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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 46695-EG PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$600 MILLION TO THE ARAB REPUBLIC OF EGYPT FOR AN AIN SOKHNA POWER PROJECT January 8,2009 Public Disclosure Authorized Sustainable Development Department Middle East and North Africa Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective October 20, 2008) Currency Unit = Egyptian Pound (LE) LE5.5 = US$l US$0.179 = LE 1 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank BOT Build Operate Transfer CAS Country Assistance Strategy CASPR Country Assistance Strategy Progress Report cc Combined Cycle CCGT Combined Cycle Gas Turbine CEPC Cairo Electricity Production Company CTF Clean Technology Fund EEHC Egyptian Electricity Holding Company EETC Egyptian Electricity Transmission Company EEUCPRA Egyptian Electric Utilities and Consumer Protection Authority EGEAS Electric Generation Expansion Analysis System ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment EIB European Investment Bank EPC Engineering, Procurement, and Construction ESMAP Energy Sector Management Assistance Program FDI Foreign Direct Investment FMU Financial Management Unit FY Fiscal Year GDP Gross Domestic Product GEF Global Environmental Facility GWh Gigawatt hour GOE Government of Egypt IPP Independent Power Producer KfW German Agency for Development Assistance kWh Kilowatt hour MMBTU Million British Thermal Units sc Steam Cycle Tcf Trillion Cubic Feet TOR Terms of Reference USAID United States Agency for International Development US$ US cents Vice President: Daniela Gressani Country Director: Emmanuel Mbi Sector Director Laszlo Lovei Sector Manager: Jonathan Walters Task Team Leader: Anna Bjerde FOR OFFICIAL USE ONLY EGYPT, ARAB REPUBLIC OF AIN SOKHNA POWER PROJECT PROJECT APPRAISAL DOCUMENT MIDDLE EAST AND NORTH AFRICA MNSSD Date: January 8,2009 Team Leader: Anna Maria Bjerde Country Director: Emmanuel Mbi Sectors: Power (1 00%) Sector Manager/Director: Jonathan D. Walters Themes: Access to urban services and housing (PI Project ID: P100047 Environmental screening category: Category A (Full Assessment) Lending Instrument: Specific Investment Loan [XI Loan [ ] Credit [ 3 Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 600.00 Development Total: 702.30 1,487.50 2,189.80 Borrower: Ministry of International Cooperation 8 Adly Street Cairo, Arab Republic of Egypt Tel: (+20-2) 391-2815 Responsible Agency: Egyptian Electricity Holding Company Ramsis Street Extension Abbassia Cairo, Arab Republic of Egypt - 1 15 17 Tel: (+20-2) 401-2368 kvassin@,moee.gov.eq / www.egelec.com This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Project implementation period: Start May 3 1,2009 End: June 30,201 5 Expected effectiveness date: May 3 1,2009 Expected closing date: December 3 1,20 15 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Ref: PAD I.C. Does the project require any exceptions from Bank policies? Ref: PAD IKG. [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [XINO Ref: PAD IILE. Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Ref: PAD IKG. Project development objective Ref: PAD ILC., Technical Annex 3 The project development objectives are to (i)ensure continuous electricity supply to meet demand in a sustainable manner through investment in new generation capacity; and (ii)improve the sector’s financial sustainability by providing assistance to the Egyptian Electricity Holding Company (EEHC) to support sector revenue improvements. Project description [one-sentence summary of each component] Ref: PAD II.D., Technical Annex 4 The proposed project is a 1,300 MW supercritical steam turbine power plant comprising two 650 MW steam turbines using natural gas as the main fuel (and mazout as the back-up fuel). The plant will be under the management ofthe East Delta Production Company (EDPC), one of EEHC’s subsidiaries. A technical assistance component is aimed at further enhancing the on-going energy sector policy dialogue with GOE. The assistance will mainly comprise ofstudies and policy support including rapid response support to EEHC in the implementation ofthe time-of-use tariff and further tariff adjustment recommendations from the on-going Energy Pricing Strategy work. Which safeguard policies are triggered, if any? Re$ PAD IV.F., Technical Annex 10 Environmental Assessment (OP/BP 4.0 1) - Given the project’s environmental classification, in accordance with Operation Policy (OP) 4.0 1 on Environmental Assessment, a full Environmental and Social Impact Assessment (ESIA) report was prepared for the project. Involuntary Resettlement (OP/BP 4.12) - Associated with the Ain Sokhna power plant, there are about 130 kilometers of proposed new transmission lines. Most of the routing pathways are located in uninhabited, desert land which is state owned. However, the Operational Policy on Involuntary Resettlement (OP/BP 4.12) is triggered, because the exact location of all the sections of the transmission line is not yet known. The areas in question are largely uninhabited public land; however, in order to handle any potential future changes, a Resettlement Policy Framework (RPF) was prepared. Significant, non-standard conditions, if any, for: Re$ PAD III.F. Board presentation: There are no conditions of Board presentation. Loadcredit effectiveness: Subsidiary Loan Agreement signed between Ministry of International Cooperation and the Egyptian Electricity Holding Company (EEHC). Covenants applicable to project implementation: Contractual Agreement signed between EEHC and EDEPC no later than one month after the effectiveness date. Establishment of the PMU, with qualified staff and in adequate numbers no later than two months after the effectiveness date. Adoption of the Implementation Manual (including procurement and financial management) no later than two months after the date of signature of the contractual agreement between EEHC and EDEPC. EGYPT. ARAB REPUBLIC OF Ain Sokhna Power Project CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE .................................................................. 1 A . Country and sector issues .................................................................................................... 1 B. Rationale for Bank involvement .......................................................................................... 8 C . Higher level objectives to which the project contributes .................................................... 9 I1. PROJECT DESCRIPTION ............................................................................................ 10 A . Lending instrument ........................................................................................................... -10 B. Project development objective and key indicators ............................................................ 10 C . Project components ............................................................................................................ 11 D. Lessons learned and reflected in the project design .......................................................... 12 E. Alternatives considered and reasons for rejection ............................................................. 12 I11. IMPLEMENTATION ..................................................................................................... 14 A . Partnership arrangements (ifapplicable) .......................................................................... -14 B. Institutional and implementation arrangements ................................................................ 15 C . Monitoring and evaluation of outcomeshesults ................................................................ 17 D. Sustainability .................................................................................................................... -17 E. Critical risks and possible controversial aspects ............................................................... 17 .. F. Loan conditions and covenants .......................................................................................... 19 IV. APPRAISAL SUMMARY .............................................................................................. 20 A . Economic and financial analyses ....................................................................................... 20 B . Technical ........................................................................................................................... 23 C . Fiduciary. ........................................................................................................................... 25 D. Social ................................................................................................................................. 27 E. Environment .....................................................................................................................
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