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ESP2-PAD-P152343-05262017.Pdf Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PAD1996 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED IDA CREDIT . Public Disclosure Authorized IN THE AMOUNT OF SDR 30.70 MILLION (US$42 MILLION EQUIVALENT) . AND . STRATEGIC CLIMATE FUND GRANT IN THE AMOUNT OF US$12.4 MILLION TO Public Disclosure Authorized MONGOLIA FOR THE . SECOND ENERGY SECTOR PROJECT . MAY 24, 2017 Energy & Extractives Global Practice East Asia and Pacific Region Public Disclosure Authorized 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 Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective 04/30/2017) Currency Unit = Mongolian Tugrik (MNT) US$1 = MNT 2,411 SDR1 = US$1.371 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ABC Aerial Bundled Cables EMP Environmental Management ADB Asian Development Bank Plans AMI Advanced Metering Infrastructure ENPV Economic Net Present Value AMP Avian Monitoring Program EPC Engineering Procurement and AMR Advanced Meter Reading Construction ERC Energy Regulatory Commission ASTAE Asia Sustainable and Alternative Energy Program ESMAP Energy Sector Management AuES Altai-Uliastai Energy System Assistance Program ESMF Environmental and Social BSEDN Baganuur-Southeastern Region Management Framework Electricity Distribution Network ESP1 Energy Sector Project CEO Chief Executive Officer FIRR Financial Internal Rate of Return CES Central Energy System FiT Feed-in Tariff CHP Combined Heat and Power FMM Financial Management Manual CO Carbon dioxide 2 FMSB Financial Management Sector COGS Cost of Goods Sold Board CPS Country Partnership Strategy FNPV Financial Net Present Value DA Designated Account GDP Gross Domestic Product DL Disbursement Letter GHG Greenhouse gas DSA Debt Sustainability Analysis GIZ Deutsche Gesellschaft für EA Environmental Assessment Internationale Zusammenarbeit EAR Environmental Assessment GoM Government of Mongolia Report GRS Grievance Redress Service EBEDN Erdenet-Bulgan Electricity HDI Human Development Index Distribution Network IBRD International Bank for EBRD European Bank for Reconstruction and Development Reconstruction and Development ICB International Competitive ECOP Environmental Codes of Practice Bidding EES Eastern Energy System IDA International Development EIRR Economic Internal Rate of Return Association IDC International Development Credit IFC International Finance Corporation RPF Resettlement Policy Framework IFR Interim Financial Report SA Sub-Account IP Investment Plan SAIDI System Average Interruption IPP Independent Power Producer Duration Index IPSAS International Public Sector SBD Standard Bidding Document Accounting Standards SCADA Supervisory Control and Data KfW Kreditanstalt für Wiederaufbau Acquisition LLC Limited Liability Company SCD Systematic Country Diagnostic M&E Monitoring and Evaluation SDG Sustainable Development Goals MEGDT Ministry of Environment, Green SMEs Small and Medium Enterprises Development and Tourism SO2 Sulfur Dioxide mmBTU Million British Thermal Units SOE Statement of Expenditure MNT Mongolian Tughrik MoE Ministry of Energy SOE State-Owned Enterprises MoF Ministry of Finance SOJSC State-Owned Joint Stock MW Megawatt Company SREP Scaling-Up Renewable Energy MWp Megawatt peak Program NCBs National Competitive Bidding SREP IP Scaling-Up Renewable Energy NDC National Dispatch Center Program Investment Plan NOx Nitrogen Oxides SRFP Standard Request for Proposal NPTG National Power Transmission SS Summary Sheet Grid STEP Systematic Tracking of O&M Operations and Maintenance Exchanges in Procurement OHL Overhead lines TA Technical Assistance PCB Polychlorinated Biphenyls tCO2e Tons of CO2 equivalent PDO Project Development Objective TSP Total Suspended Particulates PIU Project Implementation Unit UNFCCC United Nations Framework PMO Project Management Office Convention on Climate Change PP Power Plant WA Withdrawal Application PPA Power Purchase Agreement WACC Weighted Average Cost of PPP Purchasing Power Parity Capital PPP Public Private Partnership WB World Bank PPR Procurement Post Review WBG World Bank Group PSC Project Steering Committee WES Western Energy System RE Renewable Energy WRES Western Region Energy System REAP Renewable Energy and Rural WTP Willingness-to-pay Electricity Access Project Regional Vice President: Victoria Kwakwa Country Director: Bert Hofman Senior Global Practice Director: Riccardo Puliti Practice Manager: Jie Tang Task Team Leader: Peter Johansen Mongolia Second Energy Sector Project (P152343) TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ............................................................................................................ 1 B. Sectoral and Institutional Context ................................................................................. 1 C. Higher Level Objectives to which the Project Contributes .......................................... 3 II. PROJECT DEVELOPMENT OBJECTIVES ................................................................4 A. PDO............................................................................................................................... 4 B. Project Beneficiaries ..................................................................................................... 4 C. PDO Level Results Indicators ....................................................................................... 5 III. PROJECT DESCRIPTION ..............................................................................................5 A. Project Components ...................................................................................................... 5 B. Project Financing .......................................................................................................... 7 C. Lessons Learned and Reflected in the Project Design .................................................. 7 IV. IMPLEMENTATION .......................................................................................................8 A. Institutional and Implementation Arrangements .......................................................... 8 B. Results Monitoring and Evaluation .............................................................................. 9 C. Sustainability................................................................................................................. 9 V. KEY RISKS ........................................................................................................................9 A. Overall Risk Rating and Explanation of Key Risks ...................................................... 9 VI. APPRAISAL SUMMARY ..............................................................................................11 A. Economic and Financial (if applicable) Analysis ....................................................... 11 B. Technical ..................................................................................................................... 12 C. Financial Management ................................................................................................ 13 D. Procurement ................................................................................................................ 13 E. Social (including Safeguards) ..................................................................................... 14 F. Environment (including Safeguards) .......................................................................... 15 G. World Bank Grievance Redress .................................................................................. 17 Annex 1: Results Framework and Monitoring .........................................................................18 Annex 2: Detailed Project Description .......................................................................................24 Annex 3: Procurement Plan (IDA) .............................................................................................31 Annex 4: Implementation Arrangements ..................................................................................35 Annex 5: Implementation Support Plan ....................................................................................52 Annex 6: Economic and Financial Analysis ..............................................................................54 Annex 7: ESP2 Subprojects ........................................................................................................69 Annex 8: Scaling-Up Renewable Energy Program (SREP) .....................................................71 . PAD DATA SHEET Mongolia Second Energy Sector Project (P152343) PROJECT APPRAISAL DOCUMENT . EAST ASIA AND PACIFIC 0000009534 Report No.: PAD1996 . Basic Information Project ID EA Category Team Leader(s) P152343 B - Partial Assessment Peter Johansen Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 15-Jun-2017 30-Sep-2022 Expected Effectiveness Date Expected Closing Date 01-Sep-2017 30-Sep-2022 Joint IFC No Practice Senior Global Country Director Regional Vice President Manager/Manager Practice Director Jie Tang Riccardo Puliti Bert Hofman Victoria Kwakwa . Borrower: Mongolia
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