ICR) Review TZ-Energy Development & Access Expansion (P101645
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Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Energy Development & Access Expansion (P101645) Report Number : ICRR0021334 1. Project Data Public Disclosure Authorized Project ID Project Name TZ-Energy Development & Access P101645 Expansion Country Practice Area(Lead) Additional Financing Tanzania Energy & Extractives P117260,P125824,P153689 L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-43700,IDA-47260,IDA- 31-Mar-2012 143,671,685.12 Public Disclosure Authorized 49600,TF-96436,TF-99806 Bank Approval Date Closing Date (Actual) 13-Dec-2007 29-Sep-2017 IBRD/IDA (USD) Grants (USD) Original Commitment 105,000,000.00 0.00 Revised Commitment 105,000,000.00 0.00 Actual 134,583,952.75 0.00 Public Disclosure Authorized Prepared by Reviewed by ICR Review Coordinator Group Dileep M. Wagle Fernando Manibog Ramachandra Jammi IEGSD (Unit 4) PHPROJECTDATATBL Project ID Project Name TZ-GEF Energy Dvpt and Access P092154 Expansion ( P092154 ) Public Disclosure Authorized L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) Page 1 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Energy Development & Access Expansion (P101645) 6,441,050.29 Bank Approval Date Closing Date (Actual) 13-Dec-2007 IBRD/IDA (USD) Grants (USD) Original Commitment 0.00 6,500,000.00 Revised Commitment 0.00 6,441,050.29 Actual 0.00 6,441,050.29 2. Project Objectives and Components a. Objectives The Project Development Objective (PDO), as cited on p.5 of the original Financing Agreement (FA), was "to support the Recipient's efforts to improve the quality and efficiency of the provision of electricity service within its territory, and to establish a sustainable basis for energy access expansion". It should be noted however that in the PAD (p.7), unlike the FA, the geographical area was explicitly defined as the three main growth centers, Dar es Salaam, Kilimanjaro and Arusha. This discrepancy was however addressed in the restructuring that followed. The Project's Global Environment Objective (GEO), under the GEF Grant, was "to abate greenhouse gas emissions through the use of renewable energy in rural areas to provide electricity". During restructuring, at the time of additional financing (2010), the PDO was "slightly reformulated" (on p.4 of the project paper, though not in the new financing agreement) as follows: "to improve the quality and efficiency of the electricity service provision in the three main growth centers of Dar es Salaam, Arusha and Kilimanjaro and to establish a sustainable basis for energy access expansion and renewable energy development in Tanzania". While the inclusion of this clarification at restructuring took care of the above- mentioned discrepancy, it is clear that the PDO could have been better defined in the original financing agreement, to avoid any ambiguity regarding the intended scope of the project. The GEO was not revised. b. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? Yes Page 2 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Energy Development & Access Expansion (P101645) Date of Board Approval 04-Mar-2010 PHEVALUNDERTAKENLBL c. Will a split evaluation be undertaken? Yes d. Components The project had the following components funded by an IDA Credit and a GEF Grant: A. On-grid investments (estimated cost at appraisal US$85.8 million, financed by IDA) The original project was intended to support investments to support investments in the transmission and distribution (T&D) networks of the Tanzania Electricity Supply Company (TANESCO) in Dar es Salaam, Arusha and Kilimanjaro. This component included adding, replacing or upgrading T&D lines, substations and medium and low voltage equipment, meters, spare parts and tools. It also supported investments aimed at improving (a) corporate performance; (b) customer interface of TANESCO; and (c) access expansion in urban areas. The main rationale of these investments was to create value in the electricity business and to demonstrate its viability in a replicable manner. Key sub-components included (a) T&D investments, (b) distribution system upgrade investments, (c) on-grid access expansion, (d) commercial and institutional capacity development, and (e) on-grid technical assistance for project implementation. During the project restructuring of 2010, when the Additional Financing of US$25 million was approved, this component remained unchanged. B. Off-grid investments (estimated cost at appraisal US$59.6 million, US$22.5 million of which financed by IDA and GEF) This component was to support an institutional set-up for the newly-established Rural Energy Agency (REA) and help develop, test and demonstrate new electrification approaches, which could be easily scaled up. It consisted of the following sub-components: (a) Small Power Generation & Distribution (SPGD) sub-projects, including renewable power generation and mini-grids; (b) Sustainable Solar Market Development (SSMD), supplying PV systems for public institutions and individual households/businesses in rural areas; (c) Technical Assistance to REA and other stakeholders. During the restructuring of 2010, this component underwent the following changes: The component was renamed the Small Power project component. Sub-component B1 (Small Power Generation & Distribution) was modified to expand the matching grant window to include technical assistance (TA) to the participating financial institutions (PFIs) for capacity building, and to introduce a low-cost distribution pilot to develop new techniques and approaches to reduce the costs of distribution networks. In addition a Renewable Energy Credit Line was added as new sub-component (B4), to provide local currency term-financing.to PFIs for eligible renewable energy projects. C. Technical Assistance (estimated cost at appraisal US$3.2 million) This component was intended to fund (a) the training needs assessment for TANESCO with subsequent selected capacity building implementation; (b) increasing the Governments capacity to develop public and private generation projects through provision of legal, technical, financial, environmental and social advisory services. The key sub-components were (a) TA provided to TANESCO and (b) TA provided to the Government. During the 2010 restructuring, this component remained unaffected. Page 3 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Energy Development & Access Expansion (P101645) e. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: The project went through two restructurings - in March 2010 and March 2015 respectively - to implement (separate) Additional Financings (AFs), as well as three restructurings to change disbursement categories and extend the closing date. The restructuring for the initial AF (2010) resulted in a reformulation of the PDO. The other restructurings took place in September 2016 and July 2017, and resulted in a change in the results framework, as well as a reallocation between disbursement categories, and two further changes in closing date. The final project cost, after the various restructurings and additional financings, amounted to US$181.5 million (ICR, Annex 3, p.69), of which US$131.73 million or 72.6 percent was actually disbursed. Financing: The sources of funding for this project at appraisal consisted of IDA resources of US$105.0 million plus a grant from the Global Environment Facility (GEF) of US$6.5 million. An additional US$25.0 million of IDA funding was made available through the March 2010 restructuring and a further US$27.88 million added in May 2011. These resources were supplemented by two trust funds: (a) US$6.5 million provided through the Russian Energy Small and Medium Enterprise (ESME) Grant project, approved in November 2011, and (b) US$1.0 million through the Lighting Rural Tanzania Project approved in June 2010. Borrower Contribution: No borrower contribution was envisaged for this project, nor was any provided during the life of the project. Dates: The project was originally envisaged to close on March 31, 2012. However, the closing date was extended by three years at the time of the March 2010 restructuring. This was further extended by 18 months, to September 30, 2016, at the time of the third restructuring in March 2015. It was subsequently extended during the final restructuring to September 29, 2017, to allow TANESCO the opportunity to process outstanding claims and change orders necessary to complete the T&D works by project closing. From project approval in December 2007 to project closing in September 2017 the project took almost 10 years to complete. 3. Relevance of Objectives Rationale Original Project (2007-2010): Substantial. The project was prepared just after Tanzania had recovered from an energy crisis (2006), which highlighted the importance of reliable energy for economic growth and Page 4 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Energy Development & Access Expansion (P101645) poverty alleviation. The objectives of the project at appraisal were consistent with the 2005 National Strategy for Growth and Reduction of Poverty (NSGRP) in Tanzania, prepared by the Government in consultation with the IMF and World Bank. A sub-goal of this strategy (p.41) was to ensure provision of reliable