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Document of The World Bank Report No: ICR2263 Public Disclosure Authorized IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-38330 IDA-45410) ON A CREDIT IN THE AMOUNT OF SDR 25.7 MILLION Public Disclosure Authorized (US$35.0 MILLION EQUIVALENT) AND AN ADDITIONAL CREDIT IN THE AMOUNT OF SDR 6.7 MILLION (US$10 MILLION EQUIVALENT) TO THE REPUBLIC OF MOLDOVA Public Disclosure Authorized FOR AN ENERGY II PROJECT October 30, 2012 Public Disclosure Authorized Sustainable Development Department Ukraine, Belarus and Moldova Country Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective April 30, 2012) Currency Unit = Moldovan Leu (MDL) 1.00 = US$0.09 US$ 1.00 = MDL 11.68 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ANRE National Energy Regulatory Agency CHP Combined Heat and Power CPS Country Partnership Strategy DCA Development Credit Agreement DH District Heating EA Environmental Assessment EBRD European Bank for Reconstruction and Development ECSEE Energy Community of South-East Europe EMP Environmental Management Plan ERR Economic Rate of Return EMS Energy Management System FSU Former Soviet Union GDP Gross Domestic Product GWh Gigawatt hours IAS International Accounting Standards ICR Implementation Completion and Results Report IDA International Development Association IFC International Finance Corporation IFRS International Financial Reporting Standards IMF International Monetary Fund KWh Kilowatt hours ME SE Moldelectrica (National Transmission and Dispatch company) MEPIU Moldova Energy Projects Implementation Unit MoE Ministry of Economy MWh Megawatt hour NDC National Dispatch Center PAD Project Appraisal Document PCB Polychlorinated Biphenyls PLC Power Line Carrier PPF Project Preparation Facility RTU Remote Terminal Units SAC Structural Adjustment Credit SCADA System Control and Data Acquisition SIDA Swedish International Development Agency Vice President: Philippe H. Le Houérou Country Director: Qimiao Fan Sector Manager: Ranjit J. Lamech Project Team Leader: Sandu Ghidirim ICR Team Leader: Jann Masterson ii MOLDOVA Energy II Project 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, Development Objectives and Design ............................................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................................. 6 3. Assessment of Outcomes .......................................................................................................... 14 4. Assessment of Risk to Development Outcome ......................................................................... 17 5. Assessment of Bank and Borrower Performance ..................................................................... 18 6. Lessons Learned........................................................................................................................ 20 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ........................... 21 Annex 1. Project Costs and Financing .......................................................................................... 22 Annex 2. Outputs by Component.................................................................................................. 24 Annex 3. Economic and Financial Analysis ................................................................................. 31 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............................. 37 Annex 5. Beneficiary Survey Results ........................................................................................... 39 Annex 6. Stakeholder Workshop Report and Results ................................................................... 40 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................................... 41 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................................... 54 Annex 9. List of Supporting Documents ...................................................................................... 55 MAP .............................................................................................................................................. 56 iii A. Basic Information Country: Moldova Project Name: Energy 2 Project Project ID: P040558 L/C/TF Number(s): IDA-38330,IDA-45410 ICR Date: 10/30/2012 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: MOLDOVA Original Total XDR 25.70M Disbursed Amount: XDR 32.17M Commitment: Revised Amount: XDR 32.17M Environmental Category: B Implementing Agencies: Moldova Energy Projects Implementation Unit (MEPIU) Cofinanciers and Other External Partners: Swedish International Development Agency (SIDA) B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/07/1999 Effectiveness: 03/02/2004 03/02/2004 06/29/2004 10/08/2007 Appraisal: 05/13/2002 Restructuring(s): 01/29/2009 10/13/2009 12/26/2011 Approval: 11/25/2003 Mid-term Review: 03/31/2006 04/21/2006 Closing: 04/30/2008 04/30/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: iv C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project Quality at Entry Yes Satisfactory at any time (Yes/No): (QEA): Problem Project at any time Quality of Supervision Yes None (Yes/No): (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 10 10 Energy efficiency in Heat and Power 10 30 General education sector 5 5 Health 5 5 Power 70 50 Theme Code (as % of total Bank financing) Climate change 13 13 Infrastructure services for private sector development 25 25 Pollution management and environmental health 13 13 Regulation and competition policy 24 24 Urban services and housing for the poor 25 25 E. Bank Staff Positions At ICR At Approval Vice President: Philippe H. Le Houerou Shigeo Katsu Country Director: Qimiao Fan Luca Barbone Sector Manager: Ranjit J. Lamech Hossein Razavi Project Team Leader: Sandu Ghidirim Vladislav Vucetic ICR Team Leader: Peggy Janice Masterson ICR Primary Author: Peggy Janice Masterson v F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) Improve the security and reliability of the electricity transmission system and wholesale electricity supply and, therefore, facilitate unimpeded commercial operation of the power system. Improve the availability, quality, and efficiency of heating in selected priority public buildings. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Reduce outage rates of Moldelectrica transmission lines and substations by 35% Value 59% reduction (103 Reduce outage rates quantitative or 253 hours of outages hours of outages in by 35% Qualitative) 2011) Date achieved 12/31/2002 04/30/2012 04/30/2012 Comments Target exceeded. (incl. % Based on data from Moldelectrica's Annual Report for 2011. achievement) Indicator 2 : Reduce non-technical losses in transmission and distribution by 75% Value 100% reduction Non-technical losses in Non-technical losses quantitative or (Non-technical losses 2002 were 11% reduced by 75% Qualitative) for 2011 were 0%) Date achieved 12/31/2002 04/30/2012 04/30/2012 Comments Target exceeded. (incl. % (Information from Moldelectrica's 2011 Annual Report.) achievement) Indicator 3 : Reduce unserved energy by 200 MWh per year Value Reduce unserved Unserved energy of about 101.2 MWh unserved quantitative or energy by 200 MWh 400 MWh energy in 2011. Qualitative) per year. Date achieved 12/31/2002 04/30/2012 04/30/2012 Comments Target partially achieved, with unserved energy substantially reduced. (Information (incl. % from Moldelectrica's 2011 Annual Report.) achievement) Indicator 4 : Reduce technical losses of Moldelectrica by 5% Value 138.9 GWh of technical Reduce technical 5.65% re ductiion quantitative or losses in 2002 losses by 5% (131.04 GWh) Qualitative) Date achieved 12/31/2002 04/30/2012 04/30/2012 Comments Target achieved. (information from Moldelectrica's 2011 Annual Report) (incl. % vi achievement) Indicator 5 : Increase number of buildings with heating throughout the winter season 252 buildings in total (69 institutions and 43 residential buildings) including schools, hospitals, 120 days of Value 80 institutions/buildings 120 days of heating kindergartens and heating quantitative or with heating availability availability in 170 orphanages have availability in Qualitative) from 0-30 days per year buildings heating and domestic 217 buildings hot water (DHW) availability throughout the entire year (more