. APPRAISAL SUMMARY ..............................................................................................22 A. Economic and Financial Analysis ............................................................................... 22 B. Technical ..................................................................................................................... 23 C. Financial Management ................................................................................................ 24 D. Procurement ................................................................................................................ 25 E. Social (including Safeguards) ..................................................................................... 25 F. Environment (including Safeguards) .......................................................................... 26 Annex 1: Results Framework and Monitoring .........................................................................28 Annex 2: Detailed Project Description .......................................................................................30 Annex 3: Implementation Arrangements ..................................................................................35 Annex 4: Implementation Support Plan ....................................................................................45 Annex 5: Economic Analysis .......................................................................................................47 Annex 6: Scaling-Up Renewable Energy in Low Income Countries Program ......................52 Annex 7: Procurement Plan ........................................................................................................60 Annex 8: Map………………………………………………………………………………….....62 . PAD DATA SHEET Armenia Geothermal Exploratory Drilling Project (P152039) PROJECT APPRAISAL DOCUMENT . EUROPE AND CENTRAL ASIA 0000009058 Report No.: PAD1243 . Basic Information Project ID EA Category Team Leader P152039 B - Partial Assessment Artur Kochnakyan Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Project Implementation End Date Date 15-May-2015 30-Apr-2019 Expected Effectiveness Date Expected Closing Date 10-May-2015 31-May-2019 Joint IFC No Practice Senior Global Practice Regional Vice Country Director Manager/Manager Director President Ranjit Lamech Anita George Henry Kerali Laura Tuck . Approval Authority Approval Authority Regional Vice President (RVP) . Borrower: MINISTRY OF FINANCE AND ECONOMY Responsible Agency: Renewable Resources and Energy Efficiency Fund Contact: Ms. Tamara Babayan Title: Director Telephone +37410-58-80-11 Email: [email protected] No.: . Project Financing Data(in USD Million) [ ] Loan [ ] IDA [ ] Guarantee Grant [ ] Credit [ X ] Grant [ ] Other Total Project Cost: 10.69 Total Bank Financing: 0.00 Financing Gap: 0.00 . Financing Source Amount Recipient 2.13 Strategic Climate Fund Grant 8.55 Total 10.68 . Expected Disbursements (in USD Million) Fiscal Year 2015 2016 2017 2018 Annual 1.5 5.0 1.2 0.85 Cumulative 1.5 6.5 7.7 8.55 . Institutional Data Practice Area / Cross Cutting Solution Area Energy & Extractives Cross Cutting Areas [ x ] Climate Change [ ] Fragile, Conflict & Violence [ ] Gender [ ] Jobs [ x ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits Co-benefits % % Energy and mining Other Renewable 100 Energy Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Financial and private sector Infrastructure services for private 90 development sector development Environment and natural resources Climate change 10 management Total 100 . Proposed Development Objective(s) The proposed project development objective is to confirm whether the geothermal resource at Karkar site is suitable for power generation and, if confirmed, to involve the private sector in development of a geothermal power plant. Components Component Name Cost (USD Millions) Exploratory drilling and construction of related 9,210,000 infrastructure Technical assistance for assessment of the geothermal 1,470,000 resource potential and technical supervision . Systematic Operations Risk- Rating Tool (SORT) Risk Category Rating 1. Political and Governance Low 2. Macroeconomic Moderate 3. Sector Strategies and Policies Low 4. Technical Design of Project or Program Substantial 5. Institutional Capacity for Implementation and Sustainability Moderate 6. Fiduciary Substantial 7. Environment and Social Low 8. Stakeholders Low OVERALL Substantial . Compliance Policy Does the project depart from